PART I—FINANCIAL INFORMATION [Financial Statements](index=5&type=section&id=ITEM%201.%20Financial%20Statements) Presents unaudited consolidated financial statements for Q1 2025, showing increased net loss and decreased revenues [Financial Statements of Hudson Pacific Properties, Inc.](index=5&type=section&id=Financial%20Statements%20of%20Hudson%20Pacific%20Properties,%20Inc.) HPP, Inc. reported a **net loss of $80.3 million** in Q1 2025, with declining operating cash flow and positive investing cash flow Consolidated Balance Sheet Highlights - HPP, Inc. (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Assets | $7,998,391 | $8,132,239 | | Total Liabilities | $4,903,235 | $4,954,508 | | Total Equity | $3,038,385 | $3,118,637 | Consolidated Statement of Operations Highlights - HPP, Inc. (in thousands, except per share data) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Total Revenues | $198,459 | $214,023 | | Net Loss | $(80,278) | $(53,355) | | Net Loss Attributable to Common Stockholders | $(74,708) | $(52,202) | | Net Loss per Share (Basic & Diluted) | $(0.53) | $(0.37) | Consolidated Cash Flow Highlights - HPP, Inc. (in thousands) | Cash Flow Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $30,536 | $65,128 | | Net cash provided by (used in) investing activities | $15,945 | $(71,360) | | Net cash (used in) provided by financing activities | $(11,732) | $20,648 | [Financial Statements of Hudson Pacific Properties, L.P.](index=10&type=section&id=Financial%20Statements%20of%20Hudson%20Pacific%20Properties,%20L.P.) HPP, L.P. reported a **net loss of $80.3 million** in Q1 2025, mirroring the REIT's financial performance Consolidated Statement of Operations Highlights - HPP, L.P. (in thousands, except per unit data) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Total Revenues | $198,459 | $214,023 | | Net Loss | $(80,278) | $(53,355) | | Net Loss Available to Common Unitholders | $(77,102) | $(53,431) | | Net Loss per Unit (Basic & Diluted) | $(0.53) | $(0.37) | Consolidated Capital Highlights - HPP, L.P. (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Liabilities | $4,903,235 | $4,954,508 | | Total Capital | $3,038,385 | $3,118,637 | [Notes to Unaudited Consolidated Financial Statements](index=18&type=section&id=Notes%20to%20Unaudited%20Consolidated%20Financial%20Statements) Detailed notes explain accounting policies, portfolio, debt, and compliance, confirming adherence to all debt covenants - As of March 31, 2025, the company's portfolio consisted of **55 properties** totaling **19.3 million square feet**, primarily office and studio space in the U.S., Canada, and the U.K.[48](index=48&type=chunk) - In Q1 2025, the company sold two office properties, Maxwell and Foothill Research Center, for gross proceeds of **$46.0 million** and **$23.0 million**, respectively, resulting in a net gain of **$10.0 million**[64](index=64&type=chunk)[65](index=65&type=chunk) - An impairment charge of **$18.4 million** was recorded in Q1 2025 related to the 625 Second office property, which is classified as held for sale[67](index=67&type=chunk) Debt Summary as of March 31, 2025 (in thousands) | Debt Type | Amount | | :--- | :--- | | Unsecured Debt | $2,138,000 | | Secured Debt | $2,060,667 | | **Total Unsecured and Secured Debt** | **$4,198,667** | | Joint Venture Partner Debt | $66,136 | - The company was in compliance with all its unsecured debt covenants as of March 31, 2025, including total liabilities to total asset value (**46.9%** vs. ≤**65%** limit) and adjusted EBITDA to fixed charges (**1.7x** vs. ≥**1.4x** limit)[98](index=98&type=chunk)[99](index=99&type=chunk) - Subsequent to quarter-end, the company tendered for the full repayment of its Series B, C, and D notes, financed with borrowings on its unsecured revolving credit facility[171](index=171&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=41&type=section&id=ITEM%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial performance, portfolio, and liquidity, noting increased net loss and decreased NOI, while maintaining sufficient liquidity - Management notes that West coast office fundamentals are strengthening, with record quarterly gross leasing and improving sublease availability[178](index=178&type=chunk) - The studio business is seeing growing interest for multi-year leases[178](index=178&type=chunk) Portfolio Leasing Status as of March 31, 2025 | Portfolio | Percent Leased | | :--- | :--- | | In-service office | 76.5% | | Same-store studio (12-month avg.) | 73.8% | - Net Operating Income (NOI) decreased by **18.0%** to **$85.2 million** in Q1 2025 from **$104.0 million** in Q1 2024[223](index=223&type=chunk)[228](index=228&type=chunk) - The decline was driven by a **$7.9 million** decrease in same-store NOI and a **$10.8 million** decrease in non-same-store NOI[228](index=228&type=chunk) - The company secured a new **$475.0 million** Office Portfolio CMBS loan and used proceeds to repay other debt[215](index=215&type=chunk) - It also amended its revolving credit facility, reducing capacity from **$900.0 million** to **$775.0 million**[215](index=215&type=chunk) Funds From Operations (FFO) Reconciliation (in thousands) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net Loss | $(80,278) | $(53,355) | | Adjustments (Depreciation, Gain on Sale, etc.) | $86,474 | $80,066 | | **FFO to Common Stockholders and Unitholders** | **$3,058** | **$22,041** | [Historical Results of Operations](index=49&type=section&id=Historical%20Results%20of%20Operations) Net loss increased to **$80.3 million** and total NOI decreased by **18.0%** in Q1 2025 due to various factors Net Operating Income (NOI) by Segment (in thousands) | Segment | Q1 2025 NOI | Q1 2024 NOI | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Office NOI | $92,934 | $102,128 | $(9,194) | (9.0)% | | Studio NOI | $(7,733) | $1,839 | $(9,572) | (520.5)% | | **Total NOI** | **$85,201** | **$103,967** | **$(18,766)** | **(18.0)%** | - Same-store NOI decreased by **$7.9 million** (**7.9%**), driven by a **$6.2 million** drop in office NOI from lease expirations and a **$1.7 million** drop in studio NOI from lower production activity at Sunset Gower Studios[228](index=228&type=chunk) - Non-same-store NOI decreased by **$10.8 million**, primarily due to a **$7.8 million** decline in studio NOI, which included a one-time **$5.9 million** lease termination fee related to Quixote cost-cutting initiatives[228](index=228&type=chunk) - General and administrative expenses decreased by **6.2%** to **$18.5 million** due to lower travel, IT, and shareholder relations costs[242](index=242&type=chunk) [Liquidity and Capital Resources](index=55&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains liquidity through cash, operating cash flow, and credit facilities, despite a decrease in operating cash flow - Principal sources of liquidity include cash on hand, cash from operations, strategic dispositions, and borrowings under its credit facilities[244](index=244&type=chunk)[247](index=247&type=chunk) Borrowing Capacity as of March 31, 2025 (in thousands) | Facility | Total Capacity | Amount Drawn | Remaining Capacity | | :--- | :--- | :--- | :--- | | Unsecured revolving credit facility | $775,000 | $23,000 | $752,000 | - Net cash provided by operating activities decreased by **53.1%** to **$30.5 million** in Q1 2025, primarily due to property dispositions, tenant move-outs, and lower production activity[258](index=258&type=chunk)[259](index=259&type=chunk) - Net cash from investing activities was a source of **$15.9 million** in Q1 2025, a reversal from a **$71.4 million** use in Q1 2024, driven by **$63.2 million** in proceeds from real estate sales[260](index=260&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=61&type=section&id=ITEM%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section states that there have been no material changes to the market risk disclosures provided in the company's 2024 Annual Report on Form 10-K - There have been no material changes for the three months ended March 31, 2025, to the market risk information provided in the 2024 Annual Report on Form 10-K[274](index=274&type=chunk) [Controls and Procedures](index=61&type=section&id=ITEM%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal control over financial reporting - For both Hudson Pacific Properties, Inc. and Hudson Pacific Properties, L.P., the CEO and CFO concluded that disclosure controls and procedures were effective as of the end of the period covered by the report[277](index=277&type=chunk)[280](index=280&type=chunk) - There were no changes in internal control over financial reporting during the first quarter that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[281](index=281&type=chunk)[282](index=282&type=chunk) PART II—OTHER INFORMATION [Legal Proceedings](index=63&type=section&id=ITEM%201.%20Legal%20Proceedings) The company is not currently a party to any legal proceedings expected to have a material adverse effect on its operations - The company is not currently a party to any material legal proceedings[284](index=284&type=chunk) [Risk Factors](index=63&type=section&id=ITEM%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the company's 2024 Annual Report on Form 10-K - No material changes have been made to the risk factors disclosed in the 2024 Annual Report on Form 10-K[285](index=285&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=63&type=section&id=ITEM%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company issued 177,980 shares of common stock for vested restricted awards and repurchased 64,672 shares for tax withholding - In Q1 2025, the company issued **177,980 shares** of common stock upon vesting of restricted stock awards, with no cash consideration[286](index=286&type=chunk) - **64,672 shares** were repurchased to satisfy tax withholding obligations related to the vesting of restricted stock units at an average price of **$3.00 per share**[288](index=288&type=chunk)[289](index=289&type=chunk) - As of March 31, 2025, **$35.3 million** remained available for repurchase under the company's authorized share repurchase program[288](index=288&type=chunk) [Defaults Upon Senior Securities](index=63&type=section&id=ITEM%203.%20Defaults%20Upon%20Senior%20Securities) The company reports no defaults upon its senior securities during the period - None[290](index=290&type=chunk) [Mine Safety Disclosures](index=64&type=section&id=ITEM%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - None[292](index=292&type=chunk) [Other Information](index=64&type=section&id=ITEM%205.%20Other%20Information) During the first quarter of 2025, no officers or directors adopted or terminated a Rule 10b5-1 trading plan - No officers or directors adopted or terminated any Rule 10b5-1 trading plans during the quarter[293](index=293&type=chunk) [Exhibits](index=65&type=section&id=ITEM%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including corporate governance documents and certifications - Exhibits filed include modifications to credit agreements, new loan agreements, and required CEO/CFO certifications[295](index=295&type=chunk)

Group 1 - The Conservative Income Portfolio targets value stocks with high margins of safety and aims to reduce volatility through well-priced options [1] - The Enhanced Equity Income Solutions Portfolio is designed to generate yields of 7-9% while minimizing volatility [1] - Trapping Value provides Covered Calls for lower volatility income investing, focusing on capital preservation [3] Group 2 - Hudson Pacific Properties (HPP) and their preferred shares were previously recommended for investors to exit, suggesting a cautious stance on these investments [2] - The investing group Conservative Income Portfolio collaborates with Preferred Stock Trader, combining expertise in income-generating portfolios and bond ladders [4] - The team behind Trapping Value has over 40 years of combined experience in generating options income while emphasizing capital preservation [4]

Core Viewpoint - Hudson Pacific Properties (HPP) reported quarterly funds from operations (FFO) of $0.09 per share, exceeding the Zacks Consensus Estimate of $0.08 per share, but down from $0.17 per share a year ago, indicating a 47.06% year-over-year decline [1][2] Financial Performance - The company posted revenues of $198.46 million for the quarter ended March 2025, missing the Zacks Consensus Estimate by 2.32%, and down from $214.02 million year-over-year, reflecting a 7.26% decrease [2] - Over the last four quarters, Hudson Pacific has surpassed consensus FFO estimates two times and topped consensus revenue estimates two times [2] Stock Performance - Hudson Pacific shares have declined approximately 26.4% since the beginning of the year, compared to a decline of 4.7% for the S&P 500 [3] - The current consensus FFO estimate for the upcoming quarter is $0.07 on revenues of $204.44 million, and for the current fiscal year, it is $0.34 on revenues of $831.33 million [7] Industry Outlook - The Zacks Industry Rank for REIT and Equity Trust - Other is currently in the bottom 37% of over 250 Zacks industries, indicating potential challenges for stocks in this sector [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in estimate revisions, which could impact Hudson Pacific's stock performance [5][6]

Financial Performance - Total revenues decreased to $198459 thousand from $214023 thousand, primarily due to asset sales and lower office occupancy[7, 13] - Net loss attributable to common stockholders was $74708 thousand, or $0053 per diluted share, compared to a net loss of $52202 thousand, or $037 per diluted share[7, 13] - FFO, excluding specified items, was $12865 thousand, or $009 per diluted share, compared to $24191 thousand, or $017 per diluted share[7, 13] - AFFO was $1711 thousand, or $001 per diluted share, compared to $28491 thousand, or $019 per diluted share[7, 13] - Same-store cash NOI decreased to $93198 thousand from $103395 thousand, primarily due to lower office occupancy, representing a (99)% decrease[7, 13, 28] Portfolio & Leasing Activity - In-service office portfolio occupancy decreased to 751% from 790% year-over-year[7] - In-service office portfolio leased percentage decreased to 765% from 805% year-over-year[7] - Executed 62 new and renewal leases totaling 630295 square feet[13] - GAAP rents increased 48% while cash rents decreased (136)%[7, 13] Balance Sheet & Debt - HPP's share of net debt to HPP's share of undepreciated book value was 390%[7, 13] - Unsecured revolving credit facility undrawn capacity was $752000 thousand[7, 13]

Financial Data and Key Metrics Changes - The company's Q1 2025 revenue was $198.5 million, down from $214 million in Q1 2024, attributed to asset sales and lower office occupancy [29] - FFO excluding specified items was $12.9 million or $0.09 per diluted share, compared to $24.2 million or $0.17 per diluted share a year ago [29][30] - Same store cash NOI decreased to $93.2 million from $103.4 million year over year, primarily due to lower office occupancy [30] Business Line Data and Key Metrics Changes - The company signed 630,000 square feet of new and renewal leases in Q1 2025, the highest quarterly leasing activity since Q2 2022 [17] - GAAP rents increased by 4.8%, while cash rents decreased by 13.6% [17] - The leasing pipeline increased by 5% to 2.1 million square feet, with 716,000 square feet in late-stage deals [21] Market Data and Key Metrics Changes - San Francisco's office leasing activity saw a significant increase, with gross leasing just under 3 million square feet in Q1 2025 [9] - Downtown Seattle experienced a 15% increase in gross leasing, despite a 90 basis point increase in direct vacancy [10] - The Bay Area received nearly 70% of U.S. venture funding, totaling $59 billion, marking a fourfold year-over-year increase [7] Company Strategy and Development Direction - The company is focusing on maximizing flexibility and occupancy while monitoring tariff impacts on core industries [6] - There is a strategic reevaluation of adaptive reuse of office assets due to new financial and zoning incentives for residential conversions [10] - The company is actively pursuing non-strategic asset sales to generate liquidity and reduce leverage, with $97 million generated from recent sales [15] Management's Comments on Operating Environment and Future Outlook - Management remains optimistic about improving market fundamentals and the potential positive impact of federal investments in AI [6][7] - The company expects occupancy to stabilize and grow starting in Q3 2025, with only 225,000 square feet expiring on average each quarter thereafter [22] - Management anticipates FFO per diluted share for Q2 2025 to range from $0.03 to $0.07, reflecting lower office NOI and higher interest expenses [33] Other Important Information - The company completed a CMBS financing for $475 million, using proceeds to repay a $168 million loan and for general corporate purposes [30] - The company is in discussions for potential long-term tenants for the Sunset Pier 94 Studios, expected to deliver by year-end [26] - The company has made significant progress in cost-cutting initiatives, achieving a total run rate savings of $14.2 million annually [25] Q&A Session Summary Question: Comments on cash rent spreads and concessions trends - Management indicated that cash rent spreads were in line with expectations, with net effective rents holding up well compared to pre-pandemic levels [36][38] Question: Impact of tariffs on the studio business - Management noted no significant impact from tariffs on tenant interest and highlighted potential federal support for the studio industry [42][43] Question: Paydown of private placement notes - Management confirmed the use of the revolver to pay down Series B notes, with plans to extend the revolver beyond 2026 [46][48] Question: Guidance on asset sales - Management stated that the guidance of $125 million to $150 million in asset sales is conservative and reflects non-core assets [49][50] Question: Expectations for occupancy and leasing pipeline - Management expects occupancy to improve starting in Q3 2025, with a strong leasing pipeline and increased tour activity [62][64] Question: Debt covenants and NOI to interest expense coverage - Management confirmed compliance with covenants and expects to maintain coverage despite fluctuations [85][86] Question: Production leads on the studio side - Management mentioned two executed production leads, both involving two stages with support space, indicating a positive trend in longer-term leases [92]

[First Quarter 2025 Financial Results](index=1&type=section&id=First%20Quarter%202025%20Financial%20Results) [Highlights & Management Commentary](index=1&type=section&id=Highlights%20%26%20Management%20Commentary) The company reported strong leasing activity and liquidity, focusing on strategic asset sales and debt reduction amid AI-driven demand - Signed **630,000 square feet** of leases and ended the quarter with **$839 million** of liquidity[1](index=1&type=chunk) - The office leasing pipeline increased to **2.1 million square feet**, with over 700,000 square feet in later-stage deals[3](index=3&type=chunk) - Management noted record venture capital flows into West Coast AI companies, which are expected to drive office demand[3](index=3&type=chunk) - The company is executing on a strategy of asset sales, cost savings, and debt reduction to improve its financial position[4](index=4&type=chunk) [Financial Results (Q1 2025 vs Q1 2024)](index=1&type=section&id=Financial%20Results%20Compared%20to%20First%20Quarter%202024) Key financial metrics declined year-over-year due to asset sales, lower occupancy, and one-time expenses Q1 2025 vs. Q1 2024 Financial Comparison | Metric | Q1 2025 | Q1 2024 | Change Driver | | :--- | :--- | :--- | :--- | | Total Revenue | $198.5M | $214.0M | Asset sales, lower office occupancy | | Net Loss Attributable to Common Stockholders | $(74.7)M or $(0.53)/share | $(52.2)M or $(0.37)/share | Lower revenue, one-time costs, impairment | | FFO (excl. specified items) | $12.9M or $0.09/share | $24.2M or $0.17/share | Lower revenue | | FFO | $3.1M or $0.02/share | $22.0M or $0.15/share | Lower revenue, one-time costs | | AFFO | $1.7M or $0.01/share | $28.5M or $0.19/share | Lower FFO, increased recurring capital expenditures | | Same-Store Cash NOI | $93.2M | $103.4M | Lower office occupancy | - The wider net loss was significantly impacted by one-time lease termination fees from Quixote cost-cutting and a non-cash impairment related to a potential asset sale[5](index=5&type=chunk) [Operational & Portfolio Update](index=2&type=section&id=Operational%20%26%20Portfolio%20Update) The company executed significant leasing activity but saw a decline in office occupancy while advancing its asset disposition strategy - **Leasing Activity:** - Executed 62 new and renewal leases totaling **630,295 square feet**[10](index=10&type=chunk) - Signed a significant 20-year, **232,000 square foot lease** with the City and County of San Francisco at 1455 Market[10](index=10&type=chunk) - GAAP rents increased **4.8%**, while cash rents decreased **13.6%** from prior levels, largely due to San Francisco leasing activity[10](index=10&type=chunk) - **Portfolio Occupancy:** - In-service office portfolio occupancy ended the quarter at **75.1%**, down from 78.3% in Q4 2024[10](index=10&type=chunk) - In-service studio portfolio was **73.8% leased** on a trailing 12-month basis, in line with the prior quarter[10](index=10&type=chunk) - **Asset Dispositions:** - Sold two office properties (Foothill Research Center and Maxwell) for an aggregate of **$69.0 million**[10](index=10&type=chunk) - Entered into a contract to sell 625 Second in San Francisco for **$28.0 million** subsequent to quarter-end[10](index=10&type=chunk) - **Dividend:** - The Board of Directors declared and paid a dividend of **$0.296875 per share** on its 4.750% Series C cumulative preferred stock[9](index=9&type=chunk) [Balance Sheet and Liquidity](index=2&type=section&id=Balance%20Sheet%20and%20Liquidity) The company maintained strong liquidity of $838.5 million and actively managed its debt profile with no maturities until late 2025 - Total liquidity was **$838.5 million**, comprising $86.5 million in unrestricted cash and $752.0 million of undrawn capacity on its revolving credit facility[10](index=10&type=chunk) - Completed a **$475 million** commercial mortgage-backed securities (CMBS) financing with a five-year term, using proceeds to repay a $168 million loan and reduce borrowings on the credit facility[10](index=10&type=chunk) - HPP's share of net debt to undepreciated book value was **39.0%**, with **85.4%** of debt being fixed or capped[10](index=10&type=chunk) - Subsequent to the quarter, the company tendered for the repayment of all private placement notes (Series B, C, and D), totaling over **$304.0 million**[10](index=10&type=chunk) [2025 Outlook](index=3&type=section&id=2025%20Outlook) The company issued Q2 2025 FFO guidance of $0.03 to $0.07 per share and updated full-year assumptions, projecting a decline in same-store cash NOI - Provides FFO outlook for Q2 2025 of **$0.03 to $0.07** per diluted share[11](index=11&type=chunk) Full Year 2025 Assumptions (Unaudited, in thousands) | Metric | Low | High | | :--- | :--- | :--- | | Growth in same-store property cash NOI | (13.50)% | (12.50)% | | GAAP non-cash revenue | $8,500 | $13,500 | | General and administrative expenses | $(67,000) | $(73,000) | | Interest expense | $(185,000) | $(195,000) | | FFO from unconsolidated joint ventures | $1,000 | $3,000 | | Weighted average common stock/units outstanding—diluted | 146,500,000 | 147,500,000 | [Financial Statements & Reconciliations](index=5&type=section&id=Financial%20Statements%20%26%20Reconciliations) This section provides detailed unaudited financial statements and non-GAAP reconciliations for the period ended March 31, 2025 [Consolidated Balance Sheets](index=5&type=section&id=Consolidated%20Balance%20Sheets) Total assets were approximately $8.0 billion and total equity was $3.04 billion as of March 31, 2025, both showing slight declines Consolidated Balance Sheet Highlights (in thousands) | Account | 3/31/25 (Unaudited) | 12/31/24 | | :--- | :--- | :--- | | Investment in real estate, net | $6,356,453 | $6,442,178 | | Cash and cash equivalents | $86,474 | $63,256 | | **Total Assets** | **$7,998,391** | **$8,132,239** | | Unsecured and secured debt, net | $4,178,343 | $4,176,844 | | **Total Liabilities** | **$4,903,235** | **$4,954,508** | | **Total Equity** | **$3,038,385** | **$3,118,637** | [Consolidated Statements of Operations](index=6&type=section&id=Consolidated%20Statements%20of%20Operations) For Q1 2025, the company reported revenues of $198.5 million and a net loss of $74.7 million, wider than the prior year Consolidated Operations Highlights (in thousands, except per share data) | Account | Three Months Ended 3/31/25 | Three Months Ended 3/31/24 | | :--- | :--- | :--- | | Total Revenues | $198,459 | $214,023 | | Total Operating Expenses | $224,826 | $221,620 | | Impairment loss | $(18,476) | $— | | Net Loss | $(80,278) | $(53,355) | | **Net Loss Attributable to Common Stockholders** | **$(74,708)** | **$(52,202)** | | **Net Loss per Share - diluted** | **$(0.53)** | **$(0.37)** | [Funds from Operations (FFO)](index=7&type=section&id=Funds%20from%20Operations%20(FFO)) Q1 2025 FFO was $3.1 million, or $12.9 million excluding specified items, a significant decrease from the prior year FFO Reconciliation Highlights (in thousands, except per share data) | Metric | Three Months Ended 3/31/25 | Three Months Ended 3/31/24 | | :--- | :--- | :--- | | FFO to common stock/unit holders | $3,058 | $22,041 | | FFO per common stock/unit—diluted | $0.02 | $0.15 | | FFO (excluding specified items) to common stock/unit holders | $12,865 | $24,191 | | FFO (excluding specified items) per common stock/unit—diluted | $0.09 | $0.17 | [Adjusted Funds from Operations (AFFO)](index=8&type=section&id=Adjusted%20Funds%20from%20Operations%20(AFFO)) AFFO for Q1 2025 was $1.7 million, a sharp decline from $28.5 million in Q1 2024, driven by lower FFO and higher capital expenditures AFFO Highlights (in thousands, except per share data) | Metric | Three Months Ended 3/31/25 | Three Months Ended 3/31/24 | | :--- | :--- | :--- | | FFO (excluding specified items) | $12,865 | $24,191 | | Recurring capital expenditures, TIs & commissions | $(29,658) | $(15,743) | | **AFFO** | **$1,711** | **$28,491** | | **AFFO per common stock/unit—diluted** | **$0.01** | **$0.19** | [Net Operating Income (NOI)](index=9&type=section&id=Net%20Operating%20Income%20(NOI)) Total NOI was $85.2 million, while same-store cash NOI was $93.2 million, both declining year-over-year due to lower occupancy NOI Reconciliation Highlights (in thousands) | Metric | Three Months Ended 3/31/25 | Three Months Ended 3/31/24 | | :--- | :--- | :--- | | Net Loss | $(80,278) | $(53,355) | | **NOI** | **$85,201** | **$103,967** | | Cash NOI | $86,305 | $107,552 | | **Same-store cash NOI** | **$93,198** | **$103,395** |

分组1 - Service Properties (SVC) reported quarterly funds from operations (FFO) of $0.07 per share, exceeding the Zacks Consensus Estimate of $0.05 per share, but down from $0.13 per share a year ago, representing a 40% surprise [1] - The company posted revenues of $435.18 million for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 1.46%, although this is a slight decrease from $436.25 million in the same quarter last year [2] - Over the last four quarters, Service Properties has surpassed consensus FFO estimates two times and topped consensus revenue estimates three times [2] 分组2 - The stock has underperformed, losing about 24% since the beginning of the year compared to the S&P 500's decline of 3.9% [3] - The current consensus FFO estimate for the coming quarter is $0.41 on revenues of $501.72 million, and for the current fiscal year, it is $0.90 on revenues of $1.86 billion [7] - The Zacks Industry Rank for REIT and Equity Trust - Other is currently in the bottom 34% of over 250 Zacks industries, indicating potential challenges for the sector [8]

Core Viewpoint - Hudson Pacific Properties, Inc. (HPP) is trading at a significant discount, approximately 30% of its Net Asset Value (NAV), but this discount may be misleading due to high leverage and the overall capital structure [1][12]. Valuation Metrics - The consensus NAV for HPP is $7.61, while the stock is trading at $2.32, indicating a price to NAV of 29.71% [2][4]. - The market capitalization of fully diluted common shares is $338 million, with a NAV implied common value of $1.109 billion [7][8]. Financial Structure - HPP's total liabilities, including preferred shares, amount to $5.379 billion, with total debt at $4.176 billion [5][6]. - The asset value at NAV is $6.488 billion, while the market price implied asset value is $5.717 billion, resulting in a discount of 12% from asset value [10]. Leverage Impact - HPP's high leverage means that an 18% decline in asset value could lead to common shares being wiped out, taking NAV per share to $0 [12][13]. - The leverage amplifies both potential gains and losses, making the investment sensitive to changes in asset value [16]. Investment Thesis - For HPP to be a viable investment, there must be a belief in a turnaround story, particularly in stabilizing occupancy and returning to growth in office assets [14][15]. - The potential for significant returns exists if the office market improves, as leverage could enhance the gains on common stock [16].

Financial Performance - Vornado reported quarterly funds from operations (FFO) of $0.63 per share, exceeding the Zacks Consensus Estimate of $0.52 per share, and up from $0.55 per share a year ago, representing an FFO surprise of 21.15% [1] - The company posted revenues of $461.58 million for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 3.05%, compared to year-ago revenues of $436.38 million [2] Market Performance - Vornado shares have declined approximately 11.4% since the beginning of the year, while the S&P 500 has decreased by 3.3% [3] - The current consensus FFO estimate for the upcoming quarter is -$0.33 on revenues of $455.06 million, and for the current fiscal year, it is $2.19 on revenues of $1.82 billion [7] Industry Outlook - The REIT and Equity Trust - Other industry, to which Vornado belongs, is currently ranked in the bottom 37% of over 250 Zacks industries, indicating potential challenges ahead [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in estimate revisions, which can impact Vornado's stock performance [5][6]

Office Sector Trends - Tenant requirements increased by 28% in 1Q24 compared to 1Q23[3] - Gross leasing activity accelerated by 14% in 1Q24 compared to 1Q23[3] - Sublease additions decreased by 67% from March 2024 compared to the December 2022 peak[3] - The development pipeline shrank by 62% from 2023 compared to 2019[3] - Remote job postings on LinkedIn declined by 12 percentage points from February 2022 to December 2023[3] HPP Market Performance - Tenant demand increased in West Los Angeles, San Francisco, and Silicon Valley[4] - Sublease availability decreased in West Los Angeles, San Francisco (by 400K sq ft), and Silicon Valley (by 500K sq ft)[4] - Under construction as a percentage of inventory decreased in West Los Angeles (~130 bps YOY), Silicon Valley (~290 bps YOY), and Seattle (~370 bps YOY)[4] - AI companies in San Francisco leased 228K sq ft YTD, with another 825K sq ft of requirements in the market[9] - Bay Area received 78% of approximately $10 billion in US AI VC funding in 1Q24[10] HPP Leasing Activity - HPP executed 305K sq ft of leases in April-May, with 83% being new leases[12] - HPP's current pipeline increased 10% to 2.0M sq ft compared to 1Q24[13] - HPP signed 91K sq ft of leases at 411 First, increasing occupancy from 57% to 93% between 2Q22 and 1Q24[18]