Jacques Cornet - ICR Albert Behler - Chairman, CEO and President Wilbur Paes - EVP, CFO and Treasurer Ted Koltis - EVP, Leasing Vito Messina - SVP, Asset Management.

Steve Sawka - Evercore ISI Nick Yulico - UBS Brad Burke - Goldman Sachs Blaine Heck - Wells Fargo Vincent Chao - Deutsche Bank Jamie Feldman - Bank of America Tom Lesnick - Capital One Jed Reagan - Green Street Advisors Sumit Sharma - Morgan Stanley.

Good day ladies and gentlemen, thank you for standing by. Welcome to the Paramount Group First Quarter 2016 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, May 06, 2016.

I will now turn the call over to Jacques Cornet with ICR. Please go ahead, sir..

Thank you, operator and good morning. By now, everyone should have access to our first quarter 2016 earnings release and supplemental information. Both can be found under the heading Financial Information, Quarterly Results on the Paramount website at www.paramount-group.com in the Investors section.

Before we begin our formal remarks, we need to remind everyone that the discussion today will include forward-looking statements within the meaning of the federal securities laws.

These forward-looking statements, which are usually identified by the use of the words such as will, expect, should or other similar phrases are not guarantees of future performance.

These statements are subject to numerous risks and uncertainties that could cause actual results to differ materially from what we expect and therefore you should exercise caution in interpreting and relying on them.

We refer all of you to our recent SEC filings, including our most recent Form 10-K as updated by our subsequent quarterly reports on Form 10-Q for a more detailed discussion of the risks that could impact our future operating results and financial condition.

We encourage investors to review our regulatory filings including the Form 10-Q for the quarter ended March 31, 2016 which was filed with the SEC last night. During today's call, we will discuss 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 our financial results prepared in accordance with GAAP. A reconciliation of these measures to the most directly comparable GAAP measure is available in our first quarter 2016 earnings release and our supplemental information.

Hosting the call today, we have Chairman, Chief Executive Officer and President of the Company; Wilbur Paes, Executive Vice President, Chief Financial Officer and Treasurer; Ted Koltis, Executive Vice President Leasing; and Vito Messina, Senior Vice President, Asset Management.

Management will provide some opening remarks and we’ll then open the call to questions. With that, I will turn the call over to Albert Behler..

Thank you, Jacques, and good morning. We appreciate everyone joining us today.

We continue to execute on our core business strategies of leasing up available space, increasing below market rents in our portfolio, refinancing our above-market debt and proactively managing our properties all with the objective of driving long term cash NOI growth and value for shareholders.

During the quarter, we leased 155,000 square feet at a weighted average initial rent of $78.68 per square foot generating mark-to-markets of positive 12.2% on a GAAP basis and negative 1.3% on a cash basis.

Our first quarter mark-to-markets were clouded by the early termination of an above-market lease and a subsequent re-leasing of that space at market rents all in the same quarter.

Vito and Wilbur will go in the details later on but how our team performed in this transaction truly highlights our proactive management style and deep tenant relationships.

Recognizing that an existing 52,500 square foot tenant could potentially file for bankruptcy, we entered into a lease termination agreement with them and received a termination fee. While we were negotiating the terms of this agreement, we began discussions with another tenant in the building whose lease was scheduled to expire in 2017.

This tenant was looking for new space and even had a lease out for signature at another midtown Manhattan location. We recognized this opportunity and executed on it not only keeping this tenant in our building for an additional 11-years but doing so within a month of the previous tenant's termination.

The velocity of our first quarter leasing activity was in line with that of 2015 first quarter.

We remain laser focused on our upcoming maturities, specifically the three large block spaces in New York, the Deloitte space at 1633 Broadway, the remaining Commerzbank space at 1301 Avenue of the Americas and Assured Guaranty space at 31 West 52nd Street. Our views on the New York market remain unchanged.

Ted will provide additional details but we continue to see a steady level of demand in this broad-based market. We have been successful in executing on our leasing initiatives.

We have signed leases for nearly 2.1 millon square feet over the last 18 months and this quarter, we have seen some of the fruits of these efforts as tenants take possession of their space. Our occupancy rate has increased significantly over last quarter, up 400 basis points to 94.3%.

Another benefit of this leasing progress is that our lease expiration exposure through year end 2020 is extremely low. Given that our weighted average lease terms are 10 plus years, we expect lease roll to be around 10% on average. However, over the next five years our expiring leases average less than 5% or less than 500,000 square feet per year.

For a leasing team that over the past 5 years has leased an average of 1.1 million square feet per year, we remain confident in our ability to lease this space, space that happens to be some of the best tower space in our portfolio. Our trophy portfolio in Washington DC is now 92.5% leased, up 220 basis points from year end.

While Washington has been a top leasing market and concession packages are elevated, our portfolio here is second to none and the vacancy we have in this portfolio is along the sought after Pennsylvania Avenue corridor.

We made very good progress during the quarter as we signed leases for over 38,000 square feet including new leases at Liberty Place and 1899 Pennsylvania Avenue.

In a market with minimal net absorption over the past year, our lease percentage has climbed from 80.5% at our IPO to 92.5% today, a direct reflection of the quality and superior locations of our assets in comparison to the rest of the market, as well as a focused leasing effort.

Giving that this is an election year, we don’t expect the market to change much in Washington this year. However, if we don't have any meaningful expirations in this portfolio until 2019, and as I said earlier our assets sit along the Pennsylvania Avenue corridor so we will continue to be discerning in leasing the space.

In San Francisco, we have a great asset with a very limited availability. The tenants at One Market Plaza are of the highest quality. As previous mentioned, over 95% of our technology tenants are investment grade. The newly renovated lobby looks great and will only become more appealing as the new store fronts and shops continue to open.

Subsequent to the quarter, we completed two transactions worth highlighting. First, we recently completed the refinancing of 31 West 52nd Street, as we continue to execute on our strategy of refinancing our above-market debt.

The new loan is $500 million for 10 years at a fixed rate of 3.8% lowering our interest rate and extending our maturity profile. Wilbur will go into further details but we are very proud of this execution following the acquisition of our joint venture partners' share of the property.

To put our recent success in perspective, six months ago we had a weighted average interest rate of 5.35% portfolio wide. Today as a result of the long term refinancings of 1633 Broadway and now 31 West 52nd Street, our weighted average interest rates has been reduced by more than 100 basis points to 4.29%.

Second, was the final closing of our mezzanine debt fund, Fund VIII, bringing total capital commitment in excess of $775 million including $195 million recently raised from foreign investors who are eager to put money to work into core, coastal CBD office markets in which we operate.

This fund not only benefits Paramount shareholders in the form of significant fees and to potential promotes that it generates, but staying in this business gives us additional insight into deals as this fund only invested mezzanine and preferred equity deals in our three core markets.

Last quarter we highlighted the cash impact that all of the leasing we accomplished will have. At the end of this quarter, we again have another $87 million of contractual pro rata annualized cash rent, attributable to either tenants in a free rent period or to leases signed but not yet commenced.

90% of this will become cash paying in the next 12 months. We are excited that our continued leasing execution has positioned as well for generating long-term cash NOI growth and tremendous value for our shareholders. With that overview, I will the turn the call over to Vito, to discuss the leasing activity during the quarter..

Thank you, Albert. In the first quarter we leased 154,951 square feet in line with first quarter of 2015 at a weighted average initial rent of $78.68 per square foot and an average term of 7.7 years.

Tenant improvements in leasing commissions were $6.83 per square foot per annum or 8.7% of initial rent, a continuation of steadily improving trends since the first quarter of last year. Overall, our portfolio wise leased occupancy was 95.6% as of March 31, as compared to 95.3% at December 31 up 30 basis points.

This increase was driven primarily by leasing accomplished in our Washington DC portfolio. Of the 154,951 square feet leased during the quarter 100,343 square feet represented leases on second generation space for which we achieved a mark-to-market of positive 12.2% on a GAAP basis and negative 1.3% on a cash basis.

As Albert mentioned, our first quarter mark-to-market figures include the effect of releasing a 52,555 square foot above market lease at 1633 Broadway that was terminated in advance of the tenants potentially filing for bankruptcy. The previous tenant was paying a fully escalated rent that was significantly above market.

We were swift in recapturing the space, collecting a $10.9 million termination payment and re-leasing the space for 11-years to an existing tenant at a market rental rate of $80 per share foot with almost no down time and a below market tenant improvement allowance of $35 per square foot.

Excluding the impact of this lease with the GAAP and cash basis mark-to-markets were positive 30% and 26.8% respectively. As of March 31 2016, our New York portfolio was 95.7% leased consistent with the December 31 2015.

During the first quarter in New York we leased 97,025 square feet at a weighted average initial rent of $81.09 per square foot at an average term of 8.7 years. Tenant improvements on leasing commissions were $6.05 per square foot per annum or 7.5% of initial rents.

Of the 97,025 square feet leased in New York, 89,173 square feet represented leases on second generation space, for which we achieved mark-to-markets of positive 12.3% on a GAAP basis and negative 3.9% on a cash basis.

Excluding the impact of the releasing of the 52,555 square foot lease that I just mentioned, the GAAP and cash mark-to-markets were positive 38.2% and 27% respectively. In Washington DC, our portfolio is 92.5% leased as of March 31 2016, up 220 basis points from December 31, 2015.

During the first quarter in DC we leased 38,145 square feet at a weighted average initial rent of $71.60 per square foot at an average term of 5.5 years. Tenant improvements and leasing commissions were $9.88 per square foot per annum or 13.8% of the initial rent.

The majority of the leasing in our Washington DC portfolio represented first generation space and was concentrated in two buildings 8099 Pennsylvania Avenue and Liberty Place. 8099 Pennsylvania Avenue is now 98.3% leased, up 9050 basis points from December 31, 2015 and Liberty Place is now 88.4% leased up 830 basis points from December 31 2015.

In San Francisco our property was 98.3% leased as of March 31 2016 comparable to 98.4% as of December 31 2015. During the first quarter we leased 19,781 square feet at a weighted average rate of $85.27 per square foot.

Of this quarter's leasing, 7,123 square feet represented our share of second generation leases for which we achieved positive mark-to-markets of 44.4% on a cash basis and 17.5% on a GAAP basis. Tenant improvements and leasing commission were $6.64 per square foot per annum or 7.8% of initial rents.

With that I’ll turn the call over to Ted who will provide an update on our markets..

Thank you, Vito. Overall, our three markets continue to show solid activity across varied industries and we are not seeing any significant issues that would cause us concern or have a change of leasing stagey. In Midtown Manhattan, the key market statistics of rent and availability show little change from quarter-to-quarter.

If anything, this consistency versus a larger fluctuations we have seen in the Midtown South and Downtown markets reflects the long term stability of the Midtown market. At our properties specifically, a level of tour activity remains solid and we are seeing good tour activity from various user types on our availabilities.

As most of you are aware, we are getting back two blocks of space during the second quarter of this year. One is the 212,000 square feet of tower floors previously occupied by Deloitte at 1633 Broadway and the other is the 146,000 square feet at the top of 1301 Avenue of the Americas.

Both blocks of space offers spectacular views and both buildings are considered to be prime assets in prime locations within their sub-markets. The other important note here is the diversity of the available space that we are offering among the buildings.

Consider that at 1633 Broadway, where we have availability at the bottom of the building with 22 foot ceiling heights that makes for unique base floor space priced at about 25% below the tower block.

In fact, among our buildings and their availabilities, and I would include upcoming 31 West 52nd Street and 1325 Avenue of the Americas availabilities here, we have spaces ranging from the low 60s per square foot rent to just under double that in asking rates.

Most of these are close to the top of our buildings or found on value oriented base floors and each of these buildings can offer a 100,000 square foot continuous block to a tenant.

We could not have spread out our diversity better and the result is that we are seeing activity from all types of users simply because the market for quality 100,000 square foot blocks remains limited and we are positioned well with our offerings.

The final point is that we are actively looking at our properties as these availabilities come up and continuing to position them well by focusing on keeping them up-to-date and having them presented in the best possible light.

The Plaza renovation at 1633 Broadway has hit a major milestone with a construction bearers out front coming down in time to allow our tenants to enjoy the Plaza for spring. The Lobby upgrade at 1301 Avenue of the Americas is weeks away from being complete. And we are the initial planning stages of Lobby upgrade at 31 West 52nd Street as well.

With of all these things taken together, combined with the continued help we are seeing in Midtown, we are in a great position to keep executing on our recent plan. In Washington DC, we continue to focus on our availabilities and we delivered on good leasing progress in the first quarter.

There remains a limited supply of genuine trophy space in the CBD and given our leased occupancy of 92.5% in our DC portfolio, the limited role we have in a near term and this being an election year, we will continue to remain firm on asking rents, as we do not see this market moving down. Getting lease deals done remains a labored effort.

However, we do expect more success this year even in a relatively flat market. In San Francisco, there is not much to add to what Albert said. We do not have much space available and when we do have it, we have been able to achieve initial rents starting over $100 per square foot.

The overall market remains healthy with very low inventory especially along Mission and Mark Street corridors. We won’t really have a view into the unicorn and start-up tenants in the market as our tenants tend to be larger investment grade rated companies. We still view this as one of the best assets in a strong market.

As I made a point in our New York section, the lobby renovation here is also a key factor in positioning our property for the future. The results have shown in our strong office leasing and strong retail activity that we are looking to convert in the near time with our expanded retail product at One Market Plaza.

With that, I will turn the call over to Wilbur, who’ll discuss the financial results in more detail.

Thanks Ted and good morning everyone. Our financial results for the quarter were very strong. Yesterday we reported core FFO of $0.23 per share, up $0.05per share over 25.6% from the prior year’s first quarter. This was primarily due to the increase in GAAP NOI in our portfolio.

Our total NOI share of GAAP NOI for the quarter was $100.2 million up $12.2million or 13.9% from the prior year's first quarter. As Albert mentioned earlier and as disclosed in our first release, during the quarter we terminated a tenant lease of 1633 Broadway pursuant to which we recognized $10.9million of termination income.

I would just like to clarify that the $12.2million increase in GAAP NOI has little to do with this termination income, as it was almost entirely offset by write-offs aggregating $10.6 million which were primarily non-cash related to the tenant's FAS 141 above market lease asset.

That said, the $12.2 million increase did include $3.8 million from the acquisition of our joint venture partners' interest in 31 West 52nd Street. Our pro rata share of same-store GAAP NOI which excludes the effect of these items was $92.2million, up $4.6million or 5.2%.

Our pro rata share of straight-line rents was $18.6 million almost all of which was attributable for free rent. Notwithstanding, our strong first quarter results we are reaffirming our 2016 core FFO earnings guidance.

This is primarily due to the three large 2016 lease expirations occurring subsequent to the first quarter which we have been highlighting all along. First, the 212,000 square foot Deloitte lease at 1633 Broadway which expired at the beginning of April.

Second, the remaining 146,000 square feet of Commerzbank space at 1301 Avenue of the Americas which expires this month and lastly the 110,000 square foot assured guarantee lease at 31 West 52nd Street which expires in August.

So while our leased and occupied percentages were up this quarter, we do expect a temporary decrease in occupancy and our financial results stemming from these leased expirations.

That said, we still have $87million of contractual pro rata annualized cash rent that is attributable to tenants that are even a free rent period or related to signed leases not yet commenced that will become cash pay in the near term.

As a result of the increase in occupied percent, there has been a shift in composition of what constitutes free rent versus signed leases not commenced. Last quarter $51million of the $87million was attributable to leasing in the free rent period with the remaining $36million attributable to signed leases not commenced.

This quarter as many of the signed leases has commenced and occupancy has increased, $78million of the $87million in now attributable to free rents, with the remaining $9million attributable to the signed leases not yet commenced.

Turning to our balance sheet, we ended the quarter with $981million of liquidity, comprised of $221million of cash and restricted cash and $760million of availability under our revolving credit facility. Our outstanding debt remains unchanged from the prior quarter at $2.7 billion with the weighted average interest rate of 4.4%.

Our debt-mix is well balanced. 85% of our debt is fixed at a weighted average of interest 4.8% and a weighted average maturity of 4.4 years. The remaining 15% of our debt is floating at a weighted average interest of 1.8% and a weighted average maturity of 2 years.

Our leverage metrics remain conservative with overall net debt to enterprise value of 36.8% and net debt to EBITDA of 6.6 times. We continue to remain very focused on the right side of our balance sheet. As Albert mentioned, earlier this week, we completed the refinancing of 31 West 52nd Street.

This was for two of our strategy in acquiring our joint venture partners interest in this asset to get to this above market debt early. The debt here was 413 million at 5%. The year-end number was 4.2% but that was because of the expiration of an interest rate swap that caused the trends of that debt to go floating in the fourth quarter.

We not only refinanced this December 2017 maturity early, but upsized the loan to $500 million, realizing approximately $65 million of net proceeds and reducing the interest rate to 3.8%, all of which fixed for a term of 10 years, further elongating our debt maturity profile.

We have no debt maturing this year and the refinancing of 31 West 52nd Street now complete, we only have 484 million maturing in 2017. From an accounting standpoint, we further simplified our financial statements by deconsolidating all of our fair value funds.

Our investments in these funds and income generated from it, is now recorded under the equity method thus reflecting only a pro rata share and not 100% with adjustments thorough non-controlling interest.

Because this adoption was not retrospective, in an effort to facilitate comparability, we broke out the consolidated and unconsolidated funds separately and presented the non-controlling interest from funds separate and apart from non-controlling interest in consolidated joint ventures. We hope you find this helpful.

In addition, and if you may have noticed, we enhanced and expanded the disclosure of our supplemental package by adding 10 additional pages including segment information. Our goal here is simple, provide our investors and analyst with transparent best-in-class disclosure. We will continue to seek your feedback in accomplishing this goal.

With that, operator, please open the lines for questions..

[Operator Instructions] Our first today is coming from Steve Sawka from Evercore ISI. Please proceed with your question..

Thanks, good morning. I was wondering if you or Ted could provide a little bit more on the couple of large leases that are coming due.

Obviously, there is going to be a fair amount of downtime between when these leases end and when the new ones commence, so can you give us a little flavor for the tenants in the market and potential timing around when these may get signed and when they may start to cash flow again?.

Yes, of course, Steve, with pleasure. As you know, these opportunities just become available now in the second quarter. And these are in the best locations of our tower floor properties and we are laser focused on these opportunities.

So Ted will go into further details but as you know from the past, it normally takes a while, especially in New York to negotiate these kind of leases. And as historically, we have executed most of our leases in the third and specifically in the fourth quarter of the year.

And there will be downtime to be expected for sure for these kind of tower floors.

Ted?.

Yes. Again, it’s big block space. So big blocks where we lease while they are occupied, generally it happens after they are vacant. And we are - the good news here I think is that, we are just seeing the good diversity of tenants coming through different types of space users.

Off the top of my head, I can think there's media, advertising tech, finance, law, consumer goods, healthcare, I mean, all those we've seen various proposals and tours from tenants across different industries. So as we said, activity remains pretty solid and that's what we can report about right about now..

And is it your expectation that both of these blocks would get leased in their entirety as is or do you envision them getting split up into smaller chunks?.

Tough to say, we’ve got proposals that would take most of the block and then we’ve got some single floor users as well. It’s tough to kind of move things as you want them to move but we like to take tenants as they are ready to go and we make decision when the time comes. But I think it's not really going to lend itself to one or the other.

We are getting all types of activity..

Okay.

Then last question for me, any update on the retail at the 1633 as to the construction and leasing activity for that space?.

Steve, we are on a target with regard to finishing up construction there and if you have the time to come out here at 1633 Broadway, it looks really terrific and we will be on time and on budget.

And with regard to leasing, we really can’t comment at this point as you know from the past, we want to be very conscientious and very focused on getting the right tenants for that space..

Okay, thank you..

Thank you. Our next question today is coming from Nick Yulico from UBS. Please proceed with your question..

Good morning, everyone.

Wilbur, from a modeling standpoint, can you walk through the - a little bit the cash and GAAP NOI impact from a timing standpoint over the remainder of this year? You have the leases we just talked about expiring, but then there is some free rent burning off and leases commencing, too, as you mentioned earlier?.

Sure, again, Nick, we are not giving quarterly guidance as you know, but we did try to highlight, if you went back to what we published at year end, that GAAP NOI for 2016 would be $10 million to $15 million higher than the 2015 amount. And cash NOI would be $10 million to $15 million lower than the 2015 amount.

That said, you saw where our first quarter results were. We specifically highlighted the three large block expirations that are coming on, the 212,000 square foot Deloitte space, the 146,000 of remaining Commerzbank space, and 110,000 square foot Assured Guaranty lease. The lease expirations are in our table.

We’ve broken them down by segment, by quarter. So you can kind of get there based on what you see coming out of the portfolio..

Right. The added disclosures in the supplemental are definitely helpful. One follow-up there is you did talk about the $87 million of cash rent that still needs to commence.

I know you said a lot of that is going to be done by early 2017, but maybe just if you could tell us a little bit more about how it might hit in - how much of it might actually hit in 2016..

It really is more back-ended as Albert highlighted in his prepared remark as well. 90% of that amount starts to burn off in the next 12 months. So it’s more back-ended.

Again, the idea was to provide a bridge if you will but we do have this $87 million, we highlighted that last quarter, it continues to remain $87 million but given the increase in occupancy, the composition of what constitutes free rent has now increased to $78 million versus what constitutes signed leases not commenced which is the remaining 9..

Okay. That’s helpful. Thanks everyone..

Thank you. Our next question today is coming from the line of Brad Burke from Goldman Sachs. Please proceed with your question..

Hi, good morning guys. I realize the nearer-term focus is obviously on the lease roll, but just wanted to ask about growth beyond leasing.

How you are thinking about acquisitions, specifically, and how you are viewing your cost of capital versus some of the opportunities you might look at in the market?.

Well, we will be very, very cautious in looking at new acquisitions as we have pointed out over the last couple of quarters. The way where our stock price is trading at this point, we want to keep a very solid, conservative balance sheet.

As we had mentioned before, we would look at joint venture opportunities for potential acquisitions but the market is very pricey and will be very conservative looking at acquisitions. We would only take an opportunity of something really looks excellent long - as an excellent long term investment for our shareholders..

Okay.

And with the closing of the mez fund, how would you think about the opportunity to make mez investments versus making outright acquisitions? Also if you can give us an update on how you're looking at mezzanine yields, how those changed potentially over the last one to two quarters?.

The mezzanine fund has seen a lot of opportunities and we are looking at investment in the 55% to 80% LTV kind of level.

And as we had mentioned before sometimes these kind of debt investments turn into equity investment opportunities, and that market is very solid; there's a lot of activity and we will be pursuing a couple of closings before the end of the year..

And could you compare the attractiveness of incremental mezzanine investment to doing outright acquisitions or maybe JV acquisitions?.

That's very hard, I mean these deals come very - in different varieties. And you have potential clients for that mezzanine debt fund who are looking for refinancing opportunities and very often they're more in the area of Class B properties. And that's where we're focused and in all of our three markets.

The return ranges in the 7% to 12% range, they are more focused and long term value focused and that's where we are - this hedge fund is investing in..

Okay. Appreciate the color, thank you..

Our next question today is coming from Blaine Heck from Wells Fargo. Please proceed with your question. .

Thanks. A follow-up on the pro-rata cash NOI.

We are obviously going to see some lumpiness, but would it be fair to say that this quarter at $87 million might represent the peak in that number for the next several quarters, given the large move-outs or will the free rent burning off be enough to offset some of that in the near future?.

Well, it's hard to say that, but as you as you should remember that there's other people that I guess - our new tenants that do come online as wished other tenants com offline as well. So, there's a lot of moving pieces here Blaine, I can't precisely tell you that this would be the high point..

Okay. Fair enough. Albert, like you said, you guys have prime space that you are looking to lease.

How are you going to think about balancing the desire to get that space backfilled and occupied sooner than later versus holding off and achieving the best rent possible?.

Well, we're always looking at renting this space as quickly and expeditiously as possible. We have made studies that normally it doesn't make really sense to hold out to get the ultimate rate. Ted made comments about the washing portfolio, where we have limited additional space available and it's in the best locations of the CBD in D.C.

and that's where we will be discerning. For these large floor spaces timing is very important and we are expeditiously pursuing tendency for that space..

Okay. That's very helpful. Thanks, guys..

Thank you. Our next question today is coming from Vincent Chao from Deutsche Bank. Please proceed with your question. .

Good morning, everyone.

You alluded to it when you were talking about the closing of Fund VIII in terms of the foreign demand for that fund, but I'm curious if you have seen any changes in where that foreign capital is coming from in terms of geography, as well as where they are interested in terms of where to deploy their capital, across geographies in U.S.

or also across property type and that kind of thing?.

There's still a tremendous interest - foreign interest investing in the markets where we are active in the coastal cities. In general, you can say that they have focused on high quality Class A and trophy investments and less focused on secondary and suburban markets.

So we see a lot of interest still and especially from areas where the investors are seeking safe haven kind of investments with long term value preservation and protection against losing their investment..

And I guess are you seeking a shift in where that money is coming from maybe more from certain regions than previously or less from others?.

We are still seeing a lot of interest from Europe and maybe a little less from Asia, but that’s hard to really specify and it changes on a month by month basis, but the demand for strong solid investment opportunity is still there..

Okay. Thanks.

Then just on the release, the 1633 Broadway release, was the tenant that you were able sign behind the exiting tenant, was that an expansion or a contraction from what they were previously leasing from you guys?.

It was not - it was like-for-like..

Like for like. Okay.

Are there any - in terms of renewals over the balance of 2016 - I know, obviously, we are focused on the largest that we know are moving out, but any that are sitting at significantly above-market rents in the 2016 expirations?.

No. .

Not significant, no. .

And again we highlighted in our supplemental if you want to go to page 26 of our lease expiration schedule, you kind of get a flavor for what the rents are for the space is expiring and if you look at 2Q the 360,000 square feet that's really all in New York about the Commerzbank space and the Deloitte space at $81 blended a foot, and 130,000 square feet in the third quarter that's the assured guarantee lease at 31 West 52 Street, that's in the $70 range.

And the other space that you see in 4Q which is $91 a foot, that's really at 712 Fifth Avenue, so while that number seems high. If you look at what 712 Fifth Avenue is leasing up significantly above those numbers..

Okay.

Maybe one last one for me in terms of the leasing environment, sounds like, from your perspective, fairly little change quarter-on-quarter in your different markets, but in New York City, I'm just curious if you have seen any shift away or shrinking of demand in terms of high-end users, financial services, and that type of tenant?.

Well the key market indicators really haven't changed as much and we have a solid tour activity and the demand is pretty diverse, haven't seen much of changes here.

But as over and over again, I can only repeat, New York is a market that focuses on third and fourth quarter activity especially with regard to signed leases, so it's always a little slow at the beginning of the year.

And then as we have pointed out, we have leased as much in this first quarter as we did in the last year in the first quarter and we see solid activity in this market..

Okay. Thank you. .

Thank you. Our next question today is coming from Jamie Feldman from Bank of America. Please proceed with your question..

Great, thank you. One of the leases you didn't discuss was the ING lease in the fourth quarter, first quarter next year.

Any early thoughts on what is going on there in terms of - you said they are moving out, but just tenant interest?.

Jamie, ING, we have basically leased one of the floors already in the first quarter of this year and that is an aberration, it's a little unusual as we had mentioned before that that you can lease space while the tenant is still in occupancy and we are showing that space, it's in the lower part of 1325 Six Avenue.

And so there's solid activity already, but we really cannot show that space as well as we would if the tenant would not be in occupancy..

Okay. That's helpful. Ted mentioned proposals before, when he was talking about some of the activity.

If you were to look at the three spaces expiring over the next - for the rest of the 2016, is there one or - how would you rank the demand in terms of the number of proposals you have outstanding, of the three? Which one is moving the fastest?.

Well, I mean I think, - goes to back to the point I made about how diverse each of the offerings are so, it's not really a great apples-to-apples comparison because we got different trends with different price points looking at each of those spaces but I really can’t say it is a significant difference between one space or the other in terms of level of activity.

All these building Jamie have they own specific character and diverse tenancy base so 1633 Broadway has a different tenant that is catering to but we have solid showings as then the assets of Six Avenue but we had solid showings in all assets..

Okay. Then going to the other coast, can you talk about San Francisco and chime in on - it's been hotly debated this earnings season, but your latest thoughts on what's happening in that market.

I know you have got a very well-positioned asset, so you are a little protected from it, but latest thoughts on what you think is happening there and what your expectation is for market conditions?.

The market has been very strong and resilient and we have done a lot of leasing over a $100 square foot in our asset and all of our temi tenants of 95% of them are having good corporate credit and we really don’t see any kind of sub lease demand or request for sub lease space in all asset.

We also are managing as you know an asset that is owned by Fund VII which is a 50 Beale which we leased up close to 100%. At this point we don’t see any kind of softening in those market yet but again these are CBD assets in the best locations of San Francisco. It might be different in other parts of the market..

Okay.

Then, finally, my guess is there is probably not much to talk about yet, but any thoughts on Deutsche Bank downtown and how should people think about longer-term plans for that building?.

We can’t make any comments on that at this point Jamie..

Okay, all right. Thank you..

Thank you. Our next question today is coming from Tom Lesnick from Capital One. Please proceed with your question..

Thanks, good morning, guys.

Following up on Brad's question earlier about the mez fund, can you guys talk a little about the depth of that opportunity set and where those opportunities are coming from? Are these primarily coming from CMBS deals that are rolling out here in 2016 and 2017 or private equity, some sense there?.

The demand is really across the board and normally it’s - when a potential client is refinancing an asset that client is getting in first position normally up to 50% or 55% and then he is trying to fill in the other 20% or 25% demand has - I would say increased a little bit over the last two quarters but we are very selective because we want to make good quality investments for that fund and it's - the majority of it is in New York.

We only would invest in all three markets, New York, Washington and San Francisco, the majority of the demand is in the New York market..

Got it. Appreciate that.

Then, you guys have obviously had success with your recent refinancings, but as you look at 900 Third or Waterview, can you provide some sense as to where you are in the process for those and how we might think about timing of potential refinancings?.

Yes, we could see we have very early on proactively focused on the refinancing of 1633, way earlier than the recent financing was expiring, the same happened with 31 West.

We are looking at the refinancing opportunities for 2017 for Waterview and 900 3rd of course early as well, and so we’re looking at all the opportunities and evaluating it in the course of this year..

Okay, thanks. Appreciate it..

Thank you. Our next question today is coming from Jed Reagan from Green Street Advisors. Please proceed with your question..

Good morning, guys. Most of the questions have been asked. But I was surprised to see such a sizable markdown on the lease termination at 1633.

Is it fair to assume that prior lease was really a top-of-the-market lease from the prior cycle or were there unusually high rent bumps or how should we think about that?.

Yes, that was an unusual lease, it was done in 2007 as you mentioned correctly, it was done in the highest point of the last height of the market and that's why it, it is at high level..

Okay. That makes sense.

Can you mention which industry the tenant was in that went bankrupt?.

Well it was legal..

Okay, great. Thank you very much..

Thank you. Our next question today is coming from Sumit Sharma from Morgan Stanley. Please proceed with your questions..

Hi guys, this is Sumit, but I appreciate being called Smud. Most of my questions have been asked, as well, but focusing on 2099 Pennsylvania Avenue, if you could share any color. I haven't seen much of movement on the leasing grade or the occupancy.

I know this had a bit of history, so if you could just provide some commentary as to what you are seeing and whether we should expect anything imminent in terms of occupants movements or such?.

Well we’re always hoping to report good news, I’ll tell you we are - as we’ve said the market continues to be a somewhat labored in DC but we feel that we have a very high quality asset, we’ve got a very unique space along Pennsylvania Avenue and there are not many comparable offerings to what we have, so we’re really being very decisive about what we do in terms of pricing and who we rent to.

We have activity. We have tours. It’s just a matter of making sure it’s the right deal and the right tenant. So we’re hopeful that we’ll have some more activity there soon..

Thank you very much..

Thank you. We reached the end of our question-and-answer session. I would like to turn the floor back over to management for any further or closing comments..

Well thank you very much for the interest in Paramount Group, Inc and looking forward to have you on our next earnings call. Thank you, bye-bye..

Thank you. That does conclude today's teleconference. You may disconnect your lines at this time and have a wonderful day. We thank you for your participation today..