Office REIT Paid Millions To Companies Controlled By CEO
A Midtown Manhattan landlord paid a private jet company owned by its CEO nearly $2M, one of a handful of payments between the real estate company and entities controlled by its longtime leader.
Paramount Group, the owner of 13M SF of office and commercial space in New York and San Francisco, spent millions last year alone on businesses controlled by CEO Albert Behler, the publicly traded REIT disclosed in its annual 10-K report with the Securities and Exchange Commission.
The costs to the company last year included $1.7M to Behler’s private aviation company, $462K to his consulting company and $12K for wine from Behler’s winery in Germany, according to the filings, which were first reported by Crain's New York Business.
Paramount Group expanded its disclosures this year to include “direct and indirect related party transactions,” including items that fell below the materiality threshold required for reporting, a Paramount Group spokesperson said in a statement shared with Bisnow.
“The information provided in our 10-K reflects our commitment to transparency and enhancing our disclosures,” the spokesperson said.
Paramount Group’s stock price is sitting at roughly $4.10 a share Monday, about 70% below its prepandemic value. Its shareholders have been displeased with management for some time — a majority last year voted against doubling Behler’s annual compensation to about $20M amid a decline in stock price, but the board raised his compensation anyway, Crain's reported. The compensation package includes about $1.1M in salary and the rest in shares.
Behler has been CEO of Paramount since 1991, and the company went public on the New York Stock Exchange in 2014.
In the last three years, Paramount has spent more than $3M chartering private planes with an aviation company that is 50% owned by Behler. The costs increased from $289K in 2022 to $1.1M in 2023 and $1.7M in 2024.
Behler also owns 100% of a consulting firm that supervises Paramount’s investment efforts in Germany. Paramount spent $1.6M on the firm’s services from 2022 to 2024, the disclosure states.
Paramount also contracts with Kramer Design Services, owned by Behler’s wife. Kramer Design was paid $207K over the past two years to develop “branding and signage” for the amenity center at its 1301 Sixth Ave. office building.
Paramount Group last month entered into another $220K contract with Kramer Design for design services at its San Francisco properties.
A shareholder in January sent a letter to Paramount’s board accusing Behler of “improper self-dealing at the company’s expense,” Crain’s reported.
In its statement, Paramount acknowledged receiving “correspondence from time to time from shareholders, vendors and other stakeholders,” noting that it takes these matters seriously.
Paramount Group late last month predicted a 33% decline in its rental income for 2025 due to tenants moving out faster than they’re moving in. In January, it sold a 45% equity stake in its 600K SF office building at 900 Third Ave. for $94M.
The group leased only 109K SF of space in the last quarter of 2024, marking three quarters of consecutive decline, Crain’s reported.
Paramount leased 763K SF throughout 2024, according to the annual report, which noted same-store leasing was down due to the scheduled expiration of Clifford Chance law firm’s 380K SF sublease at 31 W. 52nd St.
