Investor Presentation 2Q 2020 Updates23.q4cdn.com/903958510/files/doc_financials/2020/q2/...900...

Investor Presentation

2Q 2020 Update

Cautionary Note on Forward-Looking Statements

This presentation 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 negative impact of the coronavirus 2019 (COVID-19) global pandemic on the U.S., regional and global

economies and our tenants’ financial condition and results of operations, 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 U.S. 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.

The data and information herein are as of June 30, 2020 unless otherwise indicated.

2

Paramount Group at a Glance

Ticker: PGRENYSE-LISTED COMPANY

1978FOUNDED IN

2014INITIAL PUBLIC OFFERING

14 REIT ASSETS

14 MM (1)

SQUARE FEET

$6 B (3)

TOTAL MARKET CAP.

$357 MM (4)

ANNUALIZED CASH NOI

~$14 B (2)

TOTAL AUM

Paramount prides itself on being a best-in-class owner and operator of high-quality,

Class A office properties in New York and San Francisco

Note: Please refer to the Appendix for all Non-GAAP reconciliations and list of defined terms. All figures as of June 30, 2020.(1) Includes 14 REIT-owned assets aggregating 13.1 million square feet and five other buildings that are managed by Paramount aggregating 1.0 million square feet.(2) Calculated based on (i) Green Street Advisors’ estimate of Gross Asset Value as of July 24, 2020 for REIT-owned assets, (ii) management’s estimate of values for managed

assets and (iii) committed capital for Fund assets as of June 30, 2020.(3) Based on PGRE closing price of $7.71 on June 30, 2020.(4) Based on PGRE’s share of Cash NOI of $89.2 million for the three months ended June 30, 2020.(5) At PGRE’s share. Excluding 1899 Pennsylvania Avenue, which is under contract for sale, the leased percentage would have been 95.7%.

95.6% (5)

LEASED

3

Executive Management

Senior Vice Presidents

Albert BehlerChairman, Chief Executive

Officer & President

Wilbur PaesChief Financial Officer

& Treasurer

David ZobelAcquisitions

Ermelinda BerberiChief Accounting Officer

David EatonLeasing, San Francisco

Ben GoodsirAsset Management

Michael JackowitzCapital Markets

Todd JanuzziChief Information &

Technology Officer

Gage Johnson General Counsel

Bernard MarascoCounsel – Leasing &

Property Management

Michael NathanAcquisitions

Douglas NeyeLeasing, New York

Peter BrindleyLeasing

Christopher BrandtAsset Management

Matt BautistaDevelopment &

Construction

Experienced Management Team

4

Mario FulgieriTax

Jennifer AmatoFinancial Applications

Holly BaglieriTax & Compliance

Aarti BalachandranTreasury

Marisa GadlinAsset Management

Melissa GraffeoCorporate Accounting

Durgesh KarlekarProperty Accounting

May LauHuman Resources

Frank PapaniaAsset Management

Bhavesh RavalSEC Reporting

Chris ThompsonFP&A

James WhelanProperty Management

Christopher ZizzaAcquisitions

Brent MorrisCapital Markets

Vice Presidents

5

COVID-19 &

Business

Update

• Leased over 300,000 square feet in the first quarter, bringing YTD activity to

over 500,000 square feet.

• Cash and GAAP mark-to-market were +24.2% and +19.2, respectively, for 2Q

2020, and +26.9% and +26.0%, respectively YTD.

• Leasing activity comprised mainly of shorter-term renewals, with tenants

taking a “wait-and-see” approach towards new and larger space

commitments.

• As of June 30, had approximately $1.35 billion of liquidity, with

approximately $550 million of cash on balance sheet and additional $800

million of revolver capacity.

• Additional ~$100 million of cash to be generated from the sale of 1899

Pennsylvania Avenue, which is expected to close in 4Q 2020.

Operating Highlights & Business Update

Note: Please refer to the Appendix for all Non-GAAP reconciliations and list of defined terms.

• Highest priority continues to be health and safety of tenants and employees.

• New York is now in Phase 4 of the re-opening process and all offices remain

open, subject to certain limitations. San Francisco has put the re-opening

on indefinite hold, including re-closure of nonessential offices.

• 2Q 2020 rent collections were 97.8% for office tenants and 57.6% for other

tenants (retail + theatres + garages), bringing portfolio wide collections to

96.4%.

• All collections figures are based on pre-COVID-19 contractual rents.

Leasing Activity

Capital Allocation

& Balance Sheet

8.6 MM square feet – 95.3% Leased (1)

New York Portfolio

900 Third Avenue

712 Fifth Avenue

1301 Avenue

of the Americas

MidtownManhattan

1325 Avenue

of the Americas31 West 52nd

Street

1633 Broadway

98.4% Leased

91.8% Leased 99.0% Leased 98.3% Leased 75.2% Leased

81.8% Leased

60 Wall Street

100.0% Leased

6 (1) Leased occupancy presented at PGRE’s share.

4.3 MM square feet – 96.9% Leased (1)

7

One Front Street

98.2% Leased

100.0% Leased

One Market Plaza

99.1% Leased

300 Mission Street111 Sutter Street

83.3% Leased 95.7% Leased

55 Second Street Market Center

94.3% Leased

(1) Leased occupancy presented at PGRE’s share.

San Francisco Portfolio

Transition to New York & San Francisco Focused REIT

Number

of

REIT-Owned

Properties

Total

Square Feet(At 100%)

Annualized

Rent (At PGRE’s Share) (1)

1Q 2015 2Q 2020

8

Washington, D.C.

5 Properties

42%

New York

6 Properties

50%

San Francisco

1 Property

8%

Washington, D.C.

$76.3MM

14%

New York

$423.0MM

78%

San Francisco

$41.1MM

8%

New York

7.2MM Sq. Ft.

69%

San Francisco

1.6MM Sq. Ft.

16%

Washington, D.C.

1.6MM Sq. Ft.

15%

New York7 Properties

50%

San Francisco6 Properties

43%

Washington, D.C.1 Property

7%

New York$482.5MM

70%

San Francisco$193.4MM

28%

Washington, D.C.$15.1MM

2%

San Francisco4.3MM Sq. Ft.

33%

New York8.6MM Sq. Ft.

66%

Washington, D.C.191,000 Sq. Ft.

1%

Note: 1899 Pennsylvania Avenue is currently under contract for sale and expected to close in 4Q 2020.(1) Please see Appendix for our definition of this measure.

Diverse and High Credit Quality Tenant Base

Industry Diversification – % of Annualized Rent

High percentage of PGRE’s share of annualized rent

derived from investment grade / nationally recognized office

tenants.

Weighted average remaining lease term of approximately 7

years on office leases.

Retail, theatre and garage tenants account for less than 4.0%

of PGRE’s share of annualized rent.

Other Blue Chip Tenants

(1) Please see page 21 for our definition of this measure.(2) 116,462 of the square feet leased expire on March 31, 2032.(3) 76,999 and 10,952 of the square feet leased expire on December 31, 2029 and December 31, 2030, respectively.9

(2)

(3)

(1)

(2)

(3)

Legal Services 22.7%

Financial Services -Commercial & Inv.

Banking20.3%

Technology and Media 19.4%

Financial Services, all others 16.6%

Insurance 5.7%

Retail 2.1%

Travel & Leisure2.0%

Real Estate 1.9%

Consumer Products

1.3%

Other 8.0%

Tenancy Highlights

PGRE's Share of

Top 10 Tenants Expiration Date

Square Feet

Occupied

% of Ann.

Rent

1. 12/2020 497,418 4.8%

2. 6/2024 328,992 4.2%

3. 2/2023 312,679 3.9%

4. 9/2034 320,325 3.9%

5. 6/2025 338,602 3.9%

6. 1/2031 288,823 3.8%

7. 3/2032 234,749 2.6%

8. 7/2029 266,713 2.5%

9. 1/2026 235,079 2.2%

10. 4/2025 167,683 2.1%

(1)

Lease Expiration Schedule

Note: Figures do not include 11,441 sf of month-to-month leases or 400,329 sf of vacant space at PGRE’s share.10

11.0%

1.0%

5-Year Average: 688,877 sf

or 7.9% per annum (~6.6% per

annum excl. Barclays in 2021)

Capital Structure Overview

Note: Please refer to the Appendix for all Non-GAAP reconciliations and list of defined terms.(1) Represents Green Street Advisors’ estimate of NAV per share as of July 24, 2020.(2) At PGRE’s share.(3) Represents contractual amounts due pursuant to the respective debt agreements.(4) Includes $200.0 million outstanding under the revolving credit facility, the proceeds of which are held as cash on the balance sheet at June 30, 2020.(5) Represents noncontrolling partners’ share of debt of 1633 Broadway, One Market Plaza and 300 Mission Street.(6) Represents PGRE’s share of 712 Fifth Avenue, Market Center, 55 Second Street, 111 Sutter Street, 60 Wall Street and Oder-Center Germany.

Secured vs. Unsecured (2) (3) (4)

Fixed vs. Floating (2) (3) (4)

11

$3,631,161 95%

$200,000 5%

Secured Unsecured

$3,180,422 83%

$650,739 17%

Fixed Rate Debt Floating Rate Debt

(in thousands, except per share amounts)

At

Green Street

NAV (1)

Stock Price $18.61

Common Shares 221,764

Operating Partnership Units 20,780

Total Shares / Units Outstanding 242,544

Equity Market Capitalization $4,513,745

Consolidated Debt:

Notes & Mortgages Payable (3)

(4)

4,012,716

Less:

Noncontrolling Interests' Share of Consolidated Debt (5)

(786,024)

Add:

PGRE's Share of Unconsolidated JV Debt (6)

604,469

PGRE's Share of Total Debt (4)

3,831,161

Total Market Capitalization 8,344,906

PGRE's Share of Cash & Cash Equiv. (553,977)

Total Enterprise Value $7,790,929

Net Debt $3,277,184

Well-Laddered Debt Maturity Profile

Debt Maturity Schedue (1) (2) (3)

Note: Please refer to the Appendix for all Non-GAAP reconciliations and list of defined terms.(1) At PGRE’s share.(2) Represents contractual amounts due pursuant to the respective debt agreements.(3) Excludes PGRE’s Share of Oder-Center Germany debt and $200.0 million outstanding on the revolving credit facility at June 30, 2020.12

Wtd. Avg. Maturity: 5.4 years

Wtd. Avg. Interest Rate: 3.22%

1633 Broadway$1,125.0

1301 AoA$850.0

31 West 52nd$500.0

Market Cntr$269.3

One Market$477.8

300 Mission$73.9 712 5th Ave.

$150.0

60 Wall$28.8

111 Sutter$71.9

55 Second$82.7

0

200

400

600

800

1000

1200

1400

2020 2021 2022 2023 2024 2025 2026 2027 2028 2029

Schedule of Free Rent Burn Off

As of June 30, 2020, we have $43.1 million of annualized initial cash rents that are yet to contribute to Cash NOI:

• $34.6 million from commenced leases in free rent periods, and

• $8.5 million from signed leases not yet commenced.

These leases become cash paying over the next three years as detailed below:

13

(in thousands) Annualized Initial Cash Rent 1 Amount Contributing to:

As of June 30, 2020 100% Amount PGRE Share 2020 2021 2022

New York:

Commenced Leases in Free Rent Period $25,200 $21,263 $4,569 $20,714 $21,263

Signed Leases Not Yet Commenced 4,316 3,537 – 1,969 3,537

Subtotal $29,516 $24,800 $4,569 $22,683 $24,800

San Francisco:

Commenced Leases in Free Rent Period $31,832 $13,361 $3,446 $13,275 $13,361

Signed Leases Not Yet Commenced 12,201 4,963 276 4,066 4,228

Subtotal $44,033 $18,324 $3,722 $17,341 $17,589

Total Commenced Leases in Free Rent Period $57,032 $34,624 $8,015 $33,989 $34,624

Total Signed Leases Not Yet Commenced 16,517 8,500 276 6,035 7,765

Grand Total $73,549 $43,124 $8,291 $40,024 $42,389

Appendix

Reconciliation of Non-GAAP Measures

(1) Please see page 21 for our definition of this measure.15

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

June 30, 2020 June 30, 2019 March 31, 2020 June 30, 2020 June 30, 2019

(7,684)$ 5,174$ 5,226$ (2,458)$ 12,174$

70,546 63,721 70,940 141,486 127,409

- 2,348 690 690 4,725

62,862 71,243 76,856 139,718 144,308

(8,711) (11,277) (8,969) (17,680) (23,025)

1,235 (53) (23) 1,212 (147)

55,386 59,913 67,864 123,250 121,136

(4,723) (5,705) (6,278) (11,001) (11,703)

50,663$ 54,208$ 61,586$ 112,249$ 109,433$

0.23$ 0.23$ 0.27$ 0.50$ 0.47$

62,862$ 71,243$ 76,856$ 139,718$ 144,308$

(920) (1,331) (388) (1,308) (61)

324 260 303 627 1,083

62,266 70,172 76,771 139,037 145,330

(8,711) (11,277) (8,969) (17,680) (23,025)

1,235 (53) (23) 1,212 (147)

54,790 58,842 67,779 122,569 122,158

(4,672) (5,603) (6,270) (10,942) (11,806)

50,118$ 53,239$ 61,509$ 111,627$ 110,352$

0.23$ 0.23$ 0.27$ 0.50$ 0.47$

221,573,199 234,329,904 227,769,213 224,671,206 233,877,117

4,225 25,960 35,963 20,164 31,119

221,577,424 234,355,864 227,805,176 224,691,370 233,908,236 Denominator for FFO and Core FFO per diluted share

Effect of dilutive securities

Weighted average shares outstanding

Reconciliation of weighted average shares outstanding:

Per diluted share

Core FFO attributable to common stockholders (1)

Less Core FFO attributable to noncontrolling interests in Operating Partnership

Core FFO attributable to Paramount Group Operating Partnership

Consolidated real estate fund

Non-core items:

FFO

Consolidated joint ventures

Less Core FFO attributable to noncontrolling interests in:

Core FFO (1)

Other, net

Our share of distributions from 712 Fifth Avenue in excess of earnings


Less FFO attributable to noncontrolling interests in:

FFO (1)

Adjustments related to discontinued operations

of unconsolidated joint ventures)

Per diluted share

FFO attributable to common stockholders (1)

Less FFO attributable to noncontrolling interests in Operating Partnership

FFO attributable to Paramount Group Operating Partnership


Three Months Ended Six Months Ended

Real estate depreciation and amortization (including our share

Net (loss) income

Reconciliation of net (loss) income to FFO and Core FFO:


16 (1) Please see page 21 for our definition of this measure.

NOI(unaudited and in thousands)

June 30, 2020 June 30, 2019 March 31, 2020 June 30, 2020 June 30, 2019

(7,684)$ 5,174$ 5,226$ (2,458)$ 12,174$

58,716 60,277 58,427 117,143 120,989

17,901 17,695 12,249 30,150 35,138

36,009 37,213 36,619 72,628 74,137

138 268 604 742 1,406

10,376 4,185 13,392 23,768 9,596

5,955 456 4,221 10,176 1,483

(6,209) (4,213) (6,330) (12,539) (10,212)

(2,252) (2,583) 996 (1,256) (6,483)

- 2,348 690 690 4,725

169 163 151 320 853

113,119 120,983 126,245 239,364 243,806

(15,733) (17,839) (15,691) (31,424) (35,748)

1,437 (6) 3 1,440 23

98,823$ 103,138$ 110,557$ 209,380$ 208,081$

113,119$ 120,983$ 126,245$ 239,364$ 243,806$

(10,037) (10,937) (11,804) (21,841) (22,806)

(1,701) (2,745) (2,832) (4,533) (5,985)

114 100 119 233 211

101,495 107,401 111,728 213,223 215,226

(13,716) (15,583) (13,202) (26,918) (30,368)

1,437 (6) 3 1,440 23

89,216$ 91,812$ 98,529$ 187,745$ 184,881$

Loss from unconsolidated joint ventures

Add (subtract) adjustments to arrive at NOI and Cash NOI:


Interest and other (income) loss, net


Net (loss) income

Reconciliation of net (loss) income to NOI and Cash NOI:

Fee income

NOI from unconsolidated joint ventures

Income tax expense

Interest and debt expense



Less NOI attributable to noncontrolling interests in:

NOI (1)

Other, net

General and administrative

Depreciation and amortization

Three Months Ended Six Months Ended

PGRE's share of Cash NOI (1)



Less Cash NOI attributable to noncontrolling interests in:

Cash NOI (1)

our share of unconsolidated joint ventures)

Amortization of above and below-market leases, net (including

unconsolidated joint ventures)

Straight-line rent adjustments (including our share of

Less:

NOI

PGRE's share of NOI (1)


(1) Please see page 21 for our definition of this measure.(2) Represents our share of Same Store Cash NOI attributable to acquired properties (Market Center and 55 Second Street in San Francisco) for the months in which they

were not owned by us in both reporting periods.(3) Represents Cash NOI from discontinued operations (1899 Pennsylvania Avenue in 2020 and 1899 Pennsylvania Avenue and Liberty Place in 2019).(4) Represents impairments of receivables arising from operating leases that have been consistently excluded from our same store results in prior periods as noted in our

definition of these terms. In prior periods, adjustments for these items have been relatively small and as such, were included within "other".(5) Represents Cash NOI attributable to 10.0% sale of 1633 Broadway for the months in which it was not owned by us in both reporting periods.17

SAME STORE RESULTS(unaudited and in thousands)

Total New York San Francisco Other

89,216$ 60,262$ 28,396$ 558$

(6,754) - (6,754) -

(2,261) - - (2,261) (3)

1,940 1,152 788 -

1,626 (77) - 1,703

83,767$ 61,337$ 22,430$ -$


91,812$ 66,378$ 21,667$ 3,767$

- - - -

(5,310) (806) (5) - (4,504) (3)

91 114 (23) -

737 - - 737

87,330$ 65,686$ 21,644$ -$

(3,563)$ (4,349)$ 786$ -$

(4.1%) (6.6%) 3.6%

PGRE's share of Same Store Cash NOI for the three months ended June 30, 2020

% (Decrease) increase

(Decrease) increase in PGRE's share of Same Store Cash NOI

Three Months Ended June 30, 2020

Lease termination income and other, net

Reserves for uncollectible accounts receivable (4)


Dispositions / Discontinued Operations

Acquisitions

SAME STORE CASH NOI (1)

PGRE's share of Cash NOI for the three months ended June 30, 2020

PGRE's share of Same Store Cash NOI for the three months ended June 30, 2019


Acquisitions (2)

PGRE's share of Cash NOI for the three months ended June 30, 2019




(1) Please see page 21 for our definition of this measure.(2) Represents our share of Same Store Cash NOI attributable to acquired properties (Market Center, 55 Second Street and 111 Sutter Street in San Francisco) for the

months in which they were not owned by us in both reporting periods.(3) Represents Cash NOI from discontinued operations (1899 Pennsylvania Avenue in 2020 and 1899 Pennsylvania Avenue and Liberty Place in 2019).(4) Represents impairments of receivables arising from operating leases that have been consistently excluded from our same store results in prior periods as noted in our

definition of these terms. In prior periods, adjustments for these items have been relatively small and as such, were included within "other".(5) Represents Cash NOI attributable to 10.0% sale of 1633 Broadway for the months in which it was not owned by us in both reporting periods18



187,745$ 129,732$ 56,629$ 1,384$

(13,560) - (13,560) -

(4,591) - - (4,591) (3)

1,940 1,152 788 -

3,047 (153) (7) 3,207

174,581$ 130,731$ 43,850$ -$


184,881$ 135,179$ 42,093$ 7,609$

- - - -

(9,904) (806) (5) - (9,098) (3)

276 299 (23) -

(857) (2,346) - 1,489

174,396$ 132,326$ 42,070$ -$

185$ (1,595)$ 1,780$ -$

0.1% (1.2%) 4.2%

Increase (decrease) in PGRE's share of Same Store Cash NOI

Six Months Ended June 30, 2020


PGRE's share of Cash NOI for the six months ended June 30, 2020

Acquisitions



PGRE's share of Same Store Cash NOI for the six months ended June 30, 2019

PGRE's share of Cash NOI for the six months ended June 30, 2019

PGRE's share of Same Store Cash NOI for the six months ended June 30, 2020



Acquisitions (2)

SAME STORE CASH NOI (1)



% Increase (decrease)


(1) Please see page 21 for our definition of this measure.(2) Represents our share of Same Store NOI attributable to acquired properties (Market Center and 55 Second Street in San Francisco) for the months in which they were

not owned by us in both reporting periods.(3) Represents NOI from discontinued operations (1899 Pennsylvania Avenue in 2020 and 1899 Pennsylvania Avenue and Liberty Place in 2019).(4) Represents impairments of receivables arising from operating leases that have been consistently excluded from our same store results in prior periods as noted in our

definition of these terms. In prior periods, adjustments for these items have been relatively small and as such, were included within "other".(5) Represents NOI attributable to 10.0% sale of 1633 Broadway for the months in which it was not owned by us in both reporting periods.19



98,823$ 65,716$ 32,635$ 472$

(8,425) - (8,425) -

(2,147) - - (2,147) (3)

7,685 4,993 2,692 -

1,940 1,152 788 -

1,598 (77) - 1,675

99,474$ 71,784$ 27,690$ -$


103,138$ 75,123$ 24,326$ 3,689$

- - - -

(5,339) (935) (5) - (4,404) (3)

91 114 (23) -

715 - - 715

98,605$ 74,302$ 24,303$ -$

869$ (2,518)$ 3,387$ -$

0.9% (3.4%) 13.9%




Increase (decrease) in PGRE's share of Same Store NOI

PGRE's share of Same Store NOI for the three months ended June 30, 2019


Acquisitions

PGRE's share of NOI for the three months ended June 30, 2019

Acquisitions (2)

PGRE's share of NOI for the three months ended June 30, 2020

SAME STORE NOI (1) Three Months Ended June 30, 2020


PGRE's share of Same Store NOI for the three months ended June 30, 2020



Non-cash write-offs (primarily straight-line rent receivables) (4)



(1) Please see page 21 for our definition of this measure.(2) Represents our share of Same Store NOI attributable to acquired properties (Market Center, 55 Second Street and 111 Sutter Street in San Francisco) for the months in

which they were not owned by us in both reporting periods.(3) Represents NOI from discontinued operations (1899 Pennsylvania Avenue in 2020 and 1899 Pennsylvania Avenue and Liberty Place in 2019).(4) Represents impairments of receivables arising from operating leases that have been consistently excluded from our same store results in prior periods as noted in our

definition of these terms. In prior periods, adjustments for these items have been relatively small and as such, were included within "other".(5) Represents NOI attributable to 10.0% sale of 1633 Broadway for the months in which it was not owned by us in both reporting periods.20



209,380$ 141,208$ 67,074$ 1,098$

(17,717) - (17,717) -

(4,358) - - (4,358) (3)

7,685 4,993 2,692

1,940 1,152 788 -

3,100 (153) (7) 3,260

200,030$ 147,200$ 52,830$ -$


208,081$ 152,773$ 47,955$ 7,353$

- - - -

(9,822) (935) (5) - (8,887) (3)

276 299 (23) -

(812) (2,346) - 1,534

197,723$ 149,791$ 47,932$ -$

2,307$ (2,591)$ 4,898$ -$

1.2% (1.7%) 10.2%



PGRE's share of NOI for the six months ended June 30, 2019

SAME STORE NOI (1)

Non-cash write-offs (primarily straight-line rent receivables) (4)


Acquisitions (2)

PGRE's share of NOI for the six months ended June 30, 2020



PGRE's share of Same Store NOI for the six months ended June 30, 2020



Increase (decrease) in PGRE's share of Same Store NOI


Acquisitions

PGRE's share of Same Store NOI for the six months ended June 30, 2019


Definitions

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

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 net income or loss, calculated in accordance with GAAP, adjusted to exclude

depreciation and amortization from real estate assets, impairment losses on certain real estate assets and gains or losses from the sale of certain real estate assets

or from change in control of certain real estate assets, including our share of such adjustments of unconsolidated joint ventures. FFO is commonly used in the

real estate industry to assist investors and analysts in comparing results of real estate companies because it excludes the effect of real estate depreciation and

amortization and net gains on sales, which are based on historical costs and implicitly assume that the value of real estate diminishes predictably over time, rather

than fluctuating based on existing market conditions. FFO is not intended to be a measure of cash flow or liquidity. 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 gains or losses

on early extinguishment of debt, in order to reflect the Core FFO of our real estate portfolio and operations. In future periods, we may also exclude other items

from Core FFO that we believe may help investors compare our results. Core FFO is not intended to be a measure of cash flow or liquidity. 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.

Net Operating Income (“NOI”) is used to measure the operating performance of our properties. NOI consists of rental revenue (which includes property

rentals, tenant reimbursements and lease termination income) and certain other property-related revenue less operating expenses (which includes property-related

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, 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 use NOI and Cash NOI internally as performance measures and

believe they provide useful information to investors regarding our financial condition and results of operations because they reflect only those income and

expense items that are incurred at property level.

Same Store NOI is used to measure the operating performance of properties in our New York and San Francisco portfolios 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, impairment of receivables arising from operating

leases 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-line rent adjustments and the amortization of above and below-market leases.

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 and not classified as discontinued operations.21

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