Paramount Group, Inc.

Good day, ladies and gentlemen. Thank you for standing by. Welcome to the Paramount Group fourth quarter 2022 earnings conference call. At this time, our participants are in a listen-only mode. Our question and answer session will follow the formal presentation. Please note this conference call is being recorded today, February 16, 2023. I will now turn the call over to Tom Hennessey, Vice President of Business Development and Investor Relations.

Thank you, Operator, and good morning, everyone. Before we begin, I would like to point everyone to our fourth quarter 2022 earnings release and supplemental information, which were released yesterday. Both can be found under the heading Financial 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 the words such as will, expect, should, or other similar phrases are subject to numerous risks and uncertainties that would 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 a more detailed discussion of the risks that could impact our future operating results and the 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. A reconciliation of these measures to the most directly comparable GAAP measure is available in our fourth quarter 2022 earnings release and 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, Tom, and thank you, everyone, for joining us this morning. As we close out another year, we continue to execute on our strategic initiatives of leasing up our available space and maintaining our discipline focus on generating long-term value for our shareholders. Yesterday, we reported core FFO for the fourth quarter of 25 cents per share, bringing our total for the year to 98 cents per share, the high end of our most recent guidance range. In the fourth quarter, we leased over 205,000 square feet, bringing our total for the year to over 947,000 square feet, above the midpoint of our most recent guidance range. We also reported positive year-over-year same-store growth of 4% on a gap basis and 1.7% on a cash basis. Today we are initiating 2023 core FFO per share guidance with a range between 88 cents and 94 cents per share and an expected leasing volume of between 600 and 900,000 square feet. We will review our financial results and guidance in greater detail. Looking back at our performance in 2022, we executed on a number of key initiatives. We signed leases covering over 300,000 square feet at 1301 Sixth Avenue, which are our key focus. The majority of this leasing, about 259,000 square feet, was with two key tenants, for Melveny & Myers and SVB Securities. These leases served to do both, backfill, existing vacancy, and pre-lease over 50% of the 305,000 square feet of space vacated by Credit Agricole earlier this month. We signed a 15-year lease with Michelin-star restaurant Din Tai Fung at our headquarters at 1633 Broadway under the iconic glass cube in our plaza, which is slated to open in late 2023. This transaction, which is among the top 10 largest retail leases signed during the year, further exemplifies our focus on partnering with world-class retail tenants and providing a spectacular amenity for our tenants and the neighborhood. We acquired, through a joint venture, a 26,000 square foot retail condominium at 1600 Broadway, which serves as a flagship for M&M's World in the heart of Times Square. M&M's World has long served as an icon for global tourism and its recent 15-year renewal and significant commitment to improve the space is a testament to the long-term value of this asset. While we met or exceeded most of our goals established at the beginning of the year, admittedly, we also did fall slightly shy of some of the lofty goals we set. All in all, I'm quite proud of our accomplishments in 2022, especially considering the slowdown in the U.S. economy spurred by the Fed's significant interest rate hikes aimed at curbing inflation. But withstanding a challenging economic environment, our 2022 report card was very good and is a direct reflection of the quality and desirability of our Class A assets, our strong tenant base, and a dedicated workforce that is physically in the office. In addition to our own employees being in the office, we are thrilled to see our tenants coming back to the office. After a series of false starts and stops, It seems not surprisingly that the office is here to stay. With several big names announcing mandatory or hybrid back to the office plans, office occupancy rates have continued to climb steadily post Labor Day. These are positive signs that we believe will continue as more people begin going in permanent and employers recognize the unbeatable productive value of having the workforce together in the office. Our New York portfolio, which represents over 70% of our business, continues to perform well and accounted for close to 80% of our 2022 leasing velocity. In fact, the occupancy of our New York portfolio, which now sits at 92.1%, has grown by an impressive 560 basis points since it dropped in second quarter 2021, while the availability rate was up 50 basis points during the same period. While our leasing volumes remain in line with historical norms, deals continue to take longer to execute. An observation we had in the second half of 2022 and one that we continue to have so far in 2023. San Francisco continues to lack New York, but like New York, it also benefits from the flight to quality trend in the market. While the depths of demand remain sparse, pricing and quality assets remain strong. This strength is demonstrated by the results in our own portfolio where we leased over 213,000 square feet at triple-digit starting rents of about $103 per square foot. Our focus in San Francisco will undoubtedly be on leasing the 235,000 square foot block of space at 555 Market that will be vacated by Uber in July 2023. Turning to the transaction market, Activity continues to remain muted. The macroeconomic backdrop and rising interest rates keep buyers at bay and sellers evaluating when conditions will improve. There have not been many quality assets that have come to the market, and for those that have, the bid-ask spread remains wide. That said, there is a wall of debt maturities on the horizon. which will certainly present us with some opportunities. We will be strategic and disciplined in allocating capital, as we always have been. Last, but certainly not least, some of our proudest achievements this year are the great strides we made in our sustainability initiatives. As always, our commitment to sustainability and ESG as a whole remains one of our core operating tenets. We pride ourselves on our leadership in this area and understand it has not only helped us manage operating costs, attract and retain premium tenants, and ultimately enhance portfolio value, but also reduce the environmental impact we leave on the world around us. To that end, We were proud to be named the 2022 Energy Star Partner of the Year, as we also achieved Energy Star labels across 100% of our portfolio. Most recently, we also achieved a five-star rating in the 2022 Grasby Real Estate Assessment for the fourth consecutive year. This distinguishes Paramount's ESG performance in the top 20% among the 1,820 entities that responded globally. Notably, we were able to maintain our market-leading performance, coming in 16 points above average despite a 20% growth in participation as the company rose to the top within both the management and performance scoring categories. We look to add to these significant achievements in 2023. ESG will continue to be integrated throughout our business and remains at the forefront of how we operate our businesses. To summarize, as we begin 2023, our priorities remain clear. We are focused on leasing up our available space and welcoming our tenants back to the office. 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.