Victor Coleman is working on his bottom line. Hudson Pacific Properties posted a $53 million net loss in the first quarter, an improvement compared to the $75 million loss in the same period last year.
The Los Angeles real estate investment trust mostly blamed the losses on non-real estate depreciation and prior-year write-downs connected to its Quixote business. The REIT lost about $300 million last year from writing down Quixote.
But Coleman, whose compensation was cut because shareholders weren’t happy, said he wants to break even on Quixote this year.
The production services vendor, which Hudson Pacific purchased for $360 million in 2022, is closing most of its sound stage business in Los Angeles and pulling out of other spots, The Real Deal previously reported.
“We’re making the necessary and quite frankly, difficult decisions,” when it comes to Quixote, the CEO and chair said on Thursday’s call.
His Los Angeles studio business — Sunset Gower, Sunset Bronson and Sunset Las Palmas — which are sound stages and production offices, is 97 percent leased. All of the company’s studio stages are 73 percent leased.
Hudson Pacific and Blackstone have a billion-dollar loan on that Hollywood portfolio coming due this summer. The company said it is in “productive” conversations with its partner and their lender.
The REIT is in conversations with its tenant Netflix, too, on the streaming giant’s long-term space needs. Netflix is in talks to buy the Radford Studio Center, after Hackman Capital Partners lost it to its lenders. “Our relationship is intact, and it’s positive,” Coleman said of Netflix. If Netflix buys the Studio City lot, “it won’t interfere with our relationship with them, and our conversations with them going forward,” he said.
On office, the REIT inked 554,000 square feet of leases in the first quarter, and about half were new. The company’s office portfolio is 78 percent occupied. It bagged two 50,000-square-foot lease renewals in Northern California. The technology and artificial intelligence boom is fueling HPP’s leasing activity in the Bay Area, but Los Angeles is still a challenge, Coleman said.
HPP wants to sell about $200 million worth of real estate this year as part of the plan to pull it into the black, Coleman said on the earnings call. There is a buyer for 10950 Washington Boulevard in Culver City at a price that exceeded expectations, he said.
The REIT’s operations generated $18 million in cash in the first quarter compared to $3 million a year earlier.
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