A $1.1B loan to Hudson Pacific Properties and Blackstone backed by studio properties partially leased to Netflix has passed into special servicing ahead of an Aug. 9 maturity date.

“The borrower and the special servicer have since agreed on terms for a longer-term extension, along with a 30-day extension, to finalize documentation,” HPP Chief Financial Officer Harout Diramerian told investors on a Wednesday call. 

Hudson Pacific Properties and Blackstone share responsibility for the $1.1B CMBS loan, with HPP on the hook for roughly half of that amount, or $566M.

Executives declined to answer additional questions from analysts about the loan extension or its terms while on the call.

The CMBS loan is backed by Sunset Gower Studios, Sunset Las Palmas Studios and Sunset Bronson Studios and office properties 6040 Sunset, Harlow and Netflix-leased Icon, Cue and Epic.

Those Hollywood studio properties are 95.5% leased, HPP President Mark Lamas said on the call. 

Netflix’s 722K SF lease at those Hollywood office properties is set to expire in 2031. HPP has sidestepped questions about Netflix and its future at HPP properties on previous earnings calls. Executives were noncommittal on Wednesday but did allude to speculation that Netflix was moving on from the Hollywood buildings. 

“All we can say is that our relationship and conversations are completely ongoing, to the contrary of what other people are talking about,” HPP CEO Victor Coleman said. 

Office leasing at HPP improved in the second quarter, due in part to an 894K SF lease with the city and county of San Francisco at 1455 Market St. The weighted average of the lease term in that deal is 24 years. 

Including that San Francisco deal, HPP signed 1.3M SF of new and renewal office leases, with 61% new leases and 39% renewals. It also has about 50% coverage on approximately 400K SF of leases set to expire through the remainder of the year.

In Los Angeles, HPP is focusing on the Westside, where leasing activity and rents are on the rise. At HPP’s Fourth and Traction, in the Arts District, a PayPal subsidiary is set to vacate about 130K SF, but the REIT has signed on tenants to backfill 80% of that space.  

The company is also progressing on its efforts to bring the Quixote soundstage and production rentals business into profitability, reducing its losses from $18.6M in 2024 to about $4M in the second quarter. 

Of Quixote’s 10 existing leases, HPP has gotten out of five of them and is in negotiations to exit the remaining five. Once the exits are complete, Quixote will be a fleet business with about 1,000, largely LA-based vehicles, Lamas said. 

HPP’s studio stages were 74.6% leased during the second quarter, up 180 basis points from the previous quarter. 

HPP leadership anticipates a shift in the tide for stages, citing improved show counts in New York and pointing to “relatively stable” numbers in LA, and anticipating more business as the industry works its way through a backlog of tax-credit-approved projects. 

With entertainment unions the Screen Actors Guild-American Federation of Television and Radio Artists, Writers Guild and Directors Guild all ratifying new four-year agreements, “the labor risk that drove much of the industry's recent volatility is now off the table,” Coleman said.