- Rithm Capital will acquire Paramount Group for $1.6B in cash, paying $6.60 per share as it moves into the office sector.
- The deal includes 13M SF across 17 assets in New York and San Francisco, two of the country’s top office markets.
- Paramount has struggled with occupancy declines, executive controversies, and an SEC investigation, prompting its board to seek strategic alternatives.
- Rithm sees this acquisition as a value play, buying the portfolio at a 30% discount to replacement cost, according to CEO Michael Nierenberg.
Rithm Expands from Mortgages into Office Towers
According to Bisnow, Rithm Capital, a residential mortgage lender, is making a major move into commercial real estate. The company announced a $1.6B deal to buy Paramount Group, a REIT with trophy assets in New York and San Francisco.
The acquisition gives Rithm control of 13M SF of Class A office space. CEO Michael Nierenberg said the company plans to bring in outside capital to co-invest.
“There’s been a ton of incoming calls from folks who want to be part of this,” Nierenberg told investors on a Wednesday call.
Paramount’s Turbulent Path to a Sale
Founded in 1978, Paramount has faced mounting pressure. In recent years, it has seen weak performance and growing governance concerns.
In March, the company revealed it made $4M in undisclosed payments to CEO Albert Behler and his wife’s businesses. It is now under investigation by the Securities and Exchange Commission. Its CFO and general counsel both left earlier this year.
Paramount’s board began exploring strategic alternatives in May. Several major firms, including Blackstone, Vornado, and SL Green, reportedly showed interest.
Paramount stock has been volatile. It jumped to $7.39 on Tuesday, up nearly 50% this year, but dropped over 11% to $6.55 in premarket trading after the deal was announced.
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Discounted Price Raises Eyebrows
Rithm believes the acquisition presents long-term value. Nierenberg called it a “dislocated recovery play,” noting that they are buying the portfolio at up to 30% below replacement cost.
The firm, formerly part of Fortress Investment Group, manages around $100B in assets. This acquisition diversifies its exposure beyond single-family mortgages.
However, the agreed purchase price drew criticism. In 2022, Monarch Alternative Capital offered $12 per share for Paramount—a deal the board rejected. In 2020, Bow Street LLC made a similar bid between $9.50 and $10 per share.
Analyst Steve Sakwa of Evercore ISI called the current deal “disappointing.” He warned that shareholders could vote against it.
Why It Matters
This deal reflects a growing trend: investors are targeting discounted office assets in top-tier cities. While the office sector remains under pressure, some buyers see opportunity in quality buildings trading at historic lows.
Bringing third-party capital into the deal could also signal renewed institutional interest in the space.
What’s Next
The transaction still needs regulatory and shareholder approval. Rithm plans to partner with institutional investors after closing, which could reshape how the assets are managed.
If approved, the deal will mark one of the year’s most notable office REIT takeovers—and a key test of whether distressed office plays can pay off.
