Paramount rejects all-cash takeover bid

Monarch Alternative Capital offered REIT $12 per share

New York /
Mar.March 24, 2022 11:15 AM

Albert Behler, chairman, Paramount Group (Getty Images, iStock/Illustration by Steven Dilakian for The Real Deal)

Paramount Group sounded a familiar refrain in response to the latest takeover bid for the REIT: thanks, but no thanks.

The company announced this week it rejected a bid from Monarch Alternative Capital to purchase the company for $12 per share, a 33 percent premium on what the shares were worth when the bid came in last month. Paramount’s board of directors were unanimous in their decision.

Paramount chairman Albert Behler said Monarch’s all-cash bid undervalued the REIT, citing opportunities laden within “industry tailwinds” and “impressive operating performance” last year, when the firm executed more than one million square feet of leases.

Despite rejecting a bid for the REIT for the second time in two years, Behler isn’t closing the door on an acquisition one day, saying “we remain open-minded to opportunities that could allow us to create additional value for our stockholders.”

Late last month, Monarch made its bid for Paramount; Monarch already owned 12 million shares in Paramount at the time.

“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 on the bid. “However, we think these assets have been, and will continue to be, significantly undervalued in the public markets.”

Paramount has been down this road before. Two years ago, the company rejected another unsolicited, all-cash offer, that time from hedge fund Bow Street. An analyst said at the time the bid appeared to undervalue the REIT’s trophy assets.

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

Paramount isn’t going anywhere, but Behler appears to be on the move. Last month, the executive sold his 5,500-square-foot duplex at 1080 Fifth Avenue in Carnegie Hill for $12.1 million. Behler spent 17 years piecing the place together, starting with a $9.3 million acquisition of the original apartment in 2005 that was joined by the purchase of two nearby full-floor units.





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