Core Insights - Rithm Capital (NYSE: RITM) is developing a well-diversified platform of complementary businesses aimed at transforming the internally managed mortgage REIT [1] - Recent acquisitions are viewed as strategic moves rather than distractions, indicating a focus on long-term growth [1] - Pacifica Yield is targeting long-term wealth creation by investing in undervalued high-growth companies, high-dividend stocks, REITs, and green energy firms [1] Company Summary - Rithm Capital is positioning itself to enhance its business model through diversification and strategic acquisitions [1] - The company is focused on creating value in the equity market, leveraging daily price fluctuations for wealth generation [1] Industry Context - The equity market serves as a mechanism for wealth creation or destruction over the long term, highlighting the importance of strategic investment choices [1] - The emphasis on high-dividend stocks and green energy firms reflects a growing trend in the investment landscape towards sustainable and income-generating assets [1]

Core Viewpoint - Rithm Capital Corp. has announced a public offering of 7,600,000 shares of its 8.75% Series E Fixed-Rate Cumulative Redeemable Preferred Stock, aiming for gross proceeds of approximately $190 million before expenses [1]. Summary by Relevant Sections - **Offering Details** - The offering consists of 7,600,000 shares of Preferred Stock with a liquidation preference of $25.00 per share [1]. - The gross proceeds from the offering are expected to be around $190 million, excluding underwriting discounts and other estimated expenses [1]. - **Listing Intentions** - The Company plans to apply for the listing of the Preferred Stock on a stock exchange [1].

Core Insights - Rithm Capital Corp. (RITM) has agreed to acquire Paramount Group, Inc. (PGRE) for approximately $1.6 billion in cash, marking a strategic expansion into real estate ownership and operations [1][4][7] - The acquisition includes a portfolio of 13 owned and four managed properties, totaling over 13.1 million square feet of Class A office space, primarily located in New York City and San Francisco [3][7] - Paramount shareholders will receive $6.60 per fully diluted share, which is a significant discount compared to its previous closing price of $7.39 [2][7] Company Performance - Following the announcement, Rithm Capital's shares increased by 3.2%, while Paramount's shares fell by 11.6% [2][7] - Rithm Capital's stock has gained 15.1% year to date, outperforming the broader industry [6] Financial Metrics - The transaction is expected to be funded through Rithm Capital's available cash, balance sheet liquidity, and potentially co-investors [4] - Rithm Capital trades at a forward price-to-earnings ratio of 5.70X, significantly below the industry average of 25.60X [9] Market Context - The acquisition signals renewed institutional interest in urban office assets, particularly in gateway cities, as evidenced by recent transactions in the sector [5] - The Zacks Consensus Estimate for Rithm Capital's 2025 earnings suggests a year-over-year increase of approximately 1%, followed by a growth of 4.6% in the subsequent year [11]

Core Viewpoint - Rithm Capital Corp. has initiated an opportunistic underwritten public offering of Series E Fixed-Rate Cumulative Redeemable Preferred Stock, contingent on market conditions [1] Group 1: Offering Details - The terms of the Preferred Stock will be determined through negotiations between the Company and the underwriters [1] - The Company plans to apply for listing the Preferred Stock on the New York Stock Exchange under the symbol "RI" [1]

Summary of Rithm Capital (NYSE:RITM) M&A Announcement Company and Industry - **Company**: Rithm Capital (formerly New Residential) - **Industry**: Commercial Real Estate, specifically focusing on office properties Key Points and Arguments 1. **Acquisition Announcement**: Rithm Capital announced the acquisition of Paramount Group Inc. for $1.6 billion, equating to $6.60 per share, which is considered a significant opportunity to acquire high-quality assets at a discount to book value [3][8][9] 2. **Market Timing**: The acquisition is viewed as timely due to the anticipated recovery in the office market, with demand for Class A office space increasing as people return to work [3][4][10] 3. **Financial Metrics**: - The acquisition price represents approximately 30% of the replacement cost of the assets and 40% below pre-COVID valuation levels [4][9] - Rithm expects to have $2.5-3 billion in cash and liquidity at closing, with $490 million of cash from Paramount's balance sheet contributing to the purchase [5][9] 4. **Investment Strategy**: The deal is intended to be balance sheet-light, funded primarily through third-party capital and limited partners (LPs), with an expected equity check from Rithm of $300-500 million [4][10][28] 5. **Portfolio Details**: Paramount owns and operates 13 owned and four managed Class A office properties totaling over 13 million square feet, with 85% currently leased [8][15] 6. **Market Recovery Indicators**: - U.S. office leasing volume increased by 15% year-over-year in Q1 2025, although still 10%-20% below pre-COVID levels [16] - Manhattan leasing activity in Q2 2025 was 33% above its five-year quarterly average [16] - San Francisco saw its highest quarterly leasing total since Q2 2019 [16] 7. **Future Growth Potential**: Rithm aims to leverage this acquisition to enhance its asset management business, which currently manages approximately $100 billion in assets [11][12][13] 8. **Expected Returns**: The company projects an internal rate of return (IRR) north of 20% and a multiple of invested capital (MOIC) of 1.5 to over 2 times in the long term [32][33] Other Important Content 1. **Management and Operations**: Rithm plans to collaborate closely with Paramount's existing management team to enhance operational efficiency and shareholder value [40][41] 2. **Market Dynamics**: The New York and San Francisco markets are highlighted as having limited supply and increasing rents, driven by a return to office work and a lack of new construction [42][43] 3. **Strategic Partnerships**: Rithm has established partnerships with Green Barn Investment Group and other financial institutions to facilitate the acquisition and future growth [5][8][10] 4. **No Impact on Dividends**: The acquisition is not expected to impact Rithm's dividend policy, with announcements anticipated shortly after the acquisition [24][25] This summary encapsulates the critical aspects of Rithm Capital's acquisition of Paramount Group, highlighting the strategic rationale, financial implications, and market context surrounding the transaction.

Transaction Overview - Rithm Capital is set to acquire Paramount Group, Inc, a Class A office REIT, for approximately $1.6 billion in cash[7] - The transaction is valued at $6.60 per fully diluted share of Paramount common stock[7] - The acquisition is targeted for late Q4 2025, pending customary closing conditions and Paramount shareholder approval[7] Paramount Group Overview - Paramount's portfolio includes 13 owned and 4 managed high-quality office assets, totaling over 13.1 million square feet, with 85.4% currently leased as of June 30, 2025[7] - Paramount's properties are predominantly located in New York City and San Francisco[7, 20] - The average lease term for office leases is 7.1 years[16] Strategic Rationale - Rithm believes it is entering a dislocated sector at attractive valuations, positioned for significant upside and the opportunity to create enterprise value[9] - Real estate is valued approximately 40% below pre-COVID values and around 25-30% of replacement cost[9] - Rithm aims to expand its asset management model, generating fee-related earnings[9] Financial Position - At the expected closing time, Rithm is projected to have $2.5 – 3.0 billion of available cash and liquidity[7] - Rithm has approximately $100 billion in investable assets[11, 31]

Group 1 - Alternative asset manager Rithm Capital announced a definitive agreement to acquire the REIT Paramount Group for approximately $1.6 billion [2] - Following the announcement, Rithm Capital shares increased by 0.66% to $12.15 in pre-market trading, while Paramount Group shares fell by 11.50% to $6.54 [2]

Core Viewpoint - Rithm Capital has agreed to acquire Paramount Group for $1.6 billion in cash, indicating a strategic move in the real estate investment trust sector [1] Company Summary - Rithm Capital is a global asset management company that is expanding its portfolio through this acquisition [1] - Paramount Group is a real estate investment trust that is being acquired for a significant cash amount, reflecting its value in the market [1] Industry Summary - The acquisition highlights ongoing consolidation trends within the real estate investment trust industry, as companies seek to enhance their market positions through strategic purchases [1]

Company Overview - Rithm (RITM) closed at $12.38, reflecting a -1.28% change from the previous day, underperforming the S&P 500 which saw a loss of 0.05% [1] - The stock has increased by 1.37% over the past month, lagging behind the Finance sector's gain of 4.15% and the S&P 500's gain of 3.44% [1] Financial Performance - Upcoming EPS for Rithm is projected at $0.52, indicating a 3.70% decrease compared to the same quarter last year [2] - The Zacks Consensus Estimate for revenue is $1.22 billion, representing a significant increase of 96.45% from the previous year [2] - For the full year, earnings are projected at $2.12 per share, with revenue expected to be $4.52 billion, showing changes of +0.95% and -13.64% respectively from the prior year [3] Analyst Estimates and Market Sentiment - Changes in analyst estimates for Rithm are crucial as they reflect short-term business trends, with positive revisions indicating optimism regarding business and profitability [3] - The Zacks Rank system, which assesses these estimate changes, currently ranks Rithm at 3 (Hold) [5] Valuation Metrics - Rithm's Forward P/E ratio is 5.92, which is a discount compared to the industry average Forward P/E of 13.33 [6] - The Financial - Miscellaneous Services industry, to which Rithm belongs, holds a Zacks Industry Rank of 63, placing it in the top 26% of over 250 industries [6]

Core Insights - The article focuses on analyzing Rithm Capital Corp.'s (RITM) recent performance compared to 17 mortgage real estate investment trust (mREIT) peers, highlighting key metrics such as investment composition, leverage, hedging coverage ratio, and economic returns [1][2][3]. Investment Composition and Performance - As of June 30, 2025, RITM's investment portfolio consisted of 20% fixed-rate agency MBS, 0% variable-rate agency MBS, 36% mortgage servicing rights (MSR), and 44% non-agency MBS and other mortgage-related investments [17][19]. - RITM's total MSR sub-portfolio had an unpaid principal balance (UPB) of $865 billion, reflecting a significant increase from $648 billion a year prior, largely due to acquisitions [37][38]. Leverage and Hedging - RITM's on-balance sheet leverage ratio was 2.5x, with an at-risk leverage ratio of 0.9x as of June 30, 2025, indicating a slight decrease in leverage compared to the previous quarter [19][20]. - The hedging coverage ratio for RITM was 44% as of June 30, 2025, which is geared towards lower mortgage interest rates, allowing the company to maintain stability in its book value (BV) during fluctuating interest rate environments [46][53]. Economic Returns - RITM achieved a trailing 24-month economic return of 20.97%, outperforming all covered mREIT peers, with the average returns for various classifications being significantly lower [51]. - The company's BV increased by 2.58% from Q1 to Q2 2025, driven by a minor increase in mortgage interest rates and a quarterly dividend of $0.25 per share, resulting in an economic return of 4.60% for Q2 2025 [20][21]. Valuation and Market Position - As of September 5, 2025, RITM's stock price was $12.62, trading at a 2.55% discount to the estimated current BV of $12.95, suggesting a slightly undervalued position compared to peers [48][49]. - RITM's diversified investment strategy, including MSR and other mortgage-related assets, positions it favorably to deliver attractive risk-adjusted returns across various interest rate scenarios [56].