Paramount Group, Inc.

Good day, ladies and gentlemen. Thank you for standing by. Welcome to the Paramount Group third quarter 2020 earnings conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. Please note that this conference call is being recorded today, October 29, 2020. I will now turn the call over to Rob Simone, Director of Business Development and Investor Relations.

Thank you, Operator, and good morning. By now, everyone should have access to our third quarter 2020 earnings release and the supplemental information. Both can be found under the heading financial information quarterly results in the investor section of the Paramount website at www.paramount-group.com. Some of our comments will be forward-looking statements within the meaning of the federal securities laws. Forward-looking statements, which are usually identified by the use of words such as will, expect, should, or other similar phrases, are subject to numerous risks and uncertainties that could cause actual results to differ materially from what we expect, including, without limitation, the negative impact of the coronavirus COVID-19 on the U.S. regional and global economies and our tenants' financial condition and results of operation. Therefore, you should exercise caution in interpreting and relying on them. We refer you to our SEC filings for a more detailed discussion of the risks that could impact our future operating results and financial conditions. During the call, we will discuss our non-GAAP measures, which we believe can be useful in evaluating the company's operating performance. These measures should not be considered in isolation or as a substitute for our financial results prepared in accordance with GAAP. Reconciliation of these measures to the most directly comparable gap measure is available in our third quarter 2020 earnings release and our supplemental information. Hosting the call today, we have Albert Baylor, Chairman, Chief Executive Officer, and President of the company, Wilbur Pace, Executive Vice President, Chief Financial Officer, and Treasurer, and Peter Brindley, Executive Vice President, Leasing. Management will provide some opening remarks, and we will then open the call to questions. With that, I'll turn the call over to Albert.

Thank you, Rob, and thank you everyone for joining this morning. We hope that everyone is staying safe and healthy. We at Paramount are back in the office in accordance with the city and state guidelines. I'm very proud of my team's resilience and commitment to Paramount. Core FFO for the third quarter was 22 cents per share and was once again impacted by straight line write-offs in the quarter. Notwithstanding this, our core FFO results were roughly in line with consensus among our analysts. Since the onset of the pandemic and the uncertain outlook, our results are demonstrating the strengths of our assets and their resiliency during this crisis. We continue to benefit from having a high-quality portfolio of trophy assets with a blue-chip tenant roster and very limited exposure to retail. Our collections have remained solid and consistent and have not materially changed from our pre-COVID levels. In fact, portfolio-wide rent receipts were 97.5% in the third quarter up 110 basis points from 96.4% in the second quarter. Wilbur will cover this and our financial results in greater detail. Our most important initiative during the quarter was to continue to engage with our tenants who remained focused on their return to work initiatives and the reintegration of their workforce. We now have several months of experience operating in this environment. The feedback from tenants thus far has been extremely positive. From our vantage point, individuals who arrive to our buildings are feeling safe and secure in a healthy environment. We will continue to execute and advance our health measures to keep up with the science in an effort to ensure that we are holding ourselves to the highest standards of workplace safety and comfort. That being said, While several tenants are continuing to gradually return to their offices, the vast majority of them are planning for an early 2021 return. We will continue to keep you updated on what we are seeing in the field. On the leasing front, we remain laser-focused on our available space. As highlighted previously, this is primarily comprised of the 500,000 square feet Barclays block at 13016 Avenue and the 130,000 square foot block at 31 West 52nd Street. Peter will provide additional details on what we are seeing in the market. This quarter, as was the case last quarter, most of the activity was once again driven by renewals. Tenants in general remain cautious, waiting for better clarity surrounding the current environment before making longer-term decisions with respect to their space needs. Most of the renewal discussions are for terms ranging from one to three years, and that trend is evident in our own leasing results this quarter. We ended the quarter with leased occupancy of 95.6% on a same store basis. Notwithstanding the current leasing environment, We have an amazing success story at 712 5th Avenue. We have signed a long-term 16-year lease with iconic luxury jeweler Harry Winston. Let me provide some background. Harry Winston currently leases about 19,000 square feet at 718 5th Avenue, which is a retail property that we manage. Our 50% joint venture partner at 712 5th Avenue also owns 50% of 718 5th Avenue and the remaining 50% is owned by a third party. As part of the transaction, we essentially demised a portion of the 712 space that is immediately adjacent to the 718 space and opened the walls between those two spaces, thereby combining the two spaces into one fully integrated and seamless space. This innovative combination of the two spaces provides Harry Winston with approximately 37,000 square feet of prime retail space at arguably the most desirable corridors on 5th Avenue. This unique deal involved multiple stakeholders, and to say it was complicated would be an understatement. There was no leasing broker involved in this deal, and it was conceived and executed by a few senior executives at Paramount. Executing a transaction of this prominence in the current environment reflects the creative efforts of both the Paramount and Harry Winston teams, and we are delighted to welcome Harry Winston to 712 Fifth Avenue. The result of the Harry Winston expansion We have now leased 23% of the available retail space at 712 5th Avenue for essentially over 80% of the previously fully escalated rent of the prior tenant. The 16-year lease provides for a weighted average initial rent of $437 per square foot. Much like we did here at 712 5th Avenue and On numerous occasions in the past, I'm confident that we will achieve great success leasing our current availabilities at 13016 Avenue and 31 West 52nd Street. We pride ourselves on being creative in our thinking and unrelenting in our pursuit. Turning to the transaction market, volume remains very low and bid-offer spreads remain wide. The market remains in a period of price discovery. Opportunistic buyers are looking for bargains, but sellers aren't reducing their asking prices. The cost of debt capital is at historically low levels, and with liquid debt markets, would-be sellers are opting to refinance instead. How this plays out and for how long is unknown and will depend on how the global economy emerges from this current crisis. It is our view that core assets that are well leased with a blue-chip tenant roster and longer-weighted average lease terms will do a lot better in this market than transitional assets that require buyers to assume lease-up risk and add incremental capital. As you know, in early March, we entered into an agreement to sell our last remaining asset in Washington, D.C., 1899 Pennsylvania Avenue, for $115 million. As previously announced, the transaction is scheduled to close during the fourth quarter. We continue to work towards completing the transaction in that timeframe. During the third quarter and into October, we opportunistically repurchased close to 3 million shares at a weighted average price of $6.77 per share, or $20 million in the aggregate. Wilbur will give details. Of course, our number one priority is reintegrating current tenants in a safe and healthy manner. We continue to be incredibly creative and innovative as we focus on extending lease expirations and continue to engage with prospective tenants. We are focused on ensuring we maintain sufficient liquidity, which amounted to $1.3 billion at the end of the quarter, and we remain well capitalized and positioned for the long term. With that, I will turn the call to Peter.