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Genesis Capital Closes Largest Ever Rated Residential Transition Loan Securitization

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Genesis Capital completes a $500 million rated securitization backed by residential transition loans, receiving support from 46 investors. The deal includes three classes of offered bonds and marks the largest-ever rated residential transition loan securitization. Goldman Sachs led the offering, enabling institutional investors to enter the RTL market.
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The completion of a $500 million rated securitization by Genesis Capital LLC is a significant event for both the company and the broader residential real estate market. By packaging residential transition loans into securities, Genesis is tapping into a new source of capital, which could potentially lower their cost of funding and increase their lending capacity. The involvement of high-profile financial institutions like Goldman Sachs and Deutsche Bank as initial purchasers indicates a strong market confidence in the quality of the underlying assets and the structure of the deal.

For investors, the introduction of bonds with ratings from A (low) to BB (low) provides a range of risk-reward profiles, potentially attracting a diverse group of institutional investors. The success of this securitization, especially being the largest of its kind, suggests a healthy appetite for such financial instruments. This could lead to more liquidity in the market and possibly drive further innovation in the financing of residential real estate development.

This landmark securitization indicates an expanding origination capacity for Genesis Capital within the residential sector, which could have ripple effects throughout the housing market. With additional capital, Genesis is poised to fund more construction and renovation projects, potentially addressing some of the demand for new housing. However, the impact on the housing market will depend on how effectively this capital is deployed and whether it translates into an increase in affordable housing stock.

Moreover, the focus on ground-up construction is particularly noteworthy as it reflects a strategic move to support a segment of the market that often faces significant barriers to entry due to the high capital requirements. By providing tailored capital solutions to developers, Genesis could play a pivotal role in shaping residential real estate trends and fostering growth in underserved areas.

The emphasis on maintaining strong credit quality across Genesis' portfolio is crucial, especially in the context of a securitization of this magnitude. Investors will closely monitor the performance of these loans and any sign of deteriorating credit quality could affect investor confidence and the pricing of future securitizations. Given the current economic climate, with concerns over interest rates and housing market stability, the ability of Genesis to uphold stringent underwriting standards will be a key factor in sustaining investor trust and ensuring the long-term success of their securitization program.

Offering Received Broad Participation From 46 Investors

NEW YORK--(BUSINESS WIRE)-- Genesis Capital LLC (“Genesis”), a leading business purpose lender that provides innovative debt solutions to professional real estate developers for new acquisition, renovation, ground-up construction, and long-term rental hold projects across the residential spectrum, today announced it has completed a $500 million rated securitization backed by residential transition loans (“RTL”). The transaction, which received support from 46 investors, represents the largest-ever rated residential transition loan securitization and the first rated transaction focused on ground-up construction.

The deal’s structure featured three classes of offered bonds ranging from A (low) rated to BB (low) rated bonds.

Goldman Sachs led the offering and served as an initial purchaser along with Deutsche Bank Securities, Morgan Stanley, Nomura, and Performance Trust.

“With the successful close of the largest-ever rated RTL, institutional investors are now able to participate in the RTL market. This is an exciting moment for the residential housing sector, and we are confident that the support of our parent company Rithm Capital Corp., our robust underwriting process, our deep and talented team, and our commitment to maintaining strong credit quality across our portfolio has positioned us to capitalize on a broad range of opportunities ahead,” said Clint Arrowsmith, President of Genesis. “This transaction will provide additional capital for Genesis’ next phase of growth and will enable us to build on our extensive track record of partnering with sophisticated, tenured development professionals to support construction and renovation projects across the residential sector.”

“This transaction is an important step in our commitment to expanding origination capacity across the Rithm platform,” said Michael Nierenberg, Chairman, Chief Executive Officer and President of Rithm Capital Corp (“Rithm”). “The offering will enhance Genesis’ ability to provide innovative, tailored capital solutions to high-quality developers. Genesis sits at a critical position in the residential real estate value chain, and we look forward to continuing to work with their team to meet strong nationwide demand for residential construction and renovation financing.”

This press release does not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction.

ABOUT GENESIS CAPITAL

Genesis Capital is the preferred capital partner for professional real estate investors seeking prompt and innovative financing solutions that support the full life cycle of their residential projects. The company leverages its expertise, proprietary data and long-term borrower relationships to deliver both agility and speed as well as reliable, integrated high-touch customer service. Headquartered in Sherman Oaks, California, Genesis has over 140 full-time employees today.

ABOUT RITHM CAPITAL

Rithm Capital Corp. (NYSE: RITM) is a global asset manager focused on real estate, credit and financial services. Rithm makes direct investments and operates several wholly-owned operating businesses. Rithm’s businesses include Sculptor Capital Management, Inc., an alternative asset manager, as well as Newrez LLC, and Genesis Capital LLC, leading mortgage origination and servicing platforms. Rithm seeks to generate attractive risk-adjusted returns across market cycles and interest rate environments. Since inception in 2013, Rithm has delivered approximately $5.0 billion in dividends to shareholders. Rithm is organized and conducts its operations to qualify as a real estate investment trust (REIT) for federal income tax purposes and is headquartered in New York City.

FORWARD-LOOKING STATEMENTS

This communication contains forward-looking statements related to Genesis within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks and uncertainties, some of which are beyond Genesis’ control. Expectations for Genesis’ future necessarily involve a number of assumptions, judgments and estimates, and various factors could cause actual results to differ materially from the expectations expressed in these and other forward-looking statements. Forward-looking statements contained herein speak only as of the date hereof, and each of Genesis and Rithm expressly disclaims any obligation to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the expectations with regard thereto or change in events, conditions or circumstances on which any statement is based. New risks and uncertainties emerge from time to time, and it is not possible for Genesis or Rithm to predict or assess the impact of every factor that may cause their actual results to differ from those contained in any forward-looking statements.

Investor Relations

(212)-850-7770

ir@rithmcap.com

Media

Jon Keehner / Sarah Salky / Erik Carlson

Joele Frank, Wilkinson Brimmer Katcher

(212)-355-4449

ritm-jf@joelefrank.com

Source: Rithm Capital Corp. and Genesis Capital LLC

FAQ

How much was the rated securitization completed by Genesis Capital ?

Genesis Capital completed a $500 million rated securitization backed by residential transition loans.

How many investors participated in the offering?

The offering received support from 46 investors.

Which investment bank led the offering for the securitization?

Goldman Sachs led the offering along with Deutsche Bank Securities, Morgan Stanley, Nomura, and Performance Trust.

What was unique about this securitization deal?

It represents the largest-ever rated residential transition loan securitization and the first rated transaction focused on ground-up construction.

Who is the President of Genesis Capital ?

Clint Arrowsmith is the President of Genesis Capital

Who is the Chairman, CEO, and President of Rithm Capital Corp?

Michael Nierenberg is the Chairman, CEO, and President of Rithm Capital Corp.

What does the completion of the securitization enable Genesis to do?

The completion of the securitization will provide additional capital for Genesis’ next phase of growth and enable them to build on their track record of supporting construction and renovation projects across the residential sector.

Rithm Capital Corp.

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