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Hudson Pacific Properties is keeping a close eye on the Writers Guild of America strike and planning for uncertainties ahead because of it.
In a presentation for Nareit's REIT Week this month, HPP outlined how it will buffer itself from the impacts of the strike, the duration of which is uncertain. The real estate income trust owns 90 soundstages in Los Angeles and in the United Kingdom.
HPP plans to grow revenue streams that are less likely to be affected by the strike, including unscripted shoots such as reality television shows, as well as commercial shoots and live events. It is also looking for ways to trim the "significant" fixed costs that studios have, but it didn't elaborate on the cutbacks it was exploring.
HPP said production had already slowed as streaming media giants braced for the strike and pivoted to cleaning the docket of existing content. The slowdown accounted for a roughly 30% decline in production across movies and television in the first quarter of this year, HPP said, citing data from FilmLA.
The REIT said that about 44% of revenue from its studios in service now and from Quixote, the production services company that HPP bought in September, are under multiyear agreements. Many of those agreements, it said, include "guaranteed minimums" for HPP to account for the usual ebb and flow of production under regular circumstances.
HPP also anticipates that once the strike is resolved, there could be a post-strike ramp-up that offers an opportunity to recoup losses from the strike period, similar to the production surge that the industry saw after pandemic lockdowns lifted.
In May, HPP announced it would cut its dividend 40% to 50% because of the strike and its potential impacts. It also said it wouldn't give guidance for the rest of the year.
The last writers strike was estimated to have cost $2B for California alone, according to a study by the Milken Institute, but the strike has affected production across the country.
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