EX-99.1 2 q32024ex991.htm EX-99.1 Document
Hudson Pacific Properties, Inc.
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Press Release

Hudson Pacific Properties Reports
Third Quarter 2024 Financial Results
– Signed 1.6 Million Sq Ft of Office Leases Year to Date with 539,000 Sq Ft in 3Q –
– Provides 4Q FFO Outlook and Updated Full-Year Assumptions –
____________
LOS ANGELES (November 12, 2024)—Hudson Pacific Properties, Inc. (NYSE: HPP) (the "Company," "Hudson Pacific," or "HPP"), a unique provider of end-to-end real estate solutions for dynamic tech and media tenants, today announced financial results for the third quarter 2024.

"Year to date, we have leased 1.6 million square feet of office space, 25% ahead of this time last year, and following nearly 540,000 square feet signed in the third quarter, our leasing pipeline and touring activity remain strong," commented Victor Coleman, Hudson Pacific's Chairman and CEO. "Growth in west coast tenant requirements has begun to outpace the broader US office market, a trend we anticipate will continue, given more 4-5 day in-office mandates from major employers, slowing tech layoffs, solid venture and AI investments, and increased venture fundraising activity. On the studios side, while Los Angeles show counts have yet to normalize post-strike, we presently have contracts for or interest in nearly 80% of our film and television stages, with demand coalescing around 2025 production starts and recently bolstered by the Governor's proposal to increase California's film and television tax credit program to three quarters of a billion dollars.

"While all of these positive developments point to meaningfully improved operating performance in the year ahead, we are laser focused on maintaining financial flexibility, and with no debt maturities until the end of 2025, we have good momentum on multiple asset-level transactions to further enhance balance sheet strength."

Financial Results Compared to Third Quarter 2023
Total revenue of $200.4 million compared to $231.4 million, almost entirely due to the sale of One Westside and expiration of the Block lease at 1455 Market last year, all partially offset by growth in studio revenue
Net loss attributable to common stockholders of $97.9 million, or $0.69 per diluted share, compared to net loss of $37.6 million, or $0.27 per diluted share, largely attributable to non-cash impairments associated with potential asset sales, along with the items affecting revenue, all partially offset by reduced depreciation and interest expense
FFO, excluding specified items, of $14.3 million, or $0.10 per diluted share, compared to $26.1 million, or $0.18 per diluted share, mostly attributable to the items affecting revenue and lower FFO attributable to non-controlling interests. Specified items consisted of a one-time straight-line rent reserve related to transitioning a tenant to cash basis reporting of $3.9 million, or $0.03 per diluted share; a non-cash revaluation associated with a loan swap unqualified for hedge accounting of $2.2 million, or $0.02 per diluted share; a non-cash deferred tax asset write-off of $1.2 million, or $0.01 per diluted share; and transaction-related expense of $0.3 million, or $0.00 per diluted share. There were no specified items for the third quarter 2023
FFO of $6.8 million, or $0.05 per diluted share, compared to $26.1 million, or $0.18 per diluted share
AFFO of $15.8 million, or $0.11 per diluted share, compared to $28.1 million, or $0.20 per diluted share, primarily attributable to the items affecting FFO


Hudson Pacific Properties, Inc.
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Same-store cash NOI of $96.9 million, compared to $113.2 million, mostly due to tenant move outs, including Block at 1455 Market
Leasing
Executed 85 new and renewal leases totaling 539,272 square feet, with significant leases including:
42,000-square-foot new lease at Page Mill Hill with an 11-year term
41,000-square-foot renewal lease at 901 Market with an approximately 10-year term
31,000-square-foot new lease at Bentall Centre with an approximately 11-year term
27,000-square-foot new lease at Palo Alto Square with an approximately 11-year term
24,000-square-foot new lease at Page Mill Center with a 4-year term
18,000-square-foot renewal at Concourse with a 15-year term
GAAP and cash rents decreased 11.5% and 13.3% from prior levels, respectively, but excluding a 29,000-square-foot short-term lease extension in Los Angeles, and two mid-size Bay Area leases totaling 68,000 square feet, GAAP and cash rent spreads would have been essentially flat
In-service office portfolio ended the quarter at 79.1% occupied and 80.0% leased, compared to 78.7% occupied and 80.0% leased, respectively, in second quarter of this year, with the change in occupancy primarily due to leases signed in the San Francisco Peninsula and Silicon Valley. But for the designation of Foothill Research Center as held-for-sale, the Company's in-service office portfolio would have ended the quarter at 79.3% occupied and 80.2% leased
On average over the trailing 12 months, the in-service studio portfolio was 73.8% leased, and the stages were 75.9% leased, compared to 76.1% and 78.1%, respectively, in the second quarter of this year, with the change due to a single tenant move out at Sunset Las Palmas Studios last year
Transactions
Entered into a contract to sell Foothill Research Center, a 195,121-square-foot office asset in Palo Alto and reclassified the property as held-for-sale
Balance Sheet as of September 30, 2024
$695.7 million of total liquidity comprised of $90.7 million of unrestricted cash and cash equivalents and $605.0 million of undrawn capacity under the unsecured revolving credit facility
$12.0 million and $183.1 million, or $6.0 million and $46.8 million at HPP's share, of undrawn capacity under construction loans secured by Sunset Glenoaks Studios and Sunset Pier 94 Studios, respectively
HPP's share of net debt to HPP's share of undepreciated book value was 37.4% with 91.5% of debt fixed or capped with no maturities until November 2025
Dividend
The Company's Board of Directors suspended payment of a quarterly dividend on its common stock and declared and paid a dividend on its 4.750% Series C cumulative preferred stock of $0.296875 per share
Personnel Update
Stefanie Bourne has been promoted to EVP, Studios effective October 15, 2024, and will oversee studio and production services sales, production services operations, and strategic initiatives for the Company's studio business. Bourne most recently served as SVP, Studio Operations and Strategic Initiatives. Prior to joining Hudson Pacific, she worked at the Walt Disney Company in global development for parks, experiences and products, and in real estate investments for Colony Capital
Anne Mehrtens has been promoted to EVP, Studio Real Estate & Southern California Office Operations effective October 15, 2024, and will continue to oversee studio real estate and office operations in Los Angeles, having recently served as an SVP with similar responsibilities. Prior to


Hudson Pacific Properties, Inc.
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joining Hudson Pacific, she worked in asset management for Topa Management Company

2024 Outlook
Hudson Pacific is providing an FFO outlook for the fourth quarter of $0.09 to $0.13 per diluted share along with updated full-year assumptions (see table below). There are no specified items in connection with this outlook.

This outlook 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 and in earlier announcements. It otherwise excludes any impact from new acquisitions, dispositions, debt financings, amendments or repayments, recapitalizations, capital markets activity or similar matters. There can be no assurance that actual results will not differ materially from these estimates.

Below are some of the assumptions the Company used in providing this outlook:

Unaudited, in thousands, except share data
Full Year 2024
 Assumptions
MetricLowHigh
Growth in same-store property cash NOI(1)(2)
(14.00)%(13.00)%
GAAP non-cash revenue (straight-line rent and above/below-market rents)(3)
$(14,500)$(9,500)
GAAP non-cash expense (straight-line rent expense and above/below-market ground rent)$(6,500)$(8,500)
General and administrative expenses(4)
$(77,000)$(83,000)
Interest expense(5)
$(173,000)$(183,000)
Non-real estate depreciation and amortization$(32,000)$(34,000)
FFO from unconsolidated joint ventures(6)
$(3,000)$(1,000)
FFO attributable to non-controlling interests$(13,000)$(17,000)
FFO attributable to preferred units/shares$(21,000)$(21,000)
Weighted average common stock/units outstanding—diluted(7)
145,000,000146,000,000
(1)Same-store for the full year 2024 is defined as the 40 office properties and three studio properties, as applicable, owned and included in the Company's stabilized portfolio as of January 1, 2023, and anticipated to still be owned and included in the stabilized portfolio through December 31, 2024. Due to reclassification as held-for-sale, Foothill Research Center has been removed from the same-store population. If Foothill Research Center remained within the same-store, growth in same-store property cash NOI would have been (13.50)% to (12.50)%.
(2)Please see non-GAAP information below for definition of cash NOI.
(3)Includes non-cash straight-line rent associated with the studio and office properties. Also includes a one-time straight-line rent reserve of approximately $7,600 related to transitioning a tenant to cash basis reporting.
(4)Includes non-cash compensation expense, which the Company estimates at $26,000 in 2024.
(5)Includes non-cash interest expense, which the Company estimates at $5,000 in 2024.
(6)Includes non-cash revaluation associated with a loan swap unqualified for hedge accounting of approximately $2,200.
(7)Diluted shares represent ownership in the Company through shares of common stock, OP Units and other convertible or exchangeable instruments. The weighted average fully diluted common stock/units outstanding for 2024 includes an estimate for the dilution impact of stock grants to the Company's executives under its long-term incentive programs. This estimate is based on the projected award potential of such programs as of the end of the most recently completed quarter, as calculated in accordance with the ASC 260, Earnings Per Share.

The Company does not provide a reconciliation for non-GAAP estimates on a forward-looking basis, 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, which is the most directly comparable forward-looking GAAP financial measure. This includes, 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.


Hudson Pacific Properties, Inc.
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Supplemental Information
Supplemental financial information regarding Hudson Pacific's third quarter 2024 results may be found on the Investors section of the Company's website at 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 third quarter 2024 financial results at 2:00 p.m. PT / 5:00 p.m. ET on November 12, 2024. The conference call will be available via live audio webcast on the Investors section of the Company's website at HudsonPacificProperties.com. A replay of the audio webcast will also be available following the call.
About Hudson Pacific Properties
Hudson Pacific Properties (NYSE: HPP) is a real estate investment trust serving dynamic tech and media tenants in global epicenters for these synergistic, converging and secular growth industries. Hudson Pacific’s unique and high-barrier tech and media focus leverages a full-service, end-to-end value creation platform forged through deep strategic relationships and niche expertise across identifying, acquiring, transforming and developing properties into world-class amenitized, collaborative and sustainable office and studio space. 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, which 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, of 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 filed with the Securities and Exchange Commission, or SEC, and other risks described in documents subsequently filed by the Company from time to time with the SEC.
Investor Contact
Laura Campbell
Executive Vice President, Investor Relations & Marketing
(310) 622-1702
lcampbell@hudsonppi.com


Hudson Pacific Properties, Inc.
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Media Contact
Laura Murray
Vice President, Communications
(310) 622-1781
lmurray@hudsonppi.com

(FINANCIAL TABLES FOLLOW)


Hudson Pacific Properties, Inc.
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Consolidated Balance Sheets
In thousands, except share data
9/30/2412/31/23
(Unaudited)
ASSETS
Investment in real estate, at cost$8,318,085 $8,212,896 
Accumulated depreciation and amortization(1,769,128)(1,728,437)
Investment in real estate, net6,548,957 6,484,459 
Non-real estate property, plant and equipment, net122,958 118,783 
Cash and cash equivalents90,692 100,391 
Restricted cash23,243 18,765 
Accounts receivable, net 14,985 24,609 
Straight-line rent receivables, net205,779 220,787 
Deferred leasing costs and intangible assets, net324,498 326,950 
Operating lease right-of-use assets359,266 376,306 
Prepaid expenses and other assets, net95,517 94,145 
Investment in unconsolidated real estate entities227,418 252,711 
Goodwill264,144 264,144 
Assets associated with real estate held for sale39,935 — 
TOTAL ASSETS$8,317,392 $8,282,050 
LIABILITIES AND EQUITY
Liabilities
Unsecured and secured debt, net$4,139,702 $3,945,314 
Joint venture partner debt66,136 66,136 
Accounts payable, accrued liabilities and other264,645 203,736 
Operating lease liabilities366,599 389,210 
Intangible liabilities, net23,550 27,751 
Security deposits, prepaid rent and other79,397 88,734 
Liabilities associated with real estate held for sale31,064 — 
Total liabilities4,971,093 4,720,881 
Redeemable preferred units of the operating partnership9,815 9,815 
Redeemable non-controlling interest in consolidated real estate entities50,172 57,182 
Equity
HPP 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 9/30/24 and 12/31/23
425,000 425,000 
Common stock, $0.01 par value, 481,600,000 authorized, 141,232,361 and 141,034,806 shares outstanding at 9/30/24 and 12/31/23, respectively
1,403 1,403 
Additional paid-in capital2,603,414 2,651,798 
Accumulated other comprehensive loss(2,344)(187)
Total HPP stockholders' equity3,027,473 3,078,014 
Non-controlling interest—members in consolidated real estate entities166,477 335,439 
Non-controlling interest—units in the operating partnership92,362 80,719 
Total equity3,286,312 3,494,172 
TOTAL LIABILITIES AND EQUITY$8,317,392 $8,282,050 



Hudson Pacific Properties, Inc.
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Consolidated Statements of Operations
Unaudited, in thousands, except per share data
Three Months EndedNine Months Ended
9/30/249/30/239/30/249/30/23
REVENUES
Office
Rental revenues$162,908 $199,633 $506,931 $605,776 
Service and other revenues4,034 3,954 11,125 11,735 
Total office revenues166,942 203,587 518,056 617,511 
Studio
Rental revenues13,720 13,482 41,761 46,109 
Service and other revenues19,731 14,374 72,599 65,254 
Total studio revenues33,451 27,856 114,360 111,363 
Total revenues200,393 231,443 632,416 728,874 
OPERATING EXPENSES
Office operating expenses79,502 80,521 227,753 231,342 
Studio operating expenses35,339 31,655 110,400 103,578 
General and administrative19,544 17,512 59,959 55,177 
Depreciation and amortization86,672 98,580 265,324 294,654 
Total operating expenses221,057 228,268 663,436 684,751 
OTHER INCOME (EXPENSES)
Loss from unconsolidated real estate entities(3,219)(759)(6,443)(2,219)
Fee income1,437 340 3,933 5,026 
Interest expense(45,005)(53,581)(133,253)(162,036)
Interest income542 800 1,975 1,407 
Management services reimbursement income—unconsolidated real estate entities989 1,015 3,187 3,138 
Management services expense—unconsolidated real estate entities(989)(1,015)(3,187)(3,138)
Transaction-related expenses(269)— (2,306)1,344 
Unrealized loss on non-real estate investments(1,081)(2,265)(3,024)(2,269)
Gain on extinguishment of debt— — — 10,000 
Gain on sale of real estate— 16,108 — 23,154 
Impairment loss(36,543)— (36,543)— 
Other (expense) income(28)1,449 139 
Total other expenses(84,166)(39,352)(174,212)(125,454)
Loss before income tax (provision) benefit(104,830)(36,177)(205,232)(81,331)
Income tax (provision) benefit(2,183)425 (2,693)(715)
Net loss(107,013)(35,752)(207,925)(82,046)
Net income attributable to Series A preferred units(153)(153)(459)(459)
Net income attributable to Series C preferred shares(5,047)(5,047)(15,141)(15,141)
Net income attributable to participating securities— — (409)(850)
Net loss attributable to non-controlling interest in consolidated real estate entities10,777 1,752 18,697 375 
Net loss attributable to redeemable non-controlling interest in consolidated real estate entities968 931 3,086 2,333 
Net loss attributable to common units in the operating partnership2,550 672 5,004 1,600 
NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS$(97,918)$(37,597)$(197,147)$(94,188)
BASIC AND DILUTED PER SHARE AMOUNTS
Net loss attributable to common stockholders—basic$(0.69)$(0.27)$(1.40)$(0.67)
Net loss attributable to common stockholders—diluted$(0.69)$(0.27)$(1.40)$(0.67)
Weighted average shares of common stock outstanding—basic141,232 140,938 141,179 140,957 
Weighted average shares of common stock outstanding—diluted141,232 140,938 141,179 140,957 



Hudson Pacific Properties, Inc.
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Funds from Operations(1)
Unaudited, in thousands, except per share data
Three Months EndedNine Months Ended
9/30/249/30/239/30/249/30/23
RECONCILIATION OF NET LOSS TO FUNDS FROM OPERATIONS (FFO)(1):
Net loss$(107,013)$(35,752)$(207,925)$(82,046)
Adjustments:
Depreciation and amortization—consolidated86,672 98,580 265,324 294,654 
Depreciation and amortization—non-real estate assets(8,031)(8,300)(24,223)(25,524)
Depreciation and amortization—HPP's share from unconsolidated real estate entities(2)
1,231 1,165 4,388 3,623 
Gain on sale of real estate— (16,108)— (23,154)
Impairment loss—real estate assets
36,543 — 36,543 — 
Unrealized loss on non-real estate investments1,081 2,265 3,024 2,269 
FFO attributable to non-controlling interests1,508 (10,509)(9,601)(37,371)
FFO attributable to preferred shares and units(5,200)(5,200)(15,600)(15,600)
FFO to common stock/unit holders6,791 26,141 51,930 116,851 
Specified items impacting FFO:
Transaction-related expenses269 — 2,306 (1,344)
Non-cash deferred tax asset write-off—HPP’s share(2)
1,170 — 1,170 3,516 
Non-cash revaluation associated with a loan swap (unqualified for hedge accounting)2,219 — 3,529 — 
One-time straight-line rent reserve—HPP’s share(2)
3,871 — 3,871 — 
Prior period net property tax adjustment—HPP’s share(2)
— — — (1,469)
One-time gain on debt extinguishment— — — (10,000)
One-time tax impact of gain on debt extinguishment— — — 2,751 
FFO (excluding specified items) to common stock/unit holders$14,320 $26,141 $62,806 $110,305 
Weighted average common stock/units outstanding—diluted145,640 143,483 145,564 143,519 
FFO per common stock/unit—diluted$0.05 $0.18 $0.36 $0.81 
FFO (excluding specified items) per common stock/unit—diluted$0.10 $0.18 $0.43 $0.77 

(1)    We calculate Funds from Operations ("FFO") in accordance with the White Paper on FFO approved by the Board of Governors of the National Association of Real Estate Investment Trusts. The White Paper defines FFO as net income or loss calculated in accordance with generally accepted accounting principles in the United States (“GAAP”), excluding gains and losses from sales of depreciable real estate and impairment write-downs associated with depreciable real estate, plus the HPP’s share of real estate-related depreciation and amortization, excluding amortization of deferred financing costs and depreciation of non-real estate assets. The calculation of FFO includes the HPP’s share of amortization of deferred revenue related to tenant-funded tenant improvements and excludes the depreciation of the related tenant improvement assets.

FFO is a non-GAAP financial measure we believe is a useful supplemental measure of our operating performance. The exclusion from FFO of gains and losses from the sale of operating real estate assets allows investors and analysts to readily identify the operating results of the assets that form the core of our activity and assists in comparing those operating results between periods. Also, because FFO is generally recognized as the industry standard for reporting the operations of REITs, it facilitates comparisons of operating performance to other REITs. However, other REITs may use different methodologies to calculate FFO, and accordingly, our FFO may not be comparable to all other REITs.

Implicit in historical cost accounting for real estate assets in accordance with GAAP is the assumption that the value of real estate assets diminishes predictably over time. Since real estate values have historically risen or fallen with market conditions, many industry investors and analysts have considered presentations of operating results for real estate companies using historical cost accounting alone to be insufficient. Because FFO excludes depreciation and amortization of real estate assets, we believe that FFO along with the required GAAP presentations provides a more complete measurement of our performance relative to our competitors and a more appropriate basis on which to make decisions involving operating, financing and investing activities than the required GAAP presentations alone would provide. We use FFO per share to calculate annual cash bonuses for certain employees.

However, FFO should not be viewed as an alternative measure of our operating performance because it does not reflect either depreciation and amortization costs or the level of capital expenditures and leasing costs necessary to maintain the operating performance of our properties, which are significant economic costs and could materially impact our results from operations.

(2)    HPP's share is a Non-GAAP financial measure calculated as the measure on a consolidated basis, in accordance with GAAP, plus our Operating Partnership’s share of the measure from our unconsolidated joint ventures (calculated based upon the Operating Partnership’s percentage ownership interest), minus our partners’ share of the measure from our consolidated joint ventures (calculated based upon the partners’


Hudson Pacific Properties, Inc.
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percentage ownership interests). We believe that presenting HPP’s share of these measures provides useful information to investors regarding the Company’s financial condition and/or results of operations because we have several significant joint ventures, and in some cases, we exercise significant influence over, but do not control, the joint venture. In such instances, GAAP requires us to account for the joint venture entity using the equity method of accounting, which we do not consolidate for financial reporting purposes. In other cases, GAAP requires us to consolidate the venture even though our partner(s) own(s) a significant percentage interest.
    


Hudson Pacific Properties, Inc.
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Adjusted Funds from Operations(1)
Unaudited, in thousands, except per share data
Three Months EndedNine Months Ended
9/30/249/30/239/30/249/30/23
FFO (excluding specified items)$14,320 $26,141 $62,806 $110,305 
Adjustments:
GAAP non-cash revenue (straight-line rent and above/below-market rents)
6,147 2,470 8,047 (9,326)
GAAP non-cash expense (straight-line rent expense and above/below-market ground rent)
1,695 1,919 4,999 5,556 
Non-real estate depreciation and amortization8,031 8,300 24,223 25,524 
Non-cash interest expense
1,599 3,121 5,209 12,822 
Non-cash compensation expense
5,926 5,519 19,347 16,904 
Recurring capital expenditures, tenant improvements and lease commissions
(21,962)(19,359)(56,350)(67,483)
AFFO
$15,756 $28,111 $68,281 $94,302 
 
 
 
 
 
 
 
 
(1)    Adjusted Funds from Operations ("AFFO") is a non-GAAP financial measure we believe is a useful supplemental measure of our performance. We compute AFFO by adding to FFO (excluding specified items) HPP's share of non-cash compensation expense and amortization of deferred financing costs, and subtracting recurring capital expenditures related to HPP's share of tenant improvements and leasing commissions (excluding pre-existing obligations on contributed or acquired properties funded with amounts received in settlement of prorations), and eliminating the net effect of HPP’s share of straight-line rents, amortization of lease buy-out costs, amortization of above- and below-market lease intangible assets and liabilities, amortization of above- and below-market ground lease intangible assets and liabilities and amortization of loan discounts/premiums. AFFO is not intended to represent cash flow for the period. We believe that AFFO provides useful information to the investment community about our financial position as compared to other REITs since AFFO is a widely reported measure used by other REITs. However, other REITs may use different methodologies for calculating AFFO and, accordingly, our AFFO may not be comparable to other REITs.


Hudson Pacific Properties, Inc.
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Net Operating Income(1)
Unaudited, in thousands
Three Months Ended
9/30/249/30/23
RECONCILIATION OF NET LOSS TO NET OPERATING INCOME (NOI):
Net loss$(107,013)$(35,752)
Adjustments:
Loss from unconsolidated real estate entities3,219 759 
Fee income(1,437)(340)
Interest expense45,005 53,581 
Interest income(542)(800)
Management services reimbursement income—unconsolidated real estate entities(989)(1,015)
Management services expense—unconsolidated real estate entities989 1,015 
Transaction-related expenses269 — 
Unrealized loss on non-real estate investments1,081 2,265 
Gain on sale of real estate— (16,108)
Impairment loss36,543 — 
Other expense (income)28 (5)
Income tax provision (benefit)2,183 (425)
General and administrative19,544 17,512 
Depreciation and amortization86,672 98,580 
NOI$85,552 $119,267 
NOI Detail
Same-store office cash revenues161,711 176,830 
Straight-line rent(10,578)(3,632)
Amortization of above/below-market leases, net1,050 1,359 
Amortization of lease incentive costs(417)(91)
Same-store office revenues151,766 174,466 
Same-store studios cash revenues14,959 14,053 
Straight-line rent(181)316 
Amortization of lease incentive costs(9)(9)
Same-store studio revenues14,769 14,360 
Same-store revenues166,535 188,826 
Same-store office cash expenses70,043 68,766 
Straight-line rent371 376 
Non-cash compensation expense16 35 
Amortization of above/below-market ground leases, net628 628 
Same-store office expenses71,058 69,805 
Same-store studio cash expenses9,770 8,879 
Non-cash compensation expense43 114 
Same-store studio expenses9,813 8,993 
Same-store expenses80,871 78,798 
Same-store NOI85,664 110,028 
Non-same-store NOI(112)9,239 
NOI$85,552 $119,267 
(1)    We evaluate performance based upon property Net Operating Income ("NOI") from continuing operations. NOI is not a measure of operating results or cash flows from operating activities or cash flows as measured by GAAP and should not be considered an alternative to income from continuing operations, as an indication of our performance, or as an alternative to cash flows as a measure of liquidity, or our ability to make distributions. All companies may not calculate NOI in the same manner. We consider NOI to be a useful performance measure to investors and


Hudson Pacific Properties, Inc.
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Press Release

management because when compared across periods, NOI reflects the revenues and expenses directly associated with owning and operating our properties and the impact to operations from trends in occupancy rates, rental rates and operating costs, providing a perspective not immediately apparent from income from continuing operations. We calculate NOI as net income (loss) excluding corporate general and administrative expenses, depreciation and amortization, impairments, gains/losses on sales of real estate, interest expense, transaction-related expenses and other non-operating items. We define NOI as operating revenues (rental revenues, other property-related revenue, tenant recoveries and other operating revenues), less property-level operating expenses (external management fees, if any, and property-level general and administrative expenses). NOI on a cash basis is NOI 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.