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Blackstone, Hudson To Form $1.6B Movie Studio JV

Blackstone Group is negotiating with Hudson Pacific Properties, which owns television and movie production facilities in Southern California, to form a $1.6B joint venture focused on those kinds of properties.

Hollywood Sign; Los Angeles; California, skyline

Blackstone Property Partners will acquire a 49% interest in Hudson Pacific’s three SoCal studios and five on-lot or adjacent office properties totaling 2.2M SF. Hudson Pacific will retain a 51% stake and be responsible for day-to-day operations of the facilities.

The deal would allow Hudson Pacific to further expand its portfolio of studio facilities, The Wall Street Journal reports. It would also represent a continued shift by major real estate investor Blackstone away from hotels and retail and toward less conventional real estate holdings.

In April, Blackstone President and Chief Operating Officer Jon Gray cited properties that support online content creation as of interest to the investment giant, among other nonstandard property types.

"As we’ve seen again and again through cycles, strong companies and properties recover and flourish given time," Gray said during the company's most recent earnings call. "We’ve also been emphasizing deployment in faster-growing sectors over the past several years, which are showing great resiliency in this environment. Key themes include: logistics, life sciences, cloud migration and online content creation, all of which are holding up quite well and are expected to outperform."

Much of Hudson Pacific's portfolio, including such production studios as Sunset Las Palmas, Sunset Gower and Sunset Bronson, is in the Hollywood neighborhood of Los Angeles, Commercial Observer reports. The company also owns 36 soundstages, as well as West Coast office buildings.

Netflix has used some of Hudson Pacific's facilities to make some of its original content.

The Blackstone-Hudson Pacific deal, which will close in the third quarter of this year, wouldn't be the first major investment in SoCal production facilities in recent years. Hackman Capital Partners has been particularly active in the space.

Last year, Carlyle Group sold its TV studio and production services platform to Hackman Capital for $650M. The facility, Manhattan Beach Studios, totals 22 acres and is headquarters of director James Cameron's Lightstorm Entertainment. HBO, ABC and Disney also use the facility.

CBS Corp. sold Television City in Los Angeles, a 25-acre TV studio and broadcast facility, to Hackman Capital in 2018 for $750M.

Hackman Capital Senior Vice President Tyler Friedman told Bisnow last year that his company plans to acquire more production facilities.

"Going forward, we are focused on acquiring additional iconic and best-in-class studio properties in Los Angeles, New York, Vancouver, Toronto and London," he said.

UPDATE, JUNE 29, 2:30 P.M. ET: This story has been updated to include details about the Blackstone-Pacific Hudson joint venture, including a revised valuation of $1.6B.