Citi Global Property CEO Conference
March 4, 2024
Differentiated Tech & Media Focused REIT
Uniquely focused on building, owning and operating premier real estate and related services required by the dynamic and synergistic tech, media and other creative industries
Value creation opportunities in west coast tech hubs and global media markets
Only publicly traded owner / operator of combined office and studio portfolio
Full-service platform with deep relationships and expertise
Proactive balance sheet management, track record of strategic capital access to fund growth
Award-winning corporate responsibility program, 100% carbon neutral operations
19M Sq Ft Portfolio
London (U.K.)
1.2M Sq Ft Future Development
New York
0.2M Sq Ft Under Construction
Vancouver (Canada)
1.5M Sq Ft
3% HPP's Share NOI
0.5M Sq Ft Future Development
Seattle
2.2M Sq Ft
14% HPP's Share NOI
Existing Portfolio Sq Ft | |
San Francisco | Under Construction / |
Future Development Sq Ft | |
2.4M Sq Ft | |
21% HPP's Share NOI |
Silicon Valley
5.7M Sq Ft
36% HPP's Share NOILos Angeles
3.2M Sq Ft
26% HPP's Share NOI
0.2M Sq Ft Under Construction
1.6M Sq Ft Future Development
Note: Data as of 12/31/23. See appendix for definitions of commonly used terms and reconciliations of non-GAAP measures. There can be no assurance that under construction or future development | 2 |
projects will be completed. Management's estimate of developable square footage may remain subject to approvals not yet obtained. |
High-Quality, Innovation Focused Tenancy
HPP's premier portfolio and focus on tech and media epicenters attracts a tenant base of leading public and established private companies with the potential for growth in their respective markets
HPP's 10 Largest Tenants
Tenant | HPP's Share |
% ABR | |
10.1% | |
5.5% | |
5.0% | |
3.7% | |
3.1% | |
2.9% | |
2.0% | |
2.0% | |
1.4% | |
1.2% |
~11 Years WALT1
~4 Years Remaining WALT1
HPP's Share of ABR by Public2 / Private & Age
6%
34%
60%
Public Company Private Company ≥10 Years
Private Company <10 Years
Public2 Tenants | HPP's Share |
% ABR | |
% Investment Grade | 73% |
Investment Grade % of Total | 44% |
Note: Data as of 12/31/23. See appendix for definitions of commonly used terms. (1) Reflects HPP's share of total and remaining weighted average lease term. (2) Reflects status of tenant or tenant's | 3 |
parent entity. There can be no assurance that parent entity will satisfy lease and other obligations upon default. |
Potential Tenant Demand Remains Encouraging
HPP's current leasing pipeline remains near record levels with number of tours continuing to trend upward to levels not seen since pre-pandemic, even as new deals take time to execute
HPP's 1.9M Sq Ft Current Leasing Pipeline1
Well Above Historic Average
New / Renewal | |
Lease Sq Ft (in | Pipeline Sq Ft (in |
Thousands) | Thousands) |
1,200 | 2,500 | ||||||||||||||||||||||||||
1.9M | |||||||||||||||||||||||||||
1,000 | 1.5M Pipeline | ||||||||||||||||||||||||||
Historic Avg.2 | 2,000 | ||||||||||||||||||||||||||
800 | |||||||||||||||||||||||||||
1,500 | |||||||||||||||||||||||||||
600 | |||||||||||||||||||||||||||
1,000 | |||||||||||||||||||||||||||
400 | |||||||||||||||||||||||||||
200 | 500 | ||||||||||||||||||||||||||
- | - | ||||||||||||||||||||||||||
3Q23 | |||||||||||||||||||||||||||
4Q18 | 1Q19 | 2Q19 | 3Q19 | 4Q19 | 1Q20 | 2Q20 | 3Q20 | 4Q20 | 1Q21 | 2Q21 | 3Q21 | 4Q21 | 1Q22 | 2Q22 | 3Q22 | 4Q22 | 1Q23 | 2Q23 | 4Q23 | ||||||||
New | Renewal | Pipeline | |||||||||||||||||||||||||
- & Aggregate Sq Ft of Tours at HPP Assets Highest Since 2018 (Pre-Pandemic)
Total Tour
Sq Ft (in | ||||||||||||||||||||||||
Thousands) | # Tours | |||||||||||||||||||||||
2,000 | 160 | |||||||||||||||||||||||
1,800 | 140 | |||||||||||||||||||||||
1,600 | 120 | |||||||||||||||||||||||
1,400 | ||||||||||||||||||||||||
1,200 | 100 | |||||||||||||||||||||||
1,000 | 80 | |||||||||||||||||||||||
800 | 60 | |||||||||||||||||||||||
600 | 40 | |||||||||||||||||||||||
400 | ||||||||||||||||||||||||
200 | 20 | |||||||||||||||||||||||
0 | 0 | |||||||||||||||||||||||
2Q20 | ||||||||||||||||||||||||
4Q18 | 1Q19 | 2Q19 | 3Q19 | 4Q19 | 1Q20 | 3Q20 | 4Q20 | 1Q21 | 2Q21 | 3Q21 | 4Q21 | 1Q22 | 2Q22 | 3Q22 | 4Q22 | 1Q23 | 2Q23 | 3Q23 | 4Q23 | |||||
Total Sq Ft | Tour Count | |||||||||||||||||||||||
Activity on ~40% of 1.5M Sq Ft of HPP's 2024 Expirations3
Lowest Level of Expirations in 3 Years-In Line with Historical Average
Only 1 Expiration >100,000 Sq Ft
Note: Data as of 12/31/23 unless otherwise indicated. See appendix for definitions of commonly used terms. There can be no assurance that deals will be consummated at expected terms or at all. (1) | |
HPP's pipeline comprised of deals in leases, LOIs or proposals. (2) Based on data from 2Q15 to 4Q23 in line with comparable portfolio size. (3) HPP activity comprised of deals in leases, LOI, proposals | 4 |
and discussions. | |
Studios in High-Demand /Supply-Constrained Markets
~90% of HPP's studio portfolio is located in Hollywood or greater Los Angeles, where pre-strike,long-term average sound stage occupancy was 94%1
Los Angeles Remains Location of Choice | |||
for Scripted Content Filming | |||
2022 # of U.S. Productions2 | |||
250 | |||
# of California | |||
Productions 2x Next | |||
200 | Largest Market | ||
150
100
50
0
Episodic Feature
HPP's In-Process Developments Well Positioned
Relative to New Competitive Supply
Est. | # | ||
Delivery | Description | ||
Stages | |||
Year | |||
Los Angeles - Under Construction3 | |||
2024 | 17 | + Sunset Glenoaks (7 stages - Los Angeles' first | |
purpose-built studio in 25 years) | |||
+ 3 non-HPP projects including some conversion | |||
stages and all with inferior locations compared to | |||
Sunset Glenoaks, but for 2 stages in Glendale | |||
2025 | 22 | + 2 non-HPP projects with 16 stages pre-leased to | |
Warner Bros. Discovery and remainder with inferior | |||
locations compared to Sunset Glenoaks | |||
2026+ | -- | + | None |
New York - Under Construction3 | |||
2024 | 23 | + 3 non-HPP projects all with inferior locations | |
compared to Sunset Pier 94 in city's outer boroughs | |||
2025 | 17 | + Sunset Pier 94 (6 stages - Manhattan's first | |
purpose-built studio) | |||
+ 3 non-HPP projects including some conversion | |||
stages and all with inferior locations compared to | |||
Sunset Pier 94 in city's outer boroughs and New | |||
Jersey | |||
2026+ | -- | + | None |
Note: Data as of 12/31/23. (1) CBRE based on data from 2016 to 2022. (2) ProdPro. (3). Based on management's assessment of competitive pipeline. There can be no assurance that under construction | 5 |
or future development projects will be completed. |
Selective Development & Diversified Future Pipeline
HPP's under construction projects require minimal additional spend-future pipeline consists of studio, residential and office opportunities to execute on when timing is right
Under Construction - Studio | Under Construction - Studio | Under Construction - Office | ||
SUNSET GLENOAKS
San Fernando Valley (Los Angeles) 241K Est. Sq Ft / 7 Stages
Est. Remaining HPP Spend: $4M
Est. Stabilization Date: 2Q24
Est. HPP's Share Stabilized NOI: $8M
SUNSET PIER 94
Manhattan (New York)
232K Est. Sq Ft / 6 Stages
Est. Remaining HPP Spend: $20M
Est. Stabilization Date: 3Q26
Est. HPP's Share Stabilized NOI: $7M
WASHINGTON 1000
Denny Triangle (Seattle)
546K Est. Sq Ft
Est. Remaining HPP Spend: $39M1
Est. Stabilization Date: 2Q26
Est. HPP's Share Stabilized NOI: $27M
Future
Development
Pipeline
7
Projects
4
Markets
3.2M
Sq Ft
~60/40%
Office/
Studio2
Note: Data as of 12/31/23. See appendix for definitions of commonly used terms. There can be no assurance that development pipeline will be completed on expected timeline or at all and that actual results will not differ materially from estimates. (1) Excludes approximately $71 million of leasing related costs. (2) Calculated as a percentage of total square footage.
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Substantial Cash Flow Growth Potential
HPP has an opportunity to create value through significant embedded growth assuming near-term acceleration in film/TV production and mid-to-longer-term improvement in office fundamentals
$260M Potential Cash NOI Growth1
Development Aggressive
Execution Leasing /
Sales
$367M +$131M +$42M
4Q23 Annualized HPP's Share Cash NOI
(Excluding Asset Sales)
Studio Portfolio Stabilization
In-Process Development
Operational Excellence
$540M | Potential Stabilized HPP's Share Cash NOI |
47% | Potential Growth (Near- to Mid-Term) |
+$87M | Office Portfolio Stabilization |
$627M | Potential Stabilized HPP's Share Cash NOI |
71% | Potential Growth (Mid- to Longer Term) |
Note: See appendix for definitions of commonly used terms and reconciliations of non-GAAP measures. Analysis assumes no dispositions or changes to existing occupancy or rents other than described
herein. (1) Includes: HPP's share of 4Q23 annualized cash NOI less $27 million attributable to 4Q23 annualized cash NOI for assets sold in 4Q23; HPP's share of incremental cash NOI comparing 4Q23 annualized studio cash NOI to stabilized studio cash NOI (calculated as 2022 (pre-strike)same-store studio cash NOI plus $75 million estimated non-same-store (Quixote) stabilized cash NOI); HPP's share of estimated stabilized cash NOI for Sunset Glenoaks, Sunset Pier 94, and Washington 1000; HPP's share of incremental cash NOI from in-service and repositioning office properties under 92% occupancy as of 4Q23 reaching 92% at an average in place building-specific market rate (excludes impact of variable operating costs/recoveries associated with lease up). There can be no assurance as to
the accuracy of management's estimates, that the underlying assumptions will be realized, or that actual results will not differ materially from these estimates. | 7 |
Focus on Fortifying the Balance Sheet
HPP continues to proactively strengthen its balance sheet-in 2023 this included executing on over
$1 billion of opportunistic asset sales
Current Liquidity
HPP Has No Debt Maturities Until November 20254
Cash on Hand | $100.4M |
Revolver Availability | $708.0M |
Construction Loan Availability | $200.6M |
TOTAL | $1,009.0M1 |
37% | 90% |
HPP's Share | |
Fixed or | |
Net Debt / HPP's | |
($ in Millions)
$1,000
$800
Series B Notes:
Repay with
corporate liquidity or (un)secured financing (dividend suspension yields ~$36M of cash per quarter 1)
1918 Eighth:
Class A, 100%
leased Top 5 tech
company with ~5 yrs remaining lease term at maturity (tenant credit, debt yield expected to support refinancing)
Element LA:
Class A, 100%
leased to Riot Games HQ (Tencent backed) with ~5 yrs remaining lease term at maturity (tenant credit, debt yield expected to support refinancing)
Share Undepreciated | Capped |
Rate Debt3 | |
2 | |
Book Value | |
8.9x | ~4 Yrs |
HPP's Share | |
Net Debt / HPP's | Avg. Debt |
Share of Cash Adj. | Maturity |
EBITDAre2 |
$600
$400
$200
$0
$0
$168 |
$173 |
$259
$531
$342
$138
$456
$56
$350
2024 | 2025 | 2026 | 2027 | 2028 |
(4Q) |
Unsecured Debt | Secured Debt | ||||
Note: Data as of 12/31/23. See appendix for definitions of commonly used terms. (1) Revolver and construction loan borrowings are subject to certain conditions. (2) See appendix for reconciliations of | |||||
HPP's share of net debt, HPP's share of undepreciated book value and HPP's share of cash adjusted EBITDAre. (3) Fixed rate debt includes debt subject to interest rate swaps. (4) Reflects HPP's share of | |||||
principal amortization and maturities based on contractual maturity dates, including impact of extension options, and excluding unamortized deferred financing costs, loan discounts/premiums, and | 8 | ||||
consolidated joint venture partners' debt. |
Potential Path to Improved Leverage Metrics
Execution on in-process developments and leasing, supported by assumed improvements in studio and office market fundamentals, provides a potential path to strengthen key leverage metrics
HPP's Share Net Debt / HPP's Share Cash Adj. EBITDAre
Estimated Following 4Q23 Asset Sales, Completion of In-
Process Developments & Related Debt Funding,
Stabilization of Studio / Office Portfolios
8.9x | |
7.0x | 6.5x |
5.6x |
4Q23 | + Studio Portfolio | +In-Process | +Office Portfolio |
Actual | Stabilized, Less | Developments | Stabilized3 |
Sold Assets1 | Debt Funded, | ||
Stabilized2 |
In-Line with HPP's Below 7.0x Target
Note: See appendix for definitions of commonly used terms and reconciliations of non-GAAP measures. Analysis assumes no dispositions or changes to leverage, occupancy or rents other than described | |
herein. (1) Adds in HPP's share of incremental cash NOI comparing 4Q23 annualized studio cash NOI to stabilized studio cash NOI (calculated as 2022 (pre-strike)same-store studio cash NOI plus $75 | |
million estimated non-same-store (Quixote) stabilized cash NOI) less $27 million attributable to 4Q23 annualized cash NOI for assets sold in 4Q23. (2) Adds in HPP's share of estimated stabilized cash NOI | |
for Sunset Glenoaks, Sunset Pier 94, and Washington 1000 and related debt fully funded and assumes no other changes to office occupancy or rents. (3) Adds in HPP's share of incremental cash NOI | |
from in-service and repositioning office properties under 92% occupancy as of 4Q23 reaching 92% at an average in place building-specific market rate (excludes impact of variable operating | |
costs/recoveries associated with lease up). There can be no assurance as to the accuracy of management's estimates, that the underlying assumptions will be realized, or that actual results will not differ | 9 |
materially from these estimates. |
Already an ESG Leader: HPPx2030 Vision
HPP has set additional ambitious targets to further reduce climate impact, grow its portfolio of green products and services, and diversify management
ESG Accolades
GRESB | NAREIT | Carbon Neutral | Newsweek |
Sector Leader | Leader in the | Operations | Listed on |
for Office Americas, | Light Award Office | Hudson Pacific | America's Most |
2021-2023 | Sector, 2022- | Achieved | Responsible |
5-Star & Green | 2023 | Carbon Neutral | Companies, |
Star Ratings, | Best New Entry, | Operation, 2020 | 2023 |
2019-2023 | 2019 |
Green Lease | Energy Star | Fitwel | Science Based |
Leader | Partner of the | Fitwel Campion, | Targets |
Silver Leader, | Year, 2019-2022 | 2019-2022 | Emissions & |
2019-2022 | Sustained | Fitwel Best in | reduction |
Excellence, 2021- | Building Health | Targets | |
2022 | Award, 2020 | Validated, 2020 |
Bloomberg | Globe Street | NAIOP | S&P Global |
Gender Equality | Real Estate | Developer of | Sustainability |
Index | Forum | the Year, 2021 | Yearbook, 2022- |
Member, 2023 | Best Places to | 2023 | |
Work 2019, 2022 |
HPPx2030 Vision
- 100% carbon neutral and renewable electricity in operations for 10 years
- 50% absolute reduction in Scope 1 & 2 GHG emissions from operations, without offsetting instruments (2018 baseline)
- 50% absolute reduction in energy and water used for operations (2019 baseline)
- Zero waste-90%+ landfill diversion rate-in operations
- 90% LEED, 80% Fitwel, 75% Energy Star in-service office portfolio
- 50% absolute reduction in Scope 3 GHG emissions from production vehicles and transportation assets (2022 baseline)
- 50% of production services business to come from "Verde" green production vehicles and transportation assets
- >1% of adjusted net earnings donated to strategic charities annually for 10 years
- $20M+ invested in innovative solutions to homelessness and housing affordability
- Equal women and 100% increase in Black, Hispanic/Latino, or Asian employees in management (2021 baseline)
- >15% of on-site contractors for (re)developments diverse and/or local
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Hudson Pacific Properties Inc. published this content on 04 March 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 04 March 2024 11:43:06 UTC.