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Hudson Pacific Properties (HPP)
NYSE:HPP
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Hudson Pacific Properties
(NYSE:HPP)
49Neutral
Positive Factors
Balance Sheet Stability
The company is poised to deliver on long-awaited plans to stabilize its balance sheet, which should provide ample runway for a recovery in office occupancy.
Leasing Success
HPP's leasing success in 2024 was driven by a recovery in small-tenant demand, which is expected to continue.
Liquidity and Financing
HPP announced the completion of a commercial mortgage-backed securities financing for a portfolio of six office properties with total gross proceeds of $475 million.
Negative Factors
Lease Negotiation Challenges
Cash leasing spreads remained weak, indicating challenges in negotiating favorable lease terms.
Market Concerns
HPP shares have disappointed due to weaker office and studio results, with the market pricing in the possibility of insolvency.
Office Occupancy Challenges
In-service office occupancy decreased with a substantial percentage of leases expiring soon, impacting future revenue stability.
Hudson Pacific Properties (HPP) vs. S&P 500 (SPY)
Market Cap
$346.91M
Dividend Yield4.18%
Average Volume (3M)2.87M
Price to Earnings (P/E)―
Beta (1Y)1.77
Revenue Growth-11.47%
EPS Growth-89.12%
CountryUS
Employees740
SectorReal Estate
Sector Strength68
IndustryREIT - Office
Share Statistics
EPS (TTM)-2.58
Shares Outstanding141,353,440
10 Day Avg. Volume2,922,527
30 Day Avg. Volume2,871,451
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)0.49
Price to Cash Flow (P/CF)637.00
P/FCF Ratio637.00
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$4.12Price Target Upside72.38% Upside
Rating ConsensusHold
Number of Analyst Covering9
Hudson Pacific Properties Business Overview & Revenue Model
Company DescriptionHudson Pacific Properties, Inc. (HPP) is a real estate investment trust (REIT) that specializes in owning, managing, and developing office and studio properties. The company primarily operates in key markets on the West Coast of the United States, with a focus on high-growth technology and media industries. Its portfolio includes notable office buildings and state-of-the-art studio facilities designed to cater to leading companies in these sectors.
How the Company Makes MoneyHudson Pacific Properties generates revenue primarily through leasing office and studio spaces to tenants, which include a diverse mix of technology, media, and entertainment companies. The company’s revenue streams include rental income from long-term leases, which provide a stable and predictable cash flow. Additionally, HPP engages in property development and redevelopment projects, which can lead to increased rental income and property value over time. The company may also engage in strategic partnerships and joint ventures to enhance its property portfolio and drive growth. These activities, combined with effective asset management and operational efficiency, contribute to HPP's earnings.
Hudson Pacific Properties Financial Statement Overview
Summary
Hudson Pacific Properties is experiencing financial difficulties with declining revenues and persistent net losses, despite improvements in leverage and EBIT margins. The company faces challenges in cash flow generation while maintaining high operating expenses. These factors contribute to an overall moderate financial health assessment.Income Statement
Hudson Pacific Properties shows a declining revenue trend with a significant fall from $952 million in 2023 to $842 million in 2024. Gross profit margin held steady at 100% due to a matching gross profit and revenue figure. However, the net profit margin remains negative, reflecting continuous net losses. The EBIT margin improved from a meager 0.35% in 2023 to 63.7% in 2024, but EBITDA turned negative in 2024, indicating operational challenges.45
Neutral
Balance Sheet
The company's debt-to-equity ratio improved slightly from 1.43 in 2023 to 1.33 in 2024, indicating a marginally lower leverage. Despite this, the return on equity remains negative due to net losses. The equity ratio decreased to 35.1% in 2024, showing a slight erosion in the company's equity base relative to its assets.55
Neutral
Cash Flow
Operating cash flow decreased from $232 million in 2023 to $165 million in 2024, while free cash flow also saw a decline. The operating cash flow to net income ratio is positive, indicating better cash generation relative to losses, but the free cash flow growth rate is negative, highlighting challenges in maintaining liquidity.50
Neutral
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 842.08M | 952.30M | 1.03B | 896.84M | 804.97M | Gross Profit |
| 388.00M | 497.71M | 612.41M | 560.99M | 505.19M | EBIT |
| -354.79M | 3.36M | 179.89M | 152.31M | 135.81M | EBITDA |
| 152.05M | 423.75M | 553.11M | 494.56M | 423.05M | Net Income Common Stockholders |
| -364.14M | -173.89M | -166.42M | -114.38M | -118.54M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 63.26M | 100.39M | 255.76M | 225.88M | 248.80M | Total Assets |
| 8.13B | 8.28B | 9.32B | 8.99B | 8.35B | Total Debt |
| 380.00M | 4.40B | 5.44B | 4.22B | 3.87B | Net Debt |
| 316.75M | 4.30B | 5.18B | 4.13B | 3.75B | Total Liabilities |
| 4.96B | 4.73B | 5.44B | 4.66B | 4.25B | Stockholders Equity |
| 2.86B | 3.08B | 3.31B | 3.74B | 3.46B |
| Cash Flow | Free Cash Flow | |||
| 141.59M | 226.52M | 252.83M | 189.63M | -291.91M | Operating Cash Flow |
| 164.66M | 232.26M | 369.50M | 314.86M | 302.03M | Investing Cash Flow |
| -250.54M | 467.84M | -378.09M | -754.21M | -1.01B | Financing Cash Flow |
| 65.90M | -866.67M | 97.45M | 486.68M | 796.09M |
Hudson Pacific Properties Technical Analysis
Negative
2.39
Price Trends
2.96
Negative
3.09
Negative
4.01
Negative
Market Momentum
-0.02
Negative
48.15
Neutral
28.15
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For HPP, the sentiment is Negative. The current price of 2.39 is below the 20-day moving average (MA) of 2.82, below the 50-day MA of 2.96, and below the 200-day MA of 4.01, indicating a bearish trend. The MACD of -0.02 indicates Negative momentum. The RSI at 48.15 is Neutral, neither overbought nor oversold. The STOCH value of 28.15 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for HPP.
Hudson Pacific Properties Risk Analysis
Hudson Pacific Properties disclosed 52 risk factors in its most recent earnings report. Hudson Pacific Properties reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Hudson Pacific Properties Peers Comparison
Overall Rating
UnderperformOutperform
Sector (61)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
63 Neutral | $3.51B | 16.62 | 3.87% | 7.35% | 0.53% | -1.38% | |
61 Neutral | $4.26B | 15.61 | -3.60% | 11.29% | 6.17% | -21.11% | |
60 Neutral | $10.17B | 647.01 | 0.23% | 6.70% | 4.10% | -92.47% | |
57 Neutral | $2.90B | 107.86 | 1.03% | 5.49% | -3.33% | ― | |
54 Neutral | $12.46B | 775.30 | 1.32% | 2.27% | -1.30% | -80.81% | |
52 Neutral | $3.82B | 644.15 | 0.71% | 6.07% | 5.12% | ― | |
49 Neutral | $346.91M | ― | -11.53% | 4.18% | -11.47% | -89.12% |
* Real Estate Sector Average
Performance Comparison
HPP
Hudson Pacific Properties
2.18
-4.44
-67.07%
BXP
Boston Properties
56.86
-4.87
-7.89%
DEI
Douglas Emmett
13.09
-0.49
-3.61%
KRC
Kilroy Realty
28.32
-5.42
-16.06%
SLG
SL Green Realty
47.90
-4.55
-8.67%
VNO
Vornado Realty
31.74
2.26
7.67%
Hudson Pacific Properties Earnings Call Summary
Earnings Call Date: Feb 20, 2025 | % Change Since: -23.15% | Next Earnings Date: May 7, 2025
Earnings Call Sentiment Neutral
The earnings call highlighted improved leasing activity and cost savings, with strong venture funding in the Bay Area and potential studio leasing improvements. However, these positives were offset by revenue and FFO declines, a significant goodwill impairment at Quixote, lower same-store cash NOI, and challenging lease spreads.Highlights
Increase in Office Leasing Activity
Office leasing ended the year nearly 20% higher than the previous year with over 2 million square feet of signed leases, including 1.2 million square feet of new leasing.
Successful Project Completions
Completion of two under-construction development projects: Washing 1000 in Seattle and Sunset Glenhos in Los Angeles.
Cost Savings Achieved
Achieved approximately $4 million in G&A savings compared to the initial outlook, with expectations for further savings.
Strong Venture Funding in the Bay Area
The Bay Area received 82% of venture funding for global AI in 2024, with a total of $75 billion in funding in the fourth quarter.
Studio Leasing Improvements
An uptick in stage leasing inquiries for Los Angeles studios, with expectations for improved occupancy in the second half of the year.
Lowlights
Decrease in Revenue
Fourth quarter 2024 revenue was $209.7 million, a decrease from $223.4 million in the fourth quarter of the previous year.
FFO Decline
Fourth quarter FFO, excluding specified items, was $15.5 million or $0.11 per diluted share, compared to $19.6 million or $0.14 per diluted share a year ago.
Goodwill Impairment at Quixote
Recorded a goodwill impairment and write-off of assets related to Quixote of $109.9 million due to slower-than-anticipated recovery post-strike.
Lower Same-Store Cash NOI
Fourth quarter same-store cash NOI was $94.2 million, down from $106.3 million in the fourth quarter of the previous year.
Challenging Lease Spreads
Reported GAAP and cash rent spreads were 6% and 9.9% lower in the quarter, respectively.
Company Guidance
During Hudson Pacific Properties' Fourth Quarter 2024 Earnings Conference Call, the company reported several key metrics and insights into its performance and future outlook. In 2024, Hudson Pacific achieved a 20% increase in office leasing, delivering over 2 million square feet of signed leases, with 1.2 million square feet being new leases. The company completed two of its three development projects and achieved approximately $4 million in G&A savings. They also placed three non-core assets under contract for $94 million. Looking forward, the company expects further G&A savings and anticipates office portfolio occupancy to stabilize and grow in the second half of 2025. The studio segment saw a slight improvement in production levels, with trailing 12-month lease percentages increasing to 77% for in-service stages. Hudson Pacific plans to right-size its Quixote business by reducing fixed expenses by $7.5 million annually. The company's financial results showed a fourth-quarter revenue of $209.7 million, a year-over-year decrease, and an FFO of $0.11 per diluted share, excluding specified items. For 2025, the company expects a same-store property cash NOI growth decline of 12.5% to 13.5% and aims to remain compliant with its private placement unsecured notes covenants.Hudson Pacific Properties Corporate Events
Private Placements and FinancingBusiness Operations and Strategy
Hudson Pacific Properties Secures $475M CMBS Financing
Positive
Mar 31, 2025
On March 28, 2025, Hudson Pacific Properties completed a $475 million commercial mortgage-backed securities (CMBS) financing for a portfolio of six office properties. The financing, secured by properties including 11601 Wilshire and Element LA, was facilitated by Goldman Sachs, Morgan Stanley, and Wells Fargo. The proceeds were used to repay a $168 million loan and amounts on the company’s credit facility, enhancing liquidity and financial flexibility. This strategic move, along with recent asset sales, positions Hudson Pacific at a positive inflection point in addressing future maturities, with approximately $815 million in liquidity following the transaction.
Business Operations and StrategyFinancial Disclosures
Hudson Pacific Properties Sees 20% Boost in Office Leasing
Neutral
Feb 20, 2025
Hudson Pacific Properties reported its financial results for the fourth quarter of 2024, highlighting a 20% increase in office leasing activity compared to the previous year. Despite a decrease in total revenue and a net loss attributed to asset sales and tenant move-outs, the company remains optimistic about future growth driven by AI-related leasing and increased demand from in-office mandates. The firm is focused on executing asset sales, finding cost savings, and reinforcing its balance sheet to position itself for future earnings growth.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.