EX-99.2 3 q2-2015ex992.htm EXHIBIT 99.2 Q2-2015 Ex. 99.2

HUDSON PACIFIC PROPERTIES, INC.
SECOND QUARTER 2015
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 and the Pacific Northwest; 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, 2014 filed with the Securities and Exchange Commission on March 2, 2015, as amended, and our Form 8-K filed on January 12, 2015. 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, 2014 filed with the Securities and Exchange Commission on March 2, 2015, as amended.

Hudson Pacific Properties, Inc.
Second Quarter 2015 Supplemental Operating and Financial Data



TABLE OF CONTENTS


 
Page
COMPANY BACKGROUND AND CORPORATE DATA
 
 
CONSOLIDATED FINANCIAL RESULTS
 
 
Consolidated Balance Sheets
Consolidated Statements of Operations
Funds from Operations
Adjusted Funds from Operations
Debt Summary
 
 
PORTFOLIO DATA
 
 
In-Service Office Portfolio by Property
In-Service Office Portfolio Summary
Redevelopment, Development and Held-For-Sale Office Summary
Land Properties Summary
Media & Entertainment Portfolio Summary
Current Value Creation Development Projects
Same-Store Analysis
Reconciliation of Same-Store Property Net Operating Income to GAAP Net Income (Loss)
Net Operating Income Detail
Office Portfolio Leasing Activity
Office Portfolio Commenced Leases with Non-Recurring, Up-Front Abatements
Quarterly Uncommenced / Backfill — Next Eight Quarters
Quarterly Office Lease Expirations — Next Eight Quarters
Office Lease Expirations — Annual
Fifteen Largest Office Tenants
Office Portfolio Diversification
 
 
DEFINITIONS


2
Hudson Pacific Properties, Inc.
Second Quarter 2015 Supplemental Operating and Financial Data


COMPANY BACKGROUND
CORPORATE
11601 Wilshire Boulevard, Sixth Floor, Los Angeles, California 90025
(310) 445-5700
www.hudsonpacificproperties.com

BOARD OF DIRECTORS
 
 
 
Victor J. Coleman
Theodore R. Antenucci
Frank Cohen
Chairman of the Board, Chief Executive Officer and President, Hudson Pacific Properties, Inc.
President and Chief Executive Officer, Catellus Development Corporation
Senior Managing Director, Blackstone Group, L.P.
 
 
 
Richard B. Fried
Jonathan M. Glaser
Robert L. Harris II
Managing Member, Farallon Capital Management, L.L.C.
Managing Member, JMG Capital Management LLC
Executive Chairman of the Board, Acacia Research Corporation
 
 
 
Mark D. Linehan
Robert M. Moran, Jr.
Michael Nash
President and Chief Executive Officer, Wynmark Company
Co-founder and Co-owner, FJM Investments LLC
Senior Managing Director, Blackstone Group, L.P., Chief Investment Officer, Blackstone Real Estate Debt Strategies
 
 
 
Barry A. Porter
 
John Schreiber
Managing General Partner, Clarity Partners L.P.
 
President, Centaur Capital Partners, Inc., Partner and Co-Founder, Blackstone Real Estate Advisors
 
 
 
EXECUTIVE AND SENIOR MANAGEMENT
 
 
 
Victor J. Coleman
Mark T. Lammas
Christopher Barton
Chief Executive Officer and President
Chief Financial Officer
EVP, Development and Capital Investments
 
 
 
 
 
Alexander Vouvalides
Dale Shimoda
Kay L. Tidwell
Chief Investment Officer
EVP, Finance
EVP, General Counsel and Secretary
 
 
 
 
 
Arthur X. Suazo
Harout Diramerian
Josh Hatfield
EVP, Leasing
Chief Accounting Officer
EVP, Operations
 
 
 
Drew Gordon
Gary Hansel
David Tye
SVP, Northern California
SVP, Southern California
SVP, Pacific Northwest
 
 
 
 
Elva Hernandez
 
 
VP, Controller
 
INVESTOR RELATIONS
 
Laura Campbell
Director, Investor Relations
lcampbell@hudsonppi.com
 

3
Hudson Pacific Properties, Inc.
Second Quarter 2015 Supplemental Operating and Financial Data


CORPORATE DATA
(unaudited, $ in thousands, except number of properties, square feet and per share data)
Hudson Pacific Properties, Inc. (NYSE: HPP) (also referred to herein as the “Company,” “we,” “us,” or “our”) is a vertically integrated real estate company focused on acquiring, repositioning, developing and operating high-quality office and state-of-the-art media and entertainment properties in high-growth, high-barrier-to-entry submarkets throughout Northern and Southern California and the Pacific Northwest.  The Company invests across the risk-return spectrum, favoring opportunities where it can employ leasing, capital investment and management expertise to create additional value.  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.
 
June 30, 2015
 
March 31, 2015
 
December 31, 2014
 
September 30, 2014
 
June 30, 2014
Number of office properties owned
53

 
25

 
26

 
25

 
26

Office properties square feet(1)
14,042,298

 
5,700,148

 
5,923,827

 
5,422,612

 
5,533,656

Stabilized office properties leased rate as of end of period(2)
94.7
%
 
93.7
%
 
94.6
%
 
94.1
%
 
94.6
%
In-Service office properties leased rate as of end of period(3)
88.8
%
 
N/A

 
N/A

 
N/A

 
N/A

Number of media & entertainment properties owned
2

 
2

 
2

 
2

 
2

Media & entertainment square feet(1)
869,568

 
869,568

 
869,568

 
884,193

 
884,193

Media & entertainment leased rate as of end of period(4)
71.6
%
 
71.6
%
 
71.6
%
 
71.6
%
 
69.9
%
Number of land assets owned
7

 
5

 
5

 
6

 
6

Land assets estimated square feet(5)
2,590,099

 
1,448,173

 
1,448,173

 
1,861,173

 
1,861,173

Market capitalization (in thousands):
 
 
 
 
 
 
 
 
 
Total debt(6)
$
2,116,974

 
$
784,571

 
$
957,452

 
$
917,238

 
$
848,338

Series A Preferred Units
10,177

 
10,177

 
10,177

 
10,177

 
10,177

Series B Preferred Stock
145,000

 
145,000

 
145,000

 
145,000

 
145,000

Common equity capitalization(7)
4,135,927

 
2,731,256

 
2,091,479

 
1,712,132

 
1,759,364

Total market capitalization
$
6,408,078

 
$
3,671,004

 
$
3,204,108

 
$
2,784,547

 
$
2,762,879

Debt/total market capitalization
33.0
%
 
21.4
%
 
29.9
%
 
32.9
%
 
30.7
%
Series A preferred units & debt/total market capitalization
33.2
%
 
21.6
%
 
30.2
%
 
33.3
%
 
31.1
%
Common stock data (NYSE:HPP)
 
 
 
 
 
 
 
 
 
Range of closing prices(8)
$ 28.22 - 33.95
 
$ 30.25 - 33.65
 
$ 24.64 - 30.34
 
$ 24.45 - 27.01
 
$ 22.32 - 25.91
Closing price at quarter end
$
28.37

 
$
33.19

 
$
30.06

 
$
24.66

 
$
25.34

Weighted average fully diluted common stock\units outstanding (in thousands)(9)
145,849

 
79,713

 
69,685

 
69,126

 
69,422

Shares of common stock\units outstanding at end of period (in thousands)(10)
145,785

 
82,292

 
69,577

 
69,430

 
69,430

__________________________
(1)
Square footage for 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.
(2)
Stabilized office properties leased rate excludes the development, redevelopment, lease-up properties, properties held-for-sale, and land properties described on pages 13, 15, and 16.
(3)
In-service office properties leased rate includes the stabilized office properties and lease-up properties described on pages 12 and 13. The Company has adopted an "in-service" office properties classification as of the three-month period ending June 30, 2015 in light of the April 1, 2015 acquisition of a significant number of lease-up properties.
(4)
Percent occupied for media and entertainment properties is the average percent leased for the 12 months ended as of the quarter indicated.
(5)
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.
(6)
Total debt excludes non-cash loan premium/discount.
(7)
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.
(8)
For the quarter indicated.
(9)
For the quarter indicated, diluted shares represent ownership in our Company through shares of common stock, OP Units and other convertible or exchangeable instruments. The weighted average fully diluted common stock\units outstanding for the three month period ending June 30, 2015, March 31, 2015 and December 31, 2014 includes an estimate for projected executive stock grants under our 2013 and 2014 outperformance programs based on the projected award potential of such programs as of end of such periods, as calculated in accordance with the Accounting Standards Codification 260 Earnings Per Share (the "Projected 2013/2014 OPP stock grants").
(10)
This amount represents fully diluted common stock and OP units (including unvested restricted stocks) as of the end of the quarter indicated. The shares of common stock\units outstanding does not include any Projected 2013/2014 OPP stock grants.


4
















CONSOLIDATED FINANCIAL RESULTS
























5
Hudson Pacific Properties, Inc.
Second Quarter 2015 Supplemental Operating and Financial Data


Consolidated Balance Sheets
(Unaudited, $ in thousands, except share data)
 
June 30, 2015
 
December 31, 2014
ASSETS
 
 
 
Total investment in real estate, net
$
5,728,509

 
$
2,036,638

Cash and cash equivalents
40,327

 
17,753

Restricted cash
17,319

 
14,244

Accounts receivable, net
12,312

 
16,247

Notes receivable
28,476

 
28,268

Straight-line rent receivables
47,137

 
33,006

Deferred leasing costs and lease intangibles, net
381,370

 
102,023

Deferred finance costs, net
18,384

 
8,723

Interest rate contracts
8,689

 
3

Goodwill
8,754

 
8,754

Prepaid expenses and other assets
21,853

 
6,692

Assets associated with real estate held for sale
—

 
68,534

TOTAL ASSETS
$
6,313,130

 
$
2,340,885

 
 
 
 
LIABILITIES AND EQUITY
 
 
 
Notes payable
$
2,119,157

 
$
918,059

Accounts payable and accrued liabilities
75,205

 
36,844

Lease intangible liabilities, net
125,795

 
40,969

Security deposits
21,100

 
6,257

Prepaid rent
21,909

 
8,600

Interest rate contracts
1,766

 
1,750

Liabilities associated with real estate held for sale
275

 
43,214

TOTAL LIABILITIES
$
2,365,207

 
$
1,055,693

 
 
 
 
6.25% series A cumulative redeemable preferred units of the Operating Partnership
10,177

 
10,177

 
 
 
 
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 June 30, 2015 and December 31, 2014, respectively
$
145,000

 
$
145,000

Common stock, $0.01 par value, 490,000,000 authorized, 89,078,401 shares and 66,797,816 shares outstanding at June 30, 2015 and December 31, 2014, respectively
890

 
668

Additional paid-in capital
1,739,088

 
1,070,833

Accumulated other comprehensive income (loss)
2,856

 
(2,443
)
Accumulated deficit
(40,766
)
 
(34,884
)
Total Hudson Pacific Properties, Inc. stockholders’ equity
$
1,847,068

 
$
1,179,174

Non-controlling interest—members in Consolidated Entities
262,756

 
42,990

Non-controlling common units in the Operating Partnership
1,827,922

 
52,851

TOTAL EQUITY
$
3,937,746

 
$
1,275,015

TOTAL LIABILITIES AND EQUITY
$
6,313,130

 
$
2,340,885


6
Hudson Pacific Properties, Inc.
Second Quarter 2015 Supplemental Operating and Financial Data


Consolidated Statements of Operations
(Unaudited, $ in thousands, except share and per share data)
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2015
 
2014
 
2015
 
2014
Revenues
 
 
 
 
 
 
 
Office
 
 
 
 
 
 
 
Rental
$
120,052

 
$
39,905

 
$
161,628

 
$
75,915

Tenant recoveries
17,790

 
5,988

 
23,854

 
11,559

Parking and other
5,716

 
7,013

 
11,011

 
11,492

Total office revenues
$
143,558

 
$
52,906

 
$
196,493

 
$
98,966

Media & entertainment
 
 
 
 
 
 
 
Rental
$
5,394

 
$
5,958

 
$
10,861

 
$
11,407

Tenant recoveries
253

 
384

 
493

 
704

Other property-related revenue
2,556

 
2,811

 
6,665

 
6,445

Other
58

 
70

 
131

 
203

Total media & entertainment revenues
$
8,261

 
$
9,223

 
$
18,150

 
$
18,759

Total revenues
$
151,819

 
$
62,129

 
$
214,643

 
$
117,725

Operating expenses
 
 
 
 
 
 
 
Office operating expenses
$
46,691

 
$
18,573

 
$
63,826

 
$
34,500

Media & entertainment operating expenses
5,069

 
5,838

 
11,074

 
11,843

General and administrative
10,373

 
6,579

 
19,573

 
12,355

Depreciation and amortization
73,592

 
17,944

 
90,750

 
34,612

Total operating expenses
$
135,725

 
$
48,934

 
$
185,223

 
$
93,310

Income from operations
$
16,094

 
$
13,195

 
$
29,420

 
$
24,415

Other expense
 
 
 
 
 
 
 
Interest expense
$
14,113

 
$
6,445

 
$
19,606

 
$
12,969

Interest income
(48
)
 
(11
)
 
(101
)
 
(20
)
Acquisition-related expenses
37,481

 
—

 
43,525

 
105

Other expenses
40

 
12

 
(1
)
 
13

 
$
51,586

 
$
6,446

 
$
63,029

 
$
13,067

(Loss) income from continuing operations before (loss) gain on sale of real estate
(35,492
)
 
6,749

 
(33,609
)
 
11,348

(Loss) gain on sale of real estate
(591
)
 
—

 
22,100

 
—

(Loss) income from continuing operations
(36,083
)
 
6,749

 
(11,509
)
 
11,348

Loss from discontinued operations
—

 
(60
)
 
—

 
(126
)
Net loss from discontinued operations
—

 
(60
)
 
—

 
(126
)
Net (loss) income
$
(36,083
)
 
$
6,689

 
$
(11,509
)
 
$
11,222

Net income attributable to preferred stock and units
(3,195
)
 
(3,195
)
 
(6,390
)
 
(6,395
)
Net income attributable to restricted shares
(80
)
 
(69
)
 
(150
)
 
(138
)
Net (income) loss attributable to non-controlling interest in consolidated entities
(1,893
)
 
61

 
(3,395
)
 
104

Net loss (income) attributable to common units in the Operating Partnership
16,008

 
(121
)
 
15,412

 
(168
)
Net (loss) income attributable to Hudson Pacific Properties, Inc. common stockholders
$
(25,243
)
 
$
3,365

 
$
(6,032
)
 
$
4,625

Basic and diluted per share amounts:
 
 
 
 
 
 
 
Net (loss) income from continuing operations attributable to common stockholders
$
(0.28
)
 
$
0.05

 
$
(0.07
)
 
$
0.07

Net (loss) income attributable to common stockholders’ per share—basic and diluted
$
(0.28
)
 
$
0.05

 
$
(0.07
)
 
$
0.07

Weighted average shares of common stock outstanding—basic
88,894,258

 
66,485,639

 
82,906,087

 
65,063,596

Weighted average shares of common stock outstanding—diluted
88,894,258

 
69,421,621

 
82,906,087

 
67,997,167

Dividends declared per share of common stock
$
0.125

 
$
0.125

 
$
0.250

 
$
0.250


7
Hudson Pacific Properties, Inc.
Second Quarter 2015 Supplemental Operating and Financial Data


    
FUNDS FROM OPERATIONS
(Unaudited, $ in thousands, except per share data)
Quarter To Date
 
Three Months Ended
Funds From Operations (FFO)(1)
 
June 30, 
 2015
 
March 31,
2015
 
December 31,
2014
 
September 30,
2014
 
June 30,
2014
 
 
 
 
 
 
 
 
 
 
 
Net (loss) income
 
$
(36,083
)
 
$
24,574

 
$
885

 
$
11,415

 
$
6,689

Adjustments:
 
 
 
 
 
 
 
 
 
 
Depreciation and amortization of real estate assets
 
73,293

 
17,073

 
20,158

 
17,342

 
17,835

Loss / (gain) from sale of real estate
 
591

 
(22,691
)
 
—

 
(5,538
)
 
—

FFO attributable to non-controlling interests
 
(3,696
)
 
(3,312
)
 
(1,254
)
 
(1,396
)
 
(1,080
)
Net income attributable to preferred stock and units
 
(3,195
)
 
(3,195
)
 
(3,195
)
 
(3,195
)
 
(3,195
)
FFO to common stockholders and unit holders
 
$
30,910

 
$
12,449

 
$
16,594

 
$
18,628

 
$
20,249

Specified items impacting FFO:
 
 
 
 
 
 
 
 
 
 
Acquisition-related expenses
 
$
37,481

 
$
6,044

 
$
4,322

 
$
214

 
$
—

Consulting fee to former executive
 
—

 
—

 
1,273

 
890

 
1,111

Supplemental net property tax expense
 
—

 
—

 
—

 
1,072

 
—

Lease termination revenue
 
—

 
—

 
—

 
—

 
(1,687
)
Lease termination non-cash write-off
 
—

 
—

 
—

 
—

 
77

FFO (excluding specified items) to common stockholders and unit holders
 
$
68,391

 
$
18,493

 
$
22,189

 
$
20,804

 
$
19,750

 
 
 
 
 
 
 
 
 
 
 
Weighted average common stock/units outstanding—diluted
 
145,849

 
79,713

 
69,685

 
69,126

 
69,422

FFO per common stock/unit—diluted
 
$
0.21

 
$
0.16

 
$
0.24

 
$
0.27

 
$
0.29

FFO (excluding specified items) per common stock/unit—diluted
 
$
0.47

 
$
0.23

 
$
0.32

 
$
0.30

 
$
0.28

 
 
 
 
 
 
 
 
 
 
 
Year To Date
 
Six Months
Ended
 
Three Months Ended
 
Twelve Months Ended
 
Nine Months
Ended
 
Six Months
Ended
Funds From Operations (FFO)(1)
 
June 30, 
 2015
 
March 31,
2015
 
December 31,
2014
 
September 30,
2014
 
June 30,
2014
 
 
 
 
 
 
 
 
 
 
 
Net (loss) income
 
$
(11,509
)
 
$
24,574

 
$
23,522

 
$
22,637

 
$
11,222

Adjustments:
 
 
 
 
 
 
 
 
 
 
Depreciation and amortization of real estate assets
 
90,366

 
17,073

 
72,003

 
51,845

 
34,503

Gain from sale of real estate
 
(22,100
)
 
(22,691
)
 
(5,538
)
 
(5,538
)
 
—

FFO attributable to non-controlling interest
 
(7,008
)
 
(3,312
)
 
(5,260
)
 
(4,009
)
 
(2,171
)
Net income attributable to preferred stock and units
 
(6,390
)
 
(3,195
)
 
(12,785
)
 
(9,590
)
 
(6,395
)
FFO to common stockholders and unit holders
 
$
43,359

 
$
12,449

 
$
71,942

 
$
55,345

 
$
37,159

Specified items impacting FFO:
 
 
 
 
 
 
 
 
 
 
Acquisition-related expenses
 
$
43,525

 
$
6,044

 
$
4,641

 
$
319

 
$
105

Consulting fee to former executive
 
—

 
—

 
4,109

 
2,836

 
1,946

Supplemental net property tax expense
 
—

 
—

 
809

 
809

 
—

Lease termination revenue
 
—

 
—

 
(1,687
)
 
(1,687
)
 
(1,687
)
Lease termination non-cash write-off
 
—

 
—

 
77

 
77

 
77

FFO (excluding specified items) to common stockholders and unit holders
 
$
86,884

 
$
18,493

 
$
79,891

 
$
57,699

 
$
37,600

 
 
 
 
 
 
 
 
 
 
 
Weighted average common stock/units outstanding—diluted
 
113,162

 
79,713

 
68,892

 
67,933

 
67,998

FFO per common stock/unit—diluted
 
$
0.38

 
$
0.16

 
$
1.04

 
$
0.81

 
$
0.55

FFO (excluding specified items) per common stock/unit—diluted
 
$
0.77

 
$
0.23

 
$
1.16

 
$
0.85

 
$
0.55

______________________________
(1)
See page 30 for Management’s Statements on Funds From Operations (FFO) and Adjusted Funds From Operations (AFFO).

8
Hudson Pacific Properties, Inc.
Second Quarter 2015 Supplemental Operating and Financial Data


ADJUSTED FUNDS FROM OPERATIONS
(Unaudited, $ in thousands, except per share data)
Quarter To Date
 
Three Months Ended
Adjusted Funds From Operations (AFFO)(1)
 
June 30, 
 2015
 
March 31,
2015
 
December 31,
2014
 
September 30, 2014
 
June 30,
2014
 
 
 
 
 
 
 
 
 
 
 
FFO
 
$
30,910

 
$
12,449

 
$
16,594

 
$
18,628

 
$
20,249

Adjustments:
 
 
 
 
 
 
 
 
 
 
Straight-line rent
 
(10,931
)
 
(3,038
)
 
(3,105
)
 
(2,737
)
 
(4,279
)
Amortization of above-market and below-market leases, net
 
(10,258
)
 
(1,291
)
 
(1,215
)
 
(1,291
)
 
(1,456
)
Amortization of above-market and below-market ground leases, net
 
515

 
62

 
62

 
62

 
62

Amortization of lease incentive costs
 
89

 
86

 
144

 
102

 
80

Amortization of deferred financing costs and loan premium/discount, net
 
1,551

 
652

 
460

 
598

 
243

Recurring capital expenditures, tenant improvements and lease commissions
 
(13,301
)
 
(6,191
)
 
(11,702
)
 
(8,378
)
 
(13,729
)
Non-cash compensation expense
 
2,003

 
2,149

 
2,512

 
1,792

 
1,978

AFFO
 
$
578

 
$
4,878

 
$
3,750

 
$
8,776

 
$
3,148

 
 
 
 
 
 
 
 
 
 
 
Weighted average common stock/units outstanding—diluted
 
145,849

 
79,713

 
69,685

 
69,126

 
69,422

AFFO per common stock/unit—diluted
 
$
—

 
$
0.06

 
$
0.05

 
$
0.13

 
$
0.05

Dividends paid to common stock and unit holders
 
$
18,224

 
$
10,287

 
$
8,932

 
$
8,679

 
$
8,679

AFFO payout ratio
 
3,152.9
%
 
210.9
%
 
238.2
%
 
98.9
%
 
275.7
%
 
 
 
 
 
 
 
 
 
 
 
Year To Date
 
Six Months
Ended
 
Three Months Ended
 
Twelve Months Ended
 
Nine Months Ended
 
Six Months
Ended
Adjusted Funds From Operations (AFFO)(1)
 
June 30, 
 2015
 
March 31,
2015
 
December 31,
2014
 
September 30, 2014
 
June 30,
2014
 
 
 
 
 
 
 
 
 
 
 
FFO
 
$
43,359

 
$
12,449

 
$
71,942

 
$
55,345

 
$
37,159

Adjustments:
 
 
 
 
 
 
 
 
 
 
Straight-line rent
 
(13,969
)
 
(3,038
)
 
(12,753
)
 
(9,435
)
 
(6,869
)
Amortization of above-market and below-market leases, net
 
(11,549
)
 
(1,291
)
 
(5,081
)
 
(3,830
)
 
(2,566
)
Amortization of above-market and below-market ground leases, net
 
577

 
62

 
248

 
186

 
124

Amortization of lease incentive costs
 
175

 
86

 
379

 
235

 
133

Amortization of deferred financing costs and loan premium/discount, net
 
2,203

 
652

 
1,525

 
1,065

 
466

Recurring capital expenditures, tenant improvements and lease commissions
 
(19,492
)
 
(6,191
)
 
(40,984
)
 
(29,282
)
 
(20,893
)
Non-cash compensation expense
 
4,152

 
2,149

 
7,559

 
5,047

 
3,255

AFFO
 
$
5,456

 
$
4,878

 
$
22,835

 
$
19,331

 
$
10,809

 
 
 
 
 
 
 
 
 
 
 
Weighted average common stock/units outstanding—diluted
 
113,162

 
79,713

 
68,892

 
67,933

 
67,998

AFFO per common stock/unit—diluted
 
$
0.05

 
$
0.06

 
$
0.33

 
$
0.28

 
$
0.16

Dividends paid to common stock and unit holders
 
$
28,511

 
$
10,287

 
$
34,966

 
$
26,034

 
$
17,355

AFFO payout ratio
 
522.6
%
 
210.9
%
 
153.1
%
 
134.7
%
 
160.6
%
______________________________
(1)
See page 30 for Management’s Statements on Funds From Operations (FFO) and Adjusted Funds From Operations (AFFO). AFFO excludes amounts attributable to non-controlling interest in Consolidated Entities. For purposes of the three-month period ending June 30, 2014, AFFO amounts appearing in our Supplemental Operating and Financial Data reports issued for those periods included amounts attributable to the non-controlling interest in Consolidated Entities. AFFO amounts in this Supplemental Operating and Financial Data report reflect an increase in AFFO compared to amounts previously reported owing to the exclusion of amounts attributable to non-controlling interest in Consolidated Entities for all periods presented.



9
Hudson Pacific Properties, Inc.
Second Quarter 2015 Supplemental Operating and Financial Data


DEBT SUMMARY
(Tabular amounts in thousands)
The following table sets forth information with respect to our outstanding indebtedness as of June 30, 2015.
 
 
 
 
 
 
Annual
 
 
 
Balance at
Debt
 
Outstanding
 
Interest Rate(1)
 
Debt Service(1)
 
Maturity Date
 
Maturity
Unsecured loans
 
 
 
 
 
 
 
 
 
 
Unsecured revolving credit facility
 
$
45,000

 
LIBOR+ 1.15% to 1.85%
 
$
—

 
4/1/2019
 
$
45,000

Unsecured term loan—2-year term
 
550,000

 
LIBOR+ 1.30% to 2.20%
 
—

 
4/1/2017
 
550,000

Unsecured term loan—5-year term(2)
 
550,000

 
LIBOR+ 1.30% to 2.20%
 
—

 
4/1/2020
 
550,000

Unsecured term loan—7-year term(3)
 
350,000

 
LIBOR+ 1.60% to 2.55%
 
—

 
4/1/2022
 
350,000

Total unsecured loans
 
$
1,495,000

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Mortgage Loans
 
 
 
 
 
 
 
 
 
 
Mortgage loan secured by Pinnacle II(4)
 
$
86,826

 
6.31%
 
6,754

 
9/6/2016
 
85,301

Mortgage loan secured by 901 Market(5)
 
30,000

 
LIBOR+2.25%
 
—

 
10/31/2016
 
30,000

Mortgage loan secured by Element LA(6)
 
82,646

 
LIBOR+1.95%
 
—

 
11/1/2017
 
82,646

Mortgage loan secured by Rincon Center(7)
 
103,365

 
5.13%
 
7,195

 
5/1/2018
 
97,673

Mortgage loan secured by Sunset Gower/Sunset Bronson(8)
 
97,000

 
LIBOR+2.25%
 
—

 
2/11/2018
 
97,000

Mortgage loan secured by Met Park North(9)
 
64,500

 
LIBOR+1.55%
 
—

 
8/1/2020
 
64,500

Mortgage loan secured by 10950 Washington(10)
 
28,637

 
5.32%
 
2,003

 
3/11/2022
 
24,632

Mortgage loan secured by Pinnacle I(11)
 
129,000

 
3.95%
 
5,172

 
11/7/2022
 
117,190

Subtotal mortgage loans
 
$
621,974

 
 
 
 
 
 
 
 
Unamortized loan premium, net(12)
 
2,183

 
 
 
 
 
 
 
 
Total mortgage loans
 
$
624,157

 
 
 
 
 
 
 
 
Total
 
$
2,119,157

 
 
 
 
 
 
 
 
______________________________
(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)
Effective as of May 1, 2015, the Company entered into an interest rate contract with respect to $300.0 million of the $550.0 million five-year term loan facility that swapped one-month LIBOR to a fixed rate of 1.36% through the loan’s maturity on April 1, 2020. As a result, $300.0 million of this facility currently bears interest at a rate equal to 2.66% to 3.56% per annum depending on our leverage ratio.
(3)
Effective as of May 1, 2015, the Company entered into an interest rate contract with respect to the entire $350.0 million seven-year term loan facility that swapped one-month LIBOR to a fixed rate of 1.61% through the loan’s maturity on April 1, 2022. As a result, this facility currently bears interest at a rate equal to 3.21% to 4.16% per annum depending on our leverage ratio.
(4)
This loan was assumed on June 14, 2013 in connection with the contribution of the Pinnacle II property to the Company’s joint venture with M. David Paul & Associates/Worthe Real Estate Group. This loan bore interest only for the first five years. Beginning with the payment due October 6, 2011, monthly debt service includes annual debt amortization payments based on a 30-year amortization schedule.
(5)
On October 29, 2012, we obtained a loan for our 901 Market property pursuant to which we borrowed $49.6 million upon closing. On April 10, 2015 we repaid $19.6 million of this loan.
(6)
On November 24, 2014 we amended our construction loan for Element LA to, among other things, increase availability from $65.5 million to $102.4 million for budgeted site-work, construction of a parking garage, base building, tenant improvement, and leasing commission costs associated with the renovation and lease-up of the property.
(7)
This loan is amortizing based on a 30-year amortization schedule.
(8)
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 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 February 11, 2016. Effective March 4, 2015, the terms of this loan were amended and restated to introduce the ability to draw up to an additional $160.0 million for budgeted construction costs associated with our ICON development and to extend the maturity date from February 11, 2018 to March 4, 2019.
(9)
This loan bears interest only at a rate equal to one-month LIBOR plus 1.55%. The full loan amount is subject to an interest rate contract that swapped one-month LIBOR to a fixed rate of 2.1644% through the loan’s maturity on August 1, 2020. As a result, this loan bears interest at a rate equal to 3.7144% per annum.
(10)
This loan is amortizing based on a 30-year amortization schedule.
(11)
This loan bears interest only for the first five years. Beginning with the payment due December 6, 2017, monthly debt service will include annual debt amortization payments based on a 30-year amortization schedule, for total annual debt service of $7.3 million.
(12)
Represents unamortized amount of the non-cash mark-to-market adjustment on debt associated with Pinnacle II.

10















PORTFOLIO DATA













11
Hudson Pacific Properties, Inc.
Second Quarter 2015 Supplemental Operating and Financial Data


IN-SERVICE OFFICE PORTFOLIO BY PROPERTY(1) 

 
 
 
 
 
 
Percent Occupied(3)
 
Percent Leased(3)
 
Annualized Base Rent(4)
 
Annualized Base Rent Per Square Foot(4)
Location
 
Submarket
 
Square Feet(2)
 
 
 
 
SAME-STORE
 
 
 
 
 
 
 
 
 
 
 
 
Greater Seattle, Washington
 
 
 
 
 
 
 
 
 
 
 
 
Met Park North
 
Lake Union
 
190,748

 
95.4
%
 
95.4
%
 
$
4,866,998

 
$
26.75

Northview
 
Lynnwood
 
182,009

 
82.8

 
82.8

 
3,200,837

 
21.24

505 First Avenue
 
Pioneer Square
 
288,140

 
96.5

 
96.5

 
5,778,605

 
20.79

83 King Street
 
Pioneer Square
 
184,083

 
97.0

 
97.0

 
4,709,812

 
26.37

Subtotal
 
 
 
844,980

 
93.4
%
 
93.4
%
 
$
18,556,252

 
$
23.51

San Francisco Bay Area, California
 
 
 
 
 
 
 
 
 
 
 
 
1455 Market Street
 
San Francisco
 
1,025,833

 
99.7
%
 
99.7
%
 
$
30,084,536

 
$
29.41

222 Kearny Street
 
San Francisco
 
148,797

 
87.2

 
87.2

 
5,272,183

 
40.63

275 Brannan Street
 
San Francisco
 
54,673

 
100.0

 
100.0

 
3,074,137

 
56.23

625 Second Street
 
San Francisco
 
138,080

 
56.1

 
73.8

 
3,717,624

 
48.03

875 Howard Street
 
San Francisco
 
286,270

 
80.0

 
80.0

 
5,570,866

 
24.32

Rincon Center
 
San Francisco
 
580,850

 
90.5

 
91.2

 
22,123,410

 
42.06

Subtotal
 
 
 
2,234,503

 
91.3
%
 
92.6
%
 
$
69,842,756

 
$
34.24

Los Angeles, California
 
 
 
 
 
 
 
 
 
 
 
 
Pinnacle I
 
Burbank
 
393,777

 
87.1
%
 
89.1
%
 
$
14,273,972

 
$
41.60

Pinnacle II
 
Burbank
 
231,864

 
99.2

 
99.2

 
8,942,900

 
38.88

6922 Hollywood
 
Hollywood
 
205,523

 
85.7

 
85.7

 
7,907,408

 
44.88

Technicolor Building
 
Hollywood
 
114,958

 
100.0

 
100.0

 
4,549,302

 
39.57

Del Amo Office Building
 
Torrance
 
113,000

 
100.0

 
100.0

 
3,327,208

 
29.44

10900 Washington
 
West Los Angeles
 
9,919

 
100.0

 
100.0

 
379,699

 
38.28

10950 Washington
 
West Los Angeles
 
159,024

 
100.0

 
100.0

 
5,751,510

 
36.17

604 Arizona
 
West Los Angeles
 
44,260

 
100.0

 
100.0

 
1,922,857

 
43.44

9300 Wilshire
 
West Los Angeles
 
61,224

 
91.5

 
91.5

 
2,374,262

 
42.38

Subtotal
 
 
 
1,333,549

 
93.5
%
 
94.0
%
 
$
49,429,118

 
$
39.66

Total Same-Store
 
 
 
4,413,032

 
92.4
%
 
93.2
%
 
$
137,828,126

 
$
33.82

NON-SAME-STORE
 
 
 
 
 
 
 
 
 
 
 
 
Greater Seattle, Washington
 
 
 
 
 
 
 
 
 
 
 
 
Merrill Place
 
Pioneer Square
 
193,153

 
73.2
%
 
73.2
%
 
$
3,490,044

 
$
24.70

Subtotal
 
 
 
193,153

 
73.2
%
 
73.2
%
 
$
3,490,044

 
$
24.70

San Francisco Bay Area, California
 
 
 
 
 
 
 
 
 
 
 
 
3400 Hillview
 
Palo Alto
 
207,857

 
100.0
%
 
100.0
%
 
$
12,569,445

 
$
60.47

Clocktower Square
 
Palo Alto
 
100,344

 
96.9

 
96.9

 
5,924,138

 
60.95

Foothill Research
 
Palo Alto
 
195,376

 
100.0

 
100.0

 
12,132,115

 
62.10

Towers at Shore Center
 
Redwood Shores
 
334,483

 
93.7

 
95.4

 
25,513,997

 
81.37

901 Market Street
 
San Franciso
 
206,199

 
100.0

 
100.0

 
9,429,654

 
45.73

1740 Technology
 
San Jose Airport
 
206,876

 
99.1

 
99.1

 
6,972,212

 
34.00

Concourse
 
San Jose Airport
 
944,386

 
94.0

 
94.5

 
24,815,720

 
27.95

Skyport Plaza
 
San Jose Airport
 
418,086

 
99.1

 
99.1

 
9,414,300

 
22.72

Campus Center
 
Silicon Valley
 
471,580

 
100.0

 
100.0

 
14,713,296

 
31.20

Subtotal
 
 
 
3,085,187

 
97.2
%
 
97.5
%
 
$
121,484,877

 
$
40.51

Los Angeles, California
 
 
 
 
 
 
 
 
 
 
 
 
3401 Exposition
 
West Los Angeles
 
63,376

 
100.0
%
 
100.0
%
 
$
2,547,715

 
$
40.20

Element LA
 
West Los Angeles
 
284,037

 
100.0

 
100.0

 
14,960,821

 
52.67

Subtotal
 
 
 
347,413

 
100.0
%
 
100.0
%
 
$
17,508,536

 
$
50.40

Total Non-Same-Store
 
 
 
3,625,753

 
96.2
%
 
94.7
%
 
$
142,483,457

 
$
40.85

Total Stabilized
 
 
 
8,038,785

 
94.1
%
 
94.7
%
 
$
280,311,583

 
$
37.06



12
Hudson Pacific Properties, Inc.
Second Quarter 2015 Supplemental Operating and Financial Data


IN-SERVICE OFFICE PORTFOLIO BY PROPERTY(1)—CONTINUED
 
 
 
 
 
 
Percent Occupied(3)
 
Percent Leased(3)
 
Annualized Base Rent(4)
 
Annualized Base Rent Per Square Foot(4)
Location
 
Submarket
 
Square Feet(2)
 
 
 
 
LEASE-UP
 
 
 
 
 
 
 
 
 
 
 
 
San Francisco Bay Area, California
 
 
 
 
 
 
 
 
 
 
 
 
Bay Park Plaza
 
Burlingame
 
260,183

 
83.4
%
 
83.4
%
 
$
6,767,317

 
$
31.18

One Bay Plaza
 
Burlingame
 
195,739

 
75.2

 
77.5

 
4,827,751

 
32.81

Metro Center
 
Foster City
 
730,215

 
58.9

 
59.7

 
18,075,508

 
42.01

2180 Sand Hill Road
 
Palo Alto
 
45,613

 
56.0

 
56.0

 
2,148,609

 
84.11

Embarcadero Place
 
Palo Alto
 
197,402

 
67.7

 
81.0

 
3,634,191

 
27.20

Lockheed
 
Palo Alto
 
46,759

 
91.7

 
91.7

 
1,651,286

 
38.49

Page Mill Center
 
Palo Alto
 
176,245

 
62.7

 
62.7

 
6,873,304

 
62.18

Palo Alto Square
 
Palo Alto
 
328,251

 
83.3

 
83.3

 
17,386,960

 
63.56

333 Twin Dolphin Plaza
 
Redwood Shores
 
182,789

 
72.9

 
72.9

 
5,596,003

 
42.00

555 Twin Dolphin Plaza
 
Redwood Shores
 
198,936

 
84.2

 
86.5

 
7,088,417

 
42.33

Shorebreeze
 
Redwood Shores
 
230,932

 
80.4

 
90.2

 
7,500,205

 
40.38

Skyway Landing
 
Redwood Shores
 
247,173

 
84.5

 
84.5

 
7,227,102

 
34.61

Bayhill Office Center
 
San Bruno
 
554,328

 
91.9

 
92.4

 
15,153,739

 
29.75

Gateway
 
San Jose Airport
 
608,625

 
83.1

 
84.8

 
13,719,016

 
27.13

Metro Plaza
 
San Jose Airport
 
456,921

 
82.7

 
82.7

 
10,499,971

 
27.79

Peninsula Office Park
 
San Mateo
 
510,456

 
72.6

 
82.3

 
13,997,755

 
37.75

Techmart Commerce
 
Silicon Valley
 
284,440

 
77.7

 
78.6

 
7,823,882

 
35.42

Total Lease-up
 
 
 
5,255,007

 
77.3
%
 
79.7
%
 
$
149,971,016

 
$
36.93

 
 
 
 
 
 
 
 
 
 
 
 
 
TOTAL IN-SERVICE
 
 
 
13,293,792

 
87.4
%
 
88.8
%
 
$
430,282,599

 
$
37.02


___________________________
(1)
Our in-service portfolio excludes the development, redevelopment, properties held-for-sale, and land properties described on pages 15 and 16. As of June 30, 2015, we had one office development property under construction, four office redevelopment properties under construction, and seven land properties (see pages 15 and 16). We define “lease-up” properties as properties we recently purchased, developed, or redeveloped that have not yet reached 92.0% 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 re-measurement or re-leasing.
(3)
Percent occupied for office properties is calculated as (i) square footage under commenced leases as of June 30, 2015, 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 June 30, 2015, 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 June 30, 2015. Annualized base rent does not reflect tenant reimbursements.

13
Hudson Pacific Properties, Inc.
Second Quarter 2015 Supplemental Operating and Financial Data


IN-SERVICE OFFICE PORTFOLIO SUMMARY(1) 
 
 
 
 
 
 
Occupied Square Feet
 
Percent Occupied(3)
 
Leased Square Feet
 
Percent Leased(3)
 
Annualized Base Rent(4)
 
Annualized Base Rent Per Square Foot(4)
Location
 
Properties
 
Square Feet(2)
 
 
 
 
 
 
STABILIZED
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Greater Seattle, Washington
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Lake Union
 
1

 
190,748

 
181,934

 
95.4
%
 
181,934

 
95.4
%
 
$
4,866,998

 
$
26.75

Lynnwood
 
1

 
182,009

 
150,727

 
82.8

 
150,727

 
82.8

 
3,200,837

 
21.24

Pioneer Square
 
3

 
665,376

 
597,830

 
89.8

 
597,830

 
89.8

 
13,978,461

 
23.38

Subtotal
 
5

 
1,038,133

 
930,491

 
89.6
%
 
930,491

 
89.6
%
 
$
22,046,296

 
$
23.69

San Francisco Bay Area, California
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Palo Alto
 
3

 
503,577

 
500,426

 
99.4
%
 
500,426

 
99.4
%
 
$
30,625,698

 
$
61.20

Redwood Shores
 
1

 
334,483

 
313,556

 
93.7

 
319,236

 
95.4

 
25,513,997

 
81.37

San Franciso
 
7

 
2,440,702

 
2,246,153

 
92.0

 
2,274,333

 
93.2

 
79,272,410

 
35.29

San Jose Airport
 
3

 
1,569,348

 
1,507,377

 
96.1

 
1,511,980

 
96.3

 
41,202,232

 
27.33

Silicon Valley
 
1

 
471,580

 
471,580

 
100.0

 
471,580

 
100.0

 
14,713,296

 
31.20

Subtotal
 
15

 
5,319,690

 
5,039,092

 
94.7
%
 
5,077,555

 
95.4
%
 
$
191,327,633

 
$
37.97

Los Angeles, California
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Burbank
 
2

 
625,641

 
573,092

 
91.6
%
 
580,704

 
92.8
%
 
$
23,216,872

 
$
40.51

Hollywood
 
2

 
320,481

 
291,142

 
90.8

 
291,142

 
90.8

 
12,456,710

 
42.79

Torrance
 
1

 
113,000

 
113,000

 
100.0

 
113,000

 
100.0

 
3,327,208

 
29.44

West Los Angeles
 
6

 
621,840

 
616,636

 
99.2

 
616,636

 
99.2

 
27,936,864

 
45.31

Subtotal
 
11

 
1,680,962

 
1,593,870

 
94.8
%
 
1,601,482

 
95.3
%
 
$
66,937,654

 
$
42.00

Total Stabilized
 
31

 
8,038,785

 
7,563,453

 
94.1
%
 
7,609,528

 
94.7
%
 
$
280,311,583

 
$
37.06

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
LEASE-UP
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
San Francisco Bay Area, California
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Burlingame
 
2

 
455,922

 
364,239

 
79.9
%
 
368,794

 
80.9
%
 
$
11,595,068

 
$
31.83

Foster City
 
1

 
730,215

 
430,223

 
58.9

 
435,770

 
59.7

 
18,075,508

 
42.01

Palo Alto
 
5

 
794,270

 
586,129

 
73.8

 
612,467

 
77.1

 
31,694,351

 
54.07

Redwood Shores
 
4

 
859,830

 
695,246

 
80.9

 
722,321

 
84.0

 
27,411,727

 
39.43

San Bruno
 
1

 
554,328

 
509,365

 
91.9

 
512,107

 
92.4

 
15,153,739

 
29.75

San Jose Airport
 
2

 
1,065,546

 
883,583

 
82.9

 
893,866

 
83.9

 
24,218,986

 
27.41

San Mateo
 
1

 
510,456

 
370,814

 
72.6

 
420,080

 
82.3

 
13,997,755

 
37.75

Silicon Valley
 
1

 
284,440

 
220,877

 
77.7

 
223,550

 
78.6

 
7,823,882

 
35.42

Total Lease-up
 
17

 
5,255,007

 
4,060,476

 
77.3
%
 
4,188,955

 
79.7
%
 
$
149,971,016

 
$
36.93

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TOTAL IN-SERVICE
 
48

 
13,293,792

 
11,623,929

 
87.4
%
 
11,798,483

 
88.8
%
 
$
430,282,599

 
$
37.02

___________________________
Refer to footnotes on page 13.

14
Hudson Pacific Properties, Inc.
Second Quarter 2015 Supplemental Operating and Financial Data


REDEVELOPMENT, DEVELOPMENT AND HELD-FOR-SALE OFFICE SUMMARY(1) 
 
 
 
 
Estimated Square Feet(2)
 
Occupied Square Feet
 
Percent Occupied(3)
 
Leased Square Feet
 
Percent Leased(3)
 
Annualized Base Rent(4)
 
Annualized Base Rent Per Square Foot(4)
Location
 
Submarket
 
 
 
 
 
 
 
REDEVELOPMENT
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Los Angeles, California
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
12655 Jefferson
 
West Los Angeles
 
93,952

 
—

 
—
%
 
—

 
—
%
 
$
—

 
$
—

3402 Pico
 
West Los Angeles
 
50,097

 
—

 
—

 
—

 
—

 
—

 
—

4th & Traction
 
Downtown Los Angeles
 
120,937

 
—

 
—

 
—

 
—

 
—

 
—

Subtotal
 
 
 
264,986

 
—

 
—
%
 
—

 
—
%
 
$
—

 
$
—

San Francisco Bay Area, California
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Patrick Henry Drive
 
Silicon Valley
 
70,520

 
—

 
—
%
 
—

 
—
%
 
$
—

 
$
—

Subtotal
 
 
 
70,520

 
—

 
—
%
 
—

 
—
%
 
$
—

 
$
—

Total Redevelopment
 
 
 
335,506

 
—

 
—
%
 
—

 
—
%
 
$
—

 
$
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
DEVELOPMENT
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Los Angeles, California
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Icon — Building I Tower
 
Hollywood
 
323,000

 
—

 
—
%
 
—

 
—
%
 
$
—

 
$
—

Icon — Building II
 
Hollywood
 
90,000

 
—

 
—

 
—

 
—

 
—

 
—

Total Icon
 
 
 
413,000

 
—

 
—
%
 
—

 
—
%
 
$
—

 
$
—

Total Development
 
 
 
413,000

 
—

 
—
%
 
—

 
—
%
 
$
—

 
$
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TOTAL
 
 
 
748,506

 
—

 
—
%
 
—

 
—
%
 
$
—

 
$
—

______________________________
(1)
Excludes in-service properties and land assets (see pages 12, 13, and 16).
(2)
Square footages have 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 re-measurement or re-leasing.
(3)
Percent occupied for office properties is calculated as (i) square footage under commenced leases as of June 30, 2015, 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 June 30, 2015, 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 lease as of June 30, 2015. Annualized base rent does not reflect tenant reimbursements.


15
Hudson Pacific Properties, Inc.
Second Quarter 2015 Supplemental Operating and Financial Data


LAND PROPERTIES SUMMARY

Location
 
Submarket
 
Square Feet(1)
 
Percent of Total
Greater Seattle, Washington
 
 
 
 
 
 
Merrill Place
 
Pioneer Square
 
166,800

 
6.4
%
Subtotal
 
 
 
166,800

 
6.4
%
 
 
 
 
 
 
 
San Francisco Bay Area, California
 
 
 
 
 
 
Skyport Plaza
 
San Jose
 
350,000

 
13.5
%
Campus Center
 
Silicon Valley
 
750,000

 
29.0

Subtotal
 
 
 
1,100,000

 
42.5
%
 
 
 
 
 
 
 
Los Angeles, California
 
 
 
 
 
 
Sunset Bronson—Lot A
 
Hollywood
 
300,000

 
11.6
%
Sunset Gower— Redevelopment
 
Hollywood
 
423,396

 
16.3

Element LA
 
West Los Angeles
 
500,000

 
19.3

3402 Pico
 
West Los Angeles
 
99,903

 
3.9

Subtotal
 
 
 
1,323,299

 
51.1
%
 
 
 
 
 
 
 
TOTAL
 
 
 
2,590,099

 
100.0
%
______________________________
(1)
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.



16
Hudson Pacific Properties, Inc.
Second Quarter 2015 Supplemental Operating and Financial Data


MEDIA & ENTERTAINMENT PORTFOLIO SUMMARY

Property
 
Square Feet(1)
 
Percent of Total
 
Percent Leased(2)
 
Annual Base Rent(3)
 
Annual Base Rent Per Leased Square Foot(4)
Sunset Gower
 
570,470

 
64.5
%
 
72.8
%
 
$
13,845,908

 
$
33.35

Sunset Bronson
 
299,098

 
35.5

 
69.4

 
7,395,912

 
35.06

 
 
 
 
 
 
 
 
 
 
 
TOTAL
 
869,568

 
100.0
%
 
71.6
%
 
$
21,241,820

 
$
33.93

______________________________
(1)
Square footage for media and entertainment properties has been determined by management based upon estimated gross square feet, which may be less or more than BOMA rentable area. Square footage may change over time due to re-measurement or re-leasing. During the fourth quarter ended December 31, 2014, the Company razed approximately 14,625 square feet at its Sunset Bronson property in connection with its ICON development.
(2)
Percent leased for media and entertainment properties is the average percent leased for the 12 months ended June 30, 2015.
(3)
Annual base rent for media and entertainment properties reflects actual base rent for the 12 months ended June 30, 2015, 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) the average square footage under lease during the 12 months ended June 30, 2015.

17
Hudson Pacific Properties, Inc.
Second Quarter 2015 Supplemental Operating and Financial Data


CURRENT VALUE CREATION DEVELOPMENT PROJECTS
(Unaudited, $ in thousands, except square feet)
 
 
 
 
Estimated Construction Period
 
 
 
 
 
 
 
Project Costs(1)
 
 
 
 
City
 
Start Date
 
Estimated Completion Date
 
Estimated
Stabilization Date(2)
 
Estimated Rentable Square Feet(3)
 
Total %Leased
 
Project Costs
as of 6/30/15
 
Total Estimated Project Costs
 
Estimated Initial Stabilized Yield on Project Costs(4)
UNDER CONSTRUCTION
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Los Angeles, California
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Icon — Building I Tower
 
Hollywood
 
Q4-2014
 
Q4-2016
 
Q2-2017
 
323,000

 
—
%
 
N/A
 
N/A
 
N/A
Icon — Building II
 
Hollywood
 
Q4-2014
 
Q3-2017
 
Q2-2018
 
90,000

 
—
%
 
N/A
 
N/A
 
N/A
Total Icon(5)
 

 
 
 
 
 
 
 
413,000

 
—
%
 
$
35,156

 
$
191,709

 
8.3%
12655 Jefferson
 
Playa Del Rey
 
Q2-2015
 
Q4-2015
 
Q2-2016
 
93,952

 
—
%
 
39,158
 
53,819
 
6.6%
Total Under Construction
 
 
 
 
 
 
 
 
 
506,952

 


 
$
74,314

 
$
245,528

 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
FUTURE DEVELOPMENT PIPELINE
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Los Angeles, California
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Sunset Bronson — Lot A
 
Hollywood
 
TBD
 
TBD
 
TBD
 
300,000

 
N/A

 
N/A
 
TBD
 
TBD
Sunset Gower — Redevelopment
 
Hollywood
 
TBD
 
TBD
 
TBD
 
423,396

 
N/A

 
N/A
 
TBD
 
TBD
Element LA
 
Los Angeles
 
TBD
 
TBD
 
TBD
 
500,000

 
N/A

 
N/A
 
TBD
 
TBD
3402 Pico(6)
 
Santa Monica
 
TBD
 
TBD
 
TBD
 
99,903

 
N/A

 
N/A
 
TBD
 
TBD
4th & Traction
 
Los Angeles
 
TBD
 
TBD
 
TBD
 
120,937

 
N/A

 
N/A
 
TBD
 
TBD
San Francisco Bay Area, California
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Skyport Plaza
 
San Jose
 
TBD
 
TBD
 
TBD
 
350,000

 
N/A

 
N/A
 
TBD
 
TBD
Campus Center
 
Milpitas
 
TBD
 
TBD
 
TBD
 
750,000

 
N/A

 
N/A
 
TBD
 
TBD
Greater Seattle, Washington
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Merrill Place
 
Seattle
 
TBD
 
TBD
 
TBD
 
166,800

 
N/A

 
N/A
 
TBD
 
TBD
Total Future Development Pipeline
 
 
 
 
 
 
 
2,711,036

 


 

 

 

______________________________
(1)
Project costs exclude interest costs capitalized in accordance with Accounting Standards Codification (“ASC”) 835-20-50-1, personnel costs capitalized in accordance with ASC 970-360-25 and operating expenses capitalized in accordance with ASC 970-340.
(2)
Based on management’s estimate of stabilized occupancy (92.0%).
(3)
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 re-measurement or re-leasing.
(4)
Estimated initial stabilized yield on project costs is calculated as the quotient of the estimated amounts of NOI and our investment in the property once the project has reached stabilized occupancy (92%) and initial rental concessions, if any, have elapsed. Our estimated initial stabilized yield excludes the impact of leverage. Our cash rents related to our value-creation projects are expected to increase over time and our average cash yields are expected, in general, to be greater than our estimated initial stabilized yields on a cash basis. Our estimates for initial cash yields, and total costs at completion, represent our initial estimates at the commencement of the project. We expect to update this information upon completion of the project, or sooner if there are significant changes to the expected project yields or costs.
(5)
The Icon development is comprised of a 14-story office tower (Icon - Building 1 Tower), a 5-story mid-rise office building (Icon - Building II), and 1,635 stall parking structure. The parking structure is scheduled to be completed within the fourth quarter of 2015. The estimated completion and stabilization dates for each of the buildings is reflected in the above table. Since the costs of the parking structure and certain other development costs are attributable to both buildings, estimated project costs and stabilized yield on project costs are shown on a combined basis for the entire Icon development. Total estimated project costs for Icon excludes land.
(6)
Estimated rentable square feet for 3402 Pico does not include a 50,097 square foot existing vacant building.    

18
Hudson Pacific Properties, Inc.
Second Quarter 2015 Supplemental Operating and Financial Data


SAME-STORE ANALYSIS(1)
(Unaudited, tabular amounts in thousands, except number of properties and square feet)
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2015
 
2014
 
% change
 
2015
 
2014
 
% change
Same-store office statistics(2)
 
 
 
 
 
 
 
 
 
 
 
Number of properties
19

 
19

 
 
 
19

 
19

 
 
Rentable square feet
4,413,032

 
4,413,032

 
 
 
4,413,032

 
4,413,032

 
 
Ending % leased
93.2
%
 
95.0
%
 
(1.9
)%
 
93.2
%
 
95.0
%
 
(1.9
)%
Ending % occupied
92.4
%
 
91.0
%
 
1.5
 %
 
92.4
%
 
91.0
%
 
1.5
 %
Average % occupied for the period
92.5
%
 
90.9
%
 
1.8
 %
 
92.3
%
 
88.8
%
 
3.9
 %
 
 
 
 
 
 
 
 
 
 
 
 
Same-store media statistics(3)
 
 
 
 
 
 
 
 
 
 
 
Number of properties
2

 
2

 
 
 
2

 
2

 
 
Rentable square feet
869,568

 
869,568

 
 
 
869,568

 
869,568

 
 
Average % occupied for the period
72.0
%
 
72.7
%
 
(1.0
)%
 
71.9
%
 
70.8
%
 
1.6
 %
 
 
 
 
 
 
 
 
 
 
 
 
SAME-STORE ANALYSIS—GAAP BASIS
 
 
 
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2015
 
2014
 
% change
 
2015
 
2014
 
% change
Same-store net operating income — GAAP basis
 
 
 
 
 
 
 
 
 
 
 
Total office revenues
$
46,185


$
45,183

(4) 
2.2
 %
 
$
91,577


$
86,412

(4) 
6.0
 %
Total media revenues
8,261

 
9,223

 
(10.4
)
 
18,150

 
18,759

 
(3.2
)
Total revenues
$
54,446

 
$
54,406

 
0.1
 %
 
$
109,727

 
$
105,171

 
4.3
 %
 
 
 
 
 
 
 
 
 
 
 
 
Total office expense
$
17,119

 
$
16,153

 
6.0
 %
 
$
32,383

 
$
30,191

 
7.3
 %
Total media expense
5,069

 
5,838

 
(13.2
)
 
11,074

 
11,843


(6.5
)
Total property expense
$
22,188

 
$
21,991

 
0.9
 %
 
$
43,457

 
$
42,034

 
3.4
 %
 
 
 
 
 
 
 
 
 
 
 
 
Same-store office net operating income — GAAP basis
$
29,066

 
$
29,030

 
0.1
 %
 
$
59,194

 
$
56,221

 
5.3
 %
NOI Margin
62.9
%
 
64.2
%
 
(2.0
)%
 
64.6
%
 
65.1
%
 
(0.8
)%
Same-store media net operating income — GAAP basis
$
3,192

 
$
3,385

 
(5.7
)%
 
$
7,076

 
$
6,916

 
2.3
 %
NOI Margin
38.6
%
 
36.7
%
 
5.2
 %
 
39.0
%
 
36.9
%
 
5.7
 %
Same-store total property net operating income — GAAP basis
$
32,258

 
$
32,415

 
(0.5
)%
 
$
66,270

 
$
63,137

 
5.0
 %
NOI Margin
59.2
%
 
59.6
%
 
(0.7
)%
 
60.4
%
 
60.0
%
 
0.7
 %





19
Hudson Pacific Properties, Inc.
Second Quarter 2015 Supplemental Operating and Financial Data


SAME-STORE ANALYSIS(1) —CONTINUED
(Unaudited, tabular amounts in thousands)

SAME-STORE ANALYSIS—CASH BASIS
 
 
 
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2015
 
2014
 
% change
 
2015
 
2014
 
% change
Same-store net operating income — Cash basis
 
 
 
 
 
 
 
 
 
 
 
Total office revenues
$
44,990

 
$
39,748

(4) 
13.2
 %
 
$
86,686

 
$
77,634

(4) 
11.7
 %
Total media revenues
7,836

 
9,212

 
(14.9
)
 
17,291

 
18,759

 
(7.8
)
Total revenues
$
52,826

 
$
48,960

 
7.9
 %
 
$
103,977

 
$
96,393

 
7.9
 %
 
 
 
 
 
 
 
 
 
 
 
 
Total office expense
$
17,057

 
$
16,091

 
6.0
 %
 
$
32,259

 
$
30,067

 
7.3
 %
Total media expense
5,069

 
5,838

 
(13.2
)
 
11,074

 
11,843

 
(6.5
)
Total property expense
$
22,126

 
$
21,929

 
0.9
 %
 
$
43,333

 
$
41,910

 
3.4
 %
 
 
 
 
 
 
 
 
 
 
 
 
Same-store office net operating income — Cash basis
$
27,933

 
$
23,657

 
18.1
 %
 
$
54,427

 
$
47,567

 
14.4
 %
NOI Margin
62.1
%
 
59.5
%
 
4.4
 %
 
62.8
%
 
61.3
%
 
2.4
 %
Same-store media net operating income — Cash basis
$
2,767

 
$
3,374

 
(18.0
)%
 
$
6,217

 
$
6,916

 
(10.1
)%
NOI Margin
35.3
%
 
36.6
%
 
(3.6
)%
 
36.0
%
 
36.9
%
 
(2.4
)%
Same-store total property net operating income — Cash basis
$
30,700

 
$
27,031

 
13.6
 %
 
$
60,644

 
$
54,483

 
11.3
 %
NOI Margin
58.1
%
 
55.2
%
 
5.3
 %
 
58.3
%
 
56.5
%
 
3.2
 %
______________________________
(1)
“Same store” defined as all of the properties owned and included in our stabilized portfolio as of January 1, 2014 and still owned and included in the stabilized portfolio as of June 30, 2015.
(2)
See page 12 for same-store office properties.
(3)
See page 17 for same-store media properties.
(4)
Amount excludes a one-time $1.6 million early lease termination fee income disclosed in the Q2-2014 earnings release.



20
Hudson Pacific Properties, Inc.
Second Quarter 2015 Supplemental Operating and Financial Data


RECONCILIATION OF SAME-STORE PROPERTY NET OPERATING INCOME TO GAAP NET INCOME (LOSS)
(Unaudited, $ in thousands)
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2015
 
2014
 
2015
 
2014
Reconciliation to net income
 
 
 
 
 
 
 
Same-store office revenues — Cash basis
$
44,990

 
$
39,748

 
$
86,686

 
$
77,634

GAAP adjustments to office revenues — Cash basis
1,195

 
5,435

 
4,891

 
8,778

One time revenue adjustments per definition
—

 
1,610

 
—

 
1,610

Same-store office revenues — GAAP basis
$
46,185

 
$
46,793

 
$
91,577

 
$
88,022

 
 
 
 
 
 
 
 
Same-store media revenues — Cash basis
$
7,836

 
$
9,212

 
$
17,291

 
$
18,759

GAAP adjustments to media revenues — Cash basis
425

 
11

 
859

 
—

Same-store media revenues — GAAP basis
$
8,261

 
$
9,223

 
$
18,150

 
$
18,759

 
 
 
 
 
 
 
 
Same-store property revenues — GAAP basis
$
54,446

 
$
56,016

 
$
109,727

 
$
106,781

 
 
 
 
 
 
 
 
Same-store office expenses — Cash basis
$
17,057

 
$
16,091

 
$
32,259

 
$
30,067

GAAP adjustments to office expenses — Cash basis
62

 
62

 
124

 
124

Same-store office expenses — GAAP basis
$
17,119

 
$
16,153

 
$
32,383

 
$
30,191

 
 
 
 
 
 
 
 
Same-store media expenses — Cash basis
$
5,069

 
$
5,838

 
$
11,074

 
$
11,843

Same-store media expenses — GAAP basis
$
5,069

 
$
5,838

 
$
11,074

 
$
11,843

 
 
 
 
 
 
 
 
Same-store property expenses — GAAP basis
$
22,188

 
$
21,991

 
$
43,457

 
$
42,034

 
 
 
 
 
 
 
 
Same-store net operating income — GAAP basis
$
32,258

 
$
34,025

 
$
66,270

 
$
64,747

Non-Same Store GAAP net operating income
67,801

 
3,693

 
73,473

 
6,635

General and administrative
(10,373
)
 
(6,579
)
 
(19,573
)
 
(12,355
)
Depreciation and amortization
(73,592
)
 
(17,944
)
 
(90,750
)
 
(34,612
)
Income from operations
$
16,094

 
$
13,195

 
$
29,420

 
$
24,415

Interest expense
(14,113
)
 
(6,445
)
 
(19,606
)
 
(12,969
)
Interest income
48

 
11

 
101

 
20

Acquisition-related expenses
(37,481
)
 
—

 
(43,525
)
 
(105
)
Other expense
(40
)
 
(12
)
 
1

 
(13
)
Gain on sale of real estate
(591
)
 
—

 
22,100

 
—

Net loss from discontinued operations
—

 
(60
)
 
—

 
(126
)
Net income (loss)
$
(36,083
)
 
$
6,689

 
$
(11,509
)
 
$
11,222


21
Hudson Pacific Properties, Inc.
Second Quarter 2015 Supplemental Operating and Financial Data


NET OPERATING INCOME DETAIL
Three Months Ended June 30, 2015
(Unaudited, $ in thousands)

 
 
Same Store Office Properties(1)
 
Non-Same Store Office Properties(2)
 
Development/
Redevelopment(3)
 
Lease-Up Properties(4)
 
Media & Entertainment(5)
 
Total
Properties
Revenue
 
 
 
 
 
 
 
 
 
 
 
 
Rents
 
 
 
 
 
 
 
 
 
 
 
 
Cash
 
$
34,046

 
$
29,967

 
$
—

 
$
34,727

 
$
4,970

 
$
103,710

GAAP Revenue
 
1,195

 
6,065

 
—

 
14,053

 
425

 
21,738

Total Rents
 
$
35,241

 
$
36,032

 
$
—

 
$
48,780

 
$
5,395

 
$
125,448

 
 
 
 
 
 
 
 
 
 
 
 
 
Tenant Reimbursements
 
$
6,670

 
$
6,371

 
$
(30
)
 
$
4,733

 
$
252

 
$
17,996

Parking and Other
 
4,274

 
325

 
73

 
106

 
2,614

 
7,393

Total Revenue
 
$
46,185

 
$
42,728

 
$
43

 
$
53,619

 
$
8,261

 
$
150,837

 
 
 
 
 
 
 
 
 
 
 
 
 
Property Operating Expenses
 
17,119

 
11,531

 
112

 
17,819

 
5,069

 
51,650

Property GAAP Net Operating Income
 
$
29,066

 
$
31,197

 
$
(69
)
 
$
35,800

 
$
3,192

 
$
99,187

 
 
 
 
 
 
 
 
 
 
 
 
 
Square Feet
 
4,413,032

 
3,625,753

 
748,506

 
5,255,007

 
869,568

 
14,911,866

Ending % Leased
 
93.2
%
 
96.5
%
 
—
%
 
79.7
%
 
72.0
%
 
83.3
%
Ending % Occupied
 
92.4
%
 
96.2
%
 
—
%
 
77.3
%
 
72.0
%
 
82.1
%
NOI Margin
 
62.9
%
 
73.0
%
 
N/A

 
N/A

 
38.6
%
 
65.8
%
Property GAAP Net Operating Income
 
$
29,066

 
$
31,197

 
$
(69
)
 
$
35,800

 
$
3,192

 
$
99,186

Less : GAAP Revenue
 
(1,195
)
 
(6,065
)
 
—

 
(14,053
)
 
(425
)
 
(21,738
)
Add : GAAP Expense
 
62

 
426

 
—

 
28

 
—

 
516

Property Cash Net Operating Income
 
$
27,933

 
$
25,558

 
$
(69
)
 
$
21,775

 
$
2,767

 
$
77,964

 
 
 
 
 
 
 
 
 
 
 
 
 
Net Income Reconciliation
 
Q2-2015

 
 
Property GAAP Net Operating Income
 
$
99,187

 
 
Broadway Note
 
898

 
 
Disposed Properties
 
51

 

Other income/inter-company eliminations
 
(77
)
 
 
Total GAAP Net Operating Income
 
$
100,059

 
 
General and administrative
 
(10,373
)
 
 
Depreciation and amortization
 
(73,592
)
 
(1) See page 12 for same-store office properties.
Income from Operations
 
$
16,094

 
(2) See page 12 for non-same-store properties.
Interest expense
 
(14,113
)
 
(3) See page 15 for development/redevelopment properties.
Interest income
 
48

 
(4) See page 13 for lease-up properties.
Acquisition-related expenses
 
(37,481
)
 
(5) See page 17 for same-store media properties.
Other (income) expenses
 
(40
)
 

Gain on sale of real estate
 
(591
)
 
 
Net Income
 
$
(36,083
)
 
 

22
Hudson Pacific Properties, Inc.
Second Quarter 2015 Supplemental Operating and Financial Data


OFFICE PORTFOLIO LEASING ACTIVITY
 
Three Months Ended 
 June 30, 2015
 
Six Months Ended 
 June 30, 2015
Total Gross Leasing Activity(1)
 
 
 
Rentable square feet
473,449

 
506,672

Gross New Leasing Activity
 
 
 
Rentable square feet
200,998

 
220,443

New cash rate
$
50.78

 
$
50.60

Gross Renewal Leasing Activity
 
 
 
Rentable square feet
272,451

 
286,229

Renewal cash rate
$
49.81

 
$
49.19

Total Leases Expired and Terminated
 
 
 
Contractual (scheduled) expiration (square feet)
126,379

 
198,248

Early termination (square feet)
114,567

 
143,007

Total
240,946

 
341,255

Net Absorption
 
 
 
Leased rentable square feet
(39,948
)
 
(120,812
)
Cash Rent Growth(2)
 
 
 
Expiring rate
$
37.73

 
$
37.57

New/renewal rate
$
51.05

 
$
50.63

Change
35.3
%
 
34.8
%
Straight-Line Rent Growth(3)
 
 
 
Expiring Rate
$
35.08

 
$
34.97

New/renewal rate
$
52.10

 
$
51.47

Change
48.5
%
 
47.2
%
Weighted Average Lease Terms
 
 
 
New (in months)
63

 
62

Renewal (in months)
40

 
38

Tenant Improvements and Leasing Commissions(4)
Lease Transaction Costs Per Square Foot
 
Three Months Ended 
 June 30, 2015
 
Six Months Ended
June 30, 2015
 
Total
 
Annual
 
Total
 
Annual
New leases
$
32.08

 
$
6.07

 
$
30.06

 
$
5.80

Renewal leases
$
12.83

 
$
3.88

 
$
12.21

 
$
3.86

Blended
$
21.00

 
$
5.07

 
$
19.98

 
$
4.94

______________________________
(1)
The 506,672 square feet executed in the six month period ended June 30, 2015 excludes: (a) a 5-year management agreement with Sodexo America to operate food services in 7,612 square feet (Suite 190) at Pinnacle I (this is a building amenity with no base rent); and (b) a 15-year lease extension with KTLA-TV for 94,205 square feet (Buildings 15, 16, 20 and 21, and Stage 6) at Sunset Bronson Studios, a part of our Media & Entertainment portfolio, scheduled to commence February 1, 2016. The current KTLA-TV lease comprised of 90,506 square feet will expire with a net effective rent of $1.50 (NNN) on January 31, 2016 while the lease extension comprised of 94,205 square feet will commence with a net effective rent of $2.39 (NNN) on February 1, 2016.
(2)
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.
(3)
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.
(4)
Represents per square foot weighted average lease transaction costs based on the lease executed in the current quarter in our properties.

23
Hudson Pacific Properties, Inc.
Second Quarter 2015 Supplemental Operating and Financial Data


OFFICE PORTFOLIO COMMENCED LEASES WITH NON-RECURRING, UP-FRONT ABATEMENTS(1)
 
 
 
 
 
Location
 
Submarket
 
Square Feet
 
Lease Start Date
 
Rent Start Date
 
Starting Base Rents(2)
 
Lease Expiration Date
San Francisco Bay Area, California
 
 
 
 
 
 
 
 
 
 
 
 
Metro Center
 
Foster City
 
33,439

 
1/1/2015
 
7/1/2015
 
39.00

 
6/30/2020
Bayhill Office Center
 
San Bruno
 
106,099

 
2/1/2015
 
10/1/2015
 
22.80

 
1/31/2025
Palo Alto Square
 
Palo Alto
 
13,040

 
2/1/2015
 
8/1/2015
 
79.20

 
12/31/2019
Clocktower square IV
 
Palo Alto
 
25,395

 
3/1/2015
 
6/1/2015
 
56.86

 
2/28/2018
Page Mill Center
 
Palo Alto
 
22,846

 
3/1/2015
 
8/1/2015
 
74.04

 
6/30/2020
Foothill Research Center
 
Palo Alto
 
85,910

 
3/1/2015
 
10/1/2015
 
61.80

 
2/28/2025
Palo Alto Square
 
Palo Alto
 
13,291

 
3/1/2015
 
9/1/2015
 
78.00

 
2/28/2025
Metro Center
 
Foster City
 
18,803

 
3/1/2015
 
10/1/2015
 
39.00

 
2/28/2022
Peninsula Office Park
 
San Mateo
 
27,737

 
5/1/2015
 
9/1/2015
 
46.20

 
4/30/2020
Skyway Landing
 
Redwood Shores
 
17,555

 
6/1/2015
 
10/1/2015
 
45.00

 
5/31/2018
Los Angeles, California
 
 
 
 
 
 
 
 
 
 
 
 
Element LA
 
West Los Angeles
 
284,037

 
4/1/2015
 
10/1/2015
 
$
52.67

 
3/31/2030


______________________________
(1)
Consists of leases greater than 10,000 square feet which commenced on or prior to June 30, 2015, with three or more months of up-front free rent resulting in a rent start date after the commencement of the three month period ending June 30, 2015.
(2)
Stated per leased square foot. Calculated by dividing the product of (i) monthly base rental payments (defined as cash base rents (before abatements)) as of the lease commencement date, and (ii) 12, by (iii) the leased square footage. For commenced leases, calculated by dividing the product of (i) monthly base rental payments (defined as cash base rents (before abatements)) for the month ended June 30, 2015, and (ii) 12, by (iii) the leased square footage. Base rents do not include tenant reimbursements.



24
Hudson Pacific Properties, Inc.
Second Quarter 2015 Supplemental Operating and Financial Data


    
QUARTERLY UNCOMMENCED/BACKFILL — NEXT EIGHT QUARTERS(1) 
 
 
Q3 2015
 
Q4 2015
 
Q1 2016
 
Q2 2016
 
Q3 2016
 
Q4 2016
 
Q1 2017
 
Q2 2017
Location
 
SF
Starting Rent/sf(2)
 
SF
Starting Rent/sf(2)
 
SF
Starting Rent/sf(2)
 
SF
Starting Rent/sf(2)
 
SF
Starting Rent/sf(2)
 
SF
Starting Rent/sf(2)
 
SF
Starting Rent/sf(2)
 
SF(2)
Starting Rent/sf(2)
Greater Seattle, Washington
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Lake Union
 
—

$
—

 
—

$
—

 
—

$
—

 
—

$
—

 
—

$
—

 
—

$
—

 
—

$
—

 
—

$
—

Lynnwood
 
—

—

 
—

—

 
—

—

 
—

—

 
—

—

 
—

—

 
—

—

 
—

—

Pioneer Square
 
—

—

 
—

—

 
—

—

 
—

—

 
—

—

 
—

—

 
—

—

 
—

—

Subtotal
 
—

$
—

 
—

$
—

 
—

$
—

 
—

$
—

 
—

$
—

 
—

$
—

 
—

$
—

 
—

$
—

San Francisco Bay Area, California
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Burlingame
 
—

$
—

 
4,555

$
39.00

 
—

$
—

 
—

$
—

 
—

$
—

 
—

$
—

 
—

$
—

 
—

$
—

Foster City
 
3,358

64.20

 
2,189

63.00

 
—

—

 
—

—

 
—

—

 
—

—

 
—

—

 
—

—

Palo Alto
 
26,338

42.09

 
—

—

 
—

—

 
—

—

 
—

—

 
—

—

 
—

—

 
—

—

Redwood Shores
 
12,465

59.03

 
—

—

 
20,290

54.00

 
—

—

 
—

—

 
—

—

 
—

—

 
—

—

San Bruno
 
5,600

45.31

 
—

—

 
—

—

 
—

—

 
—

—

 
—

—

 
—

—

 
—

—

San Francisco
 
6,486

46.96

 
24,545

57.00

 
—

—

 
—

—

 
—

—

 
—

—

 
—

—

 
38,739

70.84

San Jose Airport
 
14,886

33.60

 
—

—

 
53,624

51.54

 
—

—

 
—

—

 
—

—

 
—

—

 
—

—

San Mateo
 
49,266

49.20

 
—

—

 
—

—

 
—

—

 
—

—

 
—

—

 
—

—

 
—

—

Silicon Valley
 
3,771

45.52

 
—

—

 
—

—

 
—

—

 
—

—

 
—

—

 
—

—

 
—

—

Subtotal
 
122,170

$
46.77

 
31,289

$
54.80

 
73,914

$
52.22

 
—

$
—

 
—

$
—

 
—

$
—

 
—

$
—

 
38,739

$
70.84

Los Angeles, California
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Burbank
 
7,612

$
—

 
—

$
—

 
—

$
—

 
—

$
—

 
—

$
—

 
—

$
—

 
—

$
—

 
—

$
—

Downtown Los Angeles
 
—

—

 
—

—

 
—

—

 
—

—

 
—

—

 
—

—

 
—

—

 
—

—

Hollywood
 
—

—

 
—

—

 
—

—

 
—

—

 
—

—

 
—

—

 
—

—

 
—

—

Torrance
 
—

—

 
—

—

 
—

—

 
—

—

 
—

—

 
—

—

 
—

—

 
—

—

West Los Angeles
 
—

—

 
—

—

 
—

—

 
—

—

 
—

—

 
—

—

 
—

—

 
—

—

Subtotal
 
7,612

$
—

 
—

$
—

 
—

$
—

 
—

$
—

 
—

$
—

 
—

$
—

 
—

$
—

 
—

$
—

TOTAL
 
129,782

$
44.03

 
31,289

$
54.80

 
73,914

$
52.22

 
—

$
—

 
—

$
—

 
—

$
—

 
—

$
—

 
38,739

$
70.84


______________________
(1)
Consists of (i) uncommenced leases, defined as new leases with respect to vacant space, and (ii) backfill leases, defined as new leases with respect to occupied space, in either case executed on or prior to June 30, 2015 but with commencement dates after June 30, 2015 and within the next eight quarters.
(2)
Calculated by dividing the product of (i) monthly base rental payments (defined as cash base rents (before abatements)) as of the lease commencement date, and (ii) 12, by (iii) the leased square footage. Base rents do not include tenant reimbursements. Rent commencement dates do not reflect up-front free rents, if any.




25
Hudson Pacific Properties, Inc.
Second Quarter 2015 Supplemental Operating and Financial Data


QUARTERLY OFFICE LEASE EXPIRATIONS — NEXT EIGHT QUARTERS
 
 
Q3 2015(1)
 
Q4 2015
 
Q1 2016
 
Q2 2016
 
Q3 2016
 
Q4 2016
 
Q1 2017
 
Q2 2017
Location
 
Expiring SF
Rent/sf(2)
 
Expiring SF
Rent/sf(2)
 
Expiring SF
Rent/sf(2)
 
Expiring SF
Rent/sf(2)
 
Expiring SF
Rent/sf(2)
 
Expiring SF
Rent/sf(2)
 
Expiring SF
Rent/sf(2)
 
Expiring SF
Rent/sf(2)
Greater Seattle, Washington
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Lake Union
 
—

$
—

 
—

$
—

 
—

$
—

 
—

$
—

 
—

$
—

 
600

$
43.70

 
—

$
—

 
—

$
—

Lynnwood
 
—

—

 
—

—

 
—

—

 
59,022

18.75

 
—

—

 
—

—

 
—

—

 
—

—

Pioneer Square
 
6,547

21.25

 
26,001

23.69

 
19,445

26.51

 
—

—

 
11,995

26.96

 
8,349

25.67

 
6,000

28.50

 
—

—

Subtotal
 
6,547

$
21.25

 
26,001

$
23.69

 
19,445

$
26.51

 
59,022

$
18.75

 
11,995

$
26.96

 
8,949

$
26.88

 
6,000

$
28.50

 
—

$
—

San Francisco Bay Area, California
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Burlingame
 
14,365

$
28.83

 
13,295

$
27.71

 
2,731

$
33.99

 
13,538

$
26.85

 
6,692

$
30.96

 
6,590

$
31.17

 
—

$
—

 
10,162

$
38.26

Foster City
 
46,476

17.24

 
13,259

36.17

 
4,485

83.52

 
694

58.71

 
12,865

41.93

 
13,068

44.18

 
39,294

39.48

 
7,868

53.94

Palo Alto
 
46,306

42.40

 
—

—

 
21,899

33.62

 
96,838

31.81

 
39,199

44.45

 
36,150

37.02

 
80,944

76.30

 
25,952

65.30

Redwood Shores
 
54,145

44.10

 
67,993

36.32

 
31,039

28.65

 
84,070

37.10

 
43,718

116.13

 
58,986

45.08

 
12,894

30.11

 
43,107

52.72

San Bruno
 
19,875

26.60

 
16,976

36.37

 
4,460

25.96

 
34,100

34.90

 
4,771

37.92

 
54,649

29.81

 
3,129

28.68

 
10,770

38.97

San Francisco
 
28,260

41.21

 
27,091

15.07

 
3,332

35.00

 
47,617

33.60

 
22,283

37.79

 
3,515

37.73

 
162,180

35.53

 
32,621

34.88

San Jose Airport
 
94,865

20.92

 
173,631

28.60

 
98,434

28.59

 
60,847

28.78

 
81,863

30.10

 
117,839

28.28

 
161,400

30.67

 
91,865

29.74

San Mateo
 
5,445

31.16

 
12,709

40.42

 
4,563

43.28

 
43,779

36.97

 
10,020

40.20

 
9,583

41.46

 
4,930

45.76

 
21,678

41.77

Silicon Valley
 
16,936

39.99

 
7,685

37.30

 
13,763

34.53

 
12,760

29.36

 
15,471

33.72

 
14,172

35.90

 
—

—

 
4,750

38.28

Subtotal
 
326,673

$
30.89

 
332,639

$
30.39

 
184,706

$
31.47

 
394,243

$
33.33

 
236,882

$
50.56

 
314,552

$
34.27

 
464,771

$
41.19

 
248,773

$
40.83

Los Angeles, California
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Burbank
 
—

$
—

 
—

$
—

 
—

$
—

 
—

$
—

 
109,323

$
43.51

 
9,005

$
56.83

 
—

$
—

 
—

$
—

Downtown Los Angeles
 
—

—

 
—

—

 
—

—

 
—

—

 
—

—

 
—

—

 
—

—

 
—

—

Hollywood
 
330

18.73

 
—

—

 
12,820

40.56

 
—

—

 
3,378

42.07

 
—

—

 
—

—

 
2,664

65.95

Torrance
 
—

—

 
—

—

 
—

—

 
—

—

 
—

—

 
—

—

 
—

—

 
—

—

West Los Angeles
 
590

23.40

 
2,749

43.75

 
4,364

45.21

 
33,031

31.31

 
—

—

 
2,853

39.96

 
—

—

 
8,527

44.67

Subtotal
 
920

$
21.72

 
2,749

$
43.75

 
17,184

$
41.74

 
33,031

$
31.31

 
112,701

$
43.47

 
11,858

$
52.77

 
—

$
—

 
11,191

$
49.73

TOTAL
 
334,140

$
30.68

 
361,389

$
30.01

 
221,335

$
31.83

 
486,296

$
31.42

 
361,578

$
47.57

 
335,359

$
34.73

 
470,771

$
41.03

 
259,964

$
41.21

______________________
(1)
Q3 2015 expiring square footage does not include 75,441 square feet that expired on June 30, 2015.
(2)
Calculated by dividing the product of (i) monthly base rental payments (defined as cash base rents (before abatements)) as of the lease expiration date, and (ii) 12, by (iii) the leased square footage. Base rents do not include tenant reimbursements.






26
Hudson Pacific Properties, Inc.
Second Quarter 2015 Supplemental Operating and Financial Data


OFFICE LEASE EXPIRATIONS — ANNUAL

Year of Lease Expiration
 
Square Footage of Expiring Leases
 
Percent of Office Portfolio Square Feet
 
Annualized Base Rent(1)
 
Percentage of Office Portfolio Annualized Base Rent
 
Annualized Base Rent Per Square Foot(2)
 
Annualized Base Rent Per Square Foot at Expiration(3)
Vacant
 
2,243,815

 
16.0
%
 


 
—
%
 
$
—

 
$
—

2015
 
770,970

 
5.5

 
23,239,202

 
5.3

 
30.14

 
30.28

2016
 
1,404,568

 
10.0

 
49,758,966

 
11.3

 
35.43

 
36.43

2017
 
2,202,875

 
15.7

 
73,162,539

 
16.6

 
33.21

 
35.23

2018
 
1,225,197

 
8.7

 
43,979,769

 
10.0

 
35.90

 
39.70

2019
 
1,973,883

 
14.1

 
72,148,879

 
16.4

 
36.55

 
41.22

2020
 
799,041

 
5.7

 
32,287,805

 
7.3

 
40.41

 
47.99

2021
 
1,012,072

 
7.2

 
38,114,997

 
8.7

 
37.66

 
44.38

2022
 
184,814

 
1.3

 
8,037,395

 
1.8

 
43.49

 
58.68

2023
 
664,832

 
4.7

 
20,804,847

 
4.7

 
31.29

 
38.94

2024
 
123,907

 
0.9

 
6,509,272

 
1.5

 
52.53

 
61.56

Thereafter
 
1,149,188

 
8.2

 
62,238,929

 
14.2

 
54.16

 
65.43

Building management use
 
112,582

 
0.8

 
—

 
—

 
—

 
—

Signed leases not commenced(4)
 
174,554

 
1.2

 
9,224,714

 
2.2

 
52.85

 
59.27

Total/Weighted Average
 
14,042,298

 
100.0
%
 
$
439,507,314

 
100.0
%
 
$
37.25

 
$
41.98

______________________________
(1)
Rent data for our office properties is presented on an annualized basis without regard to cancellation options. Annualized base rent for office properties is calculated by multiplying (i) base rental payments (defined as cash base rents (before abatements)) as of June 30, 2015, by (ii) 12. Annualized base rent does not reflect tenant reimbursements.
(2)
Annualized base rent per square foot for all lease expiration years 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 June 30, 2015.
(3)
Annualized base rent per square foot at expiration for all lease expiration years 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 June 30, 2015.
(4)
Annualized base rent per leased square foot and annualized best rent per square foot at expiration for signed leases not commenced, reflects uncommenced leases on space not occupied as of June 30, 2015 and is calculated as (i) base rental payments (defined as cash base rents (before abatements)) under uncommenced leases for vacant space as of June 30, 2015, divided by (ii) square footage under uncommenced leases as of June 30, 2015.


27
Hudson Pacific Properties, Inc.
Second Quarter 2015 Supplemental Operating and Financial Data


FIFTEEN LARGEST OFFICE TENANTS

Tenant
 
Property
 
Number of Leases
 
Number of Properties
 
Lease Expiration
 
Total Leased Square Feet
 
Percent of Rentable Square Feet
 
Annualized Base Rent(1)
 
Percent of Annualized Base Rent
Google, Inc.(2)
 
Various
 
2
 
2
 
Various
 
305,729

 
2.2%
 
$
18,617,934

 
4.3%
Weil, Gotshal & Manges LLP
 
Towers at Shore Center
 
1
 
1
 
8/31/2026
 
101,000

 
0.7
 
15,640,035

 
3.6
Riot Games, Inc.
 
Element LA
 
1
 
1
 
3/31/2030
 
284,037

 
2.0
 
14,960,821

 
3.5
Cisco Systems, Inc.(3)
 
Various
 
2
 
2
 
Various
 
474,576

 
3.4
 
14,808,569

 
3.4
Square
 
1455 Market Street
 
1
 
1
 
9/27/2023
 
334,284

 
2.4
 
10,604,158

 
2.5
Salesforce.com(4)
 
Rincon Center
 
1
 
1
 
Various
 
234,699

 
1.7
 
10,551,285

 
2.4
Uber Technologies, Inc.
 
1455 Market Street
 
1
 
1
 
2/28/2025
 
232,290

 
1.7
 
9,860,339

 
2.3
Warner Bros. Entertainment
 
Pinnacle II
 
1
 
1
 
12/31/2021
 
230,000

 
1.6
 
8,942,900

 
2.1
Qualcomm Incorporated
 
Skyport Plaza
 
2
 
1
 
7/31/2017
 
365,502

 
2.6
 
8,450,298

 
2.0
Warner Music Group
 
Pinnacle I
 
1
 
1
 
12/31/2019
 
195,166

 
1.4
 
8,005,578

 
1.9
EMC Corporation(5)
 
Various
 
2
 
2
 
Various
 
294,756

 
2.1
 
7,370,001

 
1.7
Stanford(6)
 
Various
 
2
 
2
 
Various
 
89,281

 
0.6
 
5,971,358

 
1.4
AIG
 
Rincon Center
 
1
 
1
 
7/31/2017
 
132,600

 
0.9
 
5,967,000

 
1.4
GSA(7)
 
Various
 
5
 
4
 
Various
 
183,709

 
1.3
 
5,573,962

 
1.3
NFL Enterprises(8)
 
Various
 
2
 
2
 
6/30/2019
 
137,305

 
1.0
 
5,256,074

 
1.2
TOTAL
 
 
 
25
 
23
 
 
 
3,594,934

 
25.6%
 
$
150,580,312

 
35.0%
______________________________
(1)
Annualized base rent is calculated by multiplying (i) base rental payments (defined as cash base rents (before abatements)) under commenced leases as of June 30, 2015, by (ii) 12. Annualized base rent does not reflect tenant reimbursements.
(2)
Google, Inc. expirations by property and square footage: (1) 207,857 square feet at 3400 Hillview expiring on November 30, 2021 and (2) 97,872 square feet at Foothill Research Center expiring on February 28, 2025.
(3)
Cisco Systems, Inc. expirations by property and square footage: (1) 2,996 square feet at Concourse expiring  March 31, 2018 and (2) 471,580 square feet at Campus Center expiring on December 19, 2019.
(4)
Salesforce.com is expected to take possession of an additional: (1) 2,868 square feet during the third quarter of 2015; and (2) 4,144 square feet during the second quarter of 2017. Expirations by square footage: (1) 76,004 square feet expiring on July 31, 2025; (2) 59,689 square feet expiring on April 30, 2027; (3) 93,028 square feet expiring on October, 31, 2028; and (4) 5,978 square feet of MTM storage space.
(5)
EMC expirations by property and square footage: (1) 66,510 square feet at 875 Howard Street expiring on June 30, 2019; (2) 185,292 square feet at 505 First expiring on October 18, 2021; and (3) 42,954 square feet at 505 First expiring on December 31, 2023.
(6)
Stanford expirations by property and square footage: (1) Stanford Healthcare 63,201 square feet at Page Mill Center expiring June 30, 2019 and (2) Stanford University 26,080 square feet at Palo Alto Square expiring on December 31, 2019.
(7)
GSA expirations by property and square footage: (1) 71,729 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; (3) 28,993 square feet at Northview expiring on April 4, 2020; 33,582 square feet at Rincon Center expiring May 31, 2020; and (4) 43,499 square feet at 901 Market Street expiring on July 31, 2021.
(8)
NFL Enterprises expiration by property and square footage: (1) 127,386 square feet at 10950 Washington expiring on June 30, 2019 and (2) 9,919 square feet at 10900 Washington expiring on June 30, 2019.



28
Hudson Pacific Properties, Inc.
Second Quarter 2015 Supplemental Operating and Financial Data


OFFICE PORTFOLIO DIVERSIFICATION

 
 
Total
 
Annualized Rent as
Industry
 
Square Feet(1)
 
of Percent of Total
Business Services
 
1,028,531

 
8.2
%
Educational
 
87,748

 
0.6

Financial Services
 
434,499

 
1.8

Insurance
 
394,510

 
3.4

Legal
 
738,642

 
10.9

Media & Entertainment
 
1,210,028

 
11.0

Other
 
1,128,617

 
8.9

Real Estate
 
102,587

 
0.9

Retail
 
777,930

 
5.2

Technology
 
5,030,329

 
43.5

Advertising
 
122,724

 
0.9

Government
 
302,488

 
2.1

Healthcare
 
265,297

 
2.6

TOTAL
 
11,623,930

 
100.0
%
______________________________
(1)
Does not include signed leases not commenced.

29
Hudson Pacific Properties, Inc.
Second Quarter 2015 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. 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.

Net Operating Income (NOI): We evaluate performance based upon property net operating income (“NOI”) from continuing operations. NOI is not a measure of operating results or cash flows from operating activities as measured by GAAP and should not be considered an alternative to income from continuing operations, as an indication of our performance, or as an alternative to cash flows as a measure of liquidity, or our ability to make distributions. All companies may not calculate NOI in the same manner. We consider NOI to be a useful performance measure to investors and management, because when compared across periods, NOI reflects the revenues and expenses directly associated with owning and operating the Company’s properties and the impact to operations from trends in occupancy rates, rental rates, and operating costs, providing a perspective not immediately apparent from income from continuing operations. We define NOI as operating revenues (including rental revenues, other property-related revenue, tenant recoveries and other operating revenues), less property-level operating expenses (which includes external management fees, if any, and property-level general and administrative expenses). NOI excludes corporate general and administrative expenses, depreciation and amortization, impairments, gain/loss on sale of real estate, interest expense, acquisition-related expenses and other non-operating items. NOI on a cash basis is NOI on a GAAP basis, adjusted to exclude the effect of straight-line rent and adjustments required by GAAP. We believe that NOI on a cash basis is helpful to investors as an additional measure of operating performance because it eliminates straight-line rent and other non-cash adjustments to revenue and expenses.




30