SEC Company Response from Hudson Pacific Properties, Inc. (HPP, HPP-PC) (CIK 0001482512) (HPP) — Aug 16, 2018
Hudson Pacific Properties, Inc. (HPP, HPP-PC) (CIK 0001482512)
Date: Aug. 16, 2018 · CIK: 0001482512 · Accession: 0001482512-18-000095
AI Filing Summary & Sentiment
Reasoning
Letter
Exhibit
Hudson Pacific Properties, Inc.
Second Quarter 2018 Supplemental Operating and Financial Information
SAME-STORE ANALYSIS
(Unaudited, tabular amounts in thousands, except number of properties and square feet)
Three Months Ended June 30,
Six Months Ended June 30,
% change
% change
Same-Store Office Statistics
Number of properties
Rentable square feet
7,507,449
7,507,449
7,308,513
7,308,513
Ending % leased
93.2
%
94.5
%
(1.3
)%
93.3
%
94.4
%
(1.1
)%
Ending % occupied
92.4
%
93.9
%
(1.5
)%
92.4
%
93.8
%
(1.4
)%
Average % occupied for the period
92.4
%
93.7
%
(1.3
)%
92.5
%
94.4
%
(1.9
)%
Same-Store Studio Statistics(3)
Number of properties
Rentable square feet
873,002
873,002
873,002
873,002
Average % occupied for the period
89.6
%
89.9
%
(0.3
)%
89.6
%
89.9
%
(0.3
)%
SAME-STORE ANALYSIS—NET OPERATING INCOME
Three Months Ended June 30,
Six Months Ended June 30,
% change
% change
Same-Store Net Operating Income
Total Office revenues
$
102,703
$
99,896
2.8
%
$
198,485
$
188,380
5.4
%
Total Studio revenues
11,209
10,274
9.1
23,471
21,743
7.9
Same-Store property revenues
$
113,912
$
110,170
3.4
%
$
221,956
$
210,123
5.6
%
Total Office expenses
$
33,365
$
31,685
5.3
%
$
63,937
$
55,664
14.9
%
Total Studio expenses
5,199
4,935
5.3
11,586
12,187
(4.9
)
Same-Store property expenses
$
38,564
$
36,620
5.3
%
$
75,523
$
67,851
11.3
%
Same-Store Office net operating income
$
69,338
$
68,211
1.7
%
$
134,548
$
132,716
1.4
%
NOI margin
67.5
%
68.3
%
(0.8
)%
67.8
%
70.5
%
(2.7
)%
Same-Store Studio net operating income
$
6,010
$
5,339
12.6
%
$
11,885
$
9,556
24.4
%
NOI margin
53.6
%
52.0
%
1.6
%
50.6
%
43.9
%
6.7
%
Same-Store net operating income
$
75,348
$
73,550
2.4
%
$
146,433
$
142,272
2.9
%
NOI margin
66.1
%
66.8
%
0.7
%
66.0
%
67.7
%
(1.7
)%
Hudson Pacific Properties, Inc.
Second Quarter 2018 Supplemental Operating and Financial Information
SAME-STORE ANALYSIS—CONTINUED
(Unaudited, tabular amounts in thousands)
SAME-STORE ANALYSIS—NET OPERATING INCOME (CASH BASIS)
Three Months Ended June 30,
Six Months Ended June 30,
% change
% change
Same-Store Net Operating Income—Cash Basis
Total Office cash revenues
$
97,816
$
96,250
1.6
%
$
188,931
$
176,957
6.8
%
Total Studio cash revenues
11,018
10,140
8.7
23,165
21,624
7.1
Same-Store property cash revenues
$
108,834
$
106,390
2.3
%
$
212,096
$
198,581
6.8
%
Total Office cash expenses
$
32,790
$
31,110
5.4
%
$
62,787
$
54,503
15.2
%
Total Studio cash expenses
5,199
4,935
5.3
11,586
12,187
(4.9
)
Same-Store property cash expenses
$
37,989
$
36,045
5.4
%
$
74,373
$
66,690
11.5
%
Same-Store Office net operating income—Cash basis
$
65,026
$
65,140
(0.2
)%
$
126,144
$
122,454
3.0
%
NOI margin
66.5
%
67.7
%
(1.2
)%
66.8
%
69.2
%
(2.4
)%
Same-Store Studio net operating income—Cash basis
$
5,819
$
5,205
11.8
%
$
11,579
$
9,437
22.7
%
NOI margin
52.8
%
51.3
%
1.5
%
50.0
%
43.6
%
6.4
%
Same-Store net operating income—Cash basis
$
70,845
$
70,345
0.7
%
$
137,723
$
131,891
4.4
%
NOI margin
65.1
%
66.1
%
(1.0
)%
64.9
%
66.4
%
(1.5
)%
Hudson Pacific Properties, Inc.
Second Quarter 2018 Supplemental Operating and Financial Information
RECONCILIATION OF GAAP NET INCOME TO NET OPERATING INCOME
(Unaudited, in thousands)
Three Months Ended June 30,
Six Months Ended June 30,
Reconciliation to Net Operating Income
Net Income
$
19,691
$
6,954
$
72,254
$
31,107
Adjustments:
Interest expense
19,331
21,695
39,834
43,625
Interest income
(66
)
(16
)
(75
)
(46
)
Unrealized loss on ineffective portion of derivatives
—
—
Unrealized gain on non-real estate investment
(928
)
—
(928
)
—
Transaction-related expenses
—
—
—
Other income
(319
)
(576
)
(723
)
(1,254
)
Gains on sale of real estate
(1,928
)
—
(39,602
)
(16,866
)
Income from operations
$
35,781
$
28,108
$
70,878
$
56,611
Adjustments:
General and administrative
16,203
14,506
31,767
28,316
Depreciation and amortization
60,706
75,415
121,259
146,182
Net Operating Income
$
112,690
$
118,029
$
223,904
$
231,109
Net Operating Income Breakdown
Same-Store Office cash revenues
$
97,816
$
96,250
$
188,931
$
176,957
Straight-line rent
3,023
5,693
4,552
Amortization of above-market and below-market leases, net
2,215
3,853
4,526
7,376
Amortization of lease incentive costs
(351
)
(251
)
(665
)
(505
)
Same-Store Office revenues
$
102,703
$
99,896
$
198,485
$
188,380
Same-Store Studio cash revenues
$
11,018
$
10,140
$
23,165
$
21,624
Straight-line rent
Same-Store Studio revenues
$
11,209
$
10,274
$
23,471
$
21,743
Same-Store property revenues
$
113,912
$
110,170
$
221,956
$
210,123
Same-Store Office cash expenses
$
32,790
$
31,110
$
62,787
$
54,503
Amortization of above-market and below-market ground leases, net
1,150
1,161
Same-Store Office expenses
$
33,365
$
31,685
$
63,937
$
55,664
Same-Store Studio cash expenses
$
5,199
$
4,935
$
11,586
$
12,187
Same-Store Studio expenses
$
5,199
$
4,935
$
11,586
$
12,187
Same-Store property expenses
$
38,564
$
36,620
$
75,523
$
67,851
Same-Store net operating income
$
75,348
$
73,550
$
146,433
$
142,272
Non-Same-Store net operating income
37,342
44,479
77,471
88,837
Net Operating Income
$
112,690
$
118,029
$
223,904
$
231,109
Hudson Pacific Properties, Inc.
Second Quarter 2018 Supplemental Operating and Financial Information
NET OPERATING INCOME DETAIL
Three Months Ended June 30, 2018
(Unaudited, in thousands)
Same-Store Office Properties
Same-Store Studio Properties
Non-Same-Store Office Properties
Non-Same-Store Studio Properties
Redevelopment/Development
Lease-Up Properties
Held-for-Sale
Sold/Other
Total
Revenue
Rents
Cash rent
$
77,298
$
7,307
$
4,574
$
3,157
$
—
$
32,757
$
4,509
$
$
129,657
Straight-line rent
3,023
—
3,601
(3
)
7,937
Amortization of above-market and below-market leases, net
2,215
—
—
—
—
1,009
—
3,230
Amortization of lease incentive costs
(351
)
—
—
—
—
(10
)
(23
)
—
(384
)
Total Rents
$
82,185
$
7,498
$
5,414
$
3,210
$
—
$
37,357
$
4,724
$
$
140,440
Tenant reimbursements
$
16,312
$
$
$
$
—
$
4,893
$
$
$
22,460
Parking and other
4,206
3,235
1,004
2,176
—
1,536
—
12,269
Total Revenue
$
102,703
$
11,209
$
6,973
$
5,410
$
—
$
43,786
$
4,881
$
$
175,169
Property operating cash expenses
32,790
5,199
1,548
3,340
—
17,177
1,497
61,887
Amortization of above-market and below-market ground leases, net
—
—
—
—
—
—
Total operating expenses
$
33,365
$
5,199
$
1,548
$
3,340
$
—
$
17,194
$
1,497
$
$
62,479
Total Net Operating Income
$
69,338
$
6,010
$
5,425
$
2,070
$
—
$
26,592
$
3,384
$
(129
)
$
112,690
Square Feet
7,507,449
873,002
703,271
373,421
976,795
3,701,686
447,739
—
14,583,363
Ending % Leased
93.2
%
89.6
%
97.6
%
80.6
%
—
%
80.9
%
80.6
%
—
%
83.1
%
Ending % Occupied
92.4
%
89.6
%
97.2
%
80.6
%
—
%
75.9
%
80.6
%
—
%
81.4
%
NOI Margin
67.5
%
53.6
%
77.8
%
38.3
%
—
%
60.7
%
69.3
%
—
%
64.5
%
Total Net Operating Income
$
69,338
$
6,010
$
5,425
$
2,070
$
—
$
26,592
$
3,384
$
(129
)
$
112,690
Adjustments:
Straight-line rent
(3,023
)
(191
)
(840
)
(53
)
—
(3,601
)
(232
)
(7,937
)
Amortization of above market and below-market leases, net
(2,215
)
—
—
—
—
(1,009
)
(6
)
—
(3,230
)
Amortization of lease incentive costs
—
—
—
—
—
Amortization of above-market and below-market ground leases, net
—
—
—
—
—
—
Total Cash Net Operating Income
$
65,026
$
5,819
$
4,585
$
2,017
$
—
$
22,009
$
3,169
$
(126
)
$
102,499
Show Raw Text
CORRESP 1 filename1.htm Exhibit Hudson Pacific Properties, Inc. Second Quarter 2018 Supplemental Operating and Financial Information SAME-STORE ANALYSIS (Unaudited, tabular amounts in thousands, except number of properties and square feet) Three Months Ended June 30, Six Months Ended June 30, 2018 2017 % change 2018 2017 % change Same-Store Office Statistics Number of properties 30 30 29 29 Rentable square feet 7,507,449 7,507,449 7,308,513 7,308,513 Ending % leased 93.2 % 94.5 % (1.3 )% 93.3 % 94.4 % (1.1 )% Ending % occupied 92.4 % 93.9 % (1.5 )% 92.4 % 93.8 % (1.4 )% Average % occupied for the period 92.4 % 93.7 % (1.3 )% 92.5 % 94.4 % (1.9 )% Same-Store Studio Statistics(3) Number of properties 2 2 2 2 Rentable square feet 873,002 873,002 873,002 873,002 Average % occupied for the period 89.6 % 89.9 % (0.3 )% 89.6 % 89.9 % (0.3 )% SAME-STORE ANALYSIS—NET OPERATING INCOME Three Months Ended June 30, Six Months Ended June 30, 2018 2017 % change 2018 2017 % change Same-Store Net Operating Income Total Office revenues $ 102,703 $ 99,896 2.8 % $ 198,485 $ 188,380 5.4 % Total Studio revenues 11,209 10,274 9.1 23,471 21,743 7.9 Same-Store property revenues $ 113,912 $ 110,170 3.4 % $ 221,956 $ 210,123 5.6 % Total Office expenses $ 33,365 $ 31,685 5.3 % $ 63,937 $ 55,664 14.9 % Total Studio expenses 5,199 4,935 5.3 11,586 12,187 (4.9 ) Same-Store property expenses $ 38,564 $ 36,620 5.3 % $ 75,523 $ 67,851 11.3 % Same-Store Office net operating income $ 69,338 $ 68,211 1.7 % $ 134,548 $ 132,716 1.4 % NOI margin 67.5 % 68.3 % (0.8 )% 67.8 % 70.5 % (2.7 )% Same-Store Studio net operating income $ 6,010 $ 5,339 12.6 % $ 11,885 $ 9,556 24.4 % NOI margin 53.6 % 52.0 % 1.6 % 50.6 % 43.9 % 6.7 % Same-Store net operating income $ 75,348 $ 73,550 2.4 % $ 146,433 $ 142,272 2.9 % NOI margin 66.1 % 66.8 % 0.7 % 66.0 % 67.7 % (1.7 )% Hudson Pacific Properties, Inc. Second Quarter 2018 Supplemental Operating and Financial Information SAME-STORE ANALYSIS—CONTINUED (Unaudited, tabular amounts in thousands) SAME-STORE ANALYSIS—NET OPERATING INCOME (CASH BASIS) Three Months Ended June 30, Six Months Ended June 30, 2018 2017 % change 2018 2017 % change Same-Store Net Operating Income—Cash Basis Total Office cash revenues $ 97,816 $ 96,250 1.6 % $ 188,931 $ 176,957 6.8 % Total Studio cash revenues 11,018 10,140 8.7 23,165 21,624 7.1 Same-Store property cash revenues $ 108,834 $ 106,390 2.3 % $ 212,096 $ 198,581 6.8 % Total Office cash expenses $ 32,790 $ 31,110 5.4 % $ 62,787 $ 54,503 15.2 % Total Studio cash expenses 5,199 4,935 5.3 11,586 12,187 (4.9 ) Same-Store property cash expenses $ 37,989 $ 36,045 5.4 % $ 74,373 $ 66,690 11.5 % Same-Store Office net operating income—Cash basis $ 65,026 $ 65,140 (0.2 )% $ 126,144 $ 122,454 3.0 % NOI margin 66.5 % 67.7 % (1.2 )% 66.8 % 69.2 % (2.4 )% Same-Store Studio net operating income—Cash basis $ 5,819 $ 5,205 11.8 % $ 11,579 $ 9,437 22.7 % NOI margin 52.8 % 51.3 % 1.5 % 50.0 % 43.6 % 6.4 % Same-Store net operating income—Cash basis $ 70,845 $ 70,345 0.7 % $ 137,723 $ 131,891 4.4 % NOI margin 65.1 % 66.1 % (1.0 )% 64.9 % 66.4 % (1.5 )% Hudson Pacific Properties, Inc. Second Quarter 2018 Supplemental Operating and Financial Information RECONCILIATION OF GAAP NET INCOME TO NET OPERATING INCOME (Unaudited, in thousands) Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 Reconciliation to Net Operating Income Net Income $ 19,691 $ 6,954 $ 72,254 $ 31,107 Adjustments: Interest expense 19,331 21,695 39,834 43,625 Interest income (66 ) (16 ) (75 ) (46 ) Unrealized loss on ineffective portion of derivatives — 51 — 45 Unrealized gain on non-real estate investment (928 ) — (928 ) — Transaction-related expenses — — 118 — Other income (319 ) (576 ) (723 ) (1,254 ) Gains on sale of real estate (1,928 ) — (39,602 ) (16,866 ) Income from operations $ 35,781 $ 28,108 $ 70,878 $ 56,611 Adjustments: General and administrative 16,203 14,506 31,767 28,316 Depreciation and amortization 60,706 75,415 121,259 146,182 Net Operating Income $ 112,690 $ 118,029 $ 223,904 $ 231,109 Net Operating Income Breakdown Same-Store Office cash revenues $ 97,816 $ 96,250 $ 188,931 $ 176,957 Straight-line rent 3,023 44 5,693 4,552 Amortization of above-market and below-market leases, net 2,215 3,853 4,526 7,376 Amortization of lease incentive costs (351 ) (251 ) (665 ) (505 ) Same-Store Office revenues $ 102,703 $ 99,896 $ 198,485 $ 188,380 Same-Store Studio cash revenues $ 11,018 $ 10,140 $ 23,165 $ 21,624 Straight-line rent 191 134 306 119 Same-Store Studio revenues $ 11,209 $ 10,274 $ 23,471 $ 21,743 Same-Store property revenues $ 113,912 $ 110,170 $ 221,956 $ 210,123 Same-Store Office cash expenses $ 32,790 $ 31,110 $ 62,787 $ 54,503 Amortization of above-market and below-market ground leases, net 575 575 1,150 1,161 Same-Store Office expenses $ 33,365 $ 31,685 $ 63,937 $ 55,664 Same-Store Studio cash expenses $ 5,199 $ 4,935 $ 11,586 $ 12,187 Same-Store Studio expenses $ 5,199 $ 4,935 $ 11,586 $ 12,187 Same-Store property expenses $ 38,564 $ 36,620 $ 75,523 $ 67,851 Same-Store net operating income $ 75,348 $ 73,550 $ 146,433 $ 142,272 Non-Same-Store net operating income 37,342 44,479 77,471 88,837 Net Operating Income $ 112,690 $ 118,029 $ 223,904 $ 231,109 Hudson Pacific Properties, Inc. Second Quarter 2018 Supplemental Operating and Financial Information NET OPERATING INCOME DETAIL Three Months Ended June 30, 2018 (Unaudited, in thousands) Same-Store Office Properties Same-Store Studio Properties Non-Same-Store Office Properties Non-Same-Store Studio Properties Redevelopment/Development Lease-Up Properties Held-for-Sale Sold/Other Total Revenue Rents Cash rent $ 77,298 $ 7,307 $ 4,574 $ 3,157 $ — $ 32,757 $ 4,509 $ 55 $ 129,657 Straight-line rent 3,023 191 840 53 — 3,601 232 (3 ) 7,937 Amortization of above-market and below-market leases, net 2,215 — — — — 1,009 6 — 3,230 Amortization of lease incentive costs (351 ) — — — — (10 ) (23 ) — (384 ) Total Rents $ 82,185 $ 7,498 $ 5,414 $ 3,210 $ — $ 37,357 $ 4,724 $ 52 $ 140,440 Tenant reimbursements $ 16,312 $ 476 $ 555 $ 24 $ — $ 4,893 $ 157 $ 43 $ 22,460 Parking and other 4,206 3,235 1,004 2,176 — 1,536 — 112 12,269 Total Revenue $ 102,703 $ 11,209 $ 6,973 $ 5,410 $ — $ 43,786 $ 4,881 $ 207 $ 175,169 Property operating cash expenses 32,790 5,199 1,548 3,340 — 17,177 1,497 336 61,887 Amortization of above-market and below-market ground leases, net 575 — — — — 17 — — 592 Total operating expenses $ 33,365 $ 5,199 $ 1,548 $ 3,340 $ — $ 17,194 $ 1,497 $ 336 $ 62,479 Total Net Operating Income $ 69,338 $ 6,010 $ 5,425 $ 2,070 $ — $ 26,592 $ 3,384 $ (129 ) $ 112,690 Square Feet 7,507,449 873,002 703,271 373,421 976,795 3,701,686 447,739 — 14,583,363 Ending % Leased 93.2 % 89.6 % 97.6 % 80.6 % — % 80.9 % 80.6 % — % 83.1 % Ending % Occupied 92.4 % 89.6 % 97.2 % 80.6 % — % 75.9 % 80.6 % — % 81.4 % NOI Margin 67.5 % 53.6 % 77.8 % 38.3 % — % 60.7 % 69.3 % — % 64.5 % Total Net Operating Income $ 69,338 $ 6,010 $ 5,425 $ 2,070 $ — $ 26,592 $ 3,384 $ (129 ) $ 112,690 Adjustments: Straight-line rent (3,023 ) (191 ) (840 ) (53 ) — (3,601 ) (232 ) 3 (7,937 ) Amortization of above market and below-market leases, net (2,215 ) — — — — (1,009 ) (6 ) — (3,230 ) Amortization of lease incentive costs 351 — — — — 10 23 — 384 Amortization of above-market and below-market ground leases, net 575 — — — — 17 — — 592 Total Cash Net Operating Income $ 65,026 $ 5,819 $ 4,585 $ 2,017 $ — $ 22,009 $ 3,169 $ (126 ) $ 102,499