Hudson Pacific Properties Q2 Earnings Call Highlights

Record leasing improved Hudson Pacific’s office metrics: The company signed 1.3 million square feet of office leases in Q2, including an 891,000-square-foot, 24-year San Francisco government lease. Office occupancy rose 470 basis points sequentially to 82.5%, while the leasing pipeline reached 2.4 million square feet. Financial performance strengthened significantly: Core FFO nearly tripled year over year to $23.1 million, or $0.35 per diluted share, while same-store cash NOI increased 7.5% and interest expense fell 20%. Hudson Pacific raised its 2026 Core FFO guidance to $1.12–$1.20 per share. Studio operations improved as Quixote undergoes restructuring: Studio occupancy reached 74.6%, and core studio NOI rose to $4.6 million, with Hudson Pacific’s share turning positive for the first time in two years. The company plans to exit several Quixote operations and is targeting more than $200 million in asset sales.

Hudson Pacific Properties reported record office leasing activity in the second quarter of 2026, higher occupancy and a sharp increase in Core FFO, supported by a major San Francisco government lease, improved studio performance and ongoing cost reductions. Chairman and CEO Victor Coleman said the company signed 1.3 million square feet of new and renewal office leases during the quarter, including an 891,000-square-foot, 24-year lease with the City and County of San Francisco at 1455 Market. The agreement provides “nearly a quarter of a century of cash flow visibility,” Coleman said.

Office occupancy increased 470 basis points sequentially to 82.5%, while the leased rate rose 440 basis points to 82.8%. The company reported its fourth consecutive quarter of occupancy gains. Same-store net operating income rose 7.5%, reflecting improved results in both office and studio operations. Leasing Pipeline Remains Active President Mark Lammas said 61% of the quarter’s 1.3 million square feet of office leasing was new leasing and 39% was renewals. Excluding the large San Francisco government lease, Hudson Pacific completed another 402,000 square feet of leasing, of which 71% was new. The company’s leasing pipeline stood at 2.4 million square feet at quarter-end, with nearly 70% representing prospective new leases and an average requirement above 20,000 square feet. Art Suazo, executive vice president of leasing, said active deals in the pipeline were evenly divided between technology and artificial-intelligence-related tenants and non-tech tenants, including professional-services, FIRE-sector and government users. GAAP rent spreads increased 17.2%, while cash rent spreads declined 11.4%. Excluding the City and County of San Francisco lease, GAAP rents declined 3.3% and cash rents declined 9.9%, which Lammas attributed primarily to mid-sized Palo Alto leases rolling from pre-pandemic peak rents. He said those rents remained above $80 per square foot. Hudson Pacific said net effective rents rose 22% from the preceding quarter and 9% from a year earlier, significantly aided by the San Francisco lease. Trailing 12-month net effective rents increased 7% sequentially and 1% year over year. Tour activity rose nearly 20% year over year. Market Conditions Vary by Region Coleman said office demand was broadening in several markets amid limited new construction, though recovery rates differed by region. He pointed to San Francisco’s seventh straight quarter of positive absorption and its largest year-over-year rent increase since 2020. ...