UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 16, 2014
Hudson Pacific Properties, Inc.
(Exact name of registrant as specified in its charter)
| Maryland | 001-34789 | 27-1430478 | ||
| (State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
| 11601 Wilshire Blvd., Sixth Floor, Los Angeles, California | 90025 | |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code: (310) 445-5700
N/A
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instructions A.2.):
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
This Current Report on Form 8-K is filed by Hudson Pacific Properties, Inc., a Maryland corporation (which we may refer to herein as the “Company,” “we,” “our” or “us”), in connection with the matters described herein.
| ITEM 2.01 | COMPLETION OF ACQUISITION OR DISPOSITION OF ASSETS |
On July 16, 2014, Hudson Tierrasanta, LLC, a wholly own subsidiary of Hudson Pacific Properties, L.P., our operating partnership, completed the sale of our Tierrasanta property, a 112,300 square foot office property located in San Diego, California, to IPG-Monro Capital Fund I, LP, for a gross sale price of $19.5 million (before certain credits, closing costs and prorations).
| ITEM 9.01 | FINANCIAL STATEMENTS AND EXHIBITS |
| (b) | Pro Forma Financial Information. |
Hudson Pacific Properties, Inc.
| Unaudited Pro Forma Financial Information |
F-1 | |||
| Unaudited Pro Forma Consolidated Balance Sheet as of March 31, 2014 |
F-2 | |||
| Unaudited Pro Forma Consolidated Statement of Operations for the Three Months Ended March 31, 2014 |
F-3 | |||
| Unaudited Pro Forma Consolidated Statement of Operations for the Year Ended December 31, 2013 |
F-4 | |||
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Hudson Pacific Properties, Inc. | ||
| By: | /s/ Mark T. Lammas | |
| Mark T. Lammas | ||
| Chief Financial Officer | ||
Date: July 21, 2014
HUDSON PACIFIC PROPERTIES, INC.
UNAUDITED PRO FORMA FINANCIAL INFORMATION
The following unaudited pro forma consolidated balance sheet of Hudson Pacific Properties, Inc. (the “Company” or “our”) as of March 31, 2014 and unaudited pro forma consolidated statements of operations of the Company for the year ended December 31, 2013 and the three months ended March 31, 2014 have been prepared as if the disposition of Tierrasanta had occurred on March 31, 2014 for the pro forma consolidated balance sheet, and as if the disposition of Tierrasanta had occurred on January 1, 2013 for both pro forma consolidated statements of operations.
Our pro forma consolidated financial statements are presented for informational purposes only and should be read in conjunction with our forms 10-K and 10-Q filed with the Securities and Exchange Commission. The adjustments to our pro forma consolidated financial statements are based on available information and assumptions that we consider reasonable. Our pro forma consolidated financial statements do not purport to (1) represent our financial position that would have actually occurred had the disposition of Tierrasanta occurred on March 31, 2014, (2) represent the results of our operations that would have actually occurred had the disposition of Tierrasanta occurred on January 1, 2013 or (3) project our financial position or results of operations as of any future date or for any future period, as applicable.
F-1
Hudson Pacific Properties, Inc.
Unaudited Pro Forma Consolidated Balance Sheet
As of March 31, 2014
| Hudson Pacific Properties, Inc. (A) |
Sale of Tierrasanta (B) |
Company Pro Forma |
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| ASSETS |
||||||||||||
| Investment in real estate, net |
$ | 1,993,945 | $ | — | $ | 1,993,945 | ||||||
| Cash and cash equivalents |
29,063 | 18,451 | 47,514 | |||||||||
| Restricted cash |
17,714 | — | 17,714 | |||||||||
| Accounts receivable, net |
6,673 | — | 6,673 | |||||||||
| Straight-line rent receivables |
24,026 | — | 24,026 | |||||||||
| Deferred leasing costs and lease intangibles, net |
110,042 | — | 110,042 | |||||||||
| Deferred finance costs, net |
8,028 | — | 8,028 | |||||||||
| Interest rate contracts |
33 | — | 33 | |||||||||
| Goodwill |
8,754 | — | 8,754 | |||||||||
| Prepaid expenses and other assets |
5,143 | — | 5,143 | |||||||||
| Assets associated with real estate held for sale |
12,768 | (12,768 | ) | — | ||||||||
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|
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| TOTAL ASSETS |
$ | 2,216,189 | $ | 5,683 | $ | 2,221,872 | ||||||
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| LIABILITIES AND EQUITY |
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| Notes payable |
$ | 827,438 | $ | — | $ | 827,438 | ||||||
| Accounts payable and accrued liabilities |
22,545 | — | 22,545 | |||||||||
| Below-market leases and above-market ground leases |
46,853 | — | 46,853 | |||||||||
| Security deposits |
6,147 | — | 6,147 | |||||||||
| Prepaid rent |
10,565 | — | 10,565 | |||||||||
| Interest rate contracts |
475 | — | 475 | |||||||||
| Obligations associated with real estate held for sale |
170 | (170 | ) | — | ||||||||
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| TOTAL LIABILITIES |
$ | 914,193 | $ | (170 | ) | $ | 914,023 | |||||
| 6.25% Series A Cumulative Redeemable Preferred units of the Operating Partnership |
10,177 | — | 10,177 | |||||||||
| EQUITY |
||||||||||||
| Hudson Pacific Properties, Inc. shareholders’ equity: |
||||||||||||
| Series B cumulative preferred stock |
145,000 | — | 145,000 | |||||||||
| Common stockholders |
668 | — | 668 | |||||||||
| Additional paid-in capital |
1,093,774 | — | 1,093,774 | |||||||||
| Accumulated other comprehensive loss |
(1,529 | ) | — | (1,529 | ) | |||||||
| Accumulated deficit |
(43,784 | ) | 5,853 | (37,931 | ) | |||||||
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| Total Hudson Pacific Properties, Inc. shareholders’ equity |
1,194,129 | 5,853 | 1,199,982 | |||||||||
| Non-controlling unitholders in Operating Partnership |
44,224 | — | 44,224 | |||||||||
| Non-controlling interest in consolidated real estate entity |
53,466 | — | 53,466 | |||||||||
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| TOTAL EQUITY |
1,291,819 | 5,853 | 1,297,672 | |||||||||
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| TOTAL LIABILITIES & EQUITY |
$ | 2,216,189 | $ | 5,683 | $ | 2,221,872 | ||||||
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F-2
Hudson Pacific Properties, Inc.
Unaudited Pro Forma Consolidated Statement of Operations
For the Three Months Ended March 31, 2014
| Hudson Pacific Properties, Inc. (AA) |
Sale of Tierrasanta (BB) |
Pro Forma Consolidated |
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| REVENUES |
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| Office |
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| Rental |
$ | 36,010 | $ | (303 | ) | $ | 35,707 | |||||
| Tenant recoveries |
5,571 | (127 | ) | 5,444 | ||||||||
| Other |
4,479 | — | 4,479 | |||||||||
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|||||||
| 46,060 | (430 | ) | 45,630 | |||||||||
| Media and entertainment properties |
||||||||||||
| Rental |
5,449 | — | 5,449 | |||||||||
| Tenant recoveries |
320 | — | 320 | |||||||||
| Other property related revenue |
3,634 | — | 3,634 | |||||||||
| Other |
133 | — | 133 | |||||||||
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| 9,536 | — | 9,536 | ||||||||||
| Total Revenues |
55,596 | (430 | ) | 55,166 | ||||||||
| OPERATING EXPENSES |
||||||||||||
| Office property related expenses |
15,927 | (121 | ) | 15,806 | ||||||||
| Media and entertainment properties |
6,005 | — | 6,005 | |||||||||
| General and administrative |
5,776 | — | 5,776 | |||||||||
| Depreciation and amortization |
16,668 | (58 | ) | 16,610 | ||||||||
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| Total operating expenses |
44,376 | (179 | ) | 44,197 | ||||||||
| Income from operations |
11,220 | (251 | ) | 10,969 | ||||||||
| OTHER EXPENSE (INCOME) |
||||||||||||
| Interest expense |
6,524 | — | 6,524 | |||||||||
| Interest income |
(9 | ) | — | (9 | ) | |||||||
| Acquisition-related expenses |
105 | — | 105 | |||||||||
| Other expense |
1 | — | 1 | |||||||||
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| 6,621 | — | 6,621 | ||||||||||
| Income (loss) from continuing operations |
4,599 | (251 | ) | 4,348 | ||||||||
| Net income attributable to preferred stock and units |
(3,200 | ) | — | (3,200 | ) | |||||||
| Net income attributable to restricted shares |
(69 | ) | — | (69 | ) | |||||||
| Net loss attributable to non-controlling interest in Consolidated Entities |
43 | — | 43 | |||||||||
| Net income attributable to common units in the Operating Partnership |
(46 | ) | — | (38 | ) (CC) | |||||||
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| Net income attributable to Hudson Pacific Properties, Inc. common stockholders |
1,327 | (251 | ) | 1,084 | ||||||||
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| Pro Forma earnings per share—basic and diluted |
$ | 0.02 | $ | 0.02 | (DD) | |||||||
| Pro Forma weighted average shares outstanding—basic and diluted |
63,625,751 | 63,625,751 | (DD) | |||||||||
F-3
Hudson Pacific Properties, Inc.
Unaudited Pro Forma Consolidated Statement of Operations
Year Ended December 31, 2013
| Hudson Pacific Properties, Inc. (AA) |
Sale of Tierrasanta (BB) |
Pro Forma Consolidated |
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| REVENUES |
||||||||||||
| Office |
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| Rental |
$ | 124,839 | $ | (1,397 | ) | $ | 123,442 | |||||
| Tenant recoveries |
25,870 | (511 | ) | 25,359 | ||||||||
| Other |
14,732 | — | 14,732 | |||||||||
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| 165,441 | (1,908 | ) | 163,533 | |||||||||
| Media and entertainment properties |
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| Rental |
23,003 | — | 23,003 | |||||||||
| Tenant recoveries |
1,807 | — | 1,807 | |||||||||
| Other property related revenue |
15,072 | — | 15,072 | |||||||||
| Other |
235 | — | 235 | |||||||||
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| 40,117 | — | 40,117 | ||||||||||
| Total Revenues |
205,558 | (1,908 | ) | 203,650 | ||||||||
| OPERATING EXPENSES |
||||||||||||
| Office property related expenses |
63,434 | (455 | ) | 62,979 | ||||||||
| Media and entertainment properties |
24,149 | — | 24,149 | |||||||||
| General and administrative |
19,952 | — | 19,952 | |||||||||
| Depreciation and amortization |
70,063 | (629 | ) | 69,434 | ||||||||
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| Total operating expenses |
177,598 | (1,084 | ) | 176,514 | ||||||||
| Income from operations |
27,960 | (824 | ) | 27,136 | ||||||||
| OTHER EXPENSE (INCOME) |
||||||||||||
| Interest expense |
25,470 | — | 25,470 | |||||||||
| Interest income |
(272 | ) | — | (272 | ) | |||||||
| Acquisition-related expenses |
1,446 | — | 1,446 | |||||||||
| Other expense |
(99 | ) | — | (99 | ) | |||||||
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| 26,545 | — | 26,545 | ||||||||||
| Income (loss) from continuing operations |
1,415 | (824 | ) | 591 | ||||||||
| Net income attributable to preferred stock and units |
(12,893 | ) | — | (12,893 | ) | |||||||
| Net income attributable to restricted shares |
(300 | ) | — | (300 | ) | |||||||
| Net loss attributable to non-controlling interest in Consolidated Entities |
321 | — | 321 | |||||||||
| Net loss attributable to common units in the Operating Partnership |
469 | — | 503 | (CC) | ||||||||
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| Net loss attributable to Hudson Pacific Properties, Inc. common stockholders |
(10,988 | ) | (824 | ) | (11,778 | ) | ||||||
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| Pro Forma earnings per share—basic and diluted |
$ | (0.20 | ) | $ | (0.21 | ) (DD) | ||||||
| Pro Forma weighted average shares outstanding—basic and diluted |
55,182,647 | 55,182,647 | (DD) | |||||||||
F-4
HUDSON PACIFIC PROPERTIES, INC.
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
1. Balance sheet adjustments
| (A) | Represents the historical balance sheet of Hudson Pacific Properties, Inc. (the “Company,” “we,” “our” or “us”) as of March 31, 2014. |
| (B) | Reflects the disposition of Tierrasanta, which was completed on July 16, 2014. |
2. Income statement adjustments
| (AA) | Reflects our historical consolidated statement of operations for the three-month period ended March 31, 2014 and for the year ended December 31, 2013. |
| (BB) | The pro forma adjustments reflect the disposition of Tierrasanta for the three-month period ended March 31, 2014 and for the year ended December 31, 2013 as if Tierrasanta was disposed of on January 1, 2013. |
| (CC) | Reflects the incremental impact on our pro forma results of operations for the three-month period ended March 31, 2014 and for the year ended December 31, 2013 to reflect the income allocation to unitholders in our operating partnership as a result of the proforma adjustments described in (BB). |
| (DD) | Pro forma loss per share from continuing operations attributable to common shareholders—basic and diluted is calculated by dividing pro forma consolidated net loss allocable to common stockholders by the number of weighted average shares of common stock outstanding for the three-month period ended March 31, 2014 and for the year ended December 31, 2013. |
F-5