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Hudson Pacific Properties, Inc. Announces Second Quarter 2013 Financial Results



  Hudson Pacific Properties, Inc. Announces Second Quarter 2013 Financial
  Results

Business Wire

LOS ANGELES -- August 5, 2013

Hudson Pacific Properties, Inc. (the “Company,” “we,” “us” or “our”) (NYSE:
HPP) today announced financial results for the second quarter ended June 30,
2013.

Financial Results

Funds From Operations (FFO) (excluding specified items) for the three months
ended June 30, 2013 totaled $13.9 million, or $0.24 per diluted share,
compared to FFO (excluding specified items) of $9.5 million, or $0.22 per
share, a year ago. The specified items for the second quarter of 2013
consisted of expenses associated with the acquisition of the Pinnacle II
building in Burbank, California of $0.5 million, or $0.01 per diluted share.
Specified items for the second quarter of 2012 consisted of expenses
associated with the acquisitions of 901 Market Street in San Francisco and
10900 Washington Boulevard in West Los Angeles, California of $0.3 million, or
$0.01 per diluted share, and a supplemental property tax expense of $0.9
million, or $0.02 per diluted share. FFO, including the specified items,
totaled $13.4 million, or $0.23 per diluted share, for the three months ended
June 30, 2013, compared to $8.2 million, or $0.19 per share, a year ago.

The Company reported a net loss attributable to common stockholders of $6.2
million, or $(0.11) per diluted share, for the three months ended June 30,
2013, compared to net loss attributable to common stockholders of $5.2
million, or $(0.13) per diluted share, for the three months ended June 30,
2012. Net loss in the three months ended June 30, 2013 included approximately
$5.4 million of impairment associated with the disposition of the Company’s
City Plaza property, as discussed more fully below.

“During the second quarter we made significant progress on our strategic
growth initiatives,” said Mr. Victor J. Coleman, Chairman and Chief Executive
Officer of Hudson Pacific Properties, Inc. “I am very pleased with our
previously announced acquisition of a four-building, 836,419 square-foot
office portfolio in Seattle, which we successfully closed on July 31, 2013.
This high quality portfolio gives us a meaningful presence in the region with
a significant foothold in the top submarkets in Downtown Seattle. We also
completed the acquisition of 3401 Exposition Blvd., situated in the heart of
Santa Monica’s Olympic Media Corridor. This property presents an opportunity
to continue to enhance our portfolio by identifying creative office assets in
strong markets where our extensive redevelopment expertise can create value.
And, finally, during the quarter, our joint venture with MDP/Worthe completed
the previously announced acquisition of Pinnacle II located in Burbank,
California. Currently 100% leased through December 2021, this stabilized,
high-quality asset is highly complementary to our portfolio.”

Mr. Coleman continued, “second quarter leasing activity remained strong with
the completion of new and renewal leases totaling 276,897 square feet. This
included an expansion and extension through July, 2017 of our leases with NFL
Enterprises for 137,306 square feet at our 10900 and 10950 Washington
properties and a new ten-year, 88,134 square-foot lease with Uber
Technologies, Inc. at our 1455 Market Street property that backfills space
currently occupied by the property’s largest tenant, which was scheduled to
expire in 2017. This activity helped drive our stabilized office portfolio
leased rate up to 95.2% at the end of the second quarter.”

Second Quarter Highlights

  * FFO (excluding specified items) of $13.9 million, or $0.24 per diluted
    share, compared to $9.5 million, or $0.22 per share, a year ago;
  * Completed new and renewal leases totaling 276,897 square feet;
  * Stabilized office portfolio leased rate of 95.2% at June 30, 2013;
  * Announced purchase agreement to acquire a four-building, 836,419
    square-foot office portfolio in Seattle, Washington, for approximately
    $368.6 million (net of certain credits and before closing costs and
    prorations) (completed on July 31, 2013);
  * Completed acquisition of 3401 Exposition Boulevard, an approximately
    65,000 square-foot redevelopment project located in Santa Monica,
    California, for $24.7 million;
  * Completed contribution of Pinnacle II building located in Burbank,
    California to the joint venture with M. David Paul & Associates/Worthe
    Real Estate Group (“MDP/Worthe”) for a total gross purchase price of
    $130.0 million (before closing costs and prorations), including the
    assumption of an existing $89.1 million project loan;
  * Announced an agreement to sell the 333,922 square-foot City Plaza property
    in Orange, California, for approximately $56.0 million (before certain
    credits, prorations and closing costs) (completed on July 12, 2013);
  * Declared and paid quarterly dividend of $0.125 per common share; and
  * Declared and paid dividend of $0.52344 per share on 8.375% Series B
    Cumulative Preferred Stock.

Combined Operating Results For The Three Months Ended June 30, 2013

Total revenue from continuing operations during the quarter increased 21.2% to
$47.4 million from $39.1 million for the same quarter a year ago. Total
operating expenses from continuing operations increased 9.2% to $40.1 million
from $36.7 million for the same quarter a year ago. As a result, income from
operations increased 204.1% to $7.3 million for the second quarter of 2013,
compared to income from operations of $2.4 million for the same quarter a year
ago. The primary reasons for the increases in total revenue and total
operating expenses are discussed below in connection with our segment
operating results.

Interest expense during the second quarter increased 25.9% to $5.8 million,
compared to interest expense of $4.6 million for the same quarter a year ago.
At June 30, 2013, the Company had $637.1 million of notes payable, compared to
$582.1 million as of December 31, 2012 and $350.3 million at June 30, 2012.

During the quarter, the Company entered into an agreement to sell its City
Plaza property in Orange, California, for approximately $56.0 million (before
certain credits, prorations and closing costs). Accordingly, the City Plaza
property has been reclassified as held for sale and its financial results are
accounted for as discontinued operations in the 2013 second quarter and
six-month financial statements.

The City Plaza property was originally acquired by one of the entities
comprising the Company’s predecessor in August of 2008 and was contributed to
the Company upon the consummation of the Company’s initial public offering on
June 29, 2010, at the predecessor entity’s historical cost. As a result, the
approximately $5.4 million of impairment in the 2013 second quarter and
six-month financial statements reflects the estimated loss on sale based on
the historical cost basis of this property, rather than the value attributed
to it as of the Company’s initial public offering.

The disposition of the City Plaza property closed on July 12, 2013. Proceeds
from the disposition were used toward the acquisition of the Seattle portfolio
pursuant to a like-kind exchange under Internal Revenue Code Section 1031.

Segment Operating Results For The Three Months Ended June 30, 2013

Office Properties

Total revenue from continuing operations at the Company’s office properties
increased 29.6% to $37.7 million from $29.1 million for the same quarter a
year ago. The increase was primarily the result of a $8.1 million increase in
rental revenue to $29.3 million and a $0.7 million increase in parking and
other revenue to $3.1 million, largely resulting from a full quarter of
operating results from the 901 Market property we acquired on June 1, 2012,
and the Pinnacle I and Pinnacle II buildings our joint venture with MDP/Worthe
acquired on November 8, 2012 and June 14, 2013, respectively.

Office property operating expenses from continuing operations increased 7.8%
to $14.1 million from $13.1 million for the same quarter a year ago. The
increase was primarily the result of the office properties acquisitions
described above. This increase in operating expenses also reflects a
supplemental property tax expense associated with our Technicolor property,
which occurred in the three months ended June 30, 2012, of approximately $0.9
million. If this supplemental property tax expense is disregarded, operating
expenses from continuing operations at the Company’s office properties would
have increased by $1.9 million, or 16.0%, compared to the same quarter a year
ago.

At June 30, 2013, the Company’s stabilized office portfolio was 95.2% leased.
During the quarter, the Company executed 15 new and renewal leases totaling
276,897 square feet.

Media and Entertainment Properties

Total revenue at the Company’s media and entertainment properties decreased
3.3% to $9.6 million from $10.0 million for the same quarter a year ago. The
decrease was primarily the result of a $0.4 million decrease in rental revenue
to $5.4 million, primarily resulting from lower occupancy over the second
quarter of 2013 compared to the same quarter a year ago, and partially offset
by a $0.1 million increase in other revenue to $0.2 million, primarily
resulting from our acquisition of the Ocean Way recording studio equipment at
our Sunset Gower media and entertainment property in January 2013.

Total media and entertainment operating expenses increased 2.2% to $6.4
million from $6.3 million for the same quarter a year ago, primarily resulting
from expenses associated with the Ocean Way recording studio, with no
comparable activity for the same quarter a year ago.

As of June 30, 2013, the trailing 12-month occupancy for the Company’s media
and entertainment portfolio increased to 73.1% from 69.6% for the trailing
12-month period ended June 30, 2012.

Combined Operating Results For The Six Months Ended June 30, 2013

For the first six months of 2013, total revenue from continuing operations was
$94.8 million, an increase of 25.0% from $75.9 million in the same period the
prior year. Total operating expenses from continuing operations were $82.4
million, compared to $68.3 million in the same period a year ago. As a result,
income from operations increased 63.8% to $12.4 million for the first six
months of 2013, compared to income from operations of $7.6 million for the
same period a year ago. The revenue for the first six months of 2013 includes
an early lease termination payment from Bank of America relating to the
Company’s 1455 Market Street property of $1.1 million (after the write-off of
non-cash items), with no comparable activity for the same period a year ago.
Operating expenses for the first six months of 2013 include a property tax
reimbursement resulting from the reassessment of the Sunset Gower media and
entertainment property of $0.8 million, compared to the supplemental property
tax expense associated with our Technicolor property in the first six months
of 2012 of approximately $0.9 million. The Company had approximately $5.4
million of impairment loss associated with the disposition of our City Plaza
property, with no comparable activity for the same period a year ago. The
Company also had $0.5 million of acquisition-related expense during the first
six months of 2013, compared to $0.4 million of acquisition-related expense
during the first six months of 2012. Interest expense during the first six
months of 2013 increased 19.9% to $11.4 million from $9.5 million in the same
period of 2012, primarily due to interest expenses for a full six months on
the indebtedness associated with our First Financial and 10950 Washington
properties and the increase in indebtedness associated with our 901 Market
property acquired on June 1, 2012, and the acquisitions of the Pinnacle I and
Pinnacle II buildings on November 8, 2012 and June 14, 2013, respectively.

Balance Sheet

At June 30, 2013, the Company had total assets of $1.8 billion, including
unrestricted cash and cash equivalents of $96.3 million. At June 30, 2013, the
Company had total undrawn capacity of approximately $240.6 million on its
unsecured credit facility.

Acquisitions

Pinnacle II Acquisition

Through its joint venture with MDP/Worthe, effective June 14, 2013, the
Company completed the acquisition of the Pinnacle II, a 231,314 square-foot
Class-A office property located in the heart of the Burbank Media District. As
previously announced on November 8, 2012, the Company entered into a joint
venture with MDP/Worthe to acquire The Pinnacle, a two-building (Pinnacle I
and Pinnacle II), 625,091 square-foot office property located in Burbank,
California. The acquisition of the 393,777 square-foot Pinnacle I building by
the joint venture closed on November 8, 2012 for a purchase price of $212.5
million, $129.0 million of which was financed with a new ten-year project
loan. The Pinnacle II building was contributed by MDP/Worthe subject to an
existing $89.1 million project loan bearing interest at a fixed annual rate of
6.313% and maturing on September 6, 2016. Other than for purposes of funding
closing costs and prorations, the Company did not make a capital contribution
in connection with the contribution of the Pinnacle II building to the joint
venture, but the Company’s ownership interest in the joint venture was
adjusted from 98.25% to 65% to reflect the contribution of the Pinnacle II by
MDP/Worthe, with the remaining 35% owned by MDP/Worthe. With the closing of
this transaction, the joint venture owns both buildings for a combined
purchase price of $342.5 million, subject to $218.1 million of project
financing.

Seattle Acquisition

On June 11, 2013, the Company entered into a purchase agreement to acquire a
four-building, 836,419 square-foot office portfolio in Seattle, Washington
from Spear Street Capital for approximately $368.6 million (net of certain
credits and before closing costs and prorations). The Company completed the
acquisition on July 31, 2013. We paid the purchase price with a combination of
cash-on-hand (including funds from the 1031 exchange of City Plaza),
borrowings under our corporate unsecured credit facility, and the asset-level
financing described below. The Seattle Portfolio consists of the following:

  * a two-building, 472,881 square-foot waterfront property located in the
    Pioneer Square submarket of downtown Seattle, referred to as the First &
    King property. This property is 90% leased to tenants such as Capital
    One/ING Direct, EMC Corporation and Nuance Communications;
  * a 189,762 square-foot Class-A office building located in the South Lake
    Union submarket of downtown Seattle, referred to as the Met Park North
    property. This building is 99% leased, with 74% of the building to be
    occupied by Amazon.com, Inc. under a ten-year lease expected to commence
    in November 2013; and
  * a 173,776 square-foot building located in the Edmonds/Lynnwood submarket
    of Seattle’s Northend, referred to as the Northview property. This
    building is 89% leased to tenants such as Automatic Data Processing, Inc.
    and the Federal Emergency Management Agency.

In connection with the acquisition of the Seattle Portfolio, on July 31, 2013,
the Company closed a seven-year loan totaling $64.5 million with Union Bank,
N.A., secured by the Company’s Met Park North property. The loan bears
interest at a rate equal to one-month LIBOR plus 155 basis points. The full
loan is subject to an interest rate contract that swapped one-month LIBOR to a
fixed rate of 2.1644% through the loan’s maturity on August 1, 2020. Proceeds
from the loan were used toward the purchase the Seattle Portfolio.

3401 Exposition Boulevard Acquisition

On May 22, 2013, the Company acquired 3401 Exposition Blvd. in Santa Monica,
California for $24.7 million from Watt Investment Partners. 3401 Exposition
Blvd. is expected to consist of up to approximately 65,000 square feet of
state-of-the-art creative office space upon completion of a full base-building
renovation and redevelopment scheduled to be completed by the fourth quarter
of this year. With exposed brick and timber, operable windows, skylights, a
roof deck and easy access to the 10 Freeway and the new Expo Light Rail Line
currently under construction along Exposition Boulevard, the remodeled 3401
Exposition Blvd. is expected to be ideal for users seeking creative office
space in the competitive Santa Monica submarket. As part of the acquisition,
the Company assumed a loan with an outstanding principal balance of
approximately $13.2 million.

City Plaza Disposition

On May 31, 2013, the Company entered into an agreement to sell its City Plaza
property for approximately $56.0 million (before certain credits, prorations,
and closing costs). The transaction closed on July 12, 2013. Proceeds from the
disposition were used toward the acquisition of the Seattle portfolio pursuant
to a like-kind exchange under Internal Revenue Code Section 1031. City Plaza
is a nineteen-story, 333,922 rentable square-foot Class-A office building
located in Orange, California, that was acquired by the Company’s predecessor
in August of 2008 and contributed to the Company in connection with its June
29, 2010 initial public offering.

Leasing Activities

On April 24, 2013, the Company executed an expansion and extension of its
leases with NFL Enterprises for 137,306 square feet at the Company’s 10900 and
10950 Washington properties in Southern California. NFL Enterprises is a major
tenant at 10900 and 10950 Washington, where it occupies office space and two
sound stages used exclusively to broadcast the NFL Network. Under the new
lease terms, NFL Enterprises increased its occupancy by an additional 22,221
square feet effective July 2013, completely backfilling space occupied by
another tenant that expired in June 2013, and extended the term on the
combined 137,301 square feet through the middle of 2017. Prior to these new
lease terms, NFL Enterprises occupied 115,085 square feet with a scheduled
expiration of April 2015.

On June 28 2013, the Company executed a new lease at its 1455 Market Street
property with Uber Technologies, Inc., a leading provider of affordable luxury
transportation through an efficient technology-centered approach. The new
ten-year, 88,134 square-foot, lease encompasses the entire fourth floor of
1455 Market and backfills space currently occupied by the property’s largest
tenant that was scheduled to expire in 2017. Commencement of the lease with
Uber is scheduled for first quarter 2014.

Dividend

The Company’s Board of Directors declared a dividend on its common stock of
$0.125 per share and on its 8.375% Series B Cumulative Preferred Stock of
$0.52344 per share for the second quarter of 2013. Both dividends were paid on
July 1, 2013 to stockholders of record on June 20, 2013.

2013 Outlook

In light of the significant transaction activity in the second quarter, the
Company is revising its full-year 2013 FFO guidance from its previously
announced range of $0.90 to $0.94 per diluted share (excluding specified
items) to a revised range of $0.91 to $0.95 per diluted share (excluding
specified items). This guidance reflects the Company’s FFO for the second
quarter ended June 30, 2013 of $0.24 per diluted share (excluding specified
items). In addition, this guidance reflects the acquisitions, financings and
leasing activity referenced in this press release and all previously announced
acquisitions, dispositions, financings and leasing activity. As is always the
case, the Company’s guidance does not reflect or attempt to anticipate any
impact to FFO from speculative acquisitions. The full-year 2013 FFO estimates
reflect management’s view of current and future market conditions, including
assumptions with respect to rental rates, occupancy levels and the earnings
impact of events referenced in this release, but otherwise exclude any impact
from future unannounced or speculative acquisitions, dispositions, debt
financings or repayments, recapitalizations, capital market activity, or
similar matters.

Supplemental Information

Supplemental financial information regarding the Company’s second quarter 2013
results may be found in the Investor Relations section of the Company’s Web
site at www.hudsonpacificproperties.com. This supplemental information
provides additional detail on items such as property occupancy, financial
performance by property and debt maturity schedules.

Conference Call

The Company will conduct a conference call to discuss the results at 1:30 p.m.
PT / 4:30 p.m. ET on August 5, 2013. To participate in the event by telephone,
please dial (877) 407-0784 five to 10 minutes prior to the start time (to
allow time for registration) and use conference ID 417609. International
callers should dial (201) 689-8560 and enter the same conference ID number.
The call will also be broadcast live over the Internet and can be accessed on
the Investor Relations section of the Company’s Web site at
www.hudsonpacificproperties.com. A replay of the call will also be available
for 90 days on the Company’s Web site. For those unable to participate during
the live broadcast, a replay will be available beginning August 5, at 4:30
p.m. PT / 7:30 p.m. ET, through August 12, at 8:59 p.m. PT / 11:59 p.m. ET. To
access the replay, dial (877) 870-5176 and use passcode 417609. International
callers should dial (858) 384-5517 and enter the same conference ID number.

Use of Non-GAAP Information

The Company calculates funds from operations before non-controlling interest
(FFO) in accordance with the standards established by the National Association
of Real Estate Investment Trusts (NAREIT). FFO represents net income (loss),
computed in accordance with accounting principles generally accepted in the
United States of America (GAAP), excluding gains (or losses) from sales of
depreciable operating property, real estate depreciation and amortization
(excluding amortization of above/below market lease intangible assets and
liabilities and amortization of deferred financing costs and debt
discounts/premium) and after adjustments for unconsolidated partnerships and
joint ventures. The Company uses FFO as a supplemental performance measure
because, in excluding real estate depreciation and amortization and gains and
losses from property dispositions, it provides a performance measure that,
when compared year over year, captures trends in occupancy rates, rental rates
and operating costs. The Company also believes that, as a widely recognized
measure of the performance of REITs, FFO will be used by investors as a basis
to compare its operating performance with that of other REITs. However,
because FFO excludes depreciation and amortization and captures neither the
changes in the value of our properties that results from use or market
conditions nor the level of capital expenditures and leasing commissions
necessary to maintain the operating performance of its properties, all of
which have real economic effect and could materially impact the Company’s
results from operations, the utility of FFO as a measure of our performance is
limited. Other equity REITs may not calculate FFO in accordance with the
NAREIT definition and, accordingly, the Company’s FFO may not be comparable to
such other REITs’ FFO. Accordingly, FFO should be considered only as a
supplement to net income as a measure of the Company’s performance. FFO should
not be used as a measure of the Company’s liquidity, nor is it indicative of
funds available to fund the Company’s cash needs, including the Company’s
ability to pay dividends. FFO should not be used as a supplement to or
substitute for cash flow from operating activities computed in accordance with
GAAP.

About Hudson Pacific Properties

Hudson Pacific Properties, Inc. is a full-service, vertically integrated real
estate company focused on owning, operating and acquiring high-quality office
properties and state-of-the-art media and entertainment properties in select
growth markets primarily in Northern and Southern California. The Company’s
strategic investment program targets high barrier-to-entry, in-fill locations
with favorable, long-term supply-demand characteristics in select target
markets, including Los Angeles, Orange County, San Diego and San Francisco.
The Company’s portfolio currently consists of approximately 6.1 million square
feet, not including undeveloped land that the Company believes can support an
additional 1.6 million square feet. The Company has elected to be taxed as a
real estate investment trust, or REIT, for federal income tax purposes. Hudson
Pacific Properties is a component of the Russell 2000® and the Russell 3000®
indices. For additional information, please
visit www.hudsonpacificproperties.com.

Forward-Looking Statements

This press release may contain forward-looking statements within the meaning
of the federal securities laws. Forward-looking statements relate to
expectations, beliefs, projections, future plans and strategies, anticipated
events or trends and similar expressions concerning matters that are not
historical facts. In some cases, you can identify forward-looking statements
by the use of forward-looking terminology such as “may,” “will,” “should,”
“expects,” “intends,” “plans,” “anticipates,” “believes,” “estimates,”
“predicts,” or “potential” or the negative of these words and phrases or
similar words or phrases that are predictions of or indicate future events or
trends and that do not relate solely to historical matters. Forward-looking
statements involve known and unknown risks, uncertainties, assumptions and
contingencies, many of which are beyond the Company’s control that may cause
actual results to differ significantly from those expressed in any
forward-looking statement. All forward-looking statements reflect the
Company’s good faith beliefs, assumptions and expectations, but they are not
guarantees of future performance. Furthermore, the Company disclaims any
obligation to publicly update or revise any forward-looking statement to
reflect changes in underlying assumptions or factors, of new information, data
or methods, future events or other changes. For a further discussion of these
and other factors that could cause the Company’s future results to differ
materially from any forward-looking statements, see the section entitled “Risk
Factors” in the Company’s Annual Report on Form 10-K for the year ended
December 31, 2012 filed with the Securities and Exchange Commission on March
14, 2013, and other risks described in documents subsequently filed by the
Company from time to time with the Securities and Exchange Commission.

 
Hudson Pacific Properties, Inc.
Consolidated Balance Sheets
(In thousands, except share data)
                                           June 30, 2013     December 31, 2012
ASSETS                                     (Unaudited)       Audited
REAL ESTATE ASSETS
Land                                       $ 507,823         $   478,273
Building and improvements                  965,946           831,791
Tenant improvements                        84,721            75,094
Furniture and fixtures                     14,408            11,545
Property under development                 32,699            23,961          
Total real estate held for investment      1,605,597         1,420,664
Accumulated depreciation and               (94,775     )     (80,303        )
amortization
Investment in real estate, net             1,510,822         1,340,361
Cash and cash equivalents                  96,330            18,904
Restricted cash                            17,716            14,322
Accounts receivable, net                   9,942             12,167
Notes receivable                           —                 4,000
Straight-line rent receivables             16,673            12,732
Deferred leasing costs and lease           88,893            81,010
intangibles, net
Deferred finance costs, net                7,092             8,175
Interest rate contracts                    123               71
Goodwill                                   8,754             8,754
Prepaid expenses and other assets          22,615            4,588
Assets associated with real estate held    53,152            54,608          
for sale
TOTAL ASSETS                               $ 1,832,112       $   1,559,692   
                                                              
LIABILITIES AND EQUITY
Notes payable                              $ 637,118         $   582,085
Accounts payable and accrued liabilities   20,998            18,578
Below-market leases                        35,216            31,560
Security deposits                          5,671             5,291
Prepaid rent                               8,201             11,276
Obligations associated with real estate    1,269             1,205           
held for sale
TOTAL LIABILITIES                          708,473           649,995
                                                              
6.25% series A cumulative redeemable
preferred units of the Operating           12,475            12,475
Partnership
                                                              
EQUITY
Hudson Pacific Properties, Inc.
stockholders’ equity:
Preferred stock, $0.01 par value,
10,000,000 authorized; 8.375% series B
cumulative redeemable preferred stock,     145,000           145,000
$25.00 liquidation preference, 5,800,000
shares outstanding at June 30, 2013 and
December 31, 2012, respectively
Common Stock, $0.01 par value,
490,000,000 authorized, 56,709,792
shares and 47,496,732 shares outstanding   567               475
at June 30, 2013 and December 31, 2012,
respectively
Additional paid-in capital                 904,805           726,605
Accumulated other comprehensive loss       (1,177      )     (1,287         )
Accumulated deficit                        (39,478     )     (30,580        )
Total Hudson Pacific Properties, Inc.      1,009,717         840,213
stockholders’ equity
Non-controlling interest—members in        46,883            1,460
Consolidated Entities
Non-controlling common units in the        54,564            55,549          
Operating Partnership
TOTAL EQUITY                               1,111,164         897,222         
TOTAL LIABILITIES AND EQUITY               $ 1,832,112       $   1,559,692   

 
Hudson Pacific Properties, Inc.
Combined Statements of Operations
(Unaudited, in thousands, except share and per share data)
                                                     
                         Three Months Ended              Six Months Ended June
                         June 30,                        30,
                      2013           2012             2013           2012
Revenues
Office
Rental                $  29,286      $  21,158        $  56,090      $  42,122
Tenant recoveries     5,348          5,522            11,097         10,867
Parking and other     3,108          2,433            7,046          4,525       
Total office          37,742         29,113           74,233         57,514
revenues
                                                                      
Media &
entertainment
Rental                5,417          5,805            11,185         11,256
Tenant recoveries     323            417              741            665
Other
property-related      3,708          3,697            8,198          6,321
revenue
Other                 200            62               436            102         
Total media &
entertainment         9,648          9,981            20,560         18,344
revenues
                                                                      
Total revenues        47,390         39,094           94,793         75,858      
                                                                      
Operating expenses
Office operating      14,079         13,057           27,425         23,766
expenses
Media &
entertainment         6,429          6,289            11,997         11,059
operating expenses
General and           5,186          4,151            10,175         8,665
administrative
Depreciation and      14,382         13,192           32,813         24,806      
amortization
Total operating       40,076         36,689           82,410         68,296      
expenses
                                                                      
Income from           7,314          2,405            12,383         7,562
operations
                                                                      
Other expense
(income)
Interest expense      5,762          4,575            11,354         9,466
Interest income       (90        )   (2         )     (240       )   (7         )
Acquisition-related   509            299              509            360
expenses
Other expenses        9              46               54             90          
                      6,190          4,918            11,677         9,909       
Income (loss) from
continuing            1,124          (2,513     )     706            (2,347     )
operations
                                                                      
Income from
discontinued          883            284              1,618          586
operations
Impairment loss
from discontinued     (5,435     )   —                (5,435     )   —           
operations
Net (loss) income
from discontinued     (4,552     )   284              (3,817     )   586         
operations
Net loss              $  (3,428  )   $  (2,229  )     $  (3,111  )   $  (1,761  )
                                                                      
Net income
attributable to       (3,231     )   (3,231     )     (6,462     )   (6,462     )
preferred stock and
units
Net income
attributable to       (79        )   (79        )     (158       )   (157       )
restricted shares
Net loss
attributable to
non-controlling       291            —                281            —
interest in
Consolidated
Entities
Net loss
attributable to
common units in the   263            322              394            525         
Operating
Partnership
Net loss
attributable to
Hudson Pacific        $  (6,184  )   $  (5,217  )     $  (9,056  )   $  (7,855  )
Properties, Inc.
common stockholders
Basic and diluted
per share amounts:
Net loss from
continuing
operations            $  (0.03   )   $  (0.14   )     $  (0.10   )   $  (0.23   )
attributable to
common stockholders
Net (loss) income
from discontinued     (0.08      )   0.01             (0.07      )   0.02        
operations
Net loss
attributable to
common                $  (0.11   )   $  (0.13   )     $  (0.17   )   $  (0.21   )
stockholders' per
share—basic and
diluted
Weighted average
shares of common
stock                 56,075,747     39,772,030       54,140,594     36,546,240  
outstanding—basic
and diluted
Dividends declared
per share of common   $  0.125       $  0.125         $  0.250       $  0.250    
stock

 
Hudson Pacific Properties, Inc.
Funds From Operations
(Unaudited, in thousands, except per share data)
                                                       
                            Three Months Ended June     Six Months Ended June
                            30,                         30,
                            2013         2012           2013         2012
Reconciliation of net
loss to Funds From
Operations (FFO):
Net loss                    $ (3,428 )   $ (2,229 )     $ (3,111 )   $ (1,761 )
Adjustments:
Depreciation and
amortization of real        14,382       13,192         32,813       24,806
estate assets
Depreciation and
amortization—discontinued   315          516            789          1,034
operations
Impairment loss             5,435        —              5,435        —
FFO attributable to
non-controlling interest    (93      )   —              (128     )   —
in Consolidated Entities
Net income attributable
to preferred stock and      (3,231   )   (3,231   )     (6,462   )   (6,462   )
units
FFO to common
stockholders and unit       $ 13,380     $ 8,248        $ 29,336     $ 17,617
holders
Specified items impacting
FFO:
Acquisition-related         509          299            509          360
expenses
One-time property tax       —            918            (797     )   918
expenses/(savings)
Lease termination revenue   —            —              (1,082   )   —         
FFO (excluding specified
items) to common            $ 13,889     $ 9,465        $ 27,966     $ 18,895
stockholders and unit
holders
                                                                      
Weighted average common
stock/units                 59,091       42,855         57,155       39,200
outstanding—diluted
FFO per common              $ 0.23       $ 0.19         $ 0.51       $ 0.45
stock/unit—diluted
FFO (excluding specified
items) per common           $ 0.24       $ 0.22         $ 0.49       $ 0.48
stock/unit—diluted

Contact:

Investor Contact:
Hudson Pacific Properties, Inc.
Mark Lammas
Chief Financial Officer
(310) 445-5700
or
Investor / Media Contact:
Addo Communications, Inc.
Lasse Glassen
(310) 829-5400
lasseg@addocommunications.com
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