Michael Nierenberg knows how to get a steal on a real estate deal — professionally and personally.
His Rithm Capital agreed on Sept. 17 to acquire Paramount Group for $1.6 billion, a rare entrance into the commercial real estate market with Class A office space at a low entry point as the Federal Reserve was expected to — and did — lower interest rates.
One of the largest U.S. mortgage servicers, Rithm announced the news after The Real Deal and other outlets reported it was in the lead to acquire New York-based Paramount. The sale, subject to shareholder approval, is expected to close in the fourth quarter.
“We’re entering at 30 percent of what it would cost to replace these assets,” the CEO said in an investor conference call about the deal. “The valuation on these assets are roughly 40 percent of pre-Covid levels.”
The bargain deal involves a portfolio comprising 13.1 million square feet spread across 13 owned and four managed office assets in New York City and San Francisco. Those holdings include 1633 Broadway, 1301 Avenue of the Americas and 60 Wall Street, all in New York City, and One Market Plaza and 300 Mission Street, both in San Francisco.
In April Nierenberg told Bloomberg TV the firm’s “M&A calendar, or pipeline, is fairly active.”
Rithm, which Nierenberg has been leading since its inception, has $36 billion in assets under management and roughly $100 billion in investible assets.
Prior to joining, Nierenberg, 63, who is also president and chairman of the board at Rithm, was a managing director and head of global mortgages and securitized products at Bank of America Merrill Lynch. He also held senior leadership roles at J.P. Morgan, Bear Stearns and Lehman Brothers.
The executive’s compensation was $21.1 million in 2024, per an SEC filing. He works with his son, Jonathan Nierenberg, a vice president at the firm who goes by Jonny and tied the knot this year. The younger Nierenberg was hired in 2022 as an investment associate, with a base salary of $150,000 and the ability to receive a discretionary bonus, according to a 2023 SEC filing.
Rithm, first named New Residential Investment, was founded in 2013, a few years after the financial crisis, as an affiliate of Fortress Investment Group with a focus on mortgage-related assets. Over the years, it began internalizing management, ultimately rebranding as Rithm Capital in 2022. Since then, the firm began shedding its association with subprime mortgage leader Fortress in order to raise outside capital and expand its asset management platform.
The strategy seemed to work. The following year, Rithm purchased asset manager Sculptor Capital Management for $720 million. And more recently, it signed a deal to buy Crestline, a $17 billion private lender. That deal is expected to close in the fourth quarter.
“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, comparing Rithm’s future self to heavyweights like Ares, Apollo and Starwood.
Today, the New York City-based firm boasts 200 investment professionals and has been looking for a way to enter the commercial office market for a long time.
“The past couple of years we did a lot of brand building around the house,” Nierenberg said to Bloomberg Television. “I think now, we are going to start to see the fruit of that labor really come into play for the company.”
The Paramount deal comes amid controversy surrounding its CEO Albert Behler, including a U.S. Securities and Exchange Commission investigation into undisclosed payments and concerns about executive compensation and conflicts of interest.
Rithm plans to acquire the outstanding shares of Paramount’s common stock for $6.60 per diluted share, slightly below the firm’s stock price prior to the announcement.
“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 the investor call.
Paramount began looking into a sale of the company in May after analysts and investors raised concerns about the management of the company and executives’ pay levels relative to its stock performance. Rithm ultimately won the multiple-round bidding process.
Looking forward, Rithm seeks to “continue to diversify our investment strategies,” Nierenberg said on the call.
As in work, Nierenberg — who spent the last 28 years as board chairman for the Samuel Waxman Cancer Research Foundation — knows how to get a good real estate deal on the home front.
He and his wife Elin bought a Greenwich Village penthouse triplex once listed at $50 million for $14 million in 2021, the New York Post reported. The sale price was even less than the home’s last asking price of $16.5 million.
Located near Rithm’s office, the East 11th Street home features four bedrooms across 7,693 square feet with a 2,300-square-foot roof terrace that includes a solarium.
The firm declined to comment to TRD.
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