PGRE - Earnings call transcript Q3 2021

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Operator

Good day, ladies and gentlemen. Thank you for standing by. Welcome to the Paramount Group Third Quarter 2021 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 XX, today that XXXX. note call recorded is October Please the Sumit over of now call I'll turn to and Relations. Business Investor Sharma, Development President Vice Please go ahead.

Sumit Sharma

good operator morning, you, and Thank everyone.

section earnings website to begin, we to quarter the supplemental Both released I in which like can at under Relations release Before Financial point be Information-Quarterly the and Results of found would our Group everyone third were www.pgre.com. the yesterday. Paramount permission, XXXX the Investor heading

within statements forward-looking meaning be will comments our of Federal the Laws. the Securities Some of

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

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

Albert Behler

for quarter we of the refinancing you, strong leased at growing morning. you blend this of operating and reported to steady everyone FFO performance, $XXX and with thank delivered terms activity year-over-year. continue quality X.XX%. share confidence of to in square a cash and of a the the us XXX,XXX as in million NOI We core joining quarter of return XXXX third leasing quarter, In with same-store debt debt feet We normalcy. Thank square operations. XXXX, of that we bringing Sumit completed markets $X.XX per We experience the favorable X% XXXX refinancing year-to-date a the Avenue floating rate XXX,XXX feet. have Sixth of The strengths fixed the with over highlight the the to the

on metric and results much Wilbur will detail. this in for our once strong cover XXXX. to pretty guidance increase execution Our us every greater again enabled

square to quarter. Leerink. and XXX,XXX at increasing XXXX occupancy to due approximately Sixth which work feet leased. X,XXX the the vacancy square Credit feet XXX,XXX vacancy backfill points by now by Avenue highlighted was from basis as served leased XXXX I'm Avenue asset at Sixth at two property. Agricole leasing with the we the quarter’s This in resulted at signed focused team's tenants, backfilled proud SVB Barclays XX% last of very of is XXXX This existing important of we recently leases the XX.X% currently have The extremely effectively

we feet square at laser-focused space hand. available XXX,XXX continue of remain and with task left to on now are We the

at leases XXnd last the on this that momentum was successfully of space. Our Partners quarter of XX% quarter the strong established executed Bracewell we and Street block West success when XX over backfilling with Centerview built leasing we

were up all drive own leasing, impact on remarkable XX%, when COVID-XX result of expectations this a above we of the and able considering our leased As especially ahead the our to portfolio the of occupancy to market. of

by estate back as year to in they space deals, the employees cover Tenants their underestimated will on are seeing growth our not the team needs. they build. to trend space today Peter Every markets. by is leases in Ink our San in their to to that into are additional both future gradually design. leases retain our to and in greater a tenants evidence Francisco. in quality keenly focused at space the this pipeline and seeking While already are have who future have benefit. visibility fundamentals the are currently, would of Key York flight who leasing have with as sharing It to to moment and that ready have we business leasing activity their on Others The us I is we chance markets some are market continued a executed busy New detail, attract, success to the quite remains hoping look built optionality had expand improve of their a bring more day, leasing to spend It date. their and real Many less continues their of consequently, observations like but office. we endures our to and in our had. both

rents. select X% in declined have building the instances X% and with landlords about Midtown rents better are market While push and hold about Francisco, able to San in line in

the strength venues Our quality life. York, are coming to of results sports continue high the city is demonstrate full. we are and and is the back from and our Broadway assets. to selling concert portfolio, as benefit continue New In Restaurants back, our resilience out. of to

XXXX. to delay going in plan. to tenants of employees on utilization significantly COVID below reentry of progresses it plan as return January them Delta still the full Day levels. many in face portfolio are who pre-pandemic to own have is While space caused Many up, a our is back The year Labor variant our with their return

business narrative office make work-from-home tenants slower to leaders, myself, carry news, that take returning most to believe to the in continue approach continue Francisco, in will San continues to offices. While In the a the day. working including

While market our favors activity still the quarter gains leasing San to Francisco some gradually leases, renewals modestly and new through, seeing beginning the momentum. over third during spots bright are as we shine improved

our are there to being in we has still are unchanged. volume From sales Turning what pricing compared discussed. asset and volumes still XXXX Data to is an certainly Liquidity points more core there levels, assets Overall, remains uptick market. been ample see, transaction muted though the deal are limited, but underscores quarter-over-quarter. capital gradual outperforming inherent carefully. our are monitor value our remain disciplined of well portfolio. safe our of availabilities, manner. added tenants the conclude, opportunities, as and To priority yet markets our the as the in healthy interested, and value a lease reintegration remains of which We up with

has will for past the assets to to which the the been liquidity, our billion that, long-term. As we sufficient I remain turn for ability allocate well-positioned amounts proven capital, trophy quarter. portfolio at and $X.X Peter. year, case the we of end to maintain With call the stable to continue the With our of

Peter Brindley

morning. good and Albert Thanks,

investment XXXX approximately to on XXX,XXX of leased continue backfill use bank the to with Americas, signed square for reinforced Avenue was leading office space Leerink term technology. the our third Americas which superior XXX,XXX January and the with corporate of We a At portion XX.X% portfolio space building Credit will The investment XX% a in a Xst. specializing vacated bank served leases wide the of by Agricole, share, XXX points Barclays global SVB location for healthcare and and feet who Agricole at of quarter-over-quarter. and lease attributes. and as quarter, quarter-end, weighted made long-term central Avenue of both property a operations commitments the years, the importance feet at up square of Leerink, headquarters of leading average we XXXX by basis the Americas its During SVB including approximately Credit XX.X occupancy

at X% expiring through per lease annum manageable, look we expiration is profile ahead, our XXXX. with As remaining share approximately

our according Renewal five-year below third for accounted markets. X.X leasing square excluding activity up during CBRE. renewals, square term million was quarter leases, to average length, increasingly longer Turning the X.X of XX% the third feet, XX% feet but in In quarterly to Midtown, million quarter-over-quarter, quarter.

buildings. in space While space sublease currently available tenant A Midtown, five-year availability to well the Class average the in particularly in touring of direct of XX%, above continues quality accelerate, all XX% comprises for located high market activity

on York portfolio XX.X% XXX is at up share, New leased a same-store basis currently quarter-over-quarter. points Our basis

leased $XX quarter, square third we average with per initial the weighted of years foot. During a term feet at XXX,XXX rents averaging approximately XX.X square approximately

and X.X% share XXXX. approximately has portfolio square approximately feet share square at rolling XXXX York feet New rolling XX,XXX X.X% Our in XXX,XXX or in at or

expiration at lease Looking in further overall manageable, annum with XXXX. share profile through is New X.X% ahead, York expiring our per

made While up of significant the the the backfilling Americas, of Avenue continues lease XX% of we have focus. to availability space the our at remaining approximately progress primary be XXXX

the than get forward currently of rate and any quarters. quality We updating activity, our the of in future to availability progress share of strength fair boasts submarket on more the Avenue We is which continue Sixth lowest of of submarket, result the you look to in which our XXXX direct the Midtown.

quarter, as leasing the fully San now third where Turning economy Francisco office to strengthened in reopened. Francisco's San

it during was San Francisco second San pre-pandemic market. down remains capital elevated, the a the quarter-end, companies the the quarter-over-quarter. the as as was portfolio believers on over XX as quarter but backed activity the resiliency remains of per was stage and basis share, to We in XX.X% remain early basis average, leased declined Scale activity long-term highest leasing At increased since the funding, our has availability record. leasing healthy quarter strongest San Venture billion Francisco of for down Francisco quarter same-store Waymo third received of the quarter, San JLL. velocity. Venture companies $X.X quarterly Chime, Francisco expansions lease the such signed contributing below points in AI quarter-over-quarter Sublease at consecutive in on X.X% outbreak five-year While capital funding COVID-XX. leasing in quarter

During more rents feet square the leased weighted with foot. initial we averaging at average than XX,XXX a X.X than of years third per $XXX term square more quarter,

share has rolling approximately share feet XXXX at X.X% XXX,XXX in or San XXXX. square portfolio X,XXX Our just at in Francisco square feet rolling and

profile expiration manageable, lease Looking overall expiring San further at X.X% in XXXX. through our share Francisco annum with per ahead, is

current summary, I Our financial call over the to manage Francisco that well-positioned who results. discuss will portfolio Wilbur, With the to turn through San is the will environment.

Wilbur Paes

cash $X.XX Thanks than third Peter. FFO quarter. was year’s the of was and ahead X%. prior growth core per $X.XX Same-store consensus Yesterday, which share a of we NOI $X.XX reported higher robust

of average weighted square XXX,XXX leases of years. $XX.XX we square XX.X a on X.X% our positive XXX,XXX the space, XXX,XXX the quarter, second feet a mark-to-markets quarter, foot average XX and the space Of initial leased which a feet which per of of weighted in feet covering rent generation leased executed share XXX,XXX and were square X.X% that basis. square a the for was was share of basis GAAP cash on our represented square term During at feet

cash for the several core fronts. We Our again mid-point, us strong our per per and to is $X.XX $X.XX and once results year outlook. share and than for or remainder revised Same-store share expected outlook increase now share mid-point. the expect at X.X% caused per to X% on NOI operations is the guidance FFO expected $X.XX range year-to-date also interest which now between $X.XX of This XXXX X% the to between or per our driven $X.XX and from lower prior be better share at than upwards $X.XX was growth increase and from expense. was by higher

now is and full We also mid-point of revised leasing XXXX square feet, to XXX,XXX XXX,XXX feet prior and square higher in square than estimate. be leasing our upwards which expect feet year between our goal the X,XXX,XXX

a to range. rate expect with of and leased at occupancy we XXX Lastly, higher our than basis between points XX% XX.X% year XX.X% same-store previous end which or is the mid-point the mid-point the

of restricted used and billion the with balance credit $X.X over of ended the our a facility. early The comprised and liquidity and to a revolving quarter our of we to in $XXX only comprised sheet. million million over of the million new $XXX slightly has tranche. interest talked cash billion under rate were X.XX% The of variable of and refinancing cash much and $XXX a fixed about Avenue loan rate five-year from $X the August, capacity million interest proceeds of closing borrowing existing average Turning In XXXX We loan $XXX completed million Americas. the is tranche rate $XXX costs. weighted repay refinancing

to $X.X years. and amounted of outstanding X.X average at at rate Our weighted debt billion interest X.XX% a share of of quarter-end maturity weighted average a

deck, investor Americas. rent of result updated quarter million we from XX% also leases significantly over have Finally, is commenced, not as and and including now prior signed at leasing of sit space $XX the which schedule free up at the of our XXXX vacant a up of Avenue our

deck With can www.pgre.com. the investor at that, be Our our operator, lines for open found please on website questions.

Operator

this a with session. comes [Operator first the Thank question-and-answer time, Our Morgan Ronald will line you. question be Kamdem Stanley. proceed At from Please with question. your conducting we of Instructions]

Ronald Kamdem

Hey. Congrats on a quarter.

of ones. a Just couple quick

First is just on leasing.

pipeline San a contrast bit seeing now Francisco right it York and you're little be talked in and the maybe with You compare sort versus about of helpful. would New activity

Peter Brindley

more familiar portfolio it's in about heavily our course, technology We're York, seeing feel that say portfolio. services and services, But tenants, would about very to predominantly very benefit San also we We're of our the but feel say, weighted the in phenomenon I tenants. flight-to-quality financial pipeline. our Ron. Francisco, across portfolio. quality financial of all New real, Sure, I good endures good given with We that's our very would our

convert it's primarily us describing, I'm companies. on comprised of financial this on it's course, and activity to of that Of services but all not tech

specifically, Midtown really in comment, contributing total year-to-date roughly been toward last driver one velocity the services velocity. Just financial XX% have of

we would be they services that uncommon as are. not active that's seeing So financial also as

in currently. terms we're snapshot a what that's So of seeing

Ronald Kamdem

what many think rising people slowing office a And in terms are are provided in quarter, was question the feedback New last what what San how in the you bit Francisco of York sort was space? second of one actually that just, or but Great. I little and buildings usage are the from do sort of that things then, office versus hear tenants of faster? the the that rate two you

AlbertBehler

a question, positive very the it's across it's and development It's a good the -- board.

It's -- York. back higher to New coming we see the weekly clearly that basis can You San is in The percentage -- a on office. on are people more in than Francisco.

in the range building. building office situation. much figures very of tenant's XX%-plus buildings. being more Francisco back XXX%. we in different on the the are -- are seeing the back and office. in because we in efficiency that coming San to way, Francisco, depends leadership believe culture office -- By Paramount, very as office are in it XXX% are our a It We it's are tried fully each depends a do the in restaurants from booked. And meeting and way. There it's And building are And with in San early tenants XX%-plus to And rooms restaurants the started range, but also difference York that that packed. I is growing here, you in New positive news go are open. We the developing they positive think are if shows COVID. mentioned on. are there mean, that I remarks than broad-base Actually, into in arrange better more to fully that consistently. I places before is, business certain really for my we

be we along middle have I didn't go I are the And high if is very, think would And I XX% at away. of Delta will the rates. we think further threat vaccination to variant. that that both result. mean good think very a I cities

general in there, of increase I If you world the will top the public the confidence out that in that being people look the and on think space. is end at really back

Ronald Kamdem

Thank you much, so Great. That’s all questions. my Albert.

Albert Behler

You're welcome.

Operator

Thank you.

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

Blaine Heck

Thanks. out morning Good there. Great.

the maybe making that Peter, potentially new is in up a more that's in spaces, on any you financial quality, Do helpful. entrants have Or around really even velocity to I the moving by on it bit whether just services of little color would downsizing? mentioned expansions I So, and firms services driven more color you between XX% are Midtown. velocity, financial just that upgrading the guess, of be market? think drivers

Albert Behler

little are needing different chime much couple I medium It's to from adding sized companies from say more able normal. we Blaine, in. they more when Peter the let will my and then the we tenants services to they if and additional and a in start really space. services that provider goes larger and slower be bullish, really it's optionality financial me mentioned remarks, And But business of well. are to a would space saw tenants first grow financial it might be bigger These are tenant-to-tenant. talk and -- than like like companies I in future the organizations. the

And I they first have and it. of they some of indicated time now than the -- step. the currently of their that's whether They they that are current the space that might between have. to Credit plenty them and don't is expiration in took mean, end be We what you building. of the that space And know there less alerting see this available lease Agricole,

So, optionalities. they the and keep take it step by step

Peter Brindley

and a to think in bar only the the to driven not deliver, your way back, what has the enhances financial but tenants a lot also space market. think that's by and largely overall Yeah. people it's in real that say, a And chosen think And create to service that slightly construct. require quality where they've remote you're the you this financial to we a I has sector said And estate. realize raise and service office, in perhaps would choosing get compels impossible remote have such fully do landlords to of that innovate leaders what and of concessions way be themselves I market I upgrade the they're to but add we back experience. and into in elevated opportunistic expect improve can the come I They

remotely. importance here cannot realize the that seen we've they sector the in office potential theme full the year. services, that's there, we've I have that And services not the leaders that on. the we completed underlying of is only deals We've XX all seen with tenants other financial their that all acknowledge this a out that financial but of think theme think I transacted

fundamentally they more into So, a that's that their their office requirement becoming such realize people we've that the here return and good to about vocal and full happening is got that potential. are leaders leaders what thinking, these insight what's are more can increasingly

Blaine Heck

higher is That's think very talk over appetite your Maybe buybacks point? commentary. Can a probably switching little Great. about you this leverage helpful to for share Okay. at want. you'd Wilbur. I at new EBITDA of Obviously, some think down than stronger the your migrate for lease the economics point. repurchases But I assuming vacancies, to should debt up the investments. are than

should we ability think repurchase fund would how how So, that to contemplate? forward your any you you about going repurchases might and

Wilbur Paes

Sure. buybacks before as leverage have on share basis. as I Blaine, neutral before, mean, have would we said and only we done as we a

visibility As worth was space. the of less, the we that COVID of already you we plan $XXX purchased aware, million stock. paused are vacating and our tenant largest as had We have in on repurchase midst

up into try went mode to in balance you loss we point sheet. EBITDA to So, that caused defense out, higher. And tick to as leverage the shore

discuss So, we quarter this we where the are, needs. that understanding board every a with topic is capital understanding

own buying the back your on enhancing and and based return, external it lease We shore the capital ahead in for shareholder and as into versus returns we allocation go reason is or the that opportunities portfolio haven't sure some investing through And in and playing up we up are opportunities. we what buying then today. capital balance means sheet back decisions deployed making implied that market is any well whether acquisition the through offense precisely shares the can space understanding as growth gone capital -- whether

Blaine Heck

Got it. Thanks everyone.

Albert Behler

Blaine. Bye, you. Thank

Operator

you. Thank

with Our Feldman question. of America. the next Bank question your proceed from of Jamie Please comes with line

Jamie Feldman

Great. Thank you.

talk higher about I NOI guess, the more drivers growth bit a of outlook? little your you same-store first, So, can

Wilbur Paes

Sure.

in released year, the we theaters up what into open of at where So, insight didn't the initially to the streams you, Jamie, the when in obviously, beginning guidance, fact have sufficient going we of Broadway our contemplated. variable have September as it's whether was some and

the driven it is leases these as by some these of executed on now part and had leases. certainty reconstructed nature renewals of Peter more So,

from operating management. rent a originally So, we're is higher starting what that going is than by better lot drive to of also some see expense our to theaters some percentage And of that announced. we it

renewal, two and NOI, the year rent So, those in on the that's the really have in you fourth were because which in there cases, coming some that is some early third of the free primary cash are less quarter. beginning helped drivers -- with

Some of better it theater operating and of it some is is expense management.

Jamie Feldman

And the then you effective and helpful. down rents? I Can space Francisco. talk where versus negotiating pull rent? tenants of even had you bigger leverage? in I Where San net That's today. picture, market Okay. with things assume Peter, guess X% rent. or think, you kind able couple are Like about to on that's the is X% free quarters? York New And as rents do TIs last of in I Or then, you're back very just mentioned stand

Peter Brindley

of I ever elevated. decline remain that been. expected Agricole X% would we pre-pandemic. high floors with to Net largely base probably they a New that. is of elevated. you realized take closer effective rent have in on we York, would I year-over-year They're we that XX%, a concessions seen with SVB, recently X%. at rent contending in and as We're rental have asking would rates say have being concessions average look transacted the most Credit if But say, as we to function

more we've I I of a by And line So, the have the all as rents. function successful maintaining instances think, historically, in know. way but think on slightly to been, in that market we concessions chosen of we give select we than have is

Jamie Feldman

optimistic Okay. kind you appetite sound are of your for And what's mean acquisitions? where here on market heading. then, conditions I

Albert Behler

question. good very Well, Jamie, it's a

has think I us for there. have We nothing changed -- much

at very looking very, in are careful acquisitions. We

the business. mezzanine fund have We

venture the for joint have We potential investments.

equity the lot our We new for acquisitions. time of in a being will not Paramount spend

was opportunities expensive. lot that the foot see not from after And You transactions would expecting the that pandemic, everybody a can a price -- space of happening. that it's what per also happening Class of in couple pretty A be is there the despite were square the

pretty a home, plenty in the Europe, markets, U.S. at look capital it's there's looking of you liquidity these for If there's much the in lot of because same. a here

So, expensive. It is as our know equity we at make really mentioned, sense. carefully very, I very, are looking to has acquisitions. And we very

want we to careful So, be there.

Jamie Feldman

Okay. does treat just Agricole percent how the from? that space that your leased, quote future And from then Credit that's number? out When you one that moving question. in moving that the they're Is excluded housekeeping --

Wilbur Paes

No. on occupancy That wouldn't sense, Jamie. paying make that space. space are that than on They rent

So, else -- not would until you include much it would exclude move -- you like would it not they not exclude out. business the everybody in

Jamie Feldman

Okay.

they included So, lease the no? like new the are though, on space or,

Wilbur Paes

They there in right? percentage they They the vacant on paying there, space. the No. They've space, are are included occupied in are lease space. the taken and new

So, in different way an extension, else, would somebody a the as else else the said, be anybody renewal than I it's within with somebody no the business treating moving building.

Jamie Feldman

Okay.

it? expires guess I first lease that actually the stats before think -- the that is it way come they'll the will lease, about when of out So, to

Wilbur Paes

XXXX, correct. That's at that all decide, in February of if they In vacate time. out that come going then it space, point to when would yes, they are

Jamie Feldman

Got it.

you. All Okay. right. Thank

Albert Behler

it the they that time. are space, But at meantime because in in Jamie, us up lease that gives opportunity we to know the leaving point also, an

is And very tower larger So, the the in it from to in gives space, high and of taking mid us building. they're some which much bottom demand optionality. moving floors

this. quite excited we're about So,

Jamie Feldman

I it figure I opportunity. why was numbers the going through -- got wrong. was I out you've couldn't know I just the No. and Right.

makes sense. it Now,

it. got you. Thank I Okay.

Albert Behler

Sure. Bye-bye.

Operator

from Thank of Sakwa Instructions] ISI. the you. with Please proceed next [Operator with Our Steve Evercore question. comes your question line

Steve Sakwa

venture morning. dispositions, just selling on that outright, down your between guess, what are Two or I'm and you've to public expensive. Good looking some selling buildings arbitrage questions. Thanks. curious and capture markets. I talked either Albert, acquisitions joint thoughts future private about being the stakes

Albert Behler

the trophy time, careful, this to have very value have for base assets these and very, that, but limited that right changed. And take At off that chips full at have the are We willing has A asset and created. nothing Class some are table, especially looking because we and we we is are said buildings. the

be rushing to expensive this. would want being ago. just market don't This transaction more a started, we the of months say, I being and has momentum of assets couple So, focus into

the that's So, currently. situation

Wilbur Paes

And that we the to done that. midst an asset consistently interest go XXXX Broadway, capital Steve, ability you of over a the sold retain XX% in to we and that at Obviously, there's implied where evaluate a that the tax sale. board We've sit considerations the $XXX may value at pandemic, and this if we foot. understanding in recall

are We, to capital ability tax But the play we aware into play this. retain deploy So, obviously, go our the do considerations and decision, through that of it it. into decision.

it's so, discussed quite regularly. And

Steve Sakwa

I too and sort there Wilbur, you annually of think is that with figure specific, guess without you getting sell kind still tax comply round could a of the and issues? retention

Albert Behler

It's from Steve. building-to-building, very different

exchanges. XXXX of couple a have We

say it's generality. really So, in to difficult

Wilbur Paes

is, It Steve. Yeah.

is, pandemic. obviously, the our dividend also we I is think in interesting cut what

could said, things factor previously, a had potential analysis, those you retain. basis Albert bit exercise that as that that asset, you more so, whether little depending made the if And challenging now it's otherwise But all any in times leakage that has will. to that XXXX on the in of shelter a

Steve Sakwa

just When switching space Albert. planning, you're your the a deals, new maybe to kind SVB or XX versus person six any it's Agricole up an and your other per And sense ago? talking back tenants of Thanks. allocating for months per space Peter, to What today Okay. of is of for to setting they're of person that Credit question and space sense the is all whether leasing doing or that you're these what tenant? sort these

Peter Brindley

exciting comes we trying the what interesting And a very more know to employee company be to number is make we know outdoor will to company, for of -- space to. other idea vary more to it quite frankly, reflects is but as do something does are to have a brand footage square said really space from not office companies things, that there of That return much rentable what communal it's the that all vary, seen now it these inside that or are to Steve, with employees the we that element and who facilitate per space spaces important. exciting. a That that does. along reasons create make does this sort an of we how really so with have tenants whether the place

seen. space seeing our contemplated we're with Pre-pandemic, relates we're letting I square a as was But being decade. bit. I of a over seeing opportunities, each real and communal that think be contemplated. faced do up outdoor we it the resonating. trend remains being to lot last that marketing the a to these of that and footage was even headwind We're employee, attributable that's space to lot So, a think densification spaces

I productivity. more per they will improve increase how I see tenants space think raise go-forward willing we on were basis to of think companies think I to terms what in the as attribute a bar. But it more relates their employee to space,

I think but out remains any think how I per employee. footage seen, to don't be it plays see we'll square reduced

Albert Behler

I've -- They A mentioned more security, the see safety, having assets. a I on would like and my like need tenants more and future, [ph]. to they optionality, it And remarks, about might as mentioned focusing focuses in and before Class I Yeah. in C&I think divergence you cleanliness, Class a and more B on landlord between operators are they and and that space

Steve Sakwa

me. Great. for it Thanks. That's

Albert Behler

are You welcome.

Operator

Thank you. you. [Operator Instructions] Thank

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

Daniel Ismail

costs in of year is the if I'm just are the carry for that believe you tax to two, terms operating both utility expense is, in savings one then XXXX. And Francisco? you. will that and guess, York I related earlier what looking future -- curious New San you Great. any? mentioned much at how part likely Thank into Wilbur, guys this savings, of I

Wilbur Paes

-- from mean, element in drove last as your taxes that I expenses operating an savings to from well relative general, coming I'm our I about as this My question was to mean, beat was thanks XXXX yet. for Danny. savings year on I year guidance. question, same-store that. To real Look, going comment drove what the year when the in estate question, operating the not asked, comment the expense this answer and both of the is

is that XXXX guidance for we'll We XXXX, and planning are when our budgets model through obviously the going about talk and our and for our right. time

Daniel Ismail

Got it. curious moment just is and I'm as time it just into prices on reduce higher commodity construction prices are how TIs? maybe higher are concessionary a still tenants much looking for higher bigger the Or higher phenomenon then, factoring just in to And environment. concessions occupancy.

Peter Brindley

don't I have the has with do experienced construction we TI anything at yet has prices. a whole to increased think -- this point lot that increased

directly correlated this prices seen, so point. basis but do of terms that to be construction In a on I'm at they're remains what not sure go-forward

Wilbur Paes

done. landlord think We to a market, get on phenomenon in deals do And as now. Yeah. is going the right just to the necessary what's this every more meeting market they're

Daniel Ismail

you. Got it. Thank

Operator

our to Mr. Ladies any final and that question-and-answer back concludes you. for Behler I'll gentlemen, comments. floor the Thank session. turn

Albert Behler

next for Thank us to year. Goodbye. when joining continued report you all our an our quarter progress year very today much on we forward full results We look and XXXX fourth here. update providing

Operator

conference. today's concludes you. Thank This

your lines your disconnect participation. time. for Thank may at You you this

Paramount (PGRE) 2 Nov 212021 Q3 Earnings call transcript