fma
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the Quarterly Period Ended: September 30, 20172022
OR
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to.
Commission File Number: 001-36746
PARAMOUNT GROUP, INC.
(Exact name of registrant as specified in its charter)
Maryland |
| 32-0439307 |
(State or other jurisdiction of incorporation or organization) |
| (IRS Employer Identification No.) |
1633 Broadway, Suite 1801, New York, NY |
| 10019 |
(Address of principal executive offices) |
| (Zip Code) |
Registrant’s telephone number, including area code: (212) (212) 237-3100
Securities registered pursuant to Section 12(b) of the Act:
Title of each Class | Trading Symbol | Name of each exchange on which registered |
Common stock of Paramount Group, Inc., | PGRE | New York Stock Exchange |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes☒ No ☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). ☒Yes☐ No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer | ☒ |
| Accelerated Filer | ☐ | |||
Non-Accelerated Filer | ☐ |
| Smaller Reporting Company | ☐ | |||
Emerging Growth Company | ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
As of October 13, 2017,14, 2022, there were 240,073,742219,823,849 shares of the registrant’s common stock outstanding.
Table of Contents
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Part I. |
| Financial Information |
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Item 1. |
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| Consolidated Balance Sheets (Unaudited) as of September 30, |
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| Consolidated Statements of Income (Unaudited) for the three and nine months |
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Item 2. |
| Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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Item 3. |
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Item 4. |
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Part II. |
| Other Information |
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Item 1. |
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Item 1A. |
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Item 2. |
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Item 3. |
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Item 4. |
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Item 5. |
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Item 6. |
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PART I – FINANCIAL INFORMATIONFINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
PARAMOUNT GROUP, INC.
(UNAUDITED)
(Amounts in thousands, except share, unit and per share amounts) | September 30, 2022 |
|
| December 31, 2021 |
|
| ||
Assets |
|
|
|
|
|
| ||
Real estate, at cost: |
|
|
|
|
|
| ||
Land | $ | 1,966,237 |
|
| $ | 1,966,237 |
|
|
Buildings and improvements |
| 6,152,652 |
|
|
| 6,061,824 |
|
|
|
| 8,118,889 |
|
|
| 8,028,061 |
|
|
Accumulated depreciation and amortization |
| (1,248,059 | ) |
|
| (1,112,977 | ) |
|
Real estate, net |
| 6,870,830 |
|
|
| 6,915,084 |
|
|
Cash and cash equivalents |
| 469,398 |
|
|
| 524,900 |
|
|
Restricted cash |
| 40,456 |
|
|
| 4,766 |
|
|
Investments in unconsolidated joint ventures |
| 428,785 |
|
|
| 408,096 |
|
|
Investments in unconsolidated real estate funds |
| 14,558 |
|
|
| 11,421 |
|
|
Accounts and other receivables |
| 19,865 |
|
|
| 15,582 |
|
|
Deferred rent receivable |
| 340,540 |
|
|
| 332,735 |
|
|
Deferred charges, net of accumulated amortization of $65,144 and $70,666 |
| 123,864 |
|
|
| 122,177 |
|
|
Intangible assets, net of accumulated amortization of $239,733 and $252,142 |
| 97,371 |
|
|
| 119,413 |
|
|
Other assets |
| 90,813 |
|
|
| 40,388 |
|
|
Total assets (1) | $ | 8,496,480 |
|
| $ | 8,494,562 |
|
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|
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|
| ||
Liabilities and Equity |
|
|
|
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| ||
Notes and mortgages payable, net of unamortized deferred financing costs | $ | 3,839,144 |
|
| $ | 3,835,620 |
|
|
Revolving credit facility |
| - |
|
|
| - |
|
|
Accounts payable and accrued expenses |
| 152,371 |
|
|
| 116,192 |
|
|
Dividends and distributions payable |
| 18,564 |
|
|
| 16,895 |
|
|
Intangible liabilities, net of accumulated amortization of $99,689 and $105,790 |
| 39,037 |
|
|
| 45,328 |
|
|
Other liabilities |
| 24,171 |
|
|
| 25,495 |
|
|
Total liabilities (1) |
| 4,073,287 |
|
|
| 4,039,530 |
|
|
Commitments and contingencies |
|
|
|
|
|
| ||
Paramount Group, Inc. equity: |
|
|
|
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|
| ||
Common stock $0.01 par value per share; authorized 900,000,000 shares; issued and |
| 2,224 |
|
|
| 2,190 |
|
|
Additional paid-in-capital |
| 4,210,442 |
|
|
| 4,122,680 |
|
|
Earnings less than distributions |
| (589,623 | ) |
|
| (538,845 | ) |
|
Accumulated other comprehensive income |
| 51,320 |
|
|
| 2,138 |
|
|
Paramount Group, Inc. equity |
| 3,674,363 |
|
|
| 3,588,163 |
|
|
Noncontrolling interests in: |
|
|
|
|
|
| ||
Consolidated joint ventures |
| 407,402 |
|
|
| 428,833 |
|
|
Consolidated real estate fund |
| 79,248 |
|
|
| 81,925 |
|
|
Operating Partnership (15,822,806 and 21,740,404 units outstanding) |
| 262,180 |
|
|
| 356,111 |
|
|
Total equity |
| 4,423,193 |
|
|
| 4,455,032 |
|
|
Total liabilities and equity | $ | 8,496,480 |
|
| $ | 8,494,562 |
|
|
(Amounts in thousands, except share, unit and per share amounts) |
|
|
|
|
|
|
|
ASSETS | September 30, 2017 |
|
| December 31, 2016 |
| ||
Real estate, at cost |
|
|
|
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Land | $ | 2,209,506 |
|
| $ | 2,091,535 |
|
Buildings and improvements |
| 6,097,220 |
|
|
| 5,757,558 |
|
|
| 8,306,726 |
|
|
| 7,849,093 |
|
Accumulated depreciation and amortization |
| (443,555 | ) |
|
| (318,161 | ) |
Real estate, net |
| 7,863,171 |
|
|
| 7,530,932 |
|
Cash and cash equivalents |
| 185,028 |
|
|
| 162,965 |
|
Restricted cash |
| 32,320 |
|
|
| 29,374 |
|
Investments in unconsolidated joint ventures |
| 46,014 |
|
|
| 6,411 |
|
Investments in unconsolidated real estate funds |
| 8,146 |
|
|
| 28,173 |
|
Preferred equity investments, net of allowance of $19,588 and $0 |
| 35,763 |
|
|
| 55,051 |
|
Marketable securities |
| 27,867 |
|
|
| 22,393 |
|
Accounts and other receivables, net of allowance of $324 and $202 |
| 13,822 |
|
|
| 15,251 |
|
Deferred rent receivable |
| 209,226 |
|
|
| 163,695 |
|
Deferred charges, net of accumulated amortization of $16,628 and $9,832 |
| 88,846 |
|
|
| 71,184 |
|
Intangible assets, net of accumulated amortization of $189,209 and $166,841 |
| 373,053 |
|
|
| 412,225 |
|
Assets held for sale |
| - |
|
|
| 346,685 |
|
Other assets |
| 40,752 |
|
|
| 22,829 |
|
Total assets (1) | $ | 8,924,008 |
|
| $ | 8,867,168 |
|
|
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LIABILITIES AND EQUITY |
|
|
|
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Notes and mortgages payable, net of deferred financing costs of $44,029 and $43,281 | $ | 3,539,071 |
|
| $ | 3,364,898 |
|
Revolving credit facility |
| - |
|
|
| 230,000 |
|
Due to affiliates |
| 27,299 |
|
|
| 27,299 |
|
Accounts payable and accrued expenses |
| 97,679 |
|
|
| 103,896 |
|
Dividends and distributions payable |
| 25,211 |
|
|
| 25,151 |
|
Intangible liabilities, net of accumulated amortization of $71,453 and $55,349 |
| 138,563 |
|
|
| 153,018 |
|
Other liabilities |
| 54,029 |
|
|
| 76,959 |
|
Total liabilities (1) |
| 3,881,852 |
|
|
| 3,981,221 |
|
Commitments and contingencies |
|
|
|
|
|
|
|
Paramount Group, Inc. equity: |
|
|
|
|
|
|
|
Common stock $0.01 par value per share; authorized 900,000,000 shares; issued and outstanding 240,073,742 and 230,015,356 shares in 2017 and 2016, respectively |
| 2,400 |
|
|
| 2,300 |
|
Additional paid-in-capital |
| 4,286,265 |
|
|
| 4,116,987 |
|
Earnings less than distributions |
| (104,059 | ) |
|
| (129,654 | ) |
Accumulated other comprehensive income |
| 1,014 |
|
|
| 372 |
|
Paramount Group, Inc. equity |
| 4,185,620 |
|
|
| 3,990,005 |
|
Noncontrolling interests in: |
|
|
|
|
|
|
|
Consolidated joint ventures |
| 408,035 |
|
|
| 253,788 |
|
Consolidated real estate fund |
| 14,947 |
|
|
| 64,793 |
|
Operating Partnership (24,977,743 and 34,511,214 units outstanding) |
| 433,554 |
|
|
| 577,361 |
|
Total equity |
| 5,042,156 |
|
|
| 4,885,947 |
|
Total liabilities and equity | $ | 8,924,008 |
|
| $ | 8,867,168 |
|
|
|
See notes to consolidated financial statements (unaudited).
PARAMOUNT GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
| For the Three Months Ended |
|
| For the Nine Months Ended |
|
| For the Three Months Ended |
|
| For the Nine Months Ended |
| ||||||||||||||||||||
| September 30, |
|
| September 30, |
|
| September 30, |
|
| September 30, |
| ||||||||||||||||||||
(Amounts in thousands, except share and per share amounts) | 2017 |
|
| 2016 |
|
| 2017 |
|
| 2016 |
|
| 2022 |
|
| 2021 |
|
| 2022 |
|
| 2021 |
| ||||||||
REVENUES: |
|
|
|
|
|
|
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|
|
|
|
|
| |||||||||||||||
Rental income | $ | 156,384 |
|
| $ | 149,019 |
|
| $ | 469,961 |
|
| $ | 445,452 |
|
| |||||||||||||||
Tenant reimbursement income |
| 14,053 |
|
|
| 11,978 |
|
|
| 38,761 |
|
|
| 33,101 |
|
| |||||||||||||||
Revenues: |
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||
Rental revenue | $ | 179,250 |
|
| $ | 170,851 |
|
| $ | 526,415 |
|
| $ | 518,625 |
| ||||||||||||||||
Fee and other income |
| 9,333 |
|
|
| 10,321 |
|
|
| 29,988 |
|
|
| 37,986 |
|
|
| 7,897 |
|
|
| 8,280 |
|
|
| 29,934 |
|
|
| 23,941 |
|
Total revenues |
| 179,770 |
|
|
| 171,318 |
|
|
| 538,710 |
|
|
| 516,539 |
|
|
| 187,147 |
|
|
| 179,131 |
|
|
| 556,349 |
|
|
| 542,566 |
|
EXPENSES: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Expenses: |
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||
Operating |
| 68,264 |
|
|
| 64,025 |
|
|
| 197,696 |
|
|
| 186,964 |
|
|
| 72,845 |
|
|
| 67,131 |
|
|
| 207,320 |
|
|
| 197,821 |
|
Depreciation and amortization |
| 66,515 |
|
|
| 66,376 |
|
|
| 198,143 |
|
|
| 208,475 |
|
|
| 58,284 |
|
|
| 57,522 |
|
|
| 171,306 |
|
|
| 175,752 |
|
General and administrative |
| 14,470 |
|
|
| 13,235 |
|
|
| 44,624 |
|
|
| 39,335 |
|
|
| 13,150 |
|
|
| 13,257 |
|
|
| 45,501 |
|
|
| 46,039 |
|
Transaction related costs |
| 274 |
|
|
| 282 |
|
|
| 1,051 |
|
|
| 1,725 |
|
|
| 105 |
|
|
| 87 |
|
|
| 381 |
|
|
| 503 |
|
Total expenses |
| 149,523 |
|
|
| 143,918 |
|
|
| 441,514 |
|
|
| 436,499 |
|
|
| 144,384 |
|
|
| 137,997 |
|
|
| 424,508 |
|
|
| 420,115 |
|
Operating income |
| 30,247 |
|
|
| 27,400 |
|
|
| 97,196 |
|
|
| 80,040 |
|
| |||||||||||||||
Income from unconsolidated joint ventures |
| 671 |
|
|
| 1,792 |
|
|
| 19,143 |
|
|
| 5,291 |
|
| |||||||||||||||
Loss from unconsolidated real estate funds |
| (3,930 | ) |
|
| (1,254 | ) |
|
| (6,053 | ) |
|
| (2,540 | ) |
| |||||||||||||||
Interest and other (loss) income, net |
| (17,668 | ) |
|
| 2,299 |
|
|
| (11,982 | ) |
|
| 5,029 |
|
| |||||||||||||||
Other income (expense): |
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||
(Loss) income from unconsolidated joint ventures |
| (5,797 | ) |
|
| 223 |
|
|
| (15,326 | ) |
|
| (20,810 | ) | ||||||||||||||||
Income from unconsolidated real estate funds |
| 300 |
|
|
| 276 |
|
|
| 625 |
|
|
| 604 |
| ||||||||||||||||
Interest and other income, net |
| 1,580 |
|
|
| 138 |
|
|
| 2,607 |
|
|
| 2,510 |
| ||||||||||||||||
Interest and debt expense |
| (35,733 | ) |
|
| (38,278 | ) |
|
| (107,568 | ) |
|
| (113,406 | ) |
|
| (36,949 | ) |
|
| (36,266 | ) |
|
| (106,804 | ) |
|
| (105,919 | ) |
Loss on early extinguishment of debt |
| - |
|
|
| - |
|
|
| (7,877 | ) |
|
| - |
|
| |||||||||||||||
Gain on sale of real estate |
| - |
|
|
| - |
|
|
| 133,989 |
|
|
| - |
|
| |||||||||||||||
Unrealized gain on interest rate swaps |
| - |
|
|
| 12,728 |
|
|
| 1,802 |
|
|
| 29,661 |
|
| |||||||||||||||
Net (loss) income before income taxes |
| (26,413 | ) |
|
| 4,687 |
|
|
| 118,650 |
|
|
| 4,075 |
|
| |||||||||||||||
Income tax benefit (expense) |
| 1,010 |
|
|
| (218 | ) |
|
| (4,242 | ) |
|
| 817 |
|
| |||||||||||||||
Net (loss) income |
| (25,403 | ) |
|
| 4,469 |
|
|
| 114,408 |
|
|
| 4,892 |
|
| |||||||||||||||
Income (loss) before income taxes |
| 1,897 |
|
|
| 5,505 |
|
|
| 12,943 |
|
|
| (1,164 | ) | ||||||||||||||||
Income tax expense |
| (673 | ) |
|
| (873 | ) |
|
| (1,559 | ) |
|
| (2,448 | ) | ||||||||||||||||
Net income (loss) |
| 1,224 |
|
|
| 4,632 |
|
|
| 11,384 |
|
|
| (3,612 | ) | ||||||||||||||||
Less net (income) loss attributable to noncontrolling interests in: |
|
|
|
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|
|
| Less net (income) loss attributable to noncontrolling interests in: |
|
|
|
|
|
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|
|
| ||||
Consolidated joint ventures |
| 14,217 |
|
|
| (4,703 | ) |
|
| 11,029 |
|
|
| (10,062 | ) |
|
| (4,179 | ) |
|
| (3,768 | ) |
|
| (12,383 | ) |
|
| (16,924 | ) |
Consolidated real estate fund |
| (114 | ) |
|
| 67 |
|
|
| (20,195 | ) |
|
| 819 |
|
|
| 1,309 |
|
|
| (3,123 | ) |
|
| 2,677 |
|
|
| (3,179 | ) |
Operating Partnership |
| 1,086 |
|
|
| 28 |
|
|
| (12,068 | ) |
|
| 906 |
|
|
| 109 |
|
|
| 204 |
|
|
| (204 | ) |
|
| 2,139 |
|
Net (loss) income attributable to common stockholders | $ | (10,214 | ) |
| $ | (139 | ) |
| $ | 93,174 |
|
| $ | (3,445 | ) |
| $ | (1,537 | ) |
| $ | (2,055 | ) |
| $ | 1,474 |
|
| $ | (21,576 | ) |
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(LOSS) INCOME PER COMMON SHARE - BASIC: |
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(Loss) Income per Common Share - Basic: |
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| ||||||||||||||||||||
(Loss) income per common share | $ | (0.04 | ) |
| $ | (0.00 | ) |
| $ | 0.40 |
|
| $ | (0.02 | ) |
| $ | (0.01 | ) |
| $ | (0.01 | ) |
| $ | 0.01 |
|
| $ | (0.10 | ) |
Weighted average shares outstanding |
| 239,445,810 |
|
|
| 219,394,245 |
|
|
| 235,151,398 |
|
|
| 216,317,746 |
|
|
| 224,864,791 |
|
|
| 218,706,356 |
|
|
| 222,228,605 |
|
|
| 218,689,696 |
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|
|
|
|
|
|
|
|
|
|
|
|
| ||||
(LOSS) INCOME PER COMMON SHARE - DILUTED: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
(Loss) Income per Common Share - Diluted: |
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||
(Loss) income per common share | $ | (0.04 | ) |
| $ | (0.00 | ) |
| $ | 0.40 |
|
| $ | (0.02 | ) |
| $ | (0.01 | ) |
| $ | (0.01 | ) |
| $ | 0.01 |
|
| $ | (0.10 | ) |
Weighted average shares outstanding |
| 239,445,810 |
|
|
| 219,394,245 |
|
|
| 235,177,683 |
|
|
| 216,317,746 |
|
|
| 224,864,791 |
|
|
| 218,706,356 |
|
|
| 222,262,748 |
|
|
| 218,689,696 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
DIVIDENDS PER COMMON SHARE | $ | 0.095 |
|
| $ | 0.095 |
|
| $ | 0.285 |
|
| $ | 0.285 |
|
|
See notes to consolidated financial statements (unaudited).
PARAMOUNT GROUP, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
| For the Three Months Ended |
|
| For the Nine Months Ended |
| ||||||||||
| September 30, |
|
| September 30, |
| ||||||||||
(Amounts in thousands) | 2017 |
|
| 2016 |
|
| 2017 |
|
| 2016 |
| ||||
Net (loss) income | $ | (25,403 | ) |
| $ | 4,469 |
|
| $ | 114,408 |
|
| $ | 4,892 |
|
Other comprehensive income (loss): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in value of interest rate swaps |
| 738 |
|
|
| 7,802 |
|
|
| 729 |
|
|
| (33,812 | ) |
Pro rata share of other comprehensive income (loss) of unconsolidated joint ventures |
| 226 |
|
|
| (82 | ) |
|
| 39 |
|
|
| (19 | ) |
Comprehensive (loss) income |
| (24,439 | ) |
|
| 12,189 |
|
|
| 115,176 |
|
|
| (28,939 | ) |
Less comprehensive (income) loss attributable to noncontrolling |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
interests in: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated joint ventures |
| 14,217 |
|
|
| (4,703 | ) |
|
| 11,029 |
|
|
| (10,062 | ) |
Consolidated real estate fund |
| (114 | ) |
|
| 67 |
|
|
| (20,195 | ) |
|
| 819 |
|
Operating Partnership |
| 993 |
|
|
| (1,286 | ) |
|
| (12,194 | ) |
|
| 7,488 |
|
Comprehensive (loss) income attributable to common stockholders | $ | (9,343 | ) |
| $ | 6,267 |
|
| $ | 93,816 |
|
| $ | (30,694 | ) |
| For the Three Months Ended |
|
| For the Nine Months Ended |
| ||||||||||
| September 30, |
|
| September 30, |
| ||||||||||
(Amounts in thousands) | 2022 |
|
| 2021 |
|
| 2022 |
|
| 2021 |
| ||||
Net income (loss) | $ | 1,224 |
|
| $ | 4,632 |
|
| $ | 11,384 |
|
| $ | (3,612 | ) |
Other comprehensive income: |
|
|
|
|
|
|
|
|
|
|
| ||||
Change in value of interest rate swaps and interest rate caps |
| 9,796 |
|
|
| 995 |
|
|
| 34,450 |
|
|
| 995 |
|
Pro rata share of other comprehensive income of |
| 5,707 |
|
|
| 928 |
|
|
| 19,109 |
|
|
| 5,677 |
|
Comprehensive income |
| 16,727 |
|
|
| 6,555 |
|
|
| 64,943 |
|
|
| 3,060 |
|
Less comprehensive (income) loss attributable to |
|
|
|
|
|
|
|
|
|
|
| ||||
Consolidated joint ventures |
| (4,179 | ) |
|
| (3,768 | ) |
|
| (12,383 | ) |
|
| (16,924 | ) |
Consolidated real estate fund |
| 1,309 |
|
|
| (3,123 | ) |
|
| 2,677 |
|
|
| (3,191 | ) |
Operating Partnership |
| (914 | ) |
|
| 30 |
|
|
| (4,581 | ) |
|
| 1,541 |
|
Comprehensive income (loss) attributable to common | $ | 12,943 |
|
| $ | (306 | ) |
| $ | 50,656 |
|
| $ | (15,514 | ) |
See notes to consolidated financial statements (unaudited).
5
PARAMOUNT GROUP, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(UNAUDITED)
|
| Common Shares |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Noncontrolling Interests in |
|
|
|
|
| ||||||||||||||
(Amounts in thousands, except per share and unit amounts) |
| Shares |
|
| Amount |
|
| Additional Paid-in-Capital |
|
| Earnings Less than Distributions |
|
| Accumulated Other Comprehensive Income (Loss) |
|
| Consolidated Joint Ventures |
|
| Consolidated Real Estate Funds |
|
| Operating Partnership |
|
| Total Equity |
| |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of December 31, 2015 |
|
| 212,112 |
|
| $ | 2,122 |
|
| $ | 3,802,858 |
|
| $ | (36,120 | ) |
| $ | (7,843 | ) |
| $ | 236,849 |
|
| $ | 414,637 |
|
| $ | 898,047 |
|
| $ | 5,310,550 |
|
Deconsolidation of real estate fund investments upon adoption of ASU 2015-02 |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (351,035 | ) |
|
| - |
|
|
| (351,035 | ) |
Balance as of January 1, 2016 |
|
| 212,112 |
|
|
| 2,122 |
|
|
| 3,802,858 |
|
|
| (36,120 | ) |
|
| (7,843 | ) |
|
| 236,849 |
|
|
| 63,602 |
|
|
| 898,047 |
|
|
| 4,959,515 |
|
Net income (loss) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| (3,445 | ) |
|
| - |
|
|
| 10,062 |
|
|
| (819 | ) |
|
| (906 | ) |
|
| 4,892 |
|
Common shares issued upon redemption of common units |
|
| 7,403 |
|
|
| 74 |
|
|
| 126,068 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (126,142 | ) |
|
| - |
|
Common shares issued under Omnibus share plan |
|
| 97 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
Dividends and distributions ($0.285 per share and unit) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| (61,953 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| (13,496 | ) |
|
| (75,449 | ) |
Distributions to noncontrolling interests |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (2,692 | ) |
|
| - |
|
|
| - |
|
|
| (2,692 | ) |
Change in value of interest rate swaps |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (27,231 | ) |
|
| - |
|
|
| - |
|
|
| (6,581 | ) |
|
| (33,812 | ) |
Pro rata share of other comprehensive loss of unconsolidated joint ventures |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (18 | ) |
|
| - |
|
|
| - |
|
|
| (1 | ) |
|
| (19 | ) |
Amortization of equity awards |
|
| - |
|
|
| - |
|
|
| 1,605 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 8,019 |
|
|
| 9,624 |
|
Other |
|
| - |
|
|
| - |
|
|
| 18 |
|
|
| 191 |
|
|
| - |
|
|
| 15 |
|
|
| 7 |
|
|
| - |
|
|
| 231 |
|
Balance as of September 30, 2016 |
|
| 219,612 |
|
| $ | 2,196 |
|
| $ | 3,930,549 |
|
| $ | (101,327 | ) |
| $ | (35,092 | ) |
| $ | 244,234 |
|
| $ | 62,790 |
|
| $ | 758,940 |
|
| $ | 4,862,290 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of December 31, 2016 |
|
| 230,015 |
|
| $ | 2,300 |
|
| $ | 4,116,987 |
|
| $ | (129,654 | ) |
| $ | 372 |
|
| $ | 253,788 |
|
| $ | 64,793 |
|
| $ | 577,361 |
|
| $ | 4,885,947 |
|
Net income (loss) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| 93,174 |
|
|
| - |
|
|
| (11,029 | ) |
|
| 20,195 |
|
|
| 12,068 |
|
|
| 114,408 |
|
Common shares issued upon redemption of common units |
|
| 10,001 |
|
|
| 100 |
|
|
| 166,424 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (166,524 | ) |
|
| - |
|
Common shares issued under Omnibus share plan, net of shares withheld for taxes |
|
| 58 |
|
|
| - |
|
|
| - |
|
|
| (154 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (154 | ) |
Dividends and distributions ($0.285 per share and unit) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| (67,425 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| (8,204 | ) |
|
| (75,629 | ) |
Contributions from noncontrolling interests |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 96,472 |
|
|
| 4,305 |
|
|
| - |
|
|
| 100,777 |
|
Distributions to noncontrolling interests |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (41,203 | ) |
|
| (74,346 | ) |
|
| - |
|
|
| (115,549 | ) |
Consolidation of 50 Beale Street |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 110,007 |
|
|
| - |
|
|
| - |
|
|
| 110,007 |
|
Change in value of interest rate swaps |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 600 |
|
|
| - |
|
|
| - |
|
|
| 129 |
|
|
| 729 |
|
Pro rata share of other comprehensive income (loss) of unconsolidated joint ventures |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 42 |
|
|
| - |
|
|
| - |
|
|
| (3 | ) |
|
| 39 |
|
Amortization of equity awards |
|
| - |
|
|
| - |
|
|
| 2,244 |
|
|
| - |
|
|
| - |
|
|
|
|
|
|
| - |
|
|
| 10,882 |
|
|
| 13,126 |
|
Other |
|
| - |
|
|
| - |
|
|
| 610 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 7,845 |
|
|
| 8,455 |
|
Balance as of September 30, 2017 |
|
| 240,074 |
|
| $ | 2,400 |
|
| $ | 4,286,265 |
|
| $ | (104,059 | ) |
| $ | 1,014 |
|
| $ | 408,035 |
|
| $ | 14,947 |
|
| $ | 433,554 |
|
| $ | 5,042,156 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Accumulated |
|
| Noncontrolling Interests in |
|
|
|
| |||||||||||||||
|
|
|
|
|
|
|
| Additional |
|
| Earnings |
|
| Other |
|
| Consolidated |
|
| Consolidated |
|
|
|
|
|
|
| |||||||||
(Amounts in thousands, except per share |
| Common Shares |
|
| Paid-in- |
|
| Less than |
|
| Comprehensive |
|
| Joint |
|
| Real Estate |
|
| Operating |
|
| Total |
| ||||||||||||
and unit amounts) |
| Shares |
|
| Amount |
|
| Capital |
|
| Distributions |
|
| Income (Loss) |
|
| Ventures |
|
| Fund |
|
| Partnership |
|
| Equity |
| |||||||||
Balance as of June 30, 2022 |
|
| 225,625 |
|
| $ | 2,255 |
|
| $ | 4,228,674 |
|
| $ | (570,577 | ) |
| $ | 36,840 |
|
| $ | 412,189 |
|
| $ | 80,557 |
|
| $ | 261,416 |
|
| $ | 4,451,354 |
|
Net (loss) income |
|
| - |
|
|
| - |
|
|
| - |
|
|
| (1,537 | ) |
|
| - |
|
|
| 4,179 |
|
|
| (1,309 | ) |
|
| (109 | ) |
|
| 1,224 |
|
Common shares issued upon redemption of |
|
| 77 |
|
|
| 1 |
|
|
| 1,271 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (1,272 | ) |
|
| - |
|
Common shares issued under Omnibus |
|
| (4 | ) |
|
| - |
|
|
| - |
|
|
| (4 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (4 | ) |
Repurchases of common shares |
|
| (3,237 | ) |
|
| (32 | ) |
|
| (21,281 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (21,313 | ) |
Dividends and distributions ($0.0775 per share |
|
| - |
|
|
| - |
|
|
| - |
|
|
| (17,270 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| (1,294 | ) |
|
| (18,564 | ) |
Distributions to noncontrolling interests |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (8,966 | ) |
|
| - |
|
|
| - |
|
|
| (8,966 | ) |
Change in value of interest rate swaps and |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 9,150 |
|
|
| - |
|
|
| - |
|
|
| 646 |
|
|
| 9,796 |
|
Pro rata share of other comprehensive income |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 5,330 |
|
|
| - |
|
|
| - |
|
|
| 377 |
|
|
| 5,707 |
|
Amortization of equity awards |
|
| - |
|
|
| - |
|
|
| 331 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 3,863 |
|
|
| 4,194 |
|
Reallocation of noncontrolling interest |
|
| - |
|
|
| - |
|
|
| 1,447 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (1,447 | ) |
|
| - |
|
Other |
|
| - |
|
|
| - |
|
|
| - |
|
|
| (235 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (235 | ) |
Balance as of September 30, 2022 |
|
| 222,461 |
|
| $ | 2,224 |
|
| $ | 4,210,442 |
|
| $ | (589,623 | ) |
| $ | 51,320 |
|
| $ | 407,402 |
|
| $ | 79,248 |
|
| $ | 262,180 |
|
| $ | 4,423,193 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Balance as of June 30, 2021 |
|
| 218,962 |
|
| $ | 2,189 |
|
| $ | 4,113,889 |
|
| $ | (507,321 | ) |
| $ | (8,478 | ) |
| $ | 442,428 |
|
| $ | 79,085 |
|
| $ | 358,331 |
|
| $ | 4,480,123 |
|
Net (loss) income |
|
| - |
|
|
| - |
|
|
| - |
|
|
| (2,055 | ) |
|
| - |
|
|
| 3,768 |
|
|
| 3,123 |
|
|
| (204 | ) |
|
| 4,632 |
|
Common shares issued under Omnibus |
|
| (6 | ) |
|
| - |
|
|
| - |
|
|
| (14 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (14 | ) |
Dividends and distributions ($0.07 per share |
|
| - |
|
|
| - |
|
|
| - |
|
|
| (15,327 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| (1,570 | ) |
|
| (16,897 | ) |
Distributions to noncontrolling interests |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (11,054 | ) |
|
| - |
|
|
| - |
|
|
| (11,054 | ) |
Change in value of interest rate swaps and |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 905 |
|
|
| - |
|
|
| - |
|
|
| 90 |
|
|
| 995 |
|
Pro rata share of other comprehensive income |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 843 |
|
|
| - |
|
|
| 1 |
|
|
| 84 |
|
|
| 928 |
|
Amortization of equity awards |
|
| - |
|
|
| - |
|
|
| 305 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 3,928 |
|
|
| 4,233 |
|
Reallocation of noncontrolling interest |
|
| - |
|
|
| - |
|
|
| 3,474 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (3,474 | ) |
|
| - |
|
Other |
|
| - |
|
|
| - |
|
|
| 271 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 271 |
|
Balance as of September 30, 2021 |
|
| 218,956 |
|
| $ | 2,189 |
|
| $ | 4,117,939 |
|
| $ | (524,717 | ) |
| $ | (6,730 | ) |
| $ | 435,142 |
|
| $ | 82,209 |
|
| $ | 357,185 |
|
| $ | 4,463,217 |
|
See notes to consolidated financial statements (unaudited).
PARAMOUNT GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWSCHANGES IN EQUITY
(UNAUDITED)
| For the Nine Months Ended September 30, |
| |||||
(Amounts in thousands) | 2017 |
|
| 2016 |
| ||
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|
|
|
|
Net income | $ | 114,408 |
|
| $ | 4,892 |
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
|
|
|
Depreciation and amortization |
| 198,143 |
|
|
| 208,475 |
|
Amortization of deferred financing costs |
| 8,367 |
|
|
| 4,121 |
|
Gain on sale of real estate |
| (133,989 | ) |
|
| - |
|
Straight-lining of rental income |
| (43,529 | ) |
|
| (67,843 | ) |
Amortization of above and below-market leases, net |
| (14,164 | ) |
|
| (6,593 | ) |
Loss on early extinguishment of debt |
| 7,877 |
|
|
| - |
|
Unrealized gain on interest rate swaps |
| (1,802 | ) |
|
| (29,661 | ) |
Realized and unrealized gains on marketable securities |
| (3,198 | ) |
|
| (341 | ) |
Valuation allowance on preferred equity investment |
| 19,588 |
|
|
| - |
|
Income from unconsolidated joint ventures |
| (19,143 | ) |
|
| (5,291 | ) |
Distributions of earnings from unconsolidated joint ventures |
| 3,380 |
|
|
| 5,824 |
|
Loss from unconsolidated real estate funds |
| 6,053 |
|
|
| 2,540 |
|
Distributions of earnings from unconsolidated real estate funds |
| 275 |
|
|
| 308 |
|
Amortization of stock-based compensation expense |
| 11,692 |
|
|
| 8,766 |
|
Other non-cash adjustments |
| 395 |
|
|
| 1,981 |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
Accounts and other receivables |
| 2,260 |
|
|
| (1,455 | ) |
Deferred charges |
| (25,429 | ) |
|
| (11,266 | ) |
Other assets |
| (18,094 | ) |
|
| (39,338 | ) |
Accounts payable and accrued expenses |
| (10,710 | ) |
|
| (3,335 | ) |
Deferred income taxes |
| (1,499 | ) |
|
| (2,979 | ) |
Other liabilities |
| 4,190 |
|
|
| 1,343 |
|
Net cash provided by operating activities |
| 105,071 |
|
|
| 70,148 |
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
|
|
|
|
Proceeds from sale of real estate |
| 540,333 |
|
|
| - | �� |
Acquisitions of real estate |
| (161,184 | ) |
|
| - |
|
Additions to real estate |
| (59,255 | ) |
|
| (107,445 | ) |
Investments in unconsolidated joint ventures |
| (28,886 | ) |
|
| - |
|
Distributions of capital from unconsolidated joint ventures |
| 20,000 |
|
|
| - |
|
Deposits on real estate |
| - |
|
|
| (50,000 | ) |
Changes in restricted cash |
| (8,224 | ) |
|
| 11,380 |
|
Distributions of capital from unconsolidated real estate funds |
| 13,849 |
|
|
| - |
|
Contributions of capital to unconsolidated real estate funds |
| (790 | ) |
|
| (1,084 | ) |
Net cash provided by (used in) investing activities |
| 315,843 |
|
|
| (147,149 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Accumulated |
|
| Noncontrolling Interests in |
|
|
|
| |||||||||||||||
|
|
|
|
|
|
|
| Additional |
|
| Earnings |
|
| Other |
|
| Consolidated |
|
| Consolidated |
|
|
|
|
|
|
| |||||||||
(Amounts in thousands, except per share |
| Common Shares |
|
| Paid-in- |
|
| Less than |
|
| Comprehensive |
|
| Joint |
|
| Real Estate |
|
| Operating |
|
| Total |
| ||||||||||||
and unit amounts) |
| Shares |
|
| Amount |
|
| Capital |
|
| Distributions |
|
| Income (Loss) |
|
| Ventures |
|
| Fund |
|
| Partnership |
|
| Equity |
| |||||||||
Balance as of December 31, 2021 |
|
| 218,992 |
|
| $ | 2,190 |
|
| $ | 4,122,680 |
|
| $ | (538,845 | ) |
| $ | 2,138 |
|
| $ | 428,833 |
|
| $ | 81,925 |
|
| $ | 356,111 |
|
| $ | 4,455,032 |
|
Net income (loss) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| 1,474 |
|
|
| - |
|
|
| 12,383 |
|
|
| (2,677 | ) |
|
| 204 |
|
|
| 11,384 |
|
Common shares issued upon redemption of |
|
| 6,607 |
|
|
| 66 |
|
|
| 108,418 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (108,484 | ) |
|
| - |
|
Common shares issued under Omnibus |
|
| 99 |
|
|
| - |
|
|
| - |
|
|
| (284 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (284 | ) |
Repurchases of common shares |
|
| (3,237 | ) |
|
| (32 | ) |
|
| (21,281 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (21,313 | ) |
Dividends and distributions ($0.2325 per share |
|
| - |
|
|
| - |
|
|
| - |
|
|
| (51,733 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| (4,395 | ) |
|
| (56,128 | ) |
Distributions to noncontrolling interests |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (33,814 | ) |
|
| - |
|
|
| - |
|
|
| (33,814 | ) |
Change in value of interest rate swaps and |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 31,635 |
|
|
| - |
|
|
| - |
|
|
| 2,815 |
|
|
| 34,450 |
|
Pro rata share of other comprehensive income |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 17,547 |
|
|
| - |
|
|
| - |
|
|
| 1,562 |
|
|
| 19,109 |
|
Amortization of equity awards |
|
| - |
|
|
| - |
|
|
| 970 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 14,022 |
|
|
| 14,992 |
|
Reallocation of noncontrolling interest |
|
| - |
|
|
| - |
|
|
| (345 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 345 |
|
|
| - |
|
Other |
|
| - |
|
|
| - |
|
|
| - |
|
|
| (235 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (235 | ) |
Balance as of September 30, 2022 |
|
| 222,461 |
|
| $ | 2,224 |
|
| $ | 4,210,442 |
|
| $ | (589,623 | ) |
| $ | 51,320 |
|
| $ | 407,402 |
|
| $ | 79,248 |
|
| $ | 262,180 |
|
| $ | 4,423,193 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Balance as of December 31, 2020 |
|
| 218,817 |
|
| $ | 2,188 |
|
| $ | 4,120,173 |
|
| $ | (456,393 | ) |
| $ | (12,791 | ) |
| $ | 437,161 |
|
| $ | 79,017 |
|
| $ | 346,379 |
|
| $ | 4,515,734 |
|
Net (loss) income |
|
| - |
|
|
| - |
|
|
| - |
|
|
| (21,576 | ) |
|
| - |
|
|
| 16,924 |
|
|
| 3,179 |
|
|
| (2,139 | ) |
|
| (3,612 | ) |
Common shares issued upon redemption of |
|
| 10 |
|
|
| - |
|
|
| 165 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (165 | ) |
|
| - |
|
Common shares issued under Omnibus |
|
| 129 |
|
|
| 1 |
|
|
| - |
|
|
| (215 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (214 | ) |
Dividends and distributions ($0.21 per share |
|
| - |
|
|
| - |
|
|
| - |
|
|
| (45,981 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| (4,702 | ) |
|
| (50,683 | ) |
Contributions from noncontrolling interests |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 121 |
|
|
| - |
|
|
| - |
|
|
| 121 |
|
Distributions to noncontrolling interests |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (19,616 | ) |
|
| - |
|
|
| - |
|
|
| (19,616 | ) |
Change in value of interest rate swaps and |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 905 |
|
|
| - |
|
|
| - |
|
|
| 90 |
|
|
| 995 |
|
Pro rata share of other comprehensive income of |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 5,156 |
|
|
| - |
|
|
| 13 |
|
|
| 508 |
|
|
| 5,677 |
|
Amortization of equity awards |
|
| - |
|
|
| - |
|
|
| 916 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 13,628 |
|
|
| 14,544 |
|
Reallocation of noncontrolling interest |
|
| - |
|
|
| - |
|
|
| (3,586 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 3,586 |
|
|
| - |
|
Other |
|
| - |
|
|
| - |
|
|
| 271 |
|
|
| (552 | ) |
|
| - |
|
|
| 552 |
|
|
| - |
|
|
| - |
|
|
| 271 |
|
Balance as of September 30, 2021 |
|
| 218,956 |
|
| $ | 2,189 |
|
| $ | 4,117,939 |
|
| $ | (524,717 | ) |
| $ | (6,730 | ) |
| $ | 435,142 |
|
| $ | 82,209 |
|
| $ | 357,185 |
|
| $ | 4,463,217 |
|
See notes to consolidated financial statements (unaudited).
7
PARAMOUNT GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
(UNAUDITED)
| For the Nine Months Ended September 30, |
| |||||
(Amounts in thousands) | 2017 |
|
| 2016 |
| ||
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
|
|
|
|
Repayments of notes and mortgages payable | $ | (1,044,821 | ) |
| $ | (414,564 | ) |
Proceeds from notes and mortgages payable |
| 991,556 |
|
|
| 509,578 |
|
Repayment of borrowings under revolving credit facility |
| (290,000 | ) |
|
| (80,000 | ) |
Borrowings under revolving credit facility |
| 60,000 |
|
|
| 110,000 |
|
Distributions to noncontrolling interests |
| (115,549 | ) |
|
| (2,692 | ) |
Contributions from noncontrolling interests |
| 100,777 |
|
|
| - |
|
Dividends paid to common stockholders |
| (66,469 | ) |
|
| (61,241 | ) |
Settlement of interest rate swap liabilities |
| (19,425 | ) |
|
| (16,040 | ) |
Loss on early extinguishment of debt |
| (7,877 | ) |
|
| - |
|
Debt issuance costs |
| (7,344 | ) |
|
| (6,532 | ) |
Transfer tax refund in connection with the acquisition of noncontrolling interests |
| 9,555 |
|
|
| - |
|
Distributions paid to common unitholders |
| (9,100 | ) |
|
| (14,124 | ) |
Repurchase of shares related to stock compensation agreements and related tax withholdings |
| (154 | ) |
|
| - |
|
Net cash (used in) provided by financing activities |
| (398,851 | ) |
|
| 24,385 |
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash and cash equivalents |
| 22,063 |
|
|
| (52,616 | ) |
Cash and cash equivalents at beginning of period |
| 162,965 |
|
|
| 143,884 |
|
Decrease in cash due to deconsolidation of real estate fund investments |
| - |
|
|
| (7,987 | ) |
Cash and cash equivalents at end of period | $ | 185,028 |
|
| $ | 83,281 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: |
|
|
|
|
|
|
|
Cash payments for interest | $ | 106,731 |
|
| $ | 106,015 |
|
Cash payments for income taxes, net of refunds |
| 5,042 |
|
|
| 1,524 |
|
|
|
|
|
|
|
|
|
NON-CASH TRANSACTIONS: |
|
|
|
|
|
|
|
Common shares issued upon redemption of common units | $ | 166,524 |
|
| $ | 126,142 |
|
Dividends and distributions declared but not yet paid |
| 25,211 |
|
|
| 25,151 |
|
Write-off of fully amortized and/or depreciated assets |
| 5,958 |
|
|
| 8,475 |
|
Additions to real estate included in accounts payable and accrued expenses |
| 10,986 |
|
|
| 6,609 |
|
Purchases of marketable securities resulting in a decrease to restricted cash |
| 2,278 |
|
|
| 139 |
|
Change in fair value of interest rate swaps |
| (729 | ) |
|
| 33,812 |
|
Consolidation (deconsolidation) of real estate and real estate fund investments |
| 102,512 |
|
|
| (396,697 | ) |
Assumption of notes and mortgages payable |
| 228,000 |
|
|
| - |
|
| For the Nine Months Ended September 30, |
| |||||
(Amounts in thousands) | 2022 |
|
| 2021 |
| ||
Cash Flows from Operating Activities: |
|
|
|
|
| ||
Net income (loss) | $ | 11,384 |
|
| $ | (3,612 | ) |
Adjustments to reconcile net income (loss) to net cash provided by |
|
|
|
|
| ||
Depreciation and amortization |
| 171,306 |
|
|
| 175,752 |
|
Straight-lining of rental revenue |
| (7,808 | ) |
|
| (7,925 | ) |
Amortization of stock-based compensation expense |
| 14,853 |
|
|
| 14,421 |
|
Loss from unconsolidated joint ventures |
| 15,326 |
|
|
| 20,810 |
|
Amortization of deferred financing costs |
| 4,614 |
|
|
| 7,306 |
|
Distributions of earnings from unconsolidated real estate funds |
| 624 |
|
|
| 535 |
|
Distributions of earnings from unconsolidated joint ventures |
| 34 |
|
|
| 3,950 |
|
Amortization of above and below-market leases, net |
| (589 | ) |
|
| (2,335 | ) |
Income from unconsolidated real estate funds |
| (625 | ) |
|
| (604 | ) |
Realized and unrealized gains on marketable securities |
| - |
|
|
| (1,271 | ) |
Other non-cash adjustments |
| 1,084 |
|
|
| 2,330 |
|
Changes in operating assets and liabilities: |
|
|
|
|
| ||
Accounts and other receivables |
| (4,283 | ) |
|
| 6,118 |
|
Deferred charges |
| (12,286 | ) |
|
| (12,664 | ) |
Other assets |
| (21,764 | ) |
|
| (30,014 | ) |
Accounts payable and accrued expenses |
| 4,646 |
|
|
| 12,830 |
|
Other liabilities |
| (2,099 | ) |
|
| 2,433 |
|
Net cash provided by operating activities |
| 174,417 |
|
|
| 188,060 |
|
|
|
|
|
|
| ||
Cash Flows from Investing Activities: |
|
|
|
|
| ||
Additions to real estate |
| (71,284 | ) |
|
| (74,134 | ) |
Due from affiliates |
| (59,000 | ) |
|
| - |
|
Repayment of amounts due from affiliates |
| 59,000 |
|
|
| - |
|
Investments in and contributions of capital to unconsolidated joint ventures |
| (11,252 | ) |
|
| (11,750 | ) |
Contributions of capital to unconsolidated real estate funds |
| (4,642 | ) |
|
| (3,198 | ) |
Distributions of capital from unconsolidated real estate funds |
| 1,506 |
|
|
| 3,959 |
|
Purchases of marketable securities |
| - |
|
|
| (21,562 | ) |
Sales of marketable securities |
| - |
|
|
| 18,305 |
|
Net cash used in investing activities |
| (85,672 | ) |
|
| (88,380 | ) |
See notes to consolidated financial statements (unaudited).
8
PARAMOUNT GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
(UNAUDITED)
| For the Nine Months Ended September 30, |
| |||||
(Amounts in thousands) | 2022 |
|
| 2021 |
| ||
Cash Flows from Financing Activities: |
|
|
|
|
| ||
Dividends paid to common stockholders | $ | (49,793 | ) |
| $ | (45,970 | ) |
Distributions paid to common unitholders |
| (4,666 | ) |
|
| (4,612 | ) |
Distributions to noncontrolling interests |
| (33,814 | ) |
|
| (19,616 | ) |
Contributions from noncontrolling interests |
| - |
|
|
| 121 |
|
Repurchases of common shares |
| (20,000 | ) |
|
| - |
|
Repurchase of shares related to stock compensation agreements |
| (284 | ) |
|
| (214 | ) |
Proceeds from notes and mortgages payable |
| - |
|
|
| 888,566 |
|
Repayment of notes and mortgages payable |
| - |
|
|
| (850,000 | ) |
Debt issuance costs |
| - |
|
|
| (10,593 | ) |
Purchase of interest rate caps |
| - |
|
|
| (140 | ) |
Net cash used in financing activities |
| (108,557 | ) |
|
| (42,458 | ) |
|
|
|
|
|
| ||
Net (decrease) increase in cash and cash equivalents and restricted cash |
| (19,812 | ) |
|
| 57,222 |
|
Cash and cash equivalents and restricted cash at beginning of period |
| 529,666 |
|
|
| 465,324 |
|
Cash and cash equivalents and restricted cash at end of period | $ | 509,854 |
|
| $ | 522,546 |
|
|
|
|
|
|
| ||
|
|
|
|
|
| ||
Reconciliation of Cash and Cash Equivalents and Restricted Cash: |
|
|
|
| |||
Cash and cash equivalents at beginning of period | $ | 524,900 |
|
| $ | 434,530 |
|
Restricted cash at beginning of period |
| 4,766 |
|
|
| 30,794 |
|
Cash and cash equivalents and restricted cash at beginning of period | $ | 529,666 |
|
| $ | 465,324 |
|
|
|
|
|
|
| ||
Cash and cash equivalents at end of period | $ | 469,398 |
|
| $ | 494,569 |
|
Restricted cash at end of period |
| 40,456 |
|
|
| 27,977 |
|
Cash and cash equivalents and restricted cash at end of period | $ | 509,854 |
|
| $ | 522,546 |
|
|
|
|
|
|
| ||
Supplemental Disclosure of Cash Flow Information: |
|
|
|
|
| ||
Cash payments for interest | $ | 102,534 |
|
| $ | 98,917 |
|
Cash payments for income taxes, net of refunds |
| 2,177 |
|
|
| 970 |
|
|
|
|
|
|
| ||
Non-Cash Transactions: |
|
|
|
|
| ||
Common shares issued upon redemption of common units |
| 108,484 |
|
|
| 165 |
|
Change in value of interest rate swaps and interest rate caps |
| 34,450 |
|
|
| 995 |
|
Dividends and distributions declared but not yet paid |
| 18,564 |
|
|
| 16,897 |
|
Write-off of fully amortized and/or depreciated assets |
| 8,736 |
|
|
| 43,232 |
|
Additions to real estate included in accounts payable and accrued expenses |
| 42,052 |
|
|
| 17,842 |
|
Transfer of deposit to investment in unconsolidated joint ventures |
| 6,230 |
|
|
| - |
|
Repurchase of common shares included in accounts payable and accrued expenses |
| 1,313 |
|
|
| - |
|
See notes to consolidated financial statements (unaudited).
9
PARAMOUNT GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
|
As used in these consolidated financial statements, unless otherwise indicated, all references to “we,” “us,” “our,” the “Company,” and “Paramount” refer to Paramount Group, Inc., a Maryland corporation, and its consolidated subsidiaries, including Paramount Group Operating Partnership LP, a Delaware limited partnership (the “Operating Partnership”), a Delaware Limited Partnership.. We are a fully-integrated real estate investment trust (“REIT”) focused on owning, operating, managing, acquiring and redeveloping high-quality, Class A office properties in select central business district submarkets of New York City Washington, D.C. and San Francisco. As of September 30, 2017, our portfolio consisted of 14 Class A office properties aggregating approximately 12.5 million square feet. We conduct our business through, and substantially all of our interests in properties and investments are held by, the Operating Partnership. We are the sole general partner of, and owned approximately 90.6%93.4% of, the Operating Partnership as of September 30, 2017.2022.
As of September 30, 2022, we own and/or manage a portfolio aggregating 14.0 million square feet comprised of:
|
|
Additionally, we have an investment management business, where we serve as the general partner of real estate funds for institutional investors and high net-worth individuals.
Basis of Presentation
The accompanying consolidated financial statements are unaudited and have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and in conjunction with the instructions to Form 10-Q of the Securities and Exchange Commission (“SEC”). Accordingly, certain information and footnote disclosures required by GAAP for complete financial statements have been condensed or omitted. These consolidated financial statements include the accounts of Paramount and its consolidated subsidiaries, including the Operating Partnership. AllIn the opinion of management, all significant inter-company amounts have been eliminated. In our opinion, all adjustments (which include only normal recurring adjustments) and eliminations (which include intercompany balances and transactions) necessary to present fairly the financial position, results of operations and changes in cash flows have been made. CertainThe consolidated balance sheet as of December 31, 2021 was derived from audited financial statements as of that date but does not include all information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted.required by GAAP. These consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q of the Securities and Exchange Commission (“SEC”) and should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2016,2021, as filed with the SEC.
10
PARAMOUNT GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Significant Accounting Policies
There are no material changes to our significant accounting policies as disclosed in our Annual Report on Form 10-K for the year ended December 31, 2021.
Use of Estimates
We have made estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ materially from those estimates. The results of operations for the three and nine months ended September 30, 2017,2022, are not necessarily indicative of the operating results for the full year.
Significant Accounting Policies
There are no material changes to our significant accounting policies as disclosed in our Annual Report on Form 10-K for the year ended December 31, 2016.
Recently Issued Accounting Pronouncements Not Impacting Our Financial Statements
In March 2016,2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-04, which adds Accounting Standards Codification (“ASC”) Topic 848, Reference Rate Reform: Facilitation of the Effects of Reference Rate Reform on Financial Reporting. ASU 2020-04 provides temporary optional expedients and exceptions to ease financial reporting burdens related to applying current GAAP to modifications of contracts, hedging relationships and other transactions in connection with the transition from the London Interbank Offered Rate (“LIBOR”) and other interbank offered rates to alternative reference rates. In January 2021, the FASB issued ASU 2016-09,2021-01 to clarify that certain optional expedients and exceptions apply to modifications of derivative contracts and certain hedging relationships affected by changes in the interest rates used for discounting cash flows, computing variation margin settlements, and for calculating price alignment interest. ASU 2020-04 is effective beginning on March 12, 2020 and may be applied prospectively to such transactions through December 31, 2022 and ASU 2021-01 is effective beginning on January 7, 2021 and may be applied retrospectively or prospectively to such transactions through December 31, 2022. We will apply ASU 2020-04 and ASU 2021-01 prospectively as and when we enter into transactions to which these updates apply.
In August 2020, the FASB issued ASU 2020-06, an update to ASC Topic 718, Compensation – Stock Compensation. 470, Subtopic - 20, Debt - Debt with Conversion and Other Options, and ASC Topic 815, Subtopic - 4, Derivatives and Hedging - Contracts in Entity's Own Equity. ASU 2016-09 improves2020-06 simplifies the guidance for certain financial instruments with characteristics of liability and equity, including convertible instruments and contracts on an entity’s own equity by reducing the number of accounting models for share-based payments including income tax consequencesconvertible instruments and amends guidance in ASC Topic 260, Earnings Per Share, relating to the classificationcomputation of awards as either equity awards or liability awards.earnings per share for convertible instruments and contracts on an entity’s own equity. ASU 2016-092020-06 is effective for interim and annual reporting periods in fiscal years that begin after December 15, 2016,2021, with early adoption permitted. We adopted the provisions of ASU 2016-09 on January 1, 2017. This adoption did not have any impact on our consolidated financial statements.
In June 2016, the FASB issued ASU 2016-13, an update to ASC Topic 326, Financial Instruments – Credit Losses. ASU 2016-13 requires measurement and recognition of expected credit losses on financial instruments measured at amortized cost at the end of each reporting period rather than recognizing the credit losses when it is probable that the loss has been incurred in accordance with current guidance. ASU 2016-13 is effectivepermitted for interim and annual reporting periods in fiscal years that begin after December 15, 2019, with early adoption permitted for fiscal years beginning after December 15, 2018.2020. We are evaluating the impact of ASU 2016-13 but do not believe the adoption will have a material impact on our consolidated financial statements.
9
PARAMOUNT GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
In August 2016, the FASB issued ASU 2016-15, an update to ASC Topic 230, Statement of Cash Flows to provide guidance for areas where there is diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. ASU 2016-15 is effective for interim and annual reporting periods in fiscal years that begin after December 15, 2017, with early adoption permitted. We adopted the provisions of ASU 2016-15 retrospectively2020-06 on January 1, 2017.2022. This adoption did not have a material impact on our consolidated financial statements.
In October 2016, the FASB issued ASU 2016-17, an update to ASC Topic 810, Consolidation. ASU 2016-17 requires a reporting entity to consider only its proportionate indirect interest in the VIE held through a common control party in evaluating whether it is the primary beneficiary of a VIE. Currently, ASU 2015-02 requires the reporting entity to treat the common control party’s interest in the VIE as if the reporting entity held the interest itself. ASU 2016-17 is effective for interim and annual reporting periods in fiscal years that begin after December 15, 2016. We adopted the provisions of ASU 2016-17 on January 1, 2017. This adoption did not have any impact on our consolidated financial statements.
In May 2017, the FASB issued ASU 2017-09, an update to ASC Topic 718, Compensation – Stock Compensation. ASU 2017-09 clarifies the types of changes to the terms and conditions of a share-based payment award that requires modification accounting. ASU 2017-09 does not change the accounting for modification of share-based awards, but clarifies that modification accounting should only be applied if there is a change to the value, vesting condition or award classification and would not be required if the changes are considered non-substantive. ASU 2017-09 is effective for interim and annual reporting periods in fiscal years that begin after December 31, 2017, with early adoption permitted. We will adopt the provisions of ASU 2017-09 on January 1, 2018 and do not believe that the adoption of ASU 2017-09 willnot have an impact on our consolidated financial statements.
In August 2017, the FASB issued ASU 2017-12, an update to ASC Topic 815, Derivatives and Hedging. ASU 2017-12 improves transparency and understandability of information by better aligning the financing reporting for hedging relationships with the risk management activities. ASU 2017-12 also simplifies the application of hedge accounting through changes in both the designation and measurement of qualifying hedging relationships. ASU 2017-12 is effective for interim and annual reporting periods in fiscal years that begin after December 15, 2018, with early adoption permitted. We are evaluating the impact of ASU 2017-12 but do not believe the adoption will have an impact on our consolidated financial statements.
Recently Issued Accounting Pronouncements Potentially Impacting Our Financial Statements
In May 2014, the Financial Accounting Standard’s Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, an update to ASC Topic 606, Revenue from Contracts with Customers. ASU 2014-09, as amended, supersedes nearly all existing revenue recognition guidance under U.S. GAAP. The core principle of this guidance is that an entity should recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. This guidance also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. This guidance is effective for fiscal years beginning after December 15, 2017, and for interim periods within those fiscal years, and can be applied using a full retrospective or modified retrospective approach. We plan to implement ASU 2014-09 on January 1, 2018, using the modified retrospective approach. While we do not believe the adoption of ASU 2014-09 will have a material impact on our consolidated financial statements, it will result in additional disclosures on our consolidated financial statements.
In February 2016, the FASB issued ASU 2016-02, an update to ASC Topic 842, Leases. ASU 2016-02 amends the existing guidance for lease accounting, including requiring lessees to recognize most leases on their balance sheets. ASU 2016-02 requires lessees to apply a dual approach, classifying leases as either financing or operating and recording a right-of-use asset and a lease liability for all leases with a term greater than 12 months. ASU 2016-02 requires lessors to account for leases using an approach that is substantially similar to existing guidance for sales-type leases, direct financing leases and operating leases. ASU 2016-02 is effective for interim and annual reporting periods in fiscal years that begin after December 15, 2018, with early adoption permitted. We plan to adopt the provisions of ASU 2016-02 on January 1, 2019 using the modified retrospective approach. While we believe that the key changes in ASU 2016-02 relate to the separation of and allocation of consideration to, lease component (rental income) and non-lease components (revenue related to various services we provide), we continue to evaluate the other potential implications that this update will have on our consolidated financial statements.
1011
PARAMOUNT GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
In November 2016, the FASB issued ASU 2016-18, an update to ASC Topic 230, Statement of Cash Flows to provide guidance on classification and presentation of changes in restricted cash on the statement of cash flows. ASU 2016-18 requires that an entity’s reconciliation of the beginning-of-period and end-of-period total amounts shown on the statement of cash flows to include restricted cash with cash and cash equivalents. ASU 2016-18 is effective for interim and annual reporting periods in fiscal years that begin after December 15, 2017, with early adoption permitted. We will adopt the provisions of ASU 2016-18 on January 1, 2018. This adoption will impact the presentation of our consolidated statements of cash flows, as well as require additional disclosures to reconcile cash and cash equivalents and restricted cash on our consolidated balance sheets to our consolidated statements of cash flows.
In January 2017, the FASB issued ASU 2017-01, an update to ASC Topic 805, Business Combinations. ASU 2017-01 narrows the definition of a business and provides a framework for making reasonable judgments about whether a transaction involves an asset or a business. ASU 2017-01 clarifies that when substantially all the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the set is not a business. ASU 2017-01 also requires that a set cannot be considered a business unless it includes, at a minimum, an input and a substantive process that together significantly contribute to the ability to create output. ASU 2017-01 is effective for interim and annual reporting periods in fiscal years that begin after December 15, 2017, with early adoption permitted for transactions (i.e., acquisitions or dispositions) that occurred before the issuance date or effective date of the standard if the transactions were not reported in financial statements that have been issued or made available for issuance. We adopted the provisions of ASU 2017-01 on October 1, 2016 and concluded that the acquisition of our One Front Street property in December 2016 and 50 Beale in July 2017 did not meet the definition of a business and therefore were treated as asset acquisitions.
(Amounts in thousands) Purchase price allocation: Land $ 141,097 Building and improvements 343,819 In-place lease intangible assets 27,965 Above-market lease intangible assets 2,976 Accounts receivable and other assets 1,338 Below-market lease intangible liabilities (11,472 ) Accounts payable and other liabilities (6,532 ) Notes and mortgages payable (228,000 ) Net assets acquired $ 271,191 (Amounts in thousands) Land $ 78,300 Building and improvements, net 251,671 Deferred charges 14,512 Deferred rent receivable 2,202 Assets held for sale $ 346,685 The following tables summarize our investments in unconsolidated joint ventures as of (Amounts in thousands) Paramount As of Our Share of Investments: Ownership September 30, 2022 December 31, 2021 712 Fifth Avenue (1) 50.0% $ - $ - Market Center 67.0% 197,050 185,344 55 Second Street (2) 44.1% 85,988 88,284 111 Sutter Street 49.0% 33,012 35,182 1600 Broadway (2)(3) 9.2% 9,369 - 60 Wall Street (2) 5.0% 20,630 19,230 One Steuart Lane (2) 35.0% (4) 79,355 76,428 Oder-Center, Germany (2) 9.5% 3,381 3,628 Investments in unconsolidated joint ventures $ 428,785 $ 408,096 For the Three Months Ended For the Nine Months Ended (Amounts in thousands) September 30, September 30, Our Share of Net Income (Loss): 2022 2021 2022 2021 712 Fifth Avenue (1) $ - $ 431 $ - $ (10,697 ) Market Center (2,811 ) (2,228 ) (7,661 ) (9,272 ) 55 Second Street (2) (825 ) (702 ) (2,296 ) (2,171 ) 111 Sutter Street (748 ) (685 ) (2,207 ) (1,874 ) 1600 Broadway (2)(3) 30 - (38 ) - 60 Wall Street (2) (23 ) 18 42 52 One Steuart Lane (2) (1,516 ) 3,363 (3,303 ) 3,138 Oder-Center, Germany (2) 96 26 137 14 (Loss) income from unconsolidated joint ventures $ (5,797 ) $ 223 $ (15,326 ) $ (20,810 ) (Amounts in thousands) Paramount As of Our Share of Investments: Ownership September 30, 2017 December 31, 2016 712 Fifth Avenue 50.0% $ - (1) $ 2,912 60 Wall Street 5.0% 26,406 - 75 Howard 20.0% (2) 16,077 - Oder-Center, Germany 9.5% 3,531 3,499 Investments in unconsolidated joint ventures $ 46,014 $ 6,411 For the Three Months Ended For the Nine Months Ended (Amounts in thousands) Paramount September 30, September 30, Our Share of Net Income (Loss): Ownership 2017 2016 2017 2016 712 Fifth Avenue 50.0% $ 596 (1) $ 1,772 $ 19,030 (1) $ 5,233 60 Wall Street 5.0% (45 ) - (81 ) - 75 Howard 20.0% (2) 100 - 133 - Oder-Center, Germany 9.5% 20 20 61 58 Income from unconsolidated joint ventures $ 671 $ 1,792 $ 19,143 $ 5,291 PARAMOUNT GROUP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) The following tables provide the combined summarized financial information of (Amounts in thousands) As of Balance Sheets: September 30, 2022 December 31, 2021 Real estate, net $ 2,410,055 $ 2,246,152 Cash and cash equivalents and restricted cash 214,815 216,910 Intangible assets, net 74,927 58,590 For-sale residential condominium units (1) 322,696 359,638 Other assets 85,360 46,646 Total assets $ 3,107,853 $ 2,927,936 Notes and mortgages payable, net $ 1,833,023 $ 1,791,404 Intangible liabilities, net 12,700 18,397 Other liabilities 58,134 61,097 Total liabilities 1,903,857 1,870,898 Equity 1,203,996 1,057,038 Total liabilities and equity $ 3,107,853 $ 2,927,936 For the Three Months Ended For the Nine Months Ended (Amounts in thousands) September 30, September 30, Income Statements: 2022 2021 2022 2021 Revenues: Rental revenue $ 41,145 $ 57,998 $ 153,181 $ 171,721 Other income (2) 15,250 92,360 65,276 93,698 Total revenues 56,395 150,358 218,457 265,419 Expenses: Operating (2) 34,234 102,949 129,035 153,526 Depreciation and amortization 17,734 26,432 68,140 80,899 Total expenses 51,968 129,381 197,175 234,425 Other income (expense): Interest and other income (loss) 471 (27 ) 487 (83 ) Interest and debt expense (13,967 ) (17,503 ) (47,900 ) (45,135 ) (Loss) income before income taxes (9,069 ) 3,447 (26,131 ) (14,224 ) Income tax expense (11 ) (17 ) (54 ) (32 ) Net (loss) income $ (9,080 ) $ 3,430 $ (26,185 ) $ (14,256 ) (Amounts in thousands) As of Balance Sheets: September 30, 2017 December 31, 2016 Real estate, net $ 204,083 $ 207,632 Other assets 56,710 40,701 Total assets $ 260,793 $ 248,333 Notes and mortgages payable, net $ 296,051 $ 245,990 Other liabilities 5,765 8,783 Total liabilities 301,816 254,773 Equity (1) (41,023 ) (6,440 ) Total liabilities and equity $ 260,793 $ 248,333 (Amounts in thousands) For the Three Months Ended September 30, For the Nine Months Ended September 30, Income Statements: 2017 2016 2017 2016 Rental income $ 12,626 $ 12,107 $ 38,284 $ 37,501 Tenant reimbursement income 1,338 1,342 3,855 3,351 Fee and other income 507 418 1,101 1,613 Total revenues 14,471 13,867 43,240 42,465 Operating expenses 6,197 6,081 18,265 17,073 Depreciation and amortization 3,067 3,193 9,062 9,244 Total expenses 9,264 9,274 27,327 26,317 Operating income 5,207 4,593 15,913 16,148 Interest and other income, net 68 16 140 49 Interest and debt expense (2,700 ) (2,787 ) (8,651 ) (8,287 ) Unrealized gain on interest rate swaps - 1,722 1,896 2,556 Net income $ 2,575 $ 3,544 $ 9,298 $ 10,466 PARAMOUNT GROUP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) We While Fund VIII’s investment period has ended, Fund X’s investment period ends in December 2025. As of As of September 30, 2022 and As of (Amounts in thousands) September 30, 2017 December 31, 2016 Our Share of Investments: Property funds $ 2,673 $ 22,811 Alternative investment fund 5,473 5,362 Investments in unconsolidated real estate funds $ 8,146 $ 28,173 For the Three Months Ended For the Nine Months Ended (Amounts in thousands) September 30, September 30, Our Share of Net Loss: 2017 2016 2017 2016 Net investment income (loss) $ 104 $ 170 $ 228 $ (437 ) Net realized loss (839 ) - (665 ) - Net unrealized gain (loss) 202 (361 ) (26 ) (2,939 ) Carried interest (3,397 ) (1,063 ) (5,590 ) 836 Loss from unconsolidated real estate funds (1) $ (3,930 ) $ (1,254 ) $ (6,053 ) $ (2,540 ) (Amounts in thousands) As of September 30, 2017 As of December 31, 2016 Balance Sheets: Fund II Fund III Fund VII Fund II Fund III Fund VII Real estate investments $ 51 $ 15,701 $ 33,259 $ 64,989 $ 39,376 $ 165,556 (1) Cash and cash equivalents 826 2,305 762 1,297 2,221 741 Other assets 115 - 2 127 - - Total assets $ 992 $ 18,006 $ 34,023 $ 66,413 $ 41,597 $ 166,297 Other liabilities $ 45 $ 29 $ 618 $ 60 $ 49 $ 1,483 Total liabilities 45 29 618 60 49 1,483 Equity 947 17,977 33,405 66,353 41,548 164,814 Total liabilities and equity $ 992 $ 18,006 $ 34,023 $ 66,413 $ 41,597 $ 166,297 For the Three Months Ended September 30, (Amounts in thousands) 2017 2016 Income Statements: Fund II Fund III Fund VII Fund II Fund III Fund VII Investment income $ 2 $ 303 $ 479 $ 1,389 $ 480 $ 1,233 Investment expenses 13 54 120 668 55 501 Net investment (loss) income (11 ) 249 359 721 425 732 Net realized losses (5,020 ) (1,735 ) (3,809 ) - - - Net unrealized gains (losses) 5,031 1,607 (4,871 ) (40 ) 177 (4,815 ) Income (loss) from real estate fund investments $ - $ 121 $ (8,321 ) $ 681 $ 602 $ (4,083 ) For the Nine Months Ended September 30, (Amounts in thousands) 2017 2016 Income Statements: Fund II Fund III Fund VII Fund II Fund III Fund VII Investment income $ 3 $ 1,444 $ 1,441 $ 1,391 $ 480 $ 1,233 Investment expenses 291 171 1,156 2,051 193 1,512 Net investment (loss) income (288 ) 1,273 285 (660 ) 287 (279 ) Net realized losses (20,221 ) (6,988 ) (3,875 ) - - - Net unrealized gains (losses) 51 (1,411 ) (9,192 ) (31,918 ) (10,551 ) 7,929 (Loss) income from real estate fund investments $ (20,458 ) $ (7,126 ) $ (12,782 ) $ (32,578 ) $ (10,264 ) $ 7,650 (Amounts in thousands, except square feet) Paramount Dividend Initial As of Preferred Equity Investment Ownership Rate Maturity September 30, 2017 December 31, 2016 470 Vanderbilt Avenue (1) 24.4% 10.3% Feb-2019 $ 35,763 $ 35,613 2 Herald Square (2) 24.4% 10.3% Apr-2017 19,588 19,438 55,351 55,051 Less: valuation allowance (2) (19,588 ) - Preferred equity investments, net $ 35,763 $ 55,051 As of As of (Amounts in thousands) September 30, 2017 December 31, 2016 September 30, 2022 December 31, 2021 Intangible assets: Gross amount $ 562,262 $ 579,066 $ 337,104 $ 371,555 Accumulated amortization (189,209 ) (166,841 ) (239,733 ) (252,142 ) $ 373,053 $ 412,225 $ 97,371 $ 119,413 Intangible liabilities: Gross amount $ 210,016 $ 208,367 $ 138,726 $ 151,118 Accumulated amortization (71,453 ) (55,349 ) (99,689 ) (105,790 ) $ 138,563 $ 153,018 $ 39,037 $ 45,328 For the Three Months Ended For the Nine Months Ended September 30, September 30, (Amounts in thousands) 2022 2021 2022 2021 Amortization of above and below-market leases, net $ (84 ) $ 722 $ 589 $ 2,335 Amortization of acquired in-place leases 5,401 6,413 16,344 20,183 The following table sets forth amortization of acquired above and below-market leases, net (Amounts in thousands) 2018 $ 16,281 2019 14,355 2020 8,750 2021 4,491 2022 1,091 (Amounts in thousands) 2018 $ 60,896 2019 54,639 2020 42,316 2021 30,123 2022 24,009 (Amounts in thousands) Above and In-Place Leases 2023 $ 5,151 $ 17,705 2024 6,091 14,248 2025 4,745 10,451 2026 2,872 7,896 2027 2,560 7,252 PARAMOUNT GROUP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) Interest Rate Maturity Fixed/ as of As of (Amounts in thousands) Date Variable Rate September 30, 2022 September 30, 2022 December 31, 2021 Notes and mortgages payable: 1633 Broadway (1) Dec-2029 Fixed 2.99 % $ 1,250,000 $ 1,250,000 One Market Plaza (1) Feb-2024 Fixed 4.03 % 975,000 975,000 1301 Avenue of the Americas Aug-2026 Fixed (2) 2.46 % 500,000 500,000 Aug-2026 L + 356 bps (3) 5.56 % 360,000 360,000 3.76 % 860,000 860,000 31 West 52nd Street Jun-2026 Fixed 3.80 % 500,000 500,000 300 Mission Street (1) Oct-2023 Fixed 3.65 % 273,000 273,000 Total notes and mortgages payable 3.58 % 3,858,000 3,858,000 Less: unamortized deferred financing costs (18,856 ) (22,380 ) Total notes and mortgages payable, net $ 3,839,144 $ 3,835,620 $750 Million Revolving Mar-2026 SOFR + 115 bps n/a $ - $ - 15 PARAMOUNT GROUP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) We have entered into interest rate swap agreements with an aggregate notional amount of $500,000,000 to fix LIBOR at 0.46% through August 2024. We also entered into interest rate cap agreements with an aggregate notional amount of $360,000,000 to cap LIBOR at 2.00% through August 2023. These interest rate swaps and interest rate caps are designated as cash flow hedges and therefore changes in Maturity Fixed/ Interest Rate as of As of (Amounts in thousands) Date Variable Rate September 30, 2017 September 30, 2017 December 31, 2016 Notes and mortgages payable: 1633 Broadway Dec-2022 Fixed (1) 3.54 % $ 1,000,000 $ 1,000,000 Dec-2022 L + 175 bps 3.00 % 30,100 (2) 13,544 (2) 3.52 % 1,030,100 1,013,544 One Market Plaza (49.0% interest) Feb-2024 Fixed 4.03 % 975,000 860,546 n/a n/a n/a - 12,414 4.03 % 975,000 872,960 1301 Avenue of the Americas Nov-2021 Fixed 3.05 % 500,000 500,000 Nov-2021 L + 180 bps 3.05 % 350,000 350,000 3.05 % 850,000 850,000 31 West 52nd Street May-2026 Fixed 3.80 % 500,000 500,000 50 Beale (31.1% interest) (3) Oct-2021 Fixed 3.65 % 228,000 - 1899 Pennsylvania Avenue (4) n/a n/a n/a - 87,675 Liberty Place (4) n/a n/a n/a - 84,000 Total notes and mortgages payable 3.60 % 3,583,100 3,408,179 Less: deferred financing costs (44,029 ) (43,281 ) Total notes and mortgages payable, net $ 3,539,071 $ 3,364,898 Revolving Credit Facility Nov-2018 L + 125 bps n/a $ - $ 230,000 Notional Effective Maturity Benchmark Strike Fair Value as of Property Amount Date Date Rate Rate September 30, 2022 December 31, 2021 (Amounts in thousands) 1301 Avenue of the Americas $ 500,000 Jul-2021 Aug-2024 LIBOR 0.46 % $ 34,449 $ 6,691 Total interest rate swap assets designated as cash flow hedges (included in "other assets") $ 34,449 $ 6,691 Notional Effective Maturity Benchmark Strike Fair Value as of Property Amount Date Date Rate Rate September 30, 2022 December 31, 2021 (Amounts in thousands) 1301 Avenue of the Americas $ 360,000 Jul-2021 Aug-2023 LIBOR 2.00 % $ 6,987 $ 306 Total interest rate cap assets designated as cash flow hedges (included in "other assets") $ 6,987 $ 306 We have agreements with various derivative counterparties that contain provisions wherein a default on our indebtedness could be deemed a default on our derivative obligations, which would require us to Stock Repurchase Program On November 5, 2019, we received authorization from our Board of Notional Strike Fair Value as of Property Amount Effective Date Maturity Date Rate September 30, 2017 (Amounts in thousands) 1633 Broadway $ 400,000 Dec-2015 Dec-2020 1.65 % $ 1,233 1633 Broadway 300,000 Dec-2015 Dec-2021 1.82 % 142 Total interest rate swap assets designated as cash flow hedges (included in "other assets") $ 1,375 1633 Broadway $ 400,000 Dec-2020 Dec-2021 2.35 % $ 921 1633 Broadway 300,000 Dec-2015 Dec-2022 1.95 % 805 Total interest rate swap liabilities designated as cash flow hedges (included in "other liabilities") $ 1,726 Notional Strike Fair Value as of Property Amount Effective Date Maturity Date Rate December 31, 2016 (Amounts in thousands) 1633 Broadway $ 400,000 Dec-2020 Dec-2021 2.35 % $ 139 Total interest rate swap assets designated as cash flow hedges (included in "other assets") $ 139 1633 Broadway $ 300,000 Dec-2015 Dec-2022 1.95 % $ 828 1633 Broadway 300,000 Dec-2015 Dec-2021 1.82 % 379 1633 Broadway 400,000 Dec-2015 Dec-2020 1.65 % 12 Total interest rate swap liabilities designated as cash flow hedges (included in "other liabilities") $ 1,219 PARAMOUNT GROUP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) The following table sets forth changes in accumulated other comprehensive income by component for the three and nine months ended September 30, For the Three Months Ended For the Nine Months Ended September 30, September 30, (Amounts in thousands) 2022 2021 2022 2021 Amount of income related to the cash flow hedges recognized $ 12,134 $ 671 $ 36,786 $ 671 Amounts reclassified from accumulated other comprehensive (2,338 ) 324 (2,336 ) 324 Amount of income (loss) related to unconsolidated joint ventures 6,150 (88 ) 18,046 2,693 Amounts reclassified from accumulated other comprehensive income (443 ) 1,016 1,063 2,984 For the Three Months Ended For the Nine Months Ended September 30, September 30, (Amounts in thousands) 2017 2016 2017 2016 Amount of (loss) income related to the effective portion of cash flow hedges recognized in other comprehensive income (1) $ (630 ) $ 3,727 $ (4,669 ) $ (35,554 ) Amounts reclassified from accumulated other comprehensive income into interest expense (1) 1,297 2,747 5,269 8,323 Amount of income (loss) related to unconsolidated joint ventures recognized in other comprehensive income (1) (2) 204 (68 ) 42 (18 ) Amount of gain (loss) related to the ineffective portion of cash flow hedges and amount excluded from effectiveness testing - - - - Consolidated Joint Ventures Noncontrolling interests in consolidated joint ventures consist of equity interests held by third parties in 1633 Broadway, One Market Plaza Consolidated Real Estate Fund Noncontrolling interests in our consolidated real estate fund consists of equity interests held by third parties in Operating Partnership Noncontrolling interests in the Operating Partnership represent common units of the Operating Partnership that are held by third parties, including management, and units issued to management under equity incentive plans. Common units of the Operating Partnership may be tendered for redemption to the Operating Partnership for cash. We, at our option, may assume that obligation and pay the holder either cash or common shares on a one-for-one basis. Since the number of common shares outstanding is equal to the number of common units owned by us, the redemption value of each common unit is equal to the market value of each common share and distributions paid to each common unitholder is equivalent to dividends paid to common stockholders. As of September 30, PARAMOUNT GROUP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) In the normal course of business, we are the general partner of various types of investment vehicles, which may be considered VIEs. We may, from time to time, own equity or debt securities through vehicles, each of which are considered variable interests. Our involvement in financing the operations of the VIEs is generally limited to our investments in the entity. We consolidate these entities when we are Consolidated VIEs We are the sole general partner of, and As of As of (Amounts in thousands) September 30, 2017 December 31, 2016 September 30, 2022 December 31, 2021 Real estate, net $ 1,733,361 $ 1,336,810 $ 3,375,154 $ 3,415,735 Cash and restricted cash 60,725 17,054 Investments in unconsolidated joint venture 16,077 - Preferred equity investments 35,763 55,051 Cash and cash equivalents and restricted cash 151,870 198,154 Investments in unconsolidated joint ventures 79,355 76,428 Accounts and other receivables 2,208 5,966 12,502 6,801 Deferred rent receivable 42,533 32,103 194,540 197,794 Deferred charges, net 7,569 695 51,063 53,013 Intangible assets, net 71,316 52,139 53,275 62,380 Other assets 597 14,474 22,494 15,551 Total VIE assets $ 1,970,149 $ 1,514,292 $ 3,940,253 $ 4,025,856 Notes and mortgages payable, net $ 1,196,348 $ 872,960 $ 2,489,395 $ 2,487,871 Accounts payable and other accrued expenses 26,095 21,077 Accounts payable and accrued expenses 66,663 54,738 Intangible liabilities, net 50,289 48,654 23,942 27,674 Other liabilities 175 27,782 5,416 6,427 Total VIE liabilities $ 1,272,907 $ 970,473 $ 2,585,416 $ 2,576,710 Unconsolidated VIEs As of September 30, As of September 30, 2017 Asset Management Fees Maximum As of (Amounts in thousands) Investments and Other Receivables Risk of Loss September 30, 2022 December 31, 2021 Unconsolidated real estate funds $ 8,146 $ 617 $ 8,763 Investments $ 14,558 $ 11,421 Asset management fees and other receivables 11 9 Maximum risk of loss $ 14,569 $ 11,430 PARAMOUNT GROUP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) Financial Assets Measured at Fair Value The As of September 30, 2017 As of September 30, 2022 (Amounts in thousands) Total Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Marketable securities $ 27,867 $ 27,867 $ - $ - Interest rate swap assets (included in "other assets") 1,375 - 1,375 - $ 34,449 $ - $ 34,449 $ - Interest rate cap assets (included in "other assets") 6,987 - 6,987 - Total assets $ 29,242 $ 27,867 $ 1,375 $ - $ 41,436 $ - $ 41,436 $ - Interest rate swap liabilities (included in "other liabilities") $ 1,726 $ - $ 1,726 $ - Total liabilities $ 1,726 $ - $ 1,726 $ - As of December 31, 2021 (Amounts in thousands) Total Level 1 Level 2 Level 3 Interest rate swap assets (included in "other assets") $ 6,691 $ - $ 6,691 $ - Interest rate cap assets (included in "other assets") 306 - 306 - Total assets $ 6,997 $ - $ 6,997 $ - As of December 31, 2016 (Amounts in thousands) Total Level 1 Level 2 Level 3 Marketable securities $ 22,393 $ 22,393 $ - $ - Interest rate swap assets (included in "other assets") 139 - 139 - Total assets $ 22,532 $ 22,393 $ 139 $ - Interest rate swap liabilities (included in "other liabilities") $ 22,446 $ - $ 22,446 $ - Total liabilities $ 22,446 $ - $ 22,446 $ - Financial Financial The following As of September 30, 2022 As of December 31, 2021 (Amounts in thousands) Carrying Fair Carrying Fair Notes and mortgages payable $ 3,858,000 $ 3,544,332 $ 3,858,000 $ 3,893,252 Revolving credit facility - - - - Total liabilities $ 3,858,000 $ 3,544,332 $ 3,858,000 $ 3,893,252 19 PARAMOUNT GROUP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) We lease office, retail and storage space to tenants, primarily under non-cancellable operating leases which generally have terms ranging from five to fifteen years. Most of our leases provide tenants with extension options at either fixed or market rates and few of our leases provide tenants with options to early terminate, but such options generally impose an economic penalty on the tenant upon exercising. Rental revenue is recognized in accordance with ASC Topic 842, Leases, and includes (i) fixed payments of cash rents, which represents revenue each tenant pays in accordance with the terms of its respective lease and that is recognized on a straight-line basis over the non-cancellable term of the lease, and includes the effects of rent steps and rent abatements under the leases, (ii) variable payments of tenant reimbursements, which are recoveries of all or a portion of the operating expenses and real estate taxes of the property and is recognized in the same period as the expenses are incurred, (iii) amortization of acquired above and below-market leases, net and (iv) lease termination income. The following table sets forth the details of our rental revenue. For the Three Months Ended September 30, For the Nine Months Ended September 30, (Amounts in thousands) 2022 2021 2022 2021 Rental revenue: Fixed $ 162,444 $ 158,400 $ 480,766 $ 478,670 Variable 16,806 12,451 45,649 39,955 (1) Total rental revenue $ 179,250 $ 170,851 $ 526,415 $ 518,625 The following table is a schedule of future undiscounted cash flows under non-cancellable operating leases in effect as of September 30, As of September 30, 2017 As of December 31, 2016 (Amounts in thousands) Carrying Amount Fair Value Carrying Amount Fair Value Preferred equity investments $ 35,763 $ 36,048 $ 55,051 $ 55,300 Total assets $ 35,763 $ 36,048 $ 55,051 $ 55,300 As of September 30, 2017 As of December 31, 2016 (Amounts in thousands) Carrying Amount Fair Value Carrying Amount Fair Value Notes and mortgages payable $ 3,583,100 $ 3,575,843 $ 3,408,179 $ 3,371,262 Revolving credit facility - - 230,000 230,018 Total liabilities $ 3,583,100 $ 3,575,843 $ 3,638,179 $ 3,601,280 (Amounts in thousands) 2022 $ 160,622 2023 631,729 2024 644,393 2025 599,023 2026 503,600 2027 438,968 Thereafter 2,242,109 Total $ 5,220,444 20 PARAMOUNT GROUP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) The following table sets forth the details of our fee and other income. For the Three Months Ended September 30, For the Nine Months Ended September 30, (Amounts in thousands) 2022 2021 2022 2021 Fee income: Asset management $ 3,166 $ 3,280 $ 9,138 $ 10,175 Property management 1,849 2,176 6,171 6,457 Acquisition, disposition, leasing and other 117 1,105 7,785 2,800 Total fee income 5,132 6,561 23,094 19,432 Other income (1) 2,765 1,719 6,840 4,509 Total fee and other income $ 7,897 $ 8,280 $ 29,934 $ 23,941 For the Three Months Ended September 30, For the Nine Months Ended September 30, (Amounts in thousands) 2017 2016 2017 2016 Fee income Property management $ 1,673 $ 1,404 $ 4,815 $ 4,464 Asset management 1,997 2,003 6,622 5,500 Acquisition and disposition 1,475 187 7,045 777 Other 689 382 1,356 827 Total fee income 5,834 3,976 19,838 11,568 Lease termination income 954 3,460 1,915 14,508 (1) Other income (2) 2,545 2,885 8,235 11,910 Total fee and other income $ 9,333 $ 10,321 $ 29,988 $ 37,986 The following table sets forth the details of interest and other For the Three Months Ended September 30, For the Nine Months Ended September 30, (Amounts in thousands) 2022 2021 2022 2021 Interest income, net $ 1,580 $ 221 $ 2,607 $ 1,008 Mark-to-market of investments in our - (83 ) - 1,502 Total interest and other income, net $ 1,580 $ 138 $ 2,607 $ 2,510 For the Three Months Ended September 30, For the Nine Months Ended September 30, (Amounts in thousands) 2017 2016 2017 2016 Valuation allowance on preferred equity investment (1) $ (19,588 ) $ - $ (19,588 ) $ - Preferred equity investment income (2) 961 1,460 3,327 4,299 Interest and other income 147 103 743 533 Mark-to-market of investments in our deferred compensation plans (3) 812 736 3,536 197 Total interest and other (loss) income, net $ (17,668 ) $ 2,299 $ (11,982 ) $ 5,029 The following table sets forth the details of interest and debt expense. For the Three Months Ended September 30, For the Nine Months Ended September 30, (Amounts in thousands) 2022 2021 2022 2021 Interest expense $ 35,412 $ 33,600 $ 102,190 $ 98,613 Amortization of deferred financing costs 1,537 2,666 (1) 4,614 7,306 (1) Total interest and debt expense $ 36,949 $ 36,266 $ 106,804 $ 105,919 For the Three Months Ended September 30, For the Nine Months Ended September 30, (Amounts in thousands) 2017 2016 2017 2016 Interest expense $ 32,914 $ 36,820 $ 99,201 $ 109,285 Amortization of deferred financing costs 2,819 1,458 8,367 4,121 Total interest and debt expense $ 35,733 $ 38,278 $ 107,568 $ 113,406 PARAMOUNT GROUP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) Stock-Based Compensation Our Amended and Restated 2014 Equity Incentive Plan provides for grants of equity awards to our executive officers, non-employee directors and employees in order to attract and motivate talent for which we compete. In addition, equity awards are an effective management retention tool as they vest over multiple years based on continued employment. Equity awards are granted in the form of (i) restricted stock and (ii) long-term incentive plan (“LTIP”) units, which represent a class of partnership interests in our Operating Partnership and are typically comprised of performance-based LTIP units, time-based LTIP units and time-based appreciation only LTIP (“AOLTIP”) units. We account for all stock-based compensation in accordance with ASC 2022 Equity Grants 2022 Performance-Based Awards Program (“2022 Performance On January Time-Based Unit Awards Program (LTIP Units, AOLTIP Units and Restricted Stock) Completion of the 2019 Performance-Based Awards Program (“2019 Performance Program”) On December 31, 2021, the performance measurement period for the 2019 Performance Program ended. On January 13, 2022, the Compensation Committee determined that the performance goals set forth in the 2019 Performance Program were not met. Accordingly, all of the LTIP units that were granted on January 14, 2019, were forfeited, with no awards being earned. These awards had a grant date fair value of $8,106,000 and a remaining unrecognized compensation cost of $238,000 as of September 30, 2022, which will be amortized over a weighted-average period of 0.25 years. 22 PARAMOUNT GROUP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) The following table For the Three Months Ended For the Nine Months Ended For the Three Months Ended For the Nine Months Ended September 30, September 30, September 30, September 30, (Amounts in thousands, except per share amounts) 2017 2016 2017 2016 2022 2021 2022 2021 Numerator: Net (loss) income attributable to common stockholders $ (10,214 ) $ (139 ) $ 93,174 $ (3,445 ) $ (1,537 ) $ (2,055 ) $ 1,474 $ (21,576 ) Earnings allocated to unvested participating securities (13 ) (9 ) (86 ) (28 ) (21 ) (17 ) (64 ) (54 ) Numerator for (loss) income per common share - basic and diluted $ (10,227 ) $ (148 ) $ 93,088 $ (3,473 ) $ (1,558 ) $ (2,072 ) $ 1,410 $ (21,630 ) Denominator: Denominator for basic (loss) income per common share - weighted average shares 239,446 219,394 235,151 216,318 Effect of dilutive employee stock options and restricted share awards (1) - - 27 - Denominator for diluted (loss) income per common share - weighted average shares 239,446 219,394 235,178 216,318 Denominator for basic loss per common share - 224,865 218,706 222,229 218,690 Effect of dilutive stock-based compensation plans (1) - - 34 - Denominator for diluted loss per common share - 224,865 218,706 222,263 218,690 (Loss) income per common share - basic and diluted $ (0.04 ) $ (0.00 ) $ 0.40 $ (0.02 ) $ (0.01 ) $ (0.01 ) $ 0.01 $ (0.10 ) 23 PARAMOUNT GROUP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) Management Agreements We provide property management, leasing and other related services to certain properties owned by members of the Otto Family. We recognized We also provide Hamburg Trust Consulting We have an agreement with HTC, a licensed broker in Germany, to supervise selling efforts for our joint ventures and private equity real estate funds (or investments in feeder vehicles for these funds) to investors in Germany, including distribution of securitized notes of Mannheim Trust A subsidiary of Mannheim Trust leases office space at 712 Fifth Avenue, our 50.0% owned unconsolidated joint venture, pursuant to a lease agreement which expires in April 2023. Dr. Martin Bussmann (a member of our Board of Directors) is also a trustee and a director of Mannheim PARAMOUNT GROUP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) Insurance We carry commercial general liability coverage on our properties, with limits of liability customary within the industry. Similarly, we are insured against the risk of direct and indirect physical damage to our properties including coverage for the perils such as floods, earthquakes and windstorms. Our policies also cover the loss of rental income during an estimated reconstruction period. Our policies reflect limits and deductibles customary in the industry and specific to the buildings and portfolio. We also obtain title insurance policies when acquiring new properties. We currently have coverage for losses incurred in connection with both domestic and foreign terrorist-related activities. While we do carry commercial general liability insurance, property insurance and terrorism insurance with respect to our properties, these policies include limits and terms we consider commercially reasonable. In addition, there are certain losses (including, but not limited to, losses arising from known environmental conditions or acts of war) that are not insured, in full or in part, because they are either uninsurable or the cost of insurance makes it, in our belief, economically impractical to maintain such coverage. Should an uninsured loss arise against us, we would be required to use our own funds to resolve the issue, including litigation costs. We believe the policy specifications and insured limits are adequate given the relative risk of loss, the cost of the coverage and industry practice and, in consultation with our insurance advisors, we believe the properties in our portfolio are adequately insured. Other Commitments and Contingencies We are a party to various claims and routine litigation arising in the ordinary course of business. Some of these claims or others to which we may be subject from time to time, including claims arising specifically from the formation transactions, in connection with our initial public offering, may result in defense costs, settlements, fines or judgments against us, some of which are not, or cannot be, covered by insurance. Payment of any such costs, settlements, fines or judgments that are not insured could have an adverse impact on our financial position and results of operations. Should any litigation arise in connection with the formation transactions, we would contest it vigorously. In addition, certain litigation or the resolution of certain litigation may affect the availability or cost of some of our insurance coverage, which could adversely impact our results of operations and cash flow, expose us to increased risks that would be uninsured, and/or adversely impact our ability to attract officers and directors. The terms of our mortgage debt PARAMOUNT GROUP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) Our reportable segments are separated by region, based on the The following tables provide For the Three Months Ended September 30, 2022 (Amounts in thousands) Total New York San Francisco Other Property-related revenues $ 182,015 $ 117,431 $ 64,667 $ (83 ) Property-related operating expenses (72,845 ) (52,421 ) (19,496 ) (928 ) NOI from unconsolidated joint ventures 11,540 3,556 7,837 147 NOI (1) $ 120,710 $ 68,566 $ 53,008 $ (864 ) For the Three Months Ended September 30, 2021 (Amounts in thousands) Total New York San Francisco Other Property-related revenues $ 172,570 $ 109,842 $ 63,527 $ (799 ) Property-related operating expenses (67,131 ) (47,545 ) (18,646 ) (940 ) NOI from unconsolidated joint ventures 11,627 2,875 8,665 87 NOI (1) $ 117,066 $ 65,172 $ 53,546 $ (1,652 ) For the Nine Months Ended September 30, 2022 (Amounts in thousands) Total New York San Francisco Other Property-related revenues $ 533,255 $ 349,136 $ 185,798 $ (1,679 ) Property-related operating expenses (207,320 ) (148,779 ) (55,369 ) (3,172 ) NOI from unconsolidated joint ventures 34,359 9,902 24,162 295 NOI (1) $ 360,294 $ 210,259 $ 154,591 $ (4,556 ) For the Nine Months Ended September 30, 2021 (Amounts in thousands) Total New York San Francisco Other Property-related revenues $ 523,134 $ 329,870 $ 195,673 $ (2,409 ) Property-related operating expenses (197,821 ) (142,370 ) (52,651 ) (2,800 ) NOI from unconsolidated joint ventures 32,510 8,445 24,054 11 NOI (1) $ 357,823 $ 195,945 $ 167,076 $ (5,198 ) For the Three Months Ended September 30, 2017 (Amounts in thousands) Total New York Washington, D.C. San Francisco Other Property-related revenues $ 173,936 $ 109,493 $ 14,986 $ 49,758 $ (301 ) Property-related operating expenses (68,264 ) (46,609 ) (5,887 ) (14,164 ) (1,604 ) NOI from unconsolidated joint ventures 4,993 4,815 - - 178 NOI (1) $ 110,665 $ 67,699 $ 9,099 $ 35,594 $ (1,727 ) For the Three Months Ended September 30, 2016 (Amounts in thousands) Total New York Washington, D.C. San Francisco Other Property-related revenues $ 167,342 $ 113,029 $ 22,229 $ 31,441 $ 643 Property-related operating expenses (64,025 ) (45,748 ) (8,322 ) (7,994 ) (1,961 ) NOI from unconsolidated joint ventures 3,974 3,893 - - 81 NOI (1) $ 107,291 $ 71,174 $ 13,907 $ 23,447 $ (1,237 ) For the Nine Months Ended September 30, 2017 (Amounts in thousands) Total New York Washington, D.C. San Francisco Other Property-related revenues $ 518,872 $ 321,419 $ 56,911 $ 139,898 $ 644 Property-related operating expenses (197,696 ) (134,657 ) (21,376 ) (35,889 ) (5,774 ) NOI from unconsolidated joint ventures 14,774 14,406 - - 368 NOI (1) $ 335,950 $ 201,168 $ 35,535 $ 104,009 $ (4,762 ) For the Nine Months Ended September 30, 2016 (Amounts in thousands) Total New York Washington, D.C. San Francisco Other Property-related revenues $ 504,971 $ 346,683 $ 63,689 $ 92,762 $ 1,837 Property-related operating expenses (186,964 ) (132,428 ) (24,691 ) (22,426 ) (7,419 ) NOI from unconsolidated joint ventures 12,938 12,696 - - 242 NOI (1) $ 330,945 $ 226,951 $ 38,998 $ 70,336 $ (5,340 ) PARAMOUNT GROUP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) The following table provides a reconciliation of NOI to net (loss) income attributable to common stockholders for the For the Three Months Ended For the Nine Months Ended September 30, September 30, (Amounts in thousands) 2022 2021 2022 2021 NOI $ 120,710 $ 117,066 $ 360,294 $ 357,823 Add (subtract) adjustments to arrive to net income: Fee income 5,132 6,561 23,094 19,432 Depreciation and amortization expense (58,284 ) (57,522 ) (171,306 ) (175,752 ) General and administrative expenses (13,150 ) (13,257 ) (45,501 ) (46,039 ) NOI from unconsolidated joint ventures (excluding (11,540 ) (11,627 ) (34,359 ) (32,510 ) (Loss) income from unconsolidated joint ventures (5,797 ) 223 (15,326 ) (20,810 ) Interest and other income, net 1,580 138 2,607 2,510 Interest and debt expense (36,949 ) (36,266 ) (106,804 ) (105,919 ) Other, net 195 189 244 101 Income (loss) before income taxes 1,897 5,505 12,943 (1,164 ) Income tax expense (673 ) (873 ) (1,559 ) (2,448 ) Net income (loss) 1,224 4,632 11,384 (3,612 ) Less net (income) loss attributable to noncontrolling interests in: Consolidated joint ventures (4,179 ) (3,768 ) (12,383 ) (16,924 ) Consolidated real estate fund 1,309 (3,123 ) 2,677 (3,179 ) Operating Partnership 109 204 (204 ) 2,139 Net (loss) income attributable to common stockholders $ (1,537 ) $ (2,055 ) $ 1,474 $ (21,576 ) For the Three Months Ended For the Nine Months Ended September 30, September 30, (Amounts in thousands) 2017 2016 2017 2016 NOI $ 110,665 $ 107,291 $ 335,950 $ 330,945 Add (subtract) adjustments to arrive to net (loss) income: Fee income 5,834 3,976 19,838 11,568 Depreciation and amortization expense (66,515 ) (66,376 ) (198,143 ) (208,475 ) General and administrative expenses (14,470 ) (13,235 ) (44,624 ) (39,335 ) Transaction related costs (274 ) (282 ) (1,051 ) (1,725 ) NOI from unconsolidated joint ventures (4,993 ) (3,974 ) (14,774 ) (12,938 ) Income from unconsolidated joint ventures 671 1,792 19,143 5,291 Loss from unconsolidated real estate funds (3,930 ) (1,254 ) (6,053 ) (2,540 ) Interest and other (loss) income, net (17,668 ) 2,299 (11,982 ) 5,029 Interest and debt expense (35,733 ) (38,278 ) (107,568 ) (113,406 ) Loss on early extinguishment of debt - - (7,877 ) - Gain on sale of real estate - - 133,989 - Unrealized gain on interest rate swaps - 12,728 1,802 29,661 Net (loss) income before income taxes (26,413 ) 4,687 118,650 4,075 Income tax benefit (expense) 1,010 (218 ) (4,242 ) 817 Net (loss) income (25,403 ) 4,469 114,408 4,892 Less: net (income) loss attributable to noncontrolling interests in: Consolidated joint ventures 14,217 (4,703 ) 11,029 (10,062 ) Consolidated real estate fund (114 ) 67 (20,195 ) 819 Operating Partnership 1,086 28 (12,068 ) 906 Net (loss) income attributable to common stockholders $ (10,214 ) $ (139 ) $ 93,174 $ (3,445 ) The following table provides the (Amounts in thousands) As of September 30, 2017 Balance Sheet Data: Total New York Washington, D.C. San Francisco Other Total assets $ 8,924,008 $ 5,557,850 $ 701,624 $ 2,438,720 $ 225,814 Total liabilities 3,881,852 2,445,559 26,829 1,289,218 120,246 Total equity 5,042,156 3,112,291 674,795 1,149,502 105,568 (Amounts in thousands) Total Assets as of: Total New York San Francisco Other September 30, 2022 $ 8,496,480 $ 5,346,628 $ 2,684,864 $ 464,988 December 31, 2021 8,494,562 5,336,210 2,696,131 462,221 27 ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion of our financial condition and results of operations should be read in conjunction with our consolidated financial statements, including the related notes included therein. Forward-Looking Statements We make statements in this Quarterly Report on Form 10-Q that are considered “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, which are usually identified by the use of words such as “anticipates,” “believes,” “estimates,” “expects,” “intends,” “may,” “plans,” “projects,” “seeks,” “should,” “will,” and variations of such words or similar expressions. We intend these forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and are including this statement for purposes of complying with those safe harbor provisions. These forward-looking statements reflect our current views about our plans, intentions, expectations, strategies and prospects, which are based on the information currently available to us and on assumptions we have made. Although we believe that our plans, intentions, expectations, strategies and prospects as reflected in or suggested by those forward-looking statements are reasonable, we can give no assurance that the plans, intentions, expectations or strategies will be attained or achieved. Furthermore, actual results may differ materially from those described in the forward-looking statements and will be affected by a variety of risks and factors that are beyond our control including, without limitation: the negative impact of the coronavirus 2019 (“COVID-19”) global pandemic on the U.S., regional and global economies and our tenants’ financial condition and results of operations; risks associated with risks associated with ownership of real estate; decreased rental rates or increased vacancy rates; the risk we may lose a major tenant; trends in the office real estate industry including telecommuting, flexible work schedules, open workplaces and teleconferencing; intense competition in the real estate market that may limit our ability to acquire attractive investment opportunities and increase the costs of those opportunities; insufficient amounts of insurance; uncertainties and risks related to adverse weather conditions, natural disasters and climate change; risks associated with actual or threatened terrorist attacks; exposure to liability relating to environmental and health and safety matters; high costs associated with compliance with the Americans with Disabilities Act; failure of acquisitions to yield anticipated results; risks associated with real estate activity through our joint ventures and private equity real estate funds; general volatility of the capital and credit markets and the market price of our common stock; exposure to litigation or other claims; loss of key personnel; risks associated with security breaches through cyber attacks or cyber intrusions and other significant disruptions of our information technology risks associated with our substantial indebtedness; failure to refinance current or future indebtedness on favorable terms, or at all; 28 failure to meet the restrictive covenants and requirements in our existing debt agreements; risks associated with variable rate debt, derivatives or hedging activity; risks associated with the market for our common stock; regulatory changes, including changes to tax laws and regulations; compliance with REIT requirements, which may cause us to forgo otherwise attractive opportunities or liquidate certain of our investments; or any of the other risks included in this Quarterly Report on Form 10-Q or in our Annual Report on Form 10-K for the year ended December 31, Accordingly, there is no assurance that our expectations will be realized. Except as otherwise required by the U.S. federal securities laws, we disclaim any obligations or undertaking to publicly release any updates or revisions to any forward-looking statement contained herein (or elsewhere) to reflect any change in our expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based. Critical Accounting There are no material changes to our critical accounting Recently Issued Accounting Literature A summary of our recently issued accounting literature and their potential impact on our consolidated financial statements, if any, are included in Note 2, Basis of Presentation and Significant Accounting PoliciesIn February 2017, the FASB issued ASU 2017-05, an update to ASC Topic 610, Other Income. ASU 2017-05 clarifies the scope and accounting for derecognition of a nonfinancial asset and eliminates the guidance in ASC 360-20 specific to real estate sales and partial sales. ASU 2017-05 requires an entity that transfers control of a nonfinancial asset to measure any noncontrolling interest it retains (or receives) at fair value. ASU 2017-05 is effective for interim and annual reporting periods in fiscal years that begin after December 15, 2017, with early adoption permitted for entities concurrently early adopting ASU 2014-09. We plan to adopt the provisions of ASU 2017-05 on January 1, 2018, using the modified retrospective approach. Upon adoption, we expect to record a $7,086,000 adjustment to “investments in unconsolidated joint ventures” relating to the measurement of our consolidated Residential Development Fund’s (“RDF”) retained interest in 75 Howard Street, a fully-entitled residential condominium land parcel (“75 Howard”) at fair value. See Note 5, .11PARAMOUNT GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)50 Beale StreetPrior to July 17, 2017, we owned a 3.1% economic interest in 50 Beale Street, a 660,625 square foot Class A office building in San Francisco, California (“50 Beale”) through two real estate funds that owned 42.8% of the property (See Note 6, Real Estate Fund Investments). The remaining 57.2% was owned by third party investors. On July 17, 2017, we and a new joint venture in which we have a 36.6% interest, completed the acquisition of 62.2% of the property from our two funds and the third party investors. Subsequent to the acquisition, we own a direct 13.2% interest in the property and the new joint venture owns the remaining 49.0% interest. Accordingly, our economic interest in the property is 31.1%. We began consolidating the accounts of 50 Beale into our consolidated financial statements from the date of acquisition because the property is held through a VIE and we are deemed to be the primary beneficiary of the VIE.The acquisition valued the property at $517,500,000 and included the assumption of $228,000,000 of existing debt that bears interest at a fixed rate of 3.65% and is scheduled to mature in October 2021. The following table summarizes the allocation of purchase price between the assets acquired and liabilities assumed on the date of acquisition.4.DispositionsWaterviewOn May 3, 2017, we completed the sale of Waterview, a 636,768 square foot, Class A office building in Rosslyn, Virginia for $460,000,000 and recognized a net gain of $110,583,000, which is included as a component of “gain on sale of real estate” on our consolidated statement of income for the nine months ended September 30, 2017.The following table sets forth the details of the assets of Waterview that were classified as held-for-sale as of December 31, 2016.12PARAMOUNT GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)5.Investments in Unconsolidated Joint VenturesOn JanuaryFebruary 24, 2017,2022, a joint venture, in which we haveown a 5.0% ownership9.2% interest, acquired 60 Wall Street, a 1.6 million26,000 square foot office towerretail condominium at 1600 Broadway in Manhattan for $1.04 billion from certain of our real estate funds and the other investors (see Note 6, Real Estate Fund Investments)$191,500,000. In connection with the acquisition, the joint venture completedobtained a $575,000,000 financing10-year, $98,000,000 interest-only loan that has a fixed rate of 3.45%. The property, which is located in the property.heart of Times Square, is 100% leased to Mars, Inc. for a 15-year term and serves as the New York flagship location for M&M’s World. We began accountingaccount for our investment in 60 Wall Street under the equity method, from the date of the acquisition.Prior to May 5, 2017, our consolidated Residential Development Fund (“RDF”), owned 100% of the equity interests in 75 Howard Street, a fully-entitled residential condominium land parcel (“75 Howard”) in San Francisco, California. On May 5, 2017, RDF sold 80.0% of the equity interest in 75 Howard for $88,000,000 and recognized a $23,406,000 net gain on sale, of which our share, net of income taxes, was $1,661,000. Subsequent to the sale, RDF deconsolidated its investment in 75 Howard and began accounting for the remaining 20.0%1600 Broadway under the equity method of accounting however, we continue to consolidate our interest in RDF. We now have a 7.4% ownership interest in RDF; accordingly, our economic interest in 75 Howard is 1.5%.from the date of acquisition.September 30, 2017the dates thereof and December 31, 2016 andthe income or loss from these investments for the threeperiods set forth below.20172022, the joint venture had net income of $588 of which our 50.0% share was $294. Accordingly, our basis in the joint venture, taking into account our share of income, was negative $14,035 as of September 30, 2022. Additionally, during the nine months ended September 30, 2021, we received $1,053 in distributions from the joint venture and 2016.made an $11,750 contribution to the joint venture, which are included in "(loss) income from unconsolidated joint ventures" on our consolidated statements of income for the nine months ended September 30, 2021.(1)Prior to June 30, 2017, the basis of our investment in the property was $4,928. On June 30, 2017, we received a $20,000 distribution for our
50.0% share of net proceeds from refinancing the property. Because the distributions resulted in our basis becoming negative and because we have no further obligation to fund additional capital to the venture, in accordance with GAAP, we can no longer recognize our proportionate share of earnings from the venture until our basis is above zero. Accordingly, we are only recognizing income to the extent we receive cash distributions from the venture.(2)Represents RDF’s ownership interest in the property. We own a 7.4% ownership interest in RDF; accordingly, our economic interest in 75 Howard is 1.5%.1312712 Fifth Avenueour unconsolidated joint ventures as of the dates thereof and for the periods set forth below.(1)(1)As of September 30, 2017, the carrying amount of our investment is greater than our share of the equity by $20,512. This basis difference resulted from distributions in excess of the equity in net earnings of the property.1413manage four Property Funds comprisedare the general partner and investment manager of (i) Paramount Group Real Estate Fund II, L.P. (“Fund II”), (ii) Paramount Group Real Estate Fund III, L.P. (“Fund III”), (iii) Paramount Group Real Estate Fund VII, L.P. (“Fund VII”) and (iv) Paramount Group Real Estate Fund VII-H, L.P. (“Fund VII-H”). We also manage Paramount Group Real Estate Fund VIII, L.P.LP (“Fund VIII”) and Paramount Group Real Estate Fund X, LP and its parallel fund, Paramount Group Real Estate Fund X-ECI, LP, (collectively, “Fund X”), our Alternative Investment Fund,Funds, which investsinvest in mortgage and mezzanine loans and preferred equity investments.December 31, 2016,September 30, 2022, Fund IIX has $192,000,000 of capital committed, of which $139,637,000 has been invested and Fund III collectively owned a 62.3% interest in 60 Wall Street, a 1.6 million square foot office tower in Manhattan. On January 24, 2017, Fund II and Fund III, together with the other investors that owned the remaining 37.7% interest, sold their interests in 60 Wall Street to a newly formed joint venture, in which we have a 5.0%$43,016,000 has been reserved for future funding. Our ownership interest. Accordingly, beginning on January 24, 2017, we began accounting for our investment in 60 Wall Street under the equity method. See Note 5, Investments in Unconsolidated Joint Ventures.We own a 7.2% interest in Fund VIIVIII and Fund VII-H that, prior to July 17, 2017, owned 42.8%X was approximately 1.3% and 7.8%, respectively, as of 50 Beale. On July 17, 2017, Fund VIISeptember 30, 2022.Fund VII-H completedDecember 31, 2021, our share of the sale of their interests to us and a new joint venture, in which we have a 36.6% ownership interest (see Note 3, Acquisitions).The following tables summarize our investments in thesethe unconsolidated real estate funds asaggregated $14,558,000 and $11,421,000, respectively. We recognized $300,000 and $276,000 for our share of income in the three months ended September 30, 20172022 and December 31, 2016,2021, respectively, and $625,000 and $604,000 for our share of income or loss recognized from these investments forin the three and nine months ended September 30, 20172022 and 2016.2021, respectively.(1)Excludes asset management and other fee income from real estate funds, which is included as a component of “fee and other income” in our consolidated statements of income.15PARAMOUNT GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)As of September 30, 2017, we own a 10.0% interest in Fund II, a 3.1% interest in Fund III, and a 7.5% interest in Fund VII, all of which are accounted for under the equity method. The following tables provide summarized financial information for Fund II, Fund III and Fund VII as of the dates and for the periods set forth below.(1)Includes $123,105 attributable to 50 Beale that was sold July 17, 2017.16PARAMOUNT GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)As of September 30, 2017, we own a 24.4% interest in PGRESS Equity Holdings L.P., an entity that owns certain preferred equity investments that are consolidated into our consolidated financial statements and summarized in the table below.Preferred equity investments are recorded at cost. We evaluate the collectability of preferred equity investments each quarter in determining whether they are impaired. Preferred equity investments are impaired when changes in events or circumstances, including delinquencies, loss experience and collateral quality, indicate that it is probable we will be unable to collect all amounts due under the contractual terms. If a preferred equity investment is considered impaired, an impairment loss is measured based on the excess of the carrying amount of the investment over the net realizable value of the collateral. On April 11, 2017, the partnership that owns 2 Herald Square defaulted on the obligation to extend the maturity date or redeem the preferred equity investment, together with accrued and unpaid dividends. We believe, based on current facts and circumstances, that the redemption of our preferred equity investment, is not probable. Accordingly, we have recorded a $19,588,000 valuation allowance, which is included in “interest and other (loss) income” on our consolidated statements of income for the three and nine months ended September 30, 2017.The following is a summary of the preferred equity investments.(1)Represents a $33,750 preferred equity investment in a partnership that owns 470 Vanderbilt Avenue, a 650,000 square foot office building in Brooklyn, New York. The preferred equity has a dividend rate of 10.3%, of which 8.0% was paid in cash through February 2016 and the unpaid portion accreted to the balance of the investment. Subsequent to February 2016, the entire 10.3% dividend is being paid in cash.(2)Represents a $17,500 preferred equity investment in a partnership that owns 2 Herald Square, a 369,000 square foot office and retail property in Manhattan. The preferred equity investment had a dividend rate of 10.3%, of which 7.0% was paid in cash and the remainder accreted to the balance of the investment. The preferred equity investment had two one-year extension options.17PARAMOUNT GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)8.Intangible Assets and LiabilitiesThe following table summarizessummarize our intangible assets (acquired above-market leases and acquired in-place leases) and intangible liabilities (acquired below-market leases) and the related amortization as of September 30, 2017the dates thereof and December 31, 2016.for the periods set forth below.
(component of "rental revenue")
(component of "depreciation and amortization")Amortizationof acquired above-market leases, resulted in an increase to “rental income” of $3,175,000 and $3,112,000 for the three months ended September 30, 2017 and 2016, respectively, and $14,164,000 and $6,593,000 for the nine months ended September 30, 2017 and 2016, respectively. The three and nine months ended September 30, 2016 included $1,743,000 and $11,577,000 of expense, respectively, from the write-off of above-market lease assets in connection with lease terminations. Estimated annual amortization of acquired below-market leases, net of acquired above-market leases, for each of the five succeeding years commencing January 1, 2018 is as follows.Amortization of acquired in-place leases (a component of “depreciation and amortization” expense) was $17,929,000 and $21,917,000 for the three months ended September 30, 2017 and 2016, respectively, and $58,352,000 and $76,072,000 for the nine months ended September 30, 2017 and 2016, respectively. Estimated annual amortization of acquired in-place leases for each of the five succeeding years commencing from January 1, 2018 is as follows.2023.
For the Year Ending December 31,
Below-Market
Leases, Net18149.DebtOn January 19, 2017, we completed a $975,000,000 refinancing ofThe following table summarizes our consolidated outstanding debt.
Credit Facilitya 1.6 million square foot Class A office and retail property300 Mission Street are 90.0%, 49.0% and 31.1%, respectively.San Francisco, California. The new seven-year interest-only loan maturestheir fair values are recognized in February 2024other comprehensive income or loss (outside of earnings). We recognized other comprehensive income of $9,796,000 and has a fixed rate of 4.03%. In connection therewith, we incurred $2,715,000 of prepayment costs, which is included in “loss on early extinguishment of debt” on our consolidated statements of income$34,450,000 for the three and nine months ended September 30, 2017.The following is a summary of our outstanding debt as of2022, respectively, and $995,000 for the three and nine months ended September 30, 2017 and December 31, 2016.2021, from the changes in fair value of these derivative financial instruments. See Note 9, Accumulated Other Comprehensive Income. During the next twelve months, we estimate that $26,010,000 of the amounts to be recognized in accumulated other comprehensive income will be reclassified as a decrease to interest expense.(1)Represents loans with variable interest rates that have been fixed by interest rate swaps. See Note 10, Derivative Instruments and Hedging Activities.(2)Represents amounts outstanding under an option to increase the loan balance up to $250,000, at LIBOR plus 175 basis points, if certain performance hurdles relating to the property are satisfied.(3)Assumed in connection with the acquisition of 50 Beale on July 17, 2017. See Note 3, Acquisitions.(4)These loans were repaid on May 3, 2017. In connection with the repayment, we incurred an aggregate of $5,162 of prepayment costs, which are included in “loss on early extinguishment of debt”The tables below provide additional details on our consolidated statement of income for the nine months ended September 30, 2017.19PARAMOUNT GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)We manage our market risk on variable rate debt by entering into interest rate swaps to fix the rate on all or a portion of the debt for varying periods through maturity. Theseand interest rate swapscaps that are accounted fordesignated as derivative instruments and, pursuant to ASC Topic 815, are recorded on our consolidated balance sheets at fair value. Changes in the fair value of interest rate swaps are accounted for based on the hedging relationship and their designation and qualification. cash flow hedges.either post collateral up to the fair value ofsettle our derivative obligations or settle the obligations for cash. As of September 30, 2017, the fair value of the derivative2022, we did not have any obligations with such provisions aggregated $1,138,000.Interest Rate Swaps – Designated as Cash Flow HedgesAs of September 30, 2017, we haverelating to our interest rate swaps with an aggregate notional amount of $1.0 billion that are designated as cash flow hedges. We also have entered into a forward startingor interest rate swaps with an aggregate notional amountcaps that contained such provisions.$400,000,000Directors to extend the maturityrepurchase up to $200,000,000 of certain swaps for an additional year. Changesour common stock, from time to time, in the fair valueopen market or in privately negotiated transactions. During 2022, we repurchased 6,498,232 common shares at a weighted average price of interest rate swaps that are designated as cash flow hedges are recognized$6.41 per share, or $41,674,000 in “other comprehensive income (loss)” (outsidethe aggregate, of earnings). We recognized other comprehensive income of $738,000 and $7,802,000 forwhich 3,237,392 shares were repurchased in the three months ended September 30, 2017 and 2016, respectively and other comprehensive income2022 at a weighted average price of $729,000 and other comprehensive loss of $33,812,000 for the nine months ended September 30, 2017 and 2016, respectively, from the changes$6.58 per share, or $21,313,000 in the fair valueaggregate, and the remaining 3,260,840 shares were repurchased in October 2022 at a weighted average price of these interest rate swaps. During the next twelve months, we estimate that $3,315,000 of the amounts recognized in accumulated other comprehensive income will be reclassified as an increase to interest expense. The tables below provide additional details on our interest rate swaps that are designated as cash flow hedges. Interest Rate Swaps – Non-designated HedgesAs of September 30, 2017, we did not have any interest rate swaps that were not designated as hedges. As of December 31, 2016, we had interest rate swap liabilities that had a fair value of $21,227,000, which were terminated on January 19, 2017 in connection with the refinancing of One Market Plaza. See Note 9, Debt for additional details. Changes$6.24 per share, or $20,361,000 in the fair valueaggregate. During 2020, we repurchased 13,813,158 common shares at a weighted average price of interest rate swaps that are not designated as hedges are recognized in earnings. We recognized unrealized gains of $1,802,000 for the nine months ended September 30, 2017 and $12,728,000 and $29,661,000 for the three and nine months ended September 30, 2016, respectively, from the changes$8.69 per share, or $120,000,000 in the fair valueaggregate. Accordingly, we have $38,326,000 available for future repurchases under the existing program. The amount and timing of these interest rate swaps.future repurchases, if any, will depend on a number of factors, including, the price and availability of our shares, trading volume, general market conditions and available funding. The stock repurchase program may be suspended or discontinued at any time.201611.20172022 and 2016.2021, respectively, including amounts attributable to noncontrolling interests in the Operating Partnership.
in other comprehensive income (1)
income (decreasing) increasing interest and debt expense (1)
recognized in other comprehensive income (loss) (2)
(decreasing) increasing loss from unconsolidated joint ventures (2)(1)(1)Net of amount attributable to the noncontrolling interests in the Operating Partnership.(2)Balance held in accumulated other comprehensive income relates to foreign currency translation adjustments. No amounts were reclassified from accumulated other comprehensive income during any of the periods set forth above.12.Noncontrolling Interests50 Beale and PGRESS Equity Holdings L.P.300 Mission Street. As of September 30, 20172022 and December 31, 2016,2021, noncontrolling interests in our consolidated joint ventures aggregated $408,035,000$407,402,000 and $253,788,000,$428,833,000, respectively.RDF.our Residential Development Fund. As of September 30, 20172022 and December 31, 2016,2021, the noncontrolling interest in our consolidated real estate fund aggregated $14,947,000$79,248,000 and $64,793,000,$81,925,000, respectively.20172022 and December 31, 2016,2021, noncontrolling interests in the Operating Partnership on our consolidated balance sheets had a carrying amount of $433,554,000$262,180,000 and $577,361,000,$356,111,000, respectively, and a redemption value of $399,644,000$98,576,000 and $551,834,000, respectively.$181,315,000, respectively, based on the closing share price of our common stock on the New York Stock Exchange at the end of each period.211713.Variable Interest Entities (“VIEs”)determineddeemed to be the primary beneficiary.ownowned approximately 90.6%93.4% of, the Operating Partnership as of September 30, 2017.2022. The Operating Partnership is considered a VIE and is consolidated in our consolidated financial statements. Since we conduct our business through and substantially all of our interests are held by the Operating Partnership, the assets and liabilities on our consolidated financial statements represent the assets and liabilities of the Operating Partnership. As of September 30, 20172022 and December 31, 2016,2021, the Operating Partnership held variable interests in the entitiesconsolidated VIEs owning properties and a real estate fund and preferred equity investments that were determined to be VIEs. The Operating Partnership is required to consolidate its interest in these entities because it is deemed to be the primary beneficiary and has the power to direct the activities of these entities that most significantly affect economic performance and the obligation to absorb losses and rights to receive benefits that could potentially be significant to the entity. The assets of these consolidated VIEs may only be used to settle the obligations of the entities and such obligations are secured only by the assets of the entities and are non-recourse to the Operating Partnership or us. The following table below summarizes the assets and liabilities of consolidated VIEs of the Operating Partnership.2017,2022, the Operating Partnership held variable interests in entities that own certainour unconsolidated real estate funds that were deemed to be VIEs. The following table below summarizes our investments in these unconsolidated real estate funds.funds and the maximum risk of loss from these investments.221814.Fair Value MeasurementsASC Topic 820, Measurement and Disclosures, defines fair value and establishes a framework for measuring fair value. Measurementsobjective of fair value is to determine the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (the exit price). ASC Topic 820 establishes a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into three levels: Level 1 – quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities; Level 2 – observable prices that are based on inputs not quoted in active markets, but corroborated by market data; and Level 3 – unobservable inputs that are used when little or no market data is available. The fair value hierarchy gives the highest priority to Level 1 inputs and the lowest priority to Level 3 inputs. In determining fair value, we utilize valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible, as well as consider counterparty credit risk in our assessment of fair value. Considerable judgment is necessary to interpret Level 2 and 3 inputs in determiningfollowing table summarizes the fair value of our financial and non-financial assets and liabilities. Accordingly, our fair value estimates, which are made at the end of each reporting period, may be different than the amounts that may ultimately be realized upon sale or disposition of these assets or settlement of these liabilities. Financial Assets and Liabilities Measured at Fair ValueFinancial assets and liabilities that are measured at fair value on our consolidated balance sheets consist of marketable securities (which represent the assets in our deferred compensation plan, for which there is a corresponding liability on our consolidated balance sheets) and interest rate swaps. The tables below aggregate the fair values of these financial assets and liabilities as of September 30, 2017 and December 31, 2016,the dates set forth below, based on their levels in the fair value hierarchy.Interest Rate SwapsInterest rate swaps are valued by a third-party specialist. The valuation of these interest rate swaps is determined using widely accepted valuation techniques, including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the interest rate swaps and uses observable market-based inputs, including interest rate curves and implied volatilities. The fair values of interest rate swaps are determined using the market standard methodology of netting the discounted future fixed cash receipts (or payments) and the discounted expected variable cash payments (or receipts). The variable cash payments (or receipts) are based on an expectation of future interest rates (forward curves) derived from observable market interest rate curves. Interest rate swaps are classified as Level 2.23PARAMOUNT GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED) Assets and Liabilities Not Measured at Fair Valueassetsliabilities not measured at fair value on our consolidated balance sheets consistsconsist of preferred equity investments. Estimates of the fair value of these investments are determined by the standard practice of modeling the contractual cash flows required under the investment and discounting it back to its present value at the appropriate current risk adjusted interest rate. The preferred equity investments are classified as Level 3. Financial liabilities not measured at fair value include notes and mortgages payable, and the revolving credit facility. Estimates of the fair value of these instruments are determined by the standard practice of modeling the contractual cash flows required under the instrument and discounting them back to their present value at the appropriate current risk adjusted interest rate, which is provided by a third-party specialist. For floating rate debt, we use forward rates derived from observable market yield curves to project the expected cash payments we would be required to make under the instrument. These instruments would be classified as Level 2.is a summary oftable summarizes the carrying amounts and fair value of these financial instruments as of the dates set forth below.
Amount
Value
Amount
Value2017 and2022, for the three-month period from October 1, 2022 through December 31, 2016.2022, and each of the five succeeding years and thereafter commencing January 1, 2023.15.Fee and Other Income(1)(1)Includes $10,861 from the termination of a lease with a tenant at 1633 Broadway.(2)Primarily comprised of income from tenant requested services, including overtime heating and cooling. 24PARAMOUNT GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)(loss)income, net.
deferred compensation plans (1)(1)Represents the valuation allowance on 2 Herald Square, our preferred equity investment in PGRESS Equity Holdings L.P., of which our 24.4% share is $4,780 and $14,808 was attributable to the noncontrolling interests. (2)Represents income from our preferred equity investments in PGRESS Equity Holdings L.P., of which our 24.4% share is $243 and $355 for the three months ended September 30, 2017 and 2016, respectively, and $819 and $1,047 for the nine months ended September 30, 2017 and 2016, respectively. See Note 7, Preferred Equity Investments(3)The change resulting from the mark-to-market of the deferred compensation plan assets is entirely offset by the change in the deferred compensation plan liabilities, which is included in “general and administrative” expenses.17.Interest and Debt Expense(1)252118.Incentive CompensationTopic 718, Compensation – Stock Compensation. As of September 30, 2017, we have 10,369,943 shares available for future grants under the 2014 Equity Incentive Plan (“Plan”), if all awards granted are full value awards, as defined in the Plan. Stock-basedWe recognized stock-based compensation expense was $3,825,000of $4,149,000 and $2,583,000$4,192,000 for the three months ended September 30, 20172022 and 2016,2021, respectively, and $11,692,000$14,853,000 and $8,766,000$14,421,000 for the nine months ended September 30, 20172022 and 2016, respectively. Stock-based compensation expense for the nine months ended September 30, 2016 includes $1,855,000 of expense2021, respectively, related to awards granted in prior periods, including the acceleration of vesting of stockequity awards in connection with a separation agreement.granted on January 13, 2022 (“2022 Equity Grants”) described below.2017ProgramProgram”)30, 2017,13, 2022, the Compensation Committee of our Board of Directors (the “Compensation Committee”) approved the 20172022 Performance Program, a multiyearmulti-year performance-based long-term equity (“LTE”)incentive compensation program. The purpose of the 2017 Performance Program is to further align the interests of our stockholders with that of management by encouraging our senior officers to create stockholder value in a “pay for performance” structure. Under the 20172022 Performance Program, participants may earn awards in the form of Long Term Incentive PlanLTIP units based on our achievement of rigorous Net Operating Income (“LTIP”NOI”) goals over a three-year performance measurement period beginning on January 1, 2022 and continuing through December 31, 2024. The amount of LTIP units otherwise earned based on the achievement of our Operating Partnershipthe NOI goals would then be increased or decreased based on our Total Shareholder Return (“TSR”) versus that of our New York City office REIT peers (comprised of Vornado Realty Trust, SL Green Realty Corp. and Empire State Realty Trust) but the modifier will not result in a total payout exceeding 100% of the units granted. Additionally, if our TSR is negative over athe three-year performance measurement period, beginning on January 1, 2017 and continuing through December 31, 2019, on both an absolute basis and relative basis. 25.0% ofthen the award is earned if we outperform a predetermined absolute TSR and the remaining 75.0% is earned if we outperform a predetermined relative TSR. Specifically, participants begin to earn awards under the 2017 Performance Program if our TSR for the performance measurement period equals or exceeds 18.0% on an absolute basis and is in the 30th percentile of the performance of the SNL Office REIT Index constituents on a relative basis, and awards will be fully earned if our TSR for the performance measurement period equals or exceeds 30.0% on an absolute basis and exceeds the 80th percentile of the performance of the SNL Office REIT Index constituents on a relative basis. Participants will not earn any awards under the 2017 Performance Program if our TSR during the performance measurement period does not meet either of these minimum thresholds. The number of LTIP units that are earned if performance is aboveunder the minimum thresholds, but below the maximum thresholds,2022 Performance Program will be determined based on linear interpolation between the percentages earned at the minimum and maximum thresholds. During the performance measurement period, participants will receive per unit distributions equal to one-tenthreduced by 30.0% of the per share dividendsnumber of such awards that otherwise payable to our common stockholders with respect to their LTIP units. If the LTIP units are ultimately earned based on the achievement of the designated performance objectives, participants will receive cash or additional LTIP units based on the additional amount the participants would have received if per unit distributions during the performance measurement periods for the earned LTIP units had equaled per share dividends paid to our common stockholders less the amount of distributions participants actually received during the performance measurement period.If the designated performance objectives are achieved,been earned. Furthermore, awards earned under the 20172022 Performance Program will also beare subject to vesting based on continued employment with us through December 31, 2020,2025, with 50.0%50.0% of each award vesting followingupon the conclusion of the performance measurement period, and the remaining 50.0%50.0% vesting on December 31, 2020. The Company’s named executive officers, as defined,2025. Lastly, our Named Executive Officers are required to hold earned awards for an additional one-yearyear following vesting. TheAwards granted under the 2022 Performance Program had a fair value of the awards granted under the 2017 Performance Program$7,188,000 on the date of the grant, was $10,520,000 andwhich is being amortized into expense over the four-year vesting period using a graded vesting attribution method.26On January 13, 2022, we also granted an aggregate of 626,942 LTIP units, 2,703,499 AOLTIP units and 120,243 shares of Restricted Stock to our executive officers and employees that will vest over a period of three to four years. The fair value of LTIP units, AOLTIP units and restricted stock on the date of grant were $5,313,000, $5,831,000, and $1,119,000, respectively, and these awards are being amortized into expense on a straight-line basis over the vesting period.19.Earnings Per Shareprovides a summary ofsummarizes our net (loss) income (loss) and the number of common shares used in the computation of basic and diluted (loss) income (loss) per common share, which includes the weighted average number of common shares outstanding and the effect of dilutive potential common shares, if any.
weighted average shares
weighted average shares(1)The effect of dilutive securities for the three months ended September 30, 2017 and 2016 excludes 27,911 and 46,930 weighted average share equivalents, respectively, and 32,036 and 49,854(1) the nine months ended September 30, 2017 and 2016, respectively, as their effect was anti-dilutive.20.Related PartyDue to AffiliatesAs of September 30, 2017 and December 31, 2016, we had an aggregate of $27,299,000 of liabilities that were due to affiliates. These liabilities were comprised of a $24,500,000 note payable to CNBB-RDF Holdings, LP, which is an entity partially owned by Katharina Otto-Bernstein (a member of our Board of Directors), and a $2,799,000 note payable to a different entity owned by members of the Otto Family, both of which were made in lieu of certain cash distributions prior to the completion of our initial public offering. The notes, which bore interest at a fixed rate of 0.50%, were due in October 2017. We amended the agreements to extend the maturity of these notes to November 2018. The notes bear interest at a fixed rate of 1.40% during the extended term. For the three months ended September 30, 20172022 and 2016, we recognized $34,0002021, respectively, and $43,000, respectively, of interest expense20,889 and23,785 weighted average share equivalents for the nine months ended September 30, 20172022 and 2016, we recognized $103,000 and $112,000,2021, respectively, of interest expense in connection with these notes.as their effect was anti-dilutive.an aggregatefee income of $207,000$272,000 and $195,000$270,000 for the three months ended September 30, 20172022 and 2016,2021, respectively, and $619,000$1,021,000 and $594,000,$1,497,000 for the nine months ended September 30, 20172022 and 2016,2021, respectively, of fee income, in connection with these agreements, which is included as a component of “fee and other income” on our consolidated statements of income. As of September 30, 2017, there were no2022 and December 31, 2021, amounts owed to us under these agreements.agreements aggregated $53,000 and $484,000, respectively, which are included as a component of “accounts and other receivables” on our consolidated balance sheets.27PARAMOUNT GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)propertyasset management, assetproperty management, leasing and other related services to our unconsolidated joint ventures and real estate funds. ForWe recognized fee income of $4,277,000 and $5,737,000 for the three months ended September 30, 20172022 and 2016, we recognized $4,616,0002021, respectively, and $3,227,000, respectively,$20,075,000 and $16,239,000 for the nine months ended September 30, 20172022 and 2016, we recognized $16,391,000 and $7,826,000,2021, respectively, of fee income in connection with these agreements.agreements, which is included as a component of “fee and other income” on our consolidated statements of income. As of September 30, 2017,2022 and December 31, 2021, amounts owed to us under these agreements aggregated $1,815,000,$2,966,000 and $2,883,000, respectively, which are included as a component of “accounts“accounts and other receivables, net”receivables” on our consolidated balance sheet.sheets.GMBHHTC GmbH (“HTC”)a feeder vehiclevehicles for Fund VIII.X. Pursuant to this agreement, we have agreed to pay HTC for the costs incurred to sell investments in this feeder vehicle, which primarily consist of commissions paid to third party agents, and other incremental costs incurred by HTC as a result of the engagement, plus in each case, a mark-up of 10%10%. HTC is 100%100% owned by Albert Behler, our Chairman, Chief Executive Officer and President. ForWe incurred costs aggregating $105,000 and $127,000 for the three months ended September 30, 20172022 and 2016, we incurred $50,000 and $137,000 of expense,2021, respectively, and $220,000$621,000 and $694,000, respectively,$372,000 for the nine months ended in September 30, 20172022 and 2016,2021, respectively, in connection with these agreements, which is included as a component of “transaction related costs” on our consolidated statements of income.this agreement. As of September 30, 2017,2022 and December 31, 2021, we owed $95,000$123,000 and $523,000, respectively, to HTC under this agreement, which isare included as a component of “accounts payable and other accrued expenses” on our consolidated balance sheet.sheets.Trust, a subsidiaryTrust. We recognized $91,000 in each of which leases office space at 712 Fifth Avenue, our 50.0% owned unconsolidated joint venture. The Mannheim Trust is for the benefit of Dr. Bussmann’s children. Prior to December 5, 2016, the Mannheim Trust leased 6,790 square feet. On December 5, 2016, the joint venture entered into a new lease agreement for 5,593 square feet, which became effective in January 2017. The new lease expires in April 2023. For the three months ended September 30, 20172022 and 2016, we recognized $96,000 and $101,000,2021, respectively, and $274,000$273,000 and $305,000$272,000 for the nine months ended September 30, 20172022 and 2016,2021, respectively, for our share of rental income frompursuant to this lease.AcquisitionsDue from Unconsolidated Real Estate FundsAffiliatesOn January 24, 2017,During the nine months ended September 30, 2022, Fund II and Fund III sold their 62.3%X borrowed $59,000,000 from us at an interest in 60 Wall Street to a newly formed joint venture, inrate of Secured Overnight Financing Rate (“SOFR”) plus 220 basis points, which we have a 5.0% ownershipwas repaid, together with $418,000 of accrued interest. See Note 5, Investments in Unconsolidated Joint Ventures.On July 17, 2017, Fund VII and Fund VII-H completed the sale of their 42.8% interest in 50 Beale to us and a newly formed joint venture, in which we have a 36.6% ownership interest. See Note 3, Acquisitions.282421.Commitments and Contingenciesand certain side lettersagreements in place include certain restrictions and covenants which may limit, among other things, certain investments, the incurrence of additional indebtedness and liens and the disposition or other transfer of assets and interests in the borrower and other credit parties, and require compliance with certain debt yield, debt service coverage and loan to value ratios. In addition, our revolving credit facility contains representations, warranties, covenants, other agreements and events of default customary for agreements of this type with comparable companies. As of September 30, 2017,2022, we believe we are in compliance with all of our covenants.718 Fifth Avenue - Put RightTransfer Tax AssessmentsPrior toDuring 2017, the formation transactions, an affiliate of our predecessor owned a 25.0% interest in 718 Fifth Avenue, a five-story building containing 19,050 square feet of prime retail space that is located on the southwest corner of 56th Street and Fifth Avenue in New York (based on its 50.0%City Department of Finance issued Notices of Determination (“Notices”) assessing additional transfer taxes (including interest and penalties) in a joint venture that held a 50.0% tenancy-in-common interest in the property). Prior to the completion of the formation transactions, this interest was sold to its partner in the 718 Fifth Avenue joint venture, who is also our partner in the joint venture that owns 712 Fifth Avenue, New York, New York. In connection with the transfer of interests in certain properties during our 2014 initial public offering. We believe, after consultation with legal counsel, that the likelihood of a loss is reasonably possible, and while it is not possible to predict the outcome of these Notices, we estimate the range of loss could be between $0 and $55,800,000. Since no amount in this sale,range is a better estimate than any other amount within the range, we grantedhave not accrued any liability arising from potential losses relating to these Notices in our joint venture partner a put right, pursuant to which the 712 Fifth Avenue joint venture would be required to purchase the entire direct or indirect interests held by our joint venture partner or its affiliates in 718 Fifth Avenue at a purchase price equal to the fair market value of such interests. The put right may be exercised at any time after September 10, 2018 with 12 months written notice and the actual purchase occurring no earlier than September 10, 2019. If the put right is exercised and the 712 Fifth Avenue joint venture acquires the 50.0% tenancy-in-common interest in the property that will be held by our joint venture partner following the sale of its interest to our joint venture partner, we will own a 25.0% interest in 718 Fifth Avenue.consolidated financial statements.292522.Segmentsthreetwo regions in which we conduct our business: New York Washington, D.C. and San Francisco. Our determination of segments is aligned with our method of internal reporting and the way our Chief Executive Officer, who is also our Chief Operating Decision Maker, makes key operating decisions, evaluates financial results and manages our business.NOINet Operating Income (“NOI”) for each reportable segment for the threeperiods set forth below.
(excluding One Steuart Lane)
(excluding One Steuart Lane)
(excluding One Steuart Lane)
(excluding One Steuart Lane)nine months ended September 30, 2017lease termination income) and 2016.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 use NOI internally as a performance measure and believe it provides useful information to investors regarding our financial condition and results of operations because it reflects only those income and expense items that are incurred at the property level. Other real estate companies may use different methodologies for calculating NOI and, accordingly, our presentation of NOI may not be comparable to other real estate companies.(1)Net Operating Income (“NOI”) is used to measure the operating performance of our properties. NOI consists of property-related revenue (which includes rental income, tenant reimbursement income and certain other income) less operating expenses (which includes building expenses such as cleaning, security, repairs and maintenance, utilities, property administration and real estate taxes). We use NOI internally as a performance measure and believe it provides useful information to investors regarding our financial condition and results of operations because it reflects only those income and expense items that are incurred at the property level. Other real estate companies may use different methodologies for calculating NOI and, accordingly, our presentation of NOI may not be comparable to other real estate companies.3026three and nine months ended September 30, 2017 and 2016.periods set forth below.
One Steuart Lane)selected balance sheet datatotal assets for each of our reportable segments as of September 30, 2017.the dates set forth below.and globally and inincluding New York City Washington, D.C. and San Francisco; Francisco, and globally, including as a result of rising inflation and interest rates;our high concentrations of our properties in New York City Washington, D.C. and San Francisco;(IT)(“IT”) networks and related systems;
•risks associated with future sales of our common stock by our continuing investors or the perception that our continuing investors intend to sell substantially all of the shares of our common stock that they hold; 2016,2021, including those set forth in Item 1A entitled “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2016.TheA reader should review carefully our consolidated financial statements and the notes thereto, as well as Item 1A entitled “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2016.2021.PoliciesEstimatespoliciesestimates disclosed in our Annual Report on Form 10-K for the year ended December 31, 2016.2021.
29
Business Overview
We are a fully-integrated REIT focused on owning, operating, managing, acquiring and redeveloping high-quality, Class A office properties in select central business district submarkets of New York City Washington, D.C. and San Francisco. We conduct our business through, and substantially all of our interests in properties and investments are held by, Paramount Group Operating Partnership LP, a Delaware limited partnership (the “Operating Partnership”). We are the sole general partner of, and owned approximately 90.6%93.4% of, the Operating Partnership as of September 30, 2017.2022.
As of September 30, 2022, we own and/or manage a portfolio aggregating 14.0 million square feet comprised of:
Additionally, we have an investment management business, where we serve as the general partner of real estate funds for institutional investors and high net-worth individuals.
Acquisitions
Acquisitions
On JanuaryFebruary 24, 2017,2022, a joint venture, in which we haveown a 5.0% ownership9.2% interest, acquired 60 Wall Street, a 1.6 million26,000 square foot office towerretail condominium at 1600 Broadway in Manhattan for $1.04 billion.$191,500,000. In connection with the acquisition, the joint venture completedobtained a $575,000,000 financing of the property.
Prior to July 17, 2017, we owned a 3.1% economic interest in 50 Beale Street, a 660,625 square foot Class A office building in San Francisco, California (“50 Beale”) through two real estate funds that owned 42.8% of the property. The remaining 57.2% was owned by third party investors. On July 17, 2017, we and a new joint venture in which we have a 36.6% interest, completed the acquisition of 62.2% of the property from our two funds and the third party investors. Subsequent to the acquisition, we own a direct 13.2% interest in the property and the new joint venture owns the remaining 49.0% interest. Accordingly, our economic interest in the property is 31.1%. The acquisition valued the property at $517,500,000 and included the assumption of $228,000,000 of existing debt that bears interest at a fixed rate of 3.65% and is scheduled to mature in October 2021.
Dispositions
On May 3, 2017, we completed the sale of Waterview, a 636,768 square foot, Class A office building in Rosslyn, Virginia for $460,000,000 and recognized a net gain of $110,583,000.
Prior to May 5, 2017, our consolidated Residential Development Fund (“RDF”), owned 100% of the equity interests in 75 Howard Street, a fully-entitled residential condominium land parcel (“75 Howard”) in San Francisco, California. On May 5, 2017, RDF sold 80.0% of the equity interest in 75 Howard for $88,000,000 and recognized a $23,406,000 net gain on sale, of which our share, net of income taxes, was $1,661,000. Subsequent to the sale, RDF deconsolidated its investment in 75 Howard and began accounting for the remaining 20.0% under the equity method of accounting, however, we continue to consolidate our interest in RDF. We now have a 7.4% ownership interest in RDF; accordingly, our economic interest in 75 Howard is 1.5%.
Financings
On January 19, 2017, we completed a $975,000,000 refinancing of One Market Plaza, a 1.6 million square foot Class A office and retail property in San Francisco, California. The new seven-year10-year, $98,000,000 interest-only loan matures in February 2024 andthat has a fixed rate of 4.03%3.45%. We retained $23,470,000 for our 49.0% share of net proceeds, after the repayment of the existing loan, closing costs and required reserves.
On May 3, 2017, we used the net proceeds from the Waterview sale to repay the $200,000,000 outstanding under our revolving credit facility, the $87,179,000 loan on 1899 Pennsylvania Avenue, and the $84,000,000 loan on Liberty Place.
On June 13, 2017, we completed a $300,000,000 refinancing of 712 Fifth Avenue, a 543,386 square foot Class A office and retail buildingThe property, which is located in the Plaza Districtheart of Times Square, is 100% leased to Mars, Inc. for a 15-year term and serves as the New York. The new 10-year interest-only loan maturesYork flagship location for M&M’s World.
Stock Repurchase Program
On November 5, 2019, we received authorization from our Board of Directors to repurchase up to $200,000,000 of our common stock, from time to time, in July 2027the open market or in privately negotiated transactions. During 2022, we repurchased 6,498,232 common shares at a weighted average price of $6.41 per share, or $41,674,000 in the aggregate, of which 3,237,392 shares were repurchased in the three months ended September 30, 2022 at a weighted average price of $6.58 per share, or $21,313,000 in the aggregate, and hasthe remaining 3,260,840 shares were repurchased in October 2022 at a fixed rateweighted average price of 3.39%. The net proceeds from$6.24 per share, or $20,361,000 in the refinancing were used to repayaggregate. During 2020, we repurchased 13,813,158 common shares at a weighted average price of $8.69 per share, or $120,000,000 in the aggregate. Accordingly, we have $38,326,000 available for future repurchases under the existing $246,500,000 loan bearing interestprogram. The amount and timing of future repurchases, if any, will depend on a number of factors, including, the price and availability of our shares, trading volume, general market conditions and available funding. The stock repurchase program may be suspended or discontinued at 4.41% and was scheduled to mature in March 2018. We received $20,000,000 for our 50.0% share of net proceeds, after the repayment of the existing loan, closing costs and required reserves.any time.
30
Leasing Results - Three Months Ended September 30, 20172022
In the three months ended September 30, 2017,2022, we leased 369,136288,554 square feet, of which our share was 356,413 square feet215,922 that was leased at a weighted average initial rent of $80.98$82.76 per square foot. This leasing activity, partially offset by the lease expirations duringin the three months, and including the impact of the acquisition of 50 Beale in July 2017 (a 78.2% leased asset), increasedcaused our leased occupancy by 140 basis points to 92.3% at September 30, 2017 from 90.9% at June 30, 2017. Ourand same store leased occupancy (properties owned by us in a similar manner during both reporting periods) increased by 170 basis points to 92.6%remain at 91.4% at September 30, 2017 from 90.9%2022, in-line with the lease occupancy reported at June 30, 2017.2022. Of the 369,136215,922 square feet leased, in the three months, 163,298204,178 square feet represented our share of second generation space (space that had been vacant for less than twelve months) for which we achieved rental rate increases of 9.5%rates decreased by 10.5% on a GAAPcash basis and 9.8%increased by 2.7% on a cashGAAP basis. The weighted average lease term for leases signed during the three months was 10.812.5 years and weighted average tenant improvements and leasing commissions on these leases were $9.77$11.92 per square foot per annum, or 12.1%14.4% of initial rent.
New York:York
In the three months ended September 30, 2017,2022, we leased 305,351253,774 square feet in our New York portfolio, of which our share was 294,377197,828 square feet that was leased at a weighted average initial rent of $82.84$79.95 per square foot. This leasing activity, partially offset by lease expirations duringin the three months, increased our leased occupancy and same store leased occupancy by 20010 basis points to 90.9%92.1% at September 30, 20172022 from 88.9%92.0% at June 30, 2017.2022. Of the 305,351197,828 square feet leased, in the three months, 109,008190,828 square feet represented our share of second generation space for which rental rates increaseddecreased by 12.6%11.6% on a GAAPcash basis and 1.3%increased 1.5% on a cashGAAP basis. The weighted average lease term for leases signed during the three months was 11.712.9 years and weighted average tenant improvements and leasing commissions on these leases were $9.40$11.97 per square foot per annum, or 11.4%15.0% of initial rent.
Washington, D.C.:San Francisco
In the three months ended September 30, 2017,2022, we leased 7,070 square feet of previously vacant space in our Washington, D.C. portfolio, at a weighted average initial rent of $74.53 per square foot. This leasing activity increased our leased occupancy and same store leased occupancy by 90 basis points to 95.5% at September 30, 2017 from 94.6% at June 30, 2017. The weighted average lease term for leases signed during the three months was 5.5 years and weighted average tenant improvements and leasing commissions on these leases were $4.78 per square foot per annum, or 6.4% of initial rent.
San Francisco:
In the three months ended September 30, 2017, we leased 56,71534,780 square feet in our San Francisco portfolio, of which our share was 54,96618,094 square feet that was leased at a weighted average initial rent of $71.70$113.53 per square foot. Notwithstanding thisThis leasing activity, which was partially offset by lease expirations duringin the three months, ourdecreased leased occupancy decreased by 210 basis points to 96.1% at September 30, 2017 from 98.2% at June 30, 2017 due to our acquisition of 50 Beale in July 2017 (a 78.2% leased asset). Ourand same store leased occupancy (which excludesby 50 Beale) increased by 40 basis points to 98.6%89.3% at September 30, 20172022 from 98.2%89.8% at June 30, 2017.2022. Of the 56,71518,094 square feet leased in the three months, 54,29013,350 square feet represented our share of second generation space for which we achieved rental rate increases of 2.8%1.6% on GAAPa cash basis and 39.0%14.7% on a cashGAAP basis. The weighted average lease term for leases signed during the yearthree months was 7.17.3 years and weighted average tenant improvements and leasing commissions on these leases were $13.53$10.86 per square foot per annum, or 18.9%9.6% of initial rent.
31
The following is a tabular disclosure of leasing statistics fortable presents additional details on the leases signed during the three months ended September 30, 2017.2022. It is not intended to coincide with the commencement of rental revenue in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The leasing statistics, except for square feet leased, represent office space only.
Three Months Ended September 30, 2022 | Total |
|
| New York |
|
| San Francisco |
|
| ||||||||
| Total square feet leased |
| 288,554 |
|
|
| 253,774 |
|
|
| 34,780 |
|
| ||||
| Pro rata share of total square feet leased: |
| 215,922 |
|
|
| 197,828 |
|
|
| 18,094 |
|
| ||||
|
| Initial rent (1) | $ | 82.76 |
|
| $ | 79.95 |
|
| $ | 113.53 |
|
| |||
|
| Weighted average lease term (in years) |
| 12.5 |
|
|
| 12.9 |
|
|
| 7.3 |
|
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
| Tenant improvements and leasing commissions: |
|
|
|
|
|
|
|
| |||||||
|
|
| Per square foot | $ | 148.56 |
|
| $ | 154.86 |
|
| $ | 79.72 |
|
| ||
|
|
| Per square foot per annum | $ | 11.92 |
|
| $ | 11.97 |
|
| $ | 10.86 |
|
| ||
|
|
| Percentage of initial rent |
| 14.4 | % |
|
| 15.0 | % |
|
| 9.6 | % |
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
| Rent concessions: |
|
|
|
|
|
|
|
| |||||||
|
|
| Average free rent period (in months) |
| 14.3 |
|
|
| 15.1 |
|
|
| 5.8 |
|
| ||
|
|
| Average free rent period per annum (in months) |
| 1.1 |
|
|
| 1.2 |
|
|
| 0.8 |
|
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
| Second generation space: (2) |
|
|
|
|
|
|
|
| |||||||
|
| Square feet |
| 204,178 |
|
|
| 190,828 |
|
|
| 13,350 |
|
| |||
|
| Cash basis: |
|
|
|
|
|
|
|
|
| ||||||
|
|
| Initial rent (1) | $ | 80.78 |
|
| $ | 78.41 |
|
| $ | 114.63 |
|
| ||
|
|
| Prior escalated rent (3) | $ | 90.28 |
|
| $ | 88.71 |
|
| $ | 112.78 |
|
| ||
|
|
| Percentage (decrease) increase |
| (10.5 | %) |
|
| (11.6 | %) |
|
| 1.6 | % |
| ||
|
| GAAP basis: |
|
|
|
|
|
|
|
|
| ||||||
|
|
| Straight-line rent | $ | 79.32 |
|
| $ | 76.54 |
|
| $ | 119.02 |
|
| ||
|
|
| Prior straight-line rent | $ | 77.23 |
|
| $ | 75.38 |
|
| $ | 103.72 |
|
| ||
|
|
| Percentage increase |
| 2.7 | % |
|
| 1.5 | % |
|
| 14.7 | % |
|
Three Months Ended September 30, 2017 | Total |
|
| New York |
|
| Washington, D.C. |
|
| San Francisco |
| |||||||||
| Total square feet leased |
| 369,136 |
|
|
| 305,351 |
|
|
| 7,070 |
|
|
| 56,715 |
| ||||
| Pro rata share of total square feet leased: |
| 356,413 |
|
|
| 294,377 |
|
|
| 7,070 |
|
|
| 54,966 |
| ||||
|
| Initial rent (1) | $ | 80.98 |
|
| $ | 82.84 |
|
| $ | 74.53 |
|
| $ | 71.70 |
| |||
|
| Weighted average lease term (in years) |
| 10.8 |
|
|
| 11.7 |
|
|
| 5.5 |
|
|
| 7.1 |
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Tenant improvements and leasing commissions: |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
|
| Per square foot | $ | 105.94 |
|
| $ | 109.68 |
|
| $ | 26.26 |
|
| $ | 96.02 |
| ||
|
|
| Per square foot per annum | $ | 9.77 |
|
| $ | 9.40 |
|
| $ | 4.78 |
|
| $ | 13.53 |
| ||
|
|
| Percentage of initial rent |
| 12.1 | % |
|
| 11.4 | % |
|
| 6.4 | % |
|
| 18.9 | % | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Rent concessions: |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
|
| Average free rent period (in months) |
| 9.4 |
|
|
| 10.6 |
|
|
| 6.0 |
|
|
| 3.0 |
| ||
|
|
| Average free rent period per annum (in months) |
| 0.9 |
|
|
| 0.9 |
|
|
| 1.1 |
|
|
| 0.4 |
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Second generation space: (2) |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
| Square feet |
| 163,298 |
|
|
| 109,008 |
|
|
| - |
|
|
| 54,290 |
| |||
|
| GAAP basis: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
|
| Straight-line rent | $ | 81.33 |
|
| $ | 85.02 |
|
| $ | - |
|
| $ | 73.92 |
| ||
|
|
| Prior straight-line rent | $ | 74.30 |
|
| $ | 75.51 |
|
| $ | - |
|
| $ | 71.87 |
| ||
|
|
| Percentage increase |
| 9.5 | % |
|
| 12.6 | % |
|
| - |
|
|
| 2.8 | % | ||
|
| Cash basis: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
|
| Initial rent (1) | $ | 83.68 |
|
| $ | 89.65 |
|
| $ | - |
|
| $ | 71.70 |
| ||
|
|
| Prior escalated rent (3) | $ | 76.25 |
|
| $ | 88.53 |
|
| $ | - |
|
| $ | 51.59 |
| ||
|
|
| Percentage increase |
| 9.8 | % |
|
| 1.3 | % |
|
| - |
|
|
| 39.0 | % |
The following table presents same store leased occupancy as of the dates set forth below.
Same Store Leased Occupancy (1) | Total |
|
| New York |
|
| San Francisco |
| ||||
| As of September 30, 2022 |
| 91.4 | % |
|
| 92.1 | % |
|
| 89.3 | % |
| As of June 30, 2022 |
| 91.4 | % |
|
| 92.0 | % |
|
| 89.8 | % |
|
|
|
|
|
|
32
Leasing Results - Nine Months Ended September 30, 20172022
In the nine months ended September 30, 2017,2022, we leased 946,880741,605 square feet, of which our share was 859,432 square feet556,299 that was leased at a weighted average initial rent of $78.50$77.12 per square foot. Notwithstanding thisThis leasing activity, our leased occupancy decreasedpartially offset by 40 basis pointslease expirations in the nine months, increased leased occupancy by 70 basis points to 92.3%91.4% at September 30, 20172022 from 92.7%90.7% at December 31, 2016. This decrease was primarily attributable to our acquisition of 50 Beale in July 2017 (a 78.2% leased asset) and the sale of Waterview in May 2017 (a 98.7% leased asset). Our same2021. Same store leased occupancy (which excludes 50 Beale and Waterview)(properties owned by us in a similar manner during both reporting periods), increased by 2080 basis points to 92.5%91.4% at September 30, 2022 from 92.3%90.6% at December 31, 2016.2021. Of the 946,880556,299 square feet leased, in the nine months, 594,418441,499 square feet represented our share of second generation space (space that had been vacant for less than twelve months) for which we achieved rental rate increases of 11.3%rates decreased by 6.6% on a cash basis and increased 1.3% on a GAAP basis and 16.1% on a cash basis. The weighted average lease term for leases signed during the nine months was 9.410.0 years and weighted average tenant improvements and leasing commissions on these leases were $9.23$10.72 per square foot per annum, or 11.8%13.9% of initial rent.
New York:York
In the nine months ended September 30, 2017,2022, we leased 524,378582,268 square feet in our New York portfolio, of which our share was 498,610473,507 square feet that was leased at a weighted average initial rent of $80.77$72.12 per square foot. This leasing activity, partially offset by lease expirations duringin the nine months, increased our leased occupancy by 20170 basis points to 90.9%92.1% at September 30, 20172022 from 90.7%90.4% at December 31, 2016. Our same2021. Same store leased occupancy increased by 10180 basis points to 90.8%92.1% at September 30, 2022 from 90.7%90.3% at December 31, 2016.2021. Of the 524,378473,507 square feet leased, in the nine months, 257,631380,233 square feet represented our share of second generation space for which rental rates increaseddecreased by 4.9%8.5% on a GAAPcash basis and decreased by 0.5%2.0% on a cashGAAP basis. The weighted average lease term for leases signed during the nine months was 10.5 years and weighted average tenant improvements and leasing commissions on these leases were $9.59$10.85 per square foot per annum, or 11.9%15.0% of initial rent.
Washington, D.C.:San Francisco
In the nine months ended September 30, 2017,2022, we leased 19,602 square feet of previously vacant space in our Washington, D.C. portfolio, at a weighted average initial rent of $70.95 per square foot. Notwithstanding this leasing activity, our leased occupancy remained unchanged at 95.5% at September 30, 2017 from December 31, 2016 due to the sale of Waterview (a 98.7% leased asset) in May 2017. Same store leased occupancy, which excludes Waterview, increased by 220 basis points to 95.5% from 93.3% at December 31, 2016. The weighted average lease term for leases signed during the nine months was 8.3 years and weighted average tenant improvements and leasing commissions on these leases were $7.85 per square foot per annum, or 11.1% of initial rent.
San Francisco:
In the nine months ended September 30, 2017, we leased 402,900159,337 square feet in our San Francisco portfolio, of which our share was 341,22082,792 square feet that was leased at a weighted average initial rent of $75.62$105.71 per square foot. Notwithstanding thisThis leasing activity, our leased occupancy decreasedoffset by 290 basis points to 96.1% at September 30, 2017 from 99.0% at December 31, 2016 due to expiration of leases duringlease expirations in the nine months, and the acquisition of 50 Beale in July 2017 (a 78.2%decreased leased asset). Excluding 50 Beale,occupancy and same store leased occupancy decreased by 40230 basis points to 98.6%89.3% at September 30, 2022 from 99.0%91.6% at December 31, 2016.2021. Of the 402,90082,792 square feet leased duringin the year, 336,787nine months, 61,266 square feet represented our share of second generation space for which we achieved rental rate increases of 17.1%1.9% on GAAPa cash basis and 34.6%15.9% on a cashGAAP basis. The weighted average lease term for leases signed during the yearnine months was 7.97.1 years and weighted average tenant improvements and leasing commissions on these leases were $8.61$9.61 per square foot per annum, or 11.4%9.1% of initial rent.
33
The following is a tabular disclosure of leasing statistics fortable presents additional details on the leases signed during the nine months ended September 30, 2017.2022. It is not intended to coincide with the commencement of rental revenue in accordance with GAAP. The leasing statistics, except for square feet leased, represent office space only.
Nine Months Ended September 30, 2022 | Total |
|
| New York |
|
| San Francisco |
| ||||||||
| Total square feet leased |
| 741,605 |
|
|
| 582,268 |
|
|
| 159,337 |
| ||||
| Pro rata share of total square feet leased: |
| 556,299 |
|
|
| 473,507 |
|
|
| 82,792 |
| ||||
|
| Initial rent (1) | $ | 77.12 |
|
| $ | 72.12 |
|
| $ | 105.71 |
| |||
|
| Weighted average lease term (in years) |
| 10.0 |
|
|
| 10.5 |
|
|
| 7.1 |
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
| Tenant improvements and leasing commissions: |
|
|
|
|
|
|
| |||||||
|
|
| Per square foot | $ | 107.35 |
|
| $ | 114.21 |
|
| $ | 68.09 |
| ||
|
|
| Per square foot per annum | $ | 10.72 |
|
| $ | 10.85 |
|
| $ | 9.61 |
| ||
|
|
| Percentage of initial rent |
| 13.9 | % |
|
| 15.0 | % |
|
| 9.1 | % | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
| Rent concessions: |
|
|
|
|
|
|
| |||||||
|
|
| Average free rent period (in months) |
| 11.1 |
|
|
| 12.2 |
|
|
| 5.0 |
| ||
|
|
| Average free rent period per annum (in months) |
| 1.1 |
|
|
| 1.2 |
|
|
| 0.7 |
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
| Second generation space: (2) |
|
|
|
|
|
|
| |||||||
|
| Square feet |
| 441,499 |
|
|
| 380,233 |
|
|
| 61,266 |
| |||
|
| Cash basis: |
|
|
|
|
|
|
|
| ||||||
|
|
| Initial rent (1) | $ | 76.29 |
|
| $ | 70.92 |
|
| $ | 109.64 |
| ||
|
|
| Prior escalated rent (3) | $ | 81.67 |
|
| $ | 77.50 |
|
| $ | 107.60 |
| ||
|
|
| Percentage (decrease) increase |
| (6.6 | %) |
|
| (8.5 | %) |
|
| 1.9 | % | ||
|
| GAAP basis: |
|
|
|
|
|
|
|
| ||||||
|
|
| Straight-line rent | $ | 75.00 |
|
| $ | 68.83 |
|
| $ | 113.25 |
| ||
|
|
| Prior straight-line rent | $ | 74.05 |
|
| $ | 70.24 |
|
| $ | 97.70 |
| ||
|
|
| Percentage increase (decrease) |
| 1.3 | % |
|
| (2.0 | %) |
|
| 15.9 | % |
Nine Months Ended September 30, 2017 | Total |
|
| New York |
|
| Washington, D.C. |
|
| San Francisco |
| |||||||||
| Total square feet leased |
| 946,880 |
|
|
| 524,378 |
|
|
| 19,602 |
|
|
| 402,900 |
| ||||
| Pro rata share of total square feet leased: |
| 859,432 |
|
|
| 498,610 |
|
|
| 19,602 |
|
|
| 341,220 |
| ||||
|
| Initial rent (1) | $ | 78.50 |
|
| $ | 80.77 |
|
| $ | 70.95 |
|
| $ | 75.62 |
| |||
|
| Weighted average lease term (in years) |
| 9.4 |
|
|
| 10.5 |
|
|
| 8.3 |
|
|
| 7.9 |
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Tenant improvements and leasing commissions: |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
|
| Per square foot | $ | 86.74 |
|
| $ | 100.27 |
|
| $ | 65.22 |
|
| $ | 68.17 |
| ||
|
|
| Per square foot per annum | $ | 9.23 |
|
| $ | 9.59 |
|
| $ | 7.85 |
|
| $ | 8.61 |
| ||
|
|
| Percentage of initial rent |
| 11.8 | % |
|
| 11.9 | % |
|
| 11.1 | % |
|
| 11.4 | % | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Rent concessions: |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
|
| Average free rent period (in months) |
| 6.9 |
|
|
| 9.4 |
|
|
| 8.8 |
|
|
| 3.1 |
| ||
|
|
| Average free rent period per annum (in months) |
| 0.7 |
|
|
| 0.9 |
|
|
| 1.1 |
|
|
| 0.4 |
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Second generation space: (2) |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
| Square feet |
| 594,418 |
|
|
| 257,631 |
|
|
| - |
|
|
| 336,787 |
| |||
|
| GAAP basis: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
|
| Straight-line rent | $ | 76.31 |
|
| $ | 79.64 |
|
| $ | - |
|
| $ | 73.86 |
| ||
|
|
| Prior straight-line rent | $ | 68.54 |
|
| $ | 75.92 |
|
| $ | - |
|
| $ | 63.09 |
| ||
|
|
| Percentage increase |
| 11.3 | % |
|
| 4.9 | % |
|
| - |
|
|
| 17.1 | % | ||
|
| Cash basis: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
|
| Initial rent (1) | $ | 79.24 |
|
| $ | 84.16 |
|
| $ | - |
|
| $ | 75.62 |
| ||
|
|
| Prior escalated rent (3) | $ | 68.23 |
|
| $ | 84.59 |
|
| $ | - |
|
| $ | 56.17 |
| ||
|
|
| Percentage increase (decrease) |
| 16.1 | % |
|
| (0.5 | %) |
|
| - |
|
|
| 34.6 | % |
The following table presents same store leased occupancy as of the dates set forth below.
Same Store Leased Occupancy (1) | Total |
|
| New York |
|
| San Francisco |
| ||||
| As of September 30, 2022 |
| 91.4 | % |
|
| 92.1 | % |
|
| 89.3 | % |
| As of December 31, 2021 |
| 90.6 | % |
|
| 90.3 | % |
|
| 91.6 | % |
|
|
|
|
|
|
34
Financial Results - Three Months Ended September 30, 20172022 and 20162021
Net Loss,Income, FFO and Core FFO
Net loss attributable to common stockholders was $10,214,000,$1,537,000, or $0.04$0.01 per diluted share, for the three months ended September 30, 2017,2022, compared to $139,000,$2,055,000, or $0.00$0.01 per diluted share, for the three months ended September 30, 2016. 2021.
Funds from Operations (“FFO”) attributable to common stockholders was $43,530,000,$53,366,000, or $0.18$0.24 per diluted share, for the three months ended September 30, 2017,2022, compared to $50,615,000,$50,318,000, or $0.23 per diluted share, for the three months ended September 30, 2016.2021. FFO attributable to common stockholders for the three months ended September 30, 20172022 and 20162021 includes the impact of other non-core items, which are listed in the table on page 63.57. The aggregate of thesethe non-core items, net of amounts attributable to noncontrolling interests, decreased FFO attributable to common stockholders for the three months ended September 30, 20172022 by $8,839,000, $883,000, or $0.04$0.00 per diluted share, and increased FFO attributable to common stockholders for the three months ended September 30, 20162021 by $5,379,000,$249,000, respectively, or $0.02$0.00 per diluted share.
Core Funds from Operations (“Core FFO”) attributable to common stockholders, which excludes the impact of the non-core items listed on page 63,57, was $52,369,000 and $45,236,000,$54,249,000, or $0.22 and $0.21$0.24 per diluted share, for the three months ended September 30, 2017 and 2016, respectively. 2022, compared to $50,069,000, or $0.23 per diluted share, for the three months ended September 30, 2021.
See page 63 “Non-GAAP Financial Measures – FFO and Core FFO” for a reconciliation to net income in accordance with GAAP and the reasons why we believe these non-GAAP measures are useful.
Same Store NOIResults
The table below summarizes the percentage increase (decrease) in our share of Same Store NOI and Same Store Cash NOI, by segment, for the three months ended September 30, 20172022 versus September 30, 2016.2021.
(Amounts in thousands) |
| Total |
|
| New York |
|
| Washington, D.C. |
|
| San Francisco |
| ||||||||||||||||
|
| Total |
|
| New York |
|
| San Francisco |
| |||||||||||||||||||
Same Store NOI |
|
| 0.2 | % |
|
| (2.2 | %) |
|
| 19.2 | % |
|
| 2.1 | % |
|
| 6.3 | % |
|
| 10.0 | % |
|
| (0.4 | %) |
Same Store Cash NOI |
|
| 21.3 | % |
|
| 17.4 | % |
|
| 54.3 | % |
|
| 18.8 | % |
|
| 0.4 | % |
|
| 6.2 | % |
|
| (11.0 | %) |
See page 56 “Non-GAAPpages 49-57 “Non-GAAP Financial Measures – NOI” and page 60 “Non-GAAP Financial Measures – Same Store NOI”Measures” for a reconciliation of these measures to net income in accordance withthe most directly comparable GAAP measure and the reasons why we believe these non-GAAP measures are useful.
35
Financial Results - Nine Months Ended September 30, 20172022 and 20162021
Net Income, (Loss), FFO and Core FFO
Net income attributable to common stockholders was $93,174,000,$1,474,000, or $0.40$0.01 per diluted share, for the nine months ended September 30, 2017,2022, compared to a net loss attributable to common stockholders of $3,445,000,$21,576,000, or $0.02$0.10 per diluted share, for the nine months ended September 30, 2016. 2021. Net loss attributable to common stockholders for the nine months ended September 30, 2021 includes a $10,688,000 contribution to an unconsolidated joint venture that was expensed in accordance with GAAP.
FFO attributable to common stockholders was $157,437,000,$161,561,000, or $0.67$0.73 per diluted share, for the nine months ended September 30, 2017,2022, compared to $154,106,000,$139,135,000, or $0.71$0.64 per diluted share, for the nine months ended September 30, 2016.2021. FFO attributable to common stockholders for the nine months ended September 30, 20172021 includes a $10,688,000 contribution to an unconsolidated joint venture that was expensed in accordance with GAAP. FFO attributable to common stockholders for the nine months ended September 30, 2022 and 20162021 also includes the impact of other non-core items, which are listed in the table on page 63.57. The aggregate of thesethe non-core items, net of amounts attributable to noncontrolling interests, decreased FFO attributable to common stockholders for the nine months ended September 30, 20172022 and 2021 by $1,002,000,$899,000 and $9,114,000, respectively, or $0.00 per diluted share, and increased FFO attributable to common stockholders for the nine months ended September 30, 2016 by $9,557,000, or $0.04 per diluted share. share, respectively.
Core FFO attributable to common stockholders, which excludes the impact of the non-core items listed on page 63,57, was $158,439,000 and $144,549,000,$162,460,000, or $0.67 and $0.67$0.73 per diluted share, for the nine months ended September 30, 2017 and 2016, respectively.2022, compared to $148,249,000, or $0.68 per diluted share, for the nine months ended September 30, 2021.
See page 63 “Non-GAAP Financial Measures – FFO and Core FFO” for a reconciliation to net income in accordance with GAAP and the reasons why we believe these non-GAAP measures are useful.
Same Store NOIResults
The table below summarizes the percentage increase (decrease) increase in our share of Same Store NOI and Same Store Cash NOI, by segment, for the nine months ended September 30, 20172022 versus September 30, 2016.2021.
(Amounts in thousands) |
| Total |
|
| New York |
|
| Washington, D.C. |
|
| San Francisco |
| ||||||||||||||||
|
| Total |
|
| New York |
|
| San Francisco |
| |||||||||||||||||||
Same Store NOI |
|
| (3.3 | %) |
|
| (8.0 | %) |
|
| 23.9 | % |
|
| 2.4 | % |
|
| 4.1 | % |
|
| 8.2 | % |
|
| (3.3 | %) |
Same Store Cash NOI |
|
| 9.2 | % |
|
| 4.3 | % |
|
| 41.1 | % |
|
| 8.6 | % |
|
| 3.2 | % |
|
| 7.3 | % |
|
| (5.1 | %) |
See page 56 “Non-GAAPpages 49-57 “Non-GAAP Financial Measures – NOI” and page 60 “Non-GAAP Financial Measures – Same Store NOI”Measures” for a reconciliation of these measures to net income in accordance withthe most directly comparable GAAP measure and the reasons why we believe these non-GAAP measures are useful.
36
Results of Operations - Three Months Ended September 30, 20172022 and 2021
The following pages summarize our consolidated results of operations for the three months ended September 30, 20172022 and 2016.2021.
|
|
|
|
|
| For the Three Months Ended September 30, |
|
|
|
|
| |||||
(Amounts in thousands) | 2017 |
|
| 2016 |
|
| Change |
| ||||||||
REVENUES: |
|
|
|
|
|
|
|
|
|
|
| |||||
| Rental income | $ | 156,384 |
|
| $ | 149,019 |
|
| $ | 7,365 |
| ||||
| Tenant reimbursement income |
| 14,053 |
|
|
| 11,978 |
|
|
| 2,075 |
| ||||
| Fee and other income |
| 9,333 |
|
|
| 10,321 |
|
|
| (988 | ) | ||||
|
| Total revenues |
| 179,770 |
|
|
| 171,318 |
|
|
| 8,452 |
| |||
EXPENSES: |
|
|
|
|
|
|
|
|
|
|
| |||||
| Operating |
| 68,264 |
|
|
| 64,025 |
|
|
| 4,239 |
| ||||
| Depreciation and amortization |
| 66,515 |
|
|
| 66,376 |
|
|
| 139 |
| ||||
| General and administrative |
| 14,470 |
|
|
| 13,235 |
|
|
| 1,235 |
| ||||
| Transaction related costs |
| 274 |
|
|
| 282 |
|
|
| (8 | ) | ||||
|
| Total expenses |
| 149,523 |
|
|
| 143,918 |
|
|
| 5,605 |
| |||
Operating income |
| 30,247 |
|
|
| 27,400 |
|
|
| 2,847 |
| |||||
| Income from unconsolidated joint ventures |
| 671 |
|
|
| 1,792 |
|
|
| (1,121 | ) | ||||
| Loss from unconsolidated real estate funds |
| (3,930 | ) |
|
| (1,254 | ) |
|
| (2,676 | ) | ||||
| Interest and other (loss) income, net |
| (17,668 | ) |
|
| 2,299 |
|
|
| (19,967 | ) | ||||
| Interest and debt expense |
| (35,733 | ) |
|
| (38,278 | ) |
|
| 2,545 |
| ||||
| Unrealized gain on interest rate swaps |
| - |
|
|
| 12,728 |
|
|
| (12,728 | ) | ||||
Net (loss) income before income taxes |
| (26,413 | ) |
|
| 4,687 |
|
|
| (31,100 | ) | |||||
| Income tax benefit (expense) |
| 1,010 |
|
|
| (218 | ) |
|
| 1,228 |
| ||||
Net (loss) income |
| (25,403 | ) |
|
| 4,469 |
|
|
| (29,872 | ) | |||||
Less net (income) loss attributable to noncontrolling interests in: |
|
|
|
|
|
|
|
|
|
|
| |||||
| Consolidated joint ventures |
| 14,217 |
|
|
| (4,703 | ) |
|
| 18,920 |
| ||||
| Consolidated real estate fund |
| (114 | ) |
|
| 67 |
|
|
| (181 | ) | ||||
| Operating Partnership |
| 1,086 |
|
|
| 28 |
|
|
| 1,058 |
| ||||
Net loss attributable to common stockholders | $ | (10,214 | ) |
| $ | (139 | ) |
| $ | (10,075 | ) |
|
|
|
|
|
| For the Three Months Ended September 30, |
|
|
|
| ||||||
(Amounts in thousands) | 2022 |
|
| 2021 |
|
| Change |
| ||||||||
Revenues: |
|
|
|
|
|
|
|
| ||||||||
| Rental revenue | $ | 179,250 |
|
| $ | 170,851 |
|
| $ | 8,399 |
| ||||
| Fee and other income |
| 7,897 |
|
|
| 8,280 |
|
|
| (383 | ) | ||||
|
| Total revenues |
| 187,147 |
|
|
| 179,131 |
|
|
| 8,016 |
| |||
Expenses: |
|
|
|
|
|
|
|
| ||||||||
| Operating |
| 72,845 |
|
|
| 67,131 |
|
|
| 5,714 |
| ||||
| Depreciation and amortization |
| 58,284 |
|
|
| 57,522 |
|
|
| 762 |
| ||||
| General and administrative |
| 13,150 |
|
|
| 13,257 |
|
|
| (107 | ) | ||||
| Transaction related costs |
| 105 |
|
|
| 87 |
|
|
| 18 |
| ||||
|
| Total expenses |
| 144,384 |
|
|
| 137,997 |
|
|
| 6,387 |
| |||
Other income (expense): |
|
|
|
|
|
|
|
| ||||||||
| (Loss) income from unconsolidated joint ventures |
| (5,797 | ) |
|
| 223 |
|
|
| (6,020 | ) | ||||
| Income from unconsolidated real estate funds |
| 300 |
|
|
| 276 |
|
|
| 24 |
| ||||
| Interest and other income, net |
| 1,580 |
|
|
| 138 |
|
|
| 1,442 |
| ||||
| Interest and debt expense |
| (36,949 | ) |
|
| (36,266 | ) |
|
| (683 | ) | ||||
Income before income taxes |
| 1,897 |
|
|
| 5,505 |
|
|
| (3,608 | ) | |||||
| Income tax expense |
| (673 | ) |
|
| (873 | ) |
|
| 200 |
| ||||
Net income |
| 1,224 |
|
|
| 4,632 |
|
|
| (3,408 | ) | |||||
Less net (income) loss attributable to noncontrolling |
|
|
|
|
|
|
| |||||||||
| interests in: |
|
|
|
|
|
|
|
| |||||||
| Consolidated joint ventures |
| (4,179 | ) |
|
| (3,768 | ) |
|
| (411 | ) | ||||
| Consolidated real estate fund |
| 1,309 |
|
|
| (3,123 | ) |
|
| 4,432 |
| ||||
| Operating Partnership |
| 109 |
|
|
| 204 |
|
|
| (95 | ) | ||||
Net loss attributable to common stockholders | $ | (1,537 | ) |
| $ | (2,055 | ) |
| $ | 518 |
|
Revenues37
Revenues
Our revenues, which consist primarily of rental income, tenant reimbursement income,revenue and fee and other income, were $179,770,000$187,147,000 for the three months ended September 30, 2017,2022, compared to $171,318,000$179,131,000 for the three months ended September 30, 2016,2021, an increase of $8,452,000.$8,016,000. Below are the details of the increase (decrease)or decrease by segment.
(Amounts in thousands) |
| Total |
|
| New York |
|
| San Francisco |
|
| Other |
|
| ||||
Rental revenue |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Same store operations |
| $ | 9,750 |
|
| $ | 9,272 |
| (1) | $ | 478 |
|
| $ | - |
|
|
Other, net |
|
| (1,351 | ) |
|
| (2,287 | ) |
|
| 474 |
|
|
| 462 |
|
|
Increase in rental revenue |
| $ | 8,399 |
|
| $ | 6,985 |
|
| $ | 952 |
|
| $ | 462 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Fee and other income |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Fee income |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Asset management |
| $ | (114 | ) |
| $ | - |
|
| $ | - |
|
| $ | (114 | ) |
|
Property management |
|
| (327 | ) |
|
| - |
|
|
| - |
|
|
| (327 | ) |
|
Acquisition, disposition, leasing and other |
|
| (988 | ) |
|
| - |
|
|
| - |
|
|
| (988 | ) |
|
Decrease in fee income |
|
| (1,429 | ) |
|
| - |
|
|
| - |
|
|
| (1,429 | ) |
|
Other income |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Same store operations |
|
| 1,046 |
|
|
| 604 |
|
|
| 188 |
|
|
| 254 |
|
|
Increase in other income |
|
| 1,046 |
|
|
| 604 |
|
|
| 188 |
|
|
| 254 |
|
|
(Decrease) increase in fee and other income |
| $ | (383 | ) |
| $ | 604 |
|
| $ | 188 |
|
| $ | (1,175 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Total increase (decrease) in revenues |
| $ | 8,016 |
|
| $ | 7,589 |
|
| $ | 1,140 |
|
| $ | (713 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Amounts in thousands) |
| Total |
|
| New York |
|
| Washington, D.C. |
|
| San Francisco |
|
| Other |
|
| |||||||
Rental income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Acquisitions (1) |
| $ | 15,574 |
|
| $ | - |
|
| $ | - |
|
| $ | 15,574 |
|
| $ | - |
|
| ||
Dispositions (2) |
|
| (8,325 | ) |
|
| - |
|
|
| (8,325 | ) |
|
| - |
|
|
| - |
|
| ||
Same store operations |
|
| (188 | ) |
|
| (765 | ) |
|
| 901 |
|
|
| 537 |
|
|
| (861 | ) |
| ||
Other, net |
|
| 304 |
|
|
| 175 |
|
|
| - |
|
|
| 129 |
|
|
| - |
|
| ||
Increase (decrease) in rental income |
| $ | 7,365 |
|
| $ | (590 | ) |
| $ | (7,424 | ) |
| $ | 16,240 |
|
| $ | (861 | ) |
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Tenant reimbursement income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Acquisitions (1) |
| $ | 1,769 |
|
| $ | - |
|
| $ | - |
|
| $ | 1,769 |
|
| $ | - |
|
| ||
Dispositions (2) |
|
| (646 | ) |
|
| - |
|
|
| (646 | ) |
|
| - |
|
|
| - |
|
| ||
Same store operations |
|
| 952 |
|
|
| 182 |
|
|
| 1,003 |
|
|
| (233 | ) |
|
| - |
|
| ||
Increase in tenant |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
reimbursement income |
| $ | 2,075 |
|
| $ | 182 |
|
| $ | 357 |
|
| $ | 1,536 |
|
| $ | - |
|
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Fee and other income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Property management |
| $ | 269 |
|
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | 269 |
|
| ||
Asset management |
|
| (6 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| (6 | ) |
| ||
Acquisition and disposition |
|
| 1,288 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 1,288 |
|
| ||
Other |
|
| 307 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 307 |
|
| ||
Increase in fee income |
|
| 1,858 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 1,858 |
|
| ||
Acquisitions (1) |
|
| 241 |
|
|
| - |
|
|
| - |
|
|
| 241 |
|
|
| - |
|
| ||
Dispositions (2) |
|
| (84 | ) |
|
| - |
|
|
| (84 | ) |
|
| - |
|
|
| - |
|
| ||
Lease termination income |
|
| (2,506 | ) |
|
| (2,782 | ) |
|
| - |
|
|
| 276 |
|
|
| - |
|
| ||
Other income |
|
| (497 | ) |
|
| (346 | ) |
|
| (92 | ) |
|
| 24 |
|
|
| (83 | ) |
| ||
(Decrease) increase in other income |
|
| (2,846 | ) |
|
| (3,128 | ) |
|
| (176 | ) |
|
| 541 |
|
|
| (83 | ) |
| ||
(Decrease) increase in fee and other income |
| $ | (988 | ) |
| $ | (3,128 | ) |
| $ | (176 | ) |
| $ | 541 |
|
| $ | 1,775 |
|
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Total increase (decrease) in revenues |
| $ | 8,452 |
|
| $ | (3,536 | ) |
| $ | (7,243 | ) |
| $ | 18,317 |
|
| $ | 914 |
|
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
38
Expenses
Our expenses, which consist primarily of operating, depreciation and amortization, general and administrative and transaction related costs, were $149,523,000$144,384,000 for the three months ended September 30, 2017,2022, compared to $143,918,000$137,997,000 for the three months ended September 30, 2016,2021, an increase of $5,605,000.$6,387,000. Below are the details of the increase (decrease)or decrease by segment.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
(Amounts in thousands) |
| Total |
|
| New York |
|
| San Francisco |
|
| Other |
|
| |||||
Operating |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Same store operations |
| $ | 5,727 |
|
| $ | 4,876 |
| (1) | $ | 851 |
|
| $ | - |
|
| |
Other, net |
|
| (13 | ) |
|
| - |
|
|
| - |
|
|
| (13 | ) |
| |
Increase (decrease) in operating |
| $ | 5,714 |
|
| $ | 4,876 |
|
| $ | 851 |
|
| $ | (13 | ) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Depreciation and amortization |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Operations |
| $ | 762 |
|
| $ | 1,940 |
|
| $ | (1,416 | ) | (2) | $ | 238 |
|
| |
Increase (decrease) in depreciation and amortization | $ | 762 |
|
| $ | 1,940 |
|
| $ | (1,416 | ) |
| $ | 238 |
|
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
General and administrative |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Mark-to-market of investments |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
in our deferred compensation plan |
| $ | 83 |
|
| $ | - |
|
| $ | - |
|
| $ | 83 |
| (3) | |
Operations |
|
| (190 | ) |
|
| - |
|
|
| - |
|
|
| (190 | ) |
| |
Decrease in general and administrative |
| $ | (107 | ) |
| $ | - |
|
| $ | - |
|
| $ | (107 | ) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Increase in transaction related costs |
| $ | 18 |
|
| $ | - |
|
| $ | - |
|
| $ | 18 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Total increase (decrease) in expenses |
| $ | 6,387 |
|
| $ | 6,816 |
|
| $ | (565 | ) |
| $ | 136 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Amounts in thousands) |
| Total |
|
| New York |
|
| Washington, D.C. |
|
| San Francisco |
|
| Other |
|
| |||||||
Operating |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Acquisitions (1) |
| $ | 6,352 |
|
| $ | - |
|
| $ | - |
|
| $ | 6,352 |
|
| $ | - |
|
| ||
Dispositions (2) |
|
| (2,778 | ) |
|
| - |
|
|
| (2,778 | ) |
|
| - |
|
|
| - |
|
| ||
Same store operations |
|
| 493 |
|
|
| 685 |
|
|
| 347 |
|
|
| (182 | ) |
|
| (357 | ) |
| ||
Bad debt expense |
|
| 172 |
|
|
| 176 |
|
|
| (4 | ) |
|
| - |
|
|
| - |
|
| ||
Increase (decrease) in operating |
| $ | 4,239 |
|
| $ | 861 |
|
| $ | (2,435 | ) |
| $ | 6,170 |
|
| $ | (357 | ) |
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Depreciation and amortization |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Acquisitions (1) |
| $ | 10,391 |
|
| $ | - |
|
| $ | - |
|
| $ | 10,391 |
|
| $ | - |
|
| ||
Dispositions (2) |
|
| (2,604 | ) |
|
| - |
|
|
| (2,604 | ) |
|
| - |
|
|
| - |
|
| ||
Operations |
|
| (7,648 | ) |
|
| (6,918 | ) |
|
| 95 |
|
|
| (776 | ) |
|
| (49 | ) |
| ||
Increase (decrease) in depreciation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
and amortization |
| $ | 139 |
|
| $ | (6,918 | ) |
| $ | (2,509 | ) |
| $ | 9,615 |
|
| $ | (49 | ) |
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
General and administrative |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Operations |
| $ | (83 | ) |
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | (83 | ) |
| ||
Stock-based compensation |
|
| 1,242 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 1,242 |
|
| ||
Mark-to-market of investments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
in our deferred compensation plan |
|
| 76 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 76 |
| (3) | ||
Increase in general |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
and administrative |
| $ | 1,235 |
|
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | 1,235 |
|
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Decrease in transaction related costs |
| $ | (8 | ) |
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | (8 | ) |
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Total increase (decrease) in expenses |
| $ | 5,605 |
|
| $ | (6,057 | ) |
| $ | (4,944 | ) |
| $ | 15,785 |
|
| $ | 821 |
|
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) Income from Unconsolidated Joint Ventures
IncomeLoss from unconsolidated joint ventures was $671,000$5,797,000 for the three months ended September 30, 2017,2022, compared to $1,792,000income of $223,000 in the three months ended September 30, 2021, a decrease in income of $6,020,000. This decrease resulted from:
(Amounts in thousands) |
|
|
|
| |
One Steuart Lane |
| $ | (4,879 | ) | (1) |
Other, net |
|
| (1,141 | ) |
|
Total decrease in income |
| $ | (6,020 | ) |
|
Income from Unconsolidated Real Estate Funds
Income from unconsolidated real estate funds was $300,000 for the three months ended September 30, 2016, a decrease of $1,121,000. This decrease resulted from:
(Amounts in thousands) |
|
|
|
|
|
712 Fifth Avenue ($596 in 2017, compared to $1,772 in 2016) |
| $ | (1,176 | ) | (1) |
60 Wall Street (acquired in January 2017) |
|
| (45 | ) |
|
75 Howard (acquired in May 2017) |
|
| 100 |
| (2) |
Oder-Center, Germany ($20 in 2017 and 2016) |
|
| - |
|
|
Total decrease |
| $ | (1,121 | ) |
|
|
|
|
|
Loss from Unconsolidated Real Estate Funds
Loss from unconsolidated real estate funds was $3,930,0002022, compared to $276,000 for the three months ended September 30, 2017, compared to $1,254,0002021, an increase in income of $24,000.
39
Interest and Other Income, net
Interest and other income was $1,580,000 for the three months ended September 30, 2016, an increase in loss of $2,676,000. This increase resulted primarily from a decrease in carried interest of $2,334,000.
Interest and Other (Loss) Income, net
Interest and other loss was $17,668,0002022, compared to $138,000 for the three months ended September 30, 2017, compared to2021, an increase in income of $2,299,000$1,442,000. This increase resulted from:
(Amounts in thousands) |
|
|
|
| |
Higher yields on short-term investments |
| $ | 1,195 |
|
|
Mark-to-market of investments in our deferred compensation plan in 2021 (1) |
|
| 83 |
|
|
Other, net |
|
| 164 |
|
|
Total increase in income |
| $ | 1,442 |
|
|
Interest and Debt Expense
Interest and debt expense was $36,949,000 for the three months ended September 30, 2016, a decrease in income of $19,967,000. This decrease resulted from:
(Amounts in thousands) |
|
|
|
|
|
Valuation allowance on preferred equity investment in 2017 (1) |
| $ | (19,588 | ) | |
Decrease in preferred equity investment income ($961 in 2017, compared to $1,460 in 2016) (2) |
|
| (499 | ) | |
Increase in the value of investments in our deferred compensation plan (which is offset by an increase in “general and administrative”) |
|
| 76 |
| |
Other, net |
|
| 44 |
| |
Total decrease |
|
| $ | (19,967 | ) |
|
|
|
|
Interest and Debt Expense
Interest and debt expense was $35,733,0002022, compared to $36,266,000 for the three months ended September 30, 2017,2021, an increase of $683,000. This increase resulted primarily from higher interest on variable rate debt due to an increase in average LIBOR rates in the current year's three months compared to $38,278,000prior year's three months, partially offset by lower amortization of deferred financing costs in connection with the refinancing of 1301 Avenue of the Americas in July 2021.
Income Tax Expense
Income tax expense was $673,000 for the three months ended September 30, 2016, a decrease of $2,545,000. This decrease resulted from:
(Amounts in thousands) |
|
|
|
|
$445 million of debt repayments ($274 million at 900 Third Avenue in October 2016 and $171 million at 1899 Pennsylvania Avenue and Liberty Place in May 2017) |
| $ | (4,921 | ) |
$975 million refinancing of One Market Plaza in January 2017 |
|
| (4,020 | ) |
$210 million defeasance of Waterview in October 2016 |
|
| (3,131 | ) |
$850 million financing of 1301 Avenue of the Americas in October 2016 |
|
| 6,541 |
|
$228 million assumption of existing debt at 50 Beale upon acquisition in July 2017 |
|
| 1,723 |
|
Amortization of deferred financing costs |
|
| 1,361 |
|
Other, net |
|
| (98 | ) |
Total decrease |
| $ | (2,545 | ) |
Unrealized Gain on Interest Rate Swaps
Unrealized gain on interest rate swaps was $12,728,0002022, compared to $873,000 for the three months ended September 30, 2016 and was comprised of (i) $10,678,000 of unrealized gains in 2016 relating to swaps aggregating $840,000,000 on One Market Plaza that were settled upon the refinancing in January 2017 and (ii) $2,050,000 of unrealized gains in 2016 relating to swaps aggregating $162,000,000 on 900 Third Avenue that were settled upon the repayment in October 2016.
Income Tax Benefit (Expense)
Income tax benefit was $1,010,000 for the three months ended September 30, 2017, compared to an expense of $218,000 for the three months ended September 30, 2016,2021, a decrease in expense of $1,228,000. The$200,000. This decrease in expense wasresulted primarily due tofrom lower taxable income onattributable to our taxable REIT subsidiaries.subsidiaries in the current year’s three months.
Net (Loss) Income Attributable to Noncontrolling Interests in Consolidated Joint Ventures
Net lossincome attributable to noncontrolling interestinterests in consolidated joint ventures was $14,217,000$4,179,000 for the three months ended September 30, 2017,2022, compared to income of $4,703,000$3,768,000 for the three months ended September 30, 2016, a decrease2021, an increase in income allocated to noncontrolling interests of $411,000. This increase in consolidated joint ventures of $18,920,000. This decreaseincome resulted from:primarily from higher income attributable to One Market Plaza.
(Amounts in thousands) |
|
|
|
|
|
Valuation allowance on preferred equity investment in 2017 |
| $ | (14,808 | ) |
|
Lower preferred equity investment income ($718 in 2017, compared to $1,105 in 2016) |
|
| (387 | ) |
|
Lower income attributable to One Market Plaza ($853 in 2017, compared to $3,598 in 2016) |
|
| (2,745 | ) |
|
Loss attributable to 50 Beale Street (acquired in July 2017) |
|
| (980 | ) |
|
Total decrease |
| $ | (18,920 | ) |
|
Net Income (Loss)Loss (Income) Attributable to Noncontrolling Interests in Consolidated Real Estate Fund
Net incomeloss attributable to noncontrolling interests in consolidated real estate fund was $114,000$1,309,000 for the three months ended September 30, 2017,2022, compared to a lossnet income attributable to noncontrolling interests of $67,000$3,123,000 for the three months ended September 30, 2016, an increase2021, a decrease in income attributableallocated to noncontrolling interest of $4,432,000. This decrease in income resulted primarily from lower gain on sale of residential condominium units at One Steuart Lane resulting from fewer units sold in the noncontrolling interests of $181,000. This increase resulted from a higher net income subject to allocation to the noncontrolling interests for thecurrent year’s three months ended September 30, 2017. months.
Net Loss Attributable to Noncontrolling Interests in Operating Partnership
Net loss attributable to noncontrolling interests in the Operating Partnership was $1,086,000$109,000 for the three months ended September 30, 2017,2022, compared to $28,000$204,000 for the three months ended September 30, 2016, an increase2021, a decrease in loss attributableallocated to noncontrolling interests of $1,058,000.$95,000. This increasedecrease in loss resulted from a higherlower net loss subject to allocation to the unitholders of the Operating Partnership for the three months ended September 30, 2017.2022.
40
Results of Operations - Nine Months Ended September 30, 20172022 and 2021
The following pages summarize our consolidated results of operations for the nine months ended September 30, 20172022 and 2016.2021.
|
|
|
|
|
| For the Nine Months Ended September 30, |
|
|
|
|
| |||||
(Amounts in thousands) | 2017 |
|
| 2016 |
|
| Change |
| ||||||||
REVENUES: |
|
|
|
|
|
|
|
|
|
|
| |||||
| Rental income | $ | 469,961 |
|
| $ | 445,452 |
|
| $ | 24,509 |
| ||||
| Tenant reimbursement income |
| 38,761 |
|
|
| 33,101 |
|
|
| 5,660 |
| ||||
| Fee and other income |
| 29,988 |
|
|
| 37,986 |
|
|
| (7,998 | ) | ||||
|
| Total revenues |
| 538,710 |
|
|
| 516,539 |
|
|
| 22,171 |
| |||
EXPENSES: |
|
|
|
|
|
|
|
|
|
|
| |||||
| Operating |
| 197,696 |
|
|
| 186,964 |
|
|
| 10,732 |
| ||||
| Depreciation and amortization |
| 198,143 |
|
|
| 208,475 |
|
|
| (10,332 | ) | ||||
| General and administrative |
| 44,624 |
|
|
| 39,335 |
|
|
| 5,289 |
| ||||
| Transaction related costs |
| 1,051 |
|
|
| 1,725 |
|
|
| (674 | ) | ||||
|
| Total expenses |
| 441,514 |
|
|
| 436,499 |
|
|
| 5,015 |
| |||
Operating income |
| 97,196 |
|
|
| 80,040 |
|
|
| 17,156 |
| |||||
| Income from unconsolidated joint ventures |
| 19,143 |
|
|
| 5,291 |
|
|
| 13,852 |
| ||||
| Loss from unconsolidated real estate funds |
| (6,053 | ) |
|
| (2,540 | ) |
|
| (3,513 | ) | ||||
| Interest and other (loss) income, net |
| (11,982 | ) |
|
| 5,029 |
|
|
| (17,011 | ) | ||||
| Interest and debt expense |
| (107,568 | ) |
|
| (113,406 | ) |
|
| 5,838 |
| ||||
| Loss on early extinguishment of debt |
| (7,877 | ) |
|
| - |
|
|
| (7,877 | ) | ||||
| Gain on sale of real estate |
| 133,989 |
|
|
| - |
|
|
| 133,989 |
| ||||
| Unrealized gain on interest rate swaps |
| 1,802 |
|
|
| 29,661 |
|
|
| (27,859 | ) | ||||
Net income before income taxes |
| 118,650 |
|
|
| 4,075 |
|
|
| 114,575 |
| |||||
| Income tax (expense) benefit |
| (4,242 | ) |
|
| 817 |
|
|
| (5,059 | ) | ||||
Net income |
| 114,408 |
|
|
| 4,892 |
|
|
| 109,516 |
| |||||
Less net (income) loss attributable to noncontrolling interests in: |
|
|
|
|
|
|
|
|
|
|
| |||||
| Consolidated joint ventures |
| 11,029 |
|
|
| (10,062 | ) |
|
| 21,091 |
| ||||
| Consolidated real estate fund |
| (20,195 | ) |
|
| 819 |
|
|
| (21,014 | ) | ||||
| Operating Partnership |
| (12,068 | ) |
|
| 906 |
|
|
| (12,974 | ) | ||||
Net income (loss) attributable to common stockholders | $ | 93,174 |
|
| $ | (3,445 | ) |
| $ | 96,619 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| For the Nine Months Ended September 30, |
|
|
|
| ||||||
(Amounts in thousands) | 2022 |
|
| 2021 |
|
| Change |
| ||||||||
Revenues: |
|
|
|
|
|
|
|
| ||||||||
| Rental revenue | $ | 526,415 |
|
| $ | 518,625 |
|
| $ | 7,790 |
| ||||
| Fee and other income |
| 29,934 |
|
|
| 23,941 |
|
|
| 5,993 |
| ||||
|
| Total revenues |
| 556,349 |
|
|
| 542,566 |
|
|
| 13,783 |
| |||
Expenses: |
|
|
|
|
|
|
|
| ||||||||
| Operating |
| 207,320 |
|
|
| 197,821 |
|
|
| 9,499 |
| ||||
| Depreciation and amortization |
| 171,306 |
|
|
| 175,752 |
|
|
| (4,446 | ) | ||||
| General and administrative |
| 45,501 |
|
|
| 46,039 |
|
|
| (538 | ) | ||||
| Transaction related costs |
| 381 |
|
|
| 503 |
|
|
| (122 | ) | ||||
|
| Total expenses |
| 424,508 |
|
|
| 420,115 |
|
|
| 4,393 |
| |||
Other income (expense): |
|
|
|
|
|
|
|
| ||||||||
| Loss from unconsolidated joint ventures |
| (15,326 | ) |
|
| (20,810 | ) |
|
| 5,484 |
| ||||
| Income from unconsolidated real estate funds |
| 625 |
|
|
| 604 |
|
|
| 21 |
| ||||
| Interest and other income, net |
| 2,607 |
|
|
| 2,510 |
|
|
| 97 |
| ||||
| Interest and debt expense |
| (106,804 | ) |
|
| (105,919 | ) |
|
| (885 | ) | ||||
Income (loss) before income taxes |
| 12,943 |
|
|
| (1,164 | ) |
|
| 14,107 |
| |||||
| Income tax expense |
| (1,559 | ) |
|
| (2,448 | ) |
|
| 889 |
| ||||
Net income (loss) |
| 11,384 |
|
|
| (3,612 | ) |
|
| 14,996 |
| |||||
Less net (income) loss attributable to noncontrolling |
|
|
|
|
|
|
| |||||||||
| interests in: |
|
|
|
|
|
|
|
| |||||||
| Consolidated joint ventures |
| (12,383 | ) |
|
| (16,924 | ) |
|
| 4,541 |
| ||||
| Consolidated real estate fund |
| 2,677 |
|
|
| (3,179 | ) |
|
| 5,856 |
| ||||
| Operating Partnership |
| (204 | ) |
|
| 2,139 |
|
|
| (2,343 | ) | ||||
Net income (loss) attributable to common stockholders | $ | 1,474 |
|
| $ | (21,576 | ) |
| $ | 23,050 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues41
Revenues
Our revenues, which consist primarily of rental income, tenant reimbursement income,revenue and fee and other income, were $538,710,000$556,349,000 for the nine months ended September 30, 2017,2022, compared to $516,539,000$542,566,000 for the nine months ended September 30, 2016,2021, an increase of $22,171,000.$13,783,000. Below are the details of the increase (decrease)or decrease by segment.
(Amounts in thousands) |
| Total |
|
| New York |
|
| San Francisco |
|
| Other |
|
| ||||
Rental revenue |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Same store operations |
| $ | 12,023 |
|
| $ | 18,454 |
| (1) | $ | (6,431 | ) | (2) | $ | - |
|
|
Other, net |
|
| (4,233 | ) |
|
| (415 | ) |
|
| (4,285 | ) | (3) |
| 467 |
|
|
Increase (decrease) in rental revenue |
| $ | 7,790 |
|
| $ | 18,039 |
|
| $ | (10,716 | ) |
| $ | 467 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Fee and other income |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Fee income |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Asset management |
| $ | (1,037 | ) |
| $ | - |
|
| $ | - |
|
| $ | (1,037 | ) |
|
Property management |
|
| (286 | ) |
|
| - |
|
|
| - |
|
|
| (286 | ) |
|
Acquisition, disposition, leasing and other |
|
| 4,985 |
|
|
| - |
|
|
| - |
|
|
| 4,985 |
| (4) |
Increase in fee income |
|
| 3,662 |
|
|
| - |
|
|
| - |
|
|
| 3,662 |
|
|
Other income |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Same store operations |
|
| 2,331 |
|
|
| 1,227 |
|
|
| 841 |
|
|
| 263 |
|
|
Increase in other income |
|
| 2,331 |
|
|
| 1,227 |
|
|
| 841 |
|
|
| 263 |
|
|
Increase in fee and other income |
| $ | 5,993 |
|
| $ | 1,227 |
|
| $ | 841 |
|
| $ | 3,925 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Total increase (decrease) in revenues |
| $ | 13,783 |
|
| $ | 19,266 |
|
| $ | (9,875 | ) |
| $ | 4,392 |
|
|
(Amounts in thousands) |
| Total |
|
| New York |
|
| Washington, D.C. |
|
| San Francisco |
|
| Other |
|
| |||||||
Rental income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Acquisitions (1) |
| $ | 38,709 |
|
| $ | - |
|
| $ | - |
|
| $ | 38,709 |
|
| $ | - |
|
| ||
Dispositions (2) |
|
| (13,637 | ) |
|
| - |
|
|
| (13,637 | ) |
|
| - |
|
|
| - |
|
| ||
Same store operations |
|
| (3,434 | ) |
|
| (10,014 | ) | (3) |
| 4,187 |
|
|
| 3,630 |
|
|
| (1,237 | ) |
| ||
Other, net |
|
| 2,871 |
|
|
| 2,742 |
| (4) |
| - |
|
|
| 129 |
|
|
| - |
|
| ||
Increase (decrease) in rental income |
| $ | 24,509 |
|
| $ | (7,272 | ) |
| $ | (9,450 | ) |
| $ | 42,468 |
|
| $ | (1,237 | ) |
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Tenant reimbursement income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Acquisitions (1) |
| $ | 4,652 |
|
| $ | - |
|
| $ | - |
|
| $ | 4,652 |
|
| $ | - |
|
| ||
Dispositions (2) |
|
| (1,031 | ) |
|
| - |
|
|
| (1,031 | ) |
|
| - |
|
|
| - |
|
| ||
Same store operations |
|
| 2,039 |
|
|
| (1,011 | ) | (4) |
| 3,083 |
|
|
| (33 | ) |
|
| - |
|
| ||
Increase (decrease) in tenant |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
reimbursement income |
| $ | 5,660 |
|
| $ | (1,011 | ) |
| $ | 2,052 |
|
| $ | 4,619 |
|
| $ | - |
|
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Fee and other income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Property management |
| $ | 351 |
|
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | 351 |
|
| ||
Asset management |
|
| 1,122 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 1,122 |
|
| ||
Acquisition and disposition |
|
| 6,268 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 6,268 |
|
| ||
Other |
|
| 529 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 529 |
|
| ||
Increase in fee income |
|
| 8,270 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 8,270 |
|
| ||
Acquisitions (1) |
|
| 1,351 |
|
|
| - |
|
|
| - |
|
|
| 1,351 |
|
|
| - |
|
| ||
Dispositions (2) |
|
| (119 | ) |
|
| - |
|
|
| (119 | ) |
|
| - |
|
|
| - |
|
| ||
Lease termination income |
|
| (13,459 | ) |
|
| (13,605 | ) | (5) |
| - |
|
|
| 146 |
|
|
| - |
|
| ||
Other income |
|
| (4,041 | ) |
|
| (3,376 | ) |
|
| 739 |
|
|
| (1,448 | ) |
|
| 44 |
|
| ||
(Decrease) increase in other income |
|
| (16,268 | ) |
|
| (16,981 | ) |
|
| 620 |
|
|
| 49 |
|
|
| 44 |
|
| ||
(Decrease) increase in fee |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
and other income |
| $ | (7,998 | ) |
| $ | (16,981 | ) |
| $ | 620 |
|
| $ | 49 |
|
| $ | 8,314 |
|
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Total increase (decrease) in revenues |
| $ | 22,171 |
|
| $ | (25,264 | ) |
| $ | (6,778 | ) |
| $ | 47,136 |
|
| $ | 7,077 |
|
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
42
Expenses
Our expenses, which consist primarily of operating, depreciation and amortization, general and administrative and transaction related costs, were $441,514,000$424,508,000 for the nine months ended September 30, 2017,2022, compared to $436,499,000$420,115,000 for the nine months ended September 30, 2016,2021, an increase of $5,015,000.$4,393,000. Below are the details of the increase (decrease)or decrease by segment.
(Amounts in thousands) |
| Total |
|
| New York |
|
| San Francisco |
|
| Other |
|
| ||||
Operating |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Same store operations |
| $ | 9,127 |
|
| $ | 6,409 |
| (1) | $ | 2,718 |
|
| $ | - |
|
|
Other, net |
|
| 372 |
|
|
| - |
|
|
| - |
|
|
| 372 |
|
|
Increase in operating |
| $ | 9,499 |
|
| $ | 6,409 |
|
| $ | 2,718 |
|
| $ | 372 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Depreciation and amortization |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Operations |
| $ | (4,446 | ) |
| $ | 651 |
|
| $ | (5,264 | ) | (2) | $ | 167 |
|
|
(Decrease) increase in depreciation |
| $ | (4,446 | ) |
| $ | 651 |
|
| $ | (5,264 | ) |
| $ | 167 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
General and administrative |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Mark-to-market of investments |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
in our deferred compensation plan |
| $ | (1,502 | ) |
| $ | - |
|
| $ | - |
|
| $ | (1,502 | ) | (3) |
Operations |
|
| 964 |
|
|
| - |
|
|
| - |
|
|
| 964 |
|
|
Decrease in general and administrative |
| $ | (538 | ) |
| $ | - |
|
| $ | - |
|
| $ | (538 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Decrease in transaction related costs |
| $ | (122 | ) |
| $ | - |
|
| $ | - |
|
| $ | (122 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Total increase (decrease) in expenses |
| $ | 4,393 |
|
| $ | 7,060 |
|
| $ | (2,546 | ) |
| $ | (121 | ) |
|
(Amounts in thousands) |
| Total |
|
| New York |
|
| Washington, D.C. |
|
| San Francisco |
|
| Other |
|
| |||||||
Operating |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Acquisitions (1) |
| $ | 13,091 |
|
| $ | - |
|
| $ | - |
|
| $ | 13,091 |
|
| $ | - |
|
| ||
Dispositions (2) |
|
| (4,459 | ) |
|
| - |
|
|
| (4,459 | ) |
|
| - |
|
|
| - |
|
| ||
Same store operations |
|
| 2,371 |
|
|
| 2,496 |
|
|
| 1,148 |
|
|
| 372 |
|
|
| (1,645 | ) |
| ||
Bad debt expense |
|
| (271 | ) |
|
| (267 | ) |
|
| (4 | ) |
|
| - |
|
|
| - |
|
| ||
Increase (decrease) in operating |
| $ | 10,732 |
|
| $ | 2,229 |
|
| $ | (3,315 | ) |
| $ | 13,463 |
|
| $ | (1,645 | ) |
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Depreciation and amortization |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Acquisitions (1) |
| $ | 30,129 |
|
| $ | - |
|
| $ | - |
|
| $ | 30,129 |
|
| $ | - |
|
| ||
Dispositions (2) |
|
| (4,256 | ) |
|
| - |
|
|
| (4,256 | ) |
|
| - |
|
|
| - |
|
| ||
Operations |
|
| (36,205 | ) |
|
| (29,294 | ) | (3) |
| (3,250 | ) |
|
| (3,904 | ) |
|
| 243 |
|
| ||
(Decrease) increase in depreciation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
and amortization |
| $ | (10,332 | ) |
| $ | (29,294 | ) |
| $ | (7,506 | ) |
| $ | 26,225 |
|
| $ | 243 |
|
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
General and administrative |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Operations |
| $ | 43 |
|
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | 43 |
|
| ||
Stock-based Compensation |
|
| 4,781 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 4,781 |
|
| ||
Mark-to-market of investments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
in our deferred compensation plan |
|
| 3,339 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 3,339 |
| (4) | ||
Severance costs |
|
| (2,874 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| (2,874 | ) | (5) | ||
Increase in general |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
and administrative |
| $ | 5,289 |
|
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | 5,289 |
|
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Decrease in transaction related costs |
| $ | (674 | ) |
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | (674 | ) |
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Total increase (decrease) in expenses |
| $ | 5,015 |
|
| $ | (27,065 | ) |
| $ | (10,821 | ) |
| $ | 39,688 |
|
| $ | 3,213 |
|
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from Unconsolidated Joint Ventures
IncomeLoss from unconsolidated joint ventures was $19,143,000$15,326,000 for the nine months ended September 30, 2017,2022, compared to $5,291,000$20,810,000 in the nine months ended September 30, 2021, a decrease in loss of $5,484,000. This decrease resulted from:
712 Fifth Avenue |
| $ | 10,697 |
| (1) |
One Steuart Lane |
|
| (6,441 | ) | (2) |
Other, net |
|
| 1,228 |
|
|
Total decrease in loss |
| $ | 5,484 |
|
|
Income from Unconsolidated Real Estate Funds
Income from unconsolidated real estate funds was $625,000 for the nine months ended September 30, 2016, an increase of $13,852,000. This increase resulted from:
(Amounts in thousands) |
|
|
|
|
|
712 Fifth Avenue ($19,030 in 2017, compared to $5,233 in 2016) |
| $ | 13,797 |
| (1) |
60 Wall Street (acquired in January 2017) |
|
| (81 | ) |
|
75 Howard (acquired in May 2017) |
|
| 133 |
| (2) |
Oder-Center, Germany ($61 in 2017, compared to $58 in 2016) |
|
| 3 |
|
|
Total increase |
| $ | 13,852 |
|
|
|
|
|
|
Loss from Unconsolidated Real Estate Funds
Loss from unconsolidated real estate funds was $6,053,0002022, compared to $604,000 for the nine months ended September 30, 2017, compared to $2,540,0002021, an increase in income of $21,000.
Interest and Other Income, net
Interest and other income was $2,607,000 for the nine months ended September 30, 2016, an increase in loss of $3,513,000. This increase resulted primarily from a decrease in carried interest of $6,426,000, partially offset by a decrease in unrealized loss of $2,913,000.
Interest and Other (Loss) Income, net
Interest and other loss was $11,982,0002022, compared to $2,510,000 for the nine months ended September 30, 2017, compared to2021, an increase in income of $5,029,000$97,000. This increase resulted from:
(Amounts in thousands) |
|
|
| |
Higher yields on short-term investments |
| $ | 1,692 |
|
Mark-to-market of investments in our deferred compensation plan in 2021 (1) |
|
| (1,502 | ) |
Other, net |
|
| (93 | ) |
Total increase in income |
| $ | 97 |
|
Interest and Debt Expense
Interest and debt expense was $106,804,000 for the nine months ended September 30, 2016, a decrease in income of $17,011,000. This decrease resulted from:
(Amounts in thousands) |
|
|
|
|
|
Valuation allowance on preferred equity investment in 2017 (1) |
| $ | (19,588 | ) | |
Decrease in preferred equity investment income ($3,327 in 2017, compared to $4,299 in 2016) (2) |
|
| (972 | ) | |
Increase in the value of investments in our deferred compensation plan (which is offset by an increase in “general and administrative”) |
|
| 3,339 |
| |
Other, net |
|
| 210 |
| |
Total decrease |
|
| $ | (17,011 | ) |
|
|
|
|
Interest and Debt Expense
Interest and debt expense was $107,568,0002022, compared to $105,919,000 for the nine months ended September 30, 2017,2021, an increase of $885,000. This increase resulted primarily from higher interest on variable rate debt due to an increase in average LIBOR rates in the current year's nine months compared to $113,406,000prior year's nine months, partially offset by lower amortization of deferred financing costs in connection with the refinancing of 1301 Avenue of the Americas in July 2021.
Income Tax Expense
Income tax expense was $1,559,000 for the nine months ended September 30, 2016, a decrease of $5,838,000. This decrease resulted from:
(Amounts in thousands) |
|
|
|
|
$445 million of debt repayments ($274 million at 900 Third Avenue in October 2016 and $171 million at 1899 Pennsylvania Avenue and Liberty Place in May 2017) |
| $ | (12,150 | ) |
$975 million refinancing of One Market Plaza in January 2017 |
|
| (11,123 | ) |
$210 million defeasance of Waterview in October 2016 |
|
| (9,246 | ) |
$850 million financing of 1301 Avenue of the Americas in October 2016 |
|
| 19,127 |
|
$228 million assumption of existing debt at 50 Beale upon acquisition in July 2017 |
|
| 1,723 |
|
Amortization of deferred financing costs |
|
| 4,246 |
|
Other, net |
|
| 1,585 |
|
Total decrease |
| $ | (5,838 | ) |
Loss on Early Extinguishment of Debt
In the nine months ended September 30, 2017, we incurred $7,877,000 of costs in connection with the early refinancing of One Market Plaza and the early repayment of debt at 1899 Pennsylvania Avenue and Liberty Place in May 2017.
Gain on Sale of Real Estate
In the nine months ended September 30, 2017, we recognized $133,989,000 of gains on sale of real estate, comprised of a $110,583,000 net gain on sale of Waterview in May 2017 and a $23,406,000 net gain on sale of an 80.0% equity interest in 75 Howard in May 2017.
Unrealized Gain on Interest Rate Swaps
Unrealized gain on interest rate swaps was $1,802,0002022, compared to $2,448,000 for the nine months ended September 30, 2017, compared to an unrealized gain of $29,661,000 for the nine months ended September 30, 2016,2021, a decrease of $27,859,000.$889,000. This decrease wasresulted primarily duefrom lower taxable income attributable to (i) $22,219,000 of lower unrealized gains in 2017 relating to swaps aggregating $840,000,000 on One Market Plaza that were settled upon the refinancing in January 2017, (ii) $4,020,000 of unrealized gains in 2016 relating to swaps aggregating $162,000,000 on 900 Third Avenue that were settled upon the repayment in October 2016 and (iii) $1,620,000 of unrealized gains in 2016 relating to swaps aggregating $237,600,000 on 31 West 52nd Street that were settled upon the refinancing in May 2016.
Income Tax (Expense) Benefit
Income tax expense was $4,242,000 for the nine months ended September 30, 2017, compared to a benefit of $817,000 for the nine months ended September 30, 2016, an increase in expense of $5,059,000. This increase in expense was primarily due to higher fee income on our taxable REIT subsidiaries and $1,838,000 of tax onin the gain on the sale of an 80.0% equity interest in 75 Howard.current year’s nine months.
44
Net (Loss) Income Attributable to Noncontrolling Interests in Consolidated Joint Ventures
Net loss attributable to noncontrolling interest in consolidated joint ventures was $11,029,000 for the nine months ended September 30, 2017, compared to income of $10,062,000 for the nine months ended September 30, 2016, a decrease in income attributable to noncontrolling interests in consolidated joint ventures was $12,383,000 for the nine months ended September 30, 2022, compared to $16,924,000 for the nine months ended September 30, 2021, a decrease in income allocated to noncontrolling interests of $21,091,000. $4,541,000. This decrease resulted from:
(Amounts in thousands) |
|
|
|
| |
Lower income attributable to 300 Mission Street ($2,141 of income in 2022, |
| $ | (5,270 | ) | (1) |
Other, net |
|
| 729 |
|
|
Total decrease in income attributable to noncontrolling interests |
| $ | (4,541 | ) |
|
(Amounts in thousands) |
|
|
|
|
|
Valuation allowance on preferred equity investment in 2017 |
| $ | (14,808 | ) |
|
Lower preferred equity investment income ($2,508 in 2017, compared to income of $3,252 in 2016) |
|
| (744 | ) |
|
Lower income attributable to One Market Plaza ($2,251 in 2017, compared to $6,810 in 2016) |
|
| (4,559 | ) |
|
Loss attributable to 50 Beale Street (acquired in July 2017) |
|
| (980 | ) |
|
Total decrease |
| $ | (21,091 | ) |
|
Net Income (Loss)Loss (Income) Attributable to Noncontrolling Interests in Consolidated Real Estate Fund
Net loss attributable to noncontrolling interests in consolidated real estate fund was $2,677,000 for the nine months ended September 30, 2022, compared to net income attributable to noncontrolling interests in consolidated real estate fund was $20,195,000of $3,179,000 for the nine months ended September 30, 2017, compared2021, a decrease in income allocated to noncontrolling interest of $5,856,000. This decrease resulted primarily from lower gain on sale of residential condominium units at One Steuart Lane resulting from fewer units sold in the current year’s nine months and a lower loss in the prior year’s nine months due to the capitalization of $819,000expenses at One Steuart Lane (which was under development during the first half of last year).
Net (Income) Loss Attributable to Noncontrolling Interests in Operating Partnership
Net income attributable to noncontrolling interests in the Operating Partnership was $204,000 for the nine months ended September 30, 2016, an increase in income attributable2022, compared to the noncontrolling interests of $21,014,000. This increase was primarily due to noncontrolling interests share of the gain on the sale of an 80.0% equity interest in 75 Howard.
Net Income (Loss) Attributable to Noncontrolling Interests in Operating Partnership
Net incomenet loss attributable to noncontrolling interests in Operating Partnership was $12,068,000of $2,139,000 for the nine months ended September 30, 2017, compared to a loss of $906,000 for the nine months ended September 30, 2016,2021, an increase in income attributableallocated to noncontrolling interests of $12,974,000.$2,343,000. This increase in income resulted from higher net income subject to allocation to the unitholders of the Operating Partnership for the nine months ended September 30, 2017.2022.
45
Liquidity and Capital Resources
Liquidity
Our primary sources of liquidity include existing cash balances, cash flow from operations and borrowings available under our revolving credit facility. As of September 30, 2022, we had $1.26 billion of liquidity comprised of $469,398,000 of cash and cash equivalents, $40,456,000 of restricted cash and $750,000,000 of borrowing capacity under our revolving credit facility.
We expect that these sources will provide adequate liquidity over the next 12 months for all anticipated needs, including scheduled principal and interest payments on our outstanding indebtedness, existing and anticipated capital improvements, the cost of securing new and renewal leases, dividends to stockholders and distributions to unitholders, share repurchases and all other capital needs related to the operations of our business.
We anticipate that our long-term needs including debt maturities and the acquisition of additional propertiespotential acquisitions will be funded by operating cash flow, third-party joint venture capital, mortgage financings and/or re-financings, and the issuance of long-term debt or equity and existing cash on hand.
balances. Although we may be able to anticipate and plan for certain of our liquidity needs, unexpected increases in uses of cash that are beyond our control and which affect our financial condition and results of operations may arise, or our sources of liquidity may be fewer than, and the funds available from such sources may be less than, anticipated or required.
Consolidated Debt
As of September 30, 2017, we had $1.017 billion of liquidity comprised of $185,028,000 of cash and cash equivalents, $32,320,000 of restricted cash and $800,000,000 of borrowing capacity under our revolving credit facility. As of September 30, 2017,2022, our outstanding consolidated debt (includingaggregated $3.86 billion. We had no amounts outstanding under our revolving credit facility) aggregated $3.583 billion. None of ourfacility and we have no debt maturesmaturing until 2021.October 2023. We may refinance our maturing debt when it comes due or refinance or repay it early depending on prevailing market conditions, liquidity requirements and other factors. The amounts involved in connection with these transactions could be material to our consolidated financial statements.
Revolving Credit Facility
Our $750,000,000 revolving credit facility matures in March 2026 and has two six-month extension options. The interest rate on the facility is 115 basis points over the Secured Overnight Financing Rate (“SOFR”) with adjustments based on the terms of advances, plus a facility fee of 20 basis points. The facility also features a sustainability-linked pricing component such that if we meet certain sustainability performance targets, the applicable per annum interest rate will be reduced by one basis point. The facility contains certain restrictions and covenants that require us to maintain, on an ongoing basis, (i) a leverage ratio not to exceed 60%, which may be increased to 65% for any fiscal quarter in which an acquisition of real estate is completed, and for up to the next three subsequent consecutive fiscal quarters, (ii) a secured leverage ratio not to exceed 50%, (iii) a fixed coverage ratio of at least 1.50, (iv) an unsecured leverage ratio to not to exceed 60%, which may be increased to 65% for any fiscal quarter in which an acquisition of real estate is completed, and for up to the next three subsequent consecutive fiscal quarters and (v) an unencumbered interest coverage ratio of at least 1.75. The facility also contains customary representations and warranties, limitations on permitted investments and other covenants.
Dividend Policy
On September 15, 2017,2022, we declared a regular quarterly cash dividend of $0.095$0.0775 per share of common stock for the third quarter endingended September 30, 2017,2022, which was paid on October 13, 201714, 2022 to stockholders of record as of the close of business on September 29, 2017.30, 2022. This dividend policy, if continued, would require us to pay out approximately $25,211,000$18,300,000 each quarter to common stockholders and unitholders.
Off Balance Sheet Arrangements
As of September 30, 2017,2022, our unconsolidated joint ventures had $897,535,000$1.74 billion of outstanding indebtedness, of which our share was $180,949,000.$623,785,000. In 2023, $105,508,000, representing our share of unconsolidated debt, is scheduled to mature. We do not guarantee the indebtedness of our unconsolidated joint ventures other than providing customary environmental indemnities and guarantees of specified non-recourse carveouts relating to specified covenants and representations;carve-outs; however, we may elect to fund additional capital to a joint venture through equity contributions (generally on a basis proportionate to our ownership interests), advances or partner loans in order to enable the joint venture to repay this indebtedness upon maturity.
46
Stock Repurchase Program
On August 1, 2017,November 5, 2019, we received authorization from our Board of Directors approved theto repurchase of up to $200,000,000 of our common stock, from time to time, in the open market or in privately negotiated transactions. During 2022, we repurchased 6,498,232 common shares at a weighted average price of $6.41 per share, or $41,674,000 in the aggregate, of which 3,237,392 shares were repurchased in the three months ended September 30, 2022 at a weighted average price of $6.58 per share, or $21,313,000 in the aggregate, and the remaining 3,260,840 shares were repurchased in October 2022 at a weighted average price of $6.24 per share, or $20,361,000 in the aggregate. During 2020, we repurchased 13,813,158 common shares at a weighted average price of $8.69 per share, or $120,000,000 in the aggregate. Accordingly, we have $38,326,000 available for future repurchases under the existing program. The amount and the timing of future repurchases, if any, will depend on a number of factors, including, the price and availability of our shares, trading volume, and general market conditions.conditions and available funding. The stock repurchase program may be suspended or discontinued at any time.
Insurance
Insurance
We carry commercial general liability coverage on our properties, with limits of liability customary within the industry. Similarly, we are insured against the risk of direct and indirect physical damage to our properties including coverage for the perils such as floods, earthquakes and windstorms. Our policies also cover the loss of rental income during an estimated reconstruction period. Our policies reflect limits and deductibles customary in the industry and specific to the buildings and portfolio. We also obtain title insurance policies when acquiring new properties. We currently have coverage for losses incurred in connection with both domestic and foreign terrorist-related activities. While we do carry commercial general liability insurance, property insurance and terrorism insurance with respect to our properties, these policies include limits and terms we consider commercially reasonable. In addition, there are certain losses (including, but not limited to, losses arising from known environmental conditions or acts of war) that are not insured, in full or in part, because they are either uninsurable or the cost of insurance makes it, in our belief, economically impractical to maintain such coverage. Should an uninsured loss arise against us, we would be required to use our own funds to resolve the issue, including litigation costs. We believe the policy specifications and insured limits are adequate given the relative risk of loss, the cost of the coverage and industry practice and, in consultation with our insurance advisors, we believe the properties in our portfolio are adequately insured.
Other Commitments and Contingencies
We are a party to various claims and routine litigation arising in the ordinary course of business. Some of these claims or others to which we may be subject from time to time, including claims arising specifically from the formation transactions, in connection with our initial public offering, may result in defense costs, settlements, fines or judgments against us, some of which are not, or cannot be, covered by insurance. Payment of any such costs, settlements, fines or judgments that are not insured could have an adverse impact on our financial position and results of operations. Should any litigation arise in connection with the formation transactions, we would contest it vigorously. In addition, certain litigation or the resolution of certain litigation may affect the availability or cost of some of our insurance coverage, which could adversely impact our results of operations and cash flow, expose us to increased risks that would be uninsured, and/or adversely impact our ability to attract officers and directors.
The terms of our mortgage debt and certain side lettersagreements in place include certain restrictions and covenants which may limit, among other things, certain investments, the incurrence of additional indebtedness and liens and the disposition or other transfer of assets and interests in the borrower and other credit parties, and require compliance with certain debt yield, debt service coverage and loan to value ratios. In addition, our revolving credit facility contains representations, warranties, covenants, other agreements and events of default customary for agreements of this type with comparable companies. As of September 30, 2017,2022, we believe we are in compliance with all of our covenants.
InflationTransfer Tax Assessments
During 2017, the New York City Department of Finance issued Notices of Determination (“Notices”) assessing additional transfer taxes (including interest and penalties) in connection with the transfer of interests in certain properties during our 2014 initial public offering. We believe, after consultation with legal counsel that the likelihood of a loss is reasonably possible, and while it is not possible to predict the outcome of these Notices, we estimate the range of loss could be between $0 and $55,800,000. Since no amount in this range is a better estimate than any other amount within the range, we have not accrued any liability arising from potential losses relating to these Notices in our consolidated financial statements.
Inflation
Substantially all of our leases provide for separate real estate tax and operating expense escalations. In addition, many of the leases provide for fixed base rent increases. We believe inflationary increases in expenses may be at least partially offset by the contractual rent increases and expense escalations described above. We do not believe inflation has had a material impact on our historical financial position or results of operations.
Cash Flows
Cash and cash equivalents and restricted cash were $185,028,000$509,854,000 and $162,965,000$529,666,000 as of September 30, 20172022 and December 31, 2016,2021, respectively, and $522,546,000 and $465,324,000 as of September 30, 2021 and December 31, 2020, respectively. Cash and cash equivalents and restricted cash decreased by $19,812,000 for the nine months ended September 30, 2022 and increased by $57,222,000 for the nine months ended September 30, 2021. The following table sets forth the changes in cash flow.
|
| For the Nine Months Ended September 30, |
| |||||
(Amounts in thousands) | 2017 |
|
| 2016 |
| |||
Net cash provided by (used in): |
|
|
|
|
|
|
| |
Operating activities | $ | 105,071 |
|
| $ | 70,148 |
| |
Investing activities |
| 315,843 |
|
|
| (147,149 | ) | |
Financing activities |
| (398,851 | ) |
|
| 24,385 |
|
|
| For the Nine Months Ended September 30, |
| |||||
(Amounts in thousands) | 2022 |
|
| 2021 |
| |||
Net cash provided by (used in): |
|
|
|
|
| |||
Operating activities | $ | 174,417 |
|
| $ | 188,060 |
| |
Investing activities |
| (85,672 | ) |
|
| (88,380 | ) | |
Financing activities |
| (108,557 | ) |
|
| (42,458 | ) |
Operating Activities
Nine months ended September 30, 20172022 –We generated $105,071,000$174,417,000 of cash from operating activities for the nine months ended September 30, 2017,2022, primarily from (i) $150,698,000$209,545,000 of net income (before $170,279,000$198,161,000 of noncash adjustments and $133,989,000 of gain on sale of real estate)non-cash adjustments) and (ii) $3,655,000$658,000 of distributions from unconsolidated joint ventures and real estate funds, partially offset by (iii) $49,282,000$35,786,000 of net changes in operating assets and liabilities Noncashliabilities. Non-cash adjustments of $170,279,000$198,161,000 were primarily comprised of depreciation and amortization, income from unconsolidated joint ventures, straight-lining of rental income,revenue, amortization of above and below marketbelow-market leases, impairment loss on preferred equity investmentnet and amortization of stock basedstock-based compensation. The changes in operating assets and liabilities were primarily due to prepaid real estate taxes and additions to deferred charges.
Nine months ended September 30, 20162021 – We generated $70,148,000$188,060,000 of cash from operating activities for the nine months ended September 30, 2016,2021, primarily from (i) $121,046,000$204,872,000 of net income (before $116,154,000$208,484,000 of noncashnon-cash adjustments) and (ii) $6,132,000$4,485,000 of distributions from unconsolidated joint ventures and real estate funds, partially offset by (iii) $57,030,000$21,297,000 of net changes in operating assets and liabilities. NoncashNon-cash adjustments of $116,154,000$208,484,000 were primarily comprised of depreciation and amortization, straight-lining of rental incomerevenue, amortization of above and unrealized gain on interest rate swaps. The net changes in operating assetsbelow-market leases and liabilities were primarily due to prepaid real estate taxes and additions to deferred charges.amortization of stock-based compensation.
Investing Activities
Nine months ended September 30, 20172022 – We generated $315,843,000 of cash from investing activities for the nine months ended September 30, 2017, primarily from (i) $540,333,000 of proceeds from the sales of real estate and (ii) $33,849,000 of distributions from unconsolidated joint ventures and real estate funds, partially offset by (iii) $161,184,000 for acquisition of real estate; (iv) $59,255,000 for additions to real estate, which was comprised of spending for tenant improvements and other building improvements, (v) $28,886,000 for the investments in unconsolidated joint ventures and (vi) $8,224,000 increase in restricted cash.
Nine months ended September 30, 2016 – We used $147,149,000$85,672,000 of cash for investing activities for the nine months ended September 30, 2016,2022, primarily due tofor (i) $107,445,000 of$71,284,000 for additions to rental properties,real estate, which waswere comprised of spending for tenant improvements and other building improvements, (ii) $50,000,000 deposit on rental property,$11,252,000 for investments in an unconsolidated joint venture, and (iii) $1,084,000$3,136,000 of contributions of capital to unconsolidated real estate funds, partially offset by (iv) $11,380,000 decrease in restricted cash.net of distributions received.
Financing Activities
Nine months ended September 30, 2017 2021 – We used $88,380,000 of cash for investing activities for the nine months ended September 30, 2021, primarily for (i) $74,134,000 for additions to real estate, which were comprised of spending for tenant improvements and other building improvements, (ii) $11,750,000 of contributions to an unconsolidated joint venture and (iii) $3,257,000 of net purchases of marketable securities (which are held in our deferred compensation plan), partially offset by (iv) $761,000 of distributions of capital from unconsolidated real estate funds, net of contributions made.
Financing Activities
Nine months ended September 30, 2022 – We used $398,851,000$108,557,000 of cash for financing activities for the nine months ended September 30, 2017, primarily due to (i) $1,044,821,000 for repayments of notes and mortgages payable and $7,877,000 for loss on early extinguishment of debt,2022, primarily for the early repayments of One Market Plaza, 1899 Pennsylvania Avenue(i) $54,459,000 for dividends and Liberty Place loans,distributions to common stockholders and unitholders, (ii) $290,000,000 for repayments of the amounts borrowed under the revolving credit facility, (iii) $115,549,000$33,814,000 for distributions to noncontrolling interests, (iv) 75,569,000 for dividends and distributions paid tocommon stockholders and unitholders, (v) $19,425,000(iii) $20,000,000 for the settlementrepurchases of swap liabilities,common shares and (vi) $7,344,000(iv) $284,000 for the paymentrepurchase of debt issuance costs, partially offset by (vii) $991,556,000 of proceeds from notesshares related to stock compensation agreements and mortgages payable, primarily from the refinancing of One Market Plaza, (viii) $100,777,000 of contributions from noncontrolling interests, primarily from the acquisition of 50 Beale, (ix) $60,000,000 of borrowings under the revolving credit facility and (x) $9,555,000 from the refund of transfer taxes.related tax withholdings.
Nine months ended September 30, 2016 2021 – We generated $24,385,000used $42,458,000 of cash fromfor financing activities for the nine months ended September 30, 2016,2021, primarily fromfor (i) $509,578,000$850,000,000 for the repayment of notes and mortgages payable in connection with the refinancing of 1301 Avenue of the Americas, (ii) $50,582,000 for dividends and distributions to common stockholders and unitholders, (iii) $19,616,000 for distributions to noncontrolling interests, (iv) $10,593,000 for the payment of debt issuance costs in connection with the refinancing of 1301 Avenue of the Americas, (v) $214,000 for the repurchase of shares related to stock compensation agreements and related tax withholdings, and (vi) $140,000 for the purchase of interest rate caps, partially offset by (vii) $888,566,000 of proceeds from notes and mortgages payable primarily(including $860,000,000 from the refinancing of 31 West 52nd Street and (ii) $110,000,000 of borrowings under the revolving credit facility, partially offset by (iii) $414,564,000 of repayments of notes and mortgages payable, primarily for the repayment of 31 West 52nd Street loan, (iv) $80,000,000 of repayments1301 Avenue of the amounts borrowed under the revolving credit facility, (v) $75,365,000Americas) and (viii) $121,000 of dividends and distributions paid to common stockholders and unitholders, (vi) $16,040,000 for the settlement of swap liabilities and (vii) $6,532,000 for the payment of debt issuance costs.contributions from noncontrolling interests.
48
Non-GAAP Financial Measures
We use and present NOI, CashSame Store NOI, FFO and Core FFO, as supplemental measures of our performance. The summary below describes our use of these measures, provides information regarding why we believe these measures are meaningful supplemental measures of our performance and reconciles these measures from net income or loss, the most directly comparable GAAP measure. Other real estate companies may use different methodologies for calculating these measures, and accordingly, our presentation of these measures may not be comparable to other real estate companies. These non-GAAP measures should not be considered a substitute for, and should only be considered together with and as a supplement to, financial information presented in accordance with GAAP.
NOI
Net Operating Income (“NOI”)
We use NOI to measure the operating performance of our properties. NOI consists of property-relatedrental revenue (which includes rental income,property rentals, tenant reimbursement incomereimbursements and lease termination income) and certain other income)property-related revenue less operating expenses (which includes buildingproperty-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 ourParamount’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 these metricsNOI 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. Other real estate companies may use different methodologies for calculating NOI and Cash NOI, and accordingly, our presentation of NOI and Cash NOI may not be comparable to other real estate companies.
The following tables present reconciliations of net (loss) income or loss to NOI and Cash NOI for the three and nine months ended September 30, 20172022 and 2016.2021.
| For the Three Months Ended September 30, 2017 |
| |||||||||||||
(Amounts in thousands) | Total |
| New York |
| Washington, D.C. |
| San Francisco |
| Other |
| |||||
Reconciliation of net (loss) income to NOI and Cash NOI: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income | $ | (25,403 | ) | $ | 2,870 |
| $ | 3,698 |
| $ | 1,114 |
| $ | (33,085 | ) |
Add (subtract) adjustments to arrive at NOI and Cash NOI: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
| 66,515 |
|
| 38,040 |
|
| 5,417 |
|
| 22,586 |
|
| 472 |
|
General and administrative |
| 14,470 |
|
| - |
|
| - |
|
| - |
|
| 14,470 |
|
Interest and debt expense |
| 35,733 |
|
| 22,562 |
|
| - |
|
| 12,026 |
|
| 1,145 |
|
Transaction related costs |
| 274 |
|
| - |
|
| - |
|
| - |
|
| 274 |
|
Income tax (benefit) expense |
| (1,010 | ) |
| - |
|
| - |
|
| 1 |
|
| (1,011 | ) |
NOI from unconsolidated joint ventures |
| 4,993 |
|
| 4,815 |
|
| - |
|
| - |
|
| 178 |
|
Income from unconsolidated joint ventures |
| (671 | ) |
| (551 | ) |
| - |
|
| - |
|
| (120 | ) |
Loss from unconsolidated real estate funds |
| 3,930 |
|
| - |
|
| - |
|
| - |
|
| 3,930 |
|
Fee income |
| (5,834 | ) |
| - |
|
| - |
|
| - |
|
| (5,834 | ) |
Interest and other loss (income), net |
| 17,668 |
|
| (37 | ) |
| (16 | ) |
| (133 | ) |
| 17,854 |
|
NOI |
| 110,665 |
|
| 67,699 |
|
| 9,099 |
|
| 35,594 |
|
| (1,727 | ) |
Less NOI attributable to noncontrolling interests in: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated joint ventures |
| (15,307 | ) |
| - |
|
| - |
|
| (15,307 | ) |
| - |
|
Consolidated real estate fund |
| (21 | ) |
| - |
|
| - |
|
| - |
|
| (21 | ) |
Paramount's share of NOI | $ | 95,337 |
| $ | 67,699 |
| $ | 9,099 |
| $ | 20,287 |
| $ | (1,748 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NOI | $ | 110,665 |
| $ | 67,699 |
| $ | 9,099 |
| $ | 35,594 |
| $ | (1,727 | ) |
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Straight-line rent adjustments (including our |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
share of unconsolidated joint ventures) |
| (11,402 | ) |
| (8,455 | ) |
| 106 |
|
| (3,025 | ) |
| (28 | ) |
Amortization of above and below-market leases, net (including our share of unconsolidated joint ventures) |
| (3,017 | ) |
| 1,060 |
|
| (547 | ) |
| (3,530 | ) |
| - |
|
Cash NOI |
| 96,246 |
|
| 60,304 |
|
| 8,658 |
|
| 29,039 |
|
| (1,755 | ) |
Less Cash NOI attributable to noncontrolling interests in: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated joint ventures |
| (12,412 | ) |
| - |
|
| - |
|
| (12,412 | ) |
| - |
|
Consolidated real estate fund |
| (21 | ) |
| - |
|
| - |
|
| - |
|
| (21 | ) |
Paramount's share of Cash NOI | $ | 83,813 |
| $ | 60,304 |
| $ | 8,658 |
| $ | 16,627 |
| $ | (1,776 | ) |
For the Three Months Ended September 30, 2016 |
| For the Three Months Ended September 30, 2022 |
| |||||||||||||||||||||||||||
(Amounts in thousands) | Total |
| New York |
| Washington, D.C. |
| San Francisco |
| Other |
| Total |
|
| New York |
|
| San Francisco |
|
| Other |
| |||||||||
Reconciliation of net income (loss) to |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
NOI and Cash NOI: |
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Reconciliation of net income (loss) to NOI and Cash NOI: |
|
|
|
|
|
|
|
| ||||||||||||||||||||||
Net income (loss) | $ | 4,469 |
| $ | 8,562 |
| $ | 797 |
| $ | 7,091 |
| $ | (11,981 | ) | $ | 1,224 |
|
| $ | 2,701 |
|
| $ | 10,276 |
|
| $ | (11,753 | ) |
Add (subtract) adjustments to arrive at NOI and Cash NOI: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
Depreciation and amortization |
| 66,376 |
| 44,959 |
| 7,925 |
| 12,971 |
| 521 |
|
| 58,284 |
|
|
| 39,155 |
|
|
| 17,918 |
|
|
| 1,211 |
| ||||
General and administrative |
| 13,235 |
| - |
| - |
| - |
| 13,235 |
|
| 13,150 |
|
|
| - |
|
|
| - |
|
|
| 13,150 |
| ||||
Interest and debt expense |
| 38,278 |
| 17,630 |
| 5,198 |
| 14,064 |
| 1,386 |
|
| 36,949 |
|
|
| 23,392 |
|
|
| 12,794 |
|
|
| 763 |
| ||||
Transaction related costs |
| 282 |
| - |
| - |
| - |
| 282 |
| |||||||||||||||||||
Income tax expense (benefit) |
| 218 |
| - |
| (1 | ) |
| 4 |
| 215 |
| ||||||||||||||||||
NOI from unconsolidated joint ventures |
| 3,974 |
| 3,893 |
| - |
| - |
| 81 |
| |||||||||||||||||||
Income from unconsolidated joint ventures |
| (1,792 | ) |
| (1,772 | ) |
| - |
| - |
| (20 | ) | |||||||||||||||||
Loss from unconsolidated real estate funds |
| 1,254 |
| - |
| - |
| - |
| 1,254 |
| |||||||||||||||||||
Income tax expense |
| 673 |
|
|
| 5 |
|
|
| - |
|
|
| 668 |
| |||||||||||||||
NOI from unconsolidated joint ventures (excluding |
| 11,540 |
|
|
| 3,556 |
|
|
| 7,837 |
|
|
| 147 |
| |||||||||||||||
Loss (income) from unconsolidated joint ventures |
| 5,797 |
|
|
| (7 | ) |
|
| 4,384 |
|
|
| 1,420 |
| |||||||||||||||
Fee income |
| (3,976 | ) |
| - |
| - |
| - |
| (3,976 | ) |
| (5,132 | ) |
|
| - |
|
|
| - |
|
|
| (5,132 | ) | |||
Interest and other income, net |
| (2,299 | ) |
| (48 | ) |
| (12 | ) |
| (5 | ) |
| (2,234 | ) |
| (1,580 | ) |
|
| (236 | ) |
|
| (201 | ) |
|
| (1,143 | ) |
Unrealized gain on interest rate swaps |
| (12,728 | ) |
| (2,050 | ) |
| - |
|
| (10,678 | ) |
| - |
| |||||||||||||||
Other, net |
| (195 | ) |
|
| - |
|
|
| - |
|
|
| (195 | ) | |||||||||||||||
NOI |
| 107,291 |
|
| 71,174 |
|
| 13,907 |
|
| 23,447 |
|
| (1,237 | ) |
| 120,710 |
|
|
| 68,566 |
|
|
| 53,008 |
|
|
| (864 | ) |
Less NOI attributable to noncontrolling interests in: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
Consolidated joint ventures |
| (11,819 | ) |
| - |
| - |
| (11,819 | ) |
| - |
|
| (21,222 | ) |
|
| (2,383 | ) |
|
| (18,839 | ) |
|
| - |
| ||
Consolidated real estate fund |
| (157 | ) |
| - |
|
| - |
|
| - |
|
| (157 | ) | |||||||||||||||
Paramount's share of NOI | $ | 95,315 |
| $ | 71,174 |
| $ | 13,907 |
| $ | 11,628 |
| $ | (1,394 | ) | $ | 99,488 |
|
| $ | 66,183 |
|
| $ | 34,169 |
|
| $ | (864 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
NOI | $ | 107,291 |
| $ | 71,174 |
| $ | 13,907 |
| $ | 23,447 |
| $ | (1,237 | ) | $ | 120,710 |
|
| $ | 68,566 |
|
| $ | 53,008 |
|
| $ | (864 | ) |
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
Straight-line rent adjustments (including our |
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
share of unconsolidated joint ventures) |
| (23,234 | ) |
| (18,754 | ) |
| (1,425 | ) |
| (3,027 | ) |
| (28 | ) | |||||||||||||||
Amortization of above and below-market leases, net |
| (3,112 | ) |
| 1,201 |
|
| (549 | ) |
| (3,764 | ) |
| - |
| |||||||||||||||
Straight-line rent adjustments (including our share |
|
|
|
|
|
|
|
| ||||||||||||||||||||||
of unconsolidated joint ventures) |
| (3,969 | ) |
|
| 1,514 |
|
|
| (5,453 | ) |
|
| (30 | ) | |||||||||||||||
Amortization of above and below-market leases, net |
| (790 | ) |
|
| 708 |
|
|
| (1,498 | ) |
|
| - |
| |||||||||||||||
Cash NOI |
| 80,945 |
|
| 53,621 |
|
| 11,933 |
|
| 16,656 |
|
| (1,265 | ) |
| 115,951 |
|
|
| 70,788 |
|
|
| 46,057 |
|
|
| (894 | ) |
Less Cash NOI attributable to noncontrolling interests in: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
Consolidated joint ventures |
| (8,356 | ) |
| - |
| - |
| (8,356 | ) |
| - |
|
| (19,988 | ) |
|
| (2,775 | ) |
|
| (17,213 | ) |
|
| - |
| ||
Consolidated real estate fund |
| (157 | ) |
| - |
|
| - |
|
| - |
|
| (157 | ) | |||||||||||||||
Paramount's share of Cash NOI | $ | 72,432 |
| $ | 53,621 |
| $ | 11,933 |
| $ | 8,300 |
| $ | (1,422 | ) | $ | 95,963 |
|
| $ | 68,013 |
|
| $ | 28,844 |
|
| $ | (894 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| For the Nine Months Ended September 30, 2017 |
| |||||||||||||
(Amounts in thousands) | Total |
| New York |
| Washington, D.C. |
| San Francisco |
| Other |
| |||||
Reconciliation of net income (loss) to |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NOI and Cash NOI: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) | $ | 114,408 |
| $ | 23,921 |
| $ | 122,237 |
| $ | 4,942 |
| $ | (36,692 | ) |
Add (subtract) adjustments to arrive at NOI and Cash NOI: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
| 198,143 |
|
| 115,134 |
|
| 16,031 |
|
| 65,364 |
|
| 1,614 |
|
General and administrative |
| 44,624 |
|
| - |
|
| - |
|
| - |
|
| 44,624 |
|
Interest and debt expense |
| 107,568 |
|
| 66,754 |
|
| 2,724 |
|
| 32,983 |
|
| 5,107 |
|
Loss on early extinguishment of debt |
| 7,877 |
|
| - |
|
| 5,162 |
|
| 2,715 |
|
| - |
|
Transaction related costs |
| 1,051 |
|
| - |
|
| - |
|
| - |
|
| 1,051 |
|
Income tax expense |
| 4,242 |
|
| - |
|
| - |
|
| 9 |
|
| 4,233 |
|
NOI from unconsolidated joint ventures |
| 14,774 |
|
| 14,406 |
|
| - |
|
| - |
|
| 368 |
|
Income from unconsolidated joint ventures |
| (19,143 | ) |
| (18,949 | ) |
| - |
|
| - |
|
| (194 | ) |
Loss from unconsolidated real estate funds |
| 6,053 |
|
| - |
|
| - |
|
| - |
|
| 6,053 |
|
Fee income |
| (19,838 | ) |
| - |
|
| - |
|
| - |
|
| (19,838 | ) |
Interest and other loss (income), net |
| 11,982 |
|
| (98 | ) |
| (36 | ) |
| (202 | ) |
| 12,318 |
|
Gain on sale of real estate |
| (133,989 | ) |
| - |
|
| (110,583 | ) |
| - |
|
| (23,406 | ) |
Unrealized gain on interest rate swaps |
| (1,802 | ) |
| - |
|
| - |
|
| (1,802 | ) |
| - |
|
NOI |
| 335,950 |
|
| 201,168 |
|
| 35,535 |
|
| 104,009 |
|
| (4,762 | ) |
Less NOI attributable to noncontrolling interests in: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated joint ventures |
| (39,536 | ) |
| - |
|
| - |
|
| (39,536 | ) |
| - |
|
Consolidated real estate fund |
| (507 | ) |
| - |
|
| - |
|
| - |
|
| (507 | ) |
Paramount's share of NOI | $ | 295,907 |
| $ | 201,168 |
| $ | 35,535 |
| $ | 64,473 |
| $ | (5,269 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NOI | $ | 335,950 |
| $ | 201,168 |
| $ | 35,535 |
| $ | 104,009 |
| $ | (4,762 | ) |
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Straight-line rent adjustments (including our |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
share of unconsolidated joint ventures) |
| (44,121 | ) |
| (29,968 | ) |
| (1,290 | ) |
| (12,868 | ) |
| 5 |
|
Amortization of above and below-market leases, net (including our share of unconsolidated joint ventures) |
| (13,716 | ) |
| 4,017 |
|
| (1,644 | ) |
| (16,089 | ) |
| - |
|
Cash NOI |
| 278,113 |
|
| 175,217 |
|
| 32,601 |
|
| 75,052 |
|
| (4,757 | ) |
Less Cash NOI attributable to noncontrolling interests in: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated joint ventures |
| (29,240 | ) |
| - |
|
| - |
|
| (29,240 | ) |
| - |
|
Consolidated real estate fund |
| (507 | ) |
| - |
|
| - |
|
| - |
|
| (507 | ) |
Paramount's share of Cash NOI | $ | 248,366 |
| $ | 175,217 |
| $ | 32,601 |
| $ | 45,812 |
| $ | (5,264 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| For the Nine Months Ended September 30, 2016 |
| |||||||||||||
(Amounts in thousands) | Total |
| New York |
| Washington, D.C. |
| San Francisco |
| Other |
| |||||
Reconciliation of net income (loss) to |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NOI and Cash NOI: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) | $ | 4,892 |
| $ | 28,679 |
| $ | 2,582 |
| $ | 13,508 |
| $ | (39,877 | ) |
Add (subtract) adjustments to arrive at NOI and Cash NOI: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
| 208,475 |
|
| 144,429 |
|
| 23,536 |
|
| 39,139 |
|
| 1,371 |
|
General and administrative |
| 39,335 |
|
| - |
|
| - |
|
| - |
|
| 39,335 |
|
Interest and debt expense |
| 113,406 |
|
| 52,186 |
|
| 15,460 |
|
| 41,693 |
|
| 4,067 |
|
Transaction related costs |
| 1,725 |
|
| - |
|
| - |
|
| - |
|
| 1,725 |
|
Income tax (benefit) expense |
| (817 | ) |
| - |
|
| (2,537 | ) |
| 37 |
|
| 1,683 |
|
NOI from unconsolidated joint ventures |
| 12,938 |
|
| 12,696 |
|
| - |
|
| - |
|
| 242 |
|
Income from unconsolidated joint ventures |
| (5,291 | ) |
| (5,233 | ) |
| - |
|
| - |
|
| (58 | ) |
Loss from unconsolidated real estate funds |
| 2,540 |
|
| - |
|
| - |
|
| - |
|
| 2,540 |
|
Fee income |
| (11,568 | ) |
| - |
|
| - |
|
| - |
|
| (11,568 | ) |
Interest and other income, net |
| (5,029 | ) |
| (166 | ) |
| (43 | ) |
| (20 | ) |
| (4,800 | ) |
Unrealized gain on interest rate swaps |
| (29,661 | ) |
| (5,640 | ) |
| - |
|
| (24,021 | ) |
| - |
|
NOI |
| 330,945 |
|
| 226,951 |
|
| 38,998 |
|
| 70,336 |
|
| (5,340 | ) |
Less NOI attributable to noncontrolling interests in: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated joint ventures |
| (35,436 | ) |
| - |
|
| - |
|
| (35,436 | ) |
| - |
|
Consolidated real estate fund |
| 146 |
|
| - |
|
| - |
|
| - |
|
| 146 |
|
Paramount's share of NOI | $ | 295,655 |
| $ | 226,951 |
| $ | 38,998 |
| $ | 34,900 |
| $ | (5,194 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NOI | $ | 330,945 |
| $ | 226,951 |
| $ | 38,998 |
| $ | 70,336 |
| $ | (5,340 | ) |
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Straight-line rent adjustments (including our |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
share of unconsolidated joint ventures) |
| (67,968 | ) |
| (54,723 | ) |
| (3,839 | ) |
| (9,409 | ) |
| 3 |
|
Amortization of above and below-market leases, net |
| (6,593 | ) |
| 6,889 |
|
| (1,655 | ) |
| (11,827 | ) |
| - |
|
Cash NOI |
| 256,384 |
|
| 179,117 |
|
| 33,504 |
|
| 49,100 |
|
| (5,337 | ) |
Less Cash NOI attributable to noncontrolling interests in: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated joint ventures |
| (24,606 | ) |
| - |
|
| - |
|
| (24,606 | ) |
| - |
|
Consolidated real estate fund |
| 146 |
|
| - |
|
| - |
|
| - |
|
| 146 |
|
Paramount's share of Cash NOI | $ | 231,924 |
| $ | 179,117 |
| $ | 33,504 |
| $ | 24,494 |
| $ | (5,191 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
49
| For the Three Months Ended September 30, 2021 |
| |||||||||||||
(Amounts in thousands) | Total |
|
| New York |
|
| San Francisco |
|
| Other |
| ||||
Reconciliation of net income (loss) to NOI and Cash NOI: |
|
|
|
|
|
|
|
|
|
|
| ||||
Net income (loss) | $ | 4,632 |
|
| $ | 3,063 |
|
| $ | 9,204 |
|
| $ | (7,635 | ) |
Add (subtract) adjustments to arrive at NOI and Cash NOI: |
|
|
|
|
|
|
|
|
|
|
| ||||
Depreciation and amortization |
| 57,522 |
|
|
| 37,215 |
|
|
| 19,334 |
|
|
| 973 |
|
General and administrative |
| 13,257 |
|
|
| - |
|
|
| - |
|
|
| 13,257 |
|
Interest and debt expense |
| 36,266 |
|
|
| 22,458 |
|
|
| 12,760 |
|
|
| 1,048 |
|
Income tax expense |
| 873 |
|
|
| 7 |
|
|
| 1 |
|
|
| 865 |
|
NOI from unconsolidated joint ventures (excluding |
| 11,627 |
|
|
| 2,875 |
|
|
| 8,665 |
|
|
| 87 |
|
(Income) loss from unconsolidated joint ventures |
| (223 | ) |
|
| (449 | ) |
|
| 3,615 |
|
|
| (3,389 | ) |
Fee income |
| (6,561 | ) |
|
| - |
|
|
| - |
|
|
| (6,561 | ) |
Interest and other (income) loss, net |
| (138 | ) |
|
| 3 |
|
|
| (33 | ) |
|
| (108 | ) |
Other, net |
| (189 | ) |
|
| - |
|
|
| - |
|
|
| (189 | ) |
NOI |
| 117,066 |
|
|
| 65,172 |
|
|
| 53,546 |
|
|
| (1,652 | ) |
Less NOI attributable to noncontrolling interests in: |
|
|
|
|
|
|
|
|
|
|
| ||||
Consolidated joint ventures |
| (21,809 | ) |
|
| (2,573 | ) |
|
| (19,236 | ) |
|
| - |
|
Paramount's share of NOI | $ | 95,257 |
|
| $ | 62,599 |
|
| $ | 34,310 |
|
| $ | (1,652 | ) |
|
|
|
|
|
|
|
|
|
|
|
| ||||
NOI | $ | 117,066 |
|
| $ | 65,172 |
|
| $ | 53,546 |
|
| $ | (1,652 | ) |
Less: |
|
|
|
|
|
|
|
|
|
|
| ||||
Straight-line rent adjustments (including our share |
|
|
|
|
|
|
|
|
|
|
| ||||
of unconsolidated joint ventures) |
| 1,260 |
|
|
| 1,848 |
|
|
| (558 | ) |
|
| (30 | ) |
Amortization of above and below-market leases, net |
| (1,622 | ) |
|
| 406 |
|
|
| (2,028 | ) |
|
| - |
|
Cash NOI |
| 116,704 |
|
|
| 67,426 |
|
|
| 50,960 |
|
|
| (1,682 | ) |
Less Cash NOI attributable to noncontrolling interests in: |
|
|
|
|
|
|
|
|
|
|
| ||||
Consolidated joint ventures |
| (21,174 | ) |
|
| (2,635 | ) |
|
| (18,539 | ) |
|
| - |
|
Paramount's share of Cash NOI | $ | 95,530 |
|
| $ | 64,791 |
|
| $ | 32,421 |
|
| $ | (1,682 | ) |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
50
| For the Nine Months Ended September 30, 2022 |
| |||||||||||||
(Amounts in thousands) | Total |
|
| New York |
|
| San Francisco |
|
| Other |
| ||||
Reconciliation of net income (loss) to NOI and Cash NOI: |
|
|
|
|
|
|
|
|
|
|
| ||||
Net income (loss) | $ | 11,384 |
|
| $ | 18,732 |
|
| $ | 27,705 |
|
| $ | (35,053 | ) |
Add (subtract) adjustments to arrive at NOI and Cash NOI: |
|
|
|
|
|
|
|
|
|
|
| ||||
Depreciation and amortization |
| 171,306 |
|
|
| 115,439 |
|
|
| 52,782 |
|
|
| 3,085 |
|
General and administrative |
| 45,501 |
|
|
| - |
|
|
| - |
|
|
| 45,501 |
|
Interest and debt expense |
| 106,804 |
|
|
| 66,465 |
|
|
| 38,054 |
|
|
| 2,285 |
|
Income tax expense |
| 1,559 |
|
|
| 7 |
|
|
| 4 |
|
|
| 1,548 |
|
NOI from unconsolidated joint ventures (excluding |
| 34,359 |
|
|
| 9,902 |
|
|
| 24,162 |
|
|
| 295 |
|
Loss (income) from unconsolidated joint ventures |
| 15,326 |
|
|
| (4 | ) |
|
| 12,164 |
|
|
| 3,166 |
|
Fee income |
| (23,094 | ) |
|
| - |
|
|
| - |
|
|
| (23,094 | ) |
Interest and other income, net |
| (2,607 | ) |
|
| (282 | ) |
|
| (280 | ) |
|
| (2,045 | ) |
Other, net |
| (244 | ) |
|
| - |
|
|
| - |
|
|
| (244 | ) |
NOI |
| 360,294 |
|
|
| 210,259 |
|
|
| 154,591 |
|
|
| (4,556 | ) |
Less NOI attributable to noncontrolling interests in: |
|
|
|
|
|
|
|
|
|
|
| ||||
Consolidated joint ventures |
| (63,340 | ) |
|
| (7,808 | ) |
|
| (55,532 | ) |
|
| - |
|
Paramount's share of NOI | $ | 296,954 |
|
| $ | 202,451 |
|
| $ | 99,059 |
|
| $ | (4,556 | ) |
|
|
|
|
|
|
|
|
|
|
|
| ||||
NOI | $ | 360,294 |
|
| $ | 210,259 |
|
| $ | 154,591 |
|
| $ | (4,556 | ) |
Less: |
|
|
|
|
|
|
|
|
|
|
| ||||
Straight-line rent adjustments (including our share |
|
|
|
|
|
|
|
|
|
|
| ||||
of unconsolidated joint ventures) |
| (8,288 | ) |
|
| 883 |
|
|
| (9,201 | ) |
|
| 30 |
|
Amortization of above and below-market leases, net |
| (3,115 | ) |
|
| 1,597 |
|
|
| (4,712 | ) |
|
| - |
|
Cash NOI |
| 348,891 |
|
|
| 212,739 |
|
|
| 140,678 |
|
|
| (4,526 | ) |
Less Cash NOI attributable to noncontrolling interests in: |
|
|
|
|
|
|
|
|
|
|
| ||||
Consolidated joint ventures |
| (61,194 | ) |
|
| (8,459 | ) |
|
| (52,735 | ) |
|
| - |
|
Paramount's share of Cash NOI | $ | 287,697 |
|
| $ | 204,280 |
|
| $ | 87,943 |
|
| $ | (4,526 | ) |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
51
| For the Nine Months Ended September 30, 2021 |
| |||||||||||||
(Amounts in thousands) | Total |
|
| New York |
|
| San Francisco |
|
| Other |
| ||||
Reconciliation of net (loss) income to NOI and Cash NOI: |
|
|
|
|
|
|
|
|
|
|
| ||||
Net (loss) income | $ | (3,612 | ) |
| $ | (3,021 | ) |
| $ | 34,089 |
|
| $ | (34,680 | ) |
Add (subtract) adjustments to arrive at NOI and Cash NOI: |
|
|
|
|
|
|
|
|
|
|
| ||||
Depreciation and amortization |
| 175,752 |
|
|
| 114,788 |
|
|
| 58,046 |
|
|
| 2,918 |
|
General and administrative |
| 46,039 |
|
|
| - |
|
|
| - |
|
|
| 46,039 |
|
Interest and debt expense |
| 105,919 |
|
|
| 65,056 |
|
|
| 37,653 |
|
|
| 3,210 |
|
Income tax expense |
| 2,448 |
|
|
| 12 |
|
|
| 5 |
|
|
| 2,431 |
|
NOI from unconsolidated joint ventures (excluding |
| 32,510 |
|
|
| 8,445 |
|
|
| 24,054 |
|
|
| 11 |
|
Loss (income) from unconsolidated joint ventures |
| 20,810 |
|
|
| 10,645 |
|
|
| 13,317 |
|
|
| (3,152 | ) |
Fee income |
| (19,432 | ) |
|
| - |
|
|
| - |
|
|
| (19,432 | ) |
Interest and other (income) loss, net |
| (2,510 | ) |
|
| 20 |
|
|
| (88 | ) |
|
| (2,442 | ) |
Other, net |
| (101 | ) |
|
| - |
|
|
| - |
|
|
| (101 | ) |
NOI |
| 357,823 |
|
|
| 195,945 |
|
|
| 167,076 |
|
|
| (5,198 | ) |
Less NOI attributable to noncontrolling interests in: |
|
|
|
|
|
|
|
|
|
|
| ||||
Consolidated joint ventures |
| (70,767 | ) |
|
| (7,685 | ) |
|
| (63,082 | ) |
|
| - |
|
Consolidated real estate fund |
| 206 |
|
|
| - |
|
|
| - |
|
|
| 206 |
|
Paramount's share of NOI | $ | 287,262 |
|
| $ | 188,260 |
|
| $ | 103,994 |
|
| $ | (4,992 | ) |
|
|
|
|
|
|
|
|
|
|
|
| ||||
NOI | $ | 357,823 |
|
| $ | 195,945 |
|
| $ | 167,076 |
|
| $ | (5,198 | ) |
Less: |
|
|
|
|
|
|
|
|
|
|
| ||||
Straight-line rent adjustments (including our share |
|
|
|
|
|
|
|
|
|
|
| ||||
of unconsolidated joint ventures) |
| (9,800 | ) |
|
| 211 |
|
|
| (10,041 | ) |
|
| 30 |
|
Amortization of above and below-market leases, net |
| (5,087 | ) |
|
| 1,044 |
|
|
| (6,131 | ) |
|
| - |
|
Cash NOI |
| 342,936 |
|
|
| 197,200 |
|
|
| 150,904 |
|
|
| (5,168 | ) |
Less Cash NOI attributable to noncontrolling interests in: |
|
|
|
|
|
|
|
|
|
|
| ||||
Consolidated joint ventures |
| (64,313 | ) |
|
| (7,599 | ) |
|
| (56,714 | ) |
|
| - |
|
Consolidated real estate fund |
| 206 |
|
|
| - |
|
|
| - |
|
|
| 206 |
|
Paramount's share of Cash NOI | $ | 278,829 |
|
| $ | 189,601 |
|
| $ | 94,190 |
|
| $ | (4,962 | ) |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
52
Same Store NOI
The tables below set forth the reconciliations of our share of NOI to our share of Same Store NOI and Same Store Cash NOI for the three and nine months ended September 30, 20172022 and 2016.2021. These metrics are used to measure the operating performance of our properties that were owned by us in a similar manner during both the current and prior reporting periods, and represents our share of Same Store NOI and Same Store Cash 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 vary from period to period. Same Store Cash NOI excludes the effect of non-cash items such as the straight-lining of rental revenuestraight-line rent adjustments and the amortization of above and below-market leases.
|
| For the Three Months Ended September 30, 2022 |
|
| |||||||||||||
(Amounts in thousands) |
| Total |
|
| New York |
|
| San Francisco |
|
| Other |
|
| ||||
Paramount's share of NOI for the three months ended |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
September 30, 2022 (1) |
| $ | 99,488 |
|
| $ | 66,183 |
|
| $ | 34,169 |
|
| $ | (864 | ) |
|
Acquisitions / Redevelopment (2) (3) |
|
| (155 | ) |
|
| (155 | ) |
|
| - |
|
|
| - |
|
|
Other, net |
|
| 2,893 |
|
|
| 2,029 |
|
|
| - |
|
|
| 864 |
|
|
Paramount's share of Same Store NOI for the |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
three months ended September 30, 2022 |
| $ | 102,226 |
|
| $ | 68,057 |
|
| $ | 34,169 |
|
| $ | - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
| For the Three Months Ended September 30, 2021 |
|
| |||||||||||||
(Amounts in thousands) |
| Total |
|
| New York |
|
| San Francisco |
|
| Other |
|
| ||||
Paramount's share of NOI for the three months ended |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
September 30, 2021 (1) |
| $ | 95,257 |
|
| $ | 62,599 |
|
| $ | 34,310 |
|
| $ | (1,652 | ) |
|
Acquisitions / Redevelopment (3) |
|
| (693 | ) |
|
| (693 | ) |
|
| - |
|
|
| - |
|
|
Lease termination income |
|
| (33 | ) |
|
| (33 | ) |
|
| - |
|
|
| - |
|
|
Other, net |
|
| 1,642 |
|
|
| - |
|
|
| (10 | ) |
|
| 1,652 |
|
|
Paramount's share of Same Store NOI for the |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
three months ended September 30, 2021 |
| $ | 96,173 |
|
| $ | 61,873 |
|
| $ | 34,300 |
|
| $ | - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Increase (decrease) in Same Store NOI |
| $ | 6,053 |
|
| $ | 6,184 |
|
| $ | (131 | ) |
| $ | - |
|
|
% Increase (decrease) |
|
| 6.3 | % |
|
| 10.0 | % |
|
| (0.4 | %) |
|
|
|
|
|
|
| For the Three Months Ended September 30, 2017 |
|
| |||||||||||||||||
| (Amounts in thousands) |
| Total |
|
| New York |
|
| Washington, D.C. |
|
| San Francisco |
|
| Other |
|
| |||||
| Paramount's share of NOI for the three |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| months ended September 30, 2017 (1) |
| $ | 95,337 |
|
| $ | 67,699 |
|
| $ | 9,099 |
|
| $ | 20,287 |
|
| $ | (1,748 | ) |
|
| Acquisitions (2) |
|
| (8,916 | ) |
|
| (678 | ) |
|
| - |
|
|
| (8,238 | ) |
|
| - |
|
|
| Dispositions |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| Lease termination income (including our |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| share of unconsolidated joint ventures) |
|
| (886 | ) |
|
| (665 | ) |
|
| - |
|
|
| (221 | ) |
|
| - |
|
|
| Other, net |
|
| 241 |
|
|
| 208 |
|
|
| - |
|
|
| 39 |
|
|
| (6 | ) |
|
| Paramount's share of Same Store NOI for |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| the three months ended September 30, 2017 |
| $ | 85,776 |
|
| $ | 66,564 |
|
| $ | 9,099 |
|
| $ | 11,867 |
|
| $ | (1,754 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| For the Three Months Ended September 30, 2016 |
|
| |||||||||||||||||
| (Amounts in thousands) |
| Total |
|
| New York |
|
| Washington, D.C. |
|
| San Francisco |
|
| Other |
|
| |||||
| Paramount's share of NOI for the three |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| months ended September 30, 2016 (1) |
| $ | 95,315 |
|
| $ | 71,174 |
|
| $ | 13,907 |
|
| $ | 11,628 |
|
| $ | (1,394 | ) |
|
| Acquisitions |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| Dispositions (3) |
|
| (6,277 | ) |
|
| - |
|
|
| (6,277 | ) |
|
| - |
|
|
| - |
|
|
| Lease termination income (including our share of unconsolidated joint ventures) |
|
| (3,433 | ) |
|
| (3,348 | ) |
|
| - |
|
|
| (85 | ) |
|
| - |
|
|
| Other, net |
|
| (18 | ) |
|
| 207 |
|
|
| 4 |
|
|
| 78 |
|
|
| (307 | ) |
|
| Paramount's share of Same Store NOI for |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| the three months ended September 30, 2016 |
| $ | 85,587 |
|
| $ | 68,033 |
|
| $ | 7,634 |
|
| $ | 11,621 |
|
| $ | (1,701 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||
| Increase (decrease) in Same Store NOI |
| $ | 189 |
|
| $ | (1,469 | ) |
| $ | 1,465 |
|
| $ | 246 |
|
| $ | (53 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| % Increase (decrease) |
|
| 0.2 | % |
|
| (2.2 | %) |
|
| 19.2 | % |
|
| 2.1 | % |
|
|
|
|
|
|
53
|
| For the Three Months Ended September 30, 2022 |
|
| |||||||||||||
(Amounts in thousands) |
| Total |
|
| New York |
|
| San Francisco |
|
| Other |
|
| ||||
Paramount's share of Cash NOI for the three months |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
ended September 30, 2022 (1) |
| $ | 95,963 |
|
| $ | 68,013 |
|
| $ | 28,844 |
|
| $ | (894 | ) |
|
Acquisitions / Redevelopment (2) (3) |
|
| (154 | ) |
|
| (154 | ) |
|
| - |
|
|
| - |
|
|
Other, net |
|
| 894 |
|
|
| - |
|
|
| - |
|
|
| 894 |
|
|
Paramount's share of Same Store Cash NOI for the |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
three months ended September 30, 2022 |
| $ | 96,703 |
|
| $ | 67,859 |
|
| $ | 28,844 |
|
| $ | - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
| For the Three Months Ended September 30, 2021 |
|
| |||||||||||||
(Amounts in thousands) |
| Total |
|
| New York |
|
| San Francisco |
|
| Other |
|
| ||||
Paramount's share of Cash NOI for the three months |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
ended September 30, 2021 (1) |
| $ | 95,530 |
|
| $ | 64,791 |
|
| $ | 32,421 |
|
| $ | (1,682 | ) |
|
Acquisitions / Redevelopment (3) |
|
| (861 | ) |
|
| (861 | ) |
|
| - |
|
|
| - |
|
|
Lease termination income |
|
| (33 | ) |
|
| (33 | ) |
|
| - |
|
|
| - |
|
|
Other, net |
|
| 1,672 |
|
|
| - |
|
|
| (10 | ) |
|
| 1,682 |
|
|
Paramount's share of Same Store Cash NOI for the |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
three months ended September 30, 2021 |
| $ | 96,308 |
|
| $ | 63,897 |
|
| $ | 32,411 |
|
| $ | - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Increase (decrease) in Same Store Cash NOI |
| $ | 395 |
|
| $ | 3,962 |
|
| $ | (3,567 | ) |
| $ | - |
|
|
% Increase (decrease) |
|
| 0.4 | % |
|
| 6.2 | % |
|
| (11.0 | %) |
|
|
|
|
|
|
|
|
|
|
54
|
| For the Nine Months Ended September 30, 2022 |
|
| |||||||||||||
(Amounts in thousands) |
| Total |
|
| New York | �� |
| San Francisco |
|
| Other |
|
| ||||
Paramount's share of NOI for the nine months ended |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
September 30, 2022 (1) |
| $ | 296,954 |
|
| $ | 202,451 |
|
| $ | 99,059 |
|
| $ | (4,556 | ) |
|
Acquisitions / Redevelopment (2) (3) |
|
| (366 | ) |
|
| (366 | ) |
|
| - |
|
|
| - |
|
|
Lease termination income |
|
| (1,875 | ) |
|
| (1,875 | ) |
|
| - |
|
|
| - |
|
|
Other, net |
|
| 6,470 |
|
|
| 2,135 |
|
|
| (221 | ) |
|
| 4,556 |
|
|
Paramount's share of Same Store NOI for the nine |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
months ended September 30, 2022 |
| $ | 301,183 |
|
| $ | 202,345 |
|
| $ | 98,838 |
|
| $ | - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
| For the Nine Months Ended September 30, 2021 |
|
| |||||||||||||
(Amounts in thousands) |
| Total |
|
| New York |
|
| San Francisco |
|
| Other |
|
| ||||
Paramount's share of NOI for the nine months ended |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
September 30, 2021 (1) |
| $ | 287,262 |
|
| $ | 188,260 |
|
| $ | 103,994 |
|
| $ | (4,992 | ) |
|
Acquisitions / Redevelopment (3) |
|
| (924 | ) |
|
| (924 | ) |
|
| - |
|
|
| - |
|
|
Lease termination income |
|
| (1,745 | ) |
|
| (161 | ) |
|
| (1,584 | ) |
|
| - |
|
|
Other, net |
|
| 4,686 |
|
|
| (103 | ) |
|
| (203 | ) |
|
| 4,992 |
|
|
Paramount's share of Same Store NOI for the nine |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
months ended September 30, 2021 |
| $ | 289,279 |
|
| $ | 187,072 |
|
| $ | 102,207 |
|
| $ | - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Increase (decrease) in Same Store NOI |
| $ | 11,904 |
|
| $ | 15,273 |
|
| $ | (3,369 | ) |
| $ | - |
|
|
% Increase (decrease) |
|
| 4.1 | % |
|
| 8.2 | % |
|
| (3.3 | %) |
|
|
|
|
55
|
| For the Nine Months Ended September 30, 2022 |
|
| |||||||||||||
(Amounts in thousands) |
| Total |
|
| New York |
|
| San Francisco |
|
| Other |
|
| ||||
Paramount's share of Cash NOI for the nine months |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
ended September 30, 2022 (1) |
| $ | 287,697 |
|
| $ | 204,280 |
|
| $ | 87,943 |
|
| $ | (4,526 | ) |
|
Acquisitions / Redevelopment (2) (3) |
|
| (396 | ) |
|
| (396 | ) |
|
| - |
|
|
| - |
|
|
Lease termination income |
|
| (1,875 | ) |
|
| (1,875 | ) |
|
| - |
|
|
| - |
|
|
Other, net |
|
| 4,105 |
|
|
| (200 | ) |
|
| (221 | ) |
|
| 4,526 |
|
|
Paramount's share of Same Store Cash NOI for the |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
nine months ended September 30, 2022 |
| $ | 289,531 |
|
| $ | 201,809 |
|
| $ | 87,722 |
|
| $ | - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
| For the Nine Months Ended September 30, 2021 |
|
| |||||||||||||
(Amounts in thousands) |
| Total |
|
| New York |
|
| San Francisco |
|
| Other |
|
| ||||
Paramount's share of Cash NOI for the nine months |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
ended September 30, 2021 (1) |
| $ | 278,829 |
|
| $ | 189,601 |
|
| $ | 94,190 |
|
| $ | (4,962 | ) |
|
Acquisitions / Redevelopment (3) |
|
| (1,148 | ) |
|
| (1,148 | ) |
|
| - |
|
|
| - |
|
|
Lease termination income |
|
| (1,745 | ) |
|
| (161 | ) |
|
| (1,584 | ) |
|
| - |
|
|
Other, net |
|
| 4,507 |
|
|
| (245 | ) |
|
| (210 | ) |
|
| 4,962 |
|
|
Paramount's share of Same Store Cash NOI for the |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
nine months ended September 30, 2021 |
| $ | 280,443 |
|
| $ | 188,047 |
|
| $ | 92,396 |
|
| $ | - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Increase (decrease) in Same Store Cash NOI |
| $ | 9,088 |
|
| $ | 13,762 |
|
| $ | (4,674 | ) |
| $ | - |
|
|
% Increase (decrease) |
|
| 3.2 | % |
|
| 7.3 | % |
|
| (5.1 | %) |
|
|
|
|
|
|
| For the Three Months Ended September 30, 2017 |
|
| |||||||||||||||||
| (Amounts in thousands) |
| Total |
|
| New York |
|
| Washington, D.C. |
|
| San Francisco |
|
| Other |
|
| |||||
| Paramount's share of Cash NOI for the three |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| months ended September 30, 2017 (1) |
| $ | 83,813 |
|
| $ | 60,304 |
|
| $ | 8,658 |
|
| $ | 16,627 |
|
| $ | (1,776 | ) |
|
| Acquisitions (2) |
|
| (7,510 | ) |
|
| (842 | ) |
|
| - |
|
|
| (6,668 | ) |
|
| - |
|
|
| Dispositions |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| Lease termination income (including our |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| share of unconsolidated joint ventures) |
|
| (886 | ) |
|
| (665 | ) |
|
| - |
|
|
| (221 | ) |
|
| - |
|
|
| Other, net |
|
| 32 |
|
|
| 14 |
|
|
| - |
|
|
| 24 |
|
|
| (6 | ) |
|
| Paramount's share of Same Store Cash NOI |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| for the three months ended September 30, 2017 |
| $ | 75,449 |
|
| $ | 58,811 |
|
| $ | 8,658 |
|
| $ | 9,762 |
|
| $ | (1,782 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| For the Three Months Ended September 30, 2016 |
|
| |||||||||||||||||
| (Amounts in thousands) |
| Total |
|
| New York |
|
| Washington, D.C. |
|
| San Francisco |
|
| Other |
|
| |||||
| Paramount's share of Cash NOI for the three |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| months ended September 30, 2016 (1) |
| $ | 72,432 |
|
| $ | 53,621 |
|
| $ | 11,933 |
|
| $ | 8,300 |
|
| $ | (1,422 | ) |
|
| Acquisitions |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| Dispositions (3) |
|
| (6,327 | ) |
|
| - |
|
|
| (6,327 | ) |
|
| - |
|
|
| - |
|
|
| Lease termination income (including our |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| share of unconsolidated joint ventures) |
|
| (3,433 | ) |
|
| (3,348 | ) |
|
| - |
|
|
| (85 | ) |
|
| - |
|
|
| Other, net |
|
| (465 | ) |
|
| (162 | ) |
|
| 4 |
|
|
| - |
|
|
| (307 | ) |
|
| Paramount's share of Same Store Cash NOI |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| for the three months ended September 30, 2016 |
| $ | 62,207 |
|
| $ | 50,111 |
|
| $ | 5,610 |
|
| $ | 8,215 |
|
| $ | (1,729 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Increase (decrease) in Same Store Cash NOI |
| $ | 13,242 |
|
| $ | 8,700 |
|
| $ | 3,048 |
|
| $ | 1,547 |
|
| $ | (53 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| % Increase |
|
| 21.3 | % |
|
| 17.4 | % |
|
| 54.3 | % |
|
| 18.8 | % |
|
|
|
|
|
|
|
|
|
|
|
|
56
|
|
| For the Nine Months Ended September 30, 2017 |
|
| |||||||||||||||||
| (Amounts in thousands) |
| Total |
|
| New York |
|
| Washington, D.C. |
|
| San Francisco |
|
| Other |
|
| |||||
| Paramount's share of NOI for the nine months |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ended September 30, 2017 (1) |
| $ | 295,907 |
|
| $ | 201,168 |
|
| $ | 35,535 |
|
| $ | 64,473 |
|
| $ | (5,269 | ) |
|
| Acquisitions (2) |
|
| (28,981 | ) |
|
| (1,918 | ) |
|
| - |
|
|
| (27,063 | ) |
|
| - |
|
|
| Dispositions |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| Lease termination income (including our |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| share of unconsolidated joint ventures) |
|
| (1,993 | ) |
|
| (906 | ) |
|
| - |
|
|
| (1,087 | ) |
|
| - |
|
|
| Other, net |
|
| (544 | ) |
|
| 238 |
|
|
| - |
|
|
| (659 | ) |
|
| (123 | ) |
|
| Paramount's share of Same Store NOI for |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| the nine months ended September 30, 2017 |
| $ | 264,389 |
|
| $ | 198,582 |
|
| $ | 35,535 |
|
| $ | 35,664 |
|
| $ | (5,392 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| For the Nine Months Ended September 30, 2016 |
|
| |||||||||||||||||
| (Amounts in thousands) |
| Total |
|
| New York |
|
| Washington, D.C. |
|
| San Francisco |
|
| Other |
|
| |||||
| Paramount's share of NOI for the nine months |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ended September 30, 2016 (1) |
| $ | 295,655 |
|
| $ | 226,951 |
|
| $ | 38,998 |
|
| $ | 34,900 |
|
| $ | (5,194 | ) |
|
| Acquisitions |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| Dispositions (3) |
|
| (10,328 | ) |
|
| - |
|
|
| (10,328 | ) |
|
| - |
|
|
| - |
|
|
| Lease termination income (including our share of unconsolidated joint ventures) |
|
| (14,571 | ) |
|
| (14,422 | ) | (4) |
| - |
|
|
| (149 | ) |
|
| - |
|
|
| Other, net |
|
| 2,721 |
|
|
| 3,247 |
| (5) |
| 4 |
|
|
| 78 |
|
|
| (608 | ) |
|
| Paramount's share of Same Store NOI for |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| the nine months ended September 30, 2016 |
| $ | 273,477 |
|
| $ | 215,776 |
|
| $ | 28,674 |
|
| $ | 34,829 |
|
| $ | (5,802 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (Decrease) increase in Same Store NOI |
| $ | (9,088 | ) |
| $ | (17,194 | ) |
| $ | 6,861 |
|
| $ | 835 |
|
| $ | 410 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| % (Decrease) increase |
|
| (3.3 | %) |
|
| (8.0 | %) |
|
| 23.9 | % |
|
| 2.4 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| For the Nine Months Ended September 30, 2017 |
|
| |||||||||||||||||
| (Amounts in thousands) |
| Total |
|
| New York |
|
| Washington, D.C. |
|
| San Francisco |
|
| Other |
|
| |||||
| Paramount's share of Cash NOI for the nine |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| months ended September 30, 2017 (1) |
| $ | 248,366 |
|
| $ | 175,217 |
|
| $ | 32,601 |
|
| $ | 45,812 |
|
| $ | (5,264 | ) |
|
| Acquisitions (2) |
|
| (20,561 | ) |
|
| (2,260 | ) |
|
| - |
|
|
| (18,301 | ) |
|
| - |
|
|
| Dispositions |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| Lease termination income (including our |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| share of unconsolidated joint ventures) |
|
| (1,993 | ) |
|
| (906 | ) |
|
| - |
|
|
| (1,087 | ) |
|
| - |
|
|
| Other, net |
|
| (55 | ) |
|
| 44 |
|
|
| - |
|
|
| 24 |
|
|
| (123 | ) |
|
| Paramount's share of Same Store Cash NOI |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| for the nine months ended September 30, 2017 |
| $ | 225,757 |
|
| $ | 172,095 |
|
| $ | 32,601 |
|
| $ | 26,448 |
|
| $ | (5,387 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| For the Nine Months Ended September 30, 2016 |
|
| |||||||||||||||||
| (Amounts in thousands) |
| Total |
|
| New York |
|
| Washington, D.C. |
|
| San Francisco |
|
| Other |
|
| |||||
| Paramount's share of Cash NOI for the nine |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| months ended September 30, 2016 (1) |
| $ | 231,924 |
|
| $ | 179,117 |
|
| $ | 33,504 |
|
| $ | 24,494 |
|
| $ | (5,191 | ) |
|
| Acquisitions |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| Dispositions (3) |
|
| (10,408 | ) |
|
| - |
|
|
| (10,408 | ) |
|
| - |
|
|
| - |
|
|
| Lease termination income (including our |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| share of unconsolidated joint ventures) |
|
| (14,571 | ) |
|
| (14,422 | ) | (4) |
| - |
|
|
| (149 | ) |
|
| - |
|
|
| Other, net |
|
| (293 | ) |
|
| 311 |
|
|
| 4 |
|
|
| - |
|
|
| (608 | ) |
|
| Paramount's share of Same Store Cash NOI |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| for the nine months ended September 30, 2016 |
| $ | 206,652 |
|
| $ | 165,006 |
|
| $ | 23,100 |
|
| $ | 24,345 |
|
| $ | (5,799 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Increase in Same Store Cash NOI |
| $ | 19,105 |
|
| $ | 7,089 |
|
| $ | 9,501 |
|
| $ | 2,103 |
|
| $ | 412 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| % Increase |
|
| 9.2 | % |
|
| 4.3 | % |
|
| 41.1 | % |
|
| 8.6 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FFOFunds from Operations (“FFO”) and Core FFOFunds from Operations (“Core FFO”)
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”). NAREITNareit defines FFO as GAAP net income or loss, calculated in accordance with GAAP, adjusted to exclude net gainsdepreciation and amortization from sales of depreciated real estate assets, impairment losses on depreciablecertain real estate assets and depreciation and amortization expensegains 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 gaingains or losses on real estate fund investments, unrealized gains or losses on interest rate swaps, severance costs and lossgains 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 consolidated financial statements, prepared in accordance with GAAP, for purposes of evaluating our financial condition, results of operations and cash flows.
The following table presents a reconciliation of net income (loss) income to FFO and Core FFO.FFO for the periods set forth below.
|
|
| For the Three Months Ended |
|
| For the Nine Months Ended |
|
| For the Three Months Ended |
|
| For the Nine Months Ended |
| ||||||||||||||||||||||||
|
|
| September 30, |
|
| September 30, |
|
| September 30, |
|
| September 30, |
| ||||||||||||||||||||||||
(Amounts in thousands, except share and per share amounts) | (Amounts in thousands, except share and per share amounts) | 2017 |
|
| 2016 |
|
| 2017 |
|
| 2016 |
|
| 2022 |
|
| 2021 |
|
| 2022 |
|
| 2021 |
| |||||||||||||
Reconciliation of net (loss) income to FFO and Core FFO: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||
Reconciliation of net income (loss) to FFO and Core FFO: |
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||
Net income (loss) |
| $ | 1,224 |
|
| $ | 4,632 |
|
| $ | 11,384 |
|
| $ | (3,612 | ) | |||||||||||||||||||||
Real estate depreciation and amortization (including our |
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||
share of unconsolidated joint ventures) |
|
| 68,009 |
|
|
| 67,717 |
|
|
| 201,069 |
|
|
| 207,122 |
| |||||||||||||||||||||
FFO |
|
| 69,233 |
|
|
| 72,349 |
|
|
| 212,453 |
|
|
| 203,510 |
| |||||||||||||||||||||
Less FFO attributable to noncontrolling interests in: |
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||
Consolidated joint ventures |
|
| (13,408 | ) |
|
| (13,895 | ) |
|
| (39,868 | ) |
|
| (47,422 | ) | |||||||||||||||||||||
Consolidated real estate fund |
|
| 1,304 |
|
|
| (3,127 | ) |
|
| 2,659 |
|
|
| (3,183 | ) | |||||||||||||||||||||
Operating Partnership |
|
| (3,763 | ) |
|
| (5,009 | ) |
|
| (13,683 | ) |
|
| (13,770 | ) | |||||||||||||||||||||
FFO attributable to common stockholders |
| $ | 53,366 |
|
| $ | 50,318 |
|
| $ | 161,561 |
|
| $ | 139,135 |
| |||||||||||||||||||||
Per diluted share |
| $ | 0.24 |
|
| $ | 0.23 |
|
| $ | 0.73 |
|
| $ | 0.64 |
| |||||||||||||||||||||
| Net (loss) income | $ | (25,403 | ) |
| $ | 4,469 |
|
| $ | 114,408 |
|
| $ | 4,892 |
|
|
|
|
|
|
|
|
|
| ||||||||||||
| Real estate depreciation and amortization (including our share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||
|
| of unconsolidated joint ventures) |
| 68,523 |
|
|
| 68,008 |
|
|
| 204,023 |
|
|
| 213,202 |
| ||||||||||||||||||||
| Gain on sale of Waterview |
| - |
|
|
| - |
|
|
| (110,583 | ) |
|
| - |
| |||||||||||||||||||||
| FFO |
| 43,120 |
|
|
| 72,477 |
|
|
| 207,848 |
|
|
| 218,094 |
| |||||||||||||||||||||
| Less FFO attributable to noncontrolling interests in: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||
|
| Consolidated joint ventures |
| 5,152 |
|
|
| (11,319 | ) |
|
| (9,783 | ) |
|
| (30,026 | ) | ||||||||||||||||||||
|
| Consolidated real estate fund |
| (114 | ) |
|
| (157 | ) |
|
| (20,530 | ) |
|
| 147 |
| ||||||||||||||||||||
|
| Operating Partnership |
| (4,628 | ) |
|
| (10,386 | ) |
|
| (20,098 | ) |
|
| (34,109 | ) | ||||||||||||||||||||
| FFO attributable to common stockholders | $ | 43,530 |
|
| $ | 50,615 |
|
| $ | 157,437 |
|
| $ | 154,106 |
| |||||||||||||||||||||
| Per diluted share | $ | 0.18 |
|
| $ | 0.23 |
|
| $ | 0.67 |
|
| $ | 0.71 |
| |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||
| FFO | $ | 43,120 |
|
| $ | 72,477 |
|
| $ | 207,848 |
|
| $ | 218,094 |
| |||||||||||||||||||||
| Non-core items: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||
|
| Valuation allowance on preferred equity investment |
| 19,588 |
|
|
| - |
|
|
| 19,588 |
|
|
| - |
| ||||||||||||||||||||
|
| Realized and unrealized loss from unconsolidated real estate funds |
| 4,034 |
|
|
| 1,379 |
|
|
| 6,281 |
|
|
| 2,518 |
| ||||||||||||||||||||
|
| Our share of earnings from 712 Fifth Avenue in excess of distributions received and (distributions in excess of basis) |
| 691 |
|
|
| - |
|
|
| (14,381 | ) |
|
| - |
| ||||||||||||||||||||
|
| Transaction related costs |
| 274 |
|
|
| 282 |
|
|
| 1,051 |
|
|
| 1,725 |
| ||||||||||||||||||||
|
| After-tax net gain on sale of residential condominium land parcel |
| - |
|
|
| - |
|
|
| (21,568 | ) |
|
| - |
| ||||||||||||||||||||
|
| Loss on early extinguishment of debt |
| - |
|
|
| - |
|
|
| 7,877 |
|
|
| - |
| ||||||||||||||||||||
|
| Unrealized gain on interest rate swaps (including our |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||
|
| share of unconsolidated joint ventures) |
| - |
|
|
| (13,589 | ) |
|
| (2,750 | ) |
|
| (30,939 | ) | ||||||||||||||||||||
|
| Severance costs |
| - |
|
|
| - |
|
|
| - |
|
|
| 2,874 |
| ||||||||||||||||||||
| Core FFO |
| 67,707 |
|
|
| 60,549 |
|
|
| 203,946 |
|
|
| 194,272 |
| |||||||||||||||||||||
| Less Core FFO attributable to noncontrolling interests in: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||
|
| Consolidated joint ventures |
| (9,656 | ) |
|
| (5,874 | ) |
|
| (25,057 | ) |
|
| (17,776 | ) | ||||||||||||||||||||
|
| Consolidated real estate fund |
| (114 | ) |
|
| (157 | ) |
|
| (242 | ) |
|
| 147 |
| ||||||||||||||||||||
|
| Operating Partnership |
| (5,568 | ) |
|
| (9,282 | ) |
|
| (20,208 | ) |
|
| (32,094 | ) | ||||||||||||||||||||
| Core FFO attributable to common stockholders | $ | 52,369 |
|
| $ | 45,236 |
|
| $ | 158,439 |
|
| $ | 144,549 |
| |||||||||||||||||||||
| Per diluted share | $ | 0.22 |
|
| $ | 0.21 |
|
| $ | 0.67 |
|
| $ | 0.67 |
| |||||||||||||||||||||
FFO |
| $ | 69,233 |
|
| $ | 72,349 |
|
| $ | 212,453 |
|
| $ | 203,510 |
| |||||||||||||||||||||
Non-core items: |
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||
Adjustments to equity in earnings for contributions to |
|
| 709 |
|
|
| (938 | ) |
|
| 294 |
|
|
| 8,977 |
| |||||||||||||||||||||
FFO attributable to One Steuart Lane, including after-tax |
|
| 1,509 |
|
|
| (3,267 | ) |
|
| 3,283 |
|
|
| (3,267 | ) | |||||||||||||||||||||
Non-cash write-off of deferred financing costs |
|
| - |
|
|
| 761 |
|
|
| - |
|
|
| 761 |
| |||||||||||||||||||||
Other, net |
|
| 126 |
|
|
| 53 |
|
|
| 420 |
|
|
| 432 |
| |||||||||||||||||||||
Core FFO |
|
| 71,577 |
|
|
| 68,958 |
|
|
| 216,450 |
|
|
| 210,413 |
| |||||||||||||||||||||
Less Core FFO attributable to noncontrolling interests in: |
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||
Consolidated joint ventures |
|
| (13,408 | ) |
|
| (13,895 | ) |
|
| (39,868 | ) |
|
| (47,422 | ) | |||||||||||||||||||||
Consolidated real estate fund |
|
| (94 | ) |
|
| (9 | ) |
|
| (381 | ) |
|
| (65 | ) | |||||||||||||||||||||
Operating Partnership |
|
| (3,826 | ) |
|
| (4,985 | ) |
|
| (13,741 | ) |
|
| (14,677 | ) | |||||||||||||||||||||
Core FFO attributable to common stockholders |
| $ | 54,249 |
|
| $ | 50,069 |
|
| $ | 162,460 |
|
| $ | 148,249 |
| |||||||||||||||||||||
Per diluted share |
| $ | 0.24 |
|
| $ | 0.23 |
|
| $ | 0.73 |
|
| $ | 0.68 |
| |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
Reconciliation of weighted average shares outstanding: | Reconciliation of weighted average shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
| Weighted average shares outstanding |
| 239,445,810 |
|
|
| 219,394,245 |
|
|
| 235,151,398 |
|
|
| 216,317,746 |
| |||||||||||||||||||||
| Effect of dilutive securities |
| 24,653 |
|
|
| 24,385 |
|
|
| 26,285 |
|
|
| - |
| |||||||||||||||||||||
| Denominator for FFO and Core FFO per diluted share |
| 239,470,463 |
|
|
| 219,418,630 |
|
|
| 235,177,683 |
|
|
| 216,317,746 |
| |||||||||||||||||||||
Weighted average shares outstanding |
|
| 224,864,791 |
|
|
| 218,706,356 |
|
|
| 222,228,605 |
|
|
| 218,689,696 |
| |||||||||||||||||||||
Effect of dilutive securities |
|
| 28,555 |
|
|
| 44,880 |
|
|
| 34,143 |
|
|
| 41,461 |
| |||||||||||||||||||||
Denominator for FFO and Core FFO per diluted share |
|
| 224,893,346 |
|
|
| 218,751,236 |
|
|
| 222,262,748 |
|
|
| 218,731,157 |
|
ITEM 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Market risk is the risk of loss from adverse changes in market prices and interest rates. Our future earnings, cash flows and fair values relevant to financial instruments are dependent upon prevalent market interest rates. Our primary market risk results from our indebtedness, which bears interest at both fixed and variable rates. We manage our market risk on variable rate debt by entering into interest rate swap agreements to fix the rate or interest rate cap agreements to limit exposure to increases in rates, on all or a portion of the debt for varying periods through maturity. This in turn, reduces the risks of variability of cash flows created by variable rate debt and mitigates the risk of increases in interest rates. Our objective when undertaking such arrangements is to reduce our floating rate exposure and we do not enter into hedging arrangements for speculative purposes. Subject to maintaining our status as a REIT for Federal income tax purposes, we may utilize swap arrangements in the future.
The following table summarizes our consolidated debt, the weighted average interest rates and the fair value as of September 30, 2017.2022.
Property |
| Rate |
| 2022 |
|
| 2023 |
|
|
| 2024 |
|
|
| 2025 |
|
|
| 2026 |
|
| Thereafter |
|
| Total |
|
| Fair Value |
| ||||||||||||
(Amounts in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Fixed Rate Debt: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
| 300 Mission Street |
| 3.65% |
| $ | - |
|
| $ | 273,000 |
|
|
|
| $ | - |
|
|
|
| $ | - |
|
|
|
| $ | - |
|
| $ | - |
|
| $ | 273,000 |
|
| $ | 265,128 |
|
| One Market Plaza |
| 4.03% |
|
| - |
|
|
| - |
|
|
|
| 975,000 |
|
|
|
| - |
|
|
|
| - |
|
|
| - |
|
|
| 975,000 |
|
|
| 942,331 |
| |||
| 31 West 52nd Street |
| 3.80% |
|
| - |
|
|
| - |
|
|
|
| - |
|
|
|
| - |
|
|
|
| 500,000 |
|
|
| - |
|
|
| 500,000 |
|
|
| 456,034 |
| |||
| 1301 Avenue of the Americas (1) | 2.46% |
|
| - |
|
|
| - |
|
|
|
| - |
|
|
|
| - |
|
|
|
| 500,000 |
|
|
| - |
|
|
| 500,000 |
|
|
| 497,990 |
| ||||
| 1633 Broadway |
| 2.99% |
|
| - |
|
|
| - |
|
|
|
| - |
|
|
|
| - |
|
|
|
| - |
|
|
| 1,250,000 |
|
|
| 1,250,000 |
|
|
| 1,024,296 |
| |||
Total Fixed Rate Debt |
| 3.37% |
| $ | - |
|
| $ | 273,000 |
|
|
| $ | 975,000 |
|
|
| $ | - |
|
|
| $ | 1,000,000 |
|
| $ | 1,250,000 |
|
| $ | 3,498,000 |
|
| $ | 3,185,779 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
Variable Rate Debt: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
| 1301 Avenue of the Americas (2) | 5.56% |
| $ | - |
|
| $ | - |
|
|
| $ | - |
|
|
|
| $ | - |
|
|
|
| $ | 360,000 |
|
| $ | - |
|
| $ | 360,000 |
|
| $ | 358,553 |
| ||
| Revolving Credit Facility |
| n/a |
|
| - |
|
|
| - |
|
|
|
| - |
|
|
|
| - |
|
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
| |||
Total Variable Rate Debt |
| 5.56% |
| $ | - |
|
| $ | - |
|
|
| $ | - |
|
|
| $ | - |
|
|
| $ | 360,000 |
|
| $ | - |
|
| $ | 360,000 |
|
| $ | 358,553 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
Total Consolidated Debt |
| 3.58% |
| $ | - |
|
| $ | 273,000 |
|
|
| $ | 975,000 |
|
|
| $ | - |
|
|
| $ | 1,360,000 |
|
| $ | 1,250,000 |
|
| $ | 3,858,000 |
|
| $ | 3,544,332 |
|
Property |
| Rate |
|
| 2017 |
|
| 2018 |
|
| 2019 |
|
| 2020 |
|
| 2021 |
|
| Thereafter |
|
| Total |
|
| Fair Value |
| ||||||||||
(Amounts in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Fixed Rate Debt: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
| 1633 Broadway(1) |
|
| 3.54% |
|
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | 1,000,000 |
|
| $ | 1,000,000 |
|
| $ | 1,001,383 |
|
| 1301 Avenue of the Americas |
|
| 3.05% |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 500,000 |
|
|
| - |
|
|
| 500,000 |
|
|
| 488,411 |
|
| 31 West 52nd Street |
|
| 3.80% |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 500,000 |
|
|
| 500,000 |
|
|
| 486,606 |
|
| One Market Plaza |
|
| 4.03% |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 975,000 |
|
|
| 975,000 |
|
|
| 989,941 |
|
| 50 Beale |
|
| 3.65% |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 228,000 |
|
|
| - |
|
|
| 228,000 |
|
|
| 228,073 |
|
Total Fixed Rate Debt |
|
| 3.66% |
|
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | 728,000 |
|
| $ | 2,475,000 |
|
| $ | 3,203,000 |
|
| $ | 3,194,414 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Variable Rate Debt: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
| 1633 Broadway |
|
| 2.99% |
|
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | 30,100 |
|
| $ | 30,100 |
|
| $ | 30,142 |
|
| 1301 Avenue of the Americas |
|
| 3.05% |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 350,000 |
|
|
| - |
|
|
| 350,000 |
|
|
| 351,287 |
|
| Revolving Credit Facility |
| n/a |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
| |
Total Variable Rate Debt |
|
| 3.05% |
|
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | 350,000 |
|
| $ | 30,100 |
|
| $ | 380,100 |
|
| $ | 381,429 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Consolidated Debt |
|
| 3.60% |
|
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | 1,078,000 |
|
| $ | 2,505,100 |
|
| $ | 3,583,100 |
|
| $ | 3,575,843 |
|
|
|
In addition to the above, our unconsolidated joint ventures had $897,535,000$1.74 billion of outstanding indebtedness as of September 30, 2017,2022, of which our share was $180,949,000.$623,785,000.
The following table summarizedtables below provide additional details on our fixedinterest rate debt that has been swapped from floatingswaps and interest rate to fixedcaps as of September 30, 2017.2022.
|
| Notional |
|
|
|
|
|
| Strike |
|
| Fair Value as of |
| |||
Property |
| Amount |
|
| Effective Date |
| Maturity Date |
| Rate |
|
| September 30, 2017 |
| |||
(Amounts in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
| |||
1633 Broadway (1) |
| $ | 400,000 |
|
| Dec-2015 |
| Dec-2020 |
|
| 1.65 | % |
| $ | 1,233 |
|
1633 Broadway (1) |
|
| 300,000 |
|
| Dec-2015 |
| Dec-2021 |
|
| 1.82 | % |
|
| 142 |
|
Total interest rate swap assets designated as cash flow hedges (included in "other assets") |
|
| $ | 1,375 |
| |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1633 Broadway (1) |
| $ | 400,000 |
|
| Dec-2020 |
| Dec-2021 |
|
| 2.35 | % |
| $ | 921 |
|
1633 Broadway (1) |
|
| 300,000 |
|
| Dec-2015 |
| Dec-2022 |
|
| 1.95 | % |
|
| 805 |
|
Total interest rate swap liabilities designated as cash flow hedges (included in "other liabilities") | $ | 1,726 |
|
|
| Notional |
|
| Effective |
| Maturity |
| Benchmark |
| Strike |
|
| Fair Value as of |
| |||||||
Property |
| Amount |
|
| Date |
| Date |
| Rate |
| Rate |
|
| September 30, 2022 |
|
| December 31, 2021 |
| ||||
(Amounts in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
1301 Avenue of the Americas |
| $ | 500,000 |
|
| Jul-2021 |
| Aug-2024 |
| LIBOR |
|
| 0.46 | % |
| $ | 34,449 |
|
| $ | 6,691 |
|
Total interest rate swap assets designated as cash flow hedges (included in "other assets") | $ | 34,449 |
|
| $ | 6,691 |
|
|
|
|
| Notional |
|
| Effective |
| Maturity |
| Benchmark |
| Strike |
|
| Fair Value as of |
| |||||||
Property |
| Amount |
|
| Date |
| Date |
| Rate |
| Rate |
|
| September 30, 2022 |
|
| December 31, 2021 |
| ||||
(Amounts in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
1301 Avenue of the Americas |
| $ | 360,000 |
|
| Jul-2021 |
| Aug-2023 |
| LIBOR |
|
| 2.00 | % |
| $ | 6,987 |
|
| $ | 306 |
|
Total interest rate cap assets designated as cash flow hedges (included in "other assets") | $ | 6,987 |
|
| $ | 306 |
|
58
The following table summarizes our share of total indebtedness and the effect to interest expense of a 100 basis point increase in LIBOR.variable rates.
|
| September 30, 2017 |
|
| December 31, 2016 |
|
| As of September 30, 2022 |
|
| As of December 31, 2021 |
| ||||||||||||||||||||||||||||
(Amounts in thousands, except per share amount) |
| Balance |
|
| Weighted Average Interest Rate |
|
| Effect of 1% Increase in Base Rates |
|
| Balance |
|
| Weighted Average Interest Rate |
|
| Balance |
|
| Weighted |
|
| Effect of 1% Increase in Base Rates |
|
| Balance |
|
| Weighted |
| ||||||||||
Paramount's share of consolidated debt: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Variable rate |
| $ | 380,100 |
|
|
| 3.05 | % |
| $ | 3,801 |
|
| $ | 599,627 |
|
|
| 2.29 | % |
| $ | 360,000 |
|
|
| 5.56 | % |
| $ | 3,600 |
|
| $ | 360,000 |
|
|
| 3.67 | % |
Fixed rate (1) |
|
| 2,548,658 |
|
|
| 3.59 | % |
|
| - |
|
|
| 2,593,343 |
|
|
| 3.99 | % | ||||||||||||||||||||
Fixed rate |
|
| 2,687,665 |
|
|
| 3.25 | % |
|
| - |
|
|
| 2,687,665 |
|
|
| 3.25 | % | ||||||||||||||||||||
|
| $ | 2,928,758 |
|
|
| 3.52 | % |
| $ | 3,801 |
|
| $ | 3,192,970 |
|
|
| 3.67 | % |
| $ | 3,047,665 |
|
|
| 3.52 | % |
| $ | 3,600 |
|
| $ | 3,047,665 |
|
|
| 3.30 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Paramount's share of debt of non-consolidated entities (non-recourse): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||
Paramount's share of debt of non-consolidated |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||
entities (non-recourse): |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||
Variable rate |
| $ | 28,808 |
|
|
| 3.69 | % |
| $ | 288 |
|
| $ | 55,750 |
|
|
| 2.72 | % |
| $ | 111,427 |
|
|
| 4.83 | % |
| $ | 1,114 |
|
| $ | 108,963 |
|
|
| 3.27 | % |
Fixed rate (1) |
|
| 152,141 |
|
|
| 3.41 | % |
|
| - |
|
|
| 69,692 |
|
|
| 5.74 | % | ||||||||||||||||||||
Fixed rate |
|
| 512,358 |
|
|
| 3.30 | % |
|
| - |
|
|
| 503,598 |
|
|
| 3.30 | % | ||||||||||||||||||||
|
| $ | 180,949 |
|
|
| 3.45 | % |
| $ | 288 |
|
| $ | 125,442 |
|
|
| 4.40 | % |
| $ | 623,785 |
|
|
| 3.58 | % |
| $ | 1,114 |
|
| $ | 612,561 |
|
|
| 3.30 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Noncontrolling interests' in the Operating Partnership share of above |
|
| $ | (393 | ) |
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||
Noncontrolling interests' share of above | Noncontrolling interests' share of above |
|
| $ | (311 | ) |
|
|
|
|
| |||||||||||||||||||||||||||||
Total change in annual net income |
|
|
|
|
|
|
|
|
| $ | 3,696 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 4,403 |
|
|
|
|
|
| ||||||
Per diluted share |
|
|
|
|
|
|
|
|
| $ | 0.02 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 0.02 |
|
|
|
|
|
|
|
|
On December 31, 2021, the Financial Conduct Authority (“FCA”) ceased the publication of the one-week and two-month LIBOR rates. The remaining LIBOR rates will continue to be published through June 30, 2023, after which the interest rate for our variable rate debt and derivative instruments, including interest rates for our variable rate debt and derivative instruments of our unconsolidated joint ventures, will be based on an alternative variable rate as specified in the applicable documentation governing such debt or derivative instruments or as otherwise agreed upon. While we expect LIBOR to be available in substantially its current form until at least the end of June 2023, if sufficient banks decline to make submission to the LIBOR administrator, it is possible that LIBOR may become unavailable prior to that point, which could increase our risk associated with the transition to an alternative variable rate. As of December 31, 2021, banks are no longer issuing any new LIBOR debt. The discontinuation of LIBOR and the related transition to an alternative rate would not affect our ability to borrow or maintain already outstanding borrowings or swaps, however, future changes may result in interest rates and/or payments that are higher or lower than if LIBOR were to remain available in its current form. As of September 30, 2022, all of our outstanding variable rate notes and mortgages payable and derivative instruments are indexed to LIBOR and we will continue to monitor and evaluate the related risks.
ITEM 4.CONTROLS ANDAND PROCEDURES
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) that are designed to ensure that information required to be disclosed in our reports under the Exchange Act is processed, recorded, summarized and reported within the time periods specified in the SEC’s rules and regulations.regulations, and that such information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.objectives.
As of September 30, 2017,2022, the end of the period covered by this Quarterly Report on Form 10-Q, we carried out an evaluation, under the supervision and with the participation of management, including our Chief Executive Officer and Chief Financial Officer, regarding the effectiveness of our disclosure controls and procedures atprocedures. Based on the foregoing evaluation, as of the end of the period covered by this Report. Based on the foregoing,Quarterly Report, our Chief Executive Officer and Chief Financial Officer concluded as of that time, that our disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed by us in reports filed or submitted under the Exchange Act is processed, recorded, summarized and reported within the time periods specified in the SEC’s rules and forms.forms, and that such information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure.
Changes in Internal Control over Financial Reporting
There were no changes to our internal control over financial reporting in connection with the evaluation referenced above that occurred during the period covered by this Quarterly Report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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ITEM 1. LEGAL PROCEEDINGS
From time to time, we are a party to various claims and routine litigation arising in the ordinary course of business. As of September 30, 2017,2022, we do not believe that the results of any such claims or litigation, individually or in the aggregate, will have a material adverse effect on our business, financial position, results of operations or cash flows.
ITEM 1A. RISK FACTORS
Except to the extent additional factual information disclosed elsewhere in this Quarterly Report on Form 10-Q relates to such risk factors (including, without limitation, the matters discussed in Part I, “Item 2—Management’s Discussion and Analysis of Financial Condition and Results of Operations”), there were no material changes to the risk factors disclosed in Part I, “Item“Item 1A. Risk Factors”Factors” of our Annual Report on Form 10-K for the year ended December 31, 2016.2021.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Recent Sales of Unregistered Securities
None.
Recent Purchases of Equity Securities
On August 1, 2017,November 5, 2019, we received authorization from our Board of Directors to repurchase up to $200,000,000 of our common stock, from time to time, in the open market or in privately negotiated transactions. During 2022, we repurchased 6,498,232 common shares at a weighted average price of $6.41 per share, or $41,674,000 in the aggregate, of which 3,237,392 shares were repurchased in the three months ended September 30, 2022 at a weighted average price of $6.58 per share, or $21,313,000 in the aggregate, and the remaining 3,260,840 shares were repurchased in October 2022 at a weighted average price of $6.24 per share, or $20,361,000 in the aggregate. During 2020, we repurchased 13,813,158 common shares at a weighted average price of $8.69 per share, or $120,000,000 in the aggregate. Accordingly, we have $38,326,000 available for future repurchases under the existing program. The amount ofand timing of future repurchases, if any, will depend on a number of factors, including, the price and availability of our shares, trading volume, and general market conditions.conditions and available funding. The stock repurchase program may be suspended or discontinued at any time. During
The following table summarizes our purchase of equity securities in the three months ended September 30, 2017, we did not repurchase any2022.
Period |
| Total Number of Shares Purchased |
|
| Average Price Paid per Share |
|
| Total Number of Shares Purchased as Part of Publicly Announced Plan |
|
| Maximum Approximate Dollar Value Available for Future Purchase |
| ||||
July 2022 |
|
| 268,910 |
| (1) | $ | 6.96 |
|
|
| 268,231 |
|
| $ | 78,133,000 |
|
August 2022 |
|
| - |
|
|
| - |
|
|
| - |
|
|
| 78,133,000 |
|
September 2022 |
|
| 2,969,161 |
|
|
| 6.55 |
|
|
| 2,969,161 |
|
|
| 58,687,000 |
|
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
None.ITEM 4. MINE SAFETY DISCLOSURES
None.
None.
ITEM 5. OTHER INFORMATION
None.
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ITEM 6. EXHIBITS
Exhibits required by Item 601 of Regulation S-K are filed herewith or incorporated herein by reference and are listed in the following Exhibit Index:
EXHIBIT INDEX
Exhibit |
| Exhibit Description | ||
|
| |||
3.1 | ||||
|
|
| ||
31.1* | ||||
|
| |||
|
| |||
31.2* |
| |||
|
| |||
32.1** |
| |||
|
| |||
32.2** |
| |||
|
| |||
101.SCH* | ||||
|
| |||
| Inline XBRL Taxonomy Extension Schema. | |||
|
|
| ||
101.CAL* |
| Inline XBRL Taxonomy Extension Calculation Linkbase. | ||
|
|
| ||
101.DEF* |
| Inline XBRL Taxonomy Extension Definition Linkbase. | ||
|
|
| ||
101.LAB* |
| Inline XBRL Taxonomy Extension Label Linkbase. | ||
|
|
| ||
101.PRE* |
| Inline XBRL Taxonomy Extension Presentation Linkbase. | ||
|
|
| ||
|
|
| ||
|
| _______________________________ | ||
* |
|
| ||
| ||||
** | Furnished herewith | |||
|
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Paramount Group, Inc. | |||||
Date: | October 26, 2022 | By: | /s/ Wilbur Paes | ||
|
|
| |||
| |||||
| |||||
Wilbur Paes | (duly authorized officer and principal financial officer) | ||||
Date: | October 26, 2022 | By: | /s/ Ermelinda Berberi | Senior Vice President, Chief Accounting Officer | |
Ermelinda Berberi | (duly authorized officer and principal accounting officer) |
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