Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2018 | Aug. 01, 2018 | |
Entity Information [Line Items] | ||
Entity Registrant Name | Hudson Pacific Properties, Inc. | |
Entity Central Index Key | 1,482,512 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2018 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 156,705,128 | |
Hudson Pacific Partners L.P. | ||
Entity Information [Line Items] | ||
Entity Registrant Name | Hudson Pacific Properties, L.P. | |
Entity Central Index Key | 1,496,264 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Non-accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2018 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
ASSETS | ||
Investment in real estate, at cost | $ 6,418,882 | $ 6,219,361 |
Accumulated depreciation and amortization | (601,535) | (521,370) |
Investment in real estate, net | 5,817,347 | 5,697,991 |
Cash and cash equivalents | 57,515 | 78,922 |
Restricted cash | 8,472 | 22,358 |
Accounts receivable, net | 6,615 | 4,234 |
Straight-line rent receivables, net | 124,083 | 106,466 |
Deferred leasing costs and lease intangible assets, net | 236,582 | 239,029 |
Prepaid expenses and other assets, net | 107,549 | 61,139 |
Assets associated with real estate held for sale | 201,011 | 411,931 |
TOTAL ASSETS | 6,559,174 | 6,622,070 |
LIABILITIES AND EQUITY | ||
Notes payable, net | 2,361,749 | 2,421,380 |
Accounts payable and accrued liabilities | 151,697 | 162,081 |
Lease intangible liabilities, net | 41,729 | 49,540 |
Security deposits and prepaid rent | 64,582 | 62,760 |
Derivative liabilities | 0 | 265 |
Liabilities associated with real estate held for sale | 3,554 | 4,903 |
TOTAL LIABILITIES | 2,623,311 | 2,700,929 |
Redeemable non-controlling interest | 9,815 | 10,177 |
Hudson Pacific Properties, Inc. stockholders’ equity: | ||
Common stock, $0.01 par value, 490,000,000 authorized, 155,647,733 shares and 155,602,508 shares outstanding at June 30, 2018 and December 31, 2017, respectively | 1,556 | 1,556 |
Additional paid-in capital | 3,615,833 | 3,622,988 |
Accumulated other comprehensive income | 26,407 | 13,227 |
Total Hudson Pacific Properties, Inc. stockholders’ equity | 3,643,796 | 3,637,771 |
Hudson Pacific Properties, L.P. partners’ capital: | ||
Accumulated other comprehensive income | 26,407 | 13,227 |
TOTAL EQUITY | 3,926,048 | 3,910,964 |
TOTAL LIABILITIES AND EQUITY | 6,559,174 | 6,622,070 |
Hudson Pacific Partners L.P. | ||
ASSETS | ||
Investment in real estate, at cost | 6,418,882 | 6,219,361 |
Accumulated depreciation and amortization | (601,535) | (521,370) |
Investment in real estate, net | 5,817,347 | 5,697,991 |
Cash and cash equivalents | 57,515 | 78,922 |
Restricted cash | 8,472 | 22,358 |
Accounts receivable, net | 6,615 | 4,234 |
Straight-line rent receivables, net | 124,083 | 106,466 |
Deferred leasing costs and lease intangible assets, net | 236,582 | 239,029 |
Prepaid expenses and other assets, net | 107,549 | 61,139 |
Assets associated with real estate held for sale | 201,011 | 411,931 |
TOTAL ASSETS | 6,559,174 | 6,622,070 |
LIABILITIES AND EQUITY | ||
Notes payable, net | 2,361,749 | 2,421,380 |
Accounts payable and accrued liabilities | 151,697 | 162,081 |
Lease intangible liabilities, net | 41,729 | 49,540 |
Security deposits and prepaid rent | 64,582 | 62,760 |
Derivative liabilities | 0 | 265 |
Liabilities associated with real estate held for sale | 3,554 | 4,903 |
TOTAL LIABILITIES | 2,623,311 | 2,700,929 |
Redeemable non-controlling interest | 9,815 | 10,177 |
Hudson Pacific Properties, Inc. stockholders’ equity: | ||
Accumulated other comprehensive income | 26,504 | 13,276 |
Hudson Pacific Properties, L.P. partners’ capital: | ||
Common units, 156,216,778 and 156,171,553 issued and outstanding at June 30, 2018 and December 31, 2017, respectively. | 3,633,849 | 3,639,086 |
Accumulated other comprehensive income | 26,504 | 13,276 |
Total Hudson Pacific Properties, L.P. partners’ capital | 3,660,353 | 3,652,362 |
Non-controlling interest—members in consolidated entities | 265,695 | 258,602 |
TOTAL CAPITAL | 3,926,048 | 3,910,964 |
TOTAL LIABILITIES AND EQUITY | 6,559,174 | 6,622,070 |
Non-controlling interest—members in consolidated entities | ||
Hudson Pacific Properties, L.P. partners’ capital: | ||
Non-controlling interest—members in Consolidated Entities and Non-controlling units in the Operating Partnership | 265,695 | 258,602 |
Non-controlling interest—units in the operating partnership | ||
Hudson Pacific Properties, L.P. partners’ capital: | ||
Non-controlling interest—members in Consolidated Entities and Non-controlling units in the Operating Partnership | 16,557 | 14,591 |
TOTAL EQUITY | $ 16,557 | $ 14,591 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parentheticals) - $ / shares | Jun. 30, 2018 | Dec. 31, 2017 |
Common Stock: | ||
Common Stock, par value per share (in dollars per share) | $ 0.01 | $ 0.01 |
Common Stock, shares authorized (in shares) | 490,000,000 | 490,000,000 |
Common Stock, shares outstanding (in shares) | 155,647,733 | 155,602,508 |
Common Units | Hudson Pacific Partners L.P. | ||
Common Stock: | ||
Common Stock, shares outstanding (in shares) | 156,216,778 | 156,171,553 |
Common Units, shares issued (in shares) | 156,216,778 | 156,171,553 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
REVENUES | ||||
Revenues | $ 175,169 | $ 180,500 | $ 349,287 | $ 348,785 |
OPERATING EXPENSES | ||||
General and administrative | 16,203 | 14,506 | 31,767 | 28,316 |
Depreciation and amortization | 60,706 | 75,415 | 121,259 | 146,182 |
TOTAL OPERATING EXPENSES | 139,388 | 152,392 | 278,409 | 292,174 |
INCOME FROM OPERATIONS | 35,781 | 28,108 | 70,878 | 56,611 |
OTHER EXPENSE (INCOME) | ||||
Interest expense | 19,331 | 21,695 | 39,834 | 43,625 |
Interest income | (66) | (16) | (75) | (46) |
Unrealized loss on ineffective portion of derivatives | 0 | 51 | 0 | 45 |
Unrealized gain on non-real estate investment | (928) | 0 | (928) | 0 |
Transaction-related expenses | 0 | 0 | 118 | 0 |
Other income | (319) | (576) | (723) | (1,254) |
TOTAL OTHER EXPENSES | 18,018 | 21,154 | 38,226 | 42,370 |
INCOME BEFORE GAINS ON SALE OF REAL ESTATE | 17,763 | 6,954 | 32,652 | 14,241 |
Gains on sale of real estate | 1,928 | 0 | 39,602 | 16,866 |
NET INCOME | 19,691 | 6,954 | 72,254 | 31,107 |
Net income attributable to preferred units | (153) | (159) | (312) | (318) |
Net income attributable to participating securities | (110) | (255) | (437) | (495) |
Net income attributable to non-controlling interest in consolidated entities | (3,167) | (2,974) | (6,490) | (6,011) |
Net income attributable to non-controlling interest in the operating partnership | (59) | (13) | (236) | (215) |
Net income attributable to Hudson Pacific Properties, Inc. common stockholders | $ 16,202 | $ 3,553 | $ 64,779 | $ 24,068 |
Basic and diluted per share/unit amounts: | ||||
Net income attributable to common stockholders - basic (in dollars per share) | $ 0.10 | $ 0.02 | $ 0.42 | $ 0.16 |
Net income attributable to common stockholders - diluted (in dollars per share) | $ 0.10 | $ 0.02 | $ 0.41 | $ 0.16 |
Weighted average shares of common stock outstanding—basic (in shares) | 155,636,636 | 155,290,559 | 155,631,375 | 151,640,853 |
Weighted average shares of common stock outstanding - diluted (in shares) | 156,590,227 | 156,095,603 | 156,563,966 | 152,431,897 |
Dividends declared per share/unit (in dollars per share) | $ 0.25 | $ 0.250 | $ 0.5 | $ 0.500 |
Hudson Pacific Partners L.P. | ||||
REVENUES | ||||
Revenues | $ 175,169 | $ 180,500 | $ 349,287 | $ 348,785 |
OPERATING EXPENSES | ||||
General and administrative | 16,203 | 14,506 | 31,767 | 28,316 |
Depreciation and amortization | 60,706 | 75,415 | 121,259 | 146,182 |
TOTAL OPERATING EXPENSES | 139,388 | 152,392 | 278,409 | 292,174 |
INCOME FROM OPERATIONS | 35,781 | 28,108 | 70,878 | 56,611 |
OTHER EXPENSE (INCOME) | ||||
Interest expense | 19,331 | 21,695 | 39,834 | 43,625 |
Interest income | (66) | (16) | (75) | (46) |
Unrealized loss on ineffective portion of derivatives | 0 | 51 | 0 | 45 |
Unrealized gain on non-real estate investment | (928) | 0 | (928) | 0 |
Transaction-related expenses | 0 | 0 | 118 | 0 |
Other income | (319) | (576) | (723) | (1,254) |
TOTAL OTHER EXPENSES | 18,018 | 21,154 | 38,226 | 42,370 |
INCOME BEFORE GAINS ON SALE OF REAL ESTATE | 17,763 | 6,954 | 32,652 | 14,241 |
Gains on sale of real estate | 1,928 | 0 | 39,602 | 16,866 |
NET INCOME | 19,691 | 6,954 | 72,254 | 31,107 |
Net income attributable to participating securities | (110) | (255) | (437) | (495) |
Net income attributable to non-controlling interest in consolidated entities | (3,167) | (2,974) | (6,490) | (6,011) |
Net income attributable to Hudson Pacific Properties, Inc. common stockholders | 16,261 | 3,566 | 65,015 | 24,283 |
Comprehensive income attributable to preferred units | (153) | (159) | (312) | (318) |
Net income attributable to Hudson Pacific Properties, L.P. | $ 16,524 | $ 3,980 | $ 65,764 | $ 25,096 |
Basic and diluted per share/unit amounts: | ||||
Net income attributable to common unitholders —basic (in dollars per share) | $ 0.10 | $ 0.02 | $ 0.42 | $ 0.16 |
Net income attributable to common unitholders —diluted (in dollars per share) | $ 0.10 | $ 0.02 | $ 0.41 | $ 0.16 |
Weighted average shares of common units outstanding—basic (in shares) | 156,205,681 | 155,859,604 | 156,198,825 | 152,647,055 |
Weighted average shares of common units outstanding—diluted (in shares) | 157,159,272 | 156,664,648 | 157,131,416 | 153,438,100 |
Dividends declared per share/unit (in dollars per share) | $ 0.250 | $ 0.25 | $ 0.5 | $ 0.5 |
Office | ||||
REVENUES | ||||
Revenues | $ 158,550 | $ 166,852 | $ 315,082 | $ 323,668 |
OPERATING EXPENSES | ||||
Operating expenses | 53,940 | 55,468 | 107,180 | 103,422 |
Office | Hudson Pacific Partners L.P. | ||||
REVENUES | ||||
Revenues | 158,550 | 166,852 | 315,082 | 323,668 |
OPERATING EXPENSES | ||||
Operating expenses | 53,940 | 55,468 | 107,180 | 103,422 |
Office | Rental | ||||
REVENUES | ||||
Revenues | 129,732 | 133,602 | 259,814 | 267,118 |
Office | Rental | Hudson Pacific Partners L.P. | ||||
REVENUES | ||||
Revenues | 129,732 | 133,602 | 259,814 | 267,118 |
Office | Tenant recoveries | ||||
REVENUES | ||||
Revenues | 21,960 | 25,038 | 42,864 | 42,439 |
Office | Tenant recoveries | Hudson Pacific Partners L.P. | ||||
REVENUES | ||||
Revenues | 21,960 | 25,038 | 42,864 | 42,439 |
Office | Parking and other | ||||
REVENUES | ||||
Revenues | 6,858 | 8,212 | 12,404 | 14,111 |
Office | Parking and other | Hudson Pacific Partners L.P. | ||||
REVENUES | ||||
Revenues | 6,858 | 8,212 | 12,404 | 14,111 |
Studio | ||||
REVENUES | ||||
Revenues | 16,619 | 13,648 | 34,205 | 25,117 |
OPERATING EXPENSES | ||||
Operating expenses | 8,539 | 7,003 | 18,203 | 14,254 |
Studio | Hudson Pacific Partners L.P. | ||||
REVENUES | ||||
Revenues | 16,619 | 13,648 | 34,205 | 25,117 |
OPERATING EXPENSES | ||||
Operating expenses | 8,539 | 7,003 | 18,203 | 14,254 |
Studio | Rental | ||||
REVENUES | ||||
Revenues | 10,708 | 9,105 | 21,091 | 15,790 |
Studio | Rental | Hudson Pacific Partners L.P. | ||||
REVENUES | ||||
Revenues | 10,708 | 9,105 | 21,091 | 15,790 |
Studio | Tenant recoveries | ||||
REVENUES | ||||
Revenues | 500 | 129 | 854 | 794 |
Studio | Tenant recoveries | Hudson Pacific Partners L.P. | ||||
REVENUES | ||||
Revenues | 500 | 129 | 854 | 794 |
Studio | Other property-related revenue | ||||
REVENUES | ||||
Revenues | 5,301 | 4,361 | 11,736 | 8,403 |
Studio | Other property-related revenue | Hudson Pacific Partners L.P. | ||||
REVENUES | ||||
Revenues | 5,301 | 4,361 | 11,736 | 8,403 |
Studio | Other | ||||
REVENUES | ||||
Revenues | 110 | 53 | 524 | 130 |
Studio | Other | Hudson Pacific Partners L.P. | ||||
REVENUES | ||||
Revenues | $ 110 | $ 53 | $ 524 | $ 130 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Net income | $ 19,691 | $ 6,954 | $ 72,254 | $ 31,107 |
Other comprehensive income (loss): change in fair value of derivatives | 3,484 | (2,760) | 12,997 | 104 |
Comprehensive income | 23,175 | 4,194 | 85,251 | 31,211 |
Comprehensive income attributable to preferred units | (153) | (159) | (312) | (318) |
Comprehensive income attributable to participating securities | (133) | (255) | (524) | (495) |
Comprehensive income attributable to non-controlling interest in consolidated entities | (3,167) | (2,974) | (6,490) | (6,011) |
Comprehensive income attributable to non-controlling interest in the operating partnership | (72) | (3) | (283) | (233) |
Comprehensive income (loss) attributable to Hudson Pacific Properties, Inc. common stockholders or Hudson Pacific Properties, L.P. partners' capital | 19,650 | 803 | 77,642 | 24,154 |
Hudson Pacific Partners L.P. | ||||
Net income | 19,691 | 6,954 | 72,254 | 31,107 |
Other comprehensive income (loss): change in fair value of derivatives | 3,484 | (2,760) | 12,997 | 104 |
Comprehensive income | 23,175 | 4,194 | 85,251 | 31,211 |
Comprehensive income attributable to preferred units | (153) | (159) | (312) | (318) |
Comprehensive income attributable to participating securities | (133) | (255) | (524) | (495) |
Comprehensive income attributable to non-controlling interest in consolidated entities | (3,167) | (2,974) | (6,490) | (6,011) |
Comprehensive income (loss) attributable to Hudson Pacific Properties, Inc. common stockholders or Hudson Pacific Properties, L.P. partners' capital | $ 19,722 | $ 806 | $ 77,925 | $ 24,387 |
CONSOLIDATED STATEMENTS OF EQUI
CONSOLIDATED STATEMENTS OF EQUITY - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-in Capital | Retained Earnings (Accumulated Deficit) | Accumulated Other Comprehensive Income | Non- controlling Interest—Units in the Operating Partnership | Non-controlling Interest—Members in Consolidated Entities |
Beginning Balance at Dec. 31, 2016 | $ 3,702,750 | $ 1,364 | $ 3,109,394 | $ (16,971) | $ 9,496 | $ 294,859 | $ 304,608 |
Beginning balance (in shares) at Dec. 31, 2016 | 136,492,235 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Contributions | 3,870 | 3,870 | |||||
Distributions | (74,836) | (74,836) | |||||
Proceeds from sale of common stock, net of underwriters’ discount and transaction costs | 647,382 | $ 187 | 647,195 | ||||
Proceeds from sale of common stock, net of underwriters' discount and transaction costs (in shares) | 18,656,575 | ||||||
Issuance of unrestricted stock | 0 | $ 9 | (9) | ||||
Issuance of unrestricted stock (in shares) | 917,086 | ||||||
Shares withheld to satisfy tax withholding | (16,041) | $ (4) | (16,037) | ||||
Shares withheld to satisfy tax withholding (in shares) | (463,388) | ||||||
Declared dividend | (158,544) | (106,269) | (51,619) | (656) | |||
Amortization of stock-based compensation | 15,915 | 13,249 | 2,666 | ||||
Net income | 93,925 | 68,590 | 375 | 24,960 | |||
Change in fair value of derivatives | 7,398 | 7,353 | 45 | ||||
Redemption of series A | (310,855) | (24,535) | (3,622) | (282,698) | |||
Ending Balance at Dec. 31, 2017 | $ 3,910,964 | $ 1,556 | 3,622,988 | 0 | 13,227 | 14,591 | 258,602 |
Ending balance (in shares) at Dec. 31, 2017 | 155,602,508 | 155,602,508 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Cumulative adjustment related to adoption of ASU 2017-12 | $ 0 | (231) | 230 | 1 | |||
Contributions | 2,691 | 2,691 | |||||
Distributions | (2,088) | (2,088) | |||||
Proceeds from sale of common stock, net of underwriters’ discount and transaction costs | (207) | (207) | |||||
Issuance of unrestricted stock | 0 | ||||||
Issuance of unrestricted stock (in shares) | 65,578 | ||||||
Shares withheld to satisfy tax withholding | (693) | $ 0 | (693) | ||||
Shares withheld to satisfy tax withholding (in shares) | (20,353) | ||||||
Declared dividend | (78,705) | (13,364) | (64,985) | (356) | |||
Amortization of stock-based compensation | 9,147 | 7,109 | 2,038 | ||||
Net income | 71,942 | 65,216 | 236 | 6,490 | |||
Change in fair value of derivatives | 12,997 | 12,950 | 47 | ||||
Ending Balance at Jun. 30, 2018 | $ 3,926,048 | $ 1,556 | $ 3,615,833 | $ 0 | $ 26,407 | $ 16,557 | $ 265,695 |
Ending balance (in shares) at Jun. 30, 2018 | 155,647,733 | 155,647,733 |
CONSOLIDATED STATEMENTS OF CAPI
CONSOLIDATED STATEMENTS OF CAPITAL - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | |
Increase (Decrease) in Partners' Capital [Roll Forward] | |||||
Beginning balance (in shares) | 155,602,508 | ||||
Cumulative adjustment related to adoption of ASU 2017-12 | $ 0 | ||||
Contributions | $ 2,691 | 3,870 | |||
Distributions | (2,088) | (74,836) | |||
Proceeds from sale of common units, net of underwriters’ discount and transaction costs | (207) | 647,382 | |||
Issuance of unrestricted units | 0 | 0 | |||
Units withheld to satisfy tax withholding | (693) | (16,041) | |||
Declared distributions | (78,705) | (158,544) | |||
Amortization of unit-based compensation | 9,147 | 15,915 | |||
Net income | 71,942 | 93,925 | |||
Change in fair value of derivatives | $ 3,484 | $ (2,760) | $ 12,997 | $ 104 | 7,398 |
Redemption of common units | $ (310,855) | ||||
Ending balance (in shares) | 155,647,733 | 155,647,733 | 155,602,508 | ||
Hudson Pacific Partners L.P. | |||||
Increase (Decrease) in Partners' Capital [Roll Forward] | |||||
Beginning balance | $ 3,910,964 | 3,702,750 | $ 3,702,750 | ||
Cumulative adjustment related to adoption of ASU 2017-12 | 0 | ||||
Contributions | 2,691 | 3,870 | |||
Distributions | (2,088) | (74,836) | |||
Proceeds from sale of common units, net of underwriters’ discount and transaction costs | (207) | 647,382 | |||
Issuance of unrestricted units | 0 | 0 | |||
Units withheld to satisfy tax withholding | (693) | (16,041) | |||
Declared distributions | (78,705) | (158,544) | |||
Amortization of unit-based compensation | 9,147 | 15,915 | |||
Net income | 71,942 | 93,925 | |||
Change in fair value of derivatives | $ 3,484 | $ (2,760) | 12,997 | 104 | 7,398 |
Redemption of common units | (310,855) | ||||
Ending balance | 3,926,048 | 3,926,048 | 3,910,964 | ||
Hudson Pacific Partners L.P. | Total Partners’ Capital | |||||
Increase (Decrease) in Partners' Capital [Roll Forward] | |||||
Beginning balance | 3,652,362 | 3,398,142 | 3,398,142 | ||
Contributions | 0 | ||||
Distributions | 0 | ||||
Proceeds from sale of common units, net of underwriters’ discount and transaction costs | (207) | 647,382 | |||
Units withheld to satisfy tax withholding | (693) | (16,041) | |||
Declared distributions | (78,705) | (158,544) | |||
Amortization of unit-based compensation | 9,147 | 15,915 | |||
Net income | 65,452 | 68,965 | |||
Change in fair value of derivatives | 12,997 | 7,398 | |||
Redemption of common units | (310,855) | ||||
Ending balance | 3,660,353 | 3,660,353 | 3,652,362 | ||
Hudson Pacific Partners L.P. | Common Units | |||||
Increase (Decrease) in Partners' Capital [Roll Forward] | |||||
Beginning balance | $ 3,639,086 | $ 3,392,264 | $ 3,392,264 | ||
Beginning balance (in shares) | 156,171,553 | 145,942,855 | 145,942,855 | ||
Cumulative adjustment related to adoption of ASU 2017-12 | $ (231) | ||||
Proceeds from sale of common units, net of underwriters’ discount and transaction costs | $ (207) | $ 647,382 | |||
Proceeds from sale of common stock, net of underwriters' discount and transaction costs (in shares) | 18,656,575 | ||||
Issuance of unrestricted units | $ 0 | $ 0 | |||
Issuance of unrestricted stock (in shares) | 65,578 | 917,086 | |||
Units withheld to satisfy tax withholding | $ (693) | $ (16,041) | |||
Units withheld to satisfy tax withholding (in shares) | (20,353) | (463,388) | |||
Declared distributions | $ (78,705) | $ (158,544) | |||
Amortization of unit-based compensation | 9,147 | 15,915 | |||
Net income | 65,452 | 68,965 | |||
Redemption of common units | $ (310,855) | ||||
Redemption of common units (in shares) | (8,881,575) | ||||
Ending balance | $ 3,633,849 | $ 3,633,849 | $ 3,639,086 | ||
Ending balance (in shares) | 156,216,778 | 156,216,778 | 156,171,553 | ||
Hudson Pacific Partners L.P. | Accumulated Other Comprehensive Income | |||||
Increase (Decrease) in Partners' Capital [Roll Forward] | |||||
Beginning balance | $ 13,276 | $ 5,878 | $ 5,878 | ||
Cumulative adjustment related to adoption of ASU 2017-12 | 231 | ||||
Change in fair value of derivatives | 12,997 | 7,398 | |||
Ending balance | $ 26,504 | 26,504 | 13,276 | ||
Hudson Pacific Partners L.P. | Non-controlling Interest—Members in Consolidated Entities | |||||
Increase (Decrease) in Partners' Capital [Roll Forward] | |||||
Beginning balance | 258,602 | $ 304,608 | 304,608 | ||
Contributions | 2,691 | 3,870 | |||
Distributions | (2,088) | (74,836) | |||
Net income | 6,490 | 24,960 | |||
Ending balance | $ 265,695 | $ 265,695 | $ 258,602 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | ||
CASH FLOWS FROM OPERATING ACTIVITIES | |||
Net income | $ 72,254 | $ 31,107 | |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation and amortization | 121,259 | 146,182 | |
Non-cash portion of interest expense | 3,093 | 2,373 | |
Amortization of stock-based/unit-based compensation | 8,627 | 7,788 | |
Straight-line rents | (17,879) | (5,781) | |
Straight-line rent expenses | 262 | 160 | |
Amortization of above- and below-market leases, net | (7,042) | (10,405) | |
Amortization of above- and below-market ground lease, net | 1,216 | 1,470 | |
Amortization of lease incentive costs | 687 | 758 | |
Other non-cash adjustments | [1] | (114) | (30) |
Gains on sale of real estate | (39,602) | (16,866) | |
Change in operating assets and liabilities: | |||
Accounts receivable | (3,057) | 3,177 | |
Deferred leasing costs and lease intangibles | (21,835) | (15,216) | |
Prepaid expenses and other assets | (3,250) | (5,873) | |
Accounts payable and accrued liabilities | (12,666) | 6,304 | |
Security deposits and prepaid rent | 566 | (4,112) | |
Net cash provided by operating activities | 102,519 | 141,036 | |
CASH FLOWS FROM INVESTING ACTIVITIES | |||
Additions to investment property | (185,031) | (147,476) | |
Property acquisitions | (30,166) | (257,734) | |
Proceeds from sale of real estate | 250,199 | 81,707 | |
Distributions from unconsolidated entity | 0 | 14,893 | |
Contributions to unconsolidated entity | 0 | (1,071) | |
Deposits for property acquisitions | (27,500) | 0 | |
Net cash provided by (used in) investing activities | 7,502 | (309,681) | |
CASH FLOWS FROM FINANCING ACTIVITIES | |||
Proceeds from notes payable | 250,000 | 230,000 | |
Payments of notes payable | (308,660) | (321,270) | |
Proceeds from issuance of common stock, net | (207) | 647,509 | |
Payment for redemption of common units in the operating partnership | 0 | (310,855) | |
Redemption of series A preferred units | (362) | 0 | |
Distributions paid to common stock and unitholders | (78,705) | (79,163) | |
Distributions paid to preferred unitholders | (312) | (318) | |
Contributions from non-controlling member in consolidated entities | 2,691 | 3,870 | |
Distributions to non-controlling member in consolidated entities | (2,088) | (14,591) | |
Payments to satisfy tax withholding | (693) | (4,203) | |
Payments of loan costs | (6,978) | 0 | |
Net cash (used in) provided by financing activities | (145,314) | 150,979 | |
Net decrease in cash and cash equivalents and restricted cash | (35,293) | (17,666) | |
Cash and cash equivalents and restricted cash—beginning of period | 101,280 | 108,192 | |
Cash and cash equivalents and restricted cash—end of period | 65,987 | 90,526 | |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | |||
Cash paid for interest, net of capitalized interest | 39,042 | 42,462 | |
NON-CASH INVESTING AND FINANCING ACTIVITIES: | |||
Accounts payable and accrued liabilities for investment in property | (2,460) | (3,427) | |
Reclassification of investment in unconsolidated entities for real estate investments | 0 | 7,835 | |
Hudson Pacific Partners L.P. | |||
CASH FLOWS FROM OPERATING ACTIVITIES | |||
Net income | 72,254 | 31,107 | |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation and amortization | 121,259 | 146,182 | |
Non-cash portion of interest expense | 3,093 | 2,373 | |
Amortization of stock-based/unit-based compensation | 8,627 | 7,788 | |
Straight-line rents | (17,879) | (5,781) | |
Straight-line rent expenses | 262 | 160 | |
Amortization of above- and below-market leases, net | (7,042) | (10,405) | |
Amortization of above- and below-market ground lease, net | 1,216 | 1,470 | |
Amortization of lease incentive costs | 687 | 758 | |
Other non-cash adjustments | [1] | (114) | (30) |
Gains on sale of real estate | (39,602) | (16,866) | |
Change in operating assets and liabilities: | |||
Accounts receivable | (3,057) | 3,177 | |
Deferred leasing costs and lease intangibles | (21,835) | (15,216) | |
Prepaid expenses and other assets | (3,250) | (5,873) | |
Accounts payable and accrued liabilities | (12,666) | 6,304 | |
Security deposits and prepaid rent | 566 | (4,112) | |
Net cash provided by operating activities | 102,519 | 141,036 | |
CASH FLOWS FROM INVESTING ACTIVITIES | |||
Additions to investment property | (185,031) | (147,476) | |
Property acquisitions | (30,166) | (257,734) | |
Proceeds from sale of real estate | 250,199 | 81,707 | |
Distributions from unconsolidated entity | 0 | 14,893 | |
Contributions to unconsolidated entity | 0 | (1,071) | |
Deposits for property acquisitions | (27,500) | 0 | |
Net cash provided by (used in) investing activities | 7,502 | (309,681) | |
CASH FLOWS FROM FINANCING ACTIVITIES | |||
Proceeds from notes payable | 250,000 | 230,000 | |
Payments of notes payable | (308,660) | (321,270) | |
Proceeds from issuance of common stock, net | (207) | 647,509 | |
Payment for redemption of common units in the operating partnership | 0 | (310,855) | |
Redemption of series A preferred units | (362) | 0 | |
Distributions paid to common stock and unitholders | (78,705) | (79,163) | |
Distributions paid to preferred unitholders | (312) | (318) | |
Contributions from non-controlling member in consolidated entities | 2,691 | 3,870 | |
Distributions to non-controlling member in consolidated entities | (2,088) | (14,591) | |
Payments to satisfy tax withholding | (693) | (4,203) | |
Payments of loan costs | (6,978) | 0 | |
Net cash (used in) provided by financing activities | (145,314) | 150,979 | |
Net decrease in cash and cash equivalents and restricted cash | (35,293) | (17,666) | |
Cash and cash equivalents and restricted cash—beginning of period | 101,280 | 108,192 | |
Cash and cash equivalents and restricted cash—end of period | 65,987 | 90,526 | |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | |||
Cash paid for interest, net of capitalized interest | 39,042 | 42,462 | |
NON-CASH INVESTING AND FINANCING ACTIVITIES: | |||
Accounts payable and accrued liabilities for investment in property | (2,460) | (3,427) | |
Reclassification of investment in unconsolidated entities for real estate investments | $ 0 | $ 7,835 | |
[1] | Represents bad debt expense/recovery, unrealized loss/gain on ineffective portion of derivatives and unrealized loss/gain on non-real estate investment. |
Organization
Organization | 6 Months Ended |
Jun. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization | Organization Hudson Pacific Properties, Inc. is a Maryland corporation formed on November 9, 2009 as a fully integrated, self-administered and self-managed real estate investment trust (“REIT”). Through its controlling interest in the operating partnership and its subsidiaries, Hudson Pacific Properties, Inc. owns, manages, leases, acquires and develops real estate, consisting primarily of office and studio properties. Unless otherwise indicated or unless the context requires otherwise, 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 April 1, 2015, the Company completed the acquisition of the EOP Northern California Portfolio (“EOP Acquisition”) from Blackstone Real Estate Partners V and VI (“Blackstone”). The EOP Acquisition consisted of 26 high-quality office assets totaling approximately 8.2 million square feet and two development parcels located throughout Northern California. The total consideration paid for the EOP Acquisition before certain credits, prorations and closing costs included a cash payment of $1.75 billion and an aggregate of 63,474,791 shares of common stock of Hudson Pacific Properties, Inc. and common units in the operating partnership. The Company’s portfolio consists of properties located throughout Northern and Southern California and the Pacific Northwest. The following table summarizes the Company’s portfolio as of June 30, 2018 : Segments Number of Properties Square Feet (unaudited) Office 50 13,336,940 Studio 3 1,246,423 Total (1) 53 14,583,363 _________________ (1) Includes redevelopment, development and held for sale properties. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2018 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Basis of Presentation The accompanying consolidated financial statements of the Company and the operating partnership are prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) applicable to interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Certain information and footnote disclosures required for annual financial statements have been condensed or excluded pursuant to the Securities and Exchange Commission (“SEC”) rules and regulations. Accordingly, the interim financial statements do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, the accompanying interim financial statements reflect all adjustments of a normal and recurring nature that are considered necessary for a fair presentation of the results for the interim periods presented. References to number of properties and square-feet are not covered by the auditor’s review procedures. The results of operations for the interim periods are not necessarily indicative of the results that may be expected for the year ended December 31, 2018 . The interim consolidated financial statements should be read in conjunction with the consolidated financial statements in the 2017 Annual Report on Form 10-K of Hudson Pacific Properties, Inc. and Hudson Pacific Properties, L.P. and the notes thereto. Certain amounts in the consolidated financial statements for the prior period have been reclassified to conform to the current period presentation. Included in the reclassified amounts are properties held for sale. These amounts relate to our Peninsula Office Park property, which was sold on July 27, 2018 . Principles of Consolidation The unaudited interim consolidated financial statements of the Company include the accounts of the Company, the operating partnership and all wholly owned and controlled subsidiaries. The consolidated financial statements of the operating partnership include the accounts of the operating partnership and all wholly owned and controlled subsidiaries. All intercompany balances and transactions have been eliminated in the consolidated financial statements. Under the consolidation guidance, the Company first evaluates an entity using the variable interest model, then the voting model. The Company ultimately consolidates all entities that the Company controls through either majority ownership or voting rights, including all variable interest entities (“VIEs”) of which the Company is considered the primary beneficiary. The Company accounts for all other unconsolidated joint ventures using the cost or equity method of accounting. In addition, the Company continually evaluates each legal entity that is not wholly owned for reconsideration based on changing circumstances. VIEs are defined as entities in which equity investors do not have: • the characteristics of a controlling financial interest; • sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties; and/or • the entity is structured with non-substantive voting rights. The entity that consolidates a VIE is known as its primary beneficiary and is generally the entity with both the power to direct the activities that most significantly affect the VIE’s economic performance and the right to receive benefits from the VIE or the obligation to absorb losses of the VIE that could be significant to the VIE. As of June 30, 2018 , the Company has determined that four joint ventures and our operating partnership met the definition of a VIE. Three of the joint ventures are consolidated entities and one joint venture is a non-consolidated entity. Consolidated Entities As of June 30, 2018 , the operating partnership has determined that three of its joint ventures met the definition of a VIE and are consolidated: Entity Property Ownership Interest Hudson 1455 Market, L.P. 1455 Market 55.0 % Hudson 1099 Stewart, L.P. Hill7 55.0 % HPP-MAC WSP, LLC Westside Pavilion (1) 75.0 % _________________ (1) As of June 30, 2018, this joint venture was formed but no significant contributions of cash or property have been made by the partners. On March 1, 2018, the Company entered into a joint venture agreement with Macerich WSP, LLC (“Macerich”) to form HPP-MAC WSP, LLC (“HPP-MAC JV”) to redevelop Westside Pavilion, a shopping mall in West Los Angeles, into approximately 500,000 square feet of state-of-the-art creative office space, with approximately 100,000 square feet of existing retail and entertainment space. The HPP-MAC JV is held 75% by the Company and 25% by Macerich, with the Company serving as the managing member and developer. As of June 30, 2018 , the assets held by the HPP-MAC JV include pre-development costs and the initial contributions from the members. Pursuant to the joint venture agreement, it is anticipated that the Company and Macerich will enter into a contribution agreement within a year to contribute Westside Pavilion to the joint venture. The contribution is valued at approximately $190.0 million before certain credits, prorations, closing costs and debt assumption. Total costs of the HPP-MAC JV will be funded 75% by the Company and 25% by Macerich. If either party defaults on its obligation to contribute to the joint venture, the defaulting party is required to pay a $25.0 million fee to the other member. The joint venture agreement lacks substantive participating or kick-out rights and is therefore a VIE. The Company, through its subsidiaries, has the right to (i) receive benefits and absorb losses and (ii) has the power to direct the activities that most significantly affect the joint venture and, as a result, is the primary beneficiary and consolidates the joint venture. As of June 30, 2018 , the Company has determined that its operating partnership met the definition of a VIE and is consolidated. Substantially all of the assets and liabilities of the Company are related to VIEs. Non-consolidated Entities On June 16, 2016, the Company entered into a joint venture to co-originate a loan secured by land in Santa Clara, California. The assets of the joint venture consist of notes receivable. The joint venture was repaid the notes receivable balance, and on July 10, 2018 the Company received a distribution from the joint venture for its share of the repayment. As of June 30, 2018 , the Company has determined it is not the primary beneficiary of the joint venture that meets the definition of a VIE. Due to its significant influence over the non-consolidated entity, the Company accounts for it using the equity method of accounting. Under the equity method, the Company initially records the investment at cost and subsequently adjusts for equity in earnings or losses and cash contributions and distributions. The Company’s net equity investment is reflected within prepaid expenses and other assets on the Consolidated Balance Sheets, which represents the Company’s maximum exposure for loss. The Company’s share of net income or loss from the entity is included within other income on the Consolidated Statements of Operations. The Company owns 21% of the non-consolidated entity. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of commitments and contingencies at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, the Company evaluates its estimates, including those related to acquiring, developing and assessing the carrying values of its real estate properties, its accrued liabilities and its performance-based equity compensation awards. The Company bases its estimates on historical experience, current market conditions and various other assumptions that are believed to be reasonable under the circumstances. Actual results could materially differ from these estimates. Revenue Recognition The Company has compiled an inventory of its sources of revenues and has identified the following material revenue streams: (i) rental revenues (ii) tenant recoveries (iii) ancillary revenues (iv) guest parking revenues and (v) sale of real estate. Revenue Stream Components Financial Statement Location Rental revenues Office rentals, stage rentals and storage rentals Office and Studio Segments: rental Tenant recoveries Reimbursement of real estate taxes, insurance, repairs and maintenance, other operating expenses and monthly parking revenues Office Segment: tenant recoveries and parking and other Studio Segment: tenant recoveries and other property-related revenue Ancillary revenues Revenues derived from tenants’ use of lighting, equipment rental, power, HVAC and telecommunications (i.e., telephone and internet) Studio Segment: other property-related revenue Guest parking revenues Parking revenue that is not associated with lease agreements Office Segment: parking and other Sale of real estate Gains on sales derived from cash consideration less cost basis Gains on sale of real estate Currently, rental revenues are accounted for under ASC 840, Leases . Rental revenues will be accounted for under ASC 842, Leases (“ASC 842”), which the Company plans to adopt on January 1, 2019. Currently tenant recoveries are accounted for under ASC 605, Revenue Recognition (“ASC 605”). Tenant recoveries will be accounted for under ASC 606, Revenue from Contracts with Customers (“ASC 606”), beginning on January 1, 2019, when the Company adopts ASC 842. Under the current ASC 842 guidance, the Company would be required to classify its tenant recoveries into lease and non-lease components. On March 28, 2018, the FASB agreed to issue an amendment to ASC 842, which, if elected, permits the Company to classify tenant recoveries as a single lease component and account for tenant recoveries with rental revenues in the Consolidated Statement of Operations. Please refer to our Update on ASC 842 implementation section below for details. Ancillary revenues and guest parking revenues have been accounted for under ASC 606 since the Company adopted this standard on January 1, 2018. This standard requires the Company to recognize revenues based on a five-step model and will result in the consideration being recognized once all performance obligations are satisfied. The timing and pattern of revenue recognition as it relates to ancillary revenues and guest parking revenues have not changed from those under ASC 605. Sale of real estate has been accounted for under ASC 610, Other Income , since the Company adopted this standard on January 1, 2018. This standard requires the Company to apply certain recognition and measurement principles in accordance with ASC 606 when it de-recognizes nonfinancial assets and in substance nonfinancial assets, and the counterparty is not a customer. This is the case for the Company’s sales of real estate, and as a result the Company is required to evaluate the sales of real estate based on transfer of control. If a real estate sale contract includes ongoing involvement by the seller with the sold property, the seller must evaluate each promised good or service under the contract to determine whether it represents a performance obligation, constitutes a guarantee or prevents the transfer of control. The timing and pattern of revenue recognition might change as it relates to gains of sale of real estate if the sale includes continued involvement that represents a separate performance obligation. Recently Issued Accounting Pronouncements Changes to GAAP are established by the Financial Accounting Standards Board (the “FASB”) in the form of Accounting Standards Update (“ASU”). The following ASUs were adopted by the Company in 2018: Standard Description Effect on the Financial Statements or Other Significant Matters ASU 2018-09, Codification Improvements The amendment, among other things, clarifies when excess tax benefits should be recognized for share-based compensation awards, removes inconsistent guidance in income tax accounting for business combinations, clarifies the circumstances when derivatives may be offset, and the measurement of liability or equity-classified financial instruments when an identical asset is held as an asset, and allows portfolios of financial instruments and nonfinancial instruments accounted for as derivatives to use the portfolio exception to valuation. The Company adopted this guidance during Q2 2018 using the prospective approach. The adoption did not have an impact on the Consolidated Financial Statements. ASU 2018-07, Compensation—Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting This amendment expands the scope of ASC 718 to include all share-based payment arrangements. It simplifies the accounting for share-based payments granted to nonemployees for goods and services by aligning the accounting with the requirements for share-based payments granted to employees. The Company adopted this guidance during Q2 2018 using the prospective approach. The adoption did not have an impact on the Consolidated Financial Statements. Standard Description Effect on the Financial Statements or Other Significant Matters ASU 2018-04, Investments—Debt Securities (Topic 320) and Regulated Operations (Topic 980): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 117 and SEC Release No. 33-9273 (SEC Update) The guidance no longer allows the use of cost method of accounting for equity instruments that do not have a readily determinable fair value, and companies are now required to measure equity investments at fair value through net income. Companies are permitted to elect a measurement alternative that allows for measuring equity instruments at cost, less any impairment, plus or minus changes resulting from observable price changes, adjusted as of the date that an observable transaction takes place, rather than the report date. For equity investments that do not have a readily determinable fair value, this guidance is adopted prospectively for all investments that exist as of the date of adoption. The guidance allows entities to use a prospective transition approach only for securities they elect to measure using the measurement alternative. The Company adopted this guidance during Q1 2018 using the prospective approach. The Company has elected to measure our equity instruments using the measurement alternative. Please see Note 12 for details. ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities The guidance eliminates the requirement to separately measure and report hedge ineffectiveness and generally requires the entire change in the fair value of a hedging instrument to be presented in the same income statement line as the hedged item. Therefore, a cumulative effect adjustment related to elimination of ineffectiveness measurement is required to be recorded to the opening balance of retained earnings as of the beginning of the fiscal year of adoption for a cash flow hedge. The guidance also eases certain documentation and assessment requirements and modifies the accounting for components excluded from the assessment of hedge effectiveness. This guidance must be applied using a modified retrospective approach. The Company adopted this guidance during Q1 2018 using the modified retrospective approach. As a result of the adoption, the concept of ineffectiveness from an accounting perspective is eliminated. Subsequent changes in fair value for a hedging instrument that has been designated and qualifies as a cash flow hedge will be recognized as a component in other comprehensive income. Additionally, the Company eliminated any previously recorded ineffectiveness with a cumulative effect adjustment. Please see Note 9 for details. ASU 2017-09, Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting The guidance clarifies when changes to the terms or conditions of a share-based payment award must be accounted for as modifications. This guidance must be applied prospectively. The Company adopted this guidance during Q1 2018 on a prospective basis. The adoption did not have an impact on the Consolidated Financial Statements. ASU 2017-05, Other Income—Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets The guidance updates the definition of an in substance nonfinancial asset and clarifies the scope of ASC 610-20 on the sale or transfer of nonfinancial assets to noncustomers, including partial sales. It also clarifies the de-recognition guidance for nonfinancial assets to conform with the new revenue recognition standard. Either a full or modified retrospective approach can be applied. The Company adopted this guidance during Q1 2018 using the modified retrospective approach. The Company has not had variable consideration in our sale of real estate, or partial sales of nonfinancial assets or contribution of a nonfinancial asset to form a joint venture with retained noncontrolling interest. The adoption did not have an impact on the Consolidated Financial Statements. ASU 2014-09, Revenue from Contracts with Customers amended by ASU 2016-08, Revenue from Contracts with Customers—Principal versus Agent Considerations (Reporting Revenue Gross versus Net) Issued on May 28, 2014, ASU 2014-09 outlines a single comprehensive model for entities to use in accounting for revenues arising from contracts with customers and specifically notes that lease contracts with customers are a scope exception. Issued on March 17, 2016, ASU 2016-08 clarifies certain aspects of the principal-versus-agent guidance in its new revenue recognition standard related to the determination of whether an entity is a principal or agent and the determination of the nature of each specified good or service. The guidance provides for practical expedients associated with the determination of whether a significant financing component exists and the expedient for recording an immediate expense for certain incremental costs of obtaining a contract with a customer. The Company adopted this guidance during Q1 2018 using the modified retrospective approach and is using the practical expedients associated with expensing incremental costs of obtaining a contract with a customer with terms of one year or less. The adoption of this ASU did not result in any changes with respect to the timing and pattern of revenue recognition. Please refer to the revenue recognition policy note above for the additional disclosures. Update on ASC 842 implementation On February 25, 2016, the FASB issued ASU 2016-02, Leases , to amend the accounting guidance for leases and set out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a lease agreement (i.e., lessees and lessors). This ASU is effective for annual reporting periods (including interim periods) beginning after December 15, 2018. Issuers have two options for adoption: • a modified retrospective approach that must be applied for leases that exist or are entered into after January 1, 2017, the beginning of the earliest comparative period presented in the 2019 consolidated financial statements, with a cumulative adjustment to the opening balance of retained earnings (accumulated deficit) on January 1, 2017, and restatement of the amounts presented prior to January 1, 2019. • a modified retrospective transition method that, if the transition method is elected, must be applied for leases that existed or are entered into after January 1, 2019, the effective date of the ASU, with a cumulative adjustment to the opening balance of retained earnings (accumulated deficit) on January 1, 2019. Additional disclosures for the periods prior to adoption would follow ASC 840 disclosure requirements. This guidance requires all lessees to record a lease liability at lease inception, with a corresponding right-of-use asset, except for short-term leases. Lessor accounting will not be fundamentally changed. ASC 842 provides practical expedients that allow entities to not (i) reassess whether any expired or existing contracts are considered or contain leases; (ii) reassess the lease classification for any expired or existing leases; and (iii) reassess initial direct costs for any existing leases. The Company plans to adopt the standard on January 1, 2019 and expects to elect the use of practical expedients. The Company plans to elect the transition method for adoption as described above. Lessor Accounting For the three months ended June 30, 2018 and June 30, 2017 , the Company recognized rental revenues and tenant recoveries of $162.9 million and $167.9 million , respectively. For the six months ended June 30, 2018 and June 30, 2017 , the Company recognized $324.6 million and $326.1 million , respectively. Under current accounting standards, the Company recognizes rental revenue from tenants on a straight-line basis over the lease term when collectability is reasonably assured and the tenant has taken possession or controls the physical use of the leased asset. Tenant recoveries related to reimbursement of real estate taxes, insurance, repairs and maintenance and other operating expenses are recognized as revenue in the period during which the applicable expenses are incurred. The reimbursements are recognized and presented gross, as the Company, which is generally the primary obligor with respect to purchasing goods and services from third-party suppliers, has discretion in selecting the supplier and bears the associated credit risk. ASC 842 requires companies to identify lease and non-lease components of a lease agreement. Lease components relate to the right to use the leased asset whereas non-lease components relate to payments for goods or services that are transferred separately from the right to use the underlying asset. Total lease consideration is allocated to lease and non-lease components on a relative standalone basis. The recognition of revenues related to lease components will be governed by ASC 842, while revenue related to non-lease components will be subject to ASC 606. For lessors, the guidance provides for a practical expedient to elect a combined single lease component presentation if (i) the timing and pattern of the transfer of the combined single lease component is the same, and (ii) the related lease component, if accounted for separately, would be classified as an operating lease. The Company plans to elect the practical expedient for non-lease components, that qualify, to be combined under a single lease component presentation. The Company has not completed its analysis of ASC 842. The ASU also requires lessors to capitalize only those costs that are defined as initial direct costs. Under the current accounting standards, the Company capitalizes initial direct and indirect leasing costs. During the three months ended June 30, 2018 and June 30, 2017 , the Company capitalized $2.0 million and $1.7 million of indirect leasing costs, respectively. During the six months ended June 30, 2018 and June 30, 2017 , the Company capitalized $3.8 million and $3.2 million of indirect leasing costs, respectively. Under this new ASU, and based on our current policies and processes, these costs will be expensed as incurred. Lessee Accounting As of June 30, 2018 , the future undiscounted minimum lease payments under the Company’s ground leases totaled $508.0 million . This guidance requires lessees to record a lease liability at lease inception, with a corresponding right-of-use asset, except for short-term leases. The Company continues to evaluate the amount of right-of-use asset and lease liability that will ultimately be recorded with respect to its ground lease agreements, where it is the lessee. Other recently issued ASUs The Company considers the applicability and impact of all ASUs. The following table lists the recently issued ASUs that have not been disclosed in the Company ’s 2017 Annual Report on Form 10-K and have not been adopted by the Company. The list excludes those ASUs that are not expected to have a material impact on the Company’s consolidated financial statements. Standard Description Effective Date Effect on the Financial Statements or Other Significant Matters ASU 2018-11, Leases (Topic 842): Targeted Improvements The amendment provides (i) a transition option to adopt ASC 842 using the modified retrospective transition provision and (ii) a practical expedient for lessors to elect a combined single lease component presentation. The effective date and transition requirements are the same as that in Update 2016-02 (Effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years.) The Company is currently evaluating the impact of this update in conjunction with ASC 842. ASU 2018-10, Codification Improvements to Topic 842, Leases The amendments make 16 technical corrections to the lease standard, which include clarification of the rate implicit in the lease, impairment of the net investment in the lease, lessee reassessment of lease classification, lessor reassessment of lease term and purchase options, variable payments that depend on an index or rate and certain transition adjustments. The effective date and transition requirements are the same as that in Update 2016-02 (Effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years.) The Company is currently evaluating the impact of this update in conjunction with ASC 842. ASU 2018-01, Leases (Topic 842): Land Easement Practical Expedient for Transition to Topic 842 The amendments in this update permit an entity to elect an optional transition practical expedient to not evaluate under ASC 842 land easements that exist or expired before the entity’s adoption of ASC 842 and that were not previously accounted for as leases under ASC 840. An entity that elects this practical expedient should apply the practical expedient consistently to all of its existing or expired land easements that were not previously accounted for as leases under ASC 840. Once an entity adopts ASC 842, it should apply it prospectively to all new (or modified) land easements to determine whether the arrangement should be accounted for as a lease. The effective date and transition requirements are the same as that in Update 2016-02 (Effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years.) The Company is currently evaluating the impact of this update in conjunction with ASC 842. |
Investment in Real Estate
Investment in Real Estate | 6 Months Ended |
Jun. 30, 2018 | |
Real Estate [Abstract] | |
Investment in Real Estate | Investment in Real Estate Real estate held for investment The following table summarizes the Company’s investment in real estate, at cost as of: June 30, 2018 December 31, 2017 Land $ 1,220,267 $ 1,204,700 Building and improvements 4,443,050 4,389,846 Tenant improvements 443,548 397,012 Furniture and fixtures 8,756 8,576 Property under development 303,261 219,227 Investment in real estate, at cost (1) $ 6,418,882 $ 6,219,361 _____________ (1) Excludes balances related to properties that have been classified as held for sale. Acquisitions The Company’s acquisitions are accounted for using the acquisition method. The results of operations for each of these acquisitions are included in the Company’s Consolidated Statements of Operations from the date of acquisition. The Company evaluates each acquisition to determine if the integrated set of assets and activities acquired meet the definition of a business and need to be accounted for as a business combination in accordance with ASC 805, Business Combinations . An integrated set of assets and activities would fail to qualify as a business if either (i) substantially all of the fair value of the gross assets acquired is concentrated in either a single identifiable asset or a group of similar identifiable assets or (ii) the integrated set of assets and activities is lacking, at a minimum, an input and a substantive process that together significantly contribute to the ability to create outputs (i.e., revenue generated before and after the transaction). An acquired process is considered substantive if (i) the process includes an organized workforce (or includes an acquired contract that provides access to an organized workforce) that is skilled, knowledgeable and experienced in performing the process, (ii) the process cannot be replaced without significant cost, effort, or delay or (iii) the process is considered unique or scarce. The Company assesses fair value based on Level 2 and Level 3 inputs within the fair value framework, which includes estimated cash flow projections that utilize appropriate discount, capitalization rates, renewal probability and available market information, which includes market rental rate and market rent growth rates. Estimates of future cash flows are based on a number of factors, including historical operating results, known and anticipated trends and market and economic conditions. The fair value of tangible assets of an acquired property considers the value of the property as if it were vacant. The fair value of acquired “above- and below-” market leases are based on the estimated cash flow projections utilizing discount rates that reflect the risks associated with the leases acquired. The amount recorded is based on the present value of the difference between (i) the contractual amounts to be paid pursuant to each in-place lease and (ii) management’s estimate of fair market lease rates for each in-place lease, measured over a period equal to the remaining term of the lease for above-market leases and the initial term plus the extended below-market term for any leases with below-market renewal options. Other intangible assets acquired include amounts for in-place lease values that are based on the Company’s evaluation of the specific characteristics of each tenant’s lease. Factors considered include estimates of carrying costs during hypothetical expected lease-up periods, market conditions and costs to execute similar leases. In estimating carrying costs, the Company includes estimates of lost rents at market rates during the hypothetical expected lease-up periods, which are dependent on local market conditions. In estimating costs to execute similar leases, the Company considers leasing commissions, legal and other related costs. On June 7, 2018, the Company purchased real estate located at 6605 Eleanor Avenue and 1034 Seward Street in Hollywood for $30.0 million , before credits, prorations and closing costs. The acquisitions consist of 41,496 square-feet of sound stages, production office and support space. These properties are adjacent to, and now forms part of, the Sunset Las Palmas Studios property, which is part of our studio segment. The Company’s Eleanor and Seward Street acquisitions did not meet the definition of a business and were therefore accounted for as asset acquisitions. In accordance with asset acquisitions, the purchase price includes capitalized acquisition costs. The Company’s final aggregate purchase price accounting, as of the acquisition date, was $30.2 million and was allocated to investment in real estate. Dispositions The following table summarizes the properties sold during the six months ended June 30, 2018 . These properties were non-strategic assets to the Company’s portfolio and were classified as held for sale as of December 31, 2017 : Property Date of Disposal Approximate Square Feet Sales Price (1) (in millions) Embarcadero Place 1/25/2018 197,402 $ 136.0 2600 Campus Drive (building 6 of Peninsula Office Park) 1/31/2018 63,050 22.5 2180 Sand Hill 3/1/2018 45,613 82.5 9300 Wilshire 4/10/2018 61,422 13.8 Total dispositions 367,487 $ 254.8 _________________ (1) Represents gross sales price before certain credits, prorations and closing costs. These dispositions met the criteria in ASC 610 for recognizing gains of $1.9 million and $39.6 million for the three and six months ended June 30, 2018 , which is included in the gains on sale of real estate line item in the Consolidated Statements of Operations. Held for Sale The Company had five properties classified as held for sale as of December 31, 2017 and one property classified as held for sale as of June 30, 2018. Four properties have been sold as of the six months ended June 2018. The Company entered into an agreement in May 2018 to sell its Peninsula Office Park property for $210.0 million (before certain credits, prorations and closing costs). The sale of Peninsula Office Park closed on July 27, 2018 . The following table summarizes the components of assets and liabilities associated with real estate held for sale as of: June 30, 2018 December 31, 2017 ASSETS Investment in real estate, net $ 192,630 $ 396,846 Accounts receivable, net 75 213 Straight-line rent receivables, net 3,292 5,225 Deferred leasing costs and lease intangible assets, net 4,998 9,589 Prepaid expenses and other assets, net 16 58 Assets associated with real estate held for sale $ 201,011 $ 411,931 LIABILITIES Accounts payable and accrued liabilities $ 1,929 $ 1,808 Lease intangible liabilities, net 271 485 Security deposits and prepaid rent 1,354 2,610 Liabilities associated with real estate held for sale $ 3,554 $ 4,903 Impairment of Long-Lived Assets No impairment indicators have been noted and the Company recorded no impairment charges for the six months ended June 30, 2018 . |
Deferred Leasing Costs and Leas
Deferred Leasing Costs and Lease Intangibles, net | 6 Months Ended |
Jun. 30, 2018 | |
Leases [Abstract] | |
Deferred Leasing Costs and Lease Intangibles, net | Deferred Leasing Costs and Lease Intangibles, net The following summarizes the Company’s deferred leasing costs and lease intangibles as of: June 30, 2018 December 31, 2017 Above-market leases $ 9,236 $ 18,028 Accumulated amortization (7,122 ) (15,131 ) Above-market leases, net 2,114 2,897 Deferred leasing costs and in-place lease intangibles 288,353 301,945 Accumulated amortization (114,569 ) (127,703 ) Deferred leasing costs and in-place lease intangibles, net 173,784 174,242 Below-market ground leases 68,388 68,388 Accumulated amortization (7,704 ) (6,498 ) Below-market ground leases, net 60,684 61,890 Deferred leasing costs and lease intangible assets, net (1) $ 236,582 $ 239,029 Below-market leases $ 91,686 $ 103,597 Accumulated amortization (50,898 ) (55,019 ) Below-market leases, net 40,788 48,578 Above-market ground leases 1,095 1,095 Accumulated amortization (154 ) (133 ) Above-market ground leases, net 941 962 Lease intangible liabilities, net (1) $ 41,729 $ 49,540 _____________ (1) Excludes balances related to properties that have been classified as held for sale. The Company recognized the following amortization related to deferred leasing costs and lease intangibles: Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 Above-market leases (1) $ (409 ) $ (1,911 ) $ (883 ) $ (3,267 ) Deferred leasing costs and in-place lease intangibles (2) (11,423 ) (20,644 ) (23,119 ) (40,437 ) Below-market ground leases (3) (603 ) (844 ) (1,238 ) (1,492 ) Below-market leases (1) 3,640 6,584 7,925 13,672 Above-market ground leases (3) 11 11 22 22 __________________ (1) Amortization is recorded in revenues in the Consolidated Statements of Operations. (2) Amortization is recorded in depreciation and amortization expenses and office rental revenues in the Consolidated Statements of Operations. (3) Amortization is recorded in office operating expenses in the Consolidated Statements of Operations. |
Accounts Receivable, net
Accounts Receivable, net | 6 Months Ended |
Jun. 30, 2018 | |
Receivables [Abstract] | |
Accounts Receivable, net | Accounts Receivable, net The Company’s accounting policy and methodology used to estimate the allowance for doubtful accounts is discussed in the Company’s 2017 Annual Report on Form 10-K. The following table summarizes the Company’s accounts receivable, net of allowance for doubtful accounts as of: June 30, 2018 December 31, 2017 Accounts receivable $ 8,833 $ 6,706 Allowance for doubtful accounts (2,218 ) (2,472 ) Accounts receivable, net (1) $ 6,615 $ 4,234 _____________ (1) Excludes balances related to properties that have been classified as held for sale. Straight-line Rent Receivables, net The Company’s accounting policy and methodology used to estimate the allowance for doubtful accounts is discussed in the Company’s 2017 Annual Report on Form 10-K. The following table represents the Company’s straight-line rent receivables, net of allowance for doubtful accounts as of: June 30, 2018 December 31, 2017 Straight-line rent receivables $ 124,083 $ 106,466 Allowance for doubtful accounts — — Straight-line rent receivables, net (1) $ 124,083 $ 106,466 _____________ (1) Excludes balances related to properties that have been classified as held for sale. |
Straight-line Rent Receivables,
Straight-line Rent Receivables, net | 6 Months Ended |
Jun. 30, 2018 | |
Receivables [Abstract] | |
Straight-line Rent Receivables, net | Accounts Receivable, net The Company’s accounting policy and methodology used to estimate the allowance for doubtful accounts is discussed in the Company’s 2017 Annual Report on Form 10-K. The following table summarizes the Company’s accounts receivable, net of allowance for doubtful accounts as of: June 30, 2018 December 31, 2017 Accounts receivable $ 8,833 $ 6,706 Allowance for doubtful accounts (2,218 ) (2,472 ) Accounts receivable, net (1) $ 6,615 $ 4,234 _____________ (1) Excludes balances related to properties that have been classified as held for sale. Straight-line Rent Receivables, net The Company’s accounting policy and methodology used to estimate the allowance for doubtful accounts is discussed in the Company’s 2017 Annual Report on Form 10-K. The following table represents the Company’s straight-line rent receivables, net of allowance for doubtful accounts as of: June 30, 2018 December 31, 2017 Straight-line rent receivables $ 124,083 $ 106,466 Allowance for doubtful accounts — — Straight-line rent receivables, net (1) $ 124,083 $ 106,466 _____________ (1) Excludes balances related to properties that have been classified as held for sale. |
Prepaid Expenses and Other Asse
Prepaid Expenses and Other Assets, net | 6 Months Ended |
Jun. 30, 2018 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Prepaid Expenses and Other Assets, net | Prepaid Expenses and Other Assets, net The following table summarizes the Company’s prepaid expenses and other assets, net as of: June 30, 2018 December 31, 2017 Derivative assets $ 25,485 $ 12,586 Investment in unconsolidated entities 14,435 14,240 Goodwill 8,754 8,754 Non-real estate investment (1) 2,713 1,785 Other 56,162 23,774 Prepaid expenses and other assets, net (2) $ 107,549 $ 61,139 _____________ (1) Related to our investment in shares in a non-public company. See Note 12 for details. (2) Excludes balances related to properties that have been classified as held for sale. No goodwill impairment indicators have been noted during the six months ended June 30, 2018 . |
Notes Payable, net
Notes Payable, net | 6 Months Ended |
Jun. 30, 2018 | |
Debt Disclosure [Abstract] | |
Notes Payable, net | Notes Payable, net The following table sets forth information with respect to our outstanding indebtedness: June 30, 2018 December 31, 2017 Interest Rate (1) Contractual Maturity Date UNSECURED NOTES PAYABLE Unsecured Revolving Credit Facility (2)(3) $ 140,000 $ 100,000 LIBOR + 1.05% to 1.50% 3/13/2022 (4) Term Loan A (2)(5) 300,000 300,000 LIBOR + 1.20% to 1.70% 4/1/2020 (6) Term Loan C (2) 75,000 75,000 LIBOR + 1.30% to 2.20% 11/17/2020 Term Loan B (2)(7) 350,000 350,000 LIBOR + 1.20% to 1.70% 4/1/2022 Term Loan D (2)(8) 125,000 125,000 LIBOR + 1.20% to 1.70% 11/17/2022 Series A Notes 110,000 110,000 4.34% 1/2/2023 Series E Notes 50,000 50,000 3.66% 9/15/2023 Series B Notes 259,000 259,000 4.69% 12/16/2025 Series D Notes 150,000 150,000 3.98% 7/6/2026 Registered Senior Notes (9) 400,000 400,000 3.95% 11/1/2027 Series C Notes 56,000 56,000 4.79% 12/16/2027 TOTAL UNSECURED NOTES PAYABLE 2,015,000 1,975,000 SECURED NOTES PAYABLE Sunset Gower Studios/Sunset Bronson Studios (10) 5,001 5,001 LIBOR + 2.25% 3/4/2019 (4) Met Park North (11) 64,500 64,500 LIBOR + 1.55% 8/1/2020 10950 Washington (12) 27,151 27,418 5.32% 3/11/2022 Element LA 168,000 168,000 4.59% 11/6/2025 Hill7 (13) 101,000 101,000 3.38% 11/6/2028 Rincon Center — 98,392 5.13% N/A TOTAL SECURED NOTES PAYABLE 365,652 464,311 TOTAL NOTES PAYABLE 2,380,652 2,439,311 Unamortized deferred financing costs and loan discounts (14) (18,903 ) (17,931 ) TOTAL NOTES PAYABLE, NET $ 2,361,749 $ 2,421,380 _________________ (1) Interest rate with respect to indebtedness is calculated on the basis of a 360 -day year for the actual days elapsed. Interest rates are as of June 30, 2018 , which may be different than the interest rates as of December 31, 2017 for corresponding indebtedness. (2) The Company has an option to make an irrevocable election to change the interest rate depending on the Company’s credit rating or a specified base rate plus an applicable margin. As of June 30, 2018 , no such election had been made. (3) The Company has a total capacity of $600.0 million under its unsecured revolving credit facility. (4) The maturity date may be extended once for an additional one -year term. (5) The outstanding balance of the term loan was effectively fixed at 2.56% to 3.06% per annum through the use of two interest rate swaps. See Note 9 for details. (6) The maturity date may be extended twice, each time for an additional one -year term. (7) The outstanding balance of the term loan was effectively fixed at 2.96% to 3.46% per annum through the use of two interest rate swaps. See Note 9 for details. (8) The outstanding balance of the term loan was effectively fixed at 2.63% to 3.13% per annum through the use of an interest rate swap. See Note 9 for details. (9) On October 2, 2017, the Company completed an underwritten public offering of $400.0 million of senior notes, which were issued at 99.815% of par. (10) The Company has the ability to draw up to $257.0 million under its construction loan, subject to lender required submissions. (11) This loan bears interest only. Interest on the full loan amount has been effectively fixed at 3.71% per annum through the use of an interest rate swap. See Note 9 for details. (12) Monthly debt service includes annual debt amortization payments based on a 30 -year amortization schedule with a balloon payment at maturity. (13) The Company owns 55% of the ownership interest in the consolidated joint venture that owns the Hill7 property. The full amount of the loan is shown. This loan bears interest only at 3.38% until November 6, 2026, at which time the interest rate will increase and monthly debt service will include principal payments with a balloon payment at maturity. (14) Excludes deferred financing costs related to establishing the Company’s unsecured revolving credit facility. Current year activity On February 1, 2018, the Company paid in full the debt secured by its Rincon Center property, which was due to mature in May 2018. On March 13, 2018, the operating partnership entered into the Amended and Restated Credit Agreement (as defined below) with various financial institutions. The Amended and Restated Credit Agreement modifies the operating partnership’s unsecured revolving credit facility and its term loans as discussed under the Term Loan and Credit Facility section below. Indebtedness The Company presents its financial statements on a consolidated basis. Notwithstanding such presentation, except to the extent expressly indicated, such as in the case of the project financing for Sunset Gower Studios and Sunset Bronson Studios, the Company’s separate property-owning subsidiaries are not obligors of the debt of their respective affiliates and each property-owning subsidiary’s separate liabilities do not constitute obligations of its respective affiliates. Loan agreements include events of default that the Company believes are usual for loan and transactions of this type. As of the date of this filing, there have been no events of default associated with the Company’s loans. The following table summarizes the minimum future principal payments due (before the impact of extension options, if applicable) on the operating partnership’s secured and unsecured notes payable as of June 30, 2018 : Year Annual Principal Payments Remaining 2018 $ 270 2019 5,569 2020 440,095 2021 632 2022 640,086 Thereafter 1,294,000 Total $ 2,380,652 Term Loan and Credit Facility On March 13, 2018, the operating partnership entered into a Third Amended and Restated Credit Agreement (the “Amended and Restated Credit Agreement”) with various financial institutions. The Amended and Restated Credit Agreement amends and restates and replaces (i) the operating partnership’s existing Second Amended and Restated Credit Agreement, entered into on March 31, 2015 (the “Prior Credit Agreement”), which governed its $400.0 million unsecured revolving credit facility, $300.0 million unsecured 5 -year term loan facility and $350.0 million unsecured 7 -year term loan facility, and (ii) the operating partnership’s Term Loan Credit Agreement, entered into on November 17, 2015 (together with the Prior Credit Agreement, the “Existing Credit Agreements”), which governed its $75.0 million unsecured 5 -year term loan facility and $125.0 million unsecured 7 -year term loan facility. The Amended and Restated Credit Agreement provides for (i) the increase of the operating partnership’s unsecured revolving credit facility to $600.0 million and the extension of the term to March 13, 2022 and (ii) term loans in amount and tenor equal to the term loans outstanding under the Existing Credit Agreements ( $300.0 million term loan A maturing April 1, 2020, $350.0 million term loan B maturing April 1, 2022, $75.0 million term loan C maturing November 17, 2020 and $125.0 million term loan D maturing November 17, 2022). The Company uses the unsecured revolving credit facility to finance the acquisition of other properties, to provide funds for tenant improvements and capital expenditures and to provide for working capital and other corporate purposes. The following table summarizes the balance and key terms of the unsecured revolving credit facility as of: June 30, 2018 December 31, 2017 Outstanding borrowings $ 140,000 $ 100,000 Remaining borrowing capacity 460,000 300,000 Total borrowing capacity $ 600,000 $ 400,000 Interest rate (1)(2) LIBOR + 1.05% to 1.50% LIBOR + 1.15% to 1.85% Facility fee-annual rate (1) 0.15% or 0.30% 0.20% or 0.35% Contractual maturity date (3) 3/13/2022 4/1/2019 _________________ (1) The rate is based on the operating partnership’s leverage ratio. The Company has the option to make an irrevocable election to change the interest rate depending on the Company’s credit rating. As of June 30, 2018 , no such election had been made. (2) The Company has the option to make an irrevocable election to change the interest rate depending on the Company’s specified base rate plus an applicable margin. As of June 30, 2018 , no such election had been made. (3) The maturity date may be extended once for an additional one -year term. Debt Covenants The operating partnership’s ability to borrow under its unsecured loan arrangements remains subject to ongoing compliance with financial and other covenants as defined in the respective agreements. Certain financial covenant ratios are subject to change in the occurrence of material acquisitions as defined in the respective agreements. Other covenants include certain limitations on dividend payouts and distributions, limits on certain types of investments outside of the operating partnership’s primary business and other customary affirmative and negative covenants. The following table summarizes existing covenants and their covenant levels related to our unsecured revolving credit facility, term loans, and series A, B, D and E notes, when considering the most restrictive terms: Covenant Ratio Covenant Level Total Liabilities to Total Asset Value ≤ 60% Unsecured Indebtedness to Unencumbered Asset Value ≤ 60% Adjusted EBITDA to Fixed Charges ≥ 1.5x Secured Indebtedness to Total Asset Value ≤ 45% Unencumbered NOI to Unsecured Interest Expense ≥ 2.0x The following table summarizes existing covenants and their covenant levels related to our registered senior notes: Covenant Ratio Covenant Level Debt to Total Assets ≤ 60% Total Unencumbered Assets to Unsecured Debt ≥ 150% Consolidated Income Available for Debt Service to Annual Debt Service Charge ≥ 1.5x Secured Debt to Total Assets ≤ 45% The operating partnership was in compliance with its financial covenants as of June 30, 2018 . Repayment Guarantees Registered Senior Notes The Company has fully and unconditionally guaranteed the operating partnership’s $400.0 million registered senior notes due November 1, 2027. Sunset Gower Studios and Sunset Bronson Studios Loan In connection with the loan secured by the Sunset Gower Studios and Sunset Bronson Studios properties, the Company has guaranteed in favor of and promised to pay to the lender 19.5% of the principal payable under the loan in the event the borrower, a wholly-owned entity of the operating partnership, does not do so. As of June 30, 2018 , the outstanding balance was $5.0 million , which results in a maximum guarantee amount for the principal under this loan of $1.0 million . The Company has the ability to draw up to $257.0 million under its construction loan, subject to lender required submissions. Furthermore, the Company agreed to guarantee the completion of the construction improvements, including tenant improvements, as defined in the agreement, in the event of any default of the borrower. If the borrower fails to complete the remaining required work, the guarantor agrees to perform timely all of the completion obligations, as defined in the agreement. As of the date of this filing, there has been no event of default associated with this loan. Other Loans Although the rest of the operating partnership’s loans are secured and non-recourse, the operating partnership provides limited customary secured debt guarantees for items such as voluntary bankruptcy, fraud, misapplication of payments and environmental liabilities. Interest Expense The following table represents a reconciliation from gross interest expense to the interest expense line item in the Consolidated Statements of Operations: Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 Gross interest expense (1) $ 21,514 $ 23,047 $ 43,945 $ 46,238 Capitalized interest (3,618 ) (2,539 ) (7,204 ) (4,986 ) Amortization of deferred financing costs and loan discount, net 1,435 1,187 3,093 2,373 Interest expense $ 19,331 $ 21,695 $ 39,834 $ 43,625 _________________ (1) Includes interest on the Company’s notes payable and hedging activities. |
Derivatives
Derivatives | 6 Months Ended |
Jun. 30, 2018 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivatives | Derivatives The Company enters into derivatives in order to hedge interest rate risk. The Company had six interest rate swaps with aggregate notional amounts of $839.5 million as of June 30, 2018 and December 31, 2017 . These derivatives were designated as effective cash flow hedges for accounting purposes. There is no impact on the Company’s Consolidated Statements of Cash Flows. The Company has agreements with its derivative counterparties that contain a provision where the Company could be declared in default on its derivative obligations if repayment of the underlying indebtedness is accelerated by the lender due to the Company’s default on the indebtedness. The Company’s derivatives are classified as Level 2 and their fair values are derived from estimated values obtained from observable market data for similar instruments. The following table summarizes the Company’s derivative instruments as of June 30, 2018 : Strike Rate Range (1) Underlying Debt Instrument Number of Hedges Notional Amount Effective Date Maturity Date Low High Fair Value Met Park North 1 $ 64,500 Aug 2013 August 2020 2.16% 2.16% $ 586 Term Loan A (2) 2 300,000 July 2016 April 2020 2.56% 3.06% 5,818 Term Loan B (3) 2 350,000 July 2016 April 2022 2.96% 3.46% 12,211 Term Loan D (4) 1 125,000 June 2016 November 2022 2.63% 3.13% 6,870 _____________ (1) The rate is based on the operating partnership’s leverage ratio. (2) On March 13, 2018, the underlying debt instrument that was hedged was amended. Prior to the amendment, the interest was effectively fixed at 2.75% to 3.65% . (3) On March 13, 2018, the underlying debt instrument that was hedged was amended. Prior to the amendment, the interest was effectively fixed at 3.36% to 4.31% . (4) On March 13, 2018, the underlying debt instrument that was hedged was amended. Prior to the amendment, the interest was effectively fixed at 3.03% to 3.98% . On January 1, 2018, the Company early adopted ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities (“ASU 2017-12”). As a result of the adoption, the Company is no longer recognizing unrealized gains or losses related to ineffective portions of its derivatives. The Company recognized a $231 thousand cumulative-effect adjustment to other comprehensive income, with a corresponding adjustment to the opening balance of retained earnings (accumulated deficit). For the three and six months ended June 30, 2017 , the Company recognized an unrealized loss of $51 thousand and $45 thousand , respectively, reflected in the unrealized loss on ineffective portion of derivatives line item on the Consolidated Statements of Operations. The fair market value of derivatives is presented on a gross basis in prepaid and other expenses, net and derivative liabilities line items on the Consolidated Balance Sheets. The derivative assets as of June 30, 2018 and December 31, 2017 were $25.5 million and $12.6 million , respectively. The derivative liabilities as of June 30, 2018 and December 31, 2017 were $0.0 million and $0.3 million , respectively. The Company reclassifies into earnings in the same period during which the hedged forecasted transaction affects earnings. As of June 30, 2018 , the Company expects $6.7 million of unrealized gain included in accumulated other comprehensive income will be reclassified to interest expense in the next 12 months. |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes Hudson Pacific Properties, Inc. has elected to be taxed as a REIT under the Internal Revenue Code of 1986, as amended (“the Code”), commencing with its taxable year ended December 31, 2010. Provided it continues to qualify for taxation as a REIT, Hudson Pacific Properties, Inc. is generally not subject to corporate level income tax on the earnings distributed currently to its stockholders. The Company has elected, together with one of its subsidiaries, to treat such subsidiary as a taxable REIT subsidiary (“TRS”) for federal income tax purposes. The Company’s property-owning subsidiaries are limited liability companies and treated as pass-through entities or disregarded entities (or, in the case of the entities that own the 1455 Market and Hill7 properties, REITs) for federal income tax purposes. Accordingly, no provision has been made for federal income taxes in the accompanying consolidated financial statements for the activities of these entities. The Company periodically evaluates its tax positions to determine whether it is more likely than not that such positions would be sustained upon examination by a tax authority for all open tax years, as defined by the statute of limitations, based on their technical merits. As of June 30, 2018 , the Company has not established a liability for uncertain tax positions. The Company and its TRS file income tax returns with the U.S. federal government and various state and local jurisdictions. The Company and its TRS are no longer subject to tax examinations by tax authorities for years prior to 2013. The Company has assessed its tax positions for all open years, which include 2013 to 2017, and concluded that there are no material uncertainties to be recognized. |
Future Minimum Lease Payments
Future Minimum Lease Payments | 6 Months Ended |
Jun. 30, 2018 | |
Future Minimum Lease Payments [Abstract] | |
Future Minimum Lease Payments | Future Minimum Lease Payments Contingent rental expense is recorded in the period in which the contingent event becomes probable. The following table summarizes rent expense for ground leases as follows: Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 Contingent rental expense $ 2,453 $ 1,650 $ 5,548 $ 3,834 Minimum rental expense 4,136 3,055 7,473 6,251 The following table provides information regarding the Company’s future minimum lease payments for its ground leases (before the impact of extension options, if applicable) as of June 30, 2018 : Year Ground Leases (1) Remaining 2018 $ 7,908 2019 15,815 2020 15,815 2021 15,815 2022 15,815 Thereafter 436,791 Total $ 507,959 _________________ (1) In situations where ground lease obligation adjustments are based on third-party appraisals of fair market land value, CPI adjustments and/or percentage of gross income that exceeds the minimum annual rent, the future minimum lease amounts above include the lease rental obligations in effect as of June 30, 2018 . |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 6 Months Ended |
Jun. 30, 2018 | |
Fair Value Disclosures [Abstract] | |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The GAAP fair value framework uses a three-tiered approach. Fair value measurements are classified and disclosed in one of the following three categories: • Level 1: unadjusted quoted prices in active markets that are accessible at the measurement date for identical assets or liabilities; • Level 2: quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-derived valuations in which significant inputs and significant value drivers are observable in active markets; and • Level 3: prices or valuation techniques where little or no market data is available that require inputs that are both significant to the fair value measurement and unobservable. In September 2016, the Company entered into an agreement to receive shares of a nonpublic company in lieu of rental revenues and tenant recoveries. The shares were accounted for under the cost method of accounting as there was no readily determinable fair value. The investment in the shares has been accounted for under ASC 825-10, Recognition and Measurement of Financial Assets and Financial Liabilities , since the Company adopted ASU 2016-01 on January 1, 2018, at which point the Company elected the measurement alternative. This standard requires the Company to mark the investment in shares to fair value based on Level 2 inputs, whenever fair value is readily available or observable. Changes in fair value are included in the unrealized gain on non-real estate investment line item on the Consolidated Statements of Operations. The Company’s financial assets and liabilities measured and reported at fair value on a recurring basis include the following as of: June 30, 2018 December 31, 2017 Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Derivative assets (1) $ — $ 25,485 $ — $ 25,485 $ — $ 12,586 $ — $ 12,586 Derivative liabilities — — — — — 265 — 265 Non-real estate investment (1)(2) — 2,713 — 2,713 — — — — _____________ (1) Included in the prepaid expenses and other assets line item on the Consolidated Balance Sheets. (2) Related to our investment in shares in a non-public company. Pursuant to our adoption of ASU 2016-01 during 2018, the Company marked the investment to fair value during the second quarter of 2018. The investment was not fair valued in 2017 and was accounted for under the cost method. Other Financial Instruments The carrying values of cash and cash equivalents, restricted cash, accounts receivable, accounts payable and accrued liabilities are reasonable estimates of fair value, using Level 1 inputs, because of the short-term nature of these instruments. Fair values for notes payable are estimates based on rates currently prevailing for similar instruments of similar maturities using Level 2 inputs. The table below represents the carrying value and fair value of the Company’s notes payable as of: June 30, 2018 December 31, 2017 Carrying Value Fair Value Carrying Value Fair Value Unsecured notes payable (1)(2) $ 2,014,315 $ 1,968,163 1,974,278 $ 1,960,560 Secured notes payable 365,652 357,092 464,311 458,441 _________________ (1) Amounts represent notes payable excluding net deferred financing costs. (2) The $400.0 million registered senior notes were issued at a discount. The discount, net of amortization, was $685 thousand and $722 thousand at June 30, 2018 and December 31, 2017 , respectively, and is included within unsecured notes payable. |
Stock-Based Compensation
Stock-Based Compensation | 6 Months Ended |
Jun. 30, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock-Based Compensation | Stock-Based Compensation The Company has various stock compensation arrangements, which are more fully described in the 2017 Annual Report on Form 10-K. Under the 2010 Incentive Plan, as amended (“the 2010 Plan”), the Company’s board of directors (“the Board”) has the ability to grant, among other things, restricted stock, restricted stock units and performance-based awards. The Board awards restricted shares to non-employee Board members on an annual basis as part of such Board members’ annual compensation and to newly elected non-employee Board members in accordance with the Non-Employee Director Compensation Program. The time-based awards are generally issued in the second quarter, in conjunction with the director’s election to the Board, and the individual share awards vest in equal annual installments over the applicable service vesting period, which is three years. The Board awards time-based restricted shares to employees on an annual basis as part of the employees’ annual compensation. The time-based awards are generally issued in the fourth quarter and the individual share awards vest in equal annual installments over the applicable service vesting period, which is generally three years. Additionally, certain restricted share awards are subject to a mandatory holding period upon vesting if the grantee is a named executive officer. In December 2015, the compensation committee of the Board (“Compensation Committee”) awarded a one-time special retention award to certain executives. The grants consist of time-based awards and performance-based awards. The time-based awards vest in equal 25% installments over a four -year period, subject to the participant’s continued employment. The performance-based awards vest over a four -year period, subject to the achievement of applicable performance goals and the participant’s continued employment. The Compensation Committee annually adopts a Hudson Pacific Properties, Inc. Outperformance Program (“OPP Plan”) under the 2010 Plan. An award under the OPP Plan is ultimately earned to the extent the Company outperforms a predetermined total shareholder return (“TSR”) goal and/or achieves goals with respect to the outperformance of its peers in a particular REIT index. The ultimate aggregate award cannot exceed the predetermined maximum bonus pool. OPP Plan awards granted are settled in common stock and in the case of certain executives, in performance units in our operating partnership. With respect to OPP Plan awards granted prior to 2017, to the extent an award is earned following the completion of a three -year performance period, 50% of the earned award will vest in full at the end of the three -year performance period and 25% of the earned award will vest in equal annual installments over the two years thereafter, subject to the participant’s continued employment. Commencing with the 2017 OPP Plan, the two -year post-performance vesting period was replaced with a two -year mandatory holding period upon vesting. In February 2018, the Compensation Committee adopted the 2018 OPP Plan. The 2018 OPP Plan is substantially similar to the 2017 OPP Plans except for (i) the performance period beginning on January 1, 2018 and ending on December 31, 2020, (ii) the maximum bonus pool is $25.0 million , (iii) the relative comparison index is the SNL US Office REIT index, (iv) the absolute TSR hurdle will be 21% (or 7% per annum) and (v) adjusted the sliding scale low return factor so that relative TSR pool can only be reduced by 75% under this feature. The per unit fair value of the 2018 OPP award granted was estimated on the date of grant using the following assumptions in the Monte Carlo valuation: Assumption Expected price volatility for the Company 20.00% Expected price volatility for the particular REIT index 18.00% Risk-free rate 2.37% Dividend yield 2.90% The following table presents the classification and amount recognized for stock-based compensation related to the Company’s awards: Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 Expensed stock compensation (1) $ 4,289 $ 3,886 $ 8,627 $ 7,788 Capitalized stock compensation (2) 288 219 520 418 Total stock compensation (3) $ 4,577 $ 4,105 $ 9,147 $ 8,206 _________________ (1) Amounts are recorded in general and administrative expenses in the Consolidated Statements of Operations. (2) Amounts are recorded in deferred leasing costs and lease intangible assets, net and investment in real estate, at cost in the Consolidated Balance Sheets. (3) Amounts are recorded in additional paid-in capital and non-controlling interest—units in the operating partnership in the Consolidated Balance Sheets. |
Earnings Per Share
Earnings Per Share | 6 Months Ended |
Jun. 30, 2018 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Earnings Per Share Hudson Pacific Properties, Inc. Hudson Pacific Properties, Inc. calculates basic earnings per share by dividing the net income available to common stockholders for the period by the weighted average number of common shares outstanding during the period. Hudson Pacific Properties, Inc. calculates diluted earnings per share by dividing the diluted net income available to common stockholders for the period by the weighted average number of common shares and dilutive instruments outstanding during the period using the treasury stock method or the if-converted method, whichever is more dilutive. Unvested time-based RSUs and unvested OPP awards that contain nonforfeitable rights to dividends are participating securities and are included in the computation of earnings per share pursuant to the two-class method. The following table reconciles the numerator and denominator in computing Hudson Pacific Properties, Inc.’s basic and diluted earnings per share for net income available to common stockholders: Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 Numerator: Basic and diluted net income available to common stockholders $ 16,202 $ 3,553 $ 64,779 $ 24,068 Denominator: Basic weighted average common shares outstanding 155,636,636 155,290,559 155,631,375 151,640,853 Effect of dilutive instruments (1) 953,591 805,044 932,591 791,044 Diluted weighted average common shares outstanding 156,590,227 156,095,603 156,563,966 152,431,897 Basic earnings per common share $ 0.10 $ 0.02 $ 0.42 $ 0.16 Diluted earnings per common share $ 0.10 $ 0.02 $ 0.41 $ 0.16 ________________ (1) The Company includes unvested awards and convertible common units as contingently issuable shares in the computation of diluted earnings per share once the market criteria are met, assuming that the end of the reporting period is the end of the contingency period. Any anti-dilutive securities are excluded from the diluted earnings per share calculation. Hudson Pacific Properties, L.P. Hudson Pacific Properties, L.P. calculates basic earnings per share by dividing the net income available to common unitholders for the period by the weighted average number of common units outstanding during the period. Hudson Pacific Properties, L.P. calculates diluted earnings per share by dividing the diluted net income available to common unitholders for the period by the weighted average number of common units and dilutive instruments outstanding during the period using the treasury stock method or the if-converted method, whichever is more dilutive. Unvested time-based RSUs and unvested OPP awards that contain nonforfeitable rights to dividends are participating securities and are included in the computation of earnings per unit pursuant to the two-class method. The following table reconciles the numerator and denominator in computing Hudson Pacific Properties, L.P.’s basic and diluted earnings per unit for net income available to common unitholders: Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 Numerator: Basic and diluted net income available to common unitholders $ 16,261 $ 3,566 $ 65,015 $ 24,283 Denominator: Basic weighted average common units outstanding 156,205,681 155,859,604 156,198,825 152,647,055 Effect of dilutive instruments (1) 953,591 805,044 932,591 791,045 Diluted weighted average common units outstanding 157,159,272 156,664,648 157,131,416 153,438,100 Basic earnings per common unit $ 0.10 $ 0.02 $ 0.42 $ 0.16 Diluted earnings per common unit $ 0.10 $ 0.02 $ 0.41 $ 0.16 ________________ (1) The operating partnership includes unvested awards as contingently issuable units in the computation of diluted earnings per unit once the market criteria are met, assuming that the end of the reporting period is the end of the contingency period. Any anti-dilutive securities are excluded from the diluted earnings per unit calculation. |
Equity
Equity | 6 Months Ended |
Jun. 30, 2018 | |
Equity [Abstract] | |
Equity | Equity The table below presents the effect of the Company’s derivatives on accumulated other comprehensive income (“OCI”): Hudson Pacific Properties, Inc. Stockholders ’ Equity Non-controlling Interests Total Equity Balance at January 1, 2018 $ 13,227 $ 49 $ 13,276 Unrealized gain recognized in OCI due to change in fair value 13,676 50 13,726 Income reclassified from OCI into income (as interest expense) (726 ) (3 ) (729 ) Net change in OCI 12,950 47 12,997 Cumulative adjustment related to adoption of ASU 2017-12 230 1 231 Balance at June 30, 2018 $ 26,407 $ 97 $ 26,504 Non-controlling Interests Common units in the operating partnership Common units of the operating partnership and shares of common stock of the Company have essentially the same economic characteristics, as they share equally in the total net income or loss distributions of the operating partnership. Investors who own common units have the right to cause the operating partnership to repurchase any or all of their common units for cash equal to the then-current market value of one share of common stock or, at the Company’s election, issue shares of the Company’s common stock in exchange for common units on a one-for-one basis. The following table summarizes the ownership of common units, excluding unvested restricted units as of: June 30, 2018 December 31, 2017 Company-owned common units in the operating partnership 155,647,733 155,602,508 Company’s ownership interest percentage 99.6 % 99.6 % Non-controlling common units in the operating partnership (1) 569,045 569,045 Non-controlling ownership interest percentage (1) 0.4 % 0.4 % _________________ (1) Represents common units held by certain of the Company’s executive officers and directors, certain of their affiliates and other outside investors . Performance units in the operating partnership Performance units are partnership interests in the operating partnership. Each performance unit awarded will be deemed equivalent to an award of one share of common stock under the 2010 Plan, reducing the availability for other equity awards on a one-for-one basis. Under the terms of the performance units, the operating partnership will revalue its assets for tax purposes upon the occurrence of certain specified events and any increase in valuation from the time of grant until such event will be allocated first to the holders of performance units to equalize the capital accounts of such holders with the capital accounts of common unitholders. Subject to any agreed upon exceptions, once vested and having achieved parity with common unitholders, performance units are convertible into common units in the operating partnership on a one -for-one basis. Redeemable non-controlling interest Redeemable preferred units of the operating partnership As of December 31, 2017, there were 407,066 series A preferred units of partnership interest in the operating partnership, or series A preferred units, which are not owned by the Company. On April 16, 2018, 14,468 series A preferred units of partnership interest were redeemed for cash at a redemption price of $25.00 per share, plus accrued and unpaid dividends to, but not including, the date of redemption. These series A preferred units are entitled to preferential distributions at a rate of 6.25% per annum on the liquidation preference of $25.00 per unit and became convertible at the option of the holder into common units or redeemable into cash or, at the Company’s election, exchangeable for registered shares of common stock after June 29, 2013. For a description of the conversion and redemption rights of the series A preferred units, please see “Description of the Partnership Agreement of Hudson Pacific Properties, L.P. — Material Terms of Our Series A Preferred Units” in the Company’s June 23, 2010 Prospectus. Redeemable non-controlling interest in consolidated real estate entity The Company has a redeemable non-controlling interest related to a joint venture relationship with Macerich in the Westside Pavilion property. We acquired a 75% interest in the joint venture, as described in Note 2. The Company has a call right, after a specified time, to sell its interest at fair market value. Macerich has a put right, after a specified time, to sell its interest at fair market value, which is a redemption right that is not solely within the control of the Company. The put right is not currently redeemable and is not probable of being redeemable in the future. Therefore, the non-controlling interest related to this joint venture is included as temporary equity. Once the redemption is probable, the carrying amount will be marked to market with the change in value reflected in additional paid in capital. Common Stock Activity The Company has not completed any common stock offerings in 2018. The Company’s at-the-market, or ATM, program permits sales of up to $125.0 million of common stock. The Company did not utilize the ATM program during the six months ended June 30, 2018 . A cumulative total of $20.1 million has been sold as of June 30, 2018 . Share repurchase program On January 20, 2016, the Board authorized a share repurchase program to buy up to $100.0 million of the outstanding common stock of Hudson Pacific Properties, Inc., which the Board has increased up to a total of $250.0 million on March 8, 2018. No share repurchases have been made as of June 30, 2018 . Dividends During the second quarter of 2018 , the Company declared dividends on its common stock and non-controlling interest in common units in the operating partnership of $0.25 per share and unit. The Company also declared dividends on its series A preferred units of $0.3906 per unit. The second quarter dividends were paid on June 29, 2018 to stockholders and unitholders of record on June 19, 2018 . Taxability of Dividends Earnings and profits, which determine the taxability of distributions to stockholders, may differ from income reported for financial reporting purposes due to the differences for federal income tax purposes in the treatment of loss on extinguishment of debt, revenue recognition, compensation expense and the basis of depreciable assets and estimated useful lives used to compute depreciation. |
Related Party Transactions
Related Party Transactions | 6 Months Ended |
Jun. 30, 2018 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Related Party Transactions Employment Agreements The Company has entered into employment agreements with certain executive officers, effective January 1, 2016, that provide for various severance and change in control benefits and other terms and conditions of employment. Disposal of Pinnacle I and Pinnacle II to certain affiliates of Blackstone On November 16, 2017, the consolidated joint venture that owned Pinnacle I and Pinnacle II sold the properties to certain affiliates of Blackstone for $350.0 million , before credits, prorations and closing costs, including the assumption of $216.0 million of secured notes payable. Michael Nash, a director on the Board, is a senior managing director of an affiliate of Blackstone. Disposal of 222 Kearny to certain affiliates of Farallon Funds On February 14, 2017, the Company sold its 222 Kearny property to a joint venture, a partner of which is an affiliate of the Farallon Funds. Richard B. Fried, a director on the Board, is a managing member of the Farallon Funds. JMG Capital Lease at 11601 Wilshire JMG Capital Management LLC leases approximately 6,638 square feet at the Company’s 11601 Wilshire property pursuant to an eight -year lease at an aggregate rate of approximately $279 thousand annualized rent per year. Jonathan M. Glaser, a director on the Board, is the founder and managing member of JMG Capital Management LLC. JMG Capital Management LLC was a tenant of the property at the time it was purchased by the Company in 2016. During 2017, JMG Capital Management LLC assigned the lease to a third party and as a result is no longer a lessee at our 11601 Wilshire property as of December 31, 2017. Agreement Related to EOP Acquisition On April 1, 2015, the Company completed the EOP Acquisition from certain affiliates of Blackstone, which consisted of 26 high-quality office assets totaling approximately 8.2 million square feet and two development parcels located throughout the Northern California region. The total consideration paid for the EOP Acquisition before certain credits, prorations and closing costs, included a cash payment of $1.75 billion and an aggregate of 63,474,791 shares of common stock of Hudson Pacific Properties, Inc. and common units in the operating partnership. In connection with the EOP Acquisition, the Company, the operating partnership and Blackstone entered into a stockholders agreement, which conferred Blackstone certain rights, including the right to nominate up to three of the Company’s directors. Additionally, the Company entered into a registration rights agreement with Blackstone providing for customary registration rights with respect to the equity consideration paid in the EOP Acquisition. Following a common stock offering and common unit repurchase on January 10, 2017, the stockholders agreement and the registration rights agreement automatically terminated on that date. Common Stock Offerings and Common Unit Redemptions On January 10, 2017, the Company, Blackstone and the Farallon Funds completed a public offering of 18,673,808 shares of common stock, consisting of 8,881,575 shares offered by the Company and 9,792,233 shares offered by the selling stockholders. The offering generated net proceeds for the Company and the selling stockholders of approximately $310.9 million and $342.7 million , respectively, before expenses. The Company used the net proceeds that it received from the offering to redeem 8,881,575 common units held by Blackstone and the Farallon Funds. The Company did not receive any proceeds from the sale of the common stock by the selling stockholders in the offerings described above but it paid approximately half of the expenses of the offerings with respect to the shares of common stock sold by the Farallon Funds and all of the expenses with respect to the shares of common stock sold by Blackstone, in each case, other than underwriting discounts, which were borne by the selling stockholders. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Legal From time to time, the Company is party to various lawsuits, claims and other legal proceedings arising out of, or incident to, the ordinary course of business. Management believes, based in part upon consultation with legal counsel, that the ultimate resolution of all such claims will not have a material adverse effect on the Company’s results of operations, financial position or cash flows. As of June 30, 2018 , the risk of material loss from such legal actions impacting the Company’s financial condition or results from operations has been assessed as remote. Letters of Credit As of June 30, 2018 , the Company has outstanding letters of credit totaling approximately $2.6 million under the unsecured revolving credit facility. The letters of credit are primarily related to utility company security deposit requirements. |
Cash Flow Reconciliation
Cash Flow Reconciliation | 6 Months Ended |
Jun. 30, 2018 | |
Cash and Cash Equivalents [Abstract] | |
Cash Flow Reconciliation | Cash Flow Reconciliation Restricted cash primarily consists of amounts held by lenders to fund reserves such as capital improvements, taxes, insurance, debt service and operating expenditures. Pursuant to the adoption of ASU 2016-18, the Company included restricted cash with cash and cash equivalents in the Consolidated Statements of Cash Flows. The following table provides a reconciliation of cash and cash equivalents and restricted cash at the beginning and end of the periods presented: Six Months Ended June 30, 2018 2017 Beginning of period: Cash and cash equivalents $ 78,922 $ 83,015 Restricted cash 22,358 25,177 Total $ 101,280 $ 108,192 End of period: Cash and cash equivalents $ 57,515 $ 73,242 Restricted cash 8,472 17,284 Total $ 65,987 $ 90,526 |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events On July 27, 2018 , the Company sold its Peninsula Office Park property for $210.0 million (before credits, prorations and closings costs), which resulted in a gain on sale. Proceeds were used to fully pay down the unsecured revolving credit facility. |
Summary of Significant Accoun28
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2018 | |
Accounting Policies [Abstract] | |
Basis of Presentation | The accompanying consolidated financial statements of the Company and the operating partnership are prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) applicable to interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Certain information and footnote disclosures required for annual financial statements have been condensed or excluded pursuant to the Securities and Exchange Commission (“SEC”) rules and regulations. Accordingly, the interim financial statements do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, the accompanying interim financial statements reflect all adjustments of a normal and recurring nature that are considered necessary for a fair presentation of the results for the interim periods presented. References to number of properties and square-feet are not covered by the auditor’s review procedures. The results of operations for the interim periods are not necessarily indicative of the results that may be expected for the year ended December 31, 2018 . The interim consolidated financial statements should be read in conjunction with the consolidated financial statements in the 2017 Annual Report on Form 10-K of Hudson Pacific Properties, Inc. and Hudson Pacific Properties, L.P. and the notes thereto. Certain amounts in the consolidated financial statements for the prior period have been reclassified to conform to the current period presentation. Included in the reclassified amounts are properties held for sale. These amounts relate to our Peninsula Office Park property, which was sold on July 27, 2018 . |
Principles of Consolidation | The unaudited interim consolidated financial statements of the Company include the accounts of the Company, the operating partnership and all wholly owned and controlled subsidiaries. The consolidated financial statements of the operating partnership include the accounts of the operating partnership and all wholly owned and controlled subsidiaries. All intercompany balances and transactions have been eliminated in the consolidated financial statements. Under the consolidation guidance, the Company first evaluates an entity using the variable interest model, then the voting model. The Company ultimately consolidates all entities that the Company controls through either majority ownership or voting rights, including all variable interest entities (“VIEs”) of which the Company is considered the primary beneficiary. The Company accounts for all other unconsolidated joint ventures using the cost or equity method of accounting. In addition, the Company continually evaluates each legal entity that is not wholly owned for reconsideration based on changing circumstances. VIEs are defined as entities in which equity investors do not have: • the characteristics of a controlling financial interest; • sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties; and/or • the entity is structured with non-substantive voting rights. The entity that consolidates a VIE is known as its primary beneficiary and is generally the entity with both the power to direct the activities that most significantly affect the VIE’s economic performance and the right to receive benefits from the VIE or the obligation to absorb losses of the VIE that could be significant to the VIE. As of June 30, 2018 , the Company has determined that four joint ventures and our operating partnership met the definition of a VIE. Three of the joint ventures are consolidated entities and one joint venture is a non-consolidated entity. |
Use of Estimates | The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of commitments and contingencies at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, the Company evaluates its estimates, including those related to acquiring, developing and assessing the carrying values of its real estate properties, its accrued liabilities and its performance-based equity compensation awards. The Company bases its estimates on historical experience, current market conditions and various other assumptions that are believed to be reasonable under the circumstances. Actual results could materially differ from these estimates. |
Revenue Recognition | The Company has compiled an inventory of its sources of revenues and has identified the following material revenue streams: (i) rental revenues (ii) tenant recoveries (iii) ancillary revenues (iv) guest parking revenues and (v) sale of real estate. Revenue Stream Components Financial Statement Location Rental revenues Office rentals, stage rentals and storage rentals Office and Studio Segments: rental Tenant recoveries Reimbursement of real estate taxes, insurance, repairs and maintenance, other operating expenses and monthly parking revenues Office Segment: tenant recoveries and parking and other Studio Segment: tenant recoveries and other property-related revenue Ancillary revenues Revenues derived from tenants’ use of lighting, equipment rental, power, HVAC and telecommunications (i.e., telephone and internet) Studio Segment: other property-related revenue Guest parking revenues Parking revenue that is not associated with lease agreements Office Segment: parking and other Sale of real estate Gains on sales derived from cash consideration less cost basis Gains on sale of real estate Currently, rental revenues are accounted for under ASC 840, Leases . Rental revenues will be accounted for under ASC 842, Leases (“ASC 842”), which the Company plans to adopt on January 1, 2019. Currently tenant recoveries are accounted for under ASC 605, Revenue Recognition (“ASC 605”). Tenant recoveries will be accounted for under ASC 606, Revenue from Contracts with Customers (“ASC 606”), beginning on January 1, 2019, when the Company adopts ASC 842. Under the current ASC 842 guidance, the Company would be required to classify its tenant recoveries into lease and non-lease components. On March 28, 2018, the FASB agreed to issue an amendment to ASC 842, which, if elected, permits the Company to classify tenant recoveries as a single lease component and account for tenant recoveries with rental revenues in the Consolidated Statement of Operations. Please refer to our Update on ASC 842 implementation section below for details. Ancillary revenues and guest parking revenues have been accounted for under ASC 606 since the Company adopted this standard on January 1, 2018. This standard requires the Company to recognize revenues based on a five-step model and will result in the consideration being recognized once all performance obligations are satisfied. The timing and pattern of revenue recognition as it relates to ancillary revenues and guest parking revenues have not changed from those under ASC 605. Sale of real estate has been accounted for under ASC 610, Other Income , since the Company adopted this standard on January 1, 2018. This standard requires the Company to apply certain recognition and measurement principles in accordance with ASC 606 when it de-recognizes nonfinancial assets and in substance nonfinancial assets, and the counterparty is not a customer. This is the case for the Company’s sales of real estate, and as a result the Company is required to evaluate the sales of real estate based on transfer of control. If a real estate sale contract includes ongoing involvement by the seller with the sold property, the seller must evaluate each promised good or service under the contract to determine whether it represents a performance obligation, constitutes a guarantee or prevents the transfer of control. The timing and pattern of revenue recognition might change as it relates to gains of sale of real estate if the sale includes continued involvement that represents a separate performance obligation. |
Recently Issued Accounting Pronouncements | Changes to GAAP are established by the Financial Accounting Standards Board (the “FASB”) in the form of Accounting Standards Update (“ASU”). The following ASUs were adopted by the Company in 2018: Standard Description Effect on the Financial Statements or Other Significant Matters ASU 2018-09, Codification Improvements The amendment, among other things, clarifies when excess tax benefits should be recognized for share-based compensation awards, removes inconsistent guidance in income tax accounting for business combinations, clarifies the circumstances when derivatives may be offset, and the measurement of liability or equity-classified financial instruments when an identical asset is held as an asset, and allows portfolios of financial instruments and nonfinancial instruments accounted for as derivatives to use the portfolio exception to valuation. The Company adopted this guidance during Q2 2018 using the prospective approach. The adoption did not have an impact on the Consolidated Financial Statements. ASU 2018-07, Compensation—Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting This amendment expands the scope of ASC 718 to include all share-based payment arrangements. It simplifies the accounting for share-based payments granted to nonemployees for goods and services by aligning the accounting with the requirements for share-based payments granted to employees. The Company adopted this guidance during Q2 2018 using the prospective approach. The adoption did not have an impact on the Consolidated Financial Statements. Standard Description Effect on the Financial Statements or Other Significant Matters ASU 2018-04, Investments—Debt Securities (Topic 320) and Regulated Operations (Topic 980): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 117 and SEC Release No. 33-9273 (SEC Update) The guidance no longer allows the use of cost method of accounting for equity instruments that do not have a readily determinable fair value, and companies are now required to measure equity investments at fair value through net income. Companies are permitted to elect a measurement alternative that allows for measuring equity instruments at cost, less any impairment, plus or minus changes resulting from observable price changes, adjusted as of the date that an observable transaction takes place, rather than the report date. For equity investments that do not have a readily determinable fair value, this guidance is adopted prospectively for all investments that exist as of the date of adoption. The guidance allows entities to use a prospective transition approach only for securities they elect to measure using the measurement alternative. The Company adopted this guidance during Q1 2018 using the prospective approach. The Company has elected to measure our equity instruments using the measurement alternative. Please see Note 12 for details. ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities The guidance eliminates the requirement to separately measure and report hedge ineffectiveness and generally requires the entire change in the fair value of a hedging instrument to be presented in the same income statement line as the hedged item. Therefore, a cumulative effect adjustment related to elimination of ineffectiveness measurement is required to be recorded to the opening balance of retained earnings as of the beginning of the fiscal year of adoption for a cash flow hedge. The guidance also eases certain documentation and assessment requirements and modifies the accounting for components excluded from the assessment of hedge effectiveness. This guidance must be applied using a modified retrospective approach. The Company adopted this guidance during Q1 2018 using the modified retrospective approach. As a result of the adoption, the concept of ineffectiveness from an accounting perspective is eliminated. Subsequent changes in fair value for a hedging instrument that has been designated and qualifies as a cash flow hedge will be recognized as a component in other comprehensive income. Additionally, the Company eliminated any previously recorded ineffectiveness with a cumulative effect adjustment. Please see Note 9 for details. ASU 2017-09, Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting The guidance clarifies when changes to the terms or conditions of a share-based payment award must be accounted for as modifications. This guidance must be applied prospectively. The Company adopted this guidance during Q1 2018 on a prospective basis. The adoption did not have an impact on the Consolidated Financial Statements. ASU 2017-05, Other Income—Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets The guidance updates the definition of an in substance nonfinancial asset and clarifies the scope of ASC 610-20 on the sale or transfer of nonfinancial assets to noncustomers, including partial sales. It also clarifies the de-recognition guidance for nonfinancial assets to conform with the new revenue recognition standard. Either a full or modified retrospective approach can be applied. The Company adopted this guidance during Q1 2018 using the modified retrospective approach. The Company has not had variable consideration in our sale of real estate, or partial sales of nonfinancial assets or contribution of a nonfinancial asset to form a joint venture with retained noncontrolling interest. The adoption did not have an impact on the Consolidated Financial Statements. ASU 2014-09, Revenue from Contracts with Customers amended by ASU 2016-08, Revenue from Contracts with Customers—Principal versus Agent Considerations (Reporting Revenue Gross versus Net) Issued on May 28, 2014, ASU 2014-09 outlines a single comprehensive model for entities to use in accounting for revenues arising from contracts with customers and specifically notes that lease contracts with customers are a scope exception. Issued on March 17, 2016, ASU 2016-08 clarifies certain aspects of the principal-versus-agent guidance in its new revenue recognition standard related to the determination of whether an entity is a principal or agent and the determination of the nature of each specified good or service. The guidance provides for practical expedients associated with the determination of whether a significant financing component exists and the expedient for recording an immediate expense for certain incremental costs of obtaining a contract with a customer. The Company adopted this guidance during Q1 2018 using the modified retrospective approach and is using the practical expedients associated with expensing incremental costs of obtaining a contract with a customer with terms of one year or less. The adoption of this ASU did not result in any changes with respect to the timing and pattern of revenue recognition. Please refer to the revenue recognition policy note above for the additional disclosures. Update on ASC 842 implementation On February 25, 2016, the FASB issued ASU 2016-02, Leases , to amend the accounting guidance for leases and set out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a lease agreement (i.e., lessees and lessors). This ASU is effective for annual reporting periods (including interim periods) beginning after December 15, 2018. Issuers have two options for adoption: • a modified retrospective approach that must be applied for leases that exist or are entered into after January 1, 2017, the beginning of the earliest comparative period presented in the 2019 consolidated financial statements, with a cumulative adjustment to the opening balance of retained earnings (accumulated deficit) on January 1, 2017, and restatement of the amounts presented prior to January 1, 2019. • a modified retrospective transition method that, if the transition method is elected, must be applied for leases that existed or are entered into after January 1, 2019, the effective date of the ASU, with a cumulative adjustment to the opening balance of retained earnings (accumulated deficit) on January 1, 2019. Additional disclosures for the periods prior to adoption would follow ASC 840 disclosure requirements. This guidance requires all lessees to record a lease liability at lease inception, with a corresponding right-of-use asset, except for short-term leases. Lessor accounting will not be fundamentally changed. ASC 842 provides practical expedients that allow entities to not (i) reassess whether any expired or existing contracts are considered or contain leases; (ii) reassess the lease classification for any expired or existing leases; and (iii) reassess initial direct costs for any existing leases. The Company plans to adopt the standard on January 1, 2019 and expects to elect the use of practical expedients. The Company plans to elect the transition method for adoption as described above. Lessor Accounting For the three months ended June 30, 2018 and June 30, 2017 , the Company recognized rental revenues and tenant recoveries of $162.9 million and $167.9 million , respectively. For the six months ended June 30, 2018 and June 30, 2017 , the Company recognized $324.6 million and $326.1 million , respectively. Under current accounting standards, the Company recognizes rental revenue from tenants on a straight-line basis over the lease term when collectability is reasonably assured and the tenant has taken possession or controls the physical use of the leased asset. Tenant recoveries related to reimbursement of real estate taxes, insurance, repairs and maintenance and other operating expenses are recognized as revenue in the period during which the applicable expenses are incurred. The reimbursements are recognized and presented gross, as the Company, which is generally the primary obligor with respect to purchasing goods and services from third-party suppliers, has discretion in selecting the supplier and bears the associated credit risk. ASC 842 requires companies to identify lease and non-lease components of a lease agreement. Lease components relate to the right to use the leased asset whereas non-lease components relate to payments for goods or services that are transferred separately from the right to use the underlying asset. Total lease consideration is allocated to lease and non-lease components on a relative standalone basis. The recognition of revenues related to lease components will be governed by ASC 842, while revenue related to non-lease components will be subject to ASC 606. For lessors, the guidance provides for a practical expedient to elect a combined single lease component presentation if (i) the timing and pattern of the transfer of the combined single lease component is the same, and (ii) the related lease component, if accounted for separately, would be classified as an operating lease. The Company plans to elect the practical expedient for non-lease components, that qualify, to be combined under a single lease component presentation. The Company has not completed its analysis of ASC 842. The ASU also requires lessors to capitalize only those costs that are defined as initial direct costs. Under the current accounting standards, the Company capitalizes initial direct and indirect leasing costs. During the three months ended June 30, 2018 and June 30, 2017 , the Company capitalized $2.0 million and $1.7 million of indirect leasing costs, respectively. During the six months ended June 30, 2018 and June 30, 2017 , the Company capitalized $3.8 million and $3.2 million of indirect leasing costs, respectively. Under this new ASU, and based on our current policies and processes, these costs will be expensed as incurred. Lessee Accounting As of June 30, 2018 , the future undiscounted minimum lease payments under the Company’s ground leases totaled $508.0 million . This guidance requires lessees to record a lease liability at lease inception, with a corresponding right-of-use asset, except for short-term leases. The Company continues to evaluate the amount of right-of-use asset and lease liability that will ultimately be recorded with respect to its ground lease agreements, where it is the lessee. Other recently issued ASUs The Company considers the applicability and impact of all ASUs. The following table lists the recently issued ASUs that have not been disclosed in the Company ’s 2017 Annual Report on Form 10-K and have not been adopted by the Company. The list excludes those ASUs that are not expected to have a material impact on the Company’s consolidated financial statements. Standard Description Effective Date Effect on the Financial Statements or Other Significant Matters ASU 2018-11, Leases (Topic 842): Targeted Improvements The amendment provides (i) a transition option to adopt ASC 842 using the modified retrospective transition provision and (ii) a practical expedient for lessors to elect a combined single lease component presentation. The effective date and transition requirements are the same as that in Update 2016-02 (Effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years.) The Company is currently evaluating the impact of this update in conjunction with ASC 842. ASU 2018-10, Codification Improvements to Topic 842, Leases The amendments make 16 technical corrections to the lease standard, which include clarification of the rate implicit in the lease, impairment of the net investment in the lease, lessee reassessment of lease classification, lessor reassessment of lease term and purchase options, variable payments that depend on an index or rate and certain transition adjustments. The effective date and transition requirements are the same as that in Update 2016-02 (Effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years.) The Company is currently evaluating the impact of this update in conjunction with ASC 842. ASU 2018-01, Leases (Topic 842): Land Easement Practical Expedient for Transition to Topic 842 The amendments in this update permit an entity to elect an optional transition practical expedient to not evaluate under ASC 842 land easements that exist or expired before the entity’s adoption of ASC 842 and that were not previously accounted for as leases under ASC 840. An entity that elects this practical expedient should apply the practical expedient consistently to all of its existing or expired land easements that were not previously accounted for as leases under ASC 840. Once an entity adopts ASC 842, it should apply it prospectively to all new (or modified) land easements to determine whether the arrangement should be accounted for as a lease. The effective date and transition requirements are the same as that in Update 2016-02 (Effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years.) The Company is currently evaluating the impact of this update in conjunction with ASC 842. |
Organization (Tables)
Organization (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Portfolio of properties | The Company’s portfolio consists of properties located throughout Northern and Southern California and the Pacific Northwest. The following table summarizes the Company’s portfolio as of June 30, 2018 : Segments Number of Properties Square Feet (unaudited) Office 50 13,336,940 Studio 3 1,246,423 Total (1) 53 14,583,363 _________________ (1) Includes redevelopment, development and held for sale properties. The following table summarizes the properties sold during the six months ended June 30, 2018 . These properties were non-strategic assets to the Company’s portfolio and were classified as held for sale as of December 31, 2017 : Property Date of Disposal Approximate Square Feet Sales Price (1) (in millions) Embarcadero Place 1/25/2018 197,402 $ 136.0 2600 Campus Drive (building 6 of Peninsula Office Park) 1/31/2018 63,050 22.5 2180 Sand Hill 3/1/2018 45,613 82.5 9300 Wilshire 4/10/2018 61,422 13.8 Total dispositions 367,487 $ 254.8 _________________ (1) Represents gross sales price before certain credits, prorations and closing costs. |
Summary of Significant Accoun30
Summary of Significant Accounting Policies (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Accounting Policies [Abstract] | |
Schedule of consolidated entities | As of June 30, 2018 , the operating partnership has determined that three of its joint ventures met the definition of a VIE and are consolidated: Entity Property Ownership Interest Hudson 1455 Market, L.P. 1455 Market 55.0 % Hudson 1099 Stewart, L.P. Hill7 55.0 % HPP-MAC WSP, LLC Westside Pavilion (1) 75.0 % _________________ (1) As of June 30, 2018, this joint venture was formed but no significant contributions of cash or property have been made by the partners. |
Schedule of sources of revenues | The Company has compiled an inventory of its sources of revenues and has identified the following material revenue streams: (i) rental revenues (ii) tenant recoveries (iii) ancillary revenues (iv) guest parking revenues and (v) sale of real estate. Revenue Stream Components Financial Statement Location Rental revenues Office rentals, stage rentals and storage rentals Office and Studio Segments: rental Tenant recoveries Reimbursement of real estate taxes, insurance, repairs and maintenance, other operating expenses and monthly parking revenues Office Segment: tenant recoveries and parking and other Studio Segment: tenant recoveries and other property-related revenue Ancillary revenues Revenues derived from tenants’ use of lighting, equipment rental, power, HVAC and telecommunications (i.e., telephone and internet) Studio Segment: other property-related revenue Guest parking revenues Parking revenue that is not associated with lease agreements Office Segment: parking and other Sale of real estate Gains on sales derived from cash consideration less cost basis Gains on sale of real estate |
Schedule of recently issued accounting pronouncements | The following ASUs were adopted by the Company in 2018: Standard Description Effect on the Financial Statements or Other Significant Matters ASU 2018-09, Codification Improvements The amendment, among other things, clarifies when excess tax benefits should be recognized for share-based compensation awards, removes inconsistent guidance in income tax accounting for business combinations, clarifies the circumstances when derivatives may be offset, and the measurement of liability or equity-classified financial instruments when an identical asset is held as an asset, and allows portfolios of financial instruments and nonfinancial instruments accounted for as derivatives to use the portfolio exception to valuation. The Company adopted this guidance during Q2 2018 using the prospective approach. The adoption did not have an impact on the Consolidated Financial Statements. ASU 2018-07, Compensation—Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting This amendment expands the scope of ASC 718 to include all share-based payment arrangements. It simplifies the accounting for share-based payments granted to nonemployees for goods and services by aligning the accounting with the requirements for share-based payments granted to employees. The Company adopted this guidance during Q2 2018 using the prospective approach. The adoption did not have an impact on the Consolidated Financial Statements. Standard Description Effect on the Financial Statements or Other Significant Matters ASU 2018-04, Investments—Debt Securities (Topic 320) and Regulated Operations (Topic 980): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 117 and SEC Release No. 33-9273 (SEC Update) The guidance no longer allows the use of cost method of accounting for equity instruments that do not have a readily determinable fair value, and companies are now required to measure equity investments at fair value through net income. Companies are permitted to elect a measurement alternative that allows for measuring equity instruments at cost, less any impairment, plus or minus changes resulting from observable price changes, adjusted as of the date that an observable transaction takes place, rather than the report date. For equity investments that do not have a readily determinable fair value, this guidance is adopted prospectively for all investments that exist as of the date of adoption. The guidance allows entities to use a prospective transition approach only for securities they elect to measure using the measurement alternative. The Company adopted this guidance during Q1 2018 using the prospective approach. The Company has elected to measure our equity instruments using the measurement alternative. Please see Note 12 for details. ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities The guidance eliminates the requirement to separately measure and report hedge ineffectiveness and generally requires the entire change in the fair value of a hedging instrument to be presented in the same income statement line as the hedged item. Therefore, a cumulative effect adjustment related to elimination of ineffectiveness measurement is required to be recorded to the opening balance of retained earnings as of the beginning of the fiscal year of adoption for a cash flow hedge. The guidance also eases certain documentation and assessment requirements and modifies the accounting for components excluded from the assessment of hedge effectiveness. This guidance must be applied using a modified retrospective approach. The Company adopted this guidance during Q1 2018 using the modified retrospective approach. As a result of the adoption, the concept of ineffectiveness from an accounting perspective is eliminated. Subsequent changes in fair value for a hedging instrument that has been designated and qualifies as a cash flow hedge will be recognized as a component in other comprehensive income. Additionally, the Company eliminated any previously recorded ineffectiveness with a cumulative effect adjustment. Please see Note 9 for details. ASU 2017-09, Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting The guidance clarifies when changes to the terms or conditions of a share-based payment award must be accounted for as modifications. This guidance must be applied prospectively. The Company adopted this guidance during Q1 2018 on a prospective basis. The adoption did not have an impact on the Consolidated Financial Statements. ASU 2017-05, Other Income—Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets The guidance updates the definition of an in substance nonfinancial asset and clarifies the scope of ASC 610-20 on the sale or transfer of nonfinancial assets to noncustomers, including partial sales. It also clarifies the de-recognition guidance for nonfinancial assets to conform with the new revenue recognition standard. Either a full or modified retrospective approach can be applied. The Company adopted this guidance during Q1 2018 using the modified retrospective approach. The Company has not had variable consideration in our sale of real estate, or partial sales of nonfinancial assets or contribution of a nonfinancial asset to form a joint venture with retained noncontrolling interest. The adoption did not have an impact on the Consolidated Financial Statements. ASU 2014-09, Revenue from Contracts with Customers amended by ASU 2016-08, Revenue from Contracts with Customers—Principal versus Agent Considerations (Reporting Revenue Gross versus Net) Issued on May 28, 2014, ASU 2014-09 outlines a single comprehensive model for entities to use in accounting for revenues arising from contracts with customers and specifically notes that lease contracts with customers are a scope exception. Issued on March 17, 2016, ASU 2016-08 clarifies certain aspects of the principal-versus-agent guidance in its new revenue recognition standard related to the determination of whether an entity is a principal or agent and the determination of the nature of each specified good or service. The guidance provides for practical expedients associated with the determination of whether a significant financing component exists and the expedient for recording an immediate expense for certain incremental costs of obtaining a contract with a customer. The Company adopted this guidance during Q1 2018 using the modified retrospective approach and is using the practical expedients associated with expensing incremental costs of obtaining a contract with a customer with terms of one year or less. The adoption of this ASU did not result in any changes with respect to the timing and pattern of revenue recognition. Please refer to the revenue recognition policy note above for the additional disclosures. |
Schedule of new accounting pronouncements | The following table lists the recently issued ASUs that have not been disclosed in the Company ’s 2017 Annual Report on Form 10-K and have not been adopted by the Company. The list excludes those ASUs that are not expected to have a material impact on the Company’s consolidated financial statements. Standard Description Effective Date Effect on the Financial Statements or Other Significant Matters ASU 2018-11, Leases (Topic 842): Targeted Improvements The amendment provides (i) a transition option to adopt ASC 842 using the modified retrospective transition provision and (ii) a practical expedient for lessors to elect a combined single lease component presentation. The effective date and transition requirements are the same as that in Update 2016-02 (Effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years.) The Company is currently evaluating the impact of this update in conjunction with ASC 842. ASU 2018-10, Codification Improvements to Topic 842, Leases The amendments make 16 technical corrections to the lease standard, which include clarification of the rate implicit in the lease, impairment of the net investment in the lease, lessee reassessment of lease classification, lessor reassessment of lease term and purchase options, variable payments that depend on an index or rate and certain transition adjustments. The effective date and transition requirements are the same as that in Update 2016-02 (Effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years.) The Company is currently evaluating the impact of this update in conjunction with ASC 842. ASU 2018-01, Leases (Topic 842): Land Easement Practical Expedient for Transition to Topic 842 The amendments in this update permit an entity to elect an optional transition practical expedient to not evaluate under ASC 842 land easements that exist or expired before the entity’s adoption of ASC 842 and that were not previously accounted for as leases under ASC 840. An entity that elects this practical expedient should apply the practical expedient consistently to all of its existing or expired land easements that were not previously accounted for as leases under ASC 840. Once an entity adopts ASC 842, it should apply it prospectively to all new (or modified) land easements to determine whether the arrangement should be accounted for as a lease. The effective date and transition requirements are the same as that in Update 2016-02 (Effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years.) The Company is currently evaluating the impact of this update in conjunction with ASC 842. |
Investment in Real Estate (Tabl
Investment in Real Estate (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Real Estate [Abstract] | |
Summary of investment in real estate | The following table summarizes the Company’s investment in real estate, at cost as of: June 30, 2018 December 31, 2017 Land $ 1,220,267 $ 1,204,700 Building and improvements 4,443,050 4,389,846 Tenant improvements 443,548 397,012 Furniture and fixtures 8,756 8,576 Property under development 303,261 219,227 Investment in real estate, at cost (1) $ 6,418,882 $ 6,219,361 _____________ (1) Excludes balances related to properties that have been classified as held for sale. |
Schedule of dispositions | The Company’s portfolio consists of properties located throughout Northern and Southern California and the Pacific Northwest. The following table summarizes the Company’s portfolio as of June 30, 2018 : Segments Number of Properties Square Feet (unaudited) Office 50 13,336,940 Studio 3 1,246,423 Total (1) 53 14,583,363 _________________ (1) Includes redevelopment, development and held for sale properties. The following table summarizes the properties sold during the six months ended June 30, 2018 . These properties were non-strategic assets to the Company’s portfolio and were classified as held for sale as of December 31, 2017 : Property Date of Disposal Approximate Square Feet Sales Price (1) (in millions) Embarcadero Place 1/25/2018 197,402 $ 136.0 2600 Campus Drive (building 6 of Peninsula Office Park) 1/31/2018 63,050 22.5 2180 Sand Hill 3/1/2018 45,613 82.5 9300 Wilshire 4/10/2018 61,422 13.8 Total dispositions 367,487 $ 254.8 _________________ (1) Represents gross sales price before certain credits, prorations and closing costs. |
Schedule of components of assets and liabilities associated with real estate held for sale | The following table summarizes the components of assets and liabilities associated with real estate held for sale as of: June 30, 2018 December 31, 2017 ASSETS Investment in real estate, net $ 192,630 $ 396,846 Accounts receivable, net 75 213 Straight-line rent receivables, net 3,292 5,225 Deferred leasing costs and lease intangible assets, net 4,998 9,589 Prepaid expenses and other assets, net 16 58 Assets associated with real estate held for sale $ 201,011 $ 411,931 LIABILITIES Accounts payable and accrued liabilities $ 1,929 $ 1,808 Lease intangible liabilities, net 271 485 Security deposits and prepaid rent 1,354 2,610 Liabilities associated with real estate held for sale $ 3,554 $ 4,903 |
Deferred Leasing Costs and Le32
Deferred Leasing Costs and Lease Intangibles, net (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Leases [Abstract] | |
Schedule of deferred leasing cost and lease intangibles | The following summarizes the Company’s deferred leasing costs and lease intangibles as of: June 30, 2018 December 31, 2017 Above-market leases $ 9,236 $ 18,028 Accumulated amortization (7,122 ) (15,131 ) Above-market leases, net 2,114 2,897 Deferred leasing costs and in-place lease intangibles 288,353 301,945 Accumulated amortization (114,569 ) (127,703 ) Deferred leasing costs and in-place lease intangibles, net 173,784 174,242 Below-market ground leases 68,388 68,388 Accumulated amortization (7,704 ) (6,498 ) Below-market ground leases, net 60,684 61,890 Deferred leasing costs and lease intangible assets, net (1) $ 236,582 $ 239,029 Below-market leases $ 91,686 $ 103,597 Accumulated amortization (50,898 ) (55,019 ) Below-market leases, net 40,788 48,578 Above-market ground leases 1,095 1,095 Accumulated amortization (154 ) (133 ) Above-market ground leases, net 941 962 Lease intangible liabilities, net (1) $ 41,729 $ 49,540 _____________ (1) Excludes balances related to properties that have been classified as held for sale. |
Schedule of amortization during period | The Company recognized the following amortization related to deferred leasing costs and lease intangibles: Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 Above-market leases (1) $ (409 ) $ (1,911 ) $ (883 ) $ (3,267 ) Deferred leasing costs and in-place lease intangibles (2) (11,423 ) (20,644 ) (23,119 ) (40,437 ) Below-market ground leases (3) (603 ) (844 ) (1,238 ) (1,492 ) Below-market leases (1) 3,640 6,584 7,925 13,672 Above-market ground leases (3) 11 11 22 22 __________________ (1) Amortization is recorded in revenues in the Consolidated Statements of Operations. (2) Amortization is recorded in depreciation and amortization expenses and office rental revenues in the Consolidated Statements of Operations. (3) Amortization is recorded in office operating expenses in the Consolidated Statements of Operations. |
Accounts Receivable, net (Table
Accounts Receivable, net (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Receivables [Abstract] | |
Schedule of accounts receivable, net | The following table summarizes the Company’s accounts receivable, net of allowance for doubtful accounts as of: June 30, 2018 December 31, 2017 Accounts receivable $ 8,833 $ 6,706 Allowance for doubtful accounts (2,218 ) (2,472 ) Accounts receivable, net (1) $ 6,615 $ 4,234 _____________ (1) Excludes balances related to properties that have been classified as held for sale. The following table represents the Company’s straight-line rent receivables, net of allowance for doubtful accounts as of: June 30, 2018 December 31, 2017 Straight-line rent receivables $ 124,083 $ 106,466 Allowance for doubtful accounts — — Straight-line rent receivables, net (1) $ 124,083 $ 106,466 _____________ (1) Excludes balances related to properties that have been classified as held for sale. |
Straight-line Rent Receivable34
Straight-line Rent Receivables, net (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Receivables [Abstract] | |
Schedule of straight-line rent receivables, net | The following table summarizes the Company’s accounts receivable, net of allowance for doubtful accounts as of: June 30, 2018 December 31, 2017 Accounts receivable $ 8,833 $ 6,706 Allowance for doubtful accounts (2,218 ) (2,472 ) Accounts receivable, net (1) $ 6,615 $ 4,234 _____________ (1) Excludes balances related to properties that have been classified as held for sale. The following table represents the Company’s straight-line rent receivables, net of allowance for doubtful accounts as of: June 30, 2018 December 31, 2017 Straight-line rent receivables $ 124,083 $ 106,466 Allowance for doubtful accounts — — Straight-line rent receivables, net (1) $ 124,083 $ 106,466 _____________ (1) Excludes balances related to properties that have been classified as held for sale. |
Prepaid Expenses and Other As35
Prepaid Expenses and Other Assets, net (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Summary of prepaid expenses and other assets, net | The following table summarizes the Company’s prepaid expenses and other assets, net as of: June 30, 2018 December 31, 2017 Derivative assets $ 25,485 $ 12,586 Investment in unconsolidated entities 14,435 14,240 Goodwill 8,754 8,754 Non-real estate investment (1) 2,713 1,785 Other 56,162 23,774 Prepaid expenses and other assets, net (2) $ 107,549 $ 61,139 _____________ (1) Related to our investment in shares in a non-public company. See Note 12 for details. (2) Excludes balances related to properties that have been classified as held for sale. |
Notes Payable, net (Tables)
Notes Payable, net (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Debt Disclosure [Abstract] | |
Schedule of long-term debt instruments | The following table sets forth information with respect to our outstanding indebtedness: June 30, 2018 December 31, 2017 Interest Rate (1) Contractual Maturity Date UNSECURED NOTES PAYABLE Unsecured Revolving Credit Facility (2)(3) $ 140,000 $ 100,000 LIBOR + 1.05% to 1.50% 3/13/2022 (4) Term Loan A (2)(5) 300,000 300,000 LIBOR + 1.20% to 1.70% 4/1/2020 (6) Term Loan C (2) 75,000 75,000 LIBOR + 1.30% to 2.20% 11/17/2020 Term Loan B (2)(7) 350,000 350,000 LIBOR + 1.20% to 1.70% 4/1/2022 Term Loan D (2)(8) 125,000 125,000 LIBOR + 1.20% to 1.70% 11/17/2022 Series A Notes 110,000 110,000 4.34% 1/2/2023 Series E Notes 50,000 50,000 3.66% 9/15/2023 Series B Notes 259,000 259,000 4.69% 12/16/2025 Series D Notes 150,000 150,000 3.98% 7/6/2026 Registered Senior Notes (9) 400,000 400,000 3.95% 11/1/2027 Series C Notes 56,000 56,000 4.79% 12/16/2027 TOTAL UNSECURED NOTES PAYABLE 2,015,000 1,975,000 SECURED NOTES PAYABLE Sunset Gower Studios/Sunset Bronson Studios (10) 5,001 5,001 LIBOR + 2.25% 3/4/2019 (4) Met Park North (11) 64,500 64,500 LIBOR + 1.55% 8/1/2020 10950 Washington (12) 27,151 27,418 5.32% 3/11/2022 Element LA 168,000 168,000 4.59% 11/6/2025 Hill7 (13) 101,000 101,000 3.38% 11/6/2028 Rincon Center — 98,392 5.13% N/A TOTAL SECURED NOTES PAYABLE 365,652 464,311 TOTAL NOTES PAYABLE 2,380,652 2,439,311 Unamortized deferred financing costs and loan discounts (14) (18,903 ) (17,931 ) TOTAL NOTES PAYABLE, NET $ 2,361,749 $ 2,421,380 _________________ (1) Interest rate with respect to indebtedness is calculated on the basis of a 360 -day year for the actual days elapsed. Interest rates are as of June 30, 2018 , which may be different than the interest rates as of December 31, 2017 for corresponding indebtedness. (2) The Company has an option to make an irrevocable election to change the interest rate depending on the Company’s credit rating or a specified base rate plus an applicable margin. As of June 30, 2018 , no such election had been made. (3) The Company has a total capacity of $600.0 million under its unsecured revolving credit facility. (4) The maturity date may be extended once for an additional one -year term. (5) The outstanding balance of the term loan was effectively fixed at 2.56% to 3.06% per annum through the use of two interest rate swaps. See Note 9 for details. (6) The maturity date may be extended twice, each time for an additional one -year term. (7) The outstanding balance of the term loan was effectively fixed at 2.96% to 3.46% per annum through the use of two interest rate swaps. See Note 9 for details. (8) The outstanding balance of the term loan was effectively fixed at 2.63% to 3.13% per annum through the use of an interest rate swap. See Note 9 for details. (9) On October 2, 2017, the Company completed an underwritten public offering of $400.0 million of senior notes, which were issued at 99.815% of par. (10) The Company has the ability to draw up to $257.0 million under its construction loan, subject to lender required submissions. (11) This loan bears interest only. Interest on the full loan amount has been effectively fixed at 3.71% per annum through the use of an interest rate swap. See Note 9 for details. (12) Monthly debt service includes annual debt amortization payments based on a 30 -year amortization schedule with a balloon payment at maturity. (13) The Company owns 55% of the ownership interest in the consolidated joint venture that owns the Hill7 property. The full amount of the loan is shown. This loan bears interest only at 3.38% until November 6, 2026, at which time the interest rate will increase and monthly debt service will include principal payments with a balloon payment at maturity. (14) Excludes deferred financing costs related to establishing the Company’s unsecured revolving credit facility. |
Schedule of maturities of long-term debt | The following table summarizes the minimum future principal payments due (before the impact of extension options, if applicable) on the operating partnership’s secured and unsecured notes payable as of June 30, 2018 : Year Annual Principal Payments Remaining 2018 $ 270 2019 5,569 2020 440,095 2021 632 2022 640,086 Thereafter 1,294,000 Total $ 2,380,652 |
Summary of balance and key terms of the unsecured revolving credit facility | The following table summarizes the balance and key terms of the unsecured revolving credit facility as of: June 30, 2018 December 31, 2017 Outstanding borrowings $ 140,000 $ 100,000 Remaining borrowing capacity 460,000 300,000 Total borrowing capacity $ 600,000 $ 400,000 Interest rate (1)(2) LIBOR + 1.05% to 1.50% LIBOR + 1.15% to 1.85% Facility fee-annual rate (1) 0.15% or 0.30% 0.20% or 0.35% Contractual maturity date (3) 3/13/2022 4/1/2019 _________________ (1) The rate is based on the operating partnership’s leverage ratio. The Company has the option to make an irrevocable election to change the interest rate depending on the Company’s credit rating. As of June 30, 2018 , no such election had been made. (2) The Company has the option to make an irrevocable election to change the interest rate depending on the Company’s specified base rate plus an applicable margin. As of June 30, 2018 , no such election had been made. (3) The maturity date may be extended once for an additional one -year term. |
Summary of existing covenants and their covenant levels | The following table summarizes existing covenants and their covenant levels related to our unsecured revolving credit facility, term loans, and series A, B, D and E notes, when considering the most restrictive terms: Covenant Ratio Covenant Level Total Liabilities to Total Asset Value ≤ 60% Unsecured Indebtedness to Unencumbered Asset Value ≤ 60% Adjusted EBITDA to Fixed Charges ≥ 1.5x Secured Indebtedness to Total Asset Value ≤ 45% Unencumbered NOI to Unsecured Interest Expense ≥ 2.0x The following table summarizes existing covenants and their covenant levels related to our registered senior notes: Covenant Ratio Covenant Level Debt to Total Assets ≤ 60% Total Unencumbered Assets to Unsecured Debt ≥ 150% Consolidated Income Available for Debt Service to Annual Debt Service Charge ≥ 1.5x Secured Debt to Total Assets ≤ 45% |
Schedule of interest costs incurred | The following table represents a reconciliation from gross interest expense to the interest expense line item in the Consolidated Statements of Operations: Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 Gross interest expense (1) $ 21,514 $ 23,047 $ 43,945 $ 46,238 Capitalized interest (3,618 ) (2,539 ) (7,204 ) (4,986 ) Amortization of deferred financing costs and loan discount, net 1,435 1,187 3,093 2,373 Interest expense $ 19,331 $ 21,695 $ 39,834 $ 43,625 _________________ (1) Includes interest on the Company’s notes payable and hedging activities. |
Derivatives (Tables)
Derivatives (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Derivative Instruments | The following table summarizes the Company’s derivative instruments as of June 30, 2018 : Strike Rate Range (1) Underlying Debt Instrument Number of Hedges Notional Amount Effective Date Maturity Date Low High Fair Value Met Park North 1 $ 64,500 Aug 2013 August 2020 2.16% 2.16% $ 586 Term Loan A (2) 2 300,000 July 2016 April 2020 2.56% 3.06% 5,818 Term Loan B (3) 2 350,000 July 2016 April 2022 2.96% 3.46% 12,211 Term Loan D (4) 1 125,000 June 2016 November 2022 2.63% 3.13% 6,870 _____________ (1) The rate is based on the operating partnership’s leverage ratio. (2) On March 13, 2018, the underlying debt instrument that was hedged was amended. Prior to the amendment, the interest was effectively fixed at 2.75% to 3.65% . (3) On March 13, 2018, the underlying debt instrument that was hedged was amended. Prior to the amendment, the interest was effectively fixed at 3.36% to 4.31% . (4) On March 13, 2018, the underlying debt instrument that was hedged was amended. Prior to the amendment, the interest was effectively fixed at 3.03% to 3.98% . |
Future Minimum Lease Payments (
Future Minimum Lease Payments (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Future Minimum Lease Payments [Abstract] | |
Schedule of rent expense | The following table summarizes rent expense for ground leases as follows: Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 Contingent rental expense $ 2,453 $ 1,650 $ 5,548 $ 3,834 Minimum rental expense 4,136 3,055 7,473 6,251 |
Schedule of future minimum lease payments | The following table provides information regarding the Company’s future minimum lease payments for its ground leases (before the impact of extension options, if applicable) as of June 30, 2018 : Year Ground Leases (1) Remaining 2018 $ 7,908 2019 15,815 2020 15,815 2021 15,815 2022 15,815 Thereafter 436,791 Total $ 507,959 _________________ (1) In situations where ground lease obligation adjustments are based on third-party appraisals of fair market land value, CPI adjustments and/or percentage of gross income that exceeds the minimum annual rent, the future minimum lease amounts above include the lease rental obligations in effect as of June 30, 2018 . |
Fair Value of Financial Instr39
Fair Value of Financial Instruments (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Fair Value Disclosures [Abstract] | |
Schedule of estimated fair value of derivatives measured by level of fair value hierarchy | The Company’s financial assets and liabilities measured and reported at fair value on a recurring basis include the following as of: June 30, 2018 December 31, 2017 Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Derivative assets (1) $ — $ 25,485 $ — $ 25,485 $ — $ 12,586 $ — $ 12,586 Derivative liabilities — — — — — 265 — 265 Non-real estate investment (1)(2) — 2,713 — 2,713 — — — — _____________ (1) Included in the prepaid expenses and other assets line item on the Consolidated Balance Sheets. (2) Related to our investment in shares in a non-public company. Pursuant to our adoption of ASU 2016-01 during 2018, the Company marked the investment to fair value during the second quarter of 2018. The investment was not fair valued in 2017 and was accounted for under the cost method. |
Schedule of carrying value and fair value of notes payable | The table below represents the carrying value and fair value of the Company’s notes payable as of: June 30, 2018 December 31, 2017 Carrying Value Fair Value Carrying Value Fair Value Unsecured notes payable (1)(2) $ 2,014,315 $ 1,968,163 1,974,278 $ 1,960,560 Secured notes payable 365,652 357,092 464,311 458,441 _________________ (1) Amounts represent notes payable excluding net deferred financing costs. (2) The $400.0 million registered senior notes were issued at a discount. The discount, net of amortization, was $685 thousand and $722 thousand at June 30, 2018 and December 31, 2017 , respectively, and is included within unsecured notes payable. |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of fair value assumptions | The per unit fair value of the 2018 OPP award granted was estimated on the date of grant using the following assumptions in the Monte Carlo valuation: Assumption Expected price volatility for the Company 20.00% Expected price volatility for the particular REIT index 18.00% Risk-free rate 2.37% Dividend yield 2.90% |
Schedule of classification and amount recognized for stock-based compensation | The following table presents the classification and amount recognized for stock-based compensation related to the Company’s awards: Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 Expensed stock compensation (1) $ 4,289 $ 3,886 $ 8,627 $ 7,788 Capitalized stock compensation (2) 288 219 520 418 Total stock compensation (3) $ 4,577 $ 4,105 $ 9,147 $ 8,206 _________________ (1) Amounts are recorded in general and administrative expenses in the Consolidated Statements of Operations. (2) Amounts are recorded in deferred leasing costs and lease intangible assets, net and investment in real estate, at cost in the Consolidated Balance Sheets. (3) Amounts are recorded in additional paid-in capital and non-controlling interest—units in the operating partnership in the Consolidated Balance Sheets. |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Earnings Per Share [Abstract] | |
Schedule of earnings per share | The following table reconciles the numerator and denominator in computing Hudson Pacific Properties, Inc.’s basic and diluted earnings per share for net income available to common stockholders: Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 Numerator: Basic and diluted net income available to common stockholders $ 16,202 $ 3,553 $ 64,779 $ 24,068 Denominator: Basic weighted average common shares outstanding 155,636,636 155,290,559 155,631,375 151,640,853 Effect of dilutive instruments (1) 953,591 805,044 932,591 791,044 Diluted weighted average common shares outstanding 156,590,227 156,095,603 156,563,966 152,431,897 Basic earnings per common share $ 0.10 $ 0.02 $ 0.42 $ 0.16 Diluted earnings per common share $ 0.10 $ 0.02 $ 0.41 $ 0.16 ________________ (1) The Company includes unvested awards and convertible common units as contingently issuable shares in the computation of diluted earnings per share once the market criteria are met, assuming that the end of the reporting period is the end of the contingency period. Any anti-dilutive securities are excluded from the diluted earnings per share calculation. The following table reconciles the numerator and denominator in computing Hudson Pacific Properties, L.P.’s basic and diluted earnings per unit for net income available to common unitholders: Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 Numerator: Basic and diluted net income available to common unitholders $ 16,261 $ 3,566 $ 65,015 $ 24,283 Denominator: Basic weighted average common units outstanding 156,205,681 155,859,604 156,198,825 152,647,055 Effect of dilutive instruments (1) 953,591 805,044 932,591 791,045 Diluted weighted average common units outstanding 157,159,272 156,664,648 157,131,416 153,438,100 Basic earnings per common unit $ 0.10 $ 0.02 $ 0.42 $ 0.16 Diluted earnings per common unit $ 0.10 $ 0.02 $ 0.41 $ 0.16 ________________ (1) The operating partnership includes unvested awards as contingently issuable units in the computation of diluted earnings per unit once the market criteria are met, assuming that the end of the reporting period is the end of the contingency period. Any anti-dilutive securities are excluded from the diluted earnings per unit calculation. |
Equity (Tables)
Equity (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Equity [Abstract] | |
Comprehensive income (loss) | The table below presents the effect of the Company’s derivatives on accumulated other comprehensive income (“OCI”): Hudson Pacific Properties, Inc. Stockholders ’ Equity Non-controlling Interests Total Equity Balance at January 1, 2018 $ 13,227 $ 49 $ 13,276 Unrealized gain recognized in OCI due to change in fair value 13,676 50 13,726 Income reclassified from OCI into income (as interest expense) (726 ) (3 ) (729 ) Net change in OCI 12,950 47 12,997 Cumulative adjustment related to adoption of ASU 2017-12 230 1 231 Balance at June 30, 2018 $ 26,407 $ 97 $ 26,504 |
Schedule of ownership of common units including unvested restricted units | The following table summarizes the ownership of common units, excluding unvested restricted units as of: June 30, 2018 December 31, 2017 Company-owned common units in the operating partnership 155,647,733 155,602,508 Company’s ownership interest percentage 99.6 % 99.6 % Non-controlling common units in the operating partnership (1) 569,045 569,045 Non-controlling ownership interest percentage (1) 0.4 % 0.4 % _________________ (1) Represents common units held by certain of the Company’s executive officers and directors, certain of their affiliates and other outside investors . |
Cash Flow Reconciliation (Table
Cash Flow Reconciliation (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Cash and Cash Equivalents [Abstract] | |
Schedule of cash and cash equivalents | The following table provides a reconciliation of cash and cash equivalents and restricted cash at the beginning and end of the periods presented: Six Months Ended June 30, 2018 2017 Beginning of period: Cash and cash equivalents $ 78,922 $ 83,015 Restricted cash 22,358 25,177 Total $ 101,280 $ 108,192 End of period: Cash and cash equivalents $ 57,515 $ 73,242 Restricted cash 8,472 17,284 Total $ 65,987 $ 90,526 |
Restrictions on cash and cash equivalents | The following table provides a reconciliation of cash and cash equivalents and restricted cash at the beginning and end of the periods presented: Six Months Ended June 30, 2018 2017 Beginning of period: Cash and cash equivalents $ 78,922 $ 83,015 Restricted cash 22,358 25,177 Total $ 101,280 $ 108,192 End of period: Cash and cash equivalents $ 57,515 $ 73,242 Restricted cash 8,472 17,284 Total $ 65,987 $ 90,526 |
Organization (Details)
Organization (Details) $ in Millions | Apr. 01, 2015USD ($)ft²projectpropertyshares | Jun. 30, 2018ft²property |
Business Acquisition [Line Items] | ||
Area of real estate property (in square feet) | ft² | 14,583,363 | |
Number of real estate properties (in properties) | property | 53 | |
Office | ||
Business Acquisition [Line Items] | ||
Area of real estate property (in square feet) | ft² | 13,336,940 | |
Number of real estate properties (in properties) | property | 50 | |
Studio | ||
Business Acquisition [Line Items] | ||
Area of real estate property (in square feet) | ft² | 1,246,423 | |
Number of real estate properties (in properties) | property | 3 | |
EOP Northern California Portfolio | ||
Business Acquisition [Line Items] | ||
Area of real estate property (in square feet) | ft² | 8,200,000 | |
Gross payments to acquire business | $ | $ 1,750 | |
Consideration transferred, common units (in shares) | shares | 63,474,791 | |
EOP Northern California Portfolio | Office Building | ||
Business Acquisition [Line Items] | ||
Number of real estate properties acquired (in properties) | property | 26 | |
EOP Northern California Portfolio | Development Parcel | ||
Business Acquisition [Line Items] | ||
Number of development projects acquired (in projects) | project | 2 |
Summary of Significant Accoun45
Summary of Significant Accounting Policies - Narrative (Details) ft² in Thousands | Mar. 01, 2018ft² | Jun. 30, 2018USD ($) | Jun. 30, 2017USD ($) | Jun. 30, 2018USD ($)joint_venture | Jun. 30, 2017USD ($) |
Variable Interest Entity [Line Items] | |||||
Rental revenue and tenant recoveries | $ 162,900,000 | $ 167,900,000 | $ 324,600,000 | $ 326,100,000 | |
Indirect leasing costs capitalized during period | 2,000,000 | $ 1,700,000 | 3,800,000 | $ 3,200,000 | |
Future undiscounted minimum lease payments on ground leases | 507,959,000 | $ 507,959,000 | |||
VIE, Primary Beneficiary | |||||
Variable Interest Entity [Line Items] | |||||
Number of joint ventures meeting VIE definition | joint_venture | 4 | ||||
Number of joint ventures consolidated | joint_venture | 3 | ||||
VIE, Primary Beneficiary | HPP-MAC WSP, LLC | |||||
Variable Interest Entity [Line Items] | |||||
Ownership Interest | 75.00% | 75.00% | |||
Equity method investments | $ 190,000,000 | $ 190,000,000 | |||
Equity method investment agreement, defaulting penalty | $ 25,000,000 | ||||
VIE, Primary Beneficiary | HPP-MAC WSP, LLC | Macerich, WSP, LLC | |||||
Variable Interest Entity [Line Items] | |||||
Ownership Interest | 25.00% | ||||
VIE, Primary Beneficiary | HPP-MAC WSP, LLC | Creative Office Space | |||||
Variable Interest Entity [Line Items] | |||||
Area of real estate property, retail and entertainment space (in square feet) | ft² | 500 | ||||
VIE, Primary Beneficiary | HPP-MAC WSP, LLC | Retail And Entertainment Space | |||||
Variable Interest Entity [Line Items] | |||||
Area of real estate property, retail and entertainment space (in square feet) | ft² | 100 | ||||
VIE, Not Primary Beneficiary | |||||
Variable Interest Entity [Line Items] | |||||
Number of joint ventures not consolidated | joint_venture | 1 | ||||
Ownership Interest | 21.00% |
Summary of Significant Accoun46
Summary of Significant Accounting Policies - Consolidated Entities (Details) - VIE, Primary Beneficiary | Mar. 01, 2018 | Jun. 30, 2018 |
1455 Market | ||
Variable Interest Entity [Line Items] | ||
Ownership Interest | 55.00% | |
Hill7 | ||
Variable Interest Entity [Line Items] | ||
Ownership Interest | 55.00% | |
HPP-MAC WSP, LLC | ||
Variable Interest Entity [Line Items] | ||
Ownership Interest | 75.00% | 75.00% |
Investment in Real Estate - Sum
Investment in Real Estate - Summary of Real Estate Held for Investment (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Real Estate [Abstract] | ||
Land | $ 1,220,267 | $ 1,204,700 |
Building and improvements | 4,443,050 | 4,389,846 |
Tenant improvements | 443,548 | 397,012 |
Furniture and fixtures | 8,756 | 8,576 |
Property under development | 303,261 | 219,227 |
Investment in real estate, at cost | $ 6,418,882 | $ 6,219,361 |
Investment in Real Estate - Pro
Investment in Real Estate - Properties Acquired (Details) - 6605 Eleanor Avenue and 1034 Seward Street $ in Millions | Jun. 07, 2018USD ($)ft² | Jun. 30, 2018USD ($) |
Real Estate [Line Items] | ||
Purchase price of assets acquired | $ 30 | |
Square feet of assets acquired | ft² | 41,496 | |
Investment in real estate | $ 30.2 |
Investment in Real Estate - P49
Investment in Real Estate - Properties Disposed (Details) $ in Thousands | Apr. 10, 2018USD ($)ft² | Mar. 01, 2018USD ($)ft² | Jan. 31, 2018USD ($)ft² | Jan. 25, 2018USD ($)ft² | Jun. 30, 2018USD ($) | Jun. 30, 2017USD ($) | Jun. 30, 2018USD ($)ft² | Jun. 30, 2017USD ($) |
Real Estate [Line Items] | ||||||||
Square feet of real estate disposed | ft² | 367,487 | |||||||
Sales Price | $ 254,800 | |||||||
Gains on sale of real estate | $ 1,928 | $ 0 | $ 39,602 | $ 16,866 | ||||
Embarcadero Place | ||||||||
Real Estate [Line Items] | ||||||||
Square feet of real estate disposed | ft² | 197,402 | |||||||
Sales Price | $ 136,000 | |||||||
2600 Campus Drive (building 6 of Peninsula Office Park) | ||||||||
Real Estate [Line Items] | ||||||||
Square feet of real estate disposed | ft² | 63,050 | |||||||
Sales Price | $ 22,500 | |||||||
2180 Sand Hill | ||||||||
Real Estate [Line Items] | ||||||||
Square feet of real estate disposed | ft² | 45,613 | |||||||
Sales Price | $ 82,500 | |||||||
9300 Wilshire | ||||||||
Real Estate [Line Items] | ||||||||
Square feet of real estate disposed | ft² | 61,422 | |||||||
Sales Price | $ 13,800 |
Investment in Real Estate - Rea
Investment in Real Estate - Real Estate Held For Sale (Details) | 6 Months Ended | ||
Jun. 30, 2018USD ($)property | Jul. 27, 2018USD ($) | Dec. 31, 2017USD ($)property | |
Real Estate [Line Items] | |||
Number of properties held for sale | property | 1 | 5 | |
Number of properties sold during period | property | 4 | ||
ASSETS | |||
Investment in real estate, net | $ 192,630,000 | $ 396,846,000 | |
Accounts receivable, net | 75,000 | 213,000 | |
Straight-line rent receivables, net | 3,292,000 | 5,225,000 | |
Deferred leasing costs and lease intangible assets, net | 4,998,000 | 9,589,000 | |
Prepaid expenses and other assets, net | 16,000 | 58,000 | |
Assets associated with real estate held for sale | 201,011,000 | 411,931,000 | |
LIABILITIES | |||
Accounts payable and accrued liabilities | 1,929,000 | 1,808,000 | |
Lease intangible liabilities, net | 271,000 | 485,000 | |
Security deposits and prepaid rent | 1,354,000 | 2,610,000 | |
Liabilities associated with real estate held for sale | 3,554,000 | $ 4,903,000 | |
Long-lived asset impairment charges | $ 0 | ||
Subsequent Event | Peninsula Office Park | Not Discontinued Operations | Peninsula Office Park | |||
Real Estate [Line Items] | |||
Sales Price | $ 210,000,000 |
Deferred Leasing Costs and Le51
Deferred Leasing Costs and Lease Intangibles, net - Schedule of Finite-Lived Intangible Assets and Liabilities (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | |
Finite-Lived Intangible Assets, Net [Abstract] | |||||
Deferred leasing costs and lease intangibles, net | $ 236,582 | $ 236,582 | $ 239,029 | ||
Other Liabilities, Unclassified [Abstract] | |||||
Below and above market ground leases, net | 41,729 | 41,729 | 49,540 | ||
Amortization of above- and below-market leases, net | (7,042) | $ (10,405) | |||
Below Market Leases | |||||
Other Liabilities, Unclassified [Abstract] | |||||
Below and above market ground leases | 91,686 | 91,686 | 103,597 | ||
Below and above market ground leases, accumulated amortization | (50,898) | (50,898) | (55,019) | ||
Below and above market ground leases, net | 40,788 | 40,788 | 48,578 | ||
Amortization of above- and below-market leases, net | 3,640 | $ 6,584 | 7,925 | 13,672 | |
Above Market Ground Leases | |||||
Other Liabilities, Unclassified [Abstract] | |||||
Below and above market ground leases | 1,095 | 1,095 | 1,095 | ||
Below and above market ground leases, accumulated amortization | (154) | (154) | (133) | ||
Below and above market ground leases, net | 941 | 941 | 962 | ||
Amortization of above- and below-market leases, net | 11 | 11 | 22 | 22 | |
Above-market leases | |||||
Finite-Lived Intangible Assets, Net [Abstract] | |||||
Deferred leasing costs and lease intangibles | 9,236 | 9,236 | 18,028 | ||
Accumulated amortization | (7,122) | (7,122) | (15,131) | ||
Deferred leasing costs and lease intangibles, net | 2,114 | 2,114 | 2,897 | ||
Other Liabilities, Unclassified [Abstract] | |||||
Amortization of above- and below-market leases, net | (409) | (1,911) | (883) | (3,267) | |
Deferred leasing costs and in-place lease intangibles | |||||
Finite-Lived Intangible Assets, Net [Abstract] | |||||
Deferred leasing costs and lease intangibles | 288,353 | 288,353 | 301,945 | ||
Accumulated amortization | (114,569) | (114,569) | (127,703) | ||
Deferred leasing costs and lease intangibles, net | 173,784 | 173,784 | 174,242 | ||
Other Liabilities, Unclassified [Abstract] | |||||
Amortization of above- and below-market leases, net | (11,423) | (20,644) | (23,119) | (40,437) | |
Below-market ground leases | |||||
Finite-Lived Intangible Assets, Net [Abstract] | |||||
Deferred leasing costs and lease intangibles | 68,388 | 68,388 | 68,388 | ||
Accumulated amortization | (7,704) | (7,704) | (6,498) | ||
Deferred leasing costs and lease intangibles, net | 60,684 | 60,684 | $ 61,890 | ||
Other Liabilities, Unclassified [Abstract] | |||||
Amortization of above- and below-market leases, net | $ (603) | $ (844) | $ (1,238) | $ (1,492) |
Accounts Receivable, net (Detai
Accounts Receivable, net (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Receivables [Abstract] | ||
Accounts receivable | $ 8,833 | $ 6,706 |
Allowance for doubtful accounts | (2,218) | (2,472) |
Accounts receivable, net | $ 6,615 | $ 4,234 |
Straight-line Rent Receivable53
Straight-line Rent Receivables, net (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Receivables [Abstract] | ||
Straight-line rent receivables | $ 124,083 | $ 106,466 |
Allowance for doubtful accounts | 0 | 0 |
Straight-line rent receivables, net | $ 124,083 | $ 106,466 |
Prepaid Expenses and Other As54
Prepaid Expenses and Other Assets, net (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
Derivative assets | $ 25,485 | $ 12,586 |
Investment in unconsolidated entities | 14,435 | 14,240 |
Goodwill | 8,754 | 8,754 |
Non-real estate investment | 2,713 | 1,785 |
Other | 56,162 | 23,774 |
Prepaid expenses and other assets, net | $ 107,549 | $ 61,139 |
Notes Payable, net - Summary of
Notes Payable, net - Summary of Outstanding Indebtedness (Details) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2018 | Dec. 31, 2017 | Oct. 02, 2017 | |
Debt Instrument [Line Items] | |||
Principal Amounts | $ 2,380,652 | $ 2,439,311 | |
Unamortized deferred financing costs and loan discounts | (18,903) | (17,931) | |
TOTAL NOTES PAYABLE, NET | 2,361,749 | 2,421,380 | |
Unsecured Debt | |||
Debt Instrument [Line Items] | |||
Principal Amounts | 2,015,000 | 1,975,000 | |
Unsecured Debt | Term Loan A | |||
Debt Instrument [Line Items] | |||
Principal Amounts | $ 300,000 | 300,000 | |
Unsecured Debt | Term Loan A | LIBOR | Minimum | |||
Debt Instrument [Line Items] | |||
Basis spread on variable rate | 1.20% | ||
Unsecured Debt | Term Loan A | LIBOR | Maximum | |||
Debt Instrument [Line Items] | |||
Basis spread on variable rate | 1.70% | ||
Unsecured Debt | Term Loan C | |||
Debt Instrument [Line Items] | |||
Principal Amounts | $ 75,000 | 75,000 | |
Unsecured Debt | Term Loan C | LIBOR | Minimum | |||
Debt Instrument [Line Items] | |||
Basis spread on variable rate | 1.30% | ||
Unsecured Debt | Term Loan C | LIBOR | Maximum | |||
Debt Instrument [Line Items] | |||
Basis spread on variable rate | 2.20% | ||
Unsecured Debt | Term Loan B | |||
Debt Instrument [Line Items] | |||
Principal Amounts | $ 350,000 | 350,000 | |
Unsecured Debt | Term Loan B | LIBOR | Minimum | |||
Debt Instrument [Line Items] | |||
Basis spread on variable rate | 1.20% | ||
Unsecured Debt | Term Loan B | LIBOR | Maximum | |||
Debt Instrument [Line Items] | |||
Basis spread on variable rate | 1.70% | ||
Unsecured Debt | Term Loan D | |||
Debt Instrument [Line Items] | |||
Principal Amounts | $ 125,000 | 125,000 | |
Unsecured Debt | Term Loan D | LIBOR | Minimum | |||
Debt Instrument [Line Items] | |||
Basis spread on variable rate | 1.20% | ||
Unsecured Debt | Term Loan D | LIBOR | Maximum | |||
Debt Instrument [Line Items] | |||
Basis spread on variable rate | 1.70% | ||
Unsecured Debt | Series A Notes | |||
Debt Instrument [Line Items] | |||
Principal Amounts | $ 110,000 | 110,000 | |
Interest Rate | 4.34% | ||
Unsecured Debt | Series E Notes | |||
Debt Instrument [Line Items] | |||
Principal Amounts | $ 50,000 | 50,000 | |
Interest Rate | 3.66% | ||
Unsecured Debt | Series B Notes | |||
Debt Instrument [Line Items] | |||
Principal Amounts | $ 259,000 | 259,000 | |
Interest Rate | 4.69% | ||
Unsecured Debt | Series D Notes | |||
Debt Instrument [Line Items] | |||
Principal Amounts | $ 150,000 | 150,000 | |
Interest Rate | 3.98% | ||
Unsecured Debt | Registered Senior Notes | |||
Debt Instrument [Line Items] | |||
Principal Amounts | $ 400,000 | 400,000 | $ 400,000 |
Interest Rate | 3.95% | ||
Unsecured Debt | Series C Notes | |||
Debt Instrument [Line Items] | |||
Principal Amounts | $ 56,000 | 56,000 | |
Interest Rate | 4.79% | ||
Unsecured Debt | Revolving Credit Facility | |||
Debt Instrument [Line Items] | |||
Principal Amounts | $ 140,000 | $ 100,000 | |
Unsecured Debt | Revolving Credit Facility | LIBOR | Minimum | |||
Debt Instrument [Line Items] | |||
Basis spread on variable rate | 1.05% | 1.15% | |
Unsecured Debt | Revolving Credit Facility | LIBOR | Maximum | |||
Debt Instrument [Line Items] | |||
Basis spread on variable rate | 1.50% | 1.85% | |
Secured Debt | |||
Debt Instrument [Line Items] | |||
Principal Amounts | $ 365,652 | $ 464,311 | |
Secured Debt | Sunset Gower/Sunset Bronson | |||
Debt Instrument [Line Items] | |||
Principal Amounts | $ 5,001 | 5,001 | |
Secured Debt | Sunset Gower/Sunset Bronson | LIBOR | |||
Debt Instrument [Line Items] | |||
Basis spread on variable rate | 2.25% | ||
Secured Debt | Met Park North | |||
Debt Instrument [Line Items] | |||
Principal Amounts | $ 64,500 | 64,500 | |
Secured Debt | Met Park North | LIBOR | |||
Debt Instrument [Line Items] | |||
Basis spread on variable rate | 1.55% | ||
Secured Debt | 10950 Washington | |||
Debt Instrument [Line Items] | |||
Principal Amounts | $ 27,151 | 27,418 | |
Interest Rate | 5.32% | ||
Secured Debt | Element LA | |||
Debt Instrument [Line Items] | |||
Principal Amounts | $ 168,000 | 168,000 | |
Interest Rate | 4.59% | ||
Secured Debt | Hill7 | |||
Debt Instrument [Line Items] | |||
Principal Amounts | $ 101,000 | 101,000 | |
Interest Rate | 3.38% | ||
Secured Debt | Rincon Center | |||
Debt Instrument [Line Items] | |||
Principal Amounts | $ 0 | $ 98,392 | |
Interest Rate | 5.13% |
Notes Payable, net - Narrative
Notes Payable, net - Narrative (Details) | Mar. 12, 2018USD ($) | Oct. 02, 2017USD ($) | Jun. 30, 2018USD ($)instrumentderivative | Mar. 13, 2018USD ($) | Dec. 31, 2017USD ($)derivative |
Debt Instrument [Line Items] | |||||
Duration used in interest rate calculation (in days) | 360 days | ||||
Notes payable | $ 2,380,652,000 | $ 2,439,311,000 | |||
Hill7 | |||||
Debt Instrument [Line Items] | |||||
Real estate property, ownership | 55.00% | ||||
Interest Rate Swap | Designated as Hedging Instrument | |||||
Debt Instrument [Line Items] | |||||
Number of derivative instruments held | derivative | 6 | 6 | |||
Term Loan A | Interest Rate Swap | Designated as Hedging Instrument | |||||
Debt Instrument [Line Items] | |||||
Number of derivative instruments held | instrument | 2 | ||||
Term Loan A | Interest Rate Contract | |||||
Debt Instrument [Line Items] | |||||
Number of derivative instruments held | derivative | 2 | ||||
Term Loan A | Minimum | Interest Rate Swap | Designated as Hedging Instrument | |||||
Debt Instrument [Line Items] | |||||
Adjusted interest rate | 2.75% | 2.56% | |||
Term Loan A | Maximum | Interest Rate Swap | Designated as Hedging Instrument | |||||
Debt Instrument [Line Items] | |||||
Adjusted interest rate | 3.65% | 3.06% | |||
Term Loan B | Interest Rate Swap | Designated as Hedging Instrument | |||||
Debt Instrument [Line Items] | |||||
Number of derivative instruments held | instrument | 2 | ||||
Term Loan B | Minimum | Interest Rate Swap | Designated as Hedging Instrument | |||||
Debt Instrument [Line Items] | |||||
Adjusted interest rate | 3.36% | 2.96% | |||
Term Loan B | Maximum | Interest Rate Swap | Designated as Hedging Instrument | |||||
Debt Instrument [Line Items] | |||||
Adjusted interest rate | 4.31% | 3.46% | |||
Term Loan D | Interest Rate Swap | Designated as Hedging Instrument | |||||
Debt Instrument [Line Items] | |||||
Number of derivative instruments held | instrument | 1 | ||||
Term Loan D | Minimum | Interest Rate Swap | Designated as Hedging Instrument | |||||
Debt Instrument [Line Items] | |||||
Adjusted interest rate | 3.03% | 2.63% | |||
Term Loan D | Maximum | Interest Rate Swap | Designated as Hedging Instrument | |||||
Debt Instrument [Line Items] | |||||
Adjusted interest rate | 3.98% | 3.13% | |||
Sunset Gower/Sunset Bronson | |||||
Debt Instrument [Line Items] | |||||
Principal amount guaranteed | 19.50% | ||||
Maximum exposure for guarantee | $ 1,000,000 | ||||
Met Park North | |||||
Debt Instrument [Line Items] | |||||
Adjusted interest rate | 3.71% | ||||
Met Park North | Interest Rate Swap | Designated as Hedging Instrument | |||||
Debt Instrument [Line Items] | |||||
Number of derivative instruments held | instrument | 1 | ||||
10950 Washington | |||||
Debt Instrument [Line Items] | |||||
Service payment term (in years) | 30 years | ||||
Unsecured Debt | |||||
Debt Instrument [Line Items] | |||||
Notes payable | $ 2,015,000,000 | $ 1,975,000,000 | |||
Unsecured Debt | Revolving Credit Facility | |||||
Debt Instrument [Line Items] | |||||
Total borrowing capacity | $ 600,000,000 | 400,000,000 | |||
Debt instrument, extension period (in years) | 1 year | ||||
Notes payable | $ 140,000,000 | 100,000,000 | |||
Remaining borrowing capacity | 460,000,000 | 300,000,000 | |||
Unsecured Debt | Revolving Credit Facility | Hudson Pacific Partners L.P. | |||||
Debt Instrument [Line Items] | |||||
Total borrowing capacity | $ 600,000,000 | $ 600,000,000 | |||
Unsecured Debt | Term Loan A | |||||
Debt Instrument [Line Items] | |||||
Debt instrument, extension period (in years) | 1 year | ||||
Notes payable | $ 300,000,000 | 300,000,000 | |||
Unsecured Debt | Term Loan A | Hudson Pacific Partners L.P. | |||||
Debt Instrument [Line Items] | |||||
Total borrowing capacity | 300,000,000 | ||||
Unsecured Debt | Term Loan B | |||||
Debt Instrument [Line Items] | |||||
Number of derivative instruments held | derivative | 2 | ||||
Notes payable | $ 350,000,000 | 350,000,000 | |||
Unsecured Debt | Term Loan B | Hudson Pacific Partners L.P. | |||||
Debt Instrument [Line Items] | |||||
Total borrowing capacity | 350,000,000 | ||||
Unsecured Debt | Term Loan D | |||||
Debt Instrument [Line Items] | |||||
Notes payable | 125,000,000 | 125,000,000 | |||
Unsecured Debt | Term Loan D | Hudson Pacific Partners L.P. | |||||
Debt Instrument [Line Items] | |||||
Total borrowing capacity | 125,000,000 | ||||
Unsecured Debt | Registered Senior Notes | |||||
Debt Instrument [Line Items] | |||||
Notes payable | $ 400,000,000 | $ 400,000,000 | 400,000,000 | ||
Percentage of par at debt issuance | 99.815% | ||||
Interest Rate | 3.95% | ||||
Unsecured Debt | Revolving Credit Facility 2014 | Hudson Pacific Partners L.P. | |||||
Debt Instrument [Line Items] | |||||
Total borrowing capacity | $ 400,000,000 | ||||
Unsecured Debt | 5-Year Term Loan due April 2020 | Hudson Pacific Partners L.P. | |||||
Debt Instrument [Line Items] | |||||
Total borrowing capacity | $ 300,000,000 | ||||
Debt instrument, term (in years) | 5 years | ||||
Unsecured Debt | 7-Year Term Loan due April 2022 | Hudson Pacific Partners L.P. | |||||
Debt Instrument [Line Items] | |||||
Total borrowing capacity | $ 350,000,000 | ||||
Debt instrument, term (in years) | 7 years | ||||
Unsecured Debt | 5-Year Term Loan due November 2020 | Hudson Pacific Partners L.P. | |||||
Debt Instrument [Line Items] | |||||
Total borrowing capacity | $ 75,000,000 | ||||
Debt instrument, term (in years) | 5 years | ||||
Unsecured Debt | 7-Year Term Loan due November 2022 | Hudson Pacific Partners L.P. | |||||
Debt Instrument [Line Items] | |||||
Total borrowing capacity | $ 125,000,000 | ||||
Debt instrument, term (in years) | 7 years | ||||
Unsecured Debt | Term Loan C | |||||
Debt Instrument [Line Items] | |||||
Notes payable | $ 75,000,000 | 75,000,000 | |||
Unsecured Debt | Term Loan C | Hudson Pacific Partners L.P. | |||||
Debt Instrument [Line Items] | |||||
Total borrowing capacity | $ 75,000,000 | ||||
Secured Debt | |||||
Debt Instrument [Line Items] | |||||
Notes payable | 365,652,000 | 464,311,000 | |||
Secured Debt | Sunset Gower/Sunset Bronson | |||||
Debt Instrument [Line Items] | |||||
Notes payable | 5,001,000 | 5,001,000 | |||
Remaining borrowing capacity | 257,000,000 | ||||
Secured Debt | Met Park North | |||||
Debt Instrument [Line Items] | |||||
Notes payable | 64,500,000 | 64,500,000 | |||
Secured Debt | 10950 Washington | |||||
Debt Instrument [Line Items] | |||||
Notes payable | $ 27,151,000 | 27,418,000 | |||
Interest Rate | 5.32% | ||||
Secured Debt | Hill7 | |||||
Debt Instrument [Line Items] | |||||
Notes payable | $ 101,000,000 | $ 101,000,000 | |||
Interest Rate | 3.38% |
Notes Payable, net - Schedule o
Notes Payable, net - Schedule of Maturities of Long-term Debt (Details) $ in Thousands | Jun. 30, 2018USD ($) |
Debt Disclosure [Abstract] | |
Remaining 2,018 | $ 270 |
2,019 | 5,569 |
2,020 | 440,095 |
2,021 | 632 |
2,022 | 640,086 |
Thereafter | 1,294,000 |
Total | $ 2,380,652 |
Notes Payable, net - Unsecured
Notes Payable, net - Unsecured Revolving Credit Facility (Details) - USD ($) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2018 | Dec. 31, 2017 | |
Line of Credit Facility [Line Items] | ||
Outstanding borrowings | $ 2,380,652,000 | $ 2,439,311,000 |
Unsecured Debt | ||
Line of Credit Facility [Line Items] | ||
Outstanding borrowings | 2,015,000,000 | 1,975,000,000 |
Unsecured Debt | Revolving Credit Facility | ||
Line of Credit Facility [Line Items] | ||
Outstanding borrowings | 140,000,000 | 100,000,000 |
Remaining borrowing capacity | 460,000,000 | 300,000,000 |
Total borrowing capacity | $ 600,000,000 | $ 400,000,000 |
Unsecured Debt | Revolving Credit Facility | Minimum | ||
Line of Credit Facility [Line Items] | ||
Facility fee-annual rate | 0.15% | 0.20% |
Unsecured Debt | Revolving Credit Facility | Maximum | ||
Line of Credit Facility [Line Items] | ||
Facility fee-annual rate | 0.30% | 0.35% |
Unsecured Debt | Revolving Credit Facility | LIBOR | Minimum | ||
Line of Credit Facility [Line Items] | ||
Basis spread on variable rate | 1.05% | 1.15% |
Unsecured Debt | Revolving Credit Facility | LIBOR | Maximum | ||
Line of Credit Facility [Line Items] | ||
Basis spread on variable rate | 1.50% | 1.85% |
Notes Payable, net - Covenant S
Notes Payable, net - Covenant Summaries (Details) | 6 Months Ended |
Jun. 30, 2018 | |
Unsecured Debt | Registered Senior Notes | |
Debt Instrument [Line Items] | |
Debt to Total Assets | 60.00% |
Total Unencumbered Assets to Unsecured Debt | 150.00% |
Consolidated Income Available for Debt Service to Annual Debt Service Charge | 150.00% |
Secured Debt to Total Assets | 45.00% |
Hudson Pacific Partners L.P. | |
Debt Instrument [Line Items] | |
Total Liabilities to Total Asset Value | 0.6 |
Unsecured Indebtedness to Unencumbered Asset Value | 0.6 |
Adjusted EBITDA to Fixed Charges | 1.5 |
Secured Indebtedness to Total Asset Value | 0.45 |
Unencumbered NOI to Unsecured Interest Expense | 2 |
Notes Payable, net - Interest E
Notes Payable, net - Interest Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Debt Disclosure [Abstract] | ||||
Gross interest expense | $ 21,514 | $ 23,047 | $ 43,945 | $ 46,238 |
Capitalized interest | (3,618) | (2,539) | (7,204) | (4,986) |
Amortization of deferred financing costs and loan discount, net | 1,435 | 1,187 | 3,093 | 2,373 |
Interest Expense | $ 19,331 | $ 21,695 | $ 39,834 | $ 43,625 |
Derivatives (Details)
Derivatives (Details) | 3 Months Ended | 6 Months Ended | |||||
Jun. 30, 2017USD ($) | Jun. 30, 2018USD ($)instrumentderivative | Jun. 30, 2017USD ($) | Mar. 12, 2018 | Jan. 01, 2018USD ($) | Dec. 31, 2017USD ($)derivative | Oct. 02, 2017 | |
Derivative | |||||||
Adjustment to due to change in accounting principal | $ 0 | ||||||
Derivative assets | $ 25,485,000 | 12,586,000 | |||||
Derivative liabilities | 0 | 265,000 | |||||
Change in fair value of derivative instruments | 6,700,000 | ||||||
Level 2 | |||||||
Derivative | |||||||
Derivative assets | 25,485,000 | 12,586,000 | |||||
Derivative liabilities | $ 0 | 265,000 | |||||
Retained Earnings (Accumulated Deficit) | |||||||
Derivative | |||||||
Adjustment to due to change in accounting principal | $ (231,000) | ||||||
Retained Earnings (Accumulated Deficit) | ASU 2017-12 | |||||||
Derivative | |||||||
Adjustment to due to change in accounting principal | $ (231,000) | ||||||
Met Park North | |||||||
Derivative | |||||||
Adjusted interest rate | 3.71% | ||||||
Interest Rate Contract | Term Loan A | |||||||
Derivative | |||||||
Number of derivative instruments held | derivative | 2 | ||||||
Interest Rate Contract | 7 Year Term Loan Facility 2015 | |||||||
Derivative | |||||||
Unrealized gain (loss) on derivative, ineffective portion | $ (51,000) | $ (45,000) | |||||
Designated as Hedging Instrument | Interest Rate Swap | |||||||
Derivative | |||||||
Number of derivative instruments held | derivative | 6 | 6 | |||||
Notional amount of interest rate cash flow hedge derivatives | $ 839,500,000 | $ 839,500,000 | |||||
Designated as Hedging Instrument | Interest Rate Swap | Met Park North | |||||||
Derivative | |||||||
Number of derivative instruments held | instrument | 1 | ||||||
Notional amount of interest rate cash flow hedge derivatives | $ 64,500,000 | ||||||
Fair Value | $ 586,000 | ||||||
Designated as Hedging Instrument | Interest Rate Swap | Met Park North | Minimum | |||||||
Derivative | |||||||
Strike Rate Range | 2.16% | ||||||
Designated as Hedging Instrument | Interest Rate Swap | Met Park North | Maximum | |||||||
Derivative | |||||||
Strike Rate Range | 2.16% | ||||||
Designated as Hedging Instrument | Interest Rate Swap | Term Loan A | |||||||
Derivative | |||||||
Number of derivative instruments held | instrument | 2 | ||||||
Notional amount of interest rate cash flow hedge derivatives | $ 300,000,000 | ||||||
Fair Value | $ 5,818,000 | ||||||
Designated as Hedging Instrument | Interest Rate Swap | Term Loan A | Minimum | |||||||
Derivative | |||||||
Adjusted interest rate | 2.56% | 2.75% | |||||
Designated as Hedging Instrument | Interest Rate Swap | Term Loan A | Maximum | |||||||
Derivative | |||||||
Adjusted interest rate | 3.06% | 3.65% | |||||
Designated as Hedging Instrument | Interest Rate Swap | Term Loan B | |||||||
Derivative | |||||||
Number of derivative instruments held | instrument | 2 | ||||||
Notional amount of interest rate cash flow hedge derivatives | $ 350,000,000 | ||||||
Fair Value | $ 12,211,000 | ||||||
Designated as Hedging Instrument | Interest Rate Swap | Term Loan B | Minimum | |||||||
Derivative | |||||||
Adjusted interest rate | 2.96% | 3.36% | |||||
Designated as Hedging Instrument | Interest Rate Swap | Term Loan B | Maximum | |||||||
Derivative | |||||||
Adjusted interest rate | 3.46% | 4.31% | |||||
Designated as Hedging Instrument | Interest Rate Swap | Term Loan D | |||||||
Derivative | |||||||
Number of derivative instruments held | instrument | 1 | ||||||
Notional amount of interest rate cash flow hedge derivatives | $ 125,000,000 | ||||||
Fair Value | $ 6,870,000 | ||||||
Designated as Hedging Instrument | Interest Rate Swap | Term Loan D | Minimum | |||||||
Derivative | |||||||
Adjusted interest rate | 2.63% | 3.03% | |||||
Designated as Hedging Instrument | Interest Rate Swap | Term Loan D | Maximum | |||||||
Derivative | |||||||
Adjusted interest rate | 3.13% | 3.98% |
Future Minimum Lease Payments -
Future Minimum Lease Payments - Schedule of Future Minimum Lease Payments (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Future Minimum Lease Payments [Abstract] | ||||
Contingent rental expense | $ 2,453 | $ 1,650 | $ 5,548 | $ 3,834 |
Minimum rental expense | 4,136 | $ 3,055 | 7,473 | $ 6,251 |
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract] | ||||
Remaining 2,018 | 7,908 | 7,908 | ||
2,019 | 15,815 | 15,815 | ||
2,020 | 15,815 | 15,815 | ||
2,021 | 15,815 | 15,815 | ||
2,022 | 15,815 | 15,815 | ||
Thereafter | 436,791 | 436,791 | ||
Total | $ 507,959 | $ 507,959 |
Fair Value of Financial Instr63
Fair Value of Financial Instruments - Fair Value, Recurring and Nonrecurring (Details) - USD ($) | Jun. 30, 2018 | Dec. 31, 2017 |
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Derivative assets | $ 25,485,000 | $ 12,586,000 |
Derivative liabilities | 0 | 265,000 |
Non-real estate investment | 2,713,000 | 0 |
Unsecured Debt | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Notes payable | 1,968,163,000 | 1,960,560,000 |
Unsecured Debt | Registered Senior Notes | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Face amount | 400,000,000 | |
Amortization of discount | 685,000 | 722,000 |
Secured Debt | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Notes payable | 357,092,000 | 458,441,000 |
Carrying Value | Unsecured Debt | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Notes payable | 2,014,315,000 | 1,974,278,000 |
Carrying Value | Secured Debt | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Notes payable | 365,652,000 | 464,311,000 |
Level 1 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Derivative assets | 0 | 0 |
Derivative liabilities | 0 | 0 |
Non-real estate investment | 0 | 0 |
Level 2 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Derivative assets | 25,485,000 | 12,586,000 |
Derivative liabilities | 0 | 265,000 |
Non-real estate investment | 2,713,000 | 0 |
Level 3 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Derivative assets | 0 | 0 |
Derivative liabilities | 0 | 0 |
Non-real estate investment | $ 0 | $ 0 |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2015 | Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Additional paid-in capital and non-controlling interest—units in the operating partnership | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Share-based compensation expense | $ 4,577,000 | $ 4,105,000 | $ 9,147,000 | $ 8,206,000 | |
General and administrative expenses | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Share-based compensation expense | 4,289,000 | 3,886,000 | 8,627,000 | 7,788,000 | |
Deferred leasing costs and lease intangibles assets, net | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Share-based compensation expense | 288,000 | $ 219,000 | $ 520,000 | $ 418,000 | |
Existing and Newly Elected Board Member | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Award vesting period (in years) | 3 years | ||||
Employees | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Award vesting period (in years) | 3 years | ||||
Employees | Restricted Stock | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Award vesting period (in years) | 4 years | ||||
One-Time Retention Awards | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Award vesting rights | 25.00% | 25.00% | |||
Outperformance Program | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Performance period (in years) | 3 years | ||||
Outperformance Plan Prior To 2017 | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Vesting percentage after initial performance period (in years) | 50.00% | ||||
Outperformance Plan Prior To 2017 | Restricted Stock | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Award vesting period following performance period | 2 years | ||||
Award mandatory holding period | 2 years | ||||
Outperformance Program, 2017 | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Maximum bonus pool | $ 25,000,000 | $ 25,000,000 | |||
TSR, absolute hurdle rate | 21.00% | 21.00% | |||
TSR, annualized hurdle rate | 7.00% | 7.00% | |||
TSR, maximum reduction percentage | 75.00% | ||||
Risk-free rate | 2.37% | ||||
Dividend yield | 2.90% | ||||
Outperformance Program, 2017 | The Company | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Expected volatility rate | 20.00% | ||||
Outperformance Program, 2017 | Particular REIT Index | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Expected volatility rate | 18.00% |
Earnings Per Share (Details)
Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Numerator: | ||||
Basic and diluted net income available to common stockholders/unitholders | $ 16,202 | $ 3,553 | $ 64,779 | $ 24,068 |
Denominator: | ||||
Basic weighted average common shares outstanding (in shares) | 155,636,636 | 155,290,559 | 155,631,375 | 151,640,853 |
Effect of dilutive instruments (in shares) | 953,591 | 805,044 | 932,591 | 791,044 |
Diluted weighted average common shares outstanding (in shares) | 156,590,227 | 156,095,603 | 156,563,966 | 152,431,897 |
Basic earnings per common share/unit (in dollars per share) | $ 0.10 | $ 0.02 | $ 0.42 | $ 0.16 |
Diluted earnings per common share/unit (in dollars per share) | $ 0.10 | $ 0.02 | $ 0.41 | $ 0.16 |
Hudson Pacific Partners L.P. | ||||
Numerator: | ||||
Basic and diluted net income available to common stockholders/unitholders | $ 16,261 | $ 3,566 | $ 65,015 | $ 24,283 |
Denominator: | ||||
Basic weighted average common units outstanding (in shares) | 156,205,681 | 155,859,604 | 156,198,825 | 152,647,055 |
Effect of dilutive instruments (in shares) | 953,591 | 805,044 | 932,591 | 791,045 |
Diluted weighted average common units outstanding (in shares) | 157,159,272 | 156,664,648 | 157,131,416 | 153,438,100 |
Basic earnings per common unit (in dollars per share) | $ 0.10 | $ 0.02 | $ 0.42 | $ 0.16 |
Diluted earnings per common unit (in dollars per share) | $ 0.10 | $ 0.02 | $ 0.41 | $ 0.16 |
Equity - Schedule of Other Comp
Equity - Schedule of Other Comprehensive Income (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2018 | Dec. 31, 2017 | |
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||
Beginning Balance | $ 3,910,964 | |
Cumulative adjustment related to adoption of ASU 2017-12 | $ 0 | |
Ending Balance | 3,926,048 | |
Total Equity | ||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||
Beginning Balance | 13,276 | |
Unrealized gain recognized in OCI due to change in fair value | 13,726 | |
Income reclassified from OCI into income (as interest expense) | (729) | |
Net change in OCI | 12,997 | |
Cumulative adjustment related to adoption of ASU 2017-12 | 231 | |
Ending Balance | 26,504 | |
Hudson Pacific Properties, Inc. Stockholders’ Equity | ||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||
Beginning Balance | 13,227 | |
Unrealized gain recognized in OCI due to change in fair value | 13,676 | |
Income reclassified from OCI into income (as interest expense) | (726) | |
Net change in OCI | 12,950 | |
Cumulative adjustment related to adoption of ASU 2017-12 | 230 | |
Ending Balance | 26,407 | |
Non-controlling Interests | ||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||
Beginning Balance | 49 | |
Unrealized gain recognized in OCI due to change in fair value | 50 | |
Income reclassified from OCI into income (as interest expense) | (3) | |
Net change in OCI | 47 | |
Cumulative adjustment related to adoption of ASU 2017-12 | $ 1 | |
Ending Balance | $ 97 |
Equity - Narrative (Details)
Equity - Narrative (Details) | Apr. 16, 2018shares | Mar. 01, 2018 | Jan. 10, 2017shares | Jun. 30, 2018$ / sharesshares | Jun. 30, 2017$ / shares | Jun. 30, 2018USD ($)$ / sharesshares | Jun. 30, 2017USD ($)$ / shares | Mar. 08, 2018USD ($) | Dec. 31, 2017shares | Jan. 20, 2016USD ($) |
Class of Stock [Line Items] | ||||||||||
Company-owned common units in the operating partnership (in shares) | 155,647,733 | 155,647,733 | 155,602,508 | |||||||
Company's ownership interest percentage | 99.60% | 99.60% | 99.60% | |||||||
Non-controlling ownership interest percentage | 0.40% | 0.40% | 0.40% | |||||||
Proceeds from issuance of common stock, net | $ | $ (207,000) | $ 647,509,000 | ||||||||
Stock repurchase program authorized | $ | $ 250,000,000 | $ 100,000,000 | ||||||||
Common dividends declared (in dollars per share) | $ / shares | $ 0.25 | $ 0.250 | $ 0.5 | $ 0.500 | ||||||
Shares issued during period (in shares) | 18,673,808 | |||||||||
At-the-Market | ||||||||||
Class of Stock [Line Items] | ||||||||||
Maximum shares authorized, value | $ | $ 125,000,000 | |||||||||
Proceeds from issuance of common stock, net | $ | $ 20,100,000 | |||||||||
VIE, Primary Beneficiary | HPP-MAC WSP, LLC | ||||||||||
Class of Stock [Line Items] | ||||||||||
Ownership Interest | 75.00% | 75.00% | ||||||||
6.25% series A cumulative redeemable preferred units of the Operating Partnership | ||||||||||
Class of Stock [Line Items] | ||||||||||
Shares outstanding of preferred stock (in shares) | 407,066 | |||||||||
Shares redeemed during period | 14,468 | |||||||||
Liquidation preference of preferred stock (dollars per share) | $ / shares | 25 | $ 25 | ||||||||
Interest rate of preferred stock | 6.25% | |||||||||
Preferred dividends declared (dollars per share) | $ / shares | $ 0.3906 | |||||||||
Performance units | ||||||||||
Class of Stock [Line Items] | ||||||||||
Conversion ratio | 1 | |||||||||
Common Stock/Units | ||||||||||
Class of Stock [Line Items] | ||||||||||
Non-controlling common units in the operating partnership (in shares) | 569,045 | 569,045 | 569,045 | |||||||
Partnership Interest | ||||||||||
Class of Stock [Line Items] | ||||||||||
Company-owned common units in the operating partnership (in shares) | 155,647,733 | 155,647,733 | 155,602,508 |
Related Party Transactions - Na
Related Party Transactions - Narrative (Details) $ in Thousands | Jan. 10, 2017USD ($)shares | Apr. 01, 2015USD ($)ft²projectpropertydirectorshares | Jun. 30, 2018USD ($)ft² | Jun. 30, 2017USD ($) | Nov. 16, 2017USD ($) |
Related Party Transaction [Line Items] | |||||
Area of real estate property (in square feet) | ft² | 14,583,363 | ||||
Shares issued during period (in shares) | shares | 18,673,808 | ||||
Proceeds from issuance of common stock, net | $ (207) | $ 647,509 | |||
Common Stock | |||||
Related Party Transaction [Line Items] | |||||
Common units redeemed (in shares) | shares | 8,881,575 | ||||
Blackstone Real Estate Partners | |||||
Related Party Transaction [Line Items] | |||||
Number of director nominees to the board (in directors) | director | 3 | ||||
Hudson Pacific Properties, Inc. | |||||
Related Party Transaction [Line Items] | |||||
Shares issued during period (in shares) | shares | 8,881,575 | ||||
Proceeds from issuance of common stock, net | $ 310,900 | ||||
Blackstone And Farallon Funds | |||||
Related Party Transaction [Line Items] | |||||
Shares issued during period (in shares) | shares | 9,792,233 | ||||
Proceeds from issuance of common stock, net | $ 342,700 | ||||
EOP Northern California Portfolio | |||||
Related Party Transaction [Line Items] | |||||
Area of real estate property (in square feet) | ft² | 8,200,000 | ||||
Gross payments to acquire business | $ 1,750,000 | ||||
Consideration transferred, common units (in shares) | shares | 63,474,791 | ||||
EOP Northern California Portfolio | Office Building | |||||
Related Party Transaction [Line Items] | |||||
Number of real estate properties acquired (in properties) | property | 26 | ||||
EOP Northern California Portfolio | Development Parcel | |||||
Related Party Transaction [Line Items] | |||||
Number of development projects acquired (in projects) | project | 2 | ||||
Joint Venture That Owns Pinnacle I and II | Not Discontinued Operations | |||||
Related Party Transaction [Line Items] | |||||
Disposal group, consideration | $ 350,000 | ||||
Principal Amount of debt included in held-for-sale balances | $ 216,000 | ||||
11601 Wilshire Boulevard Office Building | |||||
Related Party Transaction [Line Items] | |||||
Area of leased property (in square feet) | ft² | 6,638 | ||||
Operating leases, term of contract (in years) | 8 years | ||||
Annual rent cost per year | $ 279 |
Commitments and Contingencies -
Commitments and Contingencies - Narrative (Details) $ in Millions | Jun. 30, 2018USD ($) |
Unsecured Debt | Revolving Credit Facility | |
Loss Contingencies | |
Letters of credit, amount outstanding | $ 2.6 |
Cash Flow Reconciliation (Detai
Cash Flow Reconciliation (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 | Jun. 30, 2017 | Dec. 31, 2016 |
Cash and Cash Equivalents [Abstract] | ||||
Cash and cash equivalents | $ 57,515 | $ 78,922 | $ 73,242 | $ 83,015 |
Restricted cash | 8,472 | 22,358 | 17,284 | 25,177 |
Total | $ 65,987 | $ 101,280 | $ 90,526 | $ 108,192 |
Subsequent Events (Details)
Subsequent Events (Details) $ in Millions | Jul. 27, 2018USD ($) |
Peninsula Office Park | Peninsula Office Park | Not Discontinued Operations | Subsequent Event | |
Subsequent Event [Line Items] | |
Sales Price | $ 210 |