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New York

Paramount investor cast all-cash bid for REIT

Monarch Alternative Capital offering $12 per share

Paramount's Albert Behler and Monarch's Michael Weinstock (Paramount Group, Monarch Alternative Capital)
Paramount's Albert Behler and Monarch's Michael Weinstock (Paramount Group, Monarch Alternative Capital)

For the second time in two years, the Paramount Group has received an all-cash takeover bid.

Monarch Alternative Capital made an offer to purchase the real estate investment trust for $12 per share, a 33 percent premium on what the shares were worth on Thursday, Crain’s reported. Monarch already owns 12 million shares in the company.

“We believe that your team has assembled a high-quality portfolio of properties,” Monarch co-founder Adam Sklar reportedly wrote in a letter to Behler. “However, we think these assets have been, and will continue to be, significantly undervalued in the public markets.”

Monarch has more than $9.5 billion assets under management. The investor holds 6 million square feet of commercial space and spent $3 billion on real estate in the past year, according to Crain’s.

The bid comes two years after Paramount rejected an unsolicited all-cash offer of $9.50 to $10 per share from hedge fund Bow Street to take over the trust.

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In a client note, one analyst said at the time the bid seemed to undervalue Paramount’s trophy assets. In rejecting the deal, however, Behler said his team would “remain open-minded” about the future of the trust.

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Monarch in May agreed to acquire a 90 percent stake in a downtown Miami office tower for $300 million. The firm took over Townsend Group’s interest in Citigroup Center, a 34-story office building at 201 South Biscayne Boulevard.

Paramount has more than 8.5 million square feet of commercial space in New York City and 4.3 million square feet of office and retail space in San Francisco. Leasing activity in its portfolio was up in the fourth quarter 137 percent from 2020 and the REIT’s properties were nearly 92 percent leased on average.

Paramount owns a 90 percent stake of 1633 Broadway, where famed Tainwanese chain Din Tai Fung recently inked a deal to open its first East Coast restaurant. The 15-year-lease for the soup dumpling spot will take up 26,400 square feet in the Midtown tower.

[Crain’s] — Holden Walter-Warner

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Commercial Real EstateParamount GroupREITS