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What changed in Hudson Pacific Properties, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Hudson Pacific Properties, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+262 added−280 removedSource: 10-K (2025-02-25) vs 10-K (2024-02-16)

Top changes in Hudson Pacific Properties, Inc.'s 2024 10-K

262 paragraphs added · 280 removed · 232 edited across 9 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeLikewise, competition with sellers of similar properties to locate suitable purchasers may result in us receiving lower proceeds from a sale or in us not being able to dispose of a property at a time of our choosing due to the lack of an acceptable return.
Biggest changeLikewise, competition with sellers of similar properties to find suitable purchasers may result in us receiving lower proceeds from a sale or in us not being able to dispose of a property at a time of our choosing due to the lack of an acceptable return. 8 For further discussion of the potential impact of competitive conditions on our business, refer to Item 1A “Risk Factors.” Segment and Geographic Financial Information We report our results of operations through two reportable segments: (i) office properties and related operations and (ii) studio properties and related operations.
A Phase I Environmental Site Assessment is a report prepared for real estate holdings that identifies potential or existing environmental contamination liabilities. Site assessments are intended to discover and evaluate information regarding the environmental condition of the surveyed property and surrounding properties. These assessments do not generally include soil samplings, subsurface investigations or asbestos or lead surveys.
A Phase I 9 Environmental Site Assessment is a report prepared for real estate holdings that identifies potential or existing environmental contamination liabilities. Site assessments are intended to discover and evaluate information regarding the environmental condition of the surveyed property and surrounding properties. These assessments do not generally include soil samplings, subsurface investigations or asbestos or lead surveys.
The purchase of properties with a value-add component, typically sourced through off-market transactions, also facilitates our long-term growth. These types of assets afford us the opportunity to capture embedded rent growth and occupancy upside, as we strategically invest capital to reposition and redevelop assets to generate additional cash flow.
The purchase of properties with a value-add component, typically sourced through off-market transactions, also facilitates our long-term 7 growth. These types of assets afford us the opportunity to capture embedded rent growth and occupancy upside, as we strategically invest capital to reposition and redevelop assets to generate additional cash flow.
These relationships provide us with optionality and access to unique and attractive value creation opportunities, whether through investment transactions, leasing activities, or asset-level or corporate (re)financings. • Proactive Balance Sheet Management. We seek to prioritize having a strong, flexible balance sheet with multiple avenues to access capital through market cycles from both secured and unsecured financings.
These relationships provide us with optionality and access to unique and attractive value creation opportunities, whether through investment transactions, leasing activities, or asset-level or corporate (re)financings. • Proactive Balance Sheet Management. We prioritize having a strong, flexible balance sheet with multiple avenues to access capital through market cycles from both secured and unsecured financings.
In addition, we may be held directly liable for any such damages or claims regardless of whether we knew of, or were responsible for, the presence or disposal of hazardous or toxic 10 substances or waste and irrespective of tenant lease provisions. The costs associated with such liability could be substantial and could have a material adverse effect on us.
In addition, we may be held directly liable for any such damages or claims regardless of whether we knew of, or were responsible for, the presence or disposal of hazardous or toxic substances or waste and irrespective of tenant lease provisions. The costs associated with such liability could be substantial and could have a material adverse effect on us.
As capital improvement programs progress, certain ADA upgrades will continue to be integrated into the planned improvements, specifically at the studio properties where we are able to utilize in-house construction crews to minimize costs for required ADA-related improvements. However, some of our properties may currently be in noncompliance with 9 the ADA.
As capital improvement programs progress, certain ADA upgrades will continue to be integrated into the planned improvements, specifically at the studio properties where we are able to utilize in-house construction crews to minimize costs for required ADA-related improvements. However, some of our properties may currently be in noncompliance with the ADA.
The Company presents “HPP’s share” of 7 certain of these measures, which are non-GAAP financial measures that are 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).
The Company presents “HPP’s share” of certain of these measures, which are non-GAAP financial measures that are 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).
Human Capital Hiring In alignment with our Company values, we believe our people are our greatest asset and we embrace a recruitment process that strives to attract top-tier, diverse talent. Through a series of behavioral-based interviews, Company recruiters assess candidates for skills, competencies and cultural fit.
Human Capital Hiring In alignment with our Company values, we believe our people are our greatest asset and we embrace a recruitment process that strives to attract top-tier talent. Through a series of behavioral-based interviews, Company recruiters assess candidates for skills, competencies and cultural fit.
The Company regularly honors top performers, and generous Company policies encourage work/life balance through paid time off, subsidized gym memberships, fitness programs, events and healthy dining options. 12 Compensation and Benefits We are a pay-for-performance organization, which means that compensation decisions are made based on individual, team/department, and overall Company performance.
The Company regularly honors top performers, and generous Company policies encourage work/life balance through paid time off, subsidized gym memberships, fitness programs, events and healthy dining options. 11 Compensation and Benefits We are a pay-for-performance organization, which means that compensation decisions are made based on individual, team/department, and overall Company performance.
For information about our segments, refer to Part IV, Item 15(a) “Financial Statement Schedules—Note 17 to the Consolidated Financial Statements—Segment Reporting.” Our portfolio of owned real estate is concentrated in California, the Pacific Northwest, New York, Western Canada and Greater London, United Kingdom.
For information about our segments, refer to Part IV, Item 15(a) “Financial Statement Schedules—Note 19 to the Consolidated Financial Statements—Segment Reporting.” Our portfolio of owned real estate is concentrated in California, the Pacific Northwest, New York, Western Canada and Greater London, United Kingdom.
The hiring team comprises a recruiter, hiring manager and other peers or stakeholders to ensure a collaborative process. Diversity, Equity and Inclusion We value employees at all levels of the organization and provide ample opportunities for growth, while striving to foster and celebrate diversity in all its forms including gender, age, ethnicity and cultural background.
The hiring team comprises a recruiter, hiring manager and other peers or stakeholders to ensure a collaborative process. Diversity and Inclusion We value employees at all levels of the organization and provide ample opportunities for growth, while striving to celebrate diversity in all its forms including gender, age, ethnicity and cultural background.
Our 2023 achievements include: • All operating office and studio properties use MERV-13+ filters, among other COVID-safe procedures; • Over 90% of our in-service office portfolio is served by bike storage, showers and/or lockers • Over 60% of our in-service office portfolio has on-site fitness amenities and/or a mobile app that promotes health and wellness through virtual fitness classes, mindfulness training, cooking sessions, and more; and 11 • Over 40% of our in-service office portfolio is Fitwel certified.
Our 2024 achievements include: • All operating office and studio properties use MERV-13+ filters, among other COVID-safe procedures; • Over 90% of our in-service office portfolio is served by bike storage, showers and/or lockers; • Over 60% of our in-service office portfolio has on-site fitness amenities and/or a mobile app that promotes health and wellness through virtual fitness classes, mindfulness training, cooking sessions, and more; and • Over 40% of our in-service office portfolio is Fitwel certified.
A copy of this Annual Report on Form 10-K is available without charge upon written request to: Investor Relations, Hudson Pacific Properties, Inc., 11601 Wilshire Blvd., Ninth Floor, Los Angeles, California 90025. 13
A copy of this Annual Report on Form 10-K is available without charge upon written request to: Investor Relations, Hudson Pacific Properties, Inc., 11601 Wilshire Blvd., Ninth Floor, Los Angeles, California 90025. 12
Our 2023 achievements include: • 100% carbon neutral operations across our entire real estate operating portfolio; • 100% of our in-service office portfolio has recycling services and over 70% has composting services; • Over 90% of our in-service office portfolio is LEED certified and over 70% is ENERGY STAR certified; • Better Blueprint TM Action Plans at all operating properties; and • Sustainable Design Vision for all redevelopments and major repositionings.
Our 2024 achievements include: • 100% carbon neutral operations across our entire real estate operating portfolio; • 100% of our in-service office portfolio has recycling services and over 70% has composting services; • Over 90% of our in-service office portfolio is LEED certified and over 70% is ENERGY STAR certified; • Better Blueprint TM Action Plans at all operating properties; and 10 • Sustainable Design Vision for all redevelopments and major repositionings.
Our primary investment markets include Los Angeles, the San Francisco Bay Area, Seattle, New York, Vancouver, British Columbia and Greater London, United Kingdom. We invest across the risk-return spectrum, favoring opportunities that allow us to leverage leasing, capital investment and operating expertise along with deep strategic relationships to create incremental stakeholder value.
Our primary investment markets include Los Angeles, the San Francisco Bay Area, Seattle, New York and Vancouver, British Columbia. We invest across the risk-return spectrum, favoring opportunities that allow us to leverage leasing, capital investment and operating expertise along with deep strategic relationships to create incremental stakeholder value.
Competition We compete with a number of developers, owners and operators of office and commercial real estate, many of which own properties similar to ours in the same markets in which our properties are located and some of which have greater financial resources than we do.
Competition We compete with a number of developers, owners and operators of office and studio real estate, many of which own properties similar to ours in the same markets and some of which have greater financial resources than we do.
We seek to prudently allocate capital to achieve growth while maintaining conservative leverage. We are willing to consider accessing equity markets to fund attractive investment opportunities. We believe we have the discipline to work consistently to achieve long-term leverage targets while ensuring optionality for future growth. 8 • Sustainability and ESG Leadership.
We seek to prudently allocate capital to achieve growth while maintaining conservative leverage. We are willing to consider accessing equity markets to fund attractive investment opportunities. We have the discipline to work consistently to achieve long-term leverage targets while ensuring optionality for future growth. • Leadership in Corporate Responsibility and Sustainability.
Collective Bargaining Arrangements At December 31, 2023, we had 758 employees, of which 152 were subject to collective bargaining agreements in our production services/operating companies. We believe that relations with our employees are good.
Collective Bargaining Arrangements At December 31, 2024, we had 740 employees, of which 150 were subject to collective bargaining agreements in our production services/operating companies. We believe that relations with our employees are good.
Environmental, Social and Governance (“ESG”) ESG Commitment Our ESG platform, Better Blueprint TM , is informed by decades of experience and what we believe to be best practices across every aspect of real estate. Better Blueprint TM brings to life our vision of vibrant, thriving urban spaces and places built for the long term.
Corporate Responsibility Commitment Our corporate responsibility program, Better Blueprint TM , is informed by decades of experience and what we believe to be best practices across every aspect of real estate. Better Blueprint TM brings to life our vision of vibrant, thriving urban spaces and places built for the long term.
Through our Better Blueprint program, the Company is an established industry leader in sustainability and ESG and has received accolades from the Global Real Estate Sustainability Benchmark (GRESB), the National Associate of Real Estate Investment Trusts (NAREIT), and the National Association of Office Properties (NAIOP) among many others.
Through our Better Blueprint TM program, the Company is an established industry leader in corporate responsibility and sustainability. We have received accolades from the Global Real Estate Sustainability Benchmark (GRESB), the National Associate of Real Estate Investment Trusts (NAREIT), and the National Association of Office Properties (NAIOP), ENERGY STAR among many others.
Our science-based target commits us to go further by reducing absolute Scope 1 and 2 greenhouse gas (“GHG”) emissions by 50% by 2030, from a 2018 baseline, excluding financial instruments like unbundled renewable energy credits and carbon offsets.
Our science-based target commits us to go further by reducing absolute Scope 1 and 2 greenhouse gas (“GHG”) emissions by 50% by 2030, from a 2018 baseline, excluding financial instruments like unbundled renewable energy credits and carbon offsets. More about our sustainability efforts can be found in Hudson Pacific’s Corporate Responsibility Report .
As of December 31, 2023, our portfolio included: • Office properties comprising approximately 14.7 million square feet; • Studio properties comprising approximately 48 stages and 1.7 million squa re feet of sound stages and production-supporting office and other facilities; • Land properties comprising approximately 3.2 million square feet of undeveloped density rights for future office, studio and residential space; and • Production services assets, comprising vehicles, lighting and grip, production supplies and other equipment and the lease rights to an additional 27 s ound stages.
As of December 31, 2024, our portfolio included: • Office properties comprising approximate ly 14.6 million sq uare feet; • Studio properties comprising approxi mately 45 stages and 1.7 million square feet of sound stages and production-supporting office and other facilities; • Land properties comprising approximately 3.2 million square feet of undeveloped density rights for future office, studio and residential space; and • Production services assets, comprising vehicles, lighting and grip, production supplies and other equipment and the lease rights to an additional 24 sound stages.
We donate at least 1% of net earnings to charitable causes annually and have an active employee volunteering program to ensure we give back to our communities.
We support key groups aiming to diversify talent pipelines in our industry, donate at least 1% of net earnings to charitable causes annually and have an active employee volunteering program to ensure we give back to our communities.
We take pride in the fact that our employee population across our operating office and studio portfolio reflects a balanced gender representation as well as a broad cross-section of racial and ethnic backgrounds.
We take pride in the fact that our employee population across our operating office and studio portfolio reflects a balanced gender representation as well as a broad cross-section of racial and ethnic backgrounds. We have six Employee Resource Groups, each designed to connect employees with similar backgrounds and shared experiences while sharing best practices and ensuring support for each other.
Equitable: Vibrant, Thriving Cities for All We seek to create and cultivate communities that champion diversity, equity and inclusion (“DEI”) and afford opportunity for everyone to succeed. We strive to promote an inclusive corporate culture and advance equity across recruiting, hiring and human capital development processes.
Equitable: Vibrant, Thriving Cities for All We seek to create and cultivate communities that afford opportunity for everyone to succeed. We strive to promote an inclusive corporate culture that celebrates our diverse workforce and implement fair human capital management practices.
We offer in-person and virtual wellness programming at most properties, and we have a goal to achieve Fitwel certification for at least 50% of our in-service office portfolio by 2030.
We are also committed to advancing wellness and well-being, and we consistently deliver state-of-the-art buildings with functional outdoor space, fitness amenities, natural light, healthy food and other wellness-oriented features. We offer in-person and virtual wellness programming at most properties, and we have a goal to achieve Fitwel certification for at least 50% of our in-service office portfolio by 2030.
Sustainability and ESG both in terms of our portfolio and operations are important for our stakeholders and provide a key point of differentiation for those who invest, partner, lease, or work with or for us.
Our priorities in this area focus on initiatives that are relevant for our industry and drive business value, providing a key point of differentiation for those who invest, partner, lease, or work with or for us.
Sustainable: Minimizing our Footprint We are committed to leadership in sustainability—whether designing a new property, reimagining a dated building, or managing our existing real estate portfolio and production services businesses. Addressing climate change is the number one focus of our sustainability program, and we have had 100% carbon neutral real estate operations since 2020 .
Addressing climate change in ways that are relevant to our industry and drive business value is the focus of our sustainability program. We have had 100% carbon neutral real estate operations since 2020 .
Our 2023 achievements include: • 100% of employees received training on key business topics such as health and safety and/or DEI • Deepened collaboration with Ghetto Film School to help traditionally under-represented youth enter the production business; • Continuation of our commitment to invest $20 million in innovative homelessness and housing solutions; • Over $800,000 in charitable giving; and • Over 1,400 hours of employee volunteering.
Our 2024 achievements include: • Continued collaboration with industry groups aiming to diversify our talent pipelines; • Continuation of our commitment to invest $20 million in innovative homelessness and housing solutions; • Over $800,000 in charitable giving; and • Over 8,400 hours of employee volunteering.
Its principles and objectives provide a common thread that authentically guides our work and relations with tenants, employees, investors and partners. Through this program, we aim to foster the growth of sustainable, healthy and equitable cities—vibrant cities, today and in the future.
Its principles and objectives provide a common thread that authentically guides our work and relations with tenants, employees, investors and partners. Sustainable: Minimizing our Footprint We are committed to leadership in sustainability—whether designing a new property, reimagining a dated building, or managing our existing real estate portfolio and production services businesses.
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For further discussion of the potential impact of competitive conditions on our business, see Item 1A “Risk Factors.” Segment and Geographic Financial Information We report our results of operations through two reportable segments: (i) office properties and related operations and (ii) studio properties and related operations.
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We are on track to meet this target and also are committed to reducing our Scope 3 GHG emissions by minimizing embodied carbon in our development and construction projects and transitioning our production services fleet to zero-emission vehicles. More about our bold sustainability goals can be found in Hudson Pacific’s Corporate Responsibility Report .
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We are also deeply committed to advancing wellness and well-being, as we know that the quality of our indoor environment can have a huge impact on both our physical and mental health. We consistently deliver state-of-the-art buildings with functional outdoor space, fitness amenities, natural light, healthy food and other wellness-oriented features.
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We support key groups aiming to diversify the real estate and production services talent pipelines, and our supplier diversity program includes a commitment to increase the use of diverse and/or local contractors on-site at all redevelopments to 15% by 2025.
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We have a comprehensive and robust DEI program for employees at all levels, which includes initiatives such as: • An ongoing series of intensive, cohort-based DEI training modules for employees. • Six Employee Resource Groups each designed to connect employees with similar backgrounds and shared experiences while fostering partnership with the Company on diversity and inclusion efforts, sharing best practices and ensuring support for each other across our communities. • A thoughtfully curated DEI Library filled with educational resources to increase employee awareness and knowledge of important diversity and inclusion concepts and further develop their skills to help make meaningful change.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeIf we are unable to do so or capital is otherwise unavailable, we may be unable to make the required expenditures. This could result in non-renewals by tenants upon expiration of their leases, which could adversely affect our financial condition, results of operations, cash flow and the per share trading price of our securities.
Biggest changeThis could result in non-renewals by tenants upon expiration of their leases, which could adversely affect our financial condition, results of operations, cash flow and the per share trading price of our securities. 16 The actual rents we receive for the properties in our portfolio may be less than our asking rents, and we may experience lease roll-down from time to time.
These events include many of the risks set forth above under “—Risks Related to Our Properties and Our Business,” as well as the following: • local oversupply or reduction in demand for office or studio-related space; • adverse changes in financial conditions of buyers, sellers and tenants of properties; • vacancies or our inability to rent space on favorable terms, including possible market pressures to offer tenants rent abatements, tenant improvements, early termination rights or below-market renewal options, and the need to periodically repair, renovate and re-let space; • increased operating costs, including insurance premiums, utilities, real estate taxes and state and local taxes; • civil unrest, acts of war, terrorist attacks and natural disasters, including earthquakes and floods, which may result in uninsured or underinsured losses; • decreases in the underlying value of our real estate; and • changing submarket demographics.
These events include many of the risks set forth above under “—Risks Related to Our Properties and Our Business,” as well as the following: • local oversupply or reduction in demand for office or studio-related space; • adverse changes in financial conditions of buyers, sellers and tenants of properties; • vacancies or our inability to rent space on favorable terms, including possible market pressures to offer tenants rent abatements, tenant improvements, early termination rights or below-market renewal options, and the need to periodically repair, renovate and re-let space; • increased operating costs, including insurance premiums, utilities, real estate taxes and state and local taxes; • civil unrest, acts of war, terrorist attacks and natural disasters, including earthquakes and floods, which may result in uninsured or underinsured losses; 18 • decreases in the underlying value of our real estate; and • changing submarket demographics.
Our ability to acquire properties on favorable terms, or at all, may be exposed to the following significant risks: • potential inability to acquire a desired property because of competition from other real estate investors with significant capital, including other publicly traded REITs, private equity investors and institutional investment funds, which may be able to accept more risk than we can prudently manage, including risks with respect to the geographic proximity of investments and the payment of higher acquisition prices; • we may incur significant costs and divert management attention in connection with evaluating and negotiating potential acquisitions, including ones that we are subsequently unable to complete; • even if we enter into agreements for the acquisition of properties, these agreements are typically subject to customary conditions to closing, including the satisfactory completion of our due diligence investigations; and • we may be unable to finance the acquisition on favorable terms or at all.
Our ability to acquire properties on favorable terms, or at all, may be exposed to the following significant risks: • potential inability to acquire a desired property because of competition from other real estate investors with significant capital, including other publicly traded REITs, private equity investors and institutional investment funds, which may be able 13 to accept more risk than we can prudently manage, including risks with respect to the geographic proximity of investments and the payment of higher acquisition prices; • we may incur significant costs and divert management attention in connection with evaluating and negotiating potential acquisitions, including ones that we are subsequently unable to complete; • even if we enter into agreements for the acquisition of properties, these agreements are typically subject to customary conditions to closing, including the satisfactory completion of our due diligence investigations; and • we may be unable to finance the acquisition on favorable terms or at all.
These provisions include, among others: • redemption rights of qualifying parties; • transfer restrictions on units; • our ability, as general partner, in some cases, to amend the partnership agreement and to cause the operating partnership to issue units with terms that could delay, defer or prevent a merger or other change of control of us or our operating partnership without the consent of the limited partners; • the right of the limited partners to consent to transfers of the general partnership interest and mergers or other transactions involving us under specified circumstances; and • restrictions on debt levels and equity requirements pursuant to the terms of our series A preferred units, as well as required distributions to holders of series A preferred units of our operating partnership, following certain changes of control of us.
These provisions include, among others: • redemption rights of qualifying parties; • transfer restrictions on units; 22 • our ability, as general partner, in some cases, to amend the partnership agreement and to cause the operating partnership to issue units with terms that could delay, defer or prevent a merger or other change of control of us or our operating partnership without the consent of the limited partners; • the right of the limited partners to consent to transfers of the general partnership interest and mergers or other transactions involving us under specified circumstances; and • restrictions on debt levels and equity requirements pursuant to the terms of our series A preferred units, as well as required distributions to holders of series A preferred units of our operating partnership, following certain changes of control of us.
In particular, our ability 20 to dispose of one or more properties within a specific time period is subject to certain limitations imposed by our tax protection agreements, as well as weakness in or even the lack of an established market for a property, changes in the financial condition or prospects of prospective purchasers, changes in national or international economic conditions, such as the current economic downturn, and changes in laws, regulations or fiscal policies of jurisdictions in which the property is located.
In particular, our ability to dispose of one or more properties within a specific time period is subject to certain limitations imposed by our tax protection agreements, as well as weakness in or even the lack of an established market for a property, changes in the financial condition or prospects of prospective purchasers, changes in national or international economic conditions, such as the current economic downturn, and changes in laws, regulations or fiscal policies of jurisdictions in which the property is located.
We cannot assure you that we will have access to such capital on favorable terms at the desired times, or at all, which may cause us to curtail our investment activities and/or to dispose of assets at inopportune times, and 27 could adversely affect our financial condition, results of operations, cash flow, cash available for distributions to our stockholders, and per share trading price of our securities.
We cannot assure you that we will have access to such capital on favorable terms at the desired times, or at all, which may cause us to curtail our investment activities and/or to dispose of assets at inopportune times, and could adversely affect our financial condition, results of operations, cash flow, cash available for distributions to our stockholders, and per share trading price of our securities.
If the outstanding balance of the debt secured by the mortgage exceeds our tax basis in the property, we would recognize taxable income on foreclosure, but would not receive any cash proceeds. 16 Our unsecured revolving credit facility, registered senior notes, term loan facility and note purchase agreements restrict our ability to engage in some business activities.
If the outstanding balance of the debt secured by the mortgage exceeds our tax basis in the property, we would recognize taxable income on foreclosure, but would not receive any cash proceeds. Our unsecured revolving credit facility, registered senior notes, term loan facility and note purchase agreements restrict our ability to engage in some business activities.
Moreover, to the extent any of these risks and uncertainties adversely impact us in the ways described above or otherwise, they may also have the effect of heightening many of the other risks set forth in this “Risk Factors” section. Social, political, and economic instability, unrest, and other circumstances beyond our control could adversely affect our business operations.
Moreover, to the extent any of these risks and uncertainties adversely impact us in the ways described above or otherwise, they may also have the effect of heightening many of the other risks set forth in this “Risk Factors” section. 26 Social, political, and economic instability, unrest, and other circumstances beyond our control could adversely affect our business operations.
Environmental liabilities could affect a tenant’s ability to make rental payments to us. In addition, changes in laws could increase the potential liability for noncompliance. This may result in significant unanticipated expenditures or may otherwise materially and adversely affect our operations, or those of our tenants, which could in turn have an adverse effect on us.
Environmental liabilities could affect a tenant’s ability to make rental payments to us. In addition, changes in laws could increase the 19 potential liability for noncompliance. This may result in significant unanticipated expenditures or may otherwise materially and adversely affect our operations, or those of our tenants, which could in turn have an adverse effect on us.
If we do incur material environmental liabilities in the future, we may face significant remediation costs, and we may find it difficult to sell any affected properties. 21 Our properties may contain or develop harmful mold or suffer from other air quality issues, which could lead to liability for adverse health effects and costs of remediation.
If we do incur material environmental liabilities in the future, we may face significant remediation costs, and we may find it difficult to sell any affected properties. Our properties may contain or develop harmful mold or suffer from other air quality issues, which could lead to liability for adverse health effects and costs of remediation.
Furthermore, our unsecured revolving credit facility and term loan facility contain specific cross-default provisions with respect to specified other indebtedness, giving the lenders the right to declare a default if we are in default under other loans in some circumstances. Further downgrades in our credit ratings could materially adversely affect our business and financial condition.
Furthermore, our unsecured revolving credit facility and term loan 15 facility contain specific cross-default provisions with respect to specified other indebtedness, giving the lenders the right to declare a default if we are in default under other loans in some circumstances. Further downgrades in our credit ratings could materially adversely affect our business and financial condition.
Some of our policies, like those covering losses due 29 to terrorism or earthquakes, are insured subject to limitations involving large deductibles or co-payments and policy limits that may not be sufficient to cover losses, which could affect certain of our properties that are located in areas particularly susceptible to natural disasters.
Some of our policies, like those covering losses due to terrorism or earthquakes, are insured subject to limitations involving large deductibles or co-payments and policy limits that may not be sufficient to cover losses, which could affect certain of our properties that are located in areas particularly susceptible to natural disasters.
Accordingly, investors who are individuals, trusts and estates may perceive investments in REITs to be relatively less attractive than investments in the stocks of non-REIT corporations that pay dividends, which could materially and adversely affect the value of the shares of REITs, including the per share trading price of our securities.
Accordingly, investors who are individuals, trusts and estates may perceive investments in 25 REITs to be relatively less attractive than investments in the stocks of non-REIT corporations that pay dividends, which could materially and adversely affect the value of the shares of REITs, including the per share trading price of our securities.
Our business strategy includes the acquisition of underperforming office properties. These activities require us to identify suitable acquisition candidates or investment opportunities that meet our criteria and are compatible with our growth strategies. We 14 continue to evaluate the market of available properties and may attempt to acquire properties when strategic opportunities exist.
Our business strategy includes the acquisition of underperforming office properties. These activities require us to identify suitable acquisition candidates or investment opportunities that meet our criteria and are compatible with our growth strategies. We continue to evaluate the market of available properties and may attempt to acquire properties when strategic opportunities exist.
These restrictions could limit our ability to sell an asset at a time, or on terms, that would be favorable absent such restrictions. 15 Our growth depends on external sources of capital that are outside of our control and may not be available to us on commercially reasonable terms or at all.
These restrictions could limit our ability to sell an asset at a time, or on terms, that would be favorable absent such restrictions. Our growth depends on external sources of capital that are outside of our control and may not be available to us on commercially reasonable terms or at all.
Our charter contains a provision whereby we have elected to be subject to the provisions of Title 3, Subtitle 8 of the MGCL relating to the filling of vacancies on our board of directors. 24 Certain provisions in the partnership agreement of our operating partnership may delay or prevent unsolicited acquisitions of us.
Our charter contains a provision whereby we have elected to be subject to the provisions of Title 3, Subtitle 8 of the MGCL relating to the filling of vacancies on our board of directors. Certain provisions in the partnership agreement of our operating partnership may delay or prevent unsolicited acquisitions of us.
For example, our charter prohibits the actual, beneficial or constructive ownership by any person of more than 9.8% in value or number of shares, whichever is more restrictive, of the outstanding shares of each of our common stock and series C preferred stock, and more than 9.8% in value of the aggregate outstanding shares of all classes and series of our stock.
For example, our charter prohibits the actual, beneficial or constructive ownership by any person of more than 9.8% in value or number of shares, whichever is more restrictive, of the outstanding shares 21 of each of our common stock and series C preferred stock, and more than 9.8% in value of the aggregate outstanding shares of all classes and series of our stock.
We believe that our operating partnership is properly treated as a partnership for federal income tax purposes. As a partnership, our operating partnership is not subject to federal income tax on its income. Instead, each of its partners, including us, 26 is allocated, and may be required to pay tax with respect to, its share of our operating partnership’s income.
We believe that our operating partnership is properly treated as a partnership for federal income tax purposes. As a partnership, our operating partnership is not subject to federal income tax on its income. Instead, each of its partners, including us, is allocated, and may be required to pay tax with respect to, its share of our operating partnership’s income.
As a result, we rely on distributions from our operating partnership to pay any dividends we might declare on our common stock and on shares of our series C preferred stock. We also rely on distributions from our operating partnership to meet our obligations, including any tax liability on taxable income 25 allocated to us from our operating partnership.
As a result, we rely on distributions from our operating partnership to pay any dividends we might declare on our common stock and on shares of our series C preferred stock. We also rely on distributions from our operating partnership to meet our obligations, including any tax liability on taxable income allocated to us from our operating partnership.
We may co-invest in the future with other third parties through partnerships, joint ventures or other entities, acquiring non-controlling interests in or sharing responsibility for managing the affairs of a property, partnership, joint venture or other entity.
We may co-invest in the future with other third parties through partnerships, joint ventures 17 or other entities, acquiring non-controlling interests in or sharing responsibility for managing the affairs of a property, partnership, joint venture or other entity.
If we cannot provide reliable financial reports or prevent fraud, our 19 reputation and operating results would be harmed. As part of our ongoing monitoring of internal controls we may discover material weaknesses or significant deficiencies in our internal controls.
If we cannot provide reliable financial reports or prevent fraud, our reputation and operating results would be harmed. As part of our ongoing monitoring of internal controls we may discover material weaknesses or significant deficiencies in our internal controls.
Many of our senior executives have extensive experience and strong reputations in 18 the real estate industry, which aid us in identifying opportunities, having opportunities brought to us, and negotiating with tenants and build-to-suit prospects.
Many of our senior executives have extensive experience and strong reputations in the real estate industry, which aid us in identifying opportunities, having opportunities brought to us, and negotiating with tenants and build-to-suit prospects.
Our charter contains various provisions that are intended to preserve our qualification as a REIT and, subject to certain exceptions, authorize our directors to take such actions as are necessary or 23 appropriate to preserve our qualification as a REIT.
Our charter contains various provisions that are intended to preserve our qualification as a REIT and, subject to certain exceptions, authorize our directors to take such actions as are necessary or appropriate to preserve our qualification as a REIT.
The series A preferred units are senior to any other class of 22 securities our operating partnership may issue in the future without the consent of the holders of the series A preferred units.
The series A preferred units are senior to any other class of securities our operating partnership may issue in the future without the consent of the holders of the series A preferred units.
Any one of these events may cause decline in the demand for our office and studio leased space, delay the time in which our new or renovated properties reach stabilized occupancy, increase our operating expenses, such as those attributable to increased physical security for our properties, and limit our access to capital or increase our cost of raising capital. 31 ITEM 1B.
Any one of these events may cause decline in the demand for our office and studio leased space, delay the time in which our new or renovated properties reach stabilized occupancy, increase our operating expenses, such as those attributable to increased physical security for our properties, and limit our access to capital or increase our cost of raising capital. 28 ITEM 1B.
Therefore, we cannot assure you that we have qualified as a REIT, or that we will remain qualified as such in the future.
Therefore, we cannot assure you that we have qualified as a REIT, or that we will 23 remain qualified as such in the future.
Some of our properties are subject to ground leases, the termination or expiration of which could cause us to lose our interest in, and the right to receive rental income from, such properties. Eleven of our consolidated properties are subject to ground leases (including properties with a portion of the land subject to a ground lease).
Some of our properties are subject to ground leases, the termination or expiration of which could cause us to lose our interest in, and the right to receive rental income from, such properties. Ten of our consolidated properties are subject to ground leases (including properties with a portion of the land subject to a ground lease).
See Part IV, Item 15(a) “Exhibits, Financial Statement Schedules—Note 2 to the Consolidated Financial Statements—Summary of Significant Accounting Policies” and Part IV, Item 15(a) “Exhibits, Financial Statement Schedules—Note 6 to the Consolidated Financial Statements—Investment in Unconsolidated Real Estate Entities” for details on our joint ventures.
Refer to Part IV, Item 15(a) “Exhibits, Financial Statement Schedules—Note 2 to the Consolidated Financial Statements—Summary of Significant Accounting Policies” and Part IV, Item 15(a) “Exhibits, Financial Statement Schedules—Note 6 to the Consolidated Financial Statements—Investment in Unconsolidated Real Estate Entities” for details on our joint ventures.
Joint venture investments could be adversely affected by our lack of sole decision-making authority, our reliance on co-venturers’ financial condition and disputes between us and our co-venturers. As of December 31, 2023, we had 20 joint ventures.
Joint venture investments could be adversely affected by our lack of sole decision-making authority, our reliance on co-venturers’ financial condition and disputes between us and our co-venturers. As of December 31, 2024, we had 20 joint ventures.
As of December 31, 2023, these units have an aggregate liquidation preference of approximately $9.8 million and have a preference as to distributions and upon liquidation that could limit our ability to pay dividends on series C preferred stock and common stock.
As of December 31, 2024, these units have an aggregate liquidation preference of approximately $9.8 million and have a preference as to distributions and upon liquidation that could limit our ability to pay dividends on series C preferred stock and common stock.
As of December 31, 2023, our three largest tenants were Google, Inc., Amazon and Netflix, Inc., which together accounted for 20.6% of the HPP’s share of the annualized base rent generated by our office properties.
As of December 31, 2024, our three largest tenants were Google, Inc., Netflix, Inc. and Amazon, which together accounted for 20.6% of the HPP’s share of the annualized base rent generated by our office properties.
Some of our workforce is covered by collective bargaining agreements and our business may be adversely affected by any disruptions caused by union activities. As of December 31, 2023, approximately 20% of our employees are covered by collective bargaining agreements.
Some of our workforce is covered by collective bargaining agreements and our business may be adversely affected by any disruptions caused by union activities. As of December 31, 2024, approximately 20% of our employees are covered by collective bargaining agreements.
As of December 31, 2023, we had $1.1 billion in variable rate debt, excluding debt that is effectively fixed through the use of interest rate swaps. In addition, we may incur additional variable rate debt in the future.
As of December 31, 2024, we had $1.1 billion in variable rate debt, excluding debt that is effectively fixed through the use of interest rate swaps. In addition, we may incur additional variable rate debt in the future.
If Google, Inc., Amazon and Netflix, Inc. were to experience a downturn or a weakening of financial condition resulting in a failure to make timely rental payments or 17 causing a lease default, we may experience delays in enforcing our rights as landlord and may incur substantial costs in protecting our investment.
If Google, Inc., Netflix, Inc. and Amazon w ere to experience a downturn or a weakening of financial condition resulting in a failure to make timely rental payments or causing a lease default, we may experience delays in enforcing our rights as landlord and may incur substantial costs in protecting our investment.
Risks Related to Our Organizational Structure The series A preferred units that were issued to some contributors in connection with our IPO in exchange for the contribution of their properties have certain preferences, which could limit our ability to pay dividends or other distributions to the holders of our securities or engage in certain business combinations, recapitalizations or other fundamental changes.
Risks Related to Our Organizational Structure The series A preferred units that were issued to some contributors in connection with our IPO in exchange for the contribution of their properties have certain preferences, which could limit our ability to pay dividends or other distributions to the holders of our securities or engage in certain business combinations, recapitalizations or other fundamental changes. 20 In exchange for the contribution of properties to our portfolio in connection with our IPO, some contributors received series A preferred units in our operating partnership.
If we cannot obtain capital from third-party sources, we may not be able to acquire or develop properties when strategic opportunities exist, meet the capital and operating needs of our existing properties, satisfy our debt service obligations or make the cash distributions to our stockholders necessary to maintain our qualification as a REIT.
The credit markets can experience significant disruptions. If we cannot obtain capital from third-party sources, we may not be able to acquire or develop properties when strategic opportunities exist, meet the capital and operating needs of our existing properties, satisfy our debt service obligations or make the cash distributions to our stockholders necessary to maintain our qualification as a REIT.
As a result, our financial condition, results of operations, cash flow and the per share trading price of our securities could be adversely affected. We depend on significant tenants. As of December 31, 2023, the 15 largest tenants in our office portfolio represented approximately 42.4% of the HPP’s share of the total annualized base rent generated by our office properties.
As a result, our financial condition, results of operations, cash flow and the per share trading price of our securities could be adversely affected. We depend on significant tenants. As of December 31, 2024, the 15 largest tenants in our office portfolio represented approximately 44.9% of the HPP’s share of the total annualized base rent generated by our office properties.
See Part IV, Item 15(a) “Exhibits, Financial Statement Schedules—Note 11 to the Consolidated Financial Statements—Future Minimum Base Rents and Lease Payments Future Minimum Rents” for more information regarding our ground lease agreements.
Refer to Part IV, Item 15(a) “Exhibits, Financial Statement Schedules—Note 13 to the Consolidated Financial Statements—Future Minimum Base Rents and Lease Payments Future Minimum Rents” for more information regarding our ground lease agreements.
We may be unable to renew leases, lease vacant space or re-let space as leases expire. As of December 31, 2023, approxi mately 24.5% of the HPP’s share of the square footage of the office properties (including our development and redevelopment properties) in our portfolio was available, taking into account uncommenced leases signed as of December 31, 2023.
We may be unable to renew leases, lease vacant space or re-let space as leases expire. As of December 31, 2024, approxi mately 28.7% of the HPP’s share of the square footage of the office properties (including our development and redevelopment properties) in our portfolio was available, taking into account uncommenced leases signed as of December 31, 2024.
Our access to third-party sources of capital depends, in part, on: • general market conditions; • the market’s perception of our growth potential; • our current debt levels; • our current and expected future earnings; • our cash flow and cash distributions; and • the market price per share of our common stock. The credit markets can experience significant disruptions.
Our access to third-party sources of capital depends, in part, on: • general market conditions; • the market’s perception of our growth potential; • our current debt levels; • our current and expected future earnings; 14 • our cash flow and cash distributions; and • the market price per share of our common stock.
A security breach or other significant disruption involving our IT networks and related systems could: • disrupt the proper functioning of our networks and systems and therefore our operations and/or those of certain of our tenants; • result in misstated financial reports, violations of loan covenants, and/or missed reporting deadlines; • result in our inability to properly monitor our compliance with the rules and regulations regarding our qualification as a REIT; • result in the unauthorized access to, and destruction, loss, theft, misappropriation or release of proprietary, confidential, sensitive or otherwise valuable information of ours or others, which others could use to compete against us or for disruptive, destructive or otherwise harmful purposes and outcomes; 30 • result in our inability to maintain the building systems relied upon by our tenants for the efficient use of their leased space; • require significant management attention and resources to remedy any resulting damages; • subject us to claims for breach of contract, damages, credits, penalties or termination of leases or other agreements; or • damage our reputation among our tenants and investors generally.
Accordingly, we may be unable to anticipate these techniques or to implement adequate security barriers or other preventative measures, and thus it is impossible for us to entirely mitigate this risk . 27 A security breach or other significant disruption involving our IT networks and related systems could: • disrupt the proper functioning of our networks and systems and therefore our operations and/or those of certain of our tenants; • result in misstated financial reports, violations of loan covenants, and/or missed reporting deadlines; • result in our inability to properly monitor our compliance with the rules and regulations regarding our qualification as a REIT; • result in the unauthorized access to, and destruction, loss, theft, misappropriation or release of proprietary, confidential, sensitive or otherwise valuable information of ours or others, which others could use to compete against us or for disruptive, destructive or otherwise harmful purposes and outcomes; • result in our inability to maintain the building systems relied upon by our tenants for the efficient use of their leased space; • require significant management attention and resources to remedy any resulting damages; • subject us to claims for breach of contract, damages, credits, penalties or termination of leases or other agreements; or • damage our reputation among our tenants and investors generally.
An additional approximately 12.7% of the HPP’s share of the square footage of the office properties in our portfolio is scheduled to expire in 2024 (includes leases scheduled to expire on December 31, 2023).
An additional approximately 15.0% of the HPP’s share of the square footage of the office properties in our portfolio is scheduled to expire in 2025 (includes leases scheduled to expire on December 31, 2024).
In September 2023, we suspended our quarterly dividend on our common stock in order to address liquidity considerations in light of general office industry trends and the impact of the Writers Guild of America (“WGA”) strike and the Screen Actors Guild - American Federation of Television and Radio Artists (“SAG-AFTRA”) strikes.
In September 2024, we suspended our quarterly dividend on our common stock in order to address liquidity considerations in light of general office industry trends and slower-than-anticipated recovery of studio demand following the Writers Guild of America (“WGA”) strike and the Screen Actors Guild - American Federation of Television and Radio Artists (“SAG-AFTRA”) strikes.
Although we do not intend to hold any properties that would be characterized as held for sale to customers in the ordinary course of our business, such characterization is a factual determination and we cannot assure you that the IRS would agree with our characterization of our properties or that we will always be able to make use of the available safe harbors, which, if met, would prevent any such sales from being treated as prohibited transactions.
Although we do not intend to hold any properties that would be characterized as held for sale to customers in the ordinary course of our business, such characterization is a factual determination and we cannot assure you that the IRS would agree with our characterization of our properties or that we will always be able to make use of the available safe harbors, which, if met, would prevent any such sales from being treated as prohibited transactions. 24 Our ownership of taxable REIT subsidiaries is subject to certain restrictions, and we will be required to pay a 100% penalty tax on certain income or deductions if our transactions with our taxable REIT subsidiaries are not conducted on arm’s length terms.
Also, the law relating to the tax treatment of other entities, or an investment in other entities, could change, making an investment in such other entities more attractive relative to an investment in a REIT. 28 Risks Related to General and Global Factors Adverse economic and geopolitical conditions and dislocations in the credit markets could have a material adverse effect on our financial condition, results of operations, cash flow and per share trading price of our securities.
Risks Related to General and Global Factors Adverse economic and geopolitical conditions and dislocations in the credit markets could have a material adverse effect on our financial condition, results of operations, cash flow and per share trading price of our securities.
Removed
The actual rents we receive for the properties in our portfolio may be less than our asking rents, and we may experience lease roll-down from time to time.
Added
Beginning with the fourth quarter of 2024, we also modified certain of our adjusted EBITDA to fixed charges covenants to provide for a minimum required ratio of 1.4x for such covenants which previously required a minimum ratio of 1.5x and modified certain of our unencumbered NOI to unsecured interest expense covenants to provide for a minimum required ratio of 1.75x for such covenants which previously required a minimum ratio of 2.0x.
Removed
In exchange for the contribution of properties to our portfolio in connection with our IPO, some contributors received series A preferred units in our operating partnership.
Added
If we are unable to do so or capital is otherwise unavailable, we may be unable to make the required expenditures.
Removed
Our ownership of taxable REIT subsidiaries is subject to certain restrictions, and we will be required to pay a 100% penalty tax on certain income or deductions if our transactions with our taxable REIT subsidiaries are not conducted on arm’s length terms.
Added
Also, the law relating to the tax treatment of other entities, or an investment in other entities, could change, making an investment in such other entities more attractive relative to an investment in a REIT.
Removed
Accordingly, we may be unable to anticipate these techniques or to implement adequate security barriers or other preventative measures, and thus it is impossible for us to entirely mitigate this risk .

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

2 edited+0 added−0 removed10 unchanged
Biggest changeOur management team supervises efforts to prevent, detect, mitigate, and remediate cybersecurity risks and incidents through various means, which may include briefings from internal security personnel; threat intelligence and other information obtained from governmental, public or private sources, including external consultants engaged by us; and alerts and reports produced by security tools deployed in the IT environment.
Biggest changeOur management team supervises efforts to prevent, detect, mitigate, and remediate cybersecurity risks and incidents through various means, which may include briefings from internal security personnel; threat intelligence and other information 29 obtained from governmental, public or private sources, including external consultants engaged by us; and alerts and reports produced by security tools deployed in the IT environment.
Our management team’s experience includes technical and managerial expertise, enabling them to proficiently design, engineer, and oversee the organization’s overall security stance. Their capabilities encompass 32 a wide range of skills, including proficiency in Security and Risk Management, Vulnerability Management, as well as expertise in Network Security and Operations, and Security Architecture.
Our management team’s experience includes technical and managerial expertise, enabling them to proficiently design, engineer, and oversee the organization’s overall security stance. Their capabilities encompass a wide range of skills, including proficiency in Security and Risk Management, Vulnerability Management, as well as expertise in Network Security and Operations, and Security Architecture.

Item 2. Properties

Properties — owned and leased real estate

31 edited+5 added−6 removed4 unchanged
Biggest changeAs of December 31, 2023, the weighted average remaining lease term for our in-service office portfolio was 4.3 years The following table summarizes information relating to the consolidated and unconsolidated in-service office properties owned as of December 31, 2023: Location Submarket Square Feet (1) Percent Occupied (2) Percent Leased (3) Annualized Base Rent (4) Annualized Base Rent Per Square Foot (5) Los Angeles, California ICON (6) Hollywood 326,792 100.0 % 100.0 % $ 21,278,557 $ 65.11 EPIC (6) Hollywood 301,127 100.0 100.0 22,512,255 74.76 Harlow (6) Hollywood 129,931 100.0 100.0 7,983,344 61.44 6040 Sunset (6) Hollywood 114,958 100.0 100.0 7,009,468 60.97 CUE (6) Hollywood 94,386 100.0 100.0 6,224,702 65.95 11601 Wilshire West Los Angeles 500,243 90.2 98.4 21,835,358 48.38 Element LA West Los Angeles 284,037 100.0 100.0 18,951,920 66.72 Fourth & Traction Downtown Los Angeles 131,701 100.0 100.0 6,173,837 46.88 Maxwell Downtown Los Angeles 102,963 100.0 100.0 5,003,414 48.59 San Francisco Bay Area, California Concourse North San Jose 943,789 85.4 85.8 35,597,539 44.16 Gateway North San Jose 609,278 64.3 68.0 18,322,351 46.75 Metro Plaza North San Jose 451,036 58.3 61.6 12,940,697 49.18 Skyport Plaza North San Jose 418,465 5.4 6.1 805,446 35.36 1740 Technology North San Jose 215,857 100.0 100.0 10,986,935 50.90 1455 Market (7) San Francisco 1,033,682 45.3 45.3 26,072,041 55.70 Rincon Center San Francisco 533,076 97.6 97.6 33,974,980 65.31 Ferry Building (7) San Francisco 265,916 97.4 98.3 23,727,015 91.65 901 Market San Francisco 206,113 78.8 78.8 11,888,684 73.17 875 Howard San Francisco 191,201 100.0 100.0 15,603,499 81.61 625 Second San Francisco 138,354 64.2 64.2 6,019,851 67.73 275 Brannan San Francisco 57,120 100.0 100.0 4,975,867 87.11 Palo Alto Square Palo Alto 317,845 91.9 91.9 28,762,617 98.47 33 Location Submarket Square Feet (1) Percent Occupied (2) Percent Leased (3) Annualized Base Rent (4) Annualized Base Rent Per Square Foot (5) 3400 Hillview Palo Alto 207,857 100.0 100.0 16,274,043 78.29 Foothill Research Center Palo Alto 195,121 93.6 93.6 14,500,594 79.38 Page Mill Hill Palo Alto 178,179 53.6 53.6 7,553,762 79.06 Clocktower Square Palo Alto 100,655 100.0 100.0 9,324,711 92.64 Page Mill Center Palo Alto 94,539 58.8 58.8 4,447,002 80.06 3176 Porter Palo Alto 46,759 100.0 100.0 3,422,759 73.20 Towers at Shore Center Redwood Shores 335,285 89.8 89.8 22,864,776 75.96 Shorebreeze Redwood Shores 230,932 79.6 79.6 11,900,074 64.75 555 Twin Dolphin Redwood Shores 200,785 70.8 73.2 9,217,303 64.88 333 Twin Dolphin Redwood Shores 183,118 87.4 87.4 10,211,901 63.78 Metro Center Foster City 723,848 77.7 84.3 34,745,538 61.80 Techmart Santa Clara 284,903 71.1 74.3 10,243,529 50.59 Seattle, Washington 1918 Eighth (7) Denny Triangle 667,724 99.4 100.0 28,531,929 43.00 Hill7 (7) Denny Triangle 285,310 99.6 99.6 11,962,994 42.11 5th & Bell Denny Triangle 197,136 100.0 100.0 7,470,367 37.89 Met Park North Denny Triangle 189,511 99.7 99.7 6,446,825 34.14 505 First Pioneer Square 287,853 36.0 36.0 3,714,511 35.85 83 King Pioneer Square 183,898 70.1 70.1 5,720,210 44.39 450 Alaskan Pioneer Square 171,014 99.5 99.5 7,481,307 43.96 411 First Pioneer Square 163,719 78.2 81.2 4,882,158 38.15 95 Jackson Pioneer Square 35,905 100.0 100.0 512,547 14.28 Vancouver, British Columbia Bentall Centre (8) Downtown Vancouver 1,521,084 90.1 90.1 42,065,607 30.70 Total In-Service 13,853,005 80.8 % 81.9 % $ 620,144,824 $ 55.43 _____________ 1.
Biggest changeAs of December 31, 2024, the weighted average remaining lease term for our in-service office portfolio was 4.6 years 30 The following table summarizes information relating to the consolidated and unconsolidated in-service office properties owned as of December 31, 2024: Location Submarket Square Feet (1) Percent Occupied (2) Percent Leased (3) Annualized Base Rent (4) Annualized Base Rent Per Square Foot (5) Los Angeles, California ICON (6) Hollywood 326,792 100.0 % 100.0 % $ 21,911,055 $ 67.05 EPIC (6) Hollywood 301,127 100.0 100.0 23,198,824 77.04 Harlow (6) Hollywood 129,931 100.0 100.0 8,212,625 63.21 6040 Sunset (6) Hollywood 114,958 100.0 100.0 7,219,752 62.80 CUE (6) Hollywood 94,386 100.0 100.0 6,411,443 67.93 11601 Wilshire West Los Angeles 499,758 90.8 91.4 21,783,475 47.98 Element LA West Los Angeles 284,037 100.0 100.0 19,520,478 68.73 Fourth & Traction Downtown Los Angeles 131,701 100.0 100.0 6,359,052 48.28 San Francisco Bay Area, California Concourse North San Jose 941,616 64.9 68.4 27,558,750 45.10 Gateway North San Jose 609,554 67.1 68.4 19,061,922 46.63 Metro Plaza North San Jose 468,599 57.5 57.5 12,760,908 47.36 Skyport Plaza North San Jose 418,465 6.1 6.1 779,125 30.59 1740 Technology North San Jose 215,857 100.0 100.0 11,680,792 54.11 1455 Market San Francisco 1,038,134 60.4 60.4 33,332,037 53.17 Rincon Center San Francisco 531,721 97.8 97.8 34,992,537 67.26 Ferry Building (7) San Francisco 266,402 98.3 98.9 23,760,539 90.72 901 Market San Francisco 204,381 54.6 54.6 3,772,675 33.79 875 Howard San Francisco 191,201 100.0 100.0 13,568,955 70.97 625 Second San Francisco 138,354 38.7 38.7 3,070,236 57.35 275 Brannan San Francisco 57,120 100.0 100.0 5,125,143 89.73 Palo Alto Square Palo Alto 318,166 95.7 95.7 29,407,582 96.56 3400 Hillview Palo Alto 207,857 100.0 100.0 16,762,265 80.64 Page Mill Hill Palo Alto 181,965 58.2 58.2 7,095,577 67.01 Clocktower Square Palo Alto 100,655 100.0 100.0 9,281,455 92.21 Page Mill Center Palo Alto 96,062 82.7 82.7 5,401,865 67.98 Towers at Shore Center Redwood Shores 334,695 82.5 82.5 20,433,340 73.98 Shorebreeze Redwood Shores 230,931 75.5 75.5 11,259,650 64.59 555 Twin Dolphin Redwood Shores 201,129 65.2 67.8 8,442,453 64.39 333 Twin Dolphin Redwood Shores 183,072 59.3 59.3 6,462,774 59.58 Metro Center Foster City 724,381 86.5 87.9 38,606,059 61.64 Techmart Santa Clara 284,903 70.8 73.1 10,085,953 50.03 Seattle, Washington 1918 Eighth (7) Denny Triangle 667,724 99.4 99.4 29,212,128 44.02 Hill7 (7) Denny Triangle 285,310 99.6 100.0 12,672,485 44.61 5th & Bell Denny Triangle 197,136 100.0 100.0 8,225,155 41.72 Met Park North Denny Triangle 189,451 25.9 25.9 1,217,227 24.83 505 First Pioneer Square 291,286 23.0 23.0 2,154,224 32.20 83 King Pioneer Square 186,366 73.3 73.3 6,050,841 44.30 450 Alaskan Pioneer Square 171,594 100.0 100.0 7,680,881 44.76 411 First Pioneer Square 164,799 95.3 95.3 5,883,389 37.46 95 Jackson Pioneer Square 31,613 45.8 45.8 478,203 33.00 Vancouver, British Columbia Bentall Centre (8) Downtown Vancouver 1,537,159 88.6 89.5 39,517,317 29.02 Total In-Service 13,550,348 78.3 % 78.9 % $ 580,411,146 $ 54.71 _____________ 1.
We own and operate an array of production-related services, including transportation assets, lighting and other production equipment and supplies, which we provide for lease in Los Angeles, New York, and New Orleans, as well as Albuquerque and Atlanta. We operate owned purpose-built stages under the Sunset Studios brand, and leased stages and production services assets under the Quixote brand.
We own and operate an array of production-related services, including transportation assets, lighting and other production equipment and supplies, which we provide for lease in Los Angeles and New York, as well as Albuquerque and Atlanta. We operate owned purpose-built stages under the Sunset Studios brand, and leased stages and production services assets under the Quixote brand.
Our transportation assets, including trucks, trailers, high-end motorhomes, lighting and other production equipment and supplies, collectively our production services assets, cater to the same type of tenants, but capture revenue derived from both on and off-lot productions, as well as non-production related large-scale events. 38 In-Service Studio Portfolio Our in-service studio portfolio consists of owned purpose-built studio properties, excluding repositioning, redevelopment, development and held for sale properties.
Our transportation assets, including trucks, trailers, high-end motorhomes, lighting and other production equipment and supplies, collectively our production services assets, cater to the same type of tenants, but capture revenue derived from both on and off-lot productions, as well as non-production related large-scale events. 35 In-Service Studio Portfolio Our in-service studio portfolio consists of owned purpose-built studio properties, excluding repositioning, redevelopment, development and held for sale properties.
For all expiration years, ABR is calculated as (i) cash base rents at expiration under commenced leases divided by (ii) square footage under commenced leases as of December 31, 2023. The methodology is the same when calculating ABR per square foot either in place or at expiration for uncommenced leases. Rent data is presented without regard to cancellation options.
For all expiration years, ABR is calculated as (i) cash base rents at expiration under commenced leases divided by (ii) square footage under commenced leases as of December 31, 2024. The methodology is the same when calculating ABR per square foot either in place or at expiration for uncommenced leases. Rent data is presented without regard to cancellation options.
Calculated as (i) annualized base rent divided by (ii) square footage under commenced leases as of December 31, 2023. Annualized base rent does not reflect tenant reimbursements. 6. We own 51% of the ownership interest in the consolidated joint venture that owns ICON, EPIC, Harlow, 6040 Sunset and CUE. 7.
Calculated as (i) annualized base rent divided by (ii) square footage under commenced leases as of December 31, 2024. Annualized base rent does not reflect tenant reimbursements. 6. We own 51% of the ownership interest in the consolidated joint venture that owns ICON, EPIC, Harlow, 6040 Sunset and CUE. 7.
Salesforce.com subleased 259,416 square feet at Rincon Center to Twilio Inc. in 2018 and in 2020 began paying us 50% of cash rents received pursuant to the sublease, or an average of $340,000 per month with annual growth thereafter, in addition to contractual base rent. 8.
Salesforce.com subleased 259,416 square feet at Rincon Center to Twilio Inc. in 2018 and in 2020 began paying us 50% of cash rents received pursuant to the sublease, or an average of $340,000 per month with annual growth thereafter, in addition to contractual base rent. 6.
Annual base rent per leased square foot for in-service studio calculated as (i) annual base rent divided by (ii) square footage under lease as of December 31, 2023. 4. 6,650 square feet located at Sunset Gower Studios was taken off-line for repositioning. 5. 18,594 square feet located at Sunset Las Palmas Studios was taken off-line for repositioning. 6.
Annual base rent per leased square foot for in-service studio calculated as (i) annual base rent divided by (ii) square footage under lease as of December 31, 2024. 4. 6,650 square feet located at Sunset Gower Studios was taken off-line for repositioning. 5. 18,594 square feet located at Sunset Las Palmas Studios was taken off-line for repositioning. 6.
Presented on an annualized basis and is calculated by multiplying (i) base rental payments (defined as cash base rents (before abatements or deferments)) under commenced leases as of December 31, 2023, by (ii) 12. Annualized base rent does not reflect tenant reimbursements. 5.
Presented on an annualized basis and is calculated by multiplying (i) base rental payments (defined as cash base rents (before abatements or deferments)) under commenced leases as of December 31, 2024, by (ii) 12. Annualized base rent does not reflect tenant reimbursements. 5.
ABR per square foot at expiration for all lease expiration years is calculated as (i) base rental payments (defined as cash base rents (before abatements or deferments)) under commenced leases, divided by (ii) square footage under commenced leases as of December 31, 2023. 4.
ABR per square foot at expiration for all lease expiration years is calculated as (i) base rental payments (defined as cash base rents (before abatements or deferments)) under commenced leases, divided by (ii) square footage under commenced leases as of December 31, 2024. 4.
Includes retained tenants relocated or expanded into new space within our portfolio. Studio Portfolio Our studio portfolio includes five owned purpose-built properties with 48 sound stages totaling approximately 1.7 million square feet located in Los Angeles and New York.
Includes retained tenants relocated or expanded into new space within our portfolio. Studio Portfolio Our studio portfolio includes five owned purpose-built properties with 45 sound stages totaling approximately 1.7 million square feet located in Los Angeles and New York.
Annualized base rent is calculated by multiplying (i) base rental payments (defined as cash base rents (before abatements or deferments)) under commenced leases as of December 31, 2023, by (ii) 12. Annualized base rent does not reflect tenant reimbursements.
Annualized base rent is calculated by multiplying (i) base rental payments (defined as cash base rents (before abatements or deferments)) under commenced leases as of December 31, 2024, by (ii) 12. Annualized base rent does not reflect tenant reimbursements.
Annualized base rent is calculated by multiplying (i) base rental payments (defined as cash base rents (before abatements or deferments)), including uncommenced leases, as of December 31, 2023 (ii) by 12.
Annualized base rent is calculated by multiplying (i) base rental payments (defined as cash base rents (before abatements or deferments)), including uncommenced leases, as of December 31, 2024 (ii) by 12.
We own 55% of the ownership interest in the consolidated joint ventures that own 1455 Market, Ferry Building, 1918 Eighth and Hill7. 8. We own 20% of the ownership interest in the unconsolidated joint venture that owns Bentall Centre.
We own 55% of the ownership interest in the consolidated joint ventures that own Ferry Building, 1918 Eighth and Hill7. 8. We own 20% of the ownership interest in the unconsolidated joint venture that owns Bentall Centre.
Annualized base rents related to Bentall Centre have been converted from CAD to USD using the foreign currency exchange rate as of December 31, 2023. 2.
Annualized base rents related to Bentall Centre have been converted from CAD to USD using the foreign currency exchange rate as of December 31, 2024. 2.
Percent leased for in-service studio is the average percent leased for the 12 months ended December 31, 2023. 2. Annual base rent for in-service studio reflects actual base rent for the 12 months ended December 31, 2023, excluding tenant reimbursements. 3.
Percent leased for in-service studio is the average percent leased for the 12 months ended December 31, 2024. 2. Annual base rent for in-service studio reflects actual base rent for the 12 months ended December 31, 2024, excluding tenant reimbursements. 3.
Calculated as (i) square footage under commenced leases as of December 31, 2023, divided by (ii) total square feet, expressed as a percentage. 3. Calculated as (i) square footage under commenced and uncommenced leases as of December 31, 2023, divided by (ii) total square feet, expressed as a percentage. 4.
Calculated as (i) square footage under commenced leases as of December 31, 2024, divided by (ii) total square feet, expressed as a percentage. 31 3. Calculated as (i) square footage under commenced and uncommenced leases as of December 31, 2024, divided by (ii) total square feet, expressed as a percentage. 4.
Google, Inc. expirations: (i) 182,672 square feet at Foothill Research Center in February 2025, (ii) 208,843 square feet at Rincon Center in February 2028, (iii) 207,857 square feet at 3400 Hillview in November 2028 (early termination right between March 2025 and February 2027) and (iv) 41,354 square feet at Ferry Building in October 2029. 3.
Google, Inc. expirations: (i) 182,672 square feet in February 2025 at Foothill Research Center (held-for-sale), (ii) 208,843 square feet at Rincon Center in February 2028, (iii) 207,857 square feet at 3400 Hillview in November 2028 (early termination right between March 2026-February 2027) and (iv) 41,354 square feet at Ferry Building in October 2029. 3.
Annualized base rent does not reflect tenant reimbursements. 36 Office Lease Expirations The following table summarizes the lease expirations for in-place office leases as of December 31, 2023, including vacancies. Unless otherwise stated in the footnotes, the information set forth in the table assumes that tenants did not exercise any renewal options.
Annualized base rent does not reflect tenant reimbursements. 33 Office Lease Expirations The following table summarizes the lease expirations for in-place office leases as of December 31, 2024, including vacancies. Unless otherwise stated in the footnotes, the information set forth in the table assumes that tenants did not exercise any renewal options.
Does not include 22 month-to-month leases. 2. Annualized base rent per square foot for office properties is calculated by multiplying (i) cash base rents under commenced leases excluding tenant reimbursements as of December 31, 2023 by (ii) 12. On a per square foot basis, ABR is divided by square footage under commenced leases as of December 31, 2023.
Does not include 29 month-to-month leases. 2. Annualized base rent per square foot for office properties is calculated by multiplying (i) cash base rents under commenced leases excluding tenant reimbursements as of December 31, 2024 by (ii) 12. On a per square foot basis, ABR is divided by square footage under commenced leases as of December 31, 2024.
Where applicable, rental rates converted to USD using the foreign currency exchange rate as of December 31, 2023. 3.
Where applicable, rental rates converted to USD using the foreign currency exchange rate as of December 31, 2024. 3.
Office Portfolio Our office portfolio consists of 46 office properties totaling approximately 14.7 million square feet located in Los Angeles, the San Francisco Bay Area, Seattle and Vancouver, British Columbia. In-Service Office Portfolio Our in-service office portfolio consists of owned office properties, excluding repositioning, redevelopment, development and held for sale properties.
Office Portfolio Our office portfolio consists of 45 office properties totaling approximately 14.6 million square feet located in Los Angeles, the San Francisco Bay Area, Seattle and Vancouver, British Columbia. In-Service Office Portfolio Our in-service office portfolio consists of owned office properties, excluding repositioning, redevelopment, development and held for sale properties.
ITEM 2. Properties As of December 31, 2023, our portfolio of owned real estate consisted of 58 properties (36 wholly-owned properties, 15 properties owned by joint ventures and seven land properties) totaling approximately 20 million square feet and located primarily in Los Angeles, the San Francisco Bay Area, Seattle, New York, Vancouver, British Columbia and Greater London, United Kingdom.
ITEM 2. Properties As of December 31, 2024, our portfolio of owned real estate consisted of 57 properties (36 wholly-owned properties, 14 properties owned by joint ventures and seven land properties) totaling approximately 20 million square feet and located primarily in Los Angeles, the San Francisco Bay Area, Seattle, New York, Vancouver, British Columbia and Greater London, United Kingdom.
Reflects management offices occupied by the Company with various expiration dates. 37 Historical Office Tenant Improvements and Leasing Commissions The following table represents 100% share of consolidated and unconsolidated joint ventures, summarizing historical information regarding tenant improvement and leasing commission costs for our office properties: Year Ended December 31, 2023 2022 2021 Renewals (1) Number of leases 149 162 120 Square feet 1,125,614 1,172,126 1,070,864 Tenant improvement costs per square foot (2)(3) $ 8.77 $ 11.66 $ 7.31 Leasing commission costs per square foot (2) 6.80 9.50 6.92 Total tenant improvement and leasing commission costs $ 15.57 $ 21.16 $ 14.23 New leases (4) Number of leases 117 140 122 Square feet 572,833 943,650 730,235 Tenant improvement costs per square foot (2)(3) $ 38.15 $ 65.71 $ 62.00 Leasing commission costs per square foot (2) 10.73 18.10 14.69 Total tenant improvement and leasing commission costs $ 48.88 $ 83.81 $ 76.69 TOTAL Number of leases 266 302 242 Square feet 1,698,447 2,115,776 1,801,099 Tenant improvement costs per square foot (2)(3) $ 18.49 $ 36.41 $ 28.63 Leasing commission costs per square foot (2) 8.10 13.44 9.95 TOTAL TENANT IMPROVEMENT AND LEASING COMMISSION COSTS $ 26.59 $ 49.85 $ 38.58 _____________ 1.
Reflects management offices occupied by the Company with various expiration dates. 34 Historical Office Tenant Improvements and Leasing Commissions The following table represents 100% share of consolidated and unconsolidated joint ventures, summarizing historical information regarding tenant improvement and leasing commission costs for our office properties : Year Ended December 31, 2024 2023 2022 Renewals (1) Number of leases 153 149 162 Square feet 816,965 1,125,614 1,172,126 Tenant improvement costs per square foot (2)(3) $ 18.12 $ 8.77 $ 11.66 Leasing commission costs per square foot (2) 9.50 6.80 9.50 Total tenant improvement and leasing commission costs $ 27.62 $ 15.57 $ 21.16 New leases (4) Number of leases 163 117 140 Square feet 1,212,377 572,833 943,650 Tenant improvement costs per square foot (2)(3) $ 48.82 $ 38.15 $ 65.71 Leasing commission costs per square foot (2) 14.70 10.73 18.10 Total tenant improvement and leasing commission costs $ 63.52 $ 48.88 $ 83.81 TOTAL Number of leases 316 266 302 Square feet 2,029,342 1,698,447 2,115,776 Tenant improvement costs per square foot (2)(3) $ 36.51 $ 18.49 $ 36.41 Leasing commission costs per square foot (2) 12.61 8.10 13.44 TOTAL TENANT IMPROVEMENT AND LEASING COMMISSION COSTS $ 49.12 $ 26.59 $ 49.85 _____________ 1.
We also own the lease rights to another 6 studios with 27 sound stages totaling approximately 0.5 million square feet located in Los Angeles and New Orleans.
We also own the lease rights to another 5 s tudios with 24 sound stages t otaling approximatel y 0.6 million square feet located in Los Angeles.
Dell EMC Corporation expirations: (i) 42,954 square feet at 505 First in December 2023, (ii) 83,549 square feet at 875 Howard in June 2026 and (iii) 46,472 square feet at 505 First in January 2027. 9.
Dell EMC Corporation expirations: (i) 83,549 square feet at 875 Howard in June 2026 and (ii) 46,472 square feet at 505 First in January 2027. 8. GitHub Inc. expirations: (i) 35,330 square feet at 625 Second in December 2024 and (ii) 57,120 square feet at 275 Brannan in June 2030. 9.
Nutanix, Inc. expirations: (i) 117,001 square feet at Concourse in May 2024 and (ii) 215,857 square feet at 1740 Technology in May 2030. 7. Salesforce.com expirations: (i) 83,016 square feet in July 2025, (ii) 83,372 square feet in April 2027 and (iii) 99,006 square feet in October 2028.
Salesforce.com expirations: (i) 83,016 square feet in March 2025, (ii) 83,372 square feet in April 2027 and (iii) 99,006 square feet in October 2028.
Amazon expirations: (i) 139,824 square feet at Met Park North in November 2025 (early termination right starting in December 2024), (ii) 659,150 square feet at 1918 Eighth in September 2030 and (iii) 191,814 square feet at 5th & Bell in May 2031. 4.
Netflix, Inc. expirations: (i) 326,792 square feet at ICON, (ii) 301,127 square feet at EPIC and (iii) 94,386 square feet at CUE. 4. Amazon expirations: (i) 659,150 square feet at 1918 Eighth in September 2030 and (ii) 191,814 square feet at 5th & Bell in May 2031. 5.
The following table provides occupancy and rental rate information relating to the consolidated and unconsolidated in-service studio properties owned as of December 31, 2023: Property Owned/Leased Submarket # of Stages Square Feet Stage % Leased Total % Leased (1) Annual Base Rent (2) HPP’s Share Annualized Base Rent Annualized Base Rent Per Square Foot (3) Los Angeles, California Sunset Gower Studios (4) Owned Hollywood 12 558,295 100.0 % 82.4 % $ 21,370,272 $ 10,898,839 $ 46.55 Sunset Bronson Studios Owned Hollywood 10 310,006 100.0 95.1 12,701,849 6,477,943 43.22 Sunset Las Palmas Studios (5) Owned Hollywood 13 362,977 56.2 64.9 11,226,714 5,725,624 47.71 Total in-service studio (6) 35 1,231,278 84.7 % 80.4 % $ 45,298,835 $ 23,102,406 $ 45.88 _____________ 1.
The following table provides occupancy and rental rate information relating to the consolidated and unconsolidated in-service studio properties owned as of December 31, 2024: Property Owned/Leased Submarket # of Stages Square Feet Stage % Leased Total % Leased (1) Annual Base Rent (2) HPP’s Share Annualized Base Rent Annualized Base Rent Per Square Foot (3) Los Angeles, California Sunset Gower Studios (4) Owned Hollywood 12 559,141 100.0 % 82.1 % $ 23,466,080 $ 11,967,701 $ 51.17 Sunset Bronson Studios Owned Hollywood 9 310,563 100.0 94.8 13,112,553 6,687,402 44.58 Sunset Las Palmas Studios (5) Owned Hollywood 11 341,464 31.3 42.2 6,160,055 3,141,628 41.43 Sunset Glenoaks Studios (6) Owned Sun Valley 7 241,000 N/A N/A N/A N/A N/A Total in-service studio (7) 39 1,452,168 76.8 % 73.8 % $ 42,738,688 $ 21,796,731 $ 47.41 _____________ 1.
Annualized base rent and rental rates have been converted from CAD to USD using the foreign currency exchange rate as of December 31, 2023. 34 Office Tenant Diversification The following table provides information regarding the 15 largest tenants in our office portfolio based on HPP’s share of annualized base rent as of December 31, 2023: Tenant # of Properties Lease Expiration Total Occupied Square Feet HPP’s Share Annualized Base Rent (1) Percent of Annualized Base Rent 1 Google, Inc. 4 2025-2029 640,726 (2) $ 51,963,161 10.1 % 2 Amazon 3 2025-2031 990,788 (3) 28,214,335 5.5 3 Netflix, Inc. 3 2031 722,305 (4) 25,507,912 5.0 4 Riot Games, Inc. 1 2030 284,037 (5) 18,951,920 3.7 5 Nutanix, Inc. 2 2024-2030 332,858 (6) 15,870,596 3.1 6 Salesforce.com 1 2025-2028 265,394 (7) 15,036,621 2.9 7 Dell EMC Corporation 2 2023-2027 172,975 (8) 10,235,000 2.0 8 Uber Technologies, Inc. 1 2025 325,445 10,232,000 2.0 9 GitHub, Inc. 2 2024-2030 92,450 (9) 7,086,069 1.4 10 PayPal, Inc. 1 2030 131,701 (10) 6,173,837 1.2 11 Weil, Gotshal & Manges LLP 1 2026 76,278 6,097,801 1.2 12 Regus 5 2024-2030 123,583 (11) 6,015,427 1.2 13 Poshmark, Inc. 1 2024-2029 75,876 (12) 5,636,341 1.1 14 Glu Mobile, Inc. 1 2027 61,381 5,313,948 1.0 15 TDK Corporation of America/Invensense 1 2025 139,336 5,200,020 1.0 TOTAL 4,435,133 $ 217,534,988 42.4 % _____________ 1.
Office Tenant Diversification The following table provides information regarding the 15 largest tenants in our office portfolio based on HPP’s share of annualized base rent as of December 31, 2024: Tenant # of Properties Lease Expiration Total Occupied Square Feet HPP’s Share Annualized Base Rent (1) Percent of Annualized Base Rent 1 Google, Inc. 4 2025-2029 640,726 (2) $ 53,520,411 10.6 % 2 Netflix, Inc. 3 2031 722,305 (3) 26,275,874 5.2 3 Amazon 2 2030-2031 850,964 (4) 24,114,735 4.8 4 Riot Games, Inc. 1 2030 284,037 19,520,478 3.9 5 Uber Technologies, Inc. 1 2025 325,445 19,169,077 3.8 6 Salesforce.com 1 2025-2028 265,394 (5) 15,339,075 3.0 7 Nutanix, Inc. 1 2030 215,857 11,680,792 2.3 8 City and County of San Francisco 2 2024-2067 226,007 (6) 9,198,343 1.8 9 Dell EMC Corporation 2 2026-2027 130,021 (7) 9,033,014 1.8 10 Coupa Software, Inc. 1 2033 100,654 7,841,953 1.6 11 GitHub, Inc. 2 2024-2030 92,450 (8) 7,298,651 1.4 12 PayPal, Inc. 1 2030 131,701 (9) 6,359,052 1.3 13 Weil, Gotshal & Manges LLP 1 2026 76,278 6,280,735 1.2 14 Bank of America 4 2024-2027 80,899 (10) 5,542,865 1.1 15 Glu Mobile, Inc. 1 2027 61,381 5,473,367 1.1 TOTAL 4,204,119 $ 226,648,422 44.9 % _____________ 1.
GitHub Inc. expirations: (i) 35,330 square feet at 625 Second in December 2024 and (ii) 57,120 square feet at 275 Brannan in June 2030. 10. PayPal, Inc. has an early termination right at Fourth & Traction in July 2026. 11.
PayPal, Inc. has an early termination right at Fourth & Traction in July 2026. 10.
We own 50% of the ownership interest in the unconsolidated joint venture that owns Sunset Glenoaks Studios and 25.6% of the ownership interest in the unconsolidated joint venture that owns Sunset Pier 94 Studios.
Trailing 12-month annualized base rent and occupancy will be available one year following construction completion in second quarter 2025. 7. Does not include 232,000 square feet related to Sunset Pier 94 Studios, which is currently under construction. We own 25.6% of the ownership interest in the unconsolidated joint venture that owns Sunset Pier 94 Studios.
Removed
Netflix, Inc. expirations: (i) 326,792 square feet at ICON, (ii) 301,127 square feet at EPIC and (iii) 94,386 square feet at CUE. 5. Riot Games, Inc. has an early termination right at Element LA in March 2025. 6.
Added
Annualized base rent and rental rates have been converted from CAD to USD using the foreign currency exchange rate as of December 31, 2024.
Removed
Regus expirations: (i) 20,059 square feet at 11601 Wilshire in February 2024, (ii) 27,369 square feet at Techmart in April 2025, (iii) 9,739 square feet at Palo Alto Square in April 2026, (iv) 45,120 square feet at Gateway in September 2027 and (v) 21,296 square feet at 450 Alaskan in October 2030. 12.
Added
City and County of San Francisco expirations: (i) 4,100 square feet at 1455 Market in December 2024, (ii) 24,474 square feet at 1455 Market in June 2025, (iii) 39,573 square feet at 1455 Market in September 2033, (iv) 157,154 square feet at 1455 Market in April 2045 and (v) 706 square feet at Ferry Building in April 2067. 7.
Removed
Poshmark, Inc. expirations: (i) 25,549 square feet in May 2024 and (ii) 50,327 square feet in December 2029. 35 Office Industry Diversification The following table summarizes information relating to the industry diversification within our office portfolio based on HPP’s share of annualized base rent as of December 31, 2023: HPP’s Share Industry (1) Square Feet (2) Annualized Base Rent as Percent of Total Square Feet (2) Annualized Base Rent as Percent of Total Technology 3,345,255 33.1 % 3,044,305 36.7 % Media and Entertainment 1,520,650 16.2 986,325 12.9 Retail 1,475,150 9.8 1,114,479 9.0 Legal 633,748 7.7 588,630 8.9 Financial Services 990,140 8.5 654,806 7.6 Business Services 979,983 7.7 672,689 7.1 Other 733,234 6.3 600,313 6.8 Real estate 430,047 3.2 261,611 2.7 Healthcare 202,185 2.0 193,509 2.4 Education 145,759 1.7 140,736 2.0 Insurance 230,804 1.8 176,714 1.9 Government 218,854 1.5 176,859 1.5 Advertising 44,667 0.5 44,667 0.5 Total 10,950,476 100.0 % 8,655,643 100.0 % _____________ 1.
Added
Bank of America expirations: (i) 68,991 square feet at 1455 Market in December 2024, (ii) 5,598 square feet at Palo Alto Square in March 2026, (iii) 122 square feet at Ferry Building in September 2026 and (iv) 6,188 square feet at Bentall Centre in January 2027. 32 Office Industry Diversification The following table summarizes information relating to the industry diversification within our office portfolio based on HPP’s share of annualized base rent as of December 31, 2024: HPP’s Share Industry (1) Square Feet (2) Annualized Base Rent as Percent of Total Square Feet (2) Annualized Base Rent as Percent of Total Technology 3,300,125 33.9 % 3,086,454 38.2 % Media-Entertainment 1,502,941 16.9 968,616 13.1 Legal 584,387 7.7 551,256 9.0 Financial Services 967,828 8.6 663,465 7.9 Retail 1,252,376 8.5 885,697 7.2 Business Services 844,048 7.2 612,261 6.7 Other 702,978 5.8 556,232 6.1 Government 425,605 2.7 412,431 3.1 Real estate 438,904 3.3 270,278 2.8 Health Care 205,108 2.1 197,432 2.4 Insurance 211,835 1.7 157,202 1.7 Education 99,744 1.1 94,721 1.3 Advertising 39,490 0.5 39,490 0.5 Total 10,575,369 100.0 % 8,495,535 100.0 % _____________ 1.
Removed
Office Lease Distribution The following table sets forth information relating to the distribution of leases in our office portfolio, based on net rentable square feet under lease as of December 31, 2023: HPP’s Share Square Feet Under Lease Number of Leases Total Leased Square Feet Annualized Base Rent (1) Number of Leases Total Leased Square Feet Annualized Base Rent (1) 10,000 or Less 611 2,205,381 $ 114,461,829 640 1,941,251 $ 105,846,379 10,001-25,000 93 1,421,321 75,613,497 80 1,232,885 74,249,574 25,001-50,000 54 1,940,562 119,643,329 48 1,671,353 108,574,537 50,001-100,000 28 1,911,259 114,491,195 21 1,429,120 88,673,278 Greater than 100,000 15 3,471,953 195,934,975 12 2,381,035 136,662,199 Building Management Use 43 236,687 — 43 207,760 — Signed Leases Not Commenced 31 167,911 9,358,839 31 162,911 9,293,342 Total 875 11,355,074 $ 629,503,664 875 9,026,314 $ 523,299,309 _____________ 1.
Added
Office Lease Distribution The following table sets forth information relating to the distribution of leases in our office portfolio, based on net rentable square feet under lease as of December 31, 2024: HPP’s Share Square Feet Under Lease Number of Leases Total Leased Square Feet Annualized Base Rent (1) Number of Leases Total Leased Square Feet Annualized Base Rent (1) 10,000 or Less 634 2,290,236 $ 118,003,529 664 2,038,529 $ 110,240,327 10,001-25,000 89 1,380,502 70,927,188 73 1,150,388 69,565,448 25,001-50,000 44 1,569,921 94,033,088 39 1,352,808 83,933,181 50,001-100,000 26 1,754,523 105,462,435 21 1,447,677 87,376,858 Greater than 100,000 16 3,580,187 210,423,220 12 2,506,133 153,772,160 Building Management Use 59 290,214 — 59 262,230 — Signed Leases Not Commenced 21 84,153 3,441,685 21 71,349 3,126,853 Total 889 10,949,736 $ 602,291,145 889 8,829,114 $ 508,014,827 _____________ 1.
Removed
HPP’s Share Year of Lease Expiration # of Leases Expiring (1) Square Feet Expiring Square Footage of Expiring Lease % of Office Portfolio Square Feet Annualized Base Rent (2) % of Office Portfolio Annualized Base Rent Annualized Base Rent Per Leased Square Foot (2) Annualized Base Rent at Expiration Annualized Base Rent Per Lease Square Foot at Expiration (3) Vacant 3,297,287 2,921,572 24.5 % Q4-2023 23 155,239 142,627 1.2 7,206,259 1.4 50.53 7,206,260 50.53 Total 2023 23 155,239 142,627 1.2 7,206,259 1.4 50.53 7,206,260 50.53 2024 189 1,539,790 1,378,142 11.5 77,258,172 14.8 56.06 78,381,562 56.87 2025 165 1,978,453 1,605,458 13.4 94,399,116 18.0 58.80 98,100,254 61.10 2026 99 699,959 633,136 5.3 39,608,525 7.6 62.56 42,179,316 66.62 2027 106 1,070,124 913,527 7.6 55,674,372 10.6 60.94 60,868,879 66.63 2028 67 1,187,514 986,859 8.3 70,013,934 13.4 70.95 77,938,801 78.98 2029 47 551,223 428,319 3.6 30,245,912 5.8 70.62 33,255,339 77.64 2030 25 1,642,992 1,279,627 10.7 68,116,580 13.0 53.23 79,662,632 62.25 2031 18 1,091,700 678,810 5.7 39,016,297 7.5 57.48 49,873,088 73.47 2032 10 245,879 143,943 1.2 8,505,128 1.6 59.09 10,784,667 74.92 Thereafter 30 775,147 460,037 3.9 23,695,205 4.5 51.51 30,985,284 67.35 Building management use (4) 43 236,687 207,760 1.7 — — — — — Signed leases not commenced 31 167,911 162,911 1.4 9,293,342 1.8 57.05 10,967,294 67.32 Portfolio Total/Weighted Average 853 14,639,905 11,942,728 100.0 % $ 523,032,842 100.0 % $ 57.98 $ 580,203,376 $ 64.32 _____________ 1.
Added
HPP’s Share Year of Lease Expiration # of Leases Expiring (1) Square Feet Expiring Square Footage of Expiring Lease % of Office Portfolio Square Feet Annualized Base Rent (2) % of Office Portfolio Annualized Base Rent Annualized Base Rent Per Leased Square Foot (2) Annualized Base Rent at Expiration Annualized Base Rent Per Lease Square Foot at Expiration (3) Vacant 3,680,019 3,548,244 28.7 % Q4-2024 27 397,468 343,642 2.8 14,482,100 2.9 42.14 14,482,097 42.14 Total 2024 27 397,468 343,642 2.8 14,482,100 2.9 42.14 14,482,097 42.14 2025 169 1,759,377 1,516,950 12.2 89,366,696 17.5 58.91 89,721,921 59.15 2026 134 808,117 751,826 6.1 46,531,275 9.2 61.89 48,067,093 63.93 2027 144 1,215,055 1,058,593 8.6 65,010,492 12.8 61.41 69,384,772 65.54 2028 89 1,284,325 1,094,915 8.9 77,429,902 15.2 70.72 84,328,100 77.02 2029 76 689,863 543,344 4.4 35,354,571 7.0 65.07 39,692,288 73.05 2030 47 1,771,251 1,413,108 11.4 79,227,916 15.6 56.07 88,813,407 62.85 2031 27 1,150,121 714,662 5.8 44,447,635 8.8 62.19 54,512,519 76.28 2032 12 255,910 153,974 1.2 9,157,909 1.8 59.48 11,247,083 73.05 2033 18 558,618 450,353 3.6 24,086,655 4.7 53.48 30,014,450 66.65 Thereafter 37 665,683 444,872 3.6 19,609,461 3.9 44.08 28,315,644 63.65 Building management use (4) 59 290,214 262,230 2.1 — — — — — Signed leases not commenced 21 84,153 71,349 .6 3,126,853 .6 43.82 3,663,336 51.34 Portfolio Total/Weighted Average 860 14,610,174 12,368,062 100.0 % $ 507,831,465 100.0 % $ 57.58 $ 562,242,710 $ 63.75 _____________ 1.
Removed
Does not include 241,000 square feet related to Sunset Glenoaks Studios and 232,000 square feet related to Sunset Pier 94 Studios, which are both currently under construction.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+0 added−0 removed2 unchanged
Biggest changeMine Safety Disclosures Not applicable. 39 PART II
Biggest changeMine Safety Disclosures Not applicable. 36 PART II

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

1 edited+0 added−0 removed0 unchanged
Biggest changeITEM 4. Mine Safety Disclosures 39 PART II ITEM 5. Market for Hudson Pacific Properties, Inc.’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 40 Market for Hudson Pacific Properties, L.P.’s Common Capital, Related Unitholder Matters and Issuer Purchases of Units 41
Biggest changeITEM 4. Mine Safety Disclosures 36 PART II ITEM 5. Market for Hudson Pacific Properties, Inc.’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 37 Market for Hudson Pacific Properties, L.P.’s Common Capital, Related Unitholder Matters and Issuer Purchases of Units 38

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

16 edited+2 added−1 removed10 unchanged
Biggest changeIn September 2023, the Company suspended its quarterly dividend in order to address liquidity considerations in light of general office industry trends and the impact of the WGA and SAG-AFTRA strikes. Our Board will reassess the resumption of the dividend program when appropriate.
Biggest changeThe Company suspended its quarterly common stock dividend during the third and fourth quarters of 2023 and the third and fourth quarters of 2024. Our Board will reassess the resumption of the dividend program when appropriate.
Long-term incentive plan units may also, under certain circumstances, be convertible into common units on a one-for-one basis, which are then exchangeable for shares of the Company’s common stock as described above. All other issuances of unregistered equity securities of our operating partnership during the year ended December 31, 2023 have previously been disclosed in filings with the SEC.
Long-term incentive plan units may also, under certain circumstances, be convertible into common units on a one-for-one basis, which are then exchangeable for shares of the Company’s common stock as described above. All other issuances of unregistered equity securities of our operating partnership during the year ended December 31, 2024 have previously been disclosed in filings with the SEC.
For all issuances of units to the Company, our operating partnership relied on the Company’s status as a publicly traded NYSE-listed company with approximately $8.3 billion in total consolidated assets and as our operating partnership’s majority owner and sole general partner as the basis for the exemption under Section 4(a)(2) of the Securities Act.
For all issuances of units to the Company, our operating partnership relied on the Company’s status as a publicly traded NYSE-listed company with approximately $8.1 billion in total consolidated assets and as our operating partnership’s majority owner and sole general partner as the basis for the exemption under Section 4(a)(2) of the Securities Act.
Equity Compensation Plan Information Our equity compensation plan information required by this item is incorporated by reference to the information in Part III, Item 12 “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters” of this Annual Report on Form 10-K. 40 Market for Hudson Pacific Properties, L.P.
Equity Compensation Plan Information Our equity compensation plan information required by this item is incorporated by reference to the information in Part III, Item 12 “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters” of this Annual Report on Form 10-K. 37 Market for Hudson Pacific Properties, L.P.
Issuer Purchases of Equity Securities During the fourth quarter of 2023, certain employees surrendered common shares owned by them to satisfy their statutory federal income tax obligation associated with the vesting of restricted common shares of beneficial interest issued under our 2010 Incentive Award Plan.
Issuer Purchases of Equity Securities During the fourth quarter of 2024, certain employees surrendered common shares owned by them to satisfy their statutory federal income tax obligation associated with the vesting of restricted common shares of beneficial interest issued under our 2010 Incentive Award Plan.
Recent Sales of Unregistered Securities During the fourth quarter of 2023, our operating partnership issued partnership units in private placements in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act, in the amounts and for the consideration set forth below.
Recent Sales of Unregistered Securities During the fourth quarter of 2024, our operating partnership issued partnership units in private placements in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act, in the amounts and for the consideration set forth below.
A cumulative total of $214.7 million had been repurchased under the program as of December 31, 2023. 2. The maximum that may yet be purchased under the plans or programs is shown net of repurchases. 3.
A cumulative total of $214.7 million had been repurchased under the program as of December 31, 2024. 2. The maximum that may yet be purchased under the plans or programs is shown net of repurchases. 3.
Distributions We intend to make distributions each taxable year, and intend to make regular quarterly distributions to our unitholders. Currently, we make distributions to our unitholders quarterly in March, June, September and December. Distributions are made to those unitholders who are unitholders as of the distribution record date.
Distributions We intend to make distributions each taxable year, and intend to make regular quarterly distributions to our unitholders. Historically, we have made distributions to our unitholders quarterly in March, June, September and December. Distributions are made to those unitholders who are unitholders as of the distribution record date.
Common Capital, Related Unitholder Matters and Issuer Purchases of Units Overview There is no established public trading market for our operating partnership’s common units. As of February 9, 2024, there were 21 holders of record of common units (including through our general partnership interest).
Common Capital, Related Unitholder Matters and Issuer Purchases of Units Overview There is no established public trading market for our operating partnership’s common units. As of February 19, 2025, there were 21 holders of record of common units (including through our general partnership interest).
The following graph shows our cumulative total stockholder return for the five-year period ending on December 31, 2023. The graph assumes a $100 investment in each of the indices on December 31, 2018 and the reinvestment of all dividends.
The following graph shows our cumulative total stockholder return for the five-year period ending on December 31, 2024. The graph assumes a $100 investment in each of the indices on December 31, 2019 and the reinvestment of all dividends.
ITEM 5. Market for Hudson Pacific Properties, Inc. Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Overview As of February 9, 2024, Hudson Pacific Properties, Inc. had 86 stockholders of record of our common stock. Hudson Pacific Properties, Inc. common stock has traded on the NYSE under the symbol “HPP” since June 24, 2010.
ITEM 5. Market for Hudson Pacific Properties, Inc. Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Overview As of February 19, 2025, Hudson Pacific Properties, Inc. had 78 stockholders of record of our common stock. Hudson Pacific Properties, Inc. common stock has traded on the NYSE under the symbol “HPP” since June 24, 2010.
The following table summarizes all of the repurchases of Hudson Pacific Properties, Inc. equity securities during the fourth quarter of 2023: Period Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1) Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs (2) December 1 - December 31, 2023 52,393 (3) $ 9.31 (4) — 35,250,164 TOTAL 52,393 $ 9.31 — _____________ 1.
The following table summarizes all of the repurchases of Hudson Pacific Properties, Inc. equity securities during the fourth quarter of 2024: Period Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1) Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs (2) December 1 - December 31, 2024 24,532 (3) $ 2.97 (4) — 35,250,164 _____________ 1.
However, in lieu of such payment of cash, the Company may, at its election, issue shares of its common stock in exchange for such common units on a one-for-one basis. The operating partnership also issued 291,971 long-term incentive plan units during the fourth quarter of 2023.
However, in lieu of such payment of cash, the Company may, at its election, issue shares of its common stock in exchange for such common units on a one-for-one basis. The operating partnership also issued 118,519 long-term incentive plan units during the fourth quarter of 2024.
For each share of common stock issued by the Company in connection with such an award, our operating partnership issued a restricted common unit to the Company as provided in the partnership agreement of our operating partnership. During the fourth quarter of 2023, our operating partnership issued 97,104 common units to the Company.
For each share of common stock issued by the Company in connection with such an award, our operating partnership issued a restricted common unit to the Company as provided in the partnership agreement of our operating partnership. During the fourth quarter of 2024, our operating partnership issued 46,741 common units to the Company.
During the fourth quarter of 2023, the Company issued an aggregate of 149,497 shares of its common stock in connection with restricted stock units for no cash consideration, out of which 52,393 shares of common stock were forfeited to the Company in connection with tax withholding obligations for a net issuance of 97,104 shares of common stock.
During the fourth quarter of 2024, the Company issued an aggregate of 71,273 shares of its common stock in connection with restricted stock units for no cash consideration, out of which 24,532 shares of common stock were forfeited to the Company in connection with tax withholding obligations for a net issuance of 46,741 shares of common stock.
Our stock price performance shown in the following graph is not indicative of future stock price performance. 41 Period Ending Index 12/31/18 12/31/19 12/31/20 12/31/21 12/31/22 12/31/23 Hudson Pacific Properties, Inc. 100.00 133.35 88.82 94.86 40.03 40.88 S&P 500 100.00 131.49 155.68 200.37 164.08 207.21 MSCI U.S.
Our stock price performance shown in the following graph is not indicative of future stock price performance. 38 Period Ending Index 12/31/19 12/31/20 12/31/21 12/31/22 12/31/23 12/31/24 Hudson Pacific Properties, Inc. 100.00 66.61 71.13 30.02 30.66 10.16 S&P 500 100.00 118.40 152.39 124.79 157.59 197.02 MSCI U.S.
Removed
REIT 100.00 125.84 116.31 166.39 125.61 142.87 Dow Jones Equity All REIT 100.00 128.74 122.57 173.07 129.79 144.46 Dow Jones U.S. Real Estate Office 100.00 131.28 109.47 134.57 86.72 86.20 FTSE NAREIT All Equity REITs 100.00 128.66 122.07 172.49 129.45 144.16 ITEM 6. [Reserved] 42
Added
The operating partnership suspended its quarterly distribution during the third and fourth quarters of 2023 and the third and fourth quarters of 2024. We will reassess the resumption of the dividend program when appropriate.
Added
REIT 100.00 92.43 132.23 99.82 113.54 123.47 Dow Jones Equity All REIT 100.00 95.21 134.44 100.82 112.21 117.66 Dow Jones U.S. Real Estate Office 100.00 83.39 102.50 66.06 65.66 68.44 FTSE NAREIT All Equity REITs 100.00 94.88 134.06 100.62 112.04 117.56 ITEM 6. [Reserved] 39

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

99 edited+19 added−32 removed82 unchanged
Biggest changePercent leased for same-store studio is the average percent leased for the 12 months ended December 31, 2023. 54 The following table gives further detail on our consolidated NOI (in thousands): Year Ended December 31, 2023 2022 Same-store Non-same-store Total Same-store Non-same-store Total REVENUES Office Rental $ 685,123 $ 111,972 $ 797,095 $ 704,832 $ 129,576 $ 834,408 Service and other revenues 14,182 1,098 15,280 13,895 4,397 18,292 Total office revenues 699,305 113,070 812,375 718,727 133,973 852,700 Studio Rental 48,422 10,854 59,276 51,980 7,692 59,672 Service and other revenues 21,981 58,665 80,646 33,417 80,435 113,852 Total studio revenues 70,403 69,519 139,922 85,397 88,127 173,524 Total revenues 769,708 182,589 952,297 804,124 222,100 1,026,224 OPERATING EXPENSES Office operating expenses 274,136 37,882 312,018 263,112 45,556 308,668 Studio operating expenses 41,160 97,287 138,447 49,769 55,381 105,150 Total operating expenses 315,296 135,169 450,465 312,881 100,937 413,818 Office NOI 425,169 75,188 500,357 455,615 88,417 544,032 Studio NOI 29,243 (27,768) 1,475 35,628 32,746 68,374 NOI $ 454,412 $ 47,420 $ 501,832 $ 491,243 $ 121,163 $ 612,406 55 The following table gives further detail on our change in consolidated NOI (in thousands, except percentage change): Year Ended December 31, 2023 as compared to the Year Ended December 31, 2022 Same-store Non-same-store Total Dollar change Percentage change Dollar change Percentage change Dollar change Percentage change REVENUES Office Rental $ (19,709) (2.8) % $ (17,604) (13.6) % $ (37,313) (4.5) % Service and other revenues 287 2.1 (3,299) (75.0) (3,012) (16.5) Total office revenues (19,422) (2.7) (20,903) (15.6) (40,325) (4.7) Studio Rental (3,558) (6.8) 3,162 41.1 (396) (.7) Service and other revenues (11,436) (34.2) (21,770) (27.1) (33,206) (29.2) Total studio revenues (14,994) (17.6) (18,608) (21.1) (33,602) (19.4) Total revenues (34,416) (4.3) (39,511) (17.8) (73,927) (7.2) OPERATING EXPENSES Office operating expenses 11,024 4.2 (7,674) (16.8) 3,350 1.1 Studio operating expenses (8,609) (17.3) 41,906 75.7 33,297 31.7 Total operating expenses 2,415 0.8 34,232 33.9 36,647 8.9 Office NOI (30,446) (6.7) (13,229) (15.0) (43,675) (8.0) Studio NOI (6,385) (17.9) (60,514) (184.8) (66,899) (97.8) NOI $ (36,831) (7.5) % $ (73,743) (60.9) % $ (110,574) (18.1) % NOI decreased $110.6 million, or 18.1%, for the year ended December 31, 2023 as compared to the year ended December 31, 2022, primarily resulting from: • a $73.7 million decrease in non-same-store NOI driven by: • a decrease in studio NOI of $60.5 million driven by a slowdown in production rentals activity due to the WGA and SAG-AFTRA strikes; and • a decrease in office NOI of $13.2 million primarily due to: • a $17.6 million decrease in rental revenues mainly resulting from sales of our 6922 Hollywood and Northview Center properties in 2022 and Skyway Landing, 601 Arizona and 3401 Exposition properties in 2023, as well as lease expirations at our 10900-10950 Washington and Metro Center properties, partially offset by higher tenant recoveries and must-take parking revenues at our One Westside property and the collection of past due rents and the reversal of the related reserve at our Westside Two property in 2023; and • a $3.3 million decrease in service and other revenues primarily due to non-recurring lease cancellation fees received at our Skyway Landing property in 2022 and the aforementioned property sales, partially offset by lease cancellation fees received at our 333 Twin Dolphin property in 2023; • partially offset by a $7.7 million decrease in operating expenses corresponding to the decrease in rental revenues. • a $36.8 million decrease in same-store NOI driven by: • a decrease in office NOI of $30.4 million primarily due to: • a $19.7 million decrease in rental revenues due to a decrease in the average occupancy in our same-store portfolio from 89.0% during the year ended December 31, 2022 to 83.4% during the year ended December 31, 2023, primarily driven by lease expirations at our Skyport Plaza, Metro Plaza, 1455 Market, Page Mill Hill and Gateway properties, as well as higher reserves for uncollectible rents at our 901 Market property; partially offset by income from a letter of credit associated with the WeWork lease at our Maxwell property and higher percentage rent at our Ferry Building property; and 56 • an $11.0 million increase in operating expenses, predominantly engineering, cleaning and utilities resulting from a colder winter in 2023, higher insurance premiums and higher repair and maintenance expense, which was partially offset by a prior-period property tax reimbursement at our ICON property. • a decrease in studio NOI of $6.4 million primarily due to: • an $11.4 million decrease in service and other revenues and a $3.6 million decrease in rental revenues due to the WGA and SAG-AFTRA strikes and a lease expiration at our Sunset Las Palmas Studios property; • partially offset by an $8.6 million decrease in operating expenses due to the impact of the WGA and SAG-AFTRA strikes as well as a decrease in ground rent expense arising from the acquisition of the related land at Sunset Gower Studios in May 2022.
Biggest changePercent leased for same-store studio is the average percent leased for the 12 months ended December 31, 2024. 50 The following table gives further detail on our consolidated NOI (in thousands): Year Ended December 31, 2024 2023 Same-store Non-same-store Total Same-store Non-same-store Total REVENUES Office Rental revenues $ 608,289 $ 69,331 $ 677,620 $ 660,606 $ 136,489 $ 797,095 Service and other revenues 14,023 633 14,656 14,704 576 15,280 Total office revenues 622,312 69,964 692,276 675,310 137,065 812,375 Studio Rental revenues 41,733 12,164 53,897 48,422 10,854 59,276 Service and other revenues 28,440 67,469 95,909 21,981 58,665 80,646 Total studio revenues 70,173 79,633 149,806 70,403 69,519 139,922 Total revenues 692,485 149,597 842,082 745,713 206,584 952,297 OPERATING EXPENSES Office operating expenses 269,366 36,283 305,649 265,606 46,412 312,018 Studio operating expenses 45,437 102,993 148,430 41,160 97,287 138,447 Total operating expenses 314,803 139,276 454,079 306,766 143,699 450,465 Office NOI 352,946 33,681 386,627 409,704 90,653 500,357 Studio NOI 24,736 (23,360) 1,376 29,243 (27,768) 1,475 NOI $ 377,682 $ 10,321 $ 388,003 $ 438,947 $ 62,885 $ 501,832 51 The following table gives further detail on our change in consolidated NOI (in thousands, except percentage change): Year Ended December 31, 2024 as compared to the Year Ended December 31, 2023 Same-store Non-same-store Total Dollar change Percentage change Dollar change Percentage change Dollar change Percentage change REVENUES Office Rental revenues $ (52,317) (7.9) % $ (67,158) (49.2) % $ (119,475) (15.0) % Service and other revenues (681) (4.6) 57 9.9 (624) (4.1) Total office revenues (52,998) (7.8) (67,101) (49.0) (120,099) (14.8) Studio Rental revenues (6,689) (13.8) 1,310 12.1 (5,379) (9.1) Service and other revenues 6,459 29.4 8,804 15.0 15,263 18.9 Total studio revenues (230) (.3) 10,114 14.5 9,884 7.1 Total revenues (53,228) (7.1) (56,987) (27.6) (110,215) (11.6) OPERATING EXPENSES Office operating expenses 3,760 1.4 (10,129) (21.8) (6,369) (2.0) Studio operating expenses 4,277 10.4 5,706 5.9 9,983 7.2 Total operating expenses 8,037 2.6 (4,423) (3.1) 3,614 0.8 Office NOI (56,758) (13.9) (56,972) (62.8) (113,730) (22.7) Studio NOI (4,507) (15.4) 4,408 (15.9) (99) (6.7) NOI $ (61,265) (14.0) % $ (52,564) (83.6) % $ (113,829) (22.7) % NOI decreased $113.8 million, or 22.7%, for the year ended December 31, 2024 as compared to the year ended December 31, 2023, primarily resulting from: • a $61.3 million decrease in same-store NOI driven by: • a decrease in office NOI of $56.8 million primarily due to: • a $52.3 million decrease in rental revenues related to a decrease in the average occupancy in our same-store portfolio from 82.9% during the year ended December 31, 2023 to 76.9% during the year ended December 31, 2024, primarily driven by lease expirations at several properties in the San Francisco Bay Area during the last twelve months and a straight-line rent reserve related to transitioning a tenant to cash basis reporting; and • a $3.8 million increase in operating expenses predominantly driven by a prior-period property tax reimbursement at our ICON property in 2023 and higher engineering, utility, insurance and tax expenses at several properties in 2024. • a decrease in studio NOI of $4.5 million primarily due to: • a $6.7 million decrease in rental revenues primarily driven by lower occupancy at our Sunset Las Palmas Studios property; and • a $4.3 million increase in operating expenses driven by increased production activity at our Sunset Gower Studios property; partially offset by • a $6.5 million increase in service and other revenues related to increased production activity at our Sunset Gower Studios property that was partially offset by decreased activity at our Sunset Las Palmas Studios property. • a $52.6 million decrease in non-same-store NOI driven by: • a decrease in office NOI of $57.0 million primarily due to the sales of our One Westside and Westside Two properties in December 2023 and our 604 Arizona and 3401 Exposition properties in August 2023, partially offset by an increase due to new leases commencing at our Metro Center property in 2024; partially offset by • a $4.4 million increase in studio NOI mainly driven by increased activity at Quixote in 2024 following the 2023 WGA and SAG-AFTRA strikes. 52 Other Income (Expenses) Loss from unconsolidated real estate entities Loss from our unconsolidated real estate entities increased by $3.4 million, or 87.3%, to $7.3 million for the year ended December 31, 2024 compared to $3.9 million for the year ended December 31, 2023.
Intangible assets with finite lives are amortized over their estimated useful lives using the straight-line method, which reflects the pattern in which the assets are consumed. The estimated useful lives for acquired intangible assets range from five to seven years. The Company assesses its intangible assets with finite lives for impairment when indicators of impairment are identified.
Intangible assets with finite lives are amortized over their estimated useful lives using the straight-line method, which reflects the pattern in which the assets are consumed. The estimated useful lives for acquired intangible assets range from five to seven years. The Company assesses its intangible assets with finite lives for impairment when indicators of impairment are identified.
Income tax provision During the year ended December 31, 2023, we recorded an income tax provision of $6.8 million primarily related to a valuation allowance recorded against certain deferred tax assets.
During the year ended December 31, 2023, we recorded an income tax provision of $6.8 million primarily related to a valuation allowance recorded against certain deferred tax assets.
We currently expect that our principal sources of funds to meet our short-term and long-term liquidity requirements for working capital, strategic acquisitions, capital expenditures, tenant improvements, leasing costs, dividends and distributions, share repurchases and repayments of outstanding debt financing will include: • cash on hand, cash reserves and net cash provided by operations; • strategic dispositions of real estate; • sales of non-real estate investments; • proceeds from additional equity securities; • our ATM program; • borrowings under the operating partnership’s unsecured revolving credit facility; • proceeds from joint venture partners; • proceeds from the Sunset Glenoaks construction loan (unconsolidated joint venture), Sunset Pier 94 Studios construction loan (unconsolidated joint venture) and Bentall Centre loan (unconsolidated joint venture); and • proceeds from additional secured, unsecured debt financings or offerings.
We currently expect that our principal sources of funds to meet our short-term and long-term liquidity requirements for working capital, strategic acquisitions, capital expenditures, tenant improvements, leasing costs, dividends and distributions, share repurchases and repayments of outstanding debt financing will include: • cash on hand, cash reserves and net cash provided by operations; • strategic dispositions of real estate; • sales of non-real estate investments; • proceeds from additional equity securities; • our ATM program; • borrowings under the operating partnership’s unsecured revolving credit facility; • proceeds from joint venture partners; • proceeds from the Sunset Glenoaks construction loan, Sunset Pier 94 Studios construction loan (unconsolidated joint venture) and Bentall Centre loan (unconsolidated joint venture); and • proceeds from additional secured, unsecured debt financings or offerings.
Projection of future cash flows is based upon various factors, including, but not limited to, our strategic plans in regard to our business and operations, internal forecasts, terminal year residual revenue multiples, operating profit margins, pricing of similar businesses and comparable transactions where applicable, and risk-adjusted discount rates to present value future cash flows.
Projection of future cash flows is based upon various factors, including, but not limited to, our strategic plans in regard to our business and operations, internal forecasts, terminal year residual revenue multiples, operating profit margins, pricing of similar businesses and comparable 45 transactions where applicable, and risk-adjusted discount rates to present value future cash flows.
The fair value debt assumed is based on the estimated cash flow projections utilizing interest rates available for the issuance of debt with similar terms and remaining maturities. 47 The Company applies a cost accumulation and allocation model to acquisitions that meet the definition of an asset acquisition.
The fair value debt assumed is based on the estimated cash flow projections utilizing interest rates available for the issuance of debt with similar terms and remaining maturities. The Company applies a cost accumulation and allocation model to acquisitions that meet the definition of an asset acquisition.
We believe that FFO 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 62 assets that form the core of our activity and assists in comparing those operating results between periods.
We believe that FFO 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.
Gain (loss) on sale of real estate During the year ended December 31, 2023, we recognized a $103.2 million gain on sale of real estate attributable to the sales of our Skyway Landing, 604 Arizona, 3401 Exposition, Cloud10, One Westside and Westside Two properties.
During the year ended December 31, 2023, we recognized a $103.2 million gain on sale of real estate attributable to the sales of our Skyway Landing, 604 Arizona, 3401 Exposition, Cloud10, One Westside and Westside Two properties.
We also look to 45 opportunistically recycle capital to enhance our portfolio or to otherwise further our capital allocation goals. Changes in demand for office and/or studio space, capital markets, and other macro-economic factors may impact our business and overall performance.
We also look to opportunistically recycle capital to enhance our portfolio or to otherwise further our capital allocation goals. Changes in demand for office and/or studio space, capital markets, and other macro-economic factors may impact our business and overall performance.
Costs previously capitalized related to abandoned acquisitions or developments are charged to earnings. Expenditures for repairs and maintenance are expensed as they are incurred. Operating Properties The properties are generally carried at cost less accumulated depreciation and amortization.
Costs previously capitalized related to abandoned acquisitions or developments are charged to earnings. Expenditures for repairs and maintenance are expensed as they are incurred. 44 Operating Properties The properties are generally carried at cost less accumulated depreciation and amortization.
Our ability to access the equity capital markets will be dependent on a number of factors as well, including general market conditions for REITs and market perceptions about us. We have an ATM program that allows us to sell up to $125.0 million of common stock, $65.8 million of which has been sold through December 31, 2023.
Our ability to access the equity capital markets will be dependent on a number of factors as well, including general market conditions for REITs and market perceptions about us. We have an ATM program that allows us to sell up to $125.0 million of common stock, $65.8 million of which has been sold through December 31, 2024.
For a discussion of important risks related to our business, and related to investing in our securities, including risks that could cause actual results and events to differ materially from results and events referred to in the forward-looking statements see Part I, Item 1A “Risk Factors.” In light of these risks, uncertainties and assumptions, the forward-looking events discussed in this report might not occur.
For a discussion of important risks related to our business, and related to investing in our securities, including risks that could cause actual results and events to differ materially from results and events referred to in the forward-looking statements refer to Part I, Item 1A “Risk Factors.” In light of these risks, uncertainties and assumptions, the forward-looking events discussed in this report might not occur.
We periodically evaluate our tax positions to determine whether it is more likely than not that such positions would be sustained upon examination by a tax authority for all open tax years, as defined by the statute of limitations, based on their technical merits. As of December 31, 2023, we have not established a liability for uncertain tax positions.
We periodically evaluate our tax positions to determine whether it is more likely than not that such positions would be sustained upon examination by a tax authority for all open tax years, as defined by the statute of limitations, based on their technical merits. As of December 31, 2024, we have not established a liability for uncertain tax positions.
For all expiration years, ABR is calculated as (i) cash base rents at expiration under commenced leases divided by (ii) square footage under commenced leases as of December 31, 2023. The methodology is the same when calculating ABR per square foot either in place or at expiration for uncommenced leases. Rent data is presented without regard to cancellation options.
For all expiration years, ABR is calculated as (i) cash base rents at expiration under commenced leases divided by (ii) square footage under commenced leases as of December 31, 2024. The methodology is the same when calculating ABR per square foot either in place or at expiration for uncommenced leases. Rent data is presented without regard to cancellation options.
ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion relates to our consolidated financial statements and should be read in conjunction with the consolidated financial statements and the related notes, see Part IV, Item 15(a) “Exhibits, Financial Statement Schedules.” Statements in this Item 7 contain forward-looking statements.
ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion relates to our consolidated financial statements and should be read in conjunction with the consolidated financial statements and the related notes, refer to Part IV, Item 15(a) “Exhibits, Financial Statement Schedules.” Statements in this Item 7 contain forward-looking statements.
ABR per leased square foot calculated as (i) annual base rent divided by (ii) square footage under lease as of December 31, 2023. 4. Includes office properties owned and included in our stabilized portfolio as of January 1, 2022 and still owned and included in the stabilized portfolio as of December 31, 2023. 5.
ABR per leased square foot calculated as (i) annual base rent divided by (ii) square footage under lease as of December 31, 2024. 4. Includes office properties owned and included in our stabilized portfolio as of January 1, 2023 and still owned and included in the stabilized portfolio as of December 31, 2024. 5.
See Part IV, Item 15(a) “Exhibits, Financial Statement Schedules—Note 2 to the Consolidated Financial Statements—Summary of Significant Accounting Policies” for details on our significant accounting policies. Investment in Real Estate Properties Acquisitions Our acquisitions of real estate are accounted for using the acquisition method.
Refer to Part IV, Item 15(a) “Exhibits, Financial Statement Schedules—Note 2 to the Consolidated Financial Statements—Summary of Significant Accounting Policies” for details on our significant accounting policies. Investment in Real Estate Properties Acquisitions Our acquisitions of real estate are accounted for using the acquisition method.
Included in our non-same-store property group. 6. Includes office properties that have not yet reached 92.0% occupancy since the date they were acquired or placed under redevelopment or development as of December 31, 2023. 7.
Included in our non-same-store property group. 6. Includes office properties that have not yet reached 92.0% occupancy since the date they were acquired or placed under redevelopment or development as of December 31, 2024. 7.
The activity in both periods is due to the observable changes in the fair value of the investments. Gain on extinguishment of debt During the year ended December 31, 2023, we recognized a $10.0 million gain on extinguishment of debt due to the settlement of the Quixote note at a discount.
The activity in both periods is due to the observable changes in the fair value of the investments. 53 Gain on extinguishment of debt During the year ended December 31, 2023, we recognized a $10.0 million gain on extinguishment of debt due to the settlement of the Quixote note payable at a discount.
Annualized base rent per square foot for office properties is calculated by multiplying (i) cash base rents under commenced leases excluding tenant reimbursements as of December 31, 2023 by (ii) 12. On a per square foot basis, ABR is divided by square footage under commenced leases as of December 31, 2023.
Annualized base rent per square foot for office properties is calculated by multiplying (i) cash base rents under commenced leases excluding tenant reimbursements as of December 31, 2024 by (ii) 12. On a per square foot basis, ABR is divided by square footage under commenced leases as of December 31, 2024.
Where applicable, rental rates converted to USD using the foreign currency exchange rate as of December 31, 2023. Annualized base rent per square foot for studio properties reflects actual base rent for the 12 months ended December 31, 2023, excluding tenant reimbursements.
Where applicable, rental rates converted to USD using the foreign currency exchange rate as of December 31, 2024. Annualized base rent per square foot for studio properties reflects actual base rent for the 12 months ended December 31, 2024, excluding tenant reimbursements.
No gain or loss on extinguishment of debt was recognized during the year ended December 31, 2022. Loss on sale of bonds During the year ended December 31, 2023, we recognized a loss on sale of bonds of $34.0 million in connection with the partial sale of the acquired Hollywood Media Portfolio debt.
No gain or loss on extinguishment of debt was recognized during the year ended December 31, 2024. Loss on sale of bonds During the year ended December 31, 2023, we recognized a loss on sale of bonds of $34.0 million in connection with the partial sale of the acquired Hollywood Media Portfolio debt.
We and certain of our TRSs file income tax returns with the U.S. federal government and various state and local jurisdictions. We and our TRSs are no longer subject to tax examinations by tax authorities for years prior to 2019.
We and certain of our TRSs file income tax returns with the U.S. federal government and various state and local jurisdictions. We and our TRSs are no longer subject to tax examinations by tax authorities for years prior to 2020.
Revenue Recognition The recognition of revenues related to lease components is governed by ASC 842. The revenue related to non-lease components is subject to ASC 606, Revenue from Contracts with Customers (“ASC 606”). We capitalize direct incremental costs of signing a lease.
Revenue Recognition The recognition of revenues related to lease components is governed by ASC 842, Leases (“ASC 842”). The revenue related to non-lease components is subject to ASC 606, Revenue from Contracts with Customers (“ASC 606”). We capitalize direct incremental costs of signing a lease.
Percent leased for studio properties is calculated as (i) average square footage under commenced leases for the 12 months ended December 31, 2023, divided by (ii) total square feet, expressed as a percentage. 3.
Percent leased for studio properties is calculated as (i) average square footage under commenced leases for the 12 months ended December 31, 2024, divided by (ii) total square feet, expressed as a percentage. 3.
We test our goodwill and indefinite-lived intangible assets for impairment at least annually, or more frequently if events or changes in circumstances indicate that the asset may be impaired. Goodwill is tested for impairment at the reporting unit to which it is assigned, which can be an operating segment or one level below an operating segment.
We test our goodwill and indefinite-lived intangible assets for impairment at least annually on December 31st, or more frequently if events or changes in circumstances indicate that the asset may be impaired. Goodwill is tested for impairment at the reporting unit to which it is assigned, which can be an operating segment or one level below an operating segment.
Includes 546,000 square feet related to the office development Washington 1000, 241,000 square feet related to Sunset Glenoaks Studios and 232,000 square feet related to Sunset Pier 94 Studios. 10. Includes pending entitlement to develop approximately 500 residential units at 10900-10950 Washington.
Includes 546,000 square feet related to the office development Washington 1000 and 232,000 square feet related to Sunset Pier 94 Studios. 10. Includes pending entitlement to develop approximately 500 residential units at 10900-10950 Washington.
Percent occupied for office properties is calculated as (i) square footage under commenced leases as of December 31, 2023, divided by (ii) total square feet, expressed as a percentage. Percent leased for office properties includes uncommenced leases.
Percent occupied for office properties is calculated as (i) square footage under commenced leases as of December 31, 2024, divided by (ii) total square feet, expressed as a percentage. Percent leased for office properties includes uncommenced leases.
We evaluate our real estate assets for impairment on a 48 property-by-property basis.
We evaluate our real estate assets for impairment on a property-by-property basis.
On an ongoing basis, we evaluate our estimates, including those related to acquiring, developing and assessing the carrying values of our real estate properties, the fair value measurement of contingent consideration, assets acquired and liabilities assumed in business combination transactions, determining the incremental borrowing rate used in the present value calculations of our new or modified operating lessee agreements, our accrued liabilities, and our performance-based equity compensation awards.
On an ongoing basis, we evaluate our estimates, including those related to acquiring, developing and assessing the carrying values of our real estate properties, assets acquired and liabilities assumed in business combination transactions, the fair values of our goodwill and intangible assets, determining the incremental borrowing rate used in the present value calculations of our new or modified operating lessee agreements, our accrued liabilities, and our performance-based equity compensation awards.
Please refer to Part IV, Item 15 (a) “Exhibits, Financial Statement Schedules—Note 4 to the Consolidated Financial Statements—Investment in Real Estate” for details. 43 Under Construction and Future Development Projects The following table summarizes the properties currently under construction and future development pipelines as of December 31, 2023: Type Submarket Estimated Square Feet (1) Estimated Completion Date Estimated Stabilization Date Under Construction: Los Angeles, California Sunset Glenoaks Studios (2) Studio Sun Valley 241,000 Q1-2024 Q2-2024 Seattle, Washington Washington 1000 Office Denny Triangle 546,000 Q1-2024 Q2-2026 New York, New York Sunset Pier 94 Studios (3) Studio Manhattan 232,000 Q4-2025 Q3-2026 Total Under Construction 1,019,000 Future Development Pipeline: Los Angeles, California Sunset Las Palmas Studios—Development (4) Studio Hollywood 617,581 TBD TBD Sunset Gower Studios—Development (4) Office/Studio Hollywood 478,845 TBD TBD Sunset Bronson Studios Lot D—Development (4) Residential Hollywood 33 units/19,816 TBD TBD Element LA—Development Office West Los Angeles 500,000 TBD TBD 10900/10950 Washington (5) Residential West Los Angeles N/A TBD TBD Vancouver, British Columbia Burrard Exchange (6) Office Downtown Vancouver 450,000 TBD TBD Greater London, United Kingdom Sunset Waltham Cross Studios (7) Studio Broxbourne 1,167,347 TBD TBD Total Future Development Pipeline 3,233,589 TOTAL UNDER CONSTRUCTION AND FUTURE DEVELOPMENT 4,252,589 _____________ 1.
Please refer to Part IV, Item 15 (a) “Exhibits, Financial Statement Schedules—Note 4 to the Consolidated Financial Statements—Investment in Real Estate” for details. 40 Under Construction and Future Development Projects The following table summarizes the properties currently under construction and future development pipelines as of December 31, 2024: Type Submarket Estimated Square Feet (1) Estimated Completion Date Estimated Stabilization Date Under Construction: New York, New York Sunset Pier 94 Studios (2) Studio Manhattan 232,000 Q4-2025 Q3-2026 TOTAL 232,000 Recently Completed: Seattle, Washington Washington 1000 Office Denny Triangle 546,000 Q4-2024 Q3-2026 TOTAL 546,000 Future Development Pipeline: Los Angeles, California Sunset Las Palmas Studios—Development (3) Studio Hollywood 617,581 TBD TBD Sunset Gower Studios—Development (3) Office/Studio Hollywood 478,845 TBD TBD Sunset Bronson Studios Lot D—Development (4) Residential Hollywood 33 units/19,816 TBD TBD Element LA—Development Office West Los Angeles 500,000 TBD TBD 10900/10950 Washington (4) Residential West Los Angeles N/A TBD TBD Vancouver, British Columbia Burrard Exchange (5) Office Downtown Vancouver 450,000 TBD TBD Greater London, United Kingdom Sunset Waltham Cross Studios (6) Studio Broxbourne 1,167,347 TBD TBD TOTAL 3,233,589 TOTAL UNDER CONSTRUCTION AND FUTURE DEVELOPMENT 4,011,589 _____________ 1.
We believe the average rental rates for our studio properties are generally equal to current average quoted market rates. Negative trends in one or more of these factors could adversely affect our rental revenue in future periods.
We believe that the average rental rates for our office properties are generally below the current average quoted market rate. We believe the average rental rates for our studio properties are generally equal to current average quoted market rates. Negative trends in one or more of these factors could adversely affect our rental revenue in future periods.
Unrealized loss on non-real estate investments We recognized an unrealized loss on non-real estate investments of $3.1 million for the year ended December 31, 2023 compared to an unrealized loss on non-real estate investments of $1.4 million for the year ended December 31, 2022.
Unrealized loss on non-real estate investments We recognized an unrealized loss on non-real estate investments of $4.0 million for the year ended December 31, 2024 compared to an unrealized loss on non-real estate investments of $3.1 million for the year ended December 31, 2023.
(our operating partnership) and its subsidiaries, at December 31, 2023, our portfolio of owned real estate included office properties comprising approximately 14.7 million square feet, studio properties comprising approximately 48 sound stages and 1.7 million square feet and land properties comprising approximately 3.2 million square feet of undeveloped density rights.
(our operating partnership) and its subsidiaries, at December 31, 2024, our portfolio of owned real estate included office properties comprising approximately 14.6 million square feet, studio properties comprising approximately 45 sound stages and 1.7 million square feet and land properties comprising approximately 3.2 million square feet of undeveloped density rights.
Subsequently, when the square footage offline for a full building reaches 92.0% occupancy, it would be included in our in-service population. 44 The following table summarizes the portions of office and studio projects currently under repositioning as of December 31, 2023: Location Submarket Square Feet Repositioning: 899 Howard San Francisco 96,240 Page Mill Center Palo Alto 79,056 Rincon Center San Francisco 36,905 Metro Plaza North San Jose 28,415 Sunset Las Palmas Studios Hollywood 18,594 Palo Alto Square Palo Alto 12,740 Sunset Gower Studios Hollywood 6,650 TOTAL REPOSITIONING 278,600 Financings During the year ended December 31, 2023, there were $193.0 million of repayments on the unsecured revolving credit facility, net of borrowings.
Subsequently, when the square footage offline for a full building reaches 92.0% occupancy, it would be included in our in-service population. 41 The following table summarizes the portions of office and studio projects currently under repositioning as of December 31, 2024: Location Submarket Square Feet Repositioning: 899 Howard San Francisco 96,240 Page Mill Center Palo Alto 79,056 Rincon Center San Francisco 36,905 Sunset Las Palmas Studios Hollywood 18,594 Palo Alto Square Palo Alto 12,740 Metro Plaza North San Jose 10,382 Sunset Gower Studios Hollywood 6,650 TOTAL REPOSITIONING 260,567 Financings During the year ended December 31, 2024, there were $128.0 million of borrowings on the unsecured revolving credit facility, net of repayments.
Equity capitalization represents the shares of common stock outstanding (including unvested restricted shares), OP and LTIP units outstanding, restricted performance units and dilutive shares multiplied by the closing price of $9.31, as reported by the NYSE, on December 29, 2023 as well as the aggregate value of the Series C preferred stock liquidation preference as of December 31, 2023.
Equity capitalization represents the shares of common stock outstanding (including unvested restricted shares), OP and LTIP units outstanding, restricted performance units and dilutive shares multiplied by the closing price of $3.03, as reported by the NYSE, on December 31, 2024 as well as the aggregate value of the Series C preferred stock liquidation preference as of December 31, 2024.
Outstanding Indebtedness The following table sets forth information as of December 31, 2023 and December 31, 2022 with respect to our outstanding indebtedness, excluding unamortized deferred financing costs and loan discounts (in thousands): December 31, 2023 December 31, 2022 Unsecured debt $ 2,307,000 $ 2,660,000 Secured debt $ 1,653,067 $ 1,950,088 Joint venture partner debt $ 66,136 $ 66,136 The operating partnership was in compliance with its financial covenants as of December 31, 2023.
Outstanding Indebtedness The following table sets forth information as of December 31, 2024 and December 31, 2023 with respect to our outstanding indebtedness, excluding unamortized deferred financing costs and loan discounts (in thousands): December 31, 2024 December 31, 2023 Unsecured debt $ 2,435,000 $ 2,307,000 Secured debt $ 1,752,667 $ 1,653,067 Joint venture partner debt $ 66,136 $ 66,136 The operating partnership was in compliance with its financial covenants as of December 31, 2024.
Includes studio properties owned and included in our portfolio as of January 1, 2022 and still owned and included in our portfolio as of December 31, 2023. 8. See Repositioning table in this document for the office and studio projects under repositioning as of December 31, 2023. 9.
Includes studio properties owned and included in our portfolio as of January 1, 2023 and still owned and included in our portfolio as of December 31, 2024. 8. Refer to Repositioning table in this document for the office and studio projects under repositioning as of December 31, 2024. 9.
We own 25.6% of the ownership interest in the unconsolidated joint venture that owns Sunset Pier 94 Studios. 4. We own 51% of the ownership interests in the consolidated joint venture that owns Sunset Bronson Studios, Sunset Gower Studios and Sunset Las Palmas Studios. 5. Pending entitlement to develop approximately 500 residential units. 6.
We own 51% of the ownership interests in the consolidated joint venture that owns Sunset Bronson Studios, Sunset Gower Studios and Sunset Las Palmas Studios. 4. Pending entitlement to develop approximately 500 residential units. 5. We own 20% of the ownership interests in the unconsolidated joint venture that owns Burrard Exchange. 6.
Liquidity Sources We had approximately $100.4 million of cash and cash equivalents at December 31, 2023. Our principal source of operating cash flow is related to leasing and operating the properties in our portfolio.
Liquidity Sources We had approximately $63.3 million of cash and cash equivalents at December 31, 2024. Our principal source of operating cash flow is related to leasing and operating the properties in our portfolio.
For land properties, square footage represents management’s estimate of developable square footage, the majority of which remains subject to entitlement approvals not yet obtained. 2. We own 50% of the ownership interests in the unconsolidated joint venture that owns Sunset Glenoaks Studios. 3.
For land properties, square footage represents management’s estimate of developable square footage, the majority of which remains subject to entitlement approvals not yet obtained. 2. We own 25.6% of the ownership interest in the unconsolidated joint venture that owns Sunset Pier 94 Studios. 3.
Rental Revenue The amount of net rental revenue generated by the properties in our portfolio depends principally on our ability to maintain the occupancy rates of currently leased space and to lease currently available space and space that becomes available fro m lease terminations.
Rental Revenue The amount of net rental revenue generated by the properties in our portfolio depends principally on our ability to maintain the occupancy rates of leased space and to lease available space .
Fee income Fee income decreased by $1.8 million, or 22.5%, to $6.2 million for the year ended December 31, 2023 compared to $8.0 million for the year ended December 31, 2022. Fee income represents the management fee income earned from the unconsolidated real estate entities.
Fee income Fee income decreased by $0.9 million, or 14.8%, to $5.3 million for the year ended December 31, 2024 compared to $6.2 million for the year ended December 31, 2023. Fee income represents the management fee income earned from the unconsolidated real estate entities.
Our production services assets include vehicles, lighting and grip, production supplies and other equipment and the lease rights to 27 sound stages. As of December 31, 2023, our in-service office portfolio was 81.9% leased (including leases not yet commenced). Our same-store studio properties average percent leased for the twelve months ended December 31, 2023 was 80.4%.
Our production services assets include vehicles, lighting and grip, production supplies and other equipment and the lease rights t o 24 sound stages. As of December 31, 2024, our in-service office portfolio was 78.9% leased (including leases not yet commenced). Our same-store studio properties average percent leased for the twelve months ended December 31, 2024 was 73.8%.
Includes interest on the Company’s debt and hedging activities. 2. Includes the amortization of deferred financing costs and fair market value adjustments for our mark-to-market interest rate derivatives. Gross interest expense increased $62.0 million, or 38.1%, to $224.8 million for the year ended December 31, 2023 compared to $162.8 million for the year ended December 31, 2022.
Includes interest on the Company’s debt and hedging activities. 2. Includes the amortization of deferred financing costs and fair market value adjustments for our mark-to-market interest rate derivatives. Gross interest expense decreased by $14.8 million, or 6.6%, to $210.0 million for the year ended December 31, 2024 compared to $224.8 million for the year ended December 31, 2023.
Acquisitions of real estate will generally not meet the definition of a business because substantially all of the fair value is concentrated in a single identifiable asset or group of similar identifiable assets (i.e., land, buildings and improvements and related intangible assets or liabilities) or because the acquisition does not include a substantive process in the form of an acquired workforce or an acquired contract that cannot be replaced without significant cost, effort or delay.
Acquisitions of real estate will generally not meet the definition of a business because substantially all of the fair value is concentrated in a single identifiable asset or group of similar identifiable assets (i.e., land, buildings and improvements and related intangible assets or liabilities) or because the acquisition does not include a substantive process in the form of an acquired workforce or an acquired contract that cannot be replaced without significant cost, effort or delay. 43 Acquisitions that do not meet the definition of a business When we acquire properties that are considered asset acquisitions, the purchase price, which includes transaction-related expenses, is allocated based on relative fair value of the assets acquired and liabilities assumed.
General and administrative expenses General and administrative expenses decreased $4.5 million, or 5.7%, to $75.0 million for the year ended December 31, 2023 compared to $79.5 million for the year ended December 31, 2022.
General and administrative expenses General and administrative expenses increased by $4.5 million, or 6.0%, to $79.5 million for the year ended December 31, 2024 compared to $75.0 million for the year ended December 31, 2023.
To 50 qualify as a REIT, we are required to distribute at least 90% of our REIT taxable income, excluding net capital gains, to our stockholders and meet the various other requirements imposed by the Code relating to such matters as operating results, asset holdings, distribution levels and diversity of stock ownership.
To qualify as a REIT, we are required to distribute at least 90% of our REIT taxable income, excluding net capital gains, to our stockholders and meet the various other requirements imposed by the Code relating to such matters as operating results, asset holdings, distribution levels and diversity of stock ownership. 46 Provided that we continue to qualify for taxation as a REIT, we are generally not subject to corporate level income tax on the earnings distributed currently to our stockholders.
If the lease provides for tenant improvements, we determine whether the tenant improvements, for accounting purposes, are owned by the tenant or us. When we are the owner of the tenant improvements, the tenant is not considered to have taken physical possession or have control of the physical use of the leased asset until the tenant improvements are substantially completed.
When we are the owner of the tenant improvements, the tenant is not considered to have taken physical possession or have control of the physical use of the leased asset until the tenant improvements are substantially completed.
The Company generally uses the unsecured revolving credit facility to finance the acquisition of properties and businesses, to provide funds for tenant improvements and capital expenditures and to provide for working capital and other corporate purposes. In January 2023, the Company repaid its $110.0 million Series A notes in full.
The Company generally uses the unsecured revolving credit facility to finance the acquisition of properties and businesses, to provide funds for tenant improvements and capital expenditures and to provide for working capital and other corporate purposes.
In addition, growth in rental revenue will also partially depend on our ability to acquire additional properties that meet our investment criteria. Conditions in Our Markets We own real estate primarily in California, the Pacific Northwest, Western Canada and Greater London, United Kingdom.
In addition, growth in rental revenue will also partially depend on our ability to acquire additional properties that meet our investment criteria. Market Conditions We own real estate primarily in California, the Pacific Northwest and Western Canada. We operate our production services business in key US media markets in California, New Mexico, Atlanta and New York.
Internal direct compensation costs and external legal fees related to the execution of successful lease agreements that do not meet the definition of initial direct costs under ASC 842 are accounted for as office operating expense or studio operating expense in our Consolidated Statements of Operations. 49 We elected the lessor’s practical expedient to present revenues on the Consolidated Statement of Operations as a single lease component that combines rental, tenant recoveries, and other tenant-related revenues for the office portfolio.
Internal direct compensation costs and external legal fees related to the execution of successful lease agreements that do not meet the definition of initial direct costs under ASC 842 are accounted for as office operating expense or studio operating expense in our Consolidated Statements of Operations.
Properties are selected for repositioning when an asset or portions of an asset are taken offline for a change of use or if the asset requires significant base building improvements resulting in substantial downtime in occupancy.
We own 35% of the ownership interests in the unconsolidated joint venture that owns Sunset Waltham Cross Studios. Properties are selected for repositioning when an asset or portions of an asset are taken offline for a change of use or if the asset requires significant base building improvements resulting in substantial downtime in occupancy.
Transaction-related expenses We recorded $1.2 million of income predominantly related to the remeasurement of the Zio earnout liability to fair value during the year ended December 31, 2023. During the year ended December 31, 2022, we recorded $14.4 million of expenses primarily related to the Quixote acquisition in August 2022.
Transaction-related expenses During the year ended December 31, 2024, we recorded $2.5 million of expense predominantly related to dead deal costs. During the year ended December 31, 2023, we recorded $1.2 million of income primarily related to the remeasurement of the Zio earnout liability to fair value.
Financing Activities Net cash used in financing activities increased by $964.1 million, or 989.4%, to $866.7 million for the year ended December 31, 2023 as compared to $97.4 million of cash provided by financing activities for the year ended December 31, 2022.
Financing Activities Net cash provided by financing activities increased by $932.6 million, or 107.6%, to $65.9 million for the year ended December 31, 2024 as compared to $866.7 million of cash used in financing activities for the year ended December 31, 2023.
The following table provides information about joint venture indebtedness as of December 31, 2023 (in thousands): Ownership Interest Amount Drawn Undrawn Capacity Total Capacity Interest Rate Contractual Maturity Date Bentall Centre (1) 20 % $ 482,198 $ 18,875 $ 501,073 CORRA + 2.30% 7/1/2027 Sunset Glenoaks Studios (2) 50 % 83,098 17,502 100,600 SOFR + 3.10% 1/9/2027 Sunset Pier 94 Studios (3) 26 % 100 183,100 183,200 SOFR + 4.75% 9/9/2028 _____________ (1) The loan was transacted in Canadian dollars.
The following table provides information about joint venture indebtedness as of December 31, 2024 (in thousands): Ownership Interest Amount Drawn Undrawn Capacity Total Capacity Interest Rate Contractual Maturity Date Bentall Centre (1) 20 % $ 450,551 $ 9,355 $ 459,906 CORRA + 2.30% 7/1/2027 Sunset Pier 94 Studios (2) 26 % 29,783 153,417 183,200 SOFR + 4.75% 9/9/2028 _____________ (1) The loan was transacted in Canadian dollars.
Any future sales will depend on several factors, including, but not limited to, market conditions, the trading price of our common stock and our capital needs.
Any future sales will depend on several factors, including, but not limited to, market conditions, the trading price of our common stock and our capital needs. We have no obligation to sell the remaining shares available for sale under this program.
The decrease is primarily due to a slowdown in construction activity at our unconsolidated Sunset Waltham Cross development in 2023.
The decrease is primarily due to a decrease in construction activity at our unconsolidated Sunset Waltham Cross development, partially offset by an increase in construction activity at our unconsolidated Pier 94 development.
Investing Activities Net cash provided by investing activities increased by $845.9 million, or 223.7%, to $467.8 million for the year ended December 31, 2023 as compared to $378.1 million of cash used in investing activities for the year ended December 31, 2022.
Investing Activities Net cash used in investing activities increased by $718.4 million, or 153.6%, to $250.5 million for the year ended December 31, 2024 as compared to $467.8 million of cash provided by investing activities for the year ended December 31, 2023.
We have three operating segments: the management entity, Office and Studio, each of which is a reporting unit. The Studio reporting unit consists of Zio and Star Waggons businesses acquired during the year ended December 31, 2021 and Quixote business acquired during the year ended December 31, 2022.
We have three operating segments: the management entity, Office and Studio. The Studio operating segment consists of two reporting units: Sunset Studios and Quixote. The Quixote reporting unit consists of the Zio and Star Waggons businesses acquired during 2021 and the Quixote business acquired during 2022, which have since been integrated as a single business.
Impairment loss During the year ended December 31, 2023, we recognized an impairment loss of $60.2 million due to a reduction in the estimated fair value of our Foothill Research Center property.
During the year ended December 31, 2023, we recognized an impairment loss of $60.2 million due to a reduction in the estimated fair value of one office property. Other (income) expense During the year ended December 31, 2024, we recognized other income of $1.6 million compared to other expense of $6 thousand for the year ended December 31, 2023.
In December 2023, the Company repaid its $324.6 million One Westside and Westside Two construction loan in connection with the sale of these properties. Factors That May Influence Our Operating Results Business and Strategy We invest in Class-A office properties in West Coast technology hubs and world-class studio properties and studio-related operating businesses in global media markets.
Factors That May Influence Our Operating Results Business and Strategy We invest in Class-A office properties in West Coast technology hubs and world-class studio properties and studio-related operating businesses in global media markets.
Also includes $14.2 million of projected interest related to our joint venture partner debt and debt that is effectively fixed through the use of interest rate swaps. 3. Reflects our projected interest obligations for variable rate debts, including instances where interest is paid based on an applicable SOFR margin.
Reflects our projected interest obligations for fixed rate debts, including those that are effectively fixed as a result of derivatives. Also includes $11.2 million of projected interest related to our joint venture partner debt and debt that is effectively fixed through the use of interest rate swaps. 4.
The increase was partially offset by a decrease in deferred financing cost amortization primarily due to the deferred financing costs related to the Hollywood Media Portfolio debt being fully amortized as of August 2023.
Additionally, there was a decrease in deferred financing cost amortization due to the deferred financing costs related to the Hollywood Media Portfolio loan and the One Westside and Westside Two construction loan being fully amortized as of August 2023 and December 2023, respectively.
For our rentals at the studio properties, total lease consideration is allocated to lease and non-lease components on a relative standalone basis. We recognize rental revenue from tenants on a straight-line basis over the lease term when collectability is probable and the tenant has taken possession or controls the physical use of the leased asset.
We recognize rental revenue from tenants on a straight-line basis over the lease term when collectability is probable and the tenant has taken possession or controls the physical use of the leased asset. If the lease provides for tenant improvements, we determine whether the tenant improvements, for accounting purposes, are owned by the tenant or us.
The change was primarily driven by higher interest expense at the unconsolidated entities due to an increase in the average reference rates for variable rate debt and one-time lease termination fees received in 2022.
The change was primarily driven by higher interest expense at the unconsolidated entities in 2024 due to an increase in the average reference rates for variable rate debt and a mark-to-market adjustment for an interest rate swap that does not qualify for hedge accounting.
Generally, we have assessed our tax positions for all open years, which as of December 31, 2023 include 2020 to 2022 for Federal purposes and 2019 to 2022 for state purposes, and concluded that there are no material uncertainties to be recognized. 51 Results of Operations The following table summarizes our portfolio as of December 31, 2023 : Number of Properties Rentable Square Feet (1) Percent Occupied (2) Percent Leased (2) Annualized Base Rent per Square Foot (3) OFFICE Same-store (4) 41 12,910,134 80.8 % 81.6 % $ 55.10 Stabilized non-same store (5) 2 219,023 89.5 89.5 54.71 Total stabilized 43 13,129,157 80.9 81.8 55.10 Lease-up (5)(6) 1 723,848 77.7 84.3 61.80 Total in-service office 44 13,853,005 80.8 81.9 55.43 STUDIO Same-store (7) 3 1,231,278 80.4 80.4 45.88 Total 3 1,231,278 Repositioning (5)(8) 1 278,600 — 2.2 Development (5)(9) 3 1,019,000 — 0.3 Total repositioning and development 4 1,297,600 Total office and studio properties 51 16,381,883 Future development (10) 7 3,233,589 TOTAL 58 19,615,472 ____________ 1.
Generally, we have assessed our tax positions for all open years, which as of December 31, 2024 include 2021 to 2023 for Federal purposes and 2020 to 2023 for state purposes, and concluded that there are no material uncertainties to be recognized. 47 Results of Operations The following table summarizes our portfolio as of December 31, 2024 : Number of Properties Rentable Square Feet (1) Percent Occupied (2) Percent Leased (2) Annualized Base Rent per Square Foot (3) OFFICE Same-store (4) 39 12,794,354 77.9 % 78.5 % $ 54.31 Stabilized non-same store (5) 1 31,613 45.8 45.8 33.00 Total stabilized 40 12,825,967 77.8 78.4 54.27 Lease-up (5)(6) 1 724,381 86.5 87.9 61.64 Total in-service office 41 13,550,348 78.3 78.9 54.71 STUDIO Same-store (7) 3 1,211,168 73.8 73.8 47.41 Non-same-store (5) 1 241,000 Total 4 1,452,168 Repositioning (5)(8) 1 260,567 — — — Development (5)(9) 2 778,000 0.3 0.4 — Held-for-sale (5) 2 298,084 85.2 85.2 72.64 Total repositioning and development 5 1,336,651 Total office and studio properties 50 16,339,167 Future development (10) 7 3,233,589 TOTAL 57 19,572,756 ____________ 1.
Certain of our properties have been reassessed for property tax purposes as a result of subsequent acquisition, development, redevelopment and other reassessments that remain pending. In the case of completed reassessments, the amount of property taxes we pay reflects the valuations established with the county assessors for the relevant locations of each property as of IPO or their subsequent acquisition.
In the case of completed reassessments, the amount of property taxes we pay reflects the valuations established with the county assessors for the relevant locations of each property as of IPO or their subsequent acquisition. With respect to pending reassessments, we similarly expect the amount of property taxes we pay to reflect the valuations established with such county assessors.
Management further analyzes NOI by evaluating the performance from the following property groups: • Same-store properties, which include all of the properties owned and included in our stabilized portfolio as of January 1, 2022 and still owned and included in the stabilized portfolio as of December 31, 2023; and • Non-same-store, which includes: • Stabilized non-same store properties • Lease-up properties • Repositioning properties • Development properties • Redevelopment properties • Held for sale properties • Operating results from studio service-related businesses 53 The following table reconciles net loss to NOI (in thousands, except percentage change): Year Ended December 31, 2023 2022 Dollar Change Percentage Change NET LOSS $ (170,700) $ (16,517) $ (154,183) 933.5 % Adjustments: Loss (income) from unconsolidated real estate entities 3,902 (943) 4,845 (513.8) Fee income (6,181) (7,972) 1,791 (22.5) Interest expense 214,415 149,901 64,514 43.0 Interest income (2,182) (2,340) 158 (6.8) Management services reimbursement income—unconsolidated real estate entities (4,125) (4,163) 38 (0.9) Management services expense—unconsolidated real estate entities 4,125 4,163 (38) (0.9) Transaction-related expenses (1,150) 14,356 (15,506) (108.0) Unrealized loss on non-real estate investment 3,120 1,440 1,680 116.7 Gain on extinguishment of debt (10,000) — (10,000) — Loss on sale of bonds 34,046 — 34,046 — (Gain) loss on sale of real estate (103,202) 2,164 (105,366) (4,869.0) Impairment loss 60,158 28,548 31,610 110.7 Other expense (income) 6 (8,951) 8,957 (100.1) Income tax provision 6,796 — 6,796 — General and administrative 74,958 79,501 (4,543) (5.7) Depreciation and amortization 397,846 373,219 24,627 6.6 NOI $ 501,832 $ 612,406 $ (110,574) (18.1) % Same-store NOI $ 454,412 $ 491,243 $ (36,831) (7.5) % Non-same-store NOI 47,420 121,163 (73,743) (60.9) NOI $ 501,832 $ 612,406 $ (110,574) (18.1) % The following table summarizes certain statistics of our consolidated same-store office and studio properties: Year Ended December 31, 2023 2022 Same-store office Number of properties 40 40 Rentable square feet 11,389,050 11,389,050 Ending % leased 80.5 % 88.2 % Ending % occupied 79.5 % 86.8 % Average % occupied for the period 83.4 % 89.0 % Average annual rental rate per square foot $ 58.80 $ 57.15 Same-store studio Number of properties 3 3 Rentable square feet 1,231,278 1,231,278 Average % leased over period (1) 80.4 % 84.6 % _____________ 1.
Management further analyzes NOI by evaluating the performance from the following groups: • Same-store properties, which include all of the properties owned and included in our stabilized portfolio as of January 1, 2023 and still owned and included in the stabilized portfolio as of December 31, 2024; and • Non-same-store, which includes: • Stabilized non-same store properties • Lease-up properties • Repositioning properties • Development properties • Redevelopment properties • Held for sale properties • Operating results from studio service-related businesses 49 The following table reconciles net loss to NOI (in thousands, except percentage change): Year Ended December 31, 2024 2023 Dollar Change Percentage Change NET LOSS $ (381,406) $ (170,700) $ (210,706) 123.4 % Adjustments: Loss from unconsolidated real estate entities 7,308 3,902 3,406 87.3 Fee income (5,269) (6,181) 912 (14.8) Interest expense 177,393 214,415 (37,022) (17.3) Interest income (2,467) (2,182) (285) 13.1 Management services reimbursement income—unconsolidated real estate entities (4,119) (4,125) 6 (0.1) Management services expense—unconsolidated real estate entities 4,119 4,125 (6) (0.1) Transaction-related expenses 2,499 (1,150) 3,649 (317.3) Unrealized loss on non-real estate investment 3,958 3,120 838 26.9 Gain on extinguishment of debt — (10,000) 10,000 (100.0) Loss on sale of bonds — 34,046 (34,046) (100.0) Loss (gain) on sale of real estate 2,453 (103,202) 105,655 (102.4) Impairment loss 149,664 60,158 89,506 148.8 Other (income) expense (1,647) 6 (1,653) (27,550.0) Income tax provision 1,641 6,796 (5,155) (75.9) General and administrative 79,451 74,958 4,493 6.0 Depreciation and amortization 354,425 397,846 (43,421) (10.9) NOI $ 388,003 $ 501,832 $ (113,829) (22.7) % Same-store NOI $ 377,682 $ 438,947 $ (61,265) (14.0) % Non-same-store NOI 10,321 62,885 (52,564) (83.6) NOI $ 388,003 $ 501,832 $ (113,829) (22.7) % The following table summarizes certain statistics of our consolidated same-store office and studio properties: Year Ended December 31, 2024 2023 Same-store office Number of properties 38 38 Rentable square feet 11,257,195 11,257,195 Ending % leased 77.0 % 79.9 % Ending % occupied 76.5 % 78.9 % Average % occupied for the period 76.9 % 82.9 % Average annual rental rate per square foot $ 58.31 $ 58.51 Same-store studio Number of properties 3 3 Rentable square feet 1,211,168 1,211,168 Average % leased over period (1) 73.8 % 80.4 % _____________ 1.
The decrease primarily resulted from a slowdown in production rentals activity due to the WGA and SAG-AFTRA strikes as well as the 2022 and 2023 property dispositions. Refer to Part IV, Item 15(a) “Financial Statement Schedules—Note 4 to the Consolidated Financial Statements—Investment in Real Estate” for detail on the dispositions.
Refer to Part IV, Item 15(a) “Financial Statement Schedules—Note 4 to the Consolidated Financial Statements—Investment in Real Estate” for detail on the dispositions.
We operate our production services business in key US media markets in California, New Mexico, Louisiana, Atlanta and New York. Positive or negative changes in economic or other conditions in any of the markets in which we own real estate and/or operate, including state budgetary shortfalls, employment rates, natural hazards and other factors, may impact our overall performance.
Positive or negative changes in economic or other conditions in any of the markets in which we own real estate and/or operate, including state budgetary shortfalls, employment rates, natural hazards and other factors, may impact our overall performance. 42 Operating Expenses Our operating expenses generally consist of utilities, cleaning, engineering, administrative, property, ad valorem taxes and site maintenance costs.
Because a taxable REIT subsidiary is subject to federal income tax, and state and local income tax (where applicable), as a regular C corporation, the income earned by our taxable REIT subsidiaries generally will be subject to an additional level of tax as compared to the income earned by our other subsidiaries. 46 Critical Accounting Policies and Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of commitments and contingencies as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.
Critical Accounting Policies and Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of commitments and contingencies as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.
As of December 31, 2023, the percent leased for our in-service office properties was approximately 81.9% (or 80.8%, excluding leases signed but not commenced as of that date). As of December 31, 2023, the percent leased, based on a 12-month trailing average, was approximately 80.4% for same-store studio properties.
As of December 31, 2024, the percent leased for our in-service office properties was approximatel y 78.9% (or 78.3% , excluding leases signed but not commenced as of that date).
This loan is held by an unconsolidated joint venture. Amounts are presented at HPP’s share. Our ability to incur additional debt will be dependent on a number of factors, including our degree of leverage, the value of our unencumbered assets and borrowing restrictions that may be imposed by lenders.
The loan was transacted in Canadian dollars. Amounts are shown in U.S. dollars using the foreign currency exchange rate as of December 31, 2024. Our ability to incur additional debt will be dependent on a number of factors, including our degree of leverage, the value of our unencumbered assets and borrowing restrictions that may be imposed by lenders.
Amounts are shown in U.S. dollars using the foreign currency exchange rate as of December 31, 2023. This loan is interest-only through its term.
Amounts are shown in U.S. dollars using the foreign currency exchange rate as of December 31, 2024. This loan is interest-only through its term. (2) This loan has an initial interest rate of SOFR + 4.75% per annum until stabilization of the project, at which time the effective interest rate will decrease to SOFR + 4.00%.
Our properties provide a relatively consistent stream of cash flow that provides us with resources to pay operating expenses, debt service and fund quarterly dividend and distribution requirements.
Our properties provide a relatively consistent stream of cash flow that provides us with resources to pay operating expenses, debt service and fund quarterly dividend and distribution requirements. During the year ended December 31, 2024 we completed the strategic disposition of 3176 Porter for gross proceeds of $24.8 million, before certain credits, prorations and closing costs.
No gain or loss on sale of bonds was recognized during the year ended December 31, 2022.
No gain or loss on sale of bonds was recognized during the year ended December 31, 2024. Loss (gain) on sale of real estate During the year ended December 31, 2024, we recognized a $2.5 million loss on sale of real estate attributable to the sale of our 3176 Porter property.
The following table presents a reconciliation of net loss to FFO (in thousands): Year Ended December 31, 2023 2022 Net loss $ (170,700) $ (16,517) Adjustments: Depreciation and amortization—consolidated 397,846 373,219 Depreciation and amortization—non-real estate assets (33,389) (23,110) Depreciation and amortization—HPP’s share from unconsolidated real estate entities 4,779 5,322 (Gain) loss on sale of real estate (103,202) 2,164 Loss on sale of bonds 34,046 — Impairment loss—real estate assets 60,158 20,048 Unrealized loss on non-real estate investments 3,120 1,440 FFO attributable to non-controlling interests (42,335) (71,100) FFO attributable to preferred shares and units (20,800) (21,043) FFO TO COMMON STOCKHOLDERS AND UNITHOLDERS $ 129,523 $ 270,423
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. 58 The following table presents a reconciliation of net loss to FFO (in thousands): Year Ended December 31, 2024 2023 Net loss $ (381,406) $ (170,700) Adjustments: Depreciation and amortization—consolidated 354,425 397,846 Depreciation and amortization—non-real estate assets (34,716) (33,389) Depreciation and amortization—HPP’s share from unconsolidated real estate entities 5,630 4,779 Loss (gain) on sale of real estate 2,453 (103,202) Loss on sale of bonds — 34,046 Impairment loss—real estate assets 42,049 60,158 Unrealized loss on non-real estate investments 3,958 3,120 FFO attributable to non-controlling interests (12,789) (42,335) FFO attributable to preferred shares and units (20,800) (20,800) FFO TO COMMON STOCKHOLDERS AND UNITHOLDERS $ (41,196) $ 129,523
With respect to pending reassessments, we similarly expect the amount of property taxes we pay to reflect the valuations established with such county assessors. Taxable REIT Subsidiaries Hudson Pacific Services, Inc., or our services company, is a Maryland corporation that is wholly-owned by our operating partnership.
Taxable REIT Subsidiaries Hudson Pacific Services, Inc., or our services company, is a Maryland corporation that is wholly-owned by our operating partnership.
Interest expense Comparison of the year ended December 31, 2023 to the year ended December 31, 2022 is as follows (in thousands, except percentage change): Year Ended December 31, 2023 2022 Dollar Change Percentage Change Gross interest expense (1) $ 224,801 $ 162,778 $ 62,023 38.1 % Capitalized interest (32,253) (18,031) (14,222) 78.9 Non-cash interest expense (2) 21,867 5,154 16,713 324.3 TOTAL $ 214,415 $ 149,901 $ 64,514 43.0 % _________________ 1.
Interest expense Comparison of the year ended December 31, 2024 to the year ended December 31, 2023 is as follows (in thousands, except percentage change): Year Ended December 31, 2024 2023 Dollar Change Percentage Change Gross interest expense (1) $ 210,022 $ 224,801 $ (14,779) (6.6) % Capitalized interest (40,367) (32,253) (8,114) 25.2 Non-cash interest expense (2) 7,738 21,867 (14,129) (64.6) TOTAL $ 177,393 $ 214,415 $ (37,022) (17.3) % _________________ 1.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

7 edited+1 added−0 removed5 unchanged
Biggest changeHowever, due to the uncertainty of the specific actions that would be taken and their possible effects, these analyses assume no changes in our financial structure. 63 The following table summarizes the terms our derivative instruments used to hedge interest rate risk as of December 31, 2023 (notional amounts and fair value in thousands): Underlying Debt Instrument Type of Instrument Accounting Policy Notional Amount Effective Date Maturity Date Interest Rate Fair Value Assets (Liabilities) 1918 Eighth Swap Cash flow hedge $ 172,865 February 2023 October 2025 3.75% $ 1,075 1918 Eighth Cap Partial cash flow hedge (1) $ 314,300 June 2023 December 2025 5.00% 952 1918 Eighth Sold cap (2) Mark-to-market $ 172,865 June 2023 December 2025 5.00% (520) Hollywood Media Portfolio Cap Partial cash flow hedge (1) $ 1,100,000 August 2023 August 2024 5.70% 59 Hollywood Media Portfolio Sold cap (2) Mark-to-market $ 561,000 August 2023 August 2024 5.70% (29) Hollywood Media Portfolio Swap Cash flow hedge $ 351,186 August 2023 June 2026 3.31% 4,355 TOTAL $ 5,892 _____________ 1. $141,435 and $539,000 of the notional amounts of the 1918 Eighth and Hollywood Media Portfolio caps, respectively, have been designated as effective cash flow hedges for accounting purposes.
Biggest changeThe following table summarizes the terms our derivative instruments used to hedge interest rate risk as of December 31, 2024 (notional amounts and fair value in thousands): Underlying Debt Instrument Type of Instrument Accounting Policy Notional Amount Effective Date Maturity Date Interest Rate Fair Value Assets (Liabilities) Sunset Glenoaks Studios Cap Cash flow hedge $ 100,600 August 2022 January 2025 4.50% — Sunset Glenoaks Studios Cap Cash flow hedge $ 100,600 January 2025 January 2026 4.50% 72 1918 Eighth Swap Cash flow hedge $ 172,865 February 2023 October 2025 3.75% 524 1918 Eighth Cap Partial cash flow hedge (1) $ 314,300 June 2023 December 2025 5.00% 62 1918 Eighth Sold cap (2) Mark-to-market $ 172,865 June 2023 December 2025 5.00% (34) Hollywood Media Portfolio Swap Cash flow hedge $ 351,186 August 2023 June 2026 3.31% 3,663 Hollywood Media Portfolio Swap Cash flow hedge $ 180,000 February 2024 August 2026 4.13% (267) Hollywood Media Portfolio Cap Partial cash flow hedge (1) $ 1,100,000 August 2024 August 2025 6.01% 4 Hollywood Media Portfolio Sold cap (2) Mark-to-market $ 561,000 August 2024 August 2025 6.01% (2) TOTAL $ 4,022 _____________ 1. $141,435 and $539,000 of the notional amounts of the 1918 Eighth and Hollywood Media Portfolio caps, respectively, have been designated as effective cash flow hedges for accounting purposes.
Any gains or losses resulting from the translation of Canadian dollars and pound sterling to U.S. dollars are classified on our Consolidated Balance Sheets as a separate component of other comprehensive (loss) income and are excluded from net income. ITEM 8.
Any gains or losses resulting from the translation of Canadian dollars and pound sterling to U.S. dollars are classified on our Consolidated Balance Sheets as a separate component of other comprehensive (loss) income and are excluded from net loss. ITEM 8.
Financial Statements and Supplementary Data Our consolidated financial statements included in this Annual Report on Form 10-K are listed in Part IV, Item 15(a) of this report. ITEM 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure Not applicable. 64
Financial Statements and Supplementary Data Our consolidated financial statements included in this Annual Report on Form 10-K are listed in Part IV, Item 15(a) of this report. ITEM 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure Not applicable.
For a summary of our outstanding indebtedness, see Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources.” For a summary of our derivatives, refer to Part IV, Item 15(a) “Exhibits, Financial Statement Schedules—Note 9 to the Consolidated Financial Statements—Derivatives.” Interest risk amounts were determined by considering the impact of hypothetical interest rates on our financial instruments.
For a summary of our outstanding indebtedness, refer to Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources.” For a summary of our derivatives, refer to Part IV, Item 15(a) “Exhibits, Financial Statement Schedules—Note 11 to the Consolidated Financial Statements—Derivatives.” Interest risk amounts were determined by considering the impact of hypothetical interest rates on our financial instruments.
For sensitivity purposes, if the reference rates for our variable rate debt as of December 31, 2023 were to increase by 100 basis points, or 1.0%, the resulting increase in annual interest expense would decrease our future earnings and cash flows by $10.5 million.
For sensitivity purposes, if the reference rates for our variable rate debt as of December 31, 2024 were to increase by 100 basis points, or 1.0%, the resulting increase in annual interest expense would decrease our future earnings and cash flows by $11.0 million.
The following table summarizes our fixed and variable rate debt as of December 31, 2023 (in thousands): Unsecured and Secured Debt Joint Venture Partner Debt Carrying Value Fair Value Carrying Value Fair Value Variable rate $ 1,052,016 $ 1,052,016 $ — $ — Fixed rate (1) 2,908,051 2,554,062 66,136 59,966 TOTAL (2) $ 3,960,067 $ 3,606,078 $ 66,136 $ 59,966 _____________ 1.
The sold caps serve to offset the changes in fair value of the portions of the 1918 Eighth and Hollywood Media Portfolio caps that are not designated as cash flow hedges for accounting purposes. 59 The following table summarizes our fixed and variable rate debt as of December 31, 2024 (in thousands): Unsecured and Secured Debt Joint Venture Partner Debt Carrying Value Fair Value Carrying Value Fair Value Variable rate $ 1,099,616 $ 1,099,616 $ — $ — Fixed rate (1) 3,088,051 2,681,549 66,136 60,637 TOTAL (2) $ 4,187,667 $ 3,781,165 $ 66,136 $ 60,637 _____________ 1.
The remainder of each is accounted for under mark-to-market accounting. 2. The sold caps serve to offset the changes in fair value of the portions of the 1918 Eighth and Hollywood Media Portfolio caps that are not designated as cash flow hedges for accounting purposes.
The remainder of each is accounted for under mark-to-market accounting. 2.
Added
However, due to the uncertainty of the specific actions that would be taken and their possible effects, these analyses assume no changes in our financial structure.

Other HPP 10-K year-over-year comparisons