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, 2017March 31, 2024
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 | 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,April 15, 2024, there were 240,073,742217,329,254 shares of the registrant’s common stock outstanding.
Table of Contents
Item | Page Number | |||
Part I. | Financial Information | |||
Item 1. | 3 | |||
3 | ||||
Consolidated Statements of Income (Unaudited) for the three months ended March 31, 2024 and | 4 | |||
Consolidated Statements of Comprehensive Income (Unaudited) for the three months ended March 31, 2024 and | 5 | |||
Consolidated Statements of Changes in Equity (Unaudited) for the | 6 | |||
Consolidated Statements of Cash Flows (Unaudited) for the | 7 | |||
9 | ||||
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
| ||
Item 3. |
| |||
Item 4. |
| |||
Part II. | Other Information | |||
Item 1. |
| |||
Item 1A. |
| |||
Item 2. |
| |||
Item 3. |
| |||
Item 4. |
| |||
Item 5. |
| |||
Item 6. |
| |||
|
2
PART I – FINANCIAL INFORMATIONFINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
PARAMOUNT GROUP, INC.
(UNAUDITED)
(Amounts in thousands, except share, unit and per share amounts) | March 31, 2024 |
|
| December 31, 2023 |
| ||
Assets |
|
|
|
|
| ||
Real estate, at cost |
|
|
|
|
| ||
Land | $ | 1,966,237 |
|
| $ | 1,966,237 |
|
Buildings and improvements |
| 6,278,863 |
|
|
| 6,250,379 |
|
|
| 8,245,100 |
|
|
| 8,216,616 |
|
Accumulated depreciation and amortization |
| (1,524,078 | ) |
|
| (1,471,819 | ) |
Real estate, net |
| 6,721,022 |
|
|
| 6,744,797 |
|
Cash and cash equivalents |
| 276,235 |
|
|
| 428,208 |
|
Restricted cash |
| 171,776 |
|
|
| 81,391 |
|
Accounts and other receivables |
| 16,048 |
|
|
| 18,053 |
|
Real estate related fund investments |
| - |
|
|
| 775 |
|
Investments in unconsolidated real estate related funds |
| 4,603 |
|
|
| 4,549 |
|
Investments in unconsolidated joint ventures |
| 132,788 |
|
|
| 132,239 |
|
Deferred rent receivable |
| 353,826 |
|
|
| 351,209 |
|
Deferred charges, net of accumulated amortization of $86,845 and $82,265 |
| 107,407 |
|
|
| 108,751 |
|
Intangible assets, net of accumulated amortization of $197,756 and $194,536 |
| 62,609 |
|
|
| 68,005 |
|
Other assets |
| 83,411 |
|
|
| 68,238 |
|
Total assets (1) | $ | 7,929,725 |
|
| $ | 8,006,215 |
|
|
|
|
|
|
| ||
Liabilities and Equity |
|
|
|
|
| ||
Notes and mortgages payable, net of unamortized deferred financing costs | $ | 3,669,850 |
|
| $ | 3,803,484 |
|
Revolving credit facility |
| - |
|
|
| - |
|
Accounts payable and accrued expenses |
| 115,038 |
|
|
| 114,463 |
|
Dividends and distributions payable |
| 8,376 |
|
|
| 8,360 |
|
Intangible liabilities, net of accumulated amortization of $108,708 and $108,817 |
| 26,026 |
|
|
| 28,003 |
|
Other liabilities |
| 31,774 |
|
|
| 37,017 |
|
Total liabilities (1) |
| 3,851,064 |
|
|
| 3,991,327 |
|
Commitments and contingencies |
|
|
|
|
| ||
Paramount Group, Inc. equity: |
|
|
|
|
| ||
Common stock $0.01 par value per share; authorized 900,000,000 shares; issued and |
| 2,173 |
|
|
| 2,173 |
|
Additional paid-in-capital |
| 4,131,652 |
|
|
| 4,133,801 |
|
Earnings less than distributions |
| (941,855 | ) |
|
| (943,935 | ) |
Accumulated other comprehensive income |
| 7,080 |
|
|
| 11,246 |
|
Paramount Group, Inc. equity |
| 3,199,050 |
|
|
| 3,203,285 |
|
Noncontrolling interests in: |
|
|
|
|
| ||
Consolidated joint ventures |
| 480,542 |
|
|
| 413,925 |
|
Consolidated real estate related funds |
| 103,886 |
|
|
| 110,589 |
|
Operating Partnership (20,035,314 and 19,468,095 units outstanding) |
| 295,183 |
|
|
| 287,089 |
|
Total equity |
| 4,078,661 |
|
|
| 4,014,888 |
|
Total liabilities and equity | $ | 7,929,725 |
|
| $ | 8,006,215 |
|
(Amounts in thousands, except share, unit and per share amounts) |
|
|
|
|
|
|
|
ASSETS | September 30, 2017 |
|
| December 31, 2016 |
| ||
Real estate, at cost |
|
|
|
|
|
|
|
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 |
|
|
|
|
|
|
|
|
|
LIABILITIES AND EQUITY |
|
|
|
|
|
|
|
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).
3
PARAMOUNTPARAMOUNT GROUP,, INC.
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
| For the Three Months Ended |
|
| For the Nine Months Ended |
|
| ||||||||||
| September 30, |
|
| September 30, |
|
| ||||||||||
(Amounts in thousands, except share and per share amounts) | 2017 |
|
| 2016 |
|
| 2017 |
|
| 2016 |
|
| ||||
REVENUES: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rental income | $ | 156,384 |
|
| $ | 149,019 |
|
| $ | 469,961 |
|
| $ | 445,452 |
|
|
Tenant reimbursement income |
| 14,053 |
|
|
| 11,978 |
|
|
| 38,761 |
|
|
| 33,101 |
|
|
Fee and other income |
| 9,333 |
|
|
| 10,321 |
|
|
| 29,988 |
|
|
| 37,986 |
|
|
Total revenues |
| 179,770 |
|
|
| 171,318 |
|
|
| 538,710 |
|
|
| 516,539 |
|
|
EXPENSES: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating |
| 68,264 |
|
|
| 64,025 |
|
|
| 197,696 |
|
|
| 186,964 |
|
|
Depreciation and amortization |
| 66,515 |
|
|
| 66,376 |
|
|
| 198,143 |
|
|
| 208,475 |
|
|
General and administrative |
| 14,470 |
|
|
| 13,235 |
|
|
| 44,624 |
|
|
| 39,335 |
|
|
Transaction related costs |
| 274 |
|
|
| 282 |
|
|
| 1,051 |
|
|
| 1,725 |
|
|
Total expenses |
| 149,523 |
|
|
| 143,918 |
|
|
| 441,514 |
|
|
| 436,499 |
|
|
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 |
|
|
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 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(LOSS) INCOME PER COMMON SHARE - BASIC: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) income per common share | $ | (0.04 | ) |
| $ | (0.00 | ) |
| $ | 0.40 |
|
| $ | (0.02 | ) |
|
Weighted average shares outstanding |
| 239,445,810 |
|
|
| 219,394,245 |
|
|
| 235,151,398 |
|
|
| 216,317,746 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(LOSS) INCOME PER COMMON SHARE - DILUTED: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) income per common share | $ | (0.04 | ) |
| $ | (0.00 | ) |
| $ | 0.40 |
|
| $ | (0.02 | ) |
|
Weighted average shares outstanding |
| 239,445,810 |
|
|
| 219,394,245 |
|
|
| 235,177,683 |
|
|
| 216,317,746 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DIVIDENDS PER COMMON SHARE | $ | 0.095 |
|
| $ | 0.095 |
|
| $ | 0.285 |
|
| $ | 0.285 |
|
|
| For the Three Months Ended March 31, |
| |||||
(Amounts in thousands, except share and per share amounts) | 2024 |
|
| 2023 |
| ||
Revenues: |
|
|
|
|
| ||
Rental revenue | $ | 179,723 |
|
| $ | 181,713 |
|
Fee and other income |
| 9,154 |
|
|
| 6,761 |
|
Total revenues |
| 188,877 |
|
|
| 188,474 |
|
Expenses: |
|
|
|
|
| ||
Operating |
| 71,740 |
|
|
| 70,309 |
|
Depreciation and amortization |
| 61,114 |
|
|
| 58,888 |
|
General and administrative |
| 16,634 |
|
|
| 14,623 |
|
Transaction related costs |
| 178 |
|
|
| 128 |
|
Total expenses |
| 149,666 |
|
|
| 143,948 |
|
Other income (expense): |
|
|
|
|
| ||
(Loss) income from real estate related fund investments |
| (43 | ) |
|
| 3,550 |
|
Income (loss) from unconsolidated real estate related funds |
| 105 |
|
|
| (178 | ) |
Loss from unconsolidated joint ventures |
| (1,346 | ) |
|
| (5,762 | ) |
Interest and other income, net |
| 19,420 |
|
|
| 2,925 |
|
Interest and debt expense |
| (40,269 | ) |
|
| (36,459 | ) |
Income before income taxes |
| 17,078 |
|
|
| 8,602 |
|
Income tax expense |
| (347 | ) |
|
| (288 | ) |
Net income |
| 16,731 |
|
|
| 8,314 |
|
Less net income attributable to noncontrolling interests in: |
|
|
|
| |||
Consolidated joint ventures |
| (5,206 | ) |
|
| (5,641 | ) |
Consolidated real estate related funds |
| (762 | ) |
|
| (823 | ) |
Operating Partnership |
| (898 | ) |
|
| (121 | ) |
Net income attributable to common stockholders | $ | 9,865 |
|
| $ | 1,729 |
|
|
|
|
|
|
| ||
|
|
|
|
|
| ||
Income per Common Share - Basic: |
|
|
|
|
| ||
Income per common share | $ | 0.05 |
|
| $ | 0.01 |
|
Weighted average common shares outstanding |
| 217,105,686 |
|
|
| 216,563,108 |
|
|
|
|
|
|
| ||
Income per Common Share - Diluted: |
|
|
|
|
| ||
Income per common share | $ | 0.05 |
|
| $ | 0.01 |
|
Weighted average common shares outstanding |
| 217,186,409 |
|
|
| 216,617,020 |
|
See notes to consolidated financial statements (unaudited).
4
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 March 31, |
| |||||
(Amounts in thousands) | 2024 |
|
| 2023 |
| ||
Net income | $ | 16,731 |
|
| $ | 8,314 |
|
Other comprehensive income (loss): |
|
|
|
|
| ||
Change in value of interest rate swaps and interest rate caps |
| (4,687 | ) |
|
| (8,390 | ) |
Pro rata share of other comprehensive income (loss) of unconsolidated joint ventures |
| 143 |
|
|
| (2,563 | ) |
Comprehensive income (loss) |
| 12,187 |
|
|
| (2,639 | ) |
Less comprehensive (income) loss attributable to noncontrolling interests in: |
|
|
|
|
| ||
Consolidated joint ventures |
| (5,206 | ) |
|
| (5,641 | ) |
Consolidated real estate related funds |
| (762 | ) |
|
| (823 | ) |
Operating Partnership |
| (520 | ) |
|
| 594 |
|
Comprehensive income (loss) attributable to common stockholders | $ | 5,699 |
|
| $ | (8,509 | ) |
See notes to consolidated financial statements (unaudited).
5
PARAMOUNTPARAMOUNT 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 |
|
| Ventures |
|
| Related Funds |
|
| Partnership |
|
| Equity |
| |||||||||
Balance as of December 31, 2023 |
|
| 217,366 |
|
| $ | 2,173 |
|
| $ | 4,133,801 |
|
| $ | (943,935 | ) |
| $ | 11,246 |
|
| $ | 413,925 |
|
| $ | 110,589 |
|
| $ | 287,089 |
|
| $ | 4,014,888 |
|
Net income |
|
| - |
|
|
| - |
|
|
| - |
|
|
| 9,865 |
|
|
| - |
|
|
| 5,206 |
|
|
| 762 |
|
|
| 898 |
|
|
| 16,731 |
|
Common shares issued under Omnibus |
|
| (37 | ) |
|
| - |
|
|
| - |
|
|
| (178 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (178 | ) |
Dividends and distributions ($0.035 per share |
|
| - |
|
|
| - |
|
|
| - |
|
|
| (7,607 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| (769 | ) |
|
| (8,376 | ) |
Contributions from noncontrolling interests |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 62,220 |
|
|
| 889 |
|
|
| - |
|
|
| 63,109 |
|
Distributions to noncontrolling interests |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (809 | ) |
|
| (8,354 | ) |
|
| - |
|
|
| (9,163 | ) |
Change in value of interest rate swaps and |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (4,297 | ) |
|
| - |
|
|
| - |
|
|
| (390 | ) |
|
| (4,687 | ) |
Pro rata share of other comprehensive income |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 131 |
|
|
| - |
|
|
| - |
|
|
| 12 |
|
|
| 143 |
|
Amortization of equity awards |
|
| - |
|
|
| - |
|
|
| 269 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 5,925 |
|
|
| 6,194 |
|
Reallocation of noncontrolling interest |
|
| - |
|
|
| - |
|
|
| (2,418 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 2,418 |
|
|
| - |
|
Balance as of March 31, 2024 |
|
| 217,329 |
|
| $ | 2,173 |
|
| $ | 4,131,652 |
|
| $ | (941,855 | ) |
| $ | 7,080 |
|
| $ | 480,542 |
|
| $ | 103,886 |
|
| $ | 295,183 |
|
| $ | 4,078,661 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Balance as of December 31, 2022 |
|
| 216,559 |
|
| $ | 2,165 |
|
| $ | 4,186,161 |
|
| $ | (644,331 | ) |
| $ | 48,296 |
|
| $ | 402,118 |
|
| $ | 173,375 |
|
| $ | 242,982 |
|
| $ | 4,410,766 |
|
Net income |
|
| - |
|
|
| - |
|
|
| - |
|
|
| 1,729 |
|
|
| - |
|
|
| 5,641 |
|
|
| 823 |
|
|
| 121 |
|
|
| 8,314 |
|
Common shares issued upon redemption of |
|
| 614 |
|
|
| 6 |
|
|
| 10,222 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (10,228 | ) |
|
| - |
|
Common shares issued under Omnibus |
|
| 39 |
|
|
| - |
|
|
| - |
|
|
| (205 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (205 | ) |
Dividends and distributions ($0.0775 per share |
|
| - |
|
|
| - |
|
|
| - |
|
|
| (16,834 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| (1,276 | ) |
|
| (18,110 | ) |
Contributions from noncontrolling interests |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 283 |
|
|
| 49,748 |
|
|
| - |
|
|
| 50,031 |
|
Distributions to noncontrolling interests |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (4,140 | ) |
|
| (3,740 | ) |
|
| - |
|
|
| (7,880 | ) |
Change in value of interest rate swaps and |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (7,842 | ) |
|
| - |
|
|
| - |
|
|
| (548 | ) |
|
| (8,390 | ) |
Pro rata share of other comprehensive income (loss) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (2,396 | ) |
|
| - |
|
|
| - |
|
|
| (167 | ) |
|
| (2,563 | ) |
Amortization of equity awards |
|
| - |
|
|
| - |
|
|
| 324 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 4,793 |
|
|
| 5,117 |
|
Reallocation of noncontrolling interest |
|
| - |
|
|
| - |
|
|
| (14,724 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 14,724 |
|
|
| - |
|
Balance as of March 31, 2023 |
|
| 217,212 |
|
| $ | 2,171 |
|
| $ | 4,181,983 |
|
| $ | (659,641 | ) |
| $ | 38,058 |
|
| $ | 403,902 |
|
| $ | 220,206 |
|
| $ | 250,401 |
|
| $ | 4,437,080 |
|
See notes to consolidated financial statements (unaudited).
6
PARAMOUNTPARAMOUNT GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(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 | ) |
| For the Three Months Ended March 31, |
| |||||
(Amounts in thousands) | 2024 |
|
| 2023 |
| ||
Cash Flows from Operating Activities: |
|
|
|
|
| ||
Net income | $ | 16,731 |
|
| $ | 8,314 |
|
Adjustments to reconcile net income to net cash provided by |
|
|
|
|
| ||
Depreciation and amortization |
| 61,114 |
|
|
| 58,888 |
|
Straight-lining of rental revenue |
| (2,854 | ) |
|
| (7,756 | ) |
Amortization of stock-based compensation expense |
| 6,194 |
|
|
| 5,117 |
|
Amortization of deferred financing costs |
| 2,368 |
|
|
| 1,538 |
|
Loss from unconsolidated joint ventures |
| 1,346 |
|
|
| 5,762 |
|
Distributions of earnings from unconsolidated joint ventures |
| 150 |
|
|
| 144 |
|
Unrealized losses on real estate related fund investments |
| 775 |
|
|
| 1,111 |
|
(Income) loss from unconsolidated real estate related funds |
| (105 | ) |
|
| 178 |
|
Distributions of earnings from unconsolidated real estate related funds |
| 51 |
|
|
| 51 |
|
Amortization of above and below-market leases, net |
| (1,340 | ) |
|
| (1,036 | ) |
Non-cash gain on extinguishment of IPO related tax liability |
| (15,437 | ) |
|
| - |
|
Other non-cash adjustments |
| (57 | ) |
|
| (42 | ) |
Changes in operating assets and liabilities: |
|
|
|
|
| ||
Real estate related fund investments |
| - |
|
|
| (3,918 | ) |
Accounts and other receivables |
| 2,005 |
|
|
| 4,457 |
|
Deferred charges |
| (728 | ) |
|
| (1,689 | ) |
Other assets |
| (19,648 | ) |
|
| (8,469 | ) |
Accounts payable and accrued expenses |
| 8,963 |
|
|
| (3,797 | ) |
Other liabilities |
| 10,362 |
|
|
| (885 | ) |
Net cash provided by operating activities |
| 69,890 |
|
|
| 57,968 |
|
|
|
|
|
|
| ||
Cash Flows from Investing Activities: |
|
|
|
|
| ||
Additions to real estate |
| (39,344 | ) |
|
| (18,883 | ) |
Contributions of capital to unconsolidated joint ventures |
| (1,904 | ) |
|
| - |
|
Net cash used in investing activities |
| (41,248 | ) |
|
| (18,883 | ) |
|
|
| |||||
Cash Flows from Financing Activities: |
|
|
|
|
| ||
Repayment of notes and mortgages payable |
| (975,000 | ) |
|
| - |
|
Proceeds from notes and mortgages payable |
| 850,000 |
|
|
| - |
|
Debt issuance costs |
| (10,638 | ) |
|
| - |
|
Contributions from noncontrolling interests in consolidated joint ventures |
| 62,220 |
|
|
| 283 |
|
Distributions to noncontrolling interests in consolidated joint ventures |
| (809 | ) |
|
| (4,140 | ) |
Contributions from noncontrolling interests in consolidated real estate related funds |
| 889 |
|
|
| 49,748 |
|
Distributions to noncontrolling interests in consolidated real estate related funds |
| (8,354 | ) |
|
| (3,740 | ) |
Dividends paid to common stockholders |
| (7,608 | ) |
|
| (16,827 | ) |
Distributions paid to common unitholders |
| (752 | ) |
|
| (1,199 | ) |
Settlement of accounts payable in connection with repurchases of common shares |
| - |
|
|
| (1,847 | ) |
Repurchase of shares related to stock compensation agreements |
| (178 | ) |
|
| (205 | ) |
Net cash (used in) provided by financing activities |
| (90,230 | ) |
|
| 22,073 |
|
|
|
|
|
|
| ||
Net (decrease) increase in cash and cash equivalents and restricted cash |
| (61,588 | ) |
|
| 61,158 |
|
Cash and cash equivalents and restricted cash at beginning of period |
| 509,599 |
|
|
| 449,817 |
|
Cash and cash equivalents and restricted cash at end of period | $ | 448,011 |
|
| $ | 510,975 |
|
See notes to consolidated financial statements (unaudited).
7
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 Three Months Ended March 31, |
| |||||
(Amounts in thousands) | 2024 |
|
| 2023 |
| ||
Reconciliation of Cash and Cash Equivalents and Restricted Cash: |
|
|
|
| |||
Cash and cash equivalents at beginning of period | $ | 428,208 |
|
| $ | 408,905 |
|
Restricted cash at beginning of period |
| 81,391 |
|
|
| 40,912 |
|
Cash and cash equivalents and restricted cash at beginning of period | $ | 509,599 |
|
| $ | 449,817 |
|
|
|
|
|
|
| ||
Cash and cash equivalents at end of period | $ | 276,235 |
|
| $ | 451,796 |
|
Restricted cash at end of period |
| 171,776 |
|
|
| 59,179 |
|
Cash and cash equivalents and restricted cash at end of period | $ | 448,011 |
|
| $ | 510,975 |
|
|
|
|
|
|
| ||
Supplemental Disclosure of Cash Flow Information: |
|
|
|
|
| ||
Cash payments for interest | $ | 38,228 |
|
| $ | 33,338 |
|
Cash payments for income taxes, net of refunds |
| 216 |
|
|
| 317 |
|
|
|
|
|
|
| ||
Non-Cash Transactions: |
|
|
|
|
| ||
Dividends and distributions declared but not yet paid | $ | 8,376 |
|
| $ | 18,110 |
|
Change in value of interest rate swaps and interest rate caps |
| (4,687 | ) |
|
| (8,390 | ) |
Write-off of fully amortized and/or depreciated assets |
| 1,659 |
|
|
| 10,170 |
|
Additions to real estate included in accounts payable and accrued expenses |
| 5,099 |
|
|
| 8,306 |
|
Common shares issued upon redemption of common units |
| - |
|
|
| 10,228 |
|
See notes to consolidated financial statements (unaudited).
8
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%91.6% of, the Operating Partnership as of September 30, 2017.March 31, 2024.
As of March 31, 2024, we owned and/or managed a portfolio of 18 properties aggregating 13.8 million square feet comprised of:
|
|
Additionally, we have an investment management business, where we serve as the general partner of several real estate related 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, 2023 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, 2016,2023, as filed with the SEC.
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, 2023.
9
PARAMOUNT GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
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,March 31, 2024 are not necessarily indicative of the operating results for the full year. Certain prior year balances have been reclassified to conform to current year presentation.
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
In August 2023, the Financial Statements
In March 2016, the FASBAccounting Standards Board (“FASB”) issued ASU 2016-09,Accounting Standards Update (“ASU”) 2023-05, an update to ASCAccounting Standards Codification (“ASC”) Topic 718, Compensation – Stock Compensation. 805, Business Combinations.ASU 2016-09 improves2023-05 clarifies existing guidance by requiring a joint venture to recognize and initially measure assets contributed and liabilities assumed at fair value, upon its formation in the accountingjoint venture’s separate financial statements. These amendments are effective prospectively for share-based payments including income tax consequences and the classification of awards as either equity awardsall joint venture formations with a formation date on or liability awards. ASU 2016-09 is effective for interim and annual reporting periods in fiscal years that begin after December 15, 2016,January 1, 2025, with early adoption permitted. We adoptedwill apply 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 update2023-05 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 effective 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. We are evaluating the impact of ASU 2016-13new joint ventures, as applicable, but do not believe the adoption of ASU 2023-05 will have a material impact on our consolidated financial statements.
9
PARAMOUNT GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
In August 2016,November 2023, the FASB issued ASU 2016-15,2023-07, an update to ASC Topic 230, Statement280, Segment Reporting. ASU 2023-07 enhances the segment reporting by requiring disclosures of Cash Flows(i) the significant segment expenses that are regularly provided to provide guidance for areas where there is diversity in practice in how certain cash receiptsthe CODM and cash payments are presentedincluded within each reported measure of segment profit or loss, (ii) the composition of the other segment items, including the nature and classified intype of the statementother segment items, and (iii) the title and position of cash flows.the CODM. ASU 2016-152023-07 is effective for our year ending December 31, 2024 and for our 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 retrospectively on January 1, 2017. 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 will 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, 2018,2025, with early adoption permitted. We are evaluating the impact of ASU 2017-12 but do not believe the adoption will have an impact2023-07 on our consolidated financial statements.
Recently Issued Accounting Pronouncements Potentially Impacting Our Financial Statements
In May 2014,March 2024, the Financial Accounting Standard’s Board (“FASB”)SEC issued Accounting Standards Update (“ASU”) 2014-09, an updatefinal rules on the enhancement and standardization of climate-related disclosures, and in April 2024, as a result of pending legal challenges, the SEC voluntarily stayed the new rules. The rules require disclosures relating to ASC Topic 606, Revenue from Contracts(i) material climate-related risks, (ii) governance and management of such risks and (iii) greenhouse gas emissions. Additionally, the rules require disclosure of the effects of severe weather events and other natural conditions, subject to certain materiality thresholds, in the notes to the financial statements. The requirements in the rule will be phased in starting with Customers. ASU 2014-09, as amended, supersedes nearly all existing revenue recognition guidance under U.S. GAAP. The core principleour Annual Report on Form 10-K for the year ending December 31, 2025. We are evaluating the impact 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 impactnew rules on our consolidated financial statements it will result in additional disclosures on our consolidated financial statements.and the related disclosures.
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.
10
PARAMOUNT GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Real Estate Related Fund Investments (Fund X)
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 cashReal estate related fund investments on our consolidated balance sheets to our consolidated statementsrepresent the investments 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.
In 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, Investments in Unconsolidated Joint Ventures.
11
PARAMOUNT GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
50 Beale Street
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 (See Note 6, Paramount Group Real Estate Fund InvestmentsX, LP (“Fund X”). The remaining 57.2% was owned by third party investors. On July 17, 2017, we, which invests in mezzanine loans. We are the general partner and a new joint venture in which we have a 36.6% interest, completed the acquisitioninvestment manager of 62.2% of the property from our two fundsFund X 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%13.0% 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.
(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 |
|
|
|
Waterview
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, 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 income or loss from real estate related fund investments for the assetsthree months ended March 31, 2024 and 2023.
| For the Three Months Ended March 31, |
| |||||
(Amounts in thousands) | 2024 |
|
| 2023 |
| ||
Net investment income | $ | 732 |
|
| $ | 4,661 |
|
Net unrealized losses |
| (775 | ) |
|
| (1,111 | ) |
(Loss) income from real estate related fund investments |
| (43 | ) |
|
| 3,550 |
|
Less: noncontrolling interests in consolidated real estate related funds |
| 50 |
|
|
| (2,817 | ) |
Income from real estate related fund investments attributable to | $ | 7 |
|
| $ | 733 |
|
Residential Development Fund (“RDF”)
We are also the general partner of WaterviewRDF in which we own a 7.4% interest. RDF owns a 35.0% interest in One Steuart Lane, a for-sale residential condominium project, in San Francisco, California. We consolidate the financial results of RDF into our consolidated financial statements and reflect the 92.6% interest that were classifiedwe do not own as held-for-sale asnoncontrolling interests in consolidated real estate related funds. RDF accounts for its 35.0% interest in One Steuart Lane under the equity method of accounting. Accordingly, our economic interest in One Steuart Lane (based on our 7.4% ownership interest in RDF) is 2.6%. See Note 5, Investments in Unconsolidated Joint Ventures.
We are the general partner and investment manager of Paramount Group Real Estate Fund VIII, LP (“Fund VIII”) which invests in real estate and related investments. As of March 31, 2024, our ownership interest in Fund VIII was approximately 1.3%. We account for our investment in Fund VIII under the equity method of accounting.
As of March 31, 2024 and December 31, 2016.2023, our share of the investments in the unconsolidated real estate related funds was $4,603,000 and $4,549,000, respectively, which is reflected as “investments in unconsolidated real estate related funds” on our consolidated balance sheets. We recognized income of $105,000 and loss of $178,000 during the three months ended March 31, 2024 and 2023, respectively, for our share of earnings, which is reflected as “income (loss) from unconsolidated real estate related funds” in our consolidated statements of income.
(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 |
|
11
12
PARAMOUNT GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
|
|
On January 24, 2017, aMarch 29, 2024, the joint venture that owns 60 Wall Street, in which we have a 5.0%5.0% ownership interest, acquired 60 Wall Street, a 1.6 million square foot office tower in Manhattan, for $1.04 billion from certain of our real estate fundsmodified the existing $575,000,000 mortgage loan and extended the other investors (see Note 6, Real Estate Fund Investments)maturity to May 2029. In connection with the acquisition,modification, the loan was split into (i) a $316,250,000 A-Note that bears interest at Secured Overnight Financing Rate (“SOFR”) plus 245 basis points, of which 4.0% is current pay and the remaining is accrued, and (ii) a $258,750,000 B-Note that accrues interest at 12.0%. The joint venture plans to redevelop the property and all amounts funded by the joint venture completed a $575,000,000 financing of the property. We began accounting 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. Subsequentwill be senior to the sale, RDF deconsolidated its investment in 75 HowardB-Note 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%.all accrued interest.
The following tables summarize our investments in unconsolidated joint ventures as of September 30, 2017the dates thereof and December 31, 2016 andthe income or loss from these investments for the threeperiods set forth below.
(Amounts in thousands) |
| Paramount |
| As of |
| |||||
Our Share of Investments: |
| Ownership |
| March 31, 2024 |
|
| December 31, 2023 |
| ||
712 Fifth Avenue (1) |
| 50.0% |
| $ | - |
|
| $ | - |
|
Market Center (1) |
| 67.0% |
|
| - |
|
|
| - |
|
55 Second Street (2) |
| 44.1% |
|
| 30,019 |
|
|
| 30,322 |
|
111 Sutter Street (1) |
| 49.0% |
|
| - |
|
|
| - |
|
1600 Broadway (2) |
| 9.2% |
|
| 8,496 |
|
|
| 8,646 |
|
60 Wall Street (3) |
| 5.0% |
|
| 217 |
|
|
| - |
|
One Steuart Lane (2) |
| 35.0% (4) |
|
| 90,640 |
|
|
| 89,949 |
|
Oder-Center, Germany (2) |
| 9.5% |
|
| 3,416 |
|
|
| 3,322 |
|
Investments in unconsolidated joint ventures |
| $ | 132,788 |
|
| $ | 132,239 |
|
(Amounts in thousands) | For the Three Months Ended March 31, |
| |||||
Our Share of Net (Loss) Income: | 2024 |
|
| 2023 |
| ||
712 Fifth Avenue (1) | $ | - |
|
| $ | - |
|
Market Center (1) |
| - |
|
|
| (2,655 | ) |
55 Second Street (2) |
| (302 | ) |
|
| (639 | ) |
111 Sutter Street (1) |
| - |
|
|
| - |
|
1600 Broadway (2) |
| 1 |
|
|
| (3 | ) |
60 Wall Street (3) |
| (1,687 | ) |
|
| (17 | ) |
One Steuart Lane (2) |
| 691 |
|
|
| (2,416 | ) |
Oder-Center, Germany (2) |
| (49 | ) |
|
| (32 | ) |
Loss from unconsolidated joint ventures | $ | (1,346 | ) |
| $ | (5,762 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 |
|
12
|
|
|
|
|
| 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 |
|
|
|
|
|
13
PARAMOUNT GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
The following tables provide the combined summarized financial information of 712 Fifth Avenueour unconsolidated joint ventures as of the dates thereof and for the periods set forth below.
(Amounts in thousands) | As of |
| |||||
Balance Sheets: | March 31, 2024 |
|
| December 31, 2023 |
| ||
Real estate, net | $ | 1,556,686 |
|
| $ | 1,528,595 |
|
Cash and cash equivalents and restricted cash |
| 200,573 |
|
|
| 167,355 |
|
Intangible assets, net |
| 49,194 |
|
|
| 52,164 |
|
For-sale residential condominium units (1) |
| 237,864 |
|
|
| 246,824 |
|
Other assets |
| 80,682 |
|
|
| 84,179 |
|
Total assets | $ | 2,124,999 |
|
| $ | 2,079,117 |
|
|
|
|
|
|
| ||
Notes and mortgages payable, net | $ | 1,744,978 |
|
| $ | 1,744,706 |
|
Intangible liabilities, net |
| 3,911 |
|
|
| 5,026 |
|
Other liabilities |
| 122,868 |
|
|
| 98,462 |
|
Total liabilities |
| 1,871,757 |
|
|
| 1,848,194 |
|
Equity |
| 253,242 |
|
|
| 230,923 |
|
Total liabilities and equity | $ | 2,124,999 |
|
| $ | 2,079,117 |
|
(Amounts in thousands) | For the Three Months Ended March 31, |
| |||||
Income Statements: | 2024 |
|
| 2023 |
| ||
Revenues: |
|
|
|
|
| ||
Rental revenue | $ | 35,936 |
|
| $ | 40,221 |
|
Other income |
| 14,998 |
| (2) |
| 1,757 |
|
Total revenues |
| 50,934 |
|
|
| 41,978 |
|
Expenses: |
|
|
|
|
| ||
Operating |
| 32,439 |
| (2) |
| 24,701 |
|
Depreciation and amortization |
| 13,162 |
|
|
| 17,765 |
|
Total expenses |
| 45,601 |
|
|
| 42,466 |
|
Other income (expense): |
|
|
|
|
| ||
Interest and other income |
| 626 |
|
|
| 709 |
|
Interest and debt expense |
| (17,589 | ) |
|
| (15,446 | ) |
Loss before income taxes |
| (11,630 | ) |
|
| (15,225 | ) |
Income tax expense |
| (16 | ) |
|
| (11 | ) |
Net loss | $ | (11,646 | ) |
| $ | (15,236 | ) |
(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 |
|
13 |
|
|
|
|
|
|
|
| ||||||||||
(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 |
|
14
PARAMOUNT GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Unconsolidated Real Estate Funds
We manage four Property Funds comprised 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. (“Fund VIII”), our Alternative Investment Fund, which invests in mortgage and mezzanine loans and preferred equity investments.
As of December 31, 2016, Fund II 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% 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 VII and Fund VII-H that, prior to July 17, 2017, owned 42.8% of 50 Beale. On July 17, 2017, Fund VII and Fund VII-H completed 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 these unconsolidated real estate funds as of September 30, 2017 and December 31, 2016, and income or loss recognized from these investments for the three and nine months ended September 30, 2017 and 2016.
| 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 | ) |
|
|
15
PARAMOUNT 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.
(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 |
|
16
PARAMOUNT 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.
(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 |
|
|
|
|
|
17
PARAMOUNT GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
|
|
The following table summarizes 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.
| As of |
| |||||
(Amounts in thousands) | March 31, 2024 |
|
| December 31, 2023 |
| ||
Intangible assets: |
|
|
|
|
| ||
Gross amount | $ | 260,365 |
|
| $ | 262,541 |
|
Accumulated amortization |
| (197,756 | ) |
|
| (194,536 | ) |
| $ | 62,609 |
|
| $ | 68,005 |
|
Intangible liabilities: |
|
|
|
|
| ||
Gross amount | $ | 134,734 |
|
| $ | 136,820 |
|
Accumulated amortization |
| (108,708 | ) |
|
| (108,817 | ) |
| $ | 26,026 |
|
| $ | 28,003 |
|
| For the Three Months Ended March 31, |
| |||||
(Amounts in thousands) | 2024 |
|
| 2023 |
| ||
Amortization of above and below-market leases, net | $ | 1,340 |
|
| $ | 1,036 |
|
Amortization of acquired in-place leases |
| 4,760 |
|
|
| 4,809 |
|
| As of |
| |||||
(Amounts in thousands) | September 30, 2017 |
|
| December 31, 2016 |
| ||
Intangible assets: |
|
|
|
|
|
|
|
Gross amount | $ | 562,262 |
|
| $ | 579,066 |
|
Accumulated amortization |
| (189,209 | ) |
|
| (166,841 | ) |
| $ | 373,053 |
|
| $ | 412,225 |
|
Intangible liabilities: |
|
|
|
|
|
|
|
Gross amount | $ | 210,016 |
|
| $ | 208,367 |
|
Accumulated amortization |
| (71,453 | ) |
|
| (55,349 | ) |
| $ | 138,563 |
|
| $ | 153,018 |
|
AmortizationThe following table sets forth amortization of acquired above and below-market leases, net of 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-marketin-place leases net of acquired above-market leases, for the nine-month period from April 1, 2024 through December 31, 2024, and each of the five succeeding years commencing from January 1, 2018 is2025.
(Amounts in thousands) |
| Above and |
|
| In-Place Leases |
| ||
2024 |
| $ | 3,867 |
|
| $ | 11,189 |
|
2025 |
|
| 4,447 |
|
|
| 10,300 |
|
2026 |
|
| 2,926 |
|
|
| 7,069 |
|
2027 |
|
| 2,613 |
|
|
| 6,424 |
|
2028 |
|
| 2,533 |
|
|
| 6,345 |
|
2029 |
|
| 2,095 |
|
|
| 5,688 |
|
14
PARAMOUNT GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
On February 1, 2024, we, together with our joint venture partner, modified and extended the existing mortgage loan at One Market Plaza, a 1.6 million square-foot two-building trophy asset in San Francisco, California. The existing $975,000,000 loan, which bore interest at a fixed rate of 4.03%, was scheduled to mature on February 6, 2024. In connection with the modification, the loan balance was reduced to $850,000,000, following a $125,000,000 paydown by the joint venture, of which our 49.0% share was $61,250,000. The modified loan bears interest at a fixed rate of 4.08%, matures in February 2027 and has an option to extend for an additional year, subject to certain conditions.
The following table summarizes our consolidated outstanding debt.
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
|
|
|
| Interest Rate |
|
|
|
| ||||||
| Maturity |
| Fixed/ |
| as of |
|
| As of |
| ||||||
(Amounts in thousands) | Date |
| Variable Rate |
| March 31, 2024 |
|
| March 31, 2024 |
|
| December 31, 2023 |
| |||
Notes and mortgages payable: |
|
|
|
|
|
|
|
|
|
|
| ||||
1633 Broadway (1) | Dec-2029 |
| Fixed |
|
| 2.99 | % |
| $ | 1,250,000 |
|
| $ | 1,250,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
One Market Plaza (1) | Feb-2027 |
| Fixed |
|
| 4.08 | % |
|
| 850,000 |
|
|
| 975,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
1301 Avenue of the Americas |
|
|
|
|
|
|
|
|
|
|
| ||||
| Aug-2026 |
| Fixed (2) |
|
| 2.49 | % |
|
| 500,000 |
|
|
| 500,000 |
|
| Aug-2026 |
| SOFR + 368 bps (3) |
|
| 8.18 | % |
|
| 360,000 |
|
|
| 360,000 |
|
|
|
|
|
|
| 4.87 | % |
|
| 860,000 |
|
|
| 860,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
31 West 52nd Street | Jun-2026 |
| Fixed |
|
| 3.80 | % |
|
| 500,000 |
|
|
| 500,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
300 Mission Street (1) | Oct-2026 |
| Fixed |
|
| 4.50 | % |
|
| 232,050 |
|
|
| 232,050 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Total notes and mortgages payable |
|
| 3.88 | % |
|
| 3,692,050 |
|
|
| 3,817,050 |
| |||
Less: unamortized deferred financing costs |
|
|
|
|
| (22,200 | ) |
|
| (13,566 | ) | ||||
Total notes and mortgages payable, net |
|
|
|
| $ | 3,669,850 |
|
| $ | 3,803,484 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
| |||
$750 Million Revolving | Mar-2026 |
| SOFR + 135 bps | n/a |
|
| $ | - |
|
| $ | - |
|
15
PARAMOUNT GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
On July 29, 2021, in connection with the $860,000,000 refinancing of 1301 Avenue of the Americas, we had entered into interest rate swap agreements with an aggregate notional amount of $500,000,000 to fix LIBOR at 0.46% through August 2024. On June 16, 2023, we amended the swap agreements to replace LIBOR with SOFR, effective July 7, 2023. We also entered into interest rate cap agreements with an aggregate notional amount of $360,000,000 to cap LIBOR at 2.00% which expired in August 2023. Upon expiration of these agreements, we entered into new interest rate cap agreements for the same notional amount to cap SOFR at 4.50% through August 2024. These interest rate swaps and interest rate caps are designated as follows.
(Amounts in thousands) |
|
|
|
|
2018 |
| $ | 16,281 |
|
2019 |
|
| 14,355 |
|
2020 |
|
| 8,750 |
|
2021 |
|
| 4,491 |
|
2022 |
|
| 1,091 |
|
Amortizationcash flow hedges and therefore changes in their fair values are recognized in other comprehensive income or loss (outside of acquired in-place leases (a componentearnings). We recognized other comprehensive loss of “depreciation$4,687,000 and amortization” expense) was $17,929,000 and $21,917,000$8,390,000 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 January 1, 2018 is as follows.
(Amounts in thousands) |
|
|
|
|
2018 |
| $ | 60,896 |
|
2019 |
|
| 54,639 |
|
2020 |
|
| 42,316 |
|
2021 |
|
| 30,123 |
|
2022 |
|
| 24,009 |
|
18
PARAMOUNT GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
|
|
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-year interest-only loan matures in FebruaryMarch 31, 2024 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 for2023, respectively, from the nine months ended September 30, 2017.
The following is a summary of our outstanding debt as of September 30, 2017 and December 31, 2016.
| 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 |
|
|
|
|
|
|
|
|
|
|
19
PARAMOUNT 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. These interest rate swaps are accounted for as derivative instruments and, pursuant to ASC Topic 815, are recorded on our consolidated balance sheets at fair value. Changeschanges in the fair value of these derivative financial instruments. See Note 10, Accumulated Other Comprehensive Income. During the next twelve months, we estimate that $8,561,000 of the amounts to be recognized in accumulated other comprehensive income will be reclassified as a decrease to interest expense.
The tables below provide additional details on our interest rate swaps and interest rate caps that are accounted for based on the hedging relationship and their designation and qualification. designated as cash flow hedges.
|
| Notional |
|
| Effective |
| Maturity |
| Benchmark |
| Strike |
|
| Fair Value as of |
| |||||||
Property |
| Amount |
|
| Date |
| Date |
| Rate |
| Rate |
|
| March 31, 2024 |
|
| December 31, 2023 |
| ||||
(Amounts in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
1301 Avenue of the Americas |
| $ | 500,000 |
|
| Jul-2021 |
| Aug-2024 |
| SOFR |
|
| 0.49 | % |
| $ | 8,553 |
|
| $ | 13,726 |
|
Total interest rate swap assets designated as cash flow hedges (included in "other assets") | $ | 8,553 |
|
| $ | 13,726 |
|
|
| Notional |
|
| Effective |
| Maturity |
| Benchmark |
| Strike |
|
| Fair Value as of |
| |||||||
Property |
| Amount |
|
| Date |
| Date |
| Rate |
| Rate |
|
| March 31, 2024 |
|
| December 31, 2023 |
| ||||
(Amounts in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
1301 Avenue of the Americas |
| $ | 360,000 |
|
| Aug-2023 |
| Aug-2024 |
| SOFR |
|
| 4.50 | % |
| $ | 946 |
|
| $ | 1,263 |
|
Total interest rate cap assets designated as cash flow hedges (included in "other assets") | $ | 946 |
|
| $ | 1,263 |
|
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 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 derivative obligations with such provisions aggregated $1,138,000.
Interest Rate Swaps – Designated as Cash Flow Hedges
As of September 30, 2017, we have 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 starting interest rate swaps with an aggregate notional amount of $400,000,000 to extend the maturity of certain swaps for an additional year. Changes in the fair value of interest rate swaps that are designated as cash flow hedges are recognized in “other comprehensive income (loss)” (outside of earnings). We recognized other comprehensive income of $738,000 and $7,802,000 for the three months ended September 30, 2017 and 2016, respectively and other comprehensive income 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 in the fair value 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.
|
| 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 |
|
Interest Rate Swaps – Non-designated Hedges
As of September 30, 2017,March 31, 2024, we did not have any obligations relating to our interest rate swaps or interest rate caps that were not designated as hedges.contained such provisions.
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 the open market or in privately negotiated transactions. As of December 31, 2016,2023, we had interest rate swap liabilities that hadrepurchased a fair valuetotal of $21,227,000, which were terminated on January 19, 2017 in connection with the refinancing24,183,768 common shares at a weighted average price of One Market Plaza. See Note 9, Debt for additional details. Changes$7.65 per share, or $185,000,000 in the fair value of interest rate swaps that are not designated as hedges are recognizedaggregate. We did not repurchase any shares in earnings. We recognized unrealized gains of $1,802,000 for the ninethree months ended September 30, 2017March 31, 2024. The amount and $12,728,000timing of future repurchases, if any, will depend on a number of factors, including, the price and $29,661,000 for the threeavailability of our shares, trading volume, general market conditions and nine months ended September 30, 2016, respectively, from the changes in the fair value of these interest rate swaps.available funding. The stock repurchase program may be suspended or discontinued at any time.
20
16
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, 2017March 31, 2024 and 2016.2023, respectively, including amounts attributable to noncontrolling interests in the Operating Partnership.
|
| For the Three Months Ended March 31, |
|
| |||||
(Amounts in thousands) |
| 2024 |
|
| 2023 |
|
| ||
Amount of income (loss) related to the cash flow hedges recognized | $ | 2,378 |
|
| $ | (1,039 | ) |
| |
Amounts reclassified from accumulated other comprehensive |
| (7,065 | ) |
|
| (7,351 | ) |
| |
Amount of income (loss) related to unconsolidated joint ventures |
| 143 |
|
|
| (573 | ) | (2) | |
Amounts reclassified from accumulated other comprehensive income |
| - |
|
|
| (1,990 | ) | (2) |
|
| 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 50 Beale and PGRESS Equity Holdings L.P.300 Mission Street. As of September 30, 2017March 31, 2024 and December 31, 2016,2023, noncontrolling interests in our consolidated joint ventures aggregated $408,035,000$480,542,000 and $253,788,000,$413,925,000, respectively.
Consolidated Real Estate FundRelated Funds
Noncontrolling interests in our consolidated real estate fund consistsrelated funds consist of equity interests held by third parties in RDF.our Residential Development Fund and Fund X. As of September 30, 2017March 31, 2024 and December 31, 2016,2023, the noncontrolling interestinterests in our consolidated real estate fundrelated funds aggregated $14,947,000$103,886,000 and $64,793,000,$110,589,000, respectively.
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, 2017March 31, 2024 and December 31, 2016,2023, noncontrolling interests in the Operating Partnership on our consolidated balance sheets had a carrying amount of $433,554,000$295,183,000 and $577,361,000,$287,089,000, respectively, and a redemption value of $399,644,000$93,966,000 and $551,834,000, respectively.$100,650,000, respectively, based on the closing share price of our common stock on the New York Stock Exchange at the end of each period.
2117
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 determineddeemed to be the primary beneficiary.
Consolidated VIEs
We are the sole general partner of, and ownowned approximately 90.6%91.6% of, the Operating Partnership as of September 30, 2017.March 31, 2024. 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, 2017March 31, 2024 and December 31, 2016,2023, the Operating Partnership held variable interests in the entitiesconsolidated VIEs owning properties aand real estate fund and preferred equity investmentsrelated funds 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.
|
| As of |
|
| As of |
| ||||||||||
(Amounts in thousands) |
| September 30, 2017 |
|
| December 31, 2016 |
|
| March 31, 2024 |
|
| December 31, 2023 |
| ||||
Real estate, net |
| $ | 1,733,361 |
|
| $ | 1,336,810 |
|
| $ | 3,262,604 |
|
| $ | 3,284,532 |
|
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 |
|
| 178,580 |
|
|
| 176,354 |
| ||||||||
Accounts and other receivables |
|
| 2,208 |
|
|
| 5,966 |
|
|
| 9,093 |
|
|
| 10,005 |
|
Real estate related fund investments |
|
| - |
|
|
| 775 |
| ||||||||
Investments in unconsolidated joint ventures |
|
| 90,640 |
|
|
| 89,949 |
| ||||||||
Deferred rent receivable |
|
| 42,533 |
|
|
| 32,103 |
|
|
| 206,702 |
|
|
| 207,938 |
|
Deferred charges, net |
|
| 7,569 |
|
|
| 695 |
|
|
| 43,407 |
|
|
| 45,190 |
|
Intangible assets, net |
|
| 71,316 |
|
|
| 52,139 |
|
|
| 35,320 |
|
|
| 38,209 |
|
Other assets |
|
| 597 |
|
|
| 14,474 |
|
|
| 18,226 |
|
|
| 7,374 |
|
Total VIE assets |
| $ | 1,970,149 |
|
| $ | 1,514,292 |
|
| $ | 3,844,572 |
|
| $ | 3,860,326 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Notes and mortgages payable, net |
| $ | 1,196,348 |
|
| $ | 872,960 |
|
| $ | 2,316,101 |
|
| $ | 2,450,401 |
|
Accounts payable and other accrued expenses |
|
| 26,095 |
|
|
| 21,077 |
| ||||||||
Accounts payable and accrued expenses |
|
| 53,374 |
|
|
| 48,952 |
| ||||||||
Intangible liabilities, net |
|
| 50,289 |
|
|
| 48,654 |
|
|
| 15,991 |
|
|
| 17,180 |
|
Other liabilities |
|
| 175 |
|
|
| 27,782 |
|
|
| 4,815 |
|
|
| 5,852 |
|
Total VIE liabilities |
| $ | 1,272,907 |
|
| $ | 970,473 |
|
| $ | 2,390,281 |
|
| $ | 2,522,385 |
|
Unconsolidated VIEs
As of September 30, 2017,March 31, 2024, the Operating Partnership held variable interests in entities that own certainour unconsolidated real estate related funds and an unconsolidated joint venture that were deemed to be VIEs. The following table below summarizes our investments in these unconsolidated real estate funds. entities and the maximum risk of loss from these investments.
|
| As of |
|
| |||||
(Amounts in thousands) |
| March 31, 2024 |
|
| December 31, 2023 |
|
| ||
Investments in unconsolidated real estate funds |
| $ | 4,603 |
|
| $ | 4,549 |
|
|
Investment in unconsolidated joint venture |
|
| 217 |
|
|
| - |
|
|
Asset management fees and other receivables |
|
| 807 |
|
|
| 18 |
|
|
Maximum risk of loss |
| $ | 5,627 |
|
| $ | 4,567 |
|
|
|
| As of September 30, 2017 |
| |||||||||
|
|
|
|
|
| Asset Management Fees |
|
| Maximum |
| ||
(Amounts in thousands) |
| Investments |
|
| and Other Receivables |
|
| Risk of Loss |
| |||
Unconsolidated real estate funds |
| $ | 8,146 |
|
| $ | 617 |
|
| $ | 8,763 |
|
18
22
PARAMOUNT GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
|
|
Financial Assets Measured at Fair Value The As of September 30, 2017 (Amounts in thousands) 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 - Total assets $ 29,242 $ 27,867 $ 1,375 $ - Interest rate swap liabilities (included in "other liabilities") $ 1,726 $ - $ 1,726 $ - Total liabilities $ 1,726 $ - $ 1,726 $ - As of March 31, 2024 (Amounts in thousands) Total Level 1 Level 2 Level 3 Interest rate swap and cap assets (included in "other assets") $ 9,499 $ - $ 9,499 $ - Total assets $ 9,499 $ - $ 9,499 $ - As of December 31, 2023 (Amounts in thousands) Total Level 1 Level 2 Level 3 Interest rate swap and cap assets (included in "other assets") $ 14,989 $ - $ 14,989 $ - Total assets $ 14,989 $ - $ 14,989 $ - 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 $ - For the Three Months Ended (Amounts in thousands) March 31, 2023 Beginning balance $ 105,369 Additional investments 3,918 Net unrealized losses (1,111 ) Ending balance $ 108,176 Financial Financial The following As of March 31, 2024 As of December 31, 2023 (Amounts in thousands) Carrying Fair Carrying Fair Notes and mortgages payable $ 3,692,050 $ 3,349,390 $ 3,817,050 $ 3,517,549 Revolving credit facility - - - - Total liabilities $ 3,692,050 $ 3,349,390 $ 3,817,050 $ 3,517,549 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 represent 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 are 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 March 31, (Amounts in thousands) 2024 2023 Rental revenue: Fixed $ 160,824 $ 165,863 Variable 18,899 15,850 Total rental revenue $ 179,723 $ 181,713 The following table is a schedule of future undiscounted cash flows under non-cancellable operating leases in effect as of March 31, 2024, for the nine-month period from April 1, 2024 through December 31, (Amounts in thousands) 2024 $ 462,694 2025 580,050 2026 502,994 2027 442,749 2028 440,662 2029 421,583 Thereafter 1,630,911 Total $ 4,481,643 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 The following table sets forth the details of our fee and other income. For the Three Months Ended March 31, (Amounts in thousands) 2024 2023 Fee income: Asset management $ 2,305 $ 2,175 Property management 1,744 1,862 Acquisition, disposition, leasing and other 2,199 520 Total fee income 6,248 4,557 Other income (1) 2,906 2,204 Total fee and other income $ 9,154 $ 6,761 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 ASC 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 SwapsReal Estate Related Fund InvestmentsInterest rate swapsReal estate related fund investments are valuedcomprised of investments in mezzanine loans made by a third-party specialist.Fund X. The valuation of these interest rate swaps is determined using widely accepted valuation techniques, including discounted cash flow analysisinvestments are measured at fair value on the expected cash flows of each derivative. This analysis reflects the contractual terms of the interest rate swapsour consolidated balance sheets 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 2.3. As of March 31, 2024 and December 31, 2023, the fair value of the investments was $0. The table below summarizes the changes in the fair value of real estate related fund investments for the three months ended March 31, 2023.23PARAMOUNT 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 September 30, 2017the dates set forth below.
Amount
Value
Amount
Value2016.2024, and each of the five succeeding years and thereafter commencing January 1, 2025.15.Fee and Other Income(1)
20 |
|
|
|
24
PARAMOUNT GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
The following table sets forth the details of interest and other (loss) income.income, net.
|
|
|
| |||||
|
| For the Three Months Ended March 31, |
| |||||
(Amounts in thousands) |
| 2024 |
|
| 2023 |
| ||
Interest income, net |
| $ | 3,983 |
|
| $ | 2,925 |
|
Non-cash gain on extinguishment of IPO related tax liability |
|
| 15,437 |
|
|
| - |
|
Total interest and other income, net |
| $ | 19,420 |
|
| $ | 2,925 |
|
|
| 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 March 31, |
| |||||
(Amounts in thousands) |
| 2024 |
|
| 2023 |
| ||
Interest expense |
| $ | 37,901 |
|
| $ | 34,921 |
|
Amortization of deferred financing costs |
|
| 2,368 |
|
|
| 1,538 |
|
Total interest and debt expense |
| $ | 40,269 |
|
| $ | 36,459 |
|
|
|
|
|
|
|
| ||||||||||
|
| 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 |
|
25
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 Time-Based LTIP units, Performance-Based LTIP units, Time-Based Appreciation Only LTIP units and Performance-Based Appreciation Only LTIP units. We account for all stock-based compensation in accordance with ASC Topic 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 $6,194,000 and $2,583,000$5,117,000 for the three months ended September 30, 2017March 31, 2024 and 2016,2023, respectively, and $11,692,000 and $8,766,000 for the nine months ended September 30, 2017 and 2016, respectively. Stock-based compensation expense for the nine months ended September 30, 2016 includes $1,855,000 of expense related to awards granted in prior periods.
Completion of the acceleration of vesting of stock awards in connection2021 Performance-Based Awards Program (“2021 Performance Program”)
The three-year performance measurement period with a separation agreement.
2017respect to our 2021 Performance Program
ended on December 31, 2023. On January 30, 2017,2024, the Compensation Committee approveddetermined that (i) our TSR ranked in the 2017 Performance Program, a multiyear performance-based long-term equity (“LTE”) compensation program. The purpose of25th percentile amongst the 2017 Performance Program is to further align the interestsTSR of our stockholders with that of management by encouragingNew York City office REIT peers and (ii) our senior officers to create stockholder value in a “pay for performance” structure. Under the 2017 Performance Program, participants may earn awardsTSR ranked in the form of Long Term Incentive Plan (“LTIP”) units of our Operating Partnership based on our Total Shareholder Return (“TSR”) over a 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% of 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 30th40th percentile ofamongst the performance of the SNL U.S. Office REIT Index constituents, onresulting in a relative basis, and awards will be fully earned ifpayout of approximately 34.6% of the LTIP units granted. Additionally, in accordance with the 2021 Performance Program, the final payout was reduced by 30.0% since our TSR forwas negative over thethree-year performance measurement period equalsperiod. Accordingly, only 409,046, or exceeds 30.0% on an absolute basis and exceeds the 80th percentile24.2% 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 abovewere granted under the minimum thresholds, but below the maximum thresholds, 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-tenth of the per share dividends otherwise payable to our common stockholders with respect to their LTIP units. If2021 Performance Program, were earned. Of the LTIP units are ultimatelythat were earned, based on the achievement of the designated performance objectives, participants will receive cash or additional204,727 LTIP units basedvested immediately 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, awards earned under the 2017 Performance Program will also be subject to vesting based on continued employment with us through December 31, 2020, with 50.0% of each award vesting following the conclusion of the performance measurement period,January 30, 2024 and the remaining 50.0% vesting204,319 LTIP units will vest on December 31, 2020. The Company’s named executive officers, as defined, are required to hold earned awards for an additional one-year following vesting. The2024. This award had a grant date fair value of the awards granted under the 2017 Performance Program on the date$7,303,000 and a remaining unrecognized compensation cost of the grant was $10,520,000 and is being$589,000 as of March 31, 2024, which will be amortized into expense over the four-year vestinga weighted-average period using a graded vesting attribution method.of 0.8 years.
21
26
PARAMOUNT GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
|
|
The following table provides a summary ofsummarizes our net income (loss) and the number of common shares used in the computation of basic and diluted 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.
|
| For the Three Months Ended March 31, |
| |||||
(Amounts in thousands, except per share amounts) |
| 2024 |
|
| 2023 |
| ||
Numerator: |
|
|
|
|
|
| ||
Net income attributable to common stockholders |
| $ | 9,865 |
|
| $ | 1,729 |
|
Earnings allocated to unvested participating securities |
|
| (9 | ) |
|
| (20 | ) |
Numerator for income per common share - basic and diluted |
| $ | 9,856 |
|
| $ | 1,709 |
|
Denominator: |
|
|
|
|
|
| ||
Denominator for basic income per common share - weighted average shares |
|
| 217,106 |
|
|
| 216,563 |
|
Effect of dilutive stock-based compensation plans (1) |
|
| 80 |
|
|
| 54 |
|
Denominator for diluted income per common share - weighted average shares |
|
| 217,186 |
|
|
| 216,617 |
|
|
|
|
|
|
|
| ||
Income per common share - basic and diluted |
| $ | 0.05 |
|
| $ | 0.01 |
|
|
| For the Three Months Ended |
|
| For the Nine Months Ended |
| ||||||||||
|
| September 30, |
|
| September 30, |
| ||||||||||
(Amounts in thousands, except per share amounts) |
| 2017 |
|
| 2016 |
|
| 2017 |
|
| 2016 |
| ||||
Numerator: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income attributable to common stockholders |
| $ | (10,214 | ) |
| $ | (139 | ) |
| $ | 93,174 |
|
| $ | (3,445 | ) |
Earnings allocated to unvested participating securities |
|
| (13 | ) |
|
| (9 | ) |
|
| (86 | ) |
|
| (28 | ) |
Numerator for (loss) income per common share - basic and diluted |
| $ | (10,227 | ) |
| $ | (148 | ) |
| $ | 93,088 |
|
| $ | (3,473 | ) |
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 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) income per common share - basic and diluted |
| $ | (0.04 | ) |
| $ | (0.00 | ) |
| $ | 0.40 |
|
| $ | (0.02 | ) |
|
|
|
|
Due to Affiliates
As 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, 2017March 31, 2024 and 2016, we recognized $34,000 and $43,000,2023, respectively, of interest expense and for the nine months ended September 30, 2017 and 2016, we recognized $103,000 and $112,000, respectively, of interest expense in connection with these notes.as their effect was anti-dilutive.
22
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 an aggregatefee income of $207,000$177,000 and $195,000$263,000 for the three months ended September 30, 2017March 31, 2024 and 2016,2023, respectively, and $619,000 and $594,000, for the nine months ended September 30, 2017 and 2016, respectively, of fee income, in connection with these agreements, which is included as a component of “fee and other income” onin our consolidated statements of income. As of September 30, 2017, there were noMarch 31, 2024 and December 31, 2023, amounts owed to us under these agreements.agreements aggregated $32,000 and $40,000, respectively, which are included as a component of “accounts and other receivables” on our consolidated balance sheets.
27
PARAMOUNT GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
We also provide propertyasset management, assetproperty management, leasing and other related services to our unconsolidated joint ventures and real estate related funds. ForWe recognized fee income of $5,363,000 and $3,653,000 for the three months ended September 30, 2017March 31, 2024 and 2016, we recognized $4,616,000 and $3,227,000,2023, respectively, and for the nine months ended September 30, 2017 and 2016, we recognized $16,391,000 and $7,826,000, respectively, of fee income in connection with these agreements.agreements, which is included as a component of “fee and other income” in our consolidated statements of income. As of September 30, 2017,March 31, 2024 and December 31, 2023, amounts owed to us under these agreements aggregated $1,815,000,$2,884,000 and $2,552,000, respectively, which are included as a component of “accounts“accounts and other receivables, net”receivables” on our consolidated balance sheet.sheets.
Hamburg TrustHT Consulting GMBH (“HTC”)GmbH
We have an agreement with HTC,HT Consulting GmbH (“HTC”), a licensed broker in Germany, to supervise selling efforts for our joint ventures and private equity real estate related funds (or investments in feeder vehicles for these funds) to investors in Germany, including distribution of securitized notes of a feeder vehicle for Fund VIII.Germany. 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 $123,000 and $117,000 for the three months ended September 30, 2017March 31, 2024 and 2016, we incurred $50,000 and $137,000 of expense,2023, respectively, and $220,000 and $694,000, respectively, for the nine months ended in September 30, 2017 and 2016, 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,March 31, 2024 and December 31, 2023, we owed $95,000$101,000 and $102,000, 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.
Mannheim TrustParkProperty Capital, LP
Dr. Martin Bussmann (aParkProperty Capital, LP (“ParkProperty”), an entity partially owned by Katharina Otto-Bernstein, who is a member of our Boardboard of Directors) is alsodirectors, leases 4,233 square feet at 1325 Avenue of the Americas, pursuant to a trusteelease agreement that expires in November 2027. We recognized rental revenue of $71,000 and a director$69,000 for the three months ended March 31, 2024 and 2023, respectively, pursuant to this lease.
Mannheim Trust
A subsidiary of Mannheim Trust a subsidiaryleases 3,127 square feet of which leases office space at 712 Fifth Avenue, our 50.0%50.0% owned unconsolidated joint venture.venture, pursuant to a lease agreement which expires in June 2025. The Mannheim Trust is for the benefit of the children 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 intoMartin Bussmann, who is a new lease agreementmember of our board of directors. We recognized $30,000 and $93,000 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, 2017March 31, 2024 and 2016, we recognized $96,000 and $101,000, respectively, and $274,000 and $305,000 for the nine months ended September 30, 2017 and 2016,2023, respectively, for our share of rental income frompursuant to this lease.
Acquisitions from Unconsolidated Real Estate FundsOther
On January 24, 2017, Fund IIWe have entered into an agreement with Kramer Design Services (“Kramer Design”) to develop branding and Fund III sold their 62.3% interestsignage for the Paramount Club at 1301 Avenue of the Americas. Kramer Design is 100% owned by the spouse of Albert Behler, our Chairman, Chief Executive Officer and President. During the three months ended March 31, 2024, we incurred and paid Kramer Design $25,000 in 60 Wall Streetconnection with services rendered pursuant to a newly formed joint venture, in which we have a 5.0% ownership interest. See Note 5, Investments in Unconsolidated Joint Ventures.this agreement.
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.
23
28
PARAMOUNT GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
|
|
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.activities, as well as cybersecurity incidents. While we do carry commercial general liability insurance, property insurance, and terrorism insurance with respect to our properties,and cybersecurity insurance, 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 consolidated 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,March 31, 2024, we believe we are in compliance with all of our covenants.
718 Fifth Avenue - Put Right
Prior to 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% interest 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 inOn March 29, 2024, the joint venture that owns 712 Fifth Avenue, New York, New York.60 Wall Street, in which we have a 5.0% ownership interest, modified the existing $575,000,000 mortgage loan and extended the maturity to May 2029. In connection with this sale,the modification, the joint venture committed to redevelop the property and fund the necessary costs to complete the project. On behalf of the joint venture, we grantedhave provided the lender with certain guarantees, including a completion guarantee. We have agreements with our joint venture partner a put right, pursuant to which the 712 Fifth Avenue joint venture would bepartners that indemnify us for their share of guarantees we provided. In accordance with GAAP, we are required to purchase the entire direct or indirect interests held by our joint venture partner or its affiliates in 718 Fifth Avenue atrecord a purchase priceliability equal to the fair market value of the obligations undertaken in issuing the guarantees and record an asset equal to the fair value of the indemnification we have received. As of March 31, 2024, we have recorded a $10,041,000 asset and a $10,255,000 liability, which is included as a component of “other assets” and “other liabilities”, respectively, on our consolidated balance sheet.
Transfer Tax Assessments
During 2017, the New York City Department of Finance (“NYCDOF”) 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 (“IPO”). We disagreed with the assessment and strongly contested the Notices. While we estimated that the range of loss from these Notices could be between $0 and $62,500,000, we concluded, after consultation with legal counsel, that it was not possible to predict any estimate within that range and as such interests. The put rightwe did not accrue any liability in our consolidated financial statements for potential losses that may be exercised at any time after September 10, 2018 with 12 months written noticearise relating to such Notices. In February 2024, the NYCDOF completed its assessment 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 propertyconcluded 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.no additional taxes were due.
2924
PARAMOUNT GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
|
|
Our reportable segments are separated by region, based on the threetwo 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.
The following tables provide NOIParamount's share of Net Operating Income (“NOI”) for each reportable segment for the threeperiods set forth below.
|
| For the Three Months Ended March 31, 2024 |
| |||||||||||||
(Amounts in thousands) |
| Total |
|
| New York |
|
| San Francisco |
|
| Other |
| ||||
Property-related revenues |
| $ | 182,629 |
|
| $ | 117,804 |
|
| $ | 65,190 |
|
| $ | (365 | ) |
Property-related operating expenses |
|
| (71,740 | ) |
|
| (50,314 | ) |
|
| (20,765 | ) |
|
| (661 | ) |
NOI attributable to noncontrolling interests in |
|
| (22,908 | ) |
|
| (2,676 | ) |
|
| (20,232 | ) |
|
| - |
|
NOI from unconsolidated joint ventures (1) |
|
| 5,602 |
|
|
| 3,555 |
|
|
| 2,047 |
|
|
| - |
|
Paramount's share of NOI (2) |
| $ | 93,583 |
|
| $ | 68,369 |
|
| $ | 26,240 |
|
| $ | (1,026 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
| For the Three Months Ended March 31, 2023 |
| |||||||||||||
(Amounts in thousands) |
| Total |
|
| New York |
|
| San Francisco |
|
| Other |
| ||||
Property-related revenues |
| $ | 183,917 |
|
| $ | 117,226 |
|
| $ | 67,302 |
|
| $ | (611 | ) |
Property-related operating expenses |
|
| (70,309 | ) |
|
| (49,521 | ) |
|
| (20,268 | ) |
|
| (520 | ) |
NOI attributable to noncontrolling interests in |
|
| (22,712 | ) |
|
| (2,623 | ) |
|
| (20,089 | ) |
|
| - |
|
NOI from unconsolidated joint ventures (1) |
|
| 5,305 |
|
|
| 3,363 |
|
|
| 1,943 |
|
|
| (1 | ) |
Paramount's share of NOI (2) |
| $ | 96,201 |
|
| $ | 68,445 |
|
| $ | 28,888 |
|
| $ | (1,132 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 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 | ) |
25
|
|
30
PARAMOUNT GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
The following table provides a reconciliation of Paramount's share of NOI to net (loss) income attributable to common stockholders for the threeperiods set forth below.
|
|
| |||||
| For the Three Months Ended March 31, |
| |||||
(Amounts in thousands) | 2024 |
|
| 2023 |
| ||
Paramount's share of NOI | $ | 93,583 |
|
| $ | 96,201 |
|
NOI attributable to noncontrolling interests in consolidated joint ventures |
| 22,908 |
|
|
| 22,712 |
|
Adjustments to arrive to net income: |
|
|
|
|
| ||
Fee income |
| 6,248 |
|
|
| 4,557 |
|
Depreciation and amortization expense |
| (61,114 | ) |
|
| (58,888 | ) |
General and administrative expenses |
| (16,634 | ) |
|
| (14,623 | ) |
(Loss) income from real estate related fund investments |
| (43 | ) |
|
| 3,550 |
|
Loss from unconsolidated joint ventures |
| (1,346 | ) |
|
| (5,762 | ) |
NOI from unconsolidated joint ventures (1) |
| (5,602 | ) |
|
| (5,305 | ) |
Interest and other income, net |
| 19,420 |
|
|
| 2,925 |
|
Interest and debt expense |
| (40,269 | ) |
|
| (36,459 | ) |
Other, net |
| (73 | ) |
|
| (306 | ) |
Income before income taxes |
| 17,078 |
|
|
| 8,602 |
|
Income tax expense |
| (347 | ) |
|
| (288 | ) |
Net income |
| 16,731 |
|
|
| 8,314 |
|
Less net income attributable to noncontrolling interests in: |
|
|
|
| |||
Consolidated joint ventures |
| (5,206 | ) |
|
| (5,641 | ) |
Consolidated real estate related funds |
| (762 | ) |
|
| (823 | ) |
Operating Partnership |
| (898 | ) |
|
| (121 | ) |
Net income attributable to common stockholders | $ | 9,865 |
|
| $ | 1,729 |
|
|
| 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 selected balance sheet datatotal assets for each of our reportable segments as of September 30, 2017.the dates set forth below.
(Amounts in thousands) |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Total Assets as of: |
| Total |
|
| New York |
|
| San Francisco |
|
| Other |
| ||||
March 31, 2024 |
| $ | 7,929,725 |
|
| $ | 5,229,341 |
|
| $ | 2,335,752 |
|
| $ | 364,632 |
|
December 31, 2023 |
|
| 8,006,215 |
|
|
| 5,214,504 |
|
|
| 2,342,395 |
|
|
| 449,316 |
|
(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 |
|
26
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:
unfavorable market and economic conditions in the United States, and globally and inincluding New York City Washington, D.C. and San Francisco;
risks associated with our high concentrations of our properties in New York City Washington, D.C. and San Francisco;
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 related funds;
the negative impact of any future pandemic, endemic or outbreak of infectious disease on the U.S., regional and global economies and our tenants’ financial condition and results of operations;
exposure to litigation or other claims;
loss of key personnel;
27
risks associated with our substantial indebtedness;
failure to refinance current or future indebtedness on favorable terms, or at all;
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 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;
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, 2016,2023, 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.
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. 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, 2016.2023.
Critical Accounting PoliciesEstimates
There are no material changes to our critical accounting policiesestimates disclosed in our Annual Report on Form 10-K for the year ended December 31, 2016.2023.
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 Policies, to our consolidated financial statements in this Quarterly Report on Form 10-Q.
28
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%91.6% of, the Operating Partnership as of September 30, 2017.March 31, 2024.
As of March 31, 2024, we owned and/or managed a portfolio of 18 properties aggregating 13.8 million square feet comprised of:
Additionally, we have an investment management business, where we serve as the general partner of several real estate related funds for institutional investors and high net-worth individuals.
Acquisitions
Financing
On January 24, 2017, aFebruary 1, 2024, we, together with our joint venture partner, modified and extended the existing mortgage loan at One Market Plaza, a 1.6 million square-foot two-building trophy asset in San Francisco, California. The existing $975,000,000 loan, which bore interest at a fixed rate of 4.03%, was scheduled to mature on February 6, 2024. In connection with the modification, the loan balance was reduced to $850,000,000, following a $125,000,000 paydown by the joint venture, of which our 49.0% share was $61,250,000. The modified loan bears interest at a fixed rate of 4.08%, matures in February 2027 and has an option to extend for an additional year, subject to certain conditions.
On March 29, 2024, the joint venture that owns 60 Wall Street, in which we have a 5.0% ownership interest, acquired 60 Wall Street, a 1.6 million square foot office tower in Manhattan, for $1.04 billion.modified the existing $575,000,000 mortgage loan and extended the maturity to May 2029. In connection with the acquisition,modification, the joint venture completedloan was split into (i) 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$316,250,000 A-Note that bears interest at Secured Overnight Financing Rate (“SOFR”) plus 245 basis points, of which 4.0% is current pay and the remaining is accrued, and (ii) a fixed rate$258,750,000 B-Note that accrues interest at 12.0%. The joint venture plans to redevelop the property and all amounts funded by the joint venture will be senior to the B-Note and all accrued interest.
Transfer Tax Assessments
During 2017, the New York City Department of 3.65%Finance (“NYCDOF”) issued Notices of Determination (“Notices”) assessing additional transfer taxes (including interest and is scheduledpenalties) in connection with the transfer of interests in certain properties during our 2014 initial public offering (“IPO”). We disagreed with the assessment and strongly contested the Notices. While we estimated that the range of loss from these Notices could be between $0 and $62,500,000, we concluded, after consultation with legal counsel, that it was not possible to maturepredict any estimate within that range and as such we did not accrue any liability 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 Howardfinancial statements 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. Subsequentpotential losses that may arise relating 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-year interest-only loan matures insuch Notices. In February 2024, the NYCDOF completed its assessment and has a fixed rateconcluded that no additional taxes were due.
Stock Repurchase Program
On November 5, 2019, we received authorization from our board of 4.03%. We retained $23,470,000 fordirectors to repurchase up to $200,000,000 of 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 proceedscommon stock, from the Waterview saletime 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 building locatedtime, in the Plaza Districtopen market or in privately negotiated transactions. As of New York.December 31, 2023, we had repurchased a total of 24,183,768 common shares at a weighted average price of $7.65 per share, or $185,000,000 in the aggregate. We did not repurchase any shares in the three months ended March 31, 2024. The new 10-year interest-only loan matures in July 2027amount and hastiming of future repurchases, if any, will depend on a fixed ratenumber of 3.39%.factors, including, the price and availability of our shares, trading volume, general market conditions and available funding. The net proceeds from the refinancing were used to repay the existing $246,500,000 loan bearing intereststock 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.
29
Leasing Results - Three Months Ended September 30, 2017March 31, 2024
In the three months ended September 30, 2017, we leased 369,136 square feet, of which our share was 356,413 square feet that was leased at a weighted average initial rent of $80.98 per square foot. This leasing activity, partially offset by lease expirations during the three months and including the impact of the acquisition of 50 Beale in July 2017 (a 78.2% leased asset), increased our leased occupancy by 140 basis points to 92.3% at September 30, 2017 from 90.9% at June 30, 2017. Our same store leased occupancy (properties owned by us during both reporting periods) increased by 170 basis points to 92.6% at September 30, 2017 from 90.9% at June 30, 2017. Of the 369,136 square feet leased in the three months, 163,298 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% on a GAAP basis and 9.8% on a cash basis. The weighted average lease term for leases signed during the three months was 10.8 years and weighted average tenant improvements and leasing commissions on these leases were $9.77 per square foot per annum, or 12.1% of initial rent.
New York:
In the three months ended September 30, 2017, we leased 305,351 square feet in our New York portfolio, of which our share was 294,377 square feet that was leased at a weighted average initial rent of $82.84 per square foot. This leasing activity, partially offset by lease expirations during the three months, increased our leased occupancy and same store leased occupancy by 200 basis points to 90.9% at September 30, 2017 from 88.9% at June 30, 2017. Of the 305,351 square feet leased in the three months, 109,008 square feet represented our share of second generation space for which rental rates increased by 12.6% on a GAAP basis and 1.3% on a cash basis. The weighted average lease term for leases signed during the three months was 11.7 years and weighted average tenant improvements and leasing commissions on these leases were $9.40 per square foot per annum, or 11.4% of initial rent.
Washington, D.C.:
In the three months ended September 30, 2017, 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 56,715 square feet in our San Francisco portfolio, of which our share was 54,966 square feet that was leased at a weighted average initial rent of $71.70 per square foot. Notwithstanding this leasing activity, which was partially offset by lease expirations during the three months, our 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). Our same store leased occupancy (which excludes 50 Beale) increased by 40 basis points to 98.6% at September 30, 2017 from 98.2% at June 30, 2017. Of the 56,715 square feet leased in the three months, 54,290 square feet represented our share of second generation space for which we achieved rental rate increases of 2.8% on GAAP basis and 39.0% on a cash basis. The weighted average lease term for leases signed during the year was 7.1 years and weighted average tenant improvements and leasing commissions on these leases were $13.53 per square foot per annum, or 18.9% of initial rent.
The following is a tabular disclosure of leasing statistics fortable presents the details on the leases signed during the three months ended September 30, 2017.March 31, 2024. 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 March 31, 2024 | Total |
|
| New York |
|
| San Francisco |
| ||||||||||
| Total square feet leased |
| 276,717 |
|
|
| 117,004 |
|
|
| 159,713 |
|
|
| ||||
| Pro rata share of total square feet leased: |
| 170,522 |
|
|
| 109,520 |
|
|
| 61,002 |
|
|
| ||||
|
| Initial rent (1) | $ 68.82 |
|
| $ 69.27 |
|
| $ 68.00 |
|
|
| ||||||
|
| Weighted average lease term (in years) |
| 7.9 |
|
|
| 11.4 |
|
|
| 1.8 |
|
|
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
| Tenant improvements and leasing commissions: |
|
|
|
|
|
|
|
|
| |||||||
|
|
| Per square foot | $ 83.49 |
|
| $ 127.03 |
|
| $ 5.32 |
|
|
| |||||
|
|
| Per square foot per annum | $ 10.53 |
|
| $ 11.17 |
|
| $ 3.04 |
|
|
| |||||
|
|
| Percentage of initial rent | 15.3% |
|
| 16.1% |
|
| 4.5% |
|
|
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
| Rent concessions: |
|
|
|
|
|
|
|
|
| |||||||
|
|
| Average free rent period (in months) |
| 0.8 |
|
|
| 1.3 |
|
|
| - |
|
|
| ||
|
|
| Average free rent period per annum (in months) |
| 0.1 |
|
|
| 0.1 |
|
|
| - |
|
|
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
| Second generation space: (2) |
|
|
|
|
|
|
|
|
| |||||||
|
| Square feet |
| 94,975 |
|
|
| 33,973 |
|
|
| 61,002 |
|
|
| |||
|
| Cash basis: |
|
|
|
|
|
|
|
|
|
| ||||||
|
|
| Initial rent (1) | $ 68.41 |
|
| $ 69.15 |
|
| $ 68.00 |
|
|
| |||||
|
|
| Prior escalated rent (3) | $ 71.32 |
|
| $ 69.24 |
|
| $ 72.48 |
|
|
| |||||
|
|
| Percentage increase | (4.1%) |
|
| (0.1%) |
|
| (6.2%) |
|
|
| |||||
|
| GAAP basis: |
|
|
|
|
|
|
|
|
|
| ||||||
|
|
| Straight-line rent | $ 66.59 |
|
| $ 64.20 |
|
| $ 67.91 |
|
|
| |||||
|
|
| Prior straight-line rent | $ 80.89 (4) |
|
| $ 64.50 |
|
| $ 90.02 (4) |
|
|
| |||||
|
|
| Percentage increase | (17.7%) (4) |
|
| (0.5%) |
|
| (24.6%) (4) |
|
|
|
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 March 31, 2024 |
| 89.1 | % |
|
| 90.1 | % |
|
| 85.5 | % |
| As of December 31, 2023 |
| 90.1 | % |
|
| 90.2 | % |
|
| 89.8 | % |
|
|
|
|
|
|
30
Leasing Results - NineThree Months Ended September 30, 2017March 31, 2024
In the ninethree months ended September 30, 2017,March 31, 2024, we leased 946,880276,717 square feet, of which our share was 859,432170,522 square feet that was leased at a weighted average initial rent of $78.50 per square foot. Notwithstanding this leasing activity, our leased occupancy decreased by 40 basis points in the nine months to 92.3% at September 30, 2017 from 92.7% 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 same store leased occupancy (which excludes 50 Beale and Waterview) increased by 20 basis points to 92.5% from 92.3% at December 31, 2016. Of the 946,880 square feet leased in the nine months, 594,418 square feet represented our share of second generation space for which we achieved rental rate increases of 11.3% on a GAAP basis and 16.1% on a cash basis. The weighted average lease term for leases signed during the nine months was 9.4 years and weighted average tenant improvements and leasing commissions on these leases were $9.23 per square foot per annum, or 11.8% of initial rent.
New York:
In the nine months ended September 30, 2017, we leased 524,378 square feet in our New York portfolio, of which our share was 498,610 square feet that was leased at a weighted average initial rent of $80.77$68.82 per square foot. This leasing activity, offset by lease expirations duringin the ninethree months, increased ourdecreased leased occupancy by 20120 basis points to 90.9%86.5% at September 30, 2017March 31, 2024 from 90.7%87.7% at December 31, 2016. Our same2023. Same store leased occupancy increaseddecreased by 10100 basis points to 90.8%89.1% at March 31, 2024 from 90.7%90.1% at December 31, 2016. 2023.
Of the 524,378276,717 square feet leased in the ninethree months 257,631ended March 31, 2024, 94,975 square feet represented our share of second generation space for which rental rates increaseddecreased by 4.9%17.7% on a GAAP basis and decreased by 0.5%4.1% on a cash basis. The rental rate decrease of 17.7% on a GAAP basis was driven primarily by a below-market lease adjustment in our San Francisco portfolio that was included in the prior GAAP rent. Excluding the below-market lease adjustment from the prior GAAP rent, the rental rate decrease on a GAAP basis would have been negative 2.2%. The weighted average lease term for leases signed during the ninethree months was 10.5 years and weighted average tenant improvements and leasing commissions on these leases were $9.59 per square foot per annum, or 11.9% of initial rent.
Washington, D.C.:
In the nine months ended September 30, 2017, 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 402,900 square feet in our San Francisco portfolio, of which our share was 341,220 square feet that was leased at a weighted average initial rent of $75.62 per square foot. Notwithstanding this leasing activity, our leased occupancy decreased by 290 basis points to 96.1% at September 30, 2017 from 99.0% at December 31, 2016 due to expiration of leases during the nine months and the acquisition of 50 Beale in July 2017 (a 78.2% leased asset). Excluding 50 Beale, same store leased occupancy decreased by 40 basis points to 98.6% from 99.0% at December 31, 2016. Of the 402,900 square feet leased during the year, 336,787 square feet represented our share of second generation space for which we achieved rental rate increases of 17.1% on GAAP basis and 34.6% on a cash basis. The weighted average lease term for leases signed during the year was 7.9 years and weighted average tenant improvements and leasing commissions on these leases were $8.61$10.53 per square foot per annum, or 11.4%15.3% of initial rent.
New York
In the three months ended March 31, 2024, we leased 117,004 square feet in our New York portfolio, of which our share was 109,520 square feet that was leased at a weighted average initial rent of $69.27 per square foot. This leasing activity, offset by lease expirations in the three months, decreased leased occupancy and same store leased occupancy by 10 basis points to 90.1% at March 31, 2024 from 90.2% at December 31, 2023. Of the 117,004 square feet leased in the three months ended March 31, 2024, 33,973 square feet represented second generation space for which rental rates decreased by 0.5% on a GAAP basis and 0.1% on a cash basis. The following is a tabular disclosure of leasing statisticsweighted average lease term for leases signed during the ninethree months was 11.4 years and weighted average tenant improvements and leasing commissions on these leases were $11.17 per square foot per annum, or 16.1% of initial rent.
San Francisco
In the three months ended September 30, 2017. It is not intendedMarch 31, 2024, we leased 159,713 square feet in our San Francisco portfolio, of which our share was 61,002 square feet that was leased at a weighted average initial rent of $68.00 per square foot. This leasing activity, offset by lease expirations in the three months, decreased leased occupancy by 400 basis points to coincide with76.8% at March 31, 2024 from 80.8% at December 31, 2023. Same store leased occupancy and excluding the commencementleased occupancy of Market Center and 111 Sutter Street decreased by 430 basis points to 85.5% at March 31, 2024 from 89.8% at December 31, 2023.
Of the 159,713 square feet leased in the three months, 61,002 square feet represented our share of second generation space for which rental revenuerates decreased by 24.6% on a GAAP basis and decreased by 6.2% on a cash basis. The rental rate decrease of 17.7% on a GAAP basis was driven primarily by a below-market lease adjustment that was included in accordance with GAAP.the prior GAAP rent. Excluding the below-market lease adjustment from the prior GAAP rent, the rental rate decrease on a GAAP basis would have been 3.1%. The weighted average lease term for leases signed during the three months was 1.8 years and weighted average tenant improvements and leasing commissions on these leases were $3.04 per square foot per annum, or 4.5% of initial rent.
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 | % |
31
|
|
|
|
|
|
Financial Results - Three Months Ended September 30, 2017March 31, 2024 and 20162023
Net Loss,Income, FFO and Core FFO
Net lossincome attributable to common stockholders was $10,214,000,$9,865,000, or $0.04$0.05 per diluted share, for the three months ended September 30, 2017,March 31, 2024, compared to $139,000,$1,729,000, or $0.00$0.01 per diluted share, for the three months ended September 30, 2016. March 31, 2023. Net income attributable to common stockholders for the three months ended March 31, 2024 includes a $14,148,000 non-cash gain on extinguishment of a tax liability related to our initial public offering.
Funds from Operations (“FFO”) attributable to common stockholders was $43,530,000,$59,821,000, or $0.18$0.28 per diluted share, for the three months ended September 30, 2017,March 31, 2024, compared to $50,615,000,$56,779,000, or $0.23$0.26 per diluted share, for the three months ended September 30, 2016.March 31, 2023. FFO attributable to common stockholders for the three months ended September 30, 2017March 31, 2024 includes a $14,148,000 non-cash gain on extinguishment of a tax liability related to our initial public offering. FFO attributable to common stockholders for the three months ended March 31, 2024 and 20162023 also includes the impact other of non-core items, which are listed in the table on page 63.43. 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, 2017 by $8,839,000, or $0.04 per diluted share, and increased FFO attributable to common stockholders for the three months ended September 30, 2016March 31, 2024 and 2023 by $5,379,000,$11,883,000 and $2,116,000, or $0.02$0.06 and $0.01 per diluted share. share, respectively.
Core Funds from Operations (“Core FFO”) attributable to common stockholders, which excludes the impact of the non-core items listed on page 63,43, was $52,369,000 and $45,236,000,$47,938,000, or $0.22 and $0.21 per diluted share, for the three months ended September 30, 2017 and 2016, respectively. March 31, 2024, compared to $54,663,000, or $0.25 per diluted share, for the three months ended March 31, 2023.
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)or decrease in our share of Same Store NOI and Same Store Cash NOI, by segment, for the three months ended September 30, 2017March 31, 2024 versus September 30, 2016.March 31, 2023.
(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 | % |
|
| (3.5 | %) |
|
| (1.1 | %) |
|
| (9.2 | %) |
Same Store Cash NOI |
|
| 21.3 | % |
|
| 17.4 | % |
|
| 54.3 | % |
|
| 18.8 | % |
|
| (1.5 | %) |
|
| (2.9 | %) |
|
| 1.9 | % |
See page 56 “Non-GAAPpages 40-43 “Non-GAAP Financial Measures – NOI” and page 60 “Non-GAAP Financial Measures – Same Store NOI”” 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.
32
Financial Results - Nine Months Ended September 30, 2017 and 2016
Net Income (Loss), FFO and Core FFO
Net income attributable to common stockholders was $93,174,000, or $0.40 per diluted share, for the nine months ended September 30, 2017, compared to a net loss of $3,445,000, or $0.02 per diluted share, for the nine months ended September 30, 2016. FFO attributable to common stockholders was $157,437,000, or $0.67 per diluted share, for the nine months ended September 30, 2017, compared to $154,106,000, or $0.71 per diluted share, for the nine months ended September 30, 2016. FFO attributable to common stockholders for the nine months ended September 30, 2017 and 2016 includes the impact of non-core items, which are listed in the table on page 63. The aggregate of these items, net of amounts attributable to noncontrolling interests, decreased FFO attributable to common stockholders for the nine months ended September 30, 2017 by $1,002,000, 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. Core FFO attributable to common stockholders, which excludes the impact of the non-core items listed on page 63, was $158,439,000 and $144,549,000, or $0.67 and $0.67 per diluted share, for the nine months ended September 30, 2017 and 2016, respectively.
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 NOI
The table below summarizes the percentage (decrease) increase in our share of Same Store NOI and Same Store Cash NOI, by segment, for the nine months ended September 30, 2017 versus September 30, 2016.
(Amounts in thousands) |
| Total |
|
| New York |
|
| Washington, D.C. |
|
| San Francisco |
| ||||
Same Store NOI |
|
| (3.3 | %) |
|
| (8.0 | %) |
|
| 23.9 | % |
|
| 2.4 | % |
Same Store Cash NOI |
|
| 9.2 | % |
|
| 4.3 | % |
|
| 41.1 | % |
|
| 8.6 | % |
See page 56 “Non-GAAP Financial Measures – NOI” and page 60 “Non-GAAP Financial Measures – Same Store NOI” for a reconciliation to net income in accordance with GAAP and the reasons why we believe these non-GAAP measures are useful.
Results of Operations - Three Months Ended September 30, 2017March 31, 2024 and 2023
The following pages summarize our consolidated results of operations for the three months ended September 30, 2017March 31, 2024 and 2016.2023.
|
|
|
|
|
| For the Three Months Ended March 31, |
|
|
|
| ||||||
(Amounts in thousands) | 2024 |
|
| 2023 |
|
| Change |
| ||||||||
Revenues: |
|
|
|
|
|
|
|
| ||||||||
| Rental revenue | $ | 179,723 |
|
| $ | 181,713 |
|
| $ | (1,990 | ) | ||||
| Fee and other income |
| 9,154 |
|
|
| 6,761 |
|
|
| 2,393 |
| ||||
|
| Total revenues |
| 188,877 |
|
|
| 188,474 |
|
|
| 403 |
| |||
Expenses: |
|
|
|
|
|
|
|
| ||||||||
| Operating |
| 71,740 |
|
|
| 70,309 |
|
|
| 1,431 |
| ||||
| Depreciation and amortization |
| 61,114 |
|
|
| 58,888 |
|
|
| 2,226 |
| ||||
| General and administrative |
| 16,634 |
|
|
| 14,623 |
|
|
| 2,011 |
| ||||
| Transaction related costs |
| 178 |
|
|
| 128 |
|
|
| 50 |
| ||||
|
| Total expenses |
| 149,666 |
|
|
| 143,948 |
|
|
| 5,718 |
| |||
Other income (expense): |
|
|
|
|
|
|
|
| ||||||||
| (Loss) income from real estate related fund investments |
| (43 | ) |
|
| 3,550 |
|
|
| (3,593 | ) | ||||
| Income (loss) from unconsolidated real estate related funds |
| 105 |
|
|
| (178 | ) |
|
| 283 |
| ||||
| Loss from unconsolidated joint ventures |
| (1,346 | ) |
|
| (5,762 | ) |
|
| 4,416 |
| ||||
| Interest and other income, net |
| 19,420 |
|
|
| 2,925 |
|
|
| 16,495 |
| ||||
| Interest and debt expense |
| (40,269 | ) |
|
| (36,459 | ) |
|
| (3,810 | ) | ||||
Income before income taxes |
| 17,078 |
|
|
| 8,602 |
|
|
| 8,476 |
| |||||
| Income tax expense |
| (347 | ) |
|
| (288 | ) |
|
| (59 | ) | ||||
Net income |
| 16,731 |
|
|
| 8,314 |
|
|
| 8,417 |
| |||||
Less net income attributable to noncontrolling interests in: |
|
|
|
|
|
|
| |||||||||
| Consolidated joint ventures |
| (5,206 | ) |
|
| (5,641 | ) |
|
| 435 |
| ||||
| Consolidated real estate related funds |
| (762 | ) |
|
| (823 | ) |
|
| 61 |
| ||||
| Operating Partnership |
| (898 | ) |
|
| (121 | ) |
|
| (777 | ) | ||||
Net income attributable to common stockholders | $ | 9,865 |
|
| $ | 1,729 |
|
| $ | 8,136 |
|
|
|
|
|
|
| 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 | ) |
33
Revenues
Our revenues, which consist primarily of rental income, tenant reimbursement income,revenue and fee and other income, were $179,770,000$188,877,000 for the three months ended September 30, 2017,March 31, 2024, compared to $171,318,000$188,474,000 for the three months ended September 30, 2016,March 31, 2023, an increase of $8,452,000.$403,000. 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 |
| $ | (3,158 | ) |
| $ | (595 | ) |
| $ | (2,563 | ) | (1) | $ | - |
|
|
Other, net |
|
| 1,168 |
|
|
| 944 |
| (2) |
| - |
|
|
| 224 |
|
|
(Decrease) increase in rental revenue |
| $ | (1,990 | ) |
| $ | 349 |
|
| $ | (2,563 | ) |
| $ | 224 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Fee and other income |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Fee income |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Asset management |
| $ | 130 |
|
| $ | - |
|
| $ | - |
|
| $ | 130 |
|
|
Property management |
|
| (118 | ) |
|
| - |
|
|
| - |
|
|
| (118 | ) |
|
Acquisition, disposition, leasing and other |
|
| 1,679 |
|
|
| - |
|
|
| - |
|
|
| 1,679 |
|
|
Increase in fee income |
|
| 1,691 |
|
|
| - |
|
|
| - |
|
|
| 1,691 |
|
|
Other income |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Same store operations |
|
| 702 |
|
|
| 229 |
|
|
| 451 |
|
|
| 22 |
|
|
Increase in other income |
|
| 702 |
|
|
| 229 |
|
|
| 451 |
|
|
| 22 |
|
|
Increase in fee and other income |
| $ | 2,393 |
|
| $ | 229 |
|
| $ | 451 |
|
| $ | 1,713 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Total increase (decrease) in revenues |
| $ | 403 |
|
| $ | 578 |
|
| $ | (2,112 | ) |
| $ | 1,937 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 |
|
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
34
Our expenses, which consist primarily of operating, depreciation and amortization, general and administrative and transaction related costs, were $149,523,000$149,666,000 for the three months ended September 30, 2017,March 31, 2024, compared to $143,918,000$143,948,000 for the three months ended September 30, 2016,March 31, 2023, an increase of $5,605,000.$5,718,000. 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 |
| $ | 1,290 |
|
| $ | 793 |
|
| $ | 497 |
|
| $ | - |
|
| |
Other, net |
|
| 141 |
|
|
| - |
|
|
| - |
|
|
| 141 |
|
| |
Increase in operating |
| $ | 1,431 |
|
| $ | 793 |
|
| $ | 497 |
|
| $ | 141 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Depreciation and amortization |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Operations |
| $ | 2,226 |
|
| $ | 2,127 |
| (1) | $ | 88 |
|
| $ | 11 |
|
| |
Increase in depreciation and amortization | $ | 2,226 |
|
| $ | 2,127 |
|
| $ | 88 |
|
| $ | 11 |
|
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
General and administrative |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Operations |
| $ | 2,011 |
|
| $ | - |
|
| $ | - |
|
| $ | 2,011 |
| (2) | |
Increase in general and administrative |
| $ | 2,011 |
|
| $ | - |
|
| $ | - |
|
| $ | 2,011 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Increase in transaction related costs |
| $ | 50 |
|
| $ | - |
|
| $ | - |
|
| $ | 50 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Total increase in expenses |
| $ | 5,718 |
|
| $ | 2,920 |
|
| $ | 585 |
|
| $ | 2,213 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 Real Estate Related Fund Investments
Loss from real estate related fund investments was $43,000 for the three months ended March 31, 2024, compared to income of $3,550,000 for the three months ended March 31, 2023, a decrease in income of $3,593,000. This decrease resulted primarily from lower investment income in the current year.
Income (loss) from Unconsolidated Real Estate Related Funds
Income from unconsolidated real estate related funds was $105,000 for the three months ended March 31, 2024, compared to loss of $178,000 for the three months ended March 31, 2023, an increase in income of $283,000. This increase resulted primarily from unrealized gains on mezzanine loan investments in the current year compared to unrealized losses in the prior year.
Loss from Unconsolidated Joint Ventures
IncomeLoss from unconsolidated joint ventures was $671,000$1,346,000 for the three months ended September 30, 2017,March 31, 2024, compared to $1,792,000$5,762,000 for the three months ended September 30, 2016,March 31, 2023, a decrease in loss of $1,121,000.$4,416,000. This decrease in loss resulted from:
(Amounts in thousands) |
|
|
|
| |
Higher income from One Steuart Lane |
| $ | 3,107 |
| (1) |
Other, net |
|
| 1,309 |
|
|
Total decrease in loss |
| $ | 4,416 |
|
|
(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 | ) |
|
35 |
|
|
|
|
Loss from Unconsolidated Real Estate FundsInterest and Other Income, net
Loss from unconsolidated real estate fundsInterest and other income, net was $3,930,000$19,420,000 for the three months ended September 30, 2017,March 31, 2024, compared to $1,254,000$2,925,000 for the three months ended September 30, 2016,March 31, 2023, an increase in lossincome of $2,676,000.$16,495,000. This increase resulted primarily from:
(Amounts in thousands) |
|
|
|
| |
Non-cash gain on extinguishment of IPO related transfer tax liability |
| $ | 15,437 |
|
|
Other, net (primarily higher yields on short-term investments) |
|
| 1,058 |
|
|
Total increase in income |
| $ | 16,495 |
|
|
Interest and Debt Expense
Interest and debt expense was $40,269,000 for the three months ended March 31, 2024, compared to $36,459,000 for the three months ended March 31, 2023, an increase of $3,810,000. This increase resulted primarily from a decrease in carriedhigher interest expense on the variable rate portion of $2,334,000.our debt at 1301 Avenue of the Americas.
Interest and Other (Loss) Income netTax Expense
Interest and other lossIncome tax expense was $17,668,000$347,000 for the three months ended September 30, 2017,March 31, 2024, compared to income of $2,299,000$288,000 for the three months ended September 30, 2016, a decrease in incomeMarch 31, 2023, an increase of $19,967,000. This decrease resulted from:$59,000.
(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 $35,733,000 for the three months ended September 30, 2017, compared to $38,278,000 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 $12,728,000 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, a decrease in expense of $1,228,000. The decrease in expense was primarily due to lower taxable income on our taxable REIT subsidiaries.
Net (Loss) Income Attributable to Noncontrolling Interests in Consolidated Joint Ventures
Net lossincome attributable to noncontrolling interest in consolidated joint ventures was $14,217,000 for the three months ended September 30, 2017, compared to income of $4,703,000 for the three months ended September 30, 2016, a decrease in income allocated to noncontrolling interests in consolidated joint ventures of $18,920,000. was $5,206,000 for the three months ended March 31, 2024, compared to $5,641,000 for the three months ended March 31, 2023, a $435,000 decrease in net income attributable to noncontrolling interests in consolidated joint ventures. This decrease in income resulted from:from lower net income attributable to noncontrolling interests in consolidated joint ventures.
(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) Attributable to Noncontrolling Interests in Consolidated Real Estate FundRelated Funds
Net income attributable to noncontrolling interests in consolidated real estate fundrelated funds was $114,000$762,000 for the three months ended September 30, 2017,March 31, 2024, compared to a loss of $67,000$823,000 for the three months ended September 30, 2016, an increase in income attributable to the noncontrolling interests of $181,000. This increase resulted from a higher net income subject to allocation to the noncontrolling interests for the three months ended September 30, 2017.
Net Loss Attributable to Noncontrolling Interests in Operating Partnership
Net loss attributable to noncontrolling interests in Operating Partnership was $1,086,000 for the three months ended September 30, 2017, compared to $28,000 for the three months ended September 30, 2016, an increase in loss attributable to noncontrolling interests of $1,058,000. This increase resulted from a higher net loss subject to allocation to the unitholders of the Operating Partnership for the three months ended September 30, 2017.
Results of Operations - Nine Months Ended September 30, 2017
The following pages summarize our consolidated results of operations for the nine months ended September 30, 2017 and 2016.
|
|
|
|
|
| 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 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
Our revenues, which consist primarily of rental income, tenant reimbursement income, and fee and other income, were $538,710,000 for the nine months ended September 30, 2017, compared to $516,539,000 for the nine months ended September 30, 2016, an increase of $22,171,000. Below are the details of the increase (decrease) by segment.
(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 |
|
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Our expenses, which consist primarily of operating, depreciation and amortization, general and administrative, and transaction related costs, were $441,514,000 for the nine months ended September 30, 2017, compared to $436,499,000 for the nine months ended September 30, 2016, an increase of $5,015,000. Below are the details of the increase (decrease) by segment.
(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 |
|
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from Unconsolidated Joint Ventures
Income from unconsolidated joint ventures was $19,143,000 for the nine months ended September 30, 2017, compared to $5,291,000 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 $6,053,000 for the nine months ended September 30, 2017, compared to $2,540,000 for the nine months ended September 30, 2016, an increase in loss of $3,513,000. This increase resulted primarily fromMarch 31, 2023, 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 $11,982,000 for the nine months ended September 30, 2017, compared to income of $5,029,000 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 $107,568,000 for the nine months ended September 30, 2017, compared to $113,406,000 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 $1,802,000 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, a decrease of $27,859,000. This decrease was primarily due 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 on the gain on the sale of an 80.0% equity interest in 75 Howard.
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 of $21,091,000. This decrease resulted from:
(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) Attributable to Noncontrolling Interests in Consolidated Real Estate Fund
Net income attributable to noncontrolling interests in consolidated real estate fund was $20,195,000 for the nine months ended September 30, 2017, compared to a lossrelated funds of $819,000 for the nine months ended September 30, 2016, an increase$61,000. This decrease in income resulted from lower net income attributable to the noncontrolling interests of $21,014,000. This increase was primarily due to noncontrolling interestsin Fund X, partially offset by Residential Development Fund’s share of the gain on the sale of an 80.0% equity interestresidential condominium units at One Steuart Lane in 75 Howard.the current year.
Net Income (Loss) Attributable to Noncontrolling Interests in Operating Partnership
Net income attributable to noncontrolling interests in the Operating Partnership was $12,068,000$898,000 for the ninethree months ended September 30, 2017,March 31, 2024, compared to a loss of $906,000$121,000 for the ninethree months ended September 30, 2016,March 31, 2023, an increase in net income attributableallocated to noncontrolling interests of $12,974,000.$777,000. This increase in income resulted from higher net income subject to allocation to the unitholders of the Operating Partnership forin the nine months ended September 30, 2017.current year.
36
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 March 31, 2024, we had $1.20 billion of liquidity comprised of $276,235,000 of cash and cash equivalents, $171,776,000 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, 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 cash on hand.
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,March 31, 2024, our outstanding consolidated debt (includingaggregated $3.69 billion. We had no amounts outstanding under our revolving credit facility) aggregated $3.583 billion. Nonefacility and none of our debt matures until 2021.June 2026. We may refinance any of 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 135 basis points over 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 SeptemberMarch 15, 2017,2024, we declared a regular quarterly cash dividend of $0.095$0.035 per share of common stock for the thirdfirst quarter ending September 30, 2017,ended March 31, 2024, which was paid on October 13, 2017April 15, 2024 to stockholders of record as of the close of business on September 29, 2017.March 28, 2024. This dividend policy, if continued, would require us to pay out approximately $25,211,000$8,400,000 each quarter to common stockholders and unitholders.
Off Balance Sheet Arrangements
As of September 30, 2017,March 31, 2024, our unconsolidated joint ventures had $897,535,000$1.75 billion of outstanding indebtedness, of which our share was $180,949,000.$629,681,000. We do not guarantee the indebtedness of our unconsolidated joint ventures other than providing customary environmental indemnities and guarantees of specified non-recourse carveoutscarve outs relating to specified covenants and representations; 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.
37
Stock Repurchase Program
On August 1, 2017,November 5, 2019, we received authorization from our Boardboard of Directors approved thedirectors to repurchase of up to $200,000,000 of our common stock, from time to time, in the open market or in privately negotiated transactions. As of December 31, 2023, we had repurchased a total of 24,183,768 common shares at a weighted average price of $7.65 per share, or $185,000,000 in the aggregate. We did not repurchase any shares in the three months ended March 31, 2024. 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
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.activities, as well as cybersecurity incidents. While we do carry commercial general liability insurance, property insurance, and terrorism insurance with respect to our properties,and cybersecurity insurance, 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 consolidated 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,March 31, 2024, we believe we are in compliance with all of our covenants.
Inflation
Substantially all of our leases provide for separate real estate taxOn March 29, 2024, the joint venture that owns 60 Wall Street, in which we have a 5.0% ownership interest, modified the existing $575,000,000 mortgage loan and operating expense escalations.extended the maturity to May 2029. In addition, manyconnection with the modification, the joint venture committed to redevelop the property and fund the necessary costs to complete the project. On behalf of the leases providejoint venture, we have provided the lender with certain guarantees, including a completion guarantee. We have agreements with our joint venture partners that indemnify us for fixed base rent increases. We believe inflationary increasestheir share of guarantees we provided. In accordance with GAAP, we are required to record a liability equal to the fair value of the obligations undertaken in expenses may be at least partially offset byissuing the contractual rent increasesguarantees and expense escalations described above. We do not believe inflation has hadrecord an asset equal to the fair value of the indemnification we have received. As of March 31, 2024, we have recorded a material impact$10,041,000 asset and a $10,255,000 liability, which is included as a component of “other assets” and “other liabilities”, respectively, on our historicalconsolidated balance sheet.
Transfer Tax Assessments
During 2017, the New York City Department of Finance (“NYCDOF”) 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 disagreed with the assessment and strongly contested the Notices. While we estimated that the range of loss from these Notices could be between $0 and $62,500,000, we concluded, after consultation with legal counsel, that it was not possible to predict any estimate within that range and as such we did not accrue any liability in our consolidated financial position or results of operations.statements for potential losses that may arise relating to such Notices. In February 2024, the NYCDOF completed its assessment and concluded that no additional taxes were due.
38
Cash and cash equivalents and restricted cash were $185,028,000$448,011,000 and $162,965,000$509,599,000 as of September 30, 2017March 31, 2024 and December 31, 2016,2023, respectively, and $510,975,000 and $449,817,000 as of March 31, 2023 and December 31, 2022, respectively. Cash and cash equivalents and restricted cash decreased by $61,588,000 for the three months ended March 31, 2024, and increased by $61,158,000 for the three months ended March 31, 2023. The following table sets forth the changes in cash flow.
|
| For the Nine Months Ended September 30, |
|
| For the Three Months Ended March 31, |
| ||||||||||
(Amounts in thousands) | (Amounts in thousands) | 2017 |
|
| 2016 |
| (Amounts in thousands) | 2024 |
|
| 2023 |
| ||||
Net cash provided by (used in): | Net cash provided by (used in): |
|
|
|
|
|
|
| Net cash provided by (used in): |
|
|
|
| |||
Operating activities | Operating activities | $ | 105,071 |
|
| $ | 70,148 |
| Operating activities | $ | 69,890 |
|
| $ | 57,968 |
|
Investing activities | Investing activities |
| 315,843 |
|
|
| (147,149 | ) | Investing activities |
| (41,248 | ) |
|
| (18,883 | ) |
Financing activities | Financing activities |
| (398,851 | ) |
|
| 24,385 |
| Financing activities |
| (90,230 | ) |
|
| 22,073 |
|
Operating Activities
NineThree months ended September 30, 2017March 31, 2024 –We generated $105,071,000$69,890,000 of cash from operating activities for the ninethree months ended September 30, 2017,March 31, 2024, primarily from (i) $150,698,000$68,735,000 of net income (before $170,279,000$52,004,000 of noncash adjustments and $133,989,000 of gain on sale of real estate)non-cash adjustments) and (ii) $3,655,000$201,000 of distributions from unconsolidated joint ventures and real estate related funds, partially offset by (iii) $49,282,000$954,000 of net changes in operating assets and liabilities Noncashliabilities. Non-cash adjustments of $170,279,000$52,004,000 were primarily comprised of depreciation and amortization, incomenon-cash gain on extinguishment of a tax liability related to our initial public offering, loss 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.
NineThree months ended September 30, 2016March 31, 2023 –We generated $70,148,000$57,968,000 of cash from operating activities for the ninethree months ended September 30, 2016,March 31, 2023, primarily from (i) $121,046,000$72,074,000 of net income (before $116,154,000$63,760,000 of noncashnon-cash adjustments) and (ii) $6,132,000$195,000 of distributions from unconsolidated joint ventures and real estate related funds, partially offset by (iii) $57,030,000$14,301,000 of net changes in operating assets and liabilities. NoncashNon-cash adjustments of $116,154,000$63,760,000 were primarily comprised of depreciation and amortization, loss from unconsolidated joint ventures, straight-lining of rental incomerevenue, amortization of above and unrealized gain on interest rate swaps. Thebelow-market leases, net changes in operating assets and liabilities were primarily due to prepaid real estate taxes and additions to deferred charges.amortization of stock-based compensation.
Investing Activities
NineThree months ended September 30, 2017March 31, 2024 – We generated $315,843,000used $41,248,000 of cash fromfor investing activities for the ninethree months ended September 30, 2017, primarily fromMarch 31, 2024, for (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$39,344,000 for additions to real estate, which waswere comprised of spending for tenant improvements and other building improvements (v) $28,886,000and (ii) $1,904,000 for the investments incontributions of capital to an unconsolidated joint ventures and (vi) $8,224,000 increase in restricted cash.venture.
NineThree months ended September 30, 2016March 31, 2023 –We used $147,149,000$18,883,000 of cash for investing activities for the ninethree months ended September 30, 2016, primarily due to (i) $107,445,000 ofMarch 31, 2023, 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, (iii) $1,084,000 of contributions to unconsolidated real estate funds, partially offset by (iv) $11,380,000 decrease in restricted cash.improvements.
Financing Activities
NineThree months ended September 30, 2017 March 31, 2024 – We used $398,851,000$90,230,000 of cash for financing activities for the ninethree months ended September 30, 2017, primarily due toMarch 31, 2024, for (i) $1,044,821,000$975,000,000 for repaymentsrepayment of notes and mortgages payable in connection with the modification and $7,877,000 for loss on early extinguishmentextension of debt, primarily for the early repayments of One Market Plaza 1899 Pennsylvania Avenuemortgage loan and Liberty Place loans, (ii) $290,000,000$10,638,000 for repaymentspayment of the amounts borrowed under the revolving credit facility,related debt issuance costs, (ii) $8,360,000 for dividends and distributions to common stockholders and unitholders, (iii) $115,549,000$8,354,000 for distributions to noncontrolling interests in Fund X, (iv) 75,569,000$809,000 for dividendsdistributions to noncontrolling interests in 1633 Broadway, and distributions paid tocommon stockholders and unitholders, (v) $19,425,000$178,000 for the settlementrepurchase of swap liabilities,shares related to stock compensation agreements and (vi) $7,344,000 for the payment of debt issuance costs,related tax withholdings, partially offset by (vii) $991,556,000(vi) $850,000,000 of proceeds from notes and mortgages payable primarily fromin connection with the refinancingmodification and extension of the One Market Plaza (viii) $100,777,000mortgage loan, (vii) $62,220,000 of contributions from noncontrolling interests primarilyin One Market Plaza and (viii) $889,000 of contributions 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.noncontrolling interests in Fund X.
NineThree months ended September 30, 2016 March 31, 2023 – We generated $24,385,000$22,073,000 of cash fromfor financing activities for the ninethree months ended September 30, 2016,March 31, 2023, primarily from (i) $509,578,000$49,748,000 of proceedscontributions from notes and mortgages payable, primarily from the refinancing of 31 West 52nd Streetnoncontrolling interests in consolidated real estate related funds and (ii) $110,000,000$283,000 of borrowings under the revolving credit facility,contributions from noncontrolling interests in consolidated joint ventures, partially offset by (iii) $414,564,000 of repayments of notes and mortgages payable, primarily$18,026,000 for the repayment of 31 West 52nd Street loan, (iv) $80,000,000 of repayments of the amounts borrowed under the revolving credit facility, (v) $75,365,000 of dividends and distributions paid to common stockholders and unitholders, (iv) $4,140,000 for distributions to noncontrolling interests in 300 Mission Street and 1633 Broadway, (v) $3,740,000 for distributions to noncontrolling interests in Fund X, (vi) $16,040,000$1,847,000 for the settlement of swap liabilitiesaccounts payable in connection with repurchases of common shares in 2022 and (vii) $6,532,000$205,000 for the paymentrepurchase of debt issuance costs.shares related to stock compensation agreements and related tax withholdings.
39
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. In the first quarter of 2024, we updated our presentation of NOI, Cash NOI and Core FFO attributable to common stockholders to exclude the impact of Market Center and 111 Sutter Street, which we have designated as non-core assets. Accordingly, we have recast the presentation for all prior periods presented to reflect this change.
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 our net (loss) income or loss to Paramount's share of NOI and Cash NOI for the three and nine months ended September 30, 2017March 31, 2024 and 2016.2023.
| For the Three Months Ended March 31, 2024 |
| |||||||||||||
(Amounts in thousands) | Total |
|
| New York |
|
| San Francisco |
|
| Other |
| ||||
Reconciliation of net income (loss) to NOI and Cash NOI: |
|
|
|
|
|
|
|
|
|
|
| ||||
Net income (loss) | $ | 16,731 |
|
| $ | (1,278 | ) |
| $ | 12,989 |
|
| $ | 5,020 |
|
Adjustments to arrive at NOI: |
|
|
|
|
|
|
|
|
|
|
| ||||
Fee income |
| (6,248 | ) |
|
| - |
|
|
| - |
|
|
| (6,248 | ) |
Depreciation and amortization |
| 61,114 |
|
|
| 41,294 |
|
|
| 18,570 |
|
|
| 1,250 |
|
General and administrative |
| 16,634 |
|
|
| - |
|
|
| - |
|
|
| 16,634 |
|
Loss from real estate related fund investments |
| 43 |
|
|
| - |
|
|
| - |
|
|
| 43 |
|
Loss (income) from unconsolidated joint ventures |
| 1,346 |
|
|
| 1,686 |
|
|
| 302 |
|
|
| (642 | ) |
NOI from unconsolidated joint ventures (1) |
| 5,602 |
|
|
| 3,555 |
|
|
| 2,047 |
|
|
| - |
|
Interest and other income, net |
| (19,420 | ) |
|
| (793 | ) |
|
| (386 | ) |
|
| (18,241 | ) |
Interest and debt expense |
| 40,269 |
|
|
| 26,573 |
|
|
| 12,945 |
|
|
| 751 |
|
Income tax expense |
| 347 |
|
|
| 8 |
|
|
| 5 |
|
|
| 334 |
|
Other, net |
| 73 |
|
|
| - |
|
|
| - |
|
|
| 73 |
|
Amounts attributable to noncontrolling interests in |
| (22,908 | ) |
|
| (2,676 | ) |
|
| (20,232 | ) |
|
| - |
|
Paramount's share of NOI | $ | 93,583 |
|
| $ | 68,369 |
|
| $ | 26,240 |
|
| $ | (1,026 | ) |
Adjustments to arrive at Cash NOI: |
|
|
|
|
|
|
|
|
|
|
| ||||
Straight-line rent adjustments (including our share of |
|
|
|
|
|
|
|
|
|
|
| ||||
unconsolidated joint ventures) |
| (3,387 | ) |
|
| (3,909 | ) |
|
| 416 |
|
|
| 106 |
|
Amortization of above and below-market leases, net |
| (1,658 | ) |
|
| (615 | ) |
|
| (1,043 | ) |
|
| - |
|
Amounts attributable to noncontrolling interests in |
| 439 |
|
|
| (112 | ) |
|
| 551 |
|
|
| - |
|
Paramount's share of Cash NOI | $ | 88,977 |
|
| $ | 63,733 |
|
| $ | 26,164 |
|
| $ | (920 | ) |
| 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 | ) |
40
For the Three 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) | $ | 4,469 |
| $ | 8,562 |
| $ | 797 |
| $ | 7,091 |
| $ | (11,981 | ) |
Add (subtract) adjustments to arrive at NOI and Cash NOI: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
| 66,376 |
|
| 44,959 |
|
| 7,925 |
|
| 12,971 |
|
| 521 |
|
General and administrative |
| 13,235 |
|
| - |
|
| - |
|
| - |
|
| 13,235 |
|
Interest and debt expense |
| 38,278 |
|
| 17,630 |
|
| 5,198 |
|
| 14,064 |
|
| 1,386 |
|
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 |
|
Fee income |
| (3,976 | ) |
| - |
|
| - |
|
| - |
|
| (3,976 | ) |
Interest and other income, net |
| (2,299 | ) |
| (48 | ) |
| (12 | ) |
| (5 | ) |
| (2,234 | ) |
Unrealized gain on interest rate swaps |
| (12,728 | ) |
| (2,050 | ) |
| - |
|
| (10,678 | ) |
| - |
|
NOI |
| 107,291 |
|
| 71,174 |
|
| 13,907 |
|
| 23,447 |
|
| (1,237 | ) |
Less NOI attributable to noncontrolling interests in: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated joint ventures |
| (11,819 | ) |
| - |
|
| - |
|
| (11,819 | ) |
| - |
|
Consolidated real estate fund |
| (157 | ) |
| - |
|
| - |
|
| - |
|
| (157 | ) |
Paramount's share of NOI | $ | 95,315 |
| $ | 71,174 |
| $ | 13,907 |
| $ | 11,628 |
| $ | (1,394 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NOI | $ | 107,291 |
| $ | 71,174 |
| $ | 13,907 |
| $ | 23,447 |
| $ | (1,237 | ) |
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 | ) |
| - |
|
Cash NOI |
| 80,945 |
|
| 53,621 |
|
| 11,933 |
|
| 16,656 |
|
| (1,265 | ) |
Less Cash NOI attributable to noncontrolling interests in: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated joint ventures |
| (8,356 | ) |
| - |
|
| - |
|
| (8,356 | ) |
| - |
|
Consolidated real estate fund |
| (157 | ) |
| - |
|
| - |
|
| - |
|
| (157 | ) |
Paramount's share of Cash NOI | $ | 72,432 |
| $ | 53,621 |
| $ | 11,933 |
| $ | 8,300 |
| $ | (1,422 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| For the Three Months Ended March 31, 2023 |
| |||||||||||||
(Amounts in thousands) | Total |
|
| New York |
|
| San Francisco |
|
| Other |
| ||||
Reconciliation of net income (loss) to NOI and Cash NOI: |
|
|
|
|
|
|
|
|
|
|
| ||||
Net income (loss) | $ | 8,314 |
|
| $ | 5,838 |
|
| $ | 13,087 |
|
| $ | (10,611 | ) |
Adjustments to arrive at NOI and Cash NOI: |
|
|
|
|
|
|
|
|
|
|
| ||||
Fee income |
| (4,557 | ) |
|
| - |
|
|
| - |
|
|
| (4,557 | ) |
Depreciation and amortization |
| 58,888 |
|
|
| 39,167 |
|
|
| 18,482 |
|
|
| 1,239 |
|
General and administrative |
| 14,623 |
|
|
| - |
|
|
| - |
|
|
| 14,623 |
|
Income from real estate related fund investments |
| (3,550 | ) |
|
| - |
|
|
| - |
|
|
| (3,550 | ) |
Loss from unconsolidated joint ventures |
| 5,762 |
|
|
| 20 |
|
|
| 3,294 |
|
|
| 2,448 |
|
NOI from unconsolidated joint ventures (1) |
| 5,305 |
|
|
| 3,363 |
|
|
| 1,943 |
|
|
| (1 | ) |
Interest and other income, net |
| (2,925 | ) |
|
| (442 | ) |
|
| (434 | ) |
|
| (2,049 | ) |
Interest and debt expense |
| 36,459 |
|
|
| 23,122 |
|
|
| 12,582 |
|
|
| 755 |
|
Income tax expense |
| 288 |
|
|
| - |
|
|
| 23 |
|
|
| 265 |
|
Other, net |
| 306 |
|
|
| - |
|
|
| - |
|
|
| 306 |
|
Amounts attributable to noncontrolling interests in |
| (22,712 | ) |
|
| (2,623 | ) |
|
| (20,089 | ) |
|
| - |
|
Paramount's share of NOI | $ | 96,201 |
|
| $ | 68,445 |
|
| $ | 28,888 |
|
| $ | (1,132 | ) |
Adjustments to arrive at Cash NOI: |
|
|
|
|
|
|
|
|
|
|
| ||||
Straight-line rent adjustments (including our share of |
|
|
|
|
|
|
|
|
|
|
| ||||
unconsolidated joint ventures) |
| (7,904 | ) |
|
| (3,024 | ) |
|
| (5,202 | ) |
|
| 322 |
|
Amortization of above and below-market leases, net |
| (1,364 | ) |
|
| (320 | ) |
|
| (1,044 | ) |
|
| - |
|
Amounts attributable to noncontrolling interests in |
| 2,867 |
|
|
| (155 | ) |
|
| 3,022 |
|
|
| - |
|
Paramount's share of Cash NOI | $ | 89,800 |
|
| $ | 64,946 |
|
| $ | 25,664 |
|
| $ | (810 | ) |
| 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 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
41
| 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 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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, 2017March 31, 2024 and 2016.2023. 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 representsrepresent 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 March 31, 2024 |
| |||||||||||||
(Amounts in thousands) |
| Total |
|
| New York |
|
| San Francisco |
|
| Other |
| ||||
Paramount's share of NOI for the three months ended |
|
|
|
|
|
|
|
|
|
|
|
| ||||
March 31, 2024 (1) |
| $ | 93,583 |
|
| $ | 68,369 |
|
| $ | 26,240 |
|
| $ | (1,026 | ) |
Non-same store adjustments: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Lease termination income |
|
| (944 | ) |
|
| (944 | ) |
|
| - |
|
|
| - |
|
Other, net |
|
| 1,304 |
|
|
| 278 |
|
|
| - |
|
|
| 1,026 |
|
Paramount's share of Same Store NOI for the |
|
|
|
|
|
|
|
|
|
|
|
| ||||
three months ended March 31, 2024 |
| $ | 93,943 |
|
| $ | 67,703 |
|
| $ | 26,240 |
|
| $ | - |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
| For the Three Months Ended March 31, 2023 |
| |||||||||||||
(Amounts in thousands) |
| Total |
|
| New York |
|
| San Francisco |
|
| Other |
| ||||
Paramount's share of NOI for the three months ended |
|
|
|
|
|
|
|
|
|
|
|
| ||||
March 31, 2023 (1) |
| $ | 96,201 |
|
| $ | 68,445 |
|
| $ | 28,888 |
|
| $ | (1,132 | ) |
Non-same store adjustments: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Other, net |
|
| 1,137 |
|
|
| 5 |
|
|
| - |
|
|
| 1,132 |
|
Paramount's share of Same Store NOI for the |
|
|
|
|
|
|
|
|
|
|
|
| ||||
three months ended March 31, 2023 |
| $ | 97,338 |
|
| $ | 68,450 |
|
| $ | 28,888 |
|
| $ | - |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
% Decrease |
|
| (3.5 | %) |
|
| (1.1 | %) |
|
| (9.2 | %) |
|
|
|
|
|
| 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 | % |
|
|
|
|
|
|
|
| For the Three Months Ended March 31, 2024 |
| |||||||||||||
(Amounts in thousands) |
| Total |
|
| New York |
|
| San Francisco |
|
| Other |
| ||||
Paramount's share of Cash NOI for the three months |
|
|
|
|
|
|
|
|
|
|
|
| ||||
ended March 31, 2024 (1) |
| $ | 88,977 |
|
| $ | 63,733 |
|
| $ | 26,164 |
|
| $ | (920 | ) |
Non-same store adjustments: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Lease termination income |
|
| (944 | ) |
|
| (944 | ) |
|
| - |
|
|
| - |
|
Other, net |
|
| 1,198 |
|
|
| 278 |
|
|
| - |
|
|
| 920 |
|
Paramount's share of Same Store Cash NOI for the |
|
|
|
|
|
|
|
|
|
|
|
| ||||
three months ended March 31, 2024 |
| $ | 89,231 |
|
| $ | 63,067 |
|
| $ | 26,164 |
|
| $ | - |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
| For the Three Months Ended March 31, 2023 |
| |||||||||||||
(Amounts in thousands) |
| Total |
|
| New York |
|
| San Francisco |
|
| Other |
| ||||
Paramount's share of Cash NOI for the three months |
|
|
|
|
|
|
|
|
|
|
|
| ||||
ended March 31, 2023 (1) |
| $ | 89,800 |
|
| $ | 64,946 |
|
| $ | 25,664 |
|
| $ | (810 | ) |
Non-same store adjustments: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Other, net |
|
| 815 |
|
|
| 5 |
|
|
| - |
|
|
| 810 |
|
Paramount's share of Same Store Cash NOI for the |
|
|
|
|
|
|
|
|
|
|
|
| ||||
three months ended March 31, 2023 |
| $ | 90,615 |
|
| $ | 64,951 |
|
| $ | 25,664 |
|
| $ | - |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
% (Decrease) increase |
|
| (1.5 | %) |
|
| (2.9 | %) |
|
| 1.9 | % |
|
|
|
42
|
|
|
|
|
|
|
|
| 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 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 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 related fund investments, unrealized gains or losses on interest rate swaps, severance costs, and lossgains or losses on early extinguishment of debt and other non-core adjustments, in order to reflect the Core FFO of our real estate portfolio and operations. In future periods, we may also exclude other items from Core FFO that we believe may help investors compare our results.
FFO and Core FFO are presented as supplemental financial measures and do not fully represent our operating performance. Other REITs may use different methodologies for calculating FFO and Core FFO or use other definitions of FFO and Core FFO and, accordingly, our presentation of these measures may not be comparable to other real estate companies. Neither FFO nor Core FFO is intended to be a measure of cash flow or liquidity. Please refer to our 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 (loss) income to FFO and Core FFO.FFO for the periods set forth below.
|
| For the Three Months Ended March 31, |
| |||||
(Amounts in thousands, except share and per share amounts) |
| 2024 |
|
| 2023 |
| ||
Reconciliation of net income to FFO and Core FFO: |
|
|
|
|
|
| ||
Net income |
| $ | 16,731 |
|
| $ | 8,314 |
|
Real estate depreciation and amortization (including our share of |
|
|
|
|
|
| ||
unconsolidated joint ventures) |
|
| 64,424 |
|
|
| 68,431 |
|
Amounts attributable to noncontrolling interests in consolidated joint |
|
|
|
|
|
| ||
ventures and real estate related funds |
|
| (15,885 | ) |
|
| (16,005 | ) |
FFO attributable to the Operating Partnership |
|
| 65,270 |
|
|
| 60,740 |
|
Amounts attributable to noncontrolling interests in the Operating Partnership |
|
| (5,449 | ) |
|
| (3,961 | ) |
FFO attributable to common stockholders |
| $ | 59,821 |
|
| $ | 56,779 |
|
Per diluted share |
| $ | 0.28 |
|
| $ | 0.26 |
|
|
|
|
|
|
|
| ||
FFO attributable to the Operating Partnership |
| $ | 65,270 |
|
| $ | 60,740 |
|
Adjustments for non-core items: |
|
|
|
|
|
| ||
Non-cash gain on extinguishment of IPO related tax liability |
|
| (15,437 | ) |
|
| - |
|
Non-core assets (1) |
|
| - |
|
|
| (1,616 | ) |
Other, net (primarily adjustments related to consolidated and |
|
| 2,471 |
|
|
| (647 | ) |
Core FFO attributable to the Operating Partnership |
|
| 52,304 |
|
|
| 58,477 |
|
Amounts attributable to noncontrolling interests in the Operating Partnership |
|
| (4,366 | ) |
|
| (3,814 | ) |
Core FFO attributable to common stockholders |
| $ | 47,938 |
|
| $ | 54,663 |
|
Per diluted share |
| $ | 0.22 |
|
| $ | 0.25 |
|
|
|
|
|
|
|
| ||
Reconciliation of weighted average shares outstanding: |
|
|
|
|
|
| ||
Weighted average shares outstanding |
|
| 217,105,686 |
|
|
| 216,563,108 |
|
Effect of dilutive securities |
|
| 80,723 |
|
|
| 53,912 |
|
Denominator for FFO and Core FFO per diluted share |
|
| 217,186,409 |
|
|
| 216,617,020 |
|
|
|
|
|
|
|
| For the Three Months Ended |
|
| For the Nine Months Ended |
| ||||||||||
|
|
|
|
|
|
| September 30, |
|
| September 30, |
| ||||||||||
(Amounts in thousands, except share and per share amounts) | 2017 |
|
| 2016 |
|
| 2017 |
|
| 2016 |
| ||||||||||
Reconciliation of net (loss) income to FFO and Core FFO: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
| 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 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 |
|
43
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.March 31, 2024.
Property |
|
| Rate |
| 2024 |
|
| 2025 |
|
| 2026 |
|
| 2027 |
|
| 2028 |
|
| Thereafter |
|
| Total |
|
| Fair Value |
| |||||||||
(Amounts in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Fixed Rate Debt: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
| 31 West 52nd Street | 3.80% |
| $ | - |
|
| $ | - |
|
| $ | 500,000 |
|
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | 500,000 |
|
| $ | 466,268 |
| ||
| 1301 Avenue of the Americas (1) | 2.49% |
|
| - |
|
|
| - |
|
|
| 500,000 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 500,000 |
|
|
| 501,844 |
| ||
| 300 Mission Street | 4.50% |
|
| - |
|
|
| - |
|
|
| 232,050 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 232,050 |
|
|
| 217,910 |
| ||
| One Market Plaza | 4.08% |
|
| - |
|
|
| - |
|
|
| - |
|
|
| 850,000 |
|
|
| - |
|
|
| - |
|
|
| 850,000 |
|
|
| 804,091 |
| ||
| 1633 Broadway | 2.99% |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 1,250,000 |
|
|
| 1,250,000 |
|
|
| 997,950 |
| ||
Total Fixed Rate Debt |
|
| 3.42% |
| $ | - |
|
| $ | - |
|
| $ | 1,232,050 |
|
| $ | 850,000 |
|
| $ | - |
|
| $ | 1,250,000 |
|
| $ | 3,332,050 |
|
| $ | 2,988,063 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Variable Rate Debt: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
| 1301 Avenue of the Americas (2) | 8.18% |
| $ | - |
|
| $ | - |
|
| $ | 360,000 |
|
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | 360,000 |
|
| $ | 361,327 |
| ||
| Revolving Credit Facility | n/a |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
| ||
Total Variable Rate Debt | 8.18% |
| $ | - |
|
| $ | - |
|
| $ | 360,000 |
|
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | 360,000 |
|
| $ | 361,327 |
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Total Consolidated Debt | 3.88% |
| $ | - |
|
| $ | - |
|
| $ | 1,592,050 |
|
| $ | 850,000 |
|
| $ | - |
|
| $ | 1,250,000 |
|
| $ | 3,692,050 |
|
| $ | 3,349,390 |
|
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$1.75 billion of outstanding indebtedness as of September 30, 2017,March 31, 2024, of which our share was $180,949,000.$629,681,000.
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.March 31, 2024.
|
| Notional |
|
| Effective |
| Maturity |
| Benchmark |
| Strike |
|
| Fair Value as of |
| |||||||
Property |
| Amount |
|
| Date |
| Date |
| Rate |
| Rate |
|
| March 31, 2024 |
|
| December 31, 2023 |
| ||||
(Amounts in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
1301 Avenue of the Americas |
| $ | 500,000 |
|
| Jul-2021 |
| Aug-2024 |
| SOFR |
|
| 0.49 | % |
| $ | 8,553 |
|
| $ | 13,726 |
|
Total interest rate swap assets designated as cash flow hedges (included in "other assets") | $ | 8,553 |
|
| $ | 13,726 |
|
|
| Notional |
|
| Effective |
| Maturity |
| Benchmark |
| Strike |
|
| Fair Value as of |
| |||||||
Property |
| Amount |
|
| Date |
| Date |
| Rate |
| Rate |
|
| March 31, 2024 |
|
| December 31, 2023 |
| ||||
(Amounts in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
1301 Avenue of the Americas |
| $ | 360,000 |
|
| Aug-2023 |
| Aug-2024 |
| SOFR |
|
| 4.50 | % |
| $ | 946 |
|
| $ | 1,263 |
|
Total interest rate cap assets designated as cash flow hedges (included in "other assets") | $ | 946 |
|
| $ | 1,263 |
|
|
| 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 |
|
44
|
|
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.
|
| As of March 31, 2024 |
|
| As of December 31, 2023 |
| ||||||||||||||
(Amounts in thousands, except per share amount) |
| Balance |
|
| Weighted |
|
| Effect of 1% Increase in Base Rates |
|
| Balance |
|
| Weighted |
| |||||
Paramount's share of consolidated debt: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Variable rate |
| $ | 360,000 |
|
|
| 8.18 | % |
| $ | 3,600 |
|
| $ | 360,000 |
|
|
| 8.18 | % |
Fixed rate (1) |
| 2,613,680 |
|
|
| 3.26 | % |
|
| - |
|
|
| 2,674,930 |
|
|
| 3.27 | % | |
|
| $ | 2,973,680 |
|
|
| 3.86 | % |
| $ | 3,600 |
|
| $ | 3,034,930 |
|
|
| 3.86 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Paramount's share of debt of non-consolidated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
entities (non-recourse): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Variable rate |
| $ | 105,693 |
|
|
| 7.46 | % |
| $ | 1,057 |
|
| $ | 117,913 |
|
|
| 7.51 | % |
Fixed rate |
|
| 523,988 |
|
|
| 3.54 | % |
|
| - |
|
|
| 511,025 |
|
|
| 3.32 | % |
|
| $ | 629,681 |
|
|
| 4.19 | % |
| $ | 1,057 |
|
| $ | 628,938 |
|
|
| 4.11 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Noncontrolling interests' share of above |
|
| $ | (389 | ) |
|
|
|
|
|
| |||||||||
Total change in annual net income |
|
|
|
|
|
|
| $ | 4,268 |
|
|
|
|
|
|
| ||||
Per diluted share |
|
|
|
|
|
|
| $ | 0.02 |
|
|
|
|
|
|
|
|
| September 30, 2017 |
|
| December 31, 2016 |
| ||||||||||||||
(Amounts in thousands, except per share amount) |
| Balance |
|
| Weighted Average Interest Rate |
|
| Effect of 1% Increase in Base Rates |
|
| Balance |
|
| Weighted Average Interest Rate |
| |||||
Paramount's share of consolidated debt: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Variable rate |
| $ | 380,100 |
|
|
| 3.05 | % |
| $ | 3,801 |
|
| $ | 599,627 |
|
|
| 2.29 | % |
Fixed rate (1) |
|
| 2,548,658 |
|
|
| 3.59 | % |
|
| - |
|
|
| 2,593,343 |
|
|
| 3.99 | % |
|
| $ | 2,928,758 |
|
|
| 3.52 | % |
| $ | 3,801 |
|
| $ | 3,192,970 |
|
|
| 3.67 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Paramount's share of debt of non-consolidated entities (non-recourse): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Variable rate |
| $ | 28,808 |
|
|
| 3.69 | % |
| $ | 288 |
|
| $ | 55,750 |
|
|
| 2.72 | % |
Fixed rate (1) |
|
| 152,141 |
|
|
| 3.41 | % |
|
| - |
|
|
| 69,692 |
|
|
| 5.74 | % |
|
| $ | 180,949 |
|
|
| 3.45 | % |
| $ | 288 |
|
| $ | 125,442 |
|
|
| 4.40 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noncontrolling interests' in the Operating Partnership share of above |
|
| $ | (393 | ) |
|
|
|
|
|
|
|
| |||||||
Total change in annual net income |
|
|
|
|
|
|
|
|
| $ | 3,696 |
|
|
|
|
|
|
|
|
|
Per diluted share |
|
|
|
|
|
|
|
|
| $ | 0.02 |
|
|
|
|
|
|
|
|
|
45 |
|
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,March 31, 2024, 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.
46
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,March 31, 2024, 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 updated below or 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, 2016.2023.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Recent Sales of Unregistered Securities
None.
Recent Purchases of Equity Securities
The following table summarizes our purchase of equity securities in the three months ended March 31, 2024.
Period |
| (a) |
|
| (b) |
|
| (c) |
|
| (d) |
| ||||
January 2024 |
|
| - |
|
| $ | - |
|
|
| - |
|
| $ | 15,000,000 |
|
February 2024 |
|
| 36,835 |
| (1) |
| 4.84 |
|
|
| - |
|
|
| 15,000,000 |
|
March 2024 |
|
| - |
|
|
| - |
|
|
| - |
|
|
| 15,000,000 |
|
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
None.
ITEM 5. OTHER INFORMATION
Rule 10b5-1 Trading Arrangement
During the three months ended September 30, 2017, we did not repurchase anyMarch 31, 2024, none of our common stock.directors or officers (as defined in Rule 16a-1(f) of the Securities Exchange Act of 1934) adopted, terminated or modified a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement (as such terms are defined in Item 408 of Regulation S-K).
47
ITEM 6. EXHIBITS
None.
None.
None.
Exhibits required by Item 601 of Regulation S-K are filed, or furnished as indicated, herewith or incorporated herein by reference and are listed in the following Exhibit Index:
EXHIBIT INDEX
Exhibit | Exhibit Description | |||
31.1* | ||||
| ||||
31.2* | ||||
32.1** | ||||
32.2** | ||||
101* | The following materials from the Paramount Group, Inc. Quarterly Report on Form 10-Q for the quarter ended March 31, 2024 formatted in Inline XBRL: (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Income, (iii) the Consolidated Statements of Comprehensive Income, (iv) the Consolidated Statements of Changes in Equity, (v) the Consolidated Statements of Cash Flows, and (vi) the related Notes to Consolidated Financial Statements. The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | |||
|
| |||
104* | Cover Page Interactive Data File (formatted as Inline XBRL with applicable taxonomy extension information contained in Exhibits 101.) | |||
|
| |||
* | Filed herewith | |||
|
| |||
** | Furnished herewith | |||
|
| |||
|
| |||
|
| |||
|
| |||
|
| |||
48
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: | May 1, 2024 | By: | /s/ Wilbur Paes | |||||
|
|
| ||||||
| ||||||||
| ||||||||
Wilbur Paes | (duly authorized officer and principal financial officer) | |||||||
Date: | May 1, 2024 | By: | /s/ Ermelinda Berberi | Senior Vice President, Chief Accounting Officer | ||||
Ermelinda Berberi | (duly authorized officer and principal accounting officer) |
7049