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. All forward-looking statements are made only as of the date of this Quarterly Report on Form 10-Q. Although we believe that our plans, intentions, expectations, strategies and prospects as reflected in or suggested by those forward-looking statements are reasonable, we can give no assurance that the plans, intentions, expectations or strategies will be attained or achieved. Furthermore, actual results may differ materially from those described in the forward-looking statements and will be affected by a variety of risks and factors that are beyond our control including, without limitation:
•unfavorable market and economic conditions in the United States, including New York City and San Francisco, and globally, including as a result of tariffs, geopolitical tensions and elevated inflation and interest rates;
•risks associated with high concentrations of our properties in New York City and San Francisco;
•risks associated with ownership of real estate;
•decreased rental rates or increased vacancy rates;
•the risk we may lose a major tenant or that a major tenant may be adversely impacted by market and economic conditions, including tariffs, geopolitical tensions and elevated inflation and interest rates;
•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 real estate related funds;
•the negative impact of any future pandemic, endemic or outbreak of infectious disease on the U.S., regional and global economies and our tenants’ financial condition and results of operations;
•general volatility of the capital and credit markets and the market price of our common stock;
•exposure to government investigations and litigation or other claims;
•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, 2024, including those set forth in Item 1A entitled “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2024.
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, 2024.
Critical Accounting Estimates
There are no material changes to our critical accounting estimates disclosed in our Annual Report on Form 10-K for the year ended December 31, 2024.
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 92.5% of, the Operating Partnership as of June 30, 2025.
As of June 30, 2025, we own and/or manage a portfolio of 17 properties aggregating 13.1 million square feet comprised of:
•Eight wholly and partially owned Class A properties aggregating 8.7 million square feet in New York, comprised of 8.2 million square feet of office space and 0.5 million square feet of retail and theater space;
•Five wholly and partially owned Class A properties aggregating 3.6 million square feet in San Francisco, comprised of 3.4 million square feet of office space and 0.2 million square feet of retail space; and
•Four managed properties aggregating 0.8 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 several real estate related funds for institutional investors and high net-worth individuals.
Disposition
900 Third Avenue
On January 17, 2025, we sold a 45.0% equity interest in 900 Third Avenue, a 600,000 square foot Class A office building located in New York, at a gross asset valuation of $210,000,000. We realized net proceeds of $94,000,000 from the sale after transaction costs, of which $9,450,000 was received in December 2024 upon execution of the contract.
One Front Street
On May 5, 2025, we sold a 25.0% equity interest in One Front Street, a 649,000 square foot Class A office building located in San Francisco, at a gross asset valuation of $255,000,000. As part of the transaction, we have provided $40,545,000 of seller financing for a two-year term at a fixed rate of 5.50%. We realized net proceeds of $11,500,000 from the sale, after transaction and other costs.
Revolving Credit Facility
On May 5, 2025, we terminated our revolving credit facility following the sale of a 25.0% equity interest in One Front Street, which was one of the two remaining properties supporting our credit facility. There was no outstanding balance on the facility at the time of termination.
Other
In August 2024, the joint venture that owned Market Center, in which we had a 67.0% ownership interest, ceased making debt service payments on the non-recourse mortgage loan due to insufficient property cash flows. In January 2025, the joint venture defaulted on the $416,544,000 mortgage loan, as it was not repaid at maturity. Subsequently, on May 30, 2025, the lenders completed the sale of Market Center through a deed-in-lieu of foreclosure.
Stock Repurchase Program
We currently have $15,000,000 of capacity under a $200,000,000 stock repurchase program which was approved by our board of directors in November 2019, and allows us to repurchase shares of our common stock from time to time, in the open market or in privately negotiated transactions. We did not repurchase any shares in the six months ended June 30, 2025. The amount and timing of 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, 2025
The following table presents the details on the leases signed during the three months ended June 30, 2025. 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, 2025 |
|
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 (1) |
|
$ |
|
91.93 |
|
|
|
$ |
|
91.18 |
|
|
|
$ |
|
93.07 |
|
|
Weighted average lease term (in years) |
|
|
|
12.9 |
|
|
|
|
|
14.7 |
|
|
|
|
|
10.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tenant improvements and leasing commissions: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per square foot |
|
$ |
|
201.98 |
|
|
|
$ |
|
192.71 |
|
|
|
$ |
|
216.35 |
|
|
Per square foot per annum |
|
$ |
|
15.61 |
|
|
|
$ |
|
13.15 |
|
|
|
$ |
|
21.04 |
|
|
Percentage of initial rent |
|
|
17.0% |
|
|
|
|
14.4% |
|
|
|
|
22.6% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rent concessions: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average free rent period (in months) |
|
|
|
14.8 |
|
|
|
|
|
17.1 |
|
|
|
|
|
11.1 |
|
|
Average free rent period per annum (in months) |
|
|
|
1.1 |
|
|
|
|
|
1.2 |
|
|
|
|
|
1.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Second generation space: (2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Square feet |
|
|
|
205,239 |
|
|
|
|
|
139,841 |
|
|
|
|
|
65,398 |
|
|
Cash basis: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Initial rent (1) |
|
$ |
|
93.38 |
|
|
|
$ |
|
92.76 |
|
|
|
$ |
|
94.71 |
|
|
Prior escalated rent (3) |
|
$ |
|
98.75 |
|
|
|
$ |
|
93.68 |
|
|
|
$ |
|
109.58 |
|
|
Percentage decrease |
|
|
(5.4%) |
|
|
|
|
(1.0%) |
|
|
|
|
(13.6%) |
|
|
GAAP basis: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Straight-line rent |
|
$ |
|
93.91 |
|
|
|
$ |
|
90.51 |
|
|
|
$ |
|
101.19 |
|
|
Prior straight-line rent |
|
$ |
|
91.56 |
|
|
|
$ |
|
89.15 |
|
|
|
$ |
|
96.72 |
|
|
Percentage increase |
|
|
|
2.6 |
% |
|
|
|
|
1.5 |
% |
|
|
|
|
4.6 |
% |
|
(1)Represents the weighted average cash basis starting rent per square foot and does not include free rent or periodic step-ups in rent.
(2)Represents space leased in the current period (i) that has been vacant for less than twelve months, or (ii) that has been leased ahead of its originally scheduled expiration.
(3)Represents the weighted average cash basis rents (including reimbursements) per square foot at expiration.
The following table presents same store leased occupancy (at share) as of the dates set forth below.
|
|
|
|
|
|
|
|
|
|
|
|
|
Same Store Leased Occupancy (1) |
Total |
|
|
New York |
|
|
San Francisco |
|
|
As of June 30, 2025 |
|
85.4 |
% |
|
|
88.1 |
% |
|
|
75.1 |
% |
|
As of March 31, 2025 |
|
86.2 |
% |
|
|
87.4 |
% |
|
|
82.3 |
% |
(1)Represents percentage of square feet that is leased, including signed leases not yet commenced, for properties in our same store portfolio. Our same store portfolio excludes 60 Wall Street in New York and 111 Sutter Street in San Francisco.
Leasing Results - Three Months Ended June 30, 2025
In the three months ended June 30, 2025, we leased 404,710 square feet, of which our share was 255,621 square feet that was leased at a weighted average initial rent of $91.93 per square foot. This leasing activity, partially offset by lease expirations in the three months, decreased same store leased occupancy by 80 basis points to 85.4% at June 30, 2025 from 86.2% at March 31, 2025. The decrease in same store leased occupancy was driven primarily by the scheduled expiration of Google’s lease in April 2025 at One Market Plaza in our San Francisco portfolio.
Of the 404,710 square feet leased in the three months, 205,239 square feet represented our share of second generation space for which rental rates increased by 2.6% on a GAAP basis and decreased by 5.4% on a cash basis. The weighted average lease term for leases signed during the three months was 12.9 years and weighted average tenant improvements and leasing commissions on these leases were $15.61 per square foot per annum, or 17.0% of initial rent.
New York
In the three months ended June 30, 2025, we leased 211,375 square feet in our New York portfolio, of which our share was 155,389 square feet that was leased at a weighted average initial rent of $91.18 per square foot. This leasing activity, partially offset by lease expirations in the three months, increased same store leased occupancy by 70 basis points to 88.1% at June 30, 2025 from 87.4% at March 31, 2025.
Of the 211,375 square feet leased in the three months, 139,841 square feet represented our share of second generation space for which rental rates increased by 1.5% on a GAAP basis and decreased by 1.0% on a cash basis. The weighted average lease term for leases signed during the three months was 14.7 years and weighted average tenant improvements and leasing commissions on these leases were $13.15 per square foot per annum, or 14.4% of initial rent.
San Francisco
In the three months ended June 30, 2025, we leased 193,335 square feet in our San Francisco portfolio, of which our share was 100,232 square feet that was leased at a weighted average initial rent of $93.07 per square foot. This leasing activity, offset by lease expirations in the three months, decreased same store leased occupancy by 720 basis points to 75.1% at June 30, 2025 from 82.3% at March 31, 2025. The decrease in same store leased occupancy was driven primarily by the scheduled expiration of Google’s lease in April 2025 at One Market Plaza.
Of the 193,335 square feet leased in the three months, 65,398 square feet represented our share of second generation space for which rental rates increased by 4.6% on a GAAP basis and decreased 13.6% on a cash basis. The weighted average lease term for leases signed during the three months was 10.3 years and weighted average tenant improvements and leasing commissions on these leases were $21.04 per square foot per annum, or 22.6% of initial rent.
Leasing Results - Six Months Ended June 30, 2025
The following table presents the details on the leases signed during the six months ended June 30, 2025. 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, 2025 |
|
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 (1) |
|
$ |
85.43 |
|
|
$ |
83.07 |
|
|
$ |
93.21 |
|
Weighted average lease term (in years) |
|
|
12.9 |
|
|
|
13.8 |
|
|
|
10.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tenant improvements and leasing commissions: |
|
|
|
|
|
|
|
|
|
|
|
|
Per square foot |
|
$ |
191.68 |
|
|
$ |
185.66 |
|
|
$ |
211.57 |
|
Per square foot per annum |
|
$ |
14.82 |
|
|
$ |
13.46 |
|
|
$ |
20.98 |
|
Percentage of initial rent |
|
|
17.3% |
|
|
|
16.2% |
|
|
|
22.5% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rent concessions: |
|
|
|
|
|
|
|
|
|
|
|
|
Average free rent period (in months) |
|
|
13.7 |
|
|
|
14.6 |
|
|
|
10.9 |
|
Average free rent period per annum (in months) |
|
|
1.1 |
|
|
|
1.1 |
|
|
|
1.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Second generation space: (2) |
|
|
|
|
|
|
|
|
|
|
|
|
Square feet |
|
|
286,946 |
|
|
|
220,251 |
|
|
|
66,695 |
|
Cash basis: |
|
|
|
|
|
|
|
|
|
|
|
|
Initial rent (1) |
|
$ |
89.31 |
|
|
$ |
87.53 |
|
|
$ |
95.21 |
|
Prior escalated rent (3) |
|
$ |
93.49 |
|
|
$ |
88.57 |
|
|
$ |
109.71 |
|
Percentage decrease |
|
|
(4.5%) |
|
|
|
(1.2%) |
|
|
|
(13.2%) |
|
GAAP basis: |
|
|
|
|
|
|
|
|
|
|
|
|
Straight-line rent |
|
$ |
89.52 |
|
|
$ |
85.87 |
|
|
$ |
101.56 |
|
Prior straight-line rent |
|
$ |
86.36 |
|
|
$ |
83.20 |
|
|
$ |
96.78 |
|
Percentage increase |
|
|
3.7% |
|
|
|
3.2% |
|
|
|
4.9% |
|
(1)Represents the weighted average cash basis starting rent per square foot and does not include free rent or periodic step-ups in rent.
(2)Represents space leased in the current period (i) that has been vacant for less than twelve months, or (ii) that has been leased ahead of its originally scheduled expiration.
(3)Represents the weighted average cash basis rents (including reimbursements) per square foot at expiration.
The following table presents same store leased occupancy (at share) as of the dates set forth below.
|
|
|
|
|
|
|
|
|
|
|
|
|
Same Store Leased Occupancy (1) |
Total |
|
|
New York |
|
|
San Francisco |
|
|
As of June 30, 2025 |
|
85.4 |
% |
|
|
88.1 |
% |
|
|
75.1 |
% |
|
As of December 31, 2024 |
|
84.8 |
% |
|
|
85.0 |
% |
|
|
83.8 |
% |
(1)Represents percentage of square feet that is leased, including signed leases not yet commenced, for properties in our same store portfolio. Our same store portfolio excludes 60 Wall Street in New York and 111 Sutter Street in San Francisco.
Leasing Results - Six Months Ended June 30, 2025
In the six months ended June 30, 2025, we leased 688,584 square feet, of which our share was 442,068 square feet that was leased at a weighted average initial rent of $85.43 per square foot. This leasing activity, partially offset by lease expirations in the six months, increased same store leased occupancy by 60 basis points to 85.4% at June 30, 2025 from 84.8% at December 31, 2024. The decrease in same store leased occupancy was driven primarily by the scheduled expiration of Google’s lease in April 2025 at One Market Plaza in our San Francisco portfolio.
Of the 688,584 square feet leased in the six months, 286,946 square feet represented our share of second generation space for which rental rates increased by 3.7% on a GAAP basis and decreased by 4.5% on a cash basis. The weighted average lease term for leases signed during the six months was 12.9 years and weighted average tenant improvements and leasing commissions on these leases were $14.82 per square foot per annum, or 17.3% of initial rent.
New York
In the six months ended June 30, 2025, we leased 489,490 square feet in our New York portfolio, of which our share was 339,425 square feet that was leased at a weighted average initial rent of $83.07 per square foot. This leasing activity, partially offset by lease expirations in the six months, increased same store leased occupancy by 310 basis points to 88.1% at June 30, 2025 from 85.0% at December 31, 2024.
Of the 489,490 square feet leased in the six months, 220,251 square feet represented our share of second generation space for which rental rates increased by 3.2% on a GAAP basis and decreased by 1.2% on a cash basis. The weighted average lease term for leases signed during the six months was 13.8 years and weighted average tenant improvements and leasing commissions on these leases were $13.46 per square foot per annum, or 16.2% of initial rent.
San Francisco
In the six months ended June 30, 2025, we leased 199,094 square feet in our San Francisco portfolio, of which our share was 102,643 square feet that was leased at a weighted average initial rent of $93.21 per square foot. This leasing activity, offset by lease expirations in the six months, decreased same store leased occupancy by 870 basis points to 75.1% at June 30, 2025 from 83.8% at December 31, 2024. The decrease in same store leased occupancy was driven primarily by the scheduled expiration of Google’s lease in April 2025 at One Market Plaza.
Of the 199,094 square feet leased in the six months, 66,695 square feet represented our share of second generation space for which rental rates increased by 4.9% on a GAAP basis and decreased by 13.2% on a cash basis. The weighted average lease term for leases signed during the six months was 10.1 years and weighted average tenant improvements and leasing commissions on these leases were $20.98 per square foot per annum, or 22.5% of initial rent.
Financial Results - Three Months Ended June 30, 2025 and 2024
Net Income, FFO and Core FFO
Net loss attributable to common stockholders was $19,785,000, or $0.09 per diluted share, for the three months ended June 30, 2025, compared to $7,819,000, or $0.04 per diluted share, for the three months ended June 30, 2024. Net loss attributable to common stockholders for the three months ended June 30, 2025 includes $7,535,000, or $0.03 per diluted share, of expense relating to acceleration of equity awards and severance payments.
Funds from Operations (“FFO”) attributable to common stockholders was $26,990,000, or $0.12 per diluted share, for the three months ended June 30, 2025, compared to $42,655,000, or $0.20 per diluted share, for the three months ended June 30, 2024. FFO attributable to common stockholders for the three months ended June 30, 2025 includes $7,535,000, or $0.03 per diluted share, of expense relating to acceleration of equity awards and severance payments. FFO attributable to common stockholders for the three months ended June 30, 2025 and 2024 also includes the impact of other non-core items, which are listed in the table on page 53. 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, 2025 by $9,937,000, or $0.05 per diluted share. While 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, 2024 by $773,000, it had no impact on FFO 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 53, was $36,927,000, or $0.17 per diluted share, for the three months ended June 30, 2025, compared to $43,428,000 or $0.20 per diluted share, for the three months ended June 30, 2024.
Same Store Results
The table below summarizes the percentage increase or decrease in our share of Same Store NOI and Same Store Cash NOI, by segment, for the three months ended June 30, 2025 versus June 30, 2024.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
New York |
|
|
San Francisco |
|
Same Store NOI |
|
|
(4.6 |
%) |
|
|
(5.3 |
%) |
|
|
(3.0 |
%) |
Same Store Cash NOI |
|
|
0.5 |
% |
|
|
1.2 |
% |
|
|
(0.8 |
%) |
See pages 47-53 “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, 2025 and 2024
Net Loss, FFO and Core FFO
Net loss attributable to common stockholders was $29,811,000, or $0.14 per diluted share, for the six months ended June 30, 2025, compared to net income attributable to common stockholders of $2,046,000, or $0.01 per diluted share, for the six months ended June 30, 2024. Net loss attributable to common stockholders for the six months ended June 30, 2025 includes $7,535,000 million, or $0.03 per diluted share, of expense relating to acceleration of equity awards and severance payments. Net income attributable to common stockholders for the six months ended June 30, 2024 includes a $14,148,000, or $0.07 per diluted share, non-cash gain on extinguishment of a tax liability related to our initial public offering.
FFO attributable to common stockholders was $63,870,000, or $0.29 per diluted share, for the six months ended June 30, 2025, compared to $102,476,000, or $0.47 per diluted share, for the six months ended June 30, 2024. FFO attributable to common stockholders for the six months ended June 30, 2025 includes $7,535,000 million, or $0.03 per diluted share, of expense relating to acceleration of equity awards and severance payments. FFO attributable to common stockholders for the six months ended June 30, 2024 includes $14,148,000, or $0.07 per diluted share, of a non-cash gain on extinguishment of a tax liability related to our initial public offering. FFO attributable to common stockholders for the six months ended June 30, 2025 and 2024 also includes the impact of other non-core items, which are listed in the table on page 53. The aggregate of the other non-core items, net of amounts attributable to noncontrolling interests, decreased FFO attributable to common stockholders for the six months ended June 30, 2025 by $10,948,000, or $0.05 per diluted share, and increased FFO attributable to common stockholders for the six months ended June 30, 2024 by $11,110,000, or $0.05 per diluted share.
Core FFO attributable to common stockholders, which excludes the impact of the non-core items listed on page 53, was $74,818,000, or $0.34 per diluted share, for the six months ended June 30, 2025, compared to $91,366,000, or $0.42 per diluted share, for the six months ended June 30, 2024.
Same Store Results
The table below summarizes the percentage increase or decrease in our share of Same Store NOI and Same Store Cash NOI, by segment, for the six months ended June 30, 2025 versus June 30, 2024.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
New York |
|
|
San Francisco |
|
Same Store NOI |
|
|
(5.0 |
%) |
|
|
(9.3 |
%) |
|
|
5.3 |
% |
Same Store Cash NOI |
|
|
(1.8 |
%) |
|
|
(6.9 |
%) |
|
|
9.2 |
% |
See pages 47-53 “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, 2025 and 2024
The following pages summarize our consolidated results of operations for the three months ended June 30, 2025 and 2024.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended June 30, |
|
|
|
|
(Amounts in thousands) |
2025 |
|
|
2024 |
|
|
Change |
|
Revenues: |
|
|
|
|
|
|
|
|
|
Rental revenue |
$ |
168,033 |
|
|
$ |
179,678 |
|
|
$ |
(11,645 |
) |
|
Fee and other income |
|
9,012 |
|
|
|
7,730 |
|
|
|
1,282 |
|
|
|
Total revenues |
|
177,045 |
|
|
|
187,408 |
|
|
|
(10,363 |
) |
Expenses: |
|
|
|
|
|
|
|
|
|
Operating |
|
74,884 |
|
|
|
74,192 |
|
|
|
692 |
|
|
Depreciation and amortization |
|
60,062 |
|
|
|
61,735 |
|
|
|
(1,673 |
) |
|
General and administrative |
|
24,311 |
|
|
|
16,632 |
|
|
|
7,679 |
|
|
Transaction related costs |
|
709 |
|
|
|
423 |
|
|
|
286 |
|
|
|
Total expenses |
|
159,966 |
|
|
|
152,982 |
|
|
|
6,984 |
|
Other income (expense): |
|
|
|
|
|
|
|
|
|
Loss from real estate related fund investments |
|
(23 |
) |
|
|
(27 |
) |
|
|
4 |
|
|
Loss from unconsolidated real estate related funds |
|
(224 |
) |
|
|
(15 |
) |
|
|
(209 |
) |
|
Income (loss) from unconsolidated joint ventures |
|
52 |
|
|
|
(771 |
) |
|
|
823 |
|
|
Interest and other income, net |
|
4,026 |
|
|
|
3,893 |
|
|
|
133 |
|
|
Interest and debt expense |
|
(42,284 |
) |
|
|
(40,004 |
) |
|
|
(2,280 |
) |
Loss before income taxes |
|
(21,374 |
) |
|
|
(2,498 |
) |
|
|
(18,876 |
) |
|
Income tax benefit (expense) |
|
965 |
|
|
|
(362 |
) |
|
|
1,327 |
|
Net loss |
|
(20,409 |
) |
|
|
(2,860 |
) |
|
|
(17,549 |
) |
Less net (income) loss attributable to noncontrolling interests in: |
|
|
|
|
|
|
|
|
Consolidated joint ventures |
|
(971 |
) |
|
|
(6,269 |
) |
|
|
5,298 |
|
|
Consolidated real estate related funds |
|
(99 |
) |
|
|
589 |
|
|
|
(688 |
) |
|
Operating Partnership |
|
1,694 |
|
|
|
721 |
|
|
|
973 |
|
Net loss attributable to common stockholders |
$ |
(19,785 |
) |
|
$ |
(7,819 |
) |
|
$ |
(11,966 |
) |
Revenues
Our revenues, which consist of rental revenue and fee and other income, were $177,045,000 for the three months ended June 30, 2025, compared to $187,408,000 for the three months ended June 30, 2024, a decrease of $10,363,000. Below are the details of the increase or decrease by segment.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Amounts in thousands) |
|
Total |
|
|
New York |
|
|
San Francisco |
|
|
Other |
|
Rental revenue |
|
|
|
|
|
|
|
|
|
|
|
|
Same store operations |
|
$ |
(10,314 |
) |
|
$ |
(3,289 |
) |
(1) |
$ |
(7,025 |
) |
(2) |
$ |
- |
|
Lease termination income |
|
|
(421 |
) |
|
|
(514 |
) |
|
|
93 |
|
|
|
- |
|
Other, net |
|
|
(910 |
) |
|
|
(681 |
) |
|
|
19 |
|
|
|
(248 |
) |
Decrease in rental revenue |
|
$ |
(11,645 |
) |
|
$ |
(4,484 |
) |
|
$ |
(6,913 |
) |
|
$ |
(248 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Fee and other income |
|
|
|
|
|
|
|
|
|
|
|
|
Fee income |
|
|
|
|
|
|
|
|
|
|
|
|
Asset management |
|
$ |
(406 |
) |
|
$ |
- |
|
|
$ |
- |
|
|
$ |
(406 |
) |
Property management |
|
|
(271 |
) |
|
|
- |
|
|
|
- |
|
|
|
(271 |
) |
Acquisition, disposition, leasing and other |
|
|
593 |
|
|
|
- |
|
|
|
- |
|
|
|
593 |
|
Decrease in fee income |
|
|
(84 |
) |
|
|
- |
|
|
|
- |
|
|
|
(84 |
) |
Other income |
|
|
|
|
|
|
|
|
|
|
|
|
Same store operations |
|
|
1,366 |
|
|
|
292 |
|
|
|
242 |
|
|
|
832 |
|
Increase in other income |
|
|
1,366 |
|
|
|
292 |
|
|
|
242 |
|
|
|
832 |
|
Increase in fee and other income |
|
$ |
1,282 |
|
|
$ |
292 |
|
|
$ |
242 |
|
|
$ |
748 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total (decrease) increase in revenues |
|
$ |
(10,363 |
) |
|
$ |
(4,192 |
) |
|
$ |
(6,671 |
) |
|
$ |
500 |
|
(1)Primarily due to lower average occupancy at 31 West 52nd Street due to the scheduled expiration of Clifford Chance’s lease in June 2024.
(2)Primarily due to lower average occupancy at One Market Plaza due to the scheduled expiration of Google’s lease in April 2025.
Expenses
Our expenses, which consist of operating, depreciation and amortization, general and administrative and transaction related costs, were $159,966,000 for the three months ended June 30, 2025, compared to $152,982,000 for the three months ended June 30, 2024, an increase of $6,984,000. Below are the details of the increase or decrease by segment.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Amounts in thousands) |
|
Total |
|
|
New York |
|
|
San Francisco |
|
|
Other |
|
|
Operating |
|
|
|
|
|
|
|
|
|
|
|
|
|
Same store operations |
|
$ |
(490 |
) |
|
$ |
261 |
|
|
$ |
(751 |
) |
|
$ |
- |
|
|
Other, net |
|
|
1,182 |
|
|
|
(277 |
) |
|
|
- |
|
|
|
1,459 |
|
|
Increase (decrease) in operating |
|
$ |
692 |
|
|
$ |
(16 |
) |
|
$ |
(751 |
) |
|
$ |
1,459 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operations |
|
$ |
(1,673 |
) |
|
$ |
(1,847 |
) |
(1) |
$ |
255 |
|
|
$ |
(81 |
) |
|
(Decrease) increase in depreciation and amortization |
$ |
(1,673 |
) |
|
$ |
(1,847 |
) |
|
$ |
255 |
|
|
$ |
(81 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operations |
|
$ |
(509 |
) |
|
$ |
- |
|
|
$ |
- |
|
|
$ |
(509 |
) |
|
Severance costs |
|
|
8,188 |
|
|
|
- |
|
|
|
- |
|
|
|
8,188 |
|
(2) |
Increase in general and administrative |
|
$ |
7,679 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
7,679 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase in transaction related costs |
|
$ |
286 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
286 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total increase (decrease) in expenses |
|
$ |
6,984 |
|
|
$ |
(1,863 |
) |
|
$ |
(496 |
) |
|
$ |
9,343 |
|
|
(1)Primarily due to a write-off of tenant improvements in the prior year at 1633 Broadway.
(2)Represents costs relating to acceleration of equity awards and severance payments.
Loss from Real Estate Related Fund Investments
Loss from real estate related fund investments was $23,000 for the three months ended June 30, 2025, compared to $27,000 for the three months ended June 30, 2024, a decrease in loss of $4,000.
Loss from Unconsolidated Real Estate Related Funds
Loss from unconsolidated real estate related funds was $224,000 for the three months ended June 30, 2025, compared to $15,000 for the three months ended June 30, 2024, an increase in loss of $209,000. This increase resulted primarily from unrealized losses on mezzanine loan investments in the current year.
Income (Loss) from Unconsolidated Joint Ventures
Income from unconsolidated joint ventures was $52,000 for the three months ended June 30, 2025, compared to loss from unconsolidated joint ventures of $771,000 for the three months ended June 30, 2024, an increase in income of $823,000. This increase in income resulted primarily from Residential Development Fund’s (“RDF”) share of higher gains on sale of residential condominium units at One Steuart Lane in the current year.
Interest and Other Income, net
Interest and other income, net was $4,026,000 for the three months ended June 30, 2025, compared to $3,893,000 for the three months ended June 30, 2024, an increase in income of $133,000. This increase in income resulted primarily from higher average cash balances in the current year.
Interest and Debt Expense
Interest and debt expense was $42,284,000 for the three months ended June 30, 2025, compared to $40,004,000 for the three months ended June 30, 2024, an increase of $2,280,000. This increase resulted primarily from (i) the expiration of interest rate swaps on $500,000,000 of our debt at 1301 Avenue of the Americas in August 2024, partially offset by lower interest expense on the $360,000,000 variable rate portion of our debt at the same property and (ii) a $462,000 write-off of deferred financing costs in connection with the termination of our credit facility.
Income Tax (Benefit) Expense
Income tax benefit was $965,000 for the three months ended June 30, 2025, compared to income tax expense of $362,000 for the three months ended June 30, 2024, an increase in income tax benefit of $1,327,000. This increase resulted primarily from a true-up of the prior year’s tax provision in the current year.
Net Income Attributable to Noncontrolling Interests in Consolidated Joint Ventures
Net income attributable to noncontrolling interests in consolidated joint ventures was $971,000 for the three months ended June 30, 2025, compared to $6,269,000 for the three months ended June 30, 2024, a $5,298,000 decrease in net income attributable to noncontrolling interests in consolidated joint ventures. This decrease in income resulted primarily from lower net income attributable to noncontrolling interests in One Market Plaza and 300 Mission Street.
Net (Income) Loss Attributable to Noncontrolling Interests in Consolidated Real Estate Related Funds
Net income attributable to noncontrolling interests in consolidated real estate related funds was $99,000 for the three months ended June 30, 2025, compared to net loss attributable to noncontrolling interests in consolidated real estate related funds of $589,000 for the three months ended June 30, 2024, an increase in net income attributable to noncontrolling interests in consolidated real estate related funds of $688,000. This increase in income resulted primarily from RDF’s share of higher gains on sale of residential condominium units at One Steuart Lane.
Net Loss Attributable to Noncontrolling Interests in Operating Partnership
Net loss attributable to noncontrolling interests in the Operating Partnership was $1,694,000 for the three months ended June 30, 2025, compared to $721,000 for the three months ended June 30, 2024, an increase in net loss allocated to noncontrolling interests of $973,000. This increase in loss resulted from higher net loss subject to allocation to the unitholders of the Operating Partnership.
Results of Operations - Six Months Ended June 30, 2025 and 2024
The following pages summarize our consolidated results of operations for the six months ended June 30, 2025 and 2024.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Six Months Ended June 30, |
|
|
|
|
(Amounts in thousands) |
2025 |
|
|
2024 |
|
|
Change |
|
Revenues: |
|
|
|
|
|
|
|
|
|
Rental revenue |
$ |
347,054 |
|
|
$ |
359,401 |
|
|
$ |
(12,347 |
) |
|
Fee and other income |
|
17,010 |
|
|
|
16,884 |
|
|
|
126 |
|
|
|
Total revenues |
|
364,064 |
|
|
|
376,285 |
|
|
|
(12,221 |
) |
Expenses: |
|
|
|
|
|
|
|
|
|
Operating |
|
152,934 |
|
|
|
145,932 |
|
|
|
7,002 |
|
|
Depreciation and amortization |
|
118,941 |
|
|
|
122,849 |
|
|
|
(3,908 |
) |
|
General and administrative |
|
41,772 |
|
|
|
33,266 |
|
|
|
8,506 |
|
|
Transaction related costs |
|
859 |
|
|
|
601 |
|
|
|
258 |
|
|
|
Total expenses |
|
314,506 |
|
|
|
302,648 |
|
|
|
11,858 |
|
Other income (expense): |
|
|
|
|
|
|
|
|
|
Loss from real estate related fund investments |
|
(49 |
) |
|
|
(70 |
) |
|
|
21 |
|
|
(Loss) income from unconsolidated real estate related funds |
|
(150 |
) |
|
|
90 |
|
|
|
(240 |
) |
|
Income (loss) from unconsolidated joint ventures |
|
1,959 |
|
|
|
(2,117 |
) |
|
|
4,076 |
|
|
Interest and other income, net |
|
7,841 |
|
|
|
23,313 |
|
|
|
(15,472 |
) |
|
Interest and debt expense |
|
(85,484 |
) |
|
|
(80,273 |
) |
|
|
(5,211 |
) |
(Loss) income before income taxes |
|
(26,325 |
) |
|
|
14,580 |
|
|
|
(40,905 |
) |
|
Income tax benefit (expense) |
|
599 |
|
|
|
(709 |
) |
|
|
1,308 |
|
Net (loss) income |
|
(25,726 |
) |
|
|
13,871 |
|
|
|
(39,597 |
) |
Less net (income) loss attributable to noncontrolling interests in: |
|
|
|
|
|
|
|
|
Consolidated joint ventures |
|
(4,816 |
) |
|
|
(11,475 |
) |
|
|
6,659 |
|
|
Consolidated real estate related funds |
|
(1,868 |
) |
|
|
(173 |
) |
|
|
(1,695 |
) |
|
Operating Partnership |
|
2,599 |
|
|
|
(177 |
) |
|
|
2,776 |
|
Net (loss) income attributable to common stockholders |
$ |
(29,811 |
) |
|
$ |
2,046 |
|
|
$ |
(31,857 |
) |
Revenues
Our revenues, which consist of rental revenue and fee and other income, were $364,064,000 for the six months ended June 30, 2025, compared to $376,285,000 for the six months ended June 30, 2024, a decrease of $12,221,000. Below are the details of the increase or decrease by segment.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Amounts in thousands) |
|
Total |
|
|
New York |
|
|
San Francisco |
|
|
Other |
|
Rental revenue |
|
|
|
|
|
|
|
|
|
|
|
|
Same store operations |
|
$ |
(10,987 |
) |
|
$ |
(6,379 |
) |
(1) |
$ |
(4,608 |
) |
(2) |
$ |
- |
|
Lease termination income |
|
|
(197 |
) |
|
|
(290 |
) |
|
|
93 |
|
|
|
- |
|
Other, net |
|
|
(1,163 |
) |
|
|
(681 |
) |
|
|
19 |
|
|
|
(501 |
) |
Decrease in rental revenue |
|
$ |
(12,347 |
) |
|
$ |
(7,350 |
) |
|
$ |
(4,496 |
) |
|
$ |
(501 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Fee and other income |
|
|
|
|
|
|
|
|
|
|
|
|
Fee income |
|
|
|
|
|
|
|
|
|
|
|
|
Asset management |
|
$ |
(842 |
) |
|
$ |
- |
|
|
$ |
- |
|
|
$ |
(842 |
) |
Property management |
|
|
(502 |
) |
|
|
- |
|
|
|
- |
|
|
|
(502 |
) |
Acquisition, disposition, leasing and other |
|
|
37 |
|
|
|
- |
|
|
|
- |
|
|
|
37 |
|
Decrease in fee income |
|
|
(1,307 |
) |
|
|
- |
|
|
|
- |
|
|
|
(1,307 |
) |
Other income |
|
|
|
|
|
|
|
|
|
|
|
|
Same store operations |
|
|
1,433 |
|
|
|
(79 |
) |
|
|
(377 |
) |
|
|
1,889 |
|
Increase (decrease) in other income |
|
|
1,433 |
|
|
|
(79 |
) |
|
|
(377 |
) |
|
|
1,889 |
|
Increase (decrease) in fee and other income |
|
$ |
126 |
|
|
$ |
(79 |
) |
|
$ |
(377 |
) |
|
$ |
582 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total (decrease) increase in revenues |
|
$ |
(12,221 |
) |
|
$ |
(7,429 |
) |
|
$ |
(4,873 |
) |
|
$ |
81 |
|
(1)Primarily due to lower average occupancy at 31 West 52nd Street due to the scheduled expiration of Clifford Chance’s lease in June 2024.
(2)Primarily due to lower average occupancy at One Market Plaza due to the scheduled expiration of Google’s lease in April 2025.
Expenses
Our expenses, which consist of operating, depreciation and amortization, general and administrative and transaction related costs, were $314,506,000 for the six months ended June 30, 2025, compared to $302,648,000 for the six months ended June 30, 2024, an increase of $11,858,000. Below are the details of the increase or decrease by segment.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Amounts in thousands) |
|
Total |
|
|
New York |
|
|
San Francisco |
|
|
Other |
|
|
Operating |
|
|
|
|
|
|
|
|
|
|
|
|
|
Same store operations |
|
$ |
4,513 |
|
|
$ |
5,990 |
|
(1) |
$ |
(1,477 |
) |
|
$ |
- |
|
|
Other, net |
|
|
2,489 |
|
|
|
(554 |
) |
|
|
- |
|
|
|
3,043 |
|
|
Increase (decrease) in operating |
|
$ |
7,002 |
|
|
$ |
5,436 |
|
|
$ |
(1,477 |
) |
|
$ |
3,043 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operations |
|
$ |
(3,908 |
) |
|
$ |
(3,327 |
) |
(2) |
$ |
(353 |
) |
|
$ |
(228 |
) |
|
Decrease in depreciation and amortization |
|
$ |
(3,908 |
) |
|
$ |
(3,327 |
) |
|
$ |
(353 |
) |
|
$ |
(228 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operations |
|
$ |
318 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
318 |
|
|
Severance costs |
|
|
8,188 |
|
|
|
- |
|
|
|
- |
|
|
|
8,188 |
|
(3) |
Increase in general and administrative |
|
$ |
8,506 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
8,506 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase in transaction related costs |
|
$ |
258 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
258 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total increase (decrease) in expenses |
|
$ |
11,858 |
|
|
$ |
2,109 |
|
|
$ |
(1,830 |
) |
|
$ |
11,579 |
|
|
(1)Primarily due to higher utilities, repairs and maintenance, and real estate taxes.
(2)Primarily due to a write-off of tenant improvements in the prior year at 1633 Broadway.
(3)Represents costs relating to acceleration of equity awards and severance payments.
Loss from Real Estate Related Fund Investments
Loss from real estate related fund investments was $49,000 for the six months ended June 30, 2025, compared to $70,000 for the six months ended June 30, 2024, a decrease in loss of $21,000.
(Loss) Income from Unconsolidated Real Estate Related Funds
Loss from unconsolidated real estate related funds was $150,000 for the six months ended June 30, 2025, compared to income from unconsolidated real estate related funds of $90,000 for the six months ended June 30, 2024, a decrease in income of $240,000. This decrease resulted primarily from unrealized losses on mezzanine loan investments in the current year.
Income (Loss) from Unconsolidated Joint Ventures
Income from unconsolidated joint ventures was $1,959,000 for the six months ended June 30, 2025, compared to loss from unconsolidated joint ventures of $2,117,000 for the six months ended June 30, 2024, an increase in income of $4,076,000. This increase in income resulted from:
|
|
|
|
|
|
(Amounts in thousands) |
|
|
|
|
Higher income from One Steuart Lane (higher income in the current year) |
|
$ |
1,947 |
|
(1) |
60 Wall Street (losses in the prior year) |
|
|
1,749 |
|
(2) |
Other, net |
|
|
380 |
|
|
Total increase in income |
|
$ |
4,076 |
|
|
(1)Primarily due to recognition of previously deferred losses upon the resumption of the equity method of accounting in the prior year.
(2)Primarily due to RDF’s share of gains on sale of residential condominium units at One Steuart Lane in the current year.
Interest and Other Income, net
Interest and other income, net was $7,841,000 for the six months ended June 30, 2025, compared to $23,313,000 for the six months ended June 30, 2024, a decrease in income of $15,472,000. This decrease resulted primarily from a $15,437,000 non-cash gain on extinguishment of a tax liability related to our initial public offering in the prior year.
Interest and Debt Expense
Interest and debt expense was $85,484,000 for the six months ended June 30, 2025, compared to $80,273,000 for the six months ended June 30, 2024, an increase of $5,211,000. This increase resulted primarily from (i) the expiration of interest rate swaps on $500,000,000 of our debt at 1301 Avenue of the Americas in August 2024, partially offset by lower interest expense on the $360,000,000 variable rate portion of our debt at the same property and (ii) a $1,751,000 write-off of deferred financing costs in connection with the modification and termination of our credit facility.
Income Tax Benefit (Expense)
Income tax benefit was $599,000 for the six months ended June 30, 2025, compared to income tax expense of $709,000 for the six months ended June 30, 2024, an increase in income tax benefit of $1,308,000. This increase resulted primarily from a true-up of the prior year’s tax provision in the current year.
Net Income Attributable to Noncontrolling Interests in Consolidated Joint Ventures
Net income attributable to noncontrolling interests in consolidated joint ventures was $4,816,000 for the six months ended June 30, 2025, compared to $11,475,000 for the six months ended June 30, 2024, a $6,659,000 decrease in net income attributable to noncontrolling interests in consolidated joint ventures. This decrease in income resulted primarily from lower net income attributable to noncontrolling interests in One Market Plaza and 300 Mission Street in the current year.
Net Income Attributable to Noncontrolling Interests in Consolidated Real Estate Related Funds
Net income attributable to noncontrolling interests in consolidated real estate related funds was $1,868,000 for the six months ended June 30, 2025, compared to $173,000 for the six months ended June 30, 2024, an increase in net income attributable to noncontrolling interests in consolidated real estate related funds of $1,695,000. This increase in income resulted primarily from RDF’s share of higher gains on sale of residential condominium units at One Steuart Lane in the current year.
Net Loss (Income) Attributable to Noncontrolling Interests in Operating Partnership
Net loss attributable to noncontrolling interests in the Operating Partnership was $2,599,000 for the six months ended June 30, 2025, compared to net income attributable to noncontrolling interests in the Operating Partnership of $177,000 for the six months ended June 30, 2024, a decrease in net income allocated to noncontrolling interests of $2,776,000. This decrease in income resulted from lower net income subject to allocation to the unitholders of the Operating Partnership.
Liquidity and Capital Resources
Liquidity
Our primary sources of liquidity include existing cash balances and cash flow from operations. As of June 30, 2025, we had $659,565,000 of liquidity comprised of $439,905,000 of cash and cash equivalents and $219,660,000 of restricted cash.
We expect that these sources will provide adequate liquidity over the next 12 months for all anticipated needs, including scheduled interest payments on our outstanding indebtedness, existing and anticipated capital improvements, the cost of securing new and renewal leases, and all other capital needs related to the operations of our business.
We anticipate that our long-term needs including debt maturities and potential 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, 2025, our outstanding consolidated debt aggregated $3.69 billion. The $500,000,000 mortgage loan at 31 West 52nd Street is scheduled to mature in June 2026 and the $860,000,000 loan at 1301 Avenue of the Americas is scheduled to mature in August 2026. Although these loan balances exceed our projected liquidity at the time of their respective maturities, we are currently exploring various refinancing options and believe that, based on each property’s operating performance, as well as current discussions with the lenders with respect to 1301 Avenue of the Americas, it is probable that we will be successful in refinancing each loan prior to its maturity. We may refinance these debts 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
On May 5, 2025, we terminated our revolving credit facility following the sale of a 25.0% equity interest in One Front Street, which was one of the two remaining properties supporting our credit facility. There was no outstanding balance on the facility at the time of termination.
Dividend Policy
In September 2024, we suspended our regular quarterly dividend. The decision by our board of directors to suspend our regular quarterly dividend aligns with our commitment to fortify our balance sheet and maintain significant financial flexibility. The timing and frequency of future dividends will be authorized by our board of directors, in its sole discretion, depending on a variety of factors, including our financial performance, our debt service requirements, our capital expenditure requirements, the requirements to maintain our qualification as a REIT and other factors that our board of directors may deem relevant from time to time.
Off Balance Sheet Arrangements
As of June 30, 2025, our unconsolidated joint ventures had $1.41 billion of outstanding indebtedness, of which our share was $359,982,000. We do not guarantee the indebtedness of our unconsolidated joint ventures other than providing customary environmental indemnities and guarantees of specified non-recourse carve outs relating to specified covenants and representations; however, we may elect to fund additional capital to a joint venture through equity contributions (generally on a basis proportionate to our ownership interests), advances or partner loans in order to enable the joint venture to repay this indebtedness upon maturity.
Stock Repurchase Program
We currently have $15,000,000 of capacity under a $200,000,000 stock repurchase program which was approved by our board of directors in November 2019, and allows us to repurchase shares of our common stock from time to time, in the open market or in privately negotiated transactions. We did not repurchase any shares in the six months ended June 30, 2025. The amount and timing of 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 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, as well as cybersecurity incidents. While we do carry commercial general liability insurance, property insurance, terrorism insurance and cybersecurity insurance, these policies include limits and terms we consider commercially reasonable. In addition, there are certain losses (including, but not limited to, losses arising from known environmental conditions or acts of war) that are not insured, in full or in part, because they are either uninsurable or the cost of insurance makes it, in our belief, economically impractical to maintain such coverage. Should an uninsured loss arise against us, we would be required to use our own funds to resolve the issue, including litigation costs. We believe the policy specifications and insured limits are adequate given the relative risk of loss, the cost of the coverage and industry practice and, in consultation with our insurance advisors, we believe the properties in our portfolio are adequately insured.
Other Commitments and Contingencies
We are a party to various claims and routine litigation arising in the ordinary course of business. Some of these claims or others to which we may be subject from time to time 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, 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 Division of Enforcement of the SEC is conducting an investigation into the adequacy of our disclosures concerning executive compensation, perquisites, the use of corporate assets, related party transactions, and conflicts of interest. The investigation also covers possible failures of our controls and procedures relating to the topics of those disclosures. We are cooperating with the SEC. We are unable to estimate the likely outcome of this matter, or a reasonably probable range of potential costs or exposure, or the potential duration of the process, at this time.
The terms of our consolidated mortgage debt agreements 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. As of June 30, 2025, we believe we are in compliance with all of our covenants.
On March 29, 2024, the joint venture that owns 60 Wall Street, in which we have a 5.0% ownership interest, modified the existing $575,000,000 non-recourse mortgage loan and extended the maturity to May 2029. In connection with the modification, the joint venture committed to redevelop the property and fund the necessary costs to complete the project. On behalf of the joint venture, we have provided the lender with certain guarantees, including a completion guarantee. We have agreements with our joint venture partners that indemnify us for their share of guarantees we provided. In accordance with GAAP, we are required to record a liability equal to the fair value of the obligations undertaken in issuing the guarantees and record an asset equal to the fair value of the indemnification we have received. As of June 30, 2025, we have a $14,844,000 asset and liability, which are included as a component of “other assets” and “other liabilities,” on our consolidated balance sheets.
Cash Flows
Cash and cash equivalents and restricted cash were $659,565,000 and $555,447,000 as of June 30, 2025 and December 31, 2024, respectively, and $472,100,000 and $509,599,000 as of June 30, 2024 and December 31, 2023, respectively. Cash and cash equivalents and restricted cash increased by $104,118,000 for the six months ended June 30, 2025, and decreased by $37,499,000 for the six months ended June 30, 2024. The following table sets forth the changes in cash flow.
|
|
|
|
|
|
|
|
|
|
|
For the Six Months Ended June 30, |
|
(Amounts in thousands) |
2025 |
|
|
2024 |
|
Net cash provided by (used in): |
|
|
|
|
|
Operating activities |
$ |
77,080 |
|
|
$ |
136,855 |
|
Investing activities |
|
(70,590 |
) |
|
|
(64,952 |
) |
Financing activities |
|
97,628 |
|
|
|
(109,402 |
) |
Operating Activities
Six months ended June 30, 2025 – We generated $77,080,000 of cash from operating activities for the six months ended June 30, 2025, primarily from (i) $110,080,000 of net income (before $135,806,000 of non-cash adjustments), and (ii) $331,000 of distributions from unconsolidated joint ventures and real estate related funds, partially offset by (iii) $33,331,000 of net changes in operating assets and liabilities. Non-cash adjustments of $135,806,000 were primarily comprised of depreciation and amortization, loss from unconsolidated joint ventures, straight-lining of rental revenue, amortization of above and below-market leases, net and amortization of stock-based compensation.
Six months ended June 30, 2024 – We generated $136,855,000 of cash from operating activities for the six months ended June 30, 2024, primarily from (i) $134,115,000 of net income (before $120,244,000 of non-cash adjustments), (ii) $320,000 of distributions from unconsolidated joint ventures and real estate related funds, and (iii) $2,420,000 of net changes in operating assets and liabilities. Non-cash adjustments of $120,244,000 were primarily comprised of depreciation and amortization, non-cash gain on extinguishment of a tax liability related to our initial public offering, loss from unconsolidated joint ventures, straight-lining of rental revenue, amortization of above and below-market leases, net and amortization of stock-based compensation.
Investing Activities
Six months ended June 30, 2025 – We used $70,590,000 of cash for investing activities for the six months ended June 30, 2025, for (i) $73,771,000 for additions to real estate, which were comprised of spending for tenant improvements and other building improvements, and (ii) $4,629,000 for contributions of capital to an unconsolidated joint venture, partially offset by (iii) $7,810,000 of a distribution of capital from an unconsolidated joint venture.
Six months ended June 30, 2024 – We used $64,952,000 of cash for investing activities for the six months ended June 30, 2024, for (i) $64,840,000 for additions to real estate, which were comprised of spending for tenant improvements and other building improvements and (ii) $1,904,000 for contributions of capital to an unconsolidated joint venture, partially offset by (iii) $1,792,000 for a distribution of capital from an unconsolidated joint venture.
Financing Activities
Six months ended June 30, 2025 – We generated $97,628,000 of cash from financing activities for the six months ended June 30, 2025, from (i) $83,307,000 of proceeds received for the sale of a 45.0% equity interest in 900 Third Avenue, (ii) $10,266,000 of proceeds received for the sale of a 25.0% equity interest in One Front Street, (iii) $8,376,000 of contributions from noncontrolling interests in 900 Third Avenue and One Front Street, partially offset by (iv) $3,770,000 distributions to noncontrolling interests in 300 Mission Street and 1633 Broadway, and (v) $140,000 for the repurchase of shares related to stock compensation agreements and related tax withholdings.
Six months ended June 30, 2024 – We used $109,402,000 of cash for financing activities for the six months ended June 30, 2024, primarily for (i) $975,000,000 for repayment of notes and mortgages payable in connection with the modification and extension of the One Market Plaza mortgage loan and $10,649,000 for payment of the related debt issuance costs, (ii) $16,736,000 for dividends and distributions to common stockholders and unitholders, (iii) $18,311,000 for distributions to noncontrolling interests in Fund X and RDF, (iv) $1,637,000 for distributions to noncontrolling interests in 1633 Broadway, and (v) $178,000 for the repurchase of shares related to stock compensation agreements and related tax withholdings, partially offset by (vi) $850,000,000 of proceeds from notes and mortgages payable in connection with the modification and extension of the One Market Plaza mortgage loan, (vii) $62,220,000 of contributions from noncontrolling interests in One Market Plaza and (viii) $889,000 of contributions from noncontrolling interests in Fund X.
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 include property-related expenses such as cleaning, security, repairs and maintenance, utilities, property administration and real estate taxes). We also use 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’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 the property level. The following tables present reconciliations of our net income or loss to Paramount's share of NOI and Cash NOI for the three and six months ended June 30, 2025 and 2024.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended June 30, 2025 |
|
(Amounts in thousands) |
Total |
|
|
New York |
|
|
San Francisco |
|
|
Other |
|
Reconciliation of net (loss) income to NOI and Cash NOI: |
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income |
$ |
(20,409 |
) |
|
$ |
(10,825 |
) |
|
$ |
11,472 |
|
|
$ |
(21,056 |
) |
Adjustments to arrive at NOI: |
|
|
|
|
|
|
|
|
|
|
|
Fee income |
|
(4,220 |
) |
|
|
- |
|
|
|
- |
|
|
|
(4,220 |
) |
Depreciation and amortization |
|
60,062 |
|
|
|
40,063 |
|
|
|
18,917 |
|
|
|
1,082 |
|
General and administrative |
|
24,311 |
|
|
|
- |
|
|
|
- |
|
|
|
24,311 |
|
(Income) loss from unconsolidated joint ventures |
|
(52 |
) |
|
|
(60 |
) |
|
|
- |
|
|
|
8 |
|
NOI from unconsolidated joint ventures |
|
5,036 |
|
|
|
3,306 |
|
|
|
1,680 |
|
|
|
50 |
|
Interest and other income, net |
|
(4,026 |
) |
|
|
(915 |
) |
|
|
(588 |
) |
|
|
(2,523 |
) |
Interest and debt expense |
|
42,284 |
|
|
|
29,918 |
|
|
|
11,775 |
|
|
|
591 |
|
Income tax benefit |
|
(965 |
) |
|
|
(2 |
) |
|
|
- |
|
|
|
(963 |
) |
Other, net |
|
956 |
|
|
|
- |
|
|
|
- |
|
|
|
956 |
|
Amounts attributable to noncontrolling interests in
consolidated joint ventures |
|
(20,616 |
) |
|
|
(3,462 |
) |
|
|
(17,154 |
) |
|
|
- |
|
Paramount's share of NOI |
$ |
82,361 |
|
|
$ |
58,023 |
|
|
$ |
26,102 |
|
|
$ |
(1,764 |
) |
Adjustments to arrive at Cash NOI: |
|
|
|
|
|
|
|
|
|
|
|
Straight-line rent adjustments (including our share of
unconsolidated joint ventures) |
|
4,430 |
|
|
|
(225 |
) |
|
|
4,690 |
|
|
|
(35 |
) |
Amortization of above and below-market leases, net
(including our share of unconsolidated joint ventures) |
|
(1,476 |
) |
|
|
(730 |
) |
|
|
(746 |
) |
|
|
- |
|
Amounts attributable to noncontrolling interests in
consolidated joint ventures |
|
(2,639 |
) |
|
|
(484 |
) |
|
|
(2,155 |
) |
|
|
- |
|
Paramount's share of Cash NOI |
$ |
82,676 |
|
|
$ |
56,584 |
|
|
$ |
27,891 |
|
|
$ |
(1,799 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended June 30, 2024 |
|
(Amounts in thousands) |
Total |
|
|
New York |
|
|
San Francisco |
|
|
Other |
|
Reconciliation of net (loss) income to NOI and Cash NOI: |
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income |
$ |
(2,860 |
) |
|
$ |
(4,941 |
) |
|
$ |
16,268 |
|
|
$ |
(14,187 |
) |
Adjustments to arrive at NOI and Cash NOI: |
|
|
|
|
|
|
|
|
|
|
|
Fee income |
|
(4,304 |
) |
|
|
- |
|
|
|
- |
|
|
|
(4,304 |
) |
Depreciation and amortization |
|
61,735 |
|
|
|
41,910 |
|
|
|
18,662 |
|
|
|
1,163 |
|
General and administrative |
|
16,632 |
|
|
|
- |
|
|
|
- |
|
|
|
16,632 |
|
Loss (income) from unconsolidated joint ventures |
|
771 |
|
|
|
(56 |
) |
|
|
63 |
|
|
|
764 |
|
NOI from unconsolidated joint ventures |
|
5,625 |
|
|
|
3,480 |
|
|
|
2,063 |
|
|
|
82 |
|
Interest and other income, net |
|
(3,893 |
) |
|
|
(1,031 |
) |
|
|
(295 |
) |
|
|
(2,567 |
) |
Interest and debt expense |
|
40,004 |
|
|
|
26,526 |
|
|
|
12,719 |
|
|
|
759 |
|
Income tax expense |
|
362 |
|
|
|
8 |
|
|
|
79 |
|
|
|
275 |
|
Other, net |
|
465 |
|
|
|
- |
|
|
|
- |
|
|
|
465 |
|
Amounts attributable to noncontrolling interests in
consolidated joint ventures |
|
(23,901 |
) |
|
|
(2,500 |
) |
|
|
(21,401 |
) |
|
|
- |
|
Paramount's share of NOI |
$ |
90,636 |
|
|
$ |
63,396 |
|
|
$ |
28,158 |
|
|
$ |
(918 |
) |
Adjustments to arrive at Cash NOI: |
|
|
|
|
|
|
|
|
|
|
|
Straight-line rent adjustments (including our share of
unconsolidated joint ventures) |
|
(1,116 |
) |
|
|
(4,266 |
) |
|
|
3,327 |
|
|
|
(177 |
) |
Amortization of above and below-market leases, net
(including our share of unconsolidated joint ventures) |
|
(1,949 |
) |
|
|
(893 |
) |
|
|
(1,056 |
) |
|
|
- |
|
Amounts attributable to noncontrolling interests in
consolidated joint ventures |
|
(1,028 |
) |
|
|
(153 |
) |
|
|
(875 |
) |
|
|
- |
|
Paramount's share of Cash NOI |
$ |
86,543 |
|
|
$ |
58,084 |
|
|
$ |
29,554 |
|
|
$ |
(1,095 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Six Months Ended June 30, 2025 |
|
(Amounts in thousands) |
Total |
|
|
New York |
|
|
San Francisco |
|
|
Other |
|
Reconciliation of net (loss) income to NOI and Cash NOI: |
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income |
$ |
(25,726 |
) |
|
$ |
(21,039 |
) |
|
$ |
29,377 |
|
|
$ |
(34,064 |
) |
Adjustments to arrive at NOI: |
|
|
|
|
|
|
|
|
|
|
|
Fee income |
|
(9,245 |
) |
|
|
- |
|
|
|
- |
|
|
|
(9,245 |
) |
Depreciation and amortization |
|
118,941 |
|
|
|
79,877 |
|
|
|
36,879 |
|
|
|
2,185 |
|
General and administrative |
|
41,772 |
|
|
|
- |
|
|
|
- |
|
|
|
41,772 |
|
Income from unconsolidated joint ventures |
|
(1,959 |
) |
|
|
(119 |
) |
|
|
- |
|
|
|
(1,840 |
) |
NOI from unconsolidated joint ventures |
|
9,963 |
|
|
|
6,464 |
|
|
|
3,390 |
|
|
|
109 |
|
Interest and other income, net |
|
(7,841 |
) |
|
|
(1,645 |
) |
|
|
(1,145 |
) |
|
|
(5,051 |
) |
Interest and debt expense |
|
85,484 |
|
|
|
59,843 |
|
|
|
23,408 |
|
|
|
2,233 |
|
Income tax (benefit) expense |
|
(599 |
) |
|
|
3 |
|
|
|
6 |
|
|
|
(608 |
) |
Other, net |
|
1,058 |
|
|
|
- |
|
|
|
- |
|
|
|
1,058 |
|
Amounts attributable to noncontrolling interests in
consolidated joint ventures |
|
(42,699 |
) |
|
|
(6,708 |
) |
|
|
(35,991 |
) |
|
|
- |
|
Paramount's share of NOI |
$ |
169,149 |
|
|
$ |
116,676 |
|
|
$ |
55,924 |
|
|
$ |
(3,451 |
) |
Adjustments to arrive at Cash NOI: |
|
|
|
|
|
|
|
|
|
|
|
Straight-line rent adjustments (including our share of
unconsolidated joint ventures) |
|
5,137 |
|
|
|
(3,886 |
) |
|
|
8,951 |
|
|
|
72 |
|
Amortization of above and below-market leases, net
(including our share of unconsolidated joint ventures) |
|
(3,030 |
) |
|
|
(1,477 |
) |
|
|
(1,553 |
) |
|
|
- |
|
Amounts attributable to noncontrolling interests in
consolidated joint ventures |
|
(4,903 |
) |
|
|
(839 |
) |
|
|
(4,064 |
) |
|
|
- |
|
Paramount's share of Cash NOI |
$ |
166,353 |
|
|
$ |
110,474 |
|
|
$ |
59,258 |
|
|
$ |
(3,379 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Six Months Ended June 30, 2024 |
|
(Amounts in thousands) |
Total |
|
|
New York |
|
|
San Francisco |
|
|
Other |
|
Reconciliation of net income (loss) to NOI and Cash NOI: |
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
$ |
13,871 |
|
|
$ |
(6,219 |
) |
|
$ |
29,257 |
|
|
$ |
(9,167 |
) |
Adjustments to arrive at NOI and Cash NOI: |
|
|
|
|
|
|
|
|
|
|
|
Fee income |
|
(10,552 |
) |
|
|
- |
|
|
|
- |
|
|
|
(10,552 |
) |
Depreciation and amortization |
|
122,849 |
|
|
|
83,204 |
|
|
|
37,232 |
|
|
|
2,413 |
|
General and administrative |
|
33,266 |
|
|
|
- |
|
|
|
- |
|
|
|
33,266 |
|
Loss from unconsolidated joint ventures |
|
2,117 |
|
|
|
1,630 |
|
|
|
365 |
|
|
|
122 |
|
NOI from unconsolidated joint ventures |
|
11,227 |
|
|
|
7,035 |
|
|
|
4,110 |
|
|
|
82 |
|
Interest and other income, net |
|
(23,313 |
) |
|
|
(1,824 |
) |
|
|
(681 |
) |
|
|
(20,808 |
) |
Interest and debt expense |
|
80,273 |
|
|
|
53,099 |
|
|
|
25,664 |
|
|
|
1,510 |
|
Income tax expense |
|
709 |
|
|
|
16 |
|
|
|
84 |
|
|
|
609 |
|
Other, net |
|
581 |
|
|
|
- |
|
|
|
- |
|
|
|
581 |
|
Amounts attributable to noncontrolling interests in
consolidated joint ventures |
|
(46,809 |
) |
|
|
(5,176 |
) |
|
|
(41,633 |
) |
|
|
- |
|
Paramount's share of NOI |
$ |
184,219 |
|
|
$ |
131,765 |
|
|
$ |
54,398 |
|
|
$ |
(1,944 |
) |
Adjustments to arrive at Cash NOI: |
|
|
|
|
|
|
|
|
|
|
|
Straight-line rent adjustments (including our share of
unconsolidated joint ventures) |
|
(4,503 |
) |
|
|
(8,175 |
) |
|
|
3,743 |
|
|
|
(71 |
) |
Amortization of above and below-market leases, net
(including our share of unconsolidated joint ventures) |
|
(3,607 |
) |
|
|
(1,508 |
) |
|
|
(2,099 |
) |
|
|
- |
|
Amounts attributable to noncontrolling interests in
consolidated joint ventures |
|
(589 |
) |
|
|
(265 |
) |
|
|
(324 |
) |
|
|
- |
|
Paramount's share of Cash NOI |
$ |
175,520 |
|
|
$ |
121,817 |
|
|
$ |
55,718 |
|
|
$ |
(2,015 |
) |
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, 2025 and 2024. 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 represent 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, 2025 |
|
(Amounts in thousands) |
Total |
|
|
New York |
|
|
San Francisco |
|
|
Other |
|
Paramount's share of NOI for the three months ended |
|
|
|
|
|
|
|
|
|
|
|
June 30, 2025 (1) |
$ |
82,361 |
|
|
$ |
58,023 |
|
|
$ |
26,102 |
|
|
$ |
(1,764 |
) |
Non-same store adjustments: |
|
|
|
|
|
|
|
|
|
|
|
Lease termination income |
|
(504 |
) |
|
|
(459 |
) |
|
|
(45 |
) |
|
|
- |
|
Other, net |
|
2,409 |
|
|
|
645 |
|
|
|
- |
|
|
|
1,764 |
|
Paramount's share of Same Store NOI for the |
|
|
|
|
|
|
|
|
|
|
|
three months ended June 30, 2025 |
$ |
84,266 |
|
|
$ |
58,209 |
|
|
$ |
26,057 |
|
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended June 30, 2024 |
|
(Amounts in thousands) |
Total |
|
|
New York |
|
|
San Francisco |
|
|
Other |
|
Paramount's share of NOI for the three months ended |
|
|
|
|
|
|
|
|
|
|
|
June 30, 2024 (1) |
$ |
90,636 |
|
|
$ |
63,396 |
|
|
$ |
28,158 |
|
|
$ |
(918 |
) |
Non-same store adjustments: |
|
|
|
|
|
|
|
|
|
|
|
Dispositions (2) |
|
(2,600 |
) |
|
|
(1,283 |
) |
|
|
(1,317 |
) |
|
|
- |
|
Lease termination income |
|
(1,029 |
) |
|
|
(1,029 |
) |
|
|
- |
|
|
|
- |
|
Other, net |
|
1,299 |
|
|
|
372 |
|
|
|
9 |
|
|
|
918 |
|
Paramount's share of Same Store NOI for the |
|
|
|
|
|
|
|
|
|
|
|
three months ended June 30, 2024 |
$ |
88,306 |
|
|
$ |
61,456 |
|
|
$ |
26,850 |
|
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
% Decrease |
|
(4.6 |
%) |
|
|
(5.3 |
%) |
|
|
(3.0 |
%) |
|
|
|
(1)See page 47 “Non-GAAP Financial Measures – NOI” for a reconciliation to net income or loss in accordance with GAAP and the reasons why we believe these non-GAAP measures are useful.
(2)Represents an adjustment to prior period’s NOI to account for the 45.0% sale of 900 Third Avenue in our New York portfolio and 25.0% sale of One Front Street in our San Francisco portfolio.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended June 30, 2025 |
|
(Amounts in thousands) |
Total |
|
|
New York |
|
|
San Francisco |
|
|
Other |
|
Paramount's share of Cash NOI for the three months ended |
|
|
|
|
|
|
|
|
|
|
|
June 30, 2025 (1) |
$ |
82,676 |
|
|
$ |
56,584 |
|
|
$ |
27,891 |
|
|
$ |
(1,799 |
) |
Non-same store adjustments: |
|
|
|
|
|
|
|
|
|
|
|
Lease termination income |
|
(504 |
) |
|
|
(459 |
) |
|
|
(45 |
) |
|
|
- |
|
Other, net |
|
2,444 |
|
|
|
645 |
|
|
|
- |
|
|
|
1,799 |
|
Paramount's share of Same Store Cash NOI for the |
|
|
|
|
|
|
|
|
|
|
|
three months ended June 30, 2025 |
$ |
84,616 |
|
|
$ |
56,770 |
|
|
$ |
27,846 |
|
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended June 30, 2024 |
|
(Amounts in thousands) |
Total |
|
|
New York |
|
|
San Francisco |
|
|
Other |
|
Paramount's share of Cash NOI for the three months ended |
|
|
|
|
|
|
|
|
|
|
|
June 30, 2024 (1) |
$ |
86,543 |
|
|
$ |
58,084 |
|
|
$ |
29,554 |
|
|
$ |
(1,095 |
) |
Non-same store adjustments: |
|
|
|
|
|
|
|
|
|
|
|
Dispositions (2) |
|
(2,822 |
) |
|
|
(1,341 |
) |
|
|
(1,481 |
) |
|
|
- |
|
Lease termination income |
|
(1,029 |
) |
|
|
(1,029 |
) |
|
|
- |
|
|
|
- |
|
Other, net |
|
1,476 |
|
|
|
372 |
|
|
|
9 |
|
|
|
1,095 |
|
Paramount's share of Same Store Cash NOI for the |
|
|
|
|
|
|
|
|
|
|
|
three months ended June 30, 2024 |
$ |
84,168 |
|
|
$ |
56,086 |
|
|
$ |
28,082 |
|
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
% Increase (decrease) |
|
0.5 |
% |
|
|
1.2 |
% |
|
|
(0.8 |
%) |
|
|
|
(1)See page 47 “Non-GAAP Financial Measures – NOI” for a reconciliation to net income or loss in accordance with GAAP and the reasons why we believe these non-GAAP measures are useful.
(2)Represents an adjustment to prior period’s Cash NOI to account for the 45.0% sale of 900 Third Avenue in our New York portfolio and 25.0% sale of One Front Street in our San Francisco portfolio.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Six Months Ended June 30, 2025 |
|
(Amounts in thousands) |
Total |
|
|
New York |
|
|
San Francisco |
|
|
Other |
|
Paramount's share of NOI for the six months ended |
|
|
|
|
|
|
|
|
|
|
|
June 30, 2025 (1) |
$ |
169,149 |
|
|
$ |
116,676 |
|
|
$ |
55,924 |
|
|
$ |
(3,451 |
) |
Non-same store adjustments: |
|
|
|
|
|
|
|
|
|
|
|
Lease termination income |
|
(1,672 |
) |
|
|
(1,627 |
) |
|
|
(45 |
) |
|
|
- |
|
Other, net |
|
4,128 |
|
|
|
677 |
|
|
|
- |
|
|
|
3,451 |
|
Paramount's share of Same Store NOI for the |
|
|
|
|
|
|
|
|
|
|
|
six months ended June 30, 2025 |
$ |
171,605 |
|
|
$ |
115,726 |
|
|
$ |
55,879 |
|
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Six Months Ended June 30, 2024 |
|
(Amounts in thousands) |
Total |
|
|
New York |
|
|
San Francisco |
|
|
Other |
|
Paramount's share of NOI for the six months ended |
|
|
|
|
|
|
|
|
|
|
|
June 30, 2024 (1) |
$ |
184,219 |
|
|
$ |
131,765 |
|
|
$ |
54,398 |
|
|
$ |
(1,944 |
) |
Non-same store adjustments: |
|
|
|
|
|
|
|
|
|
|
|
Dispositions (2) |
|
(4,174 |
) |
|
|
(2,857 |
) |
|
|
(1,317 |
) |
|
|
- |
|
Lease termination income |
|
(1,973 |
) |
|
|
(1,973 |
) |
|
|
- |
|
|
|
- |
|
Other, net |
|
2,603 |
|
|
|
650 |
|
|
|
9 |
|
|
|
1,944 |
|
Paramount's share of Same Store NOI for the |
|
|
|
|
|
|
|
|
|
|
|
six months ended June 30, 2024 |
$ |
180,675 |
|
|
$ |
127,585 |
|
|
$ |
53,090 |
|
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
% (Decrease) increase |
|
(5.0 |
%) |
|
|
(9.3 |
%) |
|
|
5.3 |
% |
|
|
|
(1)See page 47 “Non-GAAP Financial Measures – NOI” for a reconciliation to net income or loss in accordance with GAAP and the reasons why we believe these non-GAAP measures are useful.
(2)Represents an adjustment to prior period’s NOI to account for the 45.0% sale of 900 Third Avenue in our New York portfolio and 25.0% sale of One Front Street in our San Francisco portfolio.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Six Months Ended June 30, 2025 |
|
(Amounts in thousands) |
Total |
|
|
New York |
|
|
San Francisco |
|
|
Other |
|
Paramount's share of Cash NOI for the six months ended |
|
|
|
|
|
|
|
|
|
|
|
June 30, 2025 (1) |
$ |
166,353 |
|
|
$ |
110,474 |
|
|
$ |
59,258 |
|
|
$ |
(3,379 |
) |
Non-same store adjustments: |
|
|
|
|
|
|
|
|
|
|
|
Lease termination income |
|
(1,672 |
) |
|
|
(1,627 |
) |
|
|
(45 |
) |
|
|
- |
|
Other, net |
|
4,056 |
|
|
|
677 |
|
|
|
- |
|
|
|
3,379 |
|
Paramount's share of Same Store Cash NOI for the |
|
|
|
|
|
|
|
|
|
|
|
six months ended June 30, 2025 |
$ |
168,737 |
|
|
$ |
109,524 |
|
|
$ |
59,213 |
|
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Six Months Ended June 30, 2024 |
|
(Amounts in thousands) |
Total |
|
|
New York |
|
|
San Francisco |
|
|
Other |
|
Paramount's share of Cash NOI for the six months ended |
|
|
|
|
|
|
|
|
|
|
|
June 30, 2024 (1) |
$ |
175,520 |
|
|
$ |
121,817 |
|
|
$ |
55,718 |
|
|
$ |
(2,015 |
) |
Non-same store adjustments: |
|
|
|
|
|
|
|
|
|
|
|
Dispositions (2) |
|
(4,337 |
) |
|
|
(2,856 |
) |
|
|
(1,481 |
) |
|
|
- |
|
Lease termination income |
|
(1,973 |
) |
|
|
(1,973 |
) |
|
|
- |
|
|
|
- |
|
Other, net |
|
2,674 |
|
|
|
650 |
|
|
|
9 |
|
|
|
2,015 |
|
Paramount's share of Same Store Cash NOI for the |
|
|
|
|
|
|
|
|
|
|
|
six months ended June 30, 2024 |
$ |
171,884 |
|
|
$ |
117,638 |
|
|
$ |
54,246 |
|
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
% (Decrease) increase |
|
(1.8 |
%) |
|
|
(6.9 |
%) |
|
|
9.2 |
% |
|
|
|
(1)See page 47 “Non-GAAP Financial Measures – NOI” for a reconciliation to net income or loss in accordance with GAAP and the reasons why we believe these non-GAAP measures are useful.
(2)Represents an adjustment to prior period’s Cash NOI to account for the 45.0% sale of 900 Third Avenue in our New York portfolio and 25.0% sale of One Front Street in our San Francisco portfolio.
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 and adjustments, realized and unrealized gains or losses on real estate related 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 income or loss 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, |
|
|
|
|
|
|
|
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
Reconciliation of net (loss) income to FFO and Core FFO: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income |
|
$ |
(20,409 |
) |
|
$ |
(2,860 |
) |
|
$ |
(25,726 |
) |
|
$ |
13,871 |
|
|
Real estate depreciation and amortization (including our
share of unconsolidated joint ventures) |
|
|
63,113 |
|
|
|
65,035 |
|
|
|
125,015 |
|
|
|
129,459 |
|
|
Amounts attributable to noncontrolling interests in
consolidated joint ventures and real estate related funds |
|
|
(13,404 |
) |
|
|
(15,585 |
) |
|
|
(29,781 |
) |
|
|
(31,470 |
) |
|
FFO attributable to the Operating Partnership |
|
|
29,300 |
|
|
|
46,590 |
|
|
|
69,508 |
|
|
|
111,860 |
|
|
Amounts attributable to noncontrolling interests in the
Operating Partnership |
|
|
(2,310 |
) |
|
|
(3,935 |
) |
|
|
(5,638 |
) |
|
|
(9,384 |
) |
|
FFO attributable to common stockholders |
|
$ |
26,990 |
|
|
$ |
42,655 |
|
|
$ |
63,870 |
|
|
$ |
102,476 |
|
|
|
Per diluted share |
|
$ |
0.12 |
|
|
$ |
0.20 |
|
|
$ |
0.29 |
|
|
$ |
0.47 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FFO attributable to the Operating Partnership |
|
$ |
29,300 |
|
|
$ |
46,590 |
|
|
$ |
69,508 |
|
|
$ |
111,860 |
|
|
Adjustments for non-core items: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance costs |
|
|
8,188 |
|
|
|
- |
|
|
|
8,188 |
|
|
|
- |
|
|
|
Write-off of deferred financing costs |
|
|
462 |
|
|
|
- |
|
|
|
1,751 |
|
|
|
- |
|
|
|
Non-cash gain on extinguishment of IPO related tax liability |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(15,437 |
) |
|
|
Other, net (primarily transaction related costs) |
|
|
2,138 |
|
|
|
845 |
|
|
|
1,951 |
|
|
|
3,316 |
|
|
Core FFO attributable to the Operating Partnership |
|
|
40,088 |
|
|
|
47,435 |
|
|
|
81,398 |
|
|
|
99,739 |
|
|
Amounts attributable to noncontrolling interests in the
Operating Partnership |
|
|
(3,161 |
) |
|
|
(4,007 |
) |
|
|
(6,580 |
) |
|
|
(8,373 |
) |
|
Core FFO attributable to common stockholders |
|
$ |
36,927 |
|
|
$ |
43,428 |
|
|
$ |
74,818 |
|
|
$ |
91,366 |
|
|
|
Per diluted share |
|
$ |
0.17 |
|
|
$ |
0.20 |
|
|
$ |
0.34 |
|
|
$ |
0.42 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of weighted average shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding |
|
|
219,216,715 |
|
|
|
217,204,870 |
|
|
|
218,614,427 |
|
|
|
217,155,278 |
|
|
Effect of dilutive securities |
|
|
25,422 |
|
|
|
27,125 |
|
|
|
46,554 |
|
|
|
53,699 |
|
|
Denominator for FFO and Core FFO per diluted share |
|
|
219,242,137 |
|
|
|
217,231,995 |
|
|
|
218,660,981 |
|
|
|
217,208,977 |
|