Hudson Pacific Properties, Inc. (HPP): A Bull Case Theory

Core Thesis - Hudson Pacific Properties, Inc. (HPP) presents a unique investment opportunity due to a significant disconnect between its intrinsic asset value and current market pricing, driven by a stressed capital structure [2][4]. Financial Overview - HPP's share price was $9.49 as of January 14th, with trailing and forward P/E ratios of 159.93 and 6.32 respectively [1]. - The company owns approximately $6.3 billion in net real estate and $1.2 billion in land at cost, while the market values its equity at roughly $0.8 billion, indicating a price-to-book ratio of 0.25× pre-reverse split [2]. - Q3 2025 results showed total revenue declined to $186.6 million from $200.4 million year-over-year, same-store cash NOI fell to $89.3 million from $100 million, and a net loss attributable to common shareholders was $136.5 million, or $0.30 per share [2]. Capital Structure - HPP maintains total assets of $7.8 billion, equity of $3.4 billion, and debt of approximately $3.9–4.0 billion, with net debt of $3.7–3.8 billion [3]. - The company has $200 million in working capital and $1.0 billion in liquidity, with 100% of its debt being fixed or capped and no maturities until H2 2026 [3]. - A recent $600 million equity raise and a 1-for-7 reverse stock split have been completed, indicating efforts to stabilize the financial position [3]. Investment Potential - The disconnect between book value and market valuation suggests a deep-value opportunity if the capital structure can withstand the next year [3]. - Key hidden assets include a $1.65 billion studio joint venture with Blackstone, land held at historical cost with potential upside, and development rights that offer optionality [3]. - Despite challenges in the West Coast office cycle, studios and development platforms provide long-term optionality, and multiple catalysts such as SOTP recognition and potential upside in undervalued assets make HPP a compelling investment case for long-term investors [4]. Market Sentiment - HPP's stock price has appreciated by approximately 80.76% since a bearish thesis was published in September 2024, attributed to recapitalization efforts and recognition of hidden value [5]. - A contrarian view emphasizes the optionality in creative offices, Hollywood studios, and land assets as key drivers for potential upside [5].