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Rithm Capital has agreed to acquire Paramount Group for USD 1.6 billion, betting on a rebound in U.S. office real estate. The acquisition values Paramount at USD 6.60 per share, offering a 10.7% discount from its prior close. The company plans to fund the deal through cash, balance sheet liquidity, and potential co-investor contributions. Paramount's portfolio, spanning over 13.1 million square feet across New York and San Francisco, is about 85% leased. Analysts see the move as timely amid improving office fundamentals and a potential return-to-office trend.
Global asset manager Rithm Capital has announced an agreement to acquire office property owner Paramount Group for USD 1.6 billion in cash, signaling confidence in a potential recovery in the U.S. office real estate market. The acquisition reflects investor optimism as the market navigates challenges from high interest rates, remote work trends, and declining property values. Advertisement
The transaction values New York City-based Paramount Group at USD 6.60 per share, representing roughly a 10.7% discount compared to its previous closing price. Following the announcement, Paramount shares fell over 11%, while Rithm Capital's stock rose by around 3%.
Analysts have indicated that office and commercial real estate fundamentals are showing signs of improvement. Jason Weaver of JonesTrading said the deal is well-timed, citing potential interest rate cuts and growing expectations for employees returning to offices.
Rithm Capital plans to fund the acquisition through a combination of cash, existing balance sheet resources, and possible contributions from co-investors. CEO Michael Nierenberg highlighted that the deal will strengthen Rithm's commercial real estate and asset management platform while expanding its owner-operator model.
Paramount Group owns, operates, and redevelops office properties in key business districts of New York City and San Francisco. Its portfolio includes 13 owned and four managed office properties, covering more than 13.1 million square feet, with about 85% of the space leased as of June. Nierenberg emphasized that the company is confident in the recovery of office markets in these cities, pointing to improving rent rolls, a favorable interest rate environment, and rising demand.
The deal still requires approval from Paramount shareholders and is expected to be completed by the end of the fourth quarter.
Source Reuters
5th Jun, 2025
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