Hudson Pacific Properties reported a $218.1 million net loss for the third quarter, a significant increase from the $136.5 million loss recorded in the same period last year. They attributed this to non-cash impairments and losses from selling office properties.
The impairments included Skyport Plaza in San Jose and Hill Seven in Seattle. Additionally, the sale of two San Francisco office buildings, 875 and 899 Howard St., resulted in a loss. These buildings, totaling 284,000 square feet, were sold for $65.5 million.
Despite the losses, Hudson Pacific’s revenue for the quarter reached $180.9 million, a slight decrease from the $186.6 million reported in the third quarter of the previous year. The company cited asset sales as the primary reason for the drop, partially offset by improved office occupancy and studio production activity.
The Los Angeles film and television industry, a key market for Hudson Pacific, has not yet recovered. On-location shoot days in the third quarter were 5% lower than the previous year and 29% below the five-year average. However, they remain optimistic about potential catalysts for increased production, including proposed film tax credits by California Governor Gavin Newsom.
Hudson Pacific’s leasing activity showed positive signs, with over 500,000 square feet of office leases signed in the quarter. This brings the year-to-date total to 2.4 million square feet, a 40% increase from the same period last year.
Their performance in San Francisco was particularly notable, with eight consecutive quarters of positive net absorption, adding 1.3 million square feet. However, the wind-down of law firm Weil, Gotshal & Manges will leave a 38,000-square-foot vacancy in Hudson Pacific’s Redwood Shores property in the Bay Area.
Looking ahead, Hudson Pacific’s leasing pipeline remains strong, with over 2 million square feet in the works and more than 1 million square feet in advanced stages, nearly double the level of a year ago.
Occupancy and Revenue Trends
Two properties were 36% occupied and fully vacant at the time of sale. Revenue reached $180.9M, a drop from last year’s $186.6M, largely due to asset sales.
In-service office occupancy grew for the fifth consecutive quarter, reaching nearly 86%, with San Francisco posting eight consecutive quarters of positive net absorption, adding 1.3M SF.
