,
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: June 30, 2021March 31, 2022
OR
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File Number: 001-36746
PARAMOUNT GROUP, INC.
(Exact name of registrant as specified in its charter)
Maryland |
| 32-0439307 |
(State or other jurisdiction of incorporation or organization) |
| (IRS Employer Identification No.) |
1633 Broadway, Suite 1801, New York, NY |
| 10019 |
(Address of principal executive offices) |
| (Zip Code) |
Registrant’s telephone number, including area code: (212) 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 every Interactive Data File required to be submitted 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 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 JulyApril 15, 2021,2022, there were 218,961,000219,069,624 shares of the registrant’s common stock outstanding.
Table of Contents
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Part I. |
| Financial Information |
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Item 1. |
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| Consolidated Balance Sheets (Unaudited) as of |
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Item 2. |
| Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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Item 3. |
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Item 4. |
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Part II. |
| Other Information |
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Item 1. |
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Item 1A. |
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Item 2. |
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Item 3. |
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Item 4. |
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Item 5. |
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Item 6. |
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PART I – FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
PARAMOUNT GROUP, INC.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(Amounts in thousands, except share, unit and per share amounts) | June 30, 2021 |
|
| December 31, 2020 |
| March 31, 2022 |
|
| December 31, 2021 |
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Assets |
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Real estate, at cost: |
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Land | $ | 1,966,237 |
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| $ | 1,966,237 |
| $ | 1,966,237 |
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| $ | 1,966,237 |
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Buildings and improvements |
| 6,011,239 |
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| 5,997,078 |
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| 6,080,289 |
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| 6,061,824 |
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| 7,977,476 |
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| 7,963,315 |
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| 8,046,526 |
|
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| 8,028,061 |
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Accumulated depreciation and amortization |
| (1,026,542 | ) |
|
| (966,697 | ) |
| (1,152,264 | ) |
|
| (1,112,977 | ) |
|
Real estate, net |
| 6,950,934 |
|
|
| 6,996,618 |
|
| 6,894,262 |
|
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| 6,915,084 |
|
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Cash and cash equivalents |
| 475,289 |
|
|
| 434,530 |
|
| 461,995 |
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| 524,900 |
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Restricted cash |
| 32,552 |
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| 30,794 |
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| 6,331 |
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| 4,766 |
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Investments in unconsolidated joint ventures |
| 407,564 |
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| 412,724 |
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| 423,219 |
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| 408,096 |
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Investments in unconsolidated real estate funds |
| 12,979 |
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| 12,917 |
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| 11,573 |
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|
| 11,421 |
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Accounts and other receivables |
| 13,366 |
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|
| 17,502 |
|
| 11,678 |
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| 15,582 |
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Due from affiliates |
| 49,316 |
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|
| - |
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Deferred rent receivable |
| 339,874 |
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| 330,239 |
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| 330,944 |
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| 332,735 |
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Deferred charges, net of accumulated amortization of $62,761 and $56,612 |
| 111,275 |
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| 116,278 |
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Intangible assets, net of accumulated amortization of $245,405 and $283,332 |
| 135,764 |
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| 153,519 |
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Deferred charges, net of accumulated amortization of $57,324 and $70,666 |
| 120,557 |
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| 122,177 |
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Intangible assets, net of accumulated amortization of $226,822 and $252,142 |
| 112,108 |
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| 119,413 |
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Other assets |
| 53,543 |
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| 48,976 |
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| 76,599 |
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| 40,388 |
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Total assets (1) | $ | 8,533,140 |
|
| $ | 8,554,097 |
| $ | 8,498,582 |
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| $ | 8,494,562 |
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Liabilities and Equity |
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Notes and mortgages payable, net of unamortized deferred financing costs of $15,105 and $18,695 | $ | 3,816,759 |
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| $ | 3,800,739 |
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Notes and mortgages payable, net of unamortized deferred financing costs of $21,206 and $22,380 | $ | 3,836,794 |
|
| $ | 3,835,620 |
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Revolving credit facility |
| 0 |
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| 0 |
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| 0 |
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| 0 |
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Accounts payable and accrued expenses |
| 103,895 |
|
|
| 101,901 |
|
| 111,171 |
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|
| 116,192 |
|
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Dividends and distributions payable |
| 16,897 |
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| 16,796 |
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| 18,777 |
|
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| 16,895 |
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Intangible liabilities, net of accumulated amortization of $106,086 and $107,981 |
| 50,392 |
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| 55,996 |
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Intangible liabilities, net of accumulated amortization of $95,530 and $105,790 |
| 43,196 |
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| 45,328 |
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Other liabilities |
| 65,074 |
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| 62,931 |
|
| 25,621 |
|
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| 25,495 |
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Total liabilities (1) |
| 4,053,017 |
|
|
| 4,038,363 |
|
| 4,035,559 |
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| 4,039,530 |
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Commitments and contingencies |
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Paramount Group, Inc. equity: |
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Common stock $0.01 par value per share; authorized 900,000,000 shares; issued and outstanding 218,961,870 and 218,817,337 shares in 2021 and 2020, respectively |
| 2,189 |
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|
| 2,188 |
| ||||||||
Common stock $0.01 par value per share; authorized 900,000,000 shares; issued and outstanding 219,077,024 and 218,991,795 shares in 2022 and 2021, respectively |
| 2,190 |
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| 2,190 |
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Additional paid-in-capital |
| 4,113,889 |
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| 4,120,173 |
|
| 4,120,077 |
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| 4,122,680 |
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Earnings less than distributions |
| (507,321 | ) |
|
| (456,393 | ) |
| (552,732 | ) |
|
| (538,845 | ) |
|
Accumulated other comprehensive loss |
| (8,478 | ) |
|
| (12,791 | ) | ||||||||
Accumulated other comprehensive income |
| 28,466 |
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|
| 2,138 |
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| |||||||
Paramount Group, Inc. equity |
| 3,600,279 |
|
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| 3,653,177 |
|
| 3,598,001 |
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| 3,588,163 |
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Noncontrolling interests in: |
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Consolidated joint ventures |
| 442,428 |
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| 437,161 |
|
| 417,577 |
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| 428,833 |
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Consolidated real estate fund |
| 79,085 |
|
|
| 79,017 |
|
| 80,909 |
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| 81,925 |
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Operating Partnership (21,799,022 and 20,756,618 units outstanding) |
| 358,331 |
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|
| 346,379 |
| ||||||||
Operating Partnership (22,325,258 and 21,740,404 units outstanding) |
| 366,536 |
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| 356,111 |
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| |||||||
Total equity |
| 4,480,123 |
|
|
| 4,515,734 |
|
| 4,463,023 |
|
|
| 4,455,032 |
|
|
Total liabilities and equity | $ | 8,533,140 |
|
| $ | 8,554,097 |
| $ | 8,498,582 |
|
| $ | 8,494,562 |
|
|
(1) | Represents the consolidated assets and liabilities of Paramount Group Operating Partnership LP, a Delaware limited partnership (the “Operating Partnership”). The Operating Partnership is a consolidated variable interest entity (“VIE”), of which we are the sole general partner and own approximately |
See notes to consolidated financial statements (unaudited).
PARAMOUNT GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
| For the Three Months Ended |
|
| For the Six Months Ended |
| |||||||||||||||||
| June 30, |
|
| June 30, |
| For the Three Months Ended March 31, |
| |||||||||||||||
(Amounts in thousands, except share and per share amounts) | 2021 |
|
| 2020 |
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| 2021 |
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| 2020 |
| 2022 |
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| 2021 |
| ||||||
Revenues: |
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Rental revenue | $ | 174,628 |
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| $ | 163,989 |
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| $ | 347,774 |
|
| $ | 339,414 |
| $ | 169,922 |
|
| $ | 173,146 |
|
Fee and other income |
| 7,641 |
|
|
| 7,129 |
|
|
| 15,661 |
|
|
| 15,690 |
|
| 13,763 |
|
|
| 8,020 |
|
Total revenues |
| 182,269 |
|
|
| 171,118 |
|
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| 363,435 |
|
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| 355,104 |
|
| 183,685 |
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|
| 181,166 |
|
Expenses: |
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Operating |
| 64,072 |
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| 64,313 |
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| 130,690 |
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|
| 131,327 |
|
| 66,661 |
|
|
| 66,618 |
|
Depreciation and amortization |
| 59,925 |
|
|
| 58,716 |
|
|
| 118,230 |
|
|
| 117,143 |
|
| 55,624 |
|
|
| 58,305 |
|
General and administrative |
| 18,418 |
|
|
| 17,901 |
|
|
| 32,782 |
|
|
| 30,150 |
|
| 15,645 |
|
|
| 14,364 |
|
Transaction related costs |
| 135 |
|
|
| 258 |
|
|
| 416 |
|
|
| 461 |
|
| 117 |
|
|
| 281 |
|
Total expenses |
| 142,550 |
|
|
| 141,188 |
|
|
| 282,118 |
|
|
| 279,081 |
|
| 138,047 |
|
|
| 139,568 |
|
Other income (expense): |
|
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Loss from unconsolidated joint ventures |
| (15,717 | ) |
|
| (5,955 | ) |
|
| (21,033 | ) |
|
| (10,176 | ) |
| (5,113 | ) |
|
| (5,316 | ) |
Income from unconsolidated real estate funds |
| 148 |
|
|
| 89 |
|
|
| 328 |
|
|
| 141 |
|
| 170 |
|
|
| 180 |
|
Interest and other income, net |
| 1,070 |
|
|
| 2,252 |
|
|
| 2,372 |
|
|
| 1,256 |
|
| 231 |
|
|
| 1,302 |
|
Interest and debt expense |
| (34,914 | ) |
|
| (36,009 | ) |
|
| (69,653 | ) |
|
| (72,628 | ) |
| (34,277 | ) |
|
| (34,739 | ) |
Loss from continuing operations, before income taxes |
| (9,694 | ) |
|
| (9,693 | ) |
|
| (6,669 | ) |
|
| (5,384 | ) | |||||||
Net income before income taxes |
| 6,649 |
|
|
| 3,025 |
| |||||||||||||||
Income tax expense |
| (434 | ) |
|
| (138 | ) |
|
| (1,575 | ) |
|
| (742 | ) |
| (527 | ) |
|
| (1,141 | ) |
Loss from continuing operations, net |
| (10,128 | ) |
|
| (9,831 | ) |
|
| (8,244 | ) |
|
| (6,126 | ) | |||||||
Income from discontinued operations, net |
| - |
|
|
| 2,147 |
|
|
| - |
|
|
| 3,668 |
| |||||||
Net loss |
| (10,128 | ) |
|
| (7,684 | ) |
|
| (8,244 | ) |
|
| (2,458 | ) | |||||||
Net income |
| 6,122 |
|
|
| 1,884 |
| |||||||||||||||
Less net (income) loss attributable to noncontrolling interests in: |
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Consolidated joint ventures |
| (7,428 | ) |
|
| (405 | ) |
|
| (13,156 | ) |
|
| (1,919 | ) |
| (3,425 | ) |
|
| (5,728 | ) |
Consolidated real estate fund |
| 29 |
|
|
| 1,235 |
|
|
| (56 | ) |
|
| 1,212 |
|
| 1,016 |
|
|
| (85 | ) |
Operating Partnership |
| 1,584 |
|
|
| 584 |
|
|
| 1,935 |
|
|
| 243 |
|
| (342 | ) |
|
| 351 |
|
Net loss attributable to common stockholders | $ | (15,943 | ) |
| $ | (6,270 | ) |
| $ | (19,521 | ) |
| $ | (2,922 | ) | |||||||
Net income (loss) attributable to common stockholders | $ | 3,371 |
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| $ | (3,578 | ) | |||||||||||||||
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(Loss) Income per Common Share - Basic |
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| |||||||
Loss from continuing operations, net | $ | (0.07 | ) |
| $ | (0.04 | ) |
| $ | (0.09 | ) |
| $ | (0.03 | ) | |||||||
Income from discontinued operations, net |
| - |
|
|
| 0.01 |
|
|
| - |
|
|
| 0.02 |
| |||||||
Net loss per common share | $ | (0.07 | ) |
| $ | (0.03 | ) |
| $ | (0.09 | ) |
| $ | (0.01 | ) | |||||||
Weighted average common shares outstanding |
| 218,696,284 |
|
|
| 221,573,199 |
|
|
| 218,681,228 |
|
|
| 224,671,206 |
| |||||||
Income (Loss) per Common Share - Basic: |
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| |||||||||||||||
Income (loss) per common share | $ | 0.02 |
|
| $ | (0.02 | ) | |||||||||||||||
Weighted average shares outstanding |
| 218,782,296 |
|
|
| 218,666,005 |
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(Loss) Income per Common Share - Diluted |
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| |||||||
Loss from continuing operations, net | $ | (0.07 | ) |
| $ | (0.04 | ) |
| $ | (0.09 | ) |
| $ | (0.03 | ) | |||||||
Income from discontinued operations, net |
| - |
|
|
| 0.01 |
|
|
| - |
|
|
| 0.02 |
| |||||||
Net loss per common share | $ | (0.07 | ) |
| $ | (0.03 | ) |
| $ | (0.09 | ) |
| $ | (0.01 | ) | |||||||
Weighted average common shares outstanding |
| 218,696,284 |
|
|
| 221,573,199 |
|
|
| 218,681,228 |
|
|
| 224,671,206 |
| |||||||
Income (Loss) per Common Share - Diluted: |
|
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| |||||||||||||||
Income (loss) per common share | $ | 0.02 |
|
| $ | (0.02 | ) | |||||||||||||||
Weighted average shares outstanding |
| 218,840,094 |
|
|
| 218,666,005 |
|
See notes to consolidated financial statements (unaudited).
PARAMOUNT GROUP, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
| For the Three Months Ended |
|
| For the Six Months Ended |
| ||||||||||
| June 30, |
|
| June 30, |
| ||||||||||
(Amounts in thousands) | 2021 |
|
| 2020 |
|
| 2021 |
|
| 2020 |
| ||||
Net loss | $ | (10,128 | ) |
| $ | (7,684 | ) |
| $ | (8,244 | ) |
| $ | (2,458 | ) |
Other comprehensive loss: |
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Pro rata share of other comprehensive income (loss) of unconsolidated joint ventures |
| 365 |
|
|
| (1,696 | ) |
|
| 4,749 |
|
|
| (16,357 | ) |
Comprehensive loss |
| (9,763 | ) |
|
| (9,380 | ) |
|
| (3,495 | ) |
|
| (18,815 | ) |
Less comprehensive (income) loss attributable to noncontrolling interests in: |
| ||||||||||||||
Consolidated joint ventures |
| (7,428 | ) |
|
| (405 | ) |
|
| (13,156 | ) |
|
| (1,919 | ) |
Consolidated real estate fund |
| 29 |
|
|
| 1,233 |
|
|
| (68 | ) |
|
| 1,208 |
|
Operating Partnership |
| 1,552 |
|
|
| 729 |
|
|
| 1,511 |
|
|
| 1,744 |
|
Comprehensive loss attributable to common stockholders | $ | (15,610 | ) |
| $ | (7,823 | ) |
| $ | (15,208 | ) |
| $ | (17,782 | ) |
|
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| For the Three Months Ended March 31, |
| |||||
(Amounts in thousands) | 2022 |
|
| 2021 |
| ||
Net income | $ | 6,122 |
|
| $ | 1,884 |
|
Other comprehensive income: |
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|
|
|
|
|
Change in value of interest rate swaps and interest rate caps |
| 18,545 |
|
|
| - |
|
Pro rata share of other comprehensive income of unconsolidated joint ventures |
| 10,453 |
|
|
| 4,384 |
|
Comprehensive income |
| 35,120 |
|
|
| 6,268 |
|
Less comprehensive (income) loss attributable to noncontrolling interests in: |
| ||||||
Consolidated joint ventures |
| (3,425 | ) |
|
| (5,728 | ) |
Consolidated real estate fund |
| 1,016 |
|
|
| (97 | ) |
Operating Partnership |
| (3,012 | ) |
|
| (41 | ) |
Comprehensive income attributable to common stockholders | $ | 29,699 |
|
| $ | 402 |
|
See notes to consolidated financial statements (unaudited).
PARAMOUNT GROUP, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 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 |
|
| Loss |
|
| Ventures |
|
| Fund |
|
| Partnership |
|
| Equity |
| |||||||||
Balance as of March 31, 2021 |
|
| 218,950 |
|
| $ | 2,189 |
|
| $ | 4,111,144 |
|
| $ | (476,051 | ) |
| $ | (8,809 | ) |
| $ | 438,937 |
|
| $ | 79,114 |
|
| $ | 359,411 |
|
| $ | 4,505,935 |
|
Net (loss) income |
|
| - |
|
|
| - |
|
|
| - |
|
|
| (15,943 | ) |
|
| - |
|
|
| 7,428 |
|
|
| (29 | ) |
|
| (1,584 | ) |
|
| (10,128 | ) |
Common shares issued upon redemption of common units |
|
| 10 |
|
|
| - |
|
|
| 165 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (165 | ) |
|
| - |
|
Common shares issued under Omnibus share plan, net of shares withheld for taxes |
|
| 2 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
Dividends and distributions ($0.07 per share and unit) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| (15,327 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| (1,570 | ) |
|
| (16,897 | ) |
Distributions to noncontrolling interests |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (3,937 | ) |
|
| - |
|
|
| - |
|
|
| (3,937 | ) |
Pro rata share of other comprehensive income of unconsolidated joint ventures |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 331 |
|
|
| - |
|
|
| - |
|
|
| 34 |
|
|
| 365 |
|
Amortization of equity awards |
|
| - |
|
|
| - |
|
|
| 304 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 4,481 |
|
|
| 4,785 |
|
Reallocation of noncontrolling interest |
|
| - |
|
|
| - |
|
|
| 2,276 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (2,276 | ) |
|
| - |
|
Balance as of June 30, 2021 |
|
| 218,962 |
|
| $ | 2,189 |
|
| $ | 4,113,889 |
|
| $ | (507,321 | ) |
| $ | (8,478 | ) |
| $ | 442,428 |
|
| $ | 79,085 |
|
| $ | 358,331 |
|
| $ | 4,480,123 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of March 31, 2020 |
|
| 221,750 |
|
| $ | 2,219 |
|
| $ | 4,102,287 |
|
| $ | (368,767 | ) |
| $ | (13,478 | ) |
| $ | 359,120 |
|
| $ | 80,476 |
|
| $ | 345,335 |
|
| $ | 4,507,192 |
|
Net (loss) income |
|
| - |
|
|
| - |
|
|
| - |
|
|
| (6,270 | ) |
|
| - |
|
|
| 405 |
|
|
| (1,235 | ) |
|
| (584 | ) |
|
| (7,684 | ) |
Common shares issued under Omnibus share plan, net of shares withheld for taxes |
|
| 14 |
|
|
| - |
|
|
| - |
|
|
| (7 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (7 | ) |
Dividends and distributions ($0.10 per share and unit) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| (22,176 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| (2,116 | ) |
|
| (24,292 | ) |
Contributions from noncontrolling interests |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 3,500 |
|
|
| - |
|
|
| - |
|
|
| 3,500 |
|
Distributions to noncontrolling interests |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (3,185 | ) |
|
| - |
|
|
| - |
|
|
| (3,185 | ) |
Pro rata share of other comprehensive (loss) income of unconsolidated joint ventures |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (1,553 | ) |
|
| - |
|
|
| 2 |
|
|
| (145 | ) |
|
| (1,696 | ) |
Amortization of equity awards |
|
| - |
|
|
| - |
|
|
| 294 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 3,981 |
|
|
| 4,275 |
|
Sale of a 10.0% interest in 1633 Broadway |
|
| - |
|
|
| - |
|
|
| 33,230 |
|
|
| - |
|
|
| - |
|
|
| 76,343 |
|
|
| - |
|
|
| - |
|
|
| 109,573 |
|
Reallocation of noncontrolling interest |
|
| - |
|
|
| - |
|
|
| (2,269 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 2,269 |
|
|
| - |
|
Balance as of June 30, 2020 |
|
| 221,764 |
|
| $ | 2,219 |
|
| $ | 4,133,542 |
|
| $ | (397,220 | ) |
| $ | (15,031 | ) |
| $ | 436,183 |
|
| $ | 79,243 |
|
| $ | 348,740 |
|
| $ | 4,587,676 |
|
See notes to consolidated financial statements (unaudited).
PARAMOUNT GROUP, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Accumulated |
|
| Noncontrolling Interests in |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Accumulated |
|
| Noncontrolling Interests in |
|
|
|
|
| ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| Additional |
|
| Earnings |
|
| Other |
|
| Consolidated |
|
| Consolidated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Additional |
|
| Earnings |
|
| Other |
|
| Consolidated |
|
| Consolidated |
|
|
|
|
|
|
|
|
| ||||||||||
(Amounts in thousands, except per share |
| Common Shares |
|
| Paid-in- |
|
| Less than |
|
| Comprehensive |
|
| Joint |
|
| Real Estate |
|
| Operating |
|
| Total |
|
| Common Shares |
|
| Paid-in- |
|
| Less than |
|
| Comprehensive |
|
| Joint |
|
| Real Estate |
|
| Operating |
|
| Total |
| ||||||||||||||||||||||||
and unit amounts) |
| Shares |
|
| Amount |
|
| Capital |
|
| Distributions |
|
| Loss |
|
| Ventures |
|
| Fund |
|
| Partnership |
|
| Equity |
|
| Shares |
|
| Amount |
|
| Capital |
|
| Distributions |
|
| Income (Loss) |
|
| Ventures |
|
| Fund |
|
| Partnership |
|
| Equity |
| ||||||||||||||||||
Balance as of December 31, 2021 |
|
| 218,992 |
|
| $ | 2,190 |
|
| $ | 4,122,680 |
|
| $ | (538,845 | ) |
| $ | 2,138 |
|
| $ | 428,833 |
|
| $ | 81,925 |
|
| $ | 356,111 |
|
| $ | 4,455,032 |
| ||||||||||||||||||||||||||||||||||||
Net income (loss) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| 3,371 |
|
|
| - |
|
|
| 3,425 |
|
|
| (1,016 | ) |
|
| 342 |
|
|
| 6,122 |
| ||||||||||||||||||||||||||||||||||||
Common shares issued under Omnibus share plan, net of shares withheld for taxes |
|
| 85 |
|
|
| - |
|
|
| - |
|
|
| (280 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (280 | ) | ||||||||||||||||||||||||||||||||||||
Dividends and distributions ($0.0775 per share and unit) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| (16,978 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| (1,799 | ) |
|
| (18,777 | ) | ||||||||||||||||||||||||||||||||||||
Distributions to noncontrolling interests |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (14,681 | ) |
|
| - |
|
|
| - |
|
|
| (14,681 | ) | ||||||||||||||||||||||||||||||||||||
Change in value of interest rate swaps and interest rate caps |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 16,837 |
|
|
| - |
|
|
| - |
|
|
| 1,708 |
|
|
| 18,545 |
| ||||||||||||||||||||||||||||||||||||
Pro rata share of other comprehensive income of unconsolidated joint ventures |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 9,491 |
|
|
| - |
|
|
| - |
|
|
| 962 |
|
|
| 10,453 |
| ||||||||||||||||||||||||||||||||||||
Amortization of equity awards |
|
| - |
|
|
| - |
|
|
| 322 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 6,287 |
|
|
| 6,609 |
| ||||||||||||||||||||||||||||||||||||
Reallocation of noncontrolling interest |
|
| - |
|
|
| - |
|
|
| (2,925 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 2,925 |
|
|
| - |
| ||||||||||||||||||||||||||||||||||||
Balance as of March 31, 2022 |
|
| 219,077 |
|
| $ | 2,190 |
|
| $ | 4,120,077 |
|
| $ | (552,732 | ) |
| $ | 28,466 |
|
| $ | 417,577 |
|
| $ | 80,909 |
|
| $ | 366,536 |
|
| $ | 4,463,023 |
| ||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||||||||
Balance as of December 31, 2020 |
|
| 218,817 |
|
| $ | 2,188 |
|
| $ | 4,120,173 |
|
| $ | (456,393 | ) |
| $ | (12,791 | ) |
| $ | 437,161 |
|
| $ | 79,017 |
|
| $ | 346,379 |
|
| $ | 4,515,734 |
|
|
| 218,817 |
|
| $ | 2,188 |
|
| $ | 4,120,173 |
|
| $ | (456,393 | ) |
| $ | (12,791 | ) |
| $ | 437,161 |
|
| $ | 79,017 |
|
| $ | 346,379 |
|
| $ | 4,515,734 |
|
Net (loss) income |
|
| - |
|
|
| - |
|
|
| - |
|
|
| (19,521 | ) |
|
| - |
|
|
| 13,156 |
|
|
| 56 |
|
|
| (1,935 | ) |
|
| (8,244 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| (3,578 | ) |
|
| - |
|
|
| 5,728 |
|
|
| 85 |
|
|
| (351 | ) |
|
| 1,884 |
|
Common shares issued upon redemption of common units |
|
| 10 |
|
|
| - |
|
|
| 165 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (165 | ) |
|
| - |
| ||||||||||||||||||||||||||||||||||||
Common shares issued under Omnibus share plan, net of shares withheld for taxes |
|
| 135 |
|
|
| 1 |
|
|
| - |
|
|
| (201 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (200 | ) |
|
| 133 |
|
|
| 1 |
|
|
| - |
|
|
| (201 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (200 | ) |
Dividends and distributions ($0.14 per share and unit) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| (30,654 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| (3,132 | ) |
|
| (33,786 | ) | ||||||||||||||||||||||||||||||||||||
Dividends and distributions ($0.07 per share and unit) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| (15,327 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| (1,562 | ) |
|
| (16,889 | ) | ||||||||||||||||||||||||||||||||||||
Contributions from noncontrolling interests |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 121 |
|
|
| - |
|
|
| - |
|
|
| 121 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 121 |
|
|
| - |
|
|
| - |
|
|
| 121 |
|
Distributions to noncontrolling interests |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (8,562 | ) |
|
| - |
|
|
| - |
|
|
| (8,562 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (4,625 | ) |
|
| - |
|
|
| - |
|
|
| (4,625 | ) |
Pro rata share of other comprehensive income of unconsolidated joint ventures |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 4,313 |
|
|
| - |
|
|
| 12 |
|
|
| 424 |
|
|
| 4,749 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 3,982 |
|
|
| - |
|
|
| 12 |
|
|
| 390 |
|
|
| 4,384 |
|
Amortization of equity awards |
|
| - |
|
|
| - |
|
|
| 611 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 9,700 |
|
|
| 10,311 |
|
|
| - |
|
|
| - |
|
|
| 307 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 5,219 |
|
|
| 5,526 |
|
Reallocation of noncontrolling interest |
|
| - |
|
|
| - |
|
|
| (7,060 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 7,060 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (9,336 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 9,336 |
|
|
| - |
|
Other |
|
| - |
|
|
| - |
|
|
| - |
|
|
| (552 | ) |
|
| - |
|
|
| 552 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (552 | ) |
|
| - |
|
|
| 552 |
|
|
| - |
|
|
| - |
|
|
| - |
|
Balance as of June 30, 2021 |
|
| 218,962 |
|
| $ | 2,189 |
|
| $ | 4,113,889 |
|
| $ | (507,321 | ) |
| $ | (8,478 | ) |
| $ | 442,428 |
|
| $ | 79,085 |
|
| $ | 358,331 |
|
| $ | 4,480,123 |
| ||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||||||||
Balance as of December 31, 2019 |
|
| 227,432 |
|
| $ | 2,274 |
|
| $ | 4,133,184 |
|
| $ | (349,557 | ) |
| $ | (171 | ) |
| $ | 360,778 |
|
| $ | 72,396 |
|
| $ | 412,058 |
|
| $ | 4,630,962 |
| ||||||||||||||||||||||||||||||||||||
Net (loss) income |
|
| - |
|
|
| - |
|
|
| - |
|
|
| (2,922 | ) |
|
| - |
|
|
| 1,919 |
|
|
| (1,212 | ) |
|
| (243 | ) |
|
| (2,458 | ) | ||||||||||||||||||||||||||||||||||||
Common shares issued upon redemption of common units |
|
| 5,126 |
|
|
| 51 |
|
|
| 85,260 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (85,311 | ) |
|
| - |
| ||||||||||||||||||||||||||||||||||||
Common shares issued under Omnibus share plan, net of shares withheld for taxes |
|
| 63 |
|
|
| 3 |
|
|
| - |
|
|
| (319 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (316 | ) | ||||||||||||||||||||||||||||||||||||
Repurchases of common shares |
|
| (10,857 | ) |
|
| (109 | ) |
|
| (99,891 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (100,000 | ) | ||||||||||||||||||||||||||||||||||||
Dividends and distributions ($0.20 per share and unit) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| (44,422 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| (4,212 | ) |
|
| (48,634 | ) | ||||||||||||||||||||||||||||||||||||
Contributions from noncontrolling interests |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 3,500 |
|
|
| 8,055 |
|
|
| - |
|
|
| 11,555 |
| ||||||||||||||||||||||||||||||||||||
Distributions to noncontrolling interests |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (6,357 | ) |
|
| - |
|
|
| - |
|
|
| (6,357 | ) | ||||||||||||||||||||||||||||||||||||
Pro rata share of other comprehensive (loss) income of unconsolidated joint ventures |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (14,860 | ) |
|
| - |
|
|
| 4 |
|
|
| (1,501 | ) |
|
| (16,357 | ) | ||||||||||||||||||||||||||||||||||||
Amortization of equity awards |
|
| - |
|
|
| - |
|
|
| 692 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 9,016 |
|
|
| 9,708 |
| ||||||||||||||||||||||||||||||||||||
Sale of a 10.0% interest in 1633 Broadway |
|
| - |
|
|
| - |
|
|
| 33,230 |
|
|
| - |
|
|
| - |
|
|
| 76,343 |
|
|
| - |
|
|
| - |
|
|
| 109,573 |
| ||||||||||||||||||||||||||||||||||||
Reallocation of noncontrolling interest |
|
| - |
|
|
| - |
|
|
| (18,933 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 18,933 |
|
|
| - |
| ||||||||||||||||||||||||||||||||||||
Balance as of June 30, 2020 |
|
| 221,764 |
|
| $ | 2,219 |
|
| $ | 4,133,542 |
|
| $ | (397,220 | ) |
| $ | (15,031 | ) |
| $ | 436,183 |
|
| $ | 79,243 |
|
| $ | 348,740 |
|
| $ | 4,587,676 |
| ||||||||||||||||||||||||||||||||||||
Balance as of March 31, 2021 |
|
| 218,950 |
|
| $ | 2,189 |
|
| $ | 4,111,144 |
|
| $ | (476,051 | ) |
| $ | (8,809 | ) |
| $ | 438,937 |
|
| $ | 79,114 |
|
| $ | 359,411 |
|
| $ | 4,505,935 |
|
See notes to consolidated financial statements (unaudited).
PARAMOUNT GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
| For the Six Months Ended June 30, |
| For the Three Months Ended March 31, |
| ||||||||||
(Amounts in thousands) | 2021 |
|
| 2020 |
| 2022 |
|
| 2021 |
| ||||
Cash Flows from Operating Activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss | $ | (8,244 | ) |
| $ | (2,458 | ) | |||||||
Adjustments to reconcile net loss to net cash provided by operating activities: |
|
|
|
|
|
|
| |||||||
Net income | $ | 6,122 |
|
| $ | 1,884 |
| |||||||
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
|
|
| |||||||
Depreciation and amortization |
| 118,230 |
|
|
| 117,833 |
|
| 55,624 |
|
|
| 58,305 |
|
Straight-lining of rental revenue |
| (9,632 | ) |
|
| (19,731 | ) |
| 1,789 |
|
|
| (7,282 | ) |
Amortization of stock-based compensation expense |
| 10,229 |
|
|
| 9,638 |
|
| 6,562 |
|
|
| 5,486 |
|
Loss from unconsolidated joint ventures |
| 21,033 |
|
|
| 10,176 |
|
| 5,113 |
|
|
| 5,316 |
|
Amortization of deferred financing costs |
| 4,640 |
|
|
| 4,637 |
|
| 1,538 |
|
|
| 2,319 |
|
Distributions of earnings from unconsolidated real estate funds |
| 150 |
|
|
| 137 |
| |||||||
Distributions of earnings from unconsolidated joint ventures |
| 623 |
|
|
| 1,459 |
|
| 18 |
|
|
| - |
|
Distributions of earnings from unconsolidated real estate funds |
| 266 |
|
|
| 353 |
| |||||||
Amortization of above and below-market leases, net |
| (1,613 | ) |
|
| (2,744 | ) |
| (358 | ) |
|
| (855 | ) |
Realized and unrealized (gains) losses on marketable securities |
| (1,480 | ) |
|
| 560 |
| |||||||
Income from unconsolidated real estate funds |
| (328 | ) |
|
| (141 | ) |
| (170 | ) |
|
| (180 | ) |
Realized and unrealized gains on marketable securities |
| - |
|
|
| (858 | ) | |||||||
Other non-cash adjustments |
| 868 |
|
|
| 152 |
|
| 302 |
|
|
| 735 |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts and other receivables |
| 4,136 |
|
|
| 493 |
|
| 3,904 |
|
|
| 4,850 |
|
Deferred charges |
| (4,506 | ) |
|
| (8,107 | ) |
| (1,086 | ) |
|
| (159 | ) |
Other assets |
| (5,569 | ) |
|
| (4,367 | ) |
| (17,688 | ) |
|
| (29,311 | ) |
Accounts payable and accrued expenses |
| 3,698 |
|
|
| (4,148 | ) |
| (3,162 | ) |
|
| 16,997 |
|
Other liabilities |
| 2,107 |
|
|
| (494 | ) |
| 16 |
|
|
| 946 |
|
Net cash provided by operating activities |
| 134,458 |
|
|
| 103,111 |
|
| 58,674 |
|
|
| 58,330 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from Investing Activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Due from affiliates |
| (49,316 | ) |
|
| - |
| |||||||
Additions to real estate |
| (52,114 | ) |
|
| (46,575 | ) |
| (29,025 | ) |
|
| (19,339 | ) |
Contributions of capital to unconsolidated joint ventures |
| (11,750 | ) |
|
| - |
| |||||||
Investments in unconsolidated joint venture |
| (9,684 | ) |
|
| - |
| |||||||
Contributions of capital to unconsolidated real estate funds |
| (133 | ) |
|
| - |
| |||||||
Purchases of marketable securities |
| (9,562 | ) |
|
| (9,248 | ) |
| - |
|
|
| (9,562 | ) |
Sales of marketable securities |
| 11,381 |
|
|
| 19,049 |
|
| - |
|
|
| 2,557 |
|
Repayment of amounts due from affiliates |
| - |
|
|
| 36,918 |
| |||||||
Contributions of capital to unconsolidated real estate funds |
| - |
|
|
| (2,936 | ) | |||||||
Net cash used in investing activities |
| (62,045 | ) |
|
| (2,792 | ) |
| (88,158 | ) |
|
| (26,344 | ) |
See notes to consolidated financial statements (unaudited).
PARAMOUNT GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
(UNAUDITED)
| For the Six Months Ended June 30, |
| For the Three Months Ended March 31, |
| ||||||||||
(Amounts in thousands) | 2021 |
|
| 2020 |
| 2022 |
|
| 2021 |
| ||||
Cash Flows from Financing Activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends paid to common stockholders | $ | (30,643 | ) |
| $ | (44,989 | ) | $ | (15,329 | ) |
| $ | (15,317 | ) |
Proceeds from notes and mortgages payable |
| 12,430 |
|
|
| 3,073 |
| |||||||
Distributions paid to common unitholders |
| (1,566 | ) |
|
| (1,479 | ) | |||||||
Distributions to noncontrolling interests |
| (8,562 | ) |
|
| (6,357 | ) |
| (14,681 | ) |
|
| (4,625 | ) |
Distributions paid to common unitholders |
| (3,042 | ) |
|
| (4,608 | ) | |||||||
Contributions from noncontrolling interests |
| 121 |
|
|
| 11,555 |
|
| - |
|
|
| 121 |
|
Repurchase of shares related to stock compensation agreements and related tax withholdings |
| (200 | ) |
|
| (316 | ) |
| (280 | ) |
|
| (200 | ) |
Borrowings under revolving credit facility |
| - |
|
|
| 163,082 |
| |||||||
Proceeds from the sale of a 10.0% interest in 1633 Broadway |
| - |
|
|
| 111,984 |
| |||||||
Repurchases of common shares |
| - |
|
|
| (100,000 | ) | |||||||
Repayment of note payable issued in connection with the acquisition of noncontrolling interest in unconsolidated real estate fund |
| - |
|
|
| (8,771 | ) | |||||||
Net cash (used in) provided by financing activities |
| (29,896 | ) |
|
| 124,653 |
| |||||||
Proceeds from notes and mortgages payable |
| - |
|
|
| 12,430 |
| |||||||
Net cash used in financing activities |
| (31,856 | ) |
|
| (9,070 | ) | |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase in cash and cash equivalents and restricted cash |
| 42,517 |
|
|
| 224,972 |
| |||||||
Net (decrease) increase in cash and cash equivalents and restricted cash |
| (61,340 | ) |
|
| 22,916 |
| |||||||
Cash and cash equivalents and restricted cash at beginning of period |
| 465,324 |
|
|
| 331,487 |
|
| 529,666 |
|
|
| 465,324 |
|
Cash and cash equivalents and restricted cash at end of period | $ | 507,841 |
|
| $ | 556,459 |
| $ | 468,326 |
|
| $ | 488,240 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Cash and Cash Equivalents and Restricted Cash: | Reconciliation of Cash and Cash Equivalents and Restricted Cash: |
|
|
|
|
| Reconciliation of Cash and Cash Equivalents and Restricted Cash: |
|
|
|
|
| ||
Cash and cash equivalents at beginning of period | $ | 434,530 |
|
| $ | 306,215 |
| $ | 524,900 |
|
| $ | 434,530 |
|
Restricted cash at beginning of period |
| 30,794 |
|
|
| 25,272 |
|
| 4,766 |
|
|
| 30,794 |
|
Cash and cash equivalents and restricted cash at beginning of period | $ | 465,324 |
|
| $ | 331,487 |
| $ | 529,666 |
|
| $ | 465,324 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of period | $ | 475,289 |
|
| $ | 522,502 |
| $ | 461,995 |
|
| $ | 464,652 |
|
Restricted cash at end of period |
| 32,552 |
|
|
| 33,957 |
|
| 6,331 |
|
|
| 23,588 |
|
Cash and cash equivalents and restricted cash at end of period | $ | 507,841 |
|
| $ | 556,459 |
| $ | 468,326 |
|
| $ | 488,240 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental Disclosure of Cash Flow Information: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash payments for interest | $ | 65,227 |
|
| $ | 68,920 |
| $ | 33,190 |
|
| $ | 32,401 |
|
Cash payments for income taxes, net of refunds |
| 210 |
|
|
| 1,130 |
|
| 1,193 |
|
|
| 24 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Cash Transactions: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends and distributions declared but not yet paid |
| 16,897 |
|
|
| 24,292 |
|
| 18,777 |
|
|
| 16,889 |
|
Change in value of interest rate swaps and interest rate caps |
| 18,545 |
|
|
| - |
| |||||||
Write-off of fully amortized and/or depreciated assets |
| 7,084 |
|
|
| 2,142 |
| |||||||
Additions to real estate included in accounts payable and accrued expenses |
| 10,484 |
|
|
| 16,232 |
|
| 6,868 |
|
|
| 6,223 |
|
Write-off of fully amortized and/or depreciated assets |
| 37,149 |
|
|
| 8,612 |
| |||||||
Common shares issued upon redemption of common units |
| 165 |
|
|
| 85,311 |
|
See notes to consolidated financial statements (unaudited).
98
PARAMOUNT GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. | Organization and Business |
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 and San Francisco. As of June 30, 2021, our portfolio consisted of 13 Class A properties aggregating 12.9 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 91.0%90.8% of, the Operating Partnership as of June 30, 2021.March 31, 2022.
InAs of March 2020,31, 2022, we owned and/or managed a portfolio aggregating 13.9 million square feet comprised of:
• | NaN wholly and partially owned properties aggregating 8.6 million square feet in New York, comprised of 8.2 million square feet of office space and 0.4 million square feet of retail, theater and amenity space; |
• | NaN wholly and partially owned properties aggregating 4.3 million square feet in San Francisco, comprised of 4.1 million square feet of office space and 0.2 million square feet of retail space; and |
• | NaN managed properties aggregating 1.0 million square feet in New York and Washington, D.C. |
Additionally, we have an investment management business, where we serve as the World Health Organization declared coronavirus 2019 (“COVID-19”) a global pandemic. The outbreakgeneral partner of COVID-19 caused severe disruptions in the global economy. These disruptions have adversely impacted businessesreal estate funds for institutional investors and financial markets, including that of New York and San Francisco, the markets in which we operate and where all of our assets are located. As a result, several of our tenants sought deferrals and/or short-term relief of their rental obligations and we provided relief to select tenants.
By February 2021, the U.S. Food and Drug Administration had issued emergency use authorizations of three vaccines for the prevention of COVID-19. In July 2021, New York and San Francisco lifted most COVID-19 restrictions since a significant portion of their populations have been vaccinated. Notwithstanding the vaccination success, multiple variants of the virus that cause COVID-19 continue to persist globally and in the United States. While we continue to navigate the crisis and monitor the impact of the pandemic on our business, the rapid development and fluidity of this situation precludes us at this time from making any predictions as to the ultimate impact COVID-19 may have on our future financial condition, results of operations and cash flows.high net-worth individuals.
2. | Basis of Presentation and Significant Accounting Policies |
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. In the opinion of management, all significant 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. The consolidated balance sheet as of December 31, 20202021 was derived from audited financial statements as of that date but does not include all information and disclosures required by GAAP. These consolidated financial statements 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, 2020,2021, as filed with the SEC.
9
PARAMOUNT GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Significant Accounting Policies
There are no material changes to our significant accounting policies as disclosed in our Annual Report on Form 10-K for the year ended December 31, 2020.
10
PARAMOUNT GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
2021.
Use of Estimates
We have made estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ materially from those estimates. The results of operations for the three and six months ended June 30, 2021,March 31, 2022, are not necessarily indicative of the operating results for the full year.
Recently Issued Accounting Pronouncements
In December 2019,March 2020, the Financial Accounting Standards Board (“FASB”) issued ASU 2019-12, an update to ASC Topic 740, Income Taxes. ASU 2019-12 simplifies the accounting for income taxes by (i) eliminating certain exceptions within ASC Topic 740 and (ii) clarifying and amending the existing guidance to enable consistent application of ASC Topic 740. ASU 2019-12 is effective for interim and annual reporting periods in fiscal years that begin after December 15, 2020, with early adoption permitted. We adopted the provisions of ASU 2019-12 on January 1, 2021. This adoption did not have an impact on our consolidated financial statements.
In March 2020, the FASB issued ASUAccounting Standards Update (“ASU”) 2020-04, which adds ASCAccounting Standards Codification (“ASC”) Topic 848, Reference Rate Reform: Facilitation of the Effects of Reference Rate Reform on Financial Reporting. ASU 2020-04 provides temporary optional expedients and exceptions to ease financial reporting burdens related to applying current GAAP to modifications of contracts, hedging relationships and other transactions in connection with the transition from the London Interbank Offered Rate (“LIBOR”) and other interbank offered rates to alternative reference rates. In January 2021, the FASB issued ASU 2021-01 to clarify that certain optional expedients and exceptions apply to modifications of derivative contracts and certain hedging relationships affected by changes in the interest rates used for discounting cash flows, computing variation margin settlements, and for calculating price alignment interest. ASU 2020-04 is effective beginning on March 12, 2020 and may be applied prospectively to such transactions through December 31, 2022 and ASU 2021-01 is effective beginning on January 7, 2021 and may be applied retrospectively or prospectively to such transactions through December 31, 2022. We will apply ASU 2020-04 and ASU 2021-01 prospectively as and when we enter into transactions to which these updates apply.
In August 2020, the FASB issued ASU 2020-06, an update to ASC Topic 470, Subtopic - 20, Debt - Debt with Conversion and Other Options, and ASC Topic 815, Subtopic - 4, Derivatives and Hedging - Contracts in Entity's Own Equity. ASU 2020-06 simplifies the guidance for certain financial instruments with characteristics of liability and equity, including convertible instruments and contracts on an entity’s own equity by reducing the number of accounting models for convertible instruments and amends guidance in ASC Topic 260, Earnings Per Share, relating to the computation of earnings per share for convertible instruments and contracts on an entity’s own equity. ASU 2020-06 is effective for interim and annual reporting periods in fiscal years that begin after December 15, 2021, with early adoption permitted for fiscal years that begin after December 15, 2020. We are evaluating the impact of ASU 2020-06 on our consolidated financial statements.
In October 2020, the FASB issued ASU 2020-10, Codification Improvements. ASU 2020-10 codifies the disclosure guidance of all codifications which provide entities with an option to either present information on the face or disclose it in the notes to the financial statements. ASU 2020-10 also clarifies application of various provisions in the codifications where the guidance may have been unclear. ASU 2020-10 is effective for interim and annual reporting periods in fiscal years that begin after December 15, 2020, with early adoption permitted. We adopted the provisions of ASU 2020-102020-06 on January 1, 2021.2022. This adoption did not have an impact on our consolidated financial statements.
1110
PARAMOUNT GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
3. |
|
Over the past three years, we sold the remaining assets in our Washington, D.C. portfolio, thereby exiting the Washington, D.C. office market. These dispositions represented a strategic shift in our operations and met the criteria for classifying our Washington, D.C. segment as “discontinued operations,” in accordance with ASC Topic 205, Presentation of Financial Statements. Accordingly, effective March 31, 2020, we reclassified the results of operations of our Washington, D.C. segment as discontinued operations.
The tables below provide the details of the results of operations and the details of the cash flows related to discontinued operations for the periods set forth below.
|
|
|
|
|
|
|
|
|
(Amounts in thousands) |
| For the Three Months |
|
| For the Six Months |
| ||
Income Statement: (1) |
| Ended June 30, 2020 |
|
| Ended June 30, 2020 |
| ||
Revenues: |
|
|
|
|
|
|
|
|
Rental revenue |
| $ | 3,515 |
|
| $ | 7,078 |
|
Other income |
|
| 31 |
|
|
| 130 |
|
Total revenues |
|
| 3,546 |
|
|
| 7,208 |
|
Expenses: |
|
|
|
|
|
|
|
|
Operating |
|
| 1,399 |
|
|
| 2,850 |
|
Depreciation and amortization |
|
| - |
|
|
| 690 |
|
Total expenses |
|
| 1,399 |
|
|
| 3,540 |
|
Income from discontinued operations, net |
| $ | 2,147 |
|
| $ | 3,668 |
|
|
|
|
|
|
(Amounts in thousands) |
| For the Six Months |
| |
Statement of Cash Flows: (1) |
| Ended June 30, 2020 |
| |
Cash provided by operating activities | $ | 2,292 |
| |
|
|
|
|
|
Additional Cash Flow information: |
|
|
|
|
Depreciation and amortization |
| $ | 690 |
|
|
|
12
PARAMOUNT GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
| Investments in Unconsolidated Joint Ventures |
On February 24, 2022, a joint venture, in which we own a 9.2% interest, acquired a 26,000 square foot retail condominium at 1600 Broadway in Manhattan for $191,500,000. In connection with the acquisition, the joint venture obtained a 10-year, $98,000,000 interest-only loan that has a fixed rate of 3.45%. The property, which is located in the heart of Times Square, is 100% leased to Mars, Inc. for a 15-year term and serves as the New York flagship location for M&M’s World. We account for our investment in 1600 Broadway under the equity method of accounting from the date of acquisition.
The following tables summarize our investments in unconsolidated joint ventures as of the dates thereof and the income or loss from these investments for the periods set forth below.
(Amounts in thousands) |
| Paramount |
|
| As of |
|
|
| Paramount |
|
| As of |
| ||||||||||
Our Share of Investments: |
| Ownership |
|
| June 30, 2021 |
|
| December 31, 2020 |
|
|
| Ownership |
|
| March 31, 2022 |
|
| December 31, 2021 |
| ||||
712 Fifth Avenue (1) |
| 50.0% |
|
| $ | - |
|
| $ | - |
|
|
| 50.0% |
|
| $ | - |
|
| $ | - |
|
Market Center |
| 67.0% |
|
|
| 189,985 |
|
|
| 192,306 |
|
|
| 67.0% |
|
|
| 193,462 |
|
|
| 185,344 |
|
55 Second Street (2) |
| 44.1% |
|
|
| 90,829 |
|
|
| 92,298 |
|
|
| 44.1% |
|
|
| 87,605 |
|
|
| 88,284 |
|
111 Sutter Street |
| 49.0% |
|
|
| 36,634 |
|
|
| 37,818 |
|
|
| 49.0% |
|
|
| 34,425 |
|
|
| 35,182 |
|
1600 Broadway (2)(3) |
| 9.2% |
|
|
| 9,753 |
|
|
| - |
| ||||||||||||
60 Wall Street (2) |
| 5.0% |
|
|
| 19,198 |
|
|
| 19,164 |
|
|
| 5.0% |
|
|
| 19,253 |
|
|
| 19,230 |
|
One Steuart Lane (2) |
| 35.0% (3) |
|
|
| 67,292 |
|
|
| 67,505 |
|
|
| 35.0% (4) |
|
|
| 75,159 |
|
|
| 76,428 |
|
Oder-Center, Germany (2) |
| 9.5% |
|
|
| 3,626 |
|
|
| 3,633 |
|
|
| 9.5% |
|
|
| 3,562 |
|
|
| 3,628 |
|
Investments in unconsolidated joint ventures | Investments in unconsolidated joint ventures |
|
| $ | 407,564 |
|
| $ | 412,724 |
|
| Investments in unconsolidated joint ventures |
|
| $ | 423,219 |
|
| $ | 408,096 |
|
|
|
|
| For the Three Months Ended |
|
| For the Six Months Ended |
|
|
|
|
|
| |||||||||||||||
(Amounts in thousands) | (Amounts in thousands) | June 30, |
|
| June 30, |
| (Amounts in thousands) | For the Three Months Ended March 31, |
| |||||||||||||||||||
Our Share of Net Loss: | 2021 |
|
| 2020 |
|
| 2021 |
|
| 2020 |
| |||||||||||||||||
Our Share of Net Income (Loss): | Our Share of Net Income (Loss): | 2022 |
|
| 2021 |
| ||||||||||||||||||||||
712 Fifth Avenue (1) | 712 Fifth Avenue (1) | $ | (11,128 | ) |
| $ | 229 |
|
| $ | (11,128 | ) |
| $ | 229 |
| 712 Fifth Avenue (1) | $ | - |
|
| $ | - |
| ||||
Market Center | Market Center |
| (2,914 | ) |
|
| (3,070 | ) |
|
| (7,044 | ) |
|
| (5,924 | ) | Market Center |
| (2,363 | ) |
|
| (4,130 | ) | ||||
55 Second Street (2) | 55 Second Street (2) |
| (847 | ) |
|
| (662 | ) |
|
| (1,469 | ) |
|
| (1,346 | ) | 55 Second Street (2) |
| (679 | ) |
|
| (622 | ) | ||||
111 Sutter Street | 111 Sutter Street |
| (699 | ) |
|
| (919 | ) |
|
| (1,189 | ) |
|
| (1,529 | ) | 111 Sutter Street |
| (778 | ) |
|
| (490 | ) | ||||
1600 Broadway (2)(3) | 1600 Broadway (2)(3) |
| (48 | ) |
|
| - |
| ||||||||||||||||||||
60 Wall Street (2) | 60 Wall Street (2) |
| 17 |
|
|
| (9 | ) |
|
| 34 |
|
|
| (91 | ) | 60 Wall Street (2) |
| 12 |
|
|
| 17 |
| ||||
One Steuart Lane (2) | One Steuart Lane (2) |
| (132 | ) |
|
| (1,549 | ) |
|
| (225 | ) |
|
| (1,550 | ) | One Steuart Lane (2) |
| (1,269 | ) |
|
| (93 | ) | ||||
Oder-Center, Germany (2) | Oder-Center, Germany (2) |
| (14 | ) |
|
| 25 |
|
|
| (12 | ) |
|
| 35 |
| Oder-Center, Germany (2) |
| 12 |
|
|
| 2 |
| ||||
Loss from unconsolidated joint ventures | Loss from unconsolidated joint ventures | $ | (15,717 | ) |
| $ | (5,955 | ) |
| $ | (21,033 | ) |
| $ | (10,176 | ) | Loss from unconsolidated joint ventures | $ | (5,113 | ) |
| $ | (5,316 | ) |
(1) | At December 31, |
(2) | As of |
(3) | Acquired on February 24, 2022. |
(4) | Represents our consolidated Residential Development Fund’s (“RDF”) economic interest in One Steuart |
1311
PARAMOUNT GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
The following tables provide the combined summarized financial information of our unconsolidated joint ventures as of the dates thereof and for the periods set forth below.
(Amounts in thousands) | As of |
| |||||
Balance Sheets: | March 31, 2022 |
|
| December 31, 2021 |
| ||
Real estate, net | $ | 2,387,526 |
|
| $ | 2,246,152 |
|
Cash and cash equivalents and restricted cash |
| 224,149 |
|
|
| 216,910 |
|
Intangible assets, net |
| 85,553 |
|
|
| 58,590 |
|
For-sale residential condominium units (1) |
| 346,054 |
|
|
| 359,638 |
|
Other assets |
| 66,040 |
|
|
| 46,646 |
|
Total assets | $ | 3,109,322 |
|
| $ | 2,927,936 |
|
|
|
|
|
|
|
|
|
Notes and mortgages payable, net | $ | 1,870,635 |
|
| $ | 1,791,404 |
|
Intangible liabilities, net |
| 16,358 |
|
|
| 18,397 |
|
Other liabilities |
| 61,459 |
|
|
| 61,097 |
|
Total liabilities |
| 1,948,452 |
|
|
| 1,870,898 |
|
Equity |
| 1,160,870 |
|
|
| 1,057,038 |
|
Total liabilities and equity | $ | 3,109,322 |
|
| $ | 2,927,936 |
|
(Amounts in thousands) | As of |
| |||||
Balance Sheets: | June 30, 2021 |
|
| December 31, 2020 |
| ||
Real estate, net | $ | 2,709,681 |
|
| $ | 2,674,858 |
|
Cash and cash equivalents and restricted cash |
| 173,497 |
|
|
| 120,149 |
|
Intangible assets, net |
| 83,907 |
|
|
| 110,307 |
|
Other assets |
| 45,704 |
|
|
| 45,761 |
|
Total assets | $ | 3,012,789 |
|
| $ | 2,951,075 |
|
|
|
|
|
|
|
|
|
Notes and mortgages payable, net | $ | 1,871,120 |
|
| $ | 1,801,084 |
|
Intangible liabilities, net |
| 22,524 |
|
|
| 26,772 |
|
Other liabilities |
| 71,917 |
|
|
| 87,575 |
|
Total liabilities |
| 1,965,561 |
|
|
| 1,915,431 |
|
Equity |
| 1,047,228 |
|
|
| 1,035,644 |
|
Total liabilities and equity | $ | 3,012,789 |
|
| $ | 2,951,075 |
|
|
|
|
|
|
|
|
| |||||||||||||||
(Amounts in thousands) | For the Three Months Ended June 30, |
|
| For the Six Months Ended June 30, |
| For the Three Months Ended March 31, |
| |||||||||||||||
Income Statements: | 2021 |
|
| 2020 |
|
| 2021 |
|
| 2020 |
| 2022 |
|
| 2021 |
| ||||||
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rental revenue | $ | 57,195 |
|
| $ | 59,136 |
|
| $ | 113,723 |
|
| $ | 121,583 |
| $ | 57,520 |
|
| $ | 56,528 |
|
Other income |
| 581 |
|
|
| 777 |
|
|
| 1,338 |
|
|
| 1,524 |
|
| 18,582 |
| (2) |
| 757 |
|
Total revenues |
| 57,776 |
|
|
| 59,913 |
|
|
| 115,061 |
|
|
| 123,107 |
|
| 76,102 |
|
|
| 57,285 |
|
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating |
| 25,467 |
|
|
| 29,642 |
|
|
| 50,577 |
|
|
| 55,582 |
|
| 42,508 |
| (2) |
| 25,110 |
|
Depreciation and amortization |
| 27,014 |
|
|
| 29,099 |
|
|
| 54,467 |
|
|
| 59,281 |
|
| 26,898 |
|
|
| 27,453 |
|
Total expenses |
| 52,481 |
|
|
| 58,741 |
|
|
| 105,044 |
|
|
| 114,863 |
|
| 69,406 |
|
|
| 52,563 |
|
Other income (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest and other (loss) income |
| (23 | ) |
|
| (29 | ) |
|
| (56 | ) |
|
| 48 |
| |||||||
Interest and other loss |
| (42 | ) |
|
| (33 | ) | |||||||||||||||
Interest and debt expense |
| (13,892 | ) |
|
| (14,305 | ) |
|
| (27,632 | ) |
|
| (30,214 | ) |
| (17,598 | ) |
|
| (13,740 | ) |
Net loss before income taxes |
| (8,620 | ) |
|
| (13,162 | ) |
|
| (17,671 | ) |
|
| (21,922 | ) |
| (10,944 | ) |
|
| (9,051 | ) |
Income tax benefit (expense) |
| 1 |
|
|
| (5 | ) |
|
| (15 | ) |
|
| (44 | ) | |||||||
Income tax expense |
| (29 | ) |
|
| (16 | ) | |||||||||||||||
Net loss | $ | (8,619 | ) |
| $ | (13,167 | ) |
| $ | (17,686 | ) |
| $ | (21,966 | ) | $ | (10,973 | ) |
| $ | (9,067 | ) |
| Represents the cost of residential condominium units at One Steuart Lane that are available for sale. |
(2) | Includes proceeds and cost of sales from the sale of residential condominium units at One Steuart Lane. |
12
PARAMOUNT GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
4. | Investments in Unconsolidated Real Estate Funds |
We are the general partner and investment manager of Paramount Group Real Estate Fund VIII, LP (“Fund VIII”) and Paramount Group Real Estate Fund X, LP and its parallel fund, Paramount Group Real Estate Fund X-ECI, LP, (collectively, “Fund X”), our Alternative Investment Funds, which invest in mortgage and mezzanine loans and preferred equity investments. While Fund VIII’s investment period has ended, Fund X’s investment period ends in December 2025. As of June 30, 2021,March 31, 2022, Fund X has invested $78,791,000 of the $192,000,000 of capital committed.committed, of which $81,925,000 has been invested and $101,117,000 has been reserved for future funding. Our ownership interest in Fund VIII and Fund X was approximately 1.3% and 7.8%, respectively, as of June 30, 2021.March 31, 2022.
As of June 30, 2021March 31, 2022 and December 31, 2020,2021, our share of the investments in the above mentioned unconsolidated real estate funds aggregated $12,979,000$11,573,000 and $12,917,000, respectively,$11,421,000, respectively. We recognized income of $170,000 and we recognized $148,000 and $89,000$180,000 for our share of income in the three months ended June 30,March 31, 2022 and 2021, and 2020, respectively, and $328,000 and $141,000 for our share of income in the six months ended June 30, 2021 and 2020, respectively.
14
PARAMOUNT GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
|
| Intangible Assets and Liabilities |
The following tables summarize 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 the dates thereof and for the periods set forth below.
| As of |
| As of |
| ||||||||||
(Amounts in thousands) | June 30, 2021 |
|
| December 31, 2020 |
| March 31, 2022 |
|
| December 31, 2021 |
| ||||
Intangible assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross amount | $ | 381,169 |
|
| $ | 436,851 |
| $ | 338,930 |
|
| $ | 371,555 |
|
Accumulated amortization |
| (245,405 | ) |
|
| (283,332 | ) |
| (226,822 | ) |
|
| (252,142 | ) |
| $ | 135,764 |
|
| $ | 153,519 |
| $ | 112,108 |
|
| $ | 119,413 |
|
Intangible liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross amount | $ | 156,478 |
|
| $ | 163,977 |
| $ | 138,726 |
|
| $ | 151,118 |
|
Accumulated amortization |
| (106,086 | ) |
|
| (107,981 | ) |
| (95,530 | ) |
|
| (105,790 | ) |
| $ | 50,392 |
|
| $ | 55,996 |
| $ | 43,196 |
|
| $ | 45,328 |
|
| For the Three Months Ended |
|
| For the Six Months Ended |
|
|
| |||||||||||||||
| June 30, |
|
| June 30, |
| For the Three Months Ended March 31, |
| |||||||||||||||
(Amounts in thousands) | 2021 |
|
| 2020 |
|
| 2021 |
|
| 2020 |
| 2022 |
|
| 2021 |
| ||||||
Amortization of above and below-market leases, net (component of "rental revenue") | $ | 758 |
|
| $ | 1,235 |
|
| $ | 1,613 |
|
| $ | 2,778 |
| $ | 358 |
|
| $ | 855 |
|
Amortization of acquired in-place leases (component of "depreciation and amortization") |
| 6,551 |
|
|
| 9,190 |
|
|
| 13,770 |
|
|
| 18,682 |
|
| 5,531 |
|
|
| 7,219 |
|
The following table sets forth annual amortization of acquired above and below-market leases, net and amortization of acquired in-place leases for the nine-month period from April 1, 2022 through December 31, 2022, and each of the five succeeding years commencing from January 1, 2022.2023.
(Amounts in thousands) For the Year Ending December 31, |
| Above and Below-Market Leases, Net |
|
| In-Place Leases |
|
| Above and Below-Market Leases, Net |
|
| In-Place Leases |
| ||||
2022 |
| $ | 1,345 |
|
| $ | 21,644 |
|
| $ | 985 |
|
| $ | 16,113 |
|
2023 |
|
| 5,080 |
|
|
| 17,705 |
|
|
| 5,080 |
|
|
| 17,705 |
|
2024 |
|
| 6,020 |
|
|
| 14,248 |
|
|
| 6,020 |
|
|
| 14,248 |
|
2025 |
|
| 4,674 |
|
|
| 10,451 |
|
|
| 4,674 |
|
|
| 10,451 |
|
2026 |
|
| 2,801 |
|
|
| 7,896 |
|
|
| 2,801 |
|
|
| 7,896 |
|
2027 |
|
| 2,489 |
|
|
| 7,252 |
|
1513
PARAMOUNT GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
| Debt |
The following table summarizes our consolidated outstanding debt.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Interest Rate |
|
|
|
|
|
|
|
|
| Interest Rate |
|
|
|
|
| ||||||||||||
| Maturity |
| Fixed/ |
| as of |
|
| As of |
|
| Maturity |
| Fixed/ |
| as of |
|
| As of |
|
| ||||||||||||
(Amounts in thousands) | Date |
| Variable Rate |
| June 30, 2021 |
|
| June 30, 2021 |
|
| December 31, 2020 |
|
| Date |
| Variable Rate |
| March 31, 2022 |
|
| March 31, 2022 |
|
| December 31, 2021 |
|
| ||||||
Notes and mortgages payable: | Notes and mortgages payable: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Notes and mortgages payable: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1633 Broadway (1) | Dec-2029 |
| Fixed |
|
| 2.99 | % |
| $ | 1,250,000 |
|
| $ | 1,250,000 |
|
| Dec-2029 |
| Fixed |
|
| 2.99 | % |
| $ | 1,250,000 |
|
| $ | 1,250,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
One Market Plaza (1) | Feb-2024 |
| Fixed |
|
| 4.03 | % |
|
| 975,000 |
|
|
| 975,000 |
|
| Feb-2024 |
| Fixed |
|
| 4.03 | % |
|
| 975,000 |
|
|
| 975,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1301 Avenue of the Americas | 1301 Avenue of the Americas |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 1301 Avenue of the Americas |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Nov-2021 |
| Fixed |
|
| 3.05 | % |
|
| 500,000 |
|
|
| 500,000 |
|
| Aug-2026 |
| Fixed (2) |
|
| 2.46 | % |
|
| 500,000 |
|
|
| 500,000 |
|
|
| Nov-2021 |
| L + 180 bps |
|
| 1.93 | % |
|
| 350,000 |
|
|
| 350,000 |
|
| Aug-2026 |
| L + 356 bps (3) |
|
| 3.85 | % |
|
| 360,000 |
|
|
| 360,000 |
|
|
|
|
|
|
|
| 2.59 | % |
|
| 850,000 |
|
|
| 850,000 |
|
|
|
|
|
|
| 3.04 | % |
|
| 860,000 |
|
|
| 860,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31 West 52nd Street | June-2026 |
| Fixed |
|
| 3.80 | % |
|
| 500,000 |
|
|
| 500,000 |
|
| Jun-2026 |
| Fixed |
|
| 3.80 | % |
|
| 500,000 |
|
|
| 500,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
300 Mission Street (1) | Oct-2023 |
| Fixed |
|
| 3.65 | % |
|
| 256,864 |
|
|
| 244,434 |
|
| Oct-2023 |
| Fixed |
|
| 3.65 | % |
|
| 273,000 |
|
|
| 273,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total notes and mortgages payable | Total notes and mortgages payable |
|
| 3.32 | % |
|
| 3,831,864 |
|
|
| 3,819,434 |
|
| Total notes and mortgages payable |
|
| 3.42 | % |
|
| 3,858,000 |
|
|
| 3,858,000 |
|
| ||||
Less: unamortized deferred financing costs | Less: unamortized deferred financing costs |
|
|
|
|
|
| (15,105 | ) |
|
| (18,695 | ) |
| Less: unamortized deferred financing costs |
|
|
|
|
|
| (21,206 | ) |
|
| (22,380 | ) |
| ||||
Total notes and mortgages payable, net | Total notes and mortgages payable, net |
|
|
|
|
| $ | 3,816,759 |
|
| $ | 3,800,739 |
|
| Total notes and mortgages payable, net |
|
|
|
|
| $ | 3,836,794 |
|
| $ | 3,835,620 |
|
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$1.0 Billion Revolving Credit Facility | Jan-2022 (3) |
| L + 115 bps |
| n/a |
|
| $ | - |
|
| $ | - |
|
| |||||||||||||||||
$750 Million Revolving Credit Facility | Mar-2026 |
| SOFR + 115 bps |
| n/a |
|
| $ | - |
|
| $ | - |
|
|
(1) | Our ownership interests in 1633 Broadway, One Market Plaza and 300 Mission Street are 90.0%, 49.0% and 31.1%, respectively. |
(2) |
|
(3) |
|
14
PARAMOUNT GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
7. | Derivative Instruments and Hedging Activities |
We have entered into interest rate swap agreements with an aggregate notional amount of $500,000,000 to fix LIBOR at 0.46% through August 2024. We also entered into interest rate cap agreements with an aggregate notional amount of $360,000,000 to cap LIBOR at 2.00% through August 2023. These interest rate swaps and interest rate caps are designated as cash flow hedges and therefore changes in their fair values are recognized in other comprehensive income or loss (outside of earnings). We recognized other comprehensive income of $18,545,000 for the three months ended March 31, 2022, from the changes in fair value of these derivative financial instruments. See Note 9, Accumulated Other Comprehensive Income. During the next twelve months, we estimate that $7,347,000 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 designated as cash flow hedges.
|
| Notional |
|
| Effective |
| Maturity |
| Benchmark |
| Strike |
|
| Fair Value as of |
| |||||||
Property |
| Amount |
|
| Date |
| Date |
| Rate |
| Rate |
|
| March 31, 2022 |
|
| December 31, 2021 |
| ||||
(Amounts in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
1301 Avenue of the Americas |
| $ | 500,000 |
|
| Jul-2021 |
| Aug-2024 |
| LIBOR |
|
| 0.46 | % |
| $ | 22,760 |
|
| $ | 6,691 |
|
Total interest rate swap assets designated as cash flow hedges (included in "other assets") | $ | 22,760 |
|
| $ | 6,691 |
|
|
| Notional |
|
| Effective |
| Maturity |
| Benchmark |
| Strike |
|
| Fair Value as of |
| |||||||
Property |
| Amount |
|
| Date |
| Date |
| Rate |
| Rate |
|
| March 31, 2022 |
|
| December 31, 2021 |
| ||||
(Amounts in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
1301 Avenue of the Americas |
| $ | 360,000 |
|
| Jul-2021 |
| Aug-2023 |
| LIBOR |
|
| 2.00 | % |
| $ | 2,782 |
|
| $ | 306 |
|
Total interest rate cap assets designated as cash flow hedges (included in "other assets") | $ | 2,782 |
|
| $ | 306 |
|
We have agreements with various derivative counterparties that contain provisions wherein a default on our indebtedness could be deemed a default on our derivative obligations, which would require us to settle our derivative obligations for cash. As of March 31, 2022, we did not have any obligations relating to our interest rate swaps or interest rate caps that contained such provisions.
8. | Equity |
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. During 2020, we repurchased 13,813,158 common shares at a weighted average price of $8.69 per share, or $120,000,000 in the aggregate, of which 10,856,865 common shares were repurchased in the six months ended June 30, 2020, at a weighted average price of $9.21 per share, or $100,000,000 in the aggregate. We did not repurchasehave 0t repurchased any shares in the six months ended June 30, 2021.since December 2020. We have $80,000,000 available for future repurchases under the existing program. The amount and timing of future repurchases, if any, will depend on a number of factors, including, the price and availability of our shares, trading volume, general market conditions and available funding. The stock repurchase program may be suspended or discontinued at any time.
1615
PARAMOUNT GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
| Accumulated Other Comprehensive |
The following table sets forth changes in accumulated other comprehensive lossincome by component for the three and six months ended June 30,March 31, 2022 and 2021, and 2020, including amounts attributable to noncontrolling interests in the Operating Partnership.
|
| For the Three Months Ended |
|
| For the Six Months Ended |
| ||||||||||
|
| June 30, |
|
| June 30, |
| ||||||||||
(Amounts in thousands) |
| 2021 |
|
| 2020 |
|
| 2021 |
|
| 2020 |
| ||||
Amount of (loss) income related to unconsolidated joint ventures recognized in other comprehensive loss (1) |
| $ | (637 | ) |
| $ | (2,104 | ) |
|
| 2,785 |
|
|
| (16,672 | ) |
Amounts reclassified from accumulated other comprehensive loss increasing loss from unconsolidated joint ventures (1) |
|
| 1,002 |
|
|
| 408 |
|
|
| 1,964 |
|
|
| 315 |
|
|
|
|
| ||||||
|
| For the Three Months Ended March 31, |
| ||||||
(Amounts in thousands) |
| 2022 |
|
|
| 2021 |
| ||
Amount of income related to the cash flow hedges recognized in other comprehensive income |
| $ | 18,173 |
| (1) |
| $ | - |
|
Amounts reclassified from accumulated other comprehensive income increasing interest and debt expense |
|
| 372 |
| (1) |
|
| - |
|
Amount of income related to unconsolidated joint ventures recognized in other comprehensive income (2) |
|
| 9,495 |
|
|
|
| 3,422 |
|
Amounts reclassified from accumulated other comprehensive income increasing loss from unconsolidated joint ventures (2) |
|
| 958 |
|
|
|
| 962 |
|
| Represents amounts related to interest rate swaps with an aggregate notional value of $500,000 and interest rate caps with an aggregate notional value of $360,000, which were designated as cash flow hedges. |
(2) | Primarily represents amounts related to an interest rate swap with a notional value of $402,000, which was designated as a cash flow hedge. |
|
10. | Noncontrolling Interests |
Consolidated Joint Ventures
Noncontrolling interests in consolidated joint ventures consist of equity interests held by third parties in 1633 Broadway, One Market Plaza and 300 Mission Street. As of June 30, 2021March 31, 2022 and December 31, 2020,2021, noncontrolling interests in our consolidated joint ventures aggregated $442,428,000$417,577,000 and $437,161,000,$428,833,000, respectively.
Consolidated Real Estate Fund
Noncontrolling interests in our consolidated real estate fund consists of equity interests held by third parties in our Residential Development Fund. As of June 30, 2021March 31, 2022 and December 31, 2020,2021, the noncontrolling interest in our consolidated real estate fund aggregated $79,085,000$80,909,000 and $79,017,000,$81,925,000, 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 June 30, 2021March 31, 2022 and December 31, 2020,2021, noncontrolling interests in the Operating Partnership on our consolidated balance sheets had a carrying amount of $358,331,000$366,536,000 and $346,379,000,$356,111,000, respectively, and a redemption value of $219,516,000$243,569,000 and $187,640,000,$181,315,000, respectively, based on the closing share price of our common stock on the New York Stock Exchange.Exchange at the end of each period.
1716
PARAMOUNT GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
11. | Variable Interest Entities (“VIEs”) |
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 deemed to be the primary beneficiary.
Consolidated VIEs
We are the sole general partner of, and owned approximately 91.0%90.8% of, the Operating Partnership as of June 30, 2021.March 31, 2022. The Operating Partnership is considered a VIE and is consolidated in our consolidated financial statements. Since we conduct our business through and substantially all of our interests are held by the Operating Partnership, the assets and liabilities on our consolidated financial statements represent the assets and liabilities of the Operating Partnership. As of June 30, 2021March 31, 2022 and December 31, 2020,2021, the Operating Partnership held interests in consolidated VIEs owning properties and a real estate fund that were determined to be VIEs. 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 summarizes the assets and liabilities of consolidated VIEs of the Operating Partnership.
|
| As of |
|
| As of |
| ||||||||||
(Amounts in thousands) |
| June 30, 2021 |
|
| December 31, 2020 |
|
| March 31, 2022 |
|
| December 31, 2021 |
| ||||
Real estate, net |
| $ | 3,454,201 |
|
| $ | 3,470,766 |
|
| $ | 3,398,283 |
|
| $ | 3,415,735 |
|
Cash and cash equivalents and restricted cash |
|
| 178,873 |
|
|
| 134,647 |
|
|
| 176,487 |
|
|
| 198,154 |
|
Investments in unconsolidated joint ventures |
|
| 67,292 |
|
|
| 67,505 |
|
|
| 75,159 |
|
|
| 76,428 |
|
Accounts and other receivables |
|
| 5,236 |
|
|
| 6,871 |
|
|
| 5,199 |
|
|
| 6,801 |
|
Deferred rent receivable |
|
| 202,371 |
|
|
| 192,401 |
|
|
| 195,640 |
|
|
| 197,794 |
|
Deferred charges, net |
|
| 52,008 |
|
|
| 55,156 |
|
|
| 52,101 |
|
|
| 53,013 |
|
Intangible assets, net |
|
| 69,171 |
|
|
| 76,545 |
|
|
| 59,418 |
|
|
| 62,380 |
|
Other assets |
|
| 24,619 |
|
|
| 21,496 |
|
|
| 25,322 |
|
|
| 15,551 |
|
Total VIE assets |
| $ | 4,053,771 |
|
| $ | 4,025,387 |
|
| $ | 3,987,609 |
|
| $ | 4,025,856 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes and mortgages payable, net |
| $ | 2,470,718 |
|
| $ | 2,457,272 |
|
| $ | 2,488,379 |
|
| $ | 2,487,871 |
|
Accounts payable and accrued expenses |
|
| 54,186 |
|
|
| 51,590 |
|
|
| 54,127 |
|
|
| 54,738 |
|
Intangible liabilities, net |
|
| 30,504 |
|
|
| 33,566 |
|
|
| 26,395 |
|
|
| 27,674 |
|
Other liabilities |
|
| 5,412 |
|
|
| 4,486 |
|
|
| 6,454 |
|
|
| 6,427 |
|
Total VIE liabilities |
| $ | 2,560,820 |
|
| $ | 2,546,914 |
|
| $ | 2,575,355 |
|
| $ | 2,576,710 |
|
Unconsolidated VIEs
As of June 30, 2021,March 31, 2022, the Operating Partnership held variable interests in entities that own our unconsolidated real estate funds that were deemed to be VIEs. The following table summarizes our investments in these unconsolidated real estate funds and the maximum risk of loss from these investments.
|
| As of |
|
|
| As of |
|
| ||||||||||
(Amounts in thousands) |
| June 30, 2021 |
|
| December 31, 2020 |
|
|
| March 31, 2022 |
|
| December 31, 2021 |
|
| ||||
Investments |
| $ | 12,979 |
|
| $ | 12,917 |
|
|
| $ | 11,573 |
|
| $ | 11,421 |
|
|
Asset management fees and other receivables |
|
| 236 |
|
|
| 561 |
|
|
|
| 49,330 |
| (1) |
| 9 |
|
|
Maximum risk of loss |
| $ | 13,215 |
|
| $ | 13,478 |
|
|
| $ | 60,903 |
|
| $ | 11,430 |
|
|
(1) | Includes $49,316 note receivable from Fund X. See Note 19, Related Parties. |
18
17
PARAMOUNT GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
12. | Fair Value Measurements |
Financial Assets Measured at Fair Value
The following table summarizes the fair value of our financial assets that are measured at fair value on our consolidated balance sheets as of the dates set forth below, based on their levels in the fair value hierarchy.
| As of June 30, 2021 |
| As of March 31, 2022 |
| ||||||||||||||||||||||||||
(Amounts in thousands) | Total |
|
| Level 1 |
|
| Level 2 |
|
| Level 3 |
| Total |
|
| Level 1 |
|
| Level 2 |
|
| Level 3 |
| ||||||||
Marketable securities (included in "other assets") | $ | 16,839 |
|
| $ | 16,839 |
|
| $ | - |
|
| $ | - |
| |||||||||||||||
Interest rate swap assets (included in "other assets") | $ | 22,760 |
|
| $ | - |
|
| $ | 22,760 |
|
| $ | - |
| |||||||||||||||
Interest rate cap assets (included in "other assets") |
| 2,782 |
|
|
| - |
|
|
| 2,782 |
|
|
| - |
| |||||||||||||||
Total assets | $ | 16,839 |
|
| $ | 16,839 |
|
| $ | - |
|
| $ | - |
| $ | 25,542 |
|
| $ | - |
|
| $ | 25,542 |
|
| $ | - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| As of December 31, 2020 |
| As of December 31, 2021 |
| ||||||||||||||||||||||||||
(Amounts in thousands) | Total |
|
| Level 1 |
|
| Level 2 |
|
| Level 3 |
| Total |
|
| Level 1 |
|
| Level 2 |
|
| Level 3 |
| ||||||||
Marketable securities (included in "other assets") | $ | 17,178 |
|
| $ | 17,178 |
|
| $ | - |
|
| $ | - |
| |||||||||||||||
Interest rate swap assets (included in "other assets") | $ | 6,691 |
|
| $ | - |
|
| $ | 6,691 |
|
| $ | - |
| |||||||||||||||
Interest rate cap assets (included in "other assets") |
| 306 |
|
|
| - |
|
|
| 306 |
|
|
| - |
| |||||||||||||||
Total assets | $ | 17,178 |
|
| $ | 17,178 |
|
| $ | - |
|
| $ | - |
| $ | 6,997 |
|
| $ | - |
|
| $ | 6,997 |
|
| $ | - |
|
Financial Liabilities Not Measured at Fair Value
Financial liabilities not measured at fair value on our consolidated balance sheets consist of notes and mortgages payable, and the revolving credit facility. The following table summarizes the carrying amounts and fair value of these financial instruments as of the dates set forth below.
| As of June 30, 2021 |
|
| As of December 31, 2020 |
| As of March 31, 2022 |
|
| As of December 31, 2021 |
| ||||||||||||||||||||
(Amounts in thousands) | Carrying Amount |
|
| Fair Value |
|
| Carrying Amount |
|
| Fair Value |
| Carrying Amount |
|
| Fair Value |
|
| Carrying Amount |
|
| Fair Value |
| ||||||||
Notes and mortgages payable | $ | 3,831,864 |
|
| $ | 3,878,237 |
|
| $ | 3,819,434 |
|
| $ | 3,871,644 |
| $ | 3,858,000 |
|
| $ | 3,776,544 |
|
| $ | 3,858,000 |
|
| $ | 3,893,252 |
|
Revolving credit facility |
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
Total liabilities | $ | 3,831,864 |
|
| $ | 3,878,237 |
|
| $ | 3,819,434 |
|
| $ | 3,871,644 |
| $ | 3,858,000 |
|
| $ | 3,776,544 |
|
| $ | 3,858,000 |
|
| $ | 3,893,252 |
|
1918
PARAMOUNT GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
13. | Leases |
We lease office, retail and storage space to tenants, primarily under non-cancellable operating leases which generally have terms ranging from five to fifteen years. Most of our leases provide tenants with extension options at either fixed or market rates and few of our leases provide tenants with options to early terminate, but such options generally impose an economic penalty on the tenant upon exercising. Rental revenue is recognized in accordance with ASC Topic 842, Leases, and includes (i) fixed payments of cash rents, which represents revenue each tenant pays in accordance with the terms of its respective lease and that is recognized on a straight-line basis over the non-cancellable term of the lease, and includes the effects of rent steps and rent abatements under the leases, (ii) variable payments of tenant reimbursements, which are recoveries of all or a portion of the operating expenses and real estate taxes of the property and is recognized in the same period as the expenses are incurred, (iii) amortization of acquired above and below-market leases, net and (iv) lease termination income.
The following table sets forth the details of our rental revenue.
| For the Three Months Ended June 30, |
|
| For the Six Months Ended June 30, |
|
| ||||||||||
(Amounts in thousands) | 2021 |
|
| 2020 |
|
| 2021 |
|
| 2020 |
|
| ||||
Rental revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed | $ | 159,641 |
|
| $ | 153,868 |
| (1) | $ | 320,270 |
|
| $ | 314,544 |
| (1) |
Variable |
| 14,987 |
| (2) |
| 10,121 |
|
|
| 27,504 |
| (2) |
| 24,870 |
|
|
Total rental revenue | $ | 174,628 |
|
| $ | 163,989 |
|
| $ | 347,774 |
|
| $ | 339,414 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
| For the Three Months Ended March 31, |
| |||||||||
(Amounts in thousands) | 2022 |
|
| 2021 |
| ||||||
Rental revenue: |
|
|
|
|
|
|
| ||||
Fixed | $ | 154,777 |
|
| $ | 160,629 |
| ||||
Variable |
| 15,145 |
|
|
| 12,517 |
| ||||
Total rental revenue | $ | 169,922 |
|
| $ | 173,146 |
|
The following table is a schedule of future undiscounted cash flows under non-cancellable operating leases in effect as of June 30, 2021,March 31, 2022, for the six-monthnine-month period from JulyApril 1, 20212022 through December 31, 2021,2022, and each of the five succeeding years and thereafter commencing January 1, 2022.2023.
(Amounts in thousands) | (Amounts in thousands) |
|
|
| (Amounts in thousands) |
|
|
|
2021 |
| $ | 320,578 |
| ||||
2022 |
|
| 632,390 |
|
| $ | 477,510 |
|
2023 |
|
| 607,310 |
|
|
| 628,122 |
|
2024 |
|
| 580,419 |
|
|
| 621,054 |
|
2025 |
|
| 522,620 |
|
|
| 566,419 |
|
2026 |
|
| 426,925 |
|
|
| 470,246 |
|
2027 |
|
| 402,583 |
| ||||
Thereafter |
|
| 2,007,828 |
|
|
| 1,957,941 |
|
Total |
| $ | 5,098,070 |
|
| $ | 5,123,875 |
|
2019
PARAMOUNT GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
14. Fee and Other Income
The following table sets forth the details of our fee and other income.
|
|
|
|
|
|
| |||||||||||||||||||||
|
| For the Three Months Ended June 30, |
|
| For the Six Months Ended June 30, |
|
| For the Three Months Ended March 31, |
| ||||||||||||||||||
(Amounts in thousands) | (Amounts in thousands) | 2021 |
|
| 2020 |
|
| 2021 |
|
| 2020 |
| (Amounts in thousands) | 2022 |
|
| 2021 |
| |||||||||
Fee income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Fee income: |
|
|
|
|
|
|
|
| ||
Asset management | Asset management | $ | 3,409 |
|
| $ | 3,571 |
|
| $ | 6,895 |
|
| $ | 7,092 |
| Asset management | $ | 2,885 |
|
| $ | 3,486 |
| |||
Property management |
|
| 2,085 |
|
|
| 2,239 |
|
|
| 4,281 |
|
|
| 4,689 |
| Property management |
|
| 2,219 |
|
|
| 2,196 |
| ||
Acquisition, disposition and leasing |
| 439 |
|
|
| - |
|
|
| 439 |
|
|
| - |
| ||||||||||||
Other |
| 268 |
|
|
| 399 |
|
|
| 1,256 |
|
|
| 758 |
| ||||||||||||
Acquisition, disposition, leasing and other | Acquisition, disposition, leasing and other |
| 6,884 |
|
|
| 988 |
| |||||||||||||||||||
Total fee income | Total fee income |
| 6,201 |
|
|
| 6,209 |
|
|
| 12,871 |
|
|
| 12,539 |
| Total fee income |
| 11,988 |
|
|
| 6,670 |
| |||
Other income (1) | Other income (1) |
| 1,440 |
|
|
| 920 |
|
|
| 2,790 |
|
|
| 3,151 |
| Other income (1) |
| 1,775 |
|
|
| 1,350 |
| |||
Total fee and other income | Total fee and other income | $ | 7,641 |
|
| $ | 7,129 |
|
| $ | 15,661 |
|
| $ | 15,690 |
| Total fee and other income | $ | 13,763 |
|
| $ | 8,020 |
|
(1) | Primarily comprised of (i) tenant requested services, including cleaning, overtime heating and cooling and (ii) parking income. |
15. | Interest and Other Income, net |
The following table sets forth the details of interest and other income, net.
|
|
|
| |||||||||||||||||||||
|
| For the Three Months Ended June 30, |
|
| For the Six Months Ended June 30, |
|
| For the Three Months Ended March 31, |
| |||||||||||||||
(Amounts in thousands) |
| 2021 |
|
| 2020 |
|
| 2021 |
|
| 2020 |
|
| 2022 |
|
| 2021 |
| ||||||
Interest income, net |
| $ | 397 |
|
| $ | 428 |
|
| $ | 787 |
|
| $ | 1,416 |
|
| $ | 231 |
|
| $ | 390 |
|
Mark-to-market of investments in our deferred compensation plans (1) |
|
| 673 |
|
|
| 1,824 |
|
|
| 1,585 |
|
|
| (160 | ) |
|
| - |
|
|
| 912 |
|
Total interest and other income, net |
| $ | 1,070 |
|
| $ | 2,252 |
|
| $ | 2,372 |
|
| $ | 1,256 |
|
| $ | 231 |
|
| $ | 1,302 |
|
(1) | The change resulting from the mark-to-market of the deferred compensation plan assets is entirely offset by the change in deferred compensation plan liabilities, which is included as a component of “general and administrative” expenses on our consolidated statements of income. In December 2021, the deferred compensation plan was terminated and the net proceeds were distributed to the plan participants. |
16. | Interest and Debt Expense |
The following table sets forth the details of interest and debt expense.
|
|
|
| |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||
|
| For the Three Months Ended June 30, |
|
| For the Six Months Ended June 30, |
|
| For the Three Months Ended March 31, |
| |||||||||||||||
(Amounts in thousands) |
| 2021 |
|
| 2020 |
|
| 2021 |
|
| 2020 |
|
| 2022 |
|
| 2021 |
| ||||||
Interest expense |
| $ | 32,593 |
|
| $ | 33,690 |
|
| $ | 65,013 |
|
| $ | 67,991 |
|
| $ | 32,739 |
|
| $ | 32,420 |
|
Amortization of deferred financing costs |
|
| 2,321 |
|
|
| 2,319 |
|
|
| 4,640 |
|
|
| 4,637 |
|
|
| 1,538 |
|
|
| 2,319 |
|
Total interest and debt expense |
| $ | 34,914 |
|
| $ | 36,009 |
|
| $ | 69,653 |
|
| $ | 72,628 |
|
| $ | 34,277 |
|
| $ | 34,739 |
|
2120
PARAMOUNT GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
17. | Incentive Compensation |
Stock-Based Compensation
Our Amended and Restated 2014 Equity Incentive Plan provides for grants of equity awards to our executive officers, non-employee directors and employees in order to attract and motivate talent for which we compete. In addition, equity awards are an effective management retention tool as they vest over multiple years based on continued employment. Equity awards are granted in the form of (i) restricted stock and (ii) long-term incentive plan (“LTIP”) units, which represent a class of partnership interests in our Operating Partnership and are typically comprised of performance-based LTIP units, time-based LTIP units and time-based appreciation only LTIP (“AOLTIP”) units. We account for all stock-based compensation in accordance with ASC 718, Compensation – Stock Compensation. We recognized stock-based compensation expense of $4,743,000$6,562,000 and $4,241,000$5,486,000 for the three months ended June 30,March 31, 2022 and 2021, and 2020, respectively, and $10,229,000 and $9,638,000 for the six months ended June 30, 2021 and 2020, respectively, related to awards granted in prior periods, including the 2020 equity grantsawards granted on January 13, 2022 (“20202022 Equity Grants”) described below.
20202022 Equity Grants
20202022 Performance-Based Awards Program (“20202022 Performance Program”)
On January 11, 2021,13, 2022, the Compensation Committee of our Board of Directors (the “Compensation Committee”) approved the 20202022 Performance Program, a multi-year performance-based long-term incentive compensation program. Under the 20202022 Performance Program, participants may earn awards in the form of LTIP units based on our Total Shareholder Returnachievement of rigorous Net Operating Income (“TSR”NOI”) goals over a three-year performance measurement period beginning on January 1, 20212022 and continuing through December 31, 2023. Specifically, 50.0%2024. The amount of the awards would beLTIP units otherwise earned based on the rankachievement of the NOI goals would then be increased or decreased based on our TSR relative to the TSRTotal Shareholder Return (“TSR”) versus that of our Central Business District focused New York City office REIT peers comprised(comprised of Vornado Realty Trust, SL Green Realty Corp., and Empire State Realty Trust and Columbia Property Trust, andTrust) but the remaining 50.0%modifier will not result in a total payout exceeding 100% of the awards would be earned based on the percentile rank of our TSR relative to performance of the SNL U.S. Office REIT Index constituents. Furthermore,units granted. Additionally, if our TSR is negative over the three-year performance measurement period, then the number of LTIP units that are earned under the 20202022 Performance Program will be reduced by 30.0% of the number of such awards that otherwise would have been earned. Additionally, if the designated performance objectives are achieved,Furthermore, awards earned under the 20202022 Performance Program are subject to vesting based on continued employment with us through December 31, 2024,2025, with 50.0% of each award vesting upon the conclusion of the performance measurement period, and the remaining 50.0% vesting on December 31, 2024.2025. Lastly, our Named Executive Officers are required to hold earned awards for an additional year following vesting. TheAwards granted under the 2022 Performance Program had a fair value of the awards granted under the 2020 Performance Program$7,188,000 on the date of the grant, was $7,303,000 andwhich is being amortized into expense over the four-year vesting period using a graded vesting attribution method.
Time-Based Unit Awards Program (“LTIP(LTIP Units, AOLTIP Units and AOLTIP Units”)Restricted Stock)
On January 11, 2021,13, 2022, we also granted an aggregate of 579,520626,942 LTIP units, and 2,171,8752,703,499 AOLTIP units and 120,243 shares of Restricted Stock to our executive officers and employees that will vest over a period of three to four years. LTIP units are similar to common units of our Operating Partnership in that they are redeemable for cash, or at our election, may be converted on a one-for-one basis into shares of our common stock. AOLTIP units are similar to stock options in that it permits the holder to realize the benefit of any increase in the per share value of our common stock above the value at the time the AOLTIP units were granted and can be converted into a number of common units of our Operating Partnership that have an aggregate value equal to such increase. The common units issued upon the conversion of AOLTIP units are redeemable for cash, or at our election, may be converted on a one-for-one basis into shares of our common stock. The fair value of LTIP units, and AOLTIP units and restricted stock on the date of grant were $4,598,000$5,313,000, $5,831,000, and $4,344,000,$1,119,000, respectively, and these awards are being amortized into expense on a straight-line basis over the vesting period.
Restricted Stock
On January 11, 2021, we granted an aggregate of 166,686 shares of restricted stock to our employees that will vest over a period of four years. The fair value of the shares of restricted stock on the date of grant was $1,439,000, which is being amortized into expense on a straight-line basis over the vesting period.
22
PARAMOUNT GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Completion of the 20172019 Performance-Based Awards Program (“20172019 Performance Program”)
On December 31, 2021, the performance measurement period for the 2019 Performance Program ended. On January 11, 2021,13, 2022, the Compensation Committee determined that the performance goals set forth in the 20172019 Performance Program were not satisfied during the performance measurement period, which ended on December 31, 2020.met. Accordingly, all of the 1,382,807 LTIP units that were granted on February 5, 2018,January 14, 2019, were forfeited, with no awards being earned. These awards had a grant date fair value of $7,009,000$8,106,000 and a remaining unrecognized compensation cost of $416,000$713,000 as of June 30, 2021,March 31, 2022, which will be amortized over a weighted-average period of 0.50.8 years.
21
PARAMOUNT GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
18. | Earnings Per Share |
The following table summarizes our net lossincome (loss) and the number of common shares used in the computation of basic and diluted lossincome (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 |
|
| For the Six Months Ended |
| ||||||||||
|
| June 30, |
|
| June 30, |
| ||||||||||
(Amounts in thousands, except per share amounts) |
| 2021 |
|
| 2020 |
|
| 2021 |
|
| 2020 |
| ||||
Numerator: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing Operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss from continuing operations attributable to common stockholders |
| $ | (15,943 | ) |
| $ | (8,234 | ) |
| $ | (19,521 | ) |
| $ | (6,266 | ) |
Earnings allocated to unvested participating securities |
|
| (18 | ) |
|
| (14 | ) |
|
| (37 | ) |
|
| (26 | ) |
Numerator for loss from continuing operations per common share - basic and diluted |
|
| (15,961 | ) |
|
| (8,248 | ) |
|
| (19,558 | ) |
|
| (6,292 | ) |
Discontinued Operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income from discontinued operations attributable to common stockholders |
|
| - |
|
|
| 1,964 |
|
|
| - |
|
|
| 3,344 |
|
Earnings allocated to unvested participating securities |
|
| - |
|
|
| (4 | ) |
|
| - |
|
|
| (11 | ) |
Numerator for income from discontinued operations per common share - basic and diluted |
|
| - |
|
|
| 1,960 |
|
|
| - |
|
|
| 3,333 |
|
Numerator for loss per common share - basic and diluted |
| $ | (15,961 | ) |
| $ | (6,288 | ) |
| $ | (19,558 | ) |
| $ | (2,959 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator for basic loss per common share - weighted average shares |
|
| 218,696 |
|
|
| 221,573 |
|
|
| 218,681 |
|
|
| 224,671 |
|
Effect of dilutive stock-based compensation plans (1) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
Denominator for diluted loss per common share - weighted average shares |
|
| 218,696 |
|
|
| 221,573 |
|
|
| 218,681 |
|
|
| 224,671 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) Income per Common Share - Basic and Diluted: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations, net |
| $ | (0.07 | ) |
| $ | (0.04 | ) |
| $ | (0.09 | ) |
| $ | (0.03 | ) |
Discontinued operations, net |
|
| - |
|
|
| 0.01 |
|
|
| - |
|
|
| 0.02 |
|
Loss per common share - basic and diluted |
| $ | (0.07 | ) |
| $ | (0.03 | ) |
| $ | (0.09 | ) |
| $ | (0.01 | ) |
|
|
|
| |||||
|
| For the Three Months Ended March 31, |
| |||||
(Amounts in thousands, except per share amounts) |
| 2022 |
|
| 2021 |
| ||
Numerator: |
|
|
|
|
|
|
|
|
Net income (loss) attributable to common stockholders |
| $ | 3,371 |
|
| $ | (3,578 | ) |
Earnings allocated to unvested participating securities |
|
| (21 | ) |
|
| (19 | ) |
Numerator for income (loss) per common share - basic and diluted |
|
| 3,350 |
|
|
| (3,597 | ) |
Denominator: |
|
|
|
|
|
|
|
|
Denominator for basic loss per common share - weighted average shares |
|
| 218,782 |
|
|
| 218,666 |
|
Effect of dilutive stock-based compensation plans (1) |
|
| 58 |
|
|
| - |
|
Denominator for diluted loss per common share - weighted average shares |
|
| 218,840 |
|
|
| 218,666 |
|
|
|
|
|
|
|
|
|
|
Income (loss) per common share - basic and diluted |
| $ | 0.02 |
|
| $ | (0.02 | ) |
(1) | The effect of dilutive securities excludes |
23
PARAMOUNT GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
19.Related Parties |
|
Management Agreements
We provide property management, leasing and other related services to certain properties owned by members of the Otto Family. We recognized fee income of $710,000$489,000 and $259,000$517,000 for the three months ended June 30,March 31, 2022 and 2021, and 2020, respectively, and $1,227,000 and $707,000 for the six months ended June 30, 2021 and 2020, respectively, in connection with these agreements, which is included as a component of “fee and other income” on our consolidated statements of income. As of June 30, 2021March 31, 2022 and December 31, 2020,2021, amounts owed to us under these agreements aggregated $474,000$752,000 and $34,000,484,000, respectively, which are included as a component of “accounts and other receivables” on our consolidated balance sheets.
We also provide propertyasset management, assetproperty management, leasing and other related services to our unconsolidated joint ventures and real estate funds. We recognized fee income of $4,916,000$10,783,000 and $5,396,000$5,586,000 for the three months ended June 30,March 31, 2022 and 2021, and 2020, respectively, and $10,502,000 and $10,709,000 for the six months ended June 30, 2021 and 2020, respectively, in connection with these agreements, which is included as a component of “fee and other income” on our consolidated statements of income. As of June 30, 2021March 31, 2022 and December 31, 2020,2021, amounts owed to us under these agreements aggregated $4,399,000$2,868,000 and $5,011,000,$2,883,000, respectively, which are included as a component of “accounts and other receivables” on our consolidated balance sheets.
Hamburg Trust Consulting HTC GmbH (“HTC”)
We have an agreement with HTC, a licensed broker in Germany, to supervise selling efforts for our joint ventures and private equity real estate funds (or investments in feeder vehicles for these funds) to investors in Germany, including distribution of securitized notes of feeder vehicles for Fund X. Pursuant to this agreement, we have agreed to pay HTC for the costs incurred to sell investments in these funds or their feeder vehicles, including certain incremental costs incurred by HTC as a result of the engagement, plus a mark-up of 10%. HTC is 100% owned by Albert Behler, our Chairman, Chief Executive Officer and President. We incurred expenses of $123,000costs aggregating $389,000 and $126,000$122,000 for the three months ended June 30,March 31, 2022 and 2021, and 2020, respectively, and $245,000 and $265,000 for the six months ended June 30, 2021 and 2020, respectively, in connection with this agreement, which is included as a component of “transaction related costs” on our consolidated statements of income.agreement. As of June 30, 2021March 31, 2022 and December 31, 2020,2021, we owed $123,000$389,000 and $523,000, respectively, to HTC under this agreement, which are included as a component of “accounts payable and accrued expenses” on our consolidated balance sheets.
Mannheim Trust
A subsidiary of Mannheim Trust leases office space at 712 Fifth Avenue, our 50.0% owned unconsolidated joint venture, pursuant to a lease agreement which expires in April 2023. Dr. Martin Bussmann (a member of our Board of Directors) is also a trustee and a director of Mannheim Trust. We recognized $91,000 and $90,000 in each of the three months ended June 30,March 31, 2022 and 2021 and 2020, respectively, and $181,000 in each of the six months ended June 30, 2021 and 2020 for our share of rental income pursuant to this lease.
2422
PARAMOUNT GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Due from Affiliates
At March 31, 2022, we had a $49,316,000 note receivable from Fund X that bears interest at the Secured Overnight Financing Rate (“SOFR”) plus 220 basis points and is included as “due from affiliates” on our consolidated balance sheet.
| Commitments and Contingencies |
Insurance
We carry commercial general liability coverage on our properties, with limits of liability customary within the industry. Similarly, we are insured against the risk of direct and indirect physical damage to our properties including coverage for the perils such as floods, earthquakes and windstorms. Our policies also cover the loss of rental income during an estimated reconstruction period. Our policies reflect limits and deductibles customary in the industry and specific to the buildings and portfolio. We also obtain title insurance policies when acquiring new properties. We currently have coverage for losses incurred in connection with both domestic and foreign terrorist-related activities. While we do carry commercial general liability insurance, property insurance and terrorism insurance with respect to our properties, these policies include limits and terms we consider commercially reasonable. In addition, there are certain losses (including, but not limited to, losses arising from known environmental conditions or acts of war) that are not insured, in full or in part, because they are either uninsurable or the cost of insurance makes it, in our belief, economically impractical to maintain such coverage. Should an uninsured loss arise against us, we would be required to use our own funds to resolve the issue, including litigation costs. We believe the policy specifications and insured limits are adequate given the relative risk of loss, the cost of the coverage and industry practice and, in consultation with our insurance advisors, we believe the properties in our portfolio are adequately insured.
Other Commitments and Contingencies
We are a party to various claims and routine litigation arising in the ordinary course of business. Some of these claims or others to which we may be subject from time to time, including claims arising specifically from the formation transactions, in connection with our initial public offering, may result in defense costs, settlements, fines or judgments against us, some of which are not, or cannot be, covered by insurance. Payment of any such costs, settlements, fines or judgments that are not insured could have an adverse impact on our financial position and results of operations. Should any litigation arise in connection with the formation transactions, we would contest it vigorously. In addition, certain litigation or the resolution of certain litigation may affect the availability or cost of some of our insurance coverage, which could adversely impact our results of operations and cash flow, expose us to increased risks that would be uninsured, and/or adversely impact our ability to attract officers and directors.
The terms of our mortgage debt and certain side lettersagreements in place include certain restrictions and covenants which may limit, among other things, certain investments, the incurrence of additional indebtedness and liens and the disposition or other transfer of assets and interests in the borrower and other credit parties, and require compliance with certain debt yield, debt service coverage and loan to value ratios. In addition, our revolving credit facility contains representations, warranties, covenants, other agreements and events of default customary for agreements of this type with comparable companies. As of June 30, 2021,March 31, 2022, we believe we are in compliance with all of our covenants.
Transfer Tax Assessments
During 2017, the New York City Department of Finance issued Notices of Determination (“Notices”) assessing additional transfer taxes (including interest and penalties) in connection with the transfer of interests in certain properties during our 2014 initial public offering. We believe, after consultation with legal counsel, that the likelihood of a loss is reasonably possible, and while it is not possible to predict the outcome of these Notices, we estimate the range of loss could be between $0 and $49,800,000.$53,300,000. Since no amount in this range is a better estimate than any other amount within the range, we have not accrued any liability arising from potential losses relating to these Notices in our consolidated financial statements.
2523
PARAMOUNT GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
21. | Segments |
Our reportable segments are separated by region, based on the 2 regions in which we conduct our business: New York 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 Net Operating Income (“NOI”) for each reportable segment for the periods set forth below.
|
| For the Three Months Ended June 30, 2021 |
|
| For the Three Months Ended March 31, 2022 |
| ||||||||||||||||||||||||||
(Amounts in thousands) |
| Total |
|
| New York |
|
| San Francisco |
|
| Other |
|
| Total |
|
| New York |
|
| San Francisco |
|
| Other |
| ||||||||
Property-related revenues |
| $ | 176,068 |
|
| $ | 108,191 |
|
| $ | 68,674 |
|
| $ | (797 | ) |
| $ | 171,697 |
|
| $ | 115,405 |
|
| $ | 57,089 |
|
| $ | (797 | ) |
Property-related operating expenses |
|
| (64,072 | ) |
|
| (45,801 | ) |
|
| (17,067 | ) |
|
| (1,204 | ) |
|
| (66,661 | ) |
|
| (48,211 | ) |
|
| (17,292 | ) |
|
| (1,158 | ) |
NOI from unconsolidated joint ventures |
|
| 10,557 |
|
|
| 2,749 |
|
|
| 7,852 |
|
|
| (44 | ) | ||||||||||||||||
NOI from unconsolidated joint ventures (excluding One Steuart Lane) |
|
| 11,234 |
|
|
| 2,818 |
|
|
| 8,354 |
|
|
| 62 |
| ||||||||||||||||
NOI (1) |
| $ | 122,553 |
|
| $ | 65,139 |
|
| $ | 59,459 |
|
| $ | (2,045 | ) |
| $ | 116,270 |
|
| $ | 70,012 |
|
| $ | 48,151 |
|
| $ | (1,893 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| For the Three Months Ended June 30, 2020 |
|
| For the Three Months Ended March 31, 2021 |
| ||||||||||||||||||||||||||
(Amounts in thousands) |
| Total |
|
| New York |
|
| San Francisco |
|
| Other (2) |
|
| Total |
|
| New York |
|
| San Francisco |
|
| Other |
| ||||||||
Property-related revenues |
| $ | 168,455 |
|
| $ | 110,679 |
|
| $ | 54,827 |
|
| $ | 2,949 |
|
| $ | 174,496 |
|
| $ | 111,837 |
|
| $ | 63,472 |
|
| $ | (813 | ) |
Property-related operating expenses |
|
| (65,712 | ) |
|
| (47,213 | ) |
|
| (16,054 | ) |
|
| (2,445 | ) |
|
| (66,618 | ) |
|
| (49,024 | ) |
|
| (16,938 | ) |
|
| (656 | ) |
NOI from unconsolidated joint ventures |
|
| 10,376 |
|
|
| 2,680 |
|
|
| 9,165 |
|
|
| (1,469 | ) |
|
| 10,326 |
|
|
| 2,821 |
|
|
| 7,537 |
|
|
| (32 | ) |
NOI (1) |
| $ | 113,119 |
|
| $ | 66,146 |
|
| $ | 47,938 |
|
| $ | (965 | ) |
| $ | 118,204 |
|
| $ | 65,634 |
|
| $ | 54,071 |
|
| $ | (1,501 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| For the Six Months Ended June 30, 2021 |
| |||||||||||||||||||||||||||||
(Amounts in thousands) |
| Total |
|
| New York |
|
| San Francisco |
|
| Other |
| ||||||||||||||||||||
Property-related revenues |
| $ | 350,564 |
|
| $ | 220,028 |
|
| $ | 132,146 |
|
| $ | (1,610 | ) | ||||||||||||||||
Property-related operating expenses |
|
| (130,690 | ) |
|
| (94,825 | ) |
|
| (34,005 | ) |
|
| (1,860 | ) | ||||||||||||||||
NOI from unconsolidated joint ventures |
|
| 20,883 |
|
|
| 5,570 |
|
|
| 15,389 |
|
|
| (76 | ) | ||||||||||||||||
NOI (1) |
| $ | 240,757 |
|
| $ | 130,773 |
|
| $ | 113,530 |
|
| $ | (3,546 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||
|
| For the Six Months Ended June 30, 2020 |
| |||||||||||||||||||||||||||||
(Amounts in thousands) |
| Total |
|
| New York |
|
| San Francisco |
|
| Other (2) |
| ||||||||||||||||||||
Property-related revenues |
| $ | 349,773 |
|
| $ | 232,256 |
|
| $ | 111,494 |
|
| $ | 6,023 |
| ||||||||||||||||
Property-related operating expenses |
|
| (134,177 | ) |
|
| (96,242 | ) |
|
| (32,973 | ) |
|
| (4,962 | ) | ||||||||||||||||
NOI from unconsolidated joint ventures |
|
| 23,768 |
|
|
| 5,624 |
|
|
| 19,547 |
|
|
| (1,403 | ) | ||||||||||||||||
NOI (1) |
| $ | 239,364 |
|
| $ | 141,638 |
|
| $ | 98,068 |
|
| $ | (342 | ) |
(1) | NOI is used to measure the operating performance of our properties. NOI consists of rental revenue (which includes property rentals, tenant reimbursements and lease termination income) and certain other property-related revenue less operating expenses (which includes property-related expenses such as cleaning, security, repairs and maintenance, utilities, property administration and real estate taxes). We use NOI internally as a performance measure and believe it provides useful information to investors regarding our financial condition and results of operations because it reflects only those income and expense items that are incurred at the property level. Other real estate companies may use different methodologies for calculating NOI and, accordingly, our presentation of NOI may not be comparable to other real estate companies. |
|
|
2624
PARAMOUNT GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
The following table provides a reconciliation of NOI to net lossincome (loss) attributable to common stockholders for the periods set forth below.
|
| For the Three Months Ended |
|
| For the Six Months Ended |
|
|
|
| |||||||||||||||
|
| June 30, |
|
| June 30, |
|
| For the Three Months Ended March 31, |
| |||||||||||||||
(Amounts in thousands) |
| 2021 |
|
| 2020 |
|
| 2021 |
|
| 2020 |
|
| 2022 |
|
| 2021 |
| ||||||
NOI |
| $ | 122,553 |
|
| $ | 113,119 |
|
| $ | 240,757 |
|
| $ | 239,364 |
|
| $ | 116,270 |
|
| $ | 118,204 |
|
Add (subtract) adjustments to arrive to net income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fee income |
|
| 6,201 |
|
|
| 6,209 |
|
|
| 12,871 |
|
|
| 12,539 |
|
|
| 11,988 |
|
|
| 6,670 |
|
Depreciation and amortization expense |
|
| (59,925 | ) |
|
| (58,716 | ) |
|
| (118,230 | ) |
|
| (117,143 | ) |
|
| (55,624 | ) |
|
| (58,305 | ) |
General and administrative expenses |
|
| (18,418 | ) |
|
| (17,901 | ) |
|
| (32,782 | ) |
|
| (30,150 | ) |
|
| (15,645 | ) |
|
| (14,364 | ) |
NOI from unconsolidated joint ventures |
|
| (10,557 | ) |
|
| (10,376 | ) |
|
| (20,883 | ) |
|
| (23,768 | ) | ||||||||
NOI from unconsolidated joint ventures (excluding One Steuart Lane) |
|
| (11,234 | ) |
|
| (10,326 | ) | ||||||||||||||||
Loss from unconsolidated joint ventures |
|
| (15,717 | ) |
|
| (5,955 | ) |
|
| (21,033 | ) |
|
| (10,176 | ) |
|
| (5,113 | ) |
|
| (5,316 | ) |
Interest and other income, net |
|
| 1,070 |
|
|
| 2,252 |
|
|
| 2,372 |
|
|
| 1,256 |
|
|
| 231 |
|
|
| 1,302 |
|
Interest and debt expense |
|
| (34,914 | ) |
|
| (36,009 | ) |
|
| (69,653 | ) |
|
| (72,628 | ) |
|
| (34,277 | ) |
|
| (34,739 | ) |
Adjustments related to discontinued operations |
|
| - |
|
|
| (2,147 | ) |
|
| - |
|
|
| (4,358 | ) | ||||||||
Other, net |
|
| 13 |
|
|
| (169 | ) |
|
| (88 | ) |
|
| (320 | ) |
|
| 53 |
|
|
| (101 | ) |
Loss from continuing operations, before income taxes |
|
| (9,694 | ) |
|
| (9,693 | ) |
|
| (6,669 | ) |
|
| (5,384 | ) | ||||||||
Net income before income taxes |
|
| 6,649 |
|
|
| 3,025 |
| ||||||||||||||||
Income tax expense |
|
| (434 | ) |
|
| (138 | ) |
|
| (1,575 | ) |
|
| (742 | ) |
|
| (527 | ) |
|
| (1,141 | ) |
Loss from continuing operations, net |
|
| (10,128 | ) |
|
| (9,831 | ) |
|
| (8,244 | ) |
|
| (6,126 | ) | ||||||||
Income from discontinued operations, net |
|
| - |
|
|
| 2,147 |
|
|
| - |
|
|
| 3,668 |
| ||||||||
Net loss |
|
| (10,128 | ) |
|
| (7,684 | ) |
|
| (8,244 | ) |
|
| (2,458 | ) | ||||||||
Net income |
|
| 6,122 |
|
|
| 1,884 |
| ||||||||||||||||
Less: net (income) loss attributable to noncontrolling interests in: | Less: net (income) loss attributable to noncontrolling interests in: |
|
|
|
|
|
|
|
|
|
|
|
|
| Less: net (income) loss attributable to noncontrolling interests in: |
|
|
|
|
| ||||
Consolidated joint ventures |
|
| (7,428 | ) |
|
| (405 | ) |
|
| (13,156 | ) |
|
| (1,919 | ) |
|
| (3,425 | ) |
|
| (5,728 | ) |
Consolidated real estate fund |
|
| 29 |
|
|
| 1,235 |
|
|
| (56 | ) |
|
| 1,212 |
|
|
| 1,016 |
|
|
| (85 | ) |
Operating Partnership |
|
| 1,584 |
|
|
| 584 |
|
|
| 1,935 |
|
|
| 243 |
|
|
| (342 | ) |
|
| 351 |
|
Net loss attributable to common stockholders |
| $ | (15,943 | ) |
| $ | (6,270 | ) |
| $ | (19,521 | ) |
| $ | (2,922 | ) | ||||||||
Net income (loss) attributable to common stockholders |
| $ | 3,371 |
|
| $ | (3,578 | ) |
The following table provides the total assets for each of our reportable segments as of the dates set forth below.
(Amounts in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets as of: |
| Total |
|
| New York |
|
| San Francisco |
|
| Other |
|
| Total |
|
| New York |
|
| San Francisco |
|
| Other |
| ||||||||
June 30, 2021 |
| $ | 8,533,140 |
|
| $ | 5,359,621 |
|
| $ | 2,711,847 |
|
| $ | 461,672 |
| ||||||||||||||||
December 31, 2020 |
|
| 8,554,097 |
|
|
| 5,388,596 |
|
|
| 2,698,983 |
|
|
| 466,518 |
| ||||||||||||||||
March 31, 2022 |
| $ | 8,498,582 |
|
| $ | 5,364,204 |
|
| $ | 2,689,173 |
|
| $ | 445,205 |
| ||||||||||||||||
December 31, 2021 |
|
| 8,494,562 |
|
|
| 5,336,210 |
|
|
| 2,696,131 |
|
|
| 462,221 |
|
ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
The following discussion of our financial condition and results of operations should be read in conjunction with our consolidated financial statements, including the related notes included therein.
Forward-Looking Statements
We make statements in this Quarterly Report on Form 10-Q that are considered “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, which are usually identified by the use of words such as “anticipates,” “believes,” “estimates,” “expects,” “intends,” “may,” “plans,” “projects,” “seeks,” “should,”�� “will,” and variations of such words or similar expressions. We intend these forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and are including this statement for purposes of complying with those safe harbor provisions. These forward-looking statements reflect our current views about our plans, intentions, expectations, strategies and prospects, which are based on the information currently available to us and on assumptions we have made. Although we believe that our plans, intentions, expectations, strategies and prospects as reflected in or suggested by those forward-looking statements are reasonable, we can give no assurance that the plans, intentions, expectations or strategies will be attained or achieved. Furthermore, actual results may differ materially from those described in the forward-looking statements and will be affected by a variety of risks and factors that are beyond our control including, without limitation:
| • | the negative impact of the coronavirus 2019 (“COVID-19”) global pandemic on the U.S., regional and global economies and our tenants’ financial condition and results of operations; |
| • | unfavorable market and economic conditions in the United States, including New York City and San Francisco, and globally; |
| • | risks associated with |
| • | risks associated with ownership of real estate; |
| • | decreased rental rates or increased vacancy rates; |
| • | the risk we may lose a major tenant; |
| • | trends in the office real estate industry including telecommuting, flexible work schedules, open workplaces and teleconferencing; |
| • | limited ability to dispose of assets because of the relative illiquidity of real estate investments; |
| • | intense competition in the real estate market that may limit our ability to acquire attractive investment opportunities and increase the costs of those opportunities; |
| • | insufficient amounts of insurance; |
| • | uncertainties and risks related to adverse weather conditions, natural disasters and climate change; |
| • | risks associated with actual or threatened terrorist attacks; |
| • | exposure to liability relating to environmental and health and safety matters; |
| • | high costs associated with compliance with the Americans with Disabilities Act; |
| • | failure of acquisitions to yield anticipated results; |
| • | risks associated with real estate activity through our joint ventures and private equity real estate funds; |
| • | general volatility of the capital and credit markets and the market price of our common stock; |
| • | exposure to litigation or other claims; |
| • | loss of key personnel; |
| • | risks associated with security breaches through cyber attacks or cyber intrusions and other significant disruptions of our information technology (“IT”) networks and related systems; |
| • | 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; |
| • | fluctuations in interest rates and increased costs to refinance or issue new debt; |
| • | risks associated with variable rate debt, derivatives or hedging activity; |
| • | risks associated with the market for our common stock; |
| • | regulatory changes, including changes to tax laws and regulations; |
| • | failure to qualify as a real estate investment trust (“REIT”); |
| • | compliance with REIT requirements, which may cause us to forgo otherwise attractive opportunities or liquidate certain of our investments; or |
| • | any of the other risks included in this Quarterly Report on Form 10-Q or in our Annual Report on Form 10-K for the year ended December 31, |
Accordingly, there is no assurance that our expectations will be realized. Except as otherwise required by the U.S. federal securities laws, we disclaim any obligations or undertaking to publicly release any updates or revisions to any forward-looking statement contained herein (or elsewhere) to reflect any change in our expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based. A 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, 2020.2021.
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, 2020.2021.
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.
Business Overview
We are a fully-integrated REIT focused on owning, operating, managing, acquiring and redeveloping high-quality, Class A office properties in select central business district submarkets of New York City 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 91.0%90.8% of, the Operating Partnership as of June 30, 2021.March 31, 2022.
As of March 31, 2022, we owned and/or managed a portfolio aggregating 13.9 million square feet comprised of:
• | Eight wholly and partially owned properties aggregating 8.6 million square feet in New York, comprised of 8.2 million square feet of office space and 0.4 million square feet of retail, theater and amenity space; |
• | Six wholly and partially owned properties aggregating 4.3 million square feet in San Francisco, comprised of 4.1 million square feet of office space and 0.2 million square feet of retail space; and |
• | Six managed properties aggregating 1.0 million square feet in New York and Washington, D.C. |
Additionally, we have an investment management business, where we serve as the general partner of real estate funds for institutional investors and high net-worth individuals.
COVID-19 UpdateAcquisitions
In March 2020, the World Health Organization declared coronavirus 2019 (“COVID-19”)On February 24, 2022, a global pandemic. The outbreak of COVID-19 caused severe disruptions in the global economy. These disruptions have adversely impacted businesses and financial markets, including that of New York and San Francisco, the marketsjoint venture, in which we operateown a 9.2% interest, acquired a 26,000 square foot retail condominium at 1600 Broadway in Manhattan for $191,500,000. In connection with the acquisition, the joint venture obtained a 10-year, $98,000,000 interest-only loan that has a fixed rate of 3.45%. The property, which is located in the heart of Times Square, is 100% leased to Mars, Inc. for a 15-year term and where all of our assets are located. As a result, several of our tenants sought deferrals and/or short-term relief of their rental obligations and we provided relief to select tenants.
By February 2021,serves as the U.S. Food and Drug Administration had issued emergency use authorizations of three vaccines for the prevention of COVID-19. In July 2021, New York and San Francisco lifted most COVID-19 restrictions since a significant portion of their populations have been vaccinated. Notwithstanding the vaccination success, multiple variants of the virus that cause COVID-19 continue to persist globally and in the United States. While we continue to navigate the crisis and monitor the impact of the pandemic on our business, the rapid development and fluidity of this situation precludes us at this time from making any predictions as to the ultimate impact COVID-19 may have on our future financial condition, results of operations and cash flows.flagship location for M&M’s World.
Stock Repurchase Program
On November 5, 2019, we received authorization from our Board of Directors to repurchase up to $200,000,000 of our common stock, from time to time, in the open market or in privately negotiated transactions. During 2020, we repurchased 13,813,158 common shares at a weighted average price of $8.69 per share, or $120,000,000 in the aggregate, of which 10,856,865 common shares were repurchased in the six months ended June 30, 2020, at a weighted average price of $9.21 per share, or $100,000,000 in the aggregate. We didhave not repurchaserepurchased any shares in the six months ended June 30, 2021.since December 2020. We have $80,000,000 available for future repurchases under the existing program. The amount and timing of future repurchases, if any, will depend on a number of factors, including, the price and availability of our shares, trading volume, general market conditions and available funding. The stock repurchase program may be suspended or discontinued at any time.
Leasing Results - Three Months Ended June 30, 2021March 31, 2022
In the three months ended June 30, 2021,March 31, 2022, we leased 246,922202,820 square feet, including 81,516 square feet that served to backfill the recent vacancy at 31 West 52nd Street,of which our share was 152,202 that was leased forat a weighted average terminitial rent of 14 years and 34,570$67.67 per square feet that was leased to the Thespian Theatre at 1633 Broadway for a 15-year term.foot. This leasing activity, offset by lease expirations in the three months, (comprised primarily of the expiration of TD Bank’s 131,300 square foot lease at 31 West 52nd Street), decreased leased occupancy and same store leased occupancy (properties owned by us in a similar manner during both reporting periods) by 6010 basis points to 88.0% at June 30, 2021 from 88.6%90.6% at March 31, 2021. Excluding the theatre lease, 212,352 square feet was leased in the three months, of which our share was 197,035 square feet that was leased2022 from 90.7% at a weighted average initial rent of $70.81 per square foot.December 31, 2021. Of the 212,352152,202 square feet leased, 156,117141,269 square feet represented our share of second generation space (space that had been vacant for less than twelve months) for which the weighted average rental rates decreased by 1.4%were in-line with prior escalated rent on a cash basis and 5.2%decreased by 0.5% on a GAAP basis. The weighted average lease term for leases signed during the three months was 9.37.8 years and weighted average tenant improvements and leasing commissions on these leases were $10.64$8.40 per square foot per annum, or 15.0%12.4% of initial rent.
New York
In the three months ended June 30, 2021,March 31, 2022, we leased 224,649175,524 square feet in our New York portfolio, including 81,516 square feet that served to backfill the recent vacancy at 31 West 52nd Street, that was leased for a weighted average term of 14 years and 34,570 square feet that was leased to the Thespian Theatre at 1633 Broadway for a 15-year term. This leasing activity, offset by the lease expirations in the three months (comprised primarily of TD Bank’s 131,300 square foot lease at 31 West 52nd Street), decreased leased occupancy and same store leased occupancy by 80 basis points to 86.5% at June 30, 2021 from 87.3% at March 31, 2021. Excluding the theatre lease, 190,079 square feet was leased in the three months, of which our share was 184,234134,104 square feet that was leased at a weighted average initial rent of $69.94 per square foot. Of the 190,079 square feet leased, 147,216 represented our share of second generation space for which rental rates decreased by 1.1% on a cash basis and 4.9% on a GAAP basis. The weighted average lease term for leases signed during the three months was 9.6 years and weighted average tenant improvements and leasing commissions on these leases were $10.86 per square foot per annum, or 15.5% of initial rent.
San Francisco
In the three months ended June 30, 2021, we leased 22,273 square feet in our San Francisco portfolio, of which our share was 12,801 square feet that was leased at a weighted average initial rent of $83.33$63.35 per square foot. This leasing activity, partially offset by lease expirations in the three months, increased leased occupancy and same store leased occupancy by 1040 basis points to 92.1%90.8% at June 30, 2021March 31, 2022 from 92.0%90.4% at MarchDecember 31, 2021. Of the 22,273134,104 square feet leased, in the three months, 8,901126,125 square feet represented our share of second generation space (space that had been vacant for less than twelve months) for which rental ratesrate decreased by 6.0%1.1% on a cash basis and 9.3%4.5% on a GAAP basis. The weighted average lease term for leases signed during the three months was 5.18.3 years and weighted average tenant improvements and leasing commissions on these leases were $4.62$8.74 per square foot per annum, or 5.5%13.8% of initial rent.
San Francisco
In the three months ended March 31, 2022, we leased 27,296 square feet in our San Francisco portfolio, of which our share was 18,098 square feet that was leased at a weighted average initial rent of $99.67 per square foot. This leasing activity, offset by lease expirations in the three months, decreased leased occupancy and same store leased occupancy by 150 basis points to 90.1% at March 31, 2022 from 91.6% at December 31, 2021. Of the 18,098 square feet leased in the three months, 15,144 square feet represented our share of second generation space for which we achieved rental rate increases of 6.3% on a cash basis and 24.9% on a GAAP basis. The weighted average lease term for leases signed during the three months was 4.6 years and weighted average tenant improvements and leasing commissions on these leases were $3.95 per square foot per annum, or 4.0% of initial rent.
The following table presents additional details on the leases signed during the three months ended June 30, 2021.March 31, 2022. It is not intended to coincide with the commencement of rental revenue in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The leasing statistics, except for square feet leased, represent office space only.
Three Months Ended June 30, 2021 | Total |
|
| New York |
|
| San Francisco |
|
| ||||||||
| Total square feet leased |
| 246,922 |
|
|
| 224,649 |
| (1) |
| 22,273 |
|
| ||||
| Pro rata share of total square feet leased: |
| 197,035 |
|
|
| 184,234 |
|
|
| 12,801 |
|
| ||||
|
| Initial rent (2) | $ | 70.81 |
|
| $ | 69.94 |
|
| $ | 83.33 |
|
| |||
|
| Weighted average lease term (in years) |
| 9.3 |
|
|
| 9.6 |
|
|
| 5.1 |
|
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Tenant improvements and leasing commissions: |
|
|
|
|
|
|
|
|
|
| |||||
|
|
| Per square foot | $ | 99.43 |
|
| $ | 104.70 |
|
| $ | 23.63 |
|
| ||
|
|
| Per square foot per annum | $ | 10.64 |
|
| $ | 10.86 |
|
| $ | 4.62 |
|
| ||
|
|
| Percentage of initial rent |
| 15.0 | % |
|
| 15.5 | % |
|
| 5.5 | % |
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Rent concessions: |
|
|
|
|
|
|
|
|
|
| |||||
|
|
| Average free rent period (in months) |
| 12.7 |
|
|
| 13.3 |
|
|
| 4.8 |
|
| ||
|
|
| Average free rent period per annum (in months) |
| 1.4 |
|
|
| 1.4 |
|
|
| 0.9 |
|
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Second generation space: (3) |
|
|
|
|
|
|
|
|
|
| |||||
|
| Square feet |
| 156,117 |
|
|
| 147,216 |
|
|
| 8,901 |
|
| |||
|
| Cash basis: |
|
|
|
|
|
|
|
|
|
|
|
| |||
|
|
| Initial rent (2) | $ | 74.27 |
|
| $ | 73.64 |
|
| $ | 84.78 |
|
| ||
|
|
| Prior escalated rent (4) | $ | 75.35 |
|
| $ | 74.45 |
|
| $ | 90.23 |
|
| ||
|
|
| Percentage decrease |
| (1.4 | %) |
|
| (1.1 | %) |
|
| (6.0 | %) |
| ||
|
| GAAP basis: |
|
|
|
|
|
|
|
|
|
|
|
| |||
|
|
| Straight-line rent | $ | 70.03 |
|
| $ | 69.27 |
|
| $ | 82.61 |
|
| ||
|
|
| Prior straight-line rent | $ | 73.86 |
|
| $ | 72.82 |
|
| $ | 91.04 |
|
| ||
|
|
| Percentage decrease |
| (5.2 | %) |
|
| (4.9 | %) |
|
| (9.3 | %) |
|
Three Months Ended March 31, 2022 | Total |
|
| New York |
|
| San Francisco |
|
| ||||||||
| Total square feet leased |
| 202,820 |
|
|
| 175,524 |
|
|
| 27,296 |
|
| ||||
| Pro rata share of total square feet leased: |
| 152,202 |
|
|
| 134,104 |
|
|
| 18,098 |
|
| ||||
|
| Initial rent (1) | $ | 67.67 |
|
| $ | 63.35 |
|
| $ | 99.67 |
|
| |||
|
| Weighted average lease term (in years) |
| 7.8 |
|
|
| 8.3 |
|
|
| 4.6 |
|
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Tenant improvements and leasing commissions: |
|
|
|
|
|
|
|
|
|
| |||||
|
|
| Per square foot | $ | 65.84 |
|
| $ | 72.26 |
|
| $ | 18.25 |
|
| ||
|
|
| Per square foot per annum | $ | 8.40 |
|
| $ | 8.74 |
|
| $ | 3.95 |
|
| ||
|
|
| Percentage of initial rent |
| 12.4 | % |
|
| 13.8 | % |
|
| 4.0 | % |
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Rent concessions: |
|
|
|
|
|
|
|
|
|
| |||||
|
|
| Average free rent period (in months) |
| 8.5 |
|
|
| 9.5 |
|
|
| 1.6 |
|
| ||
|
|
| Average free rent period per annum (in months) |
| 1.1 |
|
|
| 1.1 |
|
|
| 0.3 |
|
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Second generation space: (2) |
|
|
|
|
|
|
|
|
|
| |||||
|
| Square feet |
| 141,269 |
|
|
| 126,125 |
|
|
| 15,144 |
|
| |||
|
| Cash basis: |
|
|
|
|
|
|
|
|
|
|
|
| |||
|
|
| Initial rent (1) | $ | 66.06 |
|
| $ | 61.73 |
|
| $ | 102.14 |
|
| ||
|
|
| Prior escalated rent (3) | $ | 66.04 |
|
| $ | 62.43 |
|
| $ | 96.05 |
|
| ||
|
|
| Percentage increase (decrease) |
| 0.0 | % |
|
| (1.1 | %) |
|
| 6.3 | % |
| ||
|
| GAAP basis: |
|
|
|
|
|
|
|
|
|
|
|
| |||
|
|
| Straight-line rent | $ | 64.44 |
|
| $ | 59.79 |
|
| $ | 103.20 |
|
| ||
|
|
| Prior straight-line rent | $ | 64.76 |
|
| $ | 62.61 |
|
| $ | 82.66 |
|
| ||
|
|
| Percentage (decrease) increase |
| (0.5 | %) |
|
| (4.5 | %) |
|
| 24.9 | % |
|
(1) |
|
| Represents the weighted average cash basis starting rent per square foot and does not include free rent or periodic step-ups in rent. |
| Represents space leased that has been vacant for less than twelve months. |
| Represents the weighted average cash basis rents (including reimbursements) per square foot at expiration. |
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 June 30, 2021 |
| 88.0 | % | (2) |
| 86.5 | % | (2) |
| 92.1 | % |
| As of March 31, 2021 |
| 88.6 | % |
|
| 87.3 | % |
|
| 92.0 | % |
Same Store Leased Occupancy (1) | Total |
|
| New York |
|
| San Francisco |
| ||||
| As of March 31, 2022 |
| 90.6 | % |
|
| 90.8 | % |
|
| 90.1 | % |
| As of December 31, 2021 |
| 90.7 | % |
|
| 90.4 | % |
|
| 91.6 | % |
| (1) | Represents percentage of square feet that is leased, including signed leases not yet commenced, for properties that were owned by us in a similar manner during both the current and prior reporting periods. |
|
|
|
Leasing Results – Six Months Ended June 30, 2021
In the six months ended June 30, 2021, we leased 435,563 square feet, including 81,516 square feet that served to backfill the recent vacancy at 31 West 52nd Street, that was leased for a weighted average term of 14 years and an aggregate of 190,526 square feet of theatre space that was leased at 1633 Broadway for a weighted average term of 19 years. This leasing activity, offset by lease expirations in the six months (comprised primarily of the expiration of Barclays’ 497,500 square foot lease at 1301 Avenue of the Americas and TD Bank’s 131,300 square foot lease at 31 West 52nd Street), decreased leased occupancy and same store leased occupancy (properties owned by us in a similar manner during both reporting periods) by 720 basis points to 88.0% at June 30, 2021 from 95.2% at December 31, 2020. Excluding the theatre leases, 245,037 square feet was leased in the six months, of which our share was 216,690 square feet at a weighted average initial rent of $71.29 per square foot. Of the 245,037 square feet leased, 174,328 square feet represented our share of second generation space (space that had been vacant for less than twelve months) for which rental rates decreased by 2.2% on a cash basis and 6.6% on a GAAP basis. The weighted average lease term for leases signed during the six months was 8.9 years and weighted average tenant improvements and leasing commissions on these leases were $10.38 per square foot per annum, or 14.6% of initial rent.
New York
In the six months ended June 30, 2021, we leased 380,605 square feet in our New York portfolio, including 81,516 square feet that served to backfill the recent vacancy at 31 West 52nd Street, that was leased for a weighted average term of 14 years and an aggregate of 190,526 square feet of theatre space that was leased at 1633 Broadway for a weighted average term of 19 years. This leasing activity, offset by the lease expirations in the six months (comprised primarily of the expiration of Barclays’ 497,500 square foot lease at 1301 Avenue of the Americas and TD Bank’s 131,300 square foot lease at 31 West 52nd Street), decreased leased occupancy and same store leased occupancy by 860 basis points to 86.5% at June 30, 2021 from 95.1% at December 31, 2020. Excluding the theatre leases, 190,079 square feet was leased in the six months, of which our share was 184,234 square feet at a weighted average initial rent of $69.94 per square foot. Of the 190,079 square feet leased in the six months, 147,216 square feet represented our share of second generation space for which rental rates decreased by 1.1% on a cash basis and 4.9% on a GAAP basis. The weighted average lease term for leases signed during the six months was 9.6 years and weighted average tenant improvements and leasing commissions on these leases were $10.86 per square foot per annum, or 15.5% of initial rent.
San Francisco
In the six months ended June 30, 2021, we leased 54,958 square feet in our San Francisco portfolio, of which our share was 32,456 square feet that was leased at a weighted average initial rent of $78.94 per square foot. This leasing activity, offset by lease expirations in the six months, decreased leased occupancy and same store leased occupancy by 360 basis points to 92.1% at June 30, 2021 from 95.7% at December 31, 2020. Of the 54,958 square feet leased in the six months, 27,112 square feet represented our share of second generation space for which rental rates decreased by 7.7% on a cash basis and 13.8% on a GAAP basis. The weighted average lease term for leases signed during the six months was 4.4 years and weighted average tenant improvements and leasing commissions on these leases were $4.38 per square foot per annum, or 5.5% of initial rent.
The following table presents additional details on the leases signed during the six months ended June 30, 2021. It is not intended to coincide with the commencement of rental revenue in accordance with GAAP. The leasing statistics, except for square feet leased, represent office space only.
Six Months Ended June 30, 2021 | Total |
|
| New York |
|
| San Francisco |
| ||||||||
| Total square feet leased |
| 435,563 |
|
|
| 380,605 |
| (1) |
| 54,958 |
| ||||
| Pro rata share of total square feet leased: |
| 216,690 |
|
|
| 184,234 |
|
|
| 32,456 |
| ||||
|
| Initial rent (2) | $ | 71.29 |
|
| $ | 69.94 |
|
| $ | 78.94 |
| |||
|
| Weighted average lease term (in years) |
| 8.9 |
|
|
| 9.6 |
|
|
| 4.4 |
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Tenant improvements and leasing commissions: |
|
|
|
|
|
|
|
|
| |||||
|
|
| Per square foot | $ | 91.89 |
|
| $ | 104.70 |
|
| $ | 19.18 |
| ||
|
|
| Per square foot per annum | $ | 10.38 |
|
| $ | 10.86 |
|
| $ | 4.38 |
| ||
|
|
| Percentage of initial rent |
| 14.6 | % |
|
| 15.5 | % |
|
| 5.5 | % | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Rent concessions: |
|
|
|
|
|
|
|
|
| |||||
|
|
| Average free rent period (in months) |
| 11.8 |
|
|
| 13.3 |
|
|
| 3.1 |
| ||
|
|
| Average free rent period per annum (in months) |
| 1.3 |
|
|
| 1.4 |
|
|
| 0.7 |
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Second generation space: (3) |
|
|
|
|
|
|
|
|
| |||||
|
| Square feet |
| 174,328 |
|
|
| 147,216 |
|
|
| 27,112 |
| |||
|
| Cash basis: |
|
|
|
|
|
|
|
|
|
|
| |||
|
|
| Initial rent (2) | $ | 74.42 |
|
| $ | 73.64 |
|
| $ | 78.68 |
| ||
|
|
| Prior escalated rent (4) | $ | 76.13 |
|
| $ | 74.45 |
|
| $ | 85.25 |
| ||
|
|
| Percentage decrease |
| (2.2 | %) |
|
| (1.1 | %) |
|
| (7.7 | %) | ||
|
| GAAP basis: |
|
|
|
|
|
|
|
|
|
|
| |||
|
|
| Straight-line rent | $ | 71.09 |
|
| $ | 69.27 |
|
| $ | 81.01 |
| ||
|
|
| Prior straight-line rent | $ | 76.11 |
|
| $ | 72.82 |
|
| $ | 94.00 |
| ||
|
|
| Percentage decrease |
| (6.6 | %) |
|
| (4.9 | %) |
|
| (13.8 | %) |
|
|
|
|
|
|
|
|
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 June 30, 2021 |
| 88.0 | % | (2) |
| 86.5 | % | (2) |
| 92.1 | % |
| As of December 31, 2020 |
| 95.2 | % |
|
| 95.1 | % |
|
| 95.7 | % |
|
|
|
|
Financial Results - Three Months Ended June 30,March 31, 2022 and 2021 and 2020
Net Income, FFO and Core FFO
Net lossincome attributable to common stockholders was $15,943,000,$3,371,000, or $0.07$0.02 per diluted share, for the three months ended June 30,March 31, 2021,2022, compared to $6,270,000,net loss attributable to common stockholders of $3,578,000, or $0.03$0.02 per diluted share, for the three months ended June 30, 2020. Net loss attributable to common stockholders for the three months ended June 30, 2021 includes (i) a contribution to an unconsolidated joint venture of $10,688,000 that was expensed in accordance with GAAP and (ii) lower earnings resulting from a reduction in weighted average portfolio occupancy levels (87.1% for the three months ended June 30, 2021 compared to 94.5% for the three months ended June 30, 2020). Net loss attributable to common stockholders for the three months ended June 30, 2020 includes non-cash write-offs (primarily for straight-line rent receivables) aggregating $7,030,000.March 31, 2021.
Funds from Operations (“FFO”) attributable to common stockholders was $37,943,000,$54,873,000, or $0.17$0.25 per diluted share, for the three months ended June 30, 2021,March 31, 2022, compared to $50,663,000,$50,874,000, or $0.23 per diluted share, for the three months ended June 30, 2020.March 31, 2021. FFO attributable to common stockholders for the three months ended June 30, 2021 includes (i) a contribution to an unconsolidated joint venture of $10,688,000 that was expensed in accordance with GAAP and (ii) lower earnings resulting from a reduction in weighted average portfolio occupancy levels (87.1% for the three months ended June 30, 2021 compared to 94.5% for the three months ended June 30, 2020). FFO attributable to common stockholders for the three months ended June 30, 2020 includes non-cash write-offs (primarily for straight-line rent receivables) aggregating $7,030,000. FFO attributable to common stockholders for the three months ended June 30March 31, 20212022 and 2020 also2021 includes the impact of non-core items, which are listed in the table on page 59.44. The aggregate of the non-core items, net of amounts attributable to noncontrolling interests, decreased FFO attributable to common stockholders for the three months ended June 30, 2021 by $9,665,000, or $0.05 per diluted share, and increased FFO attributable to common stockholders for the three months ended June 30, 2020March 31, 2022 and 2021 by $545,000,$295,000 and $302,000, respectively, or $0.00 per diluted share.
Core Funds from Operations (“Core FFO”) attributable to common stockholders, which excludes the impact of the non-core items listed on page 59,44, was $47,608,000,$54,578,000, or $0.22$0.25 per diluted share, for the three months ended June 30, 2021,March 31, 2022, compared to $50,118,000,$50,572,000, or $0.23 per diluted share, for the three months ended June 30, 2020March 31, 2021.
Same Store Results
The table below summarizes the percentage (decrease) increase in our share of Same Store NOI and Same Store Cash NOI, by segment, for the three months ended June 30, 2021March 31, 2022 versus June 30, 2020.March 31, 2021.
|
| Total |
|
| New York |
|
| San Francisco |
|
| Total |
|
| New York |
|
| San Francisco |
| ||||||
Same Store NOI |
|
| (11.0 | %) |
|
| (11.7 | %) |
|
| (9.5 | %) |
|
| (2.7 | %) |
|
| 3.1 | % |
|
| (13.0 | %) |
Same Store Cash NOI |
|
| 3.0 | % |
|
| 3.8 | % |
|
| 1.3 | % |
|
| 3.9 | % |
|
| 6.6 | % |
|
| (1.7 | %) |
See pages 51-5940-44 “Non-GAAP Financial Measures” for a reconciliation of these measures to the most directly comparable GAAP measure and the reasons why we believe these non-GAAP measures are useful.
Financial Results - Six Months Ended June 30, 2021 and 2020
Net Income, FFO and Core FFO
Net loss attributable to common stockholders was $19,521,000, or $0.09 per diluted share, for the six months ended June 30,2021, compared to $2,922,000, or $0.01 per diluted share, for the six months ended June 30, 2020. Net loss attributable to common stockholders for the six months ended June 30, 2021 includes (i) a contribution to an unconsolidated joint venture of $10,688,000 that was expensed in accordance with GAAP and (ii) lower earnings resulting from a reduction in weighted average portfolio occupancy levels (87.9% for the six months ended June 30, 2021 compared to 94.0% for the six months ended June 30, 2020). Net loss attributable to common stockholders for the six months ended June 30, 2020 includes non-cash write-offs (primarily for straight-line rent receivables) aggregating $7,030,000.
FFO attributable to common stockholders was $88,817,000, or $0.40 per diluted share, for the six months ended June 30, 2021, compared to $112,249,000, or $0.50 per diluted share, for the six months ended June 30, 2020. FFO attributable to common stockholders for the six months ended June 30, 2021 includes (i) a contribution to an unconsolidated joint venture of $10,688,000 that was expensed in accordance with GAAP and (ii) lower earnings resulting from a reduction in weighted average portfolio occupancy levels (87.9% for the six months ended June 30, 2021 compared to 94.0% for the six months ended June 30, 2020). FFO attributable to common stockholders for the six months ended June 30, 2020 includes non-cash write-offs (primarily for straight-line rent receivables) aggregating $7,030,000. FFO attributable to common stockholders for the six months ended June 30, 2021 and 2020 also includes the impact of non-core items, which are listed in the table on page 59. The aggregate of the non-core items, net of amounts attributable to noncontrolling interests, decreased FFO attributable to common stockholders for the six months ended June 30, 2021 by $9,363,000, or $0.05 per diluted share, and increased FFO attributable to common stockholders for the six months ended June 30, 2020 by $622,000, or $0.00 per diluted share.
Core FFO attributable to common stockholders, which excludes the impact of the non-core items listed on page 59, was $98,180,000, or $0.45 per diluted share, for the six months ended June 30, 2021, compared to $111,627,000, or $0.50 per diluted share, for the six months ended June 30, 2020.
Same Store Results
The table below summarizes the percentage (decrease) increase in our share of Same Store NOI and Same Store Cash NOI, by segment, for the six months ended June 30, 2021 versus June 30, 2020.
|
| Total |
|
| New York |
|
| San Francisco |
| |||
Same Store NOI |
|
| (9.2 | %) |
|
| (11.9 | %) |
|
| (3.7 | %) |
Same Store Cash NOI |
|
| 0.1 | % |
|
| (1.9 | %) |
|
| 4.5 | % |
See pages 51-59 “Non-GAAP Financial Measures” for a reconciliation of these measures to the most directly comparable GAAP measure and the reasons why we believe these non-GAAP measures are useful.
Results of Operations - Three Months Ended June 30,March 31, 2022 and 2021 and 2020
The following pages summarize our consolidated results of operations for the three months ended June 30, 2021March 31, 2022 and 2020.2021.
|
|
|
| For the Three Months Ended June 30, |
|
|
|
|
|
|
|
| For the Three Months Ended March 31, |
|
|
|
|
| ||||||||||||||
(Amounts in thousands) | (Amounts in thousands) | 2021 |
|
| 2020 |
|
| Change |
| (Amounts in thousands) | 2022 |
|
| 2021 |
|
| Change |
| ||||||||||||||
Revenues: | Revenues: |
|
|
|
|
|
|
|
|
|
|
| Revenues: |
|
|
|
|
|
|
|
|
|
|
| ||||||||
| Rental revenue | $ | 174,628 |
|
| $ | 163,989 |
|
| $ | 10,639 |
| Rental revenue | $ | 169,922 |
|
| $ | 173,146 |
|
| $ | (3,224 | ) | ||||||||
| Fee and other income |
| 7,641 |
|
|
| 7,129 |
|
|
| 512 |
| Fee and other income |
| 13,763 |
|
|
| 8,020 |
|
|
| 5,743 |
| ||||||||
|
| Total revenues |
| 182,269 |
|
|
| 171,118 |
|
|
| 11,151 |
|
| Total revenues |
| 183,685 |
|
|
| 181,166 |
|
|
| 2,519 |
| ||||||
Expenses: | Expenses: |
|
|
|
|
|
|
|
|
|
|
| Expenses: |
|
|
|
|
|
|
|
|
|
|
| ||||||||
| Operating |
| 64,072 |
|
|
| 64,313 |
|
|
| (241 | ) | Operating |
| 66,661 |
|
|
| 66,618 |
|
|
| 43 |
| ||||||||
| Depreciation and amortization |
| 59,925 |
|
|
| 58,716 |
|
|
| 1,209 |
| Depreciation and amortization |
| 55,624 |
|
|
| 58,305 |
|
|
| (2,681 | ) | ||||||||
| General and administrative |
| 18,418 |
|
|
| 17,901 |
|
|
| 517 |
| General and administrative |
| 15,645 |
|
|
| 14,364 |
|
|
| 1,281 |
| ||||||||
| Transaction related costs |
| 135 |
|
|
| 258 |
|
|
| (123 | ) | Transaction related costs |
| 117 |
|
|
| 281 |
|
|
| (164 | ) | ||||||||
|
| Total expenses |
| 142,550 |
|
|
| 141,188 |
|
|
| 1,362 |
|
| Total expenses |
| 138,047 |
|
|
| 139,568 |
|
|
| (1,521 | ) | ||||||
Other income (expense): | Other income (expense): |
|
|
|
|
|
|
|
|
|
|
| Other income (expense): |
|
|
|
|
|
|
|
|
|
|
| ||||||||
| Loss from unconsolidated joint ventures |
| (15,717 | ) |
|
| (5,955 | ) |
|
| (9,762 | ) | Loss from unconsolidated joint ventures |
| (5,113 | ) |
|
| (5,316 | ) |
|
| 203 |
| ||||||||
| Income from unconsolidated real estate funds |
| 148 |
|
|
| 89 |
|
|
| 59 |
| Income from unconsolidated real estate funds |
| 170 |
|
|
| 180 |
|
|
| (10 | ) | ||||||||
| Interest and other income, net |
| 1,070 |
|
|
| 2,252 |
|
|
| (1,182 | ) | Interest and other income, net |
| 231 |
|
|
| 1,302 |
|
|
| (1,071 | ) | ||||||||
| Interest and debt expense |
| (34,914 | ) |
|
| (36,009 | ) |
|
| 1,095 |
| Interest and debt expense |
| (34,277 | ) |
|
| (34,739 | ) |
|
| 462 |
| ||||||||
Loss from continuing operations, before income taxes |
| (9,694 | ) |
|
| (9,693 | ) |
|
| (1 | ) | |||||||||||||||||||||
Net income before income taxes | Net income before income taxes |
| 6,649 |
|
|
| 3,025 |
|
|
| 3,624 |
| ||||||||||||||||||||
| Income tax expense |
| (434 | ) |
|
| (138 | ) |
|
| (296 | ) | Income tax expense |
| (527 | ) |
|
| (1,141 | ) |
|
| 614 |
| ||||||||
Loss from continuing operations, net |
| (10,128 | ) |
|
| (9,831 | ) |
|
| (297 | ) | |||||||||||||||||||||
Income from discontinued operations, net |
| - |
|
|
| 2,147 |
|
|
| (2,147 | ) | |||||||||||||||||||||
Net loss |
| (10,128 | ) |
|
| (7,684 | ) |
|
| (2,444 | ) | |||||||||||||||||||||
Net income | Net income |
| 6,122 |
|
|
| 1,884 |
|
|
| 4,238 |
| ||||||||||||||||||||
Less net (income) loss attributable to noncontrolling interests in: | Less net (income) loss attributable to noncontrolling interests in: |
|
|
|
|
|
|
|
|
|
|
| Less net (income) loss attributable to noncontrolling interests in: |
|
|
|
|
|
|
|
|
|
|
| ||||||||
| Consolidated joint ventures |
| (7,428 | ) |
|
| (405 | ) |
|
| (7,023 | ) | Consolidated joint ventures |
| (3,425 | ) |
|
| (5,728 | ) |
|
| 2,303 |
| ||||||||
| Consolidated real estate fund |
| 29 |
|
|
| 1,235 |
|
|
| (1,206 | ) | Consolidated real estate fund |
| 1,016 |
|
|
| (85 | ) |
|
| 1,101 |
| ||||||||
| Operating Partnership |
| 1,584 |
|
|
| 584 |
|
|
| 1,000 |
| Operating Partnership |
| (342 | ) |
|
| 351 |
|
|
| (693 | ) | ||||||||
Net loss attributable to common stockholders | $ | (15,943 | ) |
| $ | (6,270 | ) |
| $ | (9,673 | ) | |||||||||||||||||||||
Net income (loss) attributable to common stockholders | Net income (loss) attributable to common stockholders | $ | 3,371 |
|
| $ | (3,578 | ) |
| $ | 6,949 |
|
Revenues
Our revenues, which consist of rental revenue and fee and other income, were $182,269,000$183,685,000 for the three months ended June 30, 2021,March 31, 2022, compared to $171,118,000$181,166,000 for the three months ended June 30, 2020,March 31, 2021, an increase of $11,151,000.$2,519,000. Below are the details of the increase (decrease) by segment.
(Amounts in thousands) |
| Total |
|
| New York |
|
| San Francisco |
|
| Other |
|
| Total |
|
| New York |
|
| San Francisco |
|
| Other |
|
| ||||||||
Rental revenue |
|
|
|
|
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Same store operations |
| $ | (8,531 | ) |
| $ | (9,788 | ) | (1) | $ | 1,257 |
|
| $ | - |
|
| $ | (6,071 | ) |
| $ | 879 |
|
| $ | (6,950 | ) | (1) | $ | - |
|
|
Non-cash write-offs (primarily straight-line rent receivables) |
|
| 11,309 |
|
|
| 5,400 |
|
|
| 5,909 |
|
|
| - |
| |||||||||||||||||
Reserves for uncollectible accounts receivable |
|
| 2,051 |
|
|
| 1,019 |
|
|
| 1,032 |
|
|
| - |
| |||||||||||||||||
Other, net |
|
| 5,810 |
|
|
| 628 |
|
|
| 5,253 |
| (2) |
| (71 | ) |
|
| 2,847 |
|
|
| 2,469 |
| (2) |
| 373 |
|
|
| 5 |
|
|
Increase (decrease) in rental revenue |
| $ | 10,639 |
|
| $ | (2,741 | ) |
| $ | 13,451 |
|
| $ | (71 | ) | |||||||||||||||||
(Decrease) increase in rental revenue |
| $ | (3,224 | ) |
| $ | 3,348 |
|
| $ | (6,577 | ) |
| $ | 5 |
|
| ||||||||||||||||
|
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Fee and other income |
|
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|
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|
|
|
|
|
|
|
|
|
|
|
|
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|
|
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|
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|
|
Fee income |
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset management |
| $ | (162 | ) |
| $ | - |
|
| $ | - |
|
| $ | (162 | ) |
| $ | (601 | ) |
| $ | - |
|
| $ | - |
|
| $ | (601 | ) |
|
Property management |
|
| (154 | ) |
|
| - |
|
|
| - |
|
|
| (154 | ) |
|
| 23 |
|
|
| - |
|
|
| - |
|
|
| 23 |
|
|
Acquisition, disposition and leasing |
|
| 439 |
|
|
| - |
|
|
| - |
|
|
| 439 |
| |||||||||||||||||
Other |
|
| (131 | ) |
|
| - |
|
|
| - |
|
|
| (131 | ) | |||||||||||||||||
Decrease in fee income |
|
| (8 | ) |
|
| - |
|
|
| - |
|
|
| (8 | ) | |||||||||||||||||
Acquisition, disposition, leasing and other |
|
| 5,896 |
|
|
| - |
|
|
| - |
|
|
| 5,896 |
| (3) | ||||||||||||||||
Increase in fee income |
|
| 5,318 |
|
|
| - |
|
|
| - |
|
|
| 5,318 |
|
| ||||||||||||||||
Other income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Same store operations |
|
| 520 |
|
|
| 253 |
|
|
| 396 |
|
|
| (129 | ) |
|
| 425 |
|
|
| 220 |
|
|
| 194 |
|
|
| 11 |
|
|
Increase (decrease) in other income |
|
| 520 |
|
|
| 253 |
|
|
| 396 |
|
|
| (129 | ) | |||||||||||||||||
Increase (decrease) in fee and other income |
| $ | 512 |
|
| $ | 253 |
|
| $ | 396 |
|
| $ | (137 | ) | |||||||||||||||||
Increase in other income |
|
| 425 |
|
|
| 220 |
|
|
| 194 |
|
|
| 11 |
|
| ||||||||||||||||
Increase in fee and other income |
| $ | 5,743 |
|
| $ | 220 |
|
| $ | 194 |
|
| $ | 5,329 |
|
| ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total increase (decrease) in revenues |
| $ | 11,151 |
|
| $ | (2,488 | ) |
| $ | 13,847 |
|
| $ | (208 | ) |
| $ | 2,519 |
|
| $ | 3,568 |
|
| $ | (6,383 | ) |
| $ | 5,334 |
|
|
(1) | Primarily due to |
(2) | Primarily due to lease termination income of |
(3) | Primarily due to fee income earned in connection with |
Expenses
Our expenses, which consist of operating, depreciation and amortization, general and administrative and transaction related costs, were $142,550,000$138,047,000 for the three months ended June 30, 2021,March 31, 2022, compared to $141,188,000$139,568,000 for the three months ended June 30, 2020, an increaseMarch 31, 2021, a decrease of $1,362,000.$1,521,000. Below are the details of the (decrease) increase (decrease) by segment.
|
|
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|
|
|
(Amounts in thousands) | (Amounts in thousands) |
| Total |
|
| New York |
|
| San Francisco |
|
| Other |
|
| (Amounts in thousands) |
| Total |
|
| New York |
|
| San Francisco |
|
| Other |
|
| ||||||||||
Operating | Operating |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Operating |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Same store operations | Same store operations |
| $ | (399 | ) |
| $ | (1,412 | ) |
| $ | 1,013 |
|
| $ | - |
|
| Same store operations |
| $ | (459 | ) |
| $ | (813 | ) |
| $ | 354 |
|
| $ | - |
|
| ||
Other, net | Other, net |
|
| 158 |
|
|
| - |
|
|
| - |
|
|
| 158 |
|
| Other, net |
|
| 502 |
|
|
| - |
|
|
| - |
|
|
| 502 |
|
| ||
(Decrease) increase in operating |
| $ | (241 | ) |
| $ | (1,412 | ) |
| $ | 1,013 |
|
| $ | 158 |
|
| |||||||||||||||||||||
Increase (decrease) in operating | Increase (decrease) in operating |
| $ | 43 |
|
| $ | (813 | ) |
| $ | 354 |
|
| $ | 502 |
|
| ||||||||||||||||||||
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Depreciation and amortization | Depreciation and amortization |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Depreciation and amortization |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Operations | Operations |
| $ | 1,209 |
|
| $ | (1,638 | ) | (1) | $ | 2,980 |
| (2) | $ | (133 | ) |
| Operations |
| $ | (2,681 | ) |
| $ | (1,671 | ) |
| $ | (987 | ) |
| $ | (23 | ) |
| ||
Increase (decrease) in depreciation and amortization |
| $ | 1,209 |
|
| $ | (1,638 | ) |
| $ | 2,980 |
|
| $ | (133 | ) |
| |||||||||||||||||||||
Decrease in depreciation and amortization | Decrease in depreciation and amortization |
| $ | (2,681 | ) |
| $ | (1,671 | ) |
| $ | (987 | ) |
| $ | (23 | ) |
| ||||||||||||||||||||
|
|
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
General and administrative | General and administrative |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| General and administrative |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Mark-to-market of investments | Mark-to-market of investments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Mark-to-market of investments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
in our deferred compensation plan | in our deferred compensation plan |
| $ | (1,151 | ) |
| $ | - |
|
| $ | - |
|
| $ | (1,151 | ) | (3) | in our deferred compensation plan |
| $ | (912 | ) |
| $ | - |
|
| $ | - |
|
| $ | (912 | ) | (1) | ||
Operations | Operations |
|
| 1,668 |
|
|
| - |
|
|
| - |
|
|
| 1,668 |
|
| Operations |
|
| 2,193 |
|
|
| - |
|
|
| - |
|
|
| 2,193 |
|
| ||
Increase in general and administrative | Increase in general and administrative |
| $ | 517 |
|
| $ | - |
|
| $ | - |
|
| $ | 517 |
|
| Increase in general and administrative |
| $ | 1,281 |
|
| $ | - |
|
| $ | - |
|
| $ | 1,281 |
|
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Decrease in transaction related costs | Decrease in transaction related costs |
| $ | (123 | ) |
| $ | - |
|
| $ | - |
|
| $ | (123 | ) |
| Decrease in transaction related costs |
| $ | (164 | ) |
| $ | - |
|
| $ | - |
|
| $ | (164 | ) |
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total increase (decrease) in expenses |
| $ | 1,362 |
|
| $ | (3,050 | ) |
| $ | 3,993 |
|
| $ | 419 |
|
| |||||||||||||||||||||
Total (decrease) increase in expenses | Total (decrease) increase in expenses |
| $ | (1,521 | ) |
| $ | (2,484 | ) |
| $ | (633 | ) |
| $ | 1,596 |
|
|
(1) |
|
|
|
| Represents |
|
Loss from Unconsolidated Joint Ventures
Loss from unconsolidated joint ventures was $15,717,000$5,113,000 for the three months ended June 30, 2021March 31, 2022, compared to $5,955,000$5,316,000 in the three months ended June 30, 2020, an increaseMarch 31, 2021, a decrease in loss of $9,762,000.$203,000. This increasedecrease resulted from:
(Amounts in thousands) |
|
|
|
|
|
|
|
|
|
|
712 Fifth Avenue |
| $ | (11,357 | ) | (1) | |||||
Market Center |
| $ | 1,767 |
| (1) | |||||
One Steuart Lane |
|
| (1,176 | ) | (2) | |||||
Other, net |
|
| 1,595 |
|
|
|
| (388 | ) |
|
Total increase in loss |
| $ | (9,762 | ) |
| |||||
Total decrease in loss |
| $ | 203 |
|
|
| (1) | Primarily due to |
(2) | Primarily due to higher income in the prior year’s three months resulting from capitalization of expenses while the project was under development, partially offset by gain on sale of residential condominium units at One Steuart Lane in the current year’s three |
|
Income from Unconsolidated Real Estate Funds
Income from unconsolidated real estate funds was $148,000$170,000 for the three months ended June 30, 2021,March 31, 2022, compared to $89,000$180,000 for the three months ended June 30, 2020, an increaseMarch 31, 2021, a decrease in income of $59,000.$10,000.
Interest and Other Income, net
Interest and other income was $1,070,000$231,000 for the three months ended June 30, 2021,March 31, 2022, compared to $2,252,000 of income$1,302,000 for the three months ended June 30, 2020,March 31, 2021, a decrease in income of $1,182,000.$1,071,000. This decrease in income resulted from:
(Amounts in thousands) |
|
|
|
|
Decrease in the value of investments in our deferred compensation plan (which is entirely offset by a decrease in "general and administrative") |
| $ | (1,151 | ) |
Other, net (primarily lower yields on short-term investments) |
|
| (31 | ) |
Total decrease in income |
| $ | (1,182 | ) |
Interest and Debt Expense
Interest and debt expense was $34,914,000 for the three months ended June 30, 2021, compared to $36,009,000 for the three months ended June 30, 2020, a decrease of $1,095,000. This decrease resulted primarily from lower borrowings from our revolving credit facility.
Income Tax Expense
Income tax expense was $434,000 for the three months ended June 30, 2021, compared to $138,000 for the three months ended June 30, 2020, an increase of $296,000. This increase resulted primarily from higher taxable income attributable to our taxable REIT subsidiaries in the current year’s three months.
Income from Discontinued Operations
Income from discontinued operations was $2,147,000 for the three months ended June 30, 2020 and represented income from 1899 Pennsylvania Avenue in Washington, D.C., which was sold in December 2020.
Net Income Attributable to Noncontrolling Interests in Consolidated Joint Ventures
Net income attributable to noncontrolling interests in consolidated joint ventures was $7,428,000 for the three months ended June 30, 2021, compared to $405,000 for the three months ended June 30, 2020, an increase in income allocated to noncontrolling interests of $7,023,000. This increase in income resulted from:
(Amounts in thousands) |
|
|
|
|
|
|
|
|
|
|
Higher income attributable to 300 Mission Street ($4,345 of income in 2021, compared to loss of $2,736 in 2020) |
| $ | 7,081 |
| (1) | |||||
Mark-to-market of investments in our deferred compensation plan in 2021 (1) |
| $ | (912 | ) |
| |||||
Other, net |
|
| (58 | ) |
|
|
| (159 | ) |
|
Total increase in income attributable to noncontrolling interests |
| $ | 7,023 |
|
| |||||
Total decrease in income |
| $ | (1,071 | ) |
|
| (1) |
|
Net Loss Attributable to Noncontrolling Interests in Consolidated Real Estate Fund
Net loss attributable to noncontrolling interests in consolidated real estate fund was $29,000 for the three months ended June 30, 2021, compared to $1,235,000 for the three months ended June 30, 2020, a decrease in loss allocated to noncontrolling interest of $1,206,000. This decrease was primarily due to higher marketing expense for One Steuart Lane in the prior year’s three months.
Net Loss Attributable to Noncontrolling Interests in Operating Partnership
Net loss attributable to noncontrolling interests in the Operating Partnership was $1,584,000 for the three months ended June 30, 2021, compared to $584,000 of loss for the three months ended June 30, 2020, an increase in loss allocated to noncontrolling interests of $1,000,000. This increase in loss resulted from higher net loss subject to allocation to the unitholders of the Operating Partnership for the three months ended June 30, 2021.
Results of Operations - Six Months Ended June 30, 2021 and 2020
The following pages summarize our consolidated results of operations for the six months ended June 30, 2021 and 2020.
|
|
|
|
|
| For the Six Months Ended June 30, |
|
|
|
|
| |||||
(Amounts in thousands) | 2021 |
|
| 2020 |
|
| Change |
| ||||||||
Revenues: |
|
|
|
|
|
|
|
|
|
|
| |||||
| Rental revenue | $ | 347,774 |
|
| $ | 339,414 |
|
| $ | 8,360 |
| ||||
| Fee and other income |
| 15,661 |
|
|
| 15,690 |
|
|
| (29 | ) | ||||
|
| Total revenues |
| 363,435 |
|
|
| 355,104 |
|
|
| 8,331 |
| |||
Expenses: |
|
|
|
|
|
|
|
|
|
|
| |||||
| Operating |
| 130,690 |
|
|
| 131,327 |
|
|
| (637 | ) | ||||
| Depreciation and amortization |
| 118,230 |
|
|
| 117,143 |
|
|
| 1,087 |
| ||||
| General and administrative |
| 32,782 |
|
|
| 30,150 |
|
|
| 2,632 |
| ||||
| Transaction related costs |
| 416 |
|
|
| 461 |
|
|
| (45 | ) | ||||
|
| Total expenses |
| 282,118 |
|
|
| 279,081 |
|
|
| 3,037 |
| |||
Other income (expense): |
|
|
|
|
|
|
|
|
|
|
| |||||
| Loss from unconsolidated joint ventures |
| (21,033 | ) |
|
| (10,176 | ) |
|
| (10,857 | ) | ||||
| Income from unconsolidated real estate funds |
| 328 |
|
|
| 141 |
|
|
| 187 |
| ||||
| Interest and other income, net |
| 2,372 |
|
|
| 1,256 |
|
|
| 1,116 |
| ||||
| Interest and debt expense |
| (69,653 | ) |
|
| (72,628 | ) |
|
| 2,975 |
| ||||
Loss from continuing operations, before income taxes |
| (6,669 | ) |
|
| (5,384 | ) |
|
| (1,285 | ) | |||||
| Income tax expense |
| (1,575 | ) |
|
| (742 | ) |
|
| (833 | ) | ||||
Loss from continuing operations, net |
| (8,244 | ) |
|
| (6,126 | ) |
|
| (2,118 | ) | |||||
Income from discontinued operations, net |
| - |
|
|
| 3,668 |
|
|
| (3,668 | ) | |||||
Net loss |
| (8,244 | ) |
|
| (2,458 | ) |
|
| (5,786 | ) | |||||
Less net (income) loss attributable to noncontrolling interests in: |
|
|
|
|
|
|
|
|
|
|
| |||||
| Consolidated joint ventures |
| (13,156 | ) |
|
| (1,919 | ) |
|
| (11,237 | ) | ||||
| Consolidated real estate fund |
| (56 | ) |
|
| 1,212 |
|
|
| (1,268 | ) | ||||
| Operating Partnership |
| 1,935 |
|
|
| 243 |
|
|
| 1,692 |
| ||||
Net loss attributable to common stockholders | $ | (19,521 | ) |
| $ | (2,922 | ) |
| $ | (16,599 | ) | |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
Our revenues, which consist of rental revenue and fee and other income, were $363,435,000 for the six months ended June 30, 2021, compared to $355,104,000 for the six months ended June 30, 2020, an increase of $8,331,000. Below are the details of the increase (decrease) by segment.
(Amounts in thousands) |
| Total |
|
| New York |
|
| San Francisco |
|
| Other |
| ||||
Rental revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Same store operations |
| $ | (9,660 | ) |
|
| (18,580 | ) | (1) | $ | 8,920 |
| (2) | $ | - |
|
Non-cash write-offs (primarily straight-line rent receivables) |
|
| 11,309 |
|
|
| 5,400 |
|
|
| 5,909 |
|
|
| - |
|
Reserves for uncollectible accounts receivable |
|
| 2,051 |
|
|
| 1,019 |
|
|
| 1,032 |
|
|
| - |
|
Other, net |
|
| 4,660 |
|
|
| 88 |
|
|
| 4,860 |
| (3) |
| (288 | ) |
Increase (decrease) in rental revenue |
| $ | 8,360 |
|
| $ | (12,073 | ) |
| $ | 20,721 |
|
| $ | (288 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fee and other income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fee income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset management |
| $ | (197 | ) |
| $ | - |
|
| $ | - |
|
| $ | (197 | ) |
Property management |
|
| (408 | ) |
|
| - |
|
|
| - |
|
|
| (408 | ) |
Acquisition, disposition and leasing |
|
| 439 |
|
|
| - |
|
|
| - |
|
|
| 439 |
|
Other |
|
| 498 |
|
|
| - |
|
|
| - |
|
|
| 498 |
|
Increase in fee income |
|
| 332 |
|
|
| - |
|
|
| - |
|
|
| 332 |
|
Other income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Same store operations |
|
| (361 | ) |
|
| (155 | ) |
|
| (69 | ) |
|
| (137 | ) |
Decrease in other income |
|
| (361 | ) |
|
| (155 | ) |
|
| (69 | ) |
|
| (137 | ) |
(Decrease) increase in fee and other income |
| $ | (29 | ) |
| $ | (155 | ) |
| $ | (69 | ) |
| $ | 195 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total increase (decrease) in revenues |
| $ | 8,331 |
|
| $ | (12,228 | ) |
| $ | 20,652 |
|
| $ | (93 | ) |
|
|
|
|
|
|
Expenses
Our expenses, which consist of operating, depreciation and amortization, general and administrative and transaction related costs, were $282,118,000 for the six months ended June 30, 2021, compared to $279,081,000 for the six months ended June 30, 2020, an increase of $3,037,000. Below are the details of the increase (decrease) by segment.
(Amounts in thousands) |
| Total |
|
| New York |
|
| San Francisco |
|
| Other |
|
| ||||||
Operating |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Same store operations |
| $ | (385 | ) |
| $ | (1,417 | ) |
| $ | 1,032 |
|
| $ | - |
|
| ||
Other, net |
|
| (252 | ) |
|
| - |
|
|
| - |
|
|
| (252 | ) |
| ||
(Decrease) increase in operating |
| $ | (637 | ) |
| $ | (1,417 | ) |
| $ | 1,032 |
|
| $ | (252 | ) |
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Depreciation and amortization |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Operations |
|
| 1,087 |
|
|
| (2,373 | ) | (1) |
| 3,705 |
| (2) |
| (245 | ) |
| ||
Increase (decrease) in depreciation and amortization |
| $ | 1,087 |
|
| $ | (2,373 | ) |
| $ | 3,705 |
|
| $ | (245 | ) |
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
General and administrative |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Mark-to-market of investments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
in our deferred compensation plan |
| $ | 1,745 |
|
| $ | - |
|
| $ | - |
|
| $ | 1,745 |
| (3) | ||
Operations |
|
| 887 |
|
|
| - |
|
|
| - |
|
|
| 887 |
|
| ||
Increase in general and administrative |
| $ | 2,632 |
|
| $ | - |
|
| $ | - |
|
| $ | 2,632 |
|
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Decrease in transaction related costs |
| $ | (45 | ) |
| $ | - |
|
| $ | - |
|
| $ | (45 | ) |
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total increase (decrease) in expenses |
| $ | 3,037 |
|
| $ | (3,790 | ) |
| $ | 4,737 |
|
| $ | 2,090 |
|
|
|
|
|
|
| Represents |
|
Loss from Unconsolidated Joint Ventures
Loss from unconsolidated joint ventures was $21,033,000 for the six months ended June 30, 2021 compared to $10,176,000 in the six months ended June 30, 2020, an increase of $10,857,000. This increase resulted from:
(Amounts in thousands) |
|
|
|
|
|
712 Fifth Avenue |
| $ | (11,357 | ) | (1) |
Other, net |
|
| 500 |
|
|
Total increase in loss |
| $ | (10,857 | ) |
|
|
|
Income from Unconsolidated Real Estate Funds
Income from unconsolidated real estate funds was $328,000 for the six months ended June 30, 2021, compared to $141,000 for the six months ended June 30, 2020, an increase of $187,000.
Interest and Other Income, net
Interest and other income was $2,372,000 for the six months ended June 30, 2021, compared to $1,256,000 of income for the six months ended June 30, 2020, an increase in income of $1,116,000. This increase in income resulted from:
(Amounts in thousands) |
|
|
|
|
Increase in the value of investments in our deferred compensation plan (which is entirely offset by an increase in "general and administrative") |
| $ | 1,745 |
|
Other, net (primarily lower yields on short-term investments) |
|
| (629 | ) |
Total increase in income |
| $ | 1,116 |
|
Interest and Debt Expense
Interest and debt expense was $69,653,000$34,277,000 for the sixthree months ended June 30, 2021,March 31, 2022, compared to $72,628,000$34,739,000 for the sixthree months ended June 30, 2020,March 31, 2021, a decrease of $2,975,000.$462,000. This decrease resulted primarily from (i) lower average LIBOR rates on variable rate debtamortization of deferred financing costs in connection with the current year’s six months compared to prior year’s six months and (ii) lower borrowings from our revolving credit facility.refinancing of 1301 Avenue of the Americas in July 2021.
Income Tax Expense
Income tax expense was $1,575,000$527,000 for the sixthree months ended June 30, 2021,March 31, 2022, compared to $742,000$1,141,000 for the sixthree months ended June 30, 2020, an increaseMarch 31, 2021, a decrease of $833,000.$614,000. This increasedecrease resulted primarily from higherlower taxable income attributable to our taxable REIT subsidiaries in the current year’s sixthree months.
Income from Discontinued Operations
Income from discontinued operations was $3,668,000 for the six months ended June 30, 2020 and represented income from 1899 Pennsylvania Avenue in Washington, D.C., which was sold in December 2020.
Net Income Attributable to Noncontrolling Interests in Consolidated Joint Ventures
Net income attributable to noncontrolling interests in consolidated joint ventures was $13,156,000$3,425,000 for the sixthree months ended June 30, 2021,March 31, 2022, compared to $1,919,000$5,728,000 for the sixthree months ended June 30, 2020, an increaseMarch 31, 2021, a decrease in income allocated to noncontrolling interests of $11,237,000.$2,303,000. This increasedecrease in income resulted from:
(Amounts in thousands) |
|
|
|
|
|
|
|
|
|
|
Higher income attributable to 300 Mission Street ($6,582 of income in 2021, compared to loss of $3,820 in 2020) |
| $ | 10,402 |
| (1) | |||||
Lower income attributable to 300 Mission Street ($614 of income in 2022, compared to $2,237 in 2021) |
| $ | (1,623 | ) | (1) | |||||
Lower income attributable to One Market Plaza ($2,402 of income in 2022, compared to $3,277 in 2021) |
|
| (875 | ) | (1) | |||||
Other, net |
|
| 835 |
|
|
|
| 195 |
|
|
Total increase in income attributable to noncontrolling interests |
| $ | 11,237 |
|
| |||||
Total decrease in income attributable to noncontrolling interests |
| $ | (2,303 | ) |
|
| (1) | Primarily due to |
|
Net Income (Loss)Loss (Income) Attributable to Noncontrolling Interests in Consolidated Real Estate Fund
Net incomeloss attributable to noncontrolling interests in consolidated real estate fund was $56,000$1,016,000 for the sixthree months ended June 30, 2021,March 31, 2022, compared to net lossincome attributable to noncontrolling interest in consolidated real estate fundinterests of $1,212,000$85,000 for the sixthree months ended June 30, 2020,March 31, 2021, a decrease in lossincome allocated to noncontrolling interest of $1,268,000.$1,101,000. This decrease resulted primarily from higher income in the prior year’s three months resulting from capitalization of expenses at One Steuart Lane while the project was primarily due to higher marketing expenses forunder development, partially offset by gain on sale of residential condominium units at One Steuart Lane in the priorcurrent year’s sixthree months.
Net (Income) Loss Attributable to Noncontrolling Interests in Operating Partnership
Net lossincome attributable to noncontrolling interests in the Operating Partnership was $1,935,000$342,000 for the sixthree months ended June 30, 2021,March 31, 2022, compared to $243,000 for the six months ended June 30, 2020, an increase innet loss attributable to noncontrolling interests of $1,692,000.$351,000 for the three months ended March 31, 2021, an increase in income allocated to noncontrolling interests of $693,000. This increase in lossincome resulted from higher net lossincome subject to allocation to the unitholders of the Operating Partnership for the sixthree months ended June 30, 2021.March 31, 2022.
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, 2022, we had $1.22 billion of liquidity comprised of $461,995,000 of cash and cash equivalents, $6,331,000 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 June 30, 2021, we had $1.51 billion of liquidity comprised of $475,289,000 of cash and cash equivalents, $32,552,000 of restricted cash and $1.0 billion of borrowing capacity under our revolving credit facility. As of June 30, 2021,March 31, 2022, our outstanding consolidated debt aggregated $3.83$3.86 billion. We had no amounts outstanding under our revolving credit facility. In November 2021, the $850,000,000 mortgage loan at 1301 Avenuefacility and none of the Americas is scheduled to mature. We are currently exploring various alternatives to refinance this debt.our debt matures until October 2023. We may refinance this debt or any of our maturing debt when it comes due 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 $1.0 billion$750,000,000 revolving credit facility matures in January 2022March 2026 and has two six-month extension options. The interest rate on the facility at current leverage levels, is LIBOR plus 115 basis points and hasover the Secured Overnight Financing Rate (“SOFR”) with adjustments based on the terms of advances, plus a facility fee of 20 basis pointspoints. The facility fee. We also have an option, subject to customary conditions and incremental lender commitments, to increasefeatures a sustainability-linked pricing component such that if we meet certain sustainability performance targets, the capacity under the facility to $1.5 billion at any time prior to the maturity date of the facility.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%, however, the leverage ratiowhich 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 charge coverage ratio of at least 1.50, (iv) an unsecured leverage ratio to not to exceed 60%, however, the unsecured leverage ratiowhich 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 JuneMarch 15, 2021,2022, we declared a regularan increased quarterly cash dividend of $0.07$0.0775 per share of common stock for the secondfirst quarter ended June 30, 2021,March 31, 2022, which was paid on JulyApril 15, 20212022 to stockholders of record as of the close of business on June 30, 2021.March 31, 2022. This dividend policy, if continued, would require us to pay out approximately $16,900,000$18,800,000 each quarter to common stockholders and unitholders.
Off Balance Sheet Arrangements
As of June 30, 2021,March 31, 2022, our unconsolidated joint ventures had $1.64$1.74 billion of outstanding indebtedness, of which our share was $611,320,000.$621,513,000. We do not guarantee the indebtedness of our unconsolidated joint ventures other than providing customary environmental indemnities and guarantees of non-recourse carve-outs; however, we may elect to fund additional capital to a joint venture through equity contributions (generally on a basis proportionate to our ownership interests), advances or partner loans in order to enable the joint venture to repay this indebtedness upon maturity.
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. During 2020, we repurchased 13,813,158 common shares at a weighted average price of $8.69 per share, or $120,000,000 in the aggregate, of which 10,856,865 common shares were repurchased in the six months ended June 30, 2020, at a weighted average price of $9.21 per share, or $100,000,000 in the aggregate. We didhave not repurchaserepurchased any shares in the six months ended June 30, 2021.since December 2020. We have $80,000,000 available for future repurchases under the existing program. The amount and timing of future repurchases, if any, will depend on a number of factors, including, the price and availability of our shares, trading volume, general market conditions and available funding. The stock repurchase program may be suspended or discontinued at 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. While we do carry commercial general liability insurance, property insurance and terrorism insurance with respect to our properties, these policies include limits and terms we consider commercially reasonable. In addition, there are certain losses (including, but not limited to, losses arising from known environmental conditions or acts of war) that are not insured, in full or in part, because they are either uninsurable or the cost of insurance makes it, in our belief, economically impractical to maintain such coverage. Should an uninsured loss arise against us, we would be required to use our own funds to resolve the issue, including litigation costs. We believe the policy specifications and insured limits are adequate given the relative risk of loss, the cost of the coverage and industry practice and, in consultation with our insurance advisors, we believe the properties in our portfolio are adequately insured.
Other Commitments and Contingencies
We are a party to various claims and routine litigation arising in the ordinary course of business. Some of these claims or others to which we may be subject from time to time, including claims arising specifically from the formation transactions, in connection with our initial public offering, may result in defense costs, settlements, fines or judgments against us, some of which are not, or cannot be, covered by insurance. Payment of any such costs, settlements, fines or judgments that are not insured could have an adverse impact on our financial position and results of operations. Should any litigation arise in connection with the formation transactions, we would contest it vigorously. In addition, certain litigation or the resolution of certain litigation may affect the availability or cost of some of our insurance coverage, which could adversely impact our results of operations and cash flow, expose us to increased risks that would be uninsured, and/or adversely impact our ability to attract officers and directors.
The terms of our mortgage debt and certain side lettersagreements in place include certain restrictions and covenants which may limit, among other things, certain investments, the incurrence of additional indebtedness and liens and the disposition or other transfer of assets and interests in the borrower and other credit parties, and require compliance with certain debt yield, debt service coverage and loan to value ratios. In addition, our revolving credit facility contains representations, warranties, covenants, other agreements and events of default customary for agreements of this type with comparable companies. As of June 30, 2021,March 31, 2022, we believe we are in compliance with all of our covenants.
Transfer Tax Assessments
During 2017, the New York City Department of Finance issued Notices of Determination (“Notices”) assessing additional transfer taxes (including interest and penalties) in connection with the transfer of interests in certain properties during our 2014 initial public offering. We believe, after consultation with legal counsel that the likelihood of a loss is reasonably possible, and while it is not possible to predict the outcome of these Notices, we estimate the range of loss could be between $0 and $49,800,000.$53,300,000. Since no amount in this range is a better estimate than any other amount within the range, we have not accrued any liability arising from potential losses relating to these Notices in our consolidated financial statements.
Inflation
Substantially all of our leases provide for separate real estate tax and operating expense escalations. In addition, many of the leases provide for fixed base rent increases. We believe inflationary increases in expenses may be at least partially offset by the contractual rent increases and expense escalations described above. We do not believe inflation has had a material impact on our historical financial position or results of operations.
Cash Flows
Cash and cash equivalents and restricted cash were $507,841,000$468,326,000 and $529,666,000 as of March 31, 2022 and December 31, 2021, respectively, and $488,240,000 and $465,324,000 as of June 30,March 31, 2021 and December 31, 2020, respectively, and $556,459,000 and $331,487,000 as of June 30, 2020 and December 31, 2019, respectively. Cash and cash equivalents and restricted cash decreased by $61,340,000 for the three months ended March 31, 2022 and increased by $42,517,000 and $224,972,000$22,916,000 for the sixthree months ended June 30, 2021 and 2020, respectively.March 31, 2021. The following table sets forth the changes in cash flow.
|
| For the Six Months Ended June 30, |
|
| For the Three Months Ended March 31, |
| ||||||||||
(Amounts in thousands) | (Amounts in thousands) | 2021 |
|
| 2020 |
| (Amounts in thousands) | 2022 |
|
| 2021 |
| ||||
Net cash provided by (used in): | Net cash provided by (used in): |
|
|
|
|
|
|
| Net cash provided by (used in): |
|
|
|
|
|
|
|
Operating activities | Operating activities | $ | 134,458 |
|
| $ | 103,111 |
| Operating activities | $ | 58,674 |
|
| $ | 58,330 |
|
Investing activities | Investing activities |
| (62,045 | ) |
|
| (2,792 | ) | Investing activities |
| (88,158 | ) |
|
| (26,344 | ) |
Financing activities | Financing activities |
| (29,896 | ) |
|
| 124,653 |
| Financing activities |
| (31,856 | ) |
|
| (9,070 | ) |
Operating Activities
SixThree months ended June 30, 2021March 31, 2022 – We generated $134,458,000$58,674,000 of cash from operating activities for the sixthree months ended June 30, 2021,March 31, 2022, primarily from (i) $133,703,000$76,522,000 of net income (before $141,947,000$70,400,000 of non-cash adjustments) and (ii) $889,000$168,000 of distributions from unconsolidated joint ventures and real estate funds, partially offset by (iii) $134,000$18,016,000 of net changes in operating assets and liabilities. Non-cash adjustments of $141,947,000$70,400,000 were primarily comprised of depreciation and amortization, straight-lining of rental revenue, amortization of above and below-market leases, net and amortization of stock-based compensation.
SixThree months ended June 30, 2020March 31, 2021 – We generated $103,111,000$58,330,000 of cash from operating activities for the sixthree months ended June 30, 2020,March 31, 2021, primarily from (i) $117,922,000$64,870,000 of net income (before $120,380,000$62,986,000 of non-cash adjustments), and (ii) $1,812,000$137,000 of distributions from unconsolidated joint ventures and real estate funds, partially offset by (iii) $16,623,000$6,677,000 of net changes in operating assets and liabilities. Non-cash adjustments of $120,380,000$62,986,000 were primarily comprised of depreciation and amortization, straight-lining of rental revenue, amortization of above and below-market leases, net and amortization of stock-based compensation.
Investing Activities
SixThree months ended June 30, 2021March 31, 2022 – We used $62,045,000$88,158,000 of cash for investing activities for the sixthree months ended June 30,March 31, 2022, primarily for (i) $49,316,000 for amounts due from affiliates, (ii) $29,025,000 for additions to real estate, which were comprised of spending for tenant improvements and other building improvements, (iii) $9,684,000 for investments in an unconsolidated joint venture, and (iv) $133,000 of contributions of capital to unconsolidated real estate funds.
Three months ended March 31, 2021 – We used $26,344,000 of cash for investing activities for the three months ended March 31, 2021, primarily for (i) $52,114,000$19,339,000 for additions to real estate, which were comprised of spending for tenant improvements and other building improvements and (ii) $11,750,000 of contributions to an unconsolidated joint venture, partially offset by (iii) $1,819,000 from$7,005,000 for the net salespurchases of marketable securities (which are held in our deferred compensation plan).
Six months ended June 30, 2020 – We used $2,792,000 of cash for investing activities for the six months ended June 30, 2020, primarily for (i) $46,575,000 for additions to real estate, which were comprised of spending for tenant improvements and other building improvements, and (ii) $2,936,000 of contributions to our unconsolidated real estate funds, partially offset by (iii) $36,918,000 repayment of amounts due from affiliates, and (iv) $9,801,000 from the net sales of marketable securities (which are held in our deferred compensation plan).
Financing Activities
SixThree months ended June 30, 2021March 31, 2022 – We used $29,896,000$31,856,000 of cash for financing activities for the sixthree months ended June 30,March 31, 2022, primarily for (i) $16,895,000 for dividends and distributions to common stockholders and unitholders, (ii) $14,681,000 for distributions to noncontrolling interests and (iii) $280,000 for the repurchase of shares related to stock compensation agreements and related tax withholdings.
Three months ended March 31, 2021 – We used $9,070,000 of cash for financing activities for the three months ended March 31, 2021, primarily for (i) $33,685,000$16,796,000 for dividends and distributions paid to common stockholders and unitholders, (ii) $8,562,000$4,625,000 for distributions to noncontrolling interests and (iii) $200,000 for the repurchase of shares related to stock compensation agreements and related tax withholdings, partially offset by (iv) $12,430,000 of proceeds from notes and mortgages payable and (v) $121,000 of contributions from noncontrolling interests.
Six months ended June 30, 2020 – We generated $124,653,000 of cash from financing activities for the six months ended June 30, 2020, primarily from (i) $163,082,000 of borrowings under the revolving credit facility, (ii) $111,984,000 of proceeds from the sale of a 10.0% interest in 1633 Broadway, (iii) $11,555,000 of contributions from noncontrolling interests, and (iv) $3,073,000 of proceeds from notes and mortgages payable, partially offset by (v) $100,000,000 for the repurchases of common shares, (vi) $49,597,000 for dividends and distributions paid to common stockholders and unitholders, (vii) $8,771,000 for repayment of note payable issued in connection with the acquisition of noncontrolling interest in consolidated real estate fund, (viii) $6,357,000 for distributions to noncontrolling interests and (ix) $316,000 for the repurchase of shares related to stock compensation agreements and related tax withholdings.
Non-GAAP Financial Measures
We use and present NOI, Same 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.
Net Operating Income (“NOI”)
We use NOI to measure the operating performance of our properties. NOI consists of rental revenue (which includes property rentals, tenant reimbursements and lease termination income) and certain other property-related revenue less operating expenses (which includes property-related expenses such as cleaning, security, repairs and maintenance, utilities, property administration and real estate taxes). We also present Cash NOI, which deducts from NOI, straight-line rent adjustments and the amortization of above and below-market leases, including our share of such adjustments of unconsolidated joint ventures. In addition, we present Paramount'sParamount’s share of NOI and Cash NOI which represents our share of NOI and Cash NOI of consolidated and unconsolidated joint ventures, based on our percentage ownership in the underlying assets. We use NOI and Cash NOI internally as performance measures and believe they provide useful information to investors regarding our financial condition and results of operations because they reflect only those income and expense items that are incurred at property level. The following tables present reconciliations of our net (loss) income or loss to NOI and Cash NOI for the three and six months ended June 30, 2021March 31, 2022 and 2020.2021.
| For the Three Months Ended June 30, 2021 |
| |||||||||||||
(Amounts in thousands) | Total |
|
| New York |
|
| San Francisco |
|
| Other |
| ||||
Reconciliation of net (loss) income to NOI and Cash NOI: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income | $ | (10,128 | ) |
| $ | (8,357 | ) |
| $ | 13,965 |
|
| $ | (15,736 | ) |
Add (subtract) adjustments to arrive at NOI and Cash NOI: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
| 59,925 |
|
|
| 38,289 |
|
|
| 20,660 |
|
|
| 976 |
|
General and administrative |
| 18,418 |
|
|
| - |
|
|
| - |
|
|
| 18,418 |
|
Interest and debt expense |
| 34,914 |
|
|
| 21,339 |
|
|
| 12,540 |
|
|
| 1,035 |
|
Income tax expense |
| 434 |
|
|
| 5 |
|
|
| - |
|
|
| 429 |
|
NOI from unconsolidated joint ventures |
| 10,557 |
|
|
| 2,749 |
|
|
| 7,852 |
|
|
| (44 | ) |
Loss from unconsolidated joint ventures |
| 15,717 |
|
|
| 11,111 |
|
|
| 4,460 |
|
|
| 146 |
|
Fee income |
| (6,201 | ) |
|
| - |
|
|
| - |
|
|
| (6,201 | ) |
Interest and other (income) loss, net |
| (1,070 | ) |
|
| 3 |
|
|
| (18 | ) |
|
| (1,055 | ) |
Other, net |
| (13 | ) |
|
| - |
|
|
| - |
|
|
| (13 | ) |
NOI |
| 122,553 |
|
|
| 65,139 |
|
|
| 59,459 |
|
|
| (2,045 | ) |
Less NOI attributable to noncontrolling interests in: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated joint ventures |
| (26,233 | ) |
|
| (2,519 | ) |
|
| (23,714 | ) |
|
| - |
|
Consolidated real estate fund |
| 121 |
|
|
| - |
|
|
| - |
|
|
| 121 |
|
Paramount's share of NOI | $ | 96,441 |
|
| $ | 62,620 |
|
| $ | 35,745 |
|
| $ | (1,924 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NOI | $ | 122,553 |
|
| $ | 65,139 |
|
| $ | 59,459 |
|
| $ | (2,045 | ) |
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Straight-line rent adjustments (including our share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
of unconsolidated joint ventures) |
| (2,958 | ) |
|
| 158 |
|
|
| (3,086 | ) |
|
| (30 | ) |
Amortization of above and below-market leases, net (including our share of unconsolidated joint ventures) |
| (1,662 | ) |
|
| 371 |
|
|
| (2,033 | ) |
|
| - |
|
Cash NOI |
| 117,933 |
|
|
| 65,668 |
|
|
| 54,340 |
|
|
| (2,075 | ) |
Less Cash NOI attributable to noncontrolling interests in: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated joint ventures |
| (24,198 | ) |
|
| (2,479 | ) |
|
| (21,719 | ) |
|
| - |
|
Consolidated real estate fund |
| 121 |
|
|
| - |
|
|
| - |
|
|
| 121 |
|
Paramount's share of Cash NOI | $ | 93,856 |
|
| $ | 63,189 |
|
| $ | 32,621 |
|
| $ | (1,954 | ) |
| For the Three Months Ended June 30, 2020 |
| For the Three Months Ended March 31, 2022 |
| ||||||||||||||||||||||||||
(Amounts in thousands) | Total |
|
| New York |
|
| San Francisco |
|
| Other |
| Total |
|
| New York |
|
| San Francisco |
|
| Other |
| ||||||||
Reconciliation of net (loss) income to NOI and Cash NOI: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Net (loss) income | $ | (7,684 | ) |
| $ | 1,955 |
|
| $ | 4,169 |
|
| $ | (13,808 | ) | |||||||||||||||
Reconciliation of net income (loss) to NOI and Cash NOI: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Net income (loss) | $ | 6,122 |
|
| $ | 8,604 |
|
| $ | 6,360 |
|
| $ | (8,842 | ) | |||||||||||||||
Add (subtract) adjustments to arrive at NOI and Cash NOI: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
| 58,716 |
|
|
| 39,927 |
|
|
| 17,680 |
|
|
| 1,109 |
|
| 55,624 |
|
|
| 37,613 |
|
|
| 17,065 |
|
|
| 946 |
|
General and administrative |
| 17,901 |
|
|
| - |
|
|
| - |
|
|
| 17,901 |
|
| 15,645 |
|
|
| - |
|
|
| - |
|
|
| 15,645 |
|
Interest and debt expense |
| 36,009 |
|
|
| 21,804 |
|
|
| 12,323 |
|
|
| 1,882 |
|
| 34,277 |
|
|
| 20,937 |
|
|
| 12,576 |
|
|
| 764 |
|
Income tax expense |
| 138 |
|
|
| - |
|
|
| - |
|
|
| 138 |
|
| 527 |
|
|
| 1 |
|
|
| 4 |
|
|
| 522 |
|
NOI from unconsolidated joint ventures |
| 10,376 |
|
|
| 2,680 |
|
|
| 9,165 |
|
|
| (1,469 | ) | |||||||||||||||
Loss (income) from unconsolidated joint ventures |
| 5,955 |
|
|
| (220 | ) |
|
| 4,651 |
|
|
| 1,524 |
| |||||||||||||||
NOI from unconsolidated joint ventures (excluding One Steuart Lane) |
| 11,234 |
|
|
| 2,818 |
|
|
| 8,354 |
|
|
| 62 |
| |||||||||||||||
Loss from unconsolidated joint ventures |
| 5,113 |
|
|
| 36 |
|
|
| 3,820 |
|
|
| 1,257 |
| |||||||||||||||
Fee income |
| (6,209 | ) |
|
| - |
|
|
| - |
|
|
| (6,209 | ) |
| (11,988 | ) |
|
| - |
|
|
| - |
|
|
| (11,988 | ) |
Interest and other income, net |
| (2,252 | ) |
|
| - |
|
|
| (50 | ) |
|
| (2,202 | ) | |||||||||||||||
Interest and other (income) loss, net |
| (231 | ) |
|
| 3 |
|
|
| (28 | ) |
|
| (206 | ) | |||||||||||||||
Other, net |
| 169 |
|
|
| - |
|
|
| - |
|
|
| 169 |
|
| (53 | ) |
|
| - |
|
|
| - |
|
|
| (53 | ) |
NOI |
| 113,119 |
|
|
| 66,146 |
|
|
| 47,938 |
|
|
| (965 | ) |
| 116,270 |
|
|
| 70,012 |
|
|
| 48,151 |
|
|
| (1,893 | ) |
Less NOI attributable to noncontrolling interests in: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated joint ventures |
| (15,733 | ) |
|
| (430 | ) |
|
| (15,303 | ) |
|
| - |
|
| (20,322 | ) |
|
| (2,809 | ) |
|
| (17,513 | ) |
|
| - |
|
Consolidated real estate fund |
| 1,437 |
|
|
| - |
|
|
| - |
|
|
| 1,437 |
| |||||||||||||||
Paramount's share of NOI | $ | 98,823 |
|
| $ | 65,716 |
|
| $ | 32,635 |
|
| $ | 472 |
| $ | 95,948 |
|
| $ | 67,203 |
|
| $ | 30,638 |
|
| $ | (1,893 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NOI | $ | 113,119 |
|
| $ | 66,146 |
|
| $ | 47,938 |
|
| $ | (965 | ) | $ | 116,270 |
|
| $ | 70,012 |
|
| $ | 48,151 |
|
| $ | (1,893 | ) |
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Straight-line rent adjustments (including our share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
of unconsolidated joint ventures) |
| (10,037 | ) |
|
| (5,768 | ) |
|
| (4,241 | ) |
|
| (28 | ) |
| 1,658 |
|
|
| 549 |
|
|
| 1,019 |
|
|
| 90 |
|
Amortization of above and below-market leases, net (including our share of unconsolidated joint ventures) |
| (1,701 | ) |
|
| 388 |
|
|
| (2,089 | ) |
|
| - |
|
| (1,197 | ) |
|
| 467 |
|
|
| (1,664 | ) |
|
| - |
|
Adjustments related to discontinued operations |
| 114 |
|
|
| - |
|
|
| - |
|
|
| 114 |
| |||||||||||||||
Cash NOI |
| 101,495 |
|
|
| 60,766 |
|
|
| 41,608 |
|
|
| (879 | ) |
| 116,731 |
|
|
| 71,028 |
|
|
| 47,506 |
|
|
| (1,803 | ) |
Less Cash NOI attributable to noncontrolling interests in: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated joint ventures |
| (13,716 | ) |
|
| (504 | ) |
|
| (13,212 | ) |
|
| - |
|
| (20,513 | ) |
|
| (2,915 | ) |
|
| (17,598 | ) |
|
| - |
|
Consolidated real estate fund |
| 1,437 |
|
|
| - |
|
|
| - |
|
|
| 1,437 |
| |||||||||||||||
Paramount's share of Cash NOI | $ | 89,216 |
|
| $ | 60,262 |
|
| $ | 28,396 |
|
| $ | 558 |
| $ | 96,218 |
|
| $ | 68,113 |
|
| $ | 29,908 |
|
| $ | (1,803 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| For the Six Months Ended June 30, 2021 |
| For the Three Months Ended March 31, 2021 |
| ||||||||||||||||||||||||||
(Amounts in thousands) | Total |
|
| New York |
|
| San Francisco |
|
| Other |
| Total |
|
| New York |
|
| San Francisco |
|
| Other |
| ||||||||
Reconciliation of net (loss) income to NOI and Cash NOI: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Net (loss) income | $ | (8,244 | ) |
| $ | (6,084 | ) |
| $ | 24,885 |
|
| $ | (27,045 | ) | |||||||||||||||
Reconciliation of net income (loss) to NOI and Cash NOI: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Net income (loss) | $ | 1,884 |
|
| $ | 2,273 |
|
| $ | 10,920 |
|
| $ | (11,309 | ) | |||||||||||||||
Add (subtract) adjustments to arrive at NOI and Cash NOI: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
| 118,230 |
|
|
| 77,573 |
|
|
| 38,712 |
|
|
| 1,945 |
|
| 58,305 |
|
|
| 39,284 |
|
|
| 18,052 |
|
|
| 969 |
|
General and administrative |
| 32,782 |
|
|
| - |
|
|
| - |
|
|
| 32,782 |
|
| 14,364 |
|
|
| - |
|
|
| - |
|
|
| 14,364 |
|
Interest and debt expense |
| 69,653 |
|
|
| 42,598 |
|
|
| 24,893 |
|
|
| 2,162 |
|
| 34,739 |
|
|
| 21,259 |
|
|
| 12,353 |
|
|
| 1,127 |
|
Income tax expense |
| 1,575 |
|
|
| 5 |
|
|
| 4 |
|
|
| 1,566 |
|
| 1,141 |
|
|
| - |
|
|
| 4 |
|
|
| 1,137 |
|
NOI from unconsolidated joint ventures |
| 20,883 |
|
|
| 5,570 |
|
|
| 15,389 |
|
|
| (76 | ) |
| 10,326 |
|
|
| 2,821 |
|
|
| 7,537 |
|
|
| (32 | ) |
Loss from unconsolidated joint ventures |
| 21,033 |
|
|
| 11,094 |
|
|
| 9,702 |
|
|
| 237 |
| |||||||||||||||
Loss (income) from unconsolidated joint ventures |
| 5,316 |
|
|
| (17 | ) |
|
| 5,242 |
|
|
| 91 |
| |||||||||||||||
Fee income |
| (12,871 | ) |
|
| - |
|
|
| - |
|
|
| (12,871 | ) |
| (6,670 | ) |
|
| - |
|
|
| - |
|
|
| (6,670 | ) |
Interest and other (income) loss, net |
| (2,372 | ) |
|
| 17 |
|
|
| (55 | ) |
|
| (2,334 | ) |
| (1,302 | ) |
|
| 14 |
|
|
| (37 | ) |
|
| (1,279 | ) |
Other, net |
| 88 |
|
|
| - |
|
|
| - |
|
|
| 88 |
|
| 101 |
|
|
| - |
|
|
| - |
|
|
| 101 |
|
NOI |
| 240,757 |
|
|
| 130,773 |
|
|
| 113,530 |
|
|
| (3,546 | ) |
| 118,204 |
|
|
| 65,634 |
|
|
| 54,071 |
|
|
| (1,501 | ) |
Less NOI attributable to noncontrolling interests in: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated joint ventures |
| (48,958 | ) |
|
| (5,112 | ) |
|
| (43,846 | ) |
|
| - |
|
| (22,725 | ) |
|
| (2,593 | ) |
|
| (20,132 | ) |
|
| - |
|
Consolidated real estate fund |
| 206 |
|
|
| - |
|
|
| - |
|
|
| 206 |
|
| 85 |
|
|
| - |
|
|
| - |
|
|
| 85 |
|
Paramount's share of NOI | $ | 192,005 |
|
| $ | 125,661 |
|
| $ | 69,684 |
|
| $ | (3,340 | ) | $ | 95,564 |
|
| $ | 63,041 |
|
| $ | 33,939 |
|
| $ | (1,416 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NOI | $ | 240,757 |
|
| $ | 130,773 |
|
| $ | 113,530 |
|
| $ | (3,546 | ) | $ | 118,204 |
|
| $ | 65,634 |
|
| $ | 54,071 |
|
| $ | (1,501 | ) |
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Straight-line rent adjustments (including our share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
of unconsolidated joint ventures) |
| (11,060 | ) |
|
| (1,637 | ) |
|
| (9,483 | ) |
|
| 60 |
|
| (8,102 | ) |
|
| (1,795 | ) |
|
| (6,397 | ) |
|
| 90 |
|
Amortization of above and below-market leases, net (including our share of unconsolidated joint ventures) |
| (3,465 | ) |
|
| 638 |
|
|
| (4,103 | ) |
|
| - |
|
| (1,803 | ) |
|
| 267 |
|
|
| (2,070 | ) |
|
| - |
|
Cash NOI |
| 226,232 |
|
|
| 129,774 |
|
|
| 99,944 |
|
|
| (3,486 | ) |
| 108,299 |
|
|
| 64,106 |
|
|
| 45,604 |
|
|
| (1,411 | ) |
Less Cash NOI attributable to noncontrolling interests in: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated joint ventures |
| (43,139 | ) |
|
| (4,964 | ) |
|
| (38,175 | ) |
|
| - |
|
| (18,941 | ) |
|
| (2,485 | ) |
|
| (16,456 | ) |
|
| - |
|
Consolidated real estate fund |
| 206 |
|
|
| - |
|
|
| - |
|
|
| 206 |
|
| 85 |
|
|
| - |
|
|
| - |
|
|
| 85 |
|
Paramount's share of Cash NOI | $ | 183,299 |
|
| $ | 124,810 |
|
| $ | 61,769 |
|
| $ | (3,280 | ) | $ | 89,443 |
|
| $ | 61,621 |
|
| $ | 29,148 |
|
| $ | (1,326 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| For the Six Months Ended June 30, 2020 |
| |||||||||||||
(Amounts in thousands) | Total |
|
| New York |
|
| San Francisco |
|
| Other |
| ||||
Reconciliation of net (loss) income to NOI and Cash NOI: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income | $ | (2,458 | ) |
| $ | 11,670 |
|
| $ | 10,074 |
|
| $ | (24,202 | ) |
Add (subtract) adjustments to arrive at NOI and Cash NOI: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
| 117,143 |
|
|
| 79,946 |
|
|
| 35,007 |
|
|
| 2,190 |
|
General and administrative |
| 30,150 |
|
|
| - |
|
|
| - |
|
|
| 30,150 |
|
Interest and debt expense |
| 72,628 |
|
|
| 44,536 |
|
|
| 24,885 |
|
|
| 3,207 |
|
Income tax expense (benefit) |
| 742 |
|
|
| - |
|
|
| (7 | ) |
|
| 749 |
|
NOI from unconsolidated joint ventures |
| 23,768 |
|
|
| 5,624 |
|
|
| 19,547 |
|
|
| (1,403 | ) |
Loss (income) from unconsolidated joint ventures |
| 10,176 |
|
|
| (138 | ) |
|
| 8,799 |
|
|
| 1,515 |
|
Fee income |
| (12,539 | ) |
|
| - |
|
|
| - |
|
|
| (12,539 | ) |
Interest and other income, net |
| (1,256 | ) |
|
| - |
|
|
| (237 | ) |
|
| (1,019 | ) |
Adjustments related to discontinued operations |
| 690 |
|
|
| - |
|
|
| - |
|
|
| 690 |
|
Other, net |
| 320 |
|
|
| - |
|
|
| - |
|
|
| 320 |
|
NOI |
| 239,364 |
|
|
| 141,638 |
|
|
| 98,068 |
|
|
| (342 | ) |
Less NOI attributable to noncontrolling interests in: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated joint ventures |
| (31,424 | ) |
|
| (430 | ) |
|
| (30,994 | ) |
|
| - |
|
Consolidated real estate fund |
| 1,440 |
|
|
| - |
|
|
| - |
|
|
| 1,440 |
|
Paramount's share of NOI | $ | 209,380 |
|
| $ | 141,208 |
|
| $ | 67,074 |
|
| $ | 1,098 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NOI | $ | 239,364 |
|
| $ | 141,638 |
|
| $ | 98,068 |
|
| $ | (342 | ) |
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Straight-line rent adjustments (including our share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
of unconsolidated joint ventures) |
| (21,841 | ) |
|
| (12,178 | ) |
|
| (9,716 | ) |
|
| 53 |
|
Amortization of above and below-market leases, net (including our share of unconsolidated joint ventures) |
| (4,533 | ) |
|
| 776 |
|
|
| (5,309 | ) |
|
| - |
|
Adjustments related to discontinued operations |
| 233 |
|
|
| - |
|
|
| - |
|
|
| 233 |
|
Cash NOI |
| 213,223 |
|
|
| 130,236 |
|
|
| 83,043 |
|
|
| (56 | ) |
Less Cash NOI attributable to noncontrolling interests in: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated joint ventures |
| (26,918 | ) |
|
| (504 | ) |
|
| (26,414 | ) |
|
| - |
|
Consolidated real estate fund |
| 1,440 |
|
|
| - |
|
|
| - |
|
|
| 1,440 |
|
Paramount's share of Cash NOI | $ | 187,745 |
|
| $ | 129,732 |
|
| $ | 56,629 |
|
| $ | 1,384 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Same Store NOI
The tables below set forth the reconciliations of our share of NOI to our share of Same Store NOI and Same Store Cash NOI for the three and six months ended June 30, 2021March 31, 2022 and 2020.2021. These metrics are used to measure the operating performance of our properties that were owned by us in a similar manner during both the current and prior reporting periods, and represents our share of Same Store NOI and Same Store Cash NOI from consolidated and unconsolidated joint ventures based on our percentage ownership in the underlying assets. Same Store NOI also excludes lease termination income, impairment of receivables arising from operating leases and certain other items that vary from period to period. Same Store Cash NOI excludes the effect of non-cash items such as the straight-line rent adjustments and the amortization of above and below-market leases.
|
| For the Three Months Ended June 30, 2021 |
|
|
| For the Three Months Ended March 31, 2022 |
|
| ||||||||||||||||||||||||||
(Amounts in thousands) |
| Total |
|
| New York |
|
| San Francisco |
|
| Other |
|
|
| Total |
|
| New York |
|
| San Francisco |
|
| Other |
|
| ||||||||
Paramount's share of NOI for the three months ended |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2021 (1) |
| $ | 96,441 |
|
| $ | 62,620 |
|
| $ | 35,745 |
|
| $ | (1,924 | ) |
| |||||||||||||||||
Dispositions / Discontinued Operations |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
| |||||||||||||||||
March 31, 2022 (1) |
| $ | 95,948 |
|
| $ | 67,203 |
|
| $ | 30,638 |
|
| $ | (1,893 | ) |
| |||||||||||||||||
Acquisitions |
|
| (47 | ) |
|
| (47 | ) | (2) |
| - |
|
|
| - |
|
| |||||||||||||||||
Lease termination income |
|
| (1,718 | ) |
|
| (1,718 | ) |
|
| - |
|
|
| - |
|
| |||||||||||||||||
Other, net |
|
| (1,908 | ) |
|
| (776 | ) |
|
| (3,056 | ) |
|
| 1,924 |
|
|
|
| 1,999 |
|
|
| 106 |
|
|
| - |
|
|
| 1,893 |
|
|
Paramount's share of Same Store NOI for the three |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
months ended June 30, 2021 |
| $ | 94,533 |
|
| $ | 61,844 |
|
| $ | 32,689 |
|
| $ | - |
|
| |||||||||||||||||
months ended March 31, 2022 |
| $ | 96,182 |
|
| $ | 65,544 |
|
| $ | 30,638 |
|
| $ | - |
|
| |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| For the Three Months Ended June 30, 2020 |
|
|
| For the Three Months Ended March 31, 2021 |
|
| ||||||||||||||||||||||||||
(Amounts in thousands) |
| Total |
|
| New York |
|
| San Francisco |
|
| Other |
|
|
| Total |
|
| New York |
|
| San Francisco |
|
| Other |
|
| ||||||||
Paramount's share of NOI for the three months ended |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2020 (1) |
| $ | 98,823 |
|
| $ | 65,716 |
|
| $ | 32,635 |
|
| $ | 472 |
|
| |||||||||||||||||
Dispositions / Discontinued Operations |
|
| (3,881 | ) |
|
| (1,734 | ) | (2) |
| - |
|
|
| (2,147 | ) | (3) | |||||||||||||||||
Non-cash write-offs (primarily straight-line rent receivables) |
|
| 7,685 |
|
|
| 4,993 |
|
|
| 2,692 |
|
|
| - |
|
| |||||||||||||||||
Reserves for uncollectible accounts receivable |
|
| 1,940 |
|
|
| 1,152 |
|
|
| 788 |
|
|
| - |
|
| |||||||||||||||||
March 31, 2021 (1) |
| $ | 95,564 |
|
| $ | 63,041 |
|
| $ | 33,939 |
|
| $ | (1,416 | ) |
| |||||||||||||||||
Lease termination income |
|
| (98 | ) |
|
| (84 | ) |
|
| (14 | ) |
|
| - |
|
| |||||||||||||||||
Other, net |
|
| 1,598 |
|
|
| (77 | ) |
|
| - |
|
|
| 1,675 |
|
|
|
| 3,338 |
|
|
| 629 |
|
|
| 1,293 |
|
|
| 1,416 |
|
|
Paramount's share of Same Store NOI for the three |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
months ended June 30, 2020 |
| $ | 106,165 |
|
| $ | 70,050 |
|
| $ | 36,115 |
|
| $ | - |
|
| |||||||||||||||||
months ended March 31, 2021 |
| $ | 98,804 |
|
| $ | 63,586 |
|
| $ | 35,218 |
|
| $ | - |
|
|
| Decrease in Same Store NOI |
| $ | (11,632 | ) |
| $ | (8,206 | ) |
| $ | (3,426 | ) |
| $ | - |
|
|
| % Decrease |
|
| (11.0 | %) |
|
| (11.7 | %) |
|
| (9.5 | %) |
|
|
|
|
|
| (Decrease) increase in Same Store NOI |
| $ | (2,622 | ) |
| $ | 1,958 |
|
| $ | (4,580 | ) |
| $ | - |
|
|
| % (Decrease) increase |
|
| (2.7 | %) |
|
| 3.1 | % |
|
| (13.0 | %) |
|
|
|
|
|
(1) | See page |
(2) | Represents our share of NOI attributable to |
|
|
|
|
| For the Three Months Ended June 30, 2021 |
|
| |||||||||||||
| (Amounts in thousands) |
| Total |
|
| New York |
|
| San Francisco |
|
| Other |
|
| ||||
| Paramount's share of Cash NOI for the three months |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ended June 30, 2021 (1) |
| $ | 93,856 |
|
| $ | 63,189 |
|
| $ | 32,621 |
|
| $ | (1,954 | ) |
|
| Dispositions / Discontinued Operations |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| Other, net |
|
| (1,885 | ) |
|
| (776 | ) |
|
| (3,063 | ) |
|
| 1,954 |
|
|
| Paramount's share of Same Store Cash NOI for the |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| three months ended June 30, 2021 |
| $ | 91,971 |
|
| $ | 62,413 |
|
| $ | 29,558 |
|
| $ | - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| For the Three Months Ended June 30, 2020 |
|
| |||||||||||||
| (Amounts in thousands) |
| Total |
|
| New York |
|
| San Francisco |
|
| Other |
|
| ||||
| Paramount's share of Cash NOI for the three months |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ended June 30, 2020 (1) |
| $ | 89,216 |
|
| $ | 60,262 |
|
| $ | 28,396 |
|
| $ | 558 |
|
|
| Dispositions / Discontinued Operations |
|
| (3,456 | ) |
|
| (1,195 | ) | (2) |
| - |
|
|
| (2,261 | ) | (3) |
| Reserves for uncollectible accounts receivable |
|
| 1,940 |
|
|
| 1,152 |
|
|
| 788 |
|
|
| - |
|
|
| Other, net |
|
| 1,626 |
|
|
| (77 | ) |
|
| - |
|
|
| 1,703 |
|
|
| Paramount's share of Same Store Cash NOI for the |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| three months ended June 30, 2020 |
| $ | 89,326 |
|
| $ | 60,142 |
|
| $ | 29,184 |
|
| $ | - |
|
|
|
|
| For the Three Months Ended March 31, 2022 |
|
| |||||||||||||
| (Amounts in thousands) |
| Total |
|
| New York |
|
| San Francisco |
|
| Other |
|
| ||||
| Paramount's share of Cash NOI for the three months |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ended March 31, 2022 (1) |
| $ | 96,218 |
|
| $ | 68,113 |
|
| $ | 29,908 |
|
| $ | (1,803 | ) |
|
| Acquisitions |
|
| (66 | ) |
|
| (66 | ) | (2) |
| - |
|
|
| - |
|
|
| Lease termination income |
|
| (1,718 | ) |
|
| (1,718 | ) |
|
| - |
|
|
| - |
|
|
| Other, net |
|
| 1,603 |
|
|
| (200 | ) |
|
| - |
|
|
| 1,803 |
|
|
| Paramount's share of Same Store Cash NOI for the |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| three months ended March 31, 2022 |
| $ | 96,037 |
|
| $ | 66,129 |
|
| $ | 29,908 |
|
| $ | - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| For the Three Months Ended March 31, 2021 |
|
| |||||||||||||
| (Amounts in thousands) |
| Total |
|
| New York |
|
| San Francisco |
|
| Other |
|
| ||||
| Paramount's share of Cash NOI for the three months |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ended March 31, 2021 (1) |
| $ | 89,443 |
|
| $ | 61,621 |
|
| $ | 29,148 |
|
| $ | (1,326 | ) |
|
| Lease termination income |
|
| (98 | ) |
|
| (84 | ) |
|
| (14 | ) |
|
| - |
|
|
| Other, net |
|
| 3,106 |
|
|
| 487 |
|
|
| 1,293 |
|
|
| 1,326 |
|
|
| Paramount's share of Same Store Cash NOI for the |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| three months ended March 31, 2021 |
| $ | 92,451 |
|
| $ | 62,024 |
|
| $ | 30,427 |
|
| $ | - |
|
|
| Increase in Same Store Cash NOI |
| $ | 2,645 |
|
| $ | 2,271 |
|
| $ | 374 |
|
| $ | - |
|
|
| % Increase |
|
| 3.0 | % |
|
| 3.8 | % |
|
| 1.3 | % |
|
|
|
|
|
| Increase (decrease) in Same Store Cash NOI |
| $ | 3,586 |
|
| $ | 4,105 |
|
| $ | (519 | ) |
| $ | - |
|
|
| % Increase (decrease) |
|
| 3.9 | % |
|
| 6.6 | % |
|
| (1.7 | %) |
|
|
|
|
|
(1) | See page |
(2) | Represents our share of Cash NOI attributable to |
|
|
|
|
| For the Six Months Ended June 30, 2021 |
|
| |||||||||||||
| (Amounts in thousands) |
| Total |
|
| New York |
|
| San Francisco |
|
| Other |
|
| ||||
| Paramount's share of NOI for the six months ended |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| June 30, 2021 (1) |
| $ | 192,005 |
|
| $ | 125,661 |
|
| $ | 69,684 |
|
| $ | (3,340 | ) |
|
| Dispositions / Discontinued Operations |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| Other, net |
|
| 1,332 |
|
|
| (231 | ) |
|
| (1,777 | ) |
|
| 3,340 |
|
|
| Paramount's share of Same Store NOI for the six |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| months ended June 30, 2021 |
| $ | 193,337 |
|
| $ | 125,430 |
|
| $ | 67,907 |
|
| $ | - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| For the Six Months Ended June 30, 2020 |
|
| |||||||||||||
| (Amounts in thousands) |
| Total |
|
| New York |
|
| San Francisco |
|
| Other |
|
| ||||
| Paramount's share of NOI for the six months ended |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| June 30, 2020 (1) |
| $ | 209,380 |
|
| $ | 141,208 |
|
| $ | 67,074 |
|
| $ | 1,098 |
|
|
| Dispositions / Discontinued Operations |
|
| (9,155 | ) |
|
| (4,797 | ) | (2) |
| - |
|
|
| (4,358 | ) | (3) |
| Non-cash write-offs (primarily straight-line rent receivables) |
|
| 7,685 |
|
|
| 4,993 |
|
|
| 2,692 |
|
|
| - |
|
|
| Reserves for uncollectible accounts receivable |
|
| 1,940 |
|
|
| 1,152 |
|
|
| 788 |
|
|
| - |
|
|
| Other, net |
|
| 3,100 |
|
|
| (153 | ) |
|
| (7 | ) |
|
| 3,260 |
|
|
| Paramount's share of Same Store NOI for the six |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| months ended June 30, 2020 |
| $ | 212,950 |
|
| $ | 142,403 |
|
| $ | 70,547 |
|
| $ | - |
|
|
| Decrease in Same Store NOI |
| $ | (19,613 | ) |
| $ | (16,973 | ) |
| $ | (2,640 | ) |
| $ | - |
|
|
| % Decrease |
|
| (9.2 | %) |
|
| (11.9 | %) |
|
| (3.7 | %) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| For the Six Months Ended June 30, 2021 |
|
| |||||||||||||
| (Amounts in thousands) |
| Total |
|
| New York |
|
| San Francisco |
|
| Other |
|
| ||||
| Paramount's share of Cash NOI for the six months |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ended June 30, 2021 (1) |
| $ | 183,299 |
|
| $ | 124,810 |
|
| $ | 61,769 |
|
| $ | (3,280 | ) |
|
| Dispositions / Discontinued Operations |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| Other, net |
|
| 1,123 |
|
|
| (373 | ) |
|
| (1,784 | ) |
|
| 3,280 |
|
|
| Paramount's share of Same Store Cash NOI for the |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| six months ended June 30, 2021 |
| $ | 184,422 |
|
| $ | 124,437 |
|
| $ | 59,985 |
|
| $ | - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| For the Six Months Ended June 30, 2020 |
|
| |||||||||||||
| (Amounts in thousands) |
| Total |
|
| New York |
|
| San Francisco |
|
| Other |
|
| ||||
| Paramount's share of Cash NOI for the six months |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ended June 30, 2020 (1) |
| $ | 187,745 |
|
| $ | 129,732 |
|
| $ | 56,629 |
|
| $ | 1,384 |
|
|
| Dispositions / Discontinued Operations |
|
| (8,480 | ) |
|
| (3,889 | ) | (2) |
| - |
|
|
| (4,591 | ) | (3) |
| Reserves for uncollectible accounts receivable |
|
| 1,940 |
|
|
| 1,152 |
|
|
| 788 |
|
|
| - |
|
|
| Other, net |
|
| 3,047 |
|
|
| (153 | ) |
|
| (7 | ) |
|
| 3,207 |
|
|
| Paramount's share of Same Store Cash NOI for the |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| six months ended June 30, 2020 |
| $ | 184,252 |
|
| $ | 126,842 |
|
| $ | 57,410 |
|
| $ | - |
|
|
| Increase (decrease) in Same Store Cash NOI |
| $ | 170 |
|
| $ | (2,405 | ) |
| $ | 2,575 |
|
| $ | - |
|
|
| % Increase (decrease) |
|
| 0.1 | % |
|
| (1.9 | %) |
|
| 4.5 | % |
|
|
|
|
|
|
|
|
|
|
|
Funds from Operations (“FFO”) and Core Funds 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 defines FFO as net income or loss, calculated in accordance with GAAP, adjusted to exclude depreciation and amortization from real estate assets, impairment losses on certain real estate assets and gains or losses from the sale of certain real estate assets or from change in control of certain real estate assets, including our share of such adjustments of unconsolidated joint ventures. FFO is commonly used in the real estate industry to assist investors and analysts in comparing results of real estate companies because it excludes the effect of real estate depreciation and amortization and net gains on sales, which are based on historical costs and implicitly assume that the value of real estate diminishes predictably over time, rather than fluctuating based on existing market conditions. In addition, we present Core FFO as an alternative measure of our operating performance, which adjusts FFO for certain other items that we believe enhance the comparability of our FFO across periods. Core FFO, when applicable, excludes the impact of certain items, including, transaction related costs, realized and unrealized gains or losses on real estate fund investments, unrealized gains or losses on interest rate swaps, severance costs and gains or losses on early extinguishment of debt, in order to reflect the Core FFO of our real estate portfolio and operations. In future periods, we may also exclude other items from Core FFO that we believe may help investors compare our results.
FFO and Core FFO are presented as supplemental financial measures and do not fully represent our operating performance. 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 lossincome to FFO and Core FFO for the periods set forth below.
|
| For the Three Months Ended |
|
| For the Six Months Ended |
| ||||||||||||||||||
|
| June 30, |
|
| June 30, |
|
| For the Three Months Ended March 31, |
| |||||||||||||||
(Amounts in thousands, except share and per share amounts) |
| 2021 |
|
| 2020 |
|
| 2021 |
|
| 2020 |
|
| 2022 |
|
| 2021 |
| ||||||
Reconciliation of net loss to FFO and Core FFO: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Net loss |
| $ | (10,128 | ) |
| $ | (7,684 | ) |
| $ | (8,244 | ) |
| $ | (2,458 | ) | ||||||||
Reconciliation of net income to FFO and Core FFO: |
|
|
|
|
|
|
|
| ||||||||||||||||
Net income |
| $ | 6,122 |
|
| $ | 1,884 |
| ||||||||||||||||
Real estate depreciation and amortization (including our |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
share of unconsolidated joint ventures) |
|
| 70,264 |
|
|
| 70,546 |
|
|
| 139,405 |
|
|
| 141,486 |
|
|
| 65,825 |
|
|
| 69,141 |
|
Adjustments related to discontinued operations |
|
| - |
|
|
| - |
|
|
| - |
|
|
| 690 |
| ||||||||
FFO |
|
| 60,136 |
|
|
| 62,862 |
|
|
| 131,161 |
|
|
| 139,718 |
|
|
| 71,947 |
|
|
| 71,025 |
|
Less FFO attributable to noncontrolling interests in: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated joint ventures |
|
| (18,453 | ) |
|
| (8,711 | ) |
|
| (33,527 | ) |
|
| (17,680 | ) |
|
| (12,515 | ) |
|
| (15,074 | ) |
Consolidated real estate fund |
|
| 29 |
|
|
| 1,235 |
|
|
| (56 | ) |
|
| 1,212 |
|
|
| 1,009 |
|
|
| (85 | ) |
Operating Partnership |
|
| (3,769 | ) |
|
| (4,723 | ) |
|
| (8,761 | ) |
|
| (11,001 | ) |
|
| (5,568 | ) |
|
| (4,992 | ) |
FFO attributable to common stockholders |
| $ | 37,943 |
|
| $ | 50,663 |
|
| $ | 88,817 |
|
| $ | 112,249 |
|
| $ | 54,873 |
|
| $ | 50,874 |
|
Per diluted share |
| $ | 0.17 |
|
| $ | 0.23 |
|
| $ | 0.40 |
|
| $ | 0.50 |
|
| $ | 0.25 |
|
| $ | 0.23 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FFO |
| $ | 60,136 |
|
| $ | 62,862 |
|
| $ | 131,161 |
|
| $ | 139,718 |
|
| $ | 71,947 |
|
| $ | 71,025 |
|
Non-core items: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments to equity in earnings for contributions to (distributions from) an unconsolidated joint venture |
|
| 10,492 |
|
|
| (920 | ) |
|
| 9,915 |
|
|
| (1,308 | ) | ||||||||
Adjustments to equity in earnings for distributions from an unconsolidated joint venture |
|
| (583 | ) |
|
| (577 | ) | ||||||||||||||||
Consolidated real estate fund's share of after-tax net gain on sale of residential condominium units (One Steuart Lane) |
|
| (662 | ) |
|
| - |
| ||||||||||||||||
Other, net |
|
| 133 |
|
|
| 324 |
|
|
| 379 |
|
|
| 627 |
|
|
| 2,088 |
|
|
| 246 |
|
Core FFO |
|
| 70,761 |
|
|
| 62,266 |
|
|
| 141,455 |
|
|
| 139,037 |
|
|
| 72,790 |
|
|
| 70,694 |
|
Less Core FFO attributable to noncontrolling interests in: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated joint ventures |
|
| (18,453 | ) |
|
| (8,711 | ) |
|
| (33,527 | ) |
|
| (17,680 | ) |
|
| (12,515 | ) |
|
| (15,074 | ) |
Consolidated real estate fund |
|
| 29 |
|
|
| 1,235 |
|
|
| (56 | ) |
|
| 1,212 |
|
|
| (159 | ) |
|
| (85 | ) |
Operating Partnership |
|
| (4,729 | ) |
|
| (4,672 | ) |
|
| (9,692 | ) |
|
| (10,942 | ) |
|
| (5,538 | ) |
|
| (4,963 | ) |
Core FFO attributable to common stockholders |
| $ | 47,608 |
|
| $ | 50,118 |
|
| $ | 98,180 |
|
| $ | 111,627 |
|
| $ | 54,578 |
|
| $ | 50,572 |
|
Per diluted share |
| $ | 0.22 |
|
| $ | 0.23 |
|
| $ | 0.45 |
|
| $ | 0.50 |
|
| $ | 0.25 |
|
| $ | 0.23 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of weighted average shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding |
|
| 218,696,284 |
|
|
| 221,573,199 |
|
|
| 218,681,228 |
|
|
| 224,671,206 |
|
|
| 218,782,296 |
|
|
| 218,666,005 |
|
Effect of dilutive securities |
|
| 51,117 |
|
|
| 4,225 |
|
|
| 50,563 |
|
|
| 20,164 |
|
|
| 57,798 |
|
|
| 50,920 |
|
Denominator for FFO and Core FFO per diluted share |
|
| 218,747,401 |
|
|
| 221,577,424 |
|
|
| 218,731,791 |
|
|
| 224,691,370 |
|
|
| 218,840,094 |
|
|
| 218,716,925 |
|
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 June 30, 2021.March 31, 2022.
Property | Property |
| Rate |
|
| 2021 |
|
| 2022 |
|
| 2023 |
|
| 2024 |
|
| 2025 |
|
| Thereafter |
|
| Total |
|
| Fair Value |
| Property |
| Rate |
|
| 2022 |
|
| 2023 |
|
| 2024 |
|
| 2025 |
|
| 2026 |
|
| Thereafter |
|
| Total |
|
| Fair Value |
| ||||||||||||||||||
(Amounts in thousands) | (Amounts in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (Amounts in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed Rate Debt: | Fixed Rate Debt: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Fixed Rate Debt: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 1633 Broadway |
| 2.99% |
|
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | 1,250,000 |
|
| $ | 1,250,000 |
|
| $ | 1,250,176 |
| 300 Mission Street |
| 3.65% |
|
| $ | - |
|
| $ | 273,000 |
|
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | 273,000 |
|
| $ | 271,874 |
| ||
| 1301 Avenue of the Americas |
| 3.05% |
|
|
| 500,000 |
| (1) |
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 500,000 |
|
|
| 500,061 |
| One Market Plaza |
| 4.03% |
|
|
| - |
|
|
| - |
|
|
| 975,000 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 975,000 |
|
|
| 974,695 |
| ||
| 31 West 52nd Street |
| 3.80% |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 500,000 |
|
|
| 500,000 |
|
|
| 517,906 |
| 31 West 52nd Street |
| 3.80% |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 500,000 |
|
|
| - |
|
|
| 500,000 |
|
|
| 487,580 |
| ||
| One Market Plaza |
| 4.03% |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 975,000 |
|
|
| - |
|
|
| - |
|
|
| 975,000 |
|
|
| 1,000,849 |
| 1301 Avenue of the Americas (1) |
| 2.46% |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 500,000 |
|
|
| - |
|
|
| 500,000 |
|
|
| 499,096 |
| ||
| 300 Mission Street |
| 3.65% |
|
|
| - |
|
|
| - |
|
|
| 256,864 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 256,864 |
|
|
| 260,513 |
| 1633 Broadway |
| 2.99% |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 1,250,000 |
|
|
| 1,250,000 |
|
|
| 1,183,950 |
| ||
Total Fixed Rate Debt | Total Fixed Rate Debt |
| 3.46% |
|
| $ | 500,000 |
|
| $ | - |
|
| $ | 256,864 |
|
| $ | 975,000 |
|
| $ | - |
|
| $ | 1,750,000 |
|
| $ | 3,481,864 |
|
| $ | 3,529,505 |
| Total Fixed Rate Debt |
| 3.37% |
|
| $ | - |
|
| $ | 273,000 |
|
| $ | 975,000 |
|
| $ | - |
|
| $ | 1,000,000 |
|
| $ | 1,250,000 |
|
| $ | 3,498,000 |
|
| $ | 3,417,195 |
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Variable Rate Debt: | Variable Rate Debt: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Variable Rate Debt: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 1301 Avenue of the Americas |
| 1.93% |
|
| $ | 350,000 |
| (1) | $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | 350,000 |
|
| $ | 348,732 |
| 1301 Avenue of the Americas (2) |
| 3.85% |
|
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | 360,000 |
|
| $ | - |
|
| $ | 360,000 |
|
| $ | 359,349 |
| ||
| Revolving Credit Facility |
| n/a |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
| Revolving Credit Facility |
| n/a |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
| ||
Total Variable Rate Debt | Total Variable Rate Debt |
| 1.93% |
|
| $ | 350,000 |
|
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | 350,000 |
|
| $ | 348,732 |
| Total Variable Rate Debt |
| 3.85% |
|
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | 360,000 |
|
| $ | - |
|
| $ | 360,000 |
|
| $ | 359,349 |
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Consolidated Debt | Total Consolidated Debt |
| 3.32% |
|
| $ | 850,000 |
|
| $ | - |
|
| $ | 256,864 |
|
| $ | 975,000 |
|
| $ | - |
|
| $ | 1,750,000 |
|
| $ | 3,831,864 |
|
| $ | 3,878,237 |
| Total Consolidated Debt |
| 3.42% |
|
| $ | - |
|
| $ | 273,000 |
|
| $ | 975,000 |
|
| $ | - |
|
| $ | 1,360,000 |
|
| $ | 1,250,000 |
|
| $ | 3,858,000 |
|
| $ | 3,776,544 |
|
(1) |
|
(2) | Represents variable rate loans, where LIBOR has been capped at 2.00% through August 2023. |
In addition to the above, our unconsolidated joint ventures had $1.64$1.74 billion of outstanding indebtedness as of June 30, 2021,March 31, 2022, of which our share was $611,320,000.$621,513,000.
The tables below provide additional details on our interest rate swaps and interest rate caps as of March 31, 2022.
|
| Notional |
|
| Effective |
| Maturity |
| Benchmark |
| Strike |
|
| Fair Value as of |
| |||||||
Property |
| Amount |
|
| Date |
| Date |
| Rate |
| Rate |
|
| March 31, 2022 |
|
| December 31, 2021 |
| ||||
(Amounts in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
1301 Avenue of the Americas |
| $ | 500,000 |
|
| Jul-2021 |
| Aug-2024 |
| LIBOR |
|
| 0.46 | % |
| $ | 22,760 |
|
| $ | 6,691 |
|
Total interest rate swap assets designated as cash flow hedges (included in "other assets") | $ | 22,760 |
|
| $ | 6,691 |
|
|
| Notional |
|
| Effective |
| Maturity |
| Benchmark |
| Strike |
|
| Fair Value as of |
| |||||||
Property |
| Amount |
|
| Date |
| Date |
| Rate |
| Rate |
|
| March 31, 2022 |
|
| December 31, 2021 |
| ||||
(Amounts in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
1301 Avenue of the Americas |
| $ | 360,000 |
|
| Jul-2021 |
| Aug-2023 |
| LIBOR |
|
| 2.00 | % |
| $ | 2,782 |
|
| $ | 306 |
|
Total interest rate cap assets designated as cash flow hedges (included in "other assets") | $ | 2,782 |
|
| $ | 306 |
|
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 June 30, 2021 |
|
| As of December 31, 2020 |
|
| As of March 31, 2022 |
|
| As of December 31, 2021 |
| ||||||||||||||||||||||||||||
(Amounts in thousands, except per share amount) |
| Balance |
|
| Weighted Average Interest Rate |
|
| Effect of 1% Increase in Base Rates |
|
| Balance |
|
| Weighted Average Interest Rate |
|
| Balance |
|
| Weighted Average Interest Rate |
|
| Effect of 1% Increase in Base Rates |
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| Balance |
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| Weighted Average Interest Rate |
| ||||||||||
Paramount's share of consolidated debt: |
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Variable rate |
| $ | 350,000 |
|
|
| 1.93 | % |
| $ | 3,500 |
|
| $ | 350,000 |
|
|
| 1.99 | % |
| $ | 360,000 |
|
|
| 3.85 | % |
| $ | 3,600 |
|
| $ | 360,000 |
|
|
| 3.67 | % |
Fixed rate |
|
| 2,682,647 |
|
|
| 3.36 | % |
|
| - |
|
|
| 2,678,781 |
|
|
| 3.36 | % |
|
| 2,687,665 |
|
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| 3.25 | % |
|
| - |
|
|
| 2,687,665 |
|
|
| 3.25 | % |
|
| $ | 3,032,647 |
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|
| 3.19 | % |
| $ | 3,500 |
|
| $ | 3,028,781 |
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| 3.20 | % |
| $ | 3,047,665 |
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| 3.32 | % |
| $ | 3,600 |
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| $ | 3,047,665 |
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| 3.30 | % |
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Paramount's share of debt of non-consolidated |
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entities (non-recourse): |
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Variable rate |
| $ | 107,623 |
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| 3.27 | % |
| $ | 1,076 |
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| $ | 103,880 |
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| 3.31 | % |
| $ | 108,963 |
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| 3.35 | % |
| $ | 1,090 |
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| $ | 108,963 |
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|
| 3.27 | % |
Fixed rate |
|
| 503,697 |
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|
| 3.30 | % |
|
| - |
|
|
| 503,767 |
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| 3.30 | % |
|
| 512,550 |
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|
| 3.30 | % |
|
| - |
|
|
| 503,598 |
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| 3.30 | % |
|
| $ | 611,320 |
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| 3.30 | % |
| $ | 1,076 |
|
| $ | 607,647 |
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| 3.30 | % |
| $ | 621,513 |
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| 3.31 | % |
| $ | 1,090 |
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| $ | 612,561 |
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| 3.30 | % |
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Noncontrolling interests' share of above | Noncontrolling interests' share of above |
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| $ | (413 | ) |
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| Noncontrolling interests' share of above |
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| $ | (432 | ) |
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Total change in annual net income |
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| $ | 4,163 |
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| $ | 4,258 |
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Per diluted share |
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| $ | 0.02 |
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| $ | 0.02 |
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On March 5,December 31, 2021, the Financial Conduct Authority (“FCA”) confirmed it will ceaseceased the publication of the one-week and two-monthtwo month LIBOR rates after December 31, 2021.rates. The remaining LIBOR rates will continue to be published through June 30, 2023, after which the interest rate for our variable rate debt and interest rate swaps,derivative instruments, including interest rates for our variable rate debt and interest rate swapsderivative instruments of our unconsolidated joint ventures, will be based on an alternative variable rate as specified in the applicable documentation governing such debt or swapsderivative instruments or as otherwise agreed upon. While we expect LIBOR to be available in substantially its current form until at least the end of June 2023, if sufficient banks decline to make submission to the LIBOR administrator, it is possible that LIBOR may become unavailable prior to that point.point, which could increase our risk associated with the transition to an alternative variable rate. As of December 31, 2021, banks are no longer issuing any new LIBOR debt. The discontinuation of LIBOR and the related transition to an alternative rate would not affect our ability to borrow or maintain already outstanding borrowings or swaps, however, future changes may result in interest rates and/or payments that are higher or lower than if LIBOR were to remain available in its current form. As of June 30, 2021,March 31, 2022, all of our outstanding variable rate debt outstanding isnotes and mortgages payable and derivative instruments are indexed to LIBOR and we will continue to monitor and evaluate the related risks.
ITEM 4. CONTROLS AND 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, 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.
As of June 30, 2021,March 31, 2022, the end of the period covered by this Quarterly Report on Form 10-Q, we carried out an evaluation, under the supervision and with the participation of management, including our Chief Executive Officer and Chief Financial Officer, regarding the effectiveness of our disclosure controls and procedures. Based on the foregoing evaluation, as of the end of the period covered by this Quarterly Report, our Chief Executive Officer and Chief Financial Officer concluded 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, 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.
PART II – OTHER INFORMATION
ITEM 1. | LEGAL PROCEEDINGS |
From time to time, we are a party to various claims and routine litigation arising in the ordinary course of business. As of June 30, 2021,March 31, 2022, we do not believe that the results of any such claims or litigation, individually or in the aggregate, will have a material adverse effect on our business, financial position, results of operations or cash flows.
ITEM 1A. | RISK FACTORS |
Except to the extent additional factual information disclosed elsewhere in this Quarterly Report on Form 10-Q relates to such risk factors (including, without limitation, the matters discussed in Part I, “Item 2—Management’s Discussion and Analysis of Financial Condition and Results of Operations”), there were no material changes to the risk factors disclosed in Part I, “Item 1A. Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2020.2021.
ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS |
Recent Sales of Unregistered Securities
None.
Recent Purchases of Equity Securities
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. During 2020, we repurchased 13,813,158 common shares at a weighted average price of $8.69 per share, or $120,000,000 in the aggregate. We didhave not repurchaserepurchased any shares in the three and six months ended June 30, 2021.since December 2020. We have $80,000,000 available for future repurchases under the existing program. The amount and timing of future repurchases, if any, will depend on a number of factors, including, the price and availability of our shares, trading volume, general market conditions and available funding. The stock repurchase program may be suspended or discontinued at any time.
The following table summarizes our purchase of equity securities in the three months ended March 31, 2022.
Period |
| Total Number of Shares Purchased |
|
| Average Price Paid per Share |
|
| Total Number of Shares Purchased as Part of Publicly Announced Plan |
|
| Maximum Approximate Dollar Value Available for Future Purchase |
| ||||
January 2022 |
|
| - |
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| $ | - |
|
|
| - |
|
| $ | 80,000,000 |
|
February 2022 |
|
| 29,936 |
| (1) |
| 9.32 |
|
|
| - |
|
|
| 80,000,000 |
|
March 2022 |
|
| - |
|
|
| - |
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| - |
|
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| 80,000,000 |
|
(1) | Represents shares of common stock surrendered by employees for the satisfaction of tax withholding obligations in connection with the vesting of restricted common stock. |
ITEM 3. | DEFAULTS UPON SENIOR SECURITIES |
None.
ITEM 4. | MINE SAFETY DISCLOSURES |
None.
ITEM 5. | OTHER INFORMATION |
None.
ITEM 6. EXHIBITS
Exhibits required by Item 601 of Regulation S-K are filed herewith or incorporated herein by reference and are listed in the following Exhibit Index:
EXHIBIT INDEX
Exhibit |
| Exhibit Description | |
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3.2 | |||
10.1† | |||
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31.1* |
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31.2* |
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32.1** |
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32.2** |
| ||
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| |
101.SCH* |
| Inline XBRL Taxonomy Extension Schema. | |
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| |
101.CAL* |
| Inline XBRL Taxonomy Extension Calculation Linkbase. | |
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101.DEF* |
| Inline XBRL Taxonomy Extension Definition Linkbase. | |
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101.LAB* |
| Inline XBRL Taxonomy Extension Label Linkbase. | |
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101.PRE* |
| Inline XBRL Taxonomy Extension Presentation Linkbase. | |
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104* |
| Cover Page Interactive Data File (formatted as inline XBRL with applicable taxonomy extension information contained in Exhibits 101.) | |
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* |
| Filed herewith | |
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** |
| Furnished herewith | |
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† |
| Indicates management contract or compensatory plan or arrangement | |
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|
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Paramount Group, Inc. | |||||||||
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| ||||
Date: |
| By: | /s/ Wilbur Paes |
| Chief Operating Officer, Chief Financial Officer and Treasurer | ||||
|
|
| Wilbur Paes |
| (duly authorized officer and principal financial officer) | ||||
|
|
|
|
|
| ||||
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|
|
| ||||
Date: |
| By: | /s/ Ermelinda Berberi |
| Senior Vice President, Chief Accounting Officer | ||||
|
|
| Ermelinda Berberi |
| (duly authorized officer and principal accounting officer) |
6550