Rithm Capital (RITM) investor relations material

Deal rationale and strategic fit

• Acquisition targets a large portfolio of Class A office assets in New York City and San Francisco at a significant discount to book and pre-COVID values, capitalizing on anticipated office market recovery and enterprise value creation.

• Diversifies and expands the commercial real estate asset management business, leveraging existing expertise and enhancing the asset manager model.

• Entry point is 30% of replacement cost and 40% of pre-COVID asset values, aiming for outsized returns for LPs and shareholders.

• The deal is seen as transformative and generational, supporting a shift to a balance sheet-light, third-party capital model and building out the CRE platform.

• Paramount's high-quality assets and proven management are expected to complement and enhance the acquiring firm's owner-operator model.

Financial terms and conditions

• Purchase price is $1.6 billion, or $6.60 per fully diluted share, with funding from cash, balance sheet liquidity, and potential co-investors.

• $490 million of cash on the target's balance sheet will be used to fund the purchase.

• Expected equity contribution is $300-500 million, with the remainder funded by third-party LPs and co-investors.

• At closing, acquirer expects $2.5-3 billion in cash and liquidity.

• No goodwill is created; potential negative goodwill may be offset by transaction costs.

Synergies and expected cost savings

• Asset management fee streams from third-party capital are expected to drive long-term value, with potential for high IRR and book value accretion.

• Financing synergies may be explored, leveraging experience in securitizations and asset-based finance.