HPP - Earnings call transcript Q4 2024 | Hudson Pacific Properties, Inc.

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Operator

Good afternoon. My name is Cameron, and I will be your conference operator today. At this time, I would like to welcome everyone to the Hudson Pacific Properties Fourth Quarter 2024 Earnings Conference Call. [Operator Instructions]

At this time, I'd like to turn the call over to Laura Campbell, Executive Vice President, Investor Relations and Marketing. ahead. go Please

Laura Campbell

of Thanks call everyone. Mark us. me Suazo, With President; Good are for Victor the EVP Art and today Diramerian, Chairman; Coleman, on Harout afternoon, CFO; joining Leasing. CEO Lammas, and

replay and this This X-K on be call are available will with earnings An website. for both an on and also supplemental our afternoon, on SEC, audio our we now filed our release website. the webcast available of

is we'll statements on Some of nature. on as share forward-looking of today release for in measures this reference call supplemental well information regarding earnings our used the non-GAAP financial reconciliation Please the information call. as and the forward-looking

trends. studio accomplishments financial our our will Today, Mark priorities operations Victor provide market XXXX and office XXXX and and detail our and on review XXXX, Harout will along development, and for discuss outlook. will results with and industry

Thereafter, questions. to take happy your Victor? we'll be

Victor Coleman

our afternoon, our and joining executing Good driving for office property reinvigorate strengthening and in remain everyone, on studio thanks many undeterred progress Laura. our priorities, We've plan on to continued sheet. regard, sales, and remained you, containment laser-focused on team cost we successes in committed multifaceted our Thank strategic XXXX earnings and XXXX, leasing, additional had growth. to this Throughout balance us. and

X approximately leasing activity, leasing over feet with Touching delivered square compared on nearly prior highest some of This or of square the as in And included 'XX. nearly XX% all million outlook. X signed XX% construction leases. completed of we office higher million We in initial the year highlights in savings feet Sunset the in X.X Seattle year ended and new compared the of to million development cost-cutting achieved double projects, as G&A $X Angeles. post-pandemic our level successfully our XXXX our average. under various we Los X to and Glenoaks initiatives, Washington through of since We XXXX

as year. and placed we a end discuss, a December, by January anticipated which closed further third anticipate this contract environment, is And the noncore million, of total we to to of for Harout one X under of the in savings second even the transaction And in closed in quarter. is assets going close $XX to challenging first sell the

West gross Coast office Angeles, what with relatively Bay for net our too, post-pandemic net standout bellwether should Silicon Los markets. had achieved positive fundamentals Vancouver the off In follow and are leasing. across as West quarter, fourth while showing stable. Area absorption, resilience the San capping years a for and positive Francisco Valley record remained both a absorption,

in constrained. and And where to Sublease new Downtown availability starting is become net territory. no Francisco potential steadily emerge for absorption Therefore, march of space supply summary, is shift office with post-pandemic quality our markets to towards improving construction. In all for negative Peninsula, gross leasing positive favorable as will Seattle is virtually continues the absorption reaching persisted, San highs.

driven XXXX, funding of quarter level funding received quarter markets. venture for XXXX, AI. Francisco Supporting in In of growing the San the $XX and was since AI global Bay by fourth highest venture billion second XX% received broader interest Area demand, our XX%

Bay which totaled In were companies Area. X in the venture fact, investment the recipients AI headquartered top XXXX, in all $X.X trillion

talent effect office feet to for trickle-down in reached million the Bay considerable in Area and with leasing first we materialize. research expect those presently Given of X.X proximity square over than Bay office footprints feet, the Area AI office markets. alone, about leasing the in propensity be more the square doubling year and X.X existing the million requirements affords, AI Last to to companies to on begin a

tensions, geopolitical level the later-stage growth startups macro as 'XX layoffs conflicts first see down markets, peak attention new and first Another to to from administration's and lowest tech to continue even pro-growth, turn benefit quarter of trend is the our policies. poised And favorable we quarter pro-deregulation years persists fundraising global In businesses their that appear uncertainty back their the since and after fourth XX% of from cost of in the were cutting. the 'XX. amidst quarter

the to fully East with on addition, the realizing similar in a West that Coast trends anticipate while improving the will space. has are week, fundamentals they days And led CEOs And date, in employees we office more need an emerge Coast. X-plus office

effect into go to which of in the increase of the temporarily the impacted and wildfires, Angeles the pleased approved, in support film Los the to Turning July $XXX and proposal for productions credit with million, delayed recent Los on our tax Angeles. more wake pivotal year we're industry eyes X. $XXX see if to from in double a million television governor's studios. in which groundswell all to will to personally many Particularly is XXXX a than filming industry,

The to Union FLICS, are California Production Coalition, and or comprised and the Silvester for local pushing all Special Liaisons additional Stay L.A., from in President Statewide enhancements L.A., California, of commitments Coalition, Entertainment increase Film now Coalition Voight, John Stalone Film and state local in Gibson the media and production. program companies and Mel

with but all Production of part and Coalition, these in the of groups. specifically are communication We active California

in leasing but multiple and but lighting need and uptick historically upon, just number, expand that modestly Los well many of the going long-running not wildfires, in we're up quality. production Angeles as television as Los shows is packages. bread or In quarter, due robust to Mark stages paused delayed stage production Several an picked in were seeing episodic to group of butter these fourth quarter. the first in productions in inquiries, first the season Angeles now As the

alleviated and incentives quarter in and expanded Some an start should Disney, including Discovery Note, reach pertains from as of Bros., California the see measures to incremental second third from upside. tax or be growing resulting activity be profitability. of the the dates the number may pressure Warner austerity Paramount streamers, increase we demand

I'm on an transactions. to Lastly, going provide update

the the under heels fourth Research in On first selling Maxwell closing contract and in with sold also early in quarter we Porter is Foothill of March. anticipated XXXX the Center quarter,

collectively, million X over leverage. So gross have going proceeds last of to the with reduce proceeds quarters we generated $XX all

pursuing enhancements, assets, Harout approximately million X in to we million these discuss or completed and underway. are Beyond $XXX going to are is sheet-related either stages, $XXX of additional dispositions balance various which

that, I'm over turn to And with to Mark. going it

Mark Lammas

square new XXX,XXX approximately signed XX% in quarter We leases deals. Victor. with new of and renewal the feet nearly Thanks,

let first direct lease existing X.X% lower X% backfills expiring Our XX,XXX Rincon Salesforce' subtenant reported year. GAAP Center, with a were which in which this quarter, been square lower, would for spreads, at of new an respectively, in cash X.X% quarter and have and the lease the X.X% rent fully foot and

up trailing new Our effective net were deals Net alone basis. rents only rents pre-pandemic pre-pandemic. year-over-year quarter fourth XX-month X% were effective X% XX-month than trailing below on on year-over-year and lower lower X% XX% and a

was Our metrics, term quarter-over-quarter, XX-month our XX% XX% XX-year and after lease these year-over-year. trailing year-over-year at lease still Even the Market trailing removing above X% XX% up from XXX,XXX term XXXX city our pre-pandemic. up XX-month foot lease was with square

to in lease at percentage XX% Met leased square December, unchanged. approximately XX% as compared for properties of single North have our quarter. But quarter tenant or terminating prior the Park in the the feet Our would in-service were a office XX% end been fourth essentially of approximately XXX,XXX

our the fourth with During from elevated, in and size million X.X par activity feet all-time the quarter quarter on This at a at requirement tour is ago, square average representing now our X% quarter, with of remained feet. XX,XXX in fourth the unique third aggregate year assets requirements. square up high

XXX,XXX Our This pipeline includes of of requirement square million late-stage approximately X square in comprised in LOI. in and feet. leases XXX,XXX leasing with remains over an of XXX,XXX just square current average XX,XXX deals process strong at deals of size feet feet another

under the just feet Center, we total year-end XX% activity, expirations million leasing close year, quarters. the in Research held-for-sale for of feet feet averaged those proposals. are with XX% XXX,XXX expirations Starting square including of have square Roughly half in XX,XXX square our over Excluding which expiring which Foothill well XXXX has is feet, deals through square expiring this quarter per our quarter, coverage, average X.X XXXX first XXXX X LOIs or have square that XXXX, in collectively which leases, XX% feet over last in third coverage. XXX,XXX below to X will XXX,XXX and we of the we

to start this As occupancy of than thereafter. the last noted, trend continues, for requirements. signed half XX% new to quarterly this half the year we this should office second more fully in assuming year, expect And in of Thus, of starting amounts. our expiring cover second were Victor the and leasing new portfolio stabilize leases year, grow

Turning studios. to

where the prior fourth activity, additional As improved, reflecting our leased production our occupancy were Sunset for Coincident in average, on levels there lease was points filming for quarter, Victor shows XX quarter trailing XX% quarter in noted, XX at Angeles XX of Los compared level the the to Palmas. in-service incrementally prior or XX-month this with stages than Las fourth higher the percentage basis quarter.

with Quixote Our essentially last in XX% quarter. line leased, were stages

$X.X by utilization production $X.X increased segments, Las million in decrease million a partially stage studio and $X.X Quixote ancillary a revenue attributable studio increase in activity by quarter, and higher by mostly million Sunset Sunset in at transportation revenue and from quarter Glenoaks increase driven at the offset location Fourth million stages. a more $X to compared service revenue, various in revenues Palmas to both prior rental

tax related to with of are which as potential second we in either a and start for TV quarter. with nonbinding along line the contract essentially Of half leasing This year. the occupancy the roughly XX is interest. improved in to film points of XX the Victor third our activity footage for an subject stages seen XX% expression and last But leased, the we uptick credits, snapshot second dates, square proposed quarter in are have which, provided representing of in stages, hold, noted, or the

production for to rightsize continue the for indications stronger Quixote of the future look Despite Angeles, we demand Los ways business. to

and terminated certain are the quarters, initiatives, implemented annually. which savings reduce third to leases other expected we and expenses During $X.X fourth fixed million by cost

Angeles, intently U.S. New cost Los Orleans, allow New operations will in containment, us our we part assets cease the other to As elected more markets. which York of core to and in focus on ultimately

Washington in trophy for feet. on alignment with XX,XXX we has There the with tenants mandates. square As to the office regard entering activity to are greater in full market focused increase to notable Class for a requirements A or project or ranging with from assets development, been multiple from discussions floor in upgrading XXXX, XXX,XXX return in tenants this

nearly with the a are multiyear finished delivery XX a components Pier the to systems shifting productions expect are With more summer. on by other show-by-show year, for tenants this one mechanical leading the exterior is Leasing agreements of end studio work and ongoing Studios, is As on we and for Structural interior build-out. project on budget. this substantive and on and discussions complete, begin roofing to with basis are discussions and skin or stages. anticipated time

I'll turn now Harout. call the And over to

Harout Diramerian

Thanks, Mark.

Our studio year, revenue last Sunset of strikes. $XXX.X to service million following was offset at to Palmas Las of other partially quarter sale in and fourth compared Quixote $XXX.X Maxwell, out revenue by quarter million single of Westside improved tenant the the mostly and XXXX moving a due and One the fourth

per diluted million per a the ago. items quarter $X.XX and to year-over-year the FFO, totaled the $XX.X due items, specified share for items in $X.XX was ago. per from to diluted fourth FFO change mostly $X.XX compared revenue Our $XX.X excluding fourth diluted reduced $X.XX a Apart year year share diluted or or to interest compared expense. specified Specified quarter items, per share affecting share million was

$X.XX write-off the onetime Bentall quarter $X.X legislation adjustment at from million per Quixote share or a income of of goodwill in million a of fourth $X.X a to expense and related noncash items of diluted $X.XX or included diluted deferred $X.XX a tax tax million per change $XXX.X or and share, share. impairment Specified stemming diluted assets per

our analysis impairment NOI accounting to reporting Note, result reflect the connection in is Quixote annual of impairment strike. GAAP running slower-than-anticipated goodwill the the recovery with of our post

NOI office to cash to compared same-store in million fourth occupancy. due quarter million quarter last primarily fourth $XXX.X $XX.X the year, lower Our was

long-term adjust Turning precedent to sheet. we and to as our as we In conform credit definitions in certain a to the keeping to ratios balance favorably facility facility our January, market credit measure amended play and planning indefinitely. anticipate

Xx NOI minimum fixed X.Xx and to we EBITDA unencumbered expense X.XXx. required Specifically, lowered ratios, under including the key interest adjusted charges X.Xx from unsecured to to from to

be We asset value calculations, into to also factored improve more modified certain how market assets value unencumbered terms. consistent again, with definitions asset are to and total

covenant the fourth all unchanged commitments effective the $XXX across results amendment now with improved of maturity quarter versus metrics. show exchange fourth extensions. as last date modifications, year, With lender for of $XXX quarter at million facility these performance a XXXX million December are credit our with In

recent total equivalents $XX.X in have of $XXX Factoring on the revolving and capacity cash $XXX.X million million we of amendment, and liquidity cash of comprised of credit facility. million unrestricted our unsecured undrawn

We also $XXX million is share have which capacity, loan of million. of construction our $XX

debt or our and value capped XX.X%. is book undepreciated to our relative of Our debt share fixed is share of of XX.X% net percentage

additional fully proceeds to facility from amendment, we address progress efforts have our are part we making asset we XXXX, the of enhance XXXX To and with good to pursuing sales we XXXX to financings the secured in are upcoming and near both expect intend sales the We asset no balance secured November use credit financings, which maturities, have sheet. maturities underscore multiple on to debt along and updates and term. until are concurrent our

our under covenants and strategy private our our notes placement unsecured performance our to remain we projections, to On based. expect Regarding related compliant.

outlook. to Turning

lease hampered specified fourth we quarter, this range first $X.XX mostly improvements quarter a office per equating specified to items, to office to well lesser are to diluted and approximately Angeles share $X.XX improvements be There and per at should the $X.XX the offset from items at Los studio For pending These G&A to expect guidance. this incremental anticipate diluted to NOI as expect further partially expense We recent quarter FFO, quarter, no lower the expirations asset lower other at the studio diluted wildfires, midpoint FFO to the share. which be Comparing per Quixote. midpoint, midpoint. with as favorable extent, $X.XX to approximately connection excluding demand items in especially NOI approximately NOI changes to of we higher sales. to share, by to and at due $X.XX $X.XX first due miscellaneous

we this to sales the of same-store XX.X%, the in office occupancy full We million asset XX.X% second million from both NOI year. anticipate property occupancy revenue rent both our Regarding large half midsized assumptions, the gains noncash and year between presently to half free lease lower of the landlord cash year, of negative reflecting $XX occupancy growth to several beneficial and by $XX first additional upfront to deals year due anticipate build through recent negotiation. followed in

acquisitions, from market in activity. potential million. dispositions, Lastly, ranging of and of $X sale Foothill XXXX, year, any excludes last and/or we full expect year, financings In only from Center the $XX will $X the G&A to containment to impact additional for receive achieve expense $XX million have held cost benefit this we Research which million. to assumed we the Apart undertaken quarter, measures our outlook but million were fourth savings also of lower Maxwell, not capital

happy Now take to we'll Operator? questions. be your

Operator

Your the from BTIG. Instructions] with of Tom question [Operator first line comes Catherwood

William Catherwood

starting pushing kind activity with lease of the start obviously, The ability growth you terms. talked Art, about and office since earnings tenant quarter, flows Maybe, through for tour to leasing. requirements had last increased increasing, longer your you

to you've like? or to kind it's up? the what in to are negotiating term, position whether is are what's rents done the that push of on pipeline, kind continue And able in how of look you what start looking push out still firming to -- As of start 'XX on you your and fundamentals

Arthur Suazo

Tom. Sure,

The to XX,XXX exciting. that It deals that in the important XX% that I premise tells going has up more that's of more pipeline us think at most But also feet, the quarter-over-quarter. of deal square slightly up are and and that part us to we're the the average in up volume. there's pipeline, is is downstream get quarter-over-quarter. The tells the kind larger correct. tours was beginning your gone negotiation

far in the term, direction. trending deals in the we As have are right the lease that as negotiation

our But is up telling slightly. is almost quarter-over-quarter trailing X% XX Our year-over-year XX%. more XX up is trailing

have tells that direction. encouraging. everything in very pipeline in that we that's So we're us our And heading

William Catherwood

then Appreciate transaction on to quarter me. doesn't call, fruition? assets. of mentioned second What's gets to pursuing you And backup of your if a on secured third one that, Art. current when kind that Victor, view that maturities the for X And portfolio financing what's the on come address done? plan

Victor Coleman

balance our feel to accommodate should multiple a more are or that going we're a on line, and to we of right in say time on these events now through, it going Listen, but that Tom. we're the rightsizing will imminent. not of Thanks, sheet, one suffice comment process to be confident fairly that and come

Operator

of question Your the comes with Joseph Citi. Nick next line from

Michael Griffin

Nick. It's pipeline. it back seems the Obviously, can tenants get company feel year firms tech But both are looking, the helping Michael we've the leasing to going going maybe Griffin of ahead. in like Or that heard with just positive seems Art, you do more confident office likely are type on finish somewhat. they requirements AI that to the be testing about sense commit? pretty these that it's and I over us news market water? of to to for a Is the pretty of the the deals it lot a give you are how line? are mean

Arthur Suazo

XXX,XXX The has mentioned if in deals the prepared X-yard about And the encouraging leases, than can feet, late-stage that is are Yes. that deals right? line, will square now, But to mentioned more more size I importantly, it's line, go Tom, confident remarks, ever. and we I'm inside right of over so us. our we're deal supremely get backwards. more which I pipeline, the seeing grown, to a these really in finish lot as LOI which

seeing bit bit return we're because so because they're realizing some seeing urgency, a we're get of little back office, need call running to little the to more to seeing little we're more time. And of like a I office, work are I tenants from a that work, more they urgency these out think and as bit to

to so to deals impetus good move also be that's along. going And a

of expirations those of and it coverage, prepared the pipeline, have on expirations. deals part forward, going large in some our in of coverage the the we remarks, we Additionally, high mentioned some the

For XXX,XXX square is expiration, those and have we on example, like X feet, which XX% and in Uber now, XXXX, inside the are total right the BofA yards. at over coverage deals those

So handful is a -- moving markets. again, It's it's handful and everything right in just of a it's the again, the direction, deals portfolio. in just not not of across

Michael Griffin

in Great. Art. has the that, been to like it Obviously, I years, has maybe I even, best the ringer studios. of turning through pretty limited a just of business. feels That's appreciate the past very the helpful. space mean visibility Quixote couple times. the then And

quarter. So be sense you're getting think fits ecosystem, it versus but credit make mean, I would you with took real media opportunities, do platform any thoughts are there does for it the it just there, the about that whole disposition think I impairment I know to term? interesting. broader mean, you as studio updated And you estate? the maybe longer into this if stick underlying this

Mark Lammas

this Thanks, Yes, is Mark. Mike.

the to all increase, touched comeback believe beginning Angeles getting and credit ups from is various and involved, general. that in Victor on we local here. going continue wage Los industry We've Angeles are believers, designed that the where it pull of in groups been -- through to in a the obviously, belongs. back to production downs, remain Los are the various changes, studios to tax We things it changes all like

on hands I specifically, to show sitting just go would as our just relates it we're Quixote waiting for counts to say not up.

of pro expenses. cost in 'XX we've undertaken resulting To quarter, $X.X date, We impact The again in 'XX have annualized. the We're it, various savings in already to call million cost-cutting process million starting another $X improvement operating the of, forma on results. NOI $X on fourth quarter, to like is $X.X largely million of million completed pro of savings, improvement cut in initiatives. order generating forma NOI of about third initiatives the wave of

rightsize point from and to ways business of for margins, looking cost that improve NOI. a we're enhance So view

will show other. or improve counts the further results, that going those to obviously As we're the results way so improve improve, one

Victor Coleman

And want jump just Yes. in. I to

Disney other years the going reaching And Los support globally. of Bros. fires, production obviously, the is unfortunately, is they're and for Beyond the seeing, film Paramount alleviate with that couple studio and Netflix, and streamers of lot is circumstances the profitability. I industry in around Angeles turnaround has a the are last the And leading. around Warner and merger, fruition Paramount seeing business. that, still entertainment to the now and marketplace levels mean, come a this in that this negativity we production community like of of lead collectively, with the the business for a the general TV we're massive to

devastating And the event obviously, the event that L.A. to backside that the then that of that so the changed. prepared out this there now have let's affiliated the all And remarks table rebuild that these are in with of to year, conglomeration all my we I mean come is is are entities what's say, that mentioned occurred. beginning at I of

being whatever L.A., going that table, or what is to more all Rebuild greenlit we're is you want, holds interest, forward. they're So on Steadfast stages acronyms transferring L.A. coming and the L.A. seeing just production than or to but and Rises

Operator

is question Wells Blaine the Fargo. Heck next The of line from with

Blaine Heck

you were the some Just sounds on starting a that additional there. negotiations? on for It just like under X first the give contract. slightly And contract where quarter go then to But Victor, up to is the with like target think midpoint. those the sales, do we questions the at you in stand proceeds you finished expect sounds color your close last it the can respect you of soon? can you're from And total think under more commentary to sales, X on couple

on in that on the is better far expected so those expect to a sell? that sales proceeds better proceeds still change or you So mix,

Victor Coleman

mean the X So has close. just been Yes, mentioned I Blaine, nonrefundable last the done. are we question. first start of timing part quarter. that one a I I'll with because mean gone the It's

deal process. so is And in that

LOI right X The sort now deals at one -- have confident little in are We reason the both reason stage about make. we're is negotiation. deals. that that marketed in those and other range have we -- higher we're a realizing pricing. of These good talking contract are deals another going and The the to is deals the deals that been

it's liquidity generate I maximize think And testament ability value. to a to our this and

as of slightly And But are are comps been some that looked the that X looking larger, and flux right That's that also the going marketed is some asset the higher. very now, comps we're of equally some that on and have had we've reversion some to in ones not beyond we've assets we're that's to what good little be referring at a and number considering working at which that potentially on asset. I'm that still make a would good.

So closer, on we're as this guys the closer it. with provide time. little more at to And that keeping more vest updates bit we we'll you a get

Blaine Heck

returning. then about hiatus? you That's I Is other back on And expand what guess really have the on shows that all talked side. that are on coming you Are space? commentary large shows press shows were high-caliber for means? that with the Or are makes way? Great. thanks that and markets just release, they studio what these returning, And maybe then to them Okay. studio helpful. that the a caliber? Can these moved respect lot to high of in need

Arthur Suazo

makes we episodes, Glenoaks. that mean we mean back literally in Hollywood to have of quality, looking markets. mean opposed we returning, come as don't returning butter by high-quality other L.A. stages studios, Sunset to L.A. a or studios And coming for the and kind in yes, that show. and Well, is What to like we television necessarily thrive L.A. by bread competing high

on a seeing, point type give one you were we of long-term stages, November, to available average, through average October, TV Just reference, show on December. for about our come episodic

shows last in month, came of January. of As through X those

recovery that see good these more all use that a starting heavier make those So packages, we things work. use grip to we're early from stages, coming stages rely lighting that and that on bigger to the indicator shows

Victor Coleman

seen that who've at momentum coming shows of And or in our Blaine, with now right some time. been either runners And that studios. in looking a they're the worked named year worked are coming XX-plus looking we facilities. are shows. back multiple L.A. have And in haven't in They're running show that back marketplace our at that we're the and shows in years couple past

So stickier it's picked may of that ones or the pilots been we've that than months in not may sort have seen the have XX that much last got up.

Operator

Your the next question Sandler. Piper with comes from line of Connor Mitchell

Connor Mitchell

couple. a have just I

is the else NOI first I some or gave it cash it cash something I'm and some missing? make occupancy $XX first, the the or you Harout of sure But $XX the quarter, NOI rent. understanding guidance impact free some information negative regaining you do guidance see on the million million, then to going regarding negative So of to provided, occupancy the Or back correctly, be that combination strength? rent due to some the and free dip in primarily might the just

Harout Diramerian

it hit you a combination. on It head. No, is the

on So working works deals of that free that are the are have that in upfront there's a lot rent.

that, year. GAAP the the later So half on but of definitely picked reflect NOI NOI cash up the the be will will

the occupancy, we that structure of is of anticipating. the rest timing the are of some it's the deals So

Connor Mitchell

And actual now you guys and think in versus a kind took there's the accounting on helpful. how purchase the I about just That's guys it impairment Okay. of of GAAP involved. understand value took that you Quixote, But then you a just JV, thinking this not price on is about XXXX. wondering the

Harout Diramerian

requirement. the work unlike the same doesn't impairment an estate, way. So real And it -- don't GAAP really annual is you

of the you've you the slower recovery in projections. clear, That's not stems future way, all a business the look metrics assets all just really and post it at impacted themselves. the from goodwill, or and this to the by of different got and So strike. all really be start Ultimately, the it have to And the factor it. it's it's impact how we doesn't the NOI

Connor Mitchell

Yes.

maybe -- the the still value impairment. in guys earlier can being look But mentioned than correct? value the you essentially, remarks, So after confidence currently Quixote business, like you have you at in the the slightly have higher you still book

Harout Diramerian

correct. That's

Operator

question the Kamdem next Stanley. of Ronald line with Your comes Morgan from

Ronald Kamdem

quick X me. Just for ones

sort I I year, at forth. and looking so about last guidance, the remember think, I talked of one, just you stress think the covenants testing

when how remind you this year? you trending we about Just just should year, for do that think covenants this can us the exercise

Harout Diramerian

feel is, we Ronald, to the covenants. we exceeded covenant another last X granulary. compliance. almost it X be internal reality look the at And every projections just quarter, on our the expectations or like for We quarters, we'll way, we've like the said, put

so confident And covenant feel we we'll remain compliant.

Ronald Kamdem

just the Okay. guidance then of the same on And staying topics. sort Got it.

better Just maybe I sort how to from would second to expect high maybe any going a for half, we but of XX% the trend get from occupancy, numbers in just year. this helpful. occupancy it's the level talk know through should be

Mark Lammas

outlined little looking looks over what quarter. of guidance. don't the the first happen will can second provide expirations quarter, of a elevated in We quarterly quarter terms in off simply think at Art the lease occupancy pipeline what discern bit But tapering by expirations supplemental specific you cadence somewhat I Yes. the like, kind

weighted the to the of feel occupancy. on all year. first we're expirations half going That's 'XX to So in most pressure XX% the are where of

the even in relative we believe first the to we expect to quarter to there's where So a by end quarter. recovery opportunity quarter. even thereafter see see an We second that first dip actually

steadily should thereafter. improve expirations improve it 'XX, it add, And given then where and pointing. activity and we I beyond believe -- just that will would steadily So is

Operator

Your next Caitlin question of with line comes from Goldman Sachs. Burrows the

Caitlin Burrows

guess I we've lot spreads of talked in leasing on But a and side, volume down were the pricing interest about leasing. XXXX.

this at is as down, kind a of spread like about think it, digits versus basis the occupancy, expect you how in call do you rate continue to point? decision XXXX? on occupancy much So cash like a double rate it these days? is secondary of stabilizing leasing like Or Or

Mark Lammas

Okay. Yes.

comparison You're about not seeing XXXX to in net a we're rates spreads, terms But of things on even is X-ish, course, Right just So above of expiring mark-to-market holistically on of effective couple rents. X% seeing it, somewhere like, and leasing right? call now, relative rents, face necessarily indicative rents market. that. what they're we're of on XXXX a

you gives that where So expiring are kind an of market. relative idea of to rents

mark-to-market you Now that don't is what that reported work of of always you X cash on for see gives timing get But doesn't those each in where don't activity of -- out spreads they translate necessarily because the an years. those spot idea identically. into that

pre-pandemic prepared digits to As would your the in kind the I and of month in net set I any answer year-over-year couple well. at outlined to a we of we to emphasize actual terms latest mean pre-COVID those just for effectives. low would pre-pandemic period net trailing like economics been But rents. in were held remarks net when lease quarters add, rents. you effective the whether back initial in we off even XX it to have I time of be compare that of incredibly essentially single up effective question, of of results there there's almost the And rents, continue look

period lost the able point TIs underlying -- annum. no we've is that on term ground straight-line almost again, comparison. to been And reasons rents, for out of maintaining stretch essentially to little on And LCs per while and any we've

net of are to held And soon. So pre-pandemic more a net real the an some there's we'll effectives well. recent possibility we're say incredibly start -- would see effectives than quarters up higher have I indicator

Caitlin Burrows

back And expanding activity of a through they relocating would the you on would tenants more sign and also coming whether then how that detail you tour just be some to today, if like type it. maybe quickly XXXX. to or NOI? you if realize into Wondering lease And could Washington were space? Got give the then

Arthur Suazo

Caitlin. This Yes. Art, is

from to and in square with commencement Sound. XXX,XXX lease prospects XX,XXX have And First of in XXXX market, of premier the date. with doggedly pursue prospects square all, the unquestionably, the discussions We Washington feet that Puget downtown in had team mentioned core. only constructed continues XXXX those tenants to the all our we're that actually newly is X in feet across negotiations asset one the

the transacting anticipate in we quarters. So coming

mean demand to cleaner, And enhanced the tech certainly increasing stability, elevated XXXX. growing more retail growing Washington I to return that stricter by revitalized is If we're I with what macro generate can level, City a activity of encouraged really stability at safer share security, for and meaning and Seattle. streetscapes, the office, foot traffic, is this going

Operator

with Dylan Your next of Burzinski question Street. Green is the from line

Dylan Burzinski

leasing pipeline. sort touch on Just wanted of the to

I commented throughout line feet, it's that press been where XXXX. think guys the call generally really million little X it, over square is which in with release a it's, you in

pipeline too sort done your your just trying sort leasing Because leasing like of there from of that around the of that So recovery something things square quarter, leasing much. comments sort with we're it are combining to according demand during remarks in tech. missing? seem the leasing some with doesn't pipeline to around comments a Is the the improving all of

hear be then to of anything your missing. thoughts we want and might just I sort So on that

Victor Coleman

sort me I macro and improving. in Dylan, more the clearly effectively new leased year on they're of I well, start 'XX. a since we've had we renewed mean let basis. than tenants by space last mean,

of what So to years. table set going expirations X 'XX 'XX last to had anybody to we in the in the what's now. this, have knows 'XX. million we're And X we've of line amount and if you in And we in sort have 'XX, out. did at feet you we're going what's But And X-plus right pipeline seeing 'XX and and and than numbers that is look least feet that's million is the year, expiring. pan offset by the be with

coming and available to on now, are it supportive table ones are the pipeline so in deals are And last did and what's right does come we the the good-sized to given is. in to magnify the the portfolio. which leases where some of it come that fruition And going that the available what's is what's XX months that

Arthur Suazo

Right.

earlier, to of what mentioned size average I just Victor points deal talked about. the As the pipeline is growing, which

of deals importantly kind and maintained level with -- an of early I to think is more see tours a spiked is done last pace amazing those forward. We're And of deals. starting pulling that these the out has The more urgency tours, importantly, are the bit team activity little the year. of job the up. picking right? tour We've there most

So feet, X it's about difference. reloading the pipeline. X.X Yes, also which a it X million transacting looks we're at feet, but million like it's big is million, static

Dylan Burzinski

envision envision you would of seems one the Seattle? the you If in it is sort guys recovery that thoughts Proposition guess going just Seattle. that, I sort of comments. just like that helpful. -- versus passed. out I mean, further XA kind provide into your be That's on of can Bellevue appreciate double-clicking get helpful. City separating do you guys sort Do the I of of to

Victor Coleman

the to agree available comparable that I that's Seattle. mean Yes. of A the not Listen, X space. time it, Bellevue first agreed on lack I read it's think that, not missed the you Class A and space few that day. things the is one, in very Class given other may you -- your are But right on I with I now. the have all piece in maybe but between okay. that not I over space that It's of the and was, things there's past. guys not Bellevue

that's of average $XX is foot space $XX a Bellevue's think a A difference, the right? I I space mean though, big Class Economically, price is foot. Seattle's about average and

a to employees employees, make difference that companies not are $X versus sorry, million pay momentum is the that the a are pay that employers for head going to economic going to tax a So for. want -- to for move X% big employers the shift

So going I stand think out. to that clearly is

Pioneer dollars and estate, seen South now getting Square move the Pioneer very with valuation direction looking the given indicative Union I terms, paid we're the at supportive. but I in that's relative mean, were right seeing earmarked available. recently objectives that I large and down in with XA. because been specifically attracted of to concur South think think I differences they're in Also, at Union, number being now, has X their the of to estate A analysis that's real of Seattle even activity tenants your Square rental Class are in much for to change Prop of Lake shift the are those And of really real people that go very Seattle Lake that the Bellevue quality we've

company it did CEO Seattle in XA mayor, the given supporting surprising Lastly, at momentum I supporting the XB prevail every shift is every point the given It council, the to between percentage. I would that to like sort remiss of out. be because unions say think a such you virtually did opposition ours not the us and high that and and

been So I did the all that momentum concur for that. and progressiveness And praising step on think a that around Seattle really your about would analysis the with the back. talking in we've take city we

Operator

Rich Wedbush. from next Anderson the comes line with Your question of

Richard Anderson

Correct So $XXX adjustments, time adjustments additional -- result. in flexibility million need where curious made should the lost me forever the have guys take of covenant I you future? stand of you this Harout, like year expect You you're we a Or where things foreseeable is revolver believe And or now there the from can that flexibility at there. I on second X the should for if I'm that I'm advantage terms it? now? mean additional this commitments to you as is is needed, if what or of, is a wrong.

Harout Diramerian

we recast, will on we 'XX. into for longer even once at next think And we nicely and needs conditions. that, all do but capital so different the which need in where now. to Rich, for time revolver is then execute -- and the the market least comfortable expanded depending the will extend feel can very may revolver us with I change, address we Obviously, sets it 'XX the very be a right things up

Richard Anderson

for this the balancing lose of the to it? was reduction amateur think sure act make a you just but want I sounding question, and But covenants. Is I the Okay. I understand. to right the just that way of commitments apologize the between

Harout Diramerian

set coverage to market trying financing and coming really future doing, what we're up That's It's flexibility our up. just have putting of a just creating our No, good for the for revolver sure. we terms. more that on

Richard Anderson

Okay.

It steps? of -- markets a Quixote. platform? thinking could curious, of how other mentioned this a on you're in Or question you adjustments is curious in New Orleans. Quixote within Second what's in the of I'm same go-forward the a there stopped Quixote basis. on to future series was operations to do rightsizing I'm the kind flexibility is your first about

Arthur Suazo

first. the Yes. I this mean is

that some at locations would of looking other are associated with payroll and some be warehouses We obviously downsizing. and stage there

pro more 'XX I that So that kind Rich, million. would we're initiatives NOI that saving improve cost of annualized basis, there's of million on $X an to at mentioned another $X forma that, looking about

improves. the to of phase that's depending more we'll done and We'll X. on we're out So flexible in when you the market kind thing where be But continue let market, be to next know monitor Phase where always cut the of we necessary. they're and how efficient, looking this expenses continue come to

Richard Anderson

New of may Orleans? So the exits like savings involve those in case

Arthur Suazo

was recall, of that if California. a larger the Not was of stage really because -- with the location State Orleans small only New much a was location it's outside came acquisition. It you that

at just at a opportunities here isolated at we're doesn't point. exit a to stage or there. point, this market this So It looking eliminate

Richard Anderson

-- the down I how right? of rental if lease the quarter. that that passes? as could adjust wrong, then $XX million-ish No, -- I'm a But apologize. wrong, -- Is me said time And payments, I think and in correct terms that I

Arthur Suazo

deals million mentioned leases. related directly also lease about mentioned $X.X eliminating $X.X that process say $X half deals, in is in Well, I I the -- studio-related And I of million to about completed eliminating million leases. roughly is would

Operator

Markets. is from question John of next Kim BMO Your Capital with line the

John Kim

Is some you have executing getting as topic the and cost more considered? peers goal first step that were reduction of as rerated. of that sort stating a your as far that that of terms G&A something aggressive on their On stock in reduction,

Victor Coleman

this where fact, in about last year, year-over-year. believe million $XX $X million you yes, that's John, look to year sorry, at if guided this compared a guided at G&A I time we -- decrease where we

So reflected numbers and that, addressing the definitely you in that's we're see.

and ways XXXX, to continue So of in more look going in that. it have some recognized we're do to we'll we to 'XX, and

John Kim

other versus of Quixote And is how overhead and much that corporate divisions?

Victor Coleman

Quixote Mark business is to NOI. that the Quixote overhead. Quixote the relates of the corporate and savings All All outlined that

Operator

no Victor questions Chairman, call for this to closing CEO Coleman, at further time. are and to like turn the back remarks. There I'd

Victor Coleman

Thanks to so providing participating and evolves. call, we much for more on input as you look forward quarter our the

Operator

This concludes call. conference today's

disconnect. may You now

Hudson Pacific Properties (HPP) 20 Feb 252024 Q4 Earnings call transcript