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Rithm Property Trust Shares Fall After Announcing Public Stock Offering
Shares of Rithm Property Trust Inc. (NYSE: RPT) dropped 6.9% in after-hours trading on Monday after the company announced it had commenced a public offering of its common stock. Such offerings can dilute the value of existing shares, often leading to a negative short-term price reaction from investors.
Offering Details
Rithm Property Trust disclosed the public offering in a statement, adding that underwriters will have a 30-day option to purchase up to an additional 15% of the shares sold to cover any over-allotments. The offering is being managed by a syndicate of banks including Goldman Sachs & Co. LLC, RBC Capital Markets, LLC, UBS Investment Bank, and Wells Fargo Securities, LLC, who are serving as book-running managers.
In a parallel transaction, an affiliate of Rithm Capital Corp. (NYSE: RITM), which is associated with RPT's external manager, has indicated interest in a concurrent private placement. The affiliate may purchase common stock and potentially a new class of non-voting convertible preferred stock at the same price as the public offering. The closing of this private placement is contingent on the completion of the public offering.
AdUse of Proceeds
The company stated that the net proceeds from both the public offering and the private placement will be used for a specific acquisition. Rithm Property Trust plans to acquire a portfolio of multifamily residential transition loans from affiliates of Rithm Capital.
Remaining funds, combined with available cash and borrowings under its master repurchase facility, will be allocated for other investments and general corporate purposes. Rithm Property Trust operates as a commercial real estate investment trust (REIT) and is externally managed by an affiliate of Rithm Capital Corp.