arXiv:2610.16249v1 Announce Type: new Abstract: We revisit the problem of approximating a linear time-invariant LTI model by a reduced-order model (ROM) in an $H_2$-optimal sense. A widely used method for computing such ROMs is the iterative rational Krylov algorithm (IRKA). However, in practice, the stability of the resulting ROM is not generally guaranteed. In this work, we develop a novel framework that can be used to obtain $H_2$-optimal models of single-input single-output LTI systems while enforcing stability of the ROM. We use Malmquist-Takenaka orthogonal expansions in the corresponding $H_2$-spaces and their connection to hyperbolic geometry to develop an equilibrium function. We show that the poles of an $H_2$-optimal ROM transfer function are defined by the zeros of this equilibrium function. The resulting nonlinear root-finding problem is solved using a Newton-type method formulated on the products of Poincar\'e disk manifolds, where updates are performed along hyperbolic geodesics ensuring that the stability constraint is satisfied at every iteration. We present numerical experiments on benchmark systems for both discrete- and continuous-time LTI MOR problems, including examples where IRKA produces unstable reduced models while the proposed method preserves stability throughout the iteration.