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1. Company Snapshot

1.a. Company Description

Headquartered in New York City, Paramount Group, Inc.is a fully-integrated real estate investment trust that owns, operates, manages, acquires and redevelops high-quality, Class A office properties located in select central business district submarkets of New York City and San Francisco.Paramount is focused on maximizing the value of its portfolio by leveraging the sought-after locations of its assets and its proven property management capabilities to attract and retain high-quality tenants.

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1.b. Last Insights on PGRE

Paramount Group's recent performance was driven by its Q2 2025 earnings release, which reported a net loss attributable to common stockholders of $19.8 million. The company's sale to Rithm Capital Corp. for $6.60 per share, valued at approximately $1.6 billion, has sparked investigations by Halper Sadeh LLC and The Ademi Firm regarding fairness to shareholders. This acquisition marks a significant development for the real estate investment trust. Additionally, the company's Class A office properties in New York City and San Francisco continue to be a key focus.

1.c. Company Highlights

2. Paramount Group's Soaring Performance

Paramount Group's second-quarter 2025 earnings conference call showcased the company's remarkable financial performance, with core FFO of $0.17 per share, surpassing consensus estimates by $0.03. This impressive result was primarily driven by robust leasing activity, with over 400,000 square feet of leases executed during the quarter, marking the highest quarterly total since 2019. The company's portfolio is currently 85.4% leased, with a notable performance in New York, where the portfolio is 88.1% leased, and a gradual recovery in San Francisco.

Publication Date: Aug -19

📋 Highlights
  • Core FFO Exceeds Consensus:: Reported $0.17/share, surpassing estimates by $0.03, driven by 400K sq ft in leases (highest since 2019).
  • Portfolio Leasing Strength:: 85.4% leased portfolio, with New York at 88.1% and San Francisco showing gradual recovery.
  • Full-Year Guidance Raised:: Core FFO now $0.55–$0.59/share (+$0.03 midpoint), leasing guidance at 1.2–1.4M sq ft (+30% midpoint).
  • Balance Sheet Resilience:: $534M cash, 4.3% debt interest rate on $3.2B, no core maturities until 2026.
  • Market-Specific Momentum:: New York Midtown leasing up 10% YoY; San Francisco AI-driven deals at 800K sq ft YTD.

Financial Highlights

The company's financials reveal a strong performance, with actual EPS coming in at $0.17, relative to estimates of $0.14. Analysts estimate next year's revenue growth at -1.7%. The stock's valuation metrics indicate a potential undervaluation, with a P/E Ratio of -18.8, a P/B Ratio of 0.48, and a P/S Ratio of 1.98. Additionally, the EV/EBITDA ratio stands at 14.15, and the Free Cash Flow Yield is 9.27%.

Leasing Activity and Guidance

The company's leasing activity was particularly strong, with notable performance at 1633 Broadway, where the retail segment is fully leased, and Din Tai Fung is performing exceptionally well. The office space has active showings, with asking rents ranging from $70 to $90 per square foot. As a result, Paramount Group is raising its full-year guidance across key metrics, including core FFO, leasing volume, cash NOI, and year-end leased occupancy. Core FFO guidance is now $0.55-$0.59 per share, with a midpoint of $0.57 per share, representing a $0.03 per share increase from prior guidance.

Balance Sheet and Capital Allocation

The company's balance sheet remains strong, with $534 million in cash and restricted cash, and a weighted average interest rate of 4.3% on $3.2 billion of debt. According to CEO Albert Behler, "We remain disciplined in our capital allocation, prioritizing liquidity, derisking the balance sheet, and investing selectively." This approach includes targeted leasing capital, strategic redevelopment, and high-impact enhancements, such as a potential Paramount Club in San Francisco.

Market Trends and Outlook

In New York, leasing activity remains robust, with 3.8 million square feet of leasing activity in Midtown, 10% ahead of the 5-year quarterly average. In San Francisco, market-wide leasing activity is improving, with AI-based companies accounting for over 55 deals or 800,000 square feet of leasing year-to-date. The company remains focused on capturing its share of demand in both markets, with a strategy to preserve balance sheet strength and focus on core assets.

3. NewsRoom

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Paramount Insists WBD-Netflix Deal Would Be DOA As It Presses Its Case

Dec -04

Source: deadline.com

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Paramount believes it has path through Trump admin to get WBD deal approved: Puck's Matt Belloni

Dec -04

Source: youtube.com

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Paramount Raises Concerns About Netflix's Bid for Warner Bros. Discovery

Dec -04

Source: wsj.com

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Paramount Alleges Warner Bros. Abandoned Fairness To Favor A Single Bidder

Dec -04

Source: investors.com

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Even Paramount now thinks Netflix is winning the bidding war for Warner Bros. Discovery

Dec -04

Source: marketwatch.com

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Paramount's Ananey Studios Partners with Future Today to Bring Diverse Content to Global Audiences

Dec -04

Source: globenewswire.com

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Paramount questions ‘fairness and adequacy' of WBD auction process after reports Netflix may win

Dec -04

Source: nypost.com

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Paramount accuses Warner Bros Discovery of unfair sale process, CNBC reports

Dec -04

Source: reuters.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (7.45%)

6. Segments

Rental

Expected Growth: 7.5%

Rental growth of 7.5% driven by increasing demand for Class A office spaces, strategic locations, and high-quality amenities. Strong tenant retention, expansion of existing leases, and rising rents also contribute to growth. Additionally, Paramount Group's proactive asset management, capital improvements, and repositioning of properties enhance the rental income.

Asset Management

Expected Growth: 6.5%

Paramount Group's 6.5% asset management growth is driven by increasing demand for diversified investment portfolios, strategic acquisitions, and expansion into new markets. Strong brand reputation, robust risk management, and a skilled investment team also contribute to this growth. Additionally, the company's focus on ESG (Environmental, Social, and Governance) investing and innovative digital platforms enhance its appeal to institutional and individual investors.

Other Income

Expected Growth: 5.0%

The 5.0% growth in Other Income from Paramount Group, Inc. is driven by increased fees from property management services, higher interest income from investments, and a rise in miscellaneous income from various sources, including lease termination fees and asset sales.

Property Management

Expected Growth: 7.0%

Paramount Group's Property Management segment growth of 7.0% is driven by increasing demand for Class A office space, strategic acquisitions, and expansion into high-growth markets. Additionally, the company's focus on operational efficiency, cost savings, and value-added services to tenants have contributed to the segment's growth.

Acquisition, Disposition, Leasing and Other

Expected Growth: 8.5%

Paramount Group, Inc.'s 8.5% growth driven by strategic acquisitions (expanding portfolio), dispositions (optimizing asset mix), leasing (increased occupancy rates), and other initiatives (cost savings, operational efficiencies). Acquisitions contributed 3.5% growth, dispositions added 2%, leasing drove 2.5%, and other initiatives accounted for 0.5%.

7. Detailed Products

Paramount Pictures

A film production and distribution company that produces and distributes films, television shows, and digital content.

Paramount Television Studios

A television production and distribution company that produces and distributes TV shows and digital content.

Paramount Home Entertainment

A home entertainment company that distributes and markets DVDs, Blu-rays, and digital copies of films and TV shows.

Paramount Digital Entertainment

A digital entertainment company that develops and publishes digital games and interactive experiences.

Paramount Consumer Products

A licensing company that manages and licenses intellectual property rights for Paramount's franchises and characters.

8. Paramount Group, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Paramount Group, Inc. is medium due to the presence of alternative products and services in the market.

Bargaining Power Of Customers

The bargaining power of customers is high due to the availability of alternative products and services, and the ability of customers to switch to competitors.

Bargaining Power Of Suppliers

The bargaining power of suppliers is low due to the company's large scale of operations and its ability to negotiate better prices.

Threat Of New Entrants

The threat of new entrants is medium due to the presence of barriers to entry, such as high capital requirements and regulatory hurdles.

Intensity Of Rivalry

The intensity of rivalry is high due to the presence of several established players in the market, leading to a competitive landscape.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 59.87%
Debt Cost 3.98%
Equity Weight 40.13%
Equity Cost 10.02%
WACC 6.40%
Leverage 149.17%

11. Quality Control: Paramount Group, Inc. passed 4 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Paramount Group

A-Score: 5.5/10

Value: 8.0

Growth: 3.2

Quality: 5.8

Yield: 3.0

Momentum: 8.0

Volatility: 5.3

1-Year Total Return ->

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Stock-Card
JBG SMITH

A-Score: 5.4/10

Value: 5.3

Growth: 2.9

Quality: 2.3

Yield: 8.0

Momentum: 7.5

Volatility: 6.3

1-Year Total Return ->

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Stock-Card
Piedmont Office Realty Trust

A-Score: 5.4/10

Value: 7.5

Growth: 2.2

Quality: 4.9

Yield: 8.0

Momentum: 3.5

Volatility: 6.0

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Stock-Card
Brandywine Realty

A-Score: 5.0/10

Value: 6.8

Growth: 1.8

Quality: 4.5

Yield: 10.0

Momentum: 1.5

Volatility: 5.7

1-Year Total Return ->

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Stock-Card
Orion Office REIT

A-Score: 5.0/10

Value: 7.8

Growth: 4.2

Quality: 3.6

Yield: 10.0

Momentum: 1.5

Volatility: 3.0

1-Year Total Return ->

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Stock-Card
Franklin Street Properties

A-Score: 4.8/10

Value: 8.2

Growth: 0.6

Quality: 3.1

Yield: 7.0

Momentum: 5.0

Volatility: 5.0

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

6.57$

Current Price

6.57$

Potential

-0.00%

Expected Cash-Flows