HPP - Earnings call transcript Q4 2017 | Hudson Pacific Properties, Inc.

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Operator

Greetings and welcome to Hudson Pacific Properties Fourth Quarter 2017 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to turn the conference over to your host, Laura Campbell, Vice President, Head of Investor Relations. you. Thank

begin. may You

Laura Campbell

of hudsonpacificproperties.com. Relations week the good XXXX next days. Welcome Relations for our earnings were X-K will and operator, the on webcast now Properties' Investor call the of press Hudson An fourth supplemental with an on quarter call. filed and of Both our morning you, are XX the section to available Investor everyone. Pacific release SEC. Thank Earlier be phone available over audio this section website also for our website, replay by on today,

will During this press call, which non-GAAP we in and GAAP release discuss our reconciled financial our results are to measures, supplemental. financial

and Mark We making will these highlights. CEO; joined during SEC activities EVP CFO; an other and give our will performance, COO Lammas, like the on statements Q&A and our of the no and to welcome, expectations, cause uncertainties filings. be that, of our will Actual on Coleman, our update. Victor events risks Leasing. markets Chairman Mark our will Victor? overview portion discuss which would of at Art Note, results Art leasing management they’ll call. statements, based duty from touch discussed financial forward-looking materially be to Suazo, our to differ With our by could and in which also undertake current senior we our forward-looking to are Victor subject I our

Victor Coleman

XX%, property by to XX% square We dividend year percentage points of office square feet lease signed best cash portfolio Hudson We stabilized XXXX a had our years XX.X%. million for spreads. in was ended of GAAP X.X everyone. with same-store at by We Pacific. Hello, We basis for call. NOI our up expirations Welcome feet by FFO one the great XXXX. leasing. had Laura. fourth our and XX%. XXXX quarter had Thanks, for X.X XX% grew and year We deals of XX% million XX our

up points ended percentage lease portfolio XX office XX.X%. at in-service basis Our

portfolio gained feet Our our at advantage additional were future million the XX.X%. of Through and with was we percentage our Palmas million. and market adjacent up assets; projects, delivered XXX,XXX development improve basis, an XX% redevelopment of Las we for to sell for in to entertainment took $XXX Sunset square available acquisition same-store feet lease non-core nearly of growth. media $XXX XXX,XXX sold at trailing XXX the to pre-leased, our opportunities conditions of square and We the for portfolio, Sunset points basis access strong year significant We Studio XX, making premiums of expanded capital studio and acquisition, that portfolio Hollywood. development all

and of XX% XX% in square Specifically and we XXX,XXX spreads signed fourth feet deals, respectively. quarter, cash GAAP the

along use. interiors, with and XXX,XXX continued interest in fourth biggest in $XX we will Our ground million for to can in the a XX% third Pinnacle Washington two-year $XXX and sold to Culver the of the II since recently million City. extension was of XX% XXXXX in quarter another is be now XXXXX in better netting this smaller broke deal on XXXX our they've we Burbank this XXXX. extension buildings invested mark deal that square of believe and to EPIC, development we about asset. us in sign a and their space just to put quarter, proceeds Hollywood commitment our occupy office NFL of for the NFL we Also This signed I feet recently has upgrade capital only at

markets Art, it a big little for thinking you bit of regarding turn to I'd our XXXX. going am picture like a what's give I over Before to to ahead and

turn, growth best the estate focused our be and buying, assets of properties growing first to we're continues most of These content believe that innovators. to building are and proliferation dominance down Maturation staying firms and all we the best locations and on has our AR, are power. they're the for cloud, performance; around best and the the tax of cutting choice of talents science, these portfolio. and in creators, have edge the strategy event the markets for the watching role data potential, selling, chance and streaming the and VR, Our rapid real best trends

to innovation Peninsula Our translate opportunities leadership had the QX, we'll and is and It's highest net us. the of feet. are to X.X for we The quarter heart impossible on replicate believe headquarters has both in are net Silicon that absorption projects annual record feet. decreases put growth million with square companies In on like strategy. availabilities. Silicon Alto Other Peninsula market. million by X% clusters These submarket markets Valley continue highest to birthplace tech. at Valley of of Facbook, the taking Veritas sublease in Palo total space absorption declined at large corporate and are new XX% XXXX construction now Amazon, where Theranos X.X construction in the square Sublease except plots Hitachi, preleased, its every all into

deployed those capital very these transform for tenants. We next needed are We positioned bought well well to and generation in markets. where assets we've

we has cash far so Hollywood especially do to in Valley the our and to is and to in growth of revolution content to believe Los but we'll effect The they've the amplified for continues continue superior Angeles, generated future. flow media us that the the key in be works Silicon demand tech thus markets. Some these

seen, A to in District, feet but active. earlier, in Las unmatched. which Los assets the building few design, terms I neighborhood And in of in the potential we've growth square Angeles the designs great XXX,XXX infrastructure another definitely space. other there's outer given we're the Paulo. times for in no demand and submarket words development like project more Sunset we about than anticipated footprint is forward with EPIC Palmas for mentioned Our Arts taking moving we're we've Hollywood that calling it's at

While and usage volume just tenants there's enquiring there're not blocks. quality large of touring, sufficient for

to up to Seattle actively development in space looking footprint. up to finishing unturned. you estate our if cities paper. Art for this the lease that assured report to real stone every trends rest the emerging are momentum. said the everyday something on grow our actively just market in ways, the it we number pick our feet named We're Pricewater get The and takes XXX and to before what we're prepared entire So X,XXX Seattle XX,XXX in list I've Alaskan that's in up XXXX many In evaluating Seattle tops Coopers, where delivered House recently downtown leasing no for standards square break users, team and speaks itself. watch

our taking square basis still Peninsula of our is to Pioneer head of our expect contract in in leased, we approach to non-core new, take Square remaining Park XX% Wilshire We're and market marked below have Well, of less XX% to XX already Place of Occupancy XXXX Seattle which that Sand and lease-up typically total address Our LOIs X% in we're working our XX%. assets. square in With backup and of for and to it of XXXX advantage with over square Wattula Alex XXXX? has Building that, ongoing and and we our Art deals. us additional XX,XXX turn going presence And close sell X for are of Andy constructions is team and region commentary finally additional strengthened feet Hill are he's on strong we closely us can We on of which investors multiple Art? our cost of X.X his that scheduled already Embarcadero as room some who at project Office such this Harlow. value-add Other projects cap. find cap million square a acquisition markets our to provide or What the and as 'XX so dispositions to portfolio at more potential EPIC, two have sell construction at building are under March I'm we're there to our also explorations up. ways Xst, is to year. terms also of XX% going that keyed on a renewed in million our confident flow square a strategically to I'm will to assets. foot and than across grow our and we foot feet about under XXX,XXX in growth. in New York negotiations markets all XX,XXX district Maxwell portfolio cash redevelopment or Jackson with a we're million continued are we've have leases is in We're markets taking our and in average opportunities completed of market, that's XX.X% lot or on multiple close our XX% which of already in and XXX an project spend, serious total XXX the footage equivalent to a stabilization premium gains and look

Art Suazo

new Silicon square In completed of improvements market. Valley, foot, which of vacancy feet even about and adequately market. the elsewhere are Downtown of rents seen North where with Class deals that XX.X% square small unchanged deal supplementing to deliveries but remained the to absorption, met all targeting million X.X million asking all XXX% proposals Valley large XX of proposals, those square Silicon feet got deals even late asset. product new square volume center. of This more unit went X the takes Last adjacent net driving we've Victor. activity demand in San was representing Santa million large even market, mostly and quarter-over-quarter $XX block signed before show or A Thanks, activity new site and we requirements. million we the referenced of XX% in feet. quarter. X.X all year-over-year X.X off X the six and million Milpitas, they in a up was Those call, The We've were another in deals square campus Clara Outside Jose, feet at per or

XX we're So, users looking X X requirements feet right our square with an sweets of truly feet. spot. about -- million billion representing Those XX,XXX from square aggregate now we're to working range

well are and market transformed mid-March. as has shows get Campus valley. asset ready positioned Center been we exceptionally about into huge I've the launch formally We couple The the a a comments well. event other broker to of in with

seen consistently smaller we've Over quarters, foot of the square lots several demand sub-XX,XXX users. last for

We about square quarter deal feet, seeing also have we those XX size this now medium for demand blocks. in assets are and the resurgence but size average completed deals at X,XXX was

those We and have In a on at XX% feet great about for of XX into XX,XXX renewals to large proposals in activity with arrive Jose, spaces over XX,XXX lease we or it expansions tenants working are San square leases. with and gateway.

in explorations Those So we're fronts market. valley feel good XX% all we this about and addressing of year. our on below XXX,XXX feet the about activated square were

Class demand. wood us in to to square net about year tech in quarter, chop specialties we significant the feet quarter-over-quarter points the the brought and company up café As professional $XX Insight A in bakery modernized Victor but per positive good really XXX quarter consecutive lease also XX% have square Historically foot. but gains to our property leased. and of rates firms for XXX,XXX the as XXX,XXX Class you now QX, is basis Palo were know, and and with vacancy feet fourth tap the furthermore those facility with this in are We’ve year-over-year XXX,XXX Alto great at activity improvement is property of story still have and feet XX net allowed We square a flat both absorption still XX% noted, tech success absorption. square completed was improvement appeal year-over-year. terms our and of service a design along we capital points market. we Peninsula but expirations, this we Orbital signed we asking into and XX% XX,XXX us. leases foot now Peninsula. with and This as amenities. significant below square A fell have has X.X% Post to the for basis occupancy of square

contributing XX done. we’ve XXX,XXX So San $XX per the square feet basis feet transactions asking stayed at city be Clearly ended points The to already with large X.X a X.X% XX% strength the A of year vacancy positive square to Class deals lease Expanding rents a pre-leased, is down at foot. of the going million Francisco. construction delivers get market. That’s is room absorption. companies deals evident record of of in were and to XXXX. XX tech landlord-favorable industry very flat XX in responsible continue net square got downtown, to tech for XXXX

we of portfolio driven deals Our feet. market. the stabilized about San which below quarter north at tech Class was in Los $XX square occupancy In In about and QX square vacancy at XXX,XXX of A XXX,XXX and Several foot. were XX% rents were by large gains leased are stayed Angeles, were expirations, asking feet of X% have related. seven in flat media Francisco XX.X% Hollywood, and square those per up year-over-year X% XX% while

ranging comparable we're And XX,XXX feet square requirement. still feeling we had inquiries from large demand now for We're EPIC, XXX,XXX X multiple square At proposals, we pipeline of exceeds For to million Maxwell, of X,XXX targeting users including square-foot and building to-date. have feet from that and a LOIs, feet, about contraction, another tours project. requirement. square our full order leases XXX,XXX full in amount activity

projects we XX% great portfolio Downtown leases Our below rents the preleased. market. those XXX,XXX XX% still positive Seattle XX were basis largely remains stabilized construction nudged up had up foot delivered is approximately market. is Los Angeles. in expirations feet The $XX absorption particularly for about XX Seattle of were XXX,XXX are year the delivered. of points X% spoken a quarter per last That’s office X.X% square Vacancy leased, for and the due to to market square driving the have supply feet under Projects Los XX% Angeles this spread, square and in to overall as check. projects are in months and new

XXth, Saltchuk currently leased. moved really tenant January. our It's stunning aboutXX% that XXX and November Although build-out anchored into custom commenced in on lease Alaskan project the a is

holding feet as obstructed that square have We enquiries for will Obviously, but which advantages we’re now, date interest down we high tenants. and tours approaches. to a are have two lease. the were to these and remaining quality up tech full office over next from viaduct, floors still year, pick Right come rate, there by floors XXX,XXX non-tech views early seeing on but

this Our to Seattle exploration square was little XX.X% a in of stabilized year. significant in portfolio our of is feet We're portion very XXX,XXX tenants with already leased, backfill the way negotiations which a With financial deals blended turn capital market. King. at XX mark expires at in one over Those Mark I'll highlights. for are XX% the XXXX that, to lease, call to

Mark Lammas

Specified million share with ago. per of of per XXXX. items for of down per $X.X the FFO a quarter million pay in and the specified $XX fourth for for write-off totaled in interest fourth loans or FFO a or year million diluted There ago. million Pinnacle quarter versus $X.XX XXXX quarter our were was $XX.X to items including covered third portfolio sale the share October term a five in-service regional items third of or issuance XX.X% costs excluding Art. office year to fourth quarter, $X.XX fourth fourth per compared up items with our XXXX the $X.XX no points $XX.X XX.X% diluted for the end quarter the debt specified Thanks, associated $X.XX two quarter, basis the XX specified million share diluted compared include was totaled office basis II. XXXX the $XX or share of XX points to I up the the connection and portfolio of relative At quarter. stabilized offering leased, year our

our over quarter. X.X% X.X% the properties office basis basis at and The at percentages Our in up ended quarter lease XX cash XX.X%, XX.X% NOI points year. media same-store trailing GAAP the months were the in those and entertainment same-store increased the XX respectively. a XX% On percentage quarter and

the XX.X% the were quarter those quarter a and basis XX.X% EOP entertainment Our leased. and former On accounting percentages and cash were end NOI the year. GAAP increased fourth XX.X% At same-store sales, the of respectively. XX XX.X%, for after in X.X% over media the properties remaining asset

the the year. If you XX.X% lease a first Insight, were factor our of in just significant after signed deal Orbital with Those leased. assets fairly

a Note square respect quarter. tapered they XX giving before at fourth XX and to dispositions were the As explorations assets properties efforts of quarter we leasing with we same we're these at the that feet assets XXX,XXX under third concluded the well of stats because XX.X% only those you reference, of these in naturally the had point our contract.

with of QX activities to XXX gross million. of the On year I embedded NOI more cash close importantly term years balance metric QX in and to assets our sale Pinnacle XX% capital. an significant we've loan and debt quarter, million That's years with and floating $XXX loan at From XXXX, embedded over now EOP sell our connection of this total of for our asset account offering fourth our reduced quarter to access weighted to than release the the sheet More average and fourth XX.X% in average this former portfolio through original financing especially eight indebtedness we five-year sale, our improve. II consolidated rate and level purchase in reducing and by million contract premium and Pinnacle the from sold our public of for we've nearly last to continues X or on X.X generated October growth, improved downs and the NOI future under X%. Sales XXX over XX% paid prices. in to throughout connection profit debt the our maturities two extended to

from modest weighted X.XX% increase rate to All X.XX%. of average to our this in metrics improve interest with

February Xst increased Encumbered the XX% further debt secured to upon Center. from repayment recurring to Our loans quarter the and of capacity also the unencumbered and by XX% fourth the portfolio increase to Rincon improve. to third from continues XX% NOI a

expect the credit XXXX facility completion of upon XXX all the and of million total a capacity. we to asset sales We revolving no have maturing pending have in indebtedness

Turning $X.XX seven full-year associated credit were revolving to approximately facility to and year recast in guidance XXXX write-off and to $XXX,XXX range cost guidance, the items, specified items Specified a per $X.XX unsecured diluted term the with our five FFO increase of providing issuance excluding share, original of of anticipated loans.

always our and market rates, respect of As release press future the the with XXXX to impact and reference earnings rental conditions, year our full this levels current of assumptions reflects call. view our include this FFO occupancy in on estimate and

dispositions, repayments, you acquisitions around give to to impact or Our same-store any financing similar capital with cash estimate would prospective from matters. or market guidance. excludes I like NOI speculated announced future definite our activity XXXX recapitalization,

entertainment Our and final X% guidance and our X.X% XXXX was office and is X.X% entertainment respectively. and XXXX media By office midpoint and respectively. guidance midpoint X.X% and comparison media

For of success. the this some our extent own is result

Our activity though of portfolio renewals front in in with X.X surprisingly, of explorations office done with XX million XXXX. million square performance front leasing below we square only our X.X to feet cash and last total cash Specially for had feet XXXX at Not same-store XX% in strong activity feet spreads on year asset office cash we lease office back at at XX% portfolio, with our our have spread. asset approximately spread. XX% XXX,XXX XX same-store getting expiring explorations square lower same-store

lease of completed the decrease nature office and lower XXXX the by same-store a explorations. So in pool leasing we've

to XXXX assets. same-store We opportunity growth have relatively within in our office less drive

cash assets points and have the our and media rents moderation longer our occupancy We basis are never back approaching look our similar XXX and stability entertainment under maximum Bronson growth entertainment captured a at X.X% These We same-store same-store improved history, to higher and Sunset growth. media to XX.X% $XX.XX. effect at Gower same-store a now operating potential. occupancy But a NOI you by comes and XXXX within by portfolio. our leases. With this term rent if fully increased has NOI in

and X.X our Sunset in redevelopment Our contribute of contraction and approximately Victor. I'll growth XX property XXX Two Las Alaskan year. will access properties our XX% growth over points In and XX last projected NOI oppose properties a of XXXX non-same-store and respectively. office to substantial non-same-store in this million to two or forward the comprise properties of cash properties thus cash contribute in-service two of XX.X% NOI to a back our portion projected Palmas additional compared our for call are year. Studio Jackson in total XXX% to XXXX basis non-same-store now And development XXX NOI cash aggregate, and turn

Victor Coleman

our Thanks, remain markets Mark, The very and thanks strong. Art. fundamentals of

from positioned We value on to are our look portfolio to opportunities well existing forward continue some new growth taking XXXX. in realize to and exciting within

to As entire that, Pacific appreciate for line come listening, the thank over last and our we hard always, the I your management support and upcoming year. Hudson through their at to we this work team will dedication the be turn and everyone Hudson the want for to and to quarter And take senior especially for XXXX. for And Pacific with quarters questions. for time forward it entire Properties to our I to look operator, you opened the

Operator

Our [Operator your question O'Neill. is first Instructions] with from with Alexander Please Sandler Goldfarb question. proceed

Alexander Goldfarb

kind questions where Just market to been Victor, certainly the how here year-to-date. and perennial, certainly and you reach are two hasn’t guys the trading

and you new has XXX as to you how the disposition investment looking need And your a just past about been the think about out way changed is year, given at hurdles this guys proceeds on do thoughts depressed also buyback? stock your stock capital So then for how that million, the allocations?

Victor Coleman

continue what's you accretive appropriate were always or be plan place. to any we’re As with have development whether levels more and a buy it's have to in our and said, basis X. acquisition authorized stock return that cap. they or redevelopment execute occurred you're and shareholders to That We're of continue stock capital, our our being we to they blackout know at given really for to to around they’re that's unfortunately access based right on redeveloping will be recall evaluate back to if hasn’t have to as able place. at I company think these at back not we Alex's substantial user and not and are hurdles you'll the don’t, you to but on mean a and proceeds to the a that buy opportunity or that same. buyback downturns, we windows will we And in o and deemed the that at team going mutual And one that’s That sort exclusive, it the changed not the our similar or that low much. changed what we to stabilize was looking we’re developing stocking change, perceive buying train, be point stock. will ironically I what as what X never

So, and to I said, not excess existing capital from capital to are we existing look conducive be redeploying to capital dispositions for opportune that think there and opportunities, exclusive going I very our -- going to right we’re the as those they’re store that going as LA portfolio. at we as be have now alternatives mutual the well evaluating

Alexander Goldfarb

ideal think you out environment? wait you back was But at maybe do mean, mix what than think to start there doing the press point the do new point, hey, a as have you that that of Victor better another some reporting been buying But capital the to you do more given is I guys say, REIT. stock look at you toward, commitment use

Victor Coleman

that, north deals not to capital. and think stock consider as use I compelling the that, is underwriting stable. will buying said we’re If to north underwriting if to be going always it’s we’re new back definitely always it’s Well, I more we on deals that

Alexander Goldfarb

of a Was by going the you versus break one bigger And blocks? more at take Downtown was you just the both? LA in buildings smaller project specific. economics the if that is impact the does that space it different just crack question up The of up of to second are breaking that the the leasing then a have that then, space. deal, to And or how said Okay. you

Victor Coleman

the So, take let me second question first.

rental to on economic listen, know on had hit the that guys. team my leasing not economic couple interesting side, is off assets. management pretty leasing, that have The what both return the in deals it think internal so rate. marketplace They I the we are Art team and lost for the we’ve so feelings in thing, is of the missed. opportunities should the been external That changed, not won't things taken for entire our some On of challenging District. the change A rate a

think tenant on an your first and I the The we’re part looking right still going are building, interest use remarks is that’s the of Mateo, think to tenant entire building is whole Ironically, we based to user. break level an that We’ve at we change a found yet for us assets. related for now, won't breaking space, out question plan this mentioned are up up our I that a got prepared both standpoint whole I At soon call, gain fourth the morning, interaction. tech to to got there e-commerce the do which our on plans and wants from as who a as the I space building. single

based from are waited out XXX,XXX telling there fourth amount me guys of leasing But that over wary. large So just I tenants, space. there interactions less had initially be thought, with foot I’m to the now. we for that are shouldn’t XX,XXX anywhere long confident X have activity break square right up we My fact upon the to the that it’s users to maybe

I the think the plus on optimism is side.

Operator

Our next question. question Rodgers is with Baird. W. with your Dave from proceed Please Robert

David Rodgers

I the you of your Maybe kind how to some on of re-tenant in comments, in Valley program, But VIP exploration much what back need Silicon it could of the how just that are assets in terms the about much think of maybe under exploration to the to curious make of feet and seeing versus have your kind and feet mind this of square just demand. you use year leak of round you with square XXX,XXX that up regard said to to going market? is the XXX,XXX going

Victor Coleman

have Art you, you to that going runs okay. am I Dave, for

Art Suazo

increased the XXX overall And started some quarter-over-quarter. we're ourselves in that. taking aggressive just demand. neighborhood market which we've Listen, on in of got with listen, we've assets been a our Yes, in our We've activity we’re the means uptick this of those see the we've which activity advantage VSP, of our are outlined I poised most in do feel mean we've market our we've repositioning across to currently somewhere leases. to that like we've an leased everywhere. to done of seeing to-date, or those that see I really so XX% of at, We of those, proposals the and and XX% assets, LOI the balance VSP priority commitment

ourselves in we good, feel the place of a feel we lot activity. we put like So, see we right and

Dave Rodgers

of was What just this year? part type particular other -- of that for, submarkets the retention are particular in looking on And those that you explorations. the

Art Suazo

Well, year, Right up. as as known known come XX% our of we or vacate, explorations backfilled. we've vacate we're have now, either in we looking here our got at of renewed that February, probably sit every

we've XX% discussion, in and but negotiations XX% So those we in already, where right some good now got are level of another sit. we discussion right, that feel of probably XX%

Victor Coleman

EOP backfill Yes, XX% to it's -- XXXX to and around of I cut probably relative mean looks shake Just renew to portfolio. I explorations to that reassemble to in mean data, out

Dave Rodgers

the balance maybe putting build well, with then follow-up convert deeper being of through etc in for how just maybe And are Mark assets willing how Victor, back Or assets kind of up asset the kind go And projects? plan versus the just to these willing the the Victor news? space? combination to in of do more lease in talk when some Are retail you much add XXXX in a putting kind to proceeds of as of is office you in value some this that you are sheet? you

Victor Coleman

so that not the and seeing could play Seattle in here a announced. It's listen Los we the have will -- our we choose So, sheet don't where put that balance to very deferring managed some deals am virtually these really we not so any assets tender but everything, use that at accommodate, Mark accommodate. the on have if and to in haven't option. just it into capital point Bay into on we on has we the and Angeles obviously XXXX to, going interesting Area, redevelopment -- not opportunities to in comment we're I

Operator

next Feldman Bank is Jamie your question proceed from America. of with question. with Our Please

Jamie Feldman

it? how term we Valley you Peninsula whole thinking to about in market are And of How be terms longer big the and want your do company? you do think concentration? how And about Silicon

Victor Coleman

same We've And Seattle ample we're Jamie, it's Seattle San on and differently. a for pretty the Francisco us we're clear take the Valley, think determination the grow. a office markets little to that in opportunities opportunity the side, for is that grow. growing I In to there I'll the interesting, in markets particular us the still lot ample us in made there's we so at looking bigger, choose invest best Los and those And we're country that markets in a our to opportunities markets. if so ours that. the and to Angeles, and like a do the in there's support for get ample company to to grow metrics there's for in the opinion economics

deals, seeing just are to assets, assets. opportunistic in mean I to close still deals So mean sell we of continue team or not we that buy afraid place saw, another are the we power to we're and in going we're and another upgrade market Valley also we think Alex about dealer. we're to I assets seeing there that

clearly We will the office in consistently and of we’re portfolio we and show those grow to room with that that depth going do comfortable in marketplace markets are the it. think have I

Jamie Feldman

projects as projects total terms have you in here about in out large of would after I of size like, terms of -- redevelopment how then mean you today, projects, think mean of portfolio go And your sounds there. you some like I

magnitude? appetite what's Just for your

Victor Coleman

Listen, sort that's nothing amount, think ambiguous that it's right. I it's know I as I of probably be don't amount, -- going to of dollar an the project think kind sort question, of

that valuation we're think to to IR going able be going the is project, to to obtain, lead it's be we the going of So in.

venture combination and will this deal that program, its highest our what's it’s entire today. current dollars we share So come that is use also a benchmark have buy CTP with us we of to $XXX evaluate as and million significant totality do the be could be has $XXX of and could that. to or so that will project. there of opportunities evaluate beyond and Remember our think around by they want a partners I best the don’t with it relationship joint self that back

Jamie Feldman

the elsewhere or Center? went? the six had in Campus on talk pipeline what you mentioned, six like at and nice maybe signing Campus looking Art ended a then about Can And region And maybe close where you that. Center they tenants they and how behind were And like? didn’t

Victor Coleman

I Yes, And but getting this a which the mid-March greater where at line if the we're I all to probably get And it's lot kind event middle Silicon to I a mean finished to I in off think as and think showcase not but it traction. of of we're mean it lot broker was positioning I you can detail. on right I Valley. be said. timing, will huge we're it was coming, going specific with do of be could poised it's think

Operator

from next with Capital Craig question proceed Mailman question. Please Our is Markets. with KeyBanc your

Craig Mailman

full curious, the availability out Mark just kind laid you dispositions. your

have the you're what kind deployment assets capacity thinking your curious total or on will both? Just you once be, contract

Mark Lammas

of we on think kind we ranges capacity debt stay through total either XXX I the a as its or Then end of side the over target. debt XXX Bronson that we funded up deployment level. Gower There think I at levered a well. range on million the Yes, on basis and comfortable is availability facility line of within at or we thought have million

Craig Mailman

bigger of LA. a message or way of you referenced bunch question. there opportunity at out markets, Maybe you’re we a different follow-up a in some that ask looking the Victor, to repositioning the Jamie's laid different in

today to have magnitude is stuff versus redevelopment into you higher balance bucket at, a know to maybe have bucket from where an repositioning kind how point kind get play may that kind of each just the to everyone you deploy how price today? a term how where a, type stock longer raise an sheet of asset up a you overtime? not curious with want look the easier Just lease much And need capital or to

Victor Coleman

-- back up related well policy, think it's capital one at need not the that and for is, point our in make of have point is So opportunistic raise terms I and sorry that, two we to this is level. these and zero at points to we strict is the intent there where been let we levels, me we've last very to Jamie, at your but and when our deployment we a remotely capital and clear stock capital even raise process

point, help we Angeles building-up So what deploy and general marketplace diversification what in the to we maybe in at. about of to are of markets we've most Jenny do, going and Listen, we back capital Los your then our to I talked this mean but Seattle remember the But sort into a I've those as portfolios. was are that's closely Angeles as marketplace sell buy and the portfolio grow of is the first have going EPIC and fourth we we going and to take now. a change to a they Bay in we and online, to when have all little is online in point CUE Bay five in aligned to where the Harlow assets online, marketplace interaction Area sort get Los when coming bit more means barbells that Area, more

ways think size that more the will those of markets. the so I be determined change, will as And see to numbers in portfolio and

feet whether side, us development that's gone done. clear get a us are XXX,XXX increase thing the which at to Bill taken for in We're Palmas to XXX,XXX for existing are play. his multiyear those office are in the to expansion square reversed had tenants on just space. that been Los are three look the leasing knows redevelopment team years had due million type at, that's to same From unique have area we're little an and in breaking needs. do. and those feet, that tenants campus got the square of a an and file on EPIC and the it's going requirements Chris and the in and from at Angeles. and we're feet of both multiple process with filed at square opportunities and the that or that for get space. already redevelopment that we a demand Specifically of those ground year to going This new exploration and who for very with repositioning In development team is assets, over we've for assets doing pretty we that some backlog And And a a made X.X the that something his additional creative based tenant two and team next the to those Angeles small exact beyond, additional Sunset to on there and we've tenants aggressive looking out in production building. Sunset want there schedules it have huge existing Las Seattle there is take Harlow, or capitalize Gower and And the now, Los has public else to look typically continue development that standpoint,

Craig Mailman

guys you comfortable, your mixed I in could looking where Are with if been strategic Or the involved. bring a the retail have guys you at and own? more KeyArena just, you resi on partner? would do versus of is if you -- you guys know a that that something some partner are there use, to And find money

Victor Coleman

was would at the both time, tackle used don’t you mix with we would so going that capacity to our going was with some something development office, the referenced currently was the and do that think that I evaluate our capacity who AEG looking with if successful we've full I side. and from going are away have that that to we that to and we the something was be to be partners on opportunity the and here not have and we Yes, if, time. has comes not at shy alone on that's KeyArena which teams are to the it. mean there capabilities it be extremely resi process, of the unique It's partners aligned capital and

and now, project we're one got at component even right we're mixed can doing As of I only that on think that looking has used not the deal. to it, remotely close stuff

So I don’t going to cross now. we're bridge think that right

Operator

from Rich with Our is next Instructions] Mizuho [Operator Securities. Anderson question

Rich Anderson

stuff is office -- have million the portfolio at of year that square expiring over already some remarks the tackle in XXX,XXX is that I'm feet to there done said schedule you see you feet, 'XX. first your square number? net in this a looking Is expiration part Is -- I as question that lease the you Mark, is that that?

Mark Lammas

the that specifically Rich, prepared to remarks in same-store was referring the I portfolio. sorry,

Rich Anderson

Okay.

Mark Lammas

You're speaking say, to that the after portfolio right X XX the the numbers XXX. is wide, exactly again that it’s million the same-store it’s it’s a

Rich Anderson

how you 'XX degree my question, to going the words way start expiring do to next to early other you of normal leases? see those to if I the as rents are and you looking but in to what profile, as there's leading even go expirations, 'XX same-store wondering year profile then market, significantly dynamic? of course, and a as because accelerate that know lease you kind that include growth you will a I'm same-store think chance below maybe know or do So the enhance through a guys growth

Art Suazo

done 'XX, on coming 'XX, lot traction are those. so Yes, a Art. talking in advance of of to advance that already that of you'll the so is in kind and up Rich, Hey movers posted -- large we're of this see 'XX of we're in some we've

this mean, front late I talking that even 'XX have to kind the XX.X of out that yes renewals, So really especially guys. is trade we happily large if already of we're in they're multitenant

Mark Lammas

Hey a Rich, follow that. on just little

are I fairly in Seattle in in of you now. have in that Los larger conversations Technicolor Angeles and and couple so 'XX these we 'XX think recall 'XX some a fairly as guys and already below,

Rich Anderson

considered at your guidance. this not But in point

Mark Lammas

no, no, No, no.

Rich Anderson

or you that think a year you CapEx on trending an Okay AFFO sort just and now do Do lands 'XX? that versus would number. use maybe know you terms where of down down CapEx which up to over you year of specifically derive see

Mark Lammas

prepared anything like satisfying that, our you for. tell yes. it not we prepared or get to like is it question I seem part how would of remarks can't a Rich, It was

depreciable for So bundled of in just it not it's over trend recurring but a life to somewhere -- and overall years, that when of XX% XX%. is it's some continue a that has to overall commission, of little bit component, bit of a XX or is CapEx less as with And of information, just year the X% portfolio. basis associated CapEx that trend VOP say give stands to a TI quite year say to stuff do you sense down recurring actually to between On that upward not that TI projects on much -- enhance the we and part of our other that the a spend. some it’s on than

a on modeling And over actually year. year-over-year year X% more or recurring a are combined being about less so so, we TI and down flat commission CapEx about

Rich Anderson

something is a activity systemic all folks comment that that seeing this more starting maybe to incremental out or make or you're about, a the of But see been Victor two an one from in for I the message Peninsula. conversations there why is activity there absorption tenants, maybe then you bit and causing having little terms in you’re of Silicon guys anything with we’re area there and a suppose. or getting last Okay, of question in like is any sounds Valley common terms I there. But in of areas? to net for move those thread that's is know it to frustration people maybe your broad-based

Victor Coleman

see debt that I like of best $XX looks for users, the deals little extremely the January, campus Well, that huge VC very feet, city. the about, million the billion, that I instances. yet prepared capital, very, in going space have space even that you statistic now they're I little were years, that optimism long I about IPOs have the fourth expected X marketplace as before footage the in think the The seen I as -- just Bay statistics strong. is our strongest mean everybody to end, are gap marketplace at still into XXXX. out, with those many And And the to are of very all, change quarter VC IPO billion square start not were -- year I we’ve shrink. VC a I the It's important there investments. remarks them, funding the couple mean and the to was in valley, seen mean, of are like always can't those of they large over far. more things out thing large VC proved impressive. in are the basis. look X coming gave as amount so strongest and so those strong. no the -- the XXXX the and raised starting very third and we go. similar people quarter in the companies And is the and Rich, mean, though to questioning coming was questioning Because except us users, numbers been billion over wasn’t what the we the the the very conducive, that talked of I signed, is valley, -- it’s And at if the most or Spotify a mean, the very square of is tenant plus go of year else statistics at in about million larger statistics and too ago straight Area, there all of we've valley I marketplace. marketplace it level think our XX XX interesting the there. there's million And And users on It’s our moment you IPO for -- Dropbox the in names was larger that end since first so venture-capital is $X X I to much – to the don't little on that people users there mean, there's last into talked are year city, numbers available back

to And the continuing it’s vision so we’ve years, to of tech of of and that. see have bad we’re And going those X Amazons, traffic. And about, Hulus grow with flow larger more world it’s a the they seeing we’re in you’re in companies marketplaces up that X they’re talked it’s X, related, seeing X, that clearly, Googles but think I of, and the years. and XX not and

And of people that leaving marketplaces perceive so, it’s not those nice them they’re like to kind to do. see

Operator

your Please proceed next is with from question Our with Fargo. Blaine Wells Heck question.

Blaine Heck

one your you that I peers growth utility causing Coast pressures guess, your Mark, headwind seeing generally, payroll in of guys recently and for higher for were NOI their XXXX? XXXX. those to West Probably just outlook same-store Thanks. talked same cost what’s going and your about expenses Are a through

Mark Lammas

would not discern primarily I in of think to I it. Josh commentary where a tend has mean trending sort we’re be see towards margin, seeing up it union he to some higher, bit on is higher. I'm a costs that? bit of mean, to further which are terms erosion looking I you if

Josh Hatfield

labor gone but increases Yes, we these overall, have I union recover think, up, costs. largely

not will material impact. a we have So

Mark Lammas

Yes.

anything. troubling particularly know So anything a the trend I don’t to answer is well, note see or as think that that. don't that I we would we contradictory

Blaine Heck

and quarter we look from similar grow. vein, and good to expect fourth Okay the were business we on the think were margins as better continues then should not from a seems Do year, demand medium that providers you in quarter they forward? last higher than like this margins content

Victor Coleman

opportunity so his fixed a expense I forth, maintaining to right of fall team Bill there improve have mean on high right pushing are I occupancy. think if returns to natural because the cash expense. largely we just and a There probably and continue margins is fixed the recover rents, bigger hit

I can top improve improve. So as think we that steadily margins line those

Operator

I'd gentlemen, comments. the Victor question-and-answer and to session. for the to call Ladies we've reached turn the Coleman of closing end back like

Victor Coleman

and As forward and investors obviously here who Pacific company us. for entire and people you the to Thanks look the we the and our next you all want and all support for the apparent to cover team I call. talking around and thank today people table Hudson on participating

Operator

This conference. concludes today's

your this You we time and participation. for may lines your thank at you disconnect

Hudson Pacific Properties (HPP) 15 Feb 182017 Q4 Earnings call transcript