Earnings call transcript Q1 2023

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Operator

Good day, ladies and gentlemen. Thank you for standing by. Welcome to the Paramount Group First Quarter 2023 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 recorded this XXXX. May that note is today, being X, Please

will over Development of call turn and Tom Relations. I the President to now Hennessy, Vice Investor Business

Tom Hennessy

good operator, morning, you, and Thank everyone.

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

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

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

in measures our comparable as GAAP. results financial the our be information. will a earnings supplemental measures most isolation quarter of GAAP these for which release as with our XXXX reconciliation to measure not A company’s the first be measures, is discuss performance. should accordance operating or non-GAAP in we in evaluating can considered useful substitute directly believe in we During the call, available and These our

provide remarks, Real Vice Albert we Treasurer; open of to will Chief Behler, and the Officer, the Mr. Financial we Chief Estate. Head Officer, Executive Management opening today, Wilbur President, Peter President call Operating and company; have Brindley, and the questions. then Chief Hosting of Chairman, some call and Paes, will Executive Officer,

over that, With will turn call to Albert. the I

Albert Behler

XXXX. start share morning. are in been good are off to to It Thank for a you, since us spoke, last we and everyone, long excited so progress hasn’t but as our we thank this joining far you, Tom, we

strong year-to-date seen team. leasing have execution We our by

Before the which into Francisco. overall X, of of control date, unknown. the in assets. let of impact Robert our on will Many financial Republic the I’m details took remain Chase Street current feet but and of remain we First Republic you rent me acquired First the On of remains closely sure results, are occupies its this Republic, touch XXX,XXX To regarding currently the Front payments watching dive square transaction majority open, Republic upon JPMorgan with subsequently First the detail. and its all San FDIC offices as One I approximately review greater in May ongoing situation First at are.

line core quarter in of we reported FFO our the is $X.XX Street XXX,XXX $X.XX ahead In square the years. over leasing per feet, of for which first first prior from quarter, quarter the leased we Yesterday, share, first consensus. with

We also X.X% basis and on a a reported same-store year-over-year growth basis. GAAP of on cash X.X%

per were XX% XXXX new signed Sonsini, leads law the greater guidance $X.XX with couple an in also financial by at taking at guidance we Manhattan our our happy in started West we’re lease XXnd derisked quarter lease largest approximately of a first-quarter larger end and share. our higher was which As signed announce results This as detail. midpoint have per review first now is calls, previous the our to lower illustrated XXX,XXX-square-foot in last longer of the are through raising be come Wilbur we to and which compared share during our full-year the we of roll international meaningfully XX the $X.XX midpoint, to and earnings, execute, FFO XXXX core the result Wilson Street $X.XX firm. to quarter. largest strong to of on leases, will mentioned The We results. our

a quarter well, call. perform a during outperform to workplace, the continues steady portfolio high-quality, significant well-located signed testament Class our which The on of strong last we to environment. York a the can is of in buildings we lease challenging indication assets and New the to highlighted return Our strength A our the

seeing and are of than we a While of environment lot share challenging. we to continue leasing activity fair our touring more take remains

returning and good However, the there is pre-pandemic-era work. that are sign city the average. are as pre-pandemic North to trend that optimism they some the Metro recording are for a signs positive for recently commuters announced ridership of This slowly the XX%

San New City, it ago. become the or vibrant the than has continues of months was activity Francisco now X, the Francisco X While York lag more San XX portfolio on to streets

And consistently our been San Francisco have office rising. utilization figures

centrally continues San portfolio attract Francisco to tenants. located Our high-quality

Market Wilson from we the Waymo, quality. was team lease to mentioned York, quarter, meet Waymo lease at with advantage the the this of clients. in the quarter. transaction signed San with continued the and a flight Center quality our first key our Alphabet. ability benefit largest signed a lead a objectives We market, of Francisco discerning previously the XX,XXX-square-foot demonstrates in with lease the of assets most Similar the during new San each both portfolios believe of subsidiary Francisco to in in New the During Sonsini to Clearly, to the namely

the the assets, Partner were achieved includes the from we ESG. to to Department addition Energy. our part Award highest Energy In the A proud EPA tenants of We appeal that and the announce to of Year with market-leading Class XXXX efforts well-located quality of Staff

us XX% will not key to efficiency. and matters in energy who among star Anticipation the reduce the the for the and a on across portfolio. also us labels we top in as of footprint recognized Star in recognized but our is for with responsible For of performance to our a tenants, we focus our office us. achieved of we sustainability our leader achievement thousands that our XXX% carbon a were as consecutive it expenses. one network of participants XXXX owner, tenants mission to a second is This program within the Energy partner only operating initiatives both integral in and as ESG remain energy with year, top space

muted. assets transaction Rising Turning capital, on evaluating that And the There market. will present well-capitalized to many have interest equity there keep the markets come been will remains Paramount. for have remains volatile like continue for horizon, market, availability of opportunities that significant have spread when said, maturities to sellers not firms those certainly and which That and conditions quality wide. to bid-ask bay debt the are debt improve. buyers at rates, activity the

in always we allocating We as will disciplined strategic have. capital be and

a conclude long-term saying Let approach we by business me our with mindset.

which They have and buildings are coastal grown over resilient. evolved over and cycles. markets and in we A economic operate gateway the many Class constantly Our decades

With that, turn the I to Peter. call will

Peter Brindley

morning. Thanks, Albert, and good

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

Our activity York with XXnd XX Wilson Sonsini New was signed leasing at square weighted first XXX,XXX foot leased Street. with we quarter lease powered West the towards by

this completed XXXX mentioned, largest approximately new expiration which XX%. was reduced the by Albert As portfolio’s during most in lease, the significant Manhattan quarter, lease deal our first

this our approximately are San the in signing the more lease expand through expiration of XX,XXX portfolio’s with to double our on remaining base feet of with Wilson who XXX market’s of will York In square and we delighted footprint to signing the the Street. lease of quarter lease largest largest We Waymo relationship Market than completed the their Waymo lease Sonsini, of further New building [indiscernible]. size the the new XXXX lease. in at XX%. Francisco, has reduced This chosen

locate economic office by increasing ongoing are laser-focused increasingly we have the market in Despite operating two buildings become our on evidenced and as basis we trend increased a expect more our while to year-over-year. remain make trends results. highest down economic remain at high-quality And encouraged to during exceptional was in Companies our leased to conditions than points markets. challenging share quarter stable and XX in quarter portfolio delivering return first-quarter the continue on end, We occupancy companies our assets from the progress These throughout down and the recover. best last pursuing environment, of focused and by slowdown, and portfolio-wide result ownership. in activity encouraging, caution services we exhibited same-store with our At companies plan, managers demand. business when leasing current to have quality on XXX basis points our rate them capturing share desire XX.X%, the

square As XXX,XXX share we or look our by ahead, end. year X.X% feet remaining lease approximately at are manageable expirations of expiring

submarkets large XX.X% quarterly Midtown’s our the average. activity. remains to highest quarter-over-quarter during Availability Midtown’s supply/demand in and markets, activity the X-year Midtown first well-located block the quality most estate real space exceeded was absorption active. quarter environment, challenging square approximately XX% leasing negative down was X.X remains million below-average Turning first Despite of as additions renewals, in quarter feet, the below and at elevated down leasing X% excluding

and largest to XXXX updating We Americas We XX the are first year. the had build will in balance in progress Avenue of of success encouraged of the XXnd on of level both quarter interest on look by both in our Street forward XXXX aim we properties. at the we the you to and the over XXXX and our availabilities at West

basis York New and basis same-store Credit Our known the down expiration of result Avenue down points a of points largely of on XX Americas. Agricole is portfolio basis XXXX year-over-year, the at quarter-over-quarter a currently at lease as share, XX.X% XXX leased

square years term at initial During XXX,XXX with square the of a rent per of first feet foot. XX.X quarter, we leased average $XX an weighted

expiration end. X.X% expiring Our year overall is at square New by profile in feet or approximately lease at manageable York share XX,XXX

as headwinds. requirements well-known including Leasing active Turning AI have San companies. now activity Francisco. leading to we macroeconomic the market contend challenges, Despite uptick with remains since these year-end, seen in an from in companies muted

as recovers. continue. announcements has and have we our result return-to-office policy, support utilization also this from reestablish ongoing economy expect within witnessed increased trend own the continue portfolio, many will which will workplace increased when companies the to leasing been leading The We

on similar bifurcation rate, our for at for quarter-over-quarter market. XX space basis tight San availability assets trophy to XX.X% and economics, share, At quarter quality movement remains Francisco, the continues San points resulting elevated Despite to this Francisco down an strong, same-store in premier of York, particularly points Francisco’s down basis the year-over-year. San that was and XXX remains flight and assets portfolio end, ongoing in New basis leased a market

per square leased quarter, with we feet, XX,XXX rent average foot. a of initial first approximately $XX square X term of years weighted an the During

or expires expiring occur lease ahead, X% in will We Uber’s progress. providing portfolio our look San lease share at Market success has our on of Looking by our approximately to most on feet when Market majority updates building XXX,XXX July. year-end. recent Center and square our The Center in Francisco roll XXXX at forward

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

Wilbur Paes

a by off of ahead portfolio, on which a Same-store and everyone. results was own GAAP by good discussion by internal with balance and was quarter estimates. of were on growth followed basis $X.XX morning, a update end Peter, a remarks Core robust positive will of the estimates Francisco first our our up you, details we San XX.X% our I and consensus reported X.X% Thank on our X.X% The covering cash share, X.X% Yesterday, guidance. per and an driven XXXX basis. and our a start on cash quick sheet, basis my of on results, same-store FFO was up prepared a which GAAP earnings basis.

a of Agricole’s cash expected, to of York at up Avenue on X.X% New due the basis Our on GAAP a expiration XXX,XXX-square-foot was XXXX primarily down Credit lease and scheduled X.X% Americas. the as basis portfolio

X out point the results we such, this second first full on February. And that as expired the Agricole’s of won’t end our should at I impact because lease Although months felt revenue same-store Credit had until quarter be the the the in expiration for quarter. of

of years. starting XX the term a feet XXX,XXX foot basis square lease Mark-to-markets space XXX,XXX During average rent weighted and quarter, of we first completed X.X% cash a for weighted square per on basis. on $XX.XX on and a feet of a second-generation square X.X% leasing average GAAP at positive was of negative

position remains end. strong amounted $X.X to quarter liquidity billion over our at sheet, balance to our and Now

is fact cash at is the full have $XX restricted An credit the We and balance which we is million million and under capacity about was up of revolving million important quarter, of prior of secured sheet facility. debt our our have our that share, $XXX tremendously and $XXX cash all non-recourse. underappreciated from yet

similar JV we on quarter, extensions Street terms two of assets, XXX the executed at the substantially During debt. Wall and Street, were loans XX short-term Sutter mortgage that on that to maturing

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

in $XXX debt million $XX XXXX. share We in are XXXX maturing of million maturing at have under and

first the our Turning now per are our to our This we on to remainder share Core is XXXX midpoint. results increasing or up at and to compared the share and our our $X.XX guidance per $X.XX of $X.XX $X.XX guidance, FFO quarter based year, guidance. share outlook be per prior for the between

between X%, to same-store X% is a while to known both cash growth and on basis are negative NOI now point to negative our move-outs and is XXXX, While be Francisco, Same-store to same-store and New negative between same-store by be Uber expecting now expected expect growth we GAAP X%. Agricole growth GAAP San X% cash NOI York and XX basis. continue a negative be of negative in in improvement results in Credit driven expected we in

spending my and by minutes the of me out a on results Let Republic on First couple our of financial close guidance. remarks impact

XXXX continues to its in through First with assumes agreements, and to that Our year-end. GAAP accordance guidance honor rental obligations our revenue Republic recognize we continue under lease

Street leases currently of XXX our share. One Republic square share and of at leased approximately for $XX Francisco. points Front It First million or about accounts represents feet San XXX,XXX of at at our in reminder, a X.X% As rent occupancy basis annualized space

change, will Maze have month that First of $X.X not facts Republic which until on remains about rent current We rent continue already a to and GAAP election and probable. circumstances recognize indicating rental its revenue, we do is received we in million rent.

rent of straight-line As over asset slightly on receivable have sheet of million. we March our a XX, balance $XX

situation We and to continue will monitor closely the you update accordingly.

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

Operator

Our Thank you. Sakwa Please question today Steve will go first ISI. come of Instructions] ahead. [Operator from Evercore

Steve Sakwa

realize fresh legal precedent if Good the like isn’t First any I know is I Republic. Thanks given just as of the sort to of you detail situation. ultimate typical FDIC morning. have I to a kind this JPMorgan. for a sense pretty seizure the and on Thanks. the don’t it’s what sale know bankruptcy.

for or resolved? So plays out do this sense of any kind gets you have ultimately how

Albert Behler

is Albert. we decide now part, reject days’ like morning, has referring I’m if still that’s to predict in first but to calls, way JPMorgan to way place, they From to. about or very accept premier talk you to XX in stay early Steve, It’s Well, good what too what Francisco, space about asset really think this it’s know and real space, estate I early. understand, occupy about most had the XX but we anything figure time will you’re And have too and what it. what the that space to San that and the we is would talking days one guess, out they that early it’s front of else.

Steve Sakwa

you And the derisked the in then that see little last some hopper And maybe, I call about the you’ve space deal. Thanks. with think Waymo a I having for for of Great. deals I talked space. had Peter. bit the Uber one on guess,

was near-term are Waymo in Francisco you one maybe what But for San seeing activities expiration? presume of I just So this them. other

Peter Brindley

Yes.

won’t think, come a as I surprise. Steve, this

dealing challenging seeing not We’re is first velocity said, to Francisco. San That office. We only with we in The being light saw notable challenged. are in environment a return the market a quarter. leasing

would are are ownership. we with ever real and on it be, feel has weeks. But where discerning more over demand, We expect, good like tenant managers not last also estate as really would increase an increased, who we’ve increase higher-quality with the focused it X seen in utilization. seeing tenants are a stable to it, significant It’s We in about X high-quality to you that. all but call than

are do and located. role, aware Nothing course, And can So question very that to of opportunity certainly building well year. point. have get we which activity. this further We, are back of will of answer your the specifically, brokers course, well very to more It’s this specifically at shows and share both working de-risk The well. tenants Paramount. I later

to anything forward level more don’t we today calls, And about so on feel okay I other of but specific future we to have interest. say look the you updating than

Steve Sakwa

And last for me. one Okay.

don’t talked leverage now. opportunities. on that I with Albert, is Just of the share realize alternative an might think buybacks but of and market higher you sort investments? And the the bought about I back end quarter, be right stock you against Board new you in to net in new remain challenged the how thinking and what potential about are which well opportunities office, investment comfortable as debt-to-EBITDA maybe investment

Albert Behler

very on opportunistic our mean, – will careful I Steve. future have it own also with disciplined. calls be being any a and history on said already, last we very acquisition. And question, good equity but Very I very, the of spending

lot think has bid-ask a So spreads. that said, the currently market I of

be So for opportunities. development there will

We have relationships.

know, that foreign be on for arises. opportunity to who a a but some we the that like experience would have have in didn’t looking it’s – performing property did investors quite an – And the and past talking that the we an well lot acquired there the management those for very potential lot and was have are them, equity, boots are of time. its company you a kind As management, invest of ground XXXX exposure. we with building, When when go group Broadway, of knows investor M&M very that especially investors that, happy back actually, the asset the to and leasing an who experienced situation the if for and investment. And are they love team looking as we

Steve Sakwa

for Great. Thanks, that’s it me.

Albert Behler

Thank you.

Operator

[indiscernible] of from of Bank go come ahead. will next Our Pleas question America.

Unidentified Analyst

morning. good Hi,

strong if be back not one Just negatives their you do How there that terms of to of think around view? opinions positive with and lot as and landlords are been can’t starting handing whether capital of a one taking this keys what your has come or and in your options markets, about debate with the lenders. approach should

Albert Behler

Well, the you is to have from that company. heard Wilbur’s basically non-recourse our debt remarks

on each We a are evaluating case-by-case case basis.

in to are share of not a position currently We a lot detail.

it think I really depends.

relationships We understands – they I And someone over also estate. to have it’s reality the face decade. have our with need who lenders real lenders that think a good

both giving about keys. thing not talking an easy for You’re back It’s parties.

it’s this maybe can we far, more So done we have we history the But we couple and we long-term About of into our our of pretty go can have of spread, years. position Wilbur this the the debt. and basis. that in have details, of is – re-evaluate never over are a debt Paramount, a good in a but and staggered evaluate case-by-case so on XX% lot debt

look case case-by-case a will we on at So each basis.

Wilbur Paes

to Sure. the be in case-by-case to able obviously, debt, that, economic sense to for a we make toolbox. the It’s operate said, and would you thing Kamil, It’s a asset doesn’t do if Albert it you that as the add, evaluate that only I tool have on to that ability basis. is reason non-recourse I mean the continue right?

with lenders And knowledge landlords our workouts the do this to across crisis. vantage JV to short-term our pain. is come a operator have of quarter, be groups. extended to going lot And that There out couple it’s where of going from You wherewithal this to a loans. and the able everybody we some point, saw of is have market a be to work want

have be will to parties. beneficial to discussions. be we but tough, mutually They so both have And they those will

Unidentified Analyst

out, best-performing a we’re you of I for bit One your within far your know the amount Plaza has who of Thank a portfolio. recently quite And but been large leases responses. still Visa, Market space There one relocating plans One sublet vacate be similar in ultimately around HQ its Street. a Mission it their to trend decision to announced Market Bay. seems Plaza Market that new Uber’s to to at offices to before assets

CBD could and you share in fits core with this if headwinds trophy PGRE for of the San supply these how competitiveness views wondering about Just your strategy Street Market Fran large context? demand or

Albert Behler

had was headwind in Plaza. Well, out, I When that when was the lease there. purchased very already XXXX. work large and beginning, from that clear, expires they is the supply knew we there on is their we the was moving Market Center, asset wouldn’t say something a with headquarters that Uber Market One bought This

was fantastic done one same is $XXX a time in is square in team of tenants leasing over – not on in the if two have to there get of Peter floor. a market, between this a cases, and best, So building case, the in many job San lot there XXXX. foot. one at now there his the been, a even have arguably and And space leased Francisco. best This between competition And recently,

we So we with that’s good will tackle Uber in that time. a over It’s don’t that a I are because tackle in it time. normally will and that’s making and demand, trend space think of decision.

Unidentified Analyst

for this XXXX question follow-up mortgage terms? see ability your loan Do refinance impacting a similar to at the in you announcement Wilbur. coming recent And due

Wilbur Paes

mean I X%. No. similar one, terms, that current I don’t at is comment debt –

You’re on San X% to see New Francisco. money going any not or York City in building in

way terms, similar sponsors don’t and to between asset. it Paramount is has of refinancing tenancy. had very I any more right one with best coverage, good It has the know great issue here. the a I in arguably don’t expect terminology market capturing of flocking as assets terrific and the that asset We’ve of than if that our So That is asset. demand fair history Blackstone. share

Unidentified Analyst

you taking Thank questions. my for

Operator

from Our Heck Wells is next ahead. question today of go Blaine Fargo. Please

Blaine Heck

morning. Great. Thanks. Good

on you loans those some of on piggyback and to infusions XX with questions were of to or earlier those in the partners make required Sutter, connection some your extensions on equity XXX extensions? Wall executed you Just that

Albert Behler

is currently on February. the So in no, no was let loan for project terms, mature yet. is development. scheduled by Wall, XX same infusion under you year to extended We me as loan each short-term take equity That that a itself. know, a

X%. with Recognized we are for to continue negotiate We us, the lender.

zero you discussions debt at about million having is on So balance right look which our we and of has share, have a a XX at lender sheet, Wall view our balance with – a $XX group we’re sheet assets. When our the non-income-producing EBITDA. now. partners It’s view, have

sheet, we come So it agreeable solution it improve a our off mutually don’t out to come and balance turns that metrics. that will will

Peter Brindley

let And on add me that.

have we to not the lending the is renovate asset. them. of – and is of that have knows invest to group that Blaine, millions And it’s something is available not think that We seen hundreds willing venture dollars joint I by

it’s a Nobody good said, to to So the of the term terms matter we bad like makes an that to money not evaluated. it’s for for have after invest parties. Wilbur millions renovate know dollars asset. If has sense both of good would come hundreds you, a for investment not throwing money future to also that be

Albert Behler

then that in debt came March. Sutter, due And on XXX

that the capital It’s have We we not going to but extended in ‘XX. any of that. May be are terms, putting through same under

our with That a We that That loan. challenged. essentially, going that’s capital move being XX% project. that asset be sheet continues not So talked market to to to to leased. the able about balance the lender invest going to challenged. we’re from partners flow are agreement remain We cash came asset is forward not any Peter and group invest. on our to

have we our quarter. already know, of pick we the picked be earnings, principal flow will loan that we’ve share balance. in off it our written our but cash shortfalls you so as last the And investment asset to in that up will And a

today, reassess from to will by And into we So a it. our year capital a market how not we’re in protecting see balance how then sheet that our going from own develops, investing today. year the develops

Blaine Heck

both of Great. you. Very Thank helpful color you. from

that us a TI package and both Second and guys can color Clifford where is Chance is any question, on on the you paying look Sonsini maybe the relative that free and perspective? what lease Wilson give from to concession rent like rent lease what

Albert Behler

interestingly it lease. we Sure. lease our York, square-foot ordinarily, that I not the That had reality but up would shows in we enough, staff. mean that, was in and New give XXX,XXX is

feet to Bank increasing the $XX saw former on Chance vacant XX,XXX initial absorb we The served space. rent relative to the that said I de-risk it think place, the was serves deal square floor. it occupancy Clifford You TD a remainder mark-to-market foot, Clifford to of a was really because Chance

X.X%. XX,XXX the saw So negative on square was mark-to-market feet, the you

So in the are published stats Blaine. leasing our results,

Blaine Heck

Great. helpful. spend regard higher generally, less landlords on are their can rates have then impacted TIs higher I based of And to competitive a talk how to cost you assume bit little on kind TIs? of capital. That’s about the landscape interest willing just with some

So respect how to differentiate free itself And you with or compete base out can that play increasing does think PGRE rent how lower that in rates? do environment? to

Peter Brindley

Blaine, this Peter. is

owner’s I are to it functioning that compete in in transact given with and a terms historical and prospective shrinks brokers tenant well-capitalized commitment. concessions. we be it can is But I that the they because to they to were ability and tenants who a this market are buildings at execute deliver transact building I’m of to concerned had our about about I owner actually on in and the that think able I respects, They in ultimately. environment significant many the were seeing to uptick we’re know where levels. think that the that direction ensure in on to think within. are a able don’t we’ve deal that seen already extraordinarily mindful terms considered of – and want influence true,

And play the it think our seeing and inures in we end. so it benefit out to real-time, we’re

Albert Behler

term has landlord not to it quality asset only essence, quality the to to that the quality. broadened, applies the flight does In apply

Blaine Heck

all. That’s helpful. you Thank very

Albert Behler

Thank you.

Operator

Thank you.

ahead. Malhotra of question next Please Vikram come today the go from Mizuho. Our will

Vikram Malhotra

question. the Thanks for taking

And bigger early a some had with leases. consolidating. process any stick on Francisco to be building will am early conversations this tech I the is Google? concessions Google may lease generally there Just or is but the and San obviously in if I you campus on to down had have conversations road? you or Any assuming larger of know sort have of X their wondering years out,

Albert Behler

this behind talk Albert. to Vikram, Francisco too think about to do. are San would work. tenants on is the to coming Hi give It’s say I early back is or I office And any on going what predictions

over dramatically I stabilizing the last would really months. positive dramatically say, I a of last, way it’s in York, in mean New couple in Here the substantially –

are XXXX talking now We from Broadway.

most still days, in is means That are in That is office. different people We in and the San back XX% – occupancy. to that Francisco.

sits the However, – And couple we in it more on we interest the But San to increases best funds, picked Francisco New picked condominium tower And I so, say months. have York sales over has been weeks for the up over deals. last last our developed San at the also making are of have up now condominium months the regard Embarcadero. last in than could drastic was has been waterfront sales. relatively through quiet that tower one have Francisco. or six arguably it’s significantly of the And right XX and the with and

So, now kind lifetime markets. X of these in is years a from

by is till So, stay it new alive ‘XX That’s time they alive till determine at will call ‘XX. a one. I stay one Sam out, would

So, Things you to dramatically, have are patient. a changing little be very quickly.

Vikram Malhotra

enough. fair that’s No,

work terms cash are cash the future exploring given you you decided the or postpone what Just dividend us talking And seeing on the done clearly, am how and have in about of in thoughts your still pieces mind and dividend peers just how Do payouts. cut there here, terms of ‘XX, flow. we Some be are just about you re-leasing. outlined, you coverage? the about wondering I have think is you or I guess, at to moving look stock yield to potentially all Wilbur, just thinking of updating if dividend

Wilbur Paes

details, at talking something The these decided that carefully. is and very, Board, in kind basis, the something where And this, times about think I more company early is are is gets the to very ask their and this give management Albert by a what we it’s – here. policy quarterly the Vikram. on is heads that’s together a then Board. will we say things of recommending to And to are but especially looking too putting planning dividend I

Albert Behler

right. believe not stock our come I market is – where our to where will we at the No, the is, what discuss mean we happening it peer stock exactly this Yes. lost in on It’s I is. is Board. continue us

taken. they actions the seen have We have

it done more have Some once. than

We today. the our on is dividend evaluate. recognize profile. recognize to continue So, stock We not we trading yield the that

so to that. come more And on

to to continue discuss, We and more will come.

Vikram Malhotra

recent bigger one have in York referenced well. Francisco some have San the on in handed side. players improving private traffic workouts, guess just been you other question, I back then the keys And There the Albert, Okay. New picture and months as improvement

from want I you are of things are sort add in suggest, terms would monitoring are am want on sort make types – just markets. to are of Paramount we your that So, finally the wondering work? offense in of you put it’s value I to other okay, now buildings that monitoring to go of seeing things whether What to am the or we are would if what trying things wonder core capital inflection inflecting,

Albert Behler

cycles. these between and question, the referring to and good are before kind big even careful, have historically I the we very in Very market Vikram. very difference so And bid before, of opportunistic were we and And – ask think I expectation. been mentioned we

you of and at takes look to that getting for be sense of we has and to years. they location again, certain it kind be the has very find we but And Paramount, next think It’s here, a capital if you in want to certain the – long-term as our And these for some the it’s team have available, have it find It’s might to it as but capital will sometimes out to of a look business. not what have characteristics, acquisition, market But have close opportunities. for of that’s there you to lot happens that stock would to want but quite in If think to be mass such, are So, to us, have valuation invest improving asset are and capital we looking parties put the capital, attractive I I point is own it a acquisition right market. where more equity bottom. pickers are on structure, But are to active I asset we there make making if you for – careful. impossible what’s an money. funds view, time. very, to the we see lot is is really pickers. mass not are going important come. And and it there, pain We, long the its the from know, say evaluating

Vikram Malhotra

much. Great. Thank you so

Albert Behler

You’re welcome.

Operator

from ahead. Our go Please next Derek Bank. Johnston question today is Deutsche of

Derek Johnston

go Hey than term around wanted they a TI I early the for X everybody. to square San XX,XXX received is Francisco, afternoon. Good years that XX% morning ideal I of feet, just less package guess or back there TI, starting rent. of in specifically at to nice volume but was

there San somewhat just is market? was nature, the something is norm in deal, TIs this for about a this new wondering, something in I or the special of one-off So, Francisco

Peter Brindley

would It likely to improve elevated We the No. concessions to the those think shorter is Hi use the is though a historically. were felt their overall productive the And space. to good, intend believe about expand to candidate that the building. We we potentially the to within term Derek, space. dollars continue slightly Peter. Waymo about deal. tenant. own deal, continue improve We were was been excited that relative this say, are a will I to even have they where very of we economics They

Wilbur Paes

estate will when thing what transacting, the to the business only of The Yes. I you is saying, economics at look add Peter typical downtime maybe When okay. a and killer, value real downtime. is we highlight

done the ahead chunk have We Uber of now a expiration. space de-risking of nice its

ahead expiration. of chunk nice this space Chance a Clifford the de-risked have of We

not Agricole of of We is square have about. feet de-risked now expiration. by with And the feet eliminating of downtime the leasing XXX,XXX ahead last square XXX,XXX Credit with talked savings That’s its tremendous square feet, nine on activity months. a that O'Melveny XXX,XXX amount over space

Peter Brindley

leases assets that it. to approaching talk And a on more is And especially bit the we making be laser-focused about for and you plans of own, little if lumpy. early team those seem these expirations kind

Derek Johnston

beat our was the the helpful. definitely the leasing also to second that quarter, sense. why early this internal is, you volumes expectations with Peter good guidance you Now, pretty the leasing the impressed with guys with question in here Waymo, at what make unchanged opportunity were said very seems I I we guess it strength year. And But that’s saw given expansion kept DB. very specifically, wondering

Albert Behler

year. early in the very It’s

can’t it, mentioned leases you when have negotiated as are we why to very didn’t is change I that’s these be the and hard it. going expect – predict decision to sometimes lumpy. said ago, very made. part And You is the for and a It’s minute month-on-month. It’s

why it, So, changing are doing things. that’s we not

Wilbur Paes

falls range. you annualize to guidance, number, if if the the mean at I were that it you And Derek, look within even

it between midpoint above is feet slightly of square So, our falls feet. where the and current range XXX,XXX square XXX,XXX

this that Albert so And as felt point. it we to at said, early was too adjust

Derek Johnston

something them it if And recover to decides to not you possible even there and look, that to when Okay. is just but acquire to way Fair just any analyst, am I you loud, or there that And lastly, JPMorgan wondering the a can’t force out usually, recourse And the just acquire expiration liabilities. First and that assets rent. are the if space, lease a take any somewhat fee enough. you any ways have not space? you bank can if Republic, thinking perhaps sizable monetize I pay potentially you could am occupy continue

bankruptcy I bankruptcy thinking you Just isn’t where don’t traditional once again, out protection, like really have a This know. right. loud, court

Albert Behler

too This should we Yes. I do, that. do earnings we call, early. ago I it two would on days leave an speculate was to what it’s at not can it and Derek, clearly think

Derek Johnston

Appreciate Thanks guys. it.

Albert Behler

Okay.

welcome. You’re

Operator

Please is Ronald Our today of question Kamdem Stanley. go ahead. next Morgan from

Ronald Kamdem

Hey.

quick of ones. couple a Just

So, XX on Mission Sutter was Street. and Wall you Can saw extended. XXX the comment XXX

those I forth? was other does How think that the so cause that and coming Thanks. piece. debt conversations

Wilbur Paes

pointed broader in year, the of market. in this September we starting XXX – matures oh, are a year and So, process out, as of you October Mission this to launch

group is role, asset. asset, It’s existing of obviously in has asset have a That It envision I well-leased. with plenty at that current to I north continue well. to us and the no refinancing where negotiations major it successful is. terrific lender mean rate We albeit coverage. debt has interest would as near-term the be of

Ronald Kamdem

to market sort sense. team, what a was better. sublease, on How figure sort of sort of sort just because Class wondering, is of about same A to bottom? if sort been needs in and that? guys look San it. you just Francisco, you stops Autodesk if earlier the question It just there needs guys Do and you Visa going then are right? How Got the of what the then bigger-picture this article I to something market need Because to for Visa doesn’t wait out in wrong direction, it Makes B feels have you the are everything on if availability, of happen Francisco see of you or trying Just they catalyst. get And look saw sort it? to like we at And at in that governmental? Albert cycle? like about and thinking some And you seem a going San year. be obviously, thinking

Albert Behler

Yes.

tremendously to XX say. These And we you also little XX that months. and of another starts a of before it know But back-to-the-office New I ago will terms think And because a it last I over on developed, Waterfront this mentioned cycles. mentioned is market I sales have bit. can answering about weeks. And in am months. quite time, activity that the will then go next for question I it say, news, has a you see, condominium would over – behind couple York right a Peter minute Francisco in markets that you I talk for the tower sorry had long – confident might old But impact that’s the no the up had Peter users. it in San with Visa with will details. give picked clearly

confuse public it’s have the sales. interesting that has Now, couple we But is – this a in is not a couple so see visitor funds to just have company in It’s Paramount’s and held fund. very to that of a in sold There activity. of small held of we There anyone. fund, the activity. is recently, interest one

comes but they So, goes back I And Francisco San quickly, market that old think the quickly. then news also is you down pretty is of getting some a are today – news.

Peter Brindley

did clarify, Visa. on another to question get just Ron, Yes. we

unable clarify feet. XXX,XXX leased because to Just after for were ago, accommodate X one at market so signed lease well that market and one roughly occurred square that to is years was them we

we to to in-person work is I that’s has news. wanted something with this think this and been be down in going specifically significant. leasing is capital And clarify San cost is extent, there about office uptick old have we tech very demonstrative return on the We office the a improve settle importance right some us. an to going to forward. preservation, needle know been for had most is focused just the and – increase acknowledging economy think very it as to And starts been Companies, to etcetera. mover companies. of controls, to the now that. about recently, I return But but are the Companies course, of do ultimately realize significant. that So, impetus written Francisco think

Ronald Kamdem

Hi. Thanks so much.

Albert Behler

welcome. You’re

Operator

Michael from Green go of Manos comes Street. today question next Our ahead. Instructions] [Operator Please

Michael Manos

of and morning. potential one that as has at in and just triangulating come it may capital? that acquisitions repurchase is kind like understand this question, markets million a left looking Dylan cash really for at authorization. use to current on are of the And you mindful on Mike mostly together, kind some cost you seems guys be capital large continued there looking $XX to quick looking It’s sheet, distress like guys. of balance share also your have JV just current Hey your it up guys seems balance But of everything grow then

if guys balance. just curious for you that So, cash any large plan have

Albert Behler

Let’s start with the buyback.

quarterly that We the are basis. on a with Board discussing

We are not very increase leverage. carefully looking to

own are clearly our right, comes company neutral. a it The we know company, sheet. we very the with talked it this, leverage call your be because I in balance clean on you assets. happens about to this like will ago, and you has with this careful don’t – times When do minute a capital what acquisitions, So, try to

balance all. And no have it and debt like to we have sheet, at on and would on clean. assets no assets non-recourse have debt some we debt We keep only

company But in there not past. in something fund there how We we capital out opportunistic clearly grew acquire past been the the and PGRE. and equity from have is with will if go rented significant business and opportunity, that’s this an

are We venture we that assets, at who and familiar will situations with us. with A look opportunities who and opportunities. will They are interested we the joint difficult boots venture leasing are experienced at ground partners to with on want the only have look Class

will about focus this is quality, a very, couple go And is on of key. we where the very where think quality team this to. talked careful. times, will I And to want that’s that be tenants we

Michael Manos

That’s Thanks. for me. it Great.

Albert Behler

Thank you.

Operator

to we showing our to remarks. time, over will this conclude questions, further no turn closing question-and-answer Albert the back conference I for at And Behler session. would any like

Albert Behler

joining quarter our very Goodbye. much, you we Thank us of on for progress XXXX forward all today. you We when our results. look giving continued to second report update an you

Operator

now has you attending today’s conference We presentation. thank The for concluded.

lines. now You your disconnect may

Paramount (PGRE) 4 May 232023 Q1 Earnings call transcript