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Annaly Capital Management, Inc. Reports 4th Quarter 2020 Results

NEW YORK–(BUSINESS WIRE)–
Annaly Capital Management, Inc. (NYSE: NLY) (“Annaly” or the “Company”) today announced its financial results for the quarter and year ended December 31, 2020. 

Financial Highlights

• GAAP net income of $0.60 per average common share for the quarter; ($0.73) per average common share for the full year 2020
• Core earnings (excluding PAA) of $0.30 per average common share for the quarter; $1.10 for the full year 2020
• Economic return of 5.1% for the fourth quarter; 1.8% for the full year 2020
• GAAP return on average equity of 24.9% and core return on average equity (excluding PAA) of 13.0% for the quarter
• Book value per common share of $8.92, up 2.5% from the prior quarter
• Economic leverage of 6.2x, unchanged from the prior quarter
• Declared quarterly common stock cash dividend of $0.22 per share

Business Highlights

Fourth Quarter 2020 Highlights

• Total assets of $101.6 billion including $94.6 billion in highly liquid Agency portfolio⁽¹⁾
• Agency portfolio activity was focused on reinvestment of runoff into low-coupon TBAs and specified pools; opportunistically increased hedge ratio to 61% from 48% to protect against higher long end yields
• Capital allocation to credit businesses increased modestly to 22% from 20% during the quarter, driven by approximately $1 billion of credit originations as market conditions improved⁽²⁾
  • Investment activity primarily focused in our Residential Credit Group, followed closely by Middle Market Lending Group
• $8.7 billion of unencumbered assets, including cash and unencumbered Agency MBS of $6.3 billion
• Authorized new $1.5 billion common stock repurchase program
• Redeemed all outstanding shares of the $460 million 7.50% Series D preferred stock, reducing preferred equity as percent of capital structure to 11%, which is in line with historical average over last ten years

Full-Year 2020 Highlights

Investment and Strategy

• Increased capital allocation to Agency by 400 basis points to 78% of dedicated equity capital throughout 2020 driven by our favorable investment outlook for Agency MBS⁽¹⁾
• Increased TBA exposure and rotated down in coupon throughout the year given strong technical dynamics in the market
• Full-year credit originations of $2.4 billion were down nearly 50% year-over-year given conservative approach to underwriting
• Credit businesses performed well despite challenging economic environment due to conservative positioning, significant liquidity and rigorous asset management

Financing and Capital

• Prudently managed leverage profile throughout the year, decreasing economic leverage to 6.2x from 7.2x at the end of 2019
• Record-low financing costs with average GAAP cost of interest bearing liabilities declining 166 basis points to 0.51% and average economic cost of interest bearing liabilities declining 114 basis points to 0.87% over the course of the year
• Annaly Residential Credit Group completed four residential whole loan securitizations totaling $1.8 billion and was the third largest non-bank issuer of new origination RMBS in 2020⁽³⁾
• Annaly Residential Credit Group added $1.125 billion of capacity across two new credit facilities
• Repurchased $209 million of common stock in 2020; declared $1.4 billion in common and preferred stock dividends in 2020⁽⁴⁾

Corporate Responsibility & Governance

• Completed management internalization, improving corporate governance, increasing alignment with shareholders and generating cost savings that led to a FY 2020 operating expense ratio of 1.62%⁽⁵⁾
• Appointed David Finkelstein as Chief Executive Officer and as a member of the Board
• Appointed Michael Haylon as Independent Chair of the Board
• Appointed Steve Campbell as Chief Operating Officer
• Published inaugural Corporate Responsibility Report, outlining Annaly’s key ESG achievements as well as our future ESG goals and commitments for the first time
• Named first Head of Inclusion and established an Inclusion Support Committee of Executive Sponsors

“Annaly delivered strong results in the fourth quarter of 2020, marking the end of a challenging year where we successfully navigated unprecedented volatility to deliver $1.4 billion in dividends and a positive economic return to our shareholders,” remarked David Finkelstein, Annaly’s Chief Executive Officer and Chief Investment Officer. “Looking forward, our portfolio is well-positioned with low leverage and ample liquidity to capitalize on the improving outlook for residential mortgage finance. Agency MBS remains attractive given continued low funding costs, accommodative Federal Reserve policy, and a recent steepening of the yield curve. Further, our Residential Credit Group continues to build momentum, finishing 2020 as the third largest non-bank issuer of new origination RMBS, and we believe this business will be a key growth opportunity in the coming year.

“Capital management remains a priority and we were pleased to significantly lower our cost of capital with our most recent preferred redemption and renew our common stock repurchase program following $209 million in repurchases in 2020. We will continue to look to create value for our shareholders wherever possible and believe our stable and attractive yield and current valuation discount provide a compelling investment opportunity,” continued Mr. Finkelstein.

“Lastly, during a year of great challenges, we have made an effort to lead with purpose and impact. We are proud of our accomplishments in 2020, including publishing our inaugural corporate responsibility report, completing our management internalization and increasing our corporate philanthropy efforts to support those affected by COVID-19. We are steadfast in our commitment to furthering our corporate governance enhancements, responsible investments, corporate philanthropy initiatives and culture of inclusion.”

(1)		Assets represent Annaly’s investments that are on balance sheet, net of debt issued by securitization vehicles, as well as investments that are off-balance sheet in which the Company has economic exposure. Assets include TBA purchase contracts (market value) of $20.4bn and CMBX derivatives (market value) of $496.6mm and are shown net of debt issued by securitization vehicles of $5.7bn.
(2)		Credit assets represent whole loan, CMBS and equity assets originated or purchased across ARC, ACREG, and AMML and include unfunded commitments of $36.4mm comprised of ACREG and AMML loans. There can be no assurance whether these deals will close or when they will close.
(3)		Intex data as of December 31, 2020. Does not include deals backed by non-performing, re-performing or seasoned collateral.
(4)		Amount excludes fees and commissions. Annaly’s current authorized share repurchase program expires in December 2021.
(5)		Represents operating expenses as a percentage of average equity and excludes transaction expenses and non-recurring items for the year ended December 31, 2020.

Financial Performance

The following table summarizes certain key performance indicators as of and for the quarters ended December 31, 2020, September 30, 2020 and December 31, 2019:

	December 31, 2020				September 30, 2020				December 31, 2019
Book value per common share	$	8.92			$	8.70			$	9.66
Economic leverage at period-end (1)	6.2:1				6.2:1				7.2:1
GAAP net income (loss) per average common share (2)	$	0.60			$	0.70			$	0.82
Annualized GAAP return (loss) on average equity	24.91		%		29.02		%		31.20		%
Net interest margin (3)	2.14		%		2.15		%		1.49		%
Average yield on interest earning assets (4)	2.61		%		2.70		%		3.53		%
Average GAAP cost of interest bearing liabilities (5)	0.51		%		0.60		%		2.17		%
Net interest spread	2.10		%		2.10		%		1.36		%
Non-GAAP metrics *
Core earnings (excluding PAA) per average common share (2)	$	0.30			$	0.32			$	0.26
Annualized core return on average equity (excluding PAA)	13.03		%		13.79		%		10.56		%
Net interest margin (excluding PAA) (3)	1.98		%		2.05		%		1.41		%
Average yield on interest earning assets (excluding PAA) (4)	2.80		%		2.86		%		3.25		%
Average economic cost of interest bearing liabilities (5)	0.87		%		0.93		%		2.01		%
Net interest spread (excluding PAA)	1.93		%		1.93		%		1.24		%

*		Represents a non-GAAP financial measure. Please refer to the “Non-GAAP Financial Measures” section for additional information.
(1)		Computed as the sum of recourse debt, cost basis of to-be-announced (“TBA”) and CMBX derivatives outstanding, and net forward purchases (sales) of investments divided by total equity. Recourse debt consists of repurchase agreements and other secured financing (excluding certain non-recourse credit facilities). Certain credit facilities (included within other secured financing), debt issued by securitization vehicles, participations issued, and mortgages payable are non-recourse to the Company and are excluded from this measure.
(2)		Net of dividends on preferred stock.
(3)		Net interest margin represents interest income less interest expense divided by average Interest Earning Assets. Net interest margin (excluding PAA) represents the sum of interest income (excluding PAA) plus TBA dollar roll income and CMBX coupon income less interest expense and the net interest component of interest rate swaps divided by the sum of average Interest Earning Assets plus average outstanding TBA contract and CMBX balances. PAA represents the cumulative impact on prior periods, but not the current period, of quarter-over-quarter changes in estimated long-term prepayment speeds related to the Company’s Agency mortgage-backed securities.
(4)		Average yield on interest earning assets represents annualized interest income divided by average interest earning assets. Average interest earning assets reflects the average amortized cost of our investments during the period. Average yield on interest earning assets (excluding PAA) is calculated using annualized interest income (excluding PAA).
(5)		Average GAAP cost of interest bearing liabilities represents annualized interest expense divided by average interest bearing liabilities. Average interest bearing liabilities reflects the average balances during the period. Average economic cost of interest bearing liabilities represents annualized economic interest expense divided by average interest bearing liabilities. Economic interest expense is comprised of GAAP interest expense and the net interest component of interest rate swaps.

Other Information

This news release and our public documents to which we refer contain or incorporate by reference certain forward-looking statements which are based on various assumptions (some of which are beyond our control) and may be identified by reference to a future period or periods or by the use of forward-looking terminology, such as “may,” “will,” “believe,” “expect,” “anticipate,” “continue,” or similar terms or variations on those terms or the negative of those terms. Actual results could differ materially from those set forth in forward-looking statements due to a variety of factors, including, but not limited to, risks and uncertainties related to the COVID-19 pandemic, including as related to adverse economic conditions on real estate-related assets and financing conditions; changes in interest rates; changes in the yield curve; changes in prepayment rates; the availability of mortgage-backed securities and other securities for purchase; the availability of financing and, if available, the terms of any financing; changes in the market value of our assets; changes in business conditions and the general economy; our ability to grow our commercial real estate business; our ability to grow our residential credit business; our ability to grow our middle market lending business; credit risks related to our investments in credit risk transfer securities, residential mortgage-backed securities and related residential mortgage credit assets, commercial real estate assets and corporate debt; risks related to investments in mortgage servicing rights; our ability to consummate any contemplated investment opportunities; changes in government regulations or policy affecting our business; our ability to maintain our qualification as a REIT for U.S. federal income tax purposes; and our ability to maintain our exemption from registration under the Investment Company Act of 1940. For a discussion of the risks and uncertainties which could cause actual results to differ from those contained in the forward-looking statements, see “Risk Factors” in our most recent Annual Report on Form 10-K and any subsequent Quarterly Reports on Form 10-Q. We do not undertake, and specifically disclaim any obligation, to publicly release the result of any revisions which may be made to any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements, except as required by law.

Annaly is a leading diversified capital manager that invests in and finances residential and commercial assets. Annaly’s principal business objective is to generate net income for distribution to its stockholders and to optimize its returns through prudent management of its diversified investment strategies. Annaly is internally managed and has elected to be taxed as a real estate investment trust, or REIT, for federal income tax purposes. Additional information on the company can be found at www.annaly.com.

Annaly routinely posts important information for investors on the Company’s website, www.annaly.com. Annaly intends to use this webpage as a means of disclosing material, non-public information, for complying with the Company’s disclosure obligations under Regulation FD and to post and update investor presentations and similar materials on a regular basis. Annaly encourages investors, analysts, the media and others interested in Annaly to monitor the Company’s website, in addition to following Annaly’s press releases, SEC filings, public conference calls, presentations, webcasts and other information it posts from time to time on its website. To sign-up for email-notifications, please visit the “Investors” section of our website, www.annaly.com, then click on “Investor Resources” and select “Email Alerts” to complete the email notification form. The information contained on, or that may be accessed through, the Company’s webpage is not incorporated by reference into, and is not a part of, this document.

The Company prepares a supplemental investor presentation and a financial summary for the benefit of its shareholders. Both the Fourth Quarter 2020 Investor Presentation and the Fourth Quarter 2020 Financial Summary can be found at the Company’s website (www.annaly.com) in the Investors section under Investor Presentations.

Conference Call

The Company will hold the fourth quarter 2020 earnings conference call on February 11, 2021 at 9:00 a.m. Eastern Time. Participants are encouraged to pre-register for the conference call to receive a unique PIN to gain immediate access to the call and bypass the live operator. Pre-registration may be completed by accessing the pre-registration link found on the homepage or “Investors” section of the Company’s website at www.annaly.com, or by using the following link: https://dpregister.com/sreg/10151497/e0f4bfb408. Pre-registration may be completed at any time, including up to and after the call start time.

For participants who would like to join the call but have not pre-registered, access is available by dialing 844-735-3317 within the U.S., or 412-317-5703 internationally, and requesting the “Annaly Earnings Call.”

There will also be an audio webcast of the call on www.annaly.com. A replay of the call will be available for one week following the conference call. The replay number is 877-344-7529 for domestic calls and 412-317-0088 for international calls and the conference passcode is 10151497. If you would like to be added to the e-mail distribution list, please visit www.annaly.com, click on Investors, then select Email Alerts and complete the email notification form.

Financial Statements

ANNALY CAPITAL MANAGEMENT, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (dollars in thousands, except per share data)
	December 31, 2020				September 30, 2020				June 30, 2020				March 31, 2020				December 31, 2019 (1)
	(unaudited)				(unaudited)				(unaudited)				(unaudited)
Assets
Cash and cash equivalents	$	1,243,703			$	1,239,982			$	1,393,910			$	2,823,521			$	1,850,729
Securities	75,652,396				76,098,985				77,805,743				79,357,596				114,833,580
Loans, net	3,083,821				2,788,341				3,972,671				4,068,189				4,462,350
Mortgage servicing rights	100,895				207,985				227,400				280,558				378,078
Assets transferred or pledged to securitization vehicles	6,910,020				7,269,402				7,690,451				7,671,662				7,002,460
Real estate, net	656,314				790,597				746,067				751,738				725,638
Derivative assets	171,134				103,245				165,642				238,776				113,556
Receivable for unsettled trades	15,912				54,200				747,082				1,006,853				4,792
Principal and interest receivable	268,073				281,009				300,089				335,170				449,906
Goodwill and intangible assets, net	127,341				136,900				137,680				98,293				92,772
Other assets	225,494				221,765				271,918				284,918				381,220
Total assets	$	88,455,103			$	89,192,411			$	93,458,653			$	96,917,274			$	130,295,081
Liabilities and stockholders’ equity
Liabilities
Repurchase agreements	$	64,825,239			$	64,633,447			$	67,163,598			$	72,580,183			$	101,740,728
Other secured financing	917,876				861,373				1,538,996				1,805,428				4,455,700
Debt issued by securitization vehicles	5,652,982				6,027,576				6,458,130				6,364,949				5,622,801
Participations issued	39,198				—				—				—				—
Mortgages payable	426,256				507,934				508,565				484,762				485,005
Derivative liabilities	1,033,345				1,182,681				1,257,038				1,331,188				803,866
Payable for unsettled trades	884,069				1,176,001				2,122,735				923,552				463,387
Interest payable	191,116				155,338				180,943				261,304				476,335
Dividends payable	307,613				308,644				309,686				357,606				357,527
Other liabilities	155,613				144,745				121,359				100,772				93,388
Total liabilities	74,433,307				74,997,739				79,661,050				84,209,744				114,498,737
Stockholders’ equity
Preferred stock, par value $0.01 per share (2)	1,536,569				1,982,026				1,982,026				1,982,026				1,982,026
Common stock, par value $0.01 per share (3)	13,982				14,029				14,077				14,304				14,301
Additional paid-in capital	19,750,818				19,798,032				19,827,216				19,968,372				19,966,923
Accumulated other comprehensive income (loss)	3,374,335				3,589,056				3,842,074				3,121,371				2,138,191
Accumulated deficit	(10,667,388)				(11,200,937)				(11,871,927)				(12,382,648)				(8,309,424)
Total stockholders’ equity	14,008,316				14,182,206				13,793,466				12,703,425				15,792,017
Noncontrolling interests	13,480				12,466				4,137				4,105				4,327
Total equity	14,021,796				14,194,672				13,797,603				12,707,530				15,796,344
Total liabilities and equity	$	88,455,103			$	89,192,411			$	93,458,653			$	96,917,274			$	130,295,081

(1)		Derived from the audited consolidated financial statements at December 31, 2019.
(2)		7.50% Series D Cumulative Redeemable Preferred Stock – Includes 18,400,000 shares authorized and 0 shares issued and outstanding at December 31, 2020. Includes 18,400,000 shares authorized, issued and outstanding at September 30, 2020, June 30, 2020, March 31, 2020 and December 31, 2019, respectively.
		6.95% Series F Fixed-to-Floating Rate Cumulative Redeemable Preferred Stock – Includes 28,800,000 shares authorized, issued and outstanding.
		6.50% Series G Fixed-to-Floating Rate Cumulative Redeemable Preferred Stock – Includes 19,550,000 shares authorized and 17,000,000 shares issued and outstanding.
		6.75% Series I Preferred Stock – Includes 18,400,000 shares authorized and 17,700,000 issued and outstanding.
(3)		Includes 2,914,850,000 shares authorized at December 31, 2020, September 30, 2020, June 30, 2020, March 31, 2020 and December 31, 2019. Includes 1,398,240,618 shares issued and outstanding at December 31, 2020; 1,402,928,317 shares issued and outstanding at September 30, 2020; 1,407,662,483 shares issued and outstanding at June 30, 2020; 1,430,424,398 shares issued and outstanding at March 31, 2020; and 1,430,106,199 shares issued and outstanding at December 31, 2019.

ANNALY CAPITAL MANAGEMENT, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (dollars in thousands, except per share data) (Unaudited)
	For the quarters ended
	December 31, 2020				September 30, 2020				June 30, 2020				March 31, 2020				December 31, 2019
Net interest income
Interest income	$	527,344			$	562,443			$	584,812			$	555,026			$	1,074,214
Interest expense	94,481				115,126				186,032				503,473				620,058
Net interest income	432,863				447,317				398,780				51,553				454,156
Realized and unrealized gains (losses)
Net interest component of interest rate swaps	(66,807)				(62,529)				(64,561)				(13,980)				45,221
Realized gains (losses) on termination or maturity of interest rate swaps	2,092				(427)				(1,521,732)				(397,561)				(4,615)
Unrealized gains (losses) on interest rate swaps	258,236				170,327				1,494,628				(2,827,723)				782,608
Subtotal	193,521				107,371				(91,665)				(3,239,264)				823,214
Net gains (losses) on disposal of investments and other	9,363				198,888				246,679				206,583				17,783
Net gains (losses) on other derivatives	209,647				169,316				170,916				206,426				(42,312)
Net unrealized gains (losses) on instruments measured at fair value through earnings	51,109				121,255				254,772				(730,160)				(5,636)
Loan loss provision	(1,497)				21,993				(68,751)				(99,326)				(7,362)
Subtotal	268,622				511,452				603,616				(416,477)				(37,527)
Total realized and unrealized gains (losses)	462,143				618,823				511,951				(3,655,741)				785,687
Other income (loss)	15,205				7,959				15,224				14,926				42,656
General and administrative expenses
Compensation and management fee	24,628				29,196				37,036				40,825				40,403
Other general and administrative expenses	20,443				19,636				30,630				36,804				32,948
Total general and administrative expenses	45,071				48,832				67,666				77,629				73,351
Income (loss) before income taxes	865,140				1,025,267				858,289				(3,666,891)				1,209,148
Income taxes	(13,495)				9,719				2,055				(26,702)				(594)
Net income (loss)	878,635				1,015,548				856,234				(3,640,189)				1,209,742
Net income (loss) attributable to noncontrolling interests	1,419				(126)				32				66				68
Net income (loss) attributable to Annaly	877,216				1,015,674				856,202				(3,640,255)				1,209,674
Dividends on preferred stock	35,509				35,509				35,509				35,509				35,509
Net income (loss) available (related) to common stockholders	$	841,707			$	980,165			$	820,693			$	(3,675,764)			$	1,174,165
Net income (loss) per share available (related) to common stockholders
Basic	$	0.60			$	0.70			$	0.58			$	(2.57)			$	0.82
Diluted	$	0.60			$	0.70			$	0.58			$	(2.57)			$	0.82
Weighted average number of common shares outstanding
Basic	1,399,809,722				1,404,202,695				1,423,909,112				1,430,994,319				1,431,079,108
Diluted	1,400,228,777				1,404,368,300				1,423,909,112				1,430,994,319				1,431,079,108
Other comprehensive income (loss)
Net income (loss)	$	878,635			$	1,015,548			$	856,234			$	(3,640,189)			$	1,209,742
Unrealized gains (losses) on available-for-sale securities	(207,393)				(140,671)				986,146				1,374,796				(153,192)
Reclassification adjustment for net (gains) losses included in net income (loss)	(7,328)				(112,347)				(265,443)				(391,616)				(22,432)
Other comprehensive income (loss)	(214,721)				(253,018)				720,703				983,180				(175,624)
Comprehensive income (loss)	663,914				762,530				1,576,937				(2,657,009)				1,034,118
Comprehensive income (loss) attributable to noncontrolling interests	1,419				(126)				32				66				68
Comprehensive income (loss) attributable to Annaly	662,495				762,656				1,576,905				(2,657,075)				1,034,050
Dividends on preferred stock	35,509				35,509				35,509				35,509				35,509
Comprehensive income (loss) attributable to common stockholders	$	626,986			$	727,147			$	1,541,396			$	(2,692,584)			$	998,541

ANNALY CAPITAL MANAGEMENT, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (dollars in thousands, except per share data)
	For the years ended
	December 31, 2020				December 31, 2019
Net interest income
Interest income	$	2,229,625			$	3,787,297
Interest expense	899,112				2,784,875
Net interest income	1,330,513				1,002,422
Realized and unrealized gains (losses)
Net interest component of interest rate swaps	(207,877)				351,375
Realized gains (losses) on termination or maturity of interest rate swaps	(1,917,628)				(1,442,964)
Unrealized gains (losses) on interest rate swaps	(904,532)				(1,210,276)
Subtotal	(3,030,037)				(2,301,865)
Net gains (losses) on disposal of investments	661,513				(47,944)
Net gains (losses) on other derivatives	756,305				(680,770)
Net unrealized gains (losses) on instruments measured at fair value through earnings	(303,024)				36,021
Loan loss provision	(147,581)				(16,569)
Subtotal	967,213				(709,262)
Total realized and unrealized gains (losses)	(2,062,824)				(3,011,127)
Other income (loss)	53,314				136,413
General and administrative expenses
Compensation and management fee	131,685				170,628
Other general and administrative expenses	107,513				131,006
Total general and administrative expenses	239,198				301,634
Income (loss) before income taxes	(918,195)				(2,173,926)
Income taxes	(28,423)				(10,835)
Net income (loss)	(889,772)				(2,163,091)
Net income (loss) attributable to noncontrolling interests	1,391				(226)
Net income (loss) attributable to Annaly	(891,163)				(2,162,865)
Dividends on preferred stock	142,036				136,576
Net income (loss) available (related) to common stockholders	$	(1,033,199)			$	(2,299,441)
Net income (loss) per share available (related) to common stockholders
Basic	$	(0.73)			$	(1.60)
Diluted	$	(0.73)			$	(1.60)
Weighted average number of common shares outstanding
Basic	1,414,659,439				1,434,912,682
Diluted	1,414,659,439				1,434,912,682
Other comprehensive income (loss)
Net income (loss)	$	(889,772)			$	(2,163,091)
Unrealized gains (losses) on available-for-sale securities	2,012,878				4,135,862
Reclassification adjustment for net (gains) losses included in net income (loss)	(776,734)				(17,806)
Other comprehensive income (loss)	1,236,144				4,118,056
Comprehensive income (loss)	346,372				1,954,965
Comprehensive income (loss) attributable to noncontrolling interests	1,391				(226)
Comprehensive income (loss) attributable to Annaly	344,981				1,955,191
Dividends on preferred stock	142,036				136,576
Comprehensive income (loss) attributable to common stockholders	$	202,945			$	1,818,615

Key Financial Data

The following table presents key metrics of the Company’s portfolio, liabilities and hedging positions, and performance as of and for the quarters ended December 31, 2020, September 30, 2020, and December 31, 2019:

	December 31, 2020				September 30, 2020				December 31, 2019
Portfolio related metrics
Fixed-rate Residential Securities as a percentage of total Residential Securities	98		%		98		%		97		%
Adjustable-rate and floating-rate Residential Securities as a percentage of total Residential Securities	2		%		2		%		3		%
Weighted average experienced CPR for the period	24.7		%		22.9		%		17.8		%
Weighted average projected long-term CPR at period-end	16.4		%		17.1		%		13.9		%
Liabilities and hedging metrics
Weighted average days to maturity on repurchase agreements outstanding at period-end	64				72				65
Hedge ratio (1)	61		%		48		%		75		%
Weighted average pay rate on interest rate swaps at period-end (2)	0.92		%		0.91		%		1.84		%
Weighted average receive rate on interest rate swaps at period-end (2)	0.37		%		0.48		%		1.89		%
Weighted average net rate on interest rate swaps at period-end (2)	0.55		%		0.43		%		(0.05		%)
Leverage at period-end (3)	5.1:1				5.1:1				7.1:1
Economic leverage at period-end (4)	6.2:1				6.2:1				7.2:1
Capital ratio at period-end	13.6		%		13.6		%		12.0		%
Performance related metrics
Book value per common share	$	8.92			$	8.70			$	9.66
GAAP net income (loss) per average common share (5)	$	0.60			$	0.70			$	0.82
Annualized GAAP return (loss) on average equity	24.91		%		29.02		%		31.20		%
Net interest margin (6)	2.14		%		2.15		%		1.49		%
Average yield on interest earning assets (7)	2.61		%		2.70		%		3.53		%
Average GAAP cost of interest bearing liabilities (8)	0.51		%		0.60		%		2.17		%
Net interest spread	2.10		%		2.10		%		1.36		%
Dividend declared per common share	$	0.22			$	0.22			$	0.25
Annualized dividend yield (9)	10.41		%		12.36		%		10.62		%
Non-GAAP metrics *
Core earnings (excluding PAA) per average common share (5)	$	0.30			$	0.32			$	0.26
Annualized core return on average equity (excluding PAA)	13.03		%		13.79		%		10.56		%
Net interest margin (excluding PAA) (6)	1.98		%		2.05		%		1.41		%
Average yield on interest earning assets (excluding PAA) (7)	2.80		%		2.86		%		3.25		%
Average economic cost of interest bearing liabilities (8)	0.87		%		0.93		%		2.01		%
Net interest spread (excluding PAA)	1.93		%		1.93		%		1.24		%

*		Represents a non-GAAP financial measure. Please refer to the “Non-GAAP Financial Measures” section for additional information.
(1)		Measures total notional balances of interest rate swaps, interest rate swaptions (excluding receiver swaptions) and futures relative to repurchase agreements, other secured financing and cost basis of TBA derivatives outstanding; excludes MSRs and the effects of term financing, both of which serve to reduce interest rate risk. Additionally, the hedge ratio does not take into consideration differences in duration between assets and liabilities.
(2)		Excludes forward starting swaps.
(3)		Debt consists of repurchase agreements, other secured financing, debt issued by securitization vehicles, participations issued and mortgages payable. Certain credit facilities (included within other secured financing), debt issued by securitization vehicles, participations issued and mortgages payable are non-recourse to the Company.
(4)		Computed as the sum of recourse debt, cost basis of TBA and CMBX derivatives outstanding, and net forward purchases (sales) of investments divided by total equity.
(5)		Net of dividends on preferred stock.
(6)		Net interest margin represents interest income less interest expense divided by average interest earning assets. Net interest margin (excluding PAA) represents the sum of interest income (excluding PAA) plus TBA dollar roll income and CMBX coupon income less interest expense and the net interest component of interest rate swaps divided by the sum of average interest earning assets plus average TBA contract and CMBX balances.
(7)		Average yield on interest earning assets represents annualized interest income divided by average interest earning assets. Average interest earning assets reflects the average amortized cost of our investments during the period. Average yield on interest earning assets (excluding PAA) is calculated using annualized interest income (excluding PAA).
(8)		Average GAAP cost of interest bearing liabilities represents annualized interest expense divided by average interest bearing liabilities. Average interest bearing liabilities reflects the average balances during the period. Average economic cost of interest bearing liabilities represents annualized economic interest expense divided by average interest bearing liabilities. Economic interest expense is comprised of GAAP interest expense and the net interest component of interest rate swaps.
(9)		Based on the closing price of the Company’s common stock of $8.45, $7.12 and $9.42 at December 31, 2020, September 30, 2020 and December 31, 2019, respectively.

The following table contains additional information on our residential and commercial investments as of the dates presented:

	For the quarters ended
	December 31, 2020				September 30, 2020				December 31, 2019
Agency mortgage-backed securities	$	74,067,059			$	74,915,167			$	112,893,367
Residential credit risk transfer securities	532,403				411,538				531,322
Non-agency mortgage-backed securities	972,192				717,602				1,135,868
Commercial mortgage-backed securities	80,742				54,678				273,023
Total securities	$	75,652,396			$	76,098,985			$	114,833,580
Residential mortgage loans	$	345,810			$	152,959			$	1,647,787
Commercial real estate debt and preferred equity	498,081				573,504				669,713
Corporate debt	2,239,930				2,061,878				2,144,850
Total loans, net	$	3,083,821			$	2,788,341			$	4,462,350
Mortgage servicing rights	$	100,895			$	207,985			$	378,078
Agency mortgage-backed securities transferred or pledged to securitization vehicles	$	620,347			$	623,650			$	1,122,588
Residential mortgage loans transferred or pledged to securitization vehicles	3,249,251				3,588,679				2,598,374
Commercial real estate debt investments transferred or pledged to securitization vehicles	2,166,073				2,174,118				2,345,120
Commercial real estate debt and preferred equity transferred or pledged to securitization vehicles	874,349				882,955				936,378
Assets transferred or pledged to securitization vehicles	$	6,910,020			$	7,269,402			$	7,002,460
Real estate, net	$	656,314			$	790,597			$	725,638
Total residential and commercial investments	$	86,403,446			$	87,155,310			$	127,402,106

Non-GAAP Financial Measures

To supplement its consolidated financial statements, which are prepared and presented in accordance with U.S. generally accepted accounting principles (“GAAP”), the Company provides the following non-GAAP measures:

core earnings (excluding PAA);				economic interest expense;
core earnings (excluding PAA) attributable to common stockholders;				economic net interest income (excluding PAA);
core earnings (excluding PAA) per average common share;				average yield on interest earning assets (excluding PAA);
annualized core return on average equity (excluding PAA);				average economic cost of interest bearing liabilities;
interest income (excluding PAA);				net interest margin (excluding PAA); and
				net interest spread (excluding PAA).

These measures should not be considered a substitute for, or superior to, financial measures computed in accordance with GAAP. While intended to offer a fuller understanding of the Company’s results and operations, non-GAAP financial measures also have limitations. For example, the Company may calculate its non-GAAP metrics, such as core earnings (excluding PAA), or the PAA, differently than its peers making comparative analysis difficult. Additionally, in the case of non-GAAP measures that exclude the PAA, the amount of amortization expense excluding the PAA is not necessarily representative of the amount of future periodic amortization nor is it indicative of the term over which the Company will amortize the remaining unamortized premium. Changes to actual and estimated prepayments will impact the timing and amount of premium amortization and, as such, both GAAP and non-GAAP results.

These non-GAAP measures provide additional detail to enhance investor understanding of the Company’s period-over-period operating performance and business trends, as well as for assessing the Company’s performance versus that of industry peers. Additional information pertaining to the Company’s use of these non-GAAP financial measures, including discussion of how each such measure may be useful to investors, and reconciliations to their most directly comparable GAAP results are provided below.

Core earnings (excluding PAA), core earnings (excluding PAA) attributable to common stockholders, core earnings (excluding PAA) per average common share and annualized core return on average equity (excluding PAA)

The Company’s principal business objective is to generate net income for distribution to its stockholders and to preserve capital through prudent selection of investments and continuous management of its portfolio. The Company generates net income by earning a net interest spread on its investment portfolio, which is a function of interest income from its investment portfolio less financing, hedging and operating costs. Core earnings (excluding PAA), which is defined as the sum of (a) economic net interest income, (b) TBA dollar roll income and CMBX coupon income, (c) realized amortization of MSRs, (d) other income (loss) (excluding depreciation expense related to commercial real estate and amortization of intangibles, non-core income allocated to equity method investments and other non-core components of other income (loss)), (e) general and administrative expenses (excluding transaction expenses and non-recurring items), and (f) income taxes (excluding the income tax effect of non-core income (loss) items) and excludes (g) the premium amortization adjustment (“PAA”) representing the cumulative impact on prior periods, but not the current period, of quarter-over-quarter changes in estimated long-term prepayment speeds related to the Company’s Agency mortgage-backed securities is used by the Company’s management and, the Company believes, used by analysts and investors to measure its progress in achieving its principal business objective.

The Company seeks to fulfill this objective through a variety of factors including portfolio construction, the degree of market risk exposure and related hedge profile, and the use and forms of leverage, all while operating within the parameters of the Company’s capital allocation policy and risk governance framework.

The Company believes these non-GAAP measures provide management and investors with additional details regarding the Company’s underlying operating results and investment portfolio trends by (i) making adjustments to account for the disparate reporting of changes in fair value where certain instruments are reflected in GAAP net income (loss) while others are reflected in other comprehensive income (loss) and (ii) by excluding certain unrealized, non-cash or episodic components of GAAP net income (loss) in order to provide additional transparency into the operating performance of the Company’s portfolio. Annualized core return on average equity (excluding PAA), which is calculated by dividing core earnings (excluding PAA) over average stockholders’ equity, provides investors with additional detail on the core earnings (excluding PAA) generated by the Company’s invested equity capital.

The following table presents a reconciliation of GAAP financial results to non-GAAP core earnings (excluding PAA) for the periods presented:

	For the quarters ended
	December 31, 2020				September 30, 2020				December 31, 2019
	(dollars in thousands, except per share data)
GAAP net income (loss)	$	878,635			$	1,015,548			$	1,209,742
Net income (loss) attributable to noncontrolling interests	1,419				(126)				68
Net income (loss) attributable to Annaly	877,216				1,015,674				1,209,674
Adjustments to exclude reported realized and unrealized (gains) losses
Realized (gains) losses on termination or maturity of interest rate swaps	(2,092)				427				4,615
Unrealized (gains) losses on interest rate swaps	(258,236)				(170,327)				(782,608)
Net (gains) losses on disposal of investments and other	(9,363)				(198,888)				(17,783)
Net (gains) losses on other derivatives	(209,647)				(169,316)				42,312
Net unrealized (gains) losses on instruments measured at fair value through earnings	(51,109)				(121,255)				5,636
Loan loss provision (1)	469				(21,818)				7,362
Other adjustments
Depreciation expense related to commercial real estate and amortization of intangibles	11,097				11,363				9,823
Non-core (income) loss allocated to equity method investments (2)	28				(1,151)				(3,979)
Transaction expenses and non-recurring items (3)	172				2,801				3,634
Income tax effect of non-core income (loss) items	(10,984)				13,890				(418)
TBA dollar roll income and CMBX coupon income (4)	99,027				114,092				36,901
MSR amortization (5)	(26,633)				(27,048)				(22,120)
Plus:
Premium amortization adjustment cost (benefit)	39,101				33,879				(83,892)
Core earnings (excluding PAA) *	459,046				482,323				409,157
Dividends on preferred stock	35,509				35,509				35,509
Core earnings (excluding PAA) attributable to common stockholders *	$	423,537			$	446,814			$	373,648
GAAP net income (loss) per average common share	$	0.60			$	0.70			$	0.82
Core earnings (excluding PAA) per average common share *	$	0.30			$	0.32			$	0.26
Annualized GAAP return (loss) on average equity	24.91		%		29.02		%		31.20		%
Annualized core return on average equity (excluding PAA) *	13.03		%		13.79		%		10.56		%

	For the years ended
	December 31, 2020				December 31, 2019
	(dollars in thousands, except per share data)
GAAP net income (loss)	$	(889,772)			$	(2,163,091)
Net income (loss) attributable to noncontrolling interests	1,391				(226)
Net income (loss) attributable to Annaly	(891,163)				(2,162,865)
Adjustments to exclude reported realized and unrealized (gains) losses
Realized (gains) losses on termination or maturity of interest rate swaps	1,917,628				1,442,964
Unrealized (gains) losses on interest rate swaps	904,532				1,210,276
Net (gains) losses on disposal of investments and other	(661,513)				47,944
Net (gains) losses on other derivatives	(756,305)				680,770
Net unrealized (gains) losses on instruments measured at fair value through earnings	303,024				(36,021)
Loan loss provision (1)	151,188				16,569
Other adjustments
Depreciation and amortization expense related to commercial real estate	39,108				40,058
Non-core (income) loss allocated to equity method investments (2)	22,493				21,385
Transaction expenses and non-recurring items (3)	11,293				19,284
Income tax effect of non-core income (loss) items	(17,603)				(5,961)
TBA dollar roll income and CMBX coupon income (4)	355,547				123,818
MSR amortization (5)	(97,506)				(77,719)
Plus:
Premium amortization adjustment cost (benefit)	415,444				254,894
Core earnings (excluding PAA) *	1,696,167				1,575,396
Dividends on preferred stock	142,036				136,576
Core earnings (excluding PAA) attributable to common stockholders *	$	1,554,131			$	1,438,820
GAAP net income (loss) per average common share	$	(0.73)			$	(1.60)
Core earnings (excluding PAA) per average common share *	$	1.10			$	1.00
Annualized GAAP return (loss) on average equity	(6.31)		%		(14.11)		%
Annualized core return on average equity (excluding PAA) *	12.03		%		10.28		%

*		Represents a non-GAAP financial measure.
(1)		Includes ($1.0) million and $0.2 million of loss (reversal) provision on the Company’s unfunded loan commitments for the quarters ended December 31, 2020 and September 30, 2020, respectively, which is reported in Other income (loss) in the Company’s Consolidated Statements of Comprehensive Income (Loss). Includes $3.6 million of loss provision on the Company’s unfunded loan commitments for the year ended December 31, 2020.
(2)		The Company excludes non-core (income) loss allocated to equity method investments, which represents the unrealized (gains) losses allocated to equity interests in a portfolio of MSR, which is a component of Other income (loss).
(3)		Includes costs incurred in connection with securitizations of residential whole loans for all periods presented. The year ended December 31, 2020 also includes costs incurred in connection with the Internalization, the CEO search process and a securitization of Agency mortgage-backed securities. The year ended December 31, 2019 also includes costs incurred in connection with securitizations of commercial loans and Agency mortgage-backed securities.
(4)		TBA dollar roll income and CMBX coupon income each represent a component of Net gains (losses) on other derivatives. CMBX coupon income totaled $1.5 million, $1.5 million and $1.3 million for the quarters ended December 31, 2020, September 30, 2020 and December 31, 2019, respectively. CMBX coupon income totaled $5.8 million and $4.6 million for the years ended December 31, 2020 and December 31, 2019, respectively.
(5)		MSR amortization represents the portion of changes in fair value that is attributable to the realization of estimated cash flows on the Company’s MSR portfolio and is reported as a component of Net unrealized gains (losses) on instruments measured at fair value.

From time to time, the Company enters into TBA forward contracts as an alternate means of investing in and financing Agency mortgage-backed securities. A TBA contract is an agreement to purchase or sell, for future delivery, an Agency mortgage-backed security with a specified issuer, term and coupon. A TBA dollar roll represents a transaction where TBA contracts with the same terms but different settlement dates are simultaneously bought and sold. The TBA contract settling in the later month typically prices at a discount to the earlier month contract with the difference in price commonly referred to as the “drop”. The drop is a reflection of the expected net interest income from an investment in similar Agency mortgage-backed securities, net of an implied financing cost, that would be foregone as a result of settling the contract in the later month rather than in the earlier month. The drop between the current settlement month price and the forward settlement month price occurs because in the TBA dollar roll market, the party providing the financing is the party that would retain all principal and interest payments accrued during the financing period. Accordingly, TBA dollar roll income generally represents the economic equivalent of the net interest income earned on the underlying Agency mortgage-backed security less an implied financing cost.

TBA dollar roll transactions are accounted for under GAAP as a series of derivatives transactions. The fair value of TBA derivatives is based on methods similar to those used to value Agency mortgage-backed securities. The Company records TBA derivatives at fair value on its Consolidated Statements of Financial Condition and recognizes periodic changes in fair value in Net gains (losses) on other derivatives in the Consolidated Statements of Comprehensive Income (Loss), which includes both unrealized and realized gains and losses on derivatives (excluding interest rate swaps).

TBA dollar roll income is calculated as the difference in price between two TBA contracts with the same terms but different settlement dates multiplied by the notional amount of the TBA contract. Although accounted for as derivatives, TBA dollar rolls capture the economic equivalent of net interest income, or carry, on the underlying Agency mortgage-backed security (interest income less an implied cost of financing). TBA dollar roll income is reported as a component of Net gains (losses) on other derivatives in the Consolidated Statements of Comprehensive Income (Loss).

The CMBX index is a synthetic tradable index referencing a basket of 25 commercial mortgage-backed securities (“CMBS”) of a particular rating and vintage. The CMBX index allows investors to take a long exposure (referred to as selling protection) or short exposure (referred to as buying protection) on the respective basket of CMBS securities and is structured as a “pay-as-you-go” contract whereby the protection buyer pays to the protection seller a standardized running coupon on the contracted notional amount. The Company reports income (expense) on CMBX positions in Net gains (losses) on other derivatives in the Consolidated Statements of Comprehensive Income (Loss). The coupon payments received or paid on CMBX positions are equivalent to interest income (expense) and therefore included in core earnings (excluding PAA).

Premium Amortization Expense

In accordance with GAAP, the Company amortizes or accretes premiums or discounts into interest income for its Agency mortgage-backed securities, excluding interest-only securities, multifamily and reverse mortgages, taking into account estimates of future principal prepayments in the calculation of the effective yield. The Company recalculates the effective yield as differences between anticipated and actual prepayments occur. Using third-party model and market information to project future cash flows and expected remaining lives of securities, the effective interest rate determined for each security is applied as if it had been in place from the date of the security’s acquisition. The amortized cost of the security is then adjusted to the amount that would have existed had the new effective yield been applied since the acquisition date. The adjustment to amortized cost is offset with a charge or credit to interest income. Changes in interest rates and other market factors will impact prepayment speed projections and the amount of premium amortization recognized in any given period.

The Company’s GAAP metrics include the unadjusted impact of amortization and accretion associated with this method. Certain of the Company’s non-GAAP metrics exclude the effect of the PAA, which quantifies the component of premium amortization representing the cumulative impact on prior periods, but not the current period, of quarter-over-quarter changes in estimated long-term CPR.

The following table illustrates the impact of the PAA on premium amortization expense for the Company’s Residential Securities portfolio and residential securities transferred or pledged to securitization vehicles, for the quarters ended December 31, 2020, September 30, 2020, and December 31, 2019:

	For the quarters ended
	December 31, 2020				September 30, 2020				December 31, 2019
	(dollars in thousands)
Premium amortization expense (accretion)	$	239,118			$	248,718			$	171,447
Less: PAA cost (benefit)	39,101				33,879				(83,892)
Premium amortization expense (excluding PAA)	$	200,017			$	214,839			$	255,339

Interest income (excluding PAA), economic interest expense and economic net interest income (excluding PAA)

Interest income (excluding PAA) represents interest income excluding the effect of the PAA, and serves as the basis for deriving average yield on interest earning assets (excluding PAA), net interest spread (excluding PAA) and net interest margin (excluding PAA), which are discussed below. The Company believes this measure provides management and investors with additional detail to enhance their understanding of the Company’s operating results and trends by excluding the component of premium amortization expense representing the cumulative impact on prior periods, but not the current period, of quarter-over-quarter changes in estimated long-term prepayment speeds related to the Company’s Agency mortgage-backed securities (other than interest-only securities, multifamily and reverse mortgages), which can obscure underlying trends in the performance of the portfolio.

Economic interest expense includes GAAP interest expense and the net interest component of interest rate swaps. The Company uses interest rate swaps to manage its exposure to changing interest rates on its repurchase agreements by economically hedging cash flows associated with these borrowings. Accordingly, adding the net interest component of interest rate swaps to interest expense, as computed in accordance with GAAP, reflects the total contractual interest expense and thus, provides investors with additional information about the cost of the Company’s financing strategy. The Company may use market agreed coupon (“MAC”) interest rate swaps in which the Company may receive or make a payment at the time of entering into such interest rate swap to compensate for the off-market nature of such interest rate swap. In accordance with GAAP, upfront payments associated with MAC interest rate swaps are not reflected in the net interest component of interest rate swaps in the Company’s Consolidated Statements of Comprehensive Income (Loss). The Company did not enter into any MAC interest rate swaps during the quarter ended December 31, 2020.

Similarly, economic net interest income (excluding PAA), as computed below, provides investors with additional information to enhance their understanding of the net economics of our primary business operations.

	For the quarters ended
	December 31, 2020				September 30, 2020				December 31, 2019
Interest income (excluding PAA) reconciliation	(dollars in thousands)
GAAP interest income	$	527,344			$	562,443			$	1,074,214
Premium amortization adjustment	39,101				33,879				(83,892)
Interest income (excluding PAA) *	$	566,445			$	596,322			$	990,322
Economic interest expense reconciliation
GAAP interest expense	$	94,481			$	115,126			$	620,058
Add:
Net interest component of interest rate swaps	66,807				62,529				(45,221)
Economic interest expense *	$	161,288			$	177,655			$	574,837
Economic net interest income (excluding PAA) reconciliation
Interest income (excluding PAA) *	$	566,445			$	596,322			$	990,322
Less:
Economic interest expense *	161,288				177,655				574,837
Economic net interest income (excluding PAA) *	$	405,157			$	418,667			$	415,485
* Represents a non-GAAP financial measure.

Average yield on interest earning assets (excluding PAA), net interest spread (excluding PAA), net interest margin (excluding PAA) and average economic cost of interest bearing liabilities

Net interest spread (excluding PAA), which is the difference between the average yield on interest earning assets (excluding PAA) and the average economic cost of interest bearing liabilities, which represents annualized economic interest expense divided by average interest bearing liabilities, and net interest margin (excluding PAA), which is calculated as the sum of interest income (excluding PAA) plus TBA dollar roll income and CMBX coupon income less interest expense and the net interest component of interest rate swaps divided by the sum of average interest earning assets plus average TBA contract and CMBX balances, provide management with additional measures of the Company’s profitability that management relies upon in monitoring the performance of the business.

Disclosure of these measures, which are presented below, provides investors with additional detail regarding how management evaluates the Company’s performance.

	For the quarters ended
	December 31, 2020				September 30, 2020				December 31, 2019
Economic metrics (excluding PAA)	(dollars in thousands)
Average interest earning assets	$	80,973,433			$	83,286,119			$	121,801,951
Interest income (excluding PAA) *	$	566,445			$	596,322			$	990,322
Average yield on interest earning assets (excluding PAA) *	2.80		%		2.86		%		3.25		%
Average interest bearing liabilities	$	72,233,239			$	74,901,128			$	111,873,379
Economic interest expense *	$	161,288			$	177,655			$	574,837
Average economic cost of interest bearing liabilities *	0.87		%		0.93		%		2.01		%
Economic net interest income (excluding PAA) *	$	405,157			$	418,667			$	415,485
Net interest spread (excluding PAA) *	1.93		%		1.93		%		1.24		%
Interest income (excluding PAA) *	$	566,445			$	596,322			$	990,322
TBA dollar roll income and CMBX coupon income	99,027				114,092				36,901
Interest expense	(94,481)				(115,126)				(620,058)
Net interest component of interest rate swaps	(66,807)				(62,529)				45,221
Subtotal	$	504,184			$	532,759			$	452,386
Average interest earnings assets	$	80,973,433			$	83,286,119			$	121,801,951
Average TBA contract and CMBX balances	20,744,672				20,429,935				6,878,502
Subtotal	$	101,718,105			$	103,716,054			$	128,680,453
Net interest margin (excluding PAA) *	1.98		%		2.05		%		1.41		%
* Represents a non-GAAP financial measure.

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20210210005896/en/

Annaly Capital Management, Inc.

Investor Relations

1-888-8Annaly

www.annaly.com

KEYWORDS: New York United States North America

INDUSTRY KEYWORDS: Professional Services Other Construction & Property Residential Building & Real Estate Commercial Building & Real Estate Finance Construction & Property REIT

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Paramount Announces Fourth Quarter 2020 Results

– Reports office rent collections of 98.0% in the fourth quarter –

– Initiates Guidance for Full Year 2021 –

NEW YORK–(BUSINESS WIRE)–
Paramount Group, Inc. (NYSE: PGRE) (“Paramount” or the “Company”) filed its Annual Report on Form 10-K for the year ended December 31, 2020 today and reported results for the fourth quarter ended December 31, 2020.

Fourth Quarter Highlights:

Results of Operations:

• Reported net loss attributable to common stockholders of $14.8 million, or $0.07 per diluted share, for the quarter ended December 31, 2020, compared to a net loss attributable to common stockholders of $50.1 million, or $0.22 per diluted share, for the quarter ended December 31, 2019. Net loss attributable to common stockholders for the quarter ended December 31, 2020 includes (i) an $11.7 million, or $0.05 per diluted share, loss on sale of real estate related to discontinued operations and (ii) non-cash write-offs aggregating $5.5 million, or $0.03 per diluted share, for straight-line rent receivables. Net loss attributable to common stockholders for the quarter ended December 31, 2019 includes (i) a $37.9 million, or $0.17 per diluted share, real estate impairment loss related to discontinued operations, (ii) a $10.8 million, or $0.05 per diluted share, loss on early extinguishment of debt and (iii) $7.4 million, or $0.03 per diluted share, expense from the non-cash write-off of deferred financing costs.
• Reported Core Funds from Operations (“Core FFO”) attributable to common stockholders of $52.5 million, or $0.24 per diluted share, for the quarter ended December 31, 2020, compared to $58.3 million, or $0.26 per diluted share, for the quarter ended December 31, 2019. Core FFO attributable to common stockholders for the quarter ended December 31, 2020 includes non-cash write-offs aggregating $5.5 million, or $0.03 per diluted share, for straight-line rent receivables.
• Reported a 2.2% increase in Same Store Cash Net Operating Income (“NOI”) and a 0.9% decrease in Same Store NOI in the quarter ended December 31, 2020, compared to the same period in the prior year.
• Leased 87,283 square feet, of which the Company’s share was 62,461 square feet that was leased at a weighted average initial rent of $90.81 per square foot. Of the square footage leased, 54,036 square feet represented second generation space, for which the Company achieved a positive mark-to-market of 2.3% on a GAAP basis and a negative 1.3% on a cash basis.
• Reported portfolio-wide rent collections of 96.7% in the fourth quarter, including 98.0% from office tenants and 60.3% from “non-office” tenants.

Transactions and Capital Markets Activity:

• Completed the sale of 1899 Pennsylvania Avenue, a 191,000 square foot trophy office building located in Washington, D.C., on December 24, 2020 for $103.0 million.
• Repurchased 1,723,103 common shares at a weighted average price of $6.66 per share, or $11.5 million in the aggregate.
• Ended the quarter with $1.47 billion in liquidity, comprised of $465.3 million of cash and restricted cash and $1.0 billion of borrowing capacity under its revolving credit facility.
• Declared a fourth quarter cash dividend of $0.07 per common share on December 15, 2020, which was paid on January 15, 2021.

Financial Results

Quarter Ended December 31, 2020

Net loss attributable to common stockholders was $14.8 million, or $0.07 per diluted share, for the quarter ended December 31, 2020, compared to a net loss attributable to common stockholders of $50.1 million, or $0.22 per diluted share, for the quarter ended December 31, 2019. Net loss attributable to common stockholders for the quarter ended December 31, 2020 includes (i) an $11.7 million, or $0.05 per diluted share, loss on sale of real estate related to discontinued operations and (ii) non-cash write-offs aggregating $5.5 million, or $0.03 per diluted share, for straight-line rent receivables. Net loss attributable to common stockholders for the quarter ended December 31, 2019 includes (i) a $37.9 million, or $0.17 per diluted share, real estate impairment loss related to discontinued operations, (ii) a $10.8 million, or $0.05 per diluted share, loss on early extinguishment of debt and (iii) a $7.4 million, or $0.03 per diluted share, expense from the non-cash write-off of deferred financing costs. The loss on early extinguishment of debt and the write-off of deferred financing costs were incurred in connection with the $1.25 billion refinancing of 1633 Broadway in November 2019.

Funds from Operations (“FFO”) attributable to common stockholders was $52.8 million, or $0.24 per diluted share, for the quarter ended December 31, 2020, compared to $40.0 million, or $0.18 per diluted share, for the quarter ended December 31, 2019. FFO attributable to common stockholders for the quarter ended December 31, 2020 includes non-cash write-offs aggregating $5.5 million, or $0.03 per diluted share, for straight-line rent receivables. In addition, FFO attributable to common stockholders for the quarters ended December 31, 2020 and 2019 includes the impact of non-core items, which are listed in the table on page 11. The aggregate of the non-core items, net of amounts attributable to noncontrolling interests, increased FFO attributable to common stockholders for the quarter ended December 31, 2020 by $0.3 million, or $0.00 per diluted share, and decreased FFO attributable to common stockholders for the quarter ended December 31, 2019 by $18.3 million, or $0.08 per diluted share.

Core FFO attributable to common stockholders, which excludes the impact of the non-core items listed on page 11, was $52.5 million, or $0.24 per diluted share, for the quarter ended December 31, 2020, compared to $58.3 million, or $0.26 per diluted share, for the quarter ended December 31, 2019.

Year Ended December 31, 2020

Net loss attributable to common stockholders was $24.7 million, or $0.11 per diluted share, for the year ended December 31, 2020, compared to a net loss attributable to common stockholders of $36.9 million, or $0.16 per diluted share, for the year ended December 31, 2019. Net loss attributable to common stockholders for the year ended December 31, 2020 includes (i) non-cash write-offs aggregating $24.5 million, or $0.11 per diluted share, primarily for straight-line rent receivables, (ii) an $11.7 million, or $0.05 per diluted share, loss on sale of real estate related to discontinued operations and (iii) $1.8 million, or $0.01 per diluted share, of reserves for uncollectible accounts receivable. Net loss attributable to common stockholders for the year ended December 31, 2019 includes (i) a $37.9 million, or $0.16 per diluted share, real estate impairment loss related to discontinued operations, (ii) a $10.8 million, or $0.05 per diluted share, loss on early extinguishment of debt, (iii) a $7.4 million, or $0.03 per diluted share, expense from the non-cash write-off of deferred financing costs and (iv) a $1.0 million, or $0.00 per diluted share, gain on sale of real estate related to discontinued operations. The loss on early extinguishment of debt and the write-off of deferred financing costs were incurred in connection with the $1.25 billion refinancing of 1633 Broadway in November 2019.

FFO attributable to common stockholders was $214.8 million, or $0.96 per diluted share, for the year ended December 31, 2020, compared to $208.2 million, or $0.90 per diluted share, for the year ended December 31, 2019. FFO attributable to common stockholders for the year ended December 31, 2020 includes (i) non-cash write-offs aggregating $24.5 million, or $0.11 per diluted share, primarily for straight-line rent receivables and (ii) $1.8 million, or $0.01 per diluted share, of reserves for uncollectible accounts receivable. In addition, FFO attributable to common stockholders for the years ended December 31, 2020 and 2019 includes the impact of non-core items, which are listed in the table on page 11. The aggregate of the non-core items, net of amounts attributable to noncontrolling interests, increased FFO attributable to common stockholders for the year ended December 31, 2020 by $1.1 million, or $0.00 per diluted share, and decreased FFO attributable to common stockholders for the year ended December 31, 2019 by $19.0 million, or $0.08 per diluted share.

Core FFO attributable to common stockholders, which excludes the impact of the non-core items listed on page 11, was $213.7 million, or $0.96 per diluted share, for the year ended December 31, 2020, compared to $227.2 million, or $0.98 per diluted share, for the year ended December 31, 2019.

Portfolio Operations

Quarter Ended December 31, 2020

Same Store Cash NOI increased by $2.1 million, or 2.2%, to $93.6 million for the quarter ended December 31, 2020 from $91.5 million for the quarter ended December 31, 2019. Same Store NOI decreased by $1.0 million, or 0.9%, to $102.2 million for the quarter ended December 31, 2020 from $103.2 million for the quarter ended December 31, 2019.

During the quarter ended December 31, 2020, the Company leased 87,283 square feet, of which the Company’s share was 62,461 square feet that was leased at a weighted average initial rent of $90.81 per square foot. This leasing activity, offset by lease expirations in the quarter, decreased same store leased occupancy (properties owned by the Company during both reporting periods in a similar manner and not classified as discontinued operations) by 40 basis points to 95.2% at December 31, 2020 from 95.6% at September 30, 2020. Of the 87,283 square feet leased in the quarter, 54,036 square feet represented second generation space (space that had been vacant for less than twelve months) for which the Company achieved a positive mark-to-market of 2.3% on a GAAP basis and a negative mark-to-market of 1.3% on a cash basis. The weighted average lease term for leases signed during the fourth quarter was 2.2 years and weighted average tenant improvements and leasing commissions on these leases were $6.94 per square foot per annum, or 7.6% of initial rent.

Year Ended December 31, 2020

Same Store Cash NOI increased by $0.6 million, or 0.2%, to $353.9 million for the year ended December 31, 2020 from $353.3 million for the year ended December 31, 2019. Same Store NOI increased by $2.5 million, or 0.6%, to $402.5 million for the year ended December 31, 2020 from $400.0 million for the year ended December 31, 2019.

During the year ended December 31, 2020, the Company leased 699,159 square feet, of which the Company’s share was 413,148 square feet that was leased at a weighted average initial rent of $89.85 per square foot. This leasing activity, offset by lease expirations in the year, decreased same store leased occupancy (properties owned by the Company during both reporting periods in a similar manner and not classified as discontinued operations) by 70 basis points to 95.2% at December 31, 2020 from 95.9% at December 31, 2019. Of the 699,159 square feet leased in the year, 372,613 square feet represented second generation space (space that had been vacant for less than twelve months) for which the Company achieved a positive mark-to-market of 18.5% on a cash basis and 19.8% on a GAAP basis. The weighted average lease term for leases signed during the year was 4.0 years and weighted average tenant improvements and leasing commissions on these leases were $7.14 per square foot per annum, or 7.9% of initial rent.

The Company’s share of total square feet leased for the year ended December 31, 2020 and the related statistics disclosed above exclude the impact of 17,925 square feet of retail space at 712 Fifth Avenue, that was leased to Harry Winston for a 16-year term. The lease has a weighted average initial rent of $437.43 per square foot and tenant improvements and leasing commissions were $65.13 per square foot per annum, or 14.9% of initial rent.

Guidance

The Company is providing Estimated Core FFO Guidance for the full year of 2021, which is reconciled below to estimated net loss attributable to common stockholders per diluted share in accordance with GAAP. The Company estimates that net loss attributable to common stockholders will be between $0.16 and $0.10 per diluted share. The estimated net loss attributable to common stockholders per diluted share is not a projection and is being provided solely to satisfy the disclosure requirements of the U.S. Securities and Exchange Commission.

The Company estimates 2021 Core FFO to be between $0.82 and $0.88 per diluted share. The Estimated Core FFO of $0.85 per diluted share, at the midpoint of the Company’s Guidance for 2021, when compared to actual Core FFO of $0.96 per diluted share for 2020, assumes among other items, decreases and increases in the Company’s share of the following components: (i) a decrease in Cash NOI of $0.05 per share resulting from asset sales in 2020 (i.e., the sale of a 10.0% interest in 1633 Broadway in May 2020, and the sale of 1899 Pennsylvania Avenue in December 2020), (ii) a decrease in Cash NOI of $0.17 per share due to significant tenants’ lease expirations (i.e., Barclays’ 497,000 square foot lease at 1301 Avenue of the Americas on January 1, 2021 and TD Bank’s 131,000 square foot lease at 31 West 52nd Street on May 1, 2021) and (iii) a decrease in non-cash straight-line rent and amortization of above and below-market lease revenue, net of $0.09 per share, partially offset by (iv) free rent burn-off and rent steps on existing leases aggregating $0.16 per share, (v) lower interest and debt expense of $0.02 per share and (vi) lower general and administrative expenses of $0.02 per share.

							Full Year 2021
(Amounts per diluted share)							Low				High
Estimated net loss attributable to common stockholders							$	(0.16	)		$	(0.10	)
Pro rata share of real estate depreciation and amortization, including
the Company’s share of unconsolidated joint ventures								0.98				0.98
Estimated Core FFO							$	0.82			$	0.88

Except as described above, these estimates reflect management’s view of current and future market conditions, including assumptions with respect to rental rates, occupancy levels and the earnings impact of the events referenced in this release and otherwise to be referenced during the conference call referred to on page 8. These estimates do not include the impact on operating results from possible future property acquisitions or dispositions, capital markets activity or realized and unrealized gains or losses on real estate fund investments. The estimates set forth above may be subject to fluctuations as a result of several factors, including the negative impact of the COVID-19 global pandemic, straight-line rent adjustments and the amortization of above and below-market leases. There can be no assurance that the Company’s actual results will not differ materially from the estimates set forth above.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the federal securities laws. You can identify these statements by our use of the words “assumes,” “believes,” “estimates,” “expects,” “guidance,” “intends,” “plans,” “projects” and similar expressions that do not relate to historical matters. You should exercise caution in interpreting and relying on forward-looking statements because they involve known and unknown risks, uncertainties and other factors which are, in some cases, beyond the Company’s control and could materially affect actual results, performance or achievements. These factors include, without limitation, the negative impact of the COVID-19 global pandemic on the U.S., regional and global economies and our tenants’ financial condition and results of operations, the ability to enter into new leases or renew leases on favorable terms, dependence on tenants’ financial condition, the uncertainties of real estate development, acquisition and disposition activity, the ability to effectively integrate acquisitions, the costs and availability of financing, the ability of our joint venture partners to satisfy their obligations, the effects of local, national and international economic and market conditions, the effects of acquisitions, dispositions and possible impairment charges on our operating results, regulatory changes, including changes to tax laws and regulations, and other risks and uncertainties detailed from time to time in the Company’s filings with the U.S. Securities and Exchange Commission. The Company does not undertake a duty to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

Non-GAAP Financial Measures

FFO is a supplemental measure of our performance. We present FFO in accordance with the definition adopted by the National Association of Real Estate Investment Trusts (“Nareit”). Nareit defines FFO as net income or loss, calculated in accordance with GAAP, adjusted to exclude depreciation and amortization from real estate assets, impairment losses on certain real estate assets and gains or losses from the sale of certain real estate assets or from change in control of certain real estate assets, including our 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 certain items, including, transaction related costs, realized and unrealized gains or losses on real estate fund investments, unrealized gains or losses on interest rate swaps, severance costs and gains or losses on early extinguishment of debt, 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.

NOI is used to measure the operating performance of our properties. NOI consists of rental revenue (which includes property rentals, tenant reimbursements and lease termination income) and certain other property-related revenue less operating expenses (which includes property-related 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 PGRE’s 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 NOI and Cash NOI 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 property level.

Same Store NOI is used to measure the operating performance of properties in our New York and San Francisco portfolios that were owned by us in a similar manner during both the current period and prior reporting periods, and represents Same Store NOI from consolidated and unconsolidated joint ventures based on our percentage ownership in the underlying assets. Same Store NOI also excludes lease termination income, impairment of receivables arising from operating leases and certain other items that may vary from period to period. We also present Same Store Cash NOI, which excludes the effect of non-cash items such as the straight-line rent adjustments and the amortization of above and below-market leases.

A reconciliation of each non-GAAP financial measure to the most directly comparable GAAP financial measure can be found in this press release and in our Supplemental Information for the quarter ended December 31, 2020, which is available on our website.

Investor Conference Call and Webcast

The Company will host a conference call and audio webcast on Thursday, February 11, 2021 at 10:00 a.m. Eastern Time (ET), during which management will discuss the fourth quarter results and provide commentary on business performance. A question and answer session with analysts and investors will follow the prepared remarks.

The conference call can be accessed by dialing 877-407-0789 (domestic) or 201-689-8562 (international). An audio replay of the conference call will be available from 1:00 p.m. ET on February 11, 2021 through February 18, 2021 and can be accessed by dialing 844-512-2921 (domestic) or 412-317-6671 (international) and entering the passcode 13715460.

A live audio webcast of the conference call will be available through the “Investors” section of the Company’s website, www.paramount-group.com. A replay of the webcast will be archived on the Company’s website.

About Paramount Group, Inc.

Headquartered in New York City, Paramount Group, Inc. is a fully-integrated real estate investment trust that owns, operates, manages, acquires and redevelops high-quality, Class A office properties located in select central business district submarkets of New York City and San Francisco. Paramount is focused on maximizing the value of its portfolio by leveraging the sought-after locations of its assets and its proven property management capabilities to attract and retain high-quality tenants.

Paramount Group, Inc.
Consolidated Balance Sheets
(Unaudited and in thousands)
Assets:						December 31, 2020				December 31, 2019
Real estate, at cost
Land						$	1,966,237			$	1,966,237
Buildings and improvements							5,997,078				5,923,648
							7,963,315				7,889,885
Accumulated depreciation and amortization							(966,697	)			(790,216	)
Real estate, net							6,996,618				7,099,669
Cash and cash equivalents							434,530				306,215
Restricted cash							30,794				25,272
Investments in unconsolidated joint ventures							412,724				449,180
Investments in unconsolidated real estate funds							12,917				10,317
Accounts and other receivables							17,502				19,231
Due from affiliates							–				36,918
Deferred rent receivable							330,239				301,588
Deferred charges, net							116,278				126,367
Intangible assets, net							153,519				203,169
Assets related to discontinued operations							–				104,836
Other assets							48,976				51,373
Total assets						$	8,554,097			$	8,734,135
Liabilities:
Notes and mortgages payable, net						$	3,800,739			$	3,783,851
Revolving credit facility							–				36,918
Accounts payable and accrued expenses							101,901				117,356
Dividends and distributions payable							16,796				25,255
Intangible liabilities, net							55,996				73,789
Other liabilities							62,931				66,004
Total liabilities							4,038,363				4,103,173
Equity:
Paramount Group, Inc. equity							3,653,177				3,785,730
Noncontrolling interests in:
Consolidated joint ventures							437,161				360,778
Consolidated real estate fund							79,017				72,396
Operating Partnership							346,379				412,058
Total equity							4,515,734				4,630,962
Total liabilities and equity						$	8,554,097			$	8,734,135

Paramount Group, Inc.
Consolidated Statements of Income
(Unaudited and in thousands, except share and per share amounts)
					For the Three Months Ended								For the Year Ended
					December 31,								December 31,
					2020				2019				2020				2019
Revenues:
Rental revenue					$	174,181			$	179,008			$	679,015			$	709,508
Fee and other income						8,177				7,761				35,222				34,246
Total revenues						182,358				186,769				714,237				743,754
Expenses:
Operating						68,395				65,659				267,587				264,702
Depreciation and amortization						59,168				58,419				235,200				240,104
General and administrative						17,962				17,099				64,917				68,556
Transaction related costs						554				295				1,096				1,999
Total expenses						146,079				141,472				568,800				575,361
Other income (expense):
Loss from unconsolidated joint ventures						(4,175	)			(1,891	)			(18,619	)			(4,706	)
Income (loss) from unconsolidated real estate funds						187				(614	)			272				(343	)
Interest and other income, net						2,130				2,139				4,490				9,844
Interest and debt expense						(35,788	)			(45,217	)			(144,208	)			(156,679	)
Loss on early extinguishment of debt						–				(11,989	)			–				(11,989	)
(Loss) income from continuing operations, before income taxes						(1,367	)			(12,275	)			(12,628	)			4,520
Income tax (expense) benefit						(358	)			511				(1,493	)			(312	)
(Loss) income from continuing operations, net						(1,725	)			(11,764	)			(14,121	)			4,208
Loss from discontinued operations, net						(10,890	)			(41,013	)			(5,075	)			(33,811	)
Net loss						(12,615	)			(52,777	)			(19,196	)			(29,603	)
Less net (income) loss attributable to noncontrolling interests in:
Consolidated joint ventures						(3,772	)			(2,769	)			(9,257	)			(11,022	)
Consolidated real estate fund						159				(57	)			1,450				(313	)
Operating Partnership						1,404				5,458				2,299				4,039
Net loss attributable to common stockholders					$	(14,824	)		$	(50,145	)		$	(24,704	)		$	(36,899	)
Loss per Common Share – Basic:
Loss from continuing operations, net					$	(0.02	)		$	(0.06	)		$	(0.09	)		$	(0.03	)
Loss from discontinued operations, net						(0.05	)			(0.16	)			(0.02	)			(0.13	)
Net loss per common share					$	(0.07	)		$	(0.22	)		$	(0.11	)		$	(0.16	)
Weighted average common shares outstanding						218,989,711				227,276,459				222,436,170				231,538,065
Loss per Common Share – Diluted:
Loss from continuing operations, net					$	(0.02	)		$	(0.06	)		$	(0.09	)		$	(0.03	)
Loss from discontinued operations, net						(0.05	)			(0.16	)			(0.02	)			(0.13	)
Net loss per common share					$	(0.07	)		$	(0.22	)		$	(0.11	)		$	(0.16	)
Weighted average common shares outstanding						218,989,711				227,276,459				222,436,170				231,538,065

Paramount Group, Inc.
Reconciliation of Net Loss to FFO and Core FFO
(Unaudited and in thousands, except share and per share amounts)
			For the Three Months Ended								For the Year Ended
			December 31,								December 31,
			2020				2019				2020				2019
Reconciliation of Net Loss to FFO and Core FFO:
Net loss			$	(12,615	)		$	(52,777	)		$	(19,196	)		$	(29,603	)
Real estate depreciation and amortization (including
our share of unconsolidated joint ventures)				70,700				65,368				283,317				257,876
Adjustments related to discontinued operations (including
impairments and gain or loss on sale of real estate)				12,766				43,156				13,456				49,103
FFO				70,851				55,747				277,577				277,376
Less FFO attributable to noncontrolling interests in:
Consolidated joint ventures				(13,167	)			(11,360	)			(43,542	)			(46,527	)
Consolidated real estate fund				159				(57	)			1,450				(313	)
FFO attributable to Paramount Group Operating Partnership				57,843				44,330				235,485				230,536
Less FFO attributable to noncontrolling interests
in Operating Partnership				(5,004	)			(4,352	)			(20,664	)			(22,349	)
FFO attributable to common stockholders			$	52,839			$	39,978			$	214,821			$	208,187
Per diluted share			$	0.24			$	0.18			$	0.96			$	0.90
FFO			$	70,851			$	55,747			$	277,577			$	277,376
Non-core items:
Our share of distributions from 712 Fifth Avenue
in excess of earnings				(891	)			(1,001	)			(2,697	)			(2,038	)
Loss on early extinguishment of debt				–				11,989				–				11,989
Non-cash write-off of deferred financing costs				–				8,215				–				8,215
Other, net				515				1,083				1,450				2,881
Core FFO				70,475				76,033				276,330				298,423
Less Core FFO attributable to noncontrolling interests in:
Consolidated joint ventures				(13,167	)			(11,360	)			(43,542	)			(46,527	)
Consolidated real estate fund				159				(57	)			1,450				(313	)
Core FFO attributable to Paramount Group Operating Partnership				57,467				64,616				234,238				251,583
Less Core FFO attributable to noncontrolling interests
in Operating Partnership				(4,972	)			(6,344	)			(20,556	)			(24,419	)
Core FFO attributable to common stockholders			$	52,495			$	58,272			$	213,682			$	227,164
Per diluted share			$	0.24			$	0.26			$	0.96			$	0.98
Reconciliation of weighted average shares outstanding:
Weighted average shares outstanding				218,989,711				227,276,459				222,436,170				231,538,065
Effect of dilutive securities				40,406				50,071				16,558				35,323
Denominator for FFO and Core FFO per diluted share				219,030,117				227,326,530				222,452,728				231,573,388

Paramount Group, Inc.
Reconciliation of Net Loss to Same Store NOI and Same Store Cash NOI
(Unaudited and in thousands)
				For the Three Months Ended								For the Year Ended
				December 31,								December 31,
				2020				2019				2020				2019
Reconciliation of Net Loss to Same Store NOI and Same Store Cash NOI:
Net loss				$	(12,615	)		$	(52,777	)		$	(19,196	)		$	(29,603	)
Add (subtract) adjustments to arrive at NOI and Cash NOI:
Depreciation and amortization					59,168				58,419				235,200				240,104
General and administrative					17,962				17,099				64,917				68,556
Interest and debt expense					35,788				45,217				144,208				156,679
Loss on early extinguishment of debt					–				11,989				–				11,989
Income tax expense (benefit)					358				(511	)			1,493				312
NOI from unconsolidated joint ventures					11,928				7,840				48,631				22,409
Loss from unconsolidated joint ventures					4,175				1,891				18,619				4,706
Fee income					(6,378	)			(5,373	)			(28,070	)			(22,744	)
Interest and other income, net					(2,130	)			(2,139	)			(4,490	)			(9,844	)
Adjustments related to discontinued operations (including
impairments and gain or loss on sale of real estate)					12,765				43,156				13,465				49,103
Other, net					367				909				824				2,342
NOI					121,388				125,720				475,601				494,009
Less NOI attributable to noncontrolling interests in:
Consolidated joint ventures					(20,909	)			(18,107	)			(72,766	)			(72,620	)
Consolidated real estate fund					247				103				1,892				126
PGRE’s share of NOI					100,726				107,716				404,727				421,515
Acquisitions (1)					(3,883	)			–				(28,760	)			–
Dispositions / Discontinued Operations (2)					(1,875	)			(5,340	)			(8,390	)			(22,295	)
Non-cash write-offs (primarily straight-line rent receivables) (3)					6,032				–				26,826				–
Reserves for uncollectible accounts receivable (3)					–				–				1,940				448
Lease termination income and other, net					1,242				777				6,114				346
PGRE’s share of Same Store NOI				$	102,242			$	103,153			$	402,457			$	400,014
NOI				$	121,388			$	125,720			$	475,601			$	494,009
Less:
Straight-line rent adjustments (including our share of unconsolidated joint ventures)					(4,961	)			(11,218	)			(32,325	)			(45,580	)
Amortization of above and below-market leases, net (including our share of unconsolidated joint ventures)					(1,126	)			(3,141	)			(8,645	)			(11,913	)
Adjustments related to discontinued operations					146				132				507				434
Cash NOI					115,447				111,493				435,138				436,950
Less Cash NOI attributable to noncontrolling interests in:
Consolidated joint ventures					(18,095	)			(15,841	)			(59,526	)			(62,889	)
Consolidated real estate fund					247				103				1,892				126
PGRE’s share of Cash NOI					97,599				95,755				377,504				374,187
Acquisitions (1)					(3,185	)			–				(22,644	)			–
Dispositions / Discontinued Operations (2)					(2,021	)			(5,024	)			(8,897	)			(21,688	)
Reserves for uncollectible accounts receivable (3)					–				–				1,940				448
Lease termination income and other, net					1,182				799				6,030				345
PGRE’s share of Same Store Cash NOI				$	93,575			$	91,530			$	353,933			$	353,292

(1)		Represents our share of Same Store NOI and Same Store Cash NOI attributable to acquired properties (Market Center, 55 Second Street and 111 Sutter Street in San Francisco) for the months in which they were not owned by us in both reporting periods.
(2)		Primarily represents NOI and Cash NOI from discontinued operations (1899 Pennsylvania Avenue in 2020 and 1899 Pennsylvania Avenue and Liberty Place in 2019).
(3)		Represents impairments of receivables arising from operating leases that have been consistently excluded from our same store results in prior periods as noted in our definition of these terms. In prior periods, adjustments for these items have been relatively small and as such, were included within “other.”

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20210210005921/en/

Wilbur Paes

Chief Operating Officer,

Chief Financial Officer and Treasurer

212-237-3122

[email protected]

Robert Simone

Director, Business Development and Investor Relations

212-237-3138

[email protected]

Media:

212-492-2285

[email protected]

KEYWORDS: United States North America New York

INDUSTRY KEYWORDS: Other Construction & Property Commercial Building & Real Estate Construction & Property REIT

MEDIA:

Posted on February 10, 2021 4:18 pm

ABM Names Quincy Allen to Its Board of Directors

NEW YORK, Feb. 10, 2021 (GLOBE NEWSWIRE) — ABM (NYSE: ABM), a leading provider of facility solutions, today announced that its Board of Directors has elected Quincy Allen, former Chief Marketing Officer, IBM Cloud, as an independent director.

Sudhakar Kesavan, Chairman of the Board of Directors of ABM, said: “We are pleased to have Quincy join the Board of Directors. His extensive operational and technology experience, coupled with his background in business development, is particularly relevant to ABM as the company continues to pursue best-in-class facilities services solutions, while evolving its IT strategy.”

“Quincy’s impressive experience transforming and growing businesses across a wide variety of end markets will be a tremendous asset to our Board,” said Scott Salmirs, President and Chief Executive Officer of ABM. “I look forward to working closely with him in support of our mission and vision in the years to come.”

Most recently, Mr. Allen held the role of Chief Marketing Officer of IBM Cloud at IBM Corporation from 2015 to 2018. Prior to IBM, he served as Chief Marketing and Strategy Officer at Unisys from 2012 to 2015, where he helped develop new service businesses, positioning the company as a leader in IT services and products with a differentiated focus on mission critical solutions. Prior to Unisys, he served as the Chief Executive Officer for Vertis Communications from 2009 to 2010. Mr. Allen also spent 27 years at Xerox, progressively holding leadership roles such as Vice President, Worldwide Customer Services Strategy, Senior Vice President, North American Services and Solutions, and eventually, President, Production Systems Group. Mr. Allen serves on the Board of Directors of ODP Corporation (Office Depot), and previously served on the boards of NCR Corporation and Gateway Inc. Mr. Allen earned a bachelor’s degree from Northeastern University and an MBA from the University of Rochester.

ABOUT ABM

ABM (NYSE: ABM) is a leading provider of facility solutions with revenues of approximately $6.0 billion and more than 100,000 employees in 350+ offices throughout the United States and various international locations. ABM’s comprehensive capabilities include janitorial, electrical & lighting, energy solutions, facilities engineering, HVAC & mechanical, landscape & turf, mission critical solutions and parking, provided through stand-alone or integrated solutions. ABM provides custom facility solutions in urban, suburban and rural areas to properties of all sizes – from schools and commercial buildings to hospitals, data centers, manufacturing plants and airports. ABM Industries Incorporated, which operates through its subsidiaries, was founded in 1909. For more information, visit www.abm.com.

Contact:

Media:
Nadeen Ayala
(347) 461-0324
[email protected]

Investor Relations and Treasury:
Susie A. Kim
(212) 297-9721
[email protected]

Posted on February 10, 2021 4:18 pm

MediWound to Participate in the BTIG Virtual MedTech, Digital Health, Life Science & Diagnostic Tools Conference

YAVNE, Israel, Feb. 10, 2021 (GLOBE NEWSWIRE) — MediWound Ltd. (Nasdaq: MDWD), a fully-integrated biopharmaceutical company bringing innovative therapies to address unmet needs in severe burn and wound management, today announced that Sharon Malka, Chief Executive Officer, will participate in a fireside chat during the BTIG Virtual MedTech, Digital Health, Life Science & Diagnostic Tools Conference, which is being held February 17-19, 2021.

Event Details
Date:	Thursday, February 18
Time:	11:30 am ET

A live webcast of the fireside chat will be available on Events page of the Investors section of the company’s website: www.mediwound.com.

About MediWound
Ltd.

MediWound is a fully-integrated biopharmaceutical company focused on developing, manufacturing and commercializing novel therapeutics based on its patented proteolytic enzyme technology to address unmet needs in the fields of severe burns, chronic and other hard-to-heal wounds. MediWound’s first innovative biopharmaceutical product, NexoBrid^®, non-surgically and rapidly removes burn eschar without harming viable tissue. The product has received marketing authorization from the European Medicines Agency as well as the Israeli, Argentinian, South Korean, Russian and Peruvian Ministries of Health for eschar removal (debridement) in adults with deep partial-thickness and/or full-thickness thermal burns. On June 29, 2020, a biological license application (BLA) was submitted to the U.S. FDA and was assigned a Prescription Drug User Fee Act (PDUFA) target date of June 29, 2021. MediWound’s second innovative product, EscharEx is a topical biological drug candidate for the debridement of chronic and other hard-to-heal wounds using the same proteolytic enzyme technology as NexoBrid. In two Phase 2 studies, EscharEx^® has demonstrated safety and efficacy in the debridement of various chronic and other hard-to-heal wounds, within a few daily applications. EscharEx active substance (API) is a concentrate of proteolytic enzymes enriched in bromelain. EscharEx is an investigational product, currently under a U.S. phase 2 adaptive design study. For more information, please visit www.mediwound.com.

Contacts:
Boaz Gur-Lavie	Jeremy Feffer
Chief Financial Officer	Managing Director, LifeSci Advisors
MediWound Ltd.	212-915-2568
[email protected]	[email protected]