Hudson Pacific posts loss, downplays Netflix woes
$7.6M in red ink comes as push into studio space continues
A top executive of Hudson Pacific Properties shrugged off Netflix’s recent slowdown on revenue growth as a factor in a quarterly stumble on earnings, saying demand for content creation is higher than touting the tenant base behind his company’s ongoing push into studio space.
Hudson Pacific’s President Mark Lammas made the comments as the real estate investment trust reported a $7.6 million net loss in the first quarter, compared with a $8.1 million net profit in the prior quarter and $11.4 million for the same period a year earlier.
Hudson Pacific reported a 14.7 percent year-over-year hike in revenue in the first quarter for a total of $244.5 million — with $33.1 million coming from studio real estate. Lammas said the company remains confident in future demand for new studio space, adding that Netflix’s recent earnings report would not affect his company’s development pipeline.
Netflix reported a 9.8 percent year-over-year rise in revenues for the first quarter, compared with a 24 percent rise in the first quarter of 2021. The disclosure of the steep drop-off on a year-to-year comparison led to a plunge in its shares that wiped more than $50 billion off the company’s market capitalization.
Hudson Pacific’s Lammas emphasized on his earnings call that––while the REIT leases 418,000 square feet of studio space to Netflix at the Sunset Bronson studios it owns with Blackstone–– it also counts Amazon and Apple as tenants.
“No one says the only content creator we lease to is Netflix,” Lammas said. “Competition is good, I don’t think anyone is implying if Netflix goes, Hudson goes.”
Hudson Pacific is currently in the works on it $190 million Sunset Glenoaks development in Sun Valley and a $1 billion studio development in the U.K.. Both of these deals are under a joint venture with Blackstone, which bought a 50 percent stake in Hudson Pacific’s studio business in 2020.
Hudson Pacific is even leveraging its existing studio developments to bring in new office leases.
The company signed production firm Company 3 to 60,000 more square feet at its Harlow office development at its Sunset Las Palmas studios in the first quarter, Hudson Pacific said in an earnings release. With the new lease, Company 3 now occupies the entire 130,000-square-foot Harlow property.