Hudson Pacific Properties, Inc. - Quarter Report: 2021 June (Form 10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

______________________________________

FORM 10-Q

______________________________________


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2021


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______ to ______

Commission File Number: 001-34789 (Hudson Pacific Properties, Inc.)

Commission File Number: 333-202799-01 (Hudson Pacific Properties, L.P.)

______________________________________

Hudson Pacific Properties, Inc.

Hudson Pacific Properties, L.P.

(Exact name of registrant as specified in its charter)


Hudson Pacific Properties, Inc.	Maryland (State or other jurisdiction of incorporation or organization)	27-1430478 (I.R.S. Employer Identification Number)
Hudson Pacific Properties, L.P.	Maryland (State or other jurisdiction of incorporation or organization)	80-0579682 (I.R.S. Employer Identification Number)


11601 Wilshire Blvd., Ninth Floor Los Angeles, California 90025
(Address of principal executive offices) (Zip Code)

(310) 445-5700

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

______________________________________

Securities registered pursuant to Section 12(b) of the Act:

Registrant

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Hudson Pacific Properties, Inc.

Common Stock, $0.01 par value

HPP

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.


Hudson Pacific Properties, Inc. Yes x No o			Hudson Pacific Properties, L.P. Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).


Hudson Pacific Properties, Inc. Yes x No o			Hudson Pacific Properties, L.P. Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Hudson Pacific Properties, Inc.


Large accelerated filer x						Accelerated filer o
Non-accelerated filer o						Smaller reporting company ☐
						Emerging growth company ☐

Hudson Pacific Properties, L.P.


Large accelerated filer o						Accelerated filer o
Non-accelerated filer x						Smaller reporting company ☐
						Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.


Hudson Pacific Properties, Inc. o			Hudson Pacific Properties, L.P. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).


Hudson Pacific Properties, Inc. Yes ☐ No ☒			Hudson Pacific Properties, L.P. Yes ☐ No ☒

The number of shares of common stock of Hudson Pacific Properties, Inc. outstanding at July 30, 2021 was 152,477,830.

Table of Contents

EXPLANATORY NOTE

This report combines the quarterly reports on Form 10-Q for the period ended June 30, 2021 of Hudson Pacific Properties, Inc., a Maryland corporation, and Hudson Pacific Properties, L.P., a Maryland limited partnership. Unless otherwise indicated or unless the context requires otherwise, all references in this report to “we,” “us,” “our,” or “our Company” refer to Hudson Pacific Properties, Inc. together with its consolidated subsidiaries, including Hudson Pacific Properties, L.P. In statements regarding qualification as a REIT, such terms refer solely to Hudson Pacific Properties, Inc. 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.

Hudson Pacific Properties, Inc. is a real estate investment trust, or REIT, and the sole general partner of our operating partnership. As of June 30, 2021, Hudson Pacific Properties, Inc. owned approximately 98.7% of the ownership interest in our operating partnership (including unvested restricted units). The remaining approximately 1.3% interest was owned by certain of our executive officers and directors, certain of their affiliates and other outside investors, including unvested operating partnership performance units. As the sole general partner of our operating partnership, Hudson Pacific Properties, Inc. has the full, exclusive and complete responsibility for our operating partnership’s day-to-day management and control.

We believe combining the quarterly reports on Form 10-Q of Hudson Pacific Properties, Inc. and the operating partnership into this single report results in the following benefits:

•enhancing investors’ understanding of our Company and our operating partnership by enabling investors to view the business as a whole in the same manner as management views and operates the business;

•eliminating duplicative disclosure and providing a more streamlined and readable presentation because a substantial portion of the disclosures apply to both our Company and our operating partnership; and

•creating time and cost efficiencies through the preparation of one combined report instead of two separate reports.

There are a few differences between our Company and our operating partnership, which are reflected in the disclosures in this report. We believe it is important to understand the differences between our Company and our operating partnership in the context of how we operate as an interrelated, consolidated company. Hudson Pacific Properties, Inc. is a REIT, the only material assets of which are the units of partnership interest in our operating partnership. As a result, Hudson Pacific Properties, Inc. does not conduct business itself, other than acting as the sole general partner of our operating partnership, issuing equity from time to time and guaranteeing certain debt of our operating partnership. Hudson Pacific Properties, Inc. itself does not issue any indebtedness but guarantees some of the debt of our operating partnership. Our operating partnership, which is structured as a partnership with no publicly traded equity, holds substantially all of the assets of our Company and conducts substantially all of our business. Except for net proceeds from equity issuances by Hudson Pacific Properties, Inc., which are generally contributed to our operating partnership in exchange for units of partnership interest in our operating partnership, our operating partnership generates the capital required by our Company’s business through its operations, its incurrence of indebtedness or through the issuance of units of partnership interest in our operating partnership.

Non-controlling interest, stockholders’ equity and partners’ capital are the main areas of difference between the consolidated financial statements of our Company and those of our operating partnership. The common units in our operating partnership are accounted for as partners’ capital in our operating partnership’s consolidated financial statements and, to the extent not held by our Company, as a non-controlling interest in our Company’s consolidated financial statements. The differences between stockholders’ equity, partners’ capital and non-controlling interest result from the differences in the equity issued by our Company and our operating partnership.

To help investors understand the significant differences between our Company and our operating partnership, this report presents the consolidated financial statements separately for our Company and our operating partnership. All other sections of this report, including “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” are presented together for our Company and our operating partnership.

In order to establish that the Chief Executive Officer and the Chief Financial Officer of each entity have made the requisite certifications and that our Company and our operating partnership are compliant with Rule 13a-15 or Rule 15d-15 of the Securities Exchange Act of 1934, or the Exchange Act and 18 U.S.C. §1350, this report also includes separate Part I, Item 4 “Controls and Procedures” sections and separate Exhibit 31 and 32 certifications for each of Hudson Pacific Properties, Inc. and our operating partnership.

HUDSON PACIFIC PROPERTIES, INC. AND HUDSON PACIFIC PROPERTIES, L.P.

TABLE OF CONTENTS


		Page
PART I—FINANCIAL INFORMATION
ITEM 1.	Financial Statements of Hudson Pacific Properties, Inc.
	Consolidated Balance Sheets as of June 30, 2021 (unaudited) and December 31, 2020	5
	Consolidated Statements of Operations (unaudited) for the three and six months ended June 30, 2021 and 2020	6
	Consolidated Statements of Comprehensive Income (Loss) (unaudited) for the three and six months ended June 30, 2021 and 2020	7
	Consolidated Statements of Equity (unaudited) for the three and six months ended June 30, 2021 and 2020	8
	Consolidated Statements of Cash Flows (unaudited) for the six months ended June 30, 2021 and 2020	10
ITEM 1.	Financial Statements of Hudson Pacific Properties, L.P.
	Consolidated Balance Sheets as of June 30, 2021 (unaudited) and December 31, 2020	11
	Consolidated Statements of Operations (unaudited) for the three and six months ended June 30, 2021 and 2020	12
	Consolidated Statements of Comprehensive Income (Loss) (unaudited) for the three and six months ended June 30, 2021 and 2020	13
	Consolidated Statements of Capital (unaudited) for the three and six months ended June 30, 2021 and 2020	14
	Consolidated Statements of Cash Flows (unaudited) for the six months ended June 30, 2021 and 2020	16
	Notes to Unaudited Consolidated Financial Statements	17
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	41
ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	60
ITEM 4.	Controls and Procedures	60
PART II—OTHER INFORMATION
ITEM 1.	Legal Proceedings	62
ITEM 1A.	Risk Factors	62
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	62
ITEM 3.	Defaults Upon Senior Securities	63
ITEM 4.	Mine Safety Disclosures	63
ITEM 5.	Other Information	63
ITEM 6.	Exhibits	64
SIGNATURES		65

Table of Contents

PART I—FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS OF HUDSON PACIFIC PROPERTIES, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)


	June 30, 2021 (unaudited)		December 31, 2020
ASSETS
Investment in real estate, at cost	$	8,381,071	$	8,215,017
Accumulated depreciation and amortization	(1,224,337)		(1,102,748)
Investment in real estate, net	7,156,734		7,112,269
Cash and cash equivalents	110,978		113,686
Restricted cash	33,967		35,854
Accounts receivable, net	16,391		22,105
Straight-line rent receivables, net	238,799		225,685
Deferred leasing costs and lease intangible assets, net	271,201		285,836
U.S. Government securities	132,222		135,115
Operating lease right-of-use assets	268,537		264,880
Prepaid expenses and other assets, net	111,087		72,667
Investment in unconsolidated real estate entities	85,736		82,105

TOTAL ASSETS	$	8,425,652	$	8,350,202

LIABILITIES AND EQUITY
Liabilities
Unsecured and secured debt, net	$	3,491,043	$	3,399,492
In-substance defeased debt	129,971		131,707
Joint venture partner debt	66,136		66,136
Accounts payable, accrued liabilities and other	253,271		235,860
Operating lease liabilities	274,408		270,014
Lease intangible liabilities, net	43,364		49,144
Security deposits and prepaid rent	84,393		92,180

Total liabilities	4,342,586		4,244,533

Commitments and contingencies (note 20)

Redeemable preferred units of the operating partnership	9,815		9,815
Redeemable non-controlling interest in consolidated real estate entities	127,445		127,874

Equity
Hudson Pacific Properties, Inc. stockholders’ equity
Common stock, $0.01 par value, 490,000,000 authorized, 152,319,084 shares and 151,401,365 shares outstanding at June 30, 2021 and December 31, 2020, respectively	1,523		1,514
Additional paid-in capital	3,435,156		3,469,758
Accumulated other comprehensive loss	(2,736)		(8,133)

Total Hudson Pacific Properties, Inc. stockholders’ equity	3,433,943		3,463,139
Non-controlling interest—members in consolidated real estate entities	467,476		467,009
Non-controlling interest—units in the operating partnership	44,387		37,832
Total equity	3,945,806		3,967,980
TOTAL LIABILITIES AND EQUITY	$	8,425,652	$	8,350,202

The accompanying notes are an integral part of these consolidated financial statements.

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HUDSON PACIFIC PROPERTIES, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited, in thousands, except share data)


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
REVENUES
Office
Rental	$	192,552	$	180,654	$	382,413	$	361,767
Service and other revenues	3,151		3,654		5,433		8,968
Total office revenues	195,703		184,308		387,846		370,735
Studio
Rental	11,551		12,128		23,704		25,043
Service and other revenues	8,348		2,174		17,171		9,059
Total studio revenues	19,899		14,302		40,875		34,102
Total revenues	215,602		198,610		428,721		404,837
OPERATING EXPENSES
Office operating expenses	69,111		64,611		135,673		128,471
Studio operating expenses	12,466		7,951		23,919		18,601
General and administrative	17,109		17,897		35,558		36,515
Depreciation and amortization	84,178		73,516		166,939		147,279
Total operating expenses	182,864		163,975		362,089		330,866
OTHER INCOME (EXPENSE)
Income from unconsolidated real estate entities	470		410		1,105		174
Fee income	797		556		1,645		1,166
Interest expense	(30,689)		(27,930)		(60,975)		(54,347)
Interest income	937		1,048		1,934		2,073
Management services reimbursement income—unconsolidated real estate entities	626		—		626		—
Management services expense—unconsolidated real estate entities	(626)		—		(626)		—
Transaction-related expenses	(1,064)		(157)		(1,064)		(259)
Unrealized gain (loss) on non-real estate investments	5,018		(2,267)		10,793		(2,848)



Other (expense) income	(1,177)		716		(1,629)		1,030

Total other expense	(25,708)		(27,624)		(48,191)		(53,011)
Net income	7,030		7,011		18,441		20,960
Net income attributable to preferred units	(153)		(153)		(306)		(306)
Net income attributable to participating securities	(276)		(10)		(554)		(39)
Net income attributable to non-controlling interest in consolidated real estate entities	(5,549)		(3,890)		(12,179)		(7,407)
Net loss attributable to redeemable non-controlling interest in consolidated real estate entities	1,282		770		1,964		1,403
Net income attributable to non-controlling interest in the operating partnership	(19)		(37)		(69)		(143)
NET INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS	$	2,315	$	3,691	$	7,297	$	14,468

BASIC AND DILUTED PER SHARE AMOUNTS
Net income attributable to common stockholders—basic	$	0.02	$	0.02	$	0.05	$	0.09
Net income attributable to common stockholders—diluted	$	0.02	$	0.02	$	0.05	$	0.09
Weighted average shares of common stock outstanding—basic	151,169,612		153,306,976		150,997,564		153,869,789
Weighted average shares of common stock outstanding—diluted	152,683,463		155,621,513		151,302,845		156,515,326

The accompanying notes are an integral part of these consolidated financial statements.

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HUDSON PACIFIC PROPERTIES, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(unaudited, in thousands)


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Net income	$	7,030	$	7,011	$	18,441	$	20,960
Currency translation adjustments	914		2,138		1,923		(2,861)
Net unrealized gains (losses) on derivative instruments:
Unrealized losses	(160)		(1,851)		(136)		(14,129)
Reclassification adjustment for realized gains	1,872		1,648		3,683		1,511
Total net unrealized gains (losses) on derivative instruments	1,712		(203)		3,547		(12,618)
Total other comprehensive income (loss)	2,626		1,935		5,470		(15,479)
Comprehensive income	9,656		8,946		23,911		5,481
Comprehensive income attributable to preferred units	(153)		(153)		(306)		(306)
Comprehensive income attributable to participating securities	(276)		(10)		(554)		(39)
Comprehensive income attributable to non-controlling interest in consolidated real estate entities	(5,549)		(3,890)		(12,179)		(7,407)
Comprehensive loss attributable to redeemable non-controlling interest in consolidated real estate entities	1,282		770		1,964		1,403
Comprehensive (income) loss attributable to non-controlling interest in the operating partnership	(54)		(56)		(142)		9
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS	$	4,906	$	5,607	$	12,694	$	(859)

The accompanying notes are an integral part of these consolidated financial statements.

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HUDSON PACIFIC PROPERTIES, INC.

CONSOLIDATED STATEMENTS OF EQUITY

For the three and six months ended June 30, 2021

(unaudited, in thousands, except share data)


	Hudson Pacific Properties, Inc. Stockholders’ Equity									Non-controlling Interest
	Shares of Common Stock	Stock Amount		Additional Paid-in Capital		(Accumulated Deficit) Retained Earnings		Accumulated Other Comprehensive Loss		Units in the Operating Partnership		Members in Consolidated Real Estate Entities		Total Equity
Balance, March 31, 2021	150,760,631	$	1,508	$	3,423,699	$	—	$	(5,327)	$	39,787	$	476,573	$	3,936,240


Distributions	—	—		—		—		—		—		(14,646)		(14,646)

Proceeds from sale of common stock, net of transaction costs	1,526,163	15		44,805		—		—		—		—		44,820
Issuance of unrestricted stock	33,246	—		—		—		—		—		—		—

Shares withheld to satisfy tax withholding obligations	(956)	—		—		—		—		—		—		—
Declared dividend	—	—		(35,591)		(2,591)		—		(560)		—		(38,742)
Amortization of stock-based compensation	—	—		2,243		—		—		5,106		—		7,349
Net income	—	—		—		2,591		—		19		5,549		8,159
Other comprehensive income	—	—		—		—		2,591		35		—		2,626

Balance, June 30, 2021	152,319,084	$	1,523	$	3,435,156	$	—	$	(2,736)	$	44,387	$	467,476	$	3,945,806

Balance at December 31, 2020	151,401,365	$	1,514	$	3,469,758	$	—	$	(8,133)	$	37,832	$	467,009	$	3,967,980

Contributions	—	—		—		—		—		—		15,016		15,016
Distributions	—	—		—		—		—		—		(26,728)		(26,728)

Proceeds from sale of common stock, net of transaction costs	1,526,163	15		44,805		—		—		—		—		44,820
Issuance of unrestricted stock	53,246	—		—		—		—		—		—		—
Shares repurchased	(632,109)	(6)		(14,750)		—		—		—		—		(14,756)
Shares withheld to satisfy tax withholding obligations	(29,581)	—		(693)		—		—		—		—		(693)
Declared dividend	—	—		(68,189)		(7,851)		—		(1,128)		—		(77,168)
Amortization of stock-based compensation	—	—		4,225		—		—		7,541		—		11,766
Net income	—	—		—		7,851		—		69		12,179		20,099
Other comprehensive income	—	—		—		—		5,397		73		—		5,470

Balance at June 30, 2021	152,319,084	$	1,523	$	3,435,156	$	—	$	(2,736)	$	44,387	$	467,476	$	3,945,806

The accompanying notes are an integral part of these consolidated financial statements.

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HUDSON PACIFIC PROPERTIES, INC.

CONSOLIDATED STATEMENTS OF EQUITY

For the three and six months ended June 30, 2020

(unaudited, in thousands, except share data)


	Hudson Pacific Properties, Inc. Stockholders’ Equity									Non-controlling Interest
	Shares of Common Stock	Stock Amount		Additional Paid-in Capital		(Accumulated Deficit) Retained Earnings		Accumulated Other Comprehensive Loss		Units in the Operating Partnership		Members in Consolidated Real Estate Entities		Total Equity
Balance at March 31, 2020	153,295,905	$	1,533	$	3,349,706	$	—	$	(17,804)	$	26,083	$	270,236	$	3,629,754


Distributions	—	—		—		—		—		—		(4,100)		(4,100)

Issuance of unrestricted stock	23,428	1		(1)		—		—		—		—		—


Declared dividend	—	—		(34,739)		(3,701)		—		(450)		—		(38,890)
Amortization of stock-based compensation	—	—		2,226		—		—		3,078		—		5,304
Net income	—	—		—		3,701		—		37		3,890		7,628
Other comprehensive income	—	—		—		—		1,916		19		—		1,935

Balance at June 30, 2020	153,319,333	$	1,534	$	3,317,192	$	—	$	(15,888)	$	28,767	$	270,026	$	3,601,631

Balance, December 31, 2019	154,691,052	$	1,546	$	3,415,808	$	—	$	(561)	$	23,082	$	269,487	$	3,709,362


Distributions	—	—		—		—		—		—		(6,868)		(6,868)

Issuance of unrestricted stock	179,005	3		(3)		—		—		—		—		—
Shares repurchased	(1,414,007)	(14)		(35,337)		—		—		—		—		(35,351)
Shares withheld to satisfy tax withholding obligations	(136,717)	(1)		(5,500)		—		—		—		—		(5,501)
Declared dividend	—	—		(62,366)		(14,507)		—		(900)		—		(77,773)
Amortization of stock-based compensation	—	—		4,590		—		—		6,594		—		11,184
Net income	—	—		—		14,507		—		143		7,407		22,057
Other comprehensive loss	—	—		—		—		(15,327)		(152)		—		(15,479)

Balance, June 30, 2020	153,319,333	$	1,534	$	3,317,192	$	—	$	(15,888)	$	28,767	$	270,026	$	3,601,631

The accompanying notes are an integral part of these consolidated financial statements.

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HUDSON PACIFIC PROPERTIES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, in thousands)


	Six Months Ended June 30,
	2021		2020
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	18,441	$	20,960
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	166,939		147,279
Non-cash portion of interest expense	4,835		2,489
Amortization of stock-based compensation	9,878		9,618
Income from unconsolidated real estate entities	(1,105)		(174)
Unrealized (gain) loss on non-real estate investments	(10,793)		2,848
Straight-line rents	(13,114)		(26,136)
Straight-line rent expenses	737		731
Amortization of above- and below-market leases, net	(5,258)		(5,007)
Amortization of above- and below-market ground leases, net	1,175		1,176
Amortization of lease incentive costs	952		971
Distribution of income from unconsolidated entities	872		—



Change in operating assets and liabilities:
Accounts receivable	5,624		(1,244)
Deferred leasing costs and lease intangibles	(8,867)		(8,093)
Prepaid expenses and other assets	(14,899)		(14,090)
Accounts payable, accrued liabilities and other	25,301		16,911
Security deposits and prepaid rent	(7,787)		(10,755)
Net cash provided by operating activities	172,931		137,484
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to investment in real estate	(191,005)		(169,295)


Maturities of U.S. Government securities	2,889		2,825
Contributions to non-real estate investments	(8,514)		—

Distributions from unconsolidated real estate entities	908		73
Contributions to unconsolidated real estate entities	(8,325)		(461)


Net cash used in investing activities	(204,047)		(166,858)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from unsecured and secured debt	86,850		453,184
Payments of unsecured and secured debt	(313)		(300,294)
Payments of in-substance defeased debt	(1,736)		(1,643)
Proceeds from sale of common stock, net of transaction costs	44,820		—

Repurchase of common stock	(14,756)		(35,351)


Dividends paid to common stock and unitholders	(77,168)		(77,773)
Dividends paid to preferred unitholders	(306)		(306)
Contributions from redeemable non-controlling members in consolidated real estate entities	1,543		2,551
Distribution of redeemable non-controlling members in consolidated real estate entities	(8)		(8)
Contributions from non-controlling members in consolidated real estate entities	15,016		—
Distributions to non-controlling members in consolidated real estate entities	(26,728)		(6,868)
Payments to satisfy tax withholding obligations	(693)		(5,501)
Payment of loan costs	—		(4)
Net cash provided by financing activities	26,521		27,987



Net decrease in cash and cash equivalents and restricted cash	(4,595)		(1,387)
Cash and cash equivalents and restricted cash—beginning of period	149,540		58,258
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH—END OF PERIOD	$	144,945	$	56,871

The accompanying notes are an integral part of these consolidated financial statements.

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ITEM 1. FINANCIAL STATEMENTS OF HUDSON PACIFIC PROPERTIES, L.P.

HUDSON PACIFIC PROPERTIES, L.P.

CONSOLIDATED BALANCE SHEETS

(in thousands, except unit data)


	June 30, 2021 (unaudited)		December 31, 2020
ASSETS
Investment in real estate, at cost	$	8,381,071	$	8,215,017
Accumulated depreciation and amortization	(1,224,337)		(1,102,748)
Investment in real estate, net	7,156,734		7,112,269
Cash and cash equivalents	110,978		113,686
Restricted cash	33,967		35,854
Accounts receivable, net	16,391		22,105
Straight-line rent receivables, net	238,799		225,685
Deferred leasing costs and lease intangible assets, net	271,201		285,836
U.S. Government securities	132,222		135,115
Operating lease right-of-use assets	268,537		264,880
Prepaid expenses and other assets, net	111,087		72,667
Investment in unconsolidated real estate entities	85,736		82,105

TOTAL ASSETS	$	8,425,652	$	8,350,202

LIABILITIES AND CAPITAL
Liabilities
Unsecured and secured debt, net	$	3,491,043	$	3,399,492
In-substance defeased debt	129,971		131,707
Joint venture partner debt	66,136		66,136
Accounts payable, accrued liabilities and other	253,271		235,860
Operating lease liabilities	274,408		270,014
Lease intangible liabilities, net	43,364		49,144
Security deposits and prepaid rent	84,393		92,180

Total liabilities	4,342,586		4,244,533

Commitments and contingencies (note 20)

Redeemable preferred units of the operating partnership	9,815		9,815
Redeemable non-controlling interest in consolidated real estate entities	127,445		127,874

Capital
Hudson Pacific Properties, L.P. partners’ capital
Common units, 153,700,708 and 152,722,448 outstanding at June 30, 2021 and December 31, 2020, respectively	3,481,106		3,509,217
Accumulated other comprehensive loss	(2,776)		(8,246)
Total Hudson Pacific Properties, L.P. partners’ capital	3,478,330		3,500,971
Non-controlling interest—members in consolidated real estate entities	467,476		467,009
Total capital	3,945,806		3,967,980
TOTAL LIABILITIES AND CAPITAL	$	8,425,652	$	8,350,202

The accompanying notes are an integral part of these consolidated financial statements.

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HUDSON PACIFIC PROPERTIES, L.P.

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited, in thousands, except unit data)


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
REVENUES
Office
Rental	$	192,552	$	180,654	$	382,413	$	361,767
Service and other revenues	3,151		3,654		5,433		8,968
Total office revenues	195,703		184,308		387,846		370,735
Studio
Rental	11,551		12,128		23,704		25,043
Service and other revenues	8,348		2,174		17,171		9,059
Total studio revenues	19,899		14,302		40,875		34,102
Total revenues	215,602		198,610		428,721		404,837
OPERATING EXPENSES
Office operating expenses	69,111		64,611		135,673		128,471
Studio operating expenses	12,466		7,951		23,919		18,601
General and administrative	17,109		17,897		35,558		36,515
Depreciation and amortization	84,178		73,516		166,939		147,279
Total operating expenses	182,864		163,975		362,089		330,866
OTHER INCOME (EXPENSE)
Income from unconsolidated real estate entities	470		410		1,105		174
Fee income	797		556		1,645		1,166
Interest expense	(30,689)		(27,930)		(60,975)		(54,347)
Interest income	937		1,048		1,934		2,073
Management services reimbursement income—unconsolidated real estate entities	626		—		626		—
Management services expense—unconsolidated real estate entities	(626)		—		(626)		—
Transaction-related expenses	(1,064)		(157)		(1,064)		(259)
Unrealized gain (loss) on non-real estate investments	5,018		(2,267)		10,793		(2,848)



Other (expense) income	(1,177)		716		(1,629)		1,030


Total other expense	(25,708)		(27,624)		(48,191)		(53,011)
Net income	7,030		7,011		18,441		20,960
Net income attributable to non-controlling interest in consolidated real estate entities	(5,549)		(3,890)		(12,179)		(7,407)
Net loss attributable to redeemable non-controlling interest in consolidated real estate entities	1,282		770		1,964		1,403
Net income attributable to Hudson Pacific Properties, L.P.	2,763		3,891		8,226		14,956
Net income attributable to preferred units	(153)		(153)		(306)		(306)
Net income attributable to participating securities	(276)		(25)		(554)		(97)
NET INCOME AVAILABLE TO COMMON UNITHOLDERS	$	2,334	$	3,713	$	7,366	$	14,553

BASIC AND DILUTED PER UNIT AMOUNTS
Net income attributable to common unitholders—basic	$	0.02	$	0.02	$	0.05	$	0.09
Net income attributable to common unitholders—diluted	$	0.02	$	0.02	$	0.05	$	0.09
Weighted average shares of common units outstanding—basic	152,551,236		154,218,834		152,369,823		154,781,647
Weighted average shares of common units outstanding—diluted	152,683,463		155,012,834		152,675,104		155,906,647

The accompanying notes are an integral part of these consolidated financial statements.

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HUDSON PACIFIC PROPERTIES, L.P.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(unaudited, in thousands)


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Net income	$	7,030	$	7,011	$	18,441	$	20,960
Currency translation adjustments	914		2,138		1,923		(2,861)
Net unrealized gains (losses) on derivative instruments:
Unrealized losses	(160)		(1,851)		(136)		(14,129)
Reclassification adjustment for realized gains	1,872		1,648		3,683		1,511
Total net unrealized gains (losses) on derivative instruments	1,712		(203)		3,547		(12,618)
Total other comprehensive income (loss)	2,626		1,935		5,470		(15,479)
Comprehensive income	9,656		8,946		23,911		5,481
Comprehensive income attributable to preferred units	(153)		(153)		(306)		(306)
Comprehensive income attributable to participating securities	(276)		(25)		(554)		(97)
Comprehensive income attributable to non-controlling interest in consolidated real estate entities	(5,549)		(3,890)		(12,179)		(7,407)
Comprehensive loss attributable to redeemable non-controlling interest in consolidated real estate entities	1,282		770		1,964		1,403
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO PARTNERS’ CAPITAL	$	4,960	$	5,648	$	12,836	$	(926)

The accompanying notes are an integral part of these consolidated financial statements.

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HUDSON PACIFIC PROPERTIES, L.P.

CONSOLIDATED STATEMENTS OF CAPITAL

For the three and six months ended June 30, 2021

(unaudited, in thousands, except share data)


	Hudson Pacific Properties, L.P. Partners’ Capital
	Number of Common Units	Common Units		Accumulated Other Comprehensive Loss		Total Partners’ Capital		Non-controlling Interest—Members in Consolidated Real Estate Entities		Total Capital
Balance, March 31, 2021	152,142,255	$	3,465,069	$	(5,402)	$	3,459,667	$	476,573	$	3,936,240


Distributions	—	—		—		—		(14,646)		(14,646)

Proceeds from sale of common units, net of transaction costs	1,526,163	44,820		—		44,820		—		44,820
Issuance of unrestricted units	33,246	—		—		—		—		—

Units withheld to satisfy tax withholding obligations	(956)	—		—		—		—		—
Declared distributions	—	(38,742)		—		(38,742)		—		(38,742)
Amortization of unit-based compensation	—	7,349		—		7,349		—		7,349
Net income	—	2,610		—		2,610		5,549		8,159
Other comprehensive income	—	—		2,626		2,626		—		2,626

Balance, June 30, 2021	153,700,708	$	3,481,106	$	(2,776)	$	3,478,330	$	467,476	$	3,945,806

Balance at December 31, 2020	152,722,448	$	3,509,217	$	(8,246)	$	3,500,971	$	467,009	$	3,967,980

Contributions	—	—		—		—		15,016		15,016
Distributions	—	—		—		—		(26,728)		(26,728)

Proceeds from sale of common units, net of transaction costs	1,526,163	44,820		—		44,820		—		44,820
Issuance of unrestricted units	113,787	—		—		—		—		—
Repurchase of common units	(632,109)	(14,756)		—		(14,756)		—		(14,756)
Units withheld to satisfy tax withholding obligations	(29,581)	(693)		—		(693)		—		(693)
Declared distributions	—	(77,168)		—		(77,168)		—		(77,168)
Amortization of unit-based compensation	—	11,766		—		11,766		—		11,766
Net income	—	7,920		—		7,920		12,179		20,099
Other comprehensive income	—	—		5,470		5,470		—		5,470

Balance at June 30, 2021	153,700,708	$	3,481,106	$	(2,776)	$	3,478,330	$	467,476	$	3,945,806

The accompanying notes are an integral part of these consolidated financial statements.

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HUDSON PACIFIC PROPERTIES, L.P.

CONSOLIDATED STATEMENTS OF CAPITAL

For the three and six months ended June 30, 2020

(unaudited, in thousands, except share data)


	Hudson Pacific Properties, L.P. Partners’ Capital
	Number of Common Units	Common Units		Accumulated Other Comprehensive Loss		Total Partners’ Capital		Non-controlling Interest—Members in Consolidated Real Estate Entities		Total Capital
Balance, March 31, 2020	154,207,763	$	3,377,545	$	(18,027)	$	3,359,518	$	270,236	$	3,629,754


Distributions	—	—		—		—		(4,100)		(4,100)

Issuance of unrestricted units	23,428	—		—		—		—		—


Declared distributions	—	(38,890)		—		(38,890)		—		(38,890)
Amortization of unit-based compensation	—	5,304		—		5,304		—		5,304
Net income	—	3,738		—		3,738		3,890		7,628
Other comprehensive income	—	—		1,935		1,935		—		1,935

Balance, June 30, 2020	154,231,191	$	3,347,697	$	(16,092)	$	3,331,605	$	270,026	$	3,601,631

Balance at December 31, 2019	155,602,910	$	3,440,488	$	(613)	$	3,439,875	$	269,487	$	3,709,362


Distributions	—	—		—		—		(6,868)		(6,868)

Issuance of unrestricted units	179,005	—		—		—		—		—
Units withheld to satisfy tax withholding obligations	(136,717)	(5,501)		—		(5,501)		—		(5,501)
Repurchase of common units	(1,414,007)	(35,351)		—		(35,351)		—		(35,351)
Declared distributions	—	(77,773)		—		(77,773)		—		(77,773)
Amortization of unit-based compensation	—	11,184		—		11,184		—		11,184
Net income	—	14,650		—		14,650		7,407		22,057
Other comprehensive loss	—	—		(15,479)		(15,479)		—		(15,479)

Balance at June 30, 2020	154,231,191	$	3,347,697	$	(16,092)	$	3,331,605	$	270,026	$	3,601,631

The accompanying notes are an integral part of these consolidated financial statements.

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HUDSON PACIFIC PROPERTIES, L.P.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, in thousands)


	Six Months Ended June 30,
	2021		2020
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	18,441	$	20,960
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	166,939		147,279
Non-cash portion of interest expense	4,835		2,489
Amortization of unit-based compensation	9,878		9,618
Loss from unconsolidated real estate entities	(1,105)		(174)
Unrealized (gain) loss on non-real estate investments	(10,793)		2,848
Straight-line rents	(13,114)		(26,136)
Straight-line rent expenses	737		731
Amortization of above- and below-market leases, net	(5,258)		(5,007)
Amortization of above- and below-market ground leases, net	1,175		1,176
Amortization of lease incentive costs	952		971
Distribution of income from unconsolidated entities	872		—



Change in operating assets and liabilities:
Accounts receivable	5,624		(1,244)
Deferred leasing costs and lease intangibles	(8,867)		(8,093)
Prepaid expenses and other assets	(14,899)		(14,090)
Accounts payable, accrued liabilities and other	25,301		16,911
Security deposits and prepaid rent	(7,787)		(10,755)
Net cash provided by operating activities	172,931		137,484
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to investment in real estate	(191,005)		(169,295)


Maturities of U.S. Government securities	2,889		2,825

Contributions to non-real estate investments	(8,514)		—
Distributions from unconsolidated real estate entities	908		73
Contributions to unconsolidated real estate entities	(8,325)		(461)


Net cash used in investing activities	(204,047)		(166,858)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from unsecured and secured debt	86,850		453,184
Payments of unsecured and secured debt	(313)		(300,294)
Payments of in-substance defeased debt	(1,736)		(1,643)
Proceeds from sale of common units, net of transaction costs	44,820		—

Repurchase of common units	(14,756)		(35,351)


Distributions paid to common stock and unitholders	(77,168)		(77,773)
Distributions paid to preferred unitholders	(306)		(306)
Contributions from redeemable non-controlling members in consolidated real estate entities	1,543		2,551
Distributions to redeemable non-controlling members in consolidated real estate entities	(8)		(8)
Contributions from non-controlling members in consolidated real estate entities	15,016		—
Distributions to non-controlling members in consolidated real estate entities	(26,728)		(6,868)
Payments to satisfy tax withholding obligations	(693)		(5,501)
Payment of loan costs	—		(4)
Net cash provided by financing activities	26,521		27,987



Net decrease in cash and cash equivalents and restricted cash	(4,595)		(1,387)
Cash and cash equivalents and restricted cash—beginning of period	149,540		58,258
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH—END OF PERIOD	$	144,945	$	56,871

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

Hudson Pacific Properties, Inc. and Hudson Pacific Properties, L.P.

Notes to Unaudited Consolidated Financial Statements

(Unaudited, tabular amounts in thousands, except square footage, share and unit data)

1. Organization

Hudson Pacific Properties, Inc. is a Maryland corporation formed on November 9, 2009 as a fully integrated, self-administered and self-managed real estate investment trust (“REIT”). Through its controlling interest in the operating partnership and its subsidiaries, Hudson Pacific Properties, Inc. owns, manages, leases, acquires and develops real estate, consisting primarily of office and studio properties. Unless otherwise indicated or unless the context requires otherwise, 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 Company’s portfolio consists of properties located throughout Northern and Southern California, the Pacific Northwest and Western Canada. The following table summarizes the Company’s portfolio as of June 30, 2021:


Segments	Number of Properties	Square Feet (unaudited)
Consolidated portfolio
Office	52	14,092,789
Studios	3	1,224,403
Land	6	2,504,406
Total consolidated portfolio	61	17,821,598
Unconsolidated portfolio(1)
Office	1	1,491,858
Land	2	691,000
Total unconsolidated portfolio	3	2,182,858
TOTAL(2)	64	20,004,456

_________________

1.Pursuant to a co-ownership agreement with an affiliate of Blackstone Property Partners Lower Fund 1 LP (“Blackstone 1 LP”), the Company owns 20% of the unconsolidated joint venture which owns the Bentall Centre property located in Vancouver, Canada. The Company also owns 50% of the unconsolidated joint venture entity which owns the Sunset Glenoaks Studios development. The square footage shown above represents 100% of the properties. See Note 4 for details.

2.Includes repositioning, redevelopment and development properties.

2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying consolidated financial statements of the Company and the operating partnership are prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) applicable to interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Certain information and footnote disclosures required for annual financial statements have been condensed or excluded pursuant to the Securities and Exchange Commission (“SEC”) rules and regulations. Accordingly, the interim financial statements do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, the accompanying interim financial statements reflect all adjustments of a normal and recurring nature that are considered necessary for a fair presentation of the results for the interim periods presented.

The results of operations for the interim periods are not necessarily indicative of the results that may be expected for the year ending December 31, 2021. The interim consolidated financial statements should be read in conjunction with the consolidated financial statements in the 2020 Annual Report on Form 10-K of Hudson Pacific Properties, Inc. and Hudson Pacific Properties, L.P. and the notes thereto.

Table of Contents

Hudson Pacific Properties, Inc. and Hudson Pacific Properties, L.P.

Notes to Unaudited Consolidated Financial Statements

(Unaudited, tabular amounts in thousands, except square footage, share and unit data)

Principles of Consolidation

The unaudited interim consolidated financial statements of the Company include the accounts of the Company, the operating partnership and all wholly-owned and controlled subsidiaries. The consolidated financial statements of the operating partnership include the accounts of the operating partnership and all wholly-owned and controlled subsidiaries. All intercompany balances and transactions have been eliminated in the consolidated financial statements.

Under the consolidation guidance, the Company first evaluates an entity using the variable interest model, then the voting model. The Company ultimately consolidates all entities that the Company controls through either majority ownership or voting rights, including all variable interest entities (“VIEs”) of which the Company is considered the primary beneficiary. The Company accounts for all other unconsolidated joint ventures using the equity method of accounting. In addition, the Company continually evaluates each legal entity that is not wholly-owned for reconsideration based on changing circumstances.

VIEs are defined as entities in which equity investors do not have:

•the characteristics of a controlling financial interest;

•sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties; and/or

•the entity is structured with non-substantive voting rights.

The entity that consolidates a VIE is known as its primary beneficiary and is generally the entity with both the power to direct the activities that most significantly affect the VIE’s economic performance and the right to receive benefits from the VIE or the obligation to absorb losses of the VIE that could be significant to the VIE. As of June 30, 2021, the Company has determined that its operating partnership and 14 joint ventures met the definition of a VIE. 12 of these joint ventures are consolidated and two are unconsolidated.

Consolidated Joint Ventures

As of June 30, 2021, the operating partnership has determined that 12 of its joint ventures met the definition of a VIE and are consolidated:


Entity	Property	Ownership Interest
Hudson 1455 Market, L.P.	1455 Market	55.0	%
Hudson 1099 Stewart, L.P.	Hill7	55.0	%
HPP-MAC WSP, LLC	One Westside and 10850 Pico	75.0	%
Hudson One Ferry REIT, L.P.	Ferry Building	55.0	%
Sunset Bronson Entertainment Properties, LLC	Sunset Bronson Studios, ICON, CUE	51.0	%
Sunset Gower Entertainment Properties, LLC	Sunset Gower Studios	51.0	%
Sunset Las Palmas Entertainment Properties, LLC	Sunset Las Palmas Studios, Harlow	51.0	%
Sunset Services Holdings, LLC	None(1)	51.0	%
Sunset Studios Holdings, LLC	EPIC	51.0	%
Hudson Media and Entertainment Management, LLC	None(2)	51.0	%
Hudson 6040 Sunset, LLC	6040 Sunset	51.0	%
Hudson 1918 Eighth, L.P.	1918 Eighth	55.0	%

__________________

1.Sunset Services Holdings, LLC wholly owns Services Holdings, LLC, which owns 100% interests in Sunset Bronson Services, LLC, Sunset Gower Services, LLC and Sunset Las Palmas Services, LLC, which provide services to the respective entertainment properties above.

2.Hudson Media and Entertainment Management, LLC manages the following properties: Sunset Gower Studios, Sunset Bronson Studios, Sunset Las Palmas Studios, 6040 Sunset, ICON, CUE, EPIC and Harlow (collectively “Hollywood Media Portfolio”).

Table of Contents

Hudson Pacific Properties, Inc. and Hudson Pacific Properties, L.P.

Notes to Unaudited Consolidated Financial Statements

(Unaudited, tabular amounts in thousands, except square footage, share and unit data)

On November 22, 2020, the Company entered into a joint venture agreement with CPPIB US RE-3, Inc., a subsidiary of Canada Pension Plan Investment Board (“CPPIB”), to form Hudson 1918 Eighth, L.P. On December 18, 2020, the joint venture purchased the 1918 Eighth property through a wholly-owned subsidiary. The Company owns 55% of the joint venture. As of June 30, 2021, the Company has determined that this joint venture met the definition of a VIE and is consolidated.

On July 30, 2020, funds affiliated with Blackstone Property Partners (“Blackstone”) acquired a 49% interest in the Company’s Hollywood Media Portfolio. The Company retained a 51% ownership stake and remains responsible for day-to-day operations, leasing and development. As of June 30, 2021, the Company has determined that the entities included in the Hollywood Media Portfolio and the related entities met the definition of a VIE and are consolidated.

As of June 30, 2021 and December 31, 2020, the Company has determined that its operating partnership met the definition of a VIE and is consolidated.

Substantially all of the assets and liabilities of the Company are related to the operating partnership VIE. The assets and credit of certain VIEs can only be used to satisfy those VIEs’ own contractual obligations, and the VIEs’ creditors have no recourse to the general credit of the Company.

Unconsolidated Joint Ventures

As of June 30, 2021, the Company has determined it is not the primary beneficiary of two of its joint ventures. Due to its significant influence over the unconsolidated entities, the Company accounts for them using the equity method of accounting. Under the equity method, the Company initially records the investment at cost and subsequently adjusts for equity in earnings or losses and cash contributions and distributions.

As of December 24, 2020, the Company owns 50% of the ownership interest in the joint venture which owns the Sunset Glenoaks Studios development. The Company serves as the operating member.

On June 5, 2019, the Company purchased, pursuant to a co-ownership agreement with Blackstone 1 LP, an affiliate of Blackstone, 20% of the ownership interest in the Bentall Centre property. The joint venture property-owning entity is structured as a tenancy in common under applicable tax laws. The Company owns 20% of this joint venture and serves as the operating partner.

The Company’s net equity investment in its unconsolidated joint ventures is reflected within investment in unconsolidated real estate entities on the Consolidated Balance Sheets. The Company’s share of net income or loss from the joint ventures is included within income from unconsolidated real estate entities on the Consolidated Statements of Operations. The Company uses the cumulative earnings approach for determining cash flow presentation of distributions from unconsolidated joint ventures. Under this approach, distributions up to the amount of cumulative equity in earnings recognized are classified as cash inflows from operating activities, and those in excess of that amount are classified as cash inflows from investing activities. Refer to Note 4 for further details regarding our investments in unconsolidated joint ventures.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of commitments and contingencies at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, the Company evaluates its estimates, including those related to acquiring, developing and assessing the carrying values of its real estate properties, determining the incremental borrowing rate used in the present value calculations of its new or modified operating lessee agreements, its accrued liabilities and its performance-based equity compensation awards. The Company bases its estimates on historical experience, current market conditions and various other assumptions that are believed to be reasonable under the circumstances. Actual results could materially differ from these estimates.

Table of Contents

Hudson Pacific Properties, Inc. and Hudson Pacific Properties, L.P.

Notes to Unaudited Consolidated Financial Statements

(Unaudited, tabular amounts in thousands, except square footage, share and unit data)

Lease Accounting

The Company accounts for its leases under ASC 842, Leases (“ASC 842”), which requires companies to identify lease and non-lease components of a lease agreement. Lease components relate to the right to use the leased asset whereas non-lease components relate to payments for goods or services that are transferred separately from the right to use the underlying asset.

Lessee Accounting

The Company determines if an arrangement is a lease at inception. The Company’s operating lease agreements relate to ground leases and facility leases and are reflected in operating lease right-of-use (“ROU”) assets and operating lease liabilities on the Consolidated Balance Sheets. For leases with a term of 12 months or less the Company made an accounting policy election, by class of underlying asset, not to recognize ROU assets and lease liabilities. The Company recognizes lease expense for such leases generally on a straight-line basis over the lease term.

ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent its obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. Variable lease payments are excluded from the ROU assets and lease liabilities and are recognized in the period in which the obligation for those payments is incurred. As the Company’s leases do not provide an implicit rate, the Company determines its incremental borrowing rate based on the information available at commencement date, or the date of the ASC 842 adoption, in determining the present value of lease payments. The weighted average incremental borrowing rate used to calculate the ROU assets and liabilities was 5.6%. ROU assets also include any lease payments made and exclude lease incentives. Many of the Company’s lessee agreements include options to extend the lease, which the Company does not include in its minimum lease terms unless the option is reasonably certain to be exercised. Rental expense for lease payments related to operating leases is recognized on a straight-line basis over the lease term. The weighted average remaining lease term was 30 years as of June 30, 2021.

Lessor Accounting

The presentation of revenues on the Consolidated Statements of Operations reflects a single lease component that combines rental, tenant recoveries and other tenant-related revenues for the office portfolio, with the election of the lessor practical expedient. For the Company’s rentals at the studio properties, total lease consideration is allocated to lease and non-lease components on a relative standalone basis. The recognition of revenues related to lease components is governed by ASC 842, while revenue related to non-lease components is subject to ASC 606, Revenue from Contracts with Customers (“ASC 606”).

Revenue Recognition

The Company has compiled an inventory of its sources of revenues and has identified the following material revenue streams: (i) rental revenues (ii) tenant recoveries and other tenant-related revenues (iii) ancillary revenues (iv) other revenues (v) sale of real estate (vi) management fee income and (vii) management services reimbursement income.

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Hudson Pacific Properties, Inc. and Hudson Pacific Properties, L.P.

Notes to Unaudited Consolidated Financial Statements

(Unaudited, tabular amounts in thousands, except square footage, share and unit data)

Revenue Stream

Components

Financial Statement Location

Rental revenues

Office rentals, stage rentals and storage rentals

Office and studio segments: rental

Tenant recoveries and other tenant-related revenues

Reimbursement of real estate taxes, insurance, repairs and maintenance, other operating expenses and must-take parking revenues

Office segment: rental
Studio segment: rental and service revenues and other

Ancillary revenues

Revenues derived from tenants’ use of lighting, equipment rental, power, HVAC and telecommunications (i.e., telephone and internet)

Studio segment: service revenues and other

Other revenues

Parking revenue that is not associated with lease agreements and other

Office and studio segments: service revenues and other

Sale of real estate

Gains on sales derived from cash consideration less cost basis

Gains on sale of real estate

Management fee income

Income derived from management services provided to unconsolidated joint venture entities

Fee income

Management services reimbursement income

Reimbursement of costs incurred by the Company in the management of unconsolidated joint venture entities

Management services reimbursement income—unconsolidated real estate entities

The Company recognizes rental revenue from tenants on a straight-line basis over the lease term when collectability is probable and the tenant has taken possession of or controls the physical use of the leased asset. The Company does not account for lease concessions related to the effects of the COVID-19 pandemic as lease modifications to the extent that the concessions are granted as payment deferrals and total payments remain substantially the same during the lease term.

The Company recognizes tenant recoveries related to reimbursement of real estate taxes, insurance, repairs and maintenance and other operating expenses as revenue in the period during which the applicable expenses are incurred. The reimbursements are recognized and presented gross, as the Company is generally the primary obligor with respect to purchasing goods and services from third-party suppliers, has discretion in selecting the supplier and bears the associated credit risk.

Other tenant-related revenues include parking stipulated in lease agreements as must-take parking rentals. These revenues are recognized over the term of the lease.

Ancillary revenues, other revenues, management fee income and management services reimbursement income are accounted for under ASC 606. These revenues have single performance obligations and are recognized at the point in time when services are rendered.

The following table summarizes the Company’s revenue streams that are accounted for under ASC 606 for the three and six months ended June 30, 2021 and 2020:


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Ancillary revenues	$	7,093	$	1,613	$	14,633	$	7,412
Other revenues	$	3,923	$	3,837	$	6,965	$	9,792
Studio-related tenant recoveries	$	483	$	378	$	1,006	$	823
Management fee income	$	797	$	556	$	1,645	$	1,166
Management services reimbursement income	$	626	$	—	$	626	$	—

The following table summarizes the Company’s receivables that are accounted for under ASC 606 as of:


	June 30, 2021		December 31, 2020
Ancillary revenues	$	1,465	$	1,700
Other revenues	$	1,215	$	1,058

In regards to sales of real estate, the Company applies certain recognition and measurement principles in accordance with ASC 606. The Company is required to evaluate the sales of real estate based on transfer of control. If a real estate sale contract

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Hudson Pacific Properties, Inc. and Hudson Pacific Properties, L.P.

Notes to Unaudited Consolidated Financial Statements

(Unaudited, tabular amounts in thousands, except square footage, share and unit data)

includes ongoing involvement with the sold property by the seller, the seller must evaluate each promised good or service under the contract to determine whether it represents a performance obligation, constitutes a guarantee or prevents the transfer of control. The timing and pattern of revenue recognition might change as it relates to gains on sale of real estate if the sale includes continued involvement that represents a separate performance obligation.

3. Investment in Real Estate

The following table summarizes the Company’s investment in real estate, at cost as of:


	June 30, 2021		December 31, 2020
Land	$	1,351,888	$	1,351,888
Building and improvements	5,948,317		5,840,819
Tenant improvements	742,968		728,111
Furniture and fixtures	12,881		12,250
Property under development	325,017		281,949
INVESTMENT IN REAL ESTATE, AT COST	$	8,381,071	$	8,215,017

Acquisitions

The Company had no acquisitions during the six months ended June 30, 2021.

Dispositions

The Company had no dispositions during the six months ended June 30, 2021.

Held for Sale

As of June 30, 2021, the Company had no properties that met the criteria to be classified as held for sale.

Impairment of Long-Lived Assets

The Company assesses the carrying value of real estate assets and related intangibles whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable in accordance with GAAP. Impairment losses are recorded on real estate assets held for investment when indicators of impairment are present and the future undiscounted cash flows estimated to be generated by those assets are less than the assets’ carrying amount. The Company recognizes impairment losses to the extent the carrying amount exceeds the fair value, based on Level 1 or Level 2 inputs, less estimated costs to sell.

The Company did not recognize impairment charges during the six months ended June 30, 2021 and 2020.

4. Investment in Unconsolidated Real Estate Entities

As of December 24, 2020, the Company owns 50% of the ownership interest in the joint venture which owns the Sunset Glenoaks Studios development in Los Angeles, California. The Company serves as the operating member.

The Company owns 20% of the ownership interest in the joint venture that owns Bentall Centre office property and retail complex in Vancouver, Canada (“Bentall Centre”). The Company serves as the operating partner. Bentall Centre’s functional currency is the local currency, or Canadian dollars. The Company has exposure to risks related to foreign currency fluctuations. The assets and liabilities are translated into U.S. dollars at the exchange rate in effect as of the financial statement date. Income statement accounts of our foreign subsidiaries are translated using the monthly-average exchange rate for the periods presented. Gains or losses resulting from the translation are classified in accumulated other comprehensive loss as a separate component of total equity and are excluded from net income. The maximum exposure related to this unconsolidated joint venture is limited to the Company’s investment and $104.2 million of debt which the Company has guaranteed.

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Hudson Pacific Properties, Inc. and Hudson Pacific Properties, L.P.

Notes to Unaudited Consolidated Financial Statements

(Unaudited, tabular amounts in thousands, except square footage, share and unit data)

The table below presents the combined and condensed balance sheets for the Company’s unconsolidated joint ventures as of:


	June 30, 2021		December 31, 2020
ASSETS
Investment in real estate, net	$	880,266	$	855,639
Other assets	42,943		51,118
TOTAL ASSETS	$	923,209	$	906,757

LIABILITIES
Secured debt, net	$	517,377	$	495,771
Other liabilities	39,060		52,828
TOTAL LIABILITIES	556,437		548,599

Company’s capital(1)	83,460		80,778
Partners’ capital	283,312		277,380
TOTAL CAPITAL	366,772		358,158

TOTAL LIABILITIES AND CAPITAL	$	923,209	$	906,757

__________________

1.To the extent the Company’s cost basis is different from the basis reflected at the joint venture level, the basis is amortized over the life of the related asset and is included in income from unconsolidated real estate entities on the Consolidated Statements of Operations.

The table below presents the combined and condensed statements of operations for the Company’s unconsolidated joint ventures:


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
TOTAL REVENUES	$	20,041	$	25,943	$	39,427	$	51,738

TOTAL EXPENSES	17,728		23,922		33,972		50,871

NET INCOME	$	2,313	$	2,021	$	5,455	$	867

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Hudson Pacific Properties, Inc. and Hudson Pacific Properties, L.P.

Notes to Unaudited Consolidated Financial Statements

(Unaudited, tabular amounts in thousands, except square footage, share and unit data)

5. Deferred Leasing Costs and Lease Intangibles, net

The following summarizes the Company’s deferred leasing costs and lease intangibles as of:


	June 30, 2021		December 31, 2020
Deferred leasing costs and in-place lease intangibles	$	351,637	$	352,903
Accumulated amortization	(138,852)		(127,180)
Deferred leasing costs and in-place lease intangibles, net	212,785		225,723
Below-market ground leases	72,916		72,916
Accumulated amortization	(15,028)		(13,831)
Below-market ground leases, net	57,888		59,085
Above-market leases	1,984		2,802
Accumulated amortization	(1,456)		(1,774)
Above-market leases, net	528		1,028
DEFERRED LEASING COSTS AND LEASE INTANGIBLE ASSETS, NET	$	271,201	$	285,836

Below-market leases	$	92,181	$	98,365
Accumulated amortization	(49,628)		(50,054)
Below-market leases, net	42,553		48,311
Above-market ground leases	1,095		1,095
Accumulated amortization	(284)		(262)
Above-market ground leases, net	811		833
LEASE INTANGIBLE LIABILITIES, NET	$	43,364	$	49,144

The Company recognized the following amortization related to deferred leasing costs and lease intangibles:


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Deferred leasing costs and in-place lease intangibles(1)	$	(11,654)	$	(10,129)	$	(23,221)	$	(20,864)
Below-market ground leases(2)	$	(598)	$	(599)	$	(1,197)	$	(1,198)
Above-market leases(3)	$	(76)	$	(159)	$	(500)	$	(353)
Below-market leases(3)	$	2,815	$	2,622	$	5,758	$	5,360
Above-market ground leases(2)	$	11	$	11	$	22	$	22

__________________

1.Amortization is recorded in depreciation and amortization expenses and office rental revenues on the Consolidated Statements of Operations.

2.Amortization is recorded in office operating expenses on the Consolidated Statements of Operations.

3.Amortization is recorded in office rental revenues on the Consolidated Statements of Operations.

6. Receivables

The Company’s accounting policy and methodology used to estimate the allowance for doubtful accounts related to service revenues are discussed in the Company’s 2020 Annual Report on Form 10-K.

Accounts Receivable

As of June 30, 2021, accounts receivable was $16.4 million and there was no allowance for doubtful accounts. As of December 31, 2020, accounts receivable was $22.1 million and there was no allowance for doubtful accounts.

Straight-Line Rent Receivables

As of June 30, 2021, straight-line rent receivables was $238.8 million and there was a $19.0 thousand allowance for doubtful accounts. As of December 31, 2020, straight-line rent receivables was $226.0 million and there was a $0.3 million allowance for doubtful accounts.

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Hudson Pacific Properties, Inc. and Hudson Pacific Properties, L.P.

Notes to Unaudited Consolidated Financial Statements

(Unaudited, tabular amounts in thousands, except square footage, share and unit data)

7. Prepaid Expenses and Other Assets, net

The following table summarizes the Company’s prepaid expenses and other assets, net as of:


	June 30, 2021		December 31, 2020

Deposits and pre-development costs for future acquisitions	$	40,470	$	28,488
Prepaid insurance	12,550		5,100
Goodwill	8,754		8,754
Non-real estate investments	21,646		4,088
Stock purchase warrant	1,839		—
Deferred financing costs	695		1,216
Prepaid property tax	—		2,138
Interest rate cap derivative asset	5		5
Other	25,128		22,878
PREPAID EXPENSES AND OTHER ASSETS, NET	$	111,087	$	72,667

Goodwill

No goodwill impairment indicators have been identified during the three and six months ended June 30, 2021.

Non-Real Estate Investments

The Company measures its investments in common stock and convertible preferred stock at fair value based on Level 1 and Level 2 inputs, respectively. The Company measures its investments in funds that do not have a readily determinable fair value using the Net Asset Value (“NAV”) practical expedient and uses NAV reported without adjustment unless it is aware of information indicating the NAV reported does not accurately reflect the fair value of the investment. Changes in the fair value of these non-real estate investments are included in unrealized gain (loss) on non-real estate investments on the Consolidated Statements of Operations. The Company recognized an unrealized gain of $5.1 million and $9.0 million on its non-real estate investments during the three and six months ended June 30, 2021, respectively, due to the observable changes in fair value. The Company recognized an unrealized loss of $0.7 million and $1.2 million on its non-real estate investments during the three and six months ended June 30, 2020, respectively, due to the observable changes in fair value.

Stock Purchase Warrant

The Company holds an investment in a stock purchase warrant that gives the Company the right to purchase a fixed number of shares of common stock of a non-real estate investee. The warrant meets the definition of a derivative and is measured at fair value based on Level 2 inputs. Changes in the fair value of the derivative asset are included in unrealized gain (loss) on non-real estate investments on the Consolidated Statements of Operations. The Company recognized an unrealized loss of $0.1 million and an unrealized gain of $1.8 million related to the change in the fair value of the stock purchase warrant during the three and six months ended June 30, 2021, respectively. No gain or loss was recognized related to the change in the fair value of the stock purchase warrant during the three and six months ended June 30, 2020.

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Hudson Pacific Properties, Inc. and Hudson Pacific Properties, L.P.

Notes to Unaudited Consolidated Financial Statements

(Unaudited, tabular amounts in thousands, except square footage, share and unit data)

8. Debt

The following table sets forth information with respect to the Company’s outstanding indebtedness:


	June 30, 2021		December 31, 2020		Interest Rate(1)	Contractual Maturity Date
UNSECURED AND SECURED DEBT
Unsecured debt
Unsecured revolving credit facility(2)(3)	$	—	$	—	LIBOR + 1.05% to 1.50%	3/13/2022	(4)
Series A notes	110,000		110,000		4.34%	1/2/2023
Series B notes	259,000		259,000		4.69%	12/16/2025
Series C notes	56,000		56,000		4.79%	12/16/2027
Series D notes	150,000		150,000		3.98%	7/6/2026
Series E notes	50,000		50,000		3.66%	9/15/2023
3.95% Registered senior notes	400,000		400,000		3.95%	11/1/2027
4.65% Registered senior notes	500,000		500,000		4.65%	4/1/2029
3.25% Registered senior notes	400,000		400,000		3.25%	1/15/2030
Total unsecured debt	1,925,000		1,925,000

Secured debt


Hollywood Media Portfolio, net(5)(6)	792,186		792,186		LIBOR + 2.15%	8/9/2022
10950 Washington(7)	25,404		25,717		5.32%	3/11/2022
One Westside and 10850 Pico(8)	192,923		106,073		LIBOR + 1.70%	12/18/2023	(4)
Element LA	168,000		168,000		4.59%	11/6/2025
1918 Eighth(9)	314,300		314,300		LIBOR + 1.70%	12/18/2025
Hill7(10)	101,000		101,000		3.38%	11/6/2028
Total secured debt	1,593,813		1,507,276
Total unsecured and secured debt	3,518,813		3,432,276
Unamortized deferred financing costs and loan discounts/premiums(11)	(27,770)		(32,784)
TOTAL UNSECURED AND SECURED DEBT, NET	$	3,491,043	$	3,399,492

IN-SUBSTANCE DEFEASED DEBT(12)	$	129,971	$	131,707	4.47%	10/1/2022

JOINT VENTURE PARTNER DEBT(13)	$	66,136	$	66,136	4.50%	10/9/2028

_________________

1.Interest rate with respect to indebtedness is calculated on the basis of a 360-day year for the actual days elapsed. Interest rates are as of June 30, 2021, which may be different than the interest rates as of December 31, 2020 for corresponding indebtedness.

2.The rate is based on the operating partnership’s leverage ratio. The Company has an option to make an irrevocable election to change the interest rate depending on the Company’s credit rating or a specified base rate plus an applicable margin. As of June 30, 2021, no such election had been made.

3.The Company has a total capacity of $600.0 million available under its unsecured revolving credit facility.

4.The maturity date may be extended once for an additional one-year term.

5.The Company owns 51% of the ownership interest in the consolidated joint venture that owns the Hollywood Media Portfolio. The joint venture holds a $900.0 million mortgage loan secured by the Hollywood Media Portfolio. This loan has an initial term of two years from the first payment date, with three one-year extension options, subject to certain requirements. The Company and Blackstone each purchased bonds comprising the loan in the amounts of $107.8 million and $12.5 million, respectively.

6.The interest rate on a portion of the outstanding loan balance has been effectively fixed through the use of interest rate swaps under the first payments approach. As of June 30, 2021, the LIBOR component of the interest rate was fixed at 1.76% with respect to $350.0 million and 1.43% with respect to $125.0 million of the loan secured by the Hollywood Media Portfolio, respectively.

7.Monthly debt service includes debt amortization payments based on a 30-year amortization schedule with a balloon payment at maturity.

8.The Company has the ability to draw up to $414.6 million under the construction loan secured by the One Westside and 10850 Pico properties.

9.The Company owns 55% of the ownership interest in the consolidated joint venture that owns the 1918 Eighth property. The full amount of the loan is shown. This loan has an initial interest rate of LIBOR plus 1.70% per annum and is interest-only through the five-year term.

10.The Company owns 55% of the ownership interest in the consolidated joint venture that owns the Hill7 property. The full amount of the loan is shown. This loan bears interest only at 3.38% until November 6, 2026, at which time the interest rate will increase and monthly debt service will include principal payments with a balloon payment at maturity.

11.Excludes deferred financing costs related to establishing the Company’s unsecured revolving credit facility, which are reflected in prepaid expenses and other assets, net on the Consolidated Balance Sheets. See Note 7 for details.

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Hudson Pacific Properties, Inc. and Hudson Pacific Properties, L.P.

Notes to Unaudited Consolidated Financial Statements

(Unaudited, tabular amounts in thousands, except square footage, share and unit data)

12.The Company owns 75% of the ownership interest in the joint venture that owns the One Westside and 10850 Pico properties. The full amount of the loan is shown. Monthly debt service includes debt amortization payments based on a 10-year amortization schedule with a balloon payment at maturity.

13.This amount relates to debt attributable to Allianz U.S. Private REIT LP (“Allianz”), the Company’s partner in the joint venture that owns the Ferry Building property. The maturity date may be extended twice for an additional two-year term each.

Current Year Activity

During the six months ended June 30, 2021, there were no borrowings on the unsecured revolving credit facility. The Company generally uses the unsecured revolving credit facility to finance the acquisition of properties, to provide funds for tenant improvements and capital expenditures and to provide for working capital and other corporate purposes.

Indebtedness

The Company presents its financial statements on a consolidated basis. Notwithstanding such presentation, except to the extent expressly indicated, the Company’s separate property-owning subsidiaries are not obligors of or under the debt of their respective affiliates and each property-owning subsidiary’s separate liabilities do not constitute obligations of its respective affiliates.

Loan agreements include events of default that the Company believes are usual for loans and transactions of this type. As of the date of this filing, there have been no events of default associated with the Company’s loans.

The following table provides information regarding the Company’s future minimum principal payments due on the Company’s debt (before the impact of extension options, if applicable) as of June 30, 2021:


Year	Unsecured and Secured Debt		In-substance Defeased Debt		Joint Venture Partner Debt
Remaining 2021	$	319	$	1,758	$	—
2022	817,271		128,213		—
2023	352,923		—		—
2024	—		—		—
2025	741,300		—		—
Thereafter	1,607,000		—		66,136
TOTAL	$	3,518,813	$	129,971	$	66,136

Unsecured Revolving Credit Facility

The following table summarizes the balance and key terms of the unsecured revolving credit facility as of:


	June 30, 2021		December 31, 2020
Outstanding borrowings	$	—	$	—
Remaining borrowing capacity	600,000		600,000
TOTAL BORROWING CAPACITY	$	600,000	$	600,000
Interest rate(1)	LIBOR + 1.05% to 1.50%
Annual facility fee rate(1)	0.15% or 0.30%
Contractual maturity date(2)	3/13/2022

_________________

1.The rate is based on the operating partnership’s leverage ratio. The Company has the option to make an irrevocable election to change the interest rate depending on the Company’s credit rating. As of June 30, 2021, no such election had been made.

2.The maturity date may be extended once for an additional one-year term.

Debt Covenants

The operating partnership’s ability to borrow under its unsecured loan arrangements remains subject to ongoing compliance with financial and other covenants as defined in the respective agreements. Certain financial covenant ratios are subject to change in the occurrence of material acquisitions as defined in the respective agreements. Other covenants include certain limitations on dividend payouts and distributions, limits on certain types of investments outside of the operating partnership’s primary business and other customary affirmative and negative covenants.

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Hudson Pacific Properties, Inc. and Hudson Pacific Properties, L.P.

Notes to Unaudited Consolidated Financial Statements

(Unaudited, tabular amounts in thousands, except square footage, share and unit data)

The following table summarizes existing covenants and their covenant levels as of June 30, 2021 related to the unsecured revolving credit facility, term loans and note purchase agreements, when considering the most restrictive terms:

Covenant Ratio

Covenant Level

Actual Performance

Total liabilities to total asset value

≤ 60%

39.4%

Unsecured indebtedness to unencumbered asset value

≤ 60%

37.7%

Adjusted EBITDA to fixed charges

≥ 1.5x

3.6x

Secured indebtedness to total asset value

≤ 45%

18.7%

Unencumbered NOI to unsecured interest expense

≥ 2.0x

3.4x

The following table summarizes existing covenants and their covenant levels related to the registered senior notes as of June 30, 2021:

Covenant Ratio(1)

Covenant Level

Actual Performance

Debt to total assets

≤ 60%

41.0%

Total unencumbered assets to unsecured debt

≥ 150%

291.7%

Consolidated income available for debt service to annual debt service charge

≥ 1.5x

3.8x

Secured debt to total assets

≤ 45%

19.2%

_________________

1.The covenant and actual performance metrics above represent terms and definitions reflected in the indentures governing the 3.25% Senior Notes, 3.95% Senior Notes and 4.65% Senior Notes.

The operating partnership was in compliance with its financial covenants as of June 30, 2021.

Repayment Guarantees

Although the rest of the operating partnership’s loans are secured and non-recourse, the operating partnership provides limited customary secured debt guarantees for items such as voluntary bankruptcy, fraud, misapplication of payments and environmental liabilities.

The Company guarantees the operating partnership’s unsecured debt.

Interest Expense

The following table represents a reconciliation from gross interest expense to the interest expense on the Consolidated Statements of Operations:


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Gross interest expense(1)	$	33,889	$	31,165	$	67,429	$	61,451
Capitalized interest	(5,618)		(4,479)		(11,289)		(9,593)
Amortization of deferred financing costs and loan discounts/premiums	2,418		1,244		4,835		2,489
INTEREST EXPENSE	$	30,689	$	27,930	$	60,975	$	54,347

_________________

1.Includes interest on the Company’s debt and hedging activities and term loans.

9. Derivatives

The Company enters into derivatives in order to hedge interest rate risk.

The Company had three interest rate swaps with aggregate notional amounts of $475.0 million as of June 30, 2021 and December 31, 2020. These derivatives were designated as effective cash flow hedges for accounting purposes.

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Notes to Unaudited Consolidated Financial Statements

(Unaudited, tabular amounts in thousands, except square footage, share and unit data)

The Company had one interest rate cap contract with an aggregate notional amount of $900.0 million as of June 30, 2021 and December 31, 2020. The interest rate cap is not designated under hedge accounting and is accounted for under mark-to-market accounting.

The Company has agreements with its derivative counterparties that contain a provision where the Company could be declared in default on its derivative obligations if repayment of the underlying indebtedness is accelerated by the lender due to the Company’s default on the indebtedness.

The Company’s derivatives are classified as Level 2 and their fair values are derived from estimated values obtained from observable market data for similar instruments.

The fair market value of derivatives is presented on a gross basis on the Consolidated Balance Sheets. The following table summarizes the Company’s derivative instruments as of June 30, 2021 and December 31, 2020:


						Interest Rate Range(1)		Fair Value (Liabilities) Assets
Underlying Debt Instrument	Number of Derivatives	Notional Amount		Effective Date	Maturity Date	Low	High	June 30, 2021		December 31, 2020
Interest rate swaps
Hollywood Media Portfolio(2)	2	$	350,000	April 2015	April 2022	2.96%	3.46%	(4,341)		(7,112)
Hollywood Media Portfolio(2)	1	125,000		June 2016	November 2022	2.63%	3.13%	(2,191)		(2,994)
Interest rate cap						Strike rate
Hollywood Media Portfolio	1	$	900,000	July 2020	August 2022	3.50%		$	5	$	5
TOTAL								$	(6,527)	$	(10,101)

_____________

1.The rate is based on the fixed rate from the swap and the spread based on the operating partnership’s leverage ratio.

2.The swaps were designated under the first payments approach within hedge accounting, where the Company elected to designate a cash flow (LIBOR-based interest payments) instead of a specific piece of debt.

The Company reclassifies unrealized gains and losses related to cash flow hedges into earnings in the same period during which the hedged forecasted transaction affects earnings. As of June 30, 2021, the Company expects $6.0 million of unrealized loss included in accumulated other comprehensive loss will be reclassified as an increase to interest expense in the next 12 months.

10. U.S. Government Securities

The Company had U.S. Government securities of $132.2 million and $135.1 million as of June 30, 2021 and December 31, 2020, respectively. The acquisition of the One Westside and 10850 Pico properties in 2018 included the assumption of debt that was, in substance, defeased through the purchase of U.S. Government-backed securities. The securities are investments held to maturity and are carried at amortized cost on the Consolidated Balance Sheets. The Company has both the intent and ability to hold to maturity. As of June 30, 2021, the Company has incurred $4.2 million of gross unrealized gains and no gross unrealized losses related to the U.S. Government securities.

The following table summarizes the carrying value and fair value of the Company’s securities by the contractual maturity date as of June 30, 2021:


	Carrying Value		Fair Value
Due in 1 year	$	132,222	$	136,436

TOTAL	$	132,222	$	136,436

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Hudson Pacific Properties, Inc. and Hudson Pacific Properties, L.P.

Notes to Unaudited Consolidated Financial Statements

(Unaudited, tabular amounts in thousands, except square footage, share and unit data)

11. Income Taxes

Hudson Pacific Properties, Inc. has elected to be taxed as a REIT under the Internal Revenue Code of 1986, as amended (the “Code”), commencing with its taxable year ended December 31, 2010. Provided it continues to qualify for taxation as a REIT, Hudson Pacific Properties, Inc. is generally not subject to corporate-level income tax on the earnings distributed currently to its stockholders. The Company has elected, together with certain of its subsidiaries, to treat each such subsidiary as a taxable REIT subsidiary (“TRS”) for federal income tax purposes.

In general, the Company’s property-owning subsidiaries are limited liability companies and are treated as pass-through entities or disregarded entities (or, in the case of the entities that own the 1455 Market, Hill7, Ferry Building and 1918 Eighth properties, REITs) for federal income tax purposes. In the case of the Bentall Centre property, the Company owns its interest in the property through non-U.S entities treated as TRSs for federal income tax purposes. Accordingly, no provision has been made for federal income taxes in the accompanying consolidated financial statements for the activities of these entities.

The Company periodically evaluates its tax positions to determine whether it is more likely than not that such positions would be sustained upon examination by a tax authority for all open tax years, as defined by the statute of limitations, based on their technical merits. As of June 30, 2021, the Company has not established a liability for uncertain tax positions.

The Company and certain of its TRSs file income tax returns with the U.S. federal government and various state and local jurisdictions. The Company and its TRSs are no longer subject to tax examinations by tax authorities for years prior to 2016. The Company has assessed its tax positions for all open years, which as of June 30, 2021 included 2017 to 2019 for Federal purposes and 2016 to 2019 for state purposes, and concluded that there are no material uncertainties to be recognized.

12. Future Minimum Rents and Lease Payments

The following table summarizes the future minimum base rents (excluding tenant reimbursements for operating expenses and termination fees related to tenants exercising early termination options) for properties as of June 30, 2021:


Year Ended	Non-cancellable		Subject to Early Termination Options		Total (1)
Remaining 2021	$	311,520	$	3,714	$	315,234
2022	594,199		16,171		610,370
2023	548,483		23,475		571,958
2024	486,552		18,290		504,842
2025	347,429		54,345		401,774
Thereafter	1,514,190		206,961		1,721,151
TOTAL	$	3,802,373	$	322,956	$	4,125,329

_____________

1.Excludes rents under leases at the Company’s studio properties with terms of one year or less.

Operating Lease Agreements

The Company is party to long-term non-cancellable operating lease agreements in which it is a lessee, consisting of thirteen ground leases, one office lease and one fitness facility lease as of June 30, 2021. The Company’s operating lease obligations have expiration dates ranging from 2023 through 2067, including extension options which the Company is reasonably certain to exercise. Certain leases provide for variable rental payments based on third-party appraisals of fair market land value, CPI adjustments or a percentage of annual gross income. There are no notable restrictions or covenants imposed by the leases, nor guarantees of residual value.

As of June 30, 2021, the present value of the remaining contractual payments of $605.9 million under the Company’s operating lease agreements was $274.4 million. The corresponding operating lease right-of-use assets amounted to $268.5 million.

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Hudson Pacific Properties, Inc. and Hudson Pacific Properties, L.P.

Notes to Unaudited Consolidated Financial Statements

(Unaudited, tabular amounts in thousands, except square footage, share and unit data)

The following table provides information regarding the Company’s future minimum lease payments for its operating leases (including the impact of the extension options which the Company is reasonably certain to exercise) as of June 30, 2021:


Year	Lease Payments1
Remaining 2021	$	9,666
2022	19,341
2023	19,129
2024	19,096
2025	19,109
Thereafter	519,518
Total operating lease payments	605,859
Less: interest portion	(331,451)
PRESENT VALUE OF OPERATING LEASE LIABILITIES	$	274,408

_____________

1.Future minimum lease payments for operating leases denominated in Canadian dollars are translated to U.S. dollars using the exchange rate in effect as of the financial statement date.

The following table summarizes rental expense for operating leases:


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Variable rental expense	$	2,494	$	2,100	$	5,108	$	4,256
Minimum rental expense	$	5,551	$	4,991	$	10,542	$	9,982

13. Fair Value of Financial Instruments

The GAAP fair value framework uses a three-tiered approach. Fair value measurements are classified and disclosed in one of the following three categories:

•Level 1: unadjusted quoted prices in active markets that are accessible at the measurement date for identical assets or liabilities;

•Level 2: quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-derived valuations in which significant inputs and significant value drivers are observable in active markets; and

•Level 3: prices or valuation techniques where little or no market data is available that require inputs that are both significant to the fair value measurement and unobservable.

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Hudson Pacific Properties, Inc. and Hudson Pacific Properties, L.P.

Notes to Unaudited Consolidated Financial Statements

(Unaudited, tabular amounts in thousands, except square footage, share and unit data)

The Company’s financial assets and liabilities measured and reported at fair value on a recurring basis include the following as of:


	June 30, 2021								December 31, 2020
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Interest rate cap derivative asset(1)	$	—	$	5	$	—	$	5	$	—	$	5	$	—	$	5
Interest rate swap derivative liabilities(2)	$	—	$	(6,532)	$	—	$	(6,532)	$	—	$	(10,106)	$	—	$	(10,106)
Non-real estate investments measured at fair value(1)	$	2,030	$	1,672	$	—	$	3,702	$	—	$	750	$	—	$	750
Stock purchase warrant(1)	$	—	$	1,839	$	—	$	1,839	$	—	$	—	$	—	$	—
Non-real estate investments measured at NAV(1)(3)	$	—	$	—	$	—	$	17,944	$	—	$	—	$	—	$	3,338

___________

1.Included in prepaid expenses and other assets, net on the Consolidated Balance Sheets.

2.Included in accounts payable, accrued liabilities and other on the Consolidated Balance Sheets.

3.According to the relevant accounting standards, certain investments that are measured at fair value using the NAV practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in the table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the Consolidated Balance Sheets.

Other Financial Instruments

The carrying values of cash and cash equivalents, restricted cash, accounts receivable, accounts payable and accrued liabilities are reasonable estimates of fair value, using Level 1 inputs, because of the short-term nature of these instruments. The fair value of the investment in U.S. Government securities is an estimate based on Level 1 inputs. The fair values of debt are estimates based on rates currently prevailing for similar instruments of similar maturities using Level 2 inputs.

The table below represents the carrying value and fair value of the Company’s investment in securities and debt as of:


	June 30, 2021				December 31, 2020
	Carrying Value		Fair Value		Carrying Value		Fair Value
ASSETS
U.S. Government securities	$	132,222	$	136,436	$	135,115	$	140,270
LIABILITIES
Unsecured debt(1)	$	1,925,000	$	2,058,872	$	1,925,000	$	2,072,833
Secured debt(1)	$	1,593,813	$	1,592,751	$	1,507,276	$	1,503,960
In-substance defeased debt	$	129,971	$	130,267	$	131,707	$	131,633
Joint venture partner debt	$	66,136	$	69,288	$	66,136	$	68,346

_________________

1.Amounts represent debt excluding net deferred financing costs.

14. Stock-based Compensation

The Company has various stock compensation arrangements, which are more fully described in the 2020 Annual Report on Form 10-K. Under the 2010 Incentive Plan, as amended (“2010 Plan”), the Company’s board of directors (“Board”) has the ability to grant, among other things, restricted stock, restricted stock units, operating partnership performance units and performance-based awards.

The Board awards restricted shares to non-employee Board members on an annual basis as part of such Board members’ annual compensation and to newly elected non-employee Board members in accordance with the Non-Employee Director Compensation Program. The time-based awards are generally issued in the second quarter, in conjunction with the director’s election to the Board, and the individual share awards vest in equal annual installments over the applicable service vesting period, which is three years. Additionally, certain non-employee Board members elect to receive operating partnership performance units

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Hudson Pacific Properties, Inc. and Hudson Pacific Properties, L.P.

Notes to Unaudited Consolidated Financial Statements

(Unaudited, tabular amounts in thousands, except square footage, share and unit data)

in lieu of their annual cash retainer fees. These awards are generally issued in the fourth quarter and are fully-vested upon their issuance.

The Board awards time-based restricted shares or time-based operating partnership performance units to certain employees on an annual basis as part of the employees’ annual compensation. These time-based awards are generally issued in the fourth quarter and vest in equal annual installments over the applicable service vesting period, which is generally three years. Additionally, certain awards are subject to a mandatory holding period upon vesting if the grantee is a named executive officer. Additionally, certain employees elect to receive operating partnership performance units in lieu of their annual cash bonus. These awards are generally issued in the fourth quarter and are fully-vested upon their issuance.

The Compensation Committee of the Board (“Compensation Committee”) adopted a Hudson Pacific Properties, Inc. Outperformance Program (“OPP Plan”) under the 2010 Plan through 2019. Commencing with the 2017 OPP Plan, to the extent an award is earned following the completion of a three-year performance period, 50% of the earned award will vest in full at the end of the three-year performance period and 50% of the earned award will be subject to a mandatory two-year holding period upon vesting. OPP Plan awards are settled in common stock and, in the case of certain executives, in operating partnership performance units.

Beginning in 2020, the Compensation Committee adopted an annual Hudson Pacific Properties, Inc. Performance Stock Unit Plan (“PSU Plan”). Under the PSU Plan, the Compensation Committee awards restricted stock units or performance units in the operating partnership to certain employees. PSU Plan grants consist of two portions. A portion of each award, the Relative Total Shareholder Return (“TSR”) Performance Unit, is eligible to vest based on the achievement of the Company’s TSR compared to the TSR of the SNL U.S. REIT Office Index over a three-year performance period, with the vesting percentage subject to certain percentage targets. The remaining portion of each award, the Operational Performance Unit, becomes eligible to vest based on the achievement of operational performance metrics over a one-year performance period and vests over three years. The number of Operational Performance Units that becomes eligible to vest based on the achievement of operational performance metrics may be adjusted based on the Company’s achievement of absolute TSR goals over a three-year performance period by applying the applicable vesting percentages. Certain of the awards granted under the PSU Plan are subject to a two-year post-vesting restriction period, during which any awards earned may not be sold or transferred.

The following table presents the classification and amount recognized for stock-based compensation related to the Company’s awards:


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Expensed stock compensation(1)	$	6,340	$	4,723	$	9,878	$	9,618
Capitalized stock compensation(2)	1,009		581		1,888		1,566
TOTAL STOCK COMPENSATION(3)	$	7,349	$	5,304	$	11,766	$	11,184

_________________

1.Amounts are recorded in general and administrative expenses on the Consolidated Statements of Operations.

2.Amounts are recorded in investment in real estate, at cost on the Consolidated Balance Sheets.

3.Amounts are recorded in additional paid-in capital and non-controlling interest—units in the operating partnership on the Consolidated Balance Sheets.

15. Earnings Per Share

Hudson Pacific Properties, Inc.

The Company calculates basic earnings per share using the two-class method by dividing the net income available to common stockholders for the period by the weighted average number of common shares outstanding during the period. Unvested time-based restricted stock awards, unvested time-based performance unit awards and unvested restricted stock units (“RSUs”) that contain non-forfeitable rights to dividends are participating securities and are included in the computation of earnings per share pursuant to the two-class method. The Company calculates diluted earnings per share using the two-class method or the treasury stock and if-converted method, whichever results in more dilution. For the three and six months ended months ended June 30, 2021 and 2020, both methods of calculation yielded the same diluted earnings per share amount. Diluted earnings per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock, where such exercise or conversion would result in a lower earnings per share amount.

Table of Contents

Hudson Pacific Properties, Inc. and Hudson Pacific Properties, L.P.

Notes to Unaudited Consolidated Financial Statements

(Unaudited, tabular amounts in thousands, except square footage, share and unit data)

The following table reconciles the numerator and denominator in computing the Company’s basic and diluted earnings per share for net income available to common stockholders:


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Numerator:
Basic net income available to common stockholders	$	2,315	$	3,691	$	7,297	$	14,468
Effect of dilutive instruments	18		39		—		146
Diluted net income available to common stockholders	$	2,333	$	3,730	$	7,297	$	14,614
Denominator:
Basic weighted average common shares outstanding	151,169,612		153,306,976		150,997,564		153,869,789
Effect of dilutive instruments(1)	1,513,851		2,314,537		305,281		2,645,537
DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING	152,683,463		155,621,513		151,302,845		156,515,326
Basic earnings per common share	$	0.02	$	0.02	$	0.05	$	0.09
Diluted earnings per common share	$	0.02	$	0.02	$	0.05	$	0.09

________________

1.The Company includes unvested awards and convertible common and participating units as contingently issuable shares in the computation of diluted earnings per share once the market or performance criteria are met, assuming that the end of the reporting period is the end of the contingency period. Any anti-dilutive securities are excluded from the diluted earnings per share calculation.

Hudson Pacific Properties, L.P.

The operating partnership calculates basic earnings per unit using the two-class method by dividing the net income available to common unitholders for the period by the weighted average number of common units outstanding during the period. Unvested time-based restricted stock awards, unvested time-based performance unit awards and unvested RSUs that contain non-forfeitable rights to dividends are participating securities and are included in the computation of earnings per unit pursuant to the two-class method. The operating partnership calculates diluted earnings per unit using the two-class method or the treasury stock and if-converted method, whichever results in more dilution. For the three and six months ended June 30, 2021 and 2020, both methods of calculation yielded the same diluted earnings per unit amount. Diluted earnings per unit reflects the potential dilution that could occur if securities or other contracts to issue common units were exercised or converted into common units, where such exercise or conversion would result in a lower earnings per unit amount.

The following table reconciles the numerator and denominator in computing the operating partnership’s basic and diluted earnings per unit for net income available to common unitholders:


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Numerator:
Basic and diluted net income available to common unitholders	$	2,334	$	3,713	$	7,366	$	14,553
Denominator:
Basic weighted average common units outstanding	152,551,236		154,218,834		152,369,823		154,781,647
Effect of dilutive instruments(1)	132,227		794,000		305,281		1,125,000
DILUTED WEIGHTED AVERAGE COMMON UNITS OUTSTANDING	152,683,463		155,012,834		152,675,104		155,906,647
Basic earnings per common unit	$	0.02	$	0.02	$	0.05	$	0.09
Diluted earnings per common unit	$	0.02	$	0.02	$	0.05	$	0.09

________________

1.The operating partnership includes unvested awards as contingently issuable units in the computation of diluted earnings per unit once the market or performance criteria are met, assuming that the end of the reporting period is the end of the contingency period. Any anti-dilutive securities are excluded from the diluted earnings per unit calculation.

Table of Contents

Hudson Pacific Properties, Inc. and Hudson Pacific Properties, L.P.

Notes to Unaudited Consolidated Financial Statements

(Unaudited, tabular amounts in thousands, except square footage, share and unit data)

16. Redeemable Non-controlling Interest

Redeemable Preferred Units of the Operating Partnership

As of June 30, 2021 and December 31, 2020, there were 392,598 series A preferred units of partnership interest in the operating partnership (“series A preferred units”) which are not owned by the Company.

These series A preferred units are entitled to preferential distributions at a rate of 6.25% per annum on the liquidation preference of $25.00 per unit. The units are convertible at the option of the holder into common units or redeemable into cash or, at the Company’s election, exchangeable for registered shares of common stock.

Redeemable Non-controlling Interest in Consolidated Real Estate Entities

On March 1, 2018, the Company entered into a joint venture agreement with Macerich WSP, LLC (“Macerich”) to form HPP-MAC WSP, LLC. On August 31, 2018, Macerich contributed Westside Pavilion to the HPP-MAC WSP, LLC. The Company has a 75% interest in the joint venture that owns the One Westside and 10850 Pico properties. The Company has a put right, after a specified time, to sell its interest at fair market value. Macerich has a put right, after a specified time, to sell its interest at fair market value, which is a redemption right that is not solely within the control of the Company. Therefore, the non-controlling interest related to this joint venture is included as temporary equity. The put right is not currently redeemable.

On October 9, 2018, the Company entered into a joint venture with Allianz to purchase the Ferry Building property. The Company has a 55% interest in the joint venture that owns the Ferry Building property. The Company has a put right, if certain events occur, to sell its interest at fair market value. Allianz has a put right, if certain events occur, to sell its interest at fair market value, which is a redemption right that is not solely within the control of the Company. Therefore, the non-controlling interest related to this joint venture is included as temporary equity. The put right is not currently redeemable.

The following table reconciles the beginning and ending balances of redeemable non-controlling interests:


	Three Months Ended June 30, 2021				Six Months Ended June 30, 2021
	Series A Redeemable Preferred Units		Consolidated Real Estate Entities		Series A Redeemable Preferred Units		Consolidated Entities
BEGINNING OF PERIOD	$	9,815	$	128,661	$	9,815	$	127,874
Contributions	—		74		—		1,543
Distributions	—		(8)		—		(8)
Declared dividend	(153)		—		(306)		—
Net income (loss)	153		(1,282)		306		(1,964)

END OF PERIOD	$	9,815	$	127,445	$	9,815	$	127,445

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Hudson Pacific Properties, Inc. and Hudson Pacific Properties, L.P.

Notes to Unaudited Consolidated Financial Statements

(Unaudited, tabular amounts in thousands, except square footage, share and unit data)

17. Equity

The table below presents the activity related to Hudson Pacific Properties, Inc.’s accumulated other comprehensive loss (“OCI”):


	Derivative Instruments		Currency Translation Adjustments		Total Accumulated Other Comprehensive Loss
BALANCE AT DECEMBER 31, 2020	$	(11,378)	$	3,245	$	(8,133)
Unrealized (losses) gains recognized in OCI	(134)		1,897		1,763
Reclassification adjustment for realized gains(1)	3,634		—		3,634
Net change in OCI	3,500		1,897		5,397
BALANCE AT JUNE 30, 2021	$	(7,878)	$	5,142	$	(2,736)

_____________

1.The gains and losses on the Company’s derivative instruments classified as hedges are reported in interest expense on the Consolidated Statements of Operations.

The table below presents the activity related to Hudson Pacific Properties, L.P.’s OCI:


	Derivative Instruments		Currency Translation Adjustments		Total Accumulated Other Comprehensive Loss
BALANCE AT DECEMBER 31, 2020	$	(11,485)	$	3,239	$	(8,246)
Unrealized (losses) gains recognized in OCI	(136)		1,923		1,787
Reclassification adjustment for realized gains(1)	3,683		—		3,683
Net change in OCI	3,547		1,923		5,470
BALANCE AT JUNE 30, 2021	$	(7,938)	$	5,162	$	(2,776)

_____________

1.The gains and losses on the operating partnership’s derivative instruments classified as hedges are reported in interest expense on the Consolidated Statements of Operations.

Non-controlling Interests

Common Units in the Operating Partnership

Common units of the operating partnership and shares of common stock of the Company have essentially the same economic characteristics, as they share equally in the total net income or loss distributions of the operating partnership. Investors who own common units have the right to cause the operating partnership to repurchase any or all of their common units for cash at a value equal to the then-current market value of one share of common stock. However, in lieu of such payment of cash, the Company may, at its election, issue shares of its common stock in exchange for such common units on a one-for-one basis.

Performance Units in the Operating Partnership

Performance units are partnership interests in the operating partnership. Each performance unit awarded will be deemed equivalent to an award of one share of common stock under the 2010 Plan, reducing the availability for other equity awards on a one-for-one basis. Under the terms of the performance units, the operating partnership will revalue its assets for tax purposes upon the occurrence of certain specified events and any increase in valuation from the time of grant until such event will be allocated first to the holders of performance units to equalize the capital accounts of such holders with the capital accounts of common unitholders. Subject to any agreed upon exceptions, once vested and having achieved parity with common unitholders, performance units are convertible into common units in the operating partnership on a one-for-one basis.

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Hudson Pacific Properties, Inc. and Hudson Pacific Properties, L.P.

Notes to Unaudited Consolidated Financial Statements

(Unaudited, tabular amounts in thousands, except square footage, share and unit data)

Current Year Activity

The following table summarizes the ownership interest in the operating partnership, excluding unvested restricted units and unvested restricted performance units, as of:


	June 30, 2021		December 31, 2020
Company-owned common units in the operating partnership	152,319,084		151,401,365
Company’s ownership interest percentage	99.1	%	99.1	%
Non-controlling units in the operating partnership(1)	1,381,624		1,321,083
Non-controlling ownership interest percentage	0.9	%	0.9	%

_________________

1.Represents common units held by certain of the Company’s executive officers, directors and outside investors. As of June 30, 2021, this amount represents both common units and performance units in the amount of 550,969 and 830,655, respectively. As of December 31, 2020, this amount represents both common units and performance units in the amount of 550,969 and 770,114, respectively.

Common Stock Activity

The Company has not completed any common stock offerings during the six months ended June 30, 2021.

The Company’s at-the-market (“ATM”) program permits sales of up to $125.0 million of common stock. The Company utilized the ATM program during the six months ended June 30, 2021 and sold 1,526,163 shares of common stock at sale prices ranging from $29.53 to $30.17 per share for total proceeds of $45.7 million, before transaction costs. A cumulative total of $65.8 million has been sold as of June 30, 2021.

Share Repurchase Program

The Company is authorized to repurchase shares of its common stock up to a total of $250.0 million under its share repurchase program. During the six months ended June 30, 2021, the Company repurchased $14.7 million of its common stock, before transaction costs. Since commencement of the program, a cumulative total of $144.9 million has been repurchased. Share repurchases are accounted for on the trade date. The Company may make repurchases under the program at any time in its discretion, subject to market conditions, applicable legal requirements and other factors.

Dividends

The Board declares dividends on a quarterly basis and the Company pays the dividends during the quarters in which the dividends are declared. The following table summarizes dividends declared and paid for the periods presented:


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Common stock	$	0.25	$	0.25	$	0.50	$	0.50
Common units	$	0.25	$	0.25	$	0.50	$	0.50
Series A preferred units	$	0.3906	$	0.3906	$	0.7812	$	0.7812
Performance units	$	0.25	$	0.25	$	0.50	$	0.50
Payment date	June 28, 2021		June 29, 2020		N/A		N/A
Record date	June 18, 2021		June 19, 2020		N/A		N/A

Taxability of Dividends

Earnings and profits, which determine the taxability of distributions to stockholders, may differ from income reported for financial reporting purposes due to the differences for federal income tax purposes in the treatment of loss on extinguishment of debt, revenue recognition, compensation expense and the basis of depreciable assets and estimated useful lives used to compute depreciation.

Table of Contents

Hudson Pacific Properties, Inc. and Hudson Pacific Properties, L.P.

Notes to Unaudited Consolidated Financial Statements

(Unaudited, tabular amounts in thousands, except square footage, share and unit data)

18. Segment Reporting

The Company’s reporting segments are based on the Company’s method of internal reporting, which classifies its operations into two reporting segments: (i) office properties and (ii) studio properties. The Company evaluates performance based upon net operating income of the combined properties in each segment. General and administrative expenses and interest expense are not included in segment profit as the Company’s internal reporting addresses these items on a corporate level. Asset information by segment is not reported because the Company does not use this measure to assess performance or make decisions to allocate resources; therefore, depreciation and amortization expense is not allocated among segments.

The table below presents the operating activity of the Company’s reportable segments:


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Office segment
Office revenues	$	195,703	$	184,308	$	387,846	$	370,735
Office expenses	(69,111)		(64,611)		(135,673)		(128,471)
Office segment profit	126,592		119,697		252,173		242,264
Studio segment
Studio revenues	19,899		14,302		40,875		34,102
Studio expenses	(12,466)		(7,951)		(23,919)		(18,601)
Studio segment profit	7,433		6,351		16,956		15,501
TOTAL SEGMENT PROFIT	$	134,025	$	126,048	$	269,129	$	257,765

Segment revenues	$	215,602	$	198,610	$	428,721	$	404,837
Segment expenses	(81,577)		(72,562)		(159,592)		(147,072)
TOTAL SEGMENT PROFIT	$	134,025	$	126,048	$	269,129	$	257,765

The table below is a reconciliation of the total profit from all segments to net income attributable to common stockholders:


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
NET INCOME	$	7,030	$	7,011	$	18,441	$	20,960
General and administrative	17,109		17,897		35,558		36,515
Depreciation and amortization	84,178		73,516		166,939		147,279
Income from unconsolidated real estate entities	(470)		(410)		(1,105)		(174)
Fee income	(797)		(556)		(1,645)		(1,166)
Interest expense	30,689		27,930		60,975		54,347
Interest income	(937)		(1,048)		(1,934)		(2,073)
Management services reimbursement income—unconsolidated real estate entities	(626)		—		(626)		—
Management services expense—unconsolidated real estate entities	626		—		626		—
Transaction-related expenses	1,064		157		1,064		259
Unrealized (gain) loss on non-real estate investments	(5,018)		2,267		(10,793)		2,848



Other expense (income)	1,177		(716)		1,629		(1,030)
TOTAL PROFIT FROM ALL SEGMENTS	$	134,025	$	126,048	$	269,129	$	257,765

Table of Contents

Hudson Pacific Properties, Inc. and Hudson Pacific Properties, L.P.

Notes to Unaudited Consolidated Financial Statements

(Unaudited, tabular amounts in thousands, except square footage, share and unit data)

19. Related Party Transactions

Employment Agreements

The Company has entered into employment agreements with certain executive officers, effective January 1, 2020, that provide for various severance and change in control benefits and other terms and conditions of employment.

Related Party Leases

The Company’s wholly-owned subsidiary is party to long-term operating lease agreements with an unconsolidated joint venture for office space and a fitness facility. As of June 30, 2021, the Company’s right-of-use assets and lease liabilities related to these lease obligations were $6.0 million and $6.1 million, respectively. During the six months ended June 30, 2021, the Company recognized $0.6 million of related rental expense in management services expense—unconsolidated joint ventures on the Consolidated Statement of Operations related to these leases.

20. Commitments and Contingencies

Non-Real Estate Investments

The Company invests in several non-real estate funds with an aggregate commitment to contribute up to $28.0 million. As of June 30, 2021, the Company has contributed $12.6 million to these funds, net of distributions, with $15.4 million remaining to be contributed.

Legal

From time to time, the Company is party to various lawsuits, claims and other legal proceedings arising out of, or incident to, the ordinary course of business. Management believes, based in part upon consultation with legal counsel, that the ultimate resolution of all such claims will not have a material adverse effect on the Company’s results of operations, financial position or cash flows. As of June 30, 2021, the risk of material loss from such legal actions impacting the Company’s financial condition or results from operations has been assessed as remote.

Letters of Credit

As of June 30, 2021, the Company had outstanding letters of credit totaling approximately $2.8 million under the unsecured revolving credit facility. The letters of credit are primarily related to utility company security deposit requirements.

Contractual Obligations

The Company has entered into a number of construction agreements related to its development activities at various properties. As of June 30, 2021, the Company had $163.2 million in outstanding obligations under the agreements.

21. Supplemental Cash Flow Information

Supplemental cash flow information for Hudson Pacific Properties, Inc. is included as follows:


	Six Months Ended June 30,
	2021		2020
Cash paid for interest, net of capitalized interest	$	56,034	$	48,794
Non-cash investing and financing activities

Accounts payable and accrued liabilities for real estate investments	$	134,516	$	162,454
Lease liabilities recorded in connection with right-of-use assets	$	6,688	$	—
Nonrefundable deposit for sale of non-controlling interest	$	—	$	50,000

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Hudson Pacific Properties, Inc. and Hudson Pacific Properties, L.P.

Notes to Unaudited Consolidated Financial Statements

(Unaudited, tabular amounts in thousands, except square footage, share and unit data)

Supplemental cash flow information for Hudson Pacific Properties, L.P. is included as follows:


	Six Months Ended June 30,
	2021		2020
Cash paid for interest, net of capitalized interest	$	56,034	$	48,794
Non-cash investing and financing activities

Accounts payable and accrued liabilities for real estate investments	$	134,516	$	162,454
Lease liabilities recorded in connection with right-of-use assets	$	6,688	$	—
Nonrefundable deposit for sale of non-controlling interest	$	—	$	50,000

Restricted cash primarily consists of amounts held by lenders to fund reserves such as capital improvements, taxes, insurance, debt service and operating expenditures. The following table provides a reconciliation of cash and cash equivalents and restricted cash at the beginning and end of the periods presented for Hudson Pacific Properties, Inc:


	Six Months Ended June 30,
	2021		2020
BEGINNING OF PERIOD
Cash and cash equivalents	$	113,686	$	46,224
Restricted cash	35,854		12,034
TOTAL	$	149,540	$	58,258

END OF PERIOD
Cash and cash equivalents	$	110,978	$	45,052
Restricted cash	33,967		11,819
TOTAL	$	144,945	$	56,871

The following table provides a reconciliation of cash and cash equivalents and restricted cash at the beginning and end of the periods presented for Hudson Pacific Properties, L.P.:


	Six Months Ended June 30,
	2021		2020
BEGINNING OF PERIOD
Cash and cash equivalents	$	113,686	$	46,224
Restricted cash	35,854		12,034
TOTAL	$	149,540	$	58,258

END OF PERIOD
Cash and cash equivalents	$	110,978	$	45,052
Restricted cash	33,967		11,819
TOTAL	$	144,945	$	56,871

22. Subsequent Events

On July 29, 2021, the Company purchased, through a joint venture with an affiliate of Blackstone, a 91-acre site located north of central London, England for future studio development for a total purchase price of $167.5 million, before certain credits, prorations and closing costs. The Company owns 35% of this joint venture. In anticipation of this transaction, on July 22, 2021 the Company borrowed $50.0 million under its unsecured revolving credit facility.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion relates to our consolidated financial statements and should be read in conjunction with the consolidated financial statements and the related notes, see Part I, Item 1 “Financial Statements of Hudson Pacific Properties, Inc.,” “Financial Statements of Hudson Pacific Properties, L.P.” and “Notes to Unaudited Consolidated Financial Statements.” Statements in this Item 2 contain forward-looking statements. For a discussion of important risks related to our business and related to investing in our securities, including risks that could cause actual results and events to differ materially from results and events referred to in the forward-looking statements, see Part II, Item 1A “Risk Factors.” In light of these risks, uncertainties and assumptions, the forward-looking events discussed in this report might not occur.

Forward-looking Statements

Certain written and oral statements made or incorporated by reference from time to time by us or our representatives in this Quarterly Report on Form 10-Q, other filings or reports filed with the SEC, press releases, conferences, or otherwise, are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 (set forth in Section 27A of the Securities Act of 1933, as amended, or the Securities Act, as amended, and Section 21E of the Exchange Act). In particular, statements relating to our liquidity and capital resources, portfolio performance and results of operations contain forward-looking statements. Furthermore, all of the statements regarding future financial performance (including anticipated funds from operations, or FFO, market conditions and demographics) are forward-looking statements. We are including this cautionary statement to make applicable and take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 for any such forward-looking statements. We caution investors that any forward-looking statements presented in this Quarterly Report on Form 10-Q, or that management may make orally or in writing from time to time, are based on management’s beliefs and assumptions made by, and information currently available to, management. When used, the words “anticipate,” “believe,” “expect,” “intend,” “may,” “might,” “plan,” “estimate,” “project,” “should,” “will,” “result” and similar expressions that do not relate solely to historical matters are intended to identify forward-looking statements. Such statements are subject to risks, uncertainties and assumptions and may be affected by known and unknown risks, trends, uncertainties and factors that are beyond our control. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated or projected. We expressly disclaim any responsibility to update forward-looking statements, whether as a result of new information, future events or otherwise. Accordingly, investors should use caution in relying on past forward-looking statements, which were based on results and trends at the time they were made, to anticipate future results or trends. Additional information concerning these and other risks and uncertainties is contained in our other periodic filings with the SEC.

Some of the risks and uncertainties that may cause our actual results, performance, liquidity or achievements to differ materially from those expressed or implied by forward-looking statements include, among others, the following:

•adverse economic or real estate developments in our target markets;

•general economic conditions;

•defaults on, early terminations of or non-renewal of leases by tenants;

•fluctuations in interest rates and increased operating costs;

•our failure to obtain necessary outside financing or maintain an investment grade rating;

•our failure to generate sufficient cash flows to service our outstanding indebtedness and maintain dividend payments;

•lack or insufficient amounts of insurance;

•decreased rental rates or increased vacancy rates;

•difficulties in identifying properties to acquire and completing acquisitions;

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•our failure to successfully operate acquired properties and operations;

•our failure to maintain our status as a REIT;

•the loss of key personnel;

•environmental uncertainties and risks related to adverse weather conditions and natural disasters;

•financial market and foreign currency fluctuations;

•risks related to acquisitions generally, including the diversion of management’s attention from ongoing business operations and the impact on customers, tenants, lenders, operating results and business;

•the inability to successfully integrate acquired properties, realize the anticipated benefits of acquisitions or capitalize on value creation opportunities;

•changes in the tax laws and uncertainty as to how those changes may be applied;

•changes in real estate and zoning laws and increases in real property tax rates; and

•other factors affecting the real estate industry generally, including the impact of the COVID-19 pandemic.

Set forth below are some (but not all) of the factors that could adversely affect our business and financial performance. Moreover, we operate in a highly competitive and rapidly changing environment. New risk factors emerge from time to time, and it is not possible for management to predict all such risk factors, nor can it assess the impact of all such risk factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction of actual results.

Impact of COVID-19

During 2020, the spread of COVID-19 had a significant impact on the global economy, the U.S. economy, the economies of the local markets throughout the west coast in which our properties are located and the broader financial markets. As of June 30, 2021, the COVID-19 pandemic is ongoing. We continue to closely monitor its impact on all aspects of our business and geographies, including how it will impact our tenants and business partners. We did not incur significant disruptions during the three months ended June 30, 2021 from the COVID-19 pandemic. In 2021, the economy has, with certain setbacks, begun reopening and wider distribution of vaccines will likely encourage greater economic activity. With the increased availability of vaccines, we have begun to see increases in physical occupancy at our properties. We cannot predict, however, how the COVID-19 pandemic may impact our operations in the future, including the continued return to office by our tenants, occupancy rates and the demand for office space in the future. Recovery could remain uneven, particularly given uncertainty with respect to the distribution and acceptance of the vaccines and their effectiveness with respect to new variants of the virus. This uncertainty precludes any predictions as to the actual impact of the COVID-19 pandemic on our business, operations, cash flows and financial condition for the second half of 2021 and future periods.

During the pandemic, the commercial real estate market came under pressure due to numerous factors, including preventative measures taken by local, state and federal authorities to alleviate the public health crisis such as mandatory business closures, quarantines, restrictions on travel and “shelter-in-place” or “stay-at-home” orders. As a result, the COVID-19 pandemic has negatively impacted almost every industry directly or indirectly, including industries in which we and our tenants operate. Although these restrictions have now largely been lifted in the west coast markets in which we operate, recovery continues to be gradual, uneven and characterized by meaningful dispersion across sectors and regions, and could be hindered by persistent or resurgent infection rates. Overall, among other unanticipated consequences, there remains significant uncertainty regarding the timing and duration of the economic recovery, the disruptions to, and volatility in, the credit and financial markets and in consumer spending.

Given the uncertainty of the COVID-19 pandemic’s near- and potential long-term impact on our business, and in order to preserve our liquidity position, our Board of Directors will continue to evaluate our dividend policy. We intend to continue to

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operate our business in a manner that will allow us to qualify as a REIT for U.S. federal income tax purposes. We derive revenues primarily from rents and reimbursement payments received from tenants under leases at our properties. Our operating results therefore depend materially on the ability of our tenants to make required rental payments. The extent to which the COVID-19 pandemic continues to impact the businesses of our tenants, and our operations and financial condition, will depend on future developments that remain uncertain and cannot be predicted with confidence, including the scope, severity and duration of the pandemic, the actions taken to contain the pandemic or mitigate its impact and the direct and indirect economic effects of the pandemic and such containment measures, among others. The factors described above, as well as additional factors that we may not currently be aware of, could materially negatively impact our ability to collect rent and could lead to termination of leases by tenants, tenant bankruptcies, decreases in demand for office space at our properties, difficulties in accessing capital, impairment of our long-lived assets and other impacts that could materially and adversely affect our business, results of operations, financial condition and ability to pay distributions to stockholders. See Part II, Item 1A “Risk Factors.”

For the foregoing reasons, the comparability of our results of operations for the three months ended June 30, 2021 to future periods may be significantly impacted by the effects of the COVID-19 pandemic. The situation surrounding the COVID-19 pandemic remains fluid, and we are actively managing our response in collaboration with tenants, government officials and business partners and assessing potential impacts to our financial position and operating results, as well as potential adverse developments in our business. For further information regarding the impact of COVID-19 on us, see Part II, Item 1A, “Risk Factors.”

Executive Summary

Through our interest in Hudson Pacific Properties, L.P. (our operating partnership) and its subsidiaries, at June 30, 2021, our office portfolio consisted of approximately 15.6 million square feet of in-service, repositioning, redevelopment and development properties. Additionally, as of June 30, 2021, our studio portfolio consisted of 1.2 million square feet of in-service properties and our land portfolio consisted of 3.2 million developable square feet. Our consolidated and unconsolidated portfolio consists of 64 properties (41 wholly-owned properties, 15 properties owned by joint ventures and eight land properties) located in 11 California submarkets, three Seattle submarkets and one Western Canada submarket, totaling approximately 20.0 million square feet.

As of June 30, 2021, our in-service office portfolio was 91.4% leased (including leases not yet commenced). Our same-store studio properties were 88.0% leased for the average percent leased for the 12 months ended June 30, 2021.

The following table summarizes our portfolio as of June 30, 2021:


In-Service Portfolio	Number of Properties	Rentable Square Feet(1)	Percent Occupied(2)		Percent Leased(2)		Annualized Base Rent per Square Foot(3)
Office
Same-store(4)	45	12,661,812	91.2	%	92.4	%	$	50.62
Non-same store(5)	2	899,041	97.1		97.4		38.48
Total stabilized	47	13,560,853	91.6		92.7		49.77
Lease-up(5)(6)	3	1,049,706	75.0		75.3		59.73
Total in-service	50	14,610,559	90.4		91.4		50.36
Repositioning(5)(7)	1	277,088	—		—		—
Redevelopment(5)	2	697,000	—		83.8		—


Total office	53	15,584,647
Studio
Same-store(8)	3	1,224,403			88.0		41.02
Total studio	3	1,224,403
Total office and studio properties	56	16,809,050
Land(9)	8	3,195,406
TOTAL	64	20,004,456

____________

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1.Determined by management based upon estimated leasable square feet, which may be less or more than the Building Owners and Managers Association (“BOMA”) rentable area. Square footage may change over time due to re-measurement or re-leasing.

2.Percent occupied for office properties is calculated as (i) square footage under commenced leases as of June 30, 2021, divided by (ii) total square feet, expressed as a percentage. Percent leased for office properties includes uncommenced leases. Percent leased for studio properties is calculated as (i) average square footage under commenced leases for the 12 months ended June 30, 2021, divided by (ii) total square feet, expressed as a percentage.

3.Annualized base rent per square foot for office properties is calculated as (i) annualized base rent divided by (ii) square footage under commenced leases as of June 30, 2021. Annualized base rent does not reflect tenant reimbursements. Annualized base rent per square foot for studio properties is calculated as (i) annual base rent divided by (ii) square footage under leased as of June 30, 2021.

4.Includes office properties owned and included in our stabilized portfolio as of April 1, 2020 and still owned and included in the stabilized portfolio as of June 30, 2021.

5.Included in our non-same-store property group.

6.Includes office properties that have not yet reached 92.0% occupancy since the date they were acquired as of June 30, 2021.

7.Includes 79,056 square feet at Page Mill Center, 61,066 square feet at Metro Plaza, 51,417 square feet at 10850 Pico, 36,905 square feet at Rincon Center and 12,740 square feet at Palo Alto Square. Additionally, the entire building totaling 35,904 square feet at 95 Jackson was moved to repositioning as of first quarter 2021.

8.Includes studio properties owned and included in our portfolio as of April 1, 2020 and still owned and included in our portfolio as of June 30, 2021.

9.Includes 538,164 square feet related to the office development Washington 1000, adjacent to the Washington State Convention Center, to which we purchased rights in the first quarter of 2019.

Overview

Acquisitions

We had no acquisitions during the six months ended June 30, 2021.

Dispositions

We had no dispositions during the six months ended June 30, 2021.

Held for Sale

We had no properties classified as held for sale as of June 30, 2021.

Under Construction and Future Development Projects

The following table summarizes the properties currently under construction and future development projects as of June 30, 2021:

Location

Submarket

Estimated Square Feet(1)

Estimated Completion Date

Estimated Stabilization Date

Under Construction:

One Westside(2)

West Los Angeles

584,000

Q1-2022

Q2-2023

Total Under Construction

584,000

Future Development Pipeline:

Washington 1000

Denny Triangle

538,164

TBD

Bentall Centre—Development(3)

Downtown Vancouver

450,000

TBD

Element LA—Development

West Los Angeles

500,000

TBD

Sunset Glenoaks Studios—Development(4)

Los Angeles

241,000

Q3-2023

Q2-2024

Sunset Bronson Studios Lot D—Development(5)

Hollywood

19,816

TBD

Sunset Gower Studios—Development(5)(6)

Hollywood

478,845

TBD

Sunset Las Palmas Studios—Development(5)

Hollywood

617,581

TBD

Cloud10

North San Jose

350,000

TBD

Total Future Development Pipeline

3,195,406

TOTAL UNDER CONSTRUCTION AND FUTURE DEVELOPMENT

3,779,406

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_____________

1.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 re-measurement or re-leasing.

2.We own 75% of the ownership interest in the consolidated joint venture that owns One Westside. This property is fully leased to Google, Inc. for approximately 14 years, anticipated to commence upon completion of construction and build-out of tenant improvements in 2022.

3.We own 20% of the ownership interest in the unconsolidated joint venture that owns Bentall Centre.

4.We own 50% of the ownership interest in the unconsolidated joint venture that owns Sunset Glenoaks Studios.

5.We own 51% of the ownership interest in the consolidated joint venture that owns Sunset Bronson Studios, Sunset Gower Studios and Sunset Las Palmas Studios.

6.Estimated square footage for Sunset Gower Studios development is net of 130,169 square feet of anticipated demolition in connection with the development.

The timing of completion of our projects may be impacted by factors outside of our control, including government restrictions and/or social distancing requirements affecting construction projects due to the COVID-19 pandemic.

Lease Expirations

The following table summarizes the lease expirations for leases in place as of June 30, 2021, plus available space, beginning January 1, 2021 at the properties in our office portfolio. Unless otherwise stated in the footnotes, the information set forth in the table assumes that tenants did not exercise any renewal options.


			Company’s Share(1)
Year of Lease Expiration	Number of Leases Expiring(2)	Square Footage of Expiring Leases(3)	Square Footage of Expiring Leases(4)	Percent of Office Portfolio Square Feet		Annualized Base Rent(5)		Percentage of Office Portfolio Annualized Base Rent		Annualized Base Rent Per Leased Square Foot(6)		Annualized Base Rent at Expiration		Annualized Base Rent Per Lease Square Foot at Expiration(7)
Vacant		1,639,745	1,545,927	12.2	%
2021	104	653,302	600,851	4.7		$	25,846,529	4.4	%	$	43.02	$	26,304,814	$	43.78
2022	201	1,708,680	1,502,451	11.8		76,367,384		13.0		50.83		79,689,623		53.04
2023	132	1,869,030	1,452,382	11.4		68,253,288		11.6		46.99		73,196,185		50.40
2024	144	1,939,847	1,704,771	13.4		89,218,528		15.1		52.33		97,516,659		57.20
2025	83	1,604,636	1,305,986	10.3		76,996,070		13.1		58.96		86,085,604		65.92
2026	49	694,380	604,716	4.8		36,679,207		6.2		60.66		42,290,014		69.93
2027	34	625,004	523,941	4.1		28,675,892		4.9		54.73		34,584,575		66.01
2028	26	933,095	850,661	6.7		56,802,624		9.7		66.77		69,218,649		81.37
2029	17	316,024	220,921	1.7		16,687,175		2.8		75.53		20,236,336		91.60
2030	13	1,259,659	913,472	7.2		41,519,395		7.1		45.45		56,400,853		61.74
Thereafter	23	1,391,225	760,900	6.0		38,679,459		6.6		50.83		53,134,158		69.83
Building management use(8)	37	188,952	167,456	1.3		—		—		—		—		—
Signed leases not commenced(9)	30	734,357	561,186	4.4		32,107,744		5.5		57.21		46,207,376		82.34
Portfolio Total/Weighted Average	893	15,557,936	12,715,621	100.0	%	$	587,833,295	100.0	%	$	52.63	$	684,864,846	$	61.31

_____________

1.Calculated based on the Company’s consolidated portfolio, plus the Company’s share of the amount from the Company’s unconsolidated joint ventures (calculated based on the Company’s percentage ownership interests), minus the Company’s partners’ share of the amount from the Company’s consolidated joint ventures (calculated based on the partners’ percentage ownership interests).

2.Does not include 35 month-to-month leases.

3.Total expiring square footage does not include 26,711 square feet of month-to-month leases.

4.Total expiring square footage does not include 16,148 square feet of month-to-month leases.

5.Annualized base rent for office properties is calculated by multiplying (i) base rental payments (defined as cash base rents (before abatements or deferments)) as of June 30, 2021, by (ii) 12. Annualized base rent does not reflect tenant reimbursements. Rent data for our office properties is presented on an annualized basis without regard to cancellation options.

6.Annualized base rent per square foot for all lease expiration years is calculated as (i) base rental payments (defined as cash base rents (before abatements or deferments)) under commenced leases, divided by (ii) square footage under commenced leases as of June 30, 2021.

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7.Annualized base rent per square foot at expiration for all lease expiration years is calculated as (i) base rental payments (defined as cash base rents (before abatements or deferments)) under commenced leases, divided by (ii) square footage under commenced leases as of June 30, 2021.

8.Reflects management offices occupied by the Company with various expiration dates.

9.Annualized base rent per leased square foot and annualized base rent per square foot at expiration for signed leases not commenced reflects uncommenced leases for spaces not occupied as of June 30, 2021 and is calculated as (i) base rental payments (defined as cash base rents at expiration (before abatements or deferments)) under uncommenced leases for vacant space as of June 30, 2021, divided by (ii) square footage under uncommenced leases as of June 30, 2021.

Historical Tenant Improvements and Leasing Commissions

The following table summarizes historical information regarding tenant improvement and leasing commission costs for tenants at our office properties:


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Renewals(1)
Number of leases	35		29		65		45
Square feet	336,398		82,419		721,844		171,571
Tenant improvement costs per square foot(2)(3)	$	9.17	$	0.80	$	6.14	$	4.93
Leasing commission costs per square foot(2)	4.65		3.27		8.17		6.34
Total tenant improvement and leasing commission costs(2)	$	13.82	$	4.07	$	14.31	$	11.27

New leases(4)
Number of leases	38		8		50		40
Square feet	173,799		25,010		312,706		164,790
Tenant improvement costs per square foot(2)(3)	$	53.06	$	57.71	$	62.99	$	41.03
Leasing commission costs per square foot(2)	13.09		10.34		16.63		6.24
Total tenant improvement and leasing commission costs(2)	$	66.15	$	68.05	$	79.62	$	47.27

TOTAL
Number of leases	73		37		115		85
Square feet	510,197		107,429		1,034,550		336,361
Tenant improvement costs per square foot(2)(3)	$	22.00	$	14.05	$	22.07	$	21.23
Leasing commission costs per square foot(2)	7.11		4.92		10.54		6.30
TOTAL TENANT IMPROVEMENT AND LEASING COMMISSION COSTS(2)	$	29.11	$	18.97	$	32.61	$	27.53

_____________

1.Excludes retained tenants that have relocated or expanded into new space within our portfolio.

2.Assumes all tenant improvement and leasing commissions are paid in the calendar year in which the lease is executed, which may be different than the year in which they were actually paid.

3.Tenant improvement costs are based on negotiated tenant improvement allowances set forth in leases, or, for any lease in which a tenant improvement allowance was not specified, the aggregate cost originally budgeted at the time the lease commenced.

4.Includes retained tenants that have relocated or expanded into new space within our portfolio.

Financings

During the six months ended June 30, 2021, there were no borrowings on the unsecured revolving credit facility. We generally use the unsecured revolving credit facility to finance the acquisition of other properties, to provide funds for tenant improvements, lease commissions and capital expenditures and to provide for working capital and other corporate purposes.

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Historical Results of Operations

This Quarterly Report on Form 10-Q of Hudson Pacific Properties, Inc. and Hudson Pacific Properties, L.P. represents an update to the more detailed and comprehensive disclosures included in the 2020 Annual Report on Form 10-K of Hudson Pacific Properties, Inc. and Hudson Pacific Properties, L.P. Accordingly, you should read the following discussion in conjunction with the information included in our 2020 Annual Report on Form 10-K, as well as the unaudited financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

In addition, some of the statements and assumptions in this Quarterly Report on Form 10-Q are forward-looking statements within the meaning of Section 27A of the Securities Act or Section 21E of the Exchange Act, including, in particular, statements about our plans, strategies and prospects as well as estimates of industry growth for the quarter and beyond. See “Forward-looking Statements.”

All amounts and percentages used in this discussion of our results of operations are calculated using the numbers presented in the financial statements contained in Part I, Item 1 of this Quarterly Report rather than the rounded numbers appearing in this discussion. The dollar amounts included in the tables in this discussion of our results of operations are presented in thousands.

Comparison of the Three Months Ended June 30, 2021 to the Three Months Ended June 30, 2020

Net Operating Income

We evaluate performance based upon property net operating income (“NOI”). NOI is not a measure of operating results or cash flows from operating activities or cash flows as measured by generally accepted accounting principles in the United States (“GAAP”) and should not be considered an alternative to net income, as an indication of our performance, or as an alternative to cash flows as a measure of liquidity, or our ability to make distributions. All companies may not calculate NOI in the same manner. We consider NOI to be a useful performance measure to investors and management because when compared across periods, NOI reflects the revenues and expenses directly associated with owning and operating our properties and the impact to operations from trends in occupancy rates, rental rates and operating costs, providing a perspective not immediately apparent from net income. We calculate NOI as net income excluding corporate general and administrative expenses, depreciation and amortization, impairments, gains/losses on sales of real estate, interest expense, interest income, transaction-related expenses and other non-operating items. We define NOI as operating revenues (including rental revenues, other property-related revenue, tenant recoveries and other operating revenues), less property-level operating expenses (which includes external management fees, if any, and property-level general and administrative expenses). NOI on a cash basis is NOI adjusted to exclude the effect of straight-line rent and other non-cash adjustments required by GAAP. We believe that NOI on a cash basis is helpful to investors as an additional measure of operating performance because it eliminates straight-line rent and other non-cash adjustments to revenue and expenses.

Management further analyzes NOI by evaluating the performance from the following property groups:

•Same-store properties, which includes all of the properties owned and included in our stabilized portfolio as of April 1, 2020 and still owned and included in the stabilized portfolio as of June 30, 2021; and

•Non-same-store properties, which includes:

•Stabilized non-same-store properties

•Lease-up properties

•Repositioning properties

•Development properties

•Redevelopment properties

•Held for sale properties

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The following table reconciles net income to NOI:


	Three Months Ended June 30,				Dollar Change		Percent Change
	2021		2020
Net income	$	7,030	$	7,011	$	19	0.3	%
Adjustments:
Income from unconsolidated real estate entities	(470)		(410)		(60)		14.6
Fee income	(797)		(556)		(241)		43.3
Interest expense	30,689		27,930		2,759		9.9
Interest income	(937)		(1,048)		111		(10.6)
Management services reimbursement income—unconsolidated real estate entities	626		—		626		—
Management services expense—unconsolidated real estate entities	(626)		—		(626)		—
Transaction-related expenses	1,064		157		907		577.7
Unrealized (gain) loss on non-real estate investments	(5,018)		2,267		(7,285)		(321.3)



Other expense (income)	1,177		(716)		1,893		(264.4)
General and administrative	17,109		17,897		(788)		(4.4)
Depreciation and amortization	84,178		73,516		10,662		14.5
NOI	$	134,025	$	126,048	$	7,977	6.3	%

Same-store NOI	$	115,609	$	116,834	$	(1,225)	(1.0)	%
Non-same-store NOI	18,416		9,214		9,202		99.9
NOI	$	134,025	$	126,048	$	7,977	6.3	%

The following table summarizes certain statistics of our consolidated same-store office and studio properties:


	Three Months Ended June 30,
	2021			2020
Same-store office
Number of properties	44			44
Rentable square feet	11,169,954			11,169,954
Ending % leased	91.7		%	94.7		%
Ending % occupied	90.6		%	94.2		%
Average % occupied for the period	90.5		%	94.3		%
Average annual rental rate per square foot	$	53.63		$	52.57

Same-store studio
Number of properties	3			3
Rentable square feet	1,224,403			1,224,403
Average % occupied for the period(1)	88.0		%	92.6		%

_____________

1.Percent occupied for same-store studio is the average percent occupied for the 12 months ended.

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The following table gives further detail on our NOI:


	Three Months Ended June 30,
	2021						2020
	Same-Store		Non-Same-Store		Total		Same-Store		Non-Same-Store		Total
Revenues
Office
Rental	$	164,533	$	28,019	$	192,552	$	165,397	$	15,257	$	180,654
Service and other revenues	2,880		271		3,151		3,303		351		3,654
Total office revenues	167,413		28,290		195,703		168,700		15,608		184,308

Studio
Rental	11,551		—		11,551		12,128		—		12,128
Service and other revenues	8,348		—		8,348		2,174		—		2,174
Total studio revenues	19,899		—		19,899		14,302		—		14,302

Total revenues	187,312		28,290		215,602		183,002		15,608		198,610

Operating expenses
Office operating expenses	59,237		9,874		69,111		58,217		6,394		64,611
Studio operating expenses	12,466		—		12,466		7,951		—		7,951
Total operating expenses	71,703		9,874		81,577		66,168		6,394		72,562

Office NOI	108,176		18,416		126,592		110,483		9,214		119,697
Studio NOI	7,433		—		7,433		6,351		—		6,351
NOI	$	115,609	$	18,416	$	134,025	$	116,834	$	9,214	$	126,048

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The following table gives further detail on our change in NOI:


	Three Months Ended June 30, 2021 as compared to Three Months Ended June 30, 2020
	Same-Store				Non-Same-Store				Total
	Dollar Change		Percent Change		Dollar Change		Percent Change		Dollar Change		Percent Change
Revenues
Office
Rental	$	(864)	(0.5)	%	$	12,762	83.6	%	$	11,898	6.6	%
Service and other revenues	(423)		(12.8)		(80)		(22.8)		(503)		(13.8)
Total office revenues	(1,287)		(0.8)		12,682		81.3		11,395		6.2

Studio
Rental	(577)		(4.8)		—		—		(577)		(4.8)
Service and other revenues	6,174		284.0		—		—		6,174		284.0
Total studio revenues	5,597		39.1		—		—		5,597		39.1

Total revenues	4,310		2.4		12,682		81.3		16,992		8.6

Operating expenses
Office operating expenses	1,020		1.8		3,480		54.4		4,500		7.0
Studio operating expenses	4,515		56.8		—		—		4,515		56.8
Total operating expenses	5,535		8.4		3,480		54.4		9,015		12.4

Office NOI	(2,307)		(2.1)		9,202		99.9		6,895		5.8
Studio NOI	1,082		17.0		—		—		1,082		17.0
NOI	$	(1,225)	(1.0)	%	$	9,202	99.9	%	$	7,977	6.3	%

NOI increased $8.0 million, or 6.3%, for the three months ended June 30, 2021 as compared to the three months ended June 30, 2020, primarily resulting from:

•a $9.2 million increase in NOI from our non-same-store properties primarily resulting from the acquisition of our 1918 Eighth property in December 2020 and a lease commenced at our Harlow property (Company 3).

•a $1.2 million decrease in NOI from our same-store properties driven by:

•a decrease in office NOI of $2.3 million primarily due to:

•a $1.0 million increase in office operating expenses primarily resulting from an increase in security, parking, insurance and engineering expense; and

•a $0.9 million decrease in rental revenues primarily resulting from certain retail tenants paying percentage rent in lieu of base rent at our Ferry Building property and lease terminations at our 625 Second and 11601 Wilshire properties, partially offset by increases in rental revenues resulting from the reversal of reserves for uncollectible rents at our 901 Market property and a lease commenced at our Clocktower Square property (Rivian Automotive).

•partially offset by an increase in studio NOI of $1.1 million primarily due to:

•a $6.2 million increase in service and other revenues primarily resulting from an increase in lighting and grip services at our studio properties;

•partially offset by a $4.5 million increase in operating expenses primarily resulting from higher lighting rental expense driven by the increase in lighting services, an increase in earthquake insurance premium due to greater coverage and a prior period property tax assessment for our Sunset Gower Studios property.

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Other (Income) Expenses

Interest expense

The following table presents a reconciliation from gross interest expense to the interest expense line item on the Consolidated Statements of Operations:


	Three Months Ended June 30,
	2021		2020		Dollar Change		Percent Change
Gross interest expense	$	33,889	$	31,165	$	2,724	8.7	%
Capitalized interest	(5,618)		(4,479)		(1,139)		25.4
Amortization of deferred financing costs and loan discounts/premiums	2,418		1,244		1,174		94.4
TOTAL	$	30,689	$	27,930	$	2,759	9.9	%

Gross interest expense increased by $2.7 million, or 8.7%, to $33.9 million for the three months ended June 30, 2021 compared to $31.2 million for the three months ended June 30, 2020. The increase was primarily driven by the issuance of a $900.0 million loan secured by the Hollywood Media Portfolio (July 2020) and the closing of a $314.3 million loan secured by our 1918 Eighth property (December 2020), partially offset by the paydown of Term Loan B, Term Loan D, the Met Park North loan, the Revolving Sunset Bronson Studios/ICON/CUE facility and outstanding borrowings on our unsecured revolving credit facility all in July 2020.

Capitalized interest increased by $1.1 million, or 25.4%, to $5.6 million for the three months ended June 30, 2021 compared to $4.5 million for the three months ended June 30, 2020. The increase was primarily driven by our One Westside redevelopment property and our Page Mill Center, Metro Plaza and 95 Jackson repositioning projects, partially offset by the completion of our Harlow development property.

Amortization of deferred financing costs and loan discounts/premiums increased by $1.2 million, or 94.4%, to $2.4 million for the three months ended June 30, 2021 compared to $1.2 million for the three months ended June 30, 2020. The increase was primarily driven by the amortization of new issuance costs associated with the $900.0 million loan secured by the Hollywood Media Portfolio (July 2020) and the $314.3 million loan secured by our 1918 Eighth property (December 2020).

General and administrative expenses

General and administrative expenses include wages and salaries for corporate-level employees, accounting, legal and other professional services, office supplies, entertainment, travel and automobile expenses, telecommunications and computer-related expenses and other miscellaneous items. General and administrative expenses decreased $0.8 million, or 4.4%, to $17.1 million for the three months ended June 30, 2021 compared to $17.9 million for the three months ended June 30, 2020. The change was primarily attributable to decreases in bonus and payroll expense, partially offset by increases in non-cash compensation and travel and entertainment expenses.

Depreciation and amortization expense

Depreciation and amortization expense increased $10.7 million, or 14.5%, to $84.2 million for the three months ended June 30, 2021 compared to $73.5 million for the three months ended June 30, 2020. The increase was primarily related to our acquisition of 1918 Eighth and the completion of certain development and redevelopment properties in late 2020.

Fee income

We recognized fee income of $0.8 million for the three months ended June 30, 2021 compared to $0.6 million for the three months ended June 30, 2020. Fee income primarily represents management fee, construction management fee and leasing commission income earned from the unconsolidated real estate entities.

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Unrealized gain on non-real estate investments

We recognized an unrealized gain on our non-real estate investments of $5.0 million due to the observable changes in the fair value of the investments for the three months ended June 30, 2021.

Comparison of the Six Months Ended June 30, 2021 to the Six Months Ended June 30, 2020

Net Operating Income

Management further analyzes NOI by evaluating the performance from the following property groups:

•Same-store properties, which includes all of the properties owned and included in our stabilized portfolio as of January 1, 2020 and still owned and included in the stabilized portfolio as of June 30, 2021; and

•Non-same-store properties, which includes:

•Stabilized non-same-store properties

•Lease-up properties

•Repositioning properties

•Development properties

•Redevelopment properties

•Held for sale properties

The following table reconciles net income to NOI:


	Six Months Ended June 30,				Dollar Change		Percent Change
	2021		2020
Net income	$	18,441	$	20,960	$	(2,519)	(12.0)	%
Adjustments:
Income from unconsolidated real estate entities	(1,105)		(174)		(931)		535.1
Fee income	(1,645)		(1,166)		(479)		41.1
Interest expense	60,975		54,347		6,628		12.2
Interest income	(1,934)		(2,073)		139		6.7
Management services reimbursement income—unconsolidated real estate entities	626		—		626		—
Management services expense—unconsolidated real estate entities	(626)		—		(626)		—
Transaction-related expenses	1,064		259		805		310.8
Unrealized (gain) loss on non-real estate investments	(10,793)		2,848		(13,641)		(479.0)



Other expense (income)	1,629		(1,030)		2,659		(258.2)
General and administrative	35,558		36,515		(957)		(2.6)
Depreciation and amortization	166,939		147,279		19,660		13.3
NOI	$	269,129	$	257,765	$	11,364	4.4	%

Same-store NOI	233,699		239,469		(5,770)		(2.4)
Non-same-store NOI	35,430		18,296		17,134		93.6
NOI	$	269,129	$	257,765	$	11,364	4.4	%

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The following table summarizes certain statistics of our same-store office and studio properties:


	Six Months Ended June 30,
	2021			2020
Same-store office
Number of properties	43			43
Rentable square feet	11,125,041			11,125,041
Ending % leased	91.6		%	94.6		%
Ending % occupied	90.6		%	94.0		%
Average % occupied for the period	91.2		%	94.6		%
Average annual rental rate per square foot	$	53.68		$	52.64

Same-store studio
Number of properties	3			3
Rentable square feet	1,224,403			1,224,403
Average % occupied for the period(1)	88.0		%	92.6		%

_____________

1.Percent occupied for same-store studio is the average percent occupied for the 12 months ended.

The following table gives further detail on our NOI:


	Six Months Ended June 30,
	2021						2020
	Same-Store		Non-Same-Store		Total		Same-Store		Non-Same-Store		Total
Revenues
Office
Rental	$	328,122	$	54,291	$	382,413	$	329,907	$	31,860	$	361,767
Service and other revenues	4,532		901		5,433		8,512		456		8,968
Total office revenues	332,654		55,192		387,846		338,419		32,316		370,735

Studio
Rental	23,704		—		23,704		25,043		—		25,043
Service and other revenues	17,171		—		17,171		9,059		—		9,059
Total studio revenues	40,875		—		40,875		34,102		—		34,102

Total revenues	373,529		55,192		428,721		372,521		32,316		404,837

Operating expenses
Office operating expenses	115,911		19,762		135,673		114,451		14,020		128,471
Studio operating expenses	23,919		—		23,919		18,601		—		18,601
Total operating expenses	139,830		19,762		159,592		133,052		14,020		147,072

Office NOI	216,743		35,430		252,173		223,968		18,296		242,264
Studio NOI	16,956		—		16,956		15,501		—		15,501
NOI	$	233,699	$	35,430	$	269,129	$	239,469	$	18,296	$	257,765

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The following table gives further detail on our change in NOI:


	Six Months Ended June 30, 2021 as compared to Six Months Ended June 30, 2020
	Same-Store				Non-Same-Store				Total
	Dollar Change		Percent Change		Dollar Change		Percent Change		Dollar Change		Percent Change
Revenues
Office
Rental	$	(1,785)	(0.5)	%	$	22,431	70.4	%	$	20,646	5.7	%
Service and other revenues	(3,980)		(46.8)		445		97.6		(3,535)		(39.4)
Total office revenues	(5,765)		(1.7)		22,876		70.8		17,111		4.6

Studio
Rental	(1,339)		(5.3)		—		—		(1,339)		(5.3)
Service and other revenues	8,112		89.5		—		—		8,112		89.5
Total studio revenues	6,773		19.9		—		—		6,773		19.9

Total revenues	1,008		0.3		22,876		70.8		23,884		5.9

Operating expenses
Office operating expenses	1,460		1.3		5,742		41.0		7,202		5.6
Studio operating expenses	5,318		28.6		—		—		5,318		28.6
Total operating expenses	6,778		5.1		5,742		41.0		12,520		8.5

Office NOI	(7,225)		(3.2)		17,134		93.6		9,909		4.1
Studio NOI	1,455		9.4		—		—		1,455		9.4
NOI	$	(5,770)	(2.4)	%	$	17,134	93.6	%	$	11,364	4.4	%

NOI increased $11.4 million, or 4.4%, for the six months ended June 30, 2021 as compared to the six months ended June 30, 2020, primarily resulting from:

•a $17.1 million increase in NOI from our non-same-store properties primarily resulting from the acquisition of our 1918 Eighth property in December 2020 and a lease commenced at our Harlow property (Company 3).

•a $5.8 million decrease in NOI from our same-store properties driven by:

•a decrease in office NOI of $7.2 million primarily due to:

•a $4.0 million decrease in service and other revenues primarily resulting from a decrease in parking revenue at our ICON, 11601 Wilshire, 6040 Sunset, 505 First and Met Park North properties due to reduced activity during the COVID-19 pandemic;

•a $1.8 million decrease in rental revenues primarily resulting from tenant vacancies at our 11601 Wilshire and 625 Second properties and certain retail tenants paying percentage rent in lieu of base rent at our Ferry Building property, partially offset by increases in rental revenues resulting from the reversal of reserves for uncollectible rents at our 901 Market property and a lease commenced at our Clocktower Square property (Rivian Automotive); and

•a $1.5 million increase in operating expenses primarily resulting from an increase in real estate tax, security and insurance expense, as well as a prior period property tax assessment for our ICON property.

•an increase in studio NOI of $1.5 million primarily due to:

•an $8.1 million increase in service and other revenues primarily resulting from an increase in lighting and grip services at our studio properties;

•partially offset by a $5.3 million increase in operating expenses primarily resulting from higher lighting rental expense driven by the increase in lighting services, an increase in earthquake insurance premium due to greater coverage and a prior period property tax assessment for our Sunset Gower Studios property; and

•a $1.3 million decrease in rental revenues primarily resulting from higher vacancies at our studio properties due to the COVID-19 pandemic.

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Other Expenses (Income)

Interest expense

The following table presents a reconciliation from gross interest expense to the interest expense line item on the Consolidated Statements of Operations:


	Six Months Ended June 30,
	2021		2020		Dollar Change		Percent Change
Gross interest expense	$	67,429	$	61,451	$	5,978	9.7	%
Capitalized interest	(11,289)		(9,593)		(1,696)		17.7
Amortization of deferred financing costs and loan discounts/premiums	4,835		2,489		2,346		94.3
TOTAL	$	60,975	$	54,347	$	6,628	12.2	%

Gross interest expense increased by $6.0 million, or 9.7%, to $67.4 million for the six months ended June 30, 2021 compared to $61.5 million for the six months ended June 30, 2020. The increase was primarily driven by the issuance of a $900.0 million loan secured by the Hollywood Media Portfolio (July 2020) and the closing of a $314.3 million loan secured by our 1918 Eighth property (December 2020), partially offset by the paydown of Term Loan B, Term Loan D, Met Park North loan, Revolving Sunset Bronson Studios/ICON/CUE facility and outstanding borrowings on our unsecured revolving credit facility all in July 2020.

Capitalized interest increased by $1.7 million, or 17.7%, to $11.3 million for the six months ended June 30, 2021 compared to $9.6 million for the six months ended June 30, 2020. The increase was primarily driven by our One Westside redevelopment property and our Page Mill Center, Metro Plaza and 95 Jackson repositioning projects, partially offset by the completion of our Harlow development property.

Amortization of deferred financing costs and loan discounts/premiums increased by $2.3 million, or 94.3%, to $4.8 million for the six months ended June 30, 2021 compared to $2.5 million for the six months ended June 30, 2020. The increase was primarily driven by the amortization of new issuance costs associated with the $900.0 million loan secured by the Hollywood Media Portfolio (July 2020) and the $314.3 million loan secured by our 1918 Eighth property (December 2020).

General and administrative expenses

General and administrative expenses include wages and salaries for corporate-level employees, accounting, legal and other professional services, office supplies, entertainment, travel and automobile expenses, telecommunications and computer-related expenses and other miscellaneous items. General and administrative expenses decreased $1.0 million, or 2.6%, to $35.6 million for the six months ended June 30, 2021 compared to $36.5 million for the six months ended June 30, 2020. The change was primarily attributable to decreases in shareholder relations, payroll and travel and entertainment expenses, offset by increases in non-cash compensation and bonus expenses.

Depreciation and amortization expense

Depreciation and amortization expense increased $19.7 million, or 13.3%, to $166.9 million for the six months ended June 30, 2021 compared to $147.3 million for the six months ended June 30, 2020. The increase was primarily related to our acquisition of 1918 Eighth, the accelerated amortization of lease intangibles resulting from an early termination at our 625 Second property and the completion of certain development and redevelopment properties in late 2020.

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Fee income

We recognized fee income of $1.6 million for the six months ended June 30, 2021 compared to $1.2 million for the six months ended June 30, 2020. Fee income primarily represents management fee, construction management fee and leasing commission income earned from our unconsolidated real estate entities.

Unrealized gain on non-real estate investments

We recognized an unrealized gain on our non-real estate investments of $10.8 million due to the observable changes in the fair value of the investments for the six months ended June 30, 2021.

Liquidity and Capital Resources

We have remained capitalized since our initial public offering through public offerings, private placements, joint ventures and continuous offerings under our at-the-market (“ATM”) program. We currently expect that our principal sources of funds to meet our short-term and long-term liquidity requirements for working capital, strategic acquisitions, capital expenditures, tenant improvements, leasing costs, dividends and distributions, share repurchases and repayments of outstanding debt financing will include:

•cash on hand, cash reserves and net cash provided by operations;

•proceeds from additional equity securities;

•our ATM program;

•borrowings under the operating partnership’s unsecured revolving credit facility and One Westside construction loan;

•proceeds from joint venture partners; and

•proceeds from additional secured, unsecured debt financings or offerings.

Liquidity Sources

We had approximately $111.0 million of cash and cash equivalents at June 30, 2021. Our principal source of operating cash flow is related to leasing and operating the properties in our portfolio. Our properties provide a relatively consistent stream of cash flow that provides us with resources to pay operating expenses, debt service fees and fund quarterly dividend and distribution requirements.

Our ability to access the equity capital markets will be dependent on a number of factors as well, including general market conditions for REITs and market perceptions about us.

We have an ATM program that allows us to sell up to $125.0 million of common stock, $65.8 million of which has been sold through June 30, 2021. Any future sales will depend on several factors, including, but not limited to, market conditions, the trading price of our common stock and our capital needs. We have no obligation to sell the remaining shares available for sale under this program.

As of June 30, 2021, we had total borrowing capacity of $600.0 million under our unsecured revolving credit facility, none of which had been drawn. As of June 30, 2021, we had total borrowing capacity of $414.6 million under our construction loan, secured by our One Westside and 10850 Pico properties, $192.9 million of which had been drawn.

Our ability to incur additional debt will be dependent on a number of factors, including our degree of leverage, the value of our unencumbered assets and borrowing restrictions that may be imposed by lenders. If we incur additional debt, the risks associated with our leverage, including our ability to service our debt, would increase.

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The following table sets forth our ratio of debt to total market capitalization (counting series A preferred units as debt) as of June 30, 2021 (in thousands, except percentage):


	June 30, 2021
Unsecured and secured debt(1)	$	3,518,813
Series A preferred units	9,815
Total consolidated debt	3,528,628


Common equity capitalization(2)	4,327,204
TOTAL CONSOLIDATED MARKET CAPITALIZATION	$	7,855,832
Total consolidated debt/total consolidated market capitalization	44.9		%

_____________

1.Excludes in-substance defeased debt, joint venture partner debt and unamortized deferred financing costs and loan discounts/premiums.

2.Common equity capitalization represents the shares of common stock outstanding (including unvested restricted shares), OP units outstanding, restricted performance units and dilutive shares multiplied by the closing price of $27.82, as reported by the NYSE, on June 30, 2021.

Outstanding Indebtedness

The following table sets forth information as of June 30, 2021 and December 31, 2020 with respect to our outstanding indebtedness, excluding unamortized deferred financing costs and loan discounts/premiums (in thousands):


	June 30, 2021		December 31, 2020
Unsecured debt	$	1,925,000	$	1,925,000
Secured debt	$	1,593,813	$	1,507,276
In-substance defeased debt	$	129,971	$	131,707
Joint venture partner debt	$	66,136	$	66,136

The operating partnership was in compliance with its financial covenants as of June 30, 2021.

Liquidity Uses

Contractual Obligations

During the six months ended June 30, 2021, there were no material changes outside the ordinary course of business in the information regarding specified contractual obligations contained in our 2020 Annual Report on Form 10-K. See Part I, Item 1 “Note 8 to the Consolidated Financial Statements—Debt” for information regarding our future minimum principal payments due on our outstanding debt. See Part I, Item 1 “Note 12 to the Consolidated Financial Statements—Future Minimum Rents and Lease Payments” for information regarding our future minimum operating lease payments. See Part I, Item 1 “Note 20 to the Consolidated Financial Statements—Commitments and Contingencies” for more detail.

Cash Flows

A comparison of our cash flow activity is as follows:


	Six Months Ended June 30,
	2021		2020		Dollar Change		Percent Change
Net cash provided by operating activities	$	172,931	$	137,484	$	35,447	25.8	%
Net cash used in investing activities	$	(204,047)	$	(166,858)	$	(37,189)	22.3	%
Net cash provided by financing activities	$	26,521	$	27,987	$	(1,466)	(5.2)	%

Cash and cash equivalents and restricted cash were $144.9 million and $149.5 million at June 30, 2021 and December 31, 2020, respectively.

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Operating Activities

Net cash provided by operating activities increased by $35.4 million, or 25.8%, to $172.9 million for the six months ended June 30, 2021 compared to $137.5 million for the six months ended June 30, 2020. The change primarily resulted from higher cash rents during the six months ended June 30, 2021 compared to the six months ended June 30, 2020, partially offset by increases in interest expense and studio cash operating expenses.

Investing Activities

Net cash used in investing activities increased by $37.2 million, or 22.3%, to $204.0 million for the six months ended June 30, 2021 compared to $166.9 million for the six months ended June 30, 2020. The change primarily resulted from a $21.7 million increase in additions to investment in real estate, an $8.5 million increase in contributions to non-real estate investments and a $7.9 million increase in contributions to unconsolidated real estate entities during the six months ended June 30, 2021 as compared to the six months ended June 30, 2020.

Financing Activities

Net cash provided by financing activities for the six months ended June 30, 2021 remained relatively flat compared to net cash provided by financing activities for the six months ended June 30, 2020. Proceeds from unsecured and secured debt and payments of unsecured and secured debt decreased $366.3 million and $300.0 million, respectively, resulting in a net decrease to net cash provided by financing activities of $66.4 million. In addition, there was a $19.9 million increase in distributions to non-controlling members in consolidated real estate entities. This activity was offset by an increase in proceeds from the sale of common stock of $44.8 million, a decrease in repurchases of common stock of $20.6 million and an increase in contributions from non-controlling members in consolidated real estate entities of $15.0 million.

Off-Balance Sheet Arrangements

Unconsolidated Joint Venture Indebtedness

We have an investment in an unconsolidated real estate entity pursuant to a co-ownership agreement with an affiliate of Blackstone Property Partners Lower Fund 1 LP (“Blackstone 1 LP”), the Bentall Centre property located in Vancouver, Canada. We own 20% of this joint venture and we serve as the operating partner. The unconsolidated real estate entity has mortgage indebtedness. Due to our significant influence over the unconsolidated entity, we account for the entity using the equity method of accounting. As of June 30, 2021, the aggregate carrying amount of debt, including both our and our partner’s share, incurred by the unconsolidated entity was approximately $521.0 million and our proportionate share is approximately $104.2 million.

Critical Accounting Policies

Our discussion and analysis of our historical financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of our financial statements in conformity with GAAP requires us to make estimates of certain items and judgments as to certain future events, for example with respect to the assignment of the purchase price of an acquired property among land, buildings, improvements, equipment and any related intangible assets and liabilities, or the effect of a property tax reassessment of our properties. These determinations, even though inherently subjective and prone to change, affect the reported amounts of our assets, liabilities, revenues and expenses. While we believe that our estimates are based on reasonable assumptions and judgments at the time they are made, some of our assumptions, estimates and judgments will inevitably prove to be incorrect. As a result, actual outcomes will likely differ from our accruals and those differences—positive or negative—could be material. Some of our accruals are subject to adjustment, as we believe appropriate, based on revised estimates and reconciliation to the actual results when available.

Refer to Part I, Item 1 “Note 2 to the Consolidated Financial Statements—Summary of Significant Accounting Policies,” for information regarding our critical accounting policies.

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Non-GAAP Supplemental Financial Measure: Funds From Operations

We calculate FFO in accordance with the White Paper issued in December 2018 on FFO approved by the Board of Governors of the National Association of Real Estate Investment Trusts (“NAREIT”). The White Paper defines FFO as net income or loss calculated in accordance with GAAP, excluding gains and losses from sales of depreciable real estate and impairment write-downs associated with depreciable real estate, plus real estate-related depreciation and amortization (excluding amortization of deferred financing costs and depreciation of non-real estate assets) and after adjustment for unconsolidated partnerships and joint ventures. The calculation of FFO includes the amortization of deferred revenue related to tenant-funded tenant improvements and excludes the depreciation of the related tenant improvement assets. In the December 2018 White Paper, NAREIT provided an option to include value changes in mark-to-market equity securities in the calculation of FFO. We elected this option retroactively during the fourth quarter of 2018.

We believe that FFO is a useful supplemental measure of our operating performance. The exclusion from FFO of gains and losses from the sale of operating real estate assets allows investors and analysts to readily identify the operating results of the assets that form the core of our activity and assists in comparing those operating results between periods. Also, because FFO is generally recognized as the industry standard for reporting the operations of REITs, it facilitates comparisons of operating performance to other REITs. However, other REITs may use different methodologies to calculate FFO, and accordingly, our FFO may not be comparable to all other REITs.

Implicit in historical cost accounting for real estate assets in accordance with GAAP is the assumption that the value of real estate assets diminishes predictably over time. Since real estate values have historically risen or fallen with market conditions, many industry investors and analysts have considered presentations of operating results for real estate companies using historical cost accounting alone to be insufficient. Because FFO excludes depreciation and amortization of real estate assets, we believe that FFO along with the required GAAP presentations provides a more complete measurement of our performance relative to our competitors and a more appropriate basis on which to make decisions involving operating, financing and investing activities than the required GAAP presentations alone would provide. We use FFO per share to calculate annual cash bonuses for certain employees.

However, FFO should not be viewed as an alternative measure of our operating performance because it does not reflect either depreciation and amortization costs or the level of capital expenditures and leasing costs necessary to maintain the operating performance of our properties, which are significant economic costs and could materially impact our results from operations.

The following table presents a reconciliation of net income to FFO (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Net income	$	7,030	$	7,011	$	18,441	$	20,960
Adjustments:
Depreciation and amortization—Consolidated	84,178		73,516		166,939		147,279
Depreciation and amortization—Corporate-related	(590)		(574)		(1,167)		(1,139)
Depreciation and amortization—Company’s share from unconsolidated real estate entities	1,550		1,355		3,061		2,736


Unrealized (gain) loss on non-real estate investments	(5,018)		2,267		(10,793)		2,848
Tax impact of unrealized gain on non-real estate investment	1,876		—		1,876		—
FFO attributable to non-controlling interests	(15,839)		(6,801)		(32,462)		(13,894)
FFO attributable to preferred units	(153)		(153)		(306)		(306)
FFO TO COMMON STOCKHOLDERS AND UNITHOLDERS	$	73,034	$	76,621	$	145,589	$	158,484

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Information about our market risk is disclosed in Part II, Item 7A, of our 2020 Annual Report on Form 10-K and is incorporated herein by reference. There have been no material changes for the six months ended June 30, 2021 to the information provided in Part II, Item 7A, of our 2020 Annual Report on Form 10-K.

Foreign currency exchange rate risk

We have exposure to foreign currency exchange rate risk related to our unconsolidated real estate entity operating in Canada. The unconsolidated real estate entity’s functional currency is the local currency, or Canadian dollars. Any gains or losses resulting from the translation of Canadian dollars to U.S. dollars are classified on our Consolidated Balance Sheets as a separate component of other comprehensive income and are excluded from net income.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures (Hudson Pacific Properties, Inc.)

Hudson Pacific Properties, Inc. maintains disclosure controls and procedures (as defined in Rule 13a-15(e) or Rule 15d-15(e) under the Exchange Act) that are designed to ensure that information required to be disclosed in Hudson Pacific Properties, Inc.’s reports under the Exchange Act is processed, recorded, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

As required by Rule 13a-15(b) under the Exchange Act, Hudson Pacific Properties, Inc. carried out an evaluation, under the supervision and with the participation of management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the disclosure controls and procedures as of the end of the period covered by this report.

Based on the foregoing, our Chief Executive Officer and Chief Financial Officer concluded, as of that time, that Hudson Pacific Properties, Inc.’s disclosure controls and procedures were effective in providing a reasonable level of assurance that information Hudson Pacific Properties, Inc. is required to disclose in reports that Hudson Pacific Properties, Inc. files under the Exchange Act is processed, recorded, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure.

Disclosure Controls and Procedures (Hudson Pacific Properties, L.P.)

Hudson Pacific Properties, L.P. maintains disclosure controls and procedures (as defined in Rule 13a-15(e) or Rule 15d-15(e) under the Exchange Act) that are designed to ensure that information required to be disclosed in Hudson Pacific Properties, L.P.’s reports under the Exchange Act is processed, recorded, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer of Hudson Pacific Properties, Inc. (the sole general partner of Hudson Pacific Properties, L.P.), as appropriate, to allow for timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

As required by Rule 13a-15(b) under the Exchange Act, Hudson Pacific Properties, L.P. carried out an evaluation, under the supervision and with the participation of management, including the Chief Executive Officer and Chief Financial Officer of Hudson Pacific Properties, Inc. (the sole general partner of Hudson Pacific Properties, L.P.), of the effectiveness of the design and operation of the disclosure controls and procedures as of the end of the period covered by this report.

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Based on the foregoing, the Chief Executive Officer and Chief Financial Officer of Hudson Pacific Properties, Inc. (the sole general partner of Hudson Pacific Properties, L.P.) concluded, as of that time, that Hudson Pacific Properties, L.P.’s disclosure controls and procedures were effective in providing a reasonable level of assurance that information Hudson Pacific Properties, L.P. is required to disclose in reports that Hudson Pacific Properties, L.P. files under the Exchange Act is processed, recorded, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer of Hudson Pacific Properties, Inc. (the sole general partner of Hudson Pacific Properties, L.P.), as appropriate, to allow for timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting (Hudson Pacific Properties, Inc.)

There have been no changes that occurred during the second quarter of the year covered by this report in Hudson Pacific Properties, Inc.’s internal control over financial reporting identified in connection with the evaluation referenced above that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Changes in Internal Control Over Financial Reporting (Hudson Pacific Properties, L.P.)

There have been no changes that occurred during the second quarter of the year covered by this report in Hudson Pacific Properties, L.P.’s internal control over financial reporting identified in connection with the evaluation referenced above that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II—OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

From time to time, we are a party to various lawsuits, claims and other legal proceedings arising out of, or incident to, our ordinary course of business. We are not currently a party, as plaintiff or defendant, to any legal proceedings that we believe to be material or that, individually or in the aggregate, would be expected to have a material adverse effect on our business, financial condition, results of operations or cash flows if determined adversely to us.

ITEM 1A. RISK FACTORS

Our results of operations and financial condition could be impacted by the discontinuing of LIBOR

On March 5, 2021, the Financial Conduct Authority (“FCA”) announced that USD LIBOR will no longer be published after June 30, 2023 and changed the spread that may be used to automatically convert contracts from LIBOR to the Secured Overnight Financing Rate (“SOFR”). The Company anticipates that LIBOR will continue to be available at least until June 30, 2023. Any changes adopted by the FCA or other governing bodies in the method used for determining LIBOR may result in a sudden or prolonged increase or decrease in reported LIBOR. If that were to occur, our interest payments could change. In addition, uncertainty about the extent and manner of future changes may result in interest rates and/or payments that are higher or lower than if LIBOR were to remain available in its current form.

The Company has contracts that are indexed to LIBOR and is monitoring and evaluating the related risks, which include interest on loans and amounts received and paid on derivative instruments. These risks arise in connection with transitioning contracts to an alternative rate, including any resulting value transfer that may occur, and are likely to vary by contract. The value of loans, securities, or derivative instruments tied to LIBOR, as well as interest rates on our current or future indebtedness, may also be impacted if LIBOR is limited or discontinued. While we expect LIBOR to be available in substantially its current form until at least the end of June 30, 2023, it is possible that LIBOR will become unavailable prior to that point. This could result, for example, if a sufficient number of banks decline to make submissions to the LIBOR administrator. In that case, the risks associated with the transition to an alternative reference rate will be accelerated and magnified.

Any or all of the foregoing could have an adverse effect on our financial condition, results of operations and cash flows, or the market price of our common stock. Additional risks and uncertainties not currently known to us, or that we presently deem to be immaterial, may also adversely affect our business, financial condition and results of operations.

Please review the Risk Factors set forth in our 2020 Annual Report on Form 10-K for additional risk factors.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

(a) Recent Sales of Unregistered Securities:

During the second quarter of 2021, our operating partnership issued partnership units in private placements in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act, in the amounts and for the consideration set forth below:

During the second quarter of 2021, we issued an aggregate of 33,246 shares of our common stock in connection with the vesting of restricted stock awards for no cash consideration, out of which no shares of common stock were forfeited to us in connection with tax withholding obligations. For each share of common stock issued by us in connection with such an award, our operating partnership issued a restricted common unit to us as provided in our operating partnership’s Agreement of Limited Partnership. During the second quarter of 2021, our operating partnership issued an aggregate of 33,246 units to us in connection with this transaction.

During the second quarter of 2021, we issued an aggregate of 1,526,163 shares of our common stock in connection with our ATM program for net proceeds of $44.8 million. Pursuant to the Agreement of Limited Partnership, for each share of common stock issued by us our operating partnership issued a common unit to us. During the second quarter of 2021, our operating partnership issued an aggregate of 1,526,163 common units to us in connection with this transaction.

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All other issuances of unregistered equity securities of our operating partnership during the six months ended June 30, 2021 have previously been disclosed in filings with the SEC. For all issuances of units to us, our operating partnership relied on our status as a publicly traded NYSE-listed company with $8.4 billion in total consolidated assets and as our operating partnership’s majority owner and sole general partner as the basis for the exemption under Section 4(a)(2) of the Securities Act.

(b) Use of Proceeds from Registered Securities: None

The following table summarizes the repurchases of the Company equity securities during the second quarter of 2021:


Period	Total Number of Shares Purchased	Average Price Paid Per Share		Total Shares Purchased as Part of Publicly Announced Plans or Programs(2)	Maximum That May Yet Be Purchased Under The Plans or Programs(3)

April 1 - April 30, 2021(1)(4)	956	$	23.49	—	$	105,142,574
TOTAL	956	23.49		—	$	105,142,574

_____________

1.Includes shares of common stock remitted to Hudson Pacific Properties, Inc. to satisfy tax withholding obligations in connection with the vesting of restricted stock. The price paid per share is based on the closing price of our common stock, as reported by the NYSE, as of the date of the vesting of the related restricted stock.

2.Our board of directors authorized a share repurchase program to buy up to $250.0 million of the outstanding common stock of Hudson Pacific Properties, Inc. The program does not have a termination date, and repurchases may commence or be discontinued at any time.

3.The maximum that may yet be purchased under the plans or programs is shown net of repurchases.

4.Represents an adjustment to the number of shares of common stock remitted to Hudson Pacific Properties, Inc. to satisfy tax withholding obligations in connection with the vesting of certain restricted stock in December 2020.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

None.

ITEM 5. OTHER INFORMATION

None.

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ITEM 6. EXHIBITS


		Incorporated by Reference
Exhibit No.	Description	Form	File No.	Exhibit No.	Filing Date
3.1	Articles of Amendment and Restatement of Hudson Pacific Properties, Inc.	S-11/A	333-164916	3.1	May 12, 2010
3.2	Second Amended and Restated Bylaws of Hudson Pacific Properties, Inc.	8-K	001-34789	3.1	January 12, 2015
3.3	Fourth Amended and Restated Agreement of Limited Partnership of Hudson Pacific Properties, L.P.	10-K	001-34789	10.1	February 26, 2016
3.4	Certificate of Limited Partnership of Hudson Pacific Properties, L.P.	10-Q	001-34789	3.4	November 4, 2016
10.1	Second Amended and Restated Hudson Pacific Properties, Inc. and Hudson Pacific Properties, L.P. 2010 Incentive Award Plan**+
31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for Hudson Pacific Properties, Inc.+
31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for Hudson Pacific Properties, Inc.+
31.3	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for Hudson Pacific Properties, L.P.+
31.4	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for Hudson Pacific Properties, L.P.+
32.1	Certifications by Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for Hudson Pacific Properties, Inc.+
32.2	Certifications by Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for Hudson Pacific Properties, L.P.+
101	The following financial information from Hudson Pacific Properties, Inc.’s and Hudson Pacific Properties, L.P.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2021 formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) Consolidated Balance Sheets (unaudited), (ii) Consolidated Statements of Operations (unaudited), (iii) Consolidated Statements of Comprehensive Income (Loss) (unaudited), (iv) Consolidated Statements of Equity (unaudited), (v) Consolidated Statements of Capital (unaudited), (vi) Consolidated Statements of Cash Flows (unaudited) and (vii) Notes to Unaudited Consolidated Financial Statements*
104	Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101)

____________

Pursuant to Rule 406T of Regulation S-T, the interactive data files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Section 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.

Denotes a management contract or compensatory plan or arrangement.

Filed herewith.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


		HUDSON PACIFIC PROPERTIES, INC.

Date:	August 4, 2021	/s/ VICTOR J. COLEMAN
		Victor J. Coleman Chief Executive Officer (Principal Executive Officer)


		HUDSON PACIFIC PROPERTIES, INC.

Date:	August 4, 2021	/s/ HAROUT K. DIRAMERIAN
		Harout K. Diramerian Chief Financial Officer (Principal Financial Officer)

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


		HUDSON PACIFIC PROPERTIES, L.P.

Date:	August 4, 2021	/s/ VICTOR J. COLEMAN
		Victor J. Coleman Chief Executive Officer (Principal Executive Officer)


		HUDSON PACIFIC PROPERTIES, L.P.

Date:	August 4, 2021	/s/ HAROUT K. DIRAMERIAN
		Harout K. Diramerian Chief Financial Officer (Principal Financial Officer)