Business Wire | Oct 28, 2020 04:15PM EDT

Paramount Announces Third Quarter 2020 Results

Oct. 28, 2020

NEW YORK--(BUSINESS WIRE)--Oct. 28, 2020--Paramount Group, Inc. (NYSE: PGRE) ("Paramount" or the "Company") filed its Quarterly Report on Form 10-Q for the quarter ended September 30, 2020 today and reported results for the third quarter ended September 30, 2020.

Third Quarter Highlights:

Results of Operations:

* Reported net loss attributable to common stockholders of $7.0 million, or $0.03 per diluted share, for the quarter ended September 30, 2020, compared to net income attributable to common stockholders of $7.1 million, or $0.03 per diluted share, for the quarter ended September 30, 2019. * Reported Core Funds from Operations ("Core FFO") attributable to common stockholders of $49.6 million, or $0.22 per diluted share, for the quarter ended September 30, 2020, compared to $58.5 million, or $0.25 per diluted share, for the quarter ended September 30, 2019. * Net loss attributable to common stockholders and Core FFO attributable to common stockholders for the quarter ended September 30, 2020, include non-cash write-offs aggregating $12.0 million, or $0.05 per diluted share, for straight-line rent receivables. * Reported a 1.8% decrease in Same Store Cash Net Operating Income ("NOI") and a 1.1% increase in Same Store NOI in the quarter ended September 30, 2020, compared to the same period in the prior year. * Leased 104,522 square feet, of which the Company's share was 54,721 square feet that was leased at a weighted average initial rent of $73.48 per square foot. All of the square footage leased represented second generation space, for which the Company achieved a positive mark-to-market of 3.6% on a cash basis and 9.5% on a GAAP basis. * Entered into a 16-year lease with iconic luxury jeweler Harry Winston to renew its existing 19,000 square foot lease at 718 Fifth Avenue (a property managed by Paramount) and expand into an additional 18,000 square feet at Paramount's adjacent 712 Fifth Avenue. This innovative combination of the two spaces provides Harry Winston with approximately 37,000 square feet of integrated prime retail space across multiple floors at one of the most desirable corners of Fifth Avenue, and reflects the creative efforts of both the Paramount and Harry Winston teams. The 16-year lease has a weighted average initial rent of $437.43 per square foot. * Reported portfolio-wide rent collections of 97.5% in the third quarter, including 99.0% from office tenants and 50.4% from "non-office" tenants.

Transactions and Capital Markets Activity:

* Ended the quarter with $1.35 billion in liquidity, comprised of $546.9 million of cash and restricted cash and $800.0 million of borrowing capacity under its revolving credit facility. * Repurchased 2,956,293 common shares at a weighted average price of $6.77 per share, or $20.0 million in the aggregate, of which 1,233,190 shares were repurchased in the third quarter, at a weighted average price of $6.91 per share. * Declared a third quarter cash dividend of $0.10 per common share on September 15, 2020, which was paid on October 15, 2020.

Financial Results

Quarter Ended September 30, 2020

Net loss attributable to common stockholders was $7.0 million, or $0.03 per diluted share, for the quarter ended September 30, 2020, compared to net income attributable to common stockholders of $7.1 million, or $0.03 per diluted share, for the quarter ended September 30, 2019. Net loss attributable to common stockholders for the quarter ended September 30, 2020 includes non-cash write-offs aggregating $12.0 million, or $0.05 per diluted share, for straight-line rent receivables.

Funds from Operations ("FFO") attributable to common stockholders was $49.7 million, or $0.22 per diluted share, for the quarter ended September 30, 2020, compared to $58.8 million, or $0.25 per diluted share, for the quarter ended September 30, 2019. FFO attributable to common stockholders for the quarter ended September 30, 2020 includes non-cash write-offs aggregating $12.0 million, or $0.05 per diluted share, for straight-line rent receivables. In addition, FFO attributable to common stockholders for the quarters ended September 30, 2020 and 2019 includes the impact of non-core items, which are listed in the table on page 10. The aggregate of the non-core items, net of amounts attributable to noncontrolling interests, increased FFO attributable to common stockholders for the quarters ended September 30, 2020 and 2019 by $0.1 million and $0.3 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 10, was $49.6 million, or $0.22 per diluted share, for the quarter ended September 30, 2020, compared to $58.5 million, or $0.25 per diluted share, for the quarter ended September 30, 2019.

Nine Months Ended September 30, 2020

Net loss attributable to common stockholders was $9.9 million, or $0.04 per diluted share, for the nine months ended September 30, 2020, compared to net income attributable to common stockholders of $13.2 million, or $0.06 per diluted share, for the nine months ended September 30, 2019. Net loss attributable to common stockholders for the nine months ended September 30, 2020 includes (i) $19.0 million, or $0.08 per diluted share, of non-cash write-offs, primarily for straight-line rent receivables, and (ii) $1.8 million, or $0.01 per diluted share, of reserves for uncollectible accounts receivable.

FFO attributable to common stockholders was $162.0 million, or $0.72 per diluted share, for the nine months ended September 30, 2020, compared to $168.2 million, or $0.72 per diluted share, for the nine months ended September 30, 2019. FFO attributable to common stockholders for the nine months ended September 30, 2020 includes (i) $19.0 million, or $0.08 per diluted share, of non-cash write-offs, primarily for straight-line rent receivables, and (ii) $1.8 million, or $0.01 per diluted share, of reserves for uncollectible accounts receivable. In addition, FFO attributable to common stockholders for the nine months ended September 30, 2020 and 2019 includes the impact of non-core items, which are listed in the table on page 10. The aggregate of the non-core items, net of amounts attributable to noncontrolling interests, increased FFO attributable to common stockholders for the nine months ended September 30, 2020 by $0.8 million, or $0.00 per diluted share, and decreased FFO attributable to common stockholders for the nine months ended September 30, 2019 by $0.7 million, or $0.00 per diluted share.

Core FFO attributable to common stockholders, which excludes the impact of the non-core items listed on page 10, was $161.2 million, or $0.72 per diluted share, for the nine months ended September 30, 2020, compared to $168.9 million, or $0.72 per diluted share, for the nine months ended September 30, 2019.

Portfolio Operations

Quarter Ended September 30, 2020

Same Store Cash NOI decreased by $1.6 million, or 1.8%, to $85.8 million for the quarter ended September 30, 2020 from $87.4 million for the quarter ended September 30, 2019. Same Store NOI increased by $1.1 million, or 1.1%, to $100.2 million for the quarter ended September 30, 2020 from $99.1 million for the quarter ended September 30, 2019.

During the quarter ended September 30, 2020, the Company leased 104,522 square feet, of which the Company's share was 54,721 square feet that was leased at a weighted average initial rent of $73.48 per square foot. This leasing activity, offset by lease expirations in the quarter, decreased same store leased occupancy (properties owned by us during both reporting periods in a similar manner and not classified as discontinued operations) by 10 basis points to 95.6% at September 30, 2020 from 95.7% at June 30, 2020. All of the square footage leased in the third quarter represented second generation space (space that had been vacant for less than twelve months) for which the Company achieved a positive mark-to-market of 3.6% on a cash basis and 9.5% on a GAAP basis. The weighted average lease term for leases signed during the third quarter was 3.2 years and weighted average tenant improvements and leasing commissions on these leases were $0.47 per square foot per annum, or 0.6% of initial rent.

Nine Months Ended September 30, 2020

Same Store Cash NOI decreased by $1.4 million, or 0.5%, to $260.4 million for the nine months ended September 30, 2020 from $261.8 million for the nine months ended September 30, 2019. Same Store NOI increased by $3.3 million, or 1.1%, to $300.2 million for the nine months ended September 30, 2020 from $296.9 million for the nine months ended September 30, 2019.

During the nine months ended September 30, 2020, the Company leased 611,876 square feet, of which the Company's share was 350,687 square feet that was leased at a weighted average initial rent of $89.68 per square foot. This leasing activity, offset by lease expirations in the nine months, decreased same store leased occupancy (properties owned by us during both reporting periods in a similar manner and not classified as discontinued operations) by 30 basis points to 95.6% at September 30, 2020 from 95.9% at December 31, 2019. Of the 611,876 square feet leased in the nine months, 318,577 square feet represented second generation space (space that had been vacant for less than twelve months) for which the Company achieved a positive mark-to-market of 22.9% on a cash basis and 23.4% on a GAAP basis. The weighted average lease term for leases signed during the nine months was 4.3 years and weighted average tenant improvements and leasing commissions on these leases were $7.16 per square foot per annum, or 8.0% of initial rent.

Guidance

The Company had previously provided its 2020 guidance on February 12, 2020, prior to the COVID-19 pandemic, which has materially impacted the U.S. and global economy. The Company withdrew its previously issued 2020 guidance on April 29, 2020 and is not providing an updated outlook at this time given the continued economic uncertainty and rapidly-evolving circumstances related to the COVID-19 pandemic. The Company will discuss the third quarter results and provide commentary on its business performance during its third quarter conference call.

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 negative impact of the COVID-19 global pandemic on the U.S., regional and global economies and our tenants' financial condition and results of operations, the ability to enter into new leases or renew leases on favorable terms, dependence on tenants' financial condition, the uncertainties of real estate development, acquisition and disposition activity, the ability to effectively integrate acquisitions, 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, the effects of acquisitions, dispositions and possible impairment charges on our operating results, 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 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 fund investments, unrealized gains or losses on interest rate swaps, severance costs and gains or losses on early extinguishment of debt, 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 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 us 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.

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 September 30, 2020, which is available on our website.

Investor Conference Call and Webcast

The Company will host a conference call and audio webcast on Thursday, October 29, 2020 at 10:00 a.m. Eastern Time (ET), during which management will discuss the third 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 October 29, 2020 through November 5, 2020 and can be accessed by dialing 844-512-2921 (domestic) or 412-317-6671 (international) and entering the passcode 13711586.

A live audio webcast of the conference call will be available through the "Investors" section of the Company's website, www.paramount-group.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: September 30, December 31, 2020 2019

Real estate, at cost

Land $ 1,966,237 $ 1,966,237

Buildings and improvements 5,969,297 5,923,648

7,935,534 7,889,885

Accumulated depreciation and (920,078 ) (790,216 )amortization

Real estate, net 7,015,456 7,099,669

Cash and cash equivalents 515,942 306,215

Restricted cash 30,965 25,272

Investments in unconsolidated joint 417,592 449,180 ventures

Investments in unconsolidated real 12,867 10,317 estate funds

Accounts and other receivables 15,289 19,231

Due from affiliates - 36,918

Deferred rent receivable 326,050 301,588

Deferred charges, net 120,211 126,367

Intangible assets, net 167,675 203,169

Assets related to discontinued 103,787 104,836 operations

Other assets 80,660 51,373

Total assets $ 8,806,494 $ 8,734,135



Liabilities:

Notes and mortgages payable, net $ 3,798,944 $ 3,783,851

Revolving credit facility 200,000 36,918

Accounts payable and accrued expenses 109,228 117,356

Dividends and distributions payable 24,173 25,255

Intangible liabilities, net 61,485 73,789

Other liabilities 59,531 66,004

Total liabilities 4,253,361 4,103,173

Equity:

Paramount Group, Inc. equity 3,690,246 3,785,730

Noncontrolling interests in:

Consolidated joint ventures 436,576 360,778

Consolidated real estate fund 79,168 72,396

Operating Partnership 347,143 412,058

Total equity 4,553,133 4,630,962

Total liabilities and equity $ 8,806,494 $ 8,734,135



Paramount Group, Inc.

Consolidated Statements of Income

(Unaudited and in thousands, except share and per share amounts)

For the Three Months Ended

For the Nine Months Ended

September 30,

September 30,

2020

2019

2020

2019

Revenues:

Rental revenue

$

165,420

$

181,115

$

504,834

$

530,500

Fee and other income

11,355

10,138

27,045

26,485

Total revenues

176,775

191,253

531,879

556,985

Expenses:

Operating

67,865

68,846

199,192

199,043

Depreciation and amortization

58,889

60,696

176,032

181,685

General and administrative

16,805

16,319

46,955

51,457

Transaction related costs

81

786

542

1,704

Total expenses

143,640

146,647

422,721

433,889

Other income (expense):

Loss from unconsolidated joint ventures

(4,268

)

(1,332

)

(14,444

)

(2,815

)

(Loss) income from unconsolidated real estate funds

(56

)

206

85

271

Interest and other income, net

1,104

1,222

2,360

7,705

Interest and debt expense

(35,792

)

(37,325

)

(108,420

)

(111,462

)

(Loss) income from continuing operations, before income taxes

(5,877

)

7,377

(11,261

)

16,795

Income tax (expense) benefit

(393

)

583

(1,135

)

(823

)

(Loss) income from continuing operations, net

(6,270

)

7,960

(12,396

)

15,972

Income from discontinued operations, net

2,147

3,040

5,815

7,202

Net (loss) income

(4,123

)

11,000

(6,581

)

23,174

Less net (income) loss attributable to noncontrolling interests in:

Consolidated joint ventures

(3,566

)

(3,051

)

(5,485

)

(8,253

)

Consolidated real estate fund

79

(109

)

1,291

(256

)

Operating Partnership

652

(758

)

895

(1,419

)

Net (loss) income attributable to common stockholders

$

(6,958

)

$

7,082

$

(9,880

)

$

13,246

(Loss) income per Common Share - Basic:

(Loss) income from continuing operations, net

$

(0.04

)

$

0.02

$

(0.07

)

$

0.03

Income from discontinued operations, net

0.01

0.01

0.03

0.03

Net (loss) income per common share

$

(0.03

)

$

0.03

$

(0.04

)

$

0.06

Weighted average common shares outstanding

221,461,146

231,197,838

223,593,376

232,974,210

(Loss) income per Common Share - Diluted:

(Loss) income from continuing operations, net

$

(0.04

)

$

0.02

$

(0.07

)

$

0.03

Income from discontinued operations, net

0.01

0.01

0.03

0.03

Net (loss) income per common share

$

(0.03

)

$

0.03

$

(0.04

)

$

0.06

Weighted average common shares outstanding

221,461,146

231,229,939

223,593,376

233,004,917

Paramount Group, Inc.

Consolidated Statements of Income

(Unaudited and in thousands, except share and per share amounts)

For the Three Months Ended For the Nine Months Ended

September 30, September 30,

2020 2019 2020 2019

Revenues:

Rental revenue $ 165,420 $ 181,115 $ 504,834 $ 530,500

Fee and other 11,355 10,138 27,045 26,485 income

Total revenues 176,775 191,253 531,879 556,985

Expenses:

Operating 67,865 68,846 199,192 199,043

Depreciationand 58,889 60,696 176,032 181,685 amortization

General and 16,805 16,319 46,955 51,457 administrative

Transaction 81 786 542 1,704 related costs

Total expenses 143,640 146,647 422,721 433,889

Other income (expense):

Loss fromunconsolidated (4,268 ) (1,332 ) (14,444 ) (2,815 )joint ventures

(Loss) incomefromunconsolidated (56 ) 206 85 271 real estatefunds

Interest andother income, 1,104 1,222 2,360 7,705 net

Interest and (35,792 ) (37,325 ) (108,420 ) (111,462 )debt expense

(Loss) incomefromcontinuing (5,877 ) 7,377 (11,261 ) 16,795 operations,before incometaxes

Income tax(expense) (393 ) 583 (1,135 ) (823 )benefit

(Loss) incomefromcontinuing (6,270 ) 7,960 (12,396 ) 15,972 operations,net

Income fromdiscontinued 2,147 3,040 5,815 7,202 operations,net

Net (loss) (4,123 ) 11,000 (6,581 ) 23,174 income

Less net(income) lossattributable tononcontrollinginterests in:

Consolidated (3,566 ) (3,051 ) (5,485 ) (8,253 )joint ventures

Consolidatedreal estate 79 (109 ) 1,291 (256 )fund

Operating 652 (758 ) 895 (1,419 )Partnership

Net (loss)incomeattributable $ (6,958 ) $ 7,082 $ (9,880 ) $ 13,246 to commonstockholders



(Loss) incomeper Common Share - Basic:

(Loss) incomefromcontinuing $ (0.04 ) $ 0.02 $ (0.07 ) $ 0.03 operations,net

Income fromdiscontinued 0.01 0.01 0.03 0.03 operations,net

Net (loss)income per $ (0.03 ) $ 0.03 $ (0.04 ) $ 0.06 common share

Weightedaverage common 221,461,146 231,197,838 223,593,376 232,974,210 sharesoutstanding



(Loss) incomeper Common Share -Diluted:

(Loss) incomefromcontinuing $ (0.04 ) $ 0.02 $ (0.07 ) $ 0.03 operations,net

Income fromdiscontinued 0.01 0.01 0.03 0.03 operations,net

Net (loss)income per $ (0.03 ) $ 0.03 $ (0.04 ) $ 0.06 common share

Weightedaverage common 221,461,146 231,229,939 223,593,376 233,004,917 sharesoutstanding

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 Nine Months Ended

September 30,

September 30,

2020

2019

2020

2019

Reconciliation of Net (Loss) Income to FFO and Core FFO:

Net (loss) income

$

(4,123

)

$

11,000

$

(6,581

)

$

23,174

Real estate depreciation and amortization (including our share of unconsolidated joint ventures)

71,131

65,099

212,617

192,508

Adjustments related to discontinued operations

-

1,222

690

5,947

FFO

67,008

77,321

206,726

221,629

Less FFO attributable to noncontrolling interests in:

Consolidated joint ventures

(12,695

)

(12,142

)

(30,375

)

(35,167

)

Consolidated real estate fund

79

(109

)

1,291

(256

)

FFO attributable to Paramount Group Operating Partnership

54,392

65,070

177,642

186,206

Less FFO attributable to noncontrolling interests in Operating Partnership

(4,659

)

(6,294

)

(15,660

)

(17,997

)

FFO attributable to common stockholders

$

49,733

$

58,776

$

161,982

$

168,209

Per diluted share

$

0.22

$

0.25

$

0.72

$

0.72

FFO

$

67,008

$

77,321

$

206,726

$

221,629

Non-core items:

Our share of distributions from 712 Fifth Avenue in excess of earnings

(498

)

(976

)

(1,806

)

(1,037

)

Other, net

308

715

935

1,798

Core FFO

66,818

77,060

205,855

222,390

Less Core FFO attributable to noncontrolling interests in:

Consolidated joint ventures

(12,695

)

(12,142

)

(30,375

)

(35,167

)

Consolidated real estate fund

79

(109

)

1,291

(256

)

Core FFO attributable to Paramount Group Operating Partnership

54,202

64,809

176,771

186,967

Less Core FFO attributable to noncontrolling interests in Operating Partnership

(4,642

)

(6,269

)

(15,584

)

(18,075

)

Core FFO attributable to common stockholders

$

49,560

$

58,540

$

161,187

$

168,892

Per diluted share

$

0.22

$

0.25

$

0.72

$

0.72

Reconciliation of weighted average shares outstanding:

Weighted average shares outstanding

221,461,146

231,197,838

223,593,376

232,974,210

Effect of dilutive securities

6,025

32,101

14,740

30,707

Denominator for FFO and Core FFO per diluted share

221,467,171

231,229,939

223,608,116

233,004,917

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 Nine Months Ended

September 30, September 30,

2020 2019 2020 2019

Reconciliationof Net (Loss) Income to FFOand Core FFO:

Net (loss) $ (4,123 ) $ 11,000 $ (6,581 ) $ 23,174 income

Real estatedepreciationandamortization(including our 71,131 65,099 212,617 192,508 share ofunconsolidatedjointventures)

Adjustmentsrelated to - 1,222 690 5,947 discontinuedoperations

FFO 67,008 77,321 206,726 221,629

Less FFOattributableto noncontrollinginterests in:

Consolidated (12,695 ) (12,142 ) (30,375 ) (35,167 )joint ventures

Consolidatedreal estate 79 (109 ) 1,291 (256 )fund

FFOattributableto Paramount 54,392 65,070 177,642 186,206 GroupOperatingPartnership

Less FFOattributabletononcontrolling (4,659 ) (6,294 ) (15,660 ) (17,997 )interests inOperatingPartnership

FFOattributable $ 49,733 $ 58,776 $ 161,982 $ 168,209 to commonstockholders

Per diluted $ 0.22 $ 0.25 $ 0.72 $ 0.72 share



FFO $ 67,008 $ 77,321 $ 206,726 $ 221,629

Non-core items:

Our share ofdistributionsfrom 712 Fifth (498 ) (976 ) (1,806 ) (1,037 )Avenue inexcess ofearnings

Other, net 308 715 935 1,798

Core FFO 66,818 77,060 205,855 222,390

Less Core FFOattributableto noncontrollinginterests in:

Consolidated (12,695 ) (12,142 ) (30,375 ) (35,167 )joint ventures

Consolidatedreal estate 79 (109 ) 1,291 (256 )fund

Core FFOattributableto Paramount 54,202 64,809 176,771 186,967 GroupOperatingPartnership

Less Core FFOattributabletononcontrolling (4,642 ) (6,269 ) (15,584 ) (18,075 )interests inOperatingPartnership

Core FFOattributable $ 49,560 $ 58,540 $ 161,187 $ 168,892 to commonstockholders

Per diluted $ 0.22 $ 0.25 $ 0.72 $ 0.72 share



Reconciliationof weighted average sharesoutstanding:

Weightedaverage shares 221,461,146 231,197,838 223,593,376 232,974,210 outstanding

Effect ofdilutive 6,025 32,101 14,740 30,707 securities

Denominatorfor FFO and 221,467,171 231,229,939 223,608,116 233,004,917 Core FFO perdiluted share

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 September 30,

For the Nine Months Ended September 30,

2020

2019

2020

2019

Reconciliation of Net (Loss) Income to Same Store NOIand Same Store Cash NOI:

Net (loss) income

$

(4,123

)

$

11,000

$

(6,581

)

$

23,174

Add (subtract) adjustments to arrive at NOI and Cash NOI:

Depreciation and amortization

58,889

60,696

176,032

181,685

General and administrative

16,805

16,319

46,955

51,457

Interest and debt expense

35,792

37,325

108,420

111,462

Income tax expense (benefit)

393

(583

)

1,135

823

NOI from unconsolidated joint ventures

12,935

4,973

36,703

14,569

Loss from unconsolidated joint ventures

4,268

1,332

14,444

2,815

Fee income

(9,153

)

(7,159

)

(21,692

)

(17,371

)

Interest and other income, net

(1,104

)

(1,222

)

(2,360

)

(7,705

)

Adjustments related to discontinued operations

10

1,222

700

5,947

Other, net

137

580

457

1,433

NOI

114,849

124,483

354,213

368,289

Less NOI attributable to noncontrolling interests in:

Consolidated joint ventures

(20,433

)

(18,765

)

(51,857

)

(54,513

)

Consolidated real estate fund

205

-

1,645

23

PGRE's share of NOI

94,621

105,718

304,001

313,799

Acquisitions

(7,160

)

-

(24,877

)

-

Dispositions / Discontinued Operations (1)

(2,157

)

(7,133

)

(6,515

)

(16,955

)

Non-cash write-offs (primarily straight-line rent receivables) (2)

13,109

-

20,794

-

Reserves for uncollectible accounts receivable (2)

-

172

1,940

448

Lease termination income and other, net

1,772

381

4,872

(431

)

PGRE's share of Same Store NOI

$

100,185

$

99,138

$

300,215

$

296,861

NOI

$

114,849

$

124,483

$

354,213

$

368,289

Less:

Straight-line rent adjustments (including our share of unconsolidated joint ventures)

(5,523

)

(11,556

)

(27,364

)

(34,362

)

Amortization of above and below-market leases, net (including our share of unconsolidated joint ventures)

(2,986

)

(2,787

)

(7,519

)

(8,772

)

Adjustments related to discontinued operations

128

91

361

302

Cash NOI

106,468

110,231

319,691

325,457

Less Cash NOI attributable to noncontrolling interests in:

Consolidated joint ventures

(14,513

)

(16,680

)

(41,431

)

(47,048

)

Consolidated real estate fund

205

-

1,645

23

PGRE's share of Cash NOI

92,160

93,551

279,905

278,432

Acquisitions

(5,899

)

-

(19,459

)

-

Dispositions / Discontinued Operations (1)

(2,285

)

(6,760

)

(6,876

)

(16,664

)

Reserves for uncollectible accounts receivable (2)

-

172

1,940

448

Lease termination income and other, net

1,801

403

4,848

(454

)

PGRE's share of Same Store Cash NOI

$

85,777

$

87,366

$

260,358

$

261,762

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 For the Nine Months Ended Ended September 30, September 30,

2020 2019 2020 2019

Reconciliation of Net(Loss) Income to Same Store NOI and Same Store Cash NOI:

Net (loss) income $ (4,123 ) $ 11,000 $ (6,581 ) $ 23,174

Add (subtract)adjustments to arrive at NOI and Cash NOI:

Depreciation and 58,889 60,696 176,032 181,685 amortization

General and 16,805 16,319 46,955 51,457 administrative

Interest and debt 35,792 37,325 108,420 111,462 expense

Income tax expense 393 (583 ) 1,135 823 (benefit)

NOI from unconsolidated 12,935 4,973 36,703 14,569 joint ventures

Loss fromunconsolidated joint 4,268 1,332 14,444 2,815 ventures

Fee income (9,153 ) (7,159 ) (21,692 ) (17,371 )

Interest and other (1,104 ) (1,222 ) (2,360 ) (7,705 )income, net

Adjustments related to 10 1,222 700 5,947 discontinued operations

Other, net 137 580 457 1,433

NOI 114,849 124,483 354,213 368,289

Less NOI attributableto noncontrolling interests in:

Consolidated joint (20,433 ) (18,765 ) (51,857 ) (54,513 )ventures

Consolidated real 205 - 1,645 23 estate fund

PGRE's share of NOI 94,621 105,718 304,001 313,799

Acquisitions (7,160 ) - (24,877 ) -

Dispositions /Discontinued Operations (2,157 ) (7,133 ) (6,515 ) (16,955 )^ (1)

Non-cash write-offs(primarily 13,109 - 20,794 - straight-line rent receivables) ^(2)

Reserves foruncollectible accounts - 172 1,940 448 receivable ^(2)

Lease termination 1,772 381 4,872 (431 )income and other, net

PGRE's share of Same $ 100,185 $ 99,138 $ 300,215 $ 296,861 Store NOI



NOI $ 114,849 $ 124,483 $ 354,213 $ 368,289

Less:

Straight-line rentadjustments (includingour share of (5,523 ) (11,556 ) (27,364 ) (34,362 )unconsolidated jointventures)

Amortization of aboveand below-marketleases, net (including (2,986 ) (2,787 ) (7,519 ) (8,772 )our share of unconsolidated jointventures)

Adjustments related to 128 91 361 302 discontinued operations

Cash NOI 106,468 110,231 319,691 325,457

Less Cash NOIattributable to noncontrolling interests in:

Consolidated joint (14,513 ) (16,680 ) (41,431 ) (47,048 )ventures

Consolidated real 205 - 1,645 23 estate fund

PGRE's share of Cash 92,160 93,551 279,905 278,432 NOI

Acquisitions (5,899 ) - (19,459 ) -

Dispositions /Discontinued Operations (2,285 ) (6,760 ) (6,876 ) (16,664 )^ (1)

Reserves foruncollectible accounts - 172 1,940 448 receivable ^(2)

Lease termination 1,801 403 4,848 (454 )income and other, net

PGRE's share of Same $ 85,777 $ 87,366 $ 260,358 $ 261,762 Store Cash NOI

________________________(1)Primarily represents NOI and Cash NOI from discontinued operations (1899 Pennsylvania Avenue in 2020 and 1899 Pennsylvania Avenue and Liberty Place in 2019).

(2)Represents impairments of receivables arising from operating leases that have been consistently excluded from our same store results in prior periods as noted in our definition of these terms. In prior periods, adjustments for these items have been relatively small and as such, were included within "other".

View source version on businesswire.com: https://www.businesswire.com/news/home/20201028006087/en/

CONTACT: Wilbur Paes Executive Vice President, Chief Financial Officer 212-237-3122 ir@paramount-group.com

CONTACT: Robert Simone Director, Business Development & Investor Relations 212-237-3138 ir@paramount-group.com

CONTACT: Media: 212-492-2285 pr@paramount-group.com