Rithm Capital Adds Office Assets With $1.6B Paramount Acquisition
Rithm Capital has struck a deal to acquire the REIT, Paramount, for roughly $1.6 billion, which will give the buying firm access to 17 new office properties. The purchase price comes out to $6.60 per fully diluted share.
In total, Paramount's portfolio spans 13.1 million square feet. It includes 13 owned and four managed Class A office properties. Martin Bussmann, lead independent director of Paramount, called Rithm the "ideal" partner due to its "financial scale" that can help improve operating performance. As of June, Paramount's portfolio was 85.4 percent leased.
Michael Nierenberg, CEO of Rithm, referred to the acquisition as a "generational opportunity."
“The Paramount portfolio is situated in cities where we have a strong conviction in the recovery of office market fundamentals, including improving rent rolls, a more favorable interest rate environment, and increasing demand."
"We believe Rithm’s asset management business is well-positioned to create value in the commercial real estate market, with a growing footprint of high-quality office assets and the expert urban development and complimentary office management capabilities of our GreenBarn team and broader platform.”
Specifically, Paramount is involved with not only the management but also the redevelopment of office assets in San Francisco and New York City. It's unclear if this marks an entrance into office for Rithm, but the company has $44 billion in total assets. The New York-based firm has a big focus on lending, with a major concentration on residential. Rithm does also look for other CRE opportunities, such as repositioning, equity investments or providing credit.
The move by Rithm marks at least its second major move this month. The company previously announced its acquisition of Crestline Management, which holds roughly $17 billion of assets under management. That purchase expanded Rithm's strategies for lending, liquidity solutions and insurance.
Rithm expects its buy of Paramount to close in the fourth quarter, which is subject to customary conditions.
Source: GlobeSt/ALM