Hudson Pacific Properties just scraped in a profit last quarter, its second profitable quarter in a row.
The Los Angeles-based production studio and office landlord reported $2.3 million in net income in the second quarter, down from the $5 million in income reported in the first quarter of this year, but still a steep improvement over the fourth quarter of 2020, when the firm lost $8.5 million.
Still, the company is not optimistic that office occupancy levels and vacancy rates will return to pre-pandemic levels this year, CFO Harout Diramerian said on an earnings call.
HPP reported $0.48 in funds from operations per share — a total of $73 million — the same as the previous quarter. It collected $215.6 million in revenue, a small increase from $213 million in the first quarter.
The firm has focused its spending on expanding its status as one of the largest studio investors in Los Angeles and is in discussions to acquire value-add studio properties.
This week, the company teamed up with Blackstone to plan a 241,000-square-foot, seven-stage facility in Sun Valley, California, requiring a total investment of up to $190 million, as part of its Sunset Studios platform.
Outside of Los Angeles, it’s also partnering with Blackstone to build a $1 billion movie production complex in the UK.
But its focus on studio properties won’t “distract” the firm from its office property portfolio, CEO Victor Coleman said on the call.
“Even with [Covid] variants,” Coleman said that he expects most companies to start re-occupying office space in the fall.
The firm signed over 510,000 square feet of new office leases across its portfolio in the second quarter. Last month, Califia Farms signed a 29,440-square-foot lease at HPPs Arts District building, taking over space from WeWork.
In Seattle, Dell EMC downsized its lease at Hudson Pacific’s office building at 505 First Avenue by over 130,000 square feet, but will continue to take up 89,426 square feet at the building.
HPP has also collected 100 percent of deferred office rents, it said.