10-K

,  

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

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

For the Fiscal Year Ended: December 31, 2020

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

Securities registered pursuant to section 12(b) of the Act:

Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock of Paramount Group, Inc., $0.01 par value per share	PGRE	New York Stock Exchange

Securities registered pursuant to section 12(g) of the Act:

Title of each class

None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes   ☒    No  ☐

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.    Yes  ☐    No    ☒  

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 every Interactive Data File required to be submitted 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 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	☐	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 has filed a report on and attestation to its managements’ assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C 7262(b)) by the registered public accounting firm that prepared or issued its audit report.  ☒

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

As of February 1, 2021, there were 218,991,724 shares of the registrant’s common stock outstanding.

As of June 30, 2020, the aggregate market value of the 187,870,660 shares of common stock held by non-affiliates of the Registrant was $1,448,483,000 based on the June 30, 2020 closing share price of our common stock of $7.71 per share on the New York Stock Exchange.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Proxy Statement for the Annual Stockholders’ Meeting (which is scheduled to be held on May 13, 2021) to be filed within 120 days after the end of the registrant’s fiscal year are incorporated by reference in Part III of this Annual Report on Form 10-K.

Table of Contents

Item	Financial Information	Page Number
Part I.
Item 1.	Business	8
Item 1A.	Risk Factors	13
Item 1B.	Unresolved Staff Comments	39
Item 2.	Properties	40
Item 3.	Legal Proceedings	44
Item 4.	Mine Safety Disclosures	44
Part II.
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	45
Item 6.	Selected Financial Data	48
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	49
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	77
Item 8.	Financial Statements and Supplementary Data	78
Item 9.	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure	118
Item 9A.	Controls and Procedures	118
Item 9B.	Other Information	120
Part III.
Item 10.	Directors, Executive Officers and Corporate Governance (1)	120
Item 11.	Executive Compensation (1)	120
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters (1)	120
Item 13.	Certain Relationships and Related Transactions, and Director Independence (1)	120
Item 14.	Principal Accounting Fees and Services (1)	120
Part IV.
Item 15.	Exhibits, Financial Statements Schedules	121
Item 16.	Form 10-K Summary	121

⁽¹⁾ These items are omitted in whole or in part because the registrant will file a definitive Proxy Statement pursuant to Regulation 14A under the Securities Exchange Act of 1934 with the Securities and Exchange Commission no later than 120 days after December 31, 2020, portions of which are incorporated by reference herein.

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Forward-Looking Statements

We make statements in this Annual Report on Form 10-K 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:

• the negative impact of the coronavirus 2019 (“COVID-19”) global pandemic on the U.S., regional and global economies and our tenants’ financial condition and results of operations;

• unfavorable market and economic conditions in the United States, including New York City and San Francisco, and globally;  

• risks associated with high concentrations of our properties in New York City 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;  

• trends in the office real estate industry including telecommuting, flexible work schedules, open workplaces and teleconferencing;

• 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;  

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• 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 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”);  

• 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 Annual Report on Form 10-K, including those set forth under the heading “Risk Factors.”  

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 this report.

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Summary Risk Factors

The risk factors detailed in Item 1A entitled “Risk Factors” in this Annual Report on Form 10-K, are the risks that we believe are material to our investors and a reader should carefully consider them. The following is a summary of the risk factors detailed in Item 1A:

• Unfavorable market and economic conditions in the United States and globally and in the specific markets or submarkets where our properties are located could adversely affect occupancy levels, rental rates, rent collections, operating expenses, and the overall market value of our assets, and impair our ability to sell, recapitalize or refinance our assets.

• All of our properties are located in New York City and San Francisco and adverse economic or regulatory developments in these areas could negatively affect our results of operations, financial condition and ability to make distributions to our stockholders.

• A significant portion of our revenue is generated from three of our properties – 1633 Broadway, 1301 Avenue of the Americas and One Market Plaza.

• We may be unable to renew leases, lease currently vacant space or vacating space on favorable terms or at all as leases expire.

• We are exposed to risks associated with property redevelopment and repositioning that could adversely affect us.

• We may be required to make rent or other concessions and/or significant capital expenditures to improve our properties in order to retain and attract tenants.

• We would be adversely affected if any of our significant tenants experienced a material business downturn.

• We may be adversely affected by trends in the office real estate industry, including telecommuting, flexible work schedules, open workplaces and teleconferencing.

• Real estate investments are relatively illiquid and may limit our flexibility.

• Competition could limit our ability to acquire attractive investment opportunities.

• We are subject to losses that are uninsurable, not economically insurable or that are in excess of our insurance coverage.

• We are subject to risks from natural disasters, and from the effects of climate change.

• Terrorist attacks and/or shooting incidents may adversely affect our ability to generate revenues and the value of our properties.

• We face risks associated with our tenants being designated “Prohibited Persons” by the Office of Foreign Assets Control and similar requirements.

• We may become subject to liability relating to environmental and health and safety matters.

• We may incur significant costs complying with the Americans with Disabilities Act of 1990, and similar laws.

• We may be unable to identify and successfully complete acquisitions and, even if acquisitions are identified and completed, we may fail to successfully operate acquired properties.

• We are subject to risks involved in real estate activity through joint ventures and private equity real estate funds.

• Contractual commitments with existing private equity real estate funds and our investment club may limit our ability to acquire properties, issue loans or invest in preferred equity directly in the near term.

• The COVID-19 pandemic may continue to have an adverse impact on our tenants’ businesses, including their ability to pay rent, which could materially impact our financial condition and results of operations.

• Capital and credit market conditions may adversely affect our access to various sources of capital or financing and/or the cost of capital, which could impact our business activities, dividends, earnings and common stock price.

• We may be subject to litigation, which could have an adverse effect on us.

• We may be subject to unknown or contingent liabilities related to properties or businesses that we acquire.

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• Extensive regulation of our investment management businesses affects our activities and creates the potential for significant liabilities and penalties, and increased regulatory focus could result in additional burdens on this business.

• We cannot predict the impact future actions by regulators or government bodies, including the U.S. Federal Reserve, will have on real estate debt markets or on our business, and any such actions may negatively impact us.

• The ability of stockholders to control our policies and effect a change of control of our company is limited by certain provisions of our charter and bylaws and by Maryland law.

• Conflicts of interest may exist or could arise in the future between the interests of our stockholders and the interests of holders of common units, which may impede business decisions that could benefit our stockholders.

• If there are deficiencies in our disclosure controls and procedures or internal control over financial reporting, we may be unable to accurately present our financial statements.

• We may have assumed unknown liabilities in connection with the Formation Transactions.

• We have a substantial amount of indebtedness that may limit our financial and operating activities and may adversely affect our ability to incur additional debt to fund future needs.

• Variable rate debt is subject to interest rate risk that could increase our interest expense, increase the cost to refinance and increase the cost of issuing new debt.

• We may be adversely affected by the potential discontinuation of LIBOR.

• Mortgage debt obligations expose us to the possibility of foreclosure, which could result in the loss of our investment in a property or group of properties subject to mortgage debt.

• The market price and trading volume of our common stock may be volatile, and may decline due to the large number of our shares eligible for future sale.

• Failure to qualify or to maintain our qualification as a REIT would have significant adverse consequences to the value of our common stock.

• We may owe certain taxes notwithstanding our qualification as a REIT.

• Dividends payable by REITs generally do not qualify for reduced tax rates applicable to non-corporate taxpayers.

• Complying with the REIT requirements may cause us to forego otherwise attractive opportunities or liquidate certain of our investments.

• We may be subject to a 100% penalty tax on any prohibited transactions that we enter into, or may be required to forego certain otherwise beneficial opportunities in order to avoid the penalty tax on prohibited transactions.

• REIT distribution requirements could adversely affect our liquidity and our ability to execute our business plan.

• Preferred equity and certain debt investments could impact our compliance with REIT income and assets tests.

• We depend on key personnel, and the loss of services of members of our senior management team, or our inability to attract highly qualified personnel, could adversely affect our business.

• We face risks associated with cyber security breaches and other significant disruptions of our IT networks and systems.

This section contains forward-looking statements. You should refer to the explanation of the qualifications and limitations on forward-looking statements beginning on page 4.

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PART I

ITEM 1. BUSINESS

General

Paramount Group, Inc. is 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 and San Francisco. 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 conduct our business through, and substantially all our interests in properties and investments are held by, the Operating Partnership. We are the sole general partner of, and owned approximately 91.3% of the Operating Partnership as of December 31, 2020. As of December 31, 2020, our portfolio consisted of 13 Class A office properties aggregating approximately 12.9 million square feet that was 95.4% leased and 95.1% occupied.

Our Competitive Strengths

We believe that we distinguish ourselves from other owners and operators of office properties through the following competitive strengths:

• Premier Portfolio of High-Quality Office Properties in the Most Desirable Submarkets. We have assembled a premier portfolio of Class A office properties located exclusively in carefully selected submarkets of New York City and San Francisco. Our submarkets are among the strongest commercial real estate submarkets in the United States for office properties due to a combination of their high barriers to entry, constrained supply, strong economic characteristics and a deep pool of prospective tenants in various industries that have demonstrated a strong demand for high-quality office space. Our markets are international business centers, characterized by a broad tenant base with a highly educated workforce, a mature and functional transportation infrastructure and an overall amenity rich environment. These markets are home to a diverse range of large and growing enterprises in a variety of industries, including financial services, technology, media and entertainment, consulting, legal and other professional services. As a result of the above factors, the submarkets in which we are invested have generally outperformed the broader markets in which they are located.

• Demonstrated Acquisition and Operational Expertise. Over the past 23 years, we have developed and refined our highly successful real estate investment strategy. We have a proven reputation as a value-enhancing, hands-on operator of Class A office properties. We target opportunities with a value-add component, where we can leverage our operating expertise, deep tenant relationships, and proactive approach to asset and property management. In certain instances, we may acquire properties with existing or expected future vacancy or with significant value embedded in existing below-market leases, which we will be able to mark-to-market over time. Even fully leased properties from time to time present us with value-enhancing opportunities which we have been able to capitalize on in the past.

• Value-Add Renovation and Repositioning and Development Capabilities. We have expertise in renovating, repositioning and developing office properties.  We have historically acquired well-located assets that have either suffered from a need for physical improvement to upgrade the property to Class A space, have been underperforming due to a lack of a coherent leasing and branding strategy or have been under-managed and could be immediately enhanced by our hands-on approach. We are experienced in upgrading, renovating and modernizing building lobbies, corridors, bathrooms, elevator cabs and base building systems and updating antiquated spaces to include new ceilings, lighting and other amenities. We have also successfully aggregated and are continuing to combine smaller spaces to offer larger blocks of space, including multiple floors, which are attractive to larger, high credit-quality tenants. We believe that the post-renovation quality of our buildings and our hands-on asset and property management approach attract high credit-quality tenants and allow us to increase our cash flow.

• Deep Relationships with Diverse, High Credit-Quality Tenant Base. We have long-standing relationships with high-quality tenants, including Allianz Global Investors, LP, Clifford Chance LLP, Credit Agricole Corporate & Investment Bank, First Republic Bank, Google Inc., Morgan Stanley, Norton Rose Fulbright, Showtime Networks Inc., TD Bank, N.A., and Warner Music Group.

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• Strong Internal Growth Prospects. We have substantial embedded rent growth within our portfolio as a result of the strong historical and projected future rental rate growth within our submarkets, contractual fixed rental rate increases included in our leases and incremental rent from the lease-up of vacant and expiring leases in our portfolio.

• Conservative Balance Sheet. Over the past several decades, we have built strong relationships with numerous lenders, investors and other capital providers. Our financing track record and depth of relationships provide us with significant financial flexibility and capacity to fund future growth in both good and bad economic environments. We have a strong capital structure that supports this flexibility and growth. As of December 31, 2020, our share of net debt to enterprise value was 59.5% and we had $434.5 million of cash and cash equivalents and $1.0 billion of borrowing capacity under our revolving credit facility.

• Proven Investment Management Business. We have a successful investment management business, where we serve as the general partner and property manager of certain private equity real estate funds for institutional investors and high-net-worth individuals. We have also entered into a number of joint ventures with institutional investors, high-net-worth individuals and other sophisticated real estate investors through which we and our funds have invested in real estate properties. We expect our investment management business to be a complementary part of our overall real estate investment business.

• Seasoned and Committed Management Team with Proven Track Record. Our senior management team, led by Albert Behler, our Chairman, Chief Executive Officer and President, has been in the commercial real estate industry for an average of 24 years, and has worked at our company for an average of 14 years. Our senior management team is highly regarded in the real estate community and has extensive relationships with a broad range of brokers, owners, tenants and lenders. We have developed relationships that enable us to secure high credit-quality tenants on attractive terms and provide us with potential off-market acquisition opportunities. We believe that our proven acquisition and operating expertise enables us to gain advantages over our competitors through superior acquisition sourcing, focused leasing programs, active asset and property management and first-class tenant service.

Objectives and Strategy

Our primary business objective is to enhance shareholder value by increasing cash flow from operations. The strategies we intend to execute to achieve this objective include:

• Leasing vacant and expiring space, at market rents;

• Maintaining a disciplined acquisition strategy focused on owning and operating Class A office properties in select central business district submarkets of New York City and San Francisco;

• Redeveloping and repositioning properties to increase returns; and

• Proactively managing our portfolio to increase occupancy and rental rates.

During the past three years, we sold the remaining assets in our Washington, D.C. portfolio, thereby exiting the Washington, D.C. office market. These dispositions represent a strategic shift in our operations as our focus was to become a bicoastal REIT in two of the most resilient markets in the world – New York City and San Francisco.

Significant Tenants

None of our tenants accounted for more than 10% of total revenues in the years ended December 31, 2020, 2019 and 2018.

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Human Capital

We believe that our employees are our greatest assets. Our continued success and growth depends, in large part, upon the efforts of our employees and on our ability to attract and retain highly qualified personnel. Our compensation program is designed to incentivize employees by offering competitive compensation comprised of fixed and variable pay including base salaries and cash bonuses. Several of our employees also receive equity awards that are subject to vesting over a three-to-five year period based on continued service. We believe equity awards serve as an additional retention tool for our employees. In addition, we offer our employees benefits that support their health, financial and emotional well-being. We strive to maintain a safe and healthy workplace and a corporate culture that promotes diversity and inclusion and is free from discrimination and harassment. We promote the professional development of our employees by offering regular opportunities to participate in trainings and education programs. Certain of our employees are covered by collective bargaining agreements.

As of December 31, 2020, we had 323 employees, including 94 corporate employees and 229 on-site building and property management personnel.

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.

Competition

The leasing of real estate is highly competitive in markets in which we operate. We compete with numerous acquirers, developers, owners and operators of commercial real estate, many of which own or may seek to acquire or develop properties similar to ours in the same markets in which our properties are located. The principal means of competition are rent charged, location, services provided and the nature and condition of the facility to be leased. In addition, we face competition from other real estate companies including other REITs, private real estate funds, domestic and foreign financial institutions, life insurance companies, pension trusts, partnerships, individual investors and others that may have greater financial resources or access to capital than we do or that are willing to acquire properties in transactions which are more highly leveraged or are less attractive from a financial viewpoint than we are willing to pursue. If our competitors offer space at rental rates below current market rates, below the rental rates we currently charge our tenants, in better locations within our markets or in higher quality facilities, we may lose potential tenants and we may be pressured to reduce our rental rates below those we currently charge in order to retain tenants when our tenants’ leases expire.

Governmental Regulations

Compliance with various governmental regulations has an impact on our business, including our capital expenditures, earnings and competitive position, which can be material. We incur costs to monitor and take actions to comply with governmental regulations that are applicable to our business, which include, among others, federal securities laws and regulations, applicable stock exchange requirements, REIT and other tax laws and regulations, environmental and health and safety laws and regulations, local zoning, usage and other regulations relating to real property, the Americans with Disabilities Act of 1990 and laws and regulations applicable to our investment management business, including the U.S. Investment Advisers Act of 1940, the Alternative Investment Fund Managers Directive, 2011/61/EU and related laws and regulations. See Item 1A, Risk Factors, for a discussion of material risks to us, including, to the extent material, to our competitive position, relating to governmental regulations, and see Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operation, together with our consolidated financial statements, including the related notes included therein, for a discussion of material information relevant to an assessment of our financial condition and results of operations, including, to the extent material, the effects that compliance with governmental regulations may have upon our capital expenditures and earnings.

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Executive Office

Our principal executive offices are located at 1633 Broadway, Suite 1801, New York, NY 10019; telephone (212) 237-3100.

Available Information

Copies of our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to these reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act, are available free of charge on our website (www.paramount-group.com) as soon as reasonably practicable after they are electronically filed with, or furnished to, the Securities and Exchange Commission (“SEC”). You may also obtain our reports by accessing the EDGAR database at the SEC’s website at http://www.sec.gov or copies of these documents are also available directly from us, free of charge upon written request to Investor Relations, 1633 Broadway, Suite 1801, New York, NY 10019; telephone (212) 237-3100. Also available on our website are copies of our (i) Nominating and Corporate Governance Committee Charter, (ii) Corporate Governance Guidelines, (iii) Compensation Committee Charter, (iv) Code of Business Conduct and Ethics, (v) Audit Committee Charter and (vi) Stockholder Communication Policy. In the event of any changes to these items, revised copies will be made available on our website.    

Supplemental U.S. Federal Income Tax Considerations

The following discussion supplements and updates the disclosures under “Certain United States Federal Income Tax Considerations” in the prospectus dated May 3, 2018 contained in our Registration Statement on Form S-3 filed with the SEC on May 3, 2018.  

Consolidated Appropriations Act

The Consolidated Appropriations Act amended various provisions of the Code and implicates certain tax-related disclosures contained in the prospectus.  The discussion contained in the two paragraphs under “Certain United States Federal Income Tax Considerations–Taxation of Non-U.S. Stockholders–Special FIRPTA Rules” is replaced with the following two paragraphs:

For periods on or after December 18, 2015, to the extent our stock is held directly (or indirectly through one or more partnerships) by a “qualified shareholder,” it will not be treated as a U.S. real property interest (“USRPI”) with respect to such qualified shareholder. Thus, gain treated as gain from the sale or exchange of our stock (including distributions treated as gain from the sale or exchange of our stock) will not be subject to tax unless such gain is treated as effectively connected with the qualified shareholder’s conduct of a U.S. trade or business. For these purposes, a qualified shareholder is generally a non-U.S. stockholder that (i)(A) is eligible for treaty benefits under an income tax treaty with the United States that includes an exchange of information program, and the principal class of interests of which is listed and regularly traded on one or more stock exchanges as defined by the treaty, or (B) is a foreign limited partnership organized in a jurisdiction with an exchange of information agreement with the United States and that has a class of regularly traded limited partnership units (having a value greater than 50% of the value of all partnership units) on the New York Stock Exchange or Nasdaq, (ii) is a “qualified collective investment vehicle” (within the meaning of Section 897(k)(3)(B) of the Code) and (iii) maintains records of persons holding 5% or more of the class of interests described in clauses (i)(A) or (i)(B) above. However, in the case of a qualified shareholder having one or more “applicable investors,” the exception described in the first sentence of this paragraph will not apply to the applicable percentage of the qualified shareholder’s stock (with “applicable percentage” generally meaning the percentage of the value of the interests in the qualified shareholder held by applicable investors after applying certain constructive ownership rules). The applicable percentage of the amount realized by a qualified shareholder on the disposition of our stock or with respect to a distribution from us attributable to gain from the sale or exchange of a USRPI will be treated as amounts realized from the disposition of USRPIs. Such treatment shall also apply to applicable investors in respect of distributions treated as a sale or exchange of stock with respect to a qualified shareholder. For these purposes, an “applicable investor” is a person (other than a qualified shareholder) who generally holds an interest in the qualified shareholder and holds more than 10% of our stock applying certain constructive ownership rules.

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For periods on or after December 18, 2015, for FIRPTA purposes neither a “qualified foreign pension fund” (as defined below) nor a “qualified controlled entity” (as defined below) is treated as a non-U.S. stockholder. Accordingly, the U.S. federal income tax treatment of ordinary dividends received by qualified foreign pension funds and qualified controlled entities will be determined without regard to the FIRTPA rules, and their gain from the sale or exchange of our stock, as well as our capital gain dividends and distributions treated as gain from the sale or exchange of our stock, will not be subject to U.S. federal income tax unless such gain is treated as effectively connected with the qualified foreign pension fund’s (or the qualified controlled entity’s) conduct of a U.S. trade or business. A “qualified foreign pension fund” is an organization or arrangement (i) created or organized in a foreign country, (ii) established by a foreign country (or one or more political subdivisions thereof) or one or more employers to provide retirement or pension benefits to current or former employees (including self-employed individuals) or their designees as a result of, or in consideration for, services rendered, (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. A “qualified controlled entity” for purposes of the above summary means an entity all of the interests of which are held by a qualified foreign pension fund.  Alternatively, under proposed Treasury Regulations that taxpayers generally may rely on, but which are subject to change, a “qualified controlled entity” is a trust or corporation organized under the laws of a foreign country all of the interests of which are held by one or more qualified foreign pension funds either directly or indirectly through one or more qualified controlled entities or partnerships.

FATCA Proposed Treasury Regulations

On December 18, 2018, the Internal Revenue Service promulgated proposed regulations under Sections 1471-1474 of the Code (commonly referred to as FATCA), which proposed regulations eliminate FATCA withholding on gross proceeds and thus implicate certain tax-related disclosures contained in the prospectus. While these regulations have not yet been finalized, taxpayers are generally entitled to rely on the proposed regulations (subject to certain limited exceptions). As a result, the discussion in the final sentence of the discussion under “Certain United States Federal Income Tax Considerations–Taxation of Non-U.S. Stockholders–FATCA Withholding on Certain Foreign Accounts and Entities” is deleted and replaced with the following:

While withholding under FATCA would have applied to the gross proceeds from a disposition of property that can produce U.S. source interest or dividends after December 31, 2018, recently proposed Treasury Regulations eliminate FATCA withholding on payments of gross proceeds entirely. Taxpayers generally may rely on these proposed Treasury Regulations until final Treasury Regulations are issued. Withholding under FATCA currently applies with respect to other withholding payments, including, e.g., U.S. source interest and dividends.

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ITEM 1A. RISK FACTORS

Set forth below are the risks that we believe are material to our investors. This section contains forward-looking statements. You should refer to the explanation of the qualifications and limitations on forward-looking statements beginning on page 4.

Risks Related to Real Estate

Unfavorable market and economic conditions in the United States and globally and in the specific markets or submarkets where our properties are located could adversely affect occupancy levels, rental rates, rent collections, operating expenses, and the overall market value of our assets, impair our ability to sell, recapitalize or refinance our assets and have an adverse effect on our results of operations, financial condition and our ability to make distributions to our stockholders.

Unfavorable market conditions in the areas in which we operate and unfavorable economic conditions in the United States and globally may significantly affect our occupancy levels, rental rates, rent collections, operating expenses, the market value of our assets and our ability to strategically acquire, dispose, recapitalize or refinance our properties on economically favorable terms or at all. Our ability to lease our properties at favorable rates may be adversely affected by increases in supply of office space in our markets and is dependent upon overall economic conditions, which are adversely affected by, among other things, job losses and unemployment levels, recession, stock market volatility and uncertainty about the future. Some of our major expenses, including mortgage payments and real estate taxes, generally do not decline when related rents decline. We expect that any declines in our occupancy levels, rental revenues and/or the values of our buildings would cause us to have less cash available to pay our indebtedness, fund necessary capital expenditures and to make distributions to our stockholders, which could negatively affect our financial condition and the market value of our securities. Our business may be affected by the volatility and illiquidity in the financial and credit markets, a general global economic recession and other market or economic challenges experienced by the real estate industry or the U.S. economy as a whole. Our business may also be adversely affected by local economic conditions, as all of our revenues are derived from properties located in New York City and San Francisco. Factors that may affect our occupancy levels, our rental revenues, our net operating income (“NOI”), our funds from operations (“FFO”) and/or the value of our properties include the following, among others:

• downturns in global, national, regional and local economic conditions;

• declines in the financial condition of our tenants, many of which are financial, legal and other professional firms, which may result in tenant defaults under leases due to bankruptcy, lack of liquidity, operational failures or other reasons;

• the inability or unwillingness of our tenants to pay rent increases;

• significant job losses in the financial services, professional services and technology and media industries, which may decrease demand for our office space, causing market rental rates and property values to be impacted negatively;

• an oversupply of, or a reduced demand for, Class A office space;

• changes in market rental rates in our markets;

• changes in space utilization by our tenants due to technology, economic conditions and business culture; and

• economic conditions that could cause an increase in our operating expenses, such as increases in property taxes (particularly as a result of increased local, state and national government budget deficits and debt and potentially reduced federal aid to state and local governments), utilities, insurance, compensation of on-site associates and routine maintenance.

All of our properties are located in New York City and San Francisco, and adverse economic or regulatory developments in these areas could negatively affect our results of operations, financial condition and ability to make distributions to our stockholders.

All of our properties are located in New York City and San Francisco. As a result, our business is dependent on the condition of the economy in those cities, which may expose us to greater economic risks than if we owned a more geographically diverse portfolio. We are susceptible to adverse developments in the New York City and San Francisco economic and regulatory environments (such as business layoffs or downsizing, industry slowdowns, relocations of businesses, increases in real estate and other taxes, costs of complying with governmental regulations or increased regulation). Such adverse developments could materially reduce the value of our real estate portfolio and our rental revenues, and thus adversely affect our ability to service current debt and to pay dividends to stockholders.

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We are subject to risks inherent in ownership of real estate.

Real estate cash flows and values are affected by a number of factors, including competition from other available properties and our ability to provide adequate property maintenance and insurance and to control operating costs. Real estate cash flows and values are also affected by such factors as government regulations (including zoning, usage and tax laws), interest rate levels, the availability of financing, property tax rates, utility expenses, potential liability under environmental and other laws and changes in environmental and other laws.

A significant portion of our revenue is generated from three properties.

As of December 31, 2020, approximately 63% of our total consolidated revenue was generated from three of our properties – 1633 Broadway, 1301 Avenue of the Americas and One Market Plaza. Our results of operations and cash available for distribution to our stockholders would be adversely affected if any of these properties were materially damaged or destroyed. Additionally, our results of operations and cash available for distribution to our stockholders would be adversely affected if a significant number of our tenants at these properties experienced a downturn in their business, which may weaken their financial condition and result in their failure to make timely rental payments, defaulting under their leases or filing for bankruptcy.

We may be unable to renew leases, lease currently vacant space or vacating space on favorable terms or at all as leases expire, which could adversely affect our financial condition, results of operations and cash flow.

As of December 31, 2020, the vacancy rate of our portfolio was 4.6%. In addition, 8.2% of the square footage of the properties in our portfolio will expire by the end of 2021. We cannot guarantee you that the expiring leases will be renewed or that our properties will be re-leased at rental rates equal to or above current rental rates. If the rental rates of our properties decrease, our existing tenants do not renew their leases or we do not re-lease a significant portion of our available and soon-to-be-available space, our financial condition, results of operations, cash flow, market value of common stock and our ability to satisfy our principal and interest obligations and to make distributions to our stockholders would be adversely affected.

We are exposed to risks associated with property redevelopment and repositioning that could adversely affect us, including our financial condition and results of operations.

To the extent that we continue to engage in redevelopment and repositioning activities with respect to our properties, we will be subject to certain risks, which could adversely affect us, including our financial condition and results of operations. These risks include, without limitation, (i) the availability and pricing of financing on favorable terms or at all; (ii) the availability and timely receipt of zoning and other regulatory approvals; (iii) the potential for the fluctuation of occupancy rates and rents at redeveloped properties, which may result in our investment not being profitable; (iv) start up, repositioning and redevelopment costs may be higher than anticipated; (v) cost overruns and untimely completion of construction (including risks beyond our control, such as weather or labor conditions, or material shortages); (vi) the potential that we may fail to recover expenses already incurred if we abandon development or redevelopment opportunities after we begin to explore them; (vii) the potential that we may expend funds on and devote management time to projects which we do not complete; (viii) the inability to complete construction and leasing of a property on schedule, resulting in increased debt service expense and construction or redevelopment costs; and (ix) the possibility that properties will be leased at below expected rental rates. These risks could result in substantial unanticipated delays or expenses and could prevent the initiation or the completion of redevelopment activities, any of which could have an adverse effect on our financial condition, results of operations, cash flow, the market value of our common stock and ability to satisfy our principal and interest obligations and to make distributions to our stockholders.

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We may be required to make rent or other concessions and/or significant capital expenditures to improve our properties in order to retain and attract tenants, which could adversely affect us, including our financial condition, results of operations and cash flow.

In the event that there are adverse economic conditions in the real estate market and demand for office space decreases, with respect to our current vacant space and upon expiration of leases at our properties, we may be required to increase tenant improvement allowances or concessions to tenants, accommodate increased requests for renovations, build-to-suit remodeling and other improvements or provide additional services to our tenants, all of which could negatively affect our cash flow. In addition, a few of our existing properties are pre-war office properties, which may require frequent and costly maintenance in order to retain existing tenants or attract new tenants in sufficient numbers. If the necessary capital is unavailable, we may be unable to make these significant capital expenditures. This could result in non-renewals by tenants upon expiration of their leases and our vacant space remaining untenanted, which could adversely affect our financial condition, results of operations, cash flow and market value of our common stock.

We depend on significant tenants in our office portfolio, which could cause an adverse effect on us, including our results of operations and cash flow, if any of our significant tenants were adversely affected by a material business downturn or were to become bankrupt or insolvent.

Our rental revenue depends on entering into leases with and collecting rents from tenants. While no single tenant accounts for more than 10% of our rental revenue, our six largest tenants in the aggregate account for approximately 25% of our share of rental revenue. General and regional economic conditions may adversely affect our major tenants and potential tenants in our markets. Our major tenants may experience a material business downturn, which could potentially result in a failure to make timely rental payments and/or a default under their leases. In many cases, through tenant improvement allowances and other concessions, we have made substantial up front investments in the applicable leases that we may not be able to recover. In the event of a tenant default, we may experience delays in enforcing our rights and may also incur substantial costs to protect our investments.

The bankruptcy or insolvency of a major tenant or lease guarantor may adversely affect the income produced by our properties and may delay our efforts to collect past due balances under the relevant leases and could ultimately preclude collection of these sums altogether. If a lease is rejected by a tenant in bankruptcy, we would have only a general unsecured claim for damages that is limited in amount and which may only be paid to the extent that funds are available and in the same percentage as is paid to all other holders of unsecured claims.

If any of our significant tenants were to become bankrupt or insolvent, suffer a downturn in their business, default under their leases, fail to renew their leases or renew on terms less favorable to us than their current terms, our results of operations and cash flow could be adversely affected.

We may be adversely affected by trends in the office real estate industry, including telecommuting, flexible work schedules, open workplaces and teleconferences.

Telecommuting, flexible work schedules, open workplaces, teleconferencing and video-conferencing are becoming more common, including due to the impact of the COVID-19 pandemic. These practices enable businesses to reduce their space requirements.  There is also an increasing trend among some businesses to utilize shared office spaces and co-working spaces. A continuation of the movement towards these practices could over time erode the overall demand for office space and, in turn, place downward pressure on occupancy, rental rates and property valuations.

Real estate investments are relatively illiquid and may limit our flexibility.

Equity real estate investments are relatively illiquid, which may tend to limit our ability to react promptly to changes in economic or other market conditions. Our ability to dispose of assets in the future will depend on prevailing economic and market conditions. Our inability to sell our properties on favorable terms or at all could have an adverse effect on our sources of working capital and our ability to satisfy our debt obligations. In addition, real estate can at times be difficult to sell quickly at prices we find acceptable. The Internal Revenue Code of 1986, as amended the (“Code”), also imposes restrictions on REITs, which are not applicable to other types of real estate companies, on the disposal of properties. Furthermore, we will be subject to U.S. federal income tax at the highest regular corporate rate, which is currently 21%, on certain built-in gains recognized in connection with a taxable disposition of any asset we acquire from a C corporation in a transaction in which our basis in such asset is determined by reference to the basis of the asset in the hands of the C corporation for a period of up to 5 years following the acquisition of such asset, which may make an otherwise attractive disposition opportunity less attractive or even impractical. These potential difficulties in selling real estate in our markets may limit our ability to change or reduce the office buildings in our portfolio promptly in response to changes in economic or other conditions.

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Competition could limit our ability to acquire attractive investment opportunities and increase the costs of those opportunities, which may adversely affect us, including our profitability and impede our growth.

We compete with numerous commercial developers, real estate companies and other owners of real estate for office buildings for acquisition and pursuing buyers for dispositions. We expect that other real estate investors, including insurance companies, private equity funds, sovereign wealth funds, pension funds, other REITs and other well-capitalized investors will compete with us to acquire existing properties and to develop new properties. Our markets are each generally characterized by high barriers-to-entry to construction and limited land on which to build new office space, which contributes to the competition we face to acquire existing properties and to develop new properties in these markets. This competition could increase prices for properties of the type we may pursue and adversely affect our profitability and impede our growth.

We are subject to losses that are either uninsurable, not economically insurable or that are in excess of our insurance coverage.

Our San Francisco properties are located in the general vicinity of active earthquake faults. Our New York City properties are located in areas that could be subject to windstorm losses. Insurance coverage for earthquakes and windstorms can be costly because of limited industry capacity. As a result, we may experience shortages in desired coverage levels if market conditions are such that insurance is not available or the cost of insurance makes it, in our belief, economically impractical to maintain such coverage. In addition, our New York City and other properties may be subject to a heightened risk of terrorist attacks. We carry commercial general liability insurance, property insurance and both domestic and foreign terrorism insurance with respect to our properties with limits and on terms we consider commercially reasonable. We cannot assure you, however, that our insurance coverage will be sufficient or that any uninsured loss or liability will not have an adverse effect on our business and our financial condition and results of operations in the event of a catastrophic loss event. See “Business – Insurance.”

We carry both domestic and foreign terrorism insurance as an inclusion in our property policies for which our carriers may rely, in part for foreign acts of terrorism, on support from the federal government’s Terrorism Risk Insurance Program Reauthorization Act of 2019 (“TRIPRA”).

We are subject to risks from natural disasters such as earthquakes and severe weather.

Natural disasters and severe weather such as earthquakes, tornadoes, hurricanes or floods may result in significant damage to our properties. The extent of our casualty losses and loss in operating income in connection with such events is a function of the severity of the event and the total amount of exposure in the affected area. When we have geographic concentration of exposures, a single catastrophe (such as an earthquake, especially in the San Francisco Bay Area) or destructive weather event (such as a hurricane, especially in New York City) affecting a region may have a significant negative effect on our financial condition and results of operations. As a result, our operating and financial results may vary significantly from one period to the next. Our financial results may be adversely affected by our exposure to losses arising from natural disasters or severe weather. We also are exposed to risks associated with inclement winter weather, particularly in the Northeast states in which many of our properties are located, including increased need for maintenance and repair of our buildings.

Climate change may adversely affect our business.

To the extent that climate change occurs, there are multiple scenarios where our business could be impacted. Climate change could lead to, among other effects in our target markets, rising sea levels, extreme weather, increased flooding, and changes in precipitation and temperature. Any of these developments could result in physical damage or a decrease in rent from, and the value of, our properties located in the areas affected by these conditions. We own a number of assets in low-lying areas close to sea level, making those assets, and the economies in which they reside, susceptible to adverse effects from a rise in sea level and any associated increase in episodic storm surges. If sea levels near our target markets were to rise, we may incur material costs to protect our low-lying assets or sustain damage, a decrease in demand for or total loss to those assets.

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We have performed a preliminary analysis using a third-party model to understand the direct impact to our existing properties in a scenario where global warming increases average temperatures worldwide by two degrees Celsius (the “2⁰ scenario”), a goal aligned with the Paris Agreement, the United Nations framework convention on climate change. Based on this preliminary analysis, we believe that essentially all of our properties in New York would remain above sea level, but that several of our properties in San Francisco may not, in the absence of mitigating actions. Given that there is a lag in timing between carbon release into the atmosphere and global warming, which ultimately would result in a potential rise in sea level, reputable models predict that the actual rise in sea level of that magnitude seems unlikely to occur until after the turn of this century, and perhaps much longer depending on various assumptions and mitigating factors that one considers – for example, the rate of melt for known glaciers and the Greenland and West Antarctic Ice Sheets; whether proposals to erect local sea walls in both New York and San Francisco gain additional traction and funding and are ultimately successful, and the potential for new discoveries.

Even where a property is not directly impacted by such a projected rise in sea levels, there would likely be significant disruptions to the local economies where our properties are located because other substantial areas of these coastal cities could be below sea level and the transportation systems that are vital to service CBDs could also be adversely impacted, both by the eventual rise in maximum sea level but also by episodic storm surges and other events in the decades prior to that time.

The jurisdictions where we operate have made formal public commitments to, and/or have additional legislation pending that will increase commitments to, carbon reduction aligned with the goal to keep global warming in line with the 2⁰ scenario or similar scenarios and have begun to take steps to enforce these commitments by regulation on building efficiency and/or mandated purchase of renewable energy. These and similar changes in federal and state legislation and regulation on climate change could result in increased capital expenditures to, among other things, improve the energy efficiency of our existing properties in order to comply with such regulations.

Should the impact of climate change be material in nature or occur for lengthy periods of time, our financial condition or results of operations would be adversely affected.  

Terrorist attacks and/or shooting incidents may adversely affect our ability to generate revenues and the value of our properties.

We have significant investments in large metropolitan markets, including New York City and San Francisco that have been or may be in the future the targets of actual or threatened terrorism attacks and/or shooting incidents. As a result, some tenants in these markets may choose to relocate their businesses to other markets or to lower-profile office buildings within these markets that may be perceived to be less likely targets of future terrorist activity. This could result in an overall decrease in the demand for office space in these markets generally or in our properties in particular, which could increase vacancies in our properties or necessitate that we lease our properties on less favorable terms or both. In addition, future terrorist attacks in these markets could directly or indirectly damage our properties, both physically and financially, or cause losses that materially exceed our insurance coverage. As a result of the foregoing, our ability to generate revenues and the value of our properties could decline materially. See also “We are subject to losses that are either uninsurable, not economically insurable or that are in excess of our insurance coverage.”

We face risks associated with our tenants being designated “Prohibited Persons” by the Office of Foreign Assets Control and similar requirements.

Pursuant to Executive Order 13224 and other laws, the Office of Foreign Assets Control of the United States Department of the Treasury (“OFAC”) maintains a list of persons designated as terrorists or who are otherwise blocked or banned (“Prohibited Persons”) from conducting business or engaging in transactions in the United States and thereby restricts our doing business with such persons.  We are required to comply with OFAC and related requirements and may be required to terminate or otherwise amend our leases, loans and other agreements.  If a tenant or other party with whom we conduct business is placed on the OFAC list or is otherwise a party with which we are prohibited from doing business, we may be required to terminate the lease or other agreement.  Any such termination could result in a loss of revenue or otherwise negatively affect our financial results and cash flows.

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We may become subject to liability relating to environmental and health and safety matters, which could have an adverse effect on us, including our financial condition and results of operations.

Under various federal, state and/or local laws, ordinances and regulations, as a current or former owner or operator of real property, we may be liable for costs and damages resulting from the presence or release of hazardous substances, waste, or petroleum products at, on, in, under or from such property, including costs for investigation or remediation, natural resource damages, or third-party liability for personal injury or property damage. These laws often impose liability without regard to whether the owner or operator knew of, or was responsible for, the presence or release of such materials, and the liability may be joint and several. Some of our properties have been or may be impacted by contamination arising from current or prior uses of the property or from adjacent properties used for commercial, industrial or other purposes. Such contamination may arise from spills of petroleum or hazardous substances or releases from tanks used to store such materials. We also may be liable for the costs of remediating contamination at off-site disposal or treatment facilities when we arrange for disposal or treatment of hazardous substances at such facilities, without regard to whether we comply with environmental laws in doing so. The presence of contamination or the failure to remediate contamination on our properties may adversely affect our ability to attract and/or retain tenants and our ability to develop or sell or borrow against those properties. In addition to potential liability for cleanup costs, private plaintiffs may bring claims for personal injury, property damage or for similar reasons. Environmental laws also may create liens on contaminated sites in favor of the government for damages and costs it incurs to address such contamination. Moreover, if contamination is discovered on our properties, environmental laws may impose restrictions on the manner in which that property may be used or how businesses may be operated on that property. See “Business – Environmental and Related Matters.”

In addition, our properties are subject to various federal, state and local environmental and health and safety laws and regulations. Noncompliance with these environmental and health and safety laws and regulations could subject us or our tenants to liability. These liabilities could affect a tenant’s ability to make rental payments to us. Moreover, changes in laws could increase the potential costs of compliance with such laws and regulations or increase liability for noncompliance. This may result in significant unanticipated expenditures or may otherwise adversely affect our operations, or those of our tenants, which could in turn have an adverse effect on us.

As the owner or operator of real property, we may also incur liability based on various building conditions. For example, buildings and other structures on properties that we currently own or operate or those we acquire or operate in the future contain, may contain, or may have contained Asbestos-Containing Material (“ACM”). Environmental and health and safety laws require that ACM be properly managed and maintained and may impose fines or penalties on owners, operators or employers for non-compliance with those requirements. These requirements include special precautions, such as removal, abatement or air monitoring, if ACM would be disturbed during maintenance, renovation or demolition of a building, potentially resulting in substantial costs. In addition, we may be subject to liability for personal injury or property damage sustained as a result of exposure to ACM or releases of ACM into the environment.

In addition, our properties may contain or develop harmful mold or suffer from other indoor air quality issues. Indoor air quality issues also can stem from inadequate ventilation, chemical contamination from indoor or outdoor sources, and other biological contaminants such as pollen, viruses and bacteria. Indoor exposure to airborne toxins or irritants can be alleged to cause a variety of adverse health effects and symptoms, including allergic or other reactions. As a result, the presence of significant mold or other airborne contaminants at any of our properties could require us to undertake a costly remediation program to contain or remove the mold or other airborne contaminants or to increase ventilation. In addition, the presence of significant mold or other airborne contaminants could expose us to liability from our tenants or others if property damage or personal injury occurs.

We cannot assure you that costs or liabilities incurred as a result of environmental issues will not affect our ability to make distributions to our stockholders or that such costs, liabilities, or other remedial measures will not have an adverse effect on our financial condition and results of operations.

We may incur significant costs complying with the Americans with Disabilities Act of 1990, (the “ADA”), and similar laws, which could adversely affect us, including our future results of operations and cash flow.

Under the ADA, all public accommodations must meet federal requirements related to access and use by disabled persons. We have not conducted a recent audit or investigation of all of our properties to determine our compliance with the ADA. If one or more of our properties were not in compliance with the ADA, then we could be required to incur additional costs to bring the property into compliance. Additional federal, state and local laws also may require modifications to our properties, or restrict our ability to renovate our properties. We cannot predict the ultimate amount of the cost of compliance with the ADA or similar laws. Substantial costs incurred to comply with the ADA and any other legislation could adversely affect us, including our future results of operations and cash flow.

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We may be unable to identify and successfully complete acquisitions and, even if acquisitions are identified and completed, we may fail to successfully operate acquired properties, which could adversely affect us and impede our growth.

Our ability to identify and acquire properties on favorable terms and successfully operate or redevelop them may be exposed to significant risks. Agreements for the acquisition of properties are subject to customary conditions to closing, including completion of due diligence investigations and other conditions that are not within our control, which may not be satisfied. In this event, we may be unable to complete an acquisition after incurring certain acquisition-related costs. In addition, if mortgage debt is unavailable at reasonable rates, we may be unable to finance the acquisition on favorable terms in the time period we desire, or at all. We may spend more than budgeted to make necessary improvements or renovations to acquired properties and may not be able to obtain adequate insurance coverage for new properties. Further, acquired properties may be located in new markets where we may face risks associated with a lack of market knowledge or understanding of the local economy, lack of business relationships in the area and unfamiliarity with local governmental and permitting procedures. We may also be unable to integrate new acquisitions into our existing operations quickly and efficiently, and as a result, our results of operations and financial condition could be adversely affected. Further, we may incur significant costs and divert management attention in connection with evaluating and negotiating potential acquisitions, including ones that we are subsequently unable to complete. Any delay or failure on our part to identify, negotiate, finance and consummate such acquisitions in a timely manner and on favorable terms, or operate acquired properties to meet our financial expectations, could impede our growth and have an adverse effect on us, including our financial condition, results of operations, cash flow and the market value of our securities.

Should we decide at some point in the future to expand into new markets, we may not be successful, which could adversely affect our financial condition, results of operations, cash flow and market value of our securities.

If opportunities arise, we may explore acquisitions of properties in new markets. Each of the risks applicable to our ability to acquire and integrate successfully and operate properties in our current markets is also applicable in new markets. In addition, we will not possess the same level of familiarity with the dynamics and market conditions of the new markets we may enter, which could adversely affect the results of our expansion into those markets, and we may be unable to build a significant market share or achieve our desired return on our investments in new markets. If we are unsuccessful in expanding into new markets, it could adversely affect our financial condition, results of operations, cash flow, the market value of our securities and ability to satisfy our principal and interest obligations and to make distributions to our stockholders.

We are subject to risks involved in real estate activity through joint ventures and private equity real estate funds.

We have in the past, are currently and may in the future acquire and own properties in joint ventures and private equity real estate funds with other persons or entities when we believe circumstances warrant the use of such structures. Joint venture and fund investments involve risks, including: the possibility that our partners might refuse to make capital contributions when due; that we may be responsible to our partners for indemnifiable losses; that our partners might at any time have business or economic goals that are inconsistent with ours; and that our partners may be in a position to take action or withhold consent contrary to our recommendations, instructions or requests. We and our respective joint venture partners may each have the right to trigger a buy-sell, put right or forced sale arrangement, which could cause us to sell our interest, or acquire our partner’s interest, or to sell the underlying asset, at a time when we otherwise would not have initiated such a transaction, without our consent or on unfavorable terms. In some instances, joint venture and fund partners may have competing interests in our markets that could create conflicts of interest. These conflicts may include compliance with the REIT requirements, and our REIT status could be jeopardized if any of our joint ventures or funds does not operate in compliance with the REIT requirements. Further, our joint venture and fund partners may fail to meet their obligations to the joint venture or fund as a result of financial distress or otherwise, and we may be forced to make contributions to maintain the value of the property. We will review the qualifications and previous experience of any co-venturers or partners, although we do not expect to obtain financial information from, or to undertake independent investigations with respect to, prospective co-venturers or partners. To the extent our partners do not meet their obligations to us or our joint ventures or funds or they take action inconsistent with the interests of the joint venture or fund, we may be adversely affected.

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Our joint venture partners in 712 Fifth Avenue, One Market Plaza, 300 Mission Street and 111 Sutter Street have forced sale rights as a result of which we may be forced to sell these assets to third parties at times or prices that may not be favorable to us.

Our partners in the joint ventures that own 712 Fifth Avenue, One Market Plaza, 300 Mission Street and 111 Sutter Street have forced sale rights pursuant to which, after a specified period, each may require us to sell the property to a third party. At any time on or after (i) November 24, 2020, with respect to 712 Fifth Avenue, (ii) March 31, 2021, with respect to One Market Plaza, (iii) August 12, 2024, with respect to 300 Mission Street, and (iv) February 7, 2026, with respect to 111 Sutter Street, our joint venture partners may exercise a forced sale right by delivering a written notice to us designating the sales price and other material terms and conditions upon which our joint venture partner desires to cause a sale of the property. In the case of 712 Fifth Avenue, 300 Mission Street and 111 Sutter Street, upon receipt of such sales notice, we will have the obligation either to attempt to sell the property to a third party for not less than 95.0% of the designated sales price or to elect to purchase the interest of our joint venture partner for cash at a price equal to the amount our joint venture partner would have received if the property had been sold for the designated sales price (and the joint venture paid any applicable financing breakage costs, transfer taxes, brokerage fees and marketing costs, prepaid all liquidated liabilities of the joint venture and distributed the balance). In the case of One Market Plaza, upon exercise of forced sale right, we and our joint venture partner have 60 days to negotiate a mutually agreeable transaction regarding the property. If we cannot mutually agree upon a transaction, then we will work together in good faith to market the property in a commercially reasonable manner and neither we nor our joint venture partner will be allowed to bid on the property. If our joint venture partner, after consultation with us and a qualified broker, finds a third-party bid for the property acceptable, then the joint venture will cause the property to be sold. As a result of these forced sale rights, our joint venture partners could require us to sell these properties to third parties at times or prices that may not be favorable to us, which could adversely impact us.

Contractual commitments with existing private equity real estate funds and our investment club may limit our ability to acquire properties, issue loans or invest in preferred equity directly in the near term.

Because of the limited exclusivity requirements of our private equity real estate funds, we may be required to acquire or issue loans, or invest in preferred equity partially through these funds that we otherwise would have acquired solely through our operating partnership, which may prevent our operating partnership from acquiring or issuing loans, or investing in preferred equity and adversely affect our growth prospects. In connection with certain assets that we co-invest in with our private equity real estate funds, specifically those where such funds owns a majority of the joint venture it is expected that such funds will have the authority, subject to our consent in limited circumstances, to make most of the decisions in connection with such asset. Such authority in connection with a co-investment could subject us to the applicable risks described above.

In addition, because of the exclusivity requirements of our strategic real estate co-investment platform (our investment club) focused on acquiring real estate assets and/or real estate-related equity investments, we may be required to acquire properties through this platform that we otherwise would have acquired through our operating partnership, which may prevent our operating partnership from acquiring attractive investment opportunities and adversely affect our growth prospects. Alternatively, we may choose to co-invest up to 51.0% of the equity required for any property alongside the third-party investors in this platform to the extent we determine it is in our best interest. In connection with any property in which we co-invest, we will have the authority, subject to major decision rights in favor of our joint venture partners, to make a majority of the decisions in connection with such property.

We share control of some of our properties with other investors and may have conflicts of interest with those investors.

While we make all operating decisions for certain of our joint ventures and private equity real estate funds, we are required to make other decisions jointly with other investors who have interests in the relevant property or properties. For example, the approval of certain of the other investors may be required with respect to operating budgets, including leasing decisions and refinancing, encumbering, expanding or selling any of these properties, as well as bankruptcy decisions. We might not have the same interests as the other investors in relation to these decisions or transactions. Accordingly, we might not be able to favorably resolve any of these issues, or we might have to provide financial or other inducements to the other investors to obtain a favorable resolution.

In addition, various restrictive provisions and third-party rights provisions, such as consent rights to certain transactions, apply to sales or transfers of interests in our properties owned in joint ventures. Consequently, decisions to buy or sell interests in properties relating to our joint ventures may be subject to the prior consent of other investors. These restrictive provisions and third-party rights may preclude us from achieving full value of these properties because of our inability to obtain the necessary consents to sell or transfer these interests.

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Risks Related to Our Business and Operations

Risks Related to Our Business and Operations as a result of COVID-19 pandemic.

In March 2020, the World Health Organization declared COVID-19 a global pandemic. The COVID-19 outbreak has had, and may continue to have, a significant adverse impact on economic and market conditions of economies around the world, including the United States, and more specifically the economies of New York City and San Francisco and could trigger a period of global economic slowdown or global recession.

COVID-19 may have the effect of heightening many of the risks described herein and our and our tenants’ businesses could be adversely impacted by COVID-19 due to, among other factors:

• the failure of our tenants to properly implement or deploy their business continuity plans, or the ineffectiveness of those plans, could have a material adverse effect on our tenants’ businesses and their ability to pay rent;

• the effectiveness or lack of effectiveness of governmental relief in providing assistance to large and small businesses, including our tenants, that have suffered significant declines in revenues as a result of mandatory business shut-downs, “stay-at-home” orders and social distancing practices, as well as individuals adversely impacted by the COVID-19 pandemic and the potential for a prolonged, severe recession, could have a material adverse impact on our financial condition and results of operations;

• reduced economic activity impacting the businesses, financial condition and liquidity of our tenants, which could cause one or more of our tenants to be unable to meet their obligations to us, including their ability to make rental payments, in full, or at all, or to otherwise seek modifications of such obligations, including rent concessions, deferrals or abatements, or to declare bankruptcy;

• many of our retail and some of our office tenants have approached us seeking rent concessions, deferrals or abatements, and the extent to which we grant these requests or instead seek to enforce our legal remedies could have a material adverse impact on our financial condition and results of operations;

• the degree to which our tenants’ businesses have been and continue to be negatively impacted by COVID-19 may require us to write-off a tenant’s accrued rent balance and this could have a material adverse effect on our financial condition and results of operations;

• the impact of recent and future efforts by state, local, federal and industry groups to enact laws and regulations restricting the ability of landlords, such as us, to collect rent, enforce remedies for the failure to pay rent, or otherwise enforce the terms of the lease agreements, such as a rent freeze for tenants or a suspension of a landlord’s ability to enforce evictions, could have a material adverse impact on our financial condition and results of operations;

• the impact and validity of lease provisions and related claims by tenants regarding their obligations to pay rent as a result of COVID-19, and any court rulings or decisions interpreting these provisions, could have a material adverse effect on our financial condition and results of operations;

• our inability to renew leases, lease vacant space or re-lease space as leases expire on favorable terms, or at all; which could cause a decline in our receipt of rental payments;

• adaptions made by companies in response to “stay-at-home” orders and future limitations on in-person work environments could lead to a sustained shift away from in-person work environments and have an adverse effect on the overall demand for office space across our portfolio;

• a general decline in business activity and demand for real estate transactions (including a related decrease in value of the underlying real estate), which could adversely affect our ability or desire to make strategic acquisitions or dispositions;

• difficulty accessing debt and equity capital on attractive terms, or at all, and a severe disruption and instability in the global financial markets or deteriorations in credit and financing conditions may affect our and our tenants' ability to access capital necessary to fund business activities and repayment of debt on a timely basis, and may adversely affect our ability to meet liquidity and capital expenditure requirements or have a material adverse effect on our business, financial condition, results of operations and cash flows;

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• the financial effects of the COVID-19 pandemic on our future financial results, cash flows and financial condition could adversely impact our compliance with the financial covenants of our credit facility and other debt agreements and could result in an event of default and the acceleration of indebtedness, which could adversely impact our financial condition, results of operations and our ability to make additional borrowings and pay dividends;

• if we choose to pay dividends in shares of our stock instead of cash, our stockholders may have to pay income taxes on the dividends without receiving a corresponding amount of cash;

• our failure, or that of any of our joint venture partners, to meet our or their, as applicable, responsibilities or obligations to the other or to third parties, such as lenders, including a failure to contribute additional capital needed by the joint ventures or a default by a party under a joint venture agreement or other agreement relating to a joint venture, each of which, in our case, could result in dilution of our interest or a loss of our management and other rights relating to our joint ventures, and in the case of a joint venture partner, could result in our payment of the partner’s share of the additional capital;

• a complete or partial closure of, or other operational issues at, one or more of our properties resulting from government or tenant action, which could adversely affect our operations and those of our tenants;

• uncertainty as to what conditions must be satisfied before government authorities lift “stay-at-home” orders and public health officials begin the process of gradually returning Americans to work and whether government authorities will impose (or suggest) requirements on landlords, such as us, to protect the health and safety of tenants and visitors to our buildings could result in increased operating costs and demands on our property management teams to ensure compliance with any such requirements, as well as increased costs associated with protecting against potential liability arising from these measures, such as claims by tenants that the measures violate their leases and claims by visitors that the measures caused them damages;

• our ability to operate, which may cause our business and operating results to decline or impact our ability to comply with regulatory obligations leading to reputational harm and regulatory issues or fines;

• the continued service and availability of personnel, including executive officers and other leaders that are part of the management team and the ability to recruit, attract and retain skilled personnel. To the extent management or personnel are impacted in significant numbers by the outbreak of pandemic or epidemic disease and are not available or allowed to conduct work, business and operating results may be negatively impacted;

• increased vulnerability to cyber-security threats and potential breaches, including phishing attacks, malware and impersonation tactics, resulting from the COVID-19 pandemic because of the increase in numbers of individuals working from home;

• construction delays on tenant improvements due to restrictions on construction activities, work-stoppage orders or disruptions in the supply of materials could result in delays in the commencement of new leases, which could adversely impact our future revenues; and

• the potential that business interruption, loss of rental income and/or other associated expenses related to our operations will not be covered in whole or in part by our insurance policies, which may increase unreimbursed liabilities.

The rapid development and fluidity of this situation precludes any prediction as to the ultimate impact of COVID-19. The full extent of the impact and effects of COVID-19 on our future financial performance, as a whole, and, specifically, on our tenants and their businesses, are uncertain at this time. The impact will depend on future developments, including, among other factors, the duration and spread of the outbreak, related travel advisories and restrictions, the impact of vaccines and the uncertainty with respect to the accessibility of additional liquidity or to the capital markets. COVID-19 and the current financial, economic and capital markets environment, and future developments in these and other areas present uncertainty and risk with respect to our performance, financial condition, results of operations and cash flows.

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Capital and credit market conditions may adversely affect our access to various sources of capital or financing and/or the cost of capital, which could impact our business activities, dividends, earnings and common stock price, among other things.

In periods when the capital and credit markets experience significant volatility, the amounts, sources and cost of capital available to us may be adversely affected. We primarily use third-party financing to fund acquisitions and to refinance indebtedness as it matures. As of December 31, 2020, including debt of our unconsolidated joint ventures, we had $5.5 billion of total debt, of which our share is $3.6 billion, all of which was secured debt, and we have $1.0 billion of available borrowing capacity under our unsecured revolving credit facility. If sufficient sources of external financing are not available to us on cost effective terms, we could be forced to limit our acquisition, development and redevelopment activity and/or take other actions to fund our business activities and repayment of debt, such as selling assets, reducing our cash dividend or paying out less than 100% of our taxable income. To the extent that we are able and/or choose to access capital at a higher cost than we have experienced in recent years (reflected in higher interest rates for debt financing or a lower stock price for equity financing) our earnings per share and cash flow could be adversely affected. In addition, the price of our common stock may fluctuate significantly and/or decline in a high interest rate or volatile economic environment. If economic conditions deteriorate, the ability of lenders to fulfill their obligations under working capital or other credit facilities that we may have in the future may be adversely impacted.

We may from time to time be subject to litigation, including litigation arising from the Formation Transactions, which could have an adverse effect on our financial condition, results of operations, cash flow and trading price of our common stock.

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, 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.

We may be subject to unknown or contingent liabilities related to properties or businesses that we acquire for which we may have limited or no recourse against the sellers.

Assets and entities that we have acquired or may acquire in the future may be subject to unknown or contingent liabilities for which we may have limited or no recourse against the sellers. Unknown or contingent liabilities might include liabilities for clean-up or remediation of environmental conditions, claims of customers, vendors or other persons dealing with the acquired entities, tax liabilities and other liabilities whether incurred in the ordinary course of business or otherwise. In the future we may enter into transactions with limited representations and warranties or with representations and warranties that do not survive the closing of the transactions, in which event we would have no or limited recourse against the sellers of such properties. While we usually require the sellers to indemnify us with respect to breaches of representations and warranties that survive, such indemnification is often limited and subject to various materiality thresholds, a significant deductible or an aggregate cap on losses.

As a result, there is no guarantee that we will recover any amounts with respect to losses due to breaches by the sellers of their representations and warranties. In addition, the total amount of costs and expenses that we may incur with respect to liabilities associated with acquired properties and entities may exceed our expectations, which may adversely affect our business, financial condition and results of operations. Finally, indemnification agreements between us and the sellers typically provide that the sellers will retain certain specified liabilities relating to the assets and entities acquired by us. While the sellers are generally contractually obligated to pay all losses and other expenses relating to such retained liabilities, there can be no guarantee that such arrangements will not require us to incur losses or other expenses as well.

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Extensive regulation of our investment management businesses affects our activities and creates the potential for significant liabilities and penalties, and increased regulatory focus could result in additional burdens on this business.

Our investment management business is subject to extensive regulation, including periodic examinations and investigations, by governmental agencies in the jurisdictions in which we operate or raise capital. These authorities have regulatory powers dealing with many aspects of our investment management business, including the authority to grant, and in specific circumstances to cancel, permissions to carry on particular activities. These regulations are extensive, complex and require substantial management time and attention.  In particular, two of our subsidiaries, Paramount Group Real Estate Advisor LLC and Paramount Group Real Estate Advisor II, LP, are registered with the SEC as investment advisers under the U.S. Investment Advisers Act of 1940 (the “Advisers Act”), and have been, and may in the future be, registered in certain jurisdictions as non-EU alternative investment fund managers of non-EU alternative investment funds under the Alternative Investment Fund Managers Directive, 2011/61/EU, and various local European laws implementing this directive (collectively, the “AIFMD”).  Such registration results in certain aspects of our investment management business being supervised by the SEC, and subject to regulation or reporting requirements by the regulatory bodies of the countries where our subsidiaries are currently, and may in the future be, registered in pursuant to the AIFMD. Our investment management business is also subject to notification of sales activities for one of our managed funds in Germany, and may in the future become subject to notification of sales activities for our other managed funds in Germany or other countries, the Bundesanstalt fuer Finanzdiensleistungsaufsicht, Germany’s Federal Financial Supervisory Authority (“BaFin”), or other foreign regulators. The Advisers Act, in particular, requires registered investment advisers to comply with numerous obligations, including compliance, record-keeping, operating and marketing requirements, disclosure obligations and limitations on certain activities. Investment advisers also owe fiduciary duties to their clients. These regulatory and fiduciary obligations may result in increased costs or administrative burdens or otherwise adversely impact our business, including by preventing us from recommending investment opportunities that otherwise meet the respective investment criteria of us or our funds.

Many of these regulators, including U.S. and foreign government agencies, as well as state securities commissions, are also empowered to conduct investigations and administrative proceedings that can result in fines, compensatory payments, suspensions of personnel, changes in policies, procedures or disclosure or other sanctions, including censure, the issuance of cease-and-desist orders, the suspension or expulsion of an investment adviser from registration or memberships or the commencement of a civil or criminal lawsuit against us or our personnel. Moreover, the financial services industry has been the subject of heightened scrutiny, and the SEC has specifically focused on private equity fund managers. In that regard, the SEC’s list of examination priorities includes, among other things, collection of fees and allocation of expenses, marketing and valuation practices, allocation of investment opportunities, and appropriate management of other conflicts of interest such as related party sales, loans or co-investments, by these fund managers. We may, from time to time, be subject to requests for information or informal or formal investigations by the SEC and other regulatory authorities, and, in the current environment, even historical practices that have been previously examined are being revisited. Even if an investigation or proceeding does not result in a sanction or the sanction imposed against us or our personnel by a regulator is small in monetary amount, the adverse publicity relating to the investigation, proceeding or imposition of these sanctions could harm our reputation and cause us to lose existing clients or fail to gain new investors.

We cannot predict the impact future actions by regulators or government bodies, including the U.S. Federal Reserve, will have on real estate debt markets or on our business, and any such actions may negatively impact us.

Regulators and U.S. government bodies have a major impact on our business. The U.S. Federal Reserve is a major participant in, and its actions significantly impact, the commercial real estate debt markets. If the U.S. Federal Reserve attempts to raise interest rates, this could increase the cost of borrowing, which could limit our flexibility. This may result in future acquisitions by us generating lower overall economic returns and increasing the costs associated with refinancing current debt, which could potentially reduce future cash flow available for distribution. We cannot predict or control the impact future actions by regulators or government bodies, such as the U.S. Federal Reserve, will have on our business.

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Risks Related to Our Organization and Structure

The ability of stockholders to control our policies and effect a change of control of our company is limited by certain provisions of our charter and bylaws and by Maryland law.

There are provisions in our charter and bylaws that may discourage a third party from making a proposal to acquire us, even if some of our stockholders might consider the proposal to be in their best interests. These provisions include the following:

Our charter authorizes our board of directors, without stockholder approval, to amend our charter to increase or decrease the aggregate number of authorized shares of stock, to authorize us to issue additional shares of our common stock or preferred stock and to classify or reclassify unissued shares of our common stock or preferred stock and thereafter to authorize us to issue such classified or reclassified shares of stock. We believe these charter provisions provide us with increased flexibility in structuring possible future financings and acquisitions and in meeting other needs that might arise. The additional classes or series, as well as the additional authorized shares of our common stock, are available for issuance without further action by our stockholders, unless such action is required by applicable law or the rules of any stock exchange or automated quotation system on which our securities are listed or traded. Although our board of directors does not currently intend to do so, it could authorize us to issue a class or series of stock that could, depending upon the terms of the particular class or series, delay, defer or prevent a transaction or a change of control of our company that might involve a premium price for holders of our common stock or that our common stockholders otherwise believe to be in their best interests.

In order to qualify as a REIT, not more than 50% in value of our outstanding stock may be owned, directly or indirectly, by five or fewer individuals (as defined in the Code to include certain entities such as private foundations) at any time during the last half of any taxable year. In order to help us qualify as a REIT, our charter generally prohibits any person or entity from actually owning or being deemed to own by virtue of the applicable constructive ownership provisions, (i) more than 6.50% (in value or in number of shares, whichever is more restrictive) of the outstanding shares of our common stock or (ii) more than 6.50% in value of the aggregate of the outstanding shares of all classes and series of our stock, in each case, excluding any shares of our stock not treated as outstanding for U.S. federal income tax purposes. We refer to these restrictions as the “ownership limits.” In connection with the Formation Transactions and the concurrent private placement to certain members of the Otto family and their affiliates, our board of directors granted waivers to the lineal descendants of Professor Dr. h.c. Werner Otto, their spouses and controlled entities to own stock in excess of the ownership limits (which waiver currently allows them to own up to 21.0% of our outstanding common stock in the aggregate, which can be automatically increased to an amount greater than 21.0% to the extent that their aggregate ownership exceeds such percentage solely as a result of a repurchase by the company of its common stock). The term the “Otto family” refers to the lineal descendants and the surviving former spouse of the late Professor Dr. h.c. Werner Otto. Our charter also contains a “foreign ownership limit.” The foreign ownership limit is intended to help us qualify as a “domestically controlled qualified investment entity.” The foreign ownership limit contained in our charter prohibits persons from directly or indirectly owning shares of our capital stock to the extent such ownership would cause more than 49.8% of the value of the shares of our capital stock to be owned, directly or indirectly, by Non-U.S. Persons. For this purpose, a “Non-U.S. Person” is defined as a person other than a “United States person,” as defined in Section 7701(a)(30) of the Code, and it includes a “foreign person” as such term is used in the provision of the Code defining a domestically controlled qualified investment entity. The ownership limits and the foreign ownership limit may prevent or delay a change in control and, as a result, could adversely affect our stockholders’ ability to realize a premium for their shares of our common stock.

In addition, certain provisions of the Maryland General Corporation Law (“MGCL”), may have the effect of inhibiting a third party from making a proposal to acquire us or of impeding a change of control under circumstances that otherwise could provide the holders of shares of our common stock with the opportunity to realize a premium over the then-prevailing market price of such shares, including the Maryland business combination and control share provisions.

As permitted by the MGCL, our board of directors adopted a resolution exempting any business combinations between us and any other person or entity from the business combination provisions of the MGCL. Our bylaws provide that this resolution or any other resolution of our board of directors exempting any business combination from the business combination provisions of the MGCL may only be revoked, altered or amended, and our board of directors may only adopt any resolution inconsistent with any such resolution (including an amendment to that bylaw provision), which we refer to as an opt in to the business combination provisions, with the affirmative vote of a majority of the votes cast on the matter by holders of outstanding shares of our common stock. In addition, as permitted by the MGCL, our bylaws contain a provision exempting from the control share acquisition provisions of the MGCL any and all acquisitions by any person of shares of our stock. This bylaw provision may be amended, which we refer to as an opt in to the control share acquisition provisions, only with the affirmative vote of a majority of the votes cast on such an amendment by holders of outstanding shares of our common stock.

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Title 3, Subtitle 8 of the MGCL permits our board of directors, without stockholder approval and regardless of what is currently provided in our charter or bylaws, to implement certain takeover defenses, including adopting a classified board or increasing the vote required to remove a director. Such takeover defenses may have the effect of inhibiting a third party from making an acquisition proposal for us or of delaying, deferring or preventing a change in control of us under the circumstances that otherwise could provide our common stockholders with the opportunity to realize a premium over the then current market price.

In addition, the provisions of our charter on the removal of directors and the advance notice provisions of our bylaws, among others, could delay, defer or prevent a transaction or a change of control of our company that might involve a premium price for holders of our common stock or otherwise be in their best interest.

Each item discussed above may delay, deter or prevent a change in control of our company, even if a proposed transaction is at a premium over the then-current market price for our common stock. Further, these provisions may apply in instances where some stockholders consider a transaction beneficial to them. As a result, our stock price may be negatively affected by these provisions.

Conflicts of interest may exist or could arise in the future between the interests of our stockholders and the interests of holders of common units, which may impede business decisions that could benefit our stockholders.

Conflicts of interest may exist or could arise in the future as a result of the relationships between us and our affiliates, on the one hand, and our operating partnership or any of its partners, on the other. Our directors and officers have duties to our company under Maryland law in connection with their management of our company. At the same time, we have duties and obligations to our operating partnership and its limited partners under Delaware law as modified by the partnership agreement of our operating partnership in connection with the management of our operating partnership as the sole general partner. The limited partners of our operating partnership expressly acknowledge that the general partner of our operating partnership acts for the benefit of our operating partnership, the limited partners and our stockholders collectively. When deciding whether to cause our operating partnership to take or decline to take any actions, the general partner will be under no obligation to give priority to the separate interests of (i) the limited partners of our operating partnership (including, without limitation, the tax interests of our limited partners, except as provided in a separate written agreement) or (ii) our stockholders. Nevertheless, the duties and obligations of the general partner of our operating partnership may come into conflict with the duties of our directors and officers to our company and our stockholders.

If there are deficiencies in our disclosure controls and procedures or internal control over financial reporting, we may be unable to accurately present our financial statements, which could materially and adversely affect us, including our business, reputation, results of operations, financial condition or liquidity.

As a publicly-traded company, we are required to report our financial statements on a consolidated basis. Effective internal controls are necessary for us to accurately report our financial results. Section 404 of the Sarbanes-Oxley Act of 2002 requires us to evaluate and report on our internal control over financial reporting and have our independent registered public accounting firm issue an opinion with respect to the effectiveness of our internal control over financial reporting. There can be no guarantee that our internal control over financial reporting will be effective in accomplishing all control objectives all of the time. Furthermore, as we grow our business, our internal controls will become more complex, and we may require significantly more resources to ensure our internal controls remain effective. Deficiencies, including any material weakness, in our internal control over financial reporting which may occur in the future could result in misstatements of our results of operations that could require a restatement, failing to meet our public company reporting obligations and causing investors to lose confidence in our reported financial information. These events could materially and adversely affect us, including our business, reputation, results of operations, financial condition or liquidity.

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We may have assumed unknown liabilities in connection with the Formation Transactions, which, if significant, could adversely affect our business.

As part of the Formation Transactions, we (through corporate acquisitions and contributions to our operating partnership) acquired the properties and assets of our Predecessor and certain other assets, subject to existing liabilities, some of which may be unknown. Unknown liabilities might include liabilities for cleanup or remediation of undisclosed environmental conditions, claims of tenants, vendors or other persons dealing with such entities prior to the Offering (that had not been asserted or threatened prior to the Offering), tax liabilities, and accrued but unpaid liabilities incurred in the ordinary course of business. Any unknown or unquantifiable liabilities that we assumed in connection with the Formation Transactions for which we have no or limited recourse could adversely affect us. See “We may become subject to liability relating to environmental and health and safety matters, which could have an adverse effect on us, including our financial condition and results of operations” as to the possibility of undisclosed environmental conditions potentially affecting the value of the properties in our portfolio.

Risks Related to Our Indebtedness and Financing

We have a substantial amount of indebtedness that may limit our financial and operating activities and may adversely affect our ability to incur additional debt to fund future needs.

We have a substantial amount of indebtedness. Payments of principal and interest on borrowings may leave us with insufficient cash resources to operate our properties, fully implement our capital expenditure, acquisition and redevelopment activities, or meet the REIT distribution requirements imposed by the Code. Our level of debt and the limitations imposed on us by our debt agreements could have significant adverse consequences, including the following:

● require us to dedicate a substantial portion of cash flow from operations to the payment of principal, and interest on, indebtedness, thereby reducing the funds available for other purposes;

● make it more difficult for us to borrow additional funds as needed or on favorable terms, which could, among other things, adversely affect our ability to meet operational needs;

● force us to dispose of one or more of our properties, possibly on unfavorable terms (including the possible application of the 100% tax on income from prohibited transactions, discussed below in “We may be subject to a 100% penalty tax on any prohibited transactions that we enter into, or may be required to forego certain otherwise beneficial opportunities in order to avoid the penalty tax on prohibited transactions” or in violation of certain covenants to which we may be subject;

● subject us to increased sensitivity to interest rate increases;

● make us more vulnerable to economic downturns, adverse industry conditions or catastrophic external events;

● limit our ability to withstand competitive pressures;

● limit our ability to refinance our indebtedness at maturity or the refinancing terms may be less favorable than the terms of our original indebtedness;

● reduce our flexibility in planning for or responding to changing business, industry and economic conditions; and/or

● place us at a competitive disadvantage to competitors that have relatively less debt than we have.

If any one of these events were to occur, our financial condition, results of operations, cash flow and trading price of our common stock could be adversely affected. Furthermore, foreclosures could create taxable income without accompanying cash proceeds, which could hinder our ability to meet the REIT distribution requirements imposed by the Code.

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We may not have sufficient cash flow to meet the required payments of principal and interest on our debt or to pay distributions on our shares at expected levels.

In the future, our cash flow could be insufficient to meet required payments of principal and interest or to pay distributions on our shares at expected levels. In this regard, we note that in order for us to continue to qualify as a REIT, we are required to make annual distributions generally equal to at least 90% of our taxable income, computed without regard to the dividends paid deduction and excluding net capital gain. In addition, as a REIT, we are subject to U.S. federal income tax to the extent that we distribute less than 100% of our taxable income (including capital gains) and are subject to a 4% nondeductible excise tax on the amount by which our distributions in any calendar year are less than a minimum amount specified by the Code. These requirements and considerations may limit the amount of our cash flow available to meet required principal and interest payments.

If we are unable to make required payments on indebtedness that is secured by a mortgage on our property, the asset may be transferred to the lender with a consequent loss of income and value to us, including adverse tax consequences related to such a transfer.

Our debt agreements include restrictive covenants, requirements to maintain financial ratios and default provisions which could limit our flexibility, our ability to make distributions and require us to repay the indebtedness prior to its maturity.

The mortgages on our properties contain customary negative covenants that, among other things, limit our ability, without the prior consent of the lender, to further mortgage the property and to reduce or change insurance coverage. Additionally, our debt agreements contain customary covenants that, among other things, restrict our ability to incur additional indebtedness and, in certain instances, restrict our ability to engage in material asset sales, mergers, consolidations and acquisitions, and restrict our ability to make capital expenditures. These debt agreements, in some cases, also subject us to guarantor and liquidity covenants and our revolving credit facility will, and other future debt may, require us to maintain various financial ratios. Some of our debt agreements contain certain cash flow sweep requirements and mandatory escrows, and our property mortgages generally require certain mandatory prepayments upon disposition of underlying collateral. Early repayment of certain mortgages may be subject to prepayment penalties.

Variable rate debt is subject to interest rate risk that could increase our interest expense, increase the cost to refinance and increase the cost of issuing new debt.

As of December 31, 2020, $350.0 million of our outstanding consolidated debt was subject to instruments which bear interest at variable rates, and we may also borrow additional money at variable interest rates in the future. Unless we have made arrangements that hedge against the risk of rising interest rates, increases in interest rates would increase our interest expense under these instruments, increase the cost of refinancing these instruments or issuing new debt, and adversely affect cash flow and our ability to service our indebtedness and make distributions to our stockholders, which could adversely affect the market price of our common stock.

We may, in a manner consistent with our qualification as a REIT, seek to manage our exposure to interest rate volatility by using interest rate hedging arrangements that involve risk, such as the risk that counterparties may fail to honor their obligations under these arrangements, and that these arrangements may not be effective in reducing our exposure to interest rate changes. Moreover, there can be no assurance that our hedging arrangements will qualify for hedge accounting or that our hedging activities will have the desired beneficial impact on our results of operations. Should we desire to terminate a hedging agreement, there could be significant costs and cash and other collateral requirements involved to fulfill our obligation under the hedging agreement. Failure to hedge effectively against interest rate changes may adversely affect our results of operations.

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We may be adversely affected by the potential discontinuation of LIBOR.

In July 2017, the Financial Conduct Authority (“FCA”) announced it intends to stop compelling banks to submit rates for the calculation of LIBOR after 2021. As a result, the Federal Reserve Board and the Federal Reserve Bank of New York organized the Alternative Reference Rates Committee which identified the Secured Overnight Financing Rate (“SOFR”) as its preferred alternative to LIBOR. We are not able to predict when LIBOR will cease to be published or precisely how SOFR will be calculated and published. Any changes adopted by FCA or other governing bodies in the method used for determining LIBOR may result in a sudden or prolonged increase or decrease in reported LIBOR. If that were to occur, our interest payments could change. In addition, uncertainty about the extent and manner of future changes may result in interest rates and/or payments that are higher or lower than if LIBOR were to remain available in its current form.

We have contracts that are indexed to LIBOR and are monitoring and evaluating the related risks, which include interest rates on our variable rate debt and interest rates for our variable rate debt and interest rate swaps of our unconsolidated joint ventures. In the event that LIBOR is discontinued, the interest rates will be based on a fallback reference rate specified in the applicable documentation governing such debt or swaps or as otherwise agreed upon. Such an event would not affect our ability to borrow or maintain already outstanding borrowings or swaps, but the alternative reference rate could be higher and more volatile than LIBOR.

Certain risks arise in connection with transitioning contracts to an alternative reference rate, including any resulting value transfer that may occur. The value of loans, securities, or derivative instruments tied to LIBOR could also be impacted if LIBOR is limited or discontinued. For some instruments, the method of transitioning to an alternative rate may be challenging, as they may require substantial negotiation with each respective counterparty.

If a contract is not transitioned to an alternative reference rate and LIBOR is discontinued, the impact is likely to vary by contract. If LIBOR is discontinued or if the method of calculating LIBOR changes from its current form, interest rates on our current or future indebtedness may be adversely affected.

While we expect LIBOR to be available in substantially its current form until the end of 2021, it is possible that LIBOR will become unavailable prior to that point. This could result, for example, if sufficient banks decline to make submissions to the LIBOR administrator. In that case, the risks associated with the transition to an alternative reference rate will be accelerated and magnified.

Mortgage debt obligations expose us to the possibility of foreclosure, which could result in the loss of our investment in a property or group of properties subject to mortgage debt.

Incurring mortgage and other secured debt obligations increases our risk of property losses because defaults on indebtedness secured by properties may result in foreclosure actions initiated by lenders and ultimately our loss of the property securing any loans for which we are in default. Any foreclosure on a mortgaged property or group of properties could adversely affect the overall value of our portfolio of properties. For tax purposes, a foreclosure of any of our properties that is subject to a nonrecourse mortgage loan would be treated as a sale of the property for a purchase price equal to the outstanding balance of the debt secured by the mortgage. If the outstanding balance of the debt secured by the mortgage exceeds our tax basis in the property, we would recognize taxable income on foreclosure, but would not receive any cash proceeds, which could hinder our ability to meet the distribution requirements applicable to REITs under the Code.

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Risks Related to Our Common Stock

The market price and trading volume of our common stock may be volatile.

The trading price of our common stock may be volatile. In addition, the trading volume in our common stock may fluctuate and cause significant price variations to occur. Some of the factors that could negatively affect our share price or result in fluctuations in the price or trading volume of our common stock include:

• actual or anticipated variations in our quarterly operating results or dividends;

• changes in our FFO, NOI or income estimates;

• publication of research reports about us or the real estate industry;

• increases in market interest rates that lead purchasers of our shares to demand a higher yield;

• changes in market valuations of similar companies;

• adverse market reaction to any additional debt we incur in the future;

• additions or departures of key management personnel;

• actions by institutional stockholders;

• speculation in the press or investment community;

• the realization of any of the other risk factors presented in this Form 10-K;

• the extent of investor interest in our securities;

• the general reputation of REITs and the attractiveness of our equity securities in comparison to other equity securities, including securities issued by other real estate-based companies;

• our underlying asset value;

• investor confidence in the stock and bond markets, generally;

• changes in tax laws;

• future equity issuances;

• failure to meet income estimates;

• failure to meet and maintain REIT qualifications; and

• general market and economic conditions.

In the past, securities class-action litigation has often been instituted against companies following periods of volatility in the price of their common stock. This type of litigation could result in substantial costs and divert our management’s attention and resources, which could have an adverse effect on our financial condition, results of operations, cash flow and trading price of our common stock.

The market value of our common stock may decline due to the large number of our shares eligible for future sale.

The market value of our common stock could decline as a result of sales of a large number of shares of our common stock in the market or upon exchange of common units, or the perception that such sales could occur. These sales, or the possibility that these sales may occur, also might make it more difficult for us to sell shares of our common stock in the future at a time and at a price that we deem appropriate.

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As of December 31, 2020, a significant number of our outstanding shares of our common stock are held by our continuing investors and their affiliates who acquired shares through a series of Formation Transactions (the “Formation Transactions”) and concurrent private placements at the time of our initial public offering on November 24, 2014.  These shares of common stock are “restricted securities” within the meaning of Rule 144 under the Securities Act and may not be sold in the absence of registration under the Securities Act unless an exemption from registration is available, including the exemptions contained in Rule 144. All of these shares of our common stock are eligible for future sale and certain of such shares held by our continuing investors have registration rights pursuant to registration rights agreements that we have entered into with those investors. In addition, limited partners of our operating partnership, other than us, have the right to require our operating partnership to redeem part or all of their common units for cash, based upon the value of an equivalent number of shares of our common stock at the time of the election to redeem, or, at our election, shares of our common stock on a one-for-one basis. The related shares of common stock or securities convertible into, exchangeable for, exercisable for, or repayable with common stock will be available for sale or resale, as the case may be, and such sales or resales, or the perception of such sales or resales, could depress the market price for our common stock.

Pursuant to the registration rights agreement we entered into with members of the Otto family and certain affiliated entities receiving shares of our common stock in the Formation Transactions and concurrent private placements, the parties to this agreement have the right to demand that we register the resale and/or facilitate an underwritten offering of their shares; provided that the demand relates to shares having a market value of at least $40.0 million and that such parties may not make more than two such demands in any consecutive 12-month period.  

In addition, upon the request of one or more such parties owning at least 1.0% of our total outstanding common stock, we have agreed to file a shelf registration statement registering the offering and sale of such parties’ registrable securities on a delayed or continuous basis, or a resale shelf registration statement, and maintain the effectiveness of the resale shelf registration statement for as long as the securities registered thereunder continue to qualify as registrable securities.

In connection with the registration rights agreement we entered into with the continuing investors who received common units in the Formation Transactions, on May 3, 2018, we filed a shelf registration statement with the SEC to register the primary issuance of the shares of our common stock that they may receive in exchange for their common units. We are required to maintain the effectiveness of this shelf registration statement for as long as the securities registered thereunder continue to qualify as registrable securities.

Future issuances of debt securities and equity securities may negatively affect the market price of shares of our common stock and, in the case of equity securities, may be dilutive to existing stockholders. In addition, share repurchases under our share repurchase program could also increase the volatility of the price of our common stock and could diminish our cash reserves.

Our charter provides that we may issue up to 900,000,000 shares of our common stock, $0.01 par value per share, and up to 100,000,000 shares of preferred stock, $0.01 par value per share. Moreover, under Maryland law and our charter, our board of directors has the power to increase the aggregate number of shares of stock or the number of shares of stock of any class or series that we are authorized to issue without stockholder approval. Similarly, the partnership agreement of our operating partnership authorizes us to issue an unlimited number of additional common units, which may be exchangeable for shares of our common stock. In addition, share equivalents are available for future issuance under the 2014 Equity Incentive Plan (with full value awards counting as one share equivalent and options counting as one-half of a share equivalent).

In the future, we may issue debt or equity securities or incur other financial obligations, including stock dividends and shares that may be issued in exchange for common units and equity plan shares/units. Upon liquidation, holders of our debt securities and other loans and preferred stock will receive a distribution of our available assets before common stockholders. We are not required to offer any such additional debt or equity securities to existing stockholders on a preemptive basis. Therefore, additional common stock issuances, directly or through convertible or exchangeable securities (including common units and convertible preferred units), warrants or options, will dilute the holdings of our existing common stockholders and such issuances or the perception of such issuances may reduce the market price of shares of our common stock. Any convertible preferred units would have, and any series or class of our preferred stock would likely have a preference on distribution payments, periodically or upon liquidation, which could eliminate or otherwise limit our ability to make distributions to common stockholders.

The existence of our share repurchase program could cause our stock price to be higher than it would be in the absence of such a program and could potentially reduce the market liquidity for our stock. Additionally, our share repurchase program could diminish our cash reserves, which may impact our ability to finance future growth and to pursue possible future strategic opportunities and acquisitions.  Although our share repurchase program is intended to enhance long-term stockholder value, there is no assurance that it will do so and short-term stock price fluctuations could reduce the program’s effectiveness.

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Risks Related to Our Status as a REIT

Failure to qualify or to maintain our qualification as a REIT would have significant adverse consequences to the value of our common stock.

We elected to be treated as a REIT commencing with our taxable year ended December 31, 2014. The Code generally requires that a REIT distribute at least 90% of its taxable income (without regard to the dividends paid deduction and excluding net capital gains) to stockholders annually, and a REIT must pay tax at regular corporate rates to the extent that it distributes less than 100% of its taxable income (including capital gains) in a given year. In addition, a REIT is required to pay a 4% nondeductible excise tax on the amount, if any, by which the distributions it makes in a calendar year are less than the sum of 85% of its ordinary income, 95% of its capital gain net income and 100% of its undistributed income from prior years. To avoid entity-level U.S. federal income and excise taxes, we anticipate distributing at least 100% of our taxable income annually.

We believe that we have been and are organized, and have operated and will continue to operate, in a manner that will allow us to qualify as a REIT commencing with our taxable year ended December 31, 2014. However, we cannot assure you that we have been and are organized and have operated or will continue to operate as such. This is because qualification as a REIT involves the application of highly technical and complex provisions of the Code as to which there may only be limited judicial and administrative interpretations and involves the determination of facts and circumstances not entirely within our control. We have not requested and do not intend to request a ruling from the Internal Revenue Service, or the IRS, that we qualify as a REIT. The complexity of the Code provisions and of the applicable Treasury Regulations is greater in the case of a REIT that, like us, acquired assets from taxable C corporations in tax-deferred transactions and holds its assets through one or more partnerships. Moreover, in order to qualify as a REIT, we must meet, on an ongoing basis, various tests regarding the nature and diversification of our assets and our income, the ownership of our outstanding stock, the absence of inherited retained earnings from non-REIT periods and the amount of our distributions. Our ability to satisfy the asset tests depends upon our analysis of the characterization and fair market values of our assets, some of which are not susceptible to a precise determination, and for which we will not obtain independent appraisals. Our compliance with the REIT gross income and quarterly asset requirements also depends upon our ability to manage successfully the composition of our gross income and assets on an ongoing basis. Future legislation, new regulations, administrative interpretations or court decisions may significantly change the tax laws or the application of the tax laws with respect to qualification as a REIT for U.S. federal income tax purposes or the U.S. federal income tax consequences of such qualification. Accordingly, it is possible that we may not meet the requirements for qualification as a REIT.  

If, with respect to any taxable year, we fail to maintain our qualification as a REIT, we would not be allowed to deduct distributions to stockholders in computing our taxable income. If we were not entitled to relief under the relevant statutory provisions, we would also be disqualified from treatment as a REIT for the four subsequent taxable years. If we fail to qualify as a REIT, we would be subject to entity-level income tax, including any applicable alternative minimum tax (which, for corporations, was repealed for tax years beginning after December 31, 2017), on our taxable income at regular corporate tax rates. As a result, the amount available for distribution to holders of our common stock would be reduced for the year or years involved, and we would no longer be required to make distributions to our stockholders. In addition, our failure to qualify as a REIT could impair our ability to expand our business and raise capital, and adversely affect the value of our common stock.

We may owe certain taxes notwithstanding our qualification as a REIT.

Even if we qualify as a REIT, we will be subject to certain U.S. federal, state and local taxes on our income and property, on taxable income that we do not distribute to our stockholders, on net income from certain “prohibited transactions,” and on income from certain activities conducted as a result of foreclosure. We may, in certain circumstances, be required to pay an excise or penalty tax (which could be significant in amount) in order to utilize one or more relief provisions under the Code to maintain our qualification as a REIT. In addition, we expect to provide certain services that are not customarily provided by a landlord, hold properties for sale and engage in other activities (such as a portion of our management business) through one or more TRSs, and the income of those subsidiaries will be subject to U.S. federal income tax at regular corporate rates. Furthermore, to the extent that we conduct operations outside of the United States, our operations would subject us to applicable non-U.S. taxes, regardless of our status as a REIT for U.S. tax purposes.

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In the event we acquire assets on a tax-deferred basis from C corporations, we would be subject to U.S. federal income tax, sometimes called the “sting tax,” at the highest regular corporate tax rate, which is 21%, on all or a portion of the gain recognized from a taxable disposition of any such assets occurring within the 5-year period following the acquisition date, to the extent of the asset’s built-in gain based on the fair market value of the asset on the acquisition date in excess of our initial tax basis in the asset. Additionally, depending upon the location of the asset acquired on a tax deferred basis there may be additional “sting tax” imposed on a state and local level.  Gain from a sale of such an asset occurring after the 5-year period ends will not be subject to this sting tax.  

Our Operating Partnership has limited partners that are non-U.S. persons. Such non-U.S. persons are subject to a variety of U.S. withholding taxes. A partnership that fails to remit the full amount of withholding taxes is liable for the amount of the under withholding, as well as interest and potential penalties. Although we believe that we have complied and will comply with the applicable withholding requirements, the determination of the amounts to be withheld is a complex legal determination and depends on provisions of the Code and the applicable Treasury Regulations that have little guidance. Accordingly, we may interpret the applicable law differently from the IRS and the IRS may seek to recover additional withholding taxes from us.

Our property taxes could increase due to property tax rate changes or reassessment, which could impact our cash flow.

Even if we qualify as a REIT for U.S. federal income tax purposes, we are required to pay state and local property taxes on our properties. The property taxes on our properties may increase as property tax rates change or as our properties are assessed or reassessed by taxing authorities. Therefore, the amount of property taxes we pay in the future may increase substantially from what we have paid in the past and such increases may not be covered by tenants pursuant to our lease agreements. If the property taxes we pay increase, our financial condition, results of operations, cash flow, per share trading price of our common stock and our ability to satisfy our principal and interest obligations and to make distributions to our stockholders could be adversely affected.

If our operating partnership is treated as a corporation for U.S. federal income tax purposes, we will cease to qualify as a REIT.

We believe our operating partnership qualifies and will continue to qualify as a partnership for U.S. federal income tax purposes. Assuming that it qualifies as a partnership for U.S. federal income tax purposes, our operating partnership generally will not be subject to U.S. federal income tax on its income. Instead, its partners, including us, generally are required to pay tax on their respective allocable share of our operating partnership’s income. No assurance can be provided, however, that the IRS will not challenge our operating partnership’s status as a partnership for U.S. federal income tax purposes, or that a court would not sustain such a challenge. For example, our operating partnership would be treated as a corporation for U.S. federal income tax purposes if it were deemed to be a “publicly traded partnership” and less than 90% of its income consisted of “qualified income” under the Code.  If the IRS were successful in treating our operating partnership as a corporation for U.S. federal income tax purposes, we would fail to meet the gross income tests and certain of the asset tests applicable to REITs and, therefore, cease to qualify as a REIT, and our operating partnership would become subject to U.S. federal, state and local income tax. The payment by our operating partnership of income tax would reduce significantly the amount of cash available to our operating partnership to satisfy obligations to make principal and interest payments on its debt and to make distribution to its partners, including us.

There are uncertainties relating to our distribution of non-REIT earnings and profits.

To qualify as a REIT, we must not have any non-REIT accumulated earnings and profits, as measured for U.S. federal income tax purposes, at the end of any REIT taxable year. Such non-REIT earnings and profits generally would have included any accumulated earnings and profits of the corporations acquired by us (or whose assets we acquired) in the Formation Transactions. We believe that we have operated, and intend to continue to operate, so that we have not had and will not have any earnings and profits accumulated in a non-REIT year at the end of any taxable year. However, the determination of the amounts of any such non-REIT earnings and profits is a complex factual and legal determination, especially in the case of corporations, such as the corporations acquired in the Formation Transactions that have been in operation for many years. In addition, certain aspects of the computational rules are not completely clear. Thus, we cannot guarantee that the IRS will not assert that we had accumulated non-REIT earnings as of the end of 2014 or a subsequent taxable year. If it is subsequently determined that we had any accumulated non-REIT earnings and profits as of the end of our first taxable year as a REIT or at the end of any subsequent taxable year, we could fail to qualify as a REIT beginning with the applicable taxable year. Pursuant to Treasury Regulations, however, so long as our failure to comply with the prohibition on non-REIT earnings and profits was not due to fraud with intent to evade tax, we could cure such failure by paying an interest charge on 50% of the amount of accumulated non-REIT earnings and profits and by making a special distribution of accumulated non-REIT earnings and profits. We intend to utilize such cure provisions if ever required to do so. The amount of any such interest charge could be substantial.

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Dividends payable by REITs generally do not qualify for reduced tax rates applicable to non-corporate taxpayers.

The maximum U.S. federal income tax rate for certain qualified dividends payable to U.S. stockholders that are individuals, trusts and estates generally is 20%. Dividends payable by REITs, however, are generally not eligible for the reduced rates and therefore are taxable as ordinary income when paid to such stockholders. However, current law provides a deduction of up to 20% of a non-corporate taxpayer’s ordinary REIT dividends with such deduction scheduled to expire for taxable years beginning after December 31, 2025. Although the reduced U.S. federal income tax rate applicable to dividend income from regular corporate dividends does not adversely affect the taxation of REITs or dividends paid by REITs, the more favorable rates applicable to regular corporate dividends could cause investors who are individuals, trusts and estates or are otherwise sensitive to these lower rates to perceive investments in REITs to be relatively less attractive than investments in the stock of non-REIT corporations that pay dividends, which could adversely affect the value of the shares of REITs, including our common stock.

Complying with the REIT requirements may cause us to forego otherwise attractive opportunities or liquidate certain of our investments.

To qualify as a REIT for U.S. federal income tax purposes, we must continually satisfy tests concerning, among other things, the sources of our income, the nature and diversification of our assets, the amounts we distribute to our stockholders and the ownership of our stock. We may be required to make distributions to our stockholders at disadvantageous times or when we do not have funds readily available for distribution. Thus, compliance with the REIT requirements may, for instance, hinder our ability to make certain otherwise attractive investments or undertake other activities that might otherwise be beneficial to us and our stockholders, or may require us to borrow or liquidate investments in unfavorable market conditions and, therefore, may hinder our investment performance.

As a REIT, at the end of each calendar quarter, at least 75% of the value of our assets must consist of cash, cash items, government securities, debt instruments issued by a publicly traded REIT and qualified real estate assets. The REIT asset tests further require that with respect to our assets that are not qualifying assets for purposes of this 75% asset test and that are not securities issued by a TRS, we generally cannot hold at the close of any calendar quarter (i) securities representing more than 10% of the outstanding voting securities of any one issuer or more than 10% of the total value of the outstanding securities of any one issuer or (ii) securities of any one issuer that represent more than 5% of the value of our total assets. In addition, securities (other than qualified real estate assets) issued by our TRSs cannot represent more than 20% of the value of our total assets at the close of any calendar quarter. Further, even though debt instruments issued by a publicly traded REIT that are not secured by a mortgage on real property are qualifying assets for purposes of the 75% asset test, no more than 25% of the value of our total assets can be represented by such unsecured debt instruments. After meeting these asset test requirements at the close of a calendar quarter, if we fail to comply with these requirements at the end of any subsequent calendar quarter, we must correct the failure within 30 days after the end of the calendar quarter or qualify for certain other statutory relief provisions to avoid losing our REIT qualification. As a result, we may be required to liquidate from our portfolio otherwise attractive investments. These actions could have the effect of reducing our income and amounts available for distribution to our stockholders.  

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We may be subject to a 100% penalty tax on any prohibited transactions that we enter into, or may be required to forego certain otherwise beneficial opportunities in order to avoid the penalty tax on prohibited transactions.

If we are found to have held, acquired or developed property primarily for sale to customers in the ordinary course of business, we may be subject to a 100% “prohibited transactions” tax under U.S. federal tax laws on the gain from disposition of the property unless the disposition qualifies for one or more safe harbor exceptions for properties that have been held by us for at least two years and satisfy certain additional requirements (or the disposition is made through a TRS and, therefore, is subject to corporate U.S. federal income tax).

Under existing law, whether property is held primarily for sale to customers in the ordinary course of a trade or business is a question of fact that depends on all the facts and circumstances. We intend to hold, and, to the extent within our control, to have any joint venture to which our operating partnership is a partner hold, properties for investment with a view to long-term appreciation, to engage in the business of acquiring, owning, operating and developing the properties, and to make sales of our properties and other properties acquired subsequent to the date hereof as are consistent with our investment objectives (and to hold investments that do not meet these criteria through a TRS). Based upon our investment objectives, we believe that overall, our properties (other than certain interests we intend to hold through a TRS) should not be considered property held primarily for sale to customers in the ordinary course of business. However, it may not always be practical for us to comply with one of the safe harbors, and, therefore, we may be subject to the 100% penalty tax on the gain from dispositions of property if we otherwise are deemed to have held the property primarily for sale to customers in the ordinary course of business.

The potential application of the prohibited transactions tax could cause us to forego potential dispositions of property or to forego other opportunities that might otherwise be attractive to us, or to hold investments or undertake such dispositions or other opportunities through a TRS, which would generally result in corporate income taxes being incurred.

REIT distribution requirements could adversely affect our liquidity and adversely affect our ability to execute our business plan.

In order to maintain our qualification as a REIT and to meet the REIT distribution requirements, we may need to modify our business plans. Our cash flow from operations may be insufficient to fund required distributions, for example, as a result of differences in timing between our cash flow, the receipt of income for accounting principles generally accepted in the United States of America (“GAAP”) purposes and the recognition of income for U.S. federal income tax purposes, the effect of non-deductible capital expenditures, the effect of limitations on interest and net operating loss deductibility, the creation of reserves, payment of required debt service or amortization payments, or the need to make additional investments in qualifying real estate assets. The insufficiency of our cash flow to cover our distribution requirements could require us to (i) sell assets in adverse market conditions, (ii) borrow on unfavorable terms, (iii) distribute amounts that would otherwise be invested in future acquisitions or capital expenditures or used for the repayment of debt, (iv) pay dividends in the form of “taxable stock dividends” or (v) use cash reserves, in order to comply with the REIT distribution requirements. As a result, compliance with the REIT distribution requirements could adversely affect the market value of our common stock. The inability of our cash flow to cover our distribution requirements could have an adverse impact on our ability to raise short- and long-term debt or sell equity securities. In addition, if we are compelled to liquidate our assets to repay obligations to our lenders or make distributions to our stockholders, we may be subject to a 100% tax on any resultant gain if we sell assets that are treated as property held primarily for sale to customers in the ordinary course of business, and, in the case of some of our properties, we may be subject to an entity-level sting tax.

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Preferred equity and certain debt investments could impact our compliance with REIT income and assets tests.

We indirectly hold certain preferred equity investments in entities that are treated as partnerships for U.S. federal income tax purposes that directly or indirectly own real property, and we may acquire (directly or indirectly) additional such investments in the future. Given such treatment as a partnership for U.S. federal income tax purposes, we will generally be treated as owning an interest in the underlying real estate and other assets of the partnership for tax purposes. As a result, absent sufficient controls to ensure that the underlying real property is operated in compliance with the REIT rules, preferred equity investments may impact our compliance with the REIT income and asset tests. Moreover, the treatment of interest-like preferred returns in a partnership is not clear under the REIT rules and such returns could be treated as non-qualifying income. In addition, in some cases, the proper characterization of debt-like preferred equity investments as unsecured indebtedness or as equity for U.S. federal income tax purposes may be unclear. If the IRS successfully re-characterized a preferred equity investment as unsecured debt for U.S. federal income tax purposes, the investment would be subject to various asset test limitations on unsecured debt and our preferred return would be treated as non-qualifying income for purposes of the 75% gross income test. Accordingly, such a recharacterization could impact our compliance with the REIT income and asset tests and/or be subject to substantial penalty taxes to cure the resulting violations.

Conversely, we may make investments that we treat as indebtedness for U.S. federal income tax purposes (and the REIT qualification rules) that have certain equity characteristics. If the IRS successfully recharacterized a debt investment in a non-corporate borrower as equity for U.S. federal income tax purposes, we would generally be required to include our share of the gross assets and gross income of the borrower in our REIT asset and income tests as described above. Inclusion of such items could impact our compliance with REIT income and asset tests. Moreover, to the extent a borrower holds its assets as dealer property or inventory, if we are treated as holding equity in a borrower for U.S. federal income tax purposes, our share of gains from sales by the borrower would be subject to the 100% tax on prohibited transactions (except to the extent earned through a TRS). To the extent an investment we treat as a loan to a corporate borrower is recharacterized as equity for U.S. federal income tax purposes, it could also cause us to fail one or more of the asset tests applicable to REITs.

The ability of our board of directors to revoke our REIT qualification without stockholder approval may cause adverse consequences to our stockholders.

Our charter provides that our board of directors may revoke or otherwise terminate our REIT election, without the approval of our stockholders, if it determines that it is no longer in our best interest to continue to qualify as a REIT. If we cease to be a REIT, we will not be allowed a deduction for dividends paid to stockholders in computing our taxable income and will be subject to U.S. federal income tax at regular corporate rates and state and local taxes, which may have adverse consequences on our total return to our stockholders.

Our ability to provide certain services to our tenants may be limited by the REIT rules, or may have to be provided through a TRS.

As a REIT, we generally cannot provide services to our tenants other than those that are customarily provided by landlords, nor can we derive income from a third party that provides such services. If we forego providing such services to our tenants, we may be at a disadvantage to competitors who are not subject to the same restrictions. However, we can provide such non-customary services to tenants or share in the revenue from such services if we do so through a TRS, though income earned through the TRS will be subject to corporate income taxes.

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Although our use of TRSs may partially mitigate the impact of meeting certain requirements necessary to maintain our qualification as a REIT, there are limits on our ability to own and enter into transactions with TRSs, and a failure to comply with the limits would jeopardize our REIT qualification and may result in the application of a 100% excise tax.

A REIT may own up to 100% of the stock of one or more TRSs. A TRS may hold assets and earn income that would not be qualifying assets or income if held or earned directly by a REIT. Both the subsidiary and the REIT must jointly elect to treat the subsidiary as a TRS. A corporation of which a TRS directly or indirectly owns more than 35% of the voting power or value of the stock will automatically be treated as a TRS. Overall, no more than 20% of the value of a REIT’s assets may consist of securities of one or more TRSs. Rules also impose a 100% excise tax on certain transactions between a TRS and its parent REIT that are treated as not being conducted on an arm’s-length basis.

Any company treated as our TRS under the Code for U.S. federal income tax purposes and any other TRSs that we form will pay U.S. federal, state and local income tax on their taxable income, and their after-tax net income will be available for distribution to us but is not required to be distributed to us unless necessary to maintain our REIT qualification. Although we will monitor the aggregate value of the securities of such TRSs and intend to conduct our affairs so that such securities will represent less than 20% of the value of our total assets, there can be no assurance that we will be able to comply with the TRS limitation in all market conditions.

The partnership audit rules may alter who bears the liability in the event any subsidiary partnership (such as our operating partnership) is audited and an adjustment is assessed.

In the case of an audit of a partnership for a taxable year beginning after December 31, 2017, the partnership itself may be liable for a hypothetical increase in partner-level taxes (including interest and penalties) resulting from an adjustment of partnership tax items on audit, regardless of changes in the composition of the partners (or their relative ownership) between the year under audit and the year of the adjustment.  Thus, for example, an audit assessment attributable to former partners of the operating partnership could be shifted to the partners in the year of adjustment.  The partnership audit rules also include an elective alternative method under which the additional taxes resulting from the adjustment are assessed from the affected partners (often referred to as a “push-out election”), subject to a higher rate of interest than otherwise would apply.  When a push-out election causes a partner that is itself a partnership to be assessed with its share of such additional taxes from the adjustment, such partnership may cause such additional taxes to be pushed out to its own partners.  In addition, Treasury Regulations provide that a partner that is a REIT may be able to use deficiency dividend procedures with respect to such adjustments. Many questions remain as to how the partnership audit rules will apply, and it is not clear at this time what effect these rules will have on us.  However, it is possible that these changes could increase the federal income tax, interest, and/or penalties otherwise borne by us in the event of a federal income tax audit of a subsidiary partnership (such as our operating partnership).

Tax legislation or regulatory action could adversely affect us or our investors.

The rules dealing with U.S. federal, state and local income taxation are constantly under review by persons involved in the legislative process and by the IRS and the U.S. Treasury Department. Changes to tax laws (which changes may have retroactive application) could adversely affect our stockholders or us. In recent years, many such changes have been made, including under the TCJA, which made major changes to the Code, including a number of provisions of the Code that affect the taxation of REITs and their stockholders, and changes are likely to continue to occur in the future. We cannot predict whether, when, in what form, or with what effective dates, tax laws, regulations and rulings may be enacted, promulgated or decided, or technical corrections made, which could result in an increase in our, or our stockholders’, tax liability or require changes in the manner in which we operate in order to minimize increases in our tax liability. A shortfall in tax revenues for states and municipalities in which we operate may lead to an increase in the frequency and size of such changes. If such changes occur, we may be required to pay additional taxes on our assets or income and/or be subject to additional restrictions. These increased tax costs could, among other things, adversely affect our financial condition, the results of operations and the amount of cash available for the payment of dividends. Stockholders are urged to consult with their own tax advisors with respect to the impact that recent legislation may have on their investment and the status of legislative, regulatory or administrative developments and proposals and their potential effect on their investment in our shares.

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General Risk Factors

We depend on key personnel, including Albert Behler, our Chairman, Chief Executive Officer and President, and the loss of services of one or more members of our senior management team, or our inability to attract and retain highly qualified personnel, could adversely affect our business.

There is substantial competition for qualified personnel in the real estate industry and the loss of our key personnel could have an adverse effect on us. Our continued success and our ability to manage anticipated future growth depend, in large part, upon the efforts of key personnel, particularly Albert Behler, our Chairman, Chief Executive Officer and President, who has extensive market knowledge and relationships and exercises substantial influence over our acquisition, redevelopment, financing, operational and disposition activity. Among the reasons that Albert Behler is important to our success is that he has a national, regional and local industry reputation that attracts business and investment opportunities and assists us in negotiations with financing sources and industry personnel. If we lose his services, our business and investment opportunities and our relationships with such financing sources and industry personnel could diminish.

Many of our other senior executives also have extensive experience and strong reputations in the real estate industry, which aid us in identifying or attracting investment opportunities and negotiating with sellers of properties. The loss of services of one or more members of our senior management team, or our inability to attract and retain highly qualified personnel, could adversely affect our business, diminish our investment opportunities and weaken our relationships with lenders, business partners and industry participants, which could negatively affect our financial condition, results of operations and cash flow.

We face risks associated with security breaches through cyber-attacks, cyber intrusions or otherwise, as well as other significant disruptions of our IT networks and related systems.

We face risks associated with security breaches, whether through cyber-attacks or cyber intrusions over the Internet, malware, computer viruses, attachments to e-mails, persons inside our organization or persons with access to systems inside our organization, and other significant disruptions of our IT networks and related systems. The risk of a security breach or disruption, particularly through cyber-attack or cyber intrusion, including by computer hackers, foreign governments and cyber terrorists, has generally increased as the number, intensity and sophistication of attempted attacks and intrusions from around the world have increased. Our IT networks and related systems are essential to the operation of our business and our ability to perform day-to-day operations (including managing our building systems) and, in some cases, may be critical to the operations of certain of our tenants. Although we make efforts to maintain the security and integrity of these types of IT networks and related systems, and we have implemented various measures to manage the risk of a security breach or disruption, there can be no assurance that our security efforts and measures will be effective or that attempted security breaches or disruptions would not be successful or damaging. Even the most well protected information, networks, systems and facilities remain potentially vulnerable because the techniques used in such attempted security breaches evolve and generally are not recognized until launched against a target, and in some cases are designed not to be detected and, in fact, may not be detected. Accordingly, we may be unable to anticipate these techniques or to implement adequate security barriers or other preventative measures, and thus it is impossible for us to entirely mitigate this risk.

A security breach or other significant disruption involving our IT networks and related systems could:

• disrupt the proper functioning of our networks and systems and therefore our operations and/or those of certain of our tenants;

• result in misstated financial reports, violations of loan covenants, missed reporting deadlines and/or missed permitting deadlines;

• result in our inability to properly monitor our compliance with the rules and regulations regarding our qualification as a REIT;

• result in the loss, theft or misappropriation of our property;

• result in the unauthorized access to, and destruction, loss, theft, misappropriation or release of, proprietary, confidential, sensitive or otherwise valuable information of ours or others, which others could use to compete against us or which could expose us to damage claims by third-parties for disruptive, destructive or otherwise harmful purposes and outcomes;

• result in our inability to maintain the building systems relied upon by our tenants for the efficient use of their leased space;

• require significant management attention and resources to remedy any damages that result;

• subject us to claims for breach of contract, damages, credits, penalties or termination of leases or other agreements; or

• damage our reputation among our tenants and investors generally.

Any or all of the foregoing could have a material adverse effect on our results of operations, financial condition and cash flows.

38

Our board of directors may change our policies without stockholder approval.

Our policies, including any policies with respect to investments, leverage, financing, growth, debt and capitalization, are determined by our board of directors or those committees or officers to whom our board of directors may delegate such authority. Our board of directors also establishes the amount of any dividends or other distributions that we pay to our stockholders. Our board of directors or the committees or officers to which such decisions are delegated have the ability to amend or revise these and our other policies at any time without stockholder vote. Accordingly, our stockholders are not entitled to approve changes in our policies, and, while not intending to do so, we may adopt policies that may have an adverse effect on our financial condition and results of operations.  

ITEM 1B. UNRESOLVED STAFF COMMENTS

There are no unresolved comments from the staff of the Securities and Exchange Commission as of the date of this Annual Report on Form 10-K.

39

ITEM 2. PROPERTIES

Our Portfolio Summary

As of December 31, 2020, our portfolio consisted of 13 Class A office properties aggregating approximately 12.9 million square feet that was 95.4% leased and 95.1% occupied. The following table presents an overview of our portfolio as of December 31, 2020.

(Amounts in thousands, except square feet and per square foot amounts)																Annualized Rent (3)
Property	Submarket	Paramount Ownership				Number of Buildings		Square Feet		% Leased(1)			% Occupied(2)			Amount		Per Square Foot (4)
New York:
1633 Broadway	West Side		90.0	%	(5)		1		2,499,105		98.3	%		98.3	%	$	181,941	$	76.62
1301 Avenue of the Americas	Sixth Avenue / Rock Center		100.0	%			1		1,765,688		99.0	%		99.0	%		140,142		80.48
1325 Avenue of the Americas	Sixth Avenue / Rock Center		100.0	%			1		811,104		91.8	%		91.7	%		49,745		68.29
31 West 52nd Street	Sixth Avenue / Rock Center		100.0	%			1		763,172		99.3	%		98.2	%		71,327		92.62
900 Third Avenue	East Side		100.0	%			1		591,533		80.6	%		80.6	%		34,979		73.46
712 Fifth Avenue	Madison / Fifth Avenue		50.0	%			1		543,411		70.8	%		67.5	%		42,373		115.48
60 Wall Street	Downtown		5.0	%			1		1,625,483		100.0	%		100.0	%		73,600		45.28
Subtotal / Weighted Average							7		8,599,496		95.3	%		95.0	%		594,107		73.45
Paramount's Ownership Interest							7		6,533,859		95.1	%		94.8	%		484,816		79.35
San Francisco:
One Market Plaza	South Financial District		49.0	%			2		1,591,951		97.5	%		97.5	%		142,085		90.77
Market Center	South Financial District		67.0	%			2		745,630		90.2	%		90.2	%		57,268		85.14
300 Mission Street	South Financial District		31.1	%			1		660,702		99.1	%		99.1	%		53,082		81.23
One Front Street	North Financial District		100.0	%			1		644,700		100.0	%		98.8	%		51,996		81.69
55 Second Street	South Financial District		44.1	%			1		379,621		95.7	%		95.7	%		27,854		76.88
111 Sutter Street	North Financial District		49.0	%			1		277,193		79.6	%		79.6	%		17,881		81.86
Subtotal / Weighted Average							8		4,299,797		95.6	%		95.4	%		350,166		85.21
Paramount's Ownership Interest							8		2,433,044		95.7	%		95.4	%		197,541		84.97
Total / Weighted Average							15		12,899,293		95.4	%		95.1	%		944,273		77.45
Paramount's Ownership Interest							15		8,966,903		95.2	%		95.0	%		682,357		80.92

⁽¹⁾ Represents the percentage of square feet that is leased, including signed leases not yet commenced.

⁽²⁾ Represents the percentage of space for which we have commenced rental revenue in accordance with GAAP.

⁽³⁾ Except for 60 Wall Street, which is presented on a “triple-net” basis, amounts represent the end of the period monthly base rent plus escalations in accordance with the lease terms, multiplied by 12.

⁽⁴⁾ Represents office and retail space only.

⁽⁵⁾ On May 27, 2020, we sold a 10.0% interest in 1633 Broadway.

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Tenant Diversification

As of December 31, 2020, our properties were leased to a diverse base of tenants. Our tenants represent a broad array of industries, including financial services, legal services, technology and media, insurance and other professional services. The following table sets forth information regarding the ten largest tenants in our portfolio based on annualized rent as of December 31, 2020.

(Amounts in thousands, except square feet and per square feet amounts)						Our Share of
			Total			Total			% of			Annualized Rent (1)				% of
	Lease		Square Feet			Square Feet			Total					Per Square		Annualized
Tenant	Expiration		Occupied			Occupied			Square Feet			Amount		Foot		Rent
Barclays Capital, Inc.	Dec-2020	(2)		497,418	(2)		497,418	(2)		5.5	%	$	33,475	$	67.30		4.9	%
Clifford Chance LLP	Jun-2024			328,992			328,992			3.7	%		28,993		88.13		4.2	%
First Republic Bank	Jun-2025	(3)		350,340	(3)		350,340	(3)		3.9	%		28,336		80.88		4.2	%
Credit Agricole Corporate &    Investment Bank	Feb-2023			312,679			312,679			3.5	%		27,471		87.86		4.0	%
Norton Rose Fulbright	Sep-2034	(4)		320,325	(4)		320,325	(4)		3.6	%		27,171		84.82		4.0	%
Allianz Global Investors, LP	Jan-2031			320,911			288,823			3.2	%		26,310		91.09		3.9	%
Morgan Stanley & Company	Mar-2032			260,829			234,749			2.6	%		17,919		76.33		2.6	%
WMG Acquisition Corporation    (Warner Music Group)	Jul-2029			293,888			264,502			2.9	%		17,401		65.79		2.6	%
Showtime Networks, Inc.	Jan-2026			261,196			235,079			2.6	%		15,218		64.74		2.2	%
Google, Inc.	Apr-2025			342,211			167,683			1.9	%		14,323		85.42		2.1	%

⁽¹⁾ Represents the end of the period monthly base rent plus escalations in accordance with the lease terms, multiplied by 12.

⁽²⁾ The lease expired on December 31, 2020.

⁽³⁾ 76,999 and 22,690 of the square feet leased expire on December 31, 2029 and December 31, 2030, respectively.

⁽⁴⁾ 116,462 of the square feet leased expires on March 31, 2032.

Industry Diversification

The following table sets forth information relating to tenant diversification by industry in our portfolio based on annualized rent as of December 31, 2020.

	Our Share of
(Amounts in thousands, except square feet)	Square Feet		% of Occupied			Annualized		% of Annualized
Industry	Occupied		Square Feet			Rent (1)		Rent
Legal Services		1,758,574		20.7	%	$	145,542		21.3	%
Financial Services - Commercial and Investment Banking		1,870,603		22.0	%		143,288		21.0	%
Technology and Media		1,753,697		20.6	%		134,034		19.6	%
Financial Services, all others		1,260,963		14.8	%		113,505		16.6	%
Insurance		448,762		5.3	%		39,746		5.8	%
Retail		136,385		1.6	%		14,387		2.1	%
Travel & Leisure		192,856		2.3	%		13,548		2.0	%
Other Professional Services		138,118		1.6	%		11,339		1.7	%
Real Estate		134,090		1.6	%		11,146		1.6	%
Other		820,663		9.5	%		55,822		8.3	%

⁽¹⁾ Represents the end of the period monthly base rent plus escalations in accordance with the lease terms, multiplied by 12.

41

Lease Expirations

The following table sets forth a summary schedule of lease expirations for leases in place as of December 31, 2020 for each of the ten calendar years beginning with the year ending December 31, 2021. The information set forth in the table assumes that tenants exercise no renewal options and no early termination rights.

(Amounts in thousands, except square feet)
	Total		Our Share of
Year of	Square Feet of		Square Feet of		Annualized Rent (1)				% of
Lease Expiration (2)	Expiring Leases		Expiring Leases		Amount		Per Square Foot (3)		Annualized Rent
Month to Month		14,391		9,968	$	799	$	56.62		0.1	%
2021		1,043,022		930,870		66,838		73.68		9.7	%
2022		2,263,471		464,412		31,355		80.91		4.5	%
2023		890,658		747,396		60,016		83.30		8.7	%
2024		802,940		714,755		59,664		83.52		8.6	%
2025		1,411,167		881,262		72,674		82.46		10.5	%
2026		1,403,975		980,283		78,469		78.03		11.4	%
2027		207,449		141,918		12,517		88.15		1.8	%
2028		255,681		209,154		17,080		82.15		2.5	%
2029		578,253		515,191		39,931		77.92		5.8	%
2030		610,952		512,412		44,545		86.97		6.5	%
Thereafter		2,821,206		2,432,753		206,624		84.38		29.9	%

⁽¹⁾ Represents the end of the period monthly base rent plus escalations in accordance with the lease terms, multiplied by 12.

⁽²⁾ Leases that expire on the last day of any given period are treated as occupied and are reflected as expiring space in the following period.

⁽³⁾ Represents office and retail space only.

Our portfolio contains a number of large buildings in select central business district submarkets, which often involve large users occupying multiple floors for relatively long terms. Accordingly, the renewal of one or more large leases may have a material positive or negative impact on average base rent, tenant improvement and leasing commission costs in a given period. Tenant improvement costs include expenditures for general improvements related to a new tenant. Leasing commission costs are similarly subject to significant fluctuations depending upon the anticipated revenue to be received under the leases and the length of leases being signed. Our ability to re-lease space subject to expiring leases will impact our results of operations and is affected by economic and competitive conditions in our markets and by the desirability of our individual properties.

As of December 31, 2020, the vacancy rate of our portfolio was 4.6%. In addition, 1,057,413 square feet (including month-to-month tenants), or 8.2% of the square footage of our portfolio is scheduled to expire during the year ending December 31, 2021, which represents approximately 9.8% of our annualized rent.  

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Real Estate Fund Investments

We have an investment management business, where we serve as the general partner of real estate funds for institutional investors and high net-worth individuals. The following is a summary of our ownership in these funds.

Alternative Investment Funds

We are the general partner and investment manager of Paramount Group Real Estate Fund VIII, LP (“Fund VIII”) and Paramount Group Real Estate Fund X, LP and its parallel fund, Paramount Group Real Estate Fund X-ECI, LP, (collectively “Fund X”), our Alternative Investment Funds, which invest in mortgage and mezzanine loans and preferred equity investments.

Fund VIII has investments, including commitments for future funding, aggregating $613,897,000 that have various stated interest rates ranging from 5.19% to 9.25% and maturities ranging from April 2021 to December 2027. As of December 31, 2020, our ownership interest in Fund VIII was approximately 1.3%.

Fund X completed its initial closing in December 2018 and has $192,000,000 of capital commitments, of which $78,791,000 has been invested as of December 31, 2020. The investments have stated interest rates ranging from 4.86% to 7.50% and maturity dates ranging from June 2021 to January 2023. As of December 31, 2020, our ownership in Fund X was approximately 7.8%.

Residential Development Fund

We are also the general partner of the Residential Development Fund (“RDF”). RDF owns a 35.0% interest in One Steuart Lane, a residential condominium development project, in San Francisco, California. As of December 31, 2020, our ownership interest in RDF was approximately 7.4%.

Other

Oder-Center, Germany

We own a 9.5% interest in a joint venture that owns Oder-Center, a shopping center located in Brandenburg, Germany.  

745 Fifth Avenue

We own a 1.0% interest in 745 Fifth Avenue, a 35-story 535,466 square foot art deco style building located on the corner 58th Street and Fifth Avenue, in New York, New York.

718 Fifth Avenue - Put Right

We manage 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, New York.  Prior to the Formation Transactions, an affiliate of our Predecessor owned a 25.0% interest in 718 Fifth Avenue (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 with the actual purchase occurring no earlier than 12 months after written notice is provided. If the put right is exercised and the 712 Fifth Avenue joint venture acquires the 50.0% tenancy-in-common interest in the property held by our joint venture partner, we will own a 25.0% interest in 718 Fifth Avenue based on the current ownership interests.

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ITEM 3. LEGAL PROCEEDINGS

From time to time, we are a party to various claims and routine litigation arising in the ordinary course of business. 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 4. MINE SAFETY DISCLOSURES

Not applicable.

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PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Our common stock is listed on the New York Stock Exchange (“NYSE”) under the symbol PGRE.

As of December 31, 2020, there were approximately 149 registered holders of record of our common stock. This figure does not reflect the beneficial ownership of shares of our common stock held in nominee or “street” name.

Dividends

In order to maintain our qualification as a REIT under the Internal Revenue Code, we must distribute at least 90% of our taxable income to shareholders. We intend to pay dividends on a quarterly basis to holders of our common stock. Any dividend distributions we pay in the future will depend upon our actual results of operations, economic conditions and other factors that could differ materially from our current expectations. Our actual results of operations will be affected by a number of factors; including the revenue we receive from our properties, our operating expenses, interest expense, the ability of our tenants to meet their obligations and unanticipated expenditures. Distributions declared by us will be authorized by our board of directors in its sole discretion out of funds legally available and will be dependent upon a number of factors, including restrictions under applicable law, the capital requirements of our company and the distribution requirements necessary to maintain our qualification as a REIT. See Item 1A, Risk Factors, and Item 7, Management's Discussion and Analysis of Financial Conditions and Results of Operations, of this Annual Report on Form 10-K, for information regarding the sources of funds used for dividends and for a discussion of factors, if any, which may adversely affect our ability to make distributions to our shareholders.

On December 15, 2020, we declared a regular quarterly cash dividend of $0.07 per share of common stock for the fourth quarter ended December 31, 2020, which was paid on January 15, 2021 to stockholders of record as of the close of business on December 31, 2020.

45

Performance Graph

The following graph is a comparison of the cumulative return of our common stock, the SNL Financials (“SNL”) Office REIT Index (the “SNL Office REIT Index”) and the National Association of Real Estate Investment Trusts (“Nareit”) All Equity Index (the “All Equity Index”). The graph assumes that $100 was invested on December 31, 2015 in our common stock, the SNL Office REIT Index and the All Equity Index and that all dividends were reinvested without the payment of any commissions. There can be no assurance that the performance of our stock will continue in line with the same or similar trends depicted in the graph below.

	December 31,
	2015		2016		2017		2018		2019		2020
Paramount Group, Inc.	$	100.00	$	90.47	$	91.83	$	74.84	$	85.39	$	58.07
SNL Office REIT Index		100.00		111.59		114.60		94.53		120.51		95.69
All Equity Index		100.00		108.63		118.05		113.28		145.75		138.28

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Recent Sales of Unregistered Securities

None.

Securities Authorized for Issuance Under Equity Compensation Plans

The following table summarizes certain information about our equity compensation plans as of December 31, 2020.

Plan Category	Number of securities to be issued upon exercise of outstanding options, warrants and rights			Weighted-average exercise price of outstanding options, warrants and rights			Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in the first column of this table)
Equity compensation plans approved by stockholders		14,263,985	(1)	$	17.06	(2)		7,001,002	(3)
Equity compensation plans not approved by    stockholders		-			-			-
Total		14,263,985		$	17.06			7,001,002

⁽¹⁾ Includes an aggregate of (i) 2,032,493 shares of common stock issuable upon the exercise of outstanding options granted pursuant to our 2014 Equity Incentive Plan (the "Plan"), (ii) 8,699,440 shares of common stock issuable in exchange for common units issued or which may, upon the satisfaction of certain conditions, be issuable pursuant to LTIP units of our Operating Partnership (“LTIP units”) that were previously granted pursuant to the Plan and (iii) 3,532,052 shares of common stock issuable in exchange for common units issued, pursuant to LTIP units that were previously granted outside of the Plan in connection with our initial public offering. The 8,699,440 LTIP units include 3,780,792 LTIP units that remain subject to the achievement of the requisite performance-based vesting criteria.

⁽²⁾ The outstanding LTIP units and the common units into which they were converted or are convertible into do not have an exercise price. Accordingly, these awards are not included in the weighted-average exercise price calculation.

⁽³⁾ Based on awards being granted as "Full Value Awards," as defined in the Plan, including awards such as restricted stock and LTIP units that do not require the payment of an exercise price. If we were to grant awards other than "Full Value Awards," as defined in the Plan, including Appreciation Only LTIP units of our Operating Partnership (“AOLTIPs”), stock options or stock appreciation rights, the number of securities remaining available for future issuance would be 14,002,004.

Recent Purchases of Equity Securities

Stock Repurchase Program

On November 5, 2019, we received authorization from our Board of Directors to repurchase up to an additional $200,000,000 of our common stock, from time to time, in the open market or in privately negotiated transactions. During 2020, we repurchased 13,813,158 common shares at a weighted average price of $8.69 per share, or $120,000,000 in the aggregate, of which 1,723,103 shares were repurchased in the three months ended December 31, 2020 at a weighted average price of $6.66 per share, or $11,480,000 in the aggregate. We have $80,000,000 available for future repurchases under the existing program. The amount and timing of future repurchases, if any, will depend on a number of factors, including, the price and availability of our shares, trading volume, general market conditions and available funding. The stock repurchase program may be suspended or discontinued at any time.

The following table summarizes our purchases of equity securities in the three months ended December 31, 2020.

Period	Total Number of Shares Purchased			Average Price Paid per Share		Total Number of Shares Purchased as Part  of Publicly Announced Plan		Maximum Approximate Dollar Value Available for Future Purchase
October 2020		1,725,057	(1)	$	6.66		1,723,103	$	80,000,000
November 2020		-			-		-		80,000,000
December 2020		-			-		-		80,000,000

⁽¹⁾ Includes 1,954 common shares surrendered by employees for the satisfaction of tax withholding obligations in connection with the vesting of restricted common stock.

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ITEM 6.SELECTED FINANCIAL DATA

The following tables set forth selected financial and operating data for the years ended December 31, 2020, 2019, 2018, 2017, and 2016. During the past three years, we sold the remaining assets in our Washington, D.C. portfolio, thereby exiting the Washington, D.C. office market. These dispositions represented a strategic shift in our operations and met the criteria of discontinued operations. Accordingly, the data in the tables below reflects the results of operations and the assets and liabilities of our Washington, D.C. portfolio as discontinued operations for all periods presented (see Note 3, Dispositions and Discontinued Operations). This data should be read in conjunction with the consolidated financial statements and notes thereto included in Item 8, Financial Statements and Supplementary Data and Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations in this Annual Report on Form 10-K. This data may not be comparable to, or indicative of, future operating results.

	For the Year Ended December 31,
(Amounts in thousands, except per share amounts)	2020			2019			2018			2017			2016
Revenues:
Rental revenue	$	679,015		$	709,508		$	677,138		$	612,526		$	566,537
Fee and other income		35,222			34,246			30,533			34,336			30,631
Total revenues		714,237			743,754			707,671			646,862			597,168
Expenses:
Operating		267,587			264,702			254,697			238,810			217,408
Depreciation and amortization		235,200			240,104			240,868			244,553			238,382
General and administrative		64,917			68,556			57,563			61,577			53,510
Transaction related costs		1,096			1,999			1,471			2,027			2,404
Total expenses		568,800			575,361			554,599			546,967			511,704
Other income (expense):
(Loss) income from unconsolidated joint ventures		(18,619	)		(4,706	)		3,468			20,185			7,413
Income (loss) from unconsolidated real estate funds		272			(343	)		(269	)		(6,143	)		(498	)
Interest and other income (loss), net		4,490			9,844			7,936			(9,074	)		6,881
Interest and debt expense		(144,208	)		(156,679	)		(147,653	)		(141,038	)		(135,340	)
Loss on early extinguishment of debt		-			(11,989	)		-			(2,715	)		-
Gain on sale of real estate		-			-			-			23,406			-
Unrealized gain on interest rate swaps		-			-			-			1,802			39,814
(Loss) income from continuing operations, before income taxes		(12,628	)		4,520			16,554			(13,682	)		3,734
Income tax expense		(1,493	)		(312	)		(3,139	)		(5,177	)		(1,785	)
(Loss) income from continuing operations, net		(14,121	)		4,208			13,415			(18,859	)		1,949
(Loss) income from discontinued operations, net		(5,075	)		(33,811	)		5,578			126,035			120
Net (loss) income		(19,196	)		(29,603	)		18,993			107,176			2,069
Less net (income) loss attributable to noncontrolling interests:
Consolidated joint ventures		(9,257	)		(11,022	)		(8,182	)		10,365			(15,423	)
Consolidated real estate funds		1,450			(313	)		(720	)		(19,797	)		1,316
Operating Partnership		2,299			4,039			(944	)		(11,363	)		2,104
Net (loss) income attributable to common stockholders	$	(24,704	)	$	(36,899	)	$	9,147		$	86,381		$	(9,934	)
(Loss) income per Common Share - Basic and Diluted:
(Loss) income from continuing operations, net	$	(0.09	)	$	(0.03	)	$	0.02		$	(0.10	)	$	(0.05	)
(Loss) income from discontinued operations, net		(0.02	)		(0.13	)		0.02			0.47			0.00
Net (loss) income per common share	$	(0.11	)	$	(0.16	)	$	0.04		$	0.37		$	(0.05	)
Dividends per common share	$	0.37		$	0.40		$	0.40		$	0.38		$	0.38
Balance Sheet Data (as of end of period):
Total assets	$	8,554,097		$	8,734,135		$	8,755,978		$	8,917,661		$	8,867,168
Real estate, at cost		7,963,315			7,889,885			7,793,784			7,653,276			7,180,839
Accumulated depreciation and amortization		(966,697	)		(790,216	)		(617,974	)		(445,328	)		(290,418	)
Debt, net		3,800,739			3,820,769			3,566,917			3,541,300			3,594,898
Total equity		4,515,734			4,630,962			4,891,664			5,022,084			4,885,947
Other Data:
Funds from operations attributable to common    stockholders ("FFO") (1)	$	214,821		$	208,187		$	224,465		$	205,558		$	195,140
Core funds from operations attributable to common    stockholders ("Core FFO") (1)		213,682			227,164			229,900			210,072			183,579

⁽¹⁾ For a reconciliation of net income or loss to FFO and Core FFO and why we view these measures to be useful supplemental performance measures, see page 75.

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ITEM 7. 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.

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 and San Francisco. We conduct our business through, and substantially all of our interests in properties and investments are held by, our Operating Partnership. We are the sole general partner of, and owned approximately 91.3% of the Operating Partnership as of December 31, 2020.

Objectives and Strategy

Our primary business objective is to enhance stockholder value by increasing cash flow from operations. The strategies we intend to execute to achieve this objective include:

• Leasing vacant and expiring space, at market rents;

• Maintaining a disciplined acquisition strategy focused on owning and operating Class A office properties in select central business district submarkets of New York City and San Francisco;

• Redeveloping and repositioning properties to increase returns; and

• Proactively managing our portfolio to increase occupancy and rental rates.

During the past three years, we sold the remaining assets in our Washington, D.C. portfolio, thereby exiting the Washington, D.C. office market. These dispositions represent a strategic shift in our operations as our focus was to become a bicoastal REIT in two of the most resilient markets in the world – New York City and San Francisco.

Critical Accounting Policies

Real Estate  

Real estate is carried at cost less accumulated depreciation and amortization. Betterments, major renovations and certain costs directly related to the improvement of real estate are capitalized. Maintenance and repair expenses are charged to expense as incurred. Depreciation is recognized on a straight-line basis over estimated useful lives of the assets, which range from 5 to 40 years. Tenant improvements are amortized on a straight-line basis over the lives of the related leases, which approximate the useful lives of the assets.

Upon the acquisition of real estate, we assess the fair value of acquired assets (including land, buildings and improvements, identified intangibles, such as acquired above-market leases and acquired in-place leases) and acquired liabilities (such as acquired below-market leases) and allocate the purchase price based on these assessments. We assess fair value based on estimated cash flow projections that utilize appropriate discount and capitalization rates and available market information. Estimates of future cash flows are based on a number of factors including historical operating results, known trends, and market/economic conditions. We record acquired intangible assets (including acquired above-market leases and acquired in-place leases) and acquired intangible liabilities (including below-market leases) at their estimated fair value. We amortize acquired above-market and below-market leases as a decrease or increase to rental revenue, respectively, over the lives of the respective leases. Amortization of acquired in-place leases is included as a component of “depreciation and amortization”.

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Our properties, including any related intangible assets, are individually reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Impairment analyses are based on our current plans, intended holding periods and available market information at the time the analyses are prepared. An impairment exists when the carrying amount of an asset exceeds the aggregate projected future cash flows over the anticipated holding period on an undiscounted basis. An impairment loss is measured based on the excess of the property’s carrying amount over its estimated fair value. Estimates of fair value are determined using discounted cash flow models, which consider, among other things, anticipated holding periods, current market conditions and utilize unobservable quantitative inputs, including appropriate capitalization and discount rates. If our estimates of the projected future cash flows, anticipated holding periods, or market conditions change, our evaluation of impairment losses may be different and such differences could be material to our consolidated financial statements. The evaluation of anticipated cash flows is subjective and is based, in part, on assumptions regarding future occupancy, rental rates and capital requirements that could differ materially from actual results. Plans to hold properties over longer periods decrease the likelihood of recording impairment losses.

Real estate and related intangibles are classified as held for sale when all the necessary criteria are met. The criteria include (i) management, having the authority to approve action, commits to a plan to sell the property in its present condition, (ii) the sale of the property is at a price reasonable in relation to its current fair value and (iii) the sale is probable and expected to be completed within one year. Real estate and the related intangibles held for sale are carried at the lower of carrying amounts or estimated fair value less disposal costs. Depreciation and amortization is not recognized on real estate and related intangibles classified as assets held for sale.

Variable Interest Entities (“VIEs”) and Investments in Unconsolidated Joint Ventures and Funds

We consolidate VIEs in which we are considered to be the primary beneficiary. Entities are considered to be the primary beneficiary if they have both of the following characteristics: (i) the power to direct the activities that, when taken together, most significantly impact the VIE’s performance, and (ii) the obligation to absorb losses and right to receive the returns from the VIE that would be significant to the VIE. Our judgment with respect to our level of influence or control of an entity involves the consideration of various factors including the form of our ownership interest, our representation in the entity’s governance, the size of our investment, estimates of future cash flows, our ability to participate in policy making decisions and the rights of the other investors to participate in the decision making process and to replace us as manager and/or liquidate the joint venture, if applicable.

We account for investments under the equity method when the requirements for consolidation are not met, and we have significant influence over the operations of the investee. Equity method investments, which consist of investments in unconsolidated joint ventures and funds are initially recorded at cost and subsequently adjusted for (i) our share of net income or loss, (ii) our share of other comprehensive income or loss, and (iii) cash contributions and distributions. To the extent that our cost basis is different than our share of the equity in the equity method investment, the basis difference allocated to depreciable assets is amortized into “income from unconsolidated joint ventures” over the estimated useful life of the related asset. The agreements that govern our equity method investments may designate different percentage allocations among investors for profits and losses; however, our recognition of income or loss generally follows the investment’s distribution priorities, which may change upon the achievement of certain investment return thresholds. We account for cash distributions in excess of our basis in the equity method investments as income when we have neither the requirement, nor the intent to provide financial support to the joint venture. Investments accounted for under the equity method are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the investment may not be recoverable. An impairment loss is measured based on the excess of the carrying amount of an investment over its estimated fair value. Impairment analyses are based on current plans, intended holding periods and available information at the time the analyses are prepared.

Investments that do not qualify for consolidation or equity method accounting are accounted for under the cost method.

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Revenue Recognition

Our revenues consist of rental revenues and fee and other income.

Rental Revenue

We lease office, retail and storage space to tenants, primarily under non-cancellable operating leases which have terms generally ranging from five to fifteen years. Most of our leases provide tenants with extension options at either fixed or market rates and few of our leases provide tenants with options to early terminate, but such options generally impose an economic penalty on the tenant upon exercising. Rental revenue is recognized in accordance with ASC Topic 842, Leases, and includes (i) fixed payments of cash rents, which represents revenue each tenant pays in accordance with the terms of its respective lease and that is recognized on a straight-line basis over the non-cancellable term of the lease, and includes the effects of rent steps and rent abatements under the leases, (ii) variable payments of tenant reimbursements, which are recoveries of all or a portion of the operating expenses and real estate taxes of the property and is recognized in the same period as the expenses are incurred, (iii) amortization of acquired above and below-market leases, net and (iv) lease termination income.

We evaluate the collectability of our tenant receivables for payments required under the lease agreements. If we determine that collectability is not probable, the difference between rental revenue recognized and rental payments received is recorded as an adjustment to “rental revenue” in our consolidated statements of income.

Fee and Other Income

Fee income includes (i) property management fees, (ii) asset management fees, (iii) fees relating to acquisitions, dispositions and leasing services and (iv) other fee income and 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. Other income includes income from tenant requested services, including overtime heating and cooling and parking income.

Recently Issued Accounting Literature

A summary of 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 Annual Report on Form 10-K.

Business Overview

COVID-19 Update

In March 2020, the World Health Organization declared COVID-19 a global pandemic. The outbreak of COVID-19 has caused, and continues to cause, severe disruptions in the global economy, and has adversely impacted businesses and financial markets, including that of the United States. Specifically, New York and San Francisco, the markets in which we operate and where a majority of our assets are located, have reacted by instituting quarantines, “pause” orders, “shelter-in-place” rules, restrictions on travel, and restriction on the types of business that could operate. These measures have had and continue to have a significant adverse impact on businesses.

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While our buildings have remained open throughout the pandemic, a majority of our tenants have worked remotely. The health and safety of our employees and tenants have been our highest priority and we have adopted a number of initiatives focused on ensuring a healthy and safe environment for all building occupants, including but not limited to the following:

• Adding signage, physical barriers and floor markings in common areas designed to promote social distancing;

• Increasing cleaning and disinfecting protocols and the use of EPA registered cleaning products;  

• Reducing physical touch points in common areas;

• Improving indoor air quality by installing the highest rated minimum efficiency reporting value (“MERV”) filters and additional air purifiers in lobby areas;  

• Installing thermal scanners in lobby areas to screen for temperature checks; and

• Developing efficient communication channels to communicate important health and safety information to employees and tenants.

Since the outbreak of COVID-19, we have received several requests from tenants seeking “short-term” rent relief and have entered into agreements with select tenants to abate and/or defer a portion of their 2020 rental obligations. We have closely monitored our rent collections and have evaluated and continue to evaluate tenant requests on a case-by-case basis. From April through December 31, 2020, our portfolio-wide rent collections were 97.2%, comprised of 98.5% from office tenants (which account for approximately 96.5% of our annualized rents) and 61.6% from non-office tenants (which account for the remaining 3.5% of our annualized rents). In connection with our evaluation of the probability of rent collections of future lease receivables, we recorded $33,205,000 of non-cash write-offs, primarily for straight-line rent receivables, and $2,051,000 of reserves for uncollectible accounts receivable, during the year ended December 31, 2020.

On December 11, 2020 and December 18, 2020, the U.S. Food and Drug Administration issued emergency use authorizations of two vaccines for the prevention of COVID-19. While there are other vaccines currently under development, multiple variants of the virus that cause COVID-19 are also currently present globally. The rapid development and fluidity of this situation precludes us at this time from making any predictions as to the ultimate impact COVID-19 may have on our future financial condition, results of operations and cash flows.

Dispositions and Discontinued Operations

Dispositions

1633 Broadway

On May 27, 2020, we completed the sale of a 10.0% interest in 1633 Broadway, a 2.5 million square foot trophy office building located in New York City. The transaction valued the property at $2.4 billion, or $960 per square foot and included the assumption of the existing $1.25 billion mortgage loan. Accordingly, we realized net proceeds of $111,984,000 from the sale after transaction costs.

Discontinued Operations

1899 Pennsylvania Avenue

On December 24, 2020, we completed the sale of 1899 Pennsylvania Avenue, a 191,000 square foot trophy office building located in Washington, D.C., for $103,000,000. We realized net proceeds of $89,206,000 from the sale after transaction costs and recognized a loss of $12,766,000.

Stock Repurchase Program

On November 5, 2019, we received authorization from our Board of Directors to repurchase up to an additional $200,000,000 of our common stock, from time to time, in the open market or in privately negotiated transactions. During 2020, we repurchased 13,813,158 common shares at a weighted average price of $8.69 per share, or $120,000,000 in the aggregate. We have $80,000,000 available for future repurchases under the existing program. The amount and timing of future repurchases, if any, will depend on a number of factors, including, the price and availability of our shares, trading volume, general market conditions and available funding. The stock repurchase program may be suspended or discontinued at any time.

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Leasing Results – Year Ended December 31, 2020

In the year ended December 31, 2020, we leased 699,159 square feet, of which our share was 413,148 square feet that was leased at a weighted average initial rent of $89.85 per square foot. This leasing activity, offset by lease expirations during the year, decreased same store leased occupancy (properties owned by us during both reporting periods in a similar manner and not classified as discontinued operations) by 70 basis points to 95.2% at December 31, 2020 from 95.9% at December 31, 2019. Of the 699,159 square feet leased in the year, 372,613 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 18.5% on a cash basis and 19.8% on a GAAP basis. The weighted average lease term for leases signed during the year was 4.0 years and weighted average tenant improvements and leasing commissions on these leases were $7.14 per square foot per annum, or 7.9% of initial rent.

Our share of total square feet leased and the related statistics disclosed above exclude the impact of 17,925 square feet of retail space at 712 Fifth Avenue, that was leased to Harry Winston for a 16-year term. The lease has a weighted average initial rent of $437.43 per square foot and tenant improvements and leasing commissions were $65.13 per square foot per annum, or 14.9% of initial rent.

New York

In the year ended December 31, 2020, we leased 223,568 square feet in our New York portfolio, of which our share was 180,134 square feet that was leased at a weighted average initial rent of $80.61 per square foot. This leasing activity, offset by lease expirations during the year, decreased same store leased occupancy by 20 basis points to 95.1% at December 31, 2020 from 95.3% at December 31, 2019. Of the 223,568 square feet leased in the year, 163,427 square feet represented our share of second generation space for which rental rates decreased by 0.3% on a cash basis and increased by 2.0% on a GAAP basis. The weighted average lease term for leases signed during the year was 3.3 years and weighted average tenant improvements and leasing commissions on these leases were $6.00 per square foot per annum, or 7.4% of initial rent.

San Francisco

In the year ended December 31, 2020, we leased 475,591 square feet in our San Francisco portfolio, of which our share was 233,014 square feet that was leased at a weighted average initial rent of $96.99 per square foot. This leasing activity, offset by lease expirations in the year, decreased same store leased occupancy by 180 basis points to 95.7% at December 31, 2020 from 97.5% at December 31, 2019. Of the 475,591 square feet leased in the year, 209,186 square feet represented our share of second generation space for which we achieved rental rate increases of 34.8% on a cash basis and 34.0% on GAAP basis. The weighted average lease term for leases signed during the year was 4.4 years and weighted average tenant improvements and leasing commissions on these leases were $7.80 per square foot per annum, or 8.0% of initial rent.

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The following table presents additional details on the leases signed during the year ended December 31, 2020. 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.

Year Ended December 31, 2020	Total			New York			San Francisco
Total square feet leased		699,159			223,568			475,591
Pro rata share of square feet leased: (1)		413,148			180,134			233,014
Initial rent (2)	$	89.85		$	80.61		$	96.99
Weighted average lease term (in years)		4.0			3.3			4.4
Tenant improvements and leasing commissions:
Per square foot	$	28.23		$	19.89		$	34.68
Per square foot per annum	$	7.14		$	6.00		$	7.80
Percentage of initial rent		7.9	%		7.4	%		8.0	%
Rent concessions:
Average free rent period (in months)		2.3			2.1			2.5
Average free rent period per annum (in months)		0.6			0.6			0.6
Second generation space: (3)
Square feet		372,613			163,427			209,186
Cash basis:
Initial rent (2)	$	89.31		$	79.57		$	96.91
Prior escalated rent (4)	$	75.37		$	79.84		$	71.87
Percentage increase (decrease)		18.5	%		(0.3	%)		34.8	%
GAAP basis:
Straight-line rent	$	88.68		$	76.58		$	98.13
Prior straight-line rent	$	74.05		$	75.11		$	73.23
Percentage increase		19.8	%		2.0	%		34.0	%

⁽¹⁾ Our pro rata share of total square feet leased and the related statistics exclude the impact of 17,925 square feet of retail space at 712 Fifth Avenue, that was leased to Harry Winston for a 16-year term. The lease has a weighted average initial rent of $437.43 per square foot and tenant improvement and leasing commissions were $65.13 per square foot per annum, or 14.9% of initial rent.

⁽²⁾ Represents the weighted average cash basis starting rent per square foot and does not include free rent or periodic step-ups in rent.

⁽³⁾ Represents space leased that has been vacant for less than twelve months.

⁽⁴⁾ Represents the weighted average cash basis rents (including reimbursements) per square foot at expiration.

The following table presents same store leased occupancy as of the dates set forth below.

Same Store Leased Occupancy	Total			New York			San Francisco
As of December 31, 2020		95.2	%		95.1	%		95.7	%
As of December 31, 2019		95.9	%		95.3	%		97.5	%

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Financial Results – Years Ended December 31, 2020 and 2019

Net Loss, FFO and Core FFO

Net loss attributable to common stockholders was $24,704,000, or $0.11 per diluted share, for the year ended December 31, 2020, compared to a net loss attributable to common stockholders of $36,899,000 or $0.16 per diluted share, for the year ended December 31, 2019. Net loss attributable to common stockholders for the year ended December 31, 2020 includes (i) non-cash write-offs aggregating $24,526,000, or $0.11 per diluted share, primarily for straight-line rent receivables, (ii) an $11,662,000, or $0.05 per diluted share, loss on sale of real estate related to discontinued operations, and (iii) $1,775,000, or $0.01 per diluted share, of reserves for uncollectible accounts receivable. Net loss attributable to common stockholders for the year ended December 31, 2019 includes (i) a $37,877,000, or $0.16 per diluted share, real estate impairment loss related to discontinued operations, (ii) a $10,812,000, or $0.05 per diluted share, loss on early extinguishment of debt, (iii) a $7,409,000, or $0.03 per diluted share, expense from the write-off of deferred financing costs and (iv) a $1,030,000, or $0.00 per diluted share, gain on sale of real estate related to discontinued operations. The loss on early extinguishment of debt and write-off of deferred financing costs were incurred in connection with the $1.25 billion refinancing of 1633 Broadway in November 2019.

FFO attributable to common stockholders was $214,821,000, or $0.96 per diluted share, for year ended December 31, 2020, compared to $208,187,000, or $0.90 per diluted share, for the year ended December 31, 2019. FFO attributable to common stockholders for the year ended December 31, 2020 includes (i) non-cash write-offs aggregating $24,526,000, or $0.11 per diluted share, primarily for straight-line rent receivables, and (ii) $1,775,000, or $0.01 per diluted share, of reserves for uncollectible accounts receivable. In addition, FFO attributable to common stockholders for the years ended December 31, 2020 and 2019 includes the impact of non-core items, which are listed in the table on page 76. The aggregate of the non-core items, net of amounts attributable to noncontrolling interests, increased FFO attributable to common stockholders for the year ended December 31, 2020 by $1,139,000, or $0.00 per diluted share, and decreased FFO attributable to common stockholders for the year ended December 31, 2019 by $18,977,000, or $0.08 per diluted share.

Core FFO attributable to common stockholders, which excludes the impact of the non-core items listed on page 76, was $213,682,000 or $0.96 per diluted share, for the year ended December 31, 2020, compared to $227,164,000, or $0.98 per diluted share, for the year ended December 31, 2019.

Same Store Results

The table below summarizes the percentage increase (decrease) in our share of Same Store NOI and Same Store Cash NOI, by segment, for the year ended December 31, 2020 versus December 31, 2019.

	Total			New York			San Francisco
Same Store NOI		0.6	%		(2.1	%)		8.2	%
Same Store Cash NOI		0.2	%		(2.1	%)		7.1	%

See pages 71-76 “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.

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 Results of Operations – Year Ended December 31, 2020 Compared to December 31, 2019

The following pages summarize our consolidated results of operations for the years ended December 31, 2020 and 2019.

			For the Year Ended December 31,
(Amounts in thousands)			2020			2019			Change
Revenues:
	Rental revenue		$	679,015		$	709,508		$	(30,493	)
	Fee and other income			35,222			34,246			976
		Total revenues		714,237			743,754			(29,517	)
Expenses:
	Operating			267,587			264,702			2,885
	Depreciation and amortization			235,200			240,104			(4,904	)
	General and administrative			64,917			68,556			(3,639	)
	Transaction related costs			1,096			1,999			(903	)
		Total expenses		568,800			575,361			(6,561	)
Other income (expense):
	Loss from unconsolidated joint ventures			(18,619	)		(4,706	)		(13,913	)
	Income (loss) from unconsolidated real estate funds			272			(343	)		615
	Interest and other income, net			4,490			9,844			(5,354	)
	Interest and debt expense			(144,208	)		(156,679	)		12,471
	Loss on early extinguishment of debt			-			(11,989	)		11,989
(Loss) income from continuing operations, before income taxes				(12,628	)		4,520			(17,148	)
	Income tax expense			(1,493	)		(312	)		(1,181	)
(Loss) income from continuing operations, net				(14,121	)		4,208			(18,329	)
Loss from discontinued operations, net				(5,075	)		(33,811	)		28,736
Net loss				(19,196	)		(29,603	)		10,407
Less net (income) loss attributable to noncontrolling interests in:
	Consolidated joint ventures			(9,257	)		(11,022	)		1,765
	Consolidated real estate fund			1,450			(313	)		1,763
	Operating Partnership			2,299			4,039			(1,740	)
Net loss attributable to common stockholders			$	(24,704	)	$	(36,899	)	$	12,195

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Revenues

Our revenues, which consist of rental revenue and fee and other income, were $714,237,000 for the year ended December 31, 2020, compared to $743,754,000 for the year ended December 31, 2019, a decrease of $29,517,000. Below are the details of the (decrease) increase by segment.

(Amounts in thousands)		Total			New York				San Francisco				Other
Rental revenue
Same store operations		$	9,755		$	(126	)		$	9,881		(1)	$	-
Non-cash write-offs of straight-line rent receivables			(33,205	)		(23,868	)			(9,337	)			-
Reserves for uncollectible accounts receivable			(2,051	)		(1,019	)			(1,032	)			-
Other, net			(4,992	)		(169	)			(2,927	)	(2)		(1,896	)
Decrease in rental income		$	(30,493	)	$	(25,182	)		$	(3,415	)		$	(1,896	)
Fee and other income
Fee income
	Asset management	$	3,824		$	-			$	-			$	3,824
	Property management		2,390			-				-				2,390
	Acquisition, disposition and leasing		(806	)		-				-				(806	)
	Other		(82	)		-				-				(82	)
	Increase in fee income		5,326			-				-				5,326
Other income
	Same store operations		(4,350	)		(3,395	)	(3)		(500	)			(455	)
	Decrease in other income		(4,350	)		(3,395	)			(500	)			(455	)
Increase (decrease) in fee and other income		$	976		$	(3,395	)		$	(500	)		$	4,871
Total (decrease) increase in revenues		$	(29,517	)	$	(28,577	)		$	(3,915	)		$	2,975

⁽¹⁾ Primarily due to an increase in rental rates on new leases at One Market Plaza and an increase in occupancy at One Front Street, partially offset by lower occupancy at 300 Mission Street.

⁽²⁾ Primarily due to termination income of $2,300 in the prior year.

⁽³⁾ Primarily due to lower tenant requested services including overtime heating and cooling.

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Expenses

Our expenses, which consist of operating, depreciation and amortization, general and administrative, and transaction related costs, were $568,800,000 for year ended December 31, 2020, compared to $575,361,000 for the year ended December 31, 2019, a decrease of $6,561,000. Below are the details of the (decrease) increase by segment.

(Amounts in thousands)	Total			New York			San Francisco				Other
Operating
Same store operations	$	2,546		$	3,437	(1)	$	(891	)		$	-
Other, net		339			-			-				339
Increase (decrease) in operating	$	2,885		$	3,437		$	(891	)		$	339
Depreciation and amortization
Operations	$	(4,904	)	$	691		$	(6,852	)	(2)	$	1,257
(Decrease) increase in depreciation and amortization	$	(4,904	)	$	691		$	(6,852	)		$	1,257
General and administrative
Mark-to-market of investments
in our deferred compensation plan	$	(1,470	)	$	-		$	-			$	(1,470	)	(3)
Operations		(2,169	)		-			-				(2,169	)	(4)
Decrease in general and administrative	$	(3,639	)	$	-		$	-			$	(3,639	)
Decrease in transaction related costs	$	(903	)	$	-		$	-			$	(903	)
Total (decrease) increase in expenses	$	(6,561	)	$	4,128		$	(7,743	)		$	(2,946	)

⁽¹⁾ Primarily due to higher real estate taxes.

⁽²⁾ Primarily due to lower amortization of in-place lease assets at 300 Mission Street due to the expiration of such leases.

⁽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”.

⁽⁴⁾ Primarily due to lower compensation expense.

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Loss from Unconsolidated Joint Ventures

In the year ended December 31, 2020, we recognized a $18,619,000 net loss from unconsolidated joint ventures compared to $4,706,000 of net loss in the year ended December 31, 2019, an increase in loss of $13,913,000. This increase in loss resulted from:

(Amounts in thousands)
(Increase) decrease in loss attributable to properties acquired in 2019:
Market Center (acquired in December 2019)	$	(10,571	)	(1)
55 Second Street (acquired in August 2019)		(1,897	)	(1)
111 Sutter Street (acquired in February 2019)		1,222
Lower income on 712 Fifth Avenue ($687 in 2020, compared to $1,849 in 2019)		(1,162	)	(2)
Other		(1,505	)
Total increase in loss	$	(13,913	)

⁽¹⁾ Resulted primarily from depreciation and amortization expense.

⁽²⁾ Resulted primarily from lower cash distributions in the year ended December 31, 2020 (since we only recognize earnings from 712 Fifth Avenue to the extent we receive cash distributions from the joint venture).

Income (loss) from Unconsolidated Real Estate Funds

Income from unconsolidated real estate funds was $272,000 for the year ended December 31, 2020, compared to loss from unconsolidated real estate funds of $343,000 for the year ended December 31, 2019, an increase in income of $615,000. The increase in income resulted primarily from better operations of the funds in the current year.

Interest and Other Income, net

Interest and other income was $4,490,000 for the year ended December 31, 2020, compared to $9,844,000 for the year ended December 31, 2019, a decrease of $5,354,000. This decrease in income resulted from:

(Amounts in thousands)
Lower yields on investments	$	(3,667	)
Decrease in the value of investments in our deferred compensation plan (which    is entirely offset by an increase in "general and administrative")		(1,470	)
Other, net		(217	)
Total decrease in income	$	(5,354	)

Interest and Debt Expense

Interest and debt expense was $144,208,000 for the year ended December 31, 2020, compared to $156,679,000 for the year ended December 31, 2019, a decrease of $12,471,000. This decrease in expense resulted primarily from (i) lower interest on variable rate debt due to a decrease in average LIBOR rates in the current year compared to the prior year, (ii) $8,215,000 of expense in the prior year from the non-cash write-off of deferred financing costs in connection with the $1.25 billion refinancing of 1633 Broadway in November 2019, partially offset by (iii) interest on $200,000,000 of borrowing under our revolving credit facility in the current year.

Loss on Early Extinguishment of Debt

In the year ended December 31, 2019, we recognized an $11,989,000 loss on early extinguishment of debt comprised primarily of swap breakage costs in connection with the $1.25 billion refinancing of 1633 Broadway in November 2019.

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Income Tax Expense

Income tax expense was $1,493,000 for the year ended December 31, 2020, compared to $312,000 for the year ended December 31, 2019, an increase of $1,181,000. This increase was primarily due to an income tax benefit that was recognized in the prior year as a result of a true-up of the tax provision.

Loss from Discontinued Operations

Loss from discontinued operations was $5,075,000 for the year ended December 31, 2020, compared to $33,811,000 for the year ended December 31, 2019, a decrease in loss of $28,736,000. This decrease in loss resulted from:

(Amounts in thousands)
Real estate impairment loss in 2019	$	42,000
Loss on sale of real estate in 2020		(12,766	)
Other, net		(498	)
Total decrease in loss	$	28,736

Net Income Attributable to Noncontrolling Interests in Consolidated Joint Ventures

Net income attributable to noncontrolling interests in consolidated joint ventures was $9,257,000 for the year ended December 31, 2020, compared to $11,022,000 for the year ended December 31, 2019, a decrease in income allocated to noncontrolling interests in consolidated joint ventures of $1,765,000. This decrease in income resulted from:

(Amounts in thousands)
Lower income attributable to 300 Mission Street ($784 in 2020,    compared to $1,786 in 2019)	$	(2,570	)	(1)
Loss attributable to 1633 Broadway in 2020		(1,437	)	(2)
Higher income attributable to One Market Plaza ($11,462 in 2020,    compared to $9,014 in 2019)		2,448		(3)
Other, net		(206	)
Total decrease in income attributable to noncontrolling interests	$	(1,765	)

⁽¹⁾ Primarily due to the non-cash write-off of straight-line rent receivables in the current year, partially offset by lower amortization of in-place lease assets due to the expiration of such leases.

⁽²⁾ Primarily due to the non-cash write-off of straight-line rent receivables in the current year.

⁽³⁾ Primarily due to an increase in rental rates on new leases in the current year.

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

Net loss attributable to noncontrolling interest in consolidated real estate fund was $1,450,000 for the year ended December 31, 2020, compared to net income of $313,000 for the year ended December 31, 2019, a decrease in income attributable to the noncontrolling interest of $1,763,000. The decrease was primarily due to marketing expenses for One Steuart Lane.

Net Loss Attributable to Noncontrolling Interests in Operating Partnership

Net loss attributable to noncontrolling interests in Operating Partnership was $2,299,000 for the year ended December 31, 2020, compared to $4,039,000 for the year ended December 31, 2019, a decrease in net loss attributable to noncontrolling interests in Operating Partnership of $1,740,000. This decrease in loss resulted from a lower net loss subject to allocation to the unitholders of the Operating Partnership for the year ended December 31, 2020.

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Results of Operations – Year Ended December 31, 2019 Compared to December 31, 2018

The following pages summarize our consolidated results of operations for the years ended December 31, 2019 compared to December 31, 2018.

	For the Year Ended December 31,
(Amounts in thousands)	2019			2018			Change
Revenues:
Rental revenue	$	709,508		$	677,138		$	32,370
Fee and other income		34,246			30,533			3,713
Total revenues		743,754			707,671			36,083
Expenses:
Operating		264,702			254,697			10,005
Depreciation and amortization		240,104			240,868			(764	)
General and administrative		68,556			57,563			10,993
Transaction related costs		1,999			1,471			528
Total expenses		575,361			554,599			20,762
Other income (expense):
(Loss) income from unconsolidated joint ventures		(4,706	)		3,468			(8,174	)
Loss from unconsolidated real estate funds		(343	)		(269	)		(74	)
Interest and other income, net		9,844			7,936			1,908
Interest and debt expense		(156,679	)		(147,653	)		(9,026	)
Loss on early extinguishment of debt		(11,989	)		-			(11,989	)
Income from continuing operations, before income taxes		4,520			16,554			(12,034	)
Income tax expense		(312	)		(3,139	)		2,827
Income from continuing operations, net		4,208			13,415			(9,207	)
(Loss) income from discontinued operations, net		(33,811	)		5,578			(39,389	)
Net (loss) income		(29,603	)		18,993			(48,596	)
Less net (income) loss attributable to noncontrolling interests:
Consolidated joint ventures		(11,022	)		(8,182	)		(2,840	)
Consolidated real estate funds		(313	)		(720	)		407
Operating Partnership		4,039			(944	)		4,983
Net (loss) income attributable to common stockholders	$	(36,899	)	$	9,147		$	(46,046	)

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Revenues

Our revenues, which consist of rental revenue and fee and other income, were $743,754,000 for the year ended December 31, 2019, compared to $707,671,000 for the year ended December 31, 2018, an increase of $36,083,000. Below are the details of the increase (decrease) by segment.

(Amounts in thousands)	Total			New York				San Francisco				Other
Rental revenue
Same store operations	$	32,616		$	16,587		(1)	$	16,106		(2)	$	(77	)
Other, net		(246	)		(39	)			(207	)			-
Increase (decrease) in rental revenue	$	32,370		$	16,548			$	15,899			$	(77	)
Fee and other income
Fee income
Asset management	$	2,530		$	-			$	-			$	2,530
Property management		689			-				-				689
Acquisition and disposition		275			-				-				275
Other		621			-				-				621
Increase in fee income		4,115			-				-				4,115
Other income
Same store operations		(402	)		(1,913	)			838				673
(Decrease) increase in other income		(402	)		(1,913	)			838				673
Increase (decrease) in fee and other income	$	3,713		$	(1,913	)		$	838			$	4,788
Total increase in revenues	$	36,083		$	14,635			$	16,737			$	4,711

⁽¹⁾ Primarily due to an increase in occupancy at 31 West 52^nd Street, 1633 Broadway and 1325 Avenue of the Americas.

⁽²⁾ Primarily due to an increase in occupancy at 300 Mission Street and One Front Street, and higher tenant reimbursement income resulting primarily from the new “gross receipts” tax in 2019 (see note 1 on page 63).

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Expenses

Our expenses, which consist of operating, depreciation and amortization, general and administrative, and transaction related costs, were $575,361,000 for year ended December 31, 2019, compared to $554,599,000 for the year ended December 31, 2018, an increase of $20,762,000. Below are the details of the increase (decrease) by segment.

(Amounts in thousands)	Total			New York			San Francisco				Other
Operating
Same store operations	$	10,329		$	3,519		$	9,780		(1)	$	(2,970	)
Other, net		(324	)		(316	)		(8	)			-
Increase (decrease) in operating	$	10,005		$	3,203		$	9,772			$	(2,970	)
Depreciation and amortization
Operations	$	(764	)	$	4,233		$	(5,532	)		$	535
(Decrease) increase in depreciation and amortization	$	(764	)	$	4,233		$	(5,532	)		$	535
General and administrative
Mark-to-market of investments
in our deferred compensation plan	$	4,828		$	-		$	-			$	4,828		(2)
Stock-based compensation		3,214			-			-				3,214
Operations		2,951			-			-				2,951		(3)
Increase in general and administrative	$	10,993		$	-		$	-			$	10,993
Increase in transaction related costs	$	528		$	-		$	-			$	528
Total increase in expenses	$	20,762		$	7,436		$	4,240			$	9,086

⁽¹⁾ Primarily due to the new “gross receipts” tax in 2019, which is partially offset by higher reimbursement income (see note 2 on page 62).

⁽²⁾ 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”.

⁽³⁾ Increased primarily due to change in accounting guidance that no longer permits the capitalization of internal leasing payroll costs.

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(Loss) Income from Unconsolidated Joint Ventures

In the year ended December 31, 2019, we recognized a $4,706,000 net loss from unconsolidated joint ventures compared to $3,468,000 of net income in the year ended December 31, 2018, a decrease in income of $8,174,000. This decrease in income resulted from:

(Amounts in thousands)
Net loss attributable to properties acquired in 2019 (resulting primarily from    depreciation and amortization expense):
111 Sutter Street (acquired in February 2019)	$	(4,394	)
55 Second Street (acquired in August 2019)		(826	)
Market Center (acquired in December 2019)		(744	)
Lower income on 712 Fifth Avenue ($1,849 in 2019, compared to $3,901 in 2018)		(2,052	)	(1)
Other		(158	)
Total decrease in income	$	(8,174	)

⁽¹⁾ Primarily resulted from lower cash distributions in the year ended December 31, 2019 (since we only recognize earnings from 712 fifth Avenue to the extent we receive cash distributions from the joint venture).

Loss from Unconsolidated Real Estate Funds

Loss from unconsolidated real estate funds was $343,000 for the year ended December 31, 2019, compared to $269,000 for the year ended December 31, 2018, an increase in loss of $74,000.

Interest and Other Income, net

Interest and other income was $9,844,000 for the year ended December 31, 2019, compared to $7,936,000 for the year ended December 31, 2018, an increase of $1,908,000. This increase in income resulted from:

(Amounts in thousands)
Increase in the value of investments in our deferred compensation plan (which    is offset by an increase in "general and administrative")	$	4,828
Decrease in preferred equity investment income ($454 in 2019, compared    to $3,655 in 2018) (1)		(3,201	)
Other, net		281
Total increase in income	$	1,908

⁽¹⁾ The preferred equity investment was redeemed on March 1, 2019.

Interest and Debt Expense

Interest and debt expense was $156,679,000 for the year ended December 31, 2019, compared to $147,653,000 for the year ended December 31, 2018, an increase of $9,026,000. This increase in expense resulted from (i) $8,215,000 of expense from the non-cash write-off of deferred financing costs in connection with the $1.25 billion refinancing of 1633 Broadway in November 2019 and (ii) higher interest on variable rate debt due to an increase in average LIBOR rates in the year ended December 31, 2019 compared to 2018.

Loss on Early Extinguishment of Debt

In the year ended December 31, 2019, we recognized an $11,989,000 loss on early extinguishment of debt comprised primarily of swap breakage costs in connection with the $1.25 billion refinancing of 1633 Broadway in November 2019.

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Income Tax Expense

Income tax expense was $312,000 for the year ended December 31, 2019, compared to $3,139,000 for the year ended December 31, 2018, a decrease of $2,827,000. This decrease in expense was primarily due to (i) $1,248,000 of “sting” taxes in connection with the sale of real estate in the year ended December 31, 2018 and (ii) lower taxable income on our taxable REIT subsidiaries in the year ended December 31, 2019.

(Loss) Income from Discontinued Operations

Loss from discontinued operations was $33,811,000 for the year ended December 31, 2019, compared to income from discontinued operations of $5,578,000 for the year ended December 31, 2018, a decrease in income of $39,389,000. This decrease in income resulted from:

(Amounts in thousands)
Gains on sale of real estate	$	(35,705	)
Real estate impairment losses ($42,000 in 2019 compared to $46,000 in 2018)		4,000
Change in operations resulting primarily from asset sales		(7,684	)
Total decrease in income	$	(39,389	)

Net Income Attributable to Noncontrolling Interests in Consolidated Joint Ventures

Net income attributable to noncontrolling interests in consolidated joint ventures was $11,022,000 for the year ended December 31, 2019, compared to $8,182,000 for the year ended December 31, 2018, an increase in income allocated to noncontrolling interests in consolidated joint ventures of $2,840,000. This increase resulted from:

(Amounts in thousands)
Higher income attributable to 300 Mission Street ($1,786 of income in 2019,    compared to $1,437 of loss in 2018)	$	3,223		(1)
Other, net		(383	)
Total increase in income attributable to noncontrolling interests	$	2,840

⁽¹⁾ Primarily due to an increase in occupancy.

Net Income Attributable to Noncontrolling Interest in Consolidated Real Estate Fund

Net income attributable to noncontrolling interest in consolidated real estate fund was $313,000 for the year ended December 31, 2019, compared to $720,000 for the year ended December 31, 2018, a decrease in income attributable to the noncontrolling interest of $407,000.

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

Net loss attributable to noncontrolling interests in Operating Partnership was $4,039,000 for the year ended December 31, 2019, compared to net income of $944,000 for the year ended December 31, 2018, a decrease in income attributable to noncontrolling interests of $4,983,000. This decrease resulted from a lower net income subject to allocation to the unitholders of the Operating Partnership for the year ended December 31, 2019.

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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, and 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 December 31, 2020, we had $1.47 billion of liquidity comprised of $434,530,000 of cash and cash equivalents, $30,794,000 of restricted cash and $1.0 billion of borrowing capacity under our revolving credit facility. As of December 31, 2020, our outstanding consolidated debt aggregated $3.8 billion. We had no amounts outstanding under our revolving credit facility. In November 2021, $850,000,000 of our debt is scheduled to mature. 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

Our $1.0 billion revolving credit facility matures in January 2022 and has two six-month extension options. The interest rate on the facility, at current leverage levels, is LIBOR plus 115 basis points and has a 20 basis points facility fee. 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 ratio of at least 1.50, (iv) an unsecured leverage ratio to not 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 December 15, 2020, we declared a regular quarterly cash dividend of $0.07 per share of common stock for the fourth quarter ended December 31, 2020, which was paid on January 15, 2021 to stockholders of record as of the close of business on December 31, 2020. During 2020, we paid an aggregate of $98,062,000 in dividends and distributions to our common stockholders and common unitholders. These dividends were paid utilizing the cash flow from operations. If we were to continue our current dividend policy for all of 2021, we would pay out approximately $67,000,000 to common stockholders and unitholders during 2021.

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Contractual Obligations

The following table provides a summary of our contractual obligations and commitments as of December 31, 2020.

	Payments due by period
			Less than		1-3		3-5
(Amounts in thousands)	Total		1 year		years		years		Thereafter
Our share of:
Consolidated debt (including interest expense) (1)	$	3,521,856	$	944,050	$	226,143	$	586,033	$	1,765,630
Unconsolidated debt (including interest expense) (1)		703,565		20,315		139,968		297,186		246,096
Tenant obligations		60,874		48,218		12,656		-		-
Construction		38,381		28,074		9,005		1,302		-
Leasing commissions		3,805		3,451		354		-		-
Other		8,490		65		135		143		8,147
Total  (2)	$	4,336,971	$	1,044,173	$	388,261	$	884,664	$	2,019,873

⁽¹⁾ Interest expense is calculated using contractual rates for fixed rate debt and the rates in effect as of December 31, 2020 for variable rate debt.

⁽²⁾ The total above does not include various standing or renewal service contracts with vendors in connection with the operations of our properties.

Off Balance Sheet Arrangements

As of December 31, 2020, our unconsolidated joint ventures had $1.63 billion of outstanding indebtedness, of which our share was $607,647,000. 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 November 5, 2019, we received authorization from our Board of Directors to repurchase up to an additional $200,000,000 of our common stock, from time to time, in the open market or in privately negotiated transactions. During 2020, we repurchased 13,813,158 common shares at a weighted average price of $8.69 per share, or $120,000,000 in the aggregate. We have $80,000,000 available for future repurchases under the existing program. The amount and timing of future repurchases, if any, will depend on a number of factors, including, the price and availability of our shares, trading volume, general market conditions and available funding. The stock repurchase program may be suspended or discontinued at any time.

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.

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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 December 31, 2020, we believe we are in compliance with all of our covenants.

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. We believe, after consultation with legal counsel that 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 $47,700,000. 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.

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Cash Flows

Cash and cash equivalents and restricted cash were $465,324,000, $331,487,000, $365,409,000 and $250,425,000 as of December 31, 2020, 2019, 2018 and 2017, respectively. Cash and cash equivalents and restricted cash increased by $133,837,000 and $114,984,000 for the years ended December 31, 2020 and 2018, respectively, and decreased by $33,922,000 for the year ended December 31, 2019. The following table sets forth the changes in cash flows.

	For the Year Ended December 31,
(Amount in thousands)	2020			2019			2018
Net cash provided by (used in):
Operating activities	$	237,272		$	285,441		$	156,523
Investing activities		40,035			(323,440	)		156,610
Financing activities		(143,470	)		4,077			(198,149	)

Operating Activities

Year Ended December 31, 2020 – We generated $237,272,000 of cash from operating activities for the year ended December 31, 2020, primarily from (i) net income of $241,868,000 (before $248,298,000 of non-cash adjustments and a $12,766,000 loss on sale of real estate related to discontinued operations) and (ii) $4,615,000 of distributions from unconsolidated joint ventures and real estate funds, partially offset by (iii) $9,211,000 of net changes in operating assets and liabilities. Non-cash adjustments of $248,298,000 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.

Year Ended December 31, 2019 – We generated $285,441,000 of cash from operating activities for the year ended December 31, 2019, primarily from (i) net income of $248,909,000 (before $237,652,000 of non-cash adjustments, a $42,000,000 real estate impairment loss related to discontinued operations and a $1,140,000 gain on sale of real estate related to discontinued operations), (ii) $5,620,000 of distributions from unconsolidated joint ventures and real estate funds, (iii) $2,339,000 repayment of accrued interest on preferred equity investment, and (iv) $28,573,000 of net changes in operating assets and liabilities. Non-cash adjustments of $237,652,000 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.

Year Ended December 31, 2018 – We generated $156,523,000 of cash from operating activities for the year ended December 31, 2018, primarily from (i) net income of $240,615,000 (before $212,467,000 of non-cash adjustments, a $46,000,000 real estate impairment loss related to discontinued operations and $36,845,000 of gains on sale of real estate related to discontinued operations) and (ii) $6,537,000 of distributions from unconsolidated joint ventures and real estate funds, partially offset by (iii) $90,629,000 of net changes in operating assets and liabilities. Non-cash adjustments of $212,467,000 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. The changes in operating assets and liabilities were primarily due to prepaid real estate taxes of $57,905,000 and additions to deferred charges of $31,861,000.

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Investing Activities

Year Ended December 31, 2020 – We generated $40,035,000 of cash from investing activities for the year ended December 31, 2020, primarily from (i) $89,206,000 of proceeds from the sale of real estate related to discontinued operations, (ii) $36,918,000 from repayment of amounts due from affiliates and (iii) $6,379,000 from net sales of marketable securities (which are held in our deferred compensation plan), partially offset by (iv) $89,463,000 for additions to real estate, which were comprised of spending for tenant improvements and other building improvements and (v) $2,945,000 for contributions of capital to unconsolidated real estate funds.

Year Ended December 31, 2019 – We used $323,440,000 of cash for investing activities for the year ended December 31, 2019, primarily due to (i) $368,852,000 for investments in and contributions of capital to unconsolidated joint ventures, (ii) $103,916,000 for additions to real estate, which were comprised of spending for tenant improvements and other building improvements, (iii) $36,918,000 for net amounts due from affiliates, and (iv) $1,861,000 of net distributions from and contributions to unconsolidated real estate funds, partially offset by (v) $150,307,000 of proceeds from the sale of real estate related to discontinued operations, (vi) $33,750,000 from the redemption of preferred equity investment and (vii) $4,050,000 for net sales of marketable securities (which are held in our deferred compensation plan).

Year Ended December 31, 2018 – We generated $156,610,000 of cash from investing activities for the year ended December 31, 2018, primarily from (i) $349,013,000 of proceeds from the sales of real estate related to discontinued operations and (ii) $4,775,000 from the net sales of marketable securities (which are held in our deferred compensation plan), partially offset by (iii) $137,915,000 for additions to real estate, which were comprised of spending for tenant improvements and other building improvements, (iv) $29,883,000 for investments in and contributions to unconsolidated joint ventures, (v) $15,680,000 for escrow deposits and loans receivable for RDF, (vi) $10,000,000 for deposit in connection with the acquisition of 111 Sutter Street and (vii) $3,700,000 for net contributions to our unconsolidated real estate funds.

Financing Activities

Year Ended December 31, 2020 – We used $143,470,000 of cash for financing activities for the year ended December 31, 2020, primarily due to (i) $120,000,000 for repurchase of common shares, (ii) $98,062,000 for dividends and distributions paid to common stockholders and unitholders, (iii) $36,918,000 of net repayment of borrowings under the revolving credit facility, (iv) $12,717,000 for distributions to non-controlling interests and (v) $8,771,000 for repayment of note payable issued in connection with the acquisition of noncontrolling interest in consolidated real estate fund, partially offset by (vi) $111,984,000 of proceeds from the sale of a 10.0% interest in 1633 Broadway, (vii) $11,555,000 of contributions from non-controlling interests and (viii) $9,791,000 of proceeds from notes and mortgages payable.

Year Ended December 31, 2019 – We generated $4,077,000 of cash from financing activities for the year ended December 31, 2019, primarily from (i) $1,259,843,000 of proceeds from notes and mortgages payable, primarily from the refinancing of 1633 Broadway and (ii) $36,918,000 of net borrowings under the revolving credit facility, partially offset by (iii) $1,050,000,000 of repayment of notes and mortgages payable in connection with the refinancing of 1633 Broadway, (iv) $103,111,000 for dividends and distributions paid to common stockholders and unitholders, (v) $97,461,000 for the repurchases of common shares, (vi) $30,250,000 in net contributions and distributions to non-controlling interests, (vii) $10,131,000 in debt issuance and other costs, (viii) $1,000,000 for the acquisition of non-controlling interest in consolidated real estate fund, and (ix) $731,000 of loss on early extinguishment of debt.

Year Ended December 31, 2018 – We used $198,149,000 of cash for financing activities for the year ended December 31, 2018, primarily due to (i) $105,055,000 for dividends and distributions paid to common stockholders and unitholders, (ii) $102,863,000 for the repurchases of common shares, (iii) $27,299,000 for repayment of loans to affiliates, (iv) $18,184,000 for distributions to noncontrolling interests and (v) $6,564,000 for the payment of debt issuance costs and other, partially offset by (vi) $45,116,000 of contributions from noncontrolling interests and (vii) $16,700,000 of proceeds from notes and mortgages payable.

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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 rental revenue (which includes property rentals, tenant reimbursements and lease termination income) and certain other property-related revenue less operating expenses (which includes property-related expenses such as cleaning, security, repairs and maintenance, utilities, property administration and real estate taxes). We also present Cash NOI, which deducts from NOI, straight-line rent adjustments and the amortization of above and below-market leases, including our share of such adjustments of unconsolidated joint ventures. In addition, we present Paramount’s share of NOI and Cash NOI, which represents our share of NOI and Cash NOI of consolidated and unconsolidated joint ventures, based on our percentage ownership in the underlying assets. We use NOI and Cash NOI internally as performance measures and believe they provide useful information to investors regarding our financial condition and results of operations because they reflect only those income and expense items that are incurred at property level. The following tables present reconciliations of our net income (loss) to NOI and Cash NOI for the years ended December 31, 2020, 2019 and 2018.

	For the Year Ended December 31, 2020
(Amounts in thousands)	Total			New York			San Francisco			Other
Reconciliation of net (loss) income to NOI and Cash NOI:
Net (loss) income	$	(19,196	)	$	12,606		$	28,199		$	(60,001	)
Add (subtract) adjustments to arrive at NOI and Cash NOI:
Depreciation and amortization		235,200			159,744			70,962			4,494
General and administrative		64,917			-			-			64,917
Interest and debt expense		144,208			87,687			49,905			6,616
Income tax expense		1,493			3			2			1,488
NOI from unconsolidated joint ventures		48,631			11,540			38,892			(1,801	)
Loss (income) from unconsolidated joint ventures		18,619			(617	)		17,210			2,026
Fee income		(28,070	)		-			-			(28,070	)
Interest and other income, net		(4,490	)		-			(309	)		(4,181	)
Adjustments related to discontinued operations (including    loss on sale of real estate)		13,465			-			-			13,465
Other, net		824			-			-			824
NOI		475,601			270,963			204,861			(223	)
Less NOI attributable to noncontrolling interests in:
Consolidated joint ventures		(72,766	)		(4,294	)		(68,461	)		(11	)
Consolidated real estate fund		1,892			-			-			1,892
Paramount's share of NOI	$	404,727		$	266,669		$	136,400		$	1,658
NOI	$	475,601		$	270,963		$	204,861		$	(223	)
Add (subtract) adjustments to arrive at Cash NOI:
Straight-line rent adjustments (including our
share of unconsolidated joint ventures)		(32,325	)		(7,728	)		(24,681	)		84
Amortization of above and below-market leases,    net (including our share of unconsolidated joint ventures)		(8,645	)		23			(8,668	)		-
Adjustments related to discontinued operations		507			-			-			507
Cash NOI		435,138			263,258			171,512			368
Less Cash NOI attributable to noncontrolling interests in:
Consolidated joint ventures		(59,526	)		(4,290	)		(55,225	)		(11	)
Consolidated real estate fund		1,892			-			-			1,892
Paramount's share of Cash NOI	$	377,504		$	258,968		$	116,287		$	2,249

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	For the Year Ended December 31, 2019
(Amounts in thousands)	Total			New York			San Francisco			Other
Reconciliation of net (loss) income to NOI and Cash NOI:
Net (loss) income	$	(29,603	)	$	18,634		$	36,560		$	(84,797	)
Add (subtract) adjustments to arrive at NOI and Cash NOI:
Depreciation and amortization		240,104			159,054			77,813			3,237
General and administrative		68,556			-			-			68,556
Interest and debt expense		156,679			103,052			49,412			4,215
Loss on early extinguishment of debt		11,989			11,989			-			-
Income tax expense		312			-			28			284
NOI from unconsolidated joint ventures		22,409			13,151			9,065			193
Loss (income) from unconsolidated joint ventures		4,706			(1,298	)		5,964			40
Fee income		(22,744	)		-			-			(22,744	)
Interest and other (income) loss, net		(9,844	)		6			(784	)		(9,066	)
Adjustments related to discontinued operations (including    impairments and gain on sale of real estate)		49,103			-			-			49,103
Other, net		2,342			-			-			2,342
NOI		494,009			304,588			178,058			11,363
Less NOI attributable to noncontrolling interests in:
Consolidated joint ventures		(72,620	)		-			(72,620	)		-
Consolidated real estate funds		126			-			-			126
Paramount's share of NOI	$	421,515		$	304,588		$	105,438		$	11,489
NOI	$	494,009		$	304,588		$	178,058		$	11,363
Less:
Straight-line rent adjustments (including our share of
unconsolidated joint ventures)		(45,580	)		(33,359	)		(12,222	)		1
Amortization of above and below-market leases, net    (including our share of unconsolidated joint ventures)		(11,913	)		1,745			(13,658	)		-
Adjustments related to discontinued operations		434			-			-			434
Cash NOI		436,950			272,974			152,178			11,798
Less Cash NOI attributable to noncontrolling interests in:
Consolidated joint ventures		(62,889	)		-			(62,889	)		-
Consolidated real estate funds		126			-			-			126
Paramount's share of Cash NOI	$	374,187		$	272,974		$	89,289		$	11,924

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	For the Year Ended December 31, 2018
(Amounts in thousands)	Total			New York			San Francisco			Other
Reconciliation of net income (loss) to NOI and Cash NOI:
Net income (loss)	$	18,993		$	35,209		$	30,223		$	(46,439	)
Add (subtract) adjustments to arrive at NOI and Cash NOI:
Depreciation and amortization		240,868			154,820			83,346			2,702
General and administrative		57,563			-			-			57,563
Interest and debt expense		147,653			93,359			49,207			5,087
Income tax expense		3,139			-			9			3,130
NOI from unconsolidated joint ventures		20,730			20,395			-			335
Income from unconsolidated joint ventures		(3,468	)		(3,383	)		-			(85	)
Fee income		(18,629	)		-			-			(18,629	)
Interest and other income, net		(7,936	)		-			(757	)		(7,179	)
Adjustments related to discontinued operations (including   impairments and gain on sale of real estate)		26,331			-			-			26,331
Other, net		1,740			-			-			1,740
NOI		486,984			300,400			162,028			24,556
Less NOI attributable to noncontrolling interests in:
Consolidated joint ventures		(69,017	)		-			(69,017	)		-
Consolidated real estate funds		11			-			-			11
Paramount's share of NOI	$	417,978		$	300,400		$	93,011		$	24,567
NOI	$	486,984		$	300,400		$	162,028		$	24,556
Less:
Straight-line rent adjustments (including our share of
unconsolidated joint ventures)		(57,410	)		(41,151	)		(16,252	)		(7	)
Amortization of above and below-market leases, net (including    our share of unconsolidated joint ventures)		(14,001	)		2,154			(16,155	)		-
Adjustments related to discontinued operations		(3,119	)		-			-			(3,119	)
Cash NOI		412,454			261,403			129,621			21,430
Less Cash NOI attributable to noncontrolling interests in:
Consolidated joint ventures		(56,552	)		-			(56,552	)		-
Consolidated real estate funds		11			-			-			11
Paramount's share of Cash NOI	$	355,913		$	261,403		$	73,069		$	21,441

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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 years ended December 31, 2020 and 2019. 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, impairment of receivables arising from operating leases 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-line rent adjustments and the amortization of above and below-market leases.

	For the Year Ended December 31, 2020
(Amounts in thousands)	Total			New York				San Francisco			Other
Paramount's share of NOI for the year    ended December 31, 2020 (1)	$	404,727		$	266,669			$	136,400		$	1,658
Acquisitions (2)		(28,760	)		-				(28,760	)		-
Dispositions / Discontinued Operations		(8,390	)		-				-			(8,390	)	(3)
Non-cash write-offs (primarily straight-line receivables) (4)		26,826			22,383				4,443			-
Reserves for uncollectible accounts receivable (4)		1,940			1,152				788			-
Lease termination income and other, net		6,114			(619	)			1			6,732
Paramount's share of Same Store NOI for the year    ended December 31, 2020	$	402,457		$	289,585			$	112,872		$	-
	For the Year Ended December 31, 2019
(Amounts in thousands)	Total			New York				San Francisco			Other
Paramount's share of NOI for the year    ended December 31, 2019 (1)	$	421,515		$	304,588			$	105,438		$	11,489
Dispositions / Discontinued Operations		(22,295	)		(7,003	)	(5)		-			(15,292	)	(3)
Reserves for uncollectible accounts receivable (4)		448			473				(25	)		-
Lease termination income and other, net		346			(2,346	)			(1,111	)		3,803
Paramount's share of Same Store NOI for the year    ended December 31, 2019	$	400,014		$	295,712			$	104,302		$	-
Increase (decrease) in Same Store NOI	$	2,443		$	(6,127	)		$	8,570		$	-
% Increase (decrease)		0.6	%		(2.1	%)			8.2	%

⁽¹⁾ See page 71 “Non-GAAP Financial Measures – NOI” for a reconciliation to net income or loss in accordance with GAAP and the reasons why we believe these non-GAAP measures are useful.

⁽²⁾ Represents our share of Same Store NOI attributable to acquired properties (Market Center, 55 Second Street and 111 Sutter Street in San Francisco) for the months they were not owned by us in both reporting periods.

⁽³⁾ Represents NOI from discontinued operations (1899 Pennsylvania Avenue in 2020 and 1899 Pennsylvania Avenue and Liberty Place in 2019).

⁽⁴⁾ Represents impairments of receivables arising from operating leases that have been consistently excluded from our same store results in prior periods as noted in our definition of these terms. In prior periods, adjustments for these items have been relatively small and as such, were included within “other.”

⁽⁵⁾ Represents NOI attributable to the 10.0% sale of 1633 Broadway for the months in which it was not owned by us in both reporting periods.

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	For the Year Ended December 31, 2020
(Amounts in thousands)	Total			New York				San Francisco			Other
Paramount's share of Cash NOI for the year    ended December 31, 2020 (1)	$	377,504		$	258,968			$	116,287		$	2,249
Acquisitions (2)		(22,644	)		-				(22,644	)		-
Dispositions / Discontinued Operations		(8,897	)		-				-			(8,897	)	(3)
Reserves for uncollectible accounts receivable (4)		1,940			1,152				788			-
Lease termination income and other, net		6,030			(619	)			1			6,648
Paramount's share of Same Store Cash NOI for the year    ended December 31, 2020	$	353,933		$	259,501			$	94,432		$	-
	For the Year Ended December 31, 2019
(Amounts in thousands)	Total			New York				San Francisco			Other
Paramount's share of Cash NOI for the year    ended December 31, 2019 (1)	$	374,187		$	272,974			$	89,289		$	11,924
Dispositions / Discontinued Operations		(21,688	)		(5,962	)	(5)		-			(15,726	)	(3)
Reserves for uncollectible accounts receivable (4)		448			473				(25	)		-
Lease termination income and other, net		345			(2,346	)			(1,111	)		3,802
Paramount's share of Same Store Cash NOI for the year    ended December 31, 2019	$	353,292		$	265,139			$	88,153		$	-
Increase (decrease) in Same Store Cash NOI	$	641		$	(5,638	)		$	6,279		$	-
% Increase (decrease)		0.2	%		(2.1	%)			7.1	%

⁽¹⁾ See page 71 “Non-GAAP Financial Measures – NOI” for a reconciliation to net income or loss in accordance with GAAP and the reasons why we believe these non-GAAP measures are useful.

⁽²⁾ Represents our share of Same Store Cash NOI attributable to acquired properties (Market Center, 55 Second Street and 111 Sutter Street in San Francisco) for the months they were not owned by us in both reporting periods.

⁽³⁾ Represents Cash NOI from discontinued operations (1899 Pennsylvania Avenue in 2020 and 1899 Pennsylvania Avenue and Liberty Place in 2019).

⁽⁴⁾ Represents impairments of receivables arising from operating leases that have been consistently excluded from our same store results in prior periods as noted in our definition of these terms. In prior periods, adjustments for these items have been relatively small and as such, were included within “other.”

⁽⁵⁾ Represents Cash NOI attributable to the 10.0% sale of 1633 Broadway for the months in which it was 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 net income or loss, calculated in accordance with GAAP, adjusted to exclude depreciation and amortization from real estate assets, impairment losses on certain real estate assets and gains or losses from the sale of certain real estate assets or from change in control of certain real estate assets, including our share of such adjustments of unconsolidated joint ventures. FFO is commonly used in the real estate industry to assist investors and analysts in comparing results of real estate companies because it excludes the effect of real estate depreciation and amortization and net gains on sales, which are based on historical costs and implicitly assume that the value of real estate diminishes predictably over time, rather than fluctuating based on existing market conditions. 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.

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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 Year Ended December 31,
(Amounts in thousands, except share and per share amounts)	2020			2019			2018
Reconciliation of net (loss) income to FFO and Core FFO:
Net (loss) income	$	(19,196	)	$	(29,603	)	$	18,993
Real estate depreciation and amortization (including our    share of unconsolidated joint ventures)		283,317			257,876			248,879
Adjustments related to discontinued operations (including    impairments and gain or loss on sale of real estate)		13,456			49,103			26,512
FFO		277,577			277,376			294,384
Less FFO attributable to noncontrolling interests in:
Consolidated joint ventures		(43,542	)		(46,527	)		(45,622	)
Consolidated real estate fund		1,450			(313	)		(720	)
Operating Partnership		(20,664	)		(22,349	)		(23,577	)
FFO attributable to common stockholders	$	214,821		$	208,187		$	224,465
Per diluted share	$	0.96		$	0.90		$	0.94
FFO	$	277,577		$	277,376		$	294,384
Non-core items:
Our share of (distributions received from 712 Fifth Avenue in excess    of earnings) and earnings in excess of distributions received		(2,697	)		(2,038	)		2,727
Loss on early extinguishment of debt		-			11,989			-
Non-cash write-off of deferred financing costs		-			8,215			-
Other, net		1,450			2,881			3,279
Core FFO		276,330			298,423			300,390
Less Core FFO attributable to noncontrolling interests in:
Consolidated joint ventures		(43,542	)		(46,527	)		(45,622	)
Consolidated real estate fund		1,450			(313	)		(720	)
Operating Partnership		(20,556	)		(24,419	)		(24,148	)
Core FFO attributable to common stockholders	$	213,682		$	227,164		$	229,900
Per diluted share	$	0.96		$	0.98		$	0.96
Reconciliation of weighted average shares outstanding:
Weighted average shares outstanding		222,436,170			231,538,065			239,526,694
Effect of dilutive securities		16,558			35,323			28,942
Denominator for FFO per diluted share		222,452,728			231,573,388			239,555,636

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ITEM 7A.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 December 31, 2020.

Property		Rate	2021		2022		2023		2024		2025		Thereafter		Total		Fair Value
(Amounts in thousands)
Fixed Rate Debt:
	1633 Broadway	2.99%	$	-	$	-	$	-	$	-	$	-	$	1,250,000	$	1,250,000	$	1,250,234
	1301 Avenue of the Americas	3.05%		500,000		-		-		-		-		-		500,000		500,297
	31 West 52nd Street	3.80%		-		-		-		-		-		500,000		500,000		519,750
	One Market Plaza	4.03%		-		-		-		975,000		-		-		975,000		1,005,645
	300 Mission Street	3.65%		-		-		244,434		-		-		-		244,434		248,667
Total Fixed Rate Debt		3.45%	$	500,000	$	-	$	244,434	$	975,000	$	-	$	1,750,000	$	3,469,434	$	3,524,593
Variable Rate Debt:
	1301 Avenue of the Americas	1.99%	$	350,000	$	-	$	-	$	-	$	-	$	-	$	350,000	$	347,051
	Revolving Credit Facility	n/a		-		-		-		-		-		-		-		-
Total Variable Rate Debt		1.99%	$	350,000	$	-	$	-	$	-	$	-	$	-	$	350,000	$	347,051
Total Consolidated Debt		3.32%	$	850,000	$	-	$	244,434	$	975,000	$	-	$	1,750,000	$	3,819,434	$	3,871,644

In addition to the above, our unconsolidated joint ventures had $1.63 billion of outstanding indebtedness as of December 31, 2020, of which our share was $607,647,000.

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

	December 31, 2020								December 31, 2019
(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	$	350,000		1.99	%	$	3,500		$	386,918		3.49	%
Fixed rate		2,678,781		3.36	%		-			2,800,724		3.34	%
	$	3,028,781		3.20	%	$	3,500		$	3,187,642		3.36	%
Paramount's share of debt of non-consolidated entities    (non-recourse):
Variable rate	$	103,880		3.31	%	$	1,039		$	99,748		3.96	%
Fixed rate		503,767		3.30	%		-			503,777		3.30	%
	$	607,647		3.30	%	$	1,039		$	603,525		3.41	%
Noncontrolling interests' share of above						$	(393	)
Total change in annual net income						$	4,146
Per diluted share						$	0.02

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

	Page Number
Report of Independent Registered Public Accounting Firm	79
Consolidated Balance Sheets as of December 31, 2020 and 2019	81
Consolidated Statements of Income for the years ended December 31, 2020, 2019 and 2018	82
Consolidated Statements of Comprehensive Income for the years ended December 31, 2020, 2019 and 2018	83
Consolidated Statements of Changes in Equity for the years ended December 31, 2020, 2019 and 2018	84
Consolidated Statements of Cash Flows for the years ended December 31, 2020, 2019 and 2018	86
Notes to Consolidated Financial Statements	88

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and Board of Directors of Paramount Group, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Paramount Group, Inc. and subsidiaries (the “Company”) as of December 31, 2020 and 2019, the related consolidated statements of income, comprehensive income, changes in equity, and cash flows, for each of the three years in the period ended December 31, 2020, and the related notes and the schedules listed in the Index at Item 15 (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 10, 2021, expressed an unqualified opinion on the Company’s internal control over financial reporting.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

79

Real Estate Asset Impairment—Holding Period—Refer to Note 2 to the financial statements

Critical Audit Matter Description

The Company’s real estate properties are evaluated for impairment whenever events or changes in circumstances indicate that the carrying amount of a real estate asset may not be recoverable. Impairment analyses are based on the Company’s current plans, intended holding periods and available market information at the time the analyses are prepared. The Company uses significant judgment in assessing events or circumstances which might indicate impairment, including but not limited to, changes in management’s intended holding periods. Such changes have a significant impact on the estimates of fair value which are determined using discounted cash flow models.

Evaluating the judgments made by the Company in determining the hold period for real estate assets as part of their impairment analyses involved especially subjective judgment. This required a high degree of auditor judgment and extensive auditor effort, especially given the inherent unpredictability involved in the timing of sales of real estate.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the assessment of the Company’s intended holding periods included, among others, the following:

• We tested the effectiveness of controls over management’s identification of changes in circumstances that could indicate the carrying amounts of real estate assets may not be recoverable, including controls over management’s assessment of significant judgments; specifically, the determination of whether a property was intended to be sold or otherwise disposed of.

• We evaluated the reasonableness of management’s assertions regarding the intended holding period of its real estate assets, more specifically by performing the following:

o Engaged in discussions with management, including the Chief Executive Officer and Chief Financial Officer, and inspected Board of Directors meeting minutes regarding the assumptions utilized in the determination of intended holding periods, and evaluated audit evidence to determine whether it supported or contradicted the conclusions reached by management.

o Corroborated whether an asset is being actively marketed for sale with external tools utilized by our valuation specialists, including industry intelligence and marketing platforms.

o Searched public records for indications of whether assets may be actively marketed for sale.

/s/ DELOITTE & TOUCHE LLP

New York, New York

February 10, 2021

We have served as the Company's auditor since 2014.

80

PARAMOUNT GROUP, INC.

CONSOLIDATED BALANCE SHEETS

(Amounts in thousands, except share, unit and per share amounts)
Assets	December 31, 2020			December 31, 2019
Real estate, at cost
Land	$	1,966,237		$	1,966,237
Buildings and improvements		5,997,078			5,923,648
		7,963,315			7,889,885
Accumulated depreciation and amortization		(966,697	)		(790,216	)
Real estate, net		6,996,618			7,099,669
Cash and cash equivalents		434,530			306,215
Restricted cash		30,794			25,272
Investments in unconsolidated joint ventures		412,724			449,180
Investments in unconsolidated real estate funds		12,917			10,317
Accounts and other receivables		17,502			19,231
Due from affiliates		-			36,918
Deferred rent receivable		330,239			301,588
Deferred charges, net of accumulated amortization of $56,612 and $42,096		116,278			126,367
Intangible assets, net of accumulated amortization of $283,332 and $262,930		153,519			203,169
Assets related to discontinued operations		-			104,836
Other assets		48,976			51,373
Total assets (1)	$	8,554,097		$	8,734,135
Liabilities and Equity
Notes and mortgages payable, net of unamortized deferred financing costs    of $18,695 and $25,792	$	3,800,739		$	3,783,851
Revolving credit facility		-			36,918
Accounts payable and accrued expenses		101,901			117,356
Dividends and distributions payable		16,796			25,255
Intangible liabilities, net of accumulated amortization of $107,981 and $100,881		55,996			73,789
Other liabilities		62,931			66,004
Total liabilities (1)		4,038,363			4,103,173
Commitments and contingencies
Paramount Group, Inc. equity:
Common stock $0.01 par value per share; authorized 900,000,000 shares; issued and    outstanding 218,817,337 and 227,432,030 shares in 2020 and 2019, respectively		2,188			2,274
Additional paid-in-capital		4,120,173			4,133,184
Earnings less than distributions		(456,393	)		(349,557	)
Accumulated other comprehensive loss		(12,791	)		(171	)
Paramount Group, Inc. equity		3,653,177			3,785,730
Noncontrolling interests in:
Consolidated joint ventures		437,161			360,778
Consolidated real estate fund		79,017			72,396
Operating Partnership (20,756,618 and 24,758,472 units outstanding)		346,379			412,058
Total equity		4,515,734			4,630,962
Total liabilities and equity	$	8,554,097		$	8,734,135

⁽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 91.3% as of December 31, 2020. The assets and liabilities of the Operating Partnership, as of December 31, 2020, include $4,025,387 and $2,546,914 of assets and liabilities, respectively, of certain VIEs that are consolidated by the Operating Partnership. See Note 11, Variable Interest Entities (“VIEs”).     

See notes to consolidated financial statements.

81

PARAMOUNT GROUP, INC.

CONSOLIDATED STATEMENTS OF INCOME

	For the Year Ended December 31,
(Amounts in thousands, except share and per share amounts)	2020			2019			2018
Revenues:
Rental revenue	$	679,015		$	709,508		$	677,138
Fee and other income		35,222			34,246			30,533
Total revenues		714,237			743,754			707,671
Expenses:
Operating		267,587			264,702			254,697
Depreciation and amortization		235,200			240,104			240,868
General and administrative		64,917			68,556			57,563
Transaction related costs		1,096			1,999			1,471
Total expenses		568,800			575,361			554,599
Other income (expense):
(Loss) income from unconsolidated joint ventures		(18,619	)		(4,706	)		3,468
Income (loss) from unconsolidated real estate funds		272			(343	)		(269	)
Interest and other income, net		4,490			9,844			7,936
Interest and debt expense		(144,208	)		(156,679	)		(147,653	)
Loss on early extinguishment of debt		-			(11,989	)		-
(Loss) income from continuing operations, before income taxes		(12,628	)		4,520			16,554
Income tax expense		(1,493	)		(312	)		(3,139	)
(Loss) income from continuing operations, net		(14,121	)		4,208			13,415
(Loss) income from discontinued operations, net		(5,075	)		(33,811	)		5,578
Net (loss) income		(19,196	)		(29,603	)		18,993
Less net (income) loss attributable to noncontrolling interests in:
Consolidated joint ventures		(9,257	)		(11,022	)		(8,182	)
Consolidated real estate fund		1,450			(313	)		(720	)
Operating Partnership		2,299			4,039			(944	)
Net (loss) income attributable to common stockholders	$	(24,704	)	$	(36,899	)	$	9,147
(Loss) income per Common Share - Basic:
(Loss) income from continuing operations, net	$	(0.09	)	$	(0.03	)	$	0.02
(Loss) income from discontinued operations, net		(0.02	)		(0.13	)		0.02
Net (loss) income per common share	$	(0.11	)	$	(0.16	)	$	0.04
Weighted average common shares outstanding		222,436,170			231,538,065			239,526,694
(Loss) income per Common Share - Diluted:
(Loss) income from continuing operations, net	$	(0.09	)	$	(0.03	)	$	0.02
(Loss) income from discontinued operations, net		(0.02	)		(0.13	)		0.02
Net (loss) income per common share	$	(0.11	)	$	(0.16	)	$	0.04
Weighted average common shares outstanding		222,436,170			231,538,065			239,555,636

See notes to consolidated financial statements.

82

PARAMOUNT GROUP, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

	For the Year Ended December 31,
(Amounts in thousands)	2020			2019			2018
Net (loss) income	$	(19,196	)	$	(29,603	)	$	18,993
Other comprehensive (loss) income:
Change in value of interest rate swaps		-			(28,069	)		7,273
Pro rata share of other comprehensive (loss) income of    unconsolidated joint ventures		(13,894	)		206			(129	)
Comprehensive (loss) income		(33,090	)		(57,466	)		26,137
Less comprehensive (income) loss attributable to    noncontrolling interests in:
Consolidated joint ventures		(9,257	)		(11,022	)		(8,182	)
Consolidated real estate fund		1,434			(360	)		(665	)
Operating Partnership		3,589			6,726			(1,605	)
Comprehensive (loss) income attributable to    common stockholders	$	(37,324	)	$	(62,122	)	$	15,685

See notes to consolidated financial statements.

83

PARAMOUNT GROUP, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

													Accumulated			Noncontrolling Interests in
							Additional			Earnings			Other			Consolidated			Consolidated
(Amounts in thousands, except per share	Common Shares						Paid-in-			Less than			Comprehensive			Joint			Real Estate			Operating			Total
and unit amounts)	Shares			Amount			Capital			Distributions			(Loss) Income			Ventures			Fund			Partnership			Equity
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 income		-			-			-			9,147			-			8,182			720			944			18,993
Common shares issued upon redemption of    common units		203			2			3,459			-			-			-			-			(3,461	)		-
Common shares issued under Omnibus share    plan, net of shares withheld for taxes		61			-			-			(213	)		-			-			-			-			(213	)
Repurchases of common shares		(7,555	)		(76	)		(105,307	)		-			-			-			-			-			(105,383	)
Dividends and distributions ($0.40 per share    and unit)		-			-			-			(95,506	)		-			-			-			(10,240	)		(105,746	)
Contributions from noncontrolling interests		-			-			-			-			-			-			45,116			-			45,116
Distributions to noncontrolling interests		-			-			-			-			-			(18,184	)		-			-			(18,184	)
Change in value of interest rate swaps		-			-			-			-			6,605			-			-			668			7,273
Pro rata share of other comprehensive loss    of unconsolidated joint ventures		-			-			-			-			(67	)		-			(55	)		(7	)		(129	)
Amortization of equity awards		-			-			2,943			-			-			-			-			17,994			20,937
Reallocation of noncontrolling interest		-			-			2,713			-			-			-			-			(2,713	)		-
Other		-			-			-			(170	)		-			-			-			-			(170	)
Balance as of December 31, 2018		233,136		$	2,329		$	4,201,756		$	(219,906	)	$	16,621		$	394,995		$	66,887		$	428,982		$	4,891,664
Net (loss) income		-			-			-			(36,899	)		-			11,022			313			(4,039	)		(29,603	)
Common shares issued upon redemption of    common units		1,409			14			24,016			-			-			-			-			(24,030	)		-
Common shares issued under Omnibus share    plan, net of shares withheld for taxes		46			3			-			(327	)		-			-			-			-			(324	)
Repurchases of common shares		(7,159	)		(72	)		(94,545	)		-			-			-			-			-			(94,617	)
Dividends and distributions ($0.40 per share    and unit)		-			-			-			(92,425	)		-			-			-			(10,039	)		(102,464	)
Contributions from noncontrolling interests		-			-			-			-			-			-			14,989			-			14,989
Distributions to noncontrolling interests		-			-			-			-			-			(45,239	)		-			-			(45,239	)
Change in value of interest rate swaps		-			-			-			-			(25,367	)		-			-			(2,702	)		(28,069	)
Settlement of interest rate swaps liabilities		-			-			-			-			8,431			-			-			2,827			11,258
Pro rata share of other comprehensive income    of unconsolidated joint ventures		-			-			-			-			144			-			47			15			206
Amortization of equity awards		-			-			2,564			-			-			-			-			20,437			23,001
Acquisition of noncontrolling interest		-			-			-			-			-			-			(9,840	)		-			(9,840	)
Reallocation of noncontrolling interest		-			-			(607	)		-			-			-			-			607			-
Balance as of December 31, 2019		227,432		$	2,274		$	4,133,184		$	(349,557	)	$	(171	)	$	360,778		$	72,396		$	412,058		$	4,630,962

See notes to consolidated financial statements.

84

PARAMOUNT GROUP, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY - CONTINUED

													Accumulated			Noncontrolling Interests in
							Additional			Earnings			Other			Consolidated			Consolidated
(Amounts in thousands, except per share	Common Shares						Paid-in-			Less than			Comprehensive			Joint			Real Estate			Operating			Total
and unit amounts)	Shares			Amount			Capital			Distributions			(Loss) Income			Ventures			Fund			Partnership			Equity
Balance as of December 31, 2019		227,432		$	2,274		$	4,133,184		$	(349,557	)	$	(171	)	$	360,778		$	72,396		$	412,058		$	4,630,962
Net (loss) income		-			-			-			(24,704	)		-			9,257			(1,450	)		(2,299	)		(19,196	)
Common shares issued upon redemption of    common units		5,150			51			85,659			-			-			-			-			(85,710	)		-
Common shares issued under Omnibus    share plan, net of shares withheld for taxes		48			1			-			(333	)		-			-			-			-			(332	)
Repurchases of common shares		(13,813	)		(138	)		(119,862	)		-			-			-			-			-			(120,000	)
Dividends and distributions ($0.37 per share    and unit)		-			-			-			(81,799	)		-			-			-			(7,804	)		(89,603	)
Contributions from noncontrolling interests		-			-			-			-			-			3,500			8,055			-			11,555
Distributions to noncontrolling interests		-			-			-			-			-			(12,717	)		-			-			(12,717	)
Pro rata share of other comprehensive (loss)    income of unconsolidated joint ventures		-			-			-			-			(12,620	)		-			16			(1,290	)		(13,894	)
Amortization of equity awards		-			-			1,318			-			-			-			-			18,068			19,386
Sale of a 10.0% interest in 1633 Broadway		-			-			33,230			-			-			76,343			-			-			109,573
Reallocation of noncontrolling interest		-			-			(13,356	)		-			-			-			-			13,356			-
Balance as of December 31, 2020		218,817		$	2,188		$	4,120,173		$	(456,393	)	$	(12,791	)	$	437,161		$	79,017		$	346,379		$	4,515,734

See notes to consolidated financial statements.

85

 PARAMOUNT GROUP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

	For the Year Ended December 31,
(Amounts in thousands)	2020			2019			2018
Cash Flows from Operating Activities:
Net (loss) income	$	(19,196	)	$	(29,603	)	$	18,993
Adjustments to reconcile net (loss) income to net cash provided by    operating activities:
Depreciation and amortization		235,890			248,347			258,225
Straight-lining of rental revenue		(28,216	)		(43,679	)		(59,061	)
Amortization of stock-based compensation expense		19,239			22,860			19,646
Loss (income) from unconsolidated joint ventures		18,619			4,706			(3,468	)
Loss (gain) on sale of real estate related to discontinued operations		12,766			(1,140	)		(36,845	)
Amortization of deferred financing costs		9,277			19,323			11,023
Amortization of above and below-market leases, net		(4,734	)		(10,991	)		(16,059	)
Distributions of earnings from unconsolidated joint ventures		3,999			4,067			6,207
Realized and unrealized (gains) losses on marketable securities		(1,918	)		(3,027	)		1,604
Distributions of earnings from unconsolidated real estate funds		616			1,553			330
(Income) loss from unconsolidated real estate funds		(272	)		343			269
Real estate impairment loss related to discontinued operations		-			42,000			46,000
Receipt of accrued interest on preferred equity investment		-			2,339			-
Loss on early extinguishment of debt		-			731			-
Other non-cash adjustments		413			(961	)		288
Changes in operating assets and liabilities:
Accounts and other receivables		1,729			845			(2,994	)
Deferred charges		(10,761	)		(23,029	)		(31,861	)
Other assets		(2,193	)		57,318			(57,216	)
Accounts payable and accrued expenses		(1,299	)		(8,949	)		4,200
Other liabilities		3,313			2,388			(2,758	)
Net cash provided by operating activities		237,272			285,441			156,523
Cash Flows from Investing Activities:
Additions to real estate		(89,463	)		(103,916	)		(137,915	)
Proceeds from the sale of real estate related to discontinued operations		89,206			150,307			349,013
Repayment of amounts due from affiliates		36,918			181,000			-
Sales of marketable securities		22,188			19,282			24,794
Purchases of marketable securities		(15,809	)		(15,232	)		(20,019	)
Contributions of capital to unconsolidated real estate funds		(2,945	)		(3,937	)		(3,779	)
Investments in and contributions of capital to unconsolidated joint ventures		(60	)		(368,852	)		(29,883	)
Due from affiliates		-			(217,918	)		-
Redemption of preferred equity investment		-			33,750			-
Distributions of capital from unconsolidated real estate funds		-			2,076			79
Escrow deposits and loans receivable for Residential Development Fund		-			-			(15,680	)
Real estate acquisition deposits		-			-			(10,000	)
Net cash provided by (used in) investing activities		40,035			(323,440	)		156,610

See notes to consolidated financial statements.

86

PARAMOUNT GROUP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS – CONTINUED

	For the Year Ended December 31,
(Amounts in thousands)	2020			2019			2018
Cash Flows from Financing Activities:
Repayment of borrowings under revolving credit facility	$	(200,000	)	$	(195,000	)	$	-
Borrowings under revolving credit facility		163,082			231,918			-
Repurchases of common shares		(120,000	)		(97,137	)		(102,863	)
Proceeds from the sale of a 10.0% interest in 1633 Broadway		111,984			-			-
Dividends paid to common stockholders		(89,225	)		(93,038	)		(94,991	)
Distributions paid to common unitholders		(8,837	)		(10,073	)		(10,064	)
Distributions to noncontrolling interests		(12,717	)		(45,239	)		(18,184	)
Contributions from noncontrolling interests		11,555			14,989			45,116
Proceeds from notes and mortgages payable		9,791			1,259,843			16,700
Repayment of note payable issued in connection with the acquisition of    noncontrolling interest in consolidated real estate fund		(8,771	)		-			-
Repurchase of shares related to stock compensation agreements    and related tax withholdings		(332	)		(324	)		-
Repayments of notes and mortgages payable		-			(1,050,000	)		-
Debt issuance costs and other		-			(10,131	)		(6,564	)
Acquisition of noncontrolling interest in consolidated real estate fund		-			(1,000	)		-
Loss on early extinguishment of debt		-			(731	)		-
Repayment of loans to affiliates		-			-			(27,299	)
Net cash (used in) provided by financing activities		(143,470	)		4,077			(198,149	)
Net increase (decrease) in cash and cash equivalents and restricted cash		133,837			(33,922	)		114,984
Cash and cash equivalents and restricted cash at beginning of period		331,487			365,409			250,425
Cash and cash equivalents and restricted cash at end of period	$	465,324		$	331,487		$	365,409
Reconciliation of Cash and Cash Equivalents and Restricted Cash:
Cash and cash equivalents at beginning of period	$	306,215		$	339,653		$	219,381
Restricted cash at beginning of period		25,272			25,756			31,044
Cash and cash equivalents and restricted cash at beginning of period	$	331,487		$	365,409		$	250,425
Cash and cash equivalents at end of period	$	434,530		$	306,215		$	339,653
Restricted cash at end of period		30,794			25,272			25,756
Cash and cash equivalents and restricted cash at end of period	$	465,324		$	331,487		$	365,409
Supplemental Disclosure of Cash Flow Information:
Cash payments for interest	$	135,607		$	139,130		$	136,452
Cash payments for income taxes, net of refunds		1,366			2,474			4,049
Non-Cash Transactions:
Common shares issued upon redemption of common units	$	85,710		$	24,030		$	3,461
Dividends and distributions declared but not yet paid		16,796			25,255			25,902
Write-off of fully amortized and/or depreciated assets		9,141			8,727			4,158
Additions to real estate included in accounts payable and accrued expenses		8,640			21,566			19,872
Change in value of interest rate swaps		-			28,069			(7,273	)
Note payable issued in connection with the acquisition of noncontrolling    interest in consolidated real estate fund		-			8,771			-
Basis adjustment to investment in unconsolidated joint ventures upon    adoption of ASU 2017-05		-			-			7,086

See notes to consolidated financial statements.

87

PARAMOUNT GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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 and San Francisco. As of December 31, 2020, our portfolio consisted of 13 Class A properties aggregating 12.9 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 91.3% of, the Operating Partnership as of December 31, 2020.

In March 2020, the World Health Organization declared coronavirus 2019 (“COVID-19”) a global pandemic. The outbreak of COVID-19 has caused, and continues to cause, severe disruptions in the global economy, and has adversely impacted businesses and financial markets, including that of the United States. Specifically, New York and San Francisco, the markets in which we operate and where a majority of our assets are located, have reacted by instituting quarantines, “pause” orders, “shelter-in-place” rules, restrictions on travel, and restriction on the types of business that could operate. These measures have had and continue to have a significant adverse impact on businesses.

While our buildings have remained open throughout the pandemic, a majority of our tenants have worked remotely. The health and safety of our employees and tenants have been our highest priority and we have adopted a number of initiatives focused on ensuring a healthy and safe environment for all building occupants, including but not limited to the following:

• Adding signage, physical barriers and floor markings in common areas designed to promote social distancing;

• Increasing cleaning and disinfecting protocols and the use of EPA registered cleaning products;  

• Reducing physical touch points in common areas;

• Improving indoor air quality by installing the highest rated minimum efficiency reporting value (“MERV”) filters and additional air purifiers in lobby areas;  

• Installing thermal scanners in lobby areas to screen for temperature checks; and

• Developing efficient communication channels to communicate important health and safety information to employees and tenants.

Since the outbreak of COVID-19, we have received several requests from tenants seeking “short-term” rent relief and have entered into agreements with select tenants to abate and/or defer a portion of their 2020 rental obligations. We have closely monitored our rent collections and have evaluated and continue to evaluate tenant requests on a case-by-case basis. From April through December 31, 2020, our portfolio-wide rent collections were 97.2%, comprised of 98.5% from office tenants (which account for approximately 96.5% of our annualized rents) and 61.6% from non-office tenants (which account for the remaining 3.5% of our annualized rents). In connection with our evaluation of the probability of rent collections of future lease receivables, we recorded $33,205,000 of non-cash write-offs, primarily for straight-line rent receivables, and $2,051,000 of reserves for uncollectible accounts receivable, during the year ended December 31, 2020.

On December 11, 2020 and December 18, 2020, the U.S. Food and Drug Administration issued emergency use authorizations of two vaccines for the prevention of COVID-19. While there are other vaccines currently under development, multiple variants of the virus that cause COVID-19 are also currently present globally. The rapid development and fluidity of this situation precludes us at this time from making any predictions as to the ultimate impact COVID-19 may have on our future financial condition, results of operations and cash flows.

88

PARAMOUNT GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2. Basis of Presentation and Significant Accounting Policies

Basis of Presentation

The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and with the rules and regulations of the Securities and Exchange Commission (the “SEC”). These consolidated financial statements include the accounts of Paramount and its consolidated subsidiaries, including the Operating Partnership. All significant intercompany balances and transactions have been eliminated in consolidation.

Significant Accounting Policies

Real Estate  

Real estate is carried at cost less accumulated depreciation and amortization. Betterments, major renovations and certain costs directly related to the improvement of real estate are capitalized. Maintenance and repair expenses are charged to expense as incurred. Depreciation is recognized on a straight-line basis over estimated useful lives of the assets, which range from 5 to 40 years. Tenant improvements are amortized on a straight-line basis over the lives of the related leases, which approximate the useful lives of the assets.

Upon the acquisition of real estate, we assess the fair value of acquired assets (including land, buildings and improvements, identified intangibles, such as acquired above-market leases and acquired in-place leases) and acquired liabilities (such as acquired below-market leases) and allocate the purchase price based on these assessments. We assess fair value based on estimated cash flow projections that utilize appropriate discount and capitalization rates and available market information. Estimates of future cash flows are based on a number of factors including historical operating results, known trends, and market/economic conditions. We record acquired intangible assets (including acquired above-market leases and acquired in-place leases) and acquired intangible liabilities (including below-market leases) at their estimated fair value. We amortize acquired above-market and below-market leases as a decrease or increase to rental revenue, respectively, over the lives of the respective leases. Amortization of acquired in-place leases is included as a component of “depreciation and amortization”.

Our properties, including any related intangible assets, are individually reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Impairment analyses are based on our current plans, intended holding periods and available market information at the time the analyses are prepared. An impairment exists when the carrying amount of an asset exceeds the aggregate projected future cash flows over the anticipated holding period on an undiscounted basis. An impairment loss is measured based on the excess of the property’s carrying amount over its estimated fair value. Estimates of fair value are determined using discounted cash flow models, which consider, among other things, anticipated holding periods, current market conditions and utilize unobservable quantitative inputs, including appropriate capitalization and discount rates. If our estimates of the projected future cash flows, anticipated holding periods, or market conditions change, our evaluation of impairment losses may be different and such differences could be material to our consolidated financial statements. The evaluation of anticipated cash flows is subjective and is based, in part, on assumptions regarding future occupancy, rental rates and capital requirements that could differ materially from actual results. Plans to hold properties over longer periods decrease the likelihood of recording impairment losses.

Real estate and related intangibles are classified as held for sale when all the necessary criteria are met. The criteria include (i) management, having the authority to approve action, commits to a plan to sell the property in its present condition, (ii) the sale of the property is at a price reasonable in relation to its current fair value and (iii) the sale is probable and expected to be completed within one year. Real estate and the related intangibles held for sale are carried at the lower of carrying amounts or estimated fair value less disposal costs. Depreciation and amortization is not recognized on real estate and related intangibles classified as assets held for sale.

89

PARAMOUNT GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Variable Interest Entities (“VIEs”) and Investments in Unconsolidated Joint Ventures and Funds

We consolidate VIEs in which we are considered to be the primary beneficiary. Entities are considered to be the primary beneficiary if they have both of the following characteristics: (i) the power to direct the activities that, when taken together, most significantly impact the VIE’s performance, and (ii) the obligation to absorb losses and right to receive the returns from the VIE that would be significant to the VIE. Our judgment with respect to our level of influence or control of an entity involves the consideration of various factors including the form of our ownership interest, our representation in the entity’s governance, the size of our investment, estimates of future cash flows, our ability to participate in policy making decisions and the rights of the other investors to participate in the decision making process and to replace us as manager and/or liquidate the joint venture, if applicable.

We account for investments under the equity method when the requirements for consolidation are not met, and we have significant influence over the operations of the investee. Equity method investments, which consist of investments in unconsolidated joint ventures and funds are initially recorded at cost and subsequently adjusted for (i) our share of net income or loss, (ii) our share of other comprehensive income or loss, and (iii) cash contributions and distributions. To the extent that our cost basis is different than our share of the equity in the equity method investment, the basis difference allocated to depreciable assets is amortized into “income from unconsolidated joint ventures” over the estimated useful life of the related asset. The agreements that govern our equity method investments may designate different percentage allocations among investors for profits and losses; however, our recognition of income or loss generally follows the investment’s distribution priorities, which may change upon the achievement of certain investment return thresholds. We account for cash distributions in excess of our basis in the equity method investments as income when we have neither the requirement, nor the intent to provide financial support to the joint venture. Investments accounted for under the equity method are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the investment may not be recoverable. An impairment loss is measured based on the excess of the carrying amount of an investment over its estimated fair value. Impairment analyses are based on current plans, intended holding periods and available information at the time the analyses are prepared.

Investments that do not qualify for consolidation or equity method accounting are accounted for under the cost method.

Cash and Cash Equivalents

Cash and cash equivalents consist of cash on hand and short-term highly liquid investments with original maturities of three months or less. The majority of our cash and cash equivalents are held at major commercial banks, which may at times exceed the Federal Deposit Insurance Corporation limit. To date, we have not experienced any losses on our invested cash.

Restricted Cash

Restricted cash consists primarily of security deposits held on behalf of our tenants, cash escrowed under loan agreements for debt service, real estate taxes, property insurance and capital improvements and cash restricted in connection with our deferred compensation plan.

Marketable Securities

Marketable securities consists of investments in trading securities that are held in our deferred compensation plan for which there is an offsetting liability. These investments are initially recorded at cost and subsequently measured at fair value at the end of each reporting period, with gains or losses resulting from changes in fair value recognized in earnings, which are included as a component of “interest and other income, net” on our consolidated statements of income and the earnings are entirely offset by expenses from the mark-to-market of plan liabilities, which are included as a component of “general and administrative” expenses on our consolidated statements of income.

90

PARAMOUNT GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Deferred Charges

Deferred charges include deferred leasing costs and deferred financing costs related to our revolving credit facility. Deferred leasing costs consist of fees and direct costs related to successful leasing activities. Such deferred leasing costs are amortized on a straight-line basis over the lives of the related leases and recognized in our consolidated statements of income as a component of “depreciation and amortization”. Deferred financing costs consist of fees and direct costs incurred in obtaining our revolving credit facility. Such deferred financing costs are amortized over the term of the revolving credit facility and are recognized as a component of “interest and debt expense” on our consolidated statements of income.

Deferred Financing Costs Related to Notes and Mortgages Payable

Deferred financing costs related to notes and mortgages payable consists of fees and direct costs incurred in obtaining such financing and are recorded as a reduction of our notes and mortgages payable. Such costs are amortized over the terms of the related debt agreements and recognized as a component of “interest and debt expense” on our consolidated statements of income. Upon the early extinguishment of our notes and mortgages payable, any unamortized costs related to such notes and mortgages payable are written off as a component of “loss on early extinguishment of debt” on our consolidated statements of income.

Fair Value of Financial Instruments

Accounting Standards Codification (“ASC”) Topic 820, Fair Value Measurement and Disclosures, defines fair value and establishes a framework for measuring fair value. The objective of fair value is to determine the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (the exit price). ASC Topic 820 establishes a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into three levels: Level 1 – quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities; Level 2 – observable prices that are based on inputs not quoted in active markets, but corroborated by market data; and Level 3 – unobservable inputs that are used when little or no market data is available. The fair value hierarchy gives the highest priority to Level 1 inputs and the lowest priority to Level 3 inputs. In determining fair value, we utilize valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible, as well as consider counterparty credit risk in our assessment of fair value. Considerable judgment is necessary to interpret Level 2 and 3 inputs in determining the fair value of our financial and non-financial assets and liabilities. Accordingly, our fair value estimates, which are made at the end of each reporting period, may be different than the amounts that may ultimately be realized upon sale or disposition of these assets or settlement of these liabilities.

We use the following methods and assumptions in estimating fair value for financial instruments that are presented at fair value on our consolidated balance sheets:

Marketable Securities

Marketable securities are valued by a third-party specialist using quoted prices in active markets.

We use the following methods and assumptions in estimating fair value for financial instruments that are not presented at fair value on our consolidated balance sheets, but are disclosed in the notes to our consolidated financial statements:

Notes and Mortgages Payable

Notes and mortgages payable are valued by a third-party specialist using the standard practice of modeling the contractual cash flows required under the instrument and discounting them back to their present value at the appropriate current risk adjusted interest rate. For floating rate debt, we use forward rates derived from observable market yield curves to project the expected cash payments we would be required to make under the instrument. The notes and mortgages payable are classified as Level 2 in fair value hierarchy.

The carrying values of all other financial instruments on our consolidated balance sheets, including cash and cash equivalents, restricted cash, accounts and other receivables and accounts payable and accrued expenses, approximate their fair values due to the short-term nature of these instruments.

91

PARAMOUNT GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Revenue Recognition

Rental Revenue

We lease office, retail and storage space to tenants, primarily under non-cancellable operating leases which have terms generally ranging from five to fifteen years. Most of our leases provide tenants with extension options at either fixed or market rates and few of our leases provide tenants with options to early terminate, but such options generally impose an economic penalty on the tenant upon exercising. Rental revenue is recognized in accordance with ASC Topic 842, Leases, and includes (i) fixed payments of cash rents, which represents revenue each tenant pays in accordance with the terms of its respective lease and that is recognized on a straight-line basis over the non-cancellable term of the lease, and includes the effects of rent steps and rent abatements under the leases, (ii) variable payments of tenant reimbursements, which are recoveries of all or a portion of the operating expenses and real estate taxes of the property and is recognized in the same period as the expenses are incurred, (iii) amortization of acquired above and below-market leases, net and (iv) lease termination income.

We evaluate the collectability of our tenant receivables for payments required under the lease agreements. If we determine that collectability is not probable, the difference between rental revenue recognized and rental payments received is recorded as an adjustment to “rental revenue” in our consolidated statements of income.

Fee and Other Income

Fee income includes (i) property management fees, (ii) asset management fees, (iii) fees relating to acquisitions, dispositions and leasing services and (iv) other fee income and 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. Other income includes income from tenant requested services, including overtime heating and cooling and parking income.

Gains and Losses on Sale of Real Estate

Gains and losses on the sale of real estate are recognized pursuant to ASC Topic 610-20, Gains and Losses from the Derecognition of Nonfinancial Assets, when (i) we do not have a controlling financial interest in the buyer and (ii) the buyer has obtained control of the real estate asset. Any gain or loss on sale is measured based on the difference between the amount of consideration received and the carrying amount of the real estate assets, less costs to sell. For partial sale of real estate resulting in transfer of control, we measure any noncontrolling interest retained at fair value and recognize a gain or loss on the difference between fair value and the carrying amount of the real estate assets retained.

Stock-Based Compensation

We account for stock-based compensation in accordance with ASC Topic 718, Compensation – Stock Compensation. The fair value of the award on the date of grant (adjusted for estimated forfeitures) is ratably amortized into expense over the vesting period of the respective grants. The determination of fair value of these awards involves the use of significant estimates and assumptions, including expected volatility of our stock, expected dividend yield, expected term, and assumptions of whether these awards achieve the requisite performance criteria.

92

PARAMOUNT GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Income Taxes

We operate and have been organized in conformity with the requirements for qualification and taxation as a REIT for U.S. federal income tax purposes. So long as we qualify as a REIT, we generally will not be subject to U.S. federal income tax on our net income that we distribute currently to our stockholders. In order to maintain our qualification as a REIT, we are required under the Internal Revenue Code of 1986, as amended, to distribute at least 90% of our taxable income (without regard to the deduction for dividends paid and excluding net capital gains) to our stockholders and meet certain other requirements. If, with respect to any taxable year, we fail to maintain our qualification as a REIT, and we are not entitled to relief under the relevant statutory provisions, we would be subject to income tax at regular corporate tax rates. Even if we qualify as a REIT, we may also be subject to certain state, local and franchise taxes. Under certain circumstances, U.S. federal income tax may be due on our undistributed taxable income.

We treat certain consolidated subsidiaries, and may in the future elect to treat newly formed subsidiaries, as taxable REIT subsidiaries (“TRSs”). TRSs may participate in non-real estate related activities and/or perform non-customary services for tenants and are subject to federal and state income tax at regular corporate tax rates. Our TRSs had a combined current income tax expense of approximately $698,000, $242,000 and $622,000 for the years ended December 31, 2020, 2019 and 2018, respectively. In addition, our TRSs had combined deferred income tax expense of $32,000 and $87,000 for the years ended December 31, 2020 and 2018, respectively, and a combined deferred income tax benefit of $28,000 for the year ended December 31, 2019.

The following table reconciles net (loss) income attributable to Paramount Group, Inc. to estimated taxable income for the years ended December 31, 2020, 2019 and 2018.

	For the Year Ended December 31,
(Amounts in thousands)	2020			2019			2018
Net (loss) income attributable to Paramount Group, Inc.	$	(24,704	)	$	(36,899	)	$	9,147
Book to tax differences:
Straight-lining of rents and amortization of above and    below-market leases, net		(10,462	)		(37,244	)		(48,604	)
Depreciation and amortization		62,002			79,750			92,512
Stock-based compensation		17,766			20,812			17,847
Real estate impairment loss		-			38,237			41,788
Adjustments resulting from sale of real estate		55,640			12,107			(14,381	)
Other, net		(11,095	)		12,753			(11,635	)
Estimated taxable income	$	89,147		$	89,516		$	86,674

The following table sets forth the characterization of dividend distributions for federal income tax purposes for the years ended December 31, 2020, 2019 and 2018.

	For the Year Ended December 31,
	2020						2019						2018
	Amount			%			Amount			%			Amount			%
Ordinary income	$	0.210	(1)		52.5	%	$	0.323	(1)		80.7	%	$	0.286	(1)		72.4	%
Long-term capital gain		0.190			47.5	%		0.062			15.5	%		0.074			18.7	%
Return of capital		0.000			0.0	%		0.015			3.8	%		0.035			8.9	%
Total	$	0.400	(2)		100.0	%	$	0.400	(2)		100.0	%	$	0.395	(2)		100.0	%

⁽¹⁾ Represents amounts treated as “qualified REIT dividends” for purposes of Internal Revenue Code Section 199A.

⁽²⁾ The fourth quarter dividends for the years ended December 31, 2020, 2019 and 2018 of $0.07, $0.10 and $0.10 per share, respectively, were paid in January of the subsequent years and are allocable to the subsequent years for federal income tax purposes.

93

PARAMOUNT GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Segments

Our reportable segments are separated based on the regions in which we conduct our business. Prior to January 1, 2020, our reportable segments consisted of New York, San Francisco and Washington, D.C. Upon entering into an agreement to sell 1899 Pennsylvania Avenue, our sole remaining property in the Washington, D.C. segment, we redefined our reportable segments into the two remaining regions in which we conduct our business: New York and San Francisco effective January 1, 2020. 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.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires us to make 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.

Reclassification

Certain prior year balances have been reclassified to conform to current year presentation. See Note 3, Dispositions and Discontinued Operations.

Recently Issued Accounting Pronouncements

In June 2016, the Financial Accounting Standards Board (“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. In November 2018, the FASB issued ASU 2018-19, which clarified that receivables arising from operating leases are not within the scope of ASC Topic 326, and instead, impairment of receivables arising from operating leases should be accounted for under the scope of ASC Topic 842, Leases. In May 2019, the FASB issued ASU 2019-05, which provides transition relief for entities adopting ASU 2016-13 by allowing entities to elect the fair value option on certain financial instruments. ASU 2016-13 is effective for interim and annual reporting periods in fiscal years that begin after December 15, 2019, with early adoption permitted. We adopted the provisions of ASU 2016-13 on January 1, 2020. This adoption did not have an impact on our consolidated financial statements.

In August 2018, the FASB issued ASU 2018-13, an update to ASC Topic 820, Fair Value Measurements. ASU 2018-13 modifies

the disclosure requirements in ASC Topic 820, by (i) removing certain disclosure requirements related to transfers between Level 1 and Level 2 of the fair value hierarchy and the valuation processes for Level 3 fair value measurements, (ii) modifying existing disclosure requirements related to measurement uncertainty and (iii) adding new disclosure requirements related to changes in unrealized gains or losses for the period included in other comprehensive income for recurring Level 3 fair value measurements and disclosures related to the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. ASU 2018-13 is effective for interim and annual reporting periods in fiscal years that begin after December 15, 2019, with early adoption permitted. We adopted the provisions of ASU 2018-13 on January 1, 2020. This adoption did not have an impact on our consolidated financial statements.

In October 2018, the FASB issued ASU 2018-17, an update to ASC Topic 810, Consolidations. ASU 2018-17 requires reporting entities to consider indirect interests held by related parties under common control on a proportional basis rather than as the equivalent of a direct interest in its entirety in determining whether a decision-making fee is a variable interest. ASU 2018-17 is effective for interim and annual reporting periods in fiscal years that begin after December 15, 2019, with early adoption permitted. We adopted the provisions of ASU 2018-17 on January 1, 2020. This adoption did not have an impact on our consolidated financial statements.

94

PARAMOUNT GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In December 2019, the FASB issued ASU 2019-12, an update to ASC Topic 740, Income Taxes. ASU 2019-12 simplifies the accounting for income taxes by (i) eliminating certain exceptions within ASC Topic 740 and (ii) clarifying and amending the existing guidance to enable consistent application of ASC Topic 740. ASU 2019-12 is effective for interim and annual reporting periods in fiscal years that begin after December 15, 2020, with early adoption permitted. We do not believe the adoption of ASU 2019-12 will have a material impact on our consolidated financial statements.

In March 2020, the FASB issued ASU 2020-04, which adds ASC Topic 848, Reference Rate Reform: Facilitation of the Effects of Reference Rate Reform on Financial Reporting. ASU 2020-04 provides temporary optional expedients and exceptions to ease financial reporting burdens related to applying current GAAP to modifications of contracts, hedging relationships and other transactions in connection with the transition from the London Interbank Offered Rate (“LIBOR”) and other interbank offered rates to alternative reference rates. In January 2021, the FASB issued ASU 2021-01 to clarify that certain optional expedients and exceptions apply to modifications of derivative contracts and certain hedging relationships affected by changes in the interest rates used for discounting cash flows, computing variation margin settlements, and for calculating price alignment interest. ASU 2020-04 is effective beginning on March 12, 2020 and may be applied prospectively to such transactions through December 31, 2022 and ASU 2021-01 is effective beginning on January 7, 2021 and may be applied retrospectively or prospectively to such transactions through December 31, 2022. We will apply ASU 2020-04 and ASU 2021-01 prospectively as and when we enter into transactions to which these updates apply.  

In April 2020, the FASB staff issued a question and answer document (the “Lease Modification Q&A”) focused on the application of lease accounting guidance to lease concessions provided as a result of the COVID-19 global pandemic. Under existing lease guidance, the entity would have to determine, on a lease by lease basis, if a lease concession was the result of a new arrangement reached with the tenant, which would be accounted for under the lease modification framework, or if a lease concession was under the enforceable rights and obligations that existed in the original lease, which would be accounted for outside the lease modification framework. The Lease Modification Q&A provides entities with the option to elect to account for lease concessions as though the enforceable rights and obligations existed in the original lease. This election is only available when total cash flows resulting from the modified lease are substantially the same as or less than the cash flows in the original lease. We have accounted for lease modifications executed as a result of COVID-19 under ASC Topic 842, Leases, and have elected not to use the option available in the Lease Modification Q&A. Accordingly, the Lease Modification Q&A did not have an impact on our consolidated financial statements.

In August 2020, the FASB issued ASU 2020-06, an update to ASC Topic 470, Subtopic - 20, Debt - Debt with Conversion and Other Options, and ASC Topic 815, Subtopic – 4, Derivatives and Hedging - Contracts in Entity's Own Equity. ASU 2020-06 simplifies the guidance for certain financial instruments with characteristics of liability and equity, including convertible instruments and contracts on an entity’s own equity by reducing the number of accounting models for convertible instruments and amends guidance in ASC Topic 260, Earnings Per Share, relating to the computation of earnings per share for convertible instruments and contracts on an entity’s own equity. ASU 2020-06 is effective for interim and annual reporting periods in fiscal years that begin after December 15, 2021, with early adoption permitted for fiscal years that begin after December 15, 2020. We are evaluating the impact of ASU 2020-06 on our consolidated financial statements.

In October 2020, the FASB issued ASU 2020-10, Codification Improvements. ASU 2020-10 codifies the disclosure guidance of all codifications which provide entities with an option to either present information on the face or disclose it in the notes to the financial statements. ASU 2020-10 also clarifies application of various provisions in the codifications where the guidance may have been unclear. ASU 2020-10 is effective for interim and annual reporting periods in fiscal years that begin after December 15, 2020, with early adoption permitted. We do not believe the adoption of ASU 2020-10 will have a material impact on our consolidated financial statements.

95

PARAMOUNT GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

3. Dispositions and Discontinued Operations

Dispositions

1633 Broadway

On May 27, 2020, we completed the sale of a 10.0% interest in 1633 Broadway, a 2.5 million square foot trophy office building located in New York City. The transaction valued the property at $2.4 billion, or $960 per square foot and included the assumption of the existing $1.25 billion mortgage loan. Accordingly, we realized net proceeds of $111,984,000 from the sale after transaction costs. Since we retained a controlling financial interest in 1633 Broadway and continue to consolidate the financial position and results of operations into our consolidated financial statements, the sale of the 10.0% interest was accounted for as an equity transaction.  

Discontinued Operations

During the past three years, we sold the remaining assets in our Washington, D.C. portfolio, thereby exiting the Washington, D.C. office market. These dispositions represented a strategic shift in our operations and met the criteria of discontinued operations, under ASC Topic 205, Presentation of Financial Statements. Accordingly, we have reclassified the assets and liabilities and the results of operations of our Washington, D.C. segment as discontinued operations for all periods presented.

1899 Pennsylvania Avenue

On December 24, 2020, we completed the sale of 1899 Pennsylvania Avenue, a 191,000 square foot trophy office building located in Washington, D.C., for $103,000,000. We realized net proceeds of $89,206,000 from the sale after transaction costs and recognized a loss of $12,766,000, which is included as a component of “(loss) income from discontinued operations, net” on our consolidated statement of income for the year ended December 31, 2020.

Liberty Place

On September 26, 2019, we sold Liberty Place, a 172,000 square foot office building in Washington, D.C., for $154,500,000. In connection therewith, we recognized a gain of $1,140,000, which is included as a component of “(loss) income from discontinued operations, net” on our consolidated statement of income for the year ended December 31, 2019.

425 Eye Street

On September 27, 2018, we sold 425 Eye Street, a 373,000 square foot Class A office building in Washington, D.C., for $157,000,000. In connection therewith, we recognized a gain of $1,009,000, which is included as a component of “(loss) income from discontinued operations, net” on our consolidated statement of income for the year ended December 31, 2018.

2099 Pennsylvania Avenue

On August 9, 2018, we sold 2099 Pennsylvania Avenue, a 209,000 square foot Class A office building in Washington, D.C., for $219,000,000. In connection therewith, we recognized a gain of $35,836,000, which is included as a component of “(loss) income from discontinued operations, net” on our consolidated statement of income for the year ended December 31, 2018.

96

PARAMOUNT GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The tables below set forth the details of the assets and liabilities, results of operations and the details of the cash flows related to discontinued operations as of the dates thereof and for the periods set forth below.

(Amounts in thousands)	As of
Balance Sheet: (1)	December 31, 2019
Real estate, net	$	94,251
Deferred rent receivable		4,206
Deferred charges, net		804
Intangible assets, net		5,575
Assets related to discontinued operations	$	104,836

(Amounts in thousands)	For the Year Ended December 31,
Income Statements: (2)	2020			2019			2018
Revenues:
Rental revenue	$	13,967		$	24,969		$	50,157
Other income		276			457			1,133
Total revenues		14,243			25,426			51,290
Expenses:
Operating		5,853			10,134			19,381
Depreciation and amortization		690			8,243			17,357
Total expenses		6,543			18,377			36,738
Other income (expense):
Interest and other income, net		-			-			181
Real estate impairment loss		-			(42,000	)		(46,000	)
Income (loss) before gain or loss on sale of real estate		7,700			(34,951	)		(31,267	)
(Loss) gain on sale of real estate (3)		(12,766	)		1,140			36,845
(Loss) income before income taxes		(5,066	)		(33,811	)		5,578
Income tax expense		(9	)		-			-
(Loss) income from discontinued operations, net	$	(5,075	)	$	(33,811	)	$	5,578

	For the Year Ended December 31,
Statements of Cash Flows: (2)	2020			2019			2018
Cash provided by operating activities	$	5,522		$	15,949		$	25,416
Cash provided by investing activities
Proceeds from sale of real estate (4)	$	89,206		$	150,307		$	349,013
Additions to real estate		-			(1,514	)		(4,003	)
Total cash provided by investing activities	$	89,206		$	148,793		$	345,010
Cash used in financing activities	$	(96,896	)	$	(162,294	)	$	(370,626	)
Additional Cash Flow Information:
Depreciation and amortization	$	690		$	8,243		$	17,357

⁽¹⁾ Represents assets of 1899 Pennsylvania Avenue.

⁽²⁾ Represents revenues, expenses, net income, and cash flow information of 1899 Pennsylvania Avenue in the year ended December 31, 2020, 1899 Pennsylvania Avenue and Liberty Place in the year ended December 31, 2019 and 1899 Pennsylvania Avenue, Liberty Place, 425 Eye Street and 2099 Pennsylvania Avenue in the year ended December 31, 2018.

⁽³⁾ Represents the loss on sale of 1899 Pennsylvania Avenue in 2020, gain on sale of Liberty Place in 2019, and gain on sale of 425 Eye Street and 2099 Pennsylvania Avenue in 2018. 

⁽⁴⁾ Represents the proceeds from the sale of 1899 Pennsylvania Avenue in 2020, Liberty Place in 2019, and 425 Eye Street and 2099 Pennsylvania Avenue in 2018.

97

PARAMOUNT GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

4. 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 December 31,
Our Share of Investments:	Ownership	2020		2019
712 Fifth Avenue (1)	50.0%	$	-	$	-
Market Center	67.0%		192,306		219,593
55 Second Street (2)	44.1%		92,298		95,384
111 Sutter Street	49.0%		37,818		41,519
60 Wall Street (2)	5.0%		19,164		19,777
One Steuart Lane (2)	35.0% (3)		67,505		69,536
Oder-Center, Germany (2)	9.5%		3,633		3,371
Investments in unconsolidated joint ventures		$	412,724	$	449,180

(Amounts in thousands)	For the Year Ended December 31,
Our Share of Net (Loss) Income:	2020			2019			2018
712 Fifth Avenue (1)	$	687		$	1,849		$	3,901
Market Center (4)		(11,315	)		(744	)		-
55 Second Street (2)(5)		(2,723	)		(826	)		-
111 Sutter Street (6)		(3,172	)		(4,394	)		-
60 Wall Street (2)		(70	)		(551	)		(518	)
One Steuart Lane (2)		(2,043	)		(118	)		(18	)
Oder-Center, Germany (2)		17			78			103
(Loss) income from unconsolidated joint ventures	$	(18,619	)	$	(4,706	)	$	3,468

⁽¹⁾ As of December 31, 2020, our basis in the partnership that owns 712 Fifth Avenue, was negative $22,345 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 December 31, 2020, the carrying amount of our investments in 55 Second Street, 60 Wall Street, One Steuart Lane and Oder-Center, Germany is greater than our share of equity in these investments by $489, $2,665, $970, $4,819, respectively, and primarily represents the unamortized portion of our capitalized acquisition costs. Basis differences allocated to depreciable assets are being amortized into “(loss) income from unconsolidated joint ventures” over the estimated useful life of the related assets.

⁽³⁾ Represents our consolidated Residential Development Fund’s economic interest in One Steuart Lane.

⁽⁴⁾ Acquired on December 11, 2019.

⁽⁵⁾ Acquired on August 21, 2019.

⁽⁶⁾ Acquired on February 7, 2019.

98

PARAMOUNT GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following tables provide the combined summarized financial information of our unconsolidated joint ventures as of the dates and for the periods set forth below.

(Amounts in thousands)	As of December 31,
Balance Sheets:	2020		2019
Real estate, net	$	2,674,858	$	2,581,738
Cash and cash equivalents and restricted cash		120,149		75,071
Intangible assets, net		110,307		172,041
Other assets		45,761		36,218
Total assets	$	2,951,075	$	2,865,068
Notes and mortgages payable, net	$	1,801,084	$	1,648,403
Intangible liabilities, net		26,772		38,377
Other liabilities		87,575		65,759
Total liabilities		1,915,431		1,752,539
Equity		1,035,644		1,112,529
Total liabilities and equity	$	2,951,075	$	2,865,068

(Amounts in thousands)	For the Year Ended December 31,
Income Statements:	2020			2019			2018
Revenues:
Rental revenue	$	243,713		$	164,316		$	140,653
Other income		2,828			2,108			6,827
Total revenues		246,541			166,424			147,480
Expenses:
Operating		109,114			68,491			53,417
Depreciation and amortization		117,640			68,318			48,452
Total expenses		226,754			136,809			101,869
Other (expense) income:
Interest and other (loss) income, net		(36	)		663			803
Interest and debt expense		(58,239	)		(51,113	)		(39,406	)
Net (loss) income before income taxes		(38,488	)		(20,835	)		7,008
Income tax expense		(47	)		(16	)		(10	)
Net (loss) income	$	(38,535	)	$	(20,851	)	$	6,998

99

PARAMOUNT GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

5.   Investments in Unconsolidated Real Estate Funds

We are the general partner and investment manager of Paramount Group Real Estate Fund VIII, LP (“Fund VIII”) and Paramount Group Real Estate Fund X, LP and its parallel fund, Paramount Group Real Estate Fund X-ECI, LP, (collectively “Fund X”), our Alternative Investment Funds, which invest in mortgage and mezzanine loans and preferred equity investments. Fund VIII’s investment period ended in April 2020. As of December 31, 2020, Fund X has invested $78,791,000 of the $192,000,000 of capital committed. Our ownership interest in Fund VIII and Fund X was approximately 1.3% and 7.8%, respectively.

We are also 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”), our Property Funds. On January 25, 2019, Fund VII and Fund VII-H sold their only remaining asset, 0 Bond Street, a 65,000 square foot creative office building in the NoHo submarket of Manhattan.

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 December 31,
(Amounts in thousands)	2020		2019
Our Share of Investments:
Alternative Investment Funds	$	12,878	$	10,284
Property Funds		39		33
Investments in unconsolidated real estate funds	$	12,917	$	10,317

	For the Year Ended December 31,
(Amounts in thousands)	2020			2019			2018
Our Share of Net Income (Loss):
Net investment income	$	626		$	539		$	291
Net realized loss		(2	)		(54	)		-
Net unrealized loss		(352	)		(828	)		(560	)
Income (loss) from unconsolidated real estate funds	$	272		$	(343	)	$	(269	)

100

PARAMOUNT GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

6. Intangible Assets and Liabilities

The following tables summarize 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 thereof and for the periods set forth below.

	As of December 31,
(Amounts in thousands)	2020			2019
Intangible assets:
Gross amount	$	436,851		$	466,099
Accumulated amortization		(283,332	)		(262,930	)
	$	153,519		$	203,169
Intangible liabilities:
Gross amount	$	163,977		$	174,670
Accumulated amortization		(107,981	)		(100,881	)
	$	55,996		$	73,789

	For the Year Ended December 31,
(Amounts in thousands)	2020		2019		2018
Amortization of above and below-market leases, net    (component of "rental revenue")	$	4,775	$	11,097	$	14,652
Amortization of acquired in-place leases    (component of "depreciation and amortization")	$	36,628	$	46,917	$	54,208

The following table 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, 2021.

(Amounts in thousands) For the Year Ending December 31,	Above and Below-Market Leases, Net		In-Place Leases
2021	$	3,567	$	26,375
2022		1,629		21,878
2023		5,056		17,811
2024		5,994		14,342
2025		4,633		10,435

101

PARAMOUNT GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

7. Debt

The following table summarizes our consolidated outstanding debt.

	Maturity	Fixed/	Interest Rate as of			As of December 31,
(Amounts in thousands)	Date	Variable Rate	December 31, 2020			2020			2019
Notes and mortgages payable:
1633 Broadway (1)	Dec-2029	Fixed		2.99	%	$	1,250,000		$	1,250,000
One Market Plaza (1)	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		1.99	%		350,000			350,000
				2.61	%		850,000			850,000
31 West 52nd Street	May-2026	Fixed		3.80	%		500,000			500,000
300 Mission Street (1)	Oct-2023	Fixed		3.65	%		244,434			234,643
Total notes and mortgages payable				3.32	%		3,819,434			3,809,643
Less: unamortized deferred financing costs							(18,695	)		(25,792	)
Total notes and mortgages payable, net						$	3,800,739		$	3,783,851
$1.0 Billion Revolving Credit    Facility	Jan-2022 (2)	L + 115 bps	n/a			$	-		$	36,918

⁽¹⁾ Our ownership interest in 1633 Broadway, One Market Plaza and 300 Mission Street is 90.0%, 49.0% and 31.1%, respectively.

⁽²⁾ The $1.0 billion revolving credit facility matures on January 10, 2022 and has two six-month extension options.

The following table summarizes our principal repayments required for the next five years and thereafter in connection with our consolidated notes and mortgages payable and revolving credit facility as of December 31, 2020.

			Notes and		Revolving
(Amounts in thousands)	Total		Mortgages Payable		Credit Facility
2021	$	850,000	$	850,000	$	-
2022		-		-		-
2023		244,434		244,434		-
2024		975,000		975,000		-
2025		-		-		-
Thereafter		1,750,000		1,750,000		-

102

PARAMOUNT GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

8. Equity

Stock Repurchase Program

On November 5, 2019, we received authorization from our Board of Directors to repurchase up to an additional $200,000,000 of our common stock, from time to time, in the open market or in privately negotiated transactions. During 2020, we repurchased 13,813,158 common shares at a weighted average price of $8.69 per share, or $120,000,000 in the aggregate. We have $80,000,000 available for future repurchases under the existing program. The amount and timing of future repurchases, if any, will depend on a number of factors, including, the price and availability of our shares, trading volume, general market conditions and available funding. The stock repurchase program may be suspended or discontinued at any time.

9. Accumulated Other Comprehensive Loss

The following table sets forth changes in accumulated other comprehensive loss by component for the years ended December 31, 2020, 2019 and 2018, including amounts attributable to noncontrolling interests in the Operating Partnership.

	For the Year Ended December 31,
(Amounts in thousands)	2020			2019			2018
Amount of (loss) income related to unconsolidated joint ventures    recognized in other comprehensive (loss) income (1)	$	(16,141	)	$	206		$	(129	)
Amounts reclassified from accumulated other comprehensive    loss increasing loss from unconsolidated joint ventures (1)		2,247			-			-
Amount of (loss) income related to the cash flow hedges    recognized in other comprehensive (loss) income (2)		-			(23,147	)		9,203
Amount reclassified from accumulated other comprehensive    loss decreasing interest and debt expense (2)		-			(4,922	)		(1,930	)
Amount reclassified to loss on early extinguishment of debt (3)		-			11,258			-

⁽¹⁾ Represents amounts related to interest rate swap with a notional value of $402,000, which was designated as cash flow hedge.

⁽²⁾ Represents amounts related to interest rate swaps with an aggregate notional amount of $1.0 billion and forward starting interest rate swaps with an aggregate notional amount of $400,000 that were designated as cash flow hedges. These hedges were terminated in November 2019 in connection with the refinancing of the related asset.

⁽³⁾ Represents costs incurred in connection with the settlement of interest rate swap liabilities upon the refinancing of 1633 Broadway in November 2019.

103

PARAMOUNT GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

10. Noncontrolling Interests

Consolidated Joint Ventures

Noncontrolling interests in consolidated joint ventures as of December 31, 2020 was $437,161,000, and represents the equity interests held by third parties in 1633 Broadway, One Market Plaza and 300 Mission Street. As of December 31, 2019, noncontrolling interests in consolidated joint ventures was $360,778,000, and represented equity interests held by third parties in One Market Plaza and 300 Mission Street.  

Consolidated Real Estate Fund

Noncontrolling interests in our consolidated real estate fund consists of equity interests held by third parties in our Residential Development Fund. As of December 31, 2020 and 2019, the noncontrolling interest in our consolidated real estate fund aggregated $79,017,000 and $72,396,000, 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 December 31, 2020 and 2019, noncontrolling interests in the Operating Partnership on our consolidated balance sheets had a carrying amount of $346,379,000 and $412,058,000, respectively, and a redemption value of $187,640,000 and $344,638,000, respectively.

104

PARAMOUNT GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

11. Variable Interest Entities (“VIEs”)

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 owned approximately 91.3% of, the Operating Partnership as of December 31, 2020. 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 December 31, 2020 and 2019, the Operating Partnership held interests in consolidated VIEs owning properties and a real estate fund 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 following table summarizes the assets and liabilities of consolidated VIEs of the Operating Partnership.

	As of December 31,
(Amounts in thousands)	2020		2019
Real estate, net	$	3,470,766	$	1,685,391
Cash and cash equivalents and restricted cash		134,647		69,828
Investments in unconsolidated joint ventures		67,505		69,535
Accounts and other receivables		6,871		2,140
Deferred rent receivable		192,401		57,338
Deferred charges, net		55,156		24,030
Intangible assets, net		76,545		29,872
Other assets		21,496		21,132
Total VIE assets	$	4,025,387	$	1,959,266
Notes and mortgages payable, net	$	2,457,272	$	1,205,324
Accounts payable and accrued expenses		51,590		35,252
Intangible liabilities, net		33,566		19,841
Other liabilities		4,486		13,047
Total VIE liabilities	$	2,546,914	$	1,273,464

Unconsolidated VIEs

As of December 31, 2020, the Operating Partnership held variable interests in entities that own our unconsolidated real estate funds that were deemed to be VIEs. The following table summarizes our investments in these unconsolidated real estate funds and the maximum risk of loss from these investments.

	As of December 31,
(Amounts in thousands)	2020		2019
Investments	$	12,917	$	10,317
Asset management fees and other receivables		561		37,563	(1)
Maximum risk of loss	$	13,478	$	47,880

⁽¹⁾ Includes a $36,918 note receivable from Fund X that was repaid on March 27, 2020. See Note 20, Related Parties.

105

PARAMOUNT GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

12. Fair Value Measurements

Financial Assets Measured at Fair Value

The following table summarizes the fair value of our financial assets that are measured at fair value on our consolidated balance sheets as of the dates set forth below, based on their levels in the fair value hierarchy.

	As of December 31, 2020
(Amounts in thousands)	Total		Level 1		Level 2		Level 3
Marketable securities (included in "other assets")	$	17,178	$	17,178	$	-	$	-
Total assets	$	17,178	$	17,178	$	-	$	-
	As of December 31, 2019
(Amounts in thousands)	Total		Level 1		Level 2		Level 3
Marketable securities (included in "other assets")	$	21,639	$	21,639	$	-	$	-
Total assets	$	21,639	$	21,639	$	-	$	-

Financial Liabilities Not Measured at Fair Value

Financial liabilities not measured at fair value on our consolidated balance sheets consist of notes and mortgages payable and the revolving credit facility. The following table summarizes the carrying amounts and fair value of these financial instruments as of the dates set forth below.

	As of December 31, 2020				As of December 31, 2019
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Notes and mortgages payable	$	3,819,434	$	3,871,644	$	3,809,643	$	3,848,266
Revolving credit facility		-		-		36,918		36,919
Total liabilities	$	3,819,434	$	3,871,644	$	3,846,561	$	3,885,185

106

PARAMOUNT GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

13. Leases

The following table sets forth the details of our rental revenue.

	For the Year Ended December 31,
(Amounts in thousands)	2020			2019		2018
Rental revenue:
Fixed	$	627,352	(1)	$	647,345	$	626,745
Variable		51,663			62,163		50,393
Total rental revenue	$	679,015		$	709,508	$	677,138

⁽¹⁾ Includes (i) $33,205 of non-cash write-offs, primarily for straight-line rent receivables and (ii) $2,051 of reserves for uncollectible accounts receivable in the year ended December 31, 2020.

The following table is a schedule of future undiscounted cash flows under non-cancelable operating leases in effect as of December 31, 2020, for each of the five succeeding years commencing January 1, 2021.

(Amounts in thousands)
2021	$	638,723
2022		631,503
2023		606,371
2024		579,138
2025		519,018
Thereafter		2,367,495
Total	$	5,342,248

14. Fee and Other Income

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

	For the Year Ended December 31,
(Amounts in thousands)	2020		2019		2018
Fee income:
Asset management	$	14,266	$	10,442	$	7,912
Property management		9,242		6,852		6,163
Acquisition, disposition and leasing		2,629		3,435		3,160
Other		1,933		2,015		1,394
Total fee income		28,070		22,744		18,629
Other income (1)		7,152		11,502		11,904
Total fee and other income	$	35,222	$	34,246	$	30,533

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

107

PARAMOUNT GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table 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, 2019	$	2,413	$	752	$	1,653	$	-	$	8
Balance as of December 31, 2020		5,179		793		1,949		2,259		178
Increase	$	2,766	$	41	$	296	$	2,259	$	170

15. Interest and Other Income, net

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

	For the Year Ended December 31,
(Amounts in thousands)	2020		2019		2018
Interest income, net	$	2,054	$	5,484	$	5,203
Mark-to-market of investments in our deferred    compensation plans (1)		2,436		3,906		(922	)
Preferred equity investment income (2)		-		454		3,655
Total interest and other income, net	$	4,490	$	9,844	$	7,936

⁽¹⁾ 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.

⁽²⁾ The preferred equity investment was redeemed on March 1, 2019.

16. Interest and Debt Expense

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

	For the Year Ended December 31,
(Amounts in thousands)	2020		2019			2018
Interest expense	$	134,931	$	137,356		$	136,630
Amortization of deferred financing costs		9,277		19,323	(1)		11,023
Total interest and debt expense	$	144,208	$	156,679		$	147,653

⁽¹⁾ Includes $8,215 of expense from the non-cash write-off of deferred financing costs in connection with the $1.25 billion refinancing of 1633 Broadway in November 2019.

108

PARAMOUNT GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

17. Incentive Compensation

Stock-Based Compensation

Our 2014 Equity Incentive Plan (the “Plan”), provides for grants of equity incentive awards to our executive officers, non-employee directors, eligible employees and other key persons in order to attract, motivate and retain the talent for which we compete. Under the Plan, awards may be granted up to a maximum of 17,142,857 shares, if all awards granted are “full value awards,” as defined, and up to 34,285,714 shares, if all of the awards granted are “not full value awards,” as defined. “Full value awards” are awards such as restricted stock or long-term incentive plan LTIP units of our Operating Partnership (“LTIP units”) that do not require the payment of an exercise price. “Not full value awards” are awards such as Appreciation Only LTIP units of our Operating Partnership (“AOLTIPs”), stock options or stock appreciation rights that require the payment of an exercise price. As of December 31, 2020, we have 7,001,002 shares available for future grants under the Plan, if all awards granted are full value awards, as defined in the Plan.

The following table summarizes the components of stock-based compensation expense for the years ended December 31, 2020, 2019 and 2018.

	For the Year Ended December 31,
(Amounts in thousands)	2020		2019		2018
LTIP units	$	10,463	$	11,860	$	9,059
Performance-based units		7,499		8,477		7,645
Restricted stock		1,217		1,228		988
Stock options		60		1,295		1,954
Total stock-based compensation expense	$	19,239	$	22,860	$	19,646

LTIP Units

We grant our executive officers, non-employee directors and other employees LTIP units which vest over a period of three to five years and are subject to a taxable book-up event, as defined. The LTIP units granted in the years ended December 31, 2020, 2019 and 2018 had grant date fair values of $10,940,000, $13,091,000 and $10,145,000, respectively, which are being amortized into expense on a straight-line basis over the vesting period. As of December 31, 2020, there was $12,970,000 of total unrecognized compensation cost related to unvested LTIP units, which is expected to be recognized over a weighted-average period of 2.6 years. The following table summarizes our LTIP unit activity for the year ended December 31, 2020.

	Units			Weighted-Average Grant-Date Fair Value
Unvested as of December 31, 2019		1,571,464		$	13.30
Granted		931,855			11.74
Vested		(778,510	)		13.51
Cancelled or expired		-			-
Unvested as of December 31, 2020		1,724,809		$	12.36

Performance-Based Award Programs (“Performance Programs”)

We grant our executive officers and other employees LTIP units under multi-year performance-based long-term equity compensation programs. The purpose of these Performance Programs 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 Performance Programs, participants may earn LTIP units based on our Total Shareholder Return (“TSR”) over a three-year performance measurement period on both an absolute basis and relative basis. If the designated performance objectives are achieved, awards earned under the Performance Programs are subject to vesting over a period of four years and are also subject to a taxable book-up event, as defined.

109

PARAMOUNT GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The LTIP units granted under the Performance Programs in the years ended December 31, 2020, 2019 and 2018 had grant date fair values of $7,488,000, $8,106,000 and $7,009,000, respectively, and are being amortized into expense over the four-year vesting period using a graded vesting attribution method. As of December 31, 2020, there was $8,999,000 of total unrecognized compensation cost related to unvested LTIP units granted under the Performance Programs, which is expected to be recognized over a weighted average period of 2.1 years. The following table summarizes our LTIP unit activity granted under the Performance Programs for the year ended December 31, 2020.

	Units			Weighted-Average Grant-Date Fair Value (per unit)
Unvested as of December 31, 2019		3,595,834		$	6.54
Granted		1,068,693			7.01
Earned and Vested		(216,005	)		9.71
Cancelled or expired		(667,730	)		9.71
Unvested as of December 31, 2020		3,780,792		$	5.93

2016 Performance-Based Awards Program (“2016 Performance Program”)

The three-year performance measurement period with respect to our 2016 Performance Program ended on December 31, 2019. On January 17, 2020, the Compensation Committee of our Board of Directors (the “Compensation Committee”) determined that (i) the performance goals were not met on an absolute TSR basis and (ii) the performance goals met the 30^th percentile of the performance of the SNL U.S. Office REIT Index constituents on a relative basis. Accordingly, of the 1,085,244 LTIP units that were granted under the 2016 Performance Program, 216,005 LTIP units, or approximately 19.9% of the total units granted, were earned. Of the LTIP units that were earned, 107,996 LTIP units vested immediately on January 17, 2020 and the remaining 108,009 LTIP units vested on December 31, 2020. This award had a grant date fair value of $10,520,000 that was amortized into expense over the four-year vesting period through December 31, 2020 using a graded vesting distribution method.

2019 Performance-Based Awards Program (“2019 Performance Program”)

On January 17, 2020, the Compensation Committee approved the 2019 Performance Program, a multi-year performance-based long-term incentive compensation program. Under the 2019 Performance Program, participants may earn awards in the form of LTIP units based on our TSR over a three-year performance measurement period beginning on January 1, 2020 and continuing through December 31, 2022. Specifically, 50.0% of the awards would be earned based on the rank of our TSR relative to the TSR of our Central Business District focused New York City office peers, comprised of Vornado Realty Trust, SL Green Realty Corp., Empire State Realty Trust and Columbia Property Trust, and the remaining 50.0% of the awards would be earned based on the percentile rank of our TSR relative to performance of the SNL U.S. Office REIT Index constituents. Furthermore, if our TSR is negative over the three-year performance measurement period, then the number of LTIP units that are earned under the 2019 Performance Program will be reduced by 30.0% of the number of such awards that otherwise would have been earned. Additionally, if the designated performance objectives are achieved, awards earned under the 2019 Performance Program are subject to vesting based on continued employment with us through December 31, 2023, with 50.0% of each award vesting upon the conclusion of the performance measurement period, and the remaining 50.0% vesting on December 31, 2023. Lastly, 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 2019 Performance Program on the date of the grant was $7,488,000 and is being amortized into expense over the four-year vesting period using a graded vesting attribution method.

110

PARAMOUNT GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Restricted Stock

We grant shares of restricted stock to a non-employee director and certain other employees which vest over four years. The shares of restricted stock granted in the years ended December 31, 2020, 2019 and 2018 had grant date fair values of $1,209,000, $1,238,000 and $1,335,000, respectively, which are being amortized into expense on a straight-line basis over the vesting period. As of December 31, 2020, there was $1,696,000 of total unrecognized compensation cost related to restricted stock, which is expected to be recognized over a weighted-average period of 2.3 years. The table below summarizes our restricted stock activity for the year ended December 31, 2020.

	Shares			Weighted-Average Grant-Date Fair Value
Unvested as of December 31, 2019		168,470		$	14.27
Granted		92,424			13.08
Vested		(75,895	)		14.71
Cancelled or expired		(16,291	)		14.09
Unvested as of December 31, 2020		168,708		$	13.44

Stock Options

We did not grant any stock options in the years ended December 31, 2020, 2019 and 2018. Stock options granted in prior years to certain of our executive officers and other employees vest over periods ranging from three to five years and expire 10 years from the date of grant. In the year ended December 31, 2020, we have recognized the remaining $60,000 of compensation cost related to unvested stock options.

The following table summarizes our stock option activity for the year ended December 31, 2020.

	Shares			Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value
Outstanding as of December 31, 2019		2,084,943		$	17.07
Granted		-			-
Exercised		-			-
Cancelled or expired		(52,450	)		17.50
Outstanding as of December 31, 2020		2,032,493		$	17.06		4.7	$	-
Options vested and expected to vest as of December 31, 2020		2,032,493		$	17.06		4.7	$	-
Options exercisable as of December 31, 2020		2,032,493		$	17.06		4.7	$	-

111

PARAMOUNT GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

18. Earnings Per Share

The following table summarizes our net (loss) income and the number of common shares used in the computation of basic and diluted (loss) 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 Year Ended December 31,
(Amounts in thousands, except per share amounts)	2020			2019			2018
Numerator:
Continuing Operations:
Net (loss) income from continuing operations          attributable to common stockholders	$	(20,063	)	$	(6,418	)	$	4,079
Earnings allocated to unvested participating securities		(44	)		(27	)		(18	)
Numerator for net (loss) income from continuing operations          per common share - basic and diluted		(20,107	)		(6,445	)		4,061
Discontinued Operations:
Net (loss) income from discontinued operations attributable          to common stockholders		(4,641	)		(30,481	)		5,068
Earnings allocated to unvested participating securities		(22	)		(44	)		(61	)
Numerator for net (loss) income from discontinued          operations per common share - basic and diluted		(4,663	)		(30,525	)		5,007
Numerator for net (loss) income per common share -    basic and diluted	$	(24,770	)	$	(36,970	)	$	9,068
Denominator:
Denominator for basic (loss) income per common share -       weighted average shares		222,436			231,538			239,527
Effect of dilutive stock-based compensation plans (1)		-			-			29
Denominator for diluted (loss) income per common share -       weighted average shares		222,436			231,538			239,556
(Loss) income per Common Share - Basic and Diluted:
Continuing operations, net	$	(0.09	)	$	(0.03	)	$	0.02
Discontinued operations, net		(0.02	)		(0.13	)		0.02
Net (loss) income per common share - basic and diluted	$	(0.11	)	$	(0.16	)	$	0.04

⁽¹⁾ The effect of dilutive securities for the years ended December 31, 2020, 2019 and 2018 excludes 23,540, 27,191 and 27,510 weighted average share equivalents, respectively, as their effect was anti-dilutive.

112

PARAMOUNT GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

19. Summary of Quarterly Results (unaudited)

The following table summarizes our quarterly results of operations for the years ended December 31, 2020 and 2019. The computation of basic and diluted per common share amounts for each quarter is based on the weighted average shares outstanding for that period and accordingly the sum of the quarters may not necessarily be equal to the full year basic and diluted net income per common share.

			Net (Loss) Income
(Amounts in thousands,			Attributable to the			(Loss) Income per Common Share
except per share amounts)	Revenues		Common Stockholders			Basic			Diluted
2020
December 31	$	182,358	$	(14,824	)	$	(0.07	)	$	(0.07	)
September 30		176,775		(6,958	)		(0.03	)		(0.03	)
June 30		171,118		(6,270	)		(0.03	)		(0.03	)
March 31		183,986		3,348			0.01			0.01
2019
December 31	$	186,769	$	(50,145	)	$	(0.22	)	$	(0.22	)
September 30		191,253		7,082			0.03			0.03
June 30		181,343		2,455			0.01			0.01
March 31		184,389		3,709			0.02			0.02

20. Related Parties

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 $1,227,000, $842,000 and $838,000 for the years ended December 31, 2020, 2019 and 2018, respectively, in connection with these agreements, which is included as a component of “fee and other income” on our consolidated statements of income. As of December 31, 2020, amounts owed to us under these agreements aggregated $34,000, which are included as a component of “accounts and other receivables” on our consolidated balance sheets.  

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 $22,986,000, $17,466,000 and $15,231,000, for the years ended December 31, 2020, 2019 and 2018, respectively, in connection with these agreements. As of December 31, 2020 and 2019, amounts owed to us under these agreements aggregated $5,011,000 and $2,734,000, respectively, which are included as a component of “accounts and other receivables” 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 feeder vehicles for Fund X. Pursuant to this agreement, we have agreed to pay HTC for the costs incurred to sell investments in these funds or their feeder vehicles, including certain incremental costs incurred by HTC as a result of the engagement, plus, a mark-up of 10%. HTC is 100% owned by Albert Behler, our Chairman, Chief Executive Officer and President. We incurred expenses of $512,000, $796,000 and $240,000 for the years ended December 31, 2020, 2019 and 2018, respectively, in connection with this agreement, which are included as a component of “transaction related costs” on our consolidated statements of income. As of December 31, 2020 and 2019, we owed $123,000 and $38,000, respectively, to HTC under this agreement, which are included as a component of “accounts payable and accrued expenses” on our consolidated balance sheets.

113

PARAMOUNT GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Mannheim Trust

A subsidiary of Mannheim Trust leases office space at 712 Fifth Avenue, our 50.0% owned unconsolidated joint venture, pursuant to a lease agreement which expires in April 2023. Dr. Martin Bussmann (a member of our Board of Directors) is also a trustee and a director of Mannheim Trust. During the years ended December 31, 2020, 2019 and 2018, we recognized $362,000, $360,000 and $366,000, respectively, for our share of rental income pursuant to this lease.

Due from Affiliates

At December 31, 2019, we had a $36,918,000 note receivable from Fund X that bore interest at LIBOR plus 220 basis points and was included as “due from affiliates” on our consolidated balance sheet. On March 27, 2020, the $36,918,000 note receivable was repaid, together with $349,000 of accrued interest.

Other

We have entered into an agreement with Kramer Design Services (“Kramer Design”) to, among other things, develop company-wide standard branding guidelines. Kramer Design is owned by the spouse of Albert Behler, our Chairman, Chief Executive Officer and President. During the year ended December 31, 2020, we recognized $187,000 of expenses in connection with this agreement. There were no amounts owed to Kramer Design under this agreement as of December 31, 2020.

Kramer Design has also entered into agreements with 712 Fifth Avenue, our 50.0% owned unconsolidated joint venture, to, among other things, create and design marketing materials with respect to the vacant retail space at 712 Fifth Avenue. For the year ended December 31, 2020 and 2019, we recognized expense of $29,000 and $325,000, respectively, for our share of the fees incurred in connection with these agreements.

21.  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.

114

PARAMOUNT GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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 December 31, 2020, 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 with the actual purchase occurring no earlier than 12 months after written notice is provided. 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. We believe, after consultation with legal counsel, that the likelihood of a 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 $47,700,000. 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.

115

PARAMOUNT GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

22. Segments

Our reportable segments are separated based on the regions in which we conduct our business. Prior to January 1, 2020, our reportable segments consisted of New York, San Francisco and Washington, D.C. Upon entering into an agreement to sell 1899 Pennsylvania Avenue, our sole remaining property in the Washington, D.C. segment, we redefined our reportable segments into the two remaining regions in which we conduct our business: New York and San Francisco effective January 1, 2020. 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. In connection therewith, we have reclassified the Washington, D.C. segment financial data into Other segment and reclassified prior period segment financial data to conform to current period presentation.

The following tables provide Net Operating Income (“NOI”) for each reportable segment for the periods set forth below.

	For the Year Ended December 31, 2020
(Amounts in thousands)	Total			New York			San Francisco			Other
Property-related revenues	$	700,410		$	454,071		$	234,893		$	11,446
Property-related operating expenses		(273,440	)		(194,648	)		(68,924	)		(9,868	)
NOI from unconsolidated joint ventures		48,631			11,540			38,892			(1,801	)
NOI (1)	$	475,601		$	270,963		$	204,861		$	(223	)
	For the Year Ended December 31, 2019
(Amounts in thousands)	Total			New York			San Francisco			Other
Property-related revenues	$	746,436		$	482,648		$	238,808		$	24,980
Property-related operating expenses		(274,836	)		(191,211	)		(69,815	)		(13,810	)
NOI from unconsolidated joint ventures		22,409			13,151			9,065			193
NOI (1)	$	494,009		$	304,588		$	178,058		$	11,363
	For the Year Ended December 31, 2018
(Amounts in thousands)	Total			New York			San Francisco			Other
Property-related revenues	$	740,332		$	468,013		$	222,071		$	50,248
Property-related operating expenses		(274,078	)		(188,008	)		(60,043	)		(26,027	)
NOI from unconsolidated joint ventures		20,730			20,395			-			335
NOI (1)	$	486,984		$	300,400		$	162,028		$	24,556

⁽¹⁾ NOI is used to measure the operating performance of our properties. NOI consists of rental revenue (which includes property rentals, tenant reimbursements and lease termination income) and certain other property-related revenue less operating expenses (which includes property-related expenses such as cleaning, security, repairs and maintenance, utilities, property administration and real estate taxes). We 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.

116

PARAMOUNT GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

	For the Year Ended December 31,
(Amounts in thousands)	2020			2019			2018
NOI	$	475,601		$	494,009		$	486,984
Add (subtract) adjustments to arrive to net (loss) income:
Fee income		28,070			22,744			18,629
Depreciation and amortization expense		(235,200	)		(240,104	)		(240,868	)
General and administrative expenses		(64,917	)		(68,556	)		(57,563	)
NOI from unconsolidated joint ventures		(48,631	)		(22,409	)		(20,730	)
(Loss) income from unconsolidated joint ventures		(18,619	)		(4,706	)		3,468
Interest and other income, net		4,490			9,844			7,936
Interest and debt expense		(144,208	)		(156,679	)		(147,653	)
Loss on early extinguishment of debt		-			(11,989	)		-
Adjustments related to discontinued operations (including    impairments and gain or loss on sale of real estate)		(8,390	)		(15,292	)		(31,909	)
Other, net		(824	)		(2,342	)		(1,740	)
(Loss) income from continuing operations, before income taxes		(12,628	)		4,520			16,554
Income tax expense		(1,493	)		(312	)		(3,139	)
(Loss) income from continuing operations, net		(14,121	)		4,208			13,415
(Loss) income from discontinued operations, net		(5,075	)		(33,811	)		5,578
Net (loss) income		(19,196	)		(29,603	)		18,993
Less: net (income) loss attributable to noncontrolling interests in:
Consolidated joint ventures		(9,257	)		(11,022	)		(8,182	)
Consolidated real estate fund		1,450			(313	)		(720	)
Operating Partnership		2,299			4,039			(944	)
Net (loss) income attributable to common stockholders	$	(24,704	)	$	(36,899	)	$	9,147

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

(Amounts in thousands)
Total Assets as of:	Total		New York		San Francisco		Other
December 31, 2020	$	8,554,097	$	5,388,596	$	2,698,983	$	466,518
December 31, 2019		8,734,135		5,439,929		2,708,463		585,743
December 31, 2018		8,755,978		5,583,022		2,388,094		784,862

117

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A. 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 December 31, 2020, the end of the period covered by this Annual Report on Form 10-K, 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 Annual 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.

Management’s Report on Internal Control over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over our financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act). Our internal control over financial reporting is a process designed under the supervision of our Chief Executive Officer and Chief Financial Officer to provide reasonable assurance regarding the reliability of financial reporting and the preparation of our financial statements for external reporting purposes in accordance with U.S. generally accepted accounting principles. Our internal control over financial reporting includes policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect transactions and dispositions of our assets, (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorizations of our management and directors, and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisitions, use or disposition of our assets that could have a material effect on our financial statements.

As of December 31, 2020, management conducted an assessment of the effectiveness of our internal control over financial reporting based on the framework established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on this assessment, management has concluded that our internal control over financial reporting was effective as of December 31, 2020.

Deloitte & Touche LLP, an independent registered public accounting firm, has audited our financial statements and has issued a report on the effectiveness of our internal control over financial reporting, which is included  herein.

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 in the fourth quarter of the fiscal year ended December 31, 2020 that have materially affected, or are reasonably likely to materially affect our internal control over financial reporting.

118

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and Board of Directors of Paramount Group, Inc.

Opinion on Internal Control over Financial Reporting

We have audited the internal control over financial reporting of Paramount Group, Inc. and subsidiaries (the “Company”) as of December 31, 2020, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2020, of the Company and our report dated February 10, 2021, expressed an unqualified opinion on those financial statements and financial statement schedules.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed 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. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ DELOITTE & TOUCHE LLP

New York, New York  

February 10, 2021

119

ITEM 9B. OTHER INFORMATION

On February 9, 2021, our Board of Directors approved the Fourth Amended and Restated Bylaws of Paramount Group, Inc. (the “Bylaws”), which amended the existing exclusive forum provision in our Bylaws (the “Amendment”). The Amendment more narrowly tailored the types of actions or proceedings covered by our existing exclusive forum provision, including by excluding derivative actions arising under federal securities laws and actions brought by or on behalf of a stockholder against us or any of our directors, officers or employees that fall outside of specifically listed actions generally relating to the internal affairs. The Amendment also added a federal forum provision pursuant to which, unless we consent in writing to the selection of an alternative forum, the federal district courts of the United States shall, to the fullest extent permitted by law, be the sole and exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act of 1933, as amended.

The foregoing description of the Amendment to the Bylaws does not purport to be complete and is qualified in its entirety by reference to the full text of the Bylaws, which is attached hereto as Exhibit 3.2 and incorporated herein by reference.

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The information required by Item 10 will be set forth in our Definitive Proxy Statement for our 2021 Annual Meeting of Stockholders (which is scheduled to be held on May 13, 2021), to be filed pursuant to Regulation 14A under the Securities and Exchange Act of 1934, as amended, or our Proxy Statement, and is incorporated herein by reference.

ITEM 11. EXECUTIVE COMPENSATION

The information required by Item 11 will be set forth in our Proxy Statement and is incorporated herein by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The information required by Item 12 will be set forth in our Proxy Statement and is incorporated herein by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

The information required by Item 13 will be set forth in our Proxy Statement and is incorporated herein by reference.

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

The information required by Item 14 will be set forth in our Proxy Statement and is incorporated herein by reference.

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PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENTS SCHEDULES

(a) The following documents are filed as part of this report:

1. The consolidated financial statements are set forth in Item 8 of this Annual Report on Form 10-K.

2. The following financial statement schedules should be read in conjunction with the financial statements included:

		Pages in this Annual Report on Form 10-K
i	Schedule II – Valuation and Qualifying Accounts for the years ended December 31, 2020, 2019 and 2018	122
ii	Schedule III – Real Estate and Accumulated Depreciation as of December 31, 2020, 2019 and 2018	123

(b) The exhibits required by Item 601 of Regulation S-K are listed in the Exhibit Index on page 125 of this Annual Report, on Form 10-K, and is incorporated herein by reference.

ITEM 16. FORM 10-K SUMMARY

None.

121

PARAMOUNT GROUP, INC.

SCHEDULE II

VALUATION AND QUALIFYING ACCOUNTS

COLUMN A	COLUMN B			COLUMN C		COLUMN D			COLUMN E
				Additions
	Balance at			Charged		Uncollectible			Balance
	Beginning			Against		Accounts			at End
(Amounts in thousands)	of Year			Operations		Written-off			of Year
For the Year Ended December 31, 2020
Allowance for doubtful accounts	$	-		$	-	$	-		$	-
Allowance for preferred equity investments		-			-		-			-
Total valuation allowance	$	-		$	-	$	-		$	-
For the Year Ended December 31, 2019
Allowance for doubtful accounts	$	-	(1)	$	-	$	-		$	-
Allowance for preferred equity investments		-			-		-			-
Total valuation allowance	$	-		$	-	$	-		$	-
For the Year Ended December 31, 2018
Allowance for doubtful accounts	$	277		$	324	$	(8	)	$	593	(1)
Allowance for preferred equity investments		19,588			-		(19,588	)		-
Total valuation allowance	$	19,865		$	324	$	(19,596	)	$	593

⁽¹⁾ Represents allowance for tenant receivables arising from operating leases. The allowance was written-off on January 1, 2019 upon the adoption of ASU 2016-02, an update to ASC Topic 842, Leases, which requires companies to account for impairment of receivables as reduction to “rental income” if the collectability of these receivables is not probable.

122

PARAMOUNT GROUP, INC.

SCHEDULE III

REAL ESTATE AND ACCUMULATED DEPRECIATION

COLUMN A	COLUMN B		COLUMN C				COLUMN D				COLUMN E						COLUMN F			COLUMN G	COLUMN H	COLUMN I
(Amounts in thousands)																						Life on
																						which
							Costs capitalized															depreciation
							subsequent				Gross amount at which						Accumulated					in latest
			Initial cost to company				to acquisition				carried at close of period						depreciation					income
Description	Encumbrances		Land		Building and improvements		Land		Building and improvements		Land		Building and improvements		Total (1)		and amortization			Date of construction	Date acquired	statement is computed
1633 Broadway	$	1,250,000	$	502,846	$	1,398,341	$	-	$	151,358	$	502,846	$	1,549,699	$	2,052,545	$	(258,683	)	1971	11/2014	5 to 40 Years
1301 Avenue of the Americas		850,000		406,039		1,051,697		-		101,642		406,039		1,153,339		1,559,378		(199,657	)	1963	11/2014	5 to 40 Years
31 West 52nd Street		500,000		221,318		604,994		-		62,997		221,318		667,991		889,309		(107,164	)	1987	11/2014	5 to 40 Years
1325 Avenue of the Americas		-		174,688		370,553		-		61,785		174,688		432,338		607,026		(68,822	)	1989	11/2014	5 to 40 Years
900 Third Avenue		-		103,741		296,031		-		28,335		103,741		324,366		428,107		(56,831	)	1983	11/2014	5 to 40 Years
Total New York		2,600,000		1,408,632		3,721,616		-		406,117		1,408,632		4,127,733		5,536,365		(691,157	)
One Market Plaza		975,000		288,743		988,014		-		95,035		288,743		1,083,049		1,371,792		(187,570	)	1976	11/2014	5 to 40 Years
300 Mission Street		244,434		141,097		343,819		-		40,887		141,097		384,706		525,803		(36,360	)	1968	07/2017	5 to 40 Years
One Front Street		-		127,765		376,919		-		15,046		127,765		391,965		519,730		(47,411	)	1979	12/2016	5 to 40 Years
Total San Francisco		1,219,434		557,605		1,708,752		-		150,968		557,605		1,859,720		2,417,325		(271,341	)
Other		-		-		-		-		9,625		-		9,625		9,625		(4,199	)		11/2014	5 to 40 Years
Total	$	3,819,434	$	1,966,237	$	5,430,368	$	-	$	566,710	$	1,966,237	$	5,997,078	$	7,963,315	$	(966,697	)

⁽¹⁾ The basis of the Company’s assets for tax purposes is approximately $2.4 billion lower than the amount reported for financial statement purposes.

123

PARAMOUNT GROUP, INC.

SCHEDULE III

REAL ESTATE AND ACCUMULATED DEPRECIATION

	For the Year Ended December 31,
(Amounts in thousands)	2020			2019			2018
Real Estate:
Beginning balance	$	7,889,885		$	7,793,784		$	7,653,276
Acquisitions		-			-			-
Additions during the year:
Land		-			-			-
Buildings and improvements		82,571			104,408			144,666
Assets sold and written-off		(9,141	)		(8,307	)		(4,158	)
Ending balance	$	7,963,315		$	7,889,885		$	7,793,784
Accumulated Depreciation:
Beginning balance	$	790,216		$	617,974		$	445,328
Additions charged to expense		185,622			180,549			176,804
Accumulated depreciation related    to assets sold and written-off		(9,141	)		(8,307	)		(4,158	)
Ending balance	$	966,697		$	790,216		$	617,974

124

EXHIBIT INDEX

Exhibit Number	Exhibit Description
3.1	Second Articles of Amendment and Restatement of Paramount Group, Inc., effective May 17, 2019, incorporated by reference to Exhibit 3.1 to the Registrant’s Form 8-K, filed with the SEC on May 20, 2019.
3.2*	Fourth Amended and Restated Bylaws of Paramount Group, Inc., effective as of February 9, 2021.
4.1	Specimen Certificate of Common Stock of Paramount Group, Inc., incorporated by reference to Exhibit 4.1 to Amendment No. 3 to the Registrant’s Form S-11 (Registration No. 333-198392) filed with the SEC on November 12, 2014.
4.2*	Description of Securities of the Registrant.
10.1*	Second Amended and Restated Limited Partnership Agreement of Paramount Group Operating Partnership LP, dated as of October 26, 2020.
10.2	Registration Rights Agreement by and among Paramount Group, Inc. and the holders named therein, dated November 6, 2014, incorporated by reference to Exhibit 10.2 to Amendment No. 3 to the Registrant’s Form S-11 (Registration No. 333-198392) filed with the SEC on November 12, 2014.
10.3	Registration Rights Agreement among Paramount Group, Inc. and the persons named therein, dated November 6, 2014, incorporated by reference to Exhibit 10.3 to Amendment No. 3 to the Registrant’s Form S-11 (Registration No. 333-198392) filed with the SEC on November 12, 2014.
10.4	Stockholders Agreement between Paramount Group, Inc. and Maren Otto, Alexander Otto and Katharina Otto-Bernstein, dated November 6, 2014, incorporated by reference to Exhibit 10.4 to Amendment No. 3 to the Registrant’s Form S-11 (Registration No. 333-198392) filed with the SEC on November 12, 2014.
10.5	Amended and Restated Waiver of Ownership Limits granted to The Otto Family by Paramount Group, Inc., incorporated by reference to Exhibit 10.11 to the Registrant’s Form 10-K filed with the SEC on February 12, 2020.
10.6	Form of Indemnification Agreement between Paramount Group, Inc. and each of its Directors and Executive Officers, incorporated by reference to Exhibit 10.6 to Amendment No. 3 to the Registrant’s Form S-11 (Registration No. 333-198392) filed with the SEC on November 12, 2014.
10.7	Amended and Restated Credit Agreement dated as of January 10, 2018, among Paramount Group Operating Partnership L.P., and Paramount Group Inc., and certain subsidiaries of Paramount Group Inc. from time to time party thereto, as Guarantors, each lender from time to time party thereto, Bank of America, N.A., as Administrative Agent and the financial institutions party thereto as L/C Issuers and Swing Line Lenders, incorporated by reference to Exhibit 10.1 to the Registrant’s 8-K filed with the SEC on January 16, 2018.
10.8†	2014 Equity Incentive Plan, incorporated by reference to Exhibit 10.5 to the Registrant’s Form 10-K filed with the SEC on March 19, 2015.
10.9†	The Paramount Group 2005 Nonqualified Deferred Compensation Plan, incorporated by reference to Exhibit 10.44 to Amendment No. 3 to the Registrant’s Form S-11 (Registration No. 333-198392) filed with the SEC on November 12, 2014.
10.10†	Amended and Restated Employment Agreement among Paramount Group Operating Partnership LP, Paramount Group, Inc. and Albert Behler, dated as of January 1, 2018, incorporated by reference to Exhibit 10.1 to the Registrant’s Form 8-K filed with the SEC on January 5, 2018.
10.11†	Amended and Restated Employment Agreement among Paramount Group, Inc., Paramount Group Operating Partnership LP and Wilbur Paes, effective February 4, 2021, incorporated by reference to Exhibit 10.1 to the Registrant’s Form 8-K filed with the SEC on February 5, 2021.

125

10.12†	Employment Agreement among Paramount Group, Inc., Paramount Group Operating Partnership LP and Peter Brindley, effective February 4, 2021, incorporated by reference to Exhibit 10.2 to the Registrant’s Form 8-K filed with the SEC on February 5, 2021.
10.13†	Paramount Group, Inc. Executive Severance Plan, incorporated by reference to Exhibit 10.3 to the Registrant’s Form 8-K filed with the SEC on February 5, 2021.
21.1*	List of Subsidiaries of the Registrant.
23.1*	Consent of Deloitte & Touche LLP.
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.SCH*	Inline XBRL Taxonomy Extension Schema.
101.CAL*	Inline XBRL Taxonomy Extension Calculation Linkbase.
101.DEF*	Inline XBRL Taxonomy Extension Definition Linkbase.
101.LAB*	Inline XBRL Taxonomy Extension Label Linkbase.
101.PRE*	Inline XBRL Taxonomy Extension Presentation Linkbase.
104*	Cover Page Interactive Data File (formatted as Inline XBRL with applicable taxonomy extension information contained in Exhibits 101.)
	_______________________
*	Filed herewith.
**	Furnished herewith.
†	Indicates management contract or compensatory plan or arrangement required to be filed or incorporated by reference as an exhibit to this Form 10-K pursuant to Item 15(b) of Form 10-K.

126

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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:     February 10, 2021	By:	/s/ Wilbur Paes	Chief Operating Officer, Chief Financial Officer and Treasurer
		(Wilbur Paes)	(duly authorized officer and principal financial officer)
Date:     February 10, 2021	By:	/s/ Ermelinda Berberi	Senior Vice President, Chief Accounting Officer
		(Ermelinda Berberi)	(duly authorized officer and principal accounting officer)

127

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

	Signature	Title	Date
By:	/s/ Albert Behler	Chairman, Chief Executive Officer and President	February 10, 2021
	(Albert Behler)	(Principal Executive Officer)
By:	/s/ Wilbur Paes	Chief Operating Officer, Chief Financial Officer and Treasurer	February 10, 2021
	(Wilbur Paes)	(Principal Financial Officer)
By:	/s/ Ermelinda Berberi	Senior Vice President, Chief Accounting Officer	February 10, 2021
	(Ermelinda Berberi)	(Principal Accounting Officer)
By:	/s/ Thomas Armbrust	Director	February 10, 2021
	(Thomas Armbrust)
By:	/s/ Martin Bussmann	Director	February 10, 2021
	(Martin Bussmann)
By:	/s/ Colin Dyer	Director	February 10, 2021
	(Colin Dyer)
By:	/s/ Karin Klein	Director	February 10, 2021
	(Karin Klein)
By:	/s/ Peter Linneman	Director	February 10, 2021
	(Peter Linneman)
By:	/s/ Katharina Otto-Bernstein	Director	February 10, 2021
	(Katharina Otto-Bernstein)
By:	/s/ Mark Patterson	Director	February 10, 2021
	(Mark Patterson)
By:	/s/ Greg Wright	Director	February 10, 2021
	(Greg Wright)

128

EX-3.2

EXHIBIT 3.2

THIRDFOURTH AMENDED AND RESTATED BYLAWS

OF

PARAMOUNT GROUP, INC.

article I- OFFICES

1.1Principal Office.  The principal office of Paramount Group, Inc. (the “Corporation”) in the State of Maryland shall be located at such place as the Corporation’s Board of Directors may designate.

1.2Additional Offices. The Corporation may have additional offices, including a principal executive office, and places of business at such other places, within or without the State of Maryland, as the Board of Directors may from time to time determine or the business of the Corporation may require.

article II- MEETINGS OF STOCKHOLDERS

2.1Place.  All meetings of stockholders shall be held at the principal executive office of the Corporation or at such other place as shall be set in accordance with these bylaws and designated in the notice of the meeting.

2.2Annual Meeting.  An annual meeting of the stockholders for the election of directors and the transaction of any other business which may properly come before such meeting shall be held at such time and place and on such date as may be set by the Board of Directors.  Failure to hold an annual meeting does not invalidate the Corporation’s existence or affect any otherwise valid act of the Corporation.

2.3Special Meetings.

2.3.1General.  The Chairman of the Board of Directors, Chief Executive Officer, President or Board of Directors may call a special meeting of the stockholders.  Except as provided in subsection 2.3.2(d) of this Section 2.3, a special meeting of stockholders shall be held on the date and at the time and place set by the Chairman of the Board of Directors, Chief Executive Officer, President or Board of Directors, whoever has called the meeting.  Subject to subsection 2.3.2 of this Section 2.3, a special meeting of stockholders shall also be called by the Secretary of the Corporation to act on any matter that may properly be considered at a meeting of stockholders upon the written request of stockholders entitled to cast not less than a majority of all the votes entitled to be cast on such matter at such meeting.

2.3.2Stockholder-Requested Special Meeting.

(a)Any stockholder of record seeking to have stockholders request a special meeting shall, by sending written notice to the Secretary (the “Record Date Request Notice”) by registered mail, return receipt requested, request the Board of Directors to fix a record date to determine the stockholders entitled to request a special meeting (the “Request

Record Date”).  The Record Date Request Notice shall set forth the purpose of the meeting and the matters proposed to be acted on at it, shall be signed by one or more stockholders of record as of the date of signature (or their agents duly authorized in a writing accompanying the Record Date Request Notice), shall bear the date of signature of each such stockholder (or such agent) and shall set forth all information relating to each such stockholder, each individual whom the stockholder proposes to nominate for election as a director and each matter proposed to be acted on at the meeting that would be required to be disclosed in connection with the solicitation of proxies for the election of directors (or the election of each such individual, if applicable) in an election contest (even if an election contest is not involved), or would otherwise be required in connection with such a solicitation, in each case pursuant to Regulation 14A (or any successor provision) under the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder (the “Exchange Act”).  Upon receiving the Record Date Request Notice, the Board of Directors may fix a Request Record Date.  The Request Record Date shall not precede and shall not be more than ten days after the close of business on the date on which the resolution fixing the Request Record Date is adopted by the Board of Directors.  If the Board of Directors, within ten days after the date on which a valid Record Date Request Notice is received, fails to adopt a resolution fixing the Request Record Date, the Request Record Date shall be the close of business on the tenth day after the first date on which the Record Date Request Notice is received by the Secretary. The Record Date Request Notice shall be subject to the requirements of subsections (c), (d) and (f) of Section 2.11.1.

(b)In order for any stockholder to request a special meeting to act on any matter that may properly be considered at a meeting of stockholders, one or more written requests for a special meeting (collectively, the “Special Meeting Request”) signed by stockholders of record (or their agents duly authorized in a writing accompanying the request) as of the Request Record Date entitled to cast not less than a majority of all of the votes entitled to be cast on such matter at such meeting (the “Special Meeting Percentage”) shall be delivered to the Secretary.  In addition, the Special Meeting Request shall (i) set forth the purpose of the meeting and the matters proposed to be acted on at it (which shall be limited to those lawful matters set forth in the Record Date Request Notice received by the Secretary), (ii) bear the date of signature of each such stockholder (or such agent) signing the Special Meeting Request, (iii) set forth (A) the name and address, as they appear in the Corporation’s books, of each stockholder signing such request (or on whose behalf the Special Meeting Request is signed), (B) the class, series and number of all shares of stock of the Corporation which are owned (beneficially or of record) by each such stockholder, and (C) the nominee holder for, and number of, shares of stock of the Corporation owned beneficially but not of record by each such stockholder, (iv) be sent to the Secretary by registered mail, return receipt requested, and (v) be received by the Secretary within 60 days after the Request Record Date.  Any requesting stockholder (or agent duly authorized in a writing accompanying the revocation of the Special Meeting Request) may revoke his, her or its request for a special meeting at any time by written revocation delivered to the Secretary.

(c)The Secretary shall inform the requesting stockholders of the reasonably estimated cost of preparing and mailing or delivering the notice of the meeting (including the Corporation’s proxy materials).  The Secretary shall not be required to call a special meeting upon stockholder request and such meeting shall not be held unless, in addition to the documents required by paragraph (b) of this Section 2.3.2, the Secretary receives payment

2

of such reasonably estimated cost prior to the preparation and mailing or delivery of such notice of the meeting.

(d)Except as provided in the next sentence, any special meeting shall be held at such place, date and time as may be designated by the Board of Directors; provided, however, that the date of any special meeting called by the Secretary upon the request of stockholders (a “Stockholder-Requested Meeting”) shall be not more than 90 days after the record date for such meeting (the “Meeting Record Date”); provided, further, that if the Board of Directors fails to designate, within ten days after the date that a valid Special Meeting Request is actually received by the Secretary (the “Delivery Date”), a date and time for a Stockholder-Requested Meeting, then such meeting shall be held at 2:00 p.m., local time in the location of the Corporation’s principal executive office (“Local Time”) on the 90th day after the Meeting Record Date or, if such 90th day is not a Business Day (as defined below), on the first preceding Business Day; provided, further, that in the event that the Board of Directors fails to designate a place for a Stockholder-Requested Meeting within ten days after the Delivery Date, then such meeting shall be held at the principal executive office of the Corporation.  In fixing a date for any special meeting, the Board of Directors may consider such factors as it deems relevant, including, without limitation, the nature of the matters to be considered, the facts and circumstances surrounding any request for the meeting and any plan of the Board of Directors to call an annual meeting or a special meeting.  In the case of any Stockholder-Requested Meeting, if the Board of Directors fails to fix a Meeting Record Date that is a date within 30 days after the Delivery Date, then the close of business on the 30th day after the Delivery Date shall be the Meeting Record Date.  The Board of Directors may revoke the notice for any Stockholder-Requested Meeting in the event that the requesting stockholders fail to comply with the provisions of paragraph (c) of this Section 2.3.2.

(e)If written revocations of the Special Meeting Request have been delivered to the Secretary by requesting stockholders and the result is that stockholders of record (or their agents duly authorized in writing), as of the Request Record Date, entitled to cast less than the Special Meeting Percentage have delivered, and not revoked, requests for a special meeting on the matter to the Secretary: (i) if the notice of meeting has not already been delivered, the Secretary shall refrain from delivering the notice of the meeting and send to all requesting stockholders who have not revoked such requests written notice of any revocation of a request for a special meeting on the matter or (ii) if the notice of meeting has been delivered and if the Secretary first sends to all requesting stockholders who have not revoked requests for a special meeting on the matter written notice of any revocation of a request for the special meeting and written notice of the Corporation’s intention to revoke the notice of the meeting, or for the chairman of the meeting to adjourn the meeting without action on the matter, then (A) the Secretary may revoke the notice of the meeting at any time before ten days before the commencement of the meeting or (B) the chairman of the meeting may call the meeting to order and adjourn the meeting without acting on the matter.  Any request for a special meeting received after a revocation by the Secretary of a notice of a meeting shall be considered a request for a new special meeting.

(f)The Chairman of the Board of Directors, Chief Executive Officer, President or Board of Directors may appoint regionally or nationally recognized independent inspectors of elections to act as the agent of the Corporation for the purpose of promptly

3

performing a ministerial review of the validity of any purported Special Meeting Request received by the Secretary.  For the purpose of permitting the inspectors to perform such review, no such purported Special Meeting Request shall be deemed to have been delivered to the Secretary until the earlier of (i) five Business Days after receipt by the Secretary of such purported request and (ii) such date as the independent inspectors certify to the Corporation that the valid requests received by the Secretary represent, as of the Request Record Date, stockholders of record entitled to cast not less than the Special Meeting Percentage.  Nothing contained in this paragraph (f) shall in any way be construed to suggest or imply that the Corporation or any stockholder shall not be entitled to contest the validity of any request, whether during or after such five Business Day period, or to take any other action (including, without limitation, the commencement, prosecution or defense of any litigation with respect thereto, and the seeking of injunctive relief in such litigation).

(g)For purposes of these bylaws, “Business Day” shall mean any day other than a Saturday, a Sunday or a day on which banking institutions in New York City are authorized or obligated by law or executive order to close.

2.4Notice.  Not less than ten nor more than 90 days before each meeting of stockholders, the Secretary shall give to each stockholder entitled to vote at such meeting and to each stockholder not entitled to vote who is entitled to notice of the meeting notice in writing or by electronic transmission stating the time and place of the meeting and, in the case of a special meeting or as otherwise may be required by any statute, the purpose for which the meeting is called, by mail, by presenting it to such stockholder personally, by leaving it at the stockholder’s residence or usual place of business or by any other means permitted by Maryland law.  If mailed, such notice shall be deemed to be given when deposited in the United States mail addressed to the stockholder at the stockholder’s address as it appears on the records of the Corporation, with postage thereon prepaid.  If transmitted electronically, such notice shall be deemed to be given when transmitted to the stockholder by an electronic transmission to any address or number of the stockholder at which the stockholder receives electronic transmissions.  The Corporation may give a single notice to all stockholders who share an address, which single notice shall be effective as to any stockholder at such address, unless a stockholder objects to receiving such single notice or revokes a prior consent to receiving such single notice.  Failure to give notice of any meeting to one or more stockholders, or any irregularity in such notice, shall not affect the validity of any meeting fixed in accordance with this Article II, or the validity of any proceedings at any such meeting.  

Subject to Section 2.11.1 of this Article II, any business of the Corporation may be transacted at an annual meeting of stockholders without being specifically designated in the notice, except such business as is required by any statute to be stated in such notice.  No business shall be transacted at a special meeting of stockholders except as specifically designated in the notice.  The Corporation may postpone or cancel a meeting of stockholders by making a public announcement (as defined in Section 2.11.3(c) of this Article II) of such postponement or cancellation prior to the meeting.  Notice of the date, time and place to which the meeting is postponed shall be given not less than ten days prior to such date and otherwise in the manner set forth in this section.

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2.5Organization and Conduct.  Every meeting of stockholders shall be conducted by an individual appointed by the Board of Directors to be chairman of the meeting or, in the absence of such appointment or appointed individual, by the Chairman of the Board of Directors or, in the case of a vacancy in the office or absence of the Chairman of the Board of Directors, one of the following officers present at the meeting in the following order: the Vice Chairman of the Board of Directors, if there be one, the Chief Executive Officer, the President, the Vice Presidents in their order of rank and seniority, the Secretary, or, in the absence of such officers, a chairman chosen by the stockholders by the vote of a majority of the votes cast by stockholders present in person or by proxy.  The Secretary, or, inthe Secretary’s absence, an Assistant Secretary, or in the absence of both the Secretary and Assistant Secretaries, an individual appointed by the Board of Directors or, in the absence of such appointment, an individualappointed by the chairmanof the meeting shall act as secretary.  In the event that the Secretary presides at a meeting of the stockholders, an Assistant Secretary, or, in the absence of all Assistant Secretaries, an individual appointed by the Board of Directors or the chairman of the meeting, shall record the minutes of the meeting.  The order of business and all other matters of procedure at any meeting of stockholders shall be determined by the chairman of the meeting.  The chairman of the meeting may prescribe such rules, regulations and procedures and take such action as, in the discretion of the chairmanand without any action by the stockholders, are appropriate for the proper conduct of the meeting, including, without limitation, (a) restricting admission to the time set for the commencement of the meeting; (b) limiting attendance at the meeting to stockholders of record of the Corporation, their duly authorized proxies and other such individuals as the chairman of the meeting may determine; (c) limiting participation at the meeting on any matter to stockholders of record of the Corporation entitled to vote on such matter, their duly authorized proxies and other such individuals as the chairman of the meeting may determine; (d) limiting the time allotted to questions or comments; (e) determining when and for how longthe polls should be opened and when the polls should beclosed; (f) maintaining order and security at the meeting; (g) removing any stockholder or any other individual who refuses to comply with meeting procedures, rules or guidelines as set forth by the chairman of the meeting; (h) concluding a meeting or recessing or adjourning the meeting, whether or not a quorum is present, to a later date and time and at a place announced at the meeting subject to applicable notice requirements, if any; and (i) complying with any state and local laws and regulations concerning safety and security.  Unless otherwise determined by the chairman of the meeting, meetings of stockholders shall not be required to be held in accordance with the rules of parliamentary procedure.

2.6Quorum.  At any meeting of stockholders, the presence in person or by proxy of stockholders entitled to cast a majority of all the votes entitled to be cast at such meeting on any matter shall constitute a quorum; but this section shall not affect any requirement under any statute, the charter of the Corporation or these bylaws for the vote necessary for the approval of any matter.  If, however, such quorum shall not be established at any meeting of the stockholders, the chairman of the meeting may adjourn the meeting sine die or from time to time to a date not more than 120 days after the original record date without notice other than announcement at the meeting.  At such adjourned meeting at which a quorum shall be present, any business may be transacted which might have been transacted at the meeting as originally notified.  

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The stockholders present at a meeting which has been duly called and at which a quorum has been established may continue to transact business until adjournment, notwithstanding the withdrawal from the meeting of enough stockholders to leave fewer than would be required to establish a quorum.

2.7Voting.  A nominee for director shall be elected to the Board of Directors if the votes cast for such nominee’s election exceed the votes cast against such nominee’s election; provided, however, that directors shall be elected by a plurality of the votes cast at any meeting of stockholders for which (i) the secretary of the Corporation receives a notice that a stockholder has nominated a person for election to the Board of Directors in compliance with the charter and these bylaws, to the extent applicable, and applicable law and (ii) such nomination has not been withdrawn by such stockholder on or before the tenth day before the Corporation first mails its notice of meeting for such meeting to the stockholders. If directors are to be elected by a plurality of the votes cast, stockholders shall not be permitted to vote against a nominee. Each share may be voted for as many individuals as there are directors to be elected and for whose election the share is entitled to be voted, without any right to cumulative voting.  A majority of the votes cast at a meeting of stockholders duly called and at which a quorum is present shall be sufficient to approve any other matter which may properly come before the meeting, unless more than a majority of the votes cast is required by statute, the charter or these bylaws.  Unless otherwise provided in the charter or these bylaws or expressly required by the Maryland General Corporation Law (“MGCL”), each share of stock of the Corporation outstanding shall be entitled to one vote on each matter submitted to a vote at a meeting of stockholders.

2.8Proxies.  A stockholder may cast the votes that the stockholder is entitled to cast either in person or by proxy executed by the stockholder or by the stockholder’s duly authorized agent in any manner permitted by law.  Such proxy or evidence of authorization of such proxy shall be filed with the Secretary of the Corporation before or at the meeting.  No proxy shall be valid after eleven months from its date, unless otherwise provided in the proxy.

2.9Voting of Stock by Certain Holders.  Stock of the Corporation registered in the name of a corporation, partnership, limited liability company, trust or other entity, if entitled to be voted, may be voted by the president or a vice president, a general partner, a managing member, trustee or other duly authorized officer or agent thereof, as the case may be, or a proxy appointed by any of the foregoing individuals.  The Corporation may request such documentation as it deems necessary to establish the authority of any such individual to vote such stock.  Any director or other fiduciary may vote stock registered in his or her name in such capacity, either in person or by proxy.

Shares of stock of the Corporation directly or indirectly owned by it shall not be voted at any meeting and shall not be counted in determining the total number of outstanding shares entitled to be voted at any given time, unless they are held by it in a fiduciary capacity, in which case they may be voted and shall be counted in determining the total number of outstanding shares at any given time.

2.10Inspectors.  The Board of Directors or the chairman of the meeting may appoint, before or at the meeting, one or more inspectors for the meeting and any successor thereto.  The inspectors, if any, shall (a) determine the number of shares of stock represented at the meeting, in

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person or by proxy, and the validity and effect of proxies, (b) receive and tabulate all votes, ballots or consents, (c) report such tabulation to the chairman of the meeting, (d) hear and determine all challenges and questions arising in connection with the right to vote, and (e) do such acts as are proper to fairly conduct the election or vote.  Each such report shall be in writing and signed by the inspector or by a majority of them if there is more than one inspector acting at such meeting.  If there is more than one inspector, the report of a majority shall be the report of the inspectors.  The report of the inspector or inspectors on the number of shares represented at the meeting and the results of the voting shall be prima facie evidence thereof.

2.11Nominations and Proposals by Stockholders.

2.11.1Annual Meetings of Stockholders.

(a)Nominations of individuals for election to the Board of Directors and the proposal of other business to be considered by the stockholders may only be made at an annual meeting of stockholders (i) by or at the direction of the Board of Directors, (ii) by any stockholder of the Corporation who was a stockholder of record both at the time of giving of notice by the stockholder as provided for in this Section 2.11.1 and at the time of the annual meeting, who is entitled to vote at the meeting in the election of each individual so nominated or on any such other business and who hascomplied with this Section 2.11.1 or (iii) to the extent required by other applicable law by the persons and subject to the applicable requirements provided for therein.  

(b)For any nomination or other business to be properly brought before an annual meeting by a stockholder pursuant to clause (ii) of Section 2.11.1(a), the stockholder must have given timely notice thereof in writing to the Secretary of the Corporation and, in the case of such other business, must otherwise be a proper matter for action by the stockholders.  For the first annual meeting, a stockholder’s notice shall be timely if it sets forth all information required under this Section 2.11.1 and is delivered to the Secretary at the principal executive office of the Corporation not later than the close of business on the tenth day after public announcement of the date of such meeting is first made.  For all subsequent annual meetings, a stockholder’s notice shall be timely if it sets forth all information required under this Section 2.11.1 and is delivered to the Secretary at the principal executive office of the Corporation not earlier than the 150th day nor later than 5:00 p.m., Local Time, on the 120th day prior to the first anniversary of the date of the notice for the preceding year’s annual meeting; provided, however, that in the event that the date of the annual meeting is advanced or delayed by more than 30 days from the first anniversary of the date of the preceding year’s annual meeting, notice by the stockholder to be timely must be so delivered not earlier than the 150th day prior to the date of such annual meeting and not later than 5:00 p.m., Local Time, on the later of the 120th day prior to the date of such annual meeting, as originally convened, or the tenth day following the day on which public announcement of the date of such meeting is first made.  The public announcement of a postponement or adjournment of an annual meeting shall not commence a new time period for the giving of a stockholder’s notice as described above.

(c)Such stockholder’s notice shall set forth:

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(i)as to each individual whom the stockholder proposes to nominate for election or reelection as a director (each, a “Proposed Nominee”), all information relating to the Proposed Nominee that would be required to be disclosed in connection with the solicitation of proxies for the election of the Proposed Nominee as a director in an election contest (even if an election contest is not involved), or would otherwise be required in connection with such solicitation, in each case pursuant to Regulation 14A (or any successor provision) under the Exchange Act;

(ii)as to any other business that the stockholder proposes to bring before the meeting, a description of such business, the stockholder’s reasons for proposing such business at the meeting and any material interest in such business of such stockholder or any Stockholder Associated Person (as defined below), individually or in the aggregate, including any anticipated benefit to the stockholder or the Stockholder Associated Person therefrom;

(iii)as to the stockholder giving the notice, any Proposed Nominee and any Stockholder Associated Person,

(A)the class, series and number of all shares of stock or other securities of the Corporation (collectively, the “Company Securities”), if any, which are owned (beneficially or of record) by such stockholder, Proposed Nominee or Stockholder Associated Person, the date on which each such Company Security was acquired and the investment intent of such acquisition, and any short interest (including any opportunity to profit or share in any benefit from any decrease in the price of such stock or other security) in any Company Securities of any such person,

(B)the nominee holder for, and number of, any Company Securities owned beneficially but not of record by such stockholder, Proposed Nominee or Stockholder Associated Person,

(C)any substantial interest, direct or indirect (including, without limitation, any existing or prospective commercial, business or contractual relationship with the Corporation), by security holdings or otherwise, of such stockholder, Proposed Nominee or Stockholder Associated Person, individually or in the aggregate, in the Corporation, other than an interest arising from the ownership of Company Securities where such stockholder, Proposed Nominee or Stockholder Associated Person receives no extra or special benefit not shared on a pro rata basis by all holders of the same class or series, and

(D)whether and the extent to which such stockholder, Proposed Nominee or Stockholder Associated Person is subject to or during the last six months has, directly or indirectly (through brokers, nominees or otherwise), engaged in any hedging, derivative or other transaction or series of transactions or entered into any other agreement, arrangement or understanding (including any short interest, any borrowing or lending of securities or any proxy or voting agreement), the effect or intent of which is to manage risk or benefit of

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changes in the price of Company Securities for such stockholder, Proposed Nominee or Stockholder Associated Person or to increase or decrease the voting power of such stockholder, Proposed Nominee or Stockholder Associated Person in the Corporation disproportionately to such person’s economic interest in the Company Securities;

(iv)as to the stockholder giving the notice, any Stockholder Associated Person with an interest or ownership referred to in clauses (ii) or (iii) of this paragraph (c) of this Section 2.11.1 and any Proposed Nominee;

(A)the name and address of such stockholder, as they appear on the Corporation’s stock ledger, and the current name and business address, if different, of each such Stockholder Associated Person and any Proposed Nominee, and

(B)the investment strategy or objective, if any, of such stockholder and each such Stockholder Associated Person who is not an individual and a copy of the prospectus, offering memorandum or similar document, if any, provided to investors or potential investors in such stockholder and each such Stockholder Associated Person; and

(v)to the extent known by the stockholder giving the notice, the name and address of any other stockholder supporting any Proposed Nominee or the proposal of other business on the date of such stockholder’s notice.

(d)Such stockholder’s notice shall, with respect to any Proposed Nominee, be accompanied by a certificate executed by the Proposed Nominee (i) certifying that such Proposed Nominee (A) is not, and will not become a party to, any agreement, arrangement or understanding with any person or entity other than the Corporation in connection with service or action as a director that has not been disclosed to the Corporation and (B) will serve as a director of the Corporation if elected; and (ii) attaching a completed Proposed Nominee questionnaire (which questionnaire shall be provided by the Corporation, upon request, to the stockholder providing the notice and shall include all information relating to the Proposed Nominee that would be required to be disclosed in connection with the solicitation of proxies for the election of the Proposed Nominee as a director in an election contest (even if an election contest is not involved), or would otherwise be required in connection with such solicitation, in each case pursuant to Regulation 14A (or any successor provision) under the Exchange Act and the rules thereunder, or would be required pursuant to the rules of any national securities exchange on which any securities of the Corporation are traded or over-the-counter market on which any securities of the Corporation are traded).

(e)Notwithstanding anything in this subsection (e) of this Section 2.11.1 to the contrary, in the event that the number of directors to be elected to the Board of Directors is increased, and there is no public announcement of such action at least 130 days prior to the first anniversary of the date of the notice for the preceding year’s annual meeting, a stockholder’s notice required by this Section 2.11.1 shall also be considered timely, but only with respect to nominees for any new positions created by such increase, if it shall be delivered

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to the Secretary at the principal executive office of the Corporation not later than 5:00 p.m., Local Time, on the tenth day following the day on which such public announcement to stockholders is first made by the Corporation.

(f)For purposes of this Section 2.11.1, “Stockholder Associated Person” of any stockholder means (i) any person acting in concert with such stockholder, (ii) any beneficial owner of shares of stock of the Corporation owned of record or beneficially by such stockholder (other than a stockholder that is a depositary) and (iii) any person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, such stockholder or such Stockholder Associated Person.

2.11.2Special Meetings of Stockholders.  Only such business shall be conducted at a special meeting of stockholders as shall have been brought before the meeting pursuant to the Corporation’s notice of meeting. Nominations of individuals for election to the Board of Directors may be made at a special meeting of stockholders at which one or more directors are to be elected only (a) by or at the direction of the Board of Directors or (b) by a stockholder that has requested that a special meeting be called for the election of one or more directors in compliance with Section 2.3 of this Article II, but only with respect to an individual identified as a proposed nominee in the Record Date Request Notice submitted with respect to such special meeting.

2.11.3General.

(a)If information submitted pursuant to this Section 2.11 by any stockholder proposing a nominee for election as a director or any proposal for other business at a meeting of stockholders shall be inaccurate in any material respect, such information may be deemed not to have been provided in accordance with this Section 2.11.  Any such stockholder shall notify the Corporation of any inaccuracy or change (within two Business Days of becoming aware of such inaccuracy or change) in any such information.  Upon written request by the Secretary of the Corporation or the Board of Directors, any such stockholder shall provide, within five Business Days of delivery of such request (or such other period as may be specified in such request), (i) written verification, satisfactory, in the discretion of the Board of Directors or any authorized officer of the Corporation, to demonstrate the accuracy of any information submitted by the stockholder pursuant to this Section 2.11, and (ii) a written update of any information submitted by the stockholder pursuant to this Section 2.11 as of an earlier date.  If a stockholder fails to provide such written verification or written update within such period, the information as to which written verification or a written update was requested may be deemed not to have been provided in accordance with this Section 2.11.

(b)Only such individuals who are nominated in accordance with this Section 2.11 shall be eligible for election by stockholders as directors, and only such business shall be conducted at a meeting of stockholders as shall have been brought before the meeting in accordance with this Section 2.11.  The chairman of the meeting shall have the power to determine whether a nomination or any other business proposed to be brought before the meeting was made or proposed, as the case may be, in accordance with this Section 2.11.

(c)“Public announcement” shall mean disclosure (i) in a press release reported by the Dow Jones News Service, Associated Press, Business Wire, PR

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Newswire or other widely circulated news or wire service or (ii) in a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to the Exchange Act.

(d)Notwithstanding the foregoing provisions of this Section 2.11, a stockholder shall also comply with all applicable requirements of state law and of the Exchange Act and the rules and regulations thereunder with respect to the matters set forth in this Section 2.11.  Nothing in this Section 2.11 shall be deemed to affect any right of a stockholder to request inclusion of a proposal in, nor the right of the Corporation to omit a proposal from, the Corporation’s proxy statement pursuant to Rule 14a-8 (or any successor provision) under the Exchange Act.  

(e)Nothing in this Section 2.11 shall require disclosure of revocable proxies received by the stockholder or Stockholder Associated Person pursuant to a solicitation of proxies after the filing of an effective Schedule 14A under Section 14(a) of the Exchange Act.

2.12Control Share Acquisition Act.  Notwithstanding any other provision of the charter or these bylaws, Title 3, Subtitle 7 of the MGCL (or any successor statute) shall not apply to any and all acquisitions by any person of shares of stock of the Corporation.

2.13Voting by Ballot.  Voting on any question or in any election may be viva voce unless the chairman of the meeting shall order or any stockholder shall demand that voting be by ballot.

2.14Business Combinations.  By virtue of resolutions adopted by the Board of Directors prior to or at the time of adoption of these bylaws, any business combination (as defined in Section 3-601(e) of the MGCL) between the Corporation and any of its present or future stockholders, or any affiliates or associates of the Corporation or any present or future stockholder of the Corporation, or any other person or entity or group of persons or entities, is exempt from the provisions of Title 3, Subtitle 6 of the MGCL, including, but not limited to, the provisions of Section 3-602 of such Subtitle. The Board of Directors may not revoke, alter or amend such resolution or otherwise adopt any resolution that is inconsistent with a prior resolution of the Board of Directors that exempts any business combination (as defined in Section 3-601(e) of the MGCL) between the Corporation and any other person, whether identified specifically, generally or by type from the provisions of Title 3, Subtitle 6 of the MGCL without the affirmative vote of a majority of the votes cast on the matter by the holders of the issued and outstanding shares of common stock of the Corporation.

article III- DIRECTORS

3.1General Powers.  The business and affairs of the Corporation shall be managed under the direction of its Board of Directors.

3.2Outside Activities.  A director who is not also an officer of the Corporation shall have no responsibility to devote his or her full time to the affairs of the Corporation.  Any director or officer of the Corporation, in his or her personal capacity or in a capacity as an affiliate, employee, or agent of any other person, or otherwise, may have business interests and engage in business activities similar to or in addition to or in competition with those relating to the Corporation.

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3.3Number and Tenure. The number of directors shall initially be two. A majority of the entire Board of Directors may establish, increase or decrease the number of directors; provided, however, that the number thereof shall never be less than the minimum number required by the MGCL nor, except as set forth below and in the charter, more than nine;provided, further, that the tenure of office of a director shall not be affected by any decrease in the number of directorsand, following the removal of a director, the Board of Directors may reduce the number of directors to eliminate the directorship previously held by such director.  Notwithstanding the foregoing, for avoidance of doubt, if the number of directors of the Corporation is decreased as of the end of the then current term of one or more directors, then any such directors who are not reelected for subsequent terms shall cease to be directors of the Corporation as of the end of the current term; provided that if the total number of directors elected for a subsequent term is less than the total number of directorships up for election, then the terms of the directors who were not reelected will continue until their successors are elected; provided further that the number of directors who were not reelected whose terms will continue as set forth above may not exceed the difference obtained by subtracting the total number of directors elected for a subsequent term from the total number of directorships up for election, and if the number of directors who were not reelected exceeds such difference, then only the terms of such directors who were nominated by the Board of Directors for reelection will continue.During any period when the holders of one or more classes or series of preferred stock of the Corporation shall have the right, voting separately or together with holders of one or more other classes or series of preferred stock of the Corporation, to elect additional directors as provided for or fixed pursuant to the provisions of Article V of the charter, then upon commencement and for the duration of the period during which such right continues: (a) the then otherwise total authorized number of directors of the Corporation shall automatically be increased by such specified number of directors, and the holders of such stock shall be entitled to elect the additional directors so provided for or fixed pursuant to said provisions and (b) each such additional director shall serve until such director’s successor shall have been duly elected and qualified, or until such director’s right to hold such office terminates pursuant to said provisions, whichever occurs earlier, subject to such director’s earlier death, disqualification, resignation or removal. Except as otherwise provided for or fixed pursuant to the provisions of Article V of the charter, whenever the holders of any such classes or series of preferred stock of the Corporation having such right to elect additional directors are divested of such right pursuant to the provisions of such stock, the terms of office of all such additional directors shall automatically terminate and the total authorized number of directors of the Corporation shall be reduced accordingly.

3.4Annual and Regular Meetings.  An annual meeting of the Board of Directors may be held immediately after and at the same place as the annual meeting of stockholders, with no notice other than this bylaw provision being necessary.  In the event such meeting is not so held, the meeting may be held at such time and place as shall be specified in a notice given as hereinafter provided for special meetings of the Board of Directors.The Board of Directors may provide, by resolution, the time and place, either within or without the State of Maryland, for the holding of regular meetings of the Board of Directors without other notice than such resolution.  

3.5Special Meetings.  Special meetings of the Board of Directors may be called by or at the request of the Chairman of the Board of Directors, the Chief Executive Officer or a majority of the directors then in office.  The person or persons authorized to call special meetings

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of the Board of Directors may fix any place, either within or without the State of Maryland, as the place for holding any special meeting of the Board of Directors called by them.  The Board of Directors may provide, by resolution, the time and place for the holding of special meetings of the Board of Directors without other notice than such resolution.

3.6Notice.  Notice of any special meeting of the Board of Directors shall be delivered personally or by telephone, facsimile transmission, electronic mail, United States mail, with postage thereon prepaid, or courier to each director at his or her business or residence address.  Notice by personal delivery, by telephone, facsimile transmission or electronic mail shall be given at least 24 hours prior to the meeting.  Notice by United States mail shall be given at least five days prior to the meeting and shall be deemed to be given when deposited in the United States mail properly addressed, with postage thereon prepaid.  Notice by courier shall be given at least two days prior to the meeting and shall be deemed to be given when deposited with or delivered to a courier properly addressed.  Telephone notice shall be deemed to be given when the director is personally given such notice in a telephone call to which he or she is a party.  Facsimile transmission notice shall be deemed to be given upon completion of the transmission of the message to the number given to the Corporation by the director and receipt of a completed answer back indicating receipt.  Electronic mail notice shall be deemed to be given upon transmission of the message to the electronic mail address given to the Corporation by the director.  Neither the business to be transacted at, nor the purpose of, any annual, regular or special meeting of the Board of Directors need be stated in the notice, unless specifically required by statute or these bylaws.

3.7Quorum.  A majority of the directors shall constitute a quorum for transaction of business at any meeting of the Board of Directors; provided, however, that, if less than a majority of such directors is present at such meeting, a majority of the directors present may adjourn the meeting from time to time without further notice; provided, further, that if, pursuant to applicable law, the charter or these bylaws, the vote of a majority or other percentage of a particular group of directors is required for action, a quorum must also include a majority or, if greater, the other percentage of such group.

The directors present at a meeting which has been duly called and at which a quorum has been established may continue to transact business until adjournment, notwithstanding the withdrawal from the meeting of enough directors to leave fewer than required to establish a quorum.

3.8Voting.  The action of a majority of the directors present at a meeting at which a quorum is present shall be the action of the Board of Directors, unless the concurrence of a lesser or greater proportion is required for such action by applicable law, the charter or these bylaws.  If enough directors have withdrawn from a meeting to leave fewer than required to establish a quorum but the meeting is not adjourned, the action of the majority of that number of directors necessary to constitute a quorum at such meeting shall be the action of the Board of Directors, unless the concurrence of a greater proportion is required for such action by applicable law, the charter or these bylaws.

3.9Chairman of the Board of Directors.  The Board of Directors shall designate a Chairman of the Board of Directors.  The Chairman of the Board of Directors shall be a director

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and may, but need not be, an officer of the Corporation.  The Chairman of the Board of Directors shall preside, when present, at all meetings of the Board of Directors.  The Chairman of the Board of Directors shall have such other powers and shall perform such other duties as may be assigned to him or her by these bylaws or the Board of Directors.

3.10Conduct of Meetings.  All meetings of the Board of Directors shall be called to order and presided over by the Chairman of the Board of Directors, or, in the absence of the Chairman, the Vice Chairman of the Board of Directors, if any, or in the absence of both the Chairman and Vice Chairman of the Board of Directors, by a member of the Board of Directors selected by the members present.  An individual designated by the presiding officer of the meeting or, in the absence of such appointment or appointed individual, the Secretary or, in his or her absence, an Assistant Secretary of the Corporation shall act as Secretary at all meetings of the Board of Directors.  

3.11Telephone Meetings.  Directors may participate in a meeting by means of a conference telephone or other communications equipment if all persons participating in the meeting can hear each other at the same time.  Participation in a meeting by these means shall constitute presence in person at the meeting.

3.12Consent by Directors Without a Meeting.  Any action required or permitted to be taken at any meeting of the Board of Directors may be taken without a meeting, if a consent in writing or by electronic transmission to such action is given by each director and is filed with the minutes of proceedings of the Board of Directors.

3.13Resignations.  Any director may resign from the Board of Directors or any committee thereof at any time by delivering his or her resignation to the Board of Directors, the Chairman of the Board of Directors or the Secretary.  Such resignation shall take effect at the time specified therein, which may be on or after the time of the resignation, or if no time be specified, at the time of the receipt of such resignation by the Board of Directors, the Chairman of the Board of Directors or the Secretary.  The acceptance of a resignation shall not be necessary to make it effective unless otherwise stated in the resignation.

3.14Vacancies.  If for any reason any or all of the directors cease to be directors, such event shall not terminate the Corporation or affect these bylaws or the powers of the remaining directors hereunder.  Except as may be provided for or fixed pursuant to the provisions of Article V of the charter with respect to directors that the holders of one or more classes or series of preferred stock of the Corporation shall have the right to elect, any and all vacancies on the Board of Directors resulting from any cause, including, without limitation (i) the death, retirement, resignation or removal of a director or (ii) an increase in the number of directors on the Board of Directors pursuant to these bylaws may be filled only by the affirmative vote of a majority of the remaining directors in office, even if the remaining directors do not constitute a quorum, and any such director elected to fill such a vacancy shall serve until the next annual meeting of stockholders and until his or her successor is duly elected and qualifies.

3.15Compensation.  Directors may receive compensation for any service or activity they performed or engaged in as directors.  Directors may be reimbursed for expenses of attendance, if any, at each annual, regular or special meeting of the Board of Directors or of any

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committee thereof and for their expenses, if any, in connection with any other service or activity they performed or engaged in as directors; and nothing herein contained shall be construed to preclude any directors from serving the Corporation in any other capacity and receiving compensation therefor.

3.16Reliance.  Each director and officer of the Corporation shall, in the performance of his or her duties with respect to the Corporation, be entitled to rely on any information, opinion, report or statement, including any financial statement or other financial data, prepared or presented by an officer or employee of the Corporation or any subsidiary thereof whom the director or officer reasonably believes to be reliable and competent in the matters presented, by a lawyer, certified public accountant or other person, as to a matter which the director or officer reasonably believes to be within the person’s professional or expert competence, or, with respect to a director, by a committee of the Board of Directors on which the director does not serve, as to a matter within its designated authority, if the director reasonably believes the committee to merit confidence.

3.17Ratification.  The Board of Directors or the stockholders may ratify and make binding on the Corporation any action or inaction by the Corporation or its officers to the extent that the Board of Directors or the stockholders could have originally authorized the matter. Moreover, any action or inaction questioned in any stockholders’ derivative proceeding or any other proceeding on the ground of lack of authority, defective or irregular execution, adverse interest of a director, officer or stockholder, non-disclosure, miscomputation, the application of improper principles or practices of accounting, or otherwise, may be ratified, before or after judgment, by the Board of Directors or by the stockholders, and if so ratified, shall have the same force and effect as if the questioned action or inaction had been originally duly authorized, and such ratification shall be binding upon the Corporation and its stockholders and shall constitute a bar to any claim or execution of any judgment in respect of such questioned action or inaction.

3.18Emergency Provisions.  Notwithstanding any other provision in the charter or these bylaws, this Section 3.18 shall apply during the existence of any catastrophe, or other similar emergency condition, as a result of which a quorum of the Board of Directors under Article III of these bylaws cannot readily be obtained (an “Emergency”).  During any Emergency, unless otherwise provided by the Board of Directors, (a) a meeting of the Board of Directors or a committee thereof may be called by any director or officer by any means feasible under the circumstances; (b) notice of any meeting of the Board of Directors during such an Emergency may be given less than 24 hours prior to the meeting to as many directors and by such means as may be feasible at the time, including publication, television or radio; and (c) the number of directors necessary to constitute a quorum shall be one-third of the entire Board of Directors.

article IV- COMMITTEES

4.1Number, Tenure and Qualifications.  The Board of Directors may appoint from among its members an Audit Committee, a Compensation Committee, a Nominating and Corporate Governance Committee, an Executive Committee, an Investment Committee and other committees, composed of one or more directors, to serve at the pleasure of the Board of Directors.

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4.2Powers.  The Board of Directors may delegate to committees appointed under Section 4.1 any of the powers of the Board of Directors, except as prohibited by law, the charter, or these bylaws.

4.3Meetings.  Notice of committee meetings shall be given in the same manner as notice for special meetings of the Board of Directors.  A majority of the members of the committee shall constitute a quorum for the transaction of business at any meeting of the committee.  The act of a majority of the committee members present at a meeting shall be the act of such committee.  The Board of Directors may designate a chairman of any committee, and such chairman or, in the absence of a chairman, any two members of any committee (if there are at least two members of the Committee) may fix the time and place of its meeting unless the Board of Directors shall otherwise provide.

4.4Telephone Meetings.  Members of a committee of the Board of Directors may participate in a meeting by means of a conference telephone or other communications equipment if all persons participating in the meeting can hear each other at the same time.  Participation in a meeting by these means shall constitute presence in person at the meeting.

4.5Consent by Committees Without a Meeting.  Any action required or permitted to be taken at any meeting of a committee of the Board of Directors may be taken without a meeting, if a consent in writing or by electronic transmission to such action is given by each member of the committee and such consent is filed with the minutes of proceedings of such committee.

4.6Vacancies.  Subject to the provisions hereof, the Board of Directors shall have the power at any time to change the membership of any committee, to fill any vacancy, to designate an alternate member to replace any absent or disqualified member or to dissolve any such committee.

article V- OFFICERS

5.1General Provisions.  The officers of the Corporation shall include a President, a Secretary and a Treasurer and may include a Chief Executive Officer, one or more Vice Presidents, a Chief Operating Officer, a Chief Financial Officer, one or more Assistant Secretaries, one or more Assistant Treasurers and such other officers with such titles, powers and duties as are determined from time to time.  The officers of the Corporation shall be elected or appointed by the Board of Directors or the Chief Executive Officer. Each officer shall hold office until his or her death, resignation or removal in the manner hereinafter provided.  Any two or more offices except President and Vice President may be held by the same person.  Election of an officer or agent shall not of itself create contract rights between the Corporation and such officer or agent.  In the event of the absence or disability of any officer, the Board of Directors or the Chief Executive Officer may designate another officer to act temporarily in place of such absent or disabled officer.

5.2Removal and Resignation.  Any officer or agent of the Corporation may be removed, with or without cause, by the Board of Directors or the Chief Executive Officer (except that the Chief Financial Officer may only be removed by the Board of Directors), if, in his, her or

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its judgment, the best interests of the Corporation would be served thereby, but such removal shall be without prejudice to the contract rights, if any, of the person so removed.  Any officer of the Corporation may resign at any time by delivering his or her resignation to the Board of Directors, the Chairman of the Board of Directors, the Chief Executive Officer or the Secretary.  Any resignation shall take effect at any time subsequent to the time specified therein or, if the time when it shall become effective is not specified therein, immediately upon its receipt.  The acceptance of a resignation shall not be necessary to make it effective unless otherwise stated in the resignation.  Such resignation shall be without prejudice to the contract rights, if any, of the Corporation or such officer.

5.3Vacancies.  A vacancy in any office may be filled by the Board of Directors or the Chief Executive Officer.

5.4Chief Executive Officer.  The Board of Directors may designate a Chief Executive Officer.  The Chief Executive Officer shall have general responsibility for implementation of the policies of the Corporation, as determined by the Board of Directors, and for the management of the business and affairs of the Corporation.  The Chief Executive Officer may execute any deed, mortgage, bond, contract or other instrument, except in cases where the execution thereof shall be expressly delegated by the Board of Directors or by these bylaws to some other officer or agent of the Corporation or shall be required by law to be otherwise executed; and in general shall perform all duties incident to the office of Chief Executive Officer and such other duties as may be prescribed by the Board of Directors from time to time.

5.5Chief Operating Officer.  The Board of Directors or Chief Executive Officer may designate a Chief Operating Officer.  The Chief Operating Officer shall have the responsibilities and duties as determined by the Board of Directors or the Chief Executive Officer.

5.6Chief Financial Officer.  The Board of Directors or Chief Executive Officer may designate a Chief Financial Officer.  The Chief Financial Officer shall have the responsibilities and duties as determined by the Board of Directors or the Chief Executive Officer.

5.7President.  In the absence of a Chief Executive Officer, the President shall in general supervise and control all of the business and affairs of the Corporation.  The President may execute any deed, mortgage, bond, contract or other instrument, except in cases where the execution thereof shall be expressly delegated by the Board of Directors or by these bylaws to some other officer or agent of the Corporation or shall be required by law to be otherwise executed; and in general shall perform all duties incident to the office of President and such other duties as may be prescribed by the Board of Directors or Chief Executive Officer from time to time.

5.8Vice Presidents.  In the absence of the President or in the event of a vacancy in such office, the Vice President (or in the event there be more than one Vice President, the Vice Presidents in the order designated at the time of their election or, in the absence of any designation, then in the order of their election) shall perform the duties of the President and when so acting shall have all the powers of and be subject to all the restrictions upon the President; and shall perform such other duties as from time to time may be assigned to him or her by the Chief Executive Officer, the President or the Board of Directors.  The Board of Directors may

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designate one or more Vice Presidents as Executive Vice President, as Senior Vice President, or as Vice President for particular areas of responsibility.

5.9Secretary.  The Secretary shall (a) keep the minutes of the proceedings of the stockholders, the Board of Directors and committees of the Board of Directors in one or more books provided for that purpose; (b) see that all notices are duly given in accordance with the provisions of these bylaws or as required by law; (c) be custodian of the corporate records and of the seal of the Corporation; (d) keep a register of the post office address of each stockholder which shall be furnished to the Secretary by such stockholder; (e) have general charge of the share transfer books of the Corporation; and (f) in general perform such other duties as from time to time may be assigned to him or her by the Chief Executive Officer, the President or the Board of Directors.

5.10Treasurer.  The Treasurer shall have the custody of the funds and securities of the Corporation and shall keep full and accurate accounts of receipts and disbursements in books belonging to the Corporation and shall deposit all moneys and other valuable effects in the name and to the credit of the Corporation in such depositories as may be designated by the Board of Directors or Chief Executive Officer and in general perform such other duties as from time to time may be assigned to the Treasurer by the Chief Executive Officer, the President or the Board of Directors.  In the absence of a designation of a Chief Financial Officer by the Board of Directors, the Treasurer shall be the Chief Financial Officer of the Corporation.

The Treasurer shall disburse the funds of the Corporation as may be ordered by the Board of Directors, taking proper voucher for such disbursements, and shall render to the Chief Executive Officer, the President and the Board of Directors, whenever it may so require, an account of all his or her transactions as Treasurer and of the financial condition of the Corporation.

5.11Assistant Secretaries; Assistant Treasurers.  The Assistant Secretaries and Assistant Treasurers, (a) shall have the power to perform and shall perform all the duties of the Secretary and the Treasurer, respectively, in such respective officer’s absence and (b) shall perform such duties as shall be assigned to them by the Secretary or Treasurer, respectively, or by the Chief Executive Officer, the President or the Board of Directors.  

5.12Compensation.  The salaries and other compensation of the officers shall be fixed from time to time by or under the authority of the Board of Directors and no officer shall be prevented from receiving such salary or other compensation by reason of the fact that he or she is also a director.  

article VI- CONTRACTS, LOANS, CHECKS AND DEPOSITS

6.1Contracts.  The Board of Directors may authorize any officer or agent to enter into any contract or to execute and deliver any instrument in the name of and on behalf of the Corporation and such authority may be general or confined to specific instances.  Any agreement, deed, mortgage, lease or other document shall be valid and binding upon the Corporation if authorized or ratified, generally or specifically, by action of the Board of Directors and executed by an authorized person.

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6.2Checks and Drafts.  All checks, drafts or other orders for the payment of money, notes or other evidences of indebtedness issued in the name of the Corporation shall be signed by such officer or agent of the Corporation in such manner as shall from time to time be determined by the Board of Directors.

6.3Deposits.  All funds of the Corporation not otherwise employed shall be deposited or invested from time to time to the credit of the Corporation as the Board of Directors, the Chief Executive Officer, the President, the Chief Financial Officer, or any other officer designated by the Board of Directors may determine.

article VII- STOCK

7.1Certificates.  Except as may be otherwise provided by the Board of Directors, stockholders of the Corporation are not entitled to certificates representing the shares of stock held by them.  In the event that the Corporation issues shares of stock represented by certificates, such certificates shall be in such form as prescribed by the Board of Directors or a duly authorized officer, shall contain the statements and information required by the MGCL and shall be signed by the officers of the Corporation in the manner permitted by the MGCL.  In the event that the Corporation issues shares of stock without certificates, to the extent then required by the MGCL, the Corporation shall provide to the record holders of such shares a written statement of the information required by the MGCL to be included on stock certificates.  There shall be no differences in the rights and obligations of stockholders based on whether or not their shares are represented by certificates.

7.2Transfers.  All transfers of shares of stock shall be made on the books of the Corporation, by the holder of the shares of stock, in person or by his or her attorney, in such manner as the Board of Directors or any officer of the Corporation may prescribe and, if such shares of stock are certificated, upon surrender of certificates duly endorsed.  The issuance of a new certificate upon the transfer of certificated shares of stock is subject to the determination of the Board of Directors that such shares of stock shall no longer to be represented by certificates. Upon the transfer of uncertificated shares of stock, to the extent then required by the MGCL, the Corporation shall provide to the record holders of such shares of stock a written statement of the information required by the MGCL to be included on stock certificates.

The Corporation shall be entitled to treat the holder of record of any share of stock as the holder in fact thereof and, accordingly, shall not be bound to recognize any equitable or other claim to or interest in such share or on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise expressly provided by the laws of the State of Maryland.

Notwithstanding the foregoing, transfers of shares of any class or series of stock will be subject in all respects to the charter and all of the terms and conditions contained therein.

7.3Replacement Certificate.  Any officer of the Corporation may direct a new certificate or certificates to be issued in place of any certificate or certificates theretofore issued by the Corporation alleged to have been lost, destroyed, stolen or mutilated, upon the making of an affidavit of that fact by the person claiming the certificate to be lost, destroyed, stolen or

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mutilated; provided, however, if such shares of stock have ceased to be certificated, no new certificate shall be issued unless requested in writing by such stockholder and the Board of Directors has determined that such certificates may be issued.  Unless otherwise determined by an officer of the Corporation, the owner of such lost, destroyed, stolen or mutilated certificate or certificates, or his or her legal representative, shall be required, as a condition precedent to the issuance of a new certificate or certificates, to give the Corporation a bond in such sums as it may direct as indemnity against any claim that may be made against the Corporation.

7.4Fixing of Record Date.  The Board of Directors may set, in advance, a record date for the purpose of determining stockholders entitled to notice of or to vote at any meeting of stockholders or determining stockholders entitled to receive payment of any dividend or the allotment of any other rights, or in order to make a determination of stockholders for any other proper purpose.  Such date, in any case, shall not be prior to the close of business on the day the record date is fixed and shall be not more than 90 days and, in the case of a meeting of stockholders, not less than ten days, before the date on which the meeting or particular action requiring such determination of stockholders of record is to be held or taken.

When a record date for the determination of stockholders entitled to notice of and to vote at any meeting of stockholders has been set as provided in this Section 7.4, such record date shall continue to apply to the meeting if adjourned or postponed, except if the meeting is adjourned or postponed to a date more than 120 days after the record date originally fixed for the meeting, in which case a new record date for such meeting may be determined as set forth herein.

7.5Stock Ledger.  The Corporation shall maintain at its principal office or at the office of its counsel, accountants or transfer agent, an original or duplicate stock ledger containing the name and address of each stockholder and the number of shares of each class held by such stockholder.  

7.6Fractional Stock; Issuance of Units.  The Board of Directors may authorize the Corporation to issue fractional stock or scrip, all on such terms and under such conditions as they may determine.  Notwithstanding any other provision of the charter or these bylaws, the Board of Directors may issue units consisting of different securities of the Corporation.  Any security issued in a unit shall have the same characteristics as any identical securities issued by the Corporation, except that the Board of Directors may provide that for a specified period securities of the Corporation issued in such unit may be transferred on the books of the Corporation only in such unit.

article VIII- ACCOUNTING YEAR

The Board of Directors shall have the power, from time to time, to fix the fiscal year of the Corporation by a duly adopted resolution.

article IX- DISTRIBUTIONS

9.1Authorization.  Dividends and other distributions upon the stock of the Corporation may be authorized by the Board of Directors and declared by the Corporation, subject to the provisions of applicable law and the charter.  Dividends and other distributions

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may be paid in cash, property or stock of the Corporation, subject to the provisions of applicable law and the charter.

9.2Contingencies.  Before payment of any dividends or other distributions, there may be set aside (but there is no duty to set aside) out of any assets of the Corporation available for dividends or other distributions such sum or sums as the Board of Directors may from time to time, in its absolute discretion think proper as a reserve fund for contingencies, for equalizing dividends or other distributions, for repairing or maintaining any property of the Corporation or for such other purpose as the Board of Directors shall determine, and the Board of Directors may modify or abolish any such reserve.

article X- SEAL

10.1Seal.  The Board of Directors may authorize the adoption of a seal by the Corporation.  The Board of Directors may authorize one or more duplicate seals and provide for the custody thereof.

10.2Affixing Seal.  Whenever the Corporation is permitted or required to affix its seal to a document, it shall be sufficient to meet the requirements of any law, rule or regulation relating to a seal to place the word “(SEAL)” adjacent to the signature of the person authorized to execute the document on behalf of the Corporation.

article XI- INDEMNIFICATION AND ADVANCE OF EXPENSES

11.1Indemnification to the Extent Permitted by Law.  

(a)The Corporation shall, to the maximum extent permitted by Maryland law as in effect from time to time, subject to Section 11.1(c), indemnify and, without requiring a preliminary determination of the ultimate entitlement to indemnification, pay or reimburse reasonable expenses (including legal fees) in advance of final disposition of a proceeding to, (i) any individual who is a present or former director of the Corporation and who is made or threatened to be made a party to, or witness in, the proceeding by reason of his or her service in that capacity or (ii) any individual who, while a director of the Corporation and at the request of the Corporation, serves or has served as a director, officer, partner, member, manager, trustee, employee or agent of another corporation, real estate investment trust, partnership, limited liability company, joint venture, trust, employee benefit plan or other enterprise and who is made or threatened to be made a party to, or witness in, the proceeding, by reason of his or her service in that capacity. The rights to indemnification and advance of expenses provided by the charter and these bylaws shall vest immediately upon election of a director.  

(b)In addition to and not in limitation of the provisions of Section 11.1(a), the Corporation may, with the approval of the Board of Directors, provide such indemnification and advancement of expenses to (i) an individual who served a predecessor of the Corporation in any of the capacities described in (a)(i) or (a)(ii) above, (ii) any officer, employee or agent of the Corporation or any of its subsidiaries or a predecessor of the Corporation or (iii) any officer, employee or agent who, at the request of the Corporation, serves or has served in any of the capacities described in (a)(ii) above.  For purposes of this Article XI, each individual entitled to indemnification and advancement of expenses as set forth in Sections

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11.1(a)(i) or (a)(ii), or, as set forth in this Section 11(b), each individual the Corporation may, with the approval of the Board of Directors, provide with indemnification and advancement of expenses, is referred to as an “Indemnitee.”

(c)Notwithstanding any other provision of this Article XI, Section 11.1(a) shall not entitle an Indemnitee to indemnification for any judgments, penalties, fines and amounts paid in settlement in a proceeding described in Section 11.1(a), in whole or in part, for an accounting of profits made from the purchase and sale (or sale and purchase) by the Indemnitee of securities of the Corporation within the meaning of Section 16(b) of the Securities Exchange Act of 1934, as amended, or similar provisions of state statutory law or common law; provided, however, the Corporation shall pay expenses, as described Section 11.1(a), incurred by the Indemnitee in connection with any such proceeding.

(d)Neither the amendment nor repeal of this Article XI, nor the adoption or amendment of any other provision of the bylaws or charter inconsistent with this Article XI, shall eliminate or reduce the protection afforded by this Article XI with respect to any act or failure to act which occurred prior to such amendment, repeal or adoption.

11.2Insurance.  The Corporation shall have power to purchase and maintain insurance on behalf of any Indemnitee against any liability, whether or not the Corporation would have the power to indemnify him or her against such liability.

11.3Non-Exclusive Right to Indemnify; Heirs and Personal Representatives.  The indemnification and payment or reimbursement of expenses provided in these bylaws shall not be deemed exclusive of or limit in any way the rights to which any person seeking indemnification or reimbursement of expenses may become entitled to under any bylaw, regulation, insurance agreement or otherwise.  The rights to indemnification set forth in this Article XI are in addition to all rights which any Indemnitee may be entitled as a matter of law, and shall inure to the benefit of the heirs and personal representatives of each Indemnitee.

11.4No Limitation.  In addition to any indemnification permitted by these bylaws, the Board of Directors shall, in its sole discretion, have the power to grant such indemnification as it deems in the interest of the Corporation to the full extent permitted by law.  This Article XI shall not limit the Corporation’s power to indemnify against liabilities not arising from a person’s serving the Corporation as a director, officer, employee or agent.

article XII- WAIVER OF NOTICE

Whenever any notice of any meeting is required to be given pursuant to the charter or these bylaws or pursuant to applicable law, a waiver thereof in writing or by electronic transmission, givenby the person or persons entitled to such notice, whether before or after the time stated therein, shall be deemed equivalent to the giving of such notice.  Neither the business to be transacted at nor the purpose of any meeting need be set forth in the waiver of notice, unless specifically required by statute.  The attendance of any person at any such meeting shall constitute a waiver of notice of such meeting, except where such person attends a meeting for the express purpose of objecting to the transaction of any business on the ground that the meeting is not lawfully called or convened.

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article XIII- AMENDMENT OF BYLAWS

The Board of Directors shall have the exclusive power to alter, amend or repeal these bylaws, provided that Sections 2.12 and 2.14 of Article II of these bylaws and this sentence may not be altered, amended or repealed by the Board of Directors unless it shall also obtain the affirmative vote of a majority of the votes cast on the matter by the holders of the issued and outstanding shares of common stock of the Corporation at a meeting of stockholders duly called and of which a quorum is present.

article XIV- MISCELLANEOUS

14.1Severability. If any provision of these bylaws shall be held invalid or unenforceable in any respect, such holding shall apply only to the extent of any such invalidity or unenforceability and shall not in any manner affect, impair or render invalid or unenforceable any other provision of these bylaws in any jurisdiction.

14.2Voting Stock in Other Companies. Stock of other corporations or associations, registered in the name of the Corporation, may be voted by the Chief Executive Officer, the President, a Vice President, or a proxy appointed by any of them. The Board of Directors, however, may by resolution appoint some other person to vote such shares, in which case such person shall be entitled to vote such shares upon the production of a certified copy of such resolution.

14.3Execution of Documents. A person who holds more than one office in the Corporation may not act in more than one capacity to execute, acknowledge, or verify an instrument required by law to be executed, acknowledged, or verified by more than one officer.

article XV– EXCLUSIVE FORUM FOR CERTAIN LITIGATION

Unless the Corporation consents in writing to the selection of an alternative forum, the Circuit Court for Baltimore City, Maryland, or, if that Court does not have jurisdiction, the United States District Court for the District of Maryland, Baltimore Division, shall be the sole and exclusive forum for:

(a) any derivative action or proceeding brought on behalf of the Corporation, other than actions arising under federal securities laws; , other than actions arising under federal securities laws;

                                   (b)          (b) any Internal Corporate Claim, as such term is defined in the MGCL, or any successor provision thereof, including, without limitation, (i) any action asserting a claim of breach of any duty owed by any director or officer or other employee of the Corporation to the Corporation or to the stockholders of the Corporation,

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                                   (c)         or (ii) any action asserting a claim against the Corporation or any director or officer or other employee of the Corporation arising pursuant to any provision of the MGCL, the charter of the Corporation or these bylaws; or

                                   (d)          (c) any other action asserting a claim against the Corporation or any director or officer or other employee of the Corporation that is governed by the internal affairs doctrine; or.

                                   (e)         any other action asserting a claim of any nature brought by or on behalf of any stockholder, in such stockholder’s capacity as such, of the Corporation (which, for purposes of this ARTICLE XV, shall mean any stockholder of record or any beneficial owners of stock of the Corporation either on his, her or its own behalf or on behalf of any series or class of shares of stock of the Corporation or any group of stockholders of the Corporation) against the Corporation or any director or officer or other employee of the Corporation.

             None of the foregoing actions, claims or proceedings may be brought in any court sitting outside the State of Maryland unless the Corporation consents in writing to such court.

Unless the Corporation consents in writing to the selection of an alternative forum, the federal district courts of the United States of America shall, to the fullest extent permitted by law, be the sole and exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act of 1933, as amended.

As the Corporation would be irreparably harmed by any action filed in violation of this ARTICLE XV and could not be adequately compensated by monetary damages alone, the Corporation shall be entitled to specific performance of this ARTICLE XV and to temporary, preliminary and permanent injunctive relief to specifically enforce the terms of this ARTICLE XV and to prevent any breaches thereof.

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EX-4.2

Exhibit 4.2

DESCRIPTION OF THE REGISTRANT’S SECURITIES

REGISTERED PURSUANT TO SECTION 12 OF THE

SECURITIES EXCHANGE ACT OF 1934

In this Exhibit 4.2, unless the context otherwise requires, the terms “we,” “us,” “our” and “the Company” refer to Paramount Group, Inc., a Maryland corporation, individually or together with its subsidiaries.  

Description of Common Stock

Our common stock, $0.01 par value per share, is registered under Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).  The following is a description of the rights of our common stockholders and related provisions of our charter and bylaws and the Maryland General Corporation Law (the “MGCL”). This description is qualified in its entirety by, and should be read in conjunction with, our charter and bylaws, each of which is incorporated by reference herein, and the MGCL.

Our charter provides that the Company may issue 900,000,000 shares of our common stock and 100,000,000 shares of preferred stock, $0.01 par value per share. Our charter authorizes our board of directors, with the approval of a majority of the entire board of directors and without any action by our stockholders, to amend our charter to increase or decrease the aggregate number of authorized shares of stock or the number of authorized shares of any class or series of our stock. Under Maryland law, our stockholders generally are not personally liable for our debts and obligations solely as a result of their status as stockholders.

All of the shares of our common stock are duly authorized, validly issued, fully paid and nonassessable.  All of the shares of our common stock have equal rights as to earnings, assets, dividends and voting. Subject to the preferential rights of holders of any other class or series of our stock, holders of shares of our common stock are entitled to receive dividends and other distributions on such shares if, as and when authorized by our board of directors and declared by us out of assets legally available therefor. Shares of our common stock generally have no preemptive, appraisal, preferential exchange, conversion, sinking fund or redemption rights and are freely transferable, except where their transfer is restricted by federal and state securities laws, by contract or by the restrictions in our charter. In the event of our liquidation, dissolution or winding up, each share of our common stock would be entitled to share ratably in all of our assets that are legally available for distribution after payment of or adequate provision for all of our known debts and other liabilities and subject to any preferential rights of holders of our preferred stock, if any preferred stock is outstanding at such time, and our charter restrictions on the transfer and ownership of our stock.

Except as may otherwise be specified in the terms of any class or series of our common stock, each outstanding share of our common stock entitles the holder to one vote on all matters submitted to a vote of stockholders, including the election of directors, and, except as may be provided with respect to any other class or series of stock, the holders of shares of our common stock will possess the exclusive voting power. There is no cumulative voting in the election of our directors. In contested elections, directors are elected by a plurality of all of the votes cast in the election of directors and in uncontested elections, a director is elected if he or she receives more votes for his or her election than votes against.

Under Maryland law, a Maryland corporation generally cannot dissolve, amend its charter, merge, convert, consolidate, sell all or substantially all of its assets or engage in a statutory share exchange unless declared advisable by its board of directors and approved by the affirmative vote of stockholders entitled to cast at least two-thirds of all of the votes entitled to be cast on the matter unless a lesser percentage (but not less than a majority of all of the votes entitled to be cast on the matter) is set forth in the corporation’s charter. Our charter provides for approval of any of these matters by the affirmative vote of stockholders entitled to cast a majority of all the votes entitled to be cast on such matters, except that the provisions of our charter relating to the removal of directors, the restrictions on ownership and transfer of shares of our stock and the vote required to amend these provisions may be amended only if such amendment is declared advisable by our board of directors and approved by the affirmative vote of stockholders entitled to cast at least two-thirds of all of the votes entitled to be cast on the matter. Maryland law also permits a Maryland corporation to transfer all or substantially all of its assets without the approval of the stockholders of the corporation to an entity if all of the equity interests of the entity are owned, directly or indirectly, by the corporation. Because substantially all of our assets are held by our operating partnership or its subsidiaries, these subsidiaries may be able to merge or transfer all or substantially all of their assets without the approval of our stockholders.

Our common stock is listed on the New York Stock Exchange under the symbol “PGRE.”

Power to Reclassify Our Unissued Shares of Stock

Our charter authorizes our board of directors to classify any unissued shares of preferred stock and to reclassify any previously classified but unissued shares of our common or preferred stock into one or more classes or series of stock. Prior to the issuance of shares of each class or series, our board of directors is required by Maryland law and by our charter to set, subject to the provisions of our charter regarding the restrictions on ownership and transfer of our stock, the terms, the preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends or other distributions, qualifications and terms or conditions of redemption of each such class or series. As a result, our board of directors could authorize the issuance of shares of preferred stock that have priority over shares of our common stock with respect to dividends or other distributions or rights upon liquidation or with other terms and conditions that could have the effect of delaying, deferring or preventing a transaction or a change of control of our company that might involve a premium price for holders of our common stock or that our common stockholders otherwise believe to be in their best interests. As of the date hereof, no shares of preferred stock are outstanding and we have no present plans to issue any shares of preferred stock.

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Power to Increase or Decrease Authorized Shares of Common Stock and Issue Additional Shares of Common and Preferred Stock

Our charter authorizes our board of directors to, without stockholder approval, amend our charter to increase or decrease the number of authorized shares of stock, to issue additional authorized but unissued shares of our common or preferred stock, and to classify unissued shares of our preferred stock, or reclassify unissued shares of our common stock or preferred stock, and thereafter to issue such classified or reclassified shares of stock. These charter provisions will provide us with increased flexibility in structuring possible future financings and acquisitions and in meeting other needs that might arise. The additional classes or series, as well as the additional authorized shares of our common stock, will be available for issuance without further action by our stockholders, unless such action is required by applicable law or the rules of any stock exchange or market system on which our securities may be listed or traded. Although our board of directors does not currently intend to do so, it could authorize us to issue a class or series of stock that could, depending upon the terms of the particular class or series, delay, defer or prevent a transaction or a change of control of our company that might involve a premium price for holders of our common stock or that our common stockholders otherwise believe to be in their best interests.

Restrictions on Ownership and Transfer

Ownership Limit

In order for us to qualify as a REIT under the Internal Revenue Code of 1986, as amended (the “Code”), our stock must be beneficially owned by 100 or more persons during at least 335 days of a taxable year of 12 months or during a proportionate part of a shorter taxable year (other than the first taxable year for which an election to be a REIT has been made). Also, not more than 50% of the value of the outstanding shares of our stock (after taking into account certain options to acquire shares of stock) may be owned, directly or indirectly or through application of certain attribution rules by five or fewer “individuals” (as defined in the Code to include certain entities, such as private foundations) at any time during the last half of a taxable year (other than the first taxable year for which an election to be a REIT has been made).

Our charter contains restrictions on the ownership and transfer of our stock that are, among other things, intended to assist us in complying with these requirements and to continue to qualify as a REIT. The relevant sections of our charter provide that, subject to the exceptions described below, no person or entity may actually own or be deemed to own by virtue of the applicable constructive ownership provisions, more than 6.50% (in value or in number of shares, whichever is more restrictive) of the outstanding shares of our common stock, or 6.50% in value of the aggregate of the outstanding shares of all classes and series of our stock, in each case excluding any shares of our stock that are not treated as outstanding for U.S. federal income tax purposes. We refer to each of these restrictions as an “ownership limit” and collectively as the “ownership limits.” A person or entity that would have acquired actual, beneficial or constructive ownership of our stock but for the application of the ownership limits or any of the other restrictions on ownership and transfer of our stock discussed below, and, if appropriate in the context, any person or entity that would have been the record owner of such shares, is referred to as a “prohibited owner.”

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The applicable constructive ownership rules under the Code are complex and, for instance, may cause stock owned actually or constructively by a group of related individuals and/or entities to be treated as owned constructively by one individual or entity. As a result, the acquisition of less than 6.50% in value of our outstanding stock or less than 6.50% in the value or number of our outstanding common stock (or the acquisition of an interest in an entity that owns, actually or constructively, our stock) by an individual or entity could nevertheless cause that individual or entity, or another individual or entity, to own, constructively or beneficially, in excess of 6.50% of our outstanding stock or in excess of 6.50% in the value or number of our outstanding common stock and thereby violate the applicable ownership limit.

Our charter provides that our board of directors may, prospectively or retroactively, waive the ownership limit with respect to a particular stockholder and establish or increase a different limit on ownership for such stockholder. As a condition to granting such waiver, our board of directors may require, among other things, the stockholder receiving such waiver to make certain representations, warranties and covenants related to our ability to qualify as a REIT. In addition, our board of directors may require an opinion of counsel or Internal Revenue Service (“IRS”) ruling, in either case in form and substance satisfactory to our board of directors, in its sole discretion, in order to determine or ensure our qualification as a REIT. Our board of directors may impose such other conditions or restrictions as it deems appropriate in connection with such a waiver or creating a different ownership limit for a stockholder. In connection with our formation transactions, our board of directors has granted waivers to the lineal descendants of Professor Dr. h.c. Werner Otto, their spouses and controlled entities to own up to 21.0% of our outstanding common stock in the aggregate (which can be automatically increased to an amount greater than 21.0% to the extent that their aggregate ownership exceeds such percentage solely as a result of a repurchase by us of our common stock). We do not expect that the issuance of these waivers will adversely affect our ability to qualify as a REIT.

Our charter further prohibits:

• any person from owning shares of our stock to the extent such ownership would result in our failing to qualify as a REIT;

• any person from transferring shares of our stock, commencing on the date on which shares of our stock are beneficially owned by 100 or more persons within the meaning of Section 856(a)(5) of the Code, if such transfer would result in shares of our stock being beneficially owned by fewer than 100 persons (determined under the principles of Section 856(a)(5) of the Code);

• commencing on the last day of the first half of the second taxable year for which we elected to be taxable as a REIT, any person from owing shares of our stock to the extent such ownership would result in us being “closely held” within the meaning of Section 856(h) of the Code (without regard to whether the ownership interest is held during the last half of a taxable year); and

any person from owning shares of our stock to the extent such ownership would cause any of our income that would otherwise qualify as “rents from real property” for purposes of Section 856(d) of the Code to fail to qualify as such (provided that we have waived this limitation with respect to the Otto family and other persons who are deemed to own shares held by the Otto family for purposes of determining whether any of our income would fail to qualify as “rents for real property”).

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• during the period commencing on May 17, 2019 and ending on the first day that our board of directors determines that it is no longer in our best interests to attempt to, or continue to, qualify as a “domestically-controlled qualified investment entity” (the “DCR Limitation Period”), any person from directly or indirectly owning shares of our stock as a result of a transfer or other event occurring during the DCR Limitation Period to the extent such ownership would, upon the occurrence of such transfer or other event, cause the direct or indirect ownership (for purposes of Section 897(h)(4)(B) of the Code) of our stock by Non-U.S. Persons (as defined below) to exceed 49.8% of the value of our outstanding stock or such other limit that is subsequently approved by our board of directors for this purpose (as described in more detail below under “Foreign Ownership Limit”).

Any person who acquires or attempts or intends to acquire beneficial or constructive ownership of shares of our stock that will or may violate the ownership limitation provisions or any of the other restrictions on ownership and transfer of our stock described above must give written notice immediately to us or, in the case of a proposed or attempted transaction, provide us at least 15 days prior written notice, and provide us with such other information as we may request in order to determine the effect of such transfer or other event on our qualification as a REIT or as a domestically controlled qualified investment entity.

The ownership limitation provisions and other restrictions on ownership and transfer of our stock described above will not apply if our board of directors determines that it is no longer in our best interests to continue to qualify as a REIT or that compliance with any such restriction or limitation is no longer required for REIT qualification.

Pursuant to our charter, if any purported transfer of our stock or any other event otherwise would result in any person violating the ownership limits or other restrictions described above, then that number of shares in excess of the ownership limit or causing a violation of one of the other restrictions (other than the 100 person limit addressed below) (rounded up to the nearest whole share) will be automatically transferred to a trust for the exclusive benefit of one or more charitable organizations selected by us. The prohibited owner will have no rights in shares of our stock held by the trustee. The automatic transfer will be effective as of the close of business on the business day prior to the date of the purported transfer or other event that results in the transfer to the trust. Any dividend or other distribution paid to the prohibited owner, prior to our discovery that the shares had been automatically transferred to a trust as described above, must be repaid to the trustee upon demand, and any dividend or other distribution authorized but unpaid shall be paid when due to the trustee, to be held in trust for the beneficiary of the trust. If the transfer to the trust as described above is not automatically effective, for any reason, to prevent violation of the applicable ownership limit or our failing to qualify as a REIT, then our charter provides that the transfer of shares resulting in such violation will be void, and the intended transferee will acquire no rights in the shares. If, however, any transfer of our stock would result in shares of our stock being beneficially owned by fewer than 100 persons (determined without reference to any rules of attribution), then any such purported transfer will be automatically void and of no force or effect and the intended transferee will acquire no rights in the shares.

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The trustee must sell the shares to a person or entity designated by the trustee who could own the shares without violating the ownership limits or any of the other restrictions on ownership and transfer of our stock; provided that the right of the trustee to sell the shares will be subject to the rights of any person or entity to purchase such shares from the trust that we establish by an agreement entered into prior to the date the shares are transferred to the trust. Upon such sale, the interest of the charitable beneficiary in the shares sold shall terminate, and the trustee must distribute to the prohibited owner an amount equal to the lesser of: (a) the price paid by the prohibited owner for the shares (or, if the prohibited owner did not give value for the shares in connection with the transfer or other event that resulted in the transfer to the trust (e.g., a gift, devise or other such transaction), the fair market value of such shares on the day of the transfer or other event that resulted in the transfer of such shares to the trust), as determined under our charter, and (b) the sales proceeds (net of commissions and other expenses of sale) received by the trustee for the shares. The trustee may reduce the amount payable to the prohibited owner by the amount of any dividends and other distributions paid to the prohibited owner and owed by the prohibited owner before our discovery that the shares had been transferred to the trust and that is owed by the prohibited owner to the trustee. Any net sales proceeds in excess of the amount payable to the prohibited owner will be immediately paid to the charitable beneficiary . In addition, if prior to discovery by us that shares of our stock have been transferred to the trust, such shares of stock are sold by a prohibited owner, then such shares shall be deemed to have been sold on behalf of the trust and, to the extent that the prohibited owner received an amount for such shares that exceeds the amount that such prohibited owner was entitled to receive, such excess amount shall be paid to the trustee upon demand.

The trustee will be designated by us and will be unaffiliated with us and with any prohibited owner. Prior to the sale of any shares by the trust, the trustee will receive, in trust for the charitable beneficiary, all dividends and other distributions paid by us with respect to such shares and may also exercise all voting rights with respect to such shares for the exclusive benefit of the charitable beneficiary.

Subject to Maryland law, effective as of the date that the shares have been transferred to the trust, the trustee shall have the authority, at the trustee’s sole discretion:

• to rescind as void any vote cast by a prohibited owner prior to our discovery that the shares have been transferred to the trust; and

• to recast the vote in accordance with the desires of the trustee acting for the benefit of the beneficiary of the trust.

However, if we have already taken irreversible corporate action, then the trustee may not rescind and recast the vote.

If our board of directors determines in good faith that a proposed transfer or other event has taken place that would violate the restrictions on ownership and transfer of our stock set forth in our charter, our board of directors shall take such action as it deems advisable to refuse to give effect to or to prevent such transfer, including, but not limited to, causing us to redeem shares of stock, refusing to give effect to the transfer on our books or instituting proceedings to enjoin the transfer or other event.

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Following the end of each REIT taxable year, every owner of 5% or more (or such lower percentage as required by the Code or the regulations promulgated thereunder) of the outstanding shares of any class or series of our stock, upon request following the end of each of our taxable years, must give written notice to us stating the name and address of such owner, the number of shares of each class and series of our stock that the owner beneficially owns, a description of the manner in which the shares are held, and whether or not such owner is a Non-U.S. Person (as defined below). Each such owner also must provide us with any additional information that we request in order to determine the effect, if any, of the person’s actual or beneficial ownership on our qualification as a REIT or status as a domestically controlled qualified investment entity and to ensure compliance with the ownership limitation provisions. In addition, any person or entity that is an actual owner, beneficial owner or constructive owner of shares of our stock and any person or entity (including the stockholder of record) who is holding shares of our stock for an actual owner, beneficial owner or constructive owner must, on request, provide in writing to us such information as we may request in good faith in order to determine our qualification as a REIT or status as a domestically controlled qualified investment entity and comply with requirements of any taxing authority or governmental authority or to determine such compliance.

Any certificates representing shares of our stock will bear a legend referring to the restrictions on ownership and transfer of our stock described above, or, instead of such legend, the certificate, if any, may state that we will furnish a full statement about certain restrictions on transferability to a stockholder on request and without charge.

Foreign Ownership Limit

As noted above, our charter contains a foreign ownership limit (the “Foreign Ownership Limit”). The Foreign Ownership Limit is intended to help us qualify as a “domestically controlled qualified investment entity.”

The Foreign Ownership Limit contained in our charter prohibits persons from directly or indirectly owning shares of our capital stock to the extent such ownership would cause more than 49.8% of the value of the shares of our capital stock to be owned, directly or indirectly, by Non-U.S. Persons. For this purpose, a “Non-U.S. Person” is defined as a person other than a “United States person,” as defined in Section 7701(a)(30) of the Code (a “U.S. Person”), and it includes a “foreign person” as such term is used in the provision of the Code defining a domestically controlled qualified investment entity.  In this regard, if our stock is held by a qualified investment entity (i.e., generally a REIT or certain regulated investment companies (each, a “RIC”)), any class of stock of which is publicly traded or which is a RIC that issues redeemable securities (within the meaning of section 2 of the Investment Company Act of 1940, as amended) (a “publicly-traded qualified investment entity”) and such publicly-traded qualified investment entity is not itself a domestically controlled qualified investment entity, such entity shall be treated as a Non-U.S. Person. Conversely, to the extent our capital stock is held by a publicly-traded qualified investment entity that does qualify as a domestically controlled qualified investment entity, such stock will be considered as held in its entirety by a U.S. Person. The value of our outstanding shares of capital stock will be determined by our board in good faith, which determination will be conclusive for purposes of the Foreign Ownership Limit.

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The constructive trust provisions used in the traditional REIT qualification ownership limits will also be used in connection with enforcing the Foreign Ownership Limit, as described above.

Under the Code, pursuant to certain FIRPTA provisions enacted under the Protecting Americans from Tax Hikes Act of 2015 (the “PATH Act”) in December of 2015, for purposes of determining whether we qualify as a domestically controlled qualified investment entity, we may treat any person who owns less than 5% of the outstanding shares of our common stock as a U.S. Person (i.e., not a foreign person) unless we have actual knowledge that such person is not a U.S. Person. However, the Foreign Ownership Limit will apply based on the value of the shares of our capital stock owned by Non-U.S. Persons as defined in our charter, which would include Non-U.S. Persons that own less than 5% of the outstanding shares of our common stock, whether or not we have actual knowledge that such owner is not a U.S. Person. Utilizing this approach will help assist us in not exceeding 50% or more foreign ownership.  As a result, under the charter, a Non-U.S. Person may invest in us without knowledge that the Foreign Ownership Limit has been exceeded. The existence of Non-U.S. Persons who, directly or indirectly, own less than 5% of the outstanding shares of our common stock and are not known to us, and may also not be known to other Non-U.S. Persons acquiring shares of our common stock, may nevertheless result in shares of our common stock that otherwise would have been acquired by a Non-U.S. Person being transferred automatically to the charitable trust described above. Under our charter, the last person whose acquisition of direct or indirect ownership of shares of our capital stock (or who engaged in another event) that would have resulted in the Foreign Ownership Limit being exceeded will have the shares causing such violation placed in the charitable trust whether or not that person’s ownership of our capital stock was discovered by us before or after the direct or indirect ownership of other Non-U.S. Persons. To help assist us in administering the Foreign Ownership Limit, under our charter, stockholders are required to notify us in writing of any acquisition or intended acquisition of direct or indirect ownership of our common stock that will or may violate the Foreign Ownership Limit and will also be required to provide such other information as we may request in order to determine the effect of any such transfer or non-transfer event on our status as a domestically controlled qualified investment entity. In addition, stockholders who own 5% or more of the outstanding shares of our common stock are required to provide us with certain information regarding their stock ownership, including whether the stockholder or any of its direct or indirect owners constitute a Non-U.S. Person.

Our board has the right to discontinue the Foreign Ownership Limit at any time. Our charter also gives our board the right to establish a successor Foreign Ownership Limit in the future if deemed by our board based in whole or in part on the advice of tax counsel to be necessary or appropriate in light of changes in applicable law, regulations, or the interpretation thereof (including, without limitation, changes to the Code, applicable final and temporary Treasury regulations, judicial decisions and administrative rulings and practice, including private letter rulings) to assist us in qualifying as a domestically controlled qualified investment entity. Any successor Foreign Ownership Limit approved by our board would not be effective until the next business day after a certificate of notice setting forth such successor Foreign Ownership Limit is filed with the State Department of Assessments and Taxation in Maryland and would not apply to transfers or other events occurring prior to its effectiveness except to the extent the original Foreign Ownership Limit (or previously effective successor Foreign Ownership Limit) would have resulted in the same treatment.

The ownership limits and the foreign ownership limit could delay, defer or prevent a transaction or a change of control of our company.

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Description of Certain Provisions Of Maryland Law and the Company’s Charter And Bylaws

Number of Directors; Vacancies

Our charter provides that the number of directors will be set only by the board of directors in accordance with our bylaws. Our bylaws provide that a majority of our entire board of directors may at any time increase or decrease the number of directors. However, the number of directors may never be less than the minimum number required by the MGCL, which is one and, unless our bylaws are amended, more than nine.

Pursuant to an election made by the board of directors under Subtitle 8 of Title 3 of the MGCL, our charter and bylaws provide that any and all vacancies on our board of directors may be filled only by the affirmative vote of a majority of the remaining directors in office, even if the remaining directors do not constitute a quorum, and any individual elected to fill such vacancy will serve for the remainder of the full term of the class in which the vacancy occurred and until a successor is duly elected and qualifies.

Annual Elections; Majority Voting

Each of our directors will be elected by our stockholders to serve until our next annual meeting of stockholders and until his or her successor is duly elected and qualifies. Our bylaws provide for majority voting in uncontested director elections. Pursuant to our bylaws, in a contested election, directors are elected by a plurality of all of the votes cast in the election of directors, and in an uncontested election, a director is elected if he or she receives more votes for his or her election than votes against his or her election.

Removal of Directors

Our charter provides that, subject to the rights, if any, of holders of any class or series of preferred stock to elect or remove one or more directors, a director may be removed only for cause, and then only by the affirmative vote of at least two-thirds of the votes entitled to be cast generally in the election of directors. “Cause” is defined in our charter to mean conviction of a director of a felony or a final judgment of a court of competent jurisdiction holding that a director caused demonstrable, material harm to us through bad faith or active and deliberate dishonesty. This provision, when coupled with the exclusive power of our board of directors to fill vacancies on our board of directors, precludes stockholders from (1) removing incumbent directors except upon the affirmative vote of at least two-thirds of the votes entitled to be cast on the matter and for cause and (2) filling the vacancies created by such removal with their own nominees.

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Calling of Special Meetings of Stockholders

Our bylaws provide that special meetings of stockholders may be called by our chairman of the board, our board of directors and certain of our officers. Additionally, our bylaws provide that, subject to the satisfaction of certain procedural and informational requirements by the stockholders requesting the meeting, a special meeting of stockholders to act on any matter that may properly be considered at a meeting of stockholders shall be called by the secretary of the corporation upon the written request of stockholders entitled to cast not less than a majority of all the votes entitled to be cast on such matter at such meeting.

Business Combinations

Under the MGCL, certain “business combinations” (including a merger, consolidation, share exchange or, in certain circumstances, an asset transfer or issuance or reclassification of equity securities) between a Maryland corporation and any interested stockholder, or an affiliate of such an interested stockholder, are prohibited for five years following the most recent date on which the interested stockholder became an interested stockholder. Maryland law defines an interested stockholder as:

• any person who beneficially owns, directly or indirectly, 10% or more of the voting power of the corporation’s outstanding voting stock after the date on which the corporation had 100 or more beneficial owners of its stock; or

• an affiliate or associate of the corporation who, at any time within the two-year period prior to the date in question and after the date on which the corporation had 100 or more beneficial owners of its stock, was the beneficial owner, directly or indirectly, of 10% or more of the voting power of the then outstanding voting stock of the corporation.

After such five-year period, any such business combination must be recommended by the board of directors of the corporation and approved by the affirmative vote of at least:

• 80% of the votes entitled to be cast by holders of outstanding shares of voting stock of the corporation; and

• two-thirds of the votes entitled to be cast by holders of voting stock of the corporation other than shares held by the interested stockholder with whom (or with whose affiliate) the business combination is to be effected or held by an affiliate or associate of the interested stockholder.

These supermajority approval requirements do not apply if, among other conditions, the corporation’s common stockholders receive a minimum price (as defined in the MGCL) for their shares and the consideration is received in cash or in the same form as previously paid by the interested stockholder for its shares. In addition, a person is not an interested stockholder under the statute if the board of directors approved in advance the transaction by which the person otherwise would have become an interested stockholder. The board of directors may provide that its approval is subject to compliance with any terms and conditions determined by it.

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These provisions of the MGCL do not apply, however, to business combinations that are approved or exempted by a corporation’s board of directors prior to the time that the interested stockholder becomes an interested stockholder. Our board of directors has adopted a resolution exempting any business combinations between us and any other person or entity from the business combination provisions of the MGCL and, consequently, the five-year prohibition and the supermajority vote requirements will not apply to business combinations between us and any person as described above. As a result, any person described above may be able to enter into business combinations with us that may not be in the best interest of our stockholders without compliance by our company with the supermajority vote requirements and other provisions of the statute.

Our bylaws provide that this resolution or any other resolution of our board of directors exempting any business combination from the business combination provisions of the MGCL may only be revoked, altered or amended, and our board of directors may only adopt any resolution inconsistent with any such resolution (including an amendment to that bylaw provision), with the affirmative vote of a majority of the votes cast on the matter by holders of outstanding shares of our common stock. However, we cannot assure you that our board of directors will not recommend to stockholders that the board of directors alter or repeal this resolution in the future. However, an alteration or repeal of the resolution described above will not have any effect on any business combinations that have been consummated or upon any agreements existing at the time of such modification or repeal.

Control Share Acquisitions

The MGCL provides that holders of “control shares” of a Maryland corporation acquired in a “control share acquisition” have no voting rights with respect to any control shares except to the extent approved at a special meeting of stockholders by the affirmative vote of at least two-thirds of the votes entitled to be cast on the matter, excluding shares of stock of a corporation in respect of which any of the following persons is entitled to exercise or direct the exercise of the voting power of such shares in the election of directors: (a) a person who makes or proposes to make a control share acquisition; (b) an officer of the corporation; or (c) an employee of the corporation who is also a director of the corporation. “Control shares” are voting shares of stock which, if aggregated with all other such shares of stock previously acquired by the acquirer or in respect of which the acquirer is able to exercise or direct the exercise of voting power (except solely by virtue of a revocable proxy), would entitle the acquirer to exercise voting power in electing directors within one of the following ranges of voting power:

• one-tenth or more but less than one-third;

• one-third or more but less than a majority; or

• a majority or more of all voting power.

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Control shares do not include shares that the acquiring person is then entitled to vote as a result of having previously obtained stockholder approval. A “control share acquisition” means the acquisition, directly or indirectly, of ownership of, or the power to direct the exercise of voting power with respect to, issued and outstanding control shares, subject to certain exceptions.

A person who has made or proposes to make a control share acquisition, upon satisfaction of certain conditions (including an undertaking to pay expenses and making an “acquiring person statement” as described in the MGCL), may compel our board of directors to call a special meeting of stockholders to be held within 50 days of demand to consider the voting rights of the shares acquired or to be acquired in the control share acquisition. If no request for a special meeting is made, the corporation may itself present the question at any stockholders meeting.

If voting rights of control shares are not approved at the meeting or if the acquiring person does not deliver an “acquiring person statement” as required by the statute, then, subject to certain conditions and limitations, the corporation may redeem any or all of the control shares (except those for which voting rights have previously been approved) for fair value determined, without regard to the absence of voting rights for the control shares, as of the date of the last control share acquisition by the acquirer or of any meeting of stockholders at which the voting rights of such shares are considered and not approved. If voting rights for control shares are approved at a stockholders meeting and the acquirer becomes entitled to vote a majority of the shares entitled to vote, all other stockholders may exercise appraisal rights, unless these specific appraisal rights are eliminated under the charter or bylaws.

The control share acquisition statute does not apply to: (a) shares acquired in a merger, consolidation or share exchange if the corporation is a party to the transaction, or (b) acquisitions approved or exempted by the charter or bylaws of the corporation.

Our bylaws contain a provision exempting from the control share acquisition statute any and all acquisitions by any person of shares of our stock. This bylaw provision may be amended only by our board of directors with the affirmative vote of a majority of the votes cast on such an amendment by holders of outstanding shares of our common stock.

Appraisal Rights

The MGCL provides that stockholders may exercise appraisal rights unless appraisal rights are eliminated under a company’s charter. Our charter generally eliminates all appraisal rights of stockholders.

Subtitle 8

Under Subtitle 8 of Title 3 of the MGCL, a Maryland corporation with a class of equity securities registered under the Exchange Act and at least three directors who are not officers or employees of the corporation, and who are not affiliated with a person who is seeking to acquire control of the corporation, may elect to be subject, by provision in its charter or bylaws or a resolution of its board of directors and notwithstanding any contrary provision in the charter or bylaws, to any or all of the following five provisions:

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• a classified board requirement;

• a two-thirds vote requirement for removing a director;

• a requirement that the number of directors be fixed only by vote of the board of directors;

• a requirement that a vacancy on the board be filled only by the affirmative vote of a majority of the remaining directors and for the remainder of the full term of the class of directors in which the vacancy occurred and until a successor is elected and qualifies; or

• a requirement for the calling of a special meeting of stockholders only at the written request of stockholders entitled to cast at least a majority of the votes entitled to be cast at the meeting.

Through provisions in our charter and bylaws unrelated to Subtitle 8, we already (a) require the affirmative vote of stockholders entitled to cast at least two-thirds of the votes entitled to be cast in the election of directors for the removal of any director from the board, which removal also requires cause, (b) vest in the board the exclusive power to fix the number of directorships, subject to limitations set forth in our charter and bylaws, (c) provide that vacancies on our board may be filled only by the remaining directors and for the remainder of the full term of the directorship in which the vacancy occurred, and (d) require, unless called by the chairman of our board of directors, chief executive officer, president or our board of directors, the request of stockholders entitled to cast not less than a majority of all votes entitled to be cast on a matter at such meeting to call a special meeting to consider and vote on any matter that may properly be considered at a meeting of stockholders. We have elected to be subject to the provision of Subtitle 8 requiring that any vacancy on the board of directors be filled only by the affirmative vote of a majority of the remaining directors for the remainder of the full term of the class of directors in which the vacancy occurred, and until a successor is duly elected and qualifies. We have not elected to create a classified board. In the future, our board of directors may elect, without stockholder approval, to create a classified board or elect to be subject to one or more of the other provisions of Subtitle 8.

Amendments to the Company’s Charter and Bylaws

Other than amendments to certain provisions of our charter described below and amendments permitted to be made without stockholder approval under Maryland law or by a specific provision in our charter, our charter may be amended only if such amendment is declared advisable by our board of directors and approved by the affirmative vote of stockholders entitled to cast a majority of all of the votes entitled to be cast on the matter. The provisions of our charter relating to the removal of directors, the restrictions on ownership and transfer of shares of our stock and the vote required to amend these provisions, may be amended only if such amendment is declared advisable by our board of directors and approved by the affirmative vote of stockholders entitled to cast at least two-thirds of all of the votes entitled to be cast on the matter. Our board of directors, without stockholder approval, has the power under our charter to amend our charter from time to time to increase or decrease the aggregate number of shares of stock or the number of shares of stock of any class or series that we are authorized to issue, to authorize us to issue authorized but unissued shares of our common stock or preferred stock and to classify any unissued shares of our preferred stock, or reclassify any unissued shares of our common stock or preferred stock, into one or more classes or series of stock and set the terms of such newly classified or reclassified shares.

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Our board of directors has the exclusive power to adopt, alter or repeal any provision of our bylaws and to make new bylaws, except the following bylaw provisions, each of which may be amended only by our board of directors with the affirmative vote of a majority of the votes cast on such amendment by holders of outstanding shares of our common stock:

• provisions opting out of the control share acquisition provisions of the MGCL; and

• provisions prohibiting our board of directors without the approval of a majority of the votes cast by holders of outstanding shares of our common stock, from revoking, altering or amending any resolution, or adopting any resolution inconsistent with any previously-adopted resolution of our board of directors, that exempts any business combination between us and any other person or entity from the business combination provisions of the MGCL.

Transactions Outside the Ordinary Course of Business

We generally may not merge with or into or consolidate with another company, sell all or substantially all of our assets or engage in a statutory share exchange or convert unless such transaction is declared advisable by our board of directors and approved by the affirmative vote of stockholders entitled to cast a majority of all of the votes entitled to be cast on the matter.

Dissolution of the Company

The voluntary dissolution of our company must be declared advisable by a majority of our entire board of directors and approved by the affirmative vote of stockholders entitled to cast a majority of all of the votes entitled to be cast on the matter.

Meetings of Stockholders

Under our bylaws, annual meetings of stockholders must be held at a date, time and place determined by our board of directors. Special meetings of stockholders may be called by the chairman of our board of directors, our chief executive officer, our president or our board of directors. Additionally, a special meeting of stockholders to act on any matter that may properly be considered at a meeting of stockholders must be called by our secretary upon the written request of stockholders entitled to cast not less than a majority of all of the votes entitled to be cast on the matter at such meeting who have requested the special meeting in accordance with the procedures specified in our bylaws and provided the information and certifications required by our bylaws. Only matters set forth in the notice of a special meeting of stockholders may be considered and acted upon at such a meeting.

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Advance Notice of Director Nominations and New Business

Our bylaws provide that:

• with respect to an annual meeting of stockholders, nominations of individuals for election to our board of directors and the proposal of business to be considered by stockholders at the annual meeting may be made only:  

• by or at the direction of our board of directors;  

• by a stockholder who was a stockholder of record both at the time of giving the notice required by our bylaws and at the time of the annual meeting, who is entitled to vote at the meeting in the election of each individual so nominated or on such other business and who has complied with the advance notice procedures and provided the information and certifications required by the advance notice procedures set forth in our bylaws; or  

• to the extent required by applicable law, by the persons and subject to the applicable requirements set forth therein; and  

• with respect to special meetings of stockholders, only the business specified in our notice of meeting may be brought before the meeting of stockholders, and nominations of individuals for election to our board of directors may be made, provided that the meeting has been called for the purpose of electing directors, only:  

• by or at the direction of our board of directors; or  

• by a stockholder that has requested that a special meeting be called for the election of one or more directors in compliance with our bylaws, but only with respect to an individual identified as a proposed nominee in the request submitted with respect to such special meeting.  

The purpose of requiring stockholders to give advance notice of nominations and other proposals is to afford our board of directors the opportunity to consider the qualifications of the proposed nominees or the advisability of the other proposals and, to the extent considered necessary by our board of directors, to inform stockholders and make recommendations regarding the nominations or other proposals. The advance notice procedures also permit a more orderly procedure for conducting our stockholder meetings. Although our bylaws do not give our board of directors any power to disapprove stockholder nominations for the election of directors or proposals recommending certain actions, they may have the effect of precluding a contest for the election of directors or the consideration of stockholder proposals if proper procedures are not followed and of discouraging or deterring a third party from conducting a solicitation of proxies to elect its own slate of directors or to approve its own proposal without regard to whether consideration of such nominees or proposals might be harmful or beneficial to us and our stockholders.

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Action by Stockholders

Our charter provides that stockholder action can be taken at an annual or special meeting of stockholders, or by written consent in lieu of a meeting only if such consent is approved unanimously. These provisions, combined with the requirements of our bylaws regarding advance notice of nominations and other business to be considered at a meeting of stockholders and the calling of a stockholder-requested special meeting of stockholders, may have the effect of delaying consideration of a stockholder proposal.

Anti-Takeover Effect of Certain Provisions of Maryland Law and of the Company’s Charter and Bylaws

The provisions of the MGCL, our charter and our bylaws described above including, among others, the restrictions on ownership and transfer of our stock, the exclusive power of our board of directors to fill vacancies on the board and the advance notice provisions of our bylaws could delay, defer or prevent a transaction or a change of control of our company that might involve a premium price for holders of our common stock or otherwise be in their best interests. Likewise, if our board of directors were to opt in to the provisions of Subtitle 8 of Title 3 of the MGCL providing for a classified board of directors or if our stockholders were to vote to amend our bylaws to opt in to the business combination provisions of the MGCL or the control share acquisition provisions of the MGCL, these provisions of the MGCL could provide us with similar anti-takeover effects.

REIT Qualification

Our charter provides that our board of directors may revoke or otherwise terminate our REIT election, without approval of our stockholders, if it determines that it is no longer in our best interests to continue to qualify as a REIT.

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EX-10.1

Exhibit 10.1

SECOND AMENDED AND RESTATED

AGREEMENT OF LIMITED PARTNERSHIP

OF

paramount group operating partnership lp

Dated as of October 26, 2020

THE PARTNERSHIP INTERESTS ISSUED PURSUANT TO THIS AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE SECURITIES OR “BLUE SKY” LAWS OF ANY STATE OR OTHER JURISDICTION, AND MAY NOT BE SOLD OR TRANSFERRED UNLESS THEY ARE REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND ANY OTHER APPLICABLE SECURITIES OR “BLUE SKY” LAWS, OR UNLESS AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE.  SUCH PARTNERSHIP INTERESTS ARE SUBJECT TO THE RESTRICTIONS ON TRANSFER SET FORTH IN THIS AGREEMENT.

TABLE OF CONTENTS

Page

ARTICLE 1 - DEFINED TERMS 2

ARTICLE 2 - ORGANIZATIONAL MATTERS 15

Section 2.1 Formation and Continuation15

Section 2.2 Name15

Section 2.3 Registered Office and Agent; Principal Office15

Section 2.4 Power of Attorney16

Section 2.5 Term17

Section 2.6 Partnership Interests are Securities17

ARTICLE 3 - PURPOSE 17

Section 3.1 Purpose and Business17

Section 3.2 Powers18

Section 3.3 Partnership Only for Purposes Specified18

Section 3.4 Representations and Warranties by the Partners18

ARTICLE 4 - CAPITAL CONTRIBUTIONS 20

Section 4.1 Capital Contributions of the Partners20

Section 4.2 Issuance of Additional Partnership Interests and Additional Funding21

Section 4.3 Other Contribution Provisions24

Section 4.4 No Preemptive Rights24

Section 4.5 No Interest on Capital24

ARTICLE 5 - DISTRIBUTIONS 24

Section 5.1 Distribution of Cash24

Section 5.2 REIT Distribution Requirements26

Section 5.3 No Right to Distributions in Kind26

Section 5.4 Distributions Upon Liquidation26

Section 5.5 Distributions to Reflect Issuance of Additional Partnership Units26

ARTICLE 6 – ALLOCATIONS 26

Section 6.1 Capital Account Allocations of Profit and Loss26

Section 6.2 Capital Accounts33

Section 6.3 Tax Allocations34

Section 6.4 Substantial Economic Effect34

ARTICLE 7 - MANAGEMENT AND OPERATIONS OF BUSINESS 35

Section 7.1 Management35

Section 7.2 Certificate of Limited Partnership40

Section 7.3 Restrictions on General Partner Authority41

Section 7.4 Reimbursement of the General Partner and the Company41

Section 7.5 Outside Activities of the General Partner and the Company42

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Section 7.6 Contracts with Affiliates42

Section 7.7 Indemnification43

Section 7.8 Liability of the General Partner and the Company45

Section 7.9 Other Matters Concerning the General Partner and the Company46

Section 7.10 Title to Partnership Assets47

Section 7.11 Reliance by Third Parties47

ARTICLE 8 - RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS 48

Section 8.1 Limitation of Liability48

Section 8.2 Management of Business48

Section 8.3 Outside Activities of Limited Partners48

Section 8.4 Rights of Limited Partners Relating to the Partnership48

Section 8.5 Redemption Right49

ARTICLE 9 - BOOKS, RECORDS, ACCOUNTING AND REPORTS 52

Section 9.1 Records and Accounting52

Section 9.2 Taxable Year and Fiscal Year52

Section 9.3 Reports52

ARTICLE 10 - TAX MATTERS 53

Section 10.1 Preparation of Tax Returns53

Section 10.2 Tax Elections53

Section 10.3 Tax Matters Partner54

Section 10.4 Organizational Expenses56

ARTICLE 11 - TRANSFERS AND WITHDRAWALS 56

Section 11.1 Transfer56

Section 11.2 Transfer of the Company’s and General Partner’s Partnership Interest and Limited Partner Interest; Extraordinary Transactions56

Section 11.3 Limited Partners’ Rights to Transfer58

Section 11.4 Substituted Limited Partners59

Section 11.5 Assignees59

Section 11.6 General Provisions60

ARTICLE 12 - ADMISSION OF PARTNERS 62

Section 12.1 Admission of Successor General Partner62

Section 12.2 Admission of Additional Limited Partners63

Section 12.3 Amendment of Agreement and Certificate of Limited Partnership63

ARTICLE 13 - DISSOLUTION, LIQUIDATION AND TERMINATION 64

Section 13.1 Dissolution64

Section 13.2 Winding Up64

Section 13.3 Deficit Capital Account Restoration Obligation65

Section 13.4 Compliance with Timing Requirements of Regulations66

Section 13.5 Deemed Distribution and Recontribution66

Section 13.6 Rights of Limited Partners66

Section 13.7 Notice of Dissolution67

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Section 13.8 Cancellation of Certificate of Limited Partnership67

Section 13.9 Reasonable Time for Winding‑Up67

Section 13.10 Waiver of Partition67

Section 13.11 Liability of Liquidator67

ARTICLE 14 - AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS 67

Section 14.1 Procedures for Actions and Consents of Partners67

Section 14.2 Amendments67

Section 14.3 Meetings of the Partners69

ARTICLE 15 - GENERAL PROVISIONS 71

Section 15.1 Addresses and Notice71

Section 15.2 Titles and Captions71

Section 15.3 Pronouns and Plurals71

Section 15.4 Further Action71

Section 15.5 Binding Effect71

Section 15.6 No Third-Party Rights Created Hereby71

Section 15.7 Waiver72

Section 15.8 Counterparts72

Section 15.9 Applicable Law; Waiver of Jury Trial72

Section 15.10 Invalidity of Provisions73

Section 15.11 No Rights as Stockholders73

Section 15.12 Entire Agreement73

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EXHIBITS

Exhibit A‑Notice of Redemption

Exhibit B-LTIP Units

Exhibit C-AOLTIP Units

iv

SECOND AMENDED AND RESTATED

AGREEMENT OF LIMITED PARTNERSHIP

OF

PARAMOUNT GROUP OPERATING PARTNERSHIP LP

THIS SECOND AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF PARAMOUNT GROUP OPERATING PARTNERSHIP LP, dated as of October 26, 2020, is entered into by and among PARAMOUNT GROUP, INC., a Maryland corporation (the “Company”), as the General Partner, and the Persons whose names are set forth in the Partnership Ledger (as defined below), as the Limited Partners, together with any other Persons who become Partners in the Partnership as provided herein.  

WHEREAS, the Partnership was formed as a limited partnership under the laws of the State of Delaware pursuant to a Certificate of Limited Partnership filed on August 25, 2014;

WHEREAS, an original agreement of limited partnership was entered into by the Company, as general partner, as of August 25, 2014 (the “Original Partnership Agreement”);

WHEREAS, the Original Partnership Agreement was amended and restated as of November 21, 2014 (such amended and restated agreement of limited partnership, the “Prior Partnership Agreement”) in connection with the Initial Public Offering (as defined below) and the formation transactions occurring prior to or concurrently with the completion of the Initial Public Offering (the “Formation Transactions”);

WHEREAS, the Prior Partnership Agreement was amended by (i) the First Amendment to Amended and Restated Agreement of Limited Partnership of Paramount Group Operating Partnership LP and (ii) the Second Amendment to Amended and Restated Agreement of Limited Partnership of Paramount Group Operating Partnership LP (together, the “Partnership Agreement Amendments”); and

WHEREAS, pursuant to the authority reserved in Section 14.2A and Section 14.2B of the Prior Partnership Agreement, the Board of Directors of the Company, desires to cause the Company, in its capacity as the General Partner and the holder of a majority of the Common Units held by the Limited Partners, to amend and restate the Prior Partnership Agreement to (i) reflect the Partnership Agreement Amendments, (ii) establish the terms of the AOLTIP Units (as defined below) as additional Partnership Interests that are available for issuance, (iii) amend the Prior Partnership Agreement to reflect certain tax law changes that have occurred since the date of the Prior Partnership Agreement, (iv) make such other technical amendments as are necessary to effect the foregoing and (v) otherwise amend and restate the Prior Partnership Agreement as set forth herein.

NOW, THEREFORE, in consideration of the foregoing, the Prior Partnership Agreement is hereby amended and restated as follows:

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ARTICLE 1- DEFINED TERMS

The following definitions shall be for all purposes, unless otherwise clearly indicated to the contrary, applied to the terms used in this Agreement.

“Act” means the Delaware Revised Uniform Limited Partnership Act, as it may be amended, supplemented or restated from time to time, and any successor to such statute.

“Additional Funds” has the meaning set forth in Section 4.2B hereof.

“Additional Limited Partner” means a Person admitted to the Partnership as a Limited Partner pursuant to Section 4.2 and Section 12.2 hereof.

“Adjusted Capital Account” means the Capital Account maintained for each Partner as of the end of each Partnership taxable year (i) increased by any amounts which such Partner is obligated to restore pursuant to any provision of this Agreement or is deemed to be obligated to restore pursuant to the penultimate sentences of Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5) and (ii) decreased by the items described in Regulations Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), and 1.704-1(b)(2)(ii)(d)(6).  The foregoing definition of Adjusted Capital Account is intended to comply with the provisions of Regulations Section 1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith.

“Administrative Expenses” means (i) all administrative and operating costs and expenses incurred by the Partnership, (ii) those administrative costs and expenses of the General Partner or the Company, including any salaries or other payments to directors, officers or employees of the General Partner, the Company, or any Subsidiary of the Company and any accounting and legal expenses of the General Partner, the Company, or any Subsidiary of the Company, which expenses, the Partners have agreed, are expenses of the Partnership and not the General Partner or the Company or any Subsidiary of the Company, and (iii) to the extent not included in clauses (i) or (ii) above, REIT Expenses; provided, however, that Administrative Expenses shall not include any administrative costs and expenses incurred by the General Partner or the Company that are attributable to Properties or interests in a Subsidiary of the Company that are owned by the General Partner or the Company other than through its ownership interest in the Partnership.

“Affiliate” means, with respect to any Person, any other Person directly or indirectly controlling, controlled by or under common control with such Person.  For purposes of this definition, “control,” when used with respect to any Person, means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise, and the terms “controlling” and “controlled” have meanings correlative to the foregoing.  No officer, director or stockholder of the Company shall be considered an Affiliate of the Company solely as a result of serving in such capacity or being a stockholder of the Company.

“Agreed Value” means the fair market value of a Partner’s non-cash Capital Contribution (net of assumed liabilities) as of the date of contribution as agreed to by such Partner and the General Partner.

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“Agreement” means this Amended and Restated Agreement of Limited Partnership, as it may be amended, supplemented and/or restated from time to time, including by way of adoption of a Certificate of Designations, including any exhibits attached hereto.

“AOLTIP Conversion Factor” has the meaning set forth in Section 1.8(e) of Exhibit C hereto.

“AOLTIP Conversion Notice” has the meaning set forth in Section 1.8(a) of Exhibit C hereto.

“AOLTIP Conversion Right” has the meaning set forth in Section 1.8(a) of Exhibit C hereto.

“AOLTIP Conversion Value” has the meaning set forth in Section 1.8(e) of Exhibit C hereto.

“AOLTIP Forced Conversion” has the meaning set forth in Section 1.8(c) of Exhibit C hereto.

“AOLTIP Forced Conversion Event” has the meaning set forth in Section 1.8(c) of Exhibit C hereto.

“AOLTIP Unit” means a Partnership Unit which is designated as an AOLTIP Unit having the rights, powers, privileges, restrictions, qualifications and limitations set forth in Exhibit C hereof and elsewhere in this Agreement.

“AOLTIP Unit Conversion Date” has the meaning set forth in Section 1.8(d) of Exhibit C hereto.

“AOLTIP Unit Participation Threshold” has the meaning set forth in Section 1.8(e) of Exhibit C hereto.

“AOLTIP Unit Sharing Percentage” means, for an AOLTIP Unit, the percentage that is specified as the AOLTIP Unit Sharing Percentage in the Vesting Agreement or other documentation pursuant to which such AOLTIP Unit is issued or, if no such percentage is specified, 10%.

“Articles of Incorporation” means the Articles of Incorporation of the Company filed with the Maryland State Department of Assessments and Taxation, as amended or restated from time to time.

“Assignee” means a Person to whom one or more Partnership Units have been transferred in a manner permitted under this Agreement, but who has not become a Substituted Limited Partner, and who has the rights set forth in Section 11.5.

“Book-Up Target” for an LTIP Unit means (i) initially, the Common Unit Economic Balance as determined on the date such LTIP Unit was granted and (ii) thereafter, the remaining amount, if any, required to be allocated to such LTIP Unit for the Economic Capital Account

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Balance of the holder of such LTIP Unit, to the extent attributable to such LTIP Unit, to be equal to the Common Unit Economic Balance.

“Business Day” means any day except a Saturday, Sunday or other day on which commercial banks in New York, New York are authorized or required by law to be closed.

“Bylaws” means the Amended and Restated Bylaws of the Company, as may be amended, supplemented and/or restated from time to time.

“Capital Account” has the meaning set forth in Section 6.2 hereof.

“Capital Contribution” means, with respect to each Partner, the total amount of cash, cash equivalents, and the Agreed Value of any Property or other asset contributed or deemed to be contributed, as the context requires, to the Partnership by such Partner pursuant to the terms of this Agreement.  Any reference to the “Capital Contribution” of a Partner shall include the Capital Contribution made by a predecessor holder of the Partnership Interest of such Partner.

“Cash Amount” means, with respect to Tendered Units, an amount in cash equal to the Value of the REIT Shares Amount as of the Valuation Date with respect to such Tendered Units; provided that the Cash Amount will be reduced by the amount of any distributions payable with respect to such REIT Shares Amount that have an ex-dividend date after the Valuation Date and a record date before the Specified Redemption Date.

“Certificate of Designations” means an amendment to this Agreement that sets forth the designations, rights, powers, duties and preferences of Holders of any Partnership Interests issued pursuant to Section 4.2, which amendment is in the form of a certificate signed by the General Partner and appended to this Agreement.  A Certificate of Designations is not the exclusive manner in which such an amendment may be effected.  The General Partner may adopt a Certificate of Designations without the Consent of the Limited Partners to the extent permitted pursuant to Section 14.2 hereof.

“Certificate of Limited Partnership” means the Certificate of Limited Partnership of the Partnership filed with the office of the Secretary of State of the State of Delaware on August 25, 2014, as amended from time to time in accordance with the terms hereof and the Act.

“Code” means the Internal Revenue Code of 1986, as amended and in effect from time to time or any successor statute thereto, as interpreted by the applicable regulations thereunder.  Any reference herein to a specific section or sections of the Code shall be deemed to include a reference to any corresponding provision of any succeeding law.

“Commission” means the Securities and Exchange Commission.

“Common Unit” means a Partnership Unit other than an LTIP Unit, AOLTIP Unit or Preferred Unit.

“Common Unit Economic Balance” means (i) the Economic Capital Account Balance of the Company but only to the extent attributable to the Company’s ownership of Common Units (other than any Common Units that were previously AOLTIP Units) and computed on a

4

hypothetical basis after taking into account all allocations through the date on which any allocation is made under Section 6.1I, divided by (ii) the number of the Company’s Common Units.  If the Company’s Economic Capital Account Balance at the time of determination reflects a net reduction as a result of Section 6.1L, for purposes of this definition the Company’s Economic Capital Account Balance shall be the Economic Capital Account Balance it would have been if Section 6.1L had not applied.

“Common Unitholder” means a Partner that holds Common Units.

“Company” has the meaning set forth in the introductory paragraph.

“Consent” means the consent to, approval of or vote in favor of a proposed action by a Partner given in accordance with Article 14 hereof.

“Constituent Person” has the meaning set forth in Section 1.10(b) of Exhibit B hereto.

“Conversion Factor” means 1.0; provided that in the event that:

(i) the Company (a) declares or pays a dividend on its outstanding REIT Shares wholly or partly in REIT Shares or makes a distribution to all holders of its outstanding REIT Shares wholly or partly in REIT Shares; (b) splits or subdivides its outstanding REIT Shares or (c) effects a reverse stock split or otherwise combines or reclassifies its outstanding REIT Shares into a smaller number of REIT Shares, then the Conversion Factor shall be adjusted by multiplying the Conversion Factor by a fraction, (i) the numerator of which shall be the number of REIT Shares issued and outstanding on the record date for such dividend, distribution, split, subdivision, reverse split or combination (assuming for such purpose that such dividend, distribution, split, subdivision, reverse split or combination has occurred as of such time), and (ii) the denominator of which shall be the actual number of REIT Shares (determined without the above assumption) issued and outstanding on the record date for such dividend, distribution, split, subdivision, reverse split or combination;

(ii) the Company distributes any rights, options or warrants to all holders of its REIT Shares to subscribe for or to purchase or to otherwise acquire REIT Shares (or other securities or rights convertible into, exchangeable for or exercisable for REIT Shares)(other than REIT Shares issuable pursuant to a Qualified DRIP/COPP or as compensation to employees or other service providers) at a price per share less than the Value of a REIT Share on the record date for such distribution (each a “Distributed Right”), then, as of the distribution date of such Distributed Rights or, if later, the time such Distributed Rights become exercisable, the Conversion Factor shall be adjusted by multiplying the Conversion Factor by a fraction (a) the numerator of which shall be the number of REIT Shares issued and outstanding on the record date (or, if later, the date such Distributed Rights become exercisable) plus the maximum number of REIT Shares purchasable under such Distributed Rights and (b) the denominator of which shall be the number of REIT Shares issued and outstanding on the record date plus a fraction (x) the numerator of which is the minimum aggregate purchase price under such Distributed Rights of the maximum number of REIT Shares purchasable under such Distributed Rights and (y) the denominator of which is the Value of a REIT Share as of the record date (or, if later, the date such Distributed Rights become exercisable); provided, however, that, if any such Distributed Rights expire or

5

become no longer exercisable, then the Conversion Factor shall be adjusted, effective retroactive to the date of distribution of the Distributed Rights, to reflect a reduced maximum number of REIT Shares or any change in the minimum aggregate purchase price for the purposes of the above fraction; and

(iii) the Company shall, by dividend or otherwise, distribute to all holders of its REIT Shares evidences of its indebtedness or assets (including securities, but excluding any dividend or distribution referred to in subsection (i) or (ii) above), which evidences of indebtedness or assets relate to assets not received by the Company or its Subsidiaries pursuant to a pro rata distribution by the Partnership, then the Conversion Factor shall be adjusted to equal the amount determined by multiplying the Conversion Factor in effect immediately prior to the close of business on the date fixed for determination of stockholders entitled to receive such distribution by a fraction the numerator of which shall be such Value of a REIT Share on the date fixed for such determination and the denominator of which shall be the Value of a REIT Share on the date fixed for such determination less the then fair market value (as determined by the General Partner, whose determination shall be conclusive) of the portion of the evidences of indebtedness or assets so distributed applicable to one REIT Share.

Any adjustment to the Conversion Factor shall become effective immediately after the effective date of such event retroactive to the record date, if any, for such event.  If, however, the General Partner received a Notice of Redemption after the record date, if any, but prior to the effective date of such event, the Conversion Factor shall be determined as if the General Partner had received the Notice of Redemption immediately prior to the record date for such event.

Notwithstanding the foregoing, the Conversion Factor shall not be adjusted in connection with an event described in clauses (i) or (ii) above if, in connection with such event, the Partnership makes a distribution of cash, Partnership Units, REIT Shares and/or rights, options or warrants to acquire Partnership Units and/or REIT Shares with respect to all applicable Common Units or effects a reverse split of, or otherwise combines, the Common Units, as applicable, that is comparable as a whole in all material respects with such event.  

“Debt” means, as to any Person, as of any date of determination, (i) all indebtedness of such Person for borrowed money or for the deferred purchase price of property or services; (ii) all amounts owed by such Person to banks or other Persons in respect of reimbursement obligations under letters of credit, surety bonds, guarantees and other similar instruments guaranteeing payment or other performance of obligations by such Person; (iii) all indebtedness for borrowed money or for the deferred purchase price of property or services secured by any lien on any property owned by such Person, to the extent attributable to such Person’s interest in such property, even though such Person has not assumed or become liable for the payment thereof; and (iv) lease obligations of such Person which, in accordance with U.S. GAAP, should be capitalized.

“Delaware Courts” has the meaning set forth in Section 15.9.B hereof.

“Distributed Right” has the meaning set forth in the definition of “Conversion Factor.”

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“Economic Capital Account Balance”, with respect to a Partner,means an amount equal to such Partner’s Capital Account balance, plus the amount of its share of any Partner Minimum Gain or Partnership Minimum Gain.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder, as such rules and regulations may be amended from time to time.

“Extraordinary Transaction” means, with respect to the Company, the occurrence of one or more of the following events: (i) a merger (including a triangular merger), consolidation or other combination of the Company with or into another Person (other than in connection with a change in the Company’s state of incorporation or organizational form); (ii) the direct or indirect sale, lease, exchange or other transfer of all or substantially all of its assets in one transaction or a series of related transactions; (iii) any reclassification, recapitalization or change of its outstanding equity interests (other than a change in par value, or from par value to no par value, or as a result of a split, dividend or similar subdivision); or (iv) the adoption of any plan of liquidation or dissolution of the Company (whether or not in compliance with the provisions of this Agreement).

“Flow-Through Entity” has the meaning set forth in Section 3.4C hereof.

“Flow-Through Partner” has the meaning set forth in Section 3.4C hereof.

“Funding Debt” mean the incurrence of any Debt for the purpose of providing funds to the Partnership by or on behalf of the Company or any wholly owned subsidiary of the Company.

“General Partner” means the Company in its capacity as general partner of the Partnership, or any Person who becomes a successor general partner of the Partnership.

“General Partner Interest” means a Partnership Interest held by the General Partner, in its capacity as general partner.  A General Partner Interest may be (but is not required to be) expressed as a number of Partnership Units.

“Holder” means each of any Partner or any Assignee owning a Partnership Unit.

“Immediate Family” means with respect to any natural Person, such natural person’s spouse and such natural Person’s natural or adoptive parents, descendants, nephews, nieces, brother and sisters.

“Imputed Underpayment Amount” means (i) any “imputed underpayment” within the meaning of Code Section 6225 (or any corresponding or similar provision of federal, state, local or non-U.S. tax law) paid (or payable) by the Partnership as a result of an adjustment with respect to any Partnership item (including, without limitation, any “partnership-related item” within the meaning of Code Section 6241(2) (or any corresponding or similar provision of federal, state, local or non-U.S. tax law)), including any interest, penalties or additions to tax

7

with respect to any such adjustment and any costs or expenses with respect to any of the foregoing, (ii) any amount not described in clause (i) paid (or payable) by the Partnership as a result of the application of the provisions of Code Sections 6221-6241 (or any corresponding or similar provision of federal, state, local or non-U.S. tax law), including any interest, penalties or additions to tax with respect to such amountsand any costs or expenses with respect to any of the foregoing, and/or (iii) any amount paid (or payable) by any entity treated as a partnership for U.S. federal income tax purposes in which the Partnership holds (or has held) a direct or indirect interest (other than through entities treated as corporations for U.S. federal income tax purposes) to the extent that the Partnership bears the economic burden of such amounts, whether by law or agreement, as a result of the application of the provisions of Code Sections 6221-6241 (or any corresponding or similar provision of federal, state, local or non-U.S. tax law), including any interest, penalties or additions to tax with respect to such amountsand any costs or expenses with respect to any of the foregoing.

“Incapacity” or “Incapacitated” means, (i) as to any Partner who is an individual, death, total physical disability or entry by a court of competent jurisdiction of an order adjudicating him or her incompetent to manage his or her Person or estate; (ii) as to any Partner that is a corporation or limited liability company, the filing of a certificate of dissolution, or its equivalent, or the revocation of its charter; (iii) as to any partnership or limited liability company which is a Partner, the dissolution and commencement of winding up of the partnership or the limited liability company; (iv) as to any Partner that is an estate, the distribution by the fiduciary of the estate’s entire interest in the Partnership; (v) as to any trustee of a trust which is a Partner, the termination of the trust (but not the substitution of a new trustee) or (vi) as to any Partner, the bankruptcy of such Partner.  For purposes of this definition, bankruptcy of a Partner shall be deemed to have occurred when (a) the Partner commences a voluntary proceeding seeking liquidation, reorganization or other relief under any bankruptcy, insolvency or other similar law now or hereafter in effect; (b) the Partner is adjudged as bankrupt or insolvent, or a final and nonappealable order for relief under any bankruptcy, insolvency or similar law now or hereafter in effect has been entered against the Partner; (c) the Partner executes and delivers a general assignment for the benefit of the Partner’s creditors; (d) the Partner files an answer or other pleading admitting or failing to contest the material allegations of a petition filed against the Partner in any proceeding of the nature described in clause (b) above; (e) the Partner seeks, consents to or acquiesces in the appointment of a trustee, receiver or liquidator for the Partner or for all or any substantial part of the Partner’s properties; (f) any proceeding seeking liquidation, reorganization or other relief of or against such Partner under any bankruptcy, insolvency or other similar law now or hereafter in effect has not been dismissed within one hundred twenty (120) days after the commencement thereof; (g) the appointment without the Partner’s consent or acquiescence of a trustee, receiver or liquidator has not been vacated or stayed within ninety (90) days of such appointment; or (h) an appointment referred to in clause (g) above is not vacated within ninety (90) days after the expiration of any such stay.

“Indemnitee” means (i) any Person made a party, or threatened to be made a party, to a proceeding by reason of his, her or its status as (a) the Company (b) the General Partner or (c) a director of the Company or the General Partner and (ii) such other Persons (including, without limitation, Affiliates, officers, employees and agents of the Company, the General Partner or the Partnership or any of their respective Subsidiaries or the tax matters Partner of the Partnership)

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as the General Partner may designate from time to time (whether before or after the event giving rise to potential liability), in its sole and absolute discretion.

“Initial Public Offering” means the initial public offering of REIT Shares under the Securities Act.

“IRS” means the U.S. Internal Revenue Service.

“Limited Partner” means any Person named as a Limited Partner in the books and records of the Partnership or any Substituted Limited Partner or Additional Limited Partner, in such Person’s capacity as a Limited Partner of the Partnership.

“Limited Partner Interest” means a Partnership Interest of a Limited Partner in the Partnership representing a fractional part of the Partnership Interests of all Partners and includes any and all benefits to which the Holder of such a Partnership Interest may be entitled, as provided in this Agreement, together with all obligations of such Person to comply with the terms and provisions of this Agreement.  A Limited Partner Interest may be (but is not required to be) expressed as a number of Partnership Units.

“Liquidating Event” has the meaning set forth in Section 13.1A hereof.

“Liquidating Gains” means any net gain realized in connection with the actual or hypothetical sale of all or substantially all of the assets of the Partnership (including upon the occurrence of any event of liquidation of the Partnership), including but not limited to net gain realized in connection with an adjustment to the book value of Partnership assets under Section 6.2 hereof.  

“Liquidating Losses” means any net loss realized in connection with the actual or hypothetical sale of all or substantially all of the assets of the Partnership (including upon the occurrence of any event of liquidation of the Partnership), including but not limited to net loss realized in connection with an adjustment to the book value of Partnership assets under Section 6.2 hereof.

“Liquidator” has the meaning set forth in Section 13.2A hereof.

“Loss” has the meaning set forth in Section 6.1F hereof.

“LTIP Unit” means a Partnership Unit which is designated as an LTIP Unit having the rights, powers, privileges, restrictions, qualifications and limitations set forth in Exhibit B hereof and elsewhere in this Agreement. For the avoidance of doubt, an LTIP Unit shall include a Special LTIP Unit and shall not include an AOLTIP Unit.

“LTIP Unit Adjustment Events” has the meaning set forth in Section 1.7 of Exhibit B hereto.

“LTIP Unit Conversion Date” has the meaning set forth in Section 1.8 of Exhibit B hereto.

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“LTIP Unit Limited Partner” means any Person that holds LTIP Units and/or AOLTIP Units and is named as an LTIP Unit Limited Partner in the books and records of the Partnership.

“Majority in Interest of the Outside Limited Partners” means Limited Partners (excluding for this purpose (i) any Limited Partnership Interests held by the Company, the General Partner or any Subsidiaries of the Company or the General Partner, (ii) any Person of which the Company or its Subsidiaries directly or indirectly owns or controls more than 50% of the voting interests and (iii) any Person directly or indirectly owning or controlling more than 50% of the outstanding interests of the General Partner) holding in the aggregate more than 50% of the outstanding Partnership Units (other than AOLTIP Units) held by all Limited Partners who are not excluded for the purposes hereof.

“Mandatory Conversion Date” has the meaning set forth in Section 1.8(b) of Exhibit C hereto.

“National Securities Exchange” means an exchange registered with the Commission under Section 6(a) of the Exchange Act or any other exchange (domestic or foreign, and whether or not so registered) designated by the General Partner as a National Securities Exchange.

“Net Realized Gain” means, for a particular period, any excess of (i) the items of gain reflected in the Capital Accounts at any time during such period over (ii) the items of loss reflected in the Capital Accounts at any time during such period, in each case as part of Profit or Loss or otherwise and determined without regard to any items included in the determination of Liquidating Gains or Liquidating Losses for any period.  

“Net Realized Loss” means, for a particular period, any excess of (i) the items of loss reflected in the Capital Accounts at any time during such period over (ii) the items of gain reflected in the Capital Accounts at any time during such period, in each case as part of Profit of Loss or otherwise and determined without regard to any items included in the determination of Liquidating Gains or Liquidating Losses for any period.  

“New Securities” means (i) any rights, options, warrants or convertible or exchangeable securities having the right to subscribe for or purchase REIT Shares or other shares of capital stock of the Company, or (ii) any Debt issued by the Company that provides any of the rights described in clause (i).

“Nonrecourse Liability” has the meaning set forth in Regulations Section 1.752‑1(a)(2).

“Notice of Redemption” means the Notice of Redemption substantially in the form of Exhibit B to this Agreement.

“Ownership Limit” means the restriction or restrictions on the ownership and transfer of stock of the Company imposed under the Articles of Incorporation.

“Partner” means a General Partner or a Limited Partner, and “Partners” means the General Partner and the Limited Partners collectively.

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“Partner Minimum Gains” means “partner nonrecourse debt minimum gain” within the meaning of Regulations Section 1.704-2(i).  A Partner’s share of Partner Minimum Gain shall be determined in accordance with Regulations Section 1.704-2(i)(5).

“Partnership” means the limited partnership formed under the Act and pursuant to this Agreement and any successor thereto.

“Partnership Interest” means an ownership interest in the Partnership held by either a Limited Partner or the General Partner and includes any and all benefits to which the Holder of such a Partnership Interest may be entitled as provided in this Agreement, together with all obligations of such Person to comply with the terms and provisions of this Agreement.  There may be one or more classes or series or Partnership Interests as provided in Section 4.2.  A Partnership Interest may be expressed as a number of Partnership Units.  Unless otherwise expressly provided for by the General Partner at the time of the original issuance of any Partnership Interests, all Partnership Interests (whether of a Limited Partner or a General Partner) shall be of the same class or series.  The Partnership Interests represented by the Common Units, LTIP Units and AOLTIP Units, respectively, are each a separate class of Partnership Interest for all purposes of this Agreement.

“Partnership Ledger” means the ledger maintained by the General Partner showing all of the Partners, the Partnership Interests held by each such Partner and each such Partner’s Percentage Interest as of the date of this Agreement, and as updated from time to time by the General Partner.

“Partnership Minimum Gain” has the meaning set forth in Regulations Section 1.704-2(b)(2).  A Partner’s share of Partnership Minimum Gain shall be determined in accordance with Regulations Section 1.704-2(g)(1).

“Partnership Record Date” means the record date established by the General Partner for a distribution pursuant to Section 5.1 hereof, which record date shall generally be the same as the record date established by the General Partner for a distribution to its stockholders of some or all of its portion of such distribution.

“Partnership Unit” or “Unit” means a fractional, undivided share of the Partnership Interests of all Partners issued pursuant to Article 4 (and includes Common Units, LTIP Units, AOLTIP Units and any class or series of Preferred Units that is established).  The number of Partnership Units outstanding and (in the case of Common Units, LTIP Units and AOLTIP Units) the Percentage Interest in the Partnership represented by such Partnership Units are set forth in the Partnership Ledger.  The Partnership Units shall be uncertificated securities unless the General Partner determines otherwise.  

“Partnership Year” means the fiscal year of the Partnership, which shall be the calendar year.

“Percentage Interest” means, with respect to any Partner, the percentage represented by a fraction (expressed as a percentage), the numerator of which is the total number of Common Units, LTIP Units and AOLTIP Units then owned by such Partner, and the denominator of which is the total number of Common Units, LTIP Units and AOLTIP Units then owned by all of the

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Partners; providedthat, for purposes of allocations and distributions, (i) prior to the Special LTIP Unit Full Participation Date for any Special LTIP Unit, the Percentage Interest will be calculated by only including in the numerator and denominator a number of such Special LTIP Unitsequal to the number of such Special LTIP Units outstanding multiplied bythe Special LTIP Unit Sharing Percentage for such Special LTIP Units and (ii) the Percentage Interest will be calculated by only including in the numerator and denominator a number of AOLTIP Units equal to the total obtained by multiplying each outstanding AOLTIP Unit by the AOLTIP Unit Sharing Percentage for such AOLTIP Unit.

“Person” means an individual, corporation, partnership (whether general or limited), limited liability company, trust, estate, unincorporated organization, association, custodian, nominee or any other individual or entity in its own or any representative capacity.

“Preferred Unit” means a Limited Partnership Interest (of any series), other than a Common Unit, LTIP Unit or AOLTIP Unit, represented by a fractional, undivided share of the Partnership Interests of all Partners issued hereunder and which is designated as a “Preferred Unit” (or as a particular class or series of Preferred Units) herein and which has the rights, preferences and other privileges designated herein (including by way of a Certificate of Designations).  The allocation of Preferred Units among the Partners shall be set forth in the Partnership Ledger.

“Profit” has the meaning set forth in Section 6.1F hereof.

“Property” means any property, asset or other investment in which the Partnership holds a direct or indirect interest, including, without limitation, interests in real property and personal property, including, without limitation, fee interests, interests in ground leases, easements and rights of way, interests in limited liability companies, joint ventures or partnerships, interests in mortgages, and Debt instruments.

“Qualified DRIP/COPP” means a dividend reinvestment plan or a cash option purchase plan of the Company that permits participants to acquire REIT Shares using the proceeds of dividends paid by the Company or cash of the participant, respectively.

“Qualified REIT Subsidiary” means any Subsidiary of the Company that is a “qualified REIT subsidiary” within the meaning of Section 856(i) of the Code.

“Qualified Transferee” means an “Accredited Investor” as defined in Rule 501 promulgated under the Securities Act.

“Redemption Right” has the meaning set forth in Section 8.5A hereof.

“Regulations” means the Federal Income Tax Regulations promulgated under the Code, as such regulations may be amended from time to time (including any corresponding provisions of succeeding regulations).

“Regulatory Allocations” has the meaning set forth in Section 6.1G hereof.

“REIT” means a real estate investment trust under Sections 856 through 860 of the Code.

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“REIT Expenses” means (i) costs and expenses relating to the formation and continuity of existence and operation of the Company and any Subsidiaries (other than the Partnership) thereof (which Subsidiaries shall, for purposes hereof, be included within the definition of the Company), including taxes, fees and assessments associated therewith, any and all costs, expenses or fees payable to any director, officer or employee of the Company, (ii) costs and expenses relating to any public offering and registration, or private offering, of securities by the Company and all statements, reports, fees and expenses incidental thereto, including, without limitation, underwriting discounts and selling commissions applicable to any such offering of securities, and any costs and expenses associated with any claims made by any holders of such securities or any underwriters or placement agents thereof, (iii) costs and expenses associated with any repurchase of any securities by the Company, (iv) costs and expenses associated with the preparation and filing of any periodic or other reports and communications by the Company under U.S. federal, state or local laws or regulations, including filings with the Commission, (v) costs and expenses associated with compliance by the Company with laws, rules and regulations promulgated by any regulatory body, including the Commission and any securities exchange, (vi) costs and expenses associated with any 401(k) plan, incentive plan, bonus plan or other plan providing for compensation for the employees of the Company, (vii) costs and expenses incurred by the Company relating to any issuing or redemption of Partnership Interests and (viii) all other operating or administrative costs of the Company or any Subsidiary, including the General Partner, incurred in the ordinary course of its business on behalf of or in connection with the Partnership.

“REIT Share” means a share of common stock of the Company, $0.01 par value per share.

“REIT Shares Amount” means, with respect to Tendered Units as of a particular date, a number of REIT Shares equal to the product of (x) the number of Tendered Units multiplied by (y) the Conversion Factor in effect on such date with respect to such Tendered Units.

“Safe Harbors” has the meaning set forth in Section 11.6F hereof.

“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder, as amended.

“Special LTIP Unit” means an LTIP Unit designated as a “Special LTIP Unit” as set forth in the documentation pursuant to which such LTIP Unit is granted.

“Special LTIP Unit Full Participation Date” means, for a Special LTIP Unit, the date specified as such in the documentation pursuant to which such Special LTIP Unit is granted.

“Special LTIP Unit Sharing Percentage” means, with respect to a Special LTIP Unit, ten percent (10%) or such other percentage designated as the Special LTIP Unit Sharing Percentage for such Special LTIP Unit as set forth in the documentation pursuant to which such Special LTIP Unit is granted.

“Specified Redemption Date” means the tenth (10th) Business Day after receipt by the General Partner of a Notice of Redemption; provided that if the Company combines its

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outstanding REIT Shares, no Specified Redemption Date shall occur after the record date of such combination of REIT Shares and prior to the effective date of such combination.

“Stock Plan” means any stock incentive, stock option, stock ownership or employee benefits plan now or hereafter adopted by the Company or the Partnership or any Subsidiary of the Partnership.

“Subsidiary” means, with respect to any Person, any corporation, partnership, limited liability company, joint venture or other entity of which a majority of (i) the voting power of the voting equity securities or (ii) the outstanding equity interests is owned, directly or indirectly, by such Person.

“Substituted Limited Partner” means a Person who is admitted as a Limited Partner to the Partnership pursuant to Section 11.4 hereof.

“Surviving Partnership” has the meaning set forth in Section 11.2B(2) hereof.

“Target Balance” has the meaning set forth in Section 6.1I(1) hereof.

“Tendered Units” has the meaning set forth in Section 8.5A hereof.

“Tendering Partner” has the meaning set forth in Section 8.5A hereof.

“Terminating Capital Transaction” means any sale or other disposition of all or substantially all of the assets of the Partnership or a related series of transactions that, taken together, result in the sale or other disposition of all or substantially all of the assets of the Partnership.

“Transaction” has the meaning set forth in Section 1.10(a) of Exhibit B hereto.

“Unvested AOLTIP Units” has the meaning set forth in Section 1.2 of Exhibit C hereto.

“Unvested LTIP Units” has the meaning set forth in Section 1.2 of Exhibit B hereto.

“U.S. GAAP” means U.S. generally accepted accounting principles consistently applied.

“Valuation Date” means the date of receipt by the Partnership of a Notice of Redemption or, if such date is not a Business Day, the first Business Day thereafter.

“Value” means, with respect to a REIT Share on a particular date, the market price of a REIT Share on such date.  The market price for each such trading day shall be: (i) if the REIT Shares are listed or admitted to trading on any National Securities Exchange, the closing price, regular way, on such day as reported by such National Securities Exchange, or if no such sale takes place on such day, the average of the closing bid and asked prices on such day; (ii) if the REIT Shares are not listed or admitted to trading on any National Securities Exchange, the last reported sale price on such day or, if no sale takes place on such day, the average of the closing bid and asked prices on such day, as reported by a reliable quotation source designated by the General Partner; (iii) if the REIT Shares are not listed or admitted to trading on any National

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Securities Exchange and no such last reported sale price or closing bid and asked prices are available, the average of the reported high bid and low asked prices on such day, as reported by a reliable quotation source designated by the General Partner, or if there shall be no bid and asked prices on such day, the average of the high bid and low asked prices, as so reported, on the most recent day (not more than ten (10) days prior to the date in question) for which prices have been so reported; or (iv) if none of the conditions set forth in clauses (i), (ii), or (iii) is met then, unless the holder of the REIT Shares or Common Units and the General Partner otherwise agree, with respect to a REIT Share per Common Unit offered for redemption, the amount that a Holder of one Common Unit would receive if each of the assets of the Partnership were sold for its fair market value on the Specified Redemption Date, the Partnership were to pay all of its outstanding liabilities, and the remaining proceeds were to be distributed to the Partners in accordance with the terms of this Agreement.

“Vested AOLTIP Units” has the meaning set forth in Section 1.2 of Exhibit C hereto.

“Vested LTIP Units” has the meaning set forth in Section 1.2 of Exhibit B hereto.

“Vesting Agreement” has the meaning set forth in Section 1.2 of Exhibit B hereto.

ARTICLE 2 - ORGANIZATIONAL MATTERS

Section 2.1Formation and Continuation

The Partnership is a limited partnership heretofore formed and continued pursuant to the provisions of the Act and upon the terms and subject to the conditions set forth in this Agreement.  Except as expressly provided herein to the contrary, the rights and obligations of the Partners and the administration and termination of the Partnership shall be governed by the Act.  The Partnership Interest of each Partner shall be personal property for all purposes.

Section 2.2Name

The name of the Partnership shall be “Paramount Group Operating Partnership LP”.  The Partnership’s business may be conducted under any other name or names deemed advisable by the General Partner, including the name of the General Partner or any Affiliate thereof.  The words “Limited Partnership,” “L.P.,” “Ltd.” or similar words or letters shall be included in the Partnership’s name where necessary for the purposes of complying with the laws of any jurisdiction that so requires.  The General Partner in its sole and absolute discretion may change the name of the Partnership at any time and from time to time and shall notify the Limited Partners of such change in the next regular communication to the Limited Partners; provided, however, that failure to notify the Limited Partners shall not invalidate such change or the authority granted hereunder.

Section 2.3Registered Office and Agent; Principal Office

The address of the registered office of the Partnership in the State of Delaware and the name and address of the registered agent for service of process on the Partnership in the State of Delaware is The Corporation Trust Company, Corporation Trust Center, 1209 Orange Street, Wilmington, Delaware 19801.  The principal business office of the Partnership shall be 1633

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Broadway, Suite 1801, New York, NY 10019.  The General Partner may from time to time designate in its sole and absolute discretion another registered agent or another location for the registered office or principal place of business, and shall provide the Limited Partners with notice of such change in the next regular communication to the Limited Partners; provided, however, that failure to so notify the Limited Partners shall not invalidate such change or the authority granted hereunder.  The Partnership may maintain offices at such other place or places within or outside the State of Delaware as the General Partner deems advisable.

Section 2.4Power of Attorney

A.Each Limited Partner and each Assignee hereby constitutes and appoints the General Partner, any Liquidator, and authorized officers and attorneys‑in‑fact of each, and each of those acting singly, in each case with full power of substitution, as its true and lawful agent and attorney‑in‑fact, with full power and authority in its name, place and stead to:

(1)execute, swear to, seal, acknowledge, deliver, file and record in the appropriate public offices (a) all certificates, documents and other instruments (including, without limitation, this Agreement and the Certificate of Limited Partnership and all amendments or restatements thereof) that the General Partner or any Liquidator deems appropriate or necessary to form, qualify or continue the existence or qualification of the Partnership as a limited partnership (or a partnership in which the Limited Partners have limited liability) in the State of Delaware and in all other jurisdictions in which the Partnership may or plans to conduct business or own property; (b) all instruments that the General Partner deems appropriate or necessary to reflect any amendment, change, modification or restatement of this Agreement duly adopted in accordance with its terms; (c) all conveyances and other instruments or documents that the General Partner or any Liquidator deems appropriate or necessary to reflect the dissolution and liquidation of the Partnership pursuant to the terms of this Agreement, including, without limitation, a certificate of cancellation; (d) all conveyances and other instruments or documents that the General Partner or any Liquidator deems appropriate or necessary to reflect the distribution or exchange of assets of the Partnership pursuant to the terms of this Agreement; (e) all instruments relating to the admission, withdrawal, removal or substitution of any Partner or other events described in, Article 11 or Article 12 hereof or the capital contribution of any Partner and (f) all certificates, documents and other instruments relating to the determination of the rights, preferences and privileges of Partnership Interests; and

(2)execute, swear to, seal, acknowledge and file all ballots, consents, approvals, waivers, certificates and other instruments appropriate or necessary, in the sole and absolute discretion of the General Partner or any Liquidator, to make, evidence, give, confirm or ratify any vote, Consent, approval, agreement or other action which is made or given by the Partners hereunder or is consistent with the terms of this Agreement or appropriate or necessary, in the sole discretion of the General Partner or any Liquidator, to effectuate the terms or intent of this Agreement.

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Nothing contained herein shall be construed as authorizing the General Partner or any Liquidator to amend this Agreement except in accordance with Article 14 hereof or as may be otherwise expressly provided for in this Agreement.

B.The foregoing power of attorney is hereby declared to be irrevocable and a power coupled with an interest, in recognition of the fact that each of the Partners will be relying upon the power of the General Partner and any Liquidator to act as contemplated by this Agreement in any filing or other action by it on behalf of the Partnership, and it shall survive and not be affected by the subsequent Incapacity of any Limited Partner or Assignee or the transfer of all or any portion of such Limited Partner’s or Assignee’s Partnership Units and shall extend to such Limited Partner’s or Assignee’s heirs, successors, assigns and personal representatives.  Each such Limited Partner or Assignee hereby agrees to be bound by any representation made by the General Partner or any Liquidator, acting in good faith pursuant to such power of attorney, and each such Limited Partner or Assignee hereby waives any and all defenses which may be available to contest, negate or disaffirm the action of the General Partner or any Liquidator, taken in good faith under such power of attorney.  Each Limited Partner or Assignee shall execute and deliver to the General Partner or any Liquidator, within fifteen (15) days after receipt of the General Partner’s or such Liquidator’s request therefor, such further designation, powers of attorney and other instruments as the General Partner or any Liquidator, as the case may be, deems necessary to effectuate this Agreement and the purposes of the Partnership.

Section 2.5Term

The term of the Partnership shall be perpetual unless the Partnership is dissolved sooner pursuant to the provisions of Article 13 or as otherwise provided by law.

Section 2.6Partnership Interests are Securities

All Partnership Interests shall be securities within the meaning of, and governed by, (i) Article 8 of the Delaware Uniform Commercial Code as in effect from time to time in the State of Delaware and (ii) Article 8 of the Uniform Commercial Code of any other applicable jurisdiction.

ARTICLE 3 - PURPOSE

Section 3.1Purpose and Business

The purpose and nature of the business to be conducted by the Partnership is (i) to conduct any business that may be lawfully conducted by a limited partnership organized pursuant to the Act; provided, however, that such business shall be limited to and conducted in such a manner as to permit the Company at all times to be qualified as a REIT, unless the Company is not qualified or ceases to qualify as a REIT for any reason or reasons other than the conduct of the business of the Partnership, (ii) to enter into any partnership, joint venture, limited liability company or other similar arrangement to engage in any of the foregoing or to own interests in any entity engaged, directly or indirectly, in any of the foregoing; and (iii) to do anything necessary or incidental to the foregoing.  In connection with the foregoing, and without limiting the Company’s right, in its sole discretion, to cease qualifying as a REIT, the Partners

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acknowledge that the Company’s status as a REIT inures to the benefit of all of the Partners and not solely to the Company or its Affiliates.  

Section 3.2Powers

The Partnership is empowered to do any and all acts and things necessary, appropriate, proper, advisable, incidental to or convenient for the furtherance and accomplishment of the purposes and business described herein and for the protection and benefit of the Partnership, including, without limitation, full power and authority, directly or through its ownership interest in other entities, to enter into, perform and carry out contracts of any kind, borrow money and issue evidences of indebtedness whether or not secured by mortgage, deed of trust, pledge or other lien, acquire, own, manage, improve and develop real property, and lease, sell, transfer and dispose of real property; provided, however, that the Partnership shall not take, or omit to take, any action which, in the judgment of the General Partner, in its sole and absolute discretion, (i) could adversely affect the ability of the Company to achieve or maintain qualification as a REIT; (ii) could subject the Company to any additional taxes under Section 857 or Section 4981 of the Code or (iii) could violate any law or regulation of any governmental body or agency having jurisdiction over the Company, its securities or the Partnership or any of its Subsidiaries, unless any such action (or inaction) under the foregoing clauses (i), (ii) or (iii) shall have been specifically consented to by the Company in writing.

Section 3.3Partnership Only for Purposes Specified

This Agreement shall not be deemed to create a company, venture or partnership between or among the Partners with respect to any activities whatsoever other than the activities within the purposes of this Partnership as specified in Section 3.1.  Except as otherwise provided in this Agreement, no Partner shall have any authority to act for, bind, commit or assume any obligations or responsibility on behalf of the Partnership, its properties or any other Partner.  No Partner, in its capacity as a Partner under this Agreement, shall be responsible for any indebtedness or obligation of another Partner, and the Partnership shall not be responsible or liable for any indebtedness or obligation of any Partner, incurred either before or after the execution or delivery of this Agreement by such Partner, except as to those responsibilities, liabilities, indebtedness or obligations incurred pursuant to and as limited by the terms of this Agreement and the Act.

Section 3.4Representations and Warranties by the Partners

A.Each Partner that is an individual (including, without limitation, each Additional Limited Partner or Substituted Limited Partner as a condition to becoming an Additional Limited Partner or a Substituted Limited Partner, respectively) represents and warrants to each other Partner that (i) such Partner has the legal capacity to enter into this Agreement and perform such Partner’s obligations hereunder; (ii) the consummation of the transactions contemplated by this Agreement to be performed by such Partner will not result in a breach or violation of, or a default under, any agreement by which such Partner or any of such Partner’s property is or are bound, or any statute, regulation, order or other law to which such Partner is subject; and (iii) this Agreement is binding upon, and enforceable against, such Partner in accordance with its terms, as such enforceability may be limited by applicable bankruptcy,

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insolvency, reorganization, fraudulent conveyance, moratorium or similar laws affecting creditors’ rights generally, as from time to time in effect, or the application of equitable principles.

B.Each Partner that is not an individual (including, without limitation, each Additional Limited Partner or Substituted Limited Partner as a condition to becoming an Additional Limited Partner or a Substituted Limited Partner, respectively) represents and warrants to each other Partner that (i) its execution and delivery of this Agreement and all transactions contemplated by this Agreement to be performed by it have been duly authorized by all necessary action, including without limitation, that of its general partner(s), committee(s), trustee(s), beneficiaries, director(s), member(s) and/or stockholder(s), as the case may be, as required; (ii) the consummation of such transactions shall not result in a breach or violation of, or a default under, its certificate of limited partnership, partnership agreement, trust agreement, limited liability company operating agreement, charter or bylaws, as the case may be, any agreement by which such Partner or any of such Partner’s properties or any of its partners, beneficiaries, trustees, directors, members or stockholders, as the case may be, is or are bound, or any statute, regulation, order or other law to which such Partner or any of its partners, trustees, beneficiaries, directors, members or stockholders, as the case may be, is or are subject; and (iii) this Agreement is binding upon, and enforceable against, such Partner in accordance with its terms, as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or similar laws affecting creditors’ rights generally, as from time to time in effect, or the application of equitable principles.

C.Except as set forth in a separate agreement entered into between the Partnership and a Limited Partner, each Partner (including, without limitation, each Additional Limited Partner or Substituted Limited Partner as a condition to becoming an Additional Limited Partner or Substituted Limited Partner) represents, warrants and agrees that (i) it is an “accredited investor” as defined in Rule 501 promulgated under the Securities Act, (ii) it has acquired and continues to hold its interest in the Partnership for its own account for investment purposes only and not for the purpose of, or with a view toward, the resale or distribution of all or any part thereof in violation of applicable laws, and not with a view toward selling or otherwise distributing such interest or any part thereof at any particular time or under any predetermined circumstances in violation of applicable laws, (iii) it is a sophisticated investor, able and accustomed to handling sophisticated financial matters for itself, particularly real estate investments, and that it has a sufficiently high net worth that it does not anticipate a need for the funds that it has invested in the Partnership in what it understands to be a highly speculative and illiquid investment, and (iv) without the Consent of the General Partner, it shall not take any action that would cause the Partnership at any time to have more than 100 partners, including as partners those persons (each such person, a “Flow-Through Partner”) indirectly owning an interest in the Partnership through an entity treated as a partnership, disregarded entity, S corporation or grantor trust for U.S. federal income tax purposes (each such entity, a “Flow-Through Entity”), but only if substantially all of the value of such person’s interest in the Flow-Through Entity is attributable to the Flow-Through Entity’s interest (direct or indirect) in the Partnership.

D.The representations and warranties contained in this Section 3.4 shall survive the execution and delivery of this Agreement by each Partner (and, in the case of an

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Additional Limited Partner or a Substituted Limited Partner, the admission of such Additional Limited Partner or Substituted Limited Partner as a Limited Partner in the Partnership) and the dissolution, liquidation, termination and winding up of the Partnership.

E.Each Partner (including, without limitation, each Additional Limited Partner or Substituted Limited Partner as a condition to becoming an Additional Limited Partner or Substituted Limited Partner, respectively) hereby acknowledges that no representations as to potential profit, cash flows, funds from operations or yield, if any, in respect of the Partnership, or the Company have been made by any Partner or any employee or representative or Affiliate of any Partner, and that projections and any other information, including, without limitation, financial and descriptive information and documentation, that may have been in any manner submitted to such Partner shall not constitute any representation or warranty of any kind or nature, express or implied.

F.Notwithstanding the foregoing, the General Partner may, in its sole and absolute discretion, permit the modification of any of the representations and warranties contained in Sections 3.4.A, 3.4.B and 3.4.C above as applicable to any Partner (including, without limitation any Additional Limited Partner or Substituted Limited Partner or any transferee of either), providedthat such representations and warranties, as modified, shall be set forth in either (i) a Certificate of Designation applicable to the Partnership Units held by such Partner or (ii) a separate writing addressed to the Partnership and the General Partner.

ARTICLE 4 - CAPITAL CONTRIBUTIONS

Section 4.1Capital Contributions of the Partners

A.The Partners have made or shall be deemed to have made capital contributions to the Partnership and/or have surrendered their existing interests in the Partnership in exchange for the Partnership Units of each such Partner, as set forth in the books and records of the Partnership, which number of Partnership Units and Percentage Interests shall be adjusted from time to time by the General Partner to the extent necessary to accurately reflect sales, exchanges or other transfers of Partnership Units, the issuance of additional Partnership Units, the redemption of Partnership Units, additional capital contributions and similar events having an effect on a Partner’s Percentage Interest.  

B.The General Partner holds a General Partner Interest which shall have no economic interest and is not represented by any Partnership Units. All Partnership Units held by the Company shall be deemed to be Limited Partner Interests and shall be held by the Company in its capacity as a Limited Partner in the Partnership.

C.To the extent the Partnership acquires any property (or an indirect interest therein) by the merger of any other Person into the Partnership or with or into a Subsidiary of the Partnership in a triangular merger, Persons who receive Partnership Interests in exchange for their interests in the Person merging into the Partnership or with or into a Subsidiary of the Partnership shall become Partners and shall be deemed to have made capital contributions as provided in the applicable merger agreement (or if not so provided, as determined by the General

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Partner in its sole and absolute discretion) and as set forth in the books and records of the Partnership, as amended to reflect such deemed Capital Contributions.

D.Except as provided in Section 4.2, Section 4.3, Section 5.1 and Section 13.3, the Partners shall have no obligation to make any additional capital contributions or loans to the Partnership.

Section 4.2Issuance of Additional Partnership Interests and Additional Funding

Subject to the rights of any Holder of Partnership Interests set forth in a Certificate of Designations:

A.Issuance of Additional Partnership Interests.  The General Partner, in its sole and absolute discretion, is hereby authorized without the approval of the Limited Partners or any other Person to cause the Partnership from time to time to issue to the Partners (including the General Partner, the Company and its Affiliates) or other Persons (including, without limitation, in connection with the contribution of tangible or intangible property, services or other consideration permitted by the Act to the Partnership) additional Partnership Units or other Partnership Interests in one or more classes, or one or more series of any of such classes, with such designations, preferences, and relative, participating, optional or other special rights, powers and duties all as shall be determined by the General Partner in its sole and absolute discretion subject to Delaware law, including, without limitation, (i) rights, powers, and duties senior to one or more classes or series of Partnership Interests and any other Common Units outstanding or thereafter issued; (ii) the rights to an allocation of items of Partnership income, gain, loss, deduction, and credit to each such class or series of Partnership Interests; (iii) the rights to an allocation of certain indebtedness of the Partnership pursuant to Code Section 752; (iv) the rights of each such class or series of Partnership Interests to share in Partnership distributions; (v) the rights of each such class or series of Partnership Interests upon dissolution and liquidation of the Partnership; (vi) the right to vote, if any, of each such class or series of Partnership Interests and (vii) the rights of any class or series of Partnership Interests issued in connection with any tax protection agreement or any other similar arrangement; providedthat no such additional Partnership Units or other Partnership Interests shall be issued to the General Partner or the Company or any direct or indirect wholly owned Subsidiary of the Company, unless either (a)(1) the additional Partnership Interests are issued in connection with the grant, award or issuance of REIT Shares, other shares of capital stock or New Securities of the Company pursuant to Section 4.2E that have designations, preferences and other rights such that the economic interests attributable to such REIT Shares, other shares of capital stock or New Securities are substantially similar to the designations, preferences and other rights of the additional Partnership Interests issued to the General Partner or the Company or any direct or indirect wholly owned Subsidiary of the Company (as appropriate) in accordance with this Section 4.2A, and (2) the Company shall, directly or indirectly, make a capital contribution to the Partnership in an amount equal to any net proceeds raised in connection with such issuance or (b) the additional Partnership Interests are issued to all Partners in proportion to their respective Percentage Interests or the additional Partnership Units are Common Units that are issued to all holders of Common Units in proportion to the number of Common Units held by each holder.  The General Partner’s determination that the consideration is adequate shall be conclusive

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insofar as the adequacy of consideration related to whether the Partnership Interests are validly issued and paid.

B.Additional Funds.  The General Partner may, at any time and from time to time, determine that the Partnership requires additional funds (“Additional Funds”) for the acquisition or development of additional Properties, for the redemption of Partnership Units or for such other Partnership purposes as the General Partner may determine in its sole and absolute discretion.  Additional Funds may be raised by the Partnership, at the election of the General Partner, in any manner provided in, and in accordance with, the terms of this Section 4.2 without the approval of any Limited Partner or any other Person.  

C.Loans by Third Parties.  The General Partner, on behalf of the Partnership, may obtain any Additional Funds by causing the Partnership to incur Debt, or enter into other similar credit, guarantee, financing or refinancing arrangements for any purpose (including, without limitation, in connection with any further acquisition of Properties) upon such terms as the General Partner determines appropriate; providedthat the Partnership shall not incur any Debt that is recourse to any Partner, except to the extent otherwise agreed to by the applicable Partner.

D.General Partner and Company Loans.  The General Partner, on behalf of the Partnership, may obtain any Additional Funds by causing the Partnership to incur Debt to the General Partner and/or the Company, if (i) such Debtis, to the extent permitted by law, on substantially the same terms and conditions (including interest rate, repayment schedule, and conversion, redemption, repurchase and exchange rights, but not including collateral) as Funding Debt incurred by the General Partner or the Company, as applicable, the net proceeds of which are loaned to the Partnership to provide such Additional Funds or (ii) such Debt is on terms and conditions no less favorable to the Partnership than would be available to the Partnership from any third party; provided, however, that the Partnership shall not incur any such Debt if (a) a breach, violation or default of such Debt would be deemed to occur by virtue of the transfer by any Limited Partner of any Partnership Interest or (b) such Debt is recourse to any Partner (unless the Partner otherwise agrees).  This Section 4.2D shall not limit the Company’s ability to contribute Funding Debt proceeds to the Partnership in exchange for Preferred Units rather than loaning such proceeds to the Partnership.

E.Issuance of Securities by the Company.  The Company shall not issue any additional REIT Shares, other shares of capital stock or New Securities (other than REIT Shares issued pursuant to Section 8.5 or such shares, stock or securities pursuant to a dividend or distribution (including any stock split) to all of its stockholders who hold a particular class of stock of the Company) unless (i) the General Partner shall cause the Partnership to issue to the Company, Partnership Interests or rights, options, warrants or convertible or exchangeable securities of the Partnership having designations, preferences and other rights, all such that the economic interests thereof are substantially similar to those of the REIT Shares, other shares of capital stock or New Securities issued by the Company, and (ii) the Company directly or indirectly contributes to the Partnership the proceeds, if any, received from the issuance of such additional REIT Shares, other shares of capital stock or New Securities, as the case may be, and from any exercise of the rights contained in such additional New Securities, as the case may be; providedthat the Company may use a portion of the proceeds received from such issuance to

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acquire other assets (provided such other assets are contributed to the Partnership pursuant to the terms of this Agreement).  Without limiting the foregoing, the Company is expressly authorized to issue REIT Shares, other shares of capital stock or New Securities for no tangible value or for less than fair market value, and the General Partner is expressly authorized to cause the Partnership to issue to the Company corresponding Partnership Interests, so long as (x) the General Partner concludes in good faith that such issuance of Partnership Interests is in the interests of the Partnership, and (y) the Company contributes all proceeds, if any, from such issuance and exercise to the Partnership.

F.In the event that the actual proceeds received by the Company in connection with any issuance of additional REIT Shares, other shares of capital stock or New Securities are less than the gross proceeds of such issuance as a result of any underwriter’s discount or other expenses paid in connection with such issuance, then, except as provided in Section 6.1L, the Company shall be deemed to have made, through the General Partner, a capital contribution to the Partnership in the amount equal to the sum of the net proceeds of such issuance plus the amount of such underwriter’s discount and other expenses paid by the Company (which discount and expense shall be treated as an expense for the benefit of the Partnership for purposes of Section 7.4).  In the case of the issuance of REIT Shares by the Company in any offering, whether registered under the Securities Act or exempt from such registration, underwritten, offered and sold directly to investors or through agents or other intermediaries, or otherwise distributed, for purposes of determining the number of additional Common Units issuable upon a capital contribution funded by the net proceeds thereof consistently with the immediately preceding sentence, any discount from the then current market price of REIT Shares shall be disregarded such that an equal number of Common Units can be issued to the Company as the number of REIT Shares sold by the Company in such offering.  In the case of issuances of REIT Shares, other capital stock of the Company or New Securities pursuant to any Stock Plan at a discount from fair market value or for no value, the amount of such discount representing compensation to the employee, as determined by the General Partner, shall be treated as an expense for the benefit of the Partnership for purposes of Section 7.4 and, as a result, the Company shall be deemed to have made a capital contribution to the Partnership in an amount equal to the sum of any net proceeds of such issuance plus the amount of such expense.

G.In the event that the Partnership issues Partnership Interests pursuant to this Section 4.2, the General Partner shall make such revisions to this Agreement (without any requirement of receiving approval of the Limited Partners) including, but not limited to, the revisions described in Section 6.1M and Section 8.5 hereof, as it deems necessary to reflect the issuance of such additional Partnership Interests and the special rights, powers, and duties associated therewith.

H.Notwithstanding anything to the contrary, the Partnership shall be authorized to issue LTIP Units and AOLTIP Units.  From time to time the General Partner may issue LTIP Units and/or AOLTIP Units to Persons providing services to or for the benefit of the Partnership.

I.Nothing in this Agreement shall be construed or applied to preclude or restrain the General Partner or the Company from adopting, modifying or terminating Stock

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Plans for the benefit of employees, directors or other business associates of the General Partner, the Company, the Partnership or any of their Affiliates.  The Partners acknowledge and agree that, in the event that any such Stock Plan is adopted, modified or terminated by the General Partner or the Company, amendments to this Agreement may become necessary or advisable and that any such amendments requested by the General Partner or the Company shall not require any Consent or approval by the Limited Partners.

Section 4.3Other Contribution Provisions

In the event that any Partner is admitted to the Partnership or any existing Partner is issued additional Partnership Interests and any such Partner is given (or is treated as having received) a Capital Account credit at the time of such admission or issuance, as applicable, in exchange for services rendered to the Partnership, such transaction shall be treated by the Partnership and the affected Partner as if the Partnership had compensated such Partner in cash in an amount equal to the Capital Account credit such Partner received, and the Partner had contributed such cash to the capital of the Partnership.  In addition, with the consent of the General Partner, in its sole and absolute discretion, one or more Limited Partners (or direct or indirect equity owners thereof) may enter into agreements with the Partnership, in the form of a guarantee or contribution agreement, which have the effect of providing a guarantee of certain obligations of the Partnership.

Section 4.4No Preemptive Rights

Except to the extent expressly granted by the Partnership pursuant to another agreement, no Person including, without limitation, any Partner or Assignee, shall have any preemptive, preferential or other similar right with respect to (i) capital contributions or loans to the Partnership or (ii) the issuance or sale of any Partnership Units or other Partnership Interests.

Section 4.5No Interest on Capital

No Partner shall be entitled to interest on its Capital Contributions or its Capital Account.  Except as provided herein or by law, no Partner shall have any right to withdraw any part of its Capital Account or to demand or receive the return of its Capital Contributions.

ARTICLE 5 - DISTRIBUTIONS

Section 5.1Distribution of Cash

A.Subject to Article 13, the other provisions of this Article 5 and the rights and preferences of any Preferred Units or additional class or series of Partnership Units established pursuant to Section 4.2 the Partnership shall distribute cash at such times and in such amounts as are determined by the General Partner, in its sole and absolute discretion, to the Partners who are Partners on the Partnership Record Date in accordance with their respective Percentage Interests on the Partnership Record Date.

B.Notwithstanding any other provision of this Agreement, the General Partner is authorized to take any action that it determines to be necessary or appropriate to cause the Partnership (which for purposes of this Section 5.1.B. shall include any predecessor entity

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and any person whose withholding obligations have been assumed by the Partnership) to comply with any withholding requirements established under the Code or any other U.S. federal, state or local law or foreign law including, without limitation, pursuant to Sections 1441, 1442, 1445, 1446, 1471 and 1472 of the Code.  Any amount paid on behalf of or with respect to a Limited Partner (a “Withholding Payment”) shall constitute a loan by the Partnership to such Limited Partner, which loan shall be repaid by such Limited Partner within fifteen (15) days after notice from the General Partner that such payment must be made unless (i) the Partnership withholds such payment from a distribution which would otherwise be made to the Limited Partner, (ii) the General Partner determines, in its sole and absolute discretion, that such payment may be satisfied out of the available funds of the Partnership which would, but for such payment, be distributed to the Limited Partner or (iii) treatment as a loan would jeopardize the Company’s status as a REIT or otherwise be prohibited by law, including, without limitation, Section 402 of the Sarbanes-Oxley Act of 2002 (in which case such Limited Partner shall pay such amount to the Partnership on or before the date the Partnership pays such amount on behalf of such Limited Partner).  Any amounts withheld pursuant to the foregoing clauses (i), (ii) or (iii) shall be treated as having been distributed to such Limited Partner (unless, in the case of amounts governed by clause (iii), the Limited Partner timely pays the amount to be withheld to the Partnership).  Each Limited Partner hereby unconditionally and irrevocably grants to the Partnership a security interest in such Limited Partner’s Partnership Interest to secure such Limited Partner’s obligation to pay to the Partnership any amounts required to be paid pursuant to this Section 5.1B.  Any amounts payable by a Limited Partner hereunder shall bear interest at the lesser of (1) the base rate on corporate loans at large United States money center commercial banks, as published from time to time in The Wall Street Journal, plus four (4) percentage points, or (2) the maximum lawful rate of interest on such obligation, such interest to accrue from the date such amount is due (i.e., fifteen (15) days after demand) until such amount is paid in full.  Each Limited Partner shall take such actions as the Partnership shall request in order to (i) perfect or enforce the security interest created hereunder and (ii) cause any loan arising hereunder to be treated as a real estate asset for purposes of Section 856(c)(4)(A) of the Code and to generate income described in Section 856(c)(3) of the Code.In addition to all other remedies that the Partnership may be entitled to pursue, in the event that a Limited Partner fails to pay any amount when due pursuant to this Section 5.1B, the Partnership may thereafter, at any time prior to the Limited Partner’s payment in full of such amount (plus any accrued interest), elect to redeem Common Units held by such Limited Partner, in accordance with the procedures set forth in Section 8.5 with the Valuation Date being the date the Partnership elects to redeem such Common Units, in an amount sufficient to pay any or all of such amount.In the event that proceeds to the Partnership are reduced on account of taxes withheld at the source or the Partnership incurs a tax liability and such taxes (or a portion thereof) are imposed on or with respect to one or more, but not all, of the Partners in the Partnership or if the rate of tax varies depending on the attributes of specific Partners or to whom the corresponding income is allocated, the amount of the reduction in the Partnership’s net proceeds shall be borne by and apportioned among the relevant Partners and treated as if it were paid by the Partnership as a withholding obligation with respect to such Partners in accordance with such apportionment.For the avoidance of doubt, in accordance with the foregoing, any Imputed Underpayment Amount paid (or payable) by the Partnership shall be treated as if it were paid by the Partnership as a Withholding Payment with respect to the appropriate Partners. The General Partner shall reasonably determine the portion of an Imputed Underpayment Amount attributable to each Partner or former Partner.

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C.In no event may a Partner receive a distribution of cash with respect to a Partnership Unit if such Partner is entitled to receive a cash dividend as the holder of record with respect to the Partnership Record Date for such distribution of a REIT Share for which all or part of such Partnership Unit has been or will be exchanged.

Section 5.2REIT Distribution Requirements

.  The General Partner shall use its reasonable efforts to cause the Partnership to make distributions pursuant to this Article 5 sufficient to enable the Company to pay stockholder dividends that will allow the Company to (i) meet its distribution requirement for qualification as a REIT as set forth in Section 857 of the Code and (ii) other than to the extent the Company elects to retain and pay income tax on its net capital gain, avoid or reduce any U.S. federal income or excise tax liability imposed by the Code.

Section 5.3No Right to Distributions in Kind

.  No Partner shall be entitled to demand property other than cash in connection with any distributions by the Partnership.  The General Partner may determine, in its sole and absolute discretion, to make a distribution in-kind of Partnership assets to the Holders, and such assets shall be distributed in the manner to ensure that the fair market value is distributed and allocated in accordance with Articles 5 and 6 hereof.

Section 5.4Distributions Upon Liquidation

.  Notwithstanding the other provisions of this Article 5, net proceeds from a Terminating Capital Transaction, and any other cash received or reductions in reserves made after commencement of a Liquidating Event shall be distributed to Holders in accordance with Section 13.2.

Section 5.5Distributions to Reflect Issuance of Additional Partnership Units

.  In addition to any amendment permitted under Section 14.2, the General Partner is authorized to modify the distributions in this Article 5 and amend such provisions (including the defined terms used therein) in such manner as the General Partner determines is necessary or appropriate to reflect the issuances of additional series or classes of Partnership Interests without the consent of any Partner or any other Person.  Any such modification may be made pursuant to a Certificate of Designations or similar instrument establishing such new class or series.

ARTICLE 6 – ALLOCATIONS

Section 6.1Capital Account Allocations of Profit and Loss

A.Profit

.  After giving effect to the special allocations, if any, required under this Article 6 for the applicable period, and subject to the other provisions of this Section 6.1 and to the allocations to be made with respect to any Preferred Units or additional class or series of Partnership Units established pursuant to Section 4.2, Profits in each taxable year or other allocation period shall be allocated to the Partners’ Capital Accounts in the following order of priority:

(1)First to the General Partner until the cumulative Profits allocated to the General Partner under this Section 6.1A(1) equal the cumulative Losses allocated to such Partner under Section 6.1(B)(2); and

(2)Thereafter, to the holders of Common Units, LTIP Units and AOLTIP Units in accordance with their respective Percentage Interests.

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B.Losses. After giving effect to the special allocations, if any, required under this Article 6 for the applicable period, and subject to the allocations to be made with respect to any Preferred Units or additional class or series of Partnership Units established pursuant to Section 4.2, and further subject to the other provisions of this Section 6.1, Loss in each taxable year or other period shall be allocated in the following order of priority:

(1)First, to the holders of Common Units, LTIP Units and AOLTIP Units with positive balances in their Economic Capital Account Balances in accordance with their respective Percentage Interests until their Economic Capital Accounts Balances are reduced to zero; and

(2)Thereafter, to the General Partner.

For purposes of determining allocations of Losses pursuant to Section 6.1B(1), an LTIP Unit Limited Partner shall be treated as having a separate Economic Capital Account Balance, and for this purpose a separate Capital Account with an appropriate share of Partnership Minimum Gain and Partner Minimum Gain shall be maintained, for each tranche of LTIP Units with a different issuance date that it holds and for each tranche of AOLTIP Units with a different issuance date that it holds and a separate Capital Account for its Common Units, if applicable, and the Economic Capital Account Balance of each holder of Common Units shall not include any Economic Capital Account Balance attributable to other series or classes of Partnership Units.

C.Nonrecourse Deductions and Minimum Gain Chargeback. Notwithstanding any provision to the contrary, (i) any expense of the Partnership that is a “nonrecourse deduction” within the meaning of Regulations Section 1.704-2(b)(1) shall be allocated in accordance with the Partners’ respective Percentage Interests, (ii) any expense of the Partnership that is a “partner nonrecourse deduction” within the meaning of Regulations Section 1.704-2(i)(2) shall be allocated to the Partner that bears the “economic risk of loss” of such deduction in accordance with Regulations Section 1.704-2(i)(1), (iii) if there is a net decrease in Partnership Minimum Gain within the meaning of Regulations Section 1.704-2(f)(1) for any Partnership taxable year, then, subject to the exceptions set forth in Regulations Section 1.704-2(f)(2),(3), (4) and (5), items of gain and income shall be allocated among the Partners in accordance with Regulations Section 1.704-2(f) and the ordering rules contained in Regulations Section 1.704-2(j), and (iv) if there is a net decrease in “partner nonrecourse debt minimum gain” within the meaning of Regulations Section 1.704-2(i)(4) for any Partnership taxable year, then items of gain and income shall be allocated among the Partners in accordance with Regulations Section 1.704-2(i)(4) and the ordering rules contained in Regulations Section 1.704-2(j).

D.Qualified Income Offset.  If a Partner receives in any taxable year an adjustment, allocation or distribution described in subparagraphs (4), (5) or (6) of Regulations Section 1.704-1(b)(2)(ii)(d) that causes or increases a deficit balance in such Partner’s Capital Account that exceeds the sum of such Partner’s shares of Partnership Minimum Gain and Partner Minimum Gain, as determined in accordance with Regulations Sections 1.704-2(g) and 1.704-2(i), such Partner shall be specially allocated for such taxable year (and, if necessary, later taxable years) items of income and gain in an amount and manner sufficient to eliminate such

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deficit Capital Account balance as quickly as possible as provided in Regulations Section 1.704-1(b)(2)(ii)(d).

E.Capital Account Deficits.  Loss or items thereof shall not be allocated to a Limited Partner to the extent that such allocation would cause or increase a deficit in such Partner’s Adjusted Capital Account.

F.Definition of Profit and Loss.  “Profit” and “Loss” and any items of income, gain, expense or loss referred to in this Agreement means the net income, net loss or items thereof for the applicable period as determined for maintaining Capital Accounts, and shall be determined in accordance with U.S. federal income tax accounting principles, as modified by Regulations Section 1.704-1(b)(2)(iv), except that Profit and Loss shall not include items of income, gain, loss and expense that are specially allocated pursuant to this Article 6 (other than Section 6.1A or Section 6.1B).

G.Curative Allocations.  The allocations set forth in Section 6.1C, Section 6.1D and Section 6.1E hereof (the “Regulatory Allocations”) are intended to comply with certain regulatory requirements, including the requirements of Regulations Sections 1.704-1(b) and 1.704-2. Notwithstanding the provisions of this Section 6.1 and Section 6.2 hereof, the Regulatory Allocations shall be taken into account in allocating other items of income, gain, loss and expense among the Holders so that to the extent possible without violating the requirements giving rise to the Regulatory Allocations, the net amount of such allocations of other items and the Regulatory Allocations to each Holder shall be equal to the net amount that would have been allocated to each such Holder if the Regulatory Allocations had not occurred.

H.Forfeitures.  Subject to Section 6.1J with respect to a forfeiture of certain LTIP Units,  upon a forfeiture of any unvested Partnership Interest by any Partner, gross items of income, gain, loss or deduction shall be allocated to such Partner if and to the extent required by final Regulations to ensure that allocations made with respect to all unvested Partnership Interests are recognized under Code Section 704(b).

I.LTIP Allocations.  

(1)After giving effect to the special allocations set forth in Section 6.1C and Section 6.1D hereof, and the allocations of Profit under Section 6.1A(1) (including, for the avoidance of doubt, Liquidating Gains that are a component of Profit), and subject to the other provisions of this Section 6.1, but before allocations of Profit are made under Section 6.1A(2), any remaining Liquidating Gains (or, in the case of any LTIP Unit issued prior to the date of this Agreement, Liquidating Losses) shall first be allocated among the Partners so as to cause, as nearly as possible, the Economic Capital Account Balance of each LTIP Unit Limited Partner, (i) to the extent attributable to such Limited Partner’s ownership of an LTIP Unit, to be equal to the Common Unit Economic Balance (determined after taking into account any additional allocations of Liquidating Gains or Liquidating Losses to be made with respect to Common Units after the application of this Section 6.1I(1) for the same period for which the allocations in this Section 6.1I(1) are being made) and (ii) to the extent attributable to such Limited Partner’s ownership of an AOLTIP Unit, to be equal to the Common Unit Economic

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Balance (determined after taking into account any additional allocations of Liquidating Gains or Liquidating Losses to be made with respect to Common Units after the application of this Section 6.1I(1) for the same period for which the allocations in this Section 6.1I(1) are being made) multiplied by the number of Common Units (or fractions thereof) into which such AOLTIP Unit would then be convertible, assuming for such purpose that each such AOLTIP Unit is a Vested AOLTIP Unit (with such Economic Capital Account Balance with respect to an LTIP Unit or AOLTIP Unit to be achieved through the immediately foregoing allocations referred to as the "Target Balance" for such unit).

(2)Notwithstanding Section 6.1I(1), with respect to any LTIP Unit issued on or after February 23, 2016, and except as otherwise provided in connection with an agreement or other documentation entered into by the Partnership relating to the particular LTIP Unit, no Liquidating Gains will be allocated with respect to such LTIP Unit under Section 6.1I(1) as of any date unless and to the extent that the Liquidating Gains as of such date, when aggregated with other Liquidating Gains realized since the issuance of such LTIP Unit and, in the case of any LTIP Unit issued after the date of the Agreement, reduced by the aggregate amount of depreciation realized since the issuance of such LTIP Unit, exceed Liquidating Losses realized since the issuance of such LTIP Unit. For purposes of performing the calculations in the preceding sentence, with respect to LTIP Units issued after the date hereof (or prior to the date hereof to the extent it does not adversely affect the rights of the Limited Partners in any material respect), the amount of Liquidating Gains shall be increased by the amount of any Net Realized Gain for the period since the issuance of such LTIP Unit and the amount of Liquidating Losses shall be increased by the amount of any Net Realized Loss for the period since the issuance of such LTIP Unit. 

(3)Any such allocations under this Section 6.1I shall first be made among the holders of LTIP Units in proportion to the aggregate amounts required to be allocated to each such holder under this Section 6.1I, and next to the holders of AOLTIP Units in proportion to the aggregate amounts required to be allocated to each under this Section 6.1I. For the avoidance of doubt, allocations pursuant to Section 6.1(O) hereof shall be made after any allocations with respect to LTIP Units pursuant to this Section 6.1I and prior to any allocations with respect to AOLTIP Units pursuant to this Section 6.1I.

(4)Liquidating Gain allocated to an LTIP Unit Limited Partner under this Section 6.1I will be attributed to specific LTIP Units and AOLTIP Units of such LTIP Unit Limited Partner for purposes of determining (i) allocations under this Section 6.1I, (ii) the effect of the forfeiture or conversion of specific LTIP Units or AOLTIP Units on such LTIP Unit Limited Partner’s Capital Account and (iii) the ability of such LTIP Unit Limited Partner to convert specific LTIP Units into Common Units.  Liquidating Gain allocated to such LTIP Unit Limited Partner under this Section 6.1I for any period by reason of holding LTIP Units will generally be attributed to LTIP Units with a positive Book-Up Target before the allocations with respect to AOLTIP Units under this Section 6.1I for the applicable period in the following order: (i) first, to Vested LTIP Units held for more than two years, (ii) second, to Vested LTIP Units held for two

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years or less, (iii) third, to Unvested LTIP Units that have remaining vesting conditions that only require continued employment or service to the Company, the Partnership or an Affiliate of either for a certain period of time (with such Liquidating Gains being attributed in order of vesting from soonest vesting to latest vesting), and (iv) fourth, to other Unvested LTIP Units (with such Liquidating Gains being attributed in order of issuance from earliest issued to latest issued).  The amount so attributed to each such category relating to LTIP Units shall not exceed the aggregate Book-Up Target of the units in such category, and within each category Liquidating Gain will be attributed seriatim (i.e., entirely to the first unit in a set, then entirely to the next unit in the set, and so on, until a full allocation is made to the last unit in the set) in the order of smallest Book-Up Target to largest Book-Up Target.  Subject to Section 6.1I(3) and Section 6.1O, Liquidating Gain allocated to such AOLTIP Unit Limited Partnerunder this Section 6.1I by reason of holding AOLTIP Units will generally be attributed to AOLTIP Units in proportion to the aggregate amounts required to be allocated with respect to each AOLTIP Unit.  

(5)After giving effect to the special allocations set forth above, if, due to distributions with respect to Common Units in which the LTIP Units and/or AOLTIP Units do not participate, forfeitures or otherwise, the aggregate Economic Capital Account Balance of any present or former LTIP Unit Limited Partner attributable to such LTIP Unit Limited Partner’s LTIP Units and/or AOLTIP Units, exceeds the aggregate Target Balance of such LTIP Units and/or AOLTIP Units, then Liquidating Losses shall be allocated to such LTIP Unit Limited Partner (and to the extent possible in a manner consistent with the principles of Section 6.1I(3)), or Liquidating Gains shall be allocated to the other Partners, to reduce or eliminate the disparity; provided, however, that if Liquidating Losses or Liquidating Gains are insufficient to completely eliminate all such disparities, such losses or gains shall be allocated among Partners in a manner reasonably determined by the General Partner.  

(6)The parties agree that the intent of this Section 6.1I is (i) to the extent possible within the limitations imposed by Section 6.1I(2)to make the Economic Capital Account Balance associated with (x) each LTIP Unit economically equivalent to the Common Unit Economic Balance and (y) each AOLTIP Unit economically equivalent to the Common Unit Economic Balance (or fractions thereof), if any, into which such AOLTIP Unit would then be convertible, assuming for such purpose that such AOLTIP Unit was a Vested AOLTIP Unit and (ii) to allow conversion of an LTIP Unit (assuming prior vesting) into a Common Unit when sufficient Liquidating Gains have been allocated to such LTIP Unit pursuant to Section 6.1I(1) so that either its initial Book-Up Target has been reduced to zero or the parity described in the definition of Target Balance has been achieved with respect to such LTIP Unit. The General Partner shall be permitted to interpret this Section 6.1I or to amend this Agreement to the extent necessary and consistent with this intention.

(7)In the event that Liquidating Gains or Liquidating Losses are allocated under this Section 6.1I, Profits allocable under Section 6.1A(2) and any Losses shall be recomputed without regard to the Liquidating Gains or Liquidating Losses so allocated.

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J.LTIP Forfeitures.  

(1)If an LTIP Unit Limited Partner forfeits any LTIP Units to which Liquidating Gain has previously been allocated under Section 6.1I (or previously re-allocated under this Section 6.1J), the portion of such LTIP Unit Limited Partner’s Capital Account attributable to such Liquidating Gain allocated (or reallocated) to such forfeited LTIP Units shall be re-allocated (i) first to that LTIP Unit Limited Partner’s remaining LTIP Units that were outstanding on the date of the initial allocation of such Liquidating Gain and would have been eligible to receive the allocation of such Liquidating Gain on such date (if any), using a methodology similar to that described in Section 6.1I(3) above as reasonably determined by the General Partner, to the extent necessary to cause such LTIP Unit Limited Partner’s Economic Capital Account Balance attributable to each such remaining LTIP Unit to equal the Common Unit Economic Balance, (ii) second, to the LTIP Unit Limited Partner’s Common Units (or fractions thereof) that were converted from AOLTIP Units to the extent necessary to cause such LTIP Unit Limited Partner’s Economic Capital Account Balance attributable to each such Common Unit to equal the Common Unit Economic Balance (or applicable fraction thereof), and (iii) thereafter to that LTIP Unit Limited Partner’s remaining AOLTIP Units (if any) to the extent necessary to cause such LTIP Unit Limited Partner’s Economic Capital Account Balance attributable to each such AOLTIP Unit to equal the Common Unit Economic Balance (or fractions thereof), if any, into which such AOLTIP Units would then be convertible, assuming for such purpose that such AOLTIP Units were vested AOLTIP Units.

(2)If an LTIP Unit Limited Partner forfeits any AOLTIP Units to which Liquidating Gain has previously been allocated under Section 6.1I (or previously re-allocated under this Section 6.1J), the portion of such LTIP Unit Limited Partner’s Capital Account attributable to such Liquidating Gain allocated (or re-allocated) to such forfeited AOLTIP Units shall be re-allocated (i) first to that LTIP Unit Limited Partner’s remaining LTIP Units that were outstanding on the date of the initial allocation of such Liquidating Gain and would have been eligible to receive the allocation of such Liquidating Gain on such date (if any), using a methodology similar to that described in Section 6.1I(2) above as reasonably determined by the General Partner, to the extent necessary to cause such LTIP Unit Limited Partner’s Economic Capital Account Balance attributable to each such remaining LTIP Unit to equal the Common Unit Economic Balance, (ii) second, to the LTIP Unit Limited Partner’s Common Units (or fractions thereof) that were converted from AOLTIP Units to the extent necessary to cause such LTIP Unit Limited Partner’s Economic Capital Account Balance attributable to each such Common Unit to equal the Common Unit Economic Balance (or applicable fraction thereof), and (iii) thereafter to that LTIP Unit Limited Partner’s remaining AOLTIP Units to the extent necessary to cause such LTIP Unit Limited Partner’s Economic Capital Account Balance attributable to each such AOLTIP Unit to equal the Common Unit Economic Balance (or fractions thereof), if any, into which such AOLTIP Units would then be convertible, assuming for such purpose that such AOLTIP Units were vested AOLTIP Units.

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(3)To the extent that the Capital Account of an LTIP Unit Limited Partner attributable to Liquidating Gains allocated to forfeited LTIP Units or forfeited AOLTIP Units is not re-allocated to other units under Section 6.1J(1)-(2)above, such LTIP Unit Limited Partner’s Capital Account will be reduced by the amount of any such Liquidating Gain not so re-allocated.

K.Reimbursements Treated as Guaranteed Payments.  Subject to Section 6.1L, if and to the extent any payment or reimbursement to the General Partner or the Company made pursuant to Section 7.7 or otherwise is determined for U.S. federal income tax purposes not to constitute a payment of expenses of the Partnership, the amount so determined shall constitute a guaranteed payment with respect to capital within the meaning of Section 707(c) of the Code, shall be treated consistently therewith by the Partnership and all Partners and shall not be treated as a distribution for purposes of computing the Partners’ Capital Accounts.

L.Adjustments to Preserve REIT Status and Avoid Gain.  Notwithstanding any provision in this Agreement to the contrary, if the Partnership pays or reimburses (directly or indirectly, including by reason of giving the General Partner or the Company or any direct or indirect Subsidiary of the Company Capital Account credit in excess of actual Capital Contributions made by the General Partner or the Company or any direct or indirect Subsidiary of the Company) fees, expenses or other costs pursuant to Section 4.2, Section 7.4 and/or Section 7.7, or otherwise, and if failure to treat all or part of such payment or reimbursement as a distribution to the General Partner, the Company or any Subsidiary of the Company (as appropriate), or the receipt of Capital Account credit in excess of actual Capital Contributions, would cause the Company to recognize income that would cause the Company to fail to qualify as a REIT or would cause the Company to recognize gain in connection with the Initial Public Offering and/or the Formation Transactions, then such payment or reimbursement (or portion thereof) shall be treated as a distribution to the General Partner, the Company or direct or indirect Subsidiary of the Company (as appropriate) for purposes of this Agreement, or the Capital Account credit in excess of actual Capital Contributions shall be reduced, in each case to the extent necessary to preserve the Company’s status as a REIT or would cause the Company to recognize gain in connection with the Initial Public Offering and/or the Formation Transactions.  The Capital Account of the General Partner, the Company or any direct or indirect Subsidiary of the Company (as appropriate) shall be reduced by such direct or indirect payment or reimbursement (or a portion thereof) in the same manner as an actual distribution to the General Partner, the Company, or any direct or indirect Subsidiary of the Company (as appropriate).  To the extent treated as distributions, such fees, expenses or other costs shall not be taken into account as Partnership fees, expenses or costs for the purposes of this Agreement.  In the event that amounts are recharacterized as distributions or Capital Accounts are reduced pursuant to this Section 6.1L, allocations under Section 6.1A, Section 6.1B and Section 6.1I for the current and subsequent periods shall be adjusted as reasonably determined by the General Partner so that to the extent possible the Partners have the same Capital Account balances they would have if this Section 6.1L had not applied.  This Section 6.1L is intended to prevent direct or indirect reimbursements or payments under this Agreement from giving rise to a violation of the Company’s REIT requirements or would cause the Company to recognize gain in connection with the Initial Public Offering and/or the Formation Transactions while at the same time preserving to the extent possible the parties’ intended economic arrangement and shall be interpreted and applied consistent with such intent.

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M.Modifications to Reflect New Series or Classes.

  The General Partner is authorized to modify the allocations in this Section 6.1 and amend such provisions (including the defined terms used therein) in such manner as the General Partner determines is necessary or appropriate to reflect the issues of additional series or classes of Partnership Interests.  Any such modification may be made pursuant to the Certificate of Designations or similar instrument establishing such new class or series.  

N.Agreement to Bear Disproportionate Losses.

  At the request and with the consent of the applicable Limited Partner, the General Partner may modify these allocations to provide for disproportionate allocations of Loss (or items of loss or deduction) and chargebacks thereof to a Limited Partner that agrees to restore all or part of any deficit in its Capital Account in accordance with Section 13.3 (in all cases subject to Section 6.1E).

O.Special Allocation upon Conversion of AOLTIP Unit. After a holder’s (or such holder’s transferor’s) conversion of an AOLTIP Unit into a fraction (which may be greater than one) of a Common Unit and after giving effect to the special allocations set forth in Section 6.1C, Section 6.1D and Section 6.1E hereof and after giving effect to special allocations with respect to LTIP Units set forth in Section 6.1I hereof, and the allocations of Profit under Section 6.1A(1) (including, for the avoidance of doubt Liquidating Gains that are a component of Profit), and subject to the other provisions of this Section 6.1, but before allocations of Profit are made under Section 6.1A(2), the Partnership will, consistent with Section 6.1I(3), specially allocate Liquidating Gain and Liquidating Loss to the Partners (including, for the avoidance of doubt, any transferee Partner of a Common Unit described herein) until and in a manner that causes, as promptly as practicable, the portion of the Economic Capital Account Balance of the Partner holding the fraction (which may be greater than one) of a Common Unit received upon the conversion of the AOLTIP Unit to equal the Common Unit Economic Balance multiplied by a fraction (which may be greater than one) equal to the fraction of the Common Unit issued in the conversion. Liquidating Gain allocated to a holder of a fraction of a Common Unit pursuant to this Section 6.1O by reason of holding a fraction of a Common Unit will generally be attributed to specific Common Units in proportion to the aggregate amounts required to be allocated with respect to each Common Unit.  

Section 6.2Capital Accounts

.  A separate capital account (a “Capital Account”) shall be established and maintained for each Partner in accordance with Regulations Section 1.704‑1(b)(2)(iv). Consistent with the provisions of Regulations Section 1.704-1(b)(2)(iv)(f), (i) immediately prior to the acquisition of an additional Partnership Interest by any new or existing Partner in connection with the contribution of money or other property (other than a de minimis amount) to the Partnership, (ii) immediately prior to the distribution by the Partnership to a Partner of Partnership property (other than a de minimis amount) as consideration for a Partnership Interest, (iii) upon the acquisition of a more than de minimis additional interest in the Partnership by any new or existing Partner as consideration for the provision of services to or for the benefit of the Partnership in a partner capacity or in anticipation of becoming a Partner, (iv) upon the grant of any LTIP Unit or AOLTIP Unit, and (v) immediately prior to the liquidation of the Partnership as defined in Regulations Section 1.704-1(b)(2)(ii)(g), the book value of all Partnership Assets shall be revalued upward or downward to reflect the fair market value (as determined by the General Partner, in its sole and absolute discretion, and taking into account Section 7701(g) of the Code) of each such

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Partnership asset unless the General Partner shall determine that such revaluation is not necessary to maintain the Partner’s intended economic arrangements and for the avoidance of doubt may be so revalued at such other times permitted by such Regulations.If the Capital Accounts of the Partners are adjusted pursuant to Regulations Section 1.704‑1(b)(2)(iv)(f) to reflect revaluations of Partnership property, (i) the Capital Accounts of the Partners shall be adjusted in accordance with Regulations Section 1.704‑1(b)(2)(iv)(g) for allocations of depreciation, depletion, amortization and gain or loss, as computed for book purposes, with respect to such property, (ii) the Partners’ distributive shares of depreciation, depletion, amortization and gain or loss, as computed for tax purposes, with respect to such property shall be determined so as to take account of the variation between the adjusted tax basis and book value of such property in the same manner as under Code Section 704(c), and (iii) the amount of upward and/or downward adjustments to the book value of the Partnership property shall be treated as income, gain, deduction and/or loss for purposes of applying the allocation provisions of this Article 6.  If Code Section 704(c) applies to Partnership property, the Capital Accounts of the Partners shall be adjusted in accordance with Regulations Section 1.704-1(b)(2)(iv)(g) for allocations of depreciation, depletion, amortization and gain and loss, as computed for book purposes, with respect to such property.

Section 6.3Tax Allocations

.  All allocations of income, gain, loss and deduction (and all items contained therein) for U.S. federal income tax purposes shall be identical to all allocations of such items set forth in Section 6.1, except as otherwise required by Section 6.2 or Section 704(c) of the Code and Regulations Section 1.704-1(b)(4). The General Partner shall have the authority to elect the methods to be used by the Partnership for allocating items of income, gain and expense as required by Section 704(c) of the Code and Regulations Section 1.704-1(b)(4), including the use of different methods for different items and different properties, except as otherwise agreed upon by the General Partner and one or more Limited Partners (or direct or indirect owners thereof), and such election shall be binding on all Partners.

Section 6.4Substantial Economic Effect

.  It is the intent of the Partners that the allocations of Profit and Loss under this Agreement have substantial economic effect (or be consistent with the Partners’ interests in the Partnership in the case of the allocation of losses attributable to nonrecourse debt or any other allocations that cannot have substantial economic effect under the Code) within the meaning of Section 704(b) of the Code as interpreted by the Regulations promulgated pursuant thereto. Article 6 and other relevant provisions of this Agreement shall be interpreted in a manner consistent with such intent.  The provisions of this Agreement relating to the maintenance of Capital Accounts are intended to comply with Regulations Section 1.704‑1(b), and shall be interpreted and applied in a manner consistent with such Regulations.  In the event the General Partner shall determine that it is prudent to modify (i) the manner in which the Capital Accounts, or any debits, or credits thereto (including, without limitation, debits or credits relating to liabilities which are secured by contributed or distributed property or which are assumed by the Partnership, the General Partner, or the Limited Partners) are computed; or (ii) the manner in which items are allocated among the Partners for U.S. federal income tax purposes in order to comply with such Regulations or to comply with Section 704(c) of the Code, the General Partner may make such modification without regard to Article 14 of this Agreement, provided that it is not likely to have a material effect on the amounts distributable to any Person pursuant to Article 13 of this Agreement upon the dissolution of the Partnership.  The General Partner also shall (i) make any adjustments that

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are necessary or appropriate to maintain equality between the aggregate Capital Accounts of the Partners and the amount of Partnership capital reflected on the Partnership’s balance sheet, as computed for book purposes, in accordance with Regulations Section 1.704‑1(b)(2)(iv)(q); and (ii) make any appropriate modifications in the event unanticipated events might otherwise cause this Agreement not to comply with Regulations Section 1.704‑1(b).  In addition, the General Partner may adopt and employ such methods and procedures for (i) the maintenance of book and tax capital accounts; (ii) the determination and allocation of adjustments under Sections 704(c), 734, and 743 of the Code; (iii) the determination of Profit, Loss, taxable income and loss and items thereof under this Agreement and pursuant to the Code; (iv) the adoption of reasonable conventions and methods for the valuation of assets and the determination of tax basis; (v) the allocation of asset value and tax basis; and (vi) conventions for the determination of cost recovery, depreciation and amortization deductions, as it determines in its sole discretion are necessary or appropriate to execute the provisions of this Agreement, to comply with federal and state tax laws, and/or are in the best interest of the Partners.

ARTICLE 7 - MANAGEMENT AND OPERATIONS OF BUSINESS

Section 7.1Management

A.Except as otherwise expressly provided in this Agreement, all management powers over the business and affairs of the Partnership are and shall be exclusively vested in the General Partner, and no Limited Partner, in its capacity as such, shall have any right to participate in or exercise control or management power over the business and affairs of the Partnership.  The General Partner may not be removed by the Limited Partners with or without cause, except with the consent of the General Partner, which consent may be withheld in its sole and absolute discretion.  In addition to the powers now or hereafter granted a general partner of a limited partnership under applicable law or which are granted to the General Partner under any other provision of this Agreement, the General Partner, subject to the other provisions hereof including Section 7.3 and Section 11.2, shall have full and exclusive power and authority to do all things deemed necessary or desirable by it to conduct the business of the Partnership, to exercise all powers set forth in Section 3.2 and to effectuate the purposes set forth in Section 3.1 (subject to the proviso in Section 3.2), including, without limitation:

(1)the making of any expenditures, the lending or borrowing of money (including, without limitation, making prepayments on loans and borrowing money to permit the Partnership to make distributions to its Partners in such amounts as will allow the Company to (i) meet its distribution requirement for qualification as a REIT as set forth in Section 857 of the Code and (ii) other than to the extent the Company elects to retain and pay income tax on its net capital gain, avoid or reduce any U.S. federal income or excise tax liability imposed by the Code., the assumption or guarantee of, or other contracting for, indebtedness and other liabilities, the issuance of evidences of indebtedness (including the securing of same by deed, mortgage, deed of trust or other lien or encumbrance on the Partnership’s assets) and the incurring of any obligations it deems necessary for the conduct of the activities of the Partnership;

(2)the making of tax, regulatory and other filings, or rendering of periodic or other reports to governmental or other agencies having jurisdiction over the

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business or assets of the Partnership, the registration of any class of securities of the Partnership under the Exchange Act and the listing of any debt securities of the Partnership on any exchange;

(3)subject to Section 11.2, the acquisition, disposition, mortgage, pledge, encumbrance, hypothecation or exchange of any or all of the assets of the Partnership (including the exercise or grant of any conversion, option, privilege, or subscription right or other right available in connection with any assets at any time held by the Partnership) or the merger, consolidation, reorganization or other combination of the Partnership with or into another entity on such terms as the General Partner deems proper (all of the foregoing subject to any prior approval only to the extent required by Section 7.3);

(4)the acquisition, disposition, mortgage, pledge, encumbrance or  hypothecation of any or all of the assets of the Partnership, and the use of the assets of the Partnership (including, without limitation, cash on hand) for any purpose consistent with the terms of this Agreement and on any terms the General Partner deems proper, including, without limitation, the financing of the conduct of the operations of the Company, the Partnership or any Subsidiary of the Company and/or the Partnership, the lending of funds to other Persons (including, without limitation, the Company or any Subsidiary of the Company and/or the Partnership) and the repayment of obligations of the Partnership and its Subsidiaries and any other Person in which it has an equity investment, and the making of capital contributions and equity investments to its Subsidiaries;

(5)the management, operation, leasing, landscaping, repair, alteration, demolition or improvement of any real property or improvements owned by the Partnership or any Subsidiary of the Partnership, any other asset of the Partnership or any Subsidiary of the Partnership, or any Person in which the Partnership has made a direct or indirect equity investment;

(6)the negotiation, execution, and performance of any contracts, leases, conveyances or other instruments that the General Partner considers useful or necessary to the conduct of the Partnership’s operations or the implementation of the General Partner’s powers under this Agreement, including contracting with contractors, developers, consultants, accountants, legal counsel, other professional advisors and other agents and the payment of their expenses and compensation out of the Partnership’s assets;

(7)the distribution of Partnership cash or other Partnership assets in accordance with this Agreement;

(8)the holding, managing, investing and reinvesting of cash and other assets of the Partnership;

(9)the collection and receipt of revenues, rents and income of the Partnership;

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(10)the establishment of one or more divisions of the Partnership, the selection and dismissal of employees (if any) of the Partnership or any Subsidiary of the Partnership (including, without limitation, employees having titles such as “president,” “vice president,” “secretary” and “treasurer” ), and agents, outside attorneys, accountants, consultants and contractors of the Partnership, and the determination of their compensation and other terms of employment or hiring including waivers of conflicts of interest and the payment of their expenses and compensation out of the Partnership’s assets;

(11)the maintenance of such insurance (including, without limitation, directors and officers insurance) for the benefit of the Partnership, the Partners (including, without limitation, the Company) and the directors and officers thereof as the General Partner deems necessary or appropriate;

(12)the formation of, or acquisition of an interest in, and the contribution of property to, any further limited or general partnerships, joint ventures, corporations or other relationships that it deems desirable (including, without limitation, the acquisition of interests in, and the contributions of property to, any Subsidiary and any other Person in which it has an equity investment from time to time); providedthat, as long as the Company has determined to continue to qualify as a REIT, the Partnership may not engage in any such formation, acquisition or contribution that would cause the Company to fail to qualify as a REIT;

(13)the filing of applications, communicating and otherwise dealing with any and all governmental agencies having jurisdiction over, or in any way affecting, the Partnership’s assets or any other aspect of the Partnership business;

(14)taking of any action necessary or appropriate to comply with all regulatory requirements applicable to the Partnership in respect of its business, including preparing or causing to be prepared all financial statements required under applicable regulations and contractual undertakings and all reports, filings and documents, if any, required under the Exchange Act, the Securities Act, or by National Securities Exchange requirements;

(15)the control of any matters affecting the rights and obligations of the Partnership and any Subsidiary of the Partnership, including the settlement, compromise, submission to arbitration or any other form of dispute resolution, or abandonment of, any claim, cause of action, liability, debt or damages, due or owing to or from the Partnership or any Subsidiary of the Partnership, the commencement or defense of suits, legal proceedings, administrative proceedings, arbitration or other forms of dispute resolution, and the representation of the Partnership or any Subsidiary of the Partnership in all suits or legal proceedings, administrative proceedings, arbitrations or other forms of dispute resolution, the incurring of legal expense, and the indemnification of any Person against liabilities and contingencies to the extent permitted by law;

(16)the undertaking of any action in connection with the Partnership’s direct or indirect investment in any Subsidiary or any other Person (including, without

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limitation, the contribution or loan of funds by the Partnership to such Persons, incurring indebtedness on behalf of, or guarantying the obligations of, any such Persons);

(17)the determination of the fair market value of any Partnership property distributed in kind using such reasonable method of valuation as the General Partner may adopt;

(18)the enforcement of any rights against any Partner pursuant to representations, warranties, covenants and indemnities relating to such Partner’s contribution of property or assets to the Partnership;

(19)the exercise, directly or indirectly, through any attorney‑in‑fact acting under a general or limited power of attorney, of any right, including the right to vote, appurtenant to any asset or investment held by the Partnership or any Subsidiary of the Partnership;

(20)the exercise of any of the powers of the General Partner enumerated in this Agreement on behalf of or in connection with any Subsidiary of the Partnership or any other Person in which the Partnership has a direct or indirect interest, or jointly with any such Subsidiary or other Person;

(21)the exercise of any of the powers of the General Partner enumerated in this Agreement on behalf of any Person in which the Partnership does not have an interest pursuant to contractual or other arrangements with such Person;

(22)the making, execution and delivery of any and all deeds, leases, notes, mortgages, deeds of trust, security agreements, conveyances, contracts, guarantees, warranties, indemnities, waivers, releases or legal instruments or agreements in writing necessary or appropriate, in the judgment of the General Partner, for the accomplishment of any of the powers of the General Partner enumerated in this Agreement;

(23)the maintenance of the Partnership’s books and records;

(24)the issuance of additional Partnership Units, as appropriate and in the General Partner’s sole and absolute discretion, in connection with capital contributions by Additional Limited Partners and additional capital contributions by Partners pursuant to Article 4 hereof;

(25)the selection and dismissal of General Partner employees (including, without limitation, employees having titles or offices such as president, vice president, secretary and treasurer), and agents, outside attorneys, accountants, consultants and contractors of the Partnership or the General Partner, the determination of their compensation and other terms of employment or hiring and the delegation to any such General Partner employee the authority to conduct the business of the Partnership in accordance with the terms of this Agreement;

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(26)the distribution of cash to acquire Partnership Units held by a Limited Partner in connection with a Limited Partner’s exercise of its Redemption Right under Section 8.5hereof;

(27)the collection and receipt of revenues and income of the Partnership;

(28)maintaining or causing to be maintained, the books and records of the Partnership to reflect accurately at all times the capital contributions and Percentage Interests of the Partners as the same are adjusted from time to time to the extent necessary to reflect redemptions, Capital Contributions, the issuance of Partnership Units, the admission of any Additional Limited Partner or Substituted Limited Partner or otherwise;

(29)any election to dissolve the Partnership pursuant to Section 13.1(A)(2);

(30)the registration of any class of securities under the Securities Act or the Exchange Act, and the listing of any debt securities of the Partnership on any exchange;

(31)the entering into of listing agreements with any National Securities Exchange and the listing of any securities of the Partnership on such exchange;

(32)the delisting of some or all of the Partnership Units from, or the requesting that trading be suspended on, any National Securities Exchange;

(33)the taking of any and all acts and things necessary or prudent to ensure that the Partnership will not be classified as an association taxable as a corporation for U.S. federal income tax purposes or a “publicly traded partnership” for purposes of Section 7704 of the Code, including but not limited to imposing restrictions on transfers, restrictions on the number of Partners and restrictions on redemptions; and

(34)to take such other action, execute, acknowledge, swear to or deliver such other documents and instruments, and perform any and all other acts that the General Partner deems necessary or appropriate for the formation, continuation and conduct of the business and affairs of the Partnership (including, without limitation, all actions consistent with allowing the Company at all times to qualify as a REIT unless the Company voluntarily terminates its REIT status) and to possess and enjoy all the rights and powers of a general partner as provided by the Act.

B.Each of the Limited Partners agrees that the General Partner is authorized to execute, deliver and perform the above‑mentioned agreements and transactions on behalf of the Partnership without any further act, approval or vote of the Partners, notwithstanding any other provision of this Agreement (except as provided in Section 7.3), the Act or any applicable law, rule or regulation, to the fullest extent permitted under the Act or other applicable law, rule or regulation.  The execution, delivery or performance by the General Partner or the Partnership of any agreement authorized or permitted under this Agreement shall not constitute a breach by the General Partner of any duty that the General Partner may owe the Partnership or the Limited

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Partners or any other Persons under this Agreement or of any duty stated or implied by law or equity.

C.The General Partner may cause the Partnership to establish and maintain working capital and other reserves in such amounts as the General Partner, in its sole and absolute discretion, deems appropriate and reasonable from time to time.

D.The General Partner may cause the Partnership to obtain and maintain (i) casualty, liability and other insurance on the Properties,  (ii) liability insurance for the Indemnities hereunder and (iii) such other insurance as the General Partner, in its sole and absolute discretion, determines to be necessary.

E.Except as provided in this Agreement with respect to the qualification of the Company as a REIT and as may be provided in a separate written agreement between the Partnership and a Limited Partner (or a direct or indirect owner thereof), in exercising its authority under this Agreement, the General Partner may, but shall be under no obligation to, take into account the tax consequences to any Partner (including the Company) of any action taken (or not taken) by it.  Except as provided in this Agreement with respect to the qualification of the Company as a REIT and as may be provided in a separate written agreement between the Partnership and a Limited Partner, the General Partner and the Partnership shall not have liability to a Limited Partner under any circumstances as a result of an income tax liability incurred by such Limited Partner as a result of an action (or inaction) by the General Partner pursuant to its authority under this Agreement.

Section 7.2Certificate of Limited Partnership

To the extent that such action is determined by the General Partner to be reasonable and necessary or appropriate, the General Partner shall file amendments to and restatements of the Certificate of Limited Partnership and do all of the things to maintain the Partnership as a limited partnership (or a partnership in which the limited partners have limited liability) under the laws of the State of Delaware and each other state, or the District of Columbia or other jurisdiction, in which the Partnership may elect to do business or own property.  Subject to the terms of Section 8.4A(4) hereof, the General Partner shall not be required, before or after filing, to deliver or mail a copy of the Certificate of Limited Partnership or any amendment thereto to any Limited Partner.  The General Partner shall use all reasonable efforts to cause to be filed such other certificates or documents as may be reasonable and necessary or appropriate for the formation, continuation, qualification and operation of a limited partnership (or a partnership in which the limited partners have limited liability) in the State of Delaware and any other state, or the District of Columbia or other jurisdiction, in which the Partnership may elect to do business or own property.  

Section 7.3Restrictions on General Partner Authority

The General Partner may not take any action in contravention of an express prohibition or limitation of this Agreement without the written Consent of a Majority in Interest of the Outside Limited Partners or such other percentage of the Limited Partners as may be specifically provided for under a provision of this Agreement and may not perform any act that would

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subject a Limited Partner to liability as a general partner in any jurisdiction or any other liability except as provided herein or under the Act.

Section 7.4Reimbursement of the General Partner and the Company

A.Except as provided in this Section 7.4 and elsewhere in this Agreement (including the provisions of Article 5 and Article 6 regarding distributions, payments, and allocations to which it may be entitled), the General Partner shall not be compensated for its services as the General Partner of the Partnership.

B.The Partnership shall be responsible for and shall pay all expenses relating to the Partnership’s, the General Partner’s and the Company’s organization, the ownership of their assets and their operations, including, without limitation, the Administrative Expenses.  Except to the extent provided in this Agreement, the General Partner, the Company and their Affiliates shall be reimbursed on a monthly basis, or such other basis as the General Partner may determine in its sole and absolute discretion, for all such expenses.  The Partners acknowledge that all such expenses of the General Partner and/or the Company are deemed to be for the benefit of the Partnership.  Such reimbursement shall be in addition to any reimbursement made as a result of indemnification pursuant to Section 7.7.  In the event that certain expenses are incurred for the benefit of the Partnership and other entities (including the General Partner), such expenses will be allocated to the Partnership and such other entities in such a manner as the General Partner in its sole and absolute discretion deems fair and reasonable. To the extent permitted by law and subject to Section 6.1.K and Section 6.1.L, all payments and reimbursements hereunder shall be characterized for U.S. federal income tax purposes as expenses of the Partnership incurred on its behalf, and not as expenses of the General Partner.

C.If the Company shall elect to purchase from its stockholders REIT Shares (i) for the purpose of delivering such REIT Shares to satisfy an obligation under any dividend reinvestment program adopted by the Company, any employee stock purchase plan adopted by the Company or any of its Subsidiaries, or any similar obligation or arrangement undertaken by the Company in the future or for the purpose of retiring such REIT Shares or (ii) for any other reason, the purchase price paid by the Company for such REIT Shares and any other expenses incurred by the Company in connection with such purchase shall be considered expenses of the Partnership and shall be advanced to the Company or reimbursed to the Company, subject to the conditions that: (a) if such REIT Shares subsequently are sold by the Company, the Company shall pay to the Partnership any proceeds received by the Company for such REIT Shares (which sales proceeds shall include the amount of dividends reinvested under any dividend reinvestment or similar program, providedthat a transfer of REIT Shares for Partnership Units pursuant to Section 8.5 would not be considered a sale for such purposes), and (b) if such REIT Shares are not retransferred by the Company immediately after the purchase thereof, the Company shall cause the Partnership to redeem a number of Common Units held by the Company equal to the number of such REIT Shares divided by the Conversion Factor.

D.As set forth in Section 4.2, but subject to Section 6.1, the Company shall be treated as having made a capital contribution in the amount of all expenses that the Company incurs relating to the Company’s offering of REIT Shares, other shares of capital stock of the Company or New Securities.

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Section 7.5Outside Activities of the General Partner and the Company

A.The General Partner, the Company and any Affiliates of the General Partner or the Company may acquire Limited Partner Interests and shall be entitled to exercise all rights of a Limited Partner relating to such Limited Partner Interests.

B.The Company may, in its sole and absolute discretion, from time to time hold or acquire assets in its own name or otherwise other than through the Partnership so long as the Company takes commercially reasonable measures to ensure that the economic benefits and burdens of such Property are otherwise vested in the Partnership, through assignment, mortgage loan or otherwise or, if it is not commercially reasonable to vest such economic interests in the Partnership, the General Partner shall make such amendments to this Agreement as the General Partner determines are necessary or desirable, including, without limitation, the definition of “Conversion Factor,” to reflect such activities and the direct ownership of assets by the Company. Nothing contained herein shall be deemed to prohibit the Company from executing guarantees of Partnership debt.

Section 7.6Contracts with Affiliates

A.The Partnership may lend or contribute funds or other assets to any Subsidiary or other Persons in which it has an equity investment and such Persons may borrow funds from the Partnership, on terms and conditions established in the sole and absolute discretion of the General Partner.  The foregoing authority shall not create any right or benefit in favor of any Subsidiary or any other Person.

B.Except as provided in Section 7.5, the Partnership may transfer assets to joint ventures, other partnerships, limited liability companies, business trusts, statutory trusts, corporations or other business entities in which it is or thereby becomes a participant upon such terms and subject to such conditions consistent with this Agreement and applicable law as the General Partner, in its sole and absolute discretion, believes are advisable.

C.Except as expressly permitted by this Agreement, neither the General Partner nor any of its Affiliates shall sell, transfer or convey any property to, or purchase any property from, the Partnership, directly or indirectly, except pursuant to transactions that are determined by the General Partner in good faith to be fair and reasonable.

D.The General Partner, in its sole and absolute discretion and without the approval of the Limited Partners, may propose and adopt, on behalf of the Partnership, employee benefit plans, stock option plans, and similar plans (including without limitation plans that contemplate the issuance of LTIP Units) funded by the Partnership for the benefit of employees of the General Partner, the Partnership, any Subsidiary of the Partnership or any Affiliate of any of them in respect of services performed, directly or indirectly, for the benefit of the Partnership, the General Partner or any Subsidiary of the Partnership.

Section 7.7Indemnification

A.To the fullest extent permitted by applicable law, the Partnership shall indemnify each Indemnitee from and against any and all losses, claims, damages, liabilities, joint

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or several, expenses (including, without limitation, attorneys’ fees and other legal fees and expenses), judgments, fines, settlements and other amounts arising from any and all claims, demands, subpoenas, requests for information, formal or informal investigations, actions, suits or proceedings, civil, criminal, administrative or investigative, that relate to the operations of the Partnership or the Company or any of their Subsidiaries as set forth in this Agreement, in which such Indemnitee may be involved, or is threatened to be involved, as a party or otherwise, unless it is established that: (i) the act or omission of the Indemnitee was material to the matter giving rise to the proceeding and either was committed in bad faith, constituted fraud or was the result of active and deliberate dishonesty; (ii) the Indemnitee actually received an improper personal benefit in money, property or services; or (iii) in the case of any criminal proceeding, the Indemnitee had reasonable cause to believe that the act or omission was unlawful.  Without limitation, the foregoing indemnity shall extend to any liability of any Indemnitee, pursuant to a loan guaranty (except a guaranty by a Limited Partner of nonrecourse indebtedness of the Partnership or as otherwise provided in any such loan guaranty) or otherwise for any indebtedness of the Partnership or any Subsidiary of the Partnership (including, without limitation, any indebtedness which the Partnership or any Subsidiary of the Partnership has assumed or taken subject to), and the General Partner is hereby authorized and empowered, on behalf of the Partnership, to enter into one or more indemnity agreements consistent with the provisions of this Section 7.7 in favor of any Indemnitee having or potentially having liability for any such indebtedness.  The termination of any proceeding by judgment, order or settlement does not create a presumption that the Indemnitee did not meet the requisite standard of conduct set forth in this Section 7.7A.  The termination of any proceeding by conviction of an Indemnitee or upon a plea of nolo contendere or its equivalent by an Indemnitee, or an entry of an order of probation against an Indemnitee prior to judgment does not create a presumption that such Indemnitee acted in a manner contrary to that specified in this Section 7.7A.  Any indemnification pursuant to this Section 7.7 or pursuant to any indemnity agreement permitted by this Section 7.7 shall be made only out of the assets of the Partnership and any insurance proceeds from the liability policy covering the General Partner and any Indemnitees, and neither the General Partner, the Company nor any Limited Partner shall have any obligation to contribute to the capital of the Partnership, or otherwise provide funds, to enable the Partnership to fund its obligations under this Section 7.7 or under such indemnity agreements.

B.To the fullest extent permitted by law, expenses incurred by an Indemnitee who is a party to a proceeding or the recipient of a subpoena or request for information with respect to a proceeding to which such Indemnitee is not a party shall be paid or reimbursed by the Partnership in advance of the final disposition of the proceeding upon receipt by the Partnership of (i) a written affirmation by the Indemnitee of the Indemnitee’s good faith belief that the standard of conduct necessary for indemnification by the Partnership as authorized in this Section 7.7 has been met and (ii) a written undertaking by or on behalf of the Indemnitee to repay the amount if it shall ultimately be determined that the standard of conduct has not been met.

C.The indemnification provided by this Section 7.7 shall be in addition to any other rights to which an Indemnitee or any other Person may be entitled under any agreement, pursuant to any vote of the Partners, as a matter of law or otherwise, and shall continue as to an Indemnitee who has ceased to serve in such capacity unless otherwise provided in a written agreement pursuant to which such Indemnitee is indemnified.

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D.The Partnership may, but shall not be obligated to, purchase and maintain insurance, on behalf of the Indemnitees and such other Persons as the General Partner shall determine, against any liability that may be asserted against or expenses that may be incurred by such Person in connection with the Partnership’s activities, regardless of whether the Partnership would have the power to indemnify such Person against such liability under the provisions of this Agreement.

E.For purposes of this Section 7.7, the Partnership shall be deemed to have requested an Indemnitee to serve as fiduciary of an employee benefit plan whenever the performance by an Indemnitee of his, her or its duties to the Partnership also imposes duties on, or otherwise involves services by, an Indemnitee to the plan or participants or beneficiaries of the plan; excise taxes assessed on an Indemnitee with respect to an employee benefit plan pursuant to applicable law shall constitute fines within the meaning of Section 7.7; and actions taken or omitted by the Indemnitee with respect to an employee benefit plan in the performance of its duties for a purpose reasonably believed by it to be in the interest of the participants and beneficiaries of the plan shall be deemed to be for a purpose which is not opposed to the best interests of the Partnership.

F.In no event may an Indemnitee subject any of the Partners to personal liability by reason of the indemnification provisions set forth in this Agreement.

G.An Indemnitee shall not be denied indemnification in whole or in part under this Section 7.7 because the Indemnitee had an interest in the transaction with respect to which the indemnification applies if the transaction was otherwise permitted by the terms of this Agreement.

H.The provisions of this Section 7.7 are for the benefit of the Indemnitees, their employees, officers, directors, trustees, heirs, successors, assigns and administrators and shall not be deemed to create any rights for the benefit of any other Persons.  Any amendment, modification or repeal of this Section 7.7 or any provision hereof shall be prospective only and shall not in any way affect the limitations on the Partnership’s liability to any Indemnitee under this Section 7.7, as in effect immediately prior to such amendment, modification, or repeal with respect to claims arising from or relating to matters occurring, in whole or in part, prior to such amendment, modification or repeal, regardless of when such claims may arise or be asserted.

I.It is the intent of the parties that any amounts paid by the Partnership to the General Partner or the Company pursuant to this Section 7.7 shall be treated as “guaranteed payments” within the meaning of Code Section 707(c) and shall not be treated as distributions for purposes of computing the Partners’ Capital Accounts.

Section 7.8Liability of the General Partner and the Company

A.Notwithstanding anything to the contrary set forth in this Agreement, to the maximum extent permitted by applicable law, none of the General Partner, the Company, nor any of their directors, officers, agents or employees shall be liable or accountable in monetary damages or otherwise to the Partnership, any Partners or any Assignees for losses sustained, liabilities incurred or benefits not derived as a result of errors in judgment or mistakes of fact or

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law or any act or omission unless the General Partner acted in bad faith and the act or omission was material to the matter giving rise to the loss, liability or benefit not derived.

B.The Limited Partners expressly acknowledge that the General Partner is acting for the benefit of the Partnership, the Limited Partners and the Company’s stockholders collectively, and that the General Partner are under no obligation to consider or give priority to the separate interests of the Limited Partners or the Company’s stockholders (including, without limitation, the tax consequences to the Limited Partners, Assignees or the Company’s stockholders) in deciding whether to cause the Partnership to take (or decline to take) any actions.  Unless otherwise provided in a separate written agreement between the Partnership and a Limited Partner, if there is a conflict between the interests of the stockholders of the Company on one hand and the Limited Partners on the other hand, the General Partner shall endeavor in good faith to resolve the conflict in a manner not adverse to either the stockholders of the Company or the Limited Partners; provided, however, that for so long as the Company owns a controlling interest in the Partnership, any such conflict that cannot be resolved in a manner not adverse to either the stockholders of the Company or the Limited Partners shall be resolved in favor of the stockholders of the Company.  Neither the General Partner nor the Company shall be liable under this Agreement to the Partnership or to any Partner for monetary damages for losses sustained, liabilities incurred, or benefits not derived by Limited Partners in connection with such decisions; providedthat the General Partner has acted in good faith.

C.Subject to its obligations and duties as General Partner set forth in Section 7.1A, the General Partner may exercise any of the powers granted to it by this Agreement and perform any of the duties imposed upon it hereunder either directly or by or through its agents.  The General Partner shall not be liable to the Partnership or any Partner for any misconduct or negligence on the part of any such agent appointed by the General Partner in good faith.

D.Any amendment, modification or repeal of this Section 7.8 or any provision hereof shall be prospective only and shall not in any way affect the limitations on the liability of the General Partner or the directors, officers or agents of the General Partner, the Company, or of the directors, officers, stockholders, employees or agents of the Company, or the Indemnitees, to the Partnership, the Partners or any other Person bound by this Agreement under this Section 7.8 as in effect immediately prior to such amendment, modification or repeal with respect to claims arising from or relating to matters occurring, in whole or in part, prior to such amendment, modification or repeal, regardless of when such claims may arise or be asserted.

E.To the extent that, at law or in equity, the General Partner or the Company in its capacity as a Limited Partner, has duties (including fiduciary duties) and liabilities relating thereto to the Partnership or the Limited Partners, neither the General Partner nor the Company shall be liable to the Partnership or to any other Partner for its good faith reliance on the provisions of this Agreement. The provisions of this Agreement, to the extent that they restrict or eliminate the duties and liabilities of the General Partner, the Company or any other Person under the Act or otherwise existing at law or in equity, are agreed by the Partners to replace such other duties and liabilities of the General Partner and the Company.

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F.Notwithstanding anything herein to the contrary, except for fraud, willful misconduct or gross negligence, or pursuant to any express indemnities given to the Partnership by any Partner pursuant to any other written instrument, no Partner shall have any personal liability whatsoever, to the Partnership or to the other Partner(s), for the debts or liabilities of the Partnership or the Partnership’s obligations hereunder, and the full recourse of the other Partner(s) shall be limited to the interest of that Partner in the Partnership. To the fullest extent permitted by law, no officer, director or stockholder of the General Partner shall be liable to the Partnership for money damages except for (1) active and deliberate dishonesty established by a nonappealable final judgment or (2) actual receipt of an improper benefit or profit in money, property or services. Without limitation of the foregoing, and except for fraud, willful misconduct or gross negligence, or pursuant to any such express indemnity, no property or assets of any Partner, other than its interest in the Partnership, shall be subject to levy, execution or other enforcement procedures for the satisfaction of any judgment (or other judicial process) in favor of any other Partner(s) and arising out of, or in connection with, this Agreement. This Agreement is executed by the officers of the General Partner solely as officers of the same and not in their own individual capacities.

Section 7.9Other Matters Concerning the General Partner and the Company

A.The General Partner and the Company may rely and shall be protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, bond, debenture or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties.

B.The General Partner and the Company may consult with legal counsel, accountants, appraisers, management consultants, investment bankers, architects, engineers, environmental consultants and other consultants and advisers selected by it, and any act taken or omitted to be taken in reliance upon the opinion of such Persons as to matters which such General Partner and the Company reasonably believe to be within such Person’s professional or expert competence shall be conclusively presumed to have been done or omitted in good faith and in accordance with such opinion.

C.The General Partner shall have the right, in respect of any of its powers or obligations hereunder, to act through any of its duly authorized officers and duly appointed attorney or attorneys‑in‑fact.  Each such attorney shall, to the extent provided by the General Partner in the power of attorney, have full power and authority to do and perform all and every act and duty which is permitted or required to be done by the General Partner hereunder.

D.Notwithstanding any other provisions of this Agreement or the Act, any action of the General Partner or the Company on behalf of the Partnership or any decision of the General Partner or the Company to refrain from acting on behalf of the Partnership, undertaken in the good faith belief that such action or omission is necessary or advisable in order (i) to protect the ability of the Company to continue to qualify as a REIT, or (ii) to avoid the Company from incurring any taxes under Section 857 or Section 4981 of the Code, is expressly authorized under this Agreement and is deemed approved by all of the Limited Partners.

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Section 7.10Title to Partnership Assets

Title to Partnership assets, whether real, personal or mixed and whether tangible or intangible, shall be deemed to be owned by the Partnership as an entity, and no Partner, individually or collectively, shall have any ownership interest in such Partnership assets or any portion thereof.  Title to any or all of the Partnership assets may be held in the name of the Partnership, the General Partner or one or more nominees, as the General Partner may determine, including Affiliates of the General Partner.  Subject to Section 7.5, the General Partner hereby declares and warrants that any Partnership assets for which legal title is held in the name of the General Partner or any nominee or Affiliate of the General Partner shall be held by the General Partner or such nominee or Affiliate for the use and benefit of the Partnership in accordance with the provisions of this Agreement; provided, however, that the General Partner shall use its best efforts to cause beneficial and record title to such assets to be vested in the Partnership as soon as reasonably practicable if failure to so vest such title would have a material adverse effect on the Partnership.  All Partnership assets shall be recorded as the property of the Partnership in its books and records, irrespective of the name in which legal title to such Partnership assets is held.

Section 7.11Reliance by Third Parties

Notwithstanding anything to the contrary in this Agreement, any Person dealing with the Partnership shall be entitled to assume that the General Partner has full power and authority, without the consent or approval of any other Partner or Person, to encumber, sell or otherwise use in any manner any and all assets of the Partnership and to enter into any contracts on behalf of the Partnership, and take any and all actions on behalf of the Partnership, and such Person shall be entitled to deal with the General Partner as if the General Partner were the Partnership’s sole party in interest, both legally and beneficially.  Each Limited Partner hereby waives any and all defenses or other remedies which may be available against such Person to contest, negate or disaffirm any action of the General Partner in connection with any such dealing.  In no event shall any Person dealing with the General Partner or its representatives be obligated to ascertain that the terms of this Agreement have been complied with or to inquire into the necessity or expedience of any act or action of the General Partner or its representatives.  Each and every certificate, document or other instrument executed on behalf of the Partnership by the General Partner or its representatives shall be conclusive evidence in favor of any and every Person relying in good faith thereon or claiming thereunder that (i) at the time of the execution and delivery of such certificate, document or instrument, this Agreement was in full force and effect; (ii) the Person executing and delivering such certificate, document or instrument was duly authorized and empowered to do so for and on behalf of the Partnership and (iii) such certificate, document or instrument was duly executed and delivered in accordance with the terms and provisions of this Agreement and is binding upon the Partnership.

ARTICLE 8 - RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS

Section 8.1Limitation of Liability

No Limited Partner, including the Company, acting in its capacity as such, shall have any liability under this Agreement (other than for breach thereof) except as expressly provided in this Agreement or under the Act.

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Section 8.2Management of Business

No Limited Partner or Assignee (other than the General Partner, any of its Affiliates or any officer, director, employee, partner, agent or trustee of the General Partner, the Partnership or any of their Affiliates, in their capacity as such) shall take part in the operations, management or control (within the meaning of the Act) of the Partnership’s business, transact any business in the Partnership’s name or have the power to sign documents for or otherwise bind the Partnership.  The transaction of any such business by the General Partner, any of its Affiliates or any officer, director, employee, partner, agent or trustee of the General Partner, the Partnership or any of their Affiliates, in their capacity as such, shall not affect, impair or eliminate the limitations on the liability of the Limited Partners or Assignees under this Agreement.

Section 8.3Outside Activities of Limited Partners

Subject to any other agreements with the Partnership, the General Partner or Subsidiaries thereof to the contrary, any Limited Partner (including, subject to Section 7.5 hereof, the Company) and any officer, director, employee, agent, trustee, Affiliate or stockholder of any Limited Partner shall be entitled to and may have business interests and engage in business activities in addition to those relating to the Partnership, including business interests and activities that are in direct competition with the Partnership or that are enhanced by the activities of the Partnership.  Neither the Partnership nor any Partners shall have any rights by virtue of this Agreement in any business ventures of any Limited Partner or Assignee.  Subject to such agreements, none of the Limited Partners (other than the Company) nor any other Person shall have any rights by virtue of this Agreement or the partnership relationship established hereby in any business ventures of any other Person (other than the Limited Partners benefiting from the business conducted by the General Partner) and such Person shall have no obligation pursuant to this Agreement to offer any interest in any such business ventures to the Partnership, any Limited Partner, the Company or any such other Person, even if such opportunity is of a character which, if presented to the Partnership, any Limited Partner, the Company or such other Person, could be taken by such Person.

Section 8.4Rights of Limited Partners Relating to the Partnership

A.In addition to the other rights provided by this Agreement or by the Act, and except as limited by Section 8.4C, each Limited Partner shall have the right, for a business purpose reasonably related to such Limited Partner’s interest as a limited partner in the Partnership, upon written demand with a statement of the purpose of such demand and at such Limited Partner’s own expense (including such copying and administrative charges as the General Partner may establish from time to time):

(1)to obtain a copy of the most recent annual and quarterly reports filed with the Commission by the Company pursuant to the Exchange Act;

(2)to obtain a copy of the Partnership’s federal, state and local income tax returns for each Partnership Year;

(3)to obtain a current list of the name and last known business, residence or mailing address of each Partner; and

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(4)to obtain a copy of this Agreement and the Certificate of Limited Partnership and all amendments thereto, together with executed copies of all powers of attorney pursuant to which this Agreementand the Certificate of Limited Partnership and all amendments thereto have been executed.

B.The Partnership shall notify each Limited Partner, upon request, of the then current Conversion Factor and the REIT Shares Amount per Common Unit.

C.Notwithstanding any other provision of this Section 8.4, the General Partner may keep confidential from the Limited Partners, for such period of time as the General Partner determines in its sole and absolute discretion to be reasonable, any information that (i) the General Partner believes to be in the nature of trade secrets or other information, the disclosure of which the General Partner in good faith believes is not in the best interests of the Partnership or could damage the Partnership or its business or (ii) the Partnership or the General Partner is required by law or by agreements with unaffiliated third parties to keep confidential.

Section 8.5Redemption Right

A.Except as otherwise set forth in any separate agreement entered into between the Partnership and a Limited Partner and subject to the terms and conditions set forth herein or therein, on or after the date that is 14 months from the date of issuance of a Common Unit to a Limited Partner, such Limited Partner (other than the Company or any Subsidiary of the Company) shall have the right (the “Redemption Right”) to require the Partnership to redeem on a Specified Redemption Date all or a portion of the Common Units held by such Limited Partner (such Common Units being hereafter referred to as “Tendered Units”) in exchange for the Cash Amount; unless the terms of this Agreement or a separate agreement entered into between the Partnership and the Holder of such Common Units expressly provide that such Common Units are not entitled to the Redemption Right.  The Partnership may, in the General Partner’s sole and absolute discretion, redeem Tendered Units at the request of the Holder of such Common Units prior to the end of the applicable 14 month period (or such other period as may be specified in any separate agreement entered into between the Partnership and a Limited Partner). Unless otherwise expressly provided in this Agreement or in a separate agreement entered into between the Partnership and the Holders of such Common Units, all Common Units shall be entitled to the Redemption Right.  The Tendering Partner (as defined below) shall have no right, with respect to any Common Units so redeemed, to receive any distributions with a Partnership Record Date on or after the Specified Redemption Date.  Any Redemption Right shall be exercised pursuant to a Notice of Redemption delivered to the General Partner by the Limited Partner who is exercising the right (the “Tendering Partner”).  The Cash Amount shall be payable in accordance with instructions set forth in the Notice of Redemption to the Tendering Partner on the Specified Redemption Date.  Any Common Units redeemed by the Partnership pursuant to this Section 8.5A shall be cancelled upon such redemption.

B.Notwithstanding the provisions of Section 8.5A above, if a Limited Partner has delivered to the General Partner a Notice of Redemption then the Company may, in its sole and absolute discretion (subject to Section 8.5D), elect to assume and satisfy the Partnership’s Redemption Right obligation and acquire some or all of the Tendered Units from the Tendering Partner in exchange for the REIT Shares Amount (as of the Specified Redemption

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Date) and, if the Company so elects, the Tendering Partner shall sell the Tendered Units to the Company in exchange for the REIT Shares Amount.  In such event, the Tendering Partner shall have no right to cause the Partnership to redeem such Tendered Units.  The Company shall give such Tendering Partner written notice of its election on or before the close of business on the fifth Business Day after its receipt of the Notice of Redemption. The Tendering Partner shall submit (i) such information, certification or affidavit as the Company may reasonably require in connection with the application of the Ownership Limit to any such acquisition and (ii) such written representations, investment letters, legal opinions or other instruments necessary, in the Company’ view, to effect compliance with the Securities Act. The REIT Shares Amount, if applicable, shall be delivered as duly authorized, validly issued, fully paid and nonassessable REIT Shares and, if applicable, free of any pledge, lien, encumbrance or restriction, other than those provided in the Articles of Incorporation or the Bylaws of the Company, the Securities Act, relevant state securities or blue sky laws and any applicable agreements with respect to such REIT Shares entered into by the Tendering Partner.  Notwithstanding any delay in such delivery (but subject to Section 8.5D), the Tendering Partner shall be deemed the owner of such REIT Shares for all purposes, including without limitation, rights to vote or consent, and receive dividends, as of the Specified Redemption Date.  In addition, the REIT Shares for which the Common Units might be exchanged shall also bear all legends deemed necessary or appropriate by the Company.  Neither any Tendering Partner whose Tendered Units are acquired by the Company pursuant to this Section 8.5B, any Partner, any Assignee nor any other interested Person shall have any right to require or cause the Company to register, qualify or list any REIT Shares owned or held by such Person, whether or not such REIT Shares are issued pursuant to this Section 8.5B, with the Commission, with any state securities commissioner, department or agency, under the Securities Act or the Exchange Act or with any stock exchange; unless subject to a separate written agreement pursuant to which the Company has granted registration or similar rights to any such Person.

C.Each Tendering Partner covenants and agrees with the General Partner that all Tendered Units shall be delivered to the General Partner free and clear of all liens, claims and encumbrances whatsoever and should any such liens, claims and/or encumbrances exist or arise with respect to such Tendered Units, the General Partner shall be under no obligation to acquire the same. Each Tendering Partner further agrees that, in the event any state or local property transfer tax is payable as a result of the transfer of its Tendered Units to the General Partner (or its designee), such Tendering Partner shall assume and pay such transfer tax. Each Tendering Partner further agrees to pay to the Partnership the amount of any tax withholding due upon the redemption of Tendered Units and authorizes the Partnership to retain such portion of the Cash Amount as the Partnership reasonably determines is necessary to satisfy its tax withholding obligations. In the event the Company elects to acquire some or all of the Tendered Units from the Tendering Partner in exchange for the REIT Shares Amount, the Tendering Partner agrees to pay to the Company the amount of any tax withholding due upon the redemption of Tendered Units and, in the event the Tendering Partner has not paid or made arrangements satisfactory to the Company, in its sole discretion, to pay the amount of any such tax withholding prior to the Specified Redemption Date, the Company may elect to either cancel such exchange (in which case the Tendering Partner’s exercise of the Redemption Right will be null and void ab initio), satisfy such tax withholding obligation by retaining REIT Shares with a fair market value, as determined by the Company in its sole discretion, equal to the amount of such obligation or satisfy such tax withholding obligation using amounts paid by the Partnership,

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which amounts shall be treated as a loan by the Partnership to the Tendering Partner in the manner set forth in Section 5.1B.

D.Notwithstanding the provisions of Section 8.5A, Section 8.5B, Section 8.5C or any other provision of this Agreement, a Limited Partner (i) shall not be entitled to effect the Redemption Right for cash or an exchange for REIT Shares to the extent that (if the Company were to elect to acquire the Tendered Units for REIT Shares in accordance with Section 8.5B) the ownership or right to acquire REIT Shares pursuant to such exchange by such Partner on the Specified Redemption Date could cause such Partner or any other Person to violate the Ownership Limit and (ii) shall have no rights under this Agreement to acquire REIT Shares which would otherwise be prohibited under the Articles of Incorporation. To the extent any attempted redemption or exchange for REIT Shares would be in violation of this Section 8.5D, it shall be null and void ab initio and such Limited Partner shall not acquire any rights or economic interest in the cash otherwise payable upon such redemption or the REIT Shares otherwise issuable upon such exchange.

E.Notwithstanding anything herein to the contrary (but subject to Section 8.5D), with respect to any redemption or exchange for REIT Shares pursuant to this Section 8.5: (i) without the consent of the General Partner, each Limited Partner may effect the Redemption Right only one time in each fiscal quarter; (ii) without the consent of the General Partner, each Limited Partner may not effect the Redemption Right for less than 1,000 Common Units or, if the Limited Partner holds less than 1,000 Common Units, all of the Common Units held by such Limited Partner; (iii) without the consent of the General Partner, each Limited Partner may not effect the Redemption Right during the period after the Partnership Record Date with respect to a distribution and before the record date established by the Company for a distribution to its common stockholders of some or all of its portion of such distribution; (iv) the consummation of any redemption or exchange for REIT Shares shall be subject to the expiration or termination of the applicable waiting period, if any, under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended; and (v) each Tendering Partner shall continue to own all Common Units subject to any redemption or exchange for REIT Shares, and be treated as a Limited Partner with respect to such Common Units for all purposes of this Agreement, until such Common Units are either paid for by the Partnership pursuant to Section 8.5A hereof or transferred to the Company and paid for by the issuance of the REIT Shares, pursuant to Section 8.5B hereof on the Specified Redemption Date. Until a Specified Redemption Date, the Tendering Partner shall have no rights as a stockholder of the Company with respect to such Tendering Partner’s Common Units.

F.All Common Units acquired by the Company pursuant to Section 8.5B hereof shall automatically, and without further action required, be converted into and deemed to be Limited Partner Interests and held by the Company in its capacity as a Limited Partner in the Partnership.

G.In the event that the Partnership issues additional Partnership Interests to any Additional Limited Partner pursuant to Section 4.2, the General Partner shall make such revisions to this Section 8.5 as it determines are necessary to reflect the issuance of such additional Partnership Interests.

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ARTICLE 9- BOOKS, RECORDS, ACCOUNTING AND REPORTS

Section 9.1Records and Accounting

The General Partner shall keep or cause to be kept at the principal office of the Partnership those records and documents required to be maintained by the Act and other books and records deemed by the General Partner to be appropriate with respect to the Partnership’s business, including, without limitation, all books and records necessary to provide to the Limited Partners any information, lists and copies of documents required to be provided pursuant to Section 9.3 hereof.  Any records maintained by or on behalf of the Partnership in the regular course of its business may be kept on, or be in the form of magnetic tape, photographs, micrographics or any other information storage device, provided that the records so maintained are convertible into clearly legible written form within a reasonable period of time.  The books of the Partnership shall be maintained for financial and tax reporting purposes, on an accrual basis in accordance with U.S. GAAP or such other basis as the General Partner determines to be necessary or appropriate.  

Section 9.2Taxable Year and Fiscal Year

The taxable year of the Partnership shall be the calendar year unless otherwise required by the Code.  Unless the General Partner otherwise elects, the fiscal year of the Partnership shall be the same as its taxable year.

Section 9.3Reports

A.No later than the date on which the Company mails its annual report to its stockholders, the General Partner shall cause to be mailed to each Limited Partner, as of the close of the Partnership Year, an annual report containing financial statements of the Partnership, or of the Company if such statements are prepared solely on a consolidated basis with the Company, for such Partnership Year, presented in accordance with U.S. GAAP, such statements to be audited by a nationally recognized firm of independent public accountants selected by the General Partner.

B.The General Partner shall cause to be mailed to each Limited Partner such other information as may be required by applicable law or regulation, or as the General Partner determines to be appropriate.

C.The General Partner shall have satisfied its obligations under Section 9.3A and 9.3B by (i) to the extent the General Partner or the Partnership is subject to periodic reporting requirements under the Exchange Act, filing the quarterly and annual reports required thereunder within the time periods provided for the filing of such reports, including any permitted extensions, or (ii) posting or making available the reports required by this Section 9.3 on the website maintained from time to time by the Partnership or the Company, providedthat such reports are able to be printed or downloaded from such website.

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ARTICLE 10- TAX MATTERS

Section 10.1Preparation of Tax Returns

The General Partner shall arrange for the preparation and timely filing of all returns of Partnership income, gains, deductions, losses and other items required of the Partnership for federal and state income tax purposes and shall use reasonable efforts to furnish, within ninety (90) days of the close of each Partnership Year, the tax information reasonably required by Limited Partners for federal and state income tax reporting purposes.  Each Limited Partner shall promptly provide the General Partner with any information reasonably requested by the General Partner from time to time.

Section 10.2Tax Elections

A.Except as otherwise provided herein, the General Partner shall, in its sole and absolute discretion, determine whether to make any available election pursuant to the Code, including, but not limited to, the election under Section 754 of the Code.  The General Partner shall have the right to seek to revoke any such election it makes (including, without limitation, any election under Section 754 of the Code) upon the General Partner’s determination, in its sole and absolute discretion. Notwithstanding the foregoing, in making any such tax election, the General Partner, may, but shall be under no obligation (unless pursuant to a separate written agreement) to take into account the tax consequences to any Limited Partner resulting from any such election.

B.To the extent provided for in Regulations, revenue rulings, revenue procedures and/or other IRS guidance issued after the date of the Prior Partnership Agreement, the Partnership is hereby authorized to, and at the direction of the General Partner shall, elect a safe harbor under which the fair market value of any Partnership Interests issued in connection with the performance of services after the effective date of such Regulations (or other guidance) will be treated as equal to the liquidation value of such Partnership Interests (i.e., a value equal to the total amount that would be distributed with respect to such interests if the Partnership sold all of its assets for their fair market value immediately after the issuance of such Partnership Interests, satisfied its liabilities (excluding any non-recourse liabilities to the extent the balance of such liabilities exceed the fair market value of the assets that secure them) and distributed the net proceeds to the Partners under the terms of this Agreement).  In the event that the Partnership makes a safe harbor election as described in the preceding sentence, each Partner hereby agrees to comply with all safe harbor requirements with respect to transfers of such Partnership Interests while the safe harbor election remains effective.

C.A Partner’s “interest in partnership profits” for purposes of determining its share of the excess nonrecourse liabilities of the Partnership within the meaning of Regulations Section 1.752-3(a)(3) shall be such Partner’s Percentage Interest except as otherwise determined by the General Partner in its sole discretion, consistent with Section 752 and the Treasury Regulations thereunder.

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Section 10.3Tax Matters Partner and Partnership Representative

A.The Company shall be the “tax matters partner” of the Partnership for U.S. federal income tax purposes.  Pursuant to Section 6230(e) of the Code (as in effect prior to repeal of such section pursuant to the Bipartisan Budget Act of 2015), upon receipt of notice from the IRS of the beginning of an administrative proceeding with respect to the Partnership, the tax matters partner shall furnish the IRS with the name, address, taxpayer identification number, and profits interest of each of the Limited Partners and Assignees; provided, however, that such information is provided to the Partnership by the Limited Partners and Assignees. The General Partner shall designate the “partnership representative” of the Partnership (the “Partnership Representative”) for purposes of, and in accordance with, Section 6223 of the Code (and any similar or corresponding provision of state, local or non-U.S. tax law) and the General Partner, or the Partnership Representative at the direction of the General Partner, shall be permitted to appoint any “designated individual” (a “Designated Individual”) within the meaning of Treasury Regulations Section 301.6223-1.  If the Partnership is required to appoint a Designated Individual pursuant to Section 6223 of the Code and Treasury Regulations thereunder (or any similar or corresponding provision of state, local or non-U.S. tax law) for any taxable year or other period, such Designated Individual shall be subject to this Agreement in the same manner as the Partnership Representative (and references to the Partnership Representative shall include any such Designated Individual unless the context otherwise requires or shall mean solely the Designated Individual as needed to comply with applicable law).  The Partnership Representative may be removed, and a new Partnership Representative appointed, by the General Partner in accordance with the Code and the Treasury Regulations.  The Partnership Representative shall not take any action in connection with a tax audit, or make any tax election, without approval of the General Partner. Any reasonable out-of-pocket cost incurred by the Partnership Representative (and Designated Individual), acting in its capacity as such, shall be deemed costs and expenses of the Partnership, and the Partnership shall reimburse the Partnership Representative (or Designated Individual, as applicable) for such amounts.  Each Partner hereby agrees (i) to take such actions as may be required to effect the appointed Partner’s designation as the Partnership Representative, (ii) to cooperate to provide any information or take such other actions as may be reasonably requested by the Partnership Representative in order to modify any Imputed Underpayment Amount pursuant to Code Section 6225(c) (or any similar or corresponding provision of state, local or non-U.S. tax law), and (iii) to, upon the request of the Partnership Representative, take such actions as may be required to effect any election or procedure under Code Sections 6221 through 6241 and the Treasury Regulations promulgated thereunder with respect thereto (or any similar or corresponding provision of state, local or non-U.S. tax law).  A Partnership’s obligation to comply with this Section 10.3Ashall survive the transfer, assignment or liquidation of such Partner’s interest in the Partnership.

B.With respect to any audit of the Partnership for taxable years ending on or prior to December 31, 2017, the tax matters partner is authorized, but not required:

(1)to enter into any settlement with the IRS with respect to any administrative or judicial proceedings for the adjustment of Partnership items required to be taken into account by a Partner for income tax purposes (such administrative proceedings being referred to as a “tax audit” and such judicial proceedings being referred to as “judicial review”), and in the settlement agreement the tax matters partner

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may expressly state that such agreement shall bind all Partners, except that such settlement agreement shall not bind any Partner (i) who (within the time prescribed pursuant to the Code and Regulations) files a statement with the IRS providing that the tax matters partner shall not have the authority to enter into a settlement agreement on behalf of such Partner; or (ii) who is a “notice partner” (as defined in Section 6231(a)(8) of the Code(as in effect prior to repeal of such section pursuant to the Bipartisan Budget Act of 2015)) or a member of a “notice group” (within the meaning of Section 6223(b)(2) of the Code(as in effect prior to repeal of such section pursuant to the Bipartisan Budget Act of 2015));

(2)in the event that a notice of a final administrative adjustment at the Partnership level of any item required to be taken into account by a Partner for tax purposes (a “final adjustment”) is mailed to the tax matters partner, to seek judicial review of such final adjustment, including the filing of a petition for readjustment with the Tax Court or the United States Claims Court, or the filing of a complaint for refund with the District Court of the United States for the district in which the Partnership’s principal place of business is located;

(3)to intervene in any action brought by any other Partner for judicial review of a final adjustment;

(4)to file a request for an administrative adjustment with the IRS at any time and, if any part of such request is not allowed by the IRS, to file an appropriate pleading (petition or complaint) for judicial review with respect to such request;

(5)to enter into an agreement with the IRS to extend the period for assessing any tax which is attributable to any item required to be taken into account by a Partner for tax purposes, or an item affected by such item; and

(6)to take any other action on behalf of the Partners or the Partnership in connection with any tax audit or judicial review proceeding to the extent permitted by applicable law or regulations.

The taking of any action and the incurring of any expense by the tax matters partner in connection with any such proceeding, except to the extent required by law, is a matter in the sole and absolute discretion of the tax matters partner and the provisions relating to indemnification of the General Partner set forth in Section 7.7 shall be fully applicable to the tax matters partner in its capacity as such.

C.The tax matters partner and the Partnership Representative shall receive no compensation for their services.  All third-party costs and expenses incurred by the tax matters partner or the Partnership Representative in performing its duties as such (including legal and accounting fees and expenses) shall be borne by the Partnership.  Nothing herein shall be construed to restrict the Partnership from engaging an accounting or law firm to assist the tax matters partner or the Partnership Representative in discharging its duties hereunder, so long as the compensation paid by the Partnership for such services is reasonable.

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Section 10.4Organizational Expenses

The Partnership shall elect to deduct expenses, if any, incurred by it in organizing the Partnership as provided in Section 709 of the Code.

ARTICLE 11 - TRANSFERS AND WITHDRAWALS

Section 11.1Transfer

A.The term “transfer,” when used in this Article 11 with respect to a Partnership Unit, shall be deemed to refer to a transaction by which the General Partner purports to assign all or any part of its General Partner Interest to another Person or by which a Limited Partner purports to assign all or any part of its Limited Partner Interest to another Person, and includes a sale, assignment, gift, pledge, encumbrance, hypothecation, mortgage, exchange or any other disposition by operation of law or otherwise.  The term “transfer” when used in this Article 11 does not include any redemption of Partnership Interests by the Partnership from a Limited Partner or any acquisition of Partnership Units from a Limited Partner by the Company pursuant to Section 8.5 except as otherwise provided herein.  No part of the interest of a Limited Partner shall be subject to the claims of any creditor, any spouse for alimony or support, or to legal process, and may not be voluntarily or involuntarily alienated or encumbered except as may be specifically provided for in this Agreement or consented to in writing by the General Partner.

B.No Partnership Interest may be transferred, in whole or in part, except in accordance with the terms and conditions set forth in this Article 11.  Any transfer or purported transfer of a Partnership Interest not made in accordance with this Article 11 shall be null and void ab initio unless consented to in writing by the General Partner, in its sole and absolute discretion.

Section 11.2Transfer of the Company’s and General Partner’s Partnership Interest and Limited Partner Interest; Extraordinary Transactions

A.The General Partner may not transfer any of its General Partner Interest or withdraw as General Partner, and the Company may not, directly or through its wholly owned Subsidiaries, transfer any of its Limited Partner Interest or engage in an Extraordinary Transaction, except, in any such case, (i) if such Extraordinary Transaction, or such withdrawal or transfer, is pursuant to an Extraordinary Transaction that is permitted under Section 11.2B, (ii) if the Majority in Interest of the Outside Limited Partners Consent to such withdrawal or transfer or Extraordinary Transaction or (iii) if such transfer is to an entity that is wholly owned by the Company (directly or indirectly), including any Qualified REIT Subsidiary or any other entity disregarded as an entity separate from the Company for U.S. federal income tax purposes.

B.Notwithstanding any other provision of this Agreement, but subject to compliance with the terms and conditions of Section 1.10 of Exhibit B and Section 1.8 of Exhibit C, the General Partner and the Company are permitted to engage (and cause the Partnership to participate) in the following transactions without the approval or vote of the Limited Partners:

(1)(a) an Extraordinary Transaction in connection with which either (a) the Company is the surviving entity and the holders of REIT Shares are not entitled to

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receive any cash, securities, or other property in connection with such Extraordinary Transaction or (b) all Limited Partners (other than the Company) either will receive, or will have the right to elect to receive, for each Common Unit an amount of cash, securities and other property equal to the product of (x) the REIT Shares Amount multiplied by (y) the greatest amount of cash, securities and other property paid to a holder of one REIT Share in consideration of one such REIT Share pursuant to the terms of the Extraordinary Transaction during the period from and after the date on which the Extraordinary Transaction is consummated; providedthat, if, in connection with the Extraordinary Transaction, a purchase, tender or exchange offer shall have been made to and accepted by the holders of more than 50% of the outstanding REIT Shares, each holder of Common Units shall receive, or shall have the right to elect to receive, the greatest amount of cash, securities, or other property which such holder of Common Units would have received had it exercised its Redemption Right (as set forth in Section 8.5) and received REIT Shares in exchange for its Common Units immediately prior to the expiration of such purchase, tender or exchange offer and had thereupon accepted such purchase, tender or exchange offer and then such Extraordinary Transaction shall have been consummated; or

(2)an Extraordinary Transaction if: (a) immediately after such Extraordinary Transaction, substantially all of the assets directly or indirectly owned by the surviving entity, other than a direct or indirect interest in the Surviving Partnership (as defined below), are owned directly or indirectly by the Partnership or another limited partnership or limited liability company which is the survivor of a merger, consolidation or combination of assets with the Partnership (in each case, the “Surviving Partnership”); (b) the rights, preferences and privileges of the Common Unitholders in the Surviving Partnership are at least as favorable as those in effect immediately prior to the consummation of such transaction and as those applicable to any other limited partners or non‑managing members of the Surviving Partnership (who have, in either case, the rights of a “common” equity holder); and (c) such rights of the Common Unitholders include the right to exchange their Common Unit equivalent interests in the Surviving Partnership for at least one of: (x) the consideration available to such Common Unitholders pursuant to Section 11.2B(1) or (y) if the ultimate controlling person of the Surviving Partnership has publicly traded common equity securities, such common equity securities, with an exchange ratio based on the determination of relative fair market value of such securities (as determined pursuant to Section 11.2C) and the REIT Shares.

C.In connection with any transaction permitted by Section 11.2B(2), the relative fair market values shall be reasonably determined by the General Partner as of the time of such transaction and, to the extent applicable, shall be no less favorable to the Limited Partners than the relative values reflected in the terms of such transaction.

Section 11.3Limited Partners’ Rights to Transfer

A.General.  Subject to the provisions of Sections 11.3D, 11.3E, 11.4 and 11.6, a Limited Partner (other than the Company) may transfer, without the consent of the General Partner, all or any portion of its Partnership Interest, or any of such Limited Partner's economic rights as a Limited Partner.

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B.Incapacitated Limited Partners.  If a Limited Partner is subject to Incapacity, the executor, administrator, trustee, committee, guardian, conservator or receiver of such Limited Partner’s estate shall have all of the rights of a Limited Partner, but not more rights than those enjoyed by other Limited Partners, for the purpose of settling or managing the estate and such power as the Incapacitated Limited Partner possessed to transfer all or any part of his, her or its Partnership Interest.  The Incapacity of a Limited Partner, in and of itself, shall not dissolve or terminate the Partnership.

C.Permitted Transfers. Subject to the provisions of Sections 11.3D, 11.3E, 11.4 and 11.6, a Limited Partner may transfer, with or without the consent of the General Partner, all or a portion of its Partnership Interests (i) in the case of a Limited Partner who is an individual, to a member of his Immediate Family, any trust formed for the benefit of himself and/or members of his Immediate Family, or any partnership, limited liability company, joint venture, corporation or other business entity comprised only of himself and/or members of his Immediate Family and entities the ownership interests in which are owned by or for the benefit of himself and/or members of his Immediate Family, (ii) in the case of a Limited Partner which is a trust, to the beneficiaries of such trust, (iii) in the case of a Limited Partner which is a partnership, limited liability company, joint venture, corporation or other business entity to which Partnership Interests were transferred pursuant to clause (i) above, to its partners, owners or stockholders, as the case may be, who are members of the Immediate Family of or are actually the Person(s) who transferred Partnership Units to it pursuant to clause (i) above and (iv) pursuant to applicable laws of descent or distribution.

D.Unless a transfer of a Partnership Interest meets each of the following conditions it may not be made without the consent of the General Partner:

(1)Such transfer is made only to Qualified Transferees or transferees permitted pursuant to Section 11.3C.

(2)The transferee assumes by operation of law or express agreement all of the obligations of the transferor Limited Partner under this Agreement with respect to such transferred Partnership Interest and no such transfer (other than pursuant to a statutory merger or consolidation wherein all obligations and liabilities of the transferor Limited Partner are assumed by a successor corporation by operation of law) shall relieve the transferor Partner of its obligations under this Agreement without the approval of the General Partner, in its sole and absolute discretion.  Notwithstanding the foregoing, any transferee of any transferred Partnership Interest shall be subject to any and all Ownership Limitations, which may limit or restrict such transferee’s ability to exercise its Redemption Right.  Any transferee, whether or not admitted as a Substituted Limited Partner, shall take subject to the obligations of the transferor hereunder.  Unless admitted as a Substituted Limited Partner, no transferee, whether by voluntary transfer, by operation of law or otherwise, shall have any rights hereunder, other than the rights of an Assignee as provided in Section 11.5.

E.Notwithstanding any other provision of this Section 11.3, no Limited Partner may effect a transfer of its Partnership Units, in whole or in part, if, upon the advice of legal counsel for the Partnership, such proposed transfer would require the registration of the

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Partnership Units under the Securities Act or would otherwise violate any applicable federal or state securities or blue sky law (including investment suitability standards).  The General Partner may prohibit any transfer of Partnership Units by a Limited Partner unless it receives a written opinion of legal counsel (which opinion and counsel shall be reasonably satisfactory to the Partnership) to such Limited Partner to the effect that such transfer would not require filing of a registration statement under the Securities Act or would not otherwise violate any federal or state securities laws or regulations applicable to the Partnership or the Partnership Unit or, at the option of the Partnership, an opinion of legal counsel to the Partnership to the same effect.

Section 11.4Substituted Limited Partners

A.No Limited Partner shall have the right to substitute a transferee as a Limited Partner in his, her or its place (including any transferees permitted by Section 11.3).  The General Partner shall, however, have the right to consent to the admission of a transferee of the interest of a Limited Partner pursuant to this Section 11.4 as a Substituted Limited Partner, which consent may be given or withheld by the General Partner in its sole and absolute discretion.  The General Partner’s failure or refusal to permit a transferee of any such interests to become a Substituted Limited Partner shall not give rise to any cause of action against the Partnership or any Partner.

B.A transferee who has been admitted as a Substituted Limited Partner in accordance with this Article 11 shall have all the rights and powers and be subject to all the restrictions and liabilities of a Limited Partner under this Agreement.  The admission of any transferee as a Substituted Limited Partner shall be conditioned upon the transferee executing and delivering to the Partnership an acceptance of all of the terms and conditions of this Agreement (and such other documents or instruments as may be required or advisable, in the sole and absolute discretion of the General Partner, to effect the admission, each in form and substance satisfactory to the General Partner).

C.Upon the admission of a Substituted Limited Partner, the General Partner shall amend the books and records of the Partnership to reflect the name, address, number of Partnership Units and Percentage Interest of such Substituted Limited Partner and to eliminate or adjust, if necessary, the name, address and interest of the predecessor of such Substituted Limited Partner.

Section 11.5Assignees

A.If the General Partner, in its sole and absolute discretion, does not consent to the admission of any permitted transferee as a Substituted Limited Partner, as described in Section 11.4, such transferee shall be considered an Assignee for purposes of this Agreement.  An Assignee shall be entitled to all the rights of an assignee of a limited partnership interest under the Act, including the right to receive distributions from the Partnership and the share of Profit, Loss and any other items of income, gain, loss, deduction and credit of the Partnership attributable to the Partnership Units assigned to such transferee and the rights to transfer the Partnership Units in accordance with the provisions of this Article 11, but shall not be deemed to be a Holder of Partnership Units for any other purpose under this Agreement, and shall not be entitled to effect a Consent with respect to such Partnership Units on any matter presented to the

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Limited Partners for a vote (such right to Consent to the extent provided by this Agreement or under the Act remaining with the transferor Limited Partner).  In the event any such transferee desires to make a further assignment of any such Partnership Units, such transferee shall be subject to all of the provisions of this Article 11 to the same extent and in the same manner as any Limited Partner desiring to make an assignment of Partnership Units.  

Section 11.6General Provisions

A.No Limited Partner may withdraw from the Partnership other than as a result of a permitted transfer of all of such Limited Partner’s Partnership Units in accordance with this Article 11 and the transferee of such Partnership Units being admitted to the Partnership as a Substituted Limited Partner or pursuant to a redemption of all of its Partnership Units under Section 8.5.

B.Any Limited Partner who shall transfer all of its Partnership Units in a transfer permitted pursuant to this Article 11 where such transferee was admitted as a Substituted Limited Partner or pursuant to the exercise of its Redemption Right for all of its Partnership Units under Section 8.5 shall cease to be a Limited Partner; providedthat after such transfer, exchange or redemption such Limited Partner owns no Partnership Interest.

C.Transfers pursuant to this Article 11 may only be made on the first day of a fiscal quarter of the Partnership, unless the General Partner in its sole and absolute discretion otherwise agrees.

D.If any Partnership Interest is transferred, assigned or redeemed during any quarterly segment of the Partnership’s Partnership Year in compliance with the provisions of this Article 11 or redeemed by the Partnership pursuant to Section 8.5 on any day other than the first day of a Partnership Year, then Profit, Loss, each item thereof and all other items attributable to such Partnership Interest for such Partnership Year shall be divided and allocated between the transferor Partner and the transferee Partner by taking into account their varying interests during the Partnership Year in accordance with Section 706(d) of the Code, using the “interim closing of the books” method or such other method (or combination of methods) selected by the General Partner.  Solely for purposes of making such allocations, at the discretion of the General Partner, each of such items for the calendar month in which the transfer or assignment occurs shall be allocated to the transferee Partner, and none of such items for the calendar month in which a transfer or redemption occurs shall be allocated to transferor Partner or the Tendering Partner as the case may be; provided, however, that the General Partner may adopt such other conventions relating to allocations in connection with transfers, assignments or redemptions as it determines are necessary or appropriate.  All distributions attributable to such Partnership Unit with respect to which the Partnership Record Date is before the date of such transfer, assignment, or redemption shall be made to the transferor Partner or the Tendering Partner, as the case may be, and in the case of a transfer or assignment other than a redemption, all distributions thereafter attributable to such Partnership Unit shall be made to the transferee Partner.

E.In addition to any other restrictions on transfer herein contained, including without limitation the provisions of this Article 11, in no event may any transfer or assignment of a Partnership Interest by any Partner (including pursuant to a redemption or exchange for REIT

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Shares by the Partnership or the General Partner) be made (i) to any Person who lacks the legal right, power or capacity to own a Partnership Interest; (ii) in violation of applicable law; (iii) except with the consent of the General Partner, which may be given or withheld in its sole and absolute discretion, of any component portion of a Partnership Unit, such as the Capital Account, or rights to distributions, separate and apart from all other components of a Partnership Unit; (iv) except with the consent of the General Partner, which may be given or withheld in its sole and absolute discretion, if upon the advice of legal counsel to the Partnership such transfer could cause a termination of the Partnership for federal or state income tax purposes (except as a result of the redemption or exchange for REIT Shares of all Unitsheld by all Limited Partners or pursuant to a transaction expressly permitted under Section 11.2); (v) if upon the advice of counsel to the Partnership such transfer could cause the Partnership to cease to be classified as a partnership for U.S. federal income tax purposes (except as a result of the redemption or exchange for REIT Shares of all Unitsheld by all Limited Partners); (vi) if such transfer could, upon the advice of counsel to the Partnership, cause the Partnership to become, with respect to any employee benefit plan subject to Title I of ERISA, a “party-in-interest” (as defined in Section 3(14) of ERISA) or a “disqualified person” (as defined in Section 4975(e) of the Code); (vii) if such transfer could, upon the advice of counsel to the Partnership, cause any portion of the assets of the Partnership to constitute assets of any employee benefit plan pursuant to Department of Labor Regulations Section 2510.2-101; (viii) except with the consent of the General Partner, which may be given or withheld in its sole and absolute discretion, if such transfer requires the registration of such Partnership Interest pursuant to any applicable federal or state securities laws; (ix) except with the consent of the General Partner, which may be given or withheld in its sole and absolute discretion, if such transfer could cause the Partnership to fail to qualify for any of the Safe Harbors (as defined below) or cause the Partnership to derive income that is not “qualifying income” within the meaning of Section 7704(d) of the Code; (x) except with the consent of the General Partner, which may be given or withheld in its sole and absolute discretion, if such transfer subjects the Partnership to be regulated under the Investment Company Act of 1940, the Investment Advisors Act of 1940 or ERISA, each as amended; (xi) if such transfer is made to a lender to the Partnership or any Person who is related (within the meaning of Section 1.752-4(b) of the Regulations) to any lender to the Partnership whose loan constitutes a Nonrecourse Liability, except with the consent of the General Partner, which may be given or withheld in its sole and absolute discretion; and providedthat, as a condition to granting such consent the lender may be required to enter into an arrangement with the borrower, the Partnership and the General Partner to redeem or exchange for the REIT Shares Amount any Partnership Units in which a security interest is held immediately prior to the time at which such lender would be deemed to be a partner in the Partnership for purposes of allocating liabilities to such lender under Section 752 of the Code; or (xii) if upon the advice of legal counsel for the Partnership such transfer could adversely affect the ability of the Company to continue to qualify as a REIT or, except with the consent of the General Partner, which may be given or withheld in its sole and absolute discretion, subject the Company to any additional taxes under Section 857 or Section 4981 of the Code.

F.The General Partner shall monitor the transfers of interests in the Partnership (including any acquisition of Common Units by the Partnership or the General Partner) to determine (i) if such interests could be treated as being traded on an “established securities market” or a “secondary market (or the substantial equivalent thereof)” within the meaning of Section 7704 of the Code and the regulations thereunder and (ii) whether such

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transfers of interests could result in the Partnership being unable to qualify for the “safe harbors” set forth in Regulations Section 1.7704-1 (or such other guidance subsequently published by the IRS setting forth safe harbors under which interests will not be treated as “readily tradable on a secondary market (or the substantial equivalent thereof)” within the meaning of Section 7704 of the Code) (the “Safe Harbors”). The General Partner shall have the authority (but shall not be required) to take any steps it determines are necessary or appropriate in its sole and absolute discretion (i) to prevent any trading of interests which could cause the Partnership to become a “publicly traded partnership,” within the meaning of Code Section 7704, or any recognition by the Partnership of such transfers, (ii) to insure that one or more of the Safe Harbors is met and/or (iii) to insure that the Partnership satisfies the “qualifying income” exemption of Section 7704(c) of the Code from treatment as a publicly traded partnership taxable as a corporation.

G.In the event a Limited Partner transfers (or proposes to transfer) all or any portion of its Limited Partner Interest (including, for this purpose, any transfer or redemption of a Tendered Unit pursuant to Section 8.5 hereof), all reasonable legal, accounting and other expenses incurred, or reasonably likely to be incurred, by the Partnership on account of the transfer (or proposed transfer) shall be paid by such Limited Partner, provided, however, that such obligation shall not apply to transfers (or proposed transfers) made in connection with Extraordinary Transactions or to the extent that the General Partner determines, in its sole discretion, that the Partnership shall bear such expenses with respect to a transfer.  Following the effective date of any transfer, the transferor and the transferee or Assignee (other than a transferee or Assignee that is the Company or an Affiliate of the Company) shall be jointly and severally liable for all such expenses.  At the election of the General Partner, such expenses may be paid by the Partnership and treated as a Withholding Payment under Section 5.1B for purposes of this Agreement with respect to both the transferor and transferee and/or Assignee, as applicable.  If a Limited Partner undergoes a change to its structure, nature of organization, ownership or other attributes that does not constitute a transfer by such Limited Partner under this Agreement, but that nevertheless is treated as a transfer for purposes of any applicable law or otherwise imposes upon the Partnership any corresponding regulatory, tax, compliance or other burden or expense, the costs thereof shall be borne by such Limited Partner in the same manner as described in the foregoing provisions of this Section 11.6G.

ARTICLE 12 - ADMISSION OF PARTNERS

Section 12.1Admission of Successor General Partner

A successor to all of the General Partner’s General Partner Interest pursuant to Section 11.2 who is proposed to be admitted as a successor General Partner shall be admitted to the Partnership as the General Partner, effective upon such transfer.  Any such transferee shall carry on the business of the Partnership without dissolution.  In each case, the admission shall be subject to the successor General Partner executing and delivering to the Partnership an acceptance of all of the terms and conditions of this Agreement and such other documents or instruments as may be required to effect the admission.  In the case of such admission on any day other than the first day of a Partnership Year, all items attributable to the General Partner Interest for such Partnership Year shall be allocated between the transferring General Partner and such successor as provided in Article 11.

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Section 12.2Admission of Additional Limited Partners

A.After the date of the Prior Partnership Agreement, a Person (other than an existing Partner) who makes a capital contribution to the Partnership in accordance with this Agreement shall be admitted to the Partnership as an Additional Limited Partner only upon furnishing to the General Partner (i) evidence of acceptance in form satisfactory to the General Partner of all of the terms and conditions of this Agreement, including, without limitation, the power of attorney granted in Section 2.4 and (ii) such other documents or instruments as may be required in the discretion of the General Partner in order to effect such Person’s admission as an Additional Limited Partner.

B.Notwithstanding anything to the contrary in this Section 12.2, no Person shall be admitted as an Additional Limited Partner without the written consent of the General Partner, which consent may be given or withheld in the General Partner’s sole and absolute discretion.  The admission of any Person as an Additional Limited Partner shall become effective on the date upon which the name of such Person is recorded on the books and records of the Partnership, following the written consent of the General Partner to such admission.

C.If any Additional Limited Partner is admitted to the Partnership on any day other than the first day of a Partnership Year, then Profit, Loss, each item thereof and all other items allocable among Partners and Assignees for such Partnership Year shall be allocated among such Additional Limited Partner and all other Partners and Assignees by taking into account their varying interests during the Partnership Year in accordance with Section 706(d) of the Code, using any method(s) permitted by law and selected by the General Partner consistent with the provisions of Section 11.6D.  All distributions with respect to which the Partnership Record Date is before the date of such admission shall be made solely to Partners and Assignees, other than the Additional Limited Partner and all distributions thereafter shall be made to all of the Partners and Assignees including such Additional Limited Partner.

Section 12.3Amendment of Agreement and Certificate of Limited Partnership

For the admission to the Partnership of any Partner, the General Partner shall take all steps necessary and appropriate under the Act to amend the records of the Partnership and, if necessary, to prepare as soon as practical an amendment of this Agreement and amend the books and records of the Partnership and, if required by law, shall prepare and file an amendment to the Certificate of Limited Partnership and may for this purpose exercise the power of attorney granted pursuant to Section 2.4 hereof.

ARTICLE 13 - DISSOLUTION, LIQUIDATION AND TERMINATION

Section 13.1Dissolution

A.The Partnership shall not be dissolved by the admission of Substituted Limited Partners or Additional Limited Partners or by the admission of a successor General Partner in accordance with the terms of this Agreement.  Upon the withdrawal of the General Partner, any successor General Partner shall continue the business of the Partnership.  The Partnership shall dissolve, and its affairs shall be wound up, only upon the first to occur of any of the following (each, a “Liquidating Event”):

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(1)an event of withdrawal of the General Partner, as defined in the Act (other than an event of bankruptcy), unless, within ninety (90) days after such event of withdrawal a majority of the Percentage Interests held by the Limited Partners (without taking into account any Percentage Interests attributable to outstanding AOLTIP Units) agree in writing to continue the business of the Partnership and to the appointment, effective as of the date of withdrawal, of a successor General Partner;

(2)an election to dissolve the Partnership made by the General Partner, in its sole and absolute discretion;

(3)entry of a decree of judicial dissolution of the Partnership pursuant to the provisions of the Act;

(4)a Terminating Capital Transaction;

(5)the Incapacity of the General Partner, unless all of the remaining Partners in their sole and absolute discretion agree in writing to continue the business of the Partnership and to the appointment, effective as of a date prior to the date of such Incapacity, of a successor General Partner; or

(6)a final and non‑appealable judgment is entered by a court of competent jurisdiction ruling that the General Partner is bankrupt or insolvent, or a final and non‑appealable order for relief is entered by a court with appropriate jurisdiction against the General Partner, in each case under any federal or state bankruptcy or insolvency laws as now or hereafter in effect, unless prior to the entry of such order or judgment all of the remaining Partners agree in writing to continue the business of the Partnership and to the appointment, effective as of a date prior to the date of such order or judgment, of a successor General Partner.  

Section 13.2Winding Up

A.Upon the occurrence of a Liquidating Event, the Partnership shall continue solely for the purposes of winding up its affairs in an orderly manner, liquidating its assets, and satisfying the claims of its creditors and Partners.  No Partner shall take any action that is inconsistent with, or not necessary to or appropriate for, the winding up of the Partnership’s business and affairs.  The General Partner, or, in the event there is no remaining General Partner, any Person elected by vote of the Limited Partners (the General Partner or such other Person being referred to herein as the “Liquidator”), shall be responsible for overseeing the winding up and dissolution of the Partnership and shall take full account of the Partnership’s liabilities and property and the Partnership property shall be liquidated as promptly as is consistent with obtaining the fair value thereof, and the proceeds therefrom (which may, to the extent determined by the General Partner, include shares of stock in the Company) shall be applied and distributed in the following order:

(1)First, to the payment and discharge of all of the Partnership’s debts and liabilities;

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(2)The balance, if any, to all Partners with positive Capital Accounts in accordance with their respective positive Capital Account balances, determined after all adjustments made in accordance with Article 6resulting from Partnership operations and from all sales and dispositions of all or any part of the Partnership’s assets.

The General Partner shall not receive any additional compensation for any services performed pursuant to this Article 13, other than reimbursement of its expenses as provided in Section 7.4.  Any distributions pursuant to this Section 13.2A shall be made by the end of the Partnership’s taxable year in which the Liquidating Event occurs (or, if later, within ninety (90) days after the date of the Liquidating Event). To the extent deemed advisable by the General Partner, appropriate arrangements (including the use of a liquidating trust) may be made to assure that adequate funds are available to pay any contingent debts or obligations.

B.Notwithstanding the provisions of Section 13.2A which require liquidation of the assets of the Partnership, but subject to the order of priorities set forth therein, if prior to or upon dissolution of the Partnership the Liquidator determines that an immediate sale of part or all of the Partnership’s assets would be impractical or would cause undue loss to the Partners, the Liquidator may, in its sole and absolute discretion, defer for a reasonable time the liquidation of any assets except those necessary to satisfy liabilities of the Partnership (including to those Partners as creditors) and/or distribute to the Partners, in lieu of cash, as tenants in common and in accordance with the provisions of Section 13.2A, undivided interests in such Partnership assets as the Liquidator deems not suitable for liquidation.  Any such distributions in kind shall be made only if, in the good faith judgment of the Liquidator, such distributions in kind are in the best interest of the Partners, and shall be subject to such conditions relating to the disposition and management of such properties as the Liquidator deems reasonable and equitable and to any agreements governing the operation of such properties at such time.  The Liquidator shall determine the fair market value of any property distributed in kind using such reasonable method of valuation as it may adopt.

Section 13.3Deficit Capital Account Restoration Obligation

If the General Partner has a deficit balance in its Capital Account at such time as the Partnership (or the General Partner’s interest therein, including its interest as a Limited Partner) is “liquidated” within the meaning of Regulations Section 1.704-1(b)(2)(ii)(g) (after giving effect to all contributions, distributions and allocations for the taxable years, including the year during which such liquidation occurs), the General Partner shall contribute to the capital of the Partnership the amount necessary to restore such deficit balance to zero in compliance with Regulations Section 1.704-1(b)(2)(ii)(b)(3).  If any Limited Partner has a deficit balance in its Capital Account (after giving effect to all contributions, distributions and allocations for the taxable years, including the year during which such liquidation occurs), such Limited Partner shall have no obligation to make any contribution to the capital of the Partnership with respect to such deficit, and such deficit at any time shall not be considered a Debt owed to the Partnership or to any other Person for any purpose whatsoever, except to the extent otherwise expressly agreed to by such Partner and the Partnership.

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Section 13.4Compliance with Timing Requirements of Regulations

A.In the discretion of the Liquidator or the General Partner, a pro rata portion of the distributions that would otherwise be made to the General Partner and Limited Partners pursuant to this Article 13 may be:

(1)distributed to a trust established for the benefit of the General Partner and Limited Partners for the purposes of liquidating Partnership assets, collecting amounts owed to the Partnership, and paying any contingent or unforeseen liabilities or obligations of the Partnership or of the General Partner arising out of or in connection with the Partnership.  The assets of any such trust shall be distributed to the General Partner and Limited Partners from time to time, in the reasonable discretion of the Liquidator or the General Partner, in the same proportions and the amount distributed to such trust by the Partnership would otherwise have been distributed to the General Partner and Limited Partners pursuant to this Agreement; or

(2)withheld or escrowed to provide a reasonable reserve for Partnership liabilities (contingent or otherwise) and to reflect the unrealized portion of any installment obligations owed to the Partnership, providedthat such withheld or escrowed amounts shall be distributed to the General Partner and Limited Partners in the manner and order of priority set forth in Section 13.2A as soon as practicable.

Section 13.5Deemed Distribution and Recontribution

Notwithstanding any other provision of this Article 13, in the event the Partnership is liquidated within the meaning of Regulations Section 1.704-1(b)(2)(ii)(g) but no Liquidating Event has occurred, the Partnership’s property shall not be liquidated, the Partnership’s liabilities shall not be paid or discharged, and the Partnership’s affairs shall not be wound up. Instead, the Partnership shall be deemed to have contributed all of its assets and liabilities to a new partnership in exchange for an interest in the new partnership. Immediately thereafter, the Partnership shall be deemed to distribute interests in the new partnership to the General Partner and Limited Partners in proportion to their respective interests in the Partnership in liquidation of the Partnership, and the new partnership shall be deemed to continue the business of the Partnership.  

Section 13.6Rights of Limited Partners

Except as otherwise provided in this Agreement, each Limited Partner shall look solely to the assets of the Partnership for the return of its Capital Contributions and shall have no right or power to demand or receive property other than cash from the Partnership.  Except as otherwise provided in this Agreement, no Limited Partner shall have priority over any other Partner as to the return of its Capital Contributions, distributions or allocations.

Section 13.7Notice of Dissolution

In the event a Liquidating Event occurs or an event occurs that would, but for an election or objection by one or more Partners pursuant to Section 13.1, result in a dissolution of the

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Partnership, the General Partner shall, within thirty (30) days thereafter, provide written notice thereof to each of the Partners.

Section 13.8Cancellation of Certificate of Limited Partnership

Upon the completion of the liquidation of the Partnership’s assets, as provided in Section 13.2 hereof, the Partnership shall be terminated, a certificate of cancellation shall be filed, and all qualifications of the Partnership as a foreign limited partnership in jurisdictions other than the State of Delaware shall be canceled and such other actions as may be necessary to terminate the Partnership shall be taken.

Section 13.9Reasonable Time for Winding‑Up

A reasonable time shall be allowed for the orderly winding‑up of the business and affairs of the Partnership and the liquidation of its assets pursuant to Section 13.2, in order to minimize any losses otherwise attendant upon such winding‑up, and the provisions of this Agreement shall remain in effect between the Partners during the period of liquidation.

Section 13.10Waiver of Partition

Each Partner, on behalf of itself and its successors, hereby waives any right to partition of the Partnership property.

Section 13.11Liability of Liquidator

Any Liquidator shall be indemnified and held harmless by the Partnership in the same manner and to the same degree as an Indemnitee may be indemnified pursuant to Section 7.7 hereof.

ARTICLE 14 - AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS

Section 14.1Procedures for Actions and Consents of Partners

A.The actions requiring Consent of any Partner or Partners pursuant to this Agreement, including Section 7.3 and Section 11.2 hereof, or otherwise pursuant to applicable law, are subject to the procedures set forth in this Article 14.

Section 14.2Amendments

A.Amendments to this Agreement requiring the Consent of Limited Partners may only be proposed by the General Partner.  Following such proposal, the General Partner shall submit any proposed amendment to the Limited Partners and shall seek the Consent of the Limited Partners entitled to vote thereon on any such proposed amendment in accordance with Section 14.3 hereof.  Except as set forth below in Section 14.2B, Section 14.2C and Section 14.2D or as otherwise expressly provided in this Agreement, a proposed amendment shall be adopted and be effective as an amendment hereto if it is approved by the General Partner and it receives the Consent of Limited Partners holding a majority of the Common Units held by Limited Partners (including Limited Partner Units held by the Company and its Affiliates);

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providedthat an action shall become effective at such time as the requisite Consents are received by the General Partner even if prior to such specified time.

B.The General Partner shall have the exclusive power without the prior Consent of the Limited Partners to amend this Agreement as may be required to facilitate or implement any of the following purposes:

(1)to add to the obligations of the General Partner or surrender any right or power granted to the General Partner or any Affiliate of the General Partner for the benefit of the Limited Partners;

(2)to reflect the issuance of additional Partnership Interests pursuant to Section 4.2 or the admission, substitution or withdrawal of Partners or the termination of the Partnership in accordance with this Agreement, and to amend the books and records of the Partnership (including the Partnership Ledger) in connection with such admission, substitution or withdrawal;

(3)to set forth or amend the designations, rights, powers, duties and preferences of the Holders of any additional Partnership Interests issued pursuant to this Agreement;

(4)to reflect a change that is of an inconsequential nature or does not adversely affect the rights of the Limited Partners hereunder in any material respect, or to cure any ambiguity, correct or supplement any provision in this Agreement not inconsistent with law or with other provisions, or make other changes with respect to matters arising under this Agreement that will not be inconsistent with law or with the provisions or this Agreement;

(5)to satisfy any requirements, conditions or guidelines contained in any order, directive, opinion, ruling or regulation of a federal or state agency or contained in federal or state law;

(6)to reflect such changes as are reasonably necessary for the Company to maintain its status as a REIT, including changes which may be necessitated due to a change in applicable law (or an authoritative interpretation thereof) or a ruling of the IRS;

(7)to reflect the transfer of all or any part of a Partnership Interest among the General Partner, and any Qualified REIT Subsidiary or other entity that is disregarded as an entity separate from the General Partner for U.S. federal income tax purposes;

(8)to modify, as set forth in Section 6.2, the manner in which Capital Accounts are computed;

(9)to reflect any modification to this Agreement as is necessary or desirable (as determined by the General Partner in its sole and absolute discretion),

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including, without limitation, the definition of “Conversion Factor,” to reflect the direct ownership of assets by the Company; and

(10)to reflect any modification to any provisions of this Agreement that authorizes the General Partner to make amendments without the Consent of the Limited Partners or any other Person.

The General Partner will provide notice to the Limited Partners when any action under this Section 14.2B is taken in the next regular communication to the Limited Partners.

C.Except as set forth in Section 14.2B above, without the Consent of a Majority in Interest of the Outside Limited Partners, this Agreement shall not be amended in a manner that disproportionately effects such Limited Partners, if such amendment would amend Section 4.2, Article 5, Article 6, Article 7, Section 8.5, Section 11.2 or this Section 14.2C (to reduce the items requiring the Consent described herein).  

D.This Agreement shall not be amended, and no action may be taken by the General Partner, without the Consent of each Partner whose rights under this Agreement are adversely affected thereby if such amendment or action would (i) convert a Limited Partner Interest in the Partnership into a General Partner Interest (except as a result of the General Partner acquiring such Partnership Interest), (ii) modify the limited liability of a Limited Partner or (iii) amend this Section 14.2D (to reduce the items requiring the Consent described herein).  Any such amendment or action Consented to by a Partner shall be effective as to that Partner, notwithstanding the absence of such Consent by any other Partners.  

E.Notwithstanding anything in this Article 14 or elsewhere in this Agreement to the contrary, any amendment and restatement of the Partnership Ledger by the General Partner to reflect events or changes otherwise authorized or permitted by this Agreement, whether pursuant to Section 7.1A(27) hereof or otherwise, shall not be deemed an amendment of this Agreement and may be done at any time and from time to time, as necessary by the General Partner without the Consent of the Limited Partners.

Section 14.3Meetings of the Partners

A.Meetings of the Partners may only be called by the General Partner.  The request shall state the nature of the business to be transacted.  Notice of any such meeting shall be given to all Partners not less than seven (7) days nor more than sixty (60) days prior to the date of such meeting.  Partners may vote in person or by proxy at such meeting.  Whenever the vote or Consent of the Partners is permitted or required under this Agreement, such vote or Consent may be given at a meeting of the Partners or may be given in accordance with the procedure prescribed in Section 14.1.  Except as otherwise expressly provided in this Agreement, the Consent of holders of a majority of the Common Units held by Limited Partners (including Common Units held by the Company and its Affiliates) shall control.  

B.Any action required or permitted to be taken at a meeting of the Partners may be taken without a meeting if a Consent in writing or by electronic transmission setting forth the action so taken or consented to is signed by a majority of the Common Units of the Partners (or such other percentage as is expressly required by this Agreement).  Such Consent may be in

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one instrument or in several instruments, and shall have the same force and effect as the affirmative vote of such Partners at a meeting of the Partners.  Such Consent shall be filed with the General Partner.  An action so taken shall be deemed to have been taken at a meeting held on the effective date so certified.  For purposes of obtaining a Consent in writing or by electronic transmission to any matter, the General Partner may require a response within a reasonable specified time, but not less than fifteen (15) days, and failure to respond in such time period shall constitute a Consent that is consistent with the General Partner’s recommendation with respect to the proposal; provided, however, that an action shall become effective at such time as requisite Consents are received even if prior to such specified time.

C.Each Limited Partner may authorize any Person or Persons to act for him by proxy on all matters in which a Limited Partner is entitled to participate, including waiving notice of any meeting, or voting or participating at a meeting.  Every proxy must be signed by the Limited Partner or his attorney‑in‑fact.  A proxy may be granted in writing, by means of electronic transmission or as otherwise permitted by applicable law.  No proxy shall be valid after the expiration of twelve (12) months from the date thereof unless otherwise provided in the proxy.  Every proxy shall be revocable at the pleasure of the Limited Partner executing it, such revocation to be effective upon the Partnership’s receipt of written notice of such revocation from the Limited Partner executing such proxy.

D.The General Partner may set, in advance, a record date for the purpose of determining the Partners (i) entitled to Consent to any action, (ii) entitled to receive notice of or vote at any meeting of the Partners or (iii) in order to make a determination of Partners for any other proper purpose.  Such date, in any case, shall not be prior to the close of business on the day the record date is fixed and shall be not more than ninety (90) days and, in the case of a meeting of the Partners, not less than ten (10) days, before the date on which the meeting is to be held or Consent is to be given.  If no record date is fixed, the record date for the determination of Partners entitled to notice of or to vote at a meeting of the Partners shall be at the close of business on the day on which the notice of the meeting is sent, and the record date for any other determination of Partners shall be the effective date of such Partner action, distribution or other event. When a determination of the Partners entitled to vote at any meeting of the Partners has been made as provided in this section, such determination shall apply to any adjournment thereof.

E.Each meeting of the Partners shall be conducted by the General Partner or such other Person as the General Partner may appoint pursuant to such rules for the conduct of the meeting as the General Partner or such other Person deems appropriate.  Without limitation, meetings of the Partners may be conducted in the same manner as meetings of the Company’s stockholders and may be held at the same time, and as part of, meetings of the Company’s stockholders.

F.On matters on which Limited Partners are entitled to vote, each Limited Partner shall have a vote equal to the number of Partnership Units held.

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ARTICLE 15- GENERAL PROVISIONS

Section 15.1Addresses and Notice

Any notice, demand, request or report required or permitted to be given or made to a Partner or Assignee under this Agreement shall be in writing and shall be deemed given or made when delivered in person or when sent by certified first class United States mail, return receipt requested, nationally recognized overnight delivery service, electronic mail or facsimile transmission (with receipt confirmed) to the Partner or Assignee at the address set forth in the Partnership Ledger or such other address of which the Partner shall notify the General Partner in writing.  Notices to the General Partner and the Partnership shall be delivered at or mailed to its principal office address set forth in Section 2.3.  The General Partner and the Partnership may specify a different address by notifying the Limited Partners in writing of such different address.

Section 15.2Titles and Captions

All article or section titles or captions in this Agreement are for convenience only.  They shall not be deemed part of this Agreement and in no way define, limit, extend or describe the scope or intent of any provisions hereof.  Except as specifically provided otherwise, references to “Articles” and “Sections” are to Articles and Sections of this Agreement.

Section 15.3Pronouns and Plurals

Whenever the context may require, any pronoun used in this Agreement shall include the corresponding masculine, feminine or neuter forms, and the singular form of nouns, pronouns and verbs shall include the plural and vice versa.

Section 15.4Further Action

The parties shall execute and deliver all documents, provide all information and take or refrain from taking action as may be necessary or appropriate to achieve the purposes of this Agreement.

Section 15.5Binding Effect

Subject to the terms set forth herein, this Agreement shall be binding upon and inure to the benefit of the parties hereto and their heirs, executors, administrators, successors, legal representatives and permitted assigns.

Section 15.6No Third-Party Rights Created Hereby

Other than as expressly set forth herein with respect to Indemnitees, the provisions of this Agreement are solely for the purpose of defining the interests of the Holders, inter se; and no other person, firm or entity (i.e., a party who is not a signatory hereto or a permitted successor to such signatory hereto) shall have any right, power, title or interest by way of subrogation or otherwise, in and to the rights, powers, title and provisions of this Agreement. No creditor or other third party having dealings with the Partnership shall have the right to enforce the right or obligation of any Partner to make Capital Contributions or loans to the Partnership or to pursue

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any other right or remedy hereunder or at law or in equity. None of the rights or obligations of the Partners herein set forth to make Capital Contributions or loans to the Partnership shall be deemed an asset of the Partnership for any purpose by any creditor or other third party, nor may any such rights or obligations be sold, transferred or assigned by the Partnership or pledged or encumbered by the Partnership to secure any debt or other obligation of the Partnership or any of the Partners.

Section 15.7Waiver

A.No failure by any party to insist upon the strict performance of any covenant, duty, agreement or condition of this Agreement or to exercise any right or remedy consequent upon a breach thereof shall constitute waiver of any such breach or any other covenant, duty, agreement or condition.

B.The restrictions, conditions and other limitations on the rights and benefits of the Limited Partners contained in this Agreement, and the duties, covenants and other requirements of performance or notice by the Limited Partners, are for the benefit of the Partnership and, except for an obligation to pay money to the Partnership, may be waived or relinquished by the General Partner, in its sole and absolute discretion, on behalf of the Partnership in one or more instances from time to time and at any time; provided, however, that any such waiver or relinquishment may not be made if it would have the effect of (i) creating liability for any other Limited Partner, (ii) causing the Partnership to cease to qualify as a limited partnership, (iii) reducing the amount of cash otherwise distributable to the Limited Partners (other than any such reduction that affects all of the Limited Partners holding the same class or series of Partnership Units on a uniform or pro rata basis, if approved by a majority of the Limited Partners holding such class or series of Partnership Units), (iv) resulting in the classification of the Partnership as an association or publicly traded partnership taxable as a corporation for federal income tax purposes or (v) violating the Securities Act, the Exchange Act or any state “blue sky” or other securities laws; and provided, further, that any waiver relating to compliance with the Ownership Limit or other restrictions in the Articles of Incorporation shall be made and shall be effective only as provided in the Articles of Incorporation.

Section 15.8Counterparts

This Agreement may be executed in counterparts, all of which together shall constitute one agreement binding on all of the parties hereto, notwithstanding that all such parties are not signatories to the original or the same counterpart.  Each party shall become bound by this Agreement immediately upon affixing its signature hereto.

Section 15.9Applicable Law; Waiver of Jury Trial

A.This Agreement shall be construed and enforced in accordance with and governed by the laws of the State of Delaware, without regard to the principles of conflicts of law thereof.

B.Each Partner hereby (i) submits to the non-exclusive jurisdiction of any state or federal court sitting in the State of Delaware (collectively, the “Delaware Courts”), with respect to any dispute arising out of this Agreement or any transaction contemplated hereby to

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the extent such courts would have subject matter jurisdiction with respect to such dispute, (ii) to the fullest extent permitted by law, irrevocably waives, and agrees not to assert by way of motion, defense, or otherwise, in any such action, any claim that it is not subject personally to the jurisdiction of any of the Delaware Courts, that its property is exempt or immune from attachment or execution, that the action is brought in an inconvenient forum, or that the venue of the action is improper, (iii) to the fullest extent permitted by law, agrees that notice or the service of process in any action, suit or proceeding arising out of or relating to this Agreement or the transactions contemplated hereby shall be properly served or delivered if delivered to such Partner at such Partner’s last known address as set forth in the Partnership’s books and records, and (iv) to the fullest extent permitted by law, irrevocably waives any and all right to trial by jury in any legal proceeding arising out of or related to this Agreement or the transactions contemplated hereby.

Section 15.10Invalidity of Provisions

If any provision of this Agreement shall to any extent be held void or unenforceable (as to duration, scope, activity, subject or otherwise) by a court of competent jurisdiction, such provision shall be deemed to be modified so as to constitute a provision conforming as nearly as possible to the original provision while still remaining valid and enforceable.  In such event, the remainder of this Agreement (or the application of such provision to persons or circumstances other than those in respect of which it is deemed to be void or unenforceable) shall not be affected thereby.  Each other provision of this Agreement, unless specifically conditioned upon the voided aspect of such provision, shall remain valid and enforceable to the fullest extent permitted by law; any other provisions of this Agreement that are specifically conditioned on the voided aspect of such invalid provision shall also be deemed to be modified so as to constitute a provision conforming as nearly as possible to the original provision while still remaining valid and enforceable to the fullest extent permitted by law.

Section 15.11No Rights as Stockholders

Nothing contained in this Agreement shall be construed as conferring upon the Holders of Partnership Units any rights whatsoever as stockholders of the Company, including without limitation, any right to receive dividends or other distributions made to stockholders or to vote or consent or to receive notice as stockholders in respect of any meeting of stockholders for the election of directors of the Company or any other matter.

Section 15.12Entire Agreement

This Agreement and the exhibits attached hereto contain the entire understanding and agreement among the Partners with respect to the subject matter hereof and supersedes any other prior written or oral understandings or agreements among them with respect thereto.  Notwithstanding anything to the contrary in this Agreement, the Partners hereby acknowledge and agree that the General Partner, on its own behalf and/or on behalf of the Partnership, without the approval of any Limited Partner, may enter into side letters or similar written agreements with Limited Partners that are not Affiliates of the General Partner, executed contemporaneously with the admission of such Limited Partner to the Partnership, which have the effect of establishing rights under, or altering or supplementing, the terms hereof, as negotiated with such

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Limited Partner and which the General Partner in its sole and absolute discretion deems necessary, desirable or appropriate. The parties hereto agree that any terms, conditions or provisions contained in such side letters or similar written agreements with a Limited Partner shall govern with respect to such Limited Partner notwithstanding the provisions of this Agreement.

[Signature Page Follows]

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IN WITNESS WHEREOF, the parties hereto have executed this Second Amended and Restated Agreement of Limited Partnership as of the date first written above.

GENERAL PARTNER:

PARAMOUNT GROUP, INC.

By:

Name:

Title:

LIMITED PARTNERS:

By:

Name:

Title:

Signature Page to Amended and Restated Agreement of

Limited Partnership of Paramount Group Operating Partnership LP

FORM OF LIMITED PARTNER SIGNATURE PAGE

The undersigned, desiring to become one of the named Limited Partners of Paramount Group Operating Partnership LP, hereby becomes a party to the Second Amended and Restated Agreement of Limited Partnership of Paramount Group Operating Partnership LPby and among Paramount Group, Inc. and such Limited Partners, dated as of October 26, 2020, as amended.  The undersigned agrees that this signature page may be attached to any counterpart of said Second Amended and Restated Agreement of Limited Partnership.

Signature Line for Limited Partner:	[Name] By: Name: Title: Date:
Address of Limited Partner:

Exhibit A

Notice of Redemption

The undersigned Limited Partner or Assignee hereby irrevocably (i) redeems __________ Common Units in Paramount Group Operating Partnership LPin accordance with the terms of the Amended and Restated Agreement of Limited Partnership of Paramount Group Operating Partnership LP(the “Agreement”) and the Redemption Right referred to therein; (ii) surrenders such Common Units and all right, title and interest therein; and (iii) directs that the Cash Amount or REIT Shares Amount (as determined by the General Partner) deliverable upon exercise of the Redemption Right be delivered to the address specified below, and if REIT Shares are to be delivered, such REIT Shares be registered or placed in the name(s) and at the address(es) specified below.  The undersigned hereby, represents, warrants, and certifies that the undersigned (a) has marketable and unencumbered title to such Common Units, free and clear of the rights or interests of any other Person; (b) has the full right, power, and authority to redeem and surrender such Common Units as provided herein; and (c) has obtained the consent or approval of all Persons, if any, having the right to consent or approve such redemption and surrender.

All capitalized terms used herein and not otherwise defined shall have the same meaning ascribed to them respectively in the Agreement.

Dated:_________________________

Name of Limited Partner or Assignee:____________________________________

                        Please Print

(Signature of Limited Partner or Assignee)

(Street Address)

(City)                  (State)                (Zip Code)

Medallion Guarantee:

If REIT Shares are to be issued, issue to:

Name:_________________________________

Please insert social security or identifying number:__________________

Exhibit B

LTIP Units

The following are certain additional terms of the LTIP Units:

1.1 Designation.  A class of Partnership Units in the Partnership designated as the “LTIP Units” is hereby established. LTIP Units are intended to qualify as “profits interests” in the Partnership. The number of LTIP Units that may be issued shall not be limited.

1.2 Vesting.  LTIP Units may, in the sole discretion of the General Partner, be issued subject to vesting, forfeiture and additional restrictions on transfer pursuant to the terms of an award, vesting or other similar agreement (a “Vesting Agreement”), between the Partnership or the General Partner (on behalf of the Partnership) and a holder of LTIP Units. The terms of any Vesting Agreement may be modified from time to time in accordance with their terms. LTIP Units that have vested and are no longer subject to forfeiture under the terms of a Vesting Agreement are referred to as “Vested LTIP Units”; all other LTIP Units are referred to as “Unvested LTIP Units.” Subject to the terms of any Vesting Agreement, a holder of LTIP Units shall be entitled to transfer his or her LTIP Units to the same extent, and subject to the same restrictions as holders of Common Units are entitled to transfer their Common Units pursuant to Article 11 of the Agreement.

1.3 Forfeiture or Transfer of Unvested LTIP Units.  Unless otherwise specified in the relevant Vesting Agreement, upon the occurrence of any event specified in a Vesting Agreement as resulting in either the forfeiture of any LTIP Units, or the repurchase by the Partnership or the General Partner of LTIP Units at a specified purchase price, then, upon the occurrence of the circumstances resulting in such forfeiture or repurchase by the Partnership or the General Partner, the relevant LTIP Units shall immediately, and without any further action, be treated as cancelled and no longer outstanding for any purpose, or as transferred to the Partnership or General Partner, as applicable. Unless otherwise specified in the Vesting Agreement, no consideration or other payment shall be due with respect to any LTIP Units that have been forfeited, other than any distributions declared with a record date prior to the effective date of the forfeiture.

1.4 Legend.  Any certificate evidencing an LTIP Unit shall bear an appropriate legend indicating that additional terms, conditions and restrictions on transfer, including without limitation, any Vesting Agreement, apply to the LTIP Unit.

1.5 Distributions.  The distributions to which holders of LTIP Units will be entitled with respect to their LTIP Units will be determined in accordance with the terms of the Agreement, including, without limitation, Article 5 and Article 13 thereof.

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1.6 Allocations.  The allocations to which holders of LTIP Units will be entitled with respect to their LTIP Units will be determined in accordance with the terms of the Agreement, including, without limitation, Article 6 thereof.

1.7 Adjustments.  If an LTIP Unit Adjustment Event (as defined below) occurs, then the General Partner shall make a corresponding adjustment to the LTIP Units to maintain the same correspondence between Common Units and LTIP Units as existed prior to such LTIP Unit Adjustment Event.  The following shall be “LTIP Unit Adjustment Events”: (A) the Partnership makes a distribution on all outstanding Common Units in Partnership Units, (B) the Partnership subdivides the outstanding Common Units into a greater number of units or combines the outstanding Common Units into a smaller number of units, or (C) the Partnership issues any Partnership Units in exchange for its outstanding Common Units by way of a reclassification or recapitalization of its Common Units. If more than one LTIP Unit Adjustment Event occurs, the adjustment to the LTIP Units need be made only once using a single formula that takes into account each and every LTIP Unit Adjustment Event as if all LTIP Unit Adjustment Events occurred simultaneously.  If the Partnership takes an action affecting the Common Units other than actions specifically described above as LTIP Unit Adjustment Events and in the opinion of the General Partner such action would require an adjustment to the LTIP Units to maintain the correspondence between Common Unit and LTIP Units as existed prior to such action, the General Partner shall make such adjustment to the LTIP Units, to the extent permitted by law and by the terms of any plan pursuant to which the LTIP Units have been issued, in such manner and at such time as the General Partner, in its sole discretion, may determine to be appropriate under the circumstances to maintain such correspondence.  If an adjustment is made to the LTIP Units as herein provided, the Partnership shall promptly file in the books and records of the Partnership an officer’s certificate setting forth such adjustment and a brief statement of the facts requiring such adjustment, which certificate shall be conclusive evidence of the correctness of such adjustment absent manifest error. Promptly after filing of such certificate, the Partnership shall mail a notice to each holder of LTIP Units setting forth the adjustment to his or her LTIP Units and the effective date of such adjustment.

1.8 Conversion of LTIP Units into Common Units; Redemption.  LTIP Units shall automatically convert into an equal number of Common Units, giving effect to all adjustments (if any) made pursuant to Section 1.7, on the later to occur of (i) the date on which such LTIP Units become Vested LTIP Units and (ii) the date on which the Book-Up Target for such LTIP Units becomes zero (the “LTIP Unit Conversion Date”).  Any such conversion shall occur automatically after the close of business on the applicable LTIP Unit Conversion Date without any action on the part of such holder of LTIP Units, as of which time such holder of LTIP Units shall be credited on the books and records of the Partnership with the issuance as of the opening of business on the next day of the number of Common Units issuable upon such conversion and, notwithstanding the holding period set forth in Section 8.5A of the Agreement (but subject to any limitations set forth in any applicable Vesting Agreement), such Common Units shall be immediately entitled to the Redemption Right as of such date.

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1.9 Treatment of Capital Account.  For purposes of making future allocations under Section 6.1I of this Agreement, the portion of the Economic Capital Account Balance of the applicable holder of LTIP Units that is treated as attributable to his or her LTIP Units shall be reduced, as of the date of conversion, by the product of the number of LTIP Units converted into Common Units and the Common Unit Economic Balance with respect to such converted LTIP Unit, providedthat for the avoidance of doubt, the amount of such reduction shall instead be attributable to the Economic Capital Account Balance that is attributable to the Common Units into which such LTIP Units were converted.

1.10 Mandatory Conversion in Connection with a Transaction

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(a) If the Partnership or the General Partner shall be a party to any transaction (including without limitation a merger, consolidation, unit exchange, self-tender offer for all or substantially all Common Units or other business combination or reorganization, or sale of all or substantially all of the Partnership’s assets, but excluding any transaction which constitutes an LTIP Unit Adjustment Event), in each case as a result of which Common Units shall be exchanged for or converted into the right, or the holders of Common Units shall otherwise be entitled, to receive cash, securities or other property or any combination thereof (each of the foregoing being referred to herein as a “Transaction”), then, immediately prior to the Transaction, any LTIP Units that will become eligible for conversion in connection with the Transaction in accordance with Section 1.8 shall automatically convert into an equal number of Common Units, giving effect to all adjustments (if any) made pursuant to Section 1.7, and taking into account any allocations that occur in connection with the Transaction or that would occur in connection with the Transaction if the assets of the Partnership were sold at the Transaction price or, if applicable, at a value determined by the General Partner in good faith using the value attributed to the Partnership Units in the context of the Transaction (in which case the LTIP Unit Conversion Date shall be the effective date of the Transaction and the conversion shall occur immediately prior to the effectiveness of the Transaction).

(b) In anticipation of such automatic LTIP Unit conversion and the consummation of the Transaction, the Partnership shall cause each holder of LTIP Units to be afforded the right to receive in connection with such Transaction in consideration for the Common Units into which his or her LTIP Units will be converted the same kind and amount of cash, securities and other property (or any combination thereof) receivable upon the consummation of such Transaction by a holder of the same number of Common Units, assuming such holder of Common Units is not a Person with which the Partnership consolidated or into which the Partnership merged or which merged into the Partnership or to which such sale or transfer was made, as the case may be (a “Constituent Person”), or an Affiliate of a Constituent Person. In the event that holders of Common Units have the opportunity to elect the form or type of consideration to be received upon consummation of the Transaction, prior to such Transaction the General Partner shall give prompt written notice to each holder of LTIP Units of such election, and shall afford such

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holders the right to elect, by written notice to the General Partner, the form or type of consideration to be received upon conversion of each LTIP Unit held by such holder into Common Units in connection with such Transaction. If a holder of LTIP Units fails to make such an election, such holder (and any of its transferees) shall receive upon conversion of each LTIP Unit held by him or her (or by any of his or her transferees) the same kind and amount of consideration that a holder of a Common Unit would receive if such holder of Common Units failed to make such an election.

(c) Subject to the rights of the Partnership and the General Partner under any Vesting Agreement and the terms of any plan under which LTIP Units are issued, the Partnership shall use commercially reasonable efforts to cause the terms of any Transaction to be consistent with the provisions of this Section 1.10 and to enter into an agreement with the successor or purchasing entity, as the case may be, for the benefit of any holders of LTIP Units whose LTIP Units will not be converted into Common Units in connection with the Transaction that will (i) contain provisions enabling the holders of LTIP Units that remain outstanding after such Transaction to convert their LTIP Units into securities as comparable as reasonably possible under the circumstances to the Common Units and (ii) preserve as far as reasonably possible under the circumstances the distribution, special allocation, conversion, and other rights set forth in the Agreement for the benefit of the holders of LTIP Units.

1.11 Redemption at the Option of the Partnership.  LTIP Units will not be redeemable at the option of the Partnership; provided, however, that the foregoing shall not prohibit the Partnership from (i) repurchasing LTIP Units from the holder thereof if and to the extent such holder agrees to sell such LTIP Units or (ii) converting LTIP Units pursuant to Section 1.8 above.

1.12 Voting Rights.  Holders of LTIP Units shall have the right to vote on all matters submitted to a vote of the holders of Common Units; holders of LTIP Units and Common Units shall vote together as a single class, together with any other class or series of Partnership Units upon which like voting rights have been conferred. In any matter in which the LTIP Units are entitled to vote, including an action by written consent, each LTIP Unit shall be entitled to vote a Percentage Interest equal on a per unit basis to the Percentage Interest represented by each Common Unit.

1.13 Special Approval Rights.  Except as provided in Section 1.12 above, holders of LTIP Units shall only (a) have those voting rights required from time to time by non-waivable provisions of applicable law, if any, and (b) have the additional voting rights that are expressly set forth in this Section 1.13. The General Partner and/or the Partnership shall not, without the affirmative vote of holders of more than 50% of the then outstanding LTIP Units affected thereby, given in person or by proxy, either in writing or at a meeting (voting separately as a class), take any action that would materially and adversely alter, change, modify or amend, whether by merger, consolidation or otherwise, the rights, powers or privileges of such LTIP Units, subject to the following exceptions: (i) no separate consent of the holders of LTIP Units will be required if and to the extent that any

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such alteration, change, modification or amendment would equally, ratably and proportionately alter, change, modify or amend the rights, powers or privileges of the Common Units (in which event the holders of LTIP Units shall only have such voting rights, if any, as expressly provided for in the Agreement, in accordance with Section 1.12 above); (ii) with respect to any merger, consolidation or other business combination or reorganization, so long as either (w) the LTIP Units are converted into Common Units immediately prior to the effectiveness of the transaction, (x) the holders of LTIP Units either will receive, or will have the right to elect to receive, for each LTIP Unit an amount of cash, securities, or other property equal to the greatest amount of cash, securities or other property paid to a holder of one Common Unit in consideration of one Common Unit pursuant to the terms of such transaction, (y) the LTIP Units remain outstanding with the terms thereof materially unchanged, or (z) if the Partnership is not the surviving entity in such transaction, the LTIP Units are exchanged for a security of the surviving entity with terms that are materially the same with respect to rights to allocations, distributions, redemption, conversion and voting as the LTIP Units and without any income, gain or loss expected to be recognized by the holder upon the exchange for U.S. federal income tax purposes (and with the terms of the Common Units or such other securities into which the LTIP Units (or the substitute security therefor) are convertible materially the same with respect to rights to allocations, distributions, redemption, conversion and voting), such merger, consolidation or other business combination or reorganization shall not be deemed to materially and adversely alter, change, modify or amend the rights, powers or privileges of the LTIP Units, provided further, that if some, but not all, of the LTIP Units are converted into Common Units immediately prior to the effectiveness of the transaction (and neither clause (y) or (z) above is applicable), then the consent required pursuant to this Section will be the consent of the holders of more than 50% of the LTIP Units to be outstanding following such conversion; (iii) any creation or issuance of Partnership Units (whether ranking junior to, on a parity with or senior to the LTIP Units in any respect, which either (x) does not require the consent of the holders of Common Units or (y) does require such consent and is authorized by a vote of the holders of Common Units and LTIP Units voting together as a single class pursuant to Section 1.12 above, together with any other class or series of units of limited partnership interest in the Partnership upon which like voting rights have been conferred, shall not be deemed to materially and adversely alter, change, modify or amend the rights, powers or privileges of the LTIP Units; and (iv) any waiver by the Partnership of restrictions or limitations applicable to any outstanding LTIP Units with respect to any holder or holders thereof shall not be deemed to materially and adversely alter, change, modify or amend the rights, powers or privileges of the LTIP Units with respect to other holders.  

1.14 The foregoing voting provisions will not apply if, as of or prior to the time when the action with respect to which such vote would otherwise be required to be taken or be effective, all outstanding LTIP Units shall have been converted and/or redeemed, or provision is made for such redemption and/or conversion to occur as of or prior to such time.

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Exhibit C

AOLTIP Units

The following are certain additional terms of the AOLTIP Units:

1.1 Designation.  A class of Partnership Units in the Partnership designated as the “AOLTIP Units” is hereby established. AOLTIP Units are intended to qualify as “profits interests” in the Partnership. The number of AOLTIP Units that may be issued shall not be limited.

1.2 Vesting, Generally. AOLTIP Units may, in the sole discretion of the General Partner, be issued subject to vesting, forfeiture and additional restrictions on transfer pursuant to the terms of a Vesting Agreement (as defined in Exhibit B). The terms of any Vesting Agreement may be modified from time to time in accordance with their terms. AOLTIP Units that have vested and are no longer subject to forfeiture under the terms of a Vesting Agreement are referred to as “Vested AOLTIP Units”; all other AOLTIP Units are referred to as “Unvested AOLTIP Units.”  Subject to the terms of any Vesting Agreement, a holder of AOLTIP Units shall be entitled to transfer his or her AOLTIP Units to the same extent, and subject to the same restrictions as holders of Common Units are entitled to transfer their Common Units pursuant to Article 11 of the Agreement.

1.3 Forfeiture or Transfer of Unvested AOLTIP Units. Unless otherwise specified in the relevant Vesting Agreement, upon the occurrence of any event specified in a Vesting Agreement as resulting in either the forfeiture of any AOLTIP Units, or the right of the Partnership or the General Partner to repurchase AOLTIP Units at a specified purchase price, then upon the occurrence of the circumstances resulting in such forfeiture or if the Partnership or the General Partner exercises such right to repurchase, then the relevant AOLTIP Units shall immediately, and without any further action, be treated as cancelled and no longer outstanding for any purposes or transferred to the Partnership or the General Partner, as applicable. Unless otherwise specified in the Vesting Agreement, no consideration or other payment shall be due with respect to any AOLTIP Units that have been forfeited, other than any distributions declared with a record date prior to the effective date of the forfeiture. In connection with any forfeiture or repurchase of AOLTIP Units, the portion of the holder’s Capital Account attributable to such AOLTIP Units will be treated in accordance with Section 6.1J of the Agreement.

1.4 Legend. Any certificate evidencing an AOLTIP Unit shall bear an appropriate legend indicating that additional terms, conditions and restrictions on transfer, including without limitation any Vesting Agreement, apply to the AOLTIP Unit.

1.5 AOLTIP Unit Distributions. In the event that the Partnership makes a distribution to the holders of Common Units, the distributions to which holders of AOLTIP Units will be entitled with respect to their AOLTIP Units will be determined in accordance with the terms of the Agreement, including, without limitation, Article 5 and Article 13 thereof.

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1.6 Allocations. The allocations to which holders of AOLTIP Units will be entitled with respect to their AOLTIP Units will be determined in accordance with the terms of the Agreement, including, without limitation, Article 6 thereof.

1.7 Adjustments. If an LTIP Unit Adjustment Event as defined in Exhibit B (or other similar event that the General Partner determines would require an adjustment to LTIP Units) occurs, the General Partner shall make such corresponding adjustment to each AOLTIP Unit as the General Partner determines is appropriate to maintain the same correspondence ratio between such AOLTIP Unit and the Common Units as existed immediately prior to such LTIP Unit Adjustment Event or other event. The methodology for making adjustments set forth in Exhibit B with respect to LTIP Units shall be used, with all appropriate modifications, for making adjustments under this Exhibit C with respect to AOLTIP Units as the General Partner determines to be appropriate in its judgment.

1.8Right to Convert AOLTIP Units into Common Units.

(a)Conversion Right. A holder of AOLTIP Units shall have the right (the “AOLTIP Conversion Right”), at his or her option, at any time to convert all or a portion of his or her Vested AOLTIP Units into Common Units. In order to exercise his or her AOLTIP Conversion Right, a holder of AOLTIP Units shall deliver a notice (a “AOLTIP Conversion Notice”) in the form attached as Attachment A to this Exhibit C to the Partnership. Holders of AOLTIP Units shall not have the right to convert Unvested AOLTIP Units into Common Units until they become Vested AOLTIP Units; provided, however, that when a holder of AOLTIP Units is notified of the expected occurrence of an event that will cause his or her Unvested AOLTIP Units to become Vested AOLTIP Units (or at such other times as is permitted by the General Partner), such Person may give the Partnership an AOLTIP Conversion Notice conditioned upon and effective as of the time of vesting (or the occurrence of such other event as may be permitted by the General Partner), and such AOLTIP Conversion Notice shall become effective upon the time of such vesting (or such other event) unless it is revoked by the holder of the AOLTIP Units prior to such time. In all cases, the conversion of any AOLTIP Units into Common Units shall be subject to the conditions and procedures set forth in this Section 1.8.

(b)Mandatory Conversion. On the Mandatory Conversion Date, Vested AOLTIP Units that have not previously been converted shall be converted into Common Units without any further action on the part of the Partnership or the holder of such Vested AOLTIP Units. The “Mandatory Conversion Date” with respect to an AOLTIP Unit shall mean the date specified as such in the relevant Vesting Agreement or, if no such date is specified, the date that is the tenth (10^th) anniversary of the date of issuance of such AOLTIP Unit.

(c) Forced Conversion in Connection with an AOLTIP Forced Conversion Event. Upon the effective time of an AOLTIP Forced Conversion Event (as defined

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below), at the election of the General Partner, either (i) all then outstanding AOLTIP Units shall vest and be converted into Common Units (a “AOLTIP Forced Conversion”) or (ii) the AOLTIP Units will remain outstanding and continue with appropriate adjustment pursuant to Section 1.7 above (and any other similar adjustment provisions applicable to the AOLTIP Units). Unless otherwise specified in the relevant Vesting Agreement for AOLTIP Units, an “AOLTIP ForcedConversion Event” shall mean an Extraordinary Transaction. In the event of anAOLTIP Forced Conversion, the Partnership shall use commercially reasonable efforts to cause each holder of AOLTIP Units to be afforded the right to receive, in connection with the AOLTIP Forced Conversion Event in consideration for the Common Units into which his or her AOLTIP Units will be converted, the same kind and amount of cash, securities and other property (or any combination thereof) receivable upon the consummation of such AOLTIP Forced Conversion Event by a holder of the same number of Common Units, assuming such holder of Common Units is not a Constituent Person or an affiliate of a Constituent Person. Regardless of whether the General Partner elects to cause anAOLTIP Forced Conversion, in the event the Partnership is a party to a transaction pursuant to which Common Units shall be exchanged for or converted into the right to receive cash, securities or other property, then, prior to the completion of such transaction, the General Partner shall give written notice to each holder of AOLTIP Units eligible for conversion into Common Units or that will become so eligible in connection with such transaction, and shall use commercially reasonable efforts to afford to such holders who exercise the right to convert prior to or in connection with such transaction the right to elect the form or type of consideration to be received with respect to each Common Unit issuable upon conversion of each AOLTIP Unit so converted to the same extent as the holders of the Common Units.

(d)Conversion Date. The date on which a Vested AOLTIP Unit shall be converted into Common Units (the “AOLTIP Unit Conversion Date” for such unit) shall be: (i) in the event of a conversion upon the exercise of the AOLTIP Conversion Right, the date on which the Partnership receives the AOLTIP Conversion Notice for the conversion of such Vested AOLTIP Unit (or, if later, the date upon which such AOLTIP Conversion Notice becomes effective), (ii) in the event of a conversion as a result of an AOLTIP Forced Conversion, upon the effective time of the applicable AOLTIP Forced Conversion Event or (iii) in the event of a conversion upon the Mandatory Conversion Date, the Mandatory Conversion Date.

(e)Number of Units Convertible. A holder of Vested AOLTIP Units may convert each such Vested AOLTIP Unit into a number (or fraction thereof) of fully paid and non-assessable Common Units, giving effect to all adjustments (if any) made pursuant to Section 1.7, equal to the AOLTIP Conversion Factor (as defined below) for such Vested AOLTIP Unit on the AOLTIP Unit Conversion Date for such Vested AOLTIP Unit. The “AOLTIP Conversion Factor” for a Vested LTIP Unit shall mean the amount set forth in the Vesting Agreement or other documentation pursuant to which such AOLTIP Unit is issued, or, if not set forth

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therein, for an AOLTIP Unit as of a particular date, the quotient of (i) the excess of the AOLTIP Conversion Value over the AOLTIP Unit Participation Threshold (as defined below) for such AOLTIP Unit as of such date divided by (ii) the AOLTIP Conversion Value(or, if there is no such excess, zero). The “AOLTIP Conversion Value” of an AOLTIP Unit as of a particular date means the Value of a REIT Shareon such date (or if such date is not a trading day, the most recent prior trading day) multiplied by the Conversion Factor, in each case, as of such date; provided that, notwithstanding the foregoing, the Value of a REIT Share as of the effective time of an Extraordinary Transaction as described in clauses (i)-(iii) of such definition shall be the value, as determined by the General Partner, of the consideration payable, or otherwise to be received by stockholders, per share of Common Stock pursuant to such Extraordinary Transaction. The “AOLTIP Unit Participation Threshold” shall mean, for each AOLTIP Unit, the amount specified as such in the relevant Vesting Agreement or other documentation pursuant to which such AOLTIP Unit is granted.

(f)Conversion Procedures. A conversion of Vested AOLTIP Units for which the holder thereof has given an AOLTIP Conversion Notice or that have converted upon the Mandatory Conversion Date or an AOLTIP Forced Conversion shall occur automatically after the close of business on the applicable AOLTIP Unit Conversion Date without any further action on the part of such holder of AOLTIP Units, as of which time such holder of AOLTIP Units shall be credited on the books and records of the Partnership with the issuance of the number of Common Units issuable upon such conversion.

(g)Treatment of Capital Account. For purposes of making future allocations under Section 6.1I of the Agreement, the portion of the Economic Capital Account Balance of the applicable holder of AOLTIP Units that is treated as attributable to his or her AOLTIP Units (including those that are not subject to the conversion) shall be reduced, as of an AOLTIP Unit Conversion Date, by the lesser of (i) the product of the number of Common Units into which such holder’s AOLTIP Units were converted on such date multiplied by the Common Unit Economic Balance or (ii) the entire amount of the Economic Capital Account Balance of the applicable holder of AOLTIP Units that was treated as attributable to AOLTIP Units prior to such AOLTIP Unit Conversion Date. To the extent the Economic Capital Account Balance of the applicable holder of the converted AOLTIP Units exceeds the amount set forth in the previous sentence, such excess will be specially allocated first to such holder’s Common Units that were previously converted from AOLTIP Units in a manner consistent with Section 6.1O of the Agreement and thereafter to the holder’s remaining AOLTIP Units in a manner consistent with Section 6.1(J)(2) of the Agreement.

(h) Redemption Right. Notwithstanding the holding period set forth in Section 8.5A of the Agreement, any Common Units received upon conversion of AOLTIP

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Units pursuant to this Section 1.8 shall be immediately entitled to the Redemption Right as of such conversion date.

1.9 Redemption at the Option of the Partnership. AOLTIP Units will not be redeemable at the option of the Partnership; provided, however, that the foregoing shall not prohibit the Partnership from repurchasing AOLTIP Units from the holder thereof if and to the extent such holder agrees to sell such units.

1.10Voting Rights.

(a)No Voting Rights. Except as provided in Section 1.10(b), holders of AOLTIP Units shall not have the right to vote on any matters submitted to a vote of the Limited Partners

(b)Special Approval Rights. Holders of AOLTIP Units shall only (a) have those voting rights required from time to time by non-waivable provisions of applicable law, if any, and (b) have the additional voting rights that are expressly set forth in this Section 1.10(b). The General Partner and/or the Partnership shall not, without the affirmative vote of holders of more than 50% of the then outstanding AOLTIP Units affected thereby, given in person or by proxy, either in writing or at a meeting (voting separately as a class), take any action that would materially and adversely alter, change, modify or amend, whether by merger, consolidation or otherwise, the rights, powers or privileges of such AOLTIP Units, subject to the following exceptions: (i) no separate consent of the holders of AOLTIP Units will be required with respect to any alteration, change, modification or amendment of the rights, powers or privileges of the Common Units that applies on a substantially similar basis to all holders of Common Units; (ii) with respect to any merger, consolidation or other business combination or reorganization of the Partnership or Extraordinary Transaction, so long as either (x) there is an AOLTIP Forced Conversion of all outstanding AOLTIP Units in accordance with Section 1.8(c) of this Exhibit C or the holders of AOLTIP Units are treated in the same manner as if there was an AOLTIP Forced Conversion, (y) the AOLTIP Units remain outstanding with the terms thereof materially unchanged, or (z) if the Partnership is not the surviving entity in such transaction, the AOLTIP Units are exchanged for a security of the surviving entity with terms that are materially the same with respect to rights to allocations, distributions, redemption, conversion and voting as the AOLTIP Units and without any income, gain or loss expected to be recognized by the holder upon the exchange for U.S. federal income tax purposes (and with the terms of the Common Units or such other securities into which the AOLTIP Units (or the substitute security therefor) are convertible materially the same with respect to rights to allocations, distributions, redemption, conversion and voting), such merger, consolidation or other business combination or reorganization or Extraordinary Transaction shall not be deemed to materially and adversely alter, change, modify or amend the rights, powers or privileges of the AOLTIP Units; (iii) any creation or issuance of Partnership Units (whether ranking junior to, on a parity with or senior to the AOLTIP Units in any respect, which either (x) does not require the consent of the holders of Common

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Units or (y) does require such consent and is authorized by a vote of the holders of Common Units, together with any other class or series of units of limited partnership interest in the Partnership upon which like voting rights have been conferred, shall not be deemed to materially and adversely alter, change, modify or amend the rights, powers or privileges of theAOLTIP Units; and (iv) any waiver by the Partnership of restrictions or limitations applicable to any outstandingAOLTIP Units with respect to any holder or holders thereof shall not be deemed to materially and adversely alter, change, modify or amend the rights, powers or privileges of the AOLTIP Units with respect to other holders. The foregoing voting provisions will not apply if, as of or prior to the time when the action with respect to which such vote would otherwise be required to be taken or be effective, all outstanding AOLTIP Units shall have been converted, or provision is made for such conversion to occur as of or prior to such time.

[End of text]

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 Attachment A to Exhibit C

Notice of Election by Partner to Convert
AOLTIP Units into Common Units

The undersigned holder of AOLTIP Units hereby irrevocably elects to convert the number of Vested AOLTIP Units in Paramount Group Operating Partnership, LP (the “Partnership”) set forth below into Common Units in accordance with the terms of the Second Amended and Restated Agreement of Limited Partnership of the Partnership, as amended. The undersigned hereby represents, warrants, and certifies that the undersigned: (a) has title to such AOLTIP Units, free and clear of the rights or interests of any other person or entity other than the Partnership; (b) has the full right, power, and authority to cause the conversion of such AOLTIP Units as provided herein; and (c) has obtained the consent or approval of all persons or entities, if any, having the right to consent or approve such conversion.

Name of Holder:
	(Please Print: Exact Name as Registered with Partnership)

AOLTIP Units to be Converted

Number of AOLTIP Units: _______________________

Issuance Date of AOLTIP Units:___________________

AOLTIP Unit Participation Threshold: _____________ 

(Signature of Holder: Sign Exact Name as Registered with Partnership)
(Street Address)
(City)	(State)	(Zip Code)
Signature Guaranteed by:

EX-21.1

EXHIBIT 21.1

SUBSIDIARIES OF PARAMOUNT GROUP, INC

	Jurisdiction of Formation/
Name	Incorporation
111 Sutter Street Holding I GP LLC	Delaware
111 Sutter Street Holding I LP	Delaware
111 Sutter Street Holding II GP LLC	Delaware
111 Sutter Street Holding II LP	Delaware
111 Sutter Street Investor GP LLC	Delaware
111 Sutter Street Investor LP	Delaware
111 Sutter Street Owner GP LLC	Delaware
111 Sutter Street Owner LP	Delaware
111 Sutter Street Paramount I GP LLC	Delaware
111 Sutter Street Paramount I LP	Delaware
111 Sutter Street Paramount II GP LLC	Delaware
111 Sutter Street Paramount II LP	Delaware
1301 Participating GP LLC	Delaware
1301 Properties GP LLC	Delaware
1301 Properties Owner LP	Delaware
1325 Avenue Merger Sub GP LLC	Delaware
1325 Avenue Merger Sub LP	Delaware
1325 Avenue Of The Americas, L.P.	New York
1325 Rental GP, L.L.C.	Delaware
1899 Penn Owner LP	Delaware
2099 Owner LP	Delaware
40 West 53rd Associates Limited Partnership	New York
425 Eye Street NW, L.P.	Delaware
50 Beale Fund VII-H Co-Managing GP, LLC	Delaware
50 Beale Fund VII-H Investment LP	Delaware
50 Beale GP LLC	Delaware
50 Beale Holdco LP	Delaware
50 Beale Inc.	Delaware
50 Beale LP	Delaware
50 Beale Paramount Club GP LLC	Delaware
50 Beale Paramount Club LP	Delaware
50 Beale Paramount GP LLC	Delaware
50 Beale Paramount LP	Delaware
50 Beale Street LLC	Delaware
50 Beale Sub GP LLC	Delaware
50 Beale TRS Inc.	Delaware
55 2nd St. Investor GP, LLC	Delaware
55 2nd St. Investor, LP	Delaware
55 Broadway Preferred GP LLC	Delaware
55 Broadway Preferred Investors LP	Delaware
55 Broadway Preferred LP	Delaware
55 Second Acquisition GP, LLC	Delaware
55 Second Acquisition, LP	Delaware
55 Second Street A GP, LLC	Delaware
55 Second Street A, LP	Delaware
55 Second Street B GP, LLC	Delaware
55 Second Street B, LP	Delaware
55 Second Street C GP, LLC	Delaware
55 Second Street C, LP	Delaware
55 Second Street GP, LLC	Delaware
55 Second Street Holdings A GP, LLC	Delaware
55 Second Street Holdings A, LP	Delaware
55 Second Street Holdings B GP, LLC	Delaware
55 Second Street Holdings B, LP	Delaware

55 Second Street A, LP	Delaware
55 Second Street B GP, LLC	Delaware
55 Second Street B, LP	Delaware
55 Second Street C GP, LLC	Delaware
55 Second Street C, LP	Delaware
55 Second Street GP, LLC	Delaware
55 Second Street Holdings A GP, LLC	Delaware
55 Second Street Holdings A, LP	Delaware
55 Second Street Holdings B GP, LLC	Delaware
55 Second Street Holdings B, LP	Delaware
55 Second Street Holdings C GP, LLC	Delaware
55 Second Street Holdings C, LP	Delaware
55 Second Street Imperial GP, LLC	Delaware
55 Second Street Imperial, LP	Delaware
55 Second Street Paramount GP, LLC	Delaware
55 Second Street Paramount Holdings GP, LLC	Delaware
55 Second Street Paramount Holdings, LP	Delaware
55 Second Street Paramount, LP	Delaware
55 Second Street REIT A GP, LLC	Delaware
55 Second Street REIT A, LP	Delaware
55 Second Street REIT B GP, LLC	Delaware
55 Second Street REIT B, LP	Delaware
55 Second Street REIT C GP, LLC	Delaware
55 Second Street REIT C, LP	Delaware
55 Second Street TRS GP, LLC	Delaware
55 Second Street TRS, LP	Delaware
55 Second Street WvF GP, LLC	Delaware
55 Second Street WvF, LP	Delaware
55 Second Street, LP	Delaware
60 Wall Investor LP	Delaware
60 Wall Mezz GP LLC	Delaware
60 Wall Mezz LP	Delaware
60 Wall Owner GP LLC	Delaware
60 Wall Owner LP	Delaware
60 Wall Paramount GP LLC	Delaware
60 Wall Paramount LP	Delaware
60 Wall REIT LLC	Delaware
660 North Capitol Fund X GP LLC	Delaware
660 North Capitol Fund X, LP	Delaware
670 Broadway GP LLC	Delaware
670 Broadway Holdco LP	Delaware
670 Broadway Owner LP	Delaware
712 Fifth Avenue G.P., L.L.C.	Delaware
712 Fifth Avenue Mezz GP LLC	Delaware
712 Fifth Avenue Mezz LP	Delaware
712 Fifth Avenue Owner GP LLC	Delaware
712 Fifth Avenue Owner LP	Delaware
712 Fifth Avenue, L.P.	New York
75 Howard Developer LP	Delaware
75 Howard Developer RDF Co-GP LLC	Delaware
75 Howard Investor GP LLC	Delaware
75 Howard Investor LP	Delaware
75 Howard Owner GP LLC	Delaware
75 Howard Owner LP	Delaware
900 Third Avenue, L.P.	New York
900 Third GP, LLC	Delaware
Forum Rental Investments, Inc.	Delaware
Imperial Rental Investments LLC	Delaware

Kommanditgeselleschaft Grundstucksgeselleschaft EKZ Schwedt m.b.H. & Co.	Germany
Liberty Place Owner LP	Delaware
Market Center Holdings GP, LLC	Delaware
Market Center Holdings, LP	Delaware
Market Center Investment GP, LLC	Delaware
Market Center Investment, LP	Delaware
Market Center Mezz GP, LLC	Delaware
Market Center Mezz, LP	Delaware
Market Center Owner GP, LLC	Delaware
Market Center Owner, LP	Delaware
Market Center Paramount GP, LLC	Delaware
Market Center Paramount II GP, LLC	Delaware
Market Center Paramount II, LP	Delaware
Market Center Paramount Investment GP, LLC	Delaware
Market Center Paramount Investment, LP	Delaware
Market Center Paramount, LP	Delaware
Market Center TRS GP, LLC	Delaware
Market Center TRS, LP	Delaware
Milton 712, LLC	Delaware
Milton Rental Investments, Inc.	Delaware
One Front Street Investor GP LLC	Delaware
One Front Street Investor LP	Delaware
One Front Street Owner GP LLC	Delaware
One Front Street Owner LP	Delaware
OSS Fund X Mezz A GP LLC	Delaware
OSS Fund X Mezz A LP	Delaware
OSS Fund X Mezz B GP LLC	Delaware
OSS Fund X Mezz B LP	Delaware
Paramount Development and Investment, Inc.	Delaware
Paramount Fund Verwaltungs-GmbH	Germany
Paramount Fund VII Acquisitions LLC	Delaware
Paramount Fund VIII Acquisitions LLC	Delaware
Paramount Fund X Investments LLC	Delaware
Paramount Gateway Office Club 50 Beale GP LLC	Delaware
Paramount Gateway Office Club 50 Beale LP	Delaware
Paramount Gateway Office Club Operating Investor LLC	Delaware
Paramount GREF III, L.L.C.	Delaware
Paramount GREF IV, L.L.C.	Delaware
Paramount GREF RDF, LLC	Delaware
Paramount GREF V, L.L.C.	Delaware
Paramount GREF VII, LLC	Delaware
Paramount GREF VIII, LLC	Delaware
Paramount GREF X Debt Co-Invest Trading GP, LLC	Delaware
Paramount GREF X Debt Co-Invest Trading, LP	Delaware
Paramount GREF X Debt Co-Invest, LP	Delaware
Paramount GREF X Equity Co-Invest, LP	Delaware
Paramount GREF X, LLC	Delaware
Paramount GREF, L.L.C.	Delaware
Paramount Group Acquisition and Development LLC	Delaware
Paramount Group Fund VIII 1285 LP	Delaware
Paramount Group Fund VIII 1440 Broadway Mezz LP	Delaware
Paramount Group Fund VIII 15 Laight LP	Delaware
Paramount Group Fund VIII 15 Laight Mezz LP	Delaware
Paramount Group Fund VIII 229 West Junior Mezz LP	Delaware
Paramount Group Fund VIII 229 West Senior Mezz LP	Delaware
Paramount Group Fund VIII 26 Broadway Mezz LP	Delaware
Paramount Group Fund VIII 44 Wall LP	Delaware
Paramount Group Fund VIII 575 Lexington LP	Delaware

Paramount Group Fund VIII 700 Eighth Mezz LP	Delaware
Paramount Group Fund VIII 700 Eighth Mortgage LP	Delaware
Paramount Group Fund VIII 850 Third LP	Delaware
Paramount Group Fund VIII Debt Holdings GP LLC	Delaware
Paramount Group Fund VIII Debt Holdings, LP	Delaware
Paramount Group Fund VIII Holdco I LP	Delaware
Paramount Group Fund VIII Holdco II LP	Delaware
Paramount Group Fund VIII One State Street LP	Delaware
Paramount Group Fund VIII Square 85 LP	Delaware
Paramount Group Loan Services LLC	Delaware
Paramount Group Loan Services TRS LLC	Delaware
Paramount Group Management GP, LLC	Delaware
Paramount Group Management LP	Delaware
Paramount Group Management TRS German Holdco LLC	Delaware
Paramount Group Operating Partnership LP	Delaware
Paramount Group Property-Asset Management LLC	Delaware
Paramount Group Property-Asset Management TRS LLC	Delaware
Paramount Group Real Estate Advisor II, LP	Delaware
Paramount Group Real Estate Advisor LLC	Delaware
Paramount Group Real Estate Fund RDF-LF, LP	Delaware
Paramount Group Real Estate Fund VII Inc.	Maryland
Paramount Group Real Estate Fund VII, LP	Delaware
Paramount Group Real Estate Fund VII-H, LP	Cayman Islands
Paramount Group Real Estate Fund VIII, LP	Delaware
Paramount Group Real Estate Fund X, LP	Delaware
Paramount Group Real Estate Funds I and II Inc.	Maryland
Paramount Group Real Estate International Mgmt Inc.	Delaware
Paramount Group Real Estate Special Situations Fund II, LP	Delaware
Paramount Group Real Estate Special Situations Fund, L.P.	Delaware
Paramount Group Real Estate Special Situations Fund-H, L.P.	Delaware
Paramount Group Residential Development Fund, LP	Delaware
Paramount Real Estate Fund I GmbH & Co. KG	Germany
Paramount Real Estate Fund III GmbH & Co. KG	Germany
Paramount Real Estate Fund IV GmbH & Co. KG	Germany
PGRE Fund RDF-LF Blocker-A, LP	Delaware
PGREF  I 1633 Broadway Land, L.P.	Delaware
PGREF I 1633 Broadway Tower, L.P.	Delaware
PGREF I 425 GP LLC	Delaware
PGREF I Paramount Plaza GP, LLC	Delaware
PGREF I Paramount Plaza Holding GP, LLC	Delaware
PGREF I Paramount Plaza, L.P.	Delaware
PGREF III OMP Preferred Investor, L.P.	Delaware
PGREF III OMP Prime Interest LP	Delaware
PGREF III One Market GP,  LLC	Delaware
PGREF III One Market Investor GP, LLC	Delaware
PGREF III One Market Plaza Investor, L.P.	Delaware
PGREF IV 1899 Penn Investors GP LLC	Delaware
PGREF IV 2099 Penn Investors GP LLC	Delaware
PGREF IV Parallel Fund Sub US GP, LLC	Delaware
PGREF V (Core) Parallel Fund Sub US GP, LLC	Delaware
PGREF V 1301 Participating LP	Delaware
PGREF V 1301 Sixth Holding LP	Delaware
PGREF V 1301 Sixth Investors GP LLC	Delaware
PGREF V 31 West 52nd GP, LLC	Delaware
PGREF V 31 West 52nd Street Investors, LP.	Delaware
PGREF V 40 West 53rd GP, LLC	Delaware
PGREF V Holdco GP LLC	Delaware
PGREF V Holdco LP	Delaware

PGREF V Liberty Place Investors GP LLC	Delaware
PGRE-OMP GP LLC	Delaware
PGRE-OMP LP	Delaware
PGRESS 2 Herald GP LLC	Delaware
PGRESS 2 Herald LP	Delaware
PGRESS 470 Member GP LLC	Delaware
PGRESS 470 Member LP	Delaware
PGRESS Equity Holdings 2 GP LLC	Delaware
PGRESS Equity Holdings 2 LP	Delaware
PGRESS Equity Holdings LP	Delaware
PGRESS GP LLC	Delaware
PGRESS GP-H LLC	Delaware
PGRESS II GP, LLC	Delaware
PGRESS OCS GP LLC	Delaware
PGRESS OCS JVMember LP	Delaware
PGRESS-A Acquisition GP LLC	Delaware
PGRESS-A Acquisition LP	Delaware
PGRESS-H Limited Partner LLC	Delaware
PPF OFF One Market Plaza TRS, LLC	Delaware
PPF Paramount GP, LLC	Delaware
PPF Paramount One Market Plaza Owner, L.P.	Delaware
PPF Paramount One Market Plaza, LP	Delaware
RDF 75 Howard GP LLC	Delaware
RDF 75 Howard LP	Delaware
T-C 55 Second Street, LLC	Delaware
WVF-Paramount 745 Investor, L.P.	Delaware
WVF-Paramount 745 Property, L.P.	Delaware

EX-23.1

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in Registration Statement No. 333-224646 on Form S-3 and Registration Statement No. 333-200351 on Form S-8 of our reports dated February 10, 2021, relating to the financial statements of Paramount Group, Inc. and the effectiveness of Paramount Group, Inc.’s internal control over financial reporting appearing in this Annual Report on Form 10-K for the year ended December 31, 2020.

/s/ Deloitte & Touche LLP

New York, New York

February 10, 2021

EX-31.1

EXHIBIT 31.1

CERTIFICATION

I, Albert Behler, certify that:

1. I have reviewed this Annual Report on Form 10-K 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.

February 10, 2021

/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 Annual Report on Form 10-K 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.

February 10, 2021

/s/ Wilbur Paes

Wilbur Paes

Chief Operating Officer, 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 Annual Report on Form 10-K for the year ended December 31, 2020(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.

This certification shall not be deemed “filed” for any purpose, nor shall it be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934 regardless of any general incorporation language in such filing.

February 10, 2021		/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 Annual Report on Form 10-K for the year ended December 31, 2020(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.

This certification shall not be deemed “filed” for any purpose, nor shall it be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934 regardless of any general incorporation language in such filing.

February 10, 2021		/s/ Wilbur Paes
	Name:	Wilbur Paes
	Title:	Chief Operating Officer, Chief Financial Officer and Treasurer

XML

Document and Entity Information - USD ($)

12 Months Ended

Dec. 31, 2020

Feb. 01, 2021

Jun. 30, 2020

Cover [Abstract]

Document Type

10-K

Amendment Flag

false

Document Period End Date

Dec. 31, 2020

Document Fiscal Year Focus

2020

Document Fiscal Period Focus

FY

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 Small Business

false

Entity Emerging Growth Company

false

Entity Shell Company

false

ICFR Auditor Attestation Flag

true

Entity Well Known Seasoned Issuer

Yes

Entity Current Reporting Status

Yes

Entity Interactive Data Current

Yes

Entity Voluntary Filers

No

Entity Common Stock, Shares Outstanding

218,991,724

Entity Public Float

$ 1,448,483,000

Entity File Number

001-36746

Entity Tax Identification Number

32-0439307

Entity Address, Address Line One

1633 Broadway

Entity Address, Address Line Two

Suite 1801

Entity Address, City or Town

New York

Entity Address, State or Province

NY

Entity Address, Postal Zip Code

10019

City Area Code

212

Local Phone Number

237-3100

Document Annual Report

true

Document Transition Report

false

Security Exchange Name

NYSE

Title of 12(b) Security

Common Stock of Paramount Group, Inc.,$0.01 par value per share

Entity Incorporation, State or Country Code

MD

Documents Incorporated by Reference

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Proxy Statement for the Annual Stockholders’ Meeting (which is scheduled to be held on May 13, 2021) to be filed within 120 days after the end of the registrant’s fiscal year are incorporated by reference in Part III of this Annual Report on Form 10-K.

XML

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands		Dec. 31, 2020	Dec. 31, 2019
Real estate, at cost
Land		$ 1,966,237	$ 1,966,237
Buildings and improvements		5,997,078	5,923,648
Rental property, at cost		7,963,315	7,889,885
Accumulated depreciation and amortization		(966,697)	(790,216)
Real estate, net		6,996,618	7,099,669
Cash and cash equivalents		434,530	306,215
Restricted cash		30,794	25,272
Investments in unconsolidated joint ventures		412,724	449,180
Investments in unconsolidated real estate funds		12,917	10,317
Accounts and other receivables		17,502	19,231
Due from affiliates			36,918
Deferred rent receivable		330,239	301,588
Deferred charges, net of accumulated amortization of $56,612 and $42,096		116,278	126,367
Intangible assets, net of accumulated amortization of $283,332 and $262,930		153,519	203,169
Assets related to discontinued operations			104,836
Other assets		48,976	51,373
Total assets	[1]	8,554,097	8,734,135
Liabilities and Equity
Notes and mortgages payable, net of unamortized deferred financing costs of $18,695 and $25,792		3,800,739	3,783,851
Revolving credit facility		0	36,918
Accounts payable and accrued expenses		101,901	117,356
Dividends and distributions payable		16,796	25,255
Intangible liabilities, net of accumulated amortization of $107,981 and $100,881		55,996	73,789
Other liabilities		62,931	66,004
Total liabilities	[1]	4,038,363	4,103,173
Commitments and contingencies
Paramount Group, Inc. equity:
Common stock $0.01 par value per share; authorized 900,000,000 shares; issued and outstanding 218,817,337 and 227,432,030 shares in 2020 and 2019, respectively		2,188	2,274
Additional paid-in-capital		4,120,173	4,133,184
Earnings less than distributions		(456,393)	(349,557)
Accumulated other comprehensive loss		(12,791)	(171)
Paramount Group, Inc. equity		3,653,177	3,785,730
Noncontrolling interests in:
Consolidated joint ventures		437,161	360,778
Consolidated real estate fund		79,017	72,396
Operating Partnership (20,756,618 and 24,758,472 units outstanding)		346,379	412,058
Total equity		4,515,734	4,630,962
Total liabilities and equity		$ 8,554,097	$ 8,734,135

[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 91.3% as of December 31, 2020. The assets and liabilities of the Operating Partnership, as of December 31, 2020, include $4,025,387 and $2,546,914 of assets and liabilities, respectively, of certain VIEs that are consolidated by the Operating Partnership. See Note 11, Variable Interest Entities (“VIEs”).

XML

CONSOLIDATED BALANCE SHEETS (Parentheticals) - USD ($) $ in Thousands		12 Months Ended
		Dec. 31, 2020	Dec. 31, 2019
Deferred charges, accumulated amortization		$ 56,612	$ 42,096
Intangible assets, accumulated amortization		283,332	262,930
Notes and mortgages payable, deferred financing costs		18,695	25,792
Intangible liabilities, accumulated amortization		$ 107,981	$ 100,881
Common stock, par value		$ 0.01	$ 0.01
Common stock, shares authorized		900,000,000	900,000,000
Common stock, shares issued		218,817,337	227,432,030
Common stock, shares outstanding		218,817,337	227,432,030
Operating partnership, units outstanding		20,756,618	24,758,472
Total assets	[1]	$ 8,554,097	$ 8,734,135
Total liabilities	[1]	4,038,363	4,103,173
Variable Interest Entities [Member]
Total assets		4,025,387	1,959,266
Total liabilities		$ 2,546,914	$ 1,273,464
Variable Interest Entities [Member] | Paramount Group Operating Partnership [Member]
Percentage of ownership in operating partnership		91.30%

[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 91.3% as of December 31, 2020. The assets and liabilities of the Operating Partnership, as of December 31, 2020, include $4,025,387 and $2,546,914 of assets and liabilities, respectively, of certain VIEs that are consolidated by the Operating Partnership. See Note 11, Variable Interest Entities (“VIEs”).

XML

CONSOLIDATED STATEMENTS OF INCOME - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Revenues:
Rental revenue	$ 679,015	$ 709,508	$ 677,138
Fee and other income	35,222	34,246	30,533
Total revenues	714,237	743,754	707,671
Expenses:
Operating	267,587	264,702	254,697
Depreciation and amortization	235,200	240,104	240,868
General and administrative	64,917	68,556	57,563
Transaction related costs	1,096	1,999	1,471
Total expenses	568,800	575,361	554,599
Other income (expense):
(Loss) income from unconsolidated joint ventures	(18,619)	(4,706)	3,468
Income (loss) from unconsolidated real estate funds	272	(343)	(269)
Interest and other income, net	4,490	9,844	7,936
Interest and debt expense	(144,208)	(156,679)	(147,653)
Loss on early extinguishment of debt		(11,989)
(Loss) income from continuing operations, before income taxes	(12,628)	4,520	16,554
Income tax expense	(1,493)	(312)	(3,139)
(Loss) income from continuing operations, net	(14,121)	4,208	13,415
(Loss) income from discontinued operations, net	(5,075)	(33,811)	5,578
Net (loss) income	(19,196)	(29,603)	18,993
Less net (income) loss attributable to noncontrolling interests in:
Consolidated joint ventures	(9,257)	(11,022)	(8,182)
Consolidated real estate fund	1,450	(313)	(720)
Operating Partnership	2,299	4,039	(944)
Net (loss) income attributable to common stockholders	$ (24,704)	$ (36,899)	$ 9,147
(Loss) income per Common Share - Basic:
(Loss) income from continuing operations, net	$ (0.09)	$ (0.03)	$ 0.02
(Loss) income from discontinued operations, net	(0.02)	(0.13)	0.02
Net (loss) income per common share	$ (0.11)	$ (0.16)	$ 0.04
Weighted average common shares outstanding	222,436,170	231,538,065	239,526,694
(Loss) income per Common Share - Diluted:
(Loss) income from continuing operations, net	$ (0.09)	$ (0.03)	$ 0.02
(Loss) income from discontinued operations, net	(0.02)	(0.13)	0.02
Net (loss) income per common share	$ (0.11)	$ (0.16)	$ 0.04
Weighted average common shares outstanding	222,436,170	231,538,065	239,555,636

XML

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Statement Of Income And Comprehensive Income [Abstract]
Net (loss) income	$ (19,196)	$ (29,603)	$ 18,993
Other comprehensive (loss) income:
Change in value of interest rate swaps		(28,069)	7,273
Pro rata share of other comprehensive (loss) income of unconsolidated joint ventures	(13,894)	206	(129)
Comprehensive (loss) income	(33,090)	(57,466)	26,137
Less comprehensive (income) loss attributable to noncontrolling interests in:
Consolidated joint ventures	(9,257)	(11,022)	(8,182)
Consolidated real estate fund	1,434	(360)	(665)
Operating Partnership	3,589	6,726	(1,605)
Comprehensive (loss) income attributable to common stockholders	$ (37,324)	$ (62,122)	$ 15,685

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CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY - USD ($) $ in Thousands	Total	Previously Reported [Member]	Restatement Adjustment [Member]	Common Stock [Member]	Common Stock [Member] Previously Reported [Member]	Additional Paid in Capital [Member]	Additional Paid in Capital [Member] Previously Reported [Member]	Earnings Less than Distributions [Member]	Earnings Less than Distributions [Member] Previously Reported [Member]	Earnings Less than Distributions [Member] Restatement Adjustment [Member]	Accumulated Other Comprehensive (Loss) Income [Member]	Accumulated Other Comprehensive (Loss) Income [Member] Previously Reported [Member]	Noncontrolling Interest [Member] Consolidated Joint Ventures [Member]	Noncontrolling Interest [Member] Consolidated Joint Ventures [Member] Previously Reported [Member]	Noncontrolling Interest [Member] Consolidated Real Estate Fund [Member]	Noncontrolling Interest [Member] Consolidated Real Estate Fund [Member] Previously Reported [Member]	Noncontrolling Interest [Member] Consolidated Real Estate Fund [Member] Restatement Adjustment [Member]	Noncontrolling Interest [Member] Operating Partnership [Member]	Noncontrolling Interest [Member] Operating Partnership [Member] Previously Reported [Member]
Beginning balance at Dec. 31, 2017	$ 5,029,170	$ 5,022,084		$ 2,403	$ 2,403	$ 4,297,948	$ 4,297,948	$ (133,164)	$ (133,693)		$ 10,083	$ 10,083	$ 404,997	$ 404,997	$ 21,106	$ 14,549		$ 425,797	$ 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 at Dec. 31, 2017				240,427,000	240,427,000
Net (loss) income	18,993							9,147					8,182		720			944
Common shares issued upon redemption of common units				$ 2		3,459
Common shares issued upon redemption of common units				203,000
Redemption of minority interest in operating partnerships																		(3,461)
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				61,000
Repurchases of common shares	(105,383)			$ (76)		(105,307)
Repurchases of common shares, shares				(7,555,000)
Dividends and distributions	(105,746)							(95,506)										(10,240)
Contributions from noncontrolling interests	45,116														45,116
Distributions to noncontrolling interests	(18,184)												(18,184)
Change in value of interest rate swaps	7,273										6,605							668
Pro rata share of other comprehensive (loss) income of unconsolidated joint ventures	(129)										(67)				(55)			(7)
Amortization of equity awards	20,937					2,943												17,994
Reallocation of noncontrolling interest						2,713												(2,713)
Other	(170)							(170)
Ending balance at Dec. 31, 2018		4,891,664			$ 2,329		4,201,756		(219,906)			16,621		394,995		66,887			428,982
Common stock, shares outstanding at Dec. 31, 2018					233,136,000
Net (loss) income	(29,603)							(36,899)					11,022		313			(4,039)
Common shares issued upon redemption of common units				$ 14		24,016
Common shares issued upon redemption of common units				1,409,000
Redemption of minority interest in operating partnerships																		(24,030)
Common shares issued under Omnibus share plan, net of shares withheld for taxes	(324)			$ 3				(327)
Common shares issued under Omnibus share plan, net of shares withheld for taxes				46,000
Repurchases of common shares	(94,617)			$ (72)		(94,545)
Repurchases of common shares, shares				(7,159,000)
Dividends and distributions	(102,464)							(92,425)										(10,039)
Contributions from noncontrolling interests	14,989														14,989
Distributions to noncontrolling interests	(45,239)												(45,239)
Change in value of interest rate swaps	(28,069)										(25,367)							(2,702)
Settlement of interest rate swaps liabilities	11,258										8,431							2,827
Pro rata share of other comprehensive (loss) income of unconsolidated joint ventures	206										144				47			15
Amortization of equity awards	23,001					2,564												20,437
Acquisition of noncontrolling interest	(9,840)														(9,840)
Reallocation of noncontrolling interest						(607)												607
Ending balance at Dec. 31, 2019	$ 4,630,962	$ 4,630,962		$ 2,274	$ 2,274	4,133,184	$ 4,133,184	(349,557)	$ (349,557)		(171)	$ (171)	360,778	$ 360,778	72,396	$ 72,396		412,058	$ 412,058
Common stock, shares outstanding at Dec. 31, 2019	227,432,030			227,432,000	227,432,000
Net (loss) income	$ (19,196)							(24,704)					9,257		(1,450)			(2,299)
Common shares issued upon redemption of common units				$ 51		85,659
Common shares issued upon redemption of common units				5,150,000
Redemption of minority interest in operating partnerships																		(85,710)
Common shares issued under Omnibus share plan, net of shares withheld for taxes	(332)			$ 1				(333)
Common shares issued under Omnibus share plan, net of shares withheld for taxes				48,000
Repurchases of common shares	(120,000)			$ (138)		(119,862)
Repurchases of common shares, shares				(13,813,158)
Dividends and distributions	(89,603)							(81,799)										(7,804)
Contributions from noncontrolling interests	11,555												3,500		8,055
Distributions to noncontrolling interests	(12,717)												(12,717)
Pro rata share of other comprehensive (loss) income of unconsolidated joint ventures	(13,894)										(12,620)				16			(1,290)
Amortization of equity awards	19,386					1,318												18,068
Sale of a 10.0% interest in 1633 Broadway	109,573					33,230							76,343
Reallocation of noncontrolling interest						(13,356)												13,356
Ending balance at Dec. 31, 2020	$ 4,515,734			$ 2,188		$ 4,120,173		$ (456,393)			$ (12,791)		$ 437,161		$ 79,017			$ 346,379
Common stock, shares outstanding at Dec. 31, 2020	218,817,337			218,817,000

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CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Parentheticals) - $ / shares	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Statement Of Stockholders Equity [Abstract]
Dividends and distributions, Per share and unit	$ 0.37	$ 0.40	$ 0.40

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CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Cash Flows from Operating Activities:
Net (loss) income	$ (19,196)	$ (29,603)	$ 18,993
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization	235,890	248,347	258,225
Straight-lining of rental revenue	(28,216)	(43,679)	(59,061)
Amortization of stock-based compensation expense	19,239	22,860	19,646
Loss (income) from unconsolidated joint ventures	18,619	4,706	(3,468)
Loss (gain) on sale of real estate related to discontinued operations	12,766	(1,140)	(36,845)
Amortization of deferred financing costs	9,277	19,323	11,023
Amortization of above and below-market leases, net	(4,734)	(10,991)	(16,059)
Distributions of earnings from unconsolidated joint ventures	3,999	4,067	6,207
Realized and unrealized (gains) losses on marketable securities	(1,918)	(3,027)	1,604
Distributions of earnings from unconsolidated real estate funds	616	1,553	330
(Income) loss from unconsolidated real estate funds	(272)	343	269
Real estate impairment loss related to discontinued operations		42,000	46,000
Receipt of accrued interest on preferred equity investment		2,339
Loss on early extinguishment of debt		731
Other non-cash adjustments	413	(961)	288
Changes in operating assets and liabilities:
Accounts and other receivables	1,729	845	(2,994)
Deferred charges	(10,761)	(23,029)	(31,861)
Other assets	(2,193)	57,318	(57,216)
Accounts payable and accrued expenses	(1,299)	(8,949)	4,200
Other liabilities	3,313	2,388	(2,758)
Net cash provided by operating activities	237,272	285,441	156,523
Cash Flows from Investing Activities:
Additions to real estate	(89,463)	(103,916)	(137,915)
Proceeds from the sale of real estate related to discontinued operations	89,206	150,307	349,013
Repayment of amounts due from affiliates	36,918	181,000
Sales of marketable securities	22,188	19,282	24,794
Purchases of marketable securities	(15,809)	(15,232)	(20,019)
Contributions of capital to unconsolidated real estate funds	(2,945)	(3,937)	(3,779)
Investments in and contributions of capital to unconsolidated joint ventures	(60)	(368,852)	(29,883)
Due from affiliates		(217,918)
Redemption of preferred equity investment		33,750
Distributions of capital from unconsolidated real estate funds		2,076	79
Escrow deposits and loans receivable for Residential Development Fund			(15,680)
Real estate acquisition deposits			(10,000)
Net cash provided by (used in) investing activities	40,035	(323,440)	156,610
Cash Flows from Financing Activities:
Repayment of borrowings under revolving credit facility	(200,000)	(195,000)
Borrowings under revolving credit facility	163,082	231,918
Repurchases of common shares	(120,000)	(97,137)	(102,863)
Proceeds from the sale of a 10.0% interest in 1633 Broadway	111,984
Dividends paid to common stockholders	(89,225)	(93,038)	(94,991)
Distributions paid to common unitholders	(8,837)	(10,073)	(10,064)
Distributions to noncontrolling interests	(12,717)	(45,239)	(18,184)
Contributions from noncontrolling interests	11,555	14,989	45,116
Proceeds from notes and mortgages payable	9,791	1,259,843	16,700
Repayment of note payable issued in connection with the acquisition of noncontrolling interest in consolidated real estate fund	(8,771)
Repurchase of shares related to stock compensation agreements and related tax withholdings	(332)	(324)
Repayments of notes and mortgages payable		(1,050,000)
Debt issuance costs and other		(10,131)	(6,564)
Acquisition of noncontrolling interest in consolidated real estate fund		(1,000)
Loss on early extinguishment of debt		(731)
Repayment of loans to affiliates			(27,299)
Net cash (used in) provided by financing activities	(143,470)	4,077	(198,149)
Net increase (decrease) in cash and cash equivalents and restricted cash	133,837	(33,922)	114,984
Cash and cash equivalents and restricted cash at beginning of period	331,487	365,409	250,425
Cash and cash equivalents and restricted cash at end of period	465,324	331,487	365,409
Reconciliation of Cash and Cash Equivalents and Restricted Cash:
Cash and cash equivalents at beginning of period	306,215	339,653	219,381
Restricted cash at beginning of period	25,272	25,756	31,044
Cash and cash equivalents and restricted cash at beginning of period	331,487	365,409	250,425
Cash and cash equivalents at end of period	434,530	306,215	339,653
Restricted cash at end of period	30,794	25,272	25,756
Cash and cash equivalents and restricted cash at end of period	465,324	331,487	365,409
Supplemental Disclosure of Cash Flow Information:
Cash payments for interest	135,607	139,130	136,452
Cash payments for income taxes, net of refunds	1,366	2,474	4,049
Non-Cash Transactions:
Common shares issued upon redemption of common units	85,710	24,030	3,461
Dividends and distributions declared but not yet paid	16,796	25,255	25,902
Write-off of fully amortized and/or depreciated assets	9,141	8,727	4,158
Additions to real estate included in accounts payable and accrued expenses	$ 8,640	21,566	19,872
Change in value of interest rate swaps		28,069	(7,273)
Note payable issued in connection with the acquisition of noncontrolling interest in consolidated real estate fund		$ 8,771
Basis adjustment to investment in unconsolidated joint ventures upon adoption of ASU 2017-05			$ 7,086

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Organization and Business

12 Months Ended

Dec. 31, 2020

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 and San Francisco. As of December 31, 2020, our portfolio consisted of 13 Class A properties aggregating 12.9 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 91.3% of, the Operating Partnership as of December 31, 2020.

In March 2020, the World Health Organization declared coronavirus 2019 (“COVID-19”) a global pandemic. The outbreak of COVID-19 has caused, and continues to cause, severe disruptions in the global economy, and has adversely impacted businesses and financial markets, including that of the United States. Specifically, New York and San Francisco, the markets in which we operate and where a majority of our assets are located, have reacted by instituting quarantines, “pause” orders, “shelter-in-place” rules, restrictions on travel, and restriction on the types of business that could operate. These measures have had and continue to have a significant adverse impact on businesses.

While our buildings have remained open throughout the pandemic, a majority of our tenants have worked remotely. The health and safety of our employees and tenants have been our highest priority and we have adopted a number of initiatives focused on ensuring a healthy and safe environment for all building occupants, including but not limited to the following:

• Adding signage, physical barriers and floor markings in common areas designed to promote social distancing;

• Increasing cleaning and disinfecting protocols and the use of EPA registered cleaning products;  

• Reducing physical touch points in common areas;

• Improving indoor air quality by installing the highest rated minimum efficiency reporting value (“MERV”) filters and additional air purifiers in lobby areas;  

• Installing thermal scanners in lobby areas to screen for temperature checks; and

• Developing efficient communication channels to communicate important health and safety information to employees and tenants.

Since the outbreak of COVID-19, we have received several requests from tenants seeking “short-term” rent relief and have entered into agreements with select tenants to abate and/or defer a portion of their 2020 rental obligations. We have closely monitored our rent collections and have evaluated and continue to evaluate tenant requests on a case-by-case basis. From April through December 31, 2020, our portfolio-wide rent collections were 97.2%, comprised of 98.5% from office tenants (which account for approximately 96.5% of our annualized rents) and 61.6% from non-office tenants (which account for the remaining 3.5% of our annualized rents). In connection with our evaluation of the probability of rent collections of future lease receivables, we recorded $33,205,000 of non-cash write-offs, primarily for straight-line rent receivables, and $2,051,000 of reserves for uncollectible accounts receivable, during the year ended December 31, 2020.

On December 11, 2020 and December 18, 2020, the U.S. Food and Drug Administration issued emergency use authorizations of two vaccines for the prevention of COVID-19. While there are other vaccines currently under development, multiple variants of the virus that cause COVID-19 are also currently present globally. The rapid development and fluidity of this situation precludes us at this time from making any predictions as to the ultimate impact COVID-19 may have on our future financial condition, results of operations and cash flows.

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Basis of Presentation and Significant Accounting Policies

12 Months Ended

Dec. 31, 2020

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 have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and with the rules and regulations of the Securities and Exchange Commission (the “SEC”). These consolidated financial statements include the accounts of Paramount and its consolidated subsidiaries, including the Operating Partnership. All significant intercompany balances and transactions have been eliminated in consolidation.

Significant Accounting Policies

Real Estate  

Real estate is carried at cost less accumulated depreciation and amortization. Betterments, major renovations and certain costs directly related to the improvement of real estate are capitalized. Maintenance and repair expenses are charged to expense as incurred. Depreciation is recognized on a straight-line basis over estimated useful lives of the assets, which range from 5 to 40 years. Tenant improvements are amortized on a straight-line basis over the lives of the related leases, which approximate the useful lives of the assets.

Upon the acquisition of real estate, we assess the fair value of acquired assets (including land, buildings and improvements, identified intangibles, such as acquired above-market leases and acquired in-place leases) and acquired liabilities (such as acquired below-market leases) and allocate the purchase price based on these assessments. We assess fair value based on estimated cash flow projections that utilize appropriate discount and capitalization rates and available market information. Estimates of future cash flows are based on a number of factors including historical operating results, known trends, and market/economic conditions. We record acquired intangible assets (including acquired above-market leases and acquired in-place leases) and acquired intangible liabilities (including below-market leases) at their estimated fair value. We amortize acquired above-market and below-market leases as a decrease or increase to rental revenue, respectively, over the lives of the respective leases. Amortization of acquired in-place leases is included as a component of “depreciation and amortization”.

Our properties, including any related intangible assets, are individually reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Impairment analyses are based on our current plans, intended holding periods and available market information at the time the analyses are prepared. An impairment exists when the carrying amount of an asset exceeds the aggregate projected future cash flows over the anticipated holding period on an undiscounted basis. An impairment loss is measured based on the excess of the property’s carrying amount over its estimated fair value. Estimates of fair value are determined using discounted cash flow models, which consider, among other things, anticipated holding periods, current market conditions and utilize unobservable quantitative inputs, including appropriate capitalization and discount rates. If our estimates of the projected future cash flows, anticipated holding periods, or market conditions change, our evaluation of impairment losses may be different and such differences could be material to our consolidated financial statements. The evaluation of anticipated cash flows is subjective and is based, in part, on assumptions regarding future occupancy, rental rates and capital requirements that could differ materially from actual results. Plans to hold properties over longer periods decrease the likelihood of recording impairment losses.

Real estate and related intangibles are classified as held for sale when all the necessary criteria are met. The criteria include (i) management, having the authority to approve action, commits to a plan to sell the property in its present condition, (ii) the sale of the property is at a price reasonable in relation to its current fair value and (iii) the sale is probable and expected to be completed within one year. Real estate and the related intangibles held for sale are carried at the lower of carrying amounts or estimated fair value less disposal costs. Depreciation and amortization is not recognized on real estate and related intangibles classified as assets held for sale.

Variable Interest Entities (“VIEs”) and Investments in Unconsolidated Joint Ventures and Funds

We consolidate VIEs in which we are considered to be the primary beneficiary. Entities are considered to be the primary beneficiary if they have both of the following characteristics: (i) the power to direct the activities that, when taken together, most significantly impact the VIE’s performance, and (ii) the obligation to absorb losses and right to receive the returns from the VIE that would be significant to the VIE. Our judgment with respect to our level of influence or control of an entity involves the consideration of various factors including the form of our ownership interest, our representation in the entity’s governance, the size of our investment, estimates of future cash flows, our ability to participate in policy making decisions and the rights of the other investors to participate in the decision making process and to replace us as manager and/or liquidate the joint venture, if applicable.

We account for investments under the equity method when the requirements for consolidation are not met, and we have significant influence over the operations of the investee. Equity method investments, which consist of investments in unconsolidated joint ventures and funds are initially recorded at cost and subsequently adjusted for (i) our share of net income or loss, (ii) our share of other comprehensive income or loss, and (iii) cash contributions and distributions. To the extent that our cost basis is different than our share of the equity in the equity method investment, the basis difference allocated to depreciable assets is amortized into “income from unconsolidated joint ventures” over the estimated useful life of the related asset. The agreements that govern our equity method investments may designate different percentage allocations among investors for profits and losses; however, our recognition of income or loss generally follows the investment’s distribution priorities, which may change upon the achievement of certain investment return thresholds. We account for cash distributions in excess of our basis in the equity method investments as income when we have neither the requirement, nor the intent to provide financial support to the joint venture. Investments accounted for under the equity method are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the investment may not be recoverable. An impairment loss is measured based on the excess of the carrying amount of an investment over its estimated fair value. Impairment analyses are based on current plans, intended holding periods and available information at the time the analyses are prepared.

Investments that do not qualify for consolidation or equity method accounting are accounted for under the cost method.

Cash and Cash Equivalents

Cash and cash equivalents consist of cash on hand and short-term highly liquid investments with original maturities of three months or less. The majority of our cash and cash equivalents are held at major commercial banks, which may at times exceed the Federal Deposit Insurance Corporation limit. To date, we have not experienced any losses on our invested cash.

Restricted Cash

Restricted cash consists primarily of security deposits held on behalf of our tenants, cash escrowed under loan agreements for debt service, real estate taxes, property insurance and capital improvements and cash restricted in connection with our deferred compensation plan.

Marketable Securities

Marketable securities consists of investments in trading securities that are held in our deferred compensation plan for which there is an offsetting liability. These investments are initially recorded at cost and subsequently measured at fair value at the end of each reporting period, with gains or losses resulting from changes in fair value recognized in earnings, which are included as a component of “interest and other income, net” on our consolidated statements of income and the earnings are entirely offset by expenses from the mark-to-market of plan liabilities, which are included as a component of “general and administrative” expenses on our consolidated statements of income.

Deferred Charges

Deferred charges include deferred leasing costs and deferred financing costs related to our revolving credit facility. Deferred leasing costs consist of fees and direct costs related to successful leasing activities. Such deferred leasing costs are amortized on a straight-line basis over the lives of the related leases and recognized in our consolidated statements of income as a component of “depreciation and amortization”. Deferred financing costs consist of fees and direct costs incurred in obtaining our revolving credit facility. Such deferred financing costs are amortized over the term of the revolving credit facility and are recognized as a component of “interest and debt expense” on our consolidated statements of income.

Deferred Financing Costs Related to Notes and Mortgages Payable

Deferred financing costs related to notes and mortgages payable consists of fees and direct costs incurred in obtaining such financing and are recorded as a reduction of our notes and mortgages payable. Such costs are amortized over the terms of the related debt agreements and recognized as a component of “interest and debt expense” on our consolidated statements of income. Upon the early extinguishment of our notes and mortgages payable, any unamortized costs related to such notes and mortgages payable are written off as a component of “loss on early extinguishment of debt” on our consolidated statements of income.

Fair Value of Financial Instruments

Accounting Standards Codification (“ASC”) Topic 820, Fair Value Measurement and Disclosures, defines fair value and establishes a framework for measuring fair value. The objective of fair value is to determine the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (the exit price). ASC Topic 820 establishes a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into three levels: Level 1 – quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities; Level 2 – observable prices that are based on inputs not quoted in active markets, but corroborated by market data; and Level 3 – unobservable inputs that are used when little or no market data is available. The fair value hierarchy gives the highest priority to Level 1 inputs and the lowest priority to Level 3 inputs. In determining fair value, we utilize valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible, as well as consider counterparty credit risk in our assessment of fair value. Considerable judgment is necessary to interpret Level 2 and 3 inputs in determining the fair value of our financial and non-financial assets and liabilities. Accordingly, our fair value estimates, which are made at the end of each reporting period, may be different than the amounts that may ultimately be realized upon sale or disposition of these assets or settlement of these liabilities.

We use the following methods and assumptions in estimating fair value for financial instruments that are presented at fair value on our consolidated balance sheets:

Marketable Securities

Marketable securities are valued by a third-party specialist using quoted prices in active markets.

We use the following methods and assumptions in estimating fair value for financial instruments that are not presented at fair value on our consolidated balance sheets, but are disclosed in the notes to our consolidated financial statements:

Notes and Mortgages Payable

Notes and mortgages payable are valued by a third-party specialist using the standard practice of modeling the contractual cash flows required under the instrument and discounting them back to their present value at the appropriate current risk adjusted interest rate. For floating rate debt, we use forward rates derived from observable market yield curves to project the expected cash payments we would be required to make under the instrument. The notes and mortgages payable are classified as Level 2 in fair value hierarchy.

The carrying values of all other financial instruments on our consolidated balance sheets, including cash and cash equivalents, restricted cash, accounts and other receivables and accounts payable and accrued expenses, approximate their fair values due to the short-term nature of these instruments.

Revenue Recognition

Rental Revenue

We lease office, retail and storage space to tenants, primarily under non-cancellable operating leases which have terms generally ranging from five to fifteen years. Most of our leases provide tenants with extension options at either fixed or market rates and few of our leases provide tenants with options to early terminate, but such options generally impose an economic penalty on the tenant upon exercising. Rental revenue is recognized in accordance with ASC Topic 842, Leases, and includes (i) fixed payments of cash rents, which represents revenue each tenant pays in accordance with the terms of its respective lease and that is recognized on a straight-line basis over the non-cancellable term of the lease, and includes the effects of rent steps and rent abatements under the leases, (ii) variable payments of tenant reimbursements, which are recoveries of all or a portion of the operating expenses and real estate taxes of the property and is recognized in the same period as the expenses are incurred, (iii) amortization of acquired above and below-market leases, net and (iv) lease termination income.

We evaluate the collectability of our tenant receivables for payments required under the lease agreements. If we determine that collectability is not probable, the difference between rental revenue recognized and rental payments received is recorded as an adjustment to “rental revenue” in our consolidated statements of income.

Fee and Other Income

Fee income includes (i) property management fees, (ii) asset management fees, (iii) fees relating to acquisitions, dispositions and leasing services and (iv) other fee income and 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. Other income includes income from tenant requested services, including overtime heating and cooling and parking income.

Gains and Losses on Sale of Real Estate

Gains and losses on the sale of real estate are recognized pursuant to ASC Topic 610-20, Gains and Losses from the Derecognition of Nonfinancial Assets, when (i) we do not have a controlling financial interest in the buyer and (ii) the buyer has obtained control of the real estate asset. Any gain or loss on sale is measured based on the difference between the amount of consideration received and the carrying amount of the real estate assets, less costs to sell. For partial sale of real estate resulting in transfer of control, we measure any noncontrolling interest retained at fair value and recognize a gain or loss on the difference between fair value and the carrying amount of the real estate assets retained.

Stock-Based Compensation

We account for stock-based compensation in accordance with ASC Topic 718, Compensation – Stock Compensation. The fair value of the award on the date of grant (adjusted for estimated forfeitures) is ratably amortized into expense over the vesting period of the respective grants. The determination of fair value of these awards involves the use of significant estimates and assumptions, including expected volatility of our stock, expected dividend yield, expected term, and assumptions of whether these awards achieve the requisite performance criteria.

Income Taxes

We operate and have been organized in conformity with the requirements for qualification and taxation as a REIT for U.S. federal income tax purposes. So long as we qualify as a REIT, we generally will not be subject to U.S. federal income tax on our net income that we distribute currently to our stockholders. In order to maintain our qualification as a REIT, we are required under the Internal Revenue Code of 1986, as amended, to distribute at least 90% of our taxable income (without regard to the deduction for dividends paid and excluding net capital gains) to our stockholders and meet certain other requirements. If, with respect to any taxable year, we fail to maintain our qualification as a REIT, and we are not entitled to relief under the relevant statutory provisions, we would be subject to income tax at regular corporate tax rates. Even if we qualify as a REIT, we may also be subject to certain state, local and franchise taxes. Under certain circumstances, U.S. federal income tax may be due on our undistributed taxable income.

We treat certain consolidated subsidiaries, and may in the future elect to treat newly formed subsidiaries, as taxable REIT subsidiaries (“TRSs”). TRSs may participate in non-real estate related activities and/or perform non-customary services for tenants and are subject to federal and state income tax at regular corporate tax rates. Our TRSs had a combined current income tax expense of approximately $698,000, $242,000 and $622,000 for the years ended December 31, 2020, 2019 and 2018, respectively. In addition, our TRSs had combined deferred income tax expense of $32,000 and $87,000 for the years ended December 31, 2020 and 2018, respectively, and a combined deferred income tax benefit of $28,000 for the year ended December 31, 2019.

The following table reconciles net (loss) income attributable to Paramount Group, Inc. to estimated taxable income for the years ended December 31, 2020, 2019 and 2018.

	For the Year Ended December 31,
(Amounts in thousands)	2020			2019			2018
Net (loss) income attributable to Paramount Group, Inc.	$	(24,704	)	$	(36,899	)	$	9,147
Book to tax differences:
Straight-lining of rents and amortization of above and    below-market leases, net		(10,462	)		(37,244	)		(48,604	)
Depreciation and amortization		62,002			79,750			92,512
Stock-based compensation		17,766			20,812			17,847
Real estate impairment loss		-			38,237			41,788
Adjustments resulting from sale of real estate		55,640			12,107			(14,381	)
Other, net		(11,095	)		12,753			(11,635	)
Estimated taxable income	$	89,147		$	89,516		$	86,674

The following table sets forth the characterization of dividend distributions for federal income tax purposes for the years ended December 31, 2020, 2019 and 2018.

	For the Year Ended December 31,
	2020						2019						2018
	Amount			%			Amount			%			Amount			%
Ordinary income	$	0.210	(1)		52.5	%	$	0.323	(1)		80.7	%	$	0.286	(1)		72.4	%
Long-term capital gain		0.190			47.5	%		0.062			15.5	%		0.074			18.7	%
Return of capital		0.000			0.0	%		0.015			3.8	%		0.035			8.9	%
Total	$	0.400	(2)		100.0	%	$	0.400	(2)		100.0	%	$	0.395	(2)		100.0	%

⁽¹⁾ Represents amounts treated as “qualified REIT dividends” for purposes of Internal Revenue Code Section 199A.

⁽²⁾ The fourth quarter dividends for the years ended December 31, 2020, 2019 and 2018 of $0.07, $0.10 and $0.10 per share, respectively, were paid in January of the subsequent years and are allocable to the subsequent years for federal income tax purposes.

Segments

Our reportable segments are separated based on the regions in which we conduct our business. Prior to January 1, 2020, our reportable segments consisted of New York, San Francisco and Washington, D.C. Upon entering into an agreement to sell 1899 Pennsylvania Avenue, our sole remaining property in the Washington, D.C. segment, we redefined our reportable segments into the two remaining regions in which we conduct our business: New York and San Francisco effective January 1, 2020. 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.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires us to make 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.

Reclassification

Certain prior year balances have been reclassified to conform to current year presentation. See Note 3, Dispositions and Discontinued Operations.

Recently Issued Accounting Pronouncements

In June 2016, the Financial Accounting Standards Board (“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. In November 2018, the FASB issued ASU 2018-19, which clarified that receivables arising from operating leases are not within the scope of ASC Topic 326, and instead, impairment of receivables arising from operating leases should be accounted for under the scope of ASC Topic 842, Leases. In May 2019, the FASB issued ASU 2019-05, which provides transition relief for entities adopting ASU 2016-13 by allowing entities to elect the fair value option on certain financial instruments. ASU 2016-13 is effective for interim and annual reporting periods in fiscal years that begin after December 15, 2019, with early adoption permitted. We adopted the provisions of ASU 2016-13 on January 1, 2020. This adoption did not have an impact on our consolidated financial statements.

In August 2018, the FASB issued ASU 2018-13, an update to ASC Topic 820, Fair Value Measurements. ASU 2018-13 modifies

the disclosure requirements in ASC Topic 820, by (i) removing certain disclosure requirements related to transfers between Level 1 and Level 2 of the fair value hierarchy and the valuation processes for Level 3 fair value measurements, (ii) modifying existing disclosure requirements related to measurement uncertainty and (iii) adding new disclosure requirements related to changes in unrealized gains or losses for the period included in other comprehensive income for recurring Level 3 fair value measurements and disclosures related to the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. ASU 2018-13 is effective for interim and annual reporting periods in fiscal years that begin after December 15, 2019, with early adoption permitted. We adopted the provisions of ASU 2018-13 on January 1, 2020. This adoption did not have an impact on our consolidated financial statements.

In October 2018, the FASB issued ASU 2018-17, an update to ASC Topic 810, Consolidations. ASU 2018-17 requires reporting entities to consider indirect interests held by related parties under common control on a proportional basis rather than as the equivalent of a direct interest in its entirety in determining whether a decision-making fee is a variable interest. ASU 2018-17 is effective for interim and annual reporting periods in fiscal years that begin after December 15, 2019, with early adoption permitted. We adopted the provisions of ASU 2018-17 on January 1, 2020. This adoption did not have an impact on our consolidated financial statements.

In December 2019, the FASB issued ASU 2019-12, an update to ASC Topic 740, Income Taxes. ASU 2019-12 simplifies the accounting for income taxes by (i) eliminating certain exceptions within ASC Topic 740 and (ii) clarifying and amending the existing guidance to enable consistent application of ASC Topic 740. ASU 2019-12 is effective for interim and annual reporting periods in fiscal years that begin after December 15, 2020, with early adoption permitted. We do not believe the adoption of ASU 2019-12 will have a material impact on our consolidated financial statements.

In March 2020, the FASB issued ASU 2020-04, which adds ASC Topic 848, Reference Rate Reform: Facilitation of the Effects of Reference Rate Reform on Financial Reporting. ASU 2020-04 provides temporary optional expedients and exceptions to ease financial reporting burdens related to applying current GAAP to modifications of contracts, hedging relationships and other transactions in connection with the transition from the London Interbank Offered Rate (“LIBOR”) and other interbank offered rates to alternative reference rates. In January 2021, the FASB issued ASU 2021-01 to clarify that certain optional expedients and exceptions apply to modifications of derivative contracts and certain hedging relationships affected by changes in the interest rates used for discounting cash flows, computing variation margin settlements, and for calculating price alignment interest. ASU 2020-04 is effective beginning on March 12, 2020 and may be applied prospectively to such transactions through December 31, 2022 and ASU 2021-01 is effective beginning on January 7, 2021 and may be applied retrospectively or prospectively to such transactions through December 31, 2022. We will apply ASU 2020-04 and ASU 2021-01 prospectively as and when we enter into transactions to which these updates apply.  

In April 2020, the FASB staff issued a question and answer document (the “Lease Modification Q&A”) focused on the application of lease accounting guidance to lease concessions provided as a result of the COVID-19 global pandemic. Under existing lease guidance, the entity would have to determine, on a lease by lease basis, if a lease concession was the result of a new arrangement reached with the tenant, which would be accounted for under the lease modification framework, or if a lease concession was under the enforceable rights and obligations that existed in the original lease, which would be accounted for outside the lease modification framework. The Lease Modification Q&A provides entities with the option to elect to account for lease concessions as though the enforceable rights and obligations existed in the original lease. This election is only available when total cash flows resulting from the modified lease are substantially the same as or less than the cash flows in the original lease. We have accounted for lease modifications executed as a result of COVID-19 under ASC Topic 842, Leases, and have elected not to use the option available in the Lease Modification Q&A. Accordingly, the Lease Modification Q&A did not have an impact on our consolidated financial statements.

In August 2020, the FASB issued ASU 2020-06, an update to ASC Topic 470, Subtopic - 20, Debt - Debt with Conversion and Other Options, and ASC Topic 815, Subtopic – 4, Derivatives and Hedging - Contracts in Entity's Own Equity. ASU 2020-06 simplifies the guidance for certain financial instruments with characteristics of liability and equity, including convertible instruments and contracts on an entity’s own equity by reducing the number of accounting models for convertible instruments and amends guidance in ASC Topic 260, Earnings Per Share, relating to the computation of earnings per share for convertible instruments and contracts on an entity’s own equity. ASU 2020-06 is effective for interim and annual reporting periods in fiscal years that begin after December 15, 2021, with early adoption permitted for fiscal years that begin after December 15, 2020. We are evaluating the impact of ASU 2020-06 on our consolidated financial statements.

In October 2020, the FASB issued ASU 2020-10, Codification Improvements. ASU 2020-10 codifies the disclosure guidance of all codifications which provide entities with an option to either present information on the face or disclose it in the notes to the financial statements. ASU 2020-10 also clarifies application of various provisions in the codifications where the guidance may have been unclear. ASU 2020-10 is effective for interim and annual reporting periods in fiscal years that begin after December 15, 2020, with early adoption permitted. We do not believe the adoption of ASU 2020-10 will have a material impact on our consolidated financial statements.

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Dispositions and Discontinued Operations

12 Months Ended

Dec. 31, 2020

Assets Of Disposal Group Including Discontinued Operation [Abstract]

Dispositions and Discontinued Operations

3. Dispositions and Discontinued Operations

Dispositions

1633 Broadway

On May 27, 2020, we completed the sale of a 10.0% interest in 1633 Broadway, a 2.5 million square foot trophy office building located in New York City. The transaction valued the property at $2.4 billion, or $960 per square foot and included the assumption of the existing $1.25 billion mortgage loan. Accordingly, we realized net proceeds of $111,984,000 from the sale after transaction costs. Since we retained a controlling financial interest in 1633 Broadway and continue to consolidate the financial position and results of operations into our consolidated financial statements, the sale of the 10.0% interest was accounted for as an equity transaction.  

Discontinued Operations

During the past three years, we sold the remaining assets in our Washington, D.C. portfolio, thereby exiting the Washington, D.C. office market. These dispositions represented a strategic shift in our operations and met the criteria of discontinued operations, under ASC Topic 205, Presentation of Financial Statements. Accordingly, we have reclassified the assets and liabilities and the results of operations of our Washington, D.C. segment as discontinued operations for all periods presented.

1899 Pennsylvania Avenue

On December 24, 2020, we completed the sale of 1899 Pennsylvania Avenue, a 191,000 square foot trophy office building located in Washington, D.C., for $103,000,000. We realized net proceeds of $89,206,000 from the sale after transaction costs and recognized a loss of $12,766,000, which is included as a component of “(loss) income from discontinued operations, net” on our consolidated statement of income for the year ended December 31, 2020.

Liberty Place

On September 26, 2019, we sold Liberty Place, a 172,000 square foot office building in Washington, D.C., for $154,500,000. In connection therewith, we recognized a gain of $1,140,000, which is included as a component of “(loss) income from discontinued operations, net” on our consolidated statement of income for the year ended December 31, 2019.

425 Eye Street

On September 27, 2018, we sold 425 Eye Street, a 373,000 square foot Class A office building in Washington, D.C., for $157,000,000. In connection therewith, we recognized a gain of $1,009,000, which is included as a component of “(loss) income from discontinued operations, net” on our consolidated statement of income for the year ended December 31, 2018.

2099 Pennsylvania Avenue

On August 9, 2018, we sold 2099 Pennsylvania Avenue, a 209,000 square foot Class A office building in Washington, D.C., for $219,000,000. In connection therewith, we recognized a gain of $35,836,000, which is included as a component of “(loss) income from discontinued operations, net” on our consolidated statement of income for the year ended December 31, 2018.

The tables below set forth the details of the assets and liabilities, results of operations and the details of the cash flows related to discontinued operations as of the dates thereof and for the periods set forth below.

(Amounts in thousands)	As of
Balance Sheet: (1)	December 31, 2019
Real estate, net	$	94,251
Deferred rent receivable		4,206
Deferred charges, net		804
Intangible assets, net		5,575
Assets related to discontinued operations	$	104,836

(Amounts in thousands)	For the Year Ended December 31,
Income Statements: (2)	2020			2019			2018
Revenues:
Rental revenue	$	13,967		$	24,969		$	50,157
Other income		276			457			1,133
Total revenues		14,243			25,426			51,290
Expenses:
Operating		5,853			10,134			19,381
Depreciation and amortization		690			8,243			17,357
Total expenses		6,543			18,377			36,738
Other income (expense):
Interest and other income, net		-			-			181
Real estate impairment loss		-			(42,000	)		(46,000	)
Income (loss) before gain or loss on sale of real estate		7,700			(34,951	)		(31,267	)
(Loss) gain on sale of real estate (3)		(12,766	)		1,140			36,845
(Loss) income before income taxes		(5,066	)		(33,811	)		5,578
Income tax expense		(9	)		-			-
(Loss) income from discontinued operations, net	$	(5,075	)	$	(33,811	)	$	5,578

	For the Year Ended December 31,
Statements of Cash Flows: (2)	2020			2019			2018
Cash provided by operating activities	$	5,522		$	15,949		$	25,416
Cash provided by investing activities
Proceeds from sale of real estate (4)	$	89,206		$	150,307		$	349,013
Additions to real estate		-			(1,514	)		(4,003	)
Total cash provided by investing activities	$	89,206		$	148,793		$	345,010
Cash used in financing activities	$	(96,896	)	$	(162,294	)	$	(370,626	)
Additional Cash Flow Information:
Depreciation and amortization	$	690		$	8,243		$	17,357

⁽¹⁾ Represents assets of 1899 Pennsylvania Avenue.

⁽²⁾ Represents revenues, expenses, net income, and cash flow information of 1899 Pennsylvania Avenue in the year ended December 31, 2020, 1899 Pennsylvania Avenue and Liberty Place in the year ended December 31, 2019 and 1899 Pennsylvania Avenue, Liberty Place, 425 Eye Street and 2099 Pennsylvania Avenue in the year ended December 31, 2018.

⁽³⁾ Represents the loss on sale of 1899 Pennsylvania Avenue in 2020, gain on sale of Liberty Place in 2019, and gain on sale of 425 Eye Street and 2099 Pennsylvania Avenue in 2018. 

⁽⁴⁾ Represents the proceeds from the sale of 1899 Pennsylvania Avenue in 2020, Liberty Place in 2019, and 425 Eye Street and 2099 Pennsylvania Avenue in 2018.

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Investments in Unconsolidated Joint Ventures

12 Months Ended

Dec. 31, 2020

Equity Method Investments And Joint Ventures [Abstract]

Investments in Unconsolidated Joint Ventures

4. 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 December 31,
Our Share of Investments:	Ownership	2020		2019
712 Fifth Avenue (1)	50.0%	$	-	$	-
Market Center	67.0%		192,306		219,593
55 Second Street (2)	44.1%		92,298		95,384
111 Sutter Street	49.0%		37,818		41,519
60 Wall Street (2)	5.0%		19,164		19,777
One Steuart Lane (2)	35.0% (3)		67,505		69,536
Oder-Center, Germany (2)	9.5%		3,633		3,371
Investments in unconsolidated joint ventures		$	412,724	$	449,180

(Amounts in thousands)	For the Year Ended December 31,
Our Share of Net (Loss) Income:	2020			2019			2018
712 Fifth Avenue (1)	$	687		$	1,849		$	3,901
Market Center (4)		(11,315	)		(744	)		-
55 Second Street (2)(5)		(2,723	)		(826	)		-
111 Sutter Street (6)		(3,172	)		(4,394	)		-
60 Wall Street (2)		(70	)		(551	)		(518	)
One Steuart Lane (2)		(2,043	)		(118	)		(18	)
Oder-Center, Germany (2)		17			78			103
(Loss) income from unconsolidated joint ventures	$	(18,619	)	$	(4,706	)	$	3,468

⁽¹⁾ As of December 31, 2020, our basis in the partnership that owns 712 Fifth Avenue, was negative $22,345 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 December 31, 2020, the carrying amount of our investments in 55 Second Street, 60 Wall Street, One Steuart Lane and Oder-Center, Germany is greater than our share of equity in these investments by $489, $2,665, $970, $4,819, respectively, and primarily represents the unamortized portion of our capitalized acquisition costs. Basis differences allocated to depreciable assets are being amortized into “(loss) income from unconsolidated joint ventures” over the estimated useful life of the related assets.

⁽³⁾ Represents our consolidated Residential Development Fund’s economic interest in One Steuart Lane.

⁽⁴⁾ Acquired on December 11, 2019.

⁽⁵⁾ Acquired on August 21, 2019.

⁽⁶⁾ Acquired on February 7, 2019.

The following tables provide the combined summarized financial information of our unconsolidated joint ventures as of the dates and for the periods set forth below.

(Amounts in thousands)	As of December 31,
Balance Sheets:	2020		2019
Real estate, net	$	2,674,858	$	2,581,738
Cash and cash equivalents and restricted cash		120,149		75,071
Intangible assets, net		110,307		172,041
Other assets		45,761		36,218
Total assets	$	2,951,075	$	2,865,068
Notes and mortgages payable, net	$	1,801,084	$	1,648,403
Intangible liabilities, net		26,772		38,377
Other liabilities		87,575		65,759
Total liabilities		1,915,431		1,752,539
Equity		1,035,644		1,112,529
Total liabilities and equity	$	2,951,075	$	2,865,068

(Amounts in thousands)	For the Year Ended December 31,
Income Statements:	2020			2019			2018
Revenues:
Rental revenue	$	243,713		$	164,316		$	140,653
Other income		2,828			2,108			6,827
Total revenues		246,541			166,424			147,480
Expenses:
Operating		109,114			68,491			53,417
Depreciation and amortization		117,640			68,318			48,452
Total expenses		226,754			136,809			101,869
Other (expense) income:
Interest and other (loss) income, net		(36	)		663			803
Interest and debt expense		(58,239	)		(51,113	)		(39,406	)
Net (loss) income before income taxes		(38,488	)		(20,835	)		7,008
Income tax expense		(47	)		(16	)		(10	)
Net (loss) income	$	(38,535	)	$	(20,851	)	$	6,998

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Investments in Unconsolidated Real Estate Funds

12 Months Ended

Dec. 31, 2020

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 VIII, LP (“Fund VIII”) and Paramount Group Real Estate Fund X, LP and its parallel fund, Paramount Group Real Estate Fund X-ECI, LP, (collectively “Fund X”), our Alternative Investment Funds, which invest in mortgage and mezzanine loans and preferred equity investments. Fund VIII’s investment period ended in April 2020. As of December 31, 2020, Fund X has invested $78,791,000 of the $192,000,000 of capital committed. Our ownership interest in Fund VIII and Fund X was approximately 1.3% and 7.8%, respectively.

We are also 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”), our Property Funds. On January 25, 2019, Fund VII and Fund VII-H sold their only remaining asset, 0 Bond Street, a 65,000 square foot creative office building in the NoHo submarket of Manhattan.

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 December 31,
(Amounts in thousands)	2020		2019
Our Share of Investments:
Alternative Investment Funds	$	12,878	$	10,284
Property Funds		39		33
Investments in unconsolidated real estate funds	$	12,917	$	10,317

	For the Year Ended December 31,
(Amounts in thousands)	2020			2019			2018
Our Share of Net Income (Loss):
Net investment income	$	626		$	539		$	291
Net realized loss		(2	)		(54	)		-
Net unrealized loss		(352	)		(828	)		(560	)
Income (loss) from unconsolidated real estate funds	$	272		$	(343	)	$	(269	)

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Intangible Assets and Liabilities

12 Months Ended

Dec. 31, 2020

Goodwill And Intangible Assets Disclosure [Abstract]

Intangible Assets and Liabilities

6. Intangible Assets and Liabilities

The following tables summarize 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 thereof and for the periods set forth below.

	As of December 31,
(Amounts in thousands)	2020			2019
Intangible assets:
Gross amount	$	436,851		$	466,099
Accumulated amortization		(283,332	)		(262,930	)
	$	153,519		$	203,169
Intangible liabilities:
Gross amount	$	163,977		$	174,670
Accumulated amortization		(107,981	)		(100,881	)
	$	55,996		$	73,789

	For the Year Ended December 31,
(Amounts in thousands)	2020		2019		2018
Amortization of above and below-market leases, net    (component of "rental revenue")	$	4,775	$	11,097	$	14,652
Amortization of acquired in-place leases    (component of "depreciation and amortization")	$	36,628	$	46,917	$	54,208

The following table 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, 2021.

(Amounts in thousands) For the Year Ending December 31,	Above and Below-Market Leases, Net		In-Place Leases
2021	$	3,567	$	26,375
2022		1,629		21,878
2023		5,056		17,811
2024		5,994		14,342
2025		4,633		10,435

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Debt

12 Months Ended

Dec. 31, 2020

Debt Disclosure [Abstract]

Debt

7. Debt

The following table summarizes our consolidated outstanding debt.

	Maturity	Fixed/	Interest Rate as of			As of December 31,
(Amounts in thousands)	Date	Variable Rate	December 31, 2020			2020			2019
Notes and mortgages payable:
1633 Broadway (1)	Dec-2029	Fixed		2.99	%	$	1,250,000		$	1,250,000
One Market Plaza (1)	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		1.99	%		350,000			350,000
				2.61	%		850,000			850,000
31 West 52nd Street	May-2026	Fixed		3.80	%		500,000			500,000
300 Mission Street (1)	Oct-2023	Fixed		3.65	%		244,434			234,643
Total notes and mortgages payable				3.32	%		3,819,434			3,809,643
Less: unamortized deferred financing costs							(18,695	)		(25,792	)
Total notes and mortgages payable, net						$	3,800,739		$	3,783,851
$1.0 Billion Revolving Credit    Facility	Jan-2022 (2)	L + 115 bps	n/a			$	-		$	36,918

⁽¹⁾ Our ownership interest in 1633 Broadway, One Market Plaza and 300 Mission Street is 90.0%, 49.0% and 31.1%, respectively.

⁽²⁾ The $1.0 billion revolving credit facility matures on January 10, 2022 and has two six-month extension options.

The following table summarizes our principal repayments required for the next five years and thereafter in connection with our consolidated notes and mortgages payable and revolving credit facility as of December 31, 2020.

			Notes and		Revolving
(Amounts in thousands)	Total		Mortgages Payable		Credit Facility
2021	$	850,000	$	850,000	$	-
2022		-		-		-
2023		244,434		244,434		-
2024		975,000		975,000		-
2025		-		-		-
Thereafter		1,750,000		1,750,000		-

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Equity

12 Months Ended

Dec. 31, 2020

Stockholders Equity Note [Abstract]

Equity

8. Equity

Stock Repurchase Program

On November 5, 2019, we received authorization from our Board of Directors to repurchase up to an additional $200,000,000 of our common stock, from time to time, in the open market or in privately negotiated transactions. During 2020, we repurchased 13,813,158 common shares at a weighted average price of $8.69 per share, or $120,000,000 in the aggregate. We have $80,000,000 available for future repurchases under the existing program. The amount and timing of future repurchases, if any, will depend on a number of factors, including, the price and availability of our shares, trading volume, general market conditions and available funding. The stock repurchase program may be suspended or discontinued at any time.

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Accumulated Other Comprehensive Loss

12 Months Ended

Dec. 31, 2020

Accumulated Other Comprehensive Income Loss Net Of Tax [Abstract]

Accumulated Other Comprehensive Loss

9. Accumulated Other Comprehensive Loss

The following table sets forth changes in accumulated other comprehensive loss by component for the years ended December 31, 2020, 2019 and 2018, including amounts attributable to noncontrolling interests in the Operating Partnership.

	For the Year Ended December 31,
(Amounts in thousands)	2020			2019			2018
Amount of (loss) income related to unconsolidated joint ventures    recognized in other comprehensive (loss) income (1)	$	(16,141	)	$	206		$	(129	)
Amounts reclassified from accumulated other comprehensive    loss increasing loss from unconsolidated joint ventures (1)		2,247			-			-
Amount of (loss) income related to the cash flow hedges    recognized in other comprehensive (loss) income (2)		-			(23,147	)		9,203
Amount reclassified from accumulated other comprehensive    loss decreasing interest and debt expense (2)		-			(4,922	)		(1,930	)
Amount reclassified to loss on early extinguishment of debt (3)		-			11,258			-

⁽¹⁾ Represents amounts related to interest rate swap with a notional value of $402,000, which was designated as cash flow hedge.

⁽²⁾ Represents amounts related to interest rate swaps with an aggregate notional amount of $1.0 billion and forward starting interest rate swaps with an aggregate notional amount of $400,000 that were designated as cash flow hedges. These hedges were terminated in November 2019 in connection with the refinancing of the related asset.

⁽³⁾ Represents costs incurred in connection with the settlement of interest rate swap liabilities upon the refinancing of 1633 Broadway in November 2019.

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Noncontrolling Interests

12 Months Ended

Dec. 31, 2020

Noncontrolling Interest [Abstract]

Noncontrolling Interests

10. Noncontrolling Interests

Consolidated Joint Ventures

Noncontrolling interests in consolidated joint ventures as of December 31, 2020 was $437,161,000, and represents the equity interests held by third parties in 1633 Broadway, One Market Plaza and 300 Mission Street. As of December 31, 2019, noncontrolling interests in consolidated joint ventures was $360,778,000, and represented equity interests held by third parties in One Market Plaza and 300 Mission Street.  

Consolidated Real Estate Fund

Noncontrolling interests in our consolidated real estate fund consists of equity interests held by third parties in our Residential Development Fund. As of December 31, 2020 and 2019, the noncontrolling interest in our consolidated real estate fund aggregated $79,017,000 and $72,396,000, 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 December 31, 2020 and 2019, noncontrolling interests in the Operating Partnership on our consolidated balance sheets had a carrying amount of $346,379,000 and $412,058,000, respectively, and a redemption value of $187,640,000 and $344,638,000, respectively.

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Variable Interest Entities ("VIEs")

12 Months Ended

Dec. 31, 2020

Variable Interest Entities [Abstract]

Variable Interest Entities ("VIEs")

11. Variable Interest Entities (“VIEs”)

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 owned approximately 91.3% of, the Operating Partnership as of December 31, 2020. 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 December 31, 2020 and 2019, the Operating Partnership held interests in consolidated VIEs owning properties and a real estate fund 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 following table summarizes the assets and liabilities of consolidated VIEs of the Operating Partnership.

	As of December 31,
(Amounts in thousands)	2020		2019
Real estate, net	$	3,470,766	$	1,685,391
Cash and cash equivalents and restricted cash		134,647		69,828
Investments in unconsolidated joint ventures		67,505		69,535
Accounts and other receivables		6,871		2,140
Deferred rent receivable		192,401		57,338
Deferred charges, net		55,156		24,030
Intangible assets, net		76,545		29,872
Other assets		21,496		21,132
Total VIE assets	$	4,025,387	$	1,959,266
Notes and mortgages payable, net	$	2,457,272	$	1,205,324
Accounts payable and accrued expenses		51,590		35,252
Intangible liabilities, net		33,566		19,841
Other liabilities		4,486		13,047
Total VIE liabilities	$	2,546,914	$	1,273,464

Unconsolidated VIEs

As of December 31, 2020, the Operating Partnership held variable interests in entities that own our unconsolidated real estate funds that were deemed to be VIEs. The following table summarizes our investments in these unconsolidated real estate funds and the maximum risk of loss from these investments.

	As of December 31,
(Amounts in thousands)	2020		2019
Investments	$	12,917	$	10,317
Asset management fees and other receivables		561		37,563	(1)
Maximum risk of loss	$	13,478	$	47,880

⁽¹⁾ Includes a $36,918 note receivable from Fund X that was repaid on March 27, 2020. See Note 20, Related Parties.

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Fair Value Measurements

12 Months Ended

Dec. 31, 2020

Fair Value Disclosures [Abstract]

Fair Value Measurements

12. Fair Value Measurements

Financial Assets Measured at Fair Value

The following table summarizes the fair value of our financial assets that are measured at fair value on our consolidated balance sheets as of the dates set forth below, based on their levels in the fair value hierarchy.

	As of December 31, 2020
(Amounts in thousands)	Total		Level 1		Level 2		Level 3
Marketable securities (included in "other assets")	$	17,178	$	17,178	$	-	$	-
Total assets	$	17,178	$	17,178	$	-	$	-
	As of December 31, 2019
(Amounts in thousands)	Total		Level 1		Level 2		Level 3
Marketable securities (included in "other assets")	$	21,639	$	21,639	$	-	$	-
Total assets	$	21,639	$	21,639	$	-	$	-

Financial Liabilities Not Measured at Fair Value

Financial liabilities not measured at fair value on our consolidated balance sheets consist of notes and mortgages payable and the revolving credit facility. The following table summarizes the carrying amounts and fair value of these financial instruments as of the dates set forth below.

	As of December 31, 2020				As of December 31, 2019
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Notes and mortgages payable	$	3,819,434	$	3,871,644	$	3,809,643	$	3,848,266
Revolving credit facility		-		-		36,918		36,919
Total liabilities	$	3,819,434	$	3,871,644	$	3,846,561	$	3,885,185

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Leases

12 Months Ended

Dec. 31, 2020

Leases [Abstract]

Leases

13. Leases

The following table sets forth the details of our rental revenue.

	For the Year Ended December 31,
(Amounts in thousands)	2020			2019		2018
Rental revenue:
Fixed	$	627,352	(1)	$	647,345	$	626,745
Variable		51,663			62,163		50,393
Total rental revenue	$	679,015		$	709,508	$	677,138

⁽¹⁾ Includes (i) $33,205 of non-cash write-offs, primarily for straight-line rent receivables and (ii) $2,051 of reserves for uncollectible accounts receivable in the year ended December 31, 2020.

The following table is a schedule of future undiscounted cash flows under non-cancelable operating leases in effect as of December 31, 2020, for each of the five succeeding years commencing January 1, 2021.

(Amounts in thousands)
2021	$	638,723
2022		631,503
2023		606,371
2024		579,138
2025		519,018
Thereafter		2,367,495
Total	$	5,342,248

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Fee and Other Income

12 Months Ended

Dec. 31, 2020

Revenues [Abstract]

Fee and Other Income

14. Fee and Other Income

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

	For the Year Ended December 31,
(Amounts in thousands)	2020		2019		2018
Fee income:
Asset management	$	14,266	$	10,442	$	7,912
Property management		9,242		6,852		6,163
Acquisition, disposition and leasing		2,629		3,435		3,160
Other		1,933		2,015		1,394
Total fee income		28,070		22,744		18,629
Other income (1)		7,152		11,502		11,904
Total fee and other income	$	35,222	$	34,246	$	30,533

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

The following table 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, 2019	$	2,413	$	752	$	1,653	$	-	$	8
Balance as of December 31, 2020		5,179		793		1,949		2,259		178
Increase	$	2,766	$	41	$	296	$	2,259	$	170

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Interest and Other Income, net

12 Months Ended

Dec. 31, 2020

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, net.

	For the Year Ended December 31,
(Amounts in thousands)	2020		2019		2018
Interest income, net	$	2,054	$	5,484	$	5,203
Mark-to-market of investments in our deferred    compensation plans (1)		2,436		3,906		(922	)
Preferred equity investment income (2)		-		454		3,655
Total interest and other income, net	$	4,490	$	9,844	$	7,936

⁽¹⁾ 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.

⁽²⁾ The preferred equity investment was redeemed on March 1, 2019.

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Interest and Debt Expense

12 Months Ended

Dec. 31, 2020

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 Year Ended December 31,
(Amounts in thousands)	2020		2019			2018
Interest expense	$	134,931	$	137,356		$	136,630
Amortization of deferred financing costs		9,277		19,323	(1)		11,023
Total interest and debt expense	$	144,208	$	156,679		$	147,653

⁽¹⁾ Includes $8,215 of expense from the non-cash write-off of deferred financing costs in connection with the $1.25 billion refinancing of 1633 Broadway in November 2019.

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Incentive Compensation

12 Months Ended

Dec. 31, 2020

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Incentive Compensation

17. Incentive Compensation

Stock-Based Compensation

Our 2014 Equity Incentive Plan (the “Plan”), provides for grants of equity incentive awards to our executive officers, non-employee directors, eligible employees and other key persons in order to attract, motivate and retain the talent for which we compete. Under the Plan, awards may be granted up to a maximum of 17,142,857 shares, if all awards granted are “full value awards,” as defined, and up to 34,285,714 shares, if all of the awards granted are “not full value awards,” as defined. “Full value awards” are awards such as restricted stock or long-term incentive plan LTIP units of our Operating Partnership (“LTIP units”) that do not require the payment of an exercise price. “Not full value awards” are awards such as Appreciation Only LTIP units of our Operating Partnership (“AOLTIPs”), stock options or stock appreciation rights that require the payment of an exercise price. As of December 31, 2020, we have 7,001,002 shares available for future grants under the Plan, if all awards granted are full value awards, as defined in the Plan.

The following table summarizes the components of stock-based compensation expense for the years ended December 31, 2020, 2019 and 2018.

	For the Year Ended December 31,
(Amounts in thousands)	2020		2019		2018
LTIP units	$	10,463	$	11,860	$	9,059
Performance-based units		7,499		8,477		7,645
Restricted stock		1,217		1,228		988
Stock options		60		1,295		1,954
Total stock-based compensation expense	$	19,239	$	22,860	$	19,646

LTIP Units

We grant our executive officers, non-employee directors and other employees LTIP units which vest over a period of three to five years and are subject to a taxable book-up event, as defined. The LTIP units granted in the years ended December 31, 2020, 2019 and 2018 had grant date fair values of $10,940,000, $13,091,000 and $10,145,000, respectively, which are being amortized into expense on a straight-line basis over the vesting period. As of December 31, 2020, there was $12,970,000 of total unrecognized compensation cost related to unvested LTIP units, which is expected to be recognized over a weighted-average period of 2.6 years. The following table summarizes our LTIP unit activity for the year ended December 31, 2020.

	Units			Weighted-Average Grant-Date Fair Value
Unvested as of December 31, 2019		1,571,464		$	13.30
Granted		931,855			11.74
Vested		(778,510	)		13.51
Cancelled or expired		-			-
Unvested as of December 31, 2020		1,724,809		$	12.36

Performance-Based Award Programs (“Performance Programs”)

We grant our executive officers and other employees LTIP units under multi-year performance-based long-term equity compensation programs. The purpose of these Performance Programs 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 Performance Programs, participants may earn LTIP units based on our Total Shareholder Return (“TSR”) over a three-year performance measurement period on both an absolute basis and relative basis. If the designated performance objectives are achieved, awards earned under the Performance Programs are subject to vesting over a period of four years and are also subject to a taxable book-up event, as defined.

The LTIP units granted under the Performance Programs in the years ended December 31, 2020, 2019 and 2018 had grant date fair values of $7,488,000, $8,106,000 and $7,009,000, respectively, and are being amortized into expense over the four-year vesting period using a graded vesting attribution method. As of December 31, 2020, there was $8,999,000 of total unrecognized compensation cost related to unvested LTIP units granted under the Performance Programs, which is expected to be recognized over a weighted average period of 2.1 years. The following table summarizes our LTIP unit activity granted under the Performance Programs for the year ended December 31, 2020.

	Units			Weighted-Average Grant-Date Fair Value (per unit)
Unvested as of December 31, 2019		3,595,834		$	6.54
Granted		1,068,693			7.01
Earned and Vested		(216,005	)		9.71
Cancelled or expired		(667,730	)		9.71
Unvested as of December 31, 2020		3,780,792		$	5.93

2016 Performance-Based Awards Program (“2016 Performance Program”)

The three-year performance measurement period with respect to our 2016 Performance Program ended on December 31, 2019. On January 17, 2020, the Compensation Committee of our Board of Directors (the “Compensation Committee”) determined that (i) the performance goals were not met on an absolute TSR basis and (ii) the performance goals met the 30^th percentile of the performance of the SNL U.S. Office REIT Index constituents on a relative basis. Accordingly, of the 1,085,244 LTIP units that were granted under the 2016 Performance Program, 216,005 LTIP units, or approximately 19.9% of the total units granted, were earned. Of the LTIP units that were earned, 107,996 LTIP units vested immediately on January 17, 2020 and the remaining 108,009 LTIP units vested on December 31, 2020. This award had a grant date fair value of $10,520,000 that was amortized into expense over the four-year vesting period through December 31, 2020 using a graded vesting distribution method.

2019 Performance-Based Awards Program (“2019 Performance Program”)

On January 17, 2020, the Compensation Committee approved the 2019 Performance Program, a multi-year performance-based long-term incentive compensation program. Under the 2019 Performance Program, participants may earn awards in the form of LTIP units based on our TSR over a three-year performance measurement period beginning on January 1, 2020 and continuing through December 31, 2022. Specifically, 50.0% of the awards would be earned based on the rank of our TSR relative to the TSR of our Central Business District focused New York City office peers, comprised of Vornado Realty Trust, SL Green Realty Corp., Empire State Realty Trust and Columbia Property Trust, and the remaining 50.0% of the awards would be earned based on the percentile rank of our TSR relative to performance of the SNL U.S. Office REIT Index constituents. Furthermore, if our TSR is negative over the three-year performance measurement period, then the number of LTIP units that are earned under the 2019 Performance Program will be reduced by 30.0% of the number of such awards that otherwise would have been earned. Additionally, if the designated performance objectives are achieved, awards earned under the 2019 Performance Program are subject to vesting based on continued employment with us through December 31, 2023, with 50.0% of each award vesting upon the conclusion of the performance measurement period, and the remaining 50.0% vesting on December 31, 2023. Lastly, 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 2019 Performance Program on the date of the grant was $7,488,000 and is being amortized into expense over the four-year vesting period using a graded vesting attribution method.

Restricted Stock

We grant shares of restricted stock to a non-employee director and certain other employees which vest over four years. The shares of restricted stock granted in the years ended December 31, 2020, 2019 and 2018 had grant date fair values of $1,209,000, $1,238,000 and $1,335,000, respectively, which are being amortized into expense on a straight-line basis over the vesting period. As of December 31, 2020, there was $1,696,000 of total unrecognized compensation cost related to restricted stock, which is expected to be recognized over a weighted-average period of 2.3 years. The table below summarizes our restricted stock activity for the year ended December 31, 2020.

	Shares			Weighted-Average Grant-Date Fair Value
Unvested as of December 31, 2019		168,470		$	14.27
Granted		92,424			13.08
Vested		(75,895	)		14.71
Cancelled or expired		(16,291	)		14.09
Unvested as of December 31, 2020		168,708		$	13.44

Stock Options

We did not grant any stock options in the years ended December 31, 2020, 2019 and 2018. Stock options granted in prior years to certain of our executive officers and other employees vest over periods ranging from three to five years and expire 10 years from the date of grant. In the year ended December 31, 2020, we have recognized the remaining $60,000 of compensation cost related to unvested stock options.

The following table summarizes our stock option activity for the year ended December 31, 2020.

	Shares			Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value
Outstanding as of December 31, 2019		2,084,943		$	17.07
Granted		-			-
Exercised		-			-
Cancelled or expired		(52,450	)		17.50
Outstanding as of December 31, 2020		2,032,493		$	17.06		4.7	$	-
Options vested and expected to vest as of December 31, 2020		2,032,493		$	17.06		4.7	$	-
Options exercisable as of December 31, 2020		2,032,493		$	17.06		4.7	$	-

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Earnings Per Share

12 Months Ended

Dec. 31, 2020

Earnings Per Share [Abstract]

Earnings Per Share

18. Earnings Per Share

The following table summarizes our net (loss) income and the number of common shares used in the computation of basic and diluted (loss) 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 Year Ended December 31,
(Amounts in thousands, except per share amounts)	2020			2019			2018
Numerator:
Continuing Operations:
Net (loss) income from continuing operations          attributable to common stockholders	$	(20,063	)	$	(6,418	)	$	4,079
Earnings allocated to unvested participating securities		(44	)		(27	)		(18	)
Numerator for net (loss) income from continuing operations          per common share - basic and diluted		(20,107	)		(6,445	)		4,061
Discontinued Operations:
Net (loss) income from discontinued operations attributable          to common stockholders		(4,641	)		(30,481	)		5,068
Earnings allocated to unvested participating securities		(22	)		(44	)		(61	)
Numerator for net (loss) income from discontinued          operations per common share - basic and diluted		(4,663	)		(30,525	)		5,007
Numerator for net (loss) income per common share -    basic and diluted	$	(24,770	)	$	(36,970	)	$	9,068
Denominator:
Denominator for basic (loss) income per common share -       weighted average shares		222,436			231,538			239,527
Effect of dilutive stock-based compensation plans (1)		-			-			29
Denominator for diluted (loss) income per common share -       weighted average shares		222,436			231,538			239,556
(Loss) income per Common Share - Basic and Diluted:
Continuing operations, net	$	(0.09	)	$	(0.03	)	$	0.02
Discontinued operations, net		(0.02	)		(0.13	)		0.02
Net (loss) income per common share - basic and diluted	$	(0.11	)	$	(0.16	)	$	0.04

⁽¹⁾ The effect of dilutive securities for the years ended December 31, 2020, 2019 and 2018 excludes 23,540, 27,191 and 27,510 weighted average share equivalents, respectively, as their effect was anti-dilutive.

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Summary of Quarterly Results (unaudited)

12 Months Ended

Dec. 31, 2020

Quarterly Financial Information Disclosure [Abstract]

Summary of Quarterly Results (unaudited)

19. Summary of Quarterly Results (unaudited)

The following table summarizes our quarterly results of operations for the years ended December 31, 2020 and 2019. The computation of basic and diluted per common share amounts for each quarter is based on the weighted average shares outstanding for that period and accordingly the sum of the quarters may not necessarily be equal to the full year basic and diluted net income per common share.

			Net (Loss) Income
(Amounts in thousands,			Attributable to the			(Loss) Income per Common Share
except per share amounts)	Revenues		Common Stockholders			Basic			Diluted
2020
December 31	$	182,358	$	(14,824	)	$	(0.07	)	$	(0.07	)
September 30		176,775		(6,958	)		(0.03	)		(0.03	)
June 30		171,118		(6,270	)		(0.03	)		(0.03	)
March 31		183,986		3,348			0.01			0.01
2019
December 31	$	186,769	$	(50,145	)	$	(0.22	)	$	(0.22	)
September 30		191,253		7,082			0.03			0.03
June 30		181,343		2,455			0.01			0.01
March 31		184,389		3,709			0.02			0.02

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Related Parties

12 Months Ended

Dec. 31, 2020

Related Party Transactions [Abstract]

Related Parties

20. Related Parties

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 $1,227,000, $842,000 and $838,000 for the years ended December 31, 2020, 2019 and 2018, respectively, in connection with these agreements, which is included as a component of “fee and other income” on our consolidated statements of income. As of December 31, 2020, amounts owed to us under these agreements aggregated $34,000, which are included as a component of “accounts and other receivables” on our consolidated balance sheets.  

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 $22,986,000, $17,466,000 and $15,231,000, for the years ended December 31, 2020, 2019 and 2018, respectively, in connection with these agreements. As of December 31, 2020 and 2019, amounts owed to us under these agreements aggregated $5,011,000 and $2,734,000, respectively, which are included as a component of “accounts and other receivables” 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 feeder vehicles for Fund X. Pursuant to this agreement, we have agreed to pay HTC for the costs incurred to sell investments in these funds or their feeder vehicles, including certain incremental costs incurred by HTC as a result of the engagement, plus, a mark-up of 10%. HTC is 100% owned by Albert Behler, our Chairman, Chief Executive Officer and President. We incurred expenses of $512,000, $796,000 and $240,000 for the years ended December 31, 2020, 2019 and 2018, respectively, in connection with this agreement, which are included as a component of “transaction related costs” on our consolidated statements of income. As of December 31, 2020 and 2019, we owed $123,000 and $38,000, respectively, to HTC under this agreement, which are included as a component of “accounts payable and accrued expenses” on our consolidated balance sheets.

Mannheim Trust

A subsidiary of Mannheim Trust leases office space at 712 Fifth Avenue, our 50.0% owned unconsolidated joint venture, pursuant to a lease agreement which expires in April 2023. Dr. Martin Bussmann (a member of our Board of Directors) is also a trustee and a director of Mannheim Trust. During the years ended December 31, 2020, 2019 and 2018, we recognized $362,000, $360,000 and $366,000, respectively, for our share of rental income pursuant to this lease.

Due from Affiliates

At December 31, 2019, we had a $36,918,000 note receivable from Fund X that bore interest at LIBOR plus 220 basis points and was included as “due from affiliates” on our consolidated balance sheet. On March 27, 2020, the $36,918,000 note receivable was repaid, together with $349,000 of accrued interest.

Other

We have entered into an agreement with Kramer Design Services (“Kramer Design”) to, among other things, develop company-wide standard branding guidelines. Kramer Design is owned by the spouse of Albert Behler, our Chairman, Chief Executive Officer and President. During the year ended December 31, 2020, we recognized $187,000 of expenses in connection with this agreement. There were no amounts owed to Kramer Design under this agreement as of December 31, 2020.

Kramer Design has also entered into agreements with 712 Fifth Avenue, our 50.0% owned unconsolidated joint venture, to, among other things, create and design marketing materials with respect to the vacant retail space at 712 Fifth Avenue. For the year ended December 31, 2020 and 2019, we recognized expense of $29,000 and $325,000, respectively, for our share of the fees incurred in connection with these agreements.

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Commitments and Contingencies

12 Months Ended

Dec. 31, 2020

Commitments And Contingencies Disclosure [Abstract]

Commitments and Contingencies

21.  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 December 31, 2020, 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 with the actual purchase occurring no earlier than 12 months after written notice is provided. 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. We believe, after consultation with legal counsel, that the likelihood of a 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 $47,700,000. 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.

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Segments

12 Months Ended

Dec. 31, 2020

Segment Reporting [Abstract]

Segments

22. Segments

Our reportable segments are separated based on the regions in which we conduct our business. Prior to January 1, 2020, our reportable segments consisted of New York, San Francisco and Washington, D.C. Upon entering into an agreement to sell 1899 Pennsylvania Avenue, our sole remaining property in the Washington, D.C. segment, we redefined our reportable segments into the two remaining regions in which we conduct our business: New York and San Francisco effective January 1, 2020. 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. In connection therewith, we have reclassified the Washington, D.C. segment financial data into Other segment and reclassified prior period segment financial data to conform to current period presentation.

The following tables provide Net Operating Income (“NOI”) for each reportable segment for the periods set forth below.

	For the Year Ended December 31, 2020
(Amounts in thousands)	Total			New York			San Francisco			Other
Property-related revenues	$	700,410		$	454,071		$	234,893		$	11,446
Property-related operating expenses		(273,440	)		(194,648	)		(68,924	)		(9,868	)
NOI from unconsolidated joint ventures		48,631			11,540			38,892			(1,801	)
NOI (1)	$	475,601		$	270,963		$	204,861		$	(223	)
	For the Year Ended December 31, 2019
(Amounts in thousands)	Total			New York			San Francisco			Other
Property-related revenues	$	746,436		$	482,648		$	238,808		$	24,980
Property-related operating expenses		(274,836	)		(191,211	)		(69,815	)		(13,810	)
NOI from unconsolidated joint ventures		22,409			13,151			9,065			193
NOI (1)	$	494,009		$	304,588		$	178,058		$	11,363
	For the Year Ended December 31, 2018
(Amounts in thousands)	Total			New York			San Francisco			Other
Property-related revenues	$	740,332		$	468,013		$	222,071		$	50,248
Property-related operating expenses		(274,078	)		(188,008	)		(60,043	)		(26,027	)
NOI from unconsolidated joint ventures		20,730			20,395			-			335
NOI (1)	$	486,984		$	300,400		$	162,028		$	24,556

⁽¹⁾ NOI is used to measure the operating performance of our properties. NOI consists of rental revenue (which includes property rentals, tenant reimbursements and lease termination income) and certain other property-related revenue less operating expenses (which includes property-related expenses such as cleaning, security, repairs and maintenance, utilities, property administration and real estate taxes). We 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 Year Ended December 31,
(Amounts in thousands)	2020			2019			2018
NOI	$	475,601		$	494,009		$	486,984
Add (subtract) adjustments to arrive to net (loss) income:
Fee income		28,070			22,744			18,629
Depreciation and amortization expense		(235,200	)		(240,104	)		(240,868	)
General and administrative expenses		(64,917	)		(68,556	)		(57,563	)
NOI from unconsolidated joint ventures		(48,631	)		(22,409	)		(20,730	)
(Loss) income from unconsolidated joint ventures		(18,619	)		(4,706	)		3,468
Interest and other income, net		4,490			9,844			7,936
Interest and debt expense		(144,208	)		(156,679	)		(147,653	)
Loss on early extinguishment of debt		-			(11,989	)		-
Adjustments related to discontinued operations (including    impairments and gain or loss on sale of real estate)		(8,390	)		(15,292	)		(31,909	)
Other, net		(824	)		(2,342	)		(1,740	)
(Loss) income from continuing operations, before income taxes		(12,628	)		4,520			16,554
Income tax expense		(1,493	)		(312	)		(3,139	)
(Loss) income from continuing operations, net		(14,121	)		4,208			13,415
(Loss) income from discontinued operations, net		(5,075	)		(33,811	)		5,578
Net (loss) income		(19,196	)		(29,603	)		18,993
Less: net (income) loss attributable to noncontrolling interests in:
Consolidated joint ventures		(9,257	)		(11,022	)		(8,182	)
Consolidated real estate fund		1,450			(313	)		(720	)
Operating Partnership		2,299			4,039			(944	)
Net (loss) income attributable to common stockholders	$	(24,704	)	$	(36,899	)	$	9,147

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

(Amounts in thousands)
Total Assets as of:	Total		New York		San Francisco		Other
December 31, 2020	$	8,554,097	$	5,388,596	$	2,698,983	$	466,518
December 31, 2019		8,734,135		5,439,929		2,708,463		585,743
December 31, 2018		8,755,978		5,583,022		2,388,094		784,862

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Schedule-II - Valuation and Qualifying Accounts

12 Months Ended

Dec. 31, 2020

Valuation And Qualifying Accounts [Abstract]

Schedule of Valuation and Qualifying Accounts

COLUMN A	COLUMN B			COLUMN C		COLUMN D			COLUMN E
				Additions
	Balance at			Charged		Uncollectible			Balance
	Beginning			Against		Accounts			at End
(Amounts in thousands)	of Year			Operations		Written-off			of Year
For the Year Ended December 31, 2020
Allowance for doubtful accounts	$	-		$	-	$	-		$	-
Allowance for preferred equity investments		-			-		-			-
Total valuation allowance	$	-		$	-	$	-		$	-
For the Year Ended December 31, 2019
Allowance for doubtful accounts	$	-	(1)	$	-	$	-		$	-
Allowance for preferred equity investments		-			-		-			-
Total valuation allowance	$	-		$	-	$	-		$	-
For the Year Ended December 31, 2018
Allowance for doubtful accounts	$	277		$	324	$	(8	)	$	593	(1)
Allowance for preferred equity investments		19,588			-		(19,588	)		-
Total valuation allowance	$	19,865		$	324	$	(19,596	)	$	593

⁽¹⁾ Represents allowance for tenant receivables arising from operating leases. The allowance was written-off on January 1, 2019 upon the adoption of ASU 2016-02, an update to ASC Topic 842, Leases, which requires companies to account for impairment of receivables as reduction to “rental income” if the collectability of these receivables is not probable.

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Schedule III - Real Estate and Accumulated Depreciation

12 Months Ended

Dec. 31, 2020

Real Estate And Accumulated Depreciation Disclosure [Abstract]

Schedule III - Real Estate and Accumulated Depreciation

COLUMN A	COLUMN B		COLUMN C				COLUMN D				COLUMN E						COLUMN F			COLUMN G	COLUMN H	COLUMN I
(Amounts in thousands)																						Life on
																						which
							Costs capitalized															depreciation
							subsequent				Gross amount at which						Accumulated					in latest
			Initial cost to company				to acquisition				carried at close of period						depreciation					income
Description	Encumbrances		Land		Building and improvements		Land		Building and improvements		Land		Building and improvements		Total (1)		and amortization			Date of construction	Date acquired	statement is computed
1633 Broadway	$	1,250,000	$	502,846	$	1,398,341	$	-	$	151,358	$	502,846	$	1,549,699	$	2,052,545	$	(258,683	)	1971	11/2014	5 to 40 Years
1301 Avenue of the Americas		850,000		406,039		1,051,697		-		101,642		406,039		1,153,339		1,559,378		(199,657	)	1963	11/2014	5 to 40 Years
31 West 52nd Street		500,000		221,318		604,994		-		62,997		221,318		667,991		889,309		(107,164	)	1987	11/2014	5 to 40 Years
1325 Avenue of the Americas		-		174,688		370,553		-		61,785		174,688		432,338		607,026		(68,822	)	1989	11/2014	5 to 40 Years
900 Third Avenue		-		103,741		296,031		-		28,335		103,741		324,366		428,107		(56,831	)	1983	11/2014	5 to 40 Years
Total New York		2,600,000		1,408,632		3,721,616		-		406,117		1,408,632		4,127,733		5,536,365		(691,157	)
One Market Plaza		975,000		288,743		988,014		-		95,035		288,743		1,083,049		1,371,792		(187,570	)	1976	11/2014	5 to 40 Years
300 Mission Street		244,434		141,097		343,819		-		40,887		141,097		384,706		525,803		(36,360	)	1968	07/2017	5 to 40 Years
One Front Street		-		127,765		376,919		-		15,046		127,765		391,965		519,730		(47,411	)	1979	12/2016	5 to 40 Years
Total San Francisco		1,219,434		557,605		1,708,752		-		150,968		557,605		1,859,720		2,417,325		(271,341	)
Other		-		-		-		-		9,625		-		9,625		9,625		(4,199	)		11/2014	5 to 40 Years
Total	$	3,819,434	$	1,966,237	$	5,430,368	$	-	$	566,710	$	1,966,237	$	5,997,078	$	7,963,315	$	(966,697	)

⁽¹⁾ The basis of the Company’s assets for tax purposes is approximately $2.4 billion lower than the amount reported for financial statement purposes.

	For the Year Ended December 31,
(Amounts in thousands)	2020			2019			2018
Real Estate:
Beginning balance	$	7,889,885		$	7,793,784		$	7,653,276
Acquisitions		-			-			-
Additions during the year:
Land		-			-			-
Buildings and improvements		82,571			104,408			144,666
Assets sold and written-off		(9,141	)		(8,307	)		(4,158	)
Ending balance	$	7,963,315		$	7,889,885		$	7,793,784
Accumulated Depreciation:
Beginning balance	$	790,216		$	617,974		$	445,328
Additions charged to expense		185,622			180,549			176,804
Accumulated depreciation related    to assets sold and written-off		(9,141	)		(8,307	)		(4,158	)
Ending balance	$	966,697		$	790,216		$	617,974

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Basis of Presentation and Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2020

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation

The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and with the rules and regulations of the Securities and Exchange Commission (the “SEC”). These consolidated financial statements include the accounts of Paramount and its consolidated subsidiaries, including the Operating Partnership. All significant intercompany balances and transactions have been eliminated in consolidation.

Real Estate

Real Estate  

Real estate is carried at cost less accumulated depreciation and amortization. Betterments, major renovations and certain costs directly related to the improvement of real estate are capitalized. Maintenance and repair expenses are charged to expense as incurred. Depreciation is recognized on a straight-line basis over estimated useful lives of the assets, which range from 5 to 40 years. Tenant improvements are amortized on a straight-line basis over the lives of the related leases, which approximate the useful lives of the assets.

Upon the acquisition of real estate, we assess the fair value of acquired assets (including land, buildings and improvements, identified intangibles, such as acquired above-market leases and acquired in-place leases) and acquired liabilities (such as acquired below-market leases) and allocate the purchase price based on these assessments. We assess fair value based on estimated cash flow projections that utilize appropriate discount and capitalization rates and available market information. Estimates of future cash flows are based on a number of factors including historical operating results, known trends, and market/economic conditions. We record acquired intangible assets (including acquired above-market leases and acquired in-place leases) and acquired intangible liabilities (including below-market leases) at their estimated fair value. We amortize acquired above-market and below-market leases as a decrease or increase to rental revenue, respectively, over the lives of the respective leases. Amortization of acquired in-place leases is included as a component of “depreciation and amortization”.

Our properties, including any related intangible assets, are individually reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Impairment analyses are based on our current plans, intended holding periods and available market information at the time the analyses are prepared. An impairment exists when the carrying amount of an asset exceeds the aggregate projected future cash flows over the anticipated holding period on an undiscounted basis. An impairment loss is measured based on the excess of the property’s carrying amount over its estimated fair value. Estimates of fair value are determined using discounted cash flow models, which consider, among other things, anticipated holding periods, current market conditions and utilize unobservable quantitative inputs, including appropriate capitalization and discount rates. If our estimates of the projected future cash flows, anticipated holding periods, or market conditions change, our evaluation of impairment losses may be different and such differences could be material to our consolidated financial statements. The evaluation of anticipated cash flows is subjective and is based, in part, on assumptions regarding future occupancy, rental rates and capital requirements that could differ materially from actual results. Plans to hold properties over longer periods decrease the likelihood of recording impairment losses.

Real estate and related intangibles are classified as held for sale when all the necessary criteria are met. The criteria include (i) management, having the authority to approve action, commits to a plan to sell the property in its present condition, (ii) the sale of the property is at a price reasonable in relation to its current fair value and (iii) the sale is probable and expected to be completed within one year. Real estate and the related intangibles held for sale are carried at the lower of carrying amounts or estimated fair value less disposal costs. Depreciation and amortization is not recognized on real estate and related intangibles classified as assets held for sale.

Variable Interest Entities and Investments in Unconsolidated Joint Ventures and Funds

Variable Interest Entities (“VIEs”) and Investments in Unconsolidated Joint Ventures and Funds

We consolidate VIEs in which we are considered to be the primary beneficiary. Entities are considered to be the primary beneficiary if they have both of the following characteristics: (i) the power to direct the activities that, when taken together, most significantly impact the VIE’s performance, and (ii) the obligation to absorb losses and right to receive the returns from the VIE that would be significant to the VIE. Our judgment with respect to our level of influence or control of an entity involves the consideration of various factors including the form of our ownership interest, our representation in the entity’s governance, the size of our investment, estimates of future cash flows, our ability to participate in policy making decisions and the rights of the other investors to participate in the decision making process and to replace us as manager and/or liquidate the joint venture, if applicable.

We account for investments under the equity method when the requirements for consolidation are not met, and we have significant influence over the operations of the investee. Equity method investments, which consist of investments in unconsolidated joint ventures and funds are initially recorded at cost and subsequently adjusted for (i) our share of net income or loss, (ii) our share of other comprehensive income or loss, and (iii) cash contributions and distributions. To the extent that our cost basis is different than our share of the equity in the equity method investment, the basis difference allocated to depreciable assets is amortized into “income from unconsolidated joint ventures” over the estimated useful life of the related asset. The agreements that govern our equity method investments may designate different percentage allocations among investors for profits and losses; however, our recognition of income or loss generally follows the investment’s distribution priorities, which may change upon the achievement of certain investment return thresholds. We account for cash distributions in excess of our basis in the equity method investments as income when we have neither the requirement, nor the intent to provide financial support to the joint venture. Investments accounted for under the equity method are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the investment may not be recoverable. An impairment loss is measured based on the excess of the carrying amount of an investment over its estimated fair value. Impairment analyses are based on current plans, intended holding periods and available information at the time the analyses are prepared.

Investments that do not qualify for consolidation or equity method accounting are accounted for under the cost method.

Cash and Cash Equivalents

Cash and Cash Equivalents

Cash and cash equivalents consist of cash on hand and short-term highly liquid investments with original maturities of three months or less. The majority of our cash and cash equivalents are held at major commercial banks, which may at times exceed the Federal Deposit Insurance Corporation limit. To date, we have not experienced any losses on our invested cash.

Restricted Cash

Restricted Cash

Restricted cash consists primarily of security deposits held on behalf of our tenants, cash escrowed under loan agreements for debt service, real estate taxes, property insurance and capital improvements and cash restricted in connection with our deferred compensation plan.

Marketable Securities

Marketable Securities

Marketable securities consists of investments in trading securities that are held in our deferred compensation plan for which there is an offsetting liability. These investments are initially recorded at cost and subsequently measured at fair value at the end of each reporting period, with gains or losses resulting from changes in fair value recognized in earnings, which are included as a component of “interest and other income, net” on our consolidated statements of income and the earnings are entirely offset by expenses from the mark-to-market of plan liabilities, which are included as a component of “general and administrative” expenses on our consolidated statements of income.

Deferred Charges

Deferred Charges

Deferred charges include deferred leasing costs and deferred financing costs related to our revolving credit facility. Deferred leasing costs consist of fees and direct costs related to successful leasing activities. Such deferred leasing costs are amortized on a straight-line basis over the lives of the related leases and recognized in our consolidated statements of income as a component of “depreciation and amortization”. Deferred financing costs consist of fees and direct costs incurred in obtaining our revolving credit facility. Such deferred financing costs are amortized over the term of the revolving credit facility and are recognized as a component of “interest and debt expense” on our consolidated statements of income.

Deferred Financing Costs Related to Notes and Mortgages Payable

Deferred Financing Costs Related to Notes and Mortgages Payable

Deferred financing costs related to notes and mortgages payable consists of fees and direct costs incurred in obtaining such financing and are recorded as a reduction of our notes and mortgages payable. Such costs are amortized over the terms of the related debt agreements and recognized as a component of “interest and debt expense” on our consolidated statements of income. Upon the early extinguishment of our notes and mortgages payable, any unamortized costs related to such notes and mortgages payable are written off as a component of “loss on early extinguishment of debt” on our consolidated statements of income.

Fair Value of Financial Instruments

Fair Value of Financial Instruments

Accounting Standards Codification (“ASC”) Topic 820, Fair Value Measurement and Disclosures, defines fair value and establishes a framework for measuring fair value. The objective of fair value is to determine the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (the exit price). ASC Topic 820 establishes a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into three levels: Level 1 – quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities; Level 2 – observable prices that are based on inputs not quoted in active markets, but corroborated by market data; and Level 3 – unobservable inputs that are used when little or no market data is available. The fair value hierarchy gives the highest priority to Level 1 inputs and the lowest priority to Level 3 inputs. In determining fair value, we utilize valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible, as well as consider counterparty credit risk in our assessment of fair value. Considerable judgment is necessary to interpret Level 2 and 3 inputs in determining the fair value of our financial and non-financial assets and liabilities. Accordingly, our fair value estimates, which are made at the end of each reporting period, may be different than the amounts that may ultimately be realized upon sale or disposition of these assets or settlement of these liabilities.

We use the following methods and assumptions in estimating fair value for financial instruments that are presented at fair value on our consolidated balance sheets:

Marketable Securities

Marketable securities are valued by a third-party specialist using quoted prices in active markets.

We use the following methods and assumptions in estimating fair value for financial instruments that are not presented at fair value on our consolidated balance sheets, but are disclosed in the notes to our consolidated financial statements:

Notes and Mortgages Payable

Notes and mortgages payable are valued by a third-party specialist using the standard practice of modeling the contractual cash flows required under the instrument and discounting them back to their present value at the appropriate current risk adjusted interest rate. For floating rate debt, we use forward rates derived from observable market yield curves to project the expected cash payments we would be required to make under the instrument. The notes and mortgages payable are classified as Level 2 in fair value hierarchy.

The carrying values of all other financial instruments on our consolidated balance sheets, including cash and cash equivalents, restricted cash, accounts and other receivables and accounts payable and accrued expenses, approximate their fair values due to the short-term nature of these instruments.

Revenue Recognition

Revenue Recognition

Rental Revenue

We lease office, retail and storage space to tenants, primarily under non-cancellable operating leases which have terms generally ranging from five to fifteen years. Most of our leases provide tenants with extension options at either fixed or market rates and few of our leases provide tenants with options to early terminate, but such options generally impose an economic penalty on the tenant upon exercising. Rental revenue is recognized in accordance with ASC Topic 842, Leases, and includes (i) fixed payments of cash rents, which represents revenue each tenant pays in accordance with the terms of its respective lease and that is recognized on a straight-line basis over the non-cancellable term of the lease, and includes the effects of rent steps and rent abatements under the leases, (ii) variable payments of tenant reimbursements, which are recoveries of all or a portion of the operating expenses and real estate taxes of the property and is recognized in the same period as the expenses are incurred, (iii) amortization of acquired above and below-market leases, net and (iv) lease termination income.

We evaluate the collectability of our tenant receivables for payments required under the lease agreements. If we determine that collectability is not probable, the difference between rental revenue recognized and rental payments received is recorded as an adjustment to “rental revenue” in our consolidated statements of income.

Fee and Other Income

Fee income includes (i) property management fees, (ii) asset management fees, (iii) fees relating to acquisitions, dispositions and leasing services and (iv) other fee income and 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. Other income includes income from tenant requested services, including overtime heating and cooling and parking income.

Gains and Losses on Sale of Real Estate

Gains and Losses on Sale of Real Estate

Gains and losses on the sale of real estate are recognized pursuant to ASC Topic 610-20, Gains and Losses from the Derecognition of Nonfinancial Assets, when (i) we do not have a controlling financial interest in the buyer and (ii) the buyer has obtained control of the real estate asset. Any gain or loss on sale is measured based on the difference between the amount of consideration received and the carrying amount of the real estate assets, less costs to sell. For partial sale of real estate resulting in transfer of control, we measure any noncontrolling interest retained at fair value and recognize a gain or loss on the difference between fair value and the carrying amount of the real estate assets retained.

Stock-Based Compensation

Stock-Based Compensation

We account for stock-based compensation in accordance with ASC Topic 718, Compensation – Stock Compensation. The fair value of the award on the date of grant (adjusted for estimated forfeitures) is ratably amortized into expense over the vesting period of the respective grants. The determination of fair value of these awards involves the use of significant estimates and assumptions, including expected volatility of our stock, expected dividend yield, expected term, and assumptions of whether these awards achieve the requisite performance criteria.

Income Taxes

Income Taxes

We operate and have been organized in conformity with the requirements for qualification and taxation as a REIT for U.S. federal income tax purposes. So long as we qualify as a REIT, we generally will not be subject to U.S. federal income tax on our net income that we distribute currently to our stockholders. In order to maintain our qualification as a REIT, we are required under the Internal Revenue Code of 1986, as amended, to distribute at least 90% of our taxable income (without regard to the deduction for dividends paid and excluding net capital gains) to our stockholders and meet certain other requirements. If, with respect to any taxable year, we fail to maintain our qualification as a REIT, and we are not entitled to relief under the relevant statutory provisions, we would be subject to income tax at regular corporate tax rates. Even if we qualify as a REIT, we may also be subject to certain state, local and franchise taxes. Under certain circumstances, U.S. federal income tax may be due on our undistributed taxable income.

We treat certain consolidated subsidiaries, and may in the future elect to treat newly formed subsidiaries, as taxable REIT subsidiaries (“TRSs”). TRSs may participate in non-real estate related activities and/or perform non-customary services for tenants and are subject to federal and state income tax at regular corporate tax rates. Our TRSs had a combined current income tax expense of approximately $698,000, $242,000 and $622,000 for the years ended December 31, 2020, 2019 and 2018, respectively. In addition, our TRSs had combined deferred income tax expense of $32,000 and $87,000 for the years ended December 31, 2020 and 2018, respectively, and a combined deferred income tax benefit of $28,000 for the year ended December 31, 2019.

The following table reconciles net (loss) income attributable to Paramount Group, Inc. to estimated taxable income for the years ended December 31, 2020, 2019 and 2018.

	For the Year Ended December 31,
(Amounts in thousands)	2020			2019			2018
Net (loss) income attributable to Paramount Group, Inc.	$	(24,704	)	$	(36,899	)	$	9,147
Book to tax differences:
Straight-lining of rents and amortization of above and    below-market leases, net		(10,462	)		(37,244	)		(48,604	)
Depreciation and amortization		62,002			79,750			92,512
Stock-based compensation		17,766			20,812			17,847
Real estate impairment loss		-			38,237			41,788
Adjustments resulting from sale of real estate		55,640			12,107			(14,381	)
Other, net		(11,095	)		12,753			(11,635	)
Estimated taxable income	$	89,147		$	89,516		$	86,674

The following table sets forth the characterization of dividend distributions for federal income tax purposes for the years ended December 31, 2020, 2019 and 2018.

	For the Year Ended December 31,
	2020						2019						2018
	Amount			%			Amount			%			Amount			%
Ordinary income	$	0.210	(1)		52.5	%	$	0.323	(1)		80.7	%	$	0.286	(1)		72.4	%
Long-term capital gain		0.190			47.5	%		0.062			15.5	%		0.074			18.7	%
Return of capital		0.000			0.0	%		0.015			3.8	%		0.035			8.9	%
Total	$	0.400	(2)		100.0	%	$	0.400	(2)		100.0	%	$	0.395	(2)		100.0	%

⁽¹⁾ Represents amounts treated as “qualified REIT dividends” for purposes of Internal Revenue Code Section 199A.

⁽²⁾ The fourth quarter dividends for the years ended December 31, 2020, 2019 and 2018 of $0.07, $0.10 and $0.10 per share, respectively, were paid in January of the subsequent years and are allocable to the subsequent years for federal income tax purposes.

Segments

Segments

Our reportable segments are separated based on the regions in which we conduct our business. Prior to January 1, 2020, our reportable segments consisted of New York, San Francisco and Washington, D.C. Upon entering into an agreement to sell 1899 Pennsylvania Avenue, our sole remaining property in the Washington, D.C. segment, we redefined our reportable segments into the two remaining regions in which we conduct our business: New York and San Francisco effective January 1, 2020. 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.

Use of Estimates

Use of Estimates

The preparation of financial statements in conformity with GAAP requires us to make 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.

Reclassification

Reclassification

Certain prior year balances have been reclassified to conform to current year presentation. See Note 3, Dispositions and Discontinued Operations.

Recently Issued Accounting Pronouncements

Recently Issued Accounting Pronouncements

In June 2016, the Financial Accounting Standards Board (“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. In November 2018, the FASB issued ASU 2018-19, which clarified that receivables arising from operating leases are not within the scope of ASC Topic 326, and instead, impairment of receivables arising from operating leases should be accounted for under the scope of ASC Topic 842, Leases. In May 2019, the FASB issued ASU 2019-05, which provides transition relief for entities adopting ASU 2016-13 by allowing entities to elect the fair value option on certain financial instruments. ASU 2016-13 is effective for interim and annual reporting periods in fiscal years that begin after December 15, 2019, with early adoption permitted. We adopted the provisions of ASU 2016-13 on January 1, 2020. This adoption did not have an impact on our consolidated financial statements.

In August 2018, the FASB issued ASU 2018-13, an update to ASC Topic 820, Fair Value Measurements. ASU 2018-13 modifies

the disclosure requirements in ASC Topic 820, by (i) removing certain disclosure requirements related to transfers between Level 1 and Level 2 of the fair value hierarchy and the valuation processes for Level 3 fair value measurements, (ii) modifying existing disclosure requirements related to measurement uncertainty and (iii) adding new disclosure requirements related to changes in unrealized gains or losses for the period included in other comprehensive income for recurring Level 3 fair value measurements and disclosures related to the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. ASU 2018-13 is effective for interim and annual reporting periods in fiscal years that begin after December 15, 2019, with early adoption permitted. We adopted the provisions of ASU 2018-13 on January 1, 2020. This adoption did not have an impact on our consolidated financial statements.

In October 2018, the FASB issued ASU 2018-17, an update to ASC Topic 810, Consolidations. ASU 2018-17 requires reporting entities to consider indirect interests held by related parties under common control on a proportional basis rather than as the equivalent of a direct interest in its entirety in determining whether a decision-making fee is a variable interest. ASU 2018-17 is effective for interim and annual reporting periods in fiscal years that begin after December 15, 2019, with early adoption permitted. We adopted the provisions of ASU 2018-17 on January 1, 2020. This adoption did not have an impact on our consolidated financial statements.

In December 2019, the FASB issued ASU 2019-12, an update to ASC Topic 740, Income Taxes. ASU 2019-12 simplifies the accounting for income taxes by (i) eliminating certain exceptions within ASC Topic 740 and (ii) clarifying and amending the existing guidance to enable consistent application of ASC Topic 740. ASU 2019-12 is effective for interim and annual reporting periods in fiscal years that begin after December 15, 2020, with early adoption permitted. We do not believe the adoption of ASU 2019-12 will have a material impact on our consolidated financial statements.

In March 2020, the FASB issued ASU 2020-04, which adds ASC Topic 848, Reference Rate Reform: Facilitation of the Effects of Reference Rate Reform on Financial Reporting. ASU 2020-04 provides temporary optional expedients and exceptions to ease financial reporting burdens related to applying current GAAP to modifications of contracts, hedging relationships and other transactions in connection with the transition from the London Interbank Offered Rate (“LIBOR”) and other interbank offered rates to alternative reference rates. In January 2021, the FASB issued ASU 2021-01 to clarify that certain optional expedients and exceptions apply to modifications of derivative contracts and certain hedging relationships affected by changes in the interest rates used for discounting cash flows, computing variation margin settlements, and for calculating price alignment interest. ASU 2020-04 is effective beginning on March 12, 2020 and may be applied prospectively to such transactions through December 31, 2022 and ASU 2021-01 is effective beginning on January 7, 2021 and may be applied retrospectively or prospectively to such transactions through December 31, 2022. We will apply ASU 2020-04 and ASU 2021-01 prospectively as and when we enter into transactions to which these updates apply.  

In April 2020, the FASB staff issued a question and answer document (the “Lease Modification Q&A”) focused on the application of lease accounting guidance to lease concessions provided as a result of the COVID-19 global pandemic. Under existing lease guidance, the entity would have to determine, on a lease by lease basis, if a lease concession was the result of a new arrangement reached with the tenant, which would be accounted for under the lease modification framework, or if a lease concession was under the enforceable rights and obligations that existed in the original lease, which would be accounted for outside the lease modification framework. The Lease Modification Q&A provides entities with the option to elect to account for lease concessions as though the enforceable rights and obligations existed in the original lease. This election is only available when total cash flows resulting from the modified lease are substantially the same as or less than the cash flows in the original lease. We have accounted for lease modifications executed as a result of COVID-19 under ASC Topic 842, Leases, and have elected not to use the option available in the Lease Modification Q&A. Accordingly, the Lease Modification Q&A did not have an impact on our consolidated financial statements.

In August 2020, the FASB issued ASU 2020-06, an update to ASC Topic 470, Subtopic - 20, Debt - Debt with Conversion and Other Options, and ASC Topic 815, Subtopic – 4, Derivatives and Hedging - Contracts in Entity's Own Equity. ASU 2020-06 simplifies the guidance for certain financial instruments with characteristics of liability and equity, including convertible instruments and contracts on an entity’s own equity by reducing the number of accounting models for convertible instruments and amends guidance in ASC Topic 260, Earnings Per Share, relating to the computation of earnings per share for convertible instruments and contracts on an entity’s own equity. ASU 2020-06 is effective for interim and annual reporting periods in fiscal years that begin after December 15, 2021, with early adoption permitted for fiscal years that begin after December 15, 2020. We are evaluating the impact of ASU 2020-06 on our consolidated financial statements.

In October 2020, the FASB issued ASU 2020-10, Codification Improvements. ASU 2020-10 codifies the disclosure guidance of all codifications which provide entities with an option to either present information on the face or disclose it in the notes to the financial statements. ASU 2020-10 also clarifies application of various provisions in the codifications where the guidance may have been unclear. ASU 2020-10 is effective for interim and annual reporting periods in fiscal years that begin after December 15, 2020, with early adoption permitted. We do not believe the adoption of ASU 2020-10 will have a material impact on our consolidated financial statements.

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Basis of Presentation and Significant Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2020

Income Tax Disclosure [Abstract]

Summary of Reconciliation Net Income (Loss) Attributable to Estimated Taxable Income

The following table reconciles net (loss) income attributable to Paramount Group, Inc. to estimated taxable income for the years ended December 31, 2020, 2019 and 2018.

	For the Year Ended December 31,
(Amounts in thousands)	2020			2019			2018
Net (loss) income attributable to Paramount Group, Inc.	$	(24,704	)	$	(36,899	)	$	9,147
Book to tax differences:
Straight-lining of rents and amortization of above and    below-market leases, net		(10,462	)		(37,244	)		(48,604	)
Depreciation and amortization		62,002			79,750			92,512
Stock-based compensation		17,766			20,812			17,847
Real estate impairment loss		-			38,237			41,788
Adjustments resulting from sale of real estate		55,640			12,107			(14,381	)
Other, net		(11,095	)		12,753			(11,635	)
Estimated taxable income	$	89,147		$	89,516		$	86,674

Summary of Characterization of Dividend Distributions for Federal Income Tax Purposes

The following table sets forth the characterization of dividend distributions for federal income tax purposes for the years ended December 31, 2020, 2019 and 2018.

	For the Year Ended December 31,
	2020						2019						2018
	Amount			%			Amount			%			Amount			%
Ordinary income	$	0.210	(1)		52.5	%	$	0.323	(1)		80.7	%	$	0.286	(1)		72.4	%
Long-term capital gain		0.190			47.5	%		0.062			15.5	%		0.074			18.7	%
Return of capital		0.000			0.0	%		0.015			3.8	%		0.035			8.9	%
Total	$	0.400	(2)		100.0	%	$	0.400	(2)		100.0	%	$	0.395	(2)		100.0	%

⁽¹⁾ Represents amounts treated as “qualified REIT dividends” for purposes of Internal Revenue Code Section 199A.

⁽²⁾ The fourth quarter dividends for the years ended December 31, 2020, 2019 and 2018 of $0.07, $0.10 and $0.10 per share, respectively, were paid in January of the subsequent years and are allocable to the subsequent years for federal income tax purposes.

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Dispositions and Discontinued Operations (Tables)

12 Months Ended

Dec. 31, 2020

Discontinued Operations And Disposal Groups [Abstract]

Schedule of Assets and Liabilities, Results of Operations and Cash Flow from Discontinued Operations

The tables below set forth the details of the assets and liabilities, results of operations and the details of the cash flows related to discontinued operations as of the dates thereof and for the periods set forth below.

(Amounts in thousands)	As of
Balance Sheet: (1)	December 31, 2019
Real estate, net	$	94,251
Deferred rent receivable		4,206
Deferred charges, net		804
Intangible assets, net		5,575
Assets related to discontinued operations	$	104,836

(Amounts in thousands)	For the Year Ended December 31,
Income Statements: (2)	2020			2019			2018
Revenues:
Rental revenue	$	13,967		$	24,969		$	50,157
Other income		276			457			1,133
Total revenues		14,243			25,426			51,290
Expenses:
Operating		5,853			10,134			19,381
Depreciation and amortization		690			8,243			17,357
Total expenses		6,543			18,377			36,738
Other income (expense):
Interest and other income, net		-			-			181
Real estate impairment loss		-			(42,000	)		(46,000	)
Income (loss) before gain or loss on sale of real estate		7,700			(34,951	)		(31,267	)
(Loss) gain on sale of real estate (3)		(12,766	)		1,140			36,845
(Loss) income before income taxes		(5,066	)		(33,811	)		5,578
Income tax expense		(9	)		-			-
(Loss) income from discontinued operations, net	$	(5,075	)	$	(33,811	)	$	5,578

	For the Year Ended December 31,
Statements of Cash Flows: (2)	2020			2019			2018
Cash provided by operating activities	$	5,522		$	15,949		$	25,416
Cash provided by investing activities
Proceeds from sale of real estate (4)	$	89,206		$	150,307		$	349,013
Additions to real estate		-			(1,514	)		(4,003	)
Total cash provided by investing activities	$	89,206		$	148,793		$	345,010
Cash used in financing activities	$	(96,896	)	$	(162,294	)	$	(370,626	)
Additional Cash Flow Information:
Depreciation and amortization	$	690		$	8,243		$	17,357

⁽¹⁾ Represents assets of 1899 Pennsylvania Avenue.

⁽²⁾ Represents revenues, expenses, net income, and cash flow information of 1899 Pennsylvania Avenue in the year ended December 31, 2020, 1899 Pennsylvania Avenue and Liberty Place in the year ended December 31, 2019 and 1899 Pennsylvania Avenue, Liberty Place, 425 Eye Street and 2099 Pennsylvania Avenue in the year ended December 31, 2018.

⁽³⁾ Represents the loss on sale of 1899 Pennsylvania Avenue in 2020, gain on sale of Liberty Place in 2019, and gain on sale of 425 Eye Street and 2099 Pennsylvania Avenue in 2018. 

⁽⁴⁾ Represents the proceeds from the sale of 1899 Pennsylvania Avenue in 2020, Liberty Place in 2019, and 425 Eye Street and 2099 Pennsylvania Avenue in 2018.

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Investments in Unconsolidated Joint Ventures (Tables)

12 Months Ended

Dec. 31, 2020

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 December 31,
Our Share of Investments:	Ownership	2020		2019
712 Fifth Avenue (1)	50.0%	$	-	$	-
Market Center	67.0%		192,306		219,593
55 Second Street (2)	44.1%		92,298		95,384
111 Sutter Street	49.0%		37,818		41,519
60 Wall Street (2)	5.0%		19,164		19,777
One Steuart Lane (2)	35.0% (3)		67,505		69,536
Oder-Center, Germany (2)	9.5%		3,633		3,371
Investments in unconsolidated joint ventures		$	412,724	$	449,180

(Amounts in thousands)	For the Year Ended December 31,
Our Share of Net (Loss) Income:	2020			2019			2018
712 Fifth Avenue (1)	$	687		$	1,849		$	3,901
Market Center (4)		(11,315	)		(744	)		-
55 Second Street (2)(5)		(2,723	)		(826	)		-
111 Sutter Street (6)		(3,172	)		(4,394	)		-
60 Wall Street (2)		(70	)		(551	)		(518	)
One Steuart Lane (2)		(2,043	)		(118	)		(18	)
Oder-Center, Germany (2)		17			78			103
(Loss) income from unconsolidated joint ventures	$	(18,619	)	$	(4,706	)	$	3,468

⁽¹⁾ As of December 31, 2020, our basis in the partnership that owns 712 Fifth Avenue, was negative $22,345 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 December 31, 2020, the carrying amount of our investments in 55 Second Street, 60 Wall Street, One Steuart Lane and Oder-Center, Germany is greater than our share of equity in these investments by $489, $2,665, $970, $4,819, respectively, and primarily represents the unamortized portion of our capitalized acquisition costs. Basis differences allocated to depreciable assets are being amortized into “(loss) income from unconsolidated joint ventures” over the estimated useful life of the related assets.

⁽³⁾ Represents our consolidated Residential Development Fund’s economic interest in One Steuart Lane.

⁽⁴⁾ Acquired on December 11, 2019.

⁽⁵⁾ Acquired on August 21, 2019.

⁽⁶⁾ Acquired on February 7, 2019.

Unconsolidated Joint Ventures [Member]

Schedule Of Equity Method Investments [Line Items]

Summary of Financial Information of Unconsolidated Joint Ventures

The following tables provide the combined summarized financial information of our unconsolidated joint ventures as of the dates and for the periods set forth below.

(Amounts in thousands)	As of December 31,
Balance Sheets:	2020		2019
Real estate, net	$	2,674,858	$	2,581,738
Cash and cash equivalents and restricted cash		120,149		75,071
Intangible assets, net		110,307		172,041
Other assets		45,761		36,218
Total assets	$	2,951,075	$	2,865,068
Notes and mortgages payable, net	$	1,801,084	$	1,648,403
Intangible liabilities, net		26,772		38,377
Other liabilities		87,575		65,759
Total liabilities		1,915,431		1,752,539
Equity		1,035,644		1,112,529
Total liabilities and equity	$	2,951,075	$	2,865,068

(Amounts in thousands)	For the Year Ended December 31,
Income Statements:	2020			2019			2018
Revenues:
Rental revenue	$	243,713		$	164,316		$	140,653
Other income		2,828			2,108			6,827
Total revenues		246,541			166,424			147,480
Expenses:
Operating		109,114			68,491			53,417
Depreciation and amortization		117,640			68,318			48,452
Total expenses		226,754			136,809			101,869
Other (expense) income:
Interest and other (loss) income, net		(36	)		663			803
Interest and debt expense		(58,239	)		(51,113	)		(39,406	)
Net (loss) income before income taxes		(38,488	)		(20,835	)		7,008
Income tax expense		(47	)		(16	)		(10	)
Net (loss) income	$	(38,535	)	$	(20,851	)	$	6,998

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Investments in Unconsolidated Real Estate Funds (Tables)

12 Months Ended

Dec. 31, 2020

Real Estate Fund [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 December 31,
(Amounts in thousands)	2020		2019
Our Share of Investments:
Alternative Investment Funds	$	12,878	$	10,284
Property Funds		39		33
Investments in unconsolidated real estate funds	$	12,917	$	10,317

	For the Year Ended December 31,
(Amounts in thousands)	2020			2019			2018
Our Share of Net Income (Loss):
Net investment income	$	626		$	539		$	291
Net realized loss		(2	)		(54	)		-
Net unrealized loss		(352	)		(828	)		(560	)
Income (loss) from unconsolidated real estate funds	$	272		$	(343	)	$	(269	)

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Intangible Assets and Liabilities (Tables)

12 Months Ended

Dec. 31, 2020

Goodwill And Intangible Assets Disclosure [Abstract]

Summary of Intangible Assets and Liabilities

The following tables summarize 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 thereof and for the periods set forth below.

	As of December 31,
(Amounts in thousands)	2020			2019
Intangible assets:
Gross amount	$	436,851		$	466,099
Accumulated amortization		(283,332	)		(262,930	)
	$	153,519		$	203,169
Intangible liabilities:
Gross amount	$	163,977		$	174,670
Accumulated amortization		(107,981	)		(100,881	)
	$	55,996		$	73,789

	For the Year Ended December 31,
(Amounts in thousands)	2020		2019		2018
Amortization of above and below-market leases, net    (component of "rental revenue")	$	4,775	$	11,097	$	14,652
Amortization of acquired in-place leases    (component of "depreciation and amortization")	$	36,628	$	46,917	$	54,208

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

The following table 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, 2021.

(Amounts in thousands) For the Year Ending December 31,	Above and Below-Market Leases, Net		In-Place Leases
2021	$	3,567	$	26,375
2022		1,629		21,878
2023		5,056		17,811
2024		5,994		14,342
2025		4,633		10,435

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Debt (Tables)

12 Months Ended

Dec. 31, 2020

Debt Disclosure [Abstract]

Summary of Outstanding Debt

The following table summarizes our consolidated outstanding debt.

	Maturity	Fixed/	Interest Rate as of			As of December 31,
(Amounts in thousands)	Date	Variable Rate	December 31, 2020			2020			2019
Notes and mortgages payable:
1633 Broadway (1)	Dec-2029	Fixed		2.99	%	$	1,250,000		$	1,250,000
One Market Plaza (1)	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		1.99	%		350,000			350,000
				2.61	%		850,000			850,000
31 West 52nd Street	May-2026	Fixed		3.80	%		500,000			500,000
300 Mission Street (1)	Oct-2023	Fixed		3.65	%		244,434			234,643
Total notes and mortgages payable				3.32	%		3,819,434			3,809,643
Less: unamortized deferred financing costs							(18,695	)		(25,792	)
Total notes and mortgages payable, net						$	3,800,739		$	3,783,851
$1.0 Billion Revolving Credit    Facility	Jan-2022 (2)	L + 115 bps	n/a			$	-		$	36,918

⁽¹⁾ Our ownership interest in 1633 Broadway, One Market Plaza and 300 Mission Street is 90.0%, 49.0% and 31.1%, respectively.

⁽²⁾ The $1.0 billion revolving credit facility matures on January 10, 2022 and has two six-month extension options.

Summary of Principal Repayments Required For Notes and Mortgages Payable and Revolving Credit Facility

The following table summarizes our principal repayments required for the next five years and thereafter in connection with our consolidated notes and mortgages payable and revolving credit facility as of December 31, 2020.

			Notes and		Revolving
(Amounts in thousands)	Total		Mortgages Payable		Credit Facility
2021	$	850,000	$	850,000	$	-
2022		-		-		-
2023		244,434		244,434		-
2024		975,000		975,000		-
2025		-		-		-
Thereafter		1,750,000		1,750,000		-

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Accumulated Other Comprehensive Loss (Tables)

12 Months Ended

Dec. 31, 2020

Accumulated Other Comprehensive Income Loss Net Of Tax [Abstract]

Summary of Changes in Accumulated Other Comprehensive Loss by Component

The following table sets forth changes in accumulated other comprehensive loss by component for the years ended December 31, 2020, 2019 and 2018, including amounts attributable to noncontrolling interests in the Operating Partnership.

	For the Year Ended December 31,
(Amounts in thousands)	2020			2019			2018
Amount of (loss) income related to unconsolidated joint ventures    recognized in other comprehensive (loss) income (1)	$	(16,141	)	$	206		$	(129	)
Amounts reclassified from accumulated other comprehensive    loss increasing loss from unconsolidated joint ventures (1)		2,247			-			-
Amount of (loss) income related to the cash flow hedges    recognized in other comprehensive (loss) income (2)		-			(23,147	)		9,203
Amount reclassified from accumulated other comprehensive    loss decreasing interest and debt expense (2)		-			(4,922	)		(1,930	)
Amount reclassified to loss on early extinguishment of debt (3)		-			11,258			-

⁽¹⁾ Represents amounts related to interest rate swap with a notional value of $402,000, which was designated as cash flow hedge.

⁽²⁾ Represents amounts related to interest rate swaps with an aggregate notional amount of $1.0 billion and forward starting interest rate swaps with an aggregate notional amount of $400,000 that were designated as cash flow hedges. These hedges were terminated in November 2019 in connection with the refinancing of the related asset.

⁽³⁾ Represents costs incurred in connection with the settlement of interest rate swap liabilities upon the refinancing of 1633 Broadway in November 2019.

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Variable Interest Entities ("VIEs") (Tables)

12 Months Ended

Dec. 31, 2020

Consolidated VIEs [Member]

Summary of Assets and Liabilities of Consolidated Variable Interest Entities

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

	As of December 31,
(Amounts in thousands)	2020		2019
Real estate, net	$	3,470,766	$	1,685,391
Cash and cash equivalents and restricted cash		134,647		69,828
Investments in unconsolidated joint ventures		67,505		69,535
Accounts and other receivables		6,871		2,140
Deferred rent receivable		192,401		57,338
Deferred charges, net		55,156		24,030
Intangible assets, net		76,545		29,872
Other assets		21,496		21,132
Total VIE assets	$	4,025,387	$	1,959,266
Notes and mortgages payable, net	$	2,457,272	$	1,205,324
Accounts payable and accrued expenses		51,590		35,252
Intangible liabilities, net		33,566		19,841
Other liabilities		4,486		13,047
Total VIE liabilities	$	2,546,914	$	1,273,464

Unconsolidated VIEs [Member]

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

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

	As of December 31,
(Amounts in thousands)	2020		2019
Investments	$	12,917	$	10,317
Asset management fees and other receivables		561		37,563	(1)
Maximum risk of loss	$	13,478	$	47,880

⁽¹⁾ Includes a $36,918 note receivable from Fund X that was repaid on March 27, 2020. See Note 20, Related Parties.

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Fair Value Measurements (Tables)

12 Months Ended

Dec. 31, 2020

Fair Value Disclosures [Abstract]

Schedule of Fair Value of Financial Assets Measured at Fair Value

The following table summarizes the fair value of our financial assets that are measured at fair value on our consolidated balance sheets as of the dates set forth below, based on their levels in the fair value hierarchy.

	As of December 31, 2020
(Amounts in thousands)	Total		Level 1		Level 2		Level 3
Marketable securities (included in "other assets")	$	17,178	$	17,178	$	-	$	-
Total assets	$	17,178	$	17,178	$	-	$	-
	As of December 31, 2019
(Amounts in thousands)	Total		Level 1		Level 2		Level 3
Marketable securities (included in "other assets")	$	21,639	$	21,639	$	-	$	-
Total assets	$	21,639	$	21,639	$	-	$	-

Summary of Carrying Amounts and Fair Value of Financial Instruments

The following table summarizes the carrying amounts and fair value of these financial instruments as of the dates set forth below.

	As of December 31, 2020				As of December 31, 2019
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Notes and mortgages payable	$	3,819,434	$	3,871,644	$	3,809,643	$	3,848,266
Revolving credit facility		-		-		36,918		36,919
Total liabilities	$	3,819,434	$	3,871,644	$	3,846,561	$	3,885,185

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Leases (Tables)

12 Months Ended

Dec. 31, 2020

Leases [Abstract]

Schedule of Rental Revenues

The following table sets forth the details of our rental revenue.

	For the Year Ended December 31,
(Amounts in thousands)	2020			2019		2018
Rental revenue:
Fixed	$	627,352	(1)	$	647,345	$	626,745
Variable		51,663			62,163		50,393
Total rental revenue	$	679,015		$	709,508	$	677,138

⁽¹⁾ Includes (i) $33,205 of non-cash write-offs, primarily for straight-line rent receivables and (ii) $2,051 of reserves for uncollectible accounts receivable in the year ended December 31, 2020.

Schedule of Future Undiscounted Cash Flows Under Non-Cancelable Operating Leases

The following table is a schedule of future undiscounted cash flows under non-cancelable operating leases in effect as of December 31, 2020, for each of the five succeeding years commencing January 1, 2021.

(Amounts in thousands)
2021	$	638,723
2022		631,503
2023		606,371
2024		579,138
2025		519,018
Thereafter		2,367,495
Total	$	5,342,248

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Fee and Other Income (Tables)

12 Months Ended

Dec. 31, 2020

Disaggregation Of Revenue [Abstract]

Summary of Fee and Other Income

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

	For the Year Ended December 31,
(Amounts in thousands)	2020		2019		2018
Fee income:
Asset management	$	14,266	$	10,442	$	7,912
Property management		9,242		6,852		6,163
Acquisition, disposition and leasing		2,629		3,435		3,160
Other		1,933		2,015		1,394
Total fee income		28,070		22,744		18,629
Other income (1)		7,152		11,502		11,904
Total fee and other income	$	35,222	$	34,246	$	30,533

⁽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 following table 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, 2019	$	2,413	$	752	$	1,653	$	-	$	8
Balance as of December 31, 2020		5,179		793		1,949		2,259		178
Increase	$	2,766	$	41	$	296	$	2,259	$	170

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Interest and Other Income, net (Tables)

12 Months Ended

Dec. 31, 2020

Interest And Other Income [Abstract]

Schedule of Interest and Other Income, net

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

	For the Year Ended December 31,
(Amounts in thousands)	2020		2019		2018
Interest income, net	$	2,054	$	5,484	$	5,203
Mark-to-market of investments in our deferred    compensation plans (1)		2,436		3,906		(922	)
Preferred equity investment income (2)		-		454		3,655
Total interest and other income, net	$	4,490	$	9,844	$	7,936

⁽¹⁾ 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.

⁽²⁾ The preferred equity investment was redeemed on March 1, 2019.

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Interest and Debt Expense (Tables)

12 Months Ended

Dec. 31, 2020

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 Year Ended December 31,
(Amounts in thousands)	2020		2019			2018
Interest expense	$	134,931	$	137,356		$	136,630
Amortization of deferred financing costs		9,277		19,323	(1)		11,023
Total interest and debt expense	$	144,208	$	156,679		$	147,653

⁽¹⁾ Includes $8,215 of expense from the non-cash write-off of deferred financing costs in connection with the $1.25 billion refinancing of 1633 Broadway in November 2019.

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Incentive Compensation (Tables)

12 Months Ended

Dec. 31, 2020

Summary of Components of Stock-Based Compensation Expense

The following table summarizes the components of stock-based compensation expense for the years ended December 31, 2020, 2019 and 2018.

	For the Year Ended December 31,
(Amounts in thousands)	2020		2019		2018
LTIP units	$	10,463	$	11,860	$	9,059
Performance-based units		7,499		8,477		7,645
Restricted stock		1,217		1,228		988
Stock options		60		1,295		1,954
Total stock-based compensation expense	$	19,239	$	22,860	$	19,646

Performance Programs [Member]

Summary of LTIP Unit and Restricted Stock Activity

The following table summarizes our LTIP unit activity granted under the Performance Programs for the year ended December 31, 2020.

	Units			Weighted-Average Grant-Date Fair Value (per unit)
Unvested as of December 31, 2019		3,595,834		$	6.54
Granted		1,068,693			7.01
Earned and Vested		(216,005	)		9.71
Cancelled or expired		(667,730	)		9.71
Unvested as of December 31, 2020		3,780,792		$	5.93

Restricted Stock [Member]

Summary of LTIP Unit and Restricted Stock Activity

The table below summarizes our restricted stock activity for the year ended December 31, 2020.

	Shares			Weighted-Average Grant-Date Fair Value
Unvested as of December 31, 2019		168,470		$	14.27
Granted		92,424			13.08
Vested		(75,895	)		14.71
Cancelled or expired		(16,291	)		14.09
Unvested as of December 31, 2020		168,708		$	13.44

Employee Stock Option [Member]

Summary of Stock Option Activity

The following table summarizes our stock option activity for the year ended December 31, 2020.

	Shares			Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value
Outstanding as of December 31, 2019		2,084,943		$	17.07
Granted		-			-
Exercised		-			-
Cancelled or expired		(52,450	)		17.50
Outstanding as of December 31, 2020		2,032,493		$	17.06		4.7	$	-
Options vested and expected to vest as of December 31, 2020		2,032,493		$	17.06		4.7	$	-
Options exercisable as of December 31, 2020		2,032,493		$	17.06		4.7	$	-

LTIP Units [Member]

Summary of LTIP Unit and Restricted Stock Activity

The following table summarizes our LTIP unit activity for the year ended December 31, 2020.

	Units			Weighted-Average Grant-Date Fair Value
Unvested as of December 31, 2019		1,571,464		$	13.30
Granted		931,855			11.74
Vested		(778,510	)		13.51
Cancelled or expired		-			-
Unvested as of December 31, 2020		1,724,809		$	12.36

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Earnings Per Share (Tables)

12 Months Ended

Dec. 31, 2020

Earnings Per Share [Abstract]

Summary of Computation of Earnings Per Share

The following table summarizes our net (loss) income and the number of common shares used in the computation of basic and diluted (loss) 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 Year Ended December 31,
(Amounts in thousands, except per share amounts)	2020			2019			2018
Numerator:
Continuing Operations:
Net (loss) income from continuing operations          attributable to common stockholders	$	(20,063	)	$	(6,418	)	$	4,079
Earnings allocated to unvested participating securities		(44	)		(27	)		(18	)
Numerator for net (loss) income from continuing operations          per common share - basic and diluted		(20,107	)		(6,445	)		4,061
Discontinued Operations:
Net (loss) income from discontinued operations attributable          to common stockholders		(4,641	)		(30,481	)		5,068
Earnings allocated to unvested participating securities		(22	)		(44	)		(61	)
Numerator for net (loss) income from discontinued          operations per common share - basic and diluted		(4,663	)		(30,525	)		5,007
Numerator for net (loss) income per common share -    basic and diluted	$	(24,770	)	$	(36,970	)	$	9,068
Denominator:
Denominator for basic (loss) income per common share -       weighted average shares		222,436			231,538			239,527
Effect of dilutive stock-based compensation plans (1)		-			-			29
Denominator for diluted (loss) income per common share -       weighted average shares		222,436			231,538			239,556
(Loss) income per Common Share - Basic and Diluted:
Continuing operations, net	$	(0.09	)	$	(0.03	)	$	0.02
Discontinued operations, net		(0.02	)		(0.13	)		0.02
Net (loss) income per common share - basic and diluted	$	(0.11	)	$	(0.16	)	$	0.04

The effect of dilutive securities for the years ended December 31, 2020, 2019 and 2018 excludes 23,540, 27,191 and 27,510 weighted average share equivalents, respectively, as their effect was anti-dilutive.

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Summary of Quarterly Results (unaudited) (Tables)

12 Months Ended

Dec. 31, 2020

Quarterly Financial Information Disclosure [Abstract]

Summary of Quarterly Results of Operations

The following table summarizes our quarterly results of operations for the years ended December 31, 2020 and 2019. The computation of basic and diluted per common share amounts for each quarter is based on the weighted average shares outstanding for that period and accordingly the sum of the quarters may not necessarily be equal to the full year basic and diluted net income per common share.

			Net (Loss) Income
(Amounts in thousands,			Attributable to the			(Loss) Income per Common Share
except per share amounts)	Revenues		Common Stockholders			Basic			Diluted
2020
December 31	$	182,358	$	(14,824	)	$	(0.07	)	$	(0.07	)
September 30		176,775		(6,958	)		(0.03	)		(0.03	)
June 30		171,118		(6,270	)		(0.03	)		(0.03	)
March 31		183,986		3,348			0.01			0.01
2019
December 31	$	186,769	$	(50,145	)	$	(0.22	)	$	(0.22	)
September 30		191,253		7,082			0.03			0.03
June 30		181,343		2,455			0.01			0.01
March 31		184,389		3,709			0.02			0.02

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Segments (Tables)

12 Months Ended

Dec. 31, 2020

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 periods set forth below.

	For the Year Ended December 31, 2020
(Amounts in thousands)	Total			New York			San Francisco			Other
Property-related revenues	$	700,410		$	454,071		$	234,893		$	11,446
Property-related operating expenses		(273,440	)		(194,648	)		(68,924	)		(9,868	)
NOI from unconsolidated joint ventures		48,631			11,540			38,892			(1,801	)
NOI (1)	$	475,601		$	270,963		$	204,861		$	(223	)
	For the Year Ended December 31, 2019
(Amounts in thousands)	Total			New York			San Francisco			Other
Property-related revenues	$	746,436		$	482,648		$	238,808		$	24,980
Property-related operating expenses		(274,836	)		(191,211	)		(69,815	)		(13,810	)
NOI from unconsolidated joint ventures		22,409			13,151			9,065			193
NOI (1)	$	494,009		$	304,588		$	178,058		$	11,363
	For the Year Ended December 31, 2018
(Amounts in thousands)	Total			New York			San Francisco			Other
Property-related revenues	$	740,332		$	468,013		$	222,071		$	50,248
Property-related operating expenses		(274,078	)		(188,008	)		(60,043	)		(26,027	)
NOI from unconsolidated joint ventures		20,730			20,395			-			335
NOI (1)	$	486,984		$	300,400		$	162,028		$	24,556

⁽¹⁾ NOI is used to measure the operating performance of our properties. NOI consists of rental revenue (which includes property rentals, tenant reimbursements and lease termination income) and certain other property-related revenue less operating expenses (which includes property-related expenses such as cleaning, security, repairs and maintenance, utilities, property administration and real estate taxes). We 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 (Loss) Income 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 Year Ended December 31,
(Amounts in thousands)	2020			2019			2018
NOI	$	475,601		$	494,009		$	486,984
Add (subtract) adjustments to arrive to net (loss) income:
Fee income		28,070			22,744			18,629
Depreciation and amortization expense		(235,200	)		(240,104	)		(240,868	)
General and administrative expenses		(64,917	)		(68,556	)		(57,563	)
NOI from unconsolidated joint ventures		(48,631	)		(22,409	)		(20,730	)
(Loss) income from unconsolidated joint ventures		(18,619	)		(4,706	)		3,468
Interest and other income, net		4,490			9,844			7,936
Interest and debt expense		(144,208	)		(156,679	)		(147,653	)
Loss on early extinguishment of debt		-			(11,989	)		-
Adjustments related to discontinued operations (including    impairments and gain or loss on sale of real estate)		(8,390	)		(15,292	)		(31,909	)
Other, net		(824	)		(2,342	)		(1,740	)
(Loss) income from continuing operations, before income taxes		(12,628	)		4,520			16,554
Income tax expense		(1,493	)		(312	)		(3,139	)
(Loss) income from continuing operations, net		(14,121	)		4,208			13,415
(Loss) income from discontinued operations, net		(5,075	)		(33,811	)		5,578
Net (loss) income		(19,196	)		(29,603	)		18,993
Less: net (income) loss attributable to noncontrolling interests in:
Consolidated joint ventures		(9,257	)		(11,022	)		(8,182	)
Consolidated real estate fund		1,450			(313	)		(720	)
Operating Partnership		2,299			4,039			(944	)
Net (loss) income attributable to common stockholders	$	(24,704	)	$	(36,899	)	$	9,147

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 dates set forth below.

(Amounts in thousands)
Total Assets as of:	Total		New York		San Francisco		Other
December 31, 2020	$	8,554,097	$	5,388,596	$	2,698,983	$	466,518
December 31, 2019		8,734,135		5,439,929		2,708,463		585,743
December 31, 2018		8,755,978		5,583,022		2,388,094		784,862

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Organization and Business - Additional Information (Details) ft² in Millions	9 Months Ended	12 Months Ended
	Dec. 31, 2020 ft² Properties	Dec. 31, 2020 USD ($) ft² Properties
Real Estate Properties [Line Items]
Number of Real Estate Properties | Properties	13	13
Area of office and retail properties | ft²	12.9	12.9
Rent collections expressed as a percentage of billing	97.20%
Non-cash write-offs, primarily for straight-line rent receivables		$ 33,205,000
Uncollectible accounts receivable		$ 2,051,000
Office Tenants [Member]
Real Estate Properties [Line Items]
Annualized rent		96.50%
Rent collections expressed as a percentage of billing	98.50%
Non Office Tenants [Member]
Real Estate Properties [Line Items]
Annualized rent		3.50%
Rent collections expressed as a percentage of billing	61.60%
Variable Interest Entities [Member] | Paramount Group Operating Partnership [Member]
Real Estate Properties [Line Items]
Percentage of ownership in operating partnership		91.30%

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Basis of Presentation and Significant Accounting Policies - Additional Information (Details)	12 Months Ended
	Dec. 31, 2020 USD ($) Segment	Dec. 31, 2019 USD ($)	Dec. 31, 2018 USD ($)
Minimum percentage of taxable income distributed to shareholders	90.00%
Income tax expense	$ 1,493,000	$ 312,000	$ 3,139,000
Number of reportable segments | Segment	2
Taxable REIT Subsidiaries [Member]
Income tax expense	$ 698,000	242,000	622,000
Deferred income tax expense (benefit)	$ 32,000	$ (28,000)	$ 87,000
Minimum [Member]
Estimated useful lives of the assets, years	5
Maximum [Member]
Estimated useful lives of the assets, years	40

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Basis of Presentation and Significant Accounting Policies - Summary of Reconciliation Net Income (Loss) Attributable to Estimated Taxable Income (Details) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2020	Sep. 30, 2020	Jun. 30, 2020	Mar. 31, 2020	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Income Tax Disclosure [Abstract]
Net (loss) income attributable to Paramount Group, Inc.	$ (14,824)	$ (6,958)	$ (6,270)	$ 3,348	$ (50,145)	$ 7,082	$ 2,455	$ 3,709	$ (24,704)	$ (36,899)	$ 9,147
Book to tax differences:
Straight-lining of rents and amortization of above and below-market leases, net									(10,462)	(37,244)	(48,604)
Depreciation and amortization									62,002	79,750	92,512
Stock-based compensation									17,766	20,812	17,847
Real estate impairment loss										38,237	41,788
Adjustments resulting from sale of real estate									55,640	12,107	(14,381)
Other, net									(11,095)	12,753	(11,635)
Estimated taxable income									$ 89,147	$ 89,516	$ 86,674

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Basis of Presentation and Significant Accounting Policies - Summary of Characterization of Dividend Distributions for Federal Income Tax Purposes (Details) - $ / shares	1 Months Ended		12 Months Ended
	Jan. 31, 2020	Jan. 31, 2019	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Income Taxes [Line Items]
Cash dividend	$ 0.10	$ 0.10	$ 0.400	$ 0.400	$ 0.395
Ordinary income			52.50%	80.70%	72.40%
Long-term capital gain			47.50%	15.50%	18.70%
Return of capital			0.00%	3.80%	8.90%
Total			100.00%	100.00%	100.00%
Ordinary Income [Member]
Income Taxes [Line Items]
Cash dividend			$ 0.210	$ 0.323	$ 0.286
Long-Term Capital Gain [Member]
Income Taxes [Line Items]
Cash dividend			0.190	0.062	0.074
Return of Capital [Member]
Income Taxes [Line Items]
Cash dividend			$ 0.000	$ 0.015	$ 0.035

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Basis of Presentation and Significant Accounting Policies - Summary of Characterization of Dividend Distributions for Federal Income Tax Purposes (Parenthetical) (Details) - $ / shares	1 Months Ended			12 Months Ended
	Jan. 31, 2021	Jan. 31, 2020	Jan. 31, 2019	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Income Taxes [Line Items]
Cash dividend		$ 0.10	$ 0.10	$ 0.400	$ 0.400	$ 0.395
Subsequent Event [Member]
Income Taxes [Line Items]
Cash dividend	$ 0.07

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Dispositions and Discontinued Operations - Additional Information (Details)						12 Months Ended
		Dec. 24, 2020 USD ($) ft²	Sep. 26, 2019 USD ($) ft²	Sep. 27, 2018 USD ($) ft²	Aug. 09, 2018 USD ($) ft²	Dec. 31, 2020 USD ($) ft²	May 27, 2020 USD ($) ft² $ / ft²	Dec. 31, 2019 USD ($)
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items]
Area of office and retail properties | ft²						12,900,000
Notes and mortgages payable						$ 3,819,434,000		$ 3,809,643,000
1633 Broadway [Member] | Disposal Group, Not Discontinued Operations [Member]
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items]
Sale percentage of office and retail properties							10.00%
Area of office and retail properties | ft²							2,500,000
Valuation of office and retail properties							$ 2,400,000,000
Cost per square foot | $ / ft²							960
Notes and mortgages payable							$ 1,250,000,000
Sale agreement amount							$ 111,984,000
Minority interest in joint ventures decrease, percentage						10.00%
1899 Pennsylvania Avenue [Member]
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items]
Sale, net proceeds						$ 14,243,000
Gain (loss) on sale of property	[1]					$ (12,766,000)
1899 Pennsylvania Avenue [Member] | Discontinued Operations, Disposed of by Sale [Member]
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items]
Area of office and retail properties | ft²		191,000
Sale agreement amount		$ 103,000,000
Sale, net proceeds		89,206,000
Gain (loss) on sale of property		$ (12,766,000)
Liberty Place [Member] | Discontinued Operations, Disposed of by Sale [Member]
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items]
Area of office and retail properties | ft²			172,000
Sale agreement amount			$ 154,500,000
Gain (loss) on sale of property			$ 1,140,000
425 Eye Street [Member] | Discontinued Operations, Disposed of by Sale [Member]
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items]
Area of office and retail properties | ft²				373,000
Sale agreement amount				$ 157,000,000
Gain (loss) on sale of property				$ 1,009,000
2099 Pennsylvania Avenue [Member] | Discontinued Operations, Disposed of by Sale [Member]
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items]
Area of office and retail properties | ft²					209,000
Sale agreement amount					$ 219,000,000
Gain (loss) on sale of property					$ 35,836,000

[1] Represents the loss on sale of 1899 Pennsylvania Avenue in 2020, gain on sale of Liberty Place in 2019, and gain on sale of 425 Eye Street and 2099 Pennsylvania Avenue in 2018. 

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Dispositions and Discontinued Operations - Schedule of Assets and Liabilities and Results of Operations Related to Discontinued Operations (Details) - USD ($) $ in Thousands		12 Months Ended
		Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Balance Sheet:
Assets related to discontinued operations			$ 104,836
Other income (expense):
Real estate impairment loss			(42,000)	$ (46,000)
(Loss) income from discontinued operations, net		$ (5,075)	(33,811)	5,578
1899 Pennsylvania Avenue [Member]
Revenues:
Rental revenue		13,967
Other income		276
Total revenues		14,243
Expenses:
Operating		5,853
Depreciation and amortization		690	8,243
Total expenses		6,543
Other income (expense):
Income (loss) before gain or loss on sale of real estate		7,700
(Loss) gain on sale of real estate	[1]	(12,766)
(Loss) income before income taxes		(5,066)
Income tax expense		(9)
(Loss) income from discontinued operations, net		$ (5,075)
1899 Pennsylvania Avenue [Member] | Discontinued Operations Held for Sale [Member]
Balance Sheet:
Real estate, net			94,251
Deferred rent receivable			4,206
Deferred charges, net			804
Intangible assets, net			5,575
Assets related to discontinued operations			104,836
1899 Pennsylvania Avenue and Liberty Place [Member]
Revenues:
Rental revenue			24,969
Other income			457
Total revenues			25,426
Expenses:
Operating			10,134
Depreciation and amortization			8,243
Total expenses			18,377
Other income (expense):
Real estate impairment loss			(42,000)
Income (loss) before gain or loss on sale of real estate			(34,951)
(Loss) gain on sale of real estate	[1]		1,140
(Loss) income before income taxes			(33,811)
(Loss) income from discontinued operations, net			$ (33,811)
1899 Pennsylvania Avenue, Liberty Place, 425 Eye Street and 2099 Pennsylvania Avenue [Member]
Revenues:
Rental revenue				50,157
Other income				1,133
Total revenues				51,290
Expenses:
Operating				19,381
Depreciation and amortization				17,357
Total expenses				36,738
Other income (expense):
Interest and other income, net				181
Real estate impairment loss				(46,000)
Income (loss) before gain or loss on sale of real estate				(31,267)
(Loss) gain on sale of real estate	[1]			36,845
(Loss) income before income taxes				5,578
(Loss) income from discontinued operations, net				$ 5,578

[1] Represents the loss on sale of 1899 Pennsylvania Avenue in 2020, gain on sale of Liberty Place in 2019, and gain on sale of 425 Eye Street and 2099 Pennsylvania Avenue in 2018. 

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Dispositions and Discontinued Operations - Schedule of Cash Flows from Discontinued Operations (Details) - USD ($) $ in Thousands		12 Months Ended
		Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
1899 Pennsylvania Avenue [Member]
Statements of Cash Flows:
Cash provided by operating activities		$ 5,522	$ 15,949
Cash provided by investing activities		89,206	148,793
Proceeds from sale of real estate	[1]	89,206	150,307
Additions to real estate			(1,514)
Total cash provided by investing activities		89,206	148,793
Cash used in financing activities		(96,896)	(162,294)
Additional Cash Flow Information:
Depreciation and amortization		$ 690	$ 8,243
1899 Pennsylvania Avenue, Liberty Place, 425 Eye Street and 2099 Pennsylvania Avenue [Member]
Statements of Cash Flows:
Cash provided by operating activities				$ 25,416
Cash provided by investing activities				345,010
Proceeds from sale of real estate	[1]			349,013
Additions to real estate				(4,003)
Total cash provided by investing activities				345,010
Cash used in financing activities				(370,626)
Additional Cash Flow Information:
Depreciation and amortization				$ 17,357

[1] Represents the proceeds from the sale of 1899 Pennsylvania Avenue in 2020, Liberty Place in 2019, and 425 Eye Street and 2099 Pennsylvania Avenue in 2018.

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Investments in Unconsolidated Joint Ventures - Summary of Investments and Income from Investments In Unconsolidated Joint Ventures (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Schedule Of Equity Method Investments [Line Items]
Investments in unconsolidated joint ventures	$ 412,724	$ 449,180
(Loss) income from unconsolidated joint ventures	$ (18,619)	(4,706)	$ 3,468
712 Fifth Avenue [Member]
Schedule Of Equity Method Investments [Line Items]
Equity method paramount ownership percentage	50.00%
(Loss) income from unconsolidated joint ventures	$ 687	1,849	3,901
Market Center [Member]
Schedule Of Equity Method Investments [Line Items]
Equity method paramount ownership percentage	67.00%
Investments in unconsolidated joint ventures	$ 192,306	219,593
(Loss) income from unconsolidated joint ventures	$ (11,315)	(744)
55 Second Street [Member]
Schedule Of Equity Method Investments [Line Items]
Equity method paramount ownership percentage	44.10%
Investments in unconsolidated joint ventures	$ 92,298	95,384
(Loss) income from unconsolidated joint ventures	$ (2,723)	(826)
111 Sutter Street [Member]
Schedule Of Equity Method Investments [Line Items]
Equity method paramount ownership percentage	49.00%
Investments in unconsolidated joint ventures	$ 37,818	41,519
(Loss) income from unconsolidated joint ventures	$ (3,172)	(4,394)
60 Wall Street [Member]
Schedule Of Equity Method Investments [Line Items]
Equity method paramount ownership percentage	5.00%
Investments in unconsolidated joint ventures	$ 19,164	19,777
(Loss) income from unconsolidated joint ventures	$ (70)	(551)	(518)
One Steuart Lane [Member]
Schedule Of Equity Method Investments [Line Items]
Equity method paramount ownership percentage	35.00%
Investments in unconsolidated joint ventures	$ 67,505	69,536
(Loss) income from unconsolidated joint ventures	$ (2,043)	(118)	(18)
Oder-Center, Germany [Member]
Schedule Of Equity Method Investments [Line Items]
Equity method paramount ownership percentage	9.50%
Investments in unconsolidated joint ventures	$ 3,633	3,371
(Loss) income from unconsolidated joint ventures	$ 17	$ 78	$ 103

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Investments in Unconsolidated Joint Ventures - Summary of Investments and Income from Investments In Unconsolidated Joint Ventures (Parenthetical) (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2020 USD ($)
712 Fifth Avenue [Member]
Schedule Of Equity Method Investments [Line Items]
Distributions made in excess of share of earnings recognized negative basis	$ 22,345
55 Second Street [Member]
Schedule Of Equity Method Investments [Line Items]
Difference between carrying amount of investment and equity	489
60 Wall Street [Member]
Schedule Of Equity Method Investments [Line Items]
Difference between carrying amount of investment and equity	2,665
One Steuart Lane [Member]
Schedule Of Equity Method Investments [Line Items]
Difference between carrying amount of investment and equity	970
Oder-Center, Germany [Member]
Schedule Of Equity Method Investments [Line Items]
Difference between carrying amount of investment and equity	$ 4,819

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Investments in Unconsolidated Joint Ventures - Summary of Financial Information of Unconsolidated Joint Ventures (Details) - USD ($) $ in Thousands		3 Months Ended										12 Months Ended
		Dec. 31, 2020		Sep. 30, 2020	Jun. 30, 2020	Mar. 31, 2020	Dec. 31, 2019		Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2020		Dec. 31, 2019		Dec. 31, 2018
Schedule Of Equity Method Investments [Line Items]
Total assets		$ 8,554,097	[1]				$ 8,734,135	[1]				$ 8,554,097	[1]	$ 8,734,135	[1]	$ 8,755,978
Total liabilities	[1]	4,038,363					4,103,173					4,038,363		4,103,173
Equity		3,653,177					3,785,730					3,653,177		3,785,730
Total liabilities and equity		8,554,097					8,734,135					8,554,097		8,734,135
Rental revenue												679,015		709,508		677,138
Total revenues		182,358		$ 176,775	$ 171,118	$ 183,986	186,769		$ 191,253	$ 181,343	$ 184,389	714,237		743,754		707,671
Operating												267,587		264,702		254,697
Depreciation and amortization												235,200		240,104		240,868
Total expenses												568,800		575,361		554,599
Interest and other income, net												4,490		9,844		7,936
Interest and debt expense												(144,208)		(156,679)		(147,653)
Net (loss) income before income taxes												(12,628)		4,520		16,554
Income tax expense												(1,493)		(312)		(3,139)
Net (loss) income attributable to common stockholders		(14,824)		$ (6,958)	$ (6,270)	$ 3,348	(50,145)		$ 7,082	$ 2,455	$ 3,709	(24,704)		(36,899)		9,147
Unconsolidated Joint Ventures [Member]
Schedule Of Equity Method Investments [Line Items]
Real estate, net		2,674,858					2,581,738					2,674,858		2,581,738
Cash and cash equivalents and restricted cash		120,149					75,071					120,149		75,071
Intangible assets, net		110,307					172,041					110,307		172,041
Other assets		45,761					36,218					45,761		36,218
Total assets		2,951,075					2,865,068					2,951,075		2,865,068
Notes and mortgages payable, net		1,801,084					1,648,403					1,801,084		1,648,403
Intangible liabilities, net		26,772					38,377					26,772		38,377
Other liabilities		87,575					65,759					87,575		65,759
Total liabilities		1,915,431					1,752,539					1,915,431		1,752,539
Equity		1,035,644					1,112,529					1,035,644		1,112,529
Total liabilities and equity		$ 2,951,075					$ 2,865,068					2,951,075		2,865,068
Rental revenue												243,713		164,316		140,653
Other income												2,828		2,108		6,827
Total revenues												246,541		166,424		147,480
Operating												109,114		68,491		53,417
Depreciation and amortization												117,640		68,318		48,452
Total expenses												226,754		136,809		101,869
Interest and other income, net												(36)		663		803
Interest and debt expense												(58,239)		(51,113)		(39,406)
Net (loss) income before income taxes												(38,488)		(20,835)		7,008
Income tax expense												(47)		(16)		(10)
Net (loss) income attributable to common stockholders												$ (38,535)		$ (20,851)		$ 6,998

[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 91.3% as of December 31, 2020. The assets and liabilities of the Operating Partnership, as of December 31, 2020, include $4,025,387 and $2,546,914 of assets and liabilities, respectively, of certain VIEs that are consolidated by the Operating Partnership. See Note 11, Variable Interest Entities (“VIEs”).

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Investments in Unconsolidated Real Estate Funds - Additional Information (Details)	12 Months Ended
	Dec. 31, 2020 USD ($) ft²	Jan. 25, 2019 ft²
Investment Holdings [Line Items]
Area of office and retail properties | ft²	12,900,000
Fund X [Member]
Investment Holdings [Line Items]
Capital commitments | $	$ 192,000,000
Capital commitments invested | $	$ 78,791,000
Alternative Investment Fund, Interest Rate	7.80%
Fund VIII [Member]
Investment Holdings [Line Items]
Alternative Investment Fund, Interest Rate	1.30%
Fund VII and VII-H [Member] | Office Building [Member]
Investment Holdings [Line Items]
Area of office and retail properties | ft²		65,000

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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	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Our Share of Investments:
Investments in unconsolidated real estate funds	$ 12,917	$ 10,317
Net realized loss	(2)	(54)
Net unrealized loss	(352)	(828)	$ (560)
Income (loss) from unconsolidated real estate funds	272	(343)	(269)
Net investment income [Member]
Our Share of Investments:
Investments in unconsolidated real estate funds	626	539	$ 291
Alternative Investment Fund [Member]
Our Share of Investments:
Investments in unconsolidated real estate funds	12,878	10,284
Property Funds [Member]
Our Share of Investments:
Investments in unconsolidated real estate funds	$ 39	$ 33

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Intangible Assets and Intangible Liabilities - Summary of Intangible Assets and Liabilities (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Intangible assets:
Gross amount	$ 436,851	$ 466,099
Accumulated amortization	(283,332)	(262,930)
Intangible assets, Net	153,519	203,169
Intangible liabilities:
Gross amount	163,977	174,670
Accumulated amortization	(107,981)	(100,881)
Intangible Liabilities, Net	55,996	73,789
Leases, Acquired-in-Place, Market Adjustment [Member]
Intangible liabilities:
Amortization of above and below-market leases, net (component of "rental revenue")	4,775	11,097	$ 14,652
Leases, Acquired-in-Place [Member]
Intangible liabilities:
Amortization of acquired in-place leases (component of "depreciation and amortization")	$ 36,628	$ 46,917	$ 54,208

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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	Dec. 31, 2020 USD ($)
Finite Lived Intangible Assets [Line Items]
2021	$ (3,567)
2022	(1,629)
2023	(5,056)
2024	(5,994)
2025	(4,633)
Leases, Acquired-in-Place [Member]
Finite Lived Intangible Assets [Line Items]
2021	26,375
2022	21,878
2023	17,811
2024	14,342
2025	$ 10,435

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Debt - Summary of Outstanding Debt (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Debt Instrument [Line Items]
Notes and mortgages payable, Interest Rate	3.32%
Notes and mortgages payable	$ 3,819,434	$ 3,809,643
Credit Facility	0	36,918
Less: unamortized deferred financing costs	(18,695)	(25,792)
Total notes and mortgages payable, net	$ 3,800,739	3,783,851
Credit Facility With Variable Rate [Member] | Revolving Credit Facility [Member]
Debt Instrument [Line Items]
Maturity date of debt	2022-01
Credit Facility		36,918
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%
1301 Avenue of Americas [Member]
Debt Instrument [Line Items]
Notes and mortgages payable, Interest Rate	2.61%
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	1.99%
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	1.18%
1633 Broadway [Member] | Mortgages and Notes Payable with Fixed Rate [Member]
Debt Instrument [Line Items]
Maturity date of debt	2029-12
Notes and mortgages payable, Interest Rate	2.99%
Notes and mortgages payable	$ 1,250,000	1,250,000
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
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
300 Mission Street [Member] | Mortgages and Notes Payable with Fixed Rate [Member]
Debt Instrument [Line Items]
Maturity date of debt	2023-10
Notes and mortgages payable, Interest Rate	3.65%
Notes and mortgages payable	$ 244,434	$ 234,643

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Debt - Summary of Outstanding Debt (Parenthetical) (Details) - USD ($) $ in Billions	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Credit Facility With Variable Rate [Member] | Revolving Credit Facility [Member]
Debt Instrument [Line Items]
Repayments of Long-term Lines of Credit	$ 1.0	$ 1.0
1633 Broadway [Member]
Debt Instrument [Line Items]
Ownership interest rate of property	90.00%	90.00%
One Market Plaza [Member]
Debt Instrument [Line Items]
Ownership interest rate of property	49.00%	49.00%
300 Mission Street [Member]
Debt Instrument [Line Items]
Ownership interest rate of property	31.10%	31.10%

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Debt - Summary of Principal Repayments Required For Notes and Mortgages Payable and Revolving Credit Facility (Details) $ in Thousands	Dec. 31, 2020 USD ($)
Debt Instrument [Line Items]
2021	$ 850,000
2023	244,434
2024	975,000
Thereafter	1,750,000
Notes and Mortgages Payable [Member]
Debt Instrument [Line Items]
2021	850,000
2023	244,434
2024	975,000
Thereafter	$ 1,750,000

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Equity - Additional Information (Details) - USD ($)	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018	Nov. 05, 2019
Class Of Stock [Line Items]
Common stock shares authorized amount				$ 200,000,000
Stock repurchased, value	$ 120,000,000	$ 94,617,000	$ 105,383,000
Stock repurchased, price per share	$ 8.69
Stock repurchase amount available for future repurchase	$ 80,000,000
Common Stock [Member]
Class Of Stock [Line Items]
Stock repurchased	13,813,158	7,159,000	7,555,000
Stock repurchased, value	$ 138,000	$ 72,000	$ 76,000

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Accumulated Other Comprehensive Loss - Summary of Changes in Accumulated Other Comprehensive Loss by Component (Details) - USD ($) $ in Thousands		12 Months Ended
		Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Accumulated Other Comprehensive Income Loss Net Of Tax [Abstract]
Amount of (loss) income related to unconsolidated joint ventures recognized in other comprehensive (loss) income	[1]	$ (16,141)	$ 206	$ (129)
Amounts reclassified from accumulated other comprehensive loss increasing loss from unconsolidated joint ventures	[1]	$ 2,247
Amount of loss related to the cash flow hedges recognized in other comprehensive loss	[2]		(23,147)	9,203
Amount reclassified from accumulated other comprehensive loss decreasing interest and debt expense	[2]		(4,922)	$ (1,930)
Amount reclassified to loss on early extinguishment of debt	[3]		$ 11,258

[1] ⁽¹⁾ Represents amounts related to interest rate swap with a notional value of $402,000, which was designated as cash flow hedge.  

[2] ⁽²⁾ Represents amounts related to interest rate swaps with an aggregate notional amount of $1.0 billion and forward starting interest rate swaps with an aggregate notional amount of $400,000 that were designated as cash flow hedges. These hedges were terminated in November 2019 in connection with the refinancing of the related asset.  

[3] Represents costs incurred in connection with the settlement of interest rate swap liabilities upon the refinancing of 1633 Broadway in November 2019.

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Accumulated Other Comprehensive Loss - Summary of Changes in Accumulated Other Comprehensive Loss by Component (Parenthetical) (Details) - Designated as Hedging Instrument [Member]	Dec. 31, 2020 USD ($)
Interest Rate Swap [Member] | Unconsolidated Joint Ventures [Member]
Accumulated Other Comprehensive Income Loss [Line Items]
Aggregate notional amount	$ 402,000,000
Interest Rate Swap [Member] | Cash Flow Hedge [Member]
Accumulated Other Comprehensive Income Loss [Line Items]
Aggregate notional amount	1,000,000,000.0
Forward Interest Rate Swap [Member] | Cash Flow Hedge [Member]
Accumulated Other Comprehensive Income Loss [Line Items]
Aggregate notional amount	$ 400,000,000

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Noncontrolling Interests - Additional Information (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Noncontrolling Interest [Abstract]
Consolidated joint ventures	$ 437,161	$ 360,778
Noncontrolling interests in consolidated real estate fund aggregated	79,017	72,396
Operating partnerships	346,379	412,058
Redemption value	$ 187,640	$ 344,638
Common units conversion basis	one-for-one

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Variable Interest Entities ("VIEs") - Additional Information (Details)	12 Months Ended
	Dec. 31, 2020
Variable Interest Entities [Member] | Paramount Group Operating Partnership [Member]
Variable Interest Entity [Line Items]
Percentage of ownership in operating partnership	91.30%

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Variable Interest Entities ("VIEs") - Summary of Assets and Liabilities of Consolidated Variable Interest Entities (Details) - USD ($) $ in Thousands		Dec. 31, 2020		Dec. 31, 2019		Dec. 31, 2018	Dec. 31, 2017
Variable Interest Entity [Line Items]
Real estate, net		$ 6,996,618		$ 7,099,669
Cash and cash equivalents and restricted cash		465,324		331,487		$ 365,409	$ 250,425
Deferred rent receivable		330,239		301,588
Deferred charges, net		116,278		126,367
Intangible assets, net		153,519		203,169
Other assets		48,976		51,373
Total assets		8,554,097	[1]	8,734,135	[1]	$ 8,755,978
Notes and mortgages payable, net		3,800,739		3,783,851
Accounts payable and accrued expenses		101,901		117,356
Intangible liabilities, net		55,996		73,789
Other liabilities		62,931		66,004
Total liabilities	[1]	4,038,363		4,103,173
Variable Interest Entities [Member]
Variable Interest Entity [Line Items]
Real estate, net		3,470,766		1,685,391
Cash and cash equivalents and restricted cash		134,647		69,828
Investments in unconsolidated joint ventures		67,505		69,535
Accounts and other receivables		6,871		2,140
Deferred rent receivable		192,401		57,338
Deferred charges, net		55,156		24,030
Intangible assets, net		76,545		29,872
Other assets		21,496		21,132
Total assets		4,025,387		1,959,266
Notes and mortgages payable, net		2,457,272		1,205,324
Accounts payable and accrued expenses		51,590		35,252
Intangible liabilities, net		33,566		19,841
Other liabilities		4,486		13,047
Total liabilities		$ 2,546,914		$ 1,273,464

[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 91.3% as of December 31, 2020. The assets and liabilities of the Operating Partnership, as of December 31, 2020, include $4,025,387 and $2,546,914 of assets and liabilities, respectively, of certain VIEs that are consolidated by the Operating Partnership. See Note 11, Variable Interest Entities (“VIEs”).

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Variable Interest Entities ("VIEs") - Summary of Investments in Unconsolidated Real Estate Funds and Maximum Risk of Loss from Investments (Details) - Unconsolidated Real Estate Funds [Member] - USD ($) $ in Thousands	Dec. 31, 2020	Dec. 31, 2019
Carrying Value of Investments [Member]
Variable Interest Entity [Line Items]
Investments in unconsolidated real estate funds	$ 12,917	$ 10,317
Asset Management Fees and Other Receivables [Member]
Variable Interest Entity [Line Items]
Investments in unconsolidated real estate funds	561	37,563
Maximum Risk of Loss [Member]
Variable Interest Entity [Line Items]
Investments in unconsolidated real estate funds	$ 13,478	$ 47,880

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Variable Interest Entities ("VIEs") - Summary of Investments in Unconsolidated Real Estate Funds and Maximum Risk of Loss from Investments (Parenthetical) (Details) - USD ($) $ in Thousands	Mar. 27, 2020	Dec. 31, 2019
Variable Interest Entity [Line Items]
Due from affiliates		$ 36,918
Fund X [Member]
Variable Interest Entity [Line Items]
Due from affiliates	$ 36,918

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Fair Value Measurements - Schedule of Fair Value of Financial Assets Measured at Fair Value (Details) - USD ($) $ in Thousands	Dec. 31, 2020	Dec. 31, 2019
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Marketable securities (included in "other assets")	$ 17,178	$ 21,639
Total assets	17,178	21,639
Level 1 [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Marketable securities (included in "other assets")	17,178	21,639
Total assets	$ 17,178	$ 21,639

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Fair Value Measurements - Summary of Carrying Amounts and Fair Value of Financial Instruments (Details) - USD ($) $ in Thousands	Dec. 31, 2020	Dec. 31, 2019
Carrying Amount [Member]
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Notes and mortgages payable	$ 3,819,434	$ 3,809,643
Revolving credit facility		36,918
Total liabilities	3,819,434	3,846,561
Fair Value [Member]
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Notes and mortgages payable	3,871,644	3,848,266
Revolving credit facility		36,919
Total liabilities	$ 3,871,644	$ 3,885,185

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Leases - Schedule of Rental Revenues (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Disaggregation Of Revenue [Abstract]
Fixed rental revenues	$ 627,352	$ 647,345	$ 626,745
Variable rental revenues	51,663	62,163	50,393
Total rental revenue	$ 679,015	$ 709,508	$ 677,138

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Leases - Schedule of Rental Revenues (Parenthetical) (Details)	12 Months Ended
	Dec. 31, 2020 USD ($)
Disaggregation Of Revenue [Abstract]
Non-cash write-offs, primarily for straight-line rent receivables	$ 33,205,000
Uncollectible accounts receivable	$ 2,051,000

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Leases - Schedule of Future Undiscounted Cash Flows Under Non-Cancelable Operating Leases (Details) $ in Thousands	Dec. 31, 2020 USD ($)
Leases [Abstract]
2021	$ 638,723
2022	631,503
2023	606,371
2024	579,138
2025	519,018
Thereafter	2,367,495
Total	$ 5,342,248

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Fee and Other Income - Summary of Fee and Other Income (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Fee income:
Total fee income	$ 28,070	$ 22,744	$ 18,629
Other income	7,152	11,502	11,904
Total fee and other income	35,222	34,246	30,533
Property Management Fees [Member]
Fee income:
Total fee income	9,242	6,852	6,163
Asset Management Fees [Member]
Fee income:
Total fee income	14,266	10,442	7,912
Acquisition, Disposition and Leasing Fee [Member]
Fee income:
Total fee income	2,629	3,435	3,160
Other Fee Income [Member]
Fee income:
Total fee income	$ 1,933	$ 2,015	$ 1,394

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Fee and Other Income - Summary of Amount Receivable from Customers under Various Fee Agreement (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2020 USD ($)
Disaggregation Of Revenue [Line Items]
Balance as of December 31, 2019	$ 19,231
Balance as of December 31, 2020	17,502
Revenue from Contract with Customers Under Various Fee Agreements [Member]
Disaggregation Of Revenue [Line Items]
Balance as of December 31, 2019	2,413
Balance as of December 31, 2020	5,179
Increase	2,766
Revenue from Contract with Customers Under Various Fee Agreements [Member] | Property Management Fees [Member]
Disaggregation Of Revenue [Line Items]
Balance as of December 31, 2019	752
Balance as of December 31, 2020	793
Increase	41
Revenue from Contract with Customers Under Various Fee Agreements [Member] | Asset Management Fees [Member]
Disaggregation Of Revenue [Line Items]
Balance as of December 31, 2019	1,653
Balance as of December 31, 2020	1,949
Increase	296
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, 2020	2,259
Increase	2,259
Revenue from Contract with Customers Under Various Fee Agreements [Member] | Other Fee Income [Member]
Disaggregation Of Revenue [Line Items]
Balance as of December 31, 2019	8
Balance as of December 31, 2020	178
Increase	$ 170

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Interest and Other Income, net - Schedule Of Interest And Other Income (Loss), net (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Interest And Other Income [Abstract]
Interest income, net	$ 2,054	$ 5,484	$ 5,203
Mark-to-market of investments in our deferred compensation plans	2,436	3,906	(922)
Preferred equity investment income		454	3,655
Total interest and other income, net	$ 4,490	$ 9,844	$ 7,936

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Interest and Debt Expense - Details of Interest and Debt Expense (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Interest And Debt Expense [Abstract]
Interest expense	$ 134,931	$ 137,356	$ 136,630
Amortization of deferred financing costs	9,277	19,323	11,023
Total interest and debt expense	$ 144,208	$ 156,679	$ 147,653

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Interest and Debt Expense - Details of Interest and Debt Expense (Parenthetical) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Interest And Debt Expense [Line Items]
Proceeds from debt refinancing	$ 9,791	$ 1,259,843	$ 16,700
1633 Broadway [Member]
Interest And Debt Expense [Line Items]
Expense from non-cash write-off of deferred financing costs	8,215
Proceeds from debt refinancing	$ 1,250,000

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Incentive Compensation - Additional Information (Details) - USD ($)		12 Months Ended
	Jan. 17, 2020	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018	Nov. 30, 2014
Performance Programs [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Vesting period		4 years
Unrecognized compensation cost expected to be recognized over a weighted-average period		2 years 1 month 6 days
Performance measurement period, term		3 years
Fair value of awards granted		$ 7,488,000	$ 8,106,000	$ 7,009,000
Unrecognized compensation cost		$ 8,999,000
Units, Granted		1,068,693
Vested units		216,005
Remaining units nonvested		3,780,792	3,595,834
Restricted Stock [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Vesting period		4 years
Fair value granted		$ 1,209,000	$ 1,238,000	$ 1,335,000
Unrecognized compensation cost expected to be recognized over a weighted-average period		2 years 3 months 18 days
Unrecognized compensation cost		$ 1,696,000
Units, Granted		92,424
Vested units		75,895
Remaining units nonvested		168,708	168,470
Employee Stock Option [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Unrecognized compensation cost		$ 60,000
Stock options, granted		0		0
Stock Options Expiration Period		10 years
Employee Stock Option [Member] | Maximum [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Vesting period		5 years
Employee Stock Option [Member] | Minimum [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Vesting period		3 years
Equity Incentive Plan [Member] | Full Value Awards [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Shares available for grant		7,001,002
Equity Incentive Plan [Member] | Full Value Awards [Member] | Maximum [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Shares available for grant					17,142,857
Equity Incentive Plan [Member] | Not Full Value Awards [Member] | Maximum [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Shares available for grant					34,285,714
LTIP Units [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Fair value granted		$ 10,940,000	$ 13,091,000	$ 10,145,000
Unrecognized compensation cost		$ 12,970,000
Unrecognized compensation cost expected to be recognized over a weighted-average period		2 years 7 months 6 days
Units, Granted		931,855
Vested units		778,510
Remaining units nonvested		1,724,809	1,571,464
LTIP Units [Member] | Maximum [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Vesting period		5 years
LTIP Units [Member] | Minimum [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Vesting period		3 years
2016 Performance Program [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Fair value granted		$ 10,520,000
Unrecognized compensation cost expected to be recognized over a weighted-average period		4 years
Performance measurement period, term			3 years
Performance goals met in percentile based on relative index			30th percentile
Units, Granted	1,085,244
Earned Units	216,005
Percentage of earned units	19.90%
Vested units	107,996
Remaining units nonvested		108,009
2019 Performance Program [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Vesting period	4 years
Performance measurement period, term	3 years
Fair value of awards granted	$ 7,488,000
Performance measurement period, start date	Jan. 01, 2020
Performance measurement period, end date	Dec. 31, 2022
Reduction in percentage on number of LTIP units earned if negative TSR	30.00%
2019 Performance Program [Member] | Share-Based Compensation Award Tranche One [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Percentage of earned units	50.00%
Percentage of the awards that vest	50.00%
2019 Performance Program [Member] | Share-Based Compensation Award Tranche Two [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Percentage of earned units	50.00%
Percentage of the awards that vest	50.00%

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Incentive Compensation - Summary of Components of Stock-Based Compensation Expense (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock-based compensation expense	$ 19,239	$ 22,860	$ 19,646
Stock Options [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock-based compensation expense	60	1,295	1,954
Performance-Based Units [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock-based compensation expense	7,499	8,477	7,645
Restricted Stock [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock-based compensation expense	1,217	1,228	988
LTIP Units [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock-based compensation expense	$ 10,463	$ 11,860	$ 9,059

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Incentive Compensation - Summary of LTIP Unit Activity (Details)	12 Months Ended
	Dec. 31, 2020 $ / shares shares
Performance Based Award Programs
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Units, Unvested as of December 31, 2019 | shares	3,595,834
Units, Granted | shares	1,068,693
Units, Vested | shares	(216,005)
Units, Cancelled or expired | shares	(667,730)
Units, Unvested as of December 31, 2020 | shares	3,780,792
Weighted-Average Grant-Date Fair Value (per unit/share), Unvested as of December 31, 2017 | $ / shares	$ 6.54
Weighted-Average Grant-Date Fair Value (per unit/share), Granted | $ / shares	7.01
Weighted-Average Grant-Date Fair Value (per unit/share), Vested | $ / shares	9.71
Weighted-Average Grant-Date Fair Value (per unit/share), Cancelled or expired | $ / shares	9.71
Weighted-Average Grant-Date Fair Value (per unit/share), Unvested as of December 31, 2018 | $ / shares	$ 5.93
LTIP Units [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Units, Unvested as of December 31, 2019 | shares	1,571,464
Units, Granted | shares	931,855
Units, Vested | shares	(778,510)
Units, Unvested as of December 31, 2020 | shares	1,724,809
Weighted-Average Grant-Date Fair Value (per unit/share), Unvested as of December 31, 2017 | $ / shares	$ 13.30
Weighted-Average Grant-Date Fair Value (per unit/share), Granted | $ / shares	11.74
Weighted-Average Grant-Date Fair Value (per unit/share), Vested | $ / shares	13.51
Weighted-Average Grant-Date Fair Value (per unit/share), Unvested as of December 31, 2018 | $ / shares	$ 12.36

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Incentive Compensation - Summary of Restricted Stock Activity (Details) - Restricted Stock [Member]	12 Months Ended
	Dec. 31, 2020 $ / shares shares
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Units, Unvested as of December 31, 2019 | shares	168,470
Units, Granted | shares	92,424
Units, Vested | shares	(75,895)
Units, Cancelled or expired | shares	(16,291)
Units, Unvested as of December 31, 2020 | shares	168,708
Weighted-Average Grant-Date Fair Value (per unit/share), Unvested as of December 31, 2017 | $ / shares	$ 14.27
Weighted-Average Grant-Date Fair Value (per unit/share), Granted | $ / shares	13.08
Weighted-Average Grant-Date Fair Value (per unit/share), Vested | $ / shares	14.71
Weighted-Average Grant-Date Fair Value (per unit/share), Cancelled or expired | $ / shares	14.09
Weighted-Average Grant-Date Fair Value (per unit/share), Unvested as of December 31, 2018 | $ / shares	$ 13.44

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Incentive Compensation - Summary of Stock Option Activity (Details) - $ / shares	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2018
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Weighted-Average Exercise Price, Outstanding at December 31, 2018	$ 17.07
Weighted-Average Exercise Price, Cancelled or expired	17.50
Weighted-Average Exercise Price, Outstanding at December 31, 2019	17.06
Weighted-Average Exercise Price, Options vested and expected to vest at December 31, 2019	17.06
Weighted-Average Exercise Price, Options exercisable at December 31, 2019	$ 17.06
Weighted-Average Remaining Contractual Term (in years), Outstanding at December 31, 2019	4 years 8 months 12 days
Weighted-Average Remaining Contractual Term (in years), Options vested and expected to vest at December 31, 2019	4 years 8 months 12 days
Weighted-Average Remaining Contractual Term (in years), Options exercisable at December 31, 2019	4 years 8 months 12 days
Employee Stock Option [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Shares, Outstanding at December 31, 2018	2,084,943
Shares, Granted	0	0
Shares, Cancelled or expired	(52,450)
Shares, Outstanding at December 31, 2019	2,032,493
Shares, Options vested and expected to vest at December 31, 2019	2,032,493
Shares, Options exercisable at December 31, 2019	2,032,493

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Earnings Per Share - Summary of Computation of Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Numerator:
Net (loss) income from continuing operations attributable to common stockholders	$ (20,063)	$ (6,418)	$ 4,079
Earnings allocated to unvested participating securities	(44)	(27)	(18)
Numerator for net (loss) income from continuing operations per common share - basic and diluted	(20,107)	(6,445)	4,061
Net (loss) income from discontinued operations attributable to common stockholders	(4,641)	(30,481)	5,068
Earnings allocated to unvested participating securities	(22)	(44)	(61)
Numerator for net (loss) income from discontinued operations per common share - basic and diluted	(4,663)	(30,525)	5,007
Numerator for net (loss) income per common share - basic and diluted	$ (24,770)	$ (36,970)	$ 9,068
Denominator:
Weighted average common shares outstanding	222,436,170	231,538,065	239,526,694
Effect of dilutive stock-based compensation plans			29,000
Denominator for diluted (loss) income per common share - weighted average shares	222,436,170	231,538,065	239,555,636
(Loss) income per Common Share - Basic and Diluted:
Continuing operations, net	$ (0.09)	$ (0.03)	$ 0.02
Discontinued operations, net	(0.02)	(0.13)	0.02
Net (loss) income per common share - basic and diluted	$ (0.11)	$ (0.16)	$ 0.04

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Earnings Per Share - Summary of Computation of Earnings Per Share (Parenthetical) (Details) - shares shares in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Earnings Per Share [Abstract]
Effect of dilutive securities excluded from computation of earning per share	23,540	27,191	27,510

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Summary of Quarterly Results (unaudited) - Summary of Quarterly Results of Operations (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2020	Sep. 30, 2020	Jun. 30, 2020	Mar. 31, 2020	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Quarterly Financial Data [Abstract]
Revenues	$ 182,358	$ 176,775	$ 171,118	$ 183,986	$ 186,769	$ 191,253	$ 181,343	$ 184,389	$ 714,237	$ 743,754	$ 707,671
Net (loss) income attributable to the common stockholders	$ (14,824)	$ (6,958)	$ (6,270)	$ 3,348	$ (50,145)	$ 7,082	$ 2,455	$ 3,709	$ (24,704)	$ (36,899)	$ 9,147
(Loss) income Per Common Share Basic	$ (0.07)	$ (0.03)	$ (0.03)	$ 0.01	$ (0.22)	$ 0.03	$ 0.01	$ 0.02	$ (0.11)	$ (0.16)	$ 0.04
(Loss) income Per Common Share Diluted	$ (0.07)	$ (0.03)	$ (0.03)	$ 0.01	$ (0.22)	$ 0.03	$ 0.01	$ 0.02	$ (0.11)	$ (0.16)	$ 0.04

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Related Parties - Additional Information (Details) - USD ($)		12 Months Ended
	Mar. 27, 2020	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Related Party Transaction [Line Items]
Fee and other income		$ 35,222,000	$ 34,246,000	$ 30,533,000
Accounts and other receivables, net		17,502,000	19,231,000
Property management, asset management, leasing and other related services fee income		28,070,000	22,744,000	18,629,000
Transaction related costs		1,096,000	1,999,000	1,471,000
Accounts payable and accrued expenses		101,901,000	117,356,000
Due from Affiliates			217,918,000
Repayment of amounts due from affiliates		$ 36,918,000	181,000,000
Fund X [Member]
Related Party Transaction [Line Items]
Due from Affiliates			36,918,000
Note receivables basis spread on variable rate		2.20%
Repayment of amounts due from affiliates	$ 36,918,000
Repayment of accrued interest	$ 349,000
712 Fifth Avenue [Member]
Related Party Transaction [Line Items]
Equity method paramount ownership percentage		50.00%
CNBB-RDF Holdings Otto Family [Member] | Management Agreements [Member]
Related Party Transaction [Line Items]
Fee and other income		$ 1,227,000	842,000	838,000
Accounts and other receivables, net		34,000
Unconsolidated Joint Ventures and Real Estate Funds [Member] | Management Agreements [Member]
Related Party Transaction [Line Items]
Accounts and other receivables, net		5,011,000	2,734,000
Property management, asset management, leasing and other related services fee income		$ 22,986,000	17,466,000	15,231,000
Hamburg Trust Consulting GMBH ("HTC") [Member]
Related Party Transaction [Line Items]
Mark-up cost percentage		10.00%
Transaction related costs		$ 512,000	796,000	240,000
Accounts payable and accrued expenses		$ 123,000	38,000
Hamburg Trust Consulting GMBH ("HTC") [Member] | Chairman, Chief Executive Officer and President [Member]
Related Party Transaction [Line Items]
Percentage of ownership		100.00%
Mannheim Trust [Member] | Board of Director [Member] | 712 Fifth Avenue [Member]
Related Party Transaction [Line Items]
Equity method paramount ownership percentage		50.00%
Lease rental income		$ 362,000	360,000	$ 366,000
Kramer Design Services [Member]
Related Party Transaction [Line Items]
Accounts payable and accrued expenses		0
Development expenses		$ 187,000
Kramer Design Services [Member] | 712 Fifth Avenue [Member]
Related Party Transaction [Line Items]
Equity method paramount ownership percentage		50.00%
Expense recognized		$ 29,000	$ 325,000

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Commitments and Contingencies - Additional Information (Details)	12 Months Ended
	Dec. 31, 2020 ft²	Feb. 16, 2018 USD ($)	Nov. 23, 2014 ft²
Other Commitments [Line Items]
Area of office and retail properties | ft²	12,900,000
Minimum [Member] | New York State Division Of Taxation And Finance [Member]
Other Commitments [Line Items]
Loss Contingency, Estimate of Possible Loss | $		$ 0
Maximum [Member] | New York State Division Of Taxation And Finance [Member]
Other Commitments [Line Items]
Loss Contingency, Estimate of Possible Loss | $		$ 47,700,000
718 Fifth Avenue [Member]
Other Commitments [Line Items]
Percentage of tenancy-in-common interest in property			50.00%
Put right notice period	12 months
712 Fifth Avenue [Member]
Other Commitments [Line Items]
Percentage of ownership interest in new joint venture	50.00%
Owned by Affiliate [Member] | 718 Fifth Avenue [Member] | Third Party Affiliate [Member]
Other Commitments [Line Items]
Percentage of ownership interest in new joint venture			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] | 718 Fifth Avenue [Member]
Other Commitments [Line Items]
Area of office and retail properties | ft²			19,050

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Segments - Additional Information (Details)	12 Months Ended
	Dec. 31, 2020 Segment
Segment Reporting [Abstract]
Number of reportable segments	2

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Segments - Schedule of NOI for Each Reportable Segment Information (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Segment Reporting Information [Line Items]
Property-related revenues	$ 700,410	$ 746,436	$ 740,332
Property-related operating expenses	(273,440)	(274,836)	(274,078)
NOI from unconsolidated joint ventures	48,631	22,409	20,730
NOI	475,601	494,009	486,984
New York [Member]
Segment Reporting Information [Line Items]
Property-related revenues	454,071	482,648	468,013
Property-related operating expenses	(194,648)	(191,211)	(188,008)
NOI from unconsolidated joint ventures	11,540	13,151	20,395
NOI	270,963	304,588	300,400
San Francisco [Member]
Segment Reporting Information [Line Items]
Property-related revenues	234,893	238,808	222,071
Property-related operating expenses	(68,924)	(69,815)	(60,043)
NOI from unconsolidated joint ventures	38,892	9,065
NOI	204,861	178,058	162,028
Other [Member]
Segment Reporting Information [Line Items]
Property-related revenues	11,446	24,980	50,248
Property-related operating expenses	(9,868)	(13,810)	(26,027)
NOI from unconsolidated joint ventures	(1,801)	193	335
NOI	$ (223)	$ 11,363	$ 24,556

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Segments - Schedule of Reconciliation of NOI to Net (Loss) Income Attributable to Common Stockholders (Details) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2020	Sep. 30, 2020	Jun. 30, 2020	Mar. 31, 2020	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Segment Reporting [Abstract]
NOI									$ 475,601	$ 494,009	$ 486,984
Fee income									28,070	22,744	18,629
Depreciation and amortization expense									(235,200)	(240,104)	(240,868)
General and administrative expenses									(64,917)	(68,556)	(57,563)
NOI from unconsolidated joint ventures									(48,631)	(22,409)	(20,730)
(Loss) income from unconsolidated joint ventures									(18,619)	(4,706)	3,468
Interest and other income, net									4,490	9,844	7,936
Interest and debt expense									(144,208)	(156,679)	(147,653)
Loss on early extinguishment of debt										(11,989)
Adjustments related to discontinued operations (including impairments and gain or loss on sale of real estate)									(8,390)	(15,292)	(31,909)
Other, net									(824)	(2,342)	(1,740)
Net (loss) income before income taxes									(12,628)	4,520	16,554
Income tax expense									(1,493)	(312)	(3,139)
(Loss) income from continuing operations, net									(14,121)	4,208	13,415
(Loss) income from discontinued operations, net									(5,075)	(33,811)	5,578
Net (loss) income									(19,196)	(29,603)	18,993
Consolidated joint ventures									(9,257)	(11,022)	(8,182)
Consolidated real estate fund									1,450	(313)	(720)
Operating Partnership									2,299	4,039	(944)
Net (loss) income attributable to common stockholders	$ (14,824)	$ (6,958)	$ (6,270)	$ 3,348	$ (50,145)	$ 7,082	$ 2,455	$ 3,709	$ (24,704)	$ (36,899)	$ 9,147

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Segments - Schedule of Total Assets for Each Reportable Segments Information (Details) - USD ($) $ in Thousands	Dec. 31, 2020		Dec. 31, 2019		Dec. 31, 2018
Segment Reporting Information [Line Items]
Total assets	$ 8,554,097	[1]	$ 8,734,135	[1]	$ 8,755,978
New York [Member]
Segment Reporting Information [Line Items]
Total assets	5,388,596		5,439,929		5,583,022
San Francisco [Member]
Segment Reporting Information [Line Items]
Total assets	2,698,983		2,708,463		2,388,094
Other [Member]
Segment Reporting Information [Line Items]
Total assets	$ 466,518		$ 585,743		$ 784,862

[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 91.3% as of December 31, 2020. The assets and liabilities of the Operating Partnership, as of December 31, 2020, include $4,025,387 and $2,546,914 of assets and liabilities, respectively, of certain VIEs that are consolidated by the Operating Partnership. See Note 11, Variable Interest Entities (“VIEs”).

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Schedule-II - Valuation and Qualifying Accounts (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2018 USD ($)
Valuation And Qualifying Accounts Disclosure [Line Items]
Balance at Beginning of Year	$ 19,865
Additions Charged Against Operations	324
Uncollectible accounts Written-off	(19,596)
Balance at End of Year	593
Allowance for Doubtful Accounts [Member]
Valuation And Qualifying Accounts Disclosure [Line Items]
Balance at Beginning of Year	277
Additions Charged Against Operations	324
Uncollectible accounts Written-off	(8)
Balance at End of Year	593	[1]
Allowance For Preferred Equity Investments
Valuation And Qualifying Accounts Disclosure [Line Items]
Balance at Beginning of Year	19,588
Uncollectible accounts Written-off	$ (19,588)

[1] Represents allowance for tenant receivables arising from operating leases. The allowance was written-off on January 1, 2019 upon the adoption of ASU 2016-02, an update to ASC Topic 842, Leases, which requires companies to account for impairment of receivables as reduction to “rental income” if the collectability of these receivables is not probable.

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Schedule III - Real Estate and Accumulated Depreciation (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2020
Real Estate And Accumulated Depreciation [Line Items]
Encumbrances				$ 3,819,434
Initial cost to company, Land				1,966,237
Initial cost to company, Building and Improvements				5,430,368
Costs capitalized subsequent to acquisition, Building and Improvements				566,710
Gross amount at which carried at close of period, Land				1,966,237
Gross amount at which carried at close of period, Buildings and Improvements				5,997,078
Gross amount at which carried at close of period, Total	$ 7,889,885	$ 7,793,784	$ 7,653,276	7,963,315
Accumulated depreciation and amortization	(790,216)	(617,974)	(445,328)	(966,697)
Costs capitalized subsequent to acquisition, Building and Improvements, other				9,625
Gross amount at which carried at close of period, Buildings and Improvements, other				9,625
Gross amount at which carried at close of period, other				9,625
Accumulated depreciation and amortization, other	$ (4,199)
Date acquired, other	Nov. 24, 2014
Real Estate:
Beginning balance	$ 7,889,885	7,793,784	7,653,276
Buildings and improvements	82,571	104,408	144,666
Assets sold and written-off	(9,141)	(8,307)	(4,158)
Ending balance	7,963,315	7,889,885	7,793,784
Accumulated Depreciation:
Beginning balance	790,216	617,974	445,328
Additions charged to expense	185,622	180,549	176,804
Accumulated depreciation related to assets sold and written-off	(9,141)	(8,307)	(4,158)
Ending balance	$ 966,697	$ 790,216	$ 617,974
Minimum [Member]
Real Estate And Accumulated Depreciation [Line Items]
Life on which depreciation in latest income statement is computed, other	5 years
Maximum [Member]
Real Estate And Accumulated Depreciation [Line Items]
Life on which depreciation in latest income statement is computed, other	40 years
1633 Broadway [Member]
Real Estate And Accumulated Depreciation [Line Items]
Encumbrances				1,250,000
Initial cost to company, Land				502,846
Initial cost to company, Building and Improvements				1,398,341
Costs capitalized subsequent to acquisition, Building and Improvements				151,358
Gross amount at which carried at close of period, Land				502,846
Gross amount at which carried at close of period, Buildings and Improvements				1,549,699
Gross amount at which carried at close of period, Total	$ 2,052,545			2,052,545
Accumulated depreciation and amortization	$ (258,683)			(258,683)
Date of construction	Dec. 31, 1971
Date acquired	Nov. 24, 2014
Real Estate:
Ending balance	$ 2,052,545
Accumulated Depreciation:
Ending balance	$ 258,683
1633 Broadway [Member] | Minimum [Member]
Real Estate And Accumulated Depreciation [Line Items]
Life on which depreciation in latest income statement is computed	5 years
1633 Broadway [Member] | Maximum [Member]
Real Estate And Accumulated Depreciation [Line Items]
Life on which depreciation in latest income statement is computed	40 years
1301 Avenue of Americas [Member]
Real Estate And Accumulated Depreciation [Line Items]
Encumbrances				850,000
Initial cost to company, Land				406,039
Initial cost to company, Building and Improvements				1,051,697
Costs capitalized subsequent to acquisition, Building and Improvements				101,642
Gross amount at which carried at close of period, Land				406,039
Gross amount at which carried at close of period, Buildings and Improvements				1,153,339
Gross amount at which carried at close of period, Total	$ 1,559,378			1,559,378
Accumulated depreciation and amortization	$ (199,657)			(199,657)
Date of construction	Dec. 31, 1963
Date acquired	Nov. 24, 2014
Real Estate:
Ending balance	$ 1,559,378
Accumulated Depreciation:
Ending balance	$ 199,657
1301 Avenue of Americas [Member] | Minimum [Member]
Real Estate And Accumulated Depreciation [Line Items]
Life on which depreciation in latest income statement is computed	5 years
1301 Avenue of Americas [Member] | Maximum [Member]
Real Estate And Accumulated Depreciation [Line Items]
Life on which depreciation in latest income statement is computed	40 years
31 West 52nd Street [Member]
Real Estate And Accumulated Depreciation [Line Items]
Encumbrances				500,000
Initial cost to company, Land				221,318
Initial cost to company, Building and Improvements				604,994
Costs capitalized subsequent to acquisition, Building and Improvements				62,997
Gross amount at which carried at close of period, Land				221,318
Gross amount at which carried at close of period, Buildings and Improvements				667,991
Gross amount at which carried at close of period, Total	$ 889,309			889,309
Accumulated depreciation and amortization	$ (107,164)			(107,164)
Date of construction	Dec. 31, 1987
Date acquired	Nov. 24, 2014
Real Estate:
Ending balance	$ 889,309
Accumulated Depreciation:
Ending balance	$ 107,164
31 West 52nd Street [Member] | Minimum [Member]
Real Estate And Accumulated Depreciation [Line Items]
Life on which depreciation in latest income statement is computed	5 years
31 West 52nd Street [Member] | Maximum [Member]
Real Estate And Accumulated Depreciation [Line Items]
Life on which depreciation in latest income statement is computed	40 years
1325 Avenue of the Americas [Member]
Real Estate And Accumulated Depreciation [Line Items]
Initial cost to company, Land				174,688
Initial cost to company, Building and Improvements				370,553
Costs capitalized subsequent to acquisition, Building and Improvements				61,785
Gross amount at which carried at close of period, Land				174,688
Gross amount at which carried at close of period, Buildings and Improvements				432,338
Gross amount at which carried at close of period, Total	$ 607,026			607,026
Accumulated depreciation and amortization	$ (68,822)			(68,822)
Date of construction	Dec. 31, 1989
Date acquired	Nov. 24, 2014
Real Estate:
Ending balance	$ 607,026
Accumulated Depreciation:
Ending balance	$ 68,822
1325 Avenue of the Americas [Member] | Minimum [Member]
Real Estate And Accumulated Depreciation [Line Items]
Life on which depreciation in latest income statement is computed	5 years
1325 Avenue of the Americas [Member] | Maximum [Member]
Real Estate And Accumulated Depreciation [Line Items]
Life on which depreciation in latest income statement is computed	40 years
900 Third Avenue [Member]
Real Estate And Accumulated Depreciation [Line Items]
Initial cost to company, Land				103,741
Initial cost to company, Building and Improvements				296,031
Costs capitalized subsequent to acquisition, Building and Improvements				28,335
Gross amount at which carried at close of period, Land				103,741
Gross amount at which carried at close of period, Buildings and Improvements				324,366
Gross amount at which carried at close of period, Total	$ 428,107			428,107
Accumulated depreciation and amortization	$ (56,831)			(56,831)
Date of construction	Dec. 31, 1983
Date acquired	Nov. 24, 2014
Real Estate:
Ending balance	$ 428,107
Accumulated Depreciation:
Ending balance	$ 56,831
900 Third Avenue [Member] | Minimum [Member]
Real Estate And Accumulated Depreciation [Line Items]
Life on which depreciation in latest income statement is computed	5 years
900 Third Avenue [Member] | Maximum [Member]
Real Estate And Accumulated Depreciation [Line Items]
Life on which depreciation in latest income statement is computed	40 years
Total New York [Member]
Real Estate And Accumulated Depreciation [Line Items]
Encumbrances				2,600,000
Initial cost to company, Land				1,408,632
Initial cost to company, Building and Improvements				3,721,616
Costs capitalized subsequent to acquisition, Building and Improvements				406,117
Gross amount at which carried at close of period, Land				1,408,632
Gross amount at which carried at close of period, Buildings and Improvements				4,127,733
Gross amount at which carried at close of period, Total	$ 5,536,365			5,536,365
Accumulated depreciation and amortization	(691,157)			(691,157)
Real Estate:
Ending balance	5,536,365
Accumulated Depreciation:
Ending balance	691,157
One Market Plaza [Member]
Real Estate And Accumulated Depreciation [Line Items]
Encumbrances				975,000
Initial cost to company, Land				288,743
Initial cost to company, Building and Improvements				988,014
Costs capitalized subsequent to acquisition, Building and Improvements				95,035
Gross amount at which carried at close of period, Land				288,743
Gross amount at which carried at close of period, Buildings and Improvements				1,083,049
Gross amount at which carried at close of period, Total	1,371,792			1,371,792
Accumulated depreciation and amortization	$ (187,570)			(187,570)
Date of construction	Dec. 31, 1976
Date acquired	Nov. 24, 2014
Real Estate:
Ending balance	$ 1,371,792
Accumulated Depreciation:
Ending balance	$ 187,570
One Market Plaza [Member] | Minimum [Member]
Real Estate And Accumulated Depreciation [Line Items]
Life on which depreciation in latest income statement is computed	5 years
One Market Plaza [Member] | Maximum [Member]
Real Estate And Accumulated Depreciation [Line Items]
Life on which depreciation in latest income statement is computed	40 years
300 Mission Street [Member]
Real Estate And Accumulated Depreciation [Line Items]
Encumbrances				244,434
Initial cost to company, Land				141,097
Initial cost to company, Building and Improvements				343,819
Costs capitalized subsequent to acquisition, Building and Improvements				40,887
Gross amount at which carried at close of period, Land				141,097
Gross amount at which carried at close of period, Buildings and Improvements				384,706
Gross amount at which carried at close of period, Total	$ 525,803			525,803
Accumulated depreciation and amortization	$ (36,360)			(36,360)
Date of construction	Dec. 31, 1968
Date acquired	Dec. 31, 2017
Real Estate:
Ending balance	$ 525,803
Accumulated Depreciation:
Ending balance	$ 36,360
300 Mission Street [Member] | Minimum [Member]
Real Estate And Accumulated Depreciation [Line Items]
Life on which depreciation in latest income statement is computed	5 years
300 Mission Street [Member] | Maximum [Member]
Real Estate And Accumulated Depreciation [Line Items]
Life on which depreciation in latest income statement is computed	40 years
One Front Street [Member]
Real Estate And Accumulated Depreciation [Line Items]
Initial cost to company, Land				127,765
Initial cost to company, Building and Improvements				376,919
Costs capitalized subsequent to acquisition, Building and Improvements				15,046
Gross amount at which carried at close of period, Land				127,765
Gross amount at which carried at close of period, Buildings and Improvements				391,965
Gross amount at which carried at close of period, Total	$ 519,730			519,730
Accumulated depreciation and amortization	$ (47,411)			(47,411)
Date of construction	Dec. 31, 1979
Date acquired	Dec. 31, 2016
Real Estate:
Ending balance	$ 519,730
Accumulated Depreciation:
Ending balance	$ 47,411
One Front Street [Member] | Minimum [Member]
Real Estate And Accumulated Depreciation [Line Items]
Life on which depreciation in latest income statement is computed	5 years
One Front Street [Member] | Maximum [Member]
Real Estate And Accumulated Depreciation [Line Items]
Life on which depreciation in latest income statement is computed	40 years
Total San Francisco [Member]
Real Estate And Accumulated Depreciation [Line Items]
Encumbrances				1,219,434
Initial cost to company, Land				557,605
Initial cost to company, Building and Improvements				1,708,752
Costs capitalized subsequent to acquisition, Building and Improvements				150,968
Gross amount at which carried at close of period, Land				557,605
Gross amount at which carried at close of period, Buildings and Improvements				1,859,720
Gross amount at which carried at close of period, Total	$ 2,417,325			2,417,325
Accumulated depreciation and amortization	(271,341)			$ (271,341)
Real Estate:
Ending balance	2,417,325
Accumulated Depreciation:
Ending balance	$ 271,341

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Schedule III - Real Estate and Accumulated Depreciation (Parenthetical) (Details) $ in Billions	Dec. 31, 2020 USD ($)
Real Estate And Accumulated Depreciation Disclosure [Abstract]
Assets and liabilities for tax purposes	$ 2.4