Hudson Pacific Posts $83M Loss
Hudson Pacific Properties’ losses deepened in the second quarter.
The Los Angeles-based real estate investment trust reported a loss of $83 million compared to a roughly $75 million loss the prior quarter and a $47 million loss a year earlier, attributing the results to decreased revenue, ample lease terminations and increased disposal of obsolete assets, in its second-quarter earnings release.
Revenues declined to $190 million compared to $218 million year-over-year due to declining office occupancies and discounted asset sales. That included a San Francisco office building the company sold earlier this summer for $28 million, about half the $56.5 million Hudson Pacific purchased it for a decade ago.
Hudson Pacific is still feeling the burn of flailing office and studio sectors that are dealing with soaring vacancies and a production slowdown, respectively.
Revenue Decline
The company’s office revenues fell to $156 million in the three months ending June 30, compared to $176 million during the same period last year. Production studio revenues fared worse too, dipping to $34 million from $42 million year-over-year.
Leasing Activity
Hudson Pacific chair and CEO Victor Coleman, whose total compensation was valued at about $25 million last year despite ballooning losses, hinted at offloading more properties in the future, during the company’s second-quarter earnings call Tuesday, and touted a bright spot: leasing.
Hudson Pacific executed 558,000 square feet in leases in the second quarter, a small increase from a year earlier but a decline from the previous quarter. Still, second-quarter leases included a six-year, 77,000-square-foot renewal with a cybersecurity company at Metro Center in Foster City; a nine-year, 41,000-square-foot renewal with a digital sports company at 11601 Wilshire in Los Angeles; and a six-year, 32,000-square-foot new lease with a bio-tech company at Page Mill Hill in Palo Alto.
Future Outlook
Coleman said during the call the firm is banking on artificial intelligence for an office recovery and looking to Gov. Gavin Newsom’s recent doubling of the film and television tax credit program for a production revival.
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Conclusion
Hudson Pacific Properties’ significant loss of $83 million in the second quarter is a clear indication of the challenges the company is facing in the office and studio sectors. The decline in revenue, increase in lease terminations, and disposal of obsolete assets have all contributed to the loss. However, the company is looking to leasing as a bright spot, with a small increase in leases executed in the second quarter. The company’s future outlook is dependent on its ability to recover from the current challenges and capitalize on emerging trends such as artificial intelligence.
FAQs
Q: What was Hudson Pacific Properties’ loss in the second quarter?
A: Hudson Pacific Properties reported a loss of $83 million in the second quarter.
Q: What contributed to the company’s loss?
A: The decline in revenue, increase in lease terminations, and disposal of obsolete assets all contributed to the company’s loss.
Q: What is the company’s outlook for the future?
A: The company is banking on artificial intelligence for an office recovery and looking to Gov. Gavin Newsom’s recent doubling of the film and television tax credit program for a production revival.
Q: How much did the company’s CEO earn in compensation last year?
A: The company’s CEO, Victor Coleman, earned a total compensation of about $25 million last year.
