Paramount Announces First Quarter 2021 Results

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Paramount Group, Inc. (NYSE: PGRE) reported a net loss of $3.6 million, or $0.02 per diluted share, for Q1 2021, compared to a net income of $3.3 million, or $0.01 per diluted share in Q1 2020. Core Funds from Operations (Core FFO) fell to $50.6 million, down from $61.5 million year-over-year, largely due to the expiration of Barclays’ lease. Same Store Cash NOI and Same Store NOI declined by 2.6% and 7.5%, respectively. The company declared a cash dividend of $0.07 per share and ended the quarter with $1.49 billion in liquidity. 2021 Core FFO Guidance is reaffirmed at $0.82 to $0.88 per diluted share.

Positive

Declared a cash dividend of $0.07 per common share on March 15, 2021.
Ended Q1 with $1.49 billion in liquidity, including $488.2 million in cash.
Signed a significant lease with Bracewell LLP for 54,095 square feet post-quarter.

Negative

Reported a net loss of $3.6 million for Q1 2021, a shift from net income of $3.3 million in Q1 2020.
Core FFO decreased to $50.6 million from $61.5 million year-over-year.
Same Store Cash NOI decreased by 2.6%, and Same Store NOI declined by 7.5% due to lease expirations.

04/28/2021 - 04:15 PM

Paramount Group, Inc. (NYSE: PGRE) (“Paramount” or the “Company”) filed its Quarterly Report on Form 10-Q for the quarter ended March 31, 2021 today and reported results for the first quarter ended March 31, 2021.

First Quarter Highlights:

Results of Operations:

Reported net loss attributable to common stockholders of $3.6 million, or $0.02 per diluted share, for the quarter ended March 31, 2021, compared to net income attributable to common stockholders of $3.3 million, or $0.01 per diluted share, for the quarter ended March 31, 2020.
Reported Core Funds from Operations (“Core FFO”) attributable to common stockholders of $50.6 million, or $0.23 per diluted share, for the quarter ended March 31, 2021, compared to $61.5 million, or $0.27 per diluted share, for the quarter ended March 31, 2020. The decrease in Core FFO attributable to common stockholders for the quarter ended March 31, 2021 was driven largely by a decrease in earnings of $7.7 million, or $0.04 per diluted share, as a result of the January 1, 2021 expiration of Barclays’ 497,500 square foot lease at 1301 Avenue of the Americas.
Reported a 2.6% decrease in Same Store Cash Net Operating Income (“NOI”) and a 7.5% decrease in Same Store NOI in the quarter ended March 31, 2021, compared to the same period in the prior year, which was also driven largely by the Barclays lease expiration.
Leased 188,641 square feet, including 155,956 square feet that was leased to the Gershwin Theatre at 1633 Broadway for a 20-year term. Excluding the theatre lease, 32,685 square feet was leased, of which the Company’s share was 19,655 square feet that was leased at a weighted average initial rent of $76.08 per square foot. Of the 32,685 square feet leased, 18,211 square feet represented the Company’s share of second generation space for which mark-to-markets were negative 8.6% on a cash basis and negative 15.9% on a GAAP basis. The negative mark-to-markets on 18,211 square feet of second generation space were driven by a short-term (18 month) above-market 13,914 square foot lease renewal.

Other:

Ended the quarter with $1.49 billion in liquidity, comprised of $488.2 million of cash and restricted cash and $1.0 billion of borrowing capacity under its revolving credit facility.
Declared a first quarter cash dividend of $0.07 per common share on March 15, 2021, which was paid on April 15, 2021.
Subsequent to quarter end, signed a 54,095 square foot lease with Bracewell LLP, a leading law and government relations firm, backfilling over 40% of the upcoming vacancy at 31 West 52^nd Street.

Financial Results

Quarter Ended March 31, 2021

Net loss attributable to common stockholders was $3.6 million, or $0.02 per diluted share, for the quarter ended March 31, 2021, compared to net income attributable to common stockholders of $3.3 million, or $0.01 per diluted share, for the quarter ended March 31, 2020.

Funds from Operations (“FFO”) attributable to common stockholders was $50.9 million, or $0.23 per diluted share, for the quarter ended March 31, 2021, compared to $61.6 million, or $0.27 per diluted share, for the quarter ended March 31, 2020. The decrease in FFO attributable to common stockholders for the quarter ended March 31, 2021 was driven largely by a decrease in earnings of $7.7 million, or $0.04 per diluted share, as a result of the January 1, 2021 expiration of Barclays’ 497,500 square foot lease at 1301 Avenue of the Americas. FFO attributable to common stockholders for the quarters ended March 31, 2021 and 2020 also includes the impact of non-core items, which are listed in the table on page 8. The aggregate of the non-core items, net of amounts attributable to noncontrolling interests, increased FFO attributable to common stockholders for the quarter ended March 31, 2021 and 2020 by $0.3 million and $0.1 million, respectively, or $0.00 per diluted share.

Core FFO attributable to common stockholders, which excludes the impact of the non-core items listed on page 8, was $50.6 million, or $0.23 per diluted share, for the quarter ended March 31, 2021, compared to $61.5 million, or $0.27 per diluted share, for the quarter ended March 31, 2020. The decrease in Core FFO attributable to common stockholders for the quarter ended March 31, 2021 was driven largely by a decrease in earnings of $7.7 million, or $0.04 per diluted share, as a result of the January 1, 2021 expiration of Barclays’ 497,500 square foot lease at 1301 Avenue of the Americas.

Portfolio Operations

Quarter Ended March 31, 2021

Same Store Cash NOI decreased by $2.5 million, or 2.6%, to $92.4 million for the quarter ended March 31, 2021 from $94.9 million for the quarter ended March 31, 2020. Same Store NOI decreased by $8.0 million, or 7.5%, to $98.8 million for the quarter ended March 31, 2021 from $106.8 million for the quarter ended March 31, 2020. Decreases in Same Store Cash NOI and Same Store NOI were also driven largely by the January 1, 2021 expiration of Barclays’ 497,500 square foot lease at 1301 Avenue of the Americas.

During the quarter ended March 31, 2021, the Company leased 188,641 square feet, including 155,956 square feet that was leased to the Gershwin Theatre at 1633 Broadway for a 20-year term. This leasing activity, offset by lease expirations in the quarter (comprised primarily of the expiration of Barclays’ lease at 1301 Avenue of the Americas), decreased leased occupancy and same store leased occupancy (properties owned by the Company during both reporting periods in a similar manner) by 660 basis points to 88.6% at March 31, 2021 from 95.2% at December 31, 2020. Excluding the theatre lease, 32,685 square feet was leased during the quarter, of which the Company’s share was 19,655 square feet that was leased at a weighted average initial rent of $76.08 per square foot. Of the 32,685 square feet leased, 18,211 square feet represented the Company’s share of second generation space (space that had been vacant for less than twelve months) for which mark-to-markets were negative 8.6% on a cash basis and negative 15.9% on a GAAP basis. The negative mark-to-markets on 18,211 square feet of second generation space were driven by a short-term (18 month) above-market 13,914 square foot lease renewal. Excluding the theatre lease, the weighted average lease term for leases signed during the first quarter was 3.9 years and weighted average tenant improvements and leasing commissions on these leases were $4.17 per square foot per annum, or 5.5% of initial rent.

Guidance

The Company is providing its Estimated Core FFO Guidance for the full year of 2021, which is reconciled below to estimated net loss attributable to common stockholders per diluted share in accordance with GAAP. The Company estimates that net loss attributable to common stockholders will be between $0.16 to $0.10 per diluted share. The estimated net loss attributable to common stockholders per diluted share is not a projection and is being provided solely to satisfy the disclosure requirements of the U.S. Securities and Exchange Commission.

Based on the Company’s performance for the three months ended March 31, 2021 and its outlook for the remainder of 2021, the Company is reaffirming its Estimated 2021 Core FFO Guidance to be between $0.82 to $0.88 per diluted share.

Full Year 2021

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