Rithm Capital Nears First Deal Since Paramount Buy

Rithm Capital is lining up its first sizable deal connected to the office portfolio it acquired in its deal for Paramount Group.

Rithm is nearing the landing of a $282.5 million refinancing loan at 1325 Sixth Avenue led by JPMorgan Chase, according to Bisnow, as disclosed in a KBRA report. The deal would represent the first large capital markets transaction since taking control of Paramount.

Under the deal, Rithm will repay a $250 million balance sheet loan. The fresh debt will also cover $14.7 million in rent concessions and $10.6 million in tenant improvements and closing costs. Rithm will contribute $4 million in equity to land the debt, which is expected to run for five years with a 6.6 percent interest rate.

Rithm did not respond to a request for comment, while JPMorgan declined.

As of January, the 34-story, 825,000-square-foot property in Midtown Manhattan was 90 percent leased. McGraw Hill is one of the most significant tenants, leasing 136,000 square feet and contributing more than 18 percent of the base rent.

Other tenants include law firm Olshan Frome Wolosky, the MLB Players Association and Japanese news organization Nikkei; the New York Hilton Midtown also leases several floors for an event space. The building’s most recent appraisal came in at $395 million.

Rithm appears to be getting into the swing of things with its new toys. Rithm also started seeking a joint venture partner for the 1.75 million-square-foot office tower at 1301 Sixth Avenue, eyeing a deal that would value the 45-story building at $1.4 billion.

The investment is being pitched as a cash-flowing asset with downside protection, as the building is 98 percent leased with $1.2 billion in rent coming in over the next 10 years and is supported by a $900 million fixed-rate CMBS refinancing.

It’s a better set of circumstances than the former Paramount is experiencing.

The Securities and Exchange Commission is escalating its investigation into the past dealings of Paramount.

The investigation, first revealed last summer, concerns Paramount’s disclosures regarding the use of corporate assets, executive compensation, related-party transactions, conflicts of interest and possible “failures of controls and procedures” related to its disclosures.

— Holden Walter-Warner