Trending
Hudson Pacific’s quarterly loss widens with labor strikes
Hollywood work stoppage contributes to $31M deficit for studio owner REIT
Hudson Pacific Properties faces battles on two fronts: a weak market for office leasing and two major Hollywood strikes threatening film and television production at its studios.
The Los Angeles-based REIT reported a $31 million loss in the second quarter, compared to a $20 million loss in the prior period, according to an earnings release on Wednesday.
“A strike of this magnitude, while rare and historically short-term, can be extremely impactful and far-reaching,” Hudson Pacific CEO Victor Coleman said in a statement, adding the firm is preparing for a resurgence in demand later this year, predicting the actors’ and writers’ strikes will be settled by then.
The firm reeled in $245 million in total revenues — more than 80 percent of which came from its office portfolio — down from $252 million in the first quarter and about the same in the second quarter last year.
As revenues shrunk slightly, expenses rose. Hudson Pacific posted $270 million in expenses from April through the end of June. That’s up from $267 million in the first quarter and $248 million from the second quarter of 2022.
On an earnings call discussing the firm’s second-quarter results, Coleman and other executives tried to assuage investors and analysts about the long-term impacts of the strikes. Through the end of the year, Coleman said, streaming services are projected to spend as much or more than what they did in 2023 on content.
“Original production drives a lot of subscriber growth,” said Jeff Stotland, Hudson Pacific’s global studios head. “It’s a key economic ingredient in their playbooks. And hopefully we’ll benefit from that.”
On the office front, occupancy across its 43-property portfolio has dropped to 85.6 percent, from 91.2 percent in the second quarter of last year, according to financial filings.
Hudson Pacific signed 403,000 square feet worth of new leases and renewals — an improvement from the 344,000 square feet in the first quarter, but a 43 percent drop compared to the second quarter of 2022.
“The timeline for tenant decision-making remains extended,” Coleman said in an earnings release. But he added that “a greater percentage of our tenants are starting to enforce back-to-office requirements, which we believe could ultimately result in the need for more office space.”