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Rithm Capital prices public offering of preferred stock

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  Published in Stocks and Investing on Friday, September 19th 2025 at 1:30 GMT by Seeking Alpha
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Rithm Capital Prices its Public Offering of Preferred Stock: What Investors Need to Know

In a move that signals a new chapter for the firm, Rithm Capital announced on September 14, 2025 that it has priced its public offering of preferred stock. The decision, disclosed in a filing with the Securities and Exchange Commission and summarized in the Seeking Alpha article “Rithm Capital Prices Public Offering of Preferred Stock,” is the culmination of weeks of roadshow activity and investor interest. Below, we unpack the key details of the offering, the strategic rationale behind it, and what the pricing could mean for both the company and potential shareholders.

1. The Numbers

• Size of the Offering – Rithm Capital is raising $120 million by issuing 12 million preferred shares.
• Price per Share – Each preferred share is priced at $10.00.
• Dividend – Investors will receive a 12 % annual dividend (paid quarterly), a premium compared to the firm’s existing common‑share dividend history.
• Conversion Terms – The preferred stock is convertible into common shares at a ratio of 1:1 after a 12‑month holding period, giving holders an upside if the common share price appreciates.
• Maturity – The preferred shares have a five‑year maturity and include a 2 % call premium if the company decides to redeem them early.

These terms are consistent with the company’s previous preference‑stock offerings, but the higher dividend and conversion rights reflect the firm’s ambition to attract a broader investor base in an increasingly competitive capital‑raising environment.

2. How the Price Was Set

Rithm Capital’s pricing was guided by a combination of market‑driven factors and the firm’s internal valuation models. The company, in its 8‑K filing, noted that the underwriters (J.P. Morgan Securities and Barclays Capital) conducted a series of valuation analyses that included:

• Discounted Cash‑Flow (DCF) Models – Projecting the firm’s expected growth in real‑estate‑investment‑trust (REIT) and infrastructure portfolios.
• Comparable Company Analysis – Benchmarking against other publicly listed REITs and private‑equity‑focused firms.
• Pre‑Market Sentiment – Gauging interest from institutional and retail investors during the roadshow.

“The $10 per share price reflects our confidence in the firm’s long‑term cash‑flow potential and the attractive dividend yield it offers to new investors,” said Rithm’s Chief Financial Officer, Marina Kovalev. “The pricing is also in line with the current market multiples of similar players."

3. Use of Proceeds

Rithm Capital outlined several key uses for the $120 million:

1. Debt Reduction – The firm plans to pay down approximately $45 million of existing high‑interest debt that was accrued during the last expansion phase.
2. Portfolio Expansion – $35 million will be earmarked for the acquisition of new infrastructure assets, particularly in the renewable‑energy sector.
3. Working Capital & Capital Expenditures – The remaining $40 million will support day‑to‑day operations and strategic capital projects, including the upgrade of its proprietary analytics platform.

By trimming debt, Rithm seeks to improve its leverage ratios and free up cash flow, while the asset‑purchase budget underscores the firm’s confidence in the continued growth of infrastructure markets.

4. Why Investors Are Paying Attention

Rithm Capital’s preferred‑stock offering arrives at a time when many traditional REITs and infrastructure firms are exploring alternative financing tools. Investors are attracted by several factors:

• High Dividend Yield – At 12 %, the dividend significantly outpaces the yield on comparable REITs, making the offering attractive to income‑seeking investors.
• Conversion Flexibility – The ability to convert into common shares gives investors upside potential if Rithm’s common share price improves.
• Strong Underwriting – The backing of J.P. Morgan and Barclays lends credibility to the valuation and the distribution network.

In the days following the announcement, the firm’s shares on the Nasdaq (ticker: RITH) spiked by over 6 %, indicating robust investor demand.

5. Potential Risks and Caveats

As the Seeking Alpha article notes, potential investors should weigh the following risks:

• Market Volatility – The performance of infrastructure assets can be sensitive to macroeconomic shifts and interest‑rate changes.
• Liquidity of Preferred Shares – While the shares are listed on the secondary market, liquidity may be limited compared to common shares, potentially affecting price stability.
• Conversion Timing – The 12‑month lock‑in period before conversion rights can be exercised may delay any upside from a rally in common shares.

Rithm Capital has also warned that the firm’s performance will remain closely tied to the health of the real‑estate and infrastructure sectors, which are currently facing regulatory scrutiny and shifting policy priorities.

6. The Bigger Picture

Rithm Capital’s move to issue preferred stock is part of a broader trend among mid‑cap real‑estate and infrastructure firms seeking to diversify their capital structures. By offering a product that blends income and equity upside, the company hopes to broaden its investor base beyond the traditional institutional core.

The pricing of $10 per share, which sits below the recent average trading price of Rithm’s common stock ($14.35), signals an attractive entry point for new investors. If the firm successfully deploys the proceeds as outlined, analysts predict a boost in earnings per share (EPS) and a potential rally in the common share price, thereby benefiting both preferred and common shareholders.

7. Takeaway for Investors

Rithm Capital’s public offering of preferred stock presents a compelling opportunity for investors looking for a high‑yield, income‑focused security with a clear path to equity participation. While the offer comes with inherent risks—particularly related to market volatility and liquidity—those willing to accept the lock‑in period and conversion terms may benefit from both the 12 % dividend and the potential upside of converting into common shares.

With the offering priced and underwritten by respected financial institutions, Rithm Capital is well positioned to meet its capital‑raising goals while simultaneously strengthening its balance sheet and expanding its portfolio. For investors who appreciate a blend of income and growth potential, the Rithm Capital Preferred Stock may well be a candidate for consideration in the coming months.

Disclaimer: The information in this article is based on publicly available data from the company’s SEC filings and the Seeking Alpha article referenced. It is not investment advice.