Hudson Pacific Properties Q4 Earnings Call Highlights

Core Insights - Hudson Pacific Properties reported a strong fourth quarter with leasing totaling 518,000 square feet, leading to an office occupancy rate of 76.3% and a leased rate of 77% [1][6]. - The company achieved significant cost reductions, generating $26 million in combined G&A and interest expense savings in 2025, and has locked in $25 million of annualized savings through restructuring [2][7]. - CEO Victor Coleman described 2025 as a "breakthrough year," with nearly $330 million in asset sales and over $2 billion in capital transactions, which nearly doubled the company's liquidity [3][4]. Leasing and Occupancy - The office leasing momentum is strong, with a leasing pipeline of 2.3 million square feet, up 15% year-over-year, and tours increased by over 50% year-over-year [6][10]. - The company has 60% coverage on first-quarter expirations and 55% coverage on the remainder, with only about 1 million square feet coming due in 2026 [8]. - Fourth-quarter GAAP rents rose by 0.4%, while cash rents declined by 9%, indicating a sequential improvement from the third quarter [8]. Studio Performance - Studio results are improving, with in-service occupancy rising to 69.1% and Quixote stages reaching 53.3%, up 500 basis points quarter-over-quarter [11][12]. - Studio revenue increased by $3.6 million sequentially, and studio NOI rose by $2.1 million [12]. - Management plans to mitigate Quixote's earnings drag by year-end through further cost reductions and downsizing [5][12]. Financial Performance and Guidance - Fourth-quarter total revenues were reported at $256 million, compared to $209.7 million in the prior year, driven by an Element LA lease termination fee [15]. - The company reinstated full-year FFO guidance for 2026 at $0.96 to $1.06 per diluted share, with expectations of steady sequential growth as leasing converts to cash flow [17]. - Same-store property cash NOI growth is projected to be negative 1.75% to negative 0.75%, which management expects to improve as office occupancy ramps up [18]. Development and Future Outlook - The Sunset Pier 94 Studios project was delivered on time and under budget, achieving 90% occupancy in its first quarter of operations [14]. - The company is targeting asset sales of $200 million to $300 million in 2026 and is actively marketing properties, including a re-entitled site for residential units [19]. - Management remains engaged with Netflix regarding the Hollywood Media Portfolio loan, emphasizing the portfolio's quality and expansion potential [20].