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Paramount Group (PGRE)
NYSE:PGRE

Paramount Group (PGRE) AI Stock Analysis

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Paramount Group

(NYSE:PGRE)

Rating:70Outperform
Price Target:
$7.00
▲(15.89%Upside)
Paramount Group's overall stock score is driven by strong leasing activities and strategic moves, especially highlighted in the earnings call. While technical indicators reflect bullish momentum, the valuation suggests caution due to negative earnings. The company's financial performance shows operational strengths but also emphasizes the need for profitability improvements.
Positive Factors
Financial Performance
Q1 FFO beat and FFO guidance was reiterated, while the leasing outlook was improved.
Leasing Performance
Leasing volume increased significantly from the previous quarter and long-term average.
Strategic Alternatives
The company's willingness to unlock value through strategic alternatives, which could include a potential sale of assets, is viewed as positive.
Negative Factors
Lease Renewals
JPMorgan Chase is only renewing ~10% of the 219k SF that expires, which suggests the building's leased rate may drop from 72.3% to ~42% all else equal.
Management Changes
The transition in management roles may have catalyzed the willingness to explore the strategic review, but it also introduces uncertainty.
Strategic Review Risks
The strategic review process carries high execution risk.

Paramount Group (PGRE) vs. SPDR S&P 500 ETF (SPY)

Paramount Group Business Overview & Revenue Model

Company DescriptionHeadquartered 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.
How the Company Makes MoneyParamount Group makes money primarily through leasing office space in its high-end properties to a diverse range of tenants, including corporations, law firms, financial institutions, and government entities. The company generates revenue through rental income from long-term leases and seeks to maximize this income by maintaining high occupancy rates and regularly adjusting rent to market levels. Additionally, Paramount Group may engage in strategic property sales, leveraging its expertise in real estate to realize capital gains. Its revenue model is also supported by property management fees and services offered to tenants, enhancing the value and appeal of its properties. Paramount Group's earnings are further bolstered by its ability to refinance properties at favorable interest rates and its strategic partnerships with institutional investors, which provide additional capital for growth and development.

Paramount Group Earnings Call Summary

Earnings Call Date:Apr 30, 2025
(Q1-2025)
|
% Change Since: 40.79%|
Next Earnings Date:Jul 29, 2025
Earnings Call Sentiment Positive
The earnings call reflected a positive outlook with numerous achievements in leasing activity, especially in New York, and successful capital transactions. However, challenges in the San Francisco market and negative same-store growth present notable hurdles.
Q1-2025 Updates
Positive Updates
Strong Leasing Activity
Executed leases totaling approximately 284,000 square feet, marking the strongest first quarter of leasing since 2019.
Significant New Lease with Kirkland & Ellis
Signed a 179,000 square-foot lease with Kirkland & Ellis, improving the leased occupancy of 900 Third Avenue from 68.9% to 90.2%.
Positive Market Trends in New York
Midtown's leasing activity exceeded the five-year quarterly average for the sixth consecutive quarter, with significant demand for Class A office space.
Expansion in Leasing Guidance
Increased leasing guidance to between 900,000 and 1.1 million square feet, representing an 11% increase at the midpoint.
Successful Capital Transaction
Closed the sale of a 45% interest in 900 Third Avenue, raising approximately $95 million in net proceeds.
Negative Updates
San Francisco Leasing Challenges
Leased occupancy in San Francisco decreased by 150 basis points from last quarter, with significant lease expirations expected.
Negative Same-Store Growth
First quarter same-store growth was negative 4.1% on a cash basis and negative 5.4% on a GAAP basis.
Company Guidance
During the Paramount Group's Q1 2025 earnings call, the company provided notable guidance and metrics, reflecting strong performance and strategic positioning. The company reported core FFO of $0.17 per share, surpassing consensus by $0.01. They executed leases totaling approximately 284,000 square feet, marking their strongest first quarter of leasing since 2019. The Manhattan office market showed significant improvement, with new leasing activity reaching the highest quarterly total since Q4 2021, driven largely by demand for Class A office space, which accounted for 82% of total activity. Paramount Group's New York portfolio achieved a leased occupancy rate of 87.4%, up 240 basis points from the previous quarter, while San Francisco's leased occupancy was at 82.3%, down 150 basis points. The company's leasing pipeline remains robust with over 375,000 square feet of leases under negotiation. Moreover, the sale of a 45% interest in 900 Third Avenue raised approximately $95 million in net proceeds, valuing the property at $210 million or $354 per square foot. The company has also increased its leasing guidance to between 900,000 and 1.1 million square feet for the year and raised its same-store leased occupancy guidance to between 84.4% and 86.4%.

Paramount Group Financial Statement Overview

Summary
Paramount Group exhibits strengths in revenue growth and operational cash flow, despite challenges in achieving consistent profitability. The balance sheet is solid with a healthy equity base, but profitability metrics like return on equity are impacted by negative earnings.
Income Statement
65
Positive
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.
Balance Sheet
70
Positive
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.
Cash Flow
75
Positive
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.
BreakdownTTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue755.59M757.45M742.79M740.38M726.79M714.24M
Gross Profit384.18M454.17M198.18M462.95M461.35M446.65M
EBITDA380.83M387.84M27.54M354.15M381.12M356.85M
Net Income-66.19M-46.29M-259.74M-28.20M2.06M-14.12M
Balance Sheet
Total Assets7.95B7.87B8.01B8.45B8.49B8.55B
Cash, Cash Equivalents and Short-Term Investments426.95M375.06M428.21M408.90M524.90M434.53M
Total Debt0.003.68B3.80B3.84B3.84B3.80B
Total Liabilities3.85B3.86B3.99B4.04B4.04B4.04B
Stockholders Equity3.09B3.14B3.20B3.59B3.59B3.65B
Cash Flow
Free Cash Flow203.91M264.93M277.86M120.83M132.31M237.01M
Operating Cash Flow203.91M264.93M277.86M246.64M244.31M237.27M
Investing Cash Flow-111.69M-109.11M-113.09M-152.58M-103.48M40.03M
Financing Cash Flow73.78M-109.97M-57.98M-173.90M-76.48M-143.47M

Paramount Group Technical Analysis

Technical Analysis Sentiment
Positive
Last Price6.04
Price Trends
50DMA
5.54
Positive
100DMA
4.93
Positive
200DMA
4.92
Positive
Market Momentum
MACD
0.12
Positive
RSI
50.26
Neutral
STOCH
17.33
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For PGRE, the sentiment is Positive. The current price of 6.04 is below the 20-day moving average (MA) of 6.31, above the 50-day MA of 5.54, and above the 200-day MA of 4.92, indicating a neutral trend. The MACD of 0.12 indicates Positive momentum. The RSI at 50.26 is Neutral, neither overbought nor oversold. The STOCH value of 17.33 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive 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 (63)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
DEDEA
71
Outperform
$1.00B53.911.32%8.05%6.06%-15.10%
70
Outperform
$1.44B-2.11%2.32%1.67%73.75%
HIHIW
66
Neutral
$3.37B19.567.21%6.40%-2.01%31.64%
DEDEI
65
Neutral
$3.13B48.752.49%4.93%-1.98%
63
Neutral
$6.96B18.86-1.16%6.91%4.65%-25.28%
SLSLG
63
Neutral
$4.75B663.10-0.13%4.95%14.28%94.75%
PDPDM
55
Neutral
$920.62M-3.79%6.76%-6.23%18.07%
* Real Estate Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
PGRE
Paramount Group
6.04
1.37
29.34%
DEI
Douglas Emmett
15.61
2.98
23.59%
HIW
Highwoods Properties
31.11
6.79
27.92%
SLG
SL Green Realty
62.30
9.84
18.76%
PDM
Piedmont Office
7.46
0.52
7.49%
DEA
Easterly Government Properties
22.62
-5.76
-20.30%

Paramount Group Corporate Events

Executive/Board ChangesShareholder MeetingsBusiness Operations and Strategy
Paramount Group Announces Strategic Review and Leadership Changes
Neutral
May 19, 2025

On May 15, 2025, Paramount Group held its annual meeting of stockholders, where key decisions were made, including the election of board members and approval of executive compensation. The company also announced a strategic review to maximize shareholder value, engaging BofA Securities and Latham & Watkins LLP as advisors. Additionally, Paramount appointed Ermelinda Berberi as Executive Vice President, Chief Financial Officer, and Treasurer, and Timothy Dembo as Senior Vice President, General Counsel, and Secretary, marking a significant management transition.

The most recent analyst rating on (PGRE) stock is a Sell with a $3.50 price target. To see the full list of analyst forecasts on Paramount Group stock, see the PGRE Stock Forecast page.

M&A TransactionsBusiness Operations and Strategy
Paramount Group Sells Stake in San Francisco Property
Positive
May 7, 2025

On May 7, 2025, Paramount Group, Inc. announced the sale of a 25% interest in One Front Street, a Class A office building in San Francisco, valued at $255 million. The company will retain a 75% stake and continue managing the property. This transaction, which included $40.5 million in seller financing, resulted in net proceeds of $11.5 million for Paramount. The sale aligns with the company’s confidence in San Francisco’s market potential, bolstered by urban renewal initiatives, and aims to reposition the asset for future lease-up phases.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

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.Date of analysis: Jun 05, 2025