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

Paramount Group, Inc. - FORM 8-K - EX-99.2 - February 15, 2018

Attached files

Attached files

Paramount Group, Inc. Reports

file	filename
EX-99.1 - EX-99.1 - Paramount Group, Inc.	d540174dex991.htm
8-K - FORM 8-K - Paramount Group, Inc.	d540174d8k.htm

Exhibit 99.2

LOGO

SUPPLEMENTAL OPERATING AND FINANCIAL DATA

FOR THE QUARTER ENDED DECEMBER 31, 2017


		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
Guidance		6
Financial Highlights		7
Consolidated Balance Sheets		8
Consolidated Statements of Income		9
Select Income Statement Data		10
Funds From Operations (“FFO”)		11
Funds Available for Distribution (“FAD”)		12
Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”)		13
Net Operating Income (“NOI”)		14
NOI - By Segment		15-16
Same Store Results - By Segment		17-20
Consolidated Joint Ventures and Fund		21-23
Unconsolidated Joint Ventures		24-26
Unconsolidated Funds Summary		27
Capital Structure		28
Debt Analysis		29
Debt Maturities		30

Selected Property Data
Portfolio Summary		31
Same Store Leased Occupancy		32-33
Top Tenants and Industry Diversification		34
Leasing Activity		35-36
Lease Expirations		37-40
Cash Basis Capital Expenditures		41-42

Definitions		43-44

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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
Peter Brindley		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	Chris Lucas	Vin Chao
Bank of America Merrill Lynch	BTIG	Capital One	Deutsche Bank
(646) 855-5808	(212) 738-6140	(571) 633-8151	(212) 250-6799

Steve Sakwa	Andrew Rosivach	Jed Reagan	Richard Anderson
Evercore ISI	Goldman Sachs	Green Street Advisors	Mizuho Securities USA Inc.
(212) 446-9462	(212) 902-2796	(949) 640-8780	(212) 205-8445

Vikram Malhotra	Nick Yulico	Blaine Heck
Morgan Stanley	UBS	Wells Fargo
(212) 761-7064	(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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		GUIDANCE
(unaudited and in thousands, except square feet, % and per share amounts)


	Full Year 2018
	Low			High
Estimated net income attributable to common stockholders	$	0.02		$	0.06
Our share of depreciation and amortization		0.90			0.90

Estimated core FFO	$	0.92		$	0.96

Assumptions
Leasing Activity (square feet)		500,000			700,000
PGRE’s share of Same Store leased occupancy ⁽²⁾at year end		94.0	%		96.0	%
Increase in PGRE’s share of Same Store Cash NOI ⁽²⁾		7.0	%		10.0	%
Increase in PGRE’s share of Same Store NOI ⁽²⁾		6.5	%		9.5	%
PGRE’s share of Cash NOI ⁽²⁾		349,000			354,000
PGRE’s share of NOI ⁽²⁾		412,000			419,000
PGRE’s share of straight-line rent and above and below-market lease revenue, net		63,000			65,000
Fee income, net of income taxes		17,000			18,000
PGRE’s share of interest and debt expense, including amortization of deferred financing costs		(130,000	)		(128,000	)
General and administrative expenses		(58,000	)		(56,000	)

⁽¹⁾

The Company is providing Estimated Core FFO Guidance for the full year of 2018, which is reconciled above to estimated net income attributable to common stockholders per diluted share in accordance with GAAP. The estimated net income attributable to common stockholders per diluted share is not a projection and is being provided solely to satisfy the disclosure requirements of the U.S. Securities and Exchange Commission. Except as described above, these estimates reflect management’s view of current and future market conditions, including assumptions with respect to rental rates, occupancy levels and the earnings impact of the events referenced in the Company’s earnings release issued on February 15, 2018 and otherwise referenced during the Company’s conference call scheduled for February 16, 2018. These estimates do not include the impact on operating results from possible future property acquisitions or dispositions, capital markets activity or unrealized gains or losses on real estate fund investments. The estimates set forth above may be subject to fluctuations as a result of several factors, including the straight-lining of rental income and the amortization of above and below-market leases. There can be no assurance that the Company’s actual results will not differ materially from the estimates set forth above.

⁽²⁾	See page 43 for our definition of this measure.

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		FINANCIAL HIGHLIGHTS

(unaudited and in thousands, except per share amounts)


	Three Months Ended									Year Ended
SELECTED FINANCIAL DATA	December 31, 2017			December 31, 2016			September 30, 2017			December 31, 2017			December 31, 2016
Net (loss) income attributable to common stockholders	$	(6,793	)	$	(6,489	)	$	(10,214	)	$	86,381		$	(9,934	)
Per share—basic and diluted	$	(0.03	)	$	(0.03	)	$	(0.04	)	$	0.37		$	(0.05	)
PGRE’s share of Cash NOI ⁽¹⁾	$	83,619		$	77,224		$	83,813		$	331,985		$	309,148
PGRE’s share of NOI ⁽¹⁾	$	96,737		$	90,763		$	95,337		$	392,644		$	386,418

Same Store Cash NOI				% Change			Same Store NOI									% Change
Three Months Ended December 31, 2017 vs. December 31, 2016					14.8	%		Three Months Ended December 31, 2017 vs. December 31, 2016									7.7	%
Year Ended December 31, 2017 vs. December 31, 2016					10.6	%		Year Ended December 31, 2017 vs. December 31, 2016									(0.8	%)
Core FFO attributable to common stockholders ⁽¹⁾	$	51,633		$	39,030		$	52,369		$	210,072		$	183,579
Per share—diluted	$	0.22		$	0.17		$	0.22		$	0.89		$	0.84
FAD attributable to common stockholders⁽¹⁾	$	28,942		$	17,822		$	25,197		$	121,590		$	77,260
Dividends paid to common stockholders	$	22,841		$	21,851		$	22,807		$	90,266		$	83,804

COMMON SHARE DATA

	Three Months Ended
Share Price:	December 31, 2017			September 30, 2017			June 30, 2017			March 31, 2017			December 31, 2016
High	$	16.61		$	16.79		$	17.25		$	17.58		$	16.74
Low	$	15.49		$	15.14		$	15.32		$	15.87		$	14.58
Closing (end of period)	$	15.85		$	16.00		$	16.00		$	16.21		$	15.99
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	%		2.4	%		2.4	%		2.3	%		2.4	%

PORTFOLIO STATISTICS

	Three Months Ended
	December 31, 2017			September 30, 2017			December 31, 2016
Leased % ⁽¹⁾		93.5	%		92.3	%		92.7	%

Same Store Leased %				% Change
December 31, 2017 vs. September 30, 2017					1.2	%
December 31, 2017 vs. December 31, 2016					1.3	%

⁽¹⁾	See page 43 for our definition of this measure.

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		CONSOLIDATED BALANCE SHEETS
(unaudited and in thousands)


	December 31, 2017			December 31, 2016
ASSETS:
Real estate, at cost
Land	$	2,209,506		$	2,091,535
Buildings and improvements		6,119,969			5,757,558

		8,329,475			7,849,093
Accumulated depreciation and amortization		(487,945	)		(318,161	)

Real estate, net		7,841,530			7,530,932
Cash and cash equivalents		219,381			162,965
Restricted cash		31,044			29,374
Investments in unconsolidated joint ventures		44,762			6,411
Investments in unconsolidated real estate funds		7,253			28,173
Preferred equity investments, net		35,817			55,051
Marketable securities		29,039			22,393
Accounts and other receivables, net		17,082			15,251
Deferred rent receivable		220,826			163,695
Deferred charges, net		98,645			71,184
Intangible assets, net		352,206			412,225
Assets held for sale		—			346,685
Other assets		20,076			22,829

Total Assets	$	8,917,661		$	8,867,168


LIABILITIES:
Notes and mortgages payable, net	$	3,541,300		$	3,364,898
Revolving credit facility		—			230,000
Due to affiliates		27,299			27,299
Accounts payable and accrued expenses		117,630			103,896
Dividends and distributions payable		25,211			25,151
Intangible liabilities, net		130,028			153,018
Other liabilities		54,109			76,959

Total Liabilities		3,895,577			3,981,221

EQUITY:
Paramount Group, Inc. equity		4,176,741			3,990,005
Noncontrolling interests in:
Consolidated joint ventures		404,997			253,788
Consolidated real estate fund		14,549			64,793
Operating Partnership		425,797			577,361

Total Equity		5,022,084			4,885,947

Total Liabilities and Equity	$	8,917,661		$	8,867,168

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		CONSOLIDATED STATEMENTS OF INCOME

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


	Three Months Ended									Year Ended
	December 31, 2017			December 31, 2016			September 30, 2017			December 31, 2017			December 31, 2016
REVENUES:
Property rentals	$	142,639		$	127,041		$	141,801		$	554,907		$	498,057
Straight-line rent adjustments		10,924			14,725			11,408			54,453			82,568
Amortization of above and below-market leases, net		5,359			2,943			3,175			19,523			9,536

Rental income		158,922			144,709			156,384			628,883			590,161
Tenant reimbursement income		13,657			11,842			14,053			52,418			44,943
Fee income (see details on page 9)		4,374			5,363			5,834			24,212			16,931
Other income (see details on page 9)		3,304			4,888			3,499			13,454			31,306

Total revenues		180,257			166,802			179,770			718,967			683,341
EXPENSES:
Operating		68,440			63,076			68,264			266,136			250,040
Depreciation and amortization		67,894			60,975			66,515			266,037			269,450
General and administrative (see details on page 9)		16,953			14,175			14,470			61,577			53,510
Transaction related costs		976			679			274			2,027			2,404

Total expenses		154,263			138,905			149,523			595,777			575,404
Operating income		25,994			27,897			30,247			123,190			107,937
Income from unconsolidated joint ventures		1,042			2,122			671			20,185			7,413
(Loss) income from unconsolidated real estate funds		(90	)		2,042			(3,930	)		(6,143	)		(498	)
Interest and other income (loss), net (see details on page 9)		2,951			1,905			(17,668	)		(9,031	)		6,934
Interest and debt expense (see details on page 9)		(36,194	)		(39,732	)		(35,733	)		(143,762	)		(153,138	)
Loss on early extinguishment of debt		—			(4,608	)		—			(7,877	)		(4,608	)
Gain on sale of real estate		—			—			—			133,989			—
Unrealized gain on interest rate swaps		—			10,153			—			1,802			39,814

Net (loss) income before income taxes		(6,297	)		(221	)		(26,413	)		112,353			3,854
Income tax (expense) benefit		(935	)		(2,602	)		1,010			(5,177	)		(1,785	)

Net (loss) income		(7,232	)		(2,823	)		(25,403	)		107,176			2,069
Less net (income) loss attributable to noncontrolling interests in:
Consolidated joint ventures		(664	)		(5,361	)		14,217			10,365			(15,423	)
Consolidated real estate fund		398			497			(114	)		(19,797	)		1,316
Operating Partnership		705			1,198			1,086			(11,363	)		2,104

Net (loss) income attributable to common stockholders	$	(6,793	)	$	(6,489	)	$	(10,214	)	$	86,381		$	(9,934	)

Weighted average common shares outstanding:
Basic		239,997,181			223,221,284			239,445,810			236,372,801			218,053,062

Diluted		239,997,181			223,221,284			239,445,810			236,401,548			218,053,062

(Loss) income per common share:
Basic	$	(0.03	)	$	(0.03	)	$	(0.04	)	$	0.37		$	(0.05	)

Diluted	$	(0.03	)	$	(0.03	)	$	(0.04	)	$	0.37		$	(0.05	)

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		SELECT INCOME STATEMENT DATA

(unaudited and in thousands)


	Three Months Ended							Year Ended
Fee Income:	December 31, 2017		December 31, 2016		September 30, 2017			December 31, 2017			December 31, 2016
Property management	$	1,521	$	1,484	$	1,673		$	6,336		$	5,948
Asset management		1,959		2,254		1,997			8,581			7,754
Acquisition and disposition		725		1,249		1,475			7,770			2,026
Other		169		376		689			1,525			1,203

Total fee income	$	4,374	$	5,363	$	5,834		$	24,212		$	16,931


	Three Months Ended							Year Ended
Other Income:	December 31, 2017		December 31, 2016		September 30, 2017			December 31, 2017			December 31, 2016
Lease termination income	$	274	$	2,502	$	954		$	2,189		$	17,010
Other (primarily tenant requested services, including overtime heating and cooling)		3,030		2,386		2,545			11,265			14,296

Total other income	$	3,304	$	4,888	$	3,499		$	13,454		$	31,306


	Three Months Ended							Year Ended
General and Administrative:	December 31, 2017		December 31, 2016		September 30, 2017			December 31, 2017			December 31, 2016
Cash general and administrative	$	9,649	$	11,416	$	9,833		$	39,045		$	40,769
Non-cash general and administrative - stock based compensation expense		3,100		2,512		3,825			14,792			9,423
Mark-to-market of deferred compensation plan liabilities (offset by an increase in the mark-to-market of plan assets, which is included in “interest and other income”)		1,578		247		812			5,114			444
Severance costs		2,626		—		—			2,626			2,874

Total general and administrative	$	16,953	$	14,175	$	14,470		$	61,577		$	53,510


	Three Months Ended							Year Ended
Interest and Other Income (Loss):	December 31, 2017		December 31, 2016		September 30, 2017			December 31, 2017			December 31, 2016
Valuation allowance on preferred equity investment ⁽¹⁾	$	—	$	—	$	(19,588	)	$	(19,588	)	$	—
Preferred equity investment income ⁽²⁾		860		1,417		961			4,187			5,716
Interest income		513		241		147			1,256			774
Mark-to-market of deferred compensation plan assets (offset by an increase in the mark-to-market of plan liabilities, which is included in “general and administrative” expenses)		1,578		247		812			5,114			444

Total interest and other income (loss), net	$	2,951	$	1,905	$	(17,668	)	$	(9,031	)	$	6,934

⁽¹⁾	Represents the valuation allowance on 2 Herald Square, our preferred equity investment in PGRESS Equity Holdings L.P., of which our 24.4% share is $4,780 and $14,808 was attributable to noncontrolling interests.

⁽²⁾	Represents 100% of the investment income from PGRESS Equity Holdings, L.P., of which our 24.4% share is $210, $346 and $243 for the three months ended December 31, 2017 and 2016, and September 30, 2017, respectively and $1,029 and $1,393 for the years ended December 31, 2017 and 2016, respectively.


	Three Months Ended						Year Ended
Interest and Debt Expense:	December 31, 2017		December 31, 2016		September 30, 2017		December 31, 2017		December 31, 2016
Interest expense	$	33,373	$	37,049	$	32,914	$	132,574	$	146,334
Amortization of deferred financing costs		2,821		2,683		2,819		11,188		6,804

Total interest and debt expense	$	36,194	$	39,732	$	35,733	$	143,762	$	153,138

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		FUNDS FROM OPERATIONS (“FFO”)
(unaudited and in thousands, except share and per share amounts)


	Three Months Ended									Year Ended
	December 31, 2017			December 31, 2016			September 30, 2017			December 31, 2017			December 31, 2016
Reconciliation of net (loss) income to FFO and Core FFO:
Net (loss) income	$	(7,232	)	$	(2,823	)	$	(25,403	)	$	107,176		$	2,069
Real estate depreciation and amortization (including our share of unconsolidated joint ventures)		69,915			62,451			68,523			273,938			275,653
Gain on sale of Waterview		—			—			—			(110,583	)		—

FFO ⁽¹⁾		62,683			59,628			43,120			270,531			277,722
Less FFO attributable to noncontrolling interests in:
Consolidated joint ventures		(9,965	)		(11,294	)		5,152			(19,748	)		(41,320	)
Consolidated real estate fund		398			272			(114	)		(20,132	)		419

FFO attributable to Paramount Group Operating Partnership		53,116			48,606			48,158			230,651			236,821
Less FFO attributable to noncontrolling interests in Operating Partnership		(4,995	)		(7,572	)		(4,628	)		(25,093	)		(41,681	)

FFO attributable to common stockholders ⁽¹⁾	$	48,121		$	41,034		$	43,530		$	205,558		$	195,140

Per diluted share	$	0.20		$	0.18		$	0.18		$	0.87		$	0.89

FFO	$	62,683		$	59,628		$	43,120		$	270,531		$	277,722
Non-core items:
Severance costs		2,626			—			—			2,626			2,874
Transaction related costs		976			679			274			2,027			2,404
Our share of earnings from 712 Fifth Avenue in excess of distributions received and (distributions in excess of basis)		176			—			691			(14,205	)		—
Realized and unrealized loss (gain) from unconsolidated real estate funds		99			(1,911	)		4,034			6,380			607
After-tax net gain on sale of residential condominium land parcel		—			—			—			(21,568	)		—
Valuation allowance on preferred equity investment		—			—			19,588			19,588			—
Loss on early extinguishment of debt		—			4,608			—			7,877			4,608
Unrealized gain on interest rate swaps (including our share of unconsolidated joint ventures)		—			(10,930	)		—			(2,750	)		(41,869	)

Core FFO ⁽¹⁾		66,560			52,074			67,707			270,506			246,346
Less Core FFO attributable to noncontrolling interests in:
Consolidated joint ventures		(9,965	)		(6,114	)		(9,656	)		(35,022	)		(23,890	)
Consolidated real estate fund		398			272			(114	)		156			419

Core FFO attributable to Paramount Group Operating Partnership		56,993			46,232			57,937			235,640			222,875
Less Core FFO attributable to noncontrolling interests in Operating Partnership		(5,360	)		(7,202	)		(5,568	)		(25,568	)		(39,296	)

Core FFO attributable to common stockholders ⁽¹⁾	$	51,633		$	39,030		$	52,369		$	210,072		$	183,579

Per diluted share	$	0.22		$	0.17		$	0.22		$	0.89		$	0.84

Reconciliation of weighted average shares outstanding:
Weighted average shares outstanding		239,997,181			223,221,284			239,445,810			236,372,801			218,053,062
Effect of dilutive securities		37,360			23,141			24,653			28,747			15,869

Denominator for FFO and Core FFO per diluted share		240,034,541			223,244,425			239,470,463			236,401,548			218,068,931

⁽¹⁾	See page 43 for our definition of this measure.

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		FUNDS AVAILABLE FOR DISTRIBUTION (“FAD”)
(unaudited and in thousands)


	Three Months Ended									Year Ended
	December 31, 2017			December 31, 2016			September 30, 2017			December 31, 2017			December 31, 2016
Reconciliation of Core FFO to FAD:
Core FFO	$	66,560		$	52,074		$	67,707		$	270,506		$	246,346
Add (subtract) adjustments to arrive at FAD:
Amortization of stock-based compensation expense		3,100			2,512			3,825			14,792			9,423
Amortization of deferred financing costs (including our share of unconsolidated joint ventures)		2,895			2,734			2,891			11,645			7,008
Amortization of above and below-market leases, net (including our share of unconsolidated joint ventures)		(5,196	)		(2,943	)		(3,017	)		(18,912	)		(9,536	)
Expenditures to maintain assets		(8,623	)		(7,600	)		(2,861	)		(19,038	)		(20,516	)
Second generation tenant improvements and leasing commissions		(10,744	)		(11,704	)		(22,698	)		(50,717	)		(58,451	)
Straight-line rent adjustments (including our share of unconsolidated joint ventures)		(10,765	)		(14,756	)		(11,402	)		(54,886	)		(82,724	)

FAD ⁽¹⁾		37,227			20,317			34,445			153,390			91,550
Less FAD attributable to noncontrolling interests in:
Consolidated joint ventures		(5,687	)		522			(6,454	)		(17,124	)		1,943
Consolidated real estate fund		407			272			(115	)		164			419

FAD attributable to Paramount Group Operating Partnership		31,947			21,111			27,876			136,430			93,912
Less FAD attributable to noncontrolling interests in Operating Partnership		(3,005	)		(3,289	)		(2,679	)		(14,840	)		(16,652	)

FAD attributable to common stockholders ^(1) (2)	$	28,942		$	17,822		$	25,197		$	121,590		$	77,260

⁽¹⁾	See page 43 for our definition of this measure.

⁽²⁾	FAD attributable to common stockholders is not necessarily indicative of future FAD 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.

- 12 -


		EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION (“EBITDA”)
(unaudited and in thousands)


	Three Months Ended									Year Ended
	December 31, 2017			December 31, 2016			September 30, 2017			December 31, 2017			December 31, 2016
Reconciliation of net (loss) income to EBITDA and Adjusted EBITDA:
Net (loss) income	$	(7,232	)	$	(2,823	)	$	(25,403	)	$	107,176		$	2,069
Add (subtract) adjustments to arrive at EBITDA and Adjusted EBITDA:
Depreciation and amortization (including our share of unconsolidated joint ventures)		69,915			62,451			68,523			273,938			275,653
Interest and debt expense (including our share of unconsolidated joint ventures)		37,869			41,177			37,392			150,593			158,805
Income tax expense (benefit) (including our share of unconsolidated joint ventures)		935			2,602			(1,010	)		5,177			1,786

EBITDA ⁽¹⁾		101,487			103,407			79,502			536,884			438,313
Less EBITDA attributable to noncontrolling interests in:
Consolidated joint ventures		(16,684	)		(18,379	)		(1,294	)		(43,564	)		(69,328	)
Consolidated real estate fund		398			268			(111	)		(20,130	)		414

PGRE’s share of EBITDA ⁽¹⁾	$	85,201		$	85,296		$	78,097		$	473,190		$	369,399


EBITDA	$	101,487		$	103,407		$	79,502		$	536,884		$	438,313
Add (subtract) adjustments to arrive at Adjusted EBITDA:
Severance costs		2,626			—			—			2,626			2,874
Transaction related costs		976			679			274			2,027			2,404
EBITDA from real estate funds		554			(1,732	)		3,801			5,926			976
Our share of earnings from 712 Fifth Avenue in excess of distributions received and (distributions in excess of basis)		176			—			691			(14,205	)		—
Gain on sale of Waterview		—			—			—			(110,583	)		—
Pre-tax net gain on sale of residential condominium land parcel		—			—			—			(23,406	)		—
Valuation allowance on preferred equity investment		—			—			19,588			19,588			—
Loss on early extinguishment of debt		—			4,608			—			7,877			4,608
Unrealized gain on interest rate swaps (including our share of unconsolidated joint ventures)		—			(10,930	)		—			(2,750	)		(41,869	)

Adjusted EBITDA ⁽¹⁾		105,819			96,032			103,856			423,984			407,306
Less Adjusted EBITDA attributable to noncontrolling interests in:
Consolidated joint ventures		(16,685	)		(13,199	)		(16,101	)		(58,838	)		(51,897	)
Consolidated real estate fund		—			—			3			384			—

PGRE’s share of Adjusted EBITDA ⁽¹⁾	$	89,134		$	82,833		$	87,758		$	365,530		$	355,409

⁽¹⁾	See page 43 for our definition of this measure.

- 13 -


		NET OPERATING INCOME (“NOI”)
(unaudited and in thousands)


	Three Months Ended									Year Ended
	December 31, 2017			December 31, 2016			September 30, 2017			December 31, 2017			December 31, 2016
Reconciliation of net (loss) income to NOI and Cash NOI:
Net (loss) income	$	(7,232	)	$	(2,823	)	$	(25,403	)	$	107,176		$	2,069
Add (subtract) adjustments to arrive at NOI and Cash NOI:
Depreciation and amortization		67,894			60,975			66,515			266,037			269,450
General and administrative		16,953			14,175			14,470			61,577			53,510
Interest and debt expense		36,194			39,732			35,733			143,762			153,138
Loss on early extinguishment of debt		—			4,608			—			7,877			4,608
Transaction related costs		976			679			274			2,027			2,404
Income tax expense (benefit)		935			2,602			(1,010	)		5,177			1,785
NOI from unconsolidated joint ventures		4,869			4,257			4,993			19,643			17,195
Income from unconsolidated joint ventures		(1,042	)		(2,122	)		(671	)		(20,185	)		(7,413	)
Loss (gain) from unconsolidated real estate funds		90			(2,042	)		3,930			6,143			498
Fee income		(4,374	)		(5,363	)		(5,834	)		(24,212	)		(16,931	)
Interest and other (income) loss, net		(2,951	)		(1,905	)		17,668			9,031			(6,934	)
Gain on sale of real estate		—			—			—			(133,989	)		—
Unrealized gain on interest rate swaps		—			(10,153	)		—			(1,802	)		(39,814	)

NOI ⁽¹⁾		112,312			102,620			110,665			448,262			433,565
Less NOI attributable to noncontrolling interests in:
Consolidated joint ventures		(15,928	)		(12,125	)		(15,307	)		(55,464	)		(47,561	)
Consolidated real estate fund		353			268			(21	)		(154	)		414

PGRE’s share of NOI ⁽¹⁾	$	96,737		$	90,763		$	95,337		$	392,644		$	386,418


NOI ⁽¹⁾	$	112,312		$	102,620		$	110,665		$	448,262		$	433,565
Less:
Straight-line rent adjustments (including our share of unconsolidated joint ventures)		(10,765	)		(14,756	)		(11,402	)		(54,886	)		(82,724	)
Amortization of above and below-market leases, net (including our share of unconsolidated joint ventures)		(5,196	)		(2,943	)		(3,017	)		(18,912	)		(9,536	)

Cash NOI ⁽¹⁾		96,351			84,921			96,246			374,464			341,305
Less Cash NOI attributable to noncontrolling interests in:
Consolidated joint ventures		(13,085	)		(7,965	)		(12,412	)		(42,325	)		(32,571	)
Consolidated real estate fund		353			268			(21	)		(154	)		414

PGRE’s share of Cash NOI ⁽¹⁾	$	83,619		$	77,224		$	83,813		$	331,985		$	309,148

⁽¹⁾	See page 43 for our definition of this measure.

- 14 -


		NOI - BY SEGMENT
(unaudited and in thousands)


	Three Months Ended December 31, 2017
	Total			New York			Washington, D.C.			San Francisco			Other
Reconciliation of net (loss) income to NOI and Cash NOI:
Net (loss) income	$	(7,232	)	$	3,110		$	3,817		$	785		$	(14,944	)
Add (subtract) adjustments to arrive at NOI and Cash NOI:
Depreciation and amortization		67,894			38,203			5,453			23,724			514
General and administrative		16,953			—			—			—			16,953
Interest and debt expense		36,194			22,604			—			12,383			1,207
Transaction related costs		976			—			—			—			976
Income tax expense (benefit)		935			—			—			(7	)		942
NOI from unconsolidated joint ventures		4,869			4,737			—			—			132
Income from unconsolidated joint ventures		(1,042	)		(971	)		—			—			(71	)
Loss from unconsolidated real estate funds		90			—			—			—			90
Fee income		(4,374	)		—			—			—			(4,374	)
Interest and other income, net		(2,951	)		(15	)		(4	)		(123	)		(2,809	)

NOI ⁽¹⁾		112,312			67,668			9,266			36,762			(1,384	)
Less NOI attributable to noncontrolling interests in:
Consolidated joint ventures		(15,928	)		—			—			(15,928	)		—
Consolidated real estate fund		353			—			—			—			353

PGRE’s share of NOI for the three months ended December 31, 2017	$	96,737		$	67,668		$	9,266		$	20,834		$	(1,031	)

PGRE’s share of NOI for the three months ended December 31, 2016	$	90,763		$	63,272		$	14,670		$	14,463		$	(1,642	)


NOI ⁽¹⁾	$	112,312		$	67,668		$	9,266		$	36,762		$	(1,384	)
Add (subtract) adjustments to arrive at Cash NOI:
Straight-line rent adjustments (including our share of unconsolidated joint ventures)		(10,765	)		(8,325	)		311			(2,724	)		(27	)
Amortization of above and below-market leases, net (including our share of unconsolidated joint ventures)		(5,196	)		720			(549	)		(5,367	)		—

Cash NOI ⁽¹⁾		96,351			60,063			9,028			28,671			(1,411	)
Less Cash NOI attributable to noncontrolling interests in:
Consolidated joint ventures		(13,085	)		—			—			(13,085	)		—
Consolidated real estate fund		353			—			—			—			353

PGRE’s share of Cash NOI for the three months ended December 31, 2017	$	83,619		$	60,063		$	9,028		$	15,586		$	(1,058	)

PGRE’s share of Cash NOI for the three months ended December 31, 2016	$	77,224		$	55,971		$	13,188		$	9,734		$	(1,669	)

⁽¹⁾	See page 43 for our definition of this measure.

- 15 -


		NOI - BY SEGMENT
(unaudited and in thousands)


	Year Ended December 31, 2017
	Total			New York			Washington, D.C.			San Francisco			Other
Reconciliation of net income (loss) to NOI and Cash NOI:
Net income (loss)	$	107,176		$	27,031		$	126,054		$	5,727		$	(51,636	)
Add (subtract) adjustments to arrive at NOI and Cash NOI:
Depreciation and amortization		266,037			153,337			21,484			89,088			2,128
General and administrative		61,577			—			—			—			61,577
Interest and debt expense		143,762			89,358			2,724			45,366			6,314
Loss on early extinguishment of debt		7,877			—			5,162			2,715			—
Transaction related costs		2,027			—			—			—			2,027
Income tax expense		5,177			—			—			2			5,175
NOI from unconsolidated joint ventures		19,643			19,143			—			—			500
Income from unconsolidated joint ventures		(20,185	)		(19,920	)		—			—			(265	)
Loss from unconsolidated real estate funds		6,143			—			—			—			6,143
Fee income		(24,212	)		—			—			—			(24,212	)
Interest and other loss (income), net		9,031			(113	)		(40	)		(325	)		9,509
Gain on sale of real estate		(133,989	)		—			(110,583	)		—			(23,406	)
Unrealized gain on interest rate swaps		(1,802	)		—			—			(1,802	)		—

NOI⁽¹⁾		448,262			268,836			44,801			140,771			(6,146	)
Less NOI attributable to noncontrolling interests in:
Consolidated joint ventures		(55,464	)		—			—			(55,464	)		—
Consolidated real estate funds		(154	)		—			—			—			(154	)

PGRE’s share of NOI for the year ended December 31, 2017	$	392,644		$	268,836		$	44,801		$	85,307		$	(6,300	)

PGRE’s share of NOI for the year ended December 31, 2016	$	386,418		$	290,223		$	53,668		$	49,363		$	(6,836	)

NOI⁽¹⁾	$	448,262		$	268,836		$	44,801		$	140,771		$	(6,146	)
Add (subtract) adjustments to arrive at Cash NOI:
Straight-line rent adjustments (including our share of unconsolidated joint ventures)		(54,886	)		(38,293	)		(979	)		(15,592	)		(22	)
Amortization of above and below-market leases, net		(18,912	)		4,737			(2,193	)		(21,456	)		—

Cash NOI ⁽¹⁾		374,464			235,280			41,629			103,723			(6,168	)
Less Cash NOI attributable to noncontrolling interests in:
Consolidated joint ventures		(42,325	)		—			—			(42,325	)		—
Consolidated real estate funds		(154	)		—			—			—			(154	)

PGRE’s share of Cash NOI for the year ended December 31, 2017	$	331,985		$	235,280		$	41,629		$	61,398		$	(6,322	)

PGRE’s share of Cash NOI for the year ended December 31, 2016	$	309,148		$	235,088		$	46,692		$	34,228		$	(6,860	)

⁽¹⁾	See page 43 for our definition of this measure.

- 16 -


		SAME STORE RESULTS - BY SEGMENT
(unaudited and in thousands)


SAME STORE CASH NOI⁽¹⁾	Three Months Ended December 31, 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 December 31, 2017	$	83,619		$	60,063		$	9,028		$	15,586		$	(1,058	)
Acquisitions⁽²⁾		(4,975	)		(845	)		—			(4,130	)		—
Dispositions		—			—			—			—			—
Lease termination income (including our share of unconsolidated joint ventures)		(388	)		(191	)		—			(197	)		—
Other, net		5			6			—			(1	)		—

PGRE’s share of Same Store Cash NOI⁽¹⁾for the three months ended December 31, 2017	$	78,261		$	59,033		$	9,028		$	11,258		$	(1,058	)


	Three Months Ended December 31, 2016
	Total			New York			Washington, D.C.			San Francisco			Other

PGRE’s share of Cash NOI for the three months ended December 31, 2016	$	77,224		$	55,971		$	13,188		$	9,734		$	(1,669	)
Acquisitions		—			—			—			—			—
Dispositions⁽³⁾		(6,345	)		—			(6,345	)		—			—
Lease termination income (including our share of unconsolidated joint ventures)		(2,469	)		(2,437	)		—			(32	)		—
Other, net		(243	)		—			—			—			(243	)

PGRE’s share of Same Store Cash NOI⁽¹⁾for the three months ended December 31, 2016	$	68,167		$	53,534		$	6,843		$	9,702		$	(1,912	)



Increase in PGRE’s share of Same Store Cash NOI	$	10,094		$	5,499		$	2,185		$	1,556		$	854

% Increase		14.8	%		10.3	%		31.9	%		16.0	%

⁽¹⁾	See page 43 for our definition of this measure.

⁽²⁾	Represents our share of Cash NOI attributable to acquired properties (60 Wall Street in New York and One Front Street and 50 Beale Street in San Francisco) for the months in which they were not owned by us in both reporting periods.

⁽³⁾	Represents our share of Cash NOI attributable to sold properties (Waterview in Washington, D.C.) for the months in which they were not owned by us in both reporting periods.

- 17 -


		SAME STORE RESULTS - BY SEGMENT
(unaudited and in thousands)


SAME STORE NOI⁽¹⁾	Three Months Ended December 31, 2017
	Total			New York			Washington, D.C.			San Francisco			Other

PGRE’s share of NOI for the three months ended December 31, 2017	$	96,737		$	67,668		$	9,266		$	20,834		$	(1,031	)
Acquisitions⁽²⁾		(6,871	)		(676	)		—			(6,195	)		—
Dispositions		—			—			—			—			—
Lease termination income (including our share of unconsolidated joint ventures)		(388	)		(191	)		—			(197	)		—
Other, net		(509	)		(4	)		—			(505	)		—

PGRE’s share of Same Store NOI⁽¹⁾for the three months ended December 31, 2017	$	88,969		$	66,797		$	9,266		$	13,937		$	(1,031	)


	Three Months Ended December 31, 2016
	Total			New York			Washington, D.C.			San Francisco			Other

PGRE’s share of NOI for the three months ended December 31, 2016	$	90,763		$	63,272		$	14,670		$	14,463		$	(1,642	)
Acquisitions		—			—			—			—			—
Dispositions⁽³⁾		(6,295	)		—			(6,295	)		—			—
Lease termination income (including our share of unconsolidated joint ventures)		(2,469	)		(2,437	)		—			(32	)		—
Other, net		610			1,126			22			(295	)		(243	)

PGRE’s share of Same Store NOI⁽¹⁾for the three months ended December 31, 2016	$	82,609		$	61,961		$	8,397		$	14,136		$	(1,885	)



Increase (decrease) in PGRE’s share of Same Store NOI	$	6,360		$	4,836		$	869		$	(199	)	$	854

% Increase (decrease)		7.7	%		7.8	%		10.3	%		(1.4	%)

⁽¹⁾	See page 43 for our definition of this measure.

⁽²⁾	Represents our share of NOI attributable to acquired properties (60 Wall Street in New York and One Front Street and 50 Beale Street in San Francisco) for the months in which they were not owned by us in both reporting periods.

⁽³⁾	Represents our share of NOI attributable to sold properties (Waterview in Washington, D.C.) for the months in which they were not owned by us in both reporting periods.

- 18 -


		SAME STORE RESULTS - BY SEGMENT
(unaudited and in thousands)


SAME STORE CASH NOI⁽¹⁾	Year Ended December 31, 2017
	Total			New York			Washington, D.C.			San Francisco			Other

PGRE’s share of Cash NOI for the year ended December 31, 2017	$	331,985		$	235,280		$	41,629		$	61,398		$	(6,322	)
Acquisitions⁽²⁾		(25,536	)		(3,105	)		—			(22,431	)		—
Dispositions		—			—			—			—			—
Lease termination income (including our share of unconsolidated joint ventures)		(2,381	)		(1,097	)		—			(1,284	)		—
Other, net		(50	)		50			—			23			(123	)

PGRE’s share of Same Store Cash NOI⁽¹⁾for the year ended December 31, 2017	$	304,018		$	231,128		$	41,629		$	37,706		$	(6,445	)


	Year Ended December 31, 2016
	Total			New York			Washington, D.C.			San Francisco			Other

PGRE’s share of Cash NOI for the year ended December 31, 2016	$	309,148		$	235,088		$	46,692		$	34,228		$	(6,860	)
Acquisitions		—			—			—			—			—
Dispositions⁽³⁾		(16,753	)		—			(16,753	)		—			—
Lease termination income (including our share of unconsolidated joint ventures)		(17,040	)		(16,859	)		—			(181	)		—
Other, net		(536	)		311			4			—			(851	)

PGRE’s share of Same Store Cash NOI⁽¹⁾for the year ended December 31, 2016	$	274,819		$	218,540		$	29,943		$	34,047		$	(7,711	)



Increase in PGRE’s share of Same Store Cash NOI	$	29,199		$	12,588		$	11,686		$	3,659		$	1,266

% Increase		10.6	%		5.8	%		39.0	%		10.7	%

⁽¹⁾	See page 43 for our definition of this measure.

⁽²⁾	Represents our share of Cash NOI attributable to acquired properties (60 Wall Street in New York and One Front Street and 50 Beale Street in San Francisco) for the months in which they were not owned by us in both reporting periods.

⁽³⁾	Represents our share of Cash NOI attributable to sold properties (Waterview in Washington, D.C.) for the months in which they were not owned by us in both reporting periods.

- 19 -


		SAME STORE RESULTS - BY SEGMENT
(unaudited and in thousands)


	Year Ended December 31, 2017
SAME STORE NOI⁽¹⁾	Total			New York			Washington, D.C.			San Francisco			Other

PGRE’s share of NOI for the year ended December 31, 2017	$	392,644		$	268,836		$	44,801		$	85,307		$	(6,300	)
Acquisitions⁽²⁾		(35,852	)		(2,594	)		—			(33,258	)		—
Dispositions		—			—			—			—			—
Lease termination income (including our share of unconsolidated joint ventures)		(2,381	)		(1,097	)		—			(1,284	)		—
Other, net		(1,053	)		234			—			(1,164	)		(123	)

PGRE’s share of Same Store NOI⁽¹⁾for the year ended December 31, 2017	$	353,358		$	265,379		$	44,801		$	49,601		$	(6,423	)


	Year Ended December 31, 2016
	Total			New York			Washington, D.C.			San Francisco			Other

PGRE’s share of NOI for the year ended December 31, 2016	$	386,418		$	290,223		$	53,668		$	49,363		$	(6,836	)
Acquisitions		—			—			—			—			—
Dispositions⁽³⁾		(16,623	)		—			(16,623	)		—			—
Lease termination income (including our share of unconsolidated joint ventures)		(17,040	)		(16,859	)		—			(181	)		—
Other, net		3,331			4,373			26			(217	)		(851	)

PGRE’s share of Same Store NOI⁽¹⁾for the year ended December 31, 2016	$	356,086		$	277,737		$	37,071		$	48,965		$	(7,687	)



(Decrease) increase in PGRE’s share of Same Store NOI	$	(2,728	)	$	(12,358	)	$	7,730		$	636		$	1,264

% (Decrease) increase		(0.8	%)		(4.4	%)		20.9	%		1.3	%

⁽¹⁾	See page 43 for our definition of this measure.

⁽²⁾	Represents our share of NOI attributable to acquired properties (60 Wall Street in New York and One Front Street and 50 Beale Street in San Francisco) for the months in which they were not owned by us in both reporting periods.

⁽³⁾	Represents our share of NOI attributable to sold properties (Waterview in Washington, D.C.) for the months in which they were not owned by us in both reporting periods.

- 20 -


		CONSOLIDATED JOINT VENTURES AND FUND - BALANCE SHEETS

(unaudited and in thousands)


	As of December 31, 2017										As of December 31, 2016
	Consolidated Joint Ventures								Consolidated Fund		Consolidated Joint Ventures						Consolidated Fund
	Total Consolidated Joint Ventures		One Market Plaza		50 Beale Street ⁽¹⁾		PGRESS Equity Holdings L.P.		Residential Development Fund⁽²⁾		Total Consolidated Joint Ventures		One Market Plaza		PGRESS Equity Holdings L.P.		Residential Development Fund⁽²⁾
PGRE Ownership				49.0%		31.1%		24.4%		7.4%				49.0%		24.4%		12.9%
ASSETS:
Real estate, net	$	1,726,800	$	1,246,427	$	480,373	$	—	$	—	$	1,264,387	$	1,264,387	$	—	$	72,423
Cash and cash equivalents		46,839		24,658		21,792		389		656		9,661		9,236		425		2,525
Restricted cash		8,163		8,163		—		—		—		1,868		1,868		—		3,000
Preferred equity investments, net		35,817		—		—		35,817		—		55,051		—		55,051		—
Investments in unconsolidated joint ventures		—		—		—		—		16,031		—		—		—		—
Accounts and other receivables, net		2,548		1,423		1,125		—		2		548		548		—		147
Deferred rent receivable		44,000		43,332		668		—		—		32,103		32,103		—		—
Deferred charges, net		8,123		7,508		615		—		—		5,966		5,966		—		—
Intangible assets, net		66,112		39,421		26,691		—		—		52,139		52,139		—		—
Other assets		908		747		161		—		10		14,048		14,046		2		426

Total Assets	$	1,939,310	$	1,371,679	$	531,425	$	36,206	$	16,699	$	1,435,771	$	1,380,293	$	55,478	$	78,521

LIABILITIES:
Notes and mortgages payable, net	$	1,196,607	$	968,607	$	228,000	$	—	$	—	$	872,960	$	872,960	$	—	$	—
Accounts payable and accrued expenses		21,134		14,876		6,205		53		62		19,952		19,934		18		1,125
Intangible liabilities, net		46,365		36,793		9,572		—		—		48,654		48,654		—		—
Other liabilities		156		149		7		—		—		24,782		24,782		—		3,000

Total Liabilities		1,264,262		1,020,425		243,784		53		62		966,348		966,330		18		4,125

EQUITY:
Paramount Group, Inc. equity		270,051		172,182		88,695		9,174		2,088		215,635		201,928		13,707		9,603
Noncontrolling interests		404,997		179,072		198,946		26,979		14,549		253,788		212,035		41,753		64,793

Total Equity		675,048		351,254		287,641		36,153		16,637		469,423		413,963		55,460		74,396

Total Liabilities and Equity	$	1,939,310	$	1,371,679	$	531,425	$	36,206	$	16,699	$	1,435,771	$	1,380,293	$	55,478	$	78,521

⁽¹⁾	Acquired on July 17, 2017.

⁽²⁾

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%.

- 21 -


		CONSOLIDATED JOINT VENTURES AND FUND - OPERATING RESULTS
(unaudited and in thousands)


	Three Months Ended December 31, 2017														Three Months Ended December 31, 2016
	Consolidated Joint Ventures											Consolidated Fund			Consolidated Joint Ventures								Consolidated Fund
	Total Consolidated Joint Ventures			One Market Plaza			50 Beale Street ⁽¹⁾			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	$	41,416		$	32,658		$	8,758		$	—	$	—		$	31,307		$	31,307		$	—	$	815
Total operating expenses		11,325			8,351			2,974			—		452			7,337			7,337			—		840

Net operating income		30,091			24,307			5,784			—		(452	)		23,970			23,970			—		(25	)
Depreciation and amortization		(16,495	)		(11,542	)		(4,953	)		—		—			(11,639	)		(11,639	)		—		(259	)
Interest and other income (loss), net		981			60			61			860		(53	)		1,424			7			1,417		—
Interest and debt expense		(12,383	)		(10,303	)		(2,080	)		—		—			(14,124	)		(14,124	)		—		—
Income from unconsolidated joint ventures		—			—			—			—		49			—			—			—		—
Unrealized gain on interest rate swaps		—			—			—			—		—			10,157			10,157			—		—

Net income (loss) before income taxes		2,194			2,522			(1,188	)		860		(456	)		9,788			8,371			1,417		(284	)
Income tax benefit (expense)		7			9			(2	)		—		—			—			—			—		(4	)

Net income (loss)	$	2,201		$	2,531		$	(1,190	)	$	860	$	(456	)	$	9,788		$	8,371		$	1,417	$	(288	)



PGRE’s share Ownership	Total			49.0%			31.1%			24.4%		7.4%			Total			49.0%			24.4%		12.9%
Net income (loss)	$	1,067		$	1,244		$	(387	)	$	210	$	(66	)	$	4,319		$	3,973		$	346	$	(39	)
Add: Management fee income		470			149			321			—		8			108			108			—		248

PGRE’s share of net income (loss)		1,537			1,393			(66	)		210		(58	)		4,427			4,081			346		209
Add: Real estate depreciation and amortization		7,194			5,652			1,542			—		—			5,706			5,706			—		34

FFO ⁽²⁾		8,731			7,045			1,476			210		(58	)		10,133			9,787			346		243
Less: Unrealized gain on interest rate swaps		—			—			—			—		—			(4,977	)		(4,977	)		—		—

Core FFO ⁽²⁾	$	8,731		$	7,045		$	1,476		$	210	$	(58	)	$	5,156		$	4,810		$	346	$	243



Noncontrolling interests’ share Ownership	Total			51.0%			68.9%			75.6%		92.6%			Total			51.0%			75.6%		87.1%
Net income (loss)	$	1,134		$	1,287		$	(803	)	$	650	$	(390	)	$	5,469		$	4,398		$	1,071	$	(249	)
Less: Management fee expense		(470	)		(149	)		(321	)		—		(8	)		(108	)		(108	)		—		(248	)

Net income (loss) attributable to noncontrolling interests		664			1,138			(1,124	)		650		(398	)		5,361			4,290			1,071		(497	)
Add: Real estate depreciation and amortization		9,301			5,890			3,411			—		—			5,933			5,933			—		225

FFO ⁽²⁾		9,965			7,028			2,287			650		(398	)		11,294			10,223			1,071		(272	)
Less: Unrealized gain on interest rate swaps		—			—			—			—		—			(5,180	)		(5,180	)		—		—

Core FFO ⁽²⁾	$	9,965		$	7,028		$	2,287		$	650	$	(398	)	$	6,114		$	5,043		$	1,071	$	(272	)

⁽¹⁾	Acquired on July 17, 2017.

⁽²⁾	See page 43 for our definition of this measure.

- 22 -


		CONSOLIDATED JOINT VENTURES AND FUND - OPERATING RESULTS

(unaudited and in thousands)


	Year Ended December 31, 2017															Year Ended December 31, 2016
	Consolidated Joint Ventures												Consolidated Fund			Consolidated Joint Ventures								Consolidated Fund
	Total Consolidated Joint Ventures			One Market Plaza			50 Beale Street ⁽¹⁾			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	$	143,934		$	127,844		$	16,090		$	—		$	1,338		$	124,069		$	124,069		$	—	$	3,363
Total operating expenses		36,708			31,149			5,559			—			953			29,763			29,763			—		2,716

Net operating income		107,226			96,695			10,531			—			385			94,306			94,306			—		647
Depreciation and amortization		(55,859	)		(46,777	)		(9,082	)		—			(359	)		(50,778	)		(50,778	)		—		(1,035	)
Interest and other (loss) income, net		(15,092	)		196			113			(15,401	)		76			5,743			27			5,716		1
Interest and debt expense		(45,366	)		(41,563	)		(3,803	)		—			—			(55,817	)		(55,817	)		—		—
Loss on early extinguishment of debt		(2,715	)		(2,715	)		—			—			—			—			—			—		—
Gain on sale of land parcel		—			—			—			—			23,406			—			—			—		—
Income from unconsolidated joint venture		—			—			—			—			182			—			—			—		—
Unrealized gain on interest rate swaps		1,802			1,802			—			—			—			34,178			34,178			—		—

Net (loss) income before income taxes		(10,004	)		7,638			(2,241	)		(15,401	)		23,690			27,632			21,916			5,716		(387	)
Income tax benefit (expense)		1			4			(3	)		—			(2	)		(37	)		(37	)		—		(6	)

Net (loss) income	$	(10,003	)	$	7,642		$	(2,244	)	$	(15,401	)	$	23,688		$	27,595		$	21,879		$	5,716	$	(393	)

PGRE’s share Ownership	Total			49.0%			31.1%			24.4%			7.4%			Total			49.0%			24.4%		12.9%
Net (loss) income	$	(779	)	$	3,700		$	(728	)	$	(3,751	)	$	3,518		$	11,628		$	10,235		$	1,393	$	(53	)
Add: Management fee income		1,141			553			588			—			358			544			544			—		976

PGRE’s share of net income (loss)		362			4,253			(140	)		(3,751	)		3,876			12,172			10,779			1,393		923
Add: Real estate depreciation and amortization		25,746			22,921			2,825			—			40			24,881			24,881			—		138

FFO ⁽²⁾		26,108			27,174			2,685			(3,751	)		3,916			37,053			35,660			1,393		1,061
Add: Valuation allowance on preferred equity investment		4,780			—			—			4,780			—			—			—			—		—
Add: Loss on early extinguishment of debt		1,330			1,330			—			—			—			—			—			—		—
Less: Gain on sale of land parcel		—			—			—			—			(3,118	)		—			—			—		—
Less: Unrealized gain on interest rate swaps		(883	)		(883	)		—			—			—			(16,748	)		(16,748	)		—		—

Core FFO ⁽²⁾	$	31,335		$	27,621		$	2,685		$	1,029		$	798		$	20,305		$	18,912		$	1,393	$	1,061



Noncontrolling Interests’ share Ownership	Total			51.0%			68.9%			75.6%			92.6%			Total			51.0%			75.6%		87.1%
Net (loss) income	$	(9,224	)	$	3,942		$	(1,516	)	$	(11,650	)	$	20,170		$	15,967		$	11,644		$	4,323	$	(340	)
Less: Management fee expense		(1,141	)		(553	)		(588	)		—			(358	)		(544	)		(544	)		—		(976	)

Net (loss) income attributable to noncontrolling interests		(10,365	)		3,389			(2,104	)		(11,650	)		19,812			15,423			11,100			4,323		(1,316	)
Add: Real estate depreciation and amortization		30,113			23,856			6,257			—			319			25,897			25,897			—		897

FFO ⁽²⁾		19,748			27,245			4,153			(11,650	)		20,131			41,320			36,997			4,323		(419	)
Add: Valuation allowance on preferred equity investment		14,808			—			—			14,808			—			—			—			—		—
Add: Loss on early extinguishment of debt		1,385			1,385			—			—			—			—			—			—		—
Less: Gain on sale of land parcel		—			—			—			—			(20,288	)		—			—			—		—
Less: Unrealized gain on interest rate swaps		(919	)		(919	)		—			—			—			(17,430	)		(17,430	)		—		—

Core FFO ⁽²⁾	$	35,022		$	27,711		$	4,153		$	3,158		$	(157	)	$	23,890		$	19,567		$	4,323	$	(419	)

⁽¹⁾	Acquired on July 17, 2017.

⁽²⁾	See page 43 for our definition of this measure.

- 23 -


		UNCONSOLIDATED JOINT VENTURES - BALANCE SHEETS

(unaudited and in thousands)


	As of December 31, 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	$	1,196,116	$	202,040		$	873,142	$	120,934	$	213,903		$	207,632		$	6,271
Cash and cash equivalents		52,132		31,511			18,642		1,979		19,089			18,430			659
Restricted cash		4,726		4,726			—		—		75			75			—
Accounts and other receivables, net		296		296			—		—		300			300			—
Deferred rent receivable		15,446		13,456			1,990		—		12,790			12,790			—
Deferred charges, net		7,848		7,848			—		—		8,907			8,907			—
Intangible assets, net		126,422		—			126,422		—		—			—			—
Other assets		1,148		197			105		846		690			199			491

Total Assets	$	1,404,134	$	260,074		$	1,020,301	$	123,759	$	255,754		$	248,333		$	7,421

LIABILITIES:
Notes and mortgages payable, net	$	886,902	$	296,132		$	567,799	$	22,971	$	269,063		$	245,990		$	23,073
Accounts payable and accrued expenses		12,560		4,435			7,382		743		3,633			3,460			173
Other liabilities		1,636		180			850		606		5,473			5,323			150

Total Liabilities		901,098		300,747			576,031		24,320		278,169			254,773			23,396

EQUITY:
Total Equity		503,036		(40,673	)		444,270		99,439		(22,415	)		(6,440	)		(15,975	)

Total Liabilities and Equity	$	1,404,134	$	260,074		$	1,020,301	$	123,759	$	255,754		$	248,333		$	7,421

⁽¹⁾	Acquired on January 24, 2017.

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

- 24 -


		UNCONSOLIDATED JOINT VENTURES - OPERATING RESULTS

(unaudited and in thousands)


	Three Months Ended December 31, 2017												Three Months Ended December 31, 2016
	Total			712 Fifth Avenue			60 Wall Street ⁽¹⁾			Other ⁽²⁾			Total			712 Fifth Avenue			Oder-Center, Germany
Total revenues	$	36,653		$	14,296		$	20,412		$	1,945		$	15,104		$	14,108		$	996
Total operating expenses		13,983			6,173			6,994			816			5,921			5,753			168

Net operating income		22,670			8,123			13,418			1,129			9,183			8,355			828
Depreciation and amortization expense		(12,201	)		(3,066	)		(9,033	)		(102	)		(2,976	)		(2,883	)		(93	)
Interest and other income, net		139			82			55			2			19			19			—
Interest and debt expense		(8,913	)		(2,702	)		(5,943	)		(268	)		(3,101	)		(2,841	)		(260	)
Unrealized gain on interest rate swaps		—			—			—			—			1,553			1,553			—

Net income (loss) before income taxes		1,695			2,437			(1,503	)		761			4,678			4,203			475
Income tax expense		—			—			—			—			(3	)		—			(3	)

Net income (loss)	$	1,695		$	2,437		$	(1,503	)	$	761		$	4,675		$	4,203		$	472



PGRE’s share Ownership	Total			50.0%			5.0%			Various			Total			50.0%			9.5%
Net income (loss)	$	1,245		$	1,218		$	(71	)	$	98		$	2,147		$	2,102		$	45
Less: Step-up basis adjustment		(27	)		—			—			(27	)		(25	)		—			(25	)
Less: Earnings in excess of distributions received		(176	)		(176	)		—			—			—			—			—

PGRE’s share of net income (loss)		1,042			1,042			(71	)		71			2,122			2,102			20
Less: Noncontrolling interests		(45	)		—			—			(45	)		—			—			—
Add: Real estate depreciation and amortization		2,021			1,533			452			36			1,476			1,442			34

FFO ⁽³⁾		3,018			2,575			381			62			3,598			3,544			54
Add: Earnings in excess of distributions received		176			176			—			—			—			—			—
Less: Unrealized gain on interest rate swaps		—			—			—			—			(777	)		(777	)		—

Core FFO ⁽³⁾	$	3,194		$	2,751		$	381		$	62		$	2,821		$	2,767		$	54



Joint Venture Partners’ share Ownership	Total			50.0%			95.0%			Various			Total			50.0%			90.5%
Net income (loss)	$	450		$	1,219		$	(1,432	)	$	663		$	2,529		$	2,102		$	427
Add: Real estate depreciation and amortization		10,207			1,533			8,581			93			1,526			1,442			84

FFO ⁽³⁾		10,657			2,752			7,149			756			4,055			3,544			511
Less: Unrealized gain on interest rate swaps		—			—			—			—			(777	)		(777	)		—

Core FFO ⁽³⁾	$	10,657		$	2,752		$	7,149		$	756		$	3,278		$	2,767		$	511

⁽¹⁾	Acquired on January 24, 2017.

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

⁽³⁾	See page 43 for our definition of this measure.

- 25 -


		UNCONSOLIDATED JOINT VENTURES - OPERATING RESULTS
(unaudited and in thousands)


	Year Ended December 31, 2017												Year Ended December 31, 2016
	Total			712 Fifth Avenue			60 Wall Street ⁽¹⁾			Other ⁽²⁾			Total			712 Fifth Avenue			Oder-Center, Germany
Total revenues	$	140,426		$	57,536		$	76,388		$	6,502		$	60,797		$	56,573		$	4,224
Total operating expenses		51,390			24,438			24,727			2,225			23,670			22,826			844

Net operating income		89,036			33,098			51,661			4,277			37,127			33,747			3,380
Depreciation and amortization expense		(46,409	)		(12,128	)		(33,899	)		(382	)		(12,509	)		(12,127	)		(382	)
Interest and other income, net		381			222			150			9			68			68			—
Interest and debt expense		(33,461	)		(11,353	)		(21,080	)		(1,028	)		(12,212	)		(11,128	)		(1,084	)
Unrealized gain on interest rate swaps		1,896			1,896			—			—			4,109			4,109			—

Net income (loss) before income taxes		11,443			11,735			(3,168	)		2,876			16,583			14,669			1,914
Income tax expense		(2	)		—			—			(2	)		(10	)		—			(10	)

Net income (loss)	$	11,441		$	11,735		$	(3,168	)	$	2,874		$	16,573		$	14,669		$	1,904



PGRE’s share Ownership	Total			50.0%			5.0%			Various			Total			50.0%			9.5%
Net income (loss)	$	6,083		$	5,867		$	(152	)	$	368		$	7,516		$	7,335		$	181
Less: Step-up basis adjustment		(103	)		—			—			(103	)		(103	)		—			(103	)
Add: Distributions in excess of basis		14,205			14,205			—			—			—			—			—

PGRE’s share of net income (loss)		20,185			20,072			(152	)		265			7,413			7,335			78
Less: Noncontrolling interests		(164	)		—			—			(164	)		—			—			—
Add: Real estate depreciation and amortization		7,901			6,064			1,698			139			6,203			6,064			139

FFO ⁽³⁾		27,922			26,136			1,546			240			13,616			13,399			217
Less: Distributions in excess of basis		(14,205	)		(14,205	)		—			—			—			—			—
Less: Unrealized gain on interest rate swaps		(948	)		(948	)		—			—			(2,055	)		(2,055	)		—

Core FFO ⁽³⁾	$	12,769		$	10,983		$	1,546		$	240		$	11,561		$	11,344		$	217



Joint Venture Partners’ share Ownership	Total			50.0%			95.0%			Various			Total			50.0%			90.5%
Net income (loss)	$	5,358		$	5,868		$	(3,016	)	$	2,506		$	9,058		$	7,335		$	1,723
Add: Real estate depreciation and amortization		38,611			6,064			32,201			346			6,410			6,064			346

FFO ⁽³⁾		43,969			11,932			29,185			2,852			15,468			13,399			2,069
Less: Unrealized gain on interest rate swaps		(948	)		(948	)		—			—			(2,055	)		(2,055	)		—

Core FFO ⁽³⁾	$	43,021		$	10,984		$	29,185		$	2,852		$	13,413		$	11,344		$	2,069

⁽¹⁾	Acquired on January 24, 2017.

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

⁽³⁾	See page 43 for our definition of this measure.

- 26 -


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

Debt Fund:

The following is a summary of our Debt Fund and our ownership interests in the underlying investments, as of December 31, 2017.


		PGRE Ownership			Fixed / Variable rate	Interest Rate					Face Amount				Fair Value
Investments	Investment Type	PGRE Ownership			Fixed / 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	$	50,316	$	649
700 Eighth Avenue	Mortgage/Mezzanine Loans		1.3	%	Variable (LIBOR plus 600 bps)		7.39	%		Jan-2019		74,000		955		74,439		960
1285 Avenue of the Americas	Mezzanine Loan		1.3	%	Fixed		6.75	%		Jun-2023		55,000		710		55,446		715
							5.50	% -		Oct-2018 to
Other	Mezzanine Loan/Preferred Equity		1.3	%	Various		9.61	%		Dec-2027		186,815		2,405		189,441		2,435

											$	365,815	$	4,715	$	369,642	$	4,759


	Total			Our Share
Committed capital	$	775,200		$	10,000
Called and/or invested		(369,950	)		(4,772	)

Available to be invested	$	405,250		$	5,228

- 27 -


		CAPITAL STRUCTURE

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


					As of December 31, 2017
Debt:
Consolidated debt:
Notes and mortgages payable ⁽¹⁾					$	3,583,100
$800 million Revolving Credit Facility ⁽²⁾						—

						3,583,100
Less:
Noncontrolling interest’s share of consolidated debt (One Market Plaza and 50 Beale Street)						(654,342	)
Add:
PGRE’s share of unconsolidated joint venture debt (712 Fifth Avenue, 60 Wall Street and Oder-Center, Germany)						180,990

PGRE’s share of total debt ⁽³⁾						3,109,748


	Shares /Units Outstanding		Share Price as of December 31, 2017
Equity:
Common stock		240,427,022	$	15.85		3,810,768
Operating Partnership units		24,620,279		15.85		390,231

Total equity		265,047,301		15.85		4,200,999

Total Market Capitalization					$	7,310,747

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

⁽²⁾	On January 10, 2018, we amended and extended our revolving credit facility. The maturity date of our revolving credit facility was extended from November 2018 to January 2022, with two six-month extension options, and the capacity was increased to $1.0 billion from $800 million.

⁽³⁾	See page 43 for our definition of this measure.

- 28 -


		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			3.53	%	$	1,000,000			3.54	%	$	30,100			3.11	%
1301 Avenue of the Americas		850,000			3.10	%		500,000			3.05	%		350,000			3.18	%
31 West 52nd Street		500,000			3.80	%		500,000			3.80	%		—			—
One Market Plaza ⁽¹⁾		975,000			4.03	%		975,000			4.03	%		—			—
50 Beale Street ⁽²⁾		228,000			3.65	%		228,000			3.65	%		—			—
Revolving Credit Facility ⁽³⁾		—			—			—			—			—			—

Total consolidated debt		3,583,100			3.61	%		3,203,000			3.66	%		380,100			3.17	%
Noncontrolling interest’s share		(654,342	)		3.94	%		(654,342	)		3.94	%		—			—

PGRE’s share of consolidated debt ⁽⁴⁾	$	2,928,758			3.54	%	$	2,548,658			3.59	%	$	380,100			3.17	%

Unconsolidated Joint Venture Debt:
712 Fifth Avenue ⁽⁵⁾	$	300,000			3.39	%	$	300,000			3.39	%	$	—			—
60 Wall Street		575,000			3.93	%		—			—			575,000			3.93	%
Oder-Center, Germany		22,971			4.62	%		22,971			4.62	%		—			—

Total unconsolidated debt		897,971			3.77	%		322,971			3.48	%		575,000			3.93	%
Joint venture partners’ share		(716,981	)		3.84	%		(170,789	)		3.54	%		(546,192	)		3.93	%

GRE’s share of unconsolidated debt ⁽⁴⁾	$	180,990			3.49	%	$	152,182			3.41	%	$	28,808			3.93	%

PGRE’s share of Total Debt ⁽⁴⁾	$	3,109,748			3.53	%	$	2,700,840			3.58	%	$	408,908			3.22	%


Revolving Credit Facility Covenants: ⁽⁶⁾	Required	Actual
Total Debt / Total Assets	Less than 60%		42.3	%
Secured Debt / Total Assets	Less than 50%		42.0	%
Fixed Charge Coverage	Greater than 1.5x		2.8x
Unsecured Debt / Unencumbered Assets	Less than 60%		1.5	%
Unencumbered Interest Coverage	Greater than 1.75x		38.3x


Debt Composition:	Amount		%
Fixed rate debt:
PGRE’s consolidated fixed rate debt	$	2,548,658
PGRE’s unconsolidated fixed rate debt		152,182

Total fixed rate debt		2,700,840		86.9	%

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		13.1	%

PGRE’s share of Total Debt ⁽³⁾	$	3,109,748		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⁾	On July 17, 2017, we assumed this loan in connection with the acquisition of 50 Beale Street.

⁽³⁾	On January 10, 2018, we amended and extended our revolving credit facility.

⁽⁴⁾	See page 43 for our definition of this measure.

⁽⁵⁾	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.

⁽⁶⁾

This section presents ratios as of December 31, 2017 in accordance with the terms of our revolving credit facility, which has been filed with the SEC. We are not presenting these ratios and the related calculations for any other purpose or for any other period, and are not intending for these measures to otherwise provide information to investors about our 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.

- 29 -


		DEBT MATURITIES

(unaudited and in thousands)


Consolidated Debt:	2018		2019		2020		2021			2022			Thereafter			Total
1301 Avenue of the Americas	$	—	$	—	$	—	$	850,000		$	—		$	—		$	850,000
50 Beale Street		—		—		—		228,000			—			—			228,000
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		—		—		—		1,078,000			1,030,100			1,475,000			3,583,100
Noncontrolling interest’s share		—		—		—		(157,092	)		—			(497,250	)		(654,342	)

PGRE’s share of consolidated debt ⁽¹⁾	$	—	$	—	$	—	$	920,908		$	1,030,100		$	977,750		$	2,928,758


Unconsolidated Joint Venture Debt:
712 Fifth Avenue	$	—	$	—	$	—	$	—		$	—		$	300,000		$	300,000
60 Wall Street		—		—		—		—			575,000			—			575,000
Oder-Center, Germany		—		—		—		—			22,971			—			22,971

Total unconsolidated debt		—		—		—		—			597,971			300,000			897,971
Joint venture partners’ share		—		—		—		—			(566,981	)		(150,000	)		(716,981	)

PGRE’s share of unconsolidated debt ⁽¹⁾	$	—	$	—	$	—	$	—		$	30,990		$	150,000		$	180,990


PGRE’s share of total debt ⁽¹⁾	$	—	$	—	$	—	$	920,908		$	1,061,090		$	1,127,750		$	3,109,748


Weighted average rate		—		—		—		3.14	%		3.54	%		3.84	%		3.53	%

% of debt maturing		—		—		—		29.6	%		34.1	%		36.3	%		100.0	%

⁽¹⁾	See page 43 for our definition of this measure.

- 30 -


		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 December 31, 2017
New York:
1633 Broadway	West Side		100.0	%		2,518,196		95.4	%		86.8	%	$	151,729	$	72.61
1301 Avenue of the Americas	Sixth Avenue /Rock Center		100.0	%		1,781,571		97.9	%		90.5	%		120,990		75.87
1325 Avenue of the Americas	Sixth Avenue /Rock Center		100.0	%		808,998		80.9	%		77.2	%		41,048		66.34
31 West 52nd Street	Sixth Avenue /Rock Center		100.0	%		761,790		78.0	%		78.0	%		52,333		85.04
900 Third Avenue	East Side		100.0	%		598,903		94.7	%		94.7	%		41,206		73.13
712 Fifth Avenue	Madison /Fifth Avenue		50.0	%		543,386		95.1	%		94.6	%		57,382		112.23
60 Wall Street ⁽³⁾	Downtown		5.0	%		1,625,483		100.0	%		100.0	%		73,600		45.28

Subtotal /Weighted average						8,638,327		93.8	%		89.4	%		538,288		70.58

PGRE’s share						6,822,588		92.4	%		86.8	%		439,684		75.58

Washington, D.C.:
425 Eye Street	East End		100.0	%		372,552		98.7	%		98.5	%		16,799		45.91
2099 Pennsylvania Avenue	CBD		100.0	%		208,905		88.9	%		86.4	%		14,175		78.51
1899 Pennsylvania Avenue	CBD		100.0	%		190,955		100.0	%		100.0	%		15,638		82.02
Liberty Place	East End		100.0	%		174,090		94.9	%		92.6	%		13,871		85.49

Subtotal /Weighted average						946,502		96.1	%		95.0	%		60,483		67.15

PGRE’s share						946,502		96.1	%		95.0	%		60,483		67.15

San Francisco:
One Market Plaza	South Financial District		49.0	%		1,583,136		97.7	%		96.6	%		112,177		72.50
One Front Street	North Financial District		100.0	%		646,759		99.3	%		85.3	%		34,419		62.14
50 Beale Street ⁽⁴⁾	South Financial District		31.1	%		660,625		82.6	%		78.2	%		29,399		57.27

Subtotal /Weighted average						2,890,520		94.6	%		89.9	%		175,995		67.32

PGRE’s share						1,627,950		96.4	%		89.8	%		98,529		66.95

Total /Weighted average						12,475,349		94.2	%		89.9	%	$	774,766	$	69.54

PGRE’s share						9,397,040		93.5	%		88.1	%	$	598,696	$	73.10

⁽¹⁾	See page 43 for our definition of this measure.

⁽²⁾	Represents office and retail space only.

⁽³⁾	Acquired on January 24, 2017.

⁽⁴⁾	Acquired on July 17, 2017.

- 31 -


		SAME STORE LEASED OCCUPANCY

(unaudited)


				As of December 31, 2017						As of September 30, 2017						Change in Same Store Leased %
Property	Paramount Ownership			Leased % ⁽¹⁾			Same Store Leased % ⁽¹⁾			Leased % ⁽¹⁾			Same Store Leased % ⁽¹⁾			Change in Same Store Leased %
New York:
1633 Broadway		100.0	%		95.4	%		95.4	%		90.8	%		90.8	%		4.6	%
1301 Avenue of the Americas		100.0	%		97.9	%		97.9	%		97.9	%		97.9	%		—	%
1325 Avenue of the Americas		100.0	%		80.9	%		80.9	%		80.7	%		80.7	%		0.2	%
31 West 52nd Street		100.0	%		78.0	%		78.0	%		77.7	%		77.7	%		0.3	%
900 Third Avenue		100.0	%		94.7	%		94.7	%		97.8	%		97.8	%		(3.1	%)
712 Fifth Avenue		50.0	%		95.1	%		95.1	%		95.1	%		95.1	%		—	%
60 Wall Street		5.0	%		100.0	%		100.0	%		100.0	%		100.0	%		—	%

Weighted average					93.8	%		93.8	%		92.7	%		92.7	%		1.1	%

PGRE’s share					92.4	%		92.4	%		90.9	%		90.9	%		1.5	%

Washington, D.C.:
425 Eye Street		100.0	%		98.7	%		98.7	%		98.5	%		98.5	%		0.2	%
2099 Pennsylvania Avenue		100.0	%		88.9	%		88.9	%		88.9	%		88.9	%		—	%
1899 Pennsylvania Avenue		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		—	%
Liberty Place		100.0	%		94.9	%		94.9	%		92.4	%		92.4	%		2.5	%

Weighted average					96.1	%		96.1	%		95.5	%		95.5	%		0.6	%

PGRE’s share					96.1	%		96.1	%		95.5	%		95.5	%		0.6	%

San Francisco:
One Market Plaza		49.0	%		97.7	%		97.7	%		97.9	%		97.9	%		(0.2	%)
One Front Street		100.0	%		99.3	%		99.3	%		99.5	%		99.5	%		(0.2	%)
50 Beale Street		31.1	%		82.6	%		82.6	%		78.2	%		78.2	%		4.4	%

Weighted average					94.6	%		94.6	%		93.8	%		93.8	%		0.8	%

PGRE’s share					96.4	%		96.4	%		96.1	%		96.1	%		0.3	%

Weighted average					94.2	%		94.2	%		93.1	%		93.1	%		1.1	%

PGRE’s share					93.5	%		93.5	%		92.3	%		92.3	%		1.2	%

⁽¹⁾	See page 43 for our definition of this measure.

- 32 -


		SAME STORE LEASED OCCUPANCY

(unaudited)


				As of December 31, 2017						As of December 31, 2016						Change in Same Store Leased %
Property	Paramount Ownership			Leased % ⁽¹⁾			Same Store Leased % ⁽¹⁾			Leased % ⁽¹⁾			Same Store Leased % ⁽¹⁾			Change in Same Store Leased %
New York:
1633 Broadway		100.0	%		95.4	%		95.4	%		86.3	%		86.3	%		9.1	%
1301 Avenue of the Americas		100.0	%		97.9	%		97.9	%		93.7	%		93.7	%		4.2	%
1325 Avenue of the Americas		100.0	%		80.9	%		80.9	%		96.5	%		96.5	%		(15.6	%)
31 West 52nd Street		100.0	%		78.0	%		78.0	%		84.5	%		84.5	%		(6.5	%)
900 Third Avenue		100.0	%		94.7	%		94.7	%		98.0	%		98.0	%		(3.3	%)
712 Fifth Avenue		50.0	%		95.1	%		95.1	%		97.1	%		97.1	%		(2.0	%)
60 Wall Street ⁽²⁾		5.0	%		100.0	%		—			—			—			—	%

Weighted average					93.8	%		92.4	%		91.0	%		91.0	%		1.4	%

PGRE’s share					92.4	%		92.3	%		90.7	%		90.7	%		1.6	%

Washington, D.C.:
Waterview ⁽³⁾		100.0	%		—			—			98.7	%		—			—	%
425 Eye Street		100.0	%		98.7	%		98.7	%		97.7	%		97.7	%		1.0	%
2099 Pennsylvania Avenue		100.0	%		88.9	%		88.9	%		82.3	%		82.3	%		6.6	%
1899 Pennsylvania Avenue		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		—	%
Liberty Place		100.0	%		94.9	%		94.9	%		89.9	%		89.9	%		5.0	%

Weighted average					96.1	%		96.1	%		95.5	%		93.3	%		2.8	%

PGRE’s share					96.1	%		96.1	%		95.5	%		93.3	%		2.8	%

San Francisco:
One Market Plaza		49.0	%		97.7	%		97.7	%		98.7	%		98.7	%		(1.0	%)
One Front Street		100.0	%		99.3	%		99.3	%		99.4	%		99.4	%		(0.1	%)
50 Beale Street ⁽⁴⁾		31.1	%		82.6	%		—			—			—			—	%

Weighted average					94.6	%		98.2	%		98.9	%		98.9	%		(0.7	%)

PGRE’s share					96.4	%		98.4	%		99.0	%		99.0	%		(0.6	%)

Weighted average					94.2	%		94.0	%		93.3	%		92.9	%		1.1	%

PGRE’s share					93.5	%		93.6	%		92.7	%		92.3	%		1.3	%

⁽¹⁾	See page 43 for our definition of this measure.

⁽²⁾	Acquired on January 24, 2017.

⁽³⁾	Sold on May 3, 2017.

⁽⁴⁾	Acquired on July 17, 2017.

- 33 -


		TOP TENANTS AND INDUSTRY DIVERSIFICATION

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


									PGRE’s Share of
Top 10 Tenants:	Property		Lease Expiration			Total Square Feet Occupied			Total Square Feet Occupied			% of Total Square Feet			Annualized Rent ⁽¹⁾				% of Annualized Rent
Top 10 Tenants:	Property		Lease Expiration			Total Square Feet Occupied			Total Square Feet Occupied			% of Total Square Feet			Amount		Per Square Foot		% of Annualized Rent
As of December 31, 2017
Barclays Capital, Inc.		1301 Avenue of the Americas & 2099 Pennsylvania Avenue		Dec-2020	⁽²⁾		500,790	⁽²⁾		500,790	⁽²⁾		5.3	%	$	32,457	$	64.81		5.4	%
Allianz Global Investors, LP		1633 Broadway		Jan-2031			320,911			320,911			3.4	%		28,203		87.88		4.7	%
Clifford Chance LLP		31 West 52nd Street		Jun-2024			328,992			328,992			3.5	%		26,218		79.69		4.4	%
Norton Rose Fulbright		1301 Avenue of the Americas		Sep-2034	⁽³⁾		320,325	⁽³⁾		320,325	⁽³⁾		3.4	%		25,343		79.12		4.2	%
Credit Agricole Corporate & Investment Bank		1301 Avenue of the Americas		Feb-2023			312,679			312,679			3.3	%		24,913		79.68		4.2	%
Morgan Stanley & Company		1633 Broadway		Mar-2032			260,829			260,829			2.8	%		19,124		73.32		3.2	%
WMG Acquisition Corp. (Warner Music Group)		1633 Broadway		Jul-2029			293,487			293,487			3.1	%		16,947		57.74		2.8	%
Showtime Networks, Inc.		1633 Broadway		Jan-2026			238,880			238,880			2.5	%		14,416		60.35		2.4	%
Kasowitz Benson Torres & Friedman, LLP		1633 Broadway		Mar-2037			203,394			203,394			2.2	%		14,354		70.57		2.4	%
U.S. General Services Administration		425 Eye St		Jun-2021			310,450			310,450			3.3	%		14,332		46.17		2.4	%


	PGRE’s Share of
Industry Diversification:	Square Feet Occupied		% of Occupied Square Feet			Annualized Rent ⁽¹⁾		% of Annualized Rent
As of December 31, 2017
Legal Services		1,797,586		21.9	%	$	138,432		23.1	%
Financial Services - Commercial and Investment Banking		1,727,381		21.0	%		123,130		20.6	%
Technology and Media		1,428,952		17.4	%		94,288		15.7	%
Financial Services, all others		930,909		11.3	%		79,193		13.2	%
Insurance		554,680		6.8	%		43,370		7.2	%
Retail		270,738		3.3	%		22,480		3.8	%
Government		345,278		4.2	%		16,830		2.8	%
Real Estate		226,434		2.8	%		15,544		2.6	%
Consumer Products		192,620		2.3	%		14,804		2.5	%
Other		733,244		9.0	%		50,625		8.5	%

⁽¹⁾	See page 43 for our definition of this measure.

⁽²⁾	3,372 square feet leased at 2099 Pennsylvania Avenue expires on June 30, 2023.

⁽³⁾	116,462 of the square feet leased expires on March 31, 2032.

- 34 -


		LEASING ACTIVITY

(unaudited)


	Total			New York			Washington, D.C.			San Francisco
Three Months Ended December 31, 2017
Total square feet leased		334,623			189,032			4,823			140,768
PGRE’s share of total square feet leased:		301,745			185,438			4,823			111,484
Initial rent ⁽¹⁾	$	74.44		$	73.77		$	83.55		$	75.21
Weighted average lease term (in years)		8.0			9.9			8.5			4.9
Tenant improvements and leasing commissions:
Per square foot	$	79.27		$	107.45		$	41.58		$	34.59
Per square foot per annum	$	9.93		$	10.88		$	4.87		$	7.10
Percentage of initial rent		13.3	%		14.7	%		5.8	%		9.4	%
Rent concessions:
Average free rent period (in months)		9.8			14.3			9.4			2.6
Average free rent period per annum (in months)		1.2			1.4			1.1			0.5
Second generation space: ⁽¹⁾
Square feet		167,442			65,065			—			102,377
GAAP basis:
Straight-line rent	$	74.75		$	67.42		$	—		$	79.36
Prior straight-line rent	$	74.50		$	66.31		$	—		$	79.66
Percentage increase (decrease)		0.3	%		1.7	%		—			(0.4	%)
Cash basis
Initial rent ⁽¹⁾	$	73.62		$	70.37		$	—		$	75.67
Prior escalated rent	$	71.24		$	84.12		$	—		$	63.13
Percentage increase (decrease)		3.3	%		(16.3	%)		—			19.9	%

⁽¹⁾	See page 43 for our definition of this measure.

- 35 -


		LEASING ACTIVITY
(unaudited)


	Total			New York			Washington, D.C.			San Francisco
Year Ended December 31, 2017
Total square feet leased		1,281,503			713,410			24,425			543,668
PGRE’s share of total square feet leased:		1,161,176			684,048			24,425			452,703
Initial rent ⁽¹⁾	$	77.42		$	78.83		$	73.03		$	75.52
Weighted average lease term (in years)		9.0			10.3			8.3			7.1
Tenant improvements and leasing commissions:
Per square foot	$	84.75		$	102.26		$	61.31		$	59.58
Per square foot per annum	$	9.39		$	9.93		$	7.34		$	8.35
Percentage of initial rent		12.1	%		12.6	%		10.1	%		11.1	%
Rent concessions:
Average free rent period (in months)		7.6			10.7			8.9			2.9
Average free rent period per annum (in months)		0.8			1.0			1.1			0.4
Second generation space: ⁽¹⁾
Square feet		761,860			322,696			—			439,164
GAAP basis:
Straight-line rent	$	75.96		$	77.05		$	—		$	75.18
Prior straight-line rent	$	69.90		$	73.88		$	—		$	67.07
Percentage increase		8.7	%		4.3	%		—			12.1	%
Cash basis:
Initial rent ⁽¹⁾	$	77.96		$	81.23		$	—		$	75.63
Prior escalated rent	$	68.92		$	84.49		$	—		$	57.84
Percentage increase (decrease)		13.1	%		(3.9	%)		—			30.8	%

⁽¹⁾	See page 43 for our definition of this measure.

- 36 -


		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		7,865		5,509	$	310	$	58.44		0.0	%

1Q 2018		44,447		38,844		2,959		76.15		0.5	%
2Q 2018		61,701		41,818		3,825		92.00		0.6	%
3Q 2018		28,259		25,082		1,374		58.32		0.2	%
4Q 2018		47,526		34,309		3,427		99.89		0.5	%

Total 2018		181,933		140,053		11,585		84.03		1.8	%

2019		697,883		580,536		43,727		75.69		6.9	%
2020		787,238		514,577		37,247		71.58		5.8	%
2021		1,626,605		1,408,925		89,239		64.16		14.0	%
2022		2,389,183		569,236		38,664		75.61		6.1	%
2023		723,782		661,845		51,016		77.74		8.0	%
2024		705,685		671,903		52,318		78.06		8.2	%
2025		873,820		599,539		43,551		72.69		6.8	%
2026		753,435		666,818		49,240		70.65		7.7	%
2027		125,471		117,455		9,530		81.17		1.5	%
Thereafter		2,831,701		2,805,952		211,826		75.06		33.2	%

⁽¹⁾	See page 43 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.

- 37 -


		LEASE EXPIRATIONS - NEW YORK

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


Year of Lease Expiration ⁽²⁾	Total Square Feet of Expiring Leases		PGRE’s Share of
			Square Feet of Expiring Leases		Annualized Rent ⁽¹⁾				% of
			Square Feet of Expiring Leases		Amount		Per Square Foot ⁽³⁾		Annualized Rent
Month to Month		921		921	$	121	$	—		0.0	%

1Q 2018		42,985		38,132		2,899		76.02		0.6	%
2Q 2018		58,777		40,813		3,755		92.56		0.8	%
3Q 2018		2,680		1,340		163		101.98		0.0	%
4Q 2018		38,340		25,123		3,016		120.06		0.6	%

Total 2018		142,782		105,408		9,833		93.25		2.0	%

2019		346,258		329,082		27,260		84.66		5.8	%
2020		332,981		295,388		23,441		79.44		5.0	%
2021		958,624		910,899		62,721		71.05		13.3	%
2022		1,786,888		231,932		12,135		67.01		2.6	%
2023		506,604		479,348		36,216		76.31		7.7	%
2024		573,139		552,063		42,845		77.83		9.1	%
2025		125,482		96,048		8,205		85.43		1.7	%
2026		580,801		565,656		42,028		70.54		8.9	%
2027		85,378		85,378		7,084		82.97		1.5	%
Thereafter		2,646,437		2,633,065		199,630		75.35		42.4	%

⁽¹⁾	See page 43 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.

- 38 -


		LEASE EXPIRATIONS - WASHINGTON, D.C.

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


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

1Q 2018		—		—		—		—		—
2Q 2018		—		—		—		—		—
3Q 2018		—		—		—		—		—
4Q 2018		—		—		—		—		—

Total 2018		—		—		—		—		—

2019		42,081		42,081		3,582		78.05		5.9	%
2020		33,136		33,136		2,614		78.89		4.3	%
2021		314,154		314,154		15,506		47.56		25.5	%
2022		38,919		38,919		2,531		65.03		4.2	%
2023		149,178		149,178		12,504		84.45		20.6	%
2024		78,811		78,811		6,264		79.61		10.3	%
2025		56,565		56,565		4,693		82.96		7.7	%
2026		32,011		32,011		2,261		70.65		3.7	%
2027		24,373		24,373		1,939		79.54		3.2	%
Thereafter		123,873		123,873		8,870		71.61		14.6	%

⁽¹⁾	See page 43 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.

- 39 -


		LEASE EXPIRATIONS - SAN FRANCISCO

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


	Total Square Feet of Expiring Leases		PGRE’s Share of
Year of			Square Feet of Expiring Leases		Annualized Rent ⁽¹⁾				% of Annualized Rent
Lease Expiration ⁽²⁾			Square Feet of Expiring Leases		Amount		Per Square Foot ⁽³⁾		% of Annualized Rent
Month to Month		6,944		4,588	$	189	$	58.44		0.2	%

1Q 2018		1,462		712		60		83.35		0.1	%
2Q 2018		2,924		1,005		70		69.65		0.1	%
3Q 2018		25,579		23,742		1,211		55.50		1.1	%
4Q 2018		9,186		9,186		411		44.70		0.4	%

Total 2018		39,151		34,645		1,752		53.43		1.7	%

2019		309,544		209,373		12,885		61.57		12.2	%
2020		421,121		186,053		11,192		57.70		10.6	%
2021		353,827		183,872		11,012		59.94		10.4	%
2022		563,376		298,385		23,998		80.50		22.6	%
2023		68,000		33,319		2,296		68.17		2.2	%
2024		53,735		41,029		3,209		78.21		3.0	%
2025		691,773		446,926		30,653		68.64		28.9	%
2026		140,623		69,151		4,951		71.53		4.7	%
2027		15,720		7,704		507		66.22		0.5	%
Thereafter		61,391		49,014		3,326		68.54		3.0	%

⁽¹⁾	See page 43 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.

- 40 -


		CASH BASIS CAPITAL EXPENDITURES

(unaudited and in thousands)


	Three Months Ended December 31, 2017
	Total		New York		Washington, D.C		San Francisco		Other
Capital expenditures: ⁽¹⁾
Expenditures to maintain assets	$	8,623	$	6,536	$	542	$	1,367	$	178
Second generation tenant improvements		7,502		2,971		—		4,531		—
Second generation leasing commissions		3,242		1,700		15		1,527		—
First generation leasing costs and other capital expenditures		7,094		5,123		1,252		719		—

Total Capital Expenditures	$	26,461	$	16,330	$	1,809	$	8,144	$	178

Redevelopment Expenditures ⁽¹⁾
31 West 52nd Street (Lobby Renovation)	$	4,331	$	4,331	$	—	$	—	$	—
One Market Plaza (Elevator Modernization)		1,304		—		—		1,304		—
Other		1,906		624		927		355		—

Total Redevelopment Expenditures	$	7,541	$	4,955	$	927	$	1,659	$	—


	Three Months Ended December 31, 2016
	Total		New York		Washington, D.C		San Francisco		Other
Capital expenditures: ⁽¹⁾
Expenditures to maintain assets	$	7,600	$	7,099	$	105	$	246	$	150
Second generation tenant improvements		9,679		5,256		125		4,298		—
Second generation leasing commissions		2,025		1,697		15		313		—
First generation leasing costs and other capital expenditures		3,555		1,519		2,036		—		—

Total Capital Expenditures	$	22,859	$	15,571	$	2,281	$	4,857	$	150

Redevelopment Expenditures ⁽¹⁾
Residential Development Fund	$	1,623	$	—	$	—	$	—	$	1,623
1633 Broadway (Plaza and Retail Redevelopment)		694		694		—		—		—
Other		74		74		—		—		—

Total Redevelopment Expenditures	$	2,391	$	768	$	—	$	—	$	1,623

⁽¹⁾	See page 43 for our definition of this measure.

- 41 -


		CASH BASIS CAPITAL EXPENDITURES

(unaudited and in thousands)


	Year Ended December 31, 2017
	Total		New York		Washington, D.C		San Francisco		Other
Capital expenditures: ⁽¹⁾
Expenditures to maintain assets	$	19,038	$	13,448	$	1,792	$	3,268	$	530
Second generation tenant improvements		34,373		23,730		4		10,639		—
Second generation leasing commissions		16,344		7,747		15		8,582		—
First generation leasing costs and other capital expenditures		26,586		17,155		5,117		4,314		—

Total Capital Expenditures	$	96,341	$	62,080	$	6,928	$	26,803	$	530

Redevelopment Expenditures ⁽¹⁾
31 West 52nd Street (Lobby Renovation)	$	5,461	$	5,461	$	—	$	—	$	—
One Market Plaza (Elevator Modernization)		5,409		—		—		5,409		—
Residential Development Fund		2,896		—		—		—		2,896
Other		4,241		2,776		927		538		—

Total Redevelopment Expenditures	$	18,007	$	8,237	$	927	$	5,947	$	2,896


	Year Ended December 31, 2016
	Total		New York		Washington, D.C		San Francisco		Other
Capital expenditures: ⁽¹⁾
Expenditures to maintain assets	$	20,516	$	14,849	$	1,770	$	3,490	$	407
Second generation tenant improvements		49,927		31,810		2,133		15,984		—
Second generation leasing commissions		8,524		6,093		644		1,787		—
First generation leasing costs and other capital expenditures		41,670		34,227		4,874		2,569		—

Total Capital Expenditures	$	120,637	$	86,979	$	9,421	$	23,830	$	407

Redevelopment Expenditures ⁽¹⁾
1633 Broadway (Plaza and Retail Redevelopment)	$	7,639	$	7,639	$	—	$	—	$	—
One Market Plaza (Lobby and Retail Repositioning)		4,656		—		—		4,656		—
Residential Development Fund		5,599		—		—		—		5,599
Other		1,359		1,359		—		—		—

Total Redevelopment Expenditures	$	19,253	$	8,998	$	—	$	4,656	$	5,599

⁽¹⁾	See page 43 for our definition of this measure.

- 42 -


		DEFINITIONS

We use and present various non-GAAP measures in this Supplemental Operating and Financial Data report. The following section contains definitions of these measures, describes our use of them and provides information regarding why we believe they are meaningful. Other real estate companies may use different methodologies for calculating these measures, and accordingly, our presentation of these measures may not be comparable to other real estate companies. These non-GAAP measures should not be considered a substitute for, and should only be considered together with and as a supplement to, financial information presented in accordance with GAAP.

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 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.

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 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 a supplemental measure that 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 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 a supplemental measure that is calculated by adjusting EBITDA to eliminate the impact of the performance of our real estate funds, unrealized gains or losses on interest rate swaps, transaction related costs, gains or losses on early extinguishment of debt and certain other items that may vary from period to period. Adjusted EBITDA enhances the comparability of our EBITDA across periods. In future periods, we may also exclude other items from Adjusted EBITDA that we believe may help investors compare our results. We also present our PGRE’s share of Adjusted EBITDA, which represents our share of Adjusted EBITDA generated by our consolidated and unconsolidated joint ventures based on our percentage ownership in the underlying assets.

- 43 -


		DEFINITIONS - CONTINUED

Net Operating Income (“NOI”) is used 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 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 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.

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.

- 44 -

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