In one of the most significant commercial real estate transactions of the year, Rithm Capital announced on September 17, 2025, that it has agreed to acquire Paramount Group, a New York-based real estate investment trust (REIT), in an all-cash deal valued at approximately $1.6 billion. The acquisition marks a major strategic play by Rithm, which is seeking to expand its commercial real estate platform amid cautious optimism about a potential rebound in urban office markets.
Under the terms of the deal, Rithm will acquire all outstanding shares of Paramount at $6.60 per share. The offer, which has been approved by the boards of both companies, represents a substantial cash outlay and reflects Rithm’s belief that current market conditions present a rare opportunity to acquire premium office assets at a discount. The deal is expected to close by the end of the fourth quarter of 2025, pending shareholder approval and regulatory clearance.
Paramount Group owns 13 office properties and manages four others, primarily located in New York City and San Francisco—two markets that have faced sustained challenges due to the long-term impacts of hybrid work and shifting commercial space needs. Its portfolio totals more than 13.1 million square feet, with an occupancy rate of 85.4% as of mid-year 2025. While these figures suggest some stabilization in core urban office markets, they also highlight the risks and complexities of investing in a sector still in recovery.
Rithm Capital’s move into office real estate is not unprecedented, but this deal marks a significant expansion of its owner-operator model. CEO Michael Nierenberg emphasized that the acquisition supports Rithm’s broader strategy of diversifying its asset base and leveraging its operational capabilities to create long-term value. He noted that Paramount’s assets, while currently under pressure, are high quality and located in globally significant business hubs—making them well-positioned to benefit from a gradual recovery in demand for office space.
To fund the transaction, Rithm plans to use its existing liquidity and cash reserves, and it may bring in co-investors to help execute its long-term plans for the portfolio. The company sees potential not only in maintaining current tenancy levels but also in repositioning or redeveloping select assets to meet changing tenant expectations around amenities, sustainability, and flexibility.
Market reaction to the announcement was mixed. Paramount Group shares dropped sharply in premarket trading after the deal was revealed, as the acquisition price came in below where the stock had been trading prior to the news. Analysts suggest that the discount reflects ongoing uncertainty in the office sector and investor skepticism about the speed at which occupancy rates and rental income will return to pre-pandemic levels.
Nonetheless, the transaction sends a clear signal that some investors are starting to look past near-term volatility and are instead betting on the long-term fundamentals of office real estate in major urban centers. While remote and hybrid work have reduced overall demand for office square footage, there are signs that companies are beginning to consolidate their space needs in higher-quality buildings in prime locations—precisely the type of assets held by Paramount.
This deal also underscores a broader strategic shift in the commercial property sector. With many traditional real estate investment trusts under pressure from rising interest rates, higher operating costs, and slower leasing activity, deep-pocketed asset managers like Rithm are stepping in to acquire distressed or undervalued portfolios. For Rithm, the Paramount acquisition represents not only a tactical investment, but also a long-term bet that the most desirable office markets will recover—albeit in a changed form.
As the fourth quarter of 2025 approaches, the real estate industry will be closely watching how this deal unfolds, and whether it prompts a new wave of consolidation or investment in the office sector. For now, Rithm Capital’s bold move may serve as a litmus test for confidence in the future of urban office space.
