8-K
Hudson Pacific Properties, Inc. (HPP)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________________________
FORM 8-K
_________________________________
CURRENT REPORT
Pursuant to Section 13 OR 15 (d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): December 27, 2023
_________________________________
Hudson Pacific Properties, Inc.
Hudson Pacific Properties, L.P.
(Exact name of registrant as specified in its charter)
| Hudson Pacific Properties, Inc. | Maryland | 001-34789 | 27-1430478 |
|---|---|---|---|
| Hudson Pacific Properties, L.P. | Maryland | 333-202799-01 | 80-0579682 |
| (State or other jurisdiction | (Commission | (IRS Employer | |
| of incorporation) | File Number) | Identification No.) | |
| 11601 Wilshire Blvd., Ninth Floor | |||
| --- | --- | --- | |
| Los Angeles, | California | 90025 | |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code: (310) 445-5700
Not Applicable
(Former name or former address, if changed since last report)
_________________________________
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Registrant | Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
|---|---|---|---|
| Hudson Pacific Properties, Inc. | Common Stock, $0.01 par value | HPP | New York Stock Exchange |
| Hudson Pacific Properties, Inc. | 4.750% Series C Cumulative Redeemable Preferred Stock | HPP Pr C | New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Hudson Pacific Properties, Inc ☐
Hudson Pacific Properties, L.P. ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Hudson Pacific Properties, Inc. ☐
Hudson Pacific Properties, L.P. ☐
Item 2.01 Completion of Acquisition or Disposition of Assets.
On December 27, 2023, Hudson Pacific Properties, Inc. (the “Company”), through a joint venture with Macerich in which the Company owns a 75.0% ownership interest, completed the sale of the property located at 10800, 10830 and 10850 West Pico Boulevard, Los Angeles, California, commonly known as “One Westside” and “Westside Two” (collectively, the “Property”), for a gross sale price of $700.0 million (before certain credits, prorations and closing costs). The Property was sold to The Regents of the University of California, with whom the Company has no other relationship. In connection with the disposition of the Property, the Company repaid the One Westside construction loan, which loan was secured by the Property, in the amount of $324.6 million.
Item 7.01 Regulation FD Disclosure.
On January 3, 2024, the Company issued a press release announcing the sale of the Property in an all-cash transaction. A copy of the press release is attached to this Current Report on Form 8-K as Exhibit 99.1 and is incorporated herein by reference. The press release is being furnished pursuant to Item 7.01 and shall not be deemed to be filed for the purposes of Section 18 of, or incorporated by reference into the filings of the Company under, the Securities Exchange Act of 1934, or as amended.
Item 9.01 Financial Statements and Exhibits.
| (b) | Pro forma financial information. |
|---|
The following unaudited pro-forma consolidated financial information of the Company and Hudson Pacific Properties, L.P., a Maryland limited partnership of which the Company serves as the sole general partner, is filed as Exhibit 99.2 hereof and incorporated herein by reference:
1.Unaudited Pro Forma Financial Information;
2.Unaudited Pro Forma Condensed Balance Sheets as of September 30, 2023;
3.Unaudited Pro Forma Consolidated Statements of Operations for the Nine Months Ended September 30, 2023; and
4.Unaudited Pro Forma Consolidated Statements of Operations for the Year Ended December 31, 2022.
| (d) | Exhibits. |
|---|---|
| Exhibit No. | Description |
| --- | --- |
| 99.1** | Press release datedJanuary 3, 2024regarding the Company’s disposition of One Westside and Westside Two. |
| 99.2 | Pro forma financial statements. |
| 104 | Cover page interactive data file (embedded within the Inline XBRL document). |
_____________
** Furnished herewith.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrants have duly caused this report to be signed on their behalf by the undersigned hereunto duly authorized.
| Date: January 3, 2024 | ||
|---|---|---|
| HUDSON PACIFIC PROPERTIES, INC. | ||
| By: | /s/ Mark T. Lammas | |
| Mark T. Lammas | ||
| President | ||
| HUDSON PACIFIC PROPERTIES, L.P. | ||
| By: | Hudson Pacific Properties, Inc., Its General Partner | |
| By: | /s/ Mark T. Lammas | |
| Mark T. Lammas | ||
| President |
Document
Hudson Pacific and Macerich Complete $700 Million Sale of One Westside and Westside Two
____________
LOS ANGELES (January 3, 2024)—Hudson Pacific Properties, Inc. (NYSE: HPP), a unique provider of end-to-end real estate solutions for tech and media tenants, and Macerich (NYSE: MAC), one of the nation’s leading owners, operators and developers of major retail and mixed-use properties in top markets, today announced the sale of One Westside and Westside Two in Los Angeles to the Regents of the University of California for $700 million before prorations and closing costs. Hudson Pacific held a 75% interest and Macerich a 25% interest in the joint venture that owned the assets, which total approximately 687,000 square feet.
“The opportunistic sale of One Westside and Westside Two significantly bolsters our balance sheet and we now have no debt maturities until year-end 2025,” said Victor Coleman, Chairman and CEO of Hudson Pacific. “We transformed the former Westside Pavilion mall into a multi-award winning, modern and flexible campus environment that attracted not one, but two distinct large-scale, high-quality end-users, a testament to our ability to create value through development expertise, commitment to quality and strong relationships.”
Macerich Chief Executive Officer Tom O’Hern noted that, “This transaction is an excellent example of how Macerich consistently makes the most of our opportunities to maximize value for our stakeholders. Net proceeds enable us to further deleverage and improve our liquidity profile, allowing us to more aggressively advance Macerich’s successful densification-diversification strategy, which adds new uses—from fitness, grocery and medical to residential, hotel, office and more—to our high-quality portfolio of Regional Town Centers in attractive U.S. markets.”
Hudson Pacific used net proceeds from the sale to repay amounts outstanding on its unsecured revolving credit facility. This transaction addresses the company’s debt maturities until December 2025, and further strengthens the company’s compliance with its unsecured revolving credit facility covenants as recently amended. Further, the company’s share of net debt to the company’s share of undepreciated book value as of September 30, 2023 proforma for all announced asset sales improved to 35% from 39%.
About Hudson Pacific Properties
Hudson Pacific Properties (NYSE: HPP) is a real estate investment trust serving dynamic tech and media tenants in global epicenters for these synergistic, converging and secular growth industries. Hudson Pacific’s unique and high-barrier tech and media focus leverages a full-service, end-to-end value creation platform forged through deep strategic relationships and niche expertise across identifying, acquiring, transforming and developing properties into world-class amenitized, collaborative and sustainable office and studio space. For more information visit HudsonPacificProperties.com.
About Macerich
Macerich is a fully integrated, self-managed and self-administered real estate investment trust (REIT). As a leading owner, operator and developer of high-quality retail real estate in densely populated and attractive U.S. markets, Macerich’s portfolio is concentrated in California, the Pacific Northwest, Phoenix/Scottsdale, and the Metro New York to Washington, D.C. corridor. Developing and managing properties that serve as community cornerstones, Macerich currently owns 47 million square feet of real estate consisting primarily of interests in 44 regional town centers. Macerich is firmly dedicated to advancing environmental goals, social good and sound corporate governance. A recognized leader in sustainability, Macerich has achieved a #1 Global Real Estate Sustainability Benchmark (GRESB) ranking for the North
American retail sector for nine consecutive years (2015-2023). For more information, please visit www.Macerich.com.
Macerich uses, and intends to continue to use, its Investor Relations website, which can be found at investing.macerich.com, as a means of disclosing material nonpublic information and for complying with its disclosure obligations under Regulation FD. Additional information about Macerich can be found through social media platforms such as LinkedIn. Reconciliations of non-GAAP financial measures, including NOI and FFO, to the most directly comparable GAAP measures are included in the earnings release and supplemental filed on Form 8-K with the SEC, which are posted on the Investor Relations website at investing.macerich.com.
Hudson Pacific Properties Forward-Looking Statements
This press release may contain forward-looking statements within the meaning of the federal securities laws. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. In some cases, you can identify forward-looking statements by the use of forward-looking terminology such as "may," "will," "should," "expects," "intends," "plans," "anticipates," "believes," "estimates," "predicts," or "potential" or the negative of these words and phrases or similar words or phrases that are predictions of or indicate future events, or trends and that do not relate solely to historical matters. Forward-looking statements involve known and unknown risks, uncertainties, assumptions and contingencies, many of which are beyond the company's control, which may cause actual results to differ significantly from those expressed in any forward-looking statement. All forward-looking statements reflect the company's good faith beliefs, assumptions and expectations, but they are not guarantees of future performance. Furthermore, the company disclaims any obligation to publicly update or revise any forward-looking statement to reflect changes in underlying assumptions or factors, of new information, data or methods, future events or other changes. For a further discussion of these and other factors that could cause the company's future results to differ materially from any forward-looking statements, see the section entitled "Risk Factors" in the company's Annual Report on Form 10-K filed with the Securities and Exchange Commission, or SEC, and other risks described in documents subsequently filed by the company from time to time with the SEC.
| Hudson Pacific Properties | Macerich |
|---|---|
| Investor Contact: Laura Campbell<br><br>(310) 622-1702<br><br>lcampbell@hudsonppi.com<br><br><br><br>Media Contact: Laura Murray<br><br>(310) 622-1781<br><br>lmurray@hudsonppi.com | Karen Maurer<br><br>(602) 953-6471<br><br>Karen.maurer@macerich.com |
Document
Exhibit 99.2
Hudson Pacific Properties, Inc. and Hudson Pacific Properties, L.P.
Unaudited Pro Forma Financial Information
All references in these financial statements to “the Company” refer to Hudson Pacific Properties, Inc. together with its consolidated subsidiaries, including Hudson Pacific Properties, L.P. Unless otherwise indicated or unless the context requires otherwise, all references to “our Operating Partnership” or “the Operating Partnership” refer to Hudson Pacific Properties, L.P. together with its consolidated subsidiaries.
On December 27, 2023, the Company, through a joint venture with Macerich in which the Company owns a 75.0% ownership interest, completed the sale of the property located at 10800, 10830 and 10850 West Pico Boulevard, Los Angeles, California, commonly known as “One Westside” and “Westside Two” (collectively, the “Property”), for a gross sale price of $700.0 million (before certain credits, prorations and closing costs).
The following unaudited pro forma consolidated balance sheet of the Company and the Operating Partnership as of September 30, 2023 and unaudited pro forma consolidated statements of operations for the nine months ended September 30, 2023 and the year ended December 31, 2022 have been prepared as if the disposition of the Property had occurred on September 30, 2023 for the pro forma consolidated balance sheet and as if the disposition of the Property had occurred on January 1, 2022 for both pro forma consolidated statements of operations.
Our pro forma consolidated financial statements are presented for informational purposes only and should be read in conjunction with our forms 10-K and 10-Q filed with the Securities and Exchange Commission. The adjustments to our pro forma consolidated financial statements are based on available information and assumptions that we consider reasonable. Our pro forma consolidated financial statements do not purport to (1) represent our financial position that would have actually occurred had the disposition of the Property occurred on September 30, 2023, (2) represent the results of our operations that would have actually occurred had the disposition of the Property occurred on January 1, 2022 or (3) project our financial position or results of operations as of any future date or for any future period, as applicable.
Exhibit 99.2
Hudson Pacific Properties, Inc.
Unaudited Pro Forma Consolidated Balance Sheet
As of September 30, 2023
(in thousands, except share data)
| Hudson Pacific Properties, Inc. (A) | Sale of Property (B) | Notes | Pro Forma | ||||
|---|---|---|---|---|---|---|---|
| ASSETS | |||||||
| Investment in real estate, at cost | $ | 8,831,914 | $ | (574,317) | $ | 8,257,597 | |
| Accumulated depreciation and amortization | (1,735,715) | 50,394 | (1,685,321) | ||||
| Investment in real estate, net | 7,096,199 | (523,923) | 6,572,276 | ||||
| Non-real estate property, plant and equipment, net | 115,903 | — | 115,903 | ||||
| Cash and cash equivalents | 75,040 | 219,857 | (C) | 294,897 | |||
| Restricted cash | 19,054 | 16,000 | (C) | 35,054 | |||
| Accounts receivable, net | 19,330 | 581 | 19,911 | ||||
| Straight-line rent receivables, net | 290,938 | (58,535) | 232,403 | ||||
| Deferred leasing costs and intangible assets, net | 359,870 | (23,543) | 336,327 | ||||
| Operating lease right-of-use assets | 391,177 | — | 391,177 | ||||
| Prepaid expenses and other assets, net | 119,494 | (83) | 119,411 | ||||
| Investment in unconsolidated real estate entities | 236,248 | — | 236,248 | ||||
| Goodwill | 263,549 | — | 263,549 | ||||
| TOTAL ASSETS | $ | 8,986,802 | $ | (369,646) | $ | 8,617,156 | |
| LIABILITIES AND EQUITY | |||||||
| Liabilities | |||||||
| Unsecured and secured debt, net | $ | 4,417,020 | $ | (324,273) | (D) | $ | 4,092,747 |
| Joint venture partner debt | 66,136 | — | 66,136 | ||||
| Accounts payable, accrued liabilities and other | 267,426 | (29,208) | 238,218 | ||||
| Operating lease liabilities | 393,773 | — | 393,773 | ||||
| Intangible liabilities, net | 29,247 | — | 29,247 | ||||
| Security deposits, prepaid rent and other | 86,980 | (4,587) | 82,393 | ||||
| Total liabilities | 5,260,582 | (358,068) | 4,902,514 | ||||
| Redeemable preferred units of the operating partnership | 9,815 | — | 9,815 | ||||
| Redeemable non-controlling interest in consolidated real estate entities | 115,580 | (57,914) | (E) | 57,666 | |||
| Equity | |||||||
| Hudson Pacific Properties, Inc. stockholders' equity: | |||||||
| 4.750% Series C cumulative redeemable preferred stock, $0.01 par value, $25.00 per share liquidation preference, 18,400,000 authorized, 17,000,000 shares outstanding at September 30, 2023 | 425,000 | — | 425,000 | ||||
| Common stock, $0.01 par value, 481,600,000 authorized, 140,937,702 shares outstanding at September 30, 2023 | 1,403 | — | 1,403 | ||||
| Additional paid-in capital | 2,748,309 | 45,515 | (F) | 2,793,824 | |||
| Accumulated other comprehensive income | 4,178 | — | 4,178 | ||||
| Total Hudson Pacific Properties, Inc. stockholders’ equity | 3,178,890 | 45,515 | 3,224,405 | ||||
| Non-controlling interest—members in consolidated real estate entities | 345,058 | — | 345,058 | ||||
| Non-controlling interest—units in the operating partnership | 76,877 | 821 | (G) | 77,698 | |||
| Total equity | 3,600,825 | 46,336 | 3,647,161 | ||||
| TOTAL LIABILITIES AND EQUITY | $ | 8,986,802 | $ | (369,646) | $ | 8,617,156 |
Exhibit 99.2
Hudson Pacific Properties, Inc.
Unaudited Pro Forma Consolidated Statement of Operations
For the Nine Months Ended September 30, 2023
(in thousands, except share data)
| Hudson Pacific Properties, Inc. (AA) | Sale of Property (BB) | Notes | Pro Forma | ||||
|---|---|---|---|---|---|---|---|
| REVENUES | |||||||
| Office | |||||||
| Rental | $ | 605,776 | $ | (46,729) | $ | 559,047 | |
| Service and other revenues | 11,735 | (10) | 11,725 | ||||
| Total office revenues | 617,511 | (46,739) | 570,772 | ||||
| Studio | |||||||
| Rental | 46,109 | — | 46,109 | ||||
| Service and other revenues | 65,254 | — | 65,254 | ||||
| Total studio revenues | 111,363 | — | 111,363 | ||||
| Total revenues | 728,874 | (46,739) | 682,135 | ||||
| OPERATING EXPENSES | |||||||
| Office operating expenses | 231,342 | (7,907) | 223,435 | ||||
| Studio operating expenses | 103,578 | — | 103,578 | ||||
| General and administrative | 55,177 | — | 55,177 | ||||
| Depreciation and amortization | 294,654 | (21,594) | 273,060 | ||||
| Total operating expenses | 684,751 | (29,501) | 655,250 | ||||
| OTHER INCOME (EXPENSES) | |||||||
| Loss from unconsolidated real estate entities | (2,219) | — | (2,219) | ||||
| Fee income | 5,026 | — | 5,026 | ||||
| Interest expense | (162,036) | 14,522 | (147,514) | ||||
| Interest income | 1,407 | (105) | 1,302 | ||||
| Management services reimbursement income—unconsolidated real estate entities | 3,138 | — | 3,138 | ||||
| Management services expense—unconsolidated real estate entities | (3,138) | — | (3,138) | ||||
| Transaction-related expenses | 1,344 | — | 1,344 | ||||
| Unrealized loss on non-real estate investments | (2,269) | — | (2,269) | ||||
| Gain on extinguishment of debt | 10,000 | — | 10,000 | ||||
| Gain on sale of real estate | 23,154 | — | 23,154 | ||||
| Other income | 139 | — | 139 | ||||
| Total other expenses | (125,454) | 14,417 | (111,037) | ||||
| Loss before income tax provision | (81,331) | (2,821) | (84,152) | ||||
| Income tax provision | (715) | — | (715) | ||||
| Net loss | (82,046) | (2,821) | (84,867) | ||||
| Net income attributable to Series A preferred units | (459) | — | (459) | ||||
| Net income attributable to Series C preferred shares | (15,141) | — | (15,141) | ||||
| Net income attributable to participating securities | (850) | — | (850) | ||||
| Net loss attributable to non-controlling interest in consolidated real estate entities | 375 | — | 375 | ||||
| Net loss attributable to redeemable non-controlling interest in consolidated real estate entities | 2,333 | 402 | (CC) | 2,735 | |||
| Net loss attributable to common units in the operating partnership | 1,600 | 41 | (DD) | 1,641 | |||
| NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS | $ | (94,188) | $ | (2,378) | $ | (96,566) | |
| BASIC AND DILUTED PER SHARE AMOUNTS | |||||||
| Net loss attributable to common stockholders—basic | $ | (0.67) | $ | (0.02) | (FF) | $ | (0.69) |
| Net loss attributable to common stockholders—diluted | $ | (0.67) | $ | (0.02) | (FF) | $ | (0.69) |
| Weighted average shares of common stock outstanding—basic | 140,957,170 | 140,957,170 | |||||
| Weighted average shares of common stock outstanding—diluted | 140,957,170 | 140,957,170 |
Exhibit 99.2
Hudson Pacific Properties, Inc.
Unaudited Pro Forma Consolidated Statement of Operations
For the Year Ended December 31, 2022
(in thousands, except share data)
| Hudson Pacific Properties, Inc. (AA) | Sale of Property (BB) | Notes | Pro Forma | ||||
|---|---|---|---|---|---|---|---|
| REVENUES | |||||||
| Office | |||||||
| Rental | $ | 834,408 | $ | (48,961) | $ | 785,447 | |
| Service and other revenues | 18,292 | (14) | 18,278 | ||||
| Total office revenues | 852,700 | $ | (48,975) | 803,725 | |||
| Studio | |||||||
| Rental | 59,672 | — | 59,672 | ||||
| Service and other revenues | 113,852 | — | 113,852 | ||||
| Total studio revenues | 173,524 | — | 173,524 | ||||
| Total revenues | 1,026,224 | (48,975) | 977,249 | ||||
| OPERATING EXPENSES | |||||||
| Office operating expenses | 308,668 | (10,166) | 298,502 | ||||
| Studio operating expenses | 105,150 | — | 105,150 | ||||
| General and administrative | 79,501 | — | 79,501 | ||||
| Depreciation and amortization | 373,219 | (28,737) | 344,482 | ||||
| Total operating expenses | 866,538 | (38,903) | 827,635 | ||||
| OTHER INCOME (EXPENSES) | |||||||
| Income from unconsolidated real estate entities | 943 | — | 943 | ||||
| Fee income | 7,972 | — | 7,972 | ||||
| Interest expense | (149,901) | 13,487 | (136,414) | ||||
| Interest income | 2,340 | (1,790) | 550 | ||||
| Management services reimbursement income—unconsolidated real estate entities | 4,163 | — | 4,163 | ||||
| Management services expense—unconsolidated real estate entities | (4,163) | — | (4,163) | ||||
| Transaction-related expenses | (14,356) | — | (14,356) | ||||
| Unrealized loss on non-real estate investments | (1,440) | — | (1,440) | ||||
| (Loss) Gain on sale of real estate | (2,164) | 60,644 | (EE) | 58,480 | |||
| Impairment loss | (28,548) | — | (28,548) | ||||
| Other income | 8,951 | — | 8,951 | ||||
| Total other expenses | (176,203) | 72,341 | (103,862) | ||||
| Net (loss) income | (16,517) | 62,269 | 45,752 | ||||
| Net income attributable to Series A preferred units | (612) | — | (612) | ||||
| Net income attributable to Series C preferred shares | (20,431) | — | (20,431) | ||||
| Net income attributable to participating securities | (1,194) | — | (1,194) | ||||
| Net income attributable to non-controlling interest in consolidated real estate entities | (23,418) | — | (23,418) | ||||
| Net loss (income) attributable to redeemable non-controlling interest in consolidated real estate entities | 4,964 | (16,426) | (CC) | (11,462) | |||
| Net loss attributable to common units in the operating partnership | 709 | (16) | (DD) | 693 | |||
| NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS | $ | (56,499) | $ | 45,827 | $ | (10,672) | |
| BASIC AND DILUTED PER SHARE AMOUNTS | |||||||
| Net loss attributable to common stockholders—basic | $ | (0.39) | $ | 0.32 | (FF) | $ | (0.07) |
| Net loss attributable to common stockholders—diluted | $ | (0.39) | $ | 0.32 | (FF) | $ | (0.07) |
| Weighted average shares of common stock outstanding—basic | 143,732,433 | 143,732,433 | |||||
| Weighted average shares of common stock outstanding—diluted | 143,732,433 | 143,732,433 |
Exhibit 99.2
Hudson Pacific Properties, L.P.
Unaudited Pro Forma Consolidated Balance Sheet
As of September 30, 2023
(in thousands, except share data)
| Hudson Pacific Properties, L.P. (A) | Sale of Property (B) | Notes | Pro Forma | ||||
|---|---|---|---|---|---|---|---|
| ASSETS | |||||||
| Investment in real estate, at cost | $ | 8,831,914 | $ | (574,317) | $ | 8,257,597 | |
| Accumulated depreciation and amortization | (1,735,715) | 50,394 | (1,685,321) | ||||
| Investment in real estate, net | 7,096,199 | (523,923) | 6,572,276 | ||||
| Non-real estate property, plant and equipment, net | 115,903 | — | 115,903 | ||||
| Cash and cash equivalents | 75,040 | 219,857 | (C) | 294,897 | |||
| Restricted cash | 19,054 | 16,000 | (C) | 35,054 | |||
| Accounts receivable, net | 19,330 | 581 | 19,911 | ||||
| Straight-line rent receivables, net | 290,938 | (58,535) | 232,403 | ||||
| Deferred leasing costs and intangible assets, net | 359,870 | (23,543) | 336,327 | ||||
| Operating lease right-of-use assets | 391,177 | — | 391,177 | ||||
| Prepaid expenses and other assets, net | 119,494 | (83) | 119,411 | ||||
| Investment in unconsolidated real estate entities | 236,248 | — | 236,248 | ||||
| Goodwill | 263,549 | — | 263,549 | ||||
| TOTAL ASSETS | $ | 8,986,802 | $ | (369,646) | $ | 8,617,156 | |
| LIABILITIES AND EQUITY | |||||||
| Liabilities | |||||||
| Unsecured and secured debt, net | $ | 4,417,020 | $ | (324,273) | (D) | $ | 4,092,747 |
| Joint venture partner debt | 66,136 | — | 66,136 | ||||
| Accounts payable, accrued liabilities and other | 267,426 | (29,208) | 238,218 | ||||
| Operating lease liabilities | 393,773 | — | 393,773 | ||||
| Intangible liabilities, net | 29,247 | — | 29,247 | ||||
| Security deposits, prepaid rent and other | 86,980 | (4,587) | 82,393 | ||||
| Total liabilities | 5,260,582 | (358,068) | 4,902,514 | ||||
| Redeemable preferred units of the operating partnership | 9,815 | — | 9,815 | ||||
| Redeemable non-controlling interest in consolidated real estate entities | 115,580 | (57,914) | (E) | 57,666 | |||
| Capital | |||||||
| Hudson Pacific Properties, L.P. partners’ capital | |||||||
| 4.750% Series C cumulative redeemable preferred units, $25.00 per unit liquidation preference, 17,000,000 units outstanding at September 30, 2023 | 425,000 | — | 425,000 | ||||
| Common units, 143,456,164 and 143,246,320 outstanding at September 30, 2023 | 2,826,337 | 46,336 | (F) | 2,872,673 | |||
| Accumulated other comprehensive income | 4,430 | — | 4,430 | ||||
| Total Hudson Pacific Properties, L.P. partners’ capital | 3,255,767 | 46,336 | 3,302,103 | ||||
| Non-controlling interest—members in consolidated real estate entities | 345,058 | — | 345,058 | ||||
| Total capital | 3,600,825 | 46,336 | 3,647,161 | ||||
| TOTAL LIABILITIES AND CAPITAL | $ | 8,986,802 | $ | (369,646) | $ | 8,617,156 |
Exhibit 99.2
Hudson Pacific Properties, L.P.
Unaudited Pro Forma Consolidated Statement of Operations
For the Nine Months Ended September 30, 2023
(in thousands, except share data)
| Hudson Pacific Properties, L.P. (AA) | Sale of Property (BB) | Notes | Pro Forma | ||||
|---|---|---|---|---|---|---|---|
| REVENUES | |||||||
| Office | |||||||
| Rental | $ | 605,776 | $ | (46,729) | $ | 559,047 | |
| Service and other revenues | 11,735 | (10) | 11,725 | ||||
| Total office revenues | 617,511 | (46,739) | 570,772 | ||||
| Studio | |||||||
| Rental | 46,109 | — | 46,109 | ||||
| Service and other revenues | 65,254 | — | 65,254 | ||||
| Total studio revenues | 111,363 | — | 111,363 | ||||
| Total revenues | 728,874 | (46,739) | 682,135 | ||||
| OPERATING EXPENSES | |||||||
| Office operating expenses | 231,342 | (7,907) | 223,435 | ||||
| Studio operating expenses | 103,578 | — | 103,578 | ||||
| General and administrative | 55,177 | — | 55,177 | ||||
| Depreciation and amortization | 294,654 | (21,594) | 273,060 | ||||
| Total operating expenses | 684,751 | (29,501) | 655,250 | ||||
| OTHER INCOME (EXPENSES) | |||||||
| Loss from unconsolidated real estate entities | (2,219) | — | (2,219) | ||||
| Fee income | 5,026 | — | 5,026 | ||||
| Interest expense | (162,036) | 14,522 | (147,514) | ||||
| Interest income | 1,407 | (105) | 1,302 | ||||
| Management services reimbursement income—unconsolidated real estate entities | 3,138 | — | 3,138 | ||||
| Management services expense—unconsolidated real estate entities | (3,138) | — | (3,138) | ||||
| Transaction-related expenses | 1,344 | — | 1,344 | ||||
| Unrealized loss on non-real estate investments | (2,269) | — | (2,269) | ||||
| Gain on extinguishment of debt | 10,000 | — | 10,000 | ||||
| Gain on sale of real estate | 23,154 | — | 23,154 | ||||
| Other income | 139 | — | 139 | ||||
| Total other expenses | (125,454) | 14,417 | (111,037) | ||||
| Loss before income tax provision | (81,331) | (2,821) | (84,152) | ||||
| Income tax provision | (715) | — | (715) | ||||
| Net loss | (82,046) | (2,821) | (84,867) | ||||
| Net loss attributable to non-controlling interest in consolidated real estate entities | 375 | — | 375 | ||||
| Net loss attributable to redeemable non-controlling interest in consolidated real estate entities | 2,333 | 402 | (CC) | 2,735 | |||
| Net loss attributable to Hudson Pacific Properties, L.P. | (79,338) | (2,419) | (81,757) | ||||
| Net income attributable to Series A preferred units | (459) | — | (459) | ||||
| Net income attributable to Series C preferred units | (15,141) | — | (15,141) | ||||
| Net income attributable to participating securities | (850) | — | (850) | ||||
| NET LOSS AVAILABLE TO COMMON UNITHOLDERS | $ | (95,788) | $ | (2,419) | $ | (98,207) | |
| BASIC AND DILUTED PER UNIT AMOUNTS | |||||||
| Net loss attributable to common unitholders—basic | $ | (0.67) | $ | (0.02) | (FF) | $ | (0.69) |
| Net loss attributable to common unitholders—diluted | $ | (0.67) | $ | (0.02) | (FF) | $ | (0.69) |
| Weighted average shares of common units outstanding—basic | 143,405,044 | 143,405,044 | |||||
| Weighted average shares of common units outstanding—diluted | 143,405,044 | 143,405,044 |
Exhibit 99.2
Hudson Pacific Properties, L.P.
Unaudited Pro Forma Consolidated Statement of Operations
For the Year Ended December 31, 2022
(in thousands, except share data)
| Hudson Pacific Properties, L.P. (AA) | Sale of Property (BB) | Notes | Pro Forma | ||||
|---|---|---|---|---|---|---|---|
| REVENUES | |||||||
| Office | |||||||
| Rental | $ | 834,408 | $ | (48,961) | $ | 785,447 | |
| Service and other revenues | 18,292 | (14) | 18,278 | ||||
| Total office revenues | 852,700 | $ | (48,975) | 803,725 | |||
| Studio | |||||||
| Rental | 59,672 | — | 59,672 | ||||
| Service and other revenues | 113,852 | — | 113,852 | ||||
| Total studio revenues | 173,524 | — | 173,524 | ||||
| Total revenues | 1,026,224 | (48,975) | 977,249 | ||||
| OPERATING EXPENSES | |||||||
| Office operating expenses | 308,668 | (10,166) | 298,502 | ||||
| Studio operating expenses | 105,150 | — | 105,150 | ||||
| General and administrative | 79,501 | — | 79,501 | ||||
| Depreciation and amortization | 373,219 | (28,737) | 344,482 | ||||
| Total operating expenses | 866,538 | (38,903) | 827,635 | ||||
| OTHER INCOME (EXPENSES) | |||||||
| Income from unconsolidated real estate entities | 943 | — | 943 | ||||
| Fee income | 7,972 | — | 7,972 | ||||
| Interest expense | (149,901) | 13,487 | (136,414) | ||||
| Interest income | 2,340 | (1,790) | 550 | ||||
| Management services reimbursement income—unconsolidated real estate entities | 4,163 | — | 4,163 | ||||
| Management services expense—unconsolidated real estate entities | (4,163) | — | (4,163) | ||||
| Transaction-related expenses | (14,356) | — | (14,356) | ||||
| Unrealized loss on non-real estate investments | (1,440) | — | (1,440) | ||||
| (Loss) Gain on sale of real estate | (2,164) | 60,644 | (EE) | 58,480 | |||
| Impairment loss | (28,548) | — | (28,548) | ||||
| Other income | 8,951 | — | 8,951 | ||||
| Total other expenses | (176,203) | 72,341 | (103,862) | ||||
| Net (loss) income | (16,517) | 62,269 | 45,752 | ||||
| Net income attributable to non-controlling interest in consolidated real estate entities | (23,418) | — | (23,418) | ||||
| Net loss (income) attributable to redeemable non-controlling interest in consolidated real estate entities | 4,964 | (16,426) | (CC) | (11,462) | |||
| Net (loss) income attributable to Hudson Pacific Properties, L.P. | (34,971) | 45,843 | 10,872 | ||||
| Net income attributable to Series A preferred units | (612) | — | (612) | ||||
| Net income attributable to Series C preferred units | (20,431) | — | (20,431) | ||||
| Net income attributable to participating securities | (1,194) | — | (1,194) | ||||
| NET LOSS AVAILABLE TO COMMON UNITHOLDERS | $ | (57,208) | $ | 45,843 | $ | (11,365) | |
| BASIC AND DILUTED PER UNIT AMOUNTS | |||||||
| Net loss attributable to common unitholders—basic | $ | (0.39) | $ | 0.31 | (FF) | $ | (0.08) |
| Net loss attributable to common unitholders—diluted | $ | (0.39) | $ | 0.31 | (FF) | $ | (0.08) |
| Weighted average shares of common units outstanding—basic | 145,580,928 | 145,580,928 | |||||
| Weighted average shares of common units outstanding—diluted | 145,580,928 | 145,580,928 |
Exhibit 99.2
Hudson Pacific Properties, Inc. and Hudson Pacific Properties, L.P.
Notes to Unaudited Pro Forma Consolidated Financial Statements
1.Adjustments to Pro Forma Consolidated Balance Sheet
(A) Represents the historical consolidated balance sheet as of September 30, 2023.
(B) Reflects the disposition of the Property, which was completed on December 27, 2023.
(C) Reflects the amount of proceeds from the disposition after credits, prorations, closing costs and the repayment of the construction loan secured by the Property. A holdback of $16.0 million related to the Company's liability for certain representations and warranties under the Purchase and Sale Agreement is classified as restricted for a period of twelve months.
(D) Reflects the repayment of the construction loan secured by the Property at the closing of the disposition.
(E) Reflects the distribution of the joint venture partner's equity in the net assets of the Property as of September 30, 2023.
(F) Reflects the nonrecurring estimated gain on sale calculated based on the net disposition proceeds less the carrying amounts of the assets and liabilities of the Property as of September 30, 2023.
(G) Reflects the incremental allocation of income to common unitholders in the Operating Partnership resulting from the estimated gain on sale described in (F).
2.Adjustments to Pro Forma Consolidated Statements of Operations
(AA) Represents the historical consolidated statements of operations for the nine-month period ended September 30, 2023 and for the year ended December 31, 2022.
(BB) The pro forma adjustments reflect the disposition of the Property for the nine-month period ended September 30, 2023 and for the year ended December 31, 2022 as if the Property was disposed of on January 1, 2022.
(CC) Reflects the incremental allocation of income to the joint venture partner as a result of the pro forma adjustments described in (BB) and (EE).
(DD) Reflects the incremental allocation of income to common unitholders in the Operating Partnership as a result of the pro forma adjustments described in (BB), (CC) and (EE).
(EE) Reflects the nonrecurring estimated gain on sale calculated based on the net disposition proceeds less the carrying amounts of the assets and liabilities of the Property as of January 1, 2022.
(FF) Pro forma net loss per share/unit attributable to common stockholders/unitholders—basic and diluted is calculated by dividing pro forma consolidated net loss attributable to common stockholders/unitholders by the number of weighted average shares of common stock/units outstanding for the nine-month period ended September 30, 2023 and for the year ended December 31, 2022.