Paramount Group’s Second Quarter Revenue Insights

During a recent earnings call, Paramount Group discussed significant leases that weren’t previously reported, alongside a new lease that was signed after the quarter closed.

CEO Albert Beller shared with analysts that 1301 Sixth Ave., a key asset in Midtown, successfully signed a lease with investment bank Piper Sandler for 140,000 square feet. Shortly thereafter, law firms Adler and Stachenfeld secured another 40,000 square feet following the end of the quarter.

Although JLL’s Frank Doyle and Andrew Coe were tied to both transactions, they didn’t confirm any specifics. It’s said that a different JLL team represented Piper Sandler, while CBRE also facilitated Adler Stachenfeld’s deal.

The initial rent for these leases is reported to be over $90 per square foot, according to a Paramount executive during the call.

Additionally, Behler, along with Executive Vice President Peter Brindley and CFO Linda Belbergli, revealed:

• Paramount leased 690,000 square feet of office space each year across New York and San Francisco, with 52% of that in Manhattan.

The New York portfolio boasts an 88.1% lease rate, the highest since early 2022. Behler remarked, “The city continues to demonstrate strong resilience and quality demand.”

However, this optimistic data doesn’t factor in the vacant 60 Wall St., the former Deutsche Bank building, where Paramount has invested $250 million for renovations—a detail confirmed by a Paramount representative.

Curiously, no analysts from Cole inquired about this. If the 1.6 million square feet of 60 Wall St. were included in the Manhattan portfolio, the occupancy rate of 88.1% would be significantly lower.

When questioned about debt, Behler mentioned that over 97% of leased assets are backed by solid performance for liquid and functional debt markets. He expressed confidence in their plans to refinance these assets, promising more updates in the future.

On the topic of Showtime Network’s upcoming exit from 1633 Broadway next year, where they occupy 260,000 square feet, Behler noted, “The building has maintained a steady leasing flow over the last decade, with retail tenants like the popular Taiwanese dumpling chain, Din Tai Fung.”

He added that projected rents at 1633 Broadway range from $70 to $90 per square foot, calling the current climate quite favorable. It looks like a promising situation as they anticipate changes following Showtime’s departure.