Paramount Group Reports $39M Net Loss in Q4 as Major Tenants Leave

The Paramount Group ended 2024 with a net loss of $38.6 million for the fourth quarter after it lost major tenants throughout its portfolio and a big New York City deal fell through.

Last year, Paramount Group saw J.P. Morgan deciding to leave its 244,000 square feet at One Front Street in San Francisco and SVB Securities terminating its 139,176-square-foot lease at 1301 Avenue of the Americas after the collapse of its parent Silicon Valley Bank in 2023. Paramount was almost able to fill that 1301 Avenue of the Americas space, but the potential tenant decided against it in the closing months of 2024, the company said Friday during its fourth-quarter earnings call.

A reason for the mystery tenant deciding to exit negotiations for those two floors on the cusp of finalizing the deal was not made clear, but it impacted Paramount’s finances and left an even larger vacancy in its portfolio.

“I think it’s probably more productive, quite honestly, to talk about our plan going forward. And we have a couple of tenants that are very seriously interested in these two floors right now,” Peter Brindley, head of real estate for Paramount, said during the call. “I think we will likely proceed with a very creditworthy tenant for those two floors in the not-too-distant future. In fact, we think we’re getting close, so we think we’ll have a good story, ultimately.”

In 2025, Brindley will need to focus on finding tenants to backfill space being vacated by Google (GOOGL) at One Market Plaza on the San Francisco waterfront, which it will address through improving its amenities. Between losing Google and J.P. Morgan, 29 percent of its San Francisco portfolio is expiring in 2025.

Paramount Group CEO Albert Behler said that, while San Francisco lags behind New York’s five boroughs by about a year, Paramount continues to be optimistic about the prospects of a tech resurgence with the rise of artificial intelligence companies, as was their view in October, as well as President Donald Trump’s policies marking a political shift that will further the return-to-office trends.

Despite the net loss and loss of big tenants, leasing activity in Paramount’s portfolio was 40 percent higher throughout 2024 than it was in 2023, according to Behler.

Paramount leased 108,824 square feet across 11 leases with most of the deals signed throughout the year indicating overall growth in filling office space in New York City and San Francisco, Paramount reported in a Friday morning earnings call. At least 57,000 square feet of that was leased in New York City.

The net loss for the last quarter was an improvement over the $205.6 million net loss reported in the fourth quarter of 2023, according to the company. Funds from operations were also down, with $36.3 million compared to $40.5 million in the last three months of 2023.

Mark Hallum can be reached at mhallum@commercialobserver.com.