Paramount (PGRE) - 2025 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION This section presents the company's consolidated financial statements, including balance sheets, income, equity, and cash flows, with detailed notes ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS This section presents Paramount Group, Inc.'s unaudited consolidated financial statements, including balance sheets, statements of income, comprehensive income, changes in equity, and cash flows, along with detailed notes Consolidated Balance Sheets (Unaudited) Details the company's financial position, including assets, liabilities, and equity, at specific reporting dates Consolidated Balance Sheet Highlights (Amounts in thousands) | Metric | June 30, 2025 | December 31, 2024 | Change | | :---------------------------- | :------------ | :---------------- | :----- | | Total Assets | $7,958,713 | $7,871,503 | +$87,210 | | Total Liabilities | $3,856,315 | $3,862,006 | -$5,691 | | Total Equity | $4,102,398 | $4,009,497 | +$92,901 | | Cash and cash equivalents | $439,905 | $375,056 | +$64,849 | | Restricted cash | $219,660 | $180,391 | +$39,269 | | Real estate, net | $6,624,481 | $6,651,805 | -$27,324 | Consolidated Statements of Income (Unaudited) Presents the company's revenues, expenses, and net loss or income over specific reporting periods Consolidated Statements of Income Highlights (Amounts in thousands, except per share amounts) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Total Revenues | $177,045 | $187,408 | $364,064 | $376,285 | | Total Expenses | $159,966 | $152,982 | $314,506 | $302,648 | | Net (Loss) Income attributable to common stockholders | $(19,785) | $(7,819) | $(29,811) | $2,046 | | (Loss) Income per Common Share - Basic | $(0.09) | $(0.04) | $(0.14) | $0.01 | - General and administrative expenses increased significantly by $7,679 thousand for the three months ended June 30, 2025, and by $8,506 thousand for the six months ended June 30, 2025, primarily due to severance costs related to acceleration of equity awards and severance payments[12][171][187] Consolidated Statements of Comprehensive Income (Unaudited) Outlines the company's comprehensive loss or income, including net loss and other comprehensive income items Consolidated Statements of Comprehensive Income Highlights (Amounts in thousands) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net (Loss) Income | $(20,409) | $(2,860) | $(25,726) | $13,871 | | Change in value of interest rate swaps and caps | $(461) | $(5,968) | $(474) | $(10,655) | | Comprehensive (Loss) Income | $(20,870) | $(8,899) | $(26,200) | $3,288 | | Comprehensive loss attributable to common stockholders | $(20,210) | $(13,346) | $(30,248) | $(7,647) | Consolidated Statements of Changes in Equity (Unaudited) Details changes in the company's total equity, including Paramount Group, Inc. equity and noncontrolling interests Consolidated Statements of Changes in Equity Highlights (Amounts in thousands) | Metric | As of December 31, 2024 | As of June 30, 2025 | Change | | :-------------------------------------------- | :---------------------- | :------------------ | :----- | | Total Equity | $4,009,497 | $4,102,398 | +$92,901 | | Paramount Group, Inc. equity | $3,141,277 | $3,028,442 | -$112,835 | | Noncontrolling interests in Consolidated joint ventures | $495,340 | $743,127 | +$247,787 | - The company issued common shares upon redemption of common units, with 2,768 thousand shares issued for $39,625 thousand during the six months ended June 30, 2025[21] Consolidated Statements of Cash Flows (Unaudited) Summarizes cash inflows and outflows from operating, investing, and financing activities over specific periods Consolidated Statements of Cash Flows Highlights (Amounts in thousands) | Cash Flow Activity | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change | | :-------------------------------------- | :--------------------------- | :--------------------------- | :----- | | Net cash provided by operating activities | $77,080 | $136,855 | $(59,775) | | Net cash used in investing activities | $(70,590) | $(64,952) | $(5,638) | | Net cash provided by (used in) financing activities | $97,628 | $(109,402) | $207,030 | | Net increase (decrease) in cash and cash equivalents and restricted cash | $104,118 | $(37,499) | $141,617 | | Cash and cash equivalents and restricted cash at end of period | $659,565 | $472,100 | $187,465 | - Financing activities in 2025 were significantly boosted by proceeds from the sale of equity interests in 900 Third Avenue ($83,307 thousand) and One Front Street ($10,266 thousand)[217] Notes to Consolidated Financial Statements (Unaudited) Provides detailed explanations and additional information supporting the consolidated financial statements Note 1. Organization and Business Describes the company's structure, business operations, and real estate portfolio as a REIT - Paramount Group, Inc. is a fully-integrated REIT specializing in Class A office properties in New York City and San Francisco[28] - As of June 30, 2025, the company owns approximately 92.5% of its Operating Partnership[28] - The portfolio includes 17 properties totaling 13.1 million square feet, with 8.7 million sq ft in New York, 3.6 million sq ft in San Francisco, and 0.8 million sq ft of managed properties[29][32] Note 2. Basis of Presentation and Significant Accounting Policies Outlines the accounting principles and policies used in preparing the interim financial statements - Financial statements are unaudited and prepared in conformity with GAAP for interim information[30] - No material changes to significant accounting policies from the Annual Report on Form 10-K for the year ended December 31, 2024[31] - The company is evaluating the impact of ASU 2023-09 (effective FY2025), ASU 2024-03 (effective FY2027), and ASU 2025-03 (effective FY2026) on its consolidated financial statements and disclosures[35][36][37] Note 3. Dispositions Details recent sales of equity interests in properties and their accounting treatment - On January 17, 2025, sold a 45.0% equity interest in 900 Third Avenue for $94.0 million net proceeds[38] - On May 5, 2025, sold a 25.0% equity interest in One Front Street for $11.5 million net proceeds, including $40.5 million in seller financing[39] - Both sales were accounted for as equity transactions, with the company continuing to consolidate the properties due to being the primary beneficiary of the newly formed VIEs[38][39] Note 4. Consolidated Real Estate Related Funds Reports on the financial performance of consolidated real estate related fund investments Loss from Real Estate Related Fund Investments (Amounts in thousands) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------------------------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Loss from real estate related fund investments | $(23) | $(27) | $(49) | $(70) | | (Loss) income from real estate related fund investments attributable to Paramount Group, Inc. | $(2) | $(3) | $(6) | $4 | - The company consolidates RDF's financial results, reflecting a 92.6% noncontrolling interest. RDF holds a 35.0% interest in One Steuart Lane, a residential condominium project[43] Note 5. Investments in Unconsolidated Real Estate Related Funds Summarizes the company's investments and financial results from unconsolidated real estate related funds Investments in Unconsolidated Real Estate Related Funds (Amounts in thousands) | Metric | June 30, 2025 | December 31, 2024 | Change | | :-------------------------------------------- | :------------ | :---------------- | :----- | | Investments in unconsolidated real estate related funds | $4,397 | $4,649 | $(252) | - The company recognized a loss of $150 thousand from unconsolidated real estate related funds for the six months ended June 30, 2025, compared to an income of $90 thousand in the same period of 2024[45] Note 6. Investments in Unconsolidated Joint Ventures Details the company's equity method investments in unconsolidated joint ventures and their financial impact - The company's investment in Market Center was written off in December 2023, and its sale in May 2025 had no impact on consolidated financial statements[48] Investments in Unconsolidated Joint Ventures (Amounts in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------------------------- | :------------ | :---------------- | | Investments in unconsolidated joint ventures | $84,501 | $85,952 | Income (Loss) from Unconsolidated Joint Ventures (Amounts in thousands) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Income (loss) from unconsolidated joint ventures | $52 | $(771) | $1,959 | $(2,117) | Note 7. Intangible Assets and Liabilities Provides information on the company's intangible assets and liabilities, including amortization details Intangible Assets and Liabilities, Net (Amounts in thousands) | Metric | June 30, 2025 | December 31, 2024 | Change | | :---------------------------- | :------------ | :---------------- | :----- | | Intangible assets, net | $43,724 | $50,492 | $(6,768) | | Intangible liabilities, net | $17,804 | $20,870 | $(3,066) | Amortization of Intangibles (Amounts in thousands) | Amortization | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :---------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Above and below-market leases, net | $1,376 | $1,632 | $2,829 | $2,972 | | Acquired in-place leases | $3,060 | $4,340 | $6,218 | $9,100 | Note 8. Debt Outlines the company's outstanding debt, including notes, mortgages, and refinancing activities - Revolving credit facility terminated on May 5, 2025, with no outstanding balance[59] Consolidated Outstanding Debt (Amounts in thousands) | Debt Type | June 30, 2025 | December 31, 2024 | | :------------------------------- | :------------ | :---------------- | | Total notes and mortgages payable | $3,692,050 | $3,692,050 | | Total notes and mortgages payable, net | $3,680,857 | $3,676,630 | - Key loans maturing in the near term include $500 million for 31 West 52nd Street (June 2026) and $860 million for 1301 Avenue of the Americas (August 2026). The company is exploring refinancing options[60] Note 9. Derivative Instruments and Hedging Activities Describes the company's use of derivative instruments for hedging interest rate risks - The company has interest rate cap agreements with a notional amount of $860 million, capping SOFR at 3.50% through August 2025, for the 1301 Avenue of the Americas property[61][63] Other Comprehensive Losses from Derivatives (Amounts in thousands) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------------------------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Other comprehensive losses from changes in fair value of derivatives | $(461) | $(5,968) | $(474) | $(10,655) | Note 10. Equity Details the company's equity structure, including stock repurchase programs and share issuances - $15 million capacity remains under the $200 million stock repurchase program[65] - No shares were repurchased during the six months ended June 30, 2025[65] Note 11. Accumulated Other Comprehensive (Loss) Income Reports on changes in accumulated other comprehensive loss or income from various sources Accumulated Other Comprehensive (Loss) Income (Amounts in thousands) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------------------------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Income related to cash flow hedges recognized in other comprehensive (loss) income | $302 | $1,079 | $642 | $3,457 | | Amounts reclassified from accumulated other comprehensive (loss) income decreasing interest and debt expense | $(763) | $(7,047) | $(1,116) | $(14,112) | Note 12. Noncontrolling Interests Provides details on noncontrolling interests in consolidated joint ventures, funds, and the Operating Partnership Noncontrolling Interests (Amounts in thousands) | Noncontrolling Interest | June 30, 2025 | December 31, 2024 | Change | | :--------------------------------------------- | :------------ | :---------------- | :----- | | Consolidated joint ventures | $743,127 | $495,340 | +$247,787 | | Consolidated real estate related funds | $84,743 | $82,875 | +$1,868 | | Operating Partnership | $246,086 | $290,005 | $(43,919) | - The increase in noncontrolling interests in consolidated joint ventures is net of a $40,545 thousand mezzanine loan receivable from the One Front Street sale[68] Note 13. Variable Interest Entities ("VIEs") Discusses the company's involvement with variable interest entities and associated assets and liabilities - The Operating Partnership, in which the company owns approximately 92.5%, is a consolidated VIE[73] Consolidated VIE Assets and Liabilities (Amounts in thousands) | Metric | June 30, 2025 | December 31, 2024 | Change | | :---------------------------- | :------------ | :---------------- | :----- | | Total VIE assets | $4,682,280 | $3,834,072 | +$848,208 | | Total VIE liabilities | $2,403,536 | $2,393,672 | +$9,864 | Maximum Risk of Loss from Unconsolidated VIEs (Amounts in thousands) | Metric | June 30, 2025 | December 31, 2024 | Change | | :-------------------------------------------- | :------------ | :---------------- | :----- | | Maximum risk of loss from unconsolidated VIEs | $10,946 | $6,343 | +$4,603 | Note 14. Fair Value Measurements Presents fair value measurements for financial assets and liabilities, including interest rate caps and debt Financial Assets Measured at Fair Value (Amounts in thousands) | Metric | June 30, 2025 | December 31, 2024 | Change | | :---------------------------- | :------------ | :---------------- | :----- | | Interest rate cap assets | $729 | $3,650 | $(2,921) | Notes and Mortgages Payable - Carrying Amount vs. Fair Value (Amounts in thousands) | Metric | Carrying Amount (June 30, 2025) | Fair Value (June 30, 2025) | Carrying Amount (Dec 31, 2024) | Fair Value (Dec 31, 2024) | | :---------------------------- | :------------------------------ | :------------------------- | :----------------------------- | :------------------------ | | Notes and mortgages payable | $3,692,050 | $3,489,983 | $3,692,050 | $3,412,126 | Note 15. Leases Details rental revenue from leases and future undiscounted cash flows from non-cancellable operating leases Rental Revenue Details (Amounts in thousands) | Rental Revenue | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Fixed | $145,109 | $158,406 | $298,528 | $319,230 | | Variable | $22,924 | $21,272 | $48,526 | $40,171 | | Total rental revenue | $168,033 | $179,678 | $347,054 | $359,401 | Future Undiscounted Cash Flows from Non-Cancellable Operating Leases (Amounts in thousands) | Year | Amount | | :---------------------------------------------------- | :----- | | 2025 (July 1 - Dec 31) | $276,658 | | 2026 | $510,832 | | 2027 | $501,456 | | 2028 | $510,955 | | 2029 | $494,292 | | 2030 | $444,990 | | Thereafter | $1,826,286 | | Total | $4,565,469 | Note 16. Fee and Other Income Breaks down various sources of fee and other income, including asset and property management fees Fee and Other Income Details (Amounts in thousands) | Income Type | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :--------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Asset management | $1,911 | $2,317 | $3,780 | $4,622 | | Property management | $1,386 | $1,657 | $2,899 | $3,401 | | Acquisition, disposition, leasing and other | $923 | $330 | $2,566 | $2,529 | | Total fee income | $4,220 | $4,304 | $9,245 | $10,552 | | Other income | $4,792 | $3,426 | $7,765 | $6,332 | | Total fee and other income | $9,012 | $7,730 | $17,010 | $16,884 | Note 17. Interest and Other Income, net Reports on interest income and other non-operating income components Interest and Other Income, Net (Amounts in thousands) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Interest income, net | $4,026 | $3,893 | $7,841 | $7,876 | | Non-cash gain on extinguishment of IPO related tax liability | $- | $- | $- | $15,437 | | Total interest and other income, net | $4,026 | $3,893 | $7,841 | $23,313 | Note 18. Interest and Debt Expense Details the company's interest expense and amortization of deferred financing costs Interest and Debt Expense Details (Amounts in thousands) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Interest expense | $39,525 | $37,377 | $79,088 | $75,278 | | Amortization of deferred financing costs | $2,759 | $2,627 | $6,396 | $4,995 | | Total interest and debt expense | $42,284 | $40,004 | $85,484 | $80,273 | - The increase in interest and debt expense was driven by the expiration of interest rate swaps on $500 million of debt at 1301 Avenue of the Americas and a $462 thousand write-off of deferred financing costs from credit facility termination[93][176][192] Note 19. Incentive Compensation Provides information on stock-based compensation expense and equity award vesting Stock-Based Compensation Expense (Amounts in thousands) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Stock-based compensation expense | $7,860 | $5,068 | $11,612 | $11,262 | - Stock-based compensation for the three and six months ended June 30, 2025, includes $4,438 thousand from accelerated vesting of equity awards for two former named executive officers[94] - 26.7% (474,463) of LTIP units granted under the 2022 Performance Program were earned, with half vesting immediately on February 7, 2025, and the rest on December 31, 2025[95] Note 20. Earnings Per Share Presents the calculation of basic and diluted earnings per share for common stockholders Earnings Per Share Details (Amounts in thousands, except per share amounts) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net (loss) income attributable to common stockholders | $(19,785) | $(7,819) | $(29,811) | $2,046 | | (Loss) income per common share - basic and diluted | $(0.09) | $(0.04) | $(0.14) | $0.01 | | Weighted average common shares outstanding | 219,217 | 217,205 | 218,614 | 217,155 | Note 21. Related Parties Discloses transactions and relationships with related parties, including services and reimbursements - Incurred costs of $219 thousand (6 months ended June 30, 2025) for services from HT Consulting GmbH, owned by the CEO[99] - Incurred costs of $147 thousand (6 months ended June 30, 2025) for CEO's business travel using his private aircraft[100] - Reimbursed $274 thousand (6 months ended June 30, 2025) in legal fees to former COO's counsel, where his brother is a partner, related to an SEC investigation[105] Note 22. Commitments and Contingencies Outlines the company's legal proceedings, guarantees, and compliance with debt covenants - The SEC is investigating the adequacy of disclosures concerning executive compensation, perquisites, corporate asset use, related party transactions, conflicts of interest, and control failures. The outcome, costs, and duration are currently unestimable[111] - As of June 30, 2025, the company believes it is in compliance with all covenants in its consolidated mortgage debt agreements[112] - In connection with the 60 Wall Street joint venture's modified mortgage loan, the company provided certain guarantees, including a completion guarantee, and has recorded a $14,844 thousand asset and liability for these obligations and indemnifications[113] Note 23. Segments Reports financial information by operating segment, focusing on New York and San Francisco properties - The company's operating segments are New York and San Francisco, aligning with internal reporting and key operating decisions[115] Paramount's Share of Net Operating Income (NOI) (Amounts in thousands) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :---------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Paramount's share of NOI | $82,361 | $90,636 | $169,149 | $184,219 | | New York NOI | $58,023 | $63,396 | $116,676 | $131,765 | | San Francisco NOI | $26,102 | $28,158 | $55,924 | $54,398 | Total Assets by Segment (Amounts in thousands) | Total Assets as of: | June 30, 2025 | December 31, 2024 | | :---------------------------------- | :------------ | :---------------- | | Total | $7,958,713 | $7,871,503 | | New York | $5,194,541 | $5,138,087 | | San Francisco | $2,351,304 | $2,332,583 | ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This section provides a detailed analysis of Paramount Group, Inc.'s financial condition and operational results for the three and six months ended June 30, 2025 Forward-Looking Statements Highlights inherent risks and uncertainties associated with future financial performance and market conditions - Forward-looking statements are subject to risks including unfavorable market conditions, high property concentrations in New York City and San Francisco, and general real estate ownership risks[123] - Key risks also include decreased rental rates, potential loss of major tenants, and trends in the office real estate industry such as telecommuting and flexible work schedules[123] - Financial risks involve substantial indebtedness, failure to refinance debt, fluctuations in interest rates, and compliance with REIT requirements[127] Critical Accounting Estimates Addresses key accounting estimates that require significant judgment and can impact financial results - No material changes to critical accounting estimates from the Annual Report on Form 10-K for the year ended December 31, 2024[125] Recently Issued Accounting Literature Refers to new accounting standards and their potential effects on the company's financial reporting - Refer to Note 2, 'Basis of Presentation and Significant Accounting Policies,' for a summary of recently issued accounting literature and their potential impact[126] Business Overview Provides an overview of the company's core business, property portfolio, and recent strategic activities - Paramount Group, Inc. is a REIT specializing in Class A office properties in New York City and San Francisco, with a 92.5% ownership in its Operating Partnership[128] - The company's portfolio includes 17 properties totaling 13.1 million square feet, comprising 8.7 million sq ft in New York, 3.6 million sq ft in San Francisco, and 0.8 million sq ft of managed properties[129][135] - Recent dispositions include a 45.0% equity interest in 900 Third Avenue ($94 million net proceeds) and a 25.0% equity interest in One Front Street ($11.5 million net proceeds). The revolving credit facility was terminated, and Market Center was sold via deed-in-lieu of foreclosure[130][131][132][133] Leasing Results - Three Months Ended June 30, 2025 Analyzes leasing activity, occupancy rates, and rental rate changes for the three-month period Leasing Statistics (Three Months Ended June 30, 2025) | Metric | Total | New York | San Francisco | | :------------------------------------ | :---- | :------- | :------------ | | Total square feet leased | 404,710 | 211,375 | 193,335 | | Pro rata share of total square feet leased | 255,621 | 155,389 | 100,232 | | Initial rent (per sq ft) | $91.93 | $91.18 | $93.07 | | Weighted average lease term (years) | 12.9 | 14.7 | 10.3 | | Same Store Leased Occupancy (June 30, 2025) | 85.4% | 88.1% | 75.1% | | Same Store Leased Occupancy (March 31, 2025) | 86.2% | 87.4% | 82.3% | - Same store leased occupancy decreased by 80 basis points to 85.4% at June 30, 2025, primarily due to Google's lease expiration at One Market Plaza in San Francisco[139][143] Second Generation Space Rental Rate Change (3 Months Ended June 30, 2025) | Second Generation Space Rental Rate Change | Total | New York | San Francisco | | :------------------------------------------------------------------------ | :------ | :------- | :------------ | | GAAP basis percentage increase | 2.6% | 1.5% | 4.6% | | Cash basis percentage decrease | (5.4%) | (1.0%) | (13.6%) | Leasing Results - Six Months Ended June 30, 2025 Examines leasing performance, occupancy trends, and rental rate adjustments over the six-month period Leasing Statistics (Six Months Ended June 30, 2025) | Metric | Total | New York | San Francisco | | :------------------------------------ | :---- | :------- | :------------ | | Total square feet leased | 688,584 | 489,490 | 199,094 | | Pro rata share of total square feet leased | 442,068 | 339,425 | 102,643 | | Initial rent (per sq ft) | $85.43 | $83.07 | $93.21 | | Weighted average lease term (years) | 12.9 | 13.8 | 10.1 | | Same Store Leased Occupancy (June 30, 2025) | 85.4% | 88.1% | 75.1% | | Same Store Leased Occupancy (Dec 31, 2024) | 84.8% | 85.0% | 83.8% | - Same store leased occupancy increased by 60 basis points to 85.4% at June 30, 2025, from 84.8% at December 31, 2024, despite the scheduled expiration of Google's lease in April 2025 at One Market Plaza[148][152] Second Generation Space Rental Rate Change (6 Months Ended June 30, 2025) | Second Generation Space Rental Rate Change | Total | New York | San Francisco | | :------------------------------------------------------------------------ | :------ | :------- | :------------ | | GAAP basis percentage increase | 3.7% | 3.2% | 4.9% | | Cash basis percentage decrease | (4.5%) | (1.2%) | (13.2%) | Financial Results - Three Months Ended June 30, 2025 and 2024 Compares key financial metrics, including net loss, EPS, FFO, and Same Store NOI, for the three-month periods Key Financial Metrics (Three Months Ended June 30, 2025 vs 2024) | Metric (Amounts in thousands, except per share) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change | | :---------------------------------------------- | :--------------------------- | :--------------------------- | :----- | | Net loss attributable to common stockholders | $(19,785) | $(7,819) | $(11,966) | | Diluted EPS | $(0.09) | $(0.04) | $(0.05) | | FFO attributable to common stockholders | $26,990 | $42,655 | $(15,665) | | FFO per diluted share | $0.12 | $0.20 | $(0.08) | | Core FFO attributable to common stockholders | $36,927 | $43,428 | $(6,501) | | Core FFO per diluted share | $0.17 | $0.20 | $(0.03) | - Net loss for the three months ended June 30, 2025, includes $7,535 thousand ($0.03 per diluted share) of expense related to accelerated equity awards and severance payments[154][155] Same Store Results (Three Months Ended June 30, 2025 vs 2024) | Same Store Results | Total | New York | San Francisco | | :-------------------------------------------------------- | :------ | :------- | :------------ | | Same Store NOI | (4.6%) | (5.3%) | (3.0%) | | Same Store Cash NOI | 0.5% | 1.2% | (0.8%) | Financial Results - Six Months Ended June 30, 2025 and 2024 Compares key financial metrics, including net loss, EPS, FFO, and Same Store NOI, for the six-month periods Key Financial Metrics (Six Months Ended June 30, 2025 vs 2024) | Metric (Amounts in thousands, except per share) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change | | :---------------------------------------------- | :--------------------------- | :--------------------------- | :----- | | Net loss attributable to common stockholders | $(29,811) | $2,046 | $(31,857) | | Diluted EPS | $(0.14) | $0.01 | $(0.15) | | FFO attributable to common stockholders | $63,870 | $102,476 | $(38,606) | | FFO per diluted share | $0.29 | $0.47 | $(0.18) | | Core FFO attributable to common stockholders | $74,818 | $91,366 | $(16,548) | | Core FFO per diluted share | $0.34 | $0.42 | $(0.08) | - Net loss for the six months ended June 30, 2025, includes $7,535 thousand ($0.03 per diluted share) of expense related to accelerated equity awards and severance payments. The prior year included a $14,148 thousand ($0.07 per diluted share) non-cash gain on extinguishment of an IPO-related tax liability[160][161] Same Store Results (Six Months Ended June 30, 2025 vs 2024) | Same Store Results | Total | New York | San Francisco | | :-------------------------------------------------------- | :------ | :------- | :------------ | | Same Store NOI | (5.0%) | (9.3%) | 5.3% |\ | Same Store Cash NOI | (1.8%) | (6.9%) | 9.2% | Results of Operations - Three Months Ended June 30, 2025 and 2024 Analyzes consolidated revenues, expenses, and net loss for the three-month periods, highlighting key drivers Consolidated Results of Operations (Three Months Ended June 30, 2025 vs 2024) (Amounts in thousands) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change | | :-------------------------------------------- | :--------------------------- | :--------------------------- | :----- | | Total Revenues | $177,045 | $187,408 | $(10,363) | | Rental revenue | $168,033 | $179,678 | $(11,645) | | Fee and other income | $9,012 | $7,730 | $1,282 | | Total Expenses | $159,966 | $152,982 | $6,984 | | Operating expenses | $74,884 | $74,192 | $692 | | General and administrative | $24,311 | $16,632 | $7,679 | | Net loss attributable to common stockholders | $(19,785) | $(7,819) | $(11,966) | - Rental revenue decreased primarily due to lower average occupancy at 31 West 52nd Street (New York) and One Market Plaza (San Francisco)[169] - General and administrative expenses increased due to $8,188 thousand in severance costs related to acceleration of equity awards and severance payments[171] Results of Operations - Six Months Ended June 30, 2025 and 2024 Analyzes consolidated revenues, expenses, and net loss for the six-month periods, highlighting key drivers Consolidated Results of Operations (Six Months Ended June 30, 2025 vs 2024) (Amounts in thousands) | Metric | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change | | :-------------------------------------------- | :--------------------------- | :--------------------------- | :----- | | Total Revenues | $364,064 | $376,285 | $(12,221) | | Rental revenue | $347,054 | $359,401 | $(12,347) | | Fee and other income | $17,010 | $16,884 | $126 | | Total Expenses | $314,506 | $302,648 | $11,858 | | Operating expenses | $152,934 | $145,932 | $7,002 | | General and administrative | $41,772 | $33,266 | $8,506 | | Net loss attributable to common stockholders | $(29,811) | $2,046 | $(31,857) | - Rental revenue decreased due to lower average occupancy at 31 West 52nd Street (New York) and One Market Plaza (San Francisco)[185] - Interest and other income, net, decreased by $15,472 thousand, primarily due to a non-cash gain on extinguishment of an IPO-related tax liability in the prior year that did not recur[191] - Income from unconsolidated joint ventures increased by $4,076 thousand, mainly from higher gains on sale of residential condominium units at One Steuart Lane and improved performance at 60 Wall Street[190] Liquidity and Capital Resources Assesses the company's cash position, debt obligations, and strategies for managing financial flexibility Liquidity Position (Amounts in thousands) | Metric | June 30, 2025 | | :---------------------------- | :------------ | | Total Liquidity | $659,565 | | Cash and cash equivalents | $439,905 | | Restricted cash | $219,660 | - The company suspended its regular quarterly dividend in September 2024 to strengthen its balance sheet and maintain financial flexibility[203] - Consolidated outstanding debt is $3.69 billion, with $500 million (31 West 52nd Street) and $860 million (1301 Avenue of the Americas) maturing in 2026. Refinancing options are being explored[201] - Unconsolidated joint ventures have $1.41 billion in outstanding indebtedness, with the company's share at $359,982 thousand. The company does not guarantee this debt but may fund additional capital[204] Cash Flows Summarizes cash flow activities from operations, investing, and financing, and their impact on liquidity Cash Flow Summary (Six Months Ended June 30, 2025 vs 2024) (Amounts in thousands) | Cash Flow Activity | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change | | :-------------------------------------- | :--------------------------- | :--------------------------- | :----- | | Net cash provided by operating activities | $77,080 | $136,855 | $(59,775) | | Net cash used in investing activities | $(70,590) | $(64,952) | $(5,638) | | Net cash provided by (used in) financing activities | $97,628 | $(109,402) | $207,030 | | Net increase (decrease) in cash and cash equivalents and restricted cash | $104,118 | $(37,499) | $141,617 | - Financing activities in 2025 generated $97,628 thousand, primarily from the sale of equity interests in 900 Third Avenue ($83,307 thousand) and One Front Street ($10,266 thousand)[217] - Investing activities used $70,590 thousand, mainly for additions to real estate ($73,771 thousand) and capital contributions to unconsolidated joint ventures ($4,629 thousand)[215] Non-GAAP Financial Measures Explains and reconciles non-GAAP financial metrics used to evaluate the company's operating performance - NOI, Same Store NOI, FFO, and Core FFO are supplemental non-GAAP measures used to evaluate operating performance and enhance comparability[219][220][228] Non-GAAP Financial Metrics (Six Months Ended June 30, 2025 vs 2024) (Amounts in thousands) | Metric | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change | | :-------------------------------------------- | :--------------------------- | :--------------------------- | :----- | | Paramount's share of NOI | $169,149 | $184,219 | $(15,070) | | Paramount's share of Cash NOI | $166,353 | $175,520 | $(9,167) | | FFO attributable to common stockholders | $63,870 | $102,476 | $(38,606) | | Core FFO attributable to common stockholders | $74,818 | $91,366 | $(16,548) | Same Store Performance (Six Months Ended June 30, 2025 vs 2024) | Same Store Performance | Total | New York | San Francisco | | :------------------------------------------------------------ | :------ | :------- | :------------ | | Same Store NOI % (Decrease) increase | (5.0%) | (9.3%) | 5.3% | | Same Store Cash NOI % (Decrease) increase | (1.8%) | (6.9%) | 9.2% | ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The company's primary market risk stems from its fixed and variable rate indebtedness - The company manages variable rate debt market risk using interest rate cap agreements, with an $860 million notional amount capping SOFR at 3.50% through August 2025 for 1301 Avenue of the Americas[231][235] Paramount's Share of Indebtedness and Sensitivity to Interest Rate Changes (Amounts in thousands, except per share amount) | Debt Type | June 30, 2025 Balance | Weighted Average Interest Rate | Effect of 1% Increase in Base Rates | | :-------------------------------------------- | :-------------------- | :----------------------------- | :---------------------------------- | | Paramount's share of consolidated debt: | | | | | Variable rate | $860,000 | 6.27% | $8,600 | | Fixed rate | $2,113,680 | 3.45% | $- | | Paramount's share of debt of non-consolidated entities: | | | | | Variable rate | $102,955 | 6.51% | $1,030 | | Fixed rate | $257,027 | 4.06% | $- | | Total change in annual net income | | | $8,871 | | Per diluted share | | | $0.04 | ITEM 4. CONTROLS AND PROCEDURES As of June 30, 2025, the company's Chief Executive Officer and Chief Financial Officer concluded that disclosure controls and procedures were effective in ensuring timely and accurate reporting - As of June 30, 2025, disclosure controls and procedures were deemed effective by the CEO and CFO[240] - No material changes to internal control over financial reporting occurred during the period covered by the report[241] PART II. OTHER INFORMATION This section provides additional information on legal proceedings, risk factors, equity sales, and other disclosures ITEM 1. LEGAL PROCEEDINGS The SEC's Division of Enforcement is conducting an investigation into the company's disclosures regarding executive compensation, perquisites, corporate asset use, related party transactions, conflicts of interest, and control failures - The SEC is investigating the company's disclosures on executive compensation, perquisites, corporate asset use, related party transactions, conflicts of interest, and control failures[242] - The company is cooperating with the SEC, but the likely outcome, potential costs, and duration of the investigation are currently unestimable[242] ITEM 1A. RISK FACTORS This section updates and supplements existing risk factors, emphasizing the potential adverse effects of litigation on the company's financial condition, results of operations, cash flow, and stock price - The company faces risks from litigation, including defense costs, settlements, fines, or judgments, which may not be fully covered by insurance and could adversely impact financial condition and stock price[245] - The ongoing SEC investigation into executive compensation, related party transactions, and control failures, along with shareholder demand letters, poses a significant litigation risk with unestimable costs and outcomes[246][247] ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS During the three months ended June 30, 2025, the company issued 111,285 shares of common stock in exchange for Operating Partnership common units, utilizing a Section 4(a)(2) exemption - Issued 111,285 common shares in exchange for Operating Partnership common units, relying on Section 4(a)(2) exemption[249] - No shares were repurchased under the $200 million stock repurchase program during the three months ended June 30, 2025, with $15 million capacity remaining[250] ITEM 3. DEFAULTS UPON SENIOR SECURITIES There were no defaults upon senior securities during the reporting period - No defaults upon senior securities[251] ITEM 4. MINE SAFETY DISCLOSURES This item is not applicable to the company - Not Applicable[252] ITEM 5. OTHER INFORMATION No directors or officers adopted, terminated, or modified a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement during the three months ended June 30, 2025 - No Rule 10b5-1 or non-Rule 10b5-1 trading arrangements were adopted, terminated, or modified by directors or officers during the three months ended June 30, 2025[253] ITEM 6. EXHIBITS This section lists the exhibits filed or furnished with the Form 10-Q, including certifications from the CEO and CFO, the separation agreement for Wilbur Paes, and Inline XBRL financial data - Exhibits include certifications from the CEO and CFO (31.1, 31.2, 32.1, 32.2), the Separation Agreement and Release for Wilbur Paes (10.1), and Inline XBRL financial data (101, 104)[255] SIGNATURES Confirms the official signing and submission of the financial report by authorized personnel - The report was signed by Ermelinda Berberi, Executive Vice President, Chief Financial Officer and Treasurer, on July 30, 2025[259]