Tags: Paramount | Group | IPO | REIT

Paramount Group Files for Biggest-ever IPO by a REIT

Wednesday, 27 August 2014 06:15 PM

Paramount Group Inc., a U.S. office landlord, filed for an initial public offering that is poised to be the largest ever for a real estate investment trust.

The New York-based company plans to raise more than $2.5 billion in the offering, according to people familiar with the matter who asked not to be identified because the information is private. The company’s filing Wednesday didn’t give a price range or number of shares to be sold. Paramount had filed a confidential registration statement with the Securities and Exchange Commission last month.

The company, which plans to qualify as a REIT, owns or has stakes in 12 office buildings in New York, Washington and San Francisco. Office rents in the two coastal cities are growing faster than in many other parts of the country as the economy grows and technology companies expand.

The largest IPO of a U.S. REIT was the $1.4 billion offering by Douglas Emmett Inc. in 2006, according to data compiled by Bloomberg. There have been only three initial stock sales by REITs this year, according to the National Association of Real Estate Investment Trusts. There were 19 in 2013, the Washington-based trade group said.

Paramount’s properties, which include San Francisco’s One Market Plaza and New York’s 712 Fifth Ave., were 90.7 percent leased to 253 tenants as of June 30, according to the filing. Its New York buildings accounted for 76 percent of its annualized rent.

Placeholder Amount

The filing Wednesday included a placeholder of $100 million, an amount used to calculate registration fees that will change when the company sets the price range and number of shares it will sell, closer to the IPO.

Jason Chudoba, a spokesman for Paramount, declined to comment on the offering.

Effective rents, the amount paid after landlord discounts, may climb 6.1 percent next year in San Francisco and 5 percent in New York, compared with 3.8 percent growth for the U.S., according to a Reis Inc. forecast.

Paramount’s predecessor company was founded by Werner Otto in 1978. Otto, who started Germany’s largest mail-order company from a shoe factory in Hamburg, died in 2011 at the age of 102. In 1965, he started ECE Projektmanagement GmbH, which has grown to now manage 196 shopping centers, according to ECE’s website.

Paramount is led by Albert Behler, its chief executive officer since 1991.

The underwriters on the offering are Bank of America Corp., Morgan Stanley and Wells Fargo & Co.

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Paramount Group Inc., a U.S. office landlord, filed for an initial public offering that is poised to be the largest ever for a real estate investment trust.
Paramount, Group, IPO, REIT
Wednesday, 27 August 2014 06:15 PM
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