Paramount Group, Inc.

Good day, ladies and gentlemen. Thank you for standing by. Welcome to the Paramount Group fourth quarter 2021 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, February 23, 2022. I will now turn the call over to your host, Jacques Cornet of ICR. Thank you. You may begin.

Thank you, Operator, and good morning, everyone. Before we begin, I'd like to point everyone to our fourth quarter 2021 earnings release and supplemental information, which were released yesterday. Both can be found under the heading Financial Information Quarterly Results in the Investors section of the Paramount Group website at www.pgre.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. Therefore, you should exercise caution in interpreting and relying on them. We refer you to our SEC filings for 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 financial 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. The reconciliation of these measures to the most directly comparable GAAP measure is available in our fourth quarter 2021 earnings release, and I'll end our supplemental information. Hosting the call today, we have Mr. Albert Baylor, Chairman, Chief Executive Officer and President of the company, Wilbur Pays, Chief Operating Officer, Chief Financial Officer and Treasurer, and Peter Brindley, Executive Vice President, Head of Real Estate. Management will provide some opening remarks and we will then open the call to questions. With that, I will turn the call over to Albert.

Thank you, Jack, and thank you everyone for joining us this morning. We delivered another year of strong operating performance in 2021, and we carried that momentum into 2022 as we returned to normalcy nationwide. While the emergence of the Omicron variant delayed the return to pre-pandemic life, it seems the worst is behind us, and tenants are once again returning to the office full-time, albeit with some flexibility baked into their plans. Yesterday, we reported core FFO for the fourth quarter of $0.24 per share, resulting in core FFO of $0.92 per share for the full year. These results reflect the quality and desirability of our Class A assets and strong tenant base. Today, we are initiating 2022 core FFO per share guidance with a range between $0.91 and $0.97 per share, well ahead of market consensus. Wilbur will review our financial results and our 2022 guidance in greater detail. Yesterday, we also announced that the signing of Din Tai Fung for the Glass Cube at 1633 Broadway. The lease up of this space has been several years in the making, and we couldn't be happier with the outcome. While it took longer than we hoped, we remained disciplined in not leasing the space for the sake of leasing it. But bearing in mind that this unique space sits in front of the building with 2.5 million square feet of office tenants above, tenants that in most instances have chosen 1633 Broadway at their headquarter location. Their decision is always driven in large part because of the quality of the asset, the desirability of the location, and the ability of their landlord to operate the asset in a Class A manner and surrounded with the right type of amenities for their employees. We welcome world-renowned and Michelin-star-rated Din Tai Fung to the Paramount portfolio. Their desire to select New York City as their first location on the East Coast once again cements the city as one of the premier destinations for retail across the globe. Looking back at 2021, our results stand on their own. We met and exceeded almost all of our goals. On the leasing front, we executed on over 1 million square feet, 45% above the leasing we reported for last year. And our fourth quarter leasing was 137% above the fourth quarter of last year, highlighting the strength of our portfolio and the fact that the market is indeed trending back towards normal. While we felt slightly shy of our goal to lease 50% of the Barclays vacancy, we exceeded our goal at 31 West and leased 62% of the TD Bank vacancy. All said, we leased about 46% of that vacant space in 2021, a very fine outcome, especially considering the environment in which we executed. We also remain encouraged by the long-term commitments on both new and renewal leases signed in 2021, as demonstrated in our strong average lease term of 9.4 years compared to just four years in 2020. The trends we see in our portfolio are also reflected in the Midtown Manhattan market more broadly. New York is recovering with gusto. The residential market is on fire, with vacancy rates at record lows. The city is easing COVID restrictions and encouraging employers to bring their employees back. And the labor market continues to tighten. Leasing velocity increased across the Midtown market by over 45% year over year. And average asking rents are ticking up. We see these as positive signs for the resurgence of office space in New York City during 2022 and beyond. In San Francisco, tenants continue to take a more gradual approach towards a return to offices. While our San Francisco leasing activity still favors renewals over new leases, we are beginning to see positive signs as leasing velocity increased by over 70% during 2021 compared to 2020. As we have seen throughout the pandemic, while asking rents have continued to come under pressure in San Francisco, landlords with high quality assets continue to outperform and maintain rents at or above prior levels. In other words, much like what's happening in New York, the flight to quality is noticeable. Our initial rent on leases signed during 2021 grew to about $100 per square foot in San Francisco compared to 94.5 during 2019, before the start of the pandemic. Our results continue to demonstrate the strength and resilience of our portfolio as we continue to benefit from the high quality of our assets. As far as our leasing goals for 2022 go, we are targeting between 825,000 and 1,225,000 square feet, and we remain laser-focused on our availabilities. Peter will provide additional details on what we are seeing in each of our markets. Looking at the transaction market, There is not much that has changed since the last we spoke, but we are seeing some green shoots here in New York. While overall transaction volume during the fourth quarter was relatively muted, December volume was $4.5 billion, the highest it's been since the beginning of COVID, and there was another $8 billion under contract, suggesting a strong start to 2022. Liquidity is ample and pricing remains strong for top quality assets. Inflation and rising construction costs will increase replacement costs, underscoring the inherent value of our portfolio. As always, we remain interested yet disciplined with our capital and monitor the markets carefully. We are on the verge of completing with a joint venture partner, the acquisition of 1600 Broadway, a 26,000 square foot retail condominium in the heart of Times Square. The property is 100% leased to Mars as a flagship location for M&M's World and was recently extended for 15 years, including a $25 million commitment by Mars to improve the space. We see this Commitment by Mars is a testament to the long-term value of this iconic Times Square attraction and resilience of the New York market in general. The purchase price was $191.5 million, and the joint venture will close on a $98 million mortgage loan simultaneously with the acquisition. Our joint venture partner here, who is an existing partner in another San Francisco asset, will own 91% of the asset, and we will own the remaining 9% and serve as a manager. Lastly, I'd be remiss if I didn't highlight another element of our portfolio that we take great pride in, sustainability. We remain 100% committed to sustainability and ESG and are proud of our accomplishments in improving our portfolio, our markets, and our environment. Our sustainability efforts have continued to put us ahead of the pack. As we recently announced, we achieved 2021 Energy Star labels across our entire office portfolio, certified by the EPA and signifying that our assets perform within the top 25% in terms of energy efficiency nationwide. Additionally, Paramount achieved a five-star rating in the 2021 Grespi real estate assessment for the third consecutive year and an A in public disclosure, securing the number one ranking among its peer group of USA office properties for 2021. To conclude, as we begin 2022, our priorities are straightforward. We are focused on the lease up of our available space and the reintegration of our tenants in a safe and healthy manner. As has been the case since the pandemic began, we continue to maintain sufficient liquidity, which amounts to about 1.25 billion at the end of the quarter. With our portfolio of stable trophy assets and our proven ability to allocate capital, we remain well positioned for the long term. With that, I will turn the call to Peter.