WASHINGTON, DC—New York City-based Paramount Group, an office landlord with a heavy presence in the DC area, has filed for an IPO that could be the largest ever by a US company seeking REIT status.

In the prospectus the company filed with the Securities and Exchange Commission, it said it was seeking to raise $100 million, but it is widely assumed that that amount will increase. Sources familiar with the IPO have told the Wall Street Journal and Bloomberg that the company, in fact, is hoping to raise as much as $2.7 billion in the offering, making it the largest-ever REIT IPO.

Paramount said it would use the proceeds to pay down debt and make future acquisitions, presumably in the same high-barrier-to-entry markets in which it has specialized to date.

One reason for the expected size of the offering is the company's extensive holdings in such cities as New York, San Francisco – which is poised to become the most expensive office market in terms of rent – and Washington DC.

The company's local properties include 700 14th St., 425 Eye St., the Waterview in Rosslyn, 2099 Pennsylvania Ave., 1899 Pennsylvania Ave., and Liberty Place.

Some 11.3% of its annual rent comes from its Washington portfolio. New York City is the top generator for the company, at 75% followed by San Francisco at 13.2%.

In its SEC filing, the would-be REIT spelled out its strategy for increasing cash flow from operations. Among other things, that entails leasing up the 963,000 square feet of space currently available, increasing the existing below-market rents and pursuing a disciplined acquisition strategy.

“Since 1995, we have acquired 27 high-quality office properties with a total value of approximately $11.1 billion primarily in our targeted submarkets of New York City, Washington, DC and San Francisco," according to Paramount's SEC filing. “We intend to continue our core strategy of acquiring, owning and operating class A office properties within submarkets that have high barriers to entry, are supply constrained, exhibit strong economic characteristics and have a pool of prospective tenants in various industries that have a strong demand for high-quality office space.”

Instant Insights /

DC Landlord Files for REIT IPO, May Target $2.5B

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