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Equity
 6 Months Ended
Jun. 30, 2011
Equity [Abstract]  
Equity
Equity


Non-controlling Interests


Non-controlling partnership units in the Operating Partnership


Non-controlling common partnership interests in our operating partnership relate to interests in the partnership that are not owned by us. Non-controlling interests consisted of 2,610,941 common units of partnership interest in our operating partnership, or common units, and represented approximately 7.2% of our operating partnership at June 30, 2011. Common units and shares of our common stock have essentially the same economic characteristics as they share equally in the total net income or loss distributions of our operating partnership. Investors who own common units have the right to cause our operating partnership to redeem any or all of their common units for cash equal to the then-current market value of one share of common stock, or, at our election, shares of our common stock on a one-for-one basis.


Redeemable non-controlling interest in consolidated real estate entity


Redeemable non-controlling interest in consolidated real estate entity relates to a joint venture relationship with an affiliate of Beacon Capital Partners (“Beacon”), an unrelated third party, in the Rincon Center property. We acquired a 51% interest in a 581,000 square foot commercial space owned by Beacon as described in note 3. We had a call right and Beacon had a put right that, if exercised, obligated us to make an additional investment to acquire the remaining 49% interest in the Rincon Center joint venture in the second quarter of 2011. On February 24, 2011, we exercised the call right and completed the acquisition of Beacon's 49% interest on April 29, 2011 for a purchase price of $38.7 million (before closing costs and prorations). In connection with the completion of this acquisition, we refinanced the Rincon Center property as described more fully in footnote 5 above.


6.25% Series A Cumulative Redeemable Preferred units of the Operating Partnership


Non-controlling series A preferred partnership interests in our operating partnership relate to 499,014 series A preferred units of partnership interest in our operating partnership, or series A preferred units, that are not owned by us. These series A preferred units are entitled to preferential distributions at a rate of 6.25% per annum on the liquidation preference of $25.00 per unit and are convertible at the option of the holder into common units or redeemable into cash or, at our option, exchangeable for registered shares of common stock, in each case after an initial holding period of not less than three years from the consummation of this offering. For a description of the conversion and redemption rights of the series A preferred units, please see “Description of the Partnership Agreement of Hudson Pacific Properties, L.P.—Material Terms of Our Series A Preferred Units” in our June 23, 2010 Prospectus.


Series B Cumulative Redeemable Preferred Stock


Series B cumulative redeemable preferred stock relates to 3,500,000 shares of our series B preferred stock, $0.01 par value per share. Dividends on our series B preferred stock are cumulative from the date of original issue (December 10, 2010) and payable quarterly on or about the last calendar day of each March, June, September and December, commencing on December 31, 2010, at the rate of 8.375% per annum of its $25.00 per share liquidation preference (equivalent to $2.09375 per share per annum). If following a change of control of the Company, either our series B preferred stock (or any preferred stock of the surviving entity that is issued in exchange for our series B preferred stock) or the common stock of the surviving entity, as applicable, is not listed on the New York Stock Exchange, or NYSE, or quoted on the NASDAQ Stock Market, or NASDAQ (or listed or quoted on a successor exchange or quotation system), holders of our series B preferred stock will be entitled to receive cumulative cash dividends from, and including, the first date on which both the change of control occurred and either our series B preferred stock (or any preferred stock of the surviving entity that is issued in exchange for our series B preferred stock) or the common stock of the surviving entity, as applicable, is not so listed or quoted, at the increased rate of 12.375% per annum per share of the liquidation preference of our series B preferred stock (equivalent to $3.09375 per annum per share) for as long as either our series B preferred stock (or any preferred stock of the surviving entity that is issued in exchange for our series B preferred stock) or the common stock of the surviving entity, as applicable, is not so listed or quoted. Except in instances relating to preservation of our qualification as a REIT or in connection with a change of control of the Company, our series B preferred stock is not redeemable prior to December 10, 2015. On and after December 10, 2015, we may redeem our series B preferred stock in whole, at any time, or in part, from time to time, for cash at a redemption price of $25.00 per share, plus any accrued and unpaid dividends to, but not including, the date of redemption. If at any time following a change of control either our series B preferred stock (or any preferred stock of the surviving entity that is issued in exchange for our series B preferred stock) or the common stock of the surviving entity, as applicable, is not listed on the NYSE or quoted on NASDAQ (or listed or quoted on a successor exchange or quotation system), we will have the option to redeem our series B preferred stock, in whole but not in part, within 90 days after the first date on which both the change of control has occurred and either our series B preferred stock (or any preferred stock of the surviving entity that is issued in exchange for our series B preferred stock) or the common stock of the surviving entity, as applicable, is not so listed or quoted, for cash at $25.00 per share, plus accrued and unpaid dividends, if any, to, but not including, the redemption date. Our series B preferred stock has no maturity date and will remain outstanding indefinitely unless redeemed by us, and it is not subject to any sinking fund or mandatory redemption and is not convertible into any of our other securities. For a full description of the Series B cumulative redeemable preferred stock, please see “Description of our Preferred Stock” in our December 7, 2010 Prospectus.


Secondary Common Stock Offering and Private Placement


On May 3, 2011, we completed the public offering of 6,950,000 shares of common stock and the exercise of the underwriters' over-allotment option to purchase an additional 1,042,500 shares of our common stock at the public offering price of $14.62 per share. We also completed the private placement of 3,125,000 shares to investment funds affiliated with Farallon Capital Management, L.L.C., at the same price.


Total proceeds from the public offering and the concurrent private placement, after underwriters' discount, were approximately $156.7 million (before transaction costs). Of the total, approximately $96.5 million was from the public offering of common stock, approximately $14.5 million was from the exercise of the over-allotment option and approximately $45.7 million was from the private placement investment.


The table below represent our condensed consolidated statements of equity and non-controlling series A preferred partnership and redeemable non-controlling interest in consolidated real estate entity interests:
 
 
Hudson Pacific Properties Inc., Stockholders' Equity
 
 
 
 
 
 
 
Common
Shares
Stock
Amount
Series B Cumulative Redeemable Preferred Stock
Additional
Paid in
Capital
Accumulated
Deficit
Accumulated
Other
Comprehensive
(Deficit)
Income
Non-
controlling
Interests —
Unitholders
in the
Operating
Partnership
Total Equity
 
Non-
controlling
Interests —
Series A
Cumulative
Redeemable
Preferred
Units
 
Non-
controlling
Interests —
Members in
Consolidated
Entities
Balance, January 1, 2011
22,436,950


$
224


$
87,500


$
411,598


$
(3,482
)
$
6


$
65,684


$
561,530


 
$
12,475


 
$
40,328


Contributions
 
 
 
 
 
 
 
—


 
 
 
 
Distributions
 
 
 
(452
)
 
 
 
(452
)
 
 
 
(41,131
)
Proceeds from sale of common stock, net of underwriters discount
7,992,500


80


 
110,928


 
 
 
111,008


 
 
 
 
Proceed from private placement
3,125,000


31


 
45,657


 
 
 
45,688


 
 
 
 
Issuance of restricted stock
36,305


1


 
(1
)
 
 
 
—


 
 
 
 
Forfiture of restricted stock
(7,535
)
 
 
 
 
 
 
—


 
 
 
 
Shares repurchased
(12,378
)
 
 
 
 
 
 
—


 
 
 
 
Common stock issuance transaction costs


 
 
 
(712
)
 
 
 
(712
)
 
 
 
 
Series B stock issuance transaction costs
 
 
 
(600
)
 
 
 
(600
)
 
 
 
 
Declared Dividend
 
 
(3,664
)
(7,004
)
 
 
(652
)
(11,320
)
 
(390
)
 
 
Amortization of stock based compensation
 
 
 
1,313


 
 
 
1,313


 
 
 
 
Net income (loss)
 
 
3,664


 
(4,487
)
 
(487
)
(1,310
)
 
390


 
803


Cash Flow Hedge Adjustment
 
 
 
 
 
(455
)
(44
)
(499
)
 
 
 
 
Comprehensive Loss
 
 
 
 
 
 
 
(1,809
)
 
 
 
 
Balance, June 30, 2011
33,570,842


$
336


$
87,500


$
560,727


$
(7,969
)
$
(449
)
$
64,501


$
704,646


 
$
12,475


 
$
—




Dividends


During the second quarter for 2011, we declared dividends on our common stock and non-controlling common partnership interests of $0.125 per share and unit. We also declared dividends on our series A preferred partnership interests of $0.3906 per unit. In addition, we declared dividends on our series B preferred shares of $0.52344 per share. The second quarter dividends were declared on March 10, 2011 to holders of record on March 21, 2011.


Taxability of Dividends


Earnings and profits, which determine the taxability of distributions to stockholders, may differ from income reported for financial reporting purposes due to the differences for federal income tax purposes in the treatment of loss on extinguishment of debt, revenue recognition, and compensation expense and in the basis of depreciable assets and estimated useful lives used to compute depreciation.


Stock-Based Compensation


In connection with entering into the employment arrangements effective as of closing of the IPO, Messrs. Coleman, Stern, Lammas, Barton, Shimoda, and certain non-executive employees and directors were granted 270,588 restricted shares of our common stock at our initial offering price of $17.00 per restricted share resulting in $4.5 million in total compensation expense. These restricted stock awards will vest in three equal, annual installments on each of the first three anniversaries of the date of the IPO, subject to the executive’s continued employment. On December 29, 2010, various executives were granted 219,854 restricted shares of our common stock at the closing price of $15.01 per restricted share resulting in $3.3 million total compensation expense. On January 20, 2011 our directors were granted 11,571 restricted shares and 3,308 unrestricted shares (fully vested) of our common stock at the closing price of $15.12 per restricted share resulting in $0.2 million total compensation expense. In connection with his resignation as a director, 7,535 restricted shares previously granted to Mark Burnett were forfeited, unvested. We have elected to recognize the total compensation expense for time-vested shares on a straight-line basis over the vesting period based on the fair value of the award on the date of grant. None of the restricted shares were vested at June 30, 2011. For the six months ended June 30, 2011, $1,313 of non-cash compensation expense was recognized in general and administrative expenses and additional paid-in capital.