Hudson Pacific Office Leasing Looking Up, But Big Loan Maturity Looms
Hudson Pacific Properties reported improved office occupancy and positive office leasing news, especially in the Bay Area, where artificial intelligence tenants are on the hunt for space.
But the office REIT was in the red again in the first three months of this year, reporting a net loss of $53.1M — though its results were an improvement over the nine-figure loss it posted last quarter and the $74.7M loss it reported in the first quarter of 2025.
“We're making the hard calls and continue to ensure our overhead is controlled, our disposition pipeline remains on track, and we have ample liquidity and a clear executable path to FFO growth through the balance of the year,” HPP CEO Victor Coleman told investors on a Thursday earnings call.
HPP signed over 500K SF of office leases in the first quarter of this year, its third consecutive quarter of occupancy gains. Of the office leases signed in the quarter, 49% were new leases.
The Bay Area was a particular beacon of hope for the company. San Francisco had 2.3M SF of absorption, the sixth consecutive quarter for occupancy growth in that market, according to HPP. Leasing activity there reached 4.1M SF, with AI tenants accounting for almost 60% of total volume. Asking rents at HPP’s San Francisco properties rose nearly 4% year-over-year.
Studio soundstages were also on the rise. In-service studio stages were 72.8% leased on a trailing three-month basis, an increase from 74.5% leased in the fourth quarter of 2025. Stages were 72.5% leased on a trailing 12-month basis, also up from 69.1% at the end of last year.
HPP’s Sunset Gower, Sunset Bronson and Sunset Las Palmas studio stages, all in Hollywood, were 97% leased, a 280-basis-point increase from the previous quarter.
“The leasing results made it clear these are the right assets in the right locations,” Coleman said.
HPP increased its full-year 2026 core funds from operations to $1.10 to $1.18 per diluted share, an increase of roughly 4 cents from the prior range of 96 cents to $1.06. The REIT’s studio business factored into the decision to raise the guidance. Leadership expects to reap the monetary benefits of its decision to cease Quixote operations in Atlanta and end Quixote’s leases for soundstage space.
HPP purchased the Quixote business in 2022 for $360M but had struggled to turn a profit from the acquisition. HPP is working to make Quixote “earnings-neutral” by the end of this year, Coleman said.
Another major milestone coming up later this year is the maturity of a $1.1B CMBS loan for which HPP and Blackstone are responsible. HPP’s share of the debt is $566M, filings show. The debt is backed by Sunset Gower Studios, Sunset Las Palmas Studios and Sunset Bronson Studios as well as office properties 6040 Sunset, Harlow and Netflix-leased Icon, Cue and Epic.
Netflix is HPP’s second-largest tenant, occupying 722K SF, and its lease is slated to expire in 2031. Reports that Netflix was interested in buying the Studio City studio campus, Radford Studio Center, sparked concerns about the streaming media giant potentially decamping from its Hollywood offices to Radford.
Coleman brushed aside those concerns, noting that the office space at the facility was long-term leased to CBS.
“Whether or not they buy it is really up to them,” he said. “But it's not going to interfere with our relationship with them and our conversations with them going forward.”
Further details on HPP's negotiations with Netflix, and how it will deal with an upcoming loan maturity that could be significantly impacted by Netflix’s decision-making, were scarce.
“We continue to work with our partner on a resolution for the Hollywood Media Portfolio loan maturity,” HPP Chief Financial Officer Harout Diramerian said. “Conversations with the lender, as well as those with Netflix regarding their long-term space needs, are productive and ongoing.”
