Hudson Pacific Properties (HPP) Q3 2024 earnings summary

Executive summary

• Year-to-date office leasing reached 1.6 million sq ft, up 25% year-over-year, with 539,000 sq ft signed in Q3 and robust pipelines; in-service office portfolio was 80.0% leased and 79.1% occupied at quarter end.

• Studio segment showed early signs of recovery, with contracts or holds on nearly 80% of stages for 2025, though Los Angeles production remains below normal; in-service studio portfolio was 73.8% leased.

• Asset sales and capital recycling are accelerating, with three office sales under contract, including Foothill Research Center, and $300 million in negotiations; one property classified as held for sale.

• Management expects portfolio stabilization and growth in occupancy and cash flow in 2025, supported by strong leasing and studio demand.

• Board suspended common stock dividend in September 2024; paid preferred stock dividend.

Financial highlights

• Q3 2024 revenue was $200.4 million, down from $231.4 million year-over-year, mainly due to asset sales and lease expirations; studio revenue partially offset declines.

• Net loss for Q3 2024 was $107.0 million, up from $35.8 million in Q3 2023, driven by a $36.5 million impairment and lower office revenues.

• Q3 FFO, excluding specified items, was $14.3 million ($0.10/share); reported FFO was $6.8 million ($0.05/share), both down from last year.

• Q3 AFFO was $15.8 million ($0.11/share), down from $28.1 million ($0.20/share) year-over-year.

• Same-store cash NOI was $96.9 million, compared to $113.2 million in Q3 2023; Q3 NOI was $85.6 million, down from $119.3 million.

Outlook and guidance

• Q4 FFO per diluted share is expected to range from $0.09–$0.13; full-year same-store property cash NOI expected to decline 13–14%.

• Q4 NOI for Quixote is anticipated to moderately improve due to increased production activity; office and studio NOI expected to remain consistent with Q3, adjusted for rent reserves.

• Office occupancy will decline in Q4 due to Amazon's early lease termination at Met Park North, but would have otherwise increased.

• Management expects principal sources of liquidity to include cash on hand, operations, asset sales, equity, and debt financings.

• No material changes to risk factors or forward-looking statements; market conditions and tenant demand remain key uncertainties.