4Q 2019 Investor Presentation Market Center February 2020 San Francisco
Cautionary Note on Forward-Looking Statements This presentation contains forward-looking statements within the meaning of the federal securities laws. You can identify these statements by our use of the words “assumes,” “believes,” “estimates,” “expects,” “guidance,” “intends,” “plans,” “projects” and similar expressions that do not relate to historical matters. You should exercise caution in interpreting and relying on forward-looking statements because they involve known and unknown risks, uncertainties and other factors which are, in some cases, beyond our control and could materially affect actual results, performance or achievements. These factors include, without limitation, the ability to enter into new leases or renew leases on favorable terms, dependence on tenants’ financial condition, the uncertainties of real estate development, acquisition and disposition activity, the ability to effectively integrate acquisitions, the costs and availability of financing, the ability of our joint venture partners to satisfy their obligations, the effects of local, national and international economic and market conditions, the effects of acquisitions, dispositions and possible impairment charges on our operating results, regulatory changes, including changes to tax laws and regulations, and other risks and uncertainties detailed from time to time in our filings with the U.S. Securities and Exchange Commission. We do not undertake a duty to update or revise any forward- looking statement, whether as a result of new information, future events or otherwise. The data and information herein are as of December 31, 2019 unless otherwise indicated. The Core FFO guidance set forth in this presentation represents the guidance provided in our Supplemental Operating and Financial Data issued on February 12, 2020, which was subject to the assumptions and qualifications set forth therein. 2
Paramount Group at a Glance Paramount prides itself on being a best-in-class owner and operator of high-quality, Class A office properties in New York, San Francisco and Washington, D.C. Ticker: PGRE 1978 2014 NYSE-LISTED COMPANY FOUNDED IN INITIAL PUBLIC OFFERING 14 MM (1) ~$15 B (2) 14 (1) SQUARE FEET REIT ASSETS TOTAL AUM 95.9% (5) $7 B (3) $395 MM (4) (5) LEASED TOTAL MARKET CAPITALIZATION CASH NOI Note: Please refer to the Appendix for all Non-GAAP reconciliations and list of defined terms. All figures as of December 31, 2019. (1) Includes 14 REIT-owned assets aggregating 13.1 million square feet and five other buildings that are managed by Paramount aggregating 1.0 million square feet. (2) Calculated based on (i) Green Street Advisors’ estimate of Gross Asset Value as of January 10, 2020 for REIT-owned assets, (ii) management’s estimate of values for managed assets and (iii) committed capital for Fund assets as of December 31, 2019. (3) Based on PGRE closing price of $13.92 on December 31, 2019. (4) Represents the midpoint of Cash NOI assumptions used in Full Year 2020 guidance. 3 (5) At PGRE’s share.
Deep & Experienced Management Team Executive Management Peter Brindley Leasing Albert Behler Wilbur Paes Peter Brindley David Zobel Chairman, Chief Executive Officer & Chief Financial Officer Leasing Acquisitions President & Treasurer Senior Vice Presidents Matt Bautista Ermelinda Berberi Christopher Brandt David Eaton Mario Fulgieri Ben Goodsir Development & Construction Asset Management Chief Accounting Officer Leasing, San Francisco Tax Asset Management Todd Januzzi Bernard Marasco Douglas Neye Michael Jackowitz Gage Johnson Michael Nathan Counsel – Leasing & Property Leasing, New York Capital Markets Chief Information & Technology General Counsel Acquisitions Management Officer 4
4Q 2019 & Full Year 2019 Highlights • Leased over 290,000 square feet in the quarter. • Leased over 1,500,000 square feet for the full year 2019, representing the Exceptional highest leasing volume on record as a public company. Leasing • Full year 2019 leasing spreads were positive 14.8% cash and positive 17.1% GAAP. Below average lease roll over the next five years – just over 7.0% (1) per • annum at share. Proactively • Lease roll over the next five years excluding the Barclays space at 1301 Managing Lease Roll Avenue of the Americas – just over 6.0% (1) per annum at share. • Acquired 111 Sutter Street, 55 Second Street and Market Center in San Francisco using joint venture partners and proceeds from asset sales. Strategic • Opportunistically executed on $200 million share repurchase program by Capital Recycling repurchasing 14.7 million common shares (~6.0% (2) of outstanding shares) at a weighted average price of $13.59 per share, a ~39% discount to NAV (3) . • Core FFO: $1.00 to $1.06 ($1.03 at midpoint), representing 5.1% earnings growth over 2019 at the midpoint. Introduced 2020 • Increase in PGRE’s share of Same Store Cash NOI: 3.8% to 4.8% (4.3% at Guidance midpoint). Note: Please refer to the Appendix for all Non-GAAP reconciliations and list of defined terms. (1) Reflects percentage of leased space and excludes month-to-month leases and currently vacant space. (2) Based on common shares outstanding at June 30, 2018, before share repurchases commenced. 5 (3) Represents Green Street Advisors’ estimate for NAV per share of $22.25 as of January 10, 2020.
Cash NOI Growth Fueling Core FFO Growth PGRE’s Share of Cash NOI ($ in millions) Core FFO per Share 6 Note: Please refer to the Appendix for all Non-GAAP reconciliations and list of defined terms.
2020 Guidance: Core FFO Bridge Note: Please refer to the Appendix for all Non-GAAP reconciliations and list of defined terms. (1) Based on the midpoint of Core FFO Guidance ($1.00 - $1.06 per share) and assumed Same Store Cash NOI growth (3.8% - 4.8%) for 2020. (2) Represents the incremental Cash NOI in 2020 compared to 2019 from acquisitions (111 Sutter Street, 55 Second Street and Market Center), net of dispositions (Liberty 7 Place).
Schedule of Free Rent Burn Off As of December 31, 2019, we have $51.0 million of annualized initial cash rents that are yet to contribute to Cash NOI: • $37.4 million from commenced leases in free rent periods, and • $13.6 million from signed leases not yet commenced. These leases become cash paying over the next three years as detailed below: (In thousands) Annualized Initial Cash Rent 1 Amount Contributing to: As of December 31, 2019 100% Amount PGRE Share 2020 2021 2022 New York: Commenced Leases in Free Rent Period $25,046 $24,460 $12,460 $24,460 $24,460 Signed Leases Not Yet Commenced 10,119 8,781 2,532 7,264 8,781 Subtotal $35,165 $33,241 $14,992 $31,724 $33,241 San Francisco: Commenced Leases in Free Rent Period $19,488 $12,977 $11,911 $12,977 $12,977 Signed Leases Not Yet Commenced 9,008 4,855 2,036 4,135 4,135 Subtotal $28,496 $17,832 $13,947 $17,112 $17,112 Total Commenced Leases in Free Rent Period $44,534 $37,437 $24,371 $37,437 $37,437 Total Signed Leases Not Yet Commenced 19,127 13,636 4,568 11,399 12,916 Grand Total $63,661 $51,073 $28,939 $48,836 $50,353 8
Change in Portfolio Composition 1Q 2015 4Q 2019 San Francisco New York New York San Francisco 1 Property 6 Properties 7 Properties 6 Properties 8% 50% 50% 43% Number of REIT-Owned Properties Washington, D.C. Washington, D.C. 5 Properties 1 Property 42% 7% New York San Francisco San Francisco New York 7.2MM Sq. Ft. 1.6MM Sq. Ft. 4.3MM Sq. Ft. 8.6MM Sq. Ft. 69% 16% 33% 66% Total Square Feet (At 100%) Washington, D.C. Washington, D.C. 1.6MM Sq. Ft. 191,000 Sq. Ft. 15% 1% New York San Francisco San Francisco New York $495.9MM $183.2MM $41.1MM $423.0MM 72% 26% 8% 78% Annualized Rent (At PGRE’s Share) (1) Washington, D.C. Washington, D.C. $76.3MM $15.0MM 14% 2% 9 (1) Please see page 26 for our definition of this measure.
New York Portfolio 8.6 MM square feet – 95.5% Leased (1) 1633 Broadway 900 Third Avenue Midtown Manhattan 98.4% Leased 83.4% Leased 1325 Avenue 1301 Avenue 31 West 52 nd 60 Wall Street of the Americas of the Americas Street 712 Fifth Avenue 100.0% Leased 91.1% Leased 99.4% Leased 97.5% Leased 74.2% Leased (1) At PGRE’s share. 10
San Francisco Portfolio 4.3 MM square feet – 97.5% Leased (1) One Front Street One Market Plaza 98.4% Leased 100.0% Leased 111 Sutter Street (2) 300 Mission Street 55 Second Street (3) Market Center (4) 86.3 % Leased 95.7% Leased 95.6% Leased 100.0% Leased (1) At PGRE’s share. (2) Acquired in February 2019. (3) Acquired in August 2019. (4) Acquired in December 2019. 11
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