Michael Nierenberg, CEO of Rithm Capital, has led the company into a significant acquisition with its agreement to purchase Paramount Group for $1.6 billion. The deal, announced on September 17 and subject to shareholder approval, is expected to close in the fourth quarter.
Rithm Capital is one of the largest mortgage servicers in the United States and manages $36 billion in assets, with about $100 billion in investible assets. The company’s acquisition of Paramount marks a rare move into commercial real estate office space at what Nierenberg described as an attractive price point due to current market conditions. “We’re entering at 30 percent of what it would cost to replace these assets,” Nierenberg said during an investor conference call about the transaction. “The valuation on these assets are roughly 40 percent of pre-Covid levels.”
The portfolio includes 13.1 million square feet across New York City and San Francisco, featuring properties such as 1633 Broadway, 1301 Avenue of the Americas, and 60 Wall Street in New York City, along with One Market Plaza and 300 Mission Street in San Francisco.
Nierenberg previously told Bloomberg TV that Rithm’s merger and acquisition activity was robust: “M&A calendar, or pipeline, is fairly active.” He has been leading Rithm since its founding as New Residential Investment in 2013 after the financial crisis. The firm was initially affiliated with Fortress Investment Group but rebranded as Rithm Capital in 2022 as part of a strategy to raise outside capital and expand its asset management platform.
In recent years, Rithm acquired Sculptor Capital Management for $720 million and signed an agreement to buy Crestline, a private lender managing $17 billion; that deal is also expected to close this year.
“We started as a REIT, and now we’re going to try to morph into some kind of capital structure that looks like some of the largest money managers in the world,” Nierenberg told Bloomberg at the time.
Paramount began considering a sale earlier this year after concerns were raised by analysts regarding executive compensation and management practices amid an SEC investigation involving CEO Albert Behler. Rithm plans to acquire Paramount’s outstanding shares for $6.60 per diluted share—slightly below Paramount’s stock price before news broke about the transaction.
“Very rarely do you have the opportunity to acquire what we deem are A assets at a discount-to-book value at what we deem the beginning of the so-called office market recovery,” Nierenberg said on an investor call.
Looking ahead, Nierenberg stated that Rithm aims to continue diversifying its investment strategies: “continue to diversify our investment strategies.”
Outside his work at Rithm—where he serves as president and chairman—Nierenberg has chaired the board for nearly three decades at Samuel Waxman Cancer Research Foundation. On a personal note reported by media outlets including The New York Post, he purchased a Greenwich Village penthouse triplex listed originally for $50 million for just $14 million in 2021.
Rithm declined comment when contacted by The Real Deal.
