Hudson Pacific Properties Q4 Earnings Call Highlights

Key Points

• Hudson Pacific completed roughly $330 million of asset sales and more than $2 billion of capital transactions in 2025, which management says nearly doubled liquidity and captured about $26 million of G&A/interest savings plus $25 million of annualized cuts tied to the Quixote restructuring to give the company runway to stabilize leasing.
• Office leasing momentum accelerated — Q4 leasing was 518,000 sq ft, occupancy rose to 76.3%, and the leasing pipeline expanded to 2.3 million square feet (up 15% YoY) with tours +50% YoY, supporting the reinstated 2026 FFO guidance of $0.96–$1.06 and in‑service occupancy guidance of 80–82%.
• Studio results are improving but uneven: studio NOI and in‑service occupancy climbed sequentially, yet the Quixote business caused a large non‑cash impairment and remains an earnings drag that management plans to reduce to “flat” by year‑end through further cost reductions and managed downsizing.

Hudson Pacific Properties NYSE: HPP executives used the company’s fourth-quarter 2025 earnings call to highlight a year of balance sheet changes, cost reductions, and improved leasing momentum, while also outlining a return to full-year guidance for 2026. Management repeatedly emphasized “flight to quality” demand in its West Coast office portfolio and said it is working to reduce the earnings drag from its Quixote studio-services business by year-end.

Management points to capital structure overhaul and cost cuts

CEO Victor Coleman characterized 2025 as a “breakthrough year,” citing nearly $330 million of asset sales and more than $2 billion of capital transactions. Coleman said the actions extended the company’s maturity runway and “nearly doubled” liquidity, allowing Hudson Pacific to focus on leasing up and stabilizing its office portfolio.

Executives also pointed to expense reductions. Coleman said the company generated $26 million of combined G&A and interest expense savings in 2025 and has “locked in $25 million of annualized expense savings” through restructuring at Quixote. CFO Harout Diramerian added that the company saved over $5 million of interest expense and described broad improvements in covenant metrics.

Office leasing improves; pipeline grows to 2.3 million square feet

President Mark Lamas said fourth-quarter leasing totaled 518,000 square feet, pushing office occupancy to 76.3% (up 40 basis points sequentially) and the leased rate to 77% (up 50 basis points). Excluding the sale of the fully occupied Element LA asset, Lamas said occupancy and leased rates would have increased by 90 and 100 basis points, respectively.

Hudson Pacific also reported a larger leasing pipeline and increased tenant activity:

• Office leasing pipeline of 2.3 million square feet, up 15% year-over-year
• Fourth-quarter tours of 2.1 million square feet, up more than 50% year-over-year
• Average requirement size increased to 25,000 square feet, which management said indicates tenants “aren’t just leasing, they’re expanding”

Regarding expirations, Lamas said only about 1 million square feet comes due in 2026, and the company has 60% “coverage” (deals, LOIs, or proposals) on first-quarter expirations and 55% coverage on the remainder. He cited coverage on several larger situations, including Picture Shop at 6040 Sunset, PayPal at Fourth and Traction, Dell EMC at 875 Howard, and a renewal with Weil, Gotshal & Manges that covers 80% of its lease.

On lease economics, Lamas said fourth-quarter GAAP rents rose 0.4% while cash rents declined 9%, which he called a sequential improvement from the third quarter. Management also said 2026 expirations are about 3% below market and that in-place rents are “essentially at market.”

Studios: occupancy gains, but Quixote remains a focus

In studios, management described a “disciplined production environment” but said performance has been improving. Lamas said trailing twelve-month in-service stage occupancy rose 330 basis points quarter-over-quarter to 69.1%, helped by a full lease-up at Sunset Las Palmas. For in-service Hollywood stages, he said occupancy was 86.2%, while Quixote stages reached 53.3%, up 500 basis points quarter-over-quarter.

Lamas also reported studio revenue increased $3.6 million sequentially and studio NOI increased $2.1 million. Coleman said the company is evaluating additional cost reductions to mitigate Quixote’s earnings drag by year-end. In Q&A, Coleman said the Quixote impairment was driven by required accounting evaluations for an operating business and reiterated plans to “manage that business down” so it is “flat” by year-end, while keeping details limited due to obligations to landlords and other considerations.

Executives also discussed tax credits and production timing. When asked about a potential ramp, management said the 2026 guidance does not assume improvement in show counts, holding them in line with 2025 averages “in the high 70s.” Coleman nevertheless cited “green shoots,” including growth in “micro dramas,” which he said increased from $500 million of revenue in 2021 to $7 billion in 2025 and is projected to reach $11 billion in 2026, calling it an opportunity in Los Angeles that is not included in the company’s numbers.

On the development front, management said Sunset Pier 94 Studios delivered on time and under budget and reached 90% occupancy in its first quarter of operations. In Q&A, the company said it holds a 25% interest and that the facility is fully occupied by two tenants, with one longer-term and one shorter-term lease and “backup” demand for the shorter-term space.

Financial results and 2026 guidance reinstated

Diramerian reported fourth-quarter total revenues of $256 million, compared to $209.7 million in the prior year, driven by an Element LA lease termination fee. G&A fell 33% year-over-year to $13 million. FFO excluding specified items was $13.6 million, or $0.21 per diluted share, compared to $15.5 million, or $0.74 per diluted share, a year earlier.

Specified items totaled $213.6 million, or $3.27 per diluted share, which Diramerian said primarily reflected a non-cash Quixote impairment and the Element LA lease termination fee net of transaction costs. Same-store cash NOI was $84.8 million versus $94.3 million in the prior year, which management attributed primarily to lower average office occupancy.

For 2026, Hudson Pacific reinstated full-year FFO guidance of $0.96 to $1.06 per diluted share. Diramerian said the company expects slightly lower FFO in the first quarter relative to the fourth quarter of 2025, followed by steady sequential growth as leasing converts to cash flow. The company introduced annual average in-service office occupancy guidance of 80% to 82%, with management noting year-end occupancy is expected to exceed that range, and that the outlook assumes completion of a third lease with the City and County of San Francisco at 1455 Market by mid-year and additional gains weighted to the fourth quarter.

Hudson Pacific guided to same-store property cash NOI growth of negative 1.75% to negative 0.75%, which management said would be an improvement versus 2025 as office occupancy ramps and studio NOI growth offsets near-term pressures. Diramerian also projected interest expense of $151 million to $161 million and G&A of $49 million to $55 million, which he described as meaningful savings versus 2025 at the midpoints.

In Q&A, management addressed liquidity and leasing costs, with Lamas saying internal modeling shows ample liquidity to support leasing capital needs without assuming asset sales. Coleman reiterated a 2026 asset sale target of $200 million to $300 million and noted the company is marketing 10950 Washington in Culver City, which he said was re-entitled for 508 residential units.

On an August 2026 maturity for the Hollywood Media Portfolio loan, management said discussions are ongoing but declined to provide specifics. Coleman also said the company remains engaged with Netflix and believes the portfolio is an optimal long-term office solution given its quality, location, and expansion potential.

About Hudson Pacific Properties NYSE: HPP

Hudson Pacific Properties NYSE: HPP is a self-managed real estate investment trust focused on the acquisition, development and management of high-quality office and studio properties. The company's portfolio spans strategic West Coast markets in the United States and key markets in Canada, providing space for technology, media and creative companies as well as major film and television producers. As an owner and operator of both traditional office buildings and specialized production facilities, Hudson Pacific seeks to deliver stable income through long-term leases and strategic property enhancements.

In its office segment, Hudson Pacific targets markets with strong job growth and limited supply, including Los Angeles, Silicon Valley, San Diego and Seattle, as well as Vancouver, British Columbia.

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