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 September 30, 2020March 31, 2021
or
☐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:

RegistrantTitle of each classTrading Symbol(s)Name of each exchange on which registered
Hudson Pacific Properties, Inc.Common Stock, $0.01 par valueHPPNew 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“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  x☒
Hudson Pacific Properties, L.P. Yes  ☐    No  x☒

The number of shares of common stock of Hudson Pacific Properties, Inc. outstanding at November 2, 2020May 1, 2021 was 152,144,950.150,951,455.


Table of Contents
EXPLANATORY NOTE
This report combines the quarterly reports on Form 10-Q for the period ended September 30, 2020March��31, 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 September 30, 2020,March 31, 2021, Hudson Pacific Properties, Inc. owned approximately 99.0%98.7% of the ownership interest in our operating partnership (including unvested restricted units). The remaining approximately 1.0%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 and Note 15—Earnings Per Share 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.
3


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 September 30, 2020March 31, 2021 (unaudited) and December 31, 20192020
5
Consolidated Statements of Operations (unaudited) for the three and nine months ended September 30, 2020March 31, 2021 and 20192020
6
Consolidated Statements of Comprehensive (Loss)Income (Loss)(unaudited) for the three and nine months ended September 30, 2020March 31, 2021 and 20192020
7
Consolidated Statements of Equity (unaudited) for the three and nine months ended September 30, 2020March 31, 2021 and 20192020
8
Consolidated Statements of Cash Flows (unaudited) for the ninethree months ended September 30, 2020March 31, 2021 and 20192020
109
ITEM 1.Financial Statements of Hudson Pacific Properties, L.P.
Consolidated Balance Sheets as of September 30, 2020March 31, 2021 (unaudited) and December 31, 20192020
1110
Consolidated Statements of Operations (unaudited) for the three and nine months ended September 30, 2020March 31, 2021 and 20192020
1211
Consolidated Statements of ComprehensiveIncome (Loss) Income (unaudited) for the three and nine months ended September 30, 2020March 31, 2021 and 20192020
1312
Consolidated Statements of Capital (unaudited) for the three and nine months ended September 30, 2020March 31, 2021 and 20192020
1413
Consolidated Statements of Cash Flows (unaudited) for the ninethree months ended September 30, 2020March 31, 2021 and 20192020
1614
1715
ITEM 2.
4340
ITEM 3.
6557
ITEM 4.
6557
PART II—OTHER INFORMATION
ITEM 1.
6759
ITEM 1A.
6759
ITEM 2.
6859
ITEM 3.
6860
ITEM 4.
6860
ITEM 5.
6960
ITEM 6.
7061
7162

4
Table of Contents
PART I—FINANCIAL INFORMATION
ITEM 1.         FINANCIAL STATEMENTS OF HUDSON PACIFIC PROPERTIES, INC.

CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)


September 30, 2020
(unaudited)
December 31, 2019
ASSETS
Investment in real estate, at cost$7,534,773 $7,269,128 
Accumulated depreciation and amortization(1,040,907)(898,279)
Investment in real estate, net6,493,866 6,370,849 
Cash and cash equivalents365,294 46,224 
Restricted cash38,979 12,034 
Accounts receivable, net14,136 13,007 
Straight-line rent receivables, net226,510 195,328 
Deferred leasing costs and lease intangible assets, net255,907 285,448 
U.S. Government securities136,649 140,749 
Operating lease right-of-use asset266,059 269,029 
Prepaid expenses and other assets, net80,727 68,974 
Investment in unconsolidated real estate entity63,874 64,926 
TOTAL ASSETS$7,942,001 $7,466,568 
LIABILITIES AND EQUITY
Liabilities
Unsecured and secured debt, net$3,055,197 $2,817,910 
In-substance defeased debt132,560 135,030 
Joint venture partner debt66,136 66,136 
Accounts payable, accrued liabilities and other282,766 212,673 
Operating lease liability270,827 272,701 
Lease intangible liabilities, net23,525 31,493 
Security deposits and prepaid rent75,987 86,188 
Total liabilities3,906,998 3,622,131 
Redeemable preferred units of the operating partnership9,815 9,815 
Redeemable non-controlling interest in consolidated real estate entities126,896 125,260 
Equity
Hudson Pacific Properties, Inc. stockholders’ equity
Common stock, $0.01 par value, 490,000,000 authorized, 152,143,492 shares and 154,691,052 shares outstanding at September 30, 2020 and December 31, 2019, respectively1,522 1,546 
Additional paid-in capital3,233,105 3,415,808 
Accumulated other comprehensive loss(12,795)(561)
Total Hudson Pacific Properties, Inc. stockholders’ equity3,221,832 3,416,793 
Non-controlling interest—members in consolidated entities644,924 269,487 
Non-controlling interest—units in the operating partnership31,536 23,082 
Total equity3,898,292 3,709,362 
TOTAL LIABILITIES AND EQUITY$7,942,001 $7,466,568 


March 31, 2021
(unaudited)
December 31, 2020
ASSETS
Investment in real estate, at cost$8,303,478 $8,215,017 
Accumulated depreciation and amortization(1,162,452)(1,102,748)
Investment in real estate, net7,141,026 7,112,269 
Cash and cash equivalents134,278 113,686 
Restricted cash35,055 35,854 
Accounts receivable, net19,634 22,105 
Straight-line rent receivables, net232,817 225,685 
Deferred leasing costs and lease intangible assets, net280,679 285,836 
U.S. Government securities133,790 135,115 
Operating lease right-of-use asset263,691 264,880 
Prepaid expenses and other assets, net78,948 72,667 
Investment in unconsolidated real estate entities83,917 82,105 
TOTAL ASSETS$8,403,835 $8,350,202 
LIABILITIES AND EQUITY
Liabilities
Unsecured and secured debt, net$3,454,815 $3,399,492 
In-substance defeased debt130,828 131,707 
Joint venture partner debt66,136 66,136 
Accounts payable, accrued liabilities and other271,426 235,860 
Operating lease liability269,191 270,014 
Lease intangible liabilities, net46,190 49,144 
Security deposits and prepaid rent90,533 92,180 
Total liabilities4,329,119 4,244,533 
Commitments and contingencies (note 20)00
Redeemable preferred units of the operating partnership9,815 9,815 
Redeemable non-controlling interest in consolidated real estate entities128,661 127,874 
Equity
Hudson Pacific Properties, Inc. stockholders’ equity
Common stock, $0.01 par value, 490,000,000 authorized, 150,760,631 shares and 151,401,365 shares outstanding at March 31, 2021 and December 31, 2020, respectively1,508 1,514 
Additional paid-in capital3,423,699 3,469,758 
Accumulated other comprehensive loss(5,327)(8,133)
Total Hudson Pacific Properties, Inc. stockholders’ equity3,419,880 3,463,139 
Non-controlling interest—members in consolidated real estate entities476,573 467,009 
Non-controlling interest—units in the operating partnership39,787 37,832 
Total equity3,936,240 3,967,980 
TOTAL LIABILITIES AND EQUITY$8,403,835 $8,350,202 








The accompanying notes are an integral part of these consolidated financial statements.
5
Table of Contents


HUDSON PACIFIC PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, in thousands, except share data)

Three Months Ended September 30,Nine Months Ended September 30,Three Months Ended March 31,
202020192020201920212020
REVENUESREVENUESREVENUES
OfficeOfficeOffice
RentalRental$178,256 $179,197 $540,023 $521,650 Rental$189,861 $181,113 
Service and other revenuesService and other revenues2,460 6,162 11,428 18,339 Service and other revenues2,282 5,314 
Total office revenuesTotal office revenues180,716 185,359 551,451 539,989 Total office revenues192,143 186,427 
StudioStudioStudio
RentalRental11,724 11,086 36,767 38,001 Rental12,153 12,915 
Service and other revenuesService and other revenues3,845 11,117 12,904 23,342 Service and other revenues8,823 6,885 
Total studio revenuesTotal studio revenues15,569 22,203 49,671 61,343 Total studio revenues20,976 19,800 
Total revenuesTotal revenues196,285 207,562 601,122 601,332 Total revenues213,119 206,227 
OPERATING EXPENSESOPERATING EXPENSESOPERATING EXPENSES
Office operating expensesOffice operating expenses66,075 66,969 194,546 188,680 Office operating expenses66,562 63,860 
Studio operating expensesStudio operating expenses9,034 11,440 27,635 32,088 Studio operating expenses11,453 10,650 
General and administrativeGeneral and administrative17,428 17,661 53,943 54,099 General and administrative18,449 18,618 
Depreciation and amortizationDepreciation and amortization75,052 69,781 222,331 207,892 Depreciation and amortization82,761 73,763 
Total operating expensesTotal operating expenses167,589 165,851 498,455 482,759 Total operating expenses179,225 166,891 
OTHER (EXPENSE) INCOME
(Loss) income from unconsolidated real estate entity(105)(260)69 (345)
OTHER INCOME (EXPENSE)OTHER INCOME (EXPENSE)
Income (loss) from unconsolidated real estate entitiesIncome (loss) from unconsolidated real estate entities635 (236)
Fee incomeFee income575 656 1,741 931 Fee income848 610 
Interest expenseInterest expense(32,492)(26,590)(86,839)(77,492)Interest expense(30,286)(26,417)
Interest incomeInterest income1,056 1,002 3,129 3,034 Interest income997 1,025 
Transaction-related expensesTransaction-related expenses(181)(331)(440)(459)Transaction-related expenses0 (102)
Unrealized gain (loss) on non-real estate investment513 0 (2,335)0 
Unrealized gain (loss) on non-real estate investmentsUnrealized gain (loss) on non-real estate investments5,775 (581)
Gain on sale of real estate0 47,100 0 47,100 
Impairment loss0 0 0 (52,201)
Other income (loss)576 (333)1,606 (258)
Total other (expense) income(30,058)21,244 (83,069)(79,690)
Net (loss) income(1,362)62,955 19,598 38,883 
Other (expense) incomeOther (expense) income(452)314 
Total other expenseTotal other expense(22,483)(25,387)
Net incomeNet income11,411 13,949 
Net income attributable to preferred unitsNet income attributable to preferred units(153)(153)(459)(459)Net income attributable to preferred units(153)(153)
Net income attributable to participating securitiesNet income attributable to participating securities(109)(274)(321)(138)Net income attributable to participating securities(278)(29)
Net income attributable to non-controlling interest in consolidated real estate entitiesNet income attributable to non-controlling interest in consolidated real estate entities(5,170)(3,660)(12,577)(9,798)Net income attributable to non-controlling interest in consolidated real estate entities(6,630)(3,517)
Net loss attributable to redeemable non-controlling interest in consolidated real estate entitiesNet loss attributable to redeemable non-controlling interest in consolidated real estate entities1,304 347 2,707 1,505 Net loss attributable to redeemable non-controlling interest in consolidated real estate entities682 633 
Net loss (income) attributable to non-controlling interest in the operating partnership54 (460)(89)(225)
NET (LOSS) INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS$(5,436)$58,755 $8,859 $29,768 
Net income attributable to non-controlling interest in the operating partnershipNet income attributable to non-controlling interest in the operating partnership(50)(106)
NET INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERSNET INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS$4,982 $10,777 
BASIC AND DILUTED PER SHARE AMOUNTSBASIC AND DILUTED PER SHARE AMOUNTSBASIC AND DILUTED PER SHARE AMOUNTS
Net (loss) income attributable to common stockholders—basic$(0.04)$0.38 $0.06 $0.19 
Net (loss) income attributable to common stockholders—diluted$(0.04)$0.38 $0.06 $0.19 
Net income attributable to common stockholders—basicNet income attributable to common stockholders—basic$0.03 $0.07 
Net income attributable to common stockholders—dilutedNet income attributable to common stockholders—diluted$0.03 $0.07 
Weighted average shares of common stock outstanding—basicWeighted average shares of common stock outstanding—basic153,196,007 154,414,452 153,643,278 154,398,466 Weighted average shares of common stock outstanding—basic150,823,605 154,432,602 
Weighted average shares of common stock outstanding—dilutedWeighted average shares of common stock outstanding—diluted153,196,007 156,498,919 156,030,815 156,400,075 Weighted average shares of common stock outstanding—diluted151,141,079 158,109,912 












The accompanying notes are an integral part of these consolidated financial statements.
6
Table of Contents


HUDSON PACIFIC PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) INCOME
(unaudited, in thousands)

Three Months Ended September 30,Nine Months Ended September 30,Three Months Ended March 31,
202020192020201920212020
Net (loss) income$(1,362)$62,955 $19,598 $38,883 
Net incomeNet income$11,411 $13,949 
Currency translation adjustmentsCurrency translation adjustments1,210 (720)(1,651)595 Currency translation adjustments1,009 (4,999)
Net unrealized gains (losses) on derivative instruments:Net unrealized gains (losses) on derivative instruments:Net unrealized gains (losses) on derivative instruments:
Unrealized losses(177)(1,957)(14,306)(15,847)
Unrealized gains (losses)Unrealized gains (losses)24 (12,278)
Reclassification adjustment for realized gains (losses)Reclassification adjustment for realized gains (losses)2,087 (1,360)3,598 (5,109)Reclassification adjustment for realized gains (losses)1,811 (137)
Total net unrealized gains (losses) on derivative instrumentsTotal net unrealized gains (losses) on derivative instruments1,910 (3,317)(10,708)(20,956)Total net unrealized gains (losses) on derivative instruments1,835 (12,415)
Total other comprehensive income (loss)Total other comprehensive income (loss)3,120 (4,037)(12,359)(20,361)Total other comprehensive income (loss)2,844 (17,414)
Comprehensive income1,758 58,918 7,239 18,522 
Comprehensive income (loss)Comprehensive income (loss)14,255 (3,465)
Comprehensive income attributable to preferred unitsComprehensive income attributable to preferred units(153)(153)(459)(459)Comprehensive income attributable to preferred units(153)(153)
Comprehensive income attributable to participating securitiesComprehensive income attributable to participating securities(109)(274)(321)(138)Comprehensive income attributable to participating securities(278)(29)
Comprehensive income attributable to non-controlling interest in consolidated real estate entitiesComprehensive income attributable to non-controlling interest in consolidated real estate entities(5,170)(3,660)(12,577)(9,798)Comprehensive income attributable to non-controlling interest in consolidated real estate entities(6,630)(3,517)
Comprehensive loss attributable to redeemable non-controlling interest in consolidated real estate entitiesComprehensive loss attributable to redeemable non-controlling interest in consolidated real estate entities1,304 347 2,707 1,505 Comprehensive loss attributable to redeemable non-controlling interest in consolidated real estate entities682 633 
Comprehensive loss (income) attributable to non-controlling interest in the operating partnership27 (429)36 (92)
COMPREHENSIVE (LOSS) INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS$(2,343)$54,749 $(3,375)$9,540 
Comprehensive (income) loss attributable to non-controlling interest in the operating partnershipComprehensive (income) loss attributable to non-controlling interest in the operating partnership(88)65 
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERSCOMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS$7,788 $(6,466)



































The accompanying notes are an integral part of these consolidated financial statements.
7


HUDSON PACIFIC PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF EQUITY
For the three and nine months ended September 30, 2020
(unaudited, in thousands, except share data)

Hudson Pacific Properties, Inc. Stockholders’ EquityNon-controlling interest
Shares of Common StockStock AmountAdditional Paid-in Capital Retained Earnings (Accumulated Deficit)Accumulated Other Comprehensive (Loss) IncomeUnits in the Operating PartnershipMembers in Consolidated EntitiesTotal Equity
Balance at June 30, 2020153,319,333 $1,534 $3,317,192 $0 $(15,888)$28,767 $270,026 $3,601,631 
Contributions— — — — — — 372,451 372,451 
Distributions— — — — — — (2,723)(2,723)
Transaction costs— — (16,073)— — — — (16,073)
Issuance of unrestricted stock1,286 — — — — — — — 
Shares repurchased(1,177,127)(12)(26,580)— — — — (26,592)
Declared dividend— — (43,730)5,327 — (450)— (38,853)
Amortization of stock-based
compensation		— — 2,296 — — 3,246 — 5,542 
Net (loss) income— — — (5,327)— (54)5,170 (211)
Other comprehensive income— — — — 3,093 27 — 3,120 
Balance at September 30, 2020152,143,492 $1,522 $3,233,105 $0 $(12,795)$31,536 $644,924 $3,898,292 
Balance at December 31, 2019154,691,052 $1,546 $3,415,808 $0 $(561)$23,082 $269,487 $3,709,362 
Contributions— — — — — — 372,451 372,451 
Distributions— — — — — — (9,591)(9,591)
Transaction costs— — (16,073)— — — — (16,073)
Issuance of unrestricted stock180,291 3 (3)— — — — — 
Shares withheld to satisfy tax withholding obligations(136,717)(1)(5,500)— — — — (5,501)
Shares repurchased(2,591,134)(26)(61,917)— — — — (61,943)
Declared dividend— — (106,096)(9,180)— (1,350)— (116,626)
Amortization of stock-based compensation— — 6,886 — — 9,840 — 16,726 
Net income— — — 9,180 — 89 12,577 21,846 
Other comprehensive loss— — — — (12,234)(125)— (12,359)
Balance at September 30, 2020152,143,492 $1,522 $3,233,105 $0 $(12,795)$31,536 $644,924 $3,898,292 
















The accompanying notes are an integral part of these consolidated financial statements.
8
Table of Contents

HUDSON PACIFIC PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF EQUITY
For the three and nine months ended September 30, 2019
(unaudited, in thousands, except share data)


Hudson Pacific Properties, Inc. Stockholders’ EquityNon-controlling interest
Shares of Common StockStock AmountAdditional Paid-in Capital(Accumulated Deficit) Retained EarningsAccumulated Other Comprehensive Income (Loss)Units in the Operating PartnershipMembers in Consolidated EntitiesTotal Equity
Balance at June 30, 2019154,396,755 $1,543 $3,450,155 $(31,355)$1,279 $18,999 $268,158 $3,708,779 
Distributions— — — — — — (2,156)(2,156)
Issuance of unrestricted stock17,697 — — — — — — — 
Declared dividend— — (11,110)(27,674)— (348)— (39,132)
Amortization of stock-based compensation— — 3,091 — — 2,113 — 5,204 
Net income— — — 59,029 — 460 3,660 63,149 
Other comprehensive loss— — — — (4,006)(31)— (4,037)
Balance at September 30, 2019154,414,452 $1,543 $3,442,136 $0 $(2,727)$21,193 $269,662 $3,731,807 
Balance at December 31, 2018154,371,538 $1,543 $3,524,502 $0 $17,501 $18,338 $268,246 $3,830,130 
Cumulative adjustment related to adoption of ASC 842
— — — (2,105)— — — (2,105)
Distributions— — — — — — (8,382)(8,382)
Issuance of unrestricted stock169,794 1 (1)— — — — — 
Shares withheld to satisfy tax withholding obligations(126,880)(1)(3,667)— — — — (3,668)
Declared dividend— — (89,140)(27,674)— (1,882)— (118,696)
Amortization of stock-based compensation— — 10,442 — — 5,043 — 15,485 
Net income— — — 29,779 — 352 9,798 39,929 
Other comprehensive loss— — — — (20,228)(133)— (20,361)
Redemption of operating partnership units— — — — — (525)— (525)
Balance at September 30, 2019154,414,452 $1,543 $3,442,136 $0 $(2,727)$21,193 $269,662 $3,731,807 
Hudson Pacific Properties, Inc. Stockholders’ EquityNon-controlling Interest
Shares of Common StockStock AmountAdditional Paid-in Capital (Accumulated Deficit) Retained EarningsAccumulated Other Comprehensive LossUnits in the Operating PartnershipMembers in Consolidated Real Estate EntitiesTotal Equity
Balance, December 31, 2020151,401,365 $1,514 $3,469,758 $0 $(8,133)$37,832 $467,009 $3,967,980 
Contributions— — — — — — 15,016 15,016 
Distributions— — — — — — (12,082)(12,082)
Issuance of unrestricted stock20,000 — — — — — — — 
Shares repurchased(632,109)(6)(14,750)— — — — (14,756)
Shares withheld to satisfy tax withholding obligations(28,625)— (693)— — — — (693)
Declared dividend— — (32,598)(5,260)— (568)— (38,426)
Amortization of stock-based
compensation		— — 1,982 — — 2,435 — 4,417 
Net income— — — 5,260 — 50 6,630 11,940 
Other comprehensive income— — — — 2,806 38 — 2,844 
Balance, March 31, 2021150,760,631 $1,508 $3,423,699 $0 $(5,327)$39,787 $476,573 $3,936,240 

Balance, December 31, 2019154,691,052 $1,546 $3,415,808 $0 $(561)$23,082 $269,487 $3,709,362 
Distributions— — — — — — (2,768)(2,768)
Issuance of unrestricted stock155,577 2 (2)— — — — 0 
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— — (27,627)(10,806)— (450)— (38,883)
Amortization of stock-based compensation— — 2,364 — — 3,516 — 5,880 
Net income— — — 10,806 — 106 3,517 14,429 
Other comprehensive loss— — — — (17,243)(171)— (17,414)
Balance, March 31, 2020153,295,905 $1,533 $3,349,706 $0 $(17,804)$26,083 $270,236 $3,629,754 



















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)

Nine Months Ended September 30,Three Months Ended March 31,
2020201920212020
CASH FLOWS FROM OPERATING ACTIVITIESCASH FLOWS FROM OPERATING ACTIVITIESCASH FLOWS FROM OPERATING ACTIVITIES
Net incomeNet income$19,598 $38,883 Net income$11,411 $13,949 
Adjustments to reconcile net income to net cash provided by operating activities:Adjustments to reconcile net income to net cash provided by operating activities:Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortizationDepreciation and amortization222,331 207,892 Depreciation and amortization82,761 73,763 
Non-cash portion of interest expenseNon-cash portion of interest expense7,257 4,422 Non-cash portion of interest expense2,417 1,245 
Amortization of stock-based compensationAmortization of stock-based compensation14,409 15,393 Amortization of stock-based compensation3,538 4,895 
(Income) loss from unconsolidated real estate entity(69)345 
Unrealized loss on non-real estate investment2,335 0 
(Income) loss from unconsolidated real estate entities(Income) loss from unconsolidated real estate entities(635)236 
Unrealized (gain) loss on non-real estate investmentsUnrealized (gain) loss on non-real estate investments(5,775)581 
Straight-line rentsStraight-line rents(31,182)(39,602)Straight-line rents(7,132)(13,709)
Straight-line rent expensesStraight-line rent expenses1,096 1,097 Straight-line rent expenses366 365 
Amortization of above- and below-market leases, netAmortization of above- and below-market leases, net(7,457)(9,919)Amortization of above- and below-market leases, net(2,518)(2,544)
Amortization of above- and below-market ground leases, netAmortization of above- and below-market ground leases, net1,763 1,845 Amortization of above- and below-market ground leases, net588 588 
Amortization of lease incentive costsAmortization of lease incentive costs1,437 1,267 Amortization of lease incentive costs475 472 
Distribution of income from unconsolidated entitiesDistribution of income from unconsolidated entities172 0 
Impairment loss0 52,201 
Gains on sale of real estate0 (47,100)
Change in operating assets and liabilities:Change in operating assets and liabilities:Change in operating assets and liabilities:
Accounts receivableAccounts receivable(1,129)(1,726)Accounts receivable2,381 67 
Deferred leasing costs and lease intangiblesDeferred leasing costs and lease intangibles(9,767)(36,069)Deferred leasing costs and lease intangibles(6,099)(4,139)
Prepaid expenses and other assetsPrepaid expenses and other assets(17,586)(10,217)Prepaid expenses and other assets962 (1,054)
Accounts payable, accrued liabilities and otherAccounts payable, accrued liabilities and other55,055 59,101 Accounts payable, accrued liabilities and other33,430 28,162 
Security deposits and prepaid rentSecurity deposits and prepaid rent(10,201)(4,213)Security deposits and prepaid rent(1,647)(12,779)
Net cash provided by operating activitiesNet cash provided by operating activities247,890 233,600 Net cash provided by operating activities114,695 90,098 
CASH FLOWS FROM INVESTING ACTIVITIESCASH FLOWS FROM INVESTING ACTIVITIESCASH FLOWS FROM INVESTING ACTIVITIES
Additions to investment in real estateAdditions to investment in real estate(308,909)(275,051)Additions to investment in real estate(95,884)(79,058)
Maturities of U.S. Government securitiesMaturities of U.S. Government securities4,121 4,695 Maturities of U.S. Government securities1,324 1,284 
Proceeds from sale of real estate0 147,823 
Distributions from unconsolidated entities573 290 
Contributions to unconsolidated entities(989)(64,503)
Deposits for property acquisitions0 (20,500)
Contributions to non-real estate investmentsContributions to non-real estate investments(2,215)0 
Distributions from unconsolidated real estate entitiesDistributions from unconsolidated real estate entities0 24 
Contributions to unconsolidated real estate entitiesContributions to unconsolidated real estate entities(439)(351)
Net cash used in investing activitiesNet cash used in investing activities(305,204)(207,246)Net cash used in investing activities(97,214)(78,101)
CASH FLOWS FROM FINANCING ACTIVITIESCASH FLOWS FROM FINANCING ACTIVITIESCASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from unsecured and secured debtProceeds from unsecured and secured debt1,391,651 735,001 Proceeds from unsecured and secured debt52,975 415,040 
Payments of unsecured and secured debtPayments of unsecured and secured debt(1,149,943)(630,424)Payments of unsecured and secured debt(159)(148)
Payments of in-substance defeased debtPayments of in-substance defeased debt(2,470)(2,377)Payments of in-substance defeased debt(879)(825)
Transaction costs(16,073)0 
Repurchase of common stockRepurchase of common stock(53,475)0 Repurchase of common stock(14,756)(35,351)
Redemption of operating partnership units0 (525)
Dividends paid to common stock and unitholdersDividends paid to common stock and unitholders(116,626)(118,696)Dividends paid to common stock and unitholders(38,426)(38,883)
Dividends paid to preferred unitholdersDividends paid to preferred unitholders(459)(459)Dividends paid to preferred unitholders(153)(153)
Contribution of redeemable non-controlling member in consolidated real estate entities4,351 10,587 
Distribution of redeemable non-controlling member in consolidated real estate entities(8)(7)
Contribution of non-controlling member in consolidated real estate entities372,451 0 
Distribution to non-controlling member in consolidated real estate entities(9,591)(8,382)
Payments to satisfy tax withholding(5,501)(3,668)
Payment of loan costs, net loan premium paid(10,978)(6,256)
Net cash provided by (used in) financing activities403,329 (25,206)
Contributions from redeemable non-controlling members in consolidated real estate entitiesContributions from redeemable non-controlling members in consolidated real estate entities1,469 2,456 
Contributions from non-controlling members in consolidated real estate entitiesContributions from non-controlling members in consolidated real estate entities15,016 0 
Distributions to non-controlling members in consolidated real estate entitiesDistributions to non-controlling members in consolidated real estate entities(12,082)(2,768)
Payments to satisfy tax withholding obligationsPayments to satisfy tax withholding obligations(693)(5,501)
Payment of loan costsPayment of loan costs0 (4)
Net cash provided by financing activitiesNet cash provided by financing activities2,312 333,863 
Net increase in cash and cash equivalents and restricted cashNet increase in cash and cash equivalents and restricted cash346,015 1,148 Net increase in cash and cash equivalents and restricted cash19,793 345,860 
Cash and cash equivalents and restricted cash—beginning of periodCash and cash equivalents and restricted cash—beginning of period58,258 68,191 Cash and cash equivalents and restricted cash—beginning of period149,540 58,258 
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH—END OF PERIODCASH AND CASH EQUIVALENTS AND RESTRICTED CASH—END OF PERIOD$404,273 $69,339 CASH AND CASH EQUIVALENTS AND RESTRICTED CASH—END OF PERIOD$169,333 $404,118 







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)

September 30, 2020
(unaudited)
December 31, 2019
March 31, 2021
(unaudited)
December 31, 2020
ASSETSASSETSASSETS
Investment in real estate, at costInvestment in real estate, at cost$7,534,773 $7,269,128 Investment in real estate, at cost$8,303,478 $8,215,017 
Accumulated depreciation and amortizationAccumulated depreciation and amortization(1,040,907)(898,279)Accumulated depreciation and amortization(1,162,452)(1,102,748)
Investment in real estate, netInvestment in real estate, net6,493,866 6,370,849 Investment in real estate, net7,141,026 7,112,269 
Cash and cash equivalentsCash and cash equivalents365,294 46,224 Cash and cash equivalents134,278 113,686 
Restricted cashRestricted cash38,979 12,034 Restricted cash35,055 35,854 
Accounts receivable, netAccounts receivable, net14,136 13,007 Accounts receivable, net19,634 22,105 
Straight-line rent receivables, netStraight-line rent receivables, net226,510 195,328 Straight-line rent receivables, net232,817 225,685 
Deferred leasing costs and lease intangible assets, netDeferred leasing costs and lease intangible assets, net255,907 285,448 Deferred leasing costs and lease intangible assets, net280,679 285,836 
U.S. Government securitiesU.S. Government securities136,649 140,749 U.S. Government securities133,790 135,115 
Operating lease right-of-use assetOperating lease right-of-use asset266,059 269,029 Operating lease right-of-use asset263,691 264,880 
Prepaid expenses and other assets, netPrepaid expenses and other assets, net80,727 68,974 Prepaid expenses and other assets, net78,948 72,667 
Investment in unconsolidated real estate entity63,874 64,926 
Investment in unconsolidated real estate entitiesInvestment in unconsolidated real estate entities83,917 82,105 
TOTAL ASSETSTOTAL ASSETS$7,942,001 $7,466,568 TOTAL ASSETS$8,403,835 $8,350,202 
LIABILITIES AND CAPITALLIABILITIES AND CAPITALLIABILITIES AND CAPITAL
LiabilitiesLiabilitiesLiabilities
Unsecured and secured debt, netUnsecured and secured debt, net$3,055,197 $2,817,910 Unsecured and secured debt, net$3,454,815 $3,399,492 
In-substance defeased debtIn-substance defeased debt132,560 135,030 In-substance defeased debt130,828 131,707 
Joint venture partner debtJoint venture partner debt66,136 66,136 Joint venture partner debt66,136 66,136 
Accounts payable, accrued liabilities and otherAccounts payable, accrued liabilities and other282,766 212,673 Accounts payable, accrued liabilities and other271,426 235,860 
Operating lease liabilityOperating lease liability270,827 272,701 Operating lease liability269,191 270,014 
Lease intangible liabilities, netLease intangible liabilities, net23,525 31,493 Lease intangible liabilities, net46,190 49,144 
Security deposits and prepaid rentSecurity deposits and prepaid rent75,987 86,188 Security deposits and prepaid rent90,533 92,180 
Total liabilitiesTotal liabilities3,906,998 3,622,131 Total liabilities4,329,119 4,244,533 
Commitments and contingencies (note 20)Commitments and contingencies (note 20)00
Redeemable preferred units of the operating partnershipRedeemable preferred units of the operating partnership9,815 9,815 Redeemable preferred units of the operating partnership9,815 9,815 
Redeemable non-controlling interest in consolidated real estate entitiesRedeemable non-controlling interest in consolidated real estate entities126,896 125,260 Redeemable non-controlling interest in consolidated real estate entities128,661 127,874 
CapitalCapitalCapital
Hudson Pacific Properties, L.P. partners’ capitalHudson Pacific Properties, L.P. partners’ capitalHudson Pacific Properties, L.P. partners’ capital
Common units, 153,055,350 and 155,602,910 outstanding at September 30, 2020 and December 31, 2019, respectively3,266,340 3,440,488 
Common units, 152,142,255 and 152,722,448 outstanding at March 31, 2021 and December 31, 2020, respectivelyCommon units, 152,142,255 and 152,722,448 outstanding at March 31, 2021 and December 31, 2020, respectively3,465,069 3,509,217 
Accumulated other comprehensive lossAccumulated other comprehensive loss(12,972)(613)Accumulated other comprehensive loss(5,402)(8,246)
Total Hudson Pacific Properties, L.P. partners’ capitalTotal Hudson Pacific Properties, L.P. partners’ capital3,253,368 3,439,875 Total Hudson Pacific Properties, L.P. partners’ capital3,459,667 3,500,971 
Non-controlling interest—members in consolidated entities644,924 269,487 
Non-controlling interest—members in consolidated real estate entitiesNon-controlling interest—members in consolidated real estate entities476,573 467,009 
Total capitalTotal capital3,898,292 3,709,362 Total capital3,936,240 3,967,980 
TOTAL LIABILITIES AND CAPITALTOTAL LIABILITIES AND CAPITAL$7,942,001 $7,466,568 TOTAL LIABILITIES AND CAPITAL$8,403,835 $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 March 31,
20212020
REVENUES
Office
Rental$189,861 $181,113 
Service and other revenues2,282 5,314 
Total office revenues192,143 186,427 
Studio
Rental12,153 12,915 
Service and other revenues8,823 6,885 
Total studio revenues20,976 19,800 
Total revenues213,119 206,227 
OPERATING EXPENSES
Office operating expenses66,562 63,860 
Studio operating expenses11,453 10,650 
General and administrative18,449 18,618 
Depreciation and amortization82,761 73,763 
Total operating expenses179,225 166,891 
OTHER INCOME (EXPENSE)
Income (loss) from unconsolidated real estate entities635 (236)
Fee income848 610 
Interest expense(30,286)(26,417)
Interest income997 1,025 
Transaction-related expenses0 (102)
Unrealized gain (loss) on non-real estate investments5,775 (581)
Other (expense) income(452)314 
Total other expense(22,483)(25,387)
Net income11,411 13,949 
Net income attributable to non-controlling interest in consolidated real estate entities(6,630)(3,517)
Net loss attributable to redeemable non-controlling interest in consolidated real estate entities682 633 
Net income attributable to Hudson Pacific Properties, L.P.5,463 11,065 
Net income attributable to preferred units(153)(153)
Net income attributable to participating securities(278)(72)
NET INCOME AVAILABLE TO COMMON UNITHOLDERS$5,032 $10,840 
BASIC AND DILUTED PER UNIT AMOUNTS
Net income attributable to common unitholders—basic$0.03 $0.07 
Net income attributable to common unitholders—diluted$0.03 $0.07 
Weighted average shares of common units outstanding—basic152,186,394 155,344,460 
Weighted average shares of common units outstanding—diluted152,503,868 157,501,233 












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 September 30,Nine Months Ended September 30,
2020201920202019
REVENUES
Office
Rental$178,256 $179,197 $540,023 $521,650 
Service and other revenues2,460 6,162 11,428 18,339 
Total office revenues180,716 185,359 551,451 539,989 
Studio
Rental11,724 11,086 36,767 38,001 
Service and other revenues3,845 11,117 12,904 23,342 
Total studio revenues15,569 22,203 49,671 61,343 
Total revenues196,285 207,562 601,122 601,332 
OPERATING EXPENSES
Office operating expenses66,075 66,969 194,546 188,680 
Studio operating expenses9,034 11,440 27,635 32,088 
General and administrative17,428 17,661 53,943 54,099 
Depreciation and amortization75,052 69,781 222,331 207,892 
Total operating expenses167,589 165,851 498,455 482,759 
OTHER (EXPENSE) INCOME
(Loss) income from unconsolidated real estate entity(105)(260)69 (345)
Fee income575 656 1,741 931 
Interest expense(32,492)(26,590)(86,839)(77,492)
Interest income1,056 1,002 3,129 3,034 
Transaction-related expenses(181)(331)(440)(459)
Unrealized gain (loss) on non-real estate investment513 0 (2,335)0 
Gain on sale of real estate0 47,100 0 47,100 
Impairment loss0 0 0 (52,201)
Other income (loss)576 (333)1,606 (258)
Total other (expense) income(30,058)21,244 (83,069)(79,690)
Net (loss) income(1,362)62,955 19,598 38,883 
Net income attributable to non-controlling interest in consolidated real estate entities(5,170)(3,660)(12,577)(9,798)
Net loss attributable to redeemable non-controlling interest in consolidated real estate entities1,304 347 2,707 1,505 
Net (loss) income attributable to Hudson Pacific Properties, L.P.(5,228)59,642 9,728 30,590 
Net income attributable to preferred units(153)(153)(459)(459)
Net income attributable to participating securities(261)(460)(780)(232)
NET (LOSS) INCOME AVAILABLE TO COMMON UNITHOLDERS$(5,642)$59,029 $8,489 $29,899 
BASIC AND DILUTED PER UNIT AMOUNTS
Net (loss) income attributable to common unitholders—basic$(0.04)$0.38 $0.05 $0.19 
Net (loss) income attributable to common unitholders—diluted$(0.04)$0.38 $0.05 $0.19 
Weighted average shares of common units outstanding—basic154,107,865 155,135,225 154,555,136 155,077,381 
Weighted average shares of common units outstanding—diluted154,107,865 156,010,568 155,422,136 155,911,724 









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) INCOME
(unaudited, in thousands)

Three Months Ended September 30,Nine Months Ended September 30,Three Months Ended March 31,
202020192020201920212020
Net (loss) income$(1,362)$62,955 $19,598 $38,883 
Net incomeNet income$11,411 $13,949 
Currency translation adjustmentsCurrency translation adjustments1,210 (720)(1,651)595 Currency translation adjustments1,009 (4,999)
Net unrealized gains (losses) on derivative instruments:Net unrealized gains (losses) on derivative instruments:Net unrealized gains (losses) on derivative instruments:
Unrealized losses(177)(1,957)(14,306)(15,847)
Unrealized gains (losses)Unrealized gains (losses)24 (12,278)
Reclassification adjustment for realized gains (losses)Reclassification adjustment for realized gains (losses)2,087 (1,360)3,598 (5,109)Reclassification adjustment for realized gains (losses)1,811 (137)
Total net unrealized gains (losses) on derivative instrumentsTotal net unrealized gains (losses) on derivative instruments1,910 (3,317)(10,708)(20,956)Total net unrealized gains (losses) on derivative instruments1,835 (12,415)
Total other comprehensive income (loss)Total other comprehensive income (loss)3,120 (4,037)(12,359)(20,361)Total other comprehensive income (loss)2,844 (17,414)
Comprehensive income1,758 58,918 7,239 18,522 
Comprehensive income (loss)Comprehensive income (loss)14,255 (3,465)
Comprehensive income attributable to preferred unitsComprehensive income attributable to preferred units(153)(153)(459)(459)Comprehensive income attributable to preferred units(153)(153)
Comprehensive income attributable to participating securitiesComprehensive income attributable to participating securities(261)(460)(780)(232)Comprehensive income attributable to participating securities(278)(72)
Comprehensive income attributable to non-controlling interest in consolidated real estate entitiesComprehensive income attributable to non-controlling interest in consolidated real estate entities(5,170)(3,660)(12,577)(9,798)Comprehensive income attributable to non-controlling interest in consolidated real estate entities(6,630)(3,517)
Comprehensive loss attributable to redeemable non-controlling interest in consolidated real estate entitiesComprehensive loss attributable to redeemable non-controlling interest in consolidated real estate entities1,304 347 2,707 1,505 Comprehensive loss attributable to redeemable non-controlling interest in consolidated real estate entities682 633 
COMPREHENSIVE (LOSS) INCOME ATTRIBUTABLE TO PARTNERS’ CAPITAL$(2,522)$54,992 $(3,870)$9,538 
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO PARTNERS’ CAPITALCOMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO PARTNERS’ CAPITAL$7,876 $(6,574)




































The accompanying notes are an integral part of these consolidated financial statements.
1312


HUDSON PACIFIC PROPERTIES, L.P.
CONSOLIDATED STATEMENTS OF CAPITAL
For the three and nine months ended September 30, 2020
(unaudited, in thousands, except share data)

Hudson Pacific Properties, L.P. Partners’ Capital
Number of Common UnitsCommon UnitsAccumulated Other Comprehensive (Loss) IncomeTotal Partners’ CapitalNon-controlling Interest—Members in Consolidated EntitiesTotal Capital
Balance at June 30, 2020154,231,191 $3,347,697 $(16,092)$3,331,605 $270,026 $3,601,631 
Contributions— — — — 372,451 372,451 
Distributions— — — — (2,723)(2,723)
Transaction costs— (16,073)— (16,073)— (16,073)
Issuance of unrestricted units1,286 — — — — — 
Units withheld to satisfy tax withholding obligations(1,177,127)(26,592)— (26,592)— (26,592)
Declared distributions— (38,853)— (38,853)— (38,853)
Amortization of unit-based compensation— 5,542 — 5,542 — 5,542 
Net (loss) income— (5,381)— (5,381)5,170 (211)
Other comprehensive income— — 3,120 3,120 — 3,120 
Balance at September 30, 2020153,055,350 $3,266,340 $(12,972)$3,253,368 $644,924 $3,898,292 
Balance at December 31, 2019155,602,910 $3,440,488 $(613)$3,439,875 $269,487 $3,709,362 
Contributions— — — — 372,451 372,451 
Distributions— — — — (9,591)(9,591)
Transaction costs— (16,073)— (16,073)— (16,073)
Issuance of unrestricted units180,291 — — — — — 
Units withheld to satisfy tax withholding obligations(136,717)(5,501)— (5,501)— (5,501)
Repurchase of common units(2,591,134)(61,943)— (61,943)— (61,943)
Declared distributions— (116,626)— (116,626)— (116,626)
Amortization of unit-based compensation— 16,726 — 16,726 — 16,726 
Net income— 9,269 — 9,269 12,577 21,846 
Other comprehensive loss— — (12,359)(12,359)— (12,359)
Balance at September 30, 2020153,055,350 $3,266,340 $(12,972)$3,253,368 $644,924 $3,898,292 















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 nine months ended September 30, 2019
(unaudited, in thousands, except share data)

Hudson Pacific Properties, L.P. Partners’ Capital
Number of Common UnitsCommon UnitsAccumulated Other Comprehensive LossTotal Partners’ CapitalNon-controlling Interest—Members in Consolidated Real Estate EntitiesTotal Capital
Balance, December 31, 2020152,722,448 $3,509,217 $(8,246)$3,500,971 $467,009 $3,967,980 
Contributions— — — — 15,016 15,016 
Distributions— — — — (12,082)(12,082)
Issuance of unrestricted units80,541 — — — — — 
Repurchase of common units(632,109)(14,756)— (14,756)— (14,756)
Units withheld to satisfy tax withholding obligations(28,625)(693)— (693)— (693)
Declared distributions— (38,426)— (38,426)— (38,426)
Amortization of unit-based compensation— 4,417 — 4,417 — 4,417 
Net income— 5,310 — 5,310 6,630 11,940 
Other comprehensive income— — 2,844 2,844 — 2,844 
Balance, March 31, 2021152,142,255 $3,465,069 $(5,402)$3,459,667 $476,573 $3,936,240 

Hudson Pacific Properties, L.P. Partners’ Capital
Number of Common UnitsCommon UnitsAccumulated Other Comprehensive Income (Loss)Total Partners’ CapitalNon-controlling Interest—Members in Consolidated EntitiesTotal Capital
Balance at June 30, 2019155,117,528 $3,439,380 $1,241 $3,440,621 $268,158 $3,708,779 
Distributions— — — — (2,156)(2,156)
Issuance of unrestricted units17,697 — — — — — 
Declared distributions— (39,132)— (39,132)— (39,132)
Amortization of unit-based compensation— 5,204 — 5,204 — 5,204 
Net income— 59,489 — 59,489 3,660 63,149 
Other comprehensive loss— — (4,037)(4,037)— (4,037)
Balance at September 30, 2019155,135,225 $3,464,941 $(2,796)$3,462,145 $269,662 $3,731,807 
Balance at December 31, 2018154,940,583 $3,544,319 $17,565 $3,561,884 $268,246 $3,830,130 
Cumulative adjustment related to adoption of ASC 842
— (2,105)— (2,105)— (2,105)
Distributions— — — — (8,382)(8,382)
Issuance of unrestricted units339,598 — — — — — 
Units withheld to satisfy tax withholding obligations(126,880)(3,668)— (3,668)— (3,668)
Declared distributions— (118,696)— (118,696)— (118,696)
Amortization of unit-based compensation— 15,485 — 15,485 — 15,485 
Net income— 30,131 — 30,131 9,798 39,929 
Other comprehensive loss— — (20,361)(20,361)— (20,361)
Redemption of common units in the operating partnership(18,076)(525)— (525)— (525)
Balance at September 30, 2019155,135,225 $3,464,941 $(2,796)$3,462,145 $269,662 $3,731,807 

Balance, December 31, 2019155,602,910 $3,440,488 $(613)$3,439,875 $269,487 $3,709,362 
Distributions— — — — (2,768)(2,768)
Issuance of unrestricted units155,577 — — — — — 
Repurchase of common units(1,414,007)(35,351)— (35,351)— (35,351)
Units withheld to satisfy tax withholding obligations(136,717)(5,501)— (5,501)— (5,501)
Declared distributions— (38,883)— (38,883)— (38,883)
Amortization of unit-based compensation— 5,880 — 5,880 — 5,880 
Net income— 10,912 — 10,912 3,517 14,429 
Other comprehensive loss— — (17,414)(17,414)— (17,414)
Balance, March 31, 2020154,207,763 $3,377,545 $(18,027)$3,359,518 $270,236 $3,629,754 


















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)

Nine Months Ended September 30,Three Months Ended March 31,
2020201920212020
CASH FLOWS FROM OPERATING ACTIVITIESCASH FLOWS FROM OPERATING ACTIVITIESCASH FLOWS FROM OPERATING ACTIVITIES
Net incomeNet income$19,598 $38,883 Net income$11,411 $13,949 
Adjustments to reconcile net income to net cash provided by operating activities:Adjustments to reconcile net income to net cash provided by operating activities:Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortizationDepreciation and amortization222,331 207,892 Depreciation and amortization82,761 73,763 
Non-cash portion of interest expenseNon-cash portion of interest expense7,257 4,422 Non-cash portion of interest expense2,417 1,245 
Amortization of unit-based compensationAmortization of unit-based compensation14,409 15,393 Amortization of unit-based compensation3,538 4,895 
(Income) loss from unconsolidated real estate entity(69)345 
Unrealized loss on non-real estate investment2,335 0 
(Income) loss from unconsolidated real estate entities(Income) loss from unconsolidated real estate entities(635)236 
Unrealized (gain) loss on non-real estate investmentsUnrealized (gain) loss on non-real estate investments(5,775)581 
Straight-line rentsStraight-line rents(31,182)(39,602)Straight-line rents(7,132)(13,709)
Straight-line rent expensesStraight-line rent expenses1,096 1,097 Straight-line rent expenses366 365 
Amortization of above- and below-market leases, netAmortization of above- and below-market leases, net(7,457)(9,919)Amortization of above- and below-market leases, net(2,518)(2,544)
Amortization of above- and below-market ground leases, netAmortization of above- and below-market ground leases, net1,763 1,845 Amortization of above- and below-market ground leases, net588 588 
Amortization of lease incentive costsAmortization of lease incentive costs1,437 1,267 Amortization of lease incentive costs475 472 
Distribution of income from unconsolidated entitiesDistribution of income from unconsolidated entities172 0 
Impairment loss0 52,201 
Gains on sale of real estate0 (47,100)
Change in operating assets and liabilities:Change in operating assets and liabilities:Change in operating assets and liabilities:
Accounts receivableAccounts receivable(1,129)(1,726)Accounts receivable2,381 67 
Deferred leasing costs and lease intangiblesDeferred leasing costs and lease intangibles(9,767)(36,069)Deferred leasing costs and lease intangibles(6,099)(4,139)
Prepaid expenses and other assetsPrepaid expenses and other assets(17,586)(10,217)Prepaid expenses and other assets962 (1,054)
Accounts payable and accrued liabilities and other55,055 59,101 
Accounts payable, accrued liabilities and otherAccounts payable, accrued liabilities and other33,430 28,162 
Security deposits and prepaid rentSecurity deposits and prepaid rent(10,201)(4,213)Security deposits and prepaid rent(1,647)(12,779)
Net cash provided by operating activitiesNet cash provided by operating activities247,890 233,600 Net cash provided by operating activities114,695 90,098 
CASH FLOWS FROM INVESTING ACTIVITIESCASH FLOWS FROM INVESTING ACTIVITIESCASH FLOWS FROM INVESTING ACTIVITIES
Additions to investment in real estateAdditions to investment in real estate(308,909)(275,051)Additions to investment in real estate(95,884)(79,058)
Maturities of U.S. Government securitiesMaturities of U.S. Government securities4,121 4,695 Maturities of U.S. Government securities1,324 1,284 
Proceeds from sale of real estate0 147,823 
Distributions from unconsolidated entities573 290 
Contributions to unconsolidated entities(989)(64,503)
Deposits for property acquisitions0 (20,500)
Contributions to non-real estate investmentsContributions to non-real estate investments(2,215)0 
Distributions from unconsolidated real estate entitiesDistributions from unconsolidated real estate entities0 24 
Contributions to unconsolidated real estate entitiesContributions to unconsolidated real estate entities(439)(351)
Net cash used in investing activitiesNet cash used in investing activities(305,204)(207,246)Net cash used in investing activities(97,214)(78,101)
CASH FLOWS FROM FINANCING ACTIVITIESCASH FLOWS FROM FINANCING ACTIVITIESCASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from unsecured and secured debtProceeds from unsecured and secured debt1,391,651 735,001 Proceeds from unsecured and secured debt52,975 415,040 
Payments of unsecured and secured debtPayments of unsecured and secured debt(1,149,943)(630,424)Payments of unsecured and secured debt(159)(148)
Payments of in-substance defeased debtPayments of in-substance defeased debt(2,470)(2,377)Payments of in-substance defeased debt(879)(825)
Transaction costs(16,073)0 
Repurchase of common unitsRepurchase of common units(53,475)0 Repurchase of common units(14,756)(35,351)
Redemption of common units in the operating partnership0 (525)
Distributions paid to common stock and unitholdersDistributions paid to common stock and unitholders(116,626)(118,696)Distributions paid to common stock and unitholders(38,426)(38,883)
Distributions paid to preferred unitholdersDistributions paid to preferred unitholders(459)(459)Distributions paid to preferred unitholders(153)(153)
Contribution of redeemable non-controlling member in consolidated real estate entities4,351 10,587 
Distribution of redeemable non-controlling member in consolidated real estate entities(8)(7)
Contribution of non-controlling member in consolidated real estate entities372,451 0 
Distribution to non-controlling member in consolidated real estate entities(9,591)(8,382)
Payments to satisfy tax withholding(5,501)(3,668)
Payment of loan costs, net loan premium paid(10,978)(6,256)
Net cash provided by (used in) financing activities403,329 (25,206)
Contributions from redeemable non-controlling members in consolidated real estate entitiesContributions from redeemable non-controlling members in consolidated real estate entities1,469 2,456 
Contributions from non-controlling members in consolidated real estate entitiesContributions from non-controlling members in consolidated real estate entities15,016 0 
Distributions to non-controlling members in consolidated real estate entitiesDistributions to non-controlling members in consolidated real estate entities(12,082)(2,768)
Payments to satisfy tax withholding obligationsPayments to satisfy tax withholding obligations(693)(5,501)
Payment of loan costsPayment of loan costs0 (4)
Net cash provided by financing activitiesNet cash provided by financing activities2,312 333,863 
Net increase in cash and cash equivalents and restricted cashNet increase in cash and cash equivalents and restricted cash346,015 1,148 Net increase in cash and cash equivalents and restricted cash19,793 345,860 
Cash and cash equivalents and restricted cash—beginning of periodCash and cash equivalents and restricted cash—beginning of period58,258 68,191 Cash and cash equivalents and restricted cash—beginning of period149,540 58,258 
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH—END OF PERIODCASH AND CASH EQUIVALENTS AND RESTRICTED CASH—END OF PERIOD$404,273 $69,339 CASH AND CASH EQUIVALENTS AND RESTRICTED CASH—END OF PERIOD$169,333 $404,118 






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

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 September 30, 2020:March 31, 2021:
SegmentsNumber of Properties
Square Feet
(unaudited)
Consolidated portfolio
Office51 13,383,650 
Studios3 1,224,403 
Land6 2,231,376 
Total consolidated portfolio60 16,839,429 
Unconsolidated portfolio(1)
Office1 1,486,957 
Land1 450,000 
Total unconsolidated portfolio2 1,936,957 
TOTAL(2)
62 18,776,386 

SegmentsNumber of Properties
Square Feet
(unaudited)
Consolidated portfolio
Office52 14,092,789 
Studios3 1,224,403 
Land6 2,504,406 
Total consolidated portfolio61 17,821,598 
Unconsolidated portfolio(1)
Office1 1,490,221 
Land2 682,855 
Total unconsolidated portfolio3 2,173,076 
TOTAL(2)
64 19,994,674 
_________________
1.The Company purchased, pursuantPursuant 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 20%50% of thisthe unconsolidated joint venture.venture entity which owns the Sunset LA development. The square footage shown above represents 100% of the property.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. References to number of properties and square feet are not covered by the auditor’s review procedures.

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, 2020.2021. The interim consolidated financial statements should be read in conjunction with the consolidated financial statements in the 20192020 Annual Report on Form 10-K of Hudson Pacific Properties, Inc. and Hudson Pacific Properties, L.P. and the notes thereto.

Certain amounts in the consolidated financial statements for the prior periods have been reclassified to conform to the current year presentation.

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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)
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 September 30, 2020,March 31, 2021, the Company has determined that its operating partnership and 1214 joint ventures met the definition of a VIE. NaN of thethese joint ventures are consolidated and 1 of the joint ventures is2 are unconsolidated.

Consolidated Joint Ventures

On July 30, 2020, funds affiliated with Blackstone Property Partners (“Blackstone”) acquired a 49% interest in the Company’s 3 Hollywood studios (Sunset Gower, Sunset Bronson and Sunset Las Palmas Studios) and 5 on-lot or adjacent Class A office properties (6040 Sunset, ICON, CUE, EPIC and Harlow) (collectively, the “Hollywood Media Portfolio”). The Company retained a 51% ownership stake and remains responsible for day-to-day operations, leasing and development. As of September 30, 2020, 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.
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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)
As of September 30, 2020,March 31, 2021, the operating partnership has determined that 12 of its joint ventures met the definition of a VIE and 11 of them are consolidated:

EntityPropertyOwnership Interest
Hudson 1455 Market, L.P.1455 Market55.0 %
Hudson 1099 Stewart, L.P.Hill755.0 %
HPP-MAC WSP, LLCOne Westside and 10850 Pico75.0 %
Hudson One Ferry REIT, L.P.Ferry Building55.0 %
Sunset Bronson Entertainment Properties, LLCSunset Bronson Studios, ICON, CUE51.0 %
Sunset Gower Entertainment Properties, LLCSunset Gower Studios51.0 %
Sunset Las Palmas Entertainment Properties, LLCSunset Las Palmas Studios, Harlow51.0 %
Sunset Services Holdings, LLC
None(1)
51.0 %
Sunset Studios Holdings, LLCEPIC51.0 %
Hudson Media and Entertainment Management, LLC
None(2)
51.0 %
Hudson 6040 Sunset, LLC6040 Sunset51.0 %
Hudson 1918 Eighth, L.P.1918 Eighth55.0 %
__________________ 
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 properties comprisingfollowing properties: Sunset Gower Studios, Sunset Bronson Studios, Sunset Las Palmas Studios, 6040 Sunset, ICON, CUE, EPIC, and Harlow (collectively “Hollywood Media Portfolio”).

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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)
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 March 31, 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 March 31, 2021, the Company has determined that the entities included in the Hollywood Media Portfolio.Portfolio and the related entities met the definition of a VIE and are consolidated.

As of September 30, 2020March 31, 2021 and December 31, 2019,2020, 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 September 30, 2020,March 31, 2021, the Company has determined it is not the primary beneficiary of 12 of its joint venture.ventures. Due to its significant influence over the unconsolidated entity,entities, the Company accounts for the entitythem 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 LA 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 located in Vancouver, Canada.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 thisits unconsolidated entityjoint ventures is reflected within investment in unconsolidated real estate entityentities on the Consolidated Balance Sheets. The Company’s share of net income or loss from the entityjoint ventures is included within income (loss) from unconsolidated real estate entityentities on the Consolidated Statements of Operations. SeeRefer to Note 4 for details.

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.

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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)
Lease Accounting

In February 2016, the FASB issued guidance codified inThe Company accounts for its leases under ASC 842, Leases (“ASC 842”), which amended the guidance in former ASC 840, Leases (“ASC 840”). The standard set out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a lease agreement (i.e., lessees and lessors). The new standard increased transparency and comparability most significantly by requiring the recognition by lessees of right-of-use (“ROU”) assets and lease liabilities on the balance sheet for those leases classified as operating leases. The Company adopted ASC 842 on January 1, 2019 using the modified retrospective transition approach that must be applied for leases that exist or are entered into after January 1, 2019.

ASC 842 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.

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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)
Lessee Accounting

The Company determines if an arrangement is a lease at inception. The Company’s operating lease agreements relate to ground lease assets and are reflected in operating lease ROUright-of-use (“ROU”) assets and operating lease liabilities on the Consolidated Balance Sheets.

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 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 5.7%. 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 we dothe 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 31 years as of September 30, 2020, wasMarch 31, years.2021.

Lessor Accounting

The presentation of revenues on the Consolidated StatementStatements 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 and (v) sale of real estate.
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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 StreamComponentsFinancial Statement Location
Rental revenuesOffice rentals, stage rentals and storage rentalsOffice and studio segments: rental
Tenant recoveries and other tenant-related revenuesReimbursement of real estate taxes, insurance, repairs and maintenance, other operating expenses and must-take parking revenuesOffice segment: rental
Studio segment: rental and service revenues and other
Ancillary revenuesRevenues derived from tenants’ use of lighting, equipment rental, power, HVAC and telecommunications (i.e., telephone and internet)Studio segment: service revenues and other
Other revenuesParking revenue that is not associated with lease agreements and otherOffice and studio segments: service revenues and other
Sale of real estateGains on sales derived from cash consideration less cost basisGains on sale of real estate

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 are recognized 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.

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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)
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 and other revenues have beenare 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 nine months ended September 30, 2020March 31, 2021 and 2019:2020:
Three Months Ended September 30,Nine Months Ended September 30,
2020201920202019
Ancillary revenues$3,130 $7,505 $10,542 $19,473 
Other revenues$2,832 $9,686 $12,624 $21,400 
Studio-related tenant recoveries$343 $744 $1,166 $1,739 

Three Months Ended March 31,
20212020
Ancillary revenues$7,540 $5,799 
Other revenues$3,042 $5,955 
Studio-related tenant recoveries$523 $445 

The following table summarizes the Company’s receivables that are accounted for under ASC 606 as of:
September 30, 2020December 31, 2019
Ancillary revenues$327 $1,652 
Other revenues$929 $2,417 
Studio-related tenant recoveries$0 $26 

March 31, 2021December 31, 2020
Ancillary revenues$2,436 $1,700 
Other revenues$1,524 $1,058 

In regards to salesales 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 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.

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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)
Recently Issued Accounting Pronouncements

In June 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-13, Financial Instruments—Credit Losses: Measurement of Credit Losses on Financial Instruments (Topic 326), which changed the impairment model for most financial instruments by requiring companies to recognize an allowance for expected losses, rather than incurred losses. ASC 326 applies to the Company’s receivables related to service revenues and parking revenue that is not associated with lease agreements. The accounting standard was adopted on January 1, 2020 using modified retrospective transition approach. The adoption did not have a material impact on the Consolidated Financial Statements.

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848). ASU 2020-04 contains practical expedients for reference rate reform-related activities that impact debt, leases, derivatives and other contracts. The guidance in ASU 2020-04 is optional and may be elected over time as reference rate reform activities occur. During the quarter ended March 31, 2020, the Company elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. Application of these expedients preserves the presentation of derivatives consistent with past presentation. The Company continues to evaluate the impact of the guidance and may apply other elections as applicable as additional changes in the market occur.

On April 10, 2020, the FASB issued a Staff Q&A related to the application of the lease guidance in ASC 842 for the accounting impact of lease concessions related to the COVID-19 pandemic. The FASB staff believes that it would be acceptable for entities to make an election to account for lease concessions related to the effects of the COVID-19 pandemic consistent with how those concessions would be accounted for under ASC 842 as though enforceable rights and obligations for those concessions existed. As a result of this election, for concessions related to the effects of the COVID-19 pandemic, an entity will not have to analyze each contract to determine whether enforceable rights and obligations for concessions exist in the contract and can elect to apply or not apply the lease modification guidance in ASC 842, as long as the concessions do not result in a substantial increase in the rights of the lessor or the obligations of the lessee. To date, the impact of lease concessions granted has not had a material effect on the Company’s consolidated financial statements. The Company has adopted a policy to not account for concessions as lease modifications and account for the concession in the form of a deferral of payments as if the lease is unchanged.

In August 2020, the FASB issued ASU No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40), which simplifies the accounting for convertible instruments and the application of the derivatives scope exception for contracts in an entity’s own equity. This ASU is effective for fiscal periods beginning after December 15, 2021. The Company is currently evaluating this guidance and the impact it may have on the Company’s consolidated financial statements.

3. Investment in Real Estate

The following table summarizes the Company’s investment in real estate, at cost as of:
September 30, 2020December 31, 2019
Land$1,313,412 $1,313,412 
Building and improvements5,286,780 5,189,342 
Tenant improvements677,305 631,459 
Furniture and fixtures11,697 10,693 
Property under development245,579 124,222 
INVESTMENT IN REAL ESTATE, AT COST$7,534,773 $7,269,128 

March 31, 2021December 31, 2020
Land$1,351,888 $1,351,888 
Building and improvements5,881,036 5,840,819 
Tenant improvements737,190 728,111 
Furniture and fixtures12,491 12,250 
Property under development320,873 281,949 
INVESTMENT IN REAL ESTATE, AT COST$8,303,478 $8,215,017 

Acquisitions

The Company had 0 acquisitions during the nine months ended September 30, 2020.

Dispositions

The Company had 0 dispositions during the nine months ended September 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)
Acquisitions

The Company had 0 acquisitions during the three months ended March 31, 2021.

Dispositions

The Company had 0 dispositions during the three months ended March 31, 2021.

Held for Sale

As of September 30, 2020 and DecemberMarch 31, 2019,2021, the Company had 0 properties that met the criteria to be classified as held for sale.

Studio Joint Venture

On July 30, 2020, funds affiliated with Blackstone acquired a 49% interest in the Hollywood Media Portfolio, a 2.2 million-square-foot collection of studio and office properties with a gross portfolio valuation of $1.65 billion before closing credits, prorations and costs, resulting in cash proceeds to the Company of $808.5 million. The transaction included Sunset Gower, Sunset Bronson and Sunset Las Palmas Studios, as well as 6040 Sunset, ICON, CUE, EPIC and Harlow, along with 1.1 million square feet of development rights associated with Sunset Gower and Sunset Las Palmas Studios. The Company retained a 51% ownership stake in the Hollywood Media Portfolio.

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 0t recognize impairment charges during the ninethree months ended September 30,March 31, 2021 and 2020. During the nine months ended September 30, 2019, the Company recorded $52.2 million of impairment charges related to the Campus Center office property that was held for sale at June 30, 2019 and was subsequently sold. The Company’s estimated fair value was based on the sale price (Level 2 input).

4. Investment in Unconsolidated Real Estate EntityEntities

On June 5, 2019,As of December 24, 2020, the Company purchased, through aowns 50% of the ownership interest in the joint venture with Blackstone 1 LP,which owns the Sunset LA 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 propertiesproperty and retail complex in Vancouver, Canada.Canada (“Bentall Centre”). The Company owns 20% of this joint venture and serves as the operating partner.

The unconsolidated real estate entity’s 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 income (loss) as a separate component of total equity and are excluded from net (loss) income.

The maximum exposure related to this unconsolidated joint venture is limited to ourthe Company’s investment and $95.2$101.6 million of debt which the Company has guaranteed.

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Notes to Unaudited Consolidated Financial Statements
(Unaudited, tabular amounts in thousands, except square footage, share and unit data)
The summarizedtable below presents the combined and condensed balance sheet ofsheets for the Company’s unconsolidated real estate entity represent the combined entities for our Bentall Centre propertiesjoint ventures as of September 30, 2020 and December 31, 2019:of:
September 30, 2020December 31, 2019
ASSETS
Investment in real estate, net$782,338 $794,321 
Other assets51,075 51,597 
TOTAL ASSETS$833,413 $845,918 
LIABILITIES
Secured debt, net$471,949 $480,127 
Other liabilities46,535 42,672 
TOTAL LIABILITIES518,484 522,799 
Company’s capital(1)
62,986 64,624 
Partner’s capital251,943 258,495 
TOTAL CAPITAL314,929 323,119 
TOTAL LIABILITIES AND CAPITAL$833,413 $845,918 

March 31, 2021December 31, 2020
ASSETS
Investment in real estate, net$866,132 $855,639 
Other assets43,109 51,118 
TOTAL ASSETS$909,241 $906,757 
LIABILITIES
Secured debt, net$504,315 $495,771 
Other liabilities39,942 52,828 
TOTAL LIABILITIES544,257 548,599 
Company’s capital(1)
82,143 80,778 
Partners’ capital282,841 277,380 
TOTAL CAPITAL364,984 358,158 
TOTAL LIABILITIES AND CAPITAL$909,241 $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 the income (loss) from unconsolidated real estate entityentities line item on the Consolidated Statements of Operations.

The summarized statementtable below presents the combined and condensed statements of operations offor the Company’s unconsolidated real estate entity represent the combined entities for our Bentall Centre properties for the three and nine months ended September 30, 2020 and the June 5, 2019 acquisition date through September 30, 2019:joint ventures:
Three Months Ended September 30, 2020Three Months Ended September 30, 2019Nine Months Ended September 30, 2020June 5, 2019 through September 30, 2019
TOTAL REVENUES$25,551 $28,042 $77,229 $35,820 
TOTAL EXPENSES26,081 29,831 76,892 38,149 
NET (LOSS) INCOME$(530)$(1,789)$337 $(2,329)

Three Months Ended March 31,
20212020
TOTAL REVENUES$19,386 $25,795 
TOTAL EXPENSES16,244 26,949 
NET INCOME (LOSS)$3,142 $(1,154)

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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:
September 30, 2020December 31, 2019
Deferred leasing costs and in-place lease intangibles$317,509 $359,215 
Accumulated amortization(122,381)(136,816)
Deferred leasing costs and in-place lease intangibles, net195,128 222,399 
Below-market ground leases72,916 72,916 
Accumulated amortization(13,232)(11,436)
Below-market ground leases, net59,684 61,480 
Above-market leases2,905 8,015 
Accumulated amortization(1,810)(6,446)
Above-market leases, net1,095 1,569 
DEFERRED LEASING COSTS AND LEASE INTANGIBLE ASSETS, NET$255,907 $285,448 
Below-market leases$75,035 $87,064 
Accumulated amortization(52,353)(56,447)
Below-market leases, net22,682 30,617 
Above-market ground leases1,095 1,095 
Accumulated amortization(252)(219)
Above-market ground leases, net843 876 
LEASE INTANGIBLE LIABILITIES, NET$23,525 $31,493 

March 31, 2021December 31, 2020
Deferred leasing costs and in-place lease intangibles$353,820 $352,903 
Accumulated amortization(132,230)(127,180)
Deferred leasing costs and in-place lease intangibles, net221,590 225,723 
Below-market ground leases72,916 72,916 
Accumulated amortization(14,430)(13,831)
Below-market ground leases, net58,486 59,085 
Above-market leases2,061 2,802 
Accumulated amortization(1,458)(1,774)
Above-market leases, net603 1,028 
DEFERRED LEASING COSTS AND LEASE INTANGIBLE ASSETS, NET$280,679 $285,836 
Below-market leases$93,513 $98,365 
Accumulated amortization(48,145)(50,054)
Below-market leases, net45,368 48,311 
Above-market ground leases1,095 1,095 
Accumulated amortization(273)(262)
Above-market ground leases, net822 833 
LEASE INTANGIBLE LIABILITIES, NET$46,190 $49,144 

The Company recognized the following amortization related to deferred leasing costs and lease intangibles:
Three Months Ended September 30,Nine Months Ended September 30,
2020201920202019
Deferred leasing costs and in-place lease intangibles(1)
$(9,936)$(10,813)$(30,800)$(34,006)
Below-market ground leases(2)
$(598)$(626)$(1,796)$(1,878)
Above-market leases(3)
$(120)$(296)$(472)$(944)
Below-market leases(3)
$2,575 $3,106 $7,935 $10,863 
Above-market ground leases(2)
$11 $11 $33 $33 

Three Months Ended March 31,
20212020
Deferred leasing costs and in-place lease intangibles(1)
$(11,567)$(10,735)
Below-market ground leases(2)
$(599)$(599)
Above-market leases(3)
$(424)$(194)
Below-market leases(3)
$2,942 $2,738 
Above-market ground leases(2)
$11 $11 
__________________ 
1.Amortization is recorded in depreciation and amortization expenses and office rental revenues inon the Consolidated Statements of Operations.
2.Amortization is recorded in office operating expenses inon the Consolidated Statements of Operations.
3.Amortization is recorded in office rental revenues inon 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 20192020 Annual Report on Form 10-K.
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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)

Accounts Receivable

As of September 30, 2020,March 31, 2021, accounts receivablereceivable was $14.1$19.6 million and there was 0 allowance for doubtful accounts. As of December 31, 2019,2020, accounts receivable was $13.0 million and there was 0 allowance for doubtful accounts.

Straight-Line Rent Receivable

As of September 30, 2020, straight-line rent receivable was $231.5 million and there was a $5.0 million allowance for doubtful accounts. As of December 31, 2019, straight-line rent receivable was $195.3$22.1 million and there was 0 allowance for doubtful accounts.

Straight-Line Rent Receivables

As of March 31, 2021, straight-line rent receivables was $233.0 million and there was a $0.2 million 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.

7. Prepaid Expenses and Other Assets, net    

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

March 31, 2021December 31, 2020
Deposits and pre-development costs for future acquisitions$31,519 $28,488 
Prepaid insurance535 5,100 
Goodwill8,754 8,754 
Non-real estate investments10,263 4,088 
Stock purchase warrant1,906 0 
Deferred financing costs955 1,216 
Prepaid property tax1,069 2,138 
Interest rate cap derivative asset10 5 
Other23,937 22,878 
PREPAID EXPENSES AND OTHER ASSETS, NET$78,948 $72,667 

Goodwill

No goodwill impairment indicators have been identified during the three months ended March 31, 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 investment on the Consolidated Statements of Operations. The Company recognized an unrealized gain of $3.9 million and a net unrealized loss of $0.6 million on its non-real estate investments during the three months ended March 31, 2021 and 2020, respectively, due to the observable changes in fair value.

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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:
September 30, 2020December 31, 2019
Deposits and pre-development costs for future acquisitions$27,135 $21,585 
Prepaid insurance9,091 3,463 
Goodwill8,754 8,754 
Non-real estate investments4,216 5,545 
Deferred financing costs1,477 3,246 
Prepaid property tax3,145 2,070 
Derivative assets13 479 
Other26,896 23,832 
PREPAID EXPENSES AND OTHER ASSETS, NET$80,727 $68,974 

Goodwill

No goodwill impairment indicators have been identified during the three and nine months ended September 30, 2020.

Non-Real Estate InvestmentsStock Purchase Warrant

The Company heldholds an investment in an entitya stock purchase warrant that does not report NAV.gives the Company the right to purchase a fixed number of shares of common stock of a non-real estate investee. The Company marked this investment towarrant meets the definition of a derivative and is measured at fair value based on Level 2 inputs, wheneverinputs. Changes in the fair value was readily available or observable. Changes in fair valueof the derivative asset are included in the unrealized gain (loss) on non-real estate investment line item on the Consolidated Statements of Operations. During the three months ended September 30, 2020, the Company disposed of the investment resulting in the Company receiving a cash payment of $1.16 million. NaN gain or loss was recognized due to the observable changes in fair value for the three months ended September 30, 2020. The Company recognized an unrealized loss of $1.6 million due to the observable changes in fair value for the nine months ended September 30, 2020. NaN gain or loss was recognized due to observable changes in fair value for the three and nine months ended September 30, 2019. Over the life of this investment, the Company has recognized a net unrealized loss of $0.6 million due to observable changes in fair value.

The Company also invests in an entity that reports NAV. The investment, which is in a real estate technology venture capital fund, involves a commitment of funding from the Company of up to $20.0 million. The Company uses NAV reported without adjustment unless it is aware of information indicating the NAV reported does not accurately reflect the fair value for the investment. As of September 30, 2020, the Company has contributed $6.0 million to this fund with $14.0 million remaining to be contributed. Changes in fair value are included in the unrealized gain (loss) on non-real estate investment line item on the Consolidated Statements of Operations. The Company recognized an unrealizeda gain of $0.5$1.9 million dueand $0 related to the observable changeschange in the fair value forof the stock purchase warrant during the during the three months ended September 30,March 31, 2021 and 2020, and a net unrealized loss of $0.7 million due to the observable changes in fair value for the nine months ended September 30, 2020. NaN gain or loss was recognized due to observable changes in fair value for the three and nine months ended September 30, 2019.respectively.
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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:
September 30, 2020December 31, 2019
Interest Rate(1)
Contractual Maturity Date
UNSECURED AND SECURED DEBT
Unsecured debt
Unsecured revolving credit facility(2)(3)
$0 $75,000 LIBOR + 1.05% to 1.50%3/13/2022(4)
Term loan B(2)(5)
0 350,000 LIBOR + 1.20% to 1.70%4/1/2022
Term loan D(2)(6)
0 125,000 LIBOR + 1.20% to 1.70%11/17/2022
Series A notes110,000 110,000 4.34%1/2/2023
Series B notes259,000 259,000 4.69%12/16/2025
Series C notes56,000 56,000 4.79%12/16/2027
Series D notes150,000 150,000 3.98%7/6/2026
Series E notes50,000 50,000 3.66%9/15/2023
3.95% Registered senior notes400,000 400,000 3.95%11/1/2027
4.65% Registered senior notes(7)
500,000 500,000 4.65%4/1/2029
3.25% Registered senior notes(8)
400,000 400,000 3.25%1/15/2030
Total unsecured debt1,925,000 2,475,000 
Secured debt
Hollywood Media Portfolio$900,000 $0 LIBOR + 2.15%8/9/2022
Acquired Hollywood Media Portfolio debt(107,814)0 LIBOR + 3.31%8/9/2022
Hollywood Media Portfolio, net(9)
792,186 0 
Met Park North(10)
0 64,500 LIBOR + 1.55%8/1/2020
10950 Washington(11)
25,871 26,312 5.32%3/11/2022
One Westside and 10850 Pico(12)
75,111 5,646 LIBOR + 1.70%12/18/2023(4)
Revolving Sunset Bronson Studios/ICON/CUE facility(13)
0 5,001 LIBOR + 1.35%3/1/2024
Element LA168,000 168,000 4.59%11/6/2025
Hill7(14)
101,000 101,000 3.38%11/6/2028
Total secured debt1,162,168 370,459 
Total unsecured and secured debt3,087,168 2,845,459 
Unamortized deferred financing costs and loan discounts/premiums(15)
(31,971)(27,549)
TOTAL UNSECURED AND SECURED DEBT, NET$3,055,197 $2,817,910 
IN-SUBSTANCE DEFEASED DEBT(16)
$132,560 $135,030 4.47%10/1/2022
JOINT VENTURE PARTNER DEBT(17)
$66,136 $66,136 4.50%10/9/2028

March 31, 2021December 31, 2020
Interest Rate(1)
Contractual Maturity Date
UNSECURED AND SECURED DEBT
Unsecured debt
Unsecured revolving credit facility(2)(3)
$0 $0 LIBOR + 1.05% to 1.50%3/13/2022(4)
Series A notes110,000 110,000 4.34%1/2/2023
Series B notes259,000 259,000 4.69%12/16/2025
Series C notes56,000 56,000 4.79%12/16/2027
Series D notes150,000 150,000 3.98%7/6/2026
Series E notes50,000 50,000 3.66%9/15/2023
3.95% Registered senior notes400,000 400,000 3.95%11/1/2027
4.65% Registered senior notes500,000 500,000 4.65%4/1/2029
3.25% Registered senior notes400,000 400,000 3.25%1/15/2030
Total unsecured debt1,925,000 1,925,000 
Secured debt
Hollywood Media Portfolio, net(5)(6)
792,186 792,186 LIBOR + 2.15%8/9/2022
10950 Washington(7)
25,558 25,717 5.32%3/11/2022
One Westside and 10850 Pico(8)
159,049 106,073 LIBOR + 1.70%12/18/2023(4)
Element LA168,000 168,000 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 debt1,560,093 1,507,276 
Total unsecured and secured debt3,485,093 3,432,276 
Unamortized deferred financing costs and loan discounts/premiums(11)
(30,278)(32,784)
TOTAL UNSECURED AND SECURED DEBT, NET$3,454,815 $3,399,492 
IN-SUBSTANCE DEFEASED DEBT(12)
$130,828 $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 September 30, 2020,March 31, 2021, which may be different than the interest rates as of December 31, 20192020 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 September 30, 2020,March 31, 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 interest rate on the outstanding balance of the term loan was effectively fixed at 2.96% to 3.46% per annum through the use of 2 interest rate swaps. Term loan B was repaid in the third quarter 2020. Instead of terminating the interest rate swaps on the loan, the swaps were designated under a 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. See Note 9 for details.
6.The interest rate on the outstanding balance of the term loan was effectively fixed at 2.63% to 3.13% per annum through the use of an interest rate swap. Term loan D was repaid in the third quarter 2020. Instead of terminating the interest rate swap on the loan, the swap was designated under a 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. See Note 9 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)
7.On February 27, 2019, the operating partnership completed an underwritten public offering of $350.0 million of senior notes, which were issued at a discount at 98.663% of par. On June 14, 2019, the operating partnership completed an additional underwritten public offering of $150.0 million of senior notes, which were issued at a premium at 104.544% of par. These notes are treated as a single series of securities with an aggregate principal amount of $500.0 million.
8.On October 3, 2019, the operating partnership completed an underwritten public offering of $400.0 million in senior notes due January 15, 2030. The notes were issued at a discount at 99.268% of par value, with a coupon of 3.25%.
9.The Company owns 51% of the ownership interest in the consolidated joint venture that owns the Hollywood Media Portfolio. On July 30, 2020, theThe joint venture closedholds 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 3 one-year extension options, subject to certain requirements. The Company and Blackstone purchased bonds comprising the loan in the amounts of $107.8 million and $12.5 million, respectively. The Company repaid Term loans B ($350.0 million)
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Hudson Pacific Properties, Inc. and D ($125.0 million)Hudson Pacific Properties, L.P.
Notes to Unaudited Consolidated Financial Statements
(Unaudited, tabular amounts in thousands, except square footage, share and instead of terminating the interest rate swaps on these loans, the swaps were designated under a first payments approach within hedge accounting, rather than a specific piece of debt. Therefore, theunit data)
6.The interest rate on a portion of the outstanding loan balance has been effectively fixed through the use of interest rate swaps.swaps under the first payments approach. As of September 30, 2020,March 31, 2021, the LIBOR component of the interest rate was fixed LIBOR wasat 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, loan, respectively.
10.Interest on the full loan amount has been effectively fixed at 3.71% per annum through use of an interest rate swap. See Note 9 for details. On July 31, 2020, the Company paid off the principal outstanding of $64.5 million on the Met Park North mortgage loan.
11.7.Monthly debt service includes annual debt amortization payments based on a 30-year amortization schedule with a balloon payment at maturity.
12.8.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.
13.9.The Company has a total capacityowns 55% of $235.0 million under the Sunset Bronson Studios/ICON/CUE revolving credit facility.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 secured byinterest-only through the Company’s Sunset Bronson Studios, ICON and CUE properties. The outstanding borrowings were paid off in the third quarter 2020.five-year term.
14.10.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.
15.11.Excludes deferred financing costs related to establishing the Company’s unsecured revolving credit facility, and Sunset Bronson Studios/ICON/CUE revolving credit facility, which are reflected in prepaid and other assets, net line item inon the Consolidated Balance Sheets. See Note 7 for details.
16.12.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 separately presented on the balance sheet.shown. Monthly debt service includes annual debt amortization payments based on a 10-year amortization schedule with a balloon payment at maturity.
17.13.This amount relates to debt dueattributable 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 ninethree months ended September 30, 2020, the outstandingMarch 31, 2021, there were 0 borrowings on the unsecured revolving credit facility decreased by $75.0 million, net of borrowings.facility. The Company generally uses the unsecured revolving credit facility to finance the acquisition of other properties, to provide funds for tenant improvements and capital expenditures and to provide for working capital and other corporate purposes.

On July 30, 2020, funds affiliated with Blackstone acquired a 49% interest in the Hollywood Media Portfolio. The Company retained a 51% ownership stake and remains responsible for day-to-day operations, leasing and development. In conjunction with closing this transaction, the joint venture closed a $900.0 million mortgage loan secured by the Hollywood Media Portfolio. The Company and Blackstone purchased bonds comprising the loan in the amounts of $107.8 million and $12.5 million, respectively. This loan has an initial term of two years from the first payment date, with 3 one-year extension options, subject to certain requirements. With an initial interest rate of LIBOR plus 2.15% per annum, it bears interest only payable every month during the term of the loan with principal payable at maturity. The loan is non-recourse, except as to customary non-recourse carveout guaranties from the Company and Blackstone. The combined proceeds from sale of the 49% interest in the Hollywood Media Portfolio and the Company’s share of asset-level financing was approximately $1.27 billion before closing credits, prorations and costs. The proceeds from the sale were used to pay down the outstanding borrowings on the unsecured revolving credit facility and to pay off Term loan B, Term loan D, Met Park North and the Revolving Sunset Bronson Studios/ICON/CUE facility.

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 March 31, 2021:

YearUnsecured and Secured DebtIn-substance Defeased DebtJoint Venture Partner Debt
Remaining 2021$473 $2,615 $0 
2022817,271 128,213 0 
2023319,049 0 0 
20240 0 0 
2025741,300 0 0 
Thereafter1,607,000 0 66,136 
TOTAL$3,485,093 $130,828 $66,136 

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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 minimum future principal payments due on the Company’s debt (before the impact of extension options, if applicable) as of September 30, 2020:
YearUnsecured and Secured DebtIn-substance Defeased DebtJoint Venture Partner Debt
Remaining 2020$154 $853 $0 
2021632 3,494 0 
2022817,271 128,213 0 
2023235,111 0 0 
20240 0 0 
Thereafter2,034,000 0 66,136 
TOTAL$3,087,168 $132,560 $66,136 

Unsecured Debt

Term Loan andRevolving Credit Facility

On March 13, 2018, the operating partnership entered into a third amended and restated credit agreement (the “Amended and Restated Credit Agreement”) with various financial institutions. The Amended and Restated Credit Agreement provides for (i) the increase of the operating partnership’s unsecured revolving credit facility to $600.0 million and the extension of the term to March 13, 2022 and (ii) term loans in amount and tenor equal to the term loans outstanding under the previous agreements ($300.0 million term loan A maturing April 1, 2020, $350.0 million term loan B maturing April 1, 2022, $75.0 million term loan C maturing November 17, 2020 and $125.0 million term loan D maturing November 17, 2022). The $75.0 million term loan was repaid with proceeds from the Company’s 4.65% registered senior notes on February 27, 2019. The $300.0 million term loan was repaid with proceeds from the Company’s 3.25% registered senior notes on October 3, 2019. During the three months ended September 30, 2020, the principal outstanding on Term loan B and D were repaid from the proceeds from the Hollywood Media Portfolio transaction.

The following table summarizes the balance and key terms of the unsecured revolving credit facility as of:
September 30, 2020December 31, 2019
Outstanding borrowings$0 $75,000 
Remaining borrowing capacity600,000 525,000 
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

March 31, 2021December 31, 2020
Outstanding borrowings$0 $0 
Remaining borrowing capacity600,000 600,000 
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 September 30, 2020,March 31, 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.

The following table summarizes existing covenants and their covenant levels as of March 31, 2021 related to the unsecured revolving credit facility, term loans and note purchase agreements, when considering the most restrictive terms:
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Notes to Unaudited Consolidated Financial Statements
(Unaudited, tabular amounts in thousands, except square footage, share and unit data)
Covenant RatioCovenant LevelActual Performance
Total liabilities to total asset value≤ 60%35.6%38.2%
Unsecured indebtedness to unencumbered asset value≤ 60%37.5%37.3%
Adjusted EBITDA to fixed charges≥ 1.5x3.4x3.5x
Secured indebtedness to total asset value≤ 45%15.1%18.0%
Unencumbered NOI to unsecured interest expense≥ 2.0x3.0x3.5x

The following table summarizes existing covenants and their covenant levels related to the registered senior notes:notes as of March 31, 2021:

Covenant Ratio(1)
Covenant LevelActual Performance
Debt to total assets≤ 60%40.1%41.0%
Total unencumbered assets to unsecured debt ≥ 150%286.9%290.3%
Consolidated income available for debt service to annual debt service charge≥ 1.5x3.8x3.7x
Secured debt to total assets≤ 45%15.8%19.0%
_________________
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 based on the financial results as of September 30, 2020.Notes.

The operating partnership was in compliance with its financial covenants as of September 30, 2020.March 31, 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 guaranteed the operating partnership’s unsecured debt.

Interest Expense

The following table represents a reconciliation from gross interest expense to the interest expense line item in the Consolidated Statements of Operations:
Three Months Ended September 30,Nine Months Ended September 30,
2020201920202019
Gross interest expense(1)
$32,243 $29,536 $93,846 $85,981 
Capitalized interest(4,519)(4,334)(14,264)(12,911)
Amortization of deferred financing costs and loan discounts/premiums4,768 1,388 7,257 4,422 
INTEREST EXPENSE$32,492 $26,590 $86,839 $77,492 
_________________
1.Includes interest on the Company’s debt and hedging activities and extinguishment costs related to paydowns in the term loans.

9. Derivatives

The Company enters into derivatives in order to hedge interest rate risk. The Company had 3 interest rate swaps with aggregate notional amounts of $475.0 million as of September 30, 2020 and had 4 interest rate swaps with aggregate notional amounts of $539.5 million as of December 31, 2019. These derivatives were designated as effective cash flow hedges for accounting purposes.

On July 29, 2020, the Company entered into an interest rate cap contract, required by the lender, with respect to the Hollywood Media Portfolio loan due August 2022. The aggregate notional amount is $900.0 million as of September 30, 2020.
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Notes to Unaudited Consolidated Financial Statements
(Unaudited, tabular amounts in thousands, except square footage, share and unit data)

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 line item on the Consolidated Statements of Operations:

Three Months Ended March 31,
20212020
Gross interest expense(1)
$33,540 $30,287 
Capitalized interest(5,671)(5,115)
Amortization of deferred financing costs and loan discounts/premiums2,417 1,245 
INTEREST EXPENSE$30,286 $26,417 
_________________
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 3 interest rate swaps with aggregate notional amounts of $475.0 million as of March 31, 2021 and December 31, 2020. These derivatives were designated as effective cash flow hedges for accounting purposes.

The Company had 1 interest rate cap contract with an aggregate notional amount of $900.0 million as of March 31, 2021 and December 31, 2020. The interest rate cap is not designated under hedge accounting and is accounted for under mark-to-market accounting. Changes in fair value are included in the Interest expense line item on the Consolidated Statements of Operations.

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.

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Notes to Unaudited Consolidated Financial Statements
(Unaudited, tabular amounts in thousands, except square footage, share and unit data)
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 September 30, 2020March 31, 2021 and December 31, 2019:2020:
Interest Rate Range(1)
Fair Value (Liabilities) Assets
Underlying Debt InstrumentNumber of HedgesNotional AmountEffective DateMaturity DateLowHighSeptember 30, 2020December 31, 2019
Interest rate swaps
Met Park North1$64,500 August 2013August 20203.71%3.71%$0 $(195)
Hollywood Media Portfolio (formerly Term loan B)2350,000 April 2015April 20222.96%3.46%(8,440)(1,596)
Hollywood Media Portfolio (formerly Term loan D)1125,000 June 2016November 20222.63%3.13%(3,353)479 
Interest rate capStrike rate
Hollywood Media Portfolio1$900,000 July 2020August 20223.5%$13 $0 
TOTAL$(11,780)$(1,312)

Interest Rate Range(1)
Fair Value (Liabilities) Assets
Underlying Debt InstrumentNumber of DerivativesNotional AmountEffective DateMaturity DateLowHighMarch 31, 2021December 31, 2020
Interest rate swaps
Hollywood Media Portfolio(2)
2$350,000 April 2015April 20222.96%3.46%(5,710)(7,112)
Hollywood Media Portfolio(2)
1125,000 June 2016November 20222.63%3.13%(2,545)(2,994)
Interest rate capStrike rate
Hollywood Media Portfolio1$900,000 July 2020August 20223.50%$10 $5 
TOTAL$(8,245)$(10,101)
_____________ 
1.The rate is based on the fixed rate from the interest rate swap and the spread based on the operating partnership’s leverage ratio.

2.
On July 31, 2020, the Company paid off the principal outstanding of $64.5 million on the Met Park North mortgage loan. The derivative on the Met Park North mortgage loan matured on August 1, 2020.

The proceeds from the Company’s sale of its 49% interest in the Hollywood Media Portfolio were used to pay off the principal outstanding of $350.0 million on Term loan B and $125.0 million on Term loan D. Instead of terminating the interest rate swaps on Term loans B and D, the swaps were designated under athe first payments approach within hedge accounting, where the Company elected to designate a cash flow (LIBOR based(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 September 30, 2020,March 31, 2021, the Company expects $7.3 million of unrealized loss included in accumulated other comprehensive incomeloss will be reclassified as an increase to interest expense in the next 12 months.

10. U.S. Government Securities

The Company hashad U.S. Government securities of $136.6$133.8 million and $140.7$135.1 million as of September 30, 2020March 31, 2021 and December 31, 2019,2020, respectively. The One Westside and 10850 Pico properties acquisition 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 September 30, 2020,March 31, 2021, the Company had $7.6has incurred $5.1 million of gross unrealized gains and 0 gross unrealized losses.losses related to the U.S. Government securities.

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Notes to Unaudited Consolidated Financial Statements
(Unaudited, tabular amounts in thousands, except square footage, share and unit data)
The following table summarizes the carrying value and fair value of the Company’s securities by the contractual maturity date September 30, 2020:as of March 31, 2021:
Carrying ValueFair Value
Due in 1 year$6,522 $7,385 
Due in 1 to 5 years130,127 136,885 
TOTAL$136,649 $144,270 

Carrying ValueFair Value
Due in 1 year$6,585 $6,702 
Due in 1 to 5 years127,205 132,201 
TOTAL$133,790 $138,903 

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, and 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 a non-U.S entityentities treated as a TRSTRSs 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.
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Notes to Unaudited Consolidated Financial Statements
(Unaudited, tabular amounts in thousands, except square footage, share and unit data)

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 September 30, 2020,March 31, 2021, the Company has 0t 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 2015.2016. The Company has assessed its tax positions for all open years, which as of September 30, 2020March 31, 2021 included 20152017 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 September 30, 2020:March 31, 2021:
Year EndedNon-CancellableSubject to Early Termination Options
Total (1)
Remaining 2020$154,712 $1,065 $155,777 
2021582,495 10,799 593,294 
2022523,207 23,674 546,881 
2023479,796 29,084 508,880 
2024419,047 19,040 438,087 
Thereafter1,657,622 151,782 1,809,404 
TOTAL$3,816,879 $235,444 $4,052,323 

Year EndedNon-cancellableSubject to Early Termination Options
Total (1)
Remaining 2021$462,812 $7,468 $470,280 
2022597,590 21,006 618,596 
2023550,544 28,422 578,966 
2024473,481 23,349 496,830 
2025345,430 54,623 400,053 
Thereafter1,460,803 204,721 1,665,524 
TOTAL$3,890,660 $339,589 $4,230,249 
_____________ 
1.Excludes rents under leases at the Company’s studio properties with terms of one year or less.

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Notes to Unaudited Consolidated Financial Statements
(Unaudited, tabular amounts in thousands, except square footage, share and unit data)
The following table summarizes the Company’s ground lease terms related to properties that are held subject to long-term non-cancellable ground lease obligations as of September 30, 2020:March 31, 2021:

PropertyExpiration DateNotes
3400 Hillview10/31/2040The ground rent is the greater of the minimum annual rent or percentage annual rent. The minimum annual rent until October 31, 2017 is the lesser of 10% of Fair Market Value (“FMV”) of the land or $1.0 million grown at 75% of the cumulative increases in consumer price index (“CPI”) from October 1989. Thereafter, minimum annual rent, which resets annually, is the lesser of 10% of FMV of the land or the minimum annual rent as calculated as of November 1, 2017 plus 75% of subsequent cumulative CPI changes. In no event can rent be less than the specific amount prescribed in the ground lease agreement. Percentage annual rent is gross income multiplied by 24.125%.
Clocktower Square9/26/2056The ground rent is minimum annual rent (adjusted every 10 years) plus 25% of adjusted gross income (“AGI”). Minimum rent adjustments add 60% of the average annual participation rent payable over five years. Annual participation is the excess of 25% of AGI over the minimum annual rent for a given lease year.
Del Amo6/30/2049Rent under the ground sublease is $1.00 per year, with the sublessee being responsible for all impositions, insurance premiums, operating charges, maintenance charges, construction costs and other charges, costs and expenses that arise or may be contemplated under any provisions of the ground sublease.
Ferry BuildingVarious
The land on which the building is situated is subject to a ground lease agreement that expires on April 1, 2067. The minimum annual rent (adjusted every 5 years) is the prior year’s minimum annual rent plus cumulative increase in CPI with a floor of 10% and a cap of 20%.

Additionally, the parking lot is subject to a separate ground lease agreement that expires on April 1, 2023. The minimum annual rent adjusts each year for changes in CPI with a floor of 2% and a cap of 4%. The parking lot is subject to automatic renewals for 10-year periods at market.
Foothill Research Center6/30/2039The ground rent is the greater of the minimum annual rent or percentage annual rent. The minimum annual rent, which resets annually, is the lesser of 10% of FMV of the land or the previous year’s minimum annual rent plus 75% of CPI increase. In no event can rent be less than the specific amount prescribed in the ground lease agreement. Percentage annual rent is gross income multiplied by 24.125%.
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Notes to Unaudited Consolidated Financial Statements
(Unaudited, tabular amounts in thousands, except square footage, share and unit data)
Lockheed7/31/2040The ground rent is the greater of the minimum annual rent or percentage annual rent. The minimum annual rent, which resets annually, is the lesser of 10% of FMV of the land or the previous year’s minimum annual rent plus 75% of CPI increase. Percentage annual rent is Lockheed’s base rent multiplied by 24.125%. In no event can rent be less than the specific amount prescribed in the ground lease agreement.
Metro Center4/29/2054Every 10 years rent adjusts to 7.233% of FMV of the land (since 2008) and adjusts to reflect the change in CPI from the preceding FMV adjustment date (since 2013). The CPI adjustment has a floor of the previous minimum rent. The Company has an option to extend the ground lease for 4 additional periods of 11 years each.
Page Mill Center11/30/2041The ground rent is minimum annual rent (adjusted on January 1, 2019 and January 1, 2029) plus 25% of AGI, less minimum annual rent. Minimum rent adjustments add 60% of the average annual participation rent payable over five years. Annual participation is the excess of 25% of AGI over the minimum annual rent for a given lease year.
Page Mill Hill11/17/2049The ground rent is minimum annual rent (adjusted every 10 years) plus 60% of the average of the percentage annual rent for the previous 7 lease years. Minimum rent adjustments add 60% of the average annual percentage rent for the previous 7 years.
Palo Alto Square11/30/2045The ground rent is minimum annual rent (adjusted every 10 years starting January 1, 2022) plus 25% of AGI less minimum annual rent. The minimum annual rent adjustments add 50% of the average annual percentage rent from the previous 5 years.
Sunset Gower Studios3/31/2060Every 7 years rent adjusts to 7.5% of FMV of the land.
Techmart5/31/2053Rent subject to a 10% increase every 5 years. The Company has an option to extend the ground lease for 2 additional periods of 10 years each.

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Notes to Unaudited Consolidated Financial Statements
(Unaudited, tabular amounts in thousands, except square footage, share and unit data)
Contingent rental expense is recorded in the period in which the contingent event becomes probable. The following table summarizes rental expense for ground leases and a corporate office lease as follows:
Three Months Ended September 30,Nine Months Ended September 30,
2020201920202019
Contingent rental expense$2,427 $1,523 $6,683 $7,014 
Minimum rental expense$4,991 $5,713 $14,973 $14,922 

Three Months Ended March 31,
20212020
Contingent rental expense$2,249 $2,157 
Minimum rental expense$4,991 $4,991 

The following table provides information regarding the Company’s future minimum lease payments for its ground leases (before the impact of extension options, if applicable) as of September 30, 2020:March 31, 2021:
Year
Lease Payments(1)
Remaining 2020$4,625 
202118,622 
202218,663 
202318,438 
202418,392 
Thereafter534,354 
Total ground lease payments613,094 
Less: interest portion(342,267)
PRESENT VALUE OF LEASE LIABILITY$270,827 

Year
Lease Payments(1)
Remaining 2021$13,997 
202218,663 
202318,438 
202418,392 
202518,392 
Thereafter515,961 
Total ground lease payments603,843 
Less: interest portion(334,652)
PRESENT VALUE OF LEASE LIABILITY$269,191 
_________________
1.In situations where ground lease obligation adjustments are based on third-party appraisals of fair market land value, CPI adjustments and/or percentage of gross income that exceeds the minimum annual rent, the future minimum lease amounts above include the lease rental obligations in effect as of September 30, 2020.March 31, 2021.

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Notes to Unaudited Consolidated Financial Statements
(Unaudited, tabular amounts in thousands, except square footage, share and unit data)
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.

The Company’s financial assets and liabilities measured and reported at fair value on a recurring basis include the following as of:
September 30, 2020December 31, 2019
Level 1Level 2Level 3TotalLevel 1Level 2Level 3Total
Derivative assets(1)
$0 $13 $0 $13 $0 $479 $0 $479 
Derivative liabilities(2)
$0 $(11,793)$0 $(11,793)$0 $(1,791)$0 $(1,791)
Non-real estate investments(1)
$0 $4,216 $0 $4,216 $0 $5,545 $0 $5,545 

March 31, 2021December 31, 2020
Level 1Level 2Level 3TotalLevel 1Level 2Level 3Total
Interest rate cap derivative asset(1)
$0 $10 $0 $10 $0 $5 $0 $5 
Interest rate swap derivative liabilities(2)
$0 $(8,255)$0 $(8,255)$0 $(10,106)$0 $(10,106)
Non-real estate investments measured at fair value(1)
$2,069 $1,712 $0 $3,781 $0 $750 $0 $750 
Stock purchase warrant(1)
$0 $1,906 $0 $1,906 $0 $0 $0 $0 
Non-real estate investments measured at NAV(1)(3)
$0 $0 $0 $6,482 $0 $0 $0 $3,338 
___________ 
1.Included in the prepaid expenses and other assets, net line item on the Consolidated Balance Sheets.
2.Included in the accounts payable, accrued liabilities and other line item 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.
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Notes to Unaudited Consolidated Financial Statements
(Unaudited, tabular amounts in thousands, except square footage, share and unit data)
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. FairThe fair value forof the investment in U.S. Government securities are estimatedis an estimate based on Level 1 inputs. FairThe fair values forof debt are estimatedestimates based on rates currently prevailing for similar instruments of similar maturities using Level 2 inputs.

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Notes to Unaudited Consolidated Financial Statements
(Unaudited, tabular amounts in thousands, except square footage, share and unit data)
The table below represents the carrying value and fair value of the Company’s investment in securities and debt as of:
September 30, 2020December 31, 2019
Carrying ValueFair ValueCarrying ValueFair Value
ASSETS
U.S. Government securities$136,649 $144,270 $140,749 $144,589 
LIABILITIES
Unsecured debt(1)
$1,925,000 $2,037,138 $2,475,000 $2,540,606 
Secured debt(1)
$1,162,168 $1,156,377 $370,459 $366,476 
In-substance defeased debt$132,560 $131,898 $135,030 $134,936 
Joint venture partner debt$66,136 $67,789 $66,136 $68,557 

March 31, 2021December 31, 2020
Carrying ValueFair ValueCarrying ValueFair Value
ASSETS
U.S. Government securities$133,790 $138,903 $135,115 $140,270 
LIABILITIES
Unsecured debt(1)
$1,925,000 $2,006,648 $1,925,000 $2,072,833 
Secured debt(1)
$1,560,093 $1,556,953 $1,507,276 $1,503,960 
In-substance defeased debt$130,828 $130,783 $131,707 $131,633 
Joint venture partner debt$66,136 $68,831 $66,136 $68,346 
_________________
1.Amounts represent debt excluding net deferred financing costs.

14. Stock-BasedStock-based Compensation

The Company has various stock compensation arrangements, which are more fully described in the 20192020 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 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 an annuala Hudson Pacific Properties, Inc. Outperformance Program (“OPP Plan”) under the 2010 Plan through 2019. With respect toCommencing with the 2017 OPP Plan, awards granted through 2016, 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 vest in equal annual installments over the two years thereafter,be subject to the participant’s continued employment.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. Commencing with the 2017 OPP Plan, the two-year post-performance vesting period was replaced with a two-year mandatory holding period upon vesting.

Beginning in 2020, the Compensation Committee adopted an annual Hudson Pacific Properties, Inc. Performance Stock Unit Plan (“PSU Plan”). Effective January 1, 2020,Under the PSU Plan, the Compensation Committee awarded to certain employeesawards restricted stock units or performance units in the operating partnership (“2020 PSU Plan”). The 2020to certain employees. PSU Plan grant consistsgrants consist of two portions. A portion of each performance unit award, the Relative TSRTotal Shareholder Return (“TSR”) Performance Unit, is eligible to vest based on the achievement of the Company’s total shareholder returnTSR compared to the total shareholder returnTSR of the SNL U.S. REIT Office Index over a three-year performance period, beginning January 1, 2020 and ending December 31, 2022, with the vesting percentage subject to certain percentage targets. The remaining portion of each Performance Unit award, the Operational Performance Unit, generally isbecomes eligible to vest based on the achievement of operational performance metrics over a one-year performance period beginning January 1, 2020 and ending December 31, 2020vests 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.
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and will vest over three years. The number of Operational Performance Units that become eligible to vest based on the achievement of operational performance metrics may be adjusted based on the Company’s achievement of absolute total shareholder return goals over the three-year performance period commencing January 1, 2020 and ending December 31, 2022, by applying the applicable vesting percentages.

The following table presents the classification and amount recognized for stock-based compensation related to the Company’s awards:
Three Months Ended September 30,Nine Months Ended September 30,
2020201920202019
Expensed stock compensation(1)
$4,791 $5,176 $14,409 $15,393 
Capitalized stock compensation(2)
751 28 2,317 92 
TOTAL STOCK COMPENSATION(3)
$5,542 $5,204 $16,726 $15,485 

Three Months Ended March 31,
20212020
Expensed stock compensation(1)
$3,538 $4,895 
Capitalized stock compensation(2)
879 985 
TOTAL STOCK COMPENSATION(3)
$4,417 $5,880 
_________________
1.Amounts are recorded in general and administrative expenses and studio operating expenses inon the Consolidated Statements of Operations.
2.Amounts are recorded in deferred leasing costs and lease intangible assets, net and investment in real estate, at cost inon the Consolidated Balance Sheets.
3.Amounts are recorded in additional paid-in capital and non-controlling interest—units in the operating partnership inon 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. The Company calculates diluted earnings per share by dividing the diluted net income available to common stockholders for the period by the weighted average number of common shares and dilutive instruments outstanding during the period using the treasury stock method or the if-converted method, whichever is more dilutive. 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 months ended March 31, 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.

The following table reconciles the numerator and denominator in computing the Company’s basic and diluted earnings per share for net (loss) income available to common stockholders:
Three Months Ended September 30,Nine Months Ended September 30,
2020201920202019
Numerator:
Basic net (loss) income available to common stockholders$(5,436)$58,755 $8,859 $29,768 
Effect of dilutive instruments0 460 92 225 
Diluted net (loss) income available to common stockholders$(5,436)$59,215 $8,951 $29,993 
Denominator:
Basic weighted average common shares outstanding153,196,007 154,414,452 153,643,278 154,398,466 
Effect of dilutive instruments(1)
0 2,084,467 2,387,537 2,001,609 
DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING153,196,007 156,498,919 156,030,815 156,400,075 
Basic (loss) earnings per common share$(0.04)$0.38 $0.06 $0.19 
Diluted (loss) earnings per common share$(0.04)$0.38 $0.06 $0.19 

Three Months Ended March 31,
20212020
Numerator:
Basic net income available to common stockholders$4,982 $10,777 
Effect of dilutive instruments0 108 
Diluted net income available to common stockholders$4,982 $10,885 
Denominator:
Basic weighted average common shares outstanding150,823,605 154,432,602 
Effect of dilutive instruments(1)
317,474 3,677,310 
DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING151,141,079 158,109,912 
Basic earnings per common share$0.03 $0.07 
Diluted earnings per common share$0.03 $0.07 
________________
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 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-
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Notes to Unaudited Consolidated Financial Statements
(Unaudited, tabular amounts in thousands, except square footage, share and unit data)
Hudson Pacific Properties, L.P.

The operating partnership calculates basic earnings per unit by dividing the net income available to common unitholders for the period by the weighted average number of common units outstanding during the period. The operating partnership calculates diluted earnings per unit by dividing the diluted net income available to common unitholders for the period by the weighted average number of common units and dilutive instruments outstanding during the period using the treasury stock method or the if-converted method, whichever is more dilutive. Unvested time-based restricted stock awards, unvested time-based performance unit awards and unvested RSUs that contain non-forfeitableforfeitable 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 months ended March 31, 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 (loss) income available to common unitholders:
Three Months Ended September 30,Nine Months Ended September 30,
2020201920202019
Numerator:
Basic and diluted net (loss) income available to common unitholders$(5,642)$59,029 $8,489 $29,899 
Denominator:
Basic weighted average common units outstanding154,107,865 155,135,225 154,555,136 155,077,381 
Effect of dilutive instruments(1)
0 875,343 867,000 834,343 
DILUTED WEIGHTED AVERAGE COMMON UNITS OUTSTANDING154,107,865 156,010,568 155,422,136 155,911,724 
Basic (loss) earnings per common unit$(0.04)$0.38 $0.05 $0.19 
Diluted (loss) earnings per common unit$(0.04)$0.38 $0.05 $0.19 

Three Months Ended March 31,
20212020
Numerator:
Basic and diluted net income available to common unitholders$5,032 $10,840 
Denominator:
Basic weighted average common units outstanding152,186,394 155,344,460 
Effect of dilutive instruments(1)
317,474 2,156,773 
DILUTED WEIGHTED AVERAGE COMMON UNITS OUTSTANDING152,503,868 157,501,233 
Basic earnings per common unit$0.03 $0.07 
Diluted earnings per common unit$0.03 $0.07 
________________
1.The operating partnership includes unvested awards as contingently issuable units in the computation of diluted earnings per unit once the market 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.

16. Redeemable Non-ControllingNon-controlling Interest

Redeemable Preferred Units of the Operating Partnership

As of September 30, 2020March 31, 2021 and December 31, 2019,2020, there were 392,598 series A preferred units of partnership interest in the operating partnership or (“series A preferred units,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 and becameunit. 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-ControllingNon-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 (“HPP-MAC JV”).LLC. On August 31, 2018, Macerich contributed Westside Pavilion to the HPP-MAC JV.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. The put right is not currently redeemable. Therefore, the non-controlling interest related to this joint venture is included as temporary equity. Once the redemptionThe put right is probable, the carrying amount will be marked to market with the change in value reflected in additional paid-in capital.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.
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value, which is a redemption right that is not solely within the control of the Company. The put right is not currently redeemable. Therefore, the non-controlling interest related to this joint venture is included as temporary equity. Once the redemption is probable, the carrying amount will be marked to market with the change in value reflected in additional paid-in capital.

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

Three Months Ended September 30, 2020Nine Months Ended September 30, 2020Three Months Ended March 31, 2021
Series A Redeemable Preferred UnitsConsolidated EntitiesSeries A Redeemable Preferred UnitsConsolidated EntitiesSeries A Redeemable Preferred UnitsConsolidated Real Estate Entities
BEGINNING OF PERIODBEGINNING OF PERIOD$9,815 $126,400 $9,815 $125,260 BEGINNING OF PERIOD$9,815 $127,874 
ContributionsContributions0 1,800 0 4,351 Contributions0 1,469 
Distributions0 0 0 (8)
Declared dividendDeclared dividend(153)0 (459)0 Declared dividend(153)0 
Net income (loss)Net income (loss)153 (1,304)459 (2,707)Net income (loss)153 (682)
END OF PERIODEND OF PERIOD$9,815 $126,896 $9,815 $126,896 END OF PERIOD$9,815 $128,661 

17. Equity

The table below presents the activity related to Hudson Pacific Properties, Inc.’s accumulated other comprehensive (loss) incomeloss (“OCI”):
Derivative InstrumentsCurrency Translation AdjustmentsTotal Equity
BALANCE AT DECEMBER 31, 2019$(2,391)$1,830 $(561)
Unrealized losses recognized in OCI(14,155)(1,639)(15,794)
Reclassification adjustment for realized gains(1)
3,560 0 3,560 
Net change in OCI(10,595)(1,639)(12,234)
BALANCE AT SEPTEMBER 30, 2020$(12,986)$191 $(12,795)

Derivative InstrumentsCurrency Translation AdjustmentsTotal Equity
BALANCE AT DECEMBER 31, 2020$(11,378)$3,245 $(8,133)
Unrealized gains recognized in OCI24 996 1,020 
Reclassification adjustment for realized gains(1)
1,786 0 1,786 
Net change in OCI1,810 996 2,806 
BALANCE AT MARCH 31, 2021$(9,568)$4,241 $(5,327)
_____________
1.The gains and losses on the Company’s derivative instruments classified as hedges are reported in the interest expense line item on the Consolidated Statements of Operations. Interest expense was $86.8 million for the nine months ended September 30, 2020.

The table below presents the activity related to Hudson Pacific Properties, L.P.’s OCI:
Derivative InstrumentsCurrency Translation AdjustmentsTotal Capital
BALANCE AT DECEMBER 31, 2019$(2,458)$1,845 $(613)
Unrealized losses recognized in OCI(14,306)(1,651)(15,957)
Reclassification adjustment for realized gains(1)
3,598 0 3,598 
Net change in OCI(10,708)(1,651)(12,359)
BALANCE AT SEPTEMBER 30, 2020$(13,166)$194 $(12,972)

Derivative InstrumentsCurrency Translation AdjustmentsTotal Capital
BALANCE AT DECEMBER 31, 2020$(11,485)$3,239 $(8,246)
Unrealized gains recognized in OCI24 1,009 1,033 
Reclassification adjustment for realized gains(1)
1,811 0 1,811 
Net change in OCI1,835 1,009 2,844 
BALANCE AT MARCH 31, 2021$(9,650)$4,248 $(5,402)
_____________
1.The gains and losses on the operating partnership’s derivative instruments classified as hedges are reported in the interest expense line item on the Consolidated Statements of Operations. Interest expense was $86.8 million for the nine months ended September 30, 2020.

Non-ControllingNon-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.
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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 per unit value equal to the then-current market value of one share of common stock. However, in lieu of such payment of cash, Hudson Pacific Properties, Inc. 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 (on a per unit basis) with the capital accounts of common unitholders. OnceSubject to any agreed upon exceptions, once vested and having achieved parity with common unitholders, performance units generally are convertible into common units in the operating partnership on a 1-for-one basis.

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:
September 30, 2020December 31, 2019
Company-owned common units in the operating partnership152,143,492 154,691,052 
Company’s ownership interest percentage99.4 %99.4 %
Non-controlling units in the operating partnership(1)
911,858 911,858 
Non-controlling ownership interest percentage0.6 %0.6 %

_________________ 
March 31, 2021December 31, 2020
Company-owned common units in the operating partnership150,760,631 151,401,365 
Company’s ownership interest percentage99.1 %99.1 %
Non-controlling units in the operating partnership(1)
1,381,624 1,321,083 
Non-controlling ownership interest percentage0.9 %0.9 %
_________________ 
1.Represents common units held by certain of the Company’s executive officers, directors and outside investors. As of September 30,March 31, 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 360,889, respectively. As of December 31, 2019, this amount represents both common units and performance units in the amount of 550,969 and 360,889,770,114, respectively.

Common Stock Activity

The Company has not completed any common stock offerings in 2020.during the three months ended March 31, 2021.

The Company’s at-the-market (“ATM”) program permits sales of up to $125.0 million of common stock. The Company did not utilize the ATM program during the ninethree months ended September 30, 2020.March 31, 2021. A cumulative total of $20.1 million has been sold as of September 30, 2020.March 31, 2021.

Share Repurchase Program

The Company is authorized to repurchase up to a total $250.0 million shares of its common stock up to a total of $250.0 million under its share repurchase program. During the ninethree months ended September 30, 2020,March 31, 2021, the Company repurchased $61.9$14.7 million shares of its common stock.stock, before transaction costs. Since commencement of the program, a cumulative total of $111.9$144.9 million hashad 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 declared dividends on a quarterly basis and the Company paid the dividends during the quarters in which the dividends were declared. The following table summarizes dividends declared and paid for the periods presented:
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Three Months Ended September 30,Nine Months Ended September 30,
2020201920202019
Common stock$0.25 $0.25 $0.75 $0.75 
Common units$0.25 $0.25 $0.75 $0.75 
Series A preferred units$0.3906 $0.3906 $1.1718 $1.1718 
Performance units$0.25 $0.25 $0.75 $0.75 
Payment dateSeptember 28, 2020September 30, 2019N/AN/A
Record dateSeptember 18, 2020September 20, 2019N/AN/A
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 March 31,
20212020
Common stock$0.25 $0.25 
Common units$0.25 $0.25 
Series A preferred units$0.3906 $0.3906 
Performance units$0.25 $0.25 
Payment dateMarch 29, 2021March 30, 2020
Record dateMarch 19, 2021March 20, 2020

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.

18. Segment Reporting

The Company’s reporting segments are based on the Company’s method of internal reporting, which classifies its operations into 2 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 itsthe 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,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 September 30,Nine Months Ended September 30,
2020201920202019
Office segment
Office revenues$180,716 $185,359 $551,451 $539,989 
Office expenses(66,075)(66,969)(194,546)(188,680)
Office segment profit114,641 118,390 356,905 351,309 
Studio segment
Studio revenues15,569 22,203 49,671 61,343 
Studio expenses(9,034)(11,440)(27,635)(32,088)
Studio segment profit6,535 10,763 22,036 29,255 
TOTAL SEGMENT PROFIT$121,176 $129,153 $378,941 $380,564 
Segment revenues$196,285 $207,562 $601,122 $601,332 
Segment expenses(75,109)(78,409)(222,181)(220,768)
TOTAL SEGMENT PROFIT$121,176 $129,153 $378,941 $380,564 

Three Months Ended March 31,
20212020
Office segment
Office revenues$192,143 $186,427 
Office expenses(66,562)(63,860)
Office segment profit125,581 122,567 
Studio segment
Studio revenues20,976 19,800 
Studio expenses(11,453)(10,650)
Studio segment profit9,523 9,150 
TOTAL SEGMENT PROFIT$135,104 $131,717 
Segment revenues$213,119 $206,227 
Segment expenses(78,015)(74,510)
TOTAL SEGMENT PROFIT$135,104 $131,717 

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

Three Months Ended September 30,Nine Months Ended September 30,Three Months Ended March 31
202020192020201920212020
NET (LOSS) INCOME$(1,362)$62,955 $19,598 $38,883 
NET INCOMENET INCOME$11,411 $13,949 
General and administrativeGeneral and administrative17,428 17,661 53,943 54,099 General and administrative18,449 18,618 
Depreciation and amortizationDepreciation and amortization75,052 69,781 222,331 207,892 Depreciation and amortization82,761 73,763 
Loss (income) from unconsolidated real estate entity105 260 (69)345 
(Income) loss from unconsolidated real estate entities(Income) loss from unconsolidated real estate entities(635)236 
Fee incomeFee income(575)(656)(1,741)(931)Fee income(848)(610)
Interest expenseInterest expense32,492 26,590 86,839 77,492 Interest expense30,286 26,417 
Interest incomeInterest income(1,056)(1,002)(3,129)(3,034)Interest income(997)(1,025)
Transaction-related expensesTransaction-related expenses181 331 440 459 Transaction-related expenses0 102 
Unrealized (gain) loss on non-real estate investment(513)0 2,335 0 
Unrealized (gain) loss on non-real estate investmentsUnrealized (gain) loss on non-real estate investments(5,775)581 
Gain on sale of real estate0 (47,100)0 (47,100)
Impairment loss0 0 0 52,201 
Other (income) loss(576)333 (1,606)258 
Other expense (income)Other expense (income)452 (314)
TOTAL PROFIT FROM ALL SEGMENTSTOTAL PROFIT FROM ALL SEGMENTS$121,176 $129,153 $378,941 $380,564 TOTAL PROFIT FROM ALL SEGMENTS$135,104 $131,717 

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.

Hollywood Media Portfolio debt

On July 30, 2020, funds affiliated with Blackstone acquired a 49% interest in the Hollywood Media Portfolio. The Company retained a 51% ownership stake and remains responsible for day-to-day operations, leasing and development. In conjunction with closing this transaction, the joint venture closed a $900.0 million mortgage loan secured by the Hollywood Media Portfolio. The Company and Blackstone purchased bonds comprising the loan in the amounts of $107.8 million and $12.5 million, respectively.

20. Commitments and Contingencies

The Company invests in a real estate technology venture capital fund with a commitment to contribute up to $20.0 million. As of March 31, 2021, the Company has contributed $6.1 million to this fund, net of distributions, with $13.9 million remaining to be contributed. The Company also invests in a supportive housing venture capital fund with a commitment to contribute up to $3.0 million. As of March 31, 2021, the Company has contributed $0.2 million to this fund, with $2.8 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 September 30, 2020,March 31, 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 September 30, 2020,March 31, 2021, the Company hashad outstanding letters of credit totaling approximately $3.4 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 March 31, 2021, the Company had $192.7 million in outstanding obligations under the agreements.

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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)
21. Supplemental Cash Flow Information

Supplemental cash flow information for Hudson Pacific Properties, Inc. is included as follows:
Nine Months Ended September 30,
20202019
Cash paid for interest, net of capitalized interest$65,908 $51,276 
Non-cash investing and financing activities
Accounts payable and accrued liabilities for real estate investments$(132,836)$89,147 
Accrued liability for common stock repurchases settled after quarter-end$(8,468)$0 

Three Months Ended March 31,
20212020
Cash paid for interest, net of capitalized interest$17,443 $38,126 
Non-cash investing and financing activities
Accounts payable and accrued liabilities for real estate investments$(140,709)$(142,919)

Supplemental cash flow information for Hudson Pacific Properties, L.P. is included as follows:
Nine Months Ended September 30,
20202019
Cash paid for interest, net of capitalized interest$65,908 $51,276 
Non-cash investing and financing activities
Accounts payable and accrued liabilities for real estate investments$(132,836)$89,147 
Accrued liability for common unit repurchases settled after quarter-end$(8,468)$0 

Three Months Ended March 31,
20212020
Cash paid for interest, net of capitalized interest$17,443 $38,126 
Non-cash investing and financing activities
Accounts payable and accrued liabilities for real estate investments$(140,709)$(142,919)

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:
Nine Months Ended September 30,
20202019
BEGINNING OF PERIOD
Cash and cash equivalents$46,224 $53,740 
Restricted cash12,034 14,451 
TOTAL$58,258 $68,191 
END OF PERIOD
Cash and cash equivalents$365,294 $56,777 
Restricted cash38,979 12,562 
TOTAL$404,273 $69,339 

Three Months Ended March 31,
20212020
BEGINNING OF PERIOD
Cash and cash equivalents$113,686 $46,224 
Restricted cash35,854 12,034 
TOTAL$149,540 $58,258 
END OF PERIOD
Cash and cash equivalents$134,278 $392,136 
Restricted cash35,055 11,982 
TOTAL$169,333 $404,118 

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.:
Nine Months Ended September 30,
20202019
BEGINNING OF PERIOD
Cash and cash equivalents$46,224 $53,740 
Restricted cash12,034 14,451 
TOTAL$58,258 $68,191 
END OF PERIOD
Cash and cash equivalents$365,294 $56,777 
Restricted cash38,979 12,562 
TOTAL$404,273 $69,339 

Three Months Ended March 31,
20212020
BEGINNING OF PERIOD
Cash and cash equivalents$113,686 $46,224 
Restricted cash35,854 12,034 
TOTAL$149,540 $58,258 
END OF PERIOD
Cash and cash equivalents$134,278 $392,136 
Restricted cash35,055 11,982 
TOTAL$169,333 $404,118 


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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 forward-looking statements, 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 referreferred to in the forward-looking statements, sectionsee Part II, Item 1A “Risk Factors.” In light of these risks, uncertainties and assumptions, the forward-looking events discussed in this Item 2.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;
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•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;

•the impact of changes in the tax laws as a result of recent federal tax reform legislation and uncertainty as to how some of 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.

Additionally,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

The following discussion is intended to provide stockholders with certain information regarding the impact of the COVID-19 pandemic on our business and management’s efforts to respond to that impact. Unless otherwise specified, the statistical and other information regarding our portfolio and tenants are estimates based on information available to us as of October 29, 2020.May 3, 2021. As a result of the continued uncertainty surrounding this situation, we expect that such statistical and other information will change, potentially significantly, going forward and may not be indicative of the actual impact of the COVID-19 pandemic on our business, operations, cash flows and financial condition for the fourthfirst quarter of 20202021 and future periods.

We continue to closely monitor the impact of the COVID-19 pandemic on all aspects of our business and geographies, including how it will impact our tenants and business partners. While we did not incur significant disruptions during the three months ended September 30, 2020March 31, 2021 from the COVID-19 pandemic, we are unable to predict the impact that the COVID-19 pandemic will have on our financial condition, results of operations and cash flows due to numerous uncertainties. These uncertainties include 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 containment measures, among others. TheDuring 2020, the spread of COVID-19 is havinghad 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. In 2021, the economy has, with certain setbacks, begun reopening and wider distribution of vaccines will likely encourage greater economic activity. Nonetheless, the recovery could remain uneven. The commercial real estate market has comecame 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. These containment measures, which generally dodid not apply to businesses designated as “essential,” are affectingaffected the operations of different categories of our tenancy to varying degrees with, for example, “essential businesses” generally permitted to remain open and operational, storefront retail and restaurants generally limited to take-out and delivery services only, and non-essential businesses generally forced to temporarily close, curtail operations and/or implement work-from-home strategies. There isWhile reopening has begun, uncertainty remains as to the time, date and extent to which these restrictions will be relaxed or lifted, businesses of tenants that have temporarily been disrupted, either
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voluntarily or by mandate, will resume normal operations or when customers will re-engage with tenants as they have in the past. As a result, the COVID-19 pandemic ishas negatively impactingimpacted almost every industry directly or indirectly, including industries in which we and our tenants operate. Further, although a recovery is partially underway, it continues to be gradual, uneven and characterized by meaningful dispersion across sectors and regions, and could be hindered by persistent or resurgent infection rates. The most recent round of U.S. fiscal stimulus could provide meaningful support, along with continued accommodative monetary policy and wider distribution of vaccines. Issues with respect to the impactsdistribution and acceptance of a potential worseningvaccines or the spread of globalnew variants of the virus could adversely impact the recovery. Overall, among other unanticipated consequences, there remains significant uncertainty regarding the timing and duration of the economic conditions andrecovery, the continued disruptions to, and volatility in, the credit and financial markets and in consumer spending as well as other unanticipated consequences remain unknown.
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spending.

We specialize in the ownership and management of office and studio properties on the west coast of the United States and in Vancouver, B.C.,Canada, and our portfolio and tenants have been impacted by these and other factors as follows:

•We collected approximately 97%98% of our thirdfirst quarter combined contractual rents, comprised of approximately 98%99% from office tenants, 100% from studio tenants and 52%54% from storefront retail tenants. As of October 29, 2020,May 3, 2021, we have collected 94%98% of our OctoberApril combined contractual rents, comprised of approximately 96%99% from office tenants, 98%99% from studio tenants and 51%66% from storefront retail tenants. We have implemented a rent relief program for the preponderance of the uncollected rents, and the aforementioned collection percentages exclude rents deferred or abated in accordance with COVID-related lease amendments.

We continue to take several proactive measures to maintain the strength of our business and manage the impact of COVID-19 on our operations and liquidity, including the following:

•Along with our tenants and the communities we serve, the health and safety of our employees and their families is a top priority. We are closely monitoring and conforming our operations in accordance with policies and guidelines set forth by public health agencies and state and local governments. All office and studio properties remain open and operational to enable essential business tenants to continue to operate with enhanced cleaning, communications and safety protocols. In May 2020, we launched our “4Cs” approach to tenant repopulation in conjunction with the easing of stay-at-home orders across our markets. The program, which we developed in consultation with large tenants, local governments, and internal and external subject matter experts, emphasizes proactive communication through multiple channels, seeks to instill confidence in tenants with safety focusedsafety-focused cleaning and operating procedures, ensures convenience with an emphasis on efficient access, and encourages cooperation by asking all tenants to do their part. Similarly, in early June 2020, we shifted from a policy encouraging all non-location essential employees to work remotely, and began bringing our employees back to the office with enhanced health and safety protocols, and in staggered shifts to provide for adequate physical distancing at any given time. After Labor Day,In September 2020, we successfully returned 100% of our workforce to our offices in rotating shifts.shifts, adjusting as needed during periods of increased infection rates in the areas in which our offices are located.

•We are in frequent communication with our tenants and are assisting tenants in identifying local, state and federal resources that may be available to support their businesses and employees during the pandemic, including stimulus funds that may be available under various federal and state relief funds, such as the CARES Act and the Paycheck Protection Program.

•As of September 30, 2020,March 31, 2021, we had approximately $365.3$134.3 million in cash and cash equivalents. We have $600.0 million of undrawn capacity under our unsecured revolving credit facility and $339.5$255.6 million of undrawn capacity under our stand-alone loan for One Westside, which fully funds the cost of that project.

•We do not have any secured or unsecured debt maturing until 2022.

•We have taken proactive measures to manage costs, including by taking advantage of rent relief in connection with our existing ground lease obligations and reducing services provided by third party vendors.

Given the uncertainty of the COVID-19 pandemic’s nearnear- 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 operate our business in a manner that will allow us to qualify as a REIT for U.S. federal income tax requirements.purposes. We derive revenues
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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 impactscontinues 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. While the extent of the outbreak and its impact on us, our tenants and the markets in which we operate is uncertain, a prolonged crisis could result in continued disruptions in the credit and financial markets, a continued rise in unemployment rates, decreases in consumer confidence and consumer spending levels and an overall worsening of global and U.S. economic conditions. 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
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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 and nine months ended September 30, 2020March 31, 2021 to future periods may be significantly impacted by the effects of the COVID-19 pandemic. The impact of the COVID-19 pandemic on our rental revenue for the third quarter of 2020 and thereafter cannot, however, be determined at present. 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 September 30, 2020,March 31, 2021, our office portfolio consisted of approximately 14.915.6 million square feet of in-service, repositioning, redevelopment and development properties. Additionally, as of September 30, 2020,March 31, 2021, our studio portfolio consisted of 1.2 million square feet of in-service properties and our land portfolio consisted of 2.73.2 million developable square feet. Our consolidated and unconsolidated portfolio consists of 6264 properties (41 wholly-owned properties, 1415 properties owned by joint ventures and seveneight land properties) located in teneleven California submarkets, three Seattle submarkets, and one Western Canada submarket, totaling approximately 18.820.0 million square feet.

As of September 30, 2020,March 31, 2021, our in-service office portfolio was 93.5%91.7% leased (including leases not yet commenced). Our same-store studio properties were 91.3%89.6% leased for the average percent leased for the 12 months ended September 30, 2020.March 31, 2021.

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The following table summarizes our portfolio as of September 30, 2020:March 31, 2021:
In-Service PortfolioNumber of Properties
Rentable Square Feet(1)
Percent Occupied(2)
Percent Leased(3)
Annualized Base Rent per Square Foot(4)
Office
Same-store(5)
4111,781,35893.6 %94.4 %$48.95 
Non-same store(6)
51,128,00494.0 95.4 53.89 
Total stabilized4612,909,36293.6 94.5 49.38 
Lease-up(6)(7)
3955,67979.2 79.2 58.18 
Total in-service4913,865,04192.6 93.5 49.90 
Repositioning(6)
—202,441— — — 
Redevelopment(6)
2697,000— 83.8 — 
Development(6)
1106,125— — — 
Total office5214,870,607
Studio
Same-store(8)
31,224,40391.3 40.95 
Total studio31,224,403
Total office and studio properties5516,095,010
Land72,736,825(9)
TOTAL6218,831,835

In-Service PortfolioNumber of Properties
Rentable Square Feet(1)
Percent Occupied(2)
Percent Leased(2)
Annualized Base Rent per Square Foot(3)
Office
Same-store(4)
4412,628,00291.8 %92.3 %$50.25 
Non-same store(5)
3943,95497.0 97.5 38.78 
Total stabilized4713,571,95692.2 92.7 49.41 
Lease-up(5)(6)
2919,77577.9 77.9 59.82 
Total in-service4914,491,73191.3 91.7 49.97 
Repositioning(5)(7)
1264,348— — — 
Redevelopment(5)
2697,000— 83.8 — 
Development(6)
1129,931— 54.1 — 
Total office5315,583,010
Studio
Same-store(8)
31,224,40389.6 40.48 
Total studio31,224,403
Total office and studio properties5616,807,413
Land(9)
83,187,261
TOTAL6419,994,674
____________
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.CalculatedPercent occupied for office properties is calculated as (i) square footage under commenced leases as of September 30, 2020,March 31, 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 March 31, 2021, divided by (ii) total square feet, expressed as a percentage.
3.Office portfolioAnnualized base rent per square foot for office properties is calculated as (i) square footage under commenced and uncommenced leases as of September 30, 2020, divided by (ii) total square feet, expressed as a percentage. Studio portfolio is calculated as (i) average square footage under commenced and uncommenced leases for the 12 months ended September 30, 2020, divided by (ii) total square feet, expressed as a percentage. Uncommenced leases is defined as new leases with respect to vacant space executed on or prior to September 30, 2020, but with commencement dates after September 30, 2020.
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4.Calculated as (i) annualized base rent divided by (ii) square footage under commenced leases as of September 30, 2020.March 31, 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 March 31, 2021.
5.4.Includes office properties owned and included in our stabilized portfolio as of JulyJanuary 1, 20192020 and still owned and included in the stabilized portfolio as of September 30, 2020.March 31, 2021.
6.5.Included in our non-same-store property group.
7.6.Includes office properties that have not yet reached 92.0% occupancy since the date they were acquired or placed under redevelopment or development as of March 31, 2021.
7.September 30, 2020.Includes 79,056 square feet at Page Mill Center, 61,066 square feet at Metro Plaza, 51,417 square feet at 10850 Pico and 36,905 square feet at Rincon Center. 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 January 1, 2019 2020 and still owned and included in our portfolio as of September 30, 2020.March 31, 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 ninethree months ended September 30, 2020.March 31, 2021.

Dispositions

We had no dispositions during the ninethree months ended September 30, 2020.March 31, 2021.

Held for Sale

We had no properties classified as held for sale as of September 30, 2020.March 31, 2021.

Studio Joint Venture
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On July 30, 2020, funds affiliated with Blackstone acquired a 49% interest in our Hollywood Media Portfolio, a 2.2 million-square-foot collection of studio and office properties with a gross portfolio valuation of $1.65 billion, before closing credits, prorations and costs. The transaction included Sunset Gower, Sunset Bronson and Sunset Las Palmas Studios, as well as 6040 Sunset, ICON, CUE, EPIC and Harlow, along with 1.1 million square feet of development rights associated with Sunset Gower and Sunset Las Palmas Studios. We retained a 51% ownership stake and remain responsible for day-to-day operations, leasing and development, and the joint venture will look to partner on studio acquisitions in Los Angeles and other key markets.

In conjunction with closing the transaction, the joint venture closed a $900.0 million mortgage loan secured by the 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. With an initial interest rate of LIBOR plus 2.15% per annum, it bears interest only payable every month during the term of the loan with principal payable at maturity. The loan is non-recourse, except as to customary non-recourse carveout guaranties from us and the Blackstone affiliate.

The combined proceeds from the sale of the 49% interest in the Hollywood Media Portfolio and our share of asset-level financing was approximately $1.27 billion before closing credits, prorations and costs. We used approximately $849.5 million to repay all outstanding amounts under our revolving credit facilities, Met Park North loan and Term loans B and D, which are due second and fourth quarter 2022, respectively. The remainder will be available for potential future investments and/or share repurchases, and general corporate purposes.

Under Construction and Future Development Projects

The following table summarizes the properties currently under construction and future development projects as of September 30, 2020:March 31, 2021:
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LocationSubmarket
Estimated Square Feet(1)
Estimated Completion DateEstimated Stabilization Date
Under Construction:
Harlow(2)
Hollywood106,125 Q3-2020Q4-2022
One Westside(3)(2)
West Los Angeles584,000 Q1-2022Q2-2023
Total Under Construction690,125584,000 
Future Development Pipeline:
Washington 1000Denny Triangle538,164 TBDTBD
Bentall Centre—Development(4)(3)
Downtown Vancouver450,000 TBDTBD
Element LA—DevelopmentWest Los Angeles500,000 TBDTBD
Sunset LA—Development(4)
Los Angeles232,855 TBDTBD
Sunset Bronson Studios Lot D—Development(2)(5)
Hollywood19,816 TBDTBD
Sunset Gower Studios—Development(2)(5)(6)
Hollywood478,845 TBDTBD
Sunset Las Palmas Studios—Development(2)(5)
Hollywood400,000617,581 TBDTBD
Cloud10North San Jose350,000 TBDTBD
Total Future Development Pipeline2,736,8253,187,261 
TOTAL UNDER CONSTRUCTION AND FUTURE DEVELOPMENT3,426,9503,771,261 
_____________
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 have a 51%own 75% of the ownership interest in the consolidated joint venture that owns this property.
3.We have a 75% ownership interest in the consolidated joint venture that owns this property.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.
4.3.We have aown 20% of the ownership interest in the unconsolidated joint venture that owns this property.Bentall Centre.
4.We own 50% of the ownership interest in the unconsolidated joint venture that owns Sunset LA—Development.
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.
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Lease Expirations

The following table summarizes the lease expirations for leases in place as of September 30, 2020,March 31, 2021, plus available space, beginning January 1, 20202021 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
Year of Lease Expiration
Number of
Leases Expiring(1)
Square Footage of Expiring Leases(2)
Square Footage of Expiring Leases(3)
Percent of Office Portfolio Square Feet
Annualized Base Rent(4)
Percentage of Office Portfolio Annualized Base Rent
Annualized Base Rent Per Leased Square Foot(5)
Annualized Base Rent at Expiration
Annualized Base Rent Per Lease Square Foot at Expiration(6)
Vacant1,327,035 1,233,990 10.0 %
202058 289,879 251,430 2.0 $12,860,896 2.2 %$51.15 $13,169,122 $52.38 
2021185 1,543,291 1,373,059 11.1 65,648,529 11.4 47.81 67,152,755 48.91 
2022180 1,527,570 1,351,125 11.0 67,359,916 11.6 49.85 71,692,245 53.06 
2023125 1,845,296 1,427,024 11.7 65,526,466 11.4 45.92 71,450,149 50.07 
2024124 1,798,720 1,601,638 13.0 81,734,010 14.2 51.03 91,436,765 57.09 
202579 1,567,174 1,273,515 10.3 74,296,117 12.8 58.34 84,403,653 66.28 
202635 482,637 423,764 3.4 26,161,395 4.5 61.74 30,982,955 73.11 
202728 606,737 518,661 4.2 29,516,437 5.1 56.91 35,298,289 68.06 
202820 664,804 592,680 4.8 37,704,711 6.5 63.62 46,427,328 78.33 
202917 311,382 217,548 1.8 16,115,737 2.8 74.08 19,884,167 91.40 
Thereafter27 1,997,797 1,348,815 11.0 67,266,443 11.6 49.87 90,881,877 67.38 
Building management use33 180,594 164,717 1.3 — — — — — 
Signed leases not commenced(7)
18 700,700 539,564 4.4 34,071,958 5.9 63.15 49,122,494 91.04 
Portfolio Total/Weighted Average929 14,843,616 12,317,530 100.0 %$578,262,615 100.0 %
$ 52.17(8)
$671,901,799 
$ 60.62(9)

Company’s Share
Year of Lease Expiration
Number of
Leases Expiring(1)
Square Footage of Expiring Leases(2)
Square Footage of Expiring Leases(3)
Percent of Office Portfolio Square Feet
Annualized Base Rent(4)
Percentage of Office Portfolio Annualized Base Rent
Annualized Base Rent Per Leased Square Foot(5)
Annualized Base Rent at Expiration
Annualized Base Rent Per Lease Square Foot at Expiration(6)
Vacant1,634,269 1,542,671 12.1 %
2021143 1,009,585 881,205 6.9 $38,025,196 6.5 %$43.15 $38,577,908 $43.78 
2022192 1,635,752 1,442,144 11.3 73,754,204 12.6 51.14 77,241,235 53.56 
2023129 1,862,776 1,441,761 11.3 67,214,785 11.5 46.62 72,480,422 50.27 
2024129 1,830,459 1,633,249 12.9 85,241,847 14.6 52.19 93,812,364 57.44 
202581 1,591,336 1,291,883 10.3 75,659,031 12.9 58.56 84,951,136 65.76 
202647 690,027 600,363 4.7 36,327,417 6.2 60.51 42,093,544 70.11 
202730 558,447 462,091 3.6 26,831,721 4.6 58.07 31,686,650 68.57 
202825 933,098 850,664 6.7 56,699,563 9.7 66.65 68,860,782 80.95 
202916 311,382 217,548 1.7 16,275,825 2.8 74.81 19,901,523 91.48 
203013 1,259,659 913,472 7.2 41,083,273 7.0 44.97 56,383,634 61.72 
Thereafter20 1,334,459 743,294 5.8 36,072,610 6.2 48.53 50,235,780 67.59 
Building management use(7)
35 184,551 164,267 1.3 — — — — — 
Signed leases not commenced(8)
16 718,406 529,689 4.2 31,384,924 5.4 59.25 46,419,287 87.63 
Portfolio Total/Weighted Average876 15,554,206 12,714,301 100.0 %$584,570,396 100.0 %52.33$682,644,265 61.11
_____________
1.Does not include 3439 month-to-month leases.
2.Total expiring square footage does not include 26,99128,804 square feet of month-to-month leases.
3.Total expiring square footage does not include 16,51917,139 square feet of month-to-month leases.
4.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 September 30, 2020,March 31, 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.
5.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 September 30, 2020.March 31, 2021.
6.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 September 30, 2020.March 31, 2021.
7.Reflects management offices occupied by the Company with various expiration dates.
8.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 September 30, 2020March 31, 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 September 30, 2020,March 31, 2021, divided by (ii) square footage under uncommenced leases as of September 30, 2020.
8.Included as part of the Company’s Share of total expiring square footage is 106,077 square feet of existing leases that have been amended or signed during third quarter 2020 to pay percent rent in lieu of base rent. Excluding the impact of these tenants, the weighted average annualized base rent per square foot is $52.68.
9.Included as part of the Company’s Share of total expiring square footage is 99,079 square feet of existing leases that have been amended or signed during third quarter 2020 to pay percent rent in lieu of base rent. Excluding the impact of these tenants, the weighted average annualized base rent per square foot at expiration is $61.17.

March 31, 2021.

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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 September 30,Nine Months Ended September 30,
2020201920202019
Renewals(1)
Number of leases19 41 64 97 
Square feet(2)
79,454 339,613 251,025 630,337 
Tenant improvement costs per square foot(3)(4)
$2.44 $13.27 $4.19 $12.09 
Leasing commission costs per square foot(3)
3.21 10.53 5.41 9.50 
Total tenant improvement and leasing commission costs(3)
$5.65 $23.80 $9.60 $21.59 
New leases(5)
Number of leases19 30 59 98 
Square feet(2)
105,129 212,108 269,919 1,470,133 
Tenant improvement costs per square foot(3)(4)
$78.93 $49.98 $56.26 $78.57 
Leasing commission costs per square foot(3)
17.17 7.00 10.63 25.54 
Total tenant improvement and leasing commission costs(3)
$96.10 $56.98 $66.89 $104.11 
TOTAL
Number of leases38 71 123 195 
Square feet(2)
184,583 551,721 520,944 2,100,470 
Tenant improvement costs per square foot(3)(4)
$45.59 $28.46 $29.75 $59.45 
Leasing commission costs per square foot(3)
11.08 9.07 7.97 20.93 
TOTAL TENANT IMPROVEMENT AND LEASING COMMISSION COSTS(3)
$56.67 $37.53 $37.72 $80.38 

Three Months Ended March 31,
20212020
Renewals(1)
Number of leases30 16 
Square feet385,446 89,152 
Tenant improvement costs per square foot(2)(3)
$3.49 $8.76 
Leasing commission costs per square foot(2)
11.25 9.18 
Total tenant improvement and leasing commission costs(2)
$14.74 $17.94 
New leases(4)
Number of leases12 32 
Square feet138,907 139,780 
Tenant improvement costs per square foot(2)(3)
$72.68 $37.44 
Leasing commission costs per square foot(2)
20.08 5.35 
Total tenant improvement and leasing commission costs(2)
$92.76 $42.79 
TOTAL
Number of leases42 48 
Square feet524,353 228,932 
Tenant improvement costs per square foot(2)(3)
$22.13 $24.99 
Leasing commission costs per square foot(2)
13.62 7.02 
TOTAL TENANT IMPROVEMENT AND LEASING COMMISSION COSTS(2)
$35.75 $32.01 
_____________
1.Excludes retained tenants that have relocated or expanded into new space within our portfolio.    
2.Third quarter 2020 leasing activity includes 36,837 square feet of short-term extensions (i.e. 12 months or less) in connection with COVID-19 tenant relief.
3.AssumesAssumes 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.
4.3.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.
5.4.Includes retained tenants that have relocated or expanded into new space within our portfolio.

Financings

During the ninethree months ended September 30, 2020, the outstandingMarch 31, 2021, there were no borrowings on the unsecured revolving credit facility decreased by $75.0 million, net of repayments.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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On July 30, 2020, funds affiliated with Blackstone acquired a 49% interest in our Hollywood Media Portfolio. We retained a 51% ownership stake and remain responsible for day-to-day operations, leasing and development. In conjunction with closing this transaction, the joint venture closed a $900.0 million mortgage loan secured by our Hollywood Media Portfolio. The Company and Blackstone purchased bonds comprising the loan in the amounts of $107.8 million and $12.5 million, respectively. This loan has an initial term of two years from the first payment date, with three one-year extension options, subject to certain requirements. With an initial interest rate of LIBOR plus 2.15% per annum, it bears interest only payable every month during the term of the loan with principal payable at maturity. The loan is non-recourse, except as to customary non-recourse carveout guaranties from the Company and Blackstone. The combined proceeds from sale of the 49% interest in the Hollywood Media Portfolio and our share of asset-level financing was approximately $1.27 billion before closing credits, prorations and costs. The proceeds from the sale were used to pay down the outstanding borrowings on our unsecured revolving credit facility and to pay off Term loan B, Term loan D, Met Park North and our Revolving Sunset Bronson Studios/ICON/CUE facility.

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 20192020 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 20192020 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.

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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 September 30, 2020March 31, 2021 to the Three Months Ended September 30, 2019March 31, 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 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.

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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 July 1, 2019 and still owned and included in the stabilized portfolio as of September 30, 2020; 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:
Three Months Ended
September 30,		Dollar ChangePercent Change
20202019
Net (loss) income$(1,362)$62,955 $(64,317)(102.2)%
Adjustments:
Loss from unconsolidated real estate entity105 260 (155)(59.6)
Fee income(575)(656)81 (12.3)
Interest expense32,492 26,590 5,902 22.2 
Interest income(1,056)(1,002)(54)5.4 
Transaction-related expenses181 331 (150)(45.3)
Unrealized gain on non-real estate investment(513)— (513)100.0 
Gain on sale of real estate— (47,100)47,100 (100.0)
Other (income) loss(576)333 909 273.0 
General and administrative17,428 17,661 (233)(1.3)
Depreciation and amortization75,052 69,781 5,271 7.6 
NOI$121,176 $129,153 $(7,977)(6.2)%
Same-store NOI$104,864 $119,004 $(14,140)(11.9)%
Non-same-store NOI16,312 10,149 6,163 60.7 
NOI$121,176 $129,153 $(7,977)(6.2)%

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

Three Months Ended September 30,
20202019
Same-store office(1)
Number of properties4040
Rentable square feet10,294,40110,294,401
Ending % leased93.9 %96.7 %
Ending % occupied93.1 %95.3 %
Average % occupied for the period93.3 %95.6 %
Average annual rental rate per square foot$52.35 $50.90 
Same-store studio
Number of properties33
Rentable square feet1,224,4031,224,403
Average % occupied for the period(2)
91.3 %N/A
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_____________
1.Excludes our unconsolidated joint venture, Bentall Centre.
2.Percent occupied for same-store studio is the average percent occupied for the 12 months ended. Trailing 12-month occupancy is not applicable for 11,600 square feet at 6660 Santa Monica Boulevard during the three months ended September 30, 2019 as the property was acquired in fourth quarter 2018.


The following table gives further detail on our NOI:
Three Months Ended September 30,
20202019
Same-StoreNon-Same-StoreTotalSame-StoreNon-Same-StoreTotal
Revenues
Office
Rental$151,732 $26,524 $178,256 $158,155 $21,042 $179,197 
Service and other revenues2,156 304 2,460 5,809 353 6,162 
Total office revenues153,888 26,828 180,716 163,964 21,395 185,359 
Studio
Rental11,724 — 11,724 11,086 — 11,086 
Service and other revenues3,845 — 3,845 11,117 — 11,117 
Total studio revenues15,569 — 15,569 22,203 — 22,203 
Total revenues169,457 26,828 196,285 186,167 21,395 207,562 
Operating expenses
Office operating expenses55,559 10,516 66,075 55,723 11,246 66,969 
Studio operating expenses9,034 — 9,034 11,440 — 11,440 
Total operating expenses64,593 10,516 75,109 67,163 11,246 78,409 
Office NOI98,329 16,312 114,641 108,241 10,149 118,390 
Studio NOI6,535 — 6,535 10,763 — 10,763 
NOI$104,864 $16,312 $121,176 $119,004 $10,149 $129,153 





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The following table gives further detail on our change in NOI:
Three Months Ended September 30, 2020 as compared to
Three Months Ended September 30, 2019
Same-StoreNon-Same-StoreTotal
Dollar ChangePercent ChangeDollar ChangePercent ChangeDollar ChangePercent Change
Revenues
Office
Rental$(6,423)(4.1)%$5,482 26.1 %$(941)(0.5)%
Service and other revenues(3,653)(62.9)(49)(13.9)(3,702)(60.1)
Total office revenues(10,076)(6.1)5,433 25.4 (4,643)(2.5)
Studio
Rental638 5.8 — — 638 5.8 
Service and other revenues(7,272)(65.4)— — (7,272)(65.4)
Total studio revenues(6,634)(29.9)— — (6,634)(29.9)
Total revenues(16,710)(9.0)5,433 25.4 (11,277)(5.4)
Operating expenses
Office operating expenses(164)(0.3)(730)(6.5)(894)(1.3)
Studio operating expenses(2,406)(21.0)— — (2,406)(21.0)
Total operating expenses(2,570)(3.8)(730)(6.5)(3,300)(4.2)
Office NOI(9,912)(9.2)6,163 60.7 (3,749)(3.2)
Studio NOI(4,228)(39.3)— — (4,228)(39.3)
NOI$(14,140)(11.9)%$6,163 60.7 %$(7,977)(6.2)%

NOI decreased $8.0 million, or 6.2%, for the three months ended September 30, 2020 as compared to the three months ended September 30, 2019, primarily resulting from:

•$14.1 million decrease in NOI from our same-store properties driven by:
•a decrease in office NOI of $9.9 million primarily due to:
•$6.4 million decrease in rental revenues primarily related to:
•lease expirations and vacancies at our 6922 Hollywood property;
•vacancies at our Rincon Center property due to the commencement of a repositioning project; and
•increase in straight-line rent bad debt expense at our 625 Second Street and Maxwell properties due to a modified rental agreement;
•$3.7 million decrease in service and other revenues primarily related to a decrease in parking and other revenue at our Rincon Center, 6922 Hollywood, Ferry Building, ICON, 1455 Market and 6040 Sunset properties due to reduced activity during the COVID-19 pandemic.
•a decrease in studio NOI of $4.2 million primarily due to:
•$7.3 million decrease in service and other revenues primarily resulting from reduced filming activity at our studio properties related to the COVID-19 pandemic; and
•partially offset by $2.4 million decrease in operating expenses primarily related to lower parking, utilities, cleaning and lighting rental expense also due to reduced filming activity at our studio properties related to COVID.
•$6.2 million increase in NOI from our non-same-store properties driven by:
•overall increase in office NOI of $6.2 million primarily due to:
•$5.5 million increase in rental revenues primarily relating to commencement of leases at our EPIC (Netflix, Inc.), Fourth & Traction (Honey Science Corporation), Metro Center (various tenants) and 333 Twin Dolphin (various tenants) properties, partially offset by vacancies at our Del Amo property due to the commencement of a repositioning project;
•$0.7 million decrease in operating expenses primarily relating to reduced owner’s expense, repairs and maintenance and cleaning expenses.
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Other Expenses (Income)

Interest Expense

The following table presents a reconciliation from the gross interest expense to the amount on the interest expense line item in the Consolidated Statements of Operations:
Three Months Ended September 30,
20202019Dollar ChangePercent Change
Gross interest expense$32,243 $29,536 $2,707 9.2 %
Capitalized interest(4,519)(4,334)(185)4.3 
Amortization of deferred financing costs and loan discounts/premiums4,768 1,388 3,380 243.5 
TOTAL$32,492 $26,590 $5,902 22.2 %

Gross interest expense increased by $2.7 million, or 9.2%, to $32.2 million for the three months ended September 30, 2020 compared to $29.5 million for the three months ended September 30, 2019. The increase was primarily driven by the issuance of our $900.0 million loan secured by the Hollywood Media Portfolio (July 2020), 4.65% registered senior notes (June 2019) and 3.25% registered senior notes (October 2019), partially offset by the paydown of Term loan A (October 2019), 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 on July 2020.

Capitalized interest increased by $0.2 million, or 4.3%, to $4.5 million for the three months ended September 30, 2020 compared to $4.3 million for the three months ended September 30, 2019.

Amortization of deferred financing costs and loan discounts/premiums increased by $3.4 million, or 243.5%, to $4.8 million for the three months ended September 30, 2020 compared to $1.4 million for the three months ended September 30, 2019. The increase was primarily driven by the accelerated amortization of deferred financing costs on debt paid off during the three months ended September 30, 2020 and new amortization of issuance costs associated with our $900.0 million loan secured by the Hollywood Media Portfolio (July 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 $0.2 million, or 1.3%, to $17.4 million for the three months ended September 30, 2020 compared to $17.7 million for the three months ended September 30, 2019. The change was primarily attributable to a decrease in travel and entertainment expense, offset by an increase in payroll and related expenses.

Depreciation and Amortization Expense

Depreciation and amortization expense increased $5.3 million, or 7.6%, to $75.1 million for the three months ended September 30, 2020 compared to $69.8 million for the three months ended September 30, 2019. The increase was primarily related to recently completed redevelopment and development properties (EPIC, Fourth & Traction and Maxwell) and an increase in leasing costs and tenant improvements for properties placed in service in the third quarter of 2019.

Fee Income

We recognized fee income of $0.6 million for the three months ended September 30, 2020 compared to $0.7 million for the three months ended September 30, 2019. Fee income primarily represents management fee, construction management fee and leasing commission income earned from the unconsolidated real estate entity.

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Unrealized loss on non-real estate investment

We recognized an unrealized loss on our non-real estate investment of $0.5 million due to the observable changes in fair value for the three months ended September 30, 2020.

Gain on sale of real estate

We recognized a $47.1 million gain on sale of real estate from the sale of our Campus Center property (July 2019) during the three months ended September 30, 2019. We did not recognize a gain on sale of real estate during the three months ended September 30, 2020.


Comparison of the Nine Months Ended September 30, 2020 to the Nine Months Ended September 30, 2019

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 January 1, 20192020 and still owned and included in the stabilized portfolio as of September 30, 2020;March 31, 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:
Nine Months Ended September 30,Dollar ChangePercent Change
20202019
Net income$19,598 $38,883 $(19,285)(49.6)%
Adjustments:
(Income) loss from unconsolidated real estate entity(69)345 414 120.0 
Fee income(1,741)(931)(810)87.0 
Interest expense86,839 77,492 9,347 12.1 
Interest income(3,129)(3,034)95 3.1 
Transaction-related expenses440 459 (19)(4.1)
Unrealized loss on non-real estate investment2,335 — 2,335 100.0 
Gain on sale of real estate— (47,100)47,100 (100.0)
Impairment loss— 52,201 (52,201)(100.0)
Other (income) loss(1,606)258 1,864 722.5 
General and administrative53,943 54,099 (156)(0.3)
Depreciation and amortization222,331 207,892 14,439 6.9 
NOI$378,941 $380,564 $(1,623)(0.4)%
Same-store NOI329,088 348,496 (19,408)(5.6)
Non-same-store NOI49,853 32,068 17,785 55.5 
NOI$378,941 $380,564 $(1,623)(0.4)%

Three Months Ended March 31,Dollar ChangePercent Change
20212020
Net income$11,411 $13,949 $(2,538)(18.2)%
Adjustments:
(Income) loss from unconsolidated real estate entities(635)236 (871)(369.1)
Fee income(848)(610)(238)39.0 
Interest expense30,286 26,417 3,869 14.6 
Interest income(997)(1,025)28 (2.7)
Transaction-related expenses— 102 (102)(100.0)
Unrealized (gain) loss on non-real estate investments(5,775)581 (6,356)(1,094.0)
Other expense (income)452 (314)766 (243.9)
General and administrative18,449 18,618 (169)(0.9)
Depreciation and amortization82,761 73,763 8,998 12.2 
NOI$135,104 $131,717 $3,387 2.6 %
Same-store NOI$118,307 $122,114 $(3,807)(3.1)%
Non-same-store NOI16,797 9,603 7,194 74.9 
NOI$135,104 $131,717 $3,387 2.6 %

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The following table summarizes certain statistics of our consolidated same-store office and studio properties:
Nine Months Ended September 30,
20202019
Same-store office
Number of properties39 39 
Rentable square feet10,191,438 10,191,438 
Ending % leased93.9 %96.7 %
Ending % occupied93.1 %95.3 %
Average % occupied for the period94.2 %94.6 %
Average annual rental rate per square foot$52.89 $50.92 
Same-store studio
Number of properties3 3 
Rentable square feet1,224,403 1,224,403 
Average % occupied for the period(1)
91.3 %N/A

Three Months Ended March 31,
20212020
Same-store office(1)
Number of properties4343
Rentable square feet11,137,78111,137,781
Ending % leased91.6 %95.4 %
Ending % occupied91.1 %95.0 %
Average % occupied for the period91.7 %95.1 %
Average annual rental rate per square foot$53.34 $51.92 
Same-store studio
Number of properties33
Rentable square feet1,224,4031,224,403
Average % occupied for the period(2)
89.6 %92.4 %
_____________
1.Excludes our unconsolidated joint venture, Bentall Centre.
2.Percent occupied for same-store studio is the average percent occupied for the 12 months ended. Trailing 12-month occupancy is not applicable for 11,600 square feet at 6660 Santa Monica Boulevard during the nine months ended September 30, 2019 as the property was acquired in fourth quarter 2018.
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The following table gives further detail on our NOI:

Nine Months Ended September 30,Three Months Ended March 31,
2020201920212020
Same-StoreNon-Same-StoreTotalSame-StoreNon-Same-StoreTotalSame-StoreNon-Same-StoreTotalSame-StoreNon-Same-StoreTotal
RevenuesRevenuesRevenues
OfficeOfficeOffice
RentalRental$458,565 $81,458 $540,023 $457,367 $64,283 $521,650 Rental$163,731 $26,130 $189,861 $164,670 $16,443 $181,113 
Service and other revenuesService and other revenues10,532 896 11,428 17,422 917 18,339 Service and other revenues2,077 205 2,282 5,210 104 5,314 
Total office revenuesTotal office revenues469,097 82,354 551,451 474,789 65,200 539,989 Total office revenues165,808 26,335 192,143 169,880 16,547 186,427 
StudioStudioStudio
RentalRental36,767 — 36,767 38,001 — 38,001 Rental12,153 — 12,153 12,915 — 12,915 
Service and other revenuesService and other revenues12,904 — 12,904 23,342 — 23,342 Service and other revenues8,823 — 8,823 6,885 — 6,885 
Total studio revenuesTotal studio revenues49,671 — 49,671 61,343 — 61,343 Total studio revenues20,976 — 20,976 19,800 — 19,800 
Total revenuesTotal revenues518,768 82,354 601,122 536,132 65,200 601,332 Total revenues186,784 26,335 213,119 189,680 16,547 206,227 
Operating expensesOperating expensesOperating expenses
Office operating expensesOffice operating expenses162,045 32,501 194,546 155,548 33,132 188,680 Office operating expenses57,024 9,538 66,562 56,916 6,944 63,860 
Studio operating expensesStudio operating expenses27,635 — 27,635 32,088 — 32,088 Studio operating expenses11,453 — 11,453 10,650 — 10,650 
Total operating expensesTotal operating expenses189,680 32,501 222,181 187,636 33,132 220,768 Total operating expenses68,477 9,538 78,015 67,566 6,944 74,510 
Office NOIOffice NOI307,052 49,853 356,905 319,241 32,068 351,309 Office NOI108,784 16,797 125,581 112,964 9,603 122,567 
Studio NOIStudio NOI22,036 — 22,036 29,255 — 29,255 Studio NOI9,523 — 9,523 9,150 — 9,150 
NOINOI$329,088 $49,853 $378,941 $348,496 $32,068 $380,564 NOI$118,307 $16,797 $135,104 $122,114 $9,603 $131,717 





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The following table gives further detail on our change in NOI:
Nine Months Ended September 30, 2020 as compared to
Nine Months Ended September 30, 2019
Same-StoreNon-Same-StoreTotal
Dollar ChangePercent ChangeDollar ChangePercent ChangeDollar ChangePercent Change
Revenues
Office
Rental$1,198 0.3 %$17,175 26.7 %$18,373 3.5 %
Service and other revenues(6,890)(39.5)(21)(2.3)(6,911)(37.7)
Total office revenues(5,692)(1.2)17,154 26.3 11,462 2.1 
Studio
Rental(1,234)(3.2)— — (1,234)(3.2)
Service and other revenues(10,438)(44.7)— — (10,438)(44.7)
Total studio revenues(11,672)(19.0)— — (11,672)(19.0)
Total revenues(17,364)(3.2)17,154 26.3 (210)— 
Operating expenses
Office operating expenses6,497 4.2 (631)(1.9)5,866 3.1 
Studio operating expenses(4,453)(13.9)— — (4,453)(13.9)
Total operating expenses2,044 1.1 (631)(1.9)1,413 0.6 
Office NOI(12,189)(3.8)17,785 55.5 5,596 1.6 
Studio NOI(7,219)(24.7)— — (7,219)(24.7)
NOI$(19,408)(5.6)%$17,785 55.5 %$(1,623)(0.4)%

Three Months Ended March 31, 2021 as compared to
Three Months Ended March 31, 2020
Same-StoreNon-Same-StoreTotal
Dollar ChangePercent ChangeDollar ChangePercent ChangeDollar ChangePercent Change
Revenues
Office
Rental$(939)(0.6)%$9,687 58.9 %$8,748 4.8 %
Service and other revenues(3,133)(60.1)101 97.1 (3,032)(57.1)
Total office revenues(4,072)(2.4)9,788 59.2 5,716 3.1 
Studio
Rental(762)(5.9)— — (762)(5.9)
Service and other revenues1,938 28.1 — — 1,938 28.1 
Total studio revenues1,176 5.9 — — 1,176 5.9 
Total revenues(2,896)(1.5)9,788 59.2 6,892 3.3 
Operating expenses
Office operating expenses108 0.2 2,594 37.4 2,702 4.2 
Studio operating expenses803 7.5 — — 803 7.5 
Total operating expenses911 1.3 2,594 37.4 3,505 4.7 
Office NOI(4,180)(3.7)7,194 74.9 3,014 2.5 
Studio NOI373 4.1 — — 373 4.1 
NOI$(3,807)(3.1)%$7,194 74.9 %$3,387 2.6 %

NOI decreased $1.6increased $3.4 million, or 0.4%2.6%, for the ninethree months ended September 30, 2020March 31, 2021 as compared to the ninethree months ended September 30, 2019,March 31, 2020, primarily resulting from:

•$19.4a $7.2 million increase in NOI from our non-same-store properties primarily resulting from our acquisition of 1918 Eighth in December 2020.
•a $3.8 million decrease in NOI from our same-store properties driven by:
•a decrease in office NOI of $12.2$4.2 million primarily due to:
•$6.9a $3.1 million decrease in service and other revenues primarily related to a decrease in parking and other revenue at our ICON, 11601 Wilshire, 6922 Hollywood, 1455 Market, 6040 Sunset, 6922 Hollywood, Met Park North, ICONRincon Center and Ferry Building properties due to reduced activity during the COVID-19 pandemic; and
•$6.5a $0.9 million decrease in rental revenues primarily driven by lease terminations at our 625 Second and 11601 Wilshire properties, partially offset by the reversal of reserves against uncollected cash rents and straight-line rent receivables for two material tenants.
•partially offset by an increase in studio NOI of $0.4 million primarily due to:
•a $1.9 million increase in service and other revenues primarily resulting from increased filming activity at our studio properties;
•partially offset by a $0.8 million increase in operating expenses primarily related to an increase in repairs and maintenance, real estate tax, insurance, cleaning, engineering and securityhigher lighting rental expense and due to a $2.5 million property tax savings at our Rincon Center property in the second quarter of 2019;
•partially offset by a $1.2 million increase in rental revenues primarily related to leases commenced at our Towers at Shore Center (Poshmark, Inc.), Foothill Research Center (Google, Inc.), Skyway Landing (Auris Health, Inc. and Iovance Biotherapeutics, Inc.) and 1455 Market (WeWork Companies, Inc.) properties.
•a decrease in studio NOI of $7.2 million primarily due to:
•$10.4 million decrease in service and other revenues primarily resulting from reducedincreased filming activity at our studio properties related to the COVID-19 pandemic;properties; and
•$1.2a $0.8 million decrease in rental revenues also primarily related to reduced filming activity related to COVID; and
•partially offset by $4.5 million decrease in operating expenses relating to lower parking, utilities, cleaning and lighting rental expense alsoresulting from higher vacancies at our studio properties due to reduced filming activity related to COVID-19.
•$17.8 million increase in NOI from our non-same-store properties driven by:
•overall increase in office NOI of $17.8 million primarily due to:
•$17.2 million increase in rental revenues primarily relating to:
•leases commenced at our EPIC (Netflix, Inc.), Fourth and Traction (Honey Science Corporation), Metro Center (various tenants) and 333 Twin Dolphin (various tenants)
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properties and reduced operating expenses primarily from the sale of our Campus Center property (July 2019); and
•offset by a reduction in rental income at our Maxwell (WeWork Companies, Inc.) property.COVID-19 pandemic.

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Other (Income) Expenses (Income)

Interest Expenseexpense

The following table presents a reconciliation from the gross interest expense to the amount on the interest expense line item inon the Consolidated Statements of Operations:
Nine Months Ended September 30,
20202019Dollar ChangePercent Change
Gross interest expense$93,846 $85,981 $7,865 9.1 %
Capitalized interest(14,264)(12,911)(1,353)10.5 
Amortization of deferred financing costs and loan discounts/premiums7,257 4,422 2,835 64.1 
TOTAL$86,839 $77,492 $9,347 12.1 %

Three Months Ended March 31,
20212020Dollar ChangePercent Change
Gross interest expense$33,540 $30,287 $3,253 10.7 %
Capitalized interest(5,671)(5,115)(556)10.9 
Amortization of deferred financing costs and loan discounts/premiums2,417 1,245 1,172 94.1 
TOTAL$30,286 $26,417 $3,869 14.6 %

Gross interest expense increased by $7.9$3.3 million, or 9.1%10.7%, to $93.8$33.5 million for the ninethree months ended September 30, 2020March 31, 2021 compared to $86.0$30.3 million for the ninethree months ended September 30, 2019.March 31, 2020. The increase was primarily driven by the issuanceclosing of oura $900.0 million loan secured by the Hollywood Media Portfolio (July 2020), 4.65% registered senior notes (June 2019) and 3.25% registered senior notes (October 2019)the closing of a $314.3 million loan secured by our 1918 Eighth property (December 2020), partially offset by the paydown of Term loan A (October 2019), Term loanLoan B, Term loanLoan D, Met Park North loan, Revolving Sunset Bronson Studios/ICON/CUE facility and outstanding borrowings on our unsecured revolving credit facility all onin July 2020.

Capitalized interest increased $1.4by $0.6 million, or 10.5%10.9%, to $14.3$5.7 million for the ninethree months ended September 30, 2020March 31, 2021 compared to $12.9$5.1 million for the ninethree months ended September 30, 2019. The increase was primarily driven by our One Westside redevelopment property and our EPIC and Harlow development properties, partially offset by recently completed redevelopment and development properties.March 31, 2020.

Amortization of deferred financing costs and loan discounts/premiums increased by $2.8$1.2 million, or 64.1%94.1%, to $7.3$2.4 million for the ninethree months ended September 30, 2020March 31, 2021 compared to $4.4$1.2 million for the ninethree months ended September 30, 2019.March 31, 2020. The increase was primarily driven by the accelerated amortization of deferred financing costs on debt paid off during the nine months ended September 30, 2019 and new amortization of issuance costs associated with our $400.0 million 3.25% Registered senior notes (October 2019) and our $900.0 million loan secured by the Hollywood Media Portfolio (July 2020) and $314.3 million loan secured by our 1918 Eighth property (December 2020).

General and Administrative Expensesadministrative 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 $0.2 million, or 0.3%0.9%, to $53.9$18.4 million for the ninethree months ended September 30, 2020March 31, 2021 compared to $54.1$18.6 million for the ninethree months ended September 30, 2019.March 31, 2020. The change was primarily attributable to a decrease in non-cash compensation expense and travel and entertainment expense partially offset by an increase in payroll and related expenses.bonus expense.

Depreciation and Amortization Expenseamortization expense

Depreciation and amortization expense increased $14.4$9.0 million, or 6.9%12.2%, to $222.3$82.8 million for the ninethree months ended September 30, 2020March 31, 2021 compared to $207.9$73.8 million for the ninethree months ended September 30, 2019.March 31, 2020. The increase was primarily related to recently completed redevelopmentour acquisition of 1918 Eighth and development properties (EPIC, Fourth & Traction and Maxwell) andaccelerated amortization of lease intangibles resulting from an increase in leasing costs and tenant improvements for properties placed in service during the nine months ended September 30, 2020.early termination at our 625 Second property.

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Fee Incomeincome

We recognized fee income of $1.7$0.8 million for the ninethree months ended September 30, 2020March 31, 2021 compared to $0.9$0.6 million for the ninethree months ended September 30, 2019.March 31, 2020. Fee income primarily represents management fee, construction management fee and leasing commission income earned from the unconsolidated real estate entity.entities.

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Unrealized (gain) loss on non-real estate investmentinvestments

We recognized an unrealized lossgain on our non-real estate investmentinvestments of $2.3$5.8 million due to the observable changes in the fair value of the investments for the ninethree months ended September 30, 2020.

Impairment Loss

We recorded $52.2 million of impairment charges during the six months ended June 30, 2019 related to our Campus Center office property. We did not recognize impairment charges during the nine months ended September 30, 2020.

Gain on sale of real estate

We recognized a $47.1 million gain on sale of real estate from the sale of our Campus Center property (July 2019) during the nine months ended September 30, 2019. We did not recognize a gain on sale of real estate during the nine months ended September 30, 2020.March 31, 2021.

Liquidity and Capital Resources

SinceWe have remained capitalized since our initial public offering we have remained capitalized through public offerings, private placements, joint ventures and continuous offerings under our ATMat-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 venturesventure partners; and

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

Liquidity Sources

We had $365.3approximately $134.3 million of cash and cash equivalents at September 30, 2020.March 31, 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 our debtfees and fund quarterly dividend and distribution requirements.

Our ability to access the equity capital markets will dependbe 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, $20.1 million of which has been sold through September 30, 2020.March 31, 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. We did not utilize the ATM program during the nine months ended September 30, 2020.
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As of September 30, 2020,March 31, 2021, we had total borrowing capacity of $600.0 million under our unsecured revolving credit facility, nothingnone of which had been drawn. As of September 30, 2020,March 31, 2021, we had total borrowing capacity of $414.6 million under our construction loan, secured by our One Westside and 10850 Pico properties, $75.1$159.0 million of which had been drawn.

Our ability to incur additional debt will dependbe 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 consolidated market capitalization (counting series A preferred units as debt) as of September 30, 2020:March 31, 2021 (in thousands, except percentage):

September 30, 2020March 31, 2021
Unsecured and secured debt(1)
$3,087,1683,485,093 
Series A preferred units9,815 
Total consolidated debt3,096,9833,494,908 
Less: Cash and cash equivalents365,294 
Total consolidated debt, net2,731,689
Common equity capitalization(2)
3,394,0314,177,448 
TOTAL CONSOLIDATED MARKET CAPITALIZATION$6,491,0147,672,356 
Total consolidated debt, net/debt/total consolidated market capitalization42.145.6 %
_____________
1.Excludes in-substance defeased debt, joint venture partner debt and unamortized deferred financing costs and loan discounts/premiums.discount.
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 our stock of $21.93,$27.13, as reported by the NYSE, as of September 30, 2020.on March 31, 2021.

Outstanding Indebtedness

The following table sets forth information as of September 30, 2020March 31, 2021 and December 31, 20192020 with respect to our outstanding indebtedness, (excludingexcluding unamortized deferred financing costs and loan discounts/premiums)discounts (in thousands):
September 30, 2020December 31, 2019
Unsecured debt$1,925,000 $2,475,000 
Secured debt$1,162,168 $370,459 
In-substance defeased debt$132,560 $135,030 
Joint venture partner debt$66,136 $66,136 

March 31, 2021December 31, 2020
Unsecured debt$1,925,000 $1,925,000 
Secured debt$1,560,093 $1,507,276 
In-substance defeased debt$130,828 $131,707 
Joint venture partner debt$66,136 $66,136 

The operating partnership was in compliance with its financial covenants as of September 30, 2020.March 31, 2021.

Liquidity Uses

Contractual Obligations

During the ninethree months ended September 30, 2020,March 31, 2021, there were no material changes outside the ordinary course of business in the information regarding specified contractual obligations contained in our 20192020 Annual Report on Form 10-K. See Part I, Item 1 “Note 7 to ourthe Consolidated Financial Statements—Debt” for information regarding our minimum future principal payments due on our outstanding debt. See Part I, Item 1 “Note 1112 to ourthe Consolidated Financial Statements—Future Minimum Rents and Lease Payments” for information regarding our future minimum ground lease payments. See Part I, Item 1 “Note 720 to ourthe Consolidated Financial Statements—Prepaid ExpensesCommitments and Other Assets, net”Contingencies” for additional contingencies.more detail.

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Cash Flows

A comparison of our cash flow activity is as follows:
Nine Months Ended September 30,
20202019Dollar ChangePercent Change
Net cash provided by operating activities$247,890 $233,600 $14,290 6.1 %
Net cash used in investing activities$(305,204)$(207,246)$(97,958)47.3 %
Net cash provided by (used in) financing activities$403,329 $(25,206)$428,535 1,700.1 %

Three Months Ended March 31,
20212020Dollar ChangePercent Change
Net cash provided by operating activities$114,695 $90,098 $24,597 27.3 %
Net cash used in investing activities$(97,214)$(78,101)$(19,113)24.5 %
Net cash provided by financing activities$2,312 $333,863 $(331,551)99.3 %

Cash and cash equivalents and restricted cash were $404.3$169.3 million and $58.3$149.5 million at September 30, 2020March 31, 2021 and December 31, 2019,2020, respectively.
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Operating Activities

Net cash provided by operating activities increased by $14.3$24.6 million, or 6.1%27.3%, to $247.9$114.7 million for the ninethree months ended September 30, 2020March 31, 2021 compared to $233.6$90.1 million for the ninethree months ended September 30, 2019.March 31, 2020. The change resulted primarily from higher cash NOI inrents during the three months ended March 31, 2021 compared to the three months ended March 31, 2020, partially offset by an increase in interest expense.

Investing Activities

Net cash used in investing activities increased by $98.0$19.1 million, or 47.3%24.5%, to $305.2$97.2 million for the ninethree months ended September 30, 2020March 31, 2021 compared to $207.2$78.1 million for the ninethree months ended September 30, 2019.March 31, 2020. The change resulted primarily from $147.8 million of proceeds from sale of real estate in 2019 that largely offset the amounts spent ongreater additions to investment in real estate contributionsduring the three months ended March 31, 2021 compared to unconsolidated entities, and deposits for property acquisitions that occurred in 2019.the three months ended March 31, 2020.

Financing Activities

Net cash provided by financing activities increaseddecreased by $428.5$331.6 million, or 1,700.1%99.3%, to $403.3$2.3 million for the ninethree months ended September 30, 2020March 31, 2021 compared to net cash used in financing activities of $25.2$333.9 million for the ninethree months ended September 30, 2019.March 31, 2020. The changedecrease resulted primarily from a $372.5$362.1 million contribution to consolidated entities from our joint venture partnerslower borrowings on secured and $137.1 million higher net proceeds from borrowings and repayments ofunsecured debt, in 2020, partially offset by $53.5$20.6 million less spent on sharecommon stock repurchases induring the three months ended March 31, 2021 compared to the three months ended March 31, 2020.

Off-Balance Sheet Arrangements

Unconsolidated Joint Venture Indebtedness

PursuantWe 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 we have one investment in an unconsolidated real estate entity:(“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 September 30, 2020,March 31, 2021, the aggregate carrying amount of debt, including both our and our partners’ share, incurred by the unconsolidated entity was approximately $476.1$508.2 million and our proportionate share is approximately $95.2$101.6 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
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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.

Effective January 1, 2019, we adopted ASC 842 which resulted in changes to our critical accounting policy relating to lease accounting. Refer to Part I, Item 1 “Note 2 to ourthe Consolidated Financial Statements—Summary of Significant Accounting Policies,” for information regarding our updated policies as a result of the adoption of ASC 842.critical accounting policies.

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
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of deferred financing costs and depreciation of non-real estate assets), adjusting and after adjustment for consolidatedunconsolidated partnerships and unconsolidated 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 marketmark-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.

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The following table presents a reconciliation of net income to FFO:FFO (in thousands):
Three Months Ended September 30,Nine Months Ended September 30,
2020201920202019
Net (loss) income$(1,362)$62,955 $19,598 $38,883 
Adjustments:
Depreciation and amortization—Consolidated75,052 69,781 222,331 207,892 
Depreciation and amortization—Corporate-related(581)(543)(1,720)(1,596)
Depreciation and amortization—Company’s share from unconsolidated real estate entity1,445 1,751 4,181 2,314 
Gains on sale of real estate— (47,100)— (47,100)
Impairment loss— — — 52,201 
Unrealized (loss) gain on non-real estate investment(513)— 2,335 — 
FFO attributable to non-controlling interests(10,725)(7,463)(24,619)(21,032)
FFO attributable to preferred units(153)(153)(459)(459)
FFO TO COMMON STOCKHOLDERS AND UNITHOLDERS$63,163 $79,228 $221,647 $231,103 

Three Months Ended March 31,
20212020
Net income$11,411 $13,949 
Adjustments:
Depreciation and amortization—Consolidated82,761 73,763 
Depreciation and amortization—Corporate-related(577)(565)
Depreciation and amortization—Company’s share from unconsolidated real estate investments1,511 1,381 
Unrealized (gain) loss on non-real estate investments(5,775)581 
FFO attributable to non-controlling interests(16,717)(7,093)
FFO attributable to preferred units(153)(153)
FFO TO COMMON STOCKHOLDERS AND UNITHOLDERS$72,461 $81,863 

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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 20192020 Annual Report on Form 10-K and is incorporated herein by reference. There have been no material changes for the ninethree months ended September 30, 2020March 31, 2021 to the information provided in Part II, Item 7A, of our 20192020 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 SheetSheets 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 thirdfirst 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 thirdfirst 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 business and results of operations and financial condition have been and maycould be further materially or adversely impacted by the outbreakdiscontinuing 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 pandemic including COVID-19sudden 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 global spread of COVID-19Company has created,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 continuevary by contract. The value of loans, securities, or derivative instruments tied to create, significant volatility, uncertainty and economic disruption. In response to the pandemic, state and local governments, including those in Northern and Southern California, the Pacific Northwest and British Columbia have reacted by instituting quarantines, restrictions on travel, “shelter in place” rules, restrictions on types of business that may continue to operate and/or restrictions on the types of construction projects that may continue. As a result, the COVID-19 pandemic is negatively impacting almost every industry, including industries our tenants operate in. The COVID-19 pandemic, or a future pandemic, could have material and adverse effects on our ability to successfully operate our business and on our financial condition, results of operations and cash flows due to, among other factors: our tenants’ ability to pay rent on their leases; our inability to re-let space in our properties on favorable terms; ability to access capital markets on favorable terms and potential delays with development and re-development activities resulting in failure to achieve expected occupancy and/or rent levels within the projected time frames. We collected approximately 97.0% of our third quarter combined contractual rents, comprised of approximately 98.0% from office tenants, 100.0% from studio tenants and 52.0% from storefront retail tenants. As of October 29, 2020, we have collected 94.0% of our October combined contractual rents, comprised of approximately 96.0% from office tenants, 98.0% from studio tenants and 51.0% from storefront retail tenants.

The rapid development and fluidity of this situation precludes any prediction as to the full adverse impact of the COVID-19 pandemic. Nevertheless, the COVID-19 pandemic presents material uncertainty and risk on our ability to successfully operate our business and on our financial condition, results of operations, and cash flows. Moreover, many risk factors set forth in our 2019 Annual Report on Form 10-K should be interpreted as heightened risks as a result of the impact of the COVID-19 pandemic.

Social, political, and economic instability, unrest, and other circumstances beyond our control could adversely affect our business operations

Our business may be adversely affected by social, political, and economic instability, unrest, or disruption in a geographic region in which we operate, regardless of cause, including protests, demonstrations, strikes, riots, civil disturbance, disobedience, insurrection, or social and political unrest. Such events may result in restrictions, curfews, or other actions and give rise to significant changes in regional and global economic conditions and cycles, which may adversely affect our financial condition and operations.

There have been recent demonstrations and protests in cities throughout the U.S.LIBOR, as well as globallyinterest 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 connection with civil rights, liberties, and social and governmental reform. While protests have been peaceful in many locations, looting, vandalism, and fires have taken place in cities, including Seattle, Los Angeles, and Vancouver, Canada, which ledsubstantially 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 imposition of mandatory curfewsLIBOR administrator. In that case, the risks associated with the transition to an alternative reference rate will be accelerated and in some locations, deployment of the U.S. National Guard. Government actions in an effort to protect people and property, including curfews and restrictions on business operations, may disrupt operations, harm perceptions of personal well-being, and increase the need for additional expenditures on security resources. In addition, action resulting from such social or political unrest may pose significant risks to our personnel, facilities, and operations. The effect and duration of the demonstrations, protests, or other factors is uncertain, and we cannot assure there will not be further political or social unrest in the future or that there will not be other events that could lead to the disruption of social, political, and economic conditions. If such events or disruptions persist for a prolonged period of time, our overall business and results of operations may be adversely affected.magnified.

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Any or all of the foregoing could have a materialan 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 have potential to materially adversely affect our business, financial condition, and results of operations.

Please review the Risk Factors set forth in our 20192020 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 thirdfirst quarter of 2020,2021, 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 thirdfirst quarter of 2020,2021, we issued an aggregate of 1,28620,000 shares of our common stock in connection with restricted stock awards for no cash consideration, outand a certain amount of which no shares of common stock werewas forfeited to us in connection with restricted stock awards for a net issuance of 1,286 shares of common stock.awards. 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 partnership agreement. During the thirdfirst quarter of 2020,2021, our operating partnership issued an aggregate of 1,28620,000 common units to us.us, before forfeitures. The operating partnership also issued 60,541 long-term incentive plan units during the first quarter of 2021.

All other issuances of unregistered equity securities of our operating partnership during the ninethree months ended September 30, 2020March 31, 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 $7.94$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.

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(b)    Use of Proceeds from Registered Securities: None

(c)    Purchases of Equity Securities by the Issuer and Affiliated Purchasers:

The following table summarizes the repurchases of the Company equity securities during the thirdfirst quarter of 2020:2021:
PeriodTotal Number of Shares PurchasedAverage Price Paid Per ShareTotal Shares Purchased as Part of Publicly Announced Plans or Programs
Maximum That May Yet Be Purchased Under The Plans or Programs(2)
September 1- September 30, 2020(1)
1,177,127 $22.50 1,177,127 $190,228,918 
TOTAL1,177,127 $22.50 1,177,127 $190,228,918 

PeriodTotal Number of Shares PurchasedAverage Price Paid Per ShareTotal Shares Purchased as Part of Publicly Announced Plans or Programs
Maximum That May Yet Be Purchased Under The Plans or Programs(3)
January 1- January 31, 2021(1)(2)
659,321 $23.39 632,109 $105,142,574 
February 1 - February 28, 2021(2)
1,413 $24.15 — $105,142,574 
TOTAL660,734 23.39 632,109 $105,142,574 
_____________
1.On January 20, 2016, our board of directors authorized a share repurchase program to buy up to $100.0 million of the outstanding common stock of Hudson Pacific Properties, Inc., which our board of directors On March 8, 2018, this total was increased to a total of $250.0 million on March 8, 2018.million. The program does not have a termination date, and repurchases may be discontinued at any time.
2.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.
3.The Maximum That May Yet Be Purchased Under the Plans or Programs is shown net of repurchases. During the first quarter 2020, the Company repurchased 1,414,007 shares at the average price paid per share of $23.54.

ITEM 3.    DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4.    MINE SAFETY DISCLOSURES

None.

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ITEM 5.    OTHER INFORMATION

None.

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ITEM 6.    EXHIBITS

Incorporated by ReferenceIncorporated by Reference
Exhibit No.Exhibit No.DescriptionFormFile No.Exhibit No.Filing DateExhibit No.DescriptionFormFile No.Exhibit No.Filing Date
3.13.1 S-11/A333-1649163.1May 12, 20103.1 S-11/A333-1649163.1May 12, 2010
3.23.28-K001-347893.1January 12, 20153.28-K001-347893.1January 12, 2015
3.33.310-K001-3478910.1February 26, 20163.310-K001-3478910.1February 26, 2016
3.43.410-Q001-347893.4November 4, 20163.410-Q001-347893.4November 4, 2016
10.110.18-K001-3478910.1February 12, 2021
10.210.28-K001-3478910.2February 12, 2021
10.310.310-K001-3478910.92February 22, 2021
10.410.410-K001-3478910.93February 22, 2021
31.131.131.1
31.231.231.2
31.331.331.3
31.431.431.4
32.132.132.1
32.232.232.2
101101The 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 September 30, 2020 formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) Consolidated Balance Sheets (unaudited), (ii) Consolidated Statements of Operations (unaudited), (iii) Consolidated Statements of Comprehensive (Loss) Income (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*101The 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 March 31, 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*
104104104
____________
*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.
+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:November 4, 2020May 7, 2021/S/s/ VICTOR J. COLEMAN
Victor J. Coleman
Chief Executive Officer (Principal Executive Officer)

HUDSON PACIFIC PROPERTIES, INC.
Date:November 4, 2020May 7, 2021/S/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:November 4, 2020May 7, 2021/S/s/ VICTOR J. COLEMAN
Victor J. Coleman
Chief Executive Officer (Principal Executive Officer)

HUDSON PACIFIC PROPERTIES, L.P.
Date:November 4, 2020May 7, 2021/S/s/ HAROUT K. DIRAMERIAN
Harout K. Diramerian
Chief Financial Officer (Principal Financial Officer)

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