Blaine Heck: Great. Thank you guys.
Albert Behler: Thank you, Blaine.
Operator: And the next question comes from the line of Dylan Burzinski with Green Street. Please proceed with your question.
Dylan Burzinski: Hi, all. Thanks for the taking the question. Just wanted to go back to sort of your comments on acquisitiond. I guess, what are some of the things you guys are looking for to actually go out and put capital to work in the private market? Is it simply just pricing hasn’t gotten to where you guys think it makes sense to pull the trigger today? Or are you guys more looking at it holistically from an overall portfolio perspective to where you guys kind of want to get through some of the larger move-outs within the existing portfolio today before going out and putting capital to work into another opportunity?
Albert Behler: We do things parallel. We work on leasing our portfolio and we parallel work with our funds. So in our funds business, we look at opportunities all the time. Maybe even going back to PGRE’s capital, we have said over and over that we will be currently not investing significant equity amounts from our own balance sheet. Our balance sheet and cash is very important to us. We have a balance sheet that is debt-free and filled with liquidity. And we would do it potentially in joint ventures. We have relationships that we have been working on since, in certain cases, over 25 years. And those kind of relationships have different investment horizons that we do have. We have made investments a while ago. We bought an asset together with a large pension fund that they wanted to focus on retail on Broadway.
We bought the M&M store that raised some eyebrows by some shareholders. But this was not really a Paramount core investment. We put a very, very small equity amount into this investment, and we made a very, very nice return on the fee income, outpacing our equity investment. So we are looking more for these kind of opportunities where we can use the expertise of our platform and investing in deep value that comes to the market. And we’re also focusing on quality. We are not interested in a B or C class opportunity that some other people think as because it’s just cheap and affordable. We are looking at something that would really justify a Paramount investment. And our sources on the human side is limited, and we want to make sure that we can do well by our shareholders and joint venture partners.
Dylan Burzinski: And in your discussions with your JV partners or potential future JV partners, I mean do you have a sense for what unlevered IRR targets they’re looking to achieve if they put money to work in office today?
Albert Behler: Yes, they’re looking at something in the neighborhood of 15% to 20%, depending on what their capital sources and where they’re coming from.
Dylan Burzinski: Great. That’s helpful. Thanks, guys.
Albert Behler: Thank you.
Operator: [Operator Instructions] Our next question comes from the line of Ronald Kamdem with Morgan Stanley. Please proceed with your question.
Tamim Sarwary: Hey. Good morning guys. This is Tamim for Ron. Just on the occupancy side, if I take your 87.1% occupancy, you guys finished at 89.1% in the quarter. You guys talked about Clifford Chance vacating. I guess the occupancy guidance does imply some pretty substantial absorption at Clifford Chance. Maybe just talk about that a little bit and kind of where you’d see that incremental absorption coming from, whether it’s in the San Francisco portfolio or in New York? Thanks.
Peter Brindley: Sure. So this is Peter speaking. We’re anticipating approximately 400,000 square feet of occupancy increasing leasing during the year in order to achieve the midpoint of our guidance, which is 87.1%. So the areas with which we expect to achieve that occupancy increasing leasing, I think, will be more heavily weighted toward New York. Specifically, it will certainly be 31 West 52nd Street with the known vacate of Clifford Chance. Certainly, there is an opportunity at 1301 Avenue of the Americas where we happen to be active. Third Avenue, the East side, of course, has been quiet, has a very high availability rate. It’s been one of the submarkets in Midtown that has underperformed. But I would say recently, with renewed interest in locations with close proximity to public transportation, certain buildings along Third Avenue have seen a recent uptick, 900 Third being one of them.
Not where it needs to be just yet, but there’s a building where we have an occupancy level well below where it has historically been. And there, as a result, is an opportunity to increase occupancy. So those are, I think, some opportunities for us. But certainly, we feel very good about activity specifically in our properties along Sixth Avenue where, once again, we have an opportunity to chip away at that 420,000, that’s the exact number, 420,000 square-foot occupancy goal that we have to get to our guidance.
