Hudson Pacific Properties price target lowered to $4.75 at BTIG

Investing.com - BTIG lowered its price target on Hudson Pacific Properties (NYSE:HPP) to $4.75 from $8.00 on Thursday, while maintaining a Buy rating on the real estate investment trust. The stock, currently trading at $2.68, remains below InvestingPro’s Fair Value estimate, with analyst targets ranging from $1.75 to $5.00.

The price target reduction follows Hudson (NYSE:HUD) Pacific’s recent strategic financial moves, including a $475 million CMBS financing completed on March 31, a tender offer for $465 million in private placement notes on May 9, and a recapitalization through a roughly $690 million equity raise on June 13. The company maintains a notable 7.46% dividend yield and has sustained dividend payments for 15 consecutive years.

BTIG noted that debt markets have recognized the balance sheet enhancement, with the yield-to-maturity for the company’s 2030 unsecured bonds improving from 11.1% on June 11 to 8.0% following the recapitalization efforts. According to InvestingPro data, the company’s current ratio of 1.67 indicates sufficient liquidity to meet short-term obligations, though its overall financial health score remains weak.

The research firm reduced its 2025 FFO per share estimate by $0.05 to $0.23 and its 2026 estimate by $0.24 to $0.22, citing the impact of the "highly dilutive equity raise" that created 309.4 million new shares.

BTIG maintained its Buy rating based on a positive outlook for office leasing through the second half of 2025, but adjusted its NAV estimate to reflect valuations from the CMBS issuance and commentary from NAREIT.

In other recent news, Hudson Pacific Properties reported several significant developments. The company announced a $600 million equity offering, which BMO Capital noted as highly dilutive but necessary to reduce insolvency risks. This offering led BMO to lower its price target for Hudson Pacific to $3.50, while maintaining an Outperform rating. Additionally, BTIG adjusted its price target to $4.75, citing the impact of a $690 million equity raise on future earnings estimates, although it maintained a Buy rating due to a positive outlook for office leasing.

Fitch Ratings downgraded Hudson Pacific to ’B+’ from ’BB-’, highlighting concerns over leverage metrics, with expectations of improvement by 2026 as new leasing activity increases. The company’s office portfolio occupancy was reported at 76.5% in early 2025, with plans to reach the low 80% range by the end of the year. In a cost-saving move, Hudson Pacific’s CEO, President, and CFO voluntarily forfeited their 2024 performance unit equity awards, resulting in $14.3 million in general and administrative savings.

The company has made strides in stabilizing its balance sheet, evidenced by a $475 million CMBS financing and a tender offer for $465 million in private placement notes. These efforts have been recognized by the debt markets, as seen in the improved yield-to-maturity for the company’s 2030 unsecured bonds. Hudson Pacific plans to use remaining undeployed capital for new leasing, aiming to enhance its financial position further.

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