Hudson Pacific Properties is trying to stop the bleeding after another nine-figure annual loss and coming up more than half a billion dollars short last year.
Victor Coleman’s real estate investment trust reported a loss of about $278 million in the fourth quarter, compared to $167 million a year earlier.
That put its losses at $572 million last year, compared to $364 million the prior year.
The Los Angeles-based office and studio owner blamed its Quixote business, which it purchased for more than $360 million four years ago for most of its losses.
Quixote rents sound stages, cast trailers and other production equipment. A downturn in that business comes after decreased demand caused by the slowdown in Los Angeles’ film industry because of labor strikes, cheaper productions costs abroad and media consolidation.
On Thursday’s earnings call, Coleman said Hudson Pacific wants to eliminate Quixote’s earnings drag, but he didn’t say how it plans to do that. The chairman and CEO stressed the company’s intention to be a pure-play office REIT, but he didn’t indicate plans to offload Quixote.
There are some pluses. The company signed more than 2 million square feet of office leases, its best year since before the pandemic, and it sold off $330 million of real estate.
That includes its sale of an office campus in West Los Angeles for $150 million, plus an $81 million lease termination payment that was used to repay $206 million of the property’s commercial mortgage-backed securities debt.
Coleman said more sell-offs are to come, about $200 million to $300 million worth. That includes 10950 Washington, a three-story office building with sound stages in Culver City, which Hudson Pacific repositioned for a resi play. The company is marketing the Silicon Beach property after entitling it for residential redevelopment. Coleman said it has “very strong buyer and joint venture interest.”
Despite sell-offs and extending its maturity runway, Hudson Pacific has more than $500 million debt coming due this year. The CMBS debt is secured by a Hollywood portfolio that has a $1 billion balance and includes Sunset Gower Studios, Sunset Las Palmas Studios and Sunset Bronson Studios.
Coleman wouldn’t discuss specifics on Hudson Pacific’s talks with lenders.
The company’s office portfolio is 77 percent leased, and its studios are 67 percent leased.
Its Los Angeles offices are “essentially fully leased long-term,” Coleman said. The company said it has the fewest number of lease expirations in years, representing about a million square feet.
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