Hudson Pacific Properties Reports Third Quarter 2026 Financial Results

Unaudited, in thousands

Full-Year 2026

Assumptions

Metric

Low

High

Average in-service office occupancy

82.0%

84.0%

Growth in same-store cash NOI⁽¹⁾⁽²⁾

0.0%

1.00%

GAAP non-cash revenue⁽³⁾

$8,500

$13,500

GAAP non-cash expense⁽⁴⁾

$(5,500)

$(7,500)

General and administrative expenses⁽⁵⁾

$(47,000)

$(53,000)

Interest expense⁽⁶⁾

$(151,500)

$(161,500)

Non-real estate depreciation and amortization

$(11,500)

$(13,500)

FFO from unconsolidated joint ventures

$2,500

$4,500

FFO attributable to non-controlling interests

$(20,500)

$(24,500)

FFO attributable to preferred units/shares

$(20,000)

$(20,000)

Weighted average common stock/units outstanding—diluted⁽⁷⁾

65,200

66,200

(1)

Same-store defined as consolidated 34 office properties and three studio properties owned and stabilized as of January 1, 2025, and anticipated to be owned and stabilized through December 31, 2026.

(2)

See non-GAAP information below for cash NOI definition.

(3)

Includes non-cash straight-line rent, above/below-market rents and lease incentives associated with studio and office properties.

(4)

Includes non-cash straight-line rent expense and above/below-market ground rent associated with studio and office properties.

(5)

Includes estimated $7.0 million of non-cash compensation expense.

(6)

Includes estimated $8.8 million of non-cash interest expense.

(7)

Diluted shares represent Company ownership through shares of common stock, OP Units and other convertible or exchangeable instruments. Weighted average fully diluted common stock/units outstanding for 2026 includes estimated dilution of stock grants to executives under long-term incentive programs. This estimate is based on award potential as of the end of the most recently completed quarter, calculated in accordance with ASC 260, Earnings Per Share.

Consolidated Balance Sheets

In thousands, except share data

9/30/26

12/31/25

(Unaudited)

ASSETS

Investment in real estate, at cost

$

7,420,950

$

7,793,299

Accumulated depreciation and amortization

(2,039,688

)

(1,953,048

)

Investment in real estate, net

5,381,262

5,840,251

Non-real estate property, plant and equipment, net

51,668

72,397

Cash and cash equivalents

160,533

138,358

Restricted cash

44,035

23,770

Accounts receivable, net

11,309

14,923

Straight-line rent receivables, net

207,933

195,425

Deferred leasing costs and intangible assets, net

389,735

307,390

Operating lease right-of-use assets

283,042

333,258

Prepaid expenses and other assets, net

93,189

86,607

Investment in unconsolidated real estate entities

253,566

246,835

Goodwill

8,754

8,754

Assets associated with real estate held for sale

84,321

—

TOTAL ASSETS

$

6,969,347

$

7,267,968

LIABILITIES AND EQUITY

Liabilities

Unsecured and secured debt, net

$

3,347,461

$

3,351,458

Joint venture partner debt

66,136

66,136

Accounts payable, accrued liabilities and other

319,664

209,382

Operating lease liabilities

309,907

343,886

Intangible liabilities, net

14,783

17,772

Security deposits, prepaid rent and other

88,175

74,369

Liabilities associated with real estate held for sale

1,340

—

Total liabilities

4,147,466

4,063,003

Redeemable preferred units of the operating partnership

2,795

2,795

Redeemable non-controlling interest in consolidated real estate entities

49,591

50,581

Equity

HPP stockholders' equity:

4.750% Series C cumulative redeemable preferred stock, $0.01 par value, $25.00 per share liquidation preference, 18,400,000 authorized; 17,000,000 shares issued and outstanding at 9/30/26 and 12/31/25

425,000

425,000

Common stock, $0.01 par value, 103,200,000 authorized, 54,277,747 and 54,227,096 shares issued and outstanding at 9/30/26 and 12/31/25, respectively.

529

529

Additional paid-in capital

2,173,015

2,548,488

Accumulated other comprehensive income (loss)

5,901

(1,860

)

Total HPP stockholders' equity

2,604,445

2,972,157

Non-controlling interest—members in consolidated real estate entities

57,028

67,869

Non-controlling interest—units in the operating partnership

108,022

111,563

Total equity

2,769,495

3,151,589

TOTAL LIABILITIES AND EQUITY

$

6,969,347

$

7,267,968

Consolidated Statements of Operations

Unaudited, in thousands, except per share data

Three Months Ended

Nine Months Ended

9/30/26

9/30/25

9/30/26

9/30/25

REVENUES

Office

Rental revenues

$

144,743

$

148,290

$

439,570

$

457,216

Service and other revenues

3,868

6,289

10,836

18,407

Total office revenues

148,611

154,579

450,406

475,623

Studio

Rental revenues

12,492

13,567

39,778

41,108

Service and other revenues

19,790

18,471

60,859

58,347

Total studio revenues

32,282

32,038

100,637

99,455

Total revenues

180,893

186,617

551,043

575,078

OPERATING EXPENSES

Office operating expenses

71,066

71,577

210,423

215,355

Studio operating expenses

27,412

32,382

93,260

109,915

General and administrative

12,341

13,709

36,918

59,968

Depreciation and amortization

77,859

94,085

240,714

281,921

Total operating expenses

188,678

211,753

581,315

667,159

OTHER (EXPENSES) INCOME

Loss from unconsolidated real estate entities

(503

)

(744

)

(1,899

)

(2,203

)

Fee income

1,049

1,082

3,120

3,917

Interest expense

(40,938

)

(41,726

)

(117,408

)

(133,368

)

Interest income

713

2,212

2,928

4,770

Management services reimbursement income—unconsolidated real estate entities

1,071

1,084

3,293

3,182

Management services expense—unconsolidated real estate entities

(1,071

)

(1,084

)

(3,293

)

(3,182

)

Transaction-related expenses

(262

)

(139

)

(1,045

)

(590

)

Unrealized loss on non-real estate investments

(9,189

)

(2,098

)

(11,991

)

(2,335

)

(Loss) gain on sale of real estate, net

(20,284

)

—

(20,284

)

10,007

Impairment loss

(147,825

)

—

(198,265

)

(18,476

)

Loss on deconsolidation of real estate entity

—

(77,907

)

—

(77,907

)

Loss on extinguishment of debt

—

(207

)

—

(3,702

)

Gain (loss) on lease terminations, sale of assets and other

3,153

601

(1,605

)

516

Total other expenses

(214,086

)

(118,926

)

(346,449

)

(219,371

)

Loss before income tax provision

(221,871

)

(144,062

)

(376,721

)

(311,452

)

Income tax provision

(331

)

(24

)

(1,073

)

(672

)

Net loss

(222,202

)

(144,086

)

(377,794

)

(312,124

)

Net income attributable to Series A preferred units

(44

)

(53

)

(132

)

(320

)

Net income attributable to Series C preferred shares

(5,047

)

(5,047

)

(15,141

)

(15,141

)

Net loss attributable to non-controlling interest in consolidated real estate entities

3,330

9,966

6,787

24,108

Net loss attributable to redeemable non-controlling interest in consolidated real estate entities

1,053

974

2,783

2,771

Net loss attributable to common units in the operating partnership

4,853

1,779

7,737

6,382

NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS

$

(218,057

)

$

(136,467

)

$

(375,760

)

$

(294,324

)

BASIC AND DILUTED PER SHARE AMOUNTS

Net loss attributable to common stockholders—basic

$

(3.38

)

$

(2.12

)

$

(5.83

)

$

(7.74

)

Net loss attributable to common stockholders—diluted

$

(3.38

)

$

(2.12

)

$

(5.83

)

$

(7.74

)

Weighted average shares of common stock outstanding—basic

64,492

64,433

64,477

38,023

Weighted average shares of common stock outstanding—diluted

64,492

64,433

64,477

38,023

Funds from Operations⁽¹⁾

Unaudited, in thousands, except per share data

Three Months Ended

Nine Months Ended

9/30/26

9/30/25

9/30/26

9/30/25

RECONCILIATION OF NET LOSS TO FUNDS FROM OPERATIONS (“FFO”)⁽¹⁾:

Net loss

$

(222,202

)

$

(144,086

)

$

(377,794

)

$

(312,124

)

Adjustments:

Depreciation and amortization—consolidated

77,859

94,085

240,714

281,921

Depreciation and amortization—non-real estate assets

(3,516

)

(8,919

)

(10,555

)

(27,353

)

Depreciation and amortization—HPP's share from unconsolidated real estate entities⁽²⁾

1,719

1,250

4,922

3,408

Loss on deconsolidation of real estate entity

—

77,907

—

77,907

Loss (gain) on sale of real estate, net

20,284

—

20,284

(10,007

)

Impairment loss—real estate assets

147,825

—

198,265

18,476

Unrealized loss on non-real estate investments

9,189

2,098

11,991

2,335

FFO attributable to non-controlling interests

(4,647

)

(2,611

)

(17,522

)

(12,616

)

FFO attributable to preferred shares and units

(5,091

)

(5,100

)

(15,273

)

(15,461

)

FFO to common stock/unit holders

21,420

14,624

55,032

6,486

Adjustments:

Transaction-related expenses

262

139

1,045

590

Non-core Quixote lease terminations

(2,474

)

622

2,537

7,109

Non-core Quixote Studios & Services

1,911

—

5,463

—

Prior-period property tax refund

(1,894

)

—

(4,141

)

—

Gain on sale of non-real estate assets

(636

)

—

(636

)

—

Refundable payroll tax credit interest income

—

—

(543

)

—

Loan swap non-cash reevaluation

—

—

(488

)

682

Early debt repayment expenses

—

114

—

5,185

Employee separation costs (cost-savings initiatives)

—

1,163

—

1,163

Forfeiture of non-cash compensation agreements

—

—

—

14,280

Termination of Quixote non-compete agreement (cost-savings initiatives)

—

—

—

1,402

Write-off of transportation assets (cost-savings initiatives)

—

—

—

626

Core FFO⁽³⁾ to common stock/unit holders

$

18,589

$

16,662

$

58,269

$

37,523

Weighted average common stock/units outstanding—diluted

65,902

65,298

65,894

38,857

FFO per common stock/unit—diluted

$

0.33

$

0.22

$

0.84

$

0.17

Core FFO per common stock/unit—diluted

$

0.28

$

0.26

$

0.88

$

0.97

(1)

We calculate Funds from Operations ("FFO") in accordance with the White Paper on FFO approved by the Board of Governors of the National Association of Real Estate Investment Trusts. The White Paper defines FFO as net income or loss calculated in accordance with generally accepted accounting principles in the United States (“GAAP”), excluding gains and losses from sales of depreciable real estate and impairment write-downs associated with depreciable real estate, plus the HPP’s share real estate-related depreciation and amortization, excluding amortization of deferred financing costs and depreciation of non-real estate assets. The calculation of FFO includes the HPP’s share amortization of deferred revenue related to tenant-funded tenant improvements and excludes the depreciation of the related tenant improvement assets.

FFO is a non-GAAP financial measure we believe is a useful supplemental measure of our operating performance. The exclusion from FFO of gains and losses from the sale of operating real estate assets allows investors and analysts to readily identify the operating results of the assets that form the core of our activity and assists in comparing those operating results between periods. Also, because FFO is generally recognized as the industry standard for reporting the operations of REITs, it facilitates comparisons of operating performance to other REITs. However, other REITs may use different methodologies to calculate FFO, and accordingly, our FFO may not be comparable to all other REITs.

Implicit in historical cost accounting for real estate assets in accordance with GAAP is the assumption that the value of real estate assets diminishes predictably over time. Since real estate values have historically risen or fallen with market conditions, many industry investors and analysts have considered presentations of operating results for real estate companies using historical cost accounting alone to be insufficient. Because FFO excludes depreciation and amortization of real estate assets, we believe that FFO along with the required GAAP presentations provides a more complete measurement of our performance relative to our competitors and a more appropriate basis on which to make decisions involving operating, financing and investing activities than the required GAAP presentations alone would provide. We use FFO per share to calculate annual cash bonuses for certain employees.

However, FFO should not be viewed as an alternative measure of our operating performance because it does not reflect either depreciation and amortization costs or the level of capital expenditures and leasing costs necessary to maintain the operating performance of our properties, which are significant economic costs and could materially impact our results from operations.

(2)

HPP's share is a Non-GAAP financial measure calculated as the measure on a consolidated basis, in accordance with GAAP, plus our Operating Partnership’s share of the measure from our unconsolidated joint ventures (calculated based upon the Operating Partnership’s percentage ownership interest), minus our partners’ share of the measure from our consolidated joint ventures (calculated based upon the partners’ percentage ownership interests). We believe that presenting HPP’s share of these measures provides useful information to investors regarding the Company’s financial condition and/or results of operations because we have several significant joint ventures, and in some cases, we exercise significant influence over, but do not control, the joint venture. In such instances, GAAP requires us to account for the joint venture entity using the equity method of accounting, which we do not consolidate for financial reporting purposes. In other cases, GAAP requires us to consolidate the venture even though our partner(s) own(s) a significant percentage interest.

(3)

Core Funds from Operations (“Core FFO”): Non-GAAP financial measure we believe is a useful supplemental measure of our operating performance. We compute Core FFO by adjusting FFO to common stock/unit holders to exclude items that we believe are not indicative of the ongoing operating performance of our office and studio portfolio, such as items arising from capital markets, financing or transaction activity, non-cash changes in fair value, restructuring, cost-savings initiatives and operations we have committed to exit, including non-core Quixote Studios & Services and amounts relating to prior periods. We make these adjustments consistently to both income and expense items, and each adjustment is quantified in our reconciliation of FFO to Core FFO. We believe Core FFO facilitates period-to-period comparisons of our operating performance. Core FFO is not defined by the National Association of Real Estate Investment Trusts (“NAREIT”) and may not be comparable to similarly titled measures of other REITs. Core FFO should not be viewed as an alternative measure of our operating performance. Like FFO, it does not reflect real estate depreciation and amortization or the capital expenditures and leasing costs needed to maintain our properties. In addition, Core FFO excludes items that may recur in future periods and that could materially impact our results from operations and cash available for distribution.

Adjusted Funds from Operations⁽¹⁾

Unaudited, in thousands, except per share data

Three Months Ended

Nine Months Ended

9/30/26

9/30/25

9/30/26

9/30/25

Core FFO

$

18,589

$

16,662

$

58,269

$

37,523

Adjustments:

GAAP non-cash revenue⁽²⁾

(2,715

)

(270

)

(9,275

)

(4,645

)

GAAP non-cash expense⁽³⁾

1,213

1,289

4,758

4,781

Non-real estate depreciation and amortization

3,516

8,919

10,555

25,325

Non-cash interest expense

3,768

2,556

7,395

11,730

Share/unit-based compensation expense

1,619

3,553

5,052

12,252

Recurring capital expenditures, tenant improvements and lease commissions

(31,084

)

(20,383

)

(96,140

)

(78,998

)

AFFO

$

(5,094

)

$

12,326

$

(19,386

)

$

7,968

Weighted average common stock/units outstanding—diluted

65,902

65,298

65,894

38,857

AFFO per common stock/unit—diluted

$

(0.08

)

$

0.19

$

(0.29

)

$

0.21

(1)

Adjusted Funds from Operations ("AFFO") is a non-GAAP financial measure we believe is a useful supplemental measure of our performance. We compute AFFO by adding to Core FFO HPP's share non-cash compensation expense and amortization of deferred financing costs, and subtracting recurring capital expenditures related to HPP's share tenant improvements and leasing commissions (excluding pre-existing obligations on contributed or acquired properties funded with amounts received in settlement of prorations), and eliminating the net effect of HPP’s share straight-line rents, amortization of lease buy-out costs, amortization of above- and below-market lease intangible assets and liabilities, amortization of above- and below-market ground lease intangible assets and liabilities and amortization of loan discounts/premiums. AFFO is not intended to represent cash flow for the period. We believe that AFFO provides useful information to the investment community about our financial position as compared to other REITs since AFFO is a widely reported measure used by other REITs. However, other REITs may use different methodologies for calculating AFFO and, accordingly, our AFFO may not be comparable to other REITs.

(2)

Includes non-cash straight-line rent, above/below-market rents and lease incentives associated with studio and office properties.

(3)

Includes non-cash straight-line rent expense and above/below-market ground rent associated with studio and office properties.

Net Operating Income⁽¹⁾

Unaudited, in thousands

Three Months Ended

9/30/26

9/30/25

RECONCILIATION OF NET LOSS TO NET OPERATING INCOME (“NOI”) AND SAME-STORE CASH NET OPERATING INCOME ("NOI")

Net loss

$

(222,202

)

$

(144,086

)

Adjustments:

Loss from unconsolidated real estate entities

503

744

Fee income

(1,049

)

(1,082

)

Interest expense

40,938

41,726

Interest income

(713

)

(2,212

)

Management services reimbursement income—unconsolidated real estate entities

(1,071

)

(1,084

)

Management services expense—unconsolidated real estate entities

1,071

1,084

Transaction-related expenses

262

139

Unrealized loss on non-real estate investments

9,189

2,098

Loss on sale of real estate, net

20,284

—

Impairment loss

147,825

—

Loss on deconsolidation of real estate entity

—

77,907

Loss on extinguishment of debt

—

207

Gain on lease terminations, sale of assets and other

(3,153

)

(601

)

Income tax provision

331

24

General and administrative

12,341

13,709

Depreciation and amortization

77,859

94,085

NOI

$

82,415

$

82,658

NOI BREAKDOWN

Same-store office cash revenues

143,246

136,907

Straight-line rent

5,788

3,438

Amortization of above/below-market leases, net

992

1,012

Amortization of lease incentive costs

(3,934

)

(1,829

)

Same-store office revenues

146,092

139,528

Same-store studios cash revenues

19,289

15,390

Straight-line rent

(668

)

(444

)

Amortization of lease incentive costs

(9

)

(9

)

Same-store studio revenues

18,612

14,937

Same-store revenues

164,704

154,465

Same-store office cash expenses

66,005

64,214

Straight-line rent

317

367

Share/unit-based compensation expense

2

11

Amortization of above/below-market ground leases, net

641

641

Same-store office expenses

66,965

65,233

Same-store studio cash expenses

11,318

9,424

Share/unit-based compensation expense

3

124

Same-store studio expenses

11,321

9,548

Same-store expenses

78,286

74,781

Same-store NOI

86,418

79,684

Non-same-store NOI

(4,003

)

2,974

NOI

$

82,415

$

82,658

(1)

We evaluate performance based upon property Net Operating Income ("NOI") from continuing operations. NOI is not a measure of operating results or cash flows from operating activities or cash flows as measured by GAAP and should not be considered an alternative to income from continuing operations, as an indication of our performance, or as an alternative to cash flows as a measure of liquidity, or our ability to make distributions. All companies may not calculate NOI in the same manner. We consider NOI to be a useful performance measure to investors and management because when compared across periods, NOI reflects the revenues and expenses directly associated with owning and operating our properties and the impact to operations from trends in occupancy rates, rental rates and operating costs, providing a perspective not immediately apparent from income from continuing operations. We calculate NOI as net income (loss) excluding corporate general and administrative expenses, depreciation and amortization, impairments, gains/losses on sales of real estate, interest expense, transaction-related expenses and other non-operating items. We define NOI as operating revenues (rental revenues, other property-related revenue, tenant recoveries and other operating revenues), less property-level operating expenses (external management fees, if any, and property-level general and administrative expenses). NOI on a cash basis is NOI adjusted to exclude the effect of straight-line rent and other non-cash adjustments required by GAAP. We believe that NOI on a cash basis is helpful to investors as an additional measure of operating performance because it eliminates straight-line rent and other non-cash adjustments to revenue and expenses.