Hudson Pacific Properties: Office Properties, AI, And San Francisco Recovery

2026-03-13 09:59:14 ET

Hudson Pacific Properties ( HPP ) has reverted to its cheapest ever multiple on the aggregation of a perfect storm of headwinds, including a suspended dividend, unfavorable debt maturities, and a San Francisco office vacancy rate that continues to hover far above the national U.S. average. The office REIT engineered a 1-for-7 reverse stock split in November and has since seen the value of its stock dip by over 50% since then. The intense selloff, with HPP also down 97% more broadly over the last 5 years, reflects front-loaded debt maturities and a San Francisco office vacancy rate that stood at 24.7% as of the end of January. This was a 650 basis points difference from the national U.S. vacancy rate of 18.2%, with HPP's in-service office portfolio ending its fiscal 2025 fourth quarter with a 76.3% occupancy rate. The bullish play here is that not only is this occupancy rate on the up, boosted by demand from AI companies for office space in San Francisco. The city actually saw its vacancy rate dip by 460 basis points year-over-year, but it remains one of the highest in the U.S. The REIT's in-service studio portfolio continued to show weakness, with the total 67.1% leased, a significant drop from 73.8% a year ago....

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