News Summary
Rithm Capital Corp. has agreed to acquire Paramount Group for approximately $1.6 billion in cash, pricing each share at $6.60. This acquisition reflects an 11% discount from Paramount’s recent share price. Paramount, a major player in commercial real estate with a portfolio of 13 million square feet in Manhattan and San Francisco, has an 85.4% leasing rate. While Rithm sees this deal as a strategic move at a discounted value, investor concerns have emerged about the acceptance of the acquisition price among Paramount’s shareholders.
New York City – Rithm Capital Corp. has reached an agreement to acquire Paramount Group for approximately $1.6 billion in cash, with each share priced at $6.60. This acquisition price represents an 11% discount from Paramount’s share price at the close of trading on Tuesday. As of the latest data, this deal is expected to be finalized in late Q4 2025, pending shareholder approval and other standard closing conditions.
Paramount Group is a significant player in the commercial real estate sector, owning and managing about 13 million square feet of office space, primarily in Manhattan and San Francisco. The acquisition will include 13 owned assets and 4 managed properties. As of June 30, 2025, 85.4% of Paramount’s portfolio is leased, indicating a fairly stable leasing environment amidst fluctuating market conditions.
Rithm Capital executives have characterized Paramount’s real estate portfolio as “exceptional,” emphasizing that the acquisition is being made at a “substantial discount” relative to its book value. This sentiment is backed by market analysts, including Steve Sakwa from Evercore ISI, who values Paramount’s stock at a minimum of $7.58 per share, and potentially as high as $12, suggesting some discrepancy in the perceived worth of the company against the agreed acquisition price.
Following the announcement of the acquisition, Paramount’s stock experienced a decrease, falling to $6.53 per share, indicating some investor concerns regarding the offer. Initial feedback suggests that a number of Paramount shareholders may oppose the current acquisition price, raising questions about the deal’s acceptance among stakeholders. Such opposition could potentially complicate the approval process required before the deal can be finalized.
The acquisition has received the green light from the boards of directors for both Rithm Capital and Paramount Group, signaling mutual agreement on the strategic value of the transaction. Rithm plans to finance the acquisition through a combination of cash resources, its existing balance sheet liquidity, and prospective co-investment opportunities with partners, which underscores its commitment to expanding its commercial real estate portfolio.
Michael Nierenberg, the CEO of Rithm, has referred to this acquisition as a “generational opportunity” that will enhance the company’s asset management capabilities and real estate footprint. The move comes at a time when the office market is showing signs of recovery after the setbacks experienced during the pandemic. As part of this recovery, current market data reveals that the vacancy rate in Manhattan stands at 16%, aligning with historical averages.
To facilitate the acquisition, financial advice is being provided by UBS Investment Bank and Citigroup Global Markets Inc. to Rithm, while BofA Securities is advising Paramount Group in this transaction. The collaboration of these financial advisors highlights the importance of strategic guidance in executing significant mergers and acquisitions within the current market landscape.
While the acquisition of Paramount Group represents a strategic move for Rithm Capital, the potential opposition from shareholders poses significant challenges that could influence the future trajectory of the deal. Stakeholders and market observers will be watching closely as the process unfolds, particularly regarding the responses from Paramount’s investors and the broader implications for the commercial real estate market in both New York and San Francisco.
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Additional Resources
- Seeking Alpha: Rithm Capital to Acquire Paramount Group for $1.6B
- Wikipedia: Real Estate
- The Real Deal: Rithm Capital Likely Winner of Paramount Group Acquisition
- Google Search: Rithm Capital acquisition Paramount
- Business Wire: Rithm Capital Agrees to Acquire Paramount for $1.6 Billion
- Encyclopedia Britannica: Business Enterprise
- HousingWire: Rithm to Acquire Paramount Group in $1.6B Deal
- Google News: Rithm Capital Paramount Group
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