PGRE - Earnings call transcript Q4 2021

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Operator

Good day, ladies and gentlemen. Thank you for standing by. Welcome to the Paramount Group Fourth 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 fourth 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

plans. everyone another year. While also returning for you, reflect of we the Yesterday, a share space of and that outcome. ahead several years this been glass per and baked seems be per we quarter Din the thank XXXX tenant has desirability us These XXXX Fung review the the strong the that core you making for Today of operating we with and [ph] year between base. lease detail. tenants $X.XX and We the XXXX, delayed greater Tai with flexibility and announced couldn't us The worst carried for to in delivered once again joining this guidance at in in of signing with XXXX performance our office pre-pandemic Broadway. and up the results the financial of $X.XX morning. happier Class some emergence guidance Wilbur results core the our it into quality are for Yesterday, strong will share to initiating momentum life, their consensus. per the is returned share and of reported resulting our to as FFO of we and the FFO return market per XXXX Thank nationwide, normalcy core well in Jack full A $X.XX Omicron variant range of assets time, are albeit cube share behind we $X.XX FFO we into fourth full the

the City ability a surround Class in instances the their leasing Din that landlord world sake premier the retail in employees. space their again it, this space manner of most the in we to in for star hoped, the disciplined Michelin to not operate the for that with to the headquarter the Tenants above. of select portfolio, with the cements took type remained globe. the sits of across mind Coast unique one X.X the large once of the quality Paramount and tenants but front their because Their XXXX desirability it in the first Fung city We amenities and Their it is the location have as renowned While office asset we East and Broadway Tai destinations leasing driven part longer desire at of million welcome location. of right for than A New the on location of in bearing always their chosen rated of asset, decision feet square as York of building

XXXX, stand and their Looking met on of our back own. at almost results all our exceeded or We goals.

XXX% year trending feet, On the that front, leasing on quarter was X indeed the executed above XX% portfolio towards the leasing is over above and quarter last million fourth fourth strength normal. highlighting of the fact for we market our back last of leasing year square and our reported the the we

leased in slightly vacant in of XXXX, we executed. XX% especially outcome, a TD goal exceeded vacancy. of the of to XX our XX% which very fell space about goal shy vacancy, environment at we the Bank our West, we at the fine Barclays While of that lease said, considering All least XX% we

in Midtown in by leases just years also long in more to average encouraged broadly. in X.X lease renewal term of compared in The market demonstrated We as term XXXX. signed remain commitments portfolio on see trends both the four Manhattan are years, also our reflected and XXXX strong we the our new

and Francisco, with across the The back. employers city rates space resurgence Leasing take Gusto. to New gradual City fire a residential easing Midtown tighten. encouraging and asking is We San COVID and New bring see on with offices. recovering market at market are York their restrictions vacancy record labor is a in to office employees tenants return velocity to continues the to during average for York The lows. approach positive continue increased by these market is And of year-over-year more XX% signs XXXX over rents up. towards ticking beyond. In as the

our activity leasing over leasing XXXX. during as favors still increased to signs leases, to over beginning XXXX, While velocity positive compared see renewals XX% are Francisco by new we San

seen As while the to much York, what's throughout come maintain in at prior have the continue lots we asking other above with assets happening In to quality or rents San have words, lent like levels. New noticeable. quality pandemic in rents Francisco, continued pressure is outperform flight and to high under

during compared signed about the Our to before XXXX initial during in to square start per of XXXX, the grew $XX.X $XXX on foot pandemic. leases San rent Francisco

continue continue demonstrate our to Our to from portfolio quality our resilience strength the results of and assets. the as of benefit we high

XXXX additional we leasing goals and million in of details go, between square we what are our availabilities. X.XXX,XXX each As Peter targeting and on markets. we feet will our XXX,XXX on far as are focused provide remain for our laser seeing

since we are Looking some at but the transaction here seeing green market, New we has in York. shoots there the is that last not spoke, changed much

Inflation rising and portfolio. While is of ample since suggesting overall assets. billion highest was replacement to quarter and underscoring will contract increase quality it's the $X transaction inherent costs pricing for construction our XXXX. was start Liquidity costs, a billion, of volume and during beginning volume remains the been top strong strong December under was value COVID another there $X.X relatively the fourth the muted,

our disciplined monitor interested remain we yet always, the As and with carefully. capital markets

was the a term Times Mars value of this Square of Mars World, XXX% are mortgage is on market heart partner, extended Broadway, leased Square. acquisition this will and XXXX property in commitment loan XX,XXX the flagship the to Times close general. and a joint The to retail of New purchase condominium to the venture We the the improve long with The years, verge [ph] recently testament million $XX simultaneously a commitment venture the by $XXX.X space. the square the a attraction We for with on see XX $XX including was and million million York of acquisition. of Mars resilience as M&Ms joint by as for price foot a location in iconic

is X% partner serve a San asset we manager. partner here, and Our in existing joint own will an the and venture asset will as who remaining the XX% of Francisco another own

I'd remiss element pride of proud to take markets of accomplishments our remain another improving didn't XXX% in, our if and and our highlight great sustainability. committed portfolio I in that portfolio, we We Lastly, our sustainability are be and environment. our ESG

to our entire efficiency perform sustainability put announced, style continued within ahead portfolio, of Our we have that and efforts in terms the certified we assets the across signifying as labels pack nationwide. top EPA XXXX by the XX% energy achieved recently our office us energy of

disclosure public Office assessment estate in USA consecutive conclude Additionally, A Paramount third our are XXXX. its Properties the in XXXX, achieved an To priorities ranking real group the five XXXX peer a among year rating for star begin the number one and straightforward. for GRESB securing as we of

We on safe lease are of and in available healthy the of up space a the and our tenants our reintegration focused manner.

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

Peter Brindley

Thanks, morning. Albert good and

of average feet During approximately X.X XXX,XXX the for lease fourth square term quarter, we leased weighted years. a

X.XX million the the in year, environments. the annual square full the assets the the most For of average. leasing approximately quality line team our our in of feet year was is and testament to five effort result challenging even our ability of direct execute to of velocity our with This and

Our quality Market activity leased which firm, portfolio our lease enure square our given rate private of digit for and wide was new at We transactions of as term of to One long momentum serve long good XX,XXX in XX% points Plaza. to examples investment starting continues bank flight rents share end, and completed a foot over accounted global volume. trend leading lease markets was leading term the basis with triple square These San in the equity quarter a continues new a XX,XXX deals a that fourth occupancy quarter highlighted At Francisco, foot to quarter at both up quality XX.X% to with over our benefit portfolio. the XX gain at leasing by our quarter.

are and expirations per expiring approximately ahead, role. manageable de-risk look through of result lease we to remaining pre-lease X.X% future our direct ongoing annum strategy share at XXXX, our with a lease As space

improvement markets, Midtown, to have realized CBRE. excluding XX% key our quarter feet five fourth square over according quarter of above leasing renewals to the up million Turning year X.X demand in was drivers XX% the throughout quarter we of and average, Midtown's activity quarterly year.

commitments, in levels QX. short leasing year activity activity during modest term with throughout fact, feet as fourth new portfolio. during return more quarter average leasing shift quarter. of evidenced net XX% absorption longer reached pre and to five improved a Midtown's In than Renewal activity, the quarter, the by square feet quarter continues square each in to of quarterly new editions the tenant off the term result renewals York the of capping below our results the the as second exceeding pandemic million consecutive space from sublet withdrawal XXX,XXX space the year, year quarterly to was interest the direct the positive for one New during

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

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

term. XX,XXX quarter the feet of During fourth leased term square average swing years. weighted approximately we the space at XX,XXX feet was than year, square X.X quarter, leased average which the Of lease weighted square less for leased a represented feet the affected in XX,XXX a that

was Excluding of feet leased a term average years. this space, the weighted remaining for XX,XXX eight square

full over the year, New a XXX,XXX we York feet, of X.X weighted For leasing term in square highest since leased our approximately years. for average total XXXX

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

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

strength more our availability attract of Sixth share the to XXXX where Avenue which but our than Americas. the we continue of quality market, market, of our highlighting not is We have only sub the the at activity in fair largest Avenue the the of assets,

in tenants with sits at given of overall maintain a transit. continues avenue sub lowest increasing the to rate located to market availability midtown availability XX.X%, to desire XX.X%, not superior rate While at access the be any Midtown centrally surprise,

large which significant floors, welcome to XXXX look square building, soon avenue Americas be outdoor for a tenant space on progress resonate of you a our at tenant, of all efficient amenity Our offering includes continue base a center Avenue XXXX prominent the branding, the the on Avenue center of to dedicated in and continued and Americas. We foot of to world X,XXX updating the possibility with the class forward tenants. prospective a at large

particularly Turning during drive Omicron by the an further attributable the backed funds to now to San office based leasing plans during leasing variant slowed fourth XXXX capital San relative to XXXX, to has total. Venture the San over exceeded quarter its these work quarter funding high. fourth slowdown, Francisco, was remains Francisco despite quarter. Francisco to omicron company variant slowed their office billion San This was the return the companies quarter. third continue leasing quarter Companies third Francisco as our as San quarter, quarter to all-time largely slowdown was for now during attributable delayed received robust trophy slowdown Turning down in remains space leases X.X% The funding a as transactions basis of third to $XX largely remains San the This the quarter leasing has Francisco for to quarter. relative significantly for in view as San elevated, Francisco's quarter our premier in quarter the over same demand Francisco but end, at XX up and San over tight by XX leased consecutive points evidenced Sublease the assets our assets for strong, declined fourth basis and in XX.X% market store feet. excess activity. current accounting economics, and JLL. XX,XXX per on XXXX completed availability At share square portfolio remains XX of Francisco, in

$XXX quarter more to XX.X leased lease than testament of fourth averaging years are our feet desirability real employees. the the This their world, of foot. many execution the a per our estate for initial quality During rents the with at square assets average XXX,XXX square whom term and weighted tenants cater of is we enhance to the to of experience to ability most discerning high seeking work a

For feet we initial years term X square per leased rent year, at foot. $XXX averaging weighted the XXX,XXX average with approximately of full a square approximately

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

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

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

Wilbur Paes

core Thanks consensus high share full of store Peter. the cash bringing by store Same revised range to $X.XX Yesterday NOI we $X.XX our FFO guidance. NOI growth reported ahead the core FFO end of cash quarter to share per at X.X%. the bringing X.X% full grew same in and of year year XXXX of per

generation for cash starting a were years. space XXX,XXX quarter initiated we at guidance fourth square the XX Yesterday square we for and year second per on leases average the full $XX.XX space feet on basis. covering of also a GAAP of foot XX% weighted During a basis average executed of on X.X a Mark-to-markets term XXXX. of rent lease weighted XX.X%

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

a connection income from core $X.XX due $X.XX straight in to the increase increase over pending higher of to with fees debt. space XXXX, XX.X% higher rents X.X% and XXX Broadway, in from GAAP expect $X.XX. FFO but XX.X% feet The core the to acquisition only $X.XX FFO than $X.XX to cash XXXX core and partially $X.XX and year guidance XX% to occupancy share consensus interest due increase be by at share vacant basis, midpoint. expected which of is expected midpoint in XXXX expense, XXX,XXX between expect of X,XXX,XXX on XXXX is range of ahead we the primarily $X.XX FFO with line $X.XX from the same-store rates the higher point our a primarily rate by on between a and the or primarily square between between in and increase resulting We per comprised lease-up also variable by fee not per to The core at midpoint, is X% and in following; FFO NOI higher of and $X.XX the XXXX. expect lease offset basis growth rate basis lease represents on X% we XXXX But or end X.X% a same-store between a

facility facility. to four with the Turning recycled with assets JV balance was in commensurate sold DC The asset sizing past in refinanced years of into proceeds revolving sheet, December, our those existing unencumbered over as $XXX million in our credit we our Francisco. assets the facility new unencumbered the pool we a in reduction in and Washington San credit reduction

liquidity of million of the quarter-end availability of comprised billion amounted cash full our new million and facility. at under Our revolving to $XXX and $X.XX credit cash $XXX restricted over

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

laddered. in We have maturing and are our that no maturities debt well beyond XXXX

Lastly, open www.pgre.com. With for updated which that be please website we on can the our our investor questions. operator, at have found lines deck,

Operator

be Thank Please Steve from session. conducting a Instructions] Sakwa Our you. question. question At with your this will Evercore. time, with we proceed question-and-answer first comes [Operator

Steve Sakwa

you number of a would between about leasing know add assets as difference the JV of much the talk expirations big was XXXX get how kind end I much and you a of a Good some trying maybe of your owned, gross I'm Peter, there's I activity year? I thanks. bit this versus your existing of Yes, guess could little you may share and is, new know, if not a expirations. where gross guidance. renew this I at number more pretty and your share where at be really year, occupancy that's activity wholly the the you how know, an expect wondering think to to do And of that portfolio part for morning. Wilbur just or is, add realize the and leasing

Wilbur Paes

in. Sure. to I'll that Peter in certainly and lot then Maybe unpack things chime of can question, Steve. start A

that foot XXX,XXX gross guidance, going a share our service feet of lease with look average, This line first, footage that that the at square I’ll June. in redevelopment on what it X.X square the XXXX million million of that's So we gap of expiring a square is share square projected square you historical right is the between we midpoint at wide square XXXX. at at XX asset you out volume and plus expiring in is year, X delivered call feet. gross that the taken terms for that number because including a When versus have million a feet that's in primarily XXXX, in number at about particular is footage X.XX to the be Wall in of is

So in our from million square leasing, XX square not any of we feet of leasing leasing or X.XX factor feet million do Wall.

we not do on, other assets JV you Wall. include have it but project So XX does leasing that

from large, and that delta is number. So by the biggest excluded

feet guidance, that towards the we if the stuff X.XXX Wall that’s is XX X% will that that at successful of of expiring share the Wall about million because end us Wall Of square square Now XX,XXX preleasing certainly feet. the in which is in XXX,XXX at getting X.X is help in million. and XX number are is XX some high that

square at XXX,XXX excluding the XX at block is in the number So feet, Mission. space exploration think that true And portfolio in only is XXX large Wall. about the I share

which foot and XX,XXX Bechtel, we have is square We like lease own XX%. a

share that's number to do space square and going at move about in than So is that's typically small to are that to known renew. us XX,XXX try no endeavor best our to it's other that under feet for that we there out

Steve Sakwa

this of end, a you have year, realizing the space chunks least sense I occupancy translate do the you that of take for for leasing doing think know and how ranges you're larger at into year actually the would that occupancy you year the by end maybe end? but think some you year, what at is may percentage do not appreciate Okay this physical of occupancy

Albert Behler

you're you and indicator. possession you So occupancy, leading you about GAAP talking I of guided don't Steve know then that tenant at as the year know reflect a is occupancy time a we it's is the before put actual end, of the will matter out occupancy least think for if And occupancy. at as do leased we've takes XXX% we what always thinking we share point that GAAP set very, every of the a what is increase saw robust is number that and but notes that's ambitious do. we reflected this a an in goals in lot that's a as We very portfolio. year occupancy very year XXX at not goal basis which some

So number. that's at share

in of that leases to you when at feet in excess do in So be to that. leasing occupancy, expiring increasing to achieve able square share to we the million deduct achieve X.X order need year,

So that's goal rigorous set feel about we for you that we And goal. know good meeting ourselves. that very a

Steve Sakwa

color. that for Thanks Great.

you're in quarter, estimates? transaction buyback Just doing owner, one didn't I to mention your stock discount share does trade, presume where you a for but you the know to, of sort JV any you know given continues where are this in know about the at question buybacks internal other large know you fit small Albert. see I X% NAV own share I maybe

Albert Behler

Steve, fair it's a question.

basis. the past, paramount in neutral relative doing a discussed the and on be disciplined pretty leverage always basis that The and with it we remain on gets and a to well. very is we the quarterly discussed basis have on so investment stock As board the buybacks

that small with opportunity equity sense a opportunistic a being we hell of nice put to being So lot M&M market. this had are to as investment part very we for a And the an a well we had that thought asset that we It's that. our out and our investment at manager return of for in made the opportunity pre-emptive making owner money and underwrite very a shareholders for compensated shareholders. investor and wanted

Peter Brindley

for wanted us mean, the the insignificant I the our whole you said, amount XXXX of from use time capital of share Steve, PGREs sheet. look investment board is shareholders. look, reason certainly in and because, balance lot of is XXXX which partner, a this spent to this is recall, investment in Albert and particular cut allocation. benefit to said, the discussing a when This of of in just And buyback at as as lot in any add, we very Albert a That strategic terms our if in I we we you of with or the didn't COVID. more also a do middle dividends suggests, capital

vacancy reduced we TD and You of know, system. that we cash going the of Barclays on was Bank out dividend $XX impending you the had million the know, and to, take

it with this and board great prudent didn't at time. deliberated You at seem we know, that length the

that dividend, your then go buy capital If to cutting you're use stock. back

So, see visibility. where going now behind better up. with to have know, try is things take continue allocation deliberately every to decision, us we and in look shape XXXX the we're board to XXXX, very as we you capital

Steve Sakwa

me. question I Okay. guess last for

there’s stakes buildings the on issues. and some lot you've tax sell a transaction and small Just of know side, to I looked

either sales, or do part? know, assets any you on the asset have in are in market additional whole exploring You you currently or currently

Albert Behler

in mentioned market -- we I my transactions earnings has this the past. are in opportunistically, and the -- been as been said If at market relatively the we script, that slow the has Well, I on looking transaction side. the

we're that's clearly want an have. but good the to shareholders. of one sell considerations in to So, for our that you we tell can't value get currently, I we asset market the

getting more private currently, we much best If very United seeing public And carefully. the looking have want again, so careful we foreign we are you it to the know have on so big and at actively but be we return watching hands to market for that market the about our the investors are our speak, pilot, difference and States the a and are shareholders.

Steve Sakwa

Great. That’s it Thank me. for you.

Operator

America. your next with Jamie proceed Feldman is Our question Please Bank with from of question.

Jamie Feldman

just space which you’ve leased Thank good sticking just I'm color the you with I can curious XXX in most obviously percent kind the make more you morning. assets got traction? Fifth, to and I and I next bit – can you where a of little give just amount the most a you think year? Or leased you'll occupancy you and mean, Third, guess, think traction where good you XXX make you’ll curious – as of at mean, guidance, guidance, the XXXX, maybe think

Albert Behler

Sure. And…

Jamie Feldman

how you’re …color on today?

Albert Behler

occupancy Sure. Maybe little back needle, a is I'll least go that space, otherwise you’re achieve not lease in a to in. the to right, And you renewal excess of you guidance, half vacant existing and start helping not a said, bit, million square order if Jamie, might need that feet to Again, at moving figure. then share. chime that I be Peter what has to because in

the a Barclays out to you’re significant look you remaining when as there. have the going in in space at XXXX, you or space point block we So have existing make the portfolio, the vacant to dent

vacancy as factored out, there’s So be the guidance XXX vacancy across well the to that. West in able that’s but portfolio as at achieve space XX dent as make point XXXX you’ll to you in and a the have to significant

goal leasing is your XXXX? where about talk at please So

Wilbur Paes

was striking space came in that back. we remarks Last ambitious all always Our given goal that prepared his addressed XXXX came that and within did is then not we goal we think an leased. year, at I and and to goal the shy We XX% West timing the fell slightly spaces was of a in set factored mid distance. goal, exceeded he that Albert which XX when show

all space. the is The this the So, of and goal always still Peter and to smiling. again lease he's knows is goal

Peter Brindley

with tremendous square our also right Jamie, of activate are lease square to time on branding outdoor offering period resonating now big what truly goal space. we and think activity tell only feet coupled we we've that's why this where for way part a welcome what's has have are We all to resonated about X,XXX center, and this is floors I of the to five. that And and XXX,XXX will our feet identified which equates center, two really that not amenity with but do of our I point projecting projections. at and X through during is allows are a evolved lose of will we XX that you space. the has we

Jamie Feldman

more about of you. in Can last the months? like couple it Thank changed talk you Peter. activity the has how maybe

Peter Brindley

companies, professional would consulting services financial service I of tech, firms, service financial would companies, financial the say that say Midtown. the with Midtown, throughout we've towards which in we contributing XXXX, total but sort saw in with are service because discussions way conversations a most velocity have had recovery seen I leasing in but advanced largely we XX% leading terms surprising of is not companies,

specifically the that So with asset towards we're at seeing velocity jives sort leasing of Midtown. what total in

what tech ahead. more specifically So do but jives that that to year expect asset sort the active we we're in at seeing XXXX at become of with the

gets outdoor in It's We a central space appealing. conversations. it as large midtown. is there's as Obviously have had floor the

seem tenants. a So to that the universe we wide would appeal latching I it's meaningful that question answer say way. prospective time being, in financial the think be most most we services of your specifically, - But to for to on

Albert Behler

because Avenue. building of smaller Fifth That's towards size XX,XXX floor that's know tenants XXX square is catering more about a asked feet. you as about you And

make take they tenants of good XXX we needs. have more tenants want rest and the are market. larger optimistic about it's where more their for the and totally bit decisive to They have year. activity, there's with they this smaller go a The in consensus The sure on little to to space understandable. seem are So pretty

Jamie Feldman

And tenant then you. Thank the in I you average I would XXXX tenant mean guess sizes how the size? characterize

Albert Behler

from a floor to activity. Two one XX,XXX It's tenant multi square which precise. be XX,XXX foot is floor of

Agricole we And in on the for Tucson. in tenants. plots that we up are we So are tower trying to later everything that But come a will back not have come focusing might of some back from two decade. floor also break Credit the

and XX,XXX XX,XXX between range square wide pretty a feet. offer to able have we So

Jamie Feldman

Paramount board stricter that on about for Maybe X-K bylaws talk explain you. to the about about and board board. seats, decision? thank changing that decision? for in talk the change -- you you more Okay requirements the And published Can can talking get the then more yesterday,

Albert Behler

that's Yeah, question, something but it's it's friendly. very fair shareholder a

the We we public the have since amend to it went decided board and discussed bylaws.

We a shareholders that's have request we with open discussions we and to that our make there sure wanted there be had plenty and of was flexible, the and why more shareholders pursuing our got large was and are to hurt this. --

Albert Behler

to the add I about to And Jim, maybe Yeah. background. mean. your question just

he XX-K. conduct your and an rejected outreach. management the last was one X-K come heard fully other filed that, as corporate look out we current up. highlighting the governance, had more for statement. the you would to filing two support. outreach, majority shareholder received did the shareholder out had, board outreach our know resignation, we were our And this NCG came days access and to a governance what the majority of than your the task have If respect management large to XX-K if would and that in or you result proxy XX-K to and amendment last three because a passed board we a you file render year that later. changes to could that that voting results, render and articulated of of Because And X-K committee technically, that, that the invalid it year's tender then shareholders which proxy be could things with test this reasons X-K, to see, Albert conduct which had to an file described than at reason you all and matter less offered according for not figure reaching filing will you'll shareholder-friendly chair as to is board less technical management support he our And and it The did his we up of that a said a our

tried it that you done And all to will. so, simultaneously if we XX-K get avoiding

Jamie Feldman

you. Thank

be the to can explain what clear changes? just just So you

Peter Brindley

bylaws know Paramount's permit existing use cannot you to materials board it. shareholders nominate to slate currently the not So to do our do and to you

do certainly that. can You

it's to you than of separately. for run designed time allows proxy is that's What the shareholders and construct to peers. market we do does period you is that and access The know have adopted your different all You that benefit things materials the those all through the construct some to stock in in shareholders. no for our that are prevalent amongst

Jamie Feldman

nominate have that directors. the Is stake X% have years two a correct? construct And for Okay. you to to is three

Albert Behler

correct. That’s correct. That’s

Jamie Feldman

couldn't a shareholder And even nominate before you're director? that saying

Albert Behler

could. Well they

You a certainly nominate could director.

do use to proxy cannot You that. all materials

can. you Now

Jamie Feldman

see. I

you driven And this? going Okay. else nothing reason voting market the any there last or by was would purely the week other this in year on outlook was guys do

Albert Behler

there's no other No reason.

Jamie Feldman

clarification. economics talk impact? me. the And it think on Okay. by done, way. thank the lease? just the How earnings of getting Can from All for the then you Congratulations about should about right, fund finally the you we

Peter Brindley

moving about building just million this the needle $XXX on the This is the of don't Albert done. above generates got a million right you for the more NOI. is deal amenity it's think to as this I appropriate that is us this upon curating about that economics will Look, feet less the on excess touched I of for talk square X.X tell one about us but space. call, that in

an you focused is be amenities going tenants right on we're XXXX. our And highlighted, center sure and the important so, This we are Albert at also more on to we is building. our that amenity making very highlighted very and come. know, Peter working there's to in have to something

the distance we is portfolio, for have We have, this that assets here and all all to you idea make walking within know, feet appropriate million six sure that of with. business surround tenants do amenities our the that Paramount square

Albert Behler

use opportunities fung I Jamie, was a recall Rockwell the spaces, them be of a have other to right years, David to we our entire will in front building. asset very office the the headquarter might would rent base. always in the Group had that think Over we not to tremendous design our seen convinced the There should tenants. call we a be big failed mostly market to have you was have an to concern other now put and it spearheaded by tenant are terrific and that that amenity judgment this amenity they And tenants. And this might I --

Jamie Feldman

Okay. about It we shouldn't like to probably from perspective, sounds earnings model right an much. it? Is think the that way

Albert Behler

say, going penny earnings. this less not Yeah. I is a going would -- this to than be to of you know is

Jamie Feldman

Okay.

of just a I people me because and sorry, question response. last to go email the my have to And couple back

just make making this shareholder but restrictions the I you're I comment understand I the friendly point? that think sure So to don't place is more restrictions. your before guess have want to I now in those

Albert Behler

ability our period before use all for a use longer share was now no a at they material have And they X% it. Well to proxy X%, there could have But for time. period. interest a of shareholder to

Peter Brindley

education I This is should This only our talk a great take them looking proxy to on access. right for the mean own forum run offline. is you're an use their talked we've And that this, not and to Jamie. this thing. not We about separately lend. about proxy

Jamie Feldman

were of just Okay. No, I fine. people that's confused, appreciate getting thoughts. think your you. couple I but clarification I because Thank the was

Albert Behler

welcome. You're

Operator

with comes question. question Mizuho your from next with Vikram Malhotra proceed Group. Please Our

Vikram Malhotra

Thanks question. for the taking

that set? So across I'm your just clarify wanted sure specific the we offline, the language the three I common requirements but to X% XK can peer pretty take years. Is

Albert Behler

pretty It's Yes. common.

Vikram Malhotra

Okay.

Albert Behler

the that’s standard Vikram. market That's the standard,

Vikram Malhotra

talk I'm you a light Times have maybe disposition, bit which of fund I asset is using you potential wondering but have smaller the in Square, funds about going deal acquisitions, forward, a know not your at and kind fund peers business, did the business, on more being of stake. I’m Okay. the and some wondering I even talked guess, little just about just specifically maybe you

funds business going are the how envisioning forward? fund the use you or Just of

Albert Behler

I the we This our great increase we if years, current the to under want our more is Well, fund the for for think investors environment. I model, asset say that fee to think and management market shareholders. it light and the third-party that assets and access income said you business an of have especially is have shareholders under for

So that’s a think I direction.

in use we in were with we As this also XX office that we – have done we before will and future, had well. with I communicated the assets as segment. that the other Wall mean,

Vikram Malhotra

sort leaving like a in That’s of leverage up? co-working And Okay. work, can or to as update co-working sort see a us you're on as return of party the just third appetite more then a just even what’s this you space service lease offer you we activity, companies as maybe up helpful. thoughts pickup your internally to

Albert Behler

take be we a of catering to midtown a entire could or that it XXXX so that on larger planning be each it. are by by this could we different on building take portfolio, you asset out so decisions, we we making a has of amenity case that Well, as by asset business case, see a building co-working a that an on will we are combination but and mentioned center building character, not

Vikram Malhotra

COVID, during be think will reasonable you And is dividend year post last with the Wilbur, to one, as leasing done adjustment anticipated, now this only it and that Okay. about the you the revisited then year just last dividend mentioned maybe, the you've progress lease-up?

Albert Behler

translate income, like look took to board expiration dividend said No, would revisited quite is progress that as in right-sized to is it's a with of we but would made this place and once that have generated made, the progress think forward, the I point, income and that and then discussed right, dividend. into which I was that increased as and dividend continues again envision in should quarterly relative was the think mean the the taxable translate cash to bit I that progress we move increased lease I one board to reflect XXXX quarterly, discuss flow a being will in an the taxable leasing the

would board that that as So, case decision visit we I'm and be not just logical forecasting the and board anything, our seems periodically. that's but the with it that said I

Vikram Malhotra

Great. Thank you.

Operator

you. Thank

proceed with next is Kamdem Morgan your from with Our question. Stanley. question Ronald Please

Ronald Kamdem

for on how sort X.X% the rent Hey, at escalators two the cash more talk for just rent just the little numbers. the just the that ones, does can the and NOI quick bit so on midpoint guidance you store same you one factor about color on forth into a of components components. for Maybe

Albert Behler

side a than higher Sure. I XXXX that forecasted. the that reason pre-leasing Again, in a lot as side the people was that was the a of have at saw number When people you we've would had lower little the couple what part of think than some XXXX. because you bit success on notes of thought but number look I that forecasted on cash think flip they is

free if received obviously, effected perhaps models. doing in cash renewing the you're that is number that by of XXXX, free rent rent have would there in otherwise otherwise that you're had that have your that's leases, what leases is some have in you not XXXX. renewal expired that And only would mean I why what guys when So than is that a rent of has you lower might component

Ronald Kamdem

sort just any that it, that about And to variable utilization helpful. should Thanks. that that be the sort was recovers? potential when that left expenses And what's you Got as as is or think about? that we of starts the utilization upside variable variable from of there recover of second as thinking question side today the and a is sort just office revenues there of income the that other is,

Albert Behler

been collecting XX.X% XX% we XX%, have our is our So centric. of through seen of business XX%, rents. all office pandemic And you've the XX%,

on know, Operating lot operating as I but offset to that than tenants, up expense that's at business up the of or so will more expenses yet by don't a side be those by you some whole office the there's increases. come. increases, the of offset from pass significantly trend And recoveries will variable through think least utilization

the full leased in is retail have other we some X.X% the will as theater the know, space up, space, and which, terms business, of the come swing. space I that back that you the already In started and of operating really think theaters variable

robust in is you that our know, in quarter, fourth projections. both theaters you the fact, know, so, and XXXX had In factored had attendance our

Ronald Kamdem

Great. much. Thanks so

Albert Behler

Sure.

Operator

is with with proceed question. your question Please Catherwood Next BTIG. Tom from

Tom Catherwood

good and morning, you Thank everybody.

costs were in of leasing points, to in you interesting San are that Francisco prepared per difference rent material allude the costly way rent per rent. at and quarter in the Is trending to in your tied square cost foot to costs, New kind is line less starting seem year For roughly that fourth York see How the leasing right it and think more which Peter remarks? to not price other to different it? the or about factors despite to

Albert Behler

think little New bit a You in a we especially the York, leased market bit occupied. I a that get encourage difficult be here spot, of know, little that And that's and the to XXXX better, is and quarter Tom, trend. don't space the team I -- in We and might get this will aberration. an a fourth think the

Wilbur Paes

fourth referring include XX% The New as the mean. that as quarter lease as turnkey I being you're you Yeah. might at, I numbers Albert well to looking did elevated which that be what think, a in York, is

out, number, function in which rent And why is that And that well. the factored obviously, as is it's a starting of your yeah. it So pointed you as is then elevated.

Tom Catherwood

much improvement doesn't the at dollar to tenant matter could to value, that see at they're tenant the Fred. a of and the on totally implies as more is more I have know And was it's rent. question. of, factor cost value, that of top the percent consistent we be. other, when each is the rent look a cost what space dollar the going relatively kind for maybe maybe improving the starting you starting of of A clear sorry Class across looking as right So I'm in been less which I interesting

else? see maybe tied was correlation there something there's or any Just want if to to

Albert Behler

I as a recipe. kind of wouldn't take that

that I So aberration. be an might think

Tom Catherwood

And for fair. on Totally follow Wilbur. maybe up that,

as than And spend? that are more vacancy year What mentioned leasing this square leasing XXXX? those XXX,XXX XX or far year this compared spend in to going investment require vacancy likely or to XXXX material going it's impact TI is of which expecting this is improvements. feet You year, you to as

Albert Behler

are because Tom then through to So proof get end candid tail of and that sending XXXX some end that dollars you you might the might are us remember you be that remember, us the some the get of it's the as is first, spend them of at spend that XXXX then because of the that tenants it the right. quite year, tenants reimbursing least of tail likely because spending XXXX it at

be out So do the gets lease the space requisite it's they and when during going build that to their tenants that reimbursement. start to quickly of function how handed for a when when you over tenants year space the

then paying hitting XXXX forward XXXX that successfully we do XXXX in leased in the anticipate anticipate we and out also carrying that dollars in So two. some that we know but and of in XXXX you

in capital much for capital purely that about will lot did spend PGRE of leases in was talking XXXX XXXX, least for of was So got XXXX capital the twice year be at you as and the XXXX executed in that what because I market. a in XXXX leasing the think spend spend a of as light rest

Tom Catherwood

everyone. Got it. That's it for me. Thanks,

Operator

is Daniel next Street proceed question with Green question. Our Please with your from Advisors. Ismail

Daniel Ismail

changes out. governance any to Great, thank believe season. and and with if you. if friendly opting corporate can that I'm other that include shareholder mentioned you curious on just changes the following just you back governance that the would I proxy elaborate upcoming up potential

Albert Behler

And there go to will Wilbur in the this we details this there. and proxy is technical had into statements it said more something be that we had will I think more Wilbur as do more you it's filing. As don't in a get thing positive if to phrased want

it like to that. leave would So, at I

Daniel Ismail

enough. fair Thanks everyone. Okay,

Albert Behler

you. Thank

Operator

This comments. closing concludes the call time, to over Behler I'd back At for our to question-and-answer like Albert session. this turn

Albert Behler

this quarter forward report first our We providing look to an and you. progress continued on Thank update results.

Operator

today's This concludes conference.

lines may participation. at we your disconnect thank your You and for you time, this

Paramount (PGRE) 23 Feb 222021 Q4 Earnings call transcript