How is the Hollywood Media studio loan, now with a special servicer, included in guidance, and should interest expense be modeled as unchanged?

The company cannot provide specifics as documentation is being finalized, but guidance has kept things the same, implying no change to current interest expense expectations. “So we can't get into any specifics because we're still finalizing documentation but what we can say is in our guidance, we've kept things the same, and that is our expectation.”

Given the positive signs in Seattle, is the CBD rebound a late 2026/2027 event, or will it take longer?

Green shoots are already visible, with three quarters of positive absorption in Puget Sound and the CBD showing positive absorption for the first time in six years. Demand drivers are increasing, with Seattle having the most deals in negotiation across the portfolio. The rebound is driven by 10,000-30,000 sq ft tenants, professional services, FIRE, and government firms, with larger tenant demand broadening beyond Bellevue. “Yes. I mean the good news is the word rebound is being used. We're already seeing green shoots, Alex. We've been talking about the greater Puget Sound with 3 quarters of positive absorption. We saw for the first time in 6 years, the CBD this quarter had positive absorption.”

Are large leases needed to hit the mid-80s occupancy target, and are there leases over 100,000 sq ft in the 2.4 million sq ft pipeline?

While there are some multi-tenant floor deals, the majority of the pipeline consists of the 'bread and butter' 20,000 to 30,000 sq ft tenants. Seattle has seen a handful of deals over 100,000 sq ft, and more are expected in that market and San Francisco. The 2.4 million sq ft pipeline's average size is 20,000-30,000 sq ft. “There are a couple of deals that are multi-tenant floors and leases that are large, but we're still [ banking ] on our bread and butter, which is the 20,000 to 30,000 floaters that are out there right now.”

HPP

Hudson Pacific Properties (HPP) Q2 FY26 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q2 FY26)· Real Estate· Aug 5, 2026

Source: earnings call transcript

Executive summary

Hudson Pacific Properties Q2 FY26 — Record Leasing and FFO Growth

Hudson Pacific Properties delivered a strong second quarter, marked by record leasing activity and significant FFO growth, driven by a major long-term lease and ongoing cost reductions. The company is actively managing its portfolio through strategic dispositions and re-entitlement efforts, while navigating a mixed production landscape in its studio business. Management remains focused on sustained FFO per share growth, with a clear path forward despite some near-term occupancy impacts.

Highlights

Signed 1.3 million square feet of new and renewal office leases, including a landmark 891,000 sq ft, 24-year lease with the City and County of San Francisco.
Occupancy increased 470 basis points sequentially to 82.5%, marking the fourth consecutive quarter of gains.
Same-store NOI increased 7.5% to $90.2 million, driven by improved office and studio occupancy.
Core FFO nearly tripled and increased 30% on a per diluted share basis to $0.35, up from $0.27 in the prior year.
Reloaded leasing pipeline to 2.4 million square feet, with nearly 70% new leases and an average requirement size over 20,000 sq ft.

Concerns

Cash rent spreads decreased 11.4% (excluding the City and County lease, down 9.9%) due to midsized deals rolling off pre-pandemic peak market rents.
Hollywood Media loan transferred to special servicer ahead of its third quarter maturity, though terms for a longer-term extension are agreed upon.
Anticipated third quarter expirations will impact occupancy and earnings results, with a rebound expected in the fourth quarter.

Guidance & targets

Category	Target	Timeline	Confidence
Full-year Core FFO per diluted share	$1.12 to $1.20 high materiality	FY26	High
Full-year Core FFO per diluted share (Q2 outperformance)	$0.01 medium materiality	Q2 · FY26	High
Full-year Core FFO per diluted share (H2 improved expectations)	$0.01 medium materiality	H2 FY26	High
Portfolio Occupancy	mid 80-ish range medium materiality	Year-end FY26	Medium

Segment performance

Segment	Revenue	YoY	QoQ	Margin
Office Office segment showed strong leasing activity, with significant occupancy and lease rate gains. Rent spreads were mixed, with GAAP spreads positive but cash spreads negative, particularly when excluding the large City and County lease. The leasing pipeline was reloaded, indicating continued demand. Leases signed: 1.3 million sq ftNew leases: 61%Renewal leases: 39%Occupancy rate: 82.5%Occupancy rate sequential increase: 470 bpsLease rate: 82.8%Lease rate sequential increase: 440 bpsGAAP rent spreads: 17.2% growthCash rent spreads: 11.4% decreaseGAAP rent spreads (ex-City and County lease): 3.3% decreaseCash rent spreads (ex-City and County lease): 9.9% decreaseNet effective rent sequential increase: 22%Net effective rent YoY increase: 9%Trailing 12-month net effective rents sequential increase: 7%Trailing 12-month net effective rents YoY increase: 1%Tours YoY increase: 20%Leasing pipeline: 2.4 million sq ftLeasing pipeline new leases: 70%Leasing pipeline average requirement size: >20,000 sq ftLease coverage on remaining FY26 expirations (ex-2001 Gateway & 75 Howard): >50% on ~400,000 sq ftLease coverage on PayPal lease at Fort: 80%Lease coverage on Washington 1000: 65% (up from 60%)	—	—	—	—
Studios Studio operations, particularly prime locations, continue to outperform. The in-service stages saw increased leasing, and the Hollywood stages remained highly leased. HPP's share of core studio NOI turned positive for the first time in two years. In-service stages leased: 74.6%In-service stages leased sequential increase: 180 bpsSunset Pier 94 leased: 78.5% (up 40 percentage points)Hollywood stages (incl. Sunset Las Palmas) leased: 95.5%HPP share of core studio NOI: $2.2 million (positive for first time in 2 years)	—	$7 million	$3.1 million	$4.6 million

Orderbook & backlog

Office Leasing Pipeline 2.4 million sq ft Q2 FY26

vs 2.3 million sq ft prior quarter

Nearly 70% new leases, average requirement size >20,000 sq ft. Includes 9 tenants in active negotiations for Washington 1000, with requirements up to 125,000 sq ft.

Leases set to expire (remaining FY26) 400,000 sq ft Q2 FY26

Excludes 2001 Gateway (sold) and 75 Howard (potential sale). Over 50% coverage already achieved, including 80% coverage on the PayPal lease at Fort.

Deals & partnerships

City and County of San Francisco Landmark office lease for 1455 Market 24 years

Signed an 891,000 square-foot, 24-year lease at 1455 Market.

Various buyers Sale of 2001 Gateway office asset

Sold 2001 Gateway after quarter end.

Various buyers Sale of three additional Bay Area office assets

Three additional Bay Area office assets currently in contract or negotiation.

Various buyers Sale of 10950 Washington residential development site

10950 Washington residential development site is in contract or negotiation.

Capital programs

901 Market Office to Residential Re-entitlement underway

Benefit:Residential use

Filed office to residential re-entitlement application with entitlements expected by year-end. Advancing construction drawings in parallel for quick movement once approved.

10950 Washington Residential Development underway

Benefit:Residential use

Advancing construction drawings, similar to 901 Market, to quickly move once approved for residential development. Also part of disposition plan.

Metro Center & Redwood Shores Residential Re-entitlement underway

Benefit:Residential use

Amended CC&Rs at Metro Center in Foster City and Redwood Shores assets to permit residential use, providing flexibility to explore residential and mixed-use development.

Risks & headwinds

Hollywood Media Loan Special Servicing Q3 FY26

Loan transferred to special servicer ahead of Q3 maturity

Mitigation:Borrower and special servicer have agreed on terms for a longer-term extension, with a 30-day extension to finalize documentation.

Occupancy and Earnings Impact from Q3 Expirations Q3 FY26

Third quarter expirations will impact occupancy and earnings results

Mitigation:Anticipate a rebound in the fourth quarter; leasing expectations are in line with previous guidance.

Studio Demand Volatility Ongoing

Show counts have gone down over time, currently at 70 shows

Mitigation:Ko Media restructuring efforts have lowered the breakeven threshold to 80 shows; continued focus on cost reduction. Labor risk (SAGAftra, WGA, DGA agreements) is off the table.

Cash Rent Spread Compression Q2 FY26

Cash rents down 11.4% (9.9% ex-City and County lease)

Mitigation:Primarily due to midsized deals rolling off pre-pandemic peak market rents; net effective rent strengthened sequentially and YoY.

What to watch in Q3 FY26

Hollywood Media Loan Finalization

Next quarter

Current Terms agreed, 30-day extension to finalize documentation

Target Finalized longer-term extension terms and conditions

Why it matters

Resolution of this loan is critical for balance sheet clarity and potential impact on future financial results.

Regarding the [ Holy Media ] portfolio alone. Subsequent to quarter end, the loan transferred to the special servicer ahead of its third quarter maturity. The borrower and the special servicer have since agreed on terms for a longer-term extension along with a 30-day extension to finalize documentation.

Find out whether HPP delivers this. Inve re-checks your case every morning.

Q&A highlights

What is driving demand in West LA, and is there an inflection point happening?

West LA is a bifurcated market with Brentwood, Century City, and Beverly Hills performing exceptionally well. Demand is driven by FIRE tenants (law firms) and streaming/entertainment companies, with ancillary growth. AI is not yet a strong driver. Modest improvements in net absorption and gross leasing are observed, primarily from small to mid-sized tenants.

“I mean the demand drivers, [ Jamie ], are positive. They're modestly improving. There was an improvement in net absorption, gross leasing was up slightly, things like that, that we're monitoring very closely.”

asked by Unknown Analyst · answered by Arthur Suazo

2 min read 5 chapters

Detailed narrative

Office Leasing Momentum and Market Trends

Hudson Pacific Properties achieved record office leasing in Q2 FY26, signing 1.3 million square feet, significantly boosted by an 891,000 square-foot, 24-year lease with the City and County of San Francisco. The company observed broadening demand across its portfolio, with San Francisco showing its seventh consecutive quarter of positive absorption and the largest year-over-year rent increase since 2020.

West Los Angeles continues to command robust activity, driven by law firms and entertainment companies, while Seattle's CBD is experiencing a rebound with positive absorption for the first time in six years, fueled by small to mid-sized tenants and professional services firms.

Studio Operations and Ko Media Restructuring

The company's prime location studios continue to outperform, with in-service stages 74.6% leased in Q2, and Hollywood stages at 95.5% leased. The restructuring of Ko Media is progressing, improving annualized run rate cash NOI by approximately $14.3 million, bringing the fleet business to just over $4 million of negative annualized cash NOI.

Management aims for breakeven at around 80 show counts, down from 90 previously, and is exiting noncore leased sound stage facilities and ancillary businesses.

Strategic Dispositions and Capital Recycling

Hudson Pacific is making good progress on its $200 million disposition target, having sold 2001 Gateway post-quarter end and with three additional Bay Area office assets in contract or negotiation, alongside a residential development site. The increased demand for Bay Area office assets has allowed the company to execute this program on its timeline and redeploy capital towards broader strategic priorities, including debt reduction.

Value Creation Through Re-entitlement and Adaptive Reuse

The company is actively pursuing re-entitlement and adaptive reuse projects to unlock value. At 901 Market in San Francisco, an office-to-residential re-entitlement application has been filed, with entitlements expected by year-end. Similar efforts are underway at 10950 Washington. Additionally, CC&Rs at Metro Center in Foster City and Redwood Shores assets were amended to permit residential use, providing flexibility to explore residential and mixed-use development, independent of office leasing cycles.

Hollywood Media Loan and Debt Management

The Hollywood Media portfolio loan transferred to a special servicer subsequent to quarter-end, ahead of its Q3 maturity. The borrower and servicer have agreed on terms for a longer-term extension, with a 30-day extension to finalize documentation. The company maintains total liquidity of $876 million, including $81 million cash and $795 million availability on its credit facility, and all debt is fixed or capped, contributing to a 20% year-over-year reduction in interest expense.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.