NEW YORK CITY—Office landlord Paramount GroupInc. has filed for an IPO that could bethe largest ever by a US company seeking REITstatus. Citing unnamed sources said to be familiar with the matter,Bloomberg reported on Thursday that the owner of 10.4 millionsquare feet in New York, San Francisco and Washington, DC isseeking to raise $2.5 billion.


If the Bloomberg report is accurate, the $2.5-billion stockoffering would be second only to Hilton Worldwide Holdings'$2.7-billion IPO last fall among US-based real estate firms. Thelargest REIT IPO to date was Douglas Emmett's in2006, which raised $1.4 billion.

| reported in July that Paramount was considering an IPO, along with other possiblescenarios including a reverse merger into a publicly traded REIT.The company's SEC filing on Wednesday afternoon did not specify thenumber of shares it plans to offer, the pricing or a timetable forthe offering. It set a placeholder amount of $100 million, andlisted Bank of America Merrill Lynch, Morgan Stanley and WellsFargo as underwriters.


In its SEC filing, the would-be REIT spelledout its strategy for increasing cash flow from operations. Amongother things, that entails leasing up the 963,000 square feet ofspace currently available, increasing the existing below-marketrents and pursuing a disciplined acquisition strategy.


“Since 1995, we have acquired 27 high-quality office propertieswith a total value of approximately $11.1 billion primarily in ourtargeted submarkets of New York City, Washington, DC and SanFrancisco,” according to Paramount's SEC filing. “We intend tocontinue our core strategy of acquiring, owning and operatingclass A office properties within submarkets that have highbarriers to entry, are supply constrained, exhibit strong economiccharacteristics and have a pool of prospective tenants in variousindustries that have a strong demand for high-quality officespace.”


The filing listed a dozen class A assets in Paramount's currentportfolio. In Midtown Manhattan, they include the company'sheadquarters at 1633 Broadway along with 1301 and 1325 Ave. of theAmericas, 31 W. 52nd St., 900 Third Ave. and 712 Fifth Ave; whileParamount's DC assets include 425 Eye St., Liberty Place, 1899 and2099 Pennsylvania Ave. in the nation's capital and Waterview inRosslyn, VA. In San Francisco, it owns the 1.6-million-square-footOne Market Plaza. The portfolio is 90.7% leased to a roster of 253tenants, with rents averaging $65.06 per square foot.


Citing NAREIT data, Bloomberg reported Thursdaythat REIT IPOs are down significantly this year. Just threecompanies in the REIT space to date have staged initial stock salesthus far in 2014, compared to 19 for all of 2013.

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Paul Bubny

Paul Bubny is managing editor of Real Estate Forum and He has been reporting on business since 1988 and on commercial real estate since 2007. He is based at ALM Real Estate Media Group's offices in New York City.