Paramount Group (PGRE) Q2 2024 earnings summary

Executive summary

• Core FFO for Q2 2024 was $0.20 per share, matching consensus and up from $0.17 per share in Q2 2023, with strong leasing activity totaling 198,505 sq ft in the quarter and 475,222 sq ft year-to-date, the best since 2020.

• Net loss attributable to common stockholders was $7.8 million ($0.04 per share) for Q2 2024, a significant improvement from $47.5 million ($0.22 per share) in Q2 2023, which included non-cash impairment and rent write-offs.

• Portfolio-wide same-store leased occupancy at share was 86.3% at quarter end, down from 90.1% at December 31, 2023, mainly due to a major tenant move-out.

• Owns and operates 13.8 million sq ft of Class A office properties in New York and San Francisco, with $8.1 billion in AUM as of June 30, 2024.

• Tenant base is diversified and high credit quality, with top tenants including JPMorgan Chase, Allianz, and Morgan Stanley.

Financial highlights

• Q2 2024 revenues were $187.4 million, up from $172.7 million in Q2 2023, driven by higher rental revenue and lower prior-year write-offs.

• Q2 2024 Same Store Cash NOI was $87.0 million, nearly flat year-over-year (0.1% increase), with New York down 5.9% and San Francisco up 14.3%.

• Q2 2024 Same Store NOI was $90.9 million, down 1.3% year-over-year.

• Weighted average lease term for Q2 leases was 8.6 years, with average starting rent of $74.55 per sq ft.

• Liquidity at June 30, 2024 was $1.22 billion, including $409 million in cash/restricted cash and $750 million undrawn revolver.

Outlook and guidance

• Full-year 2024 Core FFO guidance narrowed to $0.76–$0.80 per share, with midpoint maintained; net loss guidance updated to $0.11–$0.07 per share due to higher depreciation.

• Improved 2024 same-store cash NOI growth outlook by 100 bps and GAAP NOI by 50 bps.

• Management expects existing cash, operations, and credit facility to provide adequate liquidity for the next 12 months.

• Expect negative impact in H2 2024 from major tenant move-outs, but strong leasing pipeline supports guidance.

• More than 300,000 sq ft in advanced lease negotiations, with confidence in reaching leasing targets.