Paramount Office REIT Paid Millions To CEO’s Other Companies

Paramount Group (PGRE), a major office REIT with 13M SF of office and commercial space in New York and San Francisco, spent millions in 2024 on services from companies controlled by CEO Albert Behler. 

By The Numbers

The publicly traded firm disclosed in its annual 10-K filing with the SEC that it paid $1.7M to Behler’s private aviation company, $462K to his consulting firm, and $12K for wine from his German winery. 

The payments were part of a broader pattern of related-party transactions, which Paramount Group expanded its disclosures to include this year.

Soaring Aviation Costs

The largest share of these payments went to Behler’s private aviation company, which Paramount has used extensively in the past few years.

In total, Paramount spent more than $3M chartering private planes from the company over the last three years. The costs skyrocketed from $289K in 2022 to $1.1M in 2023 and $1.7M in 2024. 

Additionally, Paramount spent $1.6M from 2022 to 2024 on services from Behler’s consulting firm, which oversees Paramount’s investments in Germany.

More Transparency

Paramount’s increased transparency came after shareholder complaints and the push for improved disclosure of “direct and indirect related party transactions.”

A company spokesperson emphasized the expanded disclosures reflect a commitment to enhancing transparency, even including transactions that did not meet the materiality threshold for reporting.

Compensation Concerns

Shareholders are also displeased with Behler’s compensation package, especially given the company’s struggling stock price, down around 70% from its pre-pandemic value.

In 2024, a majority of shareholders voted against doubling Behler’s compensation to $20M, but the board proceeded with the raise, which includes about $1.1M in salary and the rest in stock.

One shareholder even sent a letter to Paramount’s board in January, accusing Behler of “improper self-dealing.” In response, the company acknowledged receiving such correspondence but emphasized its commitment to taking these concerns seriously.

Slipping Rents

Paramount’s financial outlook isn’t great. The company predicted a 33% drop in rental income for 2025 due to tenants moving out faster than they are replacing spaces.

In Q4, the office REIT leased just 109K SF, the third consecutive quarter of leasing declines. Meanwhile, full-year leasing for 2024 amounted to 763K SF, but an expiring sublease from Clifford Chance law firm in 2025 is expected to affect leasing activity even more.