Hudson Pacific Properties added 500,000 square feet of leases in the second quarter on top of the 1 million square feet from the first three months of the year, as the real estate investment trust pushed into new and existing markets.
Overall, the Los Angeles-based REIT reported increased revenue from April through June, attributing it to higher rental rates and occupancy across its studios.
Revenue rose 12.3 percent to $196.7 million, the company reported on Wednesday. Funds from operations — the key metric for REITS — totaled $75.5 million. That’s up 5.5 percent from the first quarter of 2018.
Net income was down, however, to $9.8 million. That’s a 39 percent dip from the $16.2 million reported over the same period last year.
During the earnings call Wednesday, CEO Victor Coleman said he expects the REIT will secure entitlements by mid-2020 for the 515,000-square-foot expansion at the historic Sunset Gower Studios in Hollywood. Similar to other Hudson Pacific developments, he said, Coleman expects that to be pre-leased. “Our leasing team has a lot of interest in that,” he added. In December 2017, the company filed plans to demolish 160,600 square feet of existing buildings at the 16-acre campus at 6050 W. Sunset Boulevard, while adding 628,000 square feet of production space.
For Hudson Pacific, most of its leasing activity in the second quarter — roughly 80 percent — has come from its Bay Area assets. Google was among the 79 leases that Hudson Pacific executed. The technology giant inked a deal for 41,350 square feet at the Ferry Building in San Francisco. Hudson Pacific acquired the building in fall 2018.
Currently, about 89 percent of its 1 million square feet of development projects in L.A. is pre-leased to tenants like Google and Netflix.
The company added about 1 million square feet to its development pipeline with two new projects in Vancouver and Seattle. In Seattle, it paid more than $16 million of the $86 million purchase price to develop a new office complex dubbed Washington 1000. And in Vancouver, Hudson Pacific closed on the massive Bentall Centre on June 5. It’s planning on building another office tower at the 1.5 million-square-foot complex.
The final purchase price for the Bentall Centre remains unknown, but the joint venture deal with Blackstone Property Partners is expected to be among the biggest so far this year in the Vancouver market.