Hudson Pacific sells two Santa Monica office properties for $73M

Hudson Pacific Properties has sold two office buildings in Santa Monica for a combined $72.5 million.

The Brentwood-based real estate investment trust offloaded offices at 604 Arizona Avenue and 3401 Exposition Boulevard, the Commercial Observer reported. Neither the buyers, nor the size and price of each respective building, were disclosed. 

Research by The Real Deal, however, shows the price for the combined 107,700-square-foot offices sale comes out to $673 per square foot.

The office building at 604 Arizona and Sixth Street serves as the headquarters for job search engine ZipRecruiter. The two-story building contains 59,300 square feet, according to Loopnet. 

The office building at 3401 Exposition is occupied by Company 3 and Method Studios, entertainment units of Deluxe Entertainment, which signed a 12-year lease in 2013. The one-story building has 48,400 square feet, according to Loopnet. 

In 2013, Hudson Pacific bought the building at 604 Arizona for $21.5 million and the building at 3401 Exposition for $24.7 million, for a combined $46.2 million.

The studio and office landlord has taken a financial hit from empty sound stages during the writers and actors strikes, as well as declining demand for entertainment office space. It reported a $31 million loss in the second quarter, compared to a $20 million loss in the prior period, according to The Real Deal.

Last spring, Moody’s Analytics downgraded Hudson Pacific’s credit rating because of the strikes and diminishing office leases. Moody’s downgraded its preferred stock rating to Ba3 from Ba1 and its senior unsecured debt rating to Ba1 from Baa3, according to The Real Deal.

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.

Despite the fall-off, Hudson executives remain optimistic.

“Regarding our office portfolio, 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 as workforces have grown on a net basis over the past five years in many industries central to our leasing efforts,” Victor Coleman, CEO of Hudson Pacific, said in a second-quarter earnings report.

Even with thousands of Hollywood writers on strike, Hudson Pacific is forging ahead with plans to add to its studio footprint in Hollywood.The L.A.-based REIT filed plans in June to build a 134,000-square-foot movie studio at 6650 West Romaine Street, across the road from its Sunset Las Palmas studio complex.

— Dana Bartholomew

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