Paramount Group Inc Q4 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Manus Ebbecke - Evercore ISI - Analyst : Thanks. Good morning, everyone. This is Manus on for Steve. I just got a quick question on the deals that you weren't able to sign, specifically the one that you were mentioning that fell through at the finish line. Could you maybe talk about the reasons to why that happened? Maybe if it was like location based, if the tenant was hesitant, or if you couldn't agree on rental wage just for us to understand a little bit of a color here would be helpful.

Question: Manus Ebbecke - Evercore ISI - Analyst : That makes sense. I appreciate the color and maybe one follow-up question if I may. Could you maybe touch on the progress of the current stand for the two non-core assets, so 111 Sutter Street or Market Center in terms of a potential sale or lender resolution or just kind of like the thoughts as we stand now in the beginning of 205, that would be helpful.

Question: Manus Ebbecke - Evercore ISI - Analyst : Great, that is for me. Thank you.

Question: Blaine Heck - Wells Fargo Securities LLC - Analyst : Great, thanks. Good morning. The 2025 leasing target of 900,000 square feet at the midpoint seems maybe a little ambitious relative to the 763,000 that you did and what would, what some would argue is a pretty strong New York lease. Market in 204. So can you just talk about what gives you confidence in that acceleration in 25 and related to that, I think Peter said there's around 500,000 square feet of leases under contract or in advanced stage negotiations, so that would leave 400,000 of speculative leasing to get to the target. Is that kind of the right way to think about it?

Question: Blaine Heck - Wells Fargo Securities LLC - Analyst : Okay. great. Thanks, Albert. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 28, 2025 / 3:00PM, PGRE.N - Q4 2024 Paramount Group Inc Earnings Call

Question: Blaine Heck - Wells Fargo Securities LLC - Analyst : Got it. That's very helpful. And then Peter, maybe sticking with you, leasing CapEx as a percentage of the initial rent to the highest level we have on record in the fourth quarter. Can you just talk about whether there were any specific leases that drove that increase and more generally kind of what you're seeing with respect to concessions for new leases on the market?

Question: Blaine Heck - Wells Fargo Securities LLC - Analyst : Got it. That's absolutely fair. And one more if I can, I know we're just starting 2025 and I appreciate your commentary and transparency on the 25 move outs, but I wanted to ask if you could give any color on the largest expirations in 206 and your updated thoughts on which are likely move outs and which are still in negotiation.

Question: Blaine Heck - Wells Fargo Securities LLC - Analyst : Great, very helpful. Thank you, guys.

Question: Ron Kamdem - Morgan Stanley & Co. LLC - Analyst : Hey, just two quick ones just on the San Francisco, we've heard sort of different res of property types talking about a turnaround coming there, and I'm just curious just commentary on the market overall and how you're feeling today and then if you could just specifically on some of the expirations just remind us what the plan is for the back bill, large tenants, small tenant re dev, just what's the plan of attack there would be helpful. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 28, 2025 / 3:00PM, PGRE.N - Q4 2024 Paramount Group Inc Earnings Call

Question: Ron Kamdem - Morgan Stanley & Co. LLC - Analyst : Great, that's helpful. And then my second one is, so I saw the 279 Market Center loan. I think the plan there is working with the lenders to sell the property, so I guess if I think about the 2026 maturities, I know it's early, but any indications on what the plans for those are and where you think you could sort of refinance banks.

Question: Ron Kamdem - Morgan Stanley & Co. LLC - Analyst : Great, that's it for me. Thank you.

Question: Tom Catherwood - BTIG, LLC - Analyst : Thanks, and good morning, everybody. Wilbur, sorry, I want to go back to your answer to Blaine's leasing question to make sure I get the numbers right. Between the 131,000 square feet of leasing thus far in one queue and roughly 500,000 square feet. In the active pipeline, it leaves roughly 300,000 square feet of yet to be identified leasing opportunities to hit the midpoint of guidance. Am I getting that right?

Question: Tom Catherwood - BTIG, LLC - Analyst : Okay, that so let me try a different way. It would then seem that roughly 2/3 of the midpoint, 900,000 square feet is already identified, maybe even higher, but that seems like a very high percentage at the beginning of the year. Is that normal to have kind of that much identified for your leasing target once you give guidance, or am I thinking about this the wrong way?

Question: Tom Catherwood - BTIG, LLC - Analyst : Okay, then maybe pivoting over, kind of thinking through the. Albert, I think you mentioned over $500 million in cash with the closing of the partial interests deal at 9,003. How much of that cash is earmarked for redevelopments or CapEx spending, maybe for example on one front which you've pulled out of the out of the same store pool, and then how many of that, how much of that $500 million could be allocated towards new investments should they arise.

Question: Tom Catherwood - BTIG, LLC - Analyst : Got it. Appreciate the answers. Thanks, everyone.

Question: Vikram Malhotra - Mizuho Securities USA LLC - Analyst : Thanking the questions, sorry if you answer this. I joined late, but just, specifically on, Google and JPMorgan, and I'm not sure if you gave any sense of like the pipeline, I know, there, you, they'll need to move out, etc. But just what's the, what are the options or how, the pipeline to backfill those two specifically. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 28, 2025 / 3:00PM, PGRE.N - Q4 2024 Paramount Group Inc Earnings Call

Question: Vikram Malhotra - Mizuho Securities USA LLC - Analyst : And then it just the last one is there a part about, several years ago you gave a small part of 1,633. Is there a, I guess, a thought or interest in, additional JVs or asset sales or even just bigger picture, more strategic kind of action just given where the stock is trading, perhaps absolute and relative to peers.

Question: Vikram Malhotra - Mizuho Securities USA LLC - Analyst : Thank you.

Question: Dylan Burzinski - Green Street Advisors LLC - Analyst : Hey guys, thanks for taking the question. I guess just going back to your comments on sort of the acquisition team being as busy as ever, but there's still sort of being a wider spread to really necessitate transactions and start clearing. I mean, as you guys look across San Francisco and New York, I mean, you guys get the sense that that New York is getting to a point where that buys or that that buy sell spread. Is much narrower than it is in San Francisco or can you just talk about that, across the market footprint today. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 28, 2025 / 3:00PM, PGRE.N - Q4 2024 Paramount Group Inc Earnings Call

Question: Dylan Burzinski - Green Street Advisors LLC - Analyst : That's helpful. Thanks, Albert. And I guess more touching on sort of large tenant leasing activities, especially in San Francisco, you guys are starting to see sort of a recovery there. I know traditional big tech has sort of been on the sidelines as it relates to leasing, but can you kind of talk about just the broader, larger tenant activity in San Francisco, New York today?

Question: Dylan Burzinski - Green Street Advisors LLC - Analyst : Awesome. Thanks, guys. Appreciate it.