Equity

9 Months Ended

Sep. 30, 2020

The table below presents the activity related to Hudson Pacific Properties, Inc.’s accumulated other comprehensive (loss) income (“OCI”):


	Derivative Instruments		Currency Translation Adjustments		Total Equity
BALANCE AT DECEMBER 31, 2019	$	(2,391)	$	1,830	$	(561)
Unrealized losses recognized in OCI	(14,155)		(1,639)		(15,794)
Reclassification adjustment for realized gains(1)	3,560		—		3,560
Net change in OCI	(10,595)		(1,639)		(12,234)
BALANCE AT SEPTEMBER 30, 2020	$	(12,986)	$	191	$	(12,795)

_____________

1.The gains and losses on the Company’s derivative instruments are reported in the interest expense line item on the Consolidated Statements of Operations. Interest expense was $86.8 million for the nine months ended September 30, 2020.

The table below presents the activity related to Hudson Pacific Properties, L.P.’s OCI:


	Derivative Instruments		Currency Translation Adjustments		Total Capital
BALANCE AT DECEMBER 31, 2019	$	(2,458)	$	1,845	$	(613)
Unrealized losses recognized in OCI	(14,306)		(1,651)		(15,957)
Reclassification adjustment for realized gains(1)	3,598		—		3,598
Net change in OCI	(10,708)		(1,651)		(12,359)
BALANCE AT SEPTEMBER 30, 2020	$	(13,166)	$	194	$	(12,972)

_____________

1.The gains and losses on the operating partnership’s derivative instruments are reported in the interest expense line item on the Consolidated Statements of Operations. Interest expense was $86.8 million for the nine months ended September 30, 2020.

Non-Controlling Interests

Common Units in the Operating Partnership

Common units of the operating partnership and shares of common stock of the Company have essentially the same economic characteristics, as they share equally in the total net income or loss distributions of the operating partnership. Investors

who own common units have the right to cause the operating partnership to repurchase any or all of their common units for cash at a per unit value equal to the then-current market value of one share of common stock. However, in lieu of such payment of cash, Hudson Pacific Properties, Inc. may, at its election, issue shares of its common stock in exchange for such common units on a one-for-one basis.

Performance Units in the Operating Partnership

Performance units are partnership interests in the operating partnership. Each performance unit awarded will be deemed equivalent to an award of one share of common stock under the 2010 Plan, reducing the availability for other equity awards on a one-for-one basis. Under the terms of the performance units, the operating partnership will revalue its assets for tax purposes upon the occurrence of certain specified events and any increase in valuation from the time of grant until such event will be allocated first to the holders of performance units to equalize the capital accounts of such holders (on a per unit basis) with the capital accounts of common unitholders. Once vested and having achieved parity with common unitholders, performance units generally are convertible into common units in the operating partnership on a one-for-one basis.

Current Year Activity

The following table summarizes the ownership interest in the operating partnership, excluding unvested restricted units and unvested restricted performance units as of:


	September 30, 2020		December 31, 2019
Company-owned common units in the operating partnership	152,143,492		154,691,052
Company’s ownership interest percentage	99.4	%	99.4	%
Non-controlling units in the operating partnership(1)	911,858		911,858
Non-controlling ownership interest percentage	0.6	%	0.6	%

_________________

1.Represents units held by certain of the Company’s executive officers, directors and outside investors. As of September 30, 2020, this amount represents both common units and performance units in the amount of 550,969 and 360,889, respectively. As of December 31, 2019, this amount represents both common units and performance units in the amount of 550,969 and 360,889, respectively.

Common Stock Activity

The Company has not completed any common stock offerings in 2020.

The Company’s at-the-market (“ATM”) program permits sales of up to $125.0 million of common stock. The Company did not utilize the ATM program during the nine months ended September 30, 2020. A cumulative total of $20.1 million has been sold as of September 30, 2020.

Share Repurchase Program

The Company is authorized to repurchase up to a total $250.0 million shares of its common stock under its share repurchase program. During the nine months ended September 30, 2020, the Company repurchased $61.9 million shares of its common stock. Since commencement of the program, a cumulative total of $111.9 million has been repurchased. Share repurchases are accounted for on the trade date. The Company may make repurchases under the program at any time in its discretion, subject to market conditions, applicable legal requirements and other factors.

Dividends

The Board declared dividends on a quarterly basis and the Company paid the dividends during the quarters in which the dividends were declared. The following table summarizes dividends declared and paid for the periods presented:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Common stock	$	0.25	$	0.25	$	0.75	$	0.75
Common units	$	0.25	$	0.25	$	0.75	$	0.75
Series A preferred units	$	0.3906	$	0.3906	$	1.1718	$	1.1718
Performance units	$	0.25	$	0.25	$	0.75	$	0.75
Payment date	September 28, 2020		September 30, 2019		N/A		N/A
Record date	September 18, 2020		September 20, 2019		N/A		N/A

Taxability of Dividends

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