Hudson Pacific Properties Reports Fourth Quarter 2025 Financial Results

Unaudited, in thousands, except share data

Full Year 2026

Assumptions

Metric

Low

High

Average in-service office occupancy ⁽¹⁾

80.0%

82.0%

Growth in same-store property cash NOI ⁽²⁾⁽³⁾

(1.75)%

(0.75)%

GAAP non-cash revenue (straight-line rent and above/below-market rents) ⁽⁴⁾

$11,500

$16,500

GAAP non-cash expense (straight-line rent expense and above/below-market ground rent)

$(6,000)

$(8,000)

General and administrative expenses ⁽⁵⁾

$(49,500)

$(55,500)

Interest expense ⁽⁶⁾

$(151,000)

$(161,000)

Non-real estate depreciation and amortization

$(12,000)

$(14,000)

FFO from unconsolidated joint ventures

$500

$2,500

FFO attributable to non-controlling interests

$(22,000)

$(26,000)

FFO attributable to preferred units/shares

$(20,000)

$(20,000)

Weighted average common stock/units outstanding—diluted ⁽⁷⁾

65,000,000

66,000,000

(1)

In-service office includes all office properties within the same-store for full year 2026, along with one non-same store property, Bentall Centre.

(2)

Same-store for the full year 2026 is defined as the 37 office properties and three studio properties, as applicable, owned and included in the Company's stabilized portfolio as of January 1, 2025, and anticipated to still be owned and included in the stabilized portfolio through December 31, 2026.

(3)

Please see non-GAAP information below for definition of cash NOI.

(4)

Includes non-cash straight-line rent associated with the studio and office properties.

(5)

Includes non-cash compensation expense, which the Company estimates at $11,500 in 2026.

(6)

Includes non-cash interest expense, which the Company estimates at $7,500 in 2026.

(7)

Diluted shares represent ownership in the Company through shares of common stock, OP Units and other convertible or exchangeable instruments. The weighted average fully diluted common stock/units outstanding for 2026 includes an estimate for the dilution impact of stock grants to the Company's executives under its long-term incentive programs. This estimate is based on the projected award potential of such programs as of the end of the most recently completed quarter, as calculated in accordance with the ASC 260, Earnings Per Share.

Consolidated Balance Sheets

In thousands, except share data

12/31/25

12/31/24

(Unaudited)

ASSETS

Investment in real estate, at cost

$

7,793,299

$

8,233,286

Accumulated depreciation and amortization

(1,953,048

)

(1,791,108

)

Investment in real estate, net

5,840,251

6,442,178

Non-real estate property, plant and equipment, net

72,397

127,067

Cash and cash equivalents

138,358

63,256

Restricted cash

23,770

35,921

Accounts receivable, net

14,923

14,505

Straight-line rent receivables, net

195,425

199,748

Deferred leasing costs and intangible assets, net

307,390

327,514

Operating lease right-of-use assets

333,258

370,826

Prepaid expenses and other assets, net

86,607

90,114

Investment in unconsolidated real estate entities

246,835

221,468

Goodwill

8,754

156,529

Assets associated with real estate held for sale

—

83,113

TOTAL ASSETS

$

7,267,968

$

8,132,239

LIABILITIES AND EQUITY

Liabilities

Unsecured and secured debt, net

$

3,351,458

$

4,176,844

Joint venture partner debt

66,136

66,136

Accounts payable, accrued liabilities and other

209,382

193,861

Operating lease liabilities

343,886

380,004

Intangible liabilities, net

17,772

21,838

Security deposits, prepaid rent and other

74,369

84,708

Liabilities associated with real estate held for sale

—

31,117

Total liabilities

4,063,003

4,954,508

Redeemable preferred units of the operating partnership

2,795

9,815

Redeemable non-controlling interest in consolidated real estate entities

50,581

49,279

Equity

HPP stockholders' equity:

Preferred stock, $0.01 par value, 18,400,000 authorized; 4.750% Series C cumulative redeemable preferred stock; $25.00 per share liquidation preference, 17,000,000 outstanding at 12/31/25 and 12/31/24

425,000

425,000

Common stock, $0.01 par value, 103,200,000 authorized and 54,227,096 shares outstanding at 12/31/25; 68,800,000 authorized and 20,182,702 shares outstanding at 12/31/24, respectively

529

1,403

Additional paid-in capital

2,548,488

2,437,484

Accumulated other comprehensive loss

(1,860

)

(8,417

)

Total HPP stockholders' equity

2,972,157

2,855,470

Non-controlling interest—members in consolidated real estate entities

67,869

169,452

Non-controlling interest—units in the operating partnership

111,563

93,715

Total equity

3,151,589

3,118,637

TOTAL LIABILITIES AND EQUITY

$

7,267,968

$

8,132,239

Consolidated Statements of Operations

In thousands, except per share data

Three Months Ended

Year Ended

12/31/25

12/31/24

12/31/25

12/31/24

(Unaudited)

(Unaudited)

(Unaudited)

REVENUES

Office

Rental revenues

$

216,754

$

170,689

$

681,793

$

677,620

Service and other revenues

3,683

3,531

14,267

14,656

Total office revenues

220,437

174,220

696,060

692,276

Studio

Rental revenues

13,747

12,136

54,855

53,897

Service and other revenues

21,843

23,310

80,190

95,909

Total studio revenues

35,590

35,446

135,045

149,806

Total revenues

256,027

209,666

831,105

842,082

OPERATING EXPENSES

Office operating expenses

68,661

77,896

284,016

305,649

Studio operating expenses

33,811

38,030

143,726

148,430

General and administrative

12,985

19,492

72,953

79,451

Depreciation and amortization

93,046

89,101

374,967

354,425

Total operating expenses

208,503

224,519

875,662

887,955

OTHER EXPENSES

Income (loss) from unconsolidated real estate entities

2,136

(865

)

(67

)

(7,308

)

Fee income

1,482

1,336

5,399

5,269

Interest expense

(38,850

)

(44,140

)

(172,218

)

(177,393

)

Interest income

1,468

492

6,238

2,467

Management services reimbursement income—unconsolidated real estate entities

1,024

932

4,206

4,119

Management services expense—unconsolidated real estate entities

(1,024

)

(932

)

(4,206

)

(4,119

)

Transaction-related expenses

—

(193

)

(590

)

(2,499

)

Unrealized loss on non-real estate investments

(663

)

(934

)

(2,998

)

(3,958

)

(Loss) gain on sale of real estate, net

(4,293

)

(2,453

)

5,714

(2,453

)

Impairment loss

(280,844

)

(113,121

)

(299,320

)

(149,664

)

Loss on deconsolidation of real estate entity

—

—

(77,907

)

—

Loss on extinguishment of debt

(6,751

)

—

(10,453

)

—

Other (expense) income

(2,328

)

198

(1,812

)

1,647

Total other expenses

(328,643

)

(159,680

)

(548,014

)

(333,892

)

Loss before income tax benefit (provision)

(281,119

)

(174,533

)

(592,571

)

(379,765

)

Income tax benefit (provision)

945

1,052

273

(1,641

)

Net loss

(280,174

)

(173,481

)

(592,298

)

(381,406

)

Net income attributable to Series A preferred units

(44

)

(153

)

(364

)

(612

)

Net income attributable to Series C preferred shares

(5,047

)

(5,047

)

(20,188

)

(20,188

)

Net income attributable to participating securities

—

—

—

(409

)

Net loss attributable to non-controlling interest in consolidated real estate entities

3,250

6,359

27,357

25,056

Net loss attributable to redeemable non-controlling interest in consolidated real estate entities

477

973

3,248

4,059

Net loss attributable to common units in the operating partnership

3,619

4,353

10,000

9,357

NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS

$

(277,919

)

$

(166,996

)

$

(572,245

)

$

(364,143

)

BASIC AND DILUTED PER SHARE AMOUNTS

Net loss attributable to common stockholders—basic

$

(4.31

)

$

(8.28

)

$

(12.81

)

$

(18.05

)

Net loss attributable to common stockholders—diluted

$

(4.31

)

$

(8.28

)

$

(12.81

)

$

(18.05

)

Weighted average shares of common stock outstanding—basic

64,444

20,176

44,683

20,170

Weighted average shares of common stock outstanding—diluted

64,444

20,176

44,683

20,170

Funds from Operations ⁽¹⁾

Unaudited, in thousands, except per share data

Three Months Ended

Year Ended

12/31/25

12/31/24

12/31/25

12/31/24

RECONCILIATION OF NET LOSS TO FUNDS FROM OPERATIONS ( “ FFO ” ) ⁽¹⁾ :

Net loss

$

(280,174

)

$

(173,481

)

$

(592,298

)

$

(381,406

)

Adjustments:

Depreciation and amortization—consolidated

93,046

89,101

374,967

354,425

Depreciation and amortization—non-real estate assets

(8,499

)

(10,493

)

(35,852

)

(34,716

)

Depreciation and amortization—HPP's share from unconsolidated real estate entities ⁽²⁾

1,246

1,242

4,654

5,630

Loss (gain) on sale of real estate, net

4,293

2,453

(5,714

)

2,453

Loss on deconsolidation of real estate entity

—

—

77,907

—

Impairment loss—real estate assets

—

5,506

18,476

42,049

Unrealized loss on non-real estate investments

663

934

2,998

3,958

FFO attributable to non-controlling interests

(5,475

)

(3,082

)

(18,092

)

(12,789

)

FFO attributable to preferred units

(5,091

)

(5,200

)

(20,552

)

(20,800

)

FFO to common stock/unit holders

(199,991

)

(93,020

)

(193,506

)

(41,196

)

Specified items impacting FFO:

Transaction-related expenses

—

—

590

2,306

Impairment loss—non-real estate assets

280,844

107,615

280,844

107,615

One-time termination of Quixote leases (cost-savings initiatives)

—

—

7,109

—

Sale/disposal of transportation assets (cost-savings initiatives)

1,581

2,236

2,207

2,236

One-time termination of Quixote non-compete agreement (cost-savings initiatives)

—

—

1,402

—

One-time employee separation costs (cost-savings initiatives)

—

—

1,163

—

One-time expenses associated with early repayment of debt—HPP’s share

6,751

—

11,936

—

Non-cash revaluation associated with a loan swap (unqualified for hedge accounting)

—

—

682

3,529

Forfeiture of non-cash compensation agreements

—

—

14,280

—

One-time lease termination fee, net

(69,032

)

—

(69,032

)

—

Prior period property and income tax adjustments

(3,929

)

—

(3,929

)

—

One-time distribution from unconsolidated real estate entity

(2,648

)

—

(2,648

)

—

One-time impact of tax legislation change

—

788

—

—

Non-cash deferred tax asset adjustment—HPP’s share

—

(2,121

)

—

(951

)

One-time straight-line rent reserve—HPP’s share

—

—

—

3,871

FFO (excluding specified items) to common stock/unit holders

$

13,576

$

15,498

$

51,098

$

77,410

Weighted average common stock/units outstanding—diluted

65,342

20,819

45,394

20,800

FFO per common stock/unit—diluted

$

(3.06

)

$

(4.47

)

$

(4.26

)

$

(1.98

)

FFO (excluding specified items) per common stock/unit—diluted

$

0.21

$

0.74

$

1.13

$

3.72

(1)

We calculate Funds from Operations ("FFO") in accordance with the White Paper on FFO approved by the Board of Governors of the National Association of Real Estate Investment Trusts. The White Paper defines FFO as net income or loss calculated in accordance with generally accepted accounting principles in the United States (“GAAP”), excluding gains and losses from sales of depreciable real estate and impairment write-downs associated with depreciable real estate, plus the HPP’s share of real estate-related depreciation and amortization, excluding amortization of deferred financing costs and depreciation of non-real estate assets. The calculation of FFO includes the HPP’s share of amortization of deferred revenue related to tenant-funded tenant improvements and excludes the depreciation of the related tenant improvement assets.

FFO is a non-GAAP financial measure we believe is a useful supplemental measure of our operating performance. The exclusion from FFO of gains and losses from the sale of operating real estate assets allows investors and analysts to readily identify the operating results of the assets that form the core of our activity and assists in comparing those operating results between periods. Also, because FFO is generally recognized as the industry standard for reporting the operations of REITs, it facilitates comparisons of operating performance to other REITs. However, other REITs may use different methodologies to calculate FFO, and accordingly, our FFO may not be comparable to all other REITs.

Implicit in historical cost accounting for real estate assets in accordance with GAAP is the assumption that the value of real estate assets diminishes predictably over time. Since real estate values have historically risen or fallen with market conditions, many industry investors and analysts have considered presentations of operating results for real estate companies using historical cost accounting alone to be insufficient. Because FFO excludes depreciation and amortization of real estate assets, we believe that FFO along with the required GAAP presentations provides a more complete measurement of our performance relative to our competitors and a more appropriate basis on which to make decisions involving operating, financing and investing activities than the required GAAP presentations alone would provide. We use FFO per share to calculate annual cash bonuses for certain employees.

However, FFO should not be viewed as an alternative measure of our operating performance because it does not reflect either depreciation and amortization costs or the level of capital expenditures and leasing costs necessary to maintain the operating performance of our properties, which are significant economic costs and could materially impact our results from operations.

(2)

HPP's share is a Non-GAAP financial measure calculated as the measure on a consolidated basis, in accordance with GAAP, plus our Operating Partnership’s share of the measure from our unconsolidated joint ventures (calculated based upon the Operating Partnership’s percentage ownership interest), minus our partners’ share of the measure from our consolidated joint ventures (calculated based upon the partners’ percentage ownership interests). We believe that presenting HPP’s share of these measures provides useful information to investors regarding the Company’s financial condition and/or results of operations because we have several significant joint ventures, and in some cases, we exercise significant influence over, but do not control, the joint venture. In such instances, GAAP requires us to account for the joint venture entity using the equity method of accounting, which we do not consolidate for financial reporting purposes. In other cases, GAAP requires us to consolidate the venture even though our partner(s) own(s) a significant percentage interest.

Adjusted Funds from Operations ⁽¹⁾

Unaudited, in thousands, except per share data

Three Months Ended

Year Ended

12/31/25

12/31/24

12/31/25

12/31/24

FFO (excluding specified items)

$

13,576

$

15,498

$

51,098

$

77,410

Adjustments:

GAAP non-cash revenue (straight-line rent and above-below-market rents)

(952

)

339

(5,597

)

4,515

GAAP non-cash expense (straight-line rent expense and above-below-market ground rent)

1,691

2,722

6,472

7,721

Non-real estate depreciation and amortization

6,918

8,257

32,243

32,480

Non-cash interest expense

1,682

1,679

13,412

6,888

Non-cash compensation expense

3,782

6,540

16,034

25,887

Recurring capital expenditures, tenant improvements and lease commissions

(35,758

)

(31,447

)

(114,756

)

(87,797

)

AFFO

$

(9,061

)

$

3,588

$

(1,094

)

$

67,104

Weighted average common stock/units outstanding

65,342

20,819

45,394

20,800

AFFO per common stock/unit—diluted

$

(0.14

)

$

0.17

$

(0.02

)

$

3.23

(1)

Adjusted Funds from Operations ("AFFO") is a non-GAAP financial measure we believe is a useful supplemental measure of our performance. We compute AFFO by adding to FFO (excluding specified items) HPP's share of non-cash compensation expense and amortization of deferred financing costs, and subtracting recurring capital expenditures related to HPP's share of tenant improvements and leasing commissions (excluding pre-existing obligations on contributed or acquired properties funded with amounts received in settlement of prorations), and eliminating the net effect of HPP’s share of straight-line rents, amortization of lease buy-out costs, amortization of above- and below-market lease intangible assets and liabilities, amortization of above- and below-market ground lease intangible assets and liabilities and amortization of loan discounts/premiums. AFFO is not intended to represent cash flow for the period. We believe that AFFO provides useful information to the investment community about our financial position as compared to other REITs since AFFO is a widely reported measure used by other REITs. However, other REITs may use different methodologies for calculating AFFO and, accordingly, our AFFO may not be comparable to other REITs.

Net Operating Income ⁽¹⁾

Unaudited, in thousands

Three Months Ended

12/31/25

12/31/24

RECONCILIATION OF NET LOSS TO NET OPERATING INCOME ( “ NOI ” ):

Net loss

$

(280,174

)

$

(173,481

)

Adjustments:

(Income) loss from unconsolidated real estate entities

(2,136

)

865

Fee income

(1,482

)

(1,336

)

Interest expense

38,850

44,140

Interest income

(1,468

)

(492

)

Management services reimbursement income—unconsolidated real estate entities

(1,024

)

(932

)

Management services expense—unconsolidated real estate entities

1,024

932

Transaction-related expenses

—

193

Unrealized loss on non-real estate investments

663

934

Loss on sale of real estate, net

4,293

2,453

Impairment loss

280,844

113,121

Loss on extinguishment of debt

6,751

—

Other expense (income)

2,328

(198

)

Income tax benefit

(945

)

(1,052

)

General and administrative

12,985

19,492

Depreciation and amortization

93,046

89,101

NOI

$

153,555

$

93,740

NOI BREAKDOWN

Same-store office cash revenues

144,540

160,585

Straight-line rent

3,623

(253

)

Amortization of above-/below-market leases, net

1,004

1,026

Amortization of lease incentive costs

(2,680

)

(631

)

Same-store office revenues

146,487

160,727

Same-store studios cash revenues

19,278

16,023

Straight-line rent

(643

)

(222

)

Amortization of lease incentive costs

(9

)

(9

)

Same-store studio revenues

18,626

15,792

Same-store revenues

165,113

176,519

Same-store office cash expenses

66,941

70,862

Straight-line rent

367

371

Non-cash compensation expense

5

11

Amortization of above-market and below-market ground leases, net

641

641

Same-store office expenses

67,954

71,885

Same-store studio cash expenses

12,089

11,422

Non-cash compensation expense

119

30

Same-store studio expenses

12,208

11,452

Same-store expenses

80,162

83,337

Same-store NOI

84,951

93,182

Non-same-store NOI

68,604

558

NOI

$

153,555

$

93,740

(1)

We evaluate performance based upon property Net Operating Income ("NOI") from continuing operations. NOI is not a measure of operating results or cash flows from operating activities or cash flows as measured by GAAP and should not be considered an alternative to income from continuing operations, as an indication of our performance, or as an alternative to cash flows as a measure of liquidity, or our ability to make distributions. All companies may not calculate NOI in the same manner. We consider NOI to be a useful performance measure to investors and management because when compared across periods, NOI reflects the revenues and expenses directly associated with owning and operating our properties and the impact to operations from trends in occupancy rates, rental rates and operating costs, providing a perspective not immediately apparent from income from continuing operations. We calculate NOI as net income (loss) excluding corporate general and administrative expenses, depreciation and amortization, impairments, gains/losses on sales of real estate, interest expense, transaction-related expenses and other non-operating items. We define NOI as operating revenues (rental revenues, other property-related revenue, tenant recoveries and other operating revenues), less property-level operating expenses (external management fees, if any, and property-level general and administrative expenses). NOI on a cash basis is NOI adjusted to exclude the effect of straight-line rent and other non-cash adjustments required by GAAP. We believe that NOI on a cash basis is helpful to investors as an additional measure of operating performance because it eliminates straight-line rent and other non-cash adjustments to revenue and expenses.