Release Date: February 28, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q: Could you explain why a significant lease fell through at the last minute? Was it due to location, tenant hesitation, or rental disagreements? A: Peter Brindley, Executive Vice President - Head of Real Estate, explained that the exact reason is unknown, but it is highly unusual for a lease to be pulled at the execution stage. The team is now focusing on other interested tenants for the same space, which is in a prime location atop the Paramount Club. Albert Behler, CEO, added that the new leases being negotiated are at higher rents, indicating positive momentum.
Q: Can you provide an update on the status of non-core assets like 111 Sutter Street and Market Center? A: Wilbur Paes, CFO, stated that there is no immediate risk to Paramount's balance sheet regarding 111 Sutter Street, as they are not funding debt shortfalls. For Market Center, the asset is in the market, and a deal has been awarded. They expect a resolution by the second quarter, which will remove the asset and debt from their books.
Q: The 2025 leasing target seems ambitious compared to 2024. What gives you confidence in achieving this target? A: Albert Behler, CEO, noted that the market is shifting towards 6th Avenue and the West Side, where their assets are located, providing confidence in achieving the leasing guidance. Peter Brindley added that they have a strong pipeline with leases out for 350,000 square feet and advanced negotiations for over 200,000 square feet, supporting their confidence in reaching the target.
Q: Leasing CapEx was at a high level in Q4. Were there specific leases that drove this increase, and what are you seeing in terms of market concessions? A: Peter Brindley explained that the high CapEx was due to a turnkey space deal on a lower floor, which was higher than usual. He expects pricing power for high floors in the future due to scarcity. Concessions have stabilized, and while free rent may remain elevated short-term, tenant improvements might decrease as the market tightens.
Q: What is the plan for backfilling large tenant move-outs like Google and JPMorgan in San Francisco? A: Peter Brindley mentioned that they have several leases out and are enhancing amenities at One Market Plaza and One Front Street to attract tenants. They are seeing increased tour activity and inquiries, indicating a positive trend in San Francisco's leasing market.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
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