HPP - Earnings call transcript Q3 2019 | Hudson Pacific Properties, Inc.

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Operator

Greetings, and welcome to the Hudson Pacific Properties' Third Quarter 2019 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Laura Campbell, Senior Vice President Investor Relations and Marketing. Ms. you, Thank Campbell.

begin. You may

Laura Campbell

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

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

We our statements, which These SEC materially in also our our forward-looking making subject results on from Actual these uncertainties based current statements could events to to discussed will filings. expectations. duty update. differ cause forward-looking to be we statements are risks no undertake and

activity like our will and overview Victor I'd Leasing. Victor our of discuss Mark other they Coleman, management give that, Art CFO; by welcome our of will Q&A Chairman be Suazo, leasing financial performance, Victor? highlights. and Art will COO of our markets, Note, our touch will the during to EVP senior our With Lammas, an joined in call. portion on Mark and CEO; and

Victor Coleman

for fundamentals very still excellent strong that of capital quality is an finish the aspect an we as through with combination and our XXXX. And and We Thank us every Coast This year development to as you move well. markets. strong will Laura, strengthening growth balance West same-store the recycling, up and business. in XXXX out metrics NOI sets our excellent a exceptional it for call the continue lays sheet to spreads third to completions across had quarter to third welcome foundation a call. we everyone see to – our today From by execute growth, and performance quarter to you rent exemplified across the our

third XXX,XXX leasing. signed Github's XX% cash office X.X GAAP spreads. cash GAAP you take of account that cash this with year-to-date than a and we into at quarter, gross leases In our and rent And more and feet to even spreads start a XX% we renewal square we spreads XX% XX% feet reflects spreads leased Let's GAAP we rent XX% net rent structure the rent largest fact from more GAAP lease impressive, and million at deal a XX% XX% an and square-foot square quarter adjustment XX% it XX,XXX that cash quarter, year-to-date. and triple in achieved this estimate modified if

and availabilities, almost were our XX%. of for our Shores, at significant quarter. our one XX% million this construction deals from XXX included projects activity to are Twin of XX% asset under percentage leases leased strong square Our leasing that markets Redwood the And signed in Bay at we throughout feet pre-leased. raised with two line In XX% near-term the Area. which this Dolphin And

LOIs XXXX XXXX leases of coverage have XX% remaining feet remaining and are XX% square or XXX,XXX expirations, square our deals of is that feet XXX,XXX of already market. which XX% proposals market. coverage below have We we further, XX% of below are on And which the expirations,

NOI and our rolling office meaningful respectively. of X% footage square stabilized spreads our total with backfills percent the XX-plus rent of healthy will XX.X% year. us At even growth and through these were just XX.X% in-service and renewals portfolios quarter, enable the leased Note to drive next end office

– array services for utilized recently are Netflix continue our have likes stages. and the stages to dominate studios. fully turning years. Amazon, Sunset of of from Studio's the to last we've quarter-over-quarter, of another two NBC, Viacom. Now writers the High-profile production and yet Lionsgate streaming seen and HBO, byproduct over a been and jump clients, And is demand doubling in from And productions ABC including offices for this demand

third for XXX our basis end our trailing average quarter, was of year-over-year XX.X%. leased up studios percentage XX-month same-store At points XX% to the the and

While the rent clientele as lock trailing square per from at average XX% or three space approximately X.X% to up XX-month years look $XX for derived ABR production long-term of is to for leases foot. our studio more. stages was our And now increasingly

development our Hollywood, entirety. $XXX-plus its Netflix EPIC which this occupy month, Earlier million office in will in we delivered creative

going of the noteworthy In significant this is to attributed a addition, to growth completion NOI is number which fronts. on discuss Mark project this to

record urban complex exemplifies pre-leased. and it fully time on budget, and track First our projects of on de-leveraging and large-scale

energy to our our adaptability evolve of companies to efficient Element technologies to also most started building high-tech advances sustainable continue showcases and us has campus of autonomous and how design to and the the we many and LA commitment concept, with like world's visionary cars. attract and It to in infrastructure which urban It shows AI-related tenants. innovative successful enabled

represents do Hollywood our media what finally, fourth Studios companies of entertainment the and our for the adjacent and to the as And office can for delivered markets today into it foresight Sunset future. project in and will

dispositions And core the of nearly we activity Valley $XXX in the have close explore to Campus X/X our of across primarily revolver. quarter both Campus the billion for former Peninsula than million office to Silicon Notably continue assets to portfolio. of studio third of way Center original for $X sale strategically and and completing and the Center not we our which Blackstone, did brings repay markets. our acquisitions proceeds to capital though – We used the in much disposition of the other recycling

to are throughout highlight elevate to energy ESG to the our to integrate in purchase a We of exact milestones portfolio renewable ongoing work and assets. like our few be announced priorities almost I'd XX% our carbon-neutral, Finally, recently company. entirely the thanks operations

requirements. any Our of goal is similar well be credit through regulatory to XXX% XXXX in carbon-neutral by advance purchases

to immediate these We as offsets address way pursued carbon also and footprint. impactful an our

This approach programs change. benchmarking climate strides. making holistic LEED taking includes addressing where to also in participation are as active we're we such STAR and ENERGY, significant However, a

by been X-star an our been last second tried GRESB's has LEED-certified. portfolio we also this performance But XX% receiving excellent for that year-end LEED-certified always almost report that industry leadership to the anticipate ESG well ESG-related for as disclosure, our Our and focus area developing XX% pleased time year and I'm on the we over as earned of STAR-certified. latter. Star Green XXX% GRESB's our to year. has we've an ENERGY will be that program And be initiatives which will absolute – XXXX the designations area in recognition

I'm Art going our who's comment further it on to turn our leasing With over to going and to that, markets.

Art Suazo

Thanks, continued constraints positive net Victor. absorption uniformly Strong demand has supply our and markets. across to contributed

for more aerospace and leases over million service traditional counts proposals, square which like activity, of are one contract. pipeline driving LOIs In industries Los feet. growth, companies remains creative deals or and and while Angeles Our tech financial

transition radically Hollywood, benefits increased quarter deliver absorption. of XX,XXX A the to of feet for vacancy is X% per portfolio. X.X% was redefining with This square this and while foot Class product square In rent. XX which A $XX locations that basis in which entirety most rent directly types the our next The command We're nearly to negotiations we'll net Harlow, down positive points year. Class

to we Saatchi's Our and year Saatchi are Del only significance in our which options all of lease remaining Los Amo termination exploring address. XXXX expiration Angeles & at is

portfolio more; Los X.X while and the eight not Francisco, is the square simply stabilized XX% are of the of constrained Half million X.X in square Our is in-place leased demand. meet blocks feet market. only below are to there available. there space only slowing market Angeles the large-block of feet requirements square absorption such or enough totaling feet million In XXX,XXX are XX.X% as is rents thing San pace supply

but X.X% A up per XX.X%. square of XXX,XXX remained all A XXXX square X.X% Francisco $XX this growth net quarter expirations. our addressed rose We've Class bringing basis rent year-over-year XX incredibly low at San absorption. feet essentially foot ticked remaining rents with Class positive vacancy to to points,

portfolio Francisco XX.X% San is in-place XX% are leased stabilized and below Our market. rents

discussion bringing the was Alto, includes increased to growth purposes another of square X.X%. QX, this year-over-year rents In the for A Peninsula, X% strong per $XX Palo quarter foot, for to which which Class

XXX,XXX fell of Peninsula XX% absorption. all remaining And We've points those sub-XX,XXX feet XXX,XXX with the along XX% vacancy spaces square-foot are of expirations below A square feet XXXX positive XX got basis net Class to coverage. X.X% While market. square with

million stabilized the market leased to in square Valley, North Peninsula active X.X is Silicon of feet and gross standout tighten. is below continues Our XX% portfolio in-place are a market. deals. most Jose rents as San which with terms leasing of the X% quarter, had

of Class increased resulting to -- and in quarter rents X.X% per in $XX foot square per growth the $XX XX.X%. year-over-year A

of feet XX While points Class vacancy positive absorption. fell with square basis XX.X% net to XXX,XXX A

square-foot have also spaces Valley a XXXX feet Those XXX,XXX square expirations sub-XX,XXX with coverage. Silicon XX% XX% are remaining, We of below market. all

is leased Valley XX.X% and Silicon X% rents Our stabilized in-place below market. portfolio are

Downtown as large market. Washington Seattle for have well particularly show for our to space. in become X,XXX of continues to the which development, a market, secure necessity demand to has blocks bodes pre-leasing level looking but companies all This of begun strength contiguous we properties for

increased feet per vacancy absorption. A points Downtown to XX to of Class up dropped with net XXX,XXX square A X.X% in positive $XX the quarter square Class rents year-over-year X.X% X% and in basis foot,

Seattle. remaining We the way XXXX have of nothing substantial in in expirations

leased XX.X% and stabilized in-place rents Our are is below market. Seattle XX% portfolio

in of points submarket quarter demand. absorption. XX A at competitive basis up terms year-over-year most the area's square in Class at positive X.X%, and metro net remains the Class XX.X% of per held feet is Vancouver rents $XX very square low foot, XX,XXX Downtown down with A vacancy

of XX,XXX remains negotiations had floors. to XX% on XX,XXX We QX coverage expirations space reposition in on space. Deloitte's feet XXXX about Bentall remaining and vacate. square-foot that we the square Otherwise, at several over lease known plan with a are

remaining XX% XXXX are market. Vancouver Collectively, our below expirations

are portfolio market. XX.X% rents XX% and Our in-place stabilized below Vancouver is leased

call I'll Mark for that, highlights. with And financial turn over the to

Mark Lammas

Higher diluted generated third Thanks, increase. compared share with the of share, were Ferry of acquisitions, a and specified across year-over-year rental rates per $X.XX quarter, both Art. and our Building Pico the XXXXX office diluted ago. FFO, items per studio and to specifically $X.XX this primary year the excluding drivers we asset together occupancy portfolios, In

our to of share at X% diluted $XXX,XXX properties a XX share Specified or items quarter, transaction related consisted cash or on NOI on of the of same-store In increased expenses per X.X% basis transaction $X.XX a related third basis. office ago. and expenses $XXX,XXX compared a year $X.XX per GAAP diluted

our are same-store, well Given we a the these strong third quarter a expectation NOI guidance results continued for consecutive performance from throughout portfolio's midpoint. year of as X.X% year-end, increasing full cash our that as X.X% to office

NOI impressive results, these studio on XX.X% increasing GAAP X.X%. cash on studio by year guidance same-store a In a of we increased basis light same-store basis. and midpoint Our are XX.X% NOI cash to full

$XXX issued at XX.XXX% coupon of a recently and we’ve activity, X.XX% market capital million senior XXXX of value with terms maturity. In January of par notes

We loan all used and net is near-term remainder well the proceeds to of term outstanding repay to simply facility purposes. credit on due liquidity. April maturities efforts revolving our amounts as five-year with million This our continuation for our corporate general address improve a available as $XXX XXXX,

debt maturities We only $XX.X with now XXXX. have of maturing in no next year million

We $XXX immediate also with million -- all liquidity. under us revolving have when Sunset of available our revolving credit our under $XXX facility, gives million secured to cash on our $XXX million loan which hand and available Bronson combined close with

from among In ratings, including BAAX light our this month upgraded sheet management, BAAX balance sound a long-term with to commitment Moody's rating, earlier stable strengths, credit to issuer of senior and our outlook. our unsecured other

our We are owning base our successful charge efficient including and sustainable pleased overall coverage; so, portfolio doing and our liquidity properties. track our large operating recognized markets; team; strong our and commitment the profile asset of and Moody's and fixed unencumbered quality to record; in that

including projects, & value-creation noted, three to have beyond. Victor the As service are NOI and EPIC. Maxwell And we this redevelopments, now our with projects recently poised completed we these Traction fourth and see placed significant month into we in Fourth associated growth and such quarter

reference of the We a increase third to in GAAP of fourth compared of full which generate GAAP $XXX.X company’s a anticipate quarter, year X.X% to anticipate increase the annualized projects X% We NOI share NOI, a will those NOI. quarter compared was as quarter will million. those XXXX the company's projects GAAP in third point generate share

those similar We leases cash associated ultimately abatement at will out. our also phase see with in upfront as NOI projects growth

to $X XXXX to from to diluted excluding per from share. year full $X.XX items diluted raising $X.XX guidance, FFO increasing diluted are share guidance $X.XX our Turning items; $X.XX midpoint our to specified excluding per $X.XX range specified per we to share

debt our was first connection results, of and identified our connection with consist extinguishment of Specified items $XXX,XXX which one-time and transaction of cost of identified third related $XXX,XXX with in quarter in expenses XXXX fourth the of be and our results, identified first of $XXX,XXX five-year described from April $XXX with term our earlier. would which stemming quarter million in connection loan as quarter another results repayment due $XXX,XXX,

specified financings and This items guidance million diluted the acquisitions, dispositions, of impact per activity. otherwise or these Combined, $X.XX excludes speculative $X.X unannounced capital total share. or markets

call turn With the that, back to I'll Victor.

Victor Coleman

Thanks and Art Laura. Mark,

the I assets, to robust As our and demonstrate rent at metrics. call, pipeline we've year-to-date, credit successful growth, NOI on In of for same-store and improving exceptional development themselves. yet still third the start significant solid continued spreads, noncore and mentioned leasing both results the speak activity, quarter our execution

all on your I another to Such Hudson great strong as for yet everyone our we of would to appreciate performance and Pacific, is hardly And always, support. entire new quarter. like team congratulate listening

next lines let's quarter, questions. operator With you that, and for to look updating the we open forward

Operator

you. Thank

We from the with question your [Operator of Heck conducting Please be Wells session. a Our comes Blaine Fargo. now will question. question-and-answer line with first Instructions] proceed

Blaine Heck

Great. are are to competitors strong on that prices a But the this out acquiring space. platform and Thanks. little Victor, maybe growing bit there a there. strongest studio in have seems I high you at business. the very guys touch like wanted It

supply how the grow going to influencing the do you part increased continue competition that So see of ability your operating and business any results and to your forward?

Victor Coleman

Blaine. Thanks,

conversation listen right or a this wouldn't about competition. So we so have ago about year

just structure business. for bad for it's ourselves. the our validates the end XX-plus not been So business pricing, and And validates it people great the years model day, not a thing. At others telling we've a the of it's it

other another grow opportunity continue That there is supply that feet own and square little Now is very studio albeit And campus. is studio we only which one business to at said, third the we're limited. same one to to Amazon's build. the a being it's components the model marketplaces really is time. enhances today currently XX on our competition very organically only It's have the which corporate today player. in for our opportunity other And development portfolio us about Studios is Sunset the studio evaluating million the because

We've about feel enough that and that in the look there are talked are our other key that are continuing here backyard evaluating expanding in grow. we're -- the Interestingly to to markets looking we opportunities markets players that also and we've content at.

with multiple had to with basis. players going in So grow we've we're that them hopefully and conversations

something the opportunities I are to think I to cognizant move and themselves us issue are of. what? forward. very avail do. an is Hudson for as of, going for you marketplaces to we've that's And we we're in the second-tier to go say But continue it's know Obviously, that pricing not going The do is something facts, that themselves. the line for mentioned you and sand our in sort to reality think said put

move continue we're be stickiness For economically grow I will go us marketplaces. very do to going opportunities beneficial to we think into something showed to so. said to that continue once primary lot the and that spend been we're traction going those have it's the and areas. effort of, And we And time that into to those to of markets have we going in sort as a do and we're

Blaine Heck

It had then guys on Great. a move-out Seattle. at Center. And Really two helpful. looks Northview like you questions

expensive guys your of in currently view your this a to out two And portfolio you is recently. are How there gain maybe any how that a terms wondering And foothold ton was number don't I there in point? you or at longer-term where you been activity any exposure point? then fit the that characterize guys Bellevue within there So interest in would that this have has too asset opportunities at market? of

Victor Coleman

asset. Generally deal See of, we not on I'm then top-line the is be speaking, would to long-term. those that great Bellevue. our a proven in Art cash-flowing are Blaine with talk move-out going and both and there want jump activity the to, have Northview I'll on sort what keep Alex I'll an ADP has to let asset It thoughts and

over strong, value retenancy our we're asset increase opportunity have to there. standpoint. and can the be The that is there. still next but it is We year And the some evaluating very outlying from an two aspects achieved market the

As we're market to focused Bellevue, now. right that it's highly a on

an what are that very -- if opportunity what two build currently want in? in about at Art, we or that and Seattle we're looking in what We currently substantial have we'll own jump we marketplace. foothold to are to successful And we're it's synergistic a we to you itself. think

Art Suazo

And XX,XXX negotiating as the is Sure. ADP know. August tenants all the feet we known entire for in was space. a currently team multiple vacate with square

we good And about to about space, mark-to-market talking So it. we're the feel that probably pretty XX%. on X%

Victor Coleman

Alex?

Alex Vouvalides

Yes.

it with build just feet. Seattle Victor's important in million comments infrastructure As first into it the two center got Bellevue up to Vacancy convention when now like around we and the it's fundamentals single-digits. Amazon's to relates We further on to the Bellevue really which low we're becoming downtown was essentially to platform HXQ

for So proper. right we what would market definitely Seattle it think enter could and we like the opportunity have in to the complement

Blaine Heck

guys. Great. Thanks,

Victor Coleman

Thanks, Blaine.

Operator

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

Jamie Feldman

mid you The on If estimates single-digits year. are Great. to growth track like next high looks and Street correct our kind guys Thank you. earnings are of for

the As something to versus how FFO anywhere activity you rate? you investment growth mean, maybe whether in putting or balancing be work it's that think fresh else, I growth disruptive to capital do might about Bellevue about think that

Victor Coleman

mean, out I of recycled capital Jamie -- assets. we've listen

There billion we're $X looking now have more and a you recycle think be be in heard able to that you the in over that well way. -- very at remarks capital we'll can I that that few performed portfolio. Blackstone a prepared could my we're assets little

We to and markets in is are talked we our -- growing also I in that portfolio And that three come our than assets concert you as we areas been business And overpricing or is. we've has and to relationships decision-making our venture that which maintained what have to more forward. either from marketplaces the and have be that discipline most transactions. tree away expanding capturing those disciplined our And going And existing grow-to-grow the that are to joint bought. not Mark? we've what will assets in with been walked we about be the line, think in opportunities business know very partners main say concern of going conducive our will

Mark Lammas

recently Jamie, think let you of maybe in non-income been it the estate Yes. real just capital some of underscore me around lot it's back capital real has that has a our of opportunities. lot on of on where thought opportunities more producing has. And the estate. are lot deployed if been income-producing a recycling working team been A that

so goal And we investments. look you're obviously rates know recycling be would would to hard accretive -- the did exactly to not or if immediately, cap compare whether although do how

even to on was some to down the real years then assets road expect comparison it new and estate redeployment. whatever see yield probably on see a into sold more the redeployment redeployed into. and accretion would the So was past the there closer and we by if recycling And you'll couple of

don't dilution. I think you as would So experience much

Jamie Feldman

have the talk spaces they spaces with guys? on Co-working? those had about forward? what for of any your some And you just conversations some then And about with your going of We-Working with you very That's helpful. you've them Okay. to exposure what's And can happens expectation plans

Victor Coleman

decision on whomever. in it's been have We position where absolute it's WeWork think this in Seattle a since beginning. process where to direct been listen we everybody I there. all in I've the Well, mean we our very in have listen Vancouver portfolio San WeWork in or role whether we currently And think first and space call -- of that we've an Francisco whether in as Regus Co-working I or it's there's and LA, made enviable a have pretty thought our knows.

supply-constrained for day. One I the preponderance markets. and Los marketplace San the waiting it their at we're and they in and a end is solidified our And the The nice enterprise Vancouver a reasons. there's to of is the nowhere don't like list. and go In of think are Seattle, have co-working for number exposed of enterprise space space of at portfolio a that full a has have Angeles most that all enterprise tenants Francisco and like

so an there's opportunity And there.

a with a being we tenants tenants. with do of relationship our and That Art enterprise also said we're are direct the have direct in. on a markets his have There regular lot And same conversations correlation and they in WeWork. team a actual basis that

for less don't not one, on longer-term take is, need that have our in not give be fact all the decided tenants. worried And back -- exposure from so we in or they the don't standpoint at all. short-term more that than three capital we're It's would the WeWork the you the a these vacancies not tenants would us -- about with that we're to lows the from leases we for them. think space it the as But outlay these with to to one I opportunity And overexposure for: ability markets for. give two, if about in we over heard direct be; to do And matter us of -- our no for X.X% if the worried all-time we back at deals there's we're markets statistics portfolio these standpoint. are basis that is the

Jamie Feldman

And you. Thank Okay. me. for then last

you of Peninsula. to Valley think about have the as match tenant the that or vacancy? does How up your lease with in space buildings pipeline and demand that Just Silicon

Victor Coleman

we're terms the terms our in rent tenants. of and numbers to numbers that we've mean, Jose, in I and to as and of staggering the are Valley Silicon opportunity on coming in San expectations -- what's in of in terms greatest listen and basis. Peninsula say just can I values Well, space, And then even outperforming down our

is We're about of two we're and XXX, lots cusp being of now stabilized. talking got There's that the jump we right ones activity Metro can on on leases. that in Art big two that. The XXX.

on demand want I -- leasing the And do you concern but have there I jump expectations, in to not or we hit rental our is we're no to just high Art, on exceed Metro, right now. whether numbers. XXs well then going The that? think, have not And and it's

Art Suazo

mentioned, I would X chiefly we on our being Peninsula Yeah. or square Valley. in And in over say XXX,XXX square more even about talk pipeline, our Silicon XXX feet as probably million probably pipeline resides Victor feet we there the Metro feet feet leases leases just behind got in -- We've moved XX,XXX and probably it X,XXX another Center. We've basis got points. in XX,XXX square another square that. deals

work up. talked spaces you've about and leased seen program the and we're on the these team as So smaller at really ground, our VSP getting executing is we've

well. things in Center Shores and in to come more as So, Redwood Metro

Jamie Feldman

All Thanks a lot. right.

Operator

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

Craig Mailman

wouldn't from XQ to Hey, development in deliveries. at uplift Mark, X.X% EPIC right. The to contributing clarify. I just wanted the be all guys. that

commencement on at page on looking like… Just XX the schedule doesn't look

Mark Lammas

QX. which delivered were and Yeah, X. We Chris October the did great a -- We on job. team has

day beginning right quarter. of the the So, quarter, at the first of

contribute in So, QX it GAAP. does for

Craig Mailman

forward? does a GAAP first the on just basis commence it Or is entire So stage? project going the

Mark Lammas

Yes. Yes.

purposes. tenant and all we For of turned purposes, all for improvement intents it over

building entire have of starting X. October they the on possession So

Craig Mailman

Helpful. All yield on Can the that GAAP us you what Okay. right. remind is?

Mark Lammas

in But development is X.X% right our can page. I yield. can see it's stabilized you Well, -- you it the think

the to abatements. ahead looks of burn-off that Now

mind typical a stabilized yield mean, because got not -- yield. it's And not a It a GAAP cash at So, in stabilized it's time my a I cash I would look kicked of aspect. -- like. right yield. mean to in a what straight-line I haven't it. converted cap a you it's GAAP Yeah, the is yield Yeah,

kicked it number. and cash line you be ran higher If the number, the than would you data stabilization straight a

Craig Mailman

Right.

want Okay. to your or ABR could guys to just What longer-term you is that then going of do think push back would comments going XX% the helpful. forward? kind And leases. of That's Victor coming you to from studio.

Victor Coleman

at we're I flow we'd looking we're of the increase number that for I all flexibility talking it. about mean, listen a reasons. we the think that deals at of cash were is But in XX% on fact push maintaining

I available these demand stages. think stages are the market of tenants any that high. is need for is There no moving, extremely the

And And given we've stage they I just our on measuring keep saying. occupancy year-to-year based basis right for think they when a haven't team on a returns. left. planning away just Bill and now And are the basically

So I think flexibility obviously, comfort you as is The credit very high. the the there. is know Craig huge. level is And

Craig Mailman

about mean, not institutionally Okay. you there a them? the Or disproportionate for it three is Palmas was managed. It newer kind it is And consistent of just thinking guys. asset asset? from of is I coming Las upside that of a pretty amount across the

Victor Coleman

it's say would I across. -- It's consistent No.

massive So gone listen we've through at a cycle with ABC Gower.

Bill? And so now that's right marketplace, all rolled to a and new benchmark

Bill Humphrey

Yes.

Victor Coleman

at Palmas. are over ABC and transposed most yes, so hot to Las Bronson, recent that's think gains I But those and returns, right? higher stages clearly in our that's in And over obviously Netflix demand been were, where

Bill Humphrey

longer-term Viacom They're They've and HBO. interested also And long-term have us. Yeah. already approached formally deals we with doing us. in

Craig Mailman

just a kind for of the little on give seeing And Art you you're could demand just detail more at bit me. the XXXX? last one Washington

Art Suazo

Sure.

about million square discussions negotiations about square to know X.X in as And you each active which in we've tenants XXXX. we're additional is for market campaign. XXX,XXX two now, that feet. feet feet As fantastic. square of for square marketing requirements began our XXX,XXX XXX,XXX has We're about right feet Washington currently with

Craig Mailman

guys. Thanks Great.

Operator

SMBC. Anderson line Please with comes question. your from with proceed question of Our Rich next the

Rich Anderson

morning. Thanks. Good

growth down into? a think dive you course drill unless when level to when want level of So the whatever the greater a of do XXXX to AFFO be think a growth XXXX for greater XXXX -- going number, you you you want to guidance growth your number yet in into you give profile year would or about it it. of I'm FFO not looking or lesser -- But

Mark Lammas

Yeah.

the looks spend of some I it at getting is The and that XXXX. -- looking We'd going way of and volatile, it in when are and reason in TIs be think we've it tenants -- request and the XXXX can particular been ourselves see you're to allowances forth. reported. forecast level it's on in can caution Rich we've unpredictable again, with numbers ahead you because around are that here. the as is be fairly that for And and so TIs right.

it $XX-ish more and or going of going as on I are to kind so per million on quarterly is -- like TIs looks basis where think probably think run how $XX.X XXXX, to maybe year-to-date rate we're about right finishes importantly, to basis around it that level. a and we're the quarterly it rate run be we trend a average that And around -- right AFFO and year million quarter compares

if with then you compared in growth TIs, ingredients XXXX and think XXXX of because TIs the And off XXXX and sort level off look will collectively, I of FFO leveling to to the ahead XXXX.

on think out XXXX. But down quarterly it's model going our think steeply rate But bit. basis a it's from it's fairly TIs -- to go not up So then to don't in we uncommon push going to run XXXX. go for a I that the it's suggests

that maybe trending be you leveling off touch through if So eight-quarter take a a let's XXXX, a say on higher quarterly basis, compared that. the that you and where eight-quarter higher look rate was over suggest to you ingredients say could to an even XXXX run than FFO over out period trend and leveled XX% that those XXXX over AFFO

about asking TIs into about because were the but XXXX. -- could easily for XXXX you be over forecasted want extra realize XXXX, I XXXX to that spill I Now, cautious

bit of And if into very less is could XXXX, so over much we actually benefit quite see of spill in XXXX AFFO XXXX. we don't what spend could be in and lot increase drastic as a a the a drastic

more that. know -- trends we to in don't you we that's So suggesting. about if it. a guidance bit try the more I this little can are what give point on where color we'll there's much provide say at February When

Rich Anderson

FFO But is a that on AFFO the basis. mean safely you can level profile the just level quarterly TI the down I probably trending growth is say than because the simply lower

Mark Lammas

yeah. Yeah. – That's well,

I think you're that's If right. -- right.

growth the AFFO, on compared are trend were look you to to just were If if you FFO you compare correct. to --

AFFO FFO. I XXXX, trend growth a compared the next more years think there two XXXX over on is to steep

Rich Anderson

Okay. Great.

As driving expense doesn't show amount growth of number? revenue -- potentially CapEx on a don't clean that's sort of But is you're line? future? growth far the today, achieving as any this Or up that that's get the into behind that fairly there the repeatable the same-store it is profile you

Mark Lammas

any think I Well CapEx driving extraordinary that. of can't

this So to It's answer repeatable. I to happen? did do you're is what yes, have But is is If special for to we sure. it asking make it think The extra something repeatable? no. say Yes. is hard

Rich Anderson

there that's left And Great. is How Victor. do to the mind? been your And when more Okay. to your think lastly XXXX compare One-third of portfolio any sold. back to expectations? that then in Blackstone did you to

Victor Coleman

preponderance of we've couple about that's And assets a our dispose consider left. dispose San talked there's would material. at that we assets Jose of all. of that nothing going or Well Palo the what North to we Alto of but We're opportunities have to our not

on mean, of don't terms it, But in have in return extremely calculation. sales I the... return the terms been the it's In of our successful the on I

Rich Anderson

No, meant the with did dispositions, no. the your you portfolio? compare I level when bought to that dispositions, originally of how expectations

Victor Coleman

we question. of good were say number we're When did originally there we period a we going to bought layup assets that this to that's a over not dispose Rich, But the to of obvious we're few going of. time." benchmark "Hey assets said x portfolio, dispose No. of

on came based we would And we to not on were I originally buy it's thought, number But a higher market some but probably demand. than back, sort much. by just based say tenant some came reflect if overall and

Rich Anderson

right. All

Sounds good. Thanks.

Victor Coleman

Thank you.

Operator

Nick question proceed question. of your with Scotiabank. line from Please next Yulico the from Our comes

Nick Yulico

Thanks.

Ferry You Any update a Building plan ago. the retail there? on the year bought

Victor Coleman

two-plus the listen through right complete that December years. plan by mean, I force exterior and Is believe a seeing Yes. design to two-plus-year retail is Yes. X interior I which about were am the go of going process plan? full right guys? a redevelopment in the model I now.

Nick Yulico

-- share preliminary on do Any I you what any mean there? you Okay. could to us plan with just thoughts

Victor Coleman

to coffee. Buy a going very Go take be look. though. It's No. exciting a

Nick Yulico

basis? for One foot on construction the thinking At given pricing are there? on but a don't square about asset lenders like loan the an And update that Okay. I securing latest what's how Westside, per on you've think a this,

Mark Lammas

number. a So on But loan. will most point going the likely a it. stabilized at close be But of running before some foot, syndicate securing anticipate square handful an big a we're I per with point of year end. that in to a lender. this in confidentiality. particular And on the value in we It's a basis process it's -- assume somewhat lead of don't to We've on locked one that lenders we're selected group

Nick Yulico

I pool assets Okay. see going Thanks. can stabilized the year. them to in us number just for be of mean, office that this -- entering which That's then helpful. have I year. next give feel lastly, a are wanted you a on if you same-store to pool the And are

through the And of so, pool added that year? I'm be can will these walk next just Thanks. wondering some to assets if you

Mark Lammas

Yes.

you same-store the find it's that they're could treatment. indicated. likely in XX for our those So are quarter's qualified And what this disclosure precisely

Nick Yulico

sorry are that the would in next I now. year? as those right -- listed meant your ones Right. just pool get stabilized that non-same-store added of Which are

Mark Lammas

Yes. Well -- stabilized the Nick full portfolio. so take

qualified break same And year-to-date is list what You'll the quarter's in of the precisely store. in if XX see, the in we what's XX. if same-store the or in of the properties, know, the exactly then property same-store down of for current same-store we the it's

portfolio the the it'll the stabilized that's list as -- within So of identified same-store. be

Nick Yulico

Okay.

the they next are in to assets year? not your assets going are are enter like are pool not Ferry other stabilized not Building going -- same-store enter that to So non-same-store -- HillX

Mark Lammas

right. That's Right.

Nick Yulico

helpful. right. Thank Okay, yeah. All you. That's

Mark Lammas

to We're opposed year quarterly treatment. assuming year full year mean the next the you full For for as for right.

Operator

Emmanuel question. from Citi. proceed next Our comes your line question Korchman with the with Please of

Emmanuel Korchman

Hey, maybe one for guys. you. Art,

early renewals markets? your about in conversations has how the of Just tight vacancies been tenants with going each given

Art Suazo

usually square market. probably that's out every probably of X.X front pursuing The we're smaller tenants tenants but we're years bit, two aggressively them that -- out. years, feet in they changed. I think larger front in out XX,XXX have the in don't we're Well lag a little

it's So usual us. for business as

Emmanuel Korchman

in Is maybe that calls in outgrowing similar And light a looking talked then this people a of earlier on companies and of specifically elsewhere. their San Francisco sort couple about a space season secondary seeing that markets around to of the where growing you're you've have having in primary and trend got previously? look Or looking markets either more out been elsewhere? vice people versa might

Art Suazo

San square XXX,XXX I think city been feet. good noticed one moved you that down of the we've I of problems one inside in large over South having Francisco. I Stripe glaring XXX,XXX example. that's right? eight -- of That's over And and the out you're Redwood the with if opportunities mean city just you're square example feet There's in probably beneficiary to the think case by Shores.

Michael Bilerman

Bilerman speaking. It's

to going XX Kilroy. to be on with batting November get you're visit investors Emmett Victor, after So BXP go cleanup

know set? the So your I what you you B, that how want take that outlook your But with what do your don't hoping on A, got away peer investors relative to current you spot. and your And companies? presentation they are other then focus from portfolio and to

Victor Coleman

make to see. be all our anybody the way all is Laura calendars heavy going and that the swung I our lifting than at for presentation to Listen, did sure vent to much going else's Well that of different end. to our first think be you're us the

or have they been but talk it. is Los Angeles. Laura business no it's the and And what because Los talking is which Angeles. would about to not going Angeles that idea have I have to we're Jordan my a specific Los topic, about a We strategy around guess of John specific are doing, future

And we're market now is as on, the as here to seen is to in industries currently guest ever speakers focusing right media the in be and presentation be it's going and that going revolving to entertainment. focus industry So we active something and everybody's around LA And because of we've on prepared tech going the we're our here. it's And that those it. have. what three

a think you come be as when have know what time I going to you'll it's a do So to you unique. always Event. you And good Hudson

Michael Bilerman

Thanks. Great.

Victor Coleman

you. Thank

Operator

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

Alexander Goldfarb

Hey, out good morning there.

commented of sort about questions of talking it, that disruptive. at First, that's you Mark, few on XXXX too that you the growth. back guys going dispositions just planning a really anything to if we or anything aren't look were

Looking at rolls, it over sort next four the expiring rent of quarters. rolling looks your X% like

looks we're you good you're it? almost pretty next is Is directory be think anything extraordinary that would disrupt XX% there about looking that Because for that growth fine. that markets So all would the at? there the guys it anything year? should delivering growth we capital that disrupt should Or

Mark Lammas

that on Maybe opportunities. we do. are possibility disrupt Alex looking would should to that recycling plate a mean, nothing up teed we there's we've nothing something there's we that growth. certainly that that. a that enhancing at disrupt should I discover got always But be could our that that. There's currently could

Alexander Goldfarb

Right.

that really or the there correct? do building; you the Saatchi, whatever to none backfill -- from Saatchi materially the that So disruptive whether of sell you with the growth, is expiration replace Bentall

Mark Lammas

actually get little for some we've nothing No, in a right. mean, there. That in there's a add the material. might we But been NOI We yes, -- XXXX yes, get while. hold anticipate might Del Amo. little over vacate I lucky a and

Alexander Goldfarb

on been on Okay. And that's prior calls. that's Victor, discussed Bellevue, then, topic a

just what shift. sounds were have vest, a before Or it the plans like playing So were. your had guys you close you incredibly to it maybe

demurred guys advantage, that want there. So, maybe you and just market, can in in a on preserving go why you made acquiring the it topic? something look was Or you at previously, that change talk just Bellevue competitive to your over -- did now take the

Victor Coleman

they were in. not appropriately that really or No. we mass unsuccessful we priced key. either were -- interested the the saw, were opportunities something we for Critical is It's that

a been long we've And on for that but time. so -- marketplace

our said that been do point our -- it's and from going where as business growing It's out to go plan know, about been just buy not But before, on. we're to -- -- not think market never you that I to one asset. that it's and then

some opportunity we'd have mass. an market. would be be critical entertaining to do, an find if to we we owner And in that So,

Alexander Goldfarb

thank Okay, you.

Victor Coleman

you. Thank

Operator

Please Our next of the proceed from with W. question. your David Rodgers question comes with line Robert Baird.

David Rodgers

discussions had have for you first getting out with about and the morning And in out question Victor venture maybe Macerich Mark One Good Victor there. of Westside. together. them Yeah. maybe

be XXXX, already? to And for have might what given in development what good committed you're a Mark you sense spend

Victor Coleman

documentation think they a our the reality willing the their is interest any lock-out getting interested such than look know position I'll out them first more is that, I if time We limited is out, in Yeah. would take asset. there that take But one. -- be Listen, of our there. is provision. Macerich in to

team but, They of opportunity great best, do from budget and levels. for do on our a them. it's would -- is highest extremely time on and supplementary that lead what know the And great They've we at opportunity that. in our so, Google welcome and a said, get executed which standpoint. to to being been they That partner them they

Mark Lammas

over be On there. on amount development little spend to TI and to got that. that just Because EPIC, kind of little looking Harlow year. mostly that a there's allowance at going EPIC the going ahead bit next that's done spill for to a but We've

$XX in like XX like it So looks $XX-ish million, Harlow XXXX. it's it call million there. similarly, --

One Westside bit a is chunkier.

$XXX use for -- As or availability our around on But that loan be current Alex revolver in so mentioned, capital won't a all -- this have revolver. won't for But like somewhere our that's million this studio -- see of looks rely XXXX. we'll we're But it. spend to our how of pans we construction expecting we have out.

David Rodgers

the the other it? two Westside just project into add One the just then -- is $XXX That's million and

Mark Lammas

in I dedicated are our One EPIC a we on really Yeah. if of loan Westside. sources That's have But that right, you're think, honing -- our just uses and sources it's really -- right. and uses, have utilization existing for construction because Harlow

David Rodgers

you to going program the a bit. seeing maybe of discussing the strong that VSP still kind of tenants use back small Are VSP program? and and, little the maybe you pretty Just Got Art?

activity the you're abating at seeing, of of just that. the kind us Or amount and demand you you're if now is that you're out that given on that update of come where just city kind could seeing of

Victor Coleman

No. I in said, I than basis we're to of. that downtime. these them building because a that building of example mean that's XXX mean, moved them points. And advance ever. that. lease Like we're with of I is we us great faster X,XXX stronger less suites helps It

strategically more Peninsula. the spots deploy So VSP we're trying to throughout

David Rodgers

great, right, All thanks.

Victor Coleman

Dave. you, Thank

Operator

further no back questions. Victor to closing Coleman it are remarks. like for to, hand There Mr. I'd

Victor Coleman

All forward NAREIT. everybody's Angeles you call. all and look soon. talking to time for appreciate consideration I to on morning our Los you quarterly We see And right, in this

Operator

and participation. Ladies today's this your Thank gentlemen, conclude does teleconference. you for

time. this wonderful your You may lines And have day. disconnect a at

Hudson Pacific Properties (HPP) 1 Nov 192019 Q3 Earnings call transcript