Paramount Group, Inc. [PGRE] Filings

10-Q 1 pgre-20230630.htm 10-Q 10-Q

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, 2023


☐	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., $0.01 par value per share	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,” 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 July 14, 2023, there were 217,306,498 shares of the registrant’s common stock outstanding.

Table of Contents


Item		Page Number
Part I.	Financial Information

Item 1.	Consolidated Financial Statements	3

	Consolidated Balance Sheets (Unaudited) as of June 30, 2023 and December 31, 2022	3

	Consolidated Statements of Income (Unaudited) for the three and six months ended June 30, 2023 and 2022	4

	Consolidated Statements of Comprehensive Income (Unaudited) for the three and six months ended June 30, 2023 and 2022	5

	Consolidated Statements of Changes in Equity (Unaudited) for the three and six months ended June 30, 2023 and 2022	6

	Consolidated Statements of Cash Flows (Unaudited) for the six months ended June 30, 2023 and 2022	8

	Notes to Consolidated Financial Statements (Unaudited)	10

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	28

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	57

Item 4.	Controls and Procedures	59

Part II.	Other Information

Item 1.	Legal Proceedings	60

Item 1A.	Risk Factors	60

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	60

Item 3.	Defaults Upon Senior Securities	60

Item 4.	Mine Safety Disclosures	60

Item 5.	Other Information	60

Item 6.	Exhibits	61

Signatures		62

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, 2023			December 31, 2022
Assets
Real estate, at cost
Land	$	1,966,237		$	1,966,237
Buildings and improvements		6,199,074			6,177,540
		8,165,311			8,143,777
Accumulated depreciation and amortization		(1,377,917	)		(1,297,553	)
Real estate, net		6,787,394			6,846,224
Cash and cash equivalents		434,751			408,905
Restricted cash		72,680			40,912
Accounts and other receivables		13,692			23,866
Real estate related fund investments		66,606			105,369
Investments in unconsolidated real estate related funds		5,270			3,411
Investments in unconsolidated joint ventures		398,677			393,503
Deferred rent receivable		346,583			346,338
Deferred charges, net of accumulated amortization of $75,732 and $68,686		113,271			120,685
Intangible assets, net of accumulated amortization of $189,123 and $246,723		79,558			90,381
Other assets		49,497			73,660
Total assets (1)	$	8,367,979		$	8,453,254

Liabilities and Equity
Notes and mortgages payable, net of unamortized deferred financing costs of $15,331 and $17,682	$	3,842,669		$	3,840,318
Revolving credit facility		-			-
Accounts payable and accrued expenses		113,449			123,176
Dividends and distributions payable		8,188			18,026
Intangible liabilities, net of accumulated amortization of $106,393 and $102,533		31,960			36,193
Other liabilities		23,700			24,775
Total liabilities (1)		4,019,966			4,042,488
Commitments and contingencies
Paramount Group, Inc. equity:
Common stock $0.01 par value per share; authorized 900,000,000 shares; issued and outstanding 217,306,498 and 216,559,406 shares in 2023 and 2022, respectively		2,172			2,165
Additional paid-in-capital		4,183,662			4,186,161
Earnings less than distributions		(714,785	)		(644,331	)
Accumulated other comprehensive income		36,431			48,296
Paramount Group, Inc. equity		3,507,480			3,592,291
Noncontrolling interests in:
Consolidated joint ventures		407,647			402,118
Consolidated real estate related funds		183,988			173,375
Operating Partnership (15,366,522 and 14,586,411 units outstanding)		248,898			242,982
Total equity		4,348,013			4,410,766
Total liabilities and equity	$	8,367,979		$	8,453,254

(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 93.4% as of June 30, 2023. As of June 30, 2023, the assets and liabilities of the Operating Partnership include $4,003,965 and $2,570,004 of assets and liabilities, respectively, of certain VIEs that are consolidated by the Operating Partnership. See Note 12, Variable Interest Entities (“VIEs”).

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,
(Amounts in thousands, except share and per share amounts)	2023			2022			2023			2022
Revenues:
Rental revenue	$	165,506		$	177,243		$	347,219		$	347,165
Fee and other income		7,156			8,274			13,917			22,037
Total revenues		172,662			185,517			361,136			369,202
Expenses:
Operating		71,078			67,814			141,387			134,475
Depreciation and amortization		62,627			57,398			121,515			113,022
General and administrative		16,224			16,706			30,847			32,351
Transaction related costs		63			159			191			276
Total expenses		149,992			142,077			293,940			280,124
Other income (expense):
Loss from real estate related fund investments		(42,644	)		-			(39,094	)		-
Income (loss) from unconsolidated real estate related funds		32			155			(146	)		325
Loss from unconsolidated joint ventures		(28,402	)		(4,416	)		(34,164	)		(9,529	)
Interest and other income, net		2,967			796			5,892			1,027
Interest and debt expense		(36,879	)		(35,578	)		(73,338	)		(69,855	)
(Loss) income before income taxes		(82,256	)		4,397			(73,654	)		11,046
Income tax expense		(573	)		(359	)		(861	)		(886	)
Net (loss) income		(82,829	)		4,038			(74,515	)		10,160
Less net (income) loss attributable to noncontrolling interests in:
Consolidated joint ventures		(5,351	)		(4,779	)		(10,992	)		(8,204	)
Consolidated real estate related funds		37,301			352			36,478			1,368
Operating Partnership		3,341			29			3,220			(313	)
Net (loss) income attributable to common stockholders	$	(47,538	)	$	(360	)	$	(45,809	)	$	3,011


(Loss) Income per Common Share - Basic:
(Loss) income per common share	$	(0.22	)	$	(0.00	)	$	(0.21	)	$	0.01
Weighted average shares outstanding		217,003,931			222,971,886			216,784,737			220,888,664

(Loss) Income per Common Share - Diluted:
(Loss) income per common share	$	(0.22	)	$	(0.00	)	$	(0.21	)	$	0.01
Weighted average shares outstanding		217,003,931			222,971,886			216,784,737			220,930,019

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)	2023			2022			2023			2022
Net (loss) income	$	(82,829	)	$	4,038		$	(74,515	)	$	10,160
Other comprehensive (loss) income:
Change in value of interest rate swaps and interest rate caps		(3,135	)		6,109			(11,525	)		24,654
Pro rata share of other comprehensive income (loss) of unconsolidated joint ventures		1,394			2,949			(1,169	)		13,402
Comprehensive (loss) income		(84,570	)		13,096			(87,209	)		48,216
Less comprehensive (income) loss attributable to noncontrolling interests in:
Consolidated joint ventures		(5,351	)		(4,779	)		(10,992	)		(8,204	)
Consolidated real estate related funds		37,301			352			36,478			1,368
Operating Partnership		3,455			(655	)		4,049			(3,667	)
Comprehensive (loss) income attributable to common stockholders	$	(49,165	)	$	8,014		$	(57,674	)	$	37,713

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			Income		Ventures			Related Funds			Partnership			Equity
Balance as of March 31, 2023		217,212	$	2,171	$	4,181,983	$	(659,641	)	$	38,058	$	403,902		$	220,206		$	250,401		$	4,437,080
Net (loss) income		-		-		-		(47,538	)		-		5,351			(37,301	)		(3,341	)		(82,829	)
Common shares issued upon redemption of common units		39		1		648		-			-		-			-			(649	)		-
Common shares issued under Omnibus share plan, net of shares withheld for taxes		55		-		-		-			-		-			-			-			-
Dividends and distributions ($0.035 per share and unit)		-		-		-		(7,606	)		-		-			-			(582	)		(8,188	)
Contributions from noncontrolling interests		-		-		-		-			-		-			3,606			-			3,606
Distributions to noncontrolling interests		-		-		-		-			-		(1,606	)		(2,523	)		-			(4,129

Paramount Group, Inc. [PGRE] Filings
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10-Q	[2023-05-03]
10-K	[2023-02-15]
10-Q	[2022-10-26]
10-Q	[2022-07-26]
10-Q	[2022-04-27]
10-K	[2022-02-22]
10-Q	[2021-10-27]
10-Q	[2021-07-27]
10-Q	[2021-04-28]
10-K	[2021-02-10]
10-Q	[2020-10-28]
10-Q	[2020-07-29]
10-Q	[2020-04-29]
10-K	[2020-02-12]
10-Q	[2019-11-06]
10-Q	[2019-07-31]
10-Q	[2019-05-01]
10-K	[2019-02-13]
10-Q	[2018-11-05]
10-Q	[2018-08-08]
10-Q	[2018-05-02]
10-K	[2018-02-15]
10-Q	[2017-11-06]
10-Q	[2017-08-03]
10-Q	[2017-05-04]
10-K	[2017-02-22]
10-Q	[2016-11-02]
10-Q	[2016-08-04]
10-Q	[2016-05-05]
10-K	[2016-02-25]
10-Q	[2015-11-12]
10-Q	[2015-08-13]
10-Q	[2015-05-15]
10-K	[2015-03-19]