Behind Rithm Capital’s $1.6B Deal to Buy Paramount Group

Rithm Capital’s deal to buy Paramount Group for $1.6 billion came as a bit of a surprise.

After bids from Blackstone, SL Green and Empire State Realty Trust, it was Rithm, a lesser-known but still deep-pocketed asset manager with a focus on mortgage servicing, that came out on top.

The company is set to take on Paramount’s 13 million square feet of office space in New York and San Francisco at a 40 percent discount to its book value.

“We’ve been very patient in the office sector, and we believe now is the right time to do so,” said Rithm CEO Michael Nierenberg in a conference call with analysts on September 17.

The deal comes after Paramount and its long-time CEO Albert Behler have been in the news for all the wrong reasons. Earlier this year, the company revealed it made millions of dollars in previously undisclosed payments to CEO Albert Behler’s companies. Paramount also disclosed it is under an SEC investigation. Meanwhile, TRD further discovered that Behler gave a no-bid contract to a company tied to his ex-girlfriend.

But those days should soon be behind Paramount. Rithm’s deal still requires shareholder approval, but is expected to close at the end of the year.

Paramount’s sale is being closely scrutinized by analysts. It is among the first large-scale acquisitions of offices since the pandemic. And depending on who you talk to, either paints a positive picture of the New York office landscape or a dismal one for Paramount shareholders.

Here’s a breakdown of the deal:

The offer and other key numbers:

Rithm will pay: $6.60 per diluted share

Total offer amount: $1.6B

Paramount stock price, prior to Rithm’s deal: $7.39

Paramount’s highest stock price in last five years: $11.53

Paramount’s portfolio:

Paramount’s portfolio includes 13 owned and four managed office assets in New York City and San Francisco. About 8.7 million square feet of space is located in New York.

Over 85 percent of the portfolio is leased as of June 2025 and annualized average rent is $90 per square foot, according to an investor presentation.

In New York, its buildings include: 1633 Broadway, 1301 Avenue of the Americas and 1325 Avenue of the Americas. In San Francisco, Paramount owns One Market Plaza, 300 Mission Street and One Front Street.

Behind Rithm Capital’s $1.6B Deal to Buy Paramount Group — 31 West 52nd Street, 1301 Avenue of the Americas, 1325 Avenue of the Americas and 1633 Broadway

Why was Paramount put up for sale?

Paramount was facing pressure from shareholders and analysts over its high compensation to executives relative to its stock performance.

In early 2025, Paramount disclosed that it paid millions of dollars to Behler’s outside companies or personal interests, including $3 million for a private jet firm Behler co-owned.

A short time later, Paramount announced it was undergoing a strategic review and hired Bank of America as its financial advisor. The overall office market in New York had improved and investor appetite was growing. Paramount signed over 400,000 square feet of leases in the second quarter, its most in a quarter since 2019.

But despite the uptick in leasing, Paramount reported a net loss of $19.8 million for the second quarter, compared to $7.8 million a year prior. The losses included $7.5 million of expenses related to the acceleration of equity awards and severance payments.

Who is Rithm?

Rithm was founded in 2013 as an affiliate of Fortress Investment Group with a focus on residential mortgage servicing under the name New Residential Investment.

The company internalized management and rebranded to Rithm in 2022. Since then, Rithm has gone on an acquisition spree. In 2023, Rithm acquired Sculptor Capital Management, which had $33 billion in assets under management. This month, Rithm inked a deal to buy Crestline Management, an alternative asset manager with $17 billion in assets.

Rithm now has $100 billion in investable assets. It lends across commercial and residential real estate.

Why did Rithm want to buy Paramount?

Rithm CEO Michael Nierenberg said on a call with analysts that the firm is seeking to diversify its investment strategies. Paramount presented a rare opportunity to acquire commercial real estate in gateway cities at a discount during a period when fundamentals are improving. Nierenberg repeatedly mentioned expected future rate cuts from the Federal Reserve. The cuts will lead to cap rate compression, allowing values to increase.

“We’re very bullish on office as we look at this so-called dislocated recovery trade or investment,” said Nierenberg on the call.

Paramount’s office towers are around 15 percent unoccupied with an additional 800,000 square feet of leases expiring in 2026, according to its investor presentation. Rithm can put in some upgrades, lease out the remaining space and hike rents, adding revenue to an existing portfolio.

“This is an absolute value-add opportunity,” said Dylan Burzinski, an analyst with Green Street Advisors, in an interview.

Rithm executives mentioned the deal will be balance sheet light in its call with analysts. In other words, the company will only use a portion of its own money to fund the deal and can raise money from co-investors and limited partners. Nierenberg said interest is already high. He added that Rithm could syndicate the whole deal if wanted to do so.

Rithm expects to 2x its investment.

What does this mean for the NYC office market?

Rithm’s offer could be looked at in one of two ways. It is either a huge testament to New York City’s office recovery or a major disappointment for Paramount shareholders. Wall Street analysts covering Paramount have competing viewpoints.

Evercore ISI analyst Steve Sakwa predicted Paramount was worth at least $7.58 a share and as much as $12, Crain’s reported. Sakwa said Paramount shareholders may reject the offer based on the low offer.

But Dylan Burzinski, an analyst with Green Street, said Rithm’s deal was in line with his team’s expectations. He mentioned Rithm will likely have to put in a significant amount of money in capital improvements for Paramount’s office buildings, which adds to the risk.

“The public market just got a little bit ahead of itself in terms of where valuation would shake out,” said Burzinski. “This is a very value-add portfolio.”

Paramount claims to have a Class A portfolio. But the office market recovery has not spread across all office towers. Paramount’s buildings are largely unrecognizable to most New Yorkers, most of which were built or redeveloped in the 1980s. It has no ultra-modern trophy asset like One Vanderbilt.

“What SL Green and Vornado [have] tends to be the best of the best in the New York City office. What Paramount has is good, but I wouldn’t say it’s as high of quality,” said Burzinski.

Overall, Burzinski said the reported interest in Paramount from big-name investors like SL Green, Vornado and Empire State Realty was a positive sign for the office market.

“One year ago, I don’t think you would have had that many buyers lined up wanting to take a look at this,” said Burzinski. “It’s a pretty good indicator that capital is looking more at office than in recent memory.”

What’s next for Behler?

It seems hard to imagine Behler, who’s been CEO of Paramount since 1991, will stay on when the deal closes. Most of the recent scrutiny surrounding Paramount stemmed from his cushy perks and unorthodox dealmaking. Rithm did not specifically mention Behler in its investor call. Nierenberg stressed that Paramount had a large management team.

But anything is possible. This is New York City real estate, crazier things have happened.