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Paramount Announces Second Quarter 2023 Results

Paramount Group, Inc. (NYSE: PGRE) (“Paramount” or the “Company”) filed its Quarterly Report on Form 10-Q for the quarter ended June 30, 2023 today and reported results for the second quarter ended June 30, 2023.

Second Quarter Highlights:

Results of Operations:

  • Reported net loss attributable to common stockholders of $47.5 million, or $0.22 per diluted share, for the quarter ended June 30, 2023, compared to net loss attributable to common stockholders of $0.4 million, or $0.00 per diluted share, for the quarter ended June 30, 2022. 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 previously announced terminated SVB Securities lease and the surrendered JPMorgan space.
  • Reported Core Funds from Operations (“Core FFO”) attributable to common stockholders of $38.7 million, or $0.18 per diluted share, for the quarter ended June 30, 2023, compared to $53.6 million, or $0.24 per diluted share, for the quarter ended June 30, 2022. 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 previously announced terminated SVB Securities lease and the surrendered JPMorgan space.
  • Updated its full year 2023 Earnings Guidance as follows:
    • Estimated net loss attributable to common stockholders is expected to be between $0.28 and $0.24 per diluted share, compared to its prior estimate of $0.11 and $0.07 per diluted share, an increase in net loss of $0.17 per diluted share at the midpoint of the Company’s prior estimate.
    • Estimated Core FFO attributable to common stockholders is expected to be between $0.84 and $0.88 per diluted share, compared to its prior estimate of $0.90 and $0.94 per diluted share, a decrease of $0.06 per diluted share at the midpoint of the Company’s prior guidance.
  • Reported a 5.0% decrease in Same Store Net Operating Income (“NOI”) and a 4.7% decrease in Same Store Cash NOI in the quarter ended June 30, 2023, compared to the same period in the prior year.
  • Leased 71,847 square feet, of which the Company’s share was 57,404 square feet that was leased at a weighted average initial rent of $78.14 per square foot. Of the 71,847 square feet leased, 34,514 square feet represented the Company’s share of second generation space(1), for which mark-to-markets were 3.9% on a GAAP basis and negative 3.1% on a cash basis.
  • Declared a second quarter cash dividend of $0.035 per common share on June 15, 2023, which was paid on July 14, 2023.

___________________

(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, 2023

Net loss attributable to common stockholders was $47.5 million, or $0.22 per diluted share, for the quarter ended June 30, 2023, compared to $0.4 million, or $0.00 per diluted share, for the quarter ended June 30, 2022. 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 previously announced terminated SVB Securities lease and the surrendered JPMorgan space.

Funds from Operations (“FFO”) attributable to common stockholders was $34.0 million, or $0.16 per diluted share, for the quarter ended June 30, 2023, compared to $53.3 million, or $0.24 per diluted share, for the quarter ended June 30, 2022. 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 previously announced terminated SVB Securities lease and the surrendered JPMorgan space. FFO attributable to common stockholders for the quarters ended June 30, 2023 and 2022 also 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, decreased FFO attributable to common stockholders for the quarter ended June 30, 2023 and 2022 by $4.7 million and $0.3 million, respectively, or $0.02 and $0.00 per diluted share, respectively. Core FFO attributable to common stockholders, which excludes the impact of the non-core items listed on page 10, was $38.7 million, or $0.18 per diluted share, for the quarter ended June 30, 2023, compared to $53.6 million, or $0.24 per diluted share, for the quarter ended June 30, 2022.

Six Months Ended June 30, 2023

Net loss attributable to common stockholders was $45.8 million, or $0.21 per diluted share, for the six months ended June 30, 2023, compared to net income attributable to common stockholders of $3.0 million, or $0.01 per diluted share, for the six months ended June 30, 2022. 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 previously announced terminated SVB Securities lease and the surrendered JPMorgan space.

FFO attributable to common stockholders was $90.8 million, or $0.42 per diluted share, for the six months ended June 30, 2023, compared to $108.2 million, or $0.49 per diluted share, for the six months ended June 30, 2022. 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 previously announced terminated SVB Securities lease and the surrendered JPMorgan space. FFO attributable to common stockholders for the six months ended June 30, 2023 and 2022 also 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, decreased FFO attributable to common stockholders for the six months ended June 30, 2023 by $4.0 million, or $0.02 per diluted share and did not impact FFO attributable to common stockholders for the six months ended June 30, 2022. Core FFO attributable to common stockholders, which excludes the impact of the non-core items listed on page 10, was $94.8 million, or $0.44 per diluted share, for the six months ended June 30, 2023, compared to $108.2 million, or $0.49 per diluted share, for the six months ended June 30, 2022.

Portfolio Operations

Quarter Ended June 30, 2023

Same Store NOI decreased by $5.1 million, or 5.0%, to $97.3 million for the quarter ended June 30, 2023 from $102.4 million for the quarter ended June 30, 2022. Same Store Cash NOI decreased by $4.5 million, or 4.7%, to $91.8 million for the quarter ended June 30, 2023 from $96.3 million for the quarter ended June 30, 2022.

During the quarter ended June 30, 2023, the Company leased 71,847 square feet, of which the Company’s share was 57,404 square feet that was leased at a weighted average initial rent of $78.14 per square foot. This leasing activity, offset by lease expirations in the quarter, decreased leased occupancy and same store leased occupancy (properties owned by the Company in a similar manner during both reporting periods) by 20 basis points to 89.6% at June 30, 2023 from 89.8% at March 31, 2023. Of the 71,847 square feet leased in the second quarter, 34,514 square feet represented the Company’s share of second generation space for which mark-to-markets were 3.9% on a GAAP basis and negative 3.1% on a cash basis. The weighted average lease term for leases signed during the second quarter was 10.6 years and weighted average tenant improvements and leasing commissions on these leases were $12.16 per square foot per annum, or 15.6% of initial rent.

Six Months Ended June 30, 2023

Same Store NOI increased by $1.7 million, or 0.9%, to $199.7 million for the six months ended June 30, 2023 from $198.0 million for the six months ended June 30, 2022. Same Store Cash NOI decreased by $4.4 million, or 2.3%, to $187.2 million for the six months ended June 30, 2023 from $191.6 million for the six months ended June 30, 2022.

During the six months ended June 30, 2023, the Company leased 267,481 square feet, of which the Company’s share was 227,737 square feet that was leased at a weighted average initial rent of $81.18 per square foot. This leasing activity, offset by lease expirations in the six months, decreased leased occupancy and same store leased occupancy (properties owned by the Company in a similar manner during both reporting periods) by 170 basis points to 89.6% at June 30, 2023 from 91.3% at December 31, 2022. The 170 basis point decrease in leased occupancy was driven primarily by the scheduled expiration of Credit Agricole’s 305,132 square foot lease in February 2023, partially offset by O’Melveny & Myers’ 160,708 square foot lease; both of which were at 1301 Avenue of the Americas in the Company’s New York portfolio.

Of the 267,481 square feet leased in the six months, 178,396 square feet represented the Company’s share of second generation space for which mark-to-markets were 1.4% on a GAAP basis and negative 2.1% on a cash basis. The weighted average lease term for leases signed during the six months was 12.4 years and weighted average tenant improvements and leasing commissions on these leases were $12.64 per square foot per annum, or 15.6% of initial rent.

Guidance

The Company is updating its Estimated Core FFO Guidance for the full year of 2023, 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 $0.28 and $0.24 per diluted share, compared to its prior estimate of $0.11 and $0.07 per diluted share, an increase in net loss of $0.17 per diluted share at the midpoint of the Company’s prior estimate. This increase in net loss resulted primarily from (i) our share of a non-cash real estate impairment loss related to an unconsolidated joint venture of $0.11 per diluted share, (ii) non-cash straight-line rent receivable write-offs aggregating $0.06 per diluted share related to the terminated SVB Securities lease and the surrendered JPMorgan space, (iii) lower GAAP rental revenue in the second half of the year aggregating $0.02 per diluted share related to the terminated SVB Securities lease and the surrendered JPMorgan space, partially offset by (iv) termination income of $0.02 per diluted share in connection with a tenant’s lease termination at 1633 Broadway. 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, 2023 and its outlook for the remainder of 2023, the Company is updating its Estimated 2023 Core FFO to be between $0.84 and $0.88 per diluted share, compared to its prior estimate of $0.90 and $0.94 per diluted share. This represents a decrease of $0.06 per diluted share at the midpoint of the Company’s prior guidance, resulting primarily from (i) non-cash straight-line rent receivable write-offs aggregating $0.06 per diluted share related to the terminated SVB Securities lease and the surrendered JPMorgan space, (ii) lower GAAP rental revenue in the second half of the year aggregating $0.02 per diluted share related to the terminated SVB Securities lease and the surrendered JPMorgan space, partially offset by (iii) termination income of $0.02 per diluted share in connection with a tenant’s lease termination at 1633 Broadway.

 

 

 

 

 

 

 

Full Year 2023

(Amounts per diluted share)

Low

 

High

Estimated net loss attributable to common stockholders

$

(0.28

)

 

$

(0.24

)

Pro rata share of real estate depreciation and amortization, including

the Company's share of unconsolidated joint ventures

 

1.01

 

 

 

1.01

 

Pro rata share of non-cash real estate impairment loss related to an

unconsolidated joint venture

 

0.11

 

 

 

0.11

 

Estimated Core FFO

$

0.84

 

 

$

0.88

 

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 7. 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.

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 rising 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 rising 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 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 and adjustments, realized and unrealized gains or losses on real estate related 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 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.

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, 2023, which is available on our website.

Investor Conference Call and Webcast

The Company will host a conference call and audio webcast on Tuesday, August 1, 2023 at 9:00 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, 2023 through August 8, 2023 and can be accessed by dialing 844-512-2921 (domestic) or 412-317-6671 (international) and entering the passcode 13739420.

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, 2023

 

 

December 31, 2022

 

Real estate, at cost:

 

 

 

 

 

 

Land

 

$

1,966,237

 

 

$

1,966,237

 

Buildings and improvements

 

 

6,199,074

 

 

 

6,177,540

 

 

 

 

8,165,311

 

 

 

8,143,777

 

Accumulated depreciation and amortization

 

 

(1,377,917

)

 

 

(1,297,553

)

Real estate, net

 

 

6,787,394

 

 

 

6,846,224

 

Cash and cash equivalents

 

 

434,751

 

 

 

408,905

 

Restricted cash

 

 

72,680

 

 

 

40,912

 

Accounts and other receivables

 

 

13,692

 

 

 

23,866

 

Real estate related fund investments

 

 

66,606

 

 

 

105,369

 

Investments in unconsolidated real estate related funds

 

 

5,270

 

 

 

3,411

 

Investments in unconsolidated joint ventures

 

 

398,677

 

 

 

393,503

 

Deferred rent receivable

 

 

346,583

 

 

 

346,338

 

Deferred charges, net

 

 

113,271

 

 

 

120,685

 

Intangible assets, net

 

 

79,558

 

 

 

90,381

 

Other assets

 

 

49,497

 

 

 

73,660

 

Total assets

 

$

8,367,979

 

 

$

8,453,254

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

Notes and mortgages payable, net

 

$

3,842,669

 

 

$

3,840,318

 

Revolving credit facility

 

 

-

 

 

 

-

 

Accounts payable and accrued expenses

 

 

113,449

 

 

 

123,176

 

Dividends and distributions payable

 

 

8,188

 

 

 

18,026

 

Intangible liabilities, net

 

 

31,960

 

 

 

36,193

 

Other liabilities

 

 

23,700

 

 

 

24,775

 

Total liabilities

 

 

4,019,966

 

 

 

4,042,488

 

Equity:

 

 

 

 

 

 

Paramount Group, Inc. equity

 

 

3,507,480

 

 

 

3,592,291

 

Noncontrolling interests in:

 

 

 

 

 

 

Consolidated joint ventures

 

 

407,647

 

 

 

402,118

 

Consolidated real estate related funds

 

 

183,988

 

 

 

173,375

 

Operating Partnership

 

 

248,898

 

 

 

242,982

 

Total equity

 

 

4,348,013

 

 

 

4,410,766

 

Total liabilities and equity

 

$

8,367,979

 

 

$

8,453,254

 

 

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,

 

 

2023

 

2022

 

2023

 

2022

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

Rental revenue

 

$

165,506

 

 

$

177,243

 

 

$

347,219

 

 

$

347,165

 

 

Fee and other income

 

 

7,156

 

 

 

8,274

 

 

 

13,917

 

 

 

22,037

 

 

 

Total revenues

 

 

172,662

 

 

 

185,517

 

 

 

361,136

 

 

 

369,202

 

Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating

 

 

71,078

 

 

 

67,814

 

 

 

141,387

 

 

 

134,475

 

 

Depreciation and amortization

 

 

62,627

 

 

 

57,398

 

 

 

121,515

 

 

 

113,022

 

 

General and administrative

 

 

16,224

 

 

 

16,706

 

 

 

30,847

 

 

 

32,351

 

 

Transaction related costs

 

 

63

 

 

 

159

 

 

 

191

 

 

 

276

 

 

 

Total expenses

 

 

149,992

 

 

 

142,077

 

 

 

293,940

 

 

 

280,124

 

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss from real estate related fund investments

 

 

(42,644

)

 

 

-

 

 

 

(39,094

)

 

 

-

 

 

Income (loss) from unconsolidated real estate related funds

 

 

32

 

 

 

155

 

 

 

(146

)

 

 

325

 

 

Loss from unconsolidated joint ventures

 

 

(28,402

)

 

 

(4,416

)

 

 

(34,164

)

 

 

(9,529

)

 

Interest and other income, net

 

 

2,967

 

 

 

796

 

 

 

5,892

 

 

 

1,027

 

 

Interest and debt expense

 

 

(36,879

)

 

 

(35,578

)

 

 

(73,338

)

 

 

(69,855

)

(Loss) income before income taxes

 

(82,256

)

 

 

4,397

 

 

 

(73,654

)

 

 

11,046

 

 

Income tax expense

 

 

(573

)

 

 

(359

)

 

 

(861

)

 

 

(886

)

Net (loss) income

 

 

(82,829

)

 

 

4,038

 

 

 

(74,515

)

 

 

10,160

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated joint ventures

 

 

(5,351

)

 

 

(4,779

)

 

 

(10,992

)

 

 

(8,204

)

 

Consolidated real estate related funds

 

 

37,301

 

 

 

352

 

 

 

36,478

 

 

 

1,368

 

 

Operating Partnership

 

 

3,341

 

 

 

29

 

 

 

3,220

 

 

 

(313

)

Net (loss) income attributable to common stockholders

 

$

(47,538

)

 

$

(360

)

 

$

(45,809

)

 

$

3,011

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Per Share:

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

(0.22

)

 

$

(0.00

)

 

$

(0.21

)

 

$

0.01

 

 

Diluted

 

$

(0.22

)

 

$

(0.00

)

 

$

(0.21

)

 

$

0.01

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

217,003,931

 

 

 

222,971,886

 

 

 

216,784,737

 

 

 

220,888,664

 

 

Diluted

 

 

217,003,931

 

 

 

222,971,886

 

 

 

216,784,737

 

 

 

220,930,019

 

 

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,

 

 

 

 

 

 

 

2023

 

2022

 

2023

 

2022

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

 

 

 

 

 

 

 

 

 

 

 

 

 

Net (loss) income

 

$

(82,829

)

 

$

4,038

 

 

$

(74,515

)

 

$

10,160

 

 

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

 

 

72,096

 

 

 

67,235

 

 

 

140,527

 

 

 

133,060

 

 

Our share of a real estate impairment loss related to an unconsolidated joint venture

 

 

24,734

 

 

 

-

 

 

 

24,734

 

 

 

-

 

 

FFO

 

 

14,001

 

 

 

71,273

 

 

 

90,746

 

 

 

143,220

 

 

Less FFO attributable to noncontrolling interests in:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated joint ventures

 

 

(14,889

)

 

 

(13,945

)

 

 

(30,064

)

 

 

(26,460

)

 

 

Consolidated real estate related funds

 

 

37,295

 

 

 

346

 

 

 

36,465

 

 

 

1,355

 

 

FFO attributable to Paramount Group Operating Partnership

 

 

36,407

 

 

 

57,674

 

 

 

97,147

 

 

 

118,115

 

 

Less FFO attributable to noncontrolling interests in Operating Partnership

 

 

(2,390

)

 

 

(4,352

)

 

 

(6,351

)

 

 

(9,920

)

 

FFO attributable to common stockholders

 

$

34,017

 

 

$

53,322

 

 

$

90,796

 

 

$

108,195

 

 

Per diluted share

 

$

0.16

 

 

$

0.24

 

 

$

0.42

 

 

$

0.49

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FFO

 

$

14,001

 

 

$

71,273

 

 

$

90,746

 

 

$

143,220

 

 

Non-core items:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjustment to equity in earnings for contributions to

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(distributions from) unconsolidated joint ventures

 

 

(1,301

)

 

 

168

 

 

 

(2,623

)

 

 

(415

)

 

 

Adjustments for realized and unrealized gains and losses on

 

 

 

 

 

 

 

 

 

 

 

 

 

 

consolidated and unconsolidated real estate related fund investments

 

 

45,686

 

 

 

(29

)

 

 

47,021

 

 

 

18

 

 

 

Other, net (including after-tax net gains or losses on sale of

 

 

 

 

 

 

 

 

 

 

 

 

 

 

residential condominium units at One Steuart Lane)

 

 

659

 

 

 

671

 

 

 

3,196

 

 

 

2,050

 

 

Core FFO

 

 

59,045

 

 

 

72,083

 

 

 

138,340

 

 

 

144,873

 

 

Less Core FFO attributable to noncontrolling interests in:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated joint ventures

 

 

(14,889

)

 

 

(13,945

)

 

 

(30,064

)

 

 

(26,460

)

 

 

Consolidated real estate related funds

 

 

(2,773

)

 

 

(128

)

 

 

(6,800

)

 

 

(287

)

 

Core FFO attributable to Paramount Group Operating Partnership

 

 

41,383

 

 

 

58,010

 

 

 

101,476

 

 

 

118,126

 

 

Less Core FFO attributable to noncontrolling interests in Operating Partnership

 

 

(2,717

)

 

 

(4,377

)

 

 

(6,636

)

 

 

(9,915

)

 

Core FFO attributable to common stockholders

 

$

38,666

 

 

$

53,633

 

 

$

94,840

 

 

$

108,211

 

 

Per diluted share

 

$

0.18

 

 

$

0.24

 

 

$

0.44

 

 

$

0.49

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding

 

 

217,003,931

 

 

 

222,971,886

 

 

 

216,784,737

 

 

 

220,888,664

 

 

Effect of dilutive securities

 

 

11,089

 

 

 

26,594

 

 

 

31,669

 

 

 

41,355

 

 

Denominator for FFO and Core FFO per diluted share

 

 

217,015,020

 

 

 

222,998,480

 

 

 

216,816,406

 

 

 

220,930,019

 

 

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,

 

 

 

 

 

 

2023

 

2022

 

2023

 

2022

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

 

 

 

 

 

 

 

 

 

 

 

 

Net (loss) income

$

(82,829

)

 

$

4,038

 

 

$

(74,515

)

 

$

10,160

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

62,627

 

 

 

57,398

 

 

 

121,515

 

 

 

113,022

 

 

 

General and administrative

 

16,224

 

 

 

16,706

 

 

 

30,847

 

 

 

32,351

 

 

 

Interest and debt expense

 

36,879

 

 

 

35,578

 

 

 

73,338

 

 

 

69,855

 

 

 

Income tax expense

 

573

 

 

 

359

 

 

 

861

 

 

 

886

 

 

 

Loss from real estate related fund investments

 

42,644

 

 

 

-

 

 

 

39,094

 

 

 

-

 

 

 

NOI from unconsolidated joint ventures (excluding One Steuart Lane)

 

10,720

 

 

 

11,585

 

 

 

21,101

 

 

 

22,819

 

 

 

Loss from unconsolidated joint ventures

 

28,402

 

 

 

4,416

 

 

 

34,164

 

 

 

9,529

 

 

 

Fee income

 

(4,976

)

 

 

(5,974

)

 

 

(9,533

)

 

 

(17,962

)

 

 

Interest and other income, net

 

(2,967

)

 

 

(796

)

 

 

(5,892

)

 

 

(1,027

)

 

 

Other, net

 

31

 

 

 

4

 

 

 

337

 

 

 

(49

)

 

NOI

 

107,328

 

 

 

123,314

 

 

 

231,317

 

 

 

239,584

 

 

Less NOI attributable to noncontrolling interests in:

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated joint ventures

 

(22,564

)

 

 

(21,796

)

 

 

(45,276

)

 

 

(42,118

)

 

PGRE's share of NOI

 

84,764

 

 

 

101,518

 

 

 

186,041

 

 

 

197,466

 

 

 

Lease termination income

 

(2,055

)

 

 

(157

)

 

 

(2,055

)

 

 

(1,875

)

 

 

Non-cash write-offs of straight-line rent receivable

 

13,906

 

 

 

-

 

 

 

13,906

 

 

 

306

 

 

 

Acquisitions / Redevelopment and other, net

 

686

 

 

 

1,057

 

 

 

1,765

 

 

 

2,065

 

 

PGRE's share of Same Store NOI

$

97,301

 

 

$

102,418

 

 

$

199,657

 

 

$

197,962

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NOI

$

107,328

 

 

$

123,314

 

 

$

231,317

 

 

$

239,584

 

 

Less:

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

7,515

 

 

 

(5,977

)

 

 

(176

)

 

 

(4,319

)

 

 

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

 

(2,239

)

 

 

(1,128

)

 

 

(4,077

)

 

 

(2,325

)

 

Cash NOI

 

112,604

 

 

 

116,209

 

 

 

227,064

 

 

 

232,940

 

 

Less Cash NOI attributable to noncontrolling interests in:

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated joint ventures

 

(19,707

)

 

 

(20,693

)

 

 

(39,552

)

 

 

(41,206

)

 

PGRE's share of Cash NOI

 

92,897

 

 

 

95,516

 

 

 

187,512

 

 

 

191,734

 

 

 

Lease termination income

 

(2,055

)

 

 

(157

)

 

 

(2,055

)

 

 

(1,875

)

 

 

Acquisitions / Redevelopment and other, net

 

948

 

 

 

989

 

 

 

1,701

 

 

 

1,738

 

 

PGRE's share of Same Store Cash NOI

$

91,790

 

 

$

96,348

 

 

$

187,158

 

 

$

191,597

 

 

Contacts

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

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