Hudson Pacific Could Lose $100M in Hollywood Strikes

With its Hollywood soundstages dark during six months of entertainment labor strikes, Hudson Pacific Properties expects to lose $100 million.

The Los Angeles-based real estate investment trust has forecast the loss of $100 million in earnings this year because of lost studio production, the Commercial Observer reported, citing a third-quarter earnings call.

Although the Writers Guild strike ended in September, actors remain on the picket lines.

“When the strikes are over, we will see a tremendous upswing in activity in all forms and functions,” Victor Coleman, CEO of Hudson Pacific, told investors on the call.

Mark Lammas, president of the Brentwood-based REIT, said it estimates its Hollywood studios could potentially earn as much as $120 million of net operating income. But because of the strikes, its studio business has only made $10 million in profits this year.

In the past year, Hudson Pacific studios were 83.5 percent leased after the strikes drove one tenant to vacate six soundstages at its Sunset Las Palmas in Hollywood.

It’s the first time the REIT has ever had a vacancy at Sunset Las Palmas since it bought the 13-soundstage, 369,000-square-foot complex in 2017 for $200 million. It later sold a 49 percent stake along with two other other L.A. studios to Blackstone for $800 million.

“My guess is the parent company that left us (at Las Palmas) will be the first company that’s going to call us and want to put a show in there going forward (once the actors’ strike is resolved),” Coleman said.

The Hudson Pacific studios raked in $27.9 million in revenue for the third quarter, down 40.5 percent from the $46.9 million during the same period last year. If the SAG-AFTRA strike ends this month, the REIT expects production to return to normal by the second quarter next year.

Including its office portfolio, Hudson Pacific reported $119.3 million in total net operating income in the third quarter compared to $155.3 million last year.

In spring last year, Moody’s Analytics downgraded Hudson Pacific’s credit rating because of the strikes and diminishing office leases. The REIT reported a $31 million loss in the second quarter, compared to a $20 million loss in the prior period, according to The Real Deal.

Despite the strike, Hudson Pacific has filed plans to build a 134,000-square-foot movie studio at 6650 West Romaine Street, across the street from its Sunset Las Palmas complex.

— Dana Bartholomew