Paramount Group REIT to take an earnings hit as JPMorgan surrenders some lease space acquired through First Republic, SVB lease agreement terminated

Paramount Group Inc.
PGRE,
+12.01%
disclosed Friday that it will take an earnings hit as JPMorgan Chase & Co. gave up about one-fourth of the leased office space acquired through First Republic Bank and as its lease with SVB Securities was terminated. The real estate investment trust focused on office properties said the lease deals would reduce 2023 net income by $19.6 million, or 8 cents a share, with revenue revenue being reduced by $5.7 million. Paramount said First Republic least a total of 460,726 square feet at the One Front Street property in San Francisco. After JPMorgan acquired First Republic assets, the bank decided to assume the lease agreement on 344,010 square feet office space but surrender 116,716 square feet of space. In addition, SVB Financial Group subsidiary SVB Securities had leased 108,994 square feet at Paramount’s 1301 Avenue of the Americas property in New York, but after SVB’s bankruptcy, Paramount terminated the lease and entered into a new lease with the entity that acquired nearly all SVB assets, including 61,183 square feet on a long-term basis and 40,811 square feet on a short-term basis. Paramount’s stock, which was little changed in premarket trading, has dropped 27.1% year to date, while the Real Estate Select Sector SPDR exchange-traded fund
XLRE,
-0.29%
has gained 2.8% and the S&P 500
SPX,
-0.10%
has advanced 14.9%.