Surpassed 2.9 Million Square Feet of Executed Leases in 2016
Achieved 45% GAAP and 37% Cash Rent Spreads in 2016
Provided 2017 FFO Outlook of $1.93 to $2.03 Per Share
LOS ANGELES--(BUSINESS WIRE)--
Hudson Pacific Properties, Inc. (the “Company” or “Hudson Pacific”)
(NYSE: HPP) today announced financial results for the fourth quarter
ended December 31, 2016.
Fourth Quarter Highlights
-
Net income attributable to common stockholders of $22.3 million or
$0.18 per diluted share, compared to net loss of $6.5 million, or
$(0.07) per diluted share, a year ago;
-
Funds From Operations (FFO), excluding specified items, of $68.0
million, or $0.46 per diluted share, compared to $64.8 million, or
$0.44 per share, a year ago;
-
Completed new and renewal leases totaling 560,112 square feet with
GAAP and cash rent growth of 15.5% and 9.5%, respectively, including a
two-year extension of NFL Enterprises 167,606-square-foot lease at
10900 and 10950 Washington Boulevard in Culver City at in-place rents
(GAAP and cash rent growth of 32.0% and 21.1%, respectively,
disregarding NFL Enterprises extension);
-
Improved in-service office portfolio leased rate to 91.2% at
December 31, 2016, up from 90.7% as of September 30, 2016;
-
Acquired Hill7 in Seattle through a joint venture with Canada Pension
Plan Investment Board (“CPPIB”) for $180.0 million before certain
prorations and closing costs, and Page Mill Hill in Palo Alto for
$150.0 million before credits, prorations and closing costs;
-
Sold 12655 Jefferson Boulevard in Playa Vista for $80.0 million before
credits prorations and closing costs; and
-
Declared and paid a quarterly dividend of $0.20 per share on common
stock.
“Our fourth quarter topped off an outstanding year for Hudson Pacific,”
said Victor Coleman, Hudson Pacific Properties’ Chairman and CEO. “We
signed over 560,000 square feet of leases in the quarter, bringing total
2016 deals to north of 2.9 million square feet--nearly double the
transactions we completed in 2015. GAAP and cash rent spreads for the
year were an impressive 45% and 37%, respectively. We continued to
transform our studio business, achieving 34% and 45% GAAP and cash
year-over-year net income growth, and as of the end of the fourth
quarter, Netflix’s Sunset Bronson footprint had grown to over 500,000
square feet. Also in 2016, we improved the quality of our office
portfolio with over $1.0 billion of capital recycling and selective
investments. This includes the fourth quarter sale of our completed and
fully pre-leased 12655 Jefferson redevelopment and the acquisitions of
two value-add opportunities, Hill7 and Page Mill Hill.”
Financial Results
The Company reported net income attributable to common stockholders of
$22.3 million, or $0.18 per diluted share, for the three months ended
December 31, 2016, compared to net loss attributable to common
stockholders of $6.5 million, or $(0.07) per diluted share, for the
three months ended December 31, 2015.
FFO, excluding specified items, for the three months ended December 31,
2016 totaled $68.0 million, or $0.46 per diluted share, compared to
$64.8 million, or $0.44 per share, a year ago. There were no specified
items for the fourth quarter of 2016. Specified items for the fourth
quarter of 2015 consisted of acquisition-related expense reimbursements
of $0.1 million, or $0.00 per diluted share.
FFO, including the specified items, for the three months ended
December 31, 2016 totaled $68.0 million, or $0.46 per diluted share,
compared to $64.9 million, or $0.44 per share, a year ago.
Combined Operating Results For The Three Months Ended December 31,
2016
Total revenue during the fourth quarter increased 8.1% to $167.2 million
from $154.7 million for the same quarter a year ago. Total operating
expenses for the fourth quarter remained relatively flat compared to the
same quarter a year ago. As a result, income from operations increased
94.5% to $26.8 million from $13.8 million for the same quarter a year
ago. The primary reasons for the changes in total revenue and total
operating expenses are discussed below in connection with the Company’s
segment operating results.
Interest expense during the fourth quarter increased 28.1% to $21.3
million from $16.6 million for the same quarter a year ago. The Company
had $2.7 billion and $2.3 billion of notes payable at December 31, 2016
and December 31, 2015, respectively.
The Company had $21.9 million of gain on sale primarily associated with
the disposition of 12655 Jefferson Boulevard during the fourth quarter
2016, with no comparable activity for the same quarter last year.
Segment Operating Results For The Three Months Ended December 31, 2016
Office Properties
Total revenue at the Company’s office properties increased 7.3% to
$154.4 million from $143.9 million for the same quarter a year ago. The
increase was primarily due to a $10.5 million increase in rental revenue
to $128.8 million and a $2.5 million increase in parking and other
revenue to $5.8 million, offset by a $2.5 million decrease in tenant
recoveries to $19.9 million. The increase in rental revenue largely
resulted from higher rents and occupancy throughout the Company’s
same-store portfolio together with rental revenue associated with the
acquisitions of 11601 Wilshire Boulevard, Hill7 and Page Mill Hill,
partially offset by the dispositions of Bayhill Office Center (sold in
January 2016) and One Bay Plaza (sold in June 2016). The increase in
parking and other revenue is primarily attributable to additional
parking income generated by higher occupancy throughout the Company’s
same-store portfolio together with parking and other revenue associated
with the aforementioned acquisitions. The decrease in tenant recoveries
is largely due to a recovery adjustment following the favorable property
tax reassessments of 1455 Market Street and Clocktower Square.
Office property operating expenses from continuing operations increased
2.8% to $52.2 million from $50.8 million for the same quarter a year
ago. The increase primarily resulted from the aforementioned
acquisitions, as well as higher occupancy throughout the Company’s
in-service portfolio, partially offset by the 1455 Market Street
favorable property tax reassessment and the sales of Bayhill Office
Center and One Bay Plaza.
Net operating income with respect to the Company’s 33 same-store office
properties for the fourth quarter increased by 10.7% on a GAAP basis and
by 4.1% on a cash basis. The cash basis net operating income increase
was muted by the September 1, 2016 commencement of a rent and square
footage reduction with Weil Gotshal at Towers at Shore Center under a
lease amendment entered into on December 18, 2014, prior to the
Company’s acquisition of that property from Blackstone. The Company
estimates that fourth quarter cash basis net operating income generated
by its 33 same-store office properties would have increased
approximately 14.4% under the prior lease terms with Weil Gotshal.
At December 31, 2016, the Company’s stabilized and in-service office
portfolio was 96.4% and 91.2% leased, respectively. During the quarter,
the Company executed 50 new and renewal leases totaling 560,112 square
feet.
Media and Entertainment Properties
Total revenue at the Company’s media and entertainment properties
increased 18.5% to $12.8 million from $10.8 million for the same quarter
a year ago, primarily due to a $0.7 million increase in rental revenue
to $6.9 million and a $1.0 million increase in tenant recoveries to $1.2
million. The increase in rental revenue largely stemmed from higher
occupancy at Sunset Gower and Sunset Bronson, including certain stage
and office space at Sunset Bronson taken off-line for improvements
during the first quarter of 2015 and brought back on-line and fully
occupied over the three months ended September 30, 2016. The increase in
tenant recoveries largely stemmed from higher recoveries for current and
prior year expenses attributable to KTLA at Sunset Bronson. Total media
and entertainment operating expenses increased 10.9% to $7.1 million
from $6.4 million for the same quarter a year ago, largely due to higher
occupancy at Sunset Gower and Sunset Bronson.
Media and entertainment net operating income in the fourth quarter
increased by 29.7% on a GAAP basis and by 36.9% on a cash basis.
As of December 31, 2016, the trailing 12-month occupancy for the
Company’s media and entertainment portfolio increased to 89.1% from
78.5% for the trailing 12-month period ended December 31, 2015.
Balance Sheet
At December 31, 2016, the Company had total assets of $6.7 billion,
including unrestricted cash and cash equivalents of $83.0 million. At
December 31, 2016, the Company had $400.0 million of total capacity
under its unsecured revolving credit facility, of which $300.0 million
had been drawn. Subsequent to the quarter, the Company repaid $45.0
million of unsecured revolving credit facility from proceeds generated
by the sale of 222 Kearny Street.
Major Leasing
Executed Significant New & Renewal Leases
NFL Enterprises executed a two-year extension through June 2021 of its
167,606-square-foot lease at 10900 and 10950 Washington Boulevard in
Culver City. NFL Enterprises continues to occupy the entirety of 10900
and 10950 Washington Boulevard, where it utilizes both office space and
sound stages to broadcast the NFL Network.
Netflix executed a lease to fully occupy all 91,953 square feet at the
Company’s CUE development in Hollywood through December 2026. Designed
by Gensler and currently under construction, CUE is a Class-A, creative
office environment directly adjacent to the Company’s ICON development
on the Sunset Bronson lot. Netflix had already leased all 323,000 square
feet of space at ICON.
Netflix also executed an agreement to lease multiple stages and
production offices at Sunset Bronson totaling 99,250 square feet through
December 2026. The deal enables Netflix to keep its stage and production
teams close to its new Los Angeles headquarters at ICON and CUE.
Qualys, Inc., a leading provider of cloud-based security and compliance
solutions, executed a 10-year lease for 75,275 square feet at 919
Hillsdale Drive, part of the Company’s Metro Center complex in Foster
City. Tenant’s possession of the space commences February 2017 for
purposes of tenant improvements, with cash rents commencing in May 2018.
Acquisitions
Acquired New Construction Seattle Office Asset
On October 7, 2016, the Company purchased, through a joint venture with
CPPIB, a 285,680-square-foot, Class-A office tower, known as “Hill7,”
for $180.0 million before certain prorations and closing costs. Pursuant
to the joint venture, CPPIB owns a 45% interest in the property and
Hudson Pacific owns a 55% interest. The Company will act as managing
member responsible for property management, leasing and construction.
Located at 1099 Stewart Street in Seattle’s South Lake Union
neighborhood, directly adjacent to the Company’s Met Park North asset,
this newly constructed, 11-story office building is currently 80.4%
leased, with HBO and Redfin as anchor tenants. In conjunction with the
acquisition, the joint venture closed a secured, non-recourse loan in
the amount of $101.0 million bearing an interest rate of 3.38% per
annum, interest only. This loan has a 10-year maturity with an option to
extend an additional two years at a higher interest rate and with
principal amortization.
Acquired Palo Alto Office Asset
On December 12, 2016, the Company purchased the leasehold and
improvements for Page Mill Hill, a five-building office campus totaling
182,676 square feet in Palo Alto’s Stanford Research Park for $150.0
million before credits, prorations and closing costs. Page Mill Hill is
currently leased to prominent legal and accounting firms, including
Gibson, Dunn & Crutcher; Frank, Rimerman + Co.; Manatt, Phelps &
Phillips; and Perkins Coie. The acquisition complements the Company’s
existing Stanford Research Park holdings, which now include seven
properties comprising more than 1.2 million square feet. The Company is
the largest office landlord in the Stanford Research Park, a
10-million-square-foot, university-affiliated business center focused on
innovation and research & development.
Dispositions
Sold Fully Leased Playa Vista Redevelopment
On November 4, 2016, the Company sold its 100,756-square-foot 12655
Jefferson Boulevard redevelopment in Playa Vista for $80.0 million
before certain credits, prorations, and closing costs, representing a
30.0% premium over the Company’s basis. The Company had fully pre-leased
the project to and completed tenant build-outs for WeWork and Dentsu
Aegis Network prior to sale. The Company decided to sell 12655 Jefferson
Boulevard, its only Playa Vista holding, after receiving a compelling
off-market purchase offer. Proceeds from the sale were used to repay
amounts outstanding under the Company’s unsecured revolving credit
facility.
Equity Offering
Completed Common Stock Public Offering
On November 24, 2016, the Company completed a public offering of
18,699,017 shares of its common stock, consisting of 17,533,099 shares
offered by the Company and 1,165,918 shares offered by funds affiliated
with Farallon Capital Management, L.L.C. (collectively, the “Farallon
Funds”). The Company used the approximately $572.5 million of net
proceeds to acquire 17,250,000 common units of limited partnership
interest in its operating partnership, Hudson Pacific Properties, L.P.
(the “Operating Partnership”), from certain entities affiliated with The
Blackstone Group L.P. (collectively, “Blackstone”), and 283,099 common
units of limited partnership interest in the Operating Partnership from
the Farallon Funds. The Company did not receive any proceeds from the
sale of the shares of common stock in this offering by the Farallon
Funds.
Dividend
Paid Common Dividend
The Company’s Board of Directors declared a dividend on its common stock
of $0.20 per share for the fourth quarter of 2016. The dividends were
paid on December 29, 2016 to stockholders of record on December 19, 2016.
Activities Subsequent to December 31, 2016
Sold San Francisco Office Asset
On February 14, 2017, the Company sold 222 Kearny Street, a
148,797-square-foot office building in San Francisco, to a partnership
led by LBA Realty for $51.8 million before credits, prorations and
closing costs. The Company applied $45.0 million of proceeds from the
sale to pay down amounts outstanding under its unsecured revolving
credit facility.
Entered into Agreement to Sell Los Angeles Redevelopment
On January 20, 2017, the Company entered into an agreement to sell 3402
Pico Boulevard, a 50,687-square-foot office redevelopment and related
development land in Santa Monica, for $34.0 million before credits,
prorations and closing costs. The Company expects this transaction to
close in the first quarter of 2017, and intends to use proceeds to pay
down amounts outstanding under its unsecured revolving credit facility.
Completed Common Stock Public Offering
On January 10, 2017, the Company completed a public offering of
18,673,808 shares of its common stock, consisting of 8,881,575 shares
offered by the Company, 8,626,311 shares offered by Blackstone and
1,165,922 shares offered by the Farallon Funds. The Company used the
approximately $312.2 million of gross proceeds to acquire 8,598,480
common units of limited partnership interest in the Operating
Partnership from Blackstone, and 283,095 common units of limited
partnership interest in the Operating Partnership from the Farallon
Funds. The Company did not receive any proceeds from the sale of the
shares of common stock in this offering by Blackstone or the Farallon
Funds. Upon the offering’s completion, Blackstone and the Farallon Funds
no longer hold any ownership interest in the Company or its Operating
Partnership.
2017 Outlook
The Company is providing full-year 2017 FFO guidance in the range of
$1.93 to $2.03 per diluted share excluding specified items. This
guidance assumes the use of $45.0 million of proceeds from the completed
sale of 222 Kearny Street and the use of $35.0 million of proceeds from
the anticipated sale of 3402 Pico Boulevard in late March toward the
repayment of amounts outstanding under the Company’s revolving credit
facility. This guidance also assumes full-year 2017 weighted average
fully diluted common stock/units of 147,357,000 (including 1,000,000
shares of unvested restricted stock). As is always the case, the
full-year 2017 FFO estimate reflects 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, but otherwise excludes any impact from future
unannounced or speculative acquisitions, dispositions, debt financings
or repayments, recapitalizations, capital market activity or similar
matters.
The Company does not provide a reconciliation for non-GAAP estimates on
a forward-looking basis, including the information under “2017 Outlook”
above, 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, the most directly comparable forward-looking GAAP financial
measure, including, 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 the Company’s fourth
quarter and full year 2016 results may be found in the Investor
Relations section of the Company’s Website at investors.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 fourth quarter 2016
financial results at 11:00 a.m. PT / 2:00 p.m. ET on February 16, 2017.
To participate in the call by telephone, please dial (877) 407-0784 five
to 10 minutes prior to the start time to allow time for registration.
International callers should dial (201) 689-8560. The call will also be
broadcast live over the Internet and can be accessed via the Investor
Relations section of Hudson Pacific’s Website at investors.hudsonpacificproperties.com,
where a replay of the call will be available for 90 days. A replay will
also be available beginning February 16, 2017, at 2:00 p.m. PT / 5:00
p.m. ET, through February 23, 2017, at 8:59 p.m. PT / 11:59 p.m. ET by
dialing (844) 512-2921 and entering the passcode 13653151. International
callers should dial (412) 317-6671 and enter the same passcode.
Use of Non-GAAP Information
The Company calculates funds from operations before non-controlling
interest (FFO) in accordance with the standards established by the
National Association of Real Estate Investment Trusts (NAREIT). FFO
represents net income (loss), computed in accordance with accounting
principles generally accepted in the United States of America (GAAP),
excluding gains (or losses) from sales of depreciable operating
property, real estate depreciation and amortization (excluding
amortization of above/below market lease intangible assets and
liabilities and amortization of deferred financing costs and debt
discounts/premium) and after adjustments for unconsolidated partnerships
and joint ventures. The Company uses FFO as a supplemental performance
measure because, in excluding real estate depreciation and amortization
and gains and losses from property dispositions, it provides a
performance measure that, when compared year over year, captures trends
in occupancy rates, rental rates and operating costs. The Company also
believes that, as a widely recognized measure of the performance of
REITs, FFO will be used by investors as a basis to compare its operating
performance with that of other REITs. However, because FFO excludes
depreciation and amortization and captures neither the changes in the
value of the Company’s properties that results from use or market
conditions nor the level of capital expenditures and leasing commissions
necessary to maintain the operating performance of its properties, all
of which have real economic effect and could materially impact the
Company’s results from operations, the utility of FFO as a measure of
the Company’s performance is limited. Other equity REITs may not
calculate FFO in accordance with the NAREIT definition and, accordingly,
the Company’s FFO may not be comparable to such other REITs’ FFO.
Accordingly, FFO should be considered only as a supplement to net income
as a measure of the Company’s performance. FFO should not be used as a
measure of the Company’s liquidity, nor is it indicative of funds
available to fund the Company’s cash needs, including the Company’s
ability to pay dividends. FFO should not be used as a supplement to or
substitute for cash flow from operating activities computed in
accordance with GAAP.
The Company evaluates 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 as measured by
GAAP and should not be considered an alternative to income from
continuing operations, as an indication of the Company’s performance, or
as an alternative to cash flows as a measure of liquidity, or the
Company’s ability to make distributions. All companies may not calculate
NOI in the same manner. The Company considers 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 the Company’s 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. The Company calculates net operating
income as net income (loss) excluding corporate general and
administrative expenses, depreciation and amortization, impairments,
gains/losses on sales of real estate, interest expense,
acquisition-related expenses and other non-operating items. The Company
defines NOI as operating revenues (including rental revenues, other
property-related revenue, tenant recoveries and other operating
revenues), less property-level operating expenses (which includes
external management fees, if any, and property-level general and
administrative expenses). NOI on a cash basis is NOI on a GAAP basis,
adjusted to exclude the effect of straight-line rent and other non-cash
adjustments required by GAAP. The Company believes 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.
About Hudson Pacific Properties
Hudson Pacific Properties is a vertically integrated real estate company
focused on acquiring, repositioning, developing and operating high
quality office and state-of-the-art media and entertainment properties
in select West Coast markets. Hudson Pacific invests across the
risk-return spectrum, favoring opportunities where it can employ
leasing, capital investment and management expertise to create
additional value. Founded in 2006 as Hudson Capital, the Company went
public in 2010, electing to be taxed as a real estate investment trust.
Through the years, Hudson Pacific has strategically assembled a
portfolio totaling over 17 million square feet, including land for
development, in high growth, high-barrier-to-entry submarkets throughout
Northern and Southern California and the Pacific Northwest. The Company
is a leading provider of design-forward, next-generation workspaces for
a variety of tenants, with a focus on Fortune 500 and leading growth
companies, many in the technology, media and entertainment sectors. As a
long-term owner, Hudson Pacific prioritizes tenant satisfaction and
retention, providing highly customized build-outs and working
proactively to accommodate tenants’ growth. Hudson Pacific trades as a
component of the Russell 2000® and the Russell 3000® indices. 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 for the year ended December 31,
2015 filed with the SEC on February 26, 2016, as amended by the Form
10-K/A filed with the SEC on December 23, 2016, and other risks
described in documents subsequently filed by the Company from time to
time with the SEC.
|
|
|
Hudson Pacific Properties, Inc.
|
|
Consolidated Balance Sheet
|
|
(Unaudited, in thousands, except share data)
|
|
|
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
|
2016
|
|
|
2015
|
|
ASSETS
|
|
|
|
|
|
|
|
REAL ESTATE ASSETS
|
|
|
|
|
|
|
|
Land
|
|
|
$
|
1,281,809
|
|
|
|
$
|
1,244,921
|
|
|
Building and improvements
|
|
|
4,502,235
|
|
|
|
3,907,807
|
|
|
Tenant improvements
|
|
|
373,778
|
|
|
|
288,146
|
|
|
Furniture and fixtures
|
|
|
4,276
|
|
|
|
9,578
|
|
|
Property under development
|
|
|
308,203
|
|
|
|
173,007
|
|
|
Total real estate held for investment
|
|
|
6,470,301
|
|
|
|
5,623,459
|
|
|
Accumulated depreciation and amortization
|
|
|
(419,368
|
)
|
|
|
(263,859
|
)
|
|
Investment in real estate, net
|
|
|
6,050,933
|
|
|
|
5,359,600
|
|
|
Cash and cash equivalents
|
|
|
83,015
|
|
|
|
53,551
|
|
|
Restricted cash
|
|
|
25,177
|
|
|
|
18,010
|
|
|
Accounts receivable, net
|
|
|
6,852
|
|
|
|
20,996
|
|
|
Notes receivable, net
|
|
|
—
|
|
|
|
28,684
|
|
|
Straight-line rent receivables, net
|
|
|
87,281
|
|
|
|
58,783
|
|
|
Deferred leasing costs and lease intangible assets, net
|
|
|
310,062
|
|
|
|
312,930
|
|
|
Derivative assets
|
|
|
5,935
|
|
|
|
2,061
|
|
|
Goodwill
|
|
|
8,754
|
|
|
|
8,754
|
|
|
Prepaid expenses and other assets, net
|
|
|
27,153
|
|
|
|
27,156
|
|
|
Investment in unconsolidated entities
|
|
|
37,228
|
|
|
|
—
|
|
|
Assets associated with real estate held for sale
|
|
|
36,608
|
|
|
|
363,510
|
|
|
TOTAL ASSETS
|
|
|
$
|
6,678,998
|
|
|
|
$
|
6,254,035
|
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
|
|
|
Notes payable, net
|
|
|
$
|
2,688,010
|
|
|
|
$
|
2,260,716
|
|
|
Accounts payable and accrued liabilities
|
|
|
120,572
|
|
|
|
81,658
|
|
|
Lease intangible liabilities, net
|
|
|
80,130
|
|
|
|
94,395
|
|
|
Security deposits
|
|
|
31,495
|
|
|
|
20,363
|
|
|
Prepaid rent
|
|
|
40,755
|
|
|
|
38,104
|
|
|
Derivative liabilities
|
|
|
1,303
|
|
|
|
2,010
|
|
|
Liabilities associated with real estate held for sale
|
|
|
3,806
|
|
|
|
17,575
|
|
|
TOTAL LIABILITIES
|
|
|
2,966,071
|
|
|
|
2,514,821
|
|
|
6.25% Series A cumulative redeemable preferred units of the
operating partnership
|
|
|
10,177
|
|
|
|
10,177
|
|
|
EQUITY
|
|
|
|
|
|
|
|
Hudson Pacific Properties, Inc. stockholders’ equity:
|
|
|
|
|
|
|
|
Common stock, $0.01 par value, 490,000,000 authorized, 136,492,235
shares and 89,153,780 shares outstanding at December 31, 2016 and
2015, respectively.
|
|
|
1,364
|
|
|
|
891
|
|
|
Additional paid-in capital
|
|
|
3,109,394
|
|
|
|
1,710,979
|
|
|
Accumulated other comprehensive income (loss)
|
|
|
9,496
|
|
|
|
(1,081
|
)
|
|
Accumulated deficit
|
|
|
(16,971
|
)
|
|
|
(44,955
|
)
|
|
Total Hudson Pacific Properties, Inc. stockholders’ equity
|
|
|
3,103,283
|
|
|
|
1,665,834
|
|
|
Non-controlling interest—members in consolidated entities
|
|
|
304,608
|
|
|
|
262,625
|
|
|
Non-controlling interest—units in the operating partnership
|
|
|
294,859
|
|
|
|
1,800,578
|
|
|
TOTAL EQUITY
|
|
|
3,702,750
|
|
|
|
3,729,037
|
|
|
TOTAL LIABILITIES AND EQUITY
|
|
|
$
|
6,678,998
|
|
|
|
$
|
6,254,035
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hudson Pacific Properties, Inc.
|
|
Consolidated Statements of Operations
|
|
(Unaudited, in thousands, except share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
December 31,
|
|
|
Year Ended
December 31,
|
|
|
|
|
|
|
|
|
|
2016
|
|
|
2015
|
|
|
2016
|
|
|
2015
|
|
REVENUES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Office
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rental
|
|
|
$
|
128,763
|
|
|
|
$
|
118,222
|
|
|
|
$
|
486,956
|
|
|
|
$
|
394,543
|
|
|
Tenant recoveries
|
|
|
19,893
|
|
|
|
22,345
|
|
|
|
84,386
|
|
|
|
66,235
|
|
|
Parking and other
|
|
|
5,791
|
|
|
|
3,328
|
|
|
|
21,894
|
|
|
|
20,940
|
|
|
Total office revenues
|
|
|
154,447
|
|
|
|
143,895
|
|
|
|
593,236
|
|
|
|
481,718
|
|
|
Media & Entertainment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rental
|
|
|
6,850
|
|
|
|
6,125
|
|
|
|
26,837
|
|
|
|
23,027
|
|
|
Tenant recoveries
|
|
|
1,229
|
|
|
|
238
|
|
|
|
1,884
|
|
|
|
943
|
|
|
Other property-related revenue
|
|
|
4,596
|
|
|
|
4,324
|
|
|
|
17,380
|
|
|
|
14,849
|
|
|
Other
|
|
|
76
|
|
|
|
69
|
|
|
|
302
|
|
|
|
313
|
|
|
Total Media & Entertainment revenues
|
|
|
12,751
|
|
|
|
10,756
|
|
|
|
46,403
|
|
|
|
39,132
|
|
|
TOTAL REVENUES
|
|
|
167,198
|
|
|
|
154,651
|
|
|
|
639,639
|
|
|
|
520,850
|
|
|
OPERATING EXPENSES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Office operating expenses
|
|
|
52,166
|
|
|
|
50,767
|
|
|
|
202,935
|
|
|
|
166,131
|
|
|
Media & Entertainment operating expenses
|
|
|
7,064
|
|
|
|
6,372
|
|
|
|
25,810
|
|
|
|
23,726
|
|
|
General and administrative
|
|
|
13,926
|
|
|
|
9,583
|
|
|
|
52,400
|
|
|
|
38,534
|
|
|
Depreciation and amortization
|
|
|
67,197
|
|
|
|
74,126
|
|
|
|
269,087
|
|
|
|
245,071
|
|
|
TOTAL OPERATING EXPENSES
|
|
|
140,353
|
|
|
|
140,848
|
|
|
|
550,232
|
|
|
|
473,462
|
|
|
INCOME FROM OPERATIONS
|
|
|
26,845
|
|
|
|
13,803
|
|
|
|
89,407
|
|
|
|
47,388
|
|
|
OTHER EXPENSE (INCOME)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
21,269
|
|
|
|
16,600
|
|
|
|
76,044
|
|
|
|
50,667
|
|
|
Interest income
|
|
|
(44
|
)
|
|
|
(6
|
)
|
|
|
(260
|
)
|
|
|
(124
|
)
|
|
Unrealized (gain) loss on ineffective portion of derivative
instruments
|
|
|
(194
|
)
|
|
|
—
|
|
|
|
1,436
|
|
|
|
—
|
|
|
Acquisition-related (expense reimbursements) expenses
|
|
|
—
|
|
|
|
(106
|
)
|
|
|
376
|
|
|
|
43,336
|
|
|
Other (income) expense
|
|
|
(842
|
)
|
|
|
60
|
|
|
|
(1,558
|
)
|
|
|
62
|
|
|
TOTAL OTHER EXPENSES
|
|
|
20,189
|
|
|
|
16,548
|
|
|
|
76,038
|
|
|
|
93,941
|
|
|
INCOME (LOSS) BEFORE GAINS ON SALES
|
|
|
6,656
|
|
|
|
(2,745
|
)
|
|
|
13,369
|
|
|
|
(46,553
|
)
|
|
Gains on sales
|
|
|
21,874
|
|
|
|
—
|
|
|
|
30,389
|
|
|
|
30,471
|
|
|
NET INCOME (LOSS)
|
|
|
28,530
|
|
|
|
(2,745
|
)
|
|
|
43,758
|
|
|
|
(16,082
|
)
|
|
Net income attributable to preferred stock
|
|
|
(159
|
)
|
|
|
(2,520
|
)
|
|
|
(636
|
)
|
|
|
(12,105
|
)
|
|
Original issuance costs of redeemed Series B preferred stock
|
|
|
—
|
|
|
|
(5,970
|
)
|
|
|
—
|
|
|
|
(5,970
|
)
|
|
Net income attributable to participating securities
|
|
|
(177
|
)
|
|
|
(127
|
)
|
|
|
(766
|
)
|
|
|
(356
|
)
|
|
Net (income) loss attributable to non-controlling interest in
consolidated entities
|
|
|
(2,424
|
)
|
|
|
815
|
|
|
|
(9,290
|
)
|
|
|
(3,853
|
)
|
|
Net (income) loss attributable to common units in the operating
partnership
|
|
|
(3,491
|
)
|
|
|
4,087
|
|
|
|
(5,848
|
)
|
|
|
21,969
|
|
|
Net income (loss) attributable to Hudson Pacific Properties, Inc.
common stockholders
|
|
|
$
|
22,279
|
|
|
|
$
|
(6,460
|
)
|
|
|
$
|
27,218
|
|
|
|
$
|
(16,397
|
)
|
|
Basic and diluted per share amounts:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) attributable to common stockholders—basic
|
|
|
$
|
0.18
|
|
|
|
$
|
(0.07
|
)
|
|
|
$
|
0.26
|
|
|
|
$
|
(0.19
|
)
|
|
Net income (loss) attributable to common stockholders—diluted
|
|
|
$
|
0.18
|
|
|
|
$
|
(0.07
|
)
|
|
|
$
|
0.25
|
|
|
|
$
|
(0.19
|
)
|
|
Weighted average shares of common stock outstanding—basic
|
|
|
125,994,815
|
|
|
|
88,990,612
|
|
|
|
106,188,902
|
|
|
|
85,927,216
|
|
|
Weighted average shares of common stock outstanding—diluted
|
|
|
127,212,815
|
|
|
|
88,990,612
|
|
|
|
110,369,055
|
|
|
|
85,927,216
|
|
|
Dividends declared per share of common stock
|
|
|
$
|
0.200
|
|
|
|
$
|
0.200
|
|
|
|
$
|
0.800
|
|
|
|
$
|
0.575
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hudson Pacific Properties, Inc.
|
|
Funds From Operations
|
|
(Unaudited, in thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
December 31,
|
|
|
Year Ended
December 31,
|
|
|
|
|
2016
|
|
|
2015
|
|
|
2016
|
|
|
2015
|
|
Reconciliation of net income (loss) to Funds From Operations (“FFO”):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
|
$
|
28,530
|
|
|
|
$
|
(2,745
|
)
|
|
|
$
|
43,758
|
|
|
|
$
|
(16,082
|
)
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization of real estate assets
|
|
|
|
66,720
|
|
|
|
|
73,876
|
|
|
|
|
267,245
|
|
|
|
|
244,182
|
|
|
Gains on sales
|
|
|
|
(21,874
|
)
|
|
|
|
—
|
|
|
|
|
(30,389
|
)
|
|
|
|
(30,471
|
)
|
|
FFO attributable to non-controlling interests
|
|
|
|
(5,243
|
)
|
|
|
|
(3,696
|
)
|
|
|
|
(18,817
|
)
|
|
|
|
(14,216
|
)
|
|
Net income attributable to preferred stock and units
|
|
|
|
(159
|
)
|
|
|
|
(2,520
|
)
|
|
|
|
(636
|
)
|
|
|
|
(12,105
|
)
|
|
FFO to common stockholders and unitholders
|
|
|
|
67,974
|
|
|
|
|
64,915
|
|
|
|
|
261,161
|
|
|
|
|
171,308
|
|
|
Specified items impacting FFO:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition-related (expense reimbursements) expenses
|
|
|
|
—
|
|
|
|
|
(106
|
)
|
|
|
|
376
|
|
|
|
|
43,336
|
|
|
FFO (excluding specified items) to common stockholders and
unitholders
|
|
|
$
|
67,974
|
|
|
|
$
|
64,809
|
|
|
|
$
|
261,537
|
|
|
|
$
|
214,644
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common stock/units outstanding—diluted
|
|
|
|
146,955
|
|
|
|
|
145,946
|
|
|
|
|
146,739
|
|
|
|
|
129,590
|
|
|
FFO per common stock/unit—diluted
|
|
|
$
|
0.46
|
|
|
|
$
|
0.44
|
|
|
|
$
|
1.78
|
|
|
|
$
|
1.32
|
|
|
FFO (excluding specified items) per common stock/unit—diluted
|
|
|
$
|
0.46
|
|
|
|
$
|
0.44
|
|
|
|
$
|
1.78
|
|
|
|
$
|
1.66
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hudson Pacific Properties, Inc.
|
|
Net Operating Income
|
|
(Unaudited, in thousands)
|
|
|
|
|
|
|
Three Months Ended
December 31,
|
|
|
Year Ended
December 31,
|
|
|
|
|
2016
|
|
|
2015
|
|
|
2016
|
|
|
2015
|
|
Reconciliation of net income (loss) to Net Operating Income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
|
$
|
28,530
|
|
|
|
$
|
(2,745
|
)
|
|
|
$
|
43,758
|
|
|
|
$
|
(16,082
|
)
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
|
21,269
|
|
|
|
|
16,600
|
|
|
|
|
76,044
|
|
|
|
|
50,667
|
|
|
Interest income
|
|
|
|
(44
|
)
|
|
|
|
(6
|
)
|
|
|
|
(260
|
)
|
|
|
|
(124
|
)
|
|
Unrealized (gain) loss on ineffective portion of derivative
instruments
|
|
|
|
(194
|
)
|
|
|
|
—
|
|
|
|
|
1,436
|
|
|
|
|
—
|
|
|
Acquisition-related (expense reimbursements) expenses
|
|
|
|
—
|
|
|
|
|
(106
|
)
|
|
|
|
376
|
|
|
|
|
43,336
|
|
|
Other (income) expense
|
|
|
|
(842
|
)
|
|
|
|
60
|
|
|
|
|
(1,558
|
)
|
|
|
|
62
|
|
|
Gains on sales
|
|
|
|
(21,874
|
)
|
|
|
|
—
|
|
|
|
|
(30,389
|
)
|
|
|
|
(30,471
|
)
|
|
Income from operations
|
|
|
|
26,845
|
|
|
|
|
13,803
|
|
|
|
|
89,407
|
|
|
|
|
47,388
|
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative
|
|
|
|
13,926
|
|
|
|
|
9,583
|
|
|
|
|
52,400
|
|
|
|
|
38,534
|
|
|
Depreciation and amortization
|
|
|
|
67,197
|
|
|
|
|
74,126
|
|
|
|
|
269,087
|
|
|
|
|
245,071
|
|
|
Net operating income
|
|
|
$
|
107,968
|
|
|
|
$
|
97,512
|
|
|
|
$
|
410,894
|
|
|
|
$
|
330,993
|
|
View source version on businesswire.com: http://www.businesswire.com/news/home/20170216005427/en/
Investors/Media:
Hudson Pacific Properties, Inc.
Laura
Campbell, 310-445-5700
Vice President, Head of Investor Relations
lcampbell@hudsonppi.com
or
Blue
Marlin Partners
Greg Berardi, 415-239-7826
greg@bluemarlinpartners.com
Source: Hudson Pacific Properties, Inc.