Paramount Group (NYSE: PGRE) reported Q4 EPS of ($0.22), $0.20 worse than the analyst estimate of ($0.02). Revenue for the quarter came in at $190.49 million versus the consensus estimate of $191.63 million.

Results of Operations:

• Reported net loss attributable to common stockholders of $50.1 million, or $0.22 per diluted share, for the quarter ended December 31, 2019, compared to net income attributable to common stockholders of $5.3 million, or $0.02 per diluted share, for the quarter ended December 31, 2018. Net loss attributable to common stockholders for the quarter ended December 31, 2019 includes (i) a $37.9 million, or $0.17 per diluted share, real estate impairment loss, (ii) a $10.8 million, or $0.05 per diluted share, loss on early extinguishment of debt and (iii) a $7.4 million, or $0.03 per diluted share, expense from the non-cash write-off of deferred financing costs. The loss on early extinguishment of debt and the write-off of deferred financing costs were incurred in connection with the $1.25 billion refinancing of 1633 Broadway in November 2019.
• Reported Core Funds from Operations (“Core FFO”) attributable to common stockholders of $58.3 million, or $0.26 per diluted share, for the quarter ended December 31, 2019, compared to $59.3 million, or $0.25 per diluted share, for the quarter ended December 31, 2018.
• Reported a 5.9% increase in Same Store Cash Net Operating Income (“NOI”) and a 1.7% increase in Same Store NOI in the quarter ended December 31, 2019, compared to the same period in the prior year.
• Leased 290,284 square feet, of which the Company’s share was 164,744 square feet that was leased at a weighted average initial rent of $86.23 per square foot. Of the square footage leased, 140,055 square feet represented second generation space, for which the Company achieved a positive mark-to-market of 1.1% on a cash basis and 10.1% on a GAAP basis. The cash and GAAP mark-to-markets for leases signed in the fourth quarter of 2019 were impacted by the execution of an 18,300 square foot lease in the mid-rise of 900 Third Avenue, which was previously leased on a short-term basis (nine months) to a tenant that was paying rental rates, well above market, in excess of $93.50 per square foot. Excluding this lease, the Company achieved a positive mark-to-market of 4.4% on a cash basis and 15.9% on a GAAP basis.

Guidance

The Company is providing its Estimated Core FFO Guidance for the full year of 2020, which is reconciled below to estimated net income attributable to common stockholders per diluted share in accordance with GAAP. The Company estimates that net income attributable to common stockholders will be between $0.02 and $0.08 per diluted share. The estimated net income attributable to common stockholders per diluted share is not a projection and is being provided solely to satisfy the disclosure requirements of the U.S. Securities and Exchange Commission.

The Company estimates 2020 Core FFO to be between $1.00 and $1.06 per diluted share. The estimated Core FFO of $1.03 per diluted share, at the midpoint of the Company’s Guidance for 2020, when compared to actual Core FFO of $0.98 per diluted share for 2019, assumes among other items, increases and decreases in the Company’s share of the following components: (i) an increase in Same Store Cash NOI of 3.8% to 4.8%, resulting in an incremental $0.06 per diluted share, (ii) an increase in Cash NOI of $0.04 per diluted share from acquisitions (Market Center, 55 Second Street and 111 Sutter Street), net of dispositions (Liberty Place) that closed during 2019, and (iii) a decrease in general and administrative expenses of $0.01 per diluted share, partially offset by (iv) a decrease in non-cash straight-line rent and amortization of above and below-market lease revenue, net of $0.03 per diluted share, (v) an increase in interest and debt expense of $0.03 per diluted share, resulting from new debt in connection with the acquisitions of Market Center, 55 Second Street, and 111 Sutter Street, and (vi) a decrease in lease termination income of $0.02 per diluted share. In addition, the Company expects to realize a $0.02 per diluted share benefit due to a lower number of weighted average shares and units outstanding, resulting from the 7.2 million common shares that were repurchased during 2019.

For earnings history and earnings-related data on Paramount Group (PGRE) click here.