Hudson Pacific Properties, Inc.
Second Quarter 2018 Supplemental Operating and Financial Information
SAME-STORE ANALYSIS
(Unaudited, tabular amounts in thousands, except number of properties and square feet)
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||
| 2018 | 2017 | % change | 2018 | 2017 | % change | ||||||||||||||||
| Same-Store Office Statistics | |||||||||||||||||||||
| Number of properties | 30 | 30 | 29 | 29 | |||||||||||||||||
| Rentable square feet | 7,507,449 | 7,507,449 | 7,308,513 | 7,308,513 | |||||||||||||||||
| Ending % leased | 93.2 | % | 94.5 | % | (1.3 | )% | 93.3 | % | 94.4 | % | (1.1 | )% | |||||||||
| Ending % occupied | 92.4 | % | 93.9 | % | (1.5 | )% | 92.4 | % | 93.8 | % | (1.4 | )% | |||||||||
| Average % occupied for the period | 92.4 | % | 93.7 | % | (1.3 | )% | 92.5 | % | 94.4 | % | (1.9 | )% | |||||||||
Same-Store Studio Statistics(3) | |||||||||||||||||||||
| Number of properties | 2 | 2 | 2 | 2 | |||||||||||||||||
| Rentable square feet | 873,002 | 873,002 | 873,002 | 873,002 | |||||||||||||||||
| Average % occupied for the period | 89.6 | % | 89.9 | % | (0.3 | )% | 89.6 | % | 89.9 | % | (0.3 | )% | |||||||||
| SAME-STORE ANALYSIS—NET OPERATING INCOME | |||||||||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||
| 2018 | 2017 | % change | 2018 | 2017 | % change | ||||||||||||||||
| Same-Store Net Operating Income | |||||||||||||||||||||
| Total Office revenues | $ | 102,703 | $ | 99,896 | 2.8 | % | $ | 198,485 | $ | 188,380 | 5.4 | % | |||||||||
| Total Studio revenues | 11,209 | 10,274 | 9.1 | 23,471 | 21,743 | 7.9 | |||||||||||||||
| Same-Store property revenues | $ | 113,912 | $ | 110,170 | 3.4 | % | $ | 221,956 | $ | 210,123 | 5.6 | % | |||||||||
| Total Office expenses | $ | 33,365 | $ | 31,685 | 5.3 | % | $ | 63,937 | $ | 55,664 | 14.9 | % | |||||||||
| Total Studio expenses | 5,199 | 4,935 | 5.3 | 11,586 | 12,187 | (4.9 | ) | ||||||||||||||
| Same-Store property expenses | $ | 38,564 | $ | 36,620 | 5.3 | % | $ | 75,523 | $ | 67,851 | 11.3 | % | |||||||||
| Same-Store Office net operating income | $ | 69,338 | $ | 68,211 | 1.7 | % | $ | 134,548 | $ | 132,716 | 1.4 | % | |||||||||
| NOI margin | 67.5 | % | 68.3 | % | (0.8 | )% | 67.8 | % | 70.5 | % | (2.7 | )% | |||||||||
| Same-Store Studio net operating income | $ | 6,010 | $ | 5,339 | 12.6 | % | $ | 11,885 | $ | 9,556 | 24.4 | % | |||||||||
| NOI margin | 53.6 | % | 52.0 | % | 1.6 | % | 50.6 | % | 43.9 | % | 6.7 | % | |||||||||
| Same-Store net operating income | $ | 75,348 | $ | 73,550 | 2.4 | % | $ | 146,433 | $ | 142,272 | 2.9 | % | |||||||||
| NOI margin | 66.1 | % | 66.8 | % | 0.7 | % | 66.0 | % | 67.7 | % | (1.7 | )% | |||||||||
Hudson Pacific Properties, Inc.
Second Quarter 2018 Supplemental Operating and Financial Information
SAME-STORE ANALYSIS—CONTINUED
(Unaudited, tabular amounts in thousands)
| SAME-STORE ANALYSIS—NET OPERATING INCOME (CASH BASIS) | |||||||||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||
| 2018 | 2017 | % change | 2018 | 2017 | % change | ||||||||||||||||
| Same-Store Net Operating Income—Cash Basis | |||||||||||||||||||||
| Total Office cash revenues | $ | 97,816 | $ | 96,250 | 1.6 | % | $ | 188,931 | $ | 176,957 | 6.8 | % | |||||||||
| Total Studio cash revenues | 11,018 | 10,140 | 8.7 | 23,165 | 21,624 | 7.1 | |||||||||||||||
| Same-Store property cash revenues | $ | 108,834 | $ | 106,390 | 2.3 | % | $ | 212,096 | $ | 198,581 | 6.8 | % | |||||||||
| Total Office cash expenses | $ | 32,790 | $ | 31,110 | 5.4 | % | $ | 62,787 | $ | 54,503 | 15.2 | % | |||||||||
| Total Studio cash expenses | 5,199 | 4,935 | 5.3 | 11,586 | 12,187 | (4.9 | ) | ||||||||||||||
| Same-Store property cash expenses | $ | 37,989 | $ | 36,045 | 5.4 | % | $ | 74,373 | $ | 66,690 | 11.5 | % | |||||||||
| Same-Store Office net operating income—Cash basis | $ | 65,026 | $ | 65,140 | (0.2 | )% | $ | 126,144 | $ | 122,454 | 3.0 | % | |||||||||
| NOI margin | 66.5 | % | 67.7 | % | (1.2 | )% | 66.8 | % | 69.2 | % | (2.4 | )% | |||||||||
| Same-Store Studio net operating income—Cash basis | $ | 5,819 | $ | 5,205 | 11.8 | % | $ | 11,579 | $ | 9,437 | 22.7 | % | |||||||||
| NOI margin | 52.8 | % | 51.3 | % | 1.5 | % | 50.0 | % | 43.6 | % | 6.4 | % | |||||||||
| Same-Store net operating income—Cash basis | $ | 70,845 | $ | 70,345 | 0.7 | % | $ | 137,723 | $ | 131,891 | 4.4 | % | |||||||||
| NOI margin | 65.1 | % | 66.1 | % | (1.0 | )% | 64.9 | % | 66.4 | % | (1.5 | )% | |||||||||
Hudson Pacific Properties, Inc.
Second Quarter 2018 Supplemental Operating and Financial Information
RECONCILIATION OF GAAP NET INCOME TO NET OPERATING INCOME
(Unaudited, in thousands)
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
| 2018 | 2017 | 2018 | 2017 | ||||||||||||
| Reconciliation to Net Operating Income | |||||||||||||||
| Net Income | $ | 19,691 | $ | 6,954 | $ | 72,254 | $ | 31,107 | |||||||
| Adjustments: | |||||||||||||||
| Interest expense | 19,331 | 21,695 | 39,834 | 43,625 | |||||||||||
| Interest income | (66 | ) | (16 | ) | (75 | ) | (46 | ) | |||||||
| Unrealized loss on ineffective portion of derivatives | — | 51 | — | 45 | |||||||||||
| Unrealized gain on non-real estate investment | (928 | ) | — | (928 | ) | — | |||||||||
| Transaction-related expenses | — | — | 118 | — | |||||||||||
| Other income | (319 | ) | (576 | ) | (723 | ) | (1,254 | ) | |||||||
| Gains on sale of real estate | (1,928 | ) | — | (39,602 | ) | (16,866 | ) | ||||||||
| Income from operations | $ | 35,781 | $ | 28,108 | $ | 70,878 | $ | 56,611 | |||||||
| Adjustments: | |||||||||||||||
| General and administrative | 16,203 | 14,506 | 31,767 | 28,316 | |||||||||||
| Depreciation and amortization | 60,706 | 75,415 | 121,259 | 146,182 | |||||||||||
| Net Operating Income | $ | 112,690 | $ | 118,029 | $ | 223,904 | $ | 231,109 | |||||||
| Net Operating Income Breakdown | |||||||||||||||
| Same-Store Office cash revenues | $ | 97,816 | $ | 96,250 | $ | 188,931 | $ | 176,957 | |||||||
| Straight-line rent | 3,023 | 44 | 5,693 | 4,552 | |||||||||||
| Amortization of above-market and below-market leases, net | 2,215 | 3,853 | 4,526 | 7,376 | |||||||||||
| Amortization of lease incentive costs | (351 | ) | (251 | ) | (665 | ) | (505 | ) | |||||||
| Same-Store Office revenues | $ | 102,703 | $ | 99,896 | $ | 198,485 | $ | 188,380 | |||||||
| Same-Store Studio cash revenues | $ | 11,018 | $ | 10,140 | $ | 23,165 | $ | 21,624 | |||||||
| Straight-line rent | 191 | 134 | 306 | 119 | |||||||||||
| Same-Store Studio revenues | $ | 11,209 | $ | 10,274 | $ | 23,471 | $ | 21,743 | |||||||
| Same-Store property revenues | $ | 113,912 | $ | 110,170 | $ | 221,956 | $ | 210,123 | |||||||
| Same-Store Office cash expenses | $ | 32,790 | $ | 31,110 | $ | 62,787 | $ | 54,503 | |||||||
| Amortization of above-market and below-market ground leases, net | 575 | 575 | 1,150 | 1,161 | |||||||||||
| Same-Store Office expenses | $ | 33,365 | $ | 31,685 | $ | 63,937 | $ | 55,664 | |||||||
| Same-Store Studio cash expenses | $ | 5,199 | $ | 4,935 | $ | 11,586 | $ | 12,187 | |||||||
| Same-Store Studio expenses | $ | 5,199 | $ | 4,935 | $ | 11,586 | $ | 12,187 | |||||||
| Same-Store property expenses | $ | 38,564 | $ | 36,620 | $ | 75,523 | $ | 67,851 | |||||||
| Same-Store net operating income | $ | 75,348 | $ | 73,550 | $ | 146,433 | $ | 142,272 | |||||||
| Non-Same-Store net operating income | 37,342 | 44,479 | 77,471 | 88,837 | |||||||||||
| Net Operating Income | $ | 112,690 | $ | 118,029 | $ | 223,904 | $ | 231,109 | |||||||
Hudson Pacific Properties, Inc.
Second Quarter 2018 Supplemental Operating and Financial Information
NET OPERATING INCOME DETAIL Three Months Ended June 30, 2018 (Unaudited, in thousands) | ||||||||||||||||||||||||||||||||||||
| Same-Store Office Properties | Same-Store Studio Properties | Non-Same-Store Office Properties | Non-Same-Store Studio Properties | Redevelopment/Development | Lease-Up Properties | Held-for-Sale | Sold/Other | Total | ||||||||||||||||||||||||||||
| Revenue | ||||||||||||||||||||||||||||||||||||
| Rents | ||||||||||||||||||||||||||||||||||||
| Cash rent | $ | 77,298 | $ | 7,307 | $ | 4,574 | $ | 3,157 | $ | — | $ | 32,757 | $ | 4,509 | $ | 55 | $ | 129,657 | ||||||||||||||||||
| Straight-line rent | 3,023 | 191 | 840 | 53 | — | 3,601 | 232 | (3 | ) | 7,937 | ||||||||||||||||||||||||||
| Amortization of above-market and below-market leases, net | 2,215 | — | — | — | — | 1,009 | 6 | — | 3,230 | |||||||||||||||||||||||||||
| Amortization of lease incentive costs | (351 | ) | — | — | — | — | (10 | ) | (23 | ) | — | (384 | ) | |||||||||||||||||||||||
| Total Rents | $ | 82,185 | $ | 7,498 | $ | 5,414 | $ | 3,210 | $ | — | $ | 37,357 | $ | 4,724 | $ | 52 | $ | 140,440 | ||||||||||||||||||
| Tenant reimbursements | $ | 16,312 | $ | 476 | $ | 555 | $ | 24 | $ | — | $ | 4,893 | $ | 157 | $ | 43 | $ | 22,460 | ||||||||||||||||||
| Parking and other | 4,206 | 3,235 | 1,004 | 2,176 | — | 1,536 | — | 112 | 12,269 | |||||||||||||||||||||||||||
| Total Revenue | $ | 102,703 | $ | 11,209 | $ | 6,973 | $ | 5,410 | $ | — | $ | 43,786 | $ | 4,881 | $ | 207 | $ | 175,169 | ||||||||||||||||||
| Property operating cash expenses | 32,790 | 5,199 | 1,548 | 3,340 | — | 17,177 | 1,497 | 336 | 61,887 | |||||||||||||||||||||||||||
| Amortization of above-market and below-market ground leases, net | 575 | — | — | — | — | 17 | — | — | 592 | |||||||||||||||||||||||||||
| Total operating expenses | $ | 33,365 | $ | 5,199 | $ | 1,548 | $ | 3,340 | $ | — | $ | 17,194 | $ | 1,497 | $ | 336 | $ | 62,479 | ||||||||||||||||||
| Total Net Operating Income | $ | 69,338 | $ | 6,010 | $ | 5,425 | $ | 2,070 | $ | — | $ | 26,592 | $ | 3,384 | $ | (129 | ) | $ | 112,690 | |||||||||||||||||
| Square Feet | 7,507,449 | 873,002 | 703,271 | 373,421 | 976,795 | 3,701,686 | 447,739 | — | 14,583,363 | |||||||||||||||||||||||||||
| Ending % Leased | 93.2 | % | 89.6 | % | 97.6 | % | 80.6 | % | — | % | 80.9 | % | 80.6 | % | — | % | 83.1 | % | ||||||||||||||||||
| Ending % Occupied | 92.4 | % | 89.6 | % | 97.2 | % | 80.6 | % | — | % | 75.9 | % | 80.6 | % | — | % | 81.4 | % | ||||||||||||||||||
| NOI Margin | 67.5 | % | 53.6 | % | 77.8 | % | 38.3 | % | — | % | 60.7 | % | 69.3 | % | — | % | 64.5 | % | ||||||||||||||||||
| Total Net Operating Income | $ | 69,338 | $ | 6,010 | $ | 5,425 | $ | 2,070 | $ | — | $ | 26,592 | $ | 3,384 | $ | (129 | ) | $ | 112,690 | |||||||||||||||||
| Adjustments: | ||||||||||||||||||||||||||||||||||||
| Straight-line rent | (3,023 | ) | (191 | ) | (840 | ) | (53 | ) | — | (3,601 | ) | (232 | ) | 3 | (7,937 | ) | ||||||||||||||||||||
| Amortization of above market and below-market leases, net | (2,215 | ) | — | — | — | — | (1,009 | ) | (6 | ) | — | (3,230 | ) | |||||||||||||||||||||||
| Amortization of lease incentive costs | 351 | — | — | — | — | 10 | 23 | — | 384 | |||||||||||||||||||||||||||
| Amortization of above-market and below-market ground leases, net | 575 | — | — | — | — | 17 | — | — | 592 | |||||||||||||||||||||||||||
| Total Cash Net Operating Income | $ | 65,026 | $ | 5,819 | $ | 4,585 | $ | 2,017 | $ | — | $ | 22,009 | $ | 3,169 | $ | (126 | ) | $ | 102,499 | |||||||||||||||||
