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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 company, currently trading at a Price/Book ratio of 0.43x and offering a 7.35% dividend yield, appears undervalued according to InvestingPro analysis.
The research firm cited the dilutive impact of Hudson (NYSE:HUD) Pacific’s recent equity raise of approximately $690 million, which has prompted BTIG to reduce its 2025 FFO per share estimate by $0.05 to $0.23 and its 2026 estimate by $0.24 to $0.22.
BTIG acknowledged that Hudson Pacific has achieved both balance sheet and earnings stability ahead of expectations through several strategic moves, including a $475 million CMBS financing on March 31, a tender offer for $465 million in private placement notes on May 9, and a planned 25% reduction in run rate G&A expenses.
The debt markets have recognized these balance sheet improvements, 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.
BTIG expects Hudson Pacific to prioritize the remaining approximately $150 million of undeployed capital after revolver paydown to fund new leasing, with the firm maintaining its Buy rating based on a positive outlook for office leasing through the second half of 2025.
In other recent news, Hudson Pacific Properties has been downgraded by Fitch Ratings to a ’B+’ from ’BB-’, reflecting concerns over the company’s leverage metrics. The downgrade comes as the company’s office portfolio occupancy fell to 76.5% in the first quarter of 2025, with further declines in cash same-store net operating income anticipated. In a related development, Hudson Pacific has launched a $600 million public offering of common stock and pre-funded warrants, with Cohen & Steers Capital Management expressing interest in purchasing a significant portion. The proceeds are expected to be used to repay debt and address financial concerns. Additionally, BMO Capital has lowered its price target for Hudson Pacific to $3.50, citing the equity offering’s dilutive nature but acknowledging its potential to reduce insolvency risks. In a move to cut costs, three top executives of Hudson Pacific have voluntarily forfeited their 2024 performance unit equity awards, resulting in $14.3 million in general and administrative savings. This cost-saving measure is expected to partially offset financial pressures. These developments come amid ongoing efforts by Hudson Pacific to stabilize its financial position and improve occupancy rates.
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