NEW YORK CITY—Paramount Group Inc. has made its public-markets debut, setting a new record for a REIT's initial public offering with a $2.3-billion IPO. Sales of the office landlord's stock began on an upbeat note Wednesday, with shares trading at 5.9% higher than the IPO price of $17.50 per share, or $18.49 per share.
Trading on the New York Stock Exchange under the PGRE symbol, Paramount—which owns properties in New York City, Washington, DC and San Francisco—expects net proceeds of $2.1 billion from the IPO. It has granted underwriters a 30-day option to buy up to 19.65 million shares at the IPO price to cover overallotments, which would garner about $340 million more in gross proceeds. Bank of America Corp., Morgan Stanley and Wells Fargo & Co. are listed as joint lead arrangers and joint bookrunners.
The IPO priced at the mid-point of the range Paramount set in an SEC filing earlier this month. Although the $2.3-billion haul falls short of the $2.5 billion that could have been raised had the stock priced at the top end of $19 per share, it's still comfortably ahead of the $1.6 billion raised by Douglas Emmett Inc. in its October 2006 debut.
Paramount's SEC filing earlier this month listed a dozen class A assets in the REIT's current portfolio. In Midtown Manhattan, they include the company's headquarters at 1633 Broadway along with 1301 and 1325 Ave. of the Americas, 31 W. 52nd St., 900 Third Ave. and 712 Fifth Ave; while Paramount's DC assets include 425 Eye St., Liberty Place, 1899 and 2099 Pennsylvania Ave. in the nation's capital and Waterview in Rosslyn, VA. In San Francisco, it owns One Market Plaza, and recently announced that it would buy a second asset in that city.
The properties were 92.1% leased to 260 tenants as of Sept. 30, with rents averaging $65.20 per square foot. They range from $42.93 per square foot for 425 Eye to $96.22 to 712 Fifth. The Manhattan portfolio represents 75.6% of annualized rent, while One Market Plaza represents 12.7% and the DC holdings provide the remaining 11.7%, according to Paramount's filing.
Not included in the SEC filing is the newest Paramount acquisition, 50 Beale St. in San Francisco. GlobeSt.com reported in September that the company paid $395 million to acquire the 23-story office property from a joint venture of Mitsubishi Estate New York and Rockefeller Group US Premier Office Fund LP. Paramount said at the time that it's contemplating a retail development plan for the 662,060-square-foot tower.
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Paul Bubny
Paul Bubny is managing editor of Real Estate Forum and GlobeSt.com. He has been reporting on business since 1988 and on commercial real estate since 2007. He is based at ALM Real Estate Media Group's offices in New York City.
