Over 525,000 Square Feet of Leases Executed at 63% GAAP and 42% Cash
Rent Spreads
LOS ANGELES--(BUSINESS WIRE)--
Hudson Pacific Properties, Inc. (the “Company,” or “Hudson Pacific”)
(NYSE: HPP) today announced financial results for the first quarter
ended March 31, 2017.
First Quarter Highlights
-
Net income attributable to common stockholders of $20.5 million, or
$0.14 per diluted share, compared to net income of $2.3 million, or
$0.03 per diluted share, a year ago;
-
FFO, excluding specified items, of $71.9 million, or $0.48 per diluted
share, compared to $63.2 million, or $0.43 per diluted share, a year
ago;
-
Executed new and renewal leases totaling 525,084 square feet,
consisting of 352,596 square feet of new leases and 172,488 square
feet of renewal leases with GAAP and cash rent growth of 62.6% and
42.1%, respectively, including a 10-year lease with Google, Inc. for
166,460 square feet at Rincon Center;
-
Improved in-service office portfolio leased rate to 91.2% as of
March 31, 2017, up from 90.7% a year ago;
-
Completed public offering of 9,775,000 shares of common stock
generating total net proceeds of $337.8 million after underwriting
discounts and before other transaction costs;
-
Announced the acquisition of Sunset Las Palmas Studios (formerly
Hollywood Center Studios) in Hollywood, which closed on May 1, 2017;
-
Sold 222 Kearny Street in San Francisco for $51.8 million before
credits, prorations, and closing costs;
-
Sold 3402 Pico Boulevard in Santa Monica for $35.0 million before
credits, prorations, and closing costs; and
-
Declared and paid a quarterly dividend of $0.25 per share on common
stock, a 25% increase from the previous annualized dividend level.
“We are very pleased with first quarter results,” said Victor Coleman,
Hudson Pacific Properties’ Chairman and CEO. “During the quarter, we
executed more than 525,000 square feet of leases, with cash rent spreads
of 42%, including a 166,000 square foot lease with Google, Inc. at our
Rincon Center property in San Francisco. The high level of leasing
activity to start the year demonstrates just how strong demand remains
throughout our core markets.”
Coleman continued, “We completed a public offering of 9,775,000 shares
of common stock generating net proceeds of $337.8 million. The
transaction was used largely to repay amounts outstanding under credit
facility in anticipation of redrawing amounts to complete the purchase
of Hollywood Center Studios or, as we’ve recently rebranded it, Sunset
Las Palmas Studios. The addition of Sunset Las Palmas means Hudson
Pacific is now the largest, independent owner-operator of sound stages
in the U.S. We are pleased to welcome Sunset Las Palmas to our Sunset
Studios family and we deeply appreciate the strong interest in our
recent equity offering from both existing and new investors in support
of this acquisition, the Company and its continued growth.”
Financial Results
The Company reported net income attributable to common stockholders of
$20.5 million, or $0.14 per diluted share, for the three months ended
March 31, 2017, compared to net income attributable to common
stockholders of $2.3 million, or $0.03 per diluted share, for the three
months ended March 31, 2016.
Funds From Operations (FFO), excluding specified items, for the three
months ended March 31, 2017 totaled $71.9 million, or $0.48 per diluted
share, compared to FFO, excluding specified items, of $63.2 million, or
$0.43 per diluted share, a year ago. There were no specified items for
the first quarter of either 2017 or 2016.
FFO, including specified items, for the three months ended March 31,
2017 totaled $71.9 million, or $0.48 per diluted share, compared to
$63.2 million, or $0.43 per diluted share, a year ago.
Consolidated Operating Results For The Three Months Ended March 31,
2017
Total revenue during the first quarter increased 9.6% to $168.3 million
from $153.5 million for the same quarter a year ago. Total operating
expenses decreased 3.9% to $139.8 million from $134.5 million for the
same quarter a year ago. As a result, income from operations increased
49.9% to $28.5 million from $19.0 million for the same quarter a year
ago. The primary reasons for the changes in total revenue and operating
expenses are discussed below in connection with the Company’s segment
operating results.
Interest expense during the first quarter increased 27.1% to $21.9
million from $17.3 million for the same quarter a year ago. The Company
had $2.4 billion and $2.1 billion of notes payable, excluding net
deferred financing costs and net loan premium, at March 31, 2017 and
March 31, 2016, respectively.
The Company had $6.0 thousand of unrealized gain on the ineffective
portion of derivative instruments during the first quarter of 2017
compared to $2.1 million of unrealized loss on the ineffective portion
of derivative instruments during the first quarter of 2016.
The Company also had $16.9 million of gain on sale associated with the
dispositions of 222 Kearny Street and 3402 Pico Boulevard during the
first quarter of 2017 compared to $6.4 million of gain on sale
associated with the disposition of Bayhill Office Center during the
first quarter of 2016.
Segment Operating Results For The Three Months Ended March 31, 2017
Office Properties
Total revenue at the Company’s office properties increased 10.2% to
$156.8 million from $142.3 million for the same quarter a year ago. The
increase was primarily the result of a $17.3 million increase in rental
revenue to $133.5 million, offset by a $3.1 million decrease in tenant
recoveries to $17.4 million. The increase in rental revenue largely
resulted from the commencement of the lease with Netflix at the
Company’s ICON property, together with rental revenue associated with
the acquisitions of 11601 Wilshire Boulevard (purchased in July 2016),
Hill7 (purchased in October 2016) and Page Mill Hill (purchased in
December 2016). The increase was partially offset by the dispositions of
Bayhill Office Center (sold in January 2016), One Bay Plaza (sold in
June 2016), and 222 Kearny Street (sold in February 2017). The decrease
in tenant recoveries is largely due to a recovery adjustment following
the favorable property tax reassessments of 1455 Market Street,
Clocktower Square and Rincon Center.
Office property operating expenses increased 0.5% to $48.0 million from
$47.7 million for the same quarter a year ago. The increase primarily
resulted from the aforementioned acquisitions, partially offset by the
Rincon property tax assessment and the sales of Bayhill Office Center,
One Bay Plaza and 222 Kearny Street.
Net operating income with respect to the Company’s 34 same-store office
properties for the first quarter increased 5.4% on a GAAP basis and
23.4% on a cash basis. The cash basis net operating income increase
includes Cisco’s payment of $10.4 million in early lease termination
fees, which was offset by the September 1, 2016 commencement of a rent
and square footage reduction with Weil, Gotshal & Manges 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 first quarter cash basis net operating income
generated by its 34 same-store office properties would have increased
approximately 13.2% without Cisco’s early lease termination payment and
the impact of the lease with Weil, Gotshal & Manges LLP in both periods.
At March 31, 2017, the Company’s stabilized and in-service office
portfolio was 96.4% and 91.2% leased, respectively. During the quarter,
the Company executed 59 new and renewal leases totaling 525,084 square
feet.
Media and Entertainment Properties
Total revenue at the Company’s media and entertainment properties
increased 2.0% to $11.5 million from $11.2 million for the same quarter
a year ago, largely due to a $0.7 million increase in rental revenue to
$6.7 million and a $0.5 million increase in tenant recoveries to $0.7
million. That increase was partially offset by a $0.9 million decrease
in other property-related revenue to $4.0 million. The increase in
rental revenue largely resulted from higher occupancy at Sunset Gower
and Sunset Bronson. The increase in tenant recoveries largely stemmed
from higher recoveries for current and prior year expenses attributable
to KTLA at Sunset Bronson. The decrease in other property-related
revenue reflects unusually high production activity by a stage user in
the first quarter of 2016, which normalized in the most recently
completed quarter, as well as the use by Netflix of a stage for storage
purposes in connection with its move into ICON over the most recent
quarter. Total media and entertainment operating expenses increased
21.8% to $7.3 million from $6.0 million for the same quarter a year ago,
largely due to higher occupancy at Sunset Gower and Sunset Bronson and
expense savings associated with a property tax reassessment in 2016.
As of March 31, 2017, the trailing 12-month occupancy for the Company’s
media and entertainment portfolio increased to 90.3% from 81.6% for the
period ended March 31, 2016.
Balance Sheet
At March 31, 2017, the Company had total assets of $6.7 billion,
including unrestricted cash and cash equivalents of $115.7 million. At
March 31, 2017, the Company had $400.0 million of undrawn total capacity
under its unsecured revolving credit facility.
Major Leasing
Executed Significant Bay Area Lease
Google, Inc. signed a 10-year lease for 166,460 square feet at Rincon
Center in San Francisco, California. The lease is anticipated to
commence in March 2018 and will backfill two of Hudson Pacific’s
significant 2017 expirations: a 132,600-square-foot lease with AIG and a
22,000-square-foot lease with global law firm Dentons. The deal
increased Google, Inc.’s total leased square footage within the
Company’s portfolio to 472,189 square feet.
Campus Center Repositioning
On March 24, 2017, the Company announced the launch of a significant
capital plan to reposition its 471,580-square-foot Campus Center asset
in Milpitas, California. Construction will begin in January 2018
immediately following the lease expiration of Campus Center’s existing
tenant, Cisco Systems. Cisco Systems had previously indicated it would
opt out of its lease at the end of 2017 and provided formal notice of
its intention to leave. The repositioning will include several of the
Company’s signature improvements: entrance and lobby renovations; over
100,000 square feet of contemporary, market-ready office space; master
planned landscaping; and enhanced outdoor recreation areas, including
dedicated sporting areas, patios, collaborative seating and direct
hiking trail access.
Dispositions
Sold 222 Kearny Street
On February 14, 2017, the Company sold 222 Kearny Street in San
Francisco, California for $51.8 million before credits, prorations and
closing costs. The Company sold the 148,797-square-foot office property
for nearly a 40% premium to its basis.
Sold Redevelopment and Related Land at 3402 Pico Boulevard
On March 21, 2017, the Company sold 3402 Pico Boulevard in Santa Monica,
California for $35.0 million before credits, prorations and closing
costs. The Company sold the vacant 50,687-square-foot office
redevelopment and related development land for a 13% premium to its
basis.
Equity Offerings
Blackstone/Farallon Funds 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 certain entities
affiliated with The Blackstone Group L.P. (collectively, “Blackstone”)
and 1,165,922 shares offered by certain funds affiliated with Farallon
Capital Management, L.L.C. (collectively, the “Farallon Funds”). The
Company used the approximately $312.2 million of gross proceeds, before
deducting estimated underwriting discounts and estimated offering
expenses, to acquire an aggregate of 8,598,480 common units of limited
partnership interest in its operating partnership, Hudson Pacific
Properties, L.P. (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 offering by Blackstone and the Farallon Funds.
Following the offering, Blackstone and the Farallon Funds have informed
the Company that they no longer hold any ownership interests in the
Company or the Operating Partnership.
Company Common Stock Public Offering
On March 3, 2017, the Company completed a public offering of 9,775,000
shares of its common stock, including 1,275,000 shares of its common
stock issued and sold pursuant to the exercise of the underwriters’
option to purchase additional shares in full, at the public offering
price of $36.00 per share. Net proceeds from the offering, after
deducting underwriting discounts and before other transaction costs,
were approximately $337.8 million. The Company used a portion of the net
proceeds to fully repay a $255.0 million balance outstanding under its
unsecured revolving credit facility, with the remaining proceeds used
for general corporate purposes. Subsequent to March 31, 2017, the
Company re-borrowed amounts under its credit facility to complete the
acquisition of Sunset Las Palmas Studios (formerly Hollywood Center
Studios) in Hollywood, which closed on May 1, 2017.
Dividend
Paid Common Dividend
The Company’s Board of Directors declared a dividend on its common stock
of $0.25 per share for the first quarter of 2017, equivalent to an
annual rate of $1.00 per share and a 25% increase from the previous
annualized dividend of $0.80 per share. The dividends were paid on March
30, 2017 to stockholders of record on March 20, 2017.
Activities Subsequent to March 31, 2017
Acquisition
Purchased Sunset Las Palmas Studios (formerly Hollywood Center
Studios)
On May 1, 2017, the Company completed its acquisition of Sunset Las
Palmas Studios (formerly Hollywood Center Studios) in Hollywood,
California, a 369,000-square-foot media and entertainment campus with
future development rights for $200.0 million before credits, prorations
and closing costs. Located at 1040 North Las Palmas Avenue, Sunset Las
Palmas Studios consists of 13 stages, production offices and support
space on 15 acres near Hudson Pacific’s Sunset Gower and Sunset Bronson
Studios.
2017 Outlook
Guidance Increased
The Company is increasing its full-year 2017 FFO guidance from its
previously announced range of $1.90 to $2.00 per diluted share,
excluding specified items, to a revised range of $1.92 to $2.02 per
diluted share, excluding specified items. The guidance reflects the
Company’s FFO for the first quarter ended March 31, 2017 of $0.48 per
diluted share, excluding specified items, as well as the transactional
activity referenced in this press release and in earlier announcements.
While Cisco remains obligated to pay rent at our Campus Center property
through the remainder of the current year, in addition to receiving that
rent this guidance also includes the amortization beginning with the
second quarter of this year of approximately $1.5 million per quarter of
income. This reflects Cisco’s payment of $10.4 million in termination
fees, reduced for GAAP purposes by the write-off of approximately $5.9
million of non-cash items (i.e., straight-line rent receivable and
above/below-market rent lease adjustment) associated with the early
termination. 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. There can be no assurance that the
actual results will not differ materially from this estimate.
Below are some of the assumptions we used in providing this guidance
(dollars in thousands):
|
|
|
|
|
|
|
|
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Metric
|
|
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Low
|
|
|
High
|
|
Growth in Same-Store Office Property Cash NOI(1)(2)(3)
|
|
|
6.5%
|
|
|
7.5%
|
|
Growth in Same-Store Media and Entertainment Property Cash NOI(1)(2)
|
|
|
5.9%
|
|
|
6.9%
|
|
GAAP Non-Cash Revenue (Straight-Line Rent and Above/Below-Market
Rents)(4)
|
|
|
$44,000
|
|
|
$54,000
|
|
GAAP Non-Cash Expense (Above/Below-Market Ground Rent)
|
|
|
$(3,200)
|
|
|
$(3,200)
|
|
General and Administrative Expenses(5)
|
|
|
$(52,000)
|
|
|
$(57,000)
|
|
Interest Expense, net(6)
|
|
|
$(89,000)
|
|
|
$(92,000)
|
|
FFO Attributable to Non-controlling Interests
|
|
|
$(22,500)
|
|
|
$(24,500)
|
|
Weighted Average Common Stock/Units Outstanding—Diluted(7)
|
|
|
155,000,000
|
|
|
156,000,000
|
|
|
|
|
|
|
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(1)
|
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Same-Store is defined as the 34 office properties or two media and
entertainment properties, as applicable, owned and included in our
stabilized portfolio as of January 1, 2016 and anticipated to still
be owned and included in the stabilized portfolio through December
31, 2017.
|
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(2)
|
|
Please see non-GAAP information below for definition of Cash NOI.
|
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(3)
|
|
This estimate excludes the $10.4 million early lease termination fee
payed by Cisco and the impact of the lease with Weil, Gotshal &
Manges LLP at Towers at Shore Center in both periods. Effective
September 1, 2016, the rent and square footage with Weil, Gotshal &
Manges LLP was reduced under a lease amendment entered into on
December 18, 2014, prior to the Company’s acquisition of that
property from Blackstone. We estimate that Same-Store Office
Property Cash NOI growth, including Cisco’s early lease termination
payment and the impact of the Weil, Gotshal & Manges LLP lease in
both periods, would range from 7.8% to 8.8%.
|
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(4)
|
|
Includes non-cash straight-line rent associated with the media and
entertainment properties.
|
|
(5)
|
|
Includes non-cash compensation expense, which we estimate at $16,000
in 2017.
|
|
(6)
|
|
Includes amortization of deferred financing costs and loan premiums,
which we estimate at $5,100 in 2017.
|
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(7)
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Diluted shares represent ownership in our Company through shares of
common stock, OP Units and other convertible or exchangeable
instruments. The weighted average fully diluted common stocks/units
outstanding for 2017 includes an estimate for dilution impact of
stock grants to our executives under our 2015, 2016 and 2017
outperformance programs and performance-based awards under our
special one-time award grants based on the projected award potential
of such programs as of the end of such periods, as calculated in
accordance with the Accounting Standards Codification 260 Earnings
Per Share.
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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 first quarter
2017 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 first quarter 2017
financial results at 11:00 a.m. PT / 2:00 p.m. ET on May 4, 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 the Company’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 May 4, 2017 at 2:00 p.m. PT / 5:00 p.m. ET,
through May 11, 2017 at 8:59 p.m. PT / 11:59 p.m. ET, by dialing (844)
512-2921 and entering the passcode 13658789. 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, plus 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.
Cash Net Operating Income (NOI):
We define 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. 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.
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 industry-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 that
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, 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,
2016 filed with the Securities and Exchange Commission, or SEC, on
February 21, 2017, and other risks described in documents subsequently
filed by the Company from time to time with the SEC.
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Hudson Pacific Properties, Inc.
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|
Consolidated Balance Sheets
|
|
(Unaudited, in thousands, except share data)
|
|
|
|
|
March 31, 2017
|
|
|
December 31, 2016
|
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ASSETS
|
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|
|
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REAL ESTATE ASSETS
|
|
|
|
|
|
|
|
Land
|
|
|
$
|
1,265,399
|
|
|
|
$
|
1,265,399
|
|
|
Building and improvements
|
|
|
|
4,628,355
|
|
|
|
|
4,502,235
|
|
|
Tenant improvements
|
|
|
|
393,525
|
|
|
|
|
373,778
|
|
|
Furniture and fixtures
|
|
|
|
4,231
|
|
|
|
|
4,276
|
|
|
Property under development
|
|
|
|
216,499
|
|
|
|
|
295,239
|
|
|
Total real estate held for investment
|
|
|
|
6,508,009
|
|
|
|
|
6,440,927
|
|
|
Accumulated depreciation and amortization
|
|
|
|
(463,882
|
)
|
|
|
|
(419,368
|
)
|
|
Investment in real estate, net
|
|
|
|
6,044,127
|
|
|
|
|
6,021,559
|
|
|
Cash and cash equivalents
|
|
|
|
115,690
|
|
|
|
|
83,015
|
|
|
Restricted cash
|
|
|
|
18,000
|
|
|
|
|
25,177
|
|
|
Accounts receivable, net
|
|
|
|
2,009
|
|
|
|
|
6,852
|
|
|
Straight-line rent receivables, net
|
|
|
|
84,850
|
|
|
|
|
87,281
|
|
|
Deferred leasing costs and lease intangible assets, net
|
|
|
|
296,645
|
|
|
|
|
309,962
|
|
|
Derivative assets
|
|
|
|
8,558
|
|
|
|
|
5,935
|
|
|
Goodwill
|
|
|
|
8,754
|
|
|
|
|
8,754
|
|
|
Prepaid expenses and other assets, net
|
|
|
|
84,582
|
|
|
|
|
27,153
|
|
|
Investment in unconsolidated entities
|
|
|
|
38,546
|
|
|
|
|
37,228
|
|
|
Assets associated with real estate held for sale
|
|
|
|
—
|
|
|
|
|
66,082
|
|
|
TOTAL ASSETS
|
|
|
$
|
6,701,761
|
|
|
|
$
|
6,678,998
|
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
|
|
|
Notes payable, net
|
|
|
$
|
2,388,388
|
|
|
|
$
|
2,688,010
|
|
|
Accounts payable and accrued liabilities
|
|
|
|
135,198
|
|
|
|
|
120,444
|
|
|
Lease intangible liabilities, net
|
|
|
|
73,033
|
|
|
|
|
80,130
|
|
|
Security deposits
|
|
|
|
33,019
|
|
|
|
|
31,495
|
|
|
Prepaid rent
|
|
|
|
34,779
|
|
|
|
|
40,755
|
|
|
Derivative liabilities
|
|
|
|
967
|
|
|
|
|
1,303
|
|
|
Liabilities associated with real estate held for sale
|
|
|
|
—
|
|
|
|
|
3,934
|
|
|
TOTAL LIABILITIES
|
|
|
|
2,665,384
|
|
|
|
|
2,966,071
|
|
|
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, 155,279,629
shares and 136,492,235 shares outstanding at March 31, 2017 and
December 31, 2016, respectively
|
|
|
|
1,553
|
|
|
|
|
1,364
|
|
|
Additional paid-in capital
|
|
|
|
3,691,819
|
|
|
|
|
3,109,394
|
|
|
Accumulated other comprehensive income
|
|
|
|
8,710
|
|
|
|
|
9,496
|
|
|
Accumulated income (deficit)
|
|
|
|
3,784
|
|
|
|
|
(16,971
|
)
|
|
Total Hudson Pacific Properties, Inc. stockholders’ equity
|
|
|
|
3,705,866
|
|
|
|
|
3,103,283
|
|
|
Non-controlling interest—members in consolidated entities
|
|
|
|
307,438
|
|
|
|
|
304,608
|
|
|
Non-controlling interest—units in the operating partnership
|
|
|
|
12,896
|
|
|
|
|
294,859
|
|
|
TOTAL EQUITY
|
|
|
|
4,026,200
|
|
|
|
|
3,702,750
|
|
|
TOTAL LIABILITIES AND EQUITY
|
|
|
$
|
6,701,761
|
|
|
|
$
|
6,678,998
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hudson Pacific Properties, Inc.
|
|
Consolidated Statements of Operations
|
|
(Unaudited, in thousands, except share data)
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
|
2017
|
|
|
2016
|
|
REVENUES
|
|
|
|
|
|
|
|
Office
|
|
|
|
|
|
|
|
Rental
|
|
|
$
|
133,516
|
|
|
|
$
|
116,227
|
|
|
Tenant recoveries
|
|
|
|
17,401
|
|
|
|
|
20,533
|
|
|
Parking and other
|
|
|
|
5,899
|
|
|
|
|
5,532
|
|
|
Total office revenues
|
|
|
|
156,816
|
|
|
|
|
142,292
|
|
|
Media & Entertainment
|
|
|
|
|
|
|
|
Rental
|
|
|
|
6,685
|
|
|
|
|
6,028
|
|
|
Tenant recoveries
|
|
|
|
665
|
|
|
|
|
199
|
|
|
Other property-related revenue
|
|
|
|
4,042
|
|
|
|
|
4,969
|
|
|
Other
|
|
|
|
77
|
|
|
|
|
49
|
|
|
Total Media & Entertainment revenues
|
|
|
|
11,469
|
|
|
|
|
11,245
|
|
|
TOTAL REVENUES
|
|
|
|
168,285
|
|
|
|
|
153,537
|
|
|
OPERATING EXPENSES
|
|
|
|
|
|
|
|
Office operating expenses
|
|
|
|
47,954
|
|
|
|
|
47,703
|
|
|
Media & Entertainment operating expenses
|
|
|
|
7,251
|
|
|
|
|
5,952
|
|
|
General and administrative
|
|
|
|
13,810
|
|
|
|
|
12,503
|
|
|
Depreciation and amortization
|
|
|
|
70,767
|
|
|
|
|
68,368
|
|
|
TOTAL OPERATING EXPENSES
|
|
|
|
139,782
|
|
|
|
|
134,526
|
|
|
INCOME FROM OPERATIONS
|
|
|
|
28,503
|
|
|
|
|
19,011
|
|
|
OTHER EXPENSE (INCOME)
|
|
|
|
|
|
|
|
Interest expense
|
|
|
|
21,930
|
|
|
|
|
17,251
|
|
|
Interest income
|
|
|
|
(30
|
)
|
|
|
|
(13
|
)
|
|
Unrealized (gain) loss on ineffective portion of derivative
instruments
|
|
|
|
(6
|
)
|
|
|
|
2,125
|
|
|
Other (income) expense
|
|
|
|
(678
|
)
|
|
|
|
24
|
|
|
TOTAL OTHER EXPENSES
|
|
|
|
21,216
|
|
|
|
|
19,387
|
|
|
INCOME (LOSS) BEFORE GAINS ON SALE OF REAL ESTATE
|
|
|
|
7,287
|
|
|
|
|
(376
|
)
|
|
Gains on sale of real estate
|
|
|
|
16,866
|
|
|
|
|
6,352
|
|
|
NET INCOME
|
|
|
|
24,153
|
|
|
|
|
5,976
|
|
|
Net income attributable to preferred units
|
|
|
|
(159
|
)
|
|
|
|
(159
|
)
|
|
Net income attributable to participating securities
|
|
|
|
(240
|
)
|
|
|
|
(197
|
)
|
|
Net income attributable to non-controlling interest in consolidated
entities
|
|
|
|
(3,037
|
)
|
|
|
|
(1,945
|
)
|
|
Net income attributable to units in the operating partnership
|
|
|
|
(202
|
)
|
|
|
|
(1,422
|
)
|
|
Net income attributable to Hudson Pacific Properties, Inc. common
stockholders
|
|
|
$
|
20,515
|
|
|
|
$
|
2,253
|
|
|
Basic and diluted per share amounts:
|
|
|
|
|
|
|
|
Net income attributable to common stockholders—basic
|
|
|
$
|
0.14
|
|
|
|
$
|
0.03
|
|
|
Net income attributable to common stockholders—diluted
|
|
|
$
|
0.14
|
|
|
|
$
|
0.03
|
|
|
Weighted average shares of common stock outstanding—basic
|
|
|
|
147,950,594
|
|
|
|
|
89,190,803
|
|
|
Weighted average shares of common stock outstanding—diluted
|
|
|
|
149,950,346
|
|
|
|
|
89,597,803
|
|
|
Dividends declared per share of common stock
|
|
|
$
|
0.250
|
|
|
|
$
|
0.200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hudson Pacific Properties, Inc.
|
|
Funds From Operations
|
|
(Unaudited, in thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
|
2017
|
|
|
2016
|
|
Reconciliation of net income to Funds From Operations (“FFO”):
|
|
|
|
|
|
|
|
Net income
|
|
|
$
|
24,153
|
|
|
|
$
|
5,976
|
|
|
Adjustments:
|
|
|
|
|
|
|
|
Depreciation and amortization of real estate assets
|
|
|
|
70,294
|
|
|
|
|
67,905
|
|
|
Gains on sale of real estate
|
|
|
|
(16,866
|
)
|
|
|
|
(6,352
|
)
|
|
FFO attributable to non-controlling interests
|
|
|
|
(5,507
|
)
|
|
|
|
(4,162
|
)
|
|
Net income attributable to preferred units
|
|
|
|
(159
|
)
|
|
|
|
(159
|
)
|
|
FFO to common stockholders and unitholders
|
|
|
|
71,915
|
|
|
|
|
63,208
|
|
|
|
|
|
|
|
|
|
|
Weighted average common stock/units outstanding—diluted
|
|
|
|
150,335
|
|
|
|
|
145,894
|
|
|
FFO per common stock/unit—diluted
|
|
|
$
|
0.48
|
|
|
|
$
|
0.43
|
|
|
FFO (excluding specified items) per common stock/unit—diluted
|
|
|
$
|
0.48
|
|
|
|
$
|
0.43
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hudson Pacific Properties, Inc.
|
|
Net Operating Income
|
|
(Unaudited, in thousands)
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
|
2017
|
|
|
2016
|
|
Reconciliation of net income to Net Operating Income (“NOI”):
|
|
|
|
|
|
|
|
Net income
|
|
|
$
|
24,153
|
|
|
|
$
|
5,976
|
|
|
Adjustments:
|
|
|
|
|
|
|
|
Interest expense
|
|
|
|
21,930
|
|
|
|
|
17,251
|
|
|
Interest income
|
|
|
|
(30
|
)
|
|
|
|
(13
|
)
|
|
Unrealized (gain) loss on ineffective portion of derivative
instruments
|
|
|
|
(6
|
)
|
|
|
|
2,125
|
|
|
Other (income) expense
|
|
|
|
(678
|
)
|
|
|
|
24
|
|
|
Gains on sale of real estate
|
|
|
|
(16,866
|
)
|
|
|
|
(6,352
|
)
|
|
Income from operations
|
|
|
|
28,503
|
|
|
|
|
19,011
|
|
|
Adjustments:
|
|
|
|
|
|
|
|
General and administrative
|
|
|
|
13,810
|
|
|
|
|
12,503
|
|
|
Depreciation and amortization
|
|
|
|
70,767
|
|
|
|
|
68,368
|
|
|
NOI
|
|
|
$
|
113,080
|
|
|
|
$
|
99,882
|
|
|
|
|
|
|
|
|
|
View source version on businesswire.com: http://www.businesswire.com/news/home/20170504005484/en/
Investor/Media Contacts:
Hudson Pacific Properties, Inc.
Laura
Campbell
Vice President, Head of Investor Relations
(310)
445-5700
lcampbell@hudsonppi.com
or
Blue
Marlin Partners
Greg Berardi
(415) 239-7826
greg@bluemarlinpartners.com
Source: Hudson Pacific Properties, Inc.