Paramount Group, Inc. - FORM 8-K - EX-99.2

Paramount Group, Inc. - FORM 8-K - EX-99.2 - August 3, 2017

Attached files

Attached files

Paramount Group, Inc. Reports

file	filename
EX-99.1 - EX-99.1 - Paramount Group, Inc.	d415034dex991.htm
8-K - 8-K - Paramount Group, Inc.	d415034d8k.htm

Exhibit 99.2

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SUPPLEMENTAL OPERATING AND FINANCIAL DATA

FOR THE QUARTER ENDED JUNE 30, 2017

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FORWARD-LOOKING STATEMENTS

This supplemental information contains forward-looking statements within the meaning of the Federal securities laws. You can identify these statements by our use of the words “assumes,” “believes,” “estimates,” “expects,” “guidance,” “intends,” “plans,” “projects” and similar expressions that do not relate to historical matters. You should exercise caution in interpreting and relying on forward-looking statements because they involve known and unknown risks, uncertainties and other factors which are, in some cases, beyond our control and could materially affect actual results, performance or achievements. These factors include, without limitation, the ability to enter into new leases or renew leases on favorable terms, dependence on tenants’ financial condition, the uncertainties of real estate development, acquisition and disposition activity, the ability to effectively integrate acquisitions, the costs and availability of financing, the ability of our joint venture partners to satisfy their obligations, the effects of local, national and international economic and market conditions, the effects of acquisitions, dispositions and possible impairment charges on our operating results, regulatory changes, including changes to tax laws and regulations, and other risks and uncertainties detailed from time to time in our filings with the Securities and Exchange Commission. We do not undertake a duty to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

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TABLE OF CONTENTS


		Page
Company Profile		4

Research Coverage		5

Selected Financial Information
Financial Highlights		6
Consolidated Balance Sheets		7
Consolidated Statements of Income		8
Select Income Statement Data		9
Funds From Operations (“FFO”)		10
Funds Available for Distribution (“FAD”)		11
Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”)		12
Net Operating Income (“NOI”)		13
NOI - By Segment		14-15
Same Store Results - By Segment		16-19
Consolidated Joint Ventures and Funds		20-22
Unconsolidated Joint Ventures		23-25
Unconsolidated Funds Summary		26
Capital Structure		27
Debt Analysis		28
Debt Maturities		29

Selected Property Data
Portfolio Summary		30
Same Store Leased Occupancy		31-32
Top Tenants and Industry Diversification		33
Leasing Activity		34-35
Lease Expirations		36-39
Cash Basis Capital Expenditures		40-41

Definitions		42-43

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COMPANY PROFILE

Paramount Group, Inc. (“Paramount”) is a fully-integrated real estate investment trust that owns, operates, manages, acquires and redevelops high-quality, Class A office properties located in select central business district submarkets of New York, Washington, D.C. and San Francisco. Paramount is focused on maximizing the value of its portfolio by leveraging the sought-after locations of its assets and its proven property management capabilities to attract and retain high-quality tenants.


EXECUTIVE MANAGEMENT
Albert Behler		Chairman, Chief Executive Officer and President
Wilbur Paes		Executive Vice President, Chief Financial Officer and Treasurer
Jolanta Bott		Executive Vice President, Operations and Human Resources
Theodore Koltis		Executive Vice President, Leasing
Daniel Lauer		Executive Vice President, Chief Investment Officer

BOARD OF DIRECTORS
Albert Behler		Director, Chairman of the Board
Thomas Armbrust		Director
Martin Bussmann		Director
Dan Emmett		Director, Chair of Nominating and Corporate Governance Committee; Lead Independent Director
Lizanne Galbreath		Director, Chair of Compensation Committee
Karin Klein		Director
Peter Linneman		Director, Chair of Audit Committee
David O’Connor		Director
Katharina Otto-Bernstein		Director

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RESEARCH COVERAGE⁽¹⁾


James Feldman	Thomas Catherwood	Vin Chao	Steve Sakwa
Bank of America Merrill Lynch	BTIG	Deutsche Bank	Evercore ISI
(646) 855-5808	(212) 738-6140	(212) 250-6799	(212) 446-9462

Andrew Rosivach	Jed Reagan	Richard Anderson	Vikram Malhotra
Goldman Sachs	Green Street Advisors	Mizuho Securities USA Inc.	Morgan Stanley
(212) 902-2796	(949) 640-8780	(212) 205-8445	(212) 761-7064

Nick Yulico	Blaine Heck
UBS	Wells Fargo
(212) 713-3402	(443) 263-6529

⁽¹⁾

With the exception of Green Street Advisors, an independent research firm, the equity analysts listed above are those analysts that, according to First Call Corporation, have published research material on the Company and are listed as covering the Company. Please note that any opinions, estimates or forecasts regarding the Company’s performance made by such analysts do not represent the opinions, estimates or forecasts of the Company or its management. The Company does not by its reference above, imply its endorsement of or concurrence with any information, conclusions or recommendations made by any such analysts.

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FINANCIAL HIGHLIGHTS

(unaudited and in thousands, except per share amounts)


		Three Months Ended									Six Months Ended
SELECTED FINANCIAL DATA		June 30, 2017			June 30, 2016			March 31, 2017			June 30, 2017			June 30, 2016
	Net income (loss) attributable to common stockholders	$	103,016		$	3,188		$	372		$	103,388		$	(3,306	)
	Per share—basic and diluted	$	0.44		$	0.01		$	0.00		$	0.44		$	(0.02	)

	PGRE’s share of Cash NOI ⁽¹⁾	$	85,436		$	72,253		$	79,117		$	164,553		$	159,492
	PGRE’s share of NOI ⁽¹⁾	$	102,208		$	100,175		$	98,362		$	200,570		$	200,340

	Same Store Results:
	Same Store Cash NOI		% Change						Same Store Cash NOI						% Change
	Three Months Ended June 30, 2017 vs. June 30, 2016		14.4	%					Three Months Ended June 30, 2017 vs. June 30, 2016						(3.9	%)
	Six Months Ended June 30, 2017 vs. June 30, 2016		4.1	%					Six Months Ended June 30, 2017 vs. June 30, 2016						(4.9	%)

	Core FFO attributable to common stockholders⁽¹⁾	$	54,565		$	50,122		$	51,505		$	106,070		$	99,313
	Per share—diluted	$	0.23		$	0.23		$	0.22		$	0.45		$	0.46
	FAD attributable to common stockholders ⁽¹⁾	$	37,170		$	13,663		$	30,281		$	67,451		$	40,754

COMMON SHARE DATA

		Three Months Ended
	Share Price:	June 30, 2017			March 31, 2017			December 31, 2016			September 30, 2016			June 30, 2016
	High	$	17.25		$	17.58		$	16.74		$	18.28		$	17.40
	Low	$	15.32		$	15.87		$	14.58		$	15.36		$	15.26
	Closing (end of period)	$	16.00		$	16.21		$	15.99		$	16.39		$	15.94
	Dividends per common share	$	0.095		$	0.095		$	0.095		$	0.095		$	0.095
	Annualized dividends per common share	$	0.380		$	0.380		$	0.380		$	0.380		$	0.380
	Dividend yield (on closing share price)		2.4	%		2.3	%		2.4	%		2.3	%		2.4	%

PORTFOLIO STATISTICS
		Three Months Ended
		June 30, 2017			March 31, 2017			December 31, 2016
	Leased % ⁽¹⁾		90.9	%		90.8	%		92.7	%
	Same Store Leased %		% Change
	June 30, 2017 vs. March 31, 2017		0.7	%
	June 30, 2017 vs. December 31, 2016		(1.5	%)

⁽¹⁾	See page 42 for our definition of this measure.

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CONSOLIDATED BALANCE SHEETS

(unaudited and in thousands)


	June 30, 2017			December 31, 2016
ASSETS:
Real estate, at cost
Land	$	2,068,409		$	2,091,535
Buildings and improvements		5,726,499			5,757,558

		7,794,908			7,849,093
Accumulated depreciation and amortization		(397,972	)		(318,161	)

Real estate, net		7,396,936			7,530,932
Cash and cash equivalents		254,763			162,965
Restricted cash		42,384			29,374
Investments in unconsolidated joint ventures		45,644			6,411
Investments in unconsolidated real estate funds		22,001			28,173
Preferred equity investments		55,300			55,051
Marketable securities		21,564			22,393
Accounts and other receivables, net		12,032			15,251
Deferred rent receivable		196,799			163,695
Deferred charges, net		80,352			71,184
Intangible assets, net		363,523			412,225
Assets held for sale		—			346,685
Other assets		26,205			22,829

Total Assets	$	8,517,503		$	8,867,168


LIABILITIES:
Notes and mortgages payable, net	$	3,308,845		$	3,364,898
Revolving credit facility		—			230,000
Due to affiliates ⁽¹⁾		27,299			27,299
Accounts payable and accrued expenses		83,334			103,896
Dividends and distributions payable		25,211			25,151
Deferred income taxes		1,283			1,467
Interest rate swap liabilities		1,819			22,446
Intangible liabilities, net		133,748			153,018
Other liabilities		50,053			53,046

Total Liabilities		3,631,592			3,981,221

EQUITY:
Paramount Group, Inc. equity		4,185,874			3,990,005
Noncontrolling interests in:
Consolidated joint ventures		229,133			253,788
Consolidated real estate fund		14,833			64,793
Operating Partnership		456,071			577,361

Total Equity		4,885,911			4,885,947

Total Liabilities and Equity	$	8,517,503		$	8,867,168

⁽¹⁾	Represents notes payable to affiliates, which are due in October 2017 and bear interest at a fixed rate of 0.50%.

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CONSOLIDATED STATEMENTS OF INCOME

(unaudited and in thousands, except shares and per share amounts)


	Three Months Ended									Six Months Ended
	June 30, 2017			June 30, 2016			March 31, 2017			June 30, 2017			June 30, 2016
REVENUES:
Property rentals	$	138,232		$	123,408		$	132,235		$	270,467		$	248,410
Straight-line rent adjustments		11,974			24,673			20,147			32,121			44,542
Amortization of above and below-market leases, net		7,981			7,100			3,008			10,989			3,481

Rental income		158,187			155,181			155,390			313,577			296,433
Tenant reimbursement income		11,856			10,334			12,852			24,708			21,123
Fee income (see details on page 9)		4,448			4,175			9,556			14,004			7,592
Other income (see details on page 9)		3,213			2,613			3,438			6,651			20,073

Total revenues		177,704			172,303			181,236			358,940			345,221
EXPENSES:
Operating		63,461			59,994			65,971			129,432			122,939
Depreciation and amortization		68,636			67,287			62,992			131,628			142,099
General and administrative (see details on page 9)		16,573			12,139			13,581			30,154			26,100
Transaction related costs		502			508			275			777			1,443

Total expenses		149,172			139,928			142,819			291,991			292,581
Operating income		28,532			32,375			38,417			66,949			52,640
Income from unconsolidated joint ventures		16,535			2,003			1,937			18,472			3,499
(Loss) income from unconsolidated real estate funds		(2,411	)		(960	)		288			(2,123	)		(1,286	)
Interest and other income, net (see details on page 9)		2,486			1,030			3,200			5,686			2,730
Interest and debt expense (see details on page 9)		(34,817	)		(38,009	)		(37,018	)		(71,835	)		(75,128	)
Debt breakage costs		(5,162	)		—			(2,715	)		(7,877	)		—
Gain on sale of real estate		133,989			—			—			133,989			—
Unrealized gain on interest rate swaps		—			10,073			1,802			1,802			16,933

Net income (loss) before income taxes		139,152			6,512			5,911			145,063			(612	)
Income tax (expense) benefit		(970	)		1,398			(4,282	)		(5,252	)		1,035

Net income		138,182			7,910			1,629			139,811			423
Less net (income) loss attributable to noncontrolling interests in:
Consolidated joint ventures		(1,897	)		(4,107	)		(1,291	)		(3,188	)		(5,359	)
Consolidated real estate fund		(20,169	)		78			88			(20,081	)		752
Operating Partnership		(13,100	)		(693	)		(54	)		(13,154	)		878

Net income (loss) attributable to common stockholders	$	103,016		$	3,188		$	372		$	103,388		$	(3,306	)


Weighted average common shares outstanding:
Basic		234,990,468			217,121,592			230,924,271			232,968,602			214,762,593

Diluted		235,010,830			217,137,557			230,958,441			232,995,822			214,762,593

Income (loss) per common share:
Basic	$	0.44		$	0.01		$	0.00		$	0.44		$	(0.02	)

Diluted	$	0.44		$	0.01		$	0.00		$	0.44		$	(0.02	)

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SELECT INCOME STATEMENT DATA

(unaudited and in thousands)


	Three Months Ended							Six Months Ended
Fee Income:	June 30, 2017		June 30, 2016			March 31, 2017		June 30, 2017		June 30, 2016
Property management	$	1,532	$	1,539		$	1,610	$	3,142	$	3,060
Asset management		2,359		1,783			2,266		4,625		3,497
Acquisition and disposition		250		590			5,320		5,570		590
Other		307		263			360		667		445

Total fee income	$	4,448	$	4,175		$	9,556	$	14,004	$	7,592


	Three Months Ended							Six Months Ended
Other Income:	June 30, 2017		June 30, 2016			March 31, 2017		June 30, 2017		June 30, 2016
Lease termination income	$	895	$	93		$	66	$	961	$	11,048
Other (primarily tenant requested services, including overtime heating and cooling)		2,318		2,520			3,372		5,690		9,025

Total other income	$	3,213	$	2,613		$	3,438	$	6,651	$	20,073


	Three Months Ended							Six Months Ended
General and Administrative:	June 30, 2017		June 30, 2016			March 31, 2017		June 30, 2017		June 30, 2016
Non-cash general and administrative - stock based compensation expense	$	4,438	$	2,556		$	3,429	$	7,867	$	4,328
All other general and administrative		11,113		10,326			8,450		19,563		19,437
Mark-to-market of deferred compensation plan liabilities (offset by an increase (decrease) in the mark-to-market of plan assets, which is included in “interest and other income”)		1,022		(743	)		1,702		2,724		(539	)
Severance costs		—		—			—		—		2,874

Total general and administrative	$	16,573	$	12,139		$	13,581	$	30,154	$	26,100


	Three Months Ended							Six Months Ended
Interest and Other Income:	June 30, 2017		June 30, 2016			March 31, 2017		June 30, 2017		June 30, 2016
Preferred equity investment income ⁽¹⁾	$	953	$	1,423		$	1,413	$	2,366	$	2,839
Interest income		511		350			85		596		430
Mark-to-market of deferred compensation plan assets (offset by an increase (decrease) in the mark-to-market of plan liabilities, which is included in “general and administrative” expenses)		1,022		(743	)		1,702		2,724		(539	)

Total interest and other income	$	2,486	$	1,030		$	3,200	$	5,686	$	2,730

⁽¹⁾ Represents 100% of the investment income from PGRESS Equity Holdings, L.P., of which our 24.4% share is $232, $347 and $344 for the three months ended June 30, 2017 and 2016, and March 31, 2017, respectively and $576 and $692 for the six months ended June 30, 2017 and 2016, respectively.



	Three Months Ended						Six Months Ended
Interest and Debt Expense:	June 30, 2017		June 30, 2016		March 31, 2017		June 30, 2017		June 30, 2016
Interest expense	$	31,999	$	36,604	$	34,288	$	66,287	$	72,465
Amortization of deferred financing costs		2,818		1,405		2,730		5,548		2,663

Total interest and debt expense	$	34,817	$	38,009	$	37,018	$	71,835	$	75,128

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FUNDS FROM OPERATIONS (“FFO”)

(unaudited and in thousands, except share and per share amounts)


	Three Months Ended									Six Months Ended
	June 30, 2017			June 30, 2016			March 31, 2017			June 30, 2017			June 30, 2016
Reconciliation of net income to FFO and Core FFO:
Net income	$	138,182		$	7,910		$	1,629		$	139,811		$	423
Real estate depreciation and amortization (including our share of unconsolidated joint ventures)		70,660			68,843			64,840			135,500			145,194
Gain on sale of Waterview		(110,583	)		—			—			(110,583	)		—

FFO ⁽¹⁾		98,259			76,753			66,469			164,728			145,617
Less FFO attributable to noncontrolling interests in:
Consolidated joint ventures		(7,740	)		(10,560	)		(7,195	)		(14,935	)		(18,707	)
Consolidated real estate fund		(20,276	)		(144	)		(140	)		(20,416	)		304

FFO attributable to Paramount Group Operating Partnership		70,243			66,049			59,134			129,377			127,214
Less FFO attributable to noncontrolling interests in Operating Partnership		(7,925	)		(11,806	)		(7,545	)		(15,470	)		(23,723	)

FFO attributable to common stockholders⁽¹⁾	$	62,318		$	54,243		$	51,589		$	113,907		$	103,491

Per diluted share	$	0.27		$	0.25		$	0.22		$	0.49		$	0.48

FFO	$	98,259		$	76,753		$	66,469		$	164,728		$	145,617
Non-core items:
After-tax net gain on sale of residential condominium land parcel		(21,568	)		—			—			(21,568	)		—
Distributions in excess of basis of 712 Fifth Avenue		(15,072	)		—			—			(15,072	)		—
Debt breakage costs		5,162			—			2,715			7,877			—
Realized and unrealized loss (gain) from unconsolidated real estate funds		2,482			892			(235	)		2,247			1,139
Unrealized gain on interest rate swaps (including our share of unconsolidated joint ventures)		(364	)		(10,490	)		(2,386	)		(2,750	)		(17,350	)
Transaction related costs		502			508			275			777			1,443
Severance costs		—			—			—			—			2,874

Core FFO ⁽¹⁾		69,401			67,663			66,838			136,239			133,723
Less Core FFO attributable to noncontrolling interests in:
Consolidated joint ventures		(7,740	)		(6,488	)		(7,661	)		(15,401	)		(11,902	)
Consolidated real estate fund		12			(144	)		(140	)		(128	)		304

Core FFO attributable to Paramount Group Operating Partnership		61,673			61,031			59,037			120,710			122,125
Less Core FFO attributable to noncontrolling interests in Operating Partnership		(7,108	)		(10,909	)		(7,532	)		(14,640	)		(22,812	)

Core FFO attributable to common stockholders ⁽¹⁾	$	54,565		$	50,122		$	51,505		$	106,070		$	99,313

Per diluted share	$	0.23		$	0.23		$	0.22		$	0.45		$	0.46

Reconciliation of weighted average shares outstanding:
Weighted average shares outstanding		234,990,468			217,121,592			230,924,271			232,968,602			214,762,593
Effect of dilutive securities		20,362			15,965			34,170			27,220			—

Denominator for FFO and Core FFO per diluted share		235,010,830			217,137,557			230,958,441			232,995,822			214,762,593

⁽¹⁾	See page 42 for our definition of this measure.

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FUNDS AVAILABLE FOR DISTRIBUTION (“FAD”)

(unaudited and in thousands)


	Three Months Ended									Six Months Ended
	June 30, 2017			June 30, 2016			March 31, 2017			June 30, 2017			June 30, 2016
Reconciliation of Core FFO to FAD:
Core FFO	$	69,401		$	67,663		$	66,838		$	136,239		$	133,723
Add (subtract) adjustments to arrive at FAD:
Amortization of stock-based compensation expense		4,438			2,556			3,429			7,867			4,328
Amortization of deferred financing costs (including our share of unconsolidated joint ventures)		3,061			1,456			2,798			5,859			2,765
Amortization of above and below-market leases, net (including our share of unconsolidated joint ventures)		(7,818	)		(7,100	)		(2,881	)		(10,699	)		(3,481	)
Expenditures to maintain assets		(1,999	)		(2,241	)		(5,555	)		(7,554	)		(6,413	)
Second generation tenant improvements and leasing commissions		(9,867	)		(22,501	)		(7,408	)		(17,275	)		(37,403	)
Straight-line rent adjustments (including our share of unconsolidated joint ventures)		(12,208	)		(24,764	)		(20,511	)		(32,719	)		(44,734	)

FAD ⁽¹⁾		45,008			15,069			36,710			81,718			48,785
Less FAD attributable to noncontrolling interests in:
Consolidated joint ventures		(3,123	)		1,712			(1,860	)		(4,983	)		1,195
Consolidated real estate fund		12			(144	)		(140	)		(128	)		304

FAD attributable to Paramount Group Operating Partnership		41,897			16,637			34,710			76,607			50,284
Less FAD attributable to noncontrolling interests in Operating Partnership		(4,727	)		(2,974	)		(4,429	)		(9,156	)		(9,530	)

FAD attributable to common stockholders ^(1) (2)	$	37,170		$	13,663		$	30,281		$	67,451		$	40,754

⁽¹⁾	See page 42 for our definition of this measure.

⁽²⁾	FAD attributable to common stockholders on a quarterly basis is not necessarily indicative of future amounts due to fluctuations in the timing of payments for tenant improvements and leasing commissions versus rents received from leases for which such costs are incurred.

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		EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION (“EBITDA”)

(unaudited and in thousands)


	Three Months Ended									Six Months Ended
	June 30, 2017			June 30, 2016			March 31, 2017			June 30, 2017			June 30, 2016
Reconciliation of net income to EBITDA and Adjusted EBITDA:
Net income	$	138,182		$	7,910		$	1,629		$	139,811		$	423
Add (subtract) adjustments to arrive at EBITDA:
Depreciation and amortization (including our share of unconsolidated joint ventures)		70,660			68,843			64,840			135,500			145,194
Interest and debt expense (including our share of unconsolidated joint ventures)		36,679			39,412			38,653			75,332			77,931
Income tax expense (benefit) (including our share of unconsolidated joint ventures)		970			(1,398	)		4,282			5,252			(1,035	)

EBITDA⁽¹⁾		246,491			114,767			109,404			355,895			222,513
Less EBITDA attributable to noncontrolling interests in:
Consolidated joint ventures		(12,941	)		(17,499	)		(12,645	)		(25,586	)		(32,576	)
Consolidated real estate fund		(20,276	)		(148	)		(141	)		(20,417	)		302

PGRE’s share of EBITDA ⁽¹⁾	$	213,274		$	97,120		$	96,618		$	309,892		$	190,239


EBITDA	$	246,491		$	114,767		$	109,404		$	355,895		$	222,513
Add (subtract) adjustments to arrive at adjusted EBITDA:
Gain on sale of Waterview		(110,583	)		—			—			(110,583	)		—
Pre-tax net gain on sale of residential condominium land parcel		(23,406	)		—			—			(23,406	)		—
Distributions in excess of basis of 712 Fifth Avenue		(15,072	)		—			—			(15,072	)		—
Debt breakage costs		5,162			—			2,715			7,877			—
EBITDA from real estate funds		2,021			791			(450	)		1,571			1,635
Transaction related costs		502			508			275			777			1,443
Unrealized gain on interest rate swaps (including our share of unconsolidated joint ventures)		(364	)		(10,490	)		(2,386	)		(2,750	)		(17,350	)
Severance costs		—			—			—			—			2,874

Adjusted EBITDA ⁽¹⁾		104,751			105,576			109,558			214,309			211,115
Less Adjusted EBITDA attributable to noncontrolling interests in:
Consolidated joint ventures		(12,941	)		(13,427	)		(13,111	)		(26,052	)		(25,771	)
Consolidated real estate fund		381			—			—			381			—

PGRE’s share of Adjusted EBITDA ⁽¹⁾	$	92,191		$	92,149		$	96,447		$	188,638		$	185,344

⁽¹⁾	See page 42 for our definition of this measure.

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NET OPERATING INCOME (“NOI”)

(unaudited and in thousands)


	Three Months Ended									Six Months Ended
	June 30, 2017			June 30, 2016			March 31, 2017			June 30, 2017			June 30, 2016
Reconciliation of net income to NOI and Cash NOI:
Net income	$	138,182		$	7,910		$	1,629		$	139,811		$	423
Add (subtract) adjustments to arrive at NOI and Cash NOI:
Depreciation and amortization		68,636			67,287			62,992			131,628			142,099
General and administrative		16,573			12,139			13,581			30,154			26,100
Interest and debt expense		34,817			38,009			37,018			71,835			75,128
Debt breakage costs		5,162			—			2,715			7,877			—
Transaction related costs		502			508			275			777			1,443
Income tax expense (benefit)		970			(1,398	)		4,282			5,252			(1,035	)
NOI from unconsolidated joint ventures		4,958			4,536			4,823			9,781			8,964
Income from unconsolidated joint ventures		(16,535	)		(2,003	)		(1,937	)		(18,472	)		(3,499	)
Loss (income) from unconsolidated real estate funds		2,411			960			(288	)		2,123			1,286
Fee income		(4,448	)		(4,175	)		(9,556	)		(14,004	)		(7,592	)
Interest and other income, net		(2,486	)		(1,030	)		(3,200	)		(5,686	)		(2,730	)
Gain on sale of real estate		(133,989	)		—			—			(133,989	)		—
Unrealized gain on interest rate swaps		—			(10,073	)		(1,802	)		(1,802	)		(16,933	)

NOI ⁽¹⁾		114,753			112,670			110,532			225,285			223,654
Less NOI attributable to noncontrolling interests in:
Consolidated joint ventures		(12,200	)		(12,348	)		(12,029	)		(24,229	)		(23,617	)
Consolidated real estate fund		(345	)		(147	)		(141	)		(486	)		303

PGRE’s share of NOI⁽¹⁾	$	102,208		$	100,175		$	98,362		$	200,570		$	200,340


NOI	$	114,753		$	112,670		$	110,532		$	225,285		$	223,654
Less:
Straight-line rent adjustments (including our share of unconsolidated joint ventures)		(12,208	)		(24,764	)		(20,511	)		(32,719	)		(44,734	)
Amortization of above and below-market leases, net (including our share of unconsolidated joint ventures)		(7,818	)		(7,100	)		(2,881	)		(10,699	)		(3,481	)

Cash NOI⁽¹⁾		94,727			80,806			87,140			181,867			175,439
Less Cash NOI attributable to noncontrolling interests in:
Consolidated joint ventures		(8,946	)		(8,406	)		(7,882	)		(16,828	)		(16,250	)
Consolidated real estate fund		(345	)		(147	)		(141	)		(486	)		303

PGRE’s share of Cash NOI ⁽¹⁾	$	85,436		$	72,253		$	79,117		$	164,553		$	159,492

⁽¹⁾	See page 42 for our definition of this measure.

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NOI - BY SEGMENT

(unaudited and in thousands)


	Three Months Ended June 30, 2017
	Total			New York			Washington, D.C.			San Francisco			Other
Reconciliation of net income to NOI and Cash NOI:
Net income	$	138,182		$	19,561		$	110,959		$	2,197		$	5,465
Add (subtract) adjustments to arrive at NOI:
Depreciation and amortization		68,636			38,063			5,333			24,729			511
General and administrative		16,573			—			—			—			16,573
Interest and debt expense		34,817			22,191			713			10,194			1,719
Debt breakage costs		5,162			—			5,162			—			—
Transaction related costs		502			—			—			—			502
Income tax expense		970			—			—			3			967
NOI from unconsolidated joint ventures		4,958			4,838			—			—			120
Income from unconsolidated joint ventures		(16,535	)		(16,473	)		—			—			(62	)
Loss from unconsolidated real estate funds		2,411			—			—			—			2,411
Fee income		(4,448	)		—			—			—			(4,448	)
Interest and other income, net		(2,486	)		(29	)		(11	)		(42	)		(2,404	)
Gain on sale of real estate		(133,989	)		—			(110,583	)		—			(23,406	)

NOI ⁽¹⁾		114,753			68,151			11,573			37,081			(2,052	)
Less NOI attributable to noncontrolling interests in:
Consolidated joint ventures		(12,200	)		—			—			(12,200	)		—
Consolidated real estate fund		(345	)		—			—			—			(345	)

PGRE’s share of NOIfor the three months ended June 30, 2017	$	102,208		$	68,151		$	11,573		$	24,881		$	(2,397	)

PGRE’s share of NOI for the three months ended June 30, 2016	$	100,175		$	76,264		$	13,384		$	12,095		$	(1,568	)


NOI⁽¹⁾	$	114,753		$	68,151		$	11,573		$	37,081		$	(2,052	)
Add (subtract) adjustments to arrive at Cash NOI:
Straight-line rent adjustments (including our share of unconsolidated joint ventures)		(12,208	)		(7,545	)		(333	)		(4,302	)		(28	)
Amortization of above and below-market leases, net (including our share of unconsolidated joint ventures)		(7,818	)		817			(550	)		(8,085	)		—

Cash NOI⁽¹⁾		94,727			61,423			10,690			24,694			(2,080	)
Less Cash NOI attributable to noncontrolling interests in:
Consolidated joint ventures		(8,946	)		—			—			(8,946	)		—
Consolidated real estate fund		(345	)		—			—			—			(345	)

PGRE’s share of Cash NOI for the three months ended June 30, 2017	$	85,436		$	61,423		$	10,690		$	15,748		$	(2,425	)

PGRE’s share of Cash NOI for the three months ended June 30, 2016	$	72,253		$	54,502		$	11,039		$	8,308		$	(1,596	)

⁽¹⁾	See page 42 for our definition of this measure.

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NOI - BY SEGMENT

(unaudited and in thousands)


	Six Months Ended June 30, 2017
	Total			New York			Washington, D.C.			San Francisco			Other
Reconciliation of net income (loss) to NOI and Cash NOI:
Net income (loss)	$	139,811		$	21,051		$	118,539		$	3,828		$	(3,607	)
Add (subtract) adjustments to arrive at NOI:
Depreciation and amortization		131,628			77,094			10,614			42,778			1,142
General and administrative		30,154			—			—			—			30,154
Interest and debt expense		71,835			44,192			2,724			20,957			3,962
Debt breakage costs		7,877			—			5,162			2,715			—
Transaction related costs		777			—			—			—			777
Income tax expense		5,252			—			—			8			5,244
NOI from unconsolidated joint ventures		9,781			9,591			—			—			190
Income from unconsolidated joint ventures		(18,472	)		(18,398	)		—			—			(74	)
Loss from unconsolidated real estate funds		2,123			—			—			—			2,123
Fee income		(14,004	)		—			—			—			(14,004	)
Interest and other income, net		(5,686	)		(61	)		(20	)		(69	)		(5,536	)
Gain on sale of real estate		(133,989	)		—			(110,583	)		—			(23,406	)
Unrealized gain on interest rate swaps		(1,802	)		—			—			(1,802	)		—

NOI ⁽¹⁾		225,285			133,469			26,436			68,415			(3,035	)
Less NOI attributable to noncontrolling interests in:
Consolidated joint ventures		(24,229	)		—			—			(24,229	)		—
Consolidated real estate funds		(486	)		—			—			—			(486	)

PGRE’s share of NOIfor the six months ended June 30, 2017	$	200,570		$	133,469		$	26,436		$	44,186		$	(3,521	)

PGRE’s share of NOI for the six months ended June 30, 2016	$	200,340		$	155,777		$	25,091		$	23,272		$	(3,800	)


NOI⁽¹⁾	$	225,285		$	133,469		$	26,436		$	68,415		$	(3,035	)
Add (subtract) adjustments to arrive at Cash NOI:
Straight-line rent adjustments (including our share of unconsolidated joint ventures)		(32,719	)		(21,513	)		(1,396	)		(9,843	)		33
Amortization of above and below-market leases, net		(10,699	)		2,957			(1,097	)		(12,559	)		—

Cash NOI⁽¹⁾		181,867			114,913			23,943			46,013			(3,002	)
Less Cash NOI attributable to noncontrolling interests in:
Consolidated joint ventures		(16,828	)		—			—			(16,828	)		—
Consolidated real estate funds		(486	)		—			—			—			(486	)

PGRE’s share of Cash NOI for the six months ended June 30, 2017	$	164,553		$	114,913		$	23,943		$	29,185		$	(3,488	)

PGRE’s share of Cash NOI for the six months ended June 30, 2016	$	159,492		$	125,496		$	21,571		$	16,194		$	(3,769	)

⁽¹⁾	See page 42 for our definition of this measure.

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SAME STORE RESULTS - BY SEGMENT

(unaudited and in thousands)


	Three Months Ended June 30, 2017
SAME STORE CASH NOI ⁽¹⁾	Total			New York			Washington, D.C.			San Francisco			Other

PGRE’s share of Cash NOI for the three months ended June 30, 2017	$	85,436		$	61,423		$	10,690		$	15,748		$	(2,425	)
Acquisitions ⁽²⁾		(6,827	)		(804	)		—			(6,023	)		—
Dispositions		—			—			—			—			—
Lease termination income (including our share of unconsolidated joint ventures)		(1,041	)		(175	)		—			(866	)		—
Other, net		(87	)		30			—			—			(117	)

PGRE’s share of Same Store Cash NOI⁽¹⁾ for the three months ended June 30, 2017	$	77,481		$	60,474		$	10,690		$	8,859		$	(2,542	)


	Three Months Ended June 30, 2016
	Total			New York			Washington, D.C.			San Francisco			Other

PGRE’s share of Cash NOI for the three months ended June 30, 2016	$	72,253		$	54,502		$	11,039		$	8,308		$	(1,596	)
Acquisitions		—			—			—			—			—
Dispositions ⁽³⁾		(4,081	)		—			(4,081	)		—			—
Lease termination income (including our share of unconsolidated joint ventures)		(138	)		(106	)		—			(32	)		—
Other, net		(301	)		—			—			—			(301	)

PGRE’s share of Same Store Cash NOI⁽¹⁾ for the three months ended June 30, 2016	$	67,733		$	54,396		$	6,958		$	8,276		$	(1,897	)


Increase (decrease) in PGRE’s share of Same Store Cash NOI	$	9,748		$	6,078		$	3,732		$	583		$	(645	)

% Increase (decrease)		14.4	%		11.2	%		53.6	%		7.0	%

⁽¹⁾	See page 42 for our definition of this measure.

⁽²⁾	Represents our share of Cash NOI attributable to (i) 60 Wall Street in New York, which was acquired in January 2017 and (ii) One Front Street in San Francisco, which was acquired in December 2016.

⁽³⁾	Represents our share of Cash NOI attributable to Waterview, which was sold in May 2017.

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SAME STORE RESULTS - BY SEGMENT

(unaudited and in thousands)


	Three Months Ended June 30, 2017
SAME STORE NOI ⁽¹⁾	Total			New York			Washington, D.C.			San Francisco			Other

PGRE’s share of NOI for the three months ended June 30, 2017	$	102,208		$	68,151		$	11,573		$	24,881		$	(2,397	)
Acquisitions ⁽²⁾		(12,026	)		(694	)		—			(11,332	)		—
Dispositions		—			—			—			—			—
Lease termination income (including our share of unconsolidated joint ventures)		(1,041	)		(175	)		—			(866	)		—
Other, net		(785	)		30			—			(698	)		(117	)

PGRE’s share of Same Store NOI⁽¹⁾ for the three months ended June 30, 2017	$	88,356		$	67,312		$	11,573		$	11,985		$	(2,514	)


	Three Months Ended June 30, 2016
	Total			New York			Washington, D.C.			San Francisco			Other

PGRE’s share of NOI for the three months ended June 30, 2016	$	100,175		$	76,264		$	13,384		$	12,095		$	(1,568	)
Acquisitions		—			—			—			—			—
Dispositions ⁽³⁾		(4,051	)		—			(4,051	)		—			—
Lease termination income (including our share of unconsolidated joint ventures)		(138	)		(106	)		—			(32	)		—
Other, net		(4,046	)		(3,745	)⁽⁴⁾		—			—			(301	)

PGRE’s share of Same Store NOI⁽¹⁾ for the three months ended June 30, 2016	$	91,940		$	72,413		$	9,333		$	12,063		$	(1,869	)


(Decrease) increase in PGRE’s share of Same Store NOI	$	(3,584	)	$	(5,101	)	$	2,240		$	(78	)	$	(645	)

% (Decrease) increase		(3.9	%)		(7.0	%)		24.0	%		(0.6	%)

⁽¹⁾	See page 42 for our definition of this measure.

⁽²⁾	Represents our share of NOI attributable to (i) 60 Wall Street in New York, which was acquired in January 2017 and (ii) One Front Street in San Francisco, which was acquired in December 2016.

⁽³⁾	Represents our share of NOI attributable to Waterview, which was sold in May 2017.

⁽⁴⁾	Includes $3,915 of income from the accelerated amortization of a below-market lease liability in connection with a tenant’s lease modification.

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SAME STORE RESULTS - BY SEGMENT

(unaudited and in thousands)


	Six Months Ended June 30, 2017
SAME STORE CASH NOI ⁽¹⁾	Total			New York			Washington, D.C.			San Francisco			Other

PGRE’s share of Cash NOI for the six months ended June 30, 2017	$	164,553		$	114,913		$	23,943		$	29,185		$	(3,488	)
Acquisitions ⁽²⁾		(13,051	)		(1,418	)		—			(11,633	)		—
Dispositions		—			—			—			—			—
Lease termination income (including our share of unconsolidated joint ventures)		(1,107	)		(241	)		—			(866	)		—
Other, net		(87	)		30			—			—			(117	)

PGRE’s share of Same Store Cash NOI⁽¹⁾ for the six months ended June 30, 2017	$	150,308		$	113,284		$	23,943		$	16,686		$	(3,605	)


	Six Months Ended June 30, 2016
	Total			New York			Washington, D.C.			San Francisco			Other

PGRE’s share of Cash NOI for the six months ended June 30, 2016	$	159,492		$	125,496		$	21,571		$	16,194		$	(3,769	)
Acquisitions		—			—			—			—			—
Dispositions ⁽³⁾		(4,081	)		—			(4,081	)		—			—
Lease termination income (including our share of unconsolidated joint ventures)		(11,138	)		(11,074	)⁽⁴⁾		—			(64	)		—
Other, net		172			473			—			—			(301	)

PGRE’s share of Same Store Cash NOI⁽¹⁾ for the six months ended June 30, 2016	$	144,445		$	114,895		$	17,490		$	16,130		$	(4,070	)


Increase (decrease) in PGRE’s share of Same Store Cash NOI	$	5,863		$	(1,611	)	$	6,453		$	556		$	465

% Increase (decrease)		4.1	%		(1.4	%)		36.9	%		3.4	%

⁽¹⁾	See page 42 for our definition of this measure.

⁽²⁾	Represents our share of Cash NOI attributable to (i) 60 Wall Street in New York, which was acquired in January 2017 and (ii) One Front Street in San Francisco, which was acquired in December 2016.

⁽³⁾	Represents our share of Cash NOI attributable to Waterview, which was sold in May 2017.

⁽⁴⁾	Includes $10,861 from the termination of a tenant’s lease at 1633 Broadway.

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SAME STORE RESULTS - BY SEGMENT

(unaudited and in thousands)


	Six Months Ended June 30, 2017
SAME STORE NOI ⁽¹⁾	Total			New York			Washington, D.C.			San Francisco			Other

PGRE’s share of NOI for the six months ended June 30, 2017	$	200,570		$	133,469		$	26,436		$	44,186		$	(3,521	)
Acquisitions⁽²⁾		(20,065	)		(1,240	)		—			(18,825	)		—
Dispositions		—			—			—			—			—
Lease termination income (including our share of unconsolidated joint ventures)		(1,107	)		(241	)		—			(866	)		—
Other, net		(785	)		30			—			(698	)		(117	)

PGRE’s share of Same Store NOI ⁽¹⁾ for the six months ended June 30, 2017	$	178,613		$	132,018		$	26,436		$	23,797		$	(3,638	)


	Six Months Ended June 30, 2016
	Total			New York			Washington, D.C.			San Francisco			Other

PGRE’s share of NOI for the six months ended June 30, 2016	$	200,340		$	155,777		$	25,091		$	23,272		$	(3,800	)
Acquisitions		—			—			—			—			—
Dispositions ⁽³⁾		(4,051	)		—			(4,051	)		—			—
Lease termination income (including our share of unconsolidated joint ventures)		(11,138	)		(11,074	)⁽⁴⁾		—			(64	)		—
Other, net		2,739			3,040	⁽⁵⁾		—			—			(301	)

PGRE’s share of Same Store NOI ⁽¹⁾ for the six months ended June 30, 2016	$	187,890		$	147,743		$	21,040		$	23,208		$	(4,101	)


(Decrease) increase in PGRE’s share of Same Store NOI	$	(9,277	)	$	(15,725	)	$	5,396		$	589		$	463

% (Decrease) increase		(4.9	%)		(10.6	%)		25.6	%		2.5	%

⁽¹⁾	See page 42 for our definition of this measure.

⁽²⁾	Represents our share of NOI attributable to (i) 60 Wall Street in New York, which was acquired in January 2017 and (ii) One Front Street in San Francisco, which was acquired in December 2016.

⁽³⁾	Represents our share of NOI attributable to Waterview, which was sold in May 2017.

⁽⁴⁾	Includes $10,861 from the termination of a tenant’s lease at 1633 Broadway.

⁽⁵⁾

Includes $10,057 of non-cash writeoff primarily related to an above-market lease asset from the termination of a tenant’s lease at 1633 Broadway, partially offset by $7,830 of income from the accelerated amortization of a below-market lease liability in connection with a tenant’s lease modification.

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CONSOLIDATED JOINT VENTURES AND FUND - BALANCE SHEETS

(unaudited and in thousands)


	As of June 30, 2017								As of December 31, 2016
	Consolidated Joint Ventures						Consolidated Fund		Consolidated Joint Ventures						Consolidated Fund
	Total Consolidated Joint Ventures		One Market Plaza		PGRESS Equity Holdings L.P.		Residential Development Fund⁽¹⁾		Total Consolidated Joint Ventures		One Market Plaza		PGRESS Equity Holdings L.P.		Residential Development Fund⁽¹⁾
PGRE Ownership				49.0%		24.4%		7.4%				49.0%		24.4%		12.9%
ASSETS:
Real estate, net	$	1,258,156	$	1,258,156	$	—	$	—	$	1,264,387	$	1,264,387	$	—	$	72,423
Cash and cash equivalents		26,168		25,767		401		968		9,661		9,236		425		2,525
Restricted cash		14,451		14,451		—		—		1,868		1,868		—		3,000
Preferred equity investments		55,300		—		55,300		—		55,051		—		55,051		—
Investments in unconsolidated joint ventures		—		—		—		15,881		—		—		—		—
Accounts and other receivables, net		679		678		1		2		548		548		—		147
Deferred rent receivable		40,821		40,821		—		—		32,103		32,103		—		—
Deferred charges, net		7,737		7,737		—		—		5,966		5,966		—		—
Intangible assets, net		45,803		45,803		—		—		52,139		52,139		—		—
Other assets		756		755		1		196		14,048		14,046		2		426

Total Assets	$	1,449,871	$	1,394,168	$	55,703	$	17,047	$	1,435,771	$	1,380,293	$	55,478	$	78,521


LIABILITIES:
Notes and mortgages payable, net	$	968,089	$	968,089	$	—	$	—	$	872,960	$	872,960	$	—	$	—
Accounts payable and accrued expenses		16,007		15,966		41		75		19,952		19,934		18		1,125
Interest rate swap liabilities		—		—		—		—		21,227		21,227		—		—
Intangible liabilities, net		42,645		42,645		—		—		48,654		48,654		—		—
Other liabilities		122		121		1		—		3,555		3,555		—		3,000

Total Liabilities		1,026,863		1,026,821		42		75		966,348		966,330		18		4,125

EQUITY:
Paramount Group, Inc. equity		193,875		180,025		13,850		2,139		215,635		201,928		13,707		9,603
Noncontrolling interests		229,133		187,322		41,811		14,833		253,788		212,035		41,753		64,793

Total Equity		423,008		367,347		55,661		16,972		469,423		413,963		55,460		74,396

Total Liabilities and Equity	$	1,449,871	$	1,394,168	$	55,703	$	17,047	$	1,435,771	$	1,380,293	$	55,478	$	78,521

⁽¹⁾

On May 5, 2017, Residential Development Fund (“RDF”) sold 80.0% of the equity interests in 75 Howard Street, a fully-entitled residential condominium land parcel (“75 Howard”) in San Francisco, California. Subsequent to the sale, RDF deconsolidated its investment in 75 Howard and began accounting for the remaining 20.0% under the equity method of accounting, however, we continue to consolidate our interest in RDF. We now have a 7.4% ownership interest in RDF; accordingly, our economic interest in 75 Howard is 1.5%.

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CONSOLIDATED JOINT VENTURES AND FUND - OPERATING RESULTS

(unaudited and in thousands)


	Three Months Ended June 30, 2017											Three Months Ended June 30, 2016
	Consolidated Joint Ventures								Consolidated Fund			Consolidated Joint Ventures								Consolidated Fund
	Total Consolidated Joint Ventures			One Market Plaza			PGRESS Equity Holdings L.P.		Residential Development Fund			Total Consolidated Joint Ventures			One Market Plaza			PGRESS Equity Holdings L.P.		Residential Development Fund
Total revenues	$	31,893		$	31,893		$	—	$	552		$	31,702		$	31,702		$	—	$	834
Total operating expenses		7,708			7,708			—		101			7,259			7,259			—		386

Net operating income		24,185			24,185			—		451			24,443			24,443			—		448
Depreciation and amortization		(11,467	)		(11,467	)		—		(100	)		(12,648	)		(12,648	)		—		(258	)
Interest and other income, net		990			37			953		25			1,432			9			1,423		—
Interest and debt expense		(10,194	)		(10,194	)		—		—			(13,836	)		(13,836	)		—		—
Gain on sale of real estate		—			—			—		23,406	⁽¹⁾		—			—			—		—
Income from unconsolidated joint ventures		—			—			—		33			—			—			—		—
Unrealized gain on interest rate swaps		—			—			—		—			7,984			7,984			—		—

Net income before income taxes		3,514			2,561			953		23,815			7,375			5,952			1,423		190
Income tax expense		(3	)		(3	)		—		—			(5	)		(5	)		—		(2	)

Net income	$	3,511		$	2,558		$	953	$	23,815		$	7,370		$	5,947		$	1,423	$	188



PGRE’s share Ownership	Total			49.0%			24.4%		7.4%			Total			49.0%			24.4%		13.4%
Net income	$	1,479		$	1,247		$	232	$	3,544		$	3,145		$	2,798		$	347	$	25
Add: Management fee income		135			135			—		86			118			118			—		241

PGRE’s share of net income		1,614			1,382			232		3,630			3,263			2,916			347		266
Add: Real estate depreciation and amortization		5,624			5,624			—		9			6,195			6,195			—		35

FFO ⁽²⁾		7,238			7,006			232		3,639			9,458			9,111			347		301
Less: Gain on sale of real estate		—			—			—		(3,118)			—			—			—		—
Less: Unrealized gain on interest rate swaps		—			—			—		—			(3,912	)		(3,912	)		—		—

Core FFO ⁽²⁾	$	7,238		$	7,006		$	232	$	521		$	5,546		$	5,199		$	347	$	301



Noncontrolling Interests’ share Ownership	Total			51.0%			75.6%		92.6%			Total			51.0%			75.6%		86.6%
Net income	$	2,032		$	1,311		$	721	$	20,271		$	4,225		$	3,149		$	1,076	$	163
Less: Management fee expense		(135	)		(135	)		—		(86	)		(118	)		(118	)		—		(241	)

Net income (loss) attributable to noncontrolling interests		1,897			1,176			721		20,185			4,107			3,031			1,076		(78	)
Add: Real estate depreciation and amortization		5,843			5,843			—		91			6,453			6,453			—		222

FFO ⁽²⁾		7,740			7,019			721		20,276			10,560			9,484			1,076		144
Less: Gain on sale of real estate		—			—			—		(20,288	)		—			—			—		—
Less: Unrealized gain on interest rate swaps		—			—			—		—			(4,072	)		(4,072	)		—		—

Core FFO ⁽²⁾	$	7,740		$	7,019		$	721	$	(12	)	$	6,488		$	5,412		$	1,076	$	144

⁽¹⁾	Represents the gain on sale of 75 Howard, of which our share, net of income taxes, was $1,661.

⁽²⁾	See page 42 for our definition of this measure.

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CONSOLIDATED JOINT VENTURES AND FUND - OPERATING RESULTS

(unaudited and in thousands)


	Six Months Ended June 30, 2017											Six Months Ended June 30, 2016
	Consolidated Joint Ventures								Consolidated Fund			Consolidated Joint Ventures								Consolidated Fund
	Total Consolidated Joint Ventures			One Market Plaza			PGRESS Equity Holdings L.P.		Residential Development Fund			Total Consolidated Joint Ventures			One Market Plaza			PGRESS Equity Holdings L.P.		Residential Development Fund
Total revenues	$	63,012		$	63,012		$	—	$	1,420		$	61,321		$	61,321		$	—	$	1,667
Total operating expenses		14,986			14,986			—		515			14,432			14,432			—		1,459

Net operating income		48,026			48,026			—		905			46,889			46,889			—		208
Depreciation and amortization		(23,040	)		(23,040	)		—		(359	)		(26,168	)		(26,168	)		—		(517	)
Interest and other income, net		2,428			62			2,366		25			2,854			15			2,839		1
Interest and debt expense		(23,672	)		(23,672	)		—		—			(27,629	)		(27,629	)		—		—
Gain on sale of real estate		—			—			—		23,406	⁽¹⁾		—			—			—		—
Income from unconsolidated joint ventures		—			—			—		33			—			—			—		—
Unrealized gain on interest rate swaps		1,802			1,802			—		—			13,343			13,343			—		—

Net income (loss) before income taxes		5,544			3,178			2,366		24,010			9,289			6,450			2,839		(308	)
Income tax expense		(5	)		(5	)		—		(2	)		(33	)		(33	)		—		(2	)

Net income (loss)	$	5,539		$	3,173		$	2,366	$	24,008		$	9,256		$	6,417		$	2,839	$	(310	)



PGRE’s share Ownership	Total			49.0%			24.4%		7.4%			Total			49.0%			24.4%		13.4%
Net income (loss)	$	2,084		$	1,508		$	576	$	3,568		$	3,601		$	2,909		$	692	$	(41	)
Add: Management fee income		267			267			—		343			296			296			—		483

PGRE’s share of net income		2,351			1,775			576		3,911			3,897			3,205			692		442
Add: Real estate depreciation and amortization		11,293			11,293			—		40			12,820			12,820			—		69

FFO ⁽²⁾		13,644			13,068			576		3,951			16,717			16,025			692		511
Add: Debt breakage costs		1,330			1,330			—		—			—			—			—		—
Less: Gain on sale of real estate		—			—			—		(3,118)			—			—			—		—
Less: Unrealized gain on interest rate swaps		(883)			(883)			—		—			(6,538)			(6,538)			—		—

Core FFO ⁽²⁾	$	14,091		$	13,515		$	576	$	833		$	10,179		$	9,487		$	692	$	511



Noncontrolling Interests’ share Ownership	Total			51.0%			75.6%		92.6%			Total			51.0%			75.6%		86.6%
Net income (loss)	$	3,455		$	1,665		$	1,790	$	20,440		$	5,655		$	3,508		$	2,147	$	(269	)
Less: Management fee expense		(267	)		(267	)		—		(343	)		(296	)		(296	)		—		(483	)

Net income (loss) attributable to noncontrolling interests		3,188			1,398			1,790		20,097			5,359			3,212			2,147		(752	)
Add: Real estate depreciation and amortization		11,747			11,747			—		319			13,348			13,348			—		448

FFO ⁽²⁾		14,935			13,145			1,790		20,416			18,707			16,560			2,147		(304	)
Add: Debt breakage costs		1,385			1,385			—		—			—			—			—		—
Less: Gain on sale of real estate		—			—			—		(20,288	)		—			—			—
Less: Unrealized gain on interest rate swaps		(919	)		(919	)		—		—			(6,805	)		(6,805	)		—		—

Core FFO ⁽²⁾	$	15,401		$	13,611		$	1,790	$	128		$	11,902		$	9,755		$	2,147	$	(304	)

⁽¹⁾	Represents the gain on sale of 75 Howard, of which our share, net of income taxes, was $1,661.

⁽²⁾	See page 42 for our definition of this measure.

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UNCONSOLIDATED JOINT VENTURES - BALANCE SHEETS

(unaudited and in thousands)


	As of June 30, 2017									As of December 31, 2016
	Total		712 Fifth Avenue			60 Wall Street ⁽¹⁾		Other ⁽²⁾		Total			712 Fifth Avenue			Oder-Center, Germany
PGRE Ownership			50.0%			5.0%		Various					50.0%			9.5%
ASSETS:
Real estate, net	$	1,206,102	$	206,617		$	883,328	$	116,157	$	213,903		$	207,632		$	6,271
Cash and cash equivalents		47,548		22,837			19,720		4,991		19,089			18,430			659
Restricted cash		5,910		5,910			—		—		75			75			—
Accounts and other receivables, net		924		275			472		177		300			300			—
Deferred rent receivable		15,955		13,761			2,194		—		12,790			12,790			—
Deferred charges, net		8,111		8,111			—		—		8,907			8,907			—
Intangible assets, net		140,804		—			140,804		—		—			—			—
Other assets		1,116		480			87		549		690			199			491

Total Assets	$	1,426,470	$	257,991		$	1,046,605	$	121,874	$	255,754		$	248,333		$	7,421

LIABILITIES:
Notes and mortgages payable, net	$	884,251	$	295,949		$	566,931	$	21,371	$	269,063		$	245,990		$	23,073
Accounts payable and accrued expenses		11,945		4,282			7,128		535		3,633			3,460			173
Interest rate swap liabilities		—		—			—		—		5,036			5,036			—
Other liabilities		1,084		165			841		78		437			287			150

Total Liabilities		897,280		300,396			574,900		21,984		278,169			254,773			23,396

EQUITY:
Total Equity		529,190		(42,405	)		471,705		99,890		(22,415	)		(6,440	)		(15,975	)

Total Liabilities and Equity	$	1,426,470	$	257,991		$	1,046,605	$	121,874	$	255,754		$	248,333		$	7,421

⁽¹⁾	Acquired on January 24, 2017.

⁽²⁾	Represents our investments in Oder-Center, Germany and 75 Howard.

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UNCONSOLIDATED JOINT VENTURES - OPERATING RESULTS

(unaudited and in thousands)


	Three Months Ended June 30, 2017												Three Months Ended June 30, 2016
	Total			712 Fifth Avenue			60 Wall Street ⁽¹⁾			Other ⁽²⁾			Total			712 Fifth Avenue			Oder-Center, Germany
Total revenues	$	36,314		$	14,390		$	20,235		$	1,689		$	15,268		$	14,286		$	982
Total operating expenses		13,093			6,102			6,376			615			5,593			5,375			218

Net operating income		23,221			8,288			13,859			1,074			9,675			8,911			764
Depreciation and amortization expense		(12,201	)		(3,075	)		(9,033	)		(93	)		(3,131	)		(3,043	)		(88	)
Interest and other income, net		75			48			26			1			19			19			—
Interest and debt expense		(8,860	)		(3,126	)		(5,481	)		(253	)		(3,005	)		(2,752	)		(253	)
Unrealized gain on interest rate swaps		728			728			—			—			834			834			—

Net income (loss) before income taxes		2,963			2,863			(629	)		729			4,392			3,969			423
Income tax expense		—			—			—			—			(2	)		—			(2	)

Net income (loss)	$	2,963		$	2,863		$	(629	)	$	729		$	4,390		$	3,969		$	421



PGRE’s share Ownership	Total			50.0%			5.0%			Various			Total			50.0%			9.5%
Net income (loss)	$	1,488		$	1,432		$	(31	)	$	87		$	2,025		$	1,985		$	40
Less: Step-up basis adjustment		(25	)		—			—			(25	)		(22	)		—			(22	)
Add: Distributions in excess of basis ⁽³⁾		15,072			15,072			—			—			—			—			—

PGRE’s share of net income (loss)		16,535			16,504			(31	)		62			2,003			1,985			18
Less: Noncontrolling interests		(31	)		—			—			(31	)		—			—			—
Add: Real estate depreciation and amortization		2,024			1,538			452			34			1,556			1,521			35

FFO ⁽⁴⁾		18,528			18,042			421			65			3,559			3,506			53
Less: Distributions in excess of basis ⁽³⁾		(15,072	)		(15,072	)		—			—			—			—			—
Less: Unrealized gain on interest rate swaps		(364	)		(364	)		—			—			(417	)		(417	)		—

Core FFO⁽⁴⁾	$	3,092		$	2,606		$	421		$	65		$	3,142		$	3,089		$	53



Joint Venture Partners’ share Ownership	Total			50.0%			95.0%			Various			Total			50.0%			90.5%
Net income (loss)	$	1,475		$	1,431		$	(598	)	$	642		$	2,366		$	1,985		$	381
Add: Real estate depreciation and amortization		10,202			1,537			8,581			84			1,597			1,522			75

FFO ⁽⁴⁾		11,677			2,968			7,983			726			3,963			3,507			456
Less: Unrealized gain on interest rate swaps		(364	)		(364	)		—			—			(417	)		(417	)		—

Core FFO⁽⁴⁾	$	11,313		$	2,604		$	7,983		$	726		$	3,546		$	3,090		$	456

⁽¹⁾	Acquired on January 24, 2017.

⁽²⁾	Represents our investments in Oder-Center, Germany and 75 Howard.

⁽³⁾	Represents a refinancing distribution in excess of our basis, which was treated as income in accordance with GAAP.

⁽⁴⁾	See page 42 for our definition of this measure.

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UNCONSOLIDATED JOINT VENTURES - OPERATING RESULTS

(unaudited and in thousands)


	Six Months Ended June 30, 2017												Six Months Ended June 30, 2016
	Total			712 Fifth Avenue			60 Wall Street ⁽¹⁾			Other ⁽²⁾			Total			712 Fifth Avenue			Oder-Center, Germany
Total revenues	$	66,929		$	28,769		$	35,459		$	2,701		$	30,634		$	28,598		$	2,036
Total operating expenses		24,055			12,068			11,101			886			11,411			10,992			419

Net operating income		42,874			16,701			24,358			1,815			19,223			17,606			1,617
Depreciation and amortization expense		(22,012	)		(5,995	)		(15,832	)		(185	)		(6,234	)		(6,051	)		(183	)
Interest and other income, net		105			72			32			1			33			33			—
Interest and debt expense		(15,753	)		(5,951	)		(9,296	)		(506	)		(6,027	)		(5,500	)		(527	)
Unrealized gain on interest rate swaps		1,896			1,896			—			—			834			834			—

Net income (loss) before income taxes		7,110			6,723			(738	)		1,125			7,829			6,922			907
Income tax expense		(2	)		—			—			(2	)		(4	)		—			(4	)

Net income (loss)	$	7,108		$	6,723		$	(738	)	$	1,123		$	7,825		$	6,922		$	903



PGRE’s share Ownership	Total			50.0%			5.0%			Various			Total			50.0%			9.5%
Net income (loss)	$	3,450		$	3,362		$	(36	)	$	124		$	3,547		$	3,461		$	86
Less: Step-up basis adjustment		(50	)		—			—			(50	)		(48	)		—			(48	)
Add: Distributions in excess of basis ⁽³⁾		15,072			15,072			—			—			—			—			—

PGRE’s share of net income (loss)		18,472			18,434			(36	)		74			3,499			3,461			38
Less: Noncontrolling interests		(31	)		—			—			(31	)		—			—			—
Add: Real estate depreciation and amortization		3,872			2,998			806			68			3,095			3,025			70

FFO ⁽⁴⁾		22,313			21,432			770			111			6,594			6,486			108
Less: Distributions in excess of basis ⁽³⁾		(15,072	)		(15,072	)		—			—			—			—			—
Less: Unrealized gain on interest rate swaps		(948	)		(948	)		—			—			(417	)		(417	)		—

Core FFO⁽⁴⁾	$	6,293		$	5,412		$	770		$	111		$	6,177		$	6,069		$	108



Joint Venture Partners’ share Ownership	Total			50.0%			95.0%			Various			Total			50.0%			90.5%
Net income (loss)	$	3,658		$	3,361		$	(702	)	$	999		$	4,278		$	3,461		$	817
Add: Real estate depreciation and amortization		18,190			2,997			15,026			167			3,187			3,026			161

FFO ⁽⁴⁾		21,848			6,358			14,324			1,166			7,465			6,487			978
Less: Unrealized gain on interest rate swaps		(948	)		(948	)		—			—			(417	)		(417	)		—

Core FFO⁽⁴⁾	$	20,900		$	5,410		$	14,324		$	1,166		$	7,048		$	6,070		$	978

⁽¹⁾	Acquired on January 24, 2017.

⁽²⁾	Represents our investments in Oder-Center, Germany and 75 Howard.

⁽³⁾	Represents a refinancing distribution in excess of our basis, which was treated as income in accordance with GAAP.

⁽⁴⁾	See page 42 for our definition of this measure.

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UNCONSOLIDATED FUNDS SUMMARY

(unaudited and in thousands, except square feet and per square foot amounts)

Property Funds:

The following is a summary of the Property Funds, our ownership interests in these funds and the funds’ ownership interest in the underlying investments, as of June 30, 2017.


Fund	PGRE Ownership			One Market Plaza			50 Beale Street ⁽¹⁾			0 Bond Street
Fund III		3.1	%		2.0	%		—			—
Fund VII/VII-H		7.2	%		—			42.8	%		100.0	%

Total Property Funds					2.0	%		42.8	%		100.0	%
Other Investors					98.0	%⁽²⁾		57.2	%		—

Total					100.0	%		100.0	%		100.0	%

The following is a summary of the Property Funds’ investments and our ownership interests in the underlying investments, as of June 30, 2017.


		PGRE			Square		%			%			Annualized Rent ⁽³⁾
Investments	Submarket	Ownership			Feet		Leased			Occupied			Amount		Per Square Foot⁽⁴⁾
50 Beale Street ⁽¹⁾	South Financial District		3.1	%⁽¹⁾		660,625		78.2	%		78.2	%	$	28,359	$	55.19
0 Bond Street	NoHo		7.2	%		64,390		45.1	%		45.1	%		3,600		123.96

⁽¹⁾	On July 17, 2017, Fund VII/VII-H sold their interests in 50 Beale Street.

⁽²⁾	Includes a 49.0% direct ownership interest held by us.

⁽³⁾	See page 42 for our definition of this measure.

⁽⁴⁾	Represents office and retail space only.

Debt Fund:

The following is a summary of our Debt Fund and our ownership interests in the underlying investments, as of June 30, 2017.


		PGRE			Fixed /						Face Amount				Fair Value
Investments	Investment Type	Ownership			Variable rate	Interest Rate			Maturity		Total		Our Share		Total		Our Share
26 Broadway	Mezzanine Loan		1.3	%	Fixed		8.25	%		Jan-2022	$	50,000	$	645	$	50,348	$	649
1440 Broadway	Mezzanine Loan		1.3	%	Variable (LIBOR plus 600 bps)		7.09	%		Oct-2019		40,000		516		40,411		521
700 Eighth Avenue	Mortgage/Mezzanine Loans		1.3	%	Variable (LIBOR plus 600 bps)		7.09	%		Jan-2019		74,000		955		74,178		957
1285 Avenue of the Americas	Mezzanine Loan		1.3	%	Fixed		6.75	%		Jun-2023		55,000		710		55,480		716
Other	Mezzanine Loan/Preferred Equity		1.3	%	Various		6.75% - 9.61	%		Oct-2018 to Mar-2027		161,566		2,085		163,760		2,112

											$380,566		$4,911		$384,177		$4,955

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CAPITAL STRUCTURE

(unaudited and in thousands, except share, unit and per share amounts)


					As of June 30, 2017
Debt:
Consolidated debt:
Notes and mortgages payable⁽¹⁾					$	3,355,100
Revolving Credit Facility						—

						3,355,100
Less:
Noncontrolling interest’s share of consolidated debt (One Market Plaza)						(497,250	)
Add:
PGRE’s share of unconsolidated joint venture debt (712 Fifth Avenue, 60 Wall Street and Oder-Center, Germany)						180,838

PGRE’s share of total debt ⁽²⁾						3,038,688


	Shares / Units		Share Price as of
	Outstanding		June 30, 2017
Equity:
Common stock		238,283,591	$	16.00		3,812,537
Operating Partnership units		26,771,872		16.00		428,350

Total equity		265,055,463		16.00		4,240,887

Total Market Capitalization					$	7,279,575

⁽¹⁾	Represents contractual amount due pursuant to the respective debt agreements.

⁽²⁾	See page 42 for our definition of this measure.

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DEBT ANALYSIS

(unaudited and in thousands)


	Total Debt						Fixed Rate Debt						Variable Rate Debt
Consolidated Debt:	Amount			Rate			Amount			Rate			Amount			Rate
1633 Broadway	$	1,030,100			3.52	%	$	1,000,000			3.54	%	$	30,100			2.80	%
1301 Avenue of the Americas		850,000			2.97	%		500,000			3.05	%		350,000			2.86	%
31 West 52nd Street		500,000			3.80	%		500,000			3.80	%		—			—
One Market Plaza ⁽¹⁾		975,000			4.03	%		975,000			4.03	%		—			—
Revolving Credit Facility		—			—			—			—			—			—

		3,355,100			3.57	%		2,975,000			3.66	%		380,100			2.86	%
Noncontrolling interest’s share ⁽²⁾		(497,250	)		4.03	%		(497,250	)		4.03	%		—			—

PGRE’s share of consolidated debt	$	2,857,850			3.49	%	$	2,477,750			3.59	%	$	380,100			2.86	%

Unconsolidated Joint Venture Debt:
712 Fifth Avenue ⁽³⁾	$	300,000			3.39	%	$	300,000			3.39	%	$	—			—
60 Wall Street		575,000			3.61	%		—			—			575,000			3.61	%
Oder-Center, Germany		21,371			4.62	%		21,371			4.62	%		—			—

Total unconsolidated debt		896,371			3.56	%		321,371			3.47	%		575,000			3.61	%
Joint venture partners’ share		(715,533	)		3.59	%		(169,341	)		3.53	%		(546,192	)		3.61	%

PGRE’s share of unconsolidated debt	$	180,838			3.44	%	$	152,030			3.41	%	$	28,808			3.61	%

PGRE’s Share of Total Debt ⁽²⁾	$	3,038,688			3.49	%	$	2,629,780			3.58	%	$	408,908			2.91	%


Revolving Credit Facility Covenants: ⁽⁴⁾	Required	Actual
Total Debt / Total Assets	Less than 60%		40.5	%
Secured Debt / Total Assets	Less than 50%		40.1	%
Fixed Charge Coverage	Greater than 1.5x		3.1x
Unsecured Debt / Unencumbered Assets	Less than 60%		1.4	%
Unencumbered Interest Coverage	Greater than 1.75x		18.8x


Debt Composition:	Amount		%
Fixed rate debt:
PGRE’s consolidated fixed rate debt	$	2,477,750
PGRE’s unconsolidated fixed rate debt		152,030

Total fixed rate debt		2,629,780		86.5	%

Variable rate debt:
PGRE’s consolidated variable rate debt		380,100
PGRE’s unconsolidated variable rate debt		28,808

Total variable rate debt		408,908		13.5	%

PGRE’s Share of Total Debt ⁽²⁾	$	3,038,688		100.0	%

⁽¹⁾	On January 19, 2017, we completed a $975,000 refinancing of One Market Plaza. The new seven-year interest-only loan matures in February 2024.

⁽²⁾	See page 42 for our definition of this measure.

⁽³⁾	On June 13, 2017, we completed a $300,000 refinancing of 712 Fifth Avenue. The new ten-year interest-only loan matures in July 2027.

⁽⁴⁾

This section presents ratios as of June 30, 2017 in accordance with the terms of the Company’s revolving credit facility, which has been filed with the SEC. Management is not presenting these ratios and the related calculations for any other purpose or for any other period, and is not intending for these measures to otherwise provide information to investors about the Company’s financial condition or results of operations. Investors should not rely on these measures other than for purposes of testing our compliance with the revolving credit facility.

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DEBT MATURITIES

(unaudited and in thousands)


Consolidated Debt:	2017		2018		2019		2020		2021			Thereafter			Total
1301 Avenue of the Americas	$	—	$	—	$	—	$	—	$	850,000		$	—		$	850,000
1633 Broadway		—		—		—		—		—			1,030,100			1,030,100
One Market Plaza		—		—		—		—		—			975,000			975,000
31 West 52nd Street		—		—		—		—		—			500,000			500,000
Revolving Credit Facility		—		—		—		—		—			—			—

Total consolidated debt		—		—		—		—		850,000			2,505,100			3,355,100
Noncontrolling interest’s share ⁽¹⁾		—		—		—		—		—			(497,250	)		(497,250	)

PGRE’s share of consolidated debt	$	—	$	—	$	—	$	—	$	850,000		$	2,007,850		$	2,857,850


Unconsolidated Joint Venture Debt:
712 Fifth Avenue	$	—	$	—	$	—	$	—	$	—		$	300,000		$	300,000
60 Wall Street		—		—		—		—		—			575,000			575,000
Oder-Center, Germany		—		—		—		—		—			21,371			21,371

Total unconsolidated debt		—		—		—		—		—			896,371			896,371
Joint venture partners’ share		—		—		—		—		—			(715,533	)		(715,533	)

PGRE’s share of unconsolidated debt	$	—	$	—	$	—	$	—	$	—		$	180,838		$	180,838

PGRE’s share of total debt ⁽¹⁾	$	—	$	—	$	—	$	—	$	850,000		$	2,188,688		$	3,038,688


Weighted average rate		—		—		—		—		2.97	%		3.69	%		3.49	%

% of debt maturing		—		—		—		—		28.0	%		72.0	%		100.0	%

⁽¹⁾	See page 42 for our definition of this measure.

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PORTFOLIO SUMMARY

(unaudited and in thousands, except square feet and per square foot amounts)


		Paramount			Square		%			%			Annualized Rent ⁽¹⁾
Property	Submarket	Ownership			Feet		Leased ⁽¹⁾			Occupied ⁽¹⁾			Amount		Per Square Foot ⁽²⁾
As of June 30, 2017
New York:
1633 Broadway	West Side		100.0	%		2,523,429		86.4	%		86.2	%	$	150,071	$	71.54
1301 Avenue of the Americas	Sixth Avenue / Rock Center		100.0	%		1,780,183		93.7	%		88.0	%		117,558		75.81
1325 Avenue of the Americas	Sixth Avenue / Rock Center		100.0	%		808,348		81.3	%		81.3	%		42,987		66.05
31 West 52nd Street	Sixth Avenue / Rock Center		100.0	%		761,787		84.5	%		84.5	%		54,819		82.37
900 Third Avenue	East Side		100.0	%		597,543		97.4	%		97.4	%		42,459		73.59
712 Fifth Avenue	Madison / Fifth Ave		50.0	%		543,386		94.6	%		94.6	%		56,966		111.45
60 Wall Street ⁽³⁾	Downtown		5.0	%		1,625,483		100.0	%		100.0	%		73,600		45.28

Subtotal / Weighted Average						8,640,159		91.1	%		89.9	%		538,460		70.06

PGRE’s Share						6,824,420		88.9	%		87.4	%		440,064		74.90

Washington, D.C.:
425 Eye Street	East End		100.0	%		372,552		98.5	%		98.5	%		16,741		45.51
2099 Pennsylvania Avenue	CBD		100.0	%		210,793		84.8	%		82.3	%		13,365		77.47
1899 Pennsylvania Avenue	CBD		100.0	%		190,955		100.0	%		100.0	%		15,198		79.68
Liberty Place	East End		100.0	%		174,626		92.4	%		92.4	%		13,342		82.18

Subtotal / Weighted Average						948,926		94.6	%		94.0	%		58,646		65.60

PGRE’s Share						948,926		94.6	%		94.0	%		58,646		65.60

San Francisco:
One Market Plaza	South Financial District		49.0	%		1,583,857		97.8	%		97.8	%		110,107		70.46
One Front Street	North Financial District		100.0	%		645,707		98.5	%		90.8	%		34,943		59.19

Subtotal / Weighted Average						2,229,564		98.0	%		95.8	%		145,050		67.38

PGRE’s Share						1,421,797		98.2	%		94.7	%		88,895		65.56

Total / Weighted Average						11,818,649		92.7	%		91.3	%	$	742,156	$	69.15

PGRE’s Share						9,195,143		90.9	%		89.2	%	$	587,605	$	72.31

⁽¹⁾	See page 42 for our definition of this measure.

⁽²⁾	Represents office and retail space only.

⁽³⁾	Acquired on January 24, 2017.

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SAME STORE LEASED OCCUPANCY

(unaudited)


				June 30, 2017						March 31, 2017						Change in
	Paramount						Same Store			As Reported			Same Store			Same Store
Property	Ownership			Leased % ⁽¹⁾			Leased % ⁽¹⁾			Leased % ⁽¹⁾			Leased % ⁽¹⁾			Leased %
New York:
1633 Broadway		100.0	%		86.4	%		86.4	%		86.2	%		86.2	%		0.2	%
1301 Avenue of the Americas		100.0	%		93.7	%		93.7	%		91.4	%		91.4	%		2.3	%
1325 Avenue of the Americas		100.0	%		81.3	%		81.3	%		82.6	%		82.6	%		(1.3	%)
31 West 52nd Street		100.0	%		84.5	%		84.5	%		84.5	%		84.5	%		—
900 Third Avenue		100.0	%		97.4	%		97.4	%		97.4	%		97.4	%		—
712 Fifth Avenue		50.0	%		94.6	%		94.6	%		96.9	%		96.9	%		(2.3	%)
60 Wall Street		5.0	%		100.0	%		100.0	%		100.0	%		100.0	%		—

Weighted Average					91.1	%		91.1	%		90.8	%		90.8	%		0.3	%

PGRE’s Share					88.9	%		88.9	%		88.5	%		88.5	%		0.4	%

Washington, D.C.:
Waterview ⁽²⁾		100.0	%		—			—			98.7	%		—			—
425 Eye Street		100.0	%		98.5	%		98.5	%		98.5	%		98.5	%		—
2099 Pennsylvania Avenue		100.0	%		84.8	%		84.8	%		82.3	%		82.3	%		2.5	%
1899 Pennsylvania Avenue		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		—
Liberty Place		100.0	%		92.4	%		92.4	%		91.1	%		91.1	%		1.3	%

Weighted Average					94.6	%		94.6	%		95.8	%		93.8	%		0.8	%

PGRE’s Share					94.6	%		94.6	%		95.8	%		93.8	%		0.8	%

San Francisco:
One Market Plaza		49.0	%		97.8	%		97.8	%		97.5	%		97.5	%		0.3	%
One Front Street		100.0	%		98.5	%		98.5	%		93.9	%		93.9	%		4.6	%

Weighted Average					98.0	%		98.0	%		96.5	%		96.5	%		1.5	%

PGRE’s Share					98.2	%		98.2	%		95.9	%		95.9	%		2.3	%

Weighted Average					92.7	%		92.7	%		92.5	%		92.1	%		0.6	%

PGRE’s Share					90.9	%		90.9	%		90.8	%		90.2	%		0.7	%

⁽¹⁾	See page 42 for our definition of this measure.

⁽²⁾	Sold on May 3, 2017.

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SAME STORE LEASED OCCUPANCY

(unaudited)


				June 30, 2017						December 31, 2016						Change in
	Paramount						Same Store						Same Store			Same Store
Property	Ownership			Leased % ⁽¹⁾			Leased % ⁽¹⁾			Leased % ⁽¹⁾			Leased % ⁽¹⁾			Leased %
New York:
1633 Broadway		100.0	%		86.4	%		86.4	%		86.3	%		86.3	%		0.1	%
1301 Avenue of the Americas		100.0	%		93.7	%		93.7	%		93.7	%		93.7	%		—
1325 Avenue of the Americas		100.0	%		81.3	%		81.3	%		96.5	%		96.5	%		(15.2	%)
31 West 52nd Street		100.0	%		84.5	%		84.5	%		84.5	%		84.5	%		—
900 Third Avenue		100.0	%		97.4	%		97.4	%		98.0	%		98.0	%		(0.6	%)
712 Fifth Avenue		50.0	%		94.6	%		94.6	%		97.1	%		97.1	%		(2.5	%)
60 Wall Street ⁽²⁾		5.0	%		100.0	%		—			—			—			—

Weighted Average					91.1	%		89.0	%		91.0	%		91.0	%		(2.0	%)

PGRE’s Share					88.9	%		88.8	%		90.7	%		90.7	%		(1.9	%)

Washington, D.C.:
Waterview ⁽³⁾		100.0	%		—			—			98.7	%		—			—
425 Eye Street		100.0	%		98.5	%		98.5	%		97.7	%		97.7	%		0.8	%
2099 Pennsylvania Avenue		100.0	%		84.8	%		84.8	%		82.3	%		82.3	%		2.5	%
1899 Pennsylvania Avenue		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		—
Liberty Place		100.0	%		92.4	%		92.4	%		89.9	%		89.9	%		2.5	%

Weighted Average					94.6	%		94.6	%		95.5	%		93.3	%		1.3	%

PGRE’s Share					94.6	%		94.6	%		95.5	%		93.3	%		1.3	%

San Francisco:
One Market Plaza		49.0	%		97.8	%		97.8	%		98.7	%		98.7	%		(0.9	%)
One Front Street		100.0	%		98.5	%		98.5	%		99.4	%		99.4	%		(0.9	%)

Weighted Average					98.0	%		98.0	%		98.9	%		98.9	%		(0.9	%)

PGRE’s Share					98.2	%		98.2	%		99.0	%		99.0	%		(0.8	%)

Weighted Average					92.7	%		91.5	%		93.3	%		92.9	%		(1.4	%)

PGRE’s Share					90.9	%		90.8	%		92.7	%		92.3	%		(1.5	%)

⁽¹⁾	See page 42 for our definition of this measure.

⁽²⁾	Acquired on January 24, 2017.

⁽³⁾	Sold on May 3, 2017.

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TOP TENANTS AND INDUSTRY DIVERSIFICATION

(unaudited and in thousands, except square feet and per square foot amounts)


									PGRE’s Share of
						Total			Total						Annualized Rent ⁽¹⁾				% of Annualized
			Lease			Square Feet			Square Feet			% of Total					Per Square		% of Annualized
Top 10 Tenants:	Property		Expiration			Occupied			Occupied			Square Feet			Amount		Foot		Rent
As of June 30, 2017
Barclays Capital, Inc.		1301 Avenue of the Americas		Dec-2020			497,418			497,418			5.4	%	$	32,129	$	64.59		5.5	%
Allianz Global Investors, LP		1633 Broadway		Jan-2031			320,911			320,911			3.5	%		27,836		86.74		4.7	%
Clifford Chance LLP		31 West 52nd Street		Jun-2024			328,992			328,992			3.6	%		25,925		78.80		4.4	%
Credit Agricole Corporate & Investment Bank		1301 Avenue of the Americas		Feb-2023			311,291			311,291			3.4	%		24,868		79.89		4.2	%
Morgan Stanley & Company		1633 Broadway & 31 West 52nd Street		Mar-2032	⁽²⁾		312,885	⁽²⁾		312,885	⁽²⁾		3.4	%		22,279		71.21		3.8	%
WMG Acquisition Corp. (Warner Music Group)		1633 Broadway		Jul-2029			293,487			293,487			3.2	%		16,623		56.64		2.8	%
Chadbourne & Parke, LLP		1301 Avenue of the Americas		Sep-2024			203,863			203,863			2.2	%		16,065		78.80		2.7	%
U.S. General Services Administration		425 Eye St		Jun-2021			310,450			310,450			3.4	%		14,204		45.75		2.4	%
Kasowitz Benson Torres & Friedman, LLP		1633 Broadway		Mar-2037			203,394			203,394			2.2	%		14,129		69.47		2.4	%
Showtime Networks, Inc.		1633 Broadway		Jan-2026			238,880			238,880			2.6	%		14,103		59.04		2.4	%


	PGRE’s Share of
	Square Feet		% of Occupied			Annualized		% of Annualized
Industry Diversification:	Occupied		Square Feet			Rent ⁽¹⁾		Rent
As of June 30, 2017
Legal Services		1,812,862		22.3	%	$	136,909		23.3	%
Financial Services - Commercial and Investment Banking		1,737,544		21.4	%		122,395		20.8	%
Technology and Media		1,427,619		17.6	%		92,819		15.8	%
Financial Services, all others		967,587		11.9	%		81,446		13.9	%
Insurance		457,677		5.6	%		37,855		6.4	%
Retail		269,022		3.3	%		22,160		3.8	%
Government		345,278		4.2	%		16,689		2.8	%
Consumer Products		175,269		2.2	%		13,066		2.2	%
Real Estate		190,077		2.3	%		12,832		2.2	%
Other		745,871		9.2	%		51,434		8.8	%

⁽¹⁾	See page 42 for our definition of this measure.

⁽²⁾	52,056 of the square feet leased at 31 West 52nd Street expired on June 30, 2017.

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LEASING ACTIVITY

(unaudited)


	Total			New York			Washington, D.C.			San Francisco
Three Months Ended June 30, 2017:
Total square feet leased		292,238			125,723			7,536			158,979
PGRE’s share of total square feet leased:		223,273			112,505			7,536			103,232
Initial rent ⁽¹⁾	$	84.70		$	86.35		$	74.94		$	83.97
Weighted average lease term (in years)		7.5			6.7			10.6			8.0
Tenant improvements and leasing commissions:
Per square foot	$	78.32		$	79.99		$	114.42		$	74.22
Per square foot per annum	$	10.42		$	11.87		$	10.83		$	9.31
Percentage of initial rent		12.3	%		13.7	%		14.4	%		11.1	%
Rent concessions:
Average free rent period (in months)		6.5			8.3			14.2			4.3
Average free rent period per annum (in months)		0.9			1.2			1.3			0.5
Second generation space: ⁽¹⁾
Square feet		211,873			108,641			—			103,232
GAAP basis:
Straight-line rent	$	82.90		$	81.07		$	—		$	84.50
Prior straight-line rent	$	77.11		$	85.67		$	—		$	69.62
Percentage increase (decrease)		7.5	%		(5.4	%)		—			21.4	%
Cash basis
Initial rent ⁽¹⁾	$	85.08		$	86.35		$	—		$	83.97
Prior escalated rent	$	71.00		$	90.51		$	—		$	53.94
Percentage increase (decrease)		19.8	%		(4.6	%)		—			55.7	%

⁽¹⁾	See page 42 for our definition of this measure.

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LEASING ACTIVITY

(unaudited)


	Total			New York			Washington, D.C.			San Francisco
Six Months Ended June 30, 2017:
Total square feet leased		577,744			219,027			12,532			346,185
PGRE’s share of total square feet leased:		503,019			204,233			12,532			286,254
Initial rent ⁽¹⁾	$	76.60		$	77.41		$	68.93		$	76.41
Weighted average lease term (in years)		8.3			8.5			9.9			8.1
Tenant improvements and leasing commissions:
Per square foot	$	72.05		$	85.06		$	87.19		$	62.58
Per square foot per annum	$	8.69		$	10.01		$	8.81		$	7.75
Percentage of initial rent		11.3	%		12.9	%		12.8	%		10.1	%
Rent concessions:
Average free rent period (in months)		4.9			7.3			10.4			3.1
Average free rent period per annum (in months)		0.6			0.9			1.1			0.4
Second generation space: ⁽¹⁾
Square feet		431,120			148,623			—			282,497
GAAP basis:
Straight-line rent	$	74.27		$	75.14		$	—		$	73.84
Prior straight-line rent	$	66.19		$	76.27		$	—		$	61.33
Percentage increase (decrease)		12.2	%		(1.5	%)		—			20.4	%
Cash basis:
Initial rent ⁽¹⁾	$	77.43		$	79.56		$	—		$	76.41
Prior escalated rent	$	64.97		$	81.29		$	—		$	57.09
Percentage increase (decrease)		19.2	%		(2.1	%)		—			33.8	%

⁽¹⁾	See page 42 for our definition of this measure.

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LEASE EXPIRATIONS - TOTAL PORTFOLIO

(unaudited and in thousands, except square feet and per square foot amounts)


	Total		PGRE’s Share of
Year of	Square Feet		Square Feet		Annualized Rent ⁽¹⁾				% of
Lease Expiration ⁽²⁾	of Expiring Leases		of Expiring Leases		Amount		Per Square Foot ⁽³⁾		Annualized Rent
Month to Month		7,337		5,562	$	301	$	—		0.0	%

3Q 2017		92,871		91,820		6,415		63.63		1.1	%
4Q 2017		94,289		91,993		6,599		72.78		1.1	%

Total 2017		187,160		183,813		13,014		68.20		2.2	%
1Q 2018		89,026		83,608		3,053		63.25		0.5	%
2Q 2018		127,960		111,557		9,600		86.23		1.6	%
Remaining 2018		52,836		32,846		3,691		111.57		0.6	%

Total 2018		269,822		228,011		16,344		84.90		2.7	%

2019		702,235		576,710		42,059		73.37		7.0	%
2020		481,755		393,045		30,479		77.55		5.1	%
2021		1,619,045		1,397,228		87,621		63.55		14.6	%
2022		2,203,131		510,129		34,444		73.34		5.7	%
2023		713,873		651,936		49,866		76.98		8.3	%
2024		680,160		655,487		50,411		77.11		8.4	%
2025		720,534		512,417		37,121		72.49		6.2	%
2026		748,433		661,814		48,307		69.95		8.0	%
Thereafter		2,576,165		2,546,330		190,331		79.69		31.8	%

⁽¹⁾	See page 42 for our definition of this measure.

⁽²⁾	Leases that expire on the last day of the quarter are treated as occupied and are reflected as expiring space in the following quarter.

⁽³⁾	Represents office and retail space only.

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LEASE EXPIRATIONS - NEW YORK

(unaudited and in thousands, except square feet and per square foot amounts)


	Total		PGRE’s Share of
Year of	Square Feet		Square Feet		Annualized Rent ⁽¹⁾				% of
Lease Expiration ⁽²⁾	of Expiring Leases		of Expiring Leases		Amount		Per Square Foot ⁽³⁾		Annualized Rent
Month to Month		575		575	$	129	$	—		0.0	%

3Q 2017		86,464		86,464		5,510		64.12		1.2	%
4Q 2017		50,330		48,767		4,321		91.17		1.0	%

Total 2017		136,794		135,231		9,831		73.76		2.2	%
1Q 2018		55,270		50,417		1,373		80.11		0.3	%
2Q 2018		127,960		111,557		9,600		86.23		2.1	%
Remaining 2018		40,048		21,896		3,191		144.52		0.7	%

Total 2018		223,278		183,870		14,164		94.04		3.1	%

2019		289,427		272,249		22,606		85.28		5.0	%
2020		337,648		295,491		23,574		79.78		5.3	%
2021		953,559		905,833		61,931		70.57		13.8	%
2022		1,786,888		231,938		13,204		66.42		2.9	%
2023		505,216		477,959		36,137		76.14		8.1	%
2024		573,139		552,063		42,445		77.10		9.5	%
2025		113,399		90,004		7,317		81.30		1.6	%
2026		575,799		560,653		41,254		69.99		9.2	%
Thereafter		2,354,841		2,345,063		176,034		74.49		39.3	%

⁽¹⁾	See page 42 for our definition of this measure.

⁽²⁾	Leases that expire on the last day of the quarter are treated as occupied and are reflected as expiring space in the following quarter.

⁽³⁾	Represents office and retail space only.

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LEASE EXPIRATIONS - WASHINGTON, D.C.

(unaudited and in thousands, except square feet and per square foot amounts)


	Total		PGRE’s Share of
Year of	Square Feet		Square Feet		Annualized Rent ⁽¹⁾				% of
Lease Expiration ⁽²⁾	of Expiring Leases		of Expiring Leases		Amount		Per Square Foot ⁽³⁾		Annualized Rent
Month to Month		—		—	$	—	$	—		—

3Q 2017		—		—		—		—		—
4Q 2017		—		—		—		—		—

Total 2017		—		—		—		—		—
1Q 2018		—		—		—		—		—
2Q 2018		—		—		—		—		—
Remaining 2018		—		—		—		—		—

Total 2018		—		—		—		—		—

2019		42,081		42,081		3,445		76.68		5.9	%
2020		33,136		33,136		2,537		76.56		4.3	%
2021		314,154		314,154		15,316		46.99		26.2	%
2022		38,919		38,919		2,471		63.50		4.2	%
2023		140,657		140,657		11,463		82.14		19.6	%
2024		78,811		78,811		6,063		77.07		10.4	%
2025		56,565		56,565		4,525		79.99		7.7	%
2026		32,011		32,011		2,206		68.90		3.8	%
Thereafter		144,874		144,874		10,513		72.57		17.9	%

⁽¹⁾	See page 42 for our definition of this measure.

⁽²⁾	Leases that expire on the last day of the quarter are treated as occupied and are reflected as expiring space in the following quarter.

⁽³⁾	Represents office and retail space only.

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LEASE EXPIRATIONS - SAN FRANCISCO

(unaudited and in thousands, except square feet and per square foot amounts)


	Total		PGRE’s Share of
Year of	Square Feet		Square Feet		Annualized Rent ⁽¹⁾				% of
Lease Expiration ⁽²⁾	of Expiring Leases		of Expiring Leases		Amount		Per Square Foot ⁽³⁾		Annualized Rent
Month to Month		6,762		4,987	$	172	$	—		0.2	%

3Q 2017		6,407		5,356		905		55.84		1.0	%
4Q 2017		43,959		43,226		2,278		52.69		2.4	%

Total 2017		50,366		48,582		3,183		53.04		3.4	%
1Q 2018		33,756		33,191		1,680		53.68		1.8	%
2Q 2018		—		—		—		—		—
Remaining 2018		12,788		10,951		500		45.69		0.5	%

Total 2018		46,544		44,142		2,180		51.55		2.3	%

2019		370,727		262,380		16,008		60.98		17.2	%
2020		110,971		64,418		4,368		67.81		4.7	%
2021		351,332		177,241		10,374		58.61		11.1	%
2022		377,324		239,272		18,769		78.44		20.2	%
2023		68,000		33,320		2,266		67.25		2.4	%
2024		28,210		24,613		1,903		77.33		2.0	%
2025		550,570		365,848		25,279		69.15		27.2	%
2026		140,623		69,151		4,847		70.19		5.2	%
Thereafter		76,450		56,393		3,784		67.75		4.1	%

⁽¹⁾	See page 42 for our definition of this measure.

⁽²⁾	Leases that expire on the last day of the quarter are treated as occupied and are reflected as expiring space in the following quarter.

⁽³⁾	Represents office and retail space only.

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CASH BASIS CAPITAL EXPENDITURES - TOTAL PORTFOLIO

(unaudited and in thousands)


	For the Three Months Ended June 30, 2017
	Total Portfolio		New York		Washington, D.C		San Francisco		Other
Capital expenditures: ⁽¹⁾
Expenditures to maintain assets	$	1,999	$	1,739	$	123	$	—	$	137
Second generation tenant improvements		4,151		2,454		2		1,695		—
Second generation leasing commissions		5,716		574		—		5,142		—
First generation leasing costs and other capital expenditures		6,166		2,643		1,473		2,050		—

Total Capital Expenditures	$	18,032	$	7,410	$	1,598	$	8,887	$	137

Development Expenditures ⁽¹⁾
Residential Development Fund	$	1,459	$	—	$	—	$	—	$	1,459
One Market Plaza		3,129		—		—		3,129		—
1633 Broadway		785		785		—		—		—
Other		491		461		—		30		—

Total Development Expenditures	$	5,864	$	1,246	$	—	$	3,159	$	1,459


	For the Three Months Ended June 30, 2016
	Total Portfolio		New York		Washington, D.C		San Francisco		Other
Capital expenditures: ⁽¹⁾
Expenditures to maintain assets	$	2,241	$	665	$	277	$	1,141	$	158
Second generation tenant improvements		19,523		11,351		1,538		6,634		—
Second generation leasing commissions		2,978		1,829		573		576		—
First generation leasing costs and other capital expenditures		14,073		12,740		248		1,085		—

Total Capital Expenditures	$	38,815	$	26,585	$	2,636	$	9,436	$	158

Development Expenditures ⁽¹⁾
Residential Development Fund	$	1,076	$	—	$	—	$	—	$	1,076
1633 - Plaza and Retail development		2,783		2,783		—		—		—
One Market Plaza - Lobby and Retail repositioning		196		—		—		196		—
Other		570		570		—		—		—

Total Development Expenditures	$	4,625	$	3,353	$	—	$	196	$	1,076

⁽¹⁾	See page 42 for our definition of this measure.

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CASH BASIS CAPITAL EXPENDITURES - TOTAL PORTFOLIO

(unaudited and in thousands)


	For the Six Months Ended June 30, 2017
	Total Portfolio		New York		Washington, D.C		San Francisco		Other
Capital expenditures: ⁽¹⁾
Expenditures to maintain assets	$	7,554	$	5,036	$	589	$	1,705	$	224
Second generation tenant improvements		8,108		4,941		2		3,165		—
Second generation leasing commissions		9,167		3,787		—		5,380		—
First generation leasing costs and other capital expenditures		11,732		5,459		2,699		3,574		—

Total Capital Expenditures	$	36,561	$	19,223	$	3,290	$	13,824	$	224

Development Expenditures ⁽¹⁾
Residential Development Fund	$	2,896	$	—	$	—	$	—	$	2,896
One Market Plaza		3,206		—		—		3,206
1633 Broadway		785		785		—		—		—
Other		866		836		—		30		—

Total Development Expenditures	$	7,753	$	1,621	$	—	$	3,236	$	2,896


	For the Six Months Ended June 30, 2016
	Total Portfolio		New York		Washington, D.C		San Francisco		Other
Capital expenditures: ⁽¹⁾
Expenditures to maintain assets	$	6,413	$	3,194	$	1,077	$	1,891	$	251
Second generation tenant improvements		33,099		23,040		1,929		8,130		—
Second generation leasing commissions		4,304		2,516		573		1,215		—
First generation leasing costs and other capital expenditures		21,019		17,310		2,624		1,085		—

Total Capital Expenditures	$	64,835	$	46,060	$	6,203	$	12,321	$	251

Development Expenditures ⁽¹⁾
Residential Development Fund	$	2,228	$	—	$	—	$	—	$	2,228
1633 - Plaza and Retail development		5,826		5,826		—		—		—
One Market Plaza - Lobby and Retail repositioning		4,656		—		—		4,656		—
Other		961		961		—		—		—

Total Development Expenditures	$	13,671	$	6,787	$	—	$	4,656	$	2,228

⁽¹⁾	See page 42 for our definition of this measure.

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DEFINITIONS

Funds from Operations (“FFO”) is a supplemental measure of our performance. FFO is presented in accordance with the definition adopted by the National Association of Real Estate Investment Trusts (“NAREIT”). NAREIT defines FFO as GAAP net income or loss adjusted to exclude net gains from sales of depreciated real estate assets, impairment losses on depreciable real estate and depreciation and amortization expense from 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 gain 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. FFO attributable to common stockholders represents the Company’s share of FFO that is attributable to common stockholders and is calculated by reducing from FFO, the noncontrolling interests’ share of FFO in consolidated joint ventures, real estate funds and Operating Partnership.

Core Funds from Operations (“Core FFO”) is an alternative measure of our operating performance, which adjusts FFO for certain other items that we believe enhance the comparability of our FFO across periods. Core FFO, when applicable, excludes the impact of certain items, including, transaction related costs, realized and unrealized gains or losses on real estate fund investments, unrealized gains or losses on interest rate swaps, severance costs and defeasance and debt breakage costs, 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. Core FFO attributable to common stockholders represents the Company’s share of Core FFO that is attributable to common stockholders and is calculated by reducing from Core FFO, the noncontrolling interests’ share of Core FFO in consolidated joint ventures, real estate funds and Operating Partnership.

Funds Available for Distribution (“FAD”) is a supplemental measure of our operating performance and is calculated as Core FFO adjusted for (i) capital expenditures to maintain assets, (ii) tenant improvements and leasing commissions incurred for second generation leases, (iii) straight-line rent adjustments, (iv) amortization of above and below-market leases, net, (v) amortization of stock-based compensation expense and (vi) amortization of deferred financing costs. FAD is commonly used in the real estate industry along with cash flow from operating activities as a measure of the ability to generate cash from operations and the ability to fund cash needs and make distributions to our stockholders. FAD provides supplemental information regarding our operating performance that would not otherwise be available and is useful to investors and analysts in assessing our operating performance. Additionally, although FAD is not intended to be a liquidity measure, as it does not make adjustments for the changes in working capital, we believe that FAD may provide investors and analysts with useful supplemental information regarding our ability to generate cash from operations and our ability to make distributions to our stockholders. Furthermore, we believe that FAD is frequently used by investors and analysts in evaluating our performance as a REIT. FAD attributable to common stockholders represents the Company’s share of FAD that is attributable to common stockholders and is calculated by reducing from FAD, the noncontrolling interests’ share of FAD in consolidated joint ventures, real estate funds and Operating Partnership.

Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”) is calculated as net income (loss) plus interest expense, income taxes, depreciation and amortization expenses including our share of such adjustments of unconsolidated joint ventures. EBITDA provides supplemental information regarding our operating performance that would not otherwise be available and may be useful to an investor in assessing our ability to incur and service debt. EBITDA should not be considered as (i) a substitute for net income (loss) determined in accordance with GAAP, (ii) a substitute for net cash flows from operating activities determined in accordance with GAAP, (iii) an indication of our financial performance or (iv) a measure of our liquidity. We also present PGRE’s share of EBITDA which represents our share of EBITDA generated by our consolidated and unconsolidated joint ventures, based on our percentage ownership in the underlying assets.

Adjusted EBITDA is calculated by adjusting EBITDA to eliminate the impact of the performance of our real estate funds, gains and losses on interest rate swaps, transaction related costs, debt breakage costs and certain other items that may vary from period to period. We also present our PGRE’s share of Adjusted EBITDA, which represents our share of the Adjusted EBITDA generated by our consolidated and unconsolidated joint ventures based on our percentage ownership in the underlying assets. Adjusted EBITDA helps compare our operating performance from period to period by removing from our operating results the impact of our capital structure (primarily interest charges from our consolidated outstanding debt and the impact of our interest rate swaps), certain non-cash expenses (primarily depreciation and amortization on our assets), the formation and performance of our real estate funds and transaction related costs that may vary from period to period. In future periods, we may also exclude other items from Adjusted EBITDA that we believe may help investors compare our results. Adjusted EBITDA should not be considered as a substitute for net income (loss) determined in accordance with GAAP. Other real estate companies may use different methodologies for calculating Adjusted EBITDA or similar metrics, and accordingly, our presentation of Adjusted EBITDA may not be comparable to other real estate companies.

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DEFINITIONS - CONTINUED

Net Operating Income (“NOI”) is a metric we use to measure the operating performance of our properties. NOI consists of property-related revenue (which includes rental income, tenant reimbursement income and certain other income) less operating expenses (which includes building expenses such as cleaning, security, repairs and maintenance, utilities, property administration and real estate taxes). We also present Cash NOI which deducts from NOI, straight-line rent adjustments and the amortization of above and below-market leases, net, including our share of such adjustments of unconsolidated joint ventures. In addition, we present PGRE’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 used NOI and Cash NOI as metrics to measure the operating performance of our properties. We use these metrics internally as performance measures and believe they provide useful information to investors regarding our financial condition and results of operations because they reflect only those income and expense items that are incurred at property level. Other real estate companies may use different methodologies for calculating NOI and Cash NOI, and accordingly, our presentation of NOI and Cash NOI may not be comparable to other real estate companies.

Same Store NOI is used to measure the operating performance of properties that were owned by us in a similar manner during both the current period and prior reporting periods, and represents Same Store NOI from consolidated and unconsolidated joint ventures based on our percentage ownership in the underlying assets. Same Store NOI also excludes lease termination income, bad debt expense and certain other items that may vary from period to period. We also present Same Store Cash NOI, which excludes the effect of non-cash items such as the straight-lining of rental revenue and the amortization of above and below-market leases.

PGRE’s Share of Total Debt represents our share of debt of consolidated and unconsolidated joint ventures, based on our percentage ownership in the underlying assets. We believe that PGRE’s share of total debt provides useful information to investors regarding our financial condition because it includes our share of debt from unconsolidated joint ventures and excludes the noncontrolling interests share of debt from consolidated joint ventures that is attributable to our partners. PGRE’s share of total debt should not be considered as a substitute for total debt determined in accordance with GAAP and should only be considered together with and as a supplement to the total debt determined in accordance with GAAP.

Annualized Rent represents the end of period monthly base rent plus escalations in accordance with the lease terms, multiplied by 12.

Leased % represents percentage of square feet that is leased, including signed leases not yet commenced.

Same Store Leased % represents percentage of square feet that is leased, including signed leases not yet commenced, for properties that were owned by us in a similar manner during both the current period and prior reporting periods.

Occupied % represents the percentage of space for which we have commenced rental revenue in accordance with GAAP.

Initial Rent represents the weighted average cash basis starting rent per square foot and does not include free rent or periodic step-ups in rent.

Prior Escalated Rent represents the weighted average cash basis rent (including reimbursements) per square foot at expiration.

Second Generation Space represents space leased that has been vacant for less than twelve months.

Capital Expenditures consist of expenditures to maintain assets, tenant improvement allowances and leasing commissions. Expenditures to Maintain Assets include capital expenditures to maintain current revenues. Second Generation Tenant Improvements and Leasing Commissions represent tenant improvements and leasing commissions incurred in leasing second generation space. First Generation Leasing Costs and Other Capital Expenditures include capital expenditures completed in the year of acquisition and the following two years that were planned at the time of acquisition, as well as tenant improvements and leasing commissions on space leased that has been vacant for more than twelve months. Development Expenditures consist of hard and soft costs related to the development of a property in getting it ready for its intended use.

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COMPANY INFORMATION

Corporate Headquarters

Investor Relations

Stock Exchange Listing

Trading Symbol

1633 Broadway, Suite 1801

IR@paramount-group.com

New York Stock Exchange

New York, NY 10019

(212) 492-2298

(212) 237-3100