– 509,000 Square Feet of Leasing Activity – – Purchased Partner's 45% Interest in 1455 Market – – Provides Second Quarter FFO Outlook and Updates Full-Year Assumptions –

Hudson Pacific Properties, Inc. (NYSE: HPP) (the "Company," "Hudson Pacific," or "HPP"), a unique provider of end-to-end real estate solutions for dynamic tech and media tenants, today announced financial results for the first quarter 2024.

"Our office leasing momentum accelerated to start off the year, as we signed over 500,000 square feet of leases in the first quarter. Leveraging our well-positioned portfolio and the strength of our platform, our team is executing on leasing even as adverse market conditions persist, and we view long-term demand drivers for our office space as compelling," commented Victor Coleman, Hudson Pacific's Chairman and CEO. "While we remain focused on further strengthening our balance sheet through targeted asset sales, in the first quarter, we purchased our partners’ stake in 1455 Market in San Francisco. Already in the second quarter, we signed a 157,000-square-foot new lease at that asset, which is the largest lease executed in downtown since 2021, and we have another 290,000 square feet throughout our portfolio in leases or LOIs.

"In the first quarter, revenues across essentially all our studio business segments increased quarter-over-quarter, and we now have leases, activity or interest in the majority of our stages. While the long-term fundamentals related to content and subscriber growth remain intact, production has ramped more slowly than anticipated post-strikes, partly attributable to the upcoming expiration of the IATSE and Teamsters Local 399 union contracts. Until visibility improves for our Quixote business, which is primarily leased on a show-by-show basis, we are adjusting our outlook to account for this industry uncertainty."

Financial Results Compared to First Quarter 2023

  • Total revenue of $214.0 million compared to $252.3 million, with the primary drivers being asset sales, followed by a large tenant vacating space at 1455 Market, and lower occupancy and utilization of studio stages and services, respectively
  • Net loss attributable to common stockholders of $52.2 million, or $0.37 per diluted share, compared to net loss of $20.4 million, or $0.14 per diluted share, due to the aforementioned changes to revenue
  • FFO, excluding specified items, of $24.2 million, or $0.17 per diluted share, compared to $49.7 million, or $0.35 per diluted share, with the change mostly due to the items affecting revenue, offset by reduced interest expense and less FFO allocable to non-controlling interests. Specified items consisted of transaction-related expenses of $2.2 million, or $0.01 per diluted share, compared to prior year transaction related expenses of $1.2 million, or $0.01 per diluted share
  • FFO of $22.0 million, or $0.15 per diluted share, compared to $48.5 million, or $0.34 per diluted share
  • AFFO of $28.5 million, or $0.19 per diluted share, compared to $35.0 million, or $0.24 per diluted share, largely attributable to the items affecting revenue, offset by higher cash and lower GAAP revenue and reduced recurring capital expenditures
  • Same-store cash NOI of $108.3 million, compared to $124.4 million, mostly driven by two tenant move outs, one at 1455 Market and one at Sunset Las Palmas Studios

Leasing

  • Executed 73 new and renewal leases totaling 508,615 square feet, with significant leases including:
    • 82,000 square feet of new and renewal leases with consumer electronics company TDK InvenSense at Concourse with an eight-year term
    • 54,000-square-foot new lease with a software company at Bentall Centre with an approximately 11-year term
    • 36,000-square-foot new lease with a bio-tech company at Metro Center with an approximately five-year term
    • 24,000-square-foot new lease with a semiconductor company at Metro Plaza with an approximately six-year term
  • Subsequent to the quarter, signed a 157,000-square-foot new lease with the City of San Francisco at 1455 Market with a 21-year term
  • GAAP rents increased 6.2% and cash rents decreased 5.4% from prior levels, with the decrease in cash rents primarily resulting from the aforementioned new and renewal leases at Concourse
  • In-service office portfolio ended the quarter at 79.0% occupied and 80.5% leased, compared to 80.8% and 81.9%, respectively, in fourth quarter of last year, with the decreases attributable to small to mid-size tenants vacating space in the San Francisco Bay Area and Seattle
  • On average over the trailing 12 months, the in-service studio portfolio was 76.9% leased, and the related 34 stages were 79.4% leased, compared to 80.4% and 84.7%, respectively, in the fourth quarter of last year, with the decreases due to the aforementioned tenant move out at Sunset Las Palmas Studios

Transactions

  • Purchased for $43.5 million (before prorations and closing costs) a joint venture partner's 45% ownership interest in 1455 Market, a 1.0 million-square-foot office property in San Francisco, California, and subsequently signed the aforementioned 157,000-square-foot new lease

Development

  • Subsequent to the quarter, substantially completed the 546,000-square-foot Washington 1000 office development in Seattle and the 241,000-square-foot Sunset Glenoaks studio development in Los Angeles

Balance Sheet as of March 31, 2024

  • $734.3 million of total liquidity comprised of $114.3 million of unrestricted cash and cash equivalents and $620.0 million of undrawn capacity under the unsecured revolving credit facility
  • $15.7 million and $183.1 million of undrawn capacity under construction loans secured by Sunset Glenoaks Studios and Sunset Pier 94 Studios, respectively
  • HPP's share of net debt to HPP's share of undepreciated book value was 37.0% with 91.9% of debt fixed or capped and no material maturities until November 2025

Dividend

  • The Company's Board of Directors reinstated and declared a quarterly dividend on its common stock of $0.05 per share, and declared a quarterly dividend on its 4.750% Series C cumulative preferred stock of $0.296875 per share

Corporate Responsibility

  • Subsequent to the quarter, issued the Company's 2023 Corporate Responsibility Report, detailing awards and recognition received, and success in achieving and progressing on related goals

2024 Outlook

Hudson Pacific's in-service office and studio portfolios continue to perform in line with the Company's full-year 2024 outlook provided in February of this year. The Company is therefore providing an FFO outlook of $0.15 to $0.19 per diluted share for the second quarter, but updating only key assumptions for its full-year 2024 FFO outlook, including same-store property cash NOI growth. This reflects the Company's office leasing momentum and gradual improvements within the office operating environment, as well as long-term leases and the swift return of productions filming prior to the WGA and SAG-AFTRA strikes at our in-service studio assets. However, as has been well documented in the press, post-strikes, the film and television industry has recovered far more slowly than anticipated. Contributing factors include: pending expiration of the IATSE and Teamsters Local 399 union contracts in May and July, respectively; logistical and resource constraints as multiple productions attempt to re-start simultaneously; and industry consolidation and shifting business models as networks pursue profitability. Hudson Pacific's limited visibility at this time as to the precise impact of each of these factors, presents challenges to estimating how and when production counts will normalize, and, by extension, cash flow related to the Quixote business, the primary drivers of which are stages and services leased show-by-show. For clarity, Hudson Pacific's same-store property portfolio and full-year outlook assumptions exclude Quixote. Further, the Company's outlook assumes IATSE and Teamsters do not strike, and production begins to pick up in early June following successful resolution of IATSE contract negotiations. There are no specified items in connection with this guidance.

The Company's FFO outlook and the related assumptions reflect management’s view of current and future market conditions, including assumptions with respect to rental rates, occupancy levels and the earnings impact of events referenced in this press release and in earlier announcements. It otherwise excludes any impact from new acquisitions, dispositions, debt financings, amendments or repayments, recapitalizations, capital markets activity or similar matters. There can be no assurance that actual results will not differ materially from these estimates.

Below are some of the assumptions the Company used in providing this guidance:

Unaudited, in thousands, except share data

 

Full Year 2024

 

Assumptions

Metric

Low

High

Growth in same-store property cash NOI(1)(2)

(11.75)%

(12.75)%

GAAP non-cash revenue (straight-line rent and above/below-market rents)(3)

$(2,500)

$(7,500)

GAAP non-cash expense (straight-line rent expense and above/below-market ground rent)

$(6,500)

$(8,500)

General and administrative expenses(4)

$(80,000)

$(86,000)

Interest expense(5)

$(172,000)

$(182,000)

Non-real estate depreciation and amortization

$(32,000)

$(34,000)

FFO from unconsolidated joint ventures

$1,000

$3,000

FFO attributable to non-controlling interests

$(19,000)

$(23,000)

FFO attributable to preferred units/shares

$(21,000)

$(21,000)

Weighted average common stock/units outstanding—diluted(6)

145,000,000

146,000,000

(1)

Same-store for the full year 2024 is defined as the 41 office properties and three studio properties, as applicable, owned and included in the Company's stabilized portfolio as of January 1, 2023, and anticipated to still be owned and included in the stabilized portfolio through December 31, 2024.

(2)

Please see non-GAAP information below for definition of cash NOI.

(3)

Includes non-cash straight-line rent associated with the studio and office properties.

(4)

Includes non-cash compensation expense, which the Company estimates at $26,000 in 2024.

(5)

Includes non-cash interest expense, which the Company estimates at $6,000 in 2024.

(6)

Diluted shares represent ownership in the Company through shares of common stock, OP Units and other convertible or exchangeable instruments. The weighted average fully diluted common stock/units outstanding for 2024 includes an estimate for the dilution impact of stock grants to the Company's executives under its long-term incentive programs. This estimate is based on the projected award potential of such programs as of the end of the most recently completed quarter, as calculated in accordance with the ASC 260, Earnings Per Share.

The Company does not provide a reconciliation for non-GAAP estimates on a forward-looking basis, where it is unable to provide a meaningful or accurate calculation or estimation of reconciling items and the information is not available without unreasonable effort. This is due to the inherent difficulty of forecasting the timing and/or amount of various items that would impact net income attributable to common stockholders per diluted share, which is the most directly comparable forward-looking GAAP financial measure. This includes, for example, acquisition costs and other non-core items that have not yet occurred, are out of the Company's control and/or cannot be reasonably predicted. For the same reasons, the Company is unable to address the probable significance of the unavailable information. Forward-looking non-GAAP financial measures provided without the most directly comparable GAAP financial measures may vary materially from the corresponding GAAP financial measures.

Supplemental Information

Supplemental financial information regarding Hudson Pacific's first quarter 2024 results may be found on the Investors section of the Company's website at HudsonPacificProperties.com. This supplemental information provides additional detail on items such as property occupancy, financial performance by property and debt maturity schedules.

Conference Call

The Company will hold a conference call to discuss first quarter 2024 financial results at 9:00 a.m. PT / 12:00 p.m. ET on May 2, 2024. Please dial (833) 470-1428 and enter passcode 651313 to access the call. International callers should dial (404) 975-4839 and enter the same passcode. A live, listen-only webcast and replay can be accessed via the Investors section of the Company's website at HudsonPacificProperties.com.

About Hudson Pacific Properties

Hudson Pacific Properties (NYSE: HPP) is a real estate investment trust serving dynamic tech and media tenants in global epicenters for these synergistic, converging and secular growth industries. Hudson Pacific’s unique and high-barrier tech and media focus leverages a full-service, end-to-end value creation platform forged through deep strategic relationships and niche expertise across identifying, acquiring, transforming and developing properties into world-class amenitized, collaborative and sustainable office and studio space. For more information visit HudsonPacificProperties.com.

Forward-Looking Statements

This press release may contain forward-looking statements within the meaning of the federal securities laws. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. In some cases, you can identify forward-looking statements by the use of forward-looking terminology such as "may," "will," "should," "expects," "intends," "plans," "anticipates," "believes," "estimates," "predicts," or "potential" or the negative of these words and phrases or similar words or phrases that are predictions of or indicate future events, or trends and that do not relate solely to historical matters. Forward-looking statements involve known and unknown risks, uncertainties, assumptions and contingencies, many of which are beyond the Company's control, which may cause actual results to differ significantly from those expressed in any forward-looking statement. All forward-looking statements reflect the Company's good faith beliefs, assumptions and expectations, but they are not guarantees of future performance. Furthermore, the Company disclaims any obligation to publicly update or revise any forward-looking statement to reflect changes in underlying assumptions or factors, of new information, data or methods, future events or other changes. For a further discussion of these and other factors that could cause the Company's future results to differ materially from any forward-looking statements, see the section entitled "Risk Factors" in the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission, or SEC, and other risks described in documents subsequently filed by the Company from time to time with the SEC.

Consolidated Balance Sheets

In thousands, except share data

 

3/31/24

 

12/31/23

 

(Unaudited)

 

 

ASSETS

 

 

 

Investment in real estate, at cost

$

8,178,529

 

 

$

8,212,896

 

Accumulated depreciation and amortization

 

(1,736,720

)

 

 

(1,728,437

)

Investment in real estate, net

 

6,441,809

 

 

 

6,484,459

 

Non-real estate property, plant and equipment, net

 

119,750

 

 

 

118,783

 

Cash and cash equivalents

 

114,305

 

 

 

100,391

 

Restricted cash

 

19,267

 

 

 

18,765

 

Accounts receivable, net

 

23,980

 

 

 

24,609

 

Straight-line rent receivables, net

 

217,685

 

 

 

220,787

 

Deferred leasing costs and intangible assets, net

 

319,214

 

 

 

326,950

 

Operating lease right-of-use assets

 

370,056

 

 

 

376,306

 

Prepaid expenses and other assets, net

 

90,812

 

 

 

94,145

 

Investment in unconsolidated real estate entities

 

270,440

 

 

 

252,711

 

Goodwill

 

264,144

 

 

 

264,144

 

TOTAL ASSETS

$

8,251,462

 

 

$

8,282,050

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

Liabilities

 

 

 

Unsecured and secured debt, net

$

4,034,300

 

 

$

3,945,314

 

Joint venture partner debt

 

66,136

 

 

 

66,136

 

Accounts payable, accrued liabilities and other

 

203,194

 

 

 

203,736

 

Operating lease liabilities

 

383,993

 

 

 

389,210

 

Intangible liabilities, net

 

26,305

 

 

 

27,751

 

Security deposits, prepaid rent and other

 

87,047

 

 

 

88,734

 

Total liabilities

 

4,800,975

 

 

 

4,720,881

 

 

 

 

 

Redeemable preferred units of the operating partnership

 

9,815

 

 

 

9,815

 

Redeemable non-controlling interest in consolidated real estate entities

 

52,108

 

 

 

57,182

 

 

 

 

 

Equity

 

 

 

HPP stockholders' equity:

 

 

 

4.750% Series C cumulative redeemable preferred stock, $0.01 par value, $25.00 per share liquidation preference, 18,400,000 authorized; 17,000,000 shares outstanding at 03/31/24 and 12/31/23

 

425,000

 

 

 

425,000

 

Common stock, $0.01 par value, 481,600,000 authorized, 141,144,592 shares and 141,034,806 shares outstanding at 03/31/24 and 12/31/23, respectively

 

1,403

 

 

 

1,403

 

Additional paid-in capital

 

2,753,640

 

 

 

2,651,798

 

Accumulated other comprehensive income (loss)

 

3,033

 

 

 

(187

)

Total HPP stockholders' equity

 

3,183,076

 

 

 

3,078,014

 

Non-controlling interest—members in consolidated real estate entities

 

120,526

 

 

 

335,439

 

Non-controlling interest—units in the operating partnership

 

84,962

 

 

 

80,719

 

Total equity

 

3,388,564

 

 

 

3,494,172

 

TOTAL LIABILITIES AND EQUITY

$

8,251,462

 

 

$

8,282,050

 

 

 

 

 

Consolidated Statements of Operations

In thousands, except per share data

 

Three Months Ended

 

3/31/2024

 

3/31/2023

 

(Unaudited)

 

(Unaudited)

REVENUES

 

 

 

Office

 

 

 

Rental revenues

$

171,427

 

 

$

202,657

 

Service and other revenues

 

3,648

 

 

 

3,976

 

Total office revenues

 

175,075

 

 

 

206,633

 

Studio

 

 

 

Rental revenues

 

13,600

 

 

 

16,253

 

Service and other revenues

 

25,348

 

 

 

29,377

 

Total studio revenues

 

38,948

 

 

 

45,630

 

Total revenues

 

214,023

 

 

 

252,263

 

OPERATING EXPENSES

 

 

 

Office operating expenses

 

72,947

 

 

 

74,054

 

Studio operating expenses

 

37,109

 

 

 

37,244

 

General and administrative

 

19,710

 

 

 

18,724

 

Depreciation and amortization

 

91,854

 

 

 

97,139

 

Total operating expenses

 

221,620

 

 

 

227,161

 

OTHER INCOME (EXPENSES)

 

 

 

Loss from unconsolidated real estate entities

 

(743

)

 

 

(745

)

Fee income

 

1,125

 

 

 

2,402

 

Interest expense

 

(44,089

)

 

 

(53,807

)

Interest income

 

854

 

 

 

371

 

Management services reimbursement income—unconsolidated real estate entities

 

1,156

 

 

 

1,064

 

Management services expense—unconsolidated real estate entities

 

(1,156

)

 

 

(1,064

)

Transaction-related expenses

 

(2,150

)

 

 

(1,186

)

Unrealized (loss) gain on non-real estate investments

 

(898

)

 

 

839

 

Gain on sale of real estate

 

 

 

 

7,046

 

Other income

 

143

 

 

 

5,161

 

Total other expenses

 

(45,758

)

 

 

(39,919

)

Loss before income tax benefit (provision)

 

(53,355

)

 

 

(14,817

)

Income tax benefit (provision)

 

 

 

 

 

Net loss

 

(53,355

)

 

 

(14,817

)

Net income attributable to Series A preferred units

 

(153

)

 

 

(153

)

Net income attributable to Series C preferred shares

 

(5,047

)

 

 

(5,047

)

Net income attributable to participating securities

 

(202

)

 

 

(553

)

Net loss (income) attributable to non-controlling interest in consolidated real estate entities

 

4,169

 

 

 

(1,031

)

Net loss attributable to redeemable non-controlling interest in consolidated real estate entities

 

1,157

 

 

 

894

 

Net loss attributable to common units in the operating partnership

 

1,229

 

 

 

282

 

NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS

$

(52,202

)

 

$

(20,425

)

 

 

 

 

BASIC AND DILUTED PER SHARE AMOUNTS

 

 

 

Net loss attributable to common stockholders—basic

$

(0.37

)

 

$

(0.14

)

Net loss attributable to common stockholders—diluted

$

(0.37

)

 

$

(0.14

)

Weighted average shares of common stock outstanding—basic

 

141,122

 

 

 

141,025

 

Weighted average shares of common stock outstanding—diluted

 

141,122

 

 

 

141,025

 

Funds from Operations(1)

Unaudited, in thousands, except per share data

 

Three Months Ended

 

3/31/2024

 

3/31/2023

RECONCILIATION OF NET LOSS TO FUNDS FROM OPERATIONS (FFO)(1):

 

 

 

Net loss

$

(53,355

)

 

$

(14,817

)

Adjustments:

 

 

 

Depreciation and amortization—consolidated

 

91,854

 

 

 

97,139

 

Depreciation and amortization—non-real estate assets

 

(7,981

)

 

 

(8,392

)

Depreciation and amortization—HPP's share from unconsolidated real estate entities(2)

 

1,151

 

 

 

1,263

 

Gain on sale of real estate

 

 

 

 

(7,046

)

Unrealized loss (gain) on non-real estate investments

 

898

 

 

 

(839

)

FFO attributable to non-controlling interests

 

(5,326

)

 

 

(13,637

)

FFO attributable to preferred shares and units

 

(5,200

)

 

 

(5,200

)

FFO to common stock/unit holders

 

22,041

 

 

 

48,471

 

Specified items impacting FFO:

 

 

 

Transaction-related expenses

 

2,150

 

 

 

1,186

 

FFO (excluding specified items) to common stock/unit holders

$

24,191

 

 

$

49,657

 

 

 

 

 

Weighted average common stock/units outstanding—diluted

 

146,221

 

 

 

143,329

 

FFO per common stock/unit—diluted

$

0.15

 

 

$

0.34

 

FFO (excluding specified items) per common stock/unit—diluted

$

0.17

 

 

$

0.35

 

(1)

We calculate Funds from Operations ("FFO") in accordance with the White Paper on FFO approved by the Board of Governors of the National Association of Real Estate Investment Trusts. The White Paper defines FFO as net income or loss calculated in accordance with generally accepted accounting principles in the United States (“GAAP”), excluding gains and losses from sales of depreciable real estate and impairment write-downs associated with depreciable real estate, plus the HPP’s share of real estate-related depreciation and amortization, excluding amortization of deferred financing costs and depreciation of non-real estate assets. The calculation of FFO includes the HPP’s share of amortization of deferred revenue related to tenant-funded tenant improvements and excludes the depreciation of the related tenant improvement assets.

 

 

 

FFO is a non-GAAP financial measure we believe is a useful supplemental measure of our operating performance. The exclusion from FFO of gains and losses from the sale of operating real estate assets allows investors and analysts to readily identify the operating results of the assets that form the core of our activity and assists in comparing those operating results between periods. Also, because FFO is generally recognized as the industry standard for reporting the operations of REITs, it facilitates comparisons of operating performance to other REITs. However, other REITs may use different methodologies to calculate FFO, and accordingly, our FFO may not be comparable to all other REITs.

 

 

 

Implicit in historical cost accounting for real estate assets in accordance with GAAP is the assumption that the value of real estate assets diminishes predictably over time. Since real estate values have historically risen or fallen with market conditions, many industry investors and analysts have considered presentations of operating results for real estate companies using historical cost accounting alone to be insufficient. Because FFO excludes depreciation and amortization of real estate assets, we believe that FFO along with the required GAAP presentations provides a more complete measurement of our performance relative to our competitors and a more appropriate basis on which to make decisions involving operating, financing and investing activities than the required GAAP presentations alone would provide. We use FFO per share to calculate annual cash bonuses for certain employees.

 

 

 

However, FFO should not be viewed as an alternative measure of our operating performance because it does not reflect either depreciation and amortization costs or the level of capital expenditures and leasing costs necessary to maintain the operating performance of our properties, which are significant economic costs and could materially impact our results from operations.

 

 

(2)

HPP's share is a Non-GAAP financial measure calculated as the measure on a consolidated basis, in accordance with GAAP, plus our Operating Partnership’s share of the measure from our unconsolidated joint ventures (calculated based upon the Operating Partnership’s percentage ownership interest), minus our partners’ share of the measure from our consolidated joint ventures (calculated based upon the partners’ percentage ownership interests). We believe that presenting HPP’s share of these measures provides useful information to investors regarding the Company’s financial condition and/or results of operations because we have several significant joint ventures, and in some cases, we exercise significant influence over, but do not control, the joint venture. In such instances, GAAP requires us to account for the joint venture entity using the equity method of accounting, which we do not consolidate for financial reporting purposes. In other cases, GAAP requires us to consolidate the venture even though our partner(s) own(s) a significant percentage interest.

Adjusted Funds from Operations(1)

Unaudited, in thousands, except per share data

 

Three Months Ended

 

3/31/2024

 

3/31/2023

FFO (excluding specified items)

$

24,191

 

 

$

49,657

 

Adjustments:

 

 

 

GAAP non-cash revenue (straight-line rent and above/below-market rents)

 

2,018

 

 

 

(9,136

)

GAAP non-cash expense (straight-line rent expense and above/below-market ground rent)

 

1,666

 

 

 

1,823

 

Non-real estate depreciation and amortization

 

7,981

 

 

 

8,392

 

Non-cash interest expense

 

1,846

 

 

 

4,676

 

Non-cash compensation expense

 

6,532

 

 

 

5,156

 

Recurring capital expenditures, tenant improvements and lease commissions

 

(15,743

)

 

 

(25,525

)

AFFO

$

28,491

 

 

$

35,043

 

 

 

 

 

(1)

Adjusted Funds from Operations ("AFFO") is a non-GAAP financial measure we believe is a useful supplemental measure of our performance. We compute AFFO by adding to FFO (excluding specified items) HPP's share of non-cash compensation expense and amortization of deferred financing costs, and subtracting recurring capital expenditures related to HPP's share of tenant improvements and leasing commissions (excluding pre-existing obligations on contributed or acquired properties funded with amounts received in settlement of prorations), and eliminating the net effect of HPP’s share of straight-line rents, amortization of lease buy-out costs, amortization of above-and below-market lease intangible assets and liabilities, amortization of above-and below-market ground lease intangible assets and liabilities and amortization of loan discounts/premiums. AFFO is not intended to represent cash flow for the period. We believe that AFFO provides useful information to the investment community about our financial position as compared to other REITs since AFFO is a widely reported measure used by other REITs. However, other REITs may use different methodologies for calculating AFFO and, accordingly, our AFFO may not be comparable to other REITs.

Net Operating Income(1)

Unaudited, in thousands

 

Three Months Ended

 

3/31/2024

 

3/31/2023

Net loss

$

(53,355

)

 

$

(14,817

)

Adjustments:

 

 

 

Loss from unconsolidated real estate entities

 

743

 

 

 

745

 

Fee income

 

(1,125

)

 

 

(2,402

)

Interest expense

 

44,089

 

 

 

53,807

 

Interest income

 

(854

)

 

 

(371

)

Management services reimbursement income—unconsolidated real estate entities

 

(1,156

)

 

 

(1,064

)

Management services expense—unconsolidated real estate entities

 

1,156

 

 

 

1,064

 

Transaction-related expenses

 

2,150

 

 

 

1,186

 

Unrealized loss (gain) on non-real estate investment

 

898

 

 

 

(839

)

Gain on sale of real estate

 

 

 

 

(7,046

)

Other income

 

(143

)

 

 

(5,161

)

General and administrative

 

19,710

 

 

 

18,724

 

Depreciation and amortization

 

91,854

 

 

 

97,139

 

NOI

$

103,967

 

 

$

140,965

 

 

 

 

 

NOI Detail

 

 

 

Same-store office cash revenues

 

167,096

 

 

 

179,404

 

Straight-line rent

 

(3,308

)

 

 

63

 

Amortization of above/below-market leases, net

 

1,399

 

 

 

1,591

 

Amortization of lease incentive costs

 

(128

)

 

 

(282

)

Same-store office revenues

 

165,059

 

 

 

180,776

 

 

 

 

 

Same-store studios cash revenues

 

19,144

 

 

 

21,904

 

Straight-line rent

 

191

 

 

 

494

 

Amortization of lease incentive costs

 

(9

)

 

 

(9

)

Same-store studio revenues

 

19,326

 

 

 

22,389

 

 

 

 

 

Same-store revenues

 

184,385

 

 

 

203,165

 

 

 

 

 

Same-store office cash expenses

 

66,404

 

 

 

64,989

 

Straight-line rent

 

324

 

 

 

414

 

Non-cash compensation expense

 

19

 

 

 

35

 

Amortization of above/below-market ground leases, net

 

650

 

 

 

676

 

Same-store office expenses

 

67,397

 

 

 

66,114

 

 

 

 

 

Same-store studio cash expenses

 

11,542

 

 

 

11,920

 

Non-cash compensation expense

 

51

 

 

 

111

 

Same-store studio expenses

 

11,593

 

 

 

12,031

 

 

 

 

 

Same-store expenses

 

78,990

 

 

 

78,145

 

 

 

 

 

Same-store NOI

 

105,395

 

 

 

125,020

 

Non-same-store NOI

 

(1,428

)

 

 

15,945

 

NOI

$

103,967

 

 

$

140,965

 

 

 

 

 

(1)

We evaluate performance based upon property Net Operating Income ("NOI") from continuing operations. NOI is not a measure of operating results or cash flows from operating activities or cash flows as measured by GAAP and should not be considered an alternative to income from continuing operations, as an indication of our performance, or as an alternative to cash flows as a measure of liquidity, or our ability to make distributions. All companies may not calculate NOI in the same manner. We consider NOI to be a useful performance measure to investors and management because when compared across periods, NOI reflects the revenues and expenses directly associated with owning and operating our properties and the impact to operations from trends in occupancy rates, rental rates and operating costs, providing a perspective not immediately apparent from income from continuing operations. We calculate NOI as net income (loss) excluding corporate general and administrative expenses, depreciation and amortization, impairments, gains/losses on sales of real estate, interest expense, transaction-related expenses and other non-operating items. We define NOI as operating revenues (rental revenues, other property-related revenue, tenant recoveries and other operating revenues), less property-level operating expenses (external management fees, if any, and property-level general and administrative expenses). NOI on a cash basis is NOI adjusted to exclude the effect of straight-line rent and other non-cash adjustments required by GAAP. We believe that NOI on a cash basis is helpful to investors as an additional measure of operating performance because it eliminates straight-line rent and other non-cash adjustments to revenue and expenses.

 

Investor Contact Laura Campbell Executive Vice President, Investor Relations & Marketing (310) 622-1702 lcampbell@hudsonppi.com

Media Contact Laura Murray Vice President, Communications (310) 622-1781 lmurray@hudsonppi.com

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