PGRE - Earnings call transcript Q4 2019

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Operator

Good day, ladies and gentlemen. Thank you for standing by. Welcome to the Paramount Group Fourth Quarter 2019 Earnings Conference Call. [Operator Instructions]. Please note that this conference call is being recorded today, February 13, 2020. the and to Investor turn of Simone, now Development Business Relations. will call Rob over Director I

Robert Simone

Thank you, earnings at operator, under the should supplemental have Investors and Both the good morning. to information. the Quarterly fourth By heading our section Financial quarter Results be of www.paramount-group.com. XXXX can release Information, the access and found now, in everyone website Paramount

today meaning comments our will of federal of statements the be Some within laws. the securities forward-looking

filings of and are words or results which identified could what usually from expect, risks and are the use financial we cause interpreting our materially relying caution expect. as Therefore, statements, should such Forward-looking results other We exercise subject by will, to that future uncertainties you actual phrases detailed similar differ operating on numerous and to should discussion risks that of a could for more our impact the refer in SEC condition. them. you to

we to remarks, we that, will company; Treasurer; Behler, Chairman, non-GAAP to isolation provide Executive or fourth of During the open release Albert and These comparable quarter I'll over opening with prepared and in and accordance the Brindley, not considered President, the call, substitute call which Chief have operating Financial be of our company's With Executive measure evaluating measures call in directly Albert. Wilbur measures reconciliation we be our GAAP. available then in should call performance. Paes, as Management these and Vice will measures, to today, in turn the our A Vice the the useful we will Peter our the information. believe supplemental most results financial for discuss Officer President GAAP President, a some can questions. and Hosting is earnings XXXX Leasing. Officer Executive Chief

Albert Behler

our translate continue our Rob, everyone. very and into We to morning, as XXXX initiatives FFO on was note core FFO $X.XX fourth year for you, strategic the results. share, strong XXXX to quarter above $X.XX a full bringing Thank previous $X.XX we Core good ended per both financial the Wilbur guidance and core are guidance $X per $X.XX XXXX share, results end range. and of review FFO share. greater guidance per initiating between our in will detail. our Today, high share per XXXX our

achieved In on we we several the financial and initiatives. results in strategic addition executed to strong operational XXXX,

also We shares not is about share, XX significantly at of repurchased average last NAV public only weighted years. over below me our at shares of original recap This per GAAP. if public $XXX record million Let been program We year have previous XX% the of our set to XX.X% XX.X% on total square a some highest reduce goal of X.X as we even XX.X% beginning XX.X the the over the renewal roughly twice and We Third. higher would at leasing million these. and This served completed year. leased the which feet, company leasing of price and the float. estimates, a space of X New of million York done on $XX.XX by role almost Francisco, X% current price repurchasing months, San you weighted of average in and per average XX.X% $XX excluded representing a short-term were term our XXX our starting buyback was of impact square robust at foot weighted and share rents but for and a XXXX at second-generation at stock cash cash levels. nearly Mark-to-markets GAAP, these below

million At these have embedded annually and levels, are in nearly $X.X we dividends. of million an $XX gain saving

over proceeds upsizing partners. manner repurchase to in of remaining incremental markets of at asset to from Washington, from D.C. XX-year acquisitions venture with used share the a refinanced And sales the one San term, in of program $XXX our complete by using at our Broadway an We portion XXXX Francisco, leverage-neutral funded the in fastest-growing headquarters cost. for billion generated a the $X.X to additional asset we million importantly, sales More joint effectively $X.XX also debt borrowing interest interest billion no a rate the we X.XX% nation's and reducing proceeds

we focus continues being premise and into our straightforward on XXXX, As unchanged, proposition allocating strength be the and value shareholder head leasing disciplined overarching strategy our remains our capital. to with

recycle market past opportunities price. the dislocation several growth very share into we demonstrated advantage repositioning of have by our As can in extreme by effectively capital years, consistently higher over we or it taking

being space take X the approximately been levels the X unprecedented to more million feet. and at We million in square ranging let on market that of X the market. our on reason between conference On I we fourth call, could New million In itself, office York constructive quarter tenants potential a tech has spend last this minute requirement executed. That each markets. square of begin see me said, remain very our feet

absorption All which positive of and for the great city. is

on city I tech a will to thing comment that their fits product tenants and is that needs. Peter While seeking let clear all that in are growing one the greater detail, us this over the

of XX% strong figure Looking Sixth Avenue. its represented to as fundamentals. approximately portfolio. grow, lease space healthy low job than be at the As drivers of underlying should our market to continue Barclays has sustained the continues trending average we makeup of see remains Midtown upwards. backdrop as in Paramount and the asking and serve tenant the see and to that captured XXXX more our Today, doubled growth share that rental IPO, back, tailwind TAMI work rates are availability evolution of this we demand. X% it, to unemployment we rate The fair has This office-using of time At tenants

of and very plates, half given space building the building, desirable We Our base year-end. floor location that quality the our will the space the the confident of of block market. prove goal near remains large the in least and expiration of before this to at remain lease the and at the size efficient

In San continues to demand as constrained. the remains be Francisco, robust market supply

Francisco square markets, we During perspective impressive year, several we year nearly well. as a but mark achieved occupancy nearly record milestones the it with cash San perspective, was XX%. leased X an to from only in volume a from leasing Not feet million

at addressed and We role are to leased, both San is One XXX remarkable. XX.X% our Francisco bringing truly Mission, One upcoming Plaza Front leased. XX.X% Market of XXX% same-store portfolio which leased, now

excited Francisco, are We XXX the Center. Sutter, opportunities Second acquisition we the San and have new in XX with of Market about

in approach thereby manner We begun already value our our opportunities have the these as shareholders. additional proactive business plans for and previous will acquisitions, same executing creating on our

of happy our Washington, very one in transformation. now capital D.C., and strategy We REIT our and With with allocation bicoastal are York are New only San assets with some we portfolio a best Francisco. asset the essentially in

the remaining Our with San the by New represent York coming Francisco, our of portfolio which, the XX% is from will from went at about NOI, approximately X% up way, XX% public. we time

continue the With to in will we our to while portfolio, that, undoubtedly and leasing. on Peter disciplined the main biggest be our block, additional will closing, turn insights managing I opportunistic to call give lease-up single to priority. focus remain which Barclays In our remains the

Peter Brindley

morning. good Albert, Thanks, and

expire contributed our the roll, manageable to is XXXX. or space production portfolio's of quarter, XXXX the square to our fourth near-term Approximately immediate we full X.X total million of than reduction per the to more currently this X.X% addressed leased year during leased. which vacancy XXX,XXX X/X During through year-end feet, our in square leasing scheduled feet approximately bringing The a XXXX. expiring leasing portfolio lease balance of annum

largely quarter by At on take XX.X% same-store end, XX we back Henri year-over-year, the Bendel lease down were of in basis, January points leased driven XXXX. a basis

Excluding points this have would occupancy lease up leased XX strategic same-store termination, basis our year-over-year. been

tenant and our well proven a of we expect remain relative record positioned range availabilities current track attracting on to credit demand, industry. diverse tenants to Our very of across build

year starting market, ever with the our highest review on Let's total with the results York. ended Manhattan leasing record. X-year New by

During and maintain base. influx from availability to a feet, this this million is of occupancy equal jump million during Of square city's tenant the depth diversity stable of the realized XXX to leased XXX rate Manhattan offset million ever-increasing feet of time, new the feet helping a square importance supply and square XX period. in

in tech as is The year. of best tech yet a in the services remains leasing During for irrespective time the Manhattan, financial another of reminder a brightest. and activity the largest occurred the sector of XX% largest tech emergence ever the X driver Midtown. the industry, given Manhattan the seeking quarter accounted that for in fourth for year, of first top surpassing companies past deals demand market in The magnet

the what infrastructure plates to and However, city, new scale demand their are real we tech seeing are tech estate. transportation, in access in sector the to across floor large robust hallmarks ability all is seeking dynamic of locations, superior significant

to to fuel tech diversified, of capture continue expect fair our absorption our markets. demand highly is portfolio in Our and share undoubtedly that we will this

Turning our York New results. to

Our XX.X% basis at same-store XX down portfolio quarter points was year-over-year. end, leased

a mentioned, Henri impact same-store on had occupancy. Bendel As leased significant

would If up Henri XXX Bendel basis XX.X% Avenue, at lease Fifth XX the the you termination portfolio's been York were exclude have to former points New occupancy leased, year-over-year.

expiring feet lease full average lease XXX,XXX initial of leased, quarter, total roll. only feet, square a served nearing our the XX% foot. bringing of square to square leased leases with year turn to rents Of With weighted XXXX During expirations. in the X square XXXX XXXX, and XXXX we XXX,XXX XXX,XXX term $XX XXXX approximately we We approximately X.X% square over of the much attention per XXX,XXX feet. fourth feet achieved to years of our eliminate

per schedule. as ahead, expiration approximately XXX,XXX XXXX, excludes square expiration which Looking Barclays very in XXXX our reflected with positioned X% annum York expiring the is feet, the New lease of through portfolio lease well figure year-end

located demand. relative properties current New tenant Our ideally York are to

We the tenants lease-up have our to successful remaining We the leasing which space of after block our most current of capitalized at and of to Americas quarter. be Avenue quarter tailwind space. successfully lease to largest perceive effort of competitive advantage Barclays market the a remain discerning conditions availabilities, focused by XXXX of in the is the the on on this

the Americas rate the strongest of basis heart is among submarkets, any X.X%, absorption performing Avenue of XXXX Midtown of Midtown other in than points XXX realized and the an the submarket having in Midtown's boasting broader positive Avenue below availability average. XXXX Sixth more submarket located

are and of its in of makeup. year, interest, center confident We March which our been in at in are XXXX diverse has level marketing current our this finalizing

year-end, we look Our on you progress. goal space of half lease Barclays updating to our to and remains the forward by

Fifth XXX are September result. we in the lobby the At Avenue, thrilled with renovation completed XXXX and

completed X deals, quarter, in highest at than fourth the square market. totaling more the the among During feet rents we XX,XXX

at perform Avenue will tour Fifth XXX confident activity are high to by We encouraged continue and that the are the end well.

best-in-class continues with product and will San A robust the for In Class expectation XXX San CBD continue average Net and to limited product year-over-year we positive. fundamentals strengthen, absorption continue that further for in Class remains to up demand to points A in deals in CBD. capitalize leasing down rents And basis decline, year-over-year to by asking X%. to rents It Vacancy long-term tenants. is continue our given increase, Francisco, XX.X% securing supply. the increase Francisco

Our in Francisco at same-store XXX was year-over-year. quarter leased XX.X% end, portfolio San up basis points

we approximately quarter, fourth square leased the feet. XXX,XXX During

per full did year, increase weighted nearing towards Not it initial of role. we only but occupancy, million the reduction a $XX square velocity shy leasing the this contributed XXXX of feet square X.X leased term years average For X lease with of also at just rents foot.

quarter. roll, approximately XXX now eliminated highest we square X.X% a the One is among One Bank as and XX% XXX,XXX San during The in lease positioned One bringing XXX of three transactions Francisco XXX,XXX square approximately portfolio long-term totaling year-end at continues result the feet than achieve and to the One are Plaza, Street, XXX% we annum foot both expansion excluding San leased. X we Mission, the completed which at XXXX, quarter, Market of expiring through executed XX.X% very during with of year. acquired with the Front At the XXXX. Front, Francisco. our our in Street XXXX At second to deals we the Market Republic more occupancy well Mission During properties First leased were rents X per

up from we At February XXX Sutter acquired leased, when Street, the property now we XX.X% XXXX. XX.X% in are

architecturally During healthy is appeals feet deals, and traditional fourth X cash alike. XX,XXX The we tenants double-digit successfully square building approximately to the completed totaling mark-to-markets. and creative at significant quarter, tenants

a the fitness create with transportation by boasts building at excited very are including The unparalleled amenities, we office take multi in and Francisco. Francisco, our San and in the that building have much Lastly, team's in heart to Market San upcoming CBD, of in center, advantage our a the plates access, desirable spectacular leases we several currently in in-place like well view campus is support XX.X% with have opportunity value past the which availabilities effort efficient corridors and we key what market. below San Francisco's Center, of leased floor of done process, current all the portfolio tremendous recent

With that turn over will will discuss Wilbur, the results. summary, to financial the I call who

Wilbur Paes

had performance. strong another and operating Peter. We Thanks, of quarter financial

guidance. for quarter core $X.XX full share, FFO of $X.XX the was Our per our XXXX per the our bringing share, to core above FFO results most recent $X.XX year midpoint

portfolio XX.X%. Francisco a NOI San by in The XX quarter, X.X%, higher our was cash basis points growth growth to grew the York X% year the bringing guidance. robust same-store Our by our same-store X.X% cash a and cash of same-store healthy grew NOI midpoint New than in full NOI

leased XX the As by fourth expected, early we This the decrease to the driven decreased XX.X%. lease points XXX Bendel expirations space XX.X% at occupancy in of termination previously basis telegraphed. was same-store Third, from by had which quarter and year-over-year Henri

we Francisco. covering rents In mark-to-markets The over been space foot leases quarter executing was and earlier, lease for leasing significant positive period strong square quarter, we at feet previously at York XX,XXX a were foot. XXX leases our $XX.XX we that San X-month limited despite highlighted X.X% and current both of in the impacted of Third availability, per was momentum the New square leased mid-rise XX.X% executed As and at have of and by executed space XX GAAP. GAAP XXX,XXX in square for cash mark-to-markets cash an but continued market

are square foot. $XX Just perspective, Third to average roughly put the that rents XXX in per in-place at

GAAP Excluding this and if XX.X% lease, Third. even cash mark-to-markets XX.X% of XXX XX.X% the have been Year-to-date, higher and the XX.X% cash X.X% have XX.X% and GAAP. would would and were at impact you mark-to-markets excluded at been lease GAAP, cash

with We ended with over to average billion unchanged, The for million $X.X received in balance Turning of reception interest evidenced keeping cash Broadway in as maturities execution. tremendous refinanced essentially $XXX and pushing November. weighted sheet. our We liquidity. cost the mill, its We debt was lowering quarter capital. our out XXXX by borrowed financing our

of and X.X%, is fixed a debt at and XX% outstanding interest of billion weighted XX% rate weighted interest average quarter X our at was years. average Our and end rate a $X.XX the of has X.X%. X.XX% weighted a average of is remaining debt has maturity interest average rate and floating a weighted of

maturing beyond until We fourth quarter debt laddered. XXXX, maturities have of no our the that, and well are

Turning our guidance. to

outlook remains solid. XXXX Our for

lease to the XXX,XXX for expect and XXX,XXX year. between We feet

and same-store be We XX.X% between expect occupancy to XX.X%. leased

per between and same-store $X.XX We FFO X.X% between expect $X.XX expect the cash X.X%, and to be to NOI we core $X and share grow or midpoint. at

cash XXXX. the cash XXXX $X.XX The general from in due NOI $X.XX of in higher shares increase $X.XX in growth, XXXX compared an share as from administrative net to of weighted and average $X.XX $X.XX dispositions, follows: resulting when outstanding same-store expenses. lower represents or a This to plusses repurchase from reduction and and per NOI from share X.X% are acquisitions

free offset the the Barclays it including projected These company the XXX are $X.XX due a will rent termination lower our their the and on which important XX, XXXX. December to results. of of plusses contractually following: XXXX XXXX, expense but duration rent be be for certainly are higher $X.XX in guidance they their space of resulting term, lease off expiration, a burn is FAS that are on the acquired in an pay income that will aggregating rent the from re-leasing ends straight-line If FFO to assumes of definitely It year, is which have income in note Barclays assets sooner and lower not will on to same-store than impact core long the for that $X.XX San and their to. and in received obligated successful space for by great current from outcome be $X.XX primarily our new we full term, Francisco, interest debt partially guidance, in portion

have also not $XX our leases information can deck, and we our including rent investor commenced, on found at million. This schedule signed updated www.paramount-group.com. which at now Lastly, free our sits of be website

the for please operator, that, With open lines questions.

Operator

[Operator Instructions].

Our of first question ISI. from comes line the with Jason Evercore Green

Jason Green

then how as On the affect quantify the you done. also Barclays impact detail be space guidance as in provide leased if potential early to And you leasing a But the year? current specific that's early midway you guidance? to space, say, were leasing of to or it guess, could half if, were the mentioned I be more can how little know you I to are more able contemplated it to guidance get through would

Wilbur Paes

contemplated leasing to lease XX% Barclays Jason, in the in of Sure. terms that is have of guidance, space we XXXX. the our goal

We very about about have been has vocal that. vocal that. about been vocal Albert very Peter has that. very been

that's the So guidance. leasing in

As far be do as to have goes, supposed pay XXXX. they to takes away are imprudent not we the that earnings it us the contractual guidance us and obligation would for anything projected, during that

$XX To top says Page this of tenants question our XX a answer supplemental million knows of to in our terms our on at point we've million in everybody quantification, NOI. schedule or Barclays your published contributes $XX roughly that

dividing do any You that that that to averaging could XX math time. in to the do point what earnings by of understand at and months can by implication

to example, which you try is so feet, XXX,XXX $XX our would a are many goalpost There that XX, to did lose we dimension. million. on is permutations, not you'd that for why assuming X/X X/X, the is, of course, Of lose do assuming deal all got earnings what and you March square done

could what XXX,XXX earnings, in successful, certainly at for taking will feet investors. that mean dimension time, early, when are square we are to if and that what our point we We

Jason Green

on just then kind reauthorization program. front, to the and that comparing curious what York you're seeing San of markets. buyback Francisco New acquisition And it. the City the then just And of guess, Got I in

how thinking you're as Just about go year allocation we 'XX. capital fiscal into

Albert Behler

is This Albert. Yes.

not looking are buybacks. at dispositions either or or acquisitions We exclusive

our options. looking also San portfolio. have we all And both in an these saying been past that York the are decision. look at We for and New investment at either/or we various markets, opportunistic not mezzanine It's Francisco,

markets acquisition our we involved. always So watch these And and team carefully. active very is very

be more more we all And at might York attractive. and getting New look opportunities. these

a have buyback the program by Board, we when feel will time million We new that the it authorized $XXX use and is right. we

Operator

Our next question Heck the Blaine line of Wells Fargo. comes from with

Blaine Heck

though the as in little in comments their that past, they Armour's flagship of in having out there Building maybe space. light seems interest there's flagship might pull has it So less Under been Fifth Avenue a a than GM especially of

push Henri bed of your tenant get guys are the guess, I for rate part with there? comfortable near Bendel put to the in on pretty and there rental kind and waiting space the is of you So the right leased any Or right that kind term?

Albert Behler

And highest when was at the might as had we the in an still Under well The here. best took the discussions are not sidelines world not below was best the Blaine, retail Armour as was big have changing great retail. The said, of levels, that timing, at we mode. the potential the for on not had too. be retailers. with And timing we time, location Henri we location. it a said we market locations opportunity. Bendel But space one But this the sitting it's is is in back, And a the that market. rent this

we for I the something go might have location. worth working into the it's not And are when that several to on, And that is and overnight. it it's months. too XX effort on right the space deals. got This back, to done tenant that indicated is recall, to work But take get something We might you this details. we early

Blaine Heck

missed it, Peter, on I think with there? from Got And if what in you I it. were you maybe give we I mentioned the that? space you Sticking any update the of tenant the maybe the working on appreciate retail or last sort a quarter, the can retail, commentary. sorry negotiations should any but expect in cube XXXX, at the guys impact discussion financial sense of with

Peter Brindley

do tremendous don't Blaine, continue we anything We to have be prospective just to the the a tenant perceive building. make to progress. We to amenity yet announce.

particular remain We work we of identified, finish have ahead to and user we to you this a of bit we us get we little order make look as the in updating line progress. to forward hopeful, that with but

Blaine Heck

round And helpful. with Wilbur. that's question it out I'll for Okay, a

your just with major about all next late So Barclays due. debt you're thinking talk next million the of coming that the at moving maturity you debt building? how Can out $XXX is XXXX about pieces coming year, addressing given

Wilbur Paes

Sure.

that that So when intent, on, had, in have refinanced early we by maturity we Blaine, had debt XXXX.

our So the up ability it to Barclays against re-lease dovetails space.

So best that that debt the the will conjunction be success with get we would refinanced because there have financing. outcome the in for

Blaine Heck

you have Okay. the the event any that B? event in in retenanting that? maybe there of Is plan And delay unfortunate any kind that

Wilbur Paes

have we flexibility. Yes, great

at of revolver. $XXX debt capacity billion you of have which fixed you have that's stack, is we on floating If that Obviously, the from large million. lot the a look debt, that coming and is rate chunk basically our $X.X

lot of a on have cash We sheet. balance

not tackle have success fully the we have can we of at the we We avenues because great but that, concerned are where view that space. will multiple we're Barclays

Operator

of the of Our America Bank Jamie next Lynch. Merrill question from comes Feldman with line

James Feldman

think about exact on the color give what which to as on I And are can a that just just more want submarkets, New get they'll Barclays, get aggressive York. over said color looking you're more think deeper some into want conversations exactly more all I city. just maybe tenants the to seeing, dig you little having? you're you you then maybe Peter, tech I in.

Peter Brindley

city. across seeing across Manhattan tech Sure. velocity interesting. XX% tech for XX%. market We're deals It's and it Midtown of entire was the accounted Manhattan, occur specifically,

predominantly on actually XXXX We're the in through seeing afternoon. a submarkets, various tech we're touring west tech in Specifically, this Midtown, user side. occur

from we tech. amount demand a of healthy are So seeing

we're I to think town parts what now of they connectivity transportation that outer locations. other in they're huge boroughs scale can locations is looking seeing the and for where and have

And what tech for. seeing we're so that's looking users

conviction to There As positive to find. central offer of a XXXX. very remain a many from that our lot plates significant heard and location what attributes about this floor activity you've offering, aren't at tour team, branding have large and you scale, can this as opportunities have we possess we the of ability of opportunity, and size

we remain So as tenant. with right optimistic as the ability ago to we in were months our X transact here ultimately

our we so forward And on there. to look you updating progress

James Feldman

So are the so aren't Third isn't seen on on there headlines leases that a maybe easily we recognizable maybe happening are bit certain of hear like people that interest a we've submarkets of there the pickup Avenue. getting little under that about when something tech surface thinking side. west big Is just more the

Albert Behler

than Well, of Jamie, mean, opportunistic this them are activity, more some others. I

is tenants up picked XXXX a at of technology that growing. give Broadway. And leased, good might are at example, And those have we Broadway. That also tenants XXX% as thing know, you XXXX seen we are couple the have You us opportunities. for

see we they the tenants, up rental segments across it's market, I brokerage all this different the all coming community board. that in And opportunities are think in the those so showing the is are island. -- on market rates because And activities

James Feldman

tenants? smaller Barclays, pipeline quantify, of you're like, having? Okay. And can look then several Like one does is the it what you discussions Is large like for it tenant?

Albert Behler

would suggest or considering, be it this the X. two, maybe to that we're one, the than three we're be inconceivable and more currently that based tenants, the than level I X one, would more would pipeline that I perhaps activity requirements be likely But ultimately. on it's that think just not could say

James Feldman

you're to about get the goal? for to entire And like your conversations Or just enough space? XX% you leased talking to in, fill have

Albert Behler

Well, again. this is Albert

different a And say. to there. with it's early too discussions handful have We of tenants

X Of at tenants the tenants X floor. take we have then look might just X And course, or who more of space. we -- also

a of XX%. want put That's Jamie. further we at don't I out goal I go good think this than a point, to that goal.

James Feldman

then, color before, attractive New in might Okay. and more like thoughts New on Albert, side. your to what more investment be that aggressive provide more you to city Can Makes And said sense. York? had the see you on getting just you'd get York on

Albert Behler

interest I think sorry, the the the more we from -- rates in have interest rates Well, the cap investment again. come -- have side. year early on And get down

available. market the States, think momentum. our this to with flush to change I a I momentum think since have talk this be mentioned leasing of And and might in I up, think still it's needed interest the is And market are is it tech the demand and investors been happening of a -- catalyst -- side, a I some the on they in remarks, for We positive. it because time. picking year I has lot we think my outside So quite underappreciated especially they United low capital this that

the will think change I So that momentum.

you mentioned and is again, great others, York a and from and market, activity, growth. a as of tech in the I have remarks, employment New lot positive

all value will increases. work that So out itself to

James Feldman

Okay.

venture you you a at York? more is XXXX, of the joint go or sell let's to So capital likely out say, think to you do D.C. Francisco and New do guys San

Albert Behler

two assuming don't this that you're Well, at into things to this I want -- go call. on

I So D.C. it's too And early to mean, say. Washington,

one we we whenever have something have to will and asset, report. report We

James Feldman

I question saw project about in you is, press Lane, talk And that? San release my then for more a a last condo Steuart Okay. Francisco. Can One

Albert Behler

It's That's company. asset. it a we be this garage the a and special but Francisco. just great we very It and XXXX. now formed will great the of focus is was it's the through not One long an development development managed opportunity. in Plaza manager the limited think at public We -- capital fund it went it company risk we a San manager part We asset on permitting the the the But that's was have bought a PGRE. of waterfront. asset when by major in that Market building and Yes, public of in process a -- that is

James Feldman

any or kind sales? gains Would any of you profits condo collect guys on

Wilbur Paes

we... Yes,

Albert Behler

get If out we of fees, we promotes get that's of will and works our will and course, it part business. well,

Wilbur Paes

of Jamie, fees up company's income. would All by that way, the be would showing that public in the which, fee we all of collect

James Feldman

When do you think that starts is to hit? meaningful? that Or even

Albert Behler

to that too as we're sixth only will it's And of years promotes to it's PGRE say. benefit mean, to the hit -- I Well, now. -- if be shareholders if Wilbur saying, X construction, was that that from floor. early up might the you will beyond

Operator

Vikram Malhotra from comes the with Stanley. question next of the line Our Morgan

Vikram Malhotra

at So I know prospects you've the about XXXX. talked a lot

-- please maybe may you two at that different around thinking on just doing? of know kind you're clarify parts us that maybe Just in-place? different different obviously be anything of mark-to-market space, portfolio? years or X you of specific. your is sort space versus questions. One update but you what vacancies just then Can space, to And broad on relative X is doing other building or to different had when you're ago it's in anything I there large

Peter Brindley

well different on success with know. And tackling, We no single-digit expect we've a blocks of what of honestly, as leasing terms it's which we have you the really done, other space. than in blocking had and high mark-to-market quite space,

as tour tenant, which we're deals marketing a a is and marketing the itself. discuss center in space to prospective and visuals finalizing center, And helpful material allows us that for Mentioning my themselves we supportive tenants. and all with help curate in marketing that of we remarks, think envision the

not we're little same, process. Vikram, well anything the question, These and our we we're bit The your and time. a know tackling answer remains very way doing take a working larger deals to blocking of through different. that So

working through it. we're so And

Albert Behler

has currently And maybe street. in addition, to opportunity directly space an to the access the

focusing these calls. we a get flexibility and Avenue in lot who we of wants location. branding a branding on great Sixth So there there's for haven't tenant on have right opportunity a that to a here recognition that a But

Wilbur Paes

we Just Vikram, with that be that the reference, I at this space add, would to Touche, were mean, when would your till the was & Deloitte time, the thing with in different in that one I day. dealt they big prior role the last presume be sense

to market. us until for they And so to back able that couldn't we space vacated be get

advantage Barclays if tenant. big have we prospective happy we had we they is moving give the is back Here, to are a know out,

sooner we on to able space. the market So much this are engage with

would the biggest one of I say that differences. So is probably

Vikram Malhotra

other And it's you want or curious, piece then of you looking to or be coming open, asset, doing know JV open any don't price, kind open to would would be great. whether discuss in interested but XXXX that? the right you're you buildings, Okay, someone sell you to just are largest given just to at I of your

Albert Behler

capitalize on improvements that we our full Vikram, we assets that said and to lease develop want Well, done. and then the to always have the maturity we

So we an Washington, have that that be in here and D.C., could opportunity done well. as

Vikram Malhotra

then And one of last Okay. just the -- referenced, you now REIT. bicoastal being on

the West was given Obviously, many Franciso sort of how Just -- the San has first it Coast years curious ago. kind interest spread. of has

there's opportunities? L.A. a be Now submarkets? lot of Francisco West to San would and are in other on you solely markets, Or interest you focused Coast open other

Albert Behler

It's good a very question.

open, point be market opportunity opportunistic, would I in that times. cycle of couple a we is the to also growing it another answered said this in we not to an a most at market, have you if probably are but go have We significantly.

have the team. We

to on within cycle. We we think But I good nimbleness for And the the really, currently, of have this of where focus think are in There of paramount. are markets. we opportunities. I time lots nimble, these want that's X the culture

Operator

the next line come Daniel Ismail Our will Advisors with Green question Street from of

Daniel Ismail

trend space? markets? in rightsized have to Just given the the of you Do years, tenants left still the can densification amount few your have leasing more do? there think of Or done guys last to their is most already over speak you you

Peter Brindley

of and worked way would and law lot with Certainly is a its that through I say, the Peter. rightsizing Daniel the system. occurred -- I TAMI firms has say would this tenants.

undertook I think represents a number they, suggesting point, I in that recently at this a most law even comment that firms broker of space. from a heard fact,

ongoing So for work lot call last, or the densification it, way I we give as the so, have a think that X trend or now been seen the rightsizing system years its of has take. through

something But played think really point. thinking that about. question. think out the we've I I way at good very a it's It's that's been this it's

Albert Behler

force and labor, that much look the it, as labor sometimes as and more Peter you as now millennial please for indicating, hear was have it's the tenants to from possible. they overdone qualified it's And

make more happy are some space for direction take to more going So environment the other tenants a labor. a in productive little it and their and bit

an XXXX, can was it's the something you see So maybe going think I it's hit recession in participants, after the some that 'XX of the some other of overreaction in the way. and market

Daniel Ismail

currently internal employee? in leases signing of rule or thumb you terms guys are you Do square know of out new foot per have what an guys

Peter Brindley

portfolio, you look I very it's think if diverse. our at

per think it's per XXX is but hard very square foot say, I the standard. rentable XXX -- to

by give it varies diversity of portfolio. industry, hard think figure, certainly by the our you given I It's market. a single to

Albert Behler

example, get per XXX XX,XXX foot I floors. you could for square about mean, if at, XXXX, with floor, you look people

bit they which landlords. they of should have some took think, the I for like they And tenants it. momentum a more feel taken the who And realize space, space, is, they little a good overdid

Daniel Ismail

effective Okay. helpful. That's you in Francisco you, expectations San And for maybe can your net this have I then, and quantify rent New year? since growth York Peter,

Peter Brindley

effective I be will San up. rent in think Francisco net growth

I about has stable. think velocity Availability X over the We interesting. years. talked last relatively it's in the remained Manhattan

invested our buildings is significant absorber properly submarkets So a toward. desirable, when been are having situated about think strong. and in is are think a space, I reasonable in tech, now that you buildings well-leased fundamentals that Manhattan think who to of portfolio it's way coming which And that have in certainly to stabilized, significant or concessions in

hold. will given taking remains are trends But lies to ahead, I we that how year. see And rent on think bullish that seen. you some be growth what much bit effective are of little the now a this

Daniel Ismail

both Can an last Francisco? And relative in-place for you market, York to the update on Okay. in give San currently just one us sit me. rents and where not New

Peter Brindley

In-place…

Wilbur Paes

done San Our continuing. double-digit you the have our high that that mark-to-markets in-place you IPO what you're We rents XX, that on obviously supplemental in by we've what as in and rents buildings. in-place San Francisco, our to the at can that's building at. in Page in-place our Danny, published and rents getting if se, from in we Francisco, have trend see have very can building per are continued And -- see and below in market, how building also grown the look we average go

Operator

the comes line question BTIG. of next from Tom with Our Catherwood

Tom Catherwood

is beat Peter, again. on are or just newly second-gen rent between engaging the Are of And But redeveloped have buildings large buildings? XXXX a I'm or of redeveloped developed they what tenants would you're looking kind to to of comping block sorry to newly a in comping Or to quick in what the there. space that that gap with you're what similar spaces? kind most and it for someone one get building?

Peter Brindley

construction, end in this new to we're that rent so as Class space, in about being building of talking a they're A this many of triple-digit that product, care XXs locations. the I looking but any From type ideal I about end asking location. in upper not well-located other We're users space but lot is for certainly, only also figures. It's city. we're blocks of transportation an not is think product of Well, our with although the product, plates care we're there And floor communicating comped which think users aren't perspective, have and size. location. that at early about a the to A as building

what think but and we finding points, now as will there offering. relative what we're we're compelling offering attributes, price couple So higher of are resonate. a a the are our of blocks, said times couple generally to And at we of

Tom Catherwood

just was somewhat if on between premium make at you. big substantial a they what But and a have that Sixth to correct? a Avenue, that's left. what XXXX, are thing like is what there's specifically, Got to But looking for, guys similar newly work you block the if look were needed you something redeveloped we obviously, not still there block

Peter Brindley

That's that's Yes, right. right.

Tom Catherwood

And that? Okay. XXXX right. could and also Peter, XXX,XXX And but If looks looks that guiding wrong And higher could out-year be square much fair? line do like that and feet it the do the sight it I throughout XXX,XXX leases. forward All pulling the trend that square to here, mentioned to, are feet, for on had of to A, that then, maybe XXXX is you're year? have expirations it XXX,XXX how you of I back envelope, of forward. pulled chances what from the b, being on of kind those you be

Wilbur Paes

Sure. Tom, some I'll give maybe you color.

engages that expirations place similar our of in to with hoping range. is pre-leasing would leased and Albert foot XXX,XXX-plus And the square always we derisk. and our months of XXX,XXX try to lease the if somewhere up pulling that, midpoint solve figure XX -- fairly tenants to and Your goal come head mentioned, but you taking on that then the to you do. says, And the which math exact get is never Peter our science, on because includes obviously, at look an you to a Barclays range, as square-foot It's pre-leasing is XX occupant to team to the space, with same-store we're ahead. forward

no engaging sooner. tight, leasing so that X.X is years. because being that that square tenants million feet future record of of million-plus the It's are San If came at look derisking a year, majority by market Francisco surprise XXXX there the from you X came

So we on behavior. market. have depends it leased depends It better will leasing building occupancy generally some sight, line by of higher generate because leased the buildings occupied

So there's of pieces, lot that's goal. moving a consistently our but

Tom Catherwood

Got you.

like the now. So sir, square another highly way, say you it right just all Is confident sounds it stuff already for to say? stuff is that out XXX,XXX-ish years to you're that that fair feet on on feel speaking the

Wilbur Paes

is. it Yes,

Albert Behler

Yes.

Tom Catherwood

in Albert the me. When the sorry the and start then XXX rolling X for or do XQ, But And you over did into -- final revenue? Mission XQ deals one with past, This may Maplebear. and they okay. be Wilbur, Glassdoor, in Okay, in Autodesk presentation.

Wilbur Paes

the anomaly because until So not year. come those space deals and an did were of was due only the renewals end the

in XXXX, come stabilized not So into fully to start necessarily they'll XXXX. but

Tom Catherwood

is it So is back-ended do even of natural they kind Or the that hit of year? across their as kind expirations? they would --

Wilbur Paes

the that's come and once to cash So XXXX be there'll and rent element end natural comes to when out will some from that, start the expiration in. numbers the free the at XXXX, of

hard contributing without you building the contribute speaking, say, going suffice you we've NOI tenants it it's granular XXXX. these from detail what's really to cash in to up to broadly NOI. So as to But to each standpoint portfolio-wide to Tom, to given blocks, all think, really when give and of I cash a start into come

Tom Catherwood

it. Got

sounds then in So cash like a it those? to just -- bump from NOI XXXX big there's not

Wilbur Paes

burn in a not burn Because we if $XX to cash Yes, San the Francisco our bump free about to free is off. rent there San of necessarily XXXX. NOI, at -- in off rent Francisco, be schedule will contributing there as from mentioned million look you

coming So in XXXX. of with end towards the XXXX will it tail come bulk

Operator

of next Omotayo Okusanya comes Mizuho. with question line from Our the

Omotayo Okusanya

the Congrats been of impact, a the the on your the before, just I solid proposition possibility guidance. if XX. your but not has San the the I thoughts curious call revenue Prop will bit about Francisco asked so late, know, again, this portfolio I did join but just passing? about and apologize new, is little very generally around so like

Wilbur Paes

So Omotayo, I November mean, following XX in closely, we're XXXX. set ballot the is Prop for it

this happen whether not. the polls, it's or you read fairly I does think think I if split,

closely. is to landlords in will San Francisco, said, fairly we Francisco to for new. our other be as watch continue major you office relative will us, it in it the San least So because But implicative portfolio

Omotayo Okusanya

Yes.

news, New kind are interest Okay. kind second from leases what I'm of of kind seeing all York City, around around curious demand tech just hit again, regards then it's in that tech midtown And kind big in of just That's driver. that to have the of demand core in the of demand of about you of some just all, kind helpful. yards.

Albert Behler

square X feet. million over And that remarks was call indicating to were already. feet, X the we signed, about quarter, I X square nearly on last signed X that million we quarter in I've would mentioned million my feet last million there in prepared the -- square have potentially last in it were the

a this could we it the the detail. a add catalyst Peter We think for see in really demand side and then So more island. can lot of be activity, on to

Peter Brindley

Manhattan. the an have thing have tech city. to one users is locate image And All over We island. they across of chosen is over the of all the which all evident,

hard say, to put across think, because, a as chosen I have that number the very of I them to a said, in do submarkets it's to so basket And at locate island. in this point, they difficult or to,

Omotayo Okusanya

But core you Midtown of a kind see lot in your location? like activity of

Peter Brindley

the Yes, like all I in we're we're Midtown seeing, said, city. seeing over and activity

Operator

concludes call session remarks. today. This to question-and-answer like I'd for Behler our turn closing Albert for the to back

Albert Behler

to forward May. all results joining next for quarter our on today. Goodbye. in you look report our giving you Thank when progress update We us an continuous on we

Operator

Ladies and for your does gentlemen, participation. this today's conclude teleconference. Thank you

and this may have your a time, at wonderful day. lines disconnect You

Paramount (PGRE) 14 Feb 202019 Q4 Earnings call transcript