Key Takeaways:

  • Paramount Group disclosed in a securities filing on May 19 that CFO, Treasurer, and COO Wilbur Paes and General Counsel Gage Johnson stepped down from the company and its affiliates on May 15.
  • The real estate investment trust (REIT), which owns office properties in New York and San Francisco, announced in a press release that day that it appointed Senior Vice President and Chief Accounting Officer Ermelinda Berberi as the new CFO and Treasurer, and promoted Vice President and Legal Counsel Timothy Dembo to Senior Vice President, General Counsel, and Corporate Secretary. Both appointments took effect on May 15.
  • The REIT also announced that its board has initiated a "review and evaluation of strategic alternatives aimed at maximizing shareholder value." In the press release, Chairman, President, and CEO Albert Behler said the review stems from "the board's and management's continued focus on the long-standing gap between the company's public market valuation and our assessment of its intrinsic value."

Deep Dive:

The New York-based REIT is a major office landlord in San Francisco and New York. Behler said in a statement on Monday, May 19, that as part of the review, the company is evaluating "a comprehensive range of strategic alternatives." According to a Wall Street Journal report that day, this could includea potential company sale or joint venture arrangements。

Paramount Group did not immediately respond to requests for comment.

According to the press release issued Monday, the REIT has hired BofA Securities as financial advisor and retained Latham & Watkins LLP as legal counsel to work with a "transaction committee" of independent directors in evaluating the company's options. Paramount said in the release: "There is no set timetable for the strategic review, and there can be no assurance as to its outcome."

The sudden executive departures and the strategic review are the latest signs of the real estate trust's recent troubles. According to its website, the company's business model focuses on providing office space to the financial, media, and professional services industries. The review and the two executive appointments come as the REIT seeks to regain shareholder confidence while continuing to navigate economic headwinds, includingweakness in its San Francisco portfolio, upcoming debt maturities, and the ongoing pressure across the office sector due to remote work trends.

The company previously made headlines over undisclosed CEO payments. The Wall Street Journal reported in April that Behler received at least $4 million for personal expenses and business interests.

The REIT also faces a shareholder confidence crisis amid sustained economic pressure. Paramount Group reported strong leasing activity in its latest quarter ended March 31—leasing 283,874 square feet, which, according to the earnings call transcript, was its strongest quarter since the first quarter of 2021. However, its total debt rose slightly to $5.4 billion in the quarter, with 42% of that debt maturing in 2026. The company reported a net loss of $10 million for the quarter, compared with net income of $9.9 million in the same period last year.

Incoming CFO Berberi has served as the company's Chief Accounting Officer since March 2017, joining the company in 2016 as Senior Vice President of Finance. According to her LinkedIn profile, before joining Paramount Group, Berberi was a senior manager at Big Four accounting firm Deloitte.

The company's filing Monday did not disclose Berberi's compensation as CFO. According to Paramount's latest proxy statement filed in April, her predecessor Paes received total compensation of approximately $2.4 million in 2024 as CFO, COO, and Treasurer, including a base salary of $670,000, stock awards valued at $1.7 million, and other compensation of $52,080. According to Paes's LinkedIn profile, he was a decade-long veteran of the REIT, served as CFO for five years, and was appointed CFO and COO in February 2021.

According to Monday's press release, Dembo served as the company's Vice President and Legal Counsel since 2022 before taking on the General Counsel role. He joined the company in 2020 from Wilkie Farr & Gallagher LLP, where he was an attorney. According to his LinkedIn profile, Johnson spent 16 years at the company and received total compensation of $955,419 in 2024 as General Counsel, per the proxy statement.