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1. Company Snapshot

1.a. Company Description

Hudson Pacific is a real estate investment trust with a portfolio of office and studio properties totaling nearly 19 million square feet, including land for development.Focused on premier West Coast epicenters of innovation, media and technology, its anchor tenants include Fortune 500 and leading growth companies such as Netflix, Google, Square, Uber, NFL Enterprises and more.Hudson Pacific is publicly traded on the NYSE under the symbol HPP, and listed as a component of the S&P MidCap 400 Index.

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1.b. Last Insights on HPP

Negative drivers behind Hudson Pacific Properties' recent performance include high leverage, which changes the math on its perceived discount. An 18% decline in asset value could wipe out common shares, highlighting the risk despite the apparent discount. The company's office assets face challenges, with a median year-over-year decline of 0.9% in same-store NOI. Additionally, the REIT sector saw another month of red in April, with Hudson Pacific Properties being part of the sector. The company's recent CMBS financing of $475 million may not be enough to offset these challenges.

1.c. Company Highlights

2. Hudson Pacific Properties' Q3 Earnings: A Closer Look

Hudson Pacific Properties reported total revenues of $186.6 million for the third quarter, with FFO, excluding specified items, at $16.7 million or $0.04 per diluted share, beating estimates of $0.02. The company's office portfolio ended the quarter at 75.9% occupied and 76.5% leased, with 75 office leases totaling 515,000 square feet. The strong leasing activity is a positive sign, with CEO Victor Coleman stating that Hudson Pacific is on track for its strongest office leasing year since 2019.

Publication Date: Nov -09

📋 Highlights
  • Office Leasing Momentum:: 1.7 million sq ft leased YTD, with 75.9% occupancy and CEO projecting strongest leasing since 2019.
  • Financial Strength:: $2B in capital markets activity and $1B liquidity, with 100% debt fixed/capped and next maturity in Q3 2026.
  • Studio Recovery:: 65.8% in-service studio stage leasing TTM, alongside tax credit incentives boosting California production competitiveness.
  • Regional Leasing Focus:: 80% of Q3 leasing in Bay Area driven by tech/AI tenants, with 76.3% Q4 average occupancy expected.
  • Strategic Asset Management:: Acquisition of Hill7’s 45% interest in Seattle and negotiation of multi-floor tenants for growth positioning.

Office Leasing and Occupancy

The company's office leasing activity is driven by tech and AI tenants, with 80% of third-quarter leasing activity occurring at Bay Area assets. The occupancy rate decreased to 72.8% from the previous year's high but increased sequentially to 75.9%. Mark Lammas, President, highlighted that leasing activity is picking up, particularly in the Peninsula, with large AI users taking smaller spaces in the Valley and Peninsula.

Studio Segment Performance

The studio segment saw sequential occupancy improvement, with in-service studio stages 65.8% leased on a trailing 12-month basis. The company is working with local government officials to enhance the entertainment industry and secure more filming locations. According to Harout Diramerian, CFO, the studio business is expected to drive the fourth-quarter FFO, with slower activity expected in the quarter.

Financial Foundation and Outlook

The company has significantly strengthened its financial foundation, with over $2 billion in capital markets activity year-to-date, and $1 billion of liquidity. Hudson Pacific expects FFO of $0.01 to $0.05 per diluted share for the fourth quarter, with the 2025 outlook remaining unchanged. The company's debt is 100% fixed or capped, providing predictable debt service costs.

Valuation Metrics

With a P/S Ratio of 1.12 and an EV/EBITDA of 22.69, the market is pricing in a certain level of growth for Hudson Pacific Properties. Analysts estimate next year's revenue growth at 6.8%. The company's ROE is -13.52%, and ROIC is 0.08%, indicating room for improvement in returns. The Net Debt / EBITDA ratio is 18.57, highlighting the company's leverage.

3. NewsRoom

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Hudson Pacific Sells Element LA Office Campus

Dec -05

Source: businesswire.com

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Hudson Pacific Properties Updates Fourth Quarter FFO Outlook and Full-Year Assumptions

Dec -05

Source: businesswire.com

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Hudson Pacific Appoints Jon Bortz to Board of Directors

Dec -03

Source: businesswire.com

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Hudson Pacific Properties Announces Reverse Stock Split

Nov -17

Source: businesswire.com

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REIT Replay: REIT Indexes Outperform Broader Markets During 1st Week Of November

Nov -11

Source: seekingalpha.com

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Hudson Pacific Properties, Inc. (HPP) Q3 2025 Earnings Call Transcript

Nov -05

Source: seekingalpha.com

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Compared to Estimates, Hudson Pacific (HPP) Q3 Earnings: A Look at Key Metrics

Nov -05

Source: zacks.com

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Hudson Pacific Properties (HPP) Beats Q3 FFO Estimates

Nov -05

Source: zacks.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (2.54%)

6. Segments

Office

Expected Growth: 2.5%

Hudson Pacific Properties' office segment growth is driven by increasing demand for premium office spaces in high-growth markets, particularly in the tech and media industries. Strong job market trends, limited supply, and rising rents in key markets such as Los Angeles and San Francisco also contribute to the 2.5% growth rate.

Studio

Expected Growth: 2.8%

Studio segment's 2.8% growth driven by increasing demand for production and post-production services, expansion of streaming platforms, and Hudson Pacific Properties' strategic acquisitions and developments in media and entertainment hubs, such as Los Angeles and Vancouver.

7. Detailed Products

Office Properties

Hudson Pacific Properties, Inc. owns and operates a portfolio of high-quality office properties in West Coast markets, including California, Oregon, and Washington.

Media and Entertainment Properties

The company provides specialized real estate solutions for the media and entertainment industry, including soundstages, production offices, and post-production facilities.

Studio Properties

Hudson Pacific Properties, Inc. owns and operates a portfolio of studio properties, including soundstages, production offices, and support facilities.

Land and Development Properties

The company owns and develops land parcels and properties for future development, including office, residential, and mixed-use projects.

8. Hudson Pacific Properties, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Hudson Pacific Properties, Inc. operates in a niche market, providing a unique combination of office and studio space, which reduces the threat of substitutes. However, the company still faces some competition from other real estate investment trusts (REITs) and private developers.

Bargaining Power Of Customers

Hudson Pacific Properties, Inc. has a diverse tenant base, with no single tenant accounting for more than 10% of its revenue. This reduces the bargaining power of customers, as no single tenant has significant leverage over the company.

Bargaining Power Of Suppliers

Hudson Pacific Properties, Inc. has a strong track record of developing and acquiring high-quality properties, which gives it bargaining power over its suppliers. The company's scale and reputation also enable it to negotiate favorable terms with its suppliers.

Threat Of New Entrants

The barriers to entry in the REIT industry are relatively high, with significant capital requirements and regulatory hurdles. This reduces the threat of new entrants, as it is difficult for new companies to enter the market and compete with established players like Hudson Pacific Properties, Inc.

Intensity Of Rivalry

The REIT industry is highly competitive, with many established players competing for tenants and investment capital. However, Hudson Pacific Properties, Inc. has a strong track record of differentiating itself through its unique properties and high-quality service, which helps to mitigate the intensity of rivalry.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 58.84%
Debt Cost 4.68%
Equity Weight 41.16%
Equity Cost 10.60%
WACC 7.11%
Leverage 142.97%

11. Quality Control: Hudson Pacific Properties, Inc. passed 3 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
City Office REIT

A-Score: 6.3/10

Value: 8.7

Growth: 3.4

Quality: 4.2

Yield: 9.0

Momentum: 7.5

Volatility: 5.0

1-Year Total Return ->

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Stock-Card
Easterly Government Properties

A-Score: 5.8/10

Value: 5.5

Growth: 4.8

Quality: 5.4

Yield: 10.0

Momentum: 1.0

Volatility: 8.3

1-Year Total Return ->

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Stock-Card
JBG SMITH

A-Score: 5.4/10

Value: 5.3

Growth: 2.9

Quality: 2.3

Yield: 8.0

Momentum: 7.5

Volatility: 6.3

1-Year Total Return ->

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Stock-Card
Orion Office REIT

A-Score: 5.0/10

Value: 7.8

Growth: 4.2

Quality: 3.6

Yield: 10.0

Momentum: 1.5

Volatility: 3.0

1-Year Total Return ->

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Stock-Card
Franklin Street Properties

A-Score: 4.8/10

Value: 8.2

Growth: 0.6

Quality: 3.1

Yield: 7.0

Momentum: 5.0

Volatility: 5.0

1-Year Total Return ->

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Stock-Card
Hudson Pacific Properties

A-Score: 3.2/10

Value: 6.6

Growth: 2.0

Quality: 2.2

Yield: 4.0

Momentum: 1.5

Volatility: 2.7

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

13.48$

Current Price

13.48$

Potential

-0.00%

Expected Cash-Flows