Why Elliott Management Is Buying City Office REIT

28 January 2026

When Paul Singer’s Elliott Management makes an investment, it usually means a company, or in certain cases, a country, is in really bad shape.

The $76 billion hedge fund is best known for its distressed investments in Argentina’s bonds, resulting in a 15-year legal battle and leading the country to default on its debt. It waged war against Procter & Gamble in the early 2000s over their attempt to takeover the German shampoo company Wella. It took control of the Italian soccer club AC Milan after the previous owner defaulted on its debt.

But the firm’s most recent buy may not be such a bad thing for the downtrodden office market.

Elliott and Mukang Cho’s Morning Calm Management recently closed on the acquisition of an obscure REIT in a deal valued at $1.1 billion.

The company, City Office, is an oddity. It’s headquartered in Vancouver and has employees there, but has no properties in Canada. Instead, it bought humdrum office buildings in the Sun Belt. It controlled 4.2 million square feet of office space, commanding a modest $34.89 in gross rent per square foot. Its stock price has been underwhelming, reaching a high of $21 in 2022. In the end, shareholders received just $7 per share, a 26 percent premium from its last day of trading.

But Elliott’s move to acquire City Office (surely a winner of the most creative office company name contest) may be an early tell in the post-Covid real estate landscape: investors are circling again, a sign the market may finally be scraping the bottom.

Industry insiders have long predicted that big-money investors like Elliott would acquire troubled public real estate companies and take them private, betting on a mismatch between office landlords’ stock prices and the underlying value of their assets in a market that had sharply discounted the sector.

Recently, there have been a few notable deals. Rithm Capital bought Paramount Group, a troubled office landlord in NYC and San Francisco, led by a CEO who fancied lavish expenditures and lunches at Le Bernardin, in a $1.6 billion deal.

Others appear to be lining up. Franklin Street, a Massachusetts-based office REIT with 4.8 million square feet of office space in the Mountain West and the Sunbelt, is seeking suitors as its stock price fell beneath $1. Phoenix-based Orion Properties, which owns 8 million square feet of office, is exploring a sale after stopping a takeover attempt by Kawa Capital.

Resuscitating REITs is not for the faint of heart. The maneuvers take time, burn capital and leave little room for error.

“A potential buyer has to make the determination that, even with the share premium he will likely need to pay, the juice is worth the squeeze,” said Mukang Cho, whose firm purchased CIty Office REIT with Elliott Management. “My sense is many buyers might see value [in taking REITs private], but are hesitant – somewhat understandably – to then take the next step,” he said.

Still, the opportunity is tempting. Let’s look at Rithm’s acquisition of Paramount.

According to Rithm, Paramount’s stock was trading at 40 percent discount to its book value. Furthermore, the $1.6 billion deal was a fraction of the $6.6 billion that Paramount valued its real estate at. By that math, Paramount sold for a song.

Rithm believes its acquisition could result in an impressive 20x internal rate of return.

Paramount’s office towers may not be the crème de la crème of NYC office stock, but they are 85 percent leased and commanding $90 per square foot. That’s not exactly distressed pricing.

“The overall entry point on the underlying assets at what we think are very, very attractive values,” said Rithm CEO Michael Nierenberg in a call with analysts explaining the move.

The firm’s executives also pointed to NYC’s office market resurgence.

“There’s no new construction, 10 percent of the inventory is coming offline with the conversions. And the return to work phenomenon is back now 4 to 5 days a week,” said another Rithm exec on the call.

Of course, not all office market recoveries are experiencing the same upswing as NYC. The nationwide vacancy rate remains around 20 percent. Finding a deep-pocketed investor like Elliott or Rithm willing to write the checks required to pull off these deals remains difficult, and there are only a handful of office REITs trading.

But the job of the office landlord has vastly evolved. In NYC, if you bought in the core business district, made sure the lobbies and bathrooms were clean, you could land tenants. Many of these landlords weren’t operators, they were investors who saw office as their investment vehicle. That’s changed. Tenants are picky and seek out buildings with critical amenities like podcasting rooms or signature scents. Or maybe driving range simulators for those junior analysts who need to work on their short game.

For investors that can buy at a low enough basis, and put in the money to upgrade buildings, and hold on long enough to catch the market’s resurgence, there’s at least a chance of an outsized return.