Paramount Fund Closes With Record Commitments

Albert Behler, chairman, CEO and president of Paramount, Group, Inc.

NEW YORK CITY—Office REIT Paramount Group, Inc . reports its second debt fund— Paramount Group Real Estate Fund VIII, L.P .—officially closed with $775 million in commitments, making it the largest fund in the company’s history and of its predecessor. The company was founded in 1971 by professor Dr. h.c. Werner Otto of Hamburg, Germany and raised approximately $2.3 billion in an initial public offering in November 2014, which at the time was the largest IPO by a U.S. REIT. It should perhaps come as no surprise that the firm founded by a German scholar saw its latest fund garner significant interest from German institutional investors. “The successful close of Fund VIII is recognition of Paramount’s stellar reputation and the confidence institutional investors have in our platform,” said Albert Behler , chairman, CEO and president of Paramount. “Through our current and prior investments and our significant operating experience, we have developed a deep understanding of the critical success factors in our target markets.” Fund VIII focuses on mezzanine and preferred equity investments in office properties in Paramount’s target markets of New York City, Washington, DC and San Francisco. More than $165 million of the fund has already been deployed in three investments, the company states. “We appreciate the enthusiasm and strong support shown for Fund VIII from new and key existing investors,” adds Christian Fischer, Paramount’s director of European Capital Markets. “The combination of Paramount’s market knowledge and finance expertise together with Fund VIII’s investment objectives were convincing reasons for investors.” Earlier this month, Paramount Group reported core funds from operations for the first quarter attributable to common stockholders of $49 million, or $0.23 per diluted share for the quarter ended March 31, 2016, compared to $39 million, or $0.18 per diluted share for the quarter ended March 31, 2015. On April 28, the company completed the final closing of Fund VIII, bringing total capital commitments to $775.2 million. A few days later, Paramount Group secured a $500-million refinancing of 31 West 52nd St ., a 786,647 square foot Class A office building in Manhattan. The new 10-year loan is interest only at a fixed rate of 3.80%. The company reports it realized net proceeds of approximately $65.0 million after the repayment of the existing loan, swap breakage costs and closing costs. In March, Paramount Group appointed Wilbur Paes as EVP, CFO and treasurer.