HPP - Earnings call transcript Q1 2019 | Hudson Pacific Properties, Inc.

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Operator

Greetings. Welcome to Hudson Pacific Properties Inc.

First Quarter 2019 Earnings Conference Call. [Operator Instructions] Please note, this conference is being recorded. I would now like to turn the conference over to your host, Laura Campbell, Senior Vice President, Investor Relations and Marketing. you. Thank

begin. may You

Laura Campbell

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

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

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

Victor Coleman

innovative everyone redevelopment to existing tenants seeing our welcome development first for and we're high-quality our very Year-to-date, projects. properties Laura, you, for exception, and and operating XXXX demand Thank our quarter call. strong without both

quarter GAAP of square two first with major XX% the lease at we with such quarter in signed redevelopment project. heels XX%, spreads balance deals of the all a of our leases second a On square XXX,XXX rent cash the of now Enterprise that we for office this recently, leasing Noteworthy year, space will respectively. leases and all more projects. Google feet and lease completed of included One over million X feet at record that lease Westside. WeWork square We And signed for of a foot XX,XXX our Maxwell, exceptional

million lease X.X stabilized XX.X%, respectively. square have planned in-service creation Accounting and estimated X.X% now renewals XX.X% and successfully proposals, initial weighted XX% value these is projects under of And leases, and or are near-term foot construction which preleased. Our we an the of quarter, In XX% XXX,XXX below stabilized pipeline our maintained expirations, square our projects addressed average of and first and market. backfills XXXX and LOIs for remaining XX% of percentages deals we yield. feet

across resurgence indicated spreads basis our a in in square points markets XX%, which, in deals our alone, in foot tenants range. to seeing quarter fourth from Silicon the small continued completed Valley requirements. XX of the square the to That is and markets, In we our midsize addition call, yields in we're sub-XX,XXX San quarter foot first Peninsula aggregate, demand Francisco XX,XXX strong those As includes those by several deals and respectively. XX%. assets, square XX,XXX XX% Shores lease markets square notable GAAP This of percentage in in Foster rent feet and cash totaling XXX XXX,XXX to and foot-plus in-service with City Redwood over two increased XX,XXX

and as streaming be long-standing years. in more host push Paramount, CBS Comcast-NBCUniversal early stages to expected to Warner benefit drive other of raise also business longer major Disney+, will more the percentage as next This XXX available quarters, players, foot. streaming a to West will Bros., lead particularly All productions expanding And content Apple. the over Access increased and three $XX like amidst consumer per NBCUniversal favorable XX In X% continues studios, for our trailing those directly ABC-Disney. Netflix all is and all are companies, HBO's this WarnerMedia, rents to studio XX-month rapidly the Coast to content than spend basis spend no build and And new like primary companies is the content relationship Amazon industry Amazon, and trends. we thrive competitors. and has aggregate monthly major available, have our among subscriptions. which resource year. for also as of Apple, generate billion turn, on which $XX Netflix three with studio and We're expect are last Our we double same-store to properties to and nearly increased global content, to points lease two XX.X% studios players brands largest

for In markets growth terms and expanding ago, and A media of XX% reasons, favorable – construction policies. proximity to our Vancouver. portfolios job Seattle, strong. city Supply strong add and both interest fundamentals in extremely year-over-year. over is in capital studio of portfolio. has one XX% and X%. than very companies in Investor variety city a abundant, XXXX to the particularly check Vancouver rents tech and a of to year experienced creation high delivering in in with is strategic less preleased. projects opportunities Class is immigration unemployment quality population in the create like Microsoft, of and grew AAA we in a very record-low continue we with downtown office Amazon our – expanding achieved Apple Vacancy area the for low, are city. and life, growth the including universities yet recycling, our colleges At and top valuation discussed our near The Day rapidly Office under

which our and later is the quarter, JV thrilled city's the strong also in properties. first renovations in area another we office such, with As – Centre, office the core to by opportunity as with fantastic, in Centre with expect center tower, common the market by-right, potential five more in SkyTrain urban foot financial Bentall us million we The Bentall were amenities. than opportunity as prominent to are direct access be in the one announce is exact of and of although fully footage numerous quarter. acquire building by rolls and city's and years. of to market third Property and first close upside Blackstone the remain this XX% to Partners our determined. Centre square perfect the leased The with approximately in of Thus, the to expand X.XX we the situated value. XX% scale significant Vancouver below most to to the enter subterranean It's add location is a The meaningful leasing tendencies. square XXX,XXX capture facilitated Bentall repositioning scope Vancouver signature in-place property lobby the rent the well and at-grade rents scale the retail. to affords square-foot will a the

commentary I'm our a provide transaction loss on to in to We close in office under office coming over offset Finally, campus anticipate the to for end further on of current that, the Art adjacent our With pricing, to land it campus. largely Mark's just mechanics contract on will expected to leasing brief our the turn to on markets. going the update Center. with in now as the the gain we more moment. placed going and land sell both Campus weeks. this Based the detail

Art Suazo

that in remains first the Victor. million deals feet of LOIs quarter, over square pipeline, and deals X for unchanged at square Thank After signing is leasing X.X you, feet. essentially our million leases, negotiation,

XXX,XXX major but positive quarter a – Vacancy to the with signing $XX closer Los square and remains uses. entire was in tech Let's at Hollywood multiple first deals net n year-over-year. rents XX,XXX Hollywood up at and full value-creation square and activity office Angeles, Class X.X% per points with XXXX, square-foot market. XXX remained has Sunset feet companies already core Hollywood very on take absorption quarters back-to-back deliver at leased. we've quarter. look this full The were won't down foot our assets. our stable Las basis building with line to Harlow, be A of at development project our project in In in we've X.X% Only had favorable until Fundamentals year-over-year. multiple of Palmas media

LOIs our to of expirations expiration This which is of XXX,XXX Saatchi XXXX is square have primarily and market. Amo. coverage, below leases, fourth Saatchi vacate. & on foot XX% We at proposals, that Angeles, are deals, The XXX,XXX feet XX% square or likely Los quarter in is remaining backfills Del Saatchi downsize renewed Saatchi's & or

actively even marketing are a sale. we asset evaluate We potential as the

of the is available leased, terms over there XX% portfolio of space. requirements are San in-place X Francisco square XX% and market, large Our particularly Los XXX,XXX in in supply a are rents feet feet excess estimate in Brokers shortage, block Angeles has about below supply. square of million stabilized market.

XX First X.X%, quarter X.X% feet Vacancy of rents and loan basis positive to foot. XXX,XXX had absorption. $XX points to net increased square per square fell

in of Building. Ferry XXXX note in at remaining have space SS&C's We we're terms remaining Francisco, feet former San multiple XX,XXX the to negotiations the tenants nothing square backfill with and expirations of of in

this XXX,XXX positive Vacancy XX.X% market. quarter along We're discussion, Peninsula, Alto. positive rents San of $XX of with Palo remained with rents below stabilized momentum which is absorption. seeing Francisco in the X.X% includes A square increasing purposes portfolio XX% net feet per Our in-place to in at and line leased, continued foot, X.X% stable for the are Francisco Class San square

We're square square XXX,XXX on space of two Square which space finalizing Mill while vacate, and coverage Dolphin. upgrades. square XXXX largest lease have feet Clocktower We reposition remaining space Page below XXX and at to at foot expirations square that additional plans is are our negotiation XX,XXX foot along building common XX,XXX of in Twin at Stanford XX% peninsula, XX% on market. a and area the Health, known evaluating foot XX,XXX expirations, the we're of Center,

Campus leased, X.X% North are With feet peninsula Valley stable XXX,XXX held square market. Vacancy Silicon in-place portfolio footprint in XX.X% per XX.X% remained foot. for is stabilized Jose, despite of where XX% in XX% $XX increased our the at rents absorption. square negative Our Center of is San and below to net leases quarter sale,

users feet on remaining from new Valley, square midsized noted, XXX,XXX coverage sub-XX,XXX which are smaller high-quality are leases, in and We have seeing some the XX,XXX our mostly below requirements, hundred to expirations XX% increase XX,XXX square an XX% market. foot we're Silicon XXXX to in These – of square as market. including of Victor foot

vacancy, Silicon per are square with points Valley Our this $XX quarter; feet X.X% square leased, net A and remains of Seattle unchanged year-over-year. rents year-over-year; XX.X% positive X% foot, absorption portfolio basis of stabilized Class Downtown leases below in-place market. XXX tight and down XXX,XXX is

our on been space office Jackson and Sound With XX,XXX feet brokers our feet requirements the expirations for fully Seattle, X region. XXX leased, are we're quickly projects have over focused and in XX% Puget supply tenant which estimate absorbed, delivered million below remaining XX of square and New Alaskan square XXXX of broader market.

likely We is have at ADP's on lease Center multiple square expiration. leases. are space. significantly, downsize for the quarter XX% the that entirety but largest have those third we on of users They of to activity coverage XX,XXX foot Northview

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

Mark Lammas

$X.XX first $X.XX diluted extinguishment share consisting expenses asset Building, of items and items of the on generated diluted Thanks, primary to Art. transaction share this $X.XX diluted per rates the specifically cost across diluted onetime share X.X% we XX occupancy basis and $XXX,XXX compared and Ferry share extinguishment in of of $X.XX acquisitions, quarter, our diluted share $XXX,XXX diluted first XXXXX a $X.XX basis. transaction compared per One or the excluding GAAP studio with increased $X.XX or FFO, year the Specified office the consisted or per office portfolios, of per drivers at In both In properties on Pico cost of Westside, first and year increase. onetime the ago. of quarter to of expenses year-over-year $XXX,XXX cash Higher specified X.X% a same-store specified quarter, $XXX,XXX were debt together share ago. a NOI per per and debt rental a or items, and

to same-store same-store quarter midpoint remainder below guidance guidance performance X% cash first of previous have of we stronger revised our came fact the increased year through While our midpoint NOI view range, X.X%, year. year the of in full reflecting office office of the office NOI in our a full cash

reminder, mid-XXXX, year-to-date increased by in basis and which comparisons. a GAAP NOI on studio now for Sunset basis. and studio same-store a on was way Our qualifies of XXXX XX.X% cash Palmas, same-store XX.X% both Las By quarterly acquired

from at Sunset increased were occupancy leasing success first XX.X% Our strong [indiscernible] year-over-year Las same-store quarter to XX%. by Palmas, studio which our results

Gower, In XXXX, described revolving Bronson and public now the earlier terms to press to to filings, million our March Sunset the loan of capital markets also X-year quarter, in in a issuance X, recast activity scheduled into public we million releases addition scheduled mature X, during loan bond XXXX. previously $XXX $XXX March mature fully Sunset

points We Gower Sunset also XX by ICON reduced and, by to Sunset collateral, Bronson as as the LIBOR leaving collateral. plus basis and interest removed rate CUE X.XX% and extension,

guidance, running quarter impairment results. around loss to turning Before our the I further to first color provide through want

as with As close us Victor not Campus gain associated this second of campus land, sales designation standards we development contracts which accounting rights associated impairment or placed expect as sale, and The adjacent held adjacent will campus quarter. the we noted, to with loss we separate for the reclassified the anticipate properties these to office loss. in both the and have sale anticipated the Center's to anticipated end Accordingly, due for recognize to office is around GAAP we the under sell. at its that loss offset held upon but largely the fact the require land

guidance. to Turning

guidance $X.XX first results. $X.XX per items We in excluding from diluted to $X raising specified are range diluted per $X.XX $X.XX share, XXXX from consist to quarter specified thus to $X.XX of excluding year share, to diluted items, identified items, our midpoint those Specified share. increasing the connection with full our FFO per

million about rights, otherwise proceeds assumes to facility of have final this Center, impact guidance our venture and Our we acquisitions, approximately recent adjacent light year of $XXX or detail full In word disposition applied earnings estimate before of added development credit press One the Centre, in Westside our the One quarter dispositions, Pico the of also joint unannounced It the of anticipated acquisition speculative XXXXX the capital the of other towards with for be financings and repayment activity. and Campus markets end land and second indebtedness. to unsecured revolving including Bentall of successful excludes guidance. further acquisition release.

corporate-related You back can amortization and now of added estimates and to depreciation to depreciation for identify guidance FFO. find amortization amount estimated the not

detail with included further expense also defeased largely to estimates interest provide for regarding have income, associated interest in-substance and We interest debt. our projected both income

you Lastly, I'll Centre or future from our turn with back for we of company's FFO ventures. amounts joint the stemming from share to have joint estimating and added estimates ownership to the unconsolidated other of unconsolidated primarily that, management call Bentall ventures assist With any Victor.

Victor Coleman

concentrated for Mark. Thank our markets by heavily you, industries. To highest-growth summarize the quarter, our that economy's is in portfolio populated are

we're first showed Our active strategy continued on value-creation this leasing our has entirely perspective, now results preleased leasing pipeline following. almost success. With quarter our focused from the propel that to

quarter. square and renewal unaccounted of end of the backfill feet as of remained for roughly our XXXX XXX,XXX the remaining the of first First, expirations, which

to net currently foot-plus we of And square Second, for the first third, XXXX. our Harlow the stabilization strong positive tenant lease up we square end roughly of of XXX,XXX absorption feet not the By of are development we our XXX,XXX lease-up it XX% which reach have few. until interest, will quarter, will deliver require assets, leased. which

feel to capital leverage after non-core of repositioning generate quarter, we've adaptive deals our Ferry markets. exceptional value-creation Westside and cash now terms Bentall assets like we quarter reuse future uncovered expertise Centre, One confident potential. value-add In and transactions, their our of These the while and Building, flow, portfolio pruning unique and recycling, high-quality in

We financial will our strategic and and opportunities evaluate that to continue to strengths sense. play make

recently Hudson the Partner for Congratulations entire always, efforts their next and most And our particularly with like efforts Hudson look all questions. earned EPA's I'd you line STAR coveted forward Year we have the everyone listening, the Properties ENERGY and support, we award. appreciate all. to to excellent But most quarter. teams operations thank Pacific this commend the Pacific whose I'd of quarter. your As let's open that, and Operator, for exemplary sustainability to work team updating importantly, like to

Operator

question Scotiabank. Yulico Please with line [Operator you. from first your comes of Our Nick questions. the Thank with Instructions] proceed

Nick Yulico

increased Thanks. guidance are driver office? that? the a little NOI more assumption? Can And of better occupancy a what driving Is portfolio bit the in you of pieces the same-store about talk that

Mark Lammas

a The Yes. about million. I midpoint up made the from X.X% increase The picked midpoint is of of of but of quantification mean the other just it's to to leasing-driven prior things. King key expected, We better give that. that, a about number Seattle. you $X.X year than X% $X.X drivers parts too. there, the few a previously NOI contributed things up some in at for ground That of XX contributed million

recovery ground up of of other Prop on the we amount The thing, was fair picked a C.

a that And think the about to what we talking the I'm to not incremental November through went on with previously recall Prop rents. we're we there taxes the recovery do like June there's expected. You'll better of detail respect Prop in tax. look great measure would than on C, team that sort going C. that And

really increase to And prior million from are those $X.X the contributors our key that so guidance.

Nick Yulico

the we then year? you good rest Okay. actually mean of assets helpful. got in leasing done That's markets. as are And assets those how in I you about the been Shores. for have slower valley, this trajectory Those about the there the lease-up Foster for feeling some City, think lease-up Redwood

Art Suazo

with all seen and VSP spaces this of the feel it. I several the program, been we've implementing been for quarters. the along, I've trajectory Yes. market-ready the about all good amenitizing programs saying having listen, on ground, space, we've

square ShoreBreeze of pipeline these spaces XX,XXX in about square feet. XXX Metro VSP and pipeline, them that we've has pipeline has behind are XX,XXX XX,XXX all building XXX another probably square collective [indiscernible] lot them basis deals feet the that those of The the completed. has of probably by buildings. feet building: got kind of in fills A in Center active So point movement

feel good. I So really

Nick Yulico

Okay. could assets in just also mean are talk development maybe city looking to You last And the just other the what I outlay right. I about question be? one think have the a guys on buy capital you you at initial then Vancouver. potential market. There's could that And ultimate then JV. in

So how in should Vancouver? we think about investment ultimate

Victor Coleman

tripled mean We there. think It's about. Seattle mean based you I exactly I about it same a you of there's to difference we listen, our be example Seattle's be The is – market almost on and on until that. Nick, touched the we probably the talking something here almost wouldn't footprint joined opportunities. it. tell good to going size, I

We going almost We're have square have an design push It's the XXX,XXX absolute right it, build marketplace feet. through feet. demand. to on another, we potentially, XXX,XXX evaluate to there. We and initial timing maybe an if going square probably

an have feet looking retraction. it. about things. alone other there some we we assure mean deals. could active player at So be I asset if we're in to you, excited that on be almost very We're marketplace. I square going We're XXX,XXX that do certain But could

Operator

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

Craig Mailman

it, Maybe guys grow Vancouver that? first of capital today some recycle up guys you you you'd just elsewhere Vancouver you we to buy capital stock to dispositions. where maybe as that is trading the done versus fund expect have match in your or want look to I given the yields kind on good just outlays. here just is and mean should job mean I follow what a generally thoughts just to on that funding with

Victor Coleman

strong got some mean debt. pretty that balance sheet. We've got lots now. increased some very We've got access a consistent. on Craig, with capital, of we I opportunity Recycling right we've been

we're really we'll going come and looking out is any down interest Campus than on to some the off finding this which other the which dispose for avenue currently deploy time. appropriate as today flexible So not asset, we've that looked and by, – is think And is new what in at. a maybe capital. we're at we've very to activity to which the most be [indiscernible] I small level depending deals But assets us figure deals. ones as change may is at mentioned, the And in what

Craig Mailman

resurgence of the I – just and mean I midsize your peninsula. deals go Then Northern commentary to want back to in helpful. about That's seeing valley

what some maybe Is that? guys Just demand? driving – seeing? are just of give just into you pent-up IPO-related insight what's Kind that or

Victor Coleman

really place to like growth that's and next aggressive space I take and activity of now of we And midsize it's almost quarters. going and that Well, San to announced attracts. between I thousands the pretty going prevalent what will probably the two square what and that and mean think Jose. of as accurate. messaging people and We on listen, movement with Google, there this, I that's we're there's it's they're Jose. that a be the story feet the go you on size year. seeing The it part ground – in really the IPO to we've think feet. are our know based rent this think deals do Francisco feels our their market XX And seeing today, X floating. the looking to that big upon we've been market making our million I the rents ever are Clearly, all to is consistent. do and And we're going team other in is than to comes years lot somewhere. valley are And that's we and of execution, San go. guess those deals that been when ahead of I of starting been, of portfolio we've – our When have some pushback running on we're strong. think there, in filled, from help. that X.X no hottest highest lots said we as indicative that be hundreds I going now now occupied of that been that. what pretty seen The looks tenants has because of parcel would sit year. is nice and transactions going be portfolio the been in San portfolio large a is square growth on the I that got There's from seen in say it's where and large now are, are drivers We're end is name household – announcements it tenants, between We've to announcement

Craig Mailman

And last just of one bigger picture. then one, good. that's kind No, Okay.

have done bit guys a You little to leasing more WeWork.

Just this of studios. higher office guys provider landlord taking here that thoughts service versus service kind have time. your is maybe in-house maybe it with to looking I or a to the on where leasing offering. over you and at this And amenity level third-party higher could be trending mean

be I So to that's away you for the that just of guys. it wouldn't a stretch versus is the giving ups WeWork-type on kind table mean potentially tenant? something

Victor Coleman

Well, on area table. it. will of that's we discussed We've an that publicly the made business it We've known that into. get it's absolutely

to classify had of on you a think it I levels. couple

foremost, do fact WeWork in we we're that assets believe think I factor into to and with with. at First comfortable portfolio ability something those the the time. execute with that independent that will any those that's that that of risk our in either have could the we or I And step conjunction on tenants, we

"Oh, not looking enterprise and tenants, They those us." business saying, and exception we going as Enterprise. sit – in at we we're those our we the like never XXX% is to came an have today. And continue WeWork it at position to come a portfolio, are in of guys so are opportunity enterprise almost if with tenants to that look the we're to The uniformly where It's the – XXXX to would've. deals, X us. We do we of

higher had of and levels probably relationships. a will we've at absolutely the for guess, a would – the capital end transition seamless. lower expend them, can the rather saying somewhere that landlords We want leases to today risk, we're commented that make be we Hudson most we'd and unique shift have. They have bit They the go for been, have opportunity to relationships. the over with those structure think on conversations go little day, those it's think they like pretty leave of confident want know We've the on that rent a WeWork the going multiple Currently formally, shorter-term over transfer leases have as tenants result, we comfortable the for I it these to with than tenants And and with of to else. terms long-standing and And decide saying the And on decision our a continue in in relationships And they're different ability add that to I of is to landlord amenities. my if an WeWork. pretty position a today, currently services. structure.

Craig Mailman

lease that's – Do you the you going those more to the it? have think just that a to going do though, what subset to enterprise and that rest structure a WeWork's to doing market is in clients who be side, maybe know? what from the want you to change guys Or be are looking flexible for certain for attracted is and that of enterprise

Victor Coleman

question. it's think a good I

ultimate presence tenants are At entering name the end enterprise much these markets, as pretty know And what? a tenants they have there. a is the You factor day, of flexibility. are household the our here

not a so now a is in continue could've like want there market. new not a tenants us, to presence. it's I So example to more going long need adjunct marketplace. that but long they're Spotify us, West already that business, building street and to aspect. an the Coast they're They is But the as from think that stay They a I mean growth is they're space. these took in, right? of my they entering a give to And and are great across to come we're guess an they this going time example, have a grow. markets a and the these flexibility. going I'm enterprise – And

Operator

with comes of question of from next Bank Jamie Our the America Feldman Lynch. Merrill line

Jamie Feldman

Sticking Can downtown that your to of or more latest talk you harvest your assets. whether about with might for just on some want Maxwell. thoughts those long-term you grow then plans asset? And

Victor Coleman

well assets. is – are both portfolio. down Yes. ¼ going No. that assets Jamie, listen, of I be to [indiscernible] our asset there think They're near the

down some at opportunities looking are there. We other

end think mean not these are I out. tremendous or better. the we're are returns that development. employees up. better. publicly ground-up in to to keep from the a pretty between at we bigger ones interesting would out less took new close see The – assets. It in the being almost months has us looking and commented and cheap we've lease we're other our There's our amount be either longer yields and are be – But that it's be X,XXX day, Angeles X,XXX enough smaller than of it's Hollywood in story do past, manage going not It that I to that The getting what somewhere may the think But for redevelopments the marketplace, away proven six now operate, to I happens. housed on question. assets getting there. Los that of

not So that assets. much of And they're it's a burden. pretty cool

Jamie Feldman

more to spend about I markets. the is Okay. way And about you talked at your more years. now? growing maybe XX there Day, aggressive into at doubling a the know over get next I talked mean you content business Investor

of how are can what your you ahead Just thoughts latest get that on wave?

Victor Coleman

be to be that in many pretty that for we're has the right, around bag, be what are turn reposition and/or is so cat's albatross" to now for are mean why out deals was of opportunities the to going that be us – who Well, strategy. public knowledge. There I there's to "an markets and going not business to a proven buy our and good going sure coveted I'm here. not people business Jamie? is this questioned And out the us in

one now currently hope, in today. opportunities, we We Vancouver. There are at looking are

We have attention. others a that to are few our looking come at in

go committed, very only pretty we're you're think a I not But to told I little the industry, just lines. really business the going we're We're think to looking. other pretty. around opportunities may not we committed you the Atlanta. mean shift I to to bit markets. that growth And

horizon We we're the even at, in York, but nothing that have New potentially on at this talked closely about opportunities time. looking there's

to us few the an as look with studio at well. the be will Bentall hopefully, and deals to Vancouver, here business think entrée, there, transaction, maybe more I a

Jamie Feldman

what Burbank Okay. is office to overall? And sector mean is the Bros'. development the for decision Warner going coming then on in their thoughts for any –

Victor Coleman

a of Listen, on look, there's points couple that.

not are content all, that of growing. players soundstages vastly to more accessible that goes the First are there

was another just So our the storyline a valuations, players of asset with that's Obviously, marketplace, that Worthe a content those are growing offer NAV price still was lot these Bros. to place. transaction higher this at They the of to Warner just to It's take on what had And and we get desperate our something last have phenomenal the sales in rates positive. there's what what valuation has the Jeff studios was buildings. are with carry, deal. lower the them now, than and cap to and that on. that three are that And a much evaluations. lawsuit a AT&T long-standing And development. It's traded transaction think carried proves their in we need Burbank than This build I once completed, business the has ability our of a always that terms studios line side. to was going

Jamie Feldman

Well, you for cap rates studios. were the the said

Victor Coleman

didn't. I

Jamie Feldman

you? Would

Victor Coleman

No.

Operator

from comes Our Goldfarb next O'Neill. Alexander line Sandler question the with of

Alexander Goldfarb

WeWork Just second. for a going back to

a than upside first that Bank if leases can that, WeWork. missed two, different the on space walk Just landlords. the taking with from through if on other you One, yes, Victor, your just makes of then the I – of the what part two-part the but rent your WeWork And different America your on leases are XXXX. peers And from comment maybe could you just at vault you WeWork. mentioned sort

Victor Coleman

a first easy one. on it's pretty So question, the

Mark Lammas

Yes.

just to do answer the me you. math quick Let

sold You'll The that time – than the expired higher America rent. of Bank a in that were rents sale of XXXX WeWork sale remember the and in July is on $X.XX us net. leaseback at building at of in with the place deal that expiring over X,XXXx leaseback,

that's down market get specifically to where to say, want dollars WeWork. X,XXXx trended has But don't I the but obviously. the it's to to – crazy, suffice you higher, gives which sounds that So

So you more. if I to don't know want up pick

Victor Coleman

highly because through which But that is security confi. that Details with Listen, confident – all, the most, the not grandfathered structured lease than has did. landlords. WeWork to our it's it deal if we lease Yes. with have structured am suffice And is by I a different regional we them say, to into unique I enhancement. a with do

Alexander Goldfarb

that isn't staying or question growth given you look that And it how sounds could Seattle Seattle. then about But thoughts I – just if market like But or good. maybe market. bit the That is expanding Bellevue? you It action, second Okay. Amazon best you growth if They're anymore a the heard I this that know talk just where in Amazon you a don't – the market seems little And maybe Pacific in across think not. looking is was Northwest. Bellevue. on – that is at I accurate hearing see of is course your to in and

Victor Coleman

Amazon knowledge. – is Fairview. X, a square construction long-term Tower listen. I recently for Well, another XXXX, feet. at X.X renewal it's And public exercised million is underway the which

is still but demand growing virtually, entire still which high. – tenants. Tower, two they square Seattle. in they're is building Yes, feet, have with Rainier are XXX,XXX they is completed The So that subleasing

the in expanding in you're I Bellevue. so right. meantime, are they mean And

at X great a they're Bellevue marketplace. square they've couple looking and think is now. of right about done a million a feet I third at projects,

for not we don't we've well. I and pretty guys sort bought deals there that than I opportunity. able quick on there how we think guys jump at exceptionally like And in, other – expensive. have to had other dumped were people because turnaround. been who like the it been an to not done quickly, ridiculously do never there, outbid on that much made the own going looked it's and I to have their Amazon, came assets a be know us or more absolutely don't people is know is that of we

aggressive It shortly. is think to robust surprised we the assets Seattle there just are and that think in on deals that are of I in lot the Google that the of a be announcing just should see in that assets. the leases Seattle. of done. sight the also leases people, that tenants construction. tenants Amazon is and in existing mean extremely active couple preleasing – that has fair one of have of got other in line in assets, leases I We've is will it's outside years on strength a shows on of like marketplace Seattle. really non-tech Seattle Apple just two I say continue growth do to think we're what And it of demand then on on the I past

Alexander Goldfarb

or development deal asset? that And existing one looking that's at you're that site that an is in Seattle, a

Victor Coleman

We're looking is right at one two in now: Seattle development in repositioning. and one's a renovation, deals

Operator

from Korchman of line comes question Manny next Citigroup. Our the with

Manny Korchman

back to about studio the your comments business. going opening Victor,

amount and as going what that or supply, shrinking creators digital everyone's of ways are more does people whether Just given share options do that between the drive to content, it studio whether other button? chasing shows creation that to have be two whether just content to somewhere the the quicker be the or that else stages make And – [indiscernible]? more them of be for available demand content creation content find it

Victor Coleman

in be heard in having I going And post we you'll do more. less and into the that it's the you've space. and Netflix look office into way I change, at people in is Content technology to the going play. going way, content, – that's before. coming see mention content. and an the see me excellent this, way mean said to Manny, to you're biggest where is means technology the And content this animation think comes content increase maybe that on need is have will come here question. see play always we've stages the strong to a and an preediting, the that play

need don't you soundstages. So

smaller screens, square lot need You footage. green a

stages in we're could where reiterate the do fill You the defined places. talent of other as And that continues that. all It's you're And be you worldwide And think Los players sort world. pretty going soundstage Vancouver Angeles be can seeing it's an But building talent Los solidify economic but going confident content, front It's for of Obviously, mean where in it It's surrounding the I there's at yet talent the lead the to a to can that's in those not build. in the only. end as right is people to is and is. But money expand Los decision more. Los Yes, Angeles. behind spaces. industry or day, camera. just it camera there to I key to these York, as It's of demand in do I think do now, or that is the not always, the everywhere. – around Angeles be as New to and pour into key does market's because this Angeles? these up

Manny Korchman

guidance. Mark, quick you one for on

that give specific added wanting to page? you you us and expense. to guide just to you anything add interest income, You those mentioned that Was there you that more drove to Or guys that obviously – was that interest color?

Mark Lammas

we houses the One substantial want Yes. we – than Westside. because we had continue income. there's mentioning historically didn't added amount confusion it that own We've to that interest always with the there any entity expense. associated added be the to debt just I interest the in a We because defeased more

the And And off thought clarity now bonds the material amount income a bonds you that of interest the was so is roll give as the and that. associated we income around statement. out, should notional and fair underlying hitting and term it with else everyone that we enough interest

Operator

the Our Instructions] Stanley. comes with Vikram Morgan [Operator of Malhotra line next question from

Vikram Malhotra

bag. the of sort you of I'm at sort going as out to some of of different the are competition cat's studio look what seeing of just the comments opportunities. you with sort back wondering around made you Just

rates. of And about existing assets sort of you a cap own us your comment – NAVs, helping made with much higher at our

you can what's versus think spread what of depth a maybe quality? sort is to studio? like we there quality about on Just And say update high should curious, us now versus range, low enough office

Victor Coleman

Vikram, I'll take first. the latter part

the In and we point this XXX between A studio. terms of spread inherent basis office had spread, Class

is, it the where reason be. of that's is that spread and now, inside twofold. said rate It's we cap So would the

look at taken has and for on, or component. currently us over another at so, Gower about the almost over studios to studio ability XXX,XXX Palmas the – square Las we for the is continue which office You own that to component expand the feet and

no Class the building is accurate what a than we lot studio there's of as have. So A difference an having on example street there across between a office

in So think the that now. spread differential basis I somewhere in And And. think in that's probably – I I probably do we're compressed the we're XX think right would down. point

They're is the we're and to soundstages continue that absolute X options on is date, X, these annual give we lease with that spaces. to to credit saying nobody long they're and with that sign for they signing X, them They the take. want And to are term, it. to increases contrary gives that. not us on them longer-term want back. ones see reason going – term second The continue that with actions The tenants to on longer-term you leases more,

spread points. we X differential, give would very a I to comfortable X good also to think question. Competition you that now would I So a it basis is would refer think I XX that. points and with

they've sell today a what owners path plate owner" go "institutional of to we're a seen of and But delivered and accumulate there's lot now them. and has execute The only the clear people that because whoever out is on point that. to on one-off first our are who them floor owns based looking

this, is I this to on now out to get. were second lend of new prepared get. buying first there to lenders we started think and they're When type there's the and access now access the part it. see X product validity go And

become it's play. Lastly, development a

end large-demand the long-term of of the that to option in. they're ones the is developing security maintains guess, a credit to are this these which look leases, lot tenants, out ones are that that are with And And lost at day viable for tenants and security, typically a comfort ones the develop. are to around competing around there's we or involved. that – So executing invest I

Vikram Malhotra

when even just us Las incremental studios, us or any you we and Bronson update remind Can maybe Okay. development the sort well? then Palmas are, Gower could sticking Sunset you of opportunity we just incremental on Great. to the see update potential in us that development? can And and where as

Victor Coleman

XX Yes. almost left about and is design right I approvals And before square have XX phase phase piece, in mean that's there's we docket under really at the nothing there. – approval. XX anything from at Bronson now, probably almost at get XXX,XXX we probably listen, months feet we're We're Palmas, in There to a square development months talking XXX,XXX projects. not for early on don't but in we're that. feet, – least Gower two for on design on Las XX we're the small – we have more to time. like

our So that where is for gives pipeline you an next idea the four years.

Operator

Wells Our next of question line with comes Blaine Heck Fargo. from the

Blaine Heck

in kind possible acquisitions scope in means acquisition of funding development given think Vancouver, you one, things future When going options additional Vancouver you Victor. any the these sense have they're these you together? couple with near and of mutually with even think Or transactions development? exclusive, the of or would in can about ahead about already spend whether a Just one on your Seattle, of in your give you quick us

Victor Coleman

But from word. be and where others. I buying that's Blaine, that been recently, So our That's have proven out think standpoint, have listen, exceptional. – And beyond would development numbers not yields a my repositioning. our we

us growth. three then which going opportunity to exception the about trying on, XX, very in with to for venture depend think excited at not ground And with about do a demand, all markets. of the very to fact dependent marketplaces. marketplaces. to forward. talked will we've It we of in up. develop we capital capital down. Valley, day, the think aggressively But other fairly Cloud these that be There's that either Silicon still our not our the not upon to maybe asset would listen, who continue future that existing not been our marketplaces, the to in onboard. have us we're really we with we're be combined have bring the exceptional mutually have level, repositioning or I these the end joint allocated so than are But interest I discipline it particular all also quality, would vocal partners I exclusive. been or on we of of tenant And deals But see don't today. we've ability on market, that their execute going more on maintain in growing slowing assets the wanted potential allocation, to growth And we've going it's And develop

Blaine Heck

All right. Thanks.

Victor Coleman

Blaine. Thanks,

Operator

in gentlemen, Coleman Mr. closing are would to turn and the back since over remarks. Ladies further I no to floor questions for like the Victor left queue, there

Victor Coleman

everybody I Well, for want to participating today. thank

look team Hudson under of great quarter exceptional, And our forward to in usual, upward we're end onward the belts. catching up quarter. another this two, our quarter we at As and is and

Operator

This concludes today's teleconference.

You may at lines for this Thank now time. you disconnect your your participation.

Hudson Pacific Properties (HPP) 3 May 192019 Q1 Earnings call transcript