Attached files
| file | filename |
|---|---|
| EX-99.1 - EXHIBIT 99.1 - Hudson Pacific Properties, Inc. | a991dispositionofpeninsula.htm |
| 8-K - 8-K - Hudson Pacific Properties, Inc. | a8-kpopdisposal.htm |
Hudson Pacific Properties, Inc. and Hudson Pacific Properties, L.P.
Unaudited Pro Forma Financial Information
All references in these financial statements to “the Company” refer to Hudson Pacific Properties, Inc. together with its consolidated subsidiaries, including Hudson Pacific Properties, L.P. Unless otherwise indicated or unless the context requires otherwise, all references to “our Operating Partnership” or “the Operating Partnership” refer to Hudson Pacific Properties, L.P. together with its consolidated subsidiaries.
The following unaudited pro forma consolidated balance sheet of the Company and the Operating Partnership as of March 31, 2018 and unaudited pro forma consolidated statements of operations for the year ended December 31, 2017 and the three months ended March 31, 2018 have been prepared as if the disposition of Peninsula Office Park (the “Property”) had occurred on March 31, 2018 for the pro forma consolidated balance sheet, and as if the disposition of the Property had occurred on January 1, 2017 for both pro forma consolidated statements of operations. This asset disposal was a non-strategic property of the Company portfolio.
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 the Property occurred on March 31, 2018, (2) represent the results of our operations that would have actually occurred had the disposition of the Property occurred on January 1, 2017 or (3) project our financial position or results of operations as of any future date or for any future period, as applicable.
Hudson Pacific Properties, Inc.
Unaudited Pro Forma Consolidated Balance Sheet
As of March 31, 2018
Hudson Pacific Properties, Inc. (A) | Sale of the Property (B) | Notes | Pro Forma | |||||||||||
ASSETS | ||||||||||||||
Investment in real estate, at cost | $ | 6,499,393 | $ | (204,835 | ) | $ | 6,294,558 | |||||||
Accumulated depreciation and amortization | (574,814 | ) | 13,045 | (561,769 | ) | |||||||||
Investment in real estate, net | 5,924,579 | (191,790 | ) | 5,732,789 | ||||||||||
Cash and cash equivalents | 64,080 | 202,405 | (C) | 266,485 | ||||||||||
Restricted cash | 10,900 | — | 10,900 | |||||||||||
Accounts receivable, net | 5,945 | (221 | ) | 5,724 | ||||||||||
Straight-line rent receivables, net | 119,436 | (3,060 | ) | 116,376 | ||||||||||
Deferred leasing costs and lease intangible assets, net | 241,912 | (5,326 | ) | 236,586 | ||||||||||
Prepaid expenses and other assets, net | 69,735 | — | 69,735 | |||||||||||
Assets associated with real estate held for sale | 11,704 | — | 11,704 | |||||||||||
TOTAL ASSETS | $ | 6,448,291 | $ | 2,008 | $ | 6,450,299 | ||||||||
LIABILITIES AND EQUITY | ||||||||||||||
Notes payable, net | $ | 2,240,688 | $ | — | $ | 2,240,688 | ||||||||
Accounts payable and accrued liabilities | 146,588 | (2,728 | ) | 143,860 | ||||||||||
Lease intangible liabilities, net | 45,651 | (324 | ) | 45,327 | ||||||||||
Security deposits and prepaid rent | 65,692 | (1,262 | ) | 64,430 | ||||||||||
Liabilities associated with real estate held for sale | 630 | — | 630 | |||||||||||
TOTAL LIABILITIES | 2,499,249 | (4,314 | ) | 2,494,935 | ||||||||||
6.25% Series A cumulative redeemable preferred units of the operating partnership | 10,177 | — | 10,177 | |||||||||||
EQUITY | ||||||||||||||
Hudson Pacific Properties, Inc. stockholders’ equity: | ||||||||||||||
Common stock, $0.01 par value, 490,000,000 authorized, 155,626,055 shares outstanding at March 31, 2018 | 1,556 | — | 1,556 | |||||||||||
Additional paid-in capital | 3,625,673 | — | 3,625,673 | |||||||||||
Accumulated other comprehensive income | 22,936 | — | 22,936 | |||||||||||
Retained earnings | 9,500 | 6,327 | (D) | 15,827 | ||||||||||
Total Hudson Pacific Properties, Inc. stockholders’ equity | 3,659,665 | 6,327 | 3,665,992 | |||||||||||
Non-controlling interest—members in consolidated entities | 263,556 | — | 263,556 | |||||||||||
Non-controlling interest—units in the operating partnership | 15,644 | (5 | ) | 15,639 | ||||||||||
TOTAL EQUITY | 3,938,865 | 6,322 | 3,945,187 | |||||||||||
TOTAL LIABILITIES AND EQUITY | $ | 6,448,291 | $ | 2,008 | $ | 6,450,299 | ||||||||
Hudson Pacific Properties, Inc.
Unaudited Pro Forma Consolidated Statement of Operations
For the Three Months Ended March 31, 2018
Hudson Pacific Properties, Inc. (AA) | Sale of Property (BB) | Notes | Pro Forma | |||||||||||
REVENUES | ||||||||||||||
Office | ||||||||||||||
Rental | $ | 130,082 | $ | (4,841 | ) | $ | 125,241 | |||||||
Tenant recoveries | 20,904 | (161 | ) | 20,743 | ||||||||||
Parking and other | 5,546 | (4 | ) | 5,542 | ||||||||||
Total Office revenues | 156,532 | (5,006 | ) | 151,526 | ||||||||||
Studio | ||||||||||||||
Rental | 10,383 | — | 10,383 | |||||||||||
Tenant recoveries | 354 | — | 354 | |||||||||||
Other property-related revenue | 6,435 | — | 6,435 | |||||||||||
Other | 414 | — | 414 | |||||||||||
Total Studio revenues | 17,586 | — | 17,586 | |||||||||||
TOTAL REVENUES | 174,118 | (5,006 | ) | 169,112 | ||||||||||
OPERATING EXPENSES | ||||||||||||||
Office operating expenses | 53,240 | (1,667 | ) | 51,573 | ||||||||||
Studio operating expenses | 9,664 | — | 9,664 | |||||||||||
General and administrative | 15,564 | — | 15,564 | |||||||||||
Depreciation and amortization | 60,553 | (1,746 | ) | 58,807 | ||||||||||
TOTAL OPERATING EXPENSES | 139,021 | (3,413 | ) | 135,608 | ||||||||||
INCOME FROM OPERATIONS | 35,097 | (1,593 | ) | 33,504 | ||||||||||
OTHER EXPENSE (INCOME) | ||||||||||||||
Interest expense | 20,503 | — | 20,503 | |||||||||||
Interest income | (9 | ) | — | (9 | ) | |||||||||
Transaction-related expenses | 118 | — | 118 | |||||||||||
Other income | (404 | ) | — | (404 | ) | |||||||||
TOTAL OTHER EXPENSES | 20,208 | — | 20,208 | |||||||||||
INCOME BEFORE GAINS ON SALE OF REAL ESTATE | 14,889 | (1,593 | ) | 13,296 | ||||||||||
Gains on sale of real estate | 37,674 | — | 37,674 | |||||||||||
NET INCOME | 52,563 | (1,593 | ) | 50,970 | ||||||||||
Net income attributable to preferred stock and units | (159 | ) | — | (159 | ) | |||||||||
Net income attributable to participating securities | (327 | ) | 9 | (CC) | (318 | ) | ||||||||
Net income attributable to non-controlling interest in consolidated entities | (3,323 | ) | — | (3,323 | ) | |||||||||
Net income attributable to non-controlling interest in the operating partnership | (177 | ) | 5 | (CC) | (172 | ) | ||||||||
Net income attributable to Hudson Pacific Properties, Inc. common stockholders | $ | 48,577 | $ | (1,579 | ) | $ | 46,998 | |||||||
Basic and diluted per share amounts: | ||||||||||||||
Net income attributable to common stockholders—basic | $ | 0.31 | $ | (0.01 | ) | (DD) | $ | 0.30 | ||||||
Net income attributable to common stockholders—diluted | $ | 0.31 | $ | (0.01 | ) | (DD) | $ | 0.30 | ||||||
Weighted average shares of common stock outstanding—basic | 155,626,055 | 155,626,055 | ||||||||||||
Weighted average shares of common stock outstanding—diluted | 156,714,822 | 156,714,822 | ||||||||||||
Dividends declared per share | $ | 0.25 | $ | 0.25 | ||||||||||
Hudson Pacific Properties, Inc.
Unaudited Pro Forma Consolidated Statement of Operations
Year Ended December 31, 2017
Hudson Pacific Properties, Inc. (AA) | Sale of Property (BB) | Notes | Pro Forma | |||||||||||
REVENUES | ||||||||||||||
Office | ||||||||||||||
Rental | $ | 545,453 | $ | (19,085 | ) | $ | 526,368 | |||||||
Tenant recoveries | 92,244 | (1,109 | ) | 91,135 | ||||||||||
Parking and other | 29,413 | (5 | ) | 29,408 | ||||||||||
Total Office revenues | 667,110 | (20,199 | ) | 646,911 | ||||||||||
Studio | ||||||||||||||
Rental | 36,529 | — | 36,529 | |||||||||||
Tenant recoveries | 1,336 | — | 1,336 | |||||||||||
Other property-related revenue | 22,805 | — | 22,805 | |||||||||||
Other | 359 | — | 359 | |||||||||||
Total Studio revenues | 61,029 | — | 61,029 | |||||||||||
TOTAL REVENUES | 728,139 | (20,199 | ) | 707,940 | ||||||||||
OPERATING EXPENSES | ||||||||||||||
Office operating expenses | 218,873 | (6,794 | ) | 212,079 | ||||||||||
Studio operating expenses | 34,634 | — | 34,634 | |||||||||||
General and administrative | 54,459 | — | 54,459 | |||||||||||
Depreciation and amortization | 283,570 | (7,511 | ) | 276,059 | ||||||||||
TOTAL OPERATING EXPENSES | 591,536 | (14,305 | ) | 577,231 | ||||||||||
INCOME FROM OPERATIONS | 136,603 | (5,894 | ) | 130,709 | ||||||||||
OTHER EXPENSE (INCOME) | ||||||||||||||
Interest expense | 90,037 | — | 90,037 | |||||||||||
Interest income | (97 | ) | — | (97 | ) | |||||||||
Unrealized loss on ineffective portion of derivatives | 70 | — | 70 | |||||||||||
Transaction-related expenses | 598 | — | 598 | |||||||||||
Other income | (2,992 | ) | — | (2,992 | ) | |||||||||
TOTAL OTHER EXPENSES | 87,616 | — | 87,616 | |||||||||||
INCOME BEFORE GAINS ON SALE OF REAL ESTATE | 48,987 | (5,894 | ) | 43,093 | ||||||||||
Gains on sale of real estate | 45,574 | — | 45,574 | |||||||||||
NET INCOME | 94,561 | (5,894 | ) | 88,667 | ||||||||||
Net income attributable to preferred stock and units | (636 | ) | — | (636 | ) | |||||||||
Net income attributable to participating securities | (1,003 | ) | — | (1,003 | ) | |||||||||
Net income attributable to non-controlling interest in consolidated entities | (24,960 | ) | — | (24,960 | ) | |||||||||
Net income attributable to non-controlling interest in the operating partnership | (375 | ) | 33 | (CC) | (342 | ) | ||||||||
Net income attributable to Hudson Pacific Properties, Inc. common stockholders | $ | 67,587 | $ | (5,861 | ) | $ | 61,726 | |||||||
Basic and diluted per share amounts: | ||||||||||||||
Net income attributable to common stockholders—basic | $ | 0.44 | $ | (0.04 | ) | (DD) | $ | 0.40 | ||||||
Net income attributable to common stockholders—diluted | $ | 0.44 | $ | (0.04 | ) | (DD) | $ | 0.40 | ||||||
Weighted average shares of common stock outstanding—basic | 153,488,730 | 153,488,730 | ||||||||||||
Weighted average shares of common stock outstanding—diluted | 153,882,814 | 153,882,814 | ||||||||||||
Hudson Pacific Properties, L.P.
Unaudited Pro Forma Consolidated Balance Sheet
As of March 31, 2018
Hudson Pacific Properties, L.P. (A) | Sale of the Property (B) | Notes | Pro Forma | |||||||||||
ASSETS | ||||||||||||||
Investment in real estate, at cost | $ | 6,499,393 | $ | (204,835 | ) | $ | 6,294,558 | |||||||
Accumulated depreciation and amortization | (574,814 | ) | 13,045 | (561,769 | ) | |||||||||
Investment in real estate, net | 5,924,579 | (191,790 | ) | 5,732,789 | ||||||||||
Cash and cash equivalents | 64,080 | 202,405 | (C) | 266,485 | ||||||||||
Restricted cash | 10,900 | — | 10,900 | |||||||||||
Accounts receivable, net | 5,945 | (221 | ) | 5,724 | ||||||||||
Straight-line rent receivables, net | 119,436 | (3,060 | ) | 116,376 | ||||||||||
Deferred leasing costs and lease intangible assets, net | 241,912 | (5,326 | ) | 236,586 | ||||||||||
Prepaid expenses and other assets, net | 69,735 | — | 69,735 | |||||||||||
Assets associated with real estate held for sale | 11,704 | — | 11,704 | |||||||||||
TOTAL ASSETS | $ | 6,448,291 | $ | 2,008 | $ | 6,450,299 | ||||||||
LIABILITIES | ||||||||||||||
Notes payable, net | $ | 2,240,688 | $ | — | $ | 2,240,688 | ||||||||
Accounts payable and accrued liabilities | 146,588 | (2,728 | ) | 143,860 | ||||||||||
Lease intangible liabilities, net | 45,651 | (324 | ) | 45,327 | ||||||||||
Security deposits and prepaid rent | 65,692 | (1,262 | ) | 64,430 | ||||||||||
Liabilities associated with real estate held for sale | 630 | — | 630 | |||||||||||
TOTAL LIABILITIES | 2,499,249 | (4,314 | ) | 2,494,935 | ||||||||||
6.25% Series A cumulative redeemable preferred units of the operating partnership | 10,177 | — | 10,177 | |||||||||||
CAPITAL | ||||||||||||||
Hudson Pacific Properties, L.P. partner's capital: | ||||||||||||||
Common units, 156,195,100 issued and outstanding at March 31, 2018 | 3,652,289 | — | 3,652,289 | |||||||||||
Accumulated other comprehensive income | 23,020 | 6,322 | (D) | 29,342 | ||||||||||
Total Hudson Pacific Properties, L.P. partner’s capital | 3,675,309 | 6,322 | 3,681,631 | |||||||||||
Non-controlling interest—members in Consolidated Entities | 263,556 | — | 263,556 | |||||||||||
TOTAL CAPITAL | 3,938,865 | 6,322 | 3,945,187 | |||||||||||
TOTAL LIABILITIES AND CAPITAL | $ | 6,448,291 | $ | 2,008 | $ | 6,450,299 | ||||||||
Hudson Pacific Properties, L.P.
Unaudited Pro Forma Consolidated Statement of Operations
For the Three Months Ended March 31, 2018
Hudson Pacific Properties, L.P. (AA) | Sale of Property (BB) | Notes | Pro Forma | |||||||||||
REVENUES | ||||||||||||||
Office | ||||||||||||||
Rental | $ | 130,082 | $ | (4,841 | ) | $ | 125,241 | |||||||
Tenant recoveries | 20,904 | (161 | ) | 20,743 | ||||||||||
Parking and other | 5,546 | (4 | ) | 5,542 | ||||||||||
Total Office revenues | 156,532 | (5,006 | ) | 151,526 | ||||||||||
Studio | ||||||||||||||
Rental | 10,383 | — | 10,383 | |||||||||||
Tenant recoveries | 354 | — | 354 | |||||||||||
Other property-related revenue | 6,435 | — | 6,435 | |||||||||||
Other | 414 | — | 414 | |||||||||||
Total Studio revenues | 17,586 | — | 17,586 | |||||||||||
TOTAL REVENUES | 174,118 | (5,006 | ) | 169,112 | ||||||||||
OPERATING EXPENSES | ||||||||||||||
Office operating expenses | 53,240 | (1,667 | ) | 51,573 | ||||||||||
Studio operating expenses | 9,664 | — | 9,664 | |||||||||||
General and administrative | 15,564 | — | 15,564 | |||||||||||
Depreciation and amortization | 60,553 | (1,746 | ) | 58,807 | ||||||||||
TOTAL OPERATING EXPENSES | 139,021 | (3,413 | ) | 135,608 | ||||||||||
INCOME FROM OPERATIONS | 35,097 | (1,593 | ) | 33,504 | ||||||||||
OTHER EXPENSE (INCOME) | ||||||||||||||
Interest expense | 20,503 | — | 20,503 | |||||||||||
Interest income | (9 | ) | — | (9 | ) | |||||||||
Transaction-related expenses | 118 | — | 118 | |||||||||||
Other income | (404 | ) | — | (404 | ) | |||||||||
TOTAL OTHER EXPENSES | 20,208 | — | 20,208 | |||||||||||
INCOME BEFORE GAINS ON SALE OF REAL ESTATE | 14,889 | (1,593 | ) | 13,296 | ||||||||||
Gains on sale of real estate | 37,674 | — | 37,674 | |||||||||||
NET INCOME | 52,563 | (1,593 | ) | 50,970 | ||||||||||
Net income attributable to non-controlling interest in consolidated entities | (3,323 | ) | — | (3,323 | ) | |||||||||
Net income attributable to Hudson Pacific Properties, L.P. | 49,240 | (1,593 | ) | (CC) | 47,647 | |||||||||
Net income attributable to preferred units | (159 | ) | — | (159 | ) | |||||||||
Net income attributable to participating securities | (327 | ) | 9 | (CC) | (318 | ) | ||||||||
Net income available to common unitholders | $ | 48,754 | $ | (1,584 | ) | $ | 47,170 | |||||||
Basic and diluted per unit amounts: | ||||||||||||||
Net income attributable to common unitholders—basic | $ | 0.31 | $ | (0.01 | ) | (DD) | $ | 0.30 | ||||||
Net income attributable to common unitholders—diluted | $ | 0.31 | $ | (0.01 | ) | (DD) | $ | 0.30 | ||||||
Weighted average shares of common unit outstanding—basic | 156,195,100 | 156,195,100 | ||||||||||||
Weighted average shares of common unit outstanding—diluted | 157,283,867 | 157,283,867 | ||||||||||||
Dividends declared per unit | $ | 0.25 | $ | 0.25 | ||||||||||
Hudson Pacific Properties, L.P.
Unaudited Pro Forma Consolidated Statement of Operations
Year Ended December 31, 2017
Hudson Pacific Properties, L.P. (AA) | Sale of Property (BB) | Notes | Pro Forma | |||||||||||
REVENUES | ||||||||||||||
Office | ||||||||||||||
Rental | $ | 545,453 | $ | (19,085 | ) | $ | 526,368 | |||||||
Tenant recoveries | 92,244 | (1,109 | ) | 91,135 | ||||||||||
Parking and other | 29,413 | (5 | ) | 29,408 | ||||||||||
Total Office revenues | 667,110 | (20,199 | ) | 646,911 | ||||||||||
Studio | ||||||||||||||
Rental | 36,529 | — | 36,529 | |||||||||||
Tenant recoveries | 1,336 | — | 1,336 | |||||||||||
Other property-related revenue | 22,805 | — | 22,805 | |||||||||||
Other | 359 | — | 359 | |||||||||||
Total Studio revenues | 61,029 | — | 61,029 | |||||||||||
TOTAL REVENUES | 728,139 | (20,199 | ) | 707,940 | ||||||||||
OPERATING EXPENSES | ||||||||||||||
Office operating expenses | 218,873 | (6,794 | ) | 212,079 | ||||||||||
Studio operating expenses | 34,634 | — | 34,634 | |||||||||||
General and administrative | 54,459 | — | 54,459 | |||||||||||
Depreciation and amortization | 283,570 | (7,511 | ) | 276,059 | ||||||||||
TOTAL OPERATING EXPENSES | 591,536 | (14,305 | ) | 577,231 | ||||||||||
INCOME FROM OPERATIONS | 136,603 | (5,894 | ) | 130,709 | ||||||||||
OTHER EXPENSE (INCOME) | ||||||||||||||
Interest expense | 90,037 | — | 90,037 | |||||||||||
Interest income | (97 | ) | — | (97 | ) | |||||||||
Unrealized loss on ineffective portion of derivatives | 70 | — | 70 | |||||||||||
Transaction-related expenses | 598 | — | 598 | |||||||||||
Other income | (2,992 | ) | — | (2,992 | ) | |||||||||
TOTAL OTHER EXPENSES | 87,616 | — | 87,616 | |||||||||||
INCOME BEFORE GAINS ON SALE OF REAL ESTATE | 48,987 | (5,894 | ) | 43,093 | ||||||||||
Gains on sale of real estate | 45,574 | — | 45,574 | |||||||||||
NET INCOME | 94,561 | (5,894 | ) | 88,667 | ||||||||||
Net income attributable to non-controlling interest in consolidated entities | (24,960 | ) | — | (24,960 | ) | |||||||||
Net income attributable to Hudson Pacific Properties, L.P. | 69,601 | (5,894 | ) | 63,707 | ||||||||||
Net income attributable to preferred stock and units | (636 | ) | — | (636 | ) | |||||||||
Net income attributable to participating securities | (1,003 | ) | — | (1,003 | ) | |||||||||
Net income available to common unitholders | $ | 67,962 | $ | (5,894 | ) | $ | 62,068 | |||||||
Basic and diluted per unit amounts: | ||||||||||||||
Net income attributable to common unitholders—basic | $ | 0.44 | $ | (0.04 | ) | (DD) | $ | 0.40 | ||||||
Net income attributable to common unitholders—diluted | $ | 0.44 | $ | (0.04 | ) | (DD) | $ | 0.40 | ||||||
Weighted average shares of common unit outstanding—basic | 154,276,773 | 154,276,773 | ||||||||||||
Weighted average shares of common unit outstanding—diluted | 154,670,857 | 154,670,857 | ||||||||||||
Hudson Pacific Properties, Inc. and Hudson Pacific Properties, L.P.
Notes to Unaudited Pro Forma Consolidated Financial Statements
1. Balance sheet adjustments
(A) | Represents the historical balance sheet as of March 31, 2018. |
(B) | Reflects the disposition of the Property, which was completed on July 27, 2018. |
(C) | Reflects receipt of cash consideration at the closing of the disposition. |
(D) | Reflects the gain arising the disposition as of the property on July 27, 2018. This estimated gain has not been reflected in the pro forma consolidated statements of operations because it is considered to be non-recurring in nature. No adjustment has been made to the sale proceeds to give effect to any potential post-closing adjustments under the terms of the sales agreement. |
2. Income statement adjustments
(AA) | Reflects our historical consolidated statement of operations for the three-month period ended March 31, 2018 and for the year ended December 31, 2017. |
(BB) | The pro forma adjustments reflect the disposition of the Property for the three-month period ended March 31, 2018 and for the year ended December 31, 2017 as if the Property was disposed of on January 1, 2017. |
(CC) | Reflects the incremental impact on our pro forma results of operations for the three-month period ended March 31, 2018 and for the year ended December 31, 2017 to reflect the income allocation to participating securities and unitholders in our operating partnership as a result of the proforma adjustments described in (BB). |
(DD) | Pro forma income per share from continuing operations attributable to common shareholders/unitholders—basic and diluted is calculated by dividing pro forma consolidated net income allocable to common stockholders/unitholders by the number of weighted average shares of common stock/units outstanding for the three-month period ended March 31, 2018 and for the year ended December 31, 2017. |