Core Viewpoint - Hudson Pacific Properties, Inc. (NYSE: HPP) has preferred shares that are currently deeply discounted, but the company is experiencing a rising occupancy rate, which is expected to increase further due to a significant number of upcoming lease expirations [1] Group 1: Company Performance - The occupancy rate of Hudson Pacific Properties is on the rise and is anticipated to improve further [1] - The company is positioned to benefit from an immense wall of upcoming lease expirations, which may enhance its occupancy and revenue potential [1] Group 2: Market Context - The equity market serves as a powerful mechanism for wealth creation or destruction over the long term, influenced by daily price fluctuations [1] - Pacifica Yield aims to focus on long-term wealth creation by targeting undervalued yet high-growth companies, high-dividend stocks, REITs, and green energy firms [1]

Hudson Pacific Properties, Inc.'s (NYSE: HPP ) preferreds might be deeply discounted, but an occupancy rate on the rise and set to move higher in response to an immense wall of upcoming lease expirations renders a positionThe equity market is a powerful mechanism as daily fluctuations in price get aggregated to incredible wealth creation or destruction over the long term. Pacifica Yield aims to pursue long-term wealth creation with a focus on undervalued yet high-growth companies, high-dividend tickers, REI ...

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[PART I—FINANCIAL INFORMATION](index=5&type=section&id=PART%20I%E2%80%94FINANCIAL%20INFORMATION) This part presents unaudited consolidated financial statements and management's discussion for Hudson Pacific Properties entities [ITEM 1. Financial Statements of Hudson Pacific Properties, Inc.](index=5&type=section&id=ITEM%201.%20Financial%20Statements%20of%20Hudson%20Pacific%20Properties%2C%20Inc.) This section presents Hudson Pacific Properties, Inc.'s unaudited consolidated financial statements, including balance sheets, income, comprehensive loss, equity, and cash flow statements [Consolidated Balance Sheets](index=5&type=section&id=Consolidated%20Balance%20Sheets%20as%20of%20June%2030%2C%202025%20(unaudited)%20and%20December%2031%2C%202024) Presents the unaudited consolidated balance sheets for Hudson Pacific Properties, Inc. as of June 30, 2025, and December 31, 2024 Consolidated Balance Sheet (June 30, 2025 vs. December 31, 2024) | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | Change (in thousands) | | :--------------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | Total Assets | $8,126,052 | $8,132,239 | -$6,187 | | Total Liabilities | $4,440,936 | $4,954,508 | -$513,572 | | Total Equity | $3,630,332 | $3,118,637 | +$511,695 | | Cash and cash equivalents | $236,025 | $63,256 | +$172,769 | | Unsecured and secured debt, net | $3,690,429 | $4,176,844 | -$486,415 | [Consolidated Statements of Operations](index=6&type=section&id=Consolidated%20Statements%20of%20Operations%20(unaudited)%20for%20the%20three%20and%20six%20months%20ended%20June%2030%2C%202025%20and%202024) Details the unaudited consolidated statements of operations for the three and six months ended June 30, 2025 and 2024 Consolidated Statements of Operations (Three Months Ended June 30, 2025 vs. 2024) | Metric | 2025 (in thousands) | 2024 (in thousands) | Change (in thousands) | | :--------------------------------- | :------------------ | :------------------ | :------------------ | | Total revenues | $190,002 | $218,000 | -$27,998 | | Total operating expenses | $230,580 | $220,759 | +$9,821 | | Net loss | $(87,760) | $(47,557) | -$40,203 | | Net loss attributable to common stockholders | $(83,149) | $(47,027) | -$36,122 | | Basic and Diluted EPS | $(0.41) | $(0.33) | -$0.08 | Consolidated Statements of Operations (Six Months Ended June 30, 2025 vs. 2024) | Metric | 2025 (in thousands) | 2024 (in thousands) | Change (in thousands) | | :--------------------------------- | :------------------ | :------------------ | :------------------ | | Total revenues | $388,461 | $432,023 | -$43,562 | | Total operating expenses | $455,406 | $442,379 | +$13,027 | | Net loss | $(168,038) | $(100,912) | -$67,126 | | Net loss attributable to common stockholders | $(157,857) | $(99,229) | -$58,628 | | Basic and Diluted EPS | $(0.92) | $(0.70) | -$0.22 | [Consolidated Statements of Comprehensive Loss](index=7&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Loss%20(unaudited)%20for%20the%20three%20and%20six%20months%20ended%20June%2030%2C%202025%20and%202024) Presents the unaudited consolidated statements of comprehensive loss for the three and six months ended June 30, 2025 and 2024 [Consolidated Statements of Equity](index=9&type=section&id=Consolidated%20Statements%20of%20Equity%20(unaudited)%20for%20the%20three%20and%20six%20months%20ended%20June%2030%2C%202025%20and%202024) Outlines the unaudited consolidated statements of equity for the three and six months ended June 30, 2025 and 2024 [Consolidated Statements of Cash Flows](index=12&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows%20(unaudited)%20for%20the%20six%20months%20ended%20June%2030%2C%202025%20and%202024) Provides the unaudited consolidated statements of cash flows for the six months ended June 30, 2025 and 2024 [ITEM 1. Financial Statements of Hudson Pacific Properties, L.P.](index=14&type=section&id=ITEM%201.%20Financial%20Statements%20of%20Hudson%20Pacific%20Properties%2C%20L.P.) This section presents Hudson Pacific Properties, L.P.'s unaudited consolidated financial statements, including balance sheets, income, comprehensive loss, capital, and cash flow statements [Consolidated Balance Sheets](index=14&type=section&id=Consolidated%20Balance%20Sheets%20as%20of%20June%2030%2C%202025%20(unaudited)%20and%20December%2031%2C%202024) Presents the unaudited consolidated balance sheets for Hudson Pacific Properties, L.P. as of June 30, 2025, and December 31, 2024 Consolidated Balance Sheet (June 30, 2025 vs. December 31, 2024) | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | Change (in thousands) | | :--------------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | Total Assets | $8,126,052 | $8,132,239 | -$6,187 | | Total Liabilities | $4,440,936 | $4,954,508 | -$513,572 | | Total Capital | $3,630,332 | $3,118,637 | +$511,695 | | Cash and cash equivalents | $236,025 | $63,256 | +$172,769 | | Unsecured and secured debt, net | $3,690,429 | $4,176,844 | -$486,415 | [Consolidated Statements of Operations](index=15&type=section&id=Consolidated%20Statements%20of%20Operations%20(unaudited)%20for%20the%20three%20and%20six%20months%20ended%20June%2030%2C%202025%20and%202024) Details the unaudited consolidated statements of operations for the three and six months ended June 30, 2025 and 2024 Consolidated Statements of Operations (Three Months Ended June 30, 2025 vs. 2024) | Metric | 2025 (in thousands) | 2024 (in thousands) | Change (in thousands) | | :--------------------------------- | :------------------ | :------------------ | :------------------ | | Total revenues | $190,002 | $218,000 | -$27,998 | | Total operating expenses | $230,580 | $220,759 | +$9,821 | | Net loss | $(87,760) | $(47,557) | -$40,203 | | Net loss available to common unitholders | $(85,358) | $(48,252) | -$37,106 | | Basic and Diluted EPS | $(0.41) | $(0.33) | -$0.08 | Consolidated Statements of Operations (Six Months Ended June 30, 2025 vs. 2024) | Metric | 2025 (in thousands) | 2024 (in thousands) | Change (in thousands) | | :--------------------------------- | :------------------ | :------------------ | :------------------ | | Total revenues | $388,461 | $432,023 | -$43,562 | | Total operating expenses | $455,406 | $442,379 | +$13,027 | | Net loss | $(168,038) | $(100,912) | -$67,126 | | Net loss available to common unitholders | $(162,460) | $(101,683) | -$60,777 | | Basic and Diluted EPS | $(0.92) | $(0.70) | -$0.22 | [Consolidated Statements of Comprehensive Loss](index=16&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Loss%20(unaudited)%20for%20the%20three%20and%20six%20months%20ended%20June%2030%2C%202025%20and%202024) Presents the unaudited consolidated statements of comprehensive loss for the three and six months ended June 30, 2025 and 2024 [Consolidated Statements of Capital](index=18&type=section&id=Consolidated%20Statements%20of%20Capital%20(unaudited)%20for%20the%20three%20and%20six%20months%20ended%20June%2030%2C%202025%20and%202024) Outlines the unaudited consolidated statements of capital for the three and six months ended June 30, 2025 and 2024 [Consolidated Statements of Cash Flows](index=21&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows%20(unaudited)%20for%20the%20six%20months%20ended%20June%2030%2C%202025%20and%202024) Provides the unaudited consolidated statements of cash flows for the six months ended June 30, 2025 and 2024 [Notes to Unaudited Consolidated Financial Statements](index=23&type=section&id=Notes%20to%20Unaudited%20Consolidated%20Financial%20Statements) This section provides detailed notes to the unaudited consolidated financial statements, covering organization, accounting policies, investments, debt, equity, and other disclosures [Note 1. Organization](index=23&type=section&id=1.%20Organization) Hudson Pacific Properties, Inc. operates as a REIT, managing office and studio properties through its operating partnership across the U.S., Canada, and UK - Hudson Pacific Properties, Inc. is a REIT and the sole general partner of Hudson Pacific Properties, L.P., owning approximately **97.5%** of the operating partnership as of June 30, 2025[13](index=13&type=chunk) Portfolio Summary (June 30, 2025) | Segment | Number of Properties | Square Feet | | :---------------------- | :------------------- | :------------ | | Consolidated Office | 41 | 12,687,098 | | Consolidated Studio | 4 | 1,473,568 | | Consolidated Future Development | 5 | 1,616,242 | | Total Consolidated Portfolio | 50 | 15,776,908 | | Unconsolidated Office | 1 | 1,524,254 | | Unconsolidated Studio | 1 | 232,000 | | Unconsolidated Future Development | 2 | 1,617,347 | | Total Unconsolidated Portfolio | 4 | 3,373,601 | | **TOTAL** | **54** | **19,150,509** | [Note 2. Summary of Significant Accounting Policies](index=23&type=section&id=2.%20Summary%20of%20Significant%20Accounting%20Policies) This note outlines the basis of financial statement presentation, consolidation principles, revenue recognition, and recent accounting pronouncements - The Company consolidates its operating partnership and **13 out of 19** joint ventures identified as VIEs. **Six** joint ventures are unconsolidated and accounted for using the equity method[55](index=55&type=chunk)[56](index=56&type=chunk)[59](index=59&type=chunk) Revenue from Contracts with Customers (Three Months Ended June 30, 2025 vs. 2024) | Revenue Stream | 2025 (in thousands) | 2024 (in thousands) | | :--------------------------------- | :------------------ | :------------------ | | Ancillary revenues | $19,016 | $26,187 | | Other revenues | $5,928 | $4,257 | | Studio-related tenant recoveries | $636 | $519 | | Management fee income | $1,476 | $1,371 | | Management services reimbursement income | $1,123 | $1,042 | - Goodwill carrying value remained at **$156.5 million** as of June 30, 2025, with no impairment recognized during the six months ended June 30, 2025 and 2024. Recently issued accounting pronouncements include ASU 2023-09 (Income Taxes) effective after December 15, 2024, and ASU 2024-03 (Income Statement Expenses) effective after December 15, 2026[61](index=61&type=chunk)[62](index=62&type=chunk)[63](index=63&type=chunk) [Note 3. Investment in Real Estate](index=25&type=section&id=3.%20Investment%20in%20Real%20Estate) This note details the Company's real estate investments, including cost breakdown, property dispositions, and impairment charges Investment in Real Estate, at Cost (June 30, 2025 vs. December 31, 2024) | Category | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :----------------------------- | :----------------------------- | :----------------------------- | | Land | $1,225,230 | $1,235,974 | | Building and improvements | $6,201,663 | $6,101,787 | | Tenant improvements | $727,451 | $728,186 | | Property under development | $51,292 | $161,444 | | **TOTAL** | **$8,211,478** | **$8,233,286** | Dispositions of Real Estate (Six Months Ended June 30, 2025) | Property | Segment | Disposition Date | Square Feet | Sales Price (in millions) | (Loss) Gain on Sale (in millions) | | :---------------------- | :-------- | :--------------- | :---------- | :------------------------ | :------------------------------ | | Maxwell | Office | 1/22/2025 | 102,963 | $46.0 | $(2.2) | | Foothill Research Center | Office | 3/4/2025 | 195,121 | $23.0 | $12.2 | | 625 Second | Office | 5/30/2025 | 138,354 | $28.0 | $— | - The Company recorded an impairment charge of **$18.4 million** during the six months ended June 30, 2025, related to the 625 Second office property due to a shortened expected holding period[69](index=69&type=chunk) [Note 4. Non-Real Estate Property, Plant and Equipment, net](index=26&type=section&id=4.%20Non-Real%20Estate%20Property%2C%20Plant%20and%20Equipment%2C%20net) This note provides a breakdown of the Company's non-real estate property, plant, and equipment, net of depreciation Non-Real Estate Property, Plant and Equipment, net (June 30, 2025 vs. December 31, 2024) | Category | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :--------------------------------- | :----------------------------- | :----------------------------- | | Non-real estate property, plant and equipment, at cost | $193,615 | $182,050 | | Accumulated depreciation | $(64,362) | $(54,983) | | **NON-REAL ESTATE PROPERTY, PLANT AND EQUIPMENT, NET** | **$129,253** | **$127,067** | - No impairment charges were recognized for non-real estate property, plant, and equipment during the six months ended June 30, 2025 and 2024[71](index=71&type=chunk) [Note 5. Investment in Unconsolidated Real Estate Entities](index=26&type=section&id=5.%20Investment%20in%20Unconsolidated%20Real%20Estate%20Entities) This note details investments in unconsolidated joint ventures, including property types, ownership interests, and financial summaries Unconsolidated Joint Ventures (June 30, 2025) | Property | Property Type | Submarket | Ownership Interest | Functional Currency | | :-------------------------- | :------------------ | :------------------ | :----------------- | :------------------ | | Sunset Waltham Cross Studios | Future Development | Broxbourne, United Kingdom | 35% | Pound sterling | | Bentall Centre | Operating Property | Downtown Vancouver | 20% | Canadian dollar | | Sunset Pier 94 Studios | Development | Manhattan | 51% | U.S. dollar | Combined and Condensed Balance Sheets for Unconsolidated Joint Ventures (June 30, 2025 vs. December 31, 2024) | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :--------------------------------- | :----------------------------- | :----------------------------- | | Total Assets | $1,219,222 | $1,131,128 | | Total Liabilities | $533,405 | $496,696 | | Total Capital | $685,817 | $634,432 | Combined and Condensed Statements of Operations for Unconsolidated Joint Ventures (Six Months Ended June 30, 2025 vs. 2024) | Metric | 2025 (in thousands) | 2024 (in thousands) | | :--------------------------------- | :------------------ | :------------------ | | Total Revenues | $32,266 | $39,065 | | Total Expenses | $39,158 | $53,696 | | Net Loss | $(6,892) | $(14,631) | [Note 6. Deferred Leasing Costs and Intangible Assets, net and Intangible Liabilities, net](index=28&type=section&id=6.%20Deferred%20Leasing%20Costs%20and%20Intangible%20Assets%2C%20net%20and%20Intangible%20Liabilities%2C%20net) This note details deferred leasing costs, intangible assets, and intangible liabilities, including their accumulated amortization Deferred Leasing Costs and Intangible Assets, net (June 30, 2025 vs. December 31, 2024) | Category | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :--------------------------------- | :----------------------------- | :----------------------------- | | Deferred leasing costs and in-place lease intangibles, net | $124,887 | $127,595 | | Lease incentives, net | $70,176 | $33,149 | | Below-market ground leases, net | $52,023 | $53,304 | | Above-market leases, net | $12 | $199 | | Customer relationships, net | $50,512 | $57,520 | | Non-competition agreements, net | $1,195 | $3,274 | | Trade name | $37,200 | $37,200 | | Parking easement | $15,273 | $15,273 | | **TOTAL DEFERRED LEASING COSTS AND INTANGIBLE ASSETS, NET** | **$351,278** | **$327,514** | Intangible Liabilities, net (June 30, 2025 vs. December 31, 2024) | Category | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :--------------------------------- | :----------------------------- | :----------------------------- | | Below-market leases, net | $19,790 | $21,838 | Amortization of Deferred Leasing Costs and Intangibles (Six Months Ended June 30, 2025 vs. 2024) | Category | 2025 (in thousands) | 2024 (in thousands) | | :--------------------------------- | :------------------ | :------------------ | | Deferred leasing costs and in-place lease intangibles | $(17,353) | $(16,500) | | Lease incentives | $(1,862) | $(222) | | Below-market ground leases | $(1,302) | $(1,345) | | Above-market leases | $(166) | $(29) | | Customer relationships | $(7,009) | $(7,008) | | Non-competition agreements | $(2,080) | $(823) | | Below-market leases | $2,048 | $2,732 | | Above-market ground leases | $— | $21 | [Note 7. Accounts Receivable](index=29&type=section&id=7.%20Accounts%20Receivable) This note provides balances for accounts receivable and straight-line rent receivables, with allowances for doubtful accounts Accounts Receivable (June 30, 2025 vs. December 31, 2024) | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :--------------------------------- | :----------------------------- | :----------------------------- | | Accounts receivable | $13,800 | $15,000 | | Allowance for doubtful accounts | $300 | $500 | Straight-Line Rent Receivables (June 30, 2025 vs. December 31, 2024) | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :--------------------------------- | :----------------------------- | :----------------------------- | | Straight-line rent receivables | $204,000 | $199,700 | | Allowance for doubtful accounts | $— | $— | [Note 8. Prepaid Expenses and Other Assets, net](index=29&type=section&id=8.%20Prepaid%20Expenses%20and%20Other%20Assets%2C%20net) This note details prepaid expenses and other assets, net, including non-real estate investments and fair value changes Prepaid Expenses and Other Assets, net (June 30, 2025 vs. December 31, 2024) | Category | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :--------------------------------- | :----------------------------- | :----------------------------- | | Non-real estate investments | $48,460 | $50,373 | | Deferred tax assets | $27 | $8 | | Interest rate derivative assets | $4,047 | $4,325 | | Prepaid insurance | $17,033 | $10,074 | | Deferred financing costs, net | $1,716 | $2,165 | | Prepaid property tax | $— | $2,129 | | Other | $26,196 | $21,040 | | **TOTAL** | **$97,479** | **$90,114** | - The Company recognized an unrealized gain of **$0.2 million** for the three months ended June 30, 2025, and an unrealized loss of **$0.2 million** for the six months ended June 30, 2025, on non-real estate investments. The cumulative unrealized gain as of June 30, 2025, is **$6.6 million**[86](index=86&type=chunk) [Note 9. Debt](index=30&type=section&id=9.%20Debt) This note provides comprehensive information on the Company's outstanding unsecured and secured debt, including terms and covenants Outstanding Indebtedness (June 30, 2025 vs. December 31, 2024) | Debt Type | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :--------------------------------- | :----------------------------- | :----------------------------- | | Unsecured debt | $1,650,000 | $2,435,000 | | Secured debt | $2,059,000 | $1,752,667 | | Joint venture partner debt | $66,136 | $66,136 | | **TOTAL UNSECURED AND SECURED DEBT, NET** | **$3,690,429** | **$4,176,844** | - During the six months ended June 30, 2025, the Company repaid **$320.0 million** on the unsecured revolving credit facility, secured a **$475.0 million** Office Portfolio CMBS loan, amended its unsecured revolving credit facility to decrease capacity to **$775.0 million**, and fully repaid Series B, Series C, and Series D notes, resulting in a **$1.6 million** loss on extinguishment of debt[95](index=95&type=chunk)[96](index=96&type=chunk)[97](index=97&type=chunk)[98](index=98&type=chunk) Future Minimum Principal Payments (as of June 30, 2025) | Year | Unsecured and Secured Debt (in thousands) | Joint Venture Partner Debt (in thousands) | | :---------------- | :-------------------------------- | :-------------------------------- | | Remaining 2025 | $314,300 | $— | | 2026 | $1,069,767 | $— | | 2027 | $500,600 | $— | | 2028 | $451,000 | $— | | 2029 | $500,000 | $— | | Thereafter | $873,333 | $66,136 | | **TOTAL** | **$3,709,000** | **$66,136** | [Note 10. Derivatives](index=33&type=section&id=10.%20Derivatives) This note describes the Company's derivative instruments used for interest rate hedging, their fair value, and reclassification expectations Derivative Instruments Fair Value (June 30, 2025 vs. December 31, 2024) | Type | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :--------------------------------- | :----------------------------- | :----------------------------- | | Total Fair Value Assets | $2,660 | $4,022 | | Total Fair Value Liabilities | $(1,387) | $(303) | - The Company expects **$1.8 million** of unrealized gain from cash flow hedges to be reclassified as a reduction to interest expense in the next 12 months[112](index=112&type=chunk) [Note 11. Income Taxes](index=33&type=section&id=11.%20Income%20Taxes) This note explains Hudson Pacific Properties, Inc.'s REIT status, tax treatment, and deferred tax asset and liability recognition - Hudson Pacific Properties, Inc. has elected to be taxed as a REIT, generally exempting it from corporate-level income tax on distributed earnings[113](index=113&type=chunk)[114](index=114&type=chunk) - The Company recorded an income tax provision of **$0.6 million** for the six months ended June 30, 2025, compared to **$0.5 million** for the same period in 2024[116](index=116&type=chunk) - A valuation allowance has been recorded against substantially all deferred tax assets due to uncertainty regarding their realizability[117](index=117&type=chunk) [Note 12. Future Minimum Rents and Lease Payments](index=34&type=section&id=12.%20Future%20Minimum%20Rents%20and%20Lease%20Payments) This note outlines the Company's future minimum base rents from tenant leases and its operating lease obligations as a lessee Future Minimum Base Rents from Properties (as of June 30, 2025) | Year | Amount (in thousands) | | :---------------- | :-------------------- | | Remaining 2025 | $250,237 | | 2026 | $484,450 | | 2027 | $427,945 | | 2028 | $360,852 | | 2029 | $291,715 | | Thereafter | $819,634 | | **TOTAL** | **$2,634,833** | - As of June 30, 2025, the present value of operating lease liabilities was **$358.5 million**, with corresponding ROU assets of **$347.7 million**. The weighted average remaining lease term was **22 years**, and the weighted average incremental borrowing rate was **5.7%**[123](index=123&type=chunk) Future Minimum Lease Payments for Operating Leases (as of June 30, 2025) | Year | Lease Payments (in thousands) | | :---------------- | :-------------------------- | | Remaining 2025 | $18,046 | | 2026 | $36,635 | | 2027 | $37,611 | | 2028 | $36,897 | | 2029 | $34,725 | | Thereafter | $493,631 | | **Total operating lease payments** | **$657,545** | [Note 13. Fair Value of Financial Instruments](index=35&type=section&id=13.%20Fair%20Value%20of%20Financial%20Instruments) This note details fair value measurements of the Company's financial assets and liabilities, categorized by input levels Fair Value of Financial Instruments (June 30, 2025 vs. December 31, 2024) | Category | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :--------------------------------- | :----------------------------- | :----------------------------- | | Interest rate derivative assets (Level 2) | $4,047 | $4,325 | | Interest rate derivative liabilities (Level 2) | $(1,387) | $(303) | | Non-real estate investments (measured at NAV) | $48,460 | $47,373 | Fair Value of Debt (June 30, 2025 vs. December 31, 2024) | Debt Type | Carrying Value (in thousands) | Fair Value (in thousands) | | :--------------------------------- | :-------------------------- | :------------------------ | | Unsecured debt (June 30, 2025) | $1,650,000 | $1,500,677 | | Unsecured debt (December 31, 2024) | $2,435,000 | $2,040,075 | | Secured debt (June 30, 2025) | $2,059,000 | $2,054,087 | | Secured debt (December 31, 2024) | $1,752,667 | $1,741,090 | | Consolidated joint venture partner debt (June 30, 2025) | $66,136 | $61,292 | | Consolidated joint venture partner debt (December 31, 2024) | $66,136 | $60,637 | [Note 14. Share/Unit-Based Compensation](index=36&type=section&id=14.%20Share%2FUnit-Based%20Compensation) This note describes the Company's share/unit-based compensation plans, including restricted stock and performance units, and related expenses - As of June 30, 2025, there were **10.1 million** common shares available for grant under the 2010 Incentive Plan[131](index=131&type=chunk) - The top three executive officers agreed to cancel their 2024 performance unit equity awards, resulting in an accelerated recognition of **$14.3 million** in compensation expense during the three and six months ended June 30, 2025[135](index=135&type=chunk) Total Share/Unit-Based Compensation (Six Months Ended June 30, 2025 vs. 2024) | Metric | 2025 (in thousands) | 2024 (in thousands) | | :--------------------------------- | :------------------ | :------------------ | | Expensed share/unit-based compensation | $23,029 | $13,485 | | Capitalized share/unit-based compensation | $862 | $1,089 | | **TOTAL** | **$23,891** | **$14,574** | [Note 15. Earnings Per Share](index=37&type=section&id=15.%20Earnings%20Per%20Share) This note details the calculation of basic and diluted earnings per share for Inc. and per unit for L.P. using the two-class method Hudson Pacific Properties, Inc. Basic and Diluted EPS (Six Months Ended June 30, 2025 vs. 2024) | Metric | 2025 | 2024 | | :--------------------------------- | :----- | :----- | | Net loss attributable to common stockholders | $(157,857) | $(99,229) | | Weighted average common shares outstanding—basic | 172,195,534 | 141,151,893 | | Basic and Diluted EPS | $(0.92) | $(0.70) | Hudson Pacific Properties, L.P. Basic and Diluted EPS (Six Months Ended June 30, 2025 vs. 2024) | Metric | 2025 | 2024 | | :--------------------------------- | :----- | :----- | | Net loss available to common unitholders | $(162,460) | $(101,683) | | Weighted average common units outstanding—basic | 177,214,424 | 144,673,725 | | Basic and Diluted EPS | $(0.92) | $(0.70) | [Note 16. Redeemable Non-controlling Interest](index=38&type=section&id=16.%20Redeemable%20Non-controlling%20Interest) This note describes redeemable preferred units and non-controlling interests in consolidated real estate entities, including terms and activity - As of June 30, 2025, **235,768** Series A preferred units were outstanding, entitled to **6.25%** preferential distributions. During the six months ended June 30, 2025, **156,830** units were redeemed for **$3.9 million** cash[145](index=145&type=chunk)[146](index=146&type=chunk) - Redeemable non-controlling interest in consolidated real estate entities relates to the **55%** interest in the Ferry Building property joint venture, where the partner (Allianz) has a put right, classifying it as temporary equity[147](index=147&type=chunk) Reconciliation of Redeemable Non-controlling Interests (Six Months Ended June 30, 2025) | Metric | Series A Redeemable Preferred Units (in thousands) | Consolidated Real Estate Entities (in thousands) | | :--------------------------------- | :--------------------------------- | :--------------------------------------- | | Beginning of Period | $9,815 | $49,279 | | End of Period | $5,894 | $48,890 | [Note 17. Equity](index=39&type=section&id=17.%20Equity) This note details accumulated other comprehensive income (loss) activity for Inc. and L.P., non-controlling interests, and common stock Hudson Pacific Properties, Inc. AOCI (December 31, 2024 to June 30, 2025) | Metric | Derivative Instruments (in thousands) | Currency Translation Adjustments (in thousands) | Total AOCI (in thousands) | | :--------------------------------- | :---------------------------------- | :------------------------------------ | :------------------------ | | Balance at December 31, 2024 | $2,785 | $(11,202) | $(8,417) | | Balance at June 30, 2025 | $18 | $2,142 | $2,160 | Hudson Pacific Properties, L.P. AOCI (December 31, 2024 to June 30, 2025) | Metric | Derivative Instruments (in thousands) | Currency Translation Adjustments (in thousands) | Total AOCI (in thousands) | | :--------------------------------- | :---------------------------------- | :------------------------------------ | :------------------------ | | Balance at December 31, 2024 | $2,889 | $(11,602) | $(8,713) | | Balance at June 30, 2025 | $(36) | $2,232 | $2,196 | Ownership Interest in Operating Partnership (June 30, 2025 vs. December 31, 2024) | Metric | June 30, 2025 | December 31, 2024 | | :--------------------------------- | :------------ | :---------------- | | Company-owned common units | 379,150,864 | 141,279,102 | | Company's ownership interest percentage | 98.7% | 97.4% | | Non-controlling common units | 4,941,964 | 3,796,346 | | Non-controlling ownership interest percentage | 1.3% | 2.6% | [Note 18. Segment Reporting](index=41&type=section&id=18.%20Segment%20Reporting) This note presents the Company's financial performance by office and studio property segments, evaluated based on net operating income Total Segment Profit (Six Months Ended June 30, 2025 vs. 2024) | Segment | 2025 (in thousands) | 2024 (in thousands) | Change (in thousands) | | :--------------------------------- | :------------------ | :------------------ | :------------------ | | Office net operating income | $177,266 | $202,863 | $(25,597) | | Studio net operating income | $(10,116) | $5,848 | $(15,964) | | **TOTAL SEGMENT PROFIT** | **$167,150** | **$208,711** | **$(41,561)** | Reconciliation of Net Loss to Total Profit from All Segments (Six Months Ended June 30, 2025 vs. 2024) | Metric | 2025 (in thousands) | 2024 (in thousands) | | :--------------------------------- | :------------------ | :------------------ | | Net loss | $(168,038) | $(100,912) | | Total profit from all segments | $167,150 | $208,711 | [Note 19. Related Party Transactions](index=43&type=section&id=19.%20Related%20Party%20Transactions) This note discloses related party transactions, including employment agreements, cost reimbursements, and related party leases - The Company recognized **$2.1 million** in management services reimbursement income from unconsolidated real estate entities for the six months ended June 30, 2025, a slight decrease from **$2.2 million** in the prior year[171](index=171&type=chunk) - Related rental expense from unconsolidated real estate entities was **$0.5 million** for the six months ended June 30, 2025, compared to **$0.6 million** in the prior year[172](index=172&type=chunk) [Note 20. Commitments and Contingencies](index=44&type=section&id=20.%20Commitments%20and%20Contingencies) This note outlines the Company's commitments and contingencies, including fund investments, legal proceedings, and contractual obligations - The Company has an aggregate commitment of **$51.0 million** to non-real estate funds, with **$8.2 million** remaining to be contributed as of June 30, 2025[173](index=173&type=chunk) - Management believes the ultimate resolution of current legal claims will not have a material adverse effect on the Company's financial position[174](index=174&type=chunk) - As of June 30, 2025, **$9.6 million** in outstanding letters of credit were primarily related to the Sunset Pier 94 Studios development. The Company also had **$98.7 million** in commitments related to construction agreements and executed leases[175](index=175&type=chunk)[176](index=176&type=chunk) [Note 21. Supplemental Cash Flow Information](index=44&type=section&id=21.%20Supplemental%20Cash%20Flow%20Information) This note provides supplemental cash flow information, including cash paid for interest, non-cash activities, and cash reconciliation Cash Paid for Interest (Six Months Ended June 30, 2025 vs. 2024) | Metric | 2025 (in thousands) | 2024 (in thousands) | | :--------------------------------- | :------------------ | :------------------ | | Cash paid for interest, net of capitalized interest | $79,116 | $78,981 | Cash and Restricted Cash Reconciliation (Six Months Ended June 30, 2025 vs. 2024) | Metric | June 30, 2025 (in thousands) | June 30, 2024 (in thousands) | | :--------------------------------- | :----------------------------- | :----------------------------- | | Beginning of Period | $99,177 | $119,156 | | End of Period | $267,127 | $99,940 | [Note 22. Subsequent Event](index=45&type=section&id=22.%20Subsequent%20Event) This note discloses a subsequent event regarding the redemption of Series A preferred units after the reporting period - On July 18, 2025, **123,991** Series A preferred units were redeemed for **$3.1 million** in cash[179](index=179&type=chunk) [ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=46&type=section&id=ITEM%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's analysis of financial condition and operations, covering executive summary, segment performance, liquidity, and accounting policies [Forward-looking Statements](index=46&type=section&id=Forward-looking%20Statements) This section provides a cautionary statement regarding forward-looking statements, noting that actual results may differ due to risks - Forward-looking statements are identified by words such as "anticipate," "believe," "expect," "intend," "may," "might," "plan," "estimate," "project," "should," "will," "result" and similar expressions[181](index=181&type=chunk) - Key risks include adverse economic or real estate developments, tenant defaults, fluctuations in interest rates, failure to obtain necessary financing, and inability to maintain REIT status[182](index=182&type=chunk)[183](index=183&type=chunk) [Executive Summary](index=47&type=section&id=Executive%20Summary) This executive summary provides a high-level overview of the Company's real estate portfolio, including office and studio properties and leasing status - As of June 30, 2025, the portfolio included approximately **14.2 million** square feet of office properties, **45** sound stages and **1.7 million** square feet of studio properties, and **3.2 million** square feet of land for undeveloped density rights[185](index=185&type=chunk) - The in-service office portfolio was **76.2%** leased, and same-store studio properties were **73.8%** leased for the 12 months ended June 30, 2025[186](index=186&type=chunk) Office Portfolio Statistics (June 30, 2025) | Category | Number of Properties | Rentable Square Feet | Percent Occupied | Percent Leased | Annualized Base Rent per Square Foot | | :-------------------------- | :------------------- | :------------------- | :--------------- | :------------- | :----------------------------------- | | Same-store | 40 | 13,420,243 | 75.1% | 76.2% | $54.49 | | Total in-service office | 40 | 13,420,243 | 75.1% | 76.2% | $54.49 | [Overview](index=49&type=section&id=Overview) This overview details recent business and property activities, including acquisitions, dispositions, development projects, and financing [Business Acquisitions](index=49&type=section&id=Business%20Acquisitions) Reports no business acquisitions during the six months ended June 30, 2025 - The Company had no business acquisitions during the six months ended June 30, 2025[199](index=199&type=chunk) [Property Acquisitions](index=49&type=section&id=Property%20Acquisitions) Reports no property acquisitions during the six months ended June 30, 2025 - The Company had no property acquisitions during the six months ended June 30, 2025[200](index=200&type=chunk) [Property Dispositions](index=49&type=section&id=Property%20Dispositions) Details the sale of Maxwell, Foothill Research Center, and 625 Second properties during the six months ended June 30, 2025 - During the six months ended June 30, 2025, the Company sold its Maxwell (**$46.0 million**), Foothill Research Center (**$23.0 million**), and 625 Second (**$28.0 million**) properties. A portion of the net proceeds was used to repay outstanding amounts on the unsecured revolving credit facility[201](index=201&type=chunk) [In Process and Future Development Projects](index=50&type=section&id=In%20Process%20and%20Future%20Development%20Projects) Outlines current and future development projects, including under construction, recently completed, and pipeline projects - Under construction: Sunset Pier 94 Studios (Studio, Manhattan) with **232,000 sq ft**, estimated completion **Q4-2025** and stabilization **Q3-2026**. Recently completed: Washington 1000 (Office, Denny Triangle) with **546,000 sq ft**, completed **Q4-2024** and estimated stabilization **Q1-2027**[202](index=202&type=chunk) - Future development pipeline includes projects like Sunset Las Palmas Studios, Sunset Gower Studios, Element LA, 10900/10950 Washington (residential), Burrard Exchange, and Sunset Waltham Cross Studios, totaling **3,233,589 square feet**[202](index=202&type=chunk) - Repositioning projects as of June 30, 2025, include 899 Howard, Page Mill Center, Rincon Center, Sunset Las Palmas Studios, Bentall Centre, Palo Alto Square, and Sunset Gower Studios, totaling **270,353 square feet**[209](index=209&type=chunk) [Historical Office Tenant Improvements and Leasing Commissions](index=53&type=section&id=Historical%20Office%20Tenant%20Improvements%20and%20Leasing%20Commissions) Presents historical tenant improvement and leasing commission costs for office properties for new leases and renewals Tenant Improvement and Leasing Commission Costs (Six Months Ended June 30, 2025 vs. 2024) | Lease Type | Metric | 2025 | 2024 | | :-------------------------- | :----------------------------------- | :----- | :----- | | Renewals | Tenant improvement costs per square foot | $17.88 | $26.23 | | | Leasing commission costs per square foot | $9.88 | $12.25 | | New leases | Tenant improvement costs per square foot | $64.90 | $50.24 | | | Leasing commission costs per square foot | $14.33 | $12.43 | | Total | Tenant improvement costs per square foot | $47.24 | $41.46 | | | Leasing commission costs per square foot | $12.65 | $12.37 | [Financings](index=53&type=section&id=Financings) Details recent financing activities, including debt repayments, new loans, credit facility amendments, and equity offerings - During the six months ended June 30, 2025, the Company repaid **$320.0 million** on its unsecured revolving credit facility and fully repaid its Series B, Series C, and Series D notes[219](index=219&type=chunk)[222](index=222&type=chunk) - The Company secured a **$475.0 million** Office Portfolio CMBS loan, using proceeds to repay **$259.0 million** on its unsecured revolving credit facility and a **$168.0 million** loan secured by the Element LA property[220](index=220&type=chunk) - The unsecured revolving credit facility agreement was amended, decreasing its total capacity from **$900.0 million** to **$775.0 million**. Additionally, the Company sold **237,553,442** shares of common stock and pre-funded warrants, generating **$689.3 million** in gross proceeds[221](index=221&type=chunk)[224](index=224&type=chunk) [Historical Results of Operations](index=54&type=section&id=Historical%20Results%20of%20Operations) This section compares the Company's financial performance for the three and six months ended June 30, 2025 and 2024, focusing on net loss and NOI [Comparison of the Three Months Ended June 30, 2025 to the Three Months Ended June 30, 2024](index=54&type=section&id=Comparison%20of%20the%20Three%20Months%20Ended%20June%2030%2C%202025%20to%20the%20Three%20Months%20Ended%20June%2030%2C%202024) Compares financial results for the three months ended June 30, 2025, versus the same period in 2024, highlighting changes in net loss and NOI - Net loss increased by **$40.2 million (84.5%)** to **$87.8 million** for the three months ended June 30, 2025, compared to **$47.6 million** for the same period in 2024[227](index=227&type=chunk) - Net Operating Income (NOI) decreased by **$22.8 million (21.8%)** to **$81.9 million**. This was driven by a **$15.0 million** decrease in same-store NOI (due to lower office rental revenues from lease terminations and reduced studio production activity) and a **$7.8 million** decrease in non-same-store NOI (due to property sales and lower studio activity)[230](index=230&type=chunk)[237](index=237&type=chunk) - General and administrative expenses increased by **$7.1 million (34.2%)** to **$27.8 million**, primarily due to **$14.3 million** in accelerated compensation expense related to the cancellation of 2024 performance unit equity awards. Depreciation and amortization expense increased by **$8.0 million (9.2%)** to **$94.8 million** due to accelerated depreciation from early lease terminations and asset disposals[252](index=252&type=chunk)[253](index=253&type=chunk) [Comparison of the Six Months Ended June 30, 2025 to the Six Months Ended June 30, 2024](index=59&type=section&id=Comparison%20of%20the%20Six%20Months%20Ended%20June%2030%2C%202025%20to%20the%20Six%20Months%20Ended%20June%2030%2C%202024) Compares financial results for the six months ended June 30, 2025, versus the same period in 2024, highlighting changes in net loss and NOI - Net loss increased by **$67.1 million (66.5%)** to **$168.0 million** for the six months ended June 30, 2025, compared to **$100.9 million** for the same period in 2024[254](index=254&type=chunk) - Net Operating Income (NOI) decreased by **$41.6 million (19.9%)** to **$167.2 million**. This was driven by a **$22.2 million** decrease in same-store NOI (due to lower office rental revenues and studio production) and a **$19.4 million** decrease in non-same-store NOI (due to lower studio activity and property sales)[257](index=257&type=chunk)[260](index=260&type=chunk) - The Company recognized a net gain of **$10.0 million** on real estate sales and an impairment loss of **$18.5 million**. A **$3.5 million** loss on extinguishment of debt was also recorded. General and administrative expenses increased by **$5.8 million (14.5%)** due to accelerated compensation expense, and depreciation and amortization expense increased by **$9.2 million (5.1%)** due to accelerated depreciation[271](index=271&type=chunk)[272](index=272&type=chunk)[273](index=273&type=chunk)[276](index=276&type=chunk)[277](index=277&type=chunk) [Liquidity and Capital Resources](index=65&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the Company's liquidity sources and uses, including cash, debt, equity, and contractual obligations, and its financial capacity [Liquidity Sources](index=67&type=section&id=Liquidity%20Sources) Details the Company's liquidity sources, including cash, equity offerings, ATM program, and borrowing capacity - The Company had **$236.0 million** in cash and cash equivalents at June 30, 2025. In June 2025, an equity offering generated **$689.3 million** in gross proceeds. The ATM program has sold **$65.8 million** of common stock out of **$125.0 million** authorized[279](index=279&type=chunk)[280](index=280&type=chunk)[281](index=281&type=chunk) Borrowing Capacity (as of June 30, 2025) | Loan | Total Borrowing Capacity (in thousands) | Amount Drawn (in thousands) | Remaining Borrowing Capacity (in thousands) | | :--------------------------------- | :------------------------------------ | :-------------------------- | :------------------------------------------ | | Unsecured revolving credit facility | $775,000 | $— | $775,000 | | Sunset Glenoaks Studios construction loan | $50,300 | $50,300 | $— | | Bentall Centre (HPP's share) | $97,038 | $95,640 | $1,398 | | Sunset Pier 94 Studios construction loan (HPP's share) | $46,810 | $24,481 | $22,329 | | **TOTAL** | **$969,148** | **$170,421** | **$798,727** | - The Company's senior unsecured debt ratings are **B2** (Moody's), **B** (Standard and Poor's), and **B+** (Fitch), indicating non-investment grade. The Company is in the process of refinancing the **$314.3 million** 1918 Eighth property loan and extending **$462 million** of revolving credit commitments. The ratio of total consolidated debt to total consolidated market capitalization was **68.7%** as of June 30, 2025[284](index=284&type=chunk)[285](index=285&type=chunk)[287](index=287&type=chunk) [Liquidity Uses](index=68&type=section&id=Liquidity%20Uses) Reports no material changes in contractual obligations from the prior annual report - There were no material changes outside the ordinary course of business in the information regarding specified contractual obligations contained in the 2024 Annual Report on Form 10-K[290](index=290&type=chunk) [Cash Flows](index=68&type=section&id=Cash%20Flows) Summarizes cash flow activities from operations, investing, and financing for the six months ended June 30, 2025 and 2024 Cash Flow Summary (Six Months Ended June 30, 2025 vs. 2024) | Metric | 2025 (in thousands) | 2024 (in thousands) | Dollar Change (in thousands) | Percent Change | | :--------------------------------- | :------------------ | :------------------ | :-------------- | :------------- | | Net cash provided by operating activities | $28,496 | $100,750 | $(72,254) | (71.7)% | | Net cash used in investing activities | $(8,078) | $(121,030) | $112,952 | (93.3)% | | Net cash provided by financing activities | $147,532 | $1,064 | $146,468 | 13,765.8% | - The decrease in net cash provided by operating activities was primarily due to property dispositions, lease terminations, and lower production activity. The decrease in net cash used in investing activities resulted from proceeds from real estate sales and decreased contributions to unconsolidated entities. The increase in net cash provided by financing activities was mainly from the equity offering, offset by debt repayments[293](index=293&type=chunk)[294](index=294&type=chunk)[295](index=295&type=chunk) [Off-Balance Sheet Arrangements](index=69&type=section&id=Off-Balance%20Sheet%20Arrangements) Details unconsolidated joint venture indebtedness and related borrowing capacities Unconsolidated Joint Venture Indebtedness (as of June 30, 2025) | Loan | Ownership Interest | Amount Drawn (in thousands) | Undrawn Capacity (in thousands) | Total Capacity (in thousands) | | :-------------------------- | :----------------- | :-------------------------- | :------------------------------ | :---------------------------- | | Bentall Centre | 20% | $478,199 | $6,992 | $485,191 | | Sunset Pier 94 Studios | 26% | $95,811 | $87,389 | $183,200 | [Critical Accounting Policies](index=69&type=section&id=Critical%20Accounting%20Policies) This section refers to Note 2 for critical accounting policies, emphasizing estimates and judgments impacting financial reporting - The preparation of financial statements requires management to make estimates and judgments, such as the assignment of purchase price for acquired properties and the effect of property tax reassessments. These determinations, though subjective, affect reported amounts, and actual outcomes may differ materially from estimates[298](index=298&type=chunk) [Non-GAAP Supplemental Financial Measure: Funds From Operations](index=70&type=section&id=Non-GAAP%20Supplemental%20Financial%20Measure%3A%20Funds%20From%20Operations) This section defines FFO per NAREIT guidelines, explains its utility as a REIT performance measure, and reconciles it from net loss - FFO is calculated in accordance with NAREIT's White Paper, excluding gains/losses from sales of depreciable real estate and impairment write-downs, plus real estate-related depreciation and amortization, and after adjustment for unconsolidated partnerships and joint ventures[300](index=300&type=chunk) - FFO is considered a useful supplemental measure for comparing operating performance among REITs, but it should not be viewed as an alternative to GAAP operating performance as it does not reflect depreciation, amortization, or capital expenditures[301](index=301&type=chunk)[303](index=303&type=chunk) Reconciliation of Net Loss to FFO (Six Months Ended June 30, 2025 vs. 2024) | Metric | 2025 (in thousands) | 2024 (in thousands) | | :--------------------------------- | :------------------ | :------------------ | | Net loss | $(168,038) | $(100,912) | | FFO to common stockholders and unitholders | $(8,138) | $45,252 | [ITEM 3. Quantitative and Qualitative Disclosures About Market Risk](index=71&type=section&id=ITEM%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section reports no material changes to market risk disclosures from the Company's 2024 Annual Report on Form 10-K - There have been no material changes to the market risk disclosures for the six months ended June 30, 2025, compared to the 2024 Annual Report on Form 10-K[305](index=305&type=chunk) [ITEM 4. Controls and Procedures](index=71&type=section&id=ITEM%204.%20Controls%20and%20Procedures) This section details disclosure controls and procedures for Inc. and L.P., confirming effectiveness and no material changes in internal control [Disclosure Controls and Procedures (Hudson Pacific Properties, Inc.)](index=71&type=section&id=Disclosure%20Controls%20and%20Procedures%20(Hudson%20Pacific%20Properties%2C%20Inc.)) Confirms the effectiveness of Hudson Pacific Properties, Inc.'s disclosure controls and procedures as of June 30, 2025 - Hudson Pacific Properties, Inc.'s management, including the Chief Executive Officer and Chief Financial Officer, concluded that its disclosure controls and procedures were effective as of June 30, 2025, providing reasonable assurance for timely and accurate reporting[307](index=307&type=chunk)[308](index=308&type=chunk) [Disclosure Controls and Procedures (Hudson Pacific Properties, L.P.)](index=71&type=section&id=Disclosure%20Controls%20and%20Procedures%20(Hudson%20Pacific%20Properties%2C%20L.P.)) Confirms the effectiveness of Hudson Pacific Properties, L.P.'s disclosure controls and procedures as of June 30, 2025 - Hudson Pacific Properties, L.P.'s management, including the Chief Executive Officer and Chief Financial Officer of its general partner, concluded that its disclosure controls and procedures were effective as of June 30, 2025, ensuring timely and accurate reporting[310](index=310&type=chunk)[311](index=311&type=chunk) [Changes in Internal Control Over Financial Reporting (Hudson Pacific Properties, Inc.)](index=71&type=section&id=Changes%20in%20Internal%20Control%20Over%20Financial%20Reporting%20(Hudson%20Pacific%20Properties%2C%20Inc.)) Reports no material changes in Hudson Pacific Properties, Inc.'s internal control over financial reporting during Q2 2025 - There were no changes that occurred during the second quarter of 2025 in Hudson Pacific Properties, Inc.'s internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, its internal control over financial reporting[312](index=312&type=chunk) [Changes in Internal Control Over Financial Reporting (Hudson Pacific Properties, L.P.)](index=72&type=section&id=Changes%20in%20Internal%20Control%20Over%20Financial%20Reporting%20(Hudson%20Pacific%20Properties%2C%20L.P.)) Reports no material changes in Hudson Pacific Properties, L.P.'s internal control over financial reporting during Q2 2025 - There were no changes that occurred during the second quarter of 2025 in Hudson Pacific Properties, L.P.'s internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, its internal control over financial reporting[313](index=313&type=chunk) [PART II—OTHER INFORMATION](index=73&type=section&id=PART%20II%E2%80%94OTHER%20INFORMATION) This part provides other information, including legal proceedings, risk factors, equity sales, defaults, and exhibits [ITEM 1. Legal Proceedings](index=73&type=section&id=ITEM%201.%20Legal%20Proceedings) The Company is not involved in any material legal proceedings expected to adversely affect its business or financial condition - The Company is not currently a party to any legal proceedings that are believed to be material or that would be expected to have a material adverse effect on its business, financial condition, results of operations, or cash flows[315](index=315&type=chunk) [ITEM 1A. Risk Factors](index=73&type=section&id=ITEM%201A.%20Risk%20Factors) This section reports no material changes to the risk factors previously disclosed in the Company's 2024 Annual Report - There have been no material changes to the risk factors included in the section entitled "Risk Factors" in the Company's 2024 Annual Report on Form 10-K[316](index=316&type=chunk) [ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=73&type=section&id=ITEM%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details unregistered equity sales by the operating partnership and Company, and the use of proceeds from a public offering - During Q2 2025, the operating partnership issued partnership units in private placements. The Company issued **208,178** shares of common stock upon vesting of restricted stock awards, with **3,166** shares forfeited for tax withholding[317](index=317&type=chunk) - A public offering closed on June 13, 2025, selling **237,553,442** common shares and pre-funded warrants for **71,863,597** shares, generating **$689.3 million** in gross proceeds (**$656.9 million** net). The proceeds were used to fully repay the unsecured revolving credit facility and for general corporate purposes[319](index=319&type=chunk)[320](index=320&type=chunk) - During Q2 2025, **3,166** shares of common stock were remitted to satisfy tax withholding obligations in connection with the vesting of restricted stock units, at an average price of **$2.74** per share[322](index=322&type=chunk) [ITEM 3. Defaults Upon Senior Securities](index=74&type=section&id=ITEM%203.%20Defaults%20Upon%20Senior%20Securities) The Company reported no defaults upon senior securities during the reporting period - There were no defaults upon senior securities during the period[324](index=324&type=chunk) [ITEM 4. Mine Safety Disclosures](index=74&type=section&id=ITEM%204.%20Mine%20Safety%20Disclosures) The Company reported no mine safety disclosures - There were no mine safety disclosures[325](index=325&type=chunk) [ITEM 5. Other Information](index=74&type=section&id=ITEM%205.%20Other%20Information) No officers or directors adopted or terminated Rule 10b5-1 trading arrangements during the three months ended June 30, 2025 - During the three months ended June 30, 2025, none of the Company's officers or directors adopted or terminated any Rule 10b5-1 trading arrangements[326](index=326&type=chunk) [ITEM 6. Exhibits](index=75&type=section&id=ITEM%206.%20Exhibits) This section lists all exhibits filed with Form 10-Q, including organizational documents, plans, agreements, certifications, and XBRL data - Exhibits include Articles of Amendment, Bylaws, Partnership Agreements, Form of Pre-Funded Warrant, Incentive Award Plan, Registration Rights Agreement, and various certifications (302, 906). Financial information is provided in iXBRL format[330](index=330&type=chunk) [SIGNATURES](index=76&type=section&id=SIGNATURES) This section contains the official signatures of the Chief Executive Officer and Chief Financial Officer, certifying the report - The report was signed by Victor J. Coleman (Chief Executive Officer) and Harout K. Diramerian (Chief Financial Officer) for both Hudson Pacific Properties, Inc. and Hudson Pacific Properties, L.P. on August 7, 2025[334](index=334&type=chunk)[335](index=335&type=chunk)[339](index=339&type=chunk)[340](index=340&type=chunk)

Core Insights - Hudson Pacific Properties (HPP) reported a revenue of $190 million for Q2 2025, reflecting a year-over-year decline of 12.8% and an EPS of $0.04, compared to -$0.33 a year ago [1] - The revenue fell short of the Zacks Consensus Estimate of $196.56 million by 3.33%, while the EPS exceeded the consensus estimate of $0.03 by 33.33% [1] Financial Performance Metrics - Office Rental revenues were $150.53 million, below the estimated $153.89 million, marking a 12.8% decline year-over-year [4] - Office Service and other revenues were reported at $5.3 million, slightly below the $5.41 million estimate, showing a significant year-over-year increase of 53.9% [4] - Total Studio revenues were $34.17 million, under the estimated $38.87 million, representing an 18.6% decline year-over-year [4] - Studio Service and other revenues were $20.28 million, compared to the $25.67 million estimate, indicating a year-over-year decrease of 26.3% [4] - Total Office revenues were $155.83 million, below the estimated $159.3 million, reflecting an 11.5% decline year-over-year [4] - Studio Rental revenues were $13.89 million, slightly above the estimated $13.2 million, showing a year-over-year decline of 3.8% [4] - The diluted net earnings per share were reported at -$0.41, compared to the average estimate of -$0.24 from three analysts [4] Stock Performance - Shares of Hudson Pacific have decreased by 10.7% over the past month, contrasting with a 1% increase in the Zacks S&P 500 composite [3] - The stock currently holds a Zacks Rank 4 (Sell), suggesting potential underperformance relative to the broader market in the near term [3]

Group 1 - Hudson Pacific Properties (HPP) reported quarterly funds from operations (FFO) of $0.04 per share, exceeding the Zacks Consensus Estimate of $0.03 per share, but down from $0.17 per share a year ago, representing an FFO surprise of +33.33% [1] - The company posted revenues of $190 million for the quarter ended June 2025, missing the Zacks Consensus Estimate by 3.33%, compared to year-ago revenues of $218 million [2] - Hudson Pacific has surpassed consensus FFO estimates three times over the last four quarters, but has only topped consensus revenue estimates once in the same period [2] Group 2 - The stock has underperformed, losing about 20.5% since the beginning of the year, while the S&P 500 has gained 7.6% [3] - The current consensus FFO estimate for the coming quarter is $0.03 on revenues of $199.86 million, and for the current fiscal year, it is $0.17 on revenues of $795.74 million [7] - The Zacks Industry Rank indicates that the REIT and Equity Trust - Other sector is currently in the top 40% of over 250 Zacks industries, suggesting a favorable outlook compared to the bottom 50% [8]

Financial Data and Key Metrics Changes - The second quarter revenue was $190 million, down from $218 million in the same quarter last year, primarily due to asset sales and lower office occupancy [19][20] - General and administrative (G&A) expenses improved significantly to $13.5 million from $20.7 million year-over-year, and $80.5 million in the first quarter of this year, marking a 3527% improvement [19][20] - Funds from operations (FFO) excluding specified items was $8 million or $0.04 per diluted share, compared to $24.5 million or $0.17 per diluted share in the same quarter last year [19][20] Business Line Data and Key Metrics Changes - Office leasing activity resulted in 1.2 million square feet of leases signed year-to-date, with 558,000 square feet signed in the quarter, 60% of which were new leases [5][12] - Studio revenue increased by 3% to $34.2 million due to additional studio occupancy, while studio expenses decreased by 11% to $36.6 million [16] - The trailing twelve-month net effective rents were 2% lower compared to the prior year and 11% lower versus pre-pandemic levels [13] Market Data and Key Metrics Changes - The West Coast office recovery is being driven by tech and AI companies, with San Francisco experiencing the largest quarterly occupancy increase in seven years [6][7] - In Silicon Valley, over 1 million square feet of positive net absorption was driven by the tech sector, with AI job postings increasing significantly [7][8] - The Bay Area currently hosts 60% of AI's footprint, indicating strong demand for office space in this sector [8] Company Strategy and Development Direction - The company is focused on enhancing its cost profile and has executed operational enhancements, asset sales, and capital transactions to drive future cash flow growth [6][11] - The strategic pursuit of non-core asset dispositions continues, with the sale of 625 Second for $28 million completed in the second quarter [11] - The company anticipates a stable and growing office occupancy due to lower expirations and increased demand [14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the recovery of office occupancy, projecting a low to high 8 handle by year-end 2026 [31] - The company expects to see increased allocation activity in the studio segment due to the California Film and Television Tax Credit [10] - Management noted that the balance sheet is in a strong position, allowing for a focus on leasing and operational improvements [34] Other Important Information - The company has over $1 billion in liquidity, including $236 million in unrestricted cash and $775 million in undrawn capacity under its credit facility [21] - The outlook for the third quarter expects FFO per diluted share to range from $0.01 to $0.05, with gross FFO expected to increase due to the recent equity offering [22][23] Q&A Session Summary Question: Concerns about future tenant move-outs - Management confirmed there are no significant issues with any tenant that would change the leasing dynamics [26][28] Question: Pace of occupancy recovery - Management indicated a comfortable projection for occupancy recovery, aiming for a low to high 8 handle by year-end 2026 [31] Question: Focus on leasing versus balance sheet - Management stated that the focus has shifted to leasing and occupancy growth, with no immediate major steps needed on the balance sheet [34] Question: Studio business and lease terminations - Management explained that lease terminations were part of cost-cutting efforts, with significant reductions in expenses achieved [36] Question: Revenue recovery in the studio segment - Management projected potential recovery in studio revenue, aiming for a breakeven point with increased show counts [44] Question: Leasing environment and activity levels - Management confirmed that leasing activity has picked up, surpassing previous quarterly averages [53][54] Question: Guidance for third quarter - Management indicated that studio business activity will be a key variable affecting guidance for the third quarter [62][64]

Financial Performance - Total revenues decreased to $190 million from $218 million, primarily due to asset sales and lower office occupancy[7, 13] - Net loss attributable to common stockholders was $(83149) thousand, or $(041) per diluted share, compared to a net loss of $(47027) thousand, or $(033) per diluted share[7, 13] - FFO (excluding specified items) was $8 million, or $004 per diluted share, compared to $245 million, or $017 per diluted share[7, 13] - AFFO was $(61) million, or $(003) per diluted share, compared to $242 million, or $017 per diluted share[7, 13] - Same-store cash NOI decreased to $87096 thousand from $104120 thousand, primarily due to lower office occupancy[7, 13] Portfolio & Leasing - In-service office portfolio occupancy was 751% and leased was 762%[7] - In-service studio portfolio stage leased was 636% and total leased was 630%[7] - Excluding Sunset Glenoaks, studio total leased would have been 743% and stage leased 800%[7, 8] - Executed 72 new and renewal leases totaling 558055 square feet[13] Balance Sheet & Liquidity - Sold office property 625 Second in San Francisco for $28 million[11] - Repaid private placement notes totaling $465 million[13] - Raised $690 million through a common equity offering[13] - Unsecured revolving credit facility undrawn capacity was $775 million and unrestricted cash and cash equivalents were $236025 thousand, resulting in $1 billion of total liquidity[7, 15] - HPP's share of net debt to HPP's share of undepreciated book value was 313%[7, 15]

[Overview & Highlights](index=1&type=section&id=Overview%20%26%20Highlights) Hudson Pacific Properties reported strong leasing activity and robust liquidity, driven by AI-related office demand and studio business recovery - Executed **1.2 million square feet** of office leases in H1 2025, with **558,000 square feet** signed in Q2[1](index=1&type=chunk)[2](index=2&type=chunk) - The company maintains a strong leasing pipeline exceeding **2.0 million square feet**, anticipating portfolio stabilization[2](index=2&type=chunk) - Positive trends observed from AI-related office demand and studio business recovery, with in-service studio and stage leased percentages rising to **74.3%** and **80.0%** respectively (excluding new development)[3](index=3&type=chunk) - Ended the quarter with **$1.0 billion** of liquidity and achieved a **35% year-over-year improvement** in recurring G&A expenses, totaling **$13.5 million**[1](index=1&type=chunk)[4](index=4&type=chunk) [Financial Performance](index=1&type=section&id=Financial%20Performance) Hudson Pacific's Q2 2025 financial performance showed decreased revenue and increased net loss, primarily due to asset sales and lower office occupancy Q2 2025 vs. Q2 2024 Financial Comparison | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Total Revenue | $190.0 million | $218.0 million | | Net Loss Attributable to Common Stockholders | $(83.1) million | $(47.0) million | | Net Loss per Diluted Share | $(0.41) | $(0.33) | | FFO, excluding specified items | $8.0 million | $24.5 million | | FFO per Diluted Share, excluding specified items | $0.04 | $0.17 | - Revenue decline primarily attributed to **asset sales** and **reduced office occupancy**[4](index=4&type=chunk) - Increased net loss largely due to **lower revenue**, accelerated depreciation from Quixote lease terminations, and disposal of obsolete fleet[4](index=4&type=chunk) - FFO impacted by specified items, including a **$14.3 million one-time expense** for canceling non-cash compensation agreements and **$3.2 million** for early debt repayment[4](index=4&type=chunk) [Operational & Portfolio Update](index=2&type=section&id=Operational%20%26%20Portfolio%20Update) The company demonstrated strong operational execution in Q2 2025 through significant leasing activity, strategic asset sales, and a strengthened balance sheet [Leasing Activity](index=2&type=section&id=Leasing) HPP executed 72 new and renewal leases totaling 558,055 square feet in Q2, maintaining stable office occupancy and increased core studio leasing - Executed **72 leases** for **558,055 sq. ft.**, including a **77,000 sq. ft. renewal** and a **65,000 sq. ft. new lease**[9](index=9&type=chunk) - In-service office portfolio ended Q2 **75.1% occupied** and **76.2% leased**, stable compared to Q1 2025[9](index=9&type=chunk) - Excluding new Sunset Glenoaks development, in-service studio total and stage leased percentages increased to **74.3%** and **80.0%** respectively[3](index=3&type=chunk)[9](index=9&type=chunk) - GAAP rents on new and renewal leases increased **4.9%**, while cash rents decreased **1.8%** from prior levels[9](index=9&type=chunk) [Transactions](index=2&type=section&id=Transactions) The company completed the sale of its 625 Second office property for **$28.0 million**, using net proceeds to repay its unsecured revolving credit facility - Sold the **625 Second office property** in San Francisco for **$28.0 million**[7](index=7&type=chunk) - Net proceeds from the sale were used to pay down the company's unsecured revolving credit facility[7](index=7&type=chunk) [Balance Sheet and Liquidity](index=2&type=section&id=Balance%20Sheet%20as%20of%20June%2030%2C%202025) As of quarter-end, HPP had **$1.0 billion** in total liquidity, proactively managing debt by repaying **$465.0 million** in notes and raising **$690.0 million** through a common equity offering - Total liquidity stood at **$1.0 billion**, comprising **$236.0 million** in unrestricted cash and **$775.0 million** of undrawn capacity on the revolving credit facility[9](index=9&type=chunk) - Repaid **$465.0 million** of private placement notes, addressing maturities in 2025, 2026, and 2027[9](index=9&type=chunk) - Raised **$690.0 million** in gross proceeds from a common equity offering to repay the credit facility and for general corporate purposes[9](index=9&type=chunk) - HPP's share of net debt to undepreciated book value was **31.3%**, with **99.2%** of debt fixed or capped[9](index=9&type=chunk) [Dividend](index=3&type=section&id=Dividend) The company's Board of Directors declared and paid a dividend of $0.296875 per share on its 4.750% Series C cumulative preferred stock - A dividend of **$0.296875 per share** was declared and paid on the **4.750% Series C cumulative preferred stock**[10](index=10&type=chunk) [2025 Outlook](index=3&type=section&id=2025%20Outlook) Hudson Pacific issued FFO guidance for Q3 2025 and updated full-year assumptions, anticipating a decline in same-store property cash NOI - Provides third-quarter 2025 FFO outlook of **$0.01 to $0.05 per diluted share**[11](index=11&type=chunk) Updated Full Year 2025 Assumptions | Metric | Low Assumption | High Assumption | | :--- | :--- | :--- | | Growth in same-store property cash NOI | (12.50)% | (11.50)% | | General and administrative expenses (in thousands) | $(57,500) | $(63,500) | | Interest expense (in thousands) | $(168,000) | $(178,000) | | Weighted average common stock/units outstanding (in units) | 319,000,000 | 321,000,000 | [Consolidated Financial Statements](index=6&type=section&id=Consolidated%20Financial%20Statements) This section provides detailed unaudited financial statements as of June 30, 2025, including balance sheets, statements of operations, and non-GAAP reconciliations for FFO, AFFO, and NOI [Consolidated Balance Sheets](index=6&type=section&id=Consolidated%20Balance%20Sheets) As of June 30, 2025, Hudson Pacific reported total assets of **$8.13 billion**, with total liabilities decreasing and stockholders' equity increasing, reflecting the recent common equity offering Selected Balance Sheet Data (in thousands) | Account | 6/30/2025 | 12/31/2024 | | :--- | :--- | :--- | | Total Assets | $8,126,052 | $8,132,239 | | Unsecured and secured debt, net | $3,690,429 | $4,176,844 | | Total Liabilities | $4,440,936 | $4,954,508 | | Total HPP stockholders' equity | $3,366,415 | $2,855,470 | [Consolidated Statements of Operations](index=7&type=section&id=Consolidated%20Statements%20of%20Operations) For Q2 2025, total revenues decreased to **$190.0 million** while operating expenses increased, resulting in a net loss of **$87.8 million** Q2 Statement of Operations Summary (in thousands) | Account | Three Months Ended 6/30/25 | Three Months Ended 6/30/24 | | :--- | :--- | :--- | | Total Revenues | $190,002 | $218,000 | | Total Operating Expenses | $230,580 | $220,759 | | Net Loss | $(87,760) | $(47,557) | | Net Loss Attributable to Common Stockholders | $(83,149) | $(47,027) | | Net Loss per Share (Diluted) | $(0.41) | $(0.33) | [Funds from Operations (FFO)](index=8&type=section&id=Funds%20from%20Operations%20(FFO)) FFO attributable to common stock/unit holders for Q2 2025 sharply declined to **$(11.2) million**, with adjusted FFO at **$8.0 million** FFO Reconciliation Summary (in thousands, except per share data) | Metric | Three Months Ended 6/30/25 | Three Months Ended 6/30/24 | | :--- | :--- | :--- | | FFO to common stock/unit holders | $(11,197) | $23,305 | | FFO per common stock/unit—diluted | $(0.05) | $0.16 | | FFO (excluding specified items) | $7,995 | $24,502 | | FFO (excluding specified items) per share | $0.04 | $0.17 | [Adjusted Funds from Operations (AFFO)](index=10&type=section&id=Adjusted%20Funds%20from%20Operations%20(AFFO)) AFFO for Q2 2025 was negative **$(6.1) million**, a significant decrease from Q2 2024, driven by lower FFO and increased capital expenditures AFFO Reconciliation Summary (in thousands, except per share data) | Metric | Three Months Ended 6/30/25 | Three Months Ended 6/30/24 | | :--- | :--- | :--- | | AFFO | $(6,070) | $24,241 | | Recurring capital expenditures, TIs & commissions | $(28,957) | $(18,645) | | AFFO per common stock/unit—diluted | $(0.03) | $0.17 | [Net Operating Income (NOI)](index=11&type=section&id=Net%20Operating%20Income%20(NOI)) In Q2 2025, same-store cash NOI decreased to **$87.1 million** from **$104.1 million** in Q2 2024, driven by lower same-store office cash revenues Same-Store Cash NOI (in thousands) | Metric | Three Months Ended 6/30/25 | Three Months Ended 6/30/24 | | :--- | :--- | :--- | | Same-store office cash revenues | $152,152 | $166,762 | | Same-store studios cash revenues | $15,525 | $20,186 | | Same-store cash NOI | $87,096 | $104,120 |

Core Insights - Cohen & Steers, Inc. has invested $300 million in Hudson Pacific Properties, representing 43% of HPP's $690 million offering, aimed at supporting HPP's balance sheet recapitalization [1][2]. Company Overview - Hudson Pacific Properties is a real estate investment trust (REIT) focused on serving tech and media tenants in key global markets, leveraging a high-barrier approach to property development and management [3]. - The company utilizes a full-service value creation platform, which includes identifying, acquiring, transforming, and developing properties into high-quality office and studio spaces [3]. Market Outlook - The West Coast office market is believed to be recovering and expected to gain momentum in the coming years, with Hudson Pacific Properties positioned to benefit from this trend due to its strong management and high-quality portfolio [2]. - The recapitalization of HPP's balance sheet is intended to reduce debt, extend existing debt maturities, and capitalize on the potential occupancy upside of its portfolio [2].