TRD Insights: Here’s what Netflix, Disney and CBS pay at HPP-Blackstone Hollywood studios

Content giants among studio tenants in 1.2M sf portfolio

Los Angeles Los Angeles Insights /
Aug.August 06, 2020 03:15 PM
Bob Iger, Reed Hastings and (clockwise from top left) Sunset Las Palmas, Sunset Bronson and Sunset Gower Studios (Getty, Google Maps)

Bob Iger, Reed Hastings and (clockwise from top left) Sunset Las Palmas, Sunset Bronson and Sunset Gower Studios (Getty, Google Maps)

Blackstone’s acquisition of a 49 percent stake in Hudson Pacific Properties and its $1.65 billion Hollywood real estate portfolio is a big bet on the demand for space from content creators like Netflix. The streaming giant also happens to be the largest studio tenant in the HPP portfolio. And now we know how much they’re paying.

(Related: Inside Hudson Pacific and Blackstone’s field of streams )

Like many of Blackstone’s recent blockbuster buys, such as its $18.7 billion industrial portfolio deal or its $4.6 billion buy-leaseback deal for the MGM Grand and Mandalay Bay in Las Vegas, this latest acquisition is also being financed by a large CMBS loan.

As is usually the case with CMBS deals, recently published ratings documents from Moody’s for the $900 million transaction, listed as GB 2020-FLIX, provide an in depth look at the portfolio’s finances. In this case, that includes the less-understood world of soundstage real estate.

The joint venture’s Hollywood properties include three studios — Sunset Bronson, Sunset Gower, and Sunset Las Palmas — and four adjoining office buildings. The studios have a total of 34 stages totaling 1.2 million square feet, and are spread across 37 acres of infill real estate, according to the Moody’s report.

The studio properties account for 59 percent of the properties’ rentable square footage and 44 percent of rent. Netflix is the largest studio tenant, accounting for over a third of the rent and paying $41.32 per square foot, slightly below the average for the top five tenants, which also include Disney, Disney-owned ABC, CBS/Viacom, and TV station KTLA.

Rent at the three studios has risen significantly over the past three years, according to a recent CBRE report on Los Angeles’ production landscape. Sunset Las Palmas is the priciest of the three with base rent of $51.84 a foot, up from $42.09 in 2017.

In addition to base rent, the studio properties also generate a substantial amount of income through the rental of lighting and grip equipment and control rooms. While underwritten base rent for the studios is about $42 million per year, gross annual income from light and grip is nearly $20 million.

On the office front, Netflix fully occupies three of the four office buildings, while the other building is fully occupied by film processing company Technicolor. Moody’s notes that Technicolor’s French parent company recently filed for bankruptcy, and that Netflix has a right of first offer for any space that becomes available in the Technicolor building.

Moody’s notes that Technicolor’s building is “mission critical” to the company, given its proximity to major clients like Netflix and Disney, and also serves as its global headquarters.

The rent that Blackstone’s Hollywood office tenants are paying — more than $70 per square foot at two of the buildings — is above average for the Hollywood market and L.A. as a whole.

CBRE’s latest Los Angeles office market report found that average full service gross asking rent in L.A. County was $3.71 per month per square foot, or $44.52 annually. Rents in the Hollywood/Wilshire corridor submarket were slightly lower at $43.20 per square foot per year. For comparison, the priciest submarket, West Los Angeles, had average asking rents of $62.88 a foot per year.


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