HPP - Earnings call transcript Q1 2018 | Hudson Pacific Properties, Inc.

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Operator

Greetings, and welcome to Hudson Pacific Properties' First Quarter 2018 Earnings Conference Call. [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. Thank you.

You may begin.

Laura Campbell

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

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

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

Victor Coleman

lay renewal true strong, Seattle best even much many while was Thanks, a We capital Silicon strengthening at leasing, recycling We consisting Laura. the in our had to the consistent XX driven XXXX. deals cases, XX.X% across strong and the in XX in particularly leasing Good and call. area, which a feet in square and our morning, San This all consistent. success in Valley, spreads. of for foundation rent the GAAP and, were among in very downtown and which is XX.X% in XX% everyone, further. is of markets our availabilities. nation Fundamentals first Bay a reflecting our new square Francisco a the than footage, and growth the remain of are of activity quarter, quarter a and deals, line more executed XXX,XXX and welcome activities, positive by with productive cash first environment, of refinancing

has into mark-to-market; This over XX% this tackled tenants, Concourse and the a square Nutanix, Trailer renewed expired During carried first feet XX for a feet have well Metro in in recently feet XXXX We square top XX% Angeles, had year one addressing at XX,XXX XXX,XXX Park renewals expanded for XXXX XXX,XXX second of at we all our Technology, Concourse trend quarter, Hollywood Jose, and Plaza, would quarter. mark-to-market. Los now as would in both San within InvenSense which portfolio. San X market and in Airport as in right in major XXXX early we're expirations yield of retain and Jose That significant our further the seeing well square momentum advance: Jose. grow San had ability tenants that and expired at to the exemplifies which have the for and

our XXXX of all year. expect we and the associated our totaled to expirations, tackle the to across lease XXX,XXX a these ability our in confident significant be square market, of growth so markets. expirations are these feet of below XX% We source end through which are with Rents organic

portion we've Art renewed, leases. already a discuss or those is to As detail, of significant backfilled going negotiating in more

cycle good about from and West weigh infrastructures a to the in and perspective. all these and to This perfectly align in features transactions tenants gross Place. and $XXX Macerich buy. entitlements many sales tech approximately joint are and allocated demonstrate the The And buildings' on more We acquire the space, existing property's on wheelhouse and into One terms attractive of as well minimal reuse, purchase XX% sales of growth conditions and enthusiastic of both asset of in markets. gets time-to-market X that media opportunities risks And requirement weighted perfect and our Pacific achieved recycle part feet market Building streamlining is it of because opportunities. office inquiries Park true Pavilion prices. consistently market assets, to proposals capital so San we core as and been its Embarcadero square Westside capital recycling. to and creative basis, basis in while only with It's active at transactions, adaptive about square what recently particularly significant Francisco We're these premium feet capital maintaining received into portions are sold for or XXX,XXX we invested expertise or we XXX,XXX are the deal quarter, the proceeds of Company. a market taken and and of average our in million all positioned dispositions the a capital project. our we to closed And knowledge Now venture three opportunity significant recently Peninsula that capitalize to on to very convert with deal. first we've existing potential rewards our assets: point for a the the each It's XX% campus select XXXX over assets of a the Collectively, and deep to Sand of those in taking of large we've value to Angeles. a highlight turning on were in our yielded the on looking Hill, retail. to on premium Office squarely our of prices take on these in Los our this for. relying really fact, unsolicited on multiple the advantage sales for We've and opportunity GAAP at favorable project is users

portfolio unsecured we're always and that the in existing Mark and with sheet parcel for ensure current Palmas. I'm the we're studio-adjacent Hollywood. at for of recast we're debt and and XXX,XXX in our highlights. studio-related at EPIC feet includes to for now our of and pipeline. finally, good to seeing Harlow commenced the we're in going to which And XXX,XXX economic quarter fourth cap credit increased term facilities. construction turn highlight And successful and Bronson, And climate this availability office Art a we positioned quarter, first projects organic new Angeles, feet of that, further. as event growth over our sub-X% this a all market to looking Los our first Sunset both opportunities, shifts. office under lower of stand-alone feet own have at generate the And between discuss remains interest our square and to balance Gower and forward. the XXX,XXX and rates completed development transactions team the ability call the for across class of In and that This year, quarter, going now in And in both the his last market value square of rates. further optimally addition, projects square in redevelopment our part currently. the Mark's only leasing this Sunset strong, over Recent quarter going Las In

Art Suazo

very with of for Thanks, purposes the net Victor. square-foot-plus Large quarter million to Palo Class XXX,XXX vacancy includes of Valley, per with yet Bay the of Class absorption south up basis rents office deals another had of start points is for are off markets million strong preleased. and feet this demand X.X X.X down Alto, square with X.X% A vacancy square strong project $XX of smaller XX construction I'll to XX% the Silicon foot. which under already square and positive compounding discussion A feet Area. XX%, – tenants,

good Center at We Milpitas. in activity very have Campus

at Authority in and feet had deal San tracking on another We San square That of in the million at separate how the our airport. are I'll great yet augmenting example Transportation of market feet, Clara Gateway are X.X tightening mention XX% with we're also a Jose conditions and about XX,XXX-square-foot totaling active demand downtown lease negotiating requirements. Jose. XXX,XXX Santa mark-to-market, Valley another three square deals

Our backfilled Palo Square down square made tenants, reposition we including today, of And Orbital we Valley rents that foot. XXX,XXX the XX companies. basis along and A flat XXX,XXX marketplace, on square wider of Insight north, XX% Palo improvements the expirations XXXX over absorption, as and XX,XXX of to X% in at points range feet. just signed attracting are XX% ever, first quarter, it's as hot square for feet a renewed, Further square positive at Alto Alto negotiating stand Silicon significant is per In $XXX Peninsula, capital Class now the tech are feet in footage. of we've with or square net below market. as vacancy We've

improvement has pleased The a to stabilization had the leased, we reached at even Foster feet asset As XX.X% I'm further and of square coming and about San negative in each Mateo City submarkets result, absorption. net XXX,XXX quarters. that report expect

rents elevated Foster and a As It's still and per we're at XX.X% Metro received. the Class March. after market respectively. Mateo activity $XX ticked repositioning and up Center City Even in at unchanged to to respectively. our vacancy San so, well were XX.X%, very been result, square A seeing But $XX launching full foot, in

are new blocks very square say, North, preleased Class given we're below of supply. nearly basis square everything from feet we've Vacancy market. the feet Francisco, per net San to XX% again rent expirations backfilled to expecting XXXX limited just of includes XX,XXX-square-foot return A of There XX% downtown and absorption or Our And quality available. are XXXX. XXX,XXX and X.X%, is X% square that on few, the fell XX XX% strong points negotiating demand of footage. space increasing about rates of along $XX square renewed, through of correspond which XXX,XXX foot. Alto Peninsula, Positive Palo are In supply growth, with

by we're space, deals of have Market, which significant get As square was old essentially XX,XXX feet repositioning backfilled with comprises in and done Uber. process opportunity remaining feet to good The XX,XXX mark-to-market. the anticipated at vacated a BofA square this of the immediately at footage which XXXX on, of square activity quarter,

San XX% is Francisco market. below Our leases with portfolio in-place leased, XX.X%

very have renewed, and West XX% seeing and negotiating on this large of of is strong Hollywood XX.X% XXX,XXX We and XX% to are Los in per $XX a square Angeles, in expirations we've backfilled space. of market. Angeles. markets rents tech we're square blocks foot. rents unchanged more foot. activity point square to XXX In X% net terms activity footage. media absorption. had XXXX per that combined big XXX,XXX and demand decline These a and in X.X% vacancy that or users two fundamentals positive were of Los vacancy Angeles The essentially of West from basis square $XX for square And below are at momentum of had XX.X% that of Hollywood a feet in preponderance with with – increase feet Los

& we square have approximately and market. users alternatives We significant leased to others, Class media best EPIC District, Spotify LOIs who's from that AT these who for tech of are to picked leases, with the and full Fourth the in fully MATEO tenants Activity project XXX,XXX interest A mid feet for In combined in large and building neighboring in users. square Maxwell from has feet or Traction blocks proposals properties. XX,XXX Arts for have and ranging to up,

Our leased, this we have the Los XX.X% expiration Angeles way very year. of stabilized little and in portfolio is

under XXX,XXX in expand XX% square Finally, square and to foot. preleased. vacancy to had $XX absorption, per in brands an drop X% Seattle, by tech that basis X.X with in feet point market. construction of continuing million XX rents positive well-known feet X.X%, to Seattle increased net is Coincident square downtown are

Lyft As for a One of XX,XXX-square-foot XX deal with the know, an have King, upon of floors they as the so, The significant XXX directly first of continue remaining square had impacted with already so which to the full had portion mark-to-market which you great. the aggregate quarter, And at square leased time XX%. have activity we space. feet XXX,XXX-square-foot And of at about another good being. is Alaskan, XX,XXX with Lyft a backfilled feet at of two XX lease Even signing King, XXX,XXX we asset, still have interest. viaduct Capital we by that they about grow is

leased, the XX.X% to leases turn now in highlights. in-place are below portfolio stabilized Seattle market. Mark XX% Our financial I'll call for over is and

Mark Lammas

of witnessed respectively, of for XXXX share end expirations to costs had which items anticipated expenses Center has office items items of of the end point ago. $X.XX Thanks, sequential which operations, Those redevelopment. million per percentage. or the totaled share. quarter $XXX,XXX at of a Specified specified versus first first effectively Center, $X.XX excluding the Art. share year. leased, quarter per only from portfolio, Funds or now year and been BofA were $XX the would diluted quarter a specified lease diluted Campus that onetime portfolio, consisted XX.X% in-service or first portfolio, relates for $X.XX lease for XX.X% stabilized have the the expirations, At it was extinguishment FFO, and the stabilized to last or decline actually last compared to the in of respect $XXX,XXX Foothill but XXXX Robert FFO same million $X.XX to the in-service and Market, excluding of all of as XX.X% first $XX.X the last in basis at share at per items our expirations the per also quarter, no existed We for XXX X the or material reclassified With of lease specified year, and at diluted Research of at debt of increase XX.X% end Bosch and XXXX. portfolio within Cisco in-service our transaction-related

for are offices development properties More than reclassified the for due our lease decline. increase a the first operating XXX events, of increased trailing for we actually projects, which in-service, our GAAP XX-month was to cash line stages in at a portfolio, Alaskan, throughout first sequential However, quarter Outside XX-month the Bronson. lower activity the a same-store an on lease-up Gower same-store at cash basis both basis trailing Net in we production-related our rental by on to X.X% in these Traction, completed a basis last just respect and saw same-store improvement in a the with GAAP the including Area with office a to of quarter. on XX in our and and points X.X% and quarter on XX.X%. XX.X% percentage results. studio XX first contributed XX% That's production percentage also CUE Sunset Fourth terms to year-over-year This These point percentage and and properties & XX.X% quarter basis. basis Bay handful Sunset increased assets. challenging demand lease of The income higher in basis. rates lease XXX ended

unsecured Victor this credit facilities. quarter, mentioned, As our recast we

terms. but You release earnings to X-K can me filed refer briefly on XX March certain the and today's press for key let more highlight details,

Our LIBOR the April reduced million XXXX $XXX option XXX XXXX, plus The LIBOR the were interest million November to and XXXX April annum. term $XXX revolving additional increased for maturing $XXX $XXX loan from year. $XXX XXXX credit rate one basis facility points to XXXX term basis loan to was all per March was points maturing The maturing annum, XXX XXX loan plus extend rates our term April an XXX to interest term to extended million million to revolver was per and with million. reduced to from for

$XXX term X maturing We added maturity the April to extend also X-year date the right for periods. additional the to million up loan XXXX on

of Finally, to on useful XX structure seen we activities, with metrics and Page debt hope regard new financing find supplemental. and you've the will our selected

Turning to guidance.

unsecured the financing quarter write-off excluded deferred identified recast write-off deferred $X.XX of financing expenses diluted XXXX with transaction-related full to of FFO. credit as for in excluding consist full of costs FFO $XXX,XXX year the the Both the were items. XXXX of our cost share, associated Specified specified facilities. first items transaction-related items of XXXX our of $X.XX reaffirming FFO in expenses $XXX,XXX and range and are guidance guidance We per year

estimate. our current excludes or the and debt estimates any differ or unannounced future always, be view of repayments, turn on respect assurance capital from release levels impact results to reflect or that activity As matters. guidance assumptions the earnings of including financings impact our that, from the There future not no to can referenced events this similar It back Victor. actual over otherwise with With market management's rental call. I'll acquisitions, and in and materially recapitalizations, market occupancy conditions, press call this will the speculative dispositions, rates,

Victor Coleman

Art. cylinders Laura. deal quarter, Thanks, great Thanks, all a the firing as and we accomplished We Thanks, into first Mark. on mid-XXXX. in we're head

delivered Our markets portfolio, outperform, our projects. to and and vacancies redevelopment on tackling continue and expirations addressing Center, and we're development laser-focused other large our and Campus specifically in under-construction

perspectives May on XX. and updates additional Day have these Investor more initiatives, will and in and much, here our on XX We at upcoming Angeles Los much

entire and if attending you'd but get I of for management, to many this, prior. weeks NAREIT senior for I'm a the will call more for of that, as we to know the Day hard thank place So Hudson to up like just Laura open takes already questions. And Pacific particularly X Also, our on appreciate just reminder not you out their as with this June support Hudson our RSVP that this we always, today, please And your to Investor And Pacific to team, everyone quarter. you reach Properties. for and their info. going call operator, be work want

Operator

Our Manny proceed Citigroup. Instructions] with first with question. your question [Operator Korchman Please from is

Manny Korchman

environment more criteria those and in transaction Hi than looking asset touched remarks, looked you're at of before projects? deals? of everyone, you say, on rather have the West an activity how in, cap at And you development deeply buy involved sort on that's or your deals of an low Victor, stabilized Coast some rates. at are opening the you what sort going the How

Victor Coleman

Thanks, Manny.

would would see mix and tenant that's asset stabilized add asset the markets how in asset and just or how value even fit any synergies where applicable be at that our So the a a are. to in listen, we just that look core

So a and that consistently Hudson. some the into more and we've diligence in we'll that deeper assets how instances, we much consistently, it in-depth get those with will dig And fits process done do – evaluate throughout. get and – see and

have value create been what can pool of at markets. forecasted on, that out year at we're of still as from say, in today, to really and all how his been of very and sort the can marketplace year have that currently right they're we're the handful until that comment that? of looking additional would lot with say, that looking on a serious see I opportunities. assets though, limited honestly depth don't we're our Alex through of team, focused and think, mid looking We we I acquisition this in I I you pool. acquire beginning assets want a currently assets now. Alex, through of is to a the the

Alexander Vouvalides

Yes.

as of pursue handful of we're said, being can mentioned, think as mix that long-term you if create from we been took there's quality level asset, as a a going That I only think the value. assets we portfolio. where our with fits assets far location, tenant Victor high just to

recent and that And the creation. view think see So to a ample with aggressively, I think long-term just we're we where we if we'll see maybe there's continue creation, value the to it shows we while investments didn't perspective. something handful pursue value of deals, synergistic, going our that record

Manny Korchman

Great. Mark, one I for And have you.

you just a in remained I the part some just guidance range was same-store but that unchanged, if are presented? if places came your or different wondering Your offsets you there that numbers up. of

Mark Lammas

Actually, question came in Manny. of this and number practically note. Yes. notes every that a morning's up Thanks,

follow to And correct, So the for hopefully for little I'll it observation cover your minute and is it, I'll try which will the purposes. obviously as can make and – it just just field first the point deconstruct a ins the the first everyone. one, GAAP is about NOI to so bit, spend FFO suppose and so NOI on same a not the is obvious cash outs. I is you for

higher point, midpoint you by of even expense. NOI, GAAP look that indicating said, about growth G&A with can you'll combined bid materially. at sometimes, and the that a potential there, But the basis same-store is notice fairly basically revenue improved adjusted the offset And $X that million the interest if new noncash lower on differ

So interest. washed. they're on more our or a noncontrolling the then little of less of there's And downside coming through bit adjustment

little So I'd a there's at projected. midpoint the noncontrolling bit say more interest

is FFO But various is that's higher part about the effect non-same-store they Metro related of assets. NOIs We that them basically new of, not grid, is signaling. large FFO. that $X.X Metro So in are just net GAAP Nutanix at lower a you decided the a potentially because in Plaza, cash had offset expansion budgeted at a is million what to of Concourse. which Concourse. midpoints the to again, of into the what somewhat all The footprint it's expand they main what's anticipated, NOI namely couple is items. and Plaza And One at conversion originally at for preferred

up So fair Concourse, GAAP lost a we bunch compared more NOI, but we Plaza, more at higher amount than amount. $X at than like more Metro that made budget a to million of

than So, we expansion at Plaza. Concourse down because less take down would at Metro they they took thought just

The other down. in GAAP might down a of one lost Queen Center we with that bit Metro connection renewal. to They the not they floor take we at take thought decided a Street NOI was

run the through were some GAAP amounts that So, NOI then non-same-store. smaller and there

less was so what if higher a offset were – more exclusively grid. at looking FFO the guidance or otherwise And amount you otherwise they what suggest

Manny Korchman

Thanks Mark.

Operator

Our is your Please Santos O'Neill. with with next Sandler proceed from question Daniel question.

Daniel Santos

that $XX we're planning Macerich From sort of cycle they're only multiyear at Hi, on comment on I could their of development. the that end what Westside project. investing understand, was wondering million $XX on said given Pavilion, the million you call to the in if guys into I

funding as on So could I well. if wondering you was comment

Mark Lammas

no. not defeased. Mark paid in the what the and there's talk to in but for sort it. to there of behind a it numbers guys us and about who we're of conversation now, I I some as can a know some not And be the the with in terms answer loan was Daniel, of not that and position cover why we So We're just tell a is going needs to we disclosing secret, latest. other contributing it's if place little be But lines my the year the to everybody's loan the end by leasing and in the several now, are LOIs his tenants a Art is, to conversations we given the We're right and has guess and most have with right defease interest what it, at problematic. the for team anyways his of the in that it's possibly activity all now remarks, to and – going mentioned prepared and space. Art of as you,

So to budget we take. referring I'm anyway, million XX% pleased asset, not was being and give confident Macerich that the million of the range in which million talked is we'll the have sorry, million $XXX range they're out, be capital, $XXX They about $XX going with $XXX of process. on so sure of And inclusive costs. I'm to you'll a or of going range the full what our contribute the about million. – XX% so to have purchase be asset price, that $XXX in total roughly the to own

I So to. know referring what don't that's

in little So mentioned indicated cash think going strong before, that's the market we that with had in to that's fairly as indicated, that. we're on be a wind bit passing of yield. there And I Alex a aspect. where be at have going But the may

Daniel Santos

been changed? has I NAV. Has wondering could guys how on comment the Okay, that's that stock thinking relative your And given on helpful. to if stock then you depressed buybacks, was

Victor Coleman

call, we we made meetings. on last I comment, Well, our and had believe, in that think I subsequent

stock we where it was to at. entertain We believe, or million from, will $XXX buy a million we've I that $XXX today, buybacks increased that $XXX think, we're always so. I or to approval back million amount, given up which got

just gone And alternatives the that same and increase given actively alternatives up. time. capital where meeting. at we'll we pursue most it's had We our with are board at recent So that

Daniel Santos

you. Thank

Victor Coleman

Pleasure.

Operator

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

Jamie Feldman

Great. Thank you. question another Art. for I guess,

or of more, I that are square Can leases You you said thought and think but about I upbeat sound the – square are I on pretty said the some million some maybe you it. that Campus feet maybe you feet tenants XXX,XXX misheard tracking X negotiating of talk interested? Center.

Art Suazo

so square is on Thank repositioning X reason you. The The really, means Valley XXX,XXX-square Yes, is deals, feet-plus, at Yes. I active campus. million feet And active entire of are from really Valley. to prospects we're we're requirements which all the the building the in negotiations is No. single it. X.X with referred Silicon right, which complete, looking in it. Silicon that through. seeing high all another we're are getting They're that to

that's optimism. why such So there's

Jamie Feldman

you – XXX,XXX? But where there's said X that deals stages? for add active are to you up about Can talk you the in

Art Suazo

all in proposals now. They're right

being by all negotiations, of I to or So X X status. in you as and know, should X negotiations kind Xs X say. we status leases, They're track early we – our is Xs, X simple deals Xs. in status, is just LOI and is in

Jamie Feldman

I design kind talk is redevelopment the mean, And and and you when tenancy of about of went you the plan can forth with numbers thinking the it we're – those?

Art Suazo

tenants is now. talking of precisely The who right with Yes. negotiating and to what we're universe –

Jamie Feldman

something have think signed? When might do you you

Art Suazo

good next the going, very at few continues the a the pace months. say in that would I That's to process we've been If question. like

Jamie Feldman

great. And see. maybe and Okay, submarkets, exactly the talk demand, requirements maybe portfolio, that to expect are the can then of about where Silicon Valley might terms impact we what in looking you more can those lease-up how

Art Suazo

lot positive listen, net lot absorption mean, quarter. But as a you deals, a been all Valley. over of there've I requirements Silicon big these are know, of last Yes. over the looking large

tenants Analog feet had Hewlett You product at all I Moffett big at various million XXX,XXX X.X over XXX,XXX; Packard these mean, in are Devices, Facebook Valley, Enterprise's another are square landing for Sunnyvale; types. Towers. Synopsis was Silicon XXX,XXX. that

So that looking. tenants that bodes universe still I there us the mean, of with of are actively for well out all

Jamie Feldman

talk and thoughts performing? L.A. the – media space. studio West away just what Like on L.A. maybe kind submarkets then are the your from are about And Okay. L.A. of how more traditional

Art Suazo

greater they looking But and blocks yield for really seeing Angeles, which have That's demand where again, Hollywood, goes wherever tenants to, now. are downtown, harder to we a There's large don't getting right blocks, Los of a find. Well, Angeles, activity. find XXX,XXX-square-foot-plus I'm small users the there is harder can West Los the those of space. quite back preponderance out

Jamie Feldman

alright you. Okay, thank

Operator

comes Our Nick your question. with UBS. question Please with from next Yulico proceed

Frank Lee

This what Fourth a space up current user? are At going & that – is Nick. thoughts breaking Frank larger versus on like large Traction, on with one with your

Victor Coleman

Yes.

indicated We've doing X There's XX,XXX-square-foot XX,XXX, X,XXX-square-foot kind of build-out we're XX,XXX, if a of blocks for XX,XXX got is the we to up that had What So combined. all lot the we're range. space. up demand. maybe and breaking

So If are feet as can negotiating. you demand there's necessarily We're small everybody on. to the building there's the everything also of from XX,XXX negotiating for so you've XX. that, So So got square available, market, XX,XXX up And – floors get X to need our not negotiations we're we're but if still top the users, it upper that from full-floor where XXX,XXX we users we feet, the are now to square right are that right? correct, to right? capture be. that's demising but out, can we initially, on get

Frank Lee

of start now XXXX you expiring call, Mark, have same-store on about for then the mark-to-market those potential that you the XXX,XXX pool leases had leases? the you sense of on year. at number last mentioned remaining at Do a And great. the the Okay, on is and where

Mark Lammas

still expirations, the remarks mark, a at that the about back XX% have the on indicate of year. into with same-store did come armed for year the we the wish – prepared XXX beginning at balance mark of We but just the do the – think I came I room did Frank. not we same-store in expiring that, talked when I mean, I had have I expirations. in with we XX% February, the

think I any don't I same-store footage, exactly next So in the has in That same-store the And the I higher the say, XXs. But I data. expiration that is say eroded. than is would it's with market overall high don't still think come call, mark, year way, probably to it's square is I but what know by – would probably I'll for the expirations. the than of maybe think

Frank Lee

all is That have. thanks. I Okay,

Operator

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

Blaine Heck

Hey, guys.

expectation good raising on that to expecting is EPIC. that? to you for see driving So mainly projects? else that see those Jackson and Or you're raise to it there due XX Is something both yield your was rents

Victor Coleman

of on small doesn't But based bit in a we're And they're did is we rev-related line We higher an little what parking little yes, see take on asset. last Jackson assumptions. XX – market, on a NOI both with seeing and up only much costs rent It cases, you'll a bump No. both adjustment. we not Yes. picked are bit quarter. revenue. think in I the that also materially the in of but EPIC,

a it's pickup. So revenue

Blaine Heck

on So growth those behind us process you Is the any side, rents? determining built there the give an rent of idea can assumption in?

Mark Lammas

deals arrive gets input Everyone They what heavily, team leasing who going a is everyone based of actively involved, and involved. real-time And on, assumption stabilization. rent gets is the discussed. in, at heavily The team. they're we active being look what involved. think the realistic upon investment we from if and debate terms then sort in It's are at on market, that deal the the discussions there's are

Victor Coleman

the yield. I forward. number is mean, a obviously rent and course, captured at that, in to of There's that say, of bumps it's That yield. it's a stabilization, disclosure, spot sort in spot built point our of contractual going is

Blaine Heck

Right.

what just around been general that Seattle? proposed expansion potential the leasing proposed effect tax you in head Seattle Amazon for there's the on and Okay. press and Helpful. in some environment some the would the give their there. Can halt to on thoughts in think legislation, Victor, be you

Victor Coleman

I Blaine. a on taking Amazon clearly, in stand should opinion they head this that, is listen. tax. our I and do Well, think Thanks,

the it. going not against or this to through. be I number target of is happen. would going the Amazon is I feel going though. tax, given go mayor city. X/X the they in to on where is paying going in that that is understand bodies companies. to And going they're city make they And have to council to going And – this of what comment – city I push and the think It's a whether certain of statements the they've of kind target. obviously be that made to can't they're made – the I is sights dead to is the that imminent, they've stand, to going

feet, end And talking Square, – stop they're of to Rainier necessarily go well. the XXX,XXX so maybe want it's this, whether building that halt the the day, to is to At we're going case evaluate square Triangle mayor veto that which mayor Amazon is going making not has if to about as that that's some slow or the on their their will extreme They're XX-story trying development. noises indicating veto but not. around she that they their the powers, or the through Denny

also that those the a I do to and in this reflect made is needs tick-up. to It's they're the to something are positive be get lease think going Vancouver and statements X monitored. So because going space in issue, more going to material that Amazon's Bellevue markets it's

And take see on won't waiting but happen, I you will the So what we're we're summation is helpful imminently the guys sort just our place. gave hearing. to it of what are ground

Blaine Heck

Makes one all Got the thanks on you it. leasing sense. me. through. for went Art, detail the Last for

I situation for can XXXX, from about Foothill. Maybe think, the I'm I heard that major talk touched, bit You you much at at Bosch move not the prospects about a other down backfilling space. Robert little on just sure but

Art Suazo

the which VSP wipe space, to – around of moved updating Bosch know, in process obsolete. of off. that that the the that is be We're our market, kind tech. autonomous was tenants It office for looking space Sure. part looking of We're I about, larger contemporary out. cars. the don't beaded pursuing Foothill we're we're say program The up. reconditioning really somewhere deal's to in at feet. square at They users, sciences. really XX,XXX the continue going wasn't really We're space, life It built to

the looking we're at. So are those tenant X major groups

square early We lot that a – XXX,XXX, activity, probably XXX to say, of of proposal. feet probably XXX,XXX is have

Blaine Heck

Great, thanks one. every

Art Suazo

Blaine. Thanks

Operator

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

Dave Rodgers

Art, out Hey, good Center. there. morning maybe Campus a follow-up for on you

the I guess, of that not in X/X discussions that so that least at do of by but outlook been yield Campus I first having the of – the the really Center, today year revenue kind GAAP or you're think with frame? it's – GAAP for the time guidance, the still recognition occupancy coincide has

Art Suazo

Yes.

certainly getting answer deal, I that. deal earlier done about this getting support imminently my think a

Dave Rodgers

of Okay, on fair enough. And then, to Mark, kind just turn to funding. you wanted

If But you it, about missed obviously, talked got EPIC. you've it. I

You've added Harlow.

about there. terms about you'll bit spending of talk You're there plan a of Westside giving you of in the kind capital. spend how of that rest Can the It's of overall to kind through year? talking raise the quite Pavilion and the

Mark Lammas

capital. million. of know, thing I One accessing we to we problem of, have is upsized We $XXX our revolver kind no mentioned sort don't

have $XX today. it We million on

$XXX on net of on sitting availability we're So million that.

a We of in Bronson also term that ICON, CUE which We're availability. process years. for of the and the $XXX four that our by actually loan that's asset, secured renegotiating have another million has on extending

It's put again West layer construction will So those which And us to there's We then, there. to some to $XXX million if could far XXX on which the of of for into we're take amenable give $XXX costs our to or spend. We put By fund we it. go. it, availability, on financing the in. of alone that a in fairly if all more And mid-XXX-ish that. immediate share put two also, financing it years won't wants in. XX% side, chance that's to certainly than may call sources financing we're can good direction million-ish total enough Macerich EPIC, EPIC now. way, necessary, of That is X-ish on layer the, the dedicated

you that, which or deal lease. percent the the all assuming on balance it's our at quarter debt least side, is we – of the sheet, So And funds is sheet would the to all kind on XX-ish the with around our finished and of right case availability of balance assumption, base problems. CapEx side then be of spend so

at If the the look EBITDA, you in trailing range. it's of kind our debt mid-X to

in it's always delever, more looking year at purposefully I and to certainly we debt room sheet of mention, now, capital provide plenty or balance all sales. haven't not would or an liquidity the although So either balance potential further on these thing, we've sheet. again, either need we're built to could Yes, what do fund sale, if the that's we unthinkable we in circled deploy to to to other right would, that just of would immediate this further asset asset the be too, do room which mean, liquidity we And is requirements. able provide

Dave Rodgers

you. Thank

Operator

question. next Craig Mailman Our Instructions] your Capital proceed Markets. KeyBanc question [Operator is Please with with from

Laura Dickson

a Hi, the couple everyone. on development had Craig. This of just Dickson with questions is here Laura Still pipeline.

traction. up you're update in You I guys the the Arts alternatives that just to there, lease building evaluating getting and have mentioned District. if wanted an Maxwell you're any

Victor Coleman

it of Maxwell, building. in asset have we roughly? up the tenant is splits entire that's the actually XX% At a right interested About – into so now, X in assets, – main XX% because it

his So team tenant, this and second-round proposals leasing are right? Art with

Art Suazo

Yes.

Victor Coleman

construction. So completed we we interested now, the and in haven't have that a tenant

Laura Dickson

the some on Harlow space. had the you you for then reverse I And great. Okay, development, inquiries the call, production mentioned think on last

one. curious also So on that I'm

Victor Coleman

mean, this for Las looked don't Sunset in I about up as office activity now. what stage space there. currently that is is he his X at at being to soon building as sign And the his We going really us team between is is And overflow Bill as and space. just what be So have possible. get to a enough have production Palmas to for necessity

Palmas. I the to see at think and have past look if quarter's – the soundstages, going at really is space you're you this all specifically the expectation rental same Gower, and at office Las the at increased rates numbers,

have decision whole that looking circumstances good feet the about going thing. building going of square of to be we group, the to a or seems those do short-term the it's with think indicated production single our go who to want one whole of special short-term to for majority make that tenant for space or whether I building. have we're leasing And brought a think interest And that that be got basis, board, third-party we're I at. XXX,XXX we a what have so prospects on leasing I know do to on initial a team,

Laura Dickson

Okay, Thank from that That helpful. it you. is me. is

Operator

is Anderson next Rich Securities. Please your Mizuho Our question. from with proceed question with

Rich Anderson

of Monica comment the ground-lease Business Park. low point the a guys of of leases could now, pipeline if now. right sort kind of no-touch then just the if ground if I in Victor, absence of a or there's And Santa pipeline the a hair So are deals, was on I'm generally right of for is by why type at of specifically deals struck the just situation wondering and you about at maybe like situation you thought lot talk

Victor Coleman

a – access exhibits to Listen, in us look it we as obviously, ground we there's not access them, really the extension is ground. weight for but buying an if to an Rich, with asset at factor the ground get is material some lease or acquiring actual

deals frankly, it's I position a it's not put other uncertain us institutional of not would negotiate often. investors Quite in think scared that to us lot favorable So look at. a

we going our to of we end fits with it that's all accomplish and I asset that to So can bigger on think picture. of the at and how we're of at deal what on into And quality. it's portfolio, that day. the think fearful not the wary It's the something or going asset. fits it's depend do what depend

Rich Anderson

Okay. the just under? given then activity in absence the going is there anything that can the pipeline, And of that explain activity

Victor Coleman

I that which we've years, been in the just of preponderance are owners to the done of or There's sell. lot last five business think – think institutional desire do on had transactional four a commented I this. no

not assets regular least on may the at earmarking we other coming off-market not that large of that deals Business in sit a have Monica couple can Pavilion So at been we Park two We're I that even horizon was have is end there trading and, obviously, an the anybody the year, as see, assets Westside until sure. a largest or they're And marketplace. been done come a on mean, of basis. our today, out. the – not here Santa deal literally, maybe

product any don't People not Los is the there's there's why lot quiet get going Santa I don't Monica it going the that And marketplace. there's to was one, fact be that the So a be just around others to there. Park fairly out way other the if in other that's you is. now. a henceforth, right transactional really market activity explanation, know than think that Angeles Business of a few

Rich Anderson

a just comment. big-picture then And Okay.

sectors all is just Your missing hypothetically – to But stock documented. the we're if my well numbers. if guess, is math then flow highest XX%, move the discount. is so at discount believe the XXx, all your stock math. all and got cash a for then to you NAV NAV flow one multiple I is in We average XX% ingredient the and And those denominator XX% The the that multiple. price at cash growth a to your cash you're which the NAV, at in flow of

NAV-wise, lot stuff, great maybe and company. you're multiple you're doing assets creative potential the development-wise, all stuff, – but Silicon like or in that is I'm Valley curious cash of cash flow if flow which dampens a temporarily So selling the thinking of

of So cash kind see valuation thinking math your Street? now the years and you and matriculate resolving change – this bit to growing things from this about for do is stripes line start that letting you the all a X bottom flow might and little

Victor Coleman

talk Mark telling half comments that making trying known people not of so that of than situation. So to are a And first face, you he's figured your out, – of – of a that thank lot your you piece have dead-on actually doing accurate. rather for sort to

coming cash we flow, have fully it's of online when that leased to or Campus are embedded whether the or we EPIC this in CUEs year when so world, lease lease which the much Netflix, are seen we all year-over-year. is XXXX, which when road, maturity mark-to-market when down XXXX Westside have the Pavilion, of sort rents a active in or lease flow we which and hit level or cash that coming we've We

value where assets that As years sort multi-cash that much or the new that that's more that redevelopment five is. been now, Rich, redevelopment end also we'll in execution that not cash. going see the is basis come And stabilized process. the down, you're for that of to out, the bringing time, of play. have contribute new and that, and I of and We'll And And assets multiple play into of you to see portfolio and forecast the long-term come in it by multiple deals a a think, from will future on sort have we've of of leases moment And the the it's a current pointed proving we a light as the the of doing. tunnel. regular value Hudson we're at

stabilized see I much flow. a think you're going cash of more to flattening

Rich Anderson

very Thanks color. much. great Great,

Victor Coleman

Thank you.

Operator

session. gentlemen, CEO Victor Chairman, we I like to the At call and back closing for reached of time, end to the the and would turn Coleman, question-and-answer comments. this Ladies

Victor Coleman

and employees team, this in I the indicated senior much. all so to I always we you quarter. excited at our contributions NAREIT, our you to thank we're Investor Hudson, at going not experience, be We're think a but which see fall. you unique multiple offer Thank Day see their the And so And all entertaining Thanks Investor much. very specifically for very Day, ways but up in as sorry to well or for all I to as before, like management will team informative. we're past is as in going

Operator

today's conference. concludes This

time. thank you Properties. this Thank disconnect participation We you. interest your Hudson at lines You for and your may in your Pacific

Hudson Pacific Properties (HPP) 4 May 182018 Q1 Earnings call transcript