10-Q

f

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended: June 30, 2018

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-36746

PARAMOUNT GROUP, INC.

(Exact name of registrant as specified in its charter)

Maryland	32-0439307
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)

1633 Broadway, Suite 1801, New York, NY	10019
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (212) 237-3100

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    ☒  Yes    ☐  No

Indicate by check mark whether the registrant is a large accelerated filer, accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer	☒		Accelerated Filer	☐
Non-Accelerated Filer	☐	(Do not check if smaller reporting company)	Smaller Reporting Company	☐
Emerging Growth Company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes  ☐    No  ☒

As of July 20, 2018, there were 240,529,397 shares of the registrant’s common stock outstanding.

Table of Contents

Item		Page Number
Part I.	Financial Information
Item 1.	Consolidated Financial Statements
	Consolidated Balance Sheets (Unaudited) as of June 30, 2018 and December 31, 2017	3
	Consolidated Statements of Income (Unaudited) for the three and six months ended June 30, 2018 and 2017	4
	Consolidated Statements of Comprehensive Income (Unaudited) for the three and six months ended June 30, 2018 and 2017	5
	Consolidated Statements of Changes in Equity (Unaudited) for the six months ended June 30, 2018 and 2017	6
	Consolidated Statements of Cash Flows (Unaudited) for the six months ended June 30, 2018 and 2017	7
	Notes to Consolidated Financial Statements (Unaudited)	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	30
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	61
Item 4.	Controls and Procedures	63
Part II.	Other Information
Item 1.	Legal Proceedings	64
Item 1A.	Risk Factors	64
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	64
Item 3.	Defaults Upon Senior Securities	64
Item 4.	Mine Safety Disclosures	64
Item 5.	Other Information	64
Item 6.	Exhibits	64
Signatures		66

2

PART I – FINANCIAL INFORMATION

ITEM 1.  CONSOLIDATED FINANCIAL STATEMENTS

PARAMOUNT GROUP, INC.

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

(Amounts in thousands, except share, unit and per share amounts)	June 30, 2018			December 31, 2017
ASSETS
Real estate, at cost
Land	$	2,186,006		$	2,209,506
Buildings and improvements		6,132,725			6,119,969
		8,318,731			8,329,475
Accumulated depreciation and amortization		(566,164	)		(487,945	)
Real estate, net		7,752,567			7,841,530
Cash and cash equivalents		233,530			219,381
Restricted cash		32,755			31,044
Investments in unconsolidated joint ventures		67,823			44,762
Investments in unconsolidated real estate funds		9,292			7,253
Preferred equity investments, net of allowance of $0 and $19,588		35,925			35,817
Marketable securities		25,913			29,039
Accounts and other receivables, net of allowance of $451 and $277		15,549			17,082
Deferred rent receivable		252,140			220,826
Deferred charges, net of accumulated amortization of $25,232 and $19,412		116,147			98,645
Intangible assets, net of accumulated amortization of $226,131 and $200,857		316,451			352,206
Other assets		57,821			20,076
Total assets (1)	$	8,915,913		$	8,917,661
LIABILITIES AND EQUITY
Notes and mortgages payable, net of deferred financing costs of $37,341 and $41,800	$	3,562,459		$	3,541,300
Revolving credit facility		-			-
Due to affiliates		27,299			27,299
Accounts payable and accrued expenses		123,720			117,630
Dividends and distributions payable		26,621			25,211
Intangible liabilities, net of accumulated amortization of $85,673 and $75,073		115,559			130,028
Other liabilities		54,507			54,109
Total liabilities (1)		3,910,165			3,895,577
Commitments and contingencies
Paramount Group, Inc. equity:
Common stock $0.01 par value per share; authorized 900,000,000 shares; issued    and outstanding 240,529,397 and 240,427,022 shares in 2018 and 2017, respectively		2,403			2,403
Additional paid-in-capital		4,297,823			4,297,948
Earnings less than distributions		(215,353	)		(133,693	)
Accumulated other comprehensive income		28,647			10,083
Paramount Group, Inc. equity		4,113,520			4,176,741
Noncontrolling interests in:
Consolidated joint ventures		403,686			404,997
Consolidated real estate fund		57,816			14,549
Operating Partnership (25,300,324 and 24,620,279 units outstanding)		430,726			425,797
Total equity		5,005,748			5,022,084
Total liabilities and equity	$	8,915,913		$	8,917,661

⁽¹⁾ Represents the consolidated assets and liabilities of Paramount Group Operating Partnership LP, a Delaware limited partnership (the “Operating Partnership”). The Operating Partnership is a consolidated variable interest entity (“VIE”), of which we are the sole general partner and own approximately 90.5% as of June 30, 2018. The assets and liabilities of the Operating Partnership, as of June 30, 2018, include $2,001,880 and $1,265,423 of assets and liabilities, respectively, of certain VIEs that are consolidated by the Operating Partnership. See Note 12, Variable Interest Entities.

See notes to consolidated financial statements (unaudited).

3

PARAMOUNT GROUP, INC.

CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)

	For the Three Months Ended						For the Six Months Ended
	June 30,						June 30,
(Amounts in thousands, except share and per share amounts)	2018			2017			2018			2017
REVENUES:
Rental income	$	169,529		$	158,187		$	332,934		$	313,577
Tenant reimbursement income		13,164			11,856			27,410			24,708
Fee and other income		8,726			7,661			15,346			20,655
Total revenues		191,419			177,704			375,690			358,940
EXPENSES:
Operating		67,646			63,461			136,624			129,432
Depreciation and amortization		64,775			68,636			129,931			131,628
General and administrative		17,195			16,573			29,826			30,154
Transaction related costs		293			502			413			777
Real estate impairment loss		46,000			-			46,000			-
Total expenses		195,909			149,172			342,794			291,991
Operating (loss) income		(4,490	)		28,532			32,896			66,949
Income from unconsolidated joint ventures		2,521			16,535			2,459			18,472
Loss from unconsolidated real estate funds		(14	)		(2,411	)		(80	)		(2,123	)
Interest and other income, net		2,094			2,486			4,110			5,686
Interest and debt expense		(36,809	)		(34,817	)		(72,891	)		(71,835	)
Loss on early extinguishment of debt		-			(5,162	)		-			(7,877	)
Gain on sale of real estate		-			133,989			-			133,989
Unrealized gain on interest rate swaps		-			-			-			1,802
Net (loss) income before income taxes		(36,698	)		139,152			(33,506	)		145,063
Income tax benefit (expense)		120			(970	)		(357	)		(5,252	)
Net (loss) income		(36,578	)		138,182			(33,863	)		139,811
Less net (income) loss attributable to noncontrolling interests in:
Consolidated joint ventures		(1,752	)		(1,897	)		(2,807	)		(3,188	)
Consolidated real estate fund		(152	)		(20,169	)		(582	)		(20,081	)
Operating Partnership		3,666			(13,100	)		3,550			(13,154	)
Net (loss) income attributable to common stockholders	$	(34,816	)	$	103,016		$	(33,702	)	$	103,388
(LOSS) INCOME PER COMMON SHARE - BASIC:
(Loss) income per common share	$	(0.14	)	$	0.44		$	(0.14	)	$	0.44
Weighted average shares outstanding		240,336,485			234,990,468			240,324,183			232,968,602
(LOSS) INCOME PER COMMON SHARE - DILUTED:
(Loss) income per common share	$	(0.14	)	$	0.44		$	(0.14	)	$	0.44
Weighted average shares outstanding		240,336,485			235,010,830			240,324,183			232,995,822
DIVIDENDS PER COMMON SHARE	$	0.10		$	0.095		$	0.20		$	0.190

See notes to consolidated financial statements (unaudited).

4

PARAMOUNT GROUP, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)

	For the Three Months Ended						For the Six Months Ended
	June 30,						June 30,
(Amounts in thousands)	2018			2017			2018			2017
Net (loss) income	$	(36,578	)	$	138,182		$	(33,863	)	$	139,811
Other comprehensive income (loss):
Change in value of interest rate swaps		5,795			(4,041	)		20,346			(9	)
Pro rata share of other comprehensive income (loss) of    unconsolidated joint ventures		103			35			157			(187	)
Comprehensive (loss) income		(30,680	)		134,176			(13,360	)		139,615
Less comprehensive (income) loss attributable to
noncontrolling interests in:
Consolidated joint ventures		(1,752	)		(1,897	)		(2,807	)		(3,188	)
Consolidated real estate fund		(152	)		(20,169	)		(582	)		(20,081	)
Operating Partnership		3,103			(12,647	)		1,611			(13,187	)
Comprehensive (loss) income attributable to    common stockholders	$	(29,481	)	$	99,463		$	(15,138	)	$	103,159

See notes to consolidated financial statements (unaudited).

5

PARAMOUNT GROUP, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(UNAUDITED)

	Common Shares													Noncontrolling Interests in
(Amounts in thousands, except per share and    unit amounts)	Shares		Amount		Additional Paid-in-Capital			Earnings Less than Distributions			Accumulated Other Comprehensive Income (Loss)			Consolidated Joint Ventures			Consolidated Real Estate Fund			Operating Partnership			Total Equity
Balance as of December 31, 2016		230,015	$	2,300	$	4,116,987		$	(129,654	)	$	372		$	253,788		$	64,793		$	577,361		$	4,885,947
Net income		-		-		-			103,388			-			3,188			20,081			13,154			139,811
Common shares issued upon redemption of    common units		8,207		82		135,877			-			-			-			-			(135,959	)		-
Common shares issued under Omnibus    share plan, net of shares withheld for taxes		62		-		-			(154	)		-			-			-			-			(154	)
Dividends and distributions ($0.19 per share    and unit)		-		-		-			(44,617	)		-			-			-			(5,801	)		(50,418	)
Contributions from noncontrolling interests		-		-		-			-			-			4,973			4,305			-			9,278
Distributions to noncontrolling interests		-		-		-			-			-			(32,816	)		(74,346	)		-			(107,162	)
Change in value of interest rate swaps		-		-		-			-			(67	)		-			-			58			(9	)
Pro rata share of other comprehensive loss    of unconsolidated joint ventures		-		-		-			-			(162	)		-			-			(25	)		(187	)
Amortization of equity awards		-		-		1,522			-			-			-			-			7,283			8,805
Balance as of June 30, 2017		238,284	$	2,382	$	4,254,386		$	(71,037	)	$	143		$	229,133		$	14,833		$	456,071		$	4,885,911
Balance as of December 31, 2017		240,427	$	2,403	$	4,297,948		$	(133,693	)	$	10,083		$	404,997		$	14,549		$	425,797		$	5,022,084
Basis adjustment upon adoption of ASU 2017-05		-		-		-			529			-			-			6,557			-			7,086
Balance as of January 1, 2018		240,427		2,403		4,297,948			(133,164	)		10,083			404,997			21,106			425,797			5,029,170
Net (loss) income		-		-		-			(33,702	)		-			2,807			582			(3,550	)		(33,863	)
Common shares issued upon redemption of    common units		27		-		469			-			-			-			-			(469	)		-
Common shares issued under Omnibus    share plan, net of shares withheld for taxes		75		-		-			(213	)		-			-			-			-			(213	)
Dividends and distributions ($0.20 per share    and unit)		-		-		-			(48,103	)		-			-			-			(5,144	)		(53,247	)
Contributions from noncontrolling interests		-		-		-			-			-			-			36,128			-			36,128
Distributions to noncontrolling interests		-		-		-			-			-			(4,118	)		-			-			(4,118	)
Change in value of interest rate swaps		-		-		-			-			18,422			-			-			1,924			20,346
Pro rata share of other comprehensive income    of unconsolidated joint ventures		-		-		-			-			142			-			-			15			157
Amortization of equity awards		-		-		1,470			-			-						-			10,088			11,558
Other		-		-		(2,064	)		(171	)		-			-			-			2,065			(170	)
Balance as of June 30, 2018		240,529	$	2,403	$	4,297,823		$	(215,353	)	$	28,647		$	403,686		$	57,816		$	430,726		$	5,005,748

See notes to consolidated financial statements (unaudited).

6

PARAMOUNT GROUP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	For the Six Months Ended June 30,
(Amounts in thousands)	2018			2017
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income	$	(33,863	)	$	139,811
Adjustments to reconcile net (loss) income to net cash provided by    operating activities:
Depreciation and amortization		129,931			131,628
Real estate impairment loss		46,000			-
Amortization of deferred financing costs		5,515			5,548
Gain on sale of real estate		-			(133,989	)
Straight-lining of rental income		(29,983	)		(32,121	)
Amortization of above and below-market leases, net		(8,724	)		(10,989	)
Loss on early extinguishment of debt		-			7,877
Unrealized gain on interest rate swaps		-			(1,802	)
Realized and unrealized losses (gains) on marketable securities		1			(2,486	)
Income from unconsolidated joint ventures		(2,459	)		(18,472	)
Distributions of earnings from unconsolidated joint ventures		1,170			2,758
Loss from unconsolidated real estate funds		80			2,123
Distributions of earnings from unconsolidated real estate funds		135			146
Amortization of stock-based compensation expense		10,915			7,867
Other non-cash adjustments		40			(169	)
Changes in operating assets and liabilities:
Accounts and other receivables		1,533			3,102
Deferred charges		(13,734	)		(14,297	)
Other assets		(1,910	)		7,294
Accounts payable and accrued expenses		1,297			(15,257	)
Other liabilities		567			420
Net cash provided by operating activities		106,511			78,992
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to real estate		(51,610	)		(33,079	)
Investments in unconsolidated joint ventures		(17,137	)		(28,791	)
Escrow deposits and loans receivable for Residential Development Fund		(15,680	)		-
Sales of marketable securities		15,253			9,543
Purchases of marketable securities		(12,140	)		(6,230	)
Distributions of capital from unconsolidated joint ventures		2,608			20,000
Contributions of capital to unconsolidated real estate funds		(2,254	)		(584	)
Proceeds from sale of real estate		-			540,333
Deposit on real estate		-			(12,914	)
Distributions of capital from unconsolidated real estate funds		-			3,845
Net cash (used in) provided by investing activities		(80,960	)		492,123

See notes to consolidated financial statements (unaudited).

7

PARAMOUNT GROUP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED

(UNAUDITED)

	For the Six Months Ended June 30,
(Amounts in thousands)	2018			2017
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends paid to common stockholders	$	(46,892	)	$	(43,832	)
Contributions from noncontrolling interests		36,128			9,278
Proceeds from notes and mortgages payable		16,700			991,556
Debt issuance costs		(6,351	)		(7,344	)
Distributions paid to common unitholders		(4,945	)		(6,526	)
Distributions to noncontrolling interests		(4,118	)		(107,162	)
Repurchase of shares related to stock compensation agreements    and related tax withholdings		(213	)		(154	)
Repayments of notes and mortgages payable		-			(1,044,821	)
Repayment of borrowings under revolving credit facility		-			(290,000	)
Borrowings under revolving credit facility		-			60,000
Settlement of interest rate swap liabilities		-			(19,425	)
Loss on early extinguishment of debt		-			(7,877	)
Net cash used in financing activities		(9,691	)		(466,307	)
Net increase in cash and cash equivalents and restricted cash		15,860			104,808
Cash and cash equivalents and restricted cash at beginning of period		250,425			192,339
Cash and cash equivalents and restricted cash at end of period	$	266,285		$	297,147
RECONCILIATION OF CASH AND CASH EQUIVALENTS AND RESTRICTED CASH
Cash and cash equivalents at beginning of period	$	219,381		$	162,965
Restricted cash at beginning of period		31,044			29,374
Cash and cash equivalents and restricted cash at beginning of period	$	250,425		$	192,339
Cash and cash equivalents at end of period	$	233,530		$	254,763
Restricted cash at end of period		32,755			42,384
Cash and cash equivalents and restricted cash at end of period	$	266,285		$	297,147
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash payments for interest	$	67,367		$	73,817
Cash payments for income taxes, net of refunds		1,699			3,191
NON-CASH TRANSACTIONS:
Dividends and distributions declared but not yet paid	$	26,621		$	25,211
Additions to real estate included in accounts payable and accrued expenses		10,400			8,988
Basis adjustment to investment in unconsolidated joint ventures upon    adoption of ASU 2017-05		7,086			-
Write-off of fully amortized and/or depreciated assets		2,947			4,930
Common shares issued upon redemption of common units		469			135,959
Increase (decrease) in value of interest rate swaps		20,346			(9	)
Increase (decrease) due to deconsolidation of One Steuart Lane:
Investments in unconsolidated joint ventures		-			14,915
Real estate, net		-			(14,915	)

See notes to consolidated financial statements (unaudited).

8

PARAMOUNT GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

1.     Organization and Business

As used in these consolidated financial statements, unless otherwise indicated, all references to “we,” “us,” “our,” the “Company,”  and “Paramount” refer to Paramount Group, Inc., a Maryland corporation, and its consolidated subsidiaries, including Paramount Group Operating Partnership LP (the “Operating Partnership”), a Delaware limited partnership. We are a fully-integrated real estate investment trust (“REIT”) focused on owning, operating, managing, acquiring and redeveloping high-quality, Class A office properties in select central business district submarkets of New York City, Washington, D.C. and San Francisco. As of June 30, 2018, our portfolio consisted of 14 Class A office properties aggregating approximately 12.5 million square feet. We conduct our business through, and substantially all of our interests in properties and investments are held by, the Operating Partnership. We are the sole general partner of, and owned approximately 90.5% of, the Operating Partnership as of June 30, 2018.

2. Basis of Presentation and Significant Accounting Policies

Basis of Presentation

The accompanying consolidated financial statements are unaudited and have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and in conjunction with the instructions to Form 10-Q of the Securities and Exchange Commission (“SEC”). Accordingly, certain information and footnote disclosures required by GAAP for complete financial statements have been condensed or omitted. These consolidated financial statements include the accounts of Paramount and its consolidated subsidiaries, including the Operating Partnership. In the opinion of management, all adjustments (which include only normal recurring adjustments) and eliminations (which include intercompany balances and transactions) necessary to present fairly the financial position, results of operations and changes in cash flows have been made. The consolidated balance sheet as of December 31, 2017 was derived from audited financial statements as of that date, but does not include all information and disclosures required by GAAP. These consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2017, as filed with the SEC.

Significant Accounting Policies

There are no material changes to our significant accounting policies as disclosed in our Annual Report on Form 10-K for the year ended December 31, 2017.

Use of Estimates

We have made estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ materially from those estimates. The results of operations for the three and six months ended June 30, 2018, are not necessarily indicative of the operating results for the full year.

Reclassification

Certain prior year balances have been reclassified to conform to current year presentation.

9

PARAMOUNT GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Recently Issued Accounting Pronouncements Not Materially Impacting Our Financial Statements

In May 2014, the Financial Accounting Standard’s Board (“FASB”) issued ASU 2014-09, an update to ASC Topic 606, Revenue from Contracts with Customers. ASU 2014-09, as amended, supersedes nearly all existing revenue recognition guidance under U.S. GAAP. The core principle of this guidance is that an entity should recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. This guidance also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments made in applying the guidance. This guidance is effective for fiscal years beginning after December 15, 2017, and for interim periods within those fiscal years, and can be applied using a full retrospective or modified retrospective approach. We adopted the provisions of ASU 2014-09 on January 1, 2018, using the modified retrospective approach. The adoption of ASU 2014-09 did not impact our consolidated financial results but resulted in additional disclosures on our consolidated financial statements. See Note 14, Revenues.

In June 2016, the FASB issued ASU 2016-13, an update to ASC Topic 326, Financial Instruments – Credit Losses. ASU 2016- 13 requires measurement and recognition of expected credit losses on financial instruments measured at amortized cost at the end of each reporting period rather than recognizing the credit losses when it is probable that the loss has been incurred in accordance with current guidance. ASU 2016-13 is effective for interim and annual reporting periods in fiscal years that begin after December 15, 2019, with early adoption permitted for fiscal years beginning after December 15, 2018. We are evaluating the impact of ASU 2016-13 but do not believe the adoption will have a material impact on our consolidated financial statements.

In May 2017, the FASB issued ASU 2017-09, an update to ASC Topic 718, Compensation – Stock Compensation. ASU 2017- 09 clarifies the types of changes to the terms and conditions of a share-based payment award that requires modification accounting. ASU 2017-09 does not change the accounting for modification of share-based awards, but clarifies that modification accounting should only be applied if there is a change to the value, vesting condition or award classification and would not be required if the changes are considered non-substantive. ASU 2017-09 is effective for interim and annual reporting periods in fiscal years that begin after December 31, 2017, with early adoption permitted. We adopted the provisions of ASU 2017-09 on January 1, 2018 and the adoption of ASU 2017-09 did not have an impact on our consolidated financial statements.

In August 2017, the FASB issued ASU 2017-12, an update to ASC Topic 815, Derivatives and Hedging. ASU 2017-12 improves transparency and understandability of information by better aligning the financial reporting for hedging relationships with the risk management activities. ASU 2017-12 also simplifies the application of hedge accounting through changes in both the designation and measurement of qualifying hedging relationships. ASU 2017-12 is effective for interim and annual reporting periods in fiscal years that begin after December 15, 2018, with early adoption permitted. We are evaluating the impact of ASU 2017-12 but do not believe the adoption will have an impact on our consolidated financial statements.

10

PARAMOUNT GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Recently Issued Accounting Pronouncements Impacting or Potentially Impacting Our Financial Statements

In February 2016, the FASB issued ASU 2016-02, an update to ASC Topic 842, Leases. ASU 2016-02 amends the existing guidance for lease accounting, including requiring lessees to recognize most leases on their balance sheets. ASU 2016-02 requires lessees to apply a dual approach, classifying leases as either financing or operating and recording a right-of-use asset and a lease liability for all leases with a term greater than 12 months. Accounting for lessors under ASU 2016-02 is substantially similar to existing guidance, however, lessors are required to separate lease components (rental income) and non-lease components (revenue related to various services we provide). In July 2018, the FASB issued ASU 2018-11 that provides lessors with a practical expedient to not separate lease and non-lease components, if certain criteria are met, and provides an additional transition method to adopt the standard. ASU 2016-02 is effective for interim and annual reporting periods in fiscal years that begin after December 15, 2018, with early adoption permitted. We plan to adopt the provisions of ASU 2016-02 on January 1, 2019 and are in the process of evaluating whether we will elect to apply the practical expedient.

In November 2016, the FASB issued ASU 2016-18, an update to ASC Topic 230, Statement of Cash Flows, to provide guidance on classification and presentation of changes in restricted cash on the statement of cash flows. ASU 2016-18 requires that an entity’s reconciliation of the beginning-of-period and end-of-period total amounts shown on the statement of cash flows to include restricted cash with cash and cash equivalents. ASU 2016-18 is effective for interim and annual reporting periods in fiscal years that begin after December 15, 2017, with early adoption permitted. We elected to early adopt ASU 2016-18 retrospectively, on December 31, 2017. This adoption resulted in (i) additional disclosures to reconcile cash and cash equivalents and restricted cash on our consolidated balance sheets to our consolidated statements of cash flows and (ii) a decrease to cash provided by operating activities of $3,000,000 and an increase in cash provided by investing activities of $16,010,000 for the six months ended June 30, 2017.

In February 2017, the FASB issued ASU 2017-05, an update to ASC Topic 610, Other Income. ASU 2017-05 clarifies the scope and accounting for derecognition of a nonfinancial asset and eliminates the guidance in ASC 360-20 specific to real estate sales and partial sales. ASU 2017-05 requires an entity that transfers control of a nonfinancial asset to measure any noncontrolling interest it retains (or receives) at fair value. ASU 2017-05 is effective for interim and annual reporting periods in fiscal years that begin after December 15, 2017, with early adoption permitted for entities concurrently early adopting ASU 2014-09. We adopted the provisions of ASU 2017-05 on January 1, 2018, using the modified retrospective approach. Upon adoption, we recorded a $7,086,000 adjustment to “investments in unconsolidated joint ventures” relating to the measurement of our consolidated Residential Development Fund’s (“RDF”) retained interest in One Steuart Lane (formerly 75 Howard Street) at fair value with an offset to equity. See Note 4, Investments in Unconsolidated Joint Ventures.

3. Dispositions

Waterview

On May 3, 2017, we completed the sale of Waterview, a 636,768 square foot, Class A office building in Rosslyn, Virginia for $460,000,000 and recognized a net gain of $110,583,000, which is included as a component of “gain on sale of real estate” on our consolidated statements of income for the three and six months ended June 30, 2017.

11

PARAMOUNT GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

4. Investments in Unconsolidated Joint Ventures

Prior to March 14, 2018, RDF, in which we have a 7.4% interest, owned 20.0% of One Steuart Lane (the “Property”). On March 14, 2018, RDF transferred its 20.0% interest to a new joint venture in which it owns a 75.0% interest. Separately on March 14, 2018, RDF acquired an additional 10.0% interest in the Property from its existing partner. Subsequent to these transactions RDF owns a 25.0% economic interest in the Property, comprised of the newly acquired 10.0% interest and an indirect 15.0% interest it owns through the joint venture. As a result of these transactions, RDF was required to consolidate its 75.0% interest in the joint venture that owns 20.0% of the Property, and reflect the 25.0% interest in this venture (5.0% economic interest in the Property) it does not own as noncontrolling interests. We continue to consolidate our 7.4% interest in RDF and reflect the 92.6% interest we do not own as noncontrolling interests. As of June 30, 2018, our economic interest in the Property was 1.85%.

The following tables summarize our investments in unconsolidated joint ventures as of the dates thereof and the income or loss from these investments for the periods set forth below.

(Amounts in thousands)	Paramount	As of
Our Share of Investments:	Ownership	June 30, 2018			December 31, 2017
712 Fifth Avenue (1)	50.0%	$	-		$	-
60 Wall Street (2)	5.0%		23,760			25,083
One Steuart Lane (2)	25.0% (3)		40,236	(4)		16,031
Oder-Center, Germany (2)	9.5%		3,827			3,648
Investments in unconsolidated joint ventures		$	67,823		$	44,762

		For the Three Months Ended						For the Six Months Ended
(Amounts in thousands)	Paramount	June 30,						June 30,
Our Share of Net Income (Loss):	Ownership	2018			2017			2018			2017
712 Fifth Avenue (1)	50.0%	$	2,608		$	16,504		$	2,608		$	18,434
60 Wall Street (2)	5.0%		(102	)		(31	)		(175	)		(36	)
One Steuart Lane (2)	25.0% (3)		(16	)		33			(18	)		33
Oder-Center, Germany (2)	9.5%		31			29			44			41
Income from unconsolidated joint ventures		$	2,521		$	16,535		$	2,459		$	18,472

⁽¹⁾ As of June 30, 2018, our basis in the partnership was negative $20,654 resulting from distributions made to us in excess of our share of earnings recognized. Accordingly, we no longer recognize our proportionate share of earnings from the venture because we have no further obligation to fund additional capital to the venture. Instead, we only recognize earnings to the extent we receive cash distributions from the venture.  

⁽²⁾ As of June 30, 2018, the carrying amount of our investments in 60 Wall Street, One Steuart Lane and Oder-Center is greater than our share of equity in these investments by $2,868, $692 and $5,362, respectively.

⁽³⁾ Represents RDF’s economic interest in the Property.

⁽⁴⁾ Includes a $7,086 basis adjustment which was recorded upon the adoption of ASU 2017-05 on January 1, 2018.

12

PARAMOUNT GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

712 Fifth Avenue

The following tables provide summarized financial information of 712 Fifth Avenue as of the dates and for the periods set forth below.

(Amounts in thousands)	As of
Balance Sheets:	June 30, 2018			December 31, 2017
Real estate, net	$	199,731		$	202,040
Other assets		59,879			58,034
Total assets	$	259,610		$	260,074
Notes and mortgages payable, net	$	296,337		$	296,132
Other liabilities		4,582			4,615
Total liabilities		300,919			300,747
Partners’ deficit		(41,309	)		(40,673	)
Total liabilities and partners’ deficit	$	259,610		$	260,074

(Amounts in thousands)	For the Three Months Ended June 30,						For the Six Months Ended June 30,
Income Statements:	2018			2017			2018			2017
Rental income	$	12,329		$	12,713		$	24,658		$	25,658
Tenant reimbursement income		1,245			1,209			2,590			2,517
Fee and other income		159			468			617			594
Total revenues		13,733			14,390			27,865			28,769
Operating expenses		6,126			6,102			12,310			12,068
Depreciation and amortization		2,898			3,075			5,924			5,995
Total expenses		9,024			9,177			18,234			18,063
Operating income		4,709			5,213			9,631			10,706
Interest and other income, net		157			48			270			72
Interest and debt expense		(2,674	)		(3,126	)		(5,319	)		(5,951	)
Unrealized gain on interest rate swaps		-			728			-			1,896
Net income	$	2,192		$	2,863		$	4,582		$	6,723

13

PARAMOUNT GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

5. Investments in Unconsolidated Real Estate Funds

We are the general partner and investment manager of Paramount Group Real Estate Fund VII, LP (“Fund VII”) and its parallel fund, Paramount Group Real Estate Fund VII-H, LP (“Fund VII-H”). As of June 30, 2018, Fund VII and Fund VII-H own 100% of Zero Bond Street. We also manage Paramount Group Real Estate Fund VIII, LP (“Fund VIII”), our Alternative Investment Fund, which invests in mortgage and mezzanine loans and preferred equity investments.

The following tables summarize our investments in these unconsolidated real estate funds as of the dates thereof and the income or loss recognized for the periods set forth below.

	As of
(Amounts in thousands)	June 30, 2018		December 31, 2017
Our Share of Investments:
Property funds	$	2,352	$	2,429
Alternative investment fund		6,940		4,824
Investments in unconsolidated real estate funds	$	9,292	$	7,253

	For the Three Months Ended						For the Six Months Ended
(Amounts in thousands)	June 30,						June 30,
Our Share of Net Income (Loss):	2018			2017			2018			2017
Net investment income	$	59		$	71		$	125		$	124
Net realized (loss) gain		-			(5	)		-			174
Net unrealized loss		(73	)		(324	)		(205	)		(228	)
Carried interest		-			(2,153	)		-			(2,193	)
Loss from unconsolidated real estate funds	$	(14	)	$	(2,411	)		(80	)	$	(2,123	)

14

PARAMOUNT GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

The following tables provide summarized financial information for Fund VII as of the dates and for the periods set forth below.

	As of
(Amounts in thousands)	June 30, 2018		December 31, 2017
Balance Sheets:
Real estate investments	$	31,126	$	32,943
Cash and cash equivalents		1,022		138
Total assets	$	32,148	$	33,081
Other liabilities	$	1,145	$	1,058
Total liabilities		1,145		1,058
Equity		31,003		32,023
Total liabilities and equity	$	32,148	$	33,081

	For the Three Months Ended June 30,						For the Six Months Ended June 30,
(Amounts in thousands)	2018			2017			2018			2017
Income Statements:
Investment income	$	5		$	777		$	5		$	962
Investment expenses		76			560			120			1,036
Net investment (loss) income		(71	)		217			(115	)		(74	)
Net realized losses		-			(66	)		-			(66	)
Net unrealized losses		(1,138	)		(4,456	)		(3,017	)		(4,321	)
Loss from real estate    fund investments	$	(1,209	)	$	(4,305	)	$	(3,132	)	$	(4,461	)

6. Preferred Equity Investments

We own a 24.4% interest in PGRESS Equity Holdings L.P., an entity that owns certain preferred equity investments that are consolidated into our consolidated financial statements.

The following is a summary of the preferred equity investments.

(Amounts in thousands, except square feet)	Paramount	Dividend	Initial	As of
Preferred Equity Investment	Ownership	Rate	Maturity	June 30, 2018		December 31, 2017
470 Vanderbilt Avenue (1)	24.4%	10.3%	Feb-2019	$	35,925	$	35,817
2 Herald Square (2)	n/a	n/a	n/a		-		19,588
					35,925		55,405
Less: valuation allowance (2)					-		(19,588	)
Total preferred equity investments, net				$	35,925	$	35,817

⁽¹⁾ Represents a preferred equity investment in a partnership that owns 470 Vanderbilt Avenue, a 686,000 square foot office building in Brooklyn, New York. The preferred equity has a dividend rate of 10.3%, of which 8.0% was paid in cash through February 2016 and the unpaid portion accreted to the balance of the investment. Subsequent to February 2016, the entire 10.3% dividend is being paid in cash.

⁽²⁾ Represents a preferred equity investment in a partnership that owned 2 Herald Square, a 369,000 square foot office and retail property in Manhattan. In April 2017, the borrower defaulted on the obligation to extend the maturity date or redeem the preferred equity investment and accordingly, we had recorded a valuation allowance of $19,588. In May 2018, the senior lender foreclosed out our interests and accordingly, we wrote off our preferred equity investment and the related valuation allowance.

15

PARAMOUNT GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

7. Intangible Assets and Liabilities

The following table summarizes our intangible assets (acquired above-market leases and acquired in-place leases) and intangible liabilities (acquired below-market leases) and the related amortization as of the dates and for the periods set forth below.

	As of
(Amounts in thousands)	June 30, 2018			December 31, 2017
Intangible assets:
Gross amount	$	542,582		$	553,063
Accumulated amortization		(226,131	)		(200,857	)
	$	316,451		$	352,206
Intangible liabilities:
Gross amount	$	201,232		$	205,101
Accumulated amortization		(85,673	)		(75,073	)
	$	115,559		$	130,028

	For the Three Months Ended				For the Six Months Ended
	June 30,				June 30,
(Amounts in thousands)	2018		2017		2018		2017
Amortization of above and below-market leases, net    (component of “rental income”)	$	4,304	$	7,981	$	8,724	$	10,989
Amortization of acquired in-place leases    (component of “depreciation and amortization”)	$	14,721	$	22,649	$	30,014	$	40,423

The table below sets forth annual amortization of acquired above and below-market leases, net and amortization of acquired in-place leases for each of the five succeeding years commencing from January 1, 2019.

(Amounts in thousands) For the Year Ending December 31,	Above and Below-Market Leases		In-Place Leases
2019	$	14,257	$	53,428
2020		8,679		42,303
2021		4,341		30,310
2022		942		24,200
2023		4,421		19,445

16

PARAMOUNT GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

8. Debt

On January 10, 2018, we amended and restated the credit agreement governing our revolving credit facility. The maturity date of the revolving credit facility was extended from November 2018 to January 2022, with two six-month extension options, and the capacity was increased to $1,000,000,000 from $800,000,000. The interest rate on the revolving credit facility, at current leverage levels, was lowered by 10 basis points from LIBOR plus 125 basis points to LIBOR plus 115 basis points, and the facility fee was reduced by 5 basis points from 25 basis points to 20 basis points.

The following is a summary of our outstanding debt.

			Interest Rate
	Maturity	Fixed/	as of			As of
(Amounts in thousands)	Date	Variable Rate	June 30, 2018			June 30, 2018				December 31, 2017
Notes and mortgages payable:
1633 Broadway
	Dec-2022	Fixed (1)		3.54	%	$	1,000,000			$	1,000,000
	Dec-2022	L + 175 bps		3.73	%		46,800		(2)		30,100		(2)
				3.55	%		1,046,800				1,030,100
One Market Plaza (3)	Feb-2024	Fixed		4.03	%		975,000				975,000
1301 Avenue of the Americas
	Nov-2021	Fixed		3.05	%		500,000				500,000
	Nov-2021	L + 180 bps		3.80	%		350,000				350,000
				3.36	%		850,000				850,000
31 West 52nd Street	May-2026	Fixed		3.80	%		500,000				500,000
50 Beale (3)	Oct-2021	Fixed		3.65	%		228,000				228,000
Total notes and mortgages payable				3.68	%		3,599,800				3,583,100
Less: deferred financing costs							(37,341	)			(41,800	)
Total notes and mortgages payable, net						$	3,562,459			$	3,541,300
$1.0 Billion Revolving Credit    Facility	Jan-2022	L + 115 bps	n/a			$	-			$	-

⁽¹⁾ Represents loans with variable interest rates that have been fixed by interest rate swaps. See Note 9, Derivative Instruments and Hedging Activities.

⁽²⁾ Represents amounts borrowed to fund leasing costs at the property. The loan balance can be increased by an additional $200,000 upon the satisfaction of certain performance hurdles related to the property.

⁽³⁾ Our ownership interest in One Market Plaza and 50 Beale is 49.0% and 31.1%, respectively.

17

PARAMOUNT GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

9. Derivative Instruments and Hedging Activities

Interest Rate Swaps – Designated as Cash Flow Hedges

We have interest rate swaps with an aggregate notional amount of $1.0 billion that are designated as cash flow hedges. We also have entered into forward starting interest rate swaps with an aggregate notional amount of $400,000,000 to extend the maturity of certain swaps for an additional year. Changes in the fair value of interest rate swaps that are designated as cash flow hedges are recognized in “other comprehensive income (loss)” (outside of earnings). We recognized other comprehensive income of $5,795,000 and $20,346,000 for the three and six months ended June 30, 2018, respectively, and other comprehensive loss of $4,041,000 and $9,000 for the three and six months ended June 30, 2017, respectively, from the changes in fair value of these interest rate swaps. See Note 10, Accumulated Other Comprehensive Income (Loss). During the next twelve months, we estimate that $5,995,000 of the amounts recognized in accumulated other comprehensive income will be reclassified as a decrease to interest expense.

The table below summarizes the fair value of our interest rate swaps that are designated as cash flow hedges.

	Fair Value as of
(Amounts in thousands)	June 30, 2018		December 31, 2017
Interest rate swap assets designated as cash flow hedges (included in “other assets”)	$	29,884	$	9,855
Interest rate swap liabilities designated as cash flow hedges (included in “other liabilities”)	$	-	$	317

We have agreements with various derivative counterparties that contain provisions wherein a default on our indebtedness could be deemed a default on our derivative obligations, which would require us to either post collateral up to the fair value of our derivative obligations or settle the obligations for cash. As of June 30, 2018, we did not have any obligations relating to our swaps that contained such provisions.

Interest Rate Swaps – Non-designated Hedges

As of June 30, 2018, we did not have any interest rate swaps that were not designated as hedges. Prior to January 19, 2017, our interest rate swap on One Market Plaza was not designated as a hedge. This interest rate swap was terminated in connection with the refinancing of the property on January 19, 2017. For the period from January 1, 2017 through January 19, 2017, we recognized an unrealized gain of $1,802,000, in connection with this interest rate swap, which is included as “unrealized gain on interest rate swaps” in our consolidated statement of income for the six months ended June 30, 2017.

18

PARAMOUNT GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

10. Accumulated Other Comprehensive Income (Loss)

The following table sets forth changes in accumulated other comprehensive income by component for the three and six months ended June 30, 2018 and 2017, including amounts attributable to noncontrolling interests in the Operating Partnership.

	For the Three Months Ended						For the Six Months Ended
	June 30,						June 30,
(Amounts in thousands)	2018			2017			2018		2017
Amount of income (loss) related to the effective portion of    cash flow hedges recognized in other comprehensive income	$	6,123		$	(6,025	)	$	20,202	$	(4,529	)
Amounts reclassified from accumulated other comprehensive    income (decreasing) increasing interest and debt expense		(328	)		1,984			144		4,520
Amount of income related to unconsolidated joint    ventures recognized in other comprehensive income (loss) (1)		103			35			157		(187	)
Amount of gain (loss) related to the ineffective portion of cash    flow hedges and amount excluded from effectiveness testing		-			-			-		-

⁽¹⁾ Represents foreign currency translation adjustments. No amounts were reclassified from accumulated other comprehensive income during any of the periods set forth above.

11. Noncontrolling Interests

Consolidated Joint Ventures

Noncontrolling interests in consolidated joint ventures consist of equity interests held by third parties in One Market Plaza, 50 Beale and PGRESS Equity Holdings L.P. As of June 30, 2018 and December 31, 2017, noncontrolling interests in our consolidated joint ventures aggregated $403,686,000 and $404,997,000, respectively.  

Consolidated Real Estate Fund

Noncontrolling interests in our consolidated real estate fund consist of equity interests held by third parties in RDF. As of June 30, 2018 and December 31, 2017, the noncontrolling interests in our consolidated real estate fund aggregated $57,816,000 and $14,549,000, respectively.

Operating Partnership

Noncontrolling interests in the Operating Partnership represent common units of the Operating Partnership that are held by third parties, including management, and units issued to management under equity incentive plans. Common units of the Operating Partnership may be tendered for redemption to the Operating Partnership for cash. We, at our option, may assume that obligation and pay the holder either cash or common shares on a one-for-one basis. Since the number of common shares outstanding is equal to the number of common units owned by us, the redemption value of each common unit is equal to the market value of each common share and distributions paid to each common unitholder is equivalent to dividends paid to common stockholders.  As of June 30, 2018 and December 31, 2017, noncontrolling interests in the Operating Partnership on our consolidated balance sheets had a carrying amount of $430,726,000 and $425,797,000, respectively, and a redemption value of $389,625,000 and $390,231,000, respectively.

19

PARAMOUNT GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

12. Variable Interest Entities

In the normal course of business, we are the general partner of various types of investment vehicles, which may be considered VIEs. We may, from time to time, own equity or debt securities through vehicles, each of which are considered variable interests. Our involvement in financing the operations of the VIEs is generally limited to our investments in the entity. We consolidate these entities when we are deemed to be the primary beneficiary.

Consolidated VIEs

We are the sole general partner of, and own approximately 90.5% of, the Operating Partnership as of June 30, 2018. The Operating Partnership is considered a VIE and is consolidated in our consolidated financial statements. Since we conduct our business through and substantially all of our interests are held by the Operating Partnership, the assets and liabilities on our consolidated financial statements represent the assets and liabilities of the Operating Partnership. As of June 30, 2018 and December 31, 2017, the Operating Partnership held interests in consolidated VIEs owning properties, a real estate fund and preferred equity investments that were determined to be VIEs. The assets of these consolidated VIEs may only be used to settle the obligations of the entities and such obligations are secured only by the assets of the entities and are non-recourse to the Operating Partnership or us. The table below summarizes the assets and liabilities of consolidated VIEs of the Operating Partnership.

	As of
(Amounts in thousands)	June 30, 2018		December 31, 2017
Real estate, net	$	1,711,766	$	1,726,800
Cash and restricted cash		79,622		55,658
Investments in unconsolidated joint ventures		40,236		16,031
Preferred equity investments, net		35,925		35,817
Accounts and other receivables, net		1,626		2,550
Deferred rent receivable		47,663		44,000
Deferred charges, net		10,777		8,123
Intangible assets, net		56,230		66,112
Other assets		18,035		929
Total VIE assets	$	2,001,880	$	1,956,020
Notes and mortgages payable, net	$	1,197,126	$	1,196,607
Accounts payable and accrued expenses		29,392		21,211
Intangible liabilities, net		38,754		46,365
Other liabilities		151		155
Total VIE liabilities	$	1,265,423	$	1,264,338

Unconsolidated VIEs

As of June 30, 2018, the Operating Partnership held variable interests in entities that own our unconsolidated real estate funds that were deemed to be VIEs. The table below summarizes our investments in these unconsolidated real estate funds and the maximum risk of loss from these investments.  

	As of
(Amounts in thousands)	June 30, 2018		December 31, 2017
Investments	$	9,292	$	7,253
Asset management fees and other receivables		697		597
Maximum risk of loss	$	9,989	$	7,850

20

PARAMOUNT GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

13. Fair Value Measurements

Financial Assets and Liabilities Measured at Fair Value

Financial assets and liabilities that are measured at fair value on our consolidated balance sheets consist of marketable securities and interest rate swaps. The table below aggregates the fair values of these financial assets and liabilities as of the dates set forth below, based on their levels in the fair value hierarchy.

	As of June 30, 2018
(Amounts in thousands)	Total		Level 1		Level 2		Level 3
Marketable securities	$	25,913	$	25,913	$	-	$	-
Interest rate swap assets (included in “other assets”)		29,884		-		29,884		-
Total assets	$	55,797	$	25,913	$	29,884	$	-

	As of December 31, 2017
(Amounts in thousands)	Total		Level 1		Level 2		Level 3
Marketable securities	$	29,039	$	29,039	$	-	$	-
Interest rate swap assets (included in “other assets”)		9,855		-		9,855		-
Total assets	$	38,894	$	29,039	$	9,855	$	-
Interest rate swap liabilities (included in “other liabilities”)	$	317	$	-	$	317	$	-
Total liabilities	$	317	$	-	$	317	$	-

Assets Measured at Fair Value on a Nonrecurring Basis

Assets measured at fair value on a nonrecurring basis on our consolidated balance sheets consist of real estate assets that have been written down to estimated fair value in the current period. In the quarter ended June 30, 2018, in accordance with ASC 360-10, we recorded a $46,000,000 impairment loss, which is included as “real estate impairment loss” on our consolidated statements of income for the three and six months ended June 30, 2018. The estimated fair value of real estate assets on our consolidated balance sheet was $138,000,000 and is classified as Level 3 within the fair value hierarchy.

Financial Assets and Liabilities Not Measured at Fair Value

Financial assets and liabilities not measured at fair value on our consolidated balance sheets consists of preferred equity investments, notes and mortgages payable and the revolving credit facility. The following is a summary of the carrying amounts and fair value of these financial instruments as of the dates set forth below.

	As of June 30, 2018				As of December 31, 2017
(Amounts in thousands)	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Preferred equity investments, net	$	35,925	$	36,212	$	35,817	$	36,112
Total assets	$	35,925	$	36,212	$	35,817	$	36,112
Notes and mortgages payable	$	3,599,800	$	3,591,251	$	3,583,100	$	3,596,953
Revolving credit facility		-		-		-		-
Total liabilities	$	3,599,800	$	3,591,251	$	3,583,100	$	3,596,953

21

PARAMOUNT GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

14. Revenues

Our revenues consist primarily of rental income, tenant reimbursement income and fee and other income. The following table sets forth the details of our revenues.

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
(Amounts in thousands)	2018		2017		2018		2017
Rental income	$	169,529	$	158,187	$	332,934	$	313,577
Tenant reimbursement income		13,164		11,856		27,410		24,708
Fee and other income:
Fee income:
Property management		1,490		1,532		2,992		3,142
Asset management		1,823		2,359		3,433		4,625
Acquisition, disposition and leasing		1,750		250		1,750		5,570
Other		346		307		699		667
Total fee income		5,409		4,448		8,874		14,004
Lease termination income		29		895		57		961
Other income (1)		3,288		2,318		6,415		5,690
Total fee and other income		8,726		7,661		15,346		20,655
Total revenues	$	191,419	$	177,704	$	375,690	$	358,940

⁽¹⁾ Primarily comprised of (i) tenant requested services, including overtime heating and cooling and (ii) parking income.  

Property-related Revenues

Property-related revenue is recognized in accordance with ASC Topic 840, Leases,and consists of (i) rental income, which is generated from the lease-up of office, retail and storage space to tenants under operating leases and recognized on a straight-line basis over the non-cancellable term of the lease (ii) tenant reimbursement income, which is comprised of reimbursement of certain operating costs and real estate taxes from tenants (iii) lease termination income and (iv) other income.

Revenue from Contracts with Customers

Revenue from contracts with customers, which is primarily comprised of (i) property management fees, (ii) asset management fees, (iii) fees relating to acquisitions, dispositions and leasing services and (iv) other fee income, is recognized in accordance with ASC Topic 606, Revenue From Contracts With Customers. Fee income is generated from the various services we provide to our customers and is disaggregated based on the types of services we provide pursuant to ASC Topic 606.

Fee income is recognized as and when we satisfy our performance obligations pursuant to contractual agreements. Property management and asset management services are provided continuously over time and revenue is recognized over that time. Fee income relating to acquisitions, dispositions and leasing services is recognized upon completion of the acquisition, disposition or leasing services as required in the contractual agreements. The amount of fee income to be recognized is stated in the contract as a fixed price or as a stated percentage of revenues, contributed capital or transaction price. Fee income is reported in a non-operating segment, and therefore is shown as a reconciling item to net income in Note 21, Segments.

22

PARAMOUNT GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

The table below sets forth the amounts receivable from our customers under our various fee agreements and are included as a component of “accounts and other receivables” on our consolidated balance sheets.

								Acquisition
			Property			Asset		Disposition
(Amounts in thousands)	Total		Management			Management		and Leasing		Other
Accounts and other receivables:
Balance as of December 31, 2017	$	1,558	$	290		$	762	$	490	$	16
Balance as of June 30, 2018		1,651		274			836		490		51
Increase (decrease)	$	93	$	(16	)	$	74	$	-	$	35

As of June 30, 2018 and December 31, 2017, our consolidated balance sheets included $550,000 and $387,000, respectively, of deferred revenue in connection with prepayments for services we have not yet provided. These amounts are included as a component of “accounts payable and accrued expenses” on our consolidated balance sheets and will be recognized as income upon completion of the required services.

There are no other contract assets or liabilities as of June 30, 2018 and December 31, 2017.

15. Interest and Other Income, net

The following table sets forth the details of interest and other income.

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
(Amounts in thousands)	2018		2017		2018		2017
Preferred equity investment income (1)	$	917	$	953	$	1,816	$	2,366
Interest and other income		978		511		2,004		596
Mark-to-market of investments in our    deferred compensation plans (2)		199		1,022		290		2,724
Total interest and other income, net	$	2,094	$	2,486	$	4,110	$	5,686

⁽¹⁾ Represents income from our preferred equity investments in PGRESS Equity Holdings L.P., of which our 24.4% share is $223 and $232 for the three months ended June 30, 2018 and 2017, respectively, and $442 and $576 for the six months ended June 30, 2018 and 2017, respectively. See Note 6, Preferred Equity Investments.

⁽²⁾ The change resulting from the mark-to-market of the deferred compensation plan assets is entirely offset by the change in deferred compensation plan liabilities, which is included as a component of “general and administrative” expenses on our consolidated statements of income.

16. Interest and Debt Expense

The following table sets forth the details of interest and debt expense.

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
(Amounts in thousands)	2018		2017		2018		2017
Interest expense	$	34,055	$	31,999	$	67,376	$	66,287
Amortization of deferred financing costs		2,754		2,818		5,515		5,548
Total interest and debt expense	$	36,809	$	34,817	$	72,891	$	71,835

23

PARAMOUNT GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

17. Incentive Compensation

Stock-Based Compensation

We account for all stock-based compensation in accordance with ASC 718, Compensation – Stock Compensation. As of June 30, 2018, we have 9,167,437 shares available for future grants under the 2014 Equity Incentive Plan (“Plan”), if all awards granted are full value awards, as defined in the Plan. Stock-based compensation expense was $4,650,000 and $4,438,000 for the three months ended June 30, 2018 and 2017, respectively, and $10,915,000 and $7,867,000 for the six months ended June 30, 2018 and 2017, respectively.

2017 Performance-Based Awards Program (“2017 Performance Program”)

On February 5, 2018, the Compensation Committee of our Board of Directors (the “Compensation Committee”) approved the 2017 Performance Program, a multi-year performance-based long-term equity compensation program. The purpose of the 2017 Performance Program is to further align the interests of our stockholders with that of management by encouraging our senior officers to create stockholder value in a “pay for performance” structure.

Under the 2017 Performance Program, participants may earn awards in the form of Long Term Incentive Plan (“LTIP”) units of our Operating Partnership based on our Total Shareholder Return (“TSR”) over a three-year performance measurement period beginning on January 1, 2018 and continuing through December 31, 2020, on both an absolute basis and relative basis as follows:

• 25.0% of the award is earned if our TSR over the three-year performance measurement period equals or exceeds 30.0%, with no awards being earned if our TSR over such period is less than 18.0% and awards being determined based on linear interpolation if our TSR over such period falls between such ranges.

• 75.0% of the award is earned if our TSR over the three-year performance measurement period equals or exceeds the 80th percentile of the performance of the SNL Office REIT Index constituents on a relative basis, with no awards being earned if our TSR over such period is less than the 30th percentile and awards being determined based on linear interpolation if our TSR over such period falls between such ranges.

Awards granted to our Chief Executive Officer, under the 2017 Performance Program include an additional performance feature requiring threshold TSR performance on both an absolute and a relative basis in order for any awards to be earned. Accordingly, our Chief Executive Officer will not earn any awards under the 2017 Performance Program unless our TSR for the performance measurement period is 18.0% or higher and in the 30th percentile or higher of the SNL Office REIT Index constituents.

In addition, if the designated performance objectives are achieved, awards earned under the 2017 Performance Program are also subject to vesting based on continued employment with us through December 31, 2021, with 50.0% of each award vesting upon the conclusion of the performance measurement period, and the remaining 50.0% vesting on December 31, 2021. Furthermore, our Named Executive Officers are required to hold earned awards for an additional year following vesting.

The fair value of the awards granted under the 2017 Performance Program on the date of the grant was $7,009,000 and is being amortized into expense over the four-year vesting period using a graded vesting attribution method.

2015 Performance-Based Awards Program (“2015 Performance Program”)

On April 3, 2018, the Compensation Committee determined that the performance goals set forth in the 2015 Performance Program were not satisfied during the performance measurement period, which ended on March 31, 2018. Accordingly, all of the 779,055 LTIP units that were granted on April 1, 2015, were forfeited, with no awards being earned.

24

PARAMOUNT GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

18. Earnings Per Share

The following table provides a summary of net income and the number of common shares used in the computation of basic and diluted income per common share, which includes the weighted average number of common shares outstanding and the effect of dilutive potential common shares, if any.

	For the Three Months Ended						For the Six Months Ended
	June 30,						June 30,
(Amounts in thousands, except per share amounts)	2018			2017			2018			2017
Numerator:
Net (loss) income attributable to common stockholders	$	(34,816	)	$	103,016		$	(33,702	)	$	103,388
Earnings allocated to unvested participating securities		(18	)		(59	)		(36	)		(73	)
Numerator for (loss) income per common share - basic    and diluted	$	(34,834	)	$	102,957		$	(33,738	)	$	103,315
Denominator:
Denominator for basic (loss) income per common share -    weighted average shares		240,336			234,990			240,324			232,969
Effect of dilutive stock-based compensation plans (1)		-			20			-			27
Denominator for diluted (loss) income per common    share - weighted average shares		240,336			235,010			240,324			232,996
(Loss) income per common share - basic and diluted	$	(0.14	)	$	0.44		$	(0.14	)	$	0.44

⁽¹⁾ The effect of dilutive securities for the three months ended June 30, 2018 and 2017 excludes 27,846  and 32,317 weighted average share equivalents, respectively, and 27,730 and 34,147 weighted average share equivalents for the six months ended June 30, 2018 and 2017, respectively, as their effect was anti-dilutive.

19. Related Party

Due to Affiliates

As of June 30, 2018 and December 31, 2017, we had an aggregate of $27,299,000 of liabilities that were due to affiliates. These liabilities were comprised of a $24,500,000 note payable to CNBB-RDF Holdings, LP, which is an entity partially owned by Katharina Otto-Bernstein (a member of our Board of Directors), and a $2,799,000 note payable to a different entity owned by members of the Otto Family, both of which were made in lieu of certain cash distributions prior to the completion of our initial public offering. The notes are due in November 2018 and bear interest at a fixed rate of 1.40%. We recognized interest expense of $97,000 and $35,000 for the three months ended June 30, 2018 and 2017, respectively, and $192,000 and $69,000 for the six months ended June 30, 2018 and 2017, respectively, in connection with these notes, which is included as a component of “interest and debt expense” on our consolidated statements of income.

Management Agreements

We provide property management, leasing and other related services to certain properties owned by members of the Otto Family. We recognized fee income of $215,000 and $210,000 for the three months ended June 30, 2018 and 2017, respectively, and $424,000 and $412,000 for the six months ended June 30, 2018 and 2017, respectively, in connection with these agreements, which is included as a component of “fee and other income” on our consolidated statements of income.  

25

PARAMOUNT GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

We also provide property management, asset management, leasing and other related services to our unconsolidated joint ventures and real estate funds. We recognized fee income of $4,558,000 and $3,369,000 for the three months ended June 30, 2018 and 2017, respectively, and $7,094,000 and $11,775,000 for the six months ended June 30, 2018 and 2017, respectively, in connection with these agreements. As of June 30, 2018 and December 31, 2017, amounts owed to us under these agreements aggregated $1,722,000, and $1,627,000, respectively, and are included as a component of “accounts and other receivables, net” on our consolidated balance sheets.

Hamburg Trust Consulting GMBH (“HTC”)

We have an agreement with HTC, a licensed broker in Germany, to supervise selling efforts for our private equity real estate funds (or investments in feeder vehicles for these funds) to investors in Germany, including distribution of securitized notes of a feeder vehicle for Fund VIII. Pursuant to this agreement, we have agreed to pay HTC for the costs incurred to sell investments in this feeder vehicle, which primarily consist of commissions paid to third party agents, and other incremental costs incurred by HTC as a result of the engagement, plus, in each case, a mark-up of 10%. HTC is 100% owned by Albert Behler, our Chairman, Chief Executive Officer and President.  We incurred expense of $42,000 and $134,000 for the three months ended June 30, 2018 and 2017, respectively, and $60,000 and $170,000 for the six months ended June 30, 2018 and 2017, respectively, in connection with these agreements, which is included as a component of “transaction related costs” on our consolidated statements of income. As of June 30, 2018 and December 31, 2017, we owed $83,000 and $51,000, respectively, to HTC under these agreements, which are included as a component of “accounts payable and accrued expenses” on our consolidated balance sheets.  

Mannheim Trust

Dr. Martin Bussmann (a member of our Board of Directors) is also a trustee and a director of Mannheim Trust, a subsidiary of which leases office space at 712 Fifth Avenue, our 50.0% owned unconsolidated joint venture. The Mannheim Trust, which is for the benefit of Dr. Bussmann’s children, leases 5,593 square feet, which expires in April 2023. Our share of rental income from this lease was $89,000 and $84,000, for the three months ended June 30, 2018 and 2017, respectively, and $181,000 and $178,000 for the six months ended June 30, 2018 and 2017, respectively.

20. Commitments and Contingencies

Insurance

We carry commercial general liability coverage on our properties, with limits of liability customary within the industry. Similarly, we are insured against the risk of direct and indirect physical damage to our properties including coverage for the perils such as floods, earthquakes and windstorms. Our policies also cover the loss of rental income during an estimated reconstruction period. Our policies reflect limits and deductibles customary in the industry and specific to the buildings and portfolio. We also obtain title insurance policies when acquiring new properties. We currently have coverage for losses incurred in connection with both domestic and foreign terrorist-related activities. While we do carry commercial general liability insurance, property insurance and terrorism insurance with respect to our properties, these policies include limits and terms we consider commercially reasonable. In addition, there are certain losses (including, but not limited to, losses arising from known environmental conditions or acts of war) that are not insured, in full or in part, because they are either uninsurable or the cost of insurance makes it, in our belief, economically impractical to maintain such coverage. Should an uninsured loss arise against us, we would be required to use our own funds to resolve the issue, including litigation costs. We believe the policy specifications and insured limits are adequate given the relative risk of loss, the cost of the coverage and industry practice and, in consultation with our insurance advisors, we believe the properties in our portfolio are adequately insured.

26

PARAMOUNT GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Other Commitments and Contingencies

We are a party to various claims and routine litigation arising in the ordinary course of business. Some of these claims or others to which we may be subject from time to time, including claims arising specifically from the formation transactions, in connection with our initial public offering, may result in defense costs, settlements, fines or judgments against us, some of which are not, or cannot be, covered by insurance. Payment of any such costs, settlements, fines or judgments that are not insured could have an adverse impact on our financial position and results of operations. Should any litigation arise in connection with the formation transactions, we would contest it vigorously. In addition, certain litigation or the resolution of certain litigation may affect the availability or cost of some of our insurance coverage, which could adversely impact our results of operations and cash flow, expose us to increased risks that would be uninsured, and/or adversely impact our ability to attract officers and directors.

The terms of our mortgage debt and certain side letters in place include certain restrictions and covenants which may limit, among other things, certain investments, the incurrence of additional indebtedness and liens and the disposition or other transfer of assets and interests in the borrower and other credit parties, and require compliance with certain debt yield, debt service coverage and loan to value ratios. In addition, our revolving credit facility contains representations, warranties, covenants, other agreements and events of default customary for agreements of this type with comparable companies. As of June 30, 2018, we believe we are in compliance with all of our covenants.

718 Fifth Avenue - Put Right

Prior to the formation transactions, an affiliate of our predecessor owned a 25.0% interest in 718 Fifth Avenue, a five-story building containing 19,050 square feet of prime retail space that is located on the southwest corner of 56th Street and Fifth Avenue in New York, (based on its 50.0% interest in a joint venture that held a 50.0% tenancy-in-common interest in the property). Prior to the completion of the formation transactions, this interest was sold to its partner in the 718 Fifth Avenue joint venture, who is also our joint venture partner in 712 Fifth Avenue, New York, New York. In connection with this sale, we granted our joint venture partner a put right, pursuant to which the 712 Fifth Avenue joint venture would be required to purchase the entire direct or indirect interests then held by our joint venture partner or its affiliates in 718 Fifth Avenue at a purchase price equal to the fair market value of such interests. The put right may be exercised at any time after September 10, 2018 with 12 months written notice and the actual purchase occurring no earlier than September 10, 2019. If the put right is exercised and the 712 Fifth Avenue joint venture acquires the 50.0% tenancy-in-common interest in the property by our joint venture partner, we will own a 25.0% interest in 718 Fifth Avenue based on current ownership interests.

Transfer Tax Assessments

During 2017, the New York City Department of Finance issued Notices of Determination (“Notices”) assessing additional transfer taxes (including interest and penalties) in connection with the transfer of interests in certain properties during our 2014 initial public offering. Prior to February 16, 2018, we believed that the likelihood of a loss related to these assessments was remote. On February 16, 2018, the New York City Tax Appeals Tribunal issued a decision against a publicly traded REIT in a case interpreting the same provisions of the transfer tax statute, on similar but distinguishable facts. As a result, after consultation with legal counsel, we now believe the likelihood of loss is reasonably possible, and while it is not possible to predict the outcome of these Notices, we estimate the range of loss could be between $0 and $38,000,000. Since no amount in this range is a better estimate than any other amount within the range, we have not accrued any liability arising from potential losses relating to these Notices in our consolidated financial statements.

27

PARAMOUNT GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

21. Segments

Our reportable segments are separated by region based on the three regions in which we conduct our business: New York, Washington, D.C. and San Francisco. Our determination of segments is aligned with our method of internal reporting and the way our Chief Executive Officer, who is also our Chief Operating Decision Maker, makes key operating decisions, evaluates financial results and manages our business.

The following tables provide Net Operating Income (“NOI”) for each reportable segment for the three and six months ended June 30, 2018 and 2017.

	For the Three Months Ended June 30, 2018
(Amounts in thousands)	Total			New York			Washington, D.C.			San Francisco			Other
Property-related revenues	$	186,010		$	115,536		$	15,435		$	55,344		$	(305	)
Property-related operating expenses		(67,646	)		(45,292	)		(5,736	)		(15,048	)		(1,570	)
NOI from unconsolidated joint ventures		4,569			4,493			-			-			76
NOI (1)	$	122,933		$	74,737		$	9,699		$	40,296		$	(1,799	)
	For the Three Months Ended June 30, 2017
(Amounts in thousands)	Total			New York			Washington, D.C.			San Francisco			Other
Property-related revenues	$	173,256		$	106,602		$	18,138		$	48,201		$	315
Property-related operating expenses		(63,461	)		(43,289	)		(6,565	)		(11,120	)		(2,487	)
NOI from unconsolidated joint ventures		4,958			4,838			-			-			120
NOI (1)	$	114,753		$	68,151		$	11,573		$	37,081		$	(2,052	)
	For the Six Months Ended June 30, 2018
(Amounts in thousands)	Total			New York			Washington, D.C.			San Francisco			Other
Property-related revenues	$	366,816		$	229,181		$	30,884		$	107,243		$	(492	)
Property-related operating expenses		(136,624	)		(92,453	)		(11,581	)		(29,164	)		(3,426	)
NOI from unconsolidated joint ventures		9,309			9,158			-			-			151
NOI (1)	$	239,501		$	145,886		$	19,303		$	78,079		$	(3,767	)
	For the Six Months Ended June 30, 2017
(Amounts in thousands)	Total			New York			Washington, D.C.			San Francisco			Other
Property-related revenues	$	344,936		$	211,926		$	41,925		$	90,140		$	945
Property-related operating expenses		(129,432	)		(88,048	)		(15,489	)		(21,725	)		(4,170	)
NOI from unconsolidated joint ventures		9,781			9,591			-			-			190
NOI (1)	$	225,285		$	133,469		$	26,436		$	68,415		$	(3,035	)

⁽¹⁾ 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 use NOI internally as a performance measure and believe it provides useful information to investors regarding our financial condition and results of operations because it reflects only those income and expense items that are incurred at the property level. Other real estate companies may use different methodologies for calculating NOI and, accordingly, our presentation of NOI may not be comparable to other real estate companies.

28

PARAMOUNT GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

The following table provides a reconciliation of NOI to net (loss) income attributable to common stockholders for the periods set forth below.

	For the Three Months Ended June 30,						For the Six Months Ended June 30,
(Amounts in thousands)	2018			2017			2018			2017
NOI	$	122,933		$	114,753		$	239,501		$	225,285
Add (subtract) adjustments to arrive to net income:
Fee income		5,409			4,448			8,874			14,004
Depreciation and amortization expense		(64,775	)		(68,636	)		(129,931	)		(131,628	)
General and administrative expenses		(17,195	)		(16,573	)		(29,826	)		(30,154	)
Transaction related costs		(293	)		(502	)		(413	)		(777	)
NOI from unconsolidated joint ventures		(4,569	)		(4,958	)		(9,309	)		(9,781	)
Income from unconsolidated joint ventures		2,521			16,535			2,459			18,472
Loss from unconsolidated real estate funds		(14	)		(2,411	)		(80	)		(2,123	)
Interest and other income, net		2,094			2,486			4,110			5,686
Interest and debt expense		(36,809	)		(34,817	)		(72,891	)		(71,835	)
Loss on early extinguishment of debt		-			(5,162	)		-			(7,877	)
Real estate impairment loss		(46,000	)		-			(46,000	)		-
Gain on sale of real estate		-			133,989			-			133,989
Unrealized gain on interest rate swaps		-			-			-			1,802
Net (loss) income before income taxes		(36,698	)		139,152			(33,506	)		145,063
Income tax benefit (expense)		120			(970	)		(357	)		(5,252	)
Net (loss) income		(36,578	)		138,182			(33,863	)		139,811
Less: net (income) loss attributable to    noncontrolling interests in:
Consolidated joint ventures		(1,752	)		(1,897	)		(2,807	)		(3,188	)
Consolidated real estate fund		(152	)		(20,169	)		(582	)		(20,081	)
Operating Partnership		3,666			(13,100	)		3,550			(13,154	)
Net (loss) income attributable to common stockholders	$	(34,816	)	$	103,016		$	(33,702	)	$	103,388

The following table provides the total assets for each of our reportable segments as of the periods set forth below.

(Amounts in thousands)
Total Assets as of:	Total		New York		Washington, D.C.		San Francisco		Other
June 30, 2018	$	8,915,913	$	5,518,698	$	638,793	$	2,419,887	$	338,535
December 31, 2017		8,917,661		5,511,061		693,408		2,421,173		292,019

22. Subsequent Events

Subsequent to quarter end, we entered into an agreement to sell 2099 Pennsylvania Avenue, a 208,776 square foot Class A office building in Washington, D.C., for approximately $220,000,000.

29

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion of our financial condition and results of operations should be read in conjunction with our consolidated financial statements, including the related notes included therein.

Forward-Looking Statements

We make statements in this Quarterly Report on Form 10-Q that are considered “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, which are usually identified by the use of words such as “anticipates,” “believes,” “estimates,” “expects,” “intends,” “may,” “plans,” “projects,” “seeks,” “should,” “will,” and variations of such words or similar expressions. We intend these forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and are including this statement for purposes of complying with those safe harbor provisions. These forward-looking statements reflect our current views about our plans, intentions, expectations, strategies and prospects, which are based on the information currently available to us and on assumptions we have made. Although we believe that our plans, intentions, expectations, strategies and prospects as reflected in or suggested by those forward-looking statements are reasonable, we can give no assurance that the plans, intentions, expectations or strategies will be attained or achieved. Furthermore, actual results may differ materially from those described in the forward-looking statements and will be affected by a variety of risks and factors that are beyond our control including, without limitation:

• unfavorable market and economic conditions in the United States and globally and in New York City, Washington, D.C. and San Francisco;  

• risks associated with our high concentrations of properties in New York City, Washington, D.C. and San Francisco;  

• risks associated with ownership of real estate;  

• decreased rental rates or increased vacancy rates;  

• the risk we may lose a major tenant;  

• limited ability to dispose of assets because of the relative illiquidity of real estate investments;  

• intense competition in the real estate market that may limit our ability to acquire attractive investment opportunities and increase the costs of those opportunities;

• insufficient amounts of insurance;  

• uncertainties and risks related to adverse weather conditions, natural disasters and climate change;  

• risks associated with actual or threatened terrorist attacks;  

• exposure to liability relating to environmental and health and safety matters;  

• high costs associated with compliance with the Americans with Disabilities Act;  

• failure of acquisitions to yield anticipated results;  

• risks associated with real estate activity through our joint ventures and private equity real estate funds;  

• general volatility of the capital and credit markets and the market price of our common stock;  

• exposure to litigation or other claims;  

• loss of key personnel;  

• risks associated with security breaches through cyber attacks or cyber intrusions and other significant disruptions of our information technology (“IT”) networks and related systems;

• risks associated with our substantial indebtedness;  

• failure to refinance current or future indebtedness on favorable terms, or at all;  

• failure to meet the restrictive covenants and requirements in our existing debt agreements;

• fluctuations in interest rates and increased costs to refinance or issue new debt;  

• risks associated with variable rate debt, derivatives or hedging activity;

• risks associated with future sales of our common stock by our continuing investors or the perception that our continuing investors intend to sell substantially all of the shares of our common stock that they hold;  

• risks associated with the market for our common stock;  

• regulatory changes, including changes to tax laws and regulations;

• failure to qualify as a real estate investment trust (“REIT”);  

30

• compliance with REIT requirements, which may cause us to forgo otherwise attractive opportunities or liquidate certain of our investments; or  

• any of the other risks included in this Quarterly Report on Form 10-Q or in our Annual Report on Form 10-K for the year ended December 31, 2017, including those set forth in Item 1A entitled “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2017.

Accordingly, there is no assurance that our expectations will be realized. Except as otherwise required by the U.S. federal securities laws, we disclaim any obligations or undertaking to publicly release any updates or revisions to any forward-looking statement contained herein (or elsewhere) to reflect any change in our expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based. A reader should review carefully our consolidated financial statements and the notes thereto, as well as Item 1A entitled “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2017.

Tax Disclosure Update

For FIRPTA purposes, a "qualified foreign pension fund" shall not be treated as a non-U.S. stockholder, and any entity all of the interests of which are held by a qualified foreign pension fund shall be treated as such a fund. A "qualified foreign pension fund" is an organization or arrangement (i) created or organized in a foreign country, (ii) established to provide retirement or pension benefits to current or former employees (including self-employed individuals) or their designees by either (A) a foreign country as a result of services rendered by such employees to their employers, or (B) one or more employers in consideration for services rendered by such employees to such employers, (iii) which does not have a single participant or beneficiary that has a right to more than 5% of its assets or income, (iv) which is subject to government regulation and with respect to which annual information about its beneficiaries is provided, or is otherwise available, to relevant local tax authorities and (v) with respect to which, under its local laws, (A) contributions that would otherwise be subject to tax are deductible or excluded from its gross income or taxed at a reduced rate, or (B) taxation of its investment income is deferred, or such income is excluded from its gross income or taxed at a reduced rate.

Critical Accounting Policies

There are no material changes to our critical accounting policies disclosed in our Annual Report on Form 10-K for the year ended December 31, 2017.

Recently Issued Accounting Literature

A summary of our recently issued accounting literature and their potential impact on our consolidated financial statements, if any, are included in Note 2, Basis of Presentation and Significant Accounting Policies, to our consolidated financial statements in this Quarterly Report on Form 10-Q.

Business Overview

We are a fully-integrated REIT focused on owning, operating, managing, acquiring and redeveloping high-quality, Class A office properties in select central business district submarkets of New York City, Washington, D.C. and San Francisco. We conduct our business through, and substantially all of our interests in properties and investments are held by, Paramount Group Operating Partnership LP, a Delaware limited partnership (the “Operating Partnership”). We are the sole general partner of, and owned approximately 90.5% of the Operating Partnership as of June 30, 2018.

Dispositions

Subsequent to quarter end, we entered into an agreement to sell 2099 Pennsylvania Avenue, a 208,776 square foot Class A office building in Washington, D.C., for approximately $220,000,000.

Financings

On January 10, 2018, we amended and restated the credit agreement governing our revolving credit facility. The maturity date of the revolving credit facility was extended from November 2018 to January 2022, with two six-month extension options, and the capacity was increased to $1,000,000,000 from $800,000,000. The interest rate on the extended facility, at current leverage levels, was lowered by 10 basis points from LIBOR plus 125 basis points to LIBOR plus 115 basis points, and the facility fee was reduced by 5 basis points from 25 basis points to 20 basis points.

31

Leasing Results - Three Months Ended June 30, 2018

In the three months ended June 30, 2018, we leased 312,522 square feet, of which our share was 278,845 square feet that was leased at a weighted average initial rent of $76.78 per square foot. This leasing activity, partially offset by lease expirations during the three months, increased our leased occupancy and same store leased occupancy (properties owned by us during both reporting periods) by 240 basis points to 96.4% at June 30, 2018 from 94.0% at March 31, 2018. Of the 312,522 square feet leased in the three months, 87,646 square feet represented our share of second generation space (space that had been vacant for less than twelve months) for which we achieved rental rate increases of 8.7% on a GAAP basis and 19.8% on a cash basis. The weighted average lease term for leases signed during the three months was 13.7 years and weighted average tenant improvements and leasing commissions on these leases were $10.37 per square foot per annum, or 13.5% of initial rent.

New York:

In the three months ended June 30, 2018, we leased 259,855 square feet in our New York portfolio, of which our share was 254,988 square feet that was leased at a weighted average initial rent of $76.95 per square foot. This leasing activity, partially offset by lease expirations during the three months, increased our leased occupancy and same store leased occupancy by 320 basis points to 95.9% at June 30, 2018 from 92.7% at March 31, 2018. Of the 259,855 square feet leased in the three months, 73,887 square feet represented our share of second generation space for which we achieved rental rates increases of 8.4% on a GAAP basis and 16.2% on a cash basis. The weighted average lease term for leases signed during the three months was 14.0 years and weighted average tenant improvements and leasing commissions on these leases were $10.39 per square foot per annum, or 13.5% of initial rent.

Washington, D.C.:

In the three months ended June 30, 2018, we leased 1,667 square feet in our Washington, D.C. portfolio, which increased our leased occupancy and same store leased occupancy by 20 basis points to 96.7% at June 30, 2018 from 96.5% at March 31, 2018.

San Francisco:

In the three months ended June 30, 2018, we leased 51,000 square feet in our San Francisco portfolio, of which our share was 22,190 square feet that was leased at a weighted average initial rent of $72.00 per square foot. This leasing activity, which was partially offset by lease expirations during the three months, increased our leased occupancy and same store occupancy by 50 basis points to 98.2% at June 30, 2018 from 97.7% at March 31, 2018. Of the 51,000 square feet leased in the three months, 12,092 square feet represented our share of second generation space for which we achieved rental rate increases of 10.3% on GAAP basis and 55.6% on a cash basis. The weighted average lease term for leases signed during the three months was 5.0 years and weighted average tenant improvements and leasing commissions on these leases were $9.00 per square foot per annum, or 12.5% of initial rent.

32

The following table presents additional details on the leases signed during the three months ended June 30, 2018. It is not intended to coincide with the commencement of rental revenue in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The leasing statistics, except for square feet leased, represent office space only.

Three Months Ended June 30, 2018				Total			New York			Washington, D.C.		San Francisco
	Total square feet leased				312,522			259,855			1,667		51,000
	Pro rata share of total square feet leased:				278,845			254,988			1,667		22,190
		Initial rent (1)		$	76.78		$	76.95		$	-	$	72.00
		Weighted average lease term (in years)			13.7			14.0			-		5.0
		Tenant improvements and leasing commissions:
			Per square foot	$	141.92		$	145.53		$	-	$	45.00
			Per square foot per annum	$	10.37		$	10.39		$	-	$	9.00
			Percentage of initial rent		13.5	%		13.5	%		-		12.5	%
		Rent concessions:
			Average free rent period (in months)		13.2			13.6			-		3.0
			Average free rent period per annum (in months)		1.0			1.0			-		0.6
		Second generation space: (2)
		Square feet			87,646			73,887			1,667		12,092
		GAAP basis:
			Straight-line rent	$	73.68		$	74.20		$	-	$	69.95
			Prior straight-line rent	$	67.81		$	68.42		$	-	$	63.43
			Percentage (decrease) increase		8.7	%		8.4	%		-		10.3	%
		Cash basis:
			Initial rent (1)	$	74.78		$	75.17		$	-	$	72.00
			Prior escalated rent (3)	$	62.40		$	64.66		$	-	$	46.27
			Percentage increase		19.8	%		16.2	%		-		55.6	%

⁽¹⁾ Represents the weighted average cash basis starting rent per square foot and does not include free rent of periodic step-ups in rent.

⁽²⁾ Represents space leased that has been vacant for less than twelve months.

⁽³⁾ Represents the weighted average cash basis rents (including reimbursements) per square foot at expiration.

33

Leasing Results - Six Months Ended June 30, 2018

In the six months ended June 30, 2018, we leased 597,689 square feet, of which our share was 495,693 square feet that was leased at a weighted average initial rent of $80.74 per square foot. This leasing activity, partially offset by lease expirations during the six months, increased our leased occupancy and same store leased occupancy (properties owned by us during both reporting periods) by 290 basis points to 96.4% at June 30, 2018 from 93.5% at December 31, 2017. Of the 597,689 square feet leased in the six months, 248,861 square feet represented our share of second generation space (space that had been vacant for less than twelve months) for which we achieved rental rate increases of 11.7% on a GAAP basis and 18.4% on a cash basis. The weighted average lease term for leases signed during the six months was 11.4 years and weighted average tenant improvements and leasing commissions on these leases were $9.62 per square foot per annum, or 11.9% of initial rent.

New York:

In the six months ended June 30, 2018, we leased 405,195 square feet in our New York portfolio, of which our share was 397,065 square feet that was leased at a weighted average initial rent of $81.14 per square foot. This leasing activity, partially offset by lease expirations during the six months, increased our leased occupancy and same store leased occupancy by 350 basis points to 95.9% at June 30, 2018 from 92.4% at December 31, 2017. Of the 405,195 square feet leased in the six months, 181,685 square feet represented our share of second generation space for which we achieved rental rates increases of 7.1% on a GAAP basis and 12.5%  on a cash basis. The weighted average lease term for leases signed during the six months was 12.7 years and weighted average tenant improvements and leasing commissions on these leases were $9.58 per square foot per annum, or 11.8% of initial rent.

Washington, D.C.:

In the six months ended June 30, 2018, we leased 4,929 square feet in our Washington, D.C. portfolio, at a weighted average initial rent of $58.50 per square foot. This leasing activity increased our leased occupancy and same store leased occupancy by 60 basis points to 96.7% at June 30, 2018 from 96.1% at December 31, 2017. The weighted average lease term for leases signed during the six months was 3.4 years and weighted average tenant improvements and leasing commissions on these leases were $3.24 per square foot per annum, or 5.5% of initial rent.

San Francisco:

In the six months ended June 30, 2018, we leased 187,565 square feet in our San Francisco portfolio, of which our share was 93,699 square feet that was leased at a weighted average initial rent of $79.88 per square foot. This leasing activity, which was partially offset by lease expirations during the six months, increased our leased occupancy and same store occupancy by 180 basis points to 98.2% at June 30, 2018 from 96.4% at December 31, 2017. Of the 187,565 square feet leased in the six months, 65,509 square feet represented our share of second generation space for which we achieved rental rate increases of 26.6% on GAAP basis and 39.4% on a cash basis. The weighted average lease term for leases signed during the six months was 6.0 years and weighted average tenant improvements and leasing commissions on these leases were $10.15 per square foot per annum, or 12.7% of initial rent.

34

The following table presents additional details on the leases signed during the six months ended June 30, 2018. It is not intended to coincide with the commencement of rental revenue in accordance with GAAP. The leasing statistics, except for square feet leased, represent office space only.

Six Months Ended June 30, 2018				Total			New York			Washington, D.C.			San Francisco
	Total square feet leased				597,689			405,195			4,929			187,565
	Pro rata share of total square feet leased:				495,693			397,065			4,929			93,699
		Initial rent (1)		$	80.74		$	81.14		$	58.50		$	79.88
		Weighted average lease term (in years)			11.4			12.7			3.4			6.0
		Tenant improvements and leasing commissions:
			Per square foot	$	110.06		$	122.09		$	11.07		$	61.02
			Per square foot per annum	$	9.62		$	9.58		$	3.24		$	10.15
			Percentage of initial rent		11.9	%		11.8	%		5.5	%		12.7	%
		Rent concessions:
			Average free rent period (in months)		9.8			11.6			1.0			2.0
			Average free rent period per annum (in months)		0.9			0.9			0.3			0.3
		Second generation space: (2)
		Square feet			248,861			181,685			1,667			65,509
		GAAP basis:
			Straight-line rent	$	81.92		$	81.81		$	-		$	82.24
			Prior straight-line rent	$	73.36		$	76.39		$	-		$	64.96
			Percentage increase		11.7	%		7.1	%		-			26.6	%
		Cash basis:
			Initial rent (1)	$	84.05		$	84.85		$	-		$	81.85
			Prior escalated rent (3)	$	71.01		$	75.44		$	-		$	58.73
			Percentage increase		18.4	%		12.5	%		-			39.4	%

⁽¹⁾ Represents the weighted average cash basis starting rent per square foot and does not include free rent of periodic step-ups in rent.

⁽²⁾ Represents space leased that has been vacant for less than twelve months.

⁽³⁾ Represents the weighted average cash basis rents (including reimbursements) per square foot at expiration.

35

Financial Results - Three Months Ended June 30, 2018 and 2017

Net (Loss) Income, FFO and Core FFO

Net loss attributable to common stockholders was $34,816,000, or $0.14 per diluted share, for the three months ended June 30, 2018, compared to net income attributable to common stockholders of $103,016,000, or $0.44 per diluted share, for the three months ended June 30, 2017.

Funds from Operations (“FFO”) attributable to common stockholders was $58,935,000, or $0.25 per diluted share, for the three months ended June 30, 2018, compared to $62,318,000, or $0.27 per diluted share, for the three months ended June 30, 2017. FFO attributable to common stockholders for the three months ended June 30, 2018 and 2017 includes the impact of non-core items, which are listed in the table on page 59. The aggregate of these items, net of amounts attributable to noncontrolling interests, increased FFO attributable to common stockholders for the three months ended June 30, 2018 and 2017 by $1,036,000 and $7,753,000, or $0.01 and $0.04 per diluted share, respectively.

Core Funds from Operations (“Core FFO”) attributable to common stockholders, which excludes the impact of the non-core items listed on page 59, was $57,899,000, or $0.24 per diluted share for the three months ended June 30, 2018, compared to $54,565,000, or $0.23 per diluted share, for the three months ended June 30, 2017.  

Same Store NOI

The table below summarizes the percentage increase (decrease) in our share of Same Store NOI and Same Store Cash NOI, by segment, for the three months ended June 30, 2018 versus June 30, 2017.

	Total				New York			Washington, D.C.			San Francisco
Same Store NOI		6.1	%	(1)		10.1	%		5.0	%		(8.8	%)	(1)
Same Store Cash NOI		5.9	%			4.3	%		11.9	%		3.7	%

⁽¹⁾ This decrease resulted from income in the prior year from the accelerated amortization of certain below-market lease liabilities in connection with such tenants’ lease modifications. Excluding this income, Same Store NOI increased by  9.5% for the total portfolio and 4.8% for our San Francisco portfolio.

See pages 52-60 “Non-GAAP Financial Measures” for a reconciliation of these measures to the most directly comparable GAAP measure and the reasons why we believe these non-GAAP measures are useful.

36

Financial Results - Six Months Ended June 30, 2018 and 2017

Net (Loss) Income, FFO and Core FFO

Net loss attributable to common stockholders was $33,702,000, or $0.14 per diluted share, for the six months ended June 30, 2018, compared to net income attributable to common stockholders of $103,388,000, or $0.44 per diluted share, for the six months ended June 30, 2017.

FFO attributable to common stockholders was $112,588,000, or $0.47 per diluted share, for the six months ended June 30, 2018, compared to $113,907,000, or $0.49 per diluted share, for the six months ended June 30, 2017. FFO attributable to common stockholders for the six months ended June 30, 2018 and 2017 includes the impact of non-core items, which are listed in the table on page 59. The aggregate of these items, net of amounts attributable to noncontrolling interests, decreased FFO attributable to common stockholders for the six months ended June 30, 2018 by $274,000, or $0.00 per diluted share, and increased FFO attributable to common stockholders for the six months ended June 30, 2017 by $7,837,000, or $0.04 per diluted share.

Core FFO attributable to common stockholders, which excludes the impact of the non-core items listed on page 59, was $112,862,000, or $0.47 per diluted share for the six months ended June 30, 2018, compared to $106,070,000, or $0.45 per diluted share, for the six months ended June 30, 2017.  

Same Store NOI

The table below summarizes the percentage increase (decrease) in our share of Same Store NOI and Same Store Cash NOI, by segment, for the six months ended June 30, 2018 versus June 30, 2017.

	Total				New York			Washington, D.C.			San Francisco
Same Store NOI		6.3	%	(1)		9.3	%		8.4	%		(4.0	%)	(1)
Same Store Cash NOI		10.3	%			9.6	%		21.3	%		6.3	%

⁽¹⁾ This decrease resulted from income in the prior year from the accelerated amortization of certain below-market lease liabilities in connection with such tenants’ lease modifications. Excluding this income, Same Store NOI increased by 8.1% for the total portfolio and 3.3% for our San Francisco portfolio.

See pages 52-60 “Non-GAAP Financial Measures” for a reconciliation of these measures to the most directly comparable GAAP measure and the reasons why we believe these non-GAAP measures are useful.

37

Results of Operations - Three Months Ended June 30, 2018 and 2017

The following pages summarize our consolidated results of operations for the three months ended June 30, 2018 and 2017.

			For the Three Months Ended June 30,
(Amounts in thousands)			2018			2017			Change
REVENUES:
	Rental income		$	169,529		$	158,187		$	11,342
	Tenant reimbursement income			13,164			11,856			1,308
	Fee and other income			8,726			7,661			1,065
		Total revenues		191,419			177,704			13,715
EXPENSES:
	Operating			67,646			63,461			4,185
	Depreciation and amortization			64,775			68,636			(3,861	)
	General and administrative			17,195			16,573			622
	Transaction related costs			293			502			(209	)
	Real estate impairment loss			46,000			-			46,000
		Total expenses		195,909			149,172			46,737
Operating (loss) income				(4,490	)		28,532			(33,022	)
	Income from unconsolidated joint ventures			2,521			16,535			(14,014	)
	Loss from unconsolidated real estate funds			(14	)		(2,411	)		2,397
	Interest and other income, net			2,094			2,486			(392	)
	Interest and debt expense			(36,809	)		(34,817	)		(1,992	)
	Loss on early extinguishment of debt			-			(5,162	)		5,162
	Gain on sale of real estate			-			133,989			(133,989	)
Net (loss) income before income taxes				(36,698	)		139,152			(175,850	)
	Income tax benefit (expense)			120			(970	)		1,090
Net (loss) income				(36,578	)		138,182			(174,760	)
Less net (income) loss attributable to noncontrolling interests in:
	Consolidated joint ventures			(1,752	)		(1,897	)		145
	Consolidated real estate fund			(152	)		(20,169	)		20,017
	Operating Partnership			3,666			(13,100	)		16,766
Net (loss) income attributable to common stockholders			$	(34,816	)	$	103,016		$	(137,832	)

38

Revenues

Our revenues, which consist primarily of rental income, tenant reimbursement income, and fee and other income, were $191,419,000 for the three months ended June 30, 2018, compared to $177,704,000 for the three months ended June 30, 2017, an increase of $13,715,000. Below are the details of the increase (decrease) by segment.

(Amounts in thousands)	Total			New York			Washington, D.C.			San Francisco				Other
Rental income
Acquisitions (1)	$	9,226		$	-		$	-		$	9,226			$	-
Dispositions (2)		(3,011	)		-			(3,011	)		-				-
Same store operations		5,825			7,717	(3)		(16	)		(1,431	)	(4)		(445	)
Other, net		(698	)		-			-			(698	)			-
Increase (decrease) in rental income	$	11,342		$	7,717		$	(3,027	)	$	7,097			$	(445	)
Tenant reimbursement income
Acquisitions (1)	$	423		$	-		$	-		$	423			$	-
Dispositions (2)		(224	)		-			(224	)		-				-
Same store operations		1,109			897			348			(136	)			-
Increase in tenant reimbursement
income	$	1,308		$	897		$	124		$	287			$	-
Fee and other income
Property management	$	(42	)	$	-		$	-		$	-			$	(42	)
Asset management		(536	)		-			-			-				(536	)
Acquisition, disposition and leasing		1,500			-			-			-				1,500
Other		39			-			-			-				39
Increase in fee income		961			-			-			-				961
Acquisitions (1)		172			-			-			172				-
Dispositions (2)		(30	)		-			(30	)		-				-
Lease termination income		(866	)		-			-			(866	)			-
Other income		828			320			230			453				(175	)
Increase (decrease) in other income		104			320			200			(241	)			(175	)
Increase (decrease) in fee and    other income	$	1,065		$	320		$	200		$	(241	)		$	786
Total increase (decrease) in revenues	$	13,715		$	8,934		$	(2,703	)	$	7,143			$	341

⁽¹⁾ Represents revenues attributable to 50 Beale Street in San Francisco (acquired in July 2017) for the months in which it was not owned by us in both reporting periods.

⁽²⁾ Represents revenues attributable to Waterview in Washington, D.C. (sold in May 2017) for the months in which it was not owned by us in both reporting periods.

⁽³⁾ Primarily due to an increase in occupancy at 1633 Broadway and 1301 Avenue of the Americas.

⁽⁴⁾ Includes $3,028 of income, in the three months ended June 30, 2017, from the accelerated amortization of certain below-market lease liabilities in connection with such tenants’ lease modifications.

39

Expenses

Our expenses, which consist primarily of operating, depreciation and amortization, general and administrative, transaction related costs and real estate impairment loss, were $195,909,000 for the three months ended June 30, 2018, compared to $149,172,000 for the three months ended June 30, 2017, an increase of $46,737,000. Below are the details of the increase (decrease) by segment.

(Amounts in thousands)	Total			New York		Washington, D.C.			San Francisco			Other
Operating
Acquisitions (1)	$	3,228		$	-	$	-		$	3,228		$	-
Dispositions (2)		(933	)		-		(933	)		-			-
Bad debt expense		144			144		-			-			-
Same store operations		1,746			1,859		115			700			(928	)
Increase (decrease) in operating	$	4,185		$	2,003	$	(818	)	$	3,928		$	(928	)
Depreciation and amortization
Acquisitions (1)	$	5,021		$	-	$	-		$	5,021		$	-
Dispositions (2)		-			-		-			-			-
Operations		(8,882	)		306		207			(9,544	)		149
(Decrease) increase in depreciation
and amortization	$	(3,861	)	$	306	$	207		$	(4,523	)	$	149
General and administrative
Stock-based compensation	$	212		$	-	$	-		$	-		$	212
Mark-to-market of investments
in our deferred compensation plan		(823	)		-		-			-			(823	)	(3)
Operations		1,233			-		-			-			1,233
Increase in general and
administrative	$	622		$	-	$	-		$	-		$	622
Decrease in transaction related costs	$	(209	)	$	-	$	-		$	-		$	(209	)
Real estate impairment loss in 2018	$	46,000		$	-	$	46,000		$	-		$	-
Total increase (decrease) in expenses	$	46,737		$	2,309	$	45,389		$	(595	)	$	(366	)

⁽¹⁾ Represents expenses attributable to 50 Beale Street in San Francisco (acquired in July 2017) for the months in which it was not owned by us in both reporting periods.

⁽²⁾ Represents expenses attributable to Waterview in Washington, D.C. (sold in May 2017) for the months in which it was not owned by us in both reporting periods.

⁽³⁾ Represents the change in the mark-to-market of investments in our deferred compensation plan liabilities. This change is entirely offset by the change in plan assets which is included in “interest and other income, net”.

40

Income from Unconsolidated Joint Ventures

Income from unconsolidated joint ventures was $2,521,000 for the three months ended June 30, 2018, compared to $16,535,000 for the three months ended June 30, 2017, a decrease of $14,014,000. This decrease resulted from:

(Amounts in thousands)
712 Fifth Avenue ($2,608 in 2018, compared to $16,504 in 2017) (1)	$	(13,896	)
Other		(118	)
Total decrease	$	(14,014	)

⁽¹⁾ As of June 30, 2018, our basis in the partnership was negative $20,654 resulting from distributions made to us in excess of our share of earnings recognized. Accordingly, we no longer recognize our proportionate share of earnings from the venture because we have no further obligation to fund additional capital to the venture. Instead, we only recognize earnings to the extent we receive cash distributions from the venture.

Loss from Unconsolidated Real Estate Funds

Loss from unconsolidated real estate funds was $14,000 for the three months ended June 30, 2018, compared to $2,411,000 for the three months ended June 30, 2017, a decrease of $2,397,000. This decrease was primarily due to a reversal of carried interest in the three months ended June 30, 2017 of $2,153,000.

Interest and Other Income, net

Interest and other income was $2,094,000 for the three months ended June 30, 2018, compared to $2,486,000 for the three months ended June 30, 2017, a decrease of $392,000. This decrease resulted from:

(Amounts in thousands)
Decrease in the value of investments in our deferred compensation plan (which    is offset by a decrease in “general and administrative”)	$	(823	)
Decrease in preferred equity investment income ($917 in 2018, compared    to $953 in 2017) (1)		(36	)
Other, net		467
Total decrease	$	(392	)

⁽¹⁾ Represents income from our preferred equity investments in PGRESS Equity Holdings L.P., of which our 24.4% share is $223 and $232 for the three months ended June 30, 2018 and 2017, respectively.

Interest and Debt Expense

Interest and debt expense was $36,809,000 for the three months ended June 30, 2018, compared to $34,817,000 for the three months ended June 30, 2017, an increase of $1,992,000. This increase resulted from:

(Amounts in thousands)
$228 million assumption of existing debt at 50 Beale upon acquisition in July 2017	$	2,080
Higher interest rate on variable rate debt at 1301 Avenue of the Americas		830
$171 million of debt repayments at 1899 Pennsylvania Avenue    and Liberty Place in May 2017		(713	)
Lower amounts outstanding under our revolving credit facility		(384	)
Other, net		179
Total increase	$	1,992

41

Loss on Early Extinguishment of Debt

Loss on early extinguishment of debt was $5,162,000 for the three months ended June 30, 2017 and represents costs related to the early repayment of debt at 1899 Pennsylvania Avenue and Liberty Place in May 2017.

Gain on Sale of Real Estate  

In the three months ended June 30, 2017, we recognized $133,989,000 of gains on sale of real estate, comprised of an $110,583,000 net gain on sale of Waterview in May 2017 and a $23,406,000 net gain on sale of an 80.0% equity interest in One Steuart Lane (formerly 75 Howard Street) in May 2017.

Income Tax Benefit (Expense)

Income tax benefit was $120,000 for the three months ended June 30, 2018, compared to an expense of $970,000 for the three months ended June 30, 2017, a decrease in expense of $1,090,000. This decrease was primarily due to a true-up of the prior year’s income tax provision.

Net Income Attributable to Noncontrolling Interests in Consolidated Joint Ventures

Net income attributable to noncontrolling interest in consolidated joint ventures was $1,752,000 for the three months ended June 30, 2018, compared to $1,897,000 for the three months ended June 30, 2017, a decrease in income allocated to noncontrolling interests in consolidated joint ventures of $145,000. This decrease resulted from:

(Amounts in thousands)
Loss attributable to 50 Beale Street (acquired in July 2017)	$	(621	)
Higher income attributable to One Market Plaza    ($1,679 in 2018, compared to $1,176 in 2017))		503
Lower preferred equity investment income ($694 in 2018,    compared to $721 in 2017)		(27	)
Total decrease	$	(145	)

Net Income Attributable to Noncontrolling Interests in Consolidated Real Estate Fund

Net income attributable to noncontrolling interests in consolidated real estate fund was $152,000 for the three months ended June 30, 2018, compared to $20,169,000 for the three months ended June 30, 2017, a decrease in income attributable to the noncontrolling interests of $20,017,000. This decrease was primarily due to noncontrolling interests share of the gain on the sale of an 80.0% equity interest in One Steuart Lane in May 2017.

Net (Loss) Income Attributable to Noncontrolling Interests in Operating Partnership

Net loss attributable to noncontrolling interests in Operating Partnership was $3,666,000 for the three months ended June 30, 2018, compared to net income $13,100,000 for the three months ended June 30, 2017, a decrease in income attributable to noncontrolling interests of $16,766,000. This decrease resulted from lower net income subject to allocation to the unitholders of the Operating Partnership for the three months ended June 30, 2018.

42

Results of Operations - Six Months Ended June 30, 2018 and 2017

The following pages summarize our consolidated results of operations for the six months ended June 30, 2018 and 2017.

			For the Six Months Ended June 30,
(Amounts in thousands)			2018			2017			Change
REVENUES:
	Rental income		$	332,934		$	313,577		$	19,357
	Tenant reimbursement income			27,410			24,708			2,702
	Fee and other income			15,346			20,655			(5,309	)
		Total revenues		375,690			358,940			16,750
EXPENSES:
	Operating			136,624			129,432			7,192
	Depreciation and amortization			129,931			131,628			(1,697	)
	General and administrative			29,826			30,154			(328	)
	Transaction related costs			413			777			(364	)
	Real estate impairment loss			46,000			-			46,000
		Total expenses		342,794			291,991			50,803
Operating income				32,896			66,949			(34,053	)
	Income from unconsolidated joint ventures			2,459			18,472			(16,013	)
	Loss from unconsolidated real estate funds			(80	)		(2,123	)		2,043
	Interest and other income, net			4,110			5,686			(1,576	)
	Interest and debt expense			(72,891	)		(71,835	)		(1,056	)
	Loss on early extinguishment of debt			-			(7,877	)		7,877
	Gain on sale of real estate			-			133,989			(133,989	)
	Unrealized gain on interest rate swaps			-			1,802			(1,802	)
Net (loss) income before income taxes				(33,506	)		145,063			(178,569	)
	Income tax expense			(357	)		(5,252	)		4,895
Net (loss) income				(33,863	)		139,811			(173,674	)
Less net (income) loss attributable to noncontrolling interests in:
	Consolidated joint ventures			(2,807	)		(3,188	)		381
	Consolidated real estate fund			(582	)		(20,081	)		19,499
	Operating Partnership			3,550			(13,154	)		16,704
Net (loss) income attributable to common stockholders			$	(33,702	)	$	103,388		$	(137,090	)

43

Revenues

Our revenues, which consist primarily of rental income, tenant reimbursement income, and fee and other income, were $375,690,000 for the six months ended June 30, 2018, compared to $358,940,000 for the six months ended June 30, 2017, an increase of $16,750,000. Below are the details of the increase (decrease) by segment.

(Amounts in thousands)	Total			New York				Washington, D.C.			San Francisco				Other
Rental income
Acquisitions (1)	$	17,549		$	-			$	-		$	17,549			$	-
Dispositions (2)		(11,478	)		-				(11,478	)		-				-
Same store operations		13,984			15,784		(3)		310			(799	)	(4)		(1,311	)
Other, net		(698	)		-				-			(698	)			-
Increase (decrease) in rental income	$	19,357		$	15,784			$	(11,168	)	$	16,052			$	(1,311	)
Tenant reimbursement income
Acquisitions (1)	$	873		$	-			$	-		$	873			$	-
Dispositions (2)		(792	)		-				(792	)		-				-
Same store operations		2,621			1,468				1,203			(50	)			-
Increase in tenant reimbursement
income	$	2,702		$	1,468			$	411		$	823			$	-
Fee and other income
Property management	$	(150	)	$	-			$	-		$	-			$	(150	)
Asset management		(1,192	)		-				-			-				(1,192	)
Acquisition, disposition and leasing		(3,820	)		-				-			-				(3,820	)
Other		32			-				-			-				32
Decrease in fee income		(5,130	)		-				-			-				(5,130	)
Acquisitions (1)		314			-				-			314				-
Dispositions (2)		(94	)		-				(94	)		-				-
Lease termination income		(904	)		(38	)			-			(866	)			-
Other income		505			41				(190	)		780				(126	)
(Decrease) increase in other income		(179	)		3				(284	)		228				(126	)
(Decrease) increase in fee
and other income	$	(5,309	)	$	3			$	(284	)	$	228			$	(5,256	)
Total increase (decrease) in revenues	$	16,750		$	17,255			$	(11,041	)	$	17,103			$	(6,567	)

⁽¹⁾ Represents revenues attributable to 50 Beale Street in San Francisco (acquired in July 2017) for the months in which it was not owned by us in both reporting periods.

⁽²⁾ Represents revenues attributable to Waterview in Washington, D.C. (sold in May 2017) for the months in which it was not owned by us in both reporting periods.

⁽³⁾ Primarily due to an increase in occupancy at 1633 Broadway and 1301 Avenue of the Americas.

⁽⁴⁾ Includes $3,028 of income, in the six months ended June 30, 2017, from the accelerated amortization of certain below-market lease liabilities in connection with such tenants’ lease modifications.

44

Expenses

Our expenses, which consist primarily of operating, depreciation and amortization, general and administrative, transaction related costs and real estate impairment loss, were $342,794,000 for the six months ended June 30, 2018, compared to $291,991,000 for the six months ended June 30, 2017, an increase of $50,803,000. Below are the details of the increase (decrease) by segment.

(Amounts in thousands)	Total			New York			Washington, D.C.			San Francisco			Other
Operating
Acquisitions (1)	$	6,278		$	-		$	-		$	6,278		$	-
Dispositions (2)		(3,732	)		-			(3,732	)		-			-
Same store operations		4,502			4,261			(176	)		1,161			(744	)
Bad debt expense		144			144			-			-			-
Increase (decrease) in operating	$	7,192		$	4,405		$	(3,908	)	$	7,439		$	(744	)
Depreciation and amortization
Acquisitions (1)	$	9,978		$	-		$	-		$	9,978		$	-
Dispositions		-			-			-			-			-
Operations		(11,675	)		(539	)		438			(11,687	)		113
(Decrease) increase in depreciation
and amortization	$	(1,697	)	$	(539	)	$	438		$	(1,709	)	$	113
General and administrative
Stock-based compensation	$	3,048		$	-		$	-		$	-		$	3,048		(3)
Mark-to-market of investments
in our deferred compensation plan		(2,434	)		-			-			-			(2,434	)	(4)
Operations		(942	)		-			-			-			(942	)
Decrease in general
and administrative	$	(328	)	$	-		$	-		$	-		$	(328	)
Decrease in transaction related    costs	$	(364	)	$	-		$	-		$	-		$	(364	)
Real estate impairment loss in 2018	$	46,000		$	-		$	46,000		$	-		$	-
Total increase (decrease) in    expenses	$	50,803		$	3,866		$	42,530		$	5,730		$	(1,323	)

⁽¹⁾ Represents expenses attributable to 50 Beale Street in San Francisco (acquired in July 2017) for the months in which it was not owned by us in both reporting periods.

⁽²⁾ Represents expenses attributable to Waterview in Washington, D.C. (sold in May 2017) for the months in which it was not owned by us in both reporting periods.

⁽³⁾ Primarily due to additional expense from stock awards granted in the current year.

⁽⁴⁾ Represents the change in the mark-to-market of investments in our deferred compensation plan liabilities. This change is entirely offset by the change in plan assets which is included in “interest and other income, net”.

45

Income from Unconsolidated Joint Ventures

Income from unconsolidated joint ventures was $2,459,000 for the six months ended June 30, 2018, compared to $18,472,000 for the six months ended June 30, 2017, a decrease of $16,013,000. This decrease resulted from:

(Amounts in thousands)
712 Fifth Avenue ($2,608 in 2018, compared to $18,434 in 2017) (1)	$	(15,826	)
Other		(187	)
Total decrease	$	(16,013	)

⁽¹⁾ As of June 30, 2018, our basis in the partnership was negative $20,654 resulting from distributions made to us in excess of our share of earnings recognized. Accordingly, we no longer recognize our proportionate share of earnings from the venture because we have no further obligation to fund additional capital to the venture. Instead, we only recognize earnings to the extent we receive cash distributions from the venture.

Loss from Unconsolidated Real Estate Funds

Loss from unconsolidated real estate funds was $80,000 for the six months ended June 30, 2018, compared to $2,123,000 for the six months ended June 30, 2017, a decrease of $2,043,000.  This decrease was primarily due to a reversal of carried interest in the six months ended June 30, 2017 of $2,193,000.

Interest and Other Income, net

Interest and other income was $4,110,000 for the six months ended June 30, 2018, compared to $5,686,000 for the six months ended June 30, 2017, a decrease of $1,576,000. This decrease resulted from:

(Amounts in thousands)
Decrease in the value of investments in our deferred compensation plan    (which is offset by a decrease in “general and administrative”)	$	(2,434	)
Decrease in preferred equity investment income ($1,816 in 2018, compared    to $2,366 in 2017) (1)		(550	)
Other, net		1,408
Total decrease	$	(1,576	)

⁽¹⁾ Represents income from our preferred equity investments in PGRESS Equity Holdings L.P., of which our 24.4% share is $442 and $576 for the six months ended June 30, 2018 and 2017, respectively.

Interest and Debt Expense

Interest and debt expense was $72,891,000 for the six months ended June 30, 2018, compared to $71,835,000 for the six months ended June 30, 2017, an increase of $1,056,000. This increase resulted from:

(Amounts in thousands)
$228 million assumption of existing debt at 50 Beale upon acquisition      in July 2017	$	4,161
Higher interest rate on variable rate debt at 1301 Avenue of the Americas		1,380
$171 million of debt repayments at 1899 Pennsylvania Avenue and    Liberty Place in May 2017		(2,724	)
Lower amounts outstanding under our revolving credit facility		(1,401	)
$975 million refinancing of One Market Plaza in January 2017		(766	)
Other, net		406
Total increase	$	1,056

46

Loss on Early Extinguishment of Debt

Loss on early extinguishment of debt was $7,877,000 for the six months ended June 30, 2017 and represents costs related to (i) the early repayment of One Market Plaza’s debt in January 2017, in connection with its refinancing and (ii) the early repayment of debt at 1899 Pennsylvania Avenue and Liberty Place in May 2017.

Gain on Sale of Real Estate  

In the six months ended June 30, 2017, we recognized $133,989,000 of gains on sale of real estate, comprised of an $110,583,000 net gain on sale of Waterview in May 2017 and a $23,406,000 net gain on sale of an 80.0% equity interest in One Steuart Lane in May 2017.

Unrealized Gain on Interest Rate Swaps

Unrealized gain on interest rate swaps was $1,802,000 for the six months ended June 30, 2017 and represents gains relating to swaps aggregating $840,000,000 on One Market Plaza that were settled upon the refinancing in January 2017.

Income Tax Expense

Income tax expense was $357,000 for the six months ended June 30, 2018, compared to $5,252,000 for the six months ended June 30, 2017, a decrease of $4,895,000. This decrease was primarily due to a true-up of the prior year’s income tax provision and lower income attributable to our taxable REIT subsidiaries.

Net Income Attributable to Noncontrolling Interests in Consolidated Joint Ventures

Net income attributable to noncontrolling interest in consolidated joint ventures was $2,807,000 for the six months ended June 30, 2018, compared to $3,188,000 for the six months ended June 30, 2017, a decrease in income allocated to noncontrolling interests in consolidated joint ventures of $381,000. This decrease resulted from:

(Amounts in thousands)
Higher income attributable to One Market Plaza    ($3,125 in 2018, compared to $1,398 in 2017)(1)	$	1,727
Loss attributable to 50 Beale Street (acquired in July 2017)		(1,692	)
Lower preferred equity investment income ($1,374 in 2018,    compared to income of $1,790 in 2017)		(416	)
Total decrease	$	(381	)

⁽¹⁾ Primarily due to lower interest expense in 2018 and costs related to early repayment of One Market Plaza’s debt in connection with its refinancing in 2017.

Net Income (Loss) Attributable to Noncontrolling Interests in Consolidated Real Estate Fund

Net income attributable to noncontrolling interests in consolidated real estate fund was $582,000 for the six months ended June 30, 2018, compared to income of $20,081,000 for the six months ended June 30, 2017, a decrease in income attributable to the noncontrolling interests of $19,499,000. This decrease was primarily due to noncontrolling interests share of the gain on the sale of an 80.0% equity interest in One Steuart Lane in May 2017.

Net (Loss) Income Attributable to Noncontrolling Interests in Operating Partnership

Net loss attributable to noncontrolling interests in Operating Partnership was $3,550,000 for the six months ended June 30, 2018, compared to net income $13,154,000 for the six months ended June 30, 2017, a decrease in income attributable to noncontrolling interests of $16,704,000. This decrease resulted from a lower net income subject to allocation to the unitholders of the Operating Partnership for the six months ended June 30, 2018.

47

Liquidity and Capital Resources

Liquidity

Our primary sources of liquidity include existing cash balances, cash flow from operations and borrowings available under our revolving credit facility. We expect that these sources will provide adequate liquidity over the next 12 months for all anticipated needs, including scheduled principal and interest payments on our outstanding indebtedness, existing and anticipated capital improvements, the cost of securing new and renewal leases, dividends to stockholders and distributions to unitholders, and all other capital needs related to the operations of our business. We anticipate that our long-term needs including debt maturities and the acquisition of additional properties will be funded by operating cash flow, mortgage financings and/or re-financings, the issuance of long-term debt or equity and cash on hand.

Although we may be able to anticipate and plan for certain of our liquidity needs, unexpected increases in uses of cash that are beyond our control and which affect our financial condition and results of operations may arise, or our sources of liquidity may be fewer than, and the funds available from such sources may be less than, anticipated or required.

As of June 30, 2018, we had $1.266 billion of liquidity comprised of $233,530,000 of cash and cash equivalents, $32,755,000 of restricted cash and $1.0 billion of borrowing capacity under our revolving credit facility. As of June 30, 2018, our outstanding consolidated debt aggregated $3.6 billion. We had no amounts outstanding under our revolving credit facility as of June 30, 2018 and none of our debt matures until 2021. We may refinance our maturing debt when it comes due or refinance or repay it early depending on prevailing market conditions, liquidity requirements and other factors. The amounts involved in connection with these transactions could be material to our consolidated financial statements.

Revolving Credit Facility

On January 10, 2018, we amended and restated the credit agreement governing our revolving credit facility. The maturity date of the 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 $800,000,000. The interest rate on the extended facility, at current leverage levels, was lowered by 10 basis points from LIBOR plus 125 basis points to LIBOR plus 115 basis points, and the facility fee was reduced by 5 basis points from 25 basis points to 20 basis points. We also have an option, subject to customary conditions and incremental lender commitments, to increase the capacity under the facility to $1.5 billion at any time prior to the maturity date of the facility.

The facility contains certain restrictions and covenants that require us to maintain, on an ongoing basis, (i) a leverage ratio not to exceed 60%, however, the leverage ratio may be increased to 65% for any fiscal quarter in which an acquisition of real estate is completed and for up to the next three subsequent consecutive fiscal quarters, (ii) a secured leverage ratio not to exceed 50%, (iii) a fixed charge coverage ratio of at least 1.50, (iv) an unsecured leverage ratio not to exceed 60%, however, the unsecured leverage ratio may be increased to 65% for any fiscal quarter in which an acquisition of  real estate is completed and for up to the next three subsequent consecutive fiscal quarters and (v) an unencumbered interest coverage ratio of at least 1.75. The facility also contains customary representations and warranties, limitations on permitted investments and other covenants.

Dividend Policy

On June 15, 2018, we declared a regular quarterly cash dividend of $0.10 per share of common stock for the second quarter ending June 30, 2018, which was paid on July 13, 2018 to stockholders of record as of the close of business on June 29, 2018. This dividend policy, if continued, would require us to pay out approximately $26,625,000 each quarter to common stockholders and unitholders.

48

Off Balance Sheet Arrangements

As of June 30, 2018, our unconsolidated joint ventures had $898,250,000 of outstanding indebtedness, of which our share was $181,017,000. We do not guarantee the indebtedness of our unconsolidated joint ventures other than providing customary environmental indemnities and guarantees of specified non-recourse carve outs relating to specified covenants and representations; however, we may elect to fund additional capital to a joint venture through equity contributions (generally on a basis proportionate to our ownership interests), advances or partner loans in order to enable the joint venture to repay this indebtedness upon maturity.

Stock Repurchase Program

On August 1, 2017, our Board of Directors approved the repurchase of up to $200,000,000 of our common stock from time to time, in the open market or in privately negotiated transactions.  The amount and timing of repurchases, if any, will depend on a number of factors including the price and availability of our shares, trading volume and general market conditions. The stock repurchase program may be suspended or discontinued at any time. We have not repurchased any of our common stock under the stock repurchase program.

Insurance

We carry commercial general liability coverage on our properties, with limits of liability customary within the industry. Similarly, we are insured against the risk of direct and indirect physical damage to our properties including coverage for the perils such as floods, earthquakes and windstorms. Our policies also cover the loss of rental income during an estimated reconstruction period. Our policies reflect limits and deductibles customary in the industry and specific to the buildings and portfolio. We also obtain title insurance policies when acquiring new properties. We currently have coverage for losses incurred in connection with both domestic and foreign terrorist-related activities. While we do carry commercial general liability insurance, property insurance and terrorism insurance with respect to our properties, these policies include limits and terms we consider commercially reasonable. In addition, there are certain losses (including, but not limited to, losses arising from known environmental conditions or acts of war) that are not insured, in full or in part, because they are either uninsurable or the cost of insurance makes it, in our belief, economically impractical to maintain such coverage. Should an uninsured loss arise against us, we would be required to use our own funds to resolve the issue, including litigation costs. We believe the policy specifications and insured limits are adequate given the relative risk of loss, the cost of the coverage and industry practice and, in consultation with our insurance advisors, we believe the properties in our portfolio are adequately insured.

Other Commitments and Contingencies

We are a party to various claims and routine litigation arising in the ordinary course of business. Some of these claims or others to which we may be subject from time to time, including claims arising specifically from the formation transactions, in connection with our initial public offering, may result in defense costs, settlements, fines or judgments against us, some of which are not, or cannot be, covered by insurance. Payment of any such costs, settlements, fines or judgments that are not insured could have an adverse impact on our financial position and results of operations. Should any litigation arise in connection with the formation transactions, we would contest it vigorously. In addition, certain litigation or the resolution of certain litigation may affect the availability or cost of some of our insurance coverage, which could adversely impact our results of operations and cash flow, expose us to increased risks that would be uninsured, and/or adversely impact our ability to attract officers and directors.

The terms of our mortgage debt and certain side letters in place include certain restrictions and covenants which may limit, among other things, certain investments, the incurrence of additional indebtedness and liens and the disposition or other transfer of assets and interests in the borrower and other credit parties, and require compliance with certain debt yield, debt service coverage and loan to value ratios. In addition, our revolving credit facility contains representations, warranties, covenants, other agreements and events of default customary for agreements of this type with comparable companies. As of June 30, 2018, we believe we are in compliance with all of our covenants.

49

Transfer Tax Assessments

During 2017, the New York City Department of Finance issued Notices of Determination (“Notices”) assessing additional transfer taxes (including interest and penalties) in connection with the transfer of interests in certain properties during our 2014 initial public offering. Prior to February 16, 2018, we believed that the likelihood of a loss related to these assessments was remote. On February 16, 2018, the New York City Tax Appeals Tribunal issued a decision against a publicly traded REIT in a case interpreting the same provisions of the transfer tax statute, on similar but distinguishable facts. As a result, after consultation with legal counsel, we now believe the likelihood of loss is reasonably possible, and while it is not possible to predict the outcome of these Notices, we estimate the range of loss could be between $0 and $38,000,000. Since no amount in this range is a better estimate than any other amount within the range, we have not accrued any liability arising from potential losses relating to these Notices in our consolidated financial statements.

Inflation

Substantially all of our leases provide for separate real estate tax and operating expense escalations. In addition, many of the leases provide for fixed base rent increases. We believe inflationary increases in expenses may be at least partially offset by the contractual rent increases and expense escalations described above. We do not believe inflation has had a material impact on our historical financial position or results of operations.

Cash Flows

Cash and cash equivalents and restricted cash were $266,285,000 and $250,425,000 as of June 30, 2018 and December 31, 2017, respectively. The following table sets forth the changes in cash flow.

	For the Six Months Ended June 30,
(Amounts in thousands)	2018			2017
Net cash provided by (used in):
Operating activities	$	106,511		$	78,992
Investing activities		(80,960	)		492,123
Financing activities		(9,691	)		(466,307	)

Operating Activities

Six months ended June 30, 2018 – We generated $106,511,000 of cash from operating activities for the six months ended June 30, 2018, primarily from (i) $117,453,000 of net income (before $105,316,000 of noncash adjustments and $46,000,000 of real estate impairment loss), (ii) $1,305,000 of distributions from unconsolidated joint ventures and real estate funds, partially offset by (iii) $12,247,000 of net changes in operating assets and liabilities. Noncash adjustments of $105,316,000 were primarily comprised of depreciation and amortization, straight-lining of rental income, amortization of above and below market leases and amortization of stock-based compensation.

Six months ended June 30, 2017 – We generated $78,992,000 of cash from operating activities for the six months ended June 30, 2017, primarily from (i) $94,826,000 of net income (before $89,004,000 of noncash adjustments and $133,989,000 of gain on sale of real estate) and (ii) $2,904,000 of distributions from unconsolidated joint ventures and real estate funds, partially offset by (iii) $18,738,000 of net changes in operating assets and liabilities. Noncash adjustments of $89,004,000 were primarily comprised of depreciation and amortization, income from unconsolidated joint ventures, straight-lining of rental income, amortization of above and below market leases, loss on early extinguishment of debt and amortization of stock-based compensation.

50

Investing Activities

Six months ended June 30, 2018 – We used $80,960,000 of cash for investing activities for the six months ended June 30, 2018, primarily due to (i) $51,610,000 for additions to real estate, which were comprised of spending for tenant improvements and other building improvements, (ii) $17,137,000 for investments in unconsolidated joint ventures, (iii) $15,680,000 for escrow deposits and loans receivable for RDF, partially offset by (iv) $3,113,000 from the net sales and marketable securities (which are held in our deferred compensation plan) and (v) $354,000 of net distributions from our unconsolidated joint ventures and real estate funds.

Six months ended June 30, 2017 – We generated $492,123,000 of cash for investing activities for the six months ended June 30, 2017, primarily from (i) $540,333,000 of proceeds from the sales of real estate, (ii) $23,261,000 of net distributions from unconsolidated joint ventures and real estate funds and (iii) $3,313,000 for net sales of marketable securities (which are held in our deferred compensation plan), partially offset by (iv) $33,079,000 for additions to real estate, which were comprised of spending for tenant improvements and other building improvements, (v) $28,791,000 for investments in unconsolidated joint ventures and (vi) $12,914,000 deposit on real estate.

Financing Activities

Six months ended June 30, 2018 – We used $9,691,000 of cash for financing activities for the six months ended June 30, 2018, primarily due to (i) $51,837,000 for dividends and distributions paid to common stockholders and unitholders, (ii) $6,351,000 for the payment of debt issuance costs and (iii) $4,118,000 for distributions to noncontrolling interests, partially offset by, (iv) $36,128,000 of contributions from noncontrolling interests, and (v) $16,700,000 of proceeds from notes an mortgages payable.

Six months ended June 30, 2017 – We used $466,307,000 of cash from financing activities for the six months ended June 30, 2017, primarily due to (i) $1,044,821,000 for repayment of notes and mortgages payable and $7,877,000 for the loss on early extinguishment of debt, primarily for the early repayments of One Market Plaza, 1899 Pennsylvania Avenue and Liberty Place loans, (ii) $290,000,000 for repayments of the amounts borrowed under the revolving credit facility (iii) $107,162,000 for distributions to noncontrolling interests, (iv) $50,358,000 for dividends and distributions paid tocommon stockholders and unitholders, (v) $19,425,000 for the settlement of swap liabilities and (vi) $7,344,000 for the payment of debt issuance costs, primarily offset by (vii) $991,556,000 of proceeds from notes and mortgages payable, primarily from the refinancing of One Market Plaza, (viii) $60,000,000 of borrowings under the revolving credit facility and (ix) $9,278,000 of contributions from noncontrolling interests.

51

Non-GAAP Financial Measures

We use and present NOI, Same Store NOI, FFO and Core FFO, as supplemental measures of our performance. The summary below describes our use of these measures, provides information regarding why we believe these measures are meaningful supplemental measures of our performance and reconciles these measures from net income or loss, the most directly comparable GAAP measure. 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.

Net Operating Income (“NOI”)

We use NOI 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 our 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 the property level.

The following tables present reconciliations of net (loss) income to NOI and Cash NOI for the three and six months ended June 30, 2018 and 2017.

	For the Three Months Ended June 30, 2018
(Amounts in thousands)	Total			New York			Washington, D.C.			San Francisco			Other
Reconciliation of net (loss) income to    NOI and Cash NOI:
Net (loss) income	$	(36,578	)	$	11,115		$	(41,841	)	$	7,998		$	(13,850	)
Add (subtract) adjustments to arrive at NOI    and Cash NOI:
Depreciation and amortization		64,775			38,369			5,540			20,206			660
General and administrative		17,195			-			-			-			17,195
Interest and debt expense		36,809			23,266			-			12,273			1,270
Transaction related costs		293			-			-			-			293
Income tax (benefit) expense		(120	)		-			-			5			(125	)
NOI from unconsolidated joint ventures		4,569			4,493			-			-			76
Income from unconsolidated joint ventures		(2,521	)		(2,506	)		-			-			(15	)
Loss from unconsolidated real estate funds		14			-			-			-			14
Fee income		(5,409	)		-			-			-			(5,409	)
Interest and other income, net		(2,094	)		-			-			(186	)		(1,908	)
Real estate impairment loss		46,000			-			46,000			-			-
NOI		122,933			74,737			9,699			40,296			(1,799	)
Less NOI attributable to noncontrolling interests in:
Consolidated joint ventures		(16,674	)		-			-			(16,674	)		-
Consolidated real estate fund		(13	)		-			-			-			(13	)
Paramount's share of NOI	$	106,246		$	74,737		$	9,699		$	23,622		$	(1,812	)
NOI	$	122,933		$	74,737		$	9,699		$	40,296		$	(1,799	)
Less:
Straight-line rent adjustments (including our
share of unconsolidated joint ventures)		(16,853	)		(11,497	)		204			(5,536	)		(24	)
Amortization of above and below-market leases, net    (including our share of unconsolidated joint ventures)		(4,141	)		533			(550	)		(4,124	)		-
Cash NOI		101,939			63,773			9,353			30,636			(1,823	)
Less Cash NOI attributable to noncontrolling    interests in:
Consolidated joint ventures		(13,438	)		-			-			(13,438	)		-
Consolidated real estate fund		(13	)		-			-			-			(13	)
Paramount's share of Cash NOI	$	88,488		$	63,773		$	9,353		$	17,198		$	(1,836	)

52

	For the Three Months Ended June 30, 2017
(Amounts in thousands)	Total			New York			Washington, D.C.			San Francisco			Other
Reconciliation of net income to NOI and Cash NOI:
Net income	$	138,182		$	19,561		$	110,959		$	2,197		$	5,465
Add (subtract) adjustments to arrive at NOI    and Cash NOI:
Depreciation and amortization		68,636			38,063			5,333			24,729			511
General and administrative		16,573			-			-			-			16,573
Interest and debt expense		34,817			22,191			713			10,194			1,719
Loss on early extinguishment of debt		5,162			-			5,162			-			-
Transaction related costs		502			-			-			-			502
Income tax expense		970			-			-			3			967
NOI from unconsolidated joint ventures		4,958			4,838			-			-			120
Income from unconsolidated joint ventures		(16,535	)		(16,473	)		-			-			(62	)
Loss from unconsolidated real estate funds		2,411			-			-			-			2,411
Fee income		(4,448	)		-			-			-			(4,448	)
Interest and other income, net		(2,486	)		(29	)		(11	)		(42	)		(2,404	)
Gain on sale of real estate		(133,989	)		-			(110,583	)		-			(23,406	)
NOI		114,753			68,151			11,573			37,081			(2,052	)
Less NOI attributable to noncontrolling interests in:
Consolidated joint ventures		(12,200	)		-			-			(12,200	)		-
Consolidated real estate fund		(345	)		-			-			-			(345	)
Paramount's share of NOI	$	102,208		$	68,151		$	11,573		$	24,881		$	(2,397	)
NOI	$	114,753		$	68,151		$	11,573		$	37,081		$	(2,052	)
Less:
Straight-line rent adjustments (including our
share of unconsolidated joint ventures)		(12,208	)		(7,545	)		(333	)		(4,302	)		(28	)
Amortization of above and below-market leases, net    (including our share of unconsolidated joint ventures)		(7,818	)		817			(550	)		(8,085	)		-
Cash NOI		94,727			61,423			10,690			24,694			(2,080	)
Less Cash NOI attributable to noncontrolling    interests in:
Consolidated joint ventures		(8,946	)		-			-			(8,946	)		-
Consolidated real estate fund		(345	)		-			-			-			(345	)
Paramount's share of Cash NOI	$	85,436		$	61,423		$	10,690		$	15,748		$	(2,425	)

53

	For the Six Months Ended June 30, 2018
(Amounts in thousands)	Total			New York			Washington, D.C.			San Francisco			Other
Reconciliation of net (loss) income to
NOI and Cash NOI:
Net (loss) income	$	(33,863	)	$	16,594		$	(37,749	)	$	12,907		$	(25,615	)
Add (subtract) adjustments to arrive at NOI    and Cash NOI:
Depreciation and amortization		129,931			76,555			11,052			41,069			1,255
General and administrative		29,826			-			-			-			29,826
Interest and debt expense		72,891			46,012			-			24,440			2,439
Transaction related costs		413			-			-			-			413
Income tax expense		357			-			-			8			349
NOI from unconsolidated joint ventures		9,309			9,158			-			-			151
Income from unconsolidated joint ventures		(2,459	)		(2,433	)		-			-			(26	)
Loss from unconsolidated real estate funds		80			-			-			-			80
Fee income		(8,874	)		-			-			-			(8,874	)
Interest and other income, net		(4,110	)		-			-			(345	)		(3,765	)
Real estate impairment loss		46,000			-			46,000			-			-
NOI		239,501			145,886			19,303			78,079			(3,767	)
Less NOI attributable to noncontrolling interests in:
Consolidated joint ventures		(32,688	)		-			-			(32,688	)		-
Consolidated real estate fund		13			-			-			-			13
Paramount's share of NOI	$	206,826		$	145,886		$	19,303		$	45,391		$	(3,754	)
NOI	$	239,501		$	145,886		$	19,303		$	78,079		$	(3,767	)
Less:
Straight-line rent adjustments (including our
share of unconsolidated joint ventures)		(30,050	)		(21,005	)		362			(9,444	)		37
Amortization of above and below-market leases,    net (including our share of unconsolidated    joint ventures)		(8,398	)		1,090			(1,097	)		(8,391	)		-
Cash NOI		201,053			125,971			18,568			60,244			(3,730	)
Less Cash NOI attributable to noncontrolling    interests in:
Consolidated joint ventures		(26,631	)		-			-			(26,631	)		-
Consolidated real estate fund		13			-			-			-			13
Paramount's share of Cash NOI	$	174,435		$	125,971		$	18,568		$	33,613		$	(3,717	)

54

	For the Six Months Ended June 30, 2017
(Amounts in thousands)	Total			New York			Washington, D.C.			San Francisco			Other
Reconciliation of net income (loss) to
NOI and Cash NOI:
Net income (loss)	$	139,811		$	21,051		$	118,539		$	3,828		$	(3,607	)
Add (subtract) adjustments to arrive at NOI    and Cash NOI:
Depreciation and amortization		131,628			77,094			10,614			42,778			1,142
General and administrative		30,154			-			-			-			30,154
Interest and debt expense		71,835			44,192			2,724			20,957			3,962
Loss on early extinguishment of debt		7,877			-			5,162			2,715			-
Transaction related costs		777			-			-			-			777
Income tax expense		5,252			-			-			8			5,244
NOI from unconsolidated joint ventures		9,781			9,591			-			-			190
Income from unconsolidated joint ventures		(18,472	)		(18,398	)		-			-			(74	)
Loss from unconsolidated real estate funds		2,123			-			-			-			2,123
Fee income		(14,004	)		-			-			-			(14,004	)
Interest and other income, net		(5,686	)		(61	)		(20	)		(69	)		(5,536	)
Gain on sale of real estate		(133,989	)		-			(110,583	)		-			(23,406	)
Unrealized gain on interest rate swaps		(1,802	)		-			-			(1,802	)		-
NOI		225,285			133,469			26,436			68,415			(3,035	)
Less NOI attributable to noncontrolling interests in:
Consolidated joint ventures		(24,229	)		-			-			(24,229	)		-
Consolidated real estate fund		(486	)		-			-			-			(486	)
Paramount’s share of NOI	$	200,570		$	133,469		$	26,436		$	44,186		$	(3,521	)
NOI	$	225,285		$	133,469		$	26,436		$	68,415		$	(3,035	)
Less:
Straight-line rent adjustments (including our
share of unconsolidated joint ventures)		(32,719	)		(21,513	)		(1,396	)		(9,843	)		33
Amortization of above and below-market leases, net		(10,699	)		2,957			(1,097	)		(12,559	)		-
Cash NOI		181,867			114,913			23,943			46,013			(3,002	)
Less Cash NOI attributable to noncontrolling    interests in:
Consolidated joint ventures		(16,828	)		-			-			(16,828	)		-
Consolidated real estate fund		(486	)		-			-			-			(486	)
Paramount’s share of Cash NOI	$	164,553		$	114,913		$	23,943		$	29,185		$	(3,488	)

55

Same Store NOI

The tables below set forth the reconciliations of our share of NOI to our share of Same Store NOI and Same Store Cash NOI for the three months and six months June 30, 2018 and 2017. These metrics are used to measure the operating performance of our properties that were owned by us in a similar manner during both the current and prior reporting periods, and represents our share of Same Store NOI and Same Store Cash 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 vary from period to period. Same Store Cash NOI excludes the effect of non-cash items such as the straight-lining of rental revenue and the amortization of above and below-market leases.

	For the Three Months Ended June 30, 2018
(Amounts in thousands)	Total				New York			Washington, D.C.			San Francisco				Other
Paramount's share of NOI for the three
months ended June 30, 2018 (1)	$	106,246			$	74,737		$	9,699		$	23,622			$	(1,812	)
Acquisitions (2)		(2,361	)			-			-			(2,361	)			-
Dispositions		-				-			-			-				-
Lease termination income (including our share
of unconsolidated joint ventures)		(54	)			(54	)		-			-				-
Other, net		174				174			-			-				-
Paramount's share of Same Store NOI for
the three months ended June 30, 2018	$	104,005			$	74,857		$	9,699		$	21,261			$	(1,812	)
	For the Three Months Ended June 30, 2017
(Amounts in thousands)	Total				New York			Washington, D.C.			San Francisco				Other
Paramount's share of NOI for the three
months ended June 30, 2017 (1)	$	102,208			$	68,151		$	11,573		$	24,881			$	(2,397	)
Acquisitions		-				-			-			-				-
Dispositions (3)		(2,332	)			-			(2,332	)		-				-
Lease termination income (including our share
of unconsolidated joint ventures)		(1,041	)			(175	)		-			(866	)			-
Other, net		(785	)			30			-			(698	)			(117	)
Paramount's share of Same Store NOI for
the three months ended June 30, 2017	$	98,050			$	68,006		$	9,241		$	23,317			$	(2,514	)
Increase (decrease) in Same Store NOI	$	5,955	(4)		$	6,851		$	458		$	(2,056	) (4)		$	702
% Increase (decrease)		6.1	%	(4)		10.1	%		5.0	%		(8.8	%)	(4)

⁽¹⁾ See page 52 “Non-GAAP Financial Measures – Net Operating Income (“NOI”) for a reconciliation to net income in accordance with GAAP and the reasons why we believe these non-GAAP measures are useful.

⁽²⁾ Represents our share of NOI attributable to acquired properties (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

⁽⁴⁾ This decrease resulted from income of $3,028 in the prior year from the accelerated amortization of certain below-market lease liabilities in connection with such tenants’ lease modifications. Excluding this income, Same Store NOI increased by 9.5% for the total portfolio and 4.8% for our San Francisco portfolio.  

56

	For the Three Months Ended June 30, 2018
(Amounts in thousands)	Total			New York			Washington, D.C.			San Francisco			Other
Paramount's share of Cash NOI for the three
months ended June 30, 2018 (1)	$	88,488		$	63,773		$	9,353		$	17,198		$	(1,836	)
Acquisitions (2)		(1,766	)		-			-			(1,766	)		-
Dispositions		-			-			-			-			-
Lease termination income (including our share
of unconsolidated joint ventures)		(54	)		(54	)		-			-			-
Other, net		174			174			-			-			-
Paramount's share of Same Store Cash NOI
for the three months ended June 30, 2018	$	86,842		$	63,893		$	9,353		$	15,432		$	(1,836	)
	For the Three Months Ended June 30, 2017
(Amounts in thousands)	Total			New York			Washington, D.C.			San Francisco			Other
Paramount's share of Cash NOI for the three
months ended June 30, 2017 (1)	$	85,436		$	61,423		$	10,690		$	15,748		$	(2,425	)
Acquisitions		-			-			-			-			-
Dispositions (3)		(2,332	)		-			(2,332	)		-			-
Lease termination income (including our share
of unconsolidated joint ventures)		(1,041	)		(175	)		-			(866	)		-
Other, net		(87	)		30			-			-			(117	)
Paramount's share of Same Store Cash NOI
for the three months ended June 30, 2017	$	81,976		$	61,278		$	8,358		$	14,882		$	(2,542	)
Increase in Same Store Cash NOI	$	4,866		$	2,615		$	995		$	550		$	706
% Increase		5.9	%		4.3	%		11.9	%		3.7	%

⁽¹⁾ See page 52 “Non-GAAP Financial Measures – Net Operating Income (“NOI”)” for a reconciliation to net income in accordance with GAAP and the reasons why we believe these non-GAAP measures are useful.

⁽²⁾ Represents our share of Cash NOI attributable to acquired properties (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.

57

	For the Six Months Ended June 30, 2018
(Amounts in thousands)	Total				New York			Washington, D.C.			San Francisco				Other
Paramount's share of NOI for the six months
ended June 30, 2018 (1)	$	206,826			$	145,886		$	19,303		$	45,391			$	(3,754	)
Acquisitions (2)		(4,667	)			(173	)		-			(4,494	)			-
Dispositions		-				-			-			-				-
Lease termination income (including our share
of unconsolidated joint ventures)		(244	)			(244	)		-			-				-
Other, net		174				174			-			-				-
Paramount's share of Same Store NOI for
the six months ended June 30, 2018	$	202,089			$	145,643		$	19,303		$	40,897			$	(3,754	)
	For the Six Months Ended June 30, 2017
(Amounts in thousands)	Total				New York			Washington, D.C.			San Francisco				Other
Paramount's share of NOI for the six months
ended June 30, 2017 (1)	$	200,570			$	133,469		$	26,436		$	44,186			$	(3,521	)
Acquisitions		-				-			-			-				-
Dispositions (3)		(8,632	)			-			(8,632	)		-				-
Lease termination income (including our share    of unconsolidated joint ventures)		(1,107	)			(241	)		-			(866	)			-
Other, net		(785	)			30			-			(698	)			(117	)
Paramount's share of Same Store NOI for
the six months ended June 30, 2017	$	190,046			$	133,258		$	17,804		$	42,622			$	(3,638	)
Increase (decrease) in Same Store NOI	$	12,043	(4)		$	12,385		$	1,499		$	(1,725	) (4)		$	(116	)
% Increase (decrease)		6.3	%	(4)		9.3	%		8.4	%		(4.0	%)	(4)

⁽¹⁾ See page 52 “Non-GAAP Financial Measures – Net Operating Income (“NOI”)” for a reconciliation to net income in accordance with GAAP and the reasons why we believe these non-GAAP measures are useful.

⁽²⁾ Represents our share of NOI attributable to acquired properties (60 Wall Street in New York 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.

⁽⁴⁾ This decrease resulted from income of $3,028 in the prior year from the accelerated amortization of certain below-market lease liabilities in connection with such tenants’ lease modifications. Excluding this income, Same Store NOI increased by 8.1% for the total portfolio and 3.3% for our San Francisco portfolio.  

58

	For the Six Months Ended June 30, 2018
(Amounts in thousands)	Total			New York			Washington, D.C.			San Francisco			Other
Paramount's share of Cash NOI for the six
months ended June 30, 2018 (1)	$	174,435		$	125,971		$	18,568		$	33,613		$	(3,717	)
Acquisitions (2)		(3,730	)		(215	)		-			(3,515	)		-
Dispositions		-			-			-			-			-
Lease termination income (including our share
of unconsolidated joint ventures)		(244	)		(244	)		-			-			-
Other, net		174			174			-			-			-
Paramount's share of Same Store Cash NOI
for the six months ended June 30, 2018	$	170,635		$	125,686		$	18,568		$	30,098		$	(3,717	)
	For the Six Months Ended June 30, 2017
(Amounts in thousands)	Total			New York			Washington, D.C.			San Francisco			Other
Paramount's share of Cash NOI for the six
months ended June 30, 2017 (1)	$	164,553		$	114,913		$	23,943		$	29,185		$	(3,488	)
Acquisitions		-			-			-			-			-
Dispositions (3)		(8,632	)		-			(8,632	)		-			-
Lease termination income (including our share
of unconsolidated joint ventures)		(1,107	)		(241	)		-			(866	)		-
Other, net		(87	)		30			-			-			(117	)
Paramount's share of Same Store Cash NOI
for the six months ended June 30, 2017	$	154,727		$	114,702		$	15,311		$	28,319		$	(3,605	)
Increase (decrease) in Same Store Cash NOI	$	15,908		$	10,984		$	3,257		$	1,779		$	(112	)
% Increase		10.3	%		9.6	%		21.3	%		6.3	%

⁽¹⁾ See page 52 “Non-GAAP Financial Measures – Net Operating Income (“NOI”)” for a reconciliation to net income in accordance with GAAP and the reasons why we believe these non-GAAP measures are useful.

⁽²⁾ Represents our share of Cash NOI attributable to acquired properties (60 Wall Street in New York 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.

Funds from Operations (“FFO”) and Core Funds from Operations (“Core FFO”)

FFO is a supplemental measure of our performance. We present FFO 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 gains on sales, which are based on historical costs and implicitly assume that the value of real estate diminishes predictably over time, rather than fluctuating based on existing market conditions. In addition, we present Core FFO as 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.

59

FFO and Core FFO are presented as supplemental financial measures and do not fully represent our operating performance. Neither FFO nor Core FFO is intended to be a measure of cash flow or liquidity. Please refer to our consolidated financial statements, prepared in accordance with GAAP, for purposes of evaluating our financial condition, results of operations and cash flows.

The following table presents a reconciliation of net (loss) income to FFO and Core FFO for the periods set forth below.

				For the Three Months Ended						For the Six Months Ended
				June 30,						June 30,
(Amounts in thousands, except share and per share amounts)				2018			2017			2018			2017
Reconciliation of net (loss) income to FFO and Core FFO:
	Net (loss) income			$	(36,578	)	$	138,182		$	(33,863	)	$	139,811
		Real estate depreciation and amortization (including our share
			of unconsolidated joint ventures)		66,711			70,660			133,871			135,500
		Real estate impairment loss			46,000			-			46,000			-
		Gain on sale of depreciable real estate			-			(110,583	)		-			(110,583	)
	FFO				76,133			98,259			146,008			164,728
	Less FFO attributable to noncontrolling interests in:
		Consolidated joint ventures			(10,840	)		(7,740	)		(21,047	)		(14,935	)
		Consolidated real estate fund			(152	)		(20,276	)		(582	)		(20,416	)
		Operating Partnership			(6,206	)		(7,925	)		(11,791	)		(15,470	)
	FFO attributable to common stockholders			$	58,935		$	62,318		$	112,588		$	113,907
	Per diluted share			$	0.25		$	0.27		$	0.47		$	0.49
	FFO			$	76,133		$	98,259		$	146,008		$	164,728
	Non-core items:
		Our share of distributions from 712 Fifth Avenue in excess of    earnings			(1,512	)		(15,072	)		(317	)		(15,072	)
		Transaction related costs			293			502			413			777
		Realized and unrealized loss from unconsolidated real estate funds			74			2,482			205			2,247
		After-tax net gain on sale of residential condominium land parcel			-			(21,568	)		-			(21,568	)
		Loss on early extinguishment of debt			-			5,162			-			7,877
		Unrealized gain on interest rate swaps (including our
			share of unconsolidated joint ventures)		-			(364	)		-			(2,750	)
	Core FFO				74,988			69,401			146,309			136,239
	Less Core FFO attributable to noncontrolling interests in:
		Consolidated joint ventures			(10,840	)		(7,740	)		(21,047	)		(15,401	)
		Consolidated real estate fund			(152	)		12			(582	)		(128	)
		Operating Partnership			(6,097	)		(7,108	)		(11,818	)		(14,640	)
	Core FFO attributable to common stockholders			$	57,899		$	54,565		$	112,862		$	106,070
	Per diluted share			$	0.24		$	0.23		$	0.47		$	0.45
Reconciliation of weighted average shares outstanding:
	Weighted average shares outstanding				240,336,485			234,990,468			240,324,183			232,968,602
	Effect of dilutive securities				17,229			20,362			20,525			27,220
	Denominator for FFO and Core FFO per diluted share				240,353,714			235,010,830			240,344,708			232,995,822

60

ITEM 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risk is the risk of loss from adverse changes in market prices and interest rates. Our future earnings, cash flows and fair values relevant to financial instruments are dependent upon prevalent market interest rates. Our primary market risk results from our indebtedness, which bears interest at both fixed and variable rates. We manage our market risk on variable rate debt by entering into swap agreements to fix the rate on all or a portion of the debt for varying periods through maturity. This in turn, reduces the risks of variability of cash flows created by variable rate debt and mitigates the risk of increases in interest rates. Our objective when undertaking such arrangements is to reduce our floating rate exposure and we do not enter into hedging arrangements for speculative purposes. Subject to maintaining our status as a REIT for Federal income tax purposes, we may utilize swap arrangements in the future.  

The following table summarizes our consolidated debt, the weighted average interest rates and the fair value as of June 30, 2018.

Property		Rate	2018		2019		2020		2021		2022		Thereafter		Total		Fair Value
(Amounts in thousands)
Fixed Rate Debt:
	1633 Broadway (1)	3.54%	$	-	$	-	$	-	$	-	$	1,000,000	$	-	$	1,000,000	$	1,021,456
	1301 Avenue of the Americas	3.05%		-		-		-		500,000		-		-		500,000		483,623
	31 West 52nd Street	3.80%		-		-		-		-		-		500,000		500,000		481,450
	One Market Plaza	4.03%		-		-		-		-		-		975,000		975,000		975,412
	50 Beale Street	3.65%		-		-		-		228,000		-		-		228,000		224,969
Total Fixed Rate Debt		3.66%	$	-	$	-	$	-	$	728,000	$	1,000,000	$	1,475,000	$	3,203,000	$	3,186,910
Variable Rate Debt:
	1633 Broadway	3.73%	$	-	$	-	$	-	$	-	$	46,800	$	-	$	46,800	$	47,804
	1301 Avenue of the Americas	3.80%		-		-		-		350,000		-		-		350,000		356,537
	$1.0 Billion Revolving Credit    Facility	n/a		-		-		-		-		-		-		-		-
Total Variable Rate Debt		3.79%	$	-	$	-	$	-	$	350,000	$	46,800	$	-	$	396,800	$	404,341
Total Consolidated Debt		3.68%	$	-	$	-	$	-	$	1,078,000	$	1,046,800	$	1,475,000	$	3,599,800	$	3,591,251

⁽¹⁾ All of this debt has been swapped from floating rate debt to fixed rate debt. See table below.

In addition to the above, our unconsolidated joint ventures had $898,250,000 of outstanding indebtedness as of June 30, 2018, of which our share was $181,017,000.

The following table summarizes our fixed rate debt that has been swapped from floating rate to fixed as of June 30, 2018.

	Notional				Strike			Fair Value as of
Property	Amount		Effective Date	Maturity Date	Rate			June 30, 2018
(Amounts in thousands)
1633 Broadway (1)	$	300,000	Dec-2015	Dec-2022		1.95	%	$	9,762
1633 Broadway (1)		300,000	Dec-2015	Dec-2021		1.82	%		8,790
1633 Broadway (1)		400,000	Dec-2015	Dec-2020		1.65	%		9,423
1633 Broadway (1)		400,000	Dec-2020	Dec-2021		2.35	%		1,909
Total interest rate swap assets designated as cash flow hedges (included in “other assets”)								$	29,884

⁽¹⁾ Represents interest rate swaps designated as cash flow hedges. Changes in the fair value of these hedges are recognized in “other comprehensive income (loss)” (outside of earnings).

61

The following table summarizes our share of total indebtedness and the effect to interest expense of a 100 basis point increase in LIBOR.

	As of June 30, 2018								As of December 31, 2017
(Amounts in thousands, except per share amount)	Balance		Weighted Average Interest Rate			Effect of 1% Increase in Base Rates			Balance		Weighted Average Interest Rate
Paramount’s share of consolidated debt:
Variable rate	$	396,800		3.79	%	$	3,968		$	380,100		3.17	%
Fixed rate (1)		2,548,658		3.59	%		-			2,548,658		3.59	%
	$	2,945,458		3.62	%	$	3,968		$	2,928,758		3.54	%
Paramount’s share of debt of non-consolidated entities    (non-recourse):
Variable rate	$	28,808		4.52	%	$	288		$	28,808		3.93	%
Fixed rate (1)		152,209		3.41	%		-			152,182		3.41	%
	$	181,017		3.59	%	$	288		$	180,990		3.49	%
Noncontrolling interests’ in the Operating Partnership share of above						$	(409	)
Total change in annual net income						$	3,847
Per diluted share						$	0.02

⁽¹⁾ Our fixed rate debt includes floating rate debt that has been swapped to fixed. See table on page 61.

62

ITEM 4.CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) that are designed to ensure that information required to be disclosed in our reports under the Exchange Act is processed, recorded, summarized and reported within the time periods specified in the SEC’s rules and regulations, and that such information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.

As of June 30, 2018, the end of the period covered by this Quarterly Report on Form 10-Q, we carried out an evaluation, under the supervision and with the participation of management, including our Chief Executive Officer and Chief Financial Officer, regarding the effectiveness of our disclosure controls and procedures. Based on the foregoing evaluation, as of the end of the period covered by this Quarterly Report, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed by us in reports filed or submitted under the Exchange Act is processed, recorded, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

There were no changes to our internal control over financial reporting in connection with the evaluation referenced above that occurred during the period covered by this Quarterly Report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.  

63

PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

From time to time, we are a party to various claims and routine litigation arising in the ordinary course of business. As of June 30, 2018, we do not believe that the results of any such claims or litigation, individually or in the aggregate, will have a material adverse effect on our business, financial position, results of operations or cash flows.

ITEM 1A. RISK FACTORS

Except to the extent additional factual information disclosed elsewhere in this Quarterly Report on Form 10-Q relates to such risk factors (including, without limitation, the matters discussed in Part I, “Item 2—Management’s Discussion and Analysis of Financial Condition and Results of Operations”), there were no material changes to the risk factors disclosed in Part I, “Item 1A. Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2017.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Recent Sales of Unregistered Securities

None.

Recent Purchases of Equity Securities

None.

Stock Repurchase Program

On August 1, 2017, we received authorization from our Board of Directors to repurchase up to $200,000,000 of our common stock from time to time, in the open market or in privately negotiated transactions. The amount and timing of repurchases, if any, will depend on a number of factors, including, the price and availability of our shares, trading volume and general market conditions. The stock repurchase program may be suspended or discontinued at any time. We have not repurchased any of our common stock under the stock repurchase program.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

None.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

Exhibits required by Item 601 of Regulation S-K are filed herewith or incorporated herein by reference and are listed in the following Exhibit Index:

64

EXHIBIT INDEX

Exhibit Number		Exhibit Description
10.1* †		Resignation Agreement among Paramount Group, Inc., Paramount Group Management LP, Paramount Group Operating Partnership LP and Dan Lauer, effective as of June 6, 2018.
10.2* †		Retirement and Consulting Agreement among Paramount Group, Inc., Paramount Group Management LP, Paramount Group Operating Partnership LP and Jolanta Bott, effective as of June 30, 2018.
31.1*		Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*		Certification of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1**		Certification of Chief Executive Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2**		Certification of Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS*	XBRL Instance Document.
101.SCH*	XBRL Taxonomy Extension Schema.
101.CAL*	XBRL Taxonomy Extension Calculation Linkbase.
101.DEF*	XBRL Taxonomy Extension Definition Linkbase.
101.LAB*	XBRL Taxonomy Extension Label Linkbase.
101.PRE*	XBRL Taxonomy Extension Presentation Linkbase.
	______________________________
*	Filed herewith
**	Furnished herewith
†	Indicates management contract or compensatory plan or arrangement

65

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	Paramount Group, Inc.
Date: August 8, 2018	By:	/s/ Wilbur Paes
		Wilbur Paes
		Executive Vice President, Chief Financial Officer and Treasurer (duly authorized officer and principal financial and accounting officer)

66

EX-10.1

Exhibit 10.1

RESIGNATION AGREEMENT

This Resignation Agreement (this “Agreement”) is entered into by and among Daniel Lauer (“Mr. Lauer”), Paramount Group, Inc. (the “Company”), Paramount Group Management LP (the “Employer”) and Paramount Group Operating Partnership LP (the “Operating Partnership” and, together with the Company and the Employer, “Paramount”).  This Agreement is effective as of June 6, 2018 (the “Effective Date”).

WHEREAS, Mr. Lauer has been employed by Paramount;

WHEREAS, Mr. Lauer notified Paramount that he desired to resign from employment; and

WHEREAS, Paramount and Mr. Lauer (collectively, the “Parties”) have mutually determined that it is in the best respective interests of Paramount and Mr. Lauer for Mr. Lauer’s resignation with Paramount to take effect as of the close of business on June 26, 2018 pursuant to the terms of this Agreement;

NOW THEREFORE, in consideration ofthe mutual promises contained herein,and other good and valuable considerationashereinafterrecited,the receipt and adequacy of which is hereby acknowledged,itis accordingly agreed as follows:  

1.Separation from Employment; Transition Period.Mr. Lauer hereby resigns from employment with Paramount effective on June 26, 2018, unless Mr. Lauer resigns from employment on an earlier date or Paramount terminates Mr. Lauer’s employment for Cause (as defined in The Paramount Group, Inc. Executive Severance Plan (the “Severance Plan”)) on June 26, 2018 or an earlier date.  For purposes of this Agreement, the actual last day of Mr. Lauer’s employment—whether it is June 26, 2018 or an earlier date, as specified in the preceding sentence—shall be referred to as the “Separation Date.”  During the remainder of his employment, Mr. Lauer shall continue to (i) use his best efforts to perform his employment responsibilities; (ii) receive his base salary and be eligible to participate in Paramount’s employee benefit plans, subject to the terms of such plans; and (iii) vest in grants of equity Mr. Lauer holds pursuant to the terms of applicable equity award agreements and The Paramount Group, Inc. 2014 Equity Incentive Plan (collectively, the “Equity Documents”).  On the Separation Date, Mr. Lauer shall be considered to have resigned from any and all offices, positions and directorships that he holds with Paramount or any affiliated entity and he agrees to sign any documentation that Paramount may reasonably request to confirm such resignations.  For the avoidance of doubt, Mr. Lauer is not entitled to the benefits set forth under Section 3 of the Severance Plan because Mr. Lauer’s employment with Paramount is ending due to a voluntary resignation rather than a termination other than Cause (as defined in the Severance Plan), and the only benefits, other than accrued obligations owed by law (including payment for accrued but unused vacation days), for which Mr. Lauer is eligible after the Separation Date are set forth in this Agreement.  Also for the avoidance of doubt, Mr. Lauer shall continue to be covered under Paramount’s applicable indemnification agreements and policies and under applicable directors and officers liability insurance for acts or omissions while serving as an executive or officer of Paramount and any of its affiliates, including any applicable “tail” coverage.  

2.Accelerated Vesting; Bonus.  Provided that Mr. Lauer satisfies the Conditions (defined below), Paramount shall provide Mr. Lauer with the following:  

(a)Effective on the Release Effective Date (as defined below), 32,000 LTIP Units of the Operating Partnership granted on November 23, 2014that are unvested and would otherwise be forfeited in the absence of this Agreement shall vest.  Any termination or forfeiture of such 32,000 LTIP Units that otherwise would have occurred on the Separation Date or within the following thirty (30) days shall be delayed until thirty (30) days after the Separation Date and will only occur if the Release Agreement does not become effective or Mr. Lauer has not continued to comply with this Agreement.  In all other respects, all equity awards granted by Paramount shall be subject to the terms of the Equity Documents and, for the avoidance of doubt, except as specifically provided above, all equity awards granted by Paramount that have not vested prior to the Separation Date will be automatically forfeited on the Separation Date.  

(b)No later than forty-five (45) days after the Separation Date, Paramount shall pay Mr. Lauer a pro-rated bonus with respect to 2018 in the amount of $350,000.  

For purposes of this Agreement, the “Conditions” shall mean that (i) Mr. Lauer complies with the terms of this Agreement; (ii) Mr. Lauer does not resign prior to June 26, 2018 and is not terminated for Cause on or prior to June 26, 2018; and (iii) Mr. Lauer signs the Release Agreement in the form of the attached Exhibit A (the “Release Agreement”) on or after the Separation Date, and returns it to Paramount as specified in the Release Agreement no later than July 17, 2018 and refrains from revoking the Release Agreement within seven (7) days of signing it.  The Release Agreement shall be considered to be tendered to Mr. Lauer on the Separation Date; provided that Mr. Lauer has satisfied the conditions of (i) and (ii) above.  

For purposes of this Agreement the “Release Effective Date” shall mean the “Effective Date” as defined in the Release Agreement.  

3.Noncompetition and Noninterference.  As part of the consideration for the terms of Paragraph 2, to which Mr. Lauer acknowledges he is otherwise not entitled, and to assist in preserving the confidentiality of Confidential Information as defined below and goodwill of Paramount that Mr. Lauer was responsible for developing, Mr. Lauer shall not, without the prior written consent of Paramount, at any time during the period from the Effective Date until the date six (6) months after the Separation Date, directly or indirectly:  

(a) engage, participate or assist in, either individually or as an owner, partner, employee, consultant, director, officer, trustee, or agent of any business that engages or attempts to engage in, directly or indirectly, the acquisition, development, construction, operation, management, or leasing of any commercial real estate property in any of Paramount’s Markets as of the Separation Date;

(b) intentionally interfere with, disrupt or attempt to disrupt the relationship, contractual or otherwise, between Paramount and any tenant, supplier, contractor or lender; or

(c) call upon, compete for, solicit, divert, or take away, or attempt to divert or take away any of the tenants of Paramount, either for himself or for any other business, operation, corporation, partnership, association, agency, or other person or entity.  

2

This Paragraph 3 shall not be interpreted to prevent Mr. Lauer from owning up to two percent of the outstanding stock of a public company engaged in any business described in Paragraph 3(a) acquiring, holding or exercising voting rights associated with Minority Interest Passive Investments.  

The following definitions apply to the terms used in this Paragraph 3:  

“Market” means an area covering a 25 mile radius around (i) any property or land owned by the Company, the Operating Partnership, the Employer or any affiliate of any of the foregoing (each, a “Paramount Entity”) under development by any Paramount Entity or with respect to which any Paramount Entity has an agreement or option to acquire a property, development or land or (ii) any property or development for which any Paramount Entity provides third party development or management services; provided that for any such property, development or land located in New York City, no such radial area shall extend beyond New York City.  

“Minority Interest Passive Investment” means an investment made through (i) the purchase of securities (including partnership interests) that represent a non‑controlling, minority interest in an entity or (ii) the lending of money, in either case with the purpose or intent of obtaining a return on such investment but without management by Mr. Lauer of the property or business to which such investment directly or indirectly relates and without any business or strategic consultation by Mr. Lauer with such entity.  

4.Nondisparagement.  

(a)Mr. Lauer agrees that he will not say or do anything to disparage or discredit any Paramount Entity or related person or to cause any disruption of business for any Paramount Entity or related person.  Paramount agrees that it shall direct its executive officers not to say or do anything to disparage or discredit Mr. Lauer.  “Disparaging” remarks, comments or statements (whether written or oral) are those that impugn the character, honesty, integrity, morality or business acumen or abilities of any Paramount Entity or related person in connection with any aspect of the operation of any Paramount Entity’s business or Mr. Lauer or that reflect badly on any Paramount Entity or Mr. Lauer or cast any Paramount Entity or Mr. Lauer in a negative light, as applicable; provided that disparaging remarks shall not include any remarks by Mr. Lauer on or prior to the Separation Date in response to an official inquiry from an executive officer of Paramount about Mr. Lauer’s performance assessment of a Paramount employee.  This nondisparagement obligation shall not in any way affect Mr. Lauer’s or any other person’s obligation to testify truthfully in any legal proceeding, to provide information in response to a request from a federal, state or local governmental agency or commission (a “Government Agency”) or to lawfully compete in a manner not in violation of this Agreement.  

(b)Paramount agrees that during their respective periods of employment or Board service with Paramount, its executive officers and the members of its Board of Directors shall not say or do anything to disparage or discredit Mr. Lauer, subject to the same exceptions set forth in Paragraph 4(a), above.

3

5.Confidential Information.  Mr. Lauer understands and agrees that his employment has created and will continue to create during the remainder of his employment a relationship of confidence and trust between him and Paramount with respect to all Confidential Information (defined below).  At all times, both during and after his employment, Mr. Lauer will keep in confidence and trust all such Confidential Information, and will not use or disclose any such Confidential Information without the written consent of Paramount, except as may be necessary in the ordinary course of performing Mr. Lauer’s duties to Paramount.  As used in this Agreement, “Confidential Information” means information belonging to any Paramount Entity which is of value to such Paramount Entity in the course of conducting its business and the disclosure of which could result in a competitive or other disadvantage to any Paramount Entity.  Confidential Information includes, without limitation, financial information, reports, and forecasts; inventions, improvements and other intellectual property; trade secrets; know‑how; software; market or sales information or plans; tenant lists; and business plans, prospects and opportunities (such as possible acquisitions or dispositions of businesses or facilities) which have been discussed or considered by the management of any Paramount Entity.  Confidential Information includes information developed by Mr. Lauer in the course of Mr. Lauer’s employment by Paramount, as well as other information to which Mr. Lauer may have access in connection with Mr. Lauer’s employment.  Confidential Information also includes the confidential information of others with which any Paramount Entity has a business relationship.  Notwithstanding the foregoing, Confidential Information does not include information in the public domain, unless due to breach of Mr. Lauer’s obligations under this Paragraph 5.  In addition, for the avoidance of doubt, pursuant to the federal Defend Trade Secrets Act of 2016, Mr. Lauer shall not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that (i) is made (A) in confidence to a federal, state or local government official, either directly or indirectly, or to an attorney and (B) solely for the purpose of reporting or investigating a suspected violation of law; or (ii) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal.  In addition, nothing in this Agreement shall be interpreted or applied to prohibit Mr. Lauer from making any good faith report to any Government Agency concerning any acts or omissions that Mr. Lauer may believe to constitute a possible violation of federal or state law or making other disclosures that are protected under the whistleblower provisions of applicable federal or state law or regulation.  

6.Return of Property.  Mr. Lauer acknowledges that all documents, records, data, apparatus, equipment and other physical property, whether or not pertaining to Confidential Information, which are furnished to Mr. Lauer by any Paramount Entity or are produced by Mr. Lauer in connection with his employment will be and remain the sole property of such  Paramount Entity.  Mr. Lauer agrees to return to Paramount all such materials and property as and when requested by Paramount, but in any event no later than the Separation Date.  Mr. Lauer agrees to not retain any such material or property or any copies thereof after the Separation Date.  

7.Nonsolicitation.  Mr. Lauer agrees that for a period of twelve (12) months following the Separation Date he shall not, without the prior written consent of Paramount, directly or indirectly solicit, hire or assist any employer to hire any of the employees of any Paramount Entity, either for himself or for any other business, operation, corporation, partnership, association, agency or other person or entity, or take any other action either to

4

encourage any of such employees to leave employment with any such Paramount Entity or otherwise to interfere with any such employment relationship.  

8.Litigation and Regulatory Cooperation.  Before and after the Separation Date, Mr. Lauer shall cooperate fully with any Paramount Entity in the defense or prosecution of any claims or actions now in existence or which may be brought in the future against or on behalf of any such Paramount Entity which relate to events or occurrences that transpired while Mr. Lauer was employed by Paramount.  Mr. Lauer’s full cooperation in connection with such claims or actions shall include, but not be limited to, being available to meet with counsel to prepare for discovery or trial and to act as a witness on behalf of any such Paramount Entity at mutually convenient times.  Before and after the Separation Date, Mr. Lauer also shall cooperate fully with any Paramount Entity in connection with any investigation or review of any federal, state or local regulatory authority as any such investigation or review relates to events or occurrences that transpired while Mr. Lauer was employed by Paramount.  Paramount shall reimburse Mr. Lauer for any reasonable out‑of‑pocket expenses incurred in connection with Mr. Lauer’s performance of obligations pursuant to this Paragraph 8.  In addition, for all time that Mr. Lauer reasonably expends after the Separation Date cooperating with Paramount pursuant to this Paragraph 8, Paramount shall compensate Mr. Lauer at a per hour rate to be determined by Paramount based upon the hourly equivalent of the annual base salary Paramount was paying Mr. Lauer immediately prior to the Separation Date based upon 2,080 hours per year; provided that Mr. Lauer’s right to such compensation shall not apply to time spent in activities that could have been compelled pursuant to a subpoena, including testimony and related attendance at depositions, hearings or trials.  For the avoidance of doubt, Mr. Lauer’s availability and/or performance of services pursuant to this Paragraph 8 beyond the Separation Date shall not be considered to constitute the continuation of his service to any Paramount Entity for purposes of any of the Equity Documents.  

9.Remedies Upon Breach.  If Mr. Lauer materially breaches any of his obligations under Paragraphs 3 through 8 of this Agreement, in addition to any other legal or equitable remedies it may have for such breach, Paramount shall have the right not to provide accelerated vesting and other benefits otherwise due to him pursuant to Paragraph 2 of this Agreement.  Paramount’s election to exercise its rights under this Paragraph 9 shall not affect Mr. Lauer’s continuing obligations under this Agreement.  If Paramount believes that Mr. Lauer has materially breached any of his obligations set forth in Paragraphs 3 through 8, Paramount shall provide Mr. Lauer with written notice of such material breach and provide Mr. Lauer a period of ten (10) days to cure his breach (to the extent curable) prior to exercising its rights under this Paragraph 9, provided that Paramount shall have no payment obligation during the cure period.  Paramount represents that, to its knowledge, no such breach had occurred as of the date Paramount signed this Agreement.  

10.Nonadmission of Liability.  The Partiesagreethatthe consideration exchanged herein,aswell asthe negotiationand execution ofthis Agreement, do notconstitute and shall not be deemed an admission of liability,wrongdoingorinappropriateor unlawful conduct by Paramount or by Mr. Lauer.Mr. Lauer understands that nothing in thisAgreement shall constitute or be construedasanadmissionofanyliabilitybyParamount.  

5

11.Notice to Consult Attorney.  Paramount has advisedMr. Lauer, in writing,to consult withan attorney priorto executing this Agreement and the Release Agreement and hereby reiteratesthat Mr. Lauer is advised to consult withan attorneypriorto executing this Agreement and the Release Agreement.  

12.Acknowledgment Regarding Execution of Agreement.  Mr. Lauer acknowledges that he has carefully read and fully understands all the provisions of this Agreement.  Mr. Lauer further acknowledges that Paramount has urged him to seek legal counsel in regard to the terms and conditions of this Agreement.  Mr. Lauer acknowledges and warrants that he has reviewed this Agreement and has had the opportunity to consult with an attorney, and fully and completely understands and accepts the terms, conditions, nature and legal effect of this Agreement.  Mr. Lauer warrants that he enters into this Agreement knowingly, freely and voluntarily and that his agreement hereto has not been the result of coercion or duress.

13.Governing Law; Jurisdiction.  This Agreement ismade and enteredinto intheState of New York and shall in all respects be interpreted,enforced andgoverned under thelaws oftheState of New York,without regard to conflictsoflaws principles orchoice oflawprovisions that would causethe application ofthe lawofanyotherjurisdiction.Itistheintention oftheParties to this Agreement thatthelaws oftheState of New Yorkshall govern thevalidity ofthis Agreement, theconstructionofits terms,the interpretation oftherightsand duties of the Parties, and itsenforcement.The Parties hereby consent to the jurisdiction of the state and federal courts situated in New York, New York.  Accordingly, with respect to any such court action, Mr. Lauer (a) submits to the personal jurisdiction of such courts; (b) consents to service of process; and (c) waives any other requirement (whether imposed by statute, rule of court, or otherwise) with respect to personal jurisdiction or service of process.  

14.Entire Agreement.  This Agreement constitutes a single, integratedwritten contractexpressing the entireagreement betweenthe Parties and cannot be modifiedin any way except by written modification executed by bothParties.This Agreement supersedes any previous agreements or understandings between the Parties, except for the Equity Documents (as modified pursuant to Paragraph 2, as applicable) and any other obligations specifically preserved in this Agreement.  

15.Severability.  Ifanyprovisionof this Agreement isdeclared invalid or otherwise unenforceable, the otherprovisions herein shall remain in full force and effect and shall be construedin a fashionto effectuate the purpose and intentofthis Agreement.  

16.Binding Nature of Agreement.  The Partiesagreethatthis Agreement shall be binding upon and inureto the benefit ofthe Partieshereto,and their respective successors, heirs, personal representatives and assigns.  

17.Authority to Enter Agreement.  Each individual signing thisAgreement, whethersigning individually or on behalfofany person or entity, represents and warrants thathe or she has full authority to so execute the Agreement on behalfofthe party on whose behalfheor she so signs. Each Partyseparately acknowledgesandrepresents that this representation and warranty is an essential and material provisionofthis Agreement and shall surviveexecution of this Agreement.  

6

18.Retention of Certain Documents.  Notwithstanding anything in this Agreement to the contrary, Mr. Lauer shall be permitted to retain any documents related to his compensation or reasonably necessary for tax preparation purposes.  

19.Counterparts.  The Partiesagreethatthis Agreement may be executed incounterparts, each ofwhichshallbe deemed an original, butallofwhichtogethershallconstitute one and the same instrument.  

20.Interpretation.  The Parties agree that for the purposes of construing or interpreting this Agreement, this Agreement shall be deemed to have been drafted equally by both Parties hereto.  The Parties further agree that headings in each Paragraph of this Agreement are for convenience and reference only and will not affect the construction or interpretation of this Agreement.  

[signature page follows]

7

IN WITNESS WHEREOF, the Parties hereuntoexecutethis Agreement as of the Effective Date.  

DANIEL LAUER     /s/ Daniel Lauer                                               Daniel Lauer           PARAMOUNT GROUP, INC.     By: /s/ Albert Behler                                             Name: Albert Behler Title: Chairman, Chief Executive Officer and President     Paramount GROUP MANAGEMENT LP, a Delaware limited partnership   By:  Paramount Group Management GP LLC, its General Partner   By:  Paramount Group Operating Partnership LP, its Sole Member   By:  Paramount Group, Inc., its General Partner   By: /s/ Albert Behler                                           Name: Albert Behler Title: Chairman, Chief Executive Officer and President   PARAMOUNT GROUP OPERATING PARTNERSHIP LP, a Delaware limited partnership   By:Paramount Group, Inc., its General Partner     By: /s/ Albert Behler                                         name: Albert Behler title: Chairman, Chief Executive Officer and President  

8

EXHIBIT A

RELEASE AGREEMENT

This is the Release Agreement (the “Agreement”) as defined in Paragraph 2 of the Resignation Agreement entered into by and among Daniel Lauer (“Mr. Lauer”), ParamountGroup, Inc. (the “Company”), Paramount Group Management LP (the “Employer”) and Paramount Group Operating Partnership LP (the “Operating Partnership” and, together with the Company and the Employer, “Paramount”).  Such Resignation Agreement is referred to below as the “Resignation Agreement.”   Mr. Lauer’s execution and non-revocation of this Agreement is a condition of certain payments to Mr. Lauer and other terms pursuant to Paragraph 2 of the Resignation Agreement.

1.Release.  As part of further consideration for the terms of Paragraph 2 of the Resignation Agreement, to which Mr. Lauer acknowledges that he is otherwise not entitled, Mr. Lauer,for himself, his heirs, his estate, executors,administrators,legal representatives, successors and assigns, releases and forever discharges the Company, the Operating Partnership and the Employer, their respective subsidiaries andaffiliatedcompanies andentities, predecessors,successors,andassigns,and, in their respective capacities as such,their respective shareholders, members, officers, directors, employees and agents (hereinaftercollectivelyreferredtoas the “ReleasedParties”), ofandfromany andallmanner of actions, causes of actions, claims, debts, dues, distributions, accounts, bonds, covenants,contracts, agreements andcompensation, and demandsofeveryname and nature, whether atlaw, in equity,incontractorin tort, basedupon publicpolicy,under statuteoratcommonlaw,whethernowknownorunknown,whichMr. Lauereverhad, nowhas or hereafter may have, orwhichMr. Lauer’s heirs, executors oradministrators hereafter may have, by reason ofanymatter, cause or thing whatsoeverfrom the beginning oftheir relationship to thedate ofthisAgreement (the “Claims”), including without limitation any Claims arising from, orin any way relating to, Mr. Lauer’s employmentrelationshipwith Paramountand/orthe termination of Mr. Lauer’s employmentwith Paramount.  The Claims subject to this release include,but are not limited to, any and allactions intort,contract andallegeddiscriminationofanykindand/orcausesof actionarisingunder any federal,state or locallaw,statute,regulation,or ordinance, including butnot limitedto all rightsand claimsunder Title VII ofthe Civil RightsAct, as amended,theCivilRightsAct of1991, the Age Discriminationin Employment Act (“ADEA”), as amended, the OlderWorkers BenefitProtection Act,the Americanswith Disabilities Act, theEqualPayAct, the Employment and Retirement Income Security Act of1974, the NewYorkExecutive Law, theNewYorkCityHumanRights Law, the NewYorkStateHumanRights Law, theAdministrativeCode oftheCity ofNewYork, NewYorkLaborLaw, and any rightsorclaimsforattorneys’fees or costs under these acts orany other federal,state or locallaw.  This Paragraph 1 shall not release any claims related to or affect Mr. Lauer’s (i) vested rights under Paramount’s Section 401(k) plan, the Equity Documents (as defined in Paragraph 1 of the Resignation Agreement and as modified pursuant to Paragraph 2 of the Resignation Agreement, as applicable), or any other applicable plan or program in which Mr. Lauer has accrued vested benefits or entitlements, (ii) rights under the Resignation Agreement, (iii) rights as a stockholder of the Company, (iv) rights to be covered under applicable indemnification agreements and policies and under applicable directors and officers liability insurance for acts or omissions while serving as an executive or officer of

Paramount and any of its affiliates and (v) rights with respect to any Claims that may not be released under applicable law.

2.Waiver.  Mr. Lauer acknowledgesthat he understandsthatby signingthis Agreement, he will havewaivedanyright he mayhave to recover in alawsuit against any of the Released Parties based on anyactions or omissionsmade by any such Released Party, including, but not limited to, Claims which in any way arise fromorrelate toMr. Lauer’s employment relationshipwith Paramount up to thedate ofthe signing ofthis Agreement and the terminationofhis employmentwithParamount.Mr. Lauerfurtheracknowledges that he understandsthat by signing this Agreement, he is waiving theright to recover money or other reliefinany action he might institute.  If Mr. Lauer files any charge or complaint with any federal, state or local governmental agency or commission (“Government Agency”) and if the Government Agency pursues any claim on Mr. Lauer’s behalf, or if any other third party pursues any claim on Mr. Lauer’s behalf, Mr. Lauer waives any right to monetary or other individualized relief (either individually, or as part of any collective or class action);provided that nothing in this Agreement or the Resignation Agreement limits any right Mr. Lauer may have to receive a whistleblower award or bounty for information provided to the Securities and Exchange Commission.

3.No Assignment of Claims. Mr. Lauer hereto warrants, represents andagreesthat he has not assigned or transferred, orpurported to assignor transfer, to any personor entity, any Claims.  

4.Time to Consider Agreement; Effective Date.  Mr. Lauer understands and acknowledges that he has been given the opportunity to consider this Agreement for twenty-one (21) days from the tender of this Agreement to him before signing it (the “Consideration Period”).  Mr. Lauer acknowledges that, pursuant to the Resignation Agreement, this Agreement was tendered to him on June 26, 2018.  To accept this Agreement, Mr. Lauer must return a signed original or a signed PDF copy of this Agreement so that it is received by Gage Johnson, Senior Vice President, General Counsel and Secretary, at or before the expiration of the Consideration Period.  If Mr. Lauer signs this Agreement before the end of the Consideration Period, Mr. Lauer acknowledges by signing this Agreement that such decision was entirely voluntary and that he had the opportunity to consider this Agreement for the entire Consideration Period.  For the period of seven (7) days from the date when Mr. Lauer signs this Agreement (the “Revocation Period”), Mr. Lauer has the right to revoke this Agreement by written notice to Mr. Johnson.  For such a revocation to be effective, it must be delivered so that it is received by Mr. Johnson at or before the expiration of the Revocation Period.  This Agreement shall not become effective or enforceable during the Revocation Period.  This Agreement shall become effective on the first business day following the expiration of the Revocation Period (the “Effective Date”).  

5.Other Terms.

(a) Legal Representation; Review of Release.  Mr. Lauer acknowledges that he has been advised to discuss all aspects of this Agreement with his attorney, that he has carefully read and fully understands all of the provisions of this Agreement and that he is voluntarily entering into this Agreement.

2

(b) Binding Nature of Release.  This Agreement shall be binding upon Mr. Lauer and his heirs, administrators, representatives, and successors.

(c) Governing Law; Jurisdiction.  This Agreement ismade and enteredinto intheState of New York and shall in all respects be interpreted,enforced andgoverned under thelaws oftheState of New York,without regard to conflictsoflaws principles orchoice oflawprovisions that would causethe application ofthe lawofanyotherjurisdiction.  Thelaws oftheState of New Yorkshall govern thevalidity ofthis Agreement, theconstructionofits terms,the interpretation oftherightsand duties of Mr. Lauer, and itsenforcement.Mr. Lauer hereby consents to the jurisdiction of the state and federal courts situated in New York, New York.  Accordingly, with respect to any such court action, Mr. Lauer (a) submits to the personal jurisdiction of such courts; (b) consents to service of process; and (c) waives any other requirement (whether imposed by statute, rule of court, or otherwise) with respect to personal jurisdiction or service of process.

(d) Severability.  Ifanyprovisionof this Agreement isdeclared invalid or otherwise unenforceable, the otherprovisions herein shall remain in full force and effect and shall be construedin a fashionto effectuate the purpose and intentofthis Agreement.

(e) Interpretation.  For the purposes of construing or interpreting this Agreement, this Agreement shall be deemed to have been drafted equally by Mr. Lauer and Paramount.  Headings in each Paragraph of this Agreement are for convenience and reference only and will not affect the construction or interpretation of this Agreement.

(f) Absence of Reliance.  Mr. Lauer acknowledges that he is not relying on any promises or representations by Paramount, its agents, representatives or attorneys regarding any subject matter addressed in this Agreement.

So agreed.  

/s/ Daniel Lauer                                                  June 6, 2018                                 Daniel LauerDate

3

EX-10.2

Exhibit 10.2

RETIREMENT AND CONSULTING AGREEMENT

This Retirement and Consulting Agreement (this “Agreement”) is entered into by and among Jolanta Bott (“Ms. Bott”), Paramount Group, Inc. (the “Company”), Paramount Group Management LP (the “Employer”) and Paramount Group Operating Partnership LP (the “Operating Partnership” and, together with the Company and the Employer, “Paramount”).  Ms. Bott and Paramount are together referred to as the “Parties.”  This Agreement is effective as of the Effective Date, as defined below.  

WHEREAS, Ms. Bott has been employed by Paramount; and

WHEREAS, Ms. Bott has retired from her employment with Paramount effective on June 30, 2018;

NOW THEREFORE, in consideration ofthe mutual promises contained herein,and other good and valuable considerationashereinafterrecited,the receipt and adequacy of which is hereby acknowledged,itis accordingly agreed as follows:  

1.Retirement.Ms. Bott hereby confirms her resignation from employment with Paramount and from any and all offices, positions and directorships that she holds with Paramount or any affiliated entity effective on June 30, 2018 (the “Retirement Date”) and she agrees to sign any documentation that Paramount may reasonably request to confirm such resignations.  

2.Consulting Services.  Effective for the six-month period of July 1, 2018 to December 31, 2018 (the “Consulting Period”), Ms. Bott shall provide transitional consulting services (“Consulting Services”) to Paramount.  Ms. Bott shall provide Consulting Services at reasonable times as requested by the Chairman, President and Chief Executive Officer of the Company; provided that she shall not be required to perform more than twenty (20) hours of Consulting Services in any calendar month.  Subject to Ms. Bott’s continued availability to perform Consulting Services and her use of commercially reasonable efforts to perform requested Consulting Services, the Company shall pay Ms. Bott $33,333.00 for each month during the Consulting Period (the “Consulting Fees”), with such Consulting Fee payment due no later than thirty (30) days after the end of each month.  Ms. Bott acknowledges that she shall be an independent contractor for all purposes at all times during the Consulting Period.  Paramount acknowledges that it shall not retain a right to control the manner in which Ms. Bott shall perform Consulting Services.  The Parties therefore agree that the Consulting Fees shall be treated for tax purposes as Form 1099 income and shall not be reduced by tax-related deductions and withholdings.  Ms. Bott acknowledges that her performance of Consulting Services pursuant to this Paragraph 2 shall not be considered to constitute the continuation of her employment or Continuous Service (as defined in the Equity Documents) to Paramount or any of its affiliates for purposes of any of the terms of any equity award agreements governing equity awards granted by Paramount to Ms. Bott and The Paramount Group, Inc. 2014 Equity Incentive Plan (collectively, the “Equity Documents”). Unless otherwise mutually agreed, Ms. Bott may perform such Consulting Services at a location or locations of her choosing outside of the Company’s offices.  Ms. Bott shall continue to be covered by Paramount’s indemnification agreement as if she remained employed by the Company during the Consulting Period. Ms. Bott

shall not be prohibited from seeking or obtaining other employment during the Consulting Period.  Ms. Bott may terminate the Consulting Period at any time upon seven (7) days’ written notice to the Company. Notwithstanding anything to the contrary above, Ms. Bott shall not be obligated to perform any Consulting Services until after the Effective Date, as defined below.  For the avoidance of doubt, neither the Consulting Fees nor the end date of the Consulting Period shall be affected if the Effective Date is after July 1, 2018.  

3.Noncompetition and Noninterference.  As part of the consideration for the terms of Paragraph 2, to which Ms. Bott acknowledges she is otherwise not entitled, and to assist in preserving the confidentiality of Confidential Information as defined below and goodwill of Paramount that Ms. Bott was responsible for developing, Ms. Bott shall not, without the prior written consent of Paramount, at any time during the period from the Effective Date until the date six (6) months after the Retirement Date, directly or indirectly:  

(a) engage, participate or assist in, either individually or as an owner, partner, employee, consultant, director, officer, trustee, or agent of any business that engages or attempts to engage in, directly or indirectly, the acquisition, development, construction, operation, management, or leasing of any commercial real estate property in any of Paramount’s Markets as of the Retirement Date;

(b) intentionally interfere with, disrupt or attempt to disrupt the relationship, contractual or otherwise, between Paramount and any tenant, supplier, contractor or lender; or

(c) call upon, compete for, solicit, divert, or take away, or attempt to divert or take away any of the tenants of Paramount, either for herself or for any other business, operation, corporation, partnership, association, agency, or other person or entity.  

This Paragraph 3 shall not be interpreted to prevent Ms. Bott from owning up to two percent of the outstanding stock of a public company engaged in any business described in Paragraph 3(a) acquiring, holding or exercising voting rights associated with Minority Interest Passive Investments.  

The following definitions apply to the terms used in this Paragraph 3:  

“Market” means an area covering a 25 mile radius around (i) any property or land owned by the Company, the Operating Partnership, the Employer or any affiliate of any of the foregoing (each, a “Paramount Entity”) under development by any Paramount Entity or with respect to which any Paramount Entity has an agreement or option to acquire a property, development or land or (ii) any property or development for which any Paramount Entity provides third party development or management services; provided that for any such property, development or land located in New York City, no such radial area shall extend beyond New York City.  

“Minority Interest Passive Investment” means an investment made through (i) the purchase of securities (including partnership interests) that represent a non‑controlling, minority interest in an entity or (ii) the lending of money, in either case with the purpose or intent of obtaining a return on such investment but without management by Ms. Bott of the property or business to which such investment directly or indirectly relates and without any business or

2

strategic consultation by Ms. Bott with such entity.  

4.Nondisparagement.  

(a) Ms. Bott agrees that she will not say or do anything to disparage or discredit any Paramount Entity or related person or to cause any disruption of business for any Paramount Entity or related person.  Paramount agrees that it shall direct its executive officers not to say or do anything to disparage or discredit Ms. Bott.  “Disparaging” remarks, comments or statements (whether written or oral) are those that impugn the character, honesty, integrity, morality or business acumen or abilities of any Paramount Entity or related person in connection with any aspect of the operation of any Paramount Entity’s business or Ms. Bott or that reflect badly on any Paramount Entity or Ms. Bott or cast any Paramount Entity or Ms. Bott in a negative light, as applicable; provided that disparaging remarks shall not include any remarks by Ms. Bott on or prior to the Retirement Date in response to an official inquiry from an executive officer of Paramount about Ms. Bott’s performance assessment of a Paramount employee.  This nondisparagement obligation shall not in any way affect Ms. Bott’s or any other person’s obligation to testify truthfully in any legal proceeding, to provide information in response to a request from a federal, state or local governmental agency or commission (a “Government Agency”) or to lawfully compete in a manner not in violation of this Agreement.  

(b) Paramount agrees that during their respective periods of employment or Board service with Paramount, its executive officers and the members of its Board of Directors shall not say or do anything to disparage or discredit Ms. Bott, subject to the same exceptions set forth in Paragraph 4(a), above.

5.Confidential Information.  Ms. Bott understands and agrees that her employment has created and will continue to create during the remainder of her employment a relationship of confidence and trust between her and Paramount with respect to all Confidential Information (defined below).  At all times, both during and after her employment, Ms. Bott will keep in confidence and trust all such Confidential Information, and will not use or disclose any such Confidential Information without the written consent of Paramount, except as may be necessary in the ordinary course of performing Ms. Bott’s duties to Paramount.  As used in this Agreement, “Confidential Information” means information belonging to any Paramount Entity which is of value to such Paramount Entity in the course of conducting its business and the disclosure of which could result in a competitive or other disadvantage to any Paramount Entity.  Confidential Information includes, without limitation, financial information, reports, and forecasts; inventions, improvements and other intellectual property; trade secrets; know‑how; software; market or sales information or plans; tenant lists; and business plans, prospects and opportunities (such as possible acquisitions or dispositions of businesses or facilities) which have been discussed or considered by the management of any Paramount Entity.  Confidential Information includes information developed by Ms. Bott in the course of Ms. Bott’s employment by Paramount, as well as other information to which Ms. Bott may have access in connection with Ms. Bott’s employment.  Confidential Information also includes the confidential information of others with which any Paramount Entity has a business relationship.  Notwithstanding the foregoing, Confidential Information does not include information in the public domain, unless due to breach of Ms. Bott’s obligations under this Paragraph 5.  In addition, for the avoidance of doubt, pursuant to the federal Defend Trade Secrets Act of 2016, Ms. Bott shall not be held criminally

3

or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that (i) is made (A) in confidence to a federal, state or local government official, either directly or indirectly, or to an attorney and (B) solely for the purpose of reporting or investigating a suspected violation of law; or (ii) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal.  In addition, nothing in this Agreement shall be interpreted or applied to prohibit Ms. Bott from making any good faith report to any Government Agency concerning any acts or omissions that Ms. Bott may believe to constitute a possible violation of federal or state law or making other disclosures that are protected under the whistleblower provisions of applicable federal or state law or regulation.  

6.Return of Property.  Ms. Bott acknowledges that all documents, records, data, apparatus, equipment and other physical property, whether or not pertaining to Confidential Information, which are furnished to Ms. Bott by any Paramount Entity or are produced by Ms. Bott in connection with her employment will be and remain the sole property of such Paramount Entity.  Ms. Bott agrees to return to Paramount all such materials and property as and when requested by Paramount, but in any event no later than the Retirement Date.  Ms. Bott agrees to not retain any such material or property or any copies thereof after the Retirement Date.  

7.Nonsolicitation.  Ms. Bott agrees that for a period of twelve (12) months following the Retirement Date, she shall not, without the prior written consent of Paramount, directly or indirectly solicit, hire or assist any employer to hire any of the employees of any Paramount Entity, either for herself or for any other business, operation, corporation, partnership, association, agency or other person or entity, or take any other action either to encourage any of such employees to leave employment with any such Paramount Entity or otherwise to interfere with any such employment relationship.  

8.Litigation and Regulatory Cooperation.  From and after the Effective Date, Ms. Bott shall cooperate fully with any Paramount Entity in the defense or prosecution of any claims or actions now in existence or which may be brought in the future against or on behalf of any such Paramount Entity which relate to events or occurrences that transpired while Ms. Bott was employed by Paramount.  Ms. Bott’s full cooperation in connection with such claims or actions shall include, but not be limited to, being available to meet with counsel to prepare for discovery or trial and to act as a witness on behalf of any such Paramount Entity at mutually convenient times.  From and after the Effective Date, Ms. Bott also shall cooperate fully with any Paramount Entity in connection with any investigation or review of any federal, state or local regulatory authority as any such investigation or review relates to events or occurrences that transpired while Ms. Bott was employed by Paramount.  Paramount shall reimburse Ms. Bott for any reasonable out‑of‑pocket expenses incurred in connection with Ms. Bott’s performance of obligations pursuant to this Paragraph 8.  In addition, for all time that Ms. Bott reasonably expends after the Retirement Date cooperating with Paramount pursuant to this Paragraph 8, Paramount shall compensate Ms. Bott at a per hour rate to be determined by Paramount based upon the hourly equivalent of the annual base salary Paramount was paying Ms. Bott immediately prior to the Retirement Date based upon 2,080 hours per year; provided that Ms. Bott’s right to such compensation shall not apply to time spent in activities that could have been compelled pursuant to a subpoena, including testimony and related attendance at depositions, hearings or trials.  For the avoidance of doubt, Ms. Bott’s availability and/or performance of services pursuant to this Paragraph 8 beyond the Retirement Date shall not be considered to

4

constitute the continuation of her employment or Continuous Service (as defined in the Equity Documents) to any Paramount Entity for purposes of any of the Equity Documents.  

9.Remedies Upon Breach.  If Ms. Bott materially breaches any of her obligations under Paragraphs 3 through 8 of this Agreement, in addition to any other legal or equitable remedies it may have for such breach, Paramount shall have the right to immediately terminate the Consulting Period and cease payment of the Consulting Fees.  Paramount’s election to exercise its rights under this Paragraph 9 shall not affect Ms. Bott’s continuing obligations under this Agreement other than the obligation to continue providing Consulting Services.  If Paramount believes that Ms. Bott has materially breached any of her obligations set forth in Paragraphs 3 through 8, Paramount shall provide Ms. Bott with written notice of such material breach and provide Ms. Bott a period of ten (10) days to cure her breach (to the extent curable) prior to exercising its rights under this Paragraph 9, provided that Paramount shall have no payment obligation during the cure period.  Paramount represents that, to its knowledge, no such breach had occurred as of the date Paramount signed this Agreement.  

10.Release.  As part of further consideration for the terms of Paragraph 2 of this Agreement, to which Ms. Bott acknowledges that she is otherwise not entitled, Ms. Bott,for herself, her heirs, her estate, executors,administrators,legal representatives, successors and assigns, releases and forever discharges the Company, the Operating Partnership and the Employer, their respective subsidiaries andaffiliatedcompanies andentities, predecessors,successors,andassigns,and, in their respective capacities as such,their respective shareholders, members, officers, directors, employees and agents (hereinaftercollectivelyreferredtoas the “ReleasedParties”), ofandfromany andallmanner of actions, causes of actions, claims, debts, dues, distributions, accounts, bonds, covenants,contracts, agreements andcompensation, and demandsofeveryname and nature, whether atlaw, in equity,incontractorin tort, basedupon publicpolicy,under statuteoratcommonlaw,whethernowknownorunknown,whichMs. Botteverhad, nowhas or hereafter may have, orwhichMs. Bott’s heirs, executors oradministrators hereafter may have, by reason ofanymatter, cause or thing whatsoeverfrom the beginning oftheir relationship to thedate ofthisAgreement (the “Claims”), including without limitation any Claims arising from, orin any way relating to, Ms. Bott’s employmentrelationshipwith Paramountand/orthe termination of Ms. Bott’s employmentwith Paramount.  The Claims subject to this release include,but are not limited to, any and allactions intort,contract andallegeddiscriminationofanykindand/orcausesof actionarisingunder any federal,state or locallaw,statute,regulation,or ordinance, including butnot limitedto all rightsand claimsunder Title VII ofthe Civil RightsAct, as amended,theCivilRightsAct of1991, the Age Discriminationin Employment Act (“ADEA”), as amended, the OlderWorkers BenefitProtection Act,the Americanswith Disabilities Act, theEqualPayAct, the Employee Retirement Income Security Act of1974, the NewYorkExecutive Law, theNewYorkCityHumanRights Law, the NewYorkStateHumanRights Law, theAdministrativeCode oftheCity ofNewYork, NewYorkLaborLaw, and any rightsorclaimsforattorneys’fees or costs under these acts orany other federal,state or locallaw.  This Paragraph 10 shall not release any claims related to or affect Ms. Bott’s (i) vested rights under Paramount’s Section 401(k) plan, the Equity Documents or any other applicable plan or program in which Ms. Bott has accrued vested benefits or entitlements, (ii) rights under this Agreement, (iii) rights as a stockholder of the Company, (iv) rights to be covered under applicable indemnification agreements and policies and under applicable directors and officers liability insurance for acts or omissions while serving

5

as an executive or officer of Paramount and any of its affiliates and (v) rights with respect to any Claims that may not be released under applicable law.

11.Waiver.  Ms. Bott acknowledgesthat she understandsthatby signingthis Agreement, she will havewaivedanyright she mayhave to recover in alawsuit against any of the Released Parties based on anyactions or omissionsmade by any such Released Party, including, but not limited to, Claims which in any way arise fromorrelate toMs. Bott’s employment relationshipwith Paramount up to thedate ofthe signing ofthis Agreement and the terminationofher employmentwithParamount.Ms. Bottfurtheracknowledges that she understandsthat by signing this Agreement, she is waiving theright to recover money or other reliefinany action she might institute.  If Ms. Bott files any charge or complaint with any federal, state or local governmental agency or commission (“Government Agency”) and if the Government Agency pursues any claim on Ms. Bott’s behalf, or if any other third party pursues any claim on Ms. Bott’s behalf, Ms. Bott waives any right to monetary or other individualized relief (either individually, or as part of any collective or class action);provided that nothing in this Agreement limits any right Ms. Bott may have to receive a whistleblower award or bounty for information provided to the Securities and Exchange Commission.

12.No Assignment of Claims. Ms. Bott hereto warrants, represents andagreesthat she has not assigned or transferred, orpurported to assignor transfer, to any personor entity, any Claims.  

13.Time to Consider Agreement; Effective Date.  Ms. Bott understands and acknowledges that she has been given the opportunity to consider this Agreement for twenty-one (21) days from the tender of this Agreement to her before signing it (the “Consideration Period”).  To accept this Agreement, Ms. Bott must return a signed original or a signed PDF copy of this Agreement so that it is received by Gage Johnson, Senior Vice President, General Counsel and Secretary, at or before the expiration of the Consideration Period.  If Ms. Bott signs this Agreement before the end of the Consideration Period, Ms. Bott acknowledges by signing this Agreement that such decision was entirely voluntary and that she had the opportunity to consider this Agreement for the entire Consideration Period.  For the period of seven (7) days from the date when Ms. Bott signs this Agreement (the “Revocation Period”), Ms. Bott has the right to revoke this Agreement by written notice to Mr. Johnson.  For such a revocation to be effective, it must be delivered so that it is received by Mr. Johnson at or before the expiration of the Revocation Period.  This Agreement shall not become effective or enforceable during the Revocation Period.  This Agreement shall become effective on the first business day following the expiration of the Revocation Period (the “Effective Date”).  

14.Nonadmission of Liability.  The Partiesagreethatthe consideration exchanged herein,aswell asthe negotiationand execution ofthis Agreement, do notconstitute and shall not be deemed an admission of liability,wrongdoingorinappropriateor unlawful conduct by Paramount or by Ms. Bott.Ms. Bott understands that nothing in thisAgreement shall constitute or be construedasanadmissionofanyliabilitybyParamount.  

15.Notice to Consult Attorney.  Paramount has advisedMs. Bott, in writing,to consult withan attorney priorto executing this Agreementand hereby reiteratesthat Ms. Bott is advised to consult withan attorneypriorto executing this Agreement.  

6

16.Acknowledgment Regarding Execution of Agreement.  Ms. Bott acknowledges that she has carefully read and fully understands all the provisions of this Agreement.  Ms. Bott further acknowledges that Paramount has urged her to seek legal counsel in regard to the terms and conditions of this Agreement.  Ms. Bott acknowledges and warrants that she has reviewed this Agreement and has had the opportunity to consult with an attorney, and fully and completely understands and accepts the terms, conditions, nature and legal effect of this Agreement.  Ms. Bott warrants that she enters into this Agreement knowingly, freely and voluntarily and that her agreement hereto has not been the result of coercion or duress.  

17.Governing Law; Jurisdiction.  This Agreement ismade and enteredinto intheState of New York and shall in all respects be interpreted,enforced andgoverned under thelaws oftheState of New York,without regard to conflictsoflaws principles orchoice oflawprovisions that would causethe application ofthe lawofanyotherjurisdiction.Itistheintention oftheParties thatthelaws oftheState of New Yorkshall govern thevalidity ofthis Agreement, theconstructionofits terms,the interpretation oftherightsand duties of the Parties, and itsenforcement.The Parties hereby consent to the jurisdiction of the state and federal courts situated in New York, New York.  Accordingly, with respect to any such court action, Ms. Bott (a) submits to the personal jurisdiction of such courts; (b) consents to service of process; and (c) waives any other requirement (whether imposed by statute, rule of court, or otherwise) with respect to personal jurisdiction or service of process.  

18.Entire Agreement.  This Agreement constitutes a single, integratedwritten contractexpressing the entireagreement between Ms. Bott and any and all of the other Parties and cannot be modifiedin any way except by written modification executed by bothParties.This Agreement supersedes any previous agreements or understandings between Ms. Bott and any and all of the other Parties, except for the Equity Documents and any other obligations specifically preserved in this Agreement.  

19.Severability.  Ifanyprovisionof this Agreement isdeclared invalid or otherwise unenforceable, the otherprovisions herein shall remain in full force and effect and shall be construedin a fashionto effectuate the purpose and intentofthis Agreement.  

20.Binding Nature of Agreement.  The Partiesagreethatthis Agreement shall be binding upon and inureto the benefit ofthe Partieshereto,and their respective successors, heirs, personal representatives and assigns.  

21.Authority to Enter Agreement.  Each individual signing thisAgreement, whethersigning individually or on behalfofany person or entity, represents and warrants that she or she has full authority to so execute the Agreement on behalfofthe party on whose behalf she or she so signs. Each Partyseparately acknowledgesandrepresents that this representation and warranty is an essential and material provisionofthis Agreement and shall surviveexecution of this Agreement.  

22.Retention of Certain Documents.  Notwithstanding anything in this Agreement to the contrary, Ms. Bott shall be permitted to retain any documents related to her compensation or reasonably necessary for tax preparation purposes.

7

23.Counterparts.  The Partiesagreethatthis Agreement may be executed incounterparts, each ofwhichshallbe deemed an original, butallofwhichtogethershallconstitute one and the same instrument.  

24.Interpretation.  The Parties agree that for the purposes of construing or interpreting this Agreement, this Agreement shall be deemed to have been drafted equally by both Parties hereto.  The Parties further agree that headings in each Paragraph of this Agreement are for convenience and reference only and will not affect the construction or interpretation of this Agreement.  

[signature page follows]

8

IN WITNESS WHEREOF, the Parties hereuntoexecutethis Agreement as of the Effective Date.  

JOLANTA BOTT     /s/ Jolanta Bott Jolanta Bott           PARAMOUNT GROUP, INC.     By: /s/ Wilbur Paes                                           Name: Wilbur Paes Title: Executive Vice President, CFO and Treasurer     Paramount GROUP MANAGEMENT LP, a Delaware limited partnership   By:  Paramount Group Management GP LLC, its General Partner   By:  Paramount Group Operating Partnership LP, its Sole Member   By:  Paramount Group, Inc., its General Partner   By: /s/ Wilbur Paes                                           Name: Wilbur Paes Title: Executive Vice President, CFO and Treasurer   PARAMOUNT GROUP OPERATING PARTNERSHIP LP, a Delaware limited partnership   By:Paramount Group, Inc., its General Partner     By: /s/ Wilbur Paes                                           name: Wilbur Paes       title: Executive Vice President, CFO       and Treasurer  

9

EX-31.1

EXHIBIT 31.1

CERTIFICATION

I, Albert Behler, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Paramount Group, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

August 8, 2018

/s/ Albert Behler

Albert Behler

Chairman, Chief Executive Officer and President

EX-31.2

EXHIBIT 31.2

CERTIFICATION

I, Wilbur Paes,certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Paramount Group, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

August 8, 2018

/s/ Wilbur Paes

Wilbur Paes

Executive Vice President, Chief Financial Officer and Treasurer

EX-32.1

EXHIBIT 32.1

CERTIFICATION

Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of Paramount Group, Inc. (the “Company”), hereby certifies, to such officer’s knowledge, that:

• the Quarterly Report on Form 10-Q for the quarter ended June 30, 2018(the “Report”) of the Company fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and

• the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

August 8, 2018		/s/ Albert Behler
	Name:	Albert Behler
	Title:	Chairman, Chief Executive Officer and President

EX-32.2

EXHIBIT 32.2

CERTIFICATION

Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of Paramount Group, Inc. (the “Company”), hereby certifies, to such officer’s knowledge, that:

• the Quarterly Report on Form 10-Q for the quarter ended June 30, 2018(the “Report”) of the Company fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and

• the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

August 8, 2018		/s/ Wilbur Paes
	Name:	Wilbur Paes
	Title:	Executive Vice President, Chief Financial Officer and Treasurer

XML

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2018	Jul. 20, 2018
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2018
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	Q2
Trading Symbol	PGRE
Entity Registrant Name	PARAMOUNT GROUP, INC.
Entity Central Index Key	0001605607
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		240,529,397

XML

CONSOLIDATED BALANCE SHEETS (UNAUDITED) - USD ($) $ in Thousands		Jun. 30, 2018	Dec. 31, 2017
Real estate, at cost
Land		$ 2,186,006	$ 2,209,506
Buildings and improvements		6,132,725	6,119,969
Rental property, at cost		8,318,731	8,329,475
Accumulated depreciation and amortization		(566,164)	(487,945)
Real estate, net		7,752,567	7,841,530
Cash and cash equivalents		233,530	219,381
Restricted cash		32,755	31,044
Investments in unconsolidated joint ventures		67,823	44,762
Investments in unconsolidated real estate funds		9,292	7,253
Preferred equity investments, net of allowance of $0 and $19,588		35,925	35,817
Marketable securities		25,913	29,039
Accounts and other receivables, net of allowance of $451 and $277		15,549	17,082
Deferred rent receivable		252,140	220,826
Deferred charges, net of accumulated amortization of $25,232 and $19,412		116,147	98,645
Intangible assets, net of accumulated amortization of $226,131 and $200,857		316,451	352,206
Other assets		57,821	20,076
Total assets	[1]	8,915,913	8,917,661
LIABILITIES AND EQUITY
Notes and mortgages payable, net of deferred financing costs of $37,341 and $41,800		3,562,459	3,541,300
Revolving credit facility		0	0
Due to affiliates		27,299	27,299
Accounts payable and accrued expenses		123,720	117,630
Dividends and distributions payable		26,621	25,211
Intangible liabilities, net of accumulated amortization of $85,673 and $75,073		115,559	130,028
Other liabilities		54,507	54,109
Total liabilities	[1]	3,910,165	3,895,577
Commitments and contingencies
Paramount Group, Inc. equity:
Common stock $0.01 par value per share; authorized 900,000,000 shares; issued and outstanding 240,529,397 and 240,427,022 shares in 2018 and 2017, respectively		2,403	2,403
Additional paid-in-capital		4,297,823	4,297,948
Earnings less than distributions		(215,353)	(133,693)
Accumulated other comprehensive income		28,647	10,083
Paramount Group, Inc. equity		4,113,520	4,176,741
Noncontrolling interests in:
Consolidated joint ventures		403,686	404,997
Consolidated real estate fund		57,816	14,549
Operating Partnership (25,300,324 and 24,620,279 units outstanding)		430,726	425,797
Total equity		5,005,748	5,022,084
Total liabilities and equity		$ 8,915,913	$ 8,917,661

[1] Represents the consolidated assets and liabilities of Paramount Group Operating Partnership LP, a Delaware limited partnership (the “Operating Partnership”). The Operating Partnership is a consolidated variable interest entity (“VIE”), of which we are the sole general partner and own approximately 90.5% as of June 30, 2018. The assets and liabilities of the Operating Partnership, as of June 30, 2018, include $2,001,880 and $1,265,423 of assets and liabilities, respectively, of certain VIEs that are consolidated by the Operating Partnership. See Note 12, Variable Interest Entities.

XML

CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Parentheticals) - USD ($) $ in Thousands		6 Months Ended
		Jun. 30, 2018	Dec. 31, 2017
Preferred equity investments, allowance		$ 0	$ 19,588
Accounts and other receivables, allowance		451	277
Deferred charges, accumulated amortization		25,232	19,412
Intangible assets, accumulated amortization		226,131	200,857
Notes and mortgages payable, deferred financing costs		37,341	41,800
Intangible liabilities, accumulated amortization		$ 85,673	$ 75,073
Common stock, par value		$ 0.01	$ 0.01
Common stock, shares authorized		900,000,000	900,000,000
Common stock, shares issued		240,529,397	240,427,022
Common stock, shares outstanding		240,529,397	240,427,022
Operating partnership, units outstanding		25,300,324	24,620,279
Percentage of ownership in operating partnership		90.50%
Total assets	[1]	$ 8,915,913	$ 8,917,661
Total liabilities	[1]	$ 3,910,165	3,895,577
Variable Interest Entities [Member]
Percentage of ownership in operating partnership		90.50%
Total assets		$ 2,001,880	1,956,020
Total liabilities		$ 1,265,423	$ 1,264,338

[1] Represents the consolidated assets and liabilities of Paramount Group Operating Partnership LP, a Delaware limited partnership (the “Operating Partnership”). The Operating Partnership is a consolidated variable interest entity (“VIE”), of which we are the sole general partner and own approximately 90.5% as of June 30, 2018. The assets and liabilities of the Operating Partnership, as of June 30, 2018, include $2,001,880 and $1,265,423 of assets and liabilities, respectively, of certain VIEs that are consolidated by the Operating Partnership. See Note 12, Variable Interest Entities.

XML

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
REVENUES:
Rental income	$ 169,529,000	$ 158,187,000	$ 332,934,000	$ 313,577,000
Tenant reimbursement income	13,164,000	11,856,000	27,410,000	24,708,000
Fee and other income	8,726,000	7,661,000	15,346,000	20,655,000
Total revenues	191,419,000	177,704,000	375,690,000	358,940,000
EXPENSES:
Operating	67,646,000	63,461,000	136,624,000	129,432,000
Depreciation and amortization	64,775,000	68,636,000	129,931,000	131,628,000
General and administrative	17,195,000	16,573,000	29,826,000	30,154,000
Transaction related costs	293,000	502,000	413,000	777,000
Real estate impairment loss	46,000,000		46,000,000
Total expenses	195,909,000	149,172,000	342,794,000	291,991,000
Operating (loss) income	(4,490,000)	28,532,000	32,896,000	66,949,000
Income from unconsolidated joint ventures	2,521,000	16,535,000	2,459,000	18,472,000
Loss from unconsolidated real estate funds	(14,000)	(2,411,000)	(80,000)	(2,123,000)
Interest and other income, net	2,094,000	2,486,000	4,110,000	5,686,000
Interest and debt expense	(36,809,000)	(34,817,000)	(72,891,000)	(71,835,000)
Loss on early extinguishment of debt		(5,162,000)		(7,877,000)
Gain on sale of real estate		133,989,000		133,989,000
Unrealized gain on interest rate swaps				1,802,000
Net (loss) income before income taxes	(36,698,000)	139,152,000	(33,506,000)	145,063,000
Income tax benefit (expense)	120,000	(970,000)	(357,000)	(5,252,000)
Net (loss) income	(36,578,000)	138,182,000	(33,863,000)	139,811,000
Less net (income) loss attributable to noncontrolling interests in:
Consolidated joint ventures	(1,752,000)	(1,897,000)	(2,807,000)	(3,188,000)
Consolidated real estate fund	(152,000)	(20,169,000)	(582,000)	(20,081,000)
Operating Partnership	3,666,000	(13,100,000)	3,550,000	(13,154,000)
Net (loss) income attributable to common stockholders	$ (34,816,000)	$ 103,016,000	$ (33,702,000)	$ 103,388,000
(LOSS) INCOME PER COMMON SHARE - BASIC:
(Loss) income per common share	$ (0.14)	$ 0.44	$ (0.14)	$ 0.44
Weighted average shares outstanding	240,336,485	234,990,468	240,324,183	232,968,602
(LOSS) INCOME PER COMMON SHARE - DILUTED:
(Loss) income per common share	$ (0.14)	$ 0.44	$ (0.14)	$ 0.44
Weighted average shares outstanding	240,336,485	235,010,830	240,324,183	232,995,822
DIVIDENDS PER COMMON SHARE	$ 0.10	$ 0.095	$ 0.20	$ 0.190

XML

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) - USD ($) $ in Thousands		3 Months Ended		6 Months Ended
		Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Statement Of Income And Comprehensive Income [Abstract]
Net (loss) income		$ (36,578)	$ 138,182	$ (33,863)	$ 139,811
Other comprehensive income (loss):
Change in value of interest rate swaps		5,795	(4,041)	20,346	(9)
Pro rata share of other comprehensive income (loss) of unconsolidated joint ventures	[1]	103	35	157	(187)
Comprehensive (loss) income		(30,680)	134,176	(13,360)	139,615
Less comprehensive (income) loss attributable to noncontrolling interests in:
Consolidated joint ventures		(1,752)	(1,897)	(2,807)	(3,188)
Consolidated real estate fund		(152)	(20,169)	(582)	(20,081)
Operating Partnership		3,103	(12,647)	1,611	(13,187)
Comprehensive (loss) income attributable to common stockholders		$ (29,481)	$ 99,463	$ (15,138)	$ 103,159

[1] Represents foreign currency translation adjustments. No amounts were reclassified from accumulated other comprehensive income during any of the periods set forth above.

XML

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (UNAUDITED) - USD ($) $ in Thousands	Total	Common Stock [Member]	Additional Paid in Capital [Member]	Earnings Less than Distributions [Member]	Accumulated Other Comprehensive Income (Loss) [Member]	Noncontrolling Interest Consolidated Joint Ventures [Member]	Noncontrolling Interest Consolidated Real Estate Fund [Member]	Noncontrolling Interest Operating Partnership [Member]
Beginning balance at Dec. 31, 2016	$ 4,885,947	$ 2,300	$ 4,116,987	$ (129,654)	$ 372	$ 253,788	$ 64,793	$ 577,361
Common stock, shares outstanding at Dec. 31, 2016		230,015,000
Net (loss) income	139,811			103,388		3,188	20,081	13,154
Common shares issued upon redemption of common units		$ 82	135,877
Common shares issued upon redemption of common units		8,207,000
Redemption of minority interest in operating partnerships								(135,959)
Common shares issued under Omnibus share plan, net of shares withheld for taxes	(154)			(154)
Common shares issued under Omnibus share plan, net of shares withheld for taxes		62,000
Dividends and distributions	(50,418)			(44,617)				(5,801)
Contributions from noncontrolling interests	9,278					4,973	4,305
Distributions to noncontrolling interests	(107,162)					(32,816)	(74,346)
Change in value of interest rate swaps	(9)				(67)			58
Pro rata share of other comprehensive income (loss) of unconsolidated joint ventures	(187)				(162)			(25)
Amortization of equity awards	8,805		1,522					7,283
Ending balance at Jun. 30, 2017	4,885,911	$ 2,382	4,254,386	(71,037)	143	229,133	14,833	456,071
Common stock, shares outstanding at Jun. 30, 2017		238,284,000
Beginning balance (Restatement Adjustment)	5,029,170	$ 2,403	4,297,948	(133,164)	10,083	404,997	21,106	425,797
Beginning balance at Dec. 31, 2017	5,022,084	$ 2,403	4,297,948	(133,693)	10,083	404,997	14,549	425,797
Beginning balance (Basis adjustment upon adoption of ASU 2017-05) at Dec. 31, 2017	$ 7,086			529			6,557
Common stock, shares outstanding (Restatement Adjustment)		240,427,000
Common stock, shares outstanding at Dec. 31, 2017	240,427,022	240,427,000
Net (loss) income	$ (33,863)			(33,702)		2,807	582	(3,550)
Common shares issued upon redemption of common units			469
Common shares issued upon redemption of common units		27,000
Redemption of minority interest in operating partnerships								(469)
Common shares issued under Omnibus share plan, net of shares withheld for taxes	(213)			(213)
Common shares issued under Omnibus share plan, net of shares withheld for taxes		75,000
Dividends and distributions	(53,247)			(48,103)				(5,144)
Contributions from noncontrolling interests	36,128						36,128
Distributions to noncontrolling interests	(4,118)					(4,118)
Change in value of interest rate swaps	20,346				18,422			1,924
Pro rata share of other comprehensive income (loss) of unconsolidated joint ventures	157				142			15
Amortization of equity awards	11,558		1,470					10,088
Other	(170)		(2,064)	(171)				2,065
Ending balance at Jun. 30, 2018	$ 5,005,748	$ 2,403	$ 4,297,823	$ (215,353)	$ 28,647	$ 403,686	$ 57,816	$ 430,726
Common stock, shares outstanding at Jun. 30, 2018	240,529,397	240,529,000

XML

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (UNAUDITED) (Parentheticals) - $ / shares	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Statement Of Stockholders Equity [Abstract]
Dividends and distributions, Per share and unit	$ 0.10	$ 0.095	$ 0.20	$ 0.190

XML

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($)	6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income	$ (33,863,000)	$ 139,811,000
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization	129,931,000	131,628,000
Real estate impairment loss	46,000,000
Amortization of deferred financing costs	5,515,000	5,548,000
Gain on sale of real estate		(133,989,000)
Straight-lining of rental income	(29,983,000)	(32,121,000)
Amortization of above and below-market leases, net	(8,724,000)	(10,989,000)
Loss on early extinguishment of debt		7,877,000
Unrealized gain on interest rate swaps		(1,802,000)
Realized and unrealized losses (gains) on marketable securities	1,000	(2,486,000)
Income from unconsolidated joint ventures	(2,459,000)	(18,472,000)
Distributions of earnings from unconsolidated joint ventures	1,170,000	2,758,000
Loss from unconsolidated real estate funds	80,000	2,123,000
Distributions of earnings from unconsolidated real estate funds	135,000	146,000
Amortization of stock-based compensation expense	10,915,000	7,867,000
Other non-cash adjustments	40,000	(169,000)
Changes in operating assets and liabilities:
Accounts and other receivables	1,533,000	3,102,000
Deferred charges	(13,734,000)	(14,297,000)
Other assets	(1,910,000)	7,294,000
Accounts payable and accrued expenses	1,297,000	(15,257,000)
Other liabilities	567,000	420,000
Net cash provided by operating activities	106,511,000	78,992,000
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to real estate	(51,610,000)	(33,079,000)
Investments in unconsolidated joint ventures	(17,137,000)	(28,791,000)
Escrow deposits and loans receivable for Residential Development Fund	(15,680,000)
Sales of marketable securities	15,253,000	9,543,000
Purchases of marketable securities	(12,140,000)	(6,230,000)
Distributions of capital from unconsolidated joint ventures	2,608,000	20,000,000
Contributions of capital to unconsolidated real estate funds	(2,254,000)	(584,000)
Proceeds from sale of real estate		540,333,000
Deposit on real estate		(12,914,000)
Distributions of capital from unconsolidated real estate funds		3,845,000
Net cash (used in) provided by investing activities	(80,960,000)	492,123,000
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends paid to common stockholders	(46,892,000)	(43,832,000)
Contributions from noncontrolling interests	36,128,000	9,278,000
Proceeds from notes and mortgages payable	16,700,000	991,556,000
Debt issuance costs	(6,351,000)	(7,344,000)
Distributions paid to common unitholders	(4,945,000)	(6,526,000)
Distributions to noncontrolling interests	(4,118,000)	(107,162,000)
Repurchase of shares related to stock compensation agreements and related tax withholdings	(213,000)	(154,000)
Repayments of notes and mortgages payable		(1,044,821,000)
Repayment of borrowings under revolving credit facility		(290,000,000)
Borrowings under revolving credit facility		60,000,000
Settlement of interest rate swap liabilities		(19,425,000)
Loss on early extinguishment of debt		(7,877,000)
Net cash used in financing activities	(9,691,000)	(466,307,000)
Net increase in cash and cash equivalents and restricted cash	15,860,000	104,808,000
Cash and cash equivalents and restricted cash at beginning of period	250,425,000	192,339,000
Cash and cash equivalents and restricted cash at end of period	266,285,000	297,147,000
RECONCILIATION OF CASH AND CASH EQUIVALENTS AND RESTRICTED CASH
Cash and cash equivalents at beginning of period	219,381,000	162,965,000
Restricted cash at beginning of period	31,044,000	29,374,000
Cash and cash equivalents and restricted cash at beginning of period	250,425,000	192,339,000
Cash and cash equivalents at end of period	233,530,000	254,763,000
Restricted cash at end of period	32,755,000	42,384,000
Cash and cash equivalents and restricted cash at end of period	266,285,000	297,147,000
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash payments for interest	67,367,000	73,817,000
Cash payments for income taxes, net of refunds	1,699,000	3,191,000
NON-CASH TRANSACTIONS:
Dividends and distributions declared but not yet paid	26,621,000	25,211,000
Additions to real estate included in accounts payable and accrued expenses	10,400,000	8,988,000
Basis adjustment to investment in unconsolidated joint ventures upon adoption of ASU 2017-05	7,086,000
Write-off of fully amortized and/or depreciated assets	2,947,000	4,930,000
Common shares issued upon redemption of common units	469,000	135,959,000
Increase (decrease) in value of interest rate swaps	$ 20,346,000	(9,000)
Increase (decrease) due to deconsolidation of One Steuart Lane:
Investments in unconsolidated joint ventures		14,915,000
Real estate, net		$ (14,915,000)

XML

Organization and Business

6 Months Ended

Jun. 30, 2018

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Organization And Business

1.     Organization and Business

As used in these consolidated financial statements, unless otherwise indicated, all references to “we,” “us,” “our,” the “Company,”  and “Paramount” refer to Paramount Group, Inc., a Maryland corporation, and its consolidated subsidiaries, including Paramount Group Operating Partnership LP (the “Operating Partnership”), a Delaware limited partnership. We are a fully-integrated real estate investment trust (“REIT”) focused on owning, operating, managing, acquiring and redeveloping high-quality, Class A office properties in select central business district submarkets of New York City, Washington, D.C. and San Francisco. As of June 30, 2018, our portfolio consisted of 14 Class A office properties aggregating approximately 12.5 million square feet. We conduct our business through, and substantially all of our interests in properties and investments are held by, the Operating Partnership. We are the sole general partner of, and owned approximately 90.5% of, the Operating Partnership as of June 30, 2018.

XML

Basis of Presentation and Significant Accounting Policies

6 Months Ended

Jun. 30, 2018

Basis Of Presentation And Significant Accounting Policies [Abstract]

Basis of Presentation and Significant Accounting Policies

2. Basis of Presentation and Significant Accounting Policies

Basis of Presentation

The accompanying consolidated financial statements are unaudited and have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and in conjunction with the instructions to Form 10-Q of the Securities and Exchange Commission (“SEC”). Accordingly, certain information and footnote disclosures required by GAAP for complete financial statements have been condensed or omitted. These consolidated financial statements include the accounts of Paramount and its consolidated subsidiaries, including the Operating Partnership. In the opinion of management, all adjustments (which include only normal recurring adjustments) and eliminations (which include intercompany balances and transactions) necessary to present fairly the financial position, results of operations and changes in cash flows have been made. The consolidated balance sheet as of December 31, 2017 was derived from audited financial statements as of that date, but does not include all information and disclosures required by GAAP. These consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2017, as filed with the SEC.

Significant Accounting Policies

There are no material changes to our significant accounting policies as disclosed in our Annual Report on Form 10-K for the year ended December 31, 2017.

Use of Estimates

We have made estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ materially from those estimates. The results of operations for the three and six months ended June 30, 2018, are not necessarily indicative of the operating results for the full year.

Reclassification

Certain prior year balances have been reclassified to conform to current year presentation.

Recently Issued Accounting Pronouncements Not Materially Impacting Our Financial Statements

In May 2014, the Financial Accounting Standard’s Board (“FASB”) issued ASU 2014-09, an update to ASC Topic 606, Revenue from Contracts with Customers. ASU 2014-09, as amended, supersedes nearly all existing revenue recognition guidance under U.S. GAAP. The core principle of this guidance is that an entity should recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. This guidance also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments made in applying the guidance. This guidance is effective for fiscal years beginning after December 15, 2017, and for interim periods within those fiscal years, and can be applied using a full retrospective or modified retrospective approach. We adopted the provisions of ASU 2014-09 on January 1, 2018, using the modified retrospective approach. The adoption of ASU 2014-09 did not impact our consolidated financial results but resulted in additional disclosures on our consolidated financial statements. See Note 14, Revenues.

In June 2016, the FASB issued ASU 2016-13, an update to ASC Topic 326, Financial Instruments – Credit Losses. ASU 2016- 13 requires measurement and recognition of expected credit losses on financial instruments measured at amortized cost at the end of each reporting period rather than recognizing the credit losses when it is probable that the loss has been incurred in accordance with current guidance. ASU 2016-13 is effective for interim and annual reporting periods in fiscal years that begin after December 15, 2019, with early adoption permitted for fiscal years beginning after December 15, 2018. We are evaluating the impact of ASU 2016-13 but do not believe the adoption will have a material impact on our consolidated financial statements.

In May 2017, the FASB issued ASU 2017-09, an update to ASC Topic 718, Compensation – Stock Compensation. ASU 2017- 09 clarifies the types of changes to the terms and conditions of a share-based payment award that requires modification accounting. ASU 2017-09 does not change the accounting for modification of share-based awards, but clarifies that modification accounting should only be applied if there is a change to the value, vesting condition or award classification and would not be required if the changes are considered non-substantive. ASU 2017-09 is effective for interim and annual reporting periods in fiscal years that begin after December 31, 2017, with early adoption permitted. We adopted the provisions of ASU 2017-09 on January 1, 2018 and the adoption of ASU 2017-09 did not have an impact on our consolidated financial statements.

In August 2017, the FASB issued ASU 2017-12, an update to ASC Topic 815, Derivatives and Hedging. ASU 2017-12 improves transparency and understandability of information by better aligning the financial reporting for hedging relationships with the risk management activities. ASU 2017-12 also simplifies the application of hedge accounting through changes in both the designation and measurement of qualifying hedging relationships. ASU 2017-12 is effective for interim and annual reporting periods in fiscal years that begin after December 15, 2018, with early adoption permitted. We are evaluating the impact of ASU 2017-12 but do not believe the adoption will have an impact on our consolidated financial statements.

Recently Issued Accounting Pronouncements Impacting or Potentially Impacting Our Financial Statements

In February 2016, the FASB issued ASU 2016-02, an update to ASC Topic 842, Leases. ASU 2016-02 amends the existing guidance for lease accounting, including requiring lessees to recognize most leases on their balance sheets. ASU 2016-02 requires lessees to apply a dual approach, classifying leases as either financing or operating and recording a right-of-use asset and a lease liability for all leases with a term greater than 12 months. Accounting for lessors under ASU 2016-02 is substantially similar to existing guidance, however, lessors are required to separate lease components (rental income) and non-lease components (revenue related to various services we provide). In July 2018, the FASB issued ASU 2018-11 that provides lessors with a practical expedient to not separate lease and non-lease components, if certain criteria are met, and provides an additional transition method to adopt the standard. ASU 2016-02 is effective for interim and annual reporting periods in fiscal years that begin after December 15, 2018, with early adoption permitted. We plan to adopt the provisions of ASU 2016-02 on January 1, 2019 and are in the process of evaluating whether we will elect to apply the practical expedient.

In November 2016, the FASB issued ASU 2016-18, an update to ASC Topic 230, Statement of Cash Flows, to provide guidance on classification and presentation of changes in restricted cash on the statement of cash flows. ASU 2016-18 requires that an entity’s reconciliation of the beginning-of-period and end-of-period total amounts shown on the statement of cash flows to include restricted cash with cash and cash equivalents. ASU 2016-18 is effective for interim and annual reporting periods in fiscal years that begin after December 15, 2017, with early adoption permitted. We elected to early adopt ASU 2016-18 retrospectively, on December 31, 2017. This adoption resulted in (i) additional disclosures to reconcile cash and cash equivalents and restricted cash on our consolidated balance sheets to our consolidated statements of cash flows and (ii) a decrease to cash provided by operating activities of $3,000,000 and an increase in cash provided by investing activities of $16,010,000 for the six months ended June 30, 2017.

In February 2017, the FASB issued ASU 2017-05, an update to ASC Topic 610, Other Income. ASU 2017-05 clarifies the scope and accounting for derecognition of a nonfinancial asset and eliminates the guidance in ASC 360-20 specific to real estate sales and partial sales. ASU 2017-05 requires an entity that transfers control of a nonfinancial asset to measure any noncontrolling interest it retains (or receives) at fair value. ASU 2017-05 is effective for interim and annual reporting periods in fiscal years that begin after December 15, 2017, with early adoption permitted for entities concurrently early adopting ASU 2014-09. We adopted the provisions of ASU 2017-05 on January 1, 2018, using the modified retrospective approach. Upon adoption, we recorded a $7,086,000 adjustment to “investments in unconsolidated joint ventures” relating to the measurement of our consolidated Residential Development Fund’s (“RDF”) retained interest in One Steuart Lane (formerly 75 Howard Street) at fair value with an offset to equity. See Note 4, Investments in Unconsolidated Joint Ventures.

XML

Dispositions

6 Months Ended

Jun. 30, 2018

Assets Of Disposal Group Including Discontinued Operation [Abstract]

Dispositions

3. Dispositions

Waterview

On May 3, 2017, we completed the sale of Waterview, a 636,768 square foot, Class A office building in Rosslyn, Virginia for $460,000,000 and recognized a net gain of $110,583,000, which is included as a component of “gain on sale of real estate” on our consolidated statements of income for the three and six months ended June 30, 2017.

XML

Investments in Unconsolidated Joint Ventures

6 Months Ended

Jun. 30, 2018

Equity Method Investments And Joint Ventures [Abstract]

Investments in Unconsolidated Joint Ventures

4. Investments in Unconsolidated Joint Ventures

Prior to March 14, 2018, RDF, in which we have a 7.4% interest, owned 20.0% of One Steuart Lane (the “Property”). On March 14, 2018, RDF transferred its 20.0% interest to a new joint venture in which it owns a 75.0% interest. Separately on March 14, 2018, RDF acquired an additional 10.0% interest in the Property from its existing partner. Subsequent to these transactions RDF owns a 25.0% economic interest in the Property, comprised of the newly acquired 10.0% interest and an indirect 15.0% interest it owns through the joint venture. As a result of these transactions, RDF was required to consolidate its 75.0% interest in the joint venture that owns 20.0% of the Property, and reflect the 25.0% interest in this venture (5.0% economic interest in the Property) it does not own as noncontrolling interests. We continue to consolidate our 7.4% interest in RDF and reflect the 92.6% interest we do not own as noncontrolling interests. As of June 30, 2018, our economic interest in the Property was 1.85%.

The following tables summarize our investments in unconsolidated joint ventures as of the dates thereof and the income or loss from these investments for the periods set forth below.

(Amounts in thousands)	Paramount	As of
Our Share of Investments:	Ownership	June 30, 2018			December 31, 2017
712 Fifth Avenue (1)	50.0%	$	-		$	-
60 Wall Street (2)	5.0%		23,760			25,083
One Steuart Lane (2)	25.0% (3)		40,236	(4)		16,031
Oder-Center, Germany (2)	9.5%		3,827			3,648
Investments in unconsolidated joint ventures		$	67,823		$	44,762

		For the Three Months Ended						For the Six Months Ended
(Amounts in thousands)	Paramount	June 30,						June 30,
Our Share of Net Income (Loss):	Ownership	2018			2017			2018			2017
712 Fifth Avenue (1)	50.0%	$	2,608		$	16,504		$	2,608		$	18,434
60 Wall Street (2)	5.0%		(102	)		(31	)		(175	)		(36	)
One Steuart Lane (2)	25.0% (3)		(16	)		33			(18	)		33
Oder-Center, Germany (2)	9.5%		31			29			44			41
Income from unconsolidated joint ventures		$	2,521		$	16,535		$	2,459		$	18,472

⁽¹⁾ As of June 30, 2018, our basis in the partnership was negative $20,654 resulting from distributions made to us in excess of our share of earnings recognized. Accordingly, we no longer recognize our proportionate share of earnings from the venture because we have no further obligation to fund additional capital to the venture. Instead, we only recognize earnings to the extent we receive cash distributions from the venture.  

⁽²⁾ As of June 30, 2018, the carrying amount of our investments in 60 Wall Street, One Steuart Lane and Oder-Center is greater than our share of equity in these investments by $2,868, $692 and $5,362, respectively.

⁽³⁾ Represents RDF’s economic interest in the Property.

⁽⁴⁾ Includes a $7,086 basis adjustment which was recorded upon the adoption of ASU 2017-05 on January 1, 2018.

712 Fifth Avenue

The following tables provide summarized financial information of 712 Fifth Avenue as of the dates and for the periods set forth below.

(Amounts in thousands)	As of
Balance Sheets:	June 30, 2018			December 31, 2017
Real estate, net	$	199,731		$	202,040
Other assets		59,879			58,034
Total assets	$	259,610		$	260,074
Notes and mortgages payable, net	$	296,337		$	296,132
Other liabilities		4,582			4,615
Total liabilities		300,919			300,747
Partners’ deficit		(41,309	)		(40,673	)
Total liabilities and partners’ deficit	$	259,610		$	260,074

(Amounts in thousands)	For the Three Months Ended June 30,						For the Six Months Ended June 30,
Income Statements:	2018			2017			2018			2017
Rental income	$	12,329		$	12,713		$	24,658		$	25,658
Tenant reimbursement income		1,245			1,209			2,590			2,517
Fee and other income		159			468			617			594
Total revenues		13,733			14,390			27,865			28,769
Operating expenses		6,126			6,102			12,310			12,068
Depreciation and amortization		2,898			3,075			5,924			5,995
Total expenses		9,024			9,177			18,234			18,063
Operating income		4,709			5,213			9,631			10,706
Interest and other income, net		157			48			270			72
Interest and debt expense		(2,674	)		(3,126	)		(5,319	)		(5,951	)
Unrealized gain on interest rate swaps		-			728			-			1,896
Net income	$	2,192		$	2,863		$	4,582		$	6,723

XML

Investments in Unconsolidated Real Estate Funds

6 Months Ended

Jun. 30, 2018

Real Estate Fund [Abstract]

Investments in Unconsolidated Real Estate Funds

5. Investments in Unconsolidated Real Estate Funds

We are the general partner and investment manager of Paramount Group Real Estate Fund VII, LP (“Fund VII”) and its parallel fund, Paramount Group Real Estate Fund VII-H, LP (“Fund VII-H”). As of June 30, 2018, Fund VII and Fund VII-H own 100% of Zero Bond Street. We also manage Paramount Group Real Estate Fund VIII, LP (“Fund VIII”), our Alternative Investment Fund, which invests in mortgage and mezzanine loans and preferred equity investments.

The following tables summarize our investments in these unconsolidated real estate funds as of the dates thereof and the income or loss recognized for the periods set forth below.

	As of
(Amounts in thousands)	June 30, 2018		December 31, 2017
Our Share of Investments:
Property funds	$	2,352	$	2,429
Alternative investment fund		6,940		4,824
Investments in unconsolidated real estate funds	$	9,292	$	7,253

	For the Three Months Ended						For the Six Months Ended
(Amounts in thousands)	June 30,						June 30,
Our Share of Net Income (Loss):	2018			2017			2018			2017
Net investment income	$	59		$	71		$	125		$	124
Net realized (loss) gain		-			(5	)		-			174
Net unrealized loss		(73	)		(324	)		(205	)		(228	)
Carried interest		-			(2,153	)		-			(2,193	)
Loss from unconsolidated real estate funds	$	(14	)	$	(2,411	)		(80	)	$	(2,123	)

The following tables provide summarized financial information for Fund VII as of the dates and for the periods set forth below.

	As of
(Amounts in thousands)	June 30, 2018		December 31, 2017
Balance Sheets:
Real estate investments	$	31,126	$	32,943
Cash and cash equivalents		1,022		138
Total assets	$	32,148	$	33,081
Other liabilities	$	1,145	$	1,058
Total liabilities		1,145		1,058
Equity		31,003		32,023
Total liabilities and equity	$	32,148	$	33,081

	For the Three Months Ended June 30,						For the Six Months Ended June 30,
(Amounts in thousands)	2018			2017			2018			2017
Income Statements:
Investment income	$	5		$	777		$	5		$	962
Investment expenses		76			560			120			1,036
Net investment (loss) income		(71	)		217			(115	)		(74	)
Net realized losses		-			(66	)		-			(66	)
Net unrealized losses		(1,138	)		(4,456	)		(3,017	)		(4,321	)
Loss from real estate    fund investments	$	(1,209	)	$	(4,305	)	$	(3,132	)	$	(4,461	)

XML

Preferred Equity Investments

6 Months Ended

Jun. 30, 2018

Schedule Of Investments [Abstract]

Preferred Equity Investments

6. Preferred Equity Investments

We own a 24.4% interest in PGRESS Equity Holdings L.P., an entity that owns certain preferred equity investments that are consolidated into our consolidated financial statements.

The following is a summary of the preferred equity investments.

(Amounts in thousands, except square feet)	Paramount	Dividend	Initial	As of
Preferred Equity Investment	Ownership	Rate	Maturity	June 30, 2018		December 31, 2017
470 Vanderbilt Avenue (1)	24.4%	10.3%	Feb-2019	$	35,925	$	35,817
2 Herald Square (2)	n/a	n/a	n/a		-		19,588
					35,925		55,405
Less: valuation allowance (2)					-		(19,588	)
Total preferred equity investments, net				$	35,925	$	35,817

⁽¹⁾ Represents a preferred equity investment in a partnership that owns 470 Vanderbilt Avenue, a 686,000 square foot office building in Brooklyn, New York. The preferred equity has a dividend rate of 10.3%, of which 8.0% was paid in cash through February 2016 and the unpaid portion accreted to the balance of the investment. Subsequent to February 2016, the entire 10.3% dividend is being paid in cash.

⁽²⁾ Represents a preferred equity investment in a partnership that owned 2 Herald Square, a 369,000 square foot office and retail property in Manhattan. In April 2017, the borrower defaulted on the obligation to extend the maturity date or redeem the preferred equity investment and accordingly, we had recorded a valuation allowance of $19,588. In May 2018, the senior lender foreclosed out our interests and accordingly, we wrote off our preferred equity investment and the related valuation allowance.

XML

Intangible Assets and Liabilities

6 Months Ended

Jun. 30, 2018

Goodwill And Intangible Assets Disclosure [Abstract]

Intangible Assets and Liabilities

7. Intangible Assets and Liabilities

The following table summarizes our intangible assets (acquired above-market leases and acquired in-place leases) and intangible liabilities (acquired below-market leases) and the related amortization as of the dates and for the periods set forth below.

	As of
(Amounts in thousands)	June 30, 2018			December 31, 2017
Intangible assets:
Gross amount	$	542,582		$	553,063
Accumulated amortization		(226,131	)		(200,857	)
	$	316,451		$	352,206
Intangible liabilities:
Gross amount	$	201,232		$	205,101
Accumulated amortization		(85,673	)		(75,073	)
	$	115,559		$	130,028

	For the Three Months Ended				For the Six Months Ended
	June 30,				June 30,
(Amounts in thousands)	2018		2017		2018		2017
Amortization of above and below-market leases, net    (component of “rental income”)	$	4,304	$	7,981	$	8,724	$	10,989
Amortization of acquired in-place leases    (component of “depreciation and amortization”)	$	14,721	$	22,649	$	30,014	$	40,423

The table below sets forth annual amortization of acquired above and below-market leases, net and amortization of acquired in-place leases for each of the five succeeding years commencing from January 1, 2019.

(Amounts in thousands) For the Year Ending December 31,	Above and Below-Market Leases		In-Place Leases
2019	$	14,257	$	53,428
2020		8,679		42,303
2021		4,341		30,310
2022		942		24,200
2023		4,421		19,445

XML

Debt

6 Months Ended

Jun. 30, 2018

Debt Disclosure [Abstract]

Debt

8. Debt

On January 10, 2018, we amended and restated the credit agreement governing our revolving credit facility. The maturity date of the revolving credit facility was extended from November 2018 to January 2022, with two six-month extension options, and the capacity was increased to $1,000,000,000 from $800,000,000. The interest rate on the revolving credit facility, at current leverage levels, was lowered by 10 basis points from LIBOR plus 125 basis points to LIBOR plus 115 basis points, and the facility fee was reduced by 5 basis points from 25 basis points to 20 basis points.

The following is a summary of our outstanding debt.

			Interest Rate
	Maturity	Fixed/	as of			As of
(Amounts in thousands)	Date	Variable Rate	June 30, 2018			June 30, 2018				December 31, 2017
Notes and mortgages payable:
1633 Broadway
	Dec-2022	Fixed (1)		3.54	%	$	1,000,000			$	1,000,000
	Dec-2022	L + 175 bps		3.73	%		46,800		(2)		30,100		(2)
				3.55	%		1,046,800				1,030,100
One Market Plaza (3)	Feb-2024	Fixed		4.03	%		975,000				975,000
1301 Avenue of the Americas
	Nov-2021	Fixed		3.05	%		500,000				500,000
	Nov-2021	L + 180 bps		3.80	%		350,000				350,000
				3.36	%		850,000				850,000
31 West 52nd Street	May-2026	Fixed		3.80	%		500,000				500,000
50 Beale (3)	Oct-2021	Fixed		3.65	%		228,000				228,000
Total notes and mortgages payable				3.68	%		3,599,800				3,583,100
Less: deferred financing costs							(37,341	)			(41,800	)
Total notes and mortgages payable, net						$	3,562,459			$	3,541,300
$1.0 Billion Revolving Credit    Facility	Jan-2022	L + 115 bps	n/a			$	-			$	-

⁽¹⁾ Represents loans with variable interest rates that have been fixed by interest rate swaps. See Note 9, Derivative Instruments and Hedging Activities.

⁽²⁾ Represents amounts borrowed to fund leasing costs at the property. The loan balance can be increased by an additional $200,000 upon the satisfaction of certain performance hurdles related to the property.

⁽³⁾ Our ownership interest in One Market Plaza and 50 Beale is 49.0% and 31.1%, respectively.

XML

Derivative Instruments and Hedging Activities

6 Months Ended

Jun. 30, 2018

Derivative Instruments And Hedging Activities Disclosure [Abstract]

Derivative Instruments and Hedging Activities

9. Derivative Instruments and Hedging Activities

Interest Rate Swaps – Designated as Cash Flow Hedges

We have interest rate swaps with an aggregate notional amount of $1.0 billion that are designated as cash flow hedges. We also have entered into forward starting interest rate swaps with an aggregate notional amount of $400,000,000 to extend the maturity of certain swaps for an additional year. Changes in the fair value of interest rate swaps that are designated as cash flow hedges are recognized in “other comprehensive income (loss)” (outside of earnings). We recognized other comprehensive income of $5,795,000 and $20,346,000 for the three and six months ended June 30, 2018, respectively, and other comprehensive loss of $4,041,000 and $9,000 for the three and six months ended June 30, 2017, respectively, from the changes in fair value of these interest rate swaps. See Note 10, Accumulated Other Comprehensive Income (Loss). During the next twelve months, we estimate that $5,995,000 of the amounts recognized in accumulated other comprehensive income will be reclassified as a decrease to interest expense.

The table below summarizes the fair value of our interest rate swaps that are designated as cash flow hedges.

	Fair Value as of
(Amounts in thousands)	June 30, 2018		December 31, 2017
Interest rate swap assets designated as cash flow hedges (included in “other assets”)	$	29,884	$	9,855
Interest rate swap liabilities designated as cash flow hedges (included in “other liabilities”)	$	-	$	317

We have agreements with various derivative counterparties that contain provisions wherein a default on our indebtedness could be deemed a default on our derivative obligations, which would require us to either post collateral up to the fair value of our derivative obligations or settle the obligations for cash. As of June 30, 2018, we did not have any obligations relating to our swaps that contained such provisions.

Interest Rate Swaps – Non-designated Hedges

As of June 30, 2018, we did not have any interest rate swaps that were not designated as hedges. Prior to January 19, 2017, our interest rate swap on One Market Plaza was not designated as a hedge. This interest rate swap was terminated in connection with the refinancing of the property on January 19, 2017. For the period from January 1, 2017 through January 19, 2017, we recognized an unrealized gain of $1,802,000, in connection with this interest rate swap, which is included as “unrealized gain on interest rate swaps” in our consolidated statement of income for the six months ended June 30, 2017.

XML

Accumulated Other Comprehensive Income (Loss)

6 Months Ended

Jun. 30, 2018

Accumulated Other Comprehensive Income Loss Net Of Tax [Abstract]

Accumulated Other Comprehensive Income (Loss)

10. Accumulated Other Comprehensive Income (Loss)

The following table sets forth changes in accumulated other comprehensive income by component for the three and six months ended June 30, 2018 and 2017, including amounts attributable to noncontrolling interests in the Operating Partnership.

	For the Three Months Ended						For the Six Months Ended
	June 30,						June 30,
(Amounts in thousands)	2018			2017			2018		2017
Amount of income (loss) related to the effective portion of    cash flow hedges recognized in other comprehensive income	$	6,123		$	(6,025	)	$	20,202	$	(4,529	)
Amounts reclassified from accumulated other comprehensive    income (decreasing) increasing interest and debt expense		(328	)		1,984			144		4,520
Amount of income related to unconsolidated joint    ventures recognized in other comprehensive income (loss) (1)		103			35			157		(187	)
Amount of gain (loss) related to the ineffective portion of cash    flow hedges and amount excluded from effectiveness testing		-			-			-		-

⁽¹⁾ Represents foreign currency translation adjustments. No amounts were reclassified from accumulated other comprehensive income during any of the periods set forth above.

XML

Noncontrolling Interests

6 Months Ended

Jun. 30, 2018

Noncontrolling Interest [Abstract]

Noncontrolling Interests

11. Noncontrolling Interests

Consolidated Joint Ventures

Noncontrolling interests in consolidated joint ventures consist of equity interests held by third parties in One Market Plaza, 50 Beale and PGRESS Equity Holdings L.P. As of June 30, 2018 and December 31, 2017, noncontrolling interests in our consolidated joint ventures aggregated $403,686,000 and $404,997,000, respectively.  

Consolidated Real Estate Fund

Noncontrolling interests in our consolidated real estate fund consist of equity interests held by third parties in RDF. As of June 30, 2018 and December 31, 2017, the noncontrolling interests in our consolidated real estate fund aggregated $57,816,000 and $14,549,000, respectively.

Operating Partnership

Noncontrolling interests in the Operating Partnership represent common units of the Operating Partnership that are held by third parties, including management, and units issued to management under equity incentive plans. Common units of the Operating Partnership may be tendered for redemption to the Operating Partnership for cash. We, at our option, may assume that obligation and pay the holder either cash or common shares on a one-for-one basis. Since the number of common shares outstanding is equal to the number of common units owned by us, the redemption value of each common unit is equal to the market value of each common share and distributions paid to each common unitholder is equivalent to dividends paid to common stockholders.  As of June 30, 2018 and December 31, 2017, noncontrolling interests in the Operating Partnership on our consolidated balance sheets had a carrying amount of $430,726,000 and $425,797,000, respectively, and a redemption value of $389,625,000 and $390,231,000, respectively.

XML

Variable Interest Entities

6 Months Ended

Jun. 30, 2018

Variable Interest Entities [Abstract]

Variable Interest Entities

12. Variable Interest Entities

In the normal course of business, we are the general partner of various types of investment vehicles, which may be considered VIEs. We may, from time to time, own equity or debt securities through vehicles, each of which are considered variable interests. Our involvement in financing the operations of the VIEs is generally limited to our investments in the entity. We consolidate these entities when we are deemed to be the primary beneficiary.

Consolidated VIEs

We are the sole general partner of, and own approximately 90.5% of, the Operating Partnership as of June 30, 2018. The Operating Partnership is considered a VIE and is consolidated in our consolidated financial statements. Since we conduct our business through and substantially all of our interests are held by the Operating Partnership, the assets and liabilities on our consolidated financial statements represent the assets and liabilities of the Operating Partnership. As of June 30, 2018 and December 31, 2017, the Operating Partnership held interests in consolidated VIEs owning properties, a real estate fund and preferred equity investments that were determined to be VIEs. The assets of these consolidated VIEs may only be used to settle the obligations of the entities and such obligations are secured only by the assets of the entities and are non-recourse to the Operating Partnership or us. The table below summarizes the assets and liabilities of consolidated VIEs of the Operating Partnership.

	As of
(Amounts in thousands)	June 30, 2018		December 31, 2017
Real estate, net	$	1,711,766	$	1,726,800
Cash and restricted cash		79,622		55,658
Investments in unconsolidated joint ventures		40,236		16,031
Preferred equity investments, net		35,925		35,817
Accounts and other receivables, net		1,626		2,550
Deferred rent receivable		47,663		44,000
Deferred charges, net		10,777		8,123
Intangible assets, net		56,230		66,112
Other assets		18,035		929
Total VIE assets	$	2,001,880	$	1,956,020
Notes and mortgages payable, net	$	1,197,126	$	1,196,607
Accounts payable and accrued expenses		29,392		21,211
Intangible liabilities, net		38,754		46,365
Other liabilities		151		155
Total VIE liabilities	$	1,265,423	$	1,264,338

Unconsolidated VIEs

As of June 30, 2018, the Operating Partnership held variable interests in entities that own our unconsolidated real estate funds that were deemed to be VIEs. The table below summarizes our investments in these unconsolidated real estate funds and the maximum risk of loss from these investments.  

	As of
(Amounts in thousands)	June 30, 2018		December 31, 2017
Investments	$	9,292	$	7,253
Asset management fees and other receivables		697		597
Maximum risk of loss	$	9,989	$	7,850

XML

Fair Value Measurements

6 Months Ended

Jun. 30, 2018

Fair Value Disclosures [Abstract]

Fair Value Measurements

13. Fair Value Measurements

Financial Assets and Liabilities Measured at Fair Value

Financial assets and liabilities that are measured at fair value on our consolidated balance sheets consist of marketable securities and interest rate swaps. The table below aggregates the fair values of these financial assets and liabilities as of the dates set forth below, based on their levels in the fair value hierarchy.

	As of June 30, 2018
(Amounts in thousands)	Total		Level 1		Level 2		Level 3
Marketable securities	$	25,913	$	25,913	$	-	$	-
Interest rate swap assets (included in “other assets”)		29,884		-		29,884		-
Total assets	$	55,797	$	25,913	$	29,884	$	-

	As of December 31, 2017
(Amounts in thousands)	Total		Level 1		Level 2		Level 3
Marketable securities	$	29,039	$	29,039	$	-	$	-
Interest rate swap assets (included in “other assets”)		9,855		-		9,855		-
Total assets	$	38,894	$	29,039	$	9,855	$	-
Interest rate swap liabilities (included in “other liabilities”)	$	317	$	-	$	317	$	-
Total liabilities	$	317	$	-	$	317	$	-

Assets Measured at Fair Value on a Nonrecurring Basis

Assets measured at fair value on a nonrecurring basis on our consolidated balance sheets consist of real estate assets that have been written down to estimated fair value in the current period. In the quarter ended June 30, 2018, in accordance with ASC 360-10, we recorded a $46,000,000 impairment loss, which is included as “real estate impairment loss” on our consolidated statements of income for the three and six months ended June 30, 2018. The estimated fair value of real estate assets on our consolidated balance sheet was $138,000,000 and is classified as Level 3 within the fair value hierarchy.

Financial Assets and Liabilities Not Measured at Fair Value

Financial assets and liabilities not measured at fair value on our consolidated balance sheets consists of preferred equity investments, notes and mortgages payable and the revolving credit facility. The following is a summary of the carrying amounts and fair value of these financial instruments as of the dates set forth below.

	As of June 30, 2018				As of December 31, 2017
(Amounts in thousands)	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Preferred equity investments, net	$	35,925	$	36,212	$	35,817	$	36,112
Total assets	$	35,925	$	36,212	$	35,817	$	36,112
Notes and mortgages payable	$	3,599,800	$	3,591,251	$	3,583,100	$	3,596,953
Revolving credit facility		-		-		-		-
Total liabilities	$	3,599,800	$	3,591,251	$	3,583,100	$	3,596,953

XML

Revenues

6 Months Ended

Jun. 30, 2018

Revenues [Abstract]

Revenues

14. Revenues

Our revenues consist primarily of rental income, tenant reimbursement income and fee and other income. The following table sets forth the details of our revenues.

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
(Amounts in thousands)	2018		2017		2018		2017
Rental income	$	169,529	$	158,187	$	332,934	$	313,577
Tenant reimbursement income		13,164		11,856		27,410		24,708
Fee and other income:
Fee income:
Property management		1,490		1,532		2,992		3,142
Asset management		1,823		2,359		3,433		4,625
Acquisition, disposition and leasing		1,750		250		1,750		5,570
Other		346		307		699		667
Total fee income		5,409		4,448		8,874		14,004
Lease termination income		29		895		57		961
Other income (1)		3,288		2,318		6,415		5,690
Total fee and other income		8,726		7,661		15,346		20,655
Total revenues	$	191,419	$	177,704	$	375,690	$	358,940

⁽¹⁾ Primarily comprised of (i) tenant requested services, including overtime heating and cooling and (ii) parking income.  

Property-related Revenues

Property-related revenue is recognized in accordance with ASC Topic 840, Leases,and consists of (i) rental income, which is generated from the lease-up of office, retail and storage space to tenants under operating leases and recognized on a straight-line basis over the non-cancellable term of the lease (ii) tenant reimbursement income, which is comprised of reimbursement of certain operating costs and real estate taxes from tenants (iii) lease termination income and (iv) other income.

Revenue from Contracts with Customers

Revenue from contracts with customers, which is primarily comprised of (i) property management fees, (ii) asset management fees, (iii) fees relating to acquisitions, dispositions and leasing services and (iv) other fee income, is recognized in accordance with ASC Topic 606, Revenue From Contracts With Customers. Fee income is generated from the various services we provide to our customers and is disaggregated based on the types of services we provide pursuant to ASC Topic 606.

Fee income is recognized as and when we satisfy our performance obligations pursuant to contractual agreements. Property management and asset management services are provided continuously over time and revenue is recognized over that time. Fee income relating to acquisitions, dispositions and leasing services is recognized upon completion of the acquisition, disposition or leasing services as required in the contractual agreements. The amount of fee income to be recognized is stated in the contract as a fixed price or as a stated percentage of revenues, contributed capital or transaction price. Fee income is reported in a non-operating segment, and therefore is shown as a reconciling item to net income in Note 21, Segments.

The table below sets forth the amounts receivable from our customers under our various fee agreements and are included as a component of “accounts and other receivables” on our consolidated balance sheets.

								Acquisition
			Property			Asset		Disposition
(Amounts in thousands)	Total		Management			Management		and Leasing		Other
Accounts and other receivables:
Balance as of December 31, 2017	$	1,558	$	290		$	762	$	490	$	16
Balance as of June 30, 2018		1,651		274			836		490		51
Increase (decrease)	$	93	$	(16	)	$	74	$	-	$	35

As of June 30, 2018 and December 31, 2017, our consolidated balance sheets included $550,000 and $387,000, respectively, of deferred revenue in connection with prepayments for services we have not yet provided. These amounts are included as a component of “accounts payable and accrued expenses” on our consolidated balance sheets and will be recognized as income upon completion of the required services.

There are no other contract assets or liabilities as of June 30, 2018 and December 31, 2017.

XML

Interest and Other Income, net

6 Months Ended

Jun. 30, 2018

Interest And Other Income [Abstract]

Interest and Other Income, net

15. Interest and Other Income, net

The following table sets forth the details of interest and other income.

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
(Amounts in thousands)	2018		2017		2018		2017
Preferred equity investment income (1)	$	917	$	953	$	1,816	$	2,366
Interest and other income		978		511		2,004		596
Mark-to-market of investments in our    deferred compensation plans (2)		199		1,022		290		2,724
Total interest and other income, net	$	2,094	$	2,486	$	4,110	$	5,686

⁽¹⁾ Represents income from our preferred equity investments in PGRESS Equity Holdings L.P., of which our 24.4% share is $223 and $232 for the three months ended June 30, 2018 and 2017, respectively, and $442 and $576 for the six months ended June 30, 2018 and 2017, respectively. See Note 6, Preferred Equity Investments.

⁽²⁾ The change resulting from the mark-to-market of the deferred compensation plan assets is entirely offset by the change in deferred compensation plan liabilities, which is included as a component of “general and administrative” expenses on our consolidated statements of income.

XML

Interest and Debt Expense

6 Months Ended

Jun. 30, 2018

Interest And Debt Expense [Abstract]

Interest and Debt Expense

16. Interest and Debt Expense

The following table sets forth the details of interest and debt expense.

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
(Amounts in thousands)	2018		2017		2018		2017
Interest expense	$	34,055	$	31,999	$	67,376	$	66,287
Amortization of deferred financing costs		2,754		2,818		5,515		5,548
Total interest and debt expense	$	36,809	$	34,817	$	72,891	$	71,835

XML

Incentive Compensation

6 Months Ended

Jun. 30, 2018

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Incentive Compensation

17. Incentive Compensation

Stock-Based Compensation

We account for all stock-based compensation in accordance with ASC 718, Compensation – Stock Compensation. As of June 30, 2018, we have 9,167,437 shares available for future grants under the 2014 Equity Incentive Plan (“Plan”), if all awards granted are full value awards, as defined in the Plan. Stock-based compensation expense was $4,650,000 and $4,438,000 for the three months ended June 30, 2018 and 2017, respectively, and $10,915,000 and $7,867,000 for the six months ended June 30, 2018 and 2017, respectively.

2017 Performance-Based Awards Program (“2017 Performance Program”)

On February 5, 2018, the Compensation Committee of our Board of Directors (the “Compensation Committee”) approved the 2017 Performance Program, a multi-year performance-based long-term equity compensation program. The purpose of the 2017 Performance Program is to further align the interests of our stockholders with that of management by encouraging our senior officers to create stockholder value in a “pay for performance” structure.

Under the 2017 Performance Program, participants may earn awards in the form of Long Term Incentive Plan (“LTIP”) units of our Operating Partnership based on our Total Shareholder Return (“TSR”) over a three-year performance measurement period beginning on January 1, 2018 and continuing through December 31, 2020, on both an absolute basis and relative basis as follows:

• 25.0% of the award is earned if our TSR over the three-year performance measurement period equals or exceeds 30.0%, with no awards being earned if our TSR over such period is less than 18.0% and awards being determined based on linear interpolation if our TSR over such period falls between such ranges.

• 75.0% of the award is earned if our TSR over the three-year performance measurement period equals or exceeds the 80th percentile of the performance of the SNL Office REIT Index constituents on a relative basis, with no awards being earned if our TSR over such period is less than the 30th percentile and awards being determined based on linear interpolation if our TSR over such period falls between such ranges.

Awards granted to our Chief Executive Officer, under the 2017 Performance Program include an additional performance feature requiring threshold TSR performance on both an absolute and a relative basis in order for any awards to be earned. Accordingly, our Chief Executive Officer will not earn any awards under the 2017 Performance Program unless our TSR for the performance measurement period is 18.0% or higher and in the 30th percentile or higher of the SNL Office REIT Index constituents.

In addition, if the designated performance objectives are achieved, awards earned under the 2017 Performance Program are also subject to vesting based on continued employment with us through December 31, 2021, with 50.0% of each award vesting upon the conclusion of the performance measurement period, and the remaining 50.0% vesting on December 31, 2021. Furthermore, our Named Executive Officers are required to hold earned awards for an additional year following vesting.

The fair value of the awards granted under the 2017 Performance Program on the date of the grant was $7,009,000 and is being amortized into expense over the four-year vesting period using a graded vesting attribution method.

2015 Performance-Based Awards Program (“2015 Performance Program”)

On April 3, 2018, the Compensation Committee determined that the performance goals set forth in the 2015 Performance Program were not satisfied during the performance measurement period, which ended on March 31, 2018. Accordingly, all of the 779,055 LTIP units that were granted on April 1, 2015, were forfeited, with no awards being earned.

XML

Earnings Per Share

6 Months Ended

Jun. 30, 2018

Earnings Per Share [Abstract]

Earnings Per Share

18. Earnings Per Share

The following table provides a summary of net income and the number of common shares used in the computation of basic and diluted income per common share, which includes the weighted average number of common shares outstanding and the effect of dilutive potential common shares, if any.

	For the Three Months Ended						For the Six Months Ended
	June 30,						June 30,
(Amounts in thousands, except per share amounts)	2018			2017			2018			2017
Numerator:
Net (loss) income attributable to common stockholders	$	(34,816	)	$	103,016		$	(33,702	)	$	103,388
Earnings allocated to unvested participating securities		(18	)		(59	)		(36	)		(73	)
Numerator for (loss) income per common share - basic    and diluted	$	(34,834	)	$	102,957		$	(33,738	)	$	103,315
Denominator:
Denominator for basic (loss) income per common share -    weighted average shares		240,336			234,990			240,324			232,969
Effect of dilutive stock-based compensation plans (1)		-			20			-			27
Denominator for diluted (loss) income per common    share - weighted average shares		240,336			235,010			240,324			232,996
(Loss) income per common share - basic and diluted	$	(0.14	)	$	0.44		$	(0.14	)	$	0.44

⁽¹⁾ The effect of dilutive securities for the three months ended June 30, 2018 and 2017 excludes 27,846 and 32,317 weighted average share equivalents, respectively, and 27,730 and 34,147 weighted average share equivalents for the six months ended June 30, 2018 and 2017, respectively, as their effect was anti-dilutive.

XML

Related Party

6 Months Ended

Jun. 30, 2018

Related Party Transactions [Abstract]

Related Party

19. Related Party

Due to Affiliates

As of June 30, 2018 and December 31, 2017, we had an aggregate of $27,299,000 of liabilities that were due to affiliates. These liabilities were comprised of a $24,500,000 note payable to CNBB-RDF Holdings, LP, which is an entity partially owned by Katharina Otto-Bernstein (a member of our Board of Directors), and a $2,799,000 note payable to a different entity owned by members of the Otto Family, both of which were made in lieu of certain cash distributions prior to the completion of our initial public offering. The notes are due in November 2018 and bear interest at a fixed rate of 1.40%. We recognized interest expense of $97,000 and $35,000 for the three months ended June 30, 2018 and 2017, respectively, and $192,000 and $69,000 for the six months ended June 30, 2018 and 2017, respectively, in connection with these notes, which is included as a component of “interest and debt expense” on our consolidated statements of income.

Management Agreements

We provide property management, leasing and other related services to certain properties owned by members of the Otto Family. We recognized fee income of $215,000 and $210,000 for the three months ended June 30, 2018 and 2017, respectively, and $424,000 and $412,000 for the six months ended June 30, 2018 and 2017, respectively, in connection with these agreements, which is included as a component of “fee and other income” on our consolidated statements of income.

We also provide property management, asset management, leasing and other related services to our unconsolidated joint ventures and real estate funds. We recognized fee income of $4,558,000 and $3,369,000 for the three months ended June 30, 2018 and 2017, respectively, and $7,094,000 and $11,775,000 for the six months ended June 30, 2018 and 2017, respectively, in connection with these agreements. As of June 30, 2018 and December 31, 2017, amounts owed to us under these agreements aggregated $1,722,000, and $1,627,000, respectively, and are included as a component of “accounts and other receivables, net” on our consolidated balance sheets.

Hamburg Trust Consulting GMBH (“HTC”)

We have an agreement with HTC, a licensed broker in Germany, to supervise selling efforts for our private equity real estate funds (or investments in feeder vehicles for these funds) to investors in Germany, including distribution of securitized notes of a feeder vehicle for Fund VIII. Pursuant to this agreement, we have agreed to pay HTC for the costs incurred to sell investments in this feeder vehicle, which primarily consist of commissions paid to third party agents, and other incremental costs incurred by HTC as a result of the engagement, plus, in each case, a mark-up of 10%. HTC is 100% owned by Albert Behler, our Chairman, Chief Executive Officer and President.  We incurred expense of $42,000 and $134,000 for the three months ended June 30, 2018 and 2017, respectively, and $60,000 and $170,000 for the six months ended June 30, 2018 and 2017, respectively, in connection with these agreements, which is included as a component of “transaction related costs” on our consolidated statements of income. As of June 30, 2018 and December 31, 2017, we owed $83,000 and $51,000, respectively, to HTC under these agreements, which are included as a component of “accounts payable and accrued expenses” on our consolidated balance sheets.  

Mannheim Trust

Dr. Martin Bussmann (a member of our Board of Directors) is also a trustee and a director of Mannheim Trust, a subsidiary of which leases office space at 712 Fifth Avenue, our 50.0% owned unconsolidated joint venture. The Mannheim Trust, which is for the benefit of Dr. Bussmann’s children, leases 5,593 square feet, which expires in April 2023. Our share of rental income from this lease was $89,000 and $84,000, for the three months ended June 30, 2018 and 2017, respectively, and $181,000 and $178,000 for the six months ended June 30, 2018 and 2017, respectively.

XML

Commitments and Contingencies

6 Months Ended

Jun. 30, 2018

Commitments And Contingencies Disclosure [Abstract]

Commitments and Contingencies

20. Commitments and Contingencies

Insurance

We carry commercial general liability coverage on our properties, with limits of liability customary within the industry. Similarly, we are insured against the risk of direct and indirect physical damage to our properties including coverage for the perils such as floods, earthquakes and windstorms. Our policies also cover the loss of rental income during an estimated reconstruction period. Our policies reflect limits and deductibles customary in the industry and specific to the buildings and portfolio. We also obtain title insurance policies when acquiring new properties. We currently have coverage for losses incurred in connection with both domestic and foreign terrorist-related activities. While we do carry commercial general liability insurance, property insurance and terrorism insurance with respect to our properties, these policies include limits and terms we consider commercially reasonable. In addition, there are certain losses (including, but not limited to, losses arising from known environmental conditions or acts of war) that are not insured, in full or in part, because they are either uninsurable or the cost of insurance makes it, in our belief, economically impractical to maintain such coverage. Should an uninsured loss arise against us, we would be required to use our own funds to resolve the issue, including litigation costs. We believe the policy specifications and insured limits are adequate given the relative risk of loss, the cost of the coverage and industry practice and, in consultation with our insurance advisors, we believe the properties in our portfolio are adequately insured.

Other Commitments and Contingencies

We are a party to various claims and routine litigation arising in the ordinary course of business. Some of these claims or others to which we may be subject from time to time, including claims arising specifically from the formation transactions, in connection with our initial public offering, may result in defense costs, settlements, fines or judgments against us, some of which are not, or cannot be, covered by insurance. Payment of any such costs, settlements, fines or judgments that are not insured could have an adverse impact on our financial position and results of operations. Should any litigation arise in connection with the formation transactions, we would contest it vigorously. In addition, certain litigation or the resolution of certain litigation may affect the availability or cost of some of our insurance coverage, which could adversely impact our results of operations and cash flow, expose us to increased risks that would be uninsured, and/or adversely impact our ability to attract officers and directors.

The terms of our mortgage debt and certain side letters in place include certain restrictions and covenants which may limit, among other things, certain investments, the incurrence of additional indebtedness and liens and the disposition or other transfer of assets and interests in the borrower and other credit parties, and require compliance with certain debt yield, debt service coverage and loan to value ratios. In addition, our revolving credit facility contains representations, warranties, covenants, other agreements and events of default customary for agreements of this type with comparable companies. As of June 30, 2018, we believe we are in compliance with all of our covenants.

718 Fifth Avenue - Put Right

Prior to the formation transactions, an affiliate of our predecessor owned a 25.0% interest in 718 Fifth Avenue, a five-story building containing 19,050 square feet of prime retail space that is located on the southwest corner of 56th Street and Fifth Avenue in New York, (based on its 50.0% interest in a joint venture that held a 50.0% tenancy-in-common interest in the property). Prior to the completion of the formation transactions, this interest was sold to its partner in the 718 Fifth Avenue joint venture, who is also our joint venture partner in 712 Fifth Avenue, New York, New York. In connection with this sale, we granted our joint venture partner a put right, pursuant to which the 712 Fifth Avenue joint venture would be required to purchase the entire direct or indirect interests then held by our joint venture partner or its affiliates in 718 Fifth Avenue at a purchase price equal to the fair market value of such interests. The put right may be exercised at any time after September 10, 2018 with 12 months written notice and the actual purchase occurring no earlier than September 10, 2019. If the put right is exercised and the 712 Fifth Avenue joint venture acquires the 50.0% tenancy-in-common interest in the property by our joint venture partner, we will own a 25.0% interest in 718 Fifth Avenue based on current ownership interests.

Transfer Tax Assessments

During 2017, the New York City Department of Finance issued Notices of Determination (“Notices”) assessing additional transfer taxes (including interest and penalties) in connection with the transfer of interests in certain properties during our 2014 initial public offering. Prior to February 16, 2018, we believed that the likelihood of a loss related to these assessments was remote. On February 16, 2018, the New York City Tax Appeals Tribunal issued a decision against a publicly traded REIT in a case interpreting the same provisions of the transfer tax statute, on similar but distinguishable facts. As a result, after consultation with legal counsel, we now believe the likelihood of loss is reasonably possible, and while it is not possible to predict the outcome of these Notices, we estimate the range of loss could be between $0 and $38,000,000. Since no amount in this range is a better estimate than any other amount within the range, we have not accrued any liability arising from potential losses relating to these Notices in our consolidated financial statements.

XML

Segments

6 Months Ended

Jun. 30, 2018

Segment Reporting [Abstract]

Segments

21. Segments

Our reportable segments are separated by region based on the three regions in which we conduct our business: New York, Washington, D.C. and San Francisco. Our determination of segments is aligned with our method of internal reporting and the way our Chief Executive Officer, who is also our Chief Operating Decision Maker, makes key operating decisions, evaluates financial results and manages our business.

The following tables provide Net Operating Income (“NOI”) for each reportable segment for the three and six months ended June 30, 2018 and 2017.

	For the Three Months Ended June 30, 2018
(Amounts in thousands)	Total			New York			Washington, D.C.			San Francisco			Other
Property-related revenues	$	186,010		$	115,536		$	15,435		$	55,344		$	(305	)
Property-related operating expenses		(67,646	)		(45,292	)		(5,736	)		(15,048	)		(1,570	)
NOI from unconsolidated joint ventures		4,569			4,493			-			-			76
NOI (1)	$	122,933		$	74,737		$	9,699		$	40,296		$	(1,799	)
	For the Three Months Ended June 30, 2017
(Amounts in thousands)	Total			New York			Washington, D.C.			San Francisco			Other
Property-related revenues	$	173,256		$	106,602		$	18,138		$	48,201		$	315
Property-related operating expenses		(63,461	)		(43,289	)		(6,565	)		(11,120	)		(2,487	)
NOI from unconsolidated joint ventures		4,958			4,838			-			-			120
NOI (1)	$	114,753		$	68,151		$	11,573		$	37,081		$	(2,052	)
	For the Six Months Ended June 30, 2018
(Amounts in thousands)	Total			New York			Washington, D.C.			San Francisco			Other
Property-related revenues	$	366,816		$	229,181		$	30,884		$	107,243		$	(492	)
Property-related operating expenses		(136,624	)		(92,453	)		(11,581	)		(29,164	)		(3,426	)
NOI from unconsolidated joint ventures		9,309			9,158			-			-			151
NOI (1)	$	239,501		$	145,886		$	19,303		$	78,079		$	(3,767	)
	For the Six Months Ended June 30, 2017
(Amounts in thousands)	Total			New York			Washington, D.C.			San Francisco			Other
Property-related revenues	$	344,936		$	211,926		$	41,925		$	90,140		$	945
Property-related operating expenses		(129,432	)		(88,048	)		(15,489	)		(21,725	)		(4,170	)
NOI from unconsolidated joint ventures		9,781			9,591			-			-			190
NOI (1)	$	225,285		$	133,469		$	26,436		$	68,415		$	(3,035	)

⁽¹⁾ 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 use NOI internally as a performance measure and believe it provides useful information to investors regarding our financial condition and results of operations because it reflects only those income and expense items that are incurred at the property level. Other real estate companies may use different methodologies for calculating NOI and, accordingly, our presentation of NOI may not be comparable to other real estate companies.

The following table provides a reconciliation of NOI to net (loss) income attributable to common stockholders for the periods set forth below.

	For the Three Months Ended June 30,						For the Six Months Ended June 30,
(Amounts in thousands)	2018			2017			2018			2017
NOI	$	122,933		$	114,753		$	239,501		$	225,285
Add (subtract) adjustments to arrive to net income:
Fee income		5,409			4,448			8,874			14,004
Depreciation and amortization expense		(64,775	)		(68,636	)		(129,931	)		(131,628	)
General and administrative expenses		(17,195	)		(16,573	)		(29,826	)		(30,154	)
Transaction related costs		(293	)		(502	)		(413	)		(777	)
NOI from unconsolidated joint ventures		(4,569	)		(4,958	)		(9,309	)		(9,781	)
Income from unconsolidated joint ventures		2,521			16,535			2,459			18,472
Loss from unconsolidated real estate funds		(14	)		(2,411	)		(80	)		(2,123	)
Interest and other income, net		2,094			2,486			4,110			5,686
Interest and debt expense		(36,809	)		(34,817	)		(72,891	)		(71,835	)
Loss on early extinguishment of debt		-			(5,162	)		-			(7,877	)
Real estate impairment loss		(46,000	)		-			(46,000	)		-
Gain on sale of real estate		-			133,989			-			133,989
Unrealized gain on interest rate swaps		-			-			-			1,802
Net (loss) income before income taxes		(36,698	)		139,152			(33,506	)		145,063
Income tax benefit (expense)		120			(970	)		(357	)		(5,252	)
Net (loss) income		(36,578	)		138,182			(33,863	)		139,811
Less: net (income) loss attributable to    noncontrolling interests in:
Consolidated joint ventures		(1,752	)		(1,897	)		(2,807	)		(3,188	)
Consolidated real estate fund		(152	)		(20,169	)		(582	)		(20,081	)
Operating Partnership		3,666			(13,100	)		3,550			(13,154	)
Net (loss) income attributable to common stockholders	$	(34,816	)	$	103,016		$	(33,702	)	$	103,388

The following table provides the total assets for each of our reportable segments as of the periods set forth below.

(Amounts in thousands)
Total Assets as of:	Total		New York		Washington, D.C.		San Francisco		Other
June 30, 2018	$	8,915,913	$	5,518,698	$	638,793	$	2,419,887	$	338,535
December 31, 2017		8,917,661		5,511,061		693,408		2,421,173		292,019

XML

Subsequent Events

6 Months Ended

Jun. 30, 2018

Subsequent Events [Abstract]

Subsequent Events

22. Subsequent Events

Subsequent to quarter end, we entered into an agreement to sell 2099 Pennsylvania Avenue, a 208,776 square foot Class A office building in Washington, D.C., for approximately $220,000,000.

XML

Basis of Presentation and Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2018

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation

The accompanying consolidated financial statements are unaudited and have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and in conjunction with the instructions to Form 10-Q of the Securities and Exchange Commission (“SEC”). Accordingly, certain information and footnote disclosures required by GAAP for complete financial statements have been condensed or omitted. These consolidated financial statements include the accounts of Paramount and its consolidated subsidiaries, including the Operating Partnership. In the opinion of management, all adjustments (which include only normal recurring adjustments) and eliminations (which include intercompany balances and transactions) necessary to present fairly the financial position, results of operations and changes in cash flows have been made. The consolidated balance sheet as of December 31, 2017 was derived from audited financial statements as of that date, but does not include all information and disclosures required by GAAP. These consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2017, as filed with the SEC.

Significant Accounting Policies

Significant Accounting Policies

There are no material changes to our significant accounting policies as disclosed in our Annual Report on Form 10-K for the year ended December 31, 2017.

Use of Estimates

Use of Estimates

We have made estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ materially from those estimates. The results of operations for the three and six months ended June 30, 2018, are not necessarily indicative of the operating results for the full year.

Reclassification

Reclassification

Certain prior year balances have been reclassified to conform to current year presentation.

Recently Issued Accounting Pronouncements

Recently Issued Accounting Pronouncements Not Materially Impacting Our Financial Statements

In May 2014, the Financial Accounting Standard’s Board (“FASB”) issued ASU 2014-09, an update to ASC Topic 606, Revenue from Contracts with Customers. ASU 2014-09, as amended, supersedes nearly all existing revenue recognition guidance under U.S. GAAP. The core principle of this guidance is that an entity should recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. This guidance also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments made in applying the guidance. This guidance is effective for fiscal years beginning after December 15, 2017, and for interim periods within those fiscal years, and can be applied using a full retrospective or modified retrospective approach. We adopted the provisions of ASU 2014-09 on January 1, 2018, using the modified retrospective approach. The adoption of ASU 2014-09 did not impact our consolidated financial results but resulted in additional disclosures on our consolidated financial statements. See Note 14, Revenues.

In June 2016, the FASB issued ASU 2016-13, an update to ASC Topic 326, Financial Instruments – Credit Losses. ASU 2016- 13 requires measurement and recognition of expected credit losses on financial instruments measured at amortized cost at the end of each reporting period rather than recognizing the credit losses when it is probable that the loss has been incurred in accordance with current guidance. ASU 2016-13 is effective for interim and annual reporting periods in fiscal years that begin after December 15, 2019, with early adoption permitted for fiscal years beginning after December 15, 2018. We are evaluating the impact of ASU 2016-13 but do not believe the adoption will have a material impact on our consolidated financial statements.

In May 2017, the FASB issued ASU 2017-09, an update to ASC Topic 718, Compensation – Stock Compensation. ASU 2017- 09 clarifies the types of changes to the terms and conditions of a share-based payment award that requires modification accounting. ASU 2017-09 does not change the accounting for modification of share-based awards, but clarifies that modification accounting should only be applied if there is a change to the value, vesting condition or award classification and would not be required if the changes are considered non-substantive. ASU 2017-09 is effective for interim and annual reporting periods in fiscal years that begin after December 31, 2017, with early adoption permitted. We adopted the provisions of ASU 2017-09 on January 1, 2018 and the adoption of ASU 2017-09 did not have an impact on our consolidated financial statements.

In August 2017, the FASB issued ASU 2017-12, an update to ASC Topic 815, Derivatives and Hedging. ASU 2017-12 improves transparency and understandability of information by better aligning the financial reporting for hedging relationships with the risk management activities. ASU 2017-12 also simplifies the application of hedge accounting through changes in both the designation and measurement of qualifying hedging relationships. ASU 2017-12 is effective for interim and annual reporting periods in fiscal years that begin after December 15, 2018, with early adoption permitted. We are evaluating the impact of ASU 2017-12 but do not believe the adoption will have an impact on our consolidated financial statements.

Recently Issued Accounting Pronouncements Impacting or Potentially Impacting Our Financial Statements

In February 2016, the FASB issued ASU 2016-02, an update to ASC Topic 842, Leases. ASU 2016-02 amends the existing guidance for lease accounting, including requiring lessees to recognize most leases on their balance sheets. ASU 2016-02 requires lessees to apply a dual approach, classifying leases as either financing or operating and recording a right-of-use asset and a lease liability for all leases with a term greater than 12 months. Accounting for lessors under ASU 2016-02 is substantially similar to existing guidance, however, lessors are required to separate lease components (rental income) and non-lease components (revenue related to various services we provide). In July 2018, the FASB issued ASU 2018-11 that provides lessors with a practical expedient to not separate lease and non-lease components, if certain criteria are met, and provides an additional transition method to adopt the standard. ASU 2016-02 is effective for interim and annual reporting periods in fiscal years that begin after December 15, 2018, with early adoption permitted. We plan to adopt the provisions of ASU 2016-02 on January 1, 2019 and are in the process of evaluating whether we will elect to apply the practical expedient.

In November 2016, the FASB issued ASU 2016-18, an update to ASC Topic 230, Statement of Cash Flows, to provide guidance on classification and presentation of changes in restricted cash on the statement of cash flows. ASU 2016-18 requires that an entity’s reconciliation of the beginning-of-period and end-of-period total amounts shown on the statement of cash flows to include restricted cash with cash and cash equivalents. ASU 2016-18 is effective for interim and annual reporting periods in fiscal years that begin after December 15, 2017, with early adoption permitted. We elected to early adopt ASU 2016-18 retrospectively, on December 31, 2017. This adoption resulted in (i) additional disclosures to reconcile cash and cash equivalents and restricted cash on our consolidated balance sheets to our consolidated statements of cash flows and (ii) a decrease to cash provided by operating activities of $3,000,000 and an increase in cash provided by investing activities of $16,010,000 for the six months ended June 30, 2017.

In February 2017, the FASB issued ASU 2017-05, an update to ASC Topic 610, Other Income. ASU 2017-05 clarifies the scope and accounting for derecognition of a nonfinancial asset and eliminates the guidance in ASC 360-20 specific to real estate sales and partial sales. ASU 2017-05 requires an entity that transfers control of a nonfinancial asset to measure any noncontrolling interest it retains (or receives) at fair value. ASU 2017-05 is effective for interim and annual reporting periods in fiscal years that begin after December 15, 2017, with early adoption permitted for entities concurrently early adopting ASU 2014-09. We adopted the provisions of ASU 2017-05 on January 1, 2018, using the modified retrospective approach. Upon adoption, we recorded a $7,086,000 adjustment to “investments in unconsolidated joint ventures” relating to the measurement of our consolidated Residential Development Fund’s (“RDF”) retained interest in One Steuart Lane (formerly 75 Howard Street) at fair value with an offset to equity. See Note 4, Investments in Unconsolidated Joint Ventures.

XML

Investments in Unconsolidated Joint Ventures (Tables)

6 Months Ended

Jun. 30, 2018

Schedule Of Equity Method Investments [Line Items]

Summary of Investments and Income from Investments In Unconsolidated Joint Ventures

The following tables summarize our investments in unconsolidated joint ventures as of the dates thereof and the income or loss from these investments for the periods set forth below.

(Amounts in thousands)	Paramount	As of
Our Share of Investments:	Ownership	June 30, 2018			December 31, 2017
712 Fifth Avenue (1)	50.0%	$	-		$	-
60 Wall Street (2)	5.0%		23,760			25,083
One Steuart Lane (2)	25.0% (3)		40,236	(4)		16,031
Oder-Center, Germany (2)	9.5%		3,827			3,648
Investments in unconsolidated joint ventures		$	67,823		$	44,762

		For the Three Months Ended						For the Six Months Ended
(Amounts in thousands)	Paramount	June 30,						June 30,
Our Share of Net Income (Loss):	Ownership	2018			2017			2018			2017
712 Fifth Avenue (1)	50.0%	$	2,608		$	16,504		$	2,608		$	18,434
60 Wall Street (2)	5.0%		(102	)		(31	)		(175	)		(36	)
One Steuart Lane (2)	25.0% (3)		(16	)		33			(18	)		33
Oder-Center, Germany (2)	9.5%		31			29			44			41
Income from unconsolidated joint ventures		$	2,521		$	16,535		$	2,459		$	18,472

⁽¹⁾ As of June 30, 2018, our basis in the partnership was negative $20,654 resulting from distributions made to us in excess of our share of earnings recognized. Accordingly, we no longer recognize our proportionate share of earnings from the venture because we have no further obligation to fund additional capital to the venture. Instead, we only recognize earnings to the extent we receive cash distributions from the venture.  

⁽²⁾ As of June 30, 2018, the carrying amount of our investments in 60 Wall Street, One Steuart Lane and Oder-Center is greater than our share of equity in these investments by $2,868, $692 and $5,362, respectively.

⁽³⁾ Represents RDF’s economic interest in the Property.

⁽⁴⁾ Includes a $7,086 basis adjustment which was recorded upon the adoption of ASU 2017-05 on January 1, 2018.

712 Fifth Avenue [Member]

Schedule Of Equity Method Investments [Line Items]

Summary of Investments in Unconsolidated Joint Ventures

The following tables provide summarized financial information of 712 Fifth Avenue as of the dates and for the periods set forth below.

(Amounts in thousands)	As of
Balance Sheets:	June 30, 2018			December 31, 2017
Real estate, net	$	199,731		$	202,040
Other assets		59,879			58,034
Total assets	$	259,610		$	260,074
Notes and mortgages payable, net	$	296,337		$	296,132
Other liabilities		4,582			4,615
Total liabilities		300,919			300,747
Partners’ deficit		(41,309	)		(40,673	)
Total liabilities and partners’ deficit	$	259,610		$	260,074

(Amounts in thousands)	For the Three Months Ended June 30,						For the Six Months Ended June 30,
Income Statements:	2018			2017			2018			2017
Rental income	$	12,329		$	12,713		$	24,658		$	25,658
Tenant reimbursement income		1,245			1,209			2,590			2,517
Fee and other income		159			468			617			594
Total revenues		13,733			14,390			27,865			28,769
Operating expenses		6,126			6,102			12,310			12,068
Depreciation and amortization		2,898			3,075			5,924			5,995
Total expenses		9,024			9,177			18,234			18,063
Operating income		4,709			5,213			9,631			10,706
Interest and other income, net		157			48			270			72
Interest and debt expense		(2,674	)		(3,126	)		(5,319	)		(5,951	)
Unrealized gain on interest rate swaps		-			728			-			1,896
Net income	$	2,192		$	2,863		$	4,582		$	6,723

XML

Investments in Unconsolidated Real Estate Funds (Tables)

6 Months Ended

Jun. 30, 2018

Real Estate Investments [Abstract]

Summary of Investment in Unconsolidated Real Estate Funds and Income or Loss from Fund Investments

The following tables summarize our investments in these unconsolidated real estate funds as of the dates thereof and the income or loss recognized for the periods set forth below.

	As of
(Amounts in thousands)	June 30, 2018		December 31, 2017
Our Share of Investments:
Property funds	$	2,352	$	2,429
Alternative investment fund		6,940		4,824
Investments in unconsolidated real estate funds	$	9,292	$	7,253

	For the Three Months Ended						For the Six Months Ended
(Amounts in thousands)	June 30,						June 30,
Our Share of Net Income (Loss):	2018			2017			2018			2017
Net investment income	$	59		$	71		$	125		$	124
Net realized (loss) gain		-			(5	)		-			174
Net unrealized loss		(73	)		(324	)		(205	)		(228	)
Carried interest		-			(2,153	)		-			(2,193	)
Loss from unconsolidated real estate funds	$	(14	)	$	(2,411	)		(80	)	$	(2,123	)

Schedule of Financial Information for Fund Investment

The following tables provide summarized financial information for Fund VII as of the dates and for the periods set forth below.

	As of
(Amounts in thousands)	June 30, 2018		December 31, 2017
Balance Sheets:
Real estate investments	$	31,126	$	32,943
Cash and cash equivalents		1,022		138
Total assets	$	32,148	$	33,081
Other liabilities	$	1,145	$	1,058
Total liabilities		1,145		1,058
Equity		31,003		32,023
Total liabilities and equity	$	32,148	$	33,081

	For the Three Months Ended June 30,						For the Six Months Ended June 30,
(Amounts in thousands)	2018			2017			2018			2017
Income Statements:
Investment income	$	5		$	777		$	5		$	962
Investment expenses		76			560			120			1,036
Net investment (loss) income		(71	)		217			(115	)		(74	)
Net realized losses		-			(66	)		-			(66	)
Net unrealized losses		(1,138	)		(4,456	)		(3,017	)		(4,321	)
Loss from real estate    fund investments	$	(1,209	)	$	(4,305	)	$	(3,132	)	$	(4,461	)

XML

Preferred Equity Investments (Tables)

6 Months Ended

Jun. 30, 2018

Schedule Of Investments [Abstract]

Schedule of Preferred Equity Investments

(Amounts in thousands, except square feet)	Paramount	Dividend	Initial	As of
Preferred Equity Investment	Ownership	Rate	Maturity	June 30, 2018		December 31, 2017
470 Vanderbilt Avenue (1)	24.4%	10.3%	Feb-2019	$	35,925	$	35,817
2 Herald Square (2)	n/a	n/a	n/a		-		19,588
					35,925		55,405
Less: valuation allowance (2)					-		(19,588	)
Total preferred equity investments, net				$	35,925	$	35,817

⁽¹⁾ Represents a preferred equity investment in a partnership that owns 470 Vanderbilt Avenue, a 686,000 square foot office building in Brooklyn, New York. The preferred equity has a dividend rate of 10.3%, of which 8.0% was paid in cash through February 2016 and the unpaid portion accreted to the balance of the investment. Subsequent to February 2016, the entire 10.3% dividend is being paid in cash.

⁽²⁾ Represents a preferred equity investment in a partnership that owned 2 Herald Square, a 369,000 square foot office and retail property in Manhattan. In April 2017, the borrower defaulted on the obligation to extend the maturity date or redeem the preferred equity investment and accordingly, we had recorded a valuation allowance of $19,588. In May 2018, the senior lender foreclosed out our interests and accordingly, we wrote off our preferred equity investment and the related valuation allowance.

XML

Intangible Assets and Liabilities (Tables)

6 Months Ended

Jun. 30, 2018

Goodwill And Intangible Assets Disclosure [Abstract]

Summary of Intangible Assets and Liabilities

The following table summarizes our intangible assets (acquired above-market leases and acquired in-place leases) and intangible liabilities (acquired below-market leases) and the related amortization as of the dates and for the periods set forth below.

	As of
(Amounts in thousands)	June 30, 2018			December 31, 2017
Intangible assets:
Gross amount	$	542,582		$	553,063
Accumulated amortization		(226,131	)		(200,857	)
	$	316,451		$	352,206
Intangible liabilities:
Gross amount	$	201,232		$	205,101
Accumulated amortization		(85,673	)		(75,073	)
	$	115,559		$	130,028

	For the Three Months Ended				For the Six Months Ended
	June 30,				June 30,
(Amounts in thousands)	2018		2017		2018		2017
Amortization of above and below-market leases, net    (component of “rental income”)	$	4,304	$	7,981	$	8,724	$	10,989
Amortization of acquired in-place leases    (component of “depreciation and amortization”)	$	14,721	$	22,649	$	30,014	$	40,423

Schedule of Estimated Annual Amortization of Acquired Below-Market Leases, Net of Acquired Above-Market Leases and In Place Leases

The table below sets forth annual amortization of acquired above and below-market leases, net and amortization of acquired in-place leases for each of the five succeeding years commencing from January 1, 2019.

(Amounts in thousands) For the Year Ending December 31,	Above and Below-Market Leases		In-Place Leases
2019	$	14,257	$	53,428
2020		8,679		42,303
2021		4,341		30,310
2022		942		24,200
2023		4,421		19,445

XML

Debt (Tables)

6 Months Ended

Jun. 30, 2018

Debt Disclosure [Abstract]

Summary of Outstanding Debt

The following is a summary of our outstanding debt.

			Interest Rate
	Maturity	Fixed/	as of			As of
(Amounts in thousands)	Date	Variable Rate	June 30, 2018			June 30, 2018				December 31, 2017
Notes and mortgages payable:
1633 Broadway
	Dec-2022	Fixed (1)		3.54	%	$	1,000,000			$	1,000,000
	Dec-2022	L + 175 bps		3.73	%		46,800		(2)		30,100		(2)
				3.55	%		1,046,800				1,030,100
One Market Plaza (3)	Feb-2024	Fixed		4.03	%		975,000				975,000
1301 Avenue of the Americas
	Nov-2021	Fixed		3.05	%		500,000				500,000
	Nov-2021	L + 180 bps		3.80	%		350,000				350,000
				3.36	%		850,000				850,000
31 West 52nd Street	May-2026	Fixed		3.80	%		500,000				500,000
50 Beale (3)	Oct-2021	Fixed		3.65	%		228,000				228,000
Total notes and mortgages payable				3.68	%		3,599,800				3,583,100
Less: deferred financing costs							(37,341	)			(41,800	)
Total notes and mortgages payable, net						$	3,562,459			$	3,541,300
$1.0 Billion Revolving Credit    Facility	Jan-2022	L + 115 bps	n/a			$	-			$	-

⁽¹⁾ Represents loans with variable interest rates that have been fixed by interest rate swaps. See Note 9, Derivative Instruments and Hedging Activities.

⁽²⁾ Represents amounts borrowed to fund leasing costs at the property. The loan balance can be increased by an additional $200,000 upon the satisfaction of certain performance hurdles related to the property.

⁽³⁾ Our ownership interest in One Market Plaza and 50 Beale is 49.0% and 31.1%, respectively.

XML

Derivative Instruments and Hedging Activities (Tables)

6 Months Ended

Jun. 30, 2018

Derivative Instruments And Hedging Activities Disclosure [Abstract]

Summary of Fair Value of Interest Rate Swaps

The table below summarizes the fair value of our interest rate swaps that are designated as cash flow hedges.

	Fair Value as of
(Amounts in thousands)	June 30, 2018		December 31, 2017
Interest rate swap assets designated as cash flow hedges (included in “other assets”)	$	29,884	$	9,855
Interest rate swap liabilities designated as cash flow hedges (included in “other liabilities”)	$	-	$	317

XML

Accumulated Other Comprehensive Income (Loss) (Tables)

6 Months Ended

Jun. 30, 2018

Accumulated Other Comprehensive Income Loss Net Of Tax [Abstract]

Summary of Changes in Accumulated Other Comprehensive Income by Component

The following table sets forth changes in accumulated other comprehensive income by component for the three and six months ended June 30, 2018 and 2017, including amounts attributable to noncontrolling interests in the Operating Partnership.

	For the Three Months Ended						For the Six Months Ended
	June 30,						June 30,
(Amounts in thousands)	2018			2017			2018		2017
Amount of income (loss) related to the effective portion of    cash flow hedges recognized in other comprehensive income	$	6,123		$	(6,025	)	$	20,202	$	(4,529	)
Amounts reclassified from accumulated other comprehensive    income (decreasing) increasing interest and debt expense		(328	)		1,984			144		4,520
Amount of income related to unconsolidated joint    ventures recognized in other comprehensive income (loss) (1)		103			35			157		(187	)
Amount of gain (loss) related to the ineffective portion of cash    flow hedges and amount excluded from effectiveness testing		-			-			-		-

⁽¹⁾ Represents foreign currency translation adjustments. No amounts were reclassified from accumulated other comprehensive income during any of the periods set forth above.

XML

Variable Interest Entities (Tables)

6 Months Ended

Jun. 30, 2018

Consolidated VIEs [Member]

Summary of Assets and Liabilities of Consolidated Variable Interest Entities

The table below summarizes the assets and liabilities of consolidated VIEs of the Operating Partnership

	As of
(Amounts in thousands)	June 30, 2018		December 31, 2017
Real estate, net	$	1,711,766	$	1,726,800
Cash and restricted cash		79,622		55,658
Investments in unconsolidated joint ventures		40,236		16,031
Preferred equity investments, net		35,925		35,817
Accounts and other receivables, net		1,626		2,550
Deferred rent receivable		47,663		44,000
Deferred charges, net		10,777		8,123
Intangible assets, net		56,230		66,112
Other assets		18,035		929
Total VIE assets	$	2,001,880	$	1,956,020
Notes and mortgages payable, net	$	1,197,126	$	1,196,607
Accounts payable and accrued expenses		29,392		21,211
Intangible liabilities, net		38,754		46,365
Other liabilities		151		155
Total VIE liabilities	$	1,265,423	$	1,264,338

Unconsolidated VIEs [Member]

Summary of Investments in Unconsolidated Real Estate Funds and Maximum Risk of Loss from Investments

The table below summarizes our investments in these unconsolidated real estate funds and the maximum risk of loss from these investments.

	As of
(Amounts in thousands)	June 30, 2018		December 31, 2017
Investments	$	9,292	$	7,253
Asset management fees and other receivables		697		597
Maximum risk of loss	$	9,989	$	7,850

XML

Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2018

Fair Value Disclosures [Abstract]

Schedule of Fair Values of Financial Assets and Liabilities Measured at Fair Value

The table below aggregates the fair values of these financial assets and liabilities as of the dates set forth below, based on their levels in the fair value hierarchy.

	As of June 30, 2018
(Amounts in thousands)	Total		Level 1		Level 2		Level 3
Marketable securities	$	25,913	$	25,913	$	-	$	-
Interest rate swap assets (included in “other assets”)		29,884		-		29,884		-
Total assets	$	55,797	$	25,913	$	29,884	$	-

	As of December 31, 2017
(Amounts in thousands)	Total		Level 1		Level 2		Level 3
Marketable securities	$	29,039	$	29,039	$	-	$	-
Interest rate swap assets (included in “other assets”)		9,855		-		9,855		-
Total assets	$	38,894	$	29,039	$	9,855	$	-
Interest rate swap liabilities (included in “other liabilities”)	$	317	$	-	$	317	$	-
Total liabilities	$	317	$	-	$	317	$	-

Summary of Carrying Amounts and Fair Value of Financial Instruments

The following is a summary of the carrying amounts and fair value of these financial instruments as of the dates set forth below.

	As of June 30, 2018				As of December 31, 2017
(Amounts in thousands)	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Preferred equity investments, net	$	35,925	$	36,212	$	35,817	$	36,112
Total assets	$	35,925	$	36,212	$	35,817	$	36,112
Notes and mortgages payable	$	3,599,800	$	3,591,251	$	3,583,100	$	3,596,953
Revolving credit facility		-		-		-		-
Total liabilities	$	3,599,800	$	3,591,251	$	3,583,100	$	3,596,953

XML

Revenues (Tables)

6 Months Ended

Jun. 30, 2018

Disaggregation Of Revenue [Abstract]

Summary of Revenues

The following table sets forth the details of our revenues.

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
(Amounts in thousands)	2018		2017		2018		2017
Rental income	$	169,529	$	158,187	$	332,934	$	313,577
Tenant reimbursement income		13,164		11,856		27,410		24,708
Fee and other income:
Fee income:
Property management		1,490		1,532		2,992		3,142
Asset management		1,823		2,359		3,433		4,625
Acquisition, disposition and leasing		1,750		250		1,750		5,570
Other		346		307		699		667
Total fee income		5,409		4,448		8,874		14,004
Lease termination income		29		895		57		961
Other income (1)		3,288		2,318		6,415		5,690
Total fee and other income		8,726		7,661		15,346		20,655
Total revenues	$	191,419	$	177,704	$	375,690	$	358,940

⁽¹⁾ Primarily comprised of (i) tenant requested services, including overtime heating and cooling and (ii) parking income.  

Summary of Amount Receivable from Customers under Various Fee Agreement

The table below sets forth the amounts receivable from our customers under our various fee agreements and are included as a component of “accounts and other receivables” on our consolidated balance sheets.

								Acquisition
			Property			Asset		Disposition
(Amounts in thousands)	Total		Management			Management		and Leasing		Other
Accounts and other receivables:
Balance as of December 31, 2017	$	1,558	$	290		$	762	$	490	$	16
Balance as of June 30, 2018		1,651		274			836		490		51
Increase (decrease)	$	93	$	(16	)	$	74	$	-	$	35

XML

Interest and Other Income, net (Tables)

6 Months Ended

Jun. 30, 2018

Interest And Other Income [Abstract]

Schedule Of Interest And Other (Loss) Income, net

The following table sets forth the details of interest and other income.

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
(Amounts in thousands)	2018		2017		2018		2017
Preferred equity investment income (1)	$	917	$	953	$	1,816	$	2,366
Interest and other income		978		511		2,004		596
Mark-to-market of investments in our    deferred compensation plans (2)		199		1,022		290		2,724
Total interest and other income, net	$	2,094	$	2,486	$	4,110	$	5,686

⁽¹⁾ Represents income from our preferred equity investments in PGRESS Equity Holdings L.P., of which our 24.4% share is $223 and $232 for the three months ended June 30, 2018 and 2017, respectively, and $442 and $576 for the six months ended June 30, 2018 and 2017, respectively. See Note 6, Preferred Equity Investments.

⁽²⁾ The change resulting from the mark-to-market of the deferred compensation plan assets is entirely offset by the change in deferred compensation plan liabilities, which is included as a component of “general and administrative” expenses on our consolidated statements of income.

XML

Interest and Debt Expense (Tables)

6 Months Ended

Jun. 30, 2018

Interest And Debt Expense [Abstract]

Details of Interest and Debt Expense

The following table sets forth the details of interest and debt expense.

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
(Amounts in thousands)	2018		2017		2018		2017
Interest expense	$	34,055	$	31,999	$	67,376	$	66,287
Amortization of deferred financing costs		2,754		2,818		5,515		5,548
Total interest and debt expense	$	36,809	$	34,817	$	72,891	$	71,835

XML

Earnings Per Share (Tables)

6 Months Ended

Jun. 30, 2018

Earnings Per Share [Abstract]

Summary of Computation of Earnings Per Share

The following table provides a summary of net income and the number of common shares used in the computation of basic and diluted income per common share, which includes the weighted average number of common shares outstanding and the effect of dilutive potential common shares, if any.

	For the Three Months Ended						For the Six Months Ended
	June 30,						June 30,
(Amounts in thousands, except per share amounts)	2018			2017			2018			2017
Numerator:
Net (loss) income attributable to common stockholders	$	(34,816	)	$	103,016		$	(33,702	)	$	103,388
Earnings allocated to unvested participating securities		(18	)		(59	)		(36	)		(73	)
Numerator for (loss) income per common share - basic    and diluted	$	(34,834	)	$	102,957		$	(33,738	)	$	103,315
Denominator:
Denominator for basic (loss) income per common share -    weighted average shares		240,336			234,990			240,324			232,969
Effect of dilutive stock-based compensation plans (1)		-			20			-			27
Denominator for diluted (loss) income per common    share - weighted average shares		240,336			235,010			240,324			232,996
(Loss) income per common share - basic and diluted	$	(0.14	)	$	0.44		$	(0.14	)	$	0.44

⁽¹⁾ The effect of dilutive securities for the three months ended June 30, 2018 and 2017 excludes 27,846 and 32,317 weighted average share equivalents, respectively, and 27,730 and 34,147 weighted average share equivalents for the six months ended June 30, 2018 and 2017, respectively, as their effect was anti-dilutive.

XML

Segments (Tables)

6 Months Ended

Jun. 30, 2018

Segment Reporting [Abstract]

Schedule of NOI for Each Reportable Segment Information

The following tables provide Net Operating Income (“NOI”) for each reportable segment for the three and six months ended June 30, 2018 and 2017.

	For the Three Months Ended June 30, 2018
(Amounts in thousands)	Total			New York			Washington, D.C.			San Francisco			Other
Property-related revenues	$	186,010		$	115,536		$	15,435		$	55,344		$	(305	)
Property-related operating expenses		(67,646	)		(45,292	)		(5,736	)		(15,048	)		(1,570	)
NOI from unconsolidated joint ventures		4,569			4,493			-			-			76
NOI (1)	$	122,933		$	74,737		$	9,699		$	40,296		$	(1,799	)
	For the Three Months Ended June 30, 2017
(Amounts in thousands)	Total			New York			Washington, D.C.			San Francisco			Other
Property-related revenues	$	173,256		$	106,602		$	18,138		$	48,201		$	315
Property-related operating expenses		(63,461	)		(43,289	)		(6,565	)		(11,120	)		(2,487	)
NOI from unconsolidated joint ventures		4,958			4,838			-			-			120
NOI (1)	$	114,753		$	68,151		$	11,573		$	37,081		$	(2,052	)
	For the Six Months Ended June 30, 2018
(Amounts in thousands)	Total			New York			Washington, D.C.			San Francisco			Other
Property-related revenues	$	366,816		$	229,181		$	30,884		$	107,243		$	(492	)
Property-related operating expenses		(136,624	)		(92,453	)		(11,581	)		(29,164	)		(3,426	)
NOI from unconsolidated joint ventures		9,309			9,158			-			-			151
NOI (1)	$	239,501		$	145,886		$	19,303		$	78,079		$	(3,767	)
	For the Six Months Ended June 30, 2017
(Amounts in thousands)	Total			New York			Washington, D.C.			San Francisco			Other
Property-related revenues	$	344,936		$	211,926		$	41,925		$	90,140		$	945
Property-related operating expenses		(129,432	)		(88,048	)		(15,489	)		(21,725	)		(4,170	)
NOI from unconsolidated joint ventures		9,781			9,591			-			-			190
NOI (1)	$	225,285		$	133,469		$	26,436		$	68,415		$	(3,035	)

⁽¹⁾ 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 use NOI internally as a performance measure and believe it provides useful information to investors regarding our financial condition and results of operations because it reflects only those income and expense items that are incurred at the property level. Other real estate companies may use different methodologies for calculating NOI and, accordingly, our presentation of NOI may not be comparable to other real estate companies.

Schedule of Reconciliation of NOI to Net Income (Loss) Attributable to Common Stockholders

The following table provides a reconciliation of NOI to net (loss) income attributable to common stockholders for the periods set forth below.

	For the Three Months Ended June 30,						For the Six Months Ended June 30,
(Amounts in thousands)	2018			2017			2018			2017
NOI	$	122,933		$	114,753		$	239,501		$	225,285
Add (subtract) adjustments to arrive to net income:
Fee income		5,409			4,448			8,874			14,004
Depreciation and amortization expense		(64,775	)		(68,636	)		(129,931	)		(131,628	)
General and administrative expenses		(17,195	)		(16,573	)		(29,826	)		(30,154	)
Transaction related costs		(293	)		(502	)		(413	)		(777	)
NOI from unconsolidated joint ventures		(4,569	)		(4,958	)		(9,309	)		(9,781	)
Income from unconsolidated joint ventures		2,521			16,535			2,459			18,472
Loss from unconsolidated real estate funds		(14	)		(2,411	)		(80	)		(2,123	)
Interest and other income, net		2,094			2,486			4,110			5,686
Interest and debt expense		(36,809	)		(34,817	)		(72,891	)		(71,835	)
Loss on early extinguishment of debt		-			(5,162	)		-			(7,877	)
Real estate impairment loss		(46,000	)		-			(46,000	)		-
Gain on sale of real estate		-			133,989			-			133,989
Unrealized gain on interest rate swaps		-			-			-			1,802
Net (loss) income before income taxes		(36,698	)		139,152			(33,506	)		145,063
Income tax benefit (expense)		120			(970	)		(357	)		(5,252	)
Net (loss) income		(36,578	)		138,182			(33,863	)		139,811
Less: net (income) loss attributable to    noncontrolling interests in:
Consolidated joint ventures		(1,752	)		(1,897	)		(2,807	)		(3,188	)
Consolidated real estate fund		(152	)		(20,169	)		(582	)		(20,081	)
Operating Partnership		3,666			(13,100	)		3,550			(13,154	)
Net (loss) income attributable to common stockholders	$	(34,816	)	$	103,016		$	(33,702	)	$	103,388

Schedule of Total Assets for Each Reportable Segments Information

The following table provides the total assets for each of our reportable segments as of the periods set forth below.

(Amounts in thousands)
Total Assets as of:	Total		New York		Washington, D.C.		San Francisco		Other
June 30, 2018	$	8,915,913	$	5,518,698	$	638,793	$	2,419,887	$	338,535
December 31, 2017		8,917,661		5,511,061		693,408		2,421,173		292,019

XML

Organization and Business - Additional Information (Details) ft² in Millions	6 Months Ended
	Jun. 30, 2018 ft² Properties
Organization Consolidation And Presentation Of Financial Statements [Abstract]
Number of office properties | Properties	14
Area of office and retail properties | ft²	12.5
Percentage of ownership in operating partnership	90.50%

XML

Basis of Presentation and Significant Accounting Policies - Additional Information (Details) - USD ($)		6 Months Ended
	Jan. 01, 2018	Jun. 30, 2018	Jun. 30, 2017
Property Plant And Equipment [Line Items]
Decrease in cash provided by used in operating activities continuing operations		$ 106,511,000	$ 78,992,000
Increase in cash provided by used in investing activities continuing operations		(80,960,000)	492,123,000
Adjustment to investments in unconsolidated joint ventures		$ 7,086,000
ASU 2016-18 [Member]
Property Plant And Equipment [Line Items]
Decrease in cash provided by used in operating activities continuing operations			(3,000,000)
Increase in cash provided by used in investing activities continuing operations			$ 16,010,000
ASU 2017-05 [Member] | RDF [Member] | One Steuart Lane [Member]
Property Plant And Equipment [Line Items]
Adjustment to investments in unconsolidated joint ventures	$ 7,086,000

XML

Dispositions - Additional Information (Details)	May 03, 2017 USD ($) ft²	Jun. 30, 2018 ft²
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items]
Area of office and retail properties | ft²		12,500,000
Waterview [Member]
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items]
Area of office and retail properties | ft²	636,768
Sale agreement amount | $	$ 460,000,000
Net gain on sale of property | $	$ 110,583,000

XML

Investments in Unconsolidated Joint Ventures - Additional Information (Details)		6 Months Ended
	Mar. 14, 2018	Jun. 30, 2018	Mar. 13, 2018
RDF [Member]
Schedule Of Equity Method Investments [Line Items]
Ownership percentage in residential fund		7.40%
Percentage of interest third party ownership		92.60%
One Steuart Lane [Member]
Schedule Of Equity Method Investments [Line Items]
Equity method ownership percentage		25.00%
Property funds, ownership percentage		1.85%
One Steuart Lane [Member] | RDF [Member]
Schedule Of Equity Method Investments [Line Items]
Percentage of interest acquired	10.00%
Indirect interest percentage	15.00%
Property funds, ownership percentage	25.00%
New Joint Venture [Member] | RDF [Member]
Schedule Of Equity Method Investments [Line Items]
Equity method ownership percentage			20.00%
Percentage of interest owned	75.00%	75.00%
Percentage of interest owned by third party		25.00%
New Joint Venture [Member] | One Steuart Lane [Member] | RDF [Member]
Schedule Of Equity Method Investments [Line Items]
Percentage of interest transferred to new joint venture	20.00%
Property funds, ownership percentage		20.00%
Property funds, ownership percentage		5.00%

XML

Investments in Unconsolidated Joint Ventures - Summary of Investments and Income from Investments In Unconsolidated Joint Ventures (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017	Dec. 31, 2017
Schedule Of Equity Method Investments [Line Items]
Investments in unconsolidated joint ventures	$ 67,823		$ 67,823		$ 44,762
Income from unconsolidated joint ventures	$ 2,521	$ 16,535	$ 2,459	$ 18,472
712 Fifth Avenue [Member]
Schedule Of Equity Method Investments [Line Items]
Equity method paramount ownership percentage	50.00%		50.00%
Income from unconsolidated joint ventures	$ 2,608	16,504	$ 2,608	18,434
60 Wall Street [Member]
Schedule Of Equity Method Investments [Line Items]
Equity method paramount ownership percentage	5.00%		5.00%
Investments in unconsolidated joint ventures	$ 23,760		$ 23,760		25,083
Income from unconsolidated joint ventures	$ (102)	(31)	$ (175)	(36)
One Steuart Lane [Member]
Schedule Of Equity Method Investments [Line Items]
Equity method paramount ownership percentage	25.00%		25.00%
Investments in unconsolidated joint ventures	$ 40,236		$ 40,236		16,031
Income from unconsolidated joint ventures	$ (16)	33	$ (18)	33
Oder-Center, Germany [Member]
Schedule Of Equity Method Investments [Line Items]
Equity method paramount ownership percentage	9.50%		9.50%
Investments in unconsolidated joint ventures	$ 3,827		$ 3,827		$ 3,648
Income from unconsolidated joint ventures	$ 31	$ 29	$ 44	$ 41

XML

Investments in Unconsolidated Joint Ventures - Summary of Investments and Income from Investments In Unconsolidated Joint Ventures (Parenthetical) (Details) - USD ($)		6 Months Ended
	Jan. 01, 2018	Jun. 30, 2018
Schedule Of Equity Method Investments [Line Items]
Distributions made in excess of share of earnings recognized negative basis		$ 20,654
Adjustment to investments in unconsolidated joint ventures		7,086,000
60 Wall Street [Member]
Schedule Of Equity Method Investments [Line Items]
Difference between carrying amount of investment and equity		2,868,000
One Steuart Lane [Member]
Schedule Of Equity Method Investments [Line Items]
Difference between carrying amount of investment and equity		692,000
One Steuart Lane [Member] | ASU 2017-05 [Member] | RDF [Member]
Schedule Of Equity Method Investments [Line Items]
Adjustment to investments in unconsolidated joint ventures	$ 7,086,000
Oder-Center, Germany [Member]
Schedule Of Equity Method Investments [Line Items]
Difference between carrying amount of investment and equity		$ 5,362,000

XML

Investments in Unconsolidated Joint Ventures - Summary of Financial Information (Details) - 712 Fifth Avenue [Member] - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017	Dec. 31, 2017
Schedule Of Equity Method Investments [Line Items]
Real estate, net	$ 199,731		$ 199,731		$ 202,040
Other assets	59,879		59,879		58,034
Total assets	259,610		259,610		260,074
Notes and mortgages payable, net	296,337		296,337		296,132
Other liabilities	4,582		4,582		4,615
Total liabilities	300,919		300,919		300,747
Partners’ deficit	(41,309)		(41,309)		(40,673)
Total liabilities and partners’ deficit	259,610		259,610		$ 260,074
Rental income	12,329	$ 12,713	24,658	$ 25,658
Tenant reimbursement income	1,245	1,209	2,590	2,517
Fee and other income	159	468	617	594
Total revenues	13,733	14,390	27,865	28,769
Operating expenses	6,126	6,102	12,310	12,068
Depreciation and amortization	2,898	3,075	5,924	5,995
Total expenses	9,024	9,177	18,234	18,063
Operating income	4,709	5,213	9,631	10,706
Interest and other income, net	157	48	270	72
Interest and debt expense	(2,674)	(3,126)	(5,319)	(5,951)
Unrealized gain on interest rate swaps		728		1,896
Net income	$ 2,192	$ 2,863	$ 4,582	$ 6,723

XML

Investments in Unconsolidated Real Estate Funds - Additional Information (Details)	Jun. 30, 2018
Fund VII and VII-H [Member] | Zero Bond Street [Member]
Investment Holdings [Line Items]
Property funds, percentage	100.00%

XML

Investments in Unconsolidated Real Estate Funds - Summary of Investment in Unconsolidated Real Estate Funds and Income or Loss from Fund Investments (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017	Dec. 31, 2017
Our Share of Investments:
Investments in unconsolidated real estate funds	$ 9,292		$ 9,292		$ 7,253
(Loss) income from unconsolidated real estate funds	(14)	$ (2,411)	(80)	$ (2,123)
Net realized (loss) gain		(5)		174
Net unrealized loss	(73)	(324)	(205)	(228)
Net investment income [Member]
Our Share of Investments:
(Loss) income from unconsolidated real estate funds	59	71	125	124
Carried interest [Member]
Our Share of Investments:
(Loss) income from unconsolidated real estate funds		$ (2,153)		$ (2,193)
Property Funds [Member]
Our Share of Investments:
Investments in unconsolidated real estate funds	2,352		2,352		2,429
Alternative Investment Fund [Member]
Our Share of Investments:
Investments in unconsolidated real estate funds	$ 6,940		$ 6,940		$ 4,824

XML

Investments in Unconsolidated Real Estate Funds - Schedule of Financial Information for Fund Investment (Details) - Unconsolidated Real Estate Funds [Member] - Property Fund VII [Member] - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Investment Holdings [Line Items]
Real estate investments	$ 31,126	$ 32,943
Cash and cash equivalents	1,022	138
Total assets	32,148	33,081
Other liabilities	1,145	1,058
Total liabilities	1,145	1,058
Equity	31,003	32,023
Total liabilities and partners’ deficit	$ 32,148	$ 33,081

XML

Investments in Unconsolidated Real Estate Funds - Schedule of Income from Fund Investment (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Investment Holdings [Line Items]
Net realized losses		$ (5)		$ 174
Net unrealized losses	$ (73)	(324)	$ (205)	(228)
Unconsolidated Real Estate Funds [Member] | Property Fund VII [Member]
Investment Holdings [Line Items]
Investment income	5	777	5	962
Investment expenses	76	560	120	1,036
Net investment (loss) income	(71)	217	(115)	(74)
Net realized losses		(66)		(66)
Net unrealized losses	(1,138)	(4,456)	(3,017)	(4,321)
Loss from real estate fund investments	$ (1,209)	$ (4,305)	$ (3,132)	$ (4,461)

XML

Preferred Equity Investments - Additional Information (Details)	Jun. 30, 2018
Schedule Of Investments [Abstract]
Preferred equity ownership percentage	24.40%

XML

Preferred Equity Investments (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2018	Dec. 31, 2017	Apr. 30, 2017
Investment Holdings [Line Items]
Preferred equity ownership percentage	24.40%
Preferred equity investments, gross	$ 35,925	$ 55,405
Less: valuation allowance	0	(19,588)
Total preferred equity investments, net	$ 35,925	35,817
470 Vanderbilt Avenue [Member]
Investment Holdings [Line Items]
Preferred equity ownership percentage	24.40%
Preferred Equity Investments, Dividend Rate	10.30%
Preferred Equity Investments, Initial Maturity	2019-02
Preferred equity investments, gross	$ 35,925	35,817
2 Herald Square [Member]
Investment Holdings [Line Items]
Preferred equity investments, gross		$ 19,588
Less: valuation allowance			$ (19,588)

XML

Preferred Equity Investments - Parenthetical (Details) ft² in Thousands, $ in Thousands	6 Months Ended
	Jun. 30, 2018 USD ($) ft²	Dec. 31, 2017 USD ($)	Apr. 30, 2017 USD ($)
Schedule Of Investments [Line Items]
Area of office properties	12,500
Valuation allowance on preferred equity investment | $	$ 0	$ 19,588
470 Vanderbilt Avenue [Member]
Schedule Of Investments [Line Items]
Area of office properties	686
Preferred Equity Investments, Dividend Rate	10.30%
Preferred equity investments, dividend rate percentage paid	8.00%
2 Herald Square [Member]
Schedule Of Investments [Line Items]
Area of office properties	369
Valuation allowance on preferred equity investment | $			$ 19,588

XML

Intangible Assets and Intangible Liabilities - Summary of Intangible Assets and Liabilities (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017	Dec. 31, 2017
Intangible assets:
Gross amount	$ 542,582		$ 542,582		$ 553,063
Accumulated amortization	(226,131)		(226,131)		(200,857)
Intangible assets, Net	316,451		316,451		352,206
Intangible liabilities:
Gross amount	201,232		201,232		205,101
Accumulated amortization	(85,673)		(85,673)		(75,073)
Intangible Liabilities, Net	115,559		115,559		$ 130,028
Leases, Acquired-in-Place, Market Adjustment [Member]
Intangible liabilities:
Amortization of above and below-market leases, net (component of “rental income”)	4,304	$ 7,981	8,724	$ 10,989
Leases, Acquired-in-Place [Member]
Intangible liabilities:
Amortization of acquired in-place leases (component of “depreciation and amortization”)	$ 14,721	$ 22,649	$ 30,014	$ 40,423

XML

Intangible Assets and Intangible Liabilities - Schedule of Estimated Annual Amortization of Acquired Below-Market Leases, Net of Acquired Above-Market Leases and In Place Leases (Details) $ in Thousands	Jun. 30, 2018 USD ($)
Finite Lived Intangible Assets [Line Items]
2019	$ 14,257
2020	8,679
2021	4,341
2022	942
2023	4,421
Leases, Acquired-in-Place [Member]
Finite Lived Intangible Assets [Line Items]
2019	53,428
2020	42,303
2021	30,310
2022	24,200
2023	$ 19,445

XML

Debt - Additional Information (Details) - Revolving Credit Facility [Member] - USD ($)	Jan. 10, 2018	Jan. 09, 2018
Debt Instrument [Line Items]
Maturity date of debt	2022-01	2018-11
Borrowing capacity	$ 1,000,000,000	$ 800,000,000
Decrease in facility fees	0.05%
Facility fees percentage	0.20%	0.25%
London Interbank Offered Rate (LIBOR) [Member]
Debt Instrument [Line Items]
Decrease in variable rate	0.10%
Debt instrument variable rate	1.15%	1.25%

XML

Debt - Summary of Outstanding Debt (Details) - USD ($) $ in Thousands			6 Months Ended
	Jan. 10, 2018	Jan. 09, 2018	Jun. 30, 2018	Dec. 31, 2017
Debt Instrument [Line Items]
Notes and mortgages payable, Interest Rate			3.68%
Notes and mortgages payable			$ 3,599,800	$ 3,583,100
Credit Facility			0	0
Less: deferred financing costs			(37,341)	(41,800)
Total notes and mortgages payable, net			$ 3,562,459	3,541,300
Revolving Credit Facility [Member]
Debt Instrument [Line Items]
Maturity date of debt	2022-01	2018-11
London Interbank Offered Rate (LIBOR) [Member] | Revolving Credit Facility [Member]
Debt Instrument [Line Items]
Fixed/Variable Rate	1.15%	1.25%
Credit Facility With Variable Rate [Member] | Revolving Credit Facility [Member]
Debt Instrument [Line Items]
Maturity date of debt			2022-01
Credit Facility With Variable Rate [Member] | London Interbank Offered Rate (LIBOR) [Member] | Revolving Credit Facility [Member]
Debt Instrument [Line Items]
Fixed/Variable Rate			1.15%
50 Beale Street [Member] | Mortgages and Notes Payable with Fixed Rate [Member]
Debt Instrument [Line Items]
Maturity date of debt			2021-10
Notes and mortgages payable, Interest Rate			3.65%
Notes and mortgages payable			$ 228,000	228,000
1633 Broadway [Member]
Debt Instrument [Line Items]
Notes and mortgages payable, Interest Rate			3.55%
Notes and mortgages payable			$ 1,046,800	1,030,100
1633 Broadway [Member] | Mortgages and Notes Payable with Fixed Rate [Member]
Debt Instrument [Line Items]
Maturity date of debt			2022-12
Notes and mortgages payable, Interest Rate			3.54%
Notes and mortgages payable			$ 1,000,000	1,000,000
1633 Broadway [Member] | Mortgages and Notes Payable with Variable Rate [Member]
Debt Instrument [Line Items]
Maturity date of debt			2022-12
Notes and mortgages payable, Interest Rate			3.73%
Notes and mortgages payable			$ 46,800	30,100
1633 Broadway [Member] | Mortgages and Notes Payable with Variable Rate [Member] | London Interbank Offered Rate (LIBOR) [Member]
Debt Instrument [Line Items]
Fixed/Variable Rate			1.75%
One Market Plaza [Member] | Mortgages and Notes Payable with Fixed Rate [Member]
Debt Instrument [Line Items]
Maturity date of debt			2024-02
Notes and mortgages payable, Interest Rate			4.03%
Notes and mortgages payable			$ 975,000	975,000
1301 Avenue of Americas [Member]
Debt Instrument [Line Items]
Notes and mortgages payable, Interest Rate			3.36%
Notes and mortgages payable			$ 850,000	850,000
1301 Avenue of Americas [Member] | Mortgages and Notes Payable with Fixed Rate [Member]
Debt Instrument [Line Items]
Maturity date of debt			2021-11
Notes and mortgages payable, Interest Rate			3.05%
Notes and mortgages payable			$ 500,000	500,000
1301 Avenue of Americas [Member] | Mortgages and Notes Payable with Variable Rate [Member]
Debt Instrument [Line Items]
Maturity date of debt			2021-11
Notes and mortgages payable, Interest Rate			3.80%
Notes and mortgages payable			$ 350,000	350,000
1301 Avenue of Americas [Member] | Mortgages and Notes Payable with Variable Rate [Member] | London Interbank Offered Rate (LIBOR) [Member]
Debt Instrument [Line Items]
Fixed/Variable Rate			1.80%
31 West 52nd Street [Member] | Mortgages and Notes Payable with Fixed Rate [Member]
Debt Instrument [Line Items]
Maturity date of debt			2026-05
Notes and mortgages payable, Interest Rate			3.80%
Notes and mortgages payable			$ 500,000	$ 500,000

XML

Debt - Summary of Outstanding Debt (Parenthetical) (Details) - USD ($)	6 Months Ended	12 Months Ended
	Jun. 30, 2018	Dec. 31, 2017
50 Beale Street [Member]
Debt Instrument [Line Items]
Ownership interest rate of property	31.10%	31.10%
1633 Broadway [Member] | Mortgages and Notes Payable with Variable Rate [Member]
Debt Instrument [Line Items]
Additional Borrowing Capacity Subject To Performance Hurdles	$ 200,000,000
One Market Plaza [Member]
Debt Instrument [Line Items]
Ownership interest rate of property	49.00%	49.00%

XML

Derivative Instruments and Hedging Activities - Additional Information (Details)	1 Months Ended	3 Months Ended		6 Months Ended
	Jan. 19, 2017 USD ($)	Jun. 30, 2018 USD ($) Derivative	Jun. 30, 2017 USD ($)	Jun. 30, 2018 USD ($) Derivative	Jun. 30, 2017 USD ($)
Derivative [Line Items]
Change in value of interest rate swaps		$ 6,123,000	$ (6,025,000)	$ 20,202,000	$ (4,529,000)
Number of derivative instruments | Derivative		0		0
Designated as Hedging Instrument [Member] | Interest Rate Swap [Member] | Cash Flow Hedges [Member]
Derivative [Line Items]
Change in value of interest rate swaps		$ 5,795,000	$ (4,041,000)	$ 20,346,000	$ (9,000)
Estimated accumulated other comprehensive income (loss) reclassified to interest expense in the next twelve months				5,995,000
Designated as Hedging Instrument [Member] | Interest Rate Swap [Member] | 1633 Broadway [Member] | Cash Flow Hedges [Member]
Derivative [Line Items]
Aggregate notional amount		1,000,000,000		1,000,000,000
Designated as Hedging Instrument [Member] | Interest Rate Swap March Two Thousand Eighteen [Member] | 1633 Broadway [Member] | Cash Flow Hedges [Member]
Derivative [Line Items]
Aggregate notional amount		$ 400,000,000		$ 400,000,000
Not Designated as Hedging Instrument [Member] | Interest Rate Swap [Member]
Derivative [Line Items]
Unrealized gains on interest rate swaps	$ 1,802,000

XML

Derivative Instruments and Hedging Activities - Summary of Fair Value of Interest Rate Swaps (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Derivative [Line Items]
Interest rate swap assets	$ 29,884	$ 9,855
Interest rate swap liabilities		317
Designated as Hedging Instrument [Member] | Cash Flow Hedges [Member] | Other Assets [Member]
Derivative [Line Items]
Interest rate swap assets	$ 29,884	9,855
Designated as Hedging Instrument [Member] | Cash Flow Hedges [Member] | Interest Rate Swap [Member]
Derivative [Line Items]
Interest rate swap liabilities		$ 317

XML

Accumulated Other Comprehensive Income (Loss) - Summary of Changes in Accumulated Other Comprehensive Income by Component (Details) - USD ($) $ in Thousands		3 Months Ended		6 Months Ended
		Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Accumulated Other Comprehensive Income Loss Net Of Tax [Abstract]
Amount of income (loss) related to the effective portion of cash flow hedges recognized in other comprehensive income		$ 6,123	$ (6,025)	$ 20,202	$ (4,529)
Amounts reclassified from accumulated other comprehensive income (decreasing) increasing interest and debt expense		(328)	1,984	144	4,520
Amount of income related to unconsolidated joint ventures recognized in other comprehensive income (loss)	[1]	$ 103	$ 35	$ 157	$ (187)

[1] Represents foreign currency translation adjustments. No amounts were reclassified from accumulated other comprehensive income during any of the periods set forth above.

XML

Accumulated Other Comprehensive Income (Loss) - Summary of Changes in Accumulated Other Comprehensive Income by Component (Parenthetical) (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Accumulated Other Comprehensive Income Loss Net Of Tax [Abstract]
Amounts reclassified from accumulated other comprehensive income	$ 0	$ 0	$ 0	$ 0

XML

Noncontrolling Interests - Additional Information (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2018	Dec. 31, 2017
Noncontrolling Interest [Abstract]
Consolidated joint ventures	$ 403,686	$ 404,997
Noncontrolling interests in consolidated real estate fund aggregated	57,816	14,549
Operating partnerships	430,726	425,797
Redemption value	$ 389,625	$ 390,231
Common units conversion basis	one-for-one

XML

Variable Interest Entities - Additional Information (Details)	6 Months Ended
	Jun. 30, 2018
Variable Interest Entities [Abstract]
Percentage of ownership in operating partnership	90.50%

XML

Variable Interest Entities - Summary of Assets and Liabilities of Consolidated Variable Interest Entities (Details) - USD ($) $ in Thousands		Jun. 30, 2018	Dec. 31, 2017	Jun. 30, 2017	Dec. 31, 2016
Variable Interest Entity [Line Items]
Real estate, net		$ 7,752,567	$ 7,841,530
Cash and restricted cash		32,755	31,044	$ 42,384	$ 29,374
Preferred equity investments, net		35,925	35,817
Accounts and other receivables, net		15,549	17,082
Deferred rent receivable		252,140	220,826
Deferred charges, net		116,147	98,645
Intangible assets, net		316,451	352,206
Other assets		57,821	20,076
Total assets	[1]	8,915,913	8,917,661
Notes and mortgages payable, net		3,599,800	3,583,100
Accounts payable and accrued expenses		123,720	117,630
Intangible liabilities, net		115,559	130,028
Other liabilities		54,507	54,109
Total liabilities	[1]	3,910,165	3,895,577
Variable Interest Entities [Member]
Variable Interest Entity [Line Items]
Real estate, net		1,711,766	1,726,800
Cash and restricted cash		79,622	55,658
Investments in unconsolidated joint ventures		40,236	16,031
Preferred equity investments, net		35,925	35,817
Accounts and other receivables, net		1,626	2,550
Deferred rent receivable		47,663	44,000
Deferred charges, net		10,777	8,123
Intangible assets, net		56,230	66,112
Other assets		18,035	929
Total assets		2,001,880	1,956,020
Notes and mortgages payable, net		1,197,126	1,196,607
Accounts payable and accrued expenses		29,392	21,211
Intangible liabilities, net		38,754	46,365
Other liabilities		151	155
Total liabilities		$ 1,265,423	$ 1,264,338

[1] Represents the consolidated assets and liabilities of Paramount Group Operating Partnership LP, a Delaware limited partnership (the “Operating Partnership”). The Operating Partnership is a consolidated variable interest entity (“VIE”), of which we are the sole general partner and own approximately 90.5% as of June 30, 2018. The assets and liabilities of the Operating Partnership, as of June 30, 2018, include $2,001,880 and $1,265,423 of assets and liabilities, respectively, of certain VIEs that are consolidated by the Operating Partnership. See Note 12, Variable Interest Entities.

XML

Variable Interest Entities - Summary of Investments in Unconsolidated Real Estate Funds and Maximum Risk of Loss from Investments (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Variable Interest Entity [Line Items]
Investments in unconsolidated real estate funds	$ 9,292	$ 7,253
Investment [Member]
Variable Interest Entity [Line Items]
Investments in unconsolidated real estate funds	9,292	7,253
Asset Management Fees and Other Receivables [Member]
Variable Interest Entity [Line Items]
Investments in unconsolidated real estate funds	697	597
Maximum Risk of Loss [Member]
Variable Interest Entity [Line Items]
Investments in unconsolidated real estate funds	$ 9,989	$ 7,850

XML

Fair Value Measurements - Schedule of Fair Values of Financial Assets and Liabilities Measured at Fair Value (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Marketable securities	$ 25,913	$ 29,039
Interest rate swap assets (included in “other assets”)	29,884	9,855
Total assets	55,797	38,894
Interest rate swap liabilities (included in “other liabilities”)		317
Total liabilities		317
Level 1 [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Marketable securities	25,913	29,039
Total assets	25,913	29,039
Level 2 [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Interest rate swap assets (included in “other assets”)	29,884	9,855
Total assets	$ 29,884	9,855
Interest rate swap liabilities (included in “other liabilities”)		317
Total liabilities		$ 317

XML

Fair Value Measurements - Additional Information (Details)	3 Months Ended	6 Months Ended
	Jun. 30, 2018 USD ($)	Jun. 30, 2018 USD ($)
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Real estate impairment loss	$ 46,000,000	$ 46,000,000
Level 3 [Member] | Estimated Fair Value [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Estimated fair value of real estate assets	$ 138,000,000	$ 138,000,000

XML

Fair Value Measurements - Summary of Carrying Amounts and Fair Value of Financial Instruments (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Total assets	$ 55,797	$ 38,894
Total liabilities		317
Carrying Amount [Member]
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Preferred equity investments, net	35,925	35,817
Total assets	35,925	35,817
Notes and mortgages payable	3,599,800	3,583,100
Total liabilities	3,599,800	3,583,100
Fair Value [Member]
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Preferred equity investments, net	36,212	36,112
Total assets	36,212	36,112
Notes and mortgages payable	3,591,251	3,596,953
Total liabilities	$ 3,591,251	$ 3,596,953

XML

Revenues - Summary of Revenues (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Disaggregation Of Revenue [Line Items]
Rental income	$ 169,529	$ 158,187	$ 332,934	$ 313,577
Tenant reimbursement income	13,164	11,856	27,410	24,708
Fee income:
Total fee income	5,409	4,448	8,874	14,004
Lease termination income	29	895	57	961
Other income	3,288	2,318	6,415	5,690
Total fee and other income	8,726	7,661	15,346	20,655
Total revenues	191,419	177,704	375,690	358,940
Property Management Fees [Member]
Fee income:
Total fee income	1,490	1,532	2,992	3,142
Asset Management Fees [Member]
Fee income:
Total fee income	1,823	2,359	3,433	4,625
Acquisition, Disposition and Leasing Fee [Member]
Fee income:
Total fee income	1,750	250	1,750	5,570
Other Fee Income [Member]
Fee income:
Total fee income	$ 346	$ 307	$ 699	$ 667

XML

Revenues - Summary of Amount Receivable from Customers under Various Fee Agreement (Details) $ in Thousands	6 Months Ended
	Jun. 30, 2018 USD ($)
Disaggregation Of Revenue [Line Items]
Balance as of December 31, 2017	$ 17,082
Balance as of June 30, 2018	15,549
Revenue from Contract with Customers Under Various Fee Agreements [Member]
Disaggregation Of Revenue [Line Items]
Balance as of December 31, 2017	1,558
Balance as of June 30, 2018	1,651
Increase (decrease)	93
Revenue from Contract with Customers Under Various Fee Agreements [Member] | Property Management Fees [Member]
Disaggregation Of Revenue [Line Items]
Balance as of December 31, 2017	290
Balance as of June 30, 2018	274
Increase (decrease)	(16)
Revenue from Contract with Customers Under Various Fee Agreements [Member] | Asset Management Fees [Member]
Disaggregation Of Revenue [Line Items]
Balance as of December 31, 2017	762
Balance as of June 30, 2018	836
Increase (decrease)	74
Revenue from Contract with Customers Under Various Fee Agreements [Member] | Acquisition, Disposition and Leasing Fee [Member]
Disaggregation Of Revenue [Line Items]
Balance as of December 31, 2017	490
Balance as of June 30, 2018	490
Revenue from Contract with Customers Under Various Fee Agreements [Member] | Other Fee Income [Member]
Disaggregation Of Revenue [Line Items]
Balance as of December 31, 2017	16
Balance as of June 30, 2018	51
Increase (decrease)	$ 35

XML

Revenues - Additional Information (Details) - USD ($)	Jun. 30, 2018	Dec. 31, 2017
Other Fee Income [Member]
Disaggregation Of Revenue [Line Items]
Contract liabilities	$ 550,000	$ 387,000
All Other Non-Lease Revenue [Member]
Disaggregation Of Revenue [Line Items]
Contract liabilities	0	0
Contract asset	$ 0	$ 0

XML

Interest and Other Income, net - Schedule Of Interest And Other (Loss) Income, net (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Interest And Other Income [Abstract]
Preferred equity investment income	$ 917	$ 953	$ 1,816	$ 2,366
Interest and other income	978	511	2,004	596
Mark-to-market of investments in our deferred compensation plans	199	1,022	290	2,724
Total interest and other (loss) income, net	$ 2,094	$ 2,486	$ 4,110	$ 5,686

XML

Interest and Other Income, net - Schedule Of Interest And Other (Loss) Income, net (Parenthetical) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Schedule Of Investment Income Reported Amounts By Category [Line Items]
Preferred equity ownership percentage	24.40%		24.40%
PGRESS Equity Holdings L.P. [Member]
Schedule Of Investment Income Reported Amounts By Category [Line Items]
Preferred equity investment income, attributable to parent	$ 223	$ 232	$ 442	$ 576
Preferred equity ownership percentage	24.40%		24.40%

XML

Interest and Debt Expense - Details of Interest and Debt Expense (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Interest And Debt Expense [Abstract]
Interest expense	$ 34,055	$ 31,999	$ 67,376	$ 66,287
Amortization of deferred financing costs	2,754	2,818	5,515	5,548
Total interest and debt expense	$ 36,809	$ 34,817	$ 72,891	$ 71,835

XML

Incentive Compensation - Additional Information (Details) - USD ($)			3 Months Ended		6 Months Ended
	Apr. 03, 2018	Feb. 05, 2018	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock-based compensation expense			$ 4,650,000	$ 4,438,000	$ 10,915,000	$ 7,867,000
Equity Incentive Plan [Member] | Full Value Awards [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Shares available for grant			9,167,437		9,167,437
2017 Performance Program [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Performance measurement period, term		3 years
Performance measurement period, start date		Jan. 01, 2018
Performance measurement period, end date		Dec. 31, 2020
Percentage of award earned based on performance of absolute shareholder return		25.00%
Fair value of awards granted		$ 7,009,000
Vesting period		4 years
2017 Performance Program [Member] | At 30th Percentile [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Total shareholder return for participants to start earning awards on absolute basis		18.00%
2017 Performance Program [Member] | Exceeds 80th Percentile [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Percentage of award earned based on performance of relative shareholder return		75.00%
2017 Performance Program [Member] | Share-Based Compensation Award Tranche One [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Percentage of the awards that vest		50.00%
2017 Performance Program [Member] | Share-Based Compensation Award Tranche Two [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Percentage of the awards that vest		50.00%
2017 Performance Program [Member] | Minimum
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Total shareholder return for participants to fully earn awards on absolute basis		30.00%
2017 Performance Program [Member] | Minimum | At 30th Percentile [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Percentage of the awards that vest		18.00%
2015 Performance Program [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Performance measurement period, units forfeited	779,055

XML

Earnings Per Share - Summary of Computation of Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Numerator:
Net (loss) income attributable to common stockholders	$ (34,816)	$ 103,016	$ (33,702)	$ 103,388
Earnings allocated to unvested participating securities	(18)	(59)	(36)	(73)
Numerator for (loss) income per common share - basic and diluted	$ (34,834)	$ 102,957	$ (33,738)	$ 103,315
Denominator:
Denominator for basic (loss) income per common share - weighted average shares	240,336,485	234,990,468	240,324,183	232,968,602
Effect of dilutive stock-based compensation plans		20,000		27,000
Denominator for diluted (loss) income per common share - weighted average shares	240,336,485	235,010,830	240,324,183	232,995,822
(Loss) income per common share - basic and diluted	$ (0.14)	$ 0.44	$ (0.14)	$ 0.44

XML

Earnings Per Share - Summary of Computation of Earnings Per Share (Parenthetical) (Details) - shares shares in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Earnings Per Share [Abstract]
Effect of dilutive securities excluded from computation of earning per share	27,846	32,317	27,730	34,147

XML

Related Party - Additional Information (Details)		3 Months Ended		6 Months Ended
	Nov. 01, 2017	Jun. 30, 2018 USD ($) ft²	Jun. 30, 2017 USD ($)	Jun. 30, 2018 USD ($) ft²	Jun. 30, 2017 USD ($)	Dec. 31, 2017 USD ($)
Related Party Transaction [Line Items]
Due to affiliates		$ 27,299,000		$ 27,299,000		$ 27,299,000
Interest Expense, Related Party		97,000	$ 35,000	192,000	$ 69,000
Fee and other income		8,726,000	7,661,000	15,346,000	20,655,000
Accounts and other receivables, net		15,549,000		15,549,000		17,082,000
Transaction related costs		293,000	502,000	413,000	777,000
Accounts payable and accrued expenses		$ 123,720,000		$ 123,720,000		117,630,000
Area of related party lease | ft²		12,500,000		12,500,000
712 Fifth Avenue [Member]
Related Party Transaction [Line Items]
Equity method ownership percentage		50.00%		50.00%
Management Agreements [Member]
Related Party Transaction [Line Items]
Fee and other income		$ 215,000	210,000	$ 424,000	412,000
CNBB-RDF Holdings, LP [Member]
Related Party Transaction [Line Items]
Due to affiliates		24,500,000		24,500,000
CNBB-RDF Holdings Otto Family [Member]
Related Party Transaction [Line Items]
Due to affiliates		2,799,000		2,799,000
Unconsolidated Joint Ventures and Real Estate Funds [Member] | Management Agreements [Member]
Related Party Transaction [Line Items]
Property management, asset management, leasing and other related services fee income		4,558,000	3,369,000	7,094,000	11,775,000
Accounts and other receivables, net		$ 1,722,000		$ 1,722,000		1,627,000
Hamburg Trust Consulting GMBH ("HTC") [Member]
Related Party Transaction [Line Items]
Mark-up cost percentage		10.00%		10.00%
Transaction related costs		$ 42,000	134,000	$ 60,000	170,000
Accounts payable and accrued expenses		$ 83,000		$ 83,000		$ 51,000
Hamburg Trust Consulting GMBH ("HTC") [Member] | Chairman, Chief Executive Officer and President [Member]
Related Party Transaction [Line Items]
Percentage of ownership		100.00%		100.00%
Mannheim Trust [Member] | Board of Director [Member] | 712 Fifth Avenue [Member]
Related Party Transaction [Line Items]
Equity method ownership percentage		50.00%		50.00%
Area of related party lease | ft²		5,593		5,593
Lease rental income		$ 89,000	$ 84,000	$ 181,000	$ 178,000
Notes Payable To Related Parties | CNBB-RDF Holdings, LP [Member]
Related Party Transaction [Line Items]
Maturity Date	2018-11
Note payable, fixed bearing interest rate	1.40%
Notes Payable To Related Parties | CNBB-RDF Holdings Otto Family [Member]
Related Party Transaction [Line Items]
Maturity Date	2018-11
Note payable, fixed bearing interest rate	1.40%

XML

Commitments and Contingencies - Additional Information (Details)	9 Months Ended
	Sep. 30, 2017	Jun. 30, 2018 ft²	Feb. 16, 2018 USD ($)	Nov. 23, 2014 ft²
Other Commitments [Line Items]
Area of office properties | ft²		12,500,000
Minimum | New York State Division Of Taxation And Finance [Member]
Other Commitments [Line Items]
Loss Contingency, Estimate of Possible Loss | $			$ 0
Maximum | New York State Division Of Taxation And Finance [Member]
Other Commitments [Line Items]
Loss Contingency, Estimate of Possible Loss | $			$ 38,000,000
718 Fifth Avenue [Member]
Other Commitments [Line Items]
Put right notice period	12 months
712 Fifth Avenue [Member]
Other Commitments [Line Items]
Equity method ownership percentage		50.00%
Predecessor [Member] | 718 Fifth Avenue [Member]
Other Commitments [Line Items]
Percentage of tenancy-in-common interest in property				50.00%
Predecessor [Member] | 712 Fifth Avenue [Member]
Other Commitments [Line Items]
Equity method ownership percentage	50.00%
Owned by Affiliate [Member] | Predecessor [Member] | 718 Fifth Avenue [Member] | Third Party Affiliate [Member]
Other Commitments [Line Items]
Equity method ownership percentage				25.00%
Owned by Affiliate [Member] | Parent Company [Member] | Put Right Exercised [Member] | 718 Fifth Avenue [Member]
Other Commitments [Line Items]
Pre IPO ownership percentage	25.00%
Owned by Affiliate [Member] | Retail Type Space [Member] | Predecessor [Member] | 718 Fifth Avenue [Member]
Other Commitments [Line Items]
Area of office properties | ft²				19,050

XML

Segments - Additional Information (Details)	6 Months Ended
	Jun. 30, 2018 Segment
Segment Reporting [Abstract]
Number of reportable segments	3

XML

Segments - Schedule of NOI for Each Reportable Segment Information (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Segment Reporting Information [Line Items]
Property-related revenues	$ 186,010	$ 173,256	$ 366,816	$ 344,936
Property-related operating expenses	(67,646)	(63,461)	(136,624)	(129,432)
NOI from unconsolidated joint ventures	4,569	4,958	9,309	9,781
NOI	122,933	114,753	239,501	225,285
New York [Member]
Segment Reporting Information [Line Items]
Property-related revenues	115,536	106,602	229,181	211,926
Property-related operating expenses	(45,292)	(43,289)	(92,453)	(88,048)
NOI from unconsolidated joint ventures	4,493	4,838	9,158	9,591
NOI	74,737	68,151	145,886	133,469
Washington, D.C. [Member]
Segment Reporting Information [Line Items]
Property-related revenues	15,435	18,138	30,884	41,925
Property-related operating expenses	(5,736)	(6,565)	(11,581)	(15,489)
NOI	9,699	11,573	19,303	26,436
San Francisco [Member]
Segment Reporting Information [Line Items]
Property-related revenues	55,344	48,201	107,243	90,140
Property-related operating expenses	(15,048)	(11,120)	(29,164)	(21,725)
NOI	40,296	37,081	78,079	68,415
Other [Member]
Segment Reporting Information [Line Items]
Property-related revenues	(305)	315	(492)	945
Property-related operating expenses	(1,570)	(2,487)	(3,426)	(4,170)
NOI from unconsolidated joint ventures	76	120	151	190
NOI	$ (1,799)	$ (2,052)	$ (3,767)	$ (3,035)

XML

Segments - Schedule of Reconciliation of NOI to Net (Loss) Income Attributable to Common Stockholders (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Segment Reporting [Abstract]
NOI	$ 122,933,000	$ 114,753,000	$ 239,501,000	$ 225,285,000
Fee income	5,409,000	4,448,000	8,874,000	14,004,000
Depreciation and amortization expense	(64,775,000)	(68,636,000)	(129,931,000)	(131,628,000)
General and administrative expenses	(17,195,000)	(16,573,000)	(29,826,000)	(30,154,000)
Transaction related costs	(293,000)	(502,000)	(413,000)	(777,000)
NOI from unconsolidated joint ventures	(4,569,000)	(4,958,000)	(9,309,000)	(9,781,000)
Income from unconsolidated joint ventures	2,521,000	16,535,000	2,459,000	18,472,000
Loss from unconsolidated real estate funds	(14,000)	(2,411,000)	(80,000)	(2,123,000)
Interest and other income, net	2,094,000	2,486,000	4,110,000	5,686,000
Interest and debt expense	(36,809,000)	(34,817,000)	(72,891,000)	(71,835,000)
Loss on early extinguishment of debt		(5,162,000)		(7,877,000)
Real estate impairment loss	(46,000,000)		(46,000,000)
Gain on sale of real estate		133,989,000		133,989,000
Unrealized gain on interest rate swaps				1,802,000
Net (loss) income before income taxes	(36,698,000)	139,152,000	(33,506,000)	145,063,000
Income tax benefit (expense)	120,000	(970,000)	(357,000)	(5,252,000)
Net (loss) income	(36,578,000)	138,182,000	(33,863,000)	139,811,000
Consolidated joint ventures	(1,752,000)	(1,897,000)	(2,807,000)	(3,188,000)
Consolidated real estate fund	(152,000)	(20,169,000)	(582,000)	(20,081,000)
Operating Partnership	3,666,000	(13,100,000)	3,550,000	(13,154,000)
Net (loss) income attributable to common stockholders	$ (34,816,000)	$ 103,016,000	$ (33,702,000)	$ 103,388,000

XML

Segments - Schedule of Total Assets for Each Reportable Segments Information (Details) - USD ($) $ in Thousands		Jun. 30, 2018	Dec. 31, 2017
Segment Reporting Information [Line Items]
Total assets	[1]	$ 8,915,913	$ 8,917,661
New York [Member]
Segment Reporting Information [Line Items]
Total assets		5,518,698	5,511,061
Washington, D.C. [Member]
Segment Reporting Information [Line Items]
Total assets		638,793	693,408
San Francisco [Member]
Segment Reporting Information [Line Items]
Total assets		2,419,887	2,421,173
Other [Member]
Segment Reporting Information [Line Items]
Total assets		$ 338,535	$ 292,019

[1] Represents the consolidated assets and liabilities of Paramount Group Operating Partnership LP, a Delaware limited partnership (the “Operating Partnership”). The Operating Partnership is a consolidated variable interest entity (“VIE”), of which we are the sole general partner and own approximately 90.5% as of June 30, 2018. The assets and liabilities of the Operating Partnership, as of June 30, 2018, include $2,001,880 and $1,265,423 of assets and liabilities, respectively, of certain VIEs that are consolidated by the Operating Partnership. See Note 12, Variable Interest Entities.

XML

Subsequent Events - Additional Information (Details)	Jul. 01, 2018 USD ($) ft²	Jun. 30, 2018 ft²
Subsequent Event [Line Items]
Area of office and retail properties		12,500,000
2099 Pennsylvania Avenue [Member] | Subsequent Event [Member]
Subsequent Event [Line Items]
Area of office and retail properties	208,776
Sale agreement amount | $	$ 220,000,000