10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended: June 30, 2015

OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from To

Commission File Number: 001-36746

PARAMOUNT GROUP, INC.

(Exact name of registrant as specified in its charter)

Maryland	32-0439307
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)

1633 Broadway, Suite 1801, New York, NY	10019
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (212) 237-3100

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    YES  x    NO  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    x  Yes    ¨  No

Indicate by check mark whether the registrant is a large accelerated filer, accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer	o		Accelerated Filer	o
Non-Accelerated Filer	x	(Do not check if smaller reporting company)	Smaller Reporting Company	o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  YES  ¨    NO  x

As of July 31, 2015, there were 212,111,937 shares of the registrant’s common stock outstanding.

Table of Contents

Item		Page Number
Part I.	Financial Information
Item 1.	Consolidated Financial Statements	3
	Consolidated Balance Sheets (Unaudited) as of June 30, 2015 and December 31, 2014	3
	Consolidated Statements of Income of the Company (Unaudited) for the three and six months
	ended June 30, 2015	4
	Combined Consolidated Statements of Income of the Predecessor (Unaudited) for the three
	and six months ended June 30, 2014	5
	Consolidated Statements of Comprehensive Income of the Company (Unaudited) for the three and six
	months ended June 30, 2015	6
	Combined Consolidated Statements of Changes in Equity (Unaudited) of the Company for the six months
	ended June 30, 2015 and the Predecessor for the six months ended June 30, 2014	7
	Combined Consolidated Statements of Cash Flows (Unaudited) of the Company for the six months
	ended June 30, 2015 and the Predecessor for the six months ended June 30, 2014	8
	Notes to Combined Consolidated Financial Statements (Unaudited)	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	32
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	49
Item 4.	Controls and Procedures	50
Part II.	Other Information
Item 1.	Legal Proceedings	51
Item 1A.	Risk Factors	51
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	51
Item 3.	Defaults Upon Senior Securities	51
Item 4.	Mine Safety Disclosures	51
Item 5.	Other Information	51
Item 6.	Exhibits	51
Signatures		52

2

PART I – FINANCIAL INFORMATION

ITEM 1.  CONSOLIDATED FINANCIAL STATEMENTS

PARAMOUNT GROUP, INC.

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

(Amounts in thousands, except share and per share amounts)	The Company
ASSETS	June 30, 2015			December 31, 2014
Rental property, at cost
Land	$	2,042,071		$	2,042,071
Buildings and improvements		5,534,885			5,488,168
		7,576,956			7,530,239
Accumulated depreciation and amortization		(162,377	)		(81,050	)
Rental property, net		7,414,579			7,449,189
Real estate fund investments		335,545			323,387
Investments in unconsolidated joint ventures		6,128			5,749
Cash and cash equivalents		438,088			438,599
Restricted cash		45,737			55,728
Marketable securities		21,524			20,159
Deferred rent receivable		40,308			8,267
Accounts and other receivables, net of allowance of $406 and $333 in 2015      and 2014, respectively		10,781			7,692
Deferred charges, net of accumulated amortization of $13,002 and $10,859 in 2015      and 2014, respectively		49,547			39,165
Intangible assets, net of accumulated amortization of $103,158 and $20,509 in 2015      and 2014, respectively		583,126			669,385
Other assets		9,529			13,121
Total assets	$	8,954,892		$	9,030,441
LIABILITIES AND EQUITY
Mortgages and notes payable	$	2,853,237		$	2,852,287
Credit facility		-			-
Due to affiliates		27,299			27,299
Loans payable to noncontrolling interests		43,981			42,195
Accounts payable and accrued expenses		96,595			93,472
Deferred income taxes		2,659			2,861
Interest rate swap liabilities		160,473			194,196
Intangible liabilities, net of accumulated amortization of $21,064 and $3,757 in 2015        and 2014, respectively		201,839			219,228
Dividends and distributions payable		25,066			-
Other liabilities		45,922			43,950
Total liabilities		3,457,071			3,475,488
Commitments and contingencies
Paramount Group, Inc. equity:
Common stock $0.01 par value per share; authorized 900,000,000 shares; issued       and outstanding 212,111,937 and 212,106,718 shares in 2015 and 2014, respectively		2,122			2,122
Additional paid-in-capital		3,893,756			3,851,432
Earnings (less than) in excess of distributions		(5,843	)		57,308
Accumulated other comprehensive loss		(493	)		-
Paramount Group, Inc. equity		3,889,542			3,910,862
Noncontrolling interests in:
Consolidated joint ventures and funds		703,596			685,888
Operating Partnership (51,660,088 and 51,543,993 units outstanding in 2015       and 2014, respectively)		904,683			958,203
Total equity		5,497,821			5,554,953
Total liabilities and equity	$	8,954,892		$	9,030,441

See notes to combined consolidated financial statements (unaudited).

3

PARAMOUNT GROUP, INC.

CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)

	The Company
	Three Months Ended			Six Months Ended
(Amounts in thousands, except share and per share amounts)	June 30, 2015			June 30, 2015
REVENUES:
Rental income	$	145,917		$	289,160
Tenant reimbursement income		12,063			25,551
Fee and other income		4,948			9,443
Total revenues		162,928			324,154
EXPENSES:
Operating		57,781			119,665
Depreciation and amortization		79,421			153,004
General and administrative		9,133			21,746
Acquisition and transaction related costs		8,208			9,347
Total expenses		154,543			303,762
Operating income		8,385			20,392
Income from real estate fund investments		14,072			19,293
Income from unconsolidated joint ventures		2,011			2,986
Unrealized gains on interest rate swaps		21,747			33,725
Interest and other income, net		512			1,366
Interest and debt expense		(42,236	)		(84,124	)
Net income (loss) before income taxes		4,491			(6,362	)
Income tax expense		(1,343	)		(1,917	)
Net income (loss)		3,148			(8,279	)
Less net (income) loss attributable to noncontrolling interests in:
Consolidated joint ventures and funds		(9,004	)		(9,672	)
Operating Partnership		1,147			3,511
Net loss attributable to common shareholders	$	(4,709	)	$	(14,440	)
LOSS PER COMMON SHARE - BASIC:
Loss per common share	$	(0.02	)	$	(0.07	)
Weighted average shares outstanding		212,106,718			212,106,718
LOSS PER COMMON SHARE - DILUTED:
Loss per common share	$	(0.02	)	$	(0.07	)
Weighted average shares outstanding		212,106,718			212,106,718
DIVIDENDS PER COMMON SHARE	$	0.095		$	0.190		(1)
(1) Excludes the $0.039 cash dividend for the 38 day period following the completion of our initial public offering and related formation transactions and ending on December 31, 2014.

See notes to combined consolidated financial statements (unaudited).

4

PARAMOUNT PREDECESSOR

COMBINED CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)

	The Predecessor
	Three Months Ended			Six Months Ended
(Amounts in thousands)	June 30, 2014			June 30, 2014
REVENUES:
Rental income	$	8,499		$	16,312
Tenant reimbursement income		441			896
Distributions from real estate fund investments		4,744			11,247
Realized and unrealized gains, net		33,750			79,917
Fee and other income		6,400			11,582
Total revenues		53,834			119,954
EXPENSES:
Operating		4,214			7,753
Depreciation and amortization		2,899			5,566
General and administrative		4,363			12,448
Profit sharing compensation		3,438			8,232
Other		2,634			3,901
Total expenses		17,548			37,900
Operating income		36,286			82,054
Income from unconsolidated joint ventures		903			2,035
Unrealized loss on interest rate swaps		(354	)		(196	)
Interest and other income, net		997			1,706
Interest and debt expense		(7,988	)		(15,787	)
Net income before income taxes		29,844			69,812
Income tax expense		(3,842	)		(7,105	)
Net income		26,002			62,707
Net income attributable to noncontrolling interests		(25,823	)		(53,133	)
Net income attributable to the Predecessor	$	179		$	9,574

See notes to combined consolidated financial statements (unaudited).

5

PARAMOUNT GROUP, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)

	The Company
	Three Months Ended			Six Months Ended
(Amounts in thousands)	June 30, 2015			June 30, 2015
Net income (loss)	$	3,148		$	(8,279	)
Other comprehensive loss:
Pro rata share of other comprehensive loss of unconsolidated joint ventures		(613	)		(613	)
Comprehensive income (loss)		2,535			(8,892	)
Less comprehensive (income) loss attributable to noncontrolling interests in:
Consolidated joint ventures and funds		(9,004	)		(9,672	)
Operating Partnership		1,267			3,631
Comprehensive loss attributable to Paramount Group, Inc.	$	(5,202	)	$	(14,933	)
See notes to combined consolidated financial statements (unaudited).

6

PARAMOUNT GROUP, INC. AND PARAMOUNT PREDECESSOR

COMBINED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(UNAUDITED)

	Common Shares																Noncontrolling Interests in
(Amounts in thousands)	Shares		Amount		Additional Paid in Capital			Earnings (Less than) In Excess of Distributions			Accumulated Other Comprehensive Loss			Predecessor Shareholders' Equity			Consolidated Joint Ventures and Funds			Operating Partnership			Total Equity
The Predecessor
Balance as of December 31, 2013		-	$	-	$	-		$	-		$	-		$	321,769		$	1,703,675		$	-		$	2,025,444
Net income		-		-		-			-			-			9,574			53,133			-			62,707
Contributions		-		-		-			-			-			1,253			88,804			-			90,057
Distributions		-		-		-			-			-			(22,323	)		(2,183	)		-			(24,506	)
Balance as of June 30, 2014		-	$	-	$	-		$	-		$	-		$	310,273		$	1,843,429		$	-		$	2,153,702
The Company
Balance as of December 31, 2014		212,107	$	2,122	$	3,851,432		$	57,308		$	-		$	-		$	685,888		$	958,203		$	5,554,953
Net (loss) income		-		-		-			(14,440	)		-			-			9,672			(3,511	)		(8,279	)
Common shares and units issued under      Omnibus share plan		5		-		(2,131	)		-			-			-						2,131			-
Dividends and distributions		-		-		-			(48,573	)		-			-			-			(11,819	)		(60,392	)
Contributions from noncontrolling      interests		-		-		-			-			-			-			14,031			-			14,031
Distributions to noncontrolling      interests		-		-		-			-			-			-			(5,673	)		-			(5,673	)
Pro rata share of other comprehensive     loss of unconsolidated joint ventures		-		-		-			-			(493	)		-						(120	)		(613	)
Adjustments to noncontrolling interests		-		-		43,981			-			-			-			-			(43,981	)		-
Amortization of equity awards		-		-		885			-			-			-			-			3,780			4,665
Other		-		-		(411	)		(138	)		-			-			(322	)		-			(871	)
Balance as of June 30, 2015		212,112	$	2,122	$	3,893,756		$	(5,843	)	$	(493	)	$	-		$	703,596		$	904,683		$	5,497,821

See notes to combined consolidated financial statements (unaudited).

7

PARAMOUNT GROUP, INC. AND PARAMOUNT PREDECESSOR

COMBINED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	The Company			The Predecessor
	Six Months Ended June 30,
(Amounts in thousands)	2015			2014
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) income	$	(8,279	)	$	62,707
Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities:
Depreciation and amortization		153,004			5,566
Unrealized (gains) losses on interest rate swaps		(33,725	)		196
Straight-lining of rental income		(32,042	)		90
Realized and unrealized gains, net, on real estate fund investments		(12,136	)		(79,917	)
Income from unconsolidated joint ventures		(2,986	)		(2,035	)
Distributions of income from unconsolidated joint ventures		1,993			1,768
Amortization of above and below-market leases, net		(1,762	)		-
Amortization of deferred financing costs		1,170			216
Transfer taxes due in connection with the sale of shares by a former joint venture partner		5,872			-
Realized and unrealized gains on marketable securities		(924	)		(1,228	)
Other non-cash adjustments		8,091			3,756
Changes in operating assets and liabilities:
Restricted cash		-			2,481
Real estate fund investments		(22	)		(164,181	)
Accounts and other receivables		(261	)		(2,669	)
Deferred charges		(12,523	)		-
Other assets		2,721			(3,456	)
Accounts payable and accrued expenses		(7,635	)		(2,945	)
Profit sharing payables		-			5,414
Deferred income taxes		(202	)		10,043
Other liabilities		1,972			1,693
Net cash provided by (used in) operating activities		62,326			(162,501	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions of, and additions to, rental properties		(41,914	)		(65,451	)
Changes in restricted cash		9,550			253
Distributions of capital from unconsolidated joint ventures		-			1,123
Net cash used in investing activities		(32,364	)		(64,075	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends paid to common shareholders and unitholders		(35,325	)		-
Contributions from noncontrolling interests		11,203			88,804
Distributions to noncontrolling interests		(5,673	)		(2,183	)
Contributions from Predecessor shareholders		-			1,253
Distributions to Predecessor shareholders		-			(22,323	)
Proceeds from loans payable to noncontrolling interests		-			39,075
Repayment of mortgage notes and loans payable		(678	)		(1,877	)
Offering costs		-			(9,577	)
Net cash (used in) provided by financing activities		(30,473	)		93,172
Net decrease in cash and cash equivalents		(511	)		(133,404	)
Cash and cash equivalents at beginning of period		438,599			307,161
Cash and cash equivalents at end of period	$	438,088		$	173,757
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash payments for interest	$	78,860		$	10,665
Cash payments for income taxes	$	1,213		$	5,168
NON-CASH TRANSACTIONS:
Dividends and distributions declared but not yet paid	$	25,066		$	-
Contributions from non controlling interests called but not yet received		2,828			-
(Purchases) sale of marketable securities		(441	)		6,946
See notes to combined consolidated financial statements (unaudited).

8

PARAMOUNT GROUP, INC. AND PARAMOUNT PREDECESSOR

NOTES TO COMBINED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

1. Organization and Business

As used in these consolidated and combined financial statements, unless indicated otherwise, all references to “we,” “us,” “our,” the “Company,” and “Paramount” refer to Paramount Group, Inc. and its consolidated subsidiaries, including Paramount Group Operating Partnership LP, upon completion of the Formation Transactions (as more fully described below) and the initial public offering of common stock.

We are a fully-integrated real estate investment trust (“REIT”) focused on owning, operating, managing, acquiring and redeveloping high-quality, Class A office properties in select central business district submarkets of New York City, Washington, D.C. and San Francisco. As of June 30, 2015, our portfolio consisted of 12 Class A office properties aggregating approximately 10.4 million square feet that had an occupancy rate of 92.9%.      

We were incorporated in Maryland as a corporation on April 14, 2014 to continue the business of our Predecessor, as defined, and did not have any meaningful operations until the acquisition of substantially all of the assets of our Predecessor and the assets of the Property Funds, as defined, that it controlled, as well as the interests of unaffiliated third parties in certain properties. Our properties were acquired through a series of Formation Transactions (the “Formation Transactions”) concurrently with our initial public offering of 150,650,000 common shares at a public offering price of $17.50 per share on November 24, 2014 (the “Offering”).  

We conduct our business through, and substantially all of our interests are held by, Paramount Group Operating Partnership LP, a Delaware limited partnership (the “Operating Partnership”).  We are the sole general partner of, and owned approximately 80.4% of, the Operating Partnership as of June 30, 2015.    

Our Predecessor

Our Predecessor is not a legal entity but a combination of entities under common control as they were entities controlled by members of the Otto family that held various assets, including interests in (i) 15 private equity real estate funds controlled by our Predecessor (which included nine primary funds and six parallel funds) (collectively, the “Funds”) that owned interests in 12 properties, (ii) a wholly-owned property, Waterview, in Rosslyn, Virginia and (iii) three partially owned properties in New York, NY (See note 4, Investments in Unconsolidated Joint Ventures).

Below is a summary of the 15 private equity real estate funds that were controlled by our Predecessor prior to the completion of the Formation Transactions.

The following funds are collectively referred to herein as the “Property Funds”:

• Paramount Group Real Estate Fund I, L.P. (“Fund I”)

• Paramount Group Real Estate Fund II, L.P. (“Fund II”)

• Paramount Group Real Estate Fund III, L.P. (“Fund III”)

• Paramount Group Real Estate Fund IV, L.P. (“Fund IV”)

• PGREF IV Parallel Fund (Cayman), L.P. (“Fund IV Cayman”)

• Paramount Group Real Estate Fund V (CIP), L.P. (“Fund V CIP”)

• Paramount Group Real Estate Fund V (Core), L.P. (“Fund V Core”)

• PGREF V (Core) Parallel Fund (Cayman), L.P. (“Fund V Cayman”)

• Paramount Group Real Estate Fund VII, LP (“Fund VII”)

• Paramount Group Real Estate Fund VII-H, LP (“Fund VII-H”)

9

PARAMOUNT GROUP, INC. AND PARAMOUNT PREDECESSOR

NOTES TO COMBINED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

The following fund was formed to acquire, develop and manage the residential development project at 75 Howard Street:

• Paramount Group Residential Development Fund, LP (“Residential Fund”)

The following funds are collectively referred to herein as the “Alternative Investment Funds”:

• Paramount Group Real Estate Special Situations Fund, L.P. (“PGRESS”)

• Paramount Group Real Estate Special Situations Fund–H, L.P. (“PGRESS-H”)

• Paramount Group Real Estate Special Situations Fund–A, L.P. (“PGRESS-A”)

•     Paramount Group Real Estate Fund VIII, L.P. (“Fund VIII”)

The Property Funds and Residential Fund owned interests in the following properties:

•1633 Broadway, New York, NY

•60 Wall Street, New York, NY

•900 Third Avenue, New York, NY

•31 West 52nd Street, New York, NY

•1301 Avenue of the Americas, New York, NY

•One Market Plaza, San Francisco, CA

•50 Beale Street, San Francisco, CA

•75 Howard Street, San Francisco, CA

•Liberty Place, Washington, D.C.

•1899 Pennsylvania Avenue, Washington, D.C.

•2099 Pennsylvania Avenue, Washington, D.C.

•425 Eye Street, Washington, D.C.

10

PARAMOUNT GROUP, INC. AND PARAMOUNT PREDECESSOR

NOTES TO COMBINED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

2.    Basis of Presentation and Significant Accounting Policies

Basis of Presentation

The accompanying consolidated and combined financial statements include the accounts of Paramount and its consolidated subsidiaries, including the Operating Partnership. All significant inter-company amounts have been eliminated. In our opinion, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, result of operations and changes in the cash flows have been made. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted. These consolidated and combined financial statements have been prepared in accordance with the instructions to Form 10-Q of the Securities and Exchange Commission (“SEC”) and should be read in conjunction with the consolidated and combined financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2014, as filed with the SEC.

We have made estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. The results of operations for the three and six months ended June 30, 2015 are not necessarily indicative of the operating results for the full year.

Our Predecessor’s combined financial statements included all the accounts of our Predecessor, including its interests in (i) the Funds, (ii) Waterview and (iii) the three partially-owned properties.  Our Predecessor evaluated each of the Funds pursuant to the control model of Accounting Standards Codification (“ASC”) 810-20, Consolidation—Control of Partnerships and Similar Entities and concluded that based on its rights and responsibilities as the sole managing member of the general partner it should consolidate each of the Funds.  With the exception of the Residential Fund, which is carried at historical cost, each of the Funds qualify as investment companies pursuant to Financial Services—Investment Companies (“ASC 946”); accordingly, the underlying real estate investments are carried at fair value, which was retained in consolidation by our Predecessor.  

Upon completion of the Offering and the Formation Transactions, we acquired substantially all of the assets of our Predecessor and all of the assets of the Property Funds that it controlled, other than their interests in 60 Wall Street, 50 Beale Street, and a residual 2.0% interest in One Market Plaza.  In addition, as part of the Formation Transactions, we also acquired the interests of certain unaffiliated third parties in 1633 Broadway, 31 West 52^nd Street and 1301 Avenue of the Americas.  These transactions were accounted for as transactions among entities under common control.  However, since the assets that we acquired from our Predecessor are no longer held by funds which qualify for investment company accounting, we account for these assets following the Formation Transactions using historical cost accounting. As a result, our consolidated financial statements following the Formation Transactions, differ significantly from, and are not comparable with, the historical financial position and results of operations of our Predecessor.

11

PARAMOUNT GROUP, INC. AND PARAMOUNT PREDECESSOR

NOTES TO COMBINED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Significant Accounting Policies

There were no material changes to our significant accounting policies disclosed in our Annual Report on Form 10-K for the year ended December 31, 2014.

Segment Reporting

Upon completion of the Offering and Formation Transactions, we acquired substantially all of the assets of our Predecessor and substantially all of the assets of the Property Funds that it controlled. Our business, post the Formation Transactions, is comprised of one reportable segment. We have determined that our properties have similar economic characteristics to be aggregated into one reportable segment (operating, leasing and managing office properties). Our determination was based primarily on our method of internal reporting. Our Predecessor historically operated an integrated business that consisted of three reportable segments, (i) Owned Properties, (ii) Managed Funds and (iii) a Management Company. The Owned Properties segment consisted of properties in which our Predecessor had a direct or indirect ownership interest, other than properties that it owned through its private equity real estate funds. The Managed Funds segment consisted of the private equity real estate funds.  In addition, our Predecessor included a Management Company that performed property management and asset management services and certain general and administrative level functions, including legal and accounting, as a separate reportable segment.

Recently Issued Accounting Literature

In May 2014, the FASB issued an update ("ASU 2014-09") Revenue from Contracts with Customers.  ASU 2014-09 establishes a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most of the existing revenue recognition guidance.  ASU 2014-09 requires an entity to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services and also requires certain additional disclosures.  ASU 2014-09 is effective for interim and annual reporting periods in fiscal years that begin after December 15, 2016.  We are currently evaluating the impact of the adoption of ASU 2014-09 on our consolidated financial statements.

In June 2014, the FASB issued an update (“ASU 2014-12”) to ASC Topic 718, Compensation – Stock Compensation.  ASU 2014-12 requires an entity to treat performance targets that can be met after the requisite service period of a share based award has ended, as a performance condition that affects vesting.  ASU 2014-12 is effective for interim and annual reporting periods in fiscal years that begin after December 15, 2015.  We are currently evaluating the impact of the adoption of ASU 2014-12 on our consolidated financial statements.

In February 2015, the FASB issued an update (“ASU 2015-02”) Amendments to the Consolidation Analysis to ASC Topic 810, Consolidation. ASU 2015-02 modifies the evaluation of whether limited partnerships and similar legal entities are VIEs or voting interest entities, eliminates the presumption that a general partner should consolidate a limited partnership and affects the consolidation analysis of reporting entities that are involved with VIEs, particularly those that have fee arrangements and related party relationships. ASU 2015-02 is effective for fiscal years that begin after December 15, 2015. We are currently evaluating the impact of the adoption of ASU 2015-02 on our consolidated financial statements.

In April 2015, the FASB issued an update (“ASU 2015-03”) Simplifying the Presentation of Debt Issuance Costs to ASC Topic 835, Interest – Imputation of Interest. ASU 2015-03 requires an entity to present debt issuance costs in the balance sheet as a direct deduction from the related debt liability rather than as an asset. Amortization of the costs is reported as interest expense. ASU 2015-03 is effective for interim and annual reporting periods in fiscal years that begin after December 15, 2015.  The adoption of this update on January 1, 2016 will not have a material impact on our consolidated financial statements.

12

PARAMOUNT GROUP, INC. AND PARAMOUNT PREDECESSOR

NOTES TO COMBINED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

3. Real Estate Fund Investments

Real estate fund investments are presented at fair value on our consolidated balance sheets and are comprised of (i) Property Funds and (ii) Alternative Investment Funds.  

The Company

Below is a summary of the fair value of fund investments on our consolidated balance sheet.

(Amounts in thousands)	As of
Balance Sheet	June 30, 2015		December 31, 2014
Real Estate Fund Investments:
Property Funds	$	193,081	$	183,216
Alternative Investment Funds		142,464		140,171
Total	$	335,545	$	323,387

Below is a summary of the fair value of fund investments on our consolidated statement of income.

(Amounts in thousands)	Three Months Ended		Six Months Ended
Income Statement	June 30, 2015		June 30, 2015
Investment income	$	2,853	$	7,348
Investment expenses		45		191
Net investment income		2,808		7,157
Net unrealized gains		11,264		12,136
Income from real estate fund investments	$	14,072	$	19,293

Property Funds

The purpose of the Property Funds is to invest in office buildings and related facilities primarily in New York City, Washington, D.C. and San Francisco.  As of June 30, 2015, the Property Funds were comprised of (i) Fund II, (ii) Fund III, (iii) Fund VII and (iv) Fund VII-H.

The following is a summary of the investments of our Property Funds.

				As of June 30, 2015
	% Ownership			60 Wall Street			One Market Plaza				50 Beale Street
Fund II		10.0	%		46.3	%		-				-
Fund III		3.1	%		16.0	%		2.0	%			-
Fund VII/VII-H (1)		7.2	%		-			-				42.8	%
Total Property Funds					62.3	%		2.0	%			42.8	%
Other Investors					37.7	%		98.0	%	(2)		57.2	%
Total					100.0	%		100.0	%			100.0	%

⁽¹⁾ As of June 30, 2015, Fund VII and Fund VII-H had an aggregate of $57,600,000 of committed capital that had not yet been invested. On July 10, 2015, Fund VII and Fund VII-H entered into an agreement to acquire 670 Broadway, a 77,480 square foot office building located in the NoHo submarket of Manhattan, for $112,000,000.

⁽²⁾ Includes a 49.0% direct ownership interest held by us.

13

PARAMOUNT GROUP, INC. AND PARAMOUNT PREDECESSOR

NOTES TO COMBINED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Alternative Investment Funds

The purpose of the Alternative Investment Funds is to invest primarily in real estate related debt and preferred equity investments. As of June 30, 2015, the Alternative Investment Funds were comprised of (i) PGRESS, (ii) PGRESS-H, (iii) PGRESS-A and (iv) Fund VIII, which had an aggregate of $580,200,000 of committed capital (including $95,200,000 of capital which was committed in the second quarter), of which we have invested $51,000,000.  

The following is a summary of the investments of our Alternative Investment Funds.

(Amounts in thousands)		%	Interest/			As of
Fund	Investment Type	Ownership	Dividend Rate		Initial Maturity	June 30, 2015		December 31, 2014
Fund VIII	Mezzanine Loan	1.7%		8.3%	Jan-2022	$	46,747	$	45,947
PGRESS Funds	Preferred Equity Investments	4.9% - 5.4%	10.3% - 15.0%		Sep-2015 - Feb-2019		95,717		94,224
						$	142,464	$	140,171

The Predecessor

Below is a summary of realized and unrealized gains from real estate fund investments on our consolidated statement of income.

(Amounts in thousands)	Three Months Ended		Six Months Ended
Income Statement	June 30, 2014		June 30, 2014
Realized gains on real estate fund investments	$	-	$	-
Unrealized gains on real estate fund investments		33,750		79,917
Realized and unrealized gains, net	$	33,750	$	79,917

Asset Management Fees

Our predecessor earned asset management fees from the Funds it managed. Asset management fees and expenses related to Funds included in the combined consolidated statement of income are eliminated in combination and consolidation. The limited partners’ share of such fees are reflected as a reduction of net income attributable to noncontrolling interests, which results in a corresponding increase in net income attributable to our Predecessor.

Below is a summary of the asset management fees earned by our Predecessor.

(Amounts in thousands)	Three Months Ended			Six Months Ended
Income Statement	June 30, 2014			June 30, 2014
Gross asset management fees	$	7,527		$	14,937
Eliminated fees(1)		(392	)		(782	)
Net asset management fees	$	7,135		$	14,155

⁽¹⁾ Eliminated fees reflect a reduction in asset management fees from the general partner interest in each of the Funds.    

14

PARAMOUNT GROUP, INC. AND PARAMOUNT PREDECESSOR

NOTES TO COMBINED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

The following tables summarize the income statements for the three and six months ended June 30, 2014 for each of the Property Funds’ underlying investments.

(Amounts in thousands)	Property Funds' Underlying Investments for the Three Months Ended June 30, 2014
Statements of Income	1633 Broadway			900 Third Ave			31 West 52nd St			1301 Ave of the Americas			One Market Plaza			Liberty Place			1899 Penn. Ave			2099 Penn. Ave			425 Eye St
Revenues:
Rental income	$	37,251		$	8,982		$	18,122		$	27,139		$	17,910		$	1,690		$	1,940		$	43		$	2,642
Tenant reimbursement income		3,096			751			1,300			2,318			273			563			967			1			83
Fee and other income		702			168			1,333			1,087			681			9			28			7			(179	)
Total revenue		41,049			9,901			20,755			30,544			18,864			2,262			2,935			51			2,546
Expenses:
Building operating		13,268			4,038			5,774			13,008			6,836			1,086			1,348			1,143			1,390
Related party management fees		784			261			329			427			177			61			66			1			79
Operating		14,052			4,299			6,103			13,435			7,013			1,147			1,414			1,144			1,469
Depreciation and amortization		2,780			2,144			5,545			9,341			8,682			-			940			-			1,398
General and administrative		10			24			7			24			281			11			11			12			107
Total expenses		16,842			6,467			11,655			22,800			15,976			1,158			2,365			1,156			2,974
Operating income (loss)		24,207			3,434			9,100			7,744			2,888			1,104			570			(1,105	)		(428	)
Unrealized gain on interest rate swaps		5,665			1,169			1,686			2,872			3,529			-			-			-			-
Interest and debt expense		(12,894	)		(3,696	)		(5,564	)		(15,379	)		(13,334	)		(945	)		(1,129	)		(1,380	)		(1,301	)
Unrealized depreciation on investment in real estate		-			-			-			-			-			(459	)		-			(520	)		-
Net income (loss) before taxes		16,978			907			5,222			(4,763	)		(6,917	)		(300	)		(559	)		(3,005	)		(1,729	)
Income tax benefit (expense)		-			-			-			-			-			(29	)		114			-			24
Net income (loss)	$	16,978		$	907		$	5,222		$	(4,763	)	$	(6,917	)	$	(329	)	$	(445	)	$	(3,005	)	$	(1,705	)

(Amounts in thousands)	Property Funds' Underlying Investments for the Six Months Ended June 30, 2014
Statements of Income	1633 Broadway			900 Third Ave			31 West 52nd St			1301 Ave of the Americas			One Market Plaza			Liberty Place			1899 Penn. Ave			2099 Penn. Ave			425 Eye St
Revenues:
Rental income	$	72,970		$	17,764		$	36,221		$	53,749		$	36,123		$	3,729		$	4,044		$	76		$	5,300
Tenant reimbursement income		5,913			1,514			2,489			4,434			661			1,184			2,107			3			827
Fee and other income		1,224			612			2,615			1,657			2,044			23			56			10			-
Total revenues		80,107			19,890			41,325			59,840			38,828			4,936			6,207			89			6,127
Expenses:
Building operating		26,879			8,083			11,517			25,688			14,001			2,168			2,605			2,223			2,904
Related party management fees		1,485			525			655			837			394			132			141			2			184
Operating		28,364			8,608			12,172			26,525			14,395			2,300			2,746			2,225			3,088
Depreciation and amortization		5,567			3,731			11,074			18,555			17,686			-			1,923			-			2,793
General and administrative		10			31			34			51			294			16			16			399			114
Total expenses		33,941			12,370			23,280			45,131			32,375			2,316			4,685			2,624			5,995
Operating income (loss)		46,166			7,520			18,045			14,709			6,453			2,620			1,522			(2,535	)		132
Unrealized gain on interest rate swaps		12,945			2,935			4,288			6,125			10,444			-			-			-			-
Interest and debt expense		(25,625	)		(7,353	)		(11,069	)		(30,549	)		(27,072	)		(1,890	)		(2,257	)		(2,208	)		(2,520	)
Unrealized depreciation on investment in real estate		-			-			-			-			-			(489	)		-			(530	)		-
Net income (loss) before taxes		33,486			3,102			11,264			(9,715	)		(10,175	)		241			(735	)		(5,273	)		(2,388	)
Income tax benefit (expense)		-			-			-			-			-			(26	)		182			-			(2,315	)
Net income (loss)	$	33,486		$	3,102		$	11,264		$	(9,715	)	$	(10,175	)	$	215		$	(553	)	$	(5,273	)	$	(4,703	)

15

PARAMOUNT GROUP, INC. AND PARAMOUNT PREDECESSOR

NOTES TO COMBINED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

4.     Investments in Unconsolidated Joint Ventures

The following table summarizes our investments in unconsolidated joint ventures as of June 30, 2015 and December 31, 2014.

	Percentage
	ownership at			As of
(Amounts in thousands)	June 30, 2015			June 30, 2015		December 31, 2014
Investments:
712 Fifth Avenue		50.0	%	$	2,690	$	1,697
Oder-Center, Germany		9.5	%		3,438		4,052
				$	6,128	$	5,749

The following table summarizes income from unconsolidated joint ventures for the three and six months ended June 30, 2015 and 2014.

	Percentage			TheCompany				The Predecessor
	ownershipat			Three Months Ended		Six Months Ended		Three Months Ended			Six Months Ended
(Amounts in thousands)	June 30, 2015			June 30, 2015		June 30, 2015		June 30, 2014			June 30, 2014
Our share of Net Income (Loss):
712 Fifth Avenue		50.0	%	$	1,984	$	2,925	$	934		$	2,024
1325 Avenue of the Americas	n/a				-		-		(31	)		11
900 Third Avenue (1)	n/a				-		-		-			-
Oder-Center (2)		9.5	%		27		61		-			-
				$	2,011	$	2,986	$	903		$	2,035

⁽¹⁾ As of June 30, 2014, our Predecessor’s investment in 900 Third Avenue had a deficit balance and since our Predecessor had no obligations to fund operating losses, it did not recognize any losses in excess of its investment balance. All unrecognized losses were aggregated to offset future net income until all unrecognized losses were utilized.

⁽²⁾ We account for our interest in Oder-Center on a one quarter lag basis.

16

PARAMOUNT GROUP, INC. AND PARAMOUNT PREDECESSOR

NOTES TO COMBINED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

712 Fifth Avenue

As of June 30, 2015, we own a 50.0% interest in a joint venture that owns 712 Fifth Avenue, which is accounted under the equity method.  The following tables summarize 712 Fifth Avenue’s financial information as of the dates of and for the periods set forth below.

(Amounts in thousands)	As of
Balance Sheets	June 30, 2015			December 31, 2014
Rental property, net	$	198,722		$	221,827
Other assets		56,156			46,126
Total assets	$	254,878		$	267,953
Mortgage and notes payable	$	246,500		$	246,500
Other liabilities		15,260			30,321
Total liabilities		261,760			276,821
Equity (1)		(6,882	)		(8,868	)
Total liabilities and equity	$	254,878		$	267,953
(1)   The carrying amount of our investment in 712 Fifth Avenue is greater than our share of 712 Fifth       Avenue's equity by approximately $6,131.  This basis difference resulted from distributions in excess       of the equity in net earnings of 712 Fifth Avenue.

	The Company						The Predecessor
(Amounts in thousands)	Three months ended			Six Months Ended			Three months ended			Six Months Ended
Income Statements	June 30, 2015			June 30, 2015			June 30, 2014			June 30, 2014
Rental income	$	12,392		$	24,446		$	11,457		$	22,689
Tenant reimbursement income		1,375			2,736			1,124			2,269
Fee and other income		344			623			283			638
Total revenue		14,111			27,805			12,864			25,596
Operating		5,831			12,057			5,565			11,326
Depreciation and amortization		2,954			5,884			2,786			5,525
General and administrative		-			-			25			55
Total expenses		8,785			17,941			8,376			16,906
Operating income		5,326			9,864			4,488			8,690
Unrealized gain on interest rate swaps		1,248			2,020			1,058			2,645
Interest and other income, net		4			5			-			-
Interest and debt expense		(2,611	)		(6,039	)		(3,677	)		(7,286	)
Net income	$	3,967		$	5,850		$	1,869		$	4,049

17

PARAMOUNT GROUP, INC. AND PARAMOUNT PREDECESSOR

NOTES TO COMBINED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

5. Intangible Assets and Liabilities

The following summarizes our intangible assets (primarily acquired above-market leases and acquired in-place leases) and intangible liabilities (primarily acquired below-market leases) as of June 30, 2015 and December 31, 2014.

	As of
(Amounts in thousands)	June 30, 2015			December 31, 2014
Intangible assets:
Gross amount	$	686,284		$	689,894
Accumulated amortization		(103,158	)		(20,509	)
	$	583,126		$	669,385
Intangible liabilities:
Gross amount	$	222,903		$	222,985
Accumulated amortization		(21,064	)		(3,757	)
	$	201,839		$	219,228

Amortization of acquired below-market leases, net of acquired above-market leases, resulted in an increase to rental income of $872,000 and $1,762,000 for the three and six months ended June 30, 2015, respectively. Estimated annual amortization of acquired below-market leases, net of acquired above-market leases, for each of the five succeeding years commencing January 1, 2016 is as follows.

(Amounts in thousands)
2016	$	10,159
2017		8,394
2018		10,299
2019		9,518
2020		8,231

Amortization of acquired in-place leases (a component of depreciation and amortization expense) was $37,638,000 and $70,630,000 for the three and six months ended June 30, 2015, respectively. Estimated annual amortization of acquired in-place leases for each of the five succeeding years commencing January 1, 2016 is as follows.

(Amounts in thousands)
2016	$	79,941
2017		56,511
2018		50,164
2019		45,552
2020		40,525

18

PARAMOUNT GROUP, INC. AND PARAMOUNT PREDECESSOR

NOTES TO COMBINED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

6. Debt

The following is a summary of our outstanding debt.

						Balance at
(Amounts in thousands)	Maturity Date	Fixed/Variable Rate	Interest Rate at June 30, 2015			June 30, 2015		December 31, 2014
Mortgages and notes payable
1633 Broadway
	Dec-2016	Fixed (1)		6.15	%	$	772,100	$	772,100
	Dec-2016	Variable		1.61	%		154,160		154,160
				5.39	%		926,260		926,260
900 Third Avenue
	Nov-2017	Fixed (1)		5.35	%		255,000		255,000
	Nov-2017	Variable		1.77	%		19,337		19,337
				5.10	%		274,337		274,337
31 West 52nd Street (64.2% interest)
	Dec-2017	Fixed (1)		5.74	%		337,500		337,500
	Dec-2017	Variable		1.66	%		75,990		75,990
				4.99	%		413,490		413,490
One Market Plaza (49.0% interest)	Dec-2019	Fixed (1)		6.14	%		855,339		853,711
Waterview	June-2017	Fixed		5.76	%		210,000		210,000
1899 Pennsylvania Avenue	Nov-2020	Fixed		4.88	%		89,811		90,489
Liberty Place	June-2018	Fixed		4.50	%		84,000		84,000
Total mortgages and notes payable				5.51	%	$	2,853,237	$	2,852,287

(1)  Represents loans with variable interest rates that have been fixed by interest rate swaps. See “Interest Rate Swaps” below.

Revolving Credit Facility

As of June 30, 2015, there were no amounts outstanding under our senior unsecured revolving credit facility and $200,000,000 was reserved under a letter of credit.

Interest Rate Swaps

We manage our market risk on variable rate debt by entering into swap agreements to fix the rate on all or a portion of the debt for varying periods through maturity. These interest rate swaps are derivative instruments that are designated as fair value hedges and are recorded on our balance sheet at fair value with changes in the fair value recognized through earnings. The following table summarizes our outstanding interest rate swaps.

	Notional				Strike			Fair Value as of
Property	Amount		Effective Date	Maturity Date	Rate			June 30, 2015		December 31, 2014
(Amounts in thousands)
1633 Broadway	$	772,100	Dec-2006 to Jun-2008	Dec-2016		4.92	%	$	46,929	$	60,191
900 Third Ave		255,000	Nov-2007 to Nov-2012	Nov-2015 to Nov-2017		4.15	%		15,884		19,158
31 W 52nd Street		337,500	Dec-2007 to Dec-2012	Dec-2015 to Dec-2017		4.49	%		24,013		28,748
One Market Plaza	$	840,000	Aug-2007 to Aug-2012	Aug-2017		5.02	%		73,647		86,099
Total interest rate swap liabilities								$	160,473	$	194,196

In the three and six months ended June 30, 2015, we recognized unrealized gains of $21,747,000 and $33,725,000, respectively, from the change in fair value of these interest rate swaps.

19

PARAMOUNT GROUP, INC. AND PARAMOUNT PREDECESSOR

NOTES TO COMBINED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

7.     Noncontrolling Interests

Consolidated Joint Ventures and Funds

Noncontrolling interests in consolidated joint ventures and funds consists of (i) equity interests in properties that are not wholly owned by us but are consolidated into our financial results because we exercise control over the entities that own such properties and (ii) equity interests in funds that are consolidated into our financial results because we are the sole general partner of such Funds.  As of June 30, 2015 and December 31, 2014, noncontrolling interests in consolidated joint ventures and funds on our consolidated balance sheets aggregated $703,596,000 and $685,888,000, respectively.  

Operating Partnership

Noncontrolling interests in the Operating Partnership represents common units of the Operating Partnership that are held by third parties, including management. Common units of the Operating Partnership may be tendered for redemption to the Operating Partnership for cash. We, at our option, may assume that obligation and pay the holder either cash or common shares on a one-for-one basis. Since the number of common shares outstanding is equal to the number of common units owned by us, the redemption value of each common unit is equal to the market value of each common share and distributions paid to each common unitholder is equivalent to dividends paid to common stockholders.  As of June 30, 2015, noncontrolling interests in the Operating Partnership on our consolidated balance sheets had a carrying amount of $904,683,000 and a redemption value of $886,487,000.  

8. Variable Interest Entities (“VIEs”)

As of June 30, 2015 and December 31, 2014, we held variable interests in PGRESS-A, PGRESS-H, Residential Fund Feeder and Fund VII-H, which were determined to be VIEs. We are required to consolidate our interests in these entities because we are deemed to be the primary beneficiary and have the power to direct the activities of the entity that most significantly affect economic performance and the obligation to absorb losses and right to receive benefits that could potentially be significant to the entity. The table below summarizes the assets and liabilities of these entities. The liabilities are secured only by the assets of the entities, and are non-recourse to us.

	Balance as of
(Amounts in thousands)	June 30, 2015		December 31, 2014
Investments, at fair value	$	18,318	$	17,136
Investments, at cost		63,570		63,550
Cash and restricted cash		4,959		4,976
Accounts and other receivables		501		-
Other assets		1		-
Total VIE assets	$	87,349	$	85,662
Loans payable to noncontrolling interests	$	43,981	$	42,195
Other liabilities		202		131
Total VIE liabilities	$	44,183	$	42,326

20

PARAMOUNT GROUP, INC. AND PARAMOUNT PREDECESSOR

NOTES TO COMBINED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

9. Fair Value Measurements

ASC 820, Fair Value Measurement and Disclosures, defines fair value and establishes a framework for measuring fair value.  The objective of fair value is to determine the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (the exit price).ASC 820 establishes a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into three levels: Level 1 – quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities; Level 2 – observable prices that are based on inputs not quoted in active markets, but corroborated by market data; and Level 3 – unobservable inputs that are used when little or no market data is available. The fair value hierarchy gives the highest priority to Level 1 inputs and the lowest priority to Level 3 inputs. In determining fair value, we utilize valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible, as well as consider counterparty credit risk in our assessment of fair value.  Considerable judgment is necessary to interpret Level 2 and 3 inputs in determining the fair value of our financial and non-financial assets and liabilities.  Accordingly, our fair value estimates, which are made at the end of each reporting period, may be different than the amounts that may ultimately be realized upon sale or disposition of these assets.   

Financial Assets and Liabilities measured at Fair Value

Financial assets and liabilities that are measured at fair value on our consolidated balance sheets consists of (i) real estate fund investments, (ii) marketable securities (which represent the assets in our deferred compensation plan, for which there is a corresponding liability on our consolidated balance sheets) and (iii) interest rate swaps. The table below aggregates the fair values of these financial assets and liabilities at June 30, 2015 and December 31, 2014, based on their levels in the fair value hierarchy.

	As of June 30, 2015
(Amounts in thousands)	Total		Level 1		Level 2		Level 3
Real estate fund investments:
Investments in Property Funds	$	193,081	$	-	$	-	$	193,081
Investments in Alternative Investment Funds		142,464		-		-		142,464
Total real estate fund investments		335,545		-		-		335,545
Marketable securities		21,524		21,524		-		-
Total assets	$	357,069	$	21,524	$	-	$	335,545
Interest rate swap liabilities	$	160,473		-	$	160,473		-
Total liabilities	$	160,473	$	-	$	160,473	$	-

	As of December 31, 2014
(Amounts in thousands)	Total		Level 1		Level 2		Level 3
Real estate fund investments:
Investments in Property Funds	$	183,216	$	-	$	-	$	183,216
Investments in Alternative Investment Funds		140,171		-		-		140,171
Total real estate fund investments		323,387		-		-		323,387
Marketable securities		20,159		20,159		-		-
Total assets	$	343,546	$	20,159	$	-	$	323,387
Interest rate swap liabilities	$	194,196		-	$	194,196		-
Total liabilities	$	194,196	$	-	$	194,196	$	-

21

PARAMOUNT GROUP, INC. AND PARAMOUNT PREDECESSOR

NOTES TO COMBINED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Property Funds

At June 30, 2015, the Property Funds had three investments.  These investments are classified as Level 3.  We obtain third party appraisals at least annually. We use a discounted cash flow valuation technique to estimate the fair value of each of these investments, which is updated quarterly by personnel responsible for the management of each investment and reviewed by senior management at each reporting period. The discounted cash flow valuation technique requires us to estimate cash flows for each investment over the anticipated holding period, which currently ranges from 1.0 to 10.0 years.  Cash flows are derived from property rental revenue (base rents plus reimbursements) less operating expenses, real estate taxes and capital and other costs, plus projected sales proceeds in the year of exit. Property rental revenue is based on leases currently in place and our estimates for future leasing activity, which are based on current market rents for similar space. Similarly, estimated real estate taxes and operating expenses are based on amounts incurred in the current period plus a projected growth factor for future periods. Anticipated sales proceeds at the end of an investment’s expected holding period are determined based on the net cash flow of the investment in the year of exit, divided by a terminal capitalization rate, less estimated selling costs.  The fair value of each property is calculated by discounting future cash flows (including anticipated sales proceeds), using an appropriate discount rate.  The fair value of the investment is calculated by subtracting property level debt, if any, from the fair value of the property.

Significant unobservable inputs used in determining the fair value of each investment include capitalization rates and discount rates. These rates are based on, among other factors, location and type of property.  Significant unobservable quantitative inputs in the table below were utilized in determining the fair value of the Property Fund investments at June 30, 2015 and December 31, 2014.

	As of June 30, 2015				As of December 31, 2014
Unobservable Quantitative Input	Range		Weighted average (based on fair value of investments)		Range	Weighted average (based on fair value of investments)
Discount rates		7.00%		7.00%	6.50% - 7.25%		6.83%
Terminal capitalization rates	5.00% - 6.00%			5.55%	5.50% - 6.00%		5.72%

The above inputs are subject to change based on changes in economic and market conditions and/or changes in use or timing of exit. Changes in discount rates and terminal capitalization rates result in increases, or decreases, in the fair values of these investments. The discount rates encompass, among other things, uncertainties in the valuation models with respect to terminal capitalization rates and the amount and timing of cash flows. Therefore, a change in the fair value of these investments resulting from a change in the terminal capitalization rate may be partially offset by a change in the discount rate. Significant increases (decreases) in any of these inputs in isolation would result in a significantly lower (higher) fair value, respectively.

Alternative Investment Funds

At June 30, 2015, Alternative Investment Funds had investments in a mezzanine loan and preferred equity. These instruments are classified as Level 3. Estimates of the fair value of these instruments are determined by the standard practice of modeling the contractual cash flows required under the instrument and discounting them back to their present value at the appropriate current risk adjusted interest rate. The balances are updated quarterly by a third party and reviewed by senior management at each reporting period.

Significant unobservable inputs used in determining the fair value of these investments include credit spreads and preferred returns.  Significant increases or decreases in any of these inputs in isolation would result in a significantly lower (higher) fair value, respectively. Significant unobservable quantitative inputs in the table below were utilized in determining the fair value of the investments in the Alternative Investment Funds at June 30, 2015 and December 31, 2014.

	As of June 30, 2015			As of December 31, 2014
Unobservable Quantitative Input	Range	Weighted average (based on fair value of investments)		Range	Weighted average (based on fair value of investments)
Preferred return	8.49% - 14.00%		11.07%	8.50% - 14.00%		11.07%

22

PARAMOUNT GROUP, INC. AND PARAMOUNT PREDECESSOR

NOTES TO COMBINED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

The table below summarizes the changes in the fair value of Real Estate Fund Investments that are classified as Level 3, for the three and six months ended June 30, 2015 and 2014.

	The Company				The Predecessor
	Three Months Ended		Six Months Ended		Three Months Ended		Six Months Ended
(Amounts in thousands)	June 30, 2015		June 30, 2015		June 30, 2014		June 30, 2014
Beginning balance	$	324,282	$	323,387	$	2,362,743	$	2,158,889
Purchases		-		22		6,494		164,181
Net unrealized gains		11,263		12,136		33,750		79,917
Ending Balance	$	335,545	$	335,545	$	2,402,987	$	2,402,987

Interest Rate Swaps

Interest rate swaps are valued by a third-party specialist, based on a pricing model that incorporates market observable inputs for interest rate curves and unobservable inputs for credit spreads. The interest rate swaps are classified as Level 2 in the valuations hierarchy.

Financial Assets and Liabilities Not Measured at Fair Value

Financial assets not measured at fair value on our consolidated balance sheets consists of cash equivalents, and are classified as Level 1 as their carrying amount approximates their fair value, due to their short-term nature.  Financial liabilities not measured at fair value include mortgages and notes payable.  Estimates of the fair value of these instruments are determined by the standard practice of modeling the contractual cash flows required under the instrument and discounting them back to their present value at the appropriate current risk adjusted interest rate, which is provided by a third-party specialist. For floating rate debt, we use forward rates derived from observable market yield curves to project the expected cash flows we would be required to make under the instrument. These instruments are classified as Level 2.

The following is a summary of the carrying amounts and fair value of these financial instruments as of June 30, 2015 and December 31, 2014.

	As of June 30, 2015				As of December 31, 2014
(Amounts in thousands)	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Cash equivalents	$	289,917	$	289,917	$	401,215	$	401,215
Total Assets	$	289,917	$	289,917	$	401,215	$	401,215
	As of June 30, 2015				As of December 31, 2014
(Amounts in thousands)	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Mortgage and notes payable	$	2,853,237	$	2,797,650	$	2,852,287	$	2,796,842
Total Liabilities	$	2,853,237	$	2,797,650	$	2,852,287	$	2,796,842

23

PARAMOUNT GROUP, INC. AND PARAMOUNT PREDECESSOR

NOTES TO COMBINED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

10. Fee and Other Income

The following table sets forth the details of our fee and other income.

	The Company				The Predecessor
	Three Months Ended		Six Months Ended		Three Months Ended		Six Months Ended
(Amounts in thousands)	June 30, 2015		June 30, 2015		June 30, 2014		June 30, 2014
Fee income
Property management fees	$	1,386	$	2,715	$	4,059	$	8,015
Acquisition and disposition fees		-		-		-		1,038
Construction fees		50		111		2,242		2,430
Other fees		344		489		99		99
Total fee income		1,780		3,315		6,400		11,582
Other income (1)		3,168		6,128		-		-
Total fee and other income	$	4,948	$	9,443	$	6,400	$	11,582

⁽¹⁾ Other income is primarily comprised of tenant payments for items such as after hour heating and cooling, freight elevator services and similar expenses.

11. Interest and Other Income

The following table sets forth the details of interest and other income.

	The Company				The Predecessor
	Three Months Ended		Six Months Ended		Three Months Ended		Six Months Ended
(Amounts in thousands)	June 30, 2015		June 30, 2015		June 30, 2014		June 30, 2014
Mark-to-market of investments in    our deferred compensation plans (1)	$	362	$	1,095	$	644	$	1,228
Interest and other income		150		271		353		478
Total interest and other income	$	512	$	1,366	$	997	$	1,706

⁽¹⁾ The change resulting from the mark-to-market of the deferred compensation plan assets is entirely offset by the change in the deferred compensation plan liabilities, which is included in general and administrative expense.

12.     Interest and Debt Expense

          The following table sets forth the details of interest and debt expense.

	The Company				The Predecessor
	Three Months Ended		Six Months Ended		Three Months Ended		Six Months Ended
(Amounts in thousands)	June 30, 2015		June 30, 2015		June 30, 2014		June 30, 2014
Interest and debt expense	$	41,650	$	82,954	$	7,880	$	15,571
Amortization of deferred financing costs		586		1,170		108		216
Total interest and debt expense	$	42,236	$	84,124	$	7,988	$	15,787

24

PARAMOUNT GROUP, INC. AND PARAMOUNT PREDECESSOR

NOTES TO COMBINED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

13. Incentive Compensation

       Stock Based Compensation

We account for all stock-based compensation in accordance with ASC 718, Compensation – Stock Compensation. As of June 30, 2015, we have 14,347,116 shares available for future grants under the Plan, if all awards granted are full value awards, as defined in the 2014 Equity Incentive Plan.  Stock based compensation for the three and six months ended June 30, 2015 was $1,370,000, and $4,405,000, respectively, and includes $1,861,000 of expense related to the acceleration of vesting of the stock awards in connection with a separation agreement and release in the six months ended June 30, 2015.

On April 1, 2015, the compensation committee (the “Compensation Committee”) of the board of directors approved the Company’s 2015 Performance Program (the “2015 Performance Program”), a multi-year performance-based equity compensation program. The purpose of the 2015 Performance Program is to further align the interests of the Company’s stockholders with that of management by encouraging the Company’s senior officers to create stockholder value in a “pay for performance” structure.  Under the 2015 Performance Program, participants may earn awards in the form of LTIP Units of the Operating Partnership based on the Company’s total return to stockholders (“TRS”) over a three-year performance measurement period beginning on April 1, 2015 and continuing through March 31, 2018, on both an absolute basis and relative basis. One-half of the award is earned if the Company outperforms a predetermined absolute TRS and the other half is earned if the Company outperforms a predetermined relative TRS. Specifically, participants begin to earn awards under the 2015 Performance Program if the Company’s TRS for the performance measurement  period equals or exceeds 21% on an absolute basis and exceeds the performance of the SNL Office REIT Index by 100 basis points on a relative basis, and awards will be fully earned if the Company’s TRS for the performance measurement period equals or exceeds 40% on an absolute basis and exceeds the performance of the SNL Office REIT Index by 700 basis points on a relative basis. Participants will not earn any awards under the 2015 Performance Program if the Company’s TRS during the performance measurement period does not meet these minimum thresholds. The number of LTIP Units that are earned if performance is above the minimum thresholds, but below the maximum thresholds, will be determined based on linear interpolation between the percentages earned at the minimum and maximum thresholds. During the performance measurement period, participants will receive only one-tenth of the dividends otherwise payable to the Company’s common stockholders with respect to their LTIP Units and the remaining dividends on their LTIP Units will accrue during the performance measurement period and will be paid to participants only if the LTIP Units are ultimately earned based on the achievement of the designated performance objectives.

If the designated performance objectives are achieved, awards earned under the 2015 Performance Program will also be subject to vesting based on continued employment with the Company through April 1, 2020, with 50% of each award vesting on the date the Compensation Committee determines the awards earned under the 2015 Performance Program following the conclusion of the performance period, and 25% vesting on each of April 1, 2019 and April 1, 2020.

       Deferred Compensation

In connection with the Formation Transactions, we assumed a deferred compensation plan (the “1993 Plan”) from our Predecessor. The 1993 Plan permits certain management employees to defer certain percentages of their compensation, as defined. The assets of the 1993 Plan remain the sole property of the Company and are subject to the claims of its general creditors.  The assets of the 1993 Plan are included in “marketable securities” and “restricted cash,” with an offsetting liability included in “other liabilities” on our consolidated balance sheets.  Income from the mark-to-market of investments in our deferred compensation plan is included in “interest and other income” and this amount is entirely offset by expense from the mark-to-market of plan liabilities, which is included as a component of “general and administrative” expenses on our consolidated statements of income.

The 1993 Plan had a balance of $29,829,000 and $28,148,000 as of June 30, 2015 and December 31, 2014, respectively.

25

PARAMOUNT GROUP, INC. AND PARAMOUNT PREDECESSOR

NOTES TO COMBINED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

14. Earnings Per Share

The following table provides a summary of net loss and the number of common shares used in the computation of basic income per common share - which includes the weighted average number of common shares outstanding without regard to dilutive potential common shares, and diluted loss per common share - which includes the weighted average common shares and dilutive share equivalents. Dilutive share equivalents may include our employee stock options and restricted stock.

	Three Months Ended			Six Months Ended
(Amounts in thousands, except per share amounts)	June 30, 2015			June 30, 2015
Numerator:
Net loss attributable to Paramount Group, Inc. - basic and diluted	$	(4,709	)	$	(14,440	)
Denominator:
Denominator for basic loss per share - weighted average shares		212,107			212,107
Effect of dilutive employee stock options and restricted share awards (1)		-			-
Denominator for diluted loss per share - weighted average shares		212,107			212,107
Loss per share - basic and diluted	$	(0.02	)	$	(0.07	)

(1)  The effect of dilutive securities in the three and six months ended June 30, 2015 excludes an aggregate of 53,247 and 53,095 weighted average share equivalents, respectively, as their effect was anti-dilutive.

15. Related Party

Due to Affiliates

As of June 30, 2015 and December 31, 2014, we had an aggregate of $27,299,000 of liabilities that were due to affiliates. These liabilities were comprised of a $24,500,000 note payable to CNBB-RDF Holdings, LP, which is an entity owned by Maren Otto, Katharina Otto-Bernstein and Alexander Otto, and a $2,799,000 million note payable to a different entity owned by members of the Otto family, both of which were made in lieu of certain cash distributions prior to the completion of the Formation Transactions. The notes are due in October 2017 and bear interest at a fixed rate of 0.50%.

26

PARAMOUNT GROUP, INC. AND PARAMOUNT PREDECESSOR

NOTES TO COMBINED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

16. Commitments and Contingencies

Insurance

We carry commercial general liability coverage on our properties, with limits of liability customary within the industry. Similarly, we are insured against the risk of direct and indirect physical damage to our properties including coverage for the perils of flood and earthquake shock. Our policies also cover the loss of rental income during an estimated reconstruction period. Our policies reflect limits and deductibles customary in the industry and specific to the buildings and portfolio. We also obtain title insurance policies when acquiring new properties. We currently have coverage for losses incurred in connection with both domestic and foreign terrorist-related activities. While we do carry commercial general liability insurance, property insurance and terrorism insurance with respect to our properties, these policies include limits and terms we consider commercially reasonable. In addition, there are certain losses (including, but not limited to, losses arising from known environmental conditions or acts of war) that are not insured, in full or in part, because they are either uninsurable or the cost of insurance makes it, in our belief, economically impractical to maintain such coverage. Should an uninsured loss arise against us, we would be required to use our own funds to resolve the issue, including litigation costs. We believe the policy specifications and insured limits are adequate given the relative risk of loss, the cost of the coverage and industry practice and, in the opinion of our management, the properties in our portfolio are adequately insured.

Other Commitments and Contingencies

We are a party to various claims and routine litigation arising in the ordinary course of business. Some of these claims or others to which we may be subject from time to time, including claims arising specifically from the Formation Transactions, may result in defense costs, settlements, fines or judgments against us, some of which are not, or cannot be, covered by insurance. Payment of any such costs, settlements, fines or judgments that are not insured could have an adverse impact on our financial position and results of operations. Should any litigation arise in connection with the Formation Transactions, we would contest it vigorously. In addition, certain litigation or the resolution of certain litigation may affect the availability or cost of some of our insurance coverage, which could adversely impact our results of operations and cash flow, expose us to increased risks that would be uninsured, and/or adversely impact our ability to attract officers and directors.

The terms of our mortgage debt and certain side letters in place include certain restrictions and covenants which may limit, among other things, certain investments, the incurrence of additional indebtedness and liens and the disposition or other transfer of assets and interests in the borrower and other credit parties, and requires compliance with certain debt yield, debt service coverage and loan to value ratios. In addition, our senior unsecured revolving credit facility contains representations, warranties, covenants, other agreements and events of default customary for agreements of this type with comparable companies. As of June 30, 2015, we believe we are in compliance with all of our covenants.

718 Fifth Avenue - Put Right

Prior to the Formation Transactions, an affiliate of our Predecessor owned a 25.0% interest in 718 Fifth Avenue, a five-story building containing 19,050 square feet of prime retail space that is located on the southwest corner of 56th Street and Fifth Avenue in New York, (based on its 50.0% interest in a joint venture that held a 50.0% tenancy-in-common interest in the property). Prior to the completion of the Formation Transactions, this interest was sold to its partner in the 718 Fifth Avenue joint venture, who is also our partner in the joint venture that owns 712 Fifth Avenue, New York, New York. In connection with this sale, we granted our joint venture partner a put right, pursuant to which the 712 Fifth Avenue joint venture would be required to purchase the entire direct or indirect interests held by our joint venture partner or its affiliates in 718 Fifth Avenue at a purchase price equal to the fair market value of such interests. The put right may be exercised at any time after the four-year anniversary of the sale of its interest in 718 Fifth Avenue upon 12 months written notice with the actual purchase occurring no earlier than the five-year anniversary of the sale of its interest in 718 Fifth Avenue. If the put right is exercised and the 712 Fifth Avenue joint venture acquires the 50.0% tenancy-in-common interest in the property that will be held by our joint venture partner following the sale of its interest to our joint venture partner, we will own a 25.0% interest in 718 Fifth Avenue.

27

PARAMOUNT GROUP, INC. AND PARAMOUNT PREDECESSOR

NOTES TO COMBINED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

17. Segments Disclosure

The Company

Upon completion of the Offering and Formation Transactions, we acquired substantially all of the assets of our Predecessor and substantially all of the assets of the Property Funds that it controlled. Our business, following the Formation Transactions, is comprised of one reportable segment. We have determined that our properties have similar economic characteristics to be aggregated into one reportable segment (operating, leasing and managing office properties). Our determination was based, in part, on our method of internal reporting.

The following tables provide selected results for each reportable segment for the three and six months ended June 30, 2015 and 2014.

	For the Three Months Ended June 30, 2015
	Owned
(Amounts in thousands)	Properties			Other			Total
Income Statement Data:
Revenues
Rental income	$	145,349		$	568		$	145,917
Tenant reimbursement income		12,063			-			12,063
Fee and other income		3,168			1,780			4,948
Total revenues		160,580			2,348			162,928
Total expenses		138,001			16,542			154,543
Operating income (loss)		22,579			(14,194	)		8,385
Income from real estate fund investments		-			14,072			14,072
Income from unconsolidated joint ventures		1,985			26			2,011
Unrealized gains on interest rate swaps		21,747			-			21,747
Interest and other income, net		91			421			512
Interest and debt expense		(39,741	)		(2,495	)		(42,236	)
Net income (loss) before income taxes		6,661			(2,170	)		4,491
Income tax benefit (expense)		467			(1,810	)		(1,343	)
Net income (loss)		7,128			(3,980	)		3,148
Add:
Depreciation and amortization		79,119			302			79,421
General and administrative		(42	)		9,175			9,133
Interest and debt expense		39,741			2,495			42,236
Transfer taxes due in connection with the sale of shares
by a former joint venture partner		-			5,872			5,872
Acquisition and transaction related costs		-			2,336			2,336
Income tax (benefit) expense		(467	)		1,810			1,343
Net Operating Income from unconsolidated joint ventures		4,138			140			4,278
Less:
Income from real estate fund investments		-			(14,072	)		(14,072	)
Income from unconsolidated joint ventures		(1,985	)		(26	)		(2,011	)
Fee income		-			(1,780	)		(1,780	)
Unrealized gains on interest rate swaps		(21,747	)		-			(21,747	)
Interest and other income, net		(91	)		(421	)		(512	)
Net Operating Income (1)	$	105,794		$	1,851		$	107,645

28

PARAMOUNT GROUP, INC. AND PARAMOUNT PREDECESSOR

NOTES TO COMBINED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

	For the Six Months Ended June 30, 2015
	Owned
(Amounts in thousands)	Properties			Other			Total
Income Statement Data:
Revenues
Rental income	$	287,826		$	1,334		$	289,160
Tenant reimbursement income		25,551			-			25,551
Fee and other income		6,123			3,320			9,443
Total revenues		319,500			4,654			324,154
Total expenses		273,652			30,110			303,762
Operating income (loss)		45,848			(25,456	)		20,392
Income from real estate fund investments		-			19,293			19,293
Income from unconsolidated joint ventures		2,925			61			2,986
Unrealized gains on interest rate swaps		33,725			-			33,725
Interest and other income, net		185			1,181			1,366
Interest and debt expense		(78,873	)		(5,251	)		(84,124	)
Net (loss) income before income taxes		3,810			(10,172	)		(6,362	)
Income tax benefit (expense)		7			(1,924	)		(1,917	)
Net (loss) income		3,817			(12,096	)		(8,279	)
Add:
Depreciation and amortization		152,456			548			153,004
General and administrative		-			21,746			21,746
Interest and debt expense		78,873			5,251			84,124
Transfer taxes due in connection with the sale of shares
by a former joint venture partner		-			5,872			5,872
Acquisition and transaction related costs		-			3,475			3,475
Income tax (benefit) expense		(7	)		1,924			1,917
Net Operating Income from unconsolidated joint ventures		7,874			185			8,059
Less:
Income from real estate fund investments		-			(19,293	)		(19,293	)
Income from unconsolidated joint ventures		(2,925	)		(61	)		(2,986	)
Fee income		-			(3,315	)		(3,315	)
Unrealized gains on interest rate swaps		(33,725	)		-			(33,725	)
Interest and other income, net		(185	)		(1,181	)		(1,366	)
Net Operating Income (1)	$	206,178		$	3,055		$	209,233

⁽¹⁾  Net Operating Income (“NOI”) is a metric we use to measure the operating performance of our properties, and consists of property-related revenue (which includes rental revenue, tenant reimbursement income and certain other income) less operating expenses (which includes building expenses such as cleaning, security, repairs and maintenance, utilities, property administration and real estate taxes). We use NOI internally as a performance measure and believe it provides useful information to investors regarding our financial condition and results of operations because it reflects only those income and expense items that are incurred at the property level. Other real estate companies may use different methodologies for calculating NOI, and accordingly, our presentation of NOI may not be comparable to other real estate companies.

29

PARAMOUNT GROUP, INC. AND PARAMOUNT PREDECESSOR

NOTES TO COMBINED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

The Predecessor

Our Predecessor historically operated an integrated business that consisted of three reportable segments, (i) Owned Properties, (ii) Managed Funds and (iii) a Management Company. The Owned Properties segment consisted of properties in which our Predecessor had a direct or indirect ownership interest, other than properties that it owned through its private equity real estate funds. The Managed Funds segment consisted of the private equity real estate funds. In addition, our Predecessor included a Management Company that performed property management and asset management services and certain general and administrative level functions, including legal and accounting, as a separate reportable segment.   

	For the Three Months Ended June 30, 2014
	Owned			Managed			Management
(Amounts in thousands)	Properties			Funds			Company			Eliminations			Total
Income Statement Data:
Revenues
Rental income	$	7,813		$	686		$	-		$	-		$	8,499
Tenant reimbursement income		441			-			-			-			441
Distributions from real estate fund investments		-			4,744			-			-			4,744
Realized and unrealized gains, net		-			33,750			-			-			33,750
Fee and other income		-			-			14,137			(7,737	)		6,400
Total revenues		8,254			39,180			14,137			(7,737	)		53,834
Total expenses		6,677			6,475			12,133			(7,737	)		17,548
Operating income		1,577			32,705			2,004			-			36,286
Income from unconsolidated joint ventures		903			-			11,568			(11,568	)		903
Unrealized loss on interest rate swaps		-			(354	)		-			-			(354	)
Interest and other income, net		684			310			3			-			997
Interest and debt expense		(3,880	)		(4,069	)		(39	)		-			(7,988	)
Net income (loss) before income taxes		(716	)		28,592			13,536			(11,568	)		29,844
Income tax expense		-			-			(3,842	)		-			(3,842	)
Net income (loss)		(716	)		28,592			9,694			(11,568	)		26,002
Net income attributable to noncontrolling interests		-			(25,823	)		-			-			(25,823	)
Net income (loss) attributable to the Predecessor	$	(716	)	$	2,769		$	9,694		$	(11,568	)	$	179

30

PARAMOUNT GROUP, INC. AND PARAMOUNT PREDECESSOR

NOTES TO COMBINED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

	For the Six Months Ended June 30, 2014
	Owned			Managed			Management
(Amounts in thousands)	Properties			Funds			Company			Eliminations			Total
Income Statement Data:
Revenues
Rental income	$	15,464		$	848		$	-		$	-		$	16,312
Tenant reimbursement income		896			-			-			-			896
Distributions from real estate fund investments		-			11,247			-			-			11,247
Realized and unrealized gains, net		-			79,917			-			-			79,917
Fee and other income		-			-			27,910			(16,328	)		11,582
Total revenues		16,360			92,012			27,910			(16,328	)		119,954
Total expenses		13,502			17,001			23,725			(16,328	)		37,900
Operating income		2,858			75,011			4,185			-			82,054
Income from unconsolidated joint ventures		2,035			-			25,858			(25,858	)		2,035
Unrealized loss on interest rate swaps		-			(196	)		-			-			(196	)
Interest and other income, net		1,347			356			3			-			1,706
Interest and debt expense		(7,665	)		(8,083	)		(39	)		-			(15,787	)
Net income (loss) before income taxes		(1,425	)		67,088			30,007			(25,858	)		69,812
Income tax expense		-			-			(7,105	)		-			(7,105	)
Net income (loss)		(1,425	)		67,088			22,902			(25,858	)		62,707
Net income attributable to noncontrolling interests		-			(53,133	)		-			-			(53,133	)
Net income (loss) attributable to the Predecessor	$	(1,425	)	$	13,955		$	22,902		$	(25,858	)	$	9,574

31

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and the combined consolidated financial statements of that of our Predecessor, including the related notes included therein.

Forward-Looking Statements

We make statements in this Quarterly Report on Form 10-Q that are considered “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, which are usually identified by the use of words such as “anticipates,” “believes,” “estimates,” “expects,” “intends,” “may,” “plans,” “projects,” “seeks,” “should,” “will,” and variations of such words or similar expressions. We intend these forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and are including this statement for purposes of complying with those safe harbor provisions. These forward-looking statements reflect our current views about our plans, intentions, expectations, strategies and prospects, which are based on the information currently available to us and on assumptions we have made. Although we believe that our plans, intentions, expectations, strategies and prospects as reflected in or suggested by those forward-looking statements are reasonable, we can give no assurance that the plans, intentions, expectations or strategies will be attained or achieved. Furthermore, actual results may differ materially from those described in the forward-looking statements and will be affected by a variety of risks and factors that are beyond our control including, without limitation:

· unfavorable market and economic conditions in the United States and globally and in New York City, Washington, D.C. and San Francisco;  

· risks associated with our high concentrations of properties in New York City, Washington, D.C., and San Francisco;  

· risks associated with ownership of real estate;  

· decreased rental rates or increased vacancy rates;  

· the risk we may lose a major tenant;  

· limited ability to dispose of assets because of the relative illiquidity of real estate investments;  

· intense competition in the real estate market that may limit our ability to attract or retain tenants or re-lease space;  

· insufficient amounts of insurance;  

· uncertainties and risks related to adverse weather conditions, natural disasters and climate change;  

· risks associated with actual or threatened terrorist attacks;  

· exposure to liability relating to environmental and health and safety matters;  

· high costs associated with compliance with the Americans with Disabilities Act;  

· failure of acquisitions to yield anticipated results;  

· risks associated with real estate activity through our joint ventures and private equity real estate funds;  

· general volatility of the capital and credit markets and the market price of our common stock;  

· exposure to litigation or other claims;  

· loss of key personnel;  

· risks associated with breaches of our data security;  

· risks associated with our substantial indebtedness;  

· failure to refinance current or future indebtedness on favorable terms, or at all;  

· failure to meet the restrictive covenants and requirements in our existing debt agreements;  

32

· fluctuations in interest rates and increased costs to refinance or issue new debt;  

· risks associated with derivatives or hedging activity;  

· risks associated with high mortgage rates or the unavailability of mortgage debt which make it difficult to finance or refinance properties and could subject us to foreclosure;  

· risks associated with future sales of our common stock by our continuing investors or the perception that our continuing investors intend to sell substantially all of the shares of our common stock that they hold;  

· risks associated with the market for our common stock;  

· failure to qualify as a REIT;  

· compliance with REIT requirements, which may cause us to forgo otherwise attractive opportunities or liquidate certain of our investments; or  

· any of the other risks included in this Quarterly Report on Form 10-Q or in our Annual Report on Form 10-K for the year ended December 31, 2014, including those set forth in Item 1A entitled “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2014.

Accordingly, there is no assurance that our expectations will be realized. Except as otherwise required by the U.S. federal securities laws, we disclaim any obligations or undertaking to publicly release any updates or revisions to any forward-looking statement contained herein (or elsewhere) to reflect any change in our expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based. The reader should review carefully our financial statements and the notes thereto, as well as Item 1A entitled “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2014.

Overview

We are a fully-integrated real estate investment trust (“REIT”) focused on owning, operating, managing, acquiring and redeveloping high-quality, Class A office properties in select central business district submarkets of New York City, Washington, D.C. and San Francisco. We conduct our business through, and substantially all of our interests are held by, Paramount Group Operating Partnership LP, a Delaware limited partnership (the “Operating Partnership”).  We are the sole general partner of, and owned approximately 80.4% of, the Operating Partnership as of June 30, 2015.

We were incorporated in Maryland as a corporation on April 14, 2014 to continue the business of our Predecessor, as defined, and did not have any meaningful operations until the acquisition of substantially all of the assets of our Predecessor and assets of the Property Funds, as defined, that it controlled, as well as the interests of unaffiliated third parties in certain properties. Our properties were acquired through a series of Formation Transactions (the “Formation Transactions”) concurrently with our initial public offering of 150,650,000 common shares at a public offering price of $17.50 per share on November 24, 2014 (the “Offering”).  

Objectives and Strategy

Our primary business objective is to enhance shareholder value by increasing cash flow from operations. The strategies we intend to execute to achieve this objective include:

· Leasing available vacant space;

· Releasing space that is at below-market rents;

· Maintaining a disciplined acquisition strategy focused on owning and operating Class A office properties in select central business district submarkets of New York City, Washington, D.C. and San Francisco;

· Redeveloping and repositioning properties to increase returns; and

· Proactively managing our portfolio to increase occupancy and rental rates.

33

Financial Results

Three Months Ended June 30, 2015

Net loss attributable to common shareholders was $4,709,000, or $0.02 per diluted share, for the three months ended June 30, 2015.  

Core funds from operations (“Core FFO”) attributable to common shareholders for the three months ended June 30, 2015, was $46,315,000, or $0.22 per diluted share, including $4,709,000 of carried interest from fund investments.  Core FFO attributable to common shareholders for the three months ended June 30, 2015 excludes certain “non-core” items that affect comparability, which are listed in the table below.  The aggregate of these items, net of amounts attributable to noncontrolling interests, increased FFO attributable to common shareholders by $6,348,000, or $0.03 per diluted share.  FFO attributable to common shareholders for the three months ended June 30, 2015, which includes the impact of these items, was $52,663,000, or $0.25 per diluted share.

Six Months Ended June 30, 2015

Net loss attributable to common shareholders was $14,440,000, or $0.07 per diluted share, for the six months ended June 30, 2015.

Core FFO attributable to common shareholders for the six months ended June 30, 2015, was $85,278,000, or $0.40 per diluted share, including $5,106,000, or $0.02 per diluted share, of carried interest from fund investments.  Core FFO attributable to common shareholders for the six months ended June 30, 2015, excludes certain “non-core” items that affect comparability, which are listed in the table below.  The aggregate of these items, net of amounts attributable to noncontrolling interests, increased FFO attributable to common shareholders by $10,702,000, or $0.05 per diluted share.  FFO attributable to common shareholders for the six months ended June 30, 2015, which includes the impact of these items, was $95,980,000, or $0.45 per diluted share.

	The Company
	Three Months Ended			Six Months Ended
(Amounts in thousands, except per share amounts)	June 30, 2015			June 30, 2015
Non-core (income) expense:
Transfer taxes due in connection with the sale of shares      by a former joint venture partner		5,872			5,872
Acquisition and transaction related costs		2,336			3,475
Predecessor income tax true-up		721			721
Severance costs		-			3,315
Unrealized gains on interest rate swaps		(21,747	)		(33,725	)
Pro rata share of unrealized gains on interest rate swaps of       unconsolidated joint ventures		(624	)		(1,010	)
Total non-core (income) expense		(13,442	)		(21,352	)
Less non-core (income) expense attributable to noncontrolling interests in:
Consolidated joint ventures and funds		5,550			8,047
Operating Partnership		1,544			2,603
Non-core (income) expense attributable to common shareholders	$	(6,348	)	$	(10,702	)
Per diluted share	$	(0.03	)	$	(0.05	)
Reconciliation of weighted average shares outstanding:
Weighted average shares outstanding		212,106,718			212,106,718
Effect of dilutive securities		5,004			6,467
Denominator		212,111,722			212,113,185

34

Portfolio Operations and Leasing Activity

As of June 30, 2015, our portfolio consisted of 12 Class A office properties aggregating approximately 10.4 million square feet that was 94.8% leased.

During the three months ended June 30, 2015, we leased 199,972 square feet at a weighted average initial rent of $71.84 per square foot. This leasing activity, offset by lease expirations during the three months, increased portfolio wide occupancy by 20 basis points from March 31, 2015. Of the 199,972 square feet leased in the three months, 138,232 square feet represent second generation space (space that has been vacant for less than twelve months) for which we achieved rental rate increases of 15.4% on a cash basis and 19.0 % on a GAAP basis. The weighted average lease term for leases signed during the three months was 11.1 years and tenant improvements and leasing commissions on these leases were $7.38 per square foot per annum, or 10.3% of initial rent.

The following table presents additional details on the leases signed during the three months ended June 30, 2015 and is not intended to coincide with the commencement of rental revenue in accordance with accounting principles generally accepted in the United States of America (“GAAP”).

Three Months Ended June 30, 2015	Total			New York			Washington, D.C.			San Francisco
Total square feet leased		199,972			137,975			28,863			33,134
Pro rata share of total square feet leased:		171,405			126,306			28,863			16,236
Initial rent (1)	$	71.84		$	78.58		$	40.72		$	74.72
Weighted average lease term (years)		11.1			10.5			15.1			8.1
Tenant improvements and leasing commissions:
Per square foot	$	81.57		$	78.23		$	109.30		$	58.27
Per square foot per annum	$	7.38		$	7.43		$	7.25		$	7.20
Percentage of initial rent		10.3	%		9.5	%		17.8	%		9.6	%
Rent concessions:
Average free rent period (in months)		8.4			8.2			13.4			1.1
Average free rent period per annum (in months)		0.8			0.8			0.9			0.1
Second generation space:
Square feet		138,232			126,306			-			11,926
Cash basis:
Initial rent (1)	$	78.26		$	78.58		$	-		$	74.86
Prior escalated rent (2)	$	67.80		$	68.68		$	-		$	58.54
Percentage increase		15.4	%		14.4	%		0.0	%		27.9	%
GAAP basis:
Straight-line rent	$	76.96		$	76.60		$	-		$	80.81
Prior straight-line rent	$	64.69		$	65.31		$	-		$	58.09
Percentage increase		19.0	%		17.3	%		0.0	%		39.1	%
(1) Represents the weighted average cash basis starting rent per square foot and does not include free rent or periodic step-ups in     rent.
(2) Represents the weighted average cash basis rents (including reimbursements) per square foot at expiration.

35

During the six months ended June 30, 2015, we leased 355,800 square feet at a weighted average initial rent of $73.67 per square foot.  This leasing activity, offset by lease expirations during the six months, increased portfolio wide occupancy by 90 basis points from December 31, 2014.  Of the 355,800 square feet leased during the six months, 161,962 square feet represent second generation space for which we achieved rental rate increases of 15.7% on a cash basis and 18.3% on a GAAP basis.  The weighted average lease term for leases signed during the six months was 12.6 years and tenant improvements and leasing commissions on these leases were $7.61 per square foot per annum, or 10.3% of initial rent.  

The following table presents additional details on the leases signed during the six months ended June 30, 2015 and is not intended to coincide with the commencement of rental revenue in accordance with GAAP.

Six Months Ended June 30, 2015	Total			New York			Washington, D.C.			San Francisco
Total square feet leased		355,800			289,486			33,180			33,134
Pro rata share of total square feet leased:		325,693			276,277			33,180			16,236
Initial rent (1)	$	73.67		$	77.08		$	44.79		$	74.72
Weighted average lease term (years)		12.6			12.7			13.8			8.1
Tenant improvements and leasing commissions:
Per square foot	$	95.80		$	96.90		$	105.02		$	58.27
Per square foot per annum	$	7.61		$	7.64		$	7.60		$	7.20
Percentage of initial rent		10.3	%		9.9	%		17.0	%		9.6	%
Rent concessions:
Average free rent period (in months)		10.8			11.2			12.3			1.1
Average free rent period per annum (in months)		0.9			0.9			0.9			0.1
Second generation space:
Square feet		161,962			145,719			4,317			11,926
Cash basis:
Initial rent (1)	$	76.87		$	77.18		$	72.00		$	74.86
Prior escalated rent (2)	$	66.45		$	67.04		$	68.58		$	58.54
Percentage increase		15.7	%		15.1	%		5.0	%		27.9	%
GAAP basis:
Straight-line rent	$	75.39		$	74.91		$	76.56		$	80.81
Prior straight-line rent	$	63.75		$	64.08		$	68.39		$	58.09
Percentage increase		18.3	%		16.9	%		11.9	%		39.1	%
(1) Represents the weighted average cash basis starting rent per square foot and does not include free rent or periodic step-ups in      rent.
(2) Represents the weighted average cash basis rents (including reimbursements) per square foot at expiration.

36

Our Predecessor

Our Predecessor is not a legal entity but a combination of entities under common control as they were entities controlled by members of the Otto family that held various assets, including interests in (i) 15 private equity real estate funds controlled by our Predecessor (which included nine primary funds and six parallel funds) (collectively, the “Funds”) that owned interests in 12 properties, (ii) a wholly-owned property, Waterview, in Rosslyn, Virginia and (iii) three partially owned properties in New York, NY.

Below is a summary of the 15 private equity real estate funds that were controlled by our Predecessor prior to the completion of the Formation Transactions.

The following funds are collectively referred to herein as the “Property Funds”:

• Paramount Group Real Estate Fund I, L.P. (“Fund I”)

• Paramount Group Real Estate Fund II, L.P. (“Fund II”)

• Paramount Group Real Estate Fund III, L.P. (“Fund III”)

• Paramount Group Real Estate Fund IV, L.P. (“Fund IV”)

• PGREF IV Parallel Fund (Cayman), L.P. (“Fund IV Cayman”)

• Paramount Group Real Estate Fund V (CIP), L.P. (“Fund V CIP”)

• Paramount Group Real Estate Fund V (Core), L.P. (“Fund V Core”)

• PGREF V (Core) Parallel Fund (Cayman), L.P. (“Fund V Cayman”)

• Paramount Group Real Estate Fund VII, LP (“Fund VII”)

• Paramount Group Real Estate Fund VII-H, LP (“Fund VII-H”)

The following fund was formed to acquire, develop and manage the residential development project at 75 Howard Street:

• Paramount Group Residential Development Fund, LP (“Residential Fund”)

The following funds are collectively referred to herein as the “Alternative Investment Funds”:

• Paramount Group Real Estate Special Situations Fund, L.P. (“PGRESS”)

• Paramount Group Real Estate Special Situations Fund–H, L.P. (“PGRESS-H”)

• Paramount Group Real Estate Special Situations Fund–A, L.P. (“PGRESS-A”)

• Paramount Group Real Estate Fund VIII, L.P. (“Fund VIII”)

The Property Funds and Residential Fund owned interests in the following properties:

• 1633 Broadway, New York, NY

• 60 Wall Street, New York, NY

• 900 Third Avenue, New York, NY

• 31 West 52nd Street, New York, NY

• 1301 Avenue of the Americas, New York, NY

• One Market Plaza, San Francisco, CA

• 50 Beale Street, San Francisco, CA

• 75 Howard Street, San Francisco, CA

• Liberty Place, Washington, D.C.

• 1899 Pennsylvania Avenue, Washington, D.C.

• 2099 Pennsylvania Avenue, Washington, D.C.

• 425 Eye Street, Washington, D.C.

37

Critical Accounting Policies

There were no material changes to our critical accounting policies disclosed in our Annual Report on Form 10-K for the year ended December 31, 2014.

Segment Reporting

Upon completion of the Offering and Formation Transactions, we acquired substantially all of the assets of our Predecessor and substantially all of the assets of the Property Funds that it controlled. Our business, following the Formation Transactions, is comprised of one reportable segment. We have determined that our properties have similar economic characteristics to be aggregated into one reportable segment (operating, leasing and managing office properties). Our determination was based primarily on our method of internal reporting.

Our Predecessor historically operated an integrated business that consisted of three reportable segments, (i) Owned Properties, (ii) Managed Funds and (iii) a Management Company. The Owned Properties segment consisted of properties in which our Predecessor had a direct or indirect ownership interest, other than properties that it owned through its private equity real estate funds. The Managed Funds segment consisted of the private equity real estate funds.  In addition, our Predecessor included a Management Company that performed property management and asset management services and certain general and administrative level functions, including legal and accounting, as a separate reportable segment.  

Recently Issued Accounting Literature

In May 2014, the FASB issued an update (“ASU 2014-09”) Revenue from Contracts with Customers.  ASU 2014-09 establishes a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most of the existing revenue recognition guidance.  ASU 2014-09 requires an entity to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services and also requires certain additional disclosures.  ASU 2014-09 is effective for interim and annual reporting periods in fiscal years that begin after December 15, 2016.  We are currently evaluating the impact of the adoption of ASU 2014-09 on our consolidated financial statements.

In June 2014, the FASB issued an update (“ASU 2014-12”) to ASC Topic 718, Compensation – Stock Compensation.  ASU 2014-12 requires an entity to treat performance targets that can be met after the requisite service period of a share based award has ended, as a performance condition that affects vesting.  ASU 2014-12 is effective for interim and annual reporting periods in fiscal years that begin after December 15, 2015.  We are currently evaluating the impact of the adoption of ASU 2014-12 on our consolidated financial statements.

In February 2015, the FASB issued an update (“ASU 2015-02”) Amendments to the Consolidation Analysis to ASC Topic 810, Consolidation. ASU 2015-02 modifies the evaluation of whether limited partnerships and similar legal entities are VIEs or voting interest entities, eliminates the presumption that a general partner should consolidate a limited partnership and affects the consolidation analysis of reporting entities that are involved with VIEs, particularly those that have fee arrangements and related party relationships. ASU 2015-02 is effective for fiscal years that begin after December 15, 2015. We are currently evaluating the impact of the adoption of ASU 2015-02 on our consolidated financial statements.

In April 2015, the FASB issued an update (“ASU 2015-03”) Simplifying the Presentation of Debt Issuance Costs to ASC Topic 835, Interest – Imputation of Interest. ASU 2015-03 requires an entity to present debt issuance costs in the balance sheet as a direct deduction from the related debt liability rather than as an asset. Amortization of the costs is reported as interest expense. ASU 2015-03 is effective for interim and annual reporting periods in fiscal years that begin after December 15, 2015.  The adoption of this update on January 1, 2016 will not have a material impact on our consolidated financial statements.

38

Results of Operations

The following pages summarize our consolidated results of operations for the three and six months ended June 30, 2015 and the combined consolidated historical results of operations of our Predecessor for the three and six months ended June 30, 2014.

As noted above, the acquisition of the properties from our Predecessor, was accounted for as transactions among entities under common control.  However, since the assets that we acquired from our Predecessor are no longer held by funds which qualify for investment company accounting, we account for these assets following the Formation Transactions using consolidated historical cost accounting.  As a result, our consolidated financial statements following the Formation Transactions differ significantly from, and are not comparable with, the historical financial position and results of operations of our Predecessor.

Results of Operations – The Company – Three and Six Months Ended June 30, 2015

Rental Income

Rental income was $145,917,000 and $289,160,000 for the three and six months ended June 30, 2015, respectively, and represents rental income from the 11 properties that we consolidate using historical cost accounting subsequent to the completion of the Offering and the Formation Transactions.

Tenant Reimbursement Income

Tenant reimbursement income was $12,063,000 and $25,551,000 for the three and six months ended June 30, 2015, respectively, and represents reimbursement income from tenants at the 11 properties that we consolidate using historical cost accounting subsequent to the completion of the Offering and the Formation Transactions.

Fee and Other Income

Fee and other income was $4,948,000 for the three months ended June 30, 2015 and is comprised of (i) $1,386,000 of property management fees, (ii) $394,000 of construction and other fees and (iii) $3,168,000 of other income (primarily tenant payments for items such as after hour heating and cooling, freight elevator services and similar expenses). Fee and other income was $9,443,000 for the six months ended June 30, 2015 and is comprised of (i) $2,715,000 of property management fees, (ii) $600,000 of construction and other fees and (iii) $6,128,000 of other income (primarily tenant payments for items such as after hour heating and cooling, freight elevator services and similar expenses).

Operating Expenses

Operating expenses were $57,781,000 and $119,665,000 for the three and six months ended June 30, 2015, respectively, and represents the operating expenses of the 11 properties that we consolidate using historical cost accounting subsequent to the completion of the Offering and the Formation Transactions.

Depreciation and Amortization

Depreciation and amortization was $79,421,000 and $153,004,000 for the three and six months ended June 30, 2015, respectively, and represents depreciation and amortization on the 11 properties that we consolidate using historical cost accounting subsequent to the completion of the Offering and the Formation Transactions.

General and Administrative Expenses

General and administrative expenses were $9,133,000 and $21,746,000 for the three and six months ended June 30, 2015, respectively. General and administrative expenses include $362,000 and $1,095,000 of expense for the three and six months ended June 30, 2015, respectively, from the mark-to-market of investments in our deferred compensation plan, for which there is a corresponding increase in “interest and other income, net.” General and administrative expenses for the six months ended June 30, 2015 also includes $3,315,000 of severance costs.  Excluding the impact of the mark-to-market of investments in our deferred compensation plan and severance costs, general and administrative expenses were $8,771,000 and $17,336,000 for the three and six months ended June 30, 2015, respectively.

39

Acquisition and Transaction Related Costs

Acquisition and transaction related costs were $8,208,000 and $9,347,000 for the three and six months ended June 30, 2015, respectively and are primarily comprised of legal and professional fees related to potential acquisitions and capital raising costs in connection with real estate fund investments.  Acquisition and transaction related costs for the three and six months ended June 30, 2015 also includes $5,872,000 of transfer taxes incurred in connection with the sale of shares by a former joint venture partner.

Income from Real Estate Fund Investments

Income from real estate fund investments was $14,072,000 and $19,293,000 for the three and six months ended June 30, 2015, respectively, and represents income from the remaining private equity real estate funds that we consolidate. Income from real estate fund investments for the three and six months ended June 30, 2015 includes $11,264,000 and $12,136,000, respectively, of net unrealized gains.

Income from Unconsolidated Joint Ventures

Income from unconsolidated joint ventures was $2,011,000 and $2,986,000 for the three and six months ended June 30, 2015, respectively and primarily represents our 50% share of the equity in net earnings of 712 Fifth Avenue.

Unrealized Gains on Interest Rate Swaps

Unrealized gains on interest rate swaps was $21,747,000 and $33,725,000 for the three and six months ended June 30, 2015, respectively and represents the change in the fair value of the interest rate swap derivative instruments.

Interest and Other Income, net

Interest and other income, net was $512,000 and $1,366,000 for the three and six months ended June 30, 2015, respectively and includes $362,000 and $1,095,000 of income from the mark-to-market of investments in our deferred compensation plan, for which there is a corresponding increase in “general and administrative” expenses. Excluding the impact of mark-to-market of investments in our deferred compensation plan, interest and other income was $150,000 and $271,000 for the three and six months ended June 30, 2015, respectively.

Interest and Debt Expense

Interest and debt expense was $42,236,000 and $84,124,000 for the three and six months ended June 30, 2015, respectively, and represents interest cost on the 11 properties that we consolidate using historical cost accounting upon completion of the Offering and Formation Transactions. Interest and debt expense also includes $586,000 and $1,170,000 of amortization of deferred financing costs for the three and six months ended June 30, 2015, respectively.

Income Tax Expense

Income tax expense was $1,343,000 and $1,917,000 for the three and six months ended June 30, 2015, respectively. The three and six months ended June 30, 2015, includes $683,000 related to Predecessor income tax true-up.

Net Income Attributable to Noncontrolling Interests in Consolidated Joint Ventures and Funds

Net income attributable to noncontrolling interests in consolidated joint ventures and funds was $9,004,000 and $9,672,000 for the three and six months ended June 30, 2015, respectively and represents net income attributable to the noncontrolling interests in our consolidated joint ventures: 31 West 52nd Street, One Market Plaza, and the private equity real estate funds that we consolidate.

Net Loss Attributable to Noncontrolling Interests in Operating Partnership

Net loss attributable to noncontrolling interests in Operating Partnership was $1,147,000 and $3,511,000 for the three and six months ended June 30, 2015, respectively and represents net loss attributable to the unitholders of the Operating Partnership.

40

Results of Operations – The Predecessor –Three and Six Months Ended June 30, 2014

Rental Income

Rental income in the period for the three and six months ended June 30, 2014 represents rental income from Waterview, the sole property for which direct property operations were reflected in the historical combined consolidated financial statements of our Predecessor. Rental income was $8,499,000 and $16,312,000 for the three and six months ended June 30, 2014, respectively.

Tenant Reimbursement Income

Tenant reimbursement income for the three and six months ended June 30, 2014 represents reimbursement income from tenants at Waterview, the sole property for which direct property operations are reflected in the historical combined consolidated financial statements of our Predecessor. Tenant reimbursement income was $441,000 and $896,000 for the three and six months ended June 30, 2014, respectively.

Distributions from Real Estate Fund Investments

Distributions from real estate fund investments comprise distributions received from our private equity real estate funds and were $4,744,000 and $11,247,000 for the three and six months ended June 30, 2014, respectively.

Realized and Unrealized Gains, Net

Realized and unrealized gains, net consist of the net realized and unrealized appreciation in the fair value of our private equity real estate fund investments. Realized and unrealized gains, net were $33,750,000 and $79,917,000 for the three and six months ended June 30, 2014, respectively.

Fee and Other Income

Fee and other income was $6,400,000, for the three months ended June 30, 2014 and is comprised of (i) $4,059,000 of property management fees and (ii) $2,341,000 of construction and other fees.  Fee and other income was $11,582,000, for the six months ended June 30, 2014 and is comprised of (i) $8,015,000 of property management fees, (ii) $1,038,000 of acquisition and disposition fees and (iii) $2,529,000 of construction and other fees.

Operating Expenses

Operating expenses for the three and six months ended June 30, 2014 represents the operating expenses of Waterview, the sole property for which direct property operations are reflected in the historical combined consolidated financial statements of our Predecessor, and the cost of operating and managing the portfolio of properties owned by our Predecessor as well as the private real estate funds that it controlled. Operating expenses were $4,214,000 and $7,753,000 for the three and six months ended June 30, 2014, respectively.

Depreciation and Amortization

Depreciation and amortization for the three and six months ended June 30, 2014 represents depreciation and amortization on Waterview, the sole property for which direct property operations are reflected in the historical combined consolidated financial statements of our Predecessor.  Depreciation and amortization was $2,899,000 and $5,566,000 for the three and six months ended June 30, 2014, respectively.

General and Administrative

General and administrative expenses were $4,363,000 and $12,448,000 for the three and six months ended June 30, 2014, respectively. General and administrative expenses include $644,000 and $1,228,000 of expense for the three and six months ended June 30, 2014, respectively, from the mark-to-market of investments in the deferred compensation plan of our Predecessor, for which there is a corresponding increase in “interest and other income, net.” Excluding these amounts, general and administrative expenses were $3,719,000 and $11,220,000 for the three and six months ended June 30, 2014, respectively.

41

Profit Sharing Compensation

Profit sharing compensation represents a portion of fee income and real estate appreciation attributable to our Predecessor’s private equity real estate fund business, which was payable to certain management employees through profit sharing arrangements. These arrangements ceased upon completion of the Offering and the Formation Transactions. Profit sharing compensation was $3,438,000 and $8,232,000 for the three and six months ended June 30, 2014, respectively.

Other Expenses

Other expenses were $2,634,000 and $3,901,000 for the three and six months ended June 30, 2014, respectively. Other expenses include acquisition pursuit costs, fund formation costs and capital raising costs.

Income from Unconsolidated Joint Ventures

Income from unconsolidated joint ventures was $903,000 for the three months ended June 30, 2014 and is comprised of (i) $934,000 from our 50% share of the equity in net earnings of 712 Fifth Avenue, partially offset by (ii) a loss of $31,000 from our 50% share of the equity in net earnings of 1325 Avenue of the Americas.  Income from unconsolidated joint ventures was $2,035,000 for the six months ended June 30, 2014 and is comprised of (i) $2,024,000 from our 50% share of the equity in net earnings of 712 Fifth Avenue and (ii) $11,000 from our 50% share of the equity in net earnings of 1325 Avenue of the Americas.

Unrealized Gain (Loss) on Interest Rate Swaps

Unrealized gain (loss) on interest rate swaps was a loss of $354,000 and $196,000 for the three and six months ended June 30, 2014, respectively. These swaps relate to the debt of certain private equity real estate funds.

Interest and Other Income, net

Interest and other income, net was $997,000 and $1,706,000 for the three and six months ended June 30, 2014, respectively. Interest and other income includes $644,000 and $1,228,000 for the three and six months ended, respectively, from the mark-to-market of investments in the deferred compensation plan of our Predecessor, for which there is a corresponding increase in “general and administrative” expenses. Excluding these amounts, interest and other income was $353,000 and $478,000 for the three and six months ended June 30, 2014, respectively.

Interest and Debt Expense

Interest and debt expense included for the three and six months ended June 30, 2014 relates to interest incurred on the Waterview mortgage, the fund-level debt of the private equity real estate funds and preferred equity in the joint venture holding 1633 Broadway. Interest expense was $7,988,000 and $15,787,000 for the three and six months ended June 30, 2014, respectively.  

Income Tax Expense

Income tax expense was $3,842,000 and $7,105,000 for the three and six months ended June 30, 2014, respectively.

Net Income Attributable to Noncontrolling Interests

Net income attributable to noncontrolling interests in consolidated joint ventures and funds was $25,823,000 and $53,133,000 for the three and six months ended June 30, 2014 and represents net income attributable to the noncontrolling interests of the private equity real estate funds.

42

Liquidity and Capital Resources

Our primary sources of liquidity include existing cash balances, cash flow from operations and borrowings available under our $1.0 billion senior unsecured revolving credit facility, which could be increased to $1.250 billion, subject to certain conditions. We expect that these sources will provide adequate liquidity over the next 12 months for all anticipated needs, including scheduled principal and interest payments on our outstanding indebtedness, existing and anticipated capital improvements, the cost of securing new and renewal leases, dividends to shareholders and distributions to unitholders, and all other capital needs related to the operations of our business. We anticipate that our long-term needs including debt maturities and the acquisition of additional properties will be funded by operating cash flow, mortgage financings and/or re-financings, and the issuance of long-term debt or equity.

Although we may be able to anticipate and plan for certain of our liquidity needs, unexpected increases in uses of cash that are beyond our control and which affect our financial condition and results of operations may arise, or our sources of liquidity may be fewer than, and the funds available from such sources may be less than, anticipated or required.

Liquidity

As of June 30, 2015, we had $438,088,000 of cash and cash equivalents and $800,000,000 of borrowing capacity under our revolving credit facility, net of $200,000,000, which has been reserved under a letter of credit.  At June 30, 2015, our outstanding consolidated debt aggregated $2.853 billion.  None of this debt matures in 2015 and $926,260,000 matures in December 2016. We may refinance our maturing debt when it comes due or refinance or prepay it early depending on prevailing market conditions, liquidity requirements and other factors.  The amounts involved in connection with these transactions could be material to our consolidated financial statements.

Dividend Policy

On May 21, 2015, we declared a regular quarterly cash dividend of $0.095 per share of common stock for the second quarter ending June 30, 2015, payable on July 15, 2015 to stockholders of record as of the close of business on June 30, 2015. This dividend policy, if continued, would require us to pay out approximately $25,000,000 each quarter to common stockholders and unitholders.

Development and Redevelopment Expenditures

We are in the process of redeveloping the lobby and retail space at One Market Plaza, including new entrances along Spear, Steuart and Mission streets as well as public seating.  The project, which is expected to be completed by the fall of 2015, is estimated to cost approximately $25,000,000, of which $11,234,000 has been expended as of June 30, 2015.

We are also in the process of redeveloping the public plaza at 1633 Broadway.  The project, which is expected to be completed by the fourth quarter of 2016, is estimated to cost approximately $15,000,000.

Off Balance Sheet Arrangements

As of June 30, 2015, our unconsolidated joint ventures had $270,514,000 of outstanding indebtedness, of which our share was $125,531,000. We do not guarantee the indebtedness of unconsolidated joint ventures other than providing customary environmental indemnities and guarantees of specified non-recourse carveouts relating to specified covenants and representations; however, we may elect to fund additional capital to a joint venture through equity contributions (generally on a basis proportionate to our ownership interests), advances or partner loans in order to enable the joint venture to repay this indebtedness upon maturity.

43

Insurance

We carry commercial general liability coverage on our properties, with limits of liability customary within the industry. Similarly, we are insured against the risk of direct and indirect physical damage to our properties including coverage for the perils of flood and earthquake shock. Our policies also cover the loss of rental income during an estimated reconstruction period. Our policies reflect limits and deductibles customary in the industry and specific to the buildings and portfolio. We also obtain title insurance policies when acquiring new properties. We currently have coverage for losses incurred in connection with both domestic and foreign terrorist-related activities. While we do carry commercial general liability insurance, property insurance and terrorism insurance with respect to our properties, these policies include limits and terms we consider commercially reasonable. In addition, there are certain losses (including, but not limited to, losses arising from known environmental conditions or acts of war) that are not insured, in full or in part, because they are either uninsurable or the cost of insurance makes it, in our belief, economically impractical to maintain such coverage. Should an uninsured loss arise against us, we would be required to use our own funds to resolve the issue, including litigation costs. We believe the policy specifications and insured limits are adequate given the relative risk of loss, the cost of the coverage and industry practice and, in the opinion of our management, the properties in our portfolio are adequately insured.

Other Commitments and Contingencies

We are a party to various claims and routine litigation arising in the ordinary course of business. Some of these claims or others to which we may be subject from time to time, including claims arising specifically from the Formation Transactions, may result in defense costs, settlements, fines or judgments against us, some of which are not, or cannot be, covered by insurance. Payment of any such costs, settlements, fines or judgments that are not insured could have an adverse impact on our financial position and results of operations. Should any litigation arise in connection with the Formation Transactions, we would contest it vigorously. In addition, certain litigation or the resolution of certain litigation may affect the availability or cost of some of our insurance coverage, which could adversely impact our results of operations and cash flow, expose us to increased risks that would be uninsured and/or adversely impact our ability to attract officers and directors.

The terms of our mortgage debt and certain side letters in place include certain restrictions and covenants which may limit, among other things, certain investments, the incurrence of additional indebtedness and liens and the disposition or other transfer of assets and interests in the borrower and other credit parties, and requires compliance with certain debt yield, debt service coverage and loan to value ratios. In addition, our senior unsecured revolving credit facility contains representations, warranties, covenants, other agreements and events of default customary for agreements of this type with comparable companies. As of June 30, 2015, we believe we are in compliance with all of our covenants.

Inflation

Substantially all of our leases provide for separate real estate tax and operating expense escalations. In addition, many of the leases provide for fixed base rent increases. We believe inflationary increases in expenses may be at least partially offset by the contractual rent increases and expense escalations described above. We do not believe inflation has had a material impact on our historical financial position or results of operations.

44

Cash Flows

As noted above, we no longer account for the assets that we acquired from the private equity real estate funds that our Predecessor controlled under investment company accounting. Instead, we account for these assets using either consolidated historical cost accounting or the equity method. Moving from investment company accounting to consolidated historical cost accounting or the equity method resulted in a significant change in the classification of our cash flows.  For example, the purchase and sale of underlying investments by our private equity real estate funds that utilize investment company accounting are treated as an operating activity and such purchases and sales are shown net of any related mortgage debt entered into upon acquisition or repaid upon sale. Purchases and sales that we engage in directly or through our consolidated subsidiaries other than these funds are treated as investing activities and any related mortgage debt entered into upon acquisition or repaid upon sale is treated as financing activities.  Furthermore, all other property-level debt activity relating to properties owned by these funds is currently treated as operating activity, whereas debt activity engaged in directly or through our consolidated subsidiaries other than these funds is treated as financing activity. In addition, the net income of our Predecessor currently reflects significant unrealized gains or losses relating to properties owned by these funds. Any unrealized gains or losses are reversed to arrive at net cash flow provided by or used in operating activities. Gains or losses arising from sales of properties owned by us directly or through our consolidated subsidiaries will only be recognized by us when realized. The proceeds of such sales will be reflected in net cash provided by investing activities.

The Company – Six Months Ended June 30, 2015

Cash and cash equivalents were $438,088,000 and $438,599,000, at June 30, 2015 and December 31, 2014, respectively, a decrease of $511,000. The following table sets forth the changes in cash flow.

	Six Months Ended
(Amount in thousands)	June 30, 2015
Net cash provided by (used in):
Operating activities	$	62,326
Investing activities		(32,364	)
Financing activities		(30,473	)

Operating Activities

Six months ended June 30, 2015 – We generated $62,326,000 of cash from operating activities for the six months ended June 30, 2015, primarily from $76,283,000 of net income before noncash adjustments and $1,993,000 of distributions from unconsolidated joint ventures, partially offset by $15,950,000 from net changes in operating assets and liabilities. Noncash adjustments of $84,562,000 were primarily comprised of depreciation and amortization, straight-lining of rental income, unrealized gain on interest rate swaps and changes in operating assets and liabilities was primarily due to additions to deferred charges.

Investing Activities

Six months ended June 30, 2015 – We used $32,364,000 of cash for investing activities for the six months ended June 30, 2015, primarily due to additions to rental properties of $41,914,000, partially offset by a decrease in restricted cash of $9,550,000.

Financing Activities

Six months ended June 30, 2015 – We used $30,473,000 of cash for financing activities for the six months ended June 30, 2015, primarily due to the payments of dividends to common shareholders and unitholders of $35,325,000 and distributions to noncontrolling interests of $5,673,000, partially offset by contributions from noncontrolling interests of $11,203,000.

45

Predecessor

Cash and cash equivalents were $173,757,000 and $307,161,000 at June 30, 2014 and December 31, 2013, respectively, a decrease of $133,404,000 for the three months ended June 30, 2014. The following table sets forth the changes in cash flow.

	Six Months Ended
(Amount in thousands)	June 30, 2014
Net cash provided by (used in):
Operating activities	$	(162,501	)
Investing activities		(64,075	)
Financing activities		93,172

Operating Activities

Six months ended June 30, 2014 – Our Predecessor used $162,501,000 of cash for operating activities for the six months ended June 30, 2014, primarily to fund real estate fund investments aggregating $164,181,000.

Investing Activities

Six months ended June 30, 2014 – Our Predecessor used $64,075,000 of cash for investing activities for the six months ended June 30, 2014. This was primarily due to a $64,650,000 acquisition by a consolidated private equity fund, which is accounted under the historical cost accounting rather than Investment Company accounting.

Financing Activities

Six months ended June 30, 2014 – Our Predecessor generated $93,172,000 of cash from financing activities for the three months ended June 30, 2014 primarily from contributions from noncontrolling interests aggregating $86,621,000 and loans issued by noncontrolling interests of $39,075,000, partially offset by an distributions to Predecessor shareholders of $21,070,000 and offering costs of $9,577,000.

46

Non-GAAP Financial Measures

We use and present NOI, Cash NOI, FFO and Core FFO, as supplemental measures of our performance. The summary below describes our use of these measures, provides information regarding why we believe these measures are meaningful supplemental measures of our performance and reconciles these measures from net income or loss, the most directly comparable GAAP measure.

Net Operating Income (“NOI”)

NOI is a metric we use to measure the operating performance of our properties, and consists of property-related revenue (which includes rental revenue, tenant reimbursement income and certain other income) less operating expenses (which includes building expenses such as cleaning, security, repairs and maintenance, utilities, property administration and real estate taxes). We also present Cash NOI, which deducts from NOI, straight-line rent adjustments and the amortization of above and below-market leases, including our share of such adjustments of unconsolidated joint ventures. In addition, we present our pro rata share of NOI and Cash NOI, which represents our share of NOI and Cash NOI of consolidated and unconsolidated joint ventures, based on our percentage ownership in the underlying assets. We use these metrics internally as performance measures and believe they provide useful information to investors regarding our financial condition and results of operations because they reflect only those income and expense items that are incurred at the property level. Other real estate companies may use different methodologies for calculating NOI and Cash NOI, and accordingly, our presentation of NOI and Cash NOI may not be comparable to other real estate companies.

The following table presents a reconciliation of net income (loss) to NOI and Cash NOI.

	The Company
	Three Months Ended			Six Months Ended
(Amounts in thousands)	June 30, 2015			June 30, 2015
Reconciliation of net income (loss) to NOI and Cash NOI:
Net income (loss)	$	3,148		$	(8,279	)
Add:
Depreciation and amortization		79,421			153,004
General and administrative expenses		9,133			21,746
Interest and debt expense		42,236			84,124
Transfer taxes due in connection with the sale of shares by a former joint      venture partner		5,872			5,872
Acquisition and transaction related costs		2,336			3,475
Income tax expense		1,343			1,917
NOI of unconsolidated joint ventures		4,278			8,059
Less:
Income from real estate fund investments		(14,072	)		(19,293	)
Income from unconsolidated joint ventures		(2,011	)		(2,986	)
Fee income		(1,780	)		(3,315	)
Unrealized gain on interest rate swaps		(21,747	)		(33,725	)
Interest and other income, net		(512	)		(1,366	)
NOI		107,645			209,233
Less NOI attributable to noncontrolling interests in consolidated joint ventures		(15,193	)		(28,812	)
Pro rata share of NOI	$	92,452		$	180,421
NOI	$	107,645		$	209,233
Less:
Straight-line rent adjustments		(16,091	)		(32,042	)
Amortization of above and below-market leases, net		(872	)		(1,762	)
Prorata share of straight-line rent adjustments of unconsolidated joint ventures		48			89
Cash NOI		90,730			175,518
Less Cash NOI attributable to noncontrolling interests in consolidated joint ventures		(10,273	)		(19,720	)
Pro rata share of Cash NOI	$	80,457		$	155,798

47

Funds from Operations (“FFO”) and Core Funds from Operations (“Core FFO”)

FFO is a supplemental measure of our performance. We present FFO in accordance with the definition adopted by National Association of Real Estate Investment Trusts, (“NAREIT”). NAREIT defines FFO as GAAP net income or loss adjusted to exclude net gains from sales of depreciated real estate assets, impairment losses on depreciable real estate and depreciation and amortization expense from real estate assets, including the pro rata share of such adjustments of unconsolidated joint ventures. FFO is commonly used in the real estate industry to assist investors and analysts in comparing results of real estate companies because it excludes the effect of real estate depreciation and amortization and net gains on sales, which are based on historical costs and implicitly assume that the value of real estate diminishes predictably over time, rather than fluctuating based on existing market conditions. In addition, we present Core FFO as an alternative measure of our operating performance, which adjusts FFO for certain other items that we believe enhance the comparability of our FFO across periods. Core FFO, when applicable, excludes the impact of acquisition, transaction and formation related costs, unrealized gains or losses on interest rate swaps, severance costs and defeasance and debt breakage costs, in order to reflect the Core FFO of our real estate portfolio and operations.  In future periods, we may also exclude other items from Core FFO that we believe may help investors compare our results.

FFO and Core FFO are presented as supplemental financial measures and do not fully represent our operating performance. Other REITs may use different methodologies for calculating FFO and Core FFO or use other definitions of FFO and Core FFO and, accordingly, our presentation of these measures may not be comparable to other real estate companies.  Neither FFO nor Core FFO is intended to be a measure of cash flow or liquidity. Please refer to our financial statements, prepared in accordance with GAAP, for purposes of evaluating our financial condition, results of operations and cash flows.

The following table presents a reconciliation of net income (loss) to FFO and Core FFO.

	The Company
	Three Months Ended			Six Months Ended
(Amounts in thousands, except per share amounts)	June 30, 2015			June 30, 2015
Reconciliation of net income (loss) to FFO and Core FFO:
Net income (loss)	$	3,148		$	(8,279	)
Real estate depreciation and amortization		79,421			153,004
Pro rata share of real estate depreciation and amortization of unconsolidated joint ventures		1,530			3,006
FFO		84,099			147,731
Less FFO attributable to noncontrolling interests in:
Consolidated joint ventures and funds		(18,614	)		(28,403	)
Operating Partnership		(12,822	)		(23,348	)
FFO attributable to common shareholders	$	52,663		$	95,980
Per diluted share	$	0.25		$	0.45
FFO	$	84,099		$	147,731
Non-core (income) expense:
Transfer taxes due in connection with the sale of shares by a former joint venture partner		5,872			5,872
Acquisition and transaction related costs		2,336			3,475
Predecessor income tax true-up		721			721
Severance costs		-			3,315
Unrealized gains on interest rate swaps		(21,747	)		(33,725	)
Pro rata share of unrealized gains on interest rate swaps of unconsolidated joint ventures		(624	)		(1,010	)
Core FFO		70,657			126,379
Less Core FFO attributable to noncontrolling interests in:
Consolidated joint ventures and funds		(13,065	)		(20,356	)
Operating Partnership		(11,277	)		(20,745	)
Core FFO attributable to common shareholders	$	46,315		$	85,278
Per diluted share	$	0.22		$	0.40
Reconciliation of weighted average shares outstanding:
Weighted average shares outstanding		212,106,718			212,106,718
Effect of dilutive securities		5,004			6,467
Denominator for FFO per diluted share		212,111,722			212,113,185

48

ITEM 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Quantitative and Qualitative Disclosures About Market Risk

Market risk is the risk of loss from adverse changes in market prices and interest rates. Our future earnings, cash flows and fair values relevant to financial instruments are dependent upon prevalent market interest rates. Our primary market risk results from our indebtedness, which bears interest at both fixed and variable rates. We manage our market risk on variable rate debt by entering into swap arrangements with the lender to effectively fix the rate on all or a portion of the debt for varying periods up to maturity. This in turn, reduces the risks of variability of cash flows created by variable rate debt and mitigates the risk of increases in interest rates. Our objective when undertaking such arrangements is to reduce our floating rate exposure and we do not enter into hedging arrangements for speculative purposes. Subject to maintaining our status as a REIT for Federal income tax purposes, we may utilize swap arrangements in the future.

The following table summarizes our total consolidated indebtedness and the effect to interest expense of a 100 basis point increase in LIBOR.

	2015								2014
(Amounts in thousands, except per share amount)	Balance at June 30,		Weighted Average Interest Rate			Effect of 1% Increase in Base Rates			Balance at December 31,		Weighted Average Interest Rate
Pro rata share of consolidated debt:
Variable rate	$	222,283		1.64	%	$	2,223		$	222,283		1.49	%
Fixed rate		2,046,702		5.84	%		-			2,046,582		5.79	%
	$	2,268,985		5.43	%	$	2,223		$	2,268,865		5.37	%
Pro rata share of debt of non-consolidated entities (non-recourse):
Variable rate	$	55,750		2.03	%	$	558		$	10,750		2.71	%
Fixed rate		69,781		5.74	%		-			112,500		5.65	%
	$	125,531		4.09	%	$	558		$	123,250		5.39	%
Noncontrolling interests' share of above							(545	)
Total change in annual net income						$	2,236
Per diluted share						$	0.01

As of June 30, 2015, our interest rate swaps had a fair value that resulted in a net liability of $160,473,000.

49

ITEM4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as such term is defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) that are designed to ensure that information required to be disclosed in our reports under the Exchange Act is processed, recorded, summarized and reported within the time periods specified in the SEC’s rules and regulations. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

As of June 30, 2015, the end of the period covered by this Quarterly Report on Form 10-Q, we carried out an evaluation, under the supervision and with the participation of management, including our Chief Executive Officer and Chief Financial Officer, regarding the effectiveness of our disclosure controls and procedures at the end of the period covered by this Report. Based on the foregoing, our Chief Executive Officer and Chief Financial Officer concluded, as of that time, that our disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed by us in reports filed or submitted under the Exchange Act is processed, recorded, summarized and reported within the time periods specified in the SEC’s rules and forms.

Changes in Internal Control over Financial Reporting

There were no changes to our internal control over financial reporting in connection with the evaluation referenced above that occurred during the period covered by this Quarterly Report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

50

PART II

ITEM 1. LEGAL PROCEEDINGS

From time to time, we are a party to various claims and routine litigation arising in the ordinary course of business. As of June 30, 2015, we do not believe that the results of any such claims or litigation, individually or in the aggregate, will have a material adverse effect on our business, financial position, results of operations or cash flows.

ITEM 1A. RISK FACTORS

There were no material changes to the Risk Factors disclosed in our Annual Report on Form 10-K for the year ended December 31, 2014.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

None.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

Exhibits required by Item 601 of Regulation S-K are filed herewith or incorporated herein by reference and are listed in the attached Exhibit Index.

51

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Paramount Group, Inc.

Date:	August 13, 2015	By:	/s/ Albert Behler	Chairman, Chief Executive Officer and President
			(Albert Behler)
Date:	August 13, 2015	By:	/s/ Michael Walsh	Executive Vice President, Chief Financial Officer and Treasurer
			(Michael Walsh)
Date:	August 13, 2015	By:	/s/ Wilbur Paes	Senior Vice President, Chief Accounting Officer
			(Wilbur Paes)

52

EXHIBIT INDEX

Exhibit Number	Exhibit Description
10.51†	Employment Agreement among Paramount Group, Inc., Paramount Group Operating Partnership, L.P. and Michael Walsh, dated March 26, 2015, incorporated by reference to Exhibit 10.1 to the Registrant’s Form 8-K filed with the SEC on March 26, 2015.
10.52†	Separation Agreement and Release among Paramount Group, Inc., Paramount Group Operating Partnership, L.P. and David Spence dated March 25, 2015, incorporated by reference to Exhibit 10.2 to the Registrant’s Form 8-K filed with the SEC on March 26, 2015.
10.53†	Form of Paramount Group, Inc. Performance LTIP Unit Award Agreement, incorporated by reference to Exhibit 10.1 to the Registrant’s Form 8-K filed with the SEC on April 1, 2015.
31.1*	Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*	Certification of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*	Certification of Chief Executive Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2*	Certification of Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS*	XBRL Instance Document.
101.SCH*	XBRL Taxonomy Extension Schema.
101.CAL*	XBRL Taxonomy Extension Calculation Linkbase.
101.DEF*	XBRL Taxonomy Extension Definition Linkbase.
101.LAB*	XBRL Taxonomy Extension Label Linkbase.
101.PRE*	XBRL Taxonomy Extension Presentation Linkbase.
	_______________________
*	Filed herewith.
†	Management contract or compensation arrangement.

53

EX-31.1

EXHIBIT 31.1

CERTIFICATION

I, Albert Behler, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Paramount Group, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) [language omitted in accordance with SEC release No. 34-54942] for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) [Language omitted in accordance with SEC release No. 34-54942];

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

August 13, 2015

/s/ Albert Behler

Albert Behler

Chairman, Chief Executive Officer and President

EX-31.2

EXHIBIT 31.2

CERTIFICATION

I, Michael Walsh, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Paramount Group, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) [language omitted in accordance with SEC release No. 34-54942] for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) [Language omitted in accordance with SEC release No. 34-54942];

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

August 13, 2015

/s/ Michael Walsh

Michael Walsh

Executive Vice President, Chief Financial Officer and Treasurer

EX-32.1

EXHIBIT 32.1

CERTIFICATION

Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of Paramount Group, Inc. (the “Company”), hereby certifies, to such officer’s knowledge, that:

· the Quarterly Report on Form 10-Q for the quarter ended June 30, 2015(the “Report”) of the Company fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and

· the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

August 13, 2015		/s/ Albert Behler
	Name:	Albert Behler
	Title:	Chairman, Chief Executive Officer and President

EX-32.2

EXHIBIT 32.2

CERTIFICATION

Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of Paramount Group, Inc. (the “Company”), hereby certifies, to such officer’s knowledge, that:

· the Quarterly Report on Form 10-Q for the quarter ended June 30, 2015(the “Report”) of the Company fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and

· the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

August 13, 2015		/s/ Michael Walsh
	Name:	Michael Walsh
	Title:	Executive Vice President, Chief Financial Officer and Treasurer

XML

Organization and Business - Additional Information (Details) ft² in Millions		6 Months Ended
	Nov. 24, 2014 $ / shares shares	Jun. 30, 2015 ft² Properties Fund
Real Estate Properties [Line Items]
Number of office properties | Properties		12
Area of office properties | ft²		10.4
Office properties occupancy rate		92.90%
Percentage of ownership in operating partnership		80.40%
Predecessor [Member]
Real Estate Properties [Line Items]
Number of office properties | Properties		12
Number of real estate funds		15
Predecessor [Member] | Primary Funds [Member]
Real Estate Properties [Line Items]
Number of real estate funds		9
Predecessor [Member] | Parallel Funds [Member]
Real Estate Properties [Line Items]
Number of real estate funds		6
Predecessor [Member] | Partially Owned Properties [Member]
Real Estate Properties [Line Items]
Number of office properties | Properties		3
IPO [Member]
Real Estate Properties [Line Items]
Common shares issued, initial public offering, shares | shares	150,650,000
Common stock, share price | $ / shares	$ 17.50

XML

Investments in Unconsolidated Joint Ventures - Summary of Financial Information (Parenthetical) (Details)	Jun. 30, 2015 USD ($)
712 Fifth Avenue [Member]
Schedule Of Equity Method Investments [Line Items]
Difference between carrying amount of investment and equity	$ 6,131

XML

Real Estate Fund Investments - Schedule of Asset Management Fees (Details) - Jun. 30, 2014 - Predecessor [Member] - USD ($) $ in Thousands	Total	Total
Investment Holdings [Line Items]
Gross asset management fees	$ 7,527	$ 14,937
Eliminated fees	(392)	(782)
Net asset management fees	$ 7,135	$ 14,155

XML

Fee and Other Income - Schedule of Fee and Other Income (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Fee income
Property management fees	$ 1,386		$ 2,715
Construction fees	50		111
Other fees	344		489
Total fee income	1,780		3,315
Other income	3,168		6,128
Total fee and other income	$ 4,948		$ 9,443
Predecessor [Member]
Fee income
Property management fees		$ 4,059		$ 8,015
Acquisition and disposition fees				1,038
Construction fees		2,242		2,430
Other fees		99		99
Total fee income		6,400		11,582
Total fee and other income		$ 6,400		$ 11,582

XML

Intangible Assets and Intangible Liabilities - Summary of Intangible Assets and Liabilities (Details) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Intangible assets:
Gross amount	$ 686,284	$ 689,894
Accumulated amortization	(103,158)	(20,509)
Intangible assets, Net	583,126	669,385
Intangible liabilities:
Gross amount	222,903	222,985
Accumulated amortization	(21,064)	(3,757)
Intangible Liabilities, Net	$ 201,839	$ 219,228

XML

Segments Disclosure - Additional Information (Details)	6 Months Ended
	Jun. 30, 2015 Segment
Segment Reporting Information [Line Items]
Number of reportable segments	1
Predecessor [Member]
Segment Reporting Information [Line Items]
Number of reportable segments	3

XML

Real Estate Fund Investments - Summary of Investments of Alternative Investment Funds (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2015	Dec. 31, 2014
Investment Holdings [Line Items]
Mezzanine Loan, Interest Rate	5.51%
Investment , total	$ 142,464	$ 140,171
Property Fund VIII
Investment Holdings [Line Items]
Mezzanine Loan, Ownership	1.70%
Mezzanine Loan, Interest Rate	8.30%
Mezzanine Loan, Initial Maturity	Jan. 31, 2022
Mezzanine Loan	$ 46,747	45,947
PGRESS Funds
Investment Holdings [Line Items]
Preferred Equity Investments, Initial Maturity	2015-09
Preferred Equity Investments, Initial Maturity	2019-02
Preferred Equity Investments, Investment	$ 95,717	$ 94,224
PGRESS Funds | Minimum [Member]
Investment Holdings [Line Items]
Preferred Equity Investments, Ownership	4.90%
Preferred Equity Investments, Dividend Rate	10.30%
PGRESS Funds | Maximum [Member]
Investment Holdings [Line Items]
Preferred Equity Investments, Ownership	5.40%
Preferred Equity Investments, Dividend Rate	15.00%

XML

Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2015

Fair Value Assets Measured On Recurring Basis Unobservable Input Reconciliation [Line Items]

Schedule of Fair Values of Financial Assets and Liabilities Measured at Fair Value

The table below aggregates the fair values of these financial assets and liabilities at June 30, 2015 and December 31, 2014, based on their levels in the fair value hierarchy.

	As of June 30, 2015
(Amounts in thousands)	Total		Level 1		Level 2		Level 3
Real estate fund investments:
Investments in Property Funds	$	193,081	$	-	$	-	$	193,081
Investments in Alternative Investment Funds		142,464		-		-		142,464
Total real estate fund investments		335,545		-		-		335,545
Marketable securities		21,524		21,524		-		-
Total assets	$	357,069	$	21,524	$	-	$	335,545
Interest rate swap liabilities	$	160,473		-	$	160,473		-
Total liabilities	$	160,473	$	-	$	160,473	$	-

	As of December 31, 2014
(Amounts in thousands)	Total		Level 1		Level 2		Level 3
Real estate fund investments:
Investments in Property Funds	$	183,216	$	-	$	-	$	183,216
Investments in Alternative Investment Funds		140,171		-		-		140,171
Total real estate fund investments		323,387		-		-		323,387
Marketable securities		20,159		20,159		-		-
Total assets	$	343,546	$	20,159	$	-	$	323,387
Interest rate swap liabilities	$	194,196		-	$	194,196		-
Total liabilities	$	194,196	$	-	$	194,196	$	-

Summary of Changes in Fair Value of Real Estate Fund Investments in Level 3

The table below summarizes the changes in the fair value of Real Estate Fund Investments that are classified as Level 3, for the three and six months ended June 30, 2015 and 2014.

	The Company				The Predecessor
	Three Months Ended		Six Months Ended		Three Months Ended		Six Months Ended
(Amounts in thousands)	June 30, 2015		June 30, 2015		June 30, 2014		June 30, 2014
Beginning balance	$	324,282	$	323,387	$	2,362,743	$	2,158,889
Purchases		-		22		6,494		164,181
Net unrealized gains		11,263		12,136		33,750		79,917
Ending Balance	$	335,545	$	335,545	$	2,402,987	$	2,402,987

Summary of Carrying Amounts and Fair Value of Financial Instruments

The following is a summary of the carrying amounts and fair value of these financial instruments as of June 30, 2015 and December 31, 2014.

	As of June 30, 2015				As of December 31, 2014
(Amounts in thousands)	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Cash equivalents	$	289,917	$	289,917	$	401,215	$	401,215
Total Assets	$	289,917	$	289,917	$	401,215	$	401,215
	As of June 30, 2015				As of December 31, 2014
(Amounts in thousands)	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Mortgage and notes payable	$	2,853,237	$	2,797,650	$	2,852,287	$	2,796,842
Total Liabilities	$	2,853,237	$	2,797,650	$	2,852,287	$	2,796,842

Property Funds [Member]

Fair Value Assets Measured On Recurring Basis Unobservable Input Reconciliation [Line Items]

Summary of Significant Unobservable Quantitative Inputs Utilized in Determining Fair Value of Investments

Significant unobservable quantitative inputs in the table below were utilized in determining the fair value of the Property Fund investments at June 30, 2015 and December 31, 2014.

	As of June 30, 2015				As of December 31, 2014
Unobservable Quantitative Input	Range		Weighted average (based on fair value of investments)		Range	Weighted average (based on fair value of investments)
Discount rates		7.00%		7.00%	6.50% - 7.25%		6.83%
Terminal capitalization rates	5.00% - 6.00%			5.55%	5.50% - 6.00%		5.72%

Alternative Investment Funds [Member]

Fair Value Assets Measured On Recurring Basis Unobservable Input Reconciliation [Line Items]

Summary of Significant Unobservable Quantitative Inputs Utilized in Determining Fair Value of Investments

Significant unobservable quantitative inputs in the table below were utilized in determining the fair value of the investments in the Alternative Investment Funds at June 30, 2015 and December 31, 2014.

	As of June 30, 2015			As of December 31, 2014
Unobservable Quantitative Input	Range	Weighted average (based on fair value of investments)		Range	Weighted average (based on fair value of investments)
Preferred return	8.49% - 14.00%		11.07%	8.50% - 14.00%		11.07%

XML

Segments Disclosure - Schedule of Each Reportable Segment Information (Details) - Jun. 30, 2015 - USD ($) $ in Thousands	Total	Total
Revenues
Rental income	$ 145,917	$ 289,160
Tenant reimbursement income	12,063	25,551
Fee and other income	4,948	9,443
Total revenues	162,928	324,154
Total expenses	154,543	303,762
Operating income (loss)	8,385	20,392
Income from real estate fund investments	14,072	19,293
Income from unconsolidated joint ventures	2,011	2,986
Unrealized gains on interest rate swaps	21,747	33,725
Interest and other income, net	512	1,366
Interest and debt expense	(42,236)	(84,124)
Net income (loss) before income taxes	4,491	(6,362)
Income tax benefit (expense)	(1,343)	(1,917)
Net income (loss)	3,148	(8,279)
Depreciation and amortization	79,421	153,004
General and administrative	9,133	21,746
Interest and debt expense	42,236	84,124
Transfer taxes due in connection with the sale of shares by a former joint venture partner	5,872	5,872
Acquisition and transaction related costs	2,336	3,475
Income tax (benefit) expense	1,343	1,917
Net Operating Income from unconsolidated joint ventures	4,278	8,059
Income from real estate fund investments	(14,072)	(19,293)
Income from unconsolidated joint ventures	(2,011)	(2,986)
Fee income	(1,780)	(3,315)
Unrealized (gains) losses on interest rate swaps	(21,747)	(33,725)
Interest and other income, net	(512)	(1,366)
Net Operating Income	107,645	209,233
Owned Properties [Member]
Revenues
Rental income	145,349	287,826
Tenant reimbursement income	12,063	25,551
Fee and other income	3,168	6,123
Total revenues	160,580	319,500
Total expenses	138,001	273,652
Operating income (loss)	22,579	45,848
Income from unconsolidated joint ventures	1,985	2,925
Unrealized gains on interest rate swaps	21,747	33,725
Interest and other income, net	91	185
Interest and debt expense	(39,741)	(78,873)
Net income (loss) before income taxes	6,661	3,810
Income tax benefit (expense)	467	7
Net income (loss)	7,128	3,817
Depreciation and amortization	79,119	152,456
General and administrative	(42)
Interest and debt expense	39,741	78,873
Income tax (benefit) expense	(467)	(7)
Net Operating Income from unconsolidated joint ventures	4,138	7,874
Income from unconsolidated joint ventures	(1,985)	(2,925)
Unrealized (gains) losses on interest rate swaps	(21,747)	(33,725)
Interest and other income, net	(91)	(185)
Net Operating Income	105,794	206,178
Other [Member]
Revenues
Rental income	568	1,334
Fee and other income	1,780	3,320
Total revenues	2,348	4,654
Total expenses	16,542	30,110
Operating income (loss)	(14,194)	(25,456)
Income from real estate fund investments	14,072	19,293
Income from unconsolidated joint ventures	26	61
Interest and other income, net	421	1,181
Interest and debt expense	(2,495)	(5,251)
Net income (loss) before income taxes	(2,170)	(10,172)
Income tax benefit (expense)	(1,810)	(1,924)
Net income (loss)	(3,980)	(12,096)
Depreciation and amortization	302	548
General and administrative	9,175	21,746
Interest and debt expense	2,495	5,251
Transfer taxes due in connection with the sale of shares by a former joint venture partner	5,872	5,872
Acquisition and transaction related costs	2,336	3,475
Income tax (benefit) expense	1,810	1,924
Net Operating Income from unconsolidated joint ventures	140	185
Income from real estate fund investments	(14,072)	(19,293)
Income from unconsolidated joint ventures	(26)	(61)
Fee income	(1,780)	(3,315)
Interest and other income, net	(421)	(1,181)
Net Operating Income	$ 1,851	$ 3,055

XML

Incentive Compensation - Additional Information (Details) - USD ($)		3 Months Ended	6 Months Ended
	Apr. 01, 2015	Jun. 30, 2015	Jun. 30, 2015	Dec. 31, 2014
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock-based compensation expense		$ 1,370,000	$ 4,405,000
Acceleration of vesting stock awards			$ 1,861,000
Equity Incentive Plan [Member] | Full Value Awards [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Shares available for grant		14,347,116	14,347,116
Two Thousand Fifteen Performance Program
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Performance measurement period, term			3 years
Performance measurement period, start date			Apr. 01, 2015
Performance measurement period, end date			Mar. 31, 2018
Two Thousand Fifteen Performance Program | Vesting on the date the Compensation Committee determines the awards earned
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Percentage of the awards that vest	50.00%
Two Thousand Fifteen Performance Program | Vesting on April 1, 2019
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Percentage of the awards that vest	25.00%
Two Thousand Fifteen Performance Program | Vesting on April 1, 2020
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Percentage of the awards that vest	25.00%
Two Thousand Fifteen Performance Program | Minimum [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Total return to stockholders for participants to start earning awards on absolute basis	21.00%
Percentage by which to exceed the performance of the SNL Office REIT Index for participants to start to earn awards on relative basis	1.00%
Total return to stockholders for participants to fully earn awards on absolute basis	40.00%
Percentage by which to exceed performance of the SNL office REIT index for participants to fully earn awards on relative basis	7.00%
1993 Plan [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Assets of deferred compensation plan		$ 29,829,000	$ 29,829,000	$ 28,148,000

XML

Intangible Assets and Intangible Liabilities - Schedule of Estimated Annual Amortization of Acquired Below-Market Leases, Net of Acquired Above-Market Leases (Details) $ in Thousands	Jun. 30, 2015 USD ($)
Goodwill And Intangible Assets Disclosure [Abstract]
2016	$ 10,159
2017	8,394
2018	10,299
2019	9,518
2020	$ 8,231

XML

Related Party - Additional Information (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2015	Dec. 31, 2014
Related Party Transaction [Line Items]
Due to affiliates	$ 27,299	$ 27,299
Maturity Date	2017-10
Note payable, fixed bearing interest rate	0.50%
CNBB-RDF Holdings, LP
Related Party Transaction [Line Items]
Due to affiliates	$ 24,500
CNBB-RDF Holdings Otto Family
Related Party Transaction [Line Items]
Due to affiliates	$ 2,799

XML

Commitments and Contingencies - Additional Information (Details) - Jun. 30, 2015 - ft²	Total
Other Commitments [Line Items]
Prime retail space of building	10,400,000
718 Fifth Avenue [Member]
Other Commitments [Line Items]
Put right exercise period after sale of interest	4 years
Put right notice period	12 months
Put right actual purchase period	5 years
712 Fifth Avenue [Member]
Other Commitments [Line Items]
Equity method ownership percentage	50.00%
Predecessor [Member] | 718 Fifth Avenue [Member]
Other Commitments [Line Items]
Percentage of tenancy-in-common interest in property	50.00%
Predecessor [Member] | 718 Fifth Avenue [Member] | Third Party Affiliate [Member]
Other Commitments [Line Items]
Equity method ownership percentage	25.00%
Predecessor [Member] | 712 Fifth Avenue [Member]
Other Commitments [Line Items]
Equity method ownership percentage	50.00%
Parent Company [Member] | Put Right Exercised [Member] | 718 Fifth Avenue [Member]
Other Commitments [Line Items]
Equity method ownership percentage	25.00%
Retail Type Space [Member] | Predecessor [Member] | 718 Fifth Avenue [Member]
Other Commitments [Line Items]
Prime retail space of building	19,050

XML

Interest and Other Income - Schedule of Interest and Other Income (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Schedule Of Investment Income Reported Amounts By Category [Line Items]
Mark-to-market of investments in our deferred compensation plans	$ 362		$ 1,095
Interest and other income	150		271
Total interest and other income	$ 512		$ 1,366
Predecessor [Member]
Schedule Of Investment Income Reported Amounts By Category [Line Items]
Mark-to-market of investments in our deferred compensation plans		$ 644		$ 1,228
Interest and other income		353		478
Total interest and other income		$ 997		$ 1,706

XML

Commitments and Contingencies

6 Months Ended

Jun. 30, 2015

Commitments And Contingencies Disclosure [Abstract]

Commitments and Contingencies

16. Commitments and Contingencies

Insurance

We carry commercial general liability coverage on our properties, with limits of liability customary within the industry. Similarly, we are insured against the risk of direct and indirect physical damage to our properties including coverage for the perils of flood and earthquake shock. Our policies also cover the loss of rental income during an estimated reconstruction period. Our policies reflect limits and deductibles customary in the industry and specific to the buildings and portfolio. We also obtain title insurance policies when acquiring new properties. We currently have coverage for losses incurred in connection with both domestic and foreign terrorist-related activities. While we do carry commercial general liability insurance, property insurance and terrorism insurance with respect to our properties, these policies include limits and terms we consider commercially reasonable. In addition, there are certain losses (including, but not limited to, losses arising from known environmental conditions or acts of war) that are not insured, in full or in part, because they are either uninsurable or the cost of insurance makes it, in our belief, economically impractical to maintain such coverage. Should an uninsured loss arise against us, we would be required to use our own funds to resolve the issue, including litigation costs. We believe the policy specifications and insured limits are adequate given the relative risk of loss, the cost of the coverage and industry practice and, in the opinion of our management, the properties in our portfolio are adequately insured.

Other Commitments and Contingencies

We are a party to various claims and routine litigation arising in the ordinary course of business. Some of these claims or others to which we may be subject from time to time, including claims arising specifically from the Formation Transactions, may result in defense costs, settlements, fines or judgments against us, some of which are not, or cannot be, covered by insurance. Payment of any such costs, settlements, fines or judgments that are not insured could have an adverse impact on our financial position and results of operations. Should any litigation arise in connection with the Formation Transactions, we would contest it vigorously. In addition, certain litigation or the resolution of certain litigation may affect the availability or cost of some of our insurance coverage, which could adversely impact our results of operations and cash flow, expose us to increased risks that would be uninsured, and/or adversely impact our ability to attract officers and directors.

The terms of our mortgage debt and certain side letters in place include certain restrictions and covenants which may limit, among other things, certain investments, the incurrence of additional indebtedness and liens and the disposition or other transfer of assets and interests in the borrower and other credit parties, and requires compliance with certain debt yield, debt service coverage and loan to value ratios. In addition, our senior unsecured revolving credit facility contains representations, warranties, covenants, other agreements and events of default customary for agreements of this type with comparable companies. As of June 30, 2015, we believe we are in compliance with all of our covenants.

718 Fifth Avenue - Put Right

Prior to the Formation Transactions, an affiliate of our Predecessor owned a 25.0% interest in 718 Fifth Avenue, a five-story building containing 19,050 square feet of prime retail space that is located on the southwest corner of 56th Street and Fifth Avenue in New York, (based on its 50.0% interest in a joint venture that held a 50.0% tenancy-in-common interest in the property). Prior to the completion of the Formation Transactions, this interest was sold to its partner in the 718 Fifth Avenue joint venture, who is also our partner in the joint venture that owns 712 Fifth Avenue, New York, New York. In connection with this sale, we granted our joint venture partner a put right, pursuant to which the 712 Fifth Avenue joint venture would be required to purchase the entire direct or indirect interests held by our joint venture partner or its affiliates in 718 Fifth Avenue at a purchase price equal to the fair market value of such interests. The put right may be exercised at any time after the four-year anniversary of the sale of its interest in 718 Fifth Avenue upon 12 months written notice with the actual purchase occurring no earlier than the five-year anniversary of the sale of its interest in 718 Fifth Avenue. If the put right is exercised and the 712 Fifth Avenue joint venture acquires the 50.0% tenancy-in-common interest in the property that will be held by our joint venture partner following the sale of its interest to our joint venture partner, we will own a 25.0% interest in 718 Fifth Avenue.

XML

Investments in Unconsolidated Joint Ventures - Summary of Investments in Unconsolidated Joint Ventures (Details) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Schedule Of Equity Method Investments [Line Items]
Investments in unconsolidated joint ventures	$ 6,128	$ 5,749
712 Fifth Avenue [Member]
Schedule Of Equity Method Investments [Line Items]
Equity method ownership percentage	50.00%
Investments in unconsolidated joint ventures	$ 2,690	1,697
Oder-Center, Germany [Member]
Schedule Of Equity Method Investments [Line Items]
Equity method ownership percentage	9.50%
Investments in unconsolidated joint ventures	$ 3,438	$ 4,052

XML

Real Estate Fund Investments - Schedule of Fair Value of Income from Fund Investment (Details) - Jun. 30, 2015 - USD ($) $ in Thousands	Total	Total
Investment Holdings [Line Items]
Income from real estate fund investments	$ 14,072	$ 19,293
Investment Income [Member]
Investment Holdings [Line Items]
Income from real estate fund investments	2,853	7,348
Investment Expenses [Member]
Investment Holdings [Line Items]
Income from real estate fund investments	45	191
Net Investment Income [Member]
Investment Holdings [Line Items]
Income from real estate fund investments	2,808	7,157
Net Unrealized Gains [Member]
Investment Holdings [Line Items]
Income from real estate fund investments	$ 11,264	$ 12,136

XML

Earnings Per Share - Summary of Computation of Earnings Per Share (Parenthetical) (Details) - Jun. 30, 2015 - shares shares in Thousands	Total	Total
Earnings Per Share [Abstract]
Effect of dilutive securities excluded from computation of earning per share	53,247	53,095

XML

Earnings Per Share (Tables)

6 Months Ended

Jun. 30, 2015

Earnings Per Share [Abstract]

Summary of Computation of Earnings Per Share

The following table provides a summary of net loss and the number of common shares used in the computation of basic income per common share - which includes the weighted average number of common shares outstanding without regard to dilutive potential common shares, and diluted loss per common share - which includes the weighted average common shares and dilutive share equivalents. Dilutive share equivalents may include our employee stock options and restricted stock.

	Three Months Ended			Six Months Ended
(Amounts in thousands, except per share amounts)	June 30, 2015			June 30, 2015
Numerator:
Net loss attributable to Paramount Group, Inc. - basic and diluted	$	(4,709	)	$	(14,440	)
Denominator:
Denominator for basic loss per share - weighted average shares		212,107			212,107
Effect of dilutive employee stock options and restricted share awards (1)		-			-
Denominator for diluted loss per share - weighted average shares		212,107			212,107
Loss per share - basic and diluted	$	(0.02	)	$	(0.07	)

(1)  The effect of dilutive securities in the three and six months ended June 30, 2015 excludes an aggregate of 53,247 and 53,095 weighted average share equivalents, respectively, as their effect was anti-dilutive.

XML

Investments in Unconsolidated Joint Ventures - Additional Information (Details)	Jun. 30, 2015
712 Fifth Avenue [Member]
Schedule Of Equity Method Investments [Line Items]
Equity method ownership percentage	50.00%

XML

Fair Value Measurements - Summary of Significant Unobservable Quantitative Inputs Utilized in Determining Fair Value of Investments (Details)	6 Months Ended	12 Months Ended
	Jun. 30, 2015	Dec. 31, 2014
Property Funds [Member]
Fair Value Inputs Assets Quantitative Information [Line Items]
Discount rates	7.00%
Property Funds [Member] | Minimum [Member]
Fair Value Inputs Assets Quantitative Information [Line Items]
Discount rates		6.50%
Terminal capitalization rates	5.00%	5.50%
Property Funds [Member] | Maximum [Member]
Fair Value Inputs Assets Quantitative Information [Line Items]
Discount rates		7.25%
Terminal capitalization rates	6.00%	6.00%
Property Funds [Member] | Weighted average (based on fair value of investments) [Member]
Fair Value Inputs Assets Quantitative Information [Line Items]
Discount rates	7.00%	6.83%
Terminal capitalization rates	5.55%	5.72%
Alternative Investment Funds [Member] | Minimum [Member]
Fair Value Inputs Assets Quantitative Information [Line Items]
Preferred return	8.49%	8.50%
Alternative Investment Funds [Member] | Maximum [Member]
Fair Value Inputs Assets Quantitative Information [Line Items]
Preferred return	14.00%	14.00%
Alternative Investment Funds [Member] | Weighted average (based on fair value of investments) [Member]
Fair Value Inputs Assets Quantitative Information [Line Items]
Preferred return	11.07%	11.07%

XML

Debt - Additional Information (Details) - USD ($)	3 Months Ended	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2015	Dec. 31, 2014
Debt Instrument [Line Items]
Letter of credit	$ 200,000,000	$ 200,000,000
Amount outstanding under credit facility	0	0	$ 0
Interest Rate Swap [Member]
Debt Instrument [Line Items]
Unrealized gains on interest rate swaps	21,747,000	33,725,000
Senior Unsecured Revolving Credit Facility [Member]
Debt Instrument [Line Items]
Amount outstanding under credit facility	$ 0	$ 0

XML

Real Estate Fund Investments - Schedule of Realized and Unrealized Gains from Real Estate Fund Investment (Details) - USD ($) $ in Thousands	3 Months Ended	6 Months Ended
	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Investment Holdings [Line Items]
Realized and unrealized gains, net		$ 12,136
Predecessor [Member]
Investment Holdings [Line Items]
Realized and unrealized gains, net	$ 33,750		$ 79,917
Unrealized Gain on Real Estate Fund Investments [Member] | Predecessor [Member]
Investment Holdings [Line Items]
Realized and unrealized gains, net	$ 33,750		$ 79,917

XML

COMBINED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)	$ (8,279)
Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities:
Depreciation and amortization	153,004
Unrealized (gains) losses on interest rate swaps	(33,725)
Straight-lining of rental income	(32,042)
Realized and unrealized gains, net, on real estate fund investments	(12,136)
Income from unconsolidated joint ventures	(2,986)
Distributions of income from unconsolidated joint ventures	1,993
Amortization of above and below-market leases, net	(1,762)
Amortization of deferred financing costs	1,170
Transfer taxes due in connection with the sale of shares by a former joint venture partner	5,872
Realized and unrealized gains on marketable securities	(924)
Other non-cash adjustments	8,091
Changes in operating assets and liabilities:
Real estate fund investments	(22)
Accounts and other receivables	(261)
Deferred charges	(12,523)
Other assets	2,721
Accounts payable and accrued expenses	(7,635)
Deferred income taxes	(202)
Other liabilities	1,972
Net cash provided by (used in) operating activities	62,326
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions of, and additions to, rental properties	(41,914)
Changes in restricted cash	9,550
Net cash used in investing activities	(32,364)
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends paid to common shareholders and unitholders	(35,325)
Contributions from noncontrolling interests	11,203
Distributions to noncontrolling interests	(5,673)
Repayment of mortgage notes and loans payable	(678)
Net cash (used in) provided by financing activities	(30,473)
Net decrease in cash and cash equivalents	(511)
Cash and cash equivalents at beginning of period	438,599
Cash and cash equivalents at end of period	438,088
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash payments for interest	78,860
Cash payments for income taxes	1,213
NON-CASH TRANSACTIONS:
Dividends and distributions payable	25,066
Contributions from non controlling interests called but not yet received	2,828
(Purchases) sale of marketable securities	$ (441)
Predecessor [Member]
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)		$ 62,707
Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities:
Depreciation and amortization		5,566
Unrealized (gains) losses on interest rate swaps		196
Straight-lining of rental income		90
Realized and unrealized gains, net, on real estate fund investments		(79,917)
Income from unconsolidated joint ventures		(2,035)
Distributions of income from unconsolidated joint ventures		1,768
Amortization of deferred financing costs		216
Realized and unrealized gains on marketable securities		(1,228)
Other non-cash adjustments		3,756
Changes in operating assets and liabilities:
Restricted cash		2,481
Real estate fund investments		(164,181)
Accounts and other receivables		(2,669)
Other assets		(3,456)
Accounts payable and accrued expenses		(2,945)
Profit sharing payables		5,414
Deferred income taxes		10,043
Other liabilities		1,693
Net cash provided by (used in) operating activities		(162,501)
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions of, and additions to, rental properties		(65,451)
Changes in restricted cash		253
Distributions of capital from unconsolidated joint ventures		1,123
Net cash used in investing activities		(64,075)
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends paid to common shareholders and unitholders		(22,323)
Contributions from noncontrolling interests		88,804
Distributions to noncontrolling interests		(2,183)
Contributions from Predecessor shareholders		1,253
Proceeds from loans payable to noncontrolling interests		39,075
Repayment of mortgage notes and loans payable		(1,877)
Offering costs		(9,577)
Net cash (used in) provided by financing activities		93,172
Net decrease in cash and cash equivalents		(133,404)
Cash and cash equivalents at beginning of period		307,161
Cash and cash equivalents at end of period		173,757
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash payments for interest		10,665
Cash payments for income taxes		5,168
NON-CASH TRANSACTIONS:
(Purchases) sale of marketable securities		$ 6,946

XML

Debt - Summary of Outstanding Interest Rate Swaps (Details) - USD ($)	6 Months Ended
	Jun. 30, 2015	Dec. 31, 2014
Derivative [Line Items]
Interest rate swap liabilities	$ 160,473,000	$ 194,196,000
Interest Rate Swap [Member]
Derivative [Line Items]
Interest rate swap liabilities	160,473,000	194,196,000
1633 Broadway [Member] | Interest Rate Swap [Member]
Derivative [Line Items]
Notional Amount	$ 772,100,000
Maturity Date	2016-12
Strike Rate	4.92%
Interest rate swap liabilities	$ 46,929,000	60,191,000
1633 Broadway [Member] | Minimum [Member] | Interest Rate Swap [Member]
Derivative [Line Items]
Effective Dates	2006-12
1633 Broadway [Member] | Maximum [Member] | Interest Rate Swap [Member]
Derivative [Line Items]
Effective Dates	2008-06
900 Third Avenue [Member] | Interest Rate Swap [Member]
Derivative [Line Items]
Notional Amount	$ 255,000,000
Strike Rate	4.15%
Interest rate swap liabilities	$ 15,884,000	19,158,000
900 Third Avenue [Member] | Minimum [Member] | Interest Rate Swap [Member]
Derivative [Line Items]
Effective Dates	2007-11
Maturity Date	2015-11
900 Third Avenue [Member] | Maximum [Member] | Interest Rate Swap [Member]
Derivative [Line Items]
Effective Dates	2012-11
Maturity Date	2017-11
31 West 52nd Street [Member] | Interest Rate Swap [Member]
Derivative [Line Items]
Notional Amount	$ 337,500,000
Strike Rate	4.49%
Interest rate swap liabilities	$ 24,013,000	28,748,000
31 West 52nd Street [Member] | Minimum [Member] | Interest Rate Swap [Member]
Derivative [Line Items]
Effective Dates	2007-12
Maturity Date	2015-12
31 West 52nd Street [Member] | Maximum [Member] | Interest Rate Swap [Member]
Derivative [Line Items]
Effective Dates	2012-12
Maturity Date	2017-12
One Market Plaza [Member] | Interest Rate Swap [Member]
Derivative [Line Items]
Notional Amount	$ 840,000,000
Maturity Date	2017-07
Strike Rate	5.02%
Interest rate swap liabilities	$ 73,647,000	$ 86,099,000
One Market Plaza [Member] | Minimum [Member] | Interest Rate Swap [Member]
Derivative [Line Items]
Effective Dates	2007-08
One Market Plaza [Member] | Maximum [Member] | Interest Rate Swap [Member]
Derivative [Line Items]
Effective Dates	2012-08

XML

Real Estate Fund Investments - Schedule of Investments of Property Funds (Details)	Jun. 30, 2015
60 Wall Street [Member]
Investment Holdings [Line Items]
Property funds, percentage	100.00%
One Market Plaza [Member]
Investment Holdings [Line Items]
Property funds, percentage	100.00%
50 Beale Street [Member]
Investment Holdings [Line Items]
Property funds, percentage	100.00%
Fund II [Member]
Investment Holdings [Line Items]
Property funds, percentage	10.00%
Fund II [Member] | 60 Wall Street [Member]
Investment Holdings [Line Items]
Property funds, percentage	46.30%
Fund III [Member]
Investment Holdings [Line Items]
Property funds, percentage	3.10%
Fund III [Member] | 60 Wall Street [Member]
Investment Holdings [Line Items]
Property funds, percentage	16.00%
Fund III [Member] | One Market Plaza [Member]
Investment Holdings [Line Items]
Property funds, percentage	2.00%
Fund VII and VII-H [Member]
Investment Holdings [Line Items]
Property funds, percentage	7.20%
Fund VII and VII-H [Member] | 50 Beale Street [Member]
Investment Holdings [Line Items]
Property funds, percentage	42.80%
Property Funds [Member] | 60 Wall Street [Member]
Investment Holdings [Line Items]
Property funds, percentage	62.30%
Property Funds [Member] | One Market Plaza [Member]
Investment Holdings [Line Items]
Property funds, percentage	2.00%
Property Funds [Member] | 50 Beale Street [Member]
Investment Holdings [Line Items]
Property funds, percentage	42.80%
Other Investors [Member] | 60 Wall Street [Member]
Investment Holdings [Line Items]
Property funds, percentage	37.70%
Other Investors [Member] | One Market Plaza [Member]
Investment Holdings [Line Items]
Property funds, percentage	98.00%
Other Investors [Member] | 50 Beale Street [Member]
Investment Holdings [Line Items]
Property funds, percentage	57.20%

XML

Investments in Unconsolidated Joint Ventures (Tables)

6 Months Ended

Jun. 30, 2015

Schedule Of Equity Method Investments [Line Items]

Summary of Investments in Unconsolidated Joint Ventures

The following table summarizes our investments in unconsolidated joint ventures as of June 30, 2015 and December 31, 2014.

	Percentage
	ownership at			As of
(Amounts in thousands)	June 30, 2015			June 30, 2015		December 31, 2014
Investments:
712 Fifth Avenue		50.0	%	$	2,690	$	1,697
Oder-Center, Germany		9.5	%		3,438		4,052
				$	6,128	$	5,749

Summary of Income from Unconsolidated Joint Ventures

The following table summarizes income from unconsolidated joint ventures for the three and six months ended June 30, 2015 and 2014.

	Percentage			TheCompany				The Predecessor
	ownershipat			Three Months Ended		Six Months Ended		Three Months Ended			Six Months Ended
(Amounts in thousands)	June 30, 2015			June 30, 2015		June 30, 2015		June 30, 2014			June 30, 2014
Our share of Net Income (Loss):
712 Fifth Avenue		50.0	%	$	1,984	$	2,925	$	934		$	2,024
1325 Avenue of the Americas	n/a				-		-		(31	)		11
900 Third Avenue (1)	n/a				-		-		-			-
Oder-Center (2)		9.5	%		27		61		-			-
				$	2,011	$	2,986	$	903		$	2,035

⁽¹⁾ As of June 30, 2014, our Predecessor’s investment in 900 Third Avenue had a deficit balance and since our Predecessor had no obligations to fund operating losses, it did not recognize any losses in excess of its investment balance. All unrecognized losses were aggregated to offset future net income until all unrecognized losses were utilized.

⁽²⁾ We account for our interest in Oder-Center on a one quarter lag basis.

712 Fifth Avenue [Member]

Schedule Of Equity Method Investments [Line Items]

Summary of Investments in Unconsolidated Joint Ventures

The following tables summarize 712 Fifth Avenue’s financial information as of the dates of and for the periods set forth below.

(Amounts in thousands)	As of
Balance Sheets	June 30, 2015			December 31, 2014
Rental property, net	$	198,722		$	221,827
Other assets		56,156			46,126
Total assets	$	254,878		$	267,953
Mortgage and notes payable	$	246,500		$	246,500
Other liabilities		15,260			30,321
Total liabilities		261,760			276,821
Equity (1)		(6,882	)		(8,868	)
Total liabilities and equity	$	254,878		$	267,953
(1)   The carrying amount of our investment in 712 Fifth Avenue is greater than our share of 712 Fifth       Avenue's equity by approximately $6,131.  This basis difference resulted from distributions in excess       of the equity in net earnings of 712 Fifth Avenue.

	The Company						The Predecessor
(Amounts in thousands)	Three months ended			Six Months Ended			Three months ended			Six Months Ended
Income Statements	June 30, 2015			June 30, 2015			June 30, 2014			June 30, 2014
Rental income	$	12,392		$	24,446		$	11,457		$	22,689
Tenant reimbursement income		1,375			2,736			1,124			2,269
Fee and other income		344			623			283			638
Total revenue		14,111			27,805			12,864			25,596
Operating		5,831			12,057			5,565			11,326
Depreciation and amortization		2,954			5,884			2,786			5,525
General and administrative		-			-			25			55
Total expenses		8,785			17,941			8,376			16,906
Operating income		5,326			9,864			4,488			8,690
Unrealized gain on interest rate swaps		1,248			2,020			1,058			2,645
Interest and other income, net		4			5			-			-
Interest and debt expense		(2,611	)		(6,039	)		(3,677	)		(7,286	)
Net income	$	3,967		$	5,850		$	1,869		$	4,049

XML

Real Estate Fund Investment (Tables)

6 Months Ended

Jun. 30, 2015

Real Estate Investments [Abstract]

Summary of Fair Value of Fund Investment

Below is a summary of the fair value of fund investments on our consolidated balance sheet.

(Amounts in thousands)	As of
Balance Sheet	June 30, 2015		December 31, 2014
Real Estate Fund Investments:
Property Funds	$	193,081	$	183,216
Alternative Investment Funds		142,464		140,171
Total	$	335,545	$	323,387

Schedule of Fair Value of Income from Fund Investment

Below is a summary of the fair value of fund investments on our consolidated statement of income.

(Amounts in thousands)	Three Months Ended		Six Months Ended
Income Statement	June 30, 2015		June 30, 2015
Investment income	$	2,853	$	7,348
Investment expenses		45		191
Net investment income		2,808		7,157
Net unrealized gains		11,264		12,136
Income from real estate fund investments	$	14,072	$	19,293

Schedule of Investment of Property Funds

The following is a summary of the investments of our Property Funds.

				As of June 30, 2015
	% Ownership			60 Wall Street			One Market Plaza				50 Beale Street
Fund II		10.0	%		46.3	%		-				-
Fund III		3.1	%		16.0	%		2.0	%			-
Fund VII/VII-H (1)		7.2	%		-			-				42.8	%
Total Property Funds					62.3	%		2.0	%			42.8	%
Other Investors					37.7	%		98.0	%	(2)		57.2	%
Total					100.0	%		100.0	%			100.0	%

⁽¹⁾ As of June 30, 2015, Fund VII and Fund VII-H had an aggregate of $57,600,000 of committed capital that had not yet been invested. On July 10, 2015, Fund VII and Fund VII-H entered into an agreement to acquire 670 Broadway, a 77,480 square foot office building located in the NoHo submarket of Manhattan, for $112,000,000.

⁽²⁾ Includes a 49.0% direct ownership interest held by us.

Summary Of Investments Of Alternative Investment Funds

The following is a summary of the investments of our Alternative Investment Funds.

(Amounts in thousands)		%	Interest/			As of
Fund	Investment Type	Ownership	Dividend Rate		Initial Maturity	June 30, 2015		December 31, 2014
Fund VIII	Mezzanine Loan	1.7%		8.3%	Jan-2022	$	46,747	$	45,947
PGRESS Funds	Preferred Equity Investments	4.9% - 5.4%	10.3% - 15.0%		Sep-2015 - Feb-2019		95,717		94,224
						$	142,464	$	140,171

Schedule of Realized and Unrealized Gains from Real Estate Fund Investment

Below is a summary of realized and unrealized gains from real estate fund investments on our consolidated statement of income.

(Amounts in thousands)	Three Months Ended		Six Months Ended
Income Statement	June 30, 2014		June 30, 2014
Realized gains on real estate fund investments	$	-	$	-
Unrealized gains on real estate fund investments		33,750		79,917
Realized and unrealized gains, net	$	33,750	$	79,917

Schedule of Asset Management Fees

Below is a summary of the asset management fees earned by our Predecessor.

(Amounts in thousands)	Three Months Ended			Six Months Ended
Income Statement	June 30, 2014			June 30, 2014
Gross asset management fees	$	7,527		$	14,937
Eliminated fees(1)		(392	)		(782	)
Net asset management fees	$	7,135		$	14,155

⁽¹⁾ Eliminated fees reflect a reduction in asset management fees from the general partner interest in each of the Funds.    

Schedule of Amounts Recognized in Income Statement

The following tables summarize the income statements for the three and six months ended June 30, 2014 for each of the Property Funds’ underlying investments.

(Amounts in thousands)	Property Funds' Underlying Investments for the Three Months Ended June 30, 2014
Statements of Income	1633 Broadway			900 Third Ave			31 West 52nd St			1301 Ave of the Americas			One Market Plaza			Liberty Place			1899 Penn. Ave			2099 Penn. Ave			425 Eye St
Revenues:
Rental income	$	37,251		$	8,982		$	18,122		$	27,139		$	17,910		$	1,690		$	1,940		$	43		$	2,642
Tenant reimbursement income		3,096			751			1,300			2,318			273			563			967			1			83
Fee and other income		702			168			1,333			1,087			681			9			28			7			(179	)
Total revenue		41,049			9,901			20,755			30,544			18,864			2,262			2,935			51			2,546
Expenses:
Building operating		13,268			4,038			5,774			13,008			6,836			1,086			1,348			1,143			1,390
Related party management fees		784			261			329			427			177			61			66			1			79
Operating		14,052			4,299			6,103			13,435			7,013			1,147			1,414			1,144			1,469
Depreciation and amortization		2,780			2,144			5,545			9,341			8,682			-			940			-			1,398
General and administrative		10			24			7			24			281			11			11			12			107
Total expenses		16,842			6,467			11,655			22,800			15,976			1,158			2,365			1,156			2,974
Operating income (loss)		24,207			3,434			9,100			7,744			2,888			1,104			570			(1,105	)		(428	)
Unrealized gain on interest rate swaps		5,665			1,169			1,686			2,872			3,529			-			-			-			-
Interest and debt expense		(12,894	)		(3,696	)		(5,564	)		(15,379	)		(13,334	)		(945	)		(1,129	)		(1,380	)		(1,301	)
Unrealized depreciation on investment in real estate		-			-			-			-			-			(459	)		-			(520	)		-
Net income (loss) before taxes		16,978			907			5,222			(4,763	)		(6,917	)		(300	)		(559	)		(3,005	)		(1,729	)
Income tax benefit (expense)		-			-			-			-			-			(29	)		114			-			24
Net income (loss)	$	16,978		$	907		$	5,222		$	(4,763	)	$	(6,917	)	$	(329	)	$	(445	)	$	(3,005	)	$	(1,705	)

(Amounts in thousands)	Property Funds' Underlying Investments for the Six Months Ended June 30, 2014
Statements of Income	1633 Broadway			900 Third Ave			31 West 52nd St			1301 Ave of the Americas			One Market Plaza			Liberty Place			1899 Penn. Ave			2099 Penn. Ave			425 Eye St
Revenues:
Rental income	$	72,970		$	17,764		$	36,221		$	53,749		$	36,123		$	3,729		$	4,044		$	76		$	5,300
Tenant reimbursement income		5,913			1,514			2,489			4,434			661			1,184			2,107			3			827
Fee and other income		1,224			612			2,615			1,657			2,044			23			56			10			-
Total revenues		80,107			19,890			41,325			59,840			38,828			4,936			6,207			89			6,127
Expenses:
Building operating		26,879			8,083			11,517			25,688			14,001			2,168			2,605			2,223			2,904
Related party management fees		1,485			525			655			837			394			132			141			2			184
Operating		28,364			8,608			12,172			26,525			14,395			2,300			2,746			2,225			3,088
Depreciation and amortization		5,567			3,731			11,074			18,555			17,686			-			1,923			-			2,793
General and administrative		10			31			34			51			294			16			16			399			114
Total expenses		33,941			12,370			23,280			45,131			32,375			2,316			4,685			2,624			5,995
Operating income (loss)		46,166			7,520			18,045			14,709			6,453			2,620			1,522			(2,535	)		132
Unrealized gain on interest rate swaps		12,945			2,935			4,288			6,125			10,444			-			-			-			-
Interest and debt expense		(25,625	)		(7,353	)		(11,069	)		(30,549	)		(27,072	)		(1,890	)		(2,257	)		(2,208	)		(2,520	)
Unrealized depreciation on investment in real estate		-			-			-			-			-			(489	)		-			(530	)		-
Net income (loss) before taxes		33,486			3,102			11,264			(9,715	)		(10,175	)		241			(735	)		(5,273	)		(2,388	)
Income tax benefit (expense)		-			-			-			-			-			(26	)		182			-			(2,315	)
Net income (loss)	$	33,486		$	3,102		$	11,264		$	(9,715	)	$	(10,175	)	$	215		$	(553	)	$	(5,273	)	$	(4,703	)

XML

Intangible Assets and Liabilities - Additional Information (Details) - Jun. 30, 2015 - USD ($) $ in Thousands	Total	Total
Leases, Acquired-in-Place, Market Adjustment [Member]
Finite Lived Intangible Assets [Line Items]
Rental income	$ 872	$ 1,762
Leases, Acquired-in-Place [Member]
Finite Lived Intangible Assets [Line Items]
Amortization of acquired in-place leases	$ 37,638	$ 70,630

XML

Real Estate Fund Investments - Schedule of Investments of Property Funds (Parenthetical) (Details)		6 Months Ended
	Jul. 10, 2015 USD ($) ft²	Jun. 30, 2015 USD ($) ft²
Investment Holdings [Line Items]
Area of office properties | ft²		10,400,000
One Market Plaza [Member]
Investment Holdings [Line Items]
Ownership interest rate of property		49.00%
Fund VII and VII-H [Member]
Investment Holdings [Line Items]
Committed capital that had not yet been invested		$ 57,600,000
Fund VII and VII-H [Member] | 670 Broadway [Member] | Subsequent Event [Member]
Investment Holdings [Line Items]
Area of office properties | ft²	77,480
Payment to acquire office building	$ 112,000,000
Other Investors [Member] | One Market Plaza [Member]
Investment Holdings [Line Items]
Ownership interest rate of property		49.00%

XML

Intangible Assets and Liabilities (Tables)

6 Months Ended

Jun. 30, 2015

Summary of Intangible Assets and Liabilities

The following summarizes our intangible assets (primarily acquired above-market leases and acquired in-place leases) and intangible liabilities (primarily acquired below-market leases) as of June 30, 2015 and December 31, 2014.

	As of
(Amounts in thousands)	June 30, 2015			December 31, 2014
Intangible assets:
Gross amount	$	686,284		$	689,894
Accumulated amortization		(103,158	)		(20,509	)
	$	583,126		$	669,385
Intangible liabilities:
Gross amount	$	222,903		$	222,985
Accumulated amortization		(21,064	)		(3,757	)
	$	201,839		$	219,228

Schedule of Estimated Annual Amortization of Acquired Below-Market Leases, Net of Acquired Above-Market Leases

Estimated annual amortization of acquired below-market leases, net of acquired above-market leases, for each of the five succeeding years commencing January 1, 2016 is as follows.

(Amounts in thousands)
2016	$	10,159
2017		8,394
2018		10,299
2019		9,518
2020		8,231

Leases, Acquired-in-Place [Member]

Schedule of Estimated Annual Amortization of Acquired In-Place Leases

Estimated annual amortization of acquired in-place leases for each of the five succeeding years commencing January 1, 2016 is as follows.

(Amounts in thousands)
2016	$	79,941
2017		56,511
2018		50,164
2019		45,552
2020		40,525

XML

Debt (Tables)

6 Months Ended

Jun. 30, 2015

Debt Disclosure [Abstract]

Summary of Outstanding Debt

The following is a summary of our outstanding debt.

						Balance at
(Amounts in thousands)	Maturity Date	Fixed/Variable Rate	Interest Rate at June 30, 2015			June 30, 2015		December 31, 2014
Mortgages and notes payable
1633 Broadway
	Dec-2016	Fixed (1)		6.15	%	$	772,100	$	772,100
	Dec-2016	Variable		1.61	%		154,160		154,160
				5.39	%		926,260		926,260
900 Third Avenue
	Nov-2017	Fixed (1)		5.35	%		255,000		255,000
	Nov-2017	Variable		1.77	%		19,337		19,337
				5.10	%		274,337		274,337
31 West 52nd Street (64.2% interest)
	Dec-2017	Fixed (1)		5.74	%		337,500		337,500
	Dec-2017	Variable		1.66	%		75,990		75,990
				4.99	%		413,490		413,490
One Market Plaza (49.0% interest)	Dec-2019	Fixed (1)		6.14	%		855,339		853,711
Waterview	June-2017	Fixed		5.76	%		210,000		210,000
1899 Pennsylvania Avenue	Nov-2020	Fixed		4.88	%		89,811		90,489
Liberty Place	June-2018	Fixed		4.50	%		84,000		84,000
Total mortgages and notes payable				5.51	%	$	2,853,237	$	2,852,287

(1)  Represents loans with variable interest rates that have been fixed by interest rate swaps. See “Interest Rate Swaps” below.

Summary of Outstanding Interest Rate Swaps

The following table summarizes our outstanding interest rate swaps.

	Notional				Strike			Fair Value as of
Property	Amount		Effective Date	Maturity Date	Rate			June 30, 2015		December 31, 2014
(Amounts in thousands)
1633 Broadway	$	772,100	Dec-2006 to Jun-2008	Dec-2016		4.92	%	$	46,929	$	60,191
900 Third Ave		255,000	Nov-2007 to Nov-2012	Nov-2015 to Nov-2017		4.15	%		15,884		19,158
31 W 52nd Street		337,500	Dec-2007 to Dec-2012	Dec-2015 to Dec-2017		4.49	%		24,013		28,748
One Market Plaza	$	840,000	Aug-2007 to Aug-2012	Aug-2017		5.02	%		73,647		86,099
Total interest rate swap liabilities								$	160,473	$	194,196

XML

COMBINED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (UNAUDITED) - USD ($) $ in Thousands	Total	Common Stock [Member]	Additional Paid in Capital [Member]	Earnings (Less than) In Excess of Distributions [Member]	Accumulated Other Comprehensive Loss [Member]	Predecessor Shareholders' Equity [Member]	Noncontrolling Interest [Member] Consolidated Joint Ventures and Funds [Member]	Noncontrolling Interest [Member] Operating Partnership [Member]
Beginning balance (Predecessor [Member]) at Dec. 31, 2013	$ 2,025,444					$ 321,769	$ 1,703,675
Net income (loss) | Predecessor [Member]	62,707					9,574	53,133
Contributions | Predecessor [Member]	90,057					1,253	88,804
Distributions | Predecessor [Member]	(24,506)					(22,323)	(2,183)
Ending balance (Predecessor [Member]) at Jun. 30, 2014	$ 2,153,702					$ 310,273	1,843,429
Common stock, shares outstanding at Dec. 31, 2014	212,106,718	212,107,000
Net income (loss)	$ (8,279)			$ (14,440)			9,672	$ (3,511)
Common stock, shares outstanding at Jun. 30, 2015	212,111,937	212,112,000
Beginning balance at Dec. 31, 2014	$ 5,554,953	$ 2,122	$ 3,851,432	57,308			685,888	958,203
Common shares issued under Omnibus share plan		5,000
Common units issued under Omnibus share plan			(2,131)					2,131
Dividends and distributions	(60,392)			(48,573)				(11,819)
Contributions from noncontrolling interests	14,031						14,031
Distributions to noncontrolling interests	(5,673)						(5,673)
Pro rata share of other comprehensive loss of unconsolidated joint ventures	(613)				$ (493)			(120)
Adjustments to noncontrolling interests			43,981					(43,981)
Amortization of equity awards	4,665		885					3,780
Other	(871)		(411)	(138)			(322)
Ending balance at Jun. 30, 2015	$ 5,497,821	$ 2,122	$ 3,893,756	$ (5,843)	$ (493)		$ 703,596	$ 904,683

XML

Variable Interest Entities ("VIEs") (Tables)

6 Months Ended

Jun. 30, 2015

Variable Interest Entities [Abstract]

Summary of Assets and Liabilities of Variable Interest Entities

The liabilities are secured only by the assets of the entities, and are non-recourse to us.

	Balance as of
(Amounts in thousands)	June 30, 2015		December 31, 2014
Investments, at fair value	$	18,318	$	17,136
Investments, at cost		63,570		63,550
Cash and restricted cash		4,959		4,976
Accounts and other receivables		501		-
Other assets		1		-
Total VIE assets	$	87,349	$	85,662
Loans payable to noncontrolling interests	$	43,981	$	42,195
Other liabilities		202		131
Total VIE liabilities	$	44,183	$	42,326

XML

Basis of Presentation and Significant Accounting Policies - Additional Information (Details) - Jun. 30, 2015 - Segment	Total
Property Plant And Equipment [Line Items]
Number of reportable segments	1
Predecessor [Member]
Property Plant And Equipment [Line Items]
Number of reportable segments	3
Post-Formation Transactions [Member]
Property Plant And Equipment [Line Items]
Number of reportable segments	1
One Market Plaza [Member]
Property Plant And Equipment [Line Items]
Residual ownership interest	2.00%

XML

Investments in Unconsolidated Joint Ventures - Summary of Financial Information (Details) - 712 Fifth Avenue [Member] - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014	Dec. 31, 2014
Schedule Of Equity Method Investments [Line Items]
Rental property, net	$ 198,722		$ 198,722		$ 221,827
Other assets	56,156		56,156		46,126
Total assets	254,878		254,878		267,953
Mortgage and notes payable	246,500		246,500		246,500
Other liabilities	15,260		15,260		30,321
Total liabilities	261,760		261,760		276,821
Equity	(6,882)		(6,882)		(8,868)
Total liabilities and equity	254,878		254,878		$ 267,953
Rental income	12,392		24,446
Tenant reimbursement income	1,375		2,736
Fee and other income	344		623
Total revenue	14,111		27,805
Operating	5,831		12,057
Depreciation and amortization	2,954		5,884
Total expenses	8,785		17,941
Operating income	5,326		9,864
Unrealized gain on interest rate swaps	1,248		2,020
Interest and other income, net	4		5
Interest and debt expense	(2,611)		(6,039)
Net income	$ 3,967		$ 5,850
Predecessor [Member]
Schedule Of Equity Method Investments [Line Items]
Rental income		$ 11,457		$ 22,689
Tenant reimbursement income		1,124		2,269
Fee and other income		283		638
Total revenue		12,864		25,596
Operating		5,565		11,326
Depreciation and amortization		2,786		5,525
General and administrative		25		55
Total expenses		8,376		16,906
Operating income		4,488		8,690
Unrealized gain on interest rate swaps		1,058		2,645
Interest and debt expense		(3,677)		(7,286)
Net income		$ 1,869		$ 4,049

XML

Interest and Debt Expense - Details of Interest and Debt Expense (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Interest And Debt Expense [Line Items]
Interest and debt expense	$ 41,650		$ 82,954
Amortization of deferred financing costs	586		1,170
Total interest and debt expense	$ 42,236		$ 84,124
Predecessor [Member]
Interest And Debt Expense [Line Items]
Interest and debt expense		$ 7,880		$ 15,571
Amortization of deferred financing costs		108		216
Total interest and debt expense		$ 7,988		$ 15,787

XML

CONSOLIDATED BALANCE SHEETS (UNAUDITED) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Rental property, at cost
Land	$ 2,042,071	$ 2,042,071
Buildings and improvements	5,534,885	5,488,168
Rental property, at cost	7,576,956	7,530,239
Accumulated depreciation and amortization	(162,377)	(81,050)
Rental property, net	7,414,579	7,449,189
Real estate fund investments	335,545	323,387
Investments in unconsolidated joint ventures	6,128	5,749
Cash and cash equivalents	438,088	438,599
Restricted cash	45,737	55,728
Marketable securities	21,524	20,159
Deferred rent receivable	40,308	8,267
Accounts and other receivables, net of allowance of $406 and $333 in 2015 and 2014, respectively	10,781	7,692
Deferred charges, net of accumulated amortization of $13,002 and $10,859 in 2015 and 2014, respectively	49,547	39,165
Intangible assets, net of accumulated amortization of $103,158 and $20,509 in 2015 and 2014, respectively	583,126	669,385
Other assets	9,529	13,121
Total assets	8,954,892	9,030,441
LIABILITIES AND EQUITY
Mortgages and notes payable	2,853,237	2,852,287
Credit facility	0	0
Due to affiliates	27,299	27,299
Loans payable to noncontrolling interests	43,981	42,195
Accounts payable and accrued expenses	96,595	93,472
Deferred income taxes	2,659	2,861
Interest rate swap liabilities	160,473	194,196
Intangible liabilities, net of accumulated amortization of $21,064 and $3,757 in 2015 and 2014, respectively	201,839	219,228
Dividends and distributions payable	25,066
Other liabilities	45,922	43,950
Total liabilities	$ 3,457,071	$ 3,475,488
Commitments and contingencies
Paramount Group, Inc. equity:
Common stock $0.01 par value per share; authorized 900,000,000 shares; issued and outstanding 212,111,937 and 212,106,718 shares in 2015 and 2014, respectively	$ 2,122	$ 2,122
Additional paid-in-capital	3,893,756	3,851,432
Earnings (less than) in excess of distributions	(5,843)	57,308
Accumulated other comprehensive loss	(493)
Paramount Group, Inc. equity	3,889,542	3,910,862
Noncontrolling interests in:
Consolidated joint ventures and funds	703,596	685,888
Operating Partnership (51,660,088 and 51,543,993 units outstanding in 2015 and 2014, respectively)	904,683	958,203
Total equity	5,497,821	5,554,953
Total liabilities and equity	$ 8,954,892	$ 9,030,441

XML

Real Estate Fund Investments - Additional Information (Details) - Jun. 30, 2015 - USD ($)	Total
Real Estate [Abstract]
Aggregate committed capital	$ 580,200,000
Committed capital invested	51,000,000
Capital committed	$ 95,200,000

XML

COMBINED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) - USD ($) $ in Thousands	3 Months Ended	6 Months Ended
	Jun. 30, 2014	Jun. 30, 2014
Predecessor [Member]
REVENUES:
Rental income	$ 8,499	$ 16,312
Tenant reimbursement income	441	896
Distributions from real estate fund investments	4,744	11,247
Realized and unrealized gains, net	33,750	79,917
Fee and other income	6,400	11,582
Total revenues	53,834	119,954
EXPENSES:
Operating	4,214	7,753
Depreciation and amortization	2,899	5,566
General and administrative	4,363	12,448
Profit sharing compensation	3,438	8,232
Other	2,634	3,901
Total expenses	17,548	37,900
Operating income (loss)	36,286	82,054
Income from unconsolidated joint ventures	903	2,035
Unrealized gains on interest rate swaps	(354)	(196)
Interest and other income, net	997	1,706
Interest and debt expense	(7,988)	(15,787)
Net income (loss) before income taxes	29,844	69,812
Income tax expense	(3,842)	(7,105)
Net income (loss)	26,002	62,707
Net income attributable to noncontrolling interests	(25,823)	(53,133)
Net income (loss) attributable to common shareholders	$ 179	$ 9,574

XML

Debt - Summary of Outstanding Debt (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2015	Dec. 31, 2014
Debt Instrument [Line Items]
Maturity Date	2017-10
Interest Rate	5.51%
Mortgages and notes payable	$ 2,853,237	$ 2,852,287
1633 Broadway [Member]
Debt Instrument [Line Items]
Interest Rate	5.39%
Mortgages and notes payable	$ 926,260	926,260
1633 Broadway [Member] | Mortgages and Notes Payable with Fixed Rate [Member]
Debt Instrument [Line Items]
Maturity Date	2016-12
Interest Rate	6.15%
Mortgages and notes payable	$ 772,100	772,100
1633 Broadway [Member] | Mortgages and Notes Payable with Variable Rate [Member]
Debt Instrument [Line Items]
Maturity Date	2016-12
Interest Rate	1.61%
Mortgages and notes payable	$ 154,160	154,160
900 Third Avenue [Member]
Debt Instrument [Line Items]
Interest Rate	5.10%
Mortgages and notes payable	$ 274,337	274,337
900 Third Avenue [Member] | Mortgages and Notes Payable with Fixed Rate [Member]
Debt Instrument [Line Items]
Maturity Date	2017-11
Interest Rate	5.35%
Mortgages and notes payable	$ 255,000	255,000
900 Third Avenue [Member] | Mortgages and Notes Payable with Variable Rate [Member]
Debt Instrument [Line Items]
Maturity Date	2017-11
Interest Rate	1.77%
Mortgages and notes payable	$ 19,337	19,337
31 West 52nd Street [Member]
Debt Instrument [Line Items]
Interest Rate	4.99%
Mortgages and notes payable	$ 413,490	413,490
31 West 52nd Street [Member] | Mortgages and Notes Payable with Fixed Rate [Member]
Debt Instrument [Line Items]
Maturity Date	2017-12
Interest Rate	5.74%
Mortgages and notes payable	$ 337,500	337,500
31 West 52nd Street [Member] | Mortgages and Notes Payable with Variable Rate [Member]
Debt Instrument [Line Items]
Maturity Date	2017-12
Interest Rate	1.66%
Mortgages and notes payable	$ 75,990	75,990
One Market Plaza [Member] | Mortgages and Notes Payable with Fixed Rate [Member]
Debt Instrument [Line Items]
Maturity Date	2019-12
Interest Rate	6.14%
Mortgages and notes payable	$ 855,339	853,711
Waterview [Member] | Mortgages and Notes Payable with Fixed Rate [Member]
Debt Instrument [Line Items]
Maturity Date	2017-06
Interest Rate	5.76%
Mortgages and notes payable	$ 210,000	210,000
1899 Pennsylvania Avenue [Member] | Mortgages and Notes Payable with Fixed Rate [Member]
Debt Instrument [Line Items]
Maturity Date	2020-11
Interest Rate	4.88%
Mortgages and notes payable	$ 89,811	90,489
Liberty Place [Member] | Mortgages and Notes Payable with Fixed Rate [Member]
Debt Instrument [Line Items]
Maturity Date	2018-06
Interest Rate	4.50%
Mortgages and notes payable	$ 84,000	$ 84,000

XML

Interest and Other Income (Tables)

6 Months Ended

Jun. 30, 2015

Interest And Other Income [Abstract]

Schedule Of Interest And Other Income

The following table sets forth the details of interest and other income.

	The Company				The Predecessor
	Three Months Ended		Six Months Ended		Three Months Ended		Six Months Ended
(Amounts in thousands)	June 30, 2015		June 30, 2015		June 30, 2014		June 30, 2014
Mark-to-market of investments in    our deferred compensation plans (1)	$	362	$	1,095	$	644	$	1,228
Interest and other income		150		271		353		478
Total interest and other income	$	512	$	1,366	$	997	$	1,706

⁽¹⁾ The change resulting from the mark-to-market of the deferred compensation plan assets is entirely offset by the change in the deferred compensation plan liabilities, which is included in general and administrative expense.

XML

Fair Value Measurements - Schedule of Fair Values of Financial Assets and Liabilities Measured at Fair Value (Details) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Investments in Property Funds	$ 193,081	$ 183,216
Investments in Alternative Investment Funds	142,464	140,171
Total real estate fund investments	335,545	323,387
Marketable securities	21,524	20,159
Total assets	357,069	343,546
Interest rate swap liabilities	160,473	194,196
Total liabilities	160,473	194,196
Level 1 [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Marketable securities	21,524	20,159
Total assets	21,524	20,159
Level 2 [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Interest rate swap liabilities	160,473	194,196
Total liabilities	160,473	194,196
Level 3 [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Investments in Property Funds	193,081	183,216
Investments in Alternative Investment Funds	142,464	140,171
Total real estate fund investments	335,545	323,387
Total assets	$ 335,545	$ 323,387

XML

Incentive Compensation

6 Months Ended

Jun. 30, 2015

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Incentive Compensation

13. Incentive Compensation

       Stock Based Compensation

We account for all stock-based compensation in accordance with ASC 718, Compensation – Stock Compensation. As of June 30, 2015, we have 14,347,116 shares available for future grants under the Plan, if all awards granted are full value awards, as defined in the 2014 Equity Incentive Plan.  Stock based compensation for the three and six months ended June 30, 2015 was $1,370,000, and $4,405,000, respectively, and includes $1,861,000 of expense related to the acceleration of vesting of the stock awards in connection with a separation agreement and release in the six months ended June 30, 2015.

On April 1, 2015, the compensation committee (the “Compensation Committee”) of the board of directors approved the Company’s 2015 Performance Program (the “2015 Performance Program”), a multi-year performance-based equity compensation program. The purpose of the 2015 Performance Program is to further align the interests of the Company’s stockholders with that of management by encouraging the Company’s senior officers to create stockholder value in a “pay for performance” structure.  Under the 2015 Performance Program, participants may earn awards in the form of LTIP Units of the Operating Partnership based on the Company’s total return to stockholders (“TRS”) over a three-year performance measurement period beginning on April 1, 2015 and continuing through March 31, 2018, on both an absolute basis and relative basis. One-half of the award is earned if the Company outperforms a predetermined absolute TRS and the other half is earned if the Company outperforms a predetermined relative TRS. Specifically, participants begin to earn awards under the 2015 Performance Program if the Company’s TRS for the performance measurement  period equals or exceeds 21% on an absolute basis and exceeds the performance of the SNL Office REIT Index by 100 basis points on a relative basis, and awards will be fully earned if the Company’s TRS for the performance measurement period equals or exceeds 40% on an absolute basis and exceeds the performance of the SNL Office REIT Index by 700 basis points on a relative basis. Participants will not earn any awards under the 2015 Performance Program if the Company’s TRS during the performance measurement period does not meet these minimum thresholds. The number of LTIP Units that are earned if performance is above the minimum thresholds, but below the maximum thresholds, will be determined based on linear interpolation between the percentages earned at the minimum and maximum thresholds. During the performance measurement period, participants will receive only one-tenth of the dividends otherwise payable to the Company’s common stockholders with respect to their LTIP Units and the remaining dividends on their LTIP Units will accrue during the performance measurement period and will be paid to participants only if the LTIP Units are ultimately earned based on the achievement of the designated performance objectives.

If the designated performance objectives are achieved, awards earned under the 2015 Performance Program will also be subject to vesting based on continued employment with the Company through April 1, 2020, with 50% of each award vesting on the date the Compensation Committee determines the awards earned under the 2015 Performance Program following the conclusion of the performance period, and 25% vesting on each of April 1, 2019 and April 1, 2020.

       Deferred Compensation

In connection with the Formation Transactions, we assumed a deferred compensation plan (the “1993 Plan”) from our Predecessor. The 1993 Plan permits certain management employees to defer certain percentages of their compensation, as defined. The assets of the 1993 Plan remain the sole property of the Company and are subject to the claims of its general creditors.  The assets of the 1993 Plan are included in “marketable securities” and “restricted cash,” with an offsetting liability included in “other liabilities” on our consolidated balance sheets.  Income from the mark-to-market of investments in our deferred compensation plan is included in “interest and other income” and this amount is entirely offset by expense from the mark-to-market of plan liabilities, which is included as a component of “general and administrative” expenses on our consolidated statements of income.

The 1993 Plan had a balance of $29,829,000 and $28,148,000 as of June 30, 2015 and December 31, 2014, respectively.

XML

Interest and Debt Expense (Tables)

6 Months Ended

Jun. 30, 2015

Interest And Debt Expense [Abstract]

Details of Interest and Debt Expense

          The following table sets forth the details of interest and debt expense.

	The Company				The Predecessor
	Three Months Ended		Six Months Ended		Three Months Ended		Six Months Ended
(Amounts in thousands)	June 30, 2015		June 30, 2015		June 30, 2014		June 30, 2014
Interest and debt expense	$	41,650	$	82,954	$	7,880	$	15,571
Amortization of deferred financing costs		586		1,170		108		216
Total interest and debt expense	$	42,236	$	84,124	$	7,988	$	15,787

XML

Related Party

6 Months Ended

Jun. 30, 2015

Related Party Transactions [Abstract]

Related Party

15. Related Party

Due to Affiliates

As of June 30, 2015 and December 31, 2014, we had an aggregate of $27,299,000 of liabilities that were due to affiliates. These liabilities were comprised of a $24,500,000 note payable to CNBB-RDF Holdings, LP, which is an entity owned by Maren Otto, Katharina Otto-Bernstein and Alexander Otto, and a $2,799,000 million note payable to a different entity owned by members of the Otto family, both of which were made in lieu of certain cash distributions prior to the completion of the Formation Transactions. The notes are due in October 2017 and bear interest at a fixed rate of 0.50%.

XML

Fair Value Measurements - Summary of Changes in Fair Value of Real Estate Fund Investments in Level 3 (Details) - Real Estate Fund [Member] - Level 3 [Member] - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Fair Value Assets Measured On Recurring Basis Unobservable Input Reconciliation [Line Items]
Beginning balance	$ 324,282		$ 323,387
Purchases			22
Net unrealized gains	11,263		12,136
Ending Balance	$ 335,545		$ 335,545
Predecessor [Member]
Fair Value Assets Measured On Recurring Basis Unobservable Input Reconciliation [Line Items]
Beginning balance		$ 2,362,743		$ 2,158,889
Purchases		6,494		164,181
Net unrealized gains		33,750		79,917
Ending Balance		$ 2,402,987		$ 2,402,987

XML

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) - Jun. 30, 2015 - USD ($) $ in Thousands	Total	Total
Statement Of Income And Comprehensive Income [Abstract]
Net income (loss)	$ 3,148	$ (8,279)
Other comprehensive loss:
Pro rata share of other comprehensive loss of unconsolidated joint ventures	(613)	(613)
Comprehensive income (loss)	2,535	(8,892)
Less comprehensive (income) loss attributable to noncontrolling interests in:
Consolidated joint ventures and funds	(9,004)	(9,672)
Operating Partnership	1,267	3,631
Comprehensive loss attributable to Paramount Group, Inc.	$ (5,202)	$ (14,933)

XML

CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Parentheticals) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Statement Of Financial Position [Abstract]
Accounts and other receivables, allowance	$ 406	$ 333
Deferred charges, accumulated amortization	13,002	10,859
Intangible assets, accumulated amortization	103,158	20,509
Intangible liabilities, accumulated amortization	$ 21,064	$ 3,757
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	900,000,000	900,000,000
Common stock, shares issued	212,111,937	212,106,718
Common stock, shares outstanding	212,111,937	212,106,718
Operating partnership, units outstanding	51,660,088	51,543,993

XML

Variable Interest Entities ("VIEs")

6 Months Ended

Jun. 30, 2015

Variable Interest Entities [Abstract]

Variable Interest Entities ("VIEs")

8. Variable Interest Entities (“VIEs”)

As of June 30, 2015 and December 31, 2014, we held variable interests in PGRESS-A, PGRESS-H, Residential Fund Feeder and Fund VII-H, which were determined to be VIEs. We are required to consolidate our interests in these entities because we are deemed to be the primary beneficiary and have the power to direct the activities of the entity that most significantly affect economic performance and the obligation to absorb losses and right to receive benefits that could potentially be significant to the entity. The table below summarizes the assets and liabilities of these entities. The liabilities are secured only by the assets of the entities, and are non-recourse to us.

	Balance as of
(Amounts in thousands)	June 30, 2015		December 31, 2014
Investments, at fair value	$	18,318	$	17,136
Investments, at cost		63,570		63,550
Cash and restricted cash		4,959		4,976
Accounts and other receivables		501		-
Other assets		1		-
Total VIE assets	$	87,349	$	85,662
Loans payable to noncontrolling interests	$	43,981	$	42,195
Other liabilities		202		131
Total VIE liabilities	$	44,183	$	42,326

XML

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2015	Jul. 31, 2015
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2015
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	Q2
Trading Symbol	PGRE
Entity Registrant Name	PARAMOUNT GROUP, INC.
Entity Central Index Key	0001605607
Current Fiscal Year End Date	--12-31
Entity Filer Category	Non-accelerated Filer
Entity Common Stock, Shares Outstanding		212,111,937

XML

Fair Value Measurements

6 Months Ended

Jun. 30, 2015

Fair Value Disclosures [Abstract]

Fair Value Measurements

9. Fair Value Measurements

ASC 820, Fair Value Measurement and Disclosures, defines fair value and establishes a framework for measuring fair value.  The objective of fair value is to determine the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (the exit price).ASC 820 establishes a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into three levels: Level 1 – quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities; Level 2 – observable prices that are based on inputs not quoted in active markets, but corroborated by market data; and Level 3 – unobservable inputs that are used when little or no market data is available. The fair value hierarchy gives the highest priority to Level 1 inputs and the lowest priority to Level 3 inputs. In determining fair value, we utilize valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible, as well as consider counterparty credit risk in our assessment of fair value.  Considerable judgment is necessary to interpret Level 2 and 3 inputs in determining the fair value of our financial and non-financial assets and liabilities.  Accordingly, our fair value estimates, which are made at the end of each reporting period, may be different than the amounts that may ultimately be realized upon sale or disposition of these assets.   

Financial Assets and Liabilities measured at Fair Value

Financial assets and liabilities that are measured at fair value on our consolidated balance sheets consists of (i) real estate fund investments, (ii) marketable securities (which represent the assets in our deferred compensation plan, for which there is a corresponding liability on our consolidated balance sheets) and (iii) interest rate swaps. The table below aggregates the fair values of these financial assets and liabilities at June 30, 2015 and December 31, 2014, based on their levels in the fair value hierarchy.

	As of June 30, 2015
(Amounts in thousands)	Total		Level 1		Level 2		Level 3
Real estate fund investments:
Investments in Property Funds	$	193,081	$	-	$	-	$	193,081
Investments in Alternative Investment Funds		142,464		-		-		142,464
Total real estate fund investments		335,545		-		-		335,545
Marketable securities		21,524		21,524		-		-
Total assets	$	357,069	$	21,524	$	-	$	335,545
Interest rate swap liabilities	$	160,473		-	$	160,473		-
Total liabilities	$	160,473	$	-	$	160,473	$	-

	As of December 31, 2014
(Amounts in thousands)	Total		Level 1		Level 2		Level 3
Real estate fund investments:
Investments in Property Funds	$	183,216	$	-	$	-	$	183,216
Investments in Alternative Investment Funds		140,171		-		-		140,171
Total real estate fund investments		323,387		-		-		323,387
Marketable securities		20,159		20,159		-		-
Total assets	$	343,546	$	20,159	$	-	$	323,387
Interest rate swap liabilities	$	194,196		-	$	194,196		-
Total liabilities	$	194,196	$	-	$	194,196	$	-

Property Funds

At June 30, 2015, the Property Funds had three investments.  These investments are classified as Level 3.  We obtain third party appraisals at least annually. We use a discounted cash flow valuation technique to estimate the fair value of each of these investments, which is updated quarterly by personnel responsible for the management of each investment and reviewed by senior management at each reporting period. The discounted cash flow valuation technique requires us to estimate cash flows for each investment over the anticipated holding period, which currently ranges from 1.0 to 10.0 years.  Cash flows are derived from property rental revenue (base rents plus reimbursements) less operating expenses, real estate taxes and capital and other costs, plus projected sales proceeds in the year of exit. Property rental revenue is based on leases currently in place and our estimates for future leasing activity, which are based on current market rents for similar space. Similarly, estimated real estate taxes and operating expenses are based on amounts incurred in the current period plus a projected growth factor for future periods. Anticipated sales proceeds at the end of an investment’s expected holding period are determined based on the net cash flow of the investment in the year of exit, divided by a terminal capitalization rate, less estimated selling costs.  The fair value of each property is calculated by discounting future cash flows (including anticipated sales proceeds), using an appropriate discount rate.  The fair value of the investment is calculated by subtracting property level debt, if any, from the fair value of the property.

Significant unobservable inputs used in determining the fair value of each investment include capitalization rates and discount rates. These rates are based on, among other factors, location and type of property.  Significant unobservable quantitative inputs in the table below were utilized in determining the fair value of the Property Fund investments at June 30, 2015 and December 31, 2014.

	As of June 30, 2015				As of December 31, 2014
Unobservable Quantitative Input	Range		Weighted average (based on fair value of investments)		Range	Weighted average (based on fair value of investments)
Discount rates		7.00%		7.00%	6.50% - 7.25%		6.83%
Terminal capitalization rates	5.00% - 6.00%			5.55%	5.50% - 6.00%		5.72%

The above inputs are subject to change based on changes in economic and market conditions and/or changes in use or timing of exit. Changes in discount rates and terminal capitalization rates result in increases, or decreases, in the fair values of these investments. The discount rates encompass, among other things, uncertainties in the valuation models with respect to terminal capitalization rates and the amount and timing of cash flows. Therefore, a change in the fair value of these investments resulting from a change in the terminal capitalization rate may be partially offset by a change in the discount rate. Significant increases (decreases) in any of these inputs in isolation would result in a significantly lower (higher) fair value, respectively.

Alternative Investment Funds

At June 30, 2015, Alternative Investment Funds had investments in a mezzanine loan and preferred equity. These instruments are classified as Level 3. Estimates of the fair value of these instruments are determined by the standard practice of modeling the contractual cash flows required under the instrument and discounting them back to their present value at the appropriate current risk adjusted interest rate. The balances are updated quarterly by a third party and reviewed by senior management at each reporting period.

Significant unobservable inputs used in determining the fair value of these investments include credit spreads and preferred returns.  Significant increases or decreases in any of these inputs in isolation would result in a significantly lower (higher) fair value, respectively. Significant unobservable quantitative inputs in the table below were utilized in determining the fair value of the investments in the Alternative Investment Funds at June 30, 2015 and December 31, 2014.

	As of June 30, 2015			As of December 31, 2014
Unobservable Quantitative Input	Range	Weighted average (based on fair value of investments)		Range	Weighted average (based on fair value of investments)
Preferred return	8.49% - 14.00%		11.07%	8.50% - 14.00%		11.07%

The table below summarizes the changes in the fair value of Real Estate Fund Investments that are classified as Level 3, for the three and six months ended June 30, 2015 and 2014.

	The Company				The Predecessor
	Three Months Ended		Six Months Ended		Three Months Ended		Six Months Ended
(Amounts in thousands)	June 30, 2015		June 30, 2015		June 30, 2014		June 30, 2014
Beginning balance	$	324,282	$	323,387	$	2,362,743	$	2,158,889
Purchases		-		22		6,494		164,181
Net unrealized gains		11,263		12,136		33,750		79,917
Ending Balance	$	335,545	$	335,545	$	2,402,987	$	2,402,987

Interest Rate Swaps

Interest rate swaps are valued by a third-party specialist, based on a pricing model that incorporates market observable inputs for interest rate curves and unobservable inputs for credit spreads. The interest rate swaps are classified as Level 2 in the valuations hierarchy.

Financial Assets and Liabilities Not Measured at Fair Value

Financial assets not measured at fair value on our consolidated balance sheets consists of cash equivalents, and are classified as Level 1 as their carrying amount approximates their fair value, due to their short-term nature.  Financial liabilities not measured at fair value include mortgages and notes payable.  Estimates of the fair value of these instruments are determined by the standard practice of modeling the contractual cash flows required under the instrument and discounting them back to their present value at the appropriate current risk adjusted interest rate, which is provided by a third-party specialist. For floating rate debt, we use forward rates derived from observable market yield curves to project the expected cash flows we would be required to make under the instrument. These instruments are classified as Level 2.

The following is a summary of the carrying amounts and fair value of these financial instruments as of June 30, 2015 and December 31, 2014.

	As of June 30, 2015				As of December 31, 2014
(Amounts in thousands)	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Cash equivalents	$	289,917	$	289,917	$	401,215	$	401,215
Total Assets	$	289,917	$	289,917	$	401,215	$	401,215
	As of June 30, 2015				As of December 31, 2014
(Amounts in thousands)	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Mortgage and notes payable	$	2,853,237	$	2,797,650	$	2,852,287	$	2,796,842
Total Liabilities	$	2,853,237	$	2,797,650	$	2,852,287	$	2,796,842

XML

Segments Disclosure - Schedule of Each Reportable Segment Information of Predecessor (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Revenues
Rental income	$ 145,917		$ 289,160
Tenant reimbursement income	12,063		25,551
Fee and other income	4,948		9,443
Total revenues	162,928		324,154
Total expenses	154,543		303,762
Operating income (loss)	8,385		20,392
Income from unconsolidated joint ventures	2,011		2,986
Unrealized gain (loss) on interest rate swaps	21,747		33,725
Interest and other income, net	512		1,366
Interest and debt expense	(42,236)		(84,124)
Net income (loss) before income taxes	4,491		(6,362)
Income tax expense	(1,343)		(1,917)
Net income (loss)	3,148		(8,279)
Net income (loss) attributable to common shareholders	(4,709)		(14,440)
Owned Properties [Member]
Revenues
Rental income	145,349		287,826
Tenant reimbursement income	12,063		25,551
Fee and other income	3,168		6,123
Total revenues	160,580		319,500
Total expenses	138,001		273,652
Operating income (loss)	22,579		45,848
Income from unconsolidated joint ventures	1,985		2,925
Unrealized gain (loss) on interest rate swaps	21,747		33,725
Interest and other income, net	91		185
Interest and debt expense	(39,741)		(78,873)
Net income (loss) before income taxes	6,661		3,810
Income tax expense	467		7
Net income (loss)	$ 7,128		$ 3,817
Predecessor [Member]
Revenues
Rental income		$ 8,499		$ 16,312
Tenant reimbursement income		441		896
Distributions from real estate fund investments		4,744		11,247
Realized and unrealized gains, net		33,750		79,917
Fee and other income		6,400		11,582
Total revenues		53,834		119,954
Total expenses		17,548		37,900
Operating income (loss)		36,286		82,054
Income from unconsolidated joint ventures		903		2,035
Unrealized gain (loss) on interest rate swaps		(354)		(196)
Interest and other income, net		997		1,706
Interest and debt expense		(7,988)		(15,787)
Net income (loss) before income taxes		29,844		69,812
Income tax expense		(3,842)		(7,105)
Net income (loss)		26,002		62,707
Net income attributable to noncontrolling interests		(25,823)		(53,133)
Net income (loss) attributable to common shareholders		179		9,574
Predecessor [Member] | Operating Segments [Member] | Owned Properties [Member]
Revenues
Rental income		7,813		15,464
Tenant reimbursement income		441		896
Total revenues		8,254		16,360
Total expenses		6,677		13,502
Operating income (loss)		1,577		2,858
Income from unconsolidated joint ventures		903		2,035
Interest and other income, net		684		1,347
Interest and debt expense		(3,880)		(7,665)
Net income (loss) before income taxes		(716)		(1,425)
Net income (loss)		(716)		(1,425)
Net income (loss) attributable to common shareholders		(716)		(1,425)
Predecessor [Member] | Operating Segments [Member] | Managed Funds [Member]
Revenues
Rental income		686		848
Distributions from real estate fund investments		4,744		11,247
Realized and unrealized gains, net		33,750		79,917
Total revenues		39,180		92,012
Total expenses		6,475		17,001
Operating income (loss)		32,705		75,011
Unrealized gain (loss) on interest rate swaps		(354)		(196)
Interest and other income, net		310		356
Interest and debt expense		(4,069)		(8,083)
Net income (loss) before income taxes		28,592		67,088
Net income (loss)		28,592		67,088
Net income attributable to noncontrolling interests		(25,823)		(53,133)
Net income (loss) attributable to common shareholders		2,769		13,955
Predecessor [Member] | Operating Segments [Member] | Management Company [Member]
Revenues
Fee and other income		14,137		27,910
Total revenues		14,137		27,910
Total expenses		12,133		23,725
Operating income (loss)		2,004		4,185
Income from unconsolidated joint ventures		11,568		25,858
Interest and other income, net		3		3
Interest and debt expense		(39)		(39)
Net income (loss) before income taxes		13,536		30,007
Income tax expense		(3,842)		(7,105)
Net income (loss)		9,694		22,902
Net income (loss) attributable to common shareholders		9,694		22,902
Predecessor [Member] | Eliminations [Member]
Revenues
Fee and other income		(7,737)		(16,328)
Total revenues		(7,737)		(16,328)
Total expenses		(7,737)		(16,328)
Income from unconsolidated joint ventures		(11,568)		(25,858)
Net income (loss) before income taxes		(11,568)		(25,858)
Net income (loss)		(11,568)		(25,858)
Net income (loss) attributable to common shareholders		$ (11,568)		$ (25,858)

XML

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) - Jun. 30, 2015 - USD ($) $ in Thousands	Total	Total
REVENUES:
Rental income	$ 145,917	$ 289,160
Tenant reimbursement income	12,063	25,551
Fee and other income	4,948	9,443
Total revenues	162,928	324,154
EXPENSES:
Operating	57,781	119,665
Depreciation and amortization	79,421	153,004
General and administrative	9,133	21,746
Acquisition and transaction related costs	8,208	9,347
Total expenses	154,543	303,762
Operating income (loss)	8,385	20,392
Income from real estate fund investments	14,072	19,293
Income from unconsolidated joint ventures	2,011	2,986
Unrealized gains on interest rate swaps	21,747	33,725
Interest and other income, net	512	1,366
Interest and debt expense	(42,236)	(84,124)
Net income (loss) before income taxes	4,491	(6,362)
Income tax expense	(1,343)	(1,917)
Net income (loss)	3,148	(8,279)
Less net (income) loss attributable to noncontrolling interests in:
Consolidated joint ventures and funds	(9,004)	(9,672)
Operating Partnership	1,147	3,511
Net income (loss) attributable to common shareholders	$ (4,709)	$ (14,440)
LOSS PER COMMON SHARE - BASIC:
Loss per common share	$ (0.02)	$ (0.07)
Weighted average shares outstanding	212,106,718	212,106,718
LOSS PER COMMON SHARE - DILUTED:
Loss per common share	$ (0.02)	$ (0.07)
Weighted average shares outstanding	212,106,718	212,106,718
DIVIDENDS PER COMMON SHARE	$ 0.095	$ 0.190	[1]

[1] Excludes the $0.039 cash dividend for the 38 day period following the completion of our initial public offering and related formation transactions and ending on December 31, 2014

XML

Real Estate Fund Investments

6 Months Ended

Jun. 30, 2015

Real Estate Fund [Abstract]

Real Estate Fund Investments

3. Real Estate Fund Investments

Real estate fund investments are presented at fair value on our consolidated balance sheets and are comprised of (i) Property Funds and (ii) Alternative Investment Funds.  

The Company

Below is a summary of the fair value of fund investments on our consolidated balance sheet.

(Amounts in thousands)	As of
Balance Sheet	June 30, 2015		December 31, 2014
Real Estate Fund Investments:
Property Funds	$	193,081	$	183,216
Alternative Investment Funds		142,464		140,171
Total	$	335,545	$	323,387

Below is a summary of the fair value of fund investments on our consolidated statement of income.

(Amounts in thousands)	Three Months Ended		Six Months Ended
Income Statement	June 30, 2015		June 30, 2015
Investment income	$	2,853	$	7,348
Investment expenses		45		191
Net investment income		2,808		7,157
Net unrealized gains		11,264		12,136
Income from real estate fund investments	$	14,072	$	19,293

Property Funds

The purpose of the Property Funds is to invest in office buildings and related facilities primarily in New York City, Washington, D.C. and San Francisco.  As of June 30, 2015, the Property Funds were comprised of (i) Fund II, (ii) Fund III, (iii) Fund VII and (iv) Fund VII-H.

The following is a summary of the investments of our Property Funds.

				As of June 30, 2015
	% Ownership			60 Wall Street			One Market Plaza				50 Beale Street
Fund II		10.0	%		46.3	%		-				-
Fund III		3.1	%		16.0	%		2.0	%			-
Fund VII/VII-H (1)		7.2	%		-			-				42.8	%
Total Property Funds					62.3	%		2.0	%			42.8	%
Other Investors					37.7	%		98.0	%	(2)		57.2	%
Total					100.0	%		100.0	%			100.0	%

⁽¹⁾ As of June 30, 2015, Fund VII and Fund VII-H had an aggregate of $57,600,000 of committed capital that had not yet been invested. On July 10, 2015, Fund VII and Fund VII-H entered into an agreement to acquire 670 Broadway, a 77,480 square foot office building located in the NoHo submarket of Manhattan, for $112,000,000.

⁽²⁾ Includes a 49.0% direct ownership interest held by us.

Alternative Investment Funds

The purpose of the Alternative Investment Funds is to invest primarily in real estate related debt and preferred equity investments. As of June 30, 2015, the Alternative Investment Funds were comprised of (i) PGRESS, (ii) PGRESS-H, (iii) PGRESS-A and (iv) Fund VIII, which had an aggregate of $580,200,000 of committed capital (including $95,200,000 of capital which was committed in the second quarter), of which we have invested $51,000,000.  

The following is a summary of the investments of our Alternative Investment Funds.

(Amounts in thousands)		%	Interest/			As of
Fund	Investment Type	Ownership	Dividend Rate		Initial Maturity	June 30, 2015		December 31, 2014
Fund VIII	Mezzanine Loan	1.7%		8.3%	Jan-2022	$	46,747	$	45,947
PGRESS Funds	Preferred Equity Investments	4.9% - 5.4%	10.3% - 15.0%		Sep-2015 - Feb-2019		95,717		94,224
						$	142,464	$	140,171

The Predecessor

Below is a summary of realized and unrealized gains from real estate fund investments on our consolidated statement of income.

(Amounts in thousands)	Three Months Ended		Six Months Ended
Income Statement	June 30, 2014		June 30, 2014
Realized gains on real estate fund investments	$	-	$	-
Unrealized gains on real estate fund investments		33,750		79,917
Realized and unrealized gains, net	$	33,750	$	79,917

Asset Management Fees

Our predecessor earned asset management fees from the Funds it managed. Asset management fees and expenses related to Funds included in the combined consolidated statement of income are eliminated in combination and consolidation. The limited partners’ share of such fees are reflected as a reduction of net income attributable to noncontrolling interests, which results in a corresponding increase in net income attributable to our Predecessor.

Below is a summary of the asset management fees earned by our Predecessor.

(Amounts in thousands)	Three Months Ended			Six Months Ended
Income Statement	June 30, 2014			June 30, 2014
Gross asset management fees	$	7,527		$	14,937
Eliminated fees(1)		(392	)		(782	)
Net asset management fees	$	7,135		$	14,155

⁽¹⁾ Eliminated fees reflect a reduction in asset management fees from the general partner interest in each of the Funds.    

The following tables summarize the income statements for the three and six months ended June 30, 2014 for each of the Property Funds’ underlying investments.

(Amounts in thousands)	Property Funds' Underlying Investments for the Three Months Ended June 30, 2014
Statements of Income	1633 Broadway			900 Third Ave			31 West 52nd St			1301 Ave of the Americas			One Market Plaza			Liberty Place			1899 Penn. Ave			2099 Penn. Ave			425 Eye St
Revenues:
Rental income	$	37,251		$	8,982		$	18,122		$	27,139		$	17,910		$	1,690		$	1,940		$	43		$	2,642
Tenant reimbursement income		3,096			751			1,300			2,318			273			563			967			1			83
Fee and other income		702			168			1,333			1,087			681			9			28			7			(179	)
Total revenue		41,049			9,901			20,755			30,544			18,864			2,262			2,935			51			2,546
Expenses:
Building operating		13,268			4,038			5,774			13,008			6,836			1,086			1,348			1,143			1,390
Related party management fees		784			261			329			427			177			61			66			1			79
Operating		14,052			4,299			6,103			13,435			7,013			1,147			1,414			1,144			1,469
Depreciation and amortization		2,780			2,144			5,545			9,341			8,682			-			940			-			1,398
General and administrative		10			24			7			24			281			11			11			12			107
Total expenses		16,842			6,467			11,655			22,800			15,976			1,158			2,365			1,156			2,974
Operating income (loss)		24,207			3,434			9,100			7,744			2,888			1,104			570			(1,105	)		(428	)
Unrealized gain on interest rate swaps		5,665			1,169			1,686			2,872			3,529			-			-			-			-
Interest and debt expense		(12,894	)		(3,696	)		(5,564	)		(15,379	)		(13,334	)		(945	)		(1,129	)		(1,380	)		(1,301	)
Unrealized depreciation on investment in real estate		-			-			-			-			-			(459	)		-			(520	)		-
Net income (loss) before taxes		16,978			907			5,222			(4,763	)		(6,917	)		(300	)		(559	)		(3,005	)		(1,729	)
Income tax benefit (expense)		-			-			-			-			-			(29	)		114			-			24
Net income (loss)	$	16,978		$	907		$	5,222		$	(4,763	)	$	(6,917	)	$	(329	)	$	(445	)	$	(3,005	)	$	(1,705	)

(Amounts in thousands)	Property Funds' Underlying Investments for the Six Months Ended June 30, 2014
Statements of Income	1633 Broadway			900 Third Ave			31 West 52nd St			1301 Ave of the Americas			One Market Plaza			Liberty Place			1899 Penn. Ave			2099 Penn. Ave			425 Eye St
Revenues:
Rental income	$	72,970		$	17,764		$	36,221		$	53,749		$	36,123		$	3,729		$	4,044		$	76		$	5,300
Tenant reimbursement income		5,913			1,514			2,489			4,434			661			1,184			2,107			3			827
Fee and other income		1,224			612			2,615			1,657			2,044			23			56			10			-
Total revenues		80,107			19,890			41,325			59,840			38,828			4,936			6,207			89			6,127
Expenses:
Building operating		26,879			8,083			11,517			25,688			14,001			2,168			2,605			2,223			2,904
Related party management fees		1,485			525			655			837			394			132			141			2			184
Operating		28,364			8,608			12,172			26,525			14,395			2,300			2,746			2,225			3,088
Depreciation and amortization		5,567			3,731			11,074			18,555			17,686			-			1,923			-			2,793
General and administrative		10			31			34			51			294			16			16			399			114
Total expenses		33,941			12,370			23,280			45,131			32,375			2,316			4,685			2,624			5,995
Operating income (loss)		46,166			7,520			18,045			14,709			6,453			2,620			1,522			(2,535	)		132
Unrealized gain on interest rate swaps		12,945			2,935			4,288			6,125			10,444			-			-			-			-
Interest and debt expense		(25,625	)		(7,353	)		(11,069	)		(30,549	)		(27,072	)		(1,890	)		(2,257	)		(2,208	)		(2,520	)
Unrealized depreciation on investment in real estate		-			-			-			-			-			(489	)		-			(530	)		-
Net income (loss) before taxes		33,486			3,102			11,264			(9,715	)		(10,175	)		241			(735	)		(5,273	)		(2,388	)
Income tax benefit (expense)		-			-			-			-			-			(26	)		182			-			(2,315	)
Net income (loss)	$	33,486		$	3,102		$	11,264		$	(9,715	)	$	(10,175	)	$	215		$	(553	)	$	(5,273	)	$	(4,703	)

XML

Basis of Presentation and Significant Accounting Policies

6 Months Ended

Jun. 30, 2015

Basis Of Presentation And Significant Accounting Policies [Abstract]

Basis of Presentation and Significant Accounting Policies

2.    Basis of Presentation and Significant Accounting Policies

Basis of Presentation

The accompanying consolidated and combined financial statements include the accounts of Paramount and its consolidated subsidiaries, including the Operating Partnership. All significant inter-company amounts have been eliminated. In our opinion, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, result of operations and changes in the cash flows have been made. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted. These consolidated and combined financial statements have been prepared in accordance with the instructions to Form 10-Q of the Securities and Exchange Commission (“SEC”) and should be read in conjunction with the consolidated and combined financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2014, as filed with the SEC.

We have made estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. The results of operations for the three and six months ended June 30, 2015 are not necessarily indicative of the operating results for the full year.

Our Predecessor’s combined financial statements included all the accounts of our Predecessor, including its interests in (i) the Funds, (ii) Waterview and (iii) the three partially-owned properties.  Our Predecessor evaluated each of the Funds pursuant to the control model of Accounting Standards Codification (“ASC”) 810-20, Consolidation—Control of Partnerships and Similar Entities and concluded that based on its rights and responsibilities as the sole managing member of the general partner it should consolidate each of the Funds.  With the exception of the Residential Fund, which is carried at historical cost, each of the Funds qualify as investment companies pursuant to Financial Services—Investment Companies (“ASC 946”); accordingly, the underlying real estate investments are carried at fair value, which was retained in consolidation by our Predecessor.  

Upon completion of the Offering and the Formation Transactions, we acquired substantially all of the assets of our Predecessor and all of the assets of the Property Funds that it controlled, other than their interests in 60 Wall Street, 50 Beale Street, and a residual 2.0% interest in One Market Plaza.  In addition, as part of the Formation Transactions, we also acquired the interests of certain unaffiliated third parties in 1633 Broadway, 31 West 52^nd Street and 1301 Avenue of the Americas.  These transactions were accounted for as transactions among entities under common control.  However, since the assets that we acquired from our Predecessor are no longer held by funds which qualify for investment company accounting, we account for these assets following the Formation Transactions using historical cost accounting. As a result, our consolidated financial statements following the Formation Transactions, differ significantly from, and are not comparable with, the historical financial position and results of operations of our Predecessor.

Significant Accounting Policies

There were no material changes to our significant accounting policies disclosed in our Annual Report on Form 10-K for the year ended December 31, 2014.

Segment Reporting

Upon completion of the Offering and Formation Transactions, we acquired substantially all of the assets of our Predecessor and substantially all of the assets of the Property Funds that it controlled. Our business, post the Formation Transactions, is comprised of one reportable segment. We have determined that our properties have similar economic characteristics to be aggregated into one reportable segment (operating, leasing and managing office properties). Our determination was based primarily on our method of internal reporting. Our Predecessor historically operated an integrated business that consisted of three reportable segments, (i) Owned Properties, (ii) Managed Funds and (iii) a Management Company. The Owned Properties segment consisted of properties in which our Predecessor had a direct or indirect ownership interest, other than properties that it owned through its private equity real estate funds. The Managed Funds segment consisted of the private equity real estate funds.  In addition, our Predecessor included a Management Company that performed property management and asset management services and certain general and administrative level functions, including legal and accounting, as a separate reportable segment.

Recently Issued Accounting Literature

In May 2014, the FASB issued an update ("ASU 2014-09") Revenue from Contracts with Customers.  ASU 2014-09 establishes a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most of the existing revenue recognition guidance.  ASU 2014-09 requires an entity to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services and also requires certain additional disclosures.  ASU 2014-09 is effective for interim and annual reporting periods in fiscal years that begin after December 15, 2016.  We are currently evaluating the impact of the adoption of ASU 2014-09 on our consolidated financial statements.

In June 2014, the FASB issued an update (“ASU 2014-12”) to ASC Topic 718, Compensation – Stock Compensation.  ASU 2014-12 requires an entity to treat performance targets that can be met after the requisite service period of a share based award has ended, as a performance condition that affects vesting.  ASU 2014-12 is effective for interim and annual reporting periods in fiscal years that begin after December 15, 2015.  We are currently evaluating the impact of the adoption of ASU 2014-12 on our consolidated financial statements.

In February 2015, the FASB issued an update (“ASU 2015-02”) Amendments to the Consolidation Analysis to ASC Topic 810, Consolidation. ASU 2015-02 modifies the evaluation of whether limited partnerships and similar legal entities are VIEs or voting interest entities, eliminates the presumption that a general partner should consolidate a limited partnership and affects the consolidation analysis of reporting entities that are involved with VIEs, particularly those that have fee arrangements and related party relationships. ASU 2015-02 is effective for fiscal years that begin after December 15, 2015. We are currently evaluating the impact of the adoption of ASU 2015-02 on our consolidated financial statements.

In April 2015, the FASB issued an update (“ASU 2015-03”) Simplifying the Presentation of Debt Issuance Costs to ASC Topic 835, Interest – Imputation of Interest. ASU 2015-03 requires an entity to present debt issuance costs in the balance sheet as a direct deduction from the related debt liability rather than as an asset. Amortization of the costs is reported as interest expense. ASU 2015-03 is effective for interim and annual reporting periods in fiscal years that begin after December 15, 2015.  The adoption of this update on January 1, 2016 will not have a material impact on our consolidated financial statements.

XML

Earnings Per Share

6 Months Ended

Jun. 30, 2015

Earnings Per Share [Abstract]

Earnings Per Share

14. Earnings Per Share

The following table provides a summary of net loss and the number of common shares used in the computation of basic income per common share - which includes the weighted average number of common shares outstanding without regard to dilutive potential common shares, and diluted loss per common share - which includes the weighted average common shares and dilutive share equivalents. Dilutive share equivalents may include our employee stock options and restricted stock.

	Three Months Ended			Six Months Ended
(Amounts in thousands, except per share amounts)	June 30, 2015			June 30, 2015
Numerator:
Net loss attributable to Paramount Group, Inc. - basic and diluted	$	(4,709	)	$	(14,440	)
Denominator:
Denominator for basic loss per share - weighted average shares		212,107			212,107
Effect of dilutive employee stock options and restricted share awards (1)		-			-
Denominator for diluted loss per share - weighted average shares		212,107			212,107
Loss per share - basic and diluted	$	(0.02	)	$	(0.07	)

(1)  The effect of dilutive securities in the three and six months ended June 30, 2015 excludes an aggregate of 53,247 and 53,095 weighted average share equivalents, respectively, as their effect was anti-dilutive.

XML

Fee and Other Income

6 Months Ended

Jun. 30, 2015

Fee And Other Income [Abstract]

Fee and Other Income

10. Fee and Other Income

The following table sets forth the details of our fee and other income.

	The Company				The Predecessor
	Three Months Ended		Six Months Ended		Three Months Ended		Six Months Ended
(Amounts in thousands)	June 30, 2015		June 30, 2015		June 30, 2014		June 30, 2014
Fee income
Property management fees	$	1,386	$	2,715	$	4,059	$	8,015
Acquisition and disposition fees		-		-		-		1,038
Construction fees		50		111		2,242		2,430
Other fees		344		489		99		99
Total fee income		1,780		3,315		6,400		11,582
Other income (1)		3,168		6,128		-		-
Total fee and other income	$	4,948	$	9,443	$	6,400	$	11,582

⁽¹⁾ Other income is primarily comprised of tenant payments for items such as after hour heating and cooling, freight elevator services and similar expenses.

XML

Debt

6 Months Ended

Jun. 30, 2015

Debt Disclosure [Abstract]

Debt

6. Debt

The following is a summary of our outstanding debt.

						Balance at
(Amounts in thousands)	Maturity Date	Fixed/Variable Rate	Interest Rate at June 30, 2015			June 30, 2015		December 31, 2014
Mortgages and notes payable
1633 Broadway
	Dec-2016	Fixed (1)		6.15	%	$	772,100	$	772,100
	Dec-2016	Variable		1.61	%		154,160		154,160
				5.39	%		926,260		926,260
900 Third Avenue
	Nov-2017	Fixed (1)		5.35	%		255,000		255,000
	Nov-2017	Variable		1.77	%		19,337		19,337
				5.10	%		274,337		274,337
31 West 52nd Street (64.2% interest)
	Dec-2017	Fixed (1)		5.74	%		337,500		337,500
	Dec-2017	Variable		1.66	%		75,990		75,990
				4.99	%		413,490		413,490
One Market Plaza (49.0% interest)	Dec-2019	Fixed (1)		6.14	%		855,339		853,711
Waterview	June-2017	Fixed		5.76	%		210,000		210,000
1899 Pennsylvania Avenue	Nov-2020	Fixed		4.88	%		89,811		90,489
Liberty Place	June-2018	Fixed		4.50	%		84,000		84,000
Total mortgages and notes payable				5.51	%	$	2,853,237	$	2,852,287

(1)  Represents loans with variable interest rates that have been fixed by interest rate swaps. See “Interest Rate Swaps” below.

Revolving Credit Facility

As of June 30, 2015, there were no amounts outstanding under our senior unsecured revolving credit facility and $200,000,000 was reserved under a letter of credit.

Interest Rate Swaps

We manage our market risk on variable rate debt by entering into swap agreements to fix the rate on all or a portion of the debt for varying periods through maturity. These interest rate swaps are derivative instruments that are designated as fair value hedges and are recorded on our balance sheet at fair value with changes in the fair value recognized through earnings. The following table summarizes our outstanding interest rate swaps.

	Notional				Strike			Fair Value as of
Property	Amount		Effective Date	Maturity Date	Rate			June 30, 2015		December 31, 2014
(Amounts in thousands)
1633 Broadway	$	772,100	Dec-2006 to Jun-2008	Dec-2016		4.92	%	$	46,929	$	60,191
900 Third Ave		255,000	Nov-2007 to Nov-2012	Nov-2015 to Nov-2017		4.15	%		15,884		19,158
31 W 52nd Street		337,500	Dec-2007 to Dec-2012	Dec-2015 to Dec-2017		4.49	%		24,013		28,748
One Market Plaza	$	840,000	Aug-2007 to Aug-2012	Aug-2017		5.02	%		73,647		86,099
Total interest rate swap liabilities								$	160,473	$	194,196

In the three and six months ended June 30, 2015, we recognized unrealized gains of $21,747,000 and $33,725,000, respectively, from the change in fair value of these interest rate swaps.

XML

Debt - Summary of Outstanding Debt (Parenthetical) (Details)	6 Months Ended
	Jun. 30, 2015
31 West 52nd Street [Member]
Debt Instrument [Line Items]
Ownership interest rate of property	64.20%
One Market Plaza [Member]
Debt Instrument [Line Items]
Ownership interest rate of property	49.00%

XML

Investments in Unconsolidated Joint Ventures

6 Months Ended

Jun. 30, 2015

Equity Method Investments And Joint Ventures [Abstract]

Investments in Unconsolidated Joint Ventures

4.     Investments in Unconsolidated Joint Ventures

The following table summarizes our investments in unconsolidated joint ventures as of June 30, 2015 and December 31, 2014.

	Percentage
	ownership at			As of
(Amounts in thousands)	June 30, 2015			June 30, 2015		December 31, 2014
Investments:
712 Fifth Avenue		50.0	%	$	2,690	$	1,697
Oder-Center, Germany		9.5	%		3,438		4,052
				$	6,128	$	5,749

The following table summarizes income from unconsolidated joint ventures for the three and six months ended June 30, 2015 and 2014.

	Percentage			TheCompany				The Predecessor
	ownershipat			Three Months Ended		Six Months Ended		Three Months Ended			Six Months Ended
(Amounts in thousands)	June 30, 2015			June 30, 2015		June 30, 2015		June 30, 2014			June 30, 2014
Our share of Net Income (Loss):
712 Fifth Avenue		50.0	%	$	1,984	$	2,925	$	934		$	2,024
1325 Avenue of the Americas	n/a				-		-		(31	)		11
900 Third Avenue (1)	n/a				-		-		-			-
Oder-Center (2)		9.5	%		27		61		-			-
				$	2,011	$	2,986	$	903		$	2,035

⁽¹⁾ As of June 30, 2014, our Predecessor’s investment in 900 Third Avenue had a deficit balance and since our Predecessor had no obligations to fund operating losses, it did not recognize any losses in excess of its investment balance. All unrecognized losses were aggregated to offset future net income until all unrecognized losses were utilized.

⁽²⁾ We account for our interest in Oder-Center on a one quarter lag basis.

712 Fifth Avenue

As of June 30, 2015, we own a 50.0% interest in a joint venture that owns 712 Fifth Avenue, which is accounted under the equity method.  The following tables summarize 712 Fifth Avenue’s financial information as of the dates of and for the periods set forth below.

(Amounts in thousands)	As of
Balance Sheets	June 30, 2015			December 31, 2014
Rental property, net	$	198,722		$	221,827
Other assets		56,156			46,126
Total assets	$	254,878		$	267,953
Mortgage and notes payable	$	246,500		$	246,500
Other liabilities		15,260			30,321
Total liabilities		261,760			276,821
Equity (1)		(6,882	)		(8,868	)
Total liabilities and equity	$	254,878		$	267,953
(1)   The carrying amount of our investment in 712 Fifth Avenue is greater than our share of 712 Fifth       Avenue's equity by approximately $6,131.  This basis difference resulted from distributions in excess       of the equity in net earnings of 712 Fifth Avenue.

	The Company						The Predecessor
(Amounts in thousands)	Three months ended			Six Months Ended			Three months ended			Six Months Ended
Income Statements	June 30, 2015			June 30, 2015			June 30, 2014			June 30, 2014
Rental income	$	12,392		$	24,446		$	11,457		$	22,689
Tenant reimbursement income		1,375			2,736			1,124			2,269
Fee and other income		344			623			283			638
Total revenue		14,111			27,805			12,864			25,596
Operating		5,831			12,057			5,565			11,326
Depreciation and amortization		2,954			5,884			2,786			5,525
General and administrative		-			-			25			55
Total expenses		8,785			17,941			8,376			16,906
Operating income		5,326			9,864			4,488			8,690
Unrealized gain on interest rate swaps		1,248			2,020			1,058			2,645
Interest and other income, net		4			5			-			-
Interest and debt expense		(2,611	)		(6,039	)		(3,677	)		(7,286	)
Net income	$	3,967		$	5,850		$	1,869		$	4,049

XML

Intangible Assets and Liabilities

6 Months Ended

Jun. 30, 2015

Goodwill And Intangible Assets Disclosure [Abstract]

Intangible Assets and Liabilities

5. Intangible Assets and Liabilities

The following summarizes our intangible assets (primarily acquired above-market leases and acquired in-place leases) and intangible liabilities (primarily acquired below-market leases) as of June 30, 2015 and December 31, 2014.

	As of
(Amounts in thousands)	June 30, 2015			December 31, 2014
Intangible assets:
Gross amount	$	686,284		$	689,894
Accumulated amortization		(103,158	)		(20,509	)
	$	583,126		$	669,385
Intangible liabilities:
Gross amount	$	222,903		$	222,985
Accumulated amortization		(21,064	)		(3,757	)
	$	201,839		$	219,228

Amortization of acquired below-market leases, net of acquired above-market leases, resulted in an increase to rental income of $872,000 and $1,762,000 for the three and six months ended June 30, 2015, respectively. Estimated annual amortization of acquired below-market leases, net of acquired above-market leases, for each of the five succeeding years commencing January 1, 2016 is as follows.

(Amounts in thousands)
2016	$	10,159
2017		8,394
2018		10,299
2019		9,518
2020		8,231

Amortization of acquired in-place leases (a component of depreciation and amortization expense) was $37,638,000 and $70,630,000 for the three and six months ended June 30, 2015, respectively. Estimated annual amortization of acquired in-place leases for each of the five succeeding years commencing January 1, 2016 is as follows.

(Amounts in thousands)
2016	$	79,941
2017		56,511
2018		50,164
2019		45,552
2020		40,525

XML

Noncontrolling Interests

6 Months Ended

Jun. 30, 2015

Noncontrolling Interest [Abstract]

Noncontrolling Interests

7.     Noncontrolling Interests

Consolidated Joint Ventures and Funds

Noncontrolling interests in consolidated joint ventures and funds consists of (i) equity interests in properties that are not wholly owned by us but are consolidated into our financial results because we exercise control over the entities that own such properties and (ii) equity interests in funds that are consolidated into our financial results because we are the sole general partner of such Funds.  As of June 30, 2015 and December 31, 2014, noncontrolling interests in consolidated joint ventures and funds on our consolidated balance sheets aggregated $703,596,000 and $685,888,000, respectively.  

Operating Partnership

Noncontrolling interests in the Operating Partnership represents common units of the Operating Partnership that are held by third parties, including management. Common units of the Operating Partnership may be tendered for redemption to the Operating Partnership for cash. We, at our option, may assume that obligation and pay the holder with cash or common shares on a one-for-one basis. Since the number of common shares outstanding is equal to the number of common units owned by us, the redemption value of each common unit is equal to the market value of each common share and distributions paid to each common unitholder is equivalent to dividends paid to common stockholders.  As of June 30, 2015, noncontrolling interests in the Operating Partnership on our consolidated balance sheets had a carrying amount of $904,683,000 and a redemption value of $886,487,000.  

XML

Variable Interest Entities ("VIEs") - Summary of Assets and Liabilities of Variable Interest Entities (Details) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Variable Interest Entity [Line Items]
Cash and restricted cash	$ 45,737	$ 55,728
Accounts and other receivables	10,781	7,692
Other assets	9,529	13,121
Total assets	8,954,892	9,030,441
Other liabilities	45,922	43,950
Total liabilities	3,457,071	3,475,488
Variable Interest Entity [Member]
Variable Interest Entity [Line Items]
Investments, at fair value	18,318	17,136
Investments, at cost	63,570	63,550
Cash and restricted cash	4,959	4,976
Accounts and other receivables	501
Other assets	1
Total assets	87,349	85,662
Loans payable to noncontrolling interests	43,981	42,195
Other liabilities	202	131
Total liabilities	$ 44,183	$ 42,326

XML

Fair Value Measurements - Additional Information (Details) - 6 months ended Jun. 30, 2015 - Property Funds [Member] - Investments	Total
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Number of investments held by fund	3
Minimum [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Fair value measurement anticipated investment holding period	1 year
Maximum [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Fair value measurement anticipated investment holding period	10 years

XML

Noncontrolling Interests - Additional Information (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2015	Dec. 31, 2014
Noncontrolling Interest [Abstract]
Consolidated joint ventures and funds	$ 703,596	$ 685,888
Operating partnerships	904,683	$ 958,203
Redemption value	$ 886,487
Common units conversion basis	one-for-one

XML

Fee and Other Income (Tables)

6 Months Ended

Jun. 30, 2015

Fee And Other Income [Abstract]

Schedule of Fee and Other Income

The following table sets forth the details of our fee and other income.

	The Company				The Predecessor
	Three Months Ended		Six Months Ended		Three Months Ended		Six Months Ended
(Amounts in thousands)	June 30, 2015		June 30, 2015		June 30, 2014		June 30, 2014
Fee income
Property management fees	$	1,386	$	2,715	$	4,059	$	8,015
Acquisition and disposition fees		-		-		-		1,038
Construction fees		50		111		2,242		2,430
Other fees		344		489		99		99
Total fee income		1,780		3,315		6,400		11,582
Other income (1)		3,168		6,128		-		-
Total fee and other income	$	4,948	$	9,443	$	6,400	$	11,582

⁽¹⁾ Other income is primarily comprised of tenant payments for items such as after hour heating and cooling, freight elevator services and similar expenses.

XML

Investments in Unconsolidated Joint Ventures - Summary of Income from Unconsolidated Joint Ventures (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Schedule Of Equity Method Investments [Line Items]
Income from unconsolidated joint ventures	$ 2,011		$ 2,986
Predecessor [Member]
Schedule Of Equity Method Investments [Line Items]
Income from unconsolidated joint ventures		$ 903		$ 2,035
712 Fifth Avenue [Member]
Schedule Of Equity Method Investments [Line Items]
Equity method ownership percentage	50.00%		50.00%
Income from unconsolidated joint ventures	$ 1,984		$ 2,925
712 Fifth Avenue [Member] | Predecessor [Member]
Schedule Of Equity Method Investments [Line Items]
Equity method ownership percentage	50.00%		50.00%
Income from unconsolidated joint ventures		934		2,024
1325 Avenue of the Americas [Member] | Predecessor [Member]
Schedule Of Equity Method Investments [Line Items]
Income from unconsolidated joint ventures		$ (31)		$ 11
Oder-Center, Germany [Member]
Schedule Of Equity Method Investments [Line Items]
Equity method ownership percentage	9.50%		9.50%
Income from unconsolidated joint ventures	$ 27		$ 61

XML

Interest and Debt Expense

6 Months Ended

Jun. 30, 2015

Interest And Debt Expense [Abstract]

Interest and Debt Expense

12.     Interest and Debt Expense

          The following table sets forth the details of interest and debt expense.

	The Company				The Predecessor
	Three Months Ended		Six Months Ended		Three Months Ended		Six Months Ended
(Amounts in thousands)	June 30, 2015		June 30, 2015		June 30, 2014		June 30, 2014
Interest and debt expense	$	41,650	$	82,954	$	7,880	$	15,571
Amortization of deferred financing costs		586		1,170		108		216
Total interest and debt expense	$	42,236	$	84,124	$	7,988	$	15,787

XML

Segments Disclosure

6 Months Ended

Jun. 30, 2015

Segment Reporting [Abstract]

Segments Disclosure

17. Segments Disclosure

The Company

Upon completion of the Offering and Formation Transactions, we acquired substantially all of the assets of our Predecessor and substantially all of the assets of the Property Funds that it controlled. Our business, following the Formation Transactions, is comprised of one reportable segment. We have determined that our properties have similar economic characteristics to be aggregated into one reportable segment (operating, leasing and managing office properties). Our determination was based, in part, on our method of internal reporting.

The following tables provide selected results for each reportable segment for the three and six months ended June 30, 2015 and 2014.

	For the Three Months Ended June 30, 2015
	Owned
(Amounts in thousands)	Properties			Other			Total
Income Statement Data:
Revenues
Rental income	$	145,349		$	568		$	145,917
Tenant reimbursement income		12,063			-			12,063
Fee and other income		3,168			1,780			4,948
Total revenues		160,580			2,348			162,928
Total expenses		138,001			16,542			154,543
Operating income (loss)		22,579			(14,194	)		8,385
Income from real estate fund investments		-			14,072			14,072
Income from unconsolidated joint ventures		1,985			26			2,011
Unrealized gains on interest rate swaps		21,747			-			21,747
Interest and other income, net		91			421			512
Interest and debt expense		(39,741	)		(2,495	)		(42,236	)
Net income (loss) before income taxes		6,661			(2,170	)		4,491
Income tax benefit (expense)		467			(1,810	)		(1,343	)
Net income (loss)		7,128			(3,980	)		3,148
Add:
Depreciation and amortization		79,119			302			79,421
General and administrative		(42	)		9,175			9,133
Interest and debt expense		39,741			2,495			42,236
Transfer taxes due in connection with the sale of shares
by a former joint venture partner		-			5,872			5,872
Acquisition and transaction related costs		-			2,336			2,336
Income tax (benefit) expense		(467	)		1,810			1,343
Net Operating Income from unconsolidated joint ventures		4,138			140			4,278
Less:
Income from real estate fund investments		-			(14,072	)		(14,072	)
Income from unconsolidated joint ventures		(1,985	)		(26	)		(2,011	)
Fee income		-			(1,780	)		(1,780	)
Unrealized gains on interest rate swaps		(21,747	)		-			(21,747	)
Interest and other income, net		(91	)		(421	)		(512	)
Net Operating Income (1)	$	105,794		$	1,851		$	107,645

	For the Six Months Ended June 30, 2015
	Owned
(Amounts in thousands)	Properties			Other			Total
Income Statement Data:
Revenues
Rental income	$	287,826		$	1,334		$	289,160
Tenant reimbursement income		25,551			-			25,551
Fee and other income		6,123			3,320			9,443
Total revenues		319,500			4,654			324,154
Total expenses		273,652			30,110			303,762
Operating income (loss)		45,848			(25,456	)		20,392
Income from real estate fund investments		-			19,293			19,293
Income from unconsolidated joint ventures		2,925			61			2,986
Unrealized gains on interest rate swaps		33,725			-			33,725
Interest and other income, net		185			1,181			1,366
Interest and debt expense		(78,873	)		(5,251	)		(84,124	)
Net (loss) income before income taxes		3,810			(10,172	)		(6,362	)
Income tax benefit (expense)		7			(1,924	)		(1,917	)
Net (loss) income		3,817			(12,096	)		(8,279	)
Add:
Depreciation and amortization		152,456			548			153,004
General and administrative		-			21,746			21,746
Interest and debt expense		78,873			5,251			84,124
Transfer taxes due in connection with the sale of shares
by a former joint venture partner		-			5,872			5,872
Acquisition and transaction related costs		-			3,475			3,475
Income tax (benefit) expense		(7	)		1,924			1,917
Net Operating Income from unconsolidated joint ventures		7,874			185			8,059
Less:
Income from real estate fund investments		-			(19,293	)		(19,293	)
Income from unconsolidated joint ventures		(2,925	)		(61	)		(2,986	)
Fee income		-			(3,315	)		(3,315	)
Unrealized gains on interest rate swaps		(33,725	)		-			(33,725	)
Interest and other income, net		(185	)		(1,181	)		(1,366	)
Net Operating Income (1)	$	206,178		$	3,055		$	209,233

⁽¹⁾  Net Operating Income (“NOI”) is a metric we use to measure the operating performance of our properties, and consists of property-related revenue (which includes rental revenue, tenant reimbursement income and certain other income) less operating expenses (which includes building expenses such as cleaning, security, repairs and maintenance, utilities, property administration and real estate taxes). We use NOI internally as a performance measure and believe it provides useful information to investors regarding our financial condition and results of operations because it reflects only those income and expense items that are incurred at the property level. Other real estate companies may use different methodologies for calculating NOI, and accordingly, our presentation of NOI may not be comparable to other real estate companies.

The Predecessor

Our Predecessor historically operated an integrated business that consisted of three reportable segments, (i) Owned Properties, (ii) Managed Funds and (iii) a Management Company. The Owned Properties segment consisted of properties in which our Predecessor had a direct or indirect ownership interest, other than properties that it owned through its private equity real estate funds. The Managed Funds segment consisted of the private equity real estate funds. In addition, our Predecessor included a Management Company that performed property management and asset management services and certain general and administrative level functions, including legal and accounting, as a separate reportable segment.   

	For the Three Months Ended June 30, 2014
	Owned			Managed			Management
(Amounts in thousands)	Properties			Funds			Company			Eliminations			Total
Income Statement Data:
Revenues
Rental income	$	7,813		$	686		$	-		$	-		$	8,499
Tenant reimbursement income		441			-			-			-			441
Distributions from real estate fund investments		-			4,744			-			-			4,744
Realized and unrealized gains, net		-			33,750			-			-			33,750
Fee and other income		-			-			14,137			(7,737	)		6,400
Total revenues		8,254			39,180			14,137			(7,737	)		53,834
Total expenses		6,677			6,475			12,133			(7,737	)		17,548
Operating income		1,577			32,705			2,004			-			36,286
Income from unconsolidated joint ventures		903			-			11,568			(11,568	)		903
Unrealized loss on interest rate swaps		-			(354	)		-			-			(354	)
Interest and other income, net		684			310			3			-			997
Interest and debt expense		(3,880	)		(4,069	)		(39	)		-			(7,988	)
Net income (loss) before income taxes		(716	)		28,592			13,536			(11,568	)		29,844
Income tax expense		-			-			(3,842	)		-			(3,842	)
Net income (loss)		(716	)		28,592			9,694			(11,568	)		26,002
Net income attributable to noncontrolling interests		-			(25,823	)		-			-			(25,823	)
Net income (loss) attributable to the Predecessor	$	(716	)	$	2,769		$	9,694		$	(11,568	)	$	179

	For the Six Months Ended June 30, 2014
	Owned			Managed			Management
(Amounts in thousands)	Properties			Funds			Company			Eliminations			Total
Income Statement Data:
Revenues
Rental income	$	15,464		$	848		$	-		$	-		$	16,312
Tenant reimbursement income		896			-			-			-			896
Distributions from real estate fund investments		-			11,247			-			-			11,247
Realized and unrealized gains, net		-			79,917			-			-			79,917
Fee and other income		-			-			27,910			(16,328	)		11,582
Total revenues		16,360			92,012			27,910			(16,328	)		119,954
Total expenses		13,502			17,001			23,725			(16,328	)		37,900
Operating income		2,858			75,011			4,185			-			82,054
Income from unconsolidated joint ventures		2,035			-			25,858			(25,858	)		2,035
Unrealized loss on interest rate swaps		-			(196	)		-			-			(196	)
Interest and other income, net		1,347			356			3			-			1,706
Interest and debt expense		(7,665	)		(8,083	)		(39	)		-			(15,787	)
Net income (loss) before income taxes		(1,425	)		67,088			30,007			(25,858	)		69,812
Income tax expense		-			-			(7,105	)		-			(7,105	)
Net income (loss)		(1,425	)		67,088			22,902			(25,858	)		62,707
Net income attributable to noncontrolling interests		-			(53,133	)		-			-			(53,133	)
Net income (loss) attributable to the Predecessor	$	(1,425	)	$	13,955		$	22,902		$	(25,858	)	$	9,574

XML

Real Estate Fund Investments - Schedule of Amounts Recognized in Income Statement (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Schedule Of Balance Sheet And Income Statement Items [Line Items]
Rental income	$ 145,917		$ 289,160
Tenant reimbursement income	12,063		25,551
Fee and other income	4,948		9,443
Total revenues	162,928		324,154
Operating	57,781		119,665
Depreciation and amortization	79,421		153,004
General and administrative	9,133		21,746
Total expenses	154,543		303,762
Operating income (loss)	8,385		20,392
Unrealized gains on interest rate swaps	21,747		33,725
Interest and debt expense	(42,236)		(84,124)
Net income (loss) before income taxes	4,491		(6,362)
Income tax benefit (expense)	(1,343)		(1,917)
Net income (loss)	$ 3,148		$ (8,279)
1633 Broadway [Member]
Schedule Of Balance Sheet And Income Statement Items [Line Items]
Rental income		$ 37,251		$ 72,970
Tenant reimbursement income		3,096		5,913
Fee and other income		702		1,224
Total revenues		41,049		80,107
Building operating		13,268		26,879
Related party management fees		784		1,485
Operating		14,052		28,364
Depreciation and amortization		2,780		5,567
General and administrative		10		10
Total expenses		16,842		33,941
Operating income (loss)		24,207		46,166
Unrealized gains on interest rate swaps		5,665		12,945
Interest and debt expense		(12,894)		(25,625)
Net income (loss) before income taxes		16,978		33,486
Net income (loss)		16,978		33,486
900 Third Avenue [Member]
Schedule Of Balance Sheet And Income Statement Items [Line Items]
Rental income		8,982		17,764
Tenant reimbursement income		751		1,514
Fee and other income		168		612
Total revenues		9,901		19,890
Building operating		4,038		8,083
Related party management fees		261		525
Operating		4,299		8,608
Depreciation and amortization		2,144		3,731
General and administrative		24		31
Total expenses		6,467		12,370
Operating income (loss)		3,434		7,520
Unrealized gains on interest rate swaps		1,169		2,935
Interest and debt expense		(3,696)		(7,353)
Net income (loss) before income taxes		907		3,102
Net income (loss)		907		3,102
31 West 52nd Street [Member]
Schedule Of Balance Sheet And Income Statement Items [Line Items]
Rental income		18,122		36,221
Tenant reimbursement income		1,300		2,489
Fee and other income		1,333		2,615
Total revenues		20,755		41,325
Building operating		5,774		11,517
Related party management fees		329		655
Operating		6,103		12,172
Depreciation and amortization		5,545		11,074
General and administrative		7		34
Total expenses		11,655		23,280
Operating income (loss)		9,100		18,045
Unrealized gains on interest rate swaps		1,686		4,288
Interest and debt expense		(5,564)		(11,069)
Net income (loss) before income taxes		5,222		11,264
Net income (loss)		5,222		11,264
1301 Avenue of the Americas [Member]
Schedule Of Balance Sheet And Income Statement Items [Line Items]
Rental income		27,139		53,749
Tenant reimbursement income		2,318		4,434
Fee and other income		1,087		1,657
Total revenues		30,544		59,840
Building operating		13,008		25,688
Related party management fees		427		837
Operating		13,435		26,525
Depreciation and amortization		9,341		18,555
General and administrative		24		51
Total expenses		22,800		45,131
Operating income (loss)		7,744		14,709
Unrealized gains on interest rate swaps		2,872		6,125
Interest and debt expense		(15,379)		(30,549)
Net income (loss) before income taxes		(4,763)		(9,715)
Net income (loss)		(4,763)		(9,715)
One Market Plaza [Member]
Schedule Of Balance Sheet And Income Statement Items [Line Items]
Rental income		17,910		36,123
Tenant reimbursement income		273		661
Fee and other income		681		2,044
Total revenues		18,864		38,828
Building operating		6,836		14,001
Related party management fees		177		394
Operating		7,013		14,395
Depreciation and amortization		8,682		17,686
General and administrative		281		294
Total expenses		15,976		32,375
Operating income (loss)		2,888		6,453
Unrealized gains on interest rate swaps		3,529		10,444
Interest and debt expense		(13,334)		(27,072)
Net income (loss) before income taxes		(6,917)		(10,175)
Net income (loss)		(6,917)		(10,175)
Liberty Place [Member]
Schedule Of Balance Sheet And Income Statement Items [Line Items]
Rental income		1,690		3,729
Tenant reimbursement income		563		1,184
Fee and other income		9		23
Total revenues		2,262		4,936
Building operating		1,086		2,168
Related party management fees		61		132
Operating		1,147		2,300
General and administrative		11		16
Total expenses		1,158		2,316
Operating income (loss)		1,104		2,620
Interest and debt expense		(945)		(1,890)
Unrealized depreciation on investment in real estate		(459)		(489)
Net income (loss) before income taxes		(300)		241
Income tax benefit (expense)		(29)		(26)
Net income (loss)		(329)		215
1899 Pennsylvania Avenue [Member]
Schedule Of Balance Sheet And Income Statement Items [Line Items]
Rental income		1,940		4,044
Tenant reimbursement income		967		2,107
Fee and other income		28		56
Total revenues		2,935		6,207
Building operating		1,348		2,605
Related party management fees		66		141
Operating		1,414		2,746
Depreciation and amortization		940		1,923
General and administrative		11		16
Total expenses		2,365		4,685
Operating income (loss)		570		1,522
Interest and debt expense		(1,129)		(2,257)
Net income (loss) before income taxes		(559)		(735)
Income tax benefit (expense)		114		182
Net income (loss)		(445)		(553)
2099 Pennsylvania Avenue [Member]
Schedule Of Balance Sheet And Income Statement Items [Line Items]
Rental income		43		76
Tenant reimbursement income		1		3
Fee and other income		7		10
Total revenues		51		89
Building operating		1,143		2,223
Related party management fees		1		2
Operating		1,144		2,225
General and administrative		12		399
Total expenses		1,156		2,624
Operating income (loss)		(1,105)		(2,535)
Interest and debt expense		(1,380)		(2,208)
Unrealized depreciation on investment in real estate		(520)		(530)
Net income (loss) before income taxes		(3,005)		(5,273)
Net income (loss)		(3,005)		(5,273)
425 Eye Street [Member]
Schedule Of Balance Sheet And Income Statement Items [Line Items]
Rental income		2,642		5,300
Tenant reimbursement income		83		827
Fee and other income		(179)
Total revenues		2,546		6,127
Building operating		1,390		2,904
Related party management fees		79		184
Operating		1,469		3,088
Depreciation and amortization		1,398		2,793
General and administrative		107		114
Total expenses		2,974		5,995
Operating income (loss)		(428)		132
Interest and debt expense		(1,301)		(2,520)
Net income (loss) before income taxes		(1,729)		(2,388)
Income tax benefit (expense)		24		(2,315)
Net income (loss)		$ (1,705)		$ (4,703)

XML

Real Estate Fund Investments - Summary of Fair Value of Fund Investment (Details) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Real Estate Fund Disclosure [Abstract]
Property Funds	$ 193,081	$ 183,216
Alternative Investment Funds	142,464	140,171
Total	$ 335,545	$ 323,387

XML

CONSOLIDATED STATEMENT OF INCOME (UNAUDITED) (Parentheticals)	1 Months Ended
	Dec. 31, 2014 $ / shares
Income Statement [Abstract]
Cash dividend	$ 0.039

XML

Organization and Business

6 Months Ended

Jun. 30, 2015

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Organization And Business

1. Organization and Business

As used in these consolidated and combined financial statements, unless indicated otherwise, all references to “we,” “us,” “our,” the “Company,” and “Paramount” refer to Paramount Group, Inc. and its consolidated subsidiaries, including Paramount Group Operating Partnership LP, upon completion of the Formation Transactions (as more fully described below) and the initial public offering of common stock.

We are a fully-integrated real estate investment trust (“REIT”) focused on owning, operating, managing, acquiring and redeveloping high-quality, Class A office properties in select central business district submarkets of New York City, Washington, D.C. and San Francisco. As of June 30, 2015, our portfolio consisted of 12 Class A office properties aggregating approximately 10.4 million square feet that had an occupancy rate of 92.9%.      

We were incorporated in Maryland as a corporation on April 14, 2014 to continue the business of our Predecessor, as defined, and did not have any meaningful operations until the acquisition of substantially all of the assets of our Predecessor and the assets of the Property Funds, as defined, that it controlled, as well as the interests of unaffiliated third parties in certain properties. Our properties were acquired through a series of Formation Transactions (the “Formation Transactions”) concurrently with our initial public offering of 150,650,000 common shares at a public offering price of $17.50 per share on November 24, 2014 (the “Offering”).  

We conduct our business through, and substantially all of our interests are held by, Paramount Group Operating Partnership LP, a Delaware limited partnership (the “Operating Partnership”).  We are the sole general partner of, and owned approximately 80.4% of, the Operating Partnership as of June 30, 2015.    

Our Predecessor

Our Predecessor is not a legal entity but a combination of entities under common control as they were entities controlled by members of the Otto family that held various assets, including interests in (i) 15 private equity real estate funds controlled by our Predecessor (which included nine primary funds and six parallel funds) (collectively, the “Funds”) that owned interests in 12 properties, (ii) a wholly-owned property, Waterview, in Rosslyn, Virginia and (iii) three partially owned properties in New York, NY (See note 4, Investments in Unconsolidated Joint Ventures).

Below is a summary of the 15 private equity real estate funds that were controlled by our Predecessor prior to the completion of the Formation Transactions.

The following funds are collectively referred to herein as the “Property Funds”:

• Paramount Group Real Estate Fund I, L.P. (“Fund I”)

• Paramount Group Real Estate Fund II, L.P. (“Fund II”)

• Paramount Group Real Estate Fund III, L.P. (“Fund III”)

• Paramount Group Real Estate Fund IV, L.P. (“Fund IV”)

• PGREF IV Parallel Fund (Cayman), L.P. (“Fund IV Cayman”)

• Paramount Group Real Estate Fund V (CIP), L.P. (“Fund V CIP”)

• Paramount Group Real Estate Fund V (Core), L.P. (“Fund V Core”)

• PGREF V (Core) Parallel Fund (Cayman), L.P. (“Fund V Cayman”)

• Paramount Group Real Estate Fund VII, LP (“Fund VII”)

• Paramount Group Real Estate Fund VII-H, LP (“Fund VII-H”)

The following fund was formed to acquire, develop and manage the residential development project at 75 Howard Street:

• Paramount Group Residential Development Fund, LP (“Residential Fund”)

The following funds are collectively referred to herein as the “Alternative Investment Funds”:

• Paramount Group Real Estate Special Situations Fund, L.P. (“PGRESS”)

• Paramount Group Real Estate Special Situations Fund–H, L.P. (“PGRESS-H”)

• Paramount Group Real Estate Special Situations Fund–A, L.P. (“PGRESS-A”)

•     Paramount Group Real Estate Fund VIII, L.P. (“Fund VIII”)

The Property Funds and Residential Fund owned interests in the following properties:

•1633 Broadway, New York, NY

•60 Wall Street, New York, NY

•900 Third Avenue, New York, NY

•31 West 52nd Street, New York, NY

•1301 Avenue of the Americas, New York, NY

•One Market Plaza, San Francisco, CA

•50 Beale Street, San Francisco, CA

•75 Howard Street, San Francisco, CA

•Liberty Place, Washington, D.C.

•1899 Pennsylvania Avenue, Washington, D.C.

•2099 Pennsylvania Avenue, Washington, D.C.

•425 Eye Street, Washington, D.C.

XML

Intangible Assets and Intangible Liabilities - Schedule of Estimated Annual Amortization of Acquired In-Place Leases (Details) - Leases, Acquired-in-Place [Member] $ in Thousands	Jun. 30, 2015 USD ($)
Finite Lived Intangible Assets [Line Items]
2016	$ 79,941
2017	56,511
2018	50,164
2019	45,552
2020	$ 40,525

XML

Fair Value Measurements - Summary of Carrying Amounts and Fair Value of Financial Instruments (Details) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Total Assets	$ 357,069	$ 343,546
Total liabilities	160,473	194,196
Carrying Amount [Member]
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Cash equivalents	289,917	401,215
Total Assets	289,917	401,215
Mortgage and notes payable	2,853,237	2,852,287
Total liabilities	2,853,237	2,852,287
Fair Value [Member]
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Cash equivalents	289,917	401,215
Total Assets	289,917	401,215
Mortgage and notes payable	2,797,650	2,796,842
Total liabilities	$ 2,797,650	$ 2,796,842

XML

Basis of Presentation and Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2015

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation

The accompanying consolidated and combined financial statements include the accounts of Paramount and its consolidated subsidiaries, including the Operating Partnership. All significant inter-company amounts have been eliminated. In our opinion, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, result of operations and changes in the cash flows have been made. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted. These consolidated and combined financial statements have been prepared in accordance with the instructions to Form 10-Q of the Securities and Exchange Commission (“SEC”) and should be read in conjunction with the consolidated and combined financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2014, as filed with the SEC.

We have made estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. The results of operations for the three and six months ended June 30, 2015 are not necessarily indicative of the operating results for the full year.

Our Predecessor’s combined financial statements included all the accounts of our Predecessor, including its interests in (i) the Funds, (ii) Waterview and (iii) the three partially-owned properties.  Our Predecessor evaluated each of the Funds pursuant to the control model of Accounting Standards Codification (“ASC”) 810-20, Consolidation—Control of Partnerships and Similar Entities and concluded that based on its rights and responsibilities as the sole managing member of the general partner it should consolidate each of the Funds.  With the exception of the Residential Fund, which is carried at historical cost, each of the Funds qualify as investment companies pursuant to Financial Services—Investment Companies (“ASC 946”); accordingly, the underlying real estate investments are carried at fair value, which was retained in consolidation by our Predecessor.  

Upon completion of the Offering and the Formation Transactions, we acquired substantially all of the assets of our Predecessor and all of the assets of the Property Funds that it controlled, other than their interests in 60 Wall Street, 50 Beale Street, and a residual 2.0% interest in One Market Plaza.  In addition, as part of the Formation Transactions, we also acquired the interests of certain unaffiliated third parties in 1633 Broadway, 31 West 52^nd Street and 1301 Avenue of the Americas.  These transactions were accounted for as transactions among entities under common control.  However, since the assets that we acquired from our Predecessor are no longer held by funds which qualify for investment company accounting, we account for these assets following the Formation Transactions using historical cost accounting. As a result, our consolidated financial statements following the Formation Transactions, differ significantly from, and are not comparable with, the historical financial position and results of operations of our Predecessor.

Significant Accounting Policies

Significant Accounting Policies

There were no material changes to our significant accounting policies disclosed in our Annual Report on Form 10-K for the year ended December 31, 2014.

Segment Reporting

Segment Reporting

Upon completion of the Offering and Formation Transactions, we acquired substantially all of the assets of our Predecessor and substantially all of the assets of the Property Funds that it controlled. Our business, post the Formation Transactions, is comprised of one reportable segment. We have determined that our properties have similar economic characteristics to be aggregated into one reportable segment (operating, leasing and managing office properties). Our determination was based primarily on our method of internal reporting. Our Predecessor historically operated an integrated business that consisted of three reportable segments, (i) Owned Properties, (ii) Managed Funds and (iii) a Management Company. The Owned Properties segment consisted of properties in which our Predecessor had a direct or indirect ownership interest, other than properties that it owned through its private equity real estate funds. The Managed Funds segment consisted of the private equity real estate funds.  In addition, our Predecessor included a Management Company that performed property management and asset management services and certain general and administrative level functions, including legal and accounting, as a separate reportable segment.

Recently Issued Accounting Literature

Recently Issued Accounting Literature

In May 2014, the FASB issued an update ("ASU 2014-09") Revenue from Contracts with Customers.  ASU 2014-09 establishes a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most of the existing revenue recognition guidance.  ASU 2014-09 requires an entity to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services and also requires certain additional disclosures.  ASU 2014-09 is effective for interim and annual reporting periods in fiscal years that begin after December 15, 2016.  We are currently evaluating the impact of the adoption of ASU 2014-09 on our consolidated financial statements.

In June 2014, the FASB issued an update (“ASU 2014-12”) to ASC Topic 718, Compensation – Stock Compensation.  ASU 2014-12 requires an entity to treat performance targets that can be met after the requisite service period of a share based award has ended, as a performance condition that affects vesting.  ASU 2014-12 is effective for interim and annual reporting periods in fiscal years that begin after December 15, 2015.  We are currently evaluating the impact of the adoption of ASU 2014-12 on our consolidated financial statements.

In February 2015, the FASB issued an update (“ASU 2015-02”) Amendments to the Consolidation Analysis to ASC Topic 810, Consolidation. ASU 2015-02 modifies the evaluation of whether limited partnerships and similar legal entities are VIEs or voting interest entities, eliminates the presumption that a general partner should consolidate a limited partnership and affects the consolidation analysis of reporting entities that are involved with VIEs, particularly those that have fee arrangements and related party relationships. ASU 2015-02 is effective for fiscal years that begin after December 15, 2015. We are currently evaluating the impact of the adoption of ASU 2015-02 on our consolidated financial statements.

In April 2015, the FASB issued an update (“ASU 2015-03”) Simplifying the Presentation of Debt Issuance Costs to ASC Topic 835, Interest – Imputation of Interest. ASU 2015-03 requires an entity to present debt issuance costs in the balance sheet as a direct deduction from the related debt liability rather than as an asset. Amortization of the costs is reported as interest expense. ASU 2015-03 is effective for interim and annual reporting periods in fiscal years that begin after December 15, 2015.  The adoption of this update on January 1, 2016 will not have a material impact on our consolidated financial statements.

XML

Earnings Per Share - Summary of Computation of Earnings Per Share (Details) - Jun. 30, 2015 - USD ($) $ / shares in Units, $ in Thousands	Total	Total
Numerator:
Net loss attributable to Paramount Group, Inc. - basic and diluted	$ (4,709)	$ (14,440)
Denominator:
Denominator for basic loss per share - weighted average shares	212,106,718	212,106,718
Denominator for diluted loss per share - weighted average shares	212,106,718	212,106,718
Loss per share - basic and diluted	$ (0.02)	$ (0.07)

XML

Segments Disclosure (Tables)

6 Months Ended

Jun. 30, 2015

Schedule of Each Reportable Segment Information

The following tables provide selected results for each reportable segment for the three and six months ended June 30, 2015 and 2014.

	For the Three Months Ended June 30, 2015
	Owned
(Amounts in thousands)	Properties			Other			Total
Income Statement Data:
Revenues
Rental income	$	145,349		$	568		$	145,917
Tenant reimbursement income		12,063			-			12,063
Fee and other income		3,168			1,780			4,948
Total revenues		160,580			2,348			162,928
Total expenses		138,001			16,542			154,543
Operating income (loss)		22,579			(14,194	)		8,385
Income from real estate fund investments		-			14,072			14,072
Income from unconsolidated joint ventures		1,985			26			2,011
Unrealized gains on interest rate swaps		21,747			-			21,747
Interest and other income, net		91			421			512
Interest and debt expense		(39,741	)		(2,495	)		(42,236	)
Net income (loss) before income taxes		6,661			(2,170	)		4,491
Income tax benefit (expense)		467			(1,810	)		(1,343	)
Net income (loss)		7,128			(3,980	)		3,148
Add:
Depreciation and amortization		79,119			302			79,421
General and administrative		(42	)		9,175			9,133
Interest and debt expense		39,741			2,495			42,236
Transfer taxes due in connection with the sale of shares
by a former joint venture partner		-			5,872			5,872
Acquisition and transaction related costs		-			2,336			2,336
Income tax (benefit) expense		(467	)		1,810			1,343
Net Operating Income from unconsolidated joint ventures		4,138			140			4,278
Less:
Income from real estate fund investments		-			(14,072	)		(14,072	)
Income from unconsolidated joint ventures		(1,985	)		(26	)		(2,011	)
Fee income		-			(1,780	)		(1,780	)
Unrealized gains on interest rate swaps		(21,747	)		-			(21,747	)
Interest and other income, net		(91	)		(421	)		(512	)
Net Operating Income (1)	$	105,794		$	1,851		$	107,645

	For the Six Months Ended June 30, 2015
	Owned
(Amounts in thousands)	Properties			Other			Total
Income Statement Data:
Revenues
Rental income	$	287,826		$	1,334		$	289,160
Tenant reimbursement income		25,551			-			25,551
Fee and other income		6,123			3,320			9,443
Total revenues		319,500			4,654			324,154
Total expenses		273,652			30,110			303,762
Operating income (loss)		45,848			(25,456	)		20,392
Income from real estate fund investments		-			19,293			19,293
Income from unconsolidated joint ventures		2,925			61			2,986
Unrealized gains on interest rate swaps		33,725			-			33,725
Interest and other income, net		185			1,181			1,366
Interest and debt expense		(78,873	)		(5,251	)		(84,124	)
Net (loss) income before income taxes		3,810			(10,172	)		(6,362	)
Income tax benefit (expense)		7			(1,924	)		(1,917	)
Net (loss) income		3,817			(12,096	)		(8,279	)
Add:
Depreciation and amortization		152,456			548			153,004
General and administrative		-			21,746			21,746
Interest and debt expense		78,873			5,251			84,124
Transfer taxes due in connection with the sale of shares
by a former joint venture partner		-			5,872			5,872
Acquisition and transaction related costs		-			3,475			3,475
Income tax (benefit) expense		(7	)		1,924			1,917
Net Operating Income from unconsolidated joint ventures		7,874			185			8,059
Less:
Income from real estate fund investments		-			(19,293	)		(19,293	)
Income from unconsolidated joint ventures		(2,925	)		(61	)		(2,986	)
Fee income		-			(3,315	)		(3,315	)
Unrealized gains on interest rate swaps		(33,725	)		-			(33,725	)
Interest and other income, net		(185	)		(1,181	)		(1,366	)
Net Operating Income (1)	$	206,178		$	3,055		$	209,233

⁽¹⁾  Net Operating Income (“NOI”) is a metric we use to measure the operating performance of our properties, and consists of property-related revenue (which includes rental revenue, tenant reimbursement income and certain other income) less operating expenses (which includes building expenses such as cleaning, security, repairs and maintenance, utilities, property administration and real estate taxes). We use NOI internally as a performance measure and believe it provides useful information to investors regarding our financial condition and results of operations because it reflects only those income and expense items that are incurred at the property level. Other real estate companies may use different methodologies for calculating NOI, and accordingly, our presentation of NOI may not be comparable to other real estate companies.

Predecessor [Member]

Schedule of Each Reportable Segment Information

In addition, our Predecessor included a Management Company that performed property management and asset management services and certain general and administrative level functions, including legal and accounting, as a separate reportable segment.   

	For the Three Months Ended June 30, 2014
	Owned			Managed			Management
(Amounts in thousands)	Properties			Funds			Company			Eliminations			Total
Income Statement Data:
Revenues
Rental income	$	7,813		$	686		$	-		$	-		$	8,499
Tenant reimbursement income		441			-			-			-			441
Distributions from real estate fund investments		-			4,744			-			-			4,744
Realized and unrealized gains, net		-			33,750			-			-			33,750
Fee and other income		-			-			14,137			(7,737	)		6,400
Total revenues		8,254			39,180			14,137			(7,737	)		53,834
Total expenses		6,677			6,475			12,133			(7,737	)		17,548
Operating income		1,577			32,705			2,004			-			36,286
Income from unconsolidated joint ventures		903			-			11,568			(11,568	)		903
Unrealized loss on interest rate swaps		-			(354	)		-			-			(354	)
Interest and other income, net		684			310			3			-			997
Interest and debt expense		(3,880	)		(4,069	)		(39	)		-			(7,988	)
Net income (loss) before income taxes		(716	)		28,592			13,536			(11,568	)		29,844
Income tax expense		-			-			(3,842	)		-			(3,842	)
Net income (loss)		(716	)		28,592			9,694			(11,568	)		26,002
Net income attributable to noncontrolling interests		-			(25,823	)		-			-			(25,823	)
Net income (loss) attributable to the Predecessor	$	(716	)	$	2,769		$	9,694		$	(11,568	)	$	179

	For the Six Months Ended June 30, 2014
	Owned			Managed			Management
(Amounts in thousands)	Properties			Funds			Company			Eliminations			Total
Income Statement Data:
Revenues
Rental income	$	15,464		$	848		$	-		$	-		$	16,312
Tenant reimbursement income		896			-			-			-			896
Distributions from real estate fund investments		-			11,247			-			-			11,247
Realized and unrealized gains, net		-			79,917			-			-			79,917
Fee and other income		-			-			27,910			(16,328	)		11,582
Total revenues		16,360			92,012			27,910			(16,328	)		119,954
Total expenses		13,502			17,001			23,725			(16,328	)		37,900
Operating income		2,858			75,011			4,185			-			82,054
Income from unconsolidated joint ventures		2,035			-			25,858			(25,858	)		2,035
Unrealized loss on interest rate swaps		-			(196	)		-			-			(196	)
Interest and other income, net		1,347			356			3			-			1,706
Interest and debt expense		(7,665	)		(8,083	)		(39	)		-			(15,787	)
Net income (loss) before income taxes		(1,425	)		67,088			30,007			(25,858	)		69,812
Income tax expense		-			-			(7,105	)		-			(7,105	)
Net income (loss)		(1,425	)		67,088			22,902			(25,858	)		62,707
Net income attributable to noncontrolling interests		-			(53,133	)		-			-			(53,133	)
Net income (loss) attributable to the Predecessor	$	(1,425	)	$	13,955		$	22,902		$	(25,858	)	$	9,574

XML

Interest and Other Income

6 Months Ended

Jun. 30, 2015

Interest And Other Income [Abstract]

Interest and Other Income

11. Interest and Other Income

The following table sets forth the details of interest and other income.

	The Company				The Predecessor
	Three Months Ended		Six Months Ended		Three Months Ended		Six Months Ended
(Amounts in thousands)	June 30, 2015		June 30, 2015		June 30, 2014		June 30, 2014
Mark-to-market of investments in    our deferred compensation plans (1)	$	362	$	1,095	$	644	$	1,228
Interest and other income		150		271		353		478
Total interest and other income	$	512	$	1,366	$	997	$	1,706

⁽¹⁾ The change resulting from the mark-to-market of the deferred compensation plan assets is entirely offset by the change in the deferred compensation plan liabilities, which is included in general and administrative expense.