Rithm Property Trust Inc.RPT
Rithm Property Trust Inc. Fair Value Disclosure
Fair Value
The following tables present financial assets and liabilities recorded at fair value on a recurring basis by level within the fair value hierarchy as of December 31, 2025 and 2024:
($ in thousands) | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||
| December 31, 2025 | Carrying value | Quoted prices in active markets | Observable inputs other than Level 1 prices | Unobservable inputs | |||||||||||||||||||
| Assets: | |||||||||||||||||||||||
| CMBS, at fair value | $ | 273,783 | $ | — | $ | 273,783 | $ | — | |||||||||||||||
| RMBS available-for-sale, at fair value | 49,237 | — | 49,237 | — | |||||||||||||||||||
| Other investments | 61,578 | — | — | 61,578 | |||||||||||||||||||
| Other assets | 17,189 | — | — | 17,189 | |||||||||||||||||||
| Total | $ | 401,787 | $ | — | $ | 323,020 | $ | 78,767 | |||||||||||||||
($ in thousands) | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||
| December 31, 2024 | Carrying value | Quoted prices in active markets | Observable inputs other than Level 1 prices | Unobservable inputs | |||||||||||||||||||
| Assets: | |||||||||||||||||||||||
| CMBS, at fair value | $ | 246,614 | $ | — | $ | 246,614 | $ | — | |||||||||||||||
| RMBS available-for-sale, at fair value | 62,169 | — | 62,169 | — | |||||||||||||||||||
| Other investments | 29,916 | — | — | 29,916 | |||||||||||||||||||
| Total | $ | 338,699 | $ | — | $ | 308,783 | $ | 29,916 | |||||||||||||||
Reconciliation of Fair Value Measurements Categorized within Level 3
Gains and losses on investments categorized within Level 3 are recorded in other income in the consolidated statements of operations. Gains and losses on warrant liability were recorded in fair value adjustment on mark-to market liabilities in the consolidated statements of operations.
The following tables summarize the changes in the Company’s Level 3 financial assets and liabilities measured at fair value on a recurring basis, for the years ended December 31, 2025 and 2024:
($ in thousands) | December 31, 2024 | Transfers In / (Out) of Level 3 | Purchases / Issuances | Investment Sales / Settlements | Gains / (Losses) Included in Earnings | Gains / (Losses) Included in Other Comprehensive Income | December 31, 2025 | ||||||||||||||||||||||||||||||||||
| Assets: | |||||||||||||||||||||||||||||||||||||||||
| Other investments | $ | 29,916 | $ | — | $ | 50,000 | $ | (9,723) | $ | (8,615) | $ | — | $ | 61,578 | |||||||||||||||||||||||||||
| Other assets | — | — | 17,189 | — | — | — | 17,189 | ||||||||||||||||||||||||||||||||||
($ in thousands) | December 31, 2023 | Transfers In / (Out) of Level 3 | Purchases / Issuances | Investment Sales / Settlements | Gains / (Losses) Included in Earnings | Gains / (Losses) Included in Other Comprehensive Income | December 31, 2024 | ||||||||||||||||||||||||||||||||||
| Assets: | |||||||||||||||||||||||||||||||||||||||||
| Other investments | $ | — | $ | 21,918 | (1) | $ | 7,998 | $ | — | $ | — | $ | — | $ | 29,916 | ||||||||||||||||||||||||||
| Liabilities: | |||||||||||||||||||||||||||||||||||||||||
| Warrant liability | 16,644 | (851) | (2) | 2,734 | (18,677) | (150) | — | — | |||||||||||||||||||||||||||||||||
(1)Represents reclassification from equity method securities to other investments, at fair value.
(2)Represents reclassification from warrant liability, at fair value to equity. See Note 8 for additional details.
The Company holds an investment in a REIT, Gaea. As of December 31, 2025, the fair value of the REIT was determined based on the estimated liquidation proceeds of the entity. As of December 31, 2024, the fair value of the properties held by the REIT was estimated using either an implied capitalization rate applied to the trailing and forward 12 month net operating income for each property or, for properties under contract or listed for sale, the contract or listing price. The fair value of the Company’s investment in Gaea was $11.6 million and $21.9 million as of December 31, 2025 and 2024, respectively.
The fair value for the Company’s investment in a credit risk transfer instrument (“CRT”) is calculated as the net present value of the expected cash flows on the CRT. The fair value of this investment was $8.0 million as of December 31, 2024. The Company’s CRT investment was fully settled during the year ended December 31, 2025.
The Company acquired a commercial loan during the third quarter of 2025. The fair value of this loan was $17.2 million as of December 31, 2025 and is presented within other assets on the consolidated balance sheets. The Company relies on the Manager’s pricing model, as well as vendor pricing, to estimate the underlying cash flows expected to be collected on the loans. Risks inherent in the Company’s commercial loan portfolio affecting the valuation of its loans include the risk of default, delays and inconsistency in the frequency and amount of payments, risks affecting borrowers such as man-made or natural disasters, such as floods or wildfires, or a pandemic and damage to or delay in realizing the value of the underlying collateral. In addition, the Company assesses the expected cash flows from the commercial loans, the fair value of the underlying collateral and other factors and evaluates whether and when it becomes probable that all amounts contractually due will not be collected. As of December 31, 2025, the significant unobservable quantitative input used for the fair value measurement of the commercial loan was a discount rate of 8.5%.
At December 31, 2025, the purchase price of the Company’s investment in the Aggregators (as defined in Note 7) of $50.0 million approximated fair value. The fair value of the investment is determined using an income approach, which estimates fair value based on projected net operating income of the underlying high quality office properties. Significant unobservable inputs used in the valuation include a discount rate and capitalization rates, which reflect current market conditions and the risks inherent in the underlying properties and cash flows. Changes in these assumptions could have a material impact on the estimated fair value. The following table summarizes certain information regarding the ranges and weighted averages of inputs used in valuing the Company’s investment in the Aggregators:
| Discount Rate | Capitalization Rate | |||||||||||||
| December 31, 2025 | 8.3% – 13.4% (10.1%) | 5.5% – 7.3% (6.2%) | ||||||||||||
The following tables present financial assets and liabilities not carried at fair value, by level within the fair value hierarchy as of December 31, 2025 and 2024:
($ in thousands) | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||
| December 31, 2025 | Carrying value | Quoted prices in active markets | Observable inputs other than Level 1 prices | Unobservable inputs | |||||||||||||||||||
| Assets: | |||||||||||||||||||||||
| Residential mortgage loans held-for-investment, net | $ | 362,829 | $ | — | $ | — | $ | 325,220 | |||||||||||||||
| Residential mortgage loans held-for-sale, net | 29,419 | — | — | 29,419 | |||||||||||||||||||
| Investment in debt securities held-to-maturity | 41,528 | — | 40,318 | — | |||||||||||||||||||
| Investment in beneficial interests | 99,179 | — | — | 66,249 | |||||||||||||||||||
| Liabilities: | |||||||||||||||||||||||
| Secured bonds payable, net | $ | 226,243 | $ | — | $ | 212,811 | $ | — | |||||||||||||||
| Repurchase financing agreements | 407,072 | — | 407,072 | — | |||||||||||||||||||
| Unsecured notes, net | 108,507 | — | 107,668 | — | |||||||||||||||||||
($ in thousands) | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||
| December 31, 2024 | Carrying value | Quoted prices in active markets | Observable inputs other than Level 1 prices | Unobservable inputs | |||||||||||||||||||
| Assets: | |||||||||||||||||||||||
| Residential mortgage loans held-for-investment, net | $ | 396,052 | $ | — | $ | — | $ | 357,119 | |||||||||||||||
| Residential mortgage loans held-for-sale, net | 27,788 | — | — | 27,788 | |||||||||||||||||||
| Investment in debt securities held-to-maturity | 46,043 | — | 43,947 | — | |||||||||||||||||||
| Investment in beneficial interests | 89,704 | — | — | 67,044 | |||||||||||||||||||
| Liabilities: | |||||||||||||||||||||||
| Secured bonds payable, net | $ | 258,353 | $ | — | $ | 234,181 | $ | — | |||||||||||||||
| Repurchase financing agreements | 356,565 | — | 356,565 | — | |||||||||||||||||||
| Unsecured notes, net | 107,647 | — | 104,574 | — | |||||||||||||||||||
The Company relies on the Manager’s pricing model, as well as vendor pricing, to estimate the underlying cash flows expected to be collected on the loans. Risks inherent in the Company’s residential mortgage loan portfolio affecting the valuation of its residential mortgage loans include the risk of default, delays and inconsistency in the frequency and amount of payments, risks affecting borrowers such as man-made or natural disasters, such as floods or wildfires, or a pandemic and damage to or delay in realizing the value of the underlying collateral. In addition, the Company assesses the expected cash flows from the residential mortgage loans, the fair value of the underlying collateral and other factors and evaluates whether and when it becomes probable that all amounts contractually due will not be collected.
The fair value of investments in CMBS, RMBS AFS and RMBS HTM is determined using estimates provided by the Company’s third-party pricing vendors which are then reviewed to ensure the resulting yield is comparable to market yields for similar securities.
The fair value of RMBS investments in beneficial interests is determined using prices provided by the Company’s third-party pricing vendors which are then reviewed and compared to the Manager’s pricing model to ensure the resulting yield is comparable to market yields for similar securities.
The fair value of secured bonds payable is estimated using prices provided by the Company’s third-party pricing vendors, which are then reviewed to ensure the resulting yield is comparable to market yields for similar securities.
The Company’s repurchase financing agreements are short-term in nature, and the Manager believes it can renew the current borrowing arrangements on similar terms in the future. Accordingly, the carrying value of these borrowings approximates fair value.
Fair value for unsecured notes, net is determined using indicative pricing available from an independent pricing source.
The estimated fair values are not necessarily indicative of the amounts the Company could realize on disposition of the financial instruments. The use of different market assumptions or estimation methodologies could have a material effect on the estimated fair value amounts.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 18, 2026 | Showing above |
| 2024 | Feb 18, 2025 | |
| 2023 | Feb 28, 2024 | |
| 2022 | Mar 3, 2023 | |
| 2021 | Mar 4, 2022 | |
| 2020 | Mar 5, 2021 | |
| 2019 | Mar 4, 2020 | |
| 2018 | Mar 6, 2019 | |
| 2017 | Mar 8, 2018 | |
| 2016 | Mar 2, 2017 | |
| 2015 | Mar 29, 2016 | |
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.