Skip to content
    HPP
    Earnings call· Jun 2026(Q2 FY26)

    Hudson Pacific Properties Q2 FY26 earnings call HPP

    Aug 5, 2026 Source

    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

    5

    • 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

    3

    • 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

    4
    CategoryTargetConfidence
    Full-year Core FFO per diluted share
    $1.12 to $1.20
    high materiality
    High
    Full-year Core FFO per diluted share (Q2 outperformance)
    $0.01
    medium materiality
    High
    Full-year Core FFO per diluted share (H2 improved expectations)
    $0.01
    medium materiality
    High
    Portfolio Occupancy
    mid 80-ish range
    medium materiality
    Medium

    Segment performance

    2
    SegmentRevenueYoYQoQMargin
    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

    Operational metrics

    9
    G&A
    $12 million11% lower YoY
    Q2 FY26

    Compared to $13.5 million in prior year, adjusted to exclude prior year expense associated with one-time cancellation of noncash compensation agreements.

    Adjustments to Core FFO
    $7.5 millionvs $19.2 million prior year
    Q2 FY26

    Adjustments to core FFO, including noncore TOD lines of business.

    Total liquidity
    $876 million
    Q2 FY26

    Includes cash and full availability on credit facility.

    Ko Media annualized run rate cash NOI improvement
    $14.3 million
    Since 2024

    Improved annualized run rate cash NOI since 2024, bringing the fleet business closer to breakeven.

    Ko Media annualized negative cash NOI (fleet business)
    $4 million
    Current

    Current negative annualized cash NOI for the fleet business at current demand levels (70 shows).

    Ko Media breakeven show count
    80
    Current

    Breakeven objective for Ko Media fleet business if show counts improve very modestly from 70 to 80.

    Ko Media positive NOI show count
    90
    Historical

    If show counts were at 90, Ko Media would be running at positive $4 million or $5 million NOI.

    Ko Media market share
    70%
    Current

    Market share in the Ko Media business, servicing the industry itself, not just the company's portfolio.

    Ko Media leased stages exited
    5
    Current

    Out of 10 initial stage leases, 5 have been exited, with 5 remaining in negotiation.

    Industry KPIs

    6
    MetricValueDetails
    Occupancy rate82.5%%
    Disposition volume$200 millionUSD
    Same store noi growth7.5%%
    Leasing bookings volume signed1.3 million sq ftsq ft
    Ffo core ffo normalized ffo per share$0.35USD/share
    Lease renewal spread re leasing recapture17.2%%

    Orderbook & backlog

    2
    Office Leasing Pipeline2.4 million sq ftQ2 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 ftQ2 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

    4
    City and County of San FranciscoLandmark office lease for 1455 Market24 years

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

    Various buyersSale of 2001 Gateway office asset

    Sold 2001 Gateway after quarter end.

    Various buyersSale of three additional Bay Area office assets

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

    Various buyersSale of 10950 Washington residential development site

    10950 Washington residential development site is in contract or negotiation.

    Capital programs

    3
    901 Market Office to Residential Re-entitlementunderway

    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 Developmentunderway

    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-entitlementunderway

    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

    4
    Hollywood Media Loan Special ServicingQ3 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 ExpirationsQ3 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 VolatilityOngoing

    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 CompressionQ2 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

    5

    Hollywood Media Loan Finalization

    Next quarter
    CurrentTerms agreed, 30-day extension to finalize documentation
    TargetFinalized 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.

    Q&A highlights

    5

    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 read5 chapters

    Detailed Narrative

    01

    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.

    02

    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.

    03

    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.

    04

    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.

    05

    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.

    AI-generated summary of the company’s earnings call. Not investment advice.