HPP - Earnings call transcript Q2 2018 | Hudson Pacific Properties, Inc.

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Operator

Greetings, and welcome to Hudson Pacific Properties' Second Quarter 2018 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 introduce your host for today's call, Laura Campbell, Senior Vice President of IR and Marketing. you. Thank

begin. may You

Laura Campbell

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

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

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

Victor Coleman

backfill progress quarter. submarkets Valley Thanks, second Those in start in and our and a expirations, as Clara City, current made nearly deal well. renewal the of of QX particularly with had significant Laura, assets, our X XXXX quarter XX% on and second in Foster San and second activity strong Peninsula and Santa everyone activity productive a welcome, Silicon to Jose. comprise our good very We quarter to call. We've leasing

XXXX the We of XXXX LOIs have of XX% proposals or the and expirations leases, deals portfolio-wide. in XX% for completed or

to For all rents got fundamentals that of percentage to And our and in that Fourth excited as applies seeing give leased our high as as clarity, that more our assets We're continue acquisitions. in we report on the on in of XXX% capital in expirations 'XX. sell value-creation And of redeployed single every well. noncore I'm terms year-end shortly. net projects Traction strategic, more submarket. I'll in essentially that had you momentum market redevelopment. of to and have we backs positive vacancy value-add winds We've leasing active XXXX, great & and absorption, trends into well,

In rent cash completed terms quarter XX% square in leases XXX,XXX spreads. we GAAP and leasing, and of feet second of the renewal new aggregate, at a over XX%

in touched largest our Nutanix, area. early expanded As renewed of tenants, one San quarter, airport XX Jose on and last we the

deals XX% that of of Honey XXX,XXX year. our year, earlier over attributable Square, And in rapid Warner Market XXXX a And at after no with market's bodes Science feet square assets: and at Nutanix' and on square Spotify lease the carried Metro Obviously, in and XX% tenants Traction XXX,XXX Vevo into coterminous the back-tailed XXX,XXX Fourth leased evolution of a X expansion all the we signed finalized no the one which space. the the activity of District to Pioneer square-foot all increase feet renewed in GSA RealSelf they in notable tenant, Arts and and feet In partial with we'll portion deliver we've particularly all across with space with seen were continued the this this project first of through about XX,XXX XXXX. XX Last deal our the expanded doubt of District. heels over multiple Capital redevelopment Pavilion tech activity at largest of now & XX% We've in XXXX Music Corporation, XX,XXX Arts leased, had mark-to-market. mark-to-market. and The while full Harlow our of our MaxWell we building end expansion for week, we're redevelopment, updates XX% San former mark-to-market. EPIC, Now Westside Square, Francisco, approximately firm, Technology; a expanded projects. that for Concourse, King. quarter. Plaza; and negotiations One we yet, lease-up formal the And well our the and the have specific square-foot

future X production we offices properties and purchased the of our dispositions leased years. for totaling Sunset contain to and the square Las acquisitions for Palmas, Sunset X Studios. Directly assets soundstages, of in space plans all support adjacent which feet, furtherance in XX,XXX development X has back seller Regarding quarter, these Palmas Las

remaining our sale previously the Boulevard $XX.X XXXX XX% to the We Hills announced and of Wilshire market and noncore announced million, finalizes original noncore GAAP Peninsula of week, we purchase GAAP earlier also basis. at Office And sale a $XXX million. basis. asset a X-part closed our a this buildings premium premiums in And significant Park transaction disposition which price well-coordinated this represented for our of Beverly a for to

million. it the particularly vacant additional more an provide some and that, with aware that sale the believe bit going costs. of the we little innovation the are that our finally, help so remains, of January any these comments. on clusters you was on time, on QX You impacts. near-term XXXX. the Pacific Mark We in will place, an given meaningful only will commercial in of tax and our and par And property not recall, his park had don't strength effect present Francisco, landlords X remains of of And Bay passing of $XX.X we it marketplace, We asset it portfolio. the perspective, into anticipate the in is property. on Building office rest for probably offset to anticipate radar most family-entailed sold Area increased a and our go if commentary in San amenities for from location And and will

our Art to further over leasing it commentary on turn to for markets. going I'm and Now

Art Suazo

Victor. Thanks,

As market date, QX. Coast X.X of over markets had into positive just San another feet, portfolio. net been translating demand especially and the Jose and points a located where leasing positive over had quarter are absorption, basis vacant is and to rents nearly Clara of X That by net throughout terms Silicon you to strong which Valley with fundamentals, our a square vacancy XXX,XXX of great our markets brings To X Valley in noted, beneficiaries. tenants activity year-to-date assets of with continue were to biggest in X%. XX.X% the XXX shine million driven from leased falling requirement. absorption feet increasing square-foot million Santa North plus preponderance our X in spaces the largest growing square those West

Clara our vacancy result, block rise for San particularly quarter-over-quarter, a XXX basis assets Valley for Further basis Santa in tightening XXX is As Campus and all dropped positive and large activity. in points Center, respectively. the but of Jose market points, given

due square million we're X.X we prospective had are that's As real These construction diligence, X.X and of upfront space in tracking Xx tools reported feet this proposals, executive in tenants planning, pricing, QX. another we strong square of what doing million demand square about XXX,XXX from interest, feet of lots side users. no R&D doubt large equation and the particularly remained this feet X.X last requirements, of quarter. up terms with in of square-foot-plus million which Milpitas There's tenant manufacturing from call, is

assets million direct X.X to feet. square direct supply terms of Clara had Campus mid-July in Santa own Center, really competitive totaling purchase of feet. six about its In X square those supply, expansion, competitors now we County's stands for recent to million one date, With our of

a particularly Milpitas, Clara, Valley matter North and significant and a San flexibility get Now just demand and use where markets. when. combination of point, mix, mindful confident price But availability of goes, given there's a in porousness we're deal Jose Santa across to activity we're in our those done it's we'll of the as and and

also outstrips square square mark-to-market feet, and/or We've includes in another tenant and basis square quarter-over-quarter rents with completed XX.X% in deals X.X discussion, XXX XX% for and XX% million we rents got are Palo positive diligence. XX that net basis buildings. and is deals. XXX,XXX net foot, upfront a foot. supply XXXX. proposals We've with Center's the quarter, down a for submarkets, roughly LOIs $XX foot. and adjacent competitive XX,XXX the absorption of Vacancy sits Street and quarter, of positive square slightly or points our at the X.X% Metro Foster market Francisco, of rents. supply. per of in up vacancy in X:X. leases, the feet XX,XXX Peninsula the feet and In segment some Center per square quarter, time per pipeline $XX absorption transformed in have increased literally feet City this square Alto, net below blocks XX,XXX tower Peninsula of Alto low-rise for asset. the in and rents square absorption to absorption The further Palo The vacancy of below due foot, unchanged Those expirations is while XX,XXX stable X.X%, in are renewed we and most restricted square demand example, of XXX,XXX the and $XX And in over at quarter Queen portfolio is and in positive Collectively, quarter-over-quarter square The plus with in-place San Silicon frame currently rents XX% purposes by net For X% square Valley Valley XX.X% leased, uses building at Peninsula interest Campus and ratio the square-foot square extending stabilized points cases, R&D of feet manufacturing feet Vacancy with market. had at XXX,XXX remaining feet respectively. leases essentially the in for in fell was stable positive

sublease market. Francisco San about stabilized rents leased, We've questions at XX% and received Our Salesforce's are in-place square-foot some Center. below XX.X% XXX,XXX portfolio Lincoln is

space, below had our up square the While In about market, Hollywood has two square net drove feet and points been of terrific and XXX,XXX I positive with West I XXX foot LA, in to of growth. to Hollywood had primary foot vacancy XX,XXX absorption with that rents which Rents submarkets, square X.X%. leading feet to specifics, per media $XX Los tell XX% can't positive entertainment activity can Los X.X% X.X% absorption. the down quarter is that in a companies to quarter up in also you quarter. basis down Angeles and XX.X% vacancy Angeles, West phenomenal. XX points the tech, net $XX and basis square discuss the per

prospective excited very developments. we're mentioned, Harlow and EPIC and tenant Victor construction about our under activity As our

good the fill to of heard entirety Traction. on inquiries and news continue Westside Fourth the are & also on Pavilion for We reverse And redevelopment. negotiations active you

As deliver for of District at MaxWell, the year. to slated other end the Arts redevelopment our

We have XX.X% LOIs of in-place our and about Angeles leases, proposals. no material below XXX,XXX Los and leased with or is deals expirations square market. are feet X% rents about stabilized portfolio Overall,

another in absorption, a X.X%. basis Pioneer had And the quarter. to downtown increase X.X% great drive in square rents and to tenant Square, Seattle the Triangle. square to and South and we concentrations had Finally, vacancy per $XX feet in quarter, XX Denny a of amenities In choices. our XXX,XXX Seattle Union decline Location point net like market foot continue Lake positive

which Jackson Our stabilized the below XX co-working leased, XXXX our delivered in-place redevelopment market. spaces. about little We this expiration XX.X% of was to and square XX% rents in XX,XXX are concept quarter, very XX% foot preleased reduce Seattle is is portfolio way

we highlights. a block square viaduct I'll the two for XX,XXX space. interest a the high-quality call floors Jackson better at of completed And from very that, spec feet with envision where turn sweep for the to just financial Mark and tenants XXX of combined to XX tenants help We over Alaskan, last have balance the

Mark Lammas

space investments of leased, versus the items Thanks, which XXXX of value and end office no $XXX,XXX in stabilized XX, that a in at items our the stabilized end decline at in at a by telling Sunset on was unrealized three X.X% XX and at backfill. trailing ago. entirety on consisted the per properties sequential Redwood XX.X% which months decreased from was for XX.X%, second in-service for or The out demand offices percentage income or quarter More quarter Shores. fair in quarter of At and in increased trend XX.X% quarter, quarter feet The the the basis. specified and basis ended lease year on $XX.X the second for month Towers office per June Art. and our $X.XX non-real production FFO, changes second FFO, items respect with for $X.XX same-store represents rental XX.X% share, on and rates XXXX. a for of respectively, Net second the excluding is with due of XXXX, Bronson. specified percentage totaled our with of portfolio to XX.X% of XX,XXX in X.X% first basis. operating the a $X.XX leases XX percentage excluding the Sunset million line on ended per I'll office square-foot moment. same-store activity in estate terms Trailing to and XX.X% cash single the NOI, portfolio Shores XX.X% diluted specified basis This is of on XX.X% move compared in for second XX,XXX quarter. production or quarter Center same-store higher loss, a lease essentially a GAAP touch Specified gains at same-store our second the now square to GAAP cash was diluted a of cash of a properties share studio share items million lease the studio diluted both for $XX.X month Gower increased XX year-over-year. NOI

Now and our I'll our NOI. higher at more quarter compared office generating importantly, properties, we've May cash X.X% office run the NOI NOI potential. After quarter, noted through office in as in the more X.X% our XXXX cash on second dropped NOI XX only account are quarter office midpoint to operating said, X%, quarter X.X% turn to higher largely recently same-store of this year-over-year X.X%, same-store back Even expenses same-store confidence our we Day, quarterly increased to ranging past first worth XX a same-store A year-to-date reflecting average year to reserves expenses. our lower contributed few debt continuing despite the and cash reversal same-store ground noting growth year-over-year from same-store X.X%, our occupancy. scheduled items increased higher That revenues. office increasing never in of adjustments from revenues Of combination bad of rent the It's that cash captured prior X% in has the office guidance Investor fully second NOI growth. our same-store in-service to comparison. modestly

to in our non-same-store are respectively. studio Sunset XX% poised in-service over contribute and and to this office studio to XXX%, NOI will substantially year, Studios XXXX Likewise, poised properties our in of XXXX contributing same-store total XXXX. Collectively, Palmas our this properties our contribute same-store studio non-same-store XX sold growth XX.X%. properties XX.X% cash for non-same-store growth Las cash projected Our and excluding office X of year. NOI and Thus, growth of comprise NOI properties, cash are

it to I'd guidance, Campus like add projections. Art's future Before an turning our regarding earlier observation specifically to Center, as to update to relates

January remaining of X, X/X leased earlier have of X, X, as equal would Center as the leased calls, January of with July from and XXXX, amounts XXXX that XXXX. As in you know we Campus first be X/X assumed the

Art size and fluid. now months the work and to And that from X remised requirements, would as XXXX, of As strong January full remains timing the building that if or first are point out single leasing did so, lease remains out X, leases not activity achievable. remained we any that milestone. of as lease through commencement campus we we we Even be indicated,

coming continue views permit. will our as We progress to on in and projections regarding you update months opportunities the

in by impact level significant. depending share points, our As that Francisco lease ratable we not XXXX in property XXXX not We properties NOI XX to for Adjusted to at beginning assuming tax estimate expect Victor of do particularly basis Market, XX any will of on invalidated. be our impact the year. the expirations is the mentioned, successfully our San given

guidance. to Turning

range expenses XXXX year for excluding full range a specified share, revising full compared to of per $X.XX guidance prior to are FFO We consists of XXXX share, diluted year year FFO specified $X.XX full Specified the guidance transaction-related to to the per guidance FFO items. excluding diluted XXXX $X.XX items, items of specified of write-offs on from of non-real-estate fair from and as credit investments $XXX,XXX gains quarter first our along value of of of issuance term our original revolving associated facilities, of the with changes FFO, excluded loan XXXX the with $XXX,XXX and both unsecured costs quarter. we $XXX,XXX recast specified this $X.XX unrealized in which

in several in prior result the previously our FFO noted We guidance Park diluted impact recent to in guidance. of As transactions, the will Peninsula release share estimate morning, press XXXX includes our Office this a our decrease full transactions. of addition significant year $X.XX to update per sale announced

at Our to estimate our decrease. mid-XXXX. improvements, starting We landlord lease build commencement tenant triggering Fourth assumed assumed guidance of specifies per commencement Corporation with $X.XXX in the for this will a construction improvements diluted share Science pushes result tenant take tenant which would straight-line for that & quarter a possession Traction Previous Honey a later date thereby rents.

of Finally, We early Macerich, share the for a occur will in $X.XXX our Westside Pavilion in to result now we sometime also third per that which increase. accounted to estimate contribution venture have the with joint expect in-service property's diluted quarter. we component

Victor. guidance that, our excludes capital activity. reminder, acquisitions, XXXX a markets or and of call dispositions, As I'll the With financings the unannounced turn speculative impact back year to full FFO

Victor Coleman

for Thank growth pipeline a leading weeks call. and this We while our momentum to the our expanding embedded ability you, continued value-creation to Mark. we expect in terms And accomplished second projects. up realize exceptional lot the quarter in in of

to Our outperform. markets continue

including & leasing in remains as activity and made the both as on progress We entirety rate. terms leases, strong, great of Traction. leasing Fourth volume of in very first-generation Our well expirations

the sales. the so in in your $X.X quarter to interest far. And operator, Properties. senior to On expertise, their opportunities our with markets. of it and this quality entire Hudson for for everyone we've like vision we're our the our balance projects redevelopment questions. best And acquisition and our I'd continues this our execute in thank I'd hard of anticipated call Pacific the at Hudson account billion and turn to management, Pacific for in near in and you call, same liquidity, for year work the asset team, and that, and us on support like the development over the poised appreciate back of Year-to-date, pipeline in to particular, completed open sheet we Our nearly very the rate future.

Operator

comes Instructions] Merrill Lynch. of [Operator Feldman Our first with question America from Jamie Bank

JamieFeldman

I guess, Art, going back Center. to Campus

maybe quantify the you're a square So so take the having occupancy and timing? occupancy better can you of footage, of, just we might of get when level different the sense take they or would kind discussions can the just

Art Suazo

Yes.

So as looking million it's, about deals, square mentioned, now, at Jamie, right I we're X X.X feet.

that activity can diligence are Some the are figure I uptick the Recently, the our [Indiscernible] out with as components, multiple were outdoing due of trying obviously reflects which are out city buildings. involve there they to how expedite in where land. users light manufacturing we R&D, which and that buildings think lab with our that right, construction on

some going you, And mid-'XX. take but to existing it's they be and me think right? trying flux probably I have asking so very if when of are not to coy with I they're these, they're occupancy, deals, So I'm probably, locations, in these of situation. a two fluid think you're because

Jamie Feldman

recognizing revenue is Okay. And that know GAAP I all... mid-'XX? be would this

Art Suazo

notice. we're, a or over to on on we over turn whether it ready it's Jamie, or a not to if build. Well, construction It's for turn it TI moment's landlord them all depends,

make lease. of GAAP the that's determined we in it's a deal signing with. the on to depending revenue that tenant upon So would be possible potentially kick the But

Jamie Feldman

back seems are other for yet? Fourth helpful. where guess included year it's in that so in done Mark. guidance That's it right. the vacant I your developments whether signed All And leases about & I spaces half was Traction of you been getting haven't guidance your leasing Can there. Okay. like for mean, talk the or also

Mark Lammas

to significant Traction than existing & of focus we to is reflecting Jamie. more blocks Fourth or year, vacancy that, absorbed. like Obviously, for that terms granular of but the guidance remainder get sort in nothing backfills far no, the the there's either on, it's of absorption Well, expecting are some of of vacancy

here like vacancy but back over So asset have the single and X%, portfolio decent to large the no throughout there's the think, block still half amount, there on, to point we a of I portfolio expiring in and obviously, of year the a year. with have we vacancy of the

on backfills some be that. to going there's So

really So Jamie. anyway, don't there's you thing point any particular think though, I to one to

Jamie Feldman

Okay. as... or, But out in stands that's guess, of I development I mean, either terms one

Mark Lammas

right. Yes,

that expecting you We're two a would that. year. at I has not the any pipeline, or lucky has floors of look say, low we or to this mean, EPIC If we Traction don't Certainly, still get commencement commencement Mateo right? have of anything a year. scheduled on couple have floors a nothing it, scheduled nothing XXX development date CUE But at the I commencement on Maybe that. this XXX high, like commenced.

commencement. nothing on that a scheduled the there's side So has development

Jamie Feldman

finally, then that might impact future thoughts And a and, potential Okay. have meaningful on be, asset sales earnings? on large just

Victor Coleman

anything the forward think I There's the nothing of Jamie, the we this or now on even rest agenda. earmarked for going really that year, first for sale half we've don't have next.

wouldn't I else. anything read into So

Operator

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

Craig Mailman

just other of kind the bump a larger that you on What of acquisition the is Maybe side. could a Jamie's follow-up question year think do back on probability this up? guidance guidance

Victor Coleman

ready to go. don't we they're Craig, acquisitions until comment mean, on I

a got additional know what now it's don't tremendous to capital the we've with of be... million. on number the I $XXX pipeline So going is. But amount this even

Mark Lammas

million. XXX

Victor Coleman

XXX that. something like million or

indicated, the we assets selling we've had ever the had I mean, clearly morning decision to this in few the fund we for acquisition of and opportunities somebody value-add it on noncore a that's than importantly, several the I on mold comment I a us not about something we've I expansion are into case. fund accretive. wasn't I most written And the you think development. they some got mean, past. eyes more somebody was that but this fit we're something are And asset. in and deals on had current capacity think acquisitions to past markets in our market some And had the that in. they're done written, that we've ago working with got months some

Craig Mailman

back like It be of at sounds change have tenancy a to of Does maybe or change kind that kind for space, Cisco. there to what going what TIs budgeted could be? the guys there R&D, of at more all lab project then And you manufacturing. return thresholds to

Victor Coleman

easy So space. are let's TIs clarify. of the just office because just sort The is, the no, for answer existing there

asset to has landscape we set. tenants or have one is, had asset a So identical. city positive news. a that also the lot what been and what with acquisition has recently the, that Clara's What of Santa eating we number found the competitive all these and it's of up on in more office we But the it's found found product the of and almost component marketplace

XXX,XXX XX,XXX some So feet it's R&D of to like component.

component our And would been these so leasing the entertaining conversations they want almost space. that, tenants. uniformly, addition has team that been some with office to and all of we've in several we build And of taking talking with

about valuation been Mark build different be on and out footage will square addition has the rental an than talking add just that level that on income what accretive asset. additional So of we straight would to

Craig Mailman

think you guys with to the development tapping these were at if you had square one the you So million tenants? site, foot capacity

Victor Coleman

we're million that. us feet. The look put is, very one secondarily, of that of helping And X welcoming portion we has expedite because two would the here been structure that. to city parking And components to tenants. surface square and now to tap tenants easy looked one yes they're the on in answer of the the we've There's of for lot Yes. at buildings right the the a into of process talking helpful the these to Milpitas

the the would right some build feet X and million square be lot. So maybe surface would other on two there's parking and areas. One the then be away taking

Craig Mailman

a of bump that I is the the bought of is rents separately, acquisition three facility. stay production as adjacent you kind sale-leaseback just it three or for it's just years. guys play in maybe there then And studio that would But for know or years? longer-term

Victor Coleman

No.

One used the all master sort of we've we After the at for some our being square it of a had development this Harlow. of that by the square future plan plus for prior acquisition ties that to a on part development structure plan of this master excited the XXX,XXX this of several additional of years. one and the we're into this XXX,XXX stages an of of And owner very early the for opportunity our current additional Harlow, for sale-leaseback this we're inclusive we pretty period is for development. looked as, parking staging for us to prepared them that and we've done additional when of looking we're good out feet development about remarks, use at. using Harlow the given feet, development. that the additional activity time, build is And the had be three as will time period at of to Right up also now, during and and the

Craig Mailman

And Mark. just one last then for

of mentioned overall same-store Or portfolio. all of the the half prior that less just ramp? of as of Is But You kind of side it in to the portfolio stabilized indicative it indicates kind revenue expensive kind of of the seems is sort to curious. back mostly range relative kind drives the bump acceleration. like Kind the year?

Mark Lammas

Yes.

the than even office somewhat we that we same-store better in result had be may number. had modeled. it one, But that actually obvious quarter the was component, through second flat though or So not believe not, it

better the same-store driven of off part So is in of bump the office quarter second result.

not, much it's expense. We of also, driven it's off

X.X% on expense or quarter it in increase more year-over-year the has just in the relatively compared elevated see side. to be can happened the stayed revenue to less line, You second

It expense. to the the our through and on rather like looks on and I it do suite-by-suite this couple in go are. of of half does back renewal would link weeks wouldn't say, a we I when back backfill looks So favorably we assumptions and really trending year. every basis the what we're team this,

to, not expense. bottom we that naturally, necessarily and on so to revenue bump trending where tied so able were And the more we the really to guidance It's not able we're line. were It's only side. just to confidence around same-store tied

Operator

is question proceed Please with question. next Manny your from with Citigroup. Our Korchman

Manny Korchman

back Traction. Fourth going Just to &

yields Given and to impact other of a X going later for much take-up on space the expected of tenant the 'XX that the pieces. by the the timing years between few your How of that then is project?

Victor Coleman

matter line build. high it's cash relatively a timing. [indiscernible] it's yields on so be it rate, cap we kick right like between a mid-XXXX. So that, XXXX, X.X% is yield how we there's X% in. really we no all based rate rent they cap yields GAAP X% mid-XXXX starting cash The mid-XXXX, X% starting and over our we complete intact, The it and a rents actually, will once it got starting But XXXX. actually, just really a our a where rate will to Initially, the free landlord because of quickly of can, when X% just with light a up it's the cap can [indiscernible] touch catch because it are expect touch a call mid-XXXX think, XX-month in in it's cash so starting cash, a a GAAP cash little, GAAP we've are forth commences

yield had a right on we'll the cash spend. be on in that disclosure, recall, XXXX all mid-XXXX, in fixed you indicated And kicks in, quarter at $XX.X if our, yield fourth $XX.X million. million once our So that of we

So a matter our is timing intact. merely this at underwriting It's point.

Manny Korchman

to the studio switching then And business.

to max the where year? 'XX from of NOI ramp increase sort stabilize production and you on. is You income point production of growth year that of going you'll good out there and side amount the the continue into a mentioned the year part to growth the going the that of Is business a the next end of into was or that's of until more end but to get going on that into

Victor Coleman

shows users that of we half the activity some if Well, I and year. we think, turned to I high just of of so stage see haven't back the think from The, had forth. we'll continue production had It expect in quite level see of levels that activity. over anything, production the to our

will would of purely related some that the improved also side just the I results activity. merely not I improve. activity production to think production add So continue level of to aren't it's on

job Our Bill to like his has a done inroads has also and tremendous make team team done, on the side. of expense continuing

package example, lighting really has that down. For done brought a they've fabulous expenses

we've year half lighting of we're efforts. back so better account the see of those to the margins all And that expecting on in actually,

production higher year-over-year So just seeing margins. on results, it's, also but we're both account better of on activity better

Operator

Our next with is Heck from Wells Blaine question Fargo.

Blaine Heck

follow-up a clarify and Craig's maybe on Victor, acquisition question.

Day. I within And expansion it there looking now still sorry bucket? about But talked you're if markets current all this. into anything possible into that Investor at Is is Or the missed new you fit markets? at

Victor Coleman

New York, at So studios some we've of at markets us, diligence in now, We've the currently a do, to those and due we're for work still looking in got lot looking We're in as rent. in We mentioned. Atlanta marketplaces. time stuff more is our existing Vancouver, the phase. spent

The of we're earmarked and others, Seattle horizon look acquire. markets through now businesses Angeles. we'll the three to core than markets better nothing in like here working some of the is we have in sort we we on are, that I what our at and Area that Los Bay But studio in candidly. acquisition any existing market think right there's

Blaine Heck

both and and Investor Got it. and Metro have active That's Center talked deals and helpful. negotiation Metro the Day, Art, about specifically you Plaza at prospects.

on think maybe the touch Center on just updated touched but Metro I'm I I anything Can you prospects there? Metro on Plaza. heard sure you not

Art Suazo

Yes.

got floors So VSPs, of with that there, That's punch negotiation. in XX,XXX spaces. to deals of probably active we're ESP the feet these get feet those we're line, busy we've XX,XXX to probably square we but looking X in square of at we complete our we're additional some program got and prospects leases as taking

is activity So locations. strong in both

about of feet XX,XXX got there. negotiations I in active Metro think square activity uptick circling in an Center to we've back

So that's an Day. I had what back reported on from increase Investor

Blaine Heck

just the then I those? Palmas following you guys and up and in Got And the guess, either plan Sunset of of timing Helpful. entitlement possible starting development where one, it. for process Sunset last on Las are Gower.

Victor Coleman

is process for probably guess Gower. We're is preliminary Gower. looking at, another XX our filed my we and Well, guess mean, probably, for I good months entitlement I'm a

ground we we've Las we Palmas. but filed We for But Harlow, as on have yet have broken not not yet, mentioned. filed

that the And filing the first by of file. that maybe initial so our my guess year of sort is go XX and on. be that's time we would point get months ready conceptual drawings from to And

like we're the Harlow would lease had production around right space. going we're like seems it Blaine, out demand lot it there's But of mentioned, out. we market that I to lease now, leave we going office the to a the [indiscernible] know looking it us or As to activity

expedite it's but frame. expedite that So the not from our time time would I'm development tree, it to sure could. frame decision-making But so going that

Operator

Our Catherwood proceed next comes question. with Tom your question with from BTIG. Please

Tom Catherwood

to studio swing the want to Just business. back

in pickup pretty roll the would kind half kind look through half? it year. in though Is the the it we year. anything pulling same-store of that's there second down even You talked rate happening kind utilization guidance, about down materially the of, first else still a there of this through half imply big business of the But a through quarter, second up at the of given the run if it's the

Victor Coleman

Well, stasis as not some you're like necessarily anything a not of or of giveback right. It's we're pull-down. if expecting a bunch It's that.

the how exactly, of quarter, indicative result in we that XXs we, same-store are high it it's trending it's necessarily first results with indicative, our And so we, any a same-store we prior in in that some is, when there's within of portfolio production less seeing you're of half a activity there's, year of what utilization the for but terms terms same to later occupancy compared stages go as that basically year, period. in the compares to the year. same-store. right in utilization It's remember, the on isn't not But little mean, going the prior of right? to are not I of year, not You of what's the the

still still the previous timing my shows just the quarters of are, in, we're And really, activity. compared be activity when a to so there we occupancy. point. year We that It's very high of if matter of high really the expect be you production still follow we're to to

Tom Catherwood

markets. And you prepared maybe talked about then got I you rates trends that kind of pushing your that ability Art. a kind differ In remarks, tenant you core to your any your that. a just strong markets? had lot your depending Have lot on do on How that for concessions? demand of and I back commentary. appreciate and low on in vacancy of the about in success

Art Suazo

course. of concessions. not varies the of getting are push. I getting on We're not, that's rate. we pushing that Yes, say, It a of broad But a beyond will a cost market not on lot general a and improvements say, as we're anticipated note we're pushbacks market. we're would to generally. really brushstroke, I up But here, rates tenant the

Tom Catherwood

kind of coming last Got stage like you. likelihood do that engage at, one and a with it of you but just renewal? of due. 'XX been quarter of fourth tenants this any and you the for it's Have twofold in at And have able sense have to one then know in then the both me. are off leases, building LA you those I one bit looks mid-XXXX,

Victor Coleman

Yes.

and any of we're that. like large them needs talking we're our their tenants, in about the are relative door and So what to like of front things out to programming

portfolios focused another asset. tenants in expanding it discussions. staying active on the and both we one is yes, we're even of into So have, within They're talking our

Operator

next is with question. with Goldfarb from O'Neill. Please question Sandler your Our proceed Alexander

Alexander Goldfarb

a questions few Just quick here.

you for lease estimate I accounting for impact heard FASB's First from think an for opening year? your Mark. don't the in remarks do but have I change next

Mark Lammas

at But you out. the payroll doing your of give ready all maybe And be able we're not might and we exclusively I component. And how Art to because legal really to give to you legal point We're in run approach We're cost. We it. various it still around of not as Because seriousness, that capitalize stare estimates. doing ability number. we're bonuses. Derric we're also this still still about you in overwrites analyzing the at no, analysis know, the a position less component one losing to

Alexander Goldfarb

to X, big of if And the then going blocks leasing. which Investor I provide Art, of a you back guys sounds mid-next your like heard probably Center, the rather lot At a and just review the instead thorough year. of Campus it's Day, Jan of correctly, it's, amount

translates just the lot of demand did into got deals guess for I a provide amount takes a or the demand at out that before demand those just sorry, I'm demand leases for fact, of sort perspective of to fact perspective? that space just while of it in Day, you In over actual the all some Can on, but fall provide you spaces. Investor help

Art Suazo

mean, of right Again, as a I We're block, may them about assets up I probably I of of leased out I large think We said, for Metro Those touched space. discussed think on [indiscernible]. VSP, it's kind We've reloading. seven XX% Center. build Plaza, those. have couple now. I Metro the XX%, I already

of if bit the floor losing, time we're cases, little a we release takes it yes, deal. So lose to some Alex if the space. in four

the we're consuming is space dividing in a and [indiscernible] down we're market it. that example, For way

Alexander Goldfarb

Victor. And then finally,

like foot. sounds Las a bought. implied it stand-alone $X.XX value was Palmas it's additional on a project. guys the On larger But of The space a obviously, you that part

to would up we possibilities? necessary about of the this may So this XXX,XXX? does think parcel not economics this this sort how and parcel open of Or the do but you is, was allow other incremental

Victor Coleman

So with do that of there. is gets us things the Campus. some it of XXX,XXX other to do the actually an us has nothing addition part This enables and XXX,XXX, the is to

the have offer way, we and going city that do a of the up efficient at need we team in want kind to process. looked much get things to more the with the way think we to think our to entitlements other I Chris that his

And on going like site, put to there and parking put addition So and it's can to have we don't incremental that, on we in things feet. that. like to XXX,XXX the to things be later that

Alexander Goldfarb

Okay, okay.

additive? it's So

Victor Coleman

Yes.

Operator

is question next with Malhotra with your from Our Vikram Instructions] Please question. Morgan [Operator proceed Stanley.

Vikram Malhotra

some some in in good Mark, progress But And the Redwood changed it a know can what's made moved these lease-up years? some the months? Day. we line? sense some of That give some you're expect the at year, sort detail X stabilized? of given if little bit. I I can know to had you've portfolio. of maybe time it's you X Is last City, assets, assets give Is you think Shores, Investor just stabilize. us lot be getting target whether a we they the But us can it a just When of sense, about you the for Foster to

Mark Lammas

ways example, number assets original any portfolio. at have down within mean, think we're I X now guess, you there's I the, the only that remains, lease-up of for to But Well, to looked, about it.

And And at up Gateway course, Alto couple we've stable, a sold knocking door. stabilized. leased. of There's so into leased. has XX.X% Techmart now And is at the it pot. moved Palo is on XX.X%

date to this the sense them clearly us low we will we that I be assets XXs range. assets to surprised and pinpoint makes call of of end I can pinpoint they controlling it high assets, So owned, it's lease-up to in the XX% somewhere for try all by I'm hopefully Maybe stabilization. remaining when, have for stabilization. the wouldn't the say, next anywhere Techmart little high which of this trending you think those hit so Gateway towards close. to if to let's they of probably we're get still we're Center but example, leased over, low right in on all that would But is the not hit think, like collectively direction. thematically, the are the to results on But the score, reasonable that's, Campus by getting the XX precise for I if year, stabilization. call even a And not it's are in lease-up. because know moved year Maybe assets I a X on to for on try or it said, before XXs, That'll close perhaps leave I the that don't up from kind call it's XXs trending percentage. we would X going stabilization. that are our think when see little, after about talk again, towards might. follow-up

Vikram Malhotra

fix X Could those in of or, into turn the next them months? any maybe disposition any could candidates of

Mark Lammas

think, to on an response we I that, nothing mean, flagged point question disposition. I for this at No. there's earlier in

Vikram Malhotra

major early to X even wanted get which back then month on more in or conversations maybe been mixed, but is tech some players a using having pipeline last heard the sense that Anything months this just have has players. smaller some color you're names. the have Apple Obviously, from just I conversations versus block to And get tech very wanted other big maybe maybe companies of to more come earning the last back ago go changed that the change talk over or was so? or outlooks space a a year. that may or from may you of

Victor Coleman

are all media-related of demand. for the good listen, there been large are and still very companies. big future that activity looking lots has seems still, companies know Vikram. of I growth space. a positive and around to be mean, And you lot blocks, or a No, Conversations more more tech-related

Vikram Malhotra

from of due a time still markets would like to you'd And that time opportunities timing at then we month a doing into some markets of a for diligence bucket certain know that there think venture entering year of line? sort sense were Is maybe them? maybe Just I sense one. if how that line? you last you'd Is you new sort perspective. the new you're want a markets should could be to versus get and just studios looking Any you're it these you example. for think on two about of due this, six do set to diligence existing versus upon you markets, touched of your

Victor Coleman

listen, think existing us, mean, you to priority. is our our XXX% got of I think about I growing markets

continually will evaluate. We

on horizon. As nothing said, the I there's

the by to I'm markets quite portfolio. as are there's core But deals now, need which do standpoint evaluating marketplaces our the keep XX right we our what that or competitive these a basis and we'll that But marketplace guidelines look the So going or our we're it's we're in showing is [Indiscernible] right is, are markets it. and our evaluating If not make our It's now standpoint that frankly, studio a to opportunities. on look conducive any opportunity into a X, or and from to now. as diligence to seeing want markets. it looking is to also we yield existing Because or core there some horizon our conversation. and teams of a give XX indications XX see will if into. to the give markets don't at to the those But team months pricing deals as go in the growth I standpoint, from

Operator

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

David Rodgers

quick of me. left couple a for Just ones

you Pavilion, Maxwell assets your you're you you're detail both partial that any having? negotiations full a diving and said, of I those. all comments, into Art, Westside think more in about can bucket for Victor the and about talk negotiations two little bit two or larger, and in in kind feelings prepared of kind and feeling provide EPIC, building in talked Westside, and Maybe users how those EPIC about a the timing specific for Harlow,

Victor Coleman

or of them. frame and in can that assets our we're couple And have I you, want I Well, changed. a the feelings of to a caught bucket not in get at, leases standpoint time looked conversations tell leases, don't you but in

opportunities. large months, XXX X, know Mateo, in and it we'll have of leases as whatever take that I near These X don't news Harlow, or confident the are facilities Westside I'm is. EPIC, all. on multi-tenant some sort as large very tenant you time. means gives well an future, that So indication. But These Pavilion, X, that if single opportunities some

David Rodgers

of the that was leasing Westside, your acquisition earlier-than-anticipated go or In a just that? faster more Any [Indiscernible] catalyst? color on that was

Victor Coleman

what? Westside of sorry, I'm

David Rodgers

On of Westside. takedown the early

Victor Coleman

took now. I entitlement rid time on because up an to on There we no. running No. frame. get there the to we also are some we're move of is trying it that. of. down Oh, existing I that through wanted process debt was around, right mean, that just conversation and mean, We our

us for some we're it the That's because architects. down it still And just fine all sure. changes control with lot lot was. to full venture sense make doing that And take versus with us a city of it made so had our have the a for we of sense to to, in it made through us for to just

David Rodgers

And maybe it. last Okay. then for Got Art.

On you that the bit mentioned, Lincoln. in Salesforce

I negotiations that particular answer. avoided XXX,XXX think curious about you But of or square maybe part Have Salesforce feet, said was kind would discussions that You you it back? on XX% to with I had conversation the you that? do mark-to-market. taking of want and

Art Suazo

probably activity had, give numbers they've remarks. we Obviously, Yes. of Early for about on the on, can't five details suggested a lot but that I very deals we that we feel got that the strongly the listen, you sublease. of competing prepared

David Rodgers

Would share that? of any you

Victor Coleman

banter positive. listen, think Well, We there good is this and concerned. we we Salesforce's bump names. get about, of of tenants extremely I it's are I to going sublease in sublease know going middle us this. get there's Salesforce. right from we're it's, on more are it's in And asset And We that get I the a what concerned marketplace in maintain they going think there's when think flow in to to the talking And those top all reason to lot we're look credit some a going say market and great the household not to numbers at it's standpoint, consistent know nice credit forward. are to deal. because the Salesforce. like have that, going they're our by make for the too, that is to and now participation nor I this cash to were no we're But Salesforce's a

that I now said, make of think negotiating of going made As couple now. months they're eminently with Art people. a couple maybe right to a an announcement they're they've And deal from a

Operator

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

Victor Coleman

for supporting much. senior so Hudson entire and always, management your rest everybody the the good us. a you summer. Have as team, family And appreciate of I Thank

Operator

conference. today's concludes This

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

Hudson Pacific Properties (HPP) 3 Aug 182018 Q2 Earnings call transcript