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Summary of Significant Accounting Policies (Tables)

3 Months Ended

Mar. 31, 2019

Accounting Policies [Abstract]

Schedule of consolidated entities

As of March 31, 2019, the operating partnership has determined that four of its joint ventures met the definition of a VIE and are consolidated:

Entity						Property						Ownership Interest
Hudson 1455 Market, L.P.						1455 Market						55.0		%
Hudson 1099 Stewart, L.P.						Hill7						55.0		%
HPP-MAC WSP, LLC						One Westside and 10850 Pico						75.0		%
Hudson One Ferry REIT, L.P.						Ferry Building						55.0		%

Schedule of sources of revenues

The Company has compiled an inventory of its sources of revenues and has identified the following material revenue streams: (i) rental revenues (ii) tenant recoveries and other tenant-related revenues (iii) ancillary revenues (iv) guest parking revenues and (v) sale of real estate.

Revenue Stream

Components

Financial Statement Location(1)

Rental revenues

Office rentals, stage rentals and storage rentals

Office and studio segments: rental

Tenant recoveries and other tenant-related revenues

Reimbursement of real estate taxes, insurance, repairs and maintenance, other operating expenses and must take parking revenues

Office segment: rental Studio segment: rental and service revenue and other

Ancillary revenues

Revenues derived from tenants’ use of lighting, equipment rental, power, HVAC and telecommunications (i.e., telephone and internet)

Studio segment: service revenue and other

Guest parking revenues

Parking revenue that is not associated with lease agreements

Office segment: service revenue Studio segment: service revenue and other

Sale of real estate

Gains on sales derived from cash consideration less cost basis

Gains on sale of real estate

Receivables subject to new accounting standards

The following table summarizes the Company’s revenue streams that are accounted for under ASC 606:

						March 31, 2019						March 31, 2018
Ancillary revenues						$	8,086					$	5,320
Guest parking revenues						$	6,447					$	5,413
Studio related tenant recoveries(1)						$	275					N/A

_________________

1.Studio related tenant recoveries are accounted for under ASC 606 effective January 1, 2019.

The following table summarizes the Company’s receivables that are accounted for under ASC 606:

						March 31, 2019						December 31, 2018
Ancillary revenues						$	5,836					$	3,752
Guest parking revenues						$	1,393					$	959
Studio related tenant recoveries						$	—					N/A

_________________

1.Studio related tenant recoveries are accounted for under ASC 606 effective January 1, 2019.

Schedule of recently issued accounting pronouncements

Changes to GAAP are established by the Financial Accounting Standards Board (the “FASB”) in the form of Accounting Standards Update (“ASU”). The following ASUs were adopted by the Company in 2019:

Standard

Description

Effect on the Financial Statements or Other Significant Matters

ASU 2016-02, Leases (Topic 842) ASU 2019-01, Leases (Topic 842): Codification Improvements ASU 2018-11, Leases (Topic 842): Targeted Improvements ASU 2018-10, Codification Improvements to Topic 842, Leases ASU 2018-01, Leases (Topic 842): Land Easement Practical Expedient for Transition to Topic 842

Issued on February 5, 2016, ASU 2016-02 amends the accounting guidance for leases and sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a lease agreement (i.e., lessees and lessors).

The Company adopted ASC 842 during the first quarter of 2019 using the modified retrospective transition method with a cumulative adjustment to accumulated deficit. Refer to Lease Accounting section above for details.

ASU 2018-16, Derivatives and Hedging (Topic 815): Inclusion of the Secured Overnight Financing Rate (SOFR) Overnight Index Swap (OIS) Rate as a Benchmark Interest Rate for Hedge Accounting Purposes

The amendments in this update permit use of the OIS rate based on SOFR as a U.S. benchmark interest rate for hedge accounting purposes under Topic 815 in addition to the UST, the LIBOR swap rate, the OIS rate based on the Fed Funds Effective Rate, and the SIFMA Municipal Swap Rate.

The Company adopted this guidance during the first quarter of 2019 using the prospective approach. The adoption did not have an impact on the Consolidated Financial Statements since LIBOR is still in use, however, this is expected to have an impact in later periods once SOFR is adopted.

ASU 2018-02, Income Statement—Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income

The amendments in this update allow a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act. Consequently, the amendments eliminate the stranded tax effects resulting from the Tax Cuts and Jobs Act and will improve the usefulness of information reported to financial statement users. However, because the amendments only relate to the reclassification of the income tax effects of the Tax Cuts and Jobs Act, the underlying guidance that requires that the effect of a change in tax laws or rates be included in income from continuing operations is not affected. The amendments in this Update also require certain disclosures about stranded tax effects.

The Company adopted this guidance during the first quarter of 2019 on a prospective basis. The adoption did not have an impact on the Consolidated Financial Statements.

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