HUDSON PACIFIC PROPERTIES, INC.
FIRST QUARTER 2013
Supplemental Operating and Financial Data

This Supplemental Operating and Financial Data 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 Act of 1934, as amended. Future events and actual results, financial and otherwise, may differ materially from the results discussed in the forward-looking statements. You should not rely on forward-looking statements as predictions of future events. Forward-looking statements involve numerous risks and uncertainties that could significantly affect anticipated results in the future and, accordingly, such results may differ materially from those expressed in any forward-looking statement made by us. These risks and uncertainties include, but are not limited to: adverse economic and real estate developments in Southern and Northern California; decreased rental rates or increased tenant incentives and vacancy rates; defaults on, early terminations of, or non-renewal of leases by tenants; increased interest rates and operating costs; failure to generate sufficient cash flows to service our outstanding indebtedness; difficulties in identifying properties to acquire and completing acquisitions; failure to successfully integrate pending and recent acquisitions; failure to successfully operate acquired properties and operations; failure to maintain our status as a REIT under the Internal Revenue Code of 1986, as amended; possible adverse changes in laws and regulations; environmental uncertainties; risks related to natural disasters; lack or insufficient amount of insurance; inability to successfully expand into new markets or submarkets; risks associated with property development; conflicts of interest with our officers; changes in real estate and zoning laws and increases in real property tax rates; the consequences of any possible future terrorist attacks; and other risks and uncertainties detailed in our Annual Report on Form 10-K for the year ended December 31, 2012 filed with the Securities and Exchange Commission on March 14, 2013. You are cautioned that the information contained herein speaks only as of the date hereof and Hudson Pacific Properties, Inc. assumes no obligation to update any forward-looking information, whether as a result of new information, future events or otherwise. For a discussion of important risks related to Hudson Pacific Properties, Inc.'s business, and an investment in its securities, including risks that could cause actual results and events to differ materially from results and events referred to in the forward-looking information, see the discussion under the caption “Risk Factors” in Hudson Pacific Properties, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2012 filed with the Securities and Exchange Commission on March 14, 2013.

Hudson Pacific Properties, Inc.
First Quarter 2013 Supplemental Operating and Financial Data


TABLE OF CONTENTS


 
PAGE
COMPANY BACKGROUND AND CORPORATE DATA
3 - 4
 
 
CONSOLIDATED FINANCIAL RESULTS
 
 
 
Consolidated Balance Sheets
Consolidated Statements of Operations
Funds from Operations and Adjusted Funds from Operations
Debt Summary
 
 
PORTFOLIO DATA
 
 
 
Same-Store Analysis
Reconciliation to net income
Stabilized Office Portfolio Summary, Occupancy and In-place Rents
Development, Redevelpment, and Lease-up Properties and Land Properties
Media & Entertainment Portfolio Summary, Occupancy, and In-place Rents
Ten Largest Office Tenants
Office Portfolio Leasing Activity
Office Lease Expirations — Annual
Quarterly Office Lease Expirations — Next Four Quarters
Office Portfolio Diversification
 
 
DEFINITIONS
 
 



2
Hudson Pacific Properties, Inc.
First Quarter 2013 Supplemental Operating and Financial Data

COMPANY BACKGROUND

CORPORATE
11601 Wilshire Boulevard, Suite 1600, Los Angeles, California 90025
(310) 445-5700

BOARD OF DIRECTORS
 
 
 
Victor J. Coleman
Theodore R. Antenucci
Jonathan M. Glaser
Chairman of the Board and Chief Executive Officer, Hudson Pacific Properties, Inc.
President and Chief Executive Officer, Catellus Development Corporation
Managing Member, JMG Capital Management LLC
 
 
 
Richard B. Fried
Mark D. Linehan
Robert M. Moran, Jr.
Managing Member, Farallon Capital Management, L.L.C.
President and Chief Executive Officer, Wynmark Company
Co-founder and Co-owner, FJM Investments LLC
 
 
 
Barry A. Porter
Howard S. Stern
Patrick Whitesell
Managing General Partner, Clarity Partners L.P.
President, Hudson Pacific Properties, Inc.
Co-Chief Executive, WME Entertainment
 
 
 
EXECUTIVE AND SENIOR MANAGEMENT
 
 
 
Victor J. Coleman
Howard S. Stern
Mark T. Lammas
Chief Executive Officer
President
Chief Financial Officer
 
 
 
 
 
Christopher Barton
Dale Shimoda
Kay Tidwell
EVP, Operations and Development
EVP, Finance
EVP, General Counsel and Secretary
 
 
 
 
 
Alexander Vouvalides
Drew Gordon
Harout Diramerian
SVP, Acquisitions
SVP, Northern California
Chief Accounting Officer
 
 
 
Arthur X. Suazo
 
Elva Hernandez
Director of Leasing
 
VP, Controller
INVESTOR RELATIONS
 

Addo Communications
(310) 829-5400
Email Contact: lasseg@addocommunications.com
Please visit our corporate Web site at: www.hudsonpacificproperties.com
 



3
Hudson Pacific Properties, Inc.
First Quarter 2013 Supplemental Operating and Financial Data

CORPORATE DATA
(unaudited, $ in thousands, except per share data)
Hudson Pacific Properties, Inc. (NYSE: HPP) (also referred to herein as the “Company,” “we,” “us,” or “our”) is a full-service, vertically integrated real estate company focused on owning, operating and acquiring high-quality office properties in select growth markets primarily in Northern and Southern California. Our investment strategy is focused on high barrier-to-entry, in-fill locations with favorable, long-term supply demand characteristics. These markets include Los Angeles, Orange County, San Diego, San Francisco, Silicon Valley and the East Bay, which we refer to as our target markets. This Supplemental Operating and Financial Data supplements the information provided in our reports filed with the Securities and Exchange Commission. We maintain a Web site at www.hudsonpacificproperties.com.
Number of office properties owned
19

Office properties square feet (in thousands)
4,454

Stabilized office properties leased rate as of March 31, 2013(1)
94.5
%
Stabilized office properties occupied rate as of March 31, 2013(1)(2)
92.2
%
 
 
Number of media & entertainment properties owned
2

Media & entertainment square feet (in thousands)
884

Media & entertainment occupied rate as of March 31, 2013(3)
74.1
%
 
 
Number of land assets owned
5

Land assets square feet (in thousands)(4)
1,947

 
 
Market capitalization (in thousands):
 
Total debt(5)
$
529,013

Series A Preferred Units
12,475

Series B Preferred Stock
145,000

Common equity capitalization(6)
1,285,006

Total market capitalization
$
1,971,494

Debt/total market capitalization
26.8
%
Series A preferred units & debt/total market capitalization
27.5
%
Common stock data (NYSE:HPP):
 
Range of closing prices(7)
$ 20.54-23.12

Closing price at quarter end
$
21.75

Weighted average fully diluted common stock\units outstanding (in thousands)(8)
55,196

Shares of common stock\units outstanding on March 31, 2013 (in thousands)(9)
59,081

__________________________
(1)
Stabilized office properties leased rate and occupied rate excludes the development, redevelopment, and lease-up properties described on page 14.
(2)
Represents percent leased less signed leases not yet commenced.
(3)
Percent occupied for media and entertainment properties is the average percent occupied for the 12 months ended March 31, 2013.
(4)
Square footage for land assets represents management's estimate of developable square feet, the majority of which remains subject to receipt of entitlement approvals that have not yet been obtained.
(5)
Total debt excludes non-cash loan premium/discount.
(6)
Common equity capitalization represents the shares of common stock (including unvested restricted shares) and OP units outstanding multiplied by the closing price of our stock at the end of the period.
(7)
For the quarter ended March 31, 2013.
(8)
For the quarter ended March 31, 2013. Diluted shares represent ownership in our Company through shares of common stock, OP Units and other convertible instruments. Diluted shares do not include shares issuable upon exchange of our series A preferred units, which do not become exchangeable until June 29, 2013.
(9)
This amount represents fully diluted common stock and OP units (including unvested restricted stocks) at March 31, 2013, and does not include shares issuable upon exchange of our series A preferred units, which do not become exchangeable until June 29, 2013.


4
















CONSOLIDATED FINANCIAL RESULTS

























5
Hudson Pacific Properties, Inc.
First Quarter 2013 Supplemental Operating and Financial Data

Consolidated Balance Sheets
(Unaudited, in thousands, except share data)
 
March 31, 2013
 
December 31, 2012
ASSETS
 
 
 
Total investment in real estate, net
$
1,396,479

 
$
1,390,771

Cash and cash equivalents
141,562

 
18,904

Restricted cash
14,321

 
14,322

Accounts receivable, net
13,925

 
12,442

Notes receivable
4,000

 
4,000

Straight-line rent receivables
15,612

 
14,165

Deferred leasing costs and lease intangibles, net
81,729

 
83,498

Deferred finance costs, net
7,553

 
8,175

Interest rate contracts
64

 
71

Goodwill
8,754

 
8,754

Prepaid expenses and other assets
3,330

 
4,588

TOTAL ASSETS
$
1,687,329

 
$
1,559,690

 
 
 
 
LIABILITIES AND EQUITY
 
 
 
Notes payable
$
530,023

 
$
582,085

Accounts payable and accrued liabilities
21,696

 
18,833

Below-market leases
29,351

 
31,560

Security deposits
6,262

 
5,997

Prepaid rent
9,216

 
11,518

TOTAL LIABILITIES
596,548

 
649,993

 
 
 
 
6.25% series A cumulative redeemable preferred units of the Operating Partnership
12,475

 
12,475

 
 
 
 
EQUITY
 
 
 
Hudson Pacific Properties, Inc. stockholders’ equity:
 
 
 
Preferred stock, $0.01 par value, 10,000,000 authorized; 8.375% series B cumulative redeemable preferred stock, $25.00 liquidation preference, 5,800,000 shares outstanding at March 31, 2013 and December 31, 2012, respectively
145,000

 
145,000

Common Stock, $0.01 par value, 490,000,000 authorized, 56,698,156 shares and 47,496,732 shares outstanding at March 31, 2013 and December 31, 2012, respectively
567

 
475

Additional paid-in capital
910,792

 
726,605

Accumulated other comprehensive loss
(1,271
)
 
(1,287
)
Accumulated deficit
(33,373
)
 
(30,580
)
Total Hudson Pacific Properties, Inc. stockholders’ equity
1,021,715

 
840,213

Non-controlling interest—members in Consolidated Entities
1,470

 
1,460

Non-controlling common units in the Operating Partnership
55,121

 
55,549

TOTAL EQUITY
1,078,306

 
897,222

TOTAL LIABILITIES AND EQUITY
$
1,687,329

 
$
1,559,690

 
 
 
 



6
Hudson Pacific Properties, Inc.
First Quarter 2013 Supplemental Operating and Financial Data

Consolidated Statements of Operations
(Unaudited, in thousands, except share and per share data)
 
Three Months Ended March 31,
 
 
2013
 
2012
Revenues
 
 
 
Office
 
 
 
Rental
$
28,648

 
$
22,380

Tenant recoveries
5,882

 
5,374

Parking and other
3,938

 
2,114

Total office revenues
38,468

 
29,868

 
 
 
 
Media & entertainment
 
 
 
Rental
5,768

 
5,451

Tenant recoveries
418

 
248

Other property-related revenue
4,490

 
2,624

Other
236

 
40

     Total media & entertainment revenues
10,912

 
8,363

 
 
 
 
Total revenues
49,380

 
38,231

 
 
 
 
Operating expenses
 
 
 
Office operating expenses
14,114

 
11,356

Media & entertainment operating expenses
5,568

 
4,770

General and administrative
4,989

 
4,514

Depreciation and amortization
18,905

 
12,132

Total operating expenses
43,576

 
32,772

 
 
 
 
Income from operations
5,804

 
5,459

 
 
 
 
Other expense (income)
 
 
 
Interest expense
5,592

 
4,891

Interest income
(150
)
 
(5
)
Acquisition-related expenses
—

 
61

Other expenses
45

 
44

 
5,487

 
4,991

 
 
 
 
Net income
$
317

 
$
468

 
 
 
 
Net income attributable to preferred stock and units
(3,231
)
 
(3,231
)
Net income attributable to restricted shares
(79
)
 
(78
)
Net income attributable to non-controlling interest in Consolidated Entities
(10
)
 
—

Net loss attributable to common units in the Operating Partnership
131

 
203

Net loss attributable to Hudson Pacific Properties, Inc. common stockholders
$
(2,872
)
 
$
(2,638
)
Net loss attributable to common stockholders’ per share—basic and diluted
$
(0.06
)
 
$
(0.08
)
Weighted average shares of common stock outstanding—basic and diluted
52,184,280

 
33,320,450

Dividends declared per share of common stock
$
0.125

 
$
0.125



7
Hudson Pacific Properties, Inc.
First Quarter 2013 Supplemental Operating and Financial Data

FUNDS FROM OPERATIONS AND ADJUSTED FUNDS FROM OPERATIONS
(unaudited, in thousands, except per share data)
 
 
Three Months Ended March 31,
 
 
2013
 
2012
Funds From Operations (FFO)(1)
 
 
 
 
Net (loss) income
 
$
317

 
$
468

Adjustments:
 
 
 
 
Depreciation and amortization of real estate assets
 
18,905

 
12,132

Less: Net loss (income) attributable to non-controlling interest in Consolidated Entities
 
(35
)
 
—

Less: Net income attributable to preferred stock and units
 
(3,231
)
 
(3,231
)
FFO to common shareholders and unit holders
 
$
15,956

 
$
9,369

Specified items impacting FFO:
 
 
 
 
Acquisition-related expenses
 
—

 
61

Property tax savings
 
(797
)
 
—

Termination fee revenue
 
(1,082
)
 
—

FFO (excluding specified items) to common shareholders and unit holders
 
$
14,077

 
$
9,430

 
 
 
 
 
Weighted average common stock/units outstanding - diluted
 
55,196

 
36,454

FFO per common stock/unit—diluted
 
$
0.29

 
$
0.26

FFO (excluding specified items) per common stock/unit—diluted
 
$
0.26

 
$
0.26

 
 
 
 
 
Adjusted Funds From Operations (AFFO)(1)
 
 
 
 
FFO
 
$
15,956

 
$
9,369

Adjustments:
 
 
 
 
Straight-line rent
 
(1,448
)
 
(1,563
)
Amortization of prepaid rent(2)
 
327

 
314

Amortization of above market and below market leases, net
 
(1,519
)
 
(370
)
Amortization of below market ground lease
 
62

 
62

Amortization of lease buy-out costs
 
22

 
23

Amortization of deferred financing costs and loan premium/discount, net
 
297

 
304

Recurring capital expenditures, tenant improvements and lease commissions
 
(15,473
)
 
(2,004
)
Non-cash compensation expense
 
1,726

 
1,229

AFFO
 
$
(50
)
 
$
7,364

 
 
 
 
 
Dividends paid to common stock and unit holders
 
$
7,385

 
$
4,559

AFFO payout ratio
 
(14,770.0
)%
 
61.9
%


______________________________
(1)
See page 18 for Management's Statements on Funds From Operations (FFO) and Adjusted Funds From Operations (AFFO).
(2)
Represents the difference between rental revenue recognize in accordance with accounting principles generally accepted in the United States (GAAP) based on the amortization of the prepaid rent liability relating to the KTLA lease at our Sunset Bronson property compared to scheduled cash rents received in connection with such prepayment.


8
Hudson Pacific Properties, Inc.
First Quarter 2013 Supplemental Operating and Financial Data

DEBT SUMMARY
(In thousands)

The following table sets forth information with respect to our outstanding indebtedness as of March 31, 2013.

 
 
 
 
 
Annual
 
 
 
Balance at
Debt
Outstanding
 
Interest Rate(1)
 
Debt Service(1)
 
Maturity Date
 
Maturity
Unsecured Revolving Credit Facility
$
—

 
LIBOR+1.55% to 2.20%
 
$
—

 
8/3/2016
 
$
—

Mortgage loan secured by 625 Second Street(2)
33,700

 
5.850%
 
1,999

 
2/1/2014
 
33,700

Mortgage loan secured by 6922 Hollywood Boulevard(3)
41,081

 
5.580%
 
3,230

 
1/1/2015
 
39,426

Mortgage loan secured by 275 Brannan(4)
3,830

 
LIBOR+2.00%
 
—

 
10/5/2015
 
3,830

Mortgage loan secured by Sunset Gower/Sunset Bronson(5)
92,000

 
LIBOR+3.50%
 
—

 
2/11/2016
 
89,681

Mortgage loan secured by 901 Market(6)
49,600

 
LIBOR+2.25%
 
—

 
10/31/2016
 
49,600

Mortgage loan secured by Rincon Center(7)
107,197

 
5.134%
 
7,195

 
5/1/2018
 
97,673

Mortgage loan secured by First Financial(8)
43,000

 
4.580%
 
2,002

 
2/1/2022
 
36,799

Mortgage loan secured by 10950 Washington(9)
29,605

 
5.316%
 
2,639

 
3/11/2022
 
24,632

Mortgage loan secured by Pinnacle I
129,000

 
3.954%
 
5,172

 
11/7/2022
 
117,190

Subtotal
$
529,013

 
 
 
 
 
 
 
 
Unamortized loan premium, net(10)
1,010

 
 
 
 
 
 
 
 
Total
$
530,023

 
 
 
 
 
 
 
 



______________________________
(1)
Interest rate with respect to indebtedness is calculated on the basis of a 360-day year for the actual days elapsed, excluding the amortization of loan fees and costs.
(2)
This loan was assumed on September 1, 2011 in connection with the closing of our acquisition of the 625 Second Street property.
(3)
This loan was assumed on November 22, 2011 in connection with the closing of our acquisition of the 6922 Hollywood Boulevard property.
(4)
On October 5, 2012, we obtained a loan for our 275 Brannan property pursuant to which we have the ability to draw up to $15,000 for budgeted base building, tenant improvements, and other costs associated with the renovation and lease-up of that property.
(5)
On March 16, 2011, we purchased an interest rate cap in order to cap one-month LIBOR at 3.715% with respect to $50.0 million of the loan through its maturity on February 11, 2016. On January 11, 2012 we purchased an interest rate cap in order to cap one-month LIBOR at 2.00% with respect to $42.0 million of the loan through its maturity on February 11, 2016. Beginning with the payment due February 1, 2014, monthly debt service will include principal payments based on a 30-year amortization schedule, for total annual debt amortization of $1,113..
(6)
On October 29, 2012, we obtained a loan for our 901 Market property pursuant to which we borrowed $49,600 upon closing, with the ability to draw up to an additional $11,900 for budgeted base building, tenant improvements, and other costs associated with the renovation and lease-up of that property.
(7)
On April 29, 2011, we closed a seven-year term loan totaling $110.0 million with JPMorgan Chase Bank, National Association, secured by our Rincon Center property. The loan bears interest at a fixed annual rate of 5.134%. 
(8)
The loan bears interest only for the first two years. Beginning with the payment due March 1, 2014, monthly debt service will include principal payments based on a 30-year amortization schedule, for total annual debt service of $2,639.
(9)
On February 11, 2012, we closed a 10-year term loan totaling $30.0 million with Cantor Commercial Real Estate Lending, L.P., secured by our 10950 Washington property. The loan bears interest at a fixed annual rate of 5.316% and will mature on March 11, 2022.
(10)
Represents unamortized amount of the non-cash mark-to-market adjustment on debt associated with 625 Second Street and 6922 Hollywood Boulevard.


9















PORTFOLIO DATA














10
Hudson Pacific Properties, Inc.
First Quarter 2013 Supplemental Operating and Financial Data

SAME-STORE ANALYSIS(1) 
(unaudited, $ in thousands)
Same-Store Analysis
 
Three Months Ended March 31,
 
2013
 
2012
 
% change
Same-store office statistics
 
 
 
 
 
Number of properties
14

 
14

 
 
Rentable square feet
3,531,469

 
3,531,469

 
 
Ending % leased
94.8
%
 
92.5
%
 
2.5
 %
Ending % occupied
92.2
%
 
90.5
%
 
1.9
 %
Quarterly average % occupied
88.5
%
 
90.3
%
 
(2.0
)%
 
 
 
 
 
 
Same-store media statistics
 
 
 
 
 
Number of properties
2

 
2

 
 
Rentable square feet
857,435

 
857,435

 
 
TTM average % occupied
74.0
%
 
69.2
%
 
6.9
 %
Quarterly average % occupied
71.2
%
 
69.5
%
 
2.4
 %
 
 
 
 
 
 
Same-store net operating income — GAAP basis
 
 
 
 
 
Total office revenues
29,948

(2) 
29,650

 
1.0
 %
Total media revenues
10,630

 
8,211

 
29.5
 %
Total revenues
40,578

 
37,861

 
7.2
 %
 
 
 
 
 
 
Total office expense
11,421

 
11,366

 
0.5
 %
Total media expense
6,165

(3) 
4,769

 
29.3
 %
Total property expense
17,586

 
16,135

 
9.0
 %
 
 
 
 
 
 
Same-store office net operating income - GAAP basis
18,527

 
18,284

 
1.3
 %
Same-store media net operating income- GAAP basis
4,465

 
3,442

 
29.7
 %
Same-store total property net operating income — GAAP basis
22,992

 
21,726

 
5.8
 %
 
 
 
 
 
 
Same-store net operating income — Cash basis
 
 
 
 
 
Total office revenues
28,360

(2) 
27,871

 
1.8
 %
Total media revenues
10,628

 
8,206

 
29.5
 %
Total revenues
38,988

 
36,077

 
8.1
 %
 
 
 
 
 
 
Total office expense
11,359

 
11,304

 
0.5
 %
Total media expense
6,165

(3) 
4,769

 
29.3
 %
Total property expense
17,524

 
16,073

 
9.0
 %
 
 
 
 
 
 
Same-store office net operating income - Cash basis
17,001

 
16,567

 
2.6
 %
Same-store media net operating income - Cash basis
4,463

 
3,437

 
29.9
 %
Same-store total property net operating income — Cash basis
21,464

 
20,004

 
7.3
 %
______________________________
(1)
Same store defined as all of the properties owned and included in our stabilized portfolio as of January 1, 2012 and still owned and included in the stabilized portfolio as of March 31, 2013.
(2)
Amount excludes $1,082 early lease termination fee income disclosed in the Q1-2013 earnings release.
(3)
Amount excludes $797 property tax savings disclosed in the Q1-2013 earnings release.


11
Hudson Pacific Properties, Inc.
First Quarter 2013 Supplemental Operating and Financial Data

RECONCILIATION OF SAME-STORE PROPERTY NET OPERATING INCOME TO GAAP NET INCOME (LOSS)
(unaudited, $ in thousands)

 
Three Months Ended March 31,
 
2013
 
2012
 
 
 
 
Reconciliation to net income
 
 
 
Same-store office revenues — Cash basis
28,360

 
27,871

GAAP adjustments to office revenues — Cash basis
1,589

 
1,779

Early lease termination fee adjustment to office revenues
1,081

 
—

Same-store office revenues — GAAP basis
31,030

 
29,650

 
 
 
 
Same-store media revenues — Cash basis
10,628

 
8,206

GAAP adjustments to media revenues — Cash basis
2

 
5

Same-store media revenues — GAAP basis
10,630

 
8,211

 
 
 
 
Same-store property revenues — GAAP basis
41,660

 
37,861

 
 
 
 
Same-store office expenses — Cash basis
11,359

 
11,304

GAAP adjustments to office expenses — Cash basis
62

 
62

Same-store office expenses — GAAP basis
11,421

 
11,366

 
 
 
 
Same-store media expenses — Cash basis
6,165

 
4,769

Property tax savings adjustment to media expenses
(797
)
 
—

Same-store media expenses — GAAP basis
5,368

 
4,769

 
 
 
 
Same-store property expenses — GAAP basis
16,789

 
16,135

 
 
 
 
Same-store net operating income — GAAP basis
24,871

 
21,726

Non-Same Store GAAP net operating income
4,827

 
380

General and administrative
(4,989
)
 
(4,514
)
Depreciation and amortization
(18,905
)
 
(12,132
)
Income from operations
5,804

 
5,460

Interest expense
(5,592
)
 
(4,891
)
Interest income
150

 
5

Acquisition-related expenses
—

 
(61
)
Other expenses (income)
(45
)
 
(45
)
Net income
317

 
468

 
 
 
 


12
Hudson Pacific Properties, Inc.
First Quarter 2013 Supplemental Operating and Financial Data

STABILIZED OFFICE PORTFOLIO SUMMARY, OCCUPANCY, AND IN-PLACE RENTS(1) 

 
 
 
 
 
 
 
 
 
 
 
Annualized Base Rent Per Square Foot(4)
 
Monthly Rent Per Square Foot

 
 
 
Percent of Total
 
Percent Occupied(3)
 
Percent Leased(3)
 
Annualized Base Rent(4)
 
 
County
 
Square Feet(2)
 
 
 
 
 
 
San Francisco
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Rincon Center
 
580,850

 
14.8
%
 
79.2
%
 
85.4
%
 
$
17,283,267

 
$
37.58

 
$
3.13

1455 Market Street
 
1,012,012

 
25.7
%
 
93.3
%
 
97.2
%
 
18,175,259

 
19.25

 
1.60

875 Howard Street
 
286,270

 
7.3
%
 
99.4
%
 
101.4
%
 
6,879,995

 
24.19

 
2.02

222 Kearny Street
 
148,797

 
3.8
%
 
93.8
%
 
93.8
%
 
4,992,156

 
35.78

 
2.98

625 Second Street
 
136,906

 
3.5
%
 
95.0
%
 
95.0
%
 
5,213,949

 
40.09

 
3.34

Subtotal
 
2,164,835

 
55.0
%
 
90.5
%
 
94.2
%
 
$
52,544,626

 
$
26.83

 
$
2.24

Los Angeles
 
 
 
 
 
 
 
 
 
 
 
 
 
 
First Financial
 
222,423

 
5.7
%
 
99.9
%
 
99.9
%
 
$
7,521,531

 
$
33.84

 
$
2.82

Technicolor Building
 
114,958

 
2.9
%
 
100.0
%
 
100.0
%
 
4,395,488

 
38.24

 
3.19

Del Amo Office Building
 
113,000

 
2.9
%
 
100.0
%
 
100.0
%
 
3,069,070

 
27.16

 
2.26

9300 Wilshire
 
61,224

 
1.6
%
 
84.2
%
 
84.2
%
 
2,098,373

 
40.71

 
3.39

10950 Washington
 
159,024

 
4.0
%
 
100.0
%
 
100.0
%
 
4,826,932

 
30.35

 
2.53

604 Arizona
 
44,260

 
1.1
%
 
100.0
%
 
100.0
%
 
1,779,252

 
40.20

 
3.35

6922 Hollywood
 
205,523

 
5.2
%
 
92.2
%
 
92.2
%
 
7,851,541

 
41.44

 
3.45

10900 Washington
 
9,919

 
0.3
%
 
100.0
%
 
100.0
%
 
331,017

 
33.37

 
2.78

Pinnacle I
 
393,777

 
10.0
%
 
91.7
%
 
91.7
%
 
14,916,290

 
41.29

 
3.44

Subtotal
 
1,324,108

 
33.6
%
 
95.6
%
 
95.6
%
 
$
46,789,494

 
$
36.97

 
$
3.08

Orange
 
 
 
 
 
 
 
 
 
 
 
 
 
 
City Plaza
 
333,922

 
8.5
%
 
93.8
%
 
93.8
%
 
$
7,485,632

 
$
23.91

 
$
1.99

Subtotal
 
333,922

 
8.5
%
 
93.8
%
 
93.8
%
 
$
7,485,632

 
$
23.91

 
$
1.99

San Diego
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Tierrasanta
 
112,300

 
2.9
%
 
81.1
%
 
89.1
%
 
$
1,353,740

 
$
14.86

 
$
1.24

Subtotal
 
112,300

 
2.9
%
 
81.1
%
 
89.1
%
 
$
1,353,740

 
$
14.86

 
$
1.24

TOTAL
 
3,935,165

 
100.0
%
 
92.2
%
 
94.5
%
 
$
108,173,492

 
$
29.81

 
$
2.48

_____________________________
(1)
Our stabilized portfolio excludes undeveloped land, development and redevelopment properties currently under construction or committed for construction, “lease-up” properties and properties “held-for-sale”. As of March 31, 2013, we had no office development property under construction, one office redevelopment property (275 Brannan Street) under construction, and two lease-up properties (901 Market Street and Element LA). We define “lease-up” properties as properties we recently purchased, developed, or redeveloped that have not yet reached 92% occupancy and are within one year following purchase and cessation of major construction activities, as applicable.
(2)
Square footage for office properties has been determined by management based upon estimated leasable square feet, which may be less or more than the Building Owners and Managers Association, or BOMA, rentable area. Square footage may change over time due to remeasurement or releasing.
(3)
Percent occupied for office properties is calculated as (i) square footage under commenced leases as of March 31, 2013, divided by (ii) total square feet, expressed as a percentage. Percent leased for office properties includes uncommenced leases.
(4)
Rent data for our office properties is presented on an annualized basis. Annualized base rent for office properties is calculated by multiplying (i) base rental payments (defined as cash base rents (before abatements)) under commenced leases as of March 31, 2013, by (ii) 12. Annualized base rent per square foot for the office properties is calculated as (i) annualized base rent divided by (ii) square footage under commenced leases as of March 31, 2013. Annualized base rent does not reflect tenant reimbursements.


13
Hudson Pacific Properties, Inc.
First Quarter 2013 Supplemental Operating and Financial Data

DEVELOPMENT, REDEVELOPMENT, AND LEASE-UP PROPERTIES(1) 
 
 
 
 
 
 
 
 
 
 
 
 
Annualized Base Rent Per Occupied Square Foot(4)
 
Monthly Rent Per Occupied Square Foot
 
 
 
 
Percent of Total
 
Percent Occupied(3)
 
Percent Leased(3)
 
Annualized Base Rent(4)
 
 
County
 
Square Feet(2)
 
 
 
 
 
 
San Francisco
 
 
 
 
 
 
 
 
 
 
 
 
 
 
275 Brannan Street
 
54,673

 
10.8
%
 
—
%
 
100.0
%
 
$
—

 
$
—

 
$
—

901 Market Street
 
212,319

 
41.8
%
 
54.4
%
 
75.8
%
 
3,429,343

 
29.69

 
2.47

Subtotal
 
266,992

 
52.5
%
 
43.3
%
 
80.8
%
 
$
3,429,343

 
$
29.69

 
$
2.47

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Los Angeles
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Element LA (Olympic Bundy)
 
241,427

 
47.5
%
 
22.4
%
 
22.4
%
 
$
1,297,200

 
$
24.02

 
$
2.00

Subtotal
 
241,427

 
47.5
%
 
22.4
%
 
22.4
%
 
$
1,297,200

 
$
24.02

 
$
2.00

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TOTAL
 
508,419

 
100.0
%
 
33.3
%
 
53
%
 
$
4,726,543

 
$
27.89

 
$
2.32


LAND PROPERTIES
County
 
Square Feet(5)
 
Percent of Total
Los Angeles
 
 
 
 
Sunset Bronson—Lot A
 
273,913

 
14.1
%
Sunset Bronson—Redevelopment
 
389,740

 
20.0
%
Sunset Gower— Redevelopment
 
423,396

 
21.7
%
Olympic Bundy
 
500,000

 
25.7
%
Subtotal
 
1,587,049

 
81.5
%
 
 
 
 
 
Orange
 
 
 
 
City Plaza
 
360,000

 
18.5
%
Subtotal
 
360,000

 
18.5
%
 
 
 
 
 
TOTAL
 
1,947,049

 
100.0
%
______________________________
(1)
Our stabilized portfolio excludes undeveloped land, development and redevelopment properties currently under construction or committed for construction, “lease-up” properties and properties “held-for-sale”. As of December 31, 2012, we had no office development property under construction, one office redevelopment property (275 Brannan Street) under construction, and two lease-up properties (901 Market and Olympic Bundy). We define “lease-up” properties as properties we recently purchased, developed, or redeveloped that have not yet reached 92% occupancy and are within one year following purchase and cessation of major construction activities, as applicable.
(2)
Square footage for office properties has been determined by management based upon estimated leasable square feet, which may be less or more than the Building Owners and Managers Association, or BOMA, rentable area. Square footage may change over time due to remeasurement or releasing.
(3)
Percent occupied for office properties is calculated as (i) square footage under commenced leases as of March 31, 2013, divided by (ii) total square feet, expressed as a percentage. Percent leased for office properties includes uncommenced leases.
(4)
Rent data for our office properties is presented on an annualized basis. Annualized base rent for office properties is calculated by multiplying (i) base rental payments (defined as cash base rents (before abatements)) as of March 31, 2013, by (ii) 12. Annualized base rent per occupied square foot for the office properties is calculated as (i) annualized base rent divided by (ii) square footage under lease as of March 31, 2013. Annualized base rent does not reflect tenant reimbursements.
(5)
Square footage for land assets represents management’s estimate of developable square feet, the majority of which remains subject to entitlement approvals that have not yet been obtained.



14
Hudson Pacific Properties, Inc.
First Quarter 2013 Supplemental Operating and Financial Data

MEDIA & ENTERTAINMENT PORTFOLIO SUMMARY, OCCUPANCY, AND IN-PLACE RENTS


Property
 
Square Feet(1)
 
Percent of Total
 
Percent Leased(2)
 
Annual Base Rent(3)
 
Annual Base Rent Per Leased Square Foot(4)
 
 
 
 
 
 
 
 
 
 
 
Sunset Gower
 
567,637

 
64.4
%
 
72.2
%
 
$
12,642,298

 
$
30.86

 
 
 
 
 
 
 
 
 
 
 
Sunset Bronson
 
313,723

 
35.6
%
 
77.7
%
 
10,275,489

 
42.14

 
 
 
 
 
 
 
 
 
 
 
 
 
881,360

 
100.0
%
 
74.1
%
 
$
22,917,787

 
$
35.07
























______________________________
(1)
Square footage for media and entertainment properties has been determined by management based upon estimated gross square feet, which management believes is less than the BOMA rentable area. Square footage may change over time due to remeasurement or releasing. On September 21, 2012 we acquired 5,921 square feet of office property located at 1455 Gordon, ancillary to our Sunset Gower property. That acquisition is reflected in the square footage for Sunset Gower as of September 21, 2012 on a weighted average basis. As of March 31, 2013, the square footage for Sunset Gower and Sunset Bronson totaled 884,196 square feet, including that acquisition. Since the percent occupied is determined on a weighted average basis for the 12 months ended March 31, 2013, the square footage for 1455 Gordon is also included in the square footage for the media and entertainment properties on a weighted average basis.
(2)
Percent leased for media and entertainment properties is the average percent leased for the 12 months ended March 31, 2013.
(3)
Annual base rent for media and entertainment properties reflects actual base rent for the 12 months ended March 31, 2013, excluding tenant reimbursements.
(4)
Annual base rent per leased square foot for the media and entertainment properties is calculated as (i) annual base rent divided by (ii) square footage under lease as of March 31, 2013.


15
Hudson Pacific Properties, Inc.
First Quarter 2013 Supplemental Operating and Financial Data

TEN LARGEST OFFICE TENANTS



Tenant
 
Number of Leases
 
Number of Properties
 
Lease Expiration(1)
 
Total Leased Square Feet
 
Percent of Rentable Square Feet
 
Annualized Base Rent(2)
 
Percent of Annualized Base Rent
Warner Music Group
 
1

 
1

 
12/31/2019
 
195,166

 
4.4
%
 
$
7,959,209

 
7.0
%
Bank of America
 
1

 
1

 
Various
 
616,788

 
13.9
%
 
7,652,661

 
6.8
%
AIG
 
1

 
1

 
7/31/2017
 
142,655

 
3.2
%
 
6,134,165

 
5.4
%
AT&T
 
1

 
1

 
8/31/2013
 
155,964

 
3.5
%
 
5,850,333

 
5.2
%
Square Inc.
 
1

 
1

 
9/27/2023
 
181,805

 
4.1
%
 
5,698,375

 
5.0
%
GSA - U.S. Corps of Engineers
 
3

 
2

 
Various
 
139,400

 
3.1
%
 
4,534,147

 
4.0
%
Fox Interactive Media, Inc.
 
1

 
1

 
3/31/2017
 
104,897

 
2.4
%
 
4,489,382

 
4.0
%
Clear Channel
 
1

 
1

 
9/30/2016
 
107,715

 
2.4
%
 
4,481,830

 
4.0
%
Technicolor Creative Services USA, Inc.
 
1

 
1

 
5/31/2020
 
114,958

 
2.6
%
 
4,395,488

 
3.9
%
NFL Enterprises
 
2

 
2

 
3/31/2015
 
115,084

 
2.6
%
 
3,708,243

 
3.3
%
Total
 
13

 
12

 
 
 
1,874,432

 
42.2
%
 
$
54,903,833

 
48.6
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

______________________________
(1)
GSA and Saatchi & Saatchi North America, Inc. leases are subject to early termination prior to expiration at the option of the tenant.
(2)
Annualized base rent is calculated by multiplying (i) base rental payments (defined as cash base rents (before abatements)) under commenced leases as of March 31, 2013, by (ii) 12. Annualized base rent does not reflect tenant reimbursements.
(3)
We have completed leases at our 1455 Market property with Square Inc. for 332,492 square feet which backfills certain space currently leased to Bank of America. The following summarizes Bank of America’s early termination rights by square footage as of March 31, 2013, subject to the pending lease commencements with Square Inc.: (1) 22,687 square feet at March 31, 2013, 20,801 square feet of which is scheduled to be delivered to Square Inc. in April, 2013 for lease commencement in April, 2013; (2) 152,373 square feet at December 31, 2013, 129,886 square feet of which is scheduled to be delivered to Square Inc. in January, 2014 for lease commencement in January, 2014; (3) 212,854 square feet at December 31, 2015; and (4) 228,874 square feet at December 31, 2017. In sum, the lease with Square Inc. backfills a combined 150,687 square feet of the 616,788 square feet leased to Bank of America as of March 31, 2013.
(4)
We have completed leases at our Rincon Center property with salesforce.com for 235,733 square feet which backfills 148,375 square feet currently leased to AT&T. The following summarizes the scheduled commencement by square footage of the lease with salesforce.com: (1) 93,028 square feet commencing on November 1, 2013, 71,931 square feet of which backfills space currently occupied by AT&T; (2) 59,689 square feet commencing May 1, 2014, 37,230 square feet of which backfills space currently occupied by AT&T; (3) 76,004 square feet commencing August 1, 2014, 39,214 square feet of which backfills space currently occupied by AT&T and 31,205 square feet currently occupied to other tenants; (4) 2,868 square feet commencing August 1, 2015, 2,851 square feet of which backfills space currently occupied by other tenants; and (5) 4,144 square feet commencing May 1, 2017, all of which backfills space currently occupied by other tenants. In addition to the 186,575 square feet under the lease with salesforce.com which backfills space under the lease with AT&T and other tenants, the lease with salesforce.com also includes 13,021 square feet of additional square footage due to BOMA adjustments and 36,137 square feet of net absorption, scheduled for commencement, as follows: 18,062 square feet in November, 2013; and 18,075 square feet in May, 2014.
(5)
GSA expirations by property and square footage: (1) 89,995 square feet at 1455 Market Street expiring on February 19, 2017; (2) 5,906 square feet at 901 Market Street expiring on April 30, 2017; and (3) 43,499 square feet at 901 Market Street expiring on July 31, 2021.


16
Hudson Pacific Properties, Inc.
First Quarter 2013 Supplemental Operating and Financial Data

OFFICE PORTFOLIO LEASING ACTIVITY


Total Gross Leasing Activity
 
Rentable square feet
212,178

Number of leases
16

 
 
Gross New Leasing Activity
 
Rentable square feet
195,456

New cash rate
$
35.55

Number of leases
9

 
 
Gross Renewal Leasing Activity
 
Rentable square feet
16,722

Renewal cash rate
$
36.00

Number of leases
7

 
 
Net Absorption
 
Leased rentable square feet
64,413

 
 
Cash Rent Growth(1)
 
Expiring Rate
$
24.03

New/Renewal Rate
$
28.95

Change
20.5
%
 
 
Straight-Line Rent Growth(2)
 
Expiring Rate
$
24.89

New/Renewal Rate
$
30.56

Change
22.8
%
 
 
Weighted Average Lease Terms
 
New (in months)
106

Renewal (in months)
40

Tenant Improvements and Leasing Commissions(3)
Total Lease Transaction Costs Per Square Foot
Annual Lease Transaction Costs Per Square Foot
New leases
$54.46
$6.18
Renewal leases
$4.27
$1.29
Blended
$50.5
$6.03
______________________________
(1)
Represents a comparison between initial stabilized cash rents on new and renewal leases as compared to the expiring cash rents in the same space. New leases are only included if the same space was leased within the previous 12 months.
(2)
Represents a comparison between initial straight-line rents on new and renewal leases as compared to the straight-line rents on expiring leases in the same space. New leases are only included if the same space was leased within the previous 12 months.
(3)
Represents per square foot weighted average lease transaction costs based on the lease executed in the current quarter in our properties.


17
Hudson Pacific Properties, Inc.
First Quarter 2013 Supplemental Operating and Financial Data

OFFICE LEASE EXPIRATIONS - ANNUAL


Year of Lease Expiration
 
Square Footage of Expiring Leases(1)
 
Percent of Office Portfolio Square Feet
 
Annualized Base Rent(2)
 
Percentage of Office Portfolio Annualized Base Rent
 
Annualized Base Rent Per Square Foot(3)
 
Annualized Base Rent Per Square Foot at Expiration(4)
Available
 
455,614

 
10.3
%
 
$
—

 
—

 
$
—

 
$
—

2013
 
605,208

 
13.6
%
 
16,972,078

 
13.9
%
 
28.04

 
27.52

2014
 
157,532

 
3.6
%
 
5,290,912

 
4.4
%
 
33.59

 
34.23

2015
 
400,648

 
9.0
%
 
8,228,789

 
6.8
%
 
20.54

 
22.12

2016
 
338,399

 
7.6
%
 
11,421,852

 
9.4
%
 
33.75

 
36.14

2017
 
771,843

 
17.4
%
 
22,876,369

 
18.8
%
 
29.64

 
30.93

2018
 
281,314

 
6.3
%
 
7,189,209

 
5.9
%
 
25.56

 
28.58

2019
 
594,986

 
13.4
%
 
19,918,749

 
16.4
%
 
33.48

 
38.27

2020
 
263,175

 
5.9
%
 
9,520,453

 
7.8
%
 
36.18

 
44.78

2021
 
43,499

 
1.0
%
 
1,071,673

 
0.9
%
 
24.64

 
28.45

2022
 
9,359

 
0.2
%
 
376,528

 
0.3
%
 
40.23

 
52.49

Thereafter
 
308,448

 
6.9
%
 
10,033,423

 
8.2
%
 
32.53

 
43.79

Building management use
 
23,331

 
0.5
%
 
—

 
—
%
 
—

 
—

Signed leases not commenced(5)
 
190,228

 
4.3
%
 
8,797,424

 
7.2
%
 
46.25

 
55.69

Total/Weighted Average
 
4,443,584

 
100.0
%
 
$
121,697,459

 
100.0
%
 
$
30.52

 
$
33.96




______________________________
(1)
Please see footnote (3) on page 16 of this Supplemental Operating and Financial Data report for an explanation of the re-leasing status of 175,060 square feet currently leased to Bank of America scheduled to expire in 2013 at our 1455 Market property, and footnote (4) on page 16 of this Supplemental Operating and Financial Data report for an explanation of the re-leasing status of 155,964 square feet currently leased to AT&T scheduled to expire in 2013 at our Rincon Center property.
(2)
Rent data for our office properties is presented on an annualized basis without regard to cancellation options (with the exception of the Bank of America lease at our 1455 Market property which is assumed to exercise all early termination options). Annualized base rent for office properties is calculated by multiplying (i) base rental payments (defined as cash base rents (before abatements)) as of March 31, 2013, by (ii) 12. Annualized base rent does not reflect tenant reimbursements.
(3)
Annualized base rent per square foot for all lease expiration years and building management use is calculated as (i) base rental payments (defined as cash base rents (before abatements)) under commenced leases, divided by (ii) square footage under commenced leases as of March 31, 2013.
(4)
Annualized base rent per square foot at expiration for all lease expiration years and building management use is calculated as (i) base rental payments (defined as cash base rents (before abatements)) under commenced leases, divided by (ii) square footage under commenced lease as of March 31, 2013.
(5)
Annualized base rent per leased square foot and annualized best rent per square foot at expiration for signed leases not commenced, reflects uncommenced leases and is calculated as (i) base rental payments (defined as cash base rents (before abatements)) under uncommenced leases for vacant space as of March 31, 2013, divided by (ii) square footage under uncommenced leases as of March 31, 2013.



18
Hudson Pacific Properties, Inc.
First Quarter 2013 Supplemental Operating and Financial Data

QUARTERLY OFFICE LEASE EXPIRATIONS - NEXT FOUR QUARTERS
 
 
Q2 2013
 
Q3 2013
 
Q4 2013
 
Q1 2014
County
 
Expiring SF
Rent per SF(1)
 
Expiring SF
Rent per SF(1)
 
Expiring SF
Rent per SF(1)
 
Expiring SF
Rent per SF(1)
San Francisco
 
 
 
 
 
 
 
 
 
 
 
 
Rincon Center
 
3,264

$
25.59

 
155,964

$
37.51

(2) 
2,390

$
33.67

 
8,623

$
47.00

1455 Market Street
 
—

—

 
1,511

30.23

 
152,373

20.16

(3) 
—

—

875 Howard Street
 
—

—

 
—

—

 
4,307

32.00

 
—

—

222 Kearny Street
 
—

—

 
11,772

49.55

 
11,026

24.11

 
5,306

43.86

625 Second Street
 
—

—

 
25,175

28.78

 
—

—

 
—

—

275 Brannan Street
 
—

—

 
—

—

 
—

—

 
—

—

901 Market Street
 
349

15.47

 
2,790

21.00

 
43,364

29.54

 
—

—

Subtotal
 
3,613

$
24.61

 
197,212

$
36.83

 
213,460

$
22.66

 
13,929

$
45.80

 
 
 
 
 
 
 
 
 
 
 
 
 
Los Angeles
 
 
 
 
 
 
 
 
 
 
 
 
First Financial
 
3,240

$
7.41

 
1,430

$
38.56

 
4,574

$
39.17

 
—

$
—

Technicolor Building
 
—

—

 
—

—

 
—

—

 
—

—

Del Amo Office Building
 
—

—

 
—

—

 
—

—

 
—

—

9300 Wilshire
 
—

—

 
1,087

37.08

 
1,688

44.92

 
1,772

36.00

10950 Washington
 
20,047

28.20

 
2,174

27.36

 
—

—

 
—

—

604 Arizona
 
—

—

 
—

—

 
—

—

 
—

—

6922 Hollywood
 
—

—

 
—

—

 
—

—

 
3,459

88.16

10900 Washington
 
—

—

 
—

—

 
—

—

 
—

—

Element LA
 
54,000

24.02

 
—

—

 
—

—

 
—

—

Pinnacle I
 
—

—

 
—

—

 
9,005

46.35

 
—

—

Subtotal
 
77,287

$
24.41

 
4,691

$
33.03

 
15,267

$
44.04

 
5,231

$
70.49

 
 
 
 
 
 
 
 
 
 
 
 
 
Orange
 
 
 
 
 
 
 
 
 
 
 
 
City Plaza
 
41,156

$
29.42

 
831

$
25.80

 
6,114

$
23.75

 
1,660

$
27.60

Subtotal
 
41,156

$
29.42

 
831

$
25.80

 
6,114

$
23.75

 
1,660

$
27.60

 
 
 
 
 
 
 
 
 
 
 
 
 
San Diego
 
 
 
 
 
 
 
 
 
 
 
 
Tierrasanta
 
—

$
—

 
—

$
—

 
—

$
—

 
31,422

$
14.42

Subtotal
 
—

$
—

 
—

$
—

 
—

$
—

 
31,422

$
14.42

 
 
 
 
 
 
 
 
 
 
 
 
 
Total
 
122,056

$
26.11

 
202,734

$
36.69

 
234,841

$
24.08

 
52,242

$
28.82

______________________________
(1)
Rent data for our office properties is presented on an annualized basis without regard to cancellation options (with the exception of the Bank of America lease at our 1455 Market property which is assumed to exercise all early termination options). Annualized base rent for office properties is calculated by multiplying (i) base rental payments (defined as cash base rents (before abatements)) as of March 31, 2013, by (ii) 12. Annualized base rent does not reflect tenant reimbursements.
(2)
Please see footnote (4) on page 16 of this Supplemental Operating and Financial Data report for an explanation of the re-leasing status of the 155,964 square feet scheduled to expire in Q3 2013 at our Rincon Center property.
(3)
Please see footnote (3) on page 16 of this Supplemental Operating and Financial Data report for an explanation of the re-leasing status of the 152,373 square feet scheduled to expire in Q4 2013 at our 1455 Market property.


19
Hudson Pacific Properties, Inc.
First Quarter 2013 Supplemental Operating and Financial Data

OFFICE PORTFOLIO DIVERSIFICATION


 
 
Total
 
Annualized Rent as
Industry
 
Square Feet(1)
 
of Percent of Total
Business Services
 
80,981

 
2
%
Educational
 
120,396

 
3.8
%
Financial Services
 
900,530

 
13.9
%
Insurance
 
175,921

 
6
%
Legal
 
139,037

 
3.7
%
Media & Entertainment
 
777,828

 
26.1
%
Other
 
147,441

 
2.7
%
Real Estate
 
65,102

 
2
%
Retail
 
227,374

 
5.4
%
Technology
 
737,895

 
23.2
%
Advertising
 
169,735

 
3.9
%
Government
 
216,418

 
6.2
%
Healthcare
 
39,084

 
1.1
%
Total
 
3,797,742

 
100.0
%

















______________________________
(1)
Does not include signed leases not commenced.


20
Hudson Pacific Properties, Inc.
First Quarter 2013 Supplemental Operating and Financial Data


DEFINITIONS

Funds From Operations (FFO): We calculate funds from operations before non-controlling interest (FFO) in accordance with the standards established by the National Association of Real Estate Investment Trusts (NAREIT). FFO represents net income (loss), computed in accordance with accounting principles generally accepted in the United States of America (GAAP), excluding gains (or losses) from sales of depreciable operating property, real estate depreciation and amortization (excluding amortization of above (below) market rents for acquisition properties and amortization of deferred financing costs and debt discounts) and after adjustments for unconsolidated partnerships and joint ventures. We use FFO as a supplemental performance measure because, in excluding real estate depreciation and amortization and gains and losses from property dispositions, it provides a performance measure that, when compared year over year, captures trends in occupancy rates, rental rates and operating costs.

We also believe that, as a widely recognized measure of the performance of REITs, FFO will be used by investors as a basis to compare our operating performance with that of other REITs. However, because FFO excludes depreciation and amortization and captures neither the changes in the value of our properties that results from use or market conditions nor the level of capital expenditures and leasing commissions necessary to maintain the operating performance of our properties, all of which have real economic effect and could materially impact our results from operations, the utility of FFO as a measure of our performance is limited. Other equity REITs may not calculate FFO in accordance with the NAREIT definition and, accordingly, our FFO may not be comparable to such other REITs' FFO. Accordingly, FFO should be considered only as a supplement to net income as a measure of our performance. FFO should not be used as a measure of our liquidity, nor is it indicative of funds available to fund our cash needs, including our ability to pay dividends. FFO should not be used as a supplement to or substitute for cash flow from operating activities computed in accordance with GAAP.
 
Adjusted Funds From Operations (AFFO): Adjusted Funds From Operations (AFFO) is a non-GAAP financial measure we believe is a useful supplemental measure of our performance. We compute AFFO by adding to FFO the non-cash compensation expense and amortization of deferred financing costs, and subtracting recurring capital expenditures, tenant improvements and leasing commissions (excluding pre-existing obligations on contributed or acquired properties funded with amounts received in settlement of prorations), and eliminating the net effect of straight-line rents, amortization of lease buy-out costs, and amortization of above/below market lease intangible assets and liabilities and amortization of loan discounts/premium. We also add to FFO the difference between rental revenue recognize in accordance with accounting principles generally accepted in the United States (GAAP) based on the amortization of the prepaid rent liability relating to the KTLA lease at our Sunset Bronson property compared to scheduled cash rents received in connection with such prepayment. AFFO is not intended to represent cash flow for the period. We believe that AFFO provides useful information to the investment community about our financial position as compared to other REITs since AFFO is a widely reported measure used by other REITs. However, other REITs may use different methodologies for calculating AFFO and, accordingly, our AFFO may not be comparable to other REITs.



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