Paramount Group, Inc. (NYSE: PGRE) announced that it has entered into an agreement to sell a 10% interest in 1633 Broadway, a 2.5 million square foot trophy office building located on Broadway between 50th and 51stStreets in Manhattan.
The transaction values the property at $2.4 billion, or approximately $960 per square foot. In November 2019, Paramount completed a $1.25 billion interest-only refinancing of the property at a fixed rate of 2.99%, realizing $179.0 million of net proceeds. Upon completion of the sale, Paramount will realize net proceeds of approximately $114.0 million, which will be used for general corporate purposes. The transaction, which is subject to customary closing conditions, is expected to close in the second quarter of 2020.
“With this pending sale of a joint venture interest in 1633 Broadway, we have successfully proven the value of this enormous trophy asset at levels well-above what is implied by our stock price,” said Albert Behler, Chairman, Chief Executive Officer and President of Paramount. “We have always said that we would not hesitate to harvest value when deemed appropriate. To execute on this transaction in the current environment speaks to the quality and desirability of our assets, as well as our team’s unparalleled ability to execute.”
Based on the expected timing of the closing of the transaction, the Company no longer expects to receive $0.02 per share of Core FFO that had previously been included in its full year 2020 Core FFO guidance. The impact of this transaction and the previously announced sale of 1899 Pennsylvania Avenue, which is expected to close in the fourth quarter of 2020, was not included in the Company’s most recent earnings guidance issued on February 12, 2020, and in the aggregate will reduce full year 2020 Core FFO by $0.03 per share.
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, San Francisco and Washington, D.C. 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.
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