Rhythm Capital Bets on Office Space Recovery with $1.6 Billion Deal for Paramount Group

Global asset manager Rhythm Capital (RITM.N) announced on Wednesday that it has agreed to acquire office space owner Paramount Group (PGRE.N), opening a new $1.6 billion cash investment and expressing optimism about a rebound in office real estate.

The deal comes at a time when investors are debating whether the U.S. office market—severely impacted by rising interest rates, remote work trends, and declining property values—may be approaching its lowest point.

Under the proposal, New York City-based Paramount Group is valued at $6.60 per share, representing a 10.7% discount from its previous closing price.

Paramount’s shares fell 11.6% in early trading, while Rhythm’s shares rose 3.4%.

Jason Weaver, an analyst at JonesTrading, commented, “With improving fundamentals in office and commercial real estate, potential rate cuts, and growing trends toward returning to the office, we view this transaction as a timely move into an attractive asset profile.”

Rhythm said it plans to fund the acquisition through a combination of cash reserves, existing liquidity on its balance sheet, and possible contributions from co-investors.

In a statement, Rhythm CEO Michael Nierenberg said, “This deal will serve as a springboard to expand our commercial real estate and asset management platform and further develop our owner-operator model.”

Paramount Group owns, operates, and redevelops office properties in key central business district submarkets in New York City and San Francisco. Its portfolio includes 13 owned and four managed office properties.

The company reported that its REIT portfolio spans more than 13.1 million square feet, with 85.4% leased as of June 30.

Nierenberg added, “Paramount’s portfolio is located in cities where we are confident the office market fundamentals will improve, rents will rebound, interest rates will become more favorable, and demand will grow.”

The deal, which still requires shareholder approval from Paramount, is expected to close by the end of the fourth quarter.