PGRE Overview Evercore ISI Real Estate Conference September 2018
Cautionary Note on Forward-Looking Statements In this presentation, we may make 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 risks and uncertainties detailed from time to time in our filings with the Securities and Exchange Commission, including those set forth in Item 1A. Risk Factors of our most recently filed Annual Report on Form 10-K. 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 June 30, 2018 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 August 1, 2018 which was subject to the assumptions and qualifications set forth therein. We have not updated or reaffirmed that guidance and are not doing so by restating it herein.
Paramount Group Overview Consistent Focus on High Barrier-to-Entry Supply Constrained Submarkets in Gateway Cities for over 20 Years Annualized Rent (1) Best-in-class owner and operator of high-quality, Class A office properties in New York, Washington, D.C. and San San Francisco 17.5% Francisco ─ 72.9%of Annualized Rent (1) is in New York 14 Class A office properties with 12.5 million sf (2) Washington, D.C. 9.6% Significant contractual embedded growth from leases in free rent periods and signed leases not yet commenced Strong internal growth prospects New York ─ Lease up of currently available space 72.9% ─ Increase in-place, below-market rents as leases expire Redevelop and reposition properties to enhance value Complementary investment management platform primarily focused on debt and preferred equity investments (1) Please see page 28 for our definition of this measure. 1 (2) Includes 100% of square footage from 60 Wall Street, 712 Fifth Avenue, One Market Plaza and 50 Beale Street.
Strong Execution and Continued Earnings Growth Successfully Driving Strong Executing on Cash Flow and Business Plan Earnings Growth Core FFO per Share (1) Leased % PGRE's Share of Cash NOI (1) (thousands) 99% $1.00 $0.95 $370,000 $0.95 96.8% 97% $353,000 $0.89 $0.90 $350,000 95% $0.84 $0.85 $331,985 93.5% $330,000 92.7% $0.80 93% $0.75 $309,148 $310,000 91% $0.70 $290,000 89% $0.65 $0.60 $270,000 87% $0.55 85% $250,000 $0.50 2016 2017 2018 Guidance 2016 2017 2018 Guidance 2016 2017 2018 Guidance Midpoint Midpoint Midpoint 2 (1) Please see Appendix for definitions of non-GAAP financial measures and reconciliations to most directly comparable GAAP measure.
Our People Are Our Greatest Asset With our deep knowledge, creative, proactive approach and winning spirit, we are Paramount 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 Ermelinda Berberi Charles Anastasia Karen Baumwoll David Eaton Ben Goodsir Chief Accounting Officer Tax & Compliance Chief Human Resource Officer Leasing, San Francisco Asset Management Gage Johnson Douglas Neye Michael Nathan Todd Januzzi Bernard Marasco Michael Jackowitz Leasing, New York General Counsel Chief Information & Technology Counsel – Leasing & Property Acquisitions Capital Markets Management 3 Officer
Irreplaceable Trophy Portfolio New York (8.6mm square feet) – 95.9% Leased 1633 Broadway 900 Third Avenue Midtown Manhattan 95.4% Leased 94.2% Leased 1325 Avenue 1301 Avenue 31 West 52 nd Street 60 Wall Street of the Americas of the Americas 712 Fifth Avenue 100.0% Leased 95.9% Leased 97.9% Leased 95.8% Leased 89.7% Leased 4
Irreplaceable Trophy Portfolio Washington, D.C. (946,000 square feet) – 96.7% Leased 2099 Pennsylvania Avenue (1) 425 Eye Street Capitol St NW Dupont Circle Logan Circle Georgetown Downtown Foggy George 9 th St NW Bottom Washington University 91.6% Leased 98.7% Leased Arlington National Mall & Memorial Parks NY007VUG / 540917_1.WOR Liberty Place 1899 Pennsylvania Avenue 100.0% Leased 94.9% Leased (1) On August 8, 2018, we announced that we have entered into a definitive agreement to sell 2099 Pennsylvania Avenue for approximately $220 million. The transaction, which is subject to customary closing conditions, is expected to close in the third quarter of 2018. 5
Irreplaceable Trophy Portfolio San Francisco (2.9mm square feet) – 98.2% Leased One Market Plaza One Front Street 97.9% Leased 50 Beale Street 99.5% Leased 95.8% Leased 6
Diverse and High Credit Quality Tenant Base PGRE's Share of Industry Diversification – % of Annualized Rent Square Feet % of Ann. Top 10 Tenants Expiration Date Occupied Rent Real Estate, 2.2% (1) (1) 1. 12/2020 500,790 5.1% Consumer Products, 2.3% 2. 1/2031 320,911 4.4% Other, 9.5% Government, 2.6% 3. 2/2023 312,679 4.2% Retail, 3.3% Legal Services, 22.5% 4. 6/2024 328,992 4.1% Insurance, 6.8% Financial Services - (2) (2) 5. 9/2034 320,325 4.0% Commercial and Investment Financial Services, Banking, 21.1% 6. 3/2032 260,829 3.0% all others, 12.8% 7. 7/2029 293,888 2.6% Technology and Media, 16.9% 8. 6/2025 231,443 2.4% 9. 1/2026 238,880 2.2% Tenancy Highlights 10. 3/2037 203,394 2.2% High percentage of rent derived from investment grade / Other Blue Chip Tenants nationally recognized tenants Approximately 330 tenants Average office lease size of approximately 47,500 square feet Weighted average remaining lease term of 6.7 years on office leases (1) 3,372 of the square feet leased at 2099 Pennsylvania Avenue expires on June 30, 2023. (2) 116,462 of the square feet leased expires on March 31, 2032. 7
Lease Expiration Schedule 3,500,000 32.3% 3,000,000 2,500,000 Square Feet 2,000,000 1,500,000 15.0% 2.5 Year Average 417,282 sf Or 4.4% per annum 1,000,000 8.2% 7.5% 7.4% 7.1% 6.0% 5.4% 5.0% 500,000 1.2% 0.7% – 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 Thereafter 8 Note: Figures do not include 6,581 sf of month-to- month leases or 340,447 sf of vacant space at PGRE’s share.
Focus on Sustainability LEED Certification Entire portfolio has achieved either Gold or Platinum LEED Certification BOMA Awards New York 2016 900 Third ‘Grand Pinnacle Award’ 712 5th Avenue ‘Pinnacle Award’ San Francisco 2016 One Market Plaza ‘The Outstanding Building of the Year’ Energy Star Ratings “Living Wall” – One Market Plaza Avg. Energy Star Score – Current 85 Avg. Energy Star Score at Benchmarking – 2008 71 +19.7% Increase 9
2018 Financial Highlights 712 Fifth Avenue, New York Full Year Guidance / 2Q 2018 1H 2018 Assumption Core FFO Per Share (1) $0.24 $0.47 $0.93-$0.97 Same Store 5.9% 10.3% 7.0%-10.0% Cash NOI Growth (1) Same Store 6.1% 6.3% 7.0%-10.0% NOI Growth (1) Leased Square Footage 312,522 sf 597,689 sf 700,000 - 900,000 sf Cash Mark-to-Market 19.8% 18.4% - (1) Please see Appendix for definitions of non-GAAP financial measures and reconciliations to most directly comparable GAAP measure. 10
Core FFO Projected 2015 2016 2017 2018 $0.95 (1) $0.89 $0.84 $0.81 8.5% (1) Growth $0.10 Same Store Cash NOI $0.02 S/L & FAS 141 ($0.02) Acquisitions/Dispositions (2) ($0.01) Termination Income ($0.01) Fee Income, net of Taxes ($0.01) Interest Expense ($0.01) Non-Cash G&A (3) (1) Based on the midpoint of Core FFO Guidance and assumed Same Store Cash NOI growth for 2018. (2) Includes the disposition of Waterview and the acquisition of 50 Beale Street. (3) Represents non-cash equity compensation expense resulting from the amortization of a new layer of equity grants. 11
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