Hudson Pacific Properties, Inc. [HPP-PC] Filings

10-Q 1 hpp-20230630.htm 10-Q hpp-20230630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

______________________________________

FORM 10-Q

______________________________________


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2023


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______ to ______

Commission File Number: 001-34789 (Hudson Pacific Properties, Inc.)

Commission File Number: 333-202799-01 (Hudson Pacific Properties, L.P.)

______________________________________

Hudson Pacific Properties, Inc.

Hudson Pacific Properties, L.P.

(Exact name of registrant as specified in its charter)


Hudson Pacific Properties, Inc.	Maryland (State or other jurisdiction of incorporation or organization)	27-1430478 (I.R.S. Employer Identification Number)
Hudson Pacific Properties, L.P.	Maryland (State or other jurisdiction of incorporation or organization)	80-0579682 (I.R.S. Employer Identification Number)


11601 Wilshire Blvd., Ninth Floor Los Angeles, California 90025
(Address of principal executive offices) (Zip Code)

(310) 445-5700

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

______________________________________

Securities registered pursuant to Section 12(b) of the Act:

Registrant

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Hudson Pacific Properties, Inc.

Common Stock, $0.01 par value

HPP

New York Stock Exchange

Hudson Pacific Properties, Inc.

4.750% Series C Cumulative Redeemable Preferred Stock

HPP Pr C

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.


Hudson Pacific Properties, Inc. Yes x No o			Hudson Pacific Properties, L.P. Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).


Hudson Pacific Properties, Inc. Yes x No o			Hudson Pacific Properties, L.P. Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Hudson Pacific Properties, Inc.


Large accelerated filer x						Accelerated filer o
Non-accelerated filer o						Smaller reporting company ☐
						Emerging growth company ☐

Hudson Pacific Properties, L.P.


Large accelerated filer o						Accelerated filer o
Non-accelerated filer x						Smaller reporting company ☐
						Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.


Hudson Pacific Properties, Inc. o			Hudson Pacific Properties, L.P. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).


Hudson Pacific Properties, Inc. Yes ☐ No ☒			Hudson Pacific Properties, L.P. Yes ☐ No ☒

The number of shares of common stock of Hudson Pacific Properties, Inc. outstanding at July 28, 2023 was 140,937,702.

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EXPLANATORY NOTE

This report combines the quarterly reports on Form 10-Q for the period ended June 30, 2023 of Hudson Pacific Properties, Inc., a Maryland corporation, and Hudson Pacific Properties, L.P., a Maryland limited partnership. Unless otherwise indicated or unless the context requires otherwise, all references in this report to “we,” “us,” “our,” or “our Company” refer to Hudson Pacific Properties, Inc. together with its consolidated subsidiaries, including Hudson Pacific Properties, L.P. In statements regarding qualification as a REIT, such terms refer solely to Hudson Pacific Properties, Inc. Unless otherwise indicated or unless the context requires otherwise, all references to “our operating partnership” or “the operating partnership” refer to Hudson Pacific Properties, L.P. together with its consolidated subsidiaries.

Hudson Pacific Properties, Inc. is a real estate investment trust, or REIT, and the sole general partner of our operating partnership. As of June 30, 2023, Hudson Pacific Properties, Inc. owned approximately 97.2% of the ownership interest in our operating partnership (including unvested restricted units). The remaining approximately 2.8% interest was owned by certain of our executive officers and directors, certain of their affiliates and other outside investors, including unvested operating partnership performance units. As the sole general partner of our operating partnership, Hudson Pacific Properties, Inc. has the full, exclusive and complete responsibility for our operating partnership’s day-to-day management and control.

We believe combining the quarterly reports on Form 10-Q of Hudson Pacific Properties, Inc. and the operating partnership into this single report results in the following benefits:

•enhancing investors’ understanding of our Company and our operating partnership by enabling investors to view the business as a whole in the same manner as management views and operates the business;

•eliminating duplicative disclosure and providing a more streamlined and readable presentation because a substantial portion of the disclosures apply to both our Company and our operating partnership; and

•creating time and cost efficiencies through the preparation of one combined report instead of two separate reports.

There are a few differences between our Company and our operating partnership, which are reflected in the disclosures in this report. We believe it is important to understand the differences between our Company and our operating partnership in the context of how we operate as an interrelated, consolidated company. Hudson Pacific Properties, Inc. is a REIT, the only material assets of which are the units of partnership interest in our operating partnership. As a result, Hudson Pacific Properties, Inc. does not conduct business itself, other than acting as the sole general partner of our operating partnership, issuing equity from time to time and guaranteeing certain debt of our operating partnership. Hudson Pacific Properties, Inc. itself does not issue any indebtedness but guarantees some of the debt of our operating partnership. Our operating partnership, which is structured as a partnership with no publicly traded equity, holds substantially all of the assets of our Company and conducts substantially all of our business. Except for net proceeds from equity issuances by Hudson Pacific Properties, Inc., which are generally contributed to our operating partnership in exchange for units of partnership interest in our operating partnership, our operating partnership generates the capital required by our Company’s business through its operations, its incurrence of indebtedness or through the issuance of units of partnership interest in our operating partnership.

Non-controlling interest, stockholders’ equity and partners’ capital are the main areas of difference between the consolidated financial statements of our Company and those of our operating partnership. The common units in our operating partnership are accounted for as partners’ capital in our operating partnership’s consolidated financial statements and, to the extent not held by our Company, as a non-controlling interest in our Company’s consolidated financial statements. The differences between stockholders’ equity, partners’ capital and non-controlling interest result from the differences in the equity issued by our Company and our operating partnership.

To help investors understand the significant differences between our Company and our operating partnership, this report presents the consolidated financial statements separately for our Company and our operating partnership. All other sections of this report, including “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Quantitative and Qualitative Disclosures About Market Risk,” are presented together for our Company and our operating partnership.

In order to establish that the Chief Executive Officer and the Chief Financial Officer of each entity have made the requisite certifications and that our Company and our operating partnership are compliant with Rule 13a-15 or Rule 15d-15 of the Securities Exchange Act of 1934, or the Exchange Act and 18 U.S.C. §1350, this report also includes separate Part I, Item 4 “Controls and Procedures” sections and separate Exhibit 31 and 32 certifications for each of Hudson Pacific Properties, Inc. and our operating partnership.

HUDSON PACIFIC PROPERTIES, INC. AND HUDSON PACIFIC PROPERTIES, L.P.

TABLE OF CONTENTS


		Page
PART I—FINANCIAL INFORMATION
ITEM 1.	Financial Statements of Hudson Pacific Properties, Inc.
	Consolidated Balance Sheets as of June 30, 2023 (unaudited) and December 31, 2022	5
	Consolidated Statements of Operations (unaudited) for the three and six months ended June 30, 2023 and 2022	6
	Consolidated Statements of Comprehensive Loss (unaudited) for the three and six months ended June 30, 2023 and 2022	7
	Consolidated Statements of Equity (unaudited) for the three and six months ended June 30, 2023 and 2022	8
	Consolidated Statements of Cash Flows (unaudited) for the six months ended June 30, 2023 and 2022	10
ITEM 1.	Financial Statements of Hudson Pacific Properties, L.P.
	Consolidated Balance Sheets as of June 30, 2023 (unaudited) and December 31, 2022	11
	Consolidated Statements of Operations (unaudited) for the three and six months ended June 30, 2023 and 2022	12
	Consolidated Statements of Comprehensive Loss (unaudited) for the three and six months ended June 30, 2023 and 2022	13
	Consolidated Statements of Capital (unaudited) for the three and six months ended June 30, 2023 and 2022	14
	Consolidated Statements of Cash Flows (unaudited) for the six months ended June 30, 2023 and 2022	16
	Notes to Unaudited Consolidated Financial Statements	17
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	45
ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	68
ITEM 4.	Controls and Procedures	68
PART II—OTHER INFORMATION
ITEM 1.	Legal Proceedings	70
ITEM 1A.	Risk Factors	70
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	70
ITEM 3.	Defaults Upon Senior Securities	70
ITEM 4.	Mine Safety Disclosures	70
ITEM 5.	Other Information	70
ITEM 6.	Exhibits	71
SIGNATURES		72

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PART I—FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS OF HUDSON PACIFIC PROPERTIES, INC.

HUDSON PACIFIC PROPERTIES, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)


	June 30, 2023 (unaudited)		December 31, 2022
ASSETS
Investment in real estate, at cost	$	8,856,229	$	8,716,572
Accumulated depreciation and amortization	(1,686,943)		(1,541,271)
Investment in real estate, net	7,169,286		7,175,301
Non-real estate property, plant and equipment, net	119,526		130,289
Cash and cash equivalents	109,220		255,761
Restricted cash	18,583		29,970
Accounts receivable, net	18,921		16,820
Straight-line rent receivables, net	294,050		279,910
Deferred leasing costs and intangible assets, net	371,525		393,842
Operating lease right-of-use assets	393,911		401,051
Prepaid expenses and other assets, net	128,836		98,837
Investment in unconsolidated real estate entities	218,422		180,572
Goodwill	263,549		263,549
Assets associated with real estate held for sale	—		93,238
TOTAL ASSETS	$	9,105,829	$	9,319,140

LIABILITIES AND EQUITY
Liabilities
Unsecured and secured debt, net	$	4,473,107	$	4,585,862
Joint venture partner debt	66,136		66,136
Accounts payable, accrued liabilities and other	274,294		264,098
Operating lease liabilities	395,170		399,801
Intangible liabilities, net	30,798		34,091
Security deposits, prepaid rent and other	92,021		83,797
Liabilities associated with real estate held for sale	—		665
Total liabilities	5,331,526		5,434,450

Commitments and contingencies (note 21)

Redeemable preferred units of the operating partnership	9,815		9,815
Redeemable non-controlling interest in consolidated real estate entities	119,136		125,044

Equity
Hudson Pacific Properties, Inc. 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 June 30, 2023 and December 31, 2022	425,000		425,000
Common stock, $0.01 par value, 481,600,000 authorized, 140,937,702 and 141,054,478 shares outstanding at June 30, 2023 and December 31, 2022, respectively	1,403		1,409
Additional paid-in capital	2,783,858		2,889,967
Accumulated other comprehensive income (loss)	6,413		(11,272)

Total Hudson Pacific Properties, Inc. stockholders’ equity	3,216,674		3,305,104
Non-controlling interest—members in consolidated real estate entities	355,270		377,756
Non-controlling interest—units in the operating partnership	73,408		66,971
Total equity	3,645,352		3,749,831
TOTAL LIABILITIES AND EQUITY	$	9,105,829	$	9,319,140

The accompanying notes are an integral part of these consolidated financial statements.

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HUDSON PACIFIC PROPERTIES, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited, in thousands, except share data)


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
REVENUES
Office
Rental	$	203,486	$	211,836	$	406,143	$	418,028
Service and other revenues	3,805		4,408		7,781		9,616
Total office revenues	207,291		216,244		413,924		427,644
Studio
Rental	16,374		13,438		32,627		26,832
Service and other revenues	21,503		21,748		50,880		41,467
Total studio revenues	37,877		35,186		83,507		68,299
Total revenues	245,168		251,430		497,431		495,943
OPERATING EXPENSES
Office operating expenses	76,767		78,558		150,821		152,189
Studio operating expenses	34,679		20,686		71,923		39,669
General and administrative	18,941		21,871		37,665		42,383
Depreciation and amortization	98,935		91,438		196,074		183,631
Total operating expenses	229,322		212,553		456,483		417,872
OTHER INCOME (EXPENSES)
(Loss) income from unconsolidated real estate entities	(715)		1,780		(1,460)		2,083
Fee income	2,284		1,140		4,686		2,211
Interest expense	(54,648)		(33,719)		(108,455)		(64,555)
Interest income	236		920		607		1,830
Management services reimbursement income—unconsolidated real estate entities	1,059		1,068		2,123		2,176
Management services expense—unconsolidated real estate entities	(1,059)		(1,068)		(2,123)		(2,176)
Transaction-related expenses	2,530		(1,126)		1,344		(1,382)
Unrealized loss on non-real estate investments	(843)		(1,818)		(4)		(168)
Gain on extinguishment of debt	10,000		—		10,000		—

Gain on sale of real estate	—		—		7,046		—
Impairment loss	—		(3,250)		—		(23,753)
Other income (expense)	138		(21)		135		(9)
Total other expenses	(41,018)		(36,094)		(86,101)		(83,743)
(Loss) income before income tax (provision) benefit	(25,172)		2,783		(45,153)		(5,672)
Income tax (provision) benefit	(6,302)		763		(1,140)		1,603
Net (loss) income	(31,474)		3,546		(46,293)		(4,069)
Net income attributable to Series A preferred units	(153)		(153)		(306)		(306)
Net income attributable to Series C preferred shares	(5,047)		(5,047)		(10,094)		(10,337)
Net income attributable to participating securities	(297)		(300)		(850)		(594)
Net income attributable to non-controlling interest in consolidated real estate entities	(346)		(7,081)		(1,377)		(15,642)
Net loss attributable to redeemable non-controlling interest in consolidated real estate entities	508		1,506		1,402		3,396
Net loss attributable to common units in the operating partnership	646		93		928		323
NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS	$	(36,163)	$	(7,436)	$	(56,590)	$	(27,229)

BASIC AND DILUTED PER SHARE AMOUNTS
Net loss attributable to common stockholders—basic	$	(0.26)	$	(0.05)	$	(0.40)	$	(0.19)
Net loss attributable to common stockholders—diluted	$	(0.26)	$	(0.05)	$	(0.40)	$	(0.19)
Weighted average shares of common stock outstanding—basic	140,909,747		143,816,698		140,967,066		146,487,388
Weighted average shares of common stock outstanding—diluted	140,909,747		143,816,698		140,967,066		146,487,388

The accompanying notes are an integral part of these consolidated financial statements.

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HUDSON PACIFIC PROPERTIES, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(unaudited, in thousands)


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Net (loss) income	$	(31,474)	$	3,546	$	(46,293)	$	(4,069)
Currency translation adjustments	3,760		(7,088)		5,774		(8,449)
Net unrealized gains on derivative instruments:
Unrealized gains	12,312		1,516		13,033		4,560
Reclassification adjustment for realized gains	(962)		(916)		(248)		(1,495)
Total net unrealized gains on derivative instruments	11,350		600		12,785		3,065
Total other comprehensive income (loss)	15,110		(6,488)		18,559		(5,384)
Comprehensive loss	(16,364)		(2,942)		(27,734)		(9,453)
Comprehensive income attributable to Series A preferred units	(153)		(153)		(306)		(306)
Comprehensive income attributable to Series C preferred stock	(5,047)		(5,047)		(10,094)		(10,337)
Comprehensive income attributable to participating securities	(297)		(300)		(850)		(594)
Comprehensive income attributable to non-controlling interest in consolidated real estate entities	(482)		(7,081)		(1,748)		(15,642)
Comprehensive loss attributable to redeemable non-controlling interest in consolidated real estate entities	508		1,506		1,402		3,396
Comprehensive loss attributable to non-controlling interest in the operating partnership	232		206		425		417
COMPREHENSIVE LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS	$	(21,603)	$	(13,811)	$	(38,905)	$	(32,519)

The accompanying notes are an integral part of these consolidated financial statements.

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HUDSON PACIFIC PROPERTIES, INC.

CONSOLIDATED STATEMENTS OF EQUITY

For the three and six months ended June 30, 2023

(unaudited, in thousands, except share data)


	Hudson Pacific Properties, Inc. Stockholders’ Equity											Non-controlling Interest
	Series C Cumulative Redeemable Preferred Stock		Shares of Common Stock	Stock Amount		Additional Paid-in Capital		Retained Earnings (Accumulated Deficit)		Accumulated Other Comprehensive (Loss) Income		Units in the Operating Partnership		Members in Consolidated Real Estate Entities		Total Equity
Balance, March 31, 2023	$	425,000	140,888,769	$	1,403	$	2,835,061	$	—	$	(8,147)	$	69,605	$	375,960	$	3,698,882

Contributions	—		—	—		—		—		—		—		7,708		7,708
Distributions	—		—	—		—		—		—		—		(28,880)		(28,880)


Issuance of unrestricted stock	—		48,933	—		—		—		—		—		—		—



Declared dividend	(5,047)		—	—		(53,591)		35,866		—		(570)		—		(23,342)
Amortization of stock-based compensation	—		—	—		2,388		—		—		4,605		—		6,993
Net income (loss)	5,047		—	—		—		(35,866)		—		(646)		346		(31,119)
Other comprehensive income	—		—	—		—		—		14,560		414		136		15,110

Balance, June 30, 2023	$	425,000	140,937,702	$	1,403	$	2,783,858	$	—	$	6,413	$	73,408	$	355,270	$	3,645,352

Balance, December 31, 2022	$	425,000	141,054,478	$	1,409	$	2,889,967	$	—	$	(11,272)	$	66,971	$	377,756	$	3,749,831

Contributions	—		—	—		—		—		—		—		14,205		14,205
Distributions	—		—	—		—		—		—		—		(38,439)		(38,439)


Issuance of unrestricted stock	—		82,861	—		—		—		—		—		—		—
Shares repurchased	—		(187,400)	(6)		(1,363)		—		—		—		—		(1,369)
Shares withheld to satisfy tax withholding obligations	—		(12,237)	—		(87)		—		—		—		—		(87)

Declared dividend	(10,094)		—	—		(108,959)		55,738		—		(1,739)		—		(65,054)
Amortization of stock-based compensation	—		—	—		4,300		—		—		8,601		—		12,901
Net income (loss)	10,094		—	—		—		(55,738)		—		(928)		1,377		(45,195)
Other comprehensive income	—		—	—		—		—		17,685		503		371		18,559

Balance, June 30, 2023	$	425,000	140,937,702	$	1,403	$	2,783,858	$	—	$	6,413	$	73,408	$	355,270	$	3,645,352

The accompanying notes are an integral part of these consolidated financial statements.

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HUDSON PACIFIC PROPERTIES, INC.

CONSOLIDATED STATEMENTS OF EQUITY

For the three and six months ended June 30, 2022

(unaudited, in thousands, except share data)


	Hudson Pacific Properties, Inc. Stockholders’ Equity											Non-controlling Interest
	Series C Cumulative Redeemable Preferred Stock		Shares of Common Stock	Stock Amount		Additional Paid-in Capital		Retained Earnings (Accumulated Deficit)		Accumulated Other Comprehensive Loss		Units in the Operating Partnership		Members in Consolidated Real Estate Entities		Total Equity
Balance, March 31, 2022	$	425,000	144,559,168	$	1,445	$	3,063,500	$	—	$	(676)	$	55,254	$	398,941	$	3,943,464

Contributions			—	—		—		—		—		—		12,833		12,833
Distributions	—		—	—		—		—		—		—		(34,148)		(34,148)
Transaction costs			—	—		(138)		—		—		—		—		(138)

Issuance of unrestricted stock	—		24,564	—		—		—		—		—		—		—

Shares repurchased			(2,105,359)	(21)		(37,185)		—		—		—		—		(37,206)
Accelerated share repurchase			(869,037)	(9)		9						—		—		—
Declared dividend	(5,047)		—	—		(42,863)		7,136		—		(679)		—		(41,453)
Amortization of stock-based compensation	—		—	—		2,343		—		—		4,623		—		6,966
Net income (loss)	5,047		—	—		—		(7,136)		—		(93)		7,081		4,899
Other comprehensive loss	—		—	—		—		—		(6,375)		(113)		—		(6,488)

Balance, June 30, 2022	$	425,000	141,609,336	$	1,415	$	2,985,666	$	—	$	(7,051)	$	58,992	$	384,707	$	3,848,729

Balance, December 31, 2021	$	425,000	151,124,543	$	1,511	$	3,317,072	$	—	$	(1,761)	$	52,199	$	402,971	4,196,992

Contributions	—		—	—		—		—		—		—		15,457		15,457
Distributions	—		—	—		—		—		—		—		(49,363)		(49,363)
Transaction costs	—		—	—		(214)		—		—		—		—		(214)

Issuance of unrestricted stock	—		32,861	—		—		—		—		—		—		—
Shares repurchased	—		(2,105,359)	(21)		(37,185)		—		—		—		—		(37,206)

Accelerated share repurchase	—		(7,442,709)	(75)		(199,925)		—		—		—		—		(200,000)
Declared dividend	(10,337)		—	—		(98,625)		26,635		—		(1,358)		—		(83,685)
Amortization of stock-based compensation	—		—	—		4,543		—		—		8,568		—		13,111
Net income (loss)	10,337		—	—		—		(26,635)		—		(323)		15,642		(979)
Other comprehensive loss	—		—	—		—		—		(5,290)		(94)		—		(5,384)

Balance, June 30, 2022	$	425,000	141,609,336	$	1,415	$	2,985,666	$	—	$	(7,051)	$	58,992	$	384,707	$	3,848,729

The accompanying notes are an integral part of these consolidated financial statements.

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HUDSON PACIFIC PROPERTIES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, in thousands)


	Six Months Ended June 30,
	2023		2022
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(46,293)	$	(4,069)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	196,074		183,631
Non-cash interest expense	14,905		3,272
Amortization of stock-based compensation	11,547		11,322
Loss (income) from unconsolidated real estate entities	1,460		(2,083)
Unrealized loss on non-real estate investments	4		168
Straight-line rents	(14,111)		(27,621)
Straight-line rent expenses	2,509		844
Amortization of above- and below-market leases, net	(3,239)		(4,692)
Amortization of above- and below-market ground leases, net	1,377		1,355
Amortization of lease incentive costs	603		863
Distribution of income from unconsolidated real estate entities	—		688
Impairment loss	—		23,753

Earnout liability fair value adjustment	(3,017)		—
Gain on sale of real estate	(7,046)		—
Deferred tax provision (benefit)	916		(1,500)
Change in operating assets and liabilities:
Accounts receivable	(1,989)		9,744
Deferred leasing costs and lease intangibles	(9,619)		(9,807)
Prepaid expenses and other assets	(23,474)		(12,898)
Accounts payable, accrued liabilities and other	22,993		19,428
Security deposits, prepaid rent and other	8,083		(2,256)
Net cash provided by operating activities	151,683		190,142
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sales of real estate	100,441		—
Additions to investment in real estate	(155,948)		(113,605)
Property acquisitions	—		(87,970)


Maturities of U.S. Government securities	—		129,300
Contributions to non-real estate investments	(3,339)		(11,974)
Proceeds from sales of non-real estate investments	503		—
Distributions from non-real estate investments	—		329
Distributions from unconsolidated real estate entities	1,895		883
Contributions to unconsolidated real estate entities	(35,313)		(14,892)
Additions to non-real estate property, plant and equipment	(1,650)		(6,325)


Net cash used in investing activities	(93,411)		(104,254)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from unsecured and secured debt	263,356		389,327
Payments of unsecured and secured debt	(384,000)		—
Payments of in-substance defeased debt	—		(1,815)

Transaction costs	—		(214)
Repurchases of common stock	(1,369)		(34,688)


Accelerated share repurchase	—		(200,000)
Dividends paid to common stock and unitholders	(54,960)		(73,348)
Dividends paid to preferred stock and unitholders	(10,400)		(12,924)
Contributions from redeemable non-controlling members in consolidated real estate entities	—		375
Distributions to redeemable non-controlling members in consolidated real estate entities	(4,506)		(8)
Contributions from non-controlling members in consolidated real estate entities	14,205		15,457
Distributions to non-controlling members in consolidated real estate entities	(38,439)		(49,363)
Payments to satisfy tax withholding obligations	(87)		—

Net cash (used in) provided by financing activities	(216,200)		32,799



Net (decrease) increase in cash and cash equivalents and restricted cash	(157,928)		118,687
Cash and cash equivalents and restricted cash—beginning of period	285,731		196,876
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH—END OF PERIOD	$	127,803	$	315,563

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

ITEM 1. FINANCIAL STATEMENTS OF HUDSON PACIFIC PROPERTIES, L.P.

HUDSON PACIFIC PROPERTIES, L.P.

CONSOLIDATED BALANCE SHEETS

(in thousands, except unit data)


	June 30, 2023 (unaudited)		December 31, 2022
ASSETS
Investment in real estate, at cost	$	8,856,229	$	8,716,572
Accumulated depreciation and amortization	(1,686,943)		(1,541,271)
Investment in real estate, net	7,169,286		7,175,301
Non-real estate property, plant and equipment, net	119,526		130,289
Cash and cash equivalents	109,220		255,761
Restricted cash	18,583		29,970
Accounts receivable, net	18,921		16,820
Straight-line rent receivables, net	294,050		279,910
Deferred leasing costs and intangible assets, net	371,525		393,842
Operating lease right-of-use assets	393,911		401,051
Prepaid expenses and other assets, net	128,836		98,837
Investment in unconsolidated real estate entities	218,422		180,572
Goodwill	263,549		263,549
Assets associated with real estate held for sale	—		93,238
TOTAL ASSETS	$	9,105,829	$	9,319,140

LIABILITIES AND CAPITAL
Liabilities
Unsecured and secured debt, net	$	4,473,107	$	4,585,862
Joint venture partner debt	66,136		66,136
Accounts payable, accrued liabilities and other	274,294		264,098
Operating lease liabilities	395,170		399,801
Intangible liabilities, net	30,798		34,091
Security deposits, prepaid rent and other	92,021		83,797
Liabilities associated with real estate held for sale	—		665
Total liabilities	5,331,526		5,434,450

Commitments and contingencies (note 21)

Redeemable preferred units of the operating partnership	9,815		9,815
Redeemable non-controlling interest in consolidated real estate entities	119,136		125,044

Capital
Hudson Pacific Properties, L.P. partners’ capital
4.750% Series C cumulative redeemable preferred units, $25.00 per unit liquidation preference, 17,000,000 units outstanding at June 30, 2023 and December 31, 2022	425,000		425,000
Common units, 143,456,164 and 143,246,320 outstanding at June 30, 2023 and December 31, 2022, respectively	2,858,354		2,958,535
Accumulated other comprehensive income (loss)	6,728		(11,460)
Total Hudson Pacific Properties, L.P. partners’ capital	3,290,082		3,372,075
Non-controlling interest—members in consolidated real estate entities	355,270		377,756
Total capital	3,645,352		3,749,831
TOTAL LIABILITIES AND CAPITAL	$	9,105,829	$	9,319,140

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

HUDSON PACIFIC PROPERTIES, L.P.

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited, in thousands, except unit data)


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022			2023		2022
REVENUES
Office
Rental	$	203,486	$	211,836		$	406,143	$	418,028
Service and other revenues	3,805		4,408			7,781		9,616
Total office revenues	207,291		216,244			413,924		427,644
Studio
Rental	16,374		13,438			32,627		26,832
Service and other revenues	21,503		21,748			50,880		41,467
Total studio revenues	37,877		35,186			83,507		68,299
Total revenues	245,168		251,430			497,431		495,943
OPERATING EXPENSES
Office operating expenses	76,767		78,558			150,821		152,189
Studio operating expenses	34,679		20,686			71,923		39,669
General and administrative	18,941		21,871			37,665		42,383
Depreciation and amortization	98,935		91,438			196,074		183,631
Total operating expenses	229,322		212,553			456,483		417,872
OTHER INCOME (EXPENSES)
(Loss) income from unconsolidated real estate entities	(715)		1,780			(1,460)		2,083
Fee income	2,284		1,140			4,686		2,211
Interest expense	(54,648)		(33,719)			(108,455)		(64,555)
Interest income	236		920			607		1,830
Management services reimbursement income—unconsolidated real estate entities	1,059		1,068			2,123		2,176
Management services expense—unconsolidated real estate entities	(1,059)		(1,068)			(2,123)		(2,176)
Transaction-related expenses	2,530		(1,126)			1,344		(1,382)
Unrealized loss on non-real estate investments	(843)		(1,818)			(4)		(168)

Gain on sale of real estate	—		—			7,046		—
Impairment loss	—		(3,250)			—		(23,753)
Gain on extinguishment of debt	10,000		—			10,000		—
Other income (expense)	138		(21)			135		(9)
Total other expenses	(41,018)		(36,094)			(86,101)		(83,743)
(Loss) income before income tax benefit (provision)	(25,172)		2,783			(45,153)		(5,672)
Income tax (provision) benefit	(6,302)		763			(1,140)		1,603
Net (loss) income	(31,474)

Hudson Pacific Properties, Inc. [HPP-PC] Filings
Hudson Pacific Properties, Inc. [HPP] Filings
10-Q	[2023-08-04]
10-Q	[2023-05-09]
10-K	[2023-02-10]
10-Q	[2022-11-04]
10-Q	[2022-07-29]
10-Q	[2022-04-29]
10-K	[2022-02-18]
10-Q	[2021-10-29]
10-Q	[2021-08-04]
10-Q	[2021-05-07]
10-K	[2021-02-22]
10-Q	[2020-11-05]
10-Q	[2020-07-31]
10-Q	[2020-05-08]
10-K	[2020-02-24]
10-Q	[2019-11-01]
10-Q	[2019-08-02]
10-Q	[2019-05-07]
10-K	[2019-02-19]
10-Q	[2018-11-02]
10-Q	[2018-08-02]
10-Q	[2018-05-04]
10-K	[2018-02-16]
10-Q	[2017-11-06]
10-Q	[2017-08-04]
10-Q	[2017-05-05]
10-K	[2017-02-21]
10-Q	[2016-11-04]
10-Q	[2016-08-04]
10-Q	[2016-05-09]
10-K	[2016-02-26]
10-Q	[2015-11-06]
10-Q	[2015-08-10]
10-Q	[2015-05-08]
10-K	[2015-03-02]
10-Q	[2014-11-07]
10-Q	[2014-08-07]
10-Q	[2014-05-12]
10-K	[2014-03-03]
10-Q	[2013-11-07]
10-Q	[2013-08-08]
10-Q	[2013-05-09]
10-K	[2013-03-14]
10-Q	[2012-11-09]
10-Q	[2012-08-08]
10-Q	[2012-05-09]
10-K	[2012-03-14]

Hudson Pacific Properties, Inc. [HPP-PC] Filings

Hudson Pacific Properties, Inc. [HPP] Filings