More losses at Hudson Pacific Properties.
The Los Angeles-based real estate investment trust reported a loss of $136.5 million in the third quarter compared to $97.9 million a year earlier. That put losses for the nine months ending Sept. 30 at $294.3 million.
The office and studio investor blamed the slump on the deconsolidation of Sunset Glenoaks, a $200 million purpose-built studio developed by Hudson Pacific Properties in partnership with Blackstone. It’s only 8 percent leased after being delivered last year.
Office and studio revenues decreased in the third quarter compared to a year ago, too, so total revenues came out to $186.6 million compared to $200.4 million a year ago, which the company said was due to lower office occupancy and depreciated asset sales.
When it comes to its balance sheet, Hudson Pacific said it is in no rush to sell and has no maturities until the second half of next year. However, that next maturity is a big one — the commercial mortgage-backed securities debt connected to its Hollywood Media portfolio, which has a more than $1 billion outstanding balance.
The company inked 515,000 square feet of leases in the third quarter, which amounts to 1.7 million square feet year to date. The deals included a 106,000-square-foot lease with an artificial intelligence company at its Page Mill Center offices in Palo Alto. The company said this was its best year-to-date leasing performance since 2019, before the pandemic.
“Leasing, leasing, and then more leasing,” Hudson Pacific chairman and chief executive Victor Coleman said on an earnings call Wednesday morning when discussing the path ahead.
About 80 percent of third quarter leasing activity occurred at the company’s Bay Area assets, mostly via technology and artificial intelligence tenants, which led Coleman to tout evidence of an office recovery on the West Coast.
But about a million square feet of leases are set to expire next year, affecting 8 percent of its portfolio.
The company’s office portfolio is picking up as the San Francisco technology world booms. Meanwhile, studios are dragging as the Los Angeles TV and film production industry stalls.
Twenty-two of the company’s 40 office holdings are in the Bay Area; almost all of its studios are in L.A. Coleman said he sees a return in studio demand, noting California’s recent tax credit expansion that has revealed some early promise in incentivising projects.
Shares rose during the earnings call, so it seems investors liked what they heard despite the millions in losses the company posted.
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