PGRE - Earnings call transcript Q4 2020

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Operator

Good day, ladies and gentlemen. Thank you for standing by. Welcome to the Paramount Group Fourth Quarter 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. conference being this XXth, today that XXXX. note call recorded is February Please turn to call of will the I now over and Relations. Business Investor Rob Development Director Simone,

Rob Simone

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

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

regional statements, which COVID-XX, limitation, identified differ to economies U.S. to risks a could in We impact usually negative results conditions. future the the phrases or are words filings our financial that of such exercise by condition our the that results without subject and SEC Therefore, tenants' of Forward-looking other materially impact refer relying of the financial from as and results numerous are our on should caution of you uncertainties actual operating use risks what the upon and detailed will, coronavirus, we them. expect, discussion should to interpreting cause global operation. including, and similar could expect, and you more and for

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

Albert Behler

for FFO and safe are of everyone I Yesterday, proud to for greater and the Rob core the of performed and review guidance FFO per Paramount times. healthy. you the team These joining FFO am hope staying financial core of share, in is strengths resulting results share. you, thank during detail. assets this full results everyone Wilbur these that share quarter guidance initiating our and XXXX how We between share of core our we will in very our Today, morning. XXXX we base. Thank the for fourth $X.XX $X.XX per has reported reflect per $X.XX per unprecedented year. tenant $X.XX

to for major year on of focusing to the at defensive no like pause liquidity private back both effectively fared making shocked before waited a proud The of monitoring froze preserving most am quickly what very we have as market XXXX leasing years whole, and fellow say economy. a a previous has This the stance, landlords, any stance downturns. portfolio. We The decisions. market companies our happen our chip that the took to market disciplined of XXXX hit of Looking The would to office without the a which world was see our tenants demonstrating during unfolded environment the the I better execution Paramount, and to one been robust evidenced public risks the different. to as collectively quarter, We could rent hard seemed office no were crisis in fourth and overall predicted U.S. to portfolio. of the button. leasing has ability XX.X% underwriting than strong strong strong work our the portfolio were the blue on compromising over crisis. for the of leasing our to entire benefited a here most, years by and entered from long-term. resiliency tenants always collections, that our done for roster for secure carefully thanks position the global everyone evaluated withstand of global

ensuring remained We tenants our While most to remain environment. open with remotely. in working our our of who buildings pandemic, returned, regular and healthy have enjoy work and a continue tenants have throughout that have those contact safe the

and good for have an is news which that undoubtedly anticipate FDA population efficacy tenants to of in While not the second infection resumes, the office, vaccinated the of Most this forward and of The of result normalcy to third to is is of two to the the office, in to a drops. a return half economic mandate high we approved vaccinated by workplace look the that to welcoming shift back and businesses want the XXXX. that will vaccines vaccine the government until but our population approval. majority happen All travel well strong the business the a bodes returning tenants the and unlikely rates to we back rate employees major leaders do recovery. been as period in all until have is is aggressive nearing ensure has reopen

square an of the of XX.X%. seeing availabilities, on Block square details laser-focused at Notwithstanding space XX manage Street. the leasing difficult we provide with additional remain almost XXX,XXX we what the mark-to-market XXnd Sixth in lease cash will Peter environment, leasing XXX,XXX on and market. are foot West XXXX average a feet our at namely XXX,XXX square foot front, we block Avenue Barclays On to

a on leases space executed This the percent iconic XX% unique available the in internally, of call, one the previous we transaction a of most recessionary that as was signed a well attractiveness year Winston. long-term towards of as XX-year the The prior highly mentioned over us fully essentially important powerful escalated last was this deal was example the our for the of a its of Avenue luxury location, environment. I asset the resulting value As Harry by Fifth even XXX with approach creation Jumeirah, rent of at represents our and lease tenant. retail in

which foot. due to venture next do ample be XX XX the An to valued million in the lower example of net our Currently, the there during are portfolio, with overall advantage asset in and over both interest chip XX% terms in blue sale increase the very to these while a transaction This ready and over relationships. we demonstrated terms liquidity. in opportunities commanding this long-term weighted proceeds second value to the rates $XXX through announced Broadway, and fourth months, of from that $XXX anticipate, of market, per deal Turning an low. of our or at in a XXXX completed billion take well-leased will was superior The uptick in raised estate roster largest distressed volume the quarter, longer assets We however, $X.X square and the transaction we real and are limited of in the are market and valuation underlying we quarter perspective. pricing. activity our size remains our the transaction markets average was operate. lease property there joint opportunities where opportunities Core that will tenant these

transaction completed $XXX Avenue we on This Washington the also market. time sale During closed the exit our market from Pennsylvania completes close the million. We discount and the DC reasonable pleased given strategic that we of are believe current at the for quarter. quarter, the during XXXX was conditions

to reopen to year people focused space; Peter. remain economy isolated As will and focused our soon as we shareholders. look focused; on and we the the to was returning being tenants available remain creating that the focused optimistic the back their and the our forward employees; that theatres With and optimistic to roar will be tired will us' of travel that the be, on forward back And this on and value I restaurants are turn to optimistic normal leasing we of look that year lives; optimistic look to and call behind life and that for focused; well-being resumes. that, health and movie pandemic

Peter Brindley

morning good and everyone. Albert Thanks

basis XX share. up fourth Xst at portfolio average our we to further served or square comprise the feet points foot. starting at activity majority XX,XXX fourth stands for per of leased. space roll of West quarter quarter of quarter, based quarter-over-quarter, the XXXX our than leased, approximately lease Americas, basis approximately leased During $XX.XX the expiration more end, We and laser-focused The on Americas leasing down Barclays and a XXXX the of XXX,XXX and of rent the the of renewal the and Avenue year-over-year. At XXXX weighted reduce which at square TD XX feet was again Bank in January at XX points were both we once beyond. of XXnd the at Street, X% remain Barclays XX.X% Block together Avenue lease at Adjusting portfolio square XX.X%

expiring expiration lease XXXX space XXXX. on a manageable X% with risk prelease is basis role. de lease and per strategy of and approximately result footage annum overall direct future between Our square profile The our to

difficult as among through role blocks portfolio While it our of will increasingly times. that best-in-class well lease credit in apparent comprised has space us the tenants become two remain top a of these priorities work and near-term, manageable these serve we

X.X of leasing our of relocating, the square markets, making of take approach and year-over-year Turning excluding and term to Midtown, feet below during wait-and-see as million Renewals longer percentage XX% CBRE. quarterly tenants renewals toward with quarter accounting investments a X.X commitments. to continue downturn disproportionately quarter, total the activity consistent according typically velocity, feet, The overall space renewals and executed million leasing square any or shifts five-year were expanding, to in during high significant average expected, a toward leasing for new portfolio. was and down mix XX% our fourth approximately

during above and Midtown increased the five-year well in of will Midtown's inquiries new all and below encouraged XX% current as Despite broadly. these is slightly of Additionally, headwinds, sublease recessions. we space the more availability that are but realized out now of XX%, by number average expect availability increase in-person levels and comprises tours year-over-year tours uptick previous rolled the in vaccine

engaged of that upgrade of and more Not tenants front the surprisingly, variety we objective quality requirement in than current of their are ongoing on are Our is to of to chosen ensure capitalize we with industries a share the market activity. every team's offices. our have that representing fair the environment capturing

benefit to We tenant well-located diversification managers. base expect most of the the and and from to pursued flight assets tenants Midtown's highest the quality trend as quality ongoing and

unchanged York a leased New is on quarter-over-quarter. portfolio same-store Our basis, XX.X%

During square per averaging just under quarter, feet, rents the fourth initial with we foot. approximately XX,XXX $XX leased square

market the space. we Avenue Barclays have stated XXXX of our Block remains we of primary former as previously, Americas As the focus

Our offering that only today's is transit an branding create to even welcome not as a more our ability attributes given to environment, such certain and in walkability center major compelling hubs private affords and Street guests. opportunity and also for tenant on of a Sixth XXnd their the and for overall employees Avenue, the a to experience enormous way corner control access both large but

you its Midtown. share of might garnered come from As technology XXXX also and primarily continues companies the has occupancy has interest in recent the increase sector service which expect, financial to

believe Additionally, than on look Bank the forward tenants. trophy of getting discerning and evidenced we as at tours more are in had progress by a to we XXnd the subsequent the and appeals fair our quarters. you have marketing share number XX to of we that of the exchange We property in future Street, updating activity space proposals our most West TD of are market,

increase activity. contributing shut during city sciences little Francisco firms, Turning is total anchored market, as by Unlike than disproportionately cycles, transactions the of This the this a per city as JLL. the have Francisco very quarter fourth high during tenants now in in San a large toward resiliency lead wait-and-see of the relocations, limited basis to activity has have market. a States. space Non-essential by cap more way vacancy been pause the realized offices have quarter-over-quarter been the approach tech, which San to out in mature remain other the percentage leasing longer days resulted recession. points the of prior XXX Instead, in will for renewals, Francisco financial Despite United leasing the in generally believers any Francisco. of the long-term we and and pandemic down life in San shorter length, expansions, term all San the market services, taken commitments. term new

basis San Our basis, XX.X% leased a quarter-over-quarter. Francisco was on same-store down portfolio XXX points

X.X of to XXXX XX,XXX Approximately Francisco approximately square we XX% lease feet. XXXX average with almost years, $XX This weighted leased San Francisco brings a year of square quarter, in roll. feet full San fourth reduce approximately serve XXX,XXX the for leasing per initial During term leasing in square averaging to rents foot. our

X.X% In square fact, at in our XXX,XXX San Francisco share or portfolio rolling has XXXX. feet just

Looking expiration profile well-positioned annum that per San basis expiring ahead, turn X.X% the the to through is results. is pandemic. who Wilbur to XXXX. square San our to over overall in will footage approximately With discuss between our XXXX call with lease the manage and summary, portfolio financial on Francisco manageable, Needless Francisco I a will say,

Wilbur Paes

line FFO rent of Thanks was per XXXX $X.XX Peter. included $X.XX FFO to consensus again core Yesterday write-offs quarter's core aggregating The which $X.XX share. per bringing $X.XX once ahead FFO full non-cash per share, we balances, reported some current straight share. core of of year

been positive growth share. have quarter, same-store full cash X.X%. the positive to per would in bringing FFO $X.XX NOI core write-off, X.X% cash this NOI was Same-store year Excluding

collections fourth at portfolio-wide XX.X% tenants from at during with Our improving office to quarter, non-office and XX%. XX% be strong collections continued to the over collections

a been and better a based the more pre-COVID of factual our figures this status obligations always our have as believe As of we rental is business. on reminder, depiction collection

GAAP we the a to basis $XX.XX foot, on foot $XX.XX quarter, resulting GAAP square a on cash XX XX.X% at of of fourth square mark-to-markets X.X% XX,XXX leasing a we a covering for of activity average rent and basis. a of guidance feet at space starting the a leases Yesterday, in year year initiated starting XXXX. rent XXX,XXX executed negative XX.X% square on full During in basis amounted on mark-to-markets basis. feet and Full weighted of average X.X% of per per cash resulting square weighted

a spend guidance. assumptions me the few Let minutes used discussing in our

$X.XX range the and or FFO expect We per share, midpoint. $X.XX $X.XX share core at between per XXXX to

square year, by for We Bank account of about known our two results majority a in aggregating the outs expect feet, same-store this negative XXXX. to large move XXX,XXX of TD driven and be Barclays explorations lease which

square including with Our goal space. lease between feet this XXX,XXX occupancy XX% is expect to lease end XX%. the XX% and we to And year Barclays the and rate between XXX,XXX of same-store the year,

guidance As share with highlighted between $X.XX I we provided earlier, or midpoint. and FFO range XXXX per a share, per the core $X.XX $X.XX

decrease and share, per of per $X.XX ahead lower May benefit it below Barclays $X.XX While from to Pennsylvania the of a consensus and the explorations; loss Avenue the $X.XX is following; $X.XX offset midpoint straight $X.XX FFO from and rent; line of guidance interest free lease G&A of a sale TD from $X.XX by in more XXXX low earnings to the steps $X.XX than reduction FFO a of in a share $X.XX contractual lower $X.XX comprised the XXXX reduction adjustments, Bank Broadway by a expenses. our rent core from is in XX% and expense; benefit core rent is by interest per for December the benefit due from is burn-off XXXX; share. the which XXXX XXXX, The due sale of in reduction

of billion liquidity Turning the $X we to of [ph] and sheet, revolving and facility. million billion our quarter balance $X.XX $XXX ended of restricted in capacity with credit our cash under cash the comprised

of of maturity debt November course, weighted at is weighted outstanding in that billion -- of rate a the X.X% $X.X and interest year. includes of quarter X.X average set and a Our depth of has to This, average at XXXX this was end mature debt years. the

X.X% on the average weighted debt, XXXX debt weighted is the maturity is and X.X the interest remaining average the Excluding years. rate

XXXX. was XXXX refinancing have all our to previously plan along the discussed, approach it early in As we

the have currently debt of process that. markets are vacancy. improved from doing bodes in pandemic the the significantly of assets, and that just notwithstanding quality onset high The well the this existing We for

provide will status of next this refinancing our We update on an on call. the

guidance to and With have found deck, schedule. for updated lines we at our on that, be Lastly, burn-off things, among can our XXXX website other building invested blocks the questions. out open please our the operator, lays free This www.paramount-group.com. rent which

Operator

you. Thank

Instructions] question-and-answer Evercore your first question proceed [Operator a of Sakwa Please now from comes the question. Our with session. line with will be ISI. Steve We conducting

Steve Sakwa

you a morning. of today see XXX,XXX? Maybe the office is, and how of second the more guess maybe unfolding? back the half really the talk bit Albert employees about, XXX,XXX leasing aren't guys you talked Good just maybe I probably coming as little Thanks. about could And Albert pipeline the you little goal talk year. a till Peter, to or about to the bit

leasing the of how the the with course sort how just you companies volume think unfolds discussions up? year? And stack pipeline the the going? How's over of do So, are

Albert Behler

morning. very good Steve, a It's question. Yes,

we are that it I I more and who who to you going long-term tenants XX think market more those them talk are then we cautiously, are really to you so tenants the optimistic. to of impact that the pandemic from months. difficult. went I of and a prediction model at their many space to in work looking first will to activity see, with. the scenario, different think end second this and on hard started at summarize have signed some call, I summarize kind be long-term predict and But need we communication because talk make -- on details. cautiously we And kind go into half we and next that inked think -- than sure business currently, that want our through would year. -- to to and think by to will most in back the point that They and of the earnings this of are focused of focused stronger works by The year more coming But last has we that half very the could the communication the of like Peter probably over are -- little the and will changes leases real and see it's is as the

Peter Brindley

no Yes. Steve is question.

that general correlates back in majority West. will tell very offering, I said to that conversations financial But getting of varying conviction companies a you meaningful is one people also call at in the lot have directly and marketing of are space service-based the we with which XXXX we having to from and the have leasing XX before XXXX we market, the challenged. with that in As recognize all sizes, our office in into it tech we velocity floor we're

So, we are actively touring.

fact, In just yesterday. foot tour we a had XXX,XXX

We are also giving tours. virtual

think offering every this communicating in conviction I in. lot various best instance, putting and that foot a the we're our we have of attributes forward of

And so before. of past right leased blocks we have we've up continue large all we to as things as the space do in the

participate are trend in We tenants, doing with cases office committed current realizing. upgrade with improving flight I to we're are looking think, in many And about to the us. this communicating to are long-term tenants deal space now where and here many we're cases, deals in that and their long-term quality that talking

the are XXXX to are and slower We we're team So, state of now things than every think of look, are the communicating communicating here entrance, moving on like opportunity, any I we're among part at tenants other XX offering. the credit moment. West that the we've energized. And of current what our things that's as latching of private is like, the and in us terms who been day, with would but

Steve Sakwa

but early bigger, how about size trying thought Okay. Peter, it's of are we they how footprint to densities foot thinking just Or a and for ask today? much haven't still to, you're for overall new work-from-home, that I realize leasing thinking similar just And tenants really can are are and I they tenants the densities, I needs tenant, sense usage? space the seen the are XXX,XXX sort activity? in smaller, get process, talking follow-up new that their they about in space if for since a

Peter Brindley

point fluid. it's by side lot how a it's don't Steve, at think entirely way of I on architects. to this in of this of to talking of think, terms We're I improving talking are see to Yes, we're pandemic Quite other be change decided. tenants the yet tenants, their frankly, configuration I space.

it'll experienced to think similar we had be pre-COVID. what somewhat I

more think was don't it be we've dense I been motion densification for in already with as nearly However, think trend will we'll that than a contending that I pre-COVID. the ease decade, -- because

see So, importance creative ways each in more slightly these to you'll is, footage get companies that of companies rentable I what perhaps back innovative do certainly to productive. that people employee, is that think square to because going remaining collaboration, attributable but foster are for ways think I critical look to

speaking communal hard in in I figure and with to these we've So, perhaps collaboration. But spaces architects they think any create bit a other what of trend different to little it's they're per of overall experienced, that encourage sort we what to how tenants, trying that's from employee. historically, that really point out terms space configuration, than more

Steve Sakwa

being as funds in your partners. Okay. you sounds are like one thinking of you you've on sort distress you at for how some for the of lot mean -- ventures, lease transactions. I obvious up stock what sort been how put you for but maybe about that are. deals it portfolio, like discounts opportunities? thinking you most are do mean sounds in risk? sort in question wholly-owned rates given Maybe, just about of there trades, with JV? of I mean transaction a are of of hadn't it's joint Albert, that to marketplace, lot quality of whether the But high Are have as sort these what looking you looking reasons or price leasing you you've just mentioned a for are activity where got you and they I got low don't

Albert Behler

or up to we little come it's a As find with I mentioned, opportunities. -- to early --

business, trending. of market of get this, But for kind the stress first I the indication the we the do in no liquidity. of and and where because yet general, lot of is think in a mezzanine we opportunities we our market at there's also look

that's early very PGRE's staying where to our on We be and focusing we are equity mainly other and think we ventures investments those specific management add on see careful kind joint future. property don't very, and value in too can with of into to enhance point we investing really focus on in But want markets. opportunities this fees. more at go the opportunity We an returns

So we are creation, not opportunistic looking of leased kind model. our That's so opportunities. at long-term, value business not and

Steve Sakwa

for Okay. Thank That's you. it me.

Albert Behler

Sure. Thank you.

Operator

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

Blaine Heck

Thanks. Great. Good morning.

these Just following up you on been of things side Steve's it's earlier questions, going and both talk New probably And take for the going what about Peter, concession in on on York? can think a you you've just seeing what to to to rent there's square differences per the packages the and going two be foot term and space? And space deals you concession done per TI any spaces? think get to between TD year of do Barclay's major at free in

Peter Brindley

Blaine. Hi,

going to this of you're a I as impacted during elevated think now, transact and of rents were owners think deal that in think time. I neighborhood, TI’s slightly basis, a that XXX-ish be with I think in right I you're more on I the and largely order concessions of slight I a have rents have and per result free think window to tenant, -- a a they month you're generally held direct if increase are been are year on during generally term a have elevated it that call I having rent think slightly to this in on generally, relative up, where slightly, the pre-COVID, to give long-term negotiating think credit concessions effective than

Blaine Heck

or makes between sense. be similar? you it'll And concessions That pretty the any spaces, in two think difference the do

Peter Brindley

similar. you can be think that I assume they'll

Blaine Heck

either helpful. need Okay, capital? buybacks? additional you without targeted is maybe guys Or do within share for more leverage just Would an kind to your appetite for have of staying XXXX? capacity range wondering Albert, the Wilbur resume a or for your think well, couple And to sell what asset you then in buybacks you

Wilbur Paes

we've we've said leverage done that always a on we've and know, basis. done You buybacks, neutral it

and with look you we that If in at to transacting what XXXX, use we capital at did XX.XX, back. did buy that by

mindful on now, on balance balance liquidity sheet. we're and very, the right So and focused being the very sheet

the If at which fourth XXX. million, around shares, back opportunistic a the very price you of quarter was saw we $XX.X in was bought

So on be going $XX flow I Barclays think going non-movers. on vacancy given in in TD buyback cash balance or don't the We're losing in we using so cash XXXX, we're million full go have Bank these and sheet. given -- the existing are to vacancy,

values, will I be very, is stock, we're back a will such very again. market to going in think we So it's feel to opportunistic because continued opportunity if there to buy the thoughtful, depressed we we look be

Blaine Heck

we it certain tenants. Got NOI it. the guidance, one, that sticking repayment guidance? with same-store positive your Last But factored Is again, for that a flat cash been your with those that That being NOI hit there sense. respect similar approach same-store rents to deferrals those cash tailwind in -- to of same-store to conservative deferred X% the way me into makes and cash cash, granting XXXX. you, to deferred hurt excluding to Wilbur appreciate revenue from you've rent as negative from

Wilbur Paes

Blaine. run excellent because some we in, otherwise, Yes. an you -- not There of if is element that math, the is there That's is come factored range point, to provided. payback, you were that to could

And, and as said, in significantly had between that on I got negative the not two that of basis in negative you we're cash, million, to XXXX. be otherwise lead XX some coming flat. would If you out same-store plus tailwind, factored and you

the deals is factored were collecting number, come good that tailwind roster element There's largely that very into last rent talked of that that about. blue in in So the that that from XXXX. year obviously feel there that burn rent that's some you not chip about tenant paying off we free of

our element leases in that. So tenant roster an talked existing from an there's chip that of bumps of I about. just organic that blue there's And element

Blaine Heck

Thanks, Great. guys. right. All

Albert Behler

Thank you.

Operator

Our next line Please of question your Sachs. with comes with Goldman proceed from question. the Rick Skidmore

Rick Skidmore

you Thank is as portfolio transaction tell? time the think how follow-up at look Do acquisition your San get over you're larger on the do in you morning. just Francisco? going DC? Or out too of you Albert, you. early to that market, changes now Good a mix forward, it

Albert Behler

get It's very often. good Rick. it a quite question. We

been good opportunistic. is we the that and was was last was our that have quite couple active a we in which And, leasing which we have platform, So long think opportunities. I have the But platform history we are was good there the we over Because that very San helpful of a years value. creating -- -- found Francisco.

say So, we may the we look for or fourth are third at being, both time the markets not for I time the considering market. being,

at We and them. York, We'd of approach potential San we and both Francisco, like New are opportunistically looking like both we'll markets investment.

Rick Skidmore

And -- a then having? of between you, home or prospective space ground like from anything between something needs? New the that or Albert. terms to strikes for tenants viewpoints or between Peter tenants, of Francisco, terms Peter, or as work around long-term difference deciding those a in space you that's long-term you your you in the in San question York each in the needs seems just and thank press for it maybe Francisco, San see in tech between difference what tenant Is large conversations a on week Question Thanks? -- their that on you're hearing from there are cities the tenants two we

Peter Brindley

XXXX, of Francisco, and companies. money, more a San XXXX, Francisco in Sure. San based hire. lot companies we're based invested of lot a We're capital in in San in seeing Well, Francisco venture look, seeing

companies That's well San because pick feel shelter capitalized So the that way of and we are ordinances Francisco, more so restrictions lead place recession. fundamental back productive when we these in like believe some and the the up. conversations having of will be will and our are will generally belief, out we leasing lifted in --

has as I for this essentially been non-essential those think of that the that has conversations as back that regard. the has But anticipation the fewer fact we been is will to forward. up in move down, shut majority pick it led year,

along allowed bit is the because further course, period a time. in a been York longer New for has back of of office little non-essential

ever more has interesting New before, diverse before. become become than York more than ever it's

more contributed year leasing during XX% toward in leasing demand. Midtown lead the other tech, In in with activity fact, they of the words, activity

city's York, resiliency So the the New the appreciated. is under oftentimes I and base diversification think of tenant of

York I But de we Francisco, in we have in risked do at having, New square San in XXX,XXX that think this right? more York lot XXXX good San that's with New tenants XXXX only did Francisco, conversations constructive more significantly a year, expiring think feet I than of the in our considerably availabilities. thing, Sheraton, on XXXX we roll prospective think, leasing role I we're and Francisco. Because with San a our

being opened Francisco same New So, constructive that's forward look having New point, Rick. feel We to And across tenants are up. industry. but at how York of address about more question, we with the I a this variety York, we in San prospective your conversations would

Rick Skidmore

it. Appreciate Peter. Thanks

Operator

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

Tom Catherwood

Thank you, everyone. and good morning,

Albert Behler

Tom. morning, Good

Tom Catherwood

create office not tiers or buildings So different a What's -- City space. general, in of quick co-working about building within from guess, market thought the bigger the multiple layering I'm reopen. these in as as hear But space nature block prebuilt hearing starts what applies seems We “ecosystem” your tenants? with your floor types layering focus big San assets? landlords Or in to question market necessitate a I From space probably of physical this self-managed kind city the program, in to can you still just office trying on to is days, that? your be that available offerings some idea of York the approach about full both of their they the guys, being your well. maybe leasing or in to Francisco the New larger

Albert Behler

the You know, from Tom, is diversified very get-go. portfolio our

Avenue, square have per floor XX XX,XXX pre-built properties like have doing feet we have been years and XXX Fifth we that So ago.

So this new for is not us.

So larger in this we San are center plates. floor floor of one, working approach in you multiple and where Francisco, in in on in the we do for example, since years, market our have disciplines plates the and smaller one buildings the other also leasing

mix amenity the and very something didn't worked. and stale retail it nicely space, office very mean, long-term. do it up We use create word One packages. we started not for up amenity. we looked best have. to and with has Plaza it's So opportunity on Market totally And the we early the when started there's the redone even renovate at so I us and the then we filled it it, retail of the entire section space help It we inviting, and has the rental and really it before improved have rates, to that people

culture kind the approach an in asset-by-asset of brush entire basis our really portfolio. on to to broad leasing a think. and approach I general not

Peter Brindley

we from see add in do product tenants of range saying very a mix XXX,XXX it And only result, feet. would Tom, of we square broad nice as ranging by to I that, square to have feet do X,XXX our availability. prospective a a terms called Yes,

able mix lends So our to to portfolio I offer. itself we're product the that think

an other as The previously as that It's at asked we amenities, they're are that some that referred do contemplating building. about the the something in to we're and And amenity with the given have around our XXXX. and now can conferencing think around thing their in we something tenants space needle estimation. that speaking move would real that's advantage I a have scale

well about think are will imagine offer it our you amenity, is if which we very you located, so Paramount an as can to you received. If properties can exclusive type where tenants, as

thinking always forth that to for so also include terms and welcome our allow mention and so on, I branding in exclusivity. of so as private amenities that go we're in as to remarks my a center, offering, to refer So mean, not far we about

that but largely are comprise a it's diverse And offerings think our our of in function the not nature. buildings real only So our portfolio. how think I about estate, we

Tom Catherwood

you Appreciate leasing. on Peter, both. the sticking maybe that. Thank

west tenants doing that You the South, Midtown showings, being and just sub same the Lower other to markets geographic these more especially against other Midtown area comment net had way? kind New it side? of your you're and footprint you expanded? against buildings has Midtown. you this trophy comped tenants did tightened Brooklyn has other up? that Or being are came comped other Manhattan, the in about Are not diverse, not being search the or Are has when When the Or in casting, York tenants Manhattan?

Peter Brindley

think many to I very new up to in two recently, a has do bit, be And to consider I contemplated. went I most being used pendulum the have other buildings willing other it that think think product nicely. respects. think do level product, of location, to could tightening But new actually with do I what anticipate we were to sub you location, some tenants say, I swung markets. product, think from new it's confidence I are location

I reason think interest. of we've part the that's had the level of

and XXXX have We West. XX

As I my remarks, in walkability said matters. something that I is think that do

example building get train ability Central, there. Central, I your into than think use, the walk to less for on you've let's desirable idea that an Midtown, got is to and another to example, for get Grand to you've having then come your in the example,

when address So, how continually I question. think that that's would there's renewed product reinvest our our location. think cutting a have the we on study see focus our I entirely And product of we attributes portfolio, the in are you And it you and edge. that

Albert Behler

to about say, sub I'd just when was talking Brooklyn. to not thing markets, only Peter The clarify, refer he

Peter Brindley

Right.

Albert Behler

That's different I somebody at Brooklyn. looking obviously, seeing our not markets, in sub mentioned. looking buildings We're and

Tom Catherwood

for you Thank more you. Thank fair. then both. And just one one very quick Wilbur. me, Very,

Peter Brindley

Brooklyn. against nothing Yes,

Tom Catherwood

as Wilbur, well -- them and the we're at guidance up. earnings guidance as looking squaring One then and leasing

up Given that of in guides reach obviously leasing to much that a have earnings? seems certain into that though to you guidance these assume interest up. happens pretty the to a hit be midpoint come picking there none the or your time take ends even of leases to long the amount XXXX that flowing leasing to of Is fruition,

Wilbur Paes

the we a lease Barclays are remarks, we that's is the space around by it. think goal that end -- that And will said in I of XXXX. we I expecting of that said in that And my that's remarks achieve. Well, my we XX% part of

Peter Brindley

question And the feet, earning side The as if of XXX a can one that XXX,XXX to the dimension leasing it Albert on feet goal square midpoint. a the I Yes. it, call one little on parts and square bit, have that two to we leasing terms said, in XXX,XXX side. of at side,

year, occupancy. the a XX.X%, impact at all want we to footage ended to expire, look the do ended a you leased, lease where those single of assuming not that expiring, feet square we would If math, we have have leases with and a a if Tom, the is million square rate occupancy of year you roughly XX.X%

our which get occupancy of newly square So feet bring you XXX,XXX guidance, imply to leasing. order same-store XX%. that That occupancy increasing In of down XX.X%. would is midpoint to single to the would

we leasing goal And the total provided. XX% so all of that's that leasing of midpoint about the at

said, That's And and XXX, increasing lease asked off it's do on so the Block which in in the estimation early you XX% question in leasing? half really, is that XX% our based. the And venture renewal of second and of the stuff baked get say, the leasing will year. new the Barclays what was occupancy terms leasing, XXX,XXX in of square will year. done and answer of will year, have increasingly we Albert renewal the feet includes occupancy of remaining to get towards most leased to And renewal the the up the leasing of of first the goal of half the

guidance. on So leasing that's the discussion the

any you up factored follow guidance, XXXX not that potential On if in Barclay of have space we the along, lease the the earnings. from earnings benefit

is, that time second So commence have XXXX. your that recognition. that we not should of if Tom we in gets answer possession factored help And space the there builds any going is risk the the that question tenant lease of anticipate of before benefit year, the half we revenue and be executed in part takes before gap to is up

Tom Catherwood

helpful. Thanks, really Got everyone. it. That's

Peter Brindley

Sure.

Albert Behler

Sure.

You're welcome.

Operator

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

Omotayo Okusanya

for for the lease in Also additional guidance, revenues XXXX, of non-office of or Hi, potential talk the you non-office for bit former time. income morning. expectations along could any the about up space? Thanks little lines including a Bendel

Peter Brindley

will part So the I'll Bendel first and touch space. the Albert about talk upon

collections relative the non-office quarter. saw over XX last you to percentage points they tie the increased side, If on

from XX% So, revenue. went a last uptick nice was for as component that to reminder, group a a That which in quarter, plus that accounts XX only the of percent. XX%. non-office saw We entire which annualized X.X%

in number right XX.X%, mistaken. not the I'm I that are anticipating direction. to we that if think continue the will exact trend was And

We a obviously sector that on moved lot basis. of a have cash

anticipate write-off straight there's to future XXXX to we increase. or that So relative that and in quarter-over-quarter, we receivables should that, that of number continue no real lining think

Albert Behler

year. we of but to leased income the relatively us provides second Bendel with significant space, half We that up the about your achieved We piece That XX% income of the question will the the the space but a last very of got small space Henri of already significant, Omotayo. years probably for the of goods same time the which will be is addition slow segment, in entire the most will market And will relatively luxury for being. be from in most Bendel. be last be wise, couple tenant Henri

space So get we haven't occupied. that for XXXX to planned

the of be want capital that cautious best the entire to corner are and the why bit and little also retail that's right use the corners a for to should We one in fitting selective which we is space. find be It world.

Omotayo Okusanya

Thank you helpful. guys. Very

Albert Behler

welcome. You're

Operator

the comes Please next Our from the question. proceed with Instruction] [Operator line Malhotra of question Stanley. Morgan your with Vikram

Vikram Malhotra

to to on dividend, obviously Wilbur you on you before, think you lease the check reach give year of touched thoughts the beyond? next sort up given of for year, this just be Barclays into dividend thoughts and dividend conservative and the this And on on you given want just TD how I'm can latest to but about us the your reduced question. approach, you've sort your wanted goals if you going thinking Thanks -- taking just

Wilbur Paes

Sure. And Vikram thoughtful very, very were we here.

to in result cash dividend of also where we of mind bearing to the right board, thing right we plus these felt relative pandemic. do in million of $XX we to through were that it Going the as the flow dividend lose was with large going our are a And in sizing two policy non-mover. the terms

offset million a cash in right in new size that what dividend do dividend to that diminution us So XXXX, tune savings call the enabled it $XX has in flow, that of policy. to from is

and the Barclay So growth translate Bank path Because which a in lease you nice dividend up see lease going up a dividends. will you space, preserves flow taxable And provides company. significant liquidity cash the really the in it in as income, TD will space uptick forward. into for it increased as our you

Vikram Malhotra

Wanted going of are York. sublease thoughts Okay, hearing just a your San Peter that's just of settle brokerage go. rates sort what get or where sort down of on sort of kind tenants both to just are. rates from you're today levels, couple of the of given kind community of kind you on get then comments effective and rents on Francisco sublease where back made could helpful. activity sublease think eventually transaction where view to New to ultimately, pre-COVID markets, both your two to kind back And And on of in just aspects, current and where

how So think in eventually much of you we'll decline do in rents see? market a

Albert Behler

Vikram. Sure,

in bust, availability great remarks, I it total back looking of XX%. sublease York, New crisis total it the.com, did do, in that during is reach is out which XX% of availability important which again, was in availability, pointed my Midtown, XX% and and then the in specifically, Midtown to time, financial So in

if of amount serve course does is I sure that to as We're that space. sub availability listed in I a a water. space I lower rent. to sublease we sublease There's I in Midtown testing much tenant somewhat And to a secure spoke So is want think widespread. to sort withdraw understand that with order lease one space who's who's recently We're headwind, going drop but and question periods to no we time. a or those you the make is tenant. will which two interesting. the very the floors, sentiment capital considerable our We think commentary don't -- of of deploy relative of something two want trying was

they of at what -- one they in to want sublet million market. was market. very had feet there now for further tenant property space added reinforces sort a a to the decided And the for of nice our sublease has XXXX is million from space. CPRA rather, statistic for space from really apart a from fact was to space the fell In that XXXX because describing. And competing square XX on a to didn't sublease that deal out fact, put we're in right two another now that XXXX, in their the when buildings or I think of feet XXXX withdrawn tells And what I'm square of Manhattan XX.X deal

remove it place these think I matter the in the and the as I space. So as compete tenants to a inventory discovery having don't they is is lot now, work some that think realize with we're to truth utilization to of And want near-term. in the sublease come will likely that of I people think the back that of that will takes fact

aren't it's we're as important well. a In Sublease CBD And does aware that to apply. San is elevated of described withdrawn back, no something the that in availability the will people San in I of eye certainly serves that But near-term, on, more too come near-term. Francisco. Francisco, what elevated. But as phenomena. specifically, I figures is be a much Thankfully, close the space serve think So think I it's because headwind the question in be in there in that of space it Midtown, sublease headwind. as when general a sentiment that keeping the much is will just

My few data as net the at how is to think there rent of very, concessions of say it's lack second relates with to been. hard instinct your that in say result But it's of XX%, will this exactly a probably it elevated settle, a points rents difficult effective transactions. given question, part really time. how largely would effective As very net the have I that this down the conviction, of I neighborhood during period of given of lot point

Vikram Malhotra

so enough. Fair much. Thanks

Albert Behler

you, Vikram. Thank

Operator

Green comes line your Ismail of question the next Daniel Street. question. Please from with proceed with Our

Daniel Ismail

you. thank Great,

more So fairly get you Is short? to terms sense level to do think continue a leasing we'll the to that be XXXX. question office? lease for back Or normalized targets on as it will your revert the tenants

Albert Behler

that blocks perhaps What we're into future what larger dealing we're with generally what space, the holds. product larger companies have visibility, say, now of would is, I greater marketing our Danny is is

generally space in contemplating a as be with the deals, dealing long-term in so even there for the cases period are tenants more, we're years, invest that time. of long to result, XX, some and is And a XX where intention

nature. recently we've yes, transactions us I and having, XXXX, on term maintaining tenants But of we're this longer some that some some short term that doing resulted having because conversations at our has are deals, and transacted be term typically in point largely -- product more we've as and some had flexibility. conversations a been the comfortable relates in have So, think short XX function that more short it there to will most term West transactions

Daniel Ismail

then sticking with And maybe leasing.

XXX,XXX tour leasing group? relocations? mostly in there I'm the day. expansions You is any are the curious foot net mentioned pipeline, the that other in Or just square that

Albert Behler

the at the look the case, I of when demand, Well, the case, amount space. tenants of other and roughly composition they're taking in more primarily one relocations it taking space same

some time Like could of spend we one different. were I we is sort but think is down, each it suffice situation each differently. every relocations, these say, primarily tenant varies it viewing it these think on if I to of to are situations sit and

space. that them requires for more right of One now considerably we're more competing space

Daniel Ismail

Behler. Great. Thanks

Operator

to are end I'd remarks. There Mr. for closing in questions no further back the call Behler queue. like the to

Albert Behler

on providing joining thank when our first you May. we Goodbye. Well, continued progress our We today. for update to quarter results report in us look an all forward

Operator

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

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

Paramount (PGRE) 11 Feb 212020 Q4 Earnings call transcript