Rithm Capital Completes \$1.8 Billion Acquisition of Paramount Group: What Investors Need to Know

Overview of the Transaction

On December 19, 2025, Rithm Capital Corp. finalized its acquisition of Paramount Group, Inc. in a landmark transaction valued at approximately \$1.8 billion. The deal was executed through a series of mergers involving multiple subsidiaries and operating partnerships, culminating in Rithm gaining indirect control of Paramount’s entire portfolio and operations. This transaction marks a significant consolidation in the real estate and asset management sector and is likely to have notable implications for Rithm’s financial performance and shareholder value.

Key Points of the Merger

• Merger Structure: The acquisition was completed via two primary mergers:
  • Partnership Merger: Rithm’s Operating Merger Sub merged with Paramount’s Operating Partnership, making the Operating Partnership a wholly owned, indirect subsidiary of Rithm.
  • Company Merger: Paramount was merged into Rithm’s REIT Merger Sub, with REIT Merger Sub as the surviving entity.
• Consideration: Paramount’s common shareholders received \$6.60 per share in cash, and holders of Operating Partnership Common Units received a cash amount based on a conversion factor, also corresponding to \$6.60 per unit. All shares and units held by Rithm, Paramount, or their subsidiaries were retired without consideration.
• Compensatory Awards:
  • All outstanding Paramount stock options were cancelled for no consideration.
  • Restricted shares were converted into the right to receive the merger consideration in cash.
  • All long-term incentive plan (LTIP) and appreciation-only LTIP units vested and were converted into cash or common units, then cancelled for merger consideration.
• Funding: The acquisition was financed through a mix of Rithm’s cash on hand and a \$50 million equity investment from Rithm Property Trust Inc., an entity managed externally by a Rithm affiliate.

Financial Impact and Pro Forma Results

• Accounting Treatment: The transaction is accounted for as an asset acquisition (not a business combination). The entire purchase price was allocated to the acquired assets and assumed liabilities based on their relative fair values. Importantly, no goodwill was recognized.
• Pro Forma Financial Results:
  • For the nine months ended September 30, 2025, the combined pro forma net income attributable to common stockholders would have been approximately \$458.4 million, or \$0.86 per basic share (diluted: \$0.85).
  • For the full year ended December 31, 2024, pro forma net income attributable to common stockholders would have been \$772.1 million, or \$1.56 per basic share (diluted: \$1.55).
  • Dividends: Dividends declared per share of common stock were stable at \$0.75 for the nine months ended September 2025 and \$1.00 for full-year 2024.
• Reclassifications and Adjustments: To present a unified financial statement, significant reclassifications and adjustments were made to Paramount’s historical financials. These include reclassification of rental revenues, interest income, asset management fees, and operating expenses to align with Rithm’s reporting standards.
• Transaction and Non-Recurring Costs:
  • \$10.4 million in merger-related costs and \$4.1 million in legal expenses related to an SEC investigation were not included in the pro forma adjustments.
  • Severance and board compensation costs for former Paramount personnel were also not adjusted in the pro forma figures.
• Noncontrolling Interests: Adjustments were made to reflect noncontrolling interests in consolidated subsidiaries and the 3.9% share of Rithm Property Trust.

Potential Shareholder Impacts and Price-Sensitive Information

• Immediate Value Realization: Paramount shareholders received an all-cash exit at \$6.60 per share, which could impact Rithm’s liquidity and capital structure.
• No Goodwill Created: The asset acquisition method means the transaction is not expected to create significant intangible value (goodwill), potentially affecting future balance sheet leverage and return metrics.
• Significant Reclassification of Paramount’s Financials: The reclassification and alignment of accounts may impact the way investors interpret past performance and future comparability.
• Integration Risks and Synergies: The pro forma financials do not include potential integration costs or future synergies, so actual results may differ from these estimates. If Rithm successfully realizes cost savings and operational efficiencies, future performance could outperform the pro forma scenario.
• Outstanding Legal Costs: The \$4.1 million in legal costs tied to an SEC investigation could indicate ongoing regulatory risks.
• Future Financial Metrics: The transaction materially increases Rithm’s asset base and recurring revenue, while also elevating debt and administrative expenses. The outcome for share price will depend on Rithm’s ability to efficiently integrate the acquired portfolio and extract value.

What Investors Should Watch Going Forward

• Potential realization of integration synergies and cost savings not reflected in the pro forma figures.
• Changes in Rithm’s dividend policy or capital allocation following the transaction.
• Any further disclosures on the SEC investigation and related legal liabilities.
• The effect on Rithm’s share price from enhanced scale and asset diversification, versus possible dilution from new equity and increased debt load.
• Future financial reports for actual post-acquisition results compared to the pro forma estimates.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Investors should consult their financial advisors and review official SEC filings for further details and before making any investment decisions. The information is based on unaudited pro forma data and management estimates, which may not reflect actual future performance or results.

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