Earnings call transcript: Hudson Pacific Q2 2025 sees stock rise 4.56%

Hudson Pacific Properties reported its second-quarter 2025 earnings, revealing a larger-than-expected loss per share and a slight revenue miss. The company posted an earnings per share (EPS) of -$0.41, compared to the forecasted -$0.35, resulting in a 17.14% negative surprise. Revenue came in at $190 million, below the anticipated $196.32 million. Despite these results, the company’s stock rose by 4.56% in aftermarket trading, closing at $2.41. According to InvestingPro analysis, the stock is currently trading near its Fair Value, with a market capitalization of approximately $964 million. The company’s financial health score is classified as ’WEAK’, suggesting ongoing challenges in the current market environment.

Key Takeaways

• Hudson Pacific reported a larger-than-expected EPS loss of -$0.41.
• Revenue fell short at $190 million, missing forecasts by 3.22%.
• The stock rose 4.56% in aftermarket trading, reflecting positive investor sentiment.
• Strategic asset sales and leasing activity are key focus areas.
• The company maintains a strong liquidity position of $1 billion.

Company Performance

Hudson Pacific’s performance in Q2 2025 showed a decline compared to the same period last year, with revenues falling from $218 million in Q2 2024 to $190 million. The company’s Funds from Operations (FFO) also decreased significantly to $8 million, or $0.04 per diluted share, from $24.5 million, or $0.17 per share, in the previous year. Despite these declines, the company remains focused on strategic initiatives, such as asset sales and portfolio optimization, to navigate the challenging market conditions.

Financial Highlights

• Revenue: $190 million, down from $218 million YoY
• Earnings per share: -$0.41, compared to -$0.35 forecast
• FFO: $8 million, down from $24.5 million YoY
• Liquidity: $1 billion, including $236 million in cash and $775 million in undrawn credit

Earnings vs. Forecast

Hudson Pacific’s EPS of -$0.41 was below the forecast of -$0.35, representing a 17.14% surprise. Revenue also missed expectations, coming in at $190 million against the forecasted $196.32 million, a 3.22% shortfall. This performance marks a notable deviation from previous quarters where results were closer to forecasts.

Market Reaction

Despite the earnings miss, Hudson Pacific’s stock price increased by 4.56% in aftermarket trading. This movement suggests that investors may have been encouraged by the company’s strategic focus and liquidity position, or possibly by broader market trends favoring real estate investments.

Outlook & Guidance

For the third quarter, Hudson Pacific projects FFO guidance between $0.01 and $0.05 per share. The company aims to achieve office leased occupancy in the low-to-mid 80% range by the end of 2026 and is targeting a breakeven point for its studio business with a show count in the low 90s. Full-year G&A expenses are expected to be between $57.5 million and $63.5 million.

Executive Commentary

CEO Victor Coleman expressed optimism about the company’s strategic progress, stating, "We are energized by the progress year to date on our strategic objectives." He also highlighted the role of AI in driving economic growth on the West Coast, noting, "AI and AI-enabled businesses are the next wave of economic growth."

Risks and Challenges

• Continued revenue decline could affect future liquidity.
• Market volatility may impact strategic asset sales.
• Dependence on tech and AI sectors could pose risks if these industries face downturns.
• Rising interest rates could increase borrowing costs.
• Competitive pressures in the real estate market may affect leasing activity.

Q&A

During the earnings call, analysts inquired about the company’s leasing pipeline and tenant credit concerns. Management reassured that there are no significant tenant credit issues and expressed a positive outlook on leasing, particularly in the Bay Area. Additionally, the company is focusing on cost reduction and portfolio optimization to enhance operational efficiency.

Full transcript - Hudson Pacific Properties Inc (HPP) Q2 2025:

Alex, Conference Operator: Good afternoon. My name is Alex, and I’ll be your conference operator today. This time, I’d like welcome everyone to the Hudson Pacific Properties Second Quarter twenty twenty five Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question and answer session.

At this time, I’d like to turn the call over to Laura Campbell, Executive Vice President, Investor Relations and Marketing. Please go ahead.

Laura Campbell, Executive Vice President, Investor Relations and Marketing, Hudson Pacific Properties: Good afternoon, everyone. Thanks for joining us. With me on the call today are Victor Coleman, CEO and Chairman Mark Lammas, President Harout Djerimariam, CFO and Art Swazo, EVP of Leasing. This afternoon, we filed our earnings release and supplemental on an eight ks with the SEC, and both are now available on our website. An audio webcast of this call will also be available for replay on our website.

Some of the information we’ll share on the call today is forward looking in nature. Please reference our earnings release and supplemental for statements regarding forward looking information as well as the reconciliation of non GAAP financial measures used on this call. Today, Victor will discuss industry and market trends, Mark will provide an update on our office and studio operations and development, and Haroot will review our financial results and 2025 outlook. Thereafter, we’ll be happy to take your questions. Victor?

Victor Coleman, CEO and Chairman, Hudson Pacific Properties: Thank you, Laura. Good afternoon, everyone, and welcome to our second quarter call. We are energized by the progress year to date on our strategic objectives as well as the positive trends across our portfolio, sectors and markets. Importantly, leasing, which is one of our top priorities, resulted in a 1,200,000 square feet of office leases signed year to date, and we’re on pace for our strongest office leasing year since 2019 and poised to grow occupancy with among the sector’s lowest expirations over the next two years. Our studio occupancy is also improving and California’s significantly expanded film and television tax credit is finally in effect.

Since the start of the year, we’ve also executed on operational enhancements, asset sales and capital transactions, all of which are contributing to the rebuilding of our foundation to drive future cash flow growth. Following our successful CMBS financing and follow on capital raise, we have over $1,000,000,000 of liquidity and the refinancing of our only 2025 maturity is well underway. We are also starting to realize positive results from our ongoing efforts to enhance the company’s cost profile. Specifically, we have meaningful improved g and a and further streamlined our studio business to achieve profitability. Moving to the state of our markets, the West Coast ops recovery is taking hold led by emerging AI and tech companies.

Tech and leasing in San Francisco drove the single largest quarter occupancy increase in seven years and a third consecutive quarter of positive net absorption. Given year to date leasing activity and demand in the market, the city is also on track to have the highest annual gross leasing since 2019. In Silicon Valley, occupancy also improved for the third consecutive quarter. Over 1,000,000 square feet of positive net absorption was driven by the tech sector, new leasing and for the first time in a long time deals of 100,000 plus square feet. AI and AI enabled businesses are the next wave of economic growth on the West Coast, and billions of venture capital dollars once again flowed into the sector in the second quarter with no signs of stopping despite tariff uncertainty.

AI job postings credited further upwards, and the war for the best talent is on. For AI startups especially, proximity to the broader ecosystem is the key, and this explains the reason that 60% of AI’s current footprint is located in the Bay Area and why we anticipate West Coast gateway markets, which have always had a unique mix of talent, networks, funding, and research, will be the primary beneficiaries. Today, core AI tenants, that is companies creating, selling, and licensing AI models, platforms, infrastructure, or chips, represent only 10% of our ABR and are located exclusively throughout the Bay Area. Given the funding available of these companies, their office cultures, and the current offerings within our portfolio, we see a considerable runway to expand both core AI and AI enabled companies with our tenant mix. On the studio side, there are multiple reasons we are gaining confidence in the business despite weaker overall production activity in the second quarter.

Pilot shoot days were up 11% year to date and 48% on a trailing twelve month basis. There are 134 productions in active development or prep in California during the second quarter, the most in any quarter since the 2023 strikes. In the 2025, dollars $375,000,000 was allocated under the previous California Film and Television Tax Credit program, nearly exceeding total dollars allocated during the entirety of 2024. And of the 110 allocations made so far this year, 51 of them occurred in June alone. Productions are only just beginning to apply for the more than doubled $750,000,000 California tax credit, which among other new features provides for larger allocations to more types of productions.

And we expect to see increased allocation activity in the near term with the potential for show counts to begin to benefit as early as the fourth quarter of this year. Finally, turning to asset sales. We continue to strategically pursue the disposition of non core assets. We completed the sale of six twenty five Second for $28,000,000 during the second quarter, and we are in various stages on a handful of other potential dispositions. We evaluate each transaction within the framework of our broader capital allocations priorities, seasoning opportunities to increase liquidity while optimizing our portfolio to create long term shareholder value.

And now I’m going to

Mark Lammas, President, Hudson Pacific Properties: turn the call over to Mark. Thanks, Victor. We signed 558,000 square feet of office leases in the quarter, 60% of which were new leases and 60% of which were in the Bay Area. We improved occupancy across all our major markets, but for Seattle where as expected a single tenant at Hill 7 vacated approximately 100,000 square feet. Quarter over quarter, our in service occupancy was stable at 75.1 and our lease percentage dipped only 30 basis points to 76.2%.

Our rent spreads trended upward, increasing 4.9% on a GAAP basis and decreasing 1.8% on a cash basis. Our trailing twelve month net effective rents were two percent lower compared to the prior year and 11% lower versus pre pandemic. Our tour activity increased 8% compared to the first quarter to 1,800,000 square feet, the highest level in more than two years driven by additional tours at our San Francisco Peninsula and Silicon Valley assets. Tech as a percentage of our tours grew from 35% to 53% and core AI tenants as a component of tech demand increased from 7% to 61%. Our leasing pipeline is healthy at 2,100,000 square feet including over half a million square feet of later stage deals.

Average requirement size continues to grow approaching 20,000 square feet both for tours and our pipeline. We have approximately 50% coverage including deals and leases, LOIs, proposals or in discussions on our 547,000 square feet of remaining 2025 expirations, including 100% coverage on our only remaining expiration greater than 50,000 square feet. Most of our 2025 expirations are smaller tenants averaging around 5,000 square feet and thus decision making typically occurs within the quarter of lease expiration. As we have noted, from this point forward due to both increased office demand and significantly lower expirations, we anticipate our in service office occupancy should remain stable and should begin to grow as we move through the coming quarters. We have on average 270,000 square feet expiring per quarter through 2029, which is only about half the roughly 500,000 square feet of leases we’ve signed per quarter over the last two years.

Turning to studios. On a trailing twelve month basis, our in service studios were 63% leased with related stages 63.6% leased. The quarter over quarter change for these metrics was driven by the inclusion of our Sunset Glen Oaks development for the first time. But for Sunset Glen Oaks, our trailing twelve month in service total and stage lease percentages would have increased to 74.380% respectively due to improved occupancy at Sunset Las Palmas where nine of 11 stages are leased. Our Coyote Studios total and stage trailing twelve month lease percentages also improved quarter over quarter, up three forty basis points to 40.2 and up four ten basis points to 47.4% respectively.

Quarter over quarter, our studio revenue increased 3% to $34,200,000 primarily due to additional studio occupancy and transportation utilization at Coyote, even without an improvement in show counts. Studio expenses decreased by 11% to $36,600,000 quarter over quarter mostly due to elevated expenses in the first quarter associated with various one time cost reduction initiatives at Keote. As a result, our studio NOI improved by $5,400,000 quarter over quarter.

Art Swazo, EVP of Leasing, Hudson Pacific Properties: Turning to development, construction at Pier 94 Studios in Manhattan is on time and on budget for delivery by year end.

Mark Lammas, President, Hudson Pacific Properties: We are in discussions with tenants regarding longer term leases and expect show by show demand to pick up in the fourth quarter of this year as productions typically book two to three months out. Regarding Washington one thousand in Seattle, discussions with various potential tenants are ongoing and we have tour scheduled for several new mid to large size requirements. This project’s exceptional quality positions it favorably in that market especially given a diminishing pool of truly competitive supply. And with that, I’ll turn the call over to Haru.

Harout Djerimariam, CFO, Hudson Pacific Properties: Thanks, Mark. Our second quarter twenty twenty five revenue was $190,000,000 compared to $218,000,000 in the second quarter of last year, the change primarily due to asset sales and lower office occupancy. Excluding $14,300,000 of one time expenses associated with the forfeiture of executive non cash compensation, our second quarter G and A expense improved to $13,500,000 compared to $20,700,000 in the second quarter last year and $80,500,000 in the first quarter this year or nearly a 3527% improvement respectively, in alignment with our ongoing efforts to reduce costs. Our second quarter FFO excluding specified items of $8,000,000 or $04 per diluted share compared to $24,500,000 or $0.17 per diluted share in the second quarter of last year. Specified items for the second quarter totaled $19,200,000 or $09 per diluted share, including one time expenses associated with forfeited non cash compensation agreements, debt repayment, surety cost cutting and transactions.

By comparison, specified items the second quarter of last year totaled $1,200,000 or $01 per diluted share, including income related to transactions and onetime derivative fair value adjustment. Excluding specified items, the year over year change in FFO was mostly attributable to factors affecting revenue. Our second quarter same store cash NOI was $87,100,000 compared to $104,100,000 in the second quarter last year, mostly due to lower office occupancy. Turning to the balance sheet. We continue to execute on a multi pronged approach to enhance our maturity profile, increase liquidity and strengthen key debt metrics.

In the second quarter, we repaid all of our private placement notes, Series B, C and D, totaling $465,000,000 addressing significant maturities in 2025, 2026 and 2027. We also raised $690,000,000 of gross proceeds through a common equity offering and used net proceeds to fully repay our credit facility and for general corporate purposes. In connection with this offering, we secured commitments to increase capacity under our credit facility by $20,000,000 through the 2026, including extensions and to extend $462,000,000 of capacity through year end 2029, including extensions. At the end of the second quarter, we had $1,000,000,000 of total liquidity comprised of $236,000,000 of unrestricted cash and cash equivalents and $775,000,000 of undrawn capacity under our credit facility. We had another $22,300,000 of HPP share of undrawn capacity under the Sunset Pier 94 construction loan.

Regarding our only remaining 2025 maturity, the loan secured by nineteen eighteen-eight, we expect to successfully refinance the loan. We will pursue the most cost effective structure with closing anticipated this quarter. Turning to our outlook. For our third quarter, we expect FFO per diluted share to range from $01 per share to $05 per share. Comparing our second quarter FFO of $04 per diluted share to our third quarter outlook, we expect gross FFO to increase largely due to full order impact of deleveraging following the recent equity offering.

This increase will be partially diluted by the higher weighted average share count of approximately 456,750,000 shares for the third quarter. Regarding our full year assumptions, we anticipate both improved interest expense range of $168,000,000 to $178,000,000 and G and A expense ranging from $57,500,000 to $63,500,000 as we continue to execute on previously announced cost saving measures. Estimated weighted average share counts now range from $319,000,000 and $321,000,000 for the full year. Finally, please note that consistent with this quarter’s filing, our full year same store cash NOI now reflects the inclusion of our Metro Center office property, resulted in a range of negative 11.5% to 12.5, which would have been identical to last quarter’s range of negative 12.5% to negative 13.5%, but for that adjustment. As always, our outlook excludes the impact of any potential dispositions, acquisitions, financings and or capital markets activity.

Now we’ll be happy to take your questions. Operator?

Alex, Conference Operator: Thank you. Our first question for today comes from Blaine Heck of Wells Fargo. Your line is now open. Please go ahead.

Blaine Heck, Analyst, Wells Fargo: Great. Thanks. Good afternoon. So it seems as though the building blocks are in place for office occupancy growth now that you’re effectively past the large node move outs. But just wanted to make sure that there were no incremental concerns that came up this quarter around significant move outs in in future years or tenant credit situations that could make it, a a more bumpy recovery.

Victor Coleman, CEO and Chairman, Hudson Pacific Properties: Not at all.

Art Swazo, EVP of Leasing, Hudson Pacific Properties: Blaine?

Blaine Heck, Analyst, Wells Fargo: Okay. Yeah. Go ahead. No.

Victor Coleman, CEO and Chairman, Hudson Pacific Properties: Not at all. There aren’t there aren’t any significant issues with any tenant in the portfolio on any level that would change the dynamic around what we’ve announced and what we have going forward with leasing.

Peter Abramovitz, Analyst, Jefferies: Okay. No. That’s helpful.

Blaine Heck, Analyst, Wells Fargo: I guess, you know, following up on that, Victor, I guess, how do you think about, the pace of which you can you can recover this occupancy? Is this, you know, it certainly seems like a multiyear, rebuilding effort, but, maybe give us a little bit of color around how we should be thinking about this.

Victor Coleman, CEO and Chairman, Hudson Pacific Properties: I mean, listen, Blaine, I think you heard in the prepared remarks, specifically around Mark, with we have had quarter over quarter sequential increase in leasing. We’ve had quarter over quarter, more importantly, tours and activity and pipeline has been stable. You know, we’ve gotten, I shouldn’t say we Mark got in trouble one time for sort of projecting where leasing was going. I think we feel feel very comfortable given the activity, the deals we have in the pipeline that we’re shooting for somewhere around a a low eight, high seven handle year end, and then 26, a mid eight handle, given everything we’re working on right now. And it was indicative of sort of the playbook that we laid out with the tenant occupancy, and leased differential.

I’m referring to a lease number there.

Blaine Heck, Analyst, Wells Fargo: Yep. Okay. That’s really helpful. You know, clearly, you guys accomplished a lot with respect to the balance sheet this quarter. So do you feel as though you’ve completely kinda shifted your focus to leasing and occupancy growth in both office and studios kind of driving at an improvement in your overall cost of capital as that comes through?

Or is there anything substantial that you’re working on with respect to the balance sheet in the near term that we should be aware of, obviously, outside of 1918, which which Haroot touched on?

Victor Coleman, CEO and Chairman, Hudson Pacific Properties: Yeah. I mean, indicative around 1918, I think, you know, as as Haroot said in his prepared remarks, you know, we’re very close to finalizing that deal. On a balance sheet standpoint, we have, excess liquidity that we’ve not had access to in some time, and there really isn’t any next major step on the balance sheet slash liquidity basis for us to accomplish everything we need to accomplish on the ops and studio side over the next, you know, thirty six months probably with the exception of, us renewing the media loan at a little over a year from now. I I think that, it does put us in a much stronger position to work on the execution, which is, you know, clearly around leasing and ops, and that’s where we see the upside here. And that’s why I think we’re very confident.

And, you we’ve clearly bottomed out in every market we’re in. And more than just bought in some of the markets, it’s really made a dramatic turn, as you can see, by the activity, not just within our portfolio, but also in our peers’ portfolios in the similar markets.

Blaine Heck, Analyst, Wells Fargo: Great. That’s helpful. Last one for me with respect to Quixote. It seemed as though there were some lease terminations and sales of the fleet. I guess, you talk about the drivers behind those those leases, lease terminations and and just give us an update on maybe how much more you can cut on the cost side and your ultimate plans for that business?

Mark Lammas, President, Hudson Pacific Properties: Yeah. So, Blaine, it’s, you know, the the the downsides of the fleet, the lease terminations, all part of that cost cutting efforts that we’ve been underway on. Last quarter, the update on that front was that we had cut cut about 14,000,000 of expenses on a pro form a basis. We thought relative to say 2024 actual results that 14,000,000 of cost cutting translates into about $10,000,000 of improved NOI pro form a to ’24. That effort continues.

The latest quarter, we cut another 10,000,000. That was largely downsizing of the fleet including the location services part of that fleet. So we’re at the current annualized expense cutting efforts coming in at around 24,000,000. The update on the NOI side, again, pro form a to 2024 results is 14,000,000 of NOI improvement, cash NOI improvement. I think importantly, when we last updated you, we thought that breakeven based on those cost cutting efforts were, like, mid to upper 90 show count levels.

Based on the latest cost cutting, we think that’s now down into the low nineties, gets us closer to breakeven. And I think last but not least, we still think we’re in that 30 to $40,000,000 cash NOI range if we can see show counts get somewhere back to the $1.10 to one twenty level.

Blaine Heck, Analyst, Wells Fargo: Great. Very helpful. Thanks, everyone.

Victor Coleman, CEO and Chairman, Hudson Pacific Properties: Thanks, Blaine.

Alex, Conference Operator: Thank you. Our next question comes from Alexander Goldfarb of Piper Sandler. Your line is now open. Please go ahead.

Alexander Goldfarb, Analyst, Piper Sandler: Hey, good afternoon out there. So Mark, maybe just sticking with Blaine’s question on Coyote and the studios. I think if memory serves, there was about $100,000,000 of EBITDA that went away when the studio shut down a few years ago. Obviously, you’ve retooled the business, and it’s great, Victor, to hear about the increasing show counts and the tax credits. Where should we think about I don’t know if it’s $100,000,000 that you guys will get back to, but where should we think about that revenue or that EBITDA recovery?

And if we think about the length of time, is it two years, three years? Do you think it’d be quicker? Just trying to get a sense of how much we’ll get back and a timing of when you think it will get back based on, you know, how productions are are coming back.

Mark Lammas, President, Hudson Pacific Properties: Yeah. So that last point I was making, Alex, really points to where we think it could trend to at that one ten, one twenty ish level. One twenty was, average show counts in 2022. In ’21 and 2019, we shot show counts above one thirty even in certain months, one forty. But I don’t think we’re thinking that that’s, peak television is necessary in the cards.

But, you know, with the tax credit now more than double to the $7.50 level and officially in the budget, hopeful that, we could see show counts get above, say, the one ten level, which should get us somewhere in the neighborhood of about 30,000,000 of NOI. I don’t know that it makes sense to revisit, you know, or the initial pro form a back when we purchased the company starting in 2021, which is that 100,000,000 or so that you’re pointing to. For now, I think the the key is getting closer to breakeven, which I mentioned is around that 90 ish show count level and trying to get back into positive EBITDA territory like that, 30,000,040 million dollars range that I think, we could potentially get to.

Alexander Goldfarb, Analyst, Piper Sandler: Okay. And then the second question is, Victor, I think you mentioned that you guys and obviously, job on the capital raise, that you have the capital that you need for the next thirty six months. But just want to make sure I understand. As you think about the leasing CapEx, the free rent and everything that you need to do to get the portfolio back into, I guess, sort of the low 90s on the office front, Is that correct that you don’t need any additional capital? Or I just want to make sure I understand that correctly.

Victor Coleman, CEO and Chairman, Hudson Pacific Properties: I mean, think what we’re referring to is, is that we’ve got a plan in place that can access additional capital if need be, and the balance sheet will shape up that way. I’m I’m not saying we’re not selling any more assets because that’s not the case because as in in your as my prepared remarks, we have a few assets that we are working on. I think the expediency of selling a couple quarters ago was ramped up, and now we’re taking more of a moderate time line on that because we don’t need the capital today. Doesn’t mean we’re not going to be pruning the portfolio as we typically do.

Alexander Goldfarb, Analyst, Piper Sandler: And then as part of that line of credit, which I think Haroot said is 70,000,075 million undrawn, is your view to use like maybe a little bit of that? Or as you think or as we think about this plan, the line of credit would form a meaningful part of the capital spend?

Victor Coleman, CEO and Chairman, Hudson Pacific Properties: I mean, typically, we use a line of credit on an EV basis. Right now, there’s no need because cash on the balance sheet in excess of almost $200,000,000 So we’re in good shape there. And we’ve always used the credit facility when we need it. If there are opportunities that we have to access it, we will. There’s no set game plan as to when we’re gonna draw down on it.

Alex, Conference Operator: Our next question comes from Caitlin Burrows of Goldman Sachs. Your line is now open. Please go ahead.

Caitlin Burrows, Analyst, Goldman Sachs: Hi, everyone. I guess

Laura Campbell, Executive Vice President, Investor Relations and Marketing, Hudson Pacific Properties0: I was wondering if you could

Caitlin Burrows, Analyst, Goldman Sachs: just comment on the leasing environment. It seems like, you guys have been maintaining this, kind of average quarterly pace in the 500,000 square foot range for a while now. I feel like also in line with what you guys were saying that there’s a lot of commentary about West Coast picking up.

Laura Campbell, Executive Vice President, Investor Relations and Marketing, Hudson Pacific Properties0: So I guess I was wondering if you

Caitlin Burrows, Analyst, Goldman Sachs: could just comment on are you seeing a pickup? Are you seeing what you’ve been seeing sustaining? Just how those volumes are going.

Art Swazo, EVP of Leasing, Hudson Pacific Properties: Hi, Caitlin. This is Art. Yeah. So that pace, that 500, the magical 500,000 square feet, we’ve well surpassed. If you look at the last two quarters, I think we’re averaging about five hundred and five hundred and ninety thousand square feet.

So, yes, to answer your question, it is picking up. Not only is it picking up, but we’re starting to see the front end of that engine, which is tours pick up as well. We’re up 10% quarter over quarter in just towards up to 1,800,000 square feet, which is really the highest we’ve had in probably about six years. So that’s the good news behind what’s in, you know, what’s in our pipeline and what we’re executing on. And, additionally, the tour activity, the, average deal size is increasing.

That’s telling us that’s informing us, that, you know, the mid sized deals are really back into the market, and we’re availing ourselves of of of them.

Caitlin Burrows, Analyst, Goldman Sachs: Got it. And then, I guess, maybe could you just differentiate by some of the markets? I know you were talking before about the strength in, tech and AI, mostly in the Bay Area. Would you say that’s driving the strength, or would you say the kind of pickup that you were just talking about is across markets?

Art Swazo, EVP of Leasing, Hudson Pacific Properties: No. It’s 100% driving the strength across the Bay Area, San Francisco in particular. It’s it’s the tech it’s the relationship to detect into the pipeline itself. It’s up in the valley. It’s up to about 68%.

In the city, it’s up, you know, very close to 60%. And AI’s roughly about 25% of that and and and growing, by the way. In in in, Seattle, you know, a little bit more modest increases, but increases nevertheless. We’ve seen year over year, probably 25% increase in demand and gross leasing. And the tech pipeline, though, again, a little bit more muted than San Francisco, we’re starting to see migration.

We’re starting to see the front end of some of the, you know, top name tech companies, AI companies getting a foothold in in, Seattle, availing themselves of the of the talent pool in Seattle. For example, you know, OpenAI, Anthropic, NVIDIA, Databricks to name to name a few. And so we’re seeing these tenants take eight, ten, 15,000 feet and then grow. So, you know, if if if you’re paying attention to the last cycle, that’s precisely what happened and drove the engine in Seattle.

Caitlin Burrows, Analyst, Goldman Sachs: Got it. Thanks.

Alex, Conference Operator: Thank you. Our next question comes from Seth Berge of Citi. Your line is now open. Please go ahead.

Laura Campbell, Executive Vice President, Investor Relations and Marketing, Hudson Pacific Properties1: Hi, thanks for taking my question. I just wanted to talk touch on third quarter guidance. What kind of at this point and where we sit in August, with July kind of already in the books, kind of gets you towards the lower end or the the higher end of guidance?

Harout Djerimariam, CFO, Hudson Pacific Properties: Yeah. Thanks for the question. I think, you know, a lot of this stems from the studio business. I think if we get surprised and the activity increases more than we expect, you know, we can get in the higher end of the guidance. And I think

Art Swazo, EVP of Leasing, Hudson Pacific Properties: if the studio business is slower than

Harout Djerimariam, CFO, Hudson Pacific Properties: we expect, it may go to lower end of the business. Obviously, if we get some, you know, different type of leasing, if we execute on leases that give us more beverage occupancy, that can also help on the higher end of the range. But as it relates to other costs and interest, I think those things are pretty well known as we fixed our interest, and our DNA costs are, pretty known at this point.

Laura Campbell, Executive Vice President, Investor Relations and Marketing, Hudson Pacific Properties1: Okay. Great. And then, you know, I think in your prepared remarks, you said that, you know, there’s around 500,000 square feet of, you know, the leasing pipeline is kind of in later stages. Any of that at Washington one thousand?

Art Swazo, EVP of Leasing, Hudson Pacific Properties: Yeah. So I think it was, the the number is actually closer to 600. I I think we said five, but, it’s it’s moved up. Not at Washington 1000, no later stage deals. The deals that we have at Washington 1000 is, you know, based upon the the market information I shared with Caitlin just a second ago.

We’re starting to see more multi tenant deals in the market on which we are touring. So tours are up, significantly quarter over quarter. And then we have those three one hundred thousand square foot, deals, in the market right now that we’re engaged with. So not not later stage lease or LOI yet.

Laura Campbell, Executive Vice President, Investor Relations and Marketing, Hudson Pacific Properties1: Okay. Great. Thank you.

Alex, Conference Operator: Thank you. Our next question comes from Tom Catherwood of BTIG. Your line is now open. Please go ahead.

Laura Campbell, Executive Vice President, Investor Relations and Marketing, Hudson Pacific Properties2: Thank you and good afternoon everybody. Following up on Alex’s leasing CapEx question, with the incremental capital on your balance sheet right now, can you get more aggressive pursuing new leases and kind of capturing more of the 2,000,000 plus square foot pipeline that you have? Or is the plan to hold more cash for other uses in the next twelve to eighteen months?

Victor Coleman, CEO and Chairman, Hudson Pacific Properties: Thanks, Tom. Good question. Listen, we’ve never detracted our business plan around spending capital if the quality and and and size and quantity of leasing is is available to ourselves. So it’s not about whether we have capital or not. We’ve never constrained ourselves from not doing deals because of because of capital at the end of the day.

So we’re we’re trying to expedite the process. We’re not losing deals, because we’re being aggressive or not being aggressive. We’re losing deals to competitors who may have space that’s readily accessible, and and that that marketplace has been drying up dramatically, specifically in Seattle. I mean, the deals that we’ve lost in Seattle have been to move in ready space. So the majority of that sublease space in the marketplace is now gone.

In the in the Bay Area, both in the Peninsula and San Francisco, we’re at a massive level playing field there right now. The activity, as Art mentioned, and Mark in his prepared remarks, has never been higher. So we’re comfortable in the ability for us to execute. It’s really just a timing situation. And, you know, I I do think that that that comment about, you know, we’re we’re a month into the quarter.

Remember, it’s it’s also the quietest quarter being summer. We’ve already seen a great activity for this quarter in leasing, and we expect September to to be a pretty strong month for us.

Laura Campbell, Executive Vice President, Investor Relations and Marketing, Hudson Pacific Properties2: Got it. Appreciate that, Victor. Then kind of when we think of institutional investor interest in West Coast, CRE but especially office, it seems like that’s ramped recently, whether they’re owner users, whether they’re financial investors. What have you seen in terms of valuation improvements across your markets? And is that changing how you’re approaching asset sales?

Are you moving certain assets in or out just depending on the change in values recently?

Victor Coleman, CEO and Chairman, Hudson Pacific Properties: That’s an excellent question. I think you gotta look at a couple of factors right now that are sort of lean towards the valuation and institutional capital coming to, you know, specific office. But but, you know, in general into CRE, overall on the West Coast, you know, the venture capital drive has has put the capital forefront into the Bay Area specifically and then Seattle secondarily. I mean, the Bay Area is 60% of the AI is going into the Bay Area, and the VCs are funding companies that are putting their companies and corporations and headquarters in the Bay Area. And so that has taken a a a very positive shift in terms of valuations and increased price per foot.

The number of transactions has picked up in terms of sales, in in dispositions or sales, whichever side of the table you’re at, but it’s not materially changed quarter over quarter to a point where you’re seeing massive, decrease in cap rates and evaluation shift. We think that’s coming. Clearly, those who ventured in to the marketplace in the Bay Area, both in The Peninsula and the city, you know, twelve to eighteen months back, all the way through till the beginning of this year have made really, really solid buys for the most part. And so we’re we’re seeing those valuations increase, but I think it’s still a little too early to to sort of capture a well, this is where cap rates have gone from too, but that’s that is that is coming. In terms of your latter part of your question, you know, right now, we have really looked at only one asset in the Bay Area, that that could be a disposition candidate left in in in our portfolio, that would make some sense and be priced out at a good number.

So we’re not we’re not reevaluating that, and I don’t see us doing so. I’d rather see the leasing pick up and then maybe look down the road for of a more stabilized asset.

Laura Campbell, Executive Vice President, Investor Relations and Marketing, Hudson Pacific Properties2: Got it. Thanks for that, Victor. And last one for me, Mark. You mentioned Sunset Las Palmas. I think it was nine out of the 11 studios are leased.

But in the sup, it’s still sub-fifty percent from a leased percent. Is there a lag when it comes to when a stage is spoken for to when the actual occupancy is taken and and that percentage ramps? How do we think through it with Las Palmas specifically?

Mark Lammas, President, Hudson Pacific Properties: Yeah. Yeah. For all the stages, we track occupancy on a trailing 12 basis, which is, you know, how we’ve done it, you know, historically since fifteen years now. Its origin relates to, really the period of time of really show by show occupancy on the stages and trailing twelve month occupancy looks were designed to give a more, you know, sort of robust look at ongoing occupancy unaffected by temporary expirations and then backfills across different stages. So what you’re seeing there is really just lower occupancy in earlier periods at Sunset Las Palmas.

Laura Campbell, Executive Vice President, Investor Relations and Marketing, Hudson Pacific Properties2: So then at the end of the quarter, what did the occupancy or the percent lease look like for Las Palmas?

Mark Lammas, President, Hudson Pacific Properties: Well, nine of the 11 stages were leased. I don’t know. It’s, you know, probably on the in the neighborhood of about 80% leased right now.

Laura Campbell, Executive Vice President, Investor Relations and Marketing, Hudson Pacific Properties2: Understood. That’s it for me. Thanks, everyone.

Alex, Conference Operator: Thank you. Our next question comes from Peter Abramovitz of Jefferies. Your line is now open. Please go ahead.

Peter Abramovitz, Analyst, Jefferies: Yes. Thank you for taking the question. Just want to go back to Victor’s comments around increasing occupancy. And I think you mentioned the target for getting leased occupancy back to the mid-80s by the end of next year. Obviously, the the Bay Area, despite the pickup in activity, is still kind of trailing the rest of the portfolio.

So I’m just curious, you know, what’s kind of a realistic target, you know, for stabilized occupancy in the Bay Area in your view, and and how long do you think it could take to get there?

Victor Coleman, CEO and Chairman, Hudson Pacific Properties: So when we when you’re defining the Bay Area, are you defining the the entire marketplace from San Francisco all the way

Harout Djerimariam, CFO, Hudson Pacific Properties: down to the Peninsula? Are you looking at just San Francisco first and

Peter Abramovitz, Analyst, Jefferies: then Kind of kind of looking at both. Yeah.

Victor Coleman, CEO and Chairman, Hudson Pacific Properties: Yeah. I mean, the lag has really been, you know, candidly, in in the airport area, Clara at at the end of the day. I mean, the numbers we’re looking at right now, if you look at the entire marketplace, it’s right around 70. And if you look at, you know, the city, it’s it’s it’s you know, Palo Alto being the highest, sorry, at, like, 92. Redwood Redwood is, like, seventy seventy three.

And Foster City is, like, 87, and Santa Clarita is, like, 90. And then the low end, you’ve got North San Jose, which is bringing everything down in the in the mid fifties. But the activity in North San Jose right now has been exceptional. And as Mark made sorry. As Art made the comment, we’re seeing you know, we were doing seven to 20,000 square foot deals.

We’re now seeing thirty and forty thousand square foot deals and even some even higher.

Art Swazo, EVP of Leasing, Hudson Pacific Properties: Yeah. That’s so that’s really the average, Peter. This is Art. We’re talking about the valley. You know, you talked about a an increase in deals that are a 100,000 square foot or more.

There were eight a year ago. There’s 18 today. We’re even seeing mind you, we’re talking specifically about the the airport with our portfolio. We’re seeing there’s four deals over a 100,000 square feet that we’re in discussions or negotiations on. As you know, that’s a small tenant market.

The average tenant size in our portfolio is roughly seven to 8,000 square feet. Right? And we’re in in discussion and negotiation with four tenants over over a 100,000 square feet. That’s really gonna move the needle in a big way. And as you move north, the two biggest the two biggest, vacancies that we have, we’re negotiating.

One is 80,000 square feet, the other is 50,000 square feet. We’re negotiating both both spaces with multiple users. So we feel pretty bullish about leasing, you know, that pace of lease up, you know, over the next year and a half. And then, of course, as you get into the city, our largest our largest vacancy is fourteen fifty five, and we’re in discussions right now for a for a land share of that space. So we’re feeling again, we’re we’re feeling good about what’s in the pipeline and what’s behind it in terms of tours.

Peter Abramovitz, Analyst, Jefferies: Okay. That’s helpful. I appreciate the color. And maybe just a follow-up on the tour activity. I think you mentioned it was up 10% quarter over quarter.

Could could you just specify outdoor activity trending specifically in Los Angeles?

Art Swazo, EVP of Leasing, Hudson Pacific Properties: Yeah. You know, so let me start with the with the tour. Yes. It is up 10%, but I’ll give you numbers. It’s up to 1,800,000 square feet.

At the same time, quarter over quarter, the average deal size popped 30%. Right? So it’s closing in closing in on 20,000 square feet. Those are the tours we’re seeing. That’s what’s going to feed the pipeline, which is gonna inform what we closed downstream.

And our actually, our hit rate on on tours is pretty high. It’s about 30%. So we can we can start to look favorably about what’s what’s gonna happen in in the coming quarters. In LA, you know, we really only have, this 11601 Building that we’re sitting in right now. We’re 96% leased.

It’s really become a small tenant building, and we’re, you know, we’re garnering, you know, the highest rents in the market. But the LA market in general is really driven by West LA. It always has been. It certainly well through the pandemic. The demand drivers are there.

Right? The demand’s probably up 20% year over year. More importantly, the gross leasing still remains robust. So not that concerned about LA, and certainly not this building at the moment because we have a pipeline for this building about 50,000 square feet, which doesn’t sound like much, but we’re yet, we’re closing in a 97% lease.

Blaine Heck, Analyst, Wells Fargo: Alright. That’s all for me. Thank you.

Art Swazo, EVP of Leasing, Hudson Pacific Properties: Thank you.

Alex, Conference Operator: Thank you. Our next question comes from Vikram Malhotra of Mizuho. Your line is now open. Please go ahead.

Laura Campbell, Executive Vice President, Investor Relations and Marketing, Hudson Pacific Properties3: Afternoon. Thanks for taking the question. I guess just going back to the point about target occupancy, you know, or next year, maybe if you can just step back and give us a sense of, like, over the next two years, let’s say you’re able to achieve this occupancy, you do have a fair amount of expirations over the next three years. Is it fair to say that once you achieve this occupancy, cash flow growth or AFFO growth will probably still be a probably 27, 28 time at the earliest?

Mark Lammas, President, Hudson Pacific Properties: So, Vikram, let let me

Victor Coleman, CEO and Chairman, Hudson Pacific Properties: just clarify your your comments because they’re not accurate. Okay? First of all, we’re not talking occupancy. The numbers I talked about was leasing. I specifically said leasing versus occupancy.

Second of all, we have the lowest amount of expiration in the next three years than we’ve had in the last eight. We average it around 5 to 600 a quarter. Sorry. Yes. 5 to 600,000 a quarter.

We are sub $2.50. So if you look at that and you look at what we talked about earlier and you correlate to leasing, not occupancy, we’re very comfortable that twenty six year end will be at the range that we’re talking about right now, which will correlate to occupancy and cash flow that will increase at a substantial amount from an FFO and an AFFO basis.

Laura Campbell, Executive Vice President, Investor Relations and Marketing, Hudson Pacific Properties3: Okay. Yeah. I mean, I I was just looking at the expiration as a percent over the next, you know, several years, kinda ’25 to ’28.

Victor Coleman, CEO and Chairman, Hudson Pacific Properties: But You said you said you said three years. So it’s several several years could be three. But if you look at three years, it’s about 750,000 to 800,000 versus a million and a half to 2.

Laura Campbell, Executive Vice President, Investor Relations and Marketing, Hudson Pacific Properties3: Okay. Just going back to the studio business, you talked about reaching, you know, hopefully, there’s the number of shows and then reaching sort of a run rate breakeven, NOI level or rent level. I just wanna go back. I I guess it was two quarters ago. Part of the plan was maybe looking at it more strategically.

It is a challenged business today, but is is divesting it still on the cards? And if if not, I guess, do you look for more partners, or do you just, are you still focused on the Kyoto like, having the Kyoto business as part of the company? Thanks.

Victor Coleman, CEO and Chairman, Hudson Pacific Properties: Well, I don’t recall us ever talking about divesting. What we talked about, which we’ve executed on, is divesting on certain leases and obligations that are not income producing to lower the overhead and costs, which we’ve accomplished and we’ve outlined. And in Mark’s prepared remarks, he reiterated again. We have not talked about divesting out of the Coyote business, the Sunset portfolio business, or the real property of the Outcos.

Blaine Heck, Analyst, Wells Fargo: Thanks.

Harout Djerimariam, CFO, Hudson Pacific Properties: Thank you.

Alex, Conference Operator: Thank you. Our next question comes from John Kim of BMO Capital Markets. Your line is now open. Please go ahead.

Laura Campbell, Executive Vice President, Investor Relations and Marketing, Hudson Pacific Properties4: Thank you. I just wanted to clarify your guidance for the year, I guess, for Harout. Same store NOI is basically unchanged from last quarter. G and A assumption is down, interest expense is down. Yet, it doesn’t look like earnings are moving that much.

I know it’s a pretty wide range. But what are the offsets to the positive, contributors, in your guidance? And what would you bring you to the low end of guidance, the the 1 to 5¢ in third quarter?

Harout Djerimariam, CFO, Hudson Pacific Properties: Sure. Just to clarify, the the annual numbers, you know, obviously, some of which are reflected in the third quarter numbers. Right? So they’re still in the fourth quarter. But, I think I touched upon this a second ago.

For the third quarter, you know, what the biggest variable numbers would be is the studio business. Right? I think if show counts improve, if, things are more active and more robust, that’ll get us closer to the higher end of the range. And then if things are weaker than we expect, it’ll bring us closer to the lower end of the range. That’s that to us is the biggest x factor in our guidance, for the next quarter.

Laura Campbell, Executive Vice President, Investor Relations and Marketing, Hudson Pacific Properties4: Okay. On on the studio business, with, Sunset Pier 94 looking to get complete or looking for its completion date this quarter, when do you expect occupancy to commence? And if you if you could break down the stages that you’re in negotiation with as far as the longer term leases versus the show by show, and also if there’s any services component as part of the the NOI of of the studio.

Victor Coleman, CEO and Chairman, Hudson Pacific Properties: Well, listen. Right now, John, we are in conversations with a couple of shows that are year to year, name shows that have

Harout Djerimariam, CFO, Hudson Pacific Properties: come to

Victor Coleman, CEO and Chairman, Hudson Pacific Properties: us. It’s still a little early because some are trying to film as of Jan one, which means they would be in office space prior to that. And so that’s still in limbo. For the most part, though, we’ve indicated we are going to the activity is around show to show. There’s not a lot of long term leasing that is available in any of the marketplaces throughout The States right now in the three main markets of Atlanta, Los Angeles, and New York.

But but we are seeing some very solid activity around, name company shows that will have hopefully repetitive seasons. Answer your second part of your question, the, economics around that are, you know, fully integrated with how we do every one of our deals, which is going to be package deals, which include all services, all amenities, all sound stages, all offices, and, all of our lighting and grip packages. So that will be a total a total number at the end of the day. We we will have no differentiation between Pier 94 or any of our other studio facilities in terms of how our revenue collections and charges are.

Laura Campbell, Executive Vice President, Investor Relations and Marketing, Hudson Pacific Properties4: Okay. That’s helpful. And then my final question is on leasing activity. It was pretty healthy this quarter. It looks like your 26 expirations actually went up this quarter versus versus last.

Were there a lot of short term leases that you’ve done or just, like, short term renewals that got you there? Because it, you know, it’s a little bit of a

Art Swazo, EVP of Leasing, Hudson Pacific Properties: Yeah. That’s generally the case. It went up it went up slightly. Yeah. It went it went up slightly, but, you know, some of the tenants are are holding over or in the short term situation.

Blaine Heck, Analyst, Wells Fargo: Okay. Thank you.

Alex, Conference Operator: Thank you. Our next question comes from Ronald Camden of Morgan Stanley. Your line is now open. Please go ahead.

Laura Campbell, Executive Vice President, Investor Relations and Marketing, Hudson Pacific Properties5: Hey, just wanted to circle back to the Washington one thousand. Just wondering if

Laura Campbell, Executive Vice President, Investor Relations and Marketing, Hudson Pacific Properties1: you could provide just a little

Laura Campbell, Executive Vice President, Investor Relations and Marketing, Hudson Pacific Properties5: bit more commentary on just the activity in the market overall and how that asset is differentiated. And I think it sounded like you’re leaning more towards sort of multi tenant versus maybe a big tenant and so forth. Just would love to dig in there a little bit more. Thanks.

Art Swazo, EVP of Leasing, Hudson Pacific Properties: Yeah. We’re exploring all. I mean, you know, at this point, you know, there’s there’s an uptick in multi floor tenants as I multi floor deals, as I said. We’re touring. The touring has picked up.

There are three there are really 500,000 square foot tenants in the market, three of which we are in front of for Washington 1,000, and the other two are really a Pioneer Square kind of location that we’re in negotiations with, which is the good news. So, no, we we continue, you know, we continue with tech. Of those 300,000 square foot tenants, actually, two are tech. One is one is BioMed, and, you know,

Alex, Conference Operator: we’re gonna see, you know, in

Art Swazo, EVP of Leasing, Hudson Pacific Properties: the coming quarters if we can’t execute on one of these. But the good news is is behind it, the tours that we have lined up already as we as we come kinda through the summer Well, I I really think it’s gonna start to pay dividends for us there. But to answer your question on on the building, it’s one of one. It is you want new construction state of the art asset, especially if you need more than 200,000 square feet. We’re one of one.

So we feel really good about our prospects.

Laura Campbell, Executive Vice President, Investor Relations and Marketing, Hudson Pacific Properties5: Helpful. And then my second one is just going back to the same store, NOI sort of guidance. I guess when you’re when you’re thinking about when we’re connecting the dots with the occupancy commentary, what are some of the higher level sort of takeaways in terms of what that does for same store as you’re going to ’26 and ’27, right? Because presumably, the comp is easier and you’re gaining occupancy. So how should we think about just high level what that same store should be doing?

Thanks.

Harout Djerimariam, CFO, Hudson Pacific Properties: Well, I’ll take a good this is Mark. I’ll take a crack.

Mark Lammas, President, Hudson Pacific Properties: Yeah. I mean, they’re obviously correlated. You’re gonna see gap, same store NOI begin to improve, typically sooner than cash. Typically, a reflection of, the component of the leasing activity that has front loaded free rent. But, you know, hard to pinpoint precisely when you see the turn, but, you know, our sequential flat occupancy at 75.1, I think, you know, sort of reinforces our belief that we we’ve likely hit the bottom bottom on occupancy.

We’ll see a steady march, you know, a positive net absorption that should first materialize in GAAP, like I said, and then you’ll start seeing it show up in cash rents.

Laura Campbell, Executive Vice President, Investor Relations and Marketing, Hudson Pacific Properties5: Great. That’s it for me. Thanks so much.

Alex, Conference Operator: Thank you. Our next question comes from Dylan Bozynski of Green Street. Your line is now open. Please go ahead.

Laura Campbell, Executive Vice President, Investor Relations and Marketing, Hudson Pacific Properties0: Hi, Thanks for taking the question. Just just sort of on the sort of lease trajectory, looks like you guys noted that PayPal has has executed a lease termination starting next year. Are there any other larger potential move outs that we should be aware of as we think about the 2026 ramp?

Victor Coleman, CEO and Chairman, Hudson Pacific Properties: No. No. We didn’t ask to answer that. That was the first question that was asked. No.

There’s there’s there’s nobody else there.

Laura Campbell, Executive Vice President, Investor Relations and Marketing, Hudson Pacific Properties0: Great. And then I guess, given the limited amount of near term lease signings that seem to be expected at Washington 1000, can you kind of talk about how we should expect that to sort of roll into earnings? It seems like that should sort of come off capitalization sometime towards the end of this year, but is that sort of incorrect?

Mark Lammas, President, Hudson Pacific Properties: No. That that’s right. I mean, it’ll at the end of this year, we’ll no longer be capitalizing interest on it. And then you can you’ll see in our supplemental that as we sit today, we’re currently anticipating stabilization on it, ’27, which, you know, you know, that’s 92 ish percent cash paying occupancy. So you can kind of, you know, ramp your way, up towards that because we would obviously expect there to be occupancy, you know, absorption and cash rent paying rent before that time.

That gives you sort of a time frame, over which, you know, we expect to see it stabilized.

Laura Campbell, Executive Vice President, Investor Relations and Marketing, Hudson Pacific Properties4: Okay. That’s actually helpful. Really helpful. Thanks, guys.

Victor Coleman, CEO and Chairman, Hudson Pacific Properties: Thank you, John.

Alex, Conference Operator: Thank you. Our final question for today comes from Blaine Heck of Wells Fargo. Your line is now open. Please go ahead.

Blaine Heck, Analyst, Wells Fargo: Yes. Thanks for taking the follow-up. We’re hearing a lot about the streaming platforms pushing to have more of a foothold in the sports entertainment area. I was wondering if you guys have any view on how that could impact dynamics in the studio space and and just overall demand there?

Victor Coleman, CEO and Chairman, Hudson Pacific Properties: Yeah. I I listen. I you’re you’re hearing accurately, and and what you’re finding is live content is been, an additional driver of capital for these streaming companies. And so it it’s in all forms. But, yes, the majority of the capital is going towards sports and sports related, content.

It has not, though, taken anything away from the budgetary issues that they’ve allocated for for all the other content, whether it’s features or or shows that are streaming. So it’s just it’s an addition too. And Netflix is the biggest contributor. It started with the NFL, now there’s, you know, there’s, follow ons with Apple and soccer and and, lots of American, football, European football, etcetera. But there’s a lot of those examples that are coming to play.

We had commented on this, Blaine, on the last call. Amazon, as an example, which does Thursday night football, as everybody knows, has decided to make their sports center here in Los Angeles. So and and as as as to the to the tune of Netflix, so their desks that they’re gonna be reporting from and conducting the the live sports commentators are gonna be out of LA. Other others are in New York.

Harout Djerimariam, CFO, Hudson Pacific Properties: And so that’s gonna continue, and

Victor Coleman, CEO and Chairman, Hudson Pacific Properties: I think you’re gonna see more and more capital driven that way. But to date, the capital has not shifted on a budgetary basis away from them creating new content.

Blaine Heck, Analyst, Wells Fargo: Okay. Great. Thank you.

Alex, Conference Operator: Thank you. There are no further questions at this time. I’d like to turn the call back to Victor Coleman, CEO and Chairman, for closing remarks.

Victor Coleman, CEO and Chairman, Hudson Pacific Properties: Thank you so much for participating in our call, and we look forward to speaking to everybody sometime in fall.

Alex, Conference Operator: This concludes today’s conference call. You may now disconnect your lines.

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