Published: Date
Paramount Group Inc. (PGRE) has announced that its earnings will be impacted by recent lease changes involving JPMorgan Chase & Co. and SVB Securities. The real estate investment trust, specializing in office properties, stated that these lease adjustments will result in a reduction of $19.6 million or 8 cents per share in net income for the year 2023. Additionally, revenue will be reduced by $5.7 million.
Lease Changes at One Front Street Property in San Francisco
Paramount Group disclosed that First Republic Bank leased a total of 460,726 square feet at the One Front Street property in San Francisco. However, following JPMorgan Chase & Co.’s acquisition of First Republic assets, the bank decided to assume the lease agreement for 344,010 square feet of office space, while surrendering 116,716 square feet.
Lease Termination and New Agreement with SVB Securities
In a separate arrangement, SVB Securities, a subsidiary of SVB Financial Group, had leased 108,994 square feet at Paramount’s 1301 Avenue of the Americas property in New York. Unfortunately, due to SVB’s bankruptcy, Paramount terminated the lease. However, the company has entered into a new lease agreement with the entity that acquired most of SVB’s assets. The new lease includes 61,183 square feet on a long-term basis and 40,811 square feet on a short-term basis.
Stock Performance and Market Comparison
Paramount Group’s stock has remained relatively stable in premarket trading but has experienced a year-to-date decline of 27.1%. In contrast, the Real Estate Select Sector SPDR exchange-traded fund (XLRE) has recorded a gain of 2.8%, while the S&P 500 (SPX) has advanced by 14.9%.
