Rithm's $1.6B Paramount Play Signal Big City Comeback, Shares React

Rithm Capital Corp. RITM has agreed to acquire vertically-integrated real estate investment trust, Paramount Group, Inc. PGRE, for around $1.6 billion in cash. Paramount is a well-known office REIT that owns and manages high-end Class A office properties in major U.S. markets. For Rithm, this deal represents a move adding to its core alternative asset management and mortgage servicing businesses, signaling a deeper push into real estate ownership and operations.

Shares of Rithm Capital gained 3.2% yesterday following the announcement, while Paramount shares plunged 11.6%. Paramount shareholders will receive $6.60 per fully diluted share in cash, which is a steep discount to its previous closing level of $7.39 on Sept. 16, 2025.

The agreement reflects Rithm Capital’s ambition to broaden its investment scope and add long-term value through owning premium assets in highly sought-after urban markets. The transaction covers Paramount’s portfolio of 13 owned and four managed properties, totaling above 13.1 million square feet of office space. As of June 30, 2025, the portfolio was 85.4% leased, with flagship holdings in New York City and San Francisco.

Funding will come from Rithm Capital’s available cash, balance sheet liquidity and potentially co-investors. The transaction is expected to close by the end of the fourth quarter of 2025. It is expected to expand RITM’s presence in commercial real estate, giving it a high-quality portfolio in markets that are poised to recover from recent pressures, including elevated interest rates, the rise of remote work and falling property valuations.

For the broader market, the move sends a strong signal that institutional investors see renewed opportunity in urban office assets, particularly in gateway cities. Roughly a couple of months back, Starwood Property Trust, Inc. STWD closed the acquisition of Fundamental Income Properties from Brookfield Asset Management for around $2.2 billion to achieve both portfolio diversification and more predictable, long-term earnings.

Rithm Capital’s Price Performance, Valuation and Estimates

Shares of RITM have gained 15.1% year to date, outperforming the broader industry.