Hudson Pacific Properties (HPP) 12 Nov 242024 Q3 Earnings call transcript

Good afternoon. My name is Sierra, and I will be your conference operator today. At this time, I'd like to welcome everyone to Hudson Pacific Properties Third Quarter 2024 Earnings Conference Call. [Operator Instructions] At this time, I'd like to turn the call over to Laura Campbell, Executive Vice President, Investor Relations and Marketing.

Good afternoon, everyone. us. joining for Thanks the Lammas, are and President; Leasing. EVP on and Art Coleman, Chairman; of Mark Harout call me Victor today CEO Suazo, With Diramerian, CFO; an our now are on our and This and available earnings we the SEC, filed supplemental afternoon, on X-K website. with both release for audio An available of website. our call this on webcast be will replay

regarding well and earnings Some this in provide call. Today, nature. forward-looking outlook. market the office development, Victor of today trends on our release supplemental update non-GAAP used will capital will and call will and XXXX is discuss financial financial Mark the as information Harout on the we'll operations and and forward-looking for industry of and reconciliation statements recycling. reference as our share studio and our information on an review results measures Please

your be happy to we'll Thereafter, Victor? take questions.

Thank X catering leasing you, call. related everyone, tech Pacific, quarter afternoon, estate locations real the Hudson we services media industries. welcome and acquiring, dynamic third our and in decades most and to Laura. operating premier Good sought-after spent to transforming, nearly At and developing,

platform multiple strength impacting team Over to rise the diligently our this industries and and core to our unprecedented the unique the resiliency talented has above once leverage in of challenges last years, several worked generation markets.

is As we sit turning. tide confidence are gaining the today, we that additional

And productivity facing steepest office-oriented and move years, or are emerging push in growth The shows to for X-day we has performance. time decline we cultures in positioned and are with indicators we numerous. 'XX, and needed, that clearly this believe through begun. collar week is office-related performance. that the work data XX even of more X the white enhance U.S. year the stabilize as positive the ultimately productivity While to and our that will return a be portfolio exit

CEO had attendance coming in only of policies work companies be X% office most this recent survey office anticipate And among Seattle's which remote Salesforce. their the and tech on have companies still employer, financial full-time include the and the largest San announcements respondents XXX Amazon, East gaining along momentum now Today, Francisco's years. West Dell movement, in Fortune with XX% Coast Coast. will fully mandate early largest is Recent in of traction KPMG's companies the full-time the employer

certain cutting, Francisco, the in surpassed September, of in ridership XX% average momentum to layoffs get after excess of well XXXX, slowing, are now that, approximately venture consistently XXX,XXX fundraising advising layoffs And improvement and up 'XX, XX% San XXX%. with portfolio years the of cost reaching and level investors is have in offensive. on out and since Tech first picking weekday the quarter tech to routes since a new are year-over-year. Underscoring of venture pre-pandemic lowest declined boardings recovering levels, to finally second of their back companies

over present, Wakefield feet years. with a Furthermore, of AI to in companies, office and the we're additional footprint to funding in since which tenants years in catalyst XXXX, AI we on provide least At XXXX be XX first tend million to the X.X Bay seeking Area, monitoring market expect XXX,XXX expects lion's coming grow which and back Cushman square the leasing Bay January companies in investors in pace going have X the at best months. to for venture record, brought in on next a is feet. Bay of table. be Area, XX% another the the AI square about one Area, the the to are XXX%

X% XX% West Coast taken the already the up for XX% absorption And requirements to overall Coast. markets first market. XXXX Coast, with Class traction third quarter, requirements in A Francisco for highest the just gross tenant Downtown a in And hold year-to-date recovery is increased X on gaining East San net year-over-year. time tenant U.S. picture, in broader West in positive the compared the for now product on year-over-year tech-centric years. Big has leasing office office that had is the the

Francisco seeing what And also San in the And requirements XX% and we're of its overall leasing recede demand market had first since are absorption occupancy The quarter up in to portfolio. year-over-year. to Peninsula activity own requirements starting XX about XXXX, our losses with led were volume now office mirrors and experiencing midsized Internet representing back transactions. office Valley, positive and software the has coming Seattle, of tenant year-over-year. net with up companies XX% we're the XX% top

months turning stronger to during approximately has Studios. nearly has XXXX. for Angeles with the production low Los pick following we seeing up of to in demand X been at shows started October, trend count The show Now on are XX 'XXs

normalcy, production of we sense limit continues right has for to to stages the services. While any yet moving demand return Angeles' are direction, and which our to Los in

back have to still financial increasingly Angeles the production. incentives. productions the and in film appropriate is Los competitive environment, worldwide cost-conscious an win in television leader But we must

comprehensive key services in passed to Netflix which that officials and incremental back few if office than double credit United This companies when captured studios of ahead envision realm has tax And at program remain will billion, demand, to passed new a will production making be into at mid-XXXX of such sound all this. public builds very go in is $X.XX levels recognized largest be typically a and weeks the production. state States. many ago, the supply positive We Newsom the will introduced as the a with think it Governor Fortunately, have to normal. and in legislation more moment effect a development offering limited

Disney, know functions team operations level executives Stefanie and led studio from over and a continue initiatives. we has recently XXXX to the and EVP ensure their recognition senior for Hudson best team X Southern production decade. from California Studio is Mehrtens promoted joined Studios service Pacific We of And for services, been with leadership been remain to Bourne, will oversight our known. broader of strategic of Anne the different to streamline operations, promoted growing in strategies, team and operations sales confident has in Estate EVP we Studio the promoted in business I both responsibilities. exceptional who the Real our benefit office alongside and in creative a having which are with

just talk capital across Finally, improving, With Fed and policy accelerating. office I volume recycling. to want markets is transaction fundamentals easing about our

completing a into maximize key where tapping a noncore demand We of to focus our asset sales can additional office as on are component efforts value. we strategically deleverage this with

a continuing the price rather Of $XXX that negotiation, than to gross invest buyer asset. Research of foot to assets potential we're has Foothill as of attractive proceeds We've square this in an contract, nonrefundable on at interest. our per Inclusive Alto the another totaling presently gone are Area note, opted which sell sales Bay quarter, contract we Palo XXX for million. garnering with to million. Foothill, third $XXX in under to generate Center have X strong under $XX buyer And have million

secured portfolio forward close to early and begun discussions transactions detail we with venture lenders and joint optimistic of year, much look have financing opportunity, we're additional a potential we next and and as a both could providing addition, X on a and the office more assets updates. In partners related

I'm that, to to going over With turn Mark. it

total had Thanks, X.X brought year. new Victor. ahead XXX,XXX time million This from signing feet leases execution deals. leasing this with last to strong We being another year-to-date our of of our team, feet quarter office XX% square or square XX% of

been has to XX.X%, XX%. occupancy. And a occupancy quarter, basis sequentially we with lease percentage consistent this higher XX at priority and Our reported grow stabilize at points along

basis XXX% our our which adjust points increased basis percentage we the In Foothill as for leased we to quarter, designated for Center, increased third occupied sale to occupancy XX.X% and XX.X%. XX addition, sequentially, in and lease points if held the Research XX

lease higher of average Our our pre-pandemic effective are trailing only improving than with net average. and third economics XX-month XX-month X% stable rents trailing X% our or quarter

average the was year third X quarter We have extend XX-month years, approximately term, XX-month slightly which average XX% lease our above trailing a continued to trailing our and above ago. in

prior XX.X% a area other short-term leases Angeles Palo square on GAAP Alto, spreads totaling cash XX,XXX foot San pay midsized one spreads, rent square cash flat. XX,XXX the reported X in but our GAAP Los and XX.X% Francisco, essentially we and for While rent in in lease and downtown level feet, and

our lengthen effective net spite In TIs on occasional period held of short, up check, comparison to lease rents terms rent as remain pre-pandemic continue have rent spreads. even average in free by and setback in to the and

our to square of pipeline close feet, has increase and leases, LOIs or which to increased, an pipeline, new remained Seattle leases. XX% are part size Quarter-over-quarter, activity those X attributable deals Silicon leasing to and robust XX% XX% in in about million Valley Our including in at in requirement markets. proposals

XXX,XXX at active million we representing XX,XXX feet square of recently in completed a remain XXX,XXX the Seattle XX% from with quarter the feet Washington of XXXX project, a our square Tours X.X total to size feet. date, increase To at that interest range tenants development. have during X our of level indicative are is in which of through nearly seeing which we square requirements,

we by strengthening. momentum our growth brokers only we stabilize asset expect roughly recent meaningful the per occupancy to Across which and market sustain is XXX,XXX our of occupancy our potential on the we next leasability if leasing XXXX office Seattle's the from middle square superior in by quarter, dinner top watching underscores Feedback suggests pipeline year at feet held during with reasonable, enhanced portfolio, quality for the thereafter. tours further recent of

This recently have right North, XXX,XXX with the expire Park the about full year-end. feet feet a lease. to terminate building remaining XXX,XXX includes tenant at square square to We exercised by

foot actively with are include exploring for early options for which discussions asset, square XXX,XXX multiple requirements. XX,XXX this We to tenants

discussions. XX%, deals for expiration which X,XXX coverage, remaining typical for includes expirations and This which accounting is that delayed apart to roughly proposals these Met lease making North, is square or increases given LOIs smaller XX% X not tenants. our leases on decision from average is Our surprising and and Park is feet leases,

to excluding XX% look or X.X held feet of full we square Research building Center, expiring As our Foothill we is which the at XXXX, million sale, ABR. less have lease than for

Our next top and collectively year remaining XX% feet, approximately coverage. totaled we expirations square have XXX,XXX X

roughly square is XXXX in lease X,XXX expiring average feet. our that, Beyond

Turning Note the previously sequentially, our In a percentage the last the excludes year. third during discussed trailing yet XXX basis which quarter, prior in-service stages XX% Glenoaks is vacating single were for down XX lease not tenant data. to there months, XX-month this Studios. reflecting points leased Sunset

increased Griffith the our Park XX.X% and West stage location. up points commercial had a due segments. quarter Quixote to third Hollywood to $X.X in studio we shoots third quarter was as at year was due to to and the our affecting revenue basis XX even sequential Compared million lease ago, Our to sequentially our Quixote a $X.X production levels primarily higher the million compared studio lower transportation average decline quarter, second ancillary percentage

interest have our have increase, but has expressions essentially XX notable increase quarter, stage and contract for seen the currently interest for specific in services in XXXX TV location leases tourist we and film on square inclusive what activity production a or activity in and of production improved. footage improvement coincident We days. all film Sunset our of signed Glenoaks. or transportation our industry includes a of holds, leads subsequent utilization in client with cause Similarly, are to and late XX% stages stage modest TV of XX and and stages This third the

stronger these next optimistic early are year. sustained indicators demand of We are

will Finally, on touch development. I

on We October, Construction purpose-built further have year. anticipated Manhattan. of delivery in the equity for progressing as be end Pier budget next we first Sunset by on is no active XX an the will which project, have development and of studio contributions. X time And studios,

well multiyear active as stages. leading on for or more agreements We with a are one in as studio production discussions other

And call over I'll the with that, Harout. turn to

Thanks, Mark.

million market, resolution entirely the Our $XXX.X block One revenue the third due $XXX.X of to last improved lease the almost in of to related the XXX expiration and partially union XXXX sale revenue following of offset the the million studio by was year. quarter compared of Westside strikes. quarter at third

or was Our third million share $X.XX excluding $XX.X year a $X.XX quarter ago. or compared $XX.X FFO, diluted specified per per million diluted items, share to

a onetime a the $X.X transitioning accounting, noncash $X.XX for tenant of a consisting unqualified million related items of for $X.X a and the loan reserve share quarter basis reporting, $X.X rent cash million million Specified a to third per $X.X deferred diluted transaction-related to swap million revaluation expense. write-off tax straight-line noncash a totaled hedge

lower FFO attributable partner's mostly this market in earlier factors affecting revenue The purchase was noncontrolling interest items, FFO our in the our from year. specified year-over-year of to change excluding and the XXXX interest following

or $XX.X to the million largely diluted AFFO the FFO. $XX.X with quarter affecting per the compared share attributable last diluted third share change per mentioned third million in year, or $X.XX quarter was Our to items previously $X.XX

same-store cash million year, last compared $XXX.X tenant of quarter Market. quarter third at to NOI Our $XX.X the third to move-outs, including million block was mostly the in XXXX due

Turning to our balance sheet.

earlier, paths increase partnerships liquidity, sales, secured As to we asset proactively financings. Victor JV pursuing noted and multiple are including

We have maturing no XXXX. debt November until

capacity cash XX.X%. of share relative our fixed share Our million we value unrestricted comprised facility. of book cash and quarter, net the equivalents credit undrawn our end on $XXX is of the unsecured capped debt $XX XX.X% of million liquidity $XXX and At undepreciated debt our is percentage to and of revolving of of of or third million had

$XXX share have million. million loan $XX of construction which capacity, is of our also We

our to outlook. Turning

quarter, range anticipate to our highlighted. from For to per share as We the Mark improved fourth diluted Victor production for improve quarter the that per $X.XX fourth moderately to to activity third FFO share. compared quarter Quixote and NOI business we results to due $X.XX our diluted expect

increase. mentioned building NOI quarter office shown the occupancy Met early as for Research of with consistent believe full anticipate in having termination and previously levels have office to the studio quarter, another for the portfolios reflecting straight-line held We Park early fourth for expect fourth office lower tenant result December. adjusted third our the Foothill sequential in-service this would North we vacating at remain Center reserves. sale, quarter occupancy rent We in our But designation and for

cash due to are Research XX% a our from XX.X% growth of Foothill removal property NOI pool, a negative solely XX.X%. updating Similarly, same-store to the to to Park negative from range XX% we the same-store

dispositions, activity. always, acquisitions, markets excludes the and/or capital any our of potential outlook As impact financings

to now I'll And Victor. call back turn the

along quarter, leasing, Coast our activity that West outperform are Each are office fundamentals we last executing with we Harout. you, are on office year Thank significantly to and track strengthening. undoubtedly the

side, of of the XX% meaningfully the On tax and L.A. and nearly levels credit our in contracts are have Angeles improving but potential we challenging interest to Los demand. incentives in boost stages proposed City legislation film studio production state or TV stand

And our that, And based sales, factors, partners portfolio JV our on and occupancy and next we entire to start momentum with discussions these are flow the on stabilize believe path asset we cash year. lenders. across and with of positive

have balance achieve and to to objectives. sheet the our business expect We liquidity

Now questions. to with that, we'll be happy take Operator?

with [Operator Instructions] Our Fargo. first question today comes from Blaine Wells Heck

Great.

talk what Just can effort starting at just the an asset drivers rationale like of those rates additional on the the Victor, the side and covenant? just behind behind looks lastly, the kind you maybe sales office can we looking asset sales provide how moves to And you expect accelerated about on expectations Any then cap for securitization? of all should affect there? your

nonrefundable, not which the case. have direct Thanks, Blaine. I'm actual Well, on to date listen, to in them going we sales the not until comment is

capital We is And capital go leasing $XXX improvements As growth at X of look The not X in total with are negotiations we've fit always that got should those between under assets future into the X million. you should of around or under which strategy evaluate we're excess more I long-term or we got that and noncore, how those with our contract. million work in assets, combined may and nonrefundable. may or allocation assets. the the that of contract assets $XXX portfolio said, those

best response the CMBS it's of assets our track. we've do But you the assets. a our first CMBS on from exhausting we energy information structure. for debt very, and the portfolio got -- allocation should that think partners very the on time not They're So year. more JV highest identify We that. I have, I far, not them. allocated as that's first quarter what great around would call early JV and core by and and think, around We're some so from definitive that our quarter, We've how talent X quality touched and we to portfolio.

Suffice all our is to JVs, cap which it's into be this get ownership XX%. past in is roughly around to at to rates say, what want equal don't our in that at I going interest time. to been

intent that the that's aspect. for So

there going right down terms covenants. through that Lastly, to the working We're avenue covenants, be to offensive now, any another in of liquidity we is the on not go confident feel of form on road. us impact and this is for

there. other markets tax movement rate some that affects wondering still run of you more stabilized of from I the second look I this forward come question, Newsom's studio L.A. into of with to We'll I'm much guess thanks the Great. is all out the that studio reversible think of it Governor and whether updates how for of guess commentary your side. proposal? Okay. kind can of credit and changed that has production L.A. on

overall, bank it's it's nationwide. business New are just Well, listen, general, in studio I of on impacted the and and entertainment the strike. California. shift based California, affected not Georgia think been the It's the all York in the uses

terms the still of back to world. of capital L.A., the the moving In l.A. entertainment is

think both as show an sense an some back quarter-over-quarter seeing the for normality. are and and the [ movement sides Bass Newsom remarks industry, Mercury I impetus our of right are prepared from to Governor by of tax to and now a uptick going get credits We on help in ] count us

way the we our direction have I first from track that to on massive facilities really look right through could be it quarter impact. all conversion old now the and a see quarter, operating from businesses, in for and think and onslaught, the the fourth 'XX, the it's is all holes lease the the to

that we're enhanced production here, that what put confident confident right an be we're Gavin the impetus Newsom by going is we're place. to the is in and Maribeth so of also in direction And

it So impactful seen want could just it that domestic to is I it's not yes, follow put overseas, much here think mean, hopefully late I think was. I of a as And that reiterate, and suit anywhere to as where Other in you've pickup for I production, be than and all U.S. than else. would California here greater different of well.

comes with question Alexander Goldfarb next from Piper Sandler. Our

to X going questions. Just

looking your you continuing I And up looking on debt the that all as scheduled -- question Victor, debt the negotiations? NOI, coming at that as sales that how here sit you guess, dollar-for-dollar with on this are expected and be at asset 'XX as you Or of you 'XX far to meaningful that covenants, First, think have maturities, and subject the and some amounts. to will be is Blaine's leasing of do refinanced?

mean that we and what rate, now the see due. the that conversations Alex, in very at very we good market on think I'm fixed to in on on assets I intended those are refinancing, we've to I'm or value place we debt we're don't we're we on And those to going that I not subject comment, but a X a that. where could the negotiations. concerned floating term of and or equity and X, that not a on have sure secured coming now. assets you is response at are be coming right conducive either are looking by due all right that's mean, and got 'XX, listen, about

it before exploration and that executed, feel executed at end get that of we'll well going So the they're we 'XX. confidence all have get we to the

out a into that Okay. talking the like trajectory the that you exposures. the still It the still sounds Hopefully, be like it second far and I are and higher? question a progress, fourth credit needs we're about think has would you giving the Is Hollywood realize about that a quarterly the 'XX there. year? rate guys but sounds that for to quarter, we there a is -- that the the that run little next in overall the year, it but as the And point are look then like The is, studio making that quarterly guidance, $X.XX little leasing is sounds from we is bottomed. number businesses addressed vacancy incentivizes slow. run would to that materially things with is make rate uncovered Or stuff tax some -- recovery next passes for should some

Yes. next I XX year. run $X. at a would for the not as look quarterly rate

see guidance I entertainment have as at impact you at in to do And that hold the in and going, where material in quarter's I a remarks, to place. next the the be are and I said, leased think prepared of that will and Harout as being it back is, up. think to it's was being we're business are the the look as change said of that going on his we change, our some where address put higher. we'll it transactions remarks, in demand I confident year going prepared Hopefully, to secured call. our said full that

So rate into read going yes, as our the being forward. run I wouldn't $X.XX

comes Our question today next with Michael from Griffin Citi.

seems Just fourth to and second, it things maybe better getting for like to the a into the back go quarter. studios are wanted

know similar kind the the think be of relative worry around back, should tax see you But then tax to about that the I production specify is like guide, piece gets have you to about you the increase this fourth enacted? So for political talked Quixote with go to maybe credit credit quarter? could stepping until quarter it the forward is maybe the there third worry we there an this? And in the And to delayed do industry. the beneficial, but you team NOI being strike year, capital assume of fair obviously, the a tax credit the didn't

me latter let the first. So address partner

amount think is not listen, we you to governor The confident come to with of minimal. entertainment result, in would the legislation going it's as by all have industry going place I strong is think be day, is this the as the in business. months, see billion, be it the place of we're That's all tax which that could what the sort anticipation. end We'll $XXX in confident credit the in I And very modifications out but earmarked the the at as be on did coming Michael, 'XX. for voted So for amount of to happens a and pass. the of highest midyear

in mandates Los that back Los in are that The it its proposal levels. it. Angeles. factors Angeles promoting your being I city just are city-wide production in doesn't is to There's in specifics, to at place supporting committee place. they're enhance put a There's already question going to a production There multiple is highest mean place. in that are answer think And to wait until everything tax

I waiting for on level city what think direction, the both is level. directionally, that's were we state on leadership and the and

that is And over frame. years. and that's -- This the see not And short then looking X it because hold medium think will multiple looking we're venues to production this a to for over I going for process. a time over just savings X, people overall, how direction is take in production one X, are at multiple multiple when at to production, they're look done

I say in see outsourcing envision immediately to second the of you're will of going get tailwinds on. to when and So X point a forward Day voted A where lot going it it's production XXXX. us it's and going be have to this some impacted quarter to first, wouldn't

about disclose. maybe price But that's Research back and I circling purchase the foot. were again number Foothill then on you was And can't vector. maybe yet I of set a of square just $XX I million. there $XXX a the transaction know realized think that the portfolio. activity, that part about a of things that on math, my By Center, you Appreciate

XXXX XXXX. acquired you think I around or

the compares that maybe has give to changed now? back around the call how broad the then over some volumes value past, us transaction or And pre-COVID sense of you commentary then? you bought can just So it, until property a valuation when and maybe how portfolio

Yes.

a think be that Let's our short-term lease well cost that expiring impacted help. price favorable term ground forward. that that's into it's per just Stanford very on lease about going us a ground would capital on I candidly, I the that ground dollars foot it to lease. lease talk have foot left would as of read around as viability Foothill is have aspects There's some because existing the portfolio. retenanted wouldn't

we equate and at being So out you transaction that. would the the dollars highest market investments when to sell structure sellers asset. really, strategy transaction in sold not buyer of it's figure unique we to decided I understand the is who what around a of to sort And market, to conditions. looked it that It the and we That the both unique said, relationship. and a that

I those capital think that have earlier, dollars of not an of and acquisition excellent some overall to put of team identifying done of outside is we've the I buyers our of terms down assets. assets. surprised. capital as has patient in assets pleasantly of transaction kind that portfolio In been team buyers type the we of think And been I in kind the some or the activity, said or are And the right our are we're identified We've We, think, appropriate be assets I and patient assets. they're quality expenditures highest are or and not risk in brokers the there that type for investment may and our aware job some road. activity They

them -- have announce been owner-users. been or will we And of some be will have

in specifics. the to assets they're So unique

to the acquisitions. As out. not capital mention unlimited to be access liked Hudson-esque an and a have say, as would I Coast today, had have that prepared we amount we amount wanted would in a of in what to West owned marketplace company seen have tremendous my go I us of the did would that asset said not there's transactions the we offensive in an If in on remarks, the marketplace we would missed we've

to we the identified be that with assets know they where think of gives And a issue. are. going will test where market. out Fed come We've think you'll activity improve kind market the obviously, out the the cap what there, I market timing sort are to indication opportunities and increase So are. are going is. to -- the which we rates to what to 'XX, But financing coming of as It's and you they an in easing, they're truly where think and see and in I real

today next from question Burrows with Sachs. Caitlin Your comes Goldman

guys this the square you about I occupancy pace you quarter kept up in leasing prepared support per think feet about that mid-XXXX. in XXX,XXX talked stabilization how if of could remarks,

are I seeing? pace? seeing, if you're you leasing I of that the wondering how any size on that kind of talk So guess maybe of at you just that that, kind leasing about And like could confident the cadence you're requirements other type stay details that was and can

Yes, Caitlin, feet, pleased I Listen, in of we're the start X indicative were pipeline of really we prepared X.X million quarters made. did only square quarter, very all in. I'll with In of excess most wait, X the as X.X it's quarters remarks and square XXXX, now off. million and feet, we're recent The just but we're consistent. is think right

stabilized to on in just on we're time. the level. I we we're to we've absorption continued do for And some going his time that's execute see some come increase occupancy seeing to 'XX, said Mark As prepared a say remarks, that should in that. positive confident Art probably and comment would why like first we're markets across in to think in in stabilization

Yes.

feet, that is split in remaining the at We're L.A., square square Just what extremely said, is feet Victor we activity. X right areas, square evenly obviously average XXX,XXX Vancouver to year-to-date. feet square square of the square million square across X.X X.X on feet and on finer There's especially now just feet, spread which will put the encouraged Seattle this confident feet than achieve Bay point between more and about. million because a Victor mentioned, feet XXX,XXX XXX,XXX of we're million

already we And ability execute, ahead So definitely we're these. our with of We that. team's to improve can these numbers. improve can

absorption time. time A On seeing Class in for San a we're the positive the the time long Francisco, first in the several absorption we're net seeing Peninsula positive years. absorption, space We're in seeing for in first with

absorption feet was negative a down has averaged the little through Francisco, to X importantly, in bit square Negative XXX,XXX San where feet. million greater More quarter absorption pandemic. a over square

about same over see So to really several the we're see. turn. And excited we the last quarters, what very starting

Got it.

of trying was you about and and prepared the were think. to that, I that on don't a I but speaking I mid-XXXX, I some they positive made a comment or business, was I comment. into about wrote to you remarks, bit about the a rate as I like guys studio take notes development that little things then and them, for did And myself kind you Okay. normalized of to just more being, fast, you Netflix normal wondering something just talk like know, tell closer could the more if for know, don't comment visibility in or

are which Well, uptick seeing the an it's long I we're quantity. is for an streaming now time. And finding a talked uptick quality, in companies in think what we've about

will start correct And so the term. they nothing And agree and than we that's them quarters. they I that move occupancy. hold or light more convert guess, But the shows overnight. greenlit prior production to to how just the a that green is them, emotion, we once think

And so dissimilar not direct with occupiers have that. of other with that seeing than too face. Netflix our our studio And is we correlation partners we're

just up. we're activity So seeing that pick

question Kim comes next with BMO. from Your John

NOI, reduce about versus expect that XX% overhead you in G&A And your of $X last and a earnings? you do on versus normalize realize expected it NOI in I to guidance guidance, is still kind look million went can the at at there forward XX% front year. to but earnings and going a on anything it's you the it's recovery down year-to-date cost but year-over-year. to closer increase when it your Your basis

question, Good is This Sure. Harout. John.

as constantly ways G&A our guidance. our revised by first, So evidenced looking are reduce to for

primarily that the is of increase that shares Secondly, in reflective didn't performing. incentive-based related be to are in to 'XX. XXXX the in not we added shares we going cashing. how G&A It's really the have They're

NOI. savings at I to fairly yes, And leases and in we all and to our completing we see are likes leases But of, terms have, going looking that our And that's G&A. increase future the the that, John, we're quickly. and think we of as these it's evaluating G&A constantly rightsize correlated of itself

mix. of metric comparing went went imagine footage basis. quarter with square ABR that on would looking But just some short-term happened? see associated third wanted lease leases just fourth quarter. same that some expiration that feet in The second XXX,XXX a in why is extended of schedule the with these exactly that that's expired and up the happened. the rent down quarter I no be to with Or it? And what last that your the Okay. almost expiring at I square and to

I the that listen, I but almost Amazon a Met at get their termination, XXX% our can exercised Park to in mean North you guide was we -- that's number. announced detail, and

Okay.

got that quarter? -- the the moved got to exploration up moved up So fourth

Correct.

Your Katie next with Jefferies. question comes Elders from

This Peter is the on actually line.

some to comments on expirations. coverage back on go of to wanted Just your the

Art. one or maybe for So Mark

you and said success through you what's you have of remaining on largest translating help a in expirations you remind then? think us XX, have historically just to renewal think sort define XX% sort getting actually us in coverage coverage coverage. for Can rate how the when I you tax a of lease

is This Art. Yes.

deals is a right? rate. to coverage the success will you leases, And a LOIs in So on in make give percentage distinction proposals,

I a in we think of lease. have that been on XX% our have we take at deals to that teams about clip negotiation XX%,

Okay.

then rate way the about a the good XX% of kind success that of way think sort to on it? is gauge like it So to is a XX%

Yes.

then Harout in else call make center? anything the Okay. same-store your the Research of want was Got comments. Or heard Foothill it. sure simply change in And to one removal there? Was in I I just other, the guide there out guide to correctly just

been the we same. Without that, the have that's driver. Yes, would biggest

comes with Rich question Wedbush. next Anderson from Your

assets. bought XX in back Valley when square looking you million just Peninsula the So XX feet, portfolio Silicon

the don't XX, you've your sales happened at see would the of is over going looking Is in interest million a in non-San in has disclosure remain you excluding maybe Area I apples-to-apples square years feet. significant sort Bay got XX your portfolio? that XX in your the where know what San terms markets, on of the past Just Francisco, Francisco X.X that Page those but in future forward? assets assets if appetite portion that's what of

Peninsula you is in I sure not of was the of square said think about It was size not which and It and the whether math feet. like of half. XX not on in I'm marketplace over assets the the number But the almost million. I your quality X that a their you those that the XX. we have of because million or the Rich, assets, the X.X time. regardless, question portfolio your peninsula given know, of the say earmarked is that would activity that for assets potential on one currently period disposition about

as So assets markets other well. the majority in of the are

a very of. being marketplace high-quality excited of ahead, there's said, very reverse that portfolio we They that prudent reverse that going a there's some exit marketplace. are past some had are Richard. the in owners assets. I I commented the area. the in We not -- to Shores guidance we that we've could think part those had assets if are was Redwood the that to part That a increase. we in some And we of on not And still say that's be Go X assets on exercise couple would in

of company I Yes. enough. the Fair at was at the time looking Okay. deal. that combined

range? stabilize that curious I'm happened. recapture correct at potential going second just the Or that the number is, forward? question resulted wrong, at Victor, that How improve a EBITDA point has of obviously terms me as what for of studio had we're I'm EBITDA going that in studio some looking saying all forward? said in business business as has and it of have of in $XXX you X.X. -- up? lost the recapture Has in million things the And the that is wrong along apologies and of because to So then I'm gone possible stabilized that if XX. starts way

it. Got in? Mark, to jump mean, do you I want

EBITDA. you in XXXX. consolidated the our on the it, hard historically million on potential studios in basis to Yes. the that fact on same-store on mind historical contributed it, around Rich, perfectly pointed we XXX. $XX -- -- have call to recreate have that around, that, On the view on what call we formas a Quixote have it million pro generate, is to based Historically,

got those work. Palmas to to filled. We've combined studios continue they those stages the strike, million So X or We to X up that Las spoken X to Sunset EBITDA. back $XXX are got The being stages the during essentially of hold well. currently some of same-store back are

see we're 'XX. get expecting that As improves, production into those to absorbed

to us That Quixote. takes

show And the number interest by the studio with they're to the across on store, at the get to got count being, have, show results in and we seeing fourth was October. in by of counts you're got, of we the that results, combination If XX% run million clip. quarter judging think can XXs. level, $XX we rate time here 'XX as in that improve, EBITDA continue so annualized the the And improve And They quarter the we the through. you're going about around think counts we that Quixote the -- the XXX-ish should For those third a at that show platform. same be right EBITDA out, services in have looking were come to We we've we tours low indications will that $XX across of level. holes for million business. demonstrated the back business. to

Your next from Catherwood comes BTIG. Tom question with

X-part for you. Maybe starting a Seattle with Art, on question

then First, near demand the First over your Xst if how What Pioneer XX is progress term? in this all? And year. impacting are Washington XXX availability Jackson you sublease for at for second, to over Square, at made expectations XXX

consistent is square space, significant us of XXX,XXX high-quality start with feet this market in most to across is XXX,XXX not alone, sublease. seen much of just Seattle, square the feet, fundamental and compete supply I'll improvement San and one portfolio, positive more In all shifts we've which sublease where in Seattle. Francisco The Sure. quarter allowing the the our is of effectively. reduction respectively,

great we're is which we've success under at that a XX%. starting foot was there's in to X XX,XXX feet. out Seattle, floor And going increases work demand in touring talked to right there And square feel in The some there clay spaces, just second that we're X market there square we've larger story smaller is kind wheelhouse VSP significantly. The of XXX, the to headway yes, see that We very we're to foot very, XX% real about talked starting them on shortly. about, lease our our demand grow about tenants, to tenant those high see We floor question are XX,XXX XX,XXX program as was constantly. it in is XX,XXX plates, thousands, constantly. square certainly to out make

Excellent. that it hub looks opened a Have Atlanta. that, is market? to me, for market been It in assets you Quixote response hub in is moving And new for West appreciate one for visible in Coast? you staff in Mark. more from new spec then and like to kind last demand of Art. Or I maybe the nature? And that the

time It's Atlanta of at not an presence purchase always inception a new hub. there I was mean the the at from Quixote.

fleet a the percent content there. as over terms seen has that plus years, utilized. of station obviously the its I of in is has know, domestic nothing there's well We've So the It don't of our creation. share new. fleet And been very creation, of Atlanta status XX-ish roughly, Atlanta of recognition got landscape content overall overall

in improve So out. it Atlanta see up domestically, when to things pick go utilization back likewise we that expect

businesses, best We is, good attributes by definition, transportable. the of the also news is that the freedom. The have fleet acuity

have could it, demand if the in so could facilities we for requisite So we enhance growing we there Atlanta, we our fleet do. see

this we're the improve see border at to point, across And just things domestically? waiting

has -- of presence the I referring be That X well a think incredibly, because we a fleet has bright new been spots new in domestically. incredibly Albukeriti. you to have Albuquerque might relatively done

comes Burzinski today from Street. Green Dylan question next Our with

end year's longer. figures. quarters, But versus several or the it over office to achieve last last any think in case you like terms able guys year occupancy about the seem flat of talked being the I doesn't that ending of

some and So of throughout being that just momentum flat sort front? guys on leasing seems no It picked what curious, months new feel maybe can you I then to up realize -- like incorporated of out several figure of the changed guys like last can related. the anything now? you Amazon leasing reach of why But that's in is occupancy talk has news just two, with the occupancy just has trying year-over-year. you changed or like if has anything trying all, where about to kind longer sort in at year And then so. probably if

be more So just thoughts on that would helpful.

the we changes. expects Yes. would I feet. be year-end in above And We at XXX,XXX the impact would factors. on roughly levels. XX the for occupancy but have developments, X sale to held for the mean termination early out X then One, our increased -- a we're improved by confident expirations you by at Amazon singled for basis been finish by X or it's of And occupancy flat, foothill slightly year-end, was of expected point year we current X percentage. both those

expect the to trying factors vacate. is Coast? parallel from RTO companies to something on we're what as guys to the leasing swift activity tech in to especially we direct in And in and touching what up, with office necessarily be like seems momentum West leasing the due pickup the you whether causing just with return out pretty saw it picked else. that correlation guess not I some improvement was one things I downsizing RTO you of to the mean, guys tech minimal upon cyclical larger York are then landscape, demand, figure like one or a the on more a I saw seeing is across of improvement does It New that mean me. you I Amazon. guess how an happen

still seems talk other So sit some you as can mean you with and Amazon associated still about the impact guys in companies giving larger seeing like momentum mean I are look our is it you're back RTO, of space. in today of at here offsetting I tech the that? sort any

playing takes the that of guys next XX about you some kind how you talk just months? can and So see puts and of the out over

I phenomenal is right? A remarks, subspace, Art we in downturn a versus the it, much prepared and taken. it pretty so mean, and our classify macro-wise, really you Dylan, eighth mentioned And -- seen in So B, mentioned place you've if all

And so macro that RTO. on a to of will move some form correlate

we in date, X just Coast companies Dell then Amazon be who's think on the back from go momentum days do on how I think, the suite then will place East West is similar need? I And so so there? much we right? shift the is And until and was we for that the And seen a I January getting we've back, follow not and tech X, is back, mean do Coast. where on is that feel the the are Salesforce.

they likes but entire want being one want they're want the on the and And of what space a security availability by that of saying, the do of we to versus to Coast egress that. of is they I tech all increase tech or coming mean these West the and East think is are Coast control "Hey, the realizing their have a lot being tech and entire finance we companies space. the finance the ingress need I out side their that desperate building, and side,

pick challenging to a So they more be it's and it little choose want which making at. to

are think going available marketplace, much I a the once single-tenant that to assets way. off see that you're then are today bigger those assets come

going that's think feel we see we're basis, quarter macro impact second, confident what of So 'XX. that I we're on third by a to and

future right, on even exactly looks want be talk in the potentially tenants that what right? to they And doing return they of in growth Dylan. ever the to good as more because office process right? of we're top than conversations to leasing their as the footprint decide space, growth let Victor yields, about we're not said they're with trying least say, just inference, So that, may having me it and this about future how can secure even like

with Stanley. comes from Ronald Your Kamden next Morgan question

quick X Just ones.

the or looking of you next the Just year. of beginning of that Is at really down? bottoming it occupancy year. next not Has -- expect until in think seasonality? at margin the drove middle should maybe what we quarter, occupancy pressure? Or the the NOI that mentioned sort that more And was declines margin I

I'm office on sorry, on properties? studio to pressure the are you properties, market the referring

On properties. the office

Got it.

of the I there middle basically is think the quarter. impact in the actually leasing

we tenant, we market some X our rolled like of down there. and -- that we So what -- said, that off office the drove at

then Obviously, just was on with question you have And a Great. Okay. still leases follow-up X my Amazon. just them. second

space? with sort on Just Any on how update what are I conversations their plans they're wondering that leases. those utilizing of a like? if lot those, or Clearly, term of they're but was

active in say, to our talking Obviously, future details, growth portfolio. we conversations. throughout Amazon Pacific the we're get us existing on suffice Northwest and don't is but assets into Ron, some to

So they on asset within our in thought grow and ability candidly their Met not that we're surprised was The get were going something just We markets Park them remember, they and did were we renew portfolio turn But to the expand around North confident short continue portfolio. we that. to be back. very frame a to their looking -- would for end. of it the probably year beginning for versus a reason were of and time to reason, outside the

this at time. further There are no questions

Chairman, back So I'd Coleman, turn like closing call for to remarks. CEO to and Victor the

support Thanks for your rest appreciate so much for participating today Pacific. and evening. Have the good of Hudson a

concludes conference call. today's This

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