NEW YORK--(BUSINESS WIRE)--Paramount Group, Inc. (NYSE:PGRE) (“Paramount” or the “Company”) today announced that it has entered into an agreement to acquire One Front Street, a Class A office building located in San Francisco’s highly desired Market Street corridor. The purchase price for the asset is $521 million, or approximately $800 per square foot. The transaction, which is subject to customary closing conditions, is expected to close by the end of the fourth quarter of 2016. In connection with the transaction, the Company is considering various strategic options, including bringing in a joint venture partner at the property or selling an asset within its portfolio in a tax-efficient manner.
One Front Street, which is currently 99.4% leased to a variety of tenants across various industries, consists of approximately 651,000 square feet and a 290-space parking garage. The LEED Gold, 38-story property offers the amenities and physical features that San Francisco office tenants demand. One Front Street is ideally located in the heart of San Francisco’s central business district in one of the most desired locations for professional services, financial services and technology tenants. Additionally, the property is within two blocks of the Transbay Transit Center, a $6 billion modern regional transportation hub deemed the “Grand Central Station of the West.” The Transbay Transit Center, expected to be complete in late 2017, will accommodate up to 45 million passengers per year.
“We are delighted at the opportunity to add another Class A office building in one of the strongest markets in the country to our trophy portfolio,” stated Albert Behler, Chairman, Chief Executive Officer and President. “We expect that our proven, pro-active management approach will meaningfully increase the net operating income from the property in the near to medium term as the existing leases, which are approximately 20% below market, expire. In addition, we are evaluating certain redevelopment opportunities, which could unlock additional value in the next three to five years.”
About Paramount Group, Inc.
Headquartered in New York City, Paramount Group, Inc. is a fully-integrated real estate investment trust that owns, operates, manages, acquires and redevelops high-quality, Class A office properties located in select central business district submarkets of New York City, Washington, D.C. and San Francisco. Paramount is focused on maximizing the value of its portfolio by leveraging the sought-after locations of its assets and its proven property management capabilities to attract and retain high-quality tenants.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Federal securities laws. You can identify these statements by our use of the words “expects,” “plans,” “estimates,” “projects,” “intends,” “believes” and similar expressions that do not relate to historical matters. You should exercise caution in interpreting and relying on forward-looking statements because they involve known and unknown risks, uncertainties and other factors which are, in some cases, beyond Paramount’s control and could materially affect actual results, performance or achievements. These factors include, without limitation, the Company’s ability to satisfy the closing conditions to the transaction described above, the ability to enter into new leases or renew leases on favorable terms, dependence on tenants’ financial condition, the effects of local economic and market conditions, and uncertainties detailed from time to time in the Company’s filings with the Securities and Exchange Commission. Paramount does not undertake a duty to update or revise any forward-looking statement whether as a result of new information, future events or otherwise.