Hudson Pacific losses balloon 50% as office revenues dip

The losses at Hudson Pacific Properties are adding up. 

The Los Angeles-based office and studio investor reported a loss of $47 million in the second quarter, marking its 13th quarter of consecutive net losses, according to financial filings and an earnings release last week. 

The firm’s second-quarter losses were down from the $52 million net loss reported in the first quarter, but up from the $36 million loss reported from April through June last year. 

Most of the losses were attributed to a shrink in revenues from the company’s office portfolio. 

The firm reported $176 million in total office revenues, down 15 percent from $207 million in the second quarter of last year, and roughly flat from the prior three months. In the second quarter of 2019, the firm reported $179 million in office revenues. 

A bright spot: leasing. 

On a call discussing the firm’s quarterly earnings last week, CEO Victor Coleman said the firm had signed more than 500,000 square feet of office leases, the most since 2022. About two-thirds of those leases were new deals, he said. 

“There’s a gradual strengthening across our West Coast office markets almost uniformly,” Coleman said. “Development pipelines are diminished, tenant requirements are growing, crime is falling and transit ridership is improving. Nowhere is this more evident than in San Francisco.”

Though tenants signed deals for about 2 million square feet of office space in San Francisco in the second quarter, marking the second-best quarter in the last two years, more than a third of San Francisco’s office space is still available for lease, according to CBRE. In the market, more tenants are exiting space than new ones leasing. 

Hudson Pacific is still looking to offload office buildings, but did not identify which buildings it was looking to shed. 

On the studio front, Hudson Pacific is not expecting a huge boon from its 1.7 million-square-foot studio portfolio. The firm reported $42 million in revenues from its studio business, most of which it owns with Blackstone, up from $39 million in the first quarter, according to financial filings. 

Two major Hollywood strikes, which largely halted film and television production across the U.S., hampered Hudson Pacific’s ability to make money off its studios. 

“Beyond the strikes, consolidation, cost-cutting and shifting content mix are altering not just show counts but also production type, number of episodes and budgets,” Coleman said on the earnings call. 

“We currently lack the visibility to assess with reasonable certainty how and when our studio operations will normalize,” he added.