Rithm Capital has announced plans to acquire Paramount Group, a publicly traded real estate investment trust known for its concentration of high-profile office properties in New York City and San Francisco, in a transaction valued at approximately $1.6 billion. The deal, structured as an all-cash offer at $6.60 per share, comes at a pivotal moment for the commercial real estate sector as investors seek to gauge whether the long-depressed office market has begun to stabilize after years of disruption from the pandemic and the rise of hybrid work.
The offer represents a discount to Paramount’s most recent trading price, but analysts say the valuation reflects both ongoing challenges in the sector and Rithm’s confidence that prime urban office markets will eventually recover. The move is being interpreted as a strategic bet on the enduring appeal of well-located, high-quality office towers in central business districts, even as demand for office space has yet to return to pre-pandemic norms. For Rithm, the transaction signals a willingness to take a long-term view on urban real estate at a moment when many investors remain cautious.
Paramount Group’s portfolio is sizable and strategically positioned. The company owns 13 office buildings and manages another four, with properties totaling more than 13.1 million square feet. As of mid-2025, its occupancy rate stood at 85.4 percent, which, while below the levels seen a decade ago, compares favorably with broader market averages in gateway cities where office vacancies have climbed sharply. Paramount has also worked to reposition certain assets, focusing on amenities, sustainability upgrades, and tenant experience in an effort to attract and retain occupiers navigating new workplace expectations.
Rithm Capital has indicated that the acquisition will be financed through a combination of its existing liquidity, cash reserves, and contributions from potential co-investors. Company executives emphasized that the firm’s strong balance sheet and capital flexibility give it the ability to move decisively at a time when other investors are constrained. Subject to shareholder approval and regulatory clearance, the deal is expected to close by the end of the fourth quarter of 2025.
The announcement immediately reignited debate about the trajectory of the U.S. office sector. Since the pandemic upended traditional work patterns, office landlords have grappled with elevated vacancies, declining rental growth, and questions about the long-term demand for workspace in central business districts. While some markets continue to see weakness, especially in older or less centrally located properties, a growing number of investors argue that high-quality, well-situated assets in cities like New York and San Francisco will eventually regain their footing. For those investors, the repricing of office assets represents an opportunity to acquire properties at valuations well below their replacement costs, with the potential for significant upside if leasing demand improves.
Market analysts noted that Rithm’s bid reflects a broader shift in sentiment among certain institutional buyers who are beginning to see opportunity in distress. Office assets have been heavily marked down over the past three years, leading to a widening gap between private market valuations and public market pricing. By acquiring Paramount, Rithm positions itself to benefit from potential appreciation in core markets while gaining a portfolio of trophy assets that would be difficult to assemble in today’s environment without paying a substantial premium.
For Paramount, the deal offers both certainty and a potential exit from ongoing headwinds. The company has faced shareholder pressure over its performance and its ability to navigate an uneven recovery. Selling at a discount may disappoint some investors, but others see the acquisition as a pragmatic outcome given the uncertainty surrounding the sector. The transaction could also provide Paramount’s stakeholders with liquidity and reduce the risks associated with a protracted recovery timeline.
The acquisition also highlights how capital is flowing selectively within commercial real estate. While sectors such as industrial and data centers continue to attract robust investor interest, office assets have become bifurcated. Commodity office space in secondary markets remains under pressure, but prime buildings in top-tier locations are increasingly viewed as resilient long-term bets. Investors like Rithm are recalibrating financial models to account for hybrid work, emphasizing the need for buildings with top-tier amenities, strong environmental credentials, and transit-accessible locations that can attract tenants seeking to draw employees back to the workplace.
If completed, the acquisition will mark one of the largest office-focused REIT transactions of the year and could serve as a bellwether for renewed consolidation in the sector. Analysts said that a successful deal might encourage other investors to step into the market, potentially stabilizing pricing after years of decline. It could also signal a shift in sentiment, suggesting that capital markets are beginning to differentiate between struggling assets and those with enduring long-term value.
As Rithm Capital and Paramount Group move toward closing, the transaction is being closely watched across the industry. The outcome may influence not only how other REITs are valued but also how lenders and institutional investors reassess their strategies for office exposure. With the Federal Reserve’s recent rate cut reducing borrowing costs, capital availability for such deals could improve, adding momentum to a sector long in need of positive signals.
For now, the Rithm-Paramount agreement represents both a gamble and a calculated strategy. At a time when many remain skeptical of the office market’s future, Rithm is betting that the core business districts of New York and San Francisco will remain irreplaceable hubs of commerce and culture. Should that bet prove correct, the $1.6 billion acquisition could be remembered as a turning point for both companies and for the broader perception of the U.S. office market’s resilience.
