Q3 2023 Paramount Group Inc Earnings Call
Good day, ladies and gentlemen, thank you for standing by.
Welcome to the Paramount Group third quarter 2023 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 November 2nd 2023.
I will now turn the call over to Tom Hennessy, Vice President of business development and Investor Relations.
Please go ahead Sir.
Thank you operator, and good morning, everyone before we begin I would like to point, everyone to our third quarter 2023 earnings release, and supplemental information, which we released yesterday.
Both can be found under the heading financial results in the investors section of the Paramount Group website at Www P. G. R E Dot 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 a more detailed discussion of the risks that could impact our future operating results and financial condition.
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 financial results prepared in accordance with GAAP.
A reconciliation of these measures to the most directly comparable GAAP measure is available in our third quarter 2023 earnings release, and our supplemental information.
Hosting the call today, we have Mr. Albert Behler, Chairman, Chief Executive Officer, and President of the company.
Wilbur page, Chief operating Officer, Chief Financial Officer, and Treasurer.
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.
Yeah.
Thank you Tom.
And thank you all for joining us today.
Yesterday, we reported core <unk> of 22 cents a share for the third quarter, which was in line with consensus estimates.
In the quarter, we leased over 298000 square feet, which was 123% higher than our.
Quarterly average during the first half of the year.
This activity was driven by robust leasing in both of our markets.
And San Francisco.
As you may recall, while our leasing results were trailing.
Midpoint of our guidance at the end of the first half of the year we.
We did not adjust that downward as we believe we will make up lost ground during the third quarter and that's exactly what we did.
Oh year to date leasing velocity now sits at about 566000 square feet.
What are you guys squarely at the 750000 square foot mid point.
We established at the beginning of the year.
Notwithstanding that we expect to achieve the leasing goal as we said earlier, we do not expect to do the same as it relates to our occupancy goal.
We had some unexpected surprises in 2023 and form the regional bank crisis, a few lease terminations during the year.
Which has forced us to reduce our robust leased occupancy expectations, we hope to achieve.
Our new range calls for leased occupancy between 87 and 88.
6%.
But we'll provide further details on our financial results and guidance later.
But they need to be in a period of economic uncertainty.
While the headline inflation is moderating.
Still ahead of the fed's targets.
Low unemployment and strong payroll data further complicates this dynamic.
Add to this.
Your political issues and you can see why things continued to remain in flux.
The markets have shown golf as interest rates have moved higher and by most economists have been wrong, thus far about the timing of the recession I do not believe they are wrong altogether.
Higher rates into higher for longer narrative has and will continue to stress valuations.
The dearth of liquidity in the market.
The problem.
That said, we have built the company to withstand economic downturns and this time will be no different.
We have a fortress balance sheet with ample liquidity and debt that is nonrecourse by design.
Our portfolio continues to be leased well above market levels.
Roster of Blue chip tenants and we continue to capture more than our fair share of leasing you know our.
Markets as demonstrated by our leasing results.
Turning to our operating businesses.
New York portfolio has remained stable at 94% leased.
During the third quarter, we leased almost 185000 square feet in New York or approximately 110, 6% higher than the quarterly average during the first half of the year.
New York has led the way in enforcing in person work mandates, resulting in increased foot traffic and increased office utilization.
Last quarter I touched upon our highly talked about the minute you said that you know on sixth Avenue, which will serve all of the tenants of departments campus.
30000 square foot amenity center is depth the Paramount club.
It is set to open in the second quarter of 2024.
Peter will provide additional color on this including the impacts it has had that in our pursuit of advising companies to join the Paramount campus.
During the third quarter, we leased over 113000 square feet in San Francisco.
Just like in New York, San Francisco leasing not only eclipsed the quarterly average during the first half of the year I went on at 55%.
It also represents the highest quarterly leasing volume we have had in San Francisco since the fourth quarter of 2021.
Leading San Francisco based companies continued to announce and enforced their return to office plans as concerns Mount regarding productivity of remote workers.
This has resulted in a steadily improving utilization figures across the San Francisco market is in our own portfolio post labor day.
This trend together with the changing political landscape driven by both or abandon this about the challenges facing the city will undoubtedly support improved leasing activity going forward.
Pivoting to the transaction market.
<unk> remained subdued due to elevated interest rates volatile equity markets and wider bid ask spreads.
With no debt financing readily available.
Limited activity to date has been driven by smaller deals and all cash buyers.
To date, there have been very few high quality assets brought to market, but there are signs of capitulation in the market.
We will remain disciplined in our approach and deploy capital if warranted only in an asset light approach.
In closing, let me emphasize that our approach to business is rooted in a long term perspective.
Our class a buildings and the coastal gateway markets in which we operate have demonstrated resilience consistently evolving and growing over decades numerous economic cycles.
That I will turn the call to Peter.
Thanks, Albert and good morning.
During the third quarter, we leased approximately 298000 square feet.
Our third quarter leasing activity was balanced relative to our portfolio composition.
During the third quarter, we leased approximately 185000 square feet in New York, and approximately 113000 square feet in San Francisco, including the renewal of San Francisco Health Authority at 300 mission, one of San Francisco's top 10 largest deals of the year.
We continue to execute on our business plan, while navigating the many different currents influencing market conditions in both New York and San Francisco.
This period of uncertainty has caused many companies to exercise caution when making long term real estate decisions as reflected in the broader leasing fundamentals in our two markets.
On the other hand. It is also prompted many companies, particularly those with near term lease expirations to think critically about how best to use real estate as a lever to enhance the workplace experience and supports a widespread return to the office.
This trend has resulted in company's ongoing and ever increasing desire to prioritize the highest quality assets with stable ownership.
Interestingly. It has also resulted in a reduction of competitive supply in our two markets as tenants and brokers alike aimed to focus on well located amenity rich buildings run by best in class well capitalized owners all of which benefits Paramount.
We are encouraged by the utilization figures in our portfolio and expect the accelerating return to work trends to result in increased leasing activity as sentiment improves.
At quarter end, our same store portfolio wide leased occupancy rates at share was 88, 1% down 150 basis points from last quarter and down 330 basis points year over year.
The drop in occupancy was largely driven by the known move out of Uber at market Center.
As we look ahead, our many lease explorations in 2023 are manageable with one 3% or approximately 105000 square feet at share expiring by yearend.
Turning to our markets Midtown third quarter leasing activity was approximately $2 9 million square feet, excluding renewals was up 13% quarter over quarter, but 16% below the five year quarterly average availability in Midtown remains elevated at 18, 1% and absorption.
It was positive during the third quarter as there were limited space additions coupled with space withdrawals.
Tour activity in our New York portfolio continues to increase as does our pipeline of perspective tenants most significantly on our vacant space along sixth Avenue.
Oh, one avenue of the Americas, our market, leading amenity Center Paramount's club is set to open in Q2 2024 and continues to be a difference maker in our pursuit of leading companies.
Paramount club will be a destination with paramount tenants throughout our portfolio and collaborate engaged in intellectual exchange those come rotary and partake in curated experiences and enrich both their professional and personal lives.
And Acacia regarding the Paramount club will be powered paramount's newly introduced tenant experience at will.
Offer details regarding the Paramount club as well as other benefits of being in a paramount building, including digital access and retailer perks.
Paramount Club membership is exclusive to our tenants and offers expertly appointed dining wellness conferencing and entertainment.
Needless to say existing tenants and perspective tenants alike have shown a keen interest in the Paramount one hour.
Our offering is resonating in the market and is timely given the company's strong desire to deliver an elevated experience to their employees.
Our New York portfolio is currently 94% leased on a same store basis at share down 10 basis points quarter over quarter and down 170 basis points year over year, largely as a result of the known lease exploration with credit Agricole, a 13, one avenue of the Americas earlier in the year.
During the third quarter, we leased approximately 185000 square feet at a weighted average term of six six years with an initial rent of approximately $73 per square foot.
Our overall lease exploration profile in New York is manageable with one 3% or approximately 77500 square feet at share expiring by year end.
Yeah.
Shifting our focus to San Francisco leasing activity remains muted. However, we are optimistic given San Francisco remains a hotbed for Premier Tech talent with high growth potential.
San Francisco based companies have raised approximately $27 billion in venture capital funding year to date accounting for more than 14% of venture capital investment in the United States and more than half of the venture capital investment in the Bay area.
As a result venture back companies, particularly AI has contributed more than a million square feet toward tenant demand in San Francisco, which is currently $5 2 million square feet and moving closer to San Francisco to historical average.
Proximately 7 million square feet.
At quarter end, our San Francisco portfolio was 82% leased on a same store basis at share down 540 basis points quarter over quarter, and down 730 basis points year over year, driven by the known move out of Uber.
Have partially backfill with the previously announced whaler lease.
Looking ahead, our San Francisco portfolio has one 4% or approximately 28000 square feet at share expiring by yearend.
Look forward to updating you on our progress.
With that summary, I will turn the call over to Wilbur, who will discuss the financial results.
Thank you Peter and good morning, everyone.
Yesterday, we reported core after all four of 22 cents per share which is in line with consensus estimates.
Same store growth in the quarter as expected was negative seven 1% on a cash basis and negative 10, 3% on a GAAP basis.
Bringing our year to date same store results.
Three 9% cash and negative two 9% yep.
As highlighted previously our neck.
<unk> same store growth. This year was driven by the two large known lease explorations in our portfolio, namely credit Agricole in New York and Uber in San Francisco.
During the third quarter, we completed 290259 square feet of leasing at a weighted average starting rent of $75 65 per square foot and for a weighted average lease term of six and a half years.
Mark to markets on 220495 square feet of second generation space was essentially flat.
With GAAP, Mark to markets and positive half a percent and cash mark to markets at negative 4%.
Turning to our balance sheet.
In late September we refinanced with the existing lender, but that's at 300 mission, which was scheduled to mature in October.
The new $232 million alone has a fixed rate of four 5% and matures in October 2026.
Replacing the previous $273 million alone that bore interest at a fixed rate of 365%.
Needless to say this was a terrific outcome for us and our partners.
A $41 million pay down.
Our share was less than $13 million.
Did the existing property casualty reserves.
Notwithstanding the decline in cash flow from two significant lease explorations this year a regional bank crises.
To offer our tenants clearing all largest tenant.
Pay down a portion of the debt at 300 mission.
And Capex spend we have managed to increase our cash flow and liquidity position from yearend, which now sits at one to $1 7 billion bid the 123 billion when we began the year.
We have done this through a series of austerity measures.
Expense management, and a dividend reduction, thereby enabling us to maintain a fortress balance sheet.
At one point to one 7 billion of liquidity comprised of $467 million of cash and the full $750 million of capacity under our revolving credit facility.
Outstanding debt at quarter end was $3 six 6 billion at a weighted average interest rate of three 9% and a weighted average maturity of three four years.
87% of our debt is fixed and has a weighted average interest rate of 3.28%.
The remaining 13% is floating and has a weighted average interest rate of.
1%.
We have no debt maturing for the remainder of 2023 and 478 million at Xi'an maturing in 2020 full it's primarily represents our share of that.
At one market Plaza, which matures in February 24.
Turning now to our 2023 guidance.
Based on our year to date results as well as our outlook for the remainder of the year. We have maintained our core has therefore guidance of 86 cents per share my narrowing the range to be between 85 and 87 per share.
We have also maintained the midpoint of our leasing guidance of 750000 square feet.
Growing the range to be between 650000 square feet and 850000 square feet.
Same store expectations, well left unchanged and as Albert highlighted earlier, our leased occupancy range was lowered to a range between 87% and 88, 6%.
With that operator, please open the lines for questions.
Thank you Les.
Ladies and gentlemen, we will now be conducting a question and answer session.
If you would like to ask a question. Please press star and one on your telephone keypad.
Confirmation tone will indicate your line is in the question queue.
You May press Star two if you would like to remove your question from the queue.
For participants using speaker equipment, it may be necessary to pick up your handset before pressing the stock east.
Ladies and gentlemen, we will wait for a moment, while we poll for questions.
Our first question comes from Carmel Barnhill with Bank of America. Please go ahead.
Good morning understand we still have to get through 2020 four but then I see you have another 1 million square feet in San Francisco expiring in 2020 five it just seems like a lot of roll coming with no more clarity around demand.
I guess, how do you plan to get in front of that and is there anything you can do from an asset management perspective to manage it.
Camille.
Albert.
This is a good question, but let me give you a little background with regard to San Francisco I think San Francisco.
And image currently that it is a horrible market and it looks like it but.
I wanted to say on the positive side I was just I was there just a week ago to see what has developed and is developing.
And I can tell you that first of all occupancy or attendance in the buildings in San Francisco has risen dramatically and that's not so far published dramatically and it's.
At the same level as we currently have it here in New York City.
So that's that's new in the market and.
We will look very very carefully at each asset and how it develops over the next 12 to 18 months.
And.
There is an asset that cannot perform we will have to talk to our lenders.
And and do what's necessary in this market I have mentioned.
Before that Oh on earnings calls.
The company will be very consult a conservative with its cash that we have currently available.
On the balance sheet, we have a balance sheet that is not leveraged and we definitely we'll be prudent about spending or not spending that capital. So.
Western is a good one and we will watch the market how it develops over the next 12 to 18 months.
And look at each opportunity separate you have to look at our portfolio since we only have.
Asset based lending like it's a it's a conglomerate of various different.
I proudly say this property managers operate like they are very independent and they they run their own property. The advantage of our properties that are relatively large in size and they stand alone and that's how we look at them.
And maybe Peter wants to talk a little bit more about the leasing velocity and what he sees in the market. Yes. Camille good morning, I would say that demand is picking up slightly we're just now starting to see AI have an impact on velocity in this market and so we're tracking that of course very closely but with regards to two.
Twenty-five exploration, Google and J P. Morgan Google of course that one market JP Morgan at one front make up roughly half of the 1 million square feet that you referenced in terms of explorations in 2025, and then those two tenants are no different than the rest of our tenants we maintain a very good relationships with.
Our tenants, it's something that we work very hard at.
We of course are thinking about it we're in front of them, having productive conversations and so while it's too soon to say much more beyond what I've just now.
Said I can assure you that.
We acknowledge internally the importance of both of these tenants and were in front of them having productive conversations.
We'll have more to report in the future.
I appreciate your thoughts there and just on the leasing pipeline.
Are you, having many conversations with tenants about early renewals and potentially pulling forward leases broadly.
Across the pipeline.
Yes.
Yes, we are always looking to derisk roll and I think we've historically done a very good job of this so yes, we as I just mentioned have ongoing discussions with our tenants.
We are discussing renewals with tenants that have expertise in 2024 25 and in some cases 26.
And so so I can't I can't tell you that where we're in discussions with with every tenant with an expiry in 2024 late 'twenty four 'twenty five but we are in discussions with many of them. So so yes. The answer to your question is we are we are always thinking about.
Getting ahead of it and in fact, the majority of our leasing this quarter was renewal base.
Yeah.
Mhm.
It's got a lot and.
And just a final question around what market Street and being one of your best leased assets you do have a large maturity coming up not too far now can you share how conversations with lenders aren't going on refinancing the debt and the spreads you're generally thing.
Sure first I want to I want to just clarify you. Your main one market Plaza not market Street, because that's a different type of it yes.
One market Plaza again.
We are having ongoing discussions with our partners.
And and the lenders and it's too soon to comment on that right now because it wouldn't be appropriate.
Given the discussions been very fluid.
They're very productive discussions.
Okay. Thank you for taking my question.
Thank you Emil.
Thank you. Our next question comes from Iran.
Them with Morgan Stanley. Please go ahead.
Oh, Hey, just a couple of quick one just starting with the.
The the the lease occupancy guidance can you just provide more details of what drove that 190 basis points reduction I'm, sorry, if I missed it but could you be specific on that.
Sure.
So you know Peter talked about last quarter the leasing pipeline.
Leases out for signature we've pretty much delivered on that under velocity you know the pipeline that Peter sees and that we see for the rest of the year in the fourth quarter is largely on vacant space, but.
As I'm sure Ron you've heard from the rest of our peer group deals are taking longer to get done and you know while we have a lot of these the question becomes do we get to some of these before year end or does that have a spillover effect into 2024, we thought now was the right time.
To be prudent about our approach given the fact that deals are taking longer to get done and narrow that guidance.
Yeah, we're heading on our almost every metric that we set out in the beginning of the year all of the guidance metrics that we set out at the beginning of the year, we are within the range and hitting closely to the midpoint of all of those metrics, except the leased occupancy, but that was driven by a number of factors.
You had the regional bank crises that was unexpected that impacted our numbers.
You had lease terminations that came as surprise to us as it does to other people as well I'm sure, but that affected our numbers. These are not foods, we budgeted and forecasted at the time, we came out with guidance and.
And not just mentioned the the ever changing operating environment that we find ourselves and so we thought it was the right thing to do to adjust the guidance at this point.
Great and then just two quick one I'll sneak into one question. So on the at one front Street the face of J P. M assumed just any updated color. There what are their plans are over the next several years as those leases roll.
And then and then just switching back to sort of the castle statement about $38 million this quarter any sort of one timers or working capital adjustments that happened in the quarter that we should be mindful off thanks.
To your first question Ron.
On one front, we are in communication with them now as J P. Morgan.
We had a very good.
Communication with them upfront. This was a very very difficult situation as you can imagine on front was the largest.
Largest occupancy as opposed to a public during this year.
And the team did a terrific.
A terrific job by making sure that.
J P. Morgan was made comfortable with with the asset with the leases there. It's too early to say how this will develop over the next couple of years, but I can tell you that the relationship is very good.
And Ron you know getting back I, just want to make sure I frame. Your question correctly, I think you're talking about the decline of 30, some odd million dollars in cash flow from operating activities. This quarter when you're comparing the change from September through.
Jill I presume is that correct that that's right. That's right. Okay, well that was driven largely by prepaid real estate taxes, yeah. We prepare a large portion of our real estate taxes on July one.
And that's basically what happens obviously those get collected to expense reimbursements over the next six months, but that's why you saw the large decrease this quarter over last quarter.
Great. That's it for me thank you.
Thanks, Sean.
Thank you.
Next question is from Blaine Heck with Wells Fargo. Please go ahead.
Great. Thanks, Good morning, several of your peers in New York have noted that the change the pace of leasing activity in properties with kind of middle of the market rents has picked up recently I guess are you guys seeing the same in can you talk a little bit more about any changes in that number are the size and the underlying industry.
The prospects you guys have for your larger vacancies.
Especially in the New York portfolio.
Yeah, I would say blame that.
Leasing has picked up across the board I would say because you know we have a very.
Diversified portfolio of smaller tenants mid size and larger tenants.
The very large tenants have.
Occupancy a while ago.
Think there's some tenants who are realizing now that the decisions they made and not sufficient or which is a good which is good news. Some of them are thinking about maybe taking more space. Because initially they were thinking about work from home.
Situation, taking longer and they're realizing to be competitive long term. This is not a solution and they are changing changing their focus so.
That's what we will see that we see in our Oh.
Segment here in New York.
And I would I would add by saying I do I do think leases have taken longer for a variety of reasons and velocity in the broader sort of Midtown market has not been great year to date when I will tell you that we sell a heck of a lot better about our pipeline relative to the way we felt about it earlier in the year and a lot of that activity is center.
Around 31, which gives us an opportunity to achieve some occupancy increasing leasing going forward.
And that of course.
Contained some base floors, while we're talking about rents.
Around 70 ish dollars per square foot. So we have quite a bit of activity. We have proposals that cover the entirety of that vacancy we of course need to convert on the opportunities in front of us, but suffice it to say that the pipeline.
Paramount's pipeline I'll say feels quite good relative to work, where we were earlier in the year.
And Peter has has the complexion of the you know.
Kind of pool of prospects changed at all as far as you know the underlying industries or is it still mostly your kind of traditional fire type tenants.
Predominantly fire tenants are are the most active that's reflected more broadly in the market, but we've also experienced that but we've seen some media companies that are now pursuing a several of our opportunities some professional service companies.
Law firms, we appeal to law firms and several of our buildings.
So I don't know that the complexion of industry type has changed all that dramatically. We're just seeing we're just seeing more and more tenants.
Acknowledging the importance of the office and deciding that they want to elevate.
What they have to offer their employees and they were looking to find their way into better real estate, that's what's compelling them to transact in this market. Despite all the challenges and we think we're doing a good job of appealing to those prospective tenants right now and part of that.
<unk> has been supported by the Paramount club, which we referenced in our remarks.
Respective tenants and existing tenants have responded very well to our plan.
Not just like every other amenity center, it looks and feels a bit different it will be market, leading and it's resonating and I think it is helping to support.
Not only getting initial interest, but getting some of this interest to lease.
Great. That's really helpful color, maybe for Wilbur can you just talk about the financing market a little bit more in general and then also specifically on the negotiation process on the 300 mission loan I guess, how much scrutiny was there on current operations and future lease expirations at the building.
You know what was the L. P. D that was arrived at on the loan and how was the value determined and then you know how was the link or term at three years determined as well.
Sure look that they love.
The market is pretty much shut down I don't know how else to put it there is no liquidity in the market.
New financings and so I said this on our last earnings call that most of these things are going to be.
Negotiations and refinancings and extensions with the existing lender.
The execution at 300 mission, obviously was a superior one.
Probably one of the best in the marketplaces, but it was a testament to one the sponsorship on the asset and the relationships with the lenders and we have been very very transparent with our lenders we have great relationships and we talked about this very early on what I V.
<unk> for the asset was a where the best people to navigate this environment.
And our lenders and our partners are very very supportive and we achieved a tremendous tremendous execution here.
<unk>.
Don't want to talk about Ltvs, because everybody is struggling with what the mean that equation is but there was a lot of.
Discussion about the time in term, we needed to be able to get through.
The business plan and that's what we shared very closely with our lenders that we were successful.
Okay. Thanks, a lot guys.
Thank you.
Thank you.
Next question is from Vikram Malhotra with Mizuho. Please go ahead.
Thanks for taking the question I guess, just you know with all the leasing that you've outlined this quarter the pipeline.
Well, but would it be would it be possible to give us sort of how do we think about the occupancy trajectory the lease trajectory as we kind of go into 24, just given there are several moving pieces.
Sure.
In 2020 full obviously you know the big move out for US, which is known as Clifford chance that 329000 square feet, that's going to impact occupancy is going to impact cash flow significantly.
You also have chassis, which at 16 33, that's a 50000 square foot lease.
That flow comes due I believe in May of 'twenty, four as well you have that and so.
So those are the two really large things and then in San Francisco you also have the impact of some of the space that was a tone.
After a JP Morgan gave back some of the space that was sub leased to tenants that space. We had outlined in the 8-K also comes back that was short term in 2024. So those are the large moving pieces on the downside.
Peter outlined Vikram and his pipeline of.
Fourth quarter activity and leases out for signature.
A majority of which is on currently vacant space. So yeah. We're not we're not formulated at 2020 full guidance, but wanted to be helpful to you don't have the big moving pieces here.
Okay. That's helpful and I guess just.
But you do have optionality to your funds are obviously, you know on balance sheets tougher but.
A lot of your peers yourself are talking about renewed activity you know, perhaps some signs of tour activity is picking up et cetera. So I'm wondering if you. If these actually signs of inflection on more stabilization and how that may tie into your decision to deploy either debt or equity capital over here just for me.
Perhaps a if first mover advantage.
Well Victor on B, B, I've said, it over and over again and it.
I'll repeat it here, we will be very careful not to.
<unk> <unk> capital.
We will we will go into a recovery.
Just with the asset light model that means.
We will and we get some inbound questions by investors.
To your question.
Get some some questions.
Questions.
About.
It's a market going to change those questions normally come not from institutional investors more from <unk>.
Draw high net worth investors from various parts of the world.
And I think there will be opportunities in 2024, but so far.
Nothing we haven't seen anything that would really.
Oh appetite and and really get us excited.
So.
But very clearly they were very very little of P. Jerry's equity capital being invested here.
Okay.
That's helpful and just I guess, a little bit last one.
Can you just maybe update us on.
Perhaps any any potential.
No dispositions or any capital.
So I assume that you may do.
And then utilize just buybacks and must wondering kind of given where the stock is given.
But given sort of the broader market how are you thinking about buybacks and sources of those buybacks.
Well Vikram I think it makes less sense for us to be executing buybacks today, given that we cut the dividend to protect the balance sheet.
Number one focus right now is protecting the company's balance sheet.
And maintaining ample liquidity.
We have yes, we're still in this period of Ah.
Economic uncertainty and we have debt maturities coming due.
We have Peter talked about the amenity center capital that is going to be needed there as well. So it would probably be very very prudent in terms of capital allocation. We certainly appreciate the disconnect between value and stock price.
But we're sitting with with cash on balance sheet of $2 and our stock is trading at four but our goal is to continue to protect our balance sheet, but the timing until we see.
The future getting clearer.
Makes sense. Thank you.
Thanks Vikram.
Okay.
Thank you.
Ladies and gentlemen, if you wish to ask a question Please press star and one.
Yeah.
Our next question comes from Jay.
Skip with.
With Evercore ISI. Please go ahead.
Hey, Thanks. Good morning, I was hoping you could just bridge the gap a bit between I know you mentioned that for the same store lease percentage at some of those leases were probably going to slip into 'twenty four but I'm just curious the gap there between the reduced lease percentage guidance, but then maintaining your leasing velocity for the year would you might just help me bridge the gap there.
Sure I think.
We touched upon it a little bit early a large portion of the activity was pre leasing and renewal activity. So effectively what has happened as Peter has bought forward future lease explorations and renewed them. So that has an impact on the velocity that doesn't have an impact on occupancy because that lease was currently.
You're already in occupancy so we derisk future role and so we are hitting the leasing volume target.
The vacant space.
<unk> have taken longer to come to fruition and that's why we reduced the leased occupancy target.
Okay. That's helpful. Thank you and then just another question I know you.
You said that you can't say much about the refinancing coming in February but I'm just curious in discussions with the lenders are they taking a similar stance is where you were able to negotiate with 300 mission or just given the different characteristics of the asset or those conversations kind of independent of each other.
They're very independent of each other you cannot look at two financings into execution is the same way. It's it's it's it's not a one size fits all model you got to understand your lending partners.
Yes, one market Plaza agency MBS alone.
And people that you're dealing with.
The characteristics of the asset matters the characteristics of this on some matters.
Yeah, I would not be thinking of the execution at 300 mission and trying to apply that towards every other debt maturity that's coming it's a bespoke process. Each one is treated differently.
That's great. Thanks, that's all for me.
Thank you Jay.
Thank you.
As I don't know for the questions I will now hand, the conference over to Albert Behler.
<unk> for closing comments.
Thank you all for joining us here today, we look forward to providing an update on <unk>.
Our continued progress when we report our fourth quarter 2023 results.
Goodbye.
Thank you the conference off Paramount Group has now concluded. Thank you for your participation you may now disconnect your lines.
Yeah.
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