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Paramount Group (PGRE)
NYSE:PGRE
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Paramount Group
(NYSE:PGRE)60Neutral
Positive Factors
Asset Sales
PGRE announced the sale of a 45% stake in 900 Third Ave, a 600k SF Class A office building in Manhattan. Proceeds should help strengthen the balance sheet which is incrementally positive.
Financial Performance
The company's 3Q24 FFO was reported at $0.19 per share, exceeding consensus expectations.
Negative Factors
Leasing Activity
Several large tenant move-outs, such as Google and JP Morgan, result in significant expiration of leases, reducing expected income.
Paramount Group (PGRE) vs. S&P 500 (SPY)
Market Cap
$2.18B
Dividend Yield3.26%
Average Volume (3M)994.08K
Price to Earnings (P/E)―
Beta (1Y)1.24
Revenue Growth1.97%
EPS Growth82.20%
CountryUS
Employees329
SectorReal Estate
Sector Strength72
IndustryREITs
Share Statistics
EPS (TTM)-0.21
Shares Outstanding217,527,800
10 Day Avg. Volume1,276,339
30 Day Avg. Volume994,082
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)1.24
Price to Cash Flow (P/CF)2.60
P/FCF Ratio2.40
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$4.81Price Target Upside12.38% Upside
Rating ConsensusHold
Number of Analyst Covering4
Paramount Group Business Overview & Revenue Model
Company DescriptionParamount Group, Inc. (PGRE) is a real estate investment trust (REIT) focused on owning, operating, and managing high-quality office properties. Primarily located in premier central business district locations in New York City, Washington, D.C., and San Francisco, the company is committed to developing and maintaining a portfolio of iconic and sustainable office buildings that cater to a diverse range of tenants.
How the Company Makes MoneyParamount Group generates revenue primarily through leasing office space in its strategically located properties to a variety of tenants, including corporations, government entities, and other businesses. The company's revenue model is based on long-term lease agreements that provide a steady stream of rental income. In addition to base rent, Paramount may also earn income through tenant reimbursements for operating expenses and real estate taxes. The company actively manages and upgrades its properties to increase occupancy rates and rental rates, thereby maximizing its revenue potential. Furthermore, Paramount Group may engage in strategic property acquisitions and dispositions to enhance its portfolio and drive growth. Key factors contributing to its earnings include market demand for premium office space, effective property management, and maintaining high occupancy levels.
Paramount Group Financial Statement Overview
Summary
Paramount Group's financial performance shows a moderate revenue growth and strong operational cash flow, but struggles with profitability due to negative net income. The balance sheet is solid with a strong equity base, but profitability metrics like return on equity are affected by negative earnings.Income Statement
Paramount Group's revenue has shown a moderate growth trajectory with a 1.97% increase from 2022 to 2023. However, the company is facing challenges in achieving profitability, as evidenced by negative net income figures. The gross profit margin is robust at 59.95% (2023), indicating efficient cost management, but the net profit margin remains negative due to significant non-operating expenses or other factors. EBIT and EBITDA margins are reasonable, reflecting steady operational performance.65
Positive
Balance Sheet
The balance sheet shows a solid equity base, with stockholders' equity at $4,009.5 million as of 2023, resulting in a healthy equity ratio of 50.91%. The debt-to-equity ratio stands at 0.92, suggesting a balanced use of debt and equity. While the company maintains a stable asset base, the negative net income impacts return on equity, which is currently non-positive. The overall leverage appears manageable, but continuous monitoring is advised.70
Positive
Cash Flow
Operating cash flow remains strong at $264.93 million in 2023, demonstrating effective cash generation from core operations. Free cash flow has shown resilience with a positive year-over-year growth rate of 119.19% from 2022 to 2023. The operating cash flow to net income ratio is high due to negative net income, indicating a divergence between cash generation and accounting profitability. This is a common scenario in capital-intensive industries like REITs.75
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 757.45M | 742.79M | 740.38M | 726.79M | 714.24M | Gross Profit |
| 454.17M | 198.18M | 462.95M | 461.35M | 446.65M | EBIT |
| 387.84M | 136.19M | 121.64M | 148.63M | 120.96M | EBITDA |
| 359.91M | 27.54M | 354.15M | 381.12M | 356.85M | Net Income Common Stockholders |
| -46.29M | -259.74M | -28.20M | 2.06M | -14.12M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 375.06M | 428.21M | 408.90M | 524.90M | 434.53M | Total Assets |
| 7.87B | 8.01B | 8.45B | 8.49B | 8.55B | Total Debt |
| 3.68B | 3.80B | 3.84B | 3.84B | 3.80B | Net Debt |
| 3.30B | 3.38B | 3.43B | 3.31B | 3.37B | Total Liabilities |
| 3.86B | 3.99B | 4.04B | 4.04B | 4.04B | Stockholders Equity |
| 4.01B | 3.20B | 3.59B | 3.59B | 3.65B |
| Cash Flow | Free Cash Flow | |||
| 264.93M | 277.86M | 120.83M | 132.31M | 237.01M | Operating Cash Flow |
| 264.93M | 277.86M | 246.64M | 244.31M | 237.27M | Investing Cash Flow |
| -109.11M | -113.09M | -152.58M | -103.48M | 40.03M | Financing Cash Flow |
| -109.97M | -57.98M | -173.90M | -76.48M | -143.47M |
Paramount Group Technical Analysis
Negative
4.28
Price Trends
4.68
Negative
4.82
Negative
4.83
Negative
Market Momentum
-0.11
Positive
32.15
Neutral
18.13
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For PGRE, the sentiment is Negative. The current price of 4.28 is below the 20-day moving average (MA) of 4.57, below the 50-day MA of 4.68, and below the 200-day MA of 4.83, indicating a bearish trend. The MACD of -0.11 indicates Positive momentum. The RSI at 32.15 is Neutral, neither overbought nor oversold. The STOCH value of 18.13 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for PGRE.
Paramount Group Risk Analysis
Paramount Group disclosed 55 risk factors in its most recent earnings report. Paramount Group reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Paramount Group Peers Comparison
Overall Rating
UnderperformOutperform
Sector (61)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
68 Neutral | $1.43B | 30.17 | 5.12% | 1.64% | 3.83% | -5.55% | |
64 Neutral | $14.58B | 907.36 | 1.32% | 1.86% | -1.30% | -80.81% | |
61 Neutral | $4.91B | 18.99 | -3.12% | 7.77% | 6.71% | -19.69% | |
60 Neutral | $2.18B | ― | -1.46% | 3.26% | 1.97% | 82.20% | |
60 Neutral | $11.60B | 737.50 | 0.23% | 5.68% | 4.10% | -92.47% | |
57 Neutral | $3.36B | 125.32 | 1.03% | 4.58% | -3.33% | ― | |
54 Neutral | $4.52B | 760.94 | 0.71% | 4.85% | 5.12% | ― |
* Real Estate Sector Average
Performance Comparison
PGRE
Paramount Group
4.28
-0.35
-7.56%
BXP
Boston Properties
69.00
8.76
14.54%
DEI
Douglas Emmett
17.38
4.35
33.38%
SLG
SL Green Realty
61.96
13.98
29.14%
VNO
Vornado Realty
39.75
14.48
57.30%
ESRT
Empire State Realty
8.54
-1.14
-11.78%
Paramount Group Earnings Call Summary
Earnings Call Date: Feb 27, 2025 | % Change Since: -6.96% | Next Earnings Date: Apr 30, 2025
Earnings Call Sentiment Neutral
The call presented a mixed outlook with strong achievements in leasing activity and sustainability recognition, but significant challenges such as impairment losses and market difficulties in San Francisco temper the overall sentiment. Despite these challenges, the company is optimistic about future opportunities and market improvements.Highlights
Core FFO Performance
Reported core FFO of $0.19 per share for the fourth quarter, bringing the total for the year to $0.80 per share, which was at the high end of guidance.
Leasing Activity
Leased approximately 763,500 square feet in 2024, a 3% increase from the previous year. Notably, leasing activity in San Francisco increased over 40% compared to the prior year.
GRESB Five-Star Rating
Achieved a GRESB five-star rating for the sixth consecutive year, earning sector leader status in the Office Americas category, outperforming the GRESB average by 21%.
Capital Allocation Success
Closed the sale of a 45% interest in 900 Third Avenue, raising approximately $95 million in net proceeds, underscoring the underappreciated value of assets.
Improving Market Dynamics in New York
Midtown’s fourth-quarter leasing activity was the highest quarterly total since Q4 2019, exceeding the five-year quarterly average by 73%.
Lowlights
Real Estate Impairment Loss
Recorded an $87.2 million non-cash real estate impairment loss for the 55 Second Street joint venture, with Paramount's share being $38.4 million.
San Francisco Market Challenges
Overall market conditions in San Francisco remain challenging with elevated supply and 29% lease expirations expected in 2025.
Falling Leasing Targets
Missed the mark on leasing activity and same-store occupancy goals due to a significant lease that fell through at the last moment.
Negative NOI Growth
Same-store cash NOI growth was negative 0.1% for the fourth quarter and negative 1.1% for the full year, indicating challenges in operating expense management.
Decreased 2025 FFO Guidance
Guidance for 2025 core FFO is between $0.51 and $0.57 per share, representing a decrease from 2024 due to lease expirations and reduced income.
Company Guidance
In the Paramount Group's fourth quarter 2024 earnings call, the management provided guidance for 2025, projecting a core FFO per share range between $0.51 and $0.57. They also set a 2025 leasing target of between 800,000 and 1 million square feet. The company reported having ended 2024 with a core FFO of $0.80 per share and a total of 763,500 square feet leased, slightly missing revised targets due to a significant lease falling through. The cash and restricted cash position was strengthened to $546.5 million after the partial sale of 900 Third Avenue. Management noted a robust pipeline with approximately 350,000 square feet of leases in negotiation and highlighted improving market dynamics in New York and San Francisco, emphasizing a focus on high-quality, strategically located spaces. The guidance reflects anticipated challenges from significant lease expirations, including those of JPMorgan and Google, with expected negative same-store growth and same-store occupancy to remain roughly flat in 2025.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.