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PG

Paramount Group, Inc. (PGRE)·Q3 2025 Earnings Summary

Executive Summary

  • Reported Q3 2025 GAAP net loss attributable to common stockholders of $28.9M (-$0.13/share) on $173.0M total revenue; Core FFO was $31.5M ($0.14/share). Same Store Cash NOI fell 8.0% YoY; leasing activity accelerated, lifting same-store leased occupancy 430 bps sequentially to 89.7% .
  • Versus S&P Global consensus, revenue beat by ~3.2% (actual $173.0M vs $167.7M*), while GAAP EPS missed (-$0.13 vs -$0.08*); only 1 EPS estimate and 3 revenue estimates contributed, limiting visibility (see Estimates Context) . Values marked with * retrieved from S&P Global.
  • Capital markets: refinanced 1301 Avenue of the Americas with a $900M, 5-year IO loan at a 6.39% fixed rate, extending maturity to Aug-2030 and retaining ~$26M proceeds .
  • Strategic: agreed to be acquired by Rithm Capital for $6.60/share cash (~$1.6B equity value), expected to close in Q4’25 pending shareholder approval—no Q3 call and no guidance update given the pending merger .

What Went Well and What Went Wrong

  • What Went Well

    • Leasing momentum: 547,812 sf signed in Q3 (PGRE share 481,246 sf) at $82.45 psf initial rent; second-gen mark-to-markets were +13.9% GAAP/+6.4% cash; weighted average lease term 13.2 years .
    • Occupancy inflection: same-store leased occupancy rose 430 bps sequentially to 89.7% (weighted average), helped by robust Q3 deal flow .
    • Balance sheet action: $900M refinancing at 1301 Ave. of the Americas, extending maturities and adding ~$26M of retained proceeds; net debt/annualized Adjusted EBITDAre at 10.2x (9.9x ex-non-core) .

  • What Went Wrong

    • Earnings pressure: GAAP EPS missed consensus (-$0.13 vs -$0.08*) on lower total revenue YoY and higher interest expense; non-core merger costs reduced FFO by ~$0.04/share in Q3 . Values marked with * retrieved from S&P Global.
    • San Francisco headwinds: Same Store Cash NOI declined 33.9% YoY in SF for Q3, largely reflecting the April 2025 Google lease expiration at One Market Plaza and prior-year expense true-ups .
    • Same-store fundamentals: Company-wide Same Store Cash NOI -8.0% YoY and Same Store NOI -12.0% YoY in Q3, reflecting broader market softness and mix effects .

Financial Results

MetricQ3 2024Q2 2025Q3 2025
Total Revenues ($USD Millions)$194.9 $177.0 $173.0
GAAP Diluted EPS / Loss per Share ($)-$0.04 -$0.09 -$0.13
Core FFO per Share ($)$0.19 $0.17 $0.14
Net (Loss) Income Margin (%)-2.2% (-(4.203)/194.899) -11.5% (-(20.409)/177.045) -17.5% (-(30.282)/172.959)
PGRE Share of Cash NOI ($USD Millions)$84.1 $82.7 $73.5
Same Store Cash NOI YoY Change (%)——-8.0%

Segment NOI (PGRE share, $USD Millions)

SegmentQ3 2024Q3 2025
New York$61.8 $57.6
San Francisco$28.7 $19.2
Other-$1.0 -$1.3

Key KPIs

KPIQ3 2024Q2 2025Q3 2025
Same-store leased % (weighted avg, PGRE share)84.7% 85.4% 89.7%
Square feet leased (total)—404,710 547,812
PGRE share of sf leased—255,621 481,246
Initial rent on Qtr leases ($/sf)—$91.93 $82.45
2nd-gen MTM (GAAP / Cash)—+2.6% / -5.4% +13.9% / +6.4%
WA lease term (years)—12.9 13.2
TI+LC per sf per annum—$15.61 $13.13
Net Debt / Annualized Adj. EBITDAre9.0x ex-non-core (Q2’25) 9.0x ex-non-core 10.2x incl. non-core; 9.9x ex-non-core

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Core FFO per ShareFY 2025$0.55–$0.59 (raised/narrowed on 7/30/25) No update provided due to pending merger Maintained (no update)
GAAP Net Loss per ShareFY 2025-$0.37 to -$0.33 (updated 7/30/25) No update provided due to pending merger Maintained (no update)
DividendsOngoingRegular dividend suspended since Sep-2024 No discretionary dividends without Rithm consent under merger agreement Maintained suspension constraint

Earnings Call Themes & Trends

Note: No Q3 2025 earnings call was held due to the pending merger; themes below reflect press releases and prior quarters .

TopicPrevious Mentions (Q1 2025, Q2 2025)Current Period (Q3 2025)Trend
Leasing & OccupancyQ1: 283,874 sf signed; same-store leased +140 bps to 86.2% . Q2: 404,710 sf; same-store leased 85.4% (SF decline from Google expiry) .547,812 sf; same-store leased 89.7% (+430 bps q/q) .Improving sequentially
San Francisco ExposureQ1: SF Same Store Cash NOI +19.9% YoY but risks flagged; Google lease expiration in Apr-2025 noted ahead . Q2: SF pressure from Google expiration; SF leased % decline .Q3: SF Same Store Cash NOI -33.9% YoY; Google expiration cited; expense true-up impact .Deteriorating YoY
Capital Markets / DebtQ1: Modified/limited revolver; sold 45% of 900 Third; credit facility changes . Q2: Terminated revolver; sold 25% of One Front .$900M refi at 1301 Ave., fixed 6.39%, matures 2030; retains ~$26M .Maturity profile improved
GuidanceQ1: Initiated FY’25 Core FFO $0.51–$0.57 . Q2: Raised to $0.55–$0.59; net loss -$0.37 to -$0.33 .No update; no call due to merger .Paused
ESG / GRESB—Achieved GRESB 5-Star for 7th consecutive year; CFO emphasized “operational excellence” and “corporate responsibility” .Positive recognition

Management Commentary

  • Strategic/transactional: “On September 17, 2025, the Company entered into an agreement to be acquired by Rithm Capital Corp… for $6.60 per fully diluted share… expected to close in the fourth quarter of 2025” (subject to shareholder approval and customary conditions) .
  • Balance sheet: “On August 5, 2025, the Company completed a $900.0 million refinancing of 1301 Avenue of the Americas… fixed rate of 6.39%… matures in August 2030… retained proceeds of approximately $26.0 million” .
  • ESG: “Achieving GRESB’s highest rating for the seventh year running confirms our commitment to operational excellence, performance-led initiatives, and corporate responsibility,” said Ermelinda Berberi, EVP, CFO & Treasurer .

Q&A Highlights

  • The company did not host a conference call or Q&A for Q3 2025 due to the pending merger; no real-time guidance clarifications were provided .

Estimates Context

Metric (Q3 2025)S&P Global ConsensusActualSurprise
Revenue ($USD Millions)$167.7M (3 est.)*$173.0M +$5.3M / +3.2%
GAAP EPS (Primary)-$0.08 (1 est.)*-$0.13 -$0.05

Values marked with * retrieved from S&P Global.

Implications:

  • The revenue beat reflects stronger-than-expected leasing/same-store activity and fee/other income mix, despite YoY headwinds .
  • The EPS miss likely reflects higher interest expense and non-core merger-related costs ($9.0M in Q3) depressing GAAP profitability versus consensus .

Key Takeaways for Investors

  • Deal-capped setup: With the $6.60 cash acquisition by Rithm expected in Q4’25, shares are primarily driven by deal-close probability, timing, and spread risk; no Q3 call or guidance update underscores the focus on transaction completion .
  • Fundamentals mixed: Revenue outperformed consensus, but GAAP EPS missed as higher interest expense and transaction costs weighed; Core FFO per share of $0.14 reflects stable underlying operations excluding non-core items .
  • Leasing momentum is a bright spot: 548K sf signed and +430 bps q/q occupancy lift to 89.7% indicate positive leasing velocity and pricing on second-gen space (+13.9% GAAP MTM) .
  • San Francisco remains the swing factor: Same Store Cash NOI down 33.9% YoY in SF post-Google lease expiry; portfolio re-leasing in SF will be key to stabilizing cash flows .
  • Balance sheet progress: The 1301 Avenue refi fixed a large maturity through 2030 and added ~$26M of liquidity; PGRE share net debt/annualized Adj. EBITDAre at 10.2x (9.9x ex-non-core) remains elevated but term extension reduces near-term risk .
  • No discretionary dividends under merger covenants: Dividend policy remains suspended; post-close dividend outlook will depend on acquirer strategy and capital allocation .
  • ESG credibility persists: Seventh consecutive GRESB 5-Star rating supports asset quality and operating discipline—important for tenant demand and capital access post-transaction .