Attached files
| file | filename |
|---|---|
| 8-K - 8-K - Hudson Pacific Properties, Inc. | q4-20138xk.htm |
| EX-99.1 - EXHIBIT - Hudson Pacific Properties, Inc. | q4-2013ex991.htm |
HUDSON PACIFIC PROPERTIES, INC.
FOURTH QUARTER 2013
Supplemental Operating and Financial Data
This Supplemental Operating and Financial Data contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Future events and actual results, financial and otherwise, may differ materially from the results discussed in the forward-looking statements. You should not rely on forward-looking statements as predictions of future events. Forward-looking statements involve numerous risks and uncertainties that could significantly affect anticipated results in the future and, accordingly, such results may differ materially from those expressed in any forward-looking statement made by us. These risks and uncertainties include, but are not limited to: adverse economic and real estate developments in Northern and Southern California and the Pacific Northwest; decreased rental rates or increased tenant incentives and vacancy rates; defaults on, early terminations of, or non-renewal of leases by tenants; increased interest rates and operating costs; failure to generate sufficient cash flows to service our outstanding indebtedness; difficulties in identifying properties to acquire and completing acquisitions; failure to successfully integrate pending and recent acquisitions; failure to successfully operate acquired properties and operations; failure to maintain our status as a REIT under the Internal Revenue Code of 1986, as amended; possible adverse changes in laws and regulations; environmental uncertainties; risks related to natural disasters; lack or insufficient amount of insurance; inability to successfully expand into new markets or submarkets; risks associated with property development; conflicts of interest with our officers; changes in real estate and zoning laws and increases in real property tax rates; the consequences of any possible future terrorist attacks; and other risks and uncertainties detailed in our Annual Report on Form 10-K for the year ended December 31, 2012 filed with the Securities and Exchange Commission on March 14, 2013. You are cautioned that the information contained herein speaks only as of the date hereof and Hudson Pacific Properties, Inc. assumes no obligation to update any forward-looking information, whether as a result of new information, future events or otherwise. For a discussion of important risks related to Hudson Pacific Properties, Inc.’s business, and an investment in its securities, including risks that could cause actual results and events to differ materially from results and events referred to in the forward-looking information, see the discussion under the caption “Risk Factors” in Hudson Pacific Properties, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2012 filed with the Securities and Exchange Commission on March 14, 2013.
Hudson Pacific Properties, Inc.
Fourth Quarter 2013 Supplemental Operating and Financial Data
TABLE OF CONTENTS
PAGE | ||
COMPANY BACKGROUND AND CORPORATE DATA | ||
CONSOLIDATED FINANCIAL RESULTS | ||
Consolidated Balance Sheets | ||
Consolidated Statements of Operations | ||
Funds from Operations and Adjusted Funds from Operations | ||
Debt Summary | ||
PORTFOLIO DATA | ||
Same-Store Analysis | ||
Reconciliation to Net Income | ||
Stabilized Office Portfolio Summary, Occupancy and In-place Rents | ||
Development, Redevelopment, Lease-up Properties, Properties Held-For-Sale, and Land Properties | ||
Media & Entertainment Portfolio Summary, Occupancy, and In-place Rents | ||
Fifteen Largest Office Tenants | ||
Office Portfolio Leasing Activity | ||
Office Lease Expirations — Annual | 18 | |
Quarterly Office Lease Expirations — Next Four Quarters | 19 | |
Office Portfolio Diversification | 20 | |
DEFINITIONS | 21 | |
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Hudson Pacific Properties, Inc.
Fourth Quarter 2013 Supplemental Operating and Financial Data
COMPANY BACKGROUND
CORPORATE 11601 Wilshire Boulevard, Sixth Floor, Los Angeles, California 90025 (310) 445-5700 | |||||
BOARD OF DIRECTORS | |||||
Victor J. Coleman | Theodore R. Antenucci | Jonathan M. Glaser | |||
Chairman of the Board and Chief Executive Officer, Hudson Pacific Properties, Inc. | President and Chief Executive Officer, Catellus Development Corporation | Managing Member, JMG Capital Management LLC | |||
Richard B. Fried | Mark D. Linehan | Robert M. Moran, Jr. | |||
Managing Member, Farallon Capital Management, L.L.C. | President and Chief Executive Officer, Wynmark Company | Co-founder and Co-owner, FJM Investments LLC | |||
Barry A. Porter | Patrick Whitesell | ||||
Managing General Partner, Clarity Partners L.P. | Co-Chief Executive, WME Entertainment | ||||
EXECUTIVE AND SENIOR MANAGEMENT | |||||
Victor J. Coleman | Mark T. Lammas | Christopher Barton | |||
Chief Executive Officer | Chief Financial Officer | EVP, Operations and Development | |||
Alexander Vouvalides | Dale Shimoda | Kay L. Tidwell | |||
Chief Investment Officer | EVP, Finance | EVP, General Counsel and Secretary | |||
Arthur X. Suazo | Harout Diramerian | Drew Gordon | |||
VP, Leasing | Chief Accounting Officer | SVP, Pacific Northwest | |||
Elva Hernandez | Gary Hansel | ||||
VP, Controller | SVP, Regional Operations | ||||
INVESTOR RELATIONS | |||||
Addo Communications (310) 829-5400 Email Contact: lasseg@addocommunications.com Please visit our corporate Web site at: www.hudsonpacificproperties.com | |||||
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Hudson Pacific Properties, Inc.
Fourth Quarter 2013 Supplemental Operating and Financial Data
CORPORATE DATA
(unaudited, $ in thousands, except per share data)
Hudson Pacific Properties, Inc. (NYSE: HPP) (also referred to herein as the “Company,” “we,” “us,” or “our”) is a full-service, vertically integrated real estate company focused on owning, operating and acquiring high-quality office properties in select growth markets primarily in Northern and Southern California and the Pacific Northwest. Our investment strategy is focused on high barrier-to-entry, in-fill locations with favorable, long-term supply-demand characteristics. These markets include Los Angeles, Orange County, San Diego, San Francisco, Silicon Valley, the East Bay, and the Pacific Northwest, which we refer to as our target markets. This Supplemental Operating and Financial Data supplements the information provided in our reports filed with the Securities and Exchange Commission. We maintain a Web site at www.hudsonpacificproperties.com.
Number of office properties owned | 24 | ||
Office properties square feet (in thousands) | 5,293 | ||
Stabilized office properties leased rate as of December 31, 2013(1) | 95.4 | % | |
Stabilized office properties occupied rate as of December 31, 2013(1)(2) | 90.1 | % | |
Number of media & entertainment properties owned | 2 | ||
Media & entertainment square feet (in thousands) | 884 | ||
Media & entertainment occupied rate as of December 31, 2013(3) | 69.9 | % | |
Number of land assets owned | 4 | ||
Land assets estimated developable square feet (in thousands)(4) | 1,587 | ||
Market capitalization (in thousands): | |||
Total debt(5) | $ | 925,988 | |
Series A Preferred Units | 10,475 | ||
Series B Preferred Stock | 145,000 | ||
Common equity capitalization(6) | 1,308,517 | ||
Total market capitalization | $ | 2,389,980 | |
Debt/total market capitalization | 38.7 | % | |
Series A preferred units & debt/total market capitalization | 39.2 | % | |
Common stock data (NYSE:HPP): | |||
Range of closing prices(7) | $ 19.03-22.29 | ||
Closing price at quarter end | $ | 21.87 | |
Weighted average fully diluted common stock\units outstanding (in thousands)(8) | 59,220 | ||
Shares of common stock\units outstanding on December 31, 2013 (in thousands)(9) | 59,832 | ||
__________________________
(1) | Stabilized office properties leased rate and occupied rate excludes the development, redevelopment, lease-up properties, and properties held-for-sale described on page 14. |
(2) | Represents percent leased less signed leases not yet commenced. |
(3) | Percent occupied for media and entertainment properties is the average percent occupied for the 12 months ended December 31, 2013. |
(4) | Estimated developable square footage for land assets represents management’s estimate of developable square feet, the majority of which remains subject to receipt of entitlement approvals that have not yet been obtained. |
(5) | Total debt excludes non-cash loan premium/discount. |
(6) | Common equity capitalization represents the shares of common stock (including unvested restricted shares) and common units of partnership interests, or common units, in Hudson Pacific Properties, L.P., or the Operating Partnership, not owned by us multiplied by the closing price of our stock at the end of the period. |
(7) | For the quarter ended December 31, 2013. |
(8) | For the quarter ended December 31, 2013, diluted shares represent ownership in our Company through shares of common stock, common units and other convertible or exchangeable instruments. While our series A preferred units became exchangeable on June 29, 2013, the conversion of the series A preferred units into shares of our common stock would be anti-dilutive based on the average daily share price of our common stock over the three months ended December 31, 2013, and therefore the fully diluted common stock\units do not include shares issuable upon exchange of our series A preferred units. |
(9) | This amount represents fully diluted common stock and common units (including unvested restricted stocks) at December 31, 2013. While our series A preferred units became exchangeable on June 29, 2013, the conversion of the series A preferred units into shares of our common stock would be anti-dilutive based on the average daily share price of our common stock over the three months ended December 31, 2013, and therefore the fully diluted common stock\units do not include shares issuable upon exchange of our series A preferred units. |
4
CONSOLIDATED FINANCIAL RESULTS
5
Hudson Pacific Properties, Inc.
Fourth Quarter 2013 Supplemental Operating and Financial Data
Consolidated Balance Sheets
(Unaudited, in thousands, except share data)
December 31, 2013 | December 31, 2012 | ||||||
ASSETS | |||||||
Total investment in real estate, net | $ | 1,918,988 | $ | 1,340,361 | |||
Cash and cash equivalents | 30,356 | 18,904 | |||||
Restricted cash | 16,750 | 14,322 | |||||
Accounts receivable, net | 8,253 | 12,167 | |||||
Notes receivable | — | 4,000 | |||||
Straight-line rent receivables | 22,030 | 12,732 | |||||
Deferred leasing costs and lease intangibles, net | 112,204 | 81,010 | |||||
Deferred finance costs, net | 8,577 | 8,175 | |||||
Interest rate contracts | 192 | 71 | |||||
Goodwill | 8,754 | 8,754 | |||||
Prepaid expenses and other assets | 5,170 | 4,588 | |||||
Assets associated with real estate held for sale | — | 54,608 | |||||
TOTAL ASSETS | $ | 2,131,274 | $ | 1,559,692 | |||
LIABILITIES AND EQUITY | |||||||
Notes payable | $ | 931,308 | $ | 582,085 | |||
Accounts payable and accrued liabilities | 27,511 | 18,578 | |||||
Below-market leases, net | 45,441 | 31,560 | |||||
Security deposits | 6,022 | 5,291 | |||||
Prepaid rent | 7,651 | 11,276 | |||||
Obligations associated with real estate held for sale | — | 1,205 | |||||
TOTAL LIABILITIES | $ | 1,017,933 | $ | 649,995 | |||
6.25% series A cumulative redeemable preferred units of the Operating Partnership | 10,475 | 12,475 | |||||
EQUITY | |||||||
Hudson Pacific Properties, Inc. stockholders’ equity: | |||||||
Preferred stock, $0.01 par value, 10,000,000 authorized; 8.375% series B cumulative redeemable preferred stock, $25.00 liquidation preference, 5,800,000 shares outstanding at December 31, 2013 and December 31, 2012, respectively | $ | 145,000 | $ | 145,000 | |||
Common stock, $0.01 par value, 490,000,000 authorized, 57,230,199 shares and 47,496,732 shares outstanding at December 31, 2013 and December 31, 2012, respectively | 572 | 475 | |||||
Additional paid-in capital | 903,984 | 726,605 | |||||
Accumulated other comprehensive loss | (997 | ) | (1,287 | ) | |||
Accumulated deficit | (45,113 | ) | (30,580 | ) | |||
Total Hudson Pacific Properties, Inc. stockholders’ equity | $ | 1,003,446 | $ | 840,213 | |||
Non-controlling interest—members in Consolidated Entities | 45,683 | 1,460 | |||||
Non-controlling common units in the Operating Partnership | 53,737 | 55,549 | |||||
TOTAL EQUITY | $ | 1,102,866 | $ | 897,222 | |||
TOTAL LIABILITIES AND EQUITY | $ | 2,131,274 | $ | 1,559,692 | |||
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Hudson Pacific Properties, Inc.
Fourth Quarter 2013 Supplemental Operating and Financial Data
Consolidated Statements of Operations (Unaudited, in thousands, except share and per share data) | |||||||||||||||
Three Months Ended December 31, | Twelve Months Ended December 31, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Revenues | |||||||||||||||
Office | |||||||||||||||
Rental | $ | 35,174 | $ | 24,298 | $ | 124,839 | $ | 88,459 | |||||||
Tenant recoveries | 8,253 | 6,173 | 25,870 | 22,029 | |||||||||||
Parking and other | 4,260 | 2,778 | 14,732 | 9,840 | |||||||||||
Total office revenues | $ | 47,687 | $ | 33,249 | $ | 165,441 | $ | 120,328 | |||||||
Media & entertainment | |||||||||||||||
Rental | $ | 5,841 | $ | 6,267 | $ | 23,003 | $ | 23,598 | |||||||
Tenant recoveries | 566 | 527 | 1,807 | 1,598 | |||||||||||
Other property-related revenue | 3,267 | 3,936 | 15,072 | 14,733 | |||||||||||
Other | 56 | 58 | 235 | 204 | |||||||||||
Total media & entertainment revenues | $ | 9,730 | $ | 10,788 | $ | 40,117 | $ | 40,133 | |||||||
Total revenues | $ | 57,417 | $ | 44,037 | $ | 205,558 | $ | 160,461 | |||||||
Operating expenses | |||||||||||||||
Office operating expenses | $ | 19,243 | $ | 14,622 | $ | 63,434 | $ | 50,599 | |||||||
Media & entertainment operating expenses | 6,016 | 6,347 | 24,149 | 24,340 | |||||||||||
General and administrative | 4,757 | 3,749 | 19,952 | 16,497 | |||||||||||
Depreciation and amortization | 16,994 | 17,144 | 70,063 | 54,758 | |||||||||||
Total operating expenses | $ | 47,010 | 41,862 | $ | 177,598 | $ | 146,194 | ||||||||
Income from operations | $ | 10,407 | $ | 2,175 | $ | 27,960 | $ | 14,267 | |||||||
Other expense (income) | |||||||||||||||
Interest expense | $ | 6,797 | $ | 5,094 | $ | 25,470 | $ | 19,071 | |||||||
Interest income | (10 | ) | (157 | ) | (272 | ) | (306 | ) | |||||||
Acquisition-related expenses | 454 | 236 | 1,446 | 1,051 | |||||||||||
Other income | (140 | ) | (57 | ) | (99 | ) | (92 | ) | |||||||
Total other expense (income) | $ | 7,101 | $ | 5,116 | $ | 26,545 | $ | 19,724 | |||||||
Income (loss) from continuing operations | $ | 3,306 | $ | (2,941 | ) | $ | 1,415 | $ | (5,457 | ) | |||||
(Loss) income from discontinued operations | (37 | ) | (30 | ) | 1,571 | 451 | |||||||||
Impairment loss from discontinued operations | — | — | (5,580 | ) | — | ||||||||||
Net (loss) income from discontinued operations | $ | (37 | ) | $ | (30 | ) | $ | (4,009 | ) | $ | 451 | ||||
Net income (loss) | $ | 3,269 | $ | (2,971 | ) | $ | (2,594 | ) | $ | (5,006 | ) | ||||
Net income attributable to preferred stock and units | $ | (3,200 | ) | $ | (3,231 | ) | $ | (12,893 | ) | $ | (12,924 | ) | |||
Net income attributable to restricted shares | (71 | ) | (69 | ) | (300 | ) | (295 | ) | |||||||
Net (income) loss attributable to non-controlling interest in Consolidated Entities | (78 | ) | 21 | 321 | 21 | ||||||||||
Net (income) loss attributable to common units in the Operating Partnership | (3 | ) | 310 | 633 | 1,014 | ||||||||||
Net loss attributable to Hudson Pacific Properties, Inc. common stockholders | $ | (83 | ) | $ | (5,940 | ) | $ | (14,833 | ) | $ | (17,190 | ) | |||
Basic and diluted per share amounts: | |||||||||||||||
Net loss from continuing operations attributable to common stockholders | $ | — | $ | (0.13 | ) | $ | (0.20 | ) | $ | (0.42 | ) | ||||
Net (loss) income from discontinued operations | — | — | (0.07 | ) | 0.01 | ||||||||||
Net loss attributable to common stockholders’ per share—basic and diluted | $ | — | $ | (0.13 | ) | $ | (0.27 | ) | $ | (0.41 | ) | ||||
Weighted average shares of common stock outstanding—basic and diluted | 56,271,285 | 46,690,196 | 55,182,647 | 41,640,691 | |||||||||||
Dividends declared per share of common stock | $ | 0.125 | $ | 0.125 | $ | 0.500 | $ | 0.500 | |||||||
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Hudson Pacific Properties, Inc.
Fourth Quarter 2013 Supplemental Operating and Financial Data
FUNDS FROM OPERATIONS AND ADJUSTED FUNDS FROM OPERATIONS
(unaudited, in thousands, except per share data)
Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Funds From Operations (FFO)(1) | ||||||||||||||||
Net income (loss) | $ | 3,269 | $ | (2,971 | ) | $ | (2,594 | ) | $ | (5,006 | ) | |||||
Adjustments: | ||||||||||||||||
Depreciation and amortization of real estate assets | 16,994 | 17,144 | 70,063 | 54,758 | ||||||||||||
Depreciation and amortization—discontinued operations | — | 458 | 789 | 2,266 | ||||||||||||
Impairment loss | — | — | 5,580 | — | ||||||||||||
FFO attributable to non-controlling interest in Consolidated Entities | (1,132 | ) | (17 | ) | (2,243 | ) | (17 | ) | ||||||||
Net income attributable to preferred stock and units | (3,200 | ) | (3,231 | ) | (12,893 | ) | (12,924 | ) | ||||||||
FFO to common stockholders and unit holders | $ | 15,931 | $ | 11,383 | $ | 58,702 | $ | 39,077 | ||||||||
Specified items impacting FFO: | ||||||||||||||||
Acquisition-related expenses | $ | 454 | $ | 236 | $ | 1,446 | $ | 1,051 | ||||||||
Supplemental property tax expenses/(savings) | — | — | (797 | ) | 918 | |||||||||||
Lease termination revenue | (753 | ) | — | (1,591 | ) | — | ||||||||||
FFO (excluding specified items) to common stockholders and unit holders | $ | 15,632 | $ | 11,619 | $ | 57,760 | $ | 41,046 | ||||||||
Weighted average common stock/units outstanding—diluted | 59,220 | 49,679 | 58,165 | 44,693 | ||||||||||||
FFO per common stock/unit—diluted | $ | 0.27 | $ | 0.23 | $ | 1.01 | $ | 0.87 | ||||||||
FFO (excluding specified items) per common stock/unit—diluted | $ | 0.26 | $ | 0.23 | $ | 0.99 | $ | 0.92 | ||||||||
Adjusted Funds From Operations (AFFO)(1) | ||||||||||||||||
FFO | $ | 15,931 | $ | 11,383 | $ | 58,702 | $ | 39,077 | ||||||||
Adjustments: | ||||||||||||||||
Straight-line rent | (2,434 | ) | (119 | ) | (10,066 | ) | (3,365 | ) | ||||||||
Amortization of prepaid rent(2) | — | 327 | 109 | 1,294 | ||||||||||||
Amortization of above market and below market leases, net | (1,684 | ) | (1,209 | ) | (6,028 | ) | (3,564 | ) | ||||||||
Amortization of below market ground lease | 62 | 62 | 247 | 247 | ||||||||||||
Amortization of lease buy-out costs | (1 | ) | 23 | 36 | 91 | |||||||||||
Amortization of deferred financing costs and loan premium/discount, net | 65 | 250 | 486 | 1,126 | ||||||||||||
Recurring capital expenditures, tenant improvements and lease commissions | (11,952 | ) | (7,906 | ) | (47,805 | ) | (17,844 | ) | ||||||||
Non-cash compensation expense | 1,480 | 1,014 | 6,454 | 4,212 | ||||||||||||
AFFO | $ | 1,467 | $ | 3,825 | $ | 2,135 | $ | 21,274 | ||||||||
Dividends paid to common stock and unit holders | $ | 7,446 | $ | 6,207 | $ | 29,607 | $ | 23,199 | ||||||||
AFFO payout ratio | 507.6 | % | 162.3 | % | 1,386.7 | % | 109.0 | % | ||||||||
______________________________
(1) | See page 21 for Management’s Statements on Funds From Operations (FFO) and Adjusted Funds From Operations (AFFO). |
(2) | Represents the difference between rental revenue recognize in accordance with accounting principles generally accepted in the United States (GAAP) based on the amortization of the prepaid rent liability relating to the KTLA lease at our Sunset Bronson property compared to scheduled cash rents received in connection with such prepayment. |
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Hudson Pacific Properties, Inc.
Fourth Quarter 2013 Supplemental Operating and Financial Data
DEBT SUMMARY
(unaudited, $ in thousands)
The following table sets forth information with respect to our outstanding indebtedness as of December 31, 2013.
Annual | Balance at | ||||||||||||||
Debt | Outstanding | Interest Rate(1) | Debt Service(1) | Maturity Date | Maturity | ||||||||||
Unsecured Revolving Credit Facility | $ | 155,000 | LIBOR+1.55% to 2.20% | $ | — | 8/3/2016 | $ | 155,000 | |||||||
Mortgage loan secured by 3401 Exposition Boulevard(2) | 13,233 | LIBOR+3.80% | — | 5/31/2014 | 13,233 | ||||||||||
Mortgage loan secured by 6922 Hollywood Boulevard(3) | 40,396 | 5.58% | 3,230 | 1/1/2015 | 39,426 | ||||||||||
Mortgage loan secured by 275 Brannan | 15,000 | LIBOR+2.00% | — | 10/5/2015 | 15,000 | ||||||||||
Mortgage loan secured by Pinnacle II(4) | 88,540 | 6.313% | 6,754 | 9/6/2016 | 85,301 | ||||||||||
Mortgage loan secured by 901 Market(5) | 49,600 | LIBOR+2.25% | — | 10/31/2016 | 49,600 | ||||||||||
Mortgage loan secured by Element LA(6) | 566 | LIBOR+1.95% | — | 11/1/2017 | 566 | ||||||||||
Mortgage loan secured by Sunset Gower/Sunset Bronson(7) | 97,000 | LIBOR+2.25% | — | 2/11/2018 | 97,000 | ||||||||||
Mortgage loan secured by Rincon Center(8) | 105,853 | 5.134% | 7,195 | 5/1/2018 | 97,673 | ||||||||||
Mortgage loan secured by First & King(9) | 95,000 | LIBOR+1.60% | — | 8/31/2018 | 90,188 | ||||||||||
Mortgage loan secured by Met Park North(10) | 64,500 | LIBOR+1.55% | — | 8/1/2020 | 64,500 | ||||||||||
Mortgage loan secured by First Financial(11) | 43,000 | 4.58% | 2,002 | 2/1/2022 | 36,799 | ||||||||||
Mortgage loan secured by 10950 Washington(12) | 29,300 | 5.316% | 2,639 | 3/11/2022 | 24,632 | ||||||||||
Mortgage loan secured by Pinnacle I(13) | 129,000 | 3.954% | 5,172 | 11/7/2022 | 117,190 | ||||||||||
Subtotal | $ | 925,988 | |||||||||||||
Unamortized loan premium, net(14) | 5,320 | ||||||||||||||
Total | $ | 931,308 | |||||||||||||
______________________________
(1) | Interest rate with respect to indebtedness is calculated on the basis of a 360-day year for the actual days elapsed, excluding the amortization of loan fees and costs. |
(2) | This loan was assumed on May 22, 2013 in connection with the closing of our acquisition of the 3401 Exposition Boulevard property. |
(3) | This loan was assumed on November 22, 2011 in connection with the closing of our acquisition of the 6922 Hollywood Boulevard property. This loan is amortizing based on a 30-year amortization schedule. |
(4) | This loan was assumed on June 14, 2013 in connection with the contribution of the Pinnacle II building to the Company’s joint venture with M. David Paul & Associates/Worthe Real Estate Group. This loan bore interest only for the first five years. Beginning with the payment due October 6, 2011, monthly debt service includes annual debt amortization payments based on a 30-year amortization schedule. |
(5) | On October 29, 2012, we obtained a loan for our 901 Market property pursuant to which we borrowed $49,600 upon closing, with the ability to draw up to an additional $11,900 for budgeted base building, tenant improvements, and other costs associated with the renovation and lease-up of that property. |
(6) | We have the ability to draw up to $65,500 for budgeted site-work, construction of a parking garage, base building, tenant improvement, and leasing commission costs associated with the renovation and lease-up of the property. |
(7) | On March 16, 2011, we purchased an interest rate cap in order to cap one-month LIBOR at 3.715% with respect to $50,000 of the loan through February 11, 2016. On January 11, 2012 we purchased an interest rate cap in order to cap one-month LIBOR at 2.00% with respect to $42,000 of the loan through February 11, 2016. Effective August 22, 2013, the terms of this loan were amended to increase the outstanding balance from $92,000 to $97,000, reduce the interest rate from LIBOR plus 3.50% to LIBOR plus 2.25%, and extend the maturity date from February 11, 2016 to February 11, 2018. |
(8) | This loan is amortizing based on a 30-year amortization schedule. |
(9) | This loan bears interest only for the first two years. Beginning with the payment due August 1, 2015, monthly debt service will include annual debt amortization payments of $1,604 based on a 30-year amortization schedule. |
(10) | This loan bears interest only at a rate equal to one-month LIBOR plus 1.55%. The full loan amount is subject to an interest rate contract that swapped one-month LIBOR to a fixed rate of 2.1644% through the loan's maturity on August 1, 2020. |
(11) | This loan bears interest only for the first two years. Beginning with the payment due March 1, 2014, monthly debt service will include principal payments based on a 30-year amortization schedule, for total annual debt service of $2,639. |
(12) | This loan is amortizing based on a 30-year amortization schedule. |
(13) | This loan bears interest only for the first five years. Beginning with the payment due December 6, 2017, monthly debt service will include annual debt amortization payments based on a 30-year amortization schedule. |
(14) | Represents unamortized amount of the non-cash mark-to-market adjustment on debt associated with 6922 Hollywood Boulevard and Pinnacle II. |
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PORTFOLIO DATA
10
Hudson Pacific Properties, Inc.
Fourth Quarter 2013 Supplemental Operating and Financial Data
SAME-STORE ANALYSIS(1)
(unaudited, $ in thousands)
Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||||||||||||
2013 | 2012 | % change | 2013 | 2012 | % change | |||||||||||||||||
Same-store office statistics | ||||||||||||||||||||||
Number of properties | 13 | 13 | 13 | 13 | ||||||||||||||||||
Rentable square feet | 3,197,547 | 3,197,547 | 3,197,547 | 3,197,547 | ||||||||||||||||||
Ending % leased | 95.5 | % | 94.0 | % | 1.6 | % | 95.5 | % | 94.0 | % | 1.6 | % | ||||||||||
Ending % occupied | 88.7 | % | 88.5 | % | 0.2 | % | 88.7 | % | 88.5 | % | 0.2 | % | ||||||||||
Quarterly average % occupied | 87.5 | % | 89.0 | % | (1.7 | )% | 89.7 | % | 90.6 | % | (1.0 | )% | ||||||||||
Same-store media statistics | ||||||||||||||||||||||
Number of properties | 2 | 2 | 2 | 2 | ||||||||||||||||||
Rentable square feet | 874,562 | 874,562 | 874,562 | 874,562 | ||||||||||||||||||
TTM average % occupied | 69.9 | % | 74.0 | % | (5.5 | )% | 69.9 | % | 74.0 | % | (5.5 | )% | ||||||||||
Quarterly average % occupied | 70.1 | % | 76.6 | % | (8.5 | )% | 69.9 | % | 74.0 | % | (5.5 | )% | ||||||||||
Same-store net operating income — GAAP basis | ||||||||||||||||||||||
Total office revenues | $ | 29,177 | $ | 22,795 | 28.0 | % | $ | 116,686 | (3 | ) | $ | 91,200 | 27.9 | % | ||||||||
Total media revenues | 9,560 | 10,629 | (10.1 | ) | 39,113 | 39,514 | (1.0 | ) | ||||||||||||||
Total revenues | $ | 38,737 | $ | 33,424 | 15.9 | % | $ | 155,799 | $ | 130,714 | 19.2 | % | ||||||||||
Total office expense | $ | 12,944 | $ | 10,333 | 25.3 | % | $ | 47,529 | $ | 40,713 | (2) | 0.2 | ||||||||||
Total media expense | 5,699 | 6,320 | (9.8 | ) | 23,714 | (4 | ) | 24,205 | (2.0 | ) | ||||||||||||
Total property expense | $ | 18,643 | $ | 16,653 | 11.9 | % | $ | 71,243 | $ | 64,918 | 9.7 | % | ||||||||||
Same-store office net operating income — GAAP basis | $ | 16,233 | $ | 12,462 | 30.3 | % | $ | 69,157 | $ | 50,487 | 37.0 | % | ||||||||||
Same-store media net operating income — GAAP basis | 3,861 | 4,309 | (10.4 | ) | 15,399 | 15,309 | 0.6 | |||||||||||||||
Same-store total property net operating income — GAAP basis | $ | 20,094 | $ | 16,771 | 19.8 | % | $ | 84,556 | $ | 65,796 | 28.5 | % | ||||||||||
Same-store net operating income — Cash basis | ||||||||||||||||||||||
Total office revenues | $ | 27,643 | $ | 22,656 | 22.0 | % | $ | 108,606 | (3 | ) | $ | 87,644 | 23.9 | % | ||||||||
Total media revenues | 9,559 | 10,624 | (10.0 | ) | 39,081 | 39,467 | (1.0 | ) | ||||||||||||||
Total revenues | $ | 37,202 | $ | 33,280 | 11.8 | % | $ | 147,687 | $ | 127,111 | 16.2 | % | ||||||||||
Total office expense | $ | 12,882 | $ | 10,271 | 25.4 | % | $ | 47,282 | $ | 39,548 | 19.6 | % | ||||||||||
Total media expense | 5,699 | 6,320 | (9.8 | ) | 23,714 | (4 | ) | 24,205 | (2.0 | ) | ||||||||||||
Total property expense | $ | 18,581 | $ | 16,591 | 12.0 | % | $ | 70,996 | $ | 63,753 | 11.4 | % | ||||||||||
Same-store office net operating income — Cash basis | $ | 14,761 | $ | 12,385 | 19.2 | % | $ | 61,324 | $ | 48,096 | 27.5 | % | ||||||||||
Same-store media net operating income — Cash basis | 3,860 | 4,304 | (10.3 | ) | 15,367 | 15,262 | 0.7 | |||||||||||||||
Same-store total property net operating income — Cash basis | $ | 18,621 | $ | 16,689 | 11.6 | % | $ | 76,691 | $ | 63,358 | 21.0 | % | ||||||||||
______________________________
(1) | “Same store” is defined as all of the properties owned and included in our stabilized portfolio as of January 1, 2012 and still owned and included in the stabilized portfolio as of December 31, 2013. |
(2) | Amount excludes a $918 tax charge disclosed in the Q2-2012 earnings release. |
(3) | Amount excludes a $1,082 early lease termination fee income disclosed in the Q1-2013 earnings release. |
(4) | Amount excludes a $797 property tax savings disclosed in the Q1-2013 earnings release. |
11
Hudson Pacific Properties, Inc.
Fourth Quarter 2013 Supplemental Operating and Financial Data
RECONCILIATION OF SAME-STORE PROPERTY NET OPERATING INCOME TO GAAP NET INCOME (LOSS)
(unaudited, $ in thousands)
Three Months Ended December 31, | Twelve Months Ended December 31, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Reconciliation to net income | |||||||||||||||
Same-store office revenues — Cash basis | $ | 27,643 | $ | 22,656 | $ | 108,606 | $ | 87,644 | |||||||
GAAP adjustments to office revenues — Cash basis | 1,534 | 139 | 8,080 | 3,556 | |||||||||||
Early lease termination fee adjustment to office revenues | 753 | — | 1,834 | — | |||||||||||
Same-store office revenues — GAAP basis | $ | 29,930 | $ | 22,795 | $ | 118,520 | $ | 91,200 | |||||||
Same-store media revenues — Cash basis | $ | 9,559 | $ | 10,624 | $ | 39,081 | $ | 39,467 | |||||||
GAAP adjustments to media revenues — Cash basis | 1 | 5 | 32 | 47 | |||||||||||
Same-store media revenues — GAAP basis | $ | 9,560 | $ | 10,629 | $ | 39,113 | $ | 39,514 | |||||||
Same-store property revenues — GAAP basis | $ | 39,490 | $ | 33,424 | $ | 157,633 | $ | 130,714 | |||||||
Same-store office expenses — Cash basis | $ | 12,882 | $ | 10,271 | $ | 47,282 | $ | 39,548 | |||||||
GAAP adjustments to office expenses — Cash basis | 62 | 62 | 247 | 247 | |||||||||||
One-time expense adjustments per definition | — | — | — | 918 | |||||||||||
Same-store office expenses — GAAP basis | $ | 12,944 | $ | 10,333 | $ | 47,529 | $ | 40,713 | |||||||
Same-store media expenses — Cash basis | $ | 5,699 | $ | 6,320 | $ | 23,714 | $ | 24,205 | |||||||
GAAP adjustments to media expenses — Cash basis | — | — | — | — | |||||||||||
Property tax savings adjustment to media expenses | — | — | (797 | ) | — | ||||||||||
Same-store media expenses — GAAP basis | $ | 5,699 | $ | 6,320 | $ | 22,917 | $ | 24,205 | |||||||
Same-store property expenses — GAAP basis | $ | 18,643 | $ | 16,653 | $ | 70,446 | $ | 64,918 | |||||||
Same-store net operating income — GAAP basis | $ | 20,847 | $ | 16,771 | $ | 87,187 | $ | 65,796 | |||||||
Non-Same Store GAAP net operating income | 11,311 | 6,297 | 30,788 | 19,726 | |||||||||||
General and administrative | (4,757 | ) | (3,749 | ) | (19,952 | ) | (16,497 | ) | |||||||
Depreciation and amortization | (16,994 | ) | (17,144 | ) | (70,063 | ) | (54,758 | ) | |||||||
Income from operations | $ | 10,407 | $ | 2,175 | $ | 27,960 | $ | 14,267 | |||||||
Interest expense | (6,797 | ) | (5,094 | ) | (25,470 | ) | (19,071 | ) | |||||||
Interest income | 10 | 157 | 272 | 306 | |||||||||||
Acquisition-related expenses | (454 | ) | (236 | ) | (1,446 | ) | (1,051 | ) | |||||||
Other expenses (income) | 140 | 57 | 99 | 92 | |||||||||||
Impairment loss from discontinued operations | — | — | (5,580 | ) | — | ||||||||||
Income from discontinued operations | (37 | ) | (30 | ) | 1,571 | 451 | |||||||||
Net income | $ | 3,269 | $ | (2,971 | ) | $ | (2,594 | ) | $ | (5,006 | ) | ||||
12
Hudson Pacific Properties, Inc.
Fourth Quarter 2013 Supplemental Operating and Financial Data
STABILIZED OFFICE PORTFOLIO SUMMARY, OCCUPANCY, AND IN-PLACE RENTS(1)
(unaudited)
Percent of Total | Percent Occupied(3) | Percent Leased(3) | Annualized Base Rent(4) | Annualized Base Rent Per Square Foot(4) | Monthly Rent Per Square Foot | |||||||||||||||||||
County | Square Feet(2) | |||||||||||||||||||||||
Seattle | ||||||||||||||||||||||||
Met Park North | 190,748 | 4.7 | % | 95.4 | % | 95.4 | % | $ | 4,702,751 | $ | 25.85 | $ | 2.15 | |||||||||||
Subtotal | 190,748 | 4.7 | % | 95.4 | % | 95.4 | % | $ | 4,702,751 | $ | 25.85 | $ | 2.15 | |||||||||||
San Francisco | ||||||||||||||||||||||||
Rincon Center | 580,850 | 14.2 | % | 69.8 | % | 88.8 | % | $ | 16,263,997 | $ | 40.09 | $ | 3.34 | |||||||||||
1455 Market Street | 1,012,012 | 24.8 | 88.0 | 96.7 | 18,821,822 | 21.14 | 1.76 | |||||||||||||||||
875 Howard Street | 286,270 | 7.0 | 97.9 | 99.4 | 7,019,003 | 25.05 | 2.09 | |||||||||||||||||
222 Kearny Street | 148,797 | 3.6 | 91.6 | 91.6 | 4,900,281 | 35.96 | 3.00 | |||||||||||||||||
625 Second Street | 137,018 | 3.4 | 89.6 | 100.0 | 5,391,747 | 43.91 | 3.66 | |||||||||||||||||
275 Brannan Street | 54,673 | 1.3 | 100.0 | 100.0 | 2,897,669 | 53.00 | 4.42 | |||||||||||||||||
Subtotal | 2,219,620 | 54.4 | % | 85.1 | % | 94.9 | % | $ | 55,294,519 | $ | 29.26 | $ | 2.44 | |||||||||||
Los Angeles | ||||||||||||||||||||||||
First Financial | 222,423 | 5.5 | % | 95.8 | % | 95.8 | % | $ | 7,284,917 | $ | 34.20 | $ | 2.85 | |||||||||||
Technicolor Building | 114,958 | 2.8 | 100.0 | 100.0 | 4,549,302 | 39.57 | 3.30 | |||||||||||||||||
Del Amo Office Building | 113,000 | 2.8 | 100.0 | 100.0 | 3,069,070 | 27.16 | 2.26 | |||||||||||||||||
9300 Wilshire | 61,224 | 1.5 | 96.2 | 98.0 | 2,398,198 | 40.71 | 3.39 | |||||||||||||||||
10950 Washington | 159,024 | 3.9 | 100.0 | 100.0 | 5,190,720 | 32.64 | 2.72 | |||||||||||||||||
604 Arizona | 44,260 | 1.1 | 100.0 | 100.0 | 1,779,252 | 40.20 | 3.35 | |||||||||||||||||
6922 Hollywood | 205,523 | 5.0 | 92.2 | 92.2 | 7,963,981 | 42.04 | 3.50 | |||||||||||||||||
10900 Washington | 9,919 | 0.2 | 100.0 | 100.0 | 339,176 | 34.19 | 2.85 | |||||||||||||||||
Pinnacle I | 393,777 | 9.7 | 91.7 | 91.7 | 14,829,638 | 41.05 | 3.42 | |||||||||||||||||
Pinnacle II | 231,864 | 5.7 | 99.2 | 99.2 | 8,637,927 | 37.56 | 3.13 | |||||||||||||||||
Subtotal | 1,555,972 | 38.1 | % | 96.0 | % | 96.1 | % | $ | 56,042,181 | $ | 37.52 | $ | 3.13 | |||||||||||
San Diego | ||||||||||||||||||||||||
Tierrasanta | 112,300 | 2.8 | % | 96.4 | % | 96.4 | % | $ | 1,569,572 | $ | 14.50 | $ | 1.21 | |||||||||||
Subtotal | 112,300 | 2.8 | % | 96.4 | % | 96.4 | % | $ | 1,569,572 | $ | 14.50 | $ | 1.21 | |||||||||||
TOTAL | 4,078,640 | 100.0 | % | 90.1 | % | 95.4 | % | $ | 117,609,023 | $ | 32.01 | $ | 2.67 | |||||||||||
_____________________________
(1) | Our stabilized portfolio excludes undeveloped land, development and redevelopment properties currently under construction or committed for construction, “lease-up” properties and properties “held for sale”. As of December 31, 2013, we had no office development property under construction, three office redevelopment properties (Element LA, 3401 Exposition, and 1861 Bundy) under construction, three lease-up properties (901 Market Street, First & King, and Northview) and no properties held for sale. We define “lease-up” properties as properties we recently purchased, developed, or redeveloped that have not yet reached 92% occupancy and are within one year following purchase and cessation of major construction activities, as applicable. |
(2) | Square footage for office properties has been determined by management based upon estimated leasable square feet, which may be less or more than the Building Owners and Managers Association, or BOMA, rentable area. Square footage may change over time due to remeasurement or releasing. |
(3) | Percent occupied for office properties is calculated as (i) square footage under commenced leases as of December 31, 2013, divided by (ii) total square feet, expressed as a percentage. Percent leased for office properties includes uncommenced leases. |
(4) | Rent data for our office properties is presented on an annualized basis. Annualized base rent for office properties is calculated by multiplying (i) base rental payments (defined as cash base rents (before abatements)) under commenced leases as of December 31, 2013, by (ii) 12. Annualized base rent per square foot for the office properties is calculated as (i) annualized base rent divided by (ii) square footage under commenced leases as of December 31, 2013. Annualized base rent does not reflect tenant reimbursements. |
13
Hudson Pacific Properties, Inc.
Fourth Quarter 2013 Supplemental Operating and Financial Data
DEVELOPMENT, REDEVELOPMENT, LEASE-UP PROPERTIES, AND PROPERTIES HELD-FOR-SALE(1)
(unaudited)
Annualized Base Rent Per Square Foot(4) | Monthly Rent Per Square Foot | |||||||||||||||||||||||
Percent of Total | Percent Occupied(3) | Percent Leased(3) | Annualized Base Rent(4) | |||||||||||||||||||||
County | Square Feet(2) | |||||||||||||||||||||||
Seattle | ||||||||||||||||||||||||
First & King | 472,223 | 38.9 | % | 90.5 | % | 90.5 | % | $ | 9,130,740 | $ | 21.37 | $ | 1.78 | |||||||||||
Northview | 182,229 | 15.0 | 83.3 | 83.3 | 3,119,304 | 20.56 | 1.71 | |||||||||||||||||
Subtotal | 654,452 | 53.9 | % | 88.5 | % | 88.5 | % | $ | 12,250,044 | $ | 21.16 | $ | 1.76 | |||||||||||
San Francisco | ||||||||||||||||||||||||
901 Market Street | 212,319 | 17.5 | % | 54.5 | % | 76.9 | % | $ | 3,435,511 | $ | 29.69 | $ | 2.47 | |||||||||||
Subtotal | 212,319 | 17.5 | % | 54.5 | % | 76.9 | % | $ | 3,435,511 | $ | 29.69 | $ | 2.47 | |||||||||||
Los Angeles | ||||||||||||||||||||||||
Element LA(5) | 247,545 | 20.4 | % | — | % | 100.0 | % | $ | — | $ | — | $ | — | |||||||||||
3401 Exposition(6) | 63,376 | 5.2 | — | 100.0 | — | — | — | |||||||||||||||||
1861 Bundy(5) | 36,492 | 3.0 | — | 100.0 | — | — | — | |||||||||||||||||
Subtotal | 347,413 | 28.6 | % | — | % | 100.0 | % | $ | — | $ | — | $ | — | |||||||||||
TOTAL | 1,214,184 | 100.0 | % | 57.2 | % | 89.7 | % | $ | 15,685,555 | $ | 22.58 | $ | 1.88 | |||||||||||
LAND PROPERTIES
County | Estimated Developable Square Feet(7) | Percent of Total | ||||
Los Angeles | ||||||
Sunset Bronson—Lot A | 273,913 | 17.3 | % | |||
Sunset Bronson—Redevelopment | 389,740 | 24.6 | ||||
Sunset Gower— Redevelopment | 423,396 | 26.7 | ||||
Element LA | 500,000 | 31.5 | ||||
TOTAL | 1,587,049 | 100.0 | % | |||
______________________________
(1) | Excludes stabilized properties. As of December 31, 2013, we had no office development property under construction, three office redevelopment properties (Element LA, 3401 Exposition, and 1861 Bundy) under construction, three lease-up properties (901 Market Street, First & King, and Northview) and no properties held for sale. We define “lease-up” properties as properties we recently purchased, developed, or redeveloped that have not yet reached 92% occupancy and are within one year following purchase and cessation of major construction activities, as applicable. |
(2) | Estimated developable square footage for office properties has been determined by management based upon estimated leasable square feet, which may be less or more than the BOMA rentable area. Square footage may change over time due to remeasurement or releasing. |
(3) | Percent occupied for office properties is calculated as (i) square footage under commenced leases as of December 31, 2013, divided by (ii) total square feet, expressed as a percentage. Percent leased for office properties includes uncommenced leases. |
(4) | Rent data for our office properties is presented on an annualized basis. Annualized base rent for office properties is calculated by multiplying (i) base rental payments (defined as cash base rents (before abatements)) under commenced leases as of December 31, 2013, by (ii) 12. Annualized base rent per square foot for the office properties is calculated as (i) annualized base rent divided by (ii) square footage under commenced lease as of December 31, 2013. Annualized base rent does not reflect tenant reimbursements. |
(5) | Element LA and 1861 Bundy are subject to a 15-year lease with Riot Games, Inc. for all 247,545 square feet at Element LA and 36,492 square feet at 1861 Bundy. The lease was executed on November 4, 2013. Commencement of the lease is scheduled for the second quarter of 2015. |
(6) | 3401 Exposition is subject to a 12-year lease with Deluxe Entertainment Services Inc. for all 63,376 square feet. The lease was executed on October 22, 2013. Commencement of the lease is scheduled for the third quarter of 2014. |
(7) | Estimated developable square footage for land assets represents management’s estimate of developable square feet, the majority of which remains subject to entitlement approvals that have not yet been obtained. |
14
Hudson Pacific Properties, Inc.
Fourth Quarter 2013 Supplemental Operating and Financial Data
MEDIA & ENTERTAINMENT PORTFOLIO SUMMARY, OCCUPANCY, AND IN-PLACE RENTS
Property | Square Feet(1) | Percent of Total | Percent Leased(2) | Annual Base Rent(3) | Annual Base Rent Per Leased Square Foot(4) | ||||||||||||
Sunset Gower | 570,470 | 64.5 | % | 65.3 | % | $ | 12,270,624 | $ | 32.92 | ||||||||
Sunset Bronson | 313,723 | 35.5 | 78.1 | 8,733,969 | 35.63 | ||||||||||||
TOTAL | 884,193 | 100.0 | % | 69.9 | % | $ | 21,004,593 | $ | 34.00 | ||||||||
______________________________
(1) | Square footage for media and entertainment properties has been determined by management based upon estimated gross square feet which, may be less or more than the Building Owners and Managers Association, or BOMA, rentable area. Square footage may change over time due to remeasurement or releasing. |
(2) | Percent leased for media and entertainment properties is the average percent leased for the 12 months ended December 31, 2013. |
(3) | Annual base rent for media and entertainment properties reflects actual base rent for the 12 months ended December 31, 2013, excluding tenant reimbursements. |
(4) | Annual base rent per leased square foot for the media and entertainment properties is calculated as (i) annual base rent divided by (ii) square footage under lease as of December 31, 2013. |
15
Hudson Pacific Properties, Inc.
Fourth Quarter 2013 Supplemental Operating and Financial Data
FIFTEEN LARGEST OFFICE TENANTS
Tenant | Number of Leases | Number of Properties | Lease Expiration | Total Leased Square Feet | Percent of Rentable Square Feet | Annualized Base Rent(1) | Percent of Annualized Base Rent | ||||||||||||
Warner Bros. Entertainment | 1 | 1 | 12/31/2021 | 230,000 | 4.3 | % | $ | 8,637,927 | 6.5 | % | |||||||||
Warner Music Group | 1 | 1 | 12/31/2019 | 195,166 | 3.7 | 7,881,178 | 5.9 | ||||||||||||
EMC Corporation(2) | 2 | 2 | Various | 294,756 | 5.6 | 7,033,054 | 5.3 | ||||||||||||
Bank of America(3) | 1 | 1 | Various | 502,233 | 9.5 | 6,432,454 | 4.8 | ||||||||||||
Square | 1 | 1 | 9/27/2023 | 202,606 | 3.8 | 6,322,405 | 4.7 | ||||||||||||
AIG(4) | 1 | 1 | Various | 140,564 | 2.7 | 6,183,793 | 4.6 | ||||||||||||
GSA(5) | 4 | 3 | Various | 168,393 | 3.2 | 5,350,456 | 4.0 | ||||||||||||
NFL Enterprises | 2 | 2 | 6/30/2017 | 137,305 | 2.6 | 4,704,997 | 3.5 | ||||||||||||
Fox Interactive Media, Inc. | 1 | 1 | 3/31/2017 | 104,897 | 2.0 | 4,594,278 | 3.4 | ||||||||||||
Technicolor Creative Services USA, Inc. | 1 | 1 | 5/31/2020 | 114,958 | 2.2 | 4,549,302 | 3.4 | ||||||||||||
Clear Channel | 1 | 1 | 9/30/2016 | 107,715 | 2.0 | 4,479,985 | 3.4 | ||||||||||||
Salesforce.com(6) | 1 | 1 | Various | 93,028 | 1.8 | 4,093,232 | 3.1 | ||||||||||||
Amazon | 1 | 1 | 11/30/2023 | 139,824 | 2.6 | 3,669,637 | 2.8 | ||||||||||||
Capital One | 1 | 1 | 2/28/2019 | 133,148 | 2.5 | 3,269,711 | 2.5 | ||||||||||||
Saatchi & Saatchi North America, Inc. | 1 | 1 | 12/31/2019 | 113,000 | 2.1 | 3,069,070 | 2.3 | ||||||||||||
TOTAL | 20 | 19 | 2,677,593 | 50.6 | % | $ | 80,271,479 | 60.2 | % | ||||||||||
______________________________
(1) | Annualized base rent is calculated by multiplying (i) base rental payments (defined as cash base rents (before abatements)) under commenced leases as of December 31, 2013, by (ii) 12. Annualized base rent does not reflect tenant reimbursements. |
(2) | EMC expirations by property and square footage: (1) 66,510 square feet at 875 Howard Street expiring on June 30, 2019; and (2) 228,246 square feet at First & King expiring on December 31, 2023. |
(3) | We have completed leases at our 1455 Market property with Square Inc. for 332,492 square feet which backfills certain space currently leased to Bank of America. The following summarizes Bank of America’s early termination rights by square footage as of December 31, 2013, subject to the pending lease commencements with Square Inc.: (1) 152,373 square feet at December 31, 2013, 129,886 square feet of which is scheduled to be delivered to Square Inc. in January 2014 for lease commencement in January 2014; (2) 212,854 square feet at December 31, 2015; and (3) 137,006 square feet at December 31, 2017. |
(4) | AIG expirations by square feet: (1) 7,964 square feet expiring on August 31, 2014; and (2) 132,600 square feet expiring on July 31, 2017. |
(5) | GSA expirations by property and square footage: (1) 89,995 square feet at 1455 Market Street expiring on February 19, 2017; (2) 5,906 square feet at 901 Market Street expiring on April 30, 2017; (3) 28,993 square feet at Northview expiring on April 4, 2020; and (4) 43,499 square feet at 901 Market Street expiring on July 31, 2021. |
(6) | We have completed leases at our Rincon Center property with Salesforce.com for 235,733 square feet of which 142,705 square feet has yet to commence. The following summarizes Salesforce.com's expirations by square feet: (1) 83,016 uncommenced square feet expiring on July 31, 2025; (2) 59,689 uncommenced square feet expiring April 30, 2027; and (3) 93,028 commenced square feet expiring on October 31, 2028. |
16
Hudson Pacific Properties, Inc.
Fourth Quarter 2013 Supplemental Operating and Financial Data
OFFICE PORTFOLIO LEASING ACTIVITY
Total Gross Leasing Activity | |||
Rentable square feet | 416,948 | ||
Number of leases | 19 | ||
Gross New Leasing Activity | |||
Rentable square feet | 380,118 | ||
New cash rate | $ | 49.83 | |
Number of leases | 8 | ||
Gross Renewal Leasing Activity | |||
Rentable square feet | 36,830 | ||
Renewal cash rate | $ | 38.39 | |
Number of leases | 11 | ||
Net Absorption | |||
Leased rentable square feet | 349,464 | ||
Cash Rent Growth(1) | |||
Expiring Rate | $ | 33.68 | |
New/Renewal Rate | $ | 41.08 | |
Change | 22.0 | % | |
Straight-Line Rent Growth(2) | |||
Expiring Rate | $ | 31.28 | |
New/Renewal Rate | $ | 40.39 | |
Change | 29.1 | % | |
Weighted Average Lease Terms | |||
New (in months) | 161 | ||
Renewal (in months) | 64 | ||
Tenant Improvements and Leasing Commissions(3) | Total Lease Transaction Costs Per Square Foot | Annual Lease Transaction Costs Per Square Foot |
New leases | $93.45 | $6.96 |
Renewal leases | $21.29 | $3.97 |
Blended | $87.08 | $6.85 |
______________________________
(1) | Represents a comparison between initial stabilized cash rents on new and renewal leases as compared to the expiring cash rents in the same space. New leases are only included if the same space was leased within the previous 12 months. |
(2) | Represents a comparison between initial straight-line rents on new and renewal leases as compared to the straight-line rents on expiring leases in the same space. New leases are only included if the same space was leased within the previous 12 months. |
(3) | Represents per square foot weighted average lease transaction costs based on the lease executed in the current quarter in our properties. |
17
Hudson Pacific Properties, Inc.
Fourth Quarter 2013 Supplemental Operating and Financial Data
OFFICE LEASE EXPIRATIONS — ANNUAL
Year of Lease Expiration | Square Footage of Expiring Leases(1) | Percent of Office Portfolio Square Feet | Annualized Base Rent(2) | Percentage of Office Portfolio Annualized Base Rent | Annualized Base Rent Per Square Foot(3) | Annualized Base Rent Per Square Foot at Expiration(4) | |||||||||||||||
Available | 311,164 | 5.9 | % | $ | — | — | % | $ | — | $ | — | ||||||||||
2013 | 208,299 | 3.9 | 4,575,746 | 2.8 | 21.97 | 21.97 | |||||||||||||||
2014 | 126,641 | 2.4 | 4,720,012 | 2.9 | 37.27 | 37.63 | |||||||||||||||
2015 | 292,003 | 5.5 | 4,866,628 | 3.0 | 16.67 | 17.78 | |||||||||||||||
2016 | 392,965 | 7.4 | 12,603,744 | 7.7 | 32.07 | 34.13 | |||||||||||||||
2017 | 779,768 | 14.7 | 25,817,251 | 15.8 | 33.11 | 34.76 | |||||||||||||||
2018 | 355,407 | 6.7 | 9,357,304 | 5.8 | 26.33 | 29.27 | |||||||||||||||
2019 | 605,078 | 11.4 | 20,445,039 | 12.6 | 33.79 | 38.84 | |||||||||||||||
2020 | 374,889 | 7.1 | 14,228,925 | 8.7 | 37.96 | 45.54 | |||||||||||||||
2021 | 358,091 | 6.8 | 11,474,952 | 7.0 | 32.04 | 37.82 | |||||||||||||||
2022 | 18,906 | 0.4 | 703,015 | 0.4 | 37.18 | 41.19 | |||||||||||||||
Thereafter | 835,279 | 15.8 | 24,501,961 | 15.0 | 29.33 | 38.63 | |||||||||||||||
Building management use | 21,364 | 0.4 | — | — | — | — | |||||||||||||||
Signed leases not commenced(5) | 612,970 | 11.6 | 29,736,474 | 18.3 | 48.51 | 68.51 | |||||||||||||||
Total/Weighted Average | 5,292,824 | 100.0 | % | $ | 163,031,051 | 100.0 | % | $ | 32.73 | $ | 39.07 | ||||||||||
______________________________
(1) | Please see footnote (2) on page 16 of this Supplemental Operating and Financial Data report for an explanation of the re-leasing status of 152,373 square feet currently leased to Bank of America scheduled to expire on December 31, 2013 at our 1455 Market property. |
(2) | Rent data for our office properties is presented on an annualized basis without regard to cancellation options (with the exception of the Bank of America lease at our 1455 Market property, which is assumed to exercise all early termination options). Annualized base rent for office properties is calculated by multiplying (i) base rental payments (defined as cash base rents (before abatements)) as of December 31, 2013, by (ii) 12. Annualized base rent does not reflect tenant reimbursements. |
(3) | Annualized base rent per square foot for all lease expiration years and building management use is calculated as (i) base rental payments (defined as cash base rents (before abatements)) under commenced leases, divided by (ii) square footage under commenced leases as of December 31, 2013. |
(4) | Annualized base rent per square foot at expiration for all lease expiration years and building management use is calculated as (i) base rental payments (defined as cash base rents (before abatements)) under commenced leases, divided by (ii) square footage under commenced lease as of December 31, 2013. |
(5) | Annualized base rent per leased square foot and annualized best rent per square foot at expiration for signed leases not commenced, reflects uncommenced leases and is calculated as (i) base rental payments (defined as cash base rents (before abatements)) under uncommenced leases for vacant space as of December 31, 2013, divided by (ii) square footage under uncommenced leases as of December 31, 2013. |
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Hudson Pacific Properties, Inc.
Fourth Quarter 2013 Supplemental Operating and Financial Data
QUARTERLY OFFICE LEASE EXPIRATIONS — NEXT FOUR QUARTERS
Q1 2014 | Q2 2014 | Q3 2014 | Q4 2014 | ||||||||||||||||||||||
County | Expiring SF | Rent per SF(1) | Expiring SF | Rent per SF(1) | Expiring SF | Rent per SF(1) | Expiring SF | Rent per SF(1) | |||||||||||||||||
Seattle | |||||||||||||||||||||||||
First & King | 1,334 | $ | 4.50 | — | $ | — | — | $ | — | — | $ | — | |||||||||||||
Met Park North | — | — | — | — | — | — | — | — | |||||||||||||||||
Northview | — | — | — | — | — | — | 4,015 | 18.43 | |||||||||||||||||
Subtotal | 1,334 | $ | 4.50 | — | $ | — | — | $ | — | 4,015 | $ | 18.43 | |||||||||||||
San Francisco | |||||||||||||||||||||||||
Rincon Center | 9,497 | $ | 44.27 | 16,255 | $ | 26.19 | 14,685 | $ | 42.51 | 2,130 | $ | 22.00 | |||||||||||||
1455 Market Street | 1,511 | 32.07 | — | — | — | — | 1,500 | 37.97 | |||||||||||||||||
875 Howard Street | — | — | — | — | — | — | — | — | |||||||||||||||||
222 Kearny Street | — | — | 7,844 | 34.52 | 3,613 | 31.56 | 1,271 | 38.00 | |||||||||||||||||
625 Second Street | — | — | — | — | — | — | — | — | |||||||||||||||||
275 Brannan Street | — | — | — | — | — | — | — | — | |||||||||||||||||
901 Market Street | — | — | — | — | 3,010 | 21.00 | — | — | |||||||||||||||||
Subtotal | 11,008 | $ | 42.59 | 24,099 | $ | 28.90 | 21,308 | $ | 37.61 | 4,901 | $ | 31.04 | |||||||||||||
Los Angeles | |||||||||||||||||||||||||
First Financial | — | $ | — | 3,318 | $ | 32.75 | 908 | $ | 24.60 | 3,418 | $ | 33.14 | |||||||||||||
Technicolor Building | — | — | — | — | — | — | — | — | |||||||||||||||||
Del Amo Office Building | — | — | — | — | — | — | — | — | |||||||||||||||||
9300 Wilshire | 3,155 | 35.10 | 1,410 | 39.93 | 3,472 | 38.19 | — | — | |||||||||||||||||
10950 Washington | — | — | — | — | — | — | — | — | |||||||||||||||||
604 Arizona | — | — | — | — | — | — | — | — | |||||||||||||||||
6922 Hollywood | 2,115 | 82.80 | — | — | — | — | 4,684 | 74.37 | |||||||||||||||||
10900 Washington | — | — | — | — | — | — | — | — | |||||||||||||||||
Element LA | — | — | — | — | — | — | — | — | |||||||||||||||||
Pinnacle I | — | — | 4,040 | 45.73 | — | — | 28,129 | 42.68 | |||||||||||||||||
Pinnacle II | — | — | — | — | — | — | — | — | |||||||||||||||||
3401 Exposition | — | — | — | — | — | — | — | — | |||||||||||||||||
1861 Bundy | — | — | — | — | — | — | — | — | |||||||||||||||||
Subtotal | 5,270 | $ | 54.24 | 8,768 | $ | 39.89 | 4,380 | $ | 35.37 | 36,231 | $ | 45.88 | |||||||||||||
San Diego | |||||||||||||||||||||||||
Tierrasanta | — | $ | — | 5,327 | $ | 12.83 | — | $ | — | — | $ | — | |||||||||||||
Subtotal | — | $ | — | 5,327 | $ | 12.83 | — | $ | — | — | $ | — | |||||||||||||
TOTAL | 17,612 | $ | 43.19 | 38,194 | $ | 29.18 | 25,688 | $ | 37.23 | 45,147 | $ | 41.83 | |||||||||||||
______________________________
(1) | Rent data for our office properties is presented on an annualized basis without regard to cancellation options (with the exception of the Bank of America lease at our 1455 Market property, which is assumed to exercise all early termination options). Annualized base rent for office properties is calculated by multiplying (i) base rental payments (defined as cash base rents (before abatements)) as of December 31, 2013, by (ii) 12. Annualized base rent does not reflect tenant reimbursements. |
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Hudson Pacific Properties, Inc.
Fourth Quarter 2013 Supplemental Operating and Financial Data
OFFICE PORTFOLIO DIVERSIFICATION
Total | Annualized Rent as | |||||
Industry | Square Feet(1) | of Percent of Total | ||||
Business Services | 79,001 | 1.4 | % | |||
Educational | 133,814 | 3.6 | ||||
Financial Services | 799,530 | 10.9 | ||||
Insurance | 140,564 | 4.6 | ||||
Legal | 81,279 | 2.0 | ||||
Media & Entertainment | 1,016,616 | 29.1 | ||||
Other | 168,249 | 2.7 | ||||
Real Estate | 62,437 | 1.7 | ||||
Retail | 407,703 | 8.1 | ||||
Technology | 1,045,826 | 25.7 | ||||
Advertising | 113,000 | 2.3 | ||||
Government | 283,612 | 7.0 | ||||
Healthcare | 37,059 | 0.9 | ||||
TOTAL | 4,368,690 | 100.0 | % | |||
______________________________
(1) | Does not include signed leases not commenced. |
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Hudson Pacific Properties, Inc.
Fourth Quarter 2013 Supplemental Operating and Financial Data
DEFINITIONS
Funds From Operations (FFO): We calculate funds from operations before non-controlling interest (FFO) in accordance with the standards established by the National Association of Real Estate Investment Trusts (NAREIT). FFO represents net income (loss), computed in accordance with accounting principles generally accepted in the United States of America (GAAP), excluding gains (or losses) from sales of depreciable operating property, real estate depreciation and amortization (excluding amortization of above (below) market rents for acquisition properties and amortization of deferred financing costs and debt discounts) and after adjustments for unconsolidated partnerships and joint ventures. We use FFO as a supplemental performance measure because, in excluding real estate depreciation and amortization and gains and losses from property dispositions, it provides a performance measure that, when compared year over year, captures trends in occupancy rates, rental rates and operating costs.
We also believe that, as a widely recognized measure of the performance of REITs, FFO will be used by investors as a basis to compare our operating performance with that of other REITs. However, because FFO excludes depreciation and amortization and captures neither the changes in the value of our properties that results from use or market conditions nor the level of capital expenditures and leasing commissions necessary to maintain the operating performance of our properties, all of which have real economic effect and could materially impact our results from operations, the utility of FFO as a measure of our performance is limited. Other equity REITs may not calculate FFO in accordance with the NAREIT definition and, accordingly, our FFO may not be comparable to such other REITs’ FFO. Accordingly, FFO should be considered only as a supplement to net income as a measure of our performance. FFO should not be used as a measure of our liquidity, nor is it indicative of funds available to fund our cash needs, including our ability to pay dividends. FFO should not be used as a supplement to or substitute for cash flow from operating activities computed in accordance with GAAP.
Adjusted Funds From Operations (AFFO): Adjusted Funds From Operations (AFFO) is a non-GAAP financial measure we believe is a useful supplemental measure of our performance. We compute AFFO by adding to FFO the non-cash compensation expense and amortization of deferred financing costs, and subtracting recurring capital expenditures, tenant improvements and leasing commissions (excluding pre-existing obligations on contributed or acquired properties funded with amounts received in settlement of prorations), and eliminating the net effect of straight-line rents, amortization of lease buy-out costs, and amortization of above/below market lease intangible assets and liabilities and amortization of loan discounts/premium. We also add to FFO the difference between rental revenue recognize in accordance with accounting principles generally accepted in the United States (GAAP) based on the amortization of the prepaid rent liability relating to the KTLA lease at our Sunset Bronson property compared to scheduled cash rents received in connection with such prepayment. AFFO is not intended to represent cash flow for the period. We believe that AFFO provides useful information to the investment community about our financial position as compared to other REITs since AFFO is a widely reported measure used by other REITs. However, other REITs may use different methodologies for calculating AFFO and, accordingly, our AFFO may not be comparable to other REITs.
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