Hudson Pacific Properties, Inc. · NYSE:HPP
Hudson Pacific Properties — NAREIT REITWeek 2023
30 slides from Hudson Pacific Properties's conference presentation, Jun 5, 2023
Slide 1: Investor Update | NAREIT REITWeek June 2023
Investor Update | NAREIT REITWeek June 2023
Slide 2: Slide 2
Slide 3: Differentiated Tech & Media Focused REIT
Differentiated Tech & Media Focused REIT Tech and media focused REIT with deep expertise and relationships across these synergistic, converging and secular growth industries Focused on global World-class, Full-service Proactive balance REIT-leading, tech & media amenitized office platform adept at s
Slide 4: High-Quality Tenancy of Public & Established Private Companies
High-Quality Tenancy of Public & Established Private Companies Office Tenant Diversification Public1 Tenants HPP’s Share (HPP’s Share of ABR by Public1/Private & Age) % ABR % Credit Rated 76% Credit Rated as % of Total 46% 5% Public Company 33% Private Company ≥10 Years 62% Private Company <10 Years
Slide 5: HPP Office Stands to Benefit from Flight to Quality
HPP Office Stands to Benefit from Flight to Quality 85% of HPP’s share of ABR derived from CBRE-defined Class A product, including 90% of ABR within the Peninsula and Silicon Valley submarkets HPP In-Service Portfolio % Leased vs. Market1 VANCOUVER SEATTLE 94.4% 1 20+ Yrs 100% Asset Avg. Age Class B
Slide 6: HPP Portfolio Leasing Metrics Strengthening
HPP Portfolio Leasing Metrics Strengthening Key leasing metrics continued to improve year-over-year with growth in net effective rent outpacing additional leasing costs 1Q23 Trailing YOY Change 1Q23 v. 1Q22 4Qs Total / (Total / Weighted Average Trailing 4 Quarters) Wtd. Avg. 1.96M Gross Leasing +10%
Slide 7: HPP Asset Tours at Highest Levels Since 2Q18
HPP Asset Tours at Highest Levels Since 2Q18 Increased tour activity historically a leading indicator for leasing activity in future quarters—total square feet, number of tours and average requirement size all increasing HPP Office Portfolio Tour Activity 1Q18 – 1Q23 Sq Ft # Tours 2,000,000 ~14K Sq
Slide 8: Momentum in Tackling 2023 Expirations
Momentum in Tackling 2023 Expirations HPP’s Pipeline1 Remains Strong Despite Slower Leasing Velocity New/Renewal Pipeline Sq Ft Sq Ft 1,400,000 2,500,000 1,200,000 2,000,000 1,000,000 800,000 1,500,000 600,000 1,000,000 400,000 500,000 200,000 - - Renewal Leases New Leases Leasing Pipeline Silicon V
Slide 9: Leveraging Market-Ready Suites Shortens Deal Cycle
Leveraging Market-Ready Suites Shortens Deal Cycle HPP is leveraging a track record of execution in pre-building suites to expedite the deal cycle, including a multifaceted approach to addressing uncertainty around space utilization HPP / Gensler Architects partnering to create optimized test fits t
Slide 10: Tech Employment Trends Above/In-Line with Pre-Pandemic
Tech Employment Trends Above/In-Line with Pre-Pandemic Tech layoffs represent small portion of total workforce with headcount still well in excess of pre- pandemic levels and tech-related job postings still above pre-pandemic levels FAANG+ Employment Growth Tech Job Postings 1Q20-1Q23 Pre-Pandemic v
Slide 11: Big Tech's Official Return to Office Picking Up Pace
Big Tech’s Official Return to Office Picking Up Pace Growing number of companies formalizing return to office policies typically mandating employees are in office at least 3-4 days per week Examples of Examples of Examples of 2022 RTO Announcements 2023 RTO Announcements Hybrid Policies / No Formal
Slide 12: Renewed Public Sector Focus to Address CBD Issues
Renewed Public Sector Focus to Address CBD Issues LOS ANGELES SAN FRANCISCO SEATTLE New Mayor Karen Bass took Renewed focus from Mayor New Mayor Bruce Harrell took office December 2022 London Breed on reviving Mid- office January 2022 Market, SoMa and Civic Center Already housed 4K individuals neigh
Slide 13: HPP's Markets: Epicenters for VC & AI Investment
HPP’s Markets: Epicenters for VC & AI Investment HPP’s markets command ~50% of total venture funding with 2023 on pace to meet or exceed pre- pandemic investment—over 85% of AI funding goes to Bay Area companies US Venture Capital Investment Open Source AI Open Source AI Capital Raised (US) HQ Locat
Slide 14: Content Spend Drives Sound Stage & Services Demand
Content Spend Drives Sound Stage & Services Demand Streaming companies continued to increase spending on original content through 2022 as a key component of their business model to attract & retain subscribers Licensed & Original Content Spend US Live Scripted Episodic Productions YOY Growth1 2017 v
Slide 15: The Only Publicly Traded Studio Platform
The Only Publicly Traded Studio Platform HPP is uniquely positioned through its studio business to capitalize on attractive long-term fundamentals around content production despite short-term headwinds Long-Term Strength Original content spending remains the primary growth engine of the entertainmen
Slide 16: Understanding the Studio Union Strike
Understanding the Studio Union Strike + Pre-Strike Slowdown: In 1Q23, particularly in March, production unexpectedly slowed as streaming studios postponed filming and pivoted ~30% 5/2/23 14 towards existing content pipelines in anticipation of a strike Decline in Overall LA Film & TV WGA Fails to Re
Slide 17: Full Benefit of Integrated Studio Platform Post-Strike
Full Benefit of Integrated Studio Platform Post-Strike HPP has yet to realize the full benefit of synergies from its combined purpose-built studio & services platform with significant LA market share ($ in Thousands) $180,000 $207M 23% Est. Sunset Waltham $160,000 Cross Stabilized Annual Cash NOI $7
Slide 18: Selective Development & Diversified Future Pipeline
Selective Development & Diversified Future Pipeline Under construction and future development pipeline comprised of unique studio, office and residential opportunities to execute upon when timing is right Future Under Construction Under Construction Development Pipeline 8 Projects 5 Markets SUNSET G
Slide 19: Track Record of Capital Discipline
Track Record of Capital Discipline HPP maintained 30-40% leverage while growing share of gross assets over 15x– successfully raising debt and equity at favorable terms to fund strategic growth ($ in Billions) $12.0 100% $2.4B of Equity Raised Exclusively to Fund Transactions 90% $10.0 $9.9 80% $9.7
Slide 20: Focus on Maintaining a Strong Balance Sheet
Focus on Maintaining a Strong Balance Sheet HPP is strengthening its balance sheet and enhancing its liquidity position to address challenging macroeconomic and sector-specific conditions Current Liquidity 37% 8.0x HPP’s Share HPP’s Share Cash on Hand $163.3M Net Debt1 / Net Debt / HPP’s Share HPP’s
Slide 21: Path to Address Maturities Through Year-End 2025
Path to Address Maturities Through Year-End 2025 HPP has sufficient liquidity to pay down private placement debt and expects to execute on refinancings secured by Class A assets with significant WALT HPP’s Share Debt Maturities 3Q23 – 4Q25 ($ in Millions) Owned 75/25% Class A, 100% leased to Riot Ga
Slide 22: Covenant Flexibility Under Unsecured Revolver
Covenant Flexibility Under Unsecured Revolver HPP is in compliance with its unsecured revolver covenants and stress tests indicate no risks to its ability to access funds and/or refinance Unsecured Revolver, Term Loans & Private Placement Actual Performance Covenant (as of 3/31/23) Total liabilities
Slide 23: ESG Leader: HPPx2030 Vision
ESG Leader: HPPx2030 Vision HPP recently set ambitious new targets to reduce climate impact, grow its portfolio of green products and services, make innovative community investments and diversify management ESG Accolades HPPx2030 Vision + 100% carbon neutral and renewable electricity in operations f
Slide 24: Appendix – Definitions
Appendix – Definitions Adjusted EBITDAre: Adjusted EBITDAre represents net income (loss) before interest, income taxes, depreciation and amortization, and before our share of interest and depreciation from unconsolidated real estate entities and further adjusted to eliminate the impact of certain no
Slide 25: Appendix – Definitions (Cont.)
Appendix – Definitions (Cont.) Estimated Stabilization Date: Based on management’s estimate of stabilized occupancy (92.0%). Occupancy for stabilization purposes defined as the commencement of cash rental payments. Funds from Operations (“FFO”): We calculate FFO in accordance with the White Paper on
Slide 26: Appendix – Definitions (Cont.)
Appendix – Definitions (Cont.) Net Operating Income (“NOI”): We evaluate performance based upon property 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
Slide 27: Appendix – Reconciliations
Appendix – Reconciliations Reconciliations of Net Loss to Adjusted EBITDAre (Annualized) & Total unsecured & 2022 Same-Store Studio Cash NOI Secured Debt to Consolidated Debt, Net & HPP's Share of Debt, Net Three Year Months Ended Ended 12/31/22 3/31/23 Net loss $ (16,517) Net loss $ (14,817) Adjust
Slide 28: Appendix – Reconciliations
Appendix – Reconciliations Same-Store Studio Cash NOI 1Q19 - 1Q23 3/31/23 12/31/22 9/30/22 6/30/22 3/31/22 12/31/21 9/30/21 6/30/21 3/31/21 12/31/20 9/30/20 6/30/20 3/31/20 12/31/19 9/30/19 6/30/19 3/31/19 Net loss (14,817) (5,656) (6,792) 3,546 (7,615) 16,753 (6,182) 7,030 11,411 (3,168) (1,362) 7,
Slide 29: Disclaimer
Disclaimer Hudson Pacific Properties, Inc. is referred to herein as the “Company,” “Hudson Pacific,” “HPP,” “we,” “us,” or “our.” This document contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange
Slide 30: HudsonPacificProperties.com
HudsonPacificProperties.com