Hudson Pacific Properties(HPP) - 2024 Q3 - Quarterly Report

Revenue Performance - Total revenues for the nine months ended September 30, 2024, were $632.416 million, compared to$728.874 million in the same period in 2023, representing a decrease of 13.2%[18] - Office rental revenues for the nine months ended September 30, 2024, were $506.931 million, compared to$605.776 million in the same period in 2023, a decrease of 16.3%[18] - Studio rental revenues for the nine months ended September 30, 2024, were $41.761 million, compared to$46.109 million in the same period in 2023, a decrease of 9.4%[18] - Total revenues for Q3 2024 decreased to $200.393 million from$231.443 million in Q3 2023, a decline of 13.4%[26] - Office rental revenues dropped to $162.908 million in Q3 2024 from$199.633 million in Q3 2023, a decrease of 18.4%[26] - Studio revenues increased to $33.451 million in Q3 2024 from$27.856 million in Q3 2023, a growth of 20.1%[26] - Ancillary revenues for the nine months ended September 30, 2024, are $68.8 million, compared to$61.7 million for the same period in 2023[62] - Other revenues for the nine months ended September 30, 2024, are $13.2 million, compared to$13.6 million for the same period in 2023[62] - Management fee income for the nine months ended September 30, 2024, is $3.9 million, compared to$5.0 million for the same period in 2023[62] - Office segment revenue for Q3 2024 was $166.9 million, a decrease from$203.6 million in Q3 2023[178] - Studio segment revenue for Q3 2024 was $33.5 million, an increase from$27.9 million in Q3 2023[178] Net Loss and Comprehensive Loss - Net loss attributable to common stockholders for the nine months ended September 30, 2024, was $197.147 million, compared to$94.188 million in the same period in 2023, representing a significant increase in loss[18] - Net loss for the three months ended September 30, 2024, was $107.013 million, compared to$35.752 million for the same period in 2023[20] - Comprehensive loss attributable to common stockholders for the three months ended September 30, 2024, was $103.086 million, compared to$39.832 million for the same period in 2023[20] - Net income (loss) for the nine months ended September 30, 2024, was a loss of $205.298 million[21] - Other comprehensive loss for the nine months ended September 30, 2024, was$2.189 million[21] - Net income (loss) for the nine months ended September 30, 2023, was a loss of $80.169 million[23] - Other comprehensive income for the nine months ended September 30, 2023, was$15.946 million[23] - Net loss for the nine months ended September 30, 2024, was $207.925 million, compared to$82.046 million in the same period in 2023[24] - Net loss for Q3 2024 widened to $107.013 million compared to$35.752 million in Q3 2023[26] - Comprehensive loss for Q3 2024 was $112.619 million, compared to$38.365 million in Q3 2023[27] - Net loss attributable to common unitholders was $100.468 million in Q3 2024, compared to$38.269 million in Q3 2023[26] - Net loss for the three months ended September 30, 2024, was $106,198, compared to a net loss of$34,974 for the same period in 2023[29][30] - Net loss for the nine months ended September 30, 2024, was $207.9 million, compared to a net loss of$82.0 million for the same period in 2023[31] - Net loss for Q3 2024 was $107.0 million, compared to a net loss of$35.8 million in Q3 2023[179] - Basic and diluted earnings per share for the nine months ended September 30, 2024, were both $(1.40), compared to$(0.67) in the same period of 2023[152] - Basic and diluted net loss available to common unitholders for Q3 2024 was $(100,468) compared to$(38,269) in Q3 2023, representing a significant increase in losses[156] - Basic earnings per common unit worsened from $(0.27) in Q3 2023 to$(0.69) in Q3 2024[156] Assets and Liabilities - Total assets as of September 30, 2024, were $8.317 billion, compared to$8.282 billion as of December 31, 2023, showing a slight increase[17] - Total liabilities as of September 30, 2024, were $4.971 billion, compared to$4.721 billion as of December 31, 2023, indicating an increase in liabilities[17] - Cash and cash equivalents as of September 30, 2024, were $90.692 million, compared to$100.391 million as of December 31, 2023, a decrease of 9.7%[17] - Total assets as of September 30, 2024, were $8.317 billion, slightly up from$8.282 billion at the end of 2023[25] - Total liabilities as of September 30, 2024, were $4.971 billion, up from$4.721 billion at the end of 2023[25] - Investment in real estate, net, as of September 30, 2024, was $6.549 billion, compared to$6.484 billion at the end of 2023[25] - Unsecured and secured debt, net, as of September 30, 2024, was $4.140 billion, up from$3.945 billion at the end of 2023[25] - Restricted cash as of September 30, 2024, was $23.243 million, up from$18.765 million at the end of 2023[25] - Total equity as of September 30, 2024, was $3.286 billion, a decrease from$3.494 billion as of December 31, 2023[21] - Total equity as of September 30, 2023, was $3.601 billion, a decrease from$3.750 billion as of December 31, 2022[23] - Total Capital as of September 30, 2024, decreased to $3,286,312 from$3,395,808 as of June 30, 2024, primarily due to net loss and other comprehensive loss[29] - Accumulated Other Comprehensive Loss increased to $2,336 as of September 30, 2024, from$3,091 as of June 30, 2024[29] - Total Partners' Capital decreased to $3,119,835 as of September 30, 2024, from$3,158,733 as of December 31, 2023[29] - Non-controlling Interest in Consolidated Real Estate Entities decreased to $166,477 as of September 30, 2024, from$335,439 as of December 31, 2023[29] - The company's investment in real estate, at cost, was $8,318,085 as of September 30, 2024, compared to$8,212,896 as of December 31, 2023[76] - The company's non-real estate property, plant and equipment, net was $122,958 as of September 30, 2024, compared to$118,783 as of December 31, 2023[84] - The company's investments in unconsolidated joint ventures totaled $1,199,633 in assets as of September 30, 2024, compared to$1,336,239 as of December 31, 2023[89] - Deferred leasing costs and in-place lease intangibles decreased to $245.8 million as of September 30, 2024, from$290.9 million as of December 31, 2023[92] - Accumulated amortization for deferred leasing costs and in-place lease intangibles was $115.3 million as of September 30, 2024, compared to$150.5 million as of December 31, 2023[92] - Below-market ground leases decreased to $74.9 million as of September 30, 2024, from$77.9 million as of December 31, 2023[92] - Accounts receivable decreased to $15.4 million as of September 30, 2024, from$25.0 million as of December 31, 2023[98] - Straight-line rent receivables decreased to $205.8 million as of September 30, 2024, from$220.8 million as of December 31, 2023[99] - Prepaid expenses and other assets, net increased to $95.5 million as of September 30, 2024, from$94.1 million as of December 31, 2023[100] - Total unsecured debt increased to $2,410,000 as of September 30, 2024, up from$2,307,000 as of December 31, 2023[103] - Total secured debt increased to $1,741,650 as of September 30, 2024, up from$1,653,067 as of December 31, 2023[103] - Total unsecured and secured debt, net of unamortized deferred financing costs, increased to $4,139,702 as of September 30, 2024, up from$3,945,314 as of December 31, 2023[103] - Future minimum principal payments due on debt as of September 30, 2024 are $741,300 in 2025,$1,514,767 in 2026, $544,583 in 2027,$451,000 in 2028, and $900,000 thereafter[107] - Total liabilities to total asset value covenant ratio was 48.7$1,032 million), Level 2 ($6,441 million), and Level 3 ($0) as of September 30, 2024[140] - Unsecured debt fair value decreased from $1,971,410 million in December 2023 to$2,131,471 million in September 2024, while secured debt fair value increased from $1,634,668 million to$1,729,865 million over the same period[143] - The company's ownership interest percentage in the operating partnership decreased from 98.0% at December 31, 2023 to 97.5% at September 30, 2024[168] - Non-controlling common units in the operating partnership increased from 2,810,433 at December 31, 2023 to 3,677,827 at September 30, 2024[168] - Accumulated Other Comprehensive Loss (AOCI) decreased from $(187) at December 31, 2023 to$(2,344) at September 30, 2024, primarily due to unrealized gains and reclassifications[162] Cash Flow and Financing Activities - Net cash provided by operating activities for the nine months ended September 30, 2024, was $164.495 million, down from$223.038 million in 2023[24] - Net cash used in investing activities for the nine months ended September 30, 2024, was $195.756 million, compared to$124.505 million in 2023[24] - Net cash provided by financing activities for the nine months ended September 30, 2024, was $26.040 million, compared to a net cash used of$290.170 million in 2023[24] - The company borrowed $103.0 million on the unsecured revolving credit facility during the nine months ended September 30, 2024[105] - The company has not utilized its$125.0 million ATM program during the nine months ended September 30, 2024, with cumulative sales of $65.8 million as of September 30, 2024[169] - The company has not utilized its$250.0 million share repurchase program during the nine months ended September 30, 2024, with cumulative repurchases of $214.7 million since program commencement[170] - Cash and cash equivalents decreased to$90.7 million at the end of Q3 2024 from $100.4 million at the beginning of the period[190] - Restricted cash increased to$23.2 million at the end of Q3 2024 from $18.8 million at the beginning of the period[190] Expenses and Impairments - Interest expense for the nine months ended September 30, 2024, was$133.253 million, compared to $162.036 million in the same period in 2023, a decrease of 17.7$265.324 million, compared to $294.654 million in the same period in 2023, a decrease of 10$36.543 million, compared to $0 in the same period in 2023[18] - Interest expense decreased to$45.005 million in Q3 2024 from $53.581 million in Q3 2023, a reduction of 16$221.057 million, slightly lower than $228.268 million in Q3 2023[26] - The company recorded$0.7 million of impairment charges related to deferred leasing costs and intangible assets during the three and nine months ended September 30, 2024[96] - Amortization related to deferred leasing costs and in-place lease intangibles was $7.7 million for the three months ended September 30, 2024, compared to$9.4 million for the same period in 2023[93] - The company recorded impairment charges totaling $34.4 million related to real estate assets of certain office properties during the three and nine months ended September 30, 2024[79] - The company recorded$1.4 million of impairment charges related to right-of-use assets for ground leases at certain office properties during the three months ended September 30, 2024[134] - Gross interest expense for the three months ended September 30, 2024 was $53.5 million, a decrease from$57.7 million in the same period in 2023[115] - Interest expense for the nine months ended September 30, 2024 was $133.3 million, down from$162.0 million in the same period in 2023[115] - The company recorded an income tax provision of $2.2 million for the three months ended September 30, 2024, compared to a benefit of$0.4 million in the same period in 2023[124] - Total deferred tax assets as of September 30, 2024 were $74.2 million, up from$54.2 million at December 31, 2023[126] - Net deferred tax assets as of September 30, 2024 were $26.9 million, compared to$24.7 million at December 31, 2023[126] - The company recognized an unrealized loss of $1.1 million and$3.0 million on non-real estate investments during the three and nine months ended September 30, 2024, respectively[101] Leasing and Portfolio Metrics - The company's weighted average remaining lease term is 22 years as of September 30, 2024[53] - The weighted average incremental borrowing rate used to calculate ROU assets and lease liabilities is 5.6% as of September 30, 2024[55] - Future minimum base rents for properties as of September 30, 2024 total $2.7 billion, with$504.8 million due in 2025[131] - The present value of remaining contractual payments under operating lease agreements as of September 30, 2024 was $366.6 million[133] - Operating lease right-of-use assets as of September 30, 2024 amounted to$359.3 million[133] - Total operating lease payments as of September 30, 2024 were $695.5 million, with$526.8 million due after 2028[135] - The company's portfolio as of September 30, 2024 includes 14.7 million square feet of office properties, 45 sound stages and 1.7 million square feet of studio properties, and 3.2 million square feet of undeveloped land[197] - The in-service office portfolio was 80.0% leased (including leases not yet commenced) as of September 30, 2024[198] - Same-store office properties were 79.0% occupied and 79.9% leased, with an annualized base rent of $54.64 per square foot[200] - Same-store studio properties were 73.8% leased, with an annualized