Hudson Pacific Properties Reports Third Quarter 2025 Financial Results

Unaudited, in thousands, except share data

Full Year 2025

Assumptions

Metric

Low

High

Growth in same-store property cash NOI (1)(2)

(12.50)%

(11.50)%

GAAP non-cash revenue (straight-line rent and above/below-market rents) (3)

$3,000

$8,000

GAAP non-cash expense (straight-line rent expense and above/below-market ground rent)

$(6,500)

$(8,500)

General and administrative expenses (4)

$(57,500)

$(63,500)

Interest expense (5)(6)

$(166,000)

$(176,000)

Non-real estate depreciation and amortization

$(34,000)

$(36,000)

FFO from unconsolidated joint ventures (6)

$(1,500)

$500

FFO attributable to non-controlling interests (6)

$(15,000)

$(19,000)

FFO attributable to preferred units/shares

$(21,000)

$(21,000)

Weighted average common stock/units outstanding—diluted (7)

319,000,000

321,000,000

(1)

Same-store for the full year 2025 is defined as the 39 office properties and three studio properties, as applicable, owned and included in the Company's stabilized portfolio as of January 1, 2024, and anticipated to still be owned and included in the stabilized portfolio through December 31, 2025.

(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.

(4)

Includes share/unit-based compensation expense, which the Company estimates at $16,000 in 2025. General and administrative expenses and the share/unit-based compensation exclude the impact of the one-time voluntary cancellation of non-cash compensation agreements of $14,280.

(5)

Includes non-cash interest expense, which the Company estimates at $8,500 in 2025. Interest expense excludes the one-time expenses associated with early repayment of indebtedness of $5,185.

(6)

The deconsolidation of Sunset Glenoaks Studios resulted in lower interest expense, lower FFO from unconsolidated joint ventures, and higher FFO attributable to non-controlling interest.

(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 2025 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.

Consolidated Balance Sheets

In thousands, except share data

9/30/25

12/31/24

(Unaudited)

ASSETS

Investment in real estate, at cost

$

7,963,399

$

8,233,286

Accumulated depreciation and amortization

(1,927,794

)

(1,791,108

)

Investment in real estate, net

6,035,605

6,442,178

Non-real estate property, plant and equipment, net

131,640

127,067

Cash and cash equivalents

190,436

63,256

Restricted cash

24,011

35,921

Accounts receivable, net

14,080

14,505

Straight-line rent receivables, net

204,880

199,748

Deferred leasing costs and intangible assets, net

361,610

327,514

Operating lease right-of-use assets

338,368

370,826

Prepaid expenses and other assets, net

95,278

90,114

Investment in unconsolidated real estate entities

243,353

221,468

Goodwill

156,529

156,529

Assets associated with real estate held for sale

—

83,113

TOTAL ASSETS

$

7,795,790

$

8,132,239

LIABILITIES AND EQUITY

Liabilities

Unsecured and secured debt, net

$

3,555,108

$

4,176,844

Joint venture partner debt

66,136

66,136

Accounts payable, accrued liabilities and other

243,821

193,861

Operating lease liabilities

350,736

380,004

Intangible liabilities, net

18,777

21,838

Security deposits, prepaid rent and other

75,813

84,708

Liabilities associated with real estate held for sale

—

31,117

Total liabilities

4,310,391

4,954,508

Redeemable preferred units of the operating partnership

2,795

9,815

Redeemable non-controlling interest in consolidated real estate entities

49,266

49,279

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 9/30/25 and 12/31/24

425,000

425,000

Common stock, $0.01 par value, 722,400,000 authorized and 379,433,295 shares outstanding at 9/30/25; 481,600,000 authorized and 141,279,102 shares outstanding at 12/31/24

3,781

1,403

Additional paid-in capital

2,822,616

2,437,484

Accumulated other comprehensive loss

(3,261

)

(8,417

)

Total HPP stockholders' equity

3,248,136

2,855,470

Non-controlling interest—members in consolidated real estate entities

73,700

169,452

Non-controlling interest—units in the operating partnership

111,502

93,715

Total equity

3,433,338

3,118,637

TOTAL LIABILITIES AND EQUITY

$

7,795,790

$

8,132,239

Consolidated Statements of Operations

Unaudited, in thousands, except per share data

Three Months Ended

Nine Months Ended

9/30/25

9/30/24

9/30/25

9/30/24

REVENUES

Office

Rental revenues

$

148,290

$

162,908

$

457,216

$

506,931

Service and other revenues

6,289

4,034

18,407

11,125

Total office revenues

154,579

166,942

475,623

518,056

Studio

Rental revenues

13,567

13,720

41,108

41,761

Service and other revenues

18,471

19,731

58,347

72,599

Total studio revenues

32,038

33,451

99,455

114,360

Total revenues

186,617

200,393

575,078

632,416

OPERATING EXPENSES

Office operating expenses

71,577

79,502

215,355

227,753

Studio operating expenses

32,382

35,339

109,915

110,400

General and administrative

13,709

19,544

59,968

59,959

Depreciation and amortization

94,085

86,672

281,921

265,324

Total operating expenses

211,753

221,057

667,159

663,436

OTHER EXPENSES

Loss from unconsolidated real estate entities

(744

)

(3,219

)

(2,203

)

(6,443

)

Fee income

1,082

1,437

3,917

3,933

Interest expense

(41,726

)

(45,005

)

(133,368

)

(133,253

)

Interest income

2,212

542

4,770

1,975

Management services reimbursement income—unconsolidated real estate entities

1,084

989

3,182

3,187

Management services expense—unconsolidated real estate entities

(1,084

)

(989

)

(3,182

)

(3,187

)

Transaction-related expenses

(139

)

(269

)

(590

)

(2,306

)

Unrealized loss on non-real estate investments

(2,098

)

(1,081

)

(2,335

)

(3,024

)

Gain on sale of real estate, net

—

—

10,007

Impairment loss

—

(36,543

)

(18,476

)

(36,543

)

Loss on deconsolidation of real estate entity

(77,907

)

—

(77,907

)

—

Loss on extinguishment of debt

(207

)

—

(3,702

)

—

Other income (expense)

601

(28

)

516

1,449

Total other expenses

(118,926

)

(84,166

)

(219,371

)

(174,212

)

Loss before income tax provision

(144,062

)

(104,830

)

(311,452

)

(205,232

)

Income tax provision

(24

)

(2,183

)

(672

)

(2,693

)

Net loss

(144,086

)

(107,013

)

(312,124

)

(207,925

)

Net income attributable to Series A preferred units

(53

)

(153

)

(320

)

(459

)

Net income attributable to Series C preferred shares

(5,047

)

(5,047

)

(15,141

)

(15,141

)

Net income attributable to participating securities

—

—

—

(409

)

Net loss attributable to non-controlling interest in consolidated real estate entities

9,966

10,777

24,108

18,697

Net loss attributable to redeemable non-controlling interest in consolidated real estate entities

974

968

2,771

3,086

Net loss attributable to common units in the operating partnership

1,779

2,550

6,382

5,004

NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS

$

(136,467

)

$

(97,918

)

$

(294,324

)

$

(197,147

)

BASIC AND DILUTED PER SHARE AMOUNTS

Net loss attributable to common stockholders—basic

$

(0.30

)

$

(0.69

)

$

(1.11

)

$

(1.40

)

Net loss attributable to common stockholders—diluted

$

(0.30

)

$

(0.69

)

$

(1.11

)

$

(1.40

)

Weighted average shares of common stock outstanding—basic

451,031

141,232

266,162

141,179

Weighted average shares of common stock outstanding—diluted

451,031

141,232

266,162

141,179

Funds from Operations (1)

Unaudited, in thousands, except per share data

Three Months Ended

Nine Months Ended

9/30/25

9/30/24

9/30/25

9/30/24

RECONCILIATION OF NET LOSS TO FUNDS FROM OPERATIONS ( “ FFO ” ) (1):

Net loss

$

(144,086

)

$

(107,013

)

$

(312,124

)

$

(207,925

)

Adjustments:

Depreciation and amortization—consolidated

94,085

86,672

281,921

265,324

Depreciation and amortization—non-real estate assets

(8,919

)

(8,031

)

(27,353

)

(24,223

)

Depreciation and amortization—HPP's share from unconsolidated real estate entities (2)

1,250

1,231

3,408

4,388

Gain on sale of real estate, net

—

—

(10,007

)

—

Loss on deconsolidation of real estate entity

77,907

—

77,907

—

Impairment loss—real estate assets

—

36,543

18,476

36,543

Unrealized loss on non-real estate investments

2,098

1,081

2,335

3,024

FFO attributable to non-controlling interests

(2,611

)

1,508

(12,616

)

(9,601

)

FFO attributable to preferred shares and units

(5,100

)

(5,200

)

(15,461

)

(15,600

)

FFO to common stock/unit holders

14,624

6,791

6,486

51,930

Specified items impacting FFO:

Transaction-related expenses

139

269

590

2,306

One-time employee separation costs (cost-savings initiatives)

1,163

—

1,163

—

One-time termination of Quixote leases (cost-savings initiatives)

622

—

7,109

—

One-time expenses associated with early repayment of debt—HPP’s share

114

—

5,185

—

Forfeiture of non-cash compensation agreements

—

—

14,280

—

Write-off of transportation assets (cost-savings initiatives)

—

—

626

—

One-time termination of Quixote non-compete agreement (cost-savings initiatives)

—

—

1,402

—

Non-cash revaluation associated with a loan swap (unqualified for hedge accounting)

—

2,219

682

3,529

Non-cash deferred tax asset write-off—HPP’s share

—

1,170

—

1,170

One-time straight-line rent reserve—HPP’s share

—

3,871

—

3,871

FFO (excluding specified items) to common stock/unit holders

$

16,662

$

14,320

$

37,523

$

62,806

Weighted average common stock/units outstanding—diluted

457,085

145,640

271,997

145,564

FFO per common stock/unit—diluted

$

0.03

$

0.05

$

0.02

$

0.36

FFO (excluding specified items) per common stock/unit—diluted

$

0.04

$

0.10

$

0.14

$

0.43

(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’ 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.

Adjusted Funds from Operations (1)

Unaudited, in thousands, except per share data

Three Months Ended

Nine Months Ended

9/30/25

9/30/24

9/30/25

9/30/24

FFO (excluding specified items)

$

16,662

$

14,320

$

37,523

$

62,806

Adjustments:

GAAP non-cash revenue (straight-line rent and above/below-market rents)

(270

)

6,147

(4,645

)

8,047

GAAP non-cash expense (straight-line rent expense and above/below-market ground rent)

1,289

1,695

4,781

4,999

Non-real estate depreciation and amortization

8,919

8,031

25,325

24,223

Non-cash interest expense

2,556

1,599

11,730

5,209

Share/unit-based compensation expense

3,553

5,926

12,252

19,347

Recurring capital expenditures, tenant improvements and lease commissions

(20,383

)

(21,962

)

(78,998

)

(56,350

)

AFFO

$

12,326

$

15,756

$

7,968

$

68,281

Weighted average common stock/units outstanding—diluted

457,085

145,640

271,997

145,564

AFFO per common stock/unit—diluted

$

0.03

$

0.11

$

0.03

$

0.47

(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.

Net Operating Income (1)

Unaudited, in thousands

Three Months Ended

9/30/25

9/30/24

RECONCILIATION OF NET LOSS TO NET OPERATING INCOME ( “ NOI ” ) AND SAME-STORE CASH NET OPERATING INCOME ("NOI")

Net loss

$

(144,086

)

$

(107,013

)

Adjustments:

Loss from unconsolidated real estate entities

744

3,219

Fee income

(1,082

)

(1,437

)

Interest expense

41,726

45,005

Interest income

(2,212

)

(542

)

Management services reimbursement income—unconsolidated real estate entities

(1,084

)

(989

)

Management services expense—unconsolidated real estate entities

1,084

989

Transaction-related expenses

139

269

Unrealized loss on non-real estate investments

2,098

1,081

Impairment loss

—

36,543

Loss on deconsolidation of real estate entity

77,907

—

Loss on extinguishment of debt

207

—

Other (income) expense

(601

)

28

Income tax provision

24

2,183

General and administrative

13,709

19,544

Depreciation and amortization

94,085

86,672

NOI

$

82,658

$

85,552

Straight-line rent, net

217

11,860

Share/unit-based compensation expense

249

66

Amortization of above/below-market leases, net

(1,012

)

(1,195

)

Amortization of lease incentive costs

1,838

519

Amortization of above/below-market ground leases, net

651

661

Cash NOI

84,601

97,463

Less: Non-same-store cash NOI

(4,699

)

(2,489

)

Same-store cash NOI

$

89,300

$

99,952

NOI Detail

Same-store office cash revenues

154,008

168,671

Straight-line rent

1,313

(10,324

)

Amortization of above/below-market leases, net

1,012

1,058

Amortization of lease incentive costs

(1,829

)

(418

)

Same-store office revenues

154,504

158,987

Same-store studios cash revenues

15,390

14,959

Straight-line rent

(444

)

(181

)

Amortization of lease incentive costs

(9

)

(9

)

Same-store studio revenues

14,937

14,769

Same-store revenues

169,441

173,756

Same-store office cash expenses

70,674

73,908

Straight-line rent

367

371

Share/unit-based compensation expense

12

16

Amortization of above/below-market ground leases, net

641

641

Same-store office expenses

71,694

74,936

Same-store studio cash expenses

9,424

9,770

Share/unit-based compensation expense

124

43

Same-store studio expenses

9,548

9,813

Same-store expenses

81,242

84,749

Same-store NOI

88,199

89,007

Non-same-store NOI

(5,541

)

(3,455

)

NOI

$

82,658

$

85,552

(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 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.