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Hudson Pacific Properties (HPP)
NYSE:HPP
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Hudson Pacific Properties
(NYSE:HPP)
48Neutral
Positive Factors
Financial Stability
HPP announced the completion of a commercial mortgage-backed securities financing for a portfolio of six office properties with total gross proceeds of $475 million, enhancing liquidity.
Government Support
The City of San Francisco leased an additional 226ksf of office at HPP's 1455 Market St for 21 years, indicating strong demand and long-term commitment from public sector clients.
Leasing Activity
Leasing activity accelerated to 630ksf, the highest since 2Q22, indicating a positive trend in office space demand.
Negative Factors
Earnings Performance
HPP shares have disappointed due to weaker office and studio results, with the market pricing in the possibility of insolvency.
Market Volatility
The offering rate of the CMBS deal came in wider than expected with market volatility playing a factor, indicating increased financial uncertainty.
Occupancy Challenges
In-service office occupancy decreased to 75.1% with 9.3% of leases expiring, reflecting potential challenges in maintaining tenant levels.
Hudson Pacific Properties (HPP) vs. S&P 500 (SPY)
Market Cap
$326.62M
Dividend Yield4.48%
Average Volume (3M)2.73M
Price to Earnings (P/E)―
Beta (1Y)1.34
Revenue Growth-11.47%
EPS Growth-89.12%
CountryUS
Employees740
SectorReal Estate
Sector Strength80
IndustryREIT - Office
Share Statistics
EPS (TTM)-0.53
Shares Outstanding141,392,410
10 Day Avg. Volume2,283,861
30 Day Avg. Volume2,734,151
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)0.00
Price to Cash Flow (P/CF)0.00
P/FCF Ratio0.00
Enterprise Value/Market Cap17.52
Enterprise Value/RevenueN/A
Enterprise Value/Gross Profit14.74
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$3.59Price Target Upside60.99% Upside
Rating ConsensusHold
Number of Analyst Covering9
Hudson Pacific Properties Business Overview & Revenue Model
Company DescriptionHudson Pacific is a real estate investment trust with a portfolio of office and studio properties totaling nearly 19 million square feet, including land for development. Focused on premier West Coast epicenters of innovation, media and technology, its anchor tenants include Fortune 500 and leading growth companies such as Netflix, Google, Square, Uber, NFL Enterprises and more. Hudson Pacific is publicly traded on the NYSE under the symbol HPP, and listed as a component of the S&P MidCap 400 Index.
How the Company Makes MoneyHudson Pacific Properties generates revenue primarily through leasing office and studio spaces to tenants, which include a diverse mix of technology, media, and entertainment companies. The company’s revenue streams include rental income from long-term leases, which provide a stable and predictable cash flow. Additionally, HPP engages in property development and redevelopment projects, which can lead to increased rental income and property value over time. The company may also engage in strategic partnerships and joint ventures to enhance its property portfolio and drive growth. These activities, combined with effective asset management and operational efficiency, contribute to HPP's earnings.
Hudson Pacific Properties Financial Statement Overview
Summary
Hudson Pacific Properties is facing financial difficulties with declining revenues and persistent net losses. Although there are improvements in leverage and EBIT margins, the company struggles with cash flow generation and maintaining high operating expenses. These challenges contribute to a moderate financial health assessment.Income Statement
Hudson Pacific Properties shows a declining revenue trend with a significant fall from $952 million in 2023 to $842 million in 2024. Gross profit margin held steady at 100% due to a matching gross profit and revenue figure. However, the net profit margin remains negative, reflecting continuous net losses. The EBIT margin improved from a meager 0.35% in 2023 to 63.7% in 2024, but EBITDA turned negative in 2024, indicating operational challenges.―
Balance Sheet
The company's debt-to-equity ratio improved slightly from 1.43 in 2023 to 1.33 in 2024, indicating a marginally lower leverage. Despite this, the return on equity remains negative due to net losses. The equity ratio decreased to 35.1% in 2024, showing a slight erosion in the company's equity base relative to its assets.55
Cash Flow
Operating cash flow decreased from $232 million in 2023 to $165 million in 2024, while free cash flow also saw a decline. The operating cash flow to net income ratio is positive, indicating better cash generation relative to losses, but the free cash flow growth rate is negative, highlighting challenges in maintaining liquidity.―
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 842.08M | 952.30M | 1.03B | 896.84M | 804.97M | Gross Profit |
| 388.00M | 497.71M | 612.41M | 560.99M | 505.19M | EBIT |
| -354.79M | 3.36M | 179.89M | 152.31M | 135.81M | EBITDA |
| 152.05M | 423.75M | 553.11M | 494.56M | 423.05M | Net Income Common Stockholders |
| -364.14M | -173.89M | -166.42M | -114.38M | -118.54M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 63.26M | 100.39M | 255.76M | 225.88M | 248.80M | Total Assets |
| 8.13B | 8.28B | 9.32B | 8.99B | 8.35B | Total Debt |
| 380.00M | 4.40B | 5.44B | 4.22B | 3.87B | Net Debt |
| 316.75M | 4.30B | 5.18B | 4.13B | 3.75B | Total Liabilities |
| 4.96B | 4.73B | 5.44B | 4.66B | 4.25B | Stockholders Equity |
| 2.86B | 3.08B | 3.31B | 3.74B | 3.46B |
| Cash Flow | Free Cash Flow | |||
| 141.59M | 226.52M | 252.83M | 189.63M | -291.91M | Operating Cash Flow |
| 164.66M | 232.26M | 369.50M | 314.86M | 302.03M | Investing Cash Flow |
| -250.54M | 467.84M | -378.09M | -754.21M | -1.01B | Financing Cash Flow |
| 65.90M | -866.67M | 97.45M | 486.68M | 796.09M |
Hudson Pacific Properties Technical Analysis
Neutral
2.23
Price Trends
2.63
Negative
2.81
Negative
3.73
Negative
Market Momentum
-0.11
Negative
45.95
Neutral
64.33
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For HPP, the sentiment is Neutral. The current price of 2.23 is above the 20-day moving average (MA) of 2.22, below the 50-day MA of 2.63, and below the 200-day MA of 3.73, indicating a neutral trend. The MACD of -0.11 indicates Negative momentum. The RSI at 45.95 is Neutral, neither overbought nor oversold. The STOCH value of 64.33 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for HPP.
Hudson Pacific Properties Risk Analysis
Hudson Pacific Properties disclosed 52 risk factors in its most recent earnings report. Hudson Pacific Properties reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Hudson Pacific Properties Peers Comparison
Overall Rating
UnderperformOutperform
Sector (60)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
60 Neutral | $2.81B | 11.39 | 0.21% | 8508.43% | 6.31% | -14.32% | |
60 Neutral | $196.14M | ― | -2.51% | 8.23% | -4.92% | -128.59% | |
50 Neutral | $721.62M | ― | -18.11% | 14.42% | -2.22% | 1.51% | |
50 Neutral | $110.66M | ― | -12.49% | 16.24% | -15.46% | -81.31% | |
48 Neutral | $326.62M | ― | -11.53% | 4.48% | -11.47% | -89.12% | |
48 Neutral | $809.90M | ― | -3.79% | 7.68% | -6.23% | 18.07% | |
41 Neutral | $29.32M | ― | -90.59% | ― | -1.36% | -19.10% |
* Real Estate Sector Average
Performance Comparison
HPP
Hudson Pacific Properties
2.28
-3.10
-57.62%
PDM
Piedmont Office
6.71
0.14
2.13%
BDN
Brandywine Realty
4.19
>-0.01
-0.24%
CIO
City Office REIT
4.87
0.24
5.18%
NYC
New York City REIT
11.66
3.46
42.20%
ONL
Orion Office REIT
1.99
-1.12
-36.01%
Hudson Pacific Properties Earnings Call Summary
Earnings Call Date:May 07, 2025
(Q1-2025)
| % Change Since: -2.19%|
Next Earnings Date:Aug 05, 2025
Earnings Call Sentiment Neutral
The call highlighted significant achievements in leasing activity and venture investment, particularly in the AI sector, along with successful asset sales. However, these positives were offset by declines in revenue and FFO, challenges in the Los Angeles market, and increased interest expenses. Despite notable achievements, the financial pressures and market challenges indicate a balanced outlook.Q1-2025 Updates
Positive Updates
Strong Venture Investment
Venture investing in the first quarter set a new high watermark with deal value more than doubling year-over-year to $92 billion, 92% above the 10-year average. The Bay Area received nearly 70% of the funding, totaling $59 billion.
Leasing Activity Increase
Signed 630,000 square feet of new and renewal leases in the first quarter, the highest quarterly leasing activity since Q2 2022. New leasing accounted for 66% of activity.
AI Leasing Surge
AI office leasing totaled over 0.5 million square feet in San Francisco alone in the first quarter, up significantly year-over-year.
Positive Net Absorption in San Francisco
San Francisco marked the second straight quarter of positive net absorption with gross leasing just under 3 million square feet.
Record Visitors at Ferry Building
Welcomed 2.5 million visitors to the Ferry Building in the first quarter, a 23% year-over-year increase.
High Leasing Occupancy in Los Angeles Portfolio
Los Angeles portfolio is currently 97% leased, largely under long-term leases.
Successful Asset Sales
Closed on Foothill Research Center and Maxwell dispositions for a combined total of $69 million, with net proceeds used to pay down the revolver.
Negative Updates
Decline in Revenue and FFO
First quarter 2025 revenue was $198.5 million, down from $214 million in the first quarter of last year. FFO, excluding specified items, was $12.9 million or $0.09 per diluted share, compared to $24.2 million or $0.17 per diluted share a year ago.
Challenges in Los Angeles
The devastating fires and increasing budget woes made for a challenging quarter in Los Angeles.
Studio Production Challenges
Studio revenues were $33.2 million, $2.2 million lower due to lower ancillary and transportation revenues related to production pauses during the fires.
Increased Interest Expense
Full year interest expense increased by $12 million stemming from the recent CMBS financing.
Higher Vacancy in Office Properties
In-service office properties were 76.5% leased at the end of the first quarter, down from 78.9% at the end of the fourth quarter last year.
Company Guidance
During Hudson Pacific Properties' First Quarter 2025 Earnings Conference Call, the company provided detailed guidance reflecting both challenges and opportunities in their portfolio. The firm observed a notable increase in venture investing, with deal value reaching $92 billion in Q1, marking a 92% rise above the 10-year average, particularly benefiting the Bay Area with $59 billion in funding. The AI sector was a significant focus, receiving 70% of this funding and facilitating over 0.5 million square feet of AI office leasing in San Francisco. Despite challenges in Los Angeles, the local portfolio remains 97% leased. The studio side saw average shows in production in the mid-80s, with a strong leasing pipeline. Hudson Pacific's financial outlook includes anticipated second-quarter FFO ranging from $0.03 to $0.07 per diluted share, with adjustments accounting for interest expenses and G&A savings. The company also highlighted ongoing efforts to enhance liquidity, having generated $97 million from asset sales in Q1 and planning an additional $125 million to $150 million in dispositions.Hudson Pacific Properties Corporate Events
Business Operations and StrategyFinancial Disclosures
Hudson Pacific Properties Reports Strong Q1 2025 Leasing
Neutral
May 7, 2025
Hudson Pacific Properties reported its financial results for the first quarter of 2025, highlighting a strong leasing performance with 630,000 square feet of leases signed, and a liquidity position of $839 million. Despite a net loss of $74.7 million, the company is optimistic about its future, citing a robust leasing pipeline and potential benefits from venture capital flows and government support for studios. The company is actively managing its portfolio through asset sales and debt reduction to strengthen its financial position.
Spark’s Take on HPP Stock
According to Spark, TipRanks’ AI Analyst, HPP is a Neutral.
Hudson Pacific Properties’ stock reflects financial and operational challenges, with declining revenues and net losses impacting its financial health. Technical analysis suggests bearish momentum, and valuation indicates potential overvaluation. Positive steps like increased leasing and strategic financing provide some optimism, but risks remain significant.
To see Spark’s full report on HPP stock, click here.
Private Placements and FinancingBusiness Operations and Strategy
Hudson Pacific Properties Secures $475M CMBS Financing
Positive
Mar 31, 2025
On March 28, 2025, Hudson Pacific Properties completed a $475 million commercial mortgage-backed securities (CMBS) financing for a portfolio of six office properties. The financing, secured by properties including 11601 Wilshire and Element LA, was facilitated by Goldman Sachs, Morgan Stanley, and Wells Fargo. The proceeds were used to repay a $168 million loan and amounts on the company’s credit facility, enhancing liquidity and financial flexibility. This strategic move, along with recent asset sales, positions Hudson Pacific at a positive inflection point in addressing future maturities, with approximately $815 million in liquidity following the transaction.
Business Operations and StrategyFinancial Disclosures
Hudson Pacific Properties Sees 20% Boost in Office Leasing
Neutral
Feb 20, 2025
Hudson Pacific Properties reported its financial results for the fourth quarter of 2024, highlighting a 20% increase in office leasing activity compared to the previous year. Despite a decrease in total revenue and a net loss attributed to asset sales and tenant move-outs, the company remains optimistic about future growth driven by AI-related leasing and increased demand from in-office mandates. The firm is focused on executing asset sales, finding cost savings, and reinforcing its balance sheet to position itself for future earnings growth.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.