EX-99.2 3 q2-2016ex992.htm EXHIBIT 99.2 Exhibit

HUDSON PACIFIC PROPERTIES, INC.
SECOND QUARTER 2016
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 Northern and Southern 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, 2015 filed with the Securities and Exchange Commission on February 26, 2016. 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, 2015 filed with the Securities and Exchange Commission on February 26, 2016.
 

Hudson Pacific Properties, Inc.
Second Quarter 2016 Supplemental Operating and Financial Data


TABLE OF CONTENTS


 
Page
COMPANY BACKGROUND, RESEARCH COVERAGE 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
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 2016 Supplemental Operating and Financial Data

COMPANY BACKGROUND
CORPORATE
11601 Wilshire Boulevard, Ninth 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 (retired), 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
 
 
Managing General Partner, Clarity Partners L.P.
 
 
 
 
EXECUTIVE AND SENIOR MANAGEMENT
 
 
 
Victor J. Coleman
Mark T. Lammas
Christopher Barton
Chief Executive Officer and President
Chief Operating Officer and Chief Financial Officer and Treasurer
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
Steve Jaffe
EVP, Leasing
Chief Accounting Officer
Chief Risk Officer
 
 
 
Josh Hatfield
Drew Gordon
Gary Hansel
EVP, Operations
SVP, Northern California
SVP, Southern California
 
 
 
David Tye
 
Elva Hernandez
SVP, Pacific Northwest
 
VP, Controller
INVESTOR RELATIONS
 
Laura Campbell
VP, Head of Investor Relations
lcampbell@hudsonppi.com
 

3
Hudson Pacific Properties, Inc.
Second Quarter 2016 Supplemental Operating and Financial Data

RESEARCH COVERAGE
 
EQUITY RESEARCH COVERAGE
 
 
 
James Feldman
Barry Oxford
Alexander Goldfarb
Bank of America Merrill Lynch
D.A. Davidson 
Sandler O'Neill + Partners
(646) 855-5808
(212) 240-9871
(212) 466-7937
 
 
 
Ross Smotrich
Craig Mailman
Nick Yulico
Barclay Capital
KeyBanc Capital Markets
UBS Investment Bank
(212) 526-2306
(917) 368-2316
(212) 713-3402
 
 
 
Ian Weissman
Richard Anderson
Blaine Heck
Credit Suisse
Mizuho Securities
Wells Fargo Securities
(212) 538-6889
(212) 205-8445
(443) 263-6516
 
 
 
David Rodgers
 
Sumit Sharma
Robert W. Baird & Company
 
Morgan Stanley
(216) 737-7341
 
(212) 761-7567
 
 
 
RATING AGENCIES
 
 
 
Stephen Boyd
Alice Chung
Anita Ogbara
Fitch Ratings
Moody’s Investor Service
Standard & Poor’s
(212) 908-9153
(212) 553-2949
(212) 438-5077
 
 
 
 
 

















4
Hudson Pacific Properties, Inc.
Second Quarter 2016 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,” “our,” or “our Company”) 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. Our 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, 2016
 
March 31, 2016
 
December 31, 2015
 
September 30, 2015
 
June 30, 2015
Number of office properties owned
51

 
53

 
54

 
53

 
53

Office properties square feet(1)
13,214,376

 
13,480,616

 
14,034,944

 
13,872,326

 
14,042,298

Stabilized office properties leased rate as of end of period(2)
96.5
%
 
95.8
%
 
95.3
%
 
94.5
%
 
94.7
%
In-Service office properties leased rate as of end of period(3)
91.1
%
 
90.7
%
 
90.1
%
 
89.5
%
 
88.8
%
Number of Media & Entertainment properties owned
2

 
2

 
2

 
2

 
2

Media & Entertainment square feet(1)
879,652

 
879,652

 
879,652

 
879,652

 
879,652

Media & Entertainment leased rate as of end of period(4)
85.3
%
 
81.6
%
 
78.5
%
 
76.8
%
 
76.5
%
Number of land assets owned
8

 
8

 
8

 
7

 
7

Land assets estimated square feet(5)
2,638,875

 
2,638,875

 
2,638,875

 
2,590,099

 
2,590,099

Market capitalization (in thousands):
 
 
 
 
 
 
 
 
 
Total pro-rata debt(6)
$
2,282,429

 
$
2,022,319

 
$
2,203,115

 
$
2,011,151

 
$
2,041,435

Series A Preferred Units
$
10,177

 
$
10,177

 
$
10,177

 
$
10,177

 
$
10,177

Series B Preferred Stock
$
—

 
$
—

 
$
—

 
$
145,000

 
$
145,000

Common equity capitalization(7)
$
4,300,917

 
$
4,249,186

 
$
4,116,264

 
$
4,197,190

 
$
4,135,927

Total market capitalization
$
6,593,523

 
$
6,281,682

 
$
6,329,556


$
6,363,518


$
6,332,539

Pro-rata debt/total market capitalization
34.6
%
 
32.2
%
 
34.8
%
 
31.6
%
 
32.2
%
Series A preferred units & pro-rata debt/total market capitalization
34.8
%
 
32.4
%
 
35.0
%
 
31.8
%
 
32.4
%
Common stock data (NYSE:HPP)
 
 
 
 
 
 
 
 
 
Range of closing prices(8)
$ 30.05 - 27.16

 
$ 22.97 - 29.35
 
$ 27.40 - 30.97
 
$ 27.70 - 31.68
 
$ 28.22 - 33.95
Closing price at quarter end
$
29.18

 
$
28.92

 
$
28.14

 
$
28.79

 
$
28.37

Weighted average fully diluted common stock\units outstanding (in thousands)(9)
146,399

 
145,894

 
145,946

 
145,902

 
145,849

Shares of common stock\units outstanding at end of period (in thousands)(10)
147,393

 
146,522

 
146,278

 
145,786

 
145,785

__________________________
(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 re-measurement or re-leasing. Please refer to the footnote on page 19 regarding the re-measurement of the media properties.
(2)
Stabilized office properties leased rate excludes the lease-up properties, redevelopment, development, properties held-for-sale, and land properties described on pages 15, 17 and 18.
(3)
In-service office properties leased rate includes the stabilized office properties and lease-up properties described on pages 14 and 15.
(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)
Represents total debt excluding a pro-rata share of debt allocable to the minority interest in the Pinnacle I & II joint venture, unamortized non-cash loan premium and deferred financing costs.
(7)
Common equity capitalization represents the shares of common stock (including unvested restricted shares), OP units outstanding and dilutive shares 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 stocks/units outstanding for the three-month periods ending June 30, 2016, March 31, 2016, December 31, 2015, September 30, 2015 and June 30, 2015 includes an estimate for projected executive stock grants under our 2013, 2014, 2015 and 2016 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 2013/2014/2015/2016 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 2013/2014/2015/2016 OPP stock grants or projected performance-based awards under our special one-time retention grants.


5
















CONSOLIDATED FINANCIAL RESULTS
























6
Hudson Pacific Properties, Inc.
Second Quarter 2016 Supplemental Operating and Financial Data

Consolidated Balance Sheets
(in thousands, except share data)
 
June 30, 2016
 
December 31, 2015
 
 (unaudited)
 
 
ASSETS
 
 
 
Total investment in real estate, net
$
5,407,455

 
$
5,390,458

Cash and cash equivalents
337,400

 
53,551

Restricted cash
19,166

 
18,010

Accounts receivable, net
10,550

 
21,048

Notes receivable, net
—

 
28,684

Straight-line rent receivables, net
70,529

 
59,408

Deferred leasing costs and lease intangible assets, net
293,191

 
314,483

Derivative assets
—

 
2,061

Goodwill
8,754

 
8,754

Prepaid expenses and other assets, net
49,209

 
27,278

Investment in unconsolidated entity
28,237

 
—

Assets associated with real estate held for sale
52,432

 
330,300

TOTAL ASSETS
$
6,276,923

 
$
6,254,035

 
 
 
 
LIABILITIES AND EQUITY
 
 
 
Notes payable, net
$
2,338,882

 
$
2,260,716

Accounts payable and accrued liabilities
104,156

 
82,405

Lease intangible liabilities, net
77,841

 
94,446

Security deposits
24,148

 
20,342

Prepaid rent
30,352

 
38,111

Derivative liabilities
26,478

 
2,010

Liabilities associated with real estate held for sale
5,267

 
16,791

TOTAL LIABILITIES
2,607,124

 
2,514,821

 
 
 
 
6.25% series A cumulative redeemable preferred units of the operating partnership
10,177

 
10,177

 
 
 
 
EQUITY
 
 
 
Hudson Pacific Properties, Inc. stockholders’ equity:
 
 
 
Common stock, $0.01 par value, 490,000,000 authorized, 99,385,084 shares and 89,153,780 shares outstanding at June 30, 2016 and December 31, 2015, respectively
993

 
891

Additional paid-in capital
1,998,361

 
1,710,979

Accumulated other comprehensive loss
(16,079
)
 
(1,081
)
Accumulated deficit
(41,470
)
 
(44,955
)
Total Hudson Pacific Properties, Inc. stockholders’ equity
1,941,805

 
1,665,834

Non-controlling interest—members in consolidated entities
266,406

 
262,625

Non-controlling interest—units in the operating partnership
1,451,411

 
1,800,578

TOTAL EQUITY
3,659,622

 
3,729,037

TOTAL LIABILITIES AND EQUITY
$
6,276,923

 
$
6,254,035


7
Hudson Pacific Properties, Inc.
Second Quarter 2016 Supplemental Operating and Financial Data

Consolidated Statements of Operations
(Unaudited, in thousands, except share data)
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2016
 
2015
 
2016
 
2015
Revenues
 
 
 
 
 
 
 
Office
 
 
 
 
 
 
 
Rental
$
118,047

 
$
120,052

 
$
234,274

 
$
161,628

Tenant recoveries
21,303

 
17,790

 
41,836

 
23,854

Parking and other
5,050

 
5,716

 
10,582

 
11,011

Total office revenues
144,400

 
143,558

 
286,692

 
196,493

Media & Entertainment
 
 
 
 
 
 
 
Rental
6,857

 
5,394

 
12,885

 
10,861

Tenant recoveries
213

 
253

 
412

 
493

Other property-related revenue
2,810

 
2,556

 
7,779

 
6,665

Other
41

 
58

 
90

 
131

Total Media & Entertainment revenues
9,921

 
8,261

 
21,166

 
18,150

Total revenues
154,321

 
151,819

 
307,858

 
214,643

Operating expenses
 
 
 
 
 
 
 
Office operating expenses
$
49,091

 
$
46,691

 
$
96,794

 
$
63,826

Media & Entertainment operating expenses
6,295

 
5,069

 
12,247

 
11,074

General and administrative
13,016

 
10,373

 
25,519

 
19,573

Depreciation and amortization
66,108

 
73,592

 
134,476

 
90,750

Total operating expenses
134,510

 
135,725

 
269,036

 
185,223

Income from operations
19,811

 
16,094

 
38,822

 
29,420

Other expense (income)
 
 
 
 
 
 
 
Interest expense
17,614

 
14,113

 
34,865

 
19,606

Interest income
(73
)
 
(48
)
 
(86
)
 
(101
)
Unrealized loss on ineffective portion of derivative instruments
384

 
—

 
2,509

 
—

Acquisition-related expenses
61

 
37,481

 
61

 
43,525

Other (income) expense
(47
)
 
40

 
(23
)
 
(1
)
Total other expenses
17,939

 
51,586

 
37,326

 
63,029

 Income (loss) before gains (loss) on sale of real estate
1,872

 
(35,492
)
 
1,496

 
(33,609
)
Gains (loss) on sale of real estate
2,163

 
(591
)
 
8,515

 
22,100

Net income (loss)
$
4,035

 
$
(36,083
)
 
$
10,011

 
$
(11,509
)
Net income attributable to preferred stock and units
(159
)
 
(3,195
)
 
(318
)
 
(6,390
)
Net income attributable to participating securities
(196
)
 
(80
)
 
(393
)
 
(150
)
Net income attributable to non-controlling interest in consolidated real estate entities
(2,396
)
 
(1,893
)
 
(4,341
)
 
(3,395
)
Net (income) loss attributable to common units in the operating partnership
(445
)
 
16,008

 
(1,867
)
 
15,412

Net income (loss) attributable to Hudson Pacific Properties, Inc. common stockholders
$
839

 
$
(25,243
)
 
$
3,092

 
$
(6,032
)
Basic and diluted per share amounts:
 
 
 
 
 
 
 
Net income attributable to common stockholders’ per share—basic
$
0.01

 
$
(0.28
)
 
$
0.03

 
$
(0.07
)
Net income attributable to common stockholders’ per share—diluted
$
0.01

 
$
(0.28
)
 
0.03

 
(0.07
)
Weighted average shares of common stock outstanding—basic
95,145,496

 
88,894,258

 
92,168,432

 
82,906,087

Weighted average shares of common stock outstanding—diluted
95,995,496

 
88,894,258

 
93,000,432

 
82,906,087

Dividends declared per share of common stock
$
0.200

 
$
0.125

 
$
0.400

 
$
0.250


8
Hudson Pacific Properties, Inc.
Second Quarter 2016 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, 
 2016
 
March 31,
2016
 
December 31,
2015
 
September 30,
2015
 
June 30,
2015
 
 
 
 
 
 
 
 
 
 
 
Net income (loss)
 
$
4,035

 
$
5,976

 
$
(2,745
)
 
$
(1,828
)
 
$
(36,083
)
Adjustments:
 
 
 
 
 
 
 
 
 
 
Depreciation and amortization of real estate assets
 
65,655

 
67,905

 
73,876

 
79,940

 
73,293

(Gain) loss from sale of real estate
 
(2,163
)
 
(6,352
)
 
—

 
(8,371
)
 
591

FFO attributable to non-controlling interests
 
(4,510
)
 
(4,162
)
 
(3,696
)
 
(3,494
)
 
(3,696
)
Net income attributable to preferred stock and units
 
(159
)
 
(159
)
 
(2,520
)
 
(3,195
)
 
(3,195
)
FFO to common stockholders and unitholders
 
62,858

 
63,208

 
64,915

 
63,052

 
30,910

Specified items impacting FFO:
 
 
 
 
 
 
 
 
 
 
Acquisition-related (expense reimbursements) expenses
 
61

 
—

 
(106
)
 
(83
)
 
37,481

FFO (excluding specified items) to common stockholders and unitholders
 
$
62,919

 
$
63,208

 
$
64,809

 
$
62,969

 
$
68,391

 
 
 
 
 
 
 
 
 
 
 
Weighted average common stock/units outstanding—diluted
 
146,399

 
145,894

 
145,946

 
145,902

 
145,849

FFO per common stock/unit—diluted
 
$
0.43

 
$
0.43

 
$
0.44

 
$
0.43

 
$
0.21

FFO (excluding specified items) per common stock/unit—diluted
 
$
0.43

 
$
0.43

 
$
0.44

 
$
0.43

 
$
0.47

 
 
 
 
 
 
 
 
 
 
 
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, 
 2016
 
March 31,
2016
 
December 31,
2015
 
September 30,
2015
 
June 30,
2015
 
 
 
 
 
 
 
 
 
 
 
Net income (loss)
 
$
10,011

 
$
5,976

 
$
(16,082
)
 
$
(13,337
)
 
$
(11,509
)
Adjustments:
 
 
 
 
 
 
 
 
 
 
Depreciation and amortization of real estate assets
 
133,560

 
67,905

 
244,182

 
170,306

 
90,366

Gain from sale of real estate
 
(8,515
)
 
(6,352
)
 
(30,471
)
 
(30,471
)
 
(22,100
)
FFO attributable to non-controlling interest
 
(8,672
)
 
(4,162
)
 
(14,216
)
 
(10,520
)
 
(7,008
)
Net income attributable to preferred stock and units
 
(318
)
 
(159
)
 
(12,105
)
 
(9,585
)
 
(6,390
)
FFO to common stockholders and unitholders
 
126,066

 
63,208

 
171,308

 
106,393

 
43,359

Specified items impacting FFO:
 
 
 
 
 
 
 
 
 
 
Acquisition-related expenses
 
61

 
—

 
43,336

 
43,442

 
43,525

FFO (excluding specified items) to common stockholders and unitholders
 
$
126,127

 
$
63,208

 
$
214,644

 
$
149,835

 
$
86,884

 
 
 
 
 
 
 
 
 
 
 
Weighted average common stock/units outstanding—diluted
 
146,350

 
145,894

 
129,590

 
124,052

 
113,162

FFO per common stock/unit—diluted
 
$
0.86

 
$
0.43

 
$
1.32

 
$
0.86

 
$
0.38

FFO (excluding specified items) per common stock/unit—diluted
 
$
0.86

 
$
0.43

 
$
1.66

 
$
1.21

 
$
0.77

______________________________
(1)
See page 34 for Management’s Statements on FFO and AFFO.

9
Hudson Pacific Properties, Inc.
Second Quarter 2016 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, 2016
 
March 31,
2016
 
December 31,
2015
 
September 30,
2015
 
June 30,
2015
 
 
 
 
 
 
 
 
 
 
 
FFO
 
$
62,858

 
$
63,208

 
$
64,915

 
$
63,052

 
$
30,910

Adjustments:
 
 
 
 
 
 
 
 
 
 
Straight-line rents, net
 
(4,979
)
 
(4,790
)
 
(5,053
)
 
(8,903
)
 
(10,931
)
Amortization of above-market and below-market leases, net
 
(4,298
)
 
(4,697
)
 
(6,158
)
 
(3,750
)
 
(10,258
)
Amortization of above-market and below-market ground leases, net
 
535

 
535

 
958

 
515

 
515

Amortization of lease incentive costs
 
268

 
269

 
94

 
89

 
89

Amortization of deferred financing costs and loan premium, net
 
1,558

 
1,015

 
2,546

 
1,154

 
1,551

Unrealized loss on ineffective portion of derivative instrument
 
384

 
2,125

 
—

 
—

 
—

Recurring capital expenditures, tenant improvements and lease commissions
 
(24,099
)
 
(20,217
)
 
(5,727
)
 
(8,598
)
 
(13,301
)
Non-cash compensation expense
 
3,301

 
3,342

 
2,235

 
2,034

 
2,003

AFFO
 
$
35,528

 
$
40,790

 
$
53,810

 
$
45,593

 
$
578

 
 
 
 
 
 
 
 
 
 
 
Dividends paid to common stock and unitholders
 
$
29,317

 
$
29,802

 
$
29,138

 
$
18,226

 
$
18,224

AFFO payout ratio
 
82.5
%
 
73.1
%
 
54.1
%
 
40.0
%
 
3,152.9
%
 
 
 
 
 
 
 
 
 
 
 
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, 2016
 
March 31,
2016
 
December 31,
2015
 
September 30,
2015
 
June 30,
2015
 
 
 
 
 
 
 
 
 
 
 
FFO
 
$
126,066

 
$
63,208

 
$
171,308

 
$
106,393

 
$
43,359

Adjustments:
 
 
 
 
 
 
 
 
 
 
Straight-line rents, net
 
(9,769
)
 
(4,790
)
 
(27,925
)
 
(22,872
)
 
(13,969
)
Amortization of above-market and below-market leases, net
 
(8,995
)
 
(4,697
)
 
(21,457
)
 
(15,299
)
 
(11,549
)
Amortization of above-market and below-market ground leases, net
 
1,070

 
535

 
2,050

 
1,092

 
577

Amortization of lease incentive costs
 
537

 
269

 
358

 
264

 
175

Amortization of deferred financing costs and loan premium, net
 
2,573

 
1,015

 
5,903

 
3,357

 
2,203

Unrealized loss on ineffective portion of derivative instrument
 
2,509

 
2,125

 
—

 
—

 
—

Recurring capital expenditures, tenant improvements and lease commissions
 
(44,316
)
 
(20,217
)
 
(33,817
)
 
(28,090
)
 
(19,492
)
Non-cash compensation expense
 
6,643

 
3,342

 
8,421

 
6,186

 
4,152

AFFO
 
$
76,318

 
$
40,790

 
$
104,841

 
$
51,031

 
$
5,456

 
 
 
 
 
 
 
 
 
 
 
Dividends paid to common stock and unitholders
 
$
59,119

 
$
29,802

 
$
75,875

 
$
46,737

 
$
28,511

AFFO payout ratio
 
77.5
%
 
73.1
%
 
72.4
%
 
91.6
%
 
522.6
%
_____________________________
(1)
See page 34 for Management’s Statements on FFO and AFFO.



10
Hudson Pacific Properties, Inc.
Second Quarter 2016 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, 2016 and December 31, 2015, excluding net deferred financing costs related to our unsecured revolving credit facility and undrawn term loans.
 
June 30, 2016
 
December 31, 2015
 
 
 
 
 
 
 
 
 
Principal Amount
 
Deferred Financing Costs, net
 
Principal Amount
 
Unamortized Loan Premium and Deferred Financing Costs, net
 
Interest Rate(1)
 
Contractual Maturity Date
 
Annual Debt Service (2)
 
Balance at Maturity
Unsecured Loans
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Unsecured Revolving Credit Facility(3)
$
250,000

 
$
—

 
$
230,000

 
$
—

 
LIBOR+ 1.15% to 1.85%
 
4/1/2019
(4) 
$
—

 
$
250,000

5-Year Term Loan due April 2020(3)(5)
450,000

 
(4,021
)
 
550,000

 
(5,571
)
 
LIBOR+ 1.30% to 2.20%
 
4/1/2020
 
—

 
450,000

5-Year Term Loan due November 2020(3)
175,000

 
(840
)
 
—

 
—

 
LIBOR +1.30% to 2.20%
 
11/17/2020
 
—

 
175,000

7-Year Term Loan due April 2022(3)(6)
350,000

 
(2,443
)
 
350,000

 
(2,656
)
 
LIBOR+ 1.60% to 2.55%
 
4/1/2022
 
11,235

 
350,000

7-Year Term Loan due November 2022(3)(7)
125,000

 
(1,010
)
 
—

 
—

 
LIBOR + 1.60% to 2.55%
 
11/17/2022
 
3,788

 
125,000

Series A Notes
110,000

 
(1,009
)
 
110,000

 
(1,011
)
 
4.34%
 
1/2/2023
 
4,774

 
110,000

Series B Notes
259,000

 
(2,398
)
 
259,000

 
(2,378
)
 
4.69%
 
12/16/2025
 
12,147

 
259,000

Series C Notes
56,000

 
(564
)
 
56,000

 
(509
)
 
4.79%
 
12/16/2027
 
2,682

 
56,000

    Total Unsecured Loans(8)
1,775,000

 
(12,285
)
 
1,555,000

 
(12,125
)
 
 
 
 
 
34,626

 
1,775,000

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Mortgage Loans
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Mortgage loan secured by Pinnacle II
87,000

 
(759
)
 
86,228

 
1,310

(9) 
4.30%
 
6/11/2026
 
3,741

 
87,000

Mortgage loan secured by 901 Market
—

 
—

 
30,000

 
(119
)
 
N/A
 
N/A
 
—

 
N/A

Mortgage loan secured by Rincon Center(10)
101,357

 
(276
)
 
102,309

 
(355
)
 
5.13%
 
5/1/2018
 
7,195

 
97,854

Mortgage loan secured by Sunset Gower/Sunset Bronson(11)
5,001

 
(1,889
)
 
115,001

 
(2,232
)
 
LIBOR+2.25%
 
3/4/2019
(4) 
—

 
5,001

Mortgage loan secured by Met Park North(12)
64,500

 
(453
)
 
64,500

 
(509
)
 
LIBOR+1.55%
 
8/1/2020
 
2,393

 
64,500

Mortgage loan secured by 10950 Washington(10)
28,171

 
(387
)
 
28,407

 
(421
)
 
5.32%
 
3/11/2022
 
2,003

 
24,981

Mortgage loan secured by Pinnacle I(13)
129,000

 
(644
)
 
129,000

 
(694
)
 
3.95%
 
11/7/2022
 
5,179

 
117,190

Mortgage loan secured by Element L.A.
168,000

 
(2,454
)
 
168,000

 
(2,584
)
 
4.59%
 
11/6/2025
 
7,716

 
168,000

Total mortgage loans
583,029

 
(6,862
)
 
723,445

 
(5,604
)
 
 
 
 
 
28,227

 
564,526

Total
$
2,358,029

 
$
(19,147
)
 
$
2,278,445

 
$
(17,729
)
 
 
 
 
 
$
62,853

 
$
2,339,526

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Hudson Pacific Properties, Inc. pro-rata total loans(14)
$
2,282,429

 
$
(18,655
)
 
$
2,203,115

 
$
(17,945
)
 
 
 
 
 
$
59,731

 
$
2,268,060

_________________
(1)
Interest rate with respect to indebtedness is calculated on the basis of a 360-day year for the actual days elapsed. Interest rates are as of June 30, 2016, which may be different than the interest rates as of December 31, 2015 for corresponding indebtedness.
(2)
Annual debt service includes principal payments based on amortization schedule and annual interest payments of fixed rate loans and variable rate loans with effective fixed rate as a result of interest rate contracts on the full principal balance. In instances where interest is paid based on a LIBOR margin, we used the current margin based on the leverage ratio as of June 30, 2016. Amount doesn't include interest payment of variable rate loans that are partially effectively fixed through interest rate contracts.
(3)
The Company has the option to make an irrevocable election to change the interest rate depending on the Company’s credit rating. As of June 30, 2016, no such election has been made.
(4)
The maturity date may be extended once for an additional one-year term.
(5)
Effective May 1, 2015, $300.0 million of the term loan has been effectively fixed at 2.66% to 3.56% per annum through the use of an interest rate swap. The Company redesignated this interest rate swap effective July 1, 2016, therefore, the interest rate with respect to $300.0 million of the term loan is effectively fixed at 2.75% to 3.65% per annum.

11
Hudson Pacific Properties, Inc.
Second Quarter 2016 Supplemental Operating and Financial Data

(6)
Effective May 1, 2015, the outstanding balance of the term loan has been effectively fixed at 3.21% to 4.16% per annum through the use of an interest rate swap. The Company redesignated this interest rate swap effective July 1, 2016, therefore, the interest rate is effectively fixed at 3.36% to 4.31% per annum.
(7)
Effective June 1, 2016, the outstanding balance of the term loan has been effectively fixed at 3.03% to 3.98% per annum through the use of an interest rate swap.
(8)
Total unsecured loans does not include the balance related to the private placement agreements entered on July 6, 2016 for $150.0 million of 3.98% senior guaranteed notes due July 6, 2026, and an additional $50.0 million of 3.66% senior guaranteed notes due September 15, 2023. The $150.0 million was drawn on July 6, 2016. The $50.0 million has not yet been drawn.
(9)
Represents unamortized premium amount of the non-cash mark-to-market adjustment.
(10)
Monthly debt service includes annual debt amortization payments based on a 30-year amortization schedule with a balloon payment at maturity.
(11)
Through February 11, 2016, interest on $92.0 million of the outstanding loan balance was effectively capped at 5.97% and 4.25% on $50.0 million and $42.0 million, respectively, of the loan through the use of two interest rate caps. These interest rate caps were not renewed after maturity.
(12)
This loan bears interest only. Interest on the full loan amount has been effectively fixed at 3.71% per annum through use of an interest rate swap.
(13)
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 with a balloon payment at maturity.
(14)
Represents total debt balance excluding a pro-rata share of debt allocable to the minority interest in the Pinnacle I & II joint venture.

12















PORTFOLIO DATA













13
Hudson Pacific Properties, Inc.
Second Quarter 2016 Supplemental Operating and Financial Data

IN-SERVICE OFFICE PORTFOLIO BY PROPERTY(1) 
Location
 
Submarket
 
Square Feet(2)
 
Percent Occupied(3)
 
Percent Leased(3)
 
Annualized Base Rent(4)
 
Annualized Base Rent Per Square Foot(4)
SAME-STORE(5)
 
 
 
 
 
 
 
 
 
 
 
 
Greater Seattle, Washington
 
 
 
 
 
 
 
 
 
 
 
 
Northview(6)
 
Lynnwood
 
182,009

 
84.4
%
 
84.4
%
 
$
3,273,551

 
$
21.30

Met Park North(6)
 
Lake Union
 
190,748

 
95.7

 
95.7

 
5,054,041

 
27.68

Merrill Place(6)
 
Pioneer Square
 
163,768

 
83.1

 
86.6

 
3,730,178

 
27.42

505 First Avenue(6)
 
Pioneer Square
 
288,140

 
96.9

 
97.4

 
6,042,263

 
21.63

83 King Street(6)
 
Pioneer Square
 
184,083

 
90.0

 
90.0

 
4,579,854

 
27.66

Subtotal
 
 
 
1,008,748

 
90.9
%
 
91.6
%
 
$
22,679,887

 
$
24.73

San Francisco Bay Area, California
 
 
 
 
 
 
 
 
 
 
 
 
1455 Market Street(6)
 
San Francisco
 
1,025,833

 
99.2
%
 
99.7
%
 
$
34,123,971

 
$
33.52

222 Kearny Street(6)
 
San Francisco
 
148,797

 
85.8

 
92.2

 
6,486,381

 
50.82

275 Brannan Street(6)
 
San Francisco
 
54,673

 
100.0

 
100.0

 
3,166,361

 
57.91

625 Second Street(6)
 
San Francisco
 
138,080

 
73.8

 
73.8

 
5,202,680

 
51.03

875 Howard Street(6)
 
San Francisco
 
230,443

 
99.4

 
99.4

 
5,729,942

 
25.01

Rincon Center(6)
 
San Francisco
 
580,850

 
86.0

 
91.8

 
21,616,276

 
43.29

Towers at Shore Center
 
Redwood Shores
 
334,483

 
90.5

 
93.7

 
26,531,449

 
87.65

3400 Hillview
 
Palo Alto
 
207,857

 
100.0

 
100.0

 
12,946,581

 
62.29

Clocktower Square
 
Palo Alto
 
100,344

 
96.9

 
96.9

 
6,526,693

 
67.14

Foothill Research
 
Palo Alto
 
195,376

 
100.0

 
100.0

 
12,495,934

 
63.96

Campus Center
 
Silicon Valley
 
471,580

 
100.0

 
100.0

 
15,279,192

 
32.40

1740 Technology
 
North San Jose
 
206,876

 
99.1

 
99.1

 
7,036,176

 
34.31

Concourse
 
North San Jose
 
944,386

 
96.5

 
97.7

 
27,388,425

 
30.05

Skyport Plaza
 
North San Jose
 
418,086

 
96.0

 
96.4

 
13,022,823

 
32.45

Subtotal
 
 
 
5,057,664

 
95.4
%
 
96.8
%
 
$
197,552,884

 
$
40.96

Los Angeles, California
 
 
 
 
 
 
 
 
 
 
 
 
Pinnacle I(6)
 
Burbank
 
393,777

 
94.2
%
 
97.5
%
 
$
15,385,035

 
$
41.46

Pinnacle II(6)
 
Burbank
 
230,000

 
100.0

 
100.0

 
9,099,401

 
39.56

6922 Hollywood(6)
 
Hollywood
 
205,523

 
86.1

 
86.1

 
7,887,865

 
44.59

Technicolor Building(6)
 
Hollywood
 
114,958

 
100.0

 
100.0

 
4,873,345

 
42.39

3401 Exposition(6)
 
West Los Angeles
 
63,376

 
100.0

 
100.0

 
2,624,147

 
41.41

10900 Washington(6)
 
West Los Angeles
 
9,919

 
100.0

 
100.0

 
391,602

 
39.48

10950 Washington(6)
 
West Los Angeles
 
159,024

 
80.9

 
100.0

 
5,029,239

 
39.07

604 Arizona(6)
 
West Los Angeles
 
44,260

 
100.0

 
100.0

 
1,944,237

 
43.93

9300 Wilshire(6)
 
West Los Angeles
 
61,224

 
85.1

 
85.1

 
2,369,525

 
45.48

Element LA
 
West Los Angeles
 
284,037

 
100.0

 
100.0

 
15,409,645

 
54.25

Del Amo Office Building(6)
 
Torrance
 
113,000

 
100.0

 
100.0

 
3,327,208

 
29.44

Subtotal
 
 
 
1,679,098

 
94.6
%
 
97.2
%
 
$
68,341,249

 
$
43.03

Total Same-store
 
 
 
7,745,510

 
94.6
%
 
96.2
%
 
$
288,574,020

 
$
39.38


14
Hudson Pacific Properties, Inc.
Second Quarter 2016 Supplemental Operating and Financial Data

IN-SERVICE OFFICE PORTFOLIO BY PROPERTY(1) 
NON-SAME-STORE
 
 
 
 
 
 
 
 
 
 
 
 
San Francisco Bay Area, California
 
 
 
 
 
 
 
 
 
 
 
 
901 Market Street
 
San Francisco
 
206,218

 
100.0
%
 
100.0
%
 
$
9,680,695

 
$
46.94

Skyway Landing
 
Redwood Shores
 
247,173

 
92.7

 
96.2

 
9,654,811

 
42.15

Lockheed
 
Palo Alto
 
42,899

 
100.0

 
100.0

 
2,923,996

 
68.16

2180 Sand Hill Road
 
Palo Alto
 
45,613

 
97.2

 
97.2

 
4,015,896

 
90.61

Embarcadero Place
 
Palo Alto
 
197,402

 
98.8

 
98.8

 
7,980,002

 
40.90

Page Mill Center
 
Palo Alto
 
176,245

 
99.9

 
99.9

 
11,703,718

 
66.45

Total Non-same-store
 
 
 
915,550

 
97.6
%
 
98.6
%
 
$
45,959,118

 
$
51.42

Total Stabilized
 
 
 
8,661,060

 
94.9
%
 
96.5
%
 
$
334,533,138

 
$
40.69

LEASE-UP
 
 
 
 
 
 
 
 
 
 
 
 
San Francisco Bay Area, California
 
 
 
 
 
 
 
 
 
 
 
 
Peninsula Office Park
 
San Mateo
 
510,789

 
77.3
%
 
78.0
%
 
$
16,866,569

 
$
42.72

Metro Center
 
Foster City
 
730,215

 
57.5

 
66.0

 
18,869,892

 
44.96

333 Twin Dolphin Plaza
 
Redwood Shores
 
182,789

 
73.3

 
73.3

 
6,808,003

 
50.80

555 Twin Dolphin Plaza
 
Redwood Shores
 
198,936

 
90.5

 
90.5

 
8,366,850

 
46.45

Shorebreeze
 
Redwood Shores
 
230,932

 
68.7

 
71.1

 
7,595,242

 
47.88

Palo Alto Square
 
Palo Alto
 
328,251

 
87.7

 
95.6

 
21,398,586

 
74.34

Techmart Commerce
 
Silicon Valley
 
284,440

 
74.1

 
76.9

 
8,106,832

 
38.47

Gateway
 
North San Jose
 
609,093

 
81.6

 
81.6

 
14,446,825

 
29.07

Metro Plaza
 
North San Jose
 
456,921

 
78.9

 
80.3

 
11,321,239

 
31.39

Total Lease-up
 
 
 
3,532,366

 
74.8
%
 
78.0
%
 
$
113,780,038

 
$
43.04

 
 
 
 
 
 
 
 
 
 
 
 
 
TOTAL IN-SERVICE
 
 
 
12,193,426

 
89.1
%
 
91.1
%
 
$
448,313,176

 
$
41.26

___________________________
(1)
Our in-service portfolio excludes the redevelopment, development, properties held-for-sale and land properties described on pages 17 and 18. As of June 30, 2016, we had two office development properties under construction, five office redevelopment properties under construction, one property held-for-sale and eight land properties (see pages 17 and 18). 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, 2016, 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, 2016, 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, 2016. Annualized base rent does not reflect tenant reimbursements.
(5)
Defined as all of the properties owned and included in our stabilized portfolio as of April 1, 2015 and still owned and included in the stabilized portfolio as of June 30, 2016.
(6)
These properties are included in same-store for the six months ended June 30, 2016 and are defined as all of the properties owned and included in our stabilized portfolio as of January 1, 2015 and still owned and included in the stabilized portfolio as of June 30, 2016.


15
Hudson Pacific Properties, Inc.
Second Quarter 2016 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
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Lynnwood
 
1
 
182,009

 
153,692

 
84.4
%
 
153,692

 
84.4
%
 
$
3,273,551

 
$
21.30

Lake Union
 
1
 
190,748

 
182,590

 
95.7

 
182,590

 
95.7

 
5,054,041

 
27.68

Pioneer Square
 
3
 
635,991

 
580,918

 
91.3

 
588,142

 
92.5

 
14,352,296

 
24.71

Subtotal
 
5
 
1,008,748

 
917,200

 
90.9
%
 
924,424

 
91.6
%
 
$
22,679,887

 
$
24.73

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
San Francisco Bay Area, California
 
 
 
 
 
 
 
 
 
 
 
 
 
 
San Francisco
 
7
 
2,384,894

 
2,236,889

 
93.8
%
 
2,285,549

 
95.8
%
 
$
86,006,307

 
$
38.45

Redwood Shores
 
2
 
581,656

 
531,757

 
91.4

 
551,137

 
94.8

 
36,186,260

 
68.05

Palo Alto
 
7
 
965,736

 
958,898

 
99.3

 
958,898

 
99.3

 
58,592,820

 
61.10

Silicon Valley
 
1
 
471,580

 
471,580

 
100.0

 
471,580

 
100.0

 
15,279,192

 
32.40

North San Jose
 
3
 
1,569,348

 
1,517,734

 
96.7

 
1,530,714

 
97.5

 
47,447,424

 
31.26

Subtotal
 
20
 
5,973,214

 
5,716,858

 
95.7
%
 
5,797,878

 
97.1
%
 
$
243,512,003

 
$
42.60

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Los Angeles, California
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Burbank
 
2
 
623,777

 
601,078

 
96.4
%
 
613,881

 
98.4
%
 
$
24,484,436

 
$
40.73

Hollywood
 
2
 
320,481

 
291,840

 
91.1

 
291,840

 
91.1

 
12,761,211

 
43.73

West Los Angeles
 
6
 
621,840

 
582,420

 
93.7

 
612,720

 
98.5

 
27,768,395

 
47.68

Torrance
 
1
 
113,000

 
113,000

 
100.0

 
113,000

 
100.0

 
3,327,208

 
29.44

Subtotal
 
11
 
1,679,098

 
1,588,338

 
94.6
%
 
1,631,441

 
97.2
%
 
$
68,341,249

 
$
43.03

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Stabilized
 
36
 
8,661,060

 
8,222,396

 
94.9
%
 
8,353,743

 
96.5
%
 
$
334,533,140

 
$
40.69

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
LEASE-UP
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
San Francisco Bay Area, California
 
 
 
 
 
 
 
 
 
 
 
 
 
 
San Mateo
 
1
 
510,789

 
394,850

 
77.3
%
 
398,289

 
78.0
%
 
$
16,866,569

 
$
42.72

Foster City
 
1
 
730,215

 
419,725

 
57.5

 
481,717

 
66.0

 
18,869,892

 
44.96

Redwood Shores
 
3
 
612,657

 
472,788

 
77.2

 
478,284

 
78.1

 
22,770,095

 
48.16

Palo Alto
 
1
 
328,251

 
287,844

 
87.7

 
313,924

 
95.6

 
21,398,586

 
74.34

Silicon Valley
 
1
 
284,440

 
210,735

 
74.1

 
218,691

 
76.9

 
8,106,832

 
38.47

North San Jose
 
2
 
1,066,014

 
857,640

 
80.5

 
863,635

 
81.0

 
25,768,064

 
30.05

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Lease-up
 
9
 
3,532,366

 
2,643,582

 
74.8
%
 
2,754,540

 
78.0
%
 
$
113,780,038

 
$
43.04

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TOTAL IN-SERVICE
 
45
 
12,193,426

 
10,865,978

 
89.1
%
 
11,108,283

 
91.1
%
 
$
448,313,178

 
$
41.26

___________________________
Refer to footnotes on page 15.

16
Hudson Pacific Properties, Inc.
Second Quarter 2016 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
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Greater Seattle, Washington
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Merrill Place Theater Building
 
Pioneer Square
 
29,385

 
—

 
—
%
 
—

 
—
%
 
$
—

 
$
—

Subtotal
 
 
 
29,385

 
—

 
—
%
 
—

 
—
%
 
$
—

 
$
—

San Francisco Bay Area, California
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
875 Howard (1st Floor)
 
San Francisco
 
55,827

 
—

 
—

 
—

 
—

 
—

 
—

Subtotal
 
 
 
55,827

 
—

 
—
%
 
—

 
—
%
 
$
—

 
$
—

Los Angeles, California
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3402 Pico (Existing Office)
 
West Los Angeles
 
50,687

 
—

 
—

 
—

 
—

 
—

 
—

4th & Traction
 
Downtown Los Angeles
 
120,937

 
—

 
—

 
—

 
—

 
—

 
—

405 Mateo
 
Downtown Los Angeles
 
83,285

 
—

 
—

 
—

 
—

 
—

 
—

Subtotal
 
 
 
254,909

 
—

 
—
%
 
—

 
—
%
 
$
—

 
$
—

Total Redevelopment
 
 
 
340,121

 
—

 
—
%
 
—

 
—
%
 
$
—

 
$
—

DEVELOPMENT
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Greater Seattle, Washington
 
 
 


 


 


 


 


 


 


Merrill Place—450 Alaskan Way
 
Pioneer Square
 
166,800

 
—

 
—
%
 
91,357

 
54.8
%
 
—

 
$
—

Subtotal
 
 
 
166,800

 
—

 
—
%
 
91,357

 
54.8
%
 
$
—

 
$
—

Los Angeles, California
 
 
 
 
 

 

 

 

 

 

Icon—Building I Tower
 
Hollywood
 
323,273

 
—

 
—
%
 
323,273

 
100.0
%
 
$
—

 
$
—

Icon—Building II
 
Hollywood
 
90,000

 
—

 
—

 
—

 
—

 
—

 
—

Total Icon
 
 
 
413,273

 
—

 
—
%
 
323,273

 
78.2
%
 
$
—

 
$
—

Total Development
 
 
 
580,073

 
—

 
—
%
 
414,630

 
71.5
%
 
$
—

 
$
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
HELD FOR SALE
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
12655 Jefferson
 
West Los Angeles
 
100,756

 
17,867

 
17.7
%
 
100,756

 
100.0
%
 
$
943,378

 
$
52.80

Total Held For Sale
 
 
 
100,756

 
17,867

 
17.7
%
 
100,756

 
100.0
%
 
$
943,378

 
$
52.80

TOTAL
 
 
 
1,020,950

 
17,867

 
1.8
%
 
515,386

 
50.5
%
 
$
943,378

 
$
52.80

______________________________
(1)
Excludes in-service properties and land assets (see pages 14, 15 and 18).
(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, 2016, 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, 2016, 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, 2016. Annualized base rent does not reflect tenant reimbursements.


17
Hudson Pacific Properties, Inc.
Second Quarter 2016 Supplemental Operating and Financial Data

LAND PROPERTIES SUMMARY

Location
 
Submarket
 
Square Feet(1)
 
Percent of Total
San Francisco Bay Area, California
 
 
 
 
 
 
Skyport Plaza
 
North San Jose
 
350,000

 
13.2
%
Campus Center
 
Silicon Valley
 
946,350

 
35.9

Subtotal
 
 
 
1,296,350

 
49.1
%
 
 
 
 
 
 
 
Los Angeles, California
 
 
 
 
 
 
Epic (Sunset Bronson—Lot A)
 
Hollywood
 
300,000

 
11.4
%
Sunset Bronson—Lot D(2)
 
Hollywood
 
19,816

 
0.8

Sunset Gower— Redevelopment
 
Hollywood
 
423,396

 
16.0

Element LA
 
West Los Angeles
 
500,000

 
18.9

3402 Pico (Future Office)
 
West Los Angeles
 
99,313

 
3.8

3402 Pico (Residential)(3)
 
West Los Angeles
 
TBD

 
—

Subtotal
 
 
 
1,342,525

 
50.9
%
 
 
 
 
 
 
 
TOTAL
 
 
 
2,638,875

 
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.
(2)
Square footage for Sunset Bronson Lot D represents management’s estimate of developable square feet for 33 residential units.
(3)
Management estimates that 3402 Pico (Residential) could be improved with up to 4 residential units.




18
Hudson Pacific Properties, Inc.
Second Quarter 2016 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
 
571,626

 
65.0
%
 
85.2
%
 
$
15,546,980

 
$
31.92

Sunset Bronson
 
308,026

 
35.0

 
85.6

 
8,239,717

 
31.25

 
 
 
 
 
 
 
 
 
 
 
TOTAL
 
879,652

 
100.0
%
 
85.3
%
 
$
23,786,697

 
$
31.68

______________________________
(1)
Prior to the three-month period ended December 31, 2015, occupancy trends for the media and entertainment portfolio were calculated using the gross square footage as determined in connection with the acquisitions of the Sunset Gower Studios and Sunset Bronson Studios properties in 2007 and 2008, respectively. However, since these acquisitions, certain space has been either reconfigured to improve its use or characterized as structural vacancy. During the fourth quarter of 2015, we reexamined the history of space utilization at both media and entertainment properties, adjusting the segment’s occupancy trends to reflect the utilization of certain production support space and building management uses as occupancy and to eliminate structurally vacant space (i.e. electrical plant, utility areas and covered pathways) from the available square footage. The revised methodology is more in keeping with that used to calculate occupancy in the office portfolio and, for consistency, has been used to recalculate historic occupancy for the media and entertainment portfolio. For the 12 months ended June 30, 2016, the average leased percentage for the media and entertainment properties increased to 85.3% from 76.5% for the same period a year ago. By way of comparison, under the prior methodology, the reported average percent leased for the 12 months ended June 30, 2015 was 71.6%.
(2)
Percent leased for media and entertainment properties is the average percent leased for the 12 months ended June 30, 2016.
(3)
Annual base rent for media and entertainment properties reflects actual base rent for the 12 months ended June 30, 2016, 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, 2016.

19
Hudson Pacific Properties, Inc.
Second Quarter 2016 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 6/30/16
 
Total Estimated Project Costs
 
Estimated Initial Stabilized Yield on Project Costs(4)
UNDER CONSTRUCTION
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Greater Seattle, Washington
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Merrill Place (450 Alaskan Way)
 
Seattle
 
Q1-2016
 
Q4-2017
 
Q1-2018
 
166,800

 
54.8%
 
$
13,051

(5) 
$
92,703

(5) 
6.7%
Los Angeles, California
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Icon—Building I Tower(6)
 
Hollywood
 
Q4-2014
 
Q4-2016
 
Q3-2018
 
323,273

 
100.0%
 
N/A
 
N/A
 
N/A
Icon—Building II
 
Hollywood
 
Q1-2016
 
Q3-2017
 
Q3-2018
 
90,000

 
—%
 
N/A
 
N/A
 
N/A
Total Icon
 
 
 
 
 
 
 
 
 
413,273

 
78.2%
(7 
) 
$
98,490

 
$
200,922

 
8.8%
12655 Jefferson
 
Playa Del Rey
 
Q2-2015
 
Q3-2016
 
Q3-2016
 
100,756

 
100.0%
 
48,327
 
60,950
 
7.2%
3402 Pico (Existing Office)
 
Santa Monica
 
Q3-2015
 
Q3-2016
 
TBD
 
50,687

 
—%
 
18,223

(8) 
24,251

(8) 
9.2%
4th & Traction
 
Los Angeles
 
Q4-2015
 
Q2-2017
 
Q2-2018
 
120,937

 
—%
 
57,496
(9) 
94,839
(9) 
6.4%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Under Construction
 
 
 
 
 
 
 
 
 
852,453

 
 
 
$
235,587

 
$
473,665

 
 
FUTURE DEVELOPMENT PIPELINE
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Greater Seattle, Washington
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Merrill Place Theater Building
 
Seattle
 
TBD
 
TBD
 
TBD
 
29,385

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

 
N/A
 
$
10,856

(10) 
TBD
 
TBD
Campus Center
 
Milpitas
 
TBD
 
TBD
 
TBD
 
946,350

 
N/A
 
7,371

(11) 
TBD
 
TBD
Los Angeles, California
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Sunset Bronson—Lot D
 
Hollywood
 
TBD
 
TBD
 
TBD
 
19,816

 
N/A
 
N/A
 
TBD
 
TBD
Epic (Sunset Bronson—Lot A)
 
Hollywood
 
TBD
 
TBD
 
TBD
 
300,000

 
N/A
 
$
2,590

(12) 
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 (Future Office)(13)
 
Santa Monica
 
TBD
 
TBD
 
TBD
 
99,313

 
N/A
 
N/A
 
TBD
 
TBD
3402 (Residential)
 
Santa Monica
 
TBD
 
TBD
 
TBD
 
N/A
 
N/A
 
N/A
 
TBD
 
TBD
Total 3402 Pico Future Development
 
 
 
 
 
 
 
 
 
99,313

 
N/A
 
$
5,966

(14) 
TBD
 
TBD
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
405 Mateo
 
Los Angeles
 
TBD
 
TBD
 
TBD
 
83,285

 
N/A
 
$
40,858

(15) 
TBD
 
TBD
Total Future Development Pipeline
 
 
 
 
 
 
 
 
 
2,751,545

 
 
 
 
 
 
 
 
__________________________
(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.

20
Hudson Pacific Properties, Inc.
Second Quarter 2016 Supplemental Operating and Financial Data

(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. We caution you not to place undue reliance on the estimated initial stabilized yields because they are based solely on our estimates, using data available to us throughout the development process. The amount of total investment required to reach stabilized occupancy may differ substantially from our estimates due to various factors. We can provide no assurance that the actual initial stabilized yields will be consistent with the estimated initial stabilized yields set forth herein.
(5)
Project Costs as of June 30, 2016 and Total Estimated Project Costs for Merrill Place (450 Alaskan Way) include $7.0 million for management’s estimate of allocated land and acquisition costs.
(6)
The Icon development consists of a 14-story office tower (Icon—Building 1 Tower), a five-story mid-rise office building (Icon—Building II), and 1,635-stall parking structure. The parking structure was completed within the fourth quarter of 2015. The estimated completion and stabilization dates for each of the buildings is reflected in the table above. 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 exclude land.
(7)
Netflix, Inc. is anticipated to commence 273,749 square feet on January 1, 2017. The lease will commence six months after the delivery date of July 1, 2016. Netflix is anticipated to occupy an additional 49,524 square feet on July 1, 2018.
(8)
Project Costs as of June 30, 2016 and Total Estimated Project Costs for 3402 Pico (Existing Office) include approximately $12.634 million for management’s estimate of allocated land (including existing 50,687-square-foot building) and acquisition costs. Not included in the cost for 3402 Pico (Existing Office) is $5.966 million for management’s estimate of allocated land value for 3402 Pico Future Development.
(9)
Project Costs as of June 30, 2016 and Total Estimated Project Costs for 4th & Traction include approximately $49.402 million of initial acquisition cost for existing 120,937-square-foot building.
(10)
Project Costs as of June 30, 2016 for Skyport Plaza include approximately $10.5 million for management’s estimate of allocated land and acquisition costs.
(11)
Project Costs as of June 30, 2016 for Campus Center include approximately $7.0 million for management’s estimate of allocated land and acquisition costs.
(12)
Project Costs as of June 30, 2016 for Epic (Sunset Bronson—Lot A) excludes land.
(13)
Estimated rentable square feet for 3402 Pico (Future Office) does not include a 50,687-square-foot existing vacant building.
(14)
Project Costs as of June 30, 2016 for 3402 Pico Future Development include approximately $5.966 million for management’s estimate of allocated land value.
(15)
Project Costs as of June 30, 2016 for 405 Mateo include approximately $40.0 million of initial acquisition costs for the existing 83,285-square-foot building.


21
Hudson Pacific Properties, Inc.
Second Quarter 2016 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,
 
2016
 
2015
 
% change
 
2016
 
2015
 
% change
Same-store office statistics(2)
 
 
 
 
 
 
 
 
 
 
 
Number of properties
30

 
30

 
 
 
21

 
21

 
 
Rentable square feet
7,745,510

 
7,745,510

 
 
 
4,582,485

 
4,582,485

 
 
Ending % leased
96.2
%
 
95.6
%
 
0.6
 %
 
95.0
%
 
94.2
%
 
0.8
 %
Ending % occupied
94.6
%
 
95.0
%
 
(0.4
)%
 
92.8
%
 
93.4
%
 
(0.6
)%
Average % occupied for the period
93.9
%
 
95.3
%
 
(1.5
)%
 
91.0
%
 
91.9
%
 
(1.0
)%
 
 
 
 
 
 
 
 
 
 
 
 
Same-store media statistics(3)
 
 
 
 
 
 
 
 
 
 
 
Number of properties
2

 
2

 
 
 
2

 
2

 
 
Rentable square feet
879,652

 
879,652

 
 
 
879,652

 
879,652

 
 
Average % occupied for the period
85.3
%
 
76.5
%
 
11.5
 %
 
85.3
%
 
76.5
%
 
11.5
 %
 
 
 
 
 
 
 
 
 
 
 
 
SAME-STORE ANALYSIS—GAAP BASIS
 
 
 
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2016
 
2015
 
% change
 
2016
 
2015
 
% change
Same-store net operating income—GAAP basis
 
 
 
 
 
 
 
 
 
 
 
Total office revenues
$
92,005

 
$
86,018

 
7.0
 %
 
102,256

 
95,726

 
6.8
 %
Total media revenues
9,921

 
8,261

 
20.1

 
21,166

 
18,150

 
16.6

Total revenues
$
101,926

 
$
94,279

 
8.1
 %
 
123,422

 
113,876

 
8.4
 %
 
 
 
 
 
 
 
 
 
 
 
 
Total office expense
$
29,890

 
$
27,750

 
7.7
 %
 
35,882

 
33,810

 
6.1
 %
Total media expense
6,295

 
5,069

 
24.2

 
12,247

 
11,074

 
10.6

Total property expense
$
36,185

 
$
32,819

 
10.3
 %
 
48,129

 
44,884

 
7.2
 %
 
 
 
 
 
 
 
 
 
 
 
 
Same-store office net operating income—GAAP basis
$
62,115

 
$
58,268

 
6.6
 %
 
66,374

 
61,916

 
7.2
 %
NOI Margin
67.5
%
 
67.7
%
 
(0.3
)%
 
64.9
%
 
64.7
%
 
0.3
 %
Same-store media net operating income—GAAP basis
$
3,626

 
$
3,192

 
13.6
 %
 
8,919

 
7,076

 
26.0
 %
NOI Margin
36.5
%
 
38.6
%
 
(5.4
)%
 
42.1
%
 
39.0
%
 
7.9
 %
Same-store total property net operating income—GAAP basis
$
65,741

 
$
61,460

 
7.0
 %
 
75,293

 
68,992

 
9.1
 %
NOI Margin
64.5
%
 
65.2
%
 
(1.1
)%
 
61.0
%
 
60.6
%
 
0.7
 %





22
Hudson Pacific Properties, Inc.
Second Quarter 2016 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,
 
2016
 
2015
 
% change
 
2016
 
2015
 
% change
Same-store net operating income—Cash basis
 
 
 
 
 
 
 
 
 
 
 
Total office revenues
$
89,494

 
$
79,286

 
12.9
%
 
$
95,791

 
$
90,410

 
6.0
%
Total media revenues
9,788

 
7,836

 
24.9

 
20,845

 
17,291

 
20.6

Total revenues
$
99,282

 
$
87,122

 
14.0
%
 
$
116,636

 
$
107,701

 
8.3
%
 
 
 
 
 
 
 
 
 
 
 
 
Total office expense
$
29,401

 
$
27,263

 
7.8
%
 
$
35,758

 
$
33,686

 
6.2
%
Total media expense
6,295

 
5,069

 
24.2

 
12,247

 
11,074

 
10.6

Total property expense
$
35,696

 
$
32,332

 
10.3
%
 
$
48,005

 
$
44,760

 
7.2
%
 
 
 
 
 
 
 
 
 
 
 
 
Same-store office net operating income—Cash basis
$
60,093

 
$
52,023

 
15.5
%
 
$
60,033

 
$
56,724

 
5.8
%
NOI Margin
67.1
%
 
65.6
%
 
2.3
%
 
62.7
%
 
62.7
%
 
—
%
Same-store media net operating income—Cash basis
$
3,493

 
$
2,767

 
26.2
%
 
$
8,598

 
$
6,217

 
38.3
%
NOI Margin
35.7
%
 
35.3
%
 
1.1
%
 
41.2
%
 
36.0
%
 
14.4
%
Same-store total property net operating income—Cash basis
$
63,586

 
$
54,790

 
16.1
%
 
$
68,631

 
$
62,941

 
9.0
%
NOI Margin
64.0
%
 
62.9
%
 
1.7
%
 
58.8
%
 
58.4
%
 
0.7
%
______________________________
(1)
Same-store for the three months ended June 30, 2016 is defined as all of the properties owned and included in our stabilized portfolio as of April 1, 2015 and still owned and included in the stabilized portfolio as of June 30, 2016. Same-store for the six months ended June 30, 2016 is defined as all of the properties owned and included in our stabilized portfolio as of January 1, 2015 and still owned and included in the stabilized portfolio as of June 30, 2016
(2)
See page 14 for same-store office properties.
(3)
See page 19 for same-store media properties.





23
Hudson Pacific Properties, Inc.
Second Quarter 2016 Supplemental Operating and Financial Data

RECONCILIATION OF SAME-STORE PROPERTY NET OPERATING INCOME TO GAAP NET INCOME
(Unaudited, in thousands)
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2016
 
2015
 
2016
 
2015
Reconciliation to net income
 
 
 
 
 
 
 
Same-store office revenues—Cash basis
$
89,494

 
$
79,286

 
$
95,791

 
$
90,410

GAAP adjustments to office revenues—Cash basis
2,511

 
6,732

 
6,465

 
5,316

Same-store office revenues—GAAP basis
$
92,005

 
$
86,018

 
$
102,256

 
$
95,726

 
 
 
 
 
 
 
 
Same-store media revenues—Cash basis
$
9,788

 
$
7,836

 
$
20,845

 
$
17,291

GAAP adjustments to media revenues—Cash basis
133

 
425

 
321

 
859

Same-store media revenues—GAAP basis
$
9,921

 
$
8,261

 
$
21,166

 
$
18,150

 
 
 
 
 
 
 
 
Same-store property revenues—GAAP basis
$
101,926

 
$
94,279

 
$
123,422

 
$
113,876

 
 
 
 
 
 
 
 
Same-store office expenses—Cash basis
$
29,401

 
$
27,263

 
$
35,758

 
$
33,686

GAAP adjustments to office expenses—Cash basis
489

 
487

 
124

 
124

Same-store office expenses—GAAP basis
$
29,890

 
$
27,750

 
$
35,882

 
$
33,810

 
 
 
 
 
 
 
 
Same-store media expenses—Cash basis
$
6,295

 
$
5,069

 
$
12,247

 
$
11,074

Same-store media expenses—GAAP basis
$
6,295

 
$
5,069

 
$
12,247

 
$
11,074

 
 
 
 
 
 
 
 
Same-store property expenses—GAAP basis
$
36,185

 
$
32,819

 
$
48,129

 
$
44,884

 
 
 
 
 
 
 
 
Same-store net operating income—GAAP basis
$
65,741

 
$
61,460

 
$
75,293

 
$
68,992

Non-same-store GAAP net operating income
33,194

 
38,599

 
123,524

 
70,751

General and administrative
(13,016
)
 
(10,373
)
 
(25,519
)
 
(19,573
)
Depreciation and amortization
(66,108
)
 
(73,592
)
 
(134,476
)
 
(90,750
)
Income from operations
$
19,811

 
$
16,094

 
$
38,822

 
$
29,420

Interest expense
(17,614
)
 
(14,113
)
 
(34,865
)
 
(19,606
)
Interest income
73

 
48

 
86

 
101

Unrealized loss on ineffective portion of derivative instruments
(384
)
 
—

 
(2,509
)
 
—

Acquisition-related expenses
(61
)
 
(37,481
)
 
(61
)
 
(43,525
)
Other income (expense)
47

 
(40
)
 
23

 
1

Gains (loss) on sale of real estate
2,163

 
(591
)
 
8,515

 
22,100

Net income
$
4,035

 
$
(36,083
)
 
$
10,011

 
$
(11,509
)

24
Hudson Pacific Properties, Inc.
Second Quarter 2016 Supplemental Operating and Financial Data

NET OPERATING INCOME DETAIL
Three Months Ended June 30, 2016
(Unaudited, in thousands)

 
 
Same-store Office Properties(1)
 
Non-same-store Office Properties(3)
 
Development/Redevelopment(3)
 
Lease-Up Properties(4)
 
Held-for-Sale(3)
 
Media & Entertainment(5)
 
Total
Properties
Revenue
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Rents
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash
 
$
70,003

 
$
10,043

 
$
—

 
$
27,589

 
$
81

 
$
6,724

 
$
114,440

GAAP Revenue
 
2,511

 
2,171

 
—

 
4,869

 
3

 
133

 
9,687

Total Rents
 
$
72,514

 
$
12,214

 
$
—

 
$
32,458

 
$
84

 
$
6,857

 
$
124,127

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Tenant Reimbursements
 
$
15,354

 
$
2,658

 
$
—

 
$
3,235

 
$
—

 
$
213

 
$
21,460

Parking and Other
 
4,137

 
22

 
23

 
71

 
3

 
2,851

 
7,107

Total Revenue
 
$
92,005

 
$
14,894

 
$
23

 
$
35,764

 
$
87

 
$
9,921

 
$
152,694

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Property operating expenses
 
29,890

 
4,257

 
18

 
14,635

 
12

 
6,295

 
55,107

Property GAAP Net Operating Income
 
$
62,115

 
$
10,637

 
$
5

 
$
21,129

 
$
75

 
$
3,626

 
$
97,587

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Square Feet
 
7,745,510

 
915,550

 
920,194

 
3,532,366

 
100,756

 
879,652

 
14,094,028

Ending % Leased
 
96.2
%
 
98.6
%
 
45.1
%
 
78.0
%
 
100.0
%
 
85.3
%
 
87.8
%
Ending % Occupied
 
94.6
%
 
97.6
%
 
—
%
 
74.8
%
 
17.7
%
 
85.3
%
 
82.5
%
NOI Margin
 
67.5
%
 
71.4
%
 
21.7
%
 
59.1
%
 
86.2
%
 
36.5
%
 
63.9
%
Property GAAP Net Operating Income
 
$
62,115

 
$
10,637

 
$
5

 
$
21,129

 
$
75

 
$
3,626

 
$
97,587

Less : GAAP Revenue
 
(2,511
)
 
(2,171
)
 
—

 
(4,869
)
 
(3
)
 
(133
)
 
(9,687
)
Add : GAAP Expense
 
489

 
29

 
—

 
17

 
—

 
—

 
535

Property Cash Net Operating Income
 
$
60,093

 
$
8,495

 
$
5

 
$
16,277

 
$
72

 
$
3,493

 
$
88,435

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Income Reconciliation
 
Q2-2016

 
 
Property GAAP Net Operating Income
 
$
97,587

 
 
Broadway Note
 
539

 
 
Disposed Asset
 
245

 

Other Income/Inter-Company Eliminations
 
564

 
 
Total GAAP Net Operating Income
 
$
98,935

 
 
General and administrative
 
(13,016
)
 
 
Depreciation and amortization
 
(66,108
)
 
(1) See page 14 for same-store office properties for the three months ended June 30, 2016.
Income from operations
 
$
19,811

 
(2) See page 15 for non-same-store properties.
Interest expense
 
(17,614
)
 
(3) See page 17 for redevelopment, development and held-for-sale properties.
Interest income
 
73

 
(4) See page 15 for lease-up properties.
Unrealized loss on ineffective portion of derivative instrument
 
(384
)
 
(5) See page 19 for same-store media properties.
Acquisition-related expenses
 
(61
)
 
 
Other income
 
47

 
 
Gain on sale of real estate
 
2,163

 
 
Net Income
 
$
4,035

 
 

25
Hudson Pacific Properties, Inc.
Second Quarter 2016 Supplemental Operating and Financial Data

OFFICE PORTFOLIO LEASING ACTIVITY
 
Three Months Ended 
 June 30, 2016
 
Six Months Ended 
 June 30, 2016
Total Gross Leasing Activity
 
 
 
Rentable square feet
970,770

 
1,786,801

Gross New Leasing Activity
 
 
 
Rentable square feet
237,510

 
836,713

New cash rate
$
49.45

 
$
51.66

Gross Renewal Leasing Activity
 
 
 
Rentable square feet
733,260

 
950,088

Renewal cash rate
$
40.34

 
$
42.22

Total Leases Expired and Terminated
 
 
 
Contractual (scheduled) expiration (square feet)
138,115

 
372,857

Early termination (square feet)
44,370

 
125,940

Total
182,485

 
498,797

Net Absorption
 
 
 
Leased rentable square feet
55,025

 
337,916

Cash Rent Growth(1)
 
 
 
Expiring rate
$
28.40

 
$
29.21

New/renewal rate
$
42.29

 
$
45.03

Change
48.9
%
 
54.1
%
Straight-Line Rent Growth(2)
 
 
 
Expiring Rate
$
27.25

 
$
27.65

New/renewal rate
$
42.94

 
$
44.83

Change
57.6
%
 
62.1
%
Weighted Average Lease Terms
 
 
 
New (in months)
71.9

 
98.0

Renewal (in months)
61.7

 
61.4

Tenant Improvements and Leasing Commissions(3)
Lease Transaction Costs Per Square Foot
 
 
 
 
 
Three Months Ended 
 June 30, 2016
 
Six Months Ended 
 June 30, 2016
 
Total
 
Annual
 
Total
 
Annual
New leases
$
56.01

 
$
9.34

 
$
71.44

 
$
8.74

Renewal leases
$
18.71

 
$
3.64

 
$
17.62

 
$
3.44

Blended
$
27.84

 
$
5.20

 
$
42.82

 
$
6.54

______________________________
(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.

26
Hudson Pacific Properties, Inc.
Second Quarter 2016 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
 
 
 
 
 
 
 
 
 
 
 
 
Skyport Plaza(3)
 
North San Jose
 
365,502

 
5/4/2016
 
9/1/2016
 
$
34.20

 
7/31/2022
Embarcadero Place
 
Palo Alto
 
36,594

 
6/1/2016
 
10/1/2016
 
44.64

 
5/31/2020
Lockheed
 
Palo Alto
 
42,899

 
6/1/2016
 
9/1/2016
 
68.16

 
5/31/2021
Page Mill Center
 
Palo Alto
 
22,392

 
6/1/2016
 
10/1/2016
 
75.60

 
5/31/2023
Embarcadero Place
 
Palo Alto
 
11,802

 
6/30/2016
 
1/1/2017
 
45.00

 
12/31/2026
 
 
 
 
 
 
 
 
 
 
 
 
 
Los Angeles, California
 
 
 
 
 
 
 
 
 
 
 
 
604 Arizona(4)
 
West Los Angeles
 
44,260

 
2/1/2016
 
5/1/2016
 
$
42.65

 
2/28/2026


______________________________
(1)
Consists of leases greater than 10,000 square feet which commenced on or prior to June 30, 2016, 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, 2016.
(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, 2016, and (ii) 12, by (iii) leased square footage. Base rents do not include tenant reimbursements.
(3)
Effective May 4, 2016, the terms of the existing lease with Qualcomm at Skyport Plaza was extended to July 31, 2022 with rent abatement during the five months of June, July and August of 2016 and January and February of 2017.
(4)
Effective February 1, 2016, the terms of the existing lease with Real Office Centers Corporation at 604 Arizona was extended to February 28, 2026 with three months of up-front rent abatement.




27
Hudson Pacific Properties, Inc.
Second Quarter 2016 Supplemental Operating and Financial Data

    
QUARTERLY UNCOMMENCED/BACKFILL — NEXT EIGHT QUARTERS(1) 
 
 
Q3 2016
 
Q4 2016
 
Q1 2017
 
Q2 2017
 
Q3 2017
 
Q4 2017
 
Q1 2018
 
Q2 2018
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
Starting Rent/sf(2)
Greater Seattle, Washington
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Lynnwood
 
—

$
—

 
—

$
—

 
—

$
—

 
—

$
—

 
—

$
—

 
—

$
—

 
—

$
—

 
—

$
—

Lake Union
 
—

—

 
—

—

 
—

—

 
—

—

 
—

—

 
—

—

 
—

—

 
—

—

Pioneer Square
 
7,224

34.31

 
—

—

 
—

—

 
—

—

 
—

—

 
91,357

38.00

(3) 
—

—

 
—

—

Subtotal
 
7,224

$
34.31

 
—

$
—

 
—

$
—

 
—

$
—

 
—

$
—

 
91,357

$
38.00

 
—

$
—

 
—

$
—

San Francisco Bay Area, California
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
San Francisco
 
23,252

$
64.23

 
29,544

$
68.33

 
—

$
—

 
39,494

$
69.48

 
—

$
—

 
—

$
—

 
—

$
—

 
—

$
—

San Mateo
 
3,439

55.80

 
10,020

54.00

 
—

—

 
—

—

 
—

—

 
—

—

 
—

—

 
—

—

Foster City
 
39,727

42.96

 
22,265

67.54

 
—

—

 
—

—

 
—

—

 
—

—

 
—

—

 
—

—

Redwood Shores
 
14,316

54.13

 
—

—

 
10,560

66.00

 
—

—

 
—

—

 
—

—

 
—

—

 
—

—

Palo Alto
 
26,080

85.20

 
—

—

 
—

—

 
—

—

 
—

—

 
—

—

 
—

—

 
—

—

Silicon Valley
 
7,956

47.40

 
—

—

 
—

—

 
—

—

 
—

—

 
—

—

 
—

—

 
—

—

North San Jose
 
19,936

36.22

 
12,331

39.68

 
5,034

37.80

 
—

—

 
—

—

 
—

—

 
—

—

 
—

—

Subtotal
 
134,706

$
55.59

 
74,160

$
61.39

 
15,594

$
56.90

 
39,494

$
69.48

 
—

$
—

 
—

$
—

 
—

$
—

 
—

$
—

Los Angeles, California
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Burbank
 
—

$
—

 
12,803

$
42.00

 
—

$
—

 
—

$
—

 
—

$
—

 
—

$
—

 
—

$
—

 
—

$
—

Hollywood
 
—

—

 
—

—

 
273,749

54.00

(4) 
—

—

 
—

—

 
—

—

 
—

—

 
—

—

Torrance
 
—

—

 
—

—

 
—

—

 
—

—

 
—

—

 
—

—

 
—

—

 
—

—

West Los Angeles
 
113,189

49.56

 
—

—

 
—

—

 
—

—

 
—

—

 
—

—

 
—

—

 
—

—

Subtotal
 
113,189

$
49.56

 
12,803

$
42.00

 
273,749

$
54.00

 
—

$
—

 
—

$
—

 
—

$
—

 
—

$
—

 
—

$
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TOTAL
 
255,119

$
52.31

 
86,963

$
58.54

 
289,343

$
54.16

 
39,494

$
69.48

 
—

$
—

 
91,357

$
38.00

 
—

$
—

 
—

$
—


______________________
(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, 2016 but with commencement dates after June 30, 2016 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.
(3)
Saltchuk Resources, Inc. is anticipated to commence on November 1, 2017.
(4)
Netflix, Inc. is anticipated to commence 273,749 square feet on January 1, 2017. The lease will commence 6 months after the delivery date of July 1, 2016. Netflix is anticipated to occupy an additional 49,524 square feet on July 1, 2018.


28
Hudson Pacific Properties, Inc.
Second Quarter 2016 Supplemental Operating and Financial Data

QUARTERLY OFFICE LEASE EXPIRATIONS — NEXT EIGHT QUARTERS(1) 
 
 
Q3 2016(2)
 
Q4 2016
 
Q1 2017
 
Q2 2017
 
Q3 2017
 
Q4 2017
 
Q1 2018
 
Q2 2018
 
Location
 
Expiring SF(3)
Rent/sf(4)
 
Expiring SF(3)
Rent/sf(4)
 
Expiring SF(3)
Rent/sf(4)
 
Expiring SF(3)
Rent/sf(4)
 
Expiring SF(3)
Rent/sf(4)
 
Expiring SF(3)
Rent/sf(4)
 
Expiring SF(3)
Rent/sf(4)
 
Expiring SF(3)
Rent/sf(4)
 
Greater Seattle, Washington
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Lake Union
 
—

$
—

 
600

$
43.70

 
—

$
—

 
—

$
—

 
—

$
—

 
—

$
—

 
—

$
—

 
—

$
—

 
Lynnwood
 
—

—

 
—

—

 
—

—

 
—

—

 
—

—

 
6,049

20.50

 
2,343

20.76

 
1,756

20.50

 
Pioneer Square
 
—

—

 
8,349

25.67

 
6,000

28.50

 
—

—

 
—

—

 
3,260

33.00

 
—

—

 
2,624

30.80

 
Subtotal
 
—

$
—

 
8,949

$
26.88

 
6,000

$
28.50

 
—

$
—

 
—

$
—

 
9,309

$
24.88

 
2,343

$
20.76

 
4,380

$
26.67

 
San Francisco Bay Area, California
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Foster City
 
4,329

$
57.15

 
15,618

$
46.50

 
39,294

$
39.48

 
7,868

$
53.94

 
5,577

$
56.96

 
25,668

$
52.13

 
11,507

$
44.67

 
12,806

$
55.89

 
Palo Alto
 
58,597

55.48

 
41,694

43.06

 
67,653

76.29

 
28,138

67.22

 
2,199

90.00

 
121,754

72.55

(8 
) 
37,393

78.98

 
12,637

95.60

 
Redwood Shores
 
47,573

109.24

 
31,579

39.70

 
33,140

44.19

 
30,014

50.11

 
57,436

41.73

 
54,755

56.02

 
98,806

43.96

 
58,068

53.44

 
San Francisco
 
37,301

37.18

 
3,515

37.73

 
86,144

39.76

 
26,144

34.92

 
138,531

46.96

(6) 
187,529

11.43

(9 
) 
20,842

47.43

 
6,794

39.25

 
North San Jose
 
62,578

31.29

 
66,571

32.71

 
137,072

28.29

(5) 
99,680

30.56

 
108,406

30.44

(7) 
120,174

29.33

(10 
) 
235,979

35.82

(11 
) 
59,113

33.17

 
San Mateo
 
14,355

43.46

 
9,583

41.46

 
7,182

46.84

 
39,045

43.21

 
7,576

43.92

 
15,661

36.70

 
31,865

39.57

 
14,846

54.33

 
Silicon Valley
 
8,848

33.03

 
16,409

37.63

 
—

—

 
1,093

36.92

 
33,396

32.98

 
13,018

41.19

 
4,876

44.78

 
19,691

40.31

 
Subtotal
 
233,581

$
55.47

 
184,969

$
38.38

 
370,485

$
42.69

 
231,982

$
40.98

 
353,121

$
40.07

 
538,559

$
37.17

 
441,268

$
42.45

 
183,955

$
48.13

 
Los Angeles, California
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Burbank
 
4,953

$
44.18

 
9,005

$
44.50

 
—

$
—

 
—

$
—

 
—

$
—

 
8,257

$
39.00

 
3,413

$
45.89

 
—

$
—

 
Downtown Los Angeles
 
—

—

 
—

—

 
—

—

 
—

—

 
—

—

 
—

—

 
—

—

 
—

—

 
Hollywood
 
—

—

 
—

—

 
—

—

 
2,664

—

 
—

—

 
—

—

 
10,000

50.50

 
—

—

 
Torrance
 
—

—

 
—

—

 
—

—

 
—

—

 
—

—

 
—

—

 
—

—

 
—

—

 
West Los Angeles
 
—

—

 
194

50.97

 
—

—

 
8,841

44.70

 
5,253

65.42

 
1,125

47.64

 
4,107

41.92

 
1,087

47.88

 
Subtotal
 
4,953

$
44.18

 
9,199

$
44.64

 
—

$
—

 
11,505

$
34.35

 
5,253

$
65.42

 
9,382

$
40.04

 
17,520

$
47.59

 
1,087

$
47.88

 
TOTAL
 
238,534

$
55.23

 
203,117

$
38.16

 
376,485

$
42.46

 
243,487

$
40.67

 
358,374

$
40.45

 
557,250

$
37.01

 
461,131

$
42.53

 
189,422

$
47.64

 
Expirations as % of In-Service Portfolio
 
2.0
%
 
 
1.7
%
 
 
3.1
%
 
 
2.0
%
 
 
2.9
%
 
 
4.6
%
 
 
3.8
%
 
 
1.6
%
 
 
______________________
(1)
The following schedule does not reflect 39,943 square feet that expired on June 30, 2016.
(2)
Q3 2016 expiring square footage does not include 43,197 square feet of month-to-month leases.
(3)
Includes leases that expire on the last day of the quarter.
(4)
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.
(5)
The top three expiring tenants based on annual base rent by property and square footage: (i) FICO at Metro Plaza for 45,154 square feet; (ii) Fidelity National Title Insurance at Gateway Center for 10,919 square feet; and (iii) Paychex at 1740 Technology for 10,437 square feet.
(6)
The total expiring square footage consists of: (i) AIG, Inc at Rincon Center for 132,600 square feet and (ii) Globant at 875 Howard for 5,931 square feet.
(7)
The top three expiring tenants based on annual base rent by property and square footage: (i) NTT America, Inc. at Concourse for 28,930 square feet, (ii) Mega Chips Technology at Gateway Center for 23,146 square feet and (iii) U-CAN Americas, Inc. at Metro Plaza for 11,147 square feet.

29
Hudson Pacific Properties, Inc.
Second Quarter 2016 Supplemental Operating and Financial Data

(8)
The top three expiring tenants based on annual base rent by property and square footage: (i) Robert Bosch, LLC at Foothill Research for 72,417 square feet; (ii) K&L Gates LLP at Clocktower Square for 28,305 square feet; and (iii) Zoox at 2180 Sandhill for 18,773 square feet.
(9)
The total expiring square footage consists of: (i) Bank of America at 1455 Market for 185,021 square feet; (ii) Rickey L. Liu at Rincon Center for 1,271 square feet; and (iii) Pepe’s Taqueria at Rincon Center for 1,237 square feet.
(10)
The top three expiring tenants based on annual base rent by property and square footage: (i) Haynes and Boone, LLP at Gateway Center for 23,233 square feet; (ii) Murata Electronics North America at Metro Plaza for 18,782 square feet; and (iii) Hensel Phelps Construction at Concourse for 13,688 square feet.
(11)
The top three expiring tenants based on annual base rent by property and square footage: (i) Nutanix, Inc. at 1740 Technology for 137,307 square feet and Metro Plaza for 28,121 square feet; (ii) Lumenis, Inc. at Gateway for 15,227 square feet; and (iii) Level 3 Communications, LLC at Concourse for 7,934 square feet.






30
Hudson Pacific Properties, Inc.
Second Quarter 2016 Supplemental Operating and Financial Data

OFFICE LEASE EXPIRATIONS—ANNUAL

Year of Lease Expiration
 
Square Footage of Expiring Leases
 
Percentage 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
 
1,590,707

 
12.1
%
 
 
 
 
 
 
 
 
2016
 
481,594

 
3.7

 
$
22,274,477

 
4.6
%
 
$
46.25

 
$
46.64

2017
 
1,535,596

 
11.7

 
59,449,353

 
12.2

 
38.71

 
39.73

2018
 
1,328,218

 
10.1

 
51,359,668

 
10.5

 
38.67

 
40.97

2019
 
2,250,524

 
17.1

 
86,881,983

 
17.8

 
38.61

 
43.29

2020
 
964,241

 
7.3

 
42,722,070

 
8.8

 
44.31

 
49.93

2021
 
1,282,561

 
9.7

 
50,727,265

 
10.4

 
39.55

 
45.87

2022
 
722,653

 
5.5

 
29,361,322

 
6.0

 
40.63

 
49.56

2023
 
707,557

 
5.4

 
24,769,488

 
5.1

 
35.01

 
42.49

2024
 
154,055

 
1.2

 
7,594,354

 
1.6

 
49.30

 
58.32

2025
 
542,608

 
4.1

 
27,316,543

 
5.6

 
50.34

 
63.31

Thereafter
 
763,877

 
5.8

 
45,825,587

 
9.4

 
59.99

 
69.59

Building management use
 
107,164

 
0.8

 
—

 
—

 
—

 
—

Signed leases not commenced(4)
 
739,824

 
5.6

 
39,011,906

 
8.0

 
52.73

 
68.27

Total/Weighted Average
 
13,171,179

 
100.0
%
 
$
487,294,015

 
100.0
%
 
$
42.08

 
$
47.94

______________________________
(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, 2016, 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, 2016.
(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, 2016.
(4)
Annualized base rent per leased square foot and annualized base rent per square foot at expiration for signed leases not commenced, reflects uncommenced leases on space not occupied as of June 30, 2016 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, 2016, divided by (ii) square footage under uncommenced leases as of June 30, 2016.


31
Hudson Pacific Properties, Inc.
Second Quarter 2016 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

 
2.3%
 
$
19,176,525

 
4.3%
Weil, Gotshal & Manges LLP(3)
 
Towers at Shore Center
 
1
 
1
 
Various
 
101,000

 
0.8
 
16,265,637

 
3.6
Uber Technologies, Inc.(4)
 
Various
 
2
 
2
 
Various
 
330,334

 
2.5
 
15,614,491

 
3.5
Riot Games, Inc.(5)
 
Various
 
2
 
2
 
Various
 
286,629

 
2.2
 
15,557,389

 
3.5
Cisco Systems, Inc.(6)
 
Various
 
2
 
2
 
Various
 
474,576

 
3.6
 
15,377,341

 
3.4
Qualcomm
 
Skyport Plaza
 
2
 
1
 
7/31/2022
 
365,502

 
2.8
 
12,500,168

 
2.8
Square, Inc.
 
1455 Market Street
 
1
 
1
 
9/27/2023
 
334,284

 
2.5
 
10,938,442

 
2.4
Salesforce.com(7)
 
Rincon Center
 
1
 
1
 
Various
 
237,567

 
1.8
 
10,914,802

 
2.4
Stanford(8)
 
Various
 
3
 
2
 
Various
 
132,496

 
1.0
 
9,235,901

 
2.1
Warner Bros. Entertainment
 
Pinnacle II
 
1
 
1
 
12/31/2021
 
230,000

 
1.7
 
9,099,401

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

 
1.5
 
8,169,569

 
1.8
NetSuite, Inc.(9)
 
Peninsula Office Park
 
2
 
1
 
Various
 
166,667

 
1.3
 
7,649,387

 
1.7
EMC Corporation(10)
 
Various
 
3
 
2
 
Various
 
294,756

 
2.2
 
7,596,737

 
1.7
GSA(11)
 
Various
 
5
 
5
 
Various
 
202,097

 
1.5
 
6,203,552

 
1.4
Nutanix, Inc.(12)
 
Various
 
2
 
2
 
3/31/2018
 
165,428

 
1.3
 
6,134,070

 
1.4
TOTAL
 
 
 
30
 
26
 
 
 
3,822,231

 
29.0%
 
$
170,433,412

 
38.0%
______________________________
(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, 2016, by (ii) 12. Annualized base rent does not reflect tenant reimbursements.
(2)
Google, Inc. expirations by property and square footage: (i) 207,857 square feet at 3400 Hillview expiring on November 30, 2021 and (ii) 97,872 square feet at Foothill Research Center expiring on February 28, 2025.
(3)
Weil, Gotshal & Manges LLP expiration by square footage: (i) 25,320 square feet expiring on August 31, 2016 and (ii) 75,680 square feet expiring on August 31, 2026.
(4)
Uber Technologies, Inc. expirations by property and square footage: (i) 310,088 square feet at 1455 Market expiring on February 28, 2025 and (ii) 20,246 square feet at Skyway Landing expiring March 31, 2017.
(5)
Riot Games, Inc. expirations by property and square footage: (i) 2,592 square feet at Shorebreeze Center expiring on November 30, 2016 and (ii) 284,037 square feet at Element LA expiring on March 31, 2030. This tenant may elect to exercise their early termination right at Element LA with respect to 284,037 square feet effective March 31, 2025.
(6)
Cisco Systems, Inc. expirations by property and square footage: (i) 2,996 square feet at Concourse expiring March 31, 2018 and (ii) 471,580 square feet at Campus Center expiring on December 31, 2019. This tenant may elect to exercise their early termination right at Campus Center with respect to 471,850 square feet effective December 31, 2017.
(7)
Salesforce.com is expected to take possession of an additional 4,144 square feet during the second quarter of 2017. Expirations by square footage: (i) 78,872 square feet expiring on July 31, 2025; (ii) 59,689 square feet expiring on April 30, 2027; (iii) 93,028 square feet expiring on October, 31, 2028; and (iv) 5,978 square feet of month-to-month storage space. This tenant may elect to exercise their early termination right with respect to 74,966 square feet between August 1, 2021 and September 30, 2021.
(8)
Stanford Expirations by property and square footage: (i) Stanford Healthcare 63,201 square feet at Page Mill Center expiring June 30, 2019; (ii) Stanford University 26,080 square feet at Palo Alto Square expiring on December 31, 2019; and (iii) Board of Trustees Stanford 43,215 square feet at Page Mill Center expiring December 31, 2022.
(9)
NetSuite, Inc. expirations by square footage: (i) 38,194 square feet expiring on August 31, 2019 and (ii) 128,473 square feet expiring May 31, 2022.
(10)
EMC expirations by property and square footage: (i) 66,510 square feet at 875 Howard Street expiring on June 30, 2019; (ii) 185,292 square feet at 505 First expiring on October 18, 2021; and (iii) 42,954 square feet at 505 First expiring on December 31, 2023.
(11)
GSA expirations by property and square footage: (i) 71,729 square feet at 1455 Market Street expiring on February 19, 2019; (ii) 28,993 square feet at Northview expiring on April 4, 2020;
(iii) 33,582 square feet at Rincon Center expiring May 31, 2020; (iv) 49,405 square feet at 901 Market Street expiring on July 31, 2021; and (v) 18,388 square feet at Concourse expiring on May 7, 2024.
(12)
Nutanix, Inc. expirations by property and square footage: (i) 137,307 square feet at 1740 Technology expiring on March 31, 2018 and (ii) 28,121 square feet at Metro Plaza expiring on March 31, 2018.

32
Hudson Pacific Properties, Inc.
Second Quarter 2016 Supplemental Operating and Financial Data

OFFICE PORTFOLIO DIVERSIFICATION

Industry
 
Total Square Feet(1)
 
Annualized Rent as
of Percent of Total
Business Services
 
833,124

 
6.9
%
Educational
 
100,454

 
1.1

Financial Services
 
384,967

 
1.6

Insurance
 
362,931

 
3.1

Legal
 
674,544

 
10.9

Media & Entertainment
 
1,378,888

 
13.4

Other
 
1,026,057

 
9.8

Real Estate
 
59,691

 
0.6

Retail
 
589,252

 
4.1

Technology
 
4,854,729

 
43.4

Advertising
 
125,220

 
0.9

Government
 
301,228

 
2.1

Healthcare
 
192,760

 
2.1

TOTAL
 
10,883,845

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

33
Hudson Pacific Properties, Inc.
Second Quarter 2016 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 our 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.




34