Paramount Announces Second Quarter 2024 Results

Rhea-AI Summary

Paramount Group (NYSE: PGRE) reported its Q2 2024 results, showing a net loss of $7.8 million ($0.04 per share), compared to $47.5 million ($0.22 per share) in Q2 2023. Core FFO increased to $43.4 million ($0.20 per share) from $37.1 million ($0.17 per share) year-over-year. The company updated its 2024 guidance, expecting net loss between $0.11 and $0.07 per share, and Core FFO between $0.76 and $0.80 per share.

Key highlights include:

• 0.1% increase in Same Store Cash NOI
• 198,505 square feet leased at $74.55 per square foot average initial rent
• Decreased same store leased occupancy to 86.3% from 89.1% in Q1 2024
• Modified $164.8 million mortgage loan at 111 Sutter Street
• Declared Q2 dividend of $0.035 per common share

Positive

• Core FFO increased to $43.4 million ($0.20 per share) from $37.1 million ($0.17 per share) year-over-year
• 0.1% increase in Same Store Cash NOI
• 198,505 square feet leased at $74.55 per square foot average initial rent
• Modified $164.8 million mortgage loan at 111 Sutter Street, extending maturity to December 2025

Negative

• Reported net loss of $7.8 million ($0.04 per share) in Q2 2024
• Decreased same store leased occupancy to 86.3% from 89.1% in Q1 2024
• Negative 3.4% GAAP mark-to-market on second generation space leased
• Updated guidance shows increased net loss expectations for 2024

Insights

Financial Analyst

Paramount Group's Q2 2024 results show a mixed picture. The company reported a net loss of $7.8 million, or $0.04 per diluted share, which is a significant improvement from the $47.5 million loss in Q2 2023. However, this improvement is largely due to the absence of one-time charges that affected the previous year's results.

Core Funds from Operations (FFO), a key metric for REITs, increased to $43.4 million ($0.20 per share) from $37.1 million ($0.17 per share) year-over-year. This 17.6% increase in Core FFO is positive, indicating improved operational performance.

The company's leasing activity is concerning. While they leased 198,505 square feet, same-store leased occupancy decreased by 280 basis points to 86.3%. This drop was primarily due to a major tenant (Clifford Chance) lease expiration. The negative 3.4% GAAP basis mark-to-market on new leases suggests some pressure on rental rates.

Paramount narrowed its 2024 guidance, maintaining the midpoint of Core FFO at $0.78 per share. However, they increased their estimated net loss range, primarily due to higher depreciation expenses. This could indicate ongoing challenges in maintaining property values in the current market.

Overall, while there are some positive signs in Core FFO growth, the declining occupancy and rental rates pose significant challenges for Paramount in the competitive office real estate market.

Real Estate Market Analyst

Paramount's Q2 results reflect the ongoing challenges in the office real estate market, particularly in major urban centers. The 0.1% increase in Same Store Cash NOI is barely keeping pace with inflation, while the 1.3% decrease in Same Store NOI on a GAAP basis is concerning.

The company's leasing spread (mark-to-market) of 1.0% on a cash basis and negative 3.4% on a GAAP basis for second-generation space indicates a softening rental market. This suggests that Paramount is struggling to maintain or increase rents on new leases, which could impact long-term revenue growth.

The decrease in same-store leased occupancy by 280 basis points to 86.3% is a red flag. While partly attributed to a single large lease expiration, it highlights the vulnerability of office REITs to major tenant moves. The weighted average lease term of 8.6 years for new leases is positive, providing some stability, but the company will need to focus on filling vacant space to improve occupancy rates.

Tenant improvement costs and leasing commissions at 17.2% of initial rent are relatively high, suggesting Paramount is having to offer significant incentives to attract and retain tenants. This could pressure margins in the short to medium term.

The modification of the mortgage loan for 111 Sutter Street, allowing interest to accrue to the principal balance, indicates potential cash flow pressures. While this provides short-term relief, it could lead to higher debt burdens in the future.

Overall, Paramount's results reflect a challenging office market environment, with pressure on occupancy, rents and potentially property values. The company's ability to navigate these headwinds will be important for its performance in the coming quarters.

NEW YORK--(BUSINESS WIRE)-- Paramount Group, Inc. (NYSE: PGRE) (“Paramount” or the “Company”) filed its Quarterly Report on Form 10-Q for the quarter ended June 30, 2024 today and reported results for the second quarter ended June 30, 2024.

Second Quarter Highlights:

Results of Operations:

• Reported net loss attributable to common stockholders of $7.8 million, or $0.04 per diluted share, for the quarter ended June 30, 2024, compared to $47.5 million, or $0.22 per diluted share, for the quarter ended June 30, 2023. Net loss attributable to common stockholders for the quarter ended June 30, 2023, includes (i) $23.1 million, or $0.11 per diluted share, for our share of a non-cash real estate impairment loss related to an unconsolidated joint venture, and (ii) non-cash straight-line rent receivable write-offs aggregating $13.0 million, or $0.06 per diluted share, related to the terminated SVB Securities lease at 1301 Avenue of the Americas and the surrendered JPMorgan Chase space at One Front Street.
• Reported Core Funds from Operations (“Core FFO”) attributable to common stockholders of $43.4 million, or $0.20 per diluted share, for the quarter ended June 30, 2024, compared to $37.1 million, or $0.17 per diluted share, for the quarter ended June 30, 2023. Core FFO attributable to common stockholders for the quarter ended June 30, 2023 includes non-cash straight-line rent receivable write-offs aggregating $13.0 million, or $0.06 per diluted share, related to the terminated SVB Securities lease at 1301 Avenue of the Americas and the surrendered JPMorgan Chase space at One Front Street.
• Updated and narrowed its full year 2024 Earnings Guidance as follows:
  • Estimated net loss attributable to common stockholders is expected to be between $0.11 and $0.07 per diluted share, compared to its prior estimate of $0.10 and $0.04 per diluted share, an increase in net loss of $0.02 per diluted share at the midpoint of the Company’s prior estimate.
  • Estimated Core FFO attributable to common stockholders is expected to be between $0.76 and $0.80 per diluted share, compared to its prior estimate of $0.75 and $0.81 per diluted share, in-line with the midpoint of the Company’s prior guidance.
• Reported a 0.1% increase in Same Store Cash Net Operating Income (“NOI”) and a 1.3% decrease in Same Store NOI in the quarter ended June 30, 2024, compared to the same period in the prior year.
• Leased 198,505 square feet, of which the Company’s share was 158,592 square feet that was leased at a weighted average initial rent of $74.55 per square foot. Of the 198,505 square feet leased, 98,862 square feet represented the Company’s share of second generation space⁽¹⁾, for which mark-to-markets were 1.0% on a cash basis and negative 3.4% on a GAAP basis.
• Modified the existing $164.8 million mortgage loan at 111 Sutter Street, in which the Company has a 49.0% ownership interest, to extend the maturity to December 2025. The loan bears interest at SOFR plus 215 basis points and all interest shortfalls will continue to accrue to the principal balance of the loan.
• Declared a second quarter cash dividend of $0.035 per common share on June 14, 2024, which was paid on July 15, 2024.

(1) Second generation space represents space leased in the current period (i) prior to its originally scheduled expiration, or (ii) that has been vacant for less than twelve months.

Financial Results

Quarter Ended June 30, 2024

Net loss attributable to common stockholders was $7.8 million, or $0.04 per diluted share, for the quarter ended June 30, 2024, compared to $47.5 million, or $0.22 per diluted share, for the quarter ended June 30, 2023. Net loss attributable to common stockholders for the quarter ended June 30, 2023, includes (i) $23.1 million, or $0.11 per diluted share, for our share of a non-cash real estate impairment loss related to an unconsolidated joint venture, and (ii) non-cash straight-line rent receivable write-offs aggregating $13.0 million, or $0.06 per diluted share, related to the terminated SVB Securities lease at 1301 Avenue of the Americas and the surrendered JPMorgan Chase space at One Front Street.

Funds from Operations (“FFO”) attributable to common stockholders was $42.7 million, or $0.20 per diluted share, for the quarter ended June 30, 2024, compared to $34.0 million, or $0.16 per diluted share, for the quarter ended June 30, 2023. FFO attributable to common stockholders for the quarter ended June 30, 2023 includes non-cash straight-line rent receivable write-offs aggregating $13.0 million, or $0.06 per diluted share, related to the terminated SVB Securities lease at 1301 Avenue of the Americas and the surrendered JPMorgan Chase space at One Front Street. FFO attributable to common stockholders for the quarters ended June 30, 2024 and 2023 also includes the impact of other non-core items, which are listed in the table on page 11. While the aggregate of the non-core items, net of amounts attributable to noncontrolling interests, decreased FFO attributable to common stockholders for the quarter ended June 30, 2024 by $0.7 million, it had no impact on FFO per diluted share. The aggregate of the non-core items, net of amounts attributable to noncontrolling interests, decreased FFO attributable to common stockholders for the quarter ended June 30, 2023 by $3.1 million, or $0.01 per diluted share.

Core FFO attributable to common stockholders, which excludes the impact of the non-core items listed on page 11, was $43.4 million, or $0.20 per diluted share, for the quarter ended June 30, 2024, compared to $37.1 million, or $0.17 per diluted share, for the quarter ended June 30, 2023.

Six Months Ended June 30, 2024

Net income attributable to common stockholders was $2.0 million, or $0.01 per diluted share, for the six months ended June 30, 2024, compared to net loss attributable to common stockholders of $45.8 million, or $0.21 per diluted share, for the six months ended June 30, 2023. Net income attributable to common stockholders for the six months ended June 30, 2024 includes $14.1 million, or $0.07 per diluted share, of a non-cash gain on extinguishment of a tax liability related to the Company’s initial public offering. Net loss attributable to the common stockholders for the six months ended June 30, 2023 includes (i) $23.1 million, or $0.11 per diluted share, for our share of a non-cash real estate impairment loss related to an unconsolidated joint venture, and (ii) non-cash straight-line rent receivable write-offs aggregating $13.0 million, or $0.06 per diluted share, related to the terminated SVB Securities lease at 1301 Avenue of the Americas and the surrendered JPMorgan Chase space at One Front Street.

FFO attributable to common stockholders was $102.5 million, or $0.47 per diluted share, for the six months ended June 30, 2024, compared to $90.8 million, or $0.42 per diluted share, for the six months ended June 30, 2023. FFO attributable to common stockholders for the six months ended June 30, 2024 includes $14.1 million, or $0.07 per diluted share, of a non-cash gain on extinguishment of a tax liability related to the Company’s initial public offering. FFO attributable to common stockholders for the six months ended June 30, 2023 includes non-cash straight-line rent receivable write-offs aggregating $13.0 million, or $0.06 per diluted share, related to the terminated SVB Securities lease at 1301 Avenue of the Americas and the surrendered JPMorgan Chase space at One Front Street. FFO attributable to common stockholders for the six months ended June 30, 2024 and 2023 also includes the impact of other non-core items, which are listed in the table on page 11. The aggregate of the non-core items, net of amounts attributable to noncontrolling interests, increased FFO attributable to common stockholders for the six months ended June 30, 2024 by $11.1 million, or $0.05 per diluted share. While the aggregate of the non-core items, net of amounts attributable to noncontrolling interests, decreased FFO attributable to common stockholders for the six months ended June 30, 2023 by $1.0 million, it had no impact on FFO per diluted share.

Core FFO attributable to common stockholders, which excludes the impact of the non-core items listed on page 11, was $91.4 million, or $0.42 per diluted share, for the six months ended June 30, 2024, compared to $91.8 million, or $0.42 per diluted share, for the six months ended June 30, 2023.

Portfolio Operations

Quarter Ended June 30, 2024

Same Store Cash NOI increased by $0.1 million, or 0.1%, to $87.0 million for the quarter ended June 30, 2024 from $86.9 million for the quarter ended June 30, 2023. Same Store NOI decreased by $1.2 million, or 1.3%, to $90.9 million for the quarter ended June 30, 2024 from $92.1 million for the quarter ended June 30, 2023.

During the quarter ended June 30, 2024, the Company leased 198,505 square feet, of which 177,858 square feet was leased in the Company’s same store portfolio. Of the 177,858 square feet leased, the Company’s share was 158,592 square feet that was leased at a weighted average initial rent of $74.55 per square foot. This leasing activity, offset by lease expirations in the quarter, decreased same store leased occupancy by 280 basis points to 86.3% at June 30, 2024 from 89.1% at March 31, 2024. The decrease in same store leased occupancy was driven primarily by the scheduled expiration of Clifford Chance’s lease in June 2024 at 31 West 52nd Street in the Company’s New York portfolio.

Of the 198,505 square feet leased in the second quarter, 98,862 square feet represented the Company’s share of second generation space for which mark-to-markets were 1.0% on a cash basis and negative 3.4% on a GAAP basis. The weighted average lease term for leases signed during the second quarter was 8.6 years and weighted average tenant improvements and leasing commissions on these leases were $12.85 per square foot per annum, or 17.2% of initial rent.

Six Months Ended June 30, 2024

Same Store Cash NOI decreased by $1.3 million, or 0.7%, to $176.2 million for the six months ended June 30, 2024 from $177.5 million for the six months ended June 30, 2023. Same Store NOI decreased by $4.6 million, or 2.4%, to $184.8 million for the six months ended June 30, 2024 from $189.4 million for the six months ended June 30, 2023.

During the six months ended June 30, 2024, the Company leased 475,222 square feet, of which 433,188 square feet was leased in the Company’s same store portfolio. Of the 433,188 square feet leased, the Company’s share was 329,114 square feet that was leased at a weighted average initial rent of $71.58 per square foot. This leasing activity, offset by lease expirations in the six months, decreased same store leased occupancy by 380 basis points to 86.3% at June 30, 2024 from 90.1% at December 31, 2023. The decrease in same store leased occupancy was driven primarily by the scheduled expiration of Clifford Chance’s lease in June 2024 at 31 West 52nd Street in the Company’s New York portfolio.

Of the 475,222 square feet leased in the six months, 193,837 square feet represented the Company’s share of second generation space for which mark-to-markets were negative 1.5% on a cash basis and negative 10.9% on a GAAP basis. The negative mark-to-market of 10.9% on a GAAP basis was driven primarily by a FAS 141 below-market lease adjustment that was included in the prior GAAP rent. Excluding the below-market lease adjustment from the prior GAAP rent, the mark-to-market on a GAAP basis would have been negative 2.8%. The weighted average lease term for leases signed during the six months was 8.3 years and weighted average tenant improvements and leasing commissions on these leases were $11.69 per square foot per annum, or 16.3% of initial rent.

Guidance

The Company is updating and narrowing its Estimated Core FFO Guidance for the full year of 2024, 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 $0.11 and $0.07 per diluted share, compared to its prior estimate of $0.10 and $0.04 per diluted share, an increase in net loss of $0.02 per diluted share at the midpoint of the Company’s prior estimate. The increase in net loss of $0.02 per diluted share resulted primarily from higher depreciation expense. 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 six months ended June 30, 2024 and its outlook for the remainder of 2024, the Company is updating and narrowing its Estimated 2024 Core FFO to be between $0.76 and $0.80 per diluted share, compared to its prior estimate of $0.75 and $0.81 per diluted share, in-line with the midpoint of the Company’s prior guidance.

							Full Year 2024
(Amounts per diluted share)							Low				High
Estimated net loss attributable to common stockholders							$	(0.11	)		$	(0.07	)
Pro rata share of real estate depreciation and amortization, including the Company's share of unconsolidated joint ventures								0.92				0.92
Estimated FFO								0.81				0.85
Adjustments for non-core items (1)								(0.05	)			(0.05	)
Estimated Core FFO							$	0.76			$	0.80

Except as described above, these estimates reflect management’s view of current and future market conditions, including assumptions with respect to rental rates, occupancy levels and the earnings impact of the events referenced in this release and otherwise to be referenced during the conference call referred to on page 8. These estimates do not include the impact on operating results from possible future property acquisitions or dispositions, or realized and unrealized gains and losses on real estate related fund investments. There can be no assurance that the Company’s actual results will not differ materially from the estimates set forth above.

_________________

(1) Represents non-core items for the six months ended June 30, 2024, that are listed in the table on page 11. The Company is not making projections for non-core items that may impact its financial results for the remainder of 2024, which may include unrealized gains or losses on real estate fund investments, acquisition and transaction related costs and other items that are not included in Core FFO.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the federal securities laws. You can identify these statements by our use of the words “assumes,” “believes,” “estimates,” “expects,” “guidance,” “intends,” “plans,” “projects” and similar expressions that do not relate to historical matters. You should exercise caution in interpreting and relying on forward-looking statements because they involve known and unknown risks, uncertainties and other factors which are, in some cases, beyond the Company’s control and could materially affect actual results, performance or achievements. These factors include, without limitation, the ability to enter into new leases or renew leases on favorable terms; dependence on tenants’ financial condition; the risk we may lose a major tenant or that a major tenant may be adversely impacted by market and economic conditions, including elevated inflation and interest rates; trends in the office real estate industry including telecommuting, flexible work schedules, open workplaces and teleconferencing; the uncertainties of real estate development, acquisition and disposition activity; the ability to effectively integrate acquisitions; fluctuations in interest rates and the costs and availability of financing; the ability of our joint venture partners to satisfy their obligations; the effects of local, national and international economic and market conditions and the impact of elevated inflation and interest rates on such market conditions; the effects of acquisitions, dispositions and possible impairment charges on our operating results; the negative impact of any future pandemic, endemic or outbreak of infectious disease on the U.S., regional and global economies and our tenants’ financial condition and results of operations; regulatory changes, including changes to tax laws and regulations; and other risks and uncertainties detailed from time to time in the Company’s filings with the U.S. Securities and Exchange Commission. The Company does not undertake a duty to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

Non-GAAP Financial Measures

FFO is a supplemental measure of our performance. We present FFO in accordance with the definition adopted by the National Association of Real Estate Investment Trusts (“Nareit”). Nareit defines FFO as net income or loss, calculated in accordance with accounting principles generally accepted in the United States of America (“GAAP”), adjusted to exclude depreciation and amortization from real estate assets, impairment losses on certain real estate assets and gains or losses from the sale of certain real estate assets or from change in control of certain real estate assets, including our share of such adjustments of unconsolidated joint ventures. FFO is commonly used in the real estate industry to assist investors and analysts in comparing results of real estate companies because it excludes the effect of real estate depreciation and amortization and net gains on sales, which are based on historical costs and implicitly assume that the value of real estate diminishes predictably over time, rather than fluctuating based on existing market conditions. In addition, we present Core FFO as an alternative measure of our operating performance, which adjusts FFO for certain other items that we believe enhance the comparability of our FFO across periods. Core FFO, when applicable, excludes the impact of certain items, including, transaction related costs, realized and unrealized gains or losses on real estate related fund investments, unrealized gains or losses on interest rate swaps, severance costs, gains or losses on early extinguishment of debt and other non-core adjustments, in order to reflect the Core FFO of our real estate portfolio and operations. In future periods, we may also exclude other items from Core FFO that we believe may help investors compare our results.

FFO and Core FFO are presented as supplemental financial measures and do not fully represent our operating performance. Other REITs may use different methodologies for calculating FFO and Core FFO or use other definitions of FFO and Core FFO and, accordingly, our presentation of these measures may not be comparable to other real estate companies. Neither FFO nor Core FFO is intended to be a measure of cash flow or liquidity. Please refer to our financial statements, prepared in accordance with GAAP, for purposes of evaluating our financial condition, results of operations and cash flows.

NOI is used to measure the operating performance of our properties. NOI consists of rental revenue (which includes property rentals, tenant reimbursements and lease termination income) and certain other property-related revenue less operating expenses (which includes property-related expenses such as cleaning, security, repairs and maintenance, utilities, property administration and real estate taxes). We also present Cash NOI which deducts from NOI, straight-line rent adjustments and the amortization of above and below-market leases, including our share of such adjustments of unconsolidated joint ventures. In addition, we present PGRE’s share of NOI and Cash NOI which represents our share of NOI and Cash NOI of consolidated and unconsolidated joint ventures, based on our percentage ownership in the underlying assets. We use NOI and Cash NOI internally as performance measures and believe they provide useful information to investors regarding our financial condition and results of operations because they reflect only those income and expense items that are incurred at the property level.

Same Store NOI is used to measure the operating performance of properties in our New York and San Francisco portfolios that were owned by the Company in a similar manner during both the current period and prior reporting periods and represents Same Store NOI from consolidated and unconsolidated joint ventures based on our percentage ownership in the underlying assets. Same Store NOI also excludes lease termination income, impairment of receivables arising from operating leases and certain other items that may vary from period to period. We also present Same Store Cash NOI, which excludes the effect of non-cash items such as the straight-line rent adjustments and the amortization of above and below-market leases.

In the first quarter of 2024, we updated our presentation of NOI, Cash NOI and Core FFO attributable to common stockholders to exclude the impact of Market Center and 111 Sutter Street, which we have designated as non-core assets. Accordingly, we have recast the presentation for all prior periods presented to reflect this change.

A reconciliation of each non-GAAP financial measure to the most directly comparable GAAP financial measure can be found in this press release and in our Supplemental Information for the quarter ended June 30, 2024, which is available on our website.

Investor Conference Call and Webcast

The Company will host a conference call and audio webcast on Thursday, August 1, 2024 at 10:00 a.m. Eastern Time (ET), during which management will discuss the second quarter results and provide commentary on business performance. A question and answer session with analysts and investors will follow the prepared remarks.

The conference call can be accessed by dialing 877-407-0789 (domestic) or 201-689-8562 (international). An audio replay of the conference call will be available from 1:00 p.m. ET on August 1, 2024 through August 8, 2024 and can be accessed by dialing 844-512-2921 (domestic) or 412-317-6671 (international) and entering the passcode 13746987.

A live audio webcast of the conference call will be available through the “Investors” section of the Company’s website, www.pgre.com. A replay of the webcast will be archived on the Company’s website.

About Paramount Group, Inc.

Headquartered in New York City, Paramount Group, Inc. is a fully-integrated real estate investment trust that owns, operates, manages, acquires and redevelops high-quality, Class A office properties located in select central business district submarkets of New York City and San Francisco. Paramount is focused on maximizing the value of its portfolio by leveraging the sought-after locations of its assets and its proven property management capabilities to attract and retain high-quality tenants.

Paramount Group, Inc.
Consolidated Balance Sheets
(Unaudited and in thousands)
Assets:		June 30, 2024				December 31, 2023
Real estate, at cost:
Land		$	1,966,237			$	1,966,237
Buildings and improvements			6,276,347				6,250,379
			8,242,584				8,216,616
Accumulated depreciation and amortization			(1,550,341	)			(1,471,819	)
Real estate, net			6,692,243				6,744,797
Cash and cash equivalents			307,461				428,208
Restricted cash			164,639				81,391
Accounts and other receivables			13,917				18,053
Real estate related fund investments			-				775
Investments in unconsolidated real estate related funds			4,536				4,549
Investments in unconsolidated joint ventures			130,087				132,239
Deferred rent receivable			353,769				351,209
Deferred charges, net			105,812				108,751
Intangible assets, net			57,612				68,005
Other assets			71,788				68,238
Total assets		$	7,901,864			$	8,006,215
Liabilities:
Notes and mortgages payable, net		$	3,672,103			$	3,803,484
Revolving credit facility			-				-
Accounts payable and accrued expenses			110,789				114,463
Dividends and distributions payable			8,382				8,360
Intangible liabilities, net			24,125				28,003
Other liabilities			30,802				37,017
Total liabilities			3,846,201				3,991,327
Equity:
Paramount Group, Inc. equity			3,181,913				3,203,285
Noncontrolling interests in:
Consolidated joint ventures			485,983				413,925
Consolidated real estate related funds			93,340				110,589
Operating Partnership			294,427				287,089
Total equity			4,055,663				4,014,888
Total liabilities and equity		$	7,901,864			$	8,006,215

Paramount Group, Inc.
Consolidated Statements of Income
(Unaudited and in thousands, except share and per share amounts)
		For the Three Months Ended								For the Six Months Ended
		June 30,								June 30,
		2024				2023				2024				2023
Revenues:
Rental revenue		$	179,678			$	165,506			$	359,401			$	347,219
Fee and other income			7,730				7,156				16,884				13,917
Total revenues			187,408				172,662				376,285				361,136
Expenses:
Operating			74,192				71,078				145,932				141,387
Depreciation and amortization			61,735				62,627				122,849				121,515
General and administrative			16,632				16,224				33,266				30,847
Transaction related costs			423				63				601				191
Total expenses			152,982				149,992				302,648				293,940
Other income (expense):
Loss from real estate related fund investments			(27	)			(42,644	)			(70	)			(39,094	)
(Loss) income from unconsolidated real estate related funds			(15	)			32				90				(146	)
Loss from unconsolidated joint ventures			(771	)			(28,402	)			(2,117	)			(34,164	)
Interest and other income, net			3,893				2,967				23,313				5,892
Interest and debt expense			(40,004	)			(36,879	)			(80,273	)			(73,338	)
(Loss) income before income taxes			(2,498	)			(82,256	)			14,580				(73,654	)
Income tax expense			(362	)			(573	)			(709	)			(861	)
Net (loss) income			(2,860	)			(82,829	)			13,871				(74,515	)
Less net (income) loss attributable to noncontrolling interests in:
Consolidated joint ventures			(6,269	)			(5,351	)			(11,475	)			(10,992	)
Consolidated real estate related funds			589				37,301				(173	)			36,478
Operating Partnership			721				3,341				(177	)			3,220
Net (loss) income attributable to common stockholders		$	(7,819	)		$	(47,538	)		$	2,046			$	(45,809	)
(Loss) Income per Common Share:
Basic		$	(0.04	)		$	(0.22	)		$	0.01			$	(0.21	)
Diluted		$	(0.04	)		$	(0.22	)		$	0.01			$	(0.21	)
Weighted average common shares outstanding:
Basic			217,204,870				217,003,931				217,155,278				216,784,737
Diluted			217,204,870				217,003,931				217,208,977				216,784,737

Paramount Group, Inc.
Reconciliation of Net (Loss) Income to FFO and Core FFO
(Unaudited and in thousands, except share and per share amounts)
		For the Three Months Ended								For the Six Months Ended
		June 30,								June 30,
		2024				2023				2024				2023
Reconciliation of net (loss) income to FFO and Core FFO:
Net (loss) income		$	(2,860	)		$	(82,829	)		$	13,871			$	(74,515	)
Real estate depreciation and amortization (including our share of unconsolidated joint ventures)			65,035				72,096				129,459				140,527
Our share of a non-cash real estate impairment loss related to an unconsolidated joint venture			-				24,734				-				24,734
Amounts attributable to noncontrolling interests in consolidated joint ventures and real estate related funds			(15,585	)			22,406				(31,470	)			6,401
FFO attributable to the Operating Partnership			46,590				36,407				111,860				97,147
Amounts attributable to noncontrolling interests in the Operating Partnership			(3,935	)			(2,390	)			(9,384	)			(6,351	)
FFO attributable to common stockholders		$	42,655			$	34,017			$	102,476			$	90,796
Per diluted share		$	0.20			$	0.16			$	0.47			$	0.42
FFO attributable to the Operating Partnership		$	46,590			$	36,407			$	111,860			$	97,147
Adjustments for non-core items:
Non-cash gain on extinguishment of IPO related tax liability			-				-				(15,437	)			-
Non-core assets (1)			-				(1,660	)			-				(3,276	)
Our share of realized and unrealized gains and losses from consolidated and unconsolidated real estate related funds			(692	)			5,618				28				3,756
Other, net (primarily adjustments related to unconsolidated joint ventures)			1,537				(642	)			3,288				573
Core FFO attributable to the Operating Partnership			47,435				39,723				99,739				98,200
Amounts attributable to noncontrolling interests in the Operating Partnership			(4,007	)			(2,608	)			(8,373	)			(6,422	)
Core FFO attributable to common stockholders		$	43,428			$	37,115			$	91,366			$	91,778
Per diluted share		$	0.20			$	0.17			$	0.42			$	0.42
Reconciliation of weighted average shares outstanding:
Weighted average shares outstanding			217,204,870				217,003,931				217,155,278				216,784,737
Effect of dilutive securities			27,125				11,089				53,699				31,669
Denominator for FFO and Core FFO per diluted share			217,231,995				217,015,020				217,208,977				216,816,406
(1) Represents Market Center and 111 Sutter Street.

Paramount Group, Inc.
Reconciliation of Net (Loss) Income to Same Store NOI and Same Store Cash NOI
(Unaudited and in thousands)
	For the Three Months Ended								For the Six Months Ended
	June 30,								June 30,
	2024				2023				2024				2023
Reconciliation of net (loss) income to Same Store NOI
and Same Store Cash NOI:
Net (loss) income	$	(2,860	)		$	(82,829	)		$	13,871			$	(74,515	)
Adjustments to arrive at NOI:
Fee income		(4,304	)			(4,976	)			(10,552	)			(9,533	)
Depreciation and amortization		61,735				62,627				122,849				121,515
General and administrative		16,632				16,224				33,266				30,847
Loss from real estate related fund investments		27				42,644				70				39,094
Loss from unconsolidated joint ventures		771				28,402				2,117				34,164
NOI from unconsolidated joint ventures (excluding One Steuart Lane)		5,625				10,720				11,227				21,101
Interest and other income, net		(3,893	)			(2,967	)			(23,313	)			(5,892	)
Interest and debt expense		40,004				36,879				80,273				73,338
Income tax expense		362				573				709				861
Non-core assets (1)		-				(5,217	)			-				(10,293	)
Other, net		438				31				511				337
Amounts attributable to noncontrolling interests in consolidated joint ventures		(23,901	)			(22,564	)			(46,809	)			(45,276	)
PGRE's share of NOI		90,636				79,547				184,219				175,748
Non-same store adjustments:
Lease termination income		(1,029	)			(2,055	)			(1,973	)			(2,055	)
Non-cash write-offs of straight-line rent receivables		-				13,906				-				13,906
Other, net		1,299				686				2,603				1,823
PGRE's share of Same Store NOI	$	90,906			$	92,084			$	184,849			$	189,422
PGRE's share of NOI	$	90,636			$	79,547			$	184,219			$	175,748
Adjustments to arrive at Cash NOI:
Straight-line rent (including our share of unconsolidated joint ventures)		(1,116	)			7,515				(4,503	)			(176	)
Amortization of above and below-market leases, net (including our share of unconsolidated joint ventures)		(1,949	)			(2,239	)			(3,607	)			(4,077	)
Non-core assets (1)		-				299				-				560
Amounts attributable to noncontrolling interests in consolidated joint ventures		(1,028	)			2,857				(589	)			5,724
PGRE's share of Cash NOI		86,543				87,979				175,520				177,779
Non-same store adjustments:
Lease termination income		(1,029	)			(2,055	)			(1,973	)			(2,055	)
Other, net		1,476				948				2,674				1,763
PGRE's share of Same Store Cash NOI	$	86,990			$	86,872			$	176,221			$	177,487
(1) Represents Market Center and 111 Sutter Street.

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240731387575/en/

Wilbur Paes

Chief Operating Officer,

Chief Financial Officer and Treasurer

212-237-3122

ir@pgre.com

Tom Hennessy

Vice President, Investor Relations and

Business Development

212-237-3138

ir@pgre.com

Media:

212-492-2285

pr@pgre.com

Source: Paramount Group, Inc.

FAQ

What was Paramount Group's (PGRE) Core FFO for Q2 2024?

Paramount Group (PGRE) reported Core FFO of $43.4 million, or $0.20 per diluted share, for Q2 2024.

How much office space did Paramount Group (PGRE) lease in Q2 2024?

Paramount Group (PGRE) leased 198,505 square feet in Q2 2024, with the company's share being 158,592 square feet at a weighted average initial rent of $74.55 per square foot.

What is Paramount Group's (PGRE) updated Core FFO guidance for 2024?

Paramount Group (PGRE) updated its 2024 Core FFO guidance to be between $0.76 and $0.80 per diluted share.

How did Paramount Group's (PGRE) same store leased occupancy change in Q2 2024?

Paramount Group's (PGRE) same store leased occupancy decreased by 280 basis points to 86.3% at June 30, 2024, from 89.1% at March 31, 2024.