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 ~~June~~September 30, 2022


☐			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:

Registrant

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Hudson Pacific Properties, Inc.

Common Stock, $0.01 par value

HPP

New York Stock Exchange

Hudson Pacific Properties, Inc.

4.750% Series C Cumulative Redeemable Preferred Stock

HPP Pr C

New 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 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 ☒			Hudson Pacific Properties, L.P. Yes ☐ No ☒

The number of shares of common stock of Hudson Pacific Properties, Inc. outstanding at ~~July 22,~~October 28, 2022 was ~~141,658,129.~~140,923,320.

Table of Contents

EXPLANATORY NOTE

This report combines the quarterly reports on Form 10-Q for the period ended ~~June~~September 30, 2022 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 ~~June~~September 30, 2022, Hudson Pacific Properties, Inc. owned approximately ~~98.3%~~98.2% of the ownership interest in our operating partnership (including unvested restricted units). The remaining approximately ~~1.7%~~1.8% 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 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” and “Quantitative and Qualitative Disclosures About Market Risk,” 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.

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 ~~June~~September 30, 2022 (unaudited) and December 31, 2021	5
	Consolidated Statements of Operations (unaudited) for the three and ~~six~~nine months ended ~~June~~September 30, 2022 and 2021	6
	Consolidated Statements of Comprehensive (Loss) Income (unaudited) for the three and ~~six~~nine months ended ~~June~~September 30, 2022 and 2021	7
	Consolidated Statements of Equity (unaudited) for the three and ~~six~~nine months ended ~~June~~September 30, 2022 and 2021	8
	Consolidated Statements of Cash Flows (unaudited) for the ~~six~~nine months ended ~~June~~September 30, 2022 and 2021	10
ITEM 1.	Financial Statements of Hudson Pacific Properties, L.P.
	Consolidated Balance Sheets as of ~~June~~September 30, 2022 (unaudited) and December 31, 2021	1112
	Consolidated Statements of Operations (unaudited) for the three and ~~six~~nine months ended ~~June 30, 2022~~ ~~and~~ ~~2021~~	12
	~~Consolidated Statements of Comprehensive (Loss) Income (unaudited) for the~~ ~~three and six months endedJune~~September 30, 2022 and 2021	13
	Consolidated Statements of Comprehensive (Loss) Income (unaudited) for the three and nine months ended September 30, 2022 and 2021	14
	Consolidated Statements of Capital (unaudited) for the three and ~~six~~nine months ended ~~June~~September 30, 2022 and 2021	1415
	Consolidated Statements of Cash Flows (unaudited) for the ~~six~~nine months ended ~~June~~September 30, 2022 and 2021	1617
	Notes to Unaudited Consolidated Financial Statements	1719
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	4751
ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	6972
ITEM 4.	Controls and Procedures	6972
PART II—OTHER INFORMATION
ITEM 1.	Legal Proceedings	7174
ITEM 1A.	Risk Factors	7174
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	7174
ITEM 3.	Defaults Upon Senior Securities	7274
ITEM 4.	Mine Safety Disclosures	7274
ITEM 5.	Other Information	7274
ITEM 6.	Exhibits	7375
SIGNATURES		7476

Table of Contents

PART I—FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS OF HUDSON PACIFIC PROPERTIES, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)


		June 30, 2022 (unaudited)		December 31, 2021			September 30, 2022 (unaudited)		December 31, 2021
ASSETS	ASSETS					ASSETS
Investment in real estate, at cost	Investment in real estate, at cost	$	8,562,340	$	8,361,477	Investment in real estate, at cost	$	8,656,934	$	8,361,477
Accumulated depreciation and amortization	Accumulated depreciation and amortization	(1,413,526)		(1,283,774)		Accumulated depreciation and amortization	(1,478,250)		(1,283,774)
Investment in real estate, net	Investment in real estate, net	7,148,814		7,077,703		Investment in real estate, net	7,178,684		7,077,703
Non-real estate property, plant and equipment, net	Non-real estate property, plant and equipment, net	60,222		58,469		Non-real estate property, plant and equipment, net	128,504		58,469
Cash and cash equivalents	Cash and cash equivalents	266,538		96,555		Cash and cash equivalents	161,667		96,555
Restricted cash	Restricted cash	49,025		100,321		Restricted cash	42,401		100,321
Accounts receivable, net	Accounts receivable, net	15,602		25,339		Accounts receivable, net	19,692		25,339
Straight-line rent receivables, net	Straight-line rent receivables, net	269,015		240,306		Straight-line rent receivables, net	275,518		240,306
Deferred leasing costs and intangible assets, net	Deferred leasing costs and intangible assets, net	336,439		341,444		Deferred leasing costs and intangible assets, net	405,434		341,444
U.S. Government securities	U.S. Government securities	—		129,321		U.S. Government securities	—		129,321
Operating lease right-of-use assets	Operating lease right-of-use assets	299,673		287,041		Operating lease right-of-use assets	399,570		287,041
Prepaid expenses and other assets, net	Prepaid expenses and other assets, net	99,151		119,000		Prepaid expenses and other assets, net	106,640		119,000
Investment in unconsolidated real estate entities	Investment in unconsolidated real estate entities	161,845		154,731		Investment in unconsolidated real estate entities	154,144		154,731
Goodwill	Goodwill	109,473		109,439		Goodwill	261,139		109,439
Assets associated with real estate held for sale	Assets associated with real estate held for sale	234,841		250,520		Assets associated with real estate held for sale	187,026		250,520
TOTAL ASSETS	TOTAL ASSETS	$	9,050,638	$	8,990,189	TOTAL ASSETS	$	9,320,419	$	8,990,189

LIABILITIES AND EQUITY	LIABILITIES AND EQUITY					LIABILITIES AND EQUITY
Liabilities	Liabilities					Liabilities
Unsecured and secured debt, net	Unsecured and secured debt, net	$	4,129,034	$	3,733,903	Unsecured and secured debt, net	$	4,449,316	$	3,733,903
In-substance defeased debt	In-substance defeased debt	126,397		128,212		In-substance defeased debt	—		128,212
Joint venture partner debt	Joint venture partner debt	66,136		66,136		Joint venture partner debt	66,136		66,136
Accounts payable, accrued liabilities and other	Accounts payable, accrued liabilities and other	313,572		300,959		Accounts payable, accrued liabilities and other	355,545		300,959
Operating lease liabilities	Operating lease liabilities	307,072		293,596		Operating lease liabilities	396,412		293,596
Intangible liabilities, net	Intangible liabilities, net	37,485		42,290		Intangible liabilities, net	35,758		42,290
Security deposits and prepaid rent		82,906		84,939
Security deposits, prepaid rent and other						Security deposits, prepaid rent and other	87,049		84,939
Liabilities associated with real estate held for sale	Liabilities associated with real estate held for sale	3,072		3,898		Liabilities associated with real estate held for sale	2,475		3,898
Total liabilities	Total liabilities	5,065,674		4,653,933		Total liabilities	5,392,691		4,653,933

Commitments and contingencies (note 22)	Commitments and contingencies (note 22)	0		0		Commitments and contingencies (note 22)

Redeemable preferred units of the operating partnership	Redeemable preferred units of the operating partnership	9,815		9,815		Redeemable preferred units of the operating partnership	9,815		9,815
Redeemable non-controlling interest in consolidated real estate entities	Redeemable non-controlling interest in consolidated real estate entities	126,420		129,449		Redeemable non-controlling interest in consolidated real estate entities	125,583		129,449

Equity	Equity					Equity
Hudson Pacific Properties, Inc. stockholders’ equity	Hudson Pacific Properties, Inc. stockholders’ equity					Hudson Pacific Properties, Inc. stockholders’ equity
Preferred stock, $0.01 par value, 18,400,000 authorized at June 30, 2022 and December 31, 2021, respectively; 4.750% Series C cumulative redeemable preferred stock, $25.00 per share liquidation preference, 17,000,000 outstanding at June 30, 2022 and December 31, 2021, respectively		425,000		425,000
Common stock, $0.01 par value, 481,600,000 authorized, 141,609,336 shares and 151,124,543 shares outstanding at June 30, 2022 and December 31, 2021, respectively		1,415		1,511
Preferred stock, $0.01 par value, 18,400,000 authorized at September 30, 2022 and December 31, 2021; 4.750% Series C cumulative redeemable preferred stock, $25.00 per share liquidation preference, 17,000,000 outstanding at September 30, 2022 and December 31, 2021						Preferred stock, $0.01 par value, 18,400,000 authorized at September 30, 2022 and December 31, 2021; 4.750% Series C cumulative redeemable preferred stock, $25.00 per share liquidation preference, 17,000,000 outstanding at September 30, 2022 and December 31, 2021	425,000		425,000
Common stock, $0.01 par value, 481,600,000 authorized, 140,923,320 shares and 151,124,543 shares outstanding at September 30, 2022 and December 31, 2021, respectively						Common stock, $0.01 par value, 481,600,000 authorized, 140,923,320 shares and 151,124,543 shares outstanding at September 30, 2022 and December 31, 2021, respectively	1,408		1,511
Additional paid-in capital	Additional paid-in capital	2,985,666		3,317,072		Additional paid-in capital	2,935,448		3,317,072
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(7,051)		(1,761)		Accumulated other comprehensive loss	(17,066)		(1,761)

Total Hudson Pacific Properties, Inc. stockholders’ equity	Total Hudson Pacific Properties, Inc. stockholders’ equity	3,405,030		3,741,822		Total Hudson Pacific Properties, Inc. stockholders’ equity	3,344,790		3,741,822
Non-controlling interest—members in consolidated real estate entities	Non-controlling interest—members in consolidated real estate entities	384,707		402,971		Non-controlling interest—members in consolidated real estate entities	384,724		402,971
Non-controlling interest—units in the operating partnership	Non-controlling interest—units in the operating partnership	58,992		52,199		Non-controlling interest—units in the operating partnership	62,816		52,199
Total equity	Total equity	3,848,729		4,196,992		Total equity	3,792,330		4,196,992
TOTAL LIABILITIES AND EQUITY	TOTAL LIABILITIES AND EQUITY	$	9,050,638	$	8,990,189	TOTAL LIABILITIES AND EQUITY	$	9,320,419	$	8,990,189

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

Table of Contents

HUDSON PACIFIC PROPERTIES, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited, in thousands, except share data)

Three Months Ended June 30, Six Months Ended June 30,
2022 2021 2022 2021
REVENUES
Office
Rental $ 211,836 $ 192,552 $ 418,028 $ 382,413
Service and other revenues 4,408 3,151 9,616 5,433
Total office revenues 216,244 195,703 427,644 387,846
Studio
Rental 13,438 11,551 26,832 23,704
Service and other revenues 21,748 8,348 41,467 17,171
Total studio revenues 35,186 19,899 68,299 40,875
Total revenues 251,430 215,602 495,943 428,721
OPERATING EXPENSES
Office operating expenses 78,558 69,111 152,189 135,673
Studio operating expenses 20,686 12,466 39,669 23,919
General and administrative 21,871 17,109 42,383 35,558
Depreciation and amortization 91,438 84,178 183,631 166,939
Total operating expenses 212,553 182,864 417,872 362,089
OTHER INCOME (EXPENSE)
Income from unconsolidated real estate entities 1,780 470 2,083 1,105
Fee income 1,140 797 2,211 1,645
Interest expense (33,719) (30,689) (64,555) (60,975)
Interest income 920 937 1,830 1,934
Management services reimbursement income—unconsolidated real estate entities 1,068 626 2,176 626
Management services expense—unconsolidated real estate entities (1,068) (626) (2,176) (626)
Transaction-related expenses (1,126) (1,064) (1,382) (1,064)
Unrealized (loss) gain on non-real estate investments (1,818) 5,018 (168) 10,793
Impairment loss (3,250) — (23,753) —
Other income (expense) 742 (1,177) 1,594 (1,629)
Total other expenses (35,331) (25,708) (82,140) (48,191)
Net income (loss) 3,546 7,030 (4,069) 18,441
Net income attributable to Series A preferred units (153) (153) (306) (306)
Net income attributable to Series C preferred shares (5,047) — (10,337) —
Net income attributable to participating securities (300) (276) (594) (554)
Net income attributable to non-controlling interest in consolidated real estate entities (7,081) (5,549) (15,642) (12,179)
Net loss attributable to redeemable non-controlling interest in consolidated real estate entities 1,506 1,282 3,396 1,964
Net loss (income) attributable to common units in the operating partnership 93 (19) 323 (69)
NET (LOSS) INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS $ (7,436) $ 2,315 $ (27,229) $ 7,297
BASIC AND DILUTED PER SHARE AMOUNTS
Net (loss) income attributable to common stockholders—basic $ (0.05) $ 0.02 $ (0.19) $ 0.05
Net (loss) income attributable to common stockholders—diluted $ (0.05) $ 0.02 $ (0.19) $ 0.05
Weighted average shares of common stock outstanding—basic 143,816,698 151,169,612 146,487,388 150,997,564
Weighted average shares of common stock outstanding—diluted 143,816,698 152,683,463 146,487,388 151,302,845


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
REVENUES
Office
Rental	$	208,779	$	197,941	$	626,807	$	580,354
Service and other revenues	4,712		3,925		14,328		9,358
Total office revenues	213,491		201,866		641,135		589,712
Studio
Rental	15,305		12,768		42,137		36,472
Service and other revenues	31,558		12,998		73,025		30,169
Total studio revenues	46,863		25,766		115,162		66,641
Total revenues	260,354		227,632		756,297		656,353
OPERATING EXPENSES
Office operating expenses	78,340		71,865		230,529		207,538
Studio operating expenses	26,688		12,044		66,357		35,963
General and administrative	19,795		18,288		62,178		53,846
Depreciation and amortization	93,070		88,568		276,701		255,507
Total operating expenses	217,893		190,765		635,765		552,854
OTHER INCOME (EXPENSE)
(Loss) income from unconsolidated real estate entities	(352)		566		1,731		1,671
Fee income	911		678		3,122		2,323
Interest expense	(37,261)		(30,825)		(101,816)		(91,800)
Interest income	196		934		2,026		2,868
Management services reimbursement income—unconsolidated real estate entities	983		253		3,159		879
Management services expense—unconsolidated real estate entities	(983)		(253)		(3,159)		(879)
Transaction-related expenses	(9,331)		(6,300)		(10,713)		(7,364)
Unrealized (loss) gain on non-real estate investments	(894)		827		(1,062)		11,620

Loss on sale of real estate	(180)		—		(180)		—
Impairment loss	(4,795)		(2,762)		(28,548)		(2,762)
Loss on extinguishment of debt	—		(6,249)		—		(6,249)
Other income (expense)	2,453		82		4,047		(1,547)

Total other expenses	(49,253)		(43,049)		(131,393)		(91,240)
Net (loss) income	(6,792)		(6,182)		(10,861)		12,259
Net income attributable to Series A preferred units	(153)		(153)		(459)		(459)
Net income attributable to Series C preferred shares	(5,047)		—		(15,384)		—
Net income attributable to participating securities	(300)		(276)		(894)		(830)
Net income attributable to non-controlling interest in consolidated real estate entities	(6,256)		(3,585)		(21,898)		(15,764)
Net loss attributable to redeemable non-controlling interest in consolidated real estate entities	1,037		816		4,433		2,780
Net loss attributable to common units in the operating partnership	225		85		548		16
NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS	$	(17,286)	$	(9,295)	$	(44,515)	$	(1,998)

BASIC AND DILUTED PER SHARE AMOUNTS
Net loss attributable to common stockholders—basic	$	(0.12)	$	(0.06)	$	(0.31)	$	(0.01)
Net loss attributable to common stockholders—diluted	$	(0.12)	$	(0.06)	$	(0.31)	$	(0.01)
Weighted average shares of common stock outstanding—basic	141,117,194		152,320,252		144,677,652		151,443,305
Weighted average shares of common stock outstanding—diluted	141,117,194		152,320,252		144,677,652		151,443,305

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

Table of Contents

HUDSON PACIFIC PROPERTIES, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

(unaudited, in thousands)


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2022		2021		2022		2021			2022		2021		2022		2021
Net income (loss)		$	3,546	$	7,030	$	(4,069)	$	18,441
Net (loss) income										Net (loss) income	$	(6,792)	$	(6,182)	$	(10,861)	$	12,259
Currency translation adjustments	Currency translation adjustments	(7,088)		914		(8,449)		1,923		Currency translation adjustments	(10,052)		(3,511)		(18,501)		(1,588)
Net unrealized gains on derivative instruments:	Net unrealized gains on derivative instruments:									Net unrealized gains on derivative instruments:
Unrealized gains (losses)	Unrealized gains (losses)	1,516		(160)		4,560		(136)		Unrealized gains (losses)	4,640		(243)		9,200		(379)
Reclassification adjustment for realized (gains) losses	Reclassification adjustment for realized (gains) losses	(916)		1,872		(1,495)		3,683		Reclassification adjustment for realized (gains) losses	(4,782)		2,019		(6,277)		5,702
Total net unrealized gains on derivative instruments		600		1,712		3,065		3,547
Total net unrealized gains (losses) on derivative instruments										Total net unrealized gains (losses) on derivative instruments	(142)		1,776		2,923		5,323
Total other comprehensive (loss) income	Total other comprehensive (loss) income	(6,488)		2,626		(5,384)		5,470		Total other comprehensive (loss) income	(10,194)		(1,735)		(15,578)		3,735
Comprehensive (loss) income	Comprehensive (loss) income	(2,942)		9,656		(9,453)		23,911		Comprehensive (loss) income	(16,986)		(7,917)		(26,439)		15,994
Comprehensive income attributable to Series A preferred units	Comprehensive income attributable to Series A preferred units	(153)		(153)		(306)		(306)		Comprehensive income attributable to Series A preferred units	(153)		(153)		(459)		(459)
Comprehensive income attributable to Series C preferred units		(5,047)		—		(10,337)		—
Comprehensive income attributable to Series C preferred stock										Comprehensive income attributable to Series C preferred stock	(5,047)		—		(15,384)		—
Comprehensive income attributable to participating securities	Comprehensive income attributable to participating securities	(300)		(276)		(594)		(554)		Comprehensive income attributable to participating securities	(300)		(276)		(894)		(830)
Comprehensive income attributable to non-controlling interest in consolidated real estate entities	Comprehensive income attributable to non-controlling interest in consolidated real estate entities	(7,081)		(5,549)		(15,642)		(12,179)		Comprehensive income attributable to non-controlling interest in consolidated real estate entities	(6,256)		(3,585)		(21,898)		(15,764)
Comprehensive loss attributable to redeemable non-controlling interest in consolidated real estate entities	Comprehensive loss attributable to redeemable non-controlling interest in consolidated real estate entities	1,506		1,282		3,396		1,964		Comprehensive loss attributable to redeemable non-controlling interest in consolidated real estate entities	1,037		816		4,433		2,780
Comprehensive loss (income) attributable to non-controlling interest in the operating partnership	Comprehensive loss (income) attributable to non-controlling interest in the operating partnership	206		(54)		417		(142)		Comprehensive loss (income) attributable to non-controlling interest in the operating partnership	404		108		821		(34)
COMPREHENSIVE (LOSS) INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS	COMPREHENSIVE (LOSS) INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS	$	(13,811)	$	4,906	$	(32,519)	$	12,694	COMPREHENSIVE (LOSS) INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS	$	(27,301)	$	(11,007)	$	(59,820)	$	1,687

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

Table of Contents

HUDSON PACIFIC PROPERTIES, INC.

CONSOLIDATED STATEMENTS OF EQUITY

For the three and ~~six~~nine months ended ~~June~~September 30, 2022

(unaudited, in thousands, except share data)


		Hudson Pacific Properties, Inc. Stockholders’ Equity											Non-controlling Interest							Hudson Pacific Properties, Inc. Stockholders’ Equity											Non-controlling Interest
		Series C Cumulative Redeemable Preferred Stock		Shares of Common Stock	Stock Amount		Additional Paid-in Capital		Retained Earnings (Accumulated Deficit)		Accumulated Other Comprehensive Loss		Units in the Operating Partnership		Members in Consolidated Real Estate Entities		Total Equity			Series C Cumulative Redeemable Preferred Stock		Shares of Common Stock	Stock Amount		Additional Paid-in Capital		Retained Earnings (Accumulated Deficit)		Accumulated Other Comprehensive Loss		Units in the Operating Partnership		Members in Consolidated Real Estate Entities		Total Equity
Balance, March 31, 2022		$	425,000	144,559,168	$	1,445	$	3,063,500	$	—	$	(676)	$	55,254	$	398,941	$	3,943,464
Balance, June 30, 2022																			Balance, June 30, 2022	$	425,000	141,609,336	$	1,415	$	2,985,666	$	—	$	(7,051)	$	58,992	$	384,707	$	3,848,729

Contributions	Contributions	—		—	—		—		—		—		—		12,833		12,833		Contributions	—		—	—		—		—		—		—		784		784
Distributions	Distributions	—		—	—		—		—		—		—		(34,148)		(34,148)		Distributions	—		—	—		—		—		—		—		(7,023)		(7,023)
Transaction costs	Transaction costs	—		—	—		(138)		—		—		—		—		(138)		Transaction costs	—		—	—		(359)		—		—		—		—		(359)

Issuance of unrestricted stock		—		24,564	—		—		—		—		—		—		—
Shares repurchased		—		(2,105,359)	(21)		(37,185)		—		—		—		—		(37,206)

Accelerated share repurchase	Accelerated share repurchase	—		(869,037)	(9)		9		—		—		—		—		—		Accelerated share repurchase	—		(686,016)	(7)		7		—		—		—		—		—
Declared dividend	Declared dividend	(5,047)		—	—		(42,863)		7,136		—		(679)		—		(41,453)		Declared dividend	(5,047)		—	—		(52,347)		16,986		—		(679)		—		(41,087)
Amortization of stock-based compensation	Amortization of stock-based compensation	—		—	—		2,343		—		—		4,623		—		6,966		Amortization of stock-based compensation	—		—	—		2,481		—		—		4,907		—		7,388
Net income (loss)	Net income (loss)	5,047		—	—		—		(7,136)		—		(93)		7,081		4,899		Net income (loss)	5,047		—	—		—		(16,986)		—		(225)		6,256		(5,908)
Other comprehensive loss	Other comprehensive loss	—		—	—		—		—		(6,375)		(113)		—		(6,488)		Other comprehensive loss	—		—	—		—		—		(10,015)		(179)		—		(10,194)

Balance, June 30, 2022		$	425,000	141,609,336	$	1,415	$	2,985,666	$	—	$	(7,051)	$	58,992	$	384,707	$	3,848,729
Balance, September 30, 2022																			Balance, September 30, 2022	$	425,000	140,923,320	$	1,408	$	2,935,448	$	—	$	(17,066)	$	62,816	$	384,724	$	3,792,330

Balance, December 31, 2021	Balance, December 31, 2021	$	425,000	151,124,543	$	1,511	$	3,317,072	$	—	$	(1,761)	$	52,199	$	402,971	$	4,196,992	Balance, December 31, 2021	$	425,000	151,124,543	$	1,511	$	3,317,072	$	—	$	(1,761)	$	52,199	$	402,971	$	4,196,992

Contributions	Contributions	—		—	—		—		—		—		—		15,457		15,457		Contributions	—		—	—		—		—		—		—		16,241		16,241
Distributions	Distributions	—		—	—		—		—		—		—		(49,363)		(49,363)		Distributions	—		—	—		—		—		—		—		(56,386)		(56,386)
Transaction costs	Transaction costs	—		—	—		(214)		—		—		—		—		(214)		Transaction costs	—		—	—		(573)		—		—		—		—		(573)

Issuance of unrestricted stock	Issuance of unrestricted stock	—		32,861	—		—		—		—		—		—		—		Issuance of unrestricted stock	—		32,861	—		—		—		—		—		—		—
Shares repurchased	Shares repurchased	—		(2,105,359)	(21)		(37,185)		—		—		—		—		(37,206)		Shares repurchased	—		(2,105,359)	(21)		(37,185)		—		—		—		—		(37,206)

Accelerated share repurchase	Accelerated share repurchase	—		(7,442,709)	(75)		(199,925)		—		—		—		—		(200,000)		Accelerated share repurchase	—		(8,128,725)	(82)		(199,918)		—		—		—		—		(200,000)
Declared dividend	Declared dividend	(10,337)		—	—		(98,625)		26,635		—		(1,358)		—		(83,685)		Declared dividend	(15,384)		—	—		(150,972)		43,621		—		(2,037)		—		(124,772)
Amortization of stock-based compensation	Amortization of stock-based compensation	—		—	—		4,543		—		—		8,568		—		13,111		Amortization of stock-based compensation	—		—	—		7,024		—		—		13,475		—		20,499
Net income (loss)	Net income (loss)	10,337		—	—		—		(26,635)		—		(323)		15,642		(979)		Net income (loss)	15,384		—	—		—		(43,621)		—		(548)		21,898		(6,887)
Other comprehensive loss	Other comprehensive loss	—		—	—		—		—		(5,290)		(94)		—		(5,384)		Other comprehensive loss	—		—	—		—		—		(15,305)		(273)		—		(15,578)

Balance, June 30, 2022		$	425,000	141,609,336	$	1,415	$	2,985,666	$	—	$	(7,051)	$	58,992	$	384,707	$	3,848,729
Balance, September 30, 2022																			Balance, September 30, 2022	$	425,000	140,923,320	$	1,408	$	2,935,448	$	—	$	(17,066)	$	62,816	$	384,724	$	3,792,330

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

Table of Contents

HUDSON PACIFIC PROPERTIES, INC.

CONSOLIDATED STATEMENTS OF EQUITY

For the three and ~~six~~nine months ended ~~June~~September 30, 2021

(unaudited, in thousands, except share data)


				Hudson Pacific Properties, Inc. Stockholders’ Equity									Non-controlling Interest							Hudson Pacific Properties, Inc. Stockholders’ Equity											Non-controlling Interest
		Series C Cumulative Redeemable Preferred Stock		Shares of Common Stock	Stock Amount		Additional Paid-in Capital		(Accumulated Deficit) Retained Earnings		Accumulated Other Comprehensive Loss		Units in the Operating Partnership		Members in Consolidated Real Estate Entities		Total Equity			Series C Cumulative Redeemable Preferred Stock		Shares of Common Stock	Stock Amount		Additional Paid-in Capital		(Accumulated Deficit) Retained Earnings		Accumulated Other Comprehensive Loss		Units in the Operating Partnership		Members in Consolidated Real Estate Entities		Total Equity
Balance, March 31, 2021		$	—	150,760,631	$	1,508	$	3,423,699	$	—	$	(5,327)	$	39,787	$	476,573	$	3,936,240
Balance, June 30, 2021																			Balance, June 30, 2021	$	—	152,319,084	$	1,523	$	3,435,156	$	—	$	(2,736)	$	44,387	$	467,476	$	3,945,806

Contributions																			Contributions			—	—		—		—		—		—		9,702		9,702
Distributions																			Distributions	—		—	—		—		—		—		—		(63,508)		(63,508)
Transaction costs																			Transaction costs			—	—		(232)		—		—		—		—		(232)

Distributions		—		—	—		—		—		—		—		(14,646)		(14,646)
Issuance of unrestricted stock																			Issuance of unrestricted stock	—		1,168	—		—		—		—		—		—		—

Proceeds from sale of common stock, net of transaction costs		—		1,526,163	15		44,805		—		—		—		—		44,820
Issuance of unrestricted stock		—		33,246	—		—		—		—		—		—		—
Shares withheld to satisfy tax withholding obligations		—		(956)	—		—		—		—		—		—		—

Declared dividend	Declared dividend	—		—	—		(35,591)		(2,591)		—		(560)		—		(38,742)		Declared dividend	—		—	—		(47,204)		9,019		—		(560)		—		(38,745)
Amortization of stock-based compensation	Amortization of stock-based compensation	—		—	—		2,243		—		—		5,106		—		7,349		Amortization of stock-based compensation	—		—	—		1,973		—		—		4,638		—		6,611
Net income		—		—	—		—		2,591		—		19		5,549		8,159
Other comprehensive income		—		—	—		—		—		2,591		35		—		2,626
Net (loss) income																			Net (loss) income	—		—	—		—		(9,019)		—		(85)		3,585		(5,519)
Other comprehensive loss																			Other comprehensive loss	—		—	—		—		—		(1,712)		(23)		—		(1,735)

Balance, June 30, 2021		$	—	152,319,084	$	1,523	$	3,435,156	$	—	$	(2,736)	$	44,387	$	467,476	$	3,945,806
Balance, September 30, 2021																			Balance, September 30, 2021	$	—	152,320,252	$	1,523	$	3,389,693	$	—	$	(4,448)	$	48,357	$	417,255	$	3,852,380

Balance, December 31, 2020	Balance, December 31, 2020	$	—	151,401,365	$	1,514	$	3,469,758	$	—	$	(8,133)	$	37,832	$	467,009	$	3,967,980	Balance, December 31, 2020	$	—	151,401,365	$	1,514	$	3,469,758	$	—	$	(8,133)	$	37,832	$	467,009	$	3,967,980

Contributions	Contributions	—		—	—		—		—		—		—		15,016		15,016		Contributions	—		—	—		—		—		—		—		24,718		24,718
Distributions	Distributions	—		—	—		—		—		—		—		(26,728)		(26,728)		Distributions	—		—	—		—		—		—		—		(90,236)		(90,236)

Proceeds from sale of common stock, net of transaction costs	Proceeds from sale of common stock, net of transaction costs	—		1,526,163	15		44,805		—		—		—		—		44,820		Proceeds from sale of common stock, net of transaction costs	—		1,526,163	15		44,573		—		—		—		—		44,588
Issuance of unrestricted stock	Issuance of unrestricted stock	—		53,246	—		—		—		—		—		—		—		Issuance of unrestricted stock	—		54,414	—		—		—		—		—		—		—
Shares repurchased	Shares repurchased	—		(632,109)	(6)		(14,750)		—		—		—		—		(14,756)		Shares repurchased	—		(632,109)	(6)		(14,750)		—		—		—		—		(14,756)
Shares withheld to satisfy tax withholding obligations	Shares withheld to satisfy tax withholding obligations	—		(29,581)	—		(693)		—		—		—		—		(693)		Shares withheld to satisfy tax withholding obligations	—		(29,581)	—		(693)		—		—		—		—		(693)
Declared dividend	Declared dividend	—		—	—		(68,189)		(7,851)		—		(1,128)		—		(77,168)		Declared dividend	—		—	—		(115,393)		1,168		—		(1,688)		—		(115,913)
Amortization of stock-based compensation	Amortization of stock-based compensation	—		—	—		4,225		—		—		7,541		—		11,766		Amortization of stock-based compensation	—		—	—		6,198		—		—		12,179		—		18,377
Net income		—		—	—		—		7,851		—		69		12,179		20,099
Net (loss) income																			Net (loss) income	—		—	—		—		(1,168)		—		(16)		15,764		14,580
Other comprehensive income	Other comprehensive income	—		—	—		—		—		5,397		73		—		5,470		Other comprehensive income	—		—	—		—		—		3,685		50		—		3,735

Balance, June 30, 2021		$	—	152,319,084	$	1,523	$	3,435,156	$	—	$	(2,736)	$	44,387	$	467,476	$	3,945,806
Balance, September 30, 2021																			Balance, September 30, 2021	$	—	152,320,252	$	1,523	$	3,389,693	$	—	$	(4,448)	$	48,357	$	417,255	$	3,852,380

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

Table of Contents

HUDSON PACIFIC PROPERTIES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, in thousands)

Six Months Ended June 30,
2022 2021
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) income $ (4,069) $ 18,441
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization 183,631 166,939
Non-cash portion of interest expense 6,785 4,835
Amortization of stock-based compensation 11,322 9,878
Income from unconsolidated real estate entities (2,083) (1,105)
Unrealized loss (gain) on non-real estate investments 168 (10,793)
Straight-line rents (27,621) (13,114)
Straight-line rent expenses 844 737
Amortization of above- and below-market leases, net (4,692) (5,258)
Amortization of above- and below-market ground leases, net 1,355 1,175
Amortization of lease incentive costs 863 952
Distribution of income from unconsolidated entities 688 872
Gain on derivatives (3,513) —
Impairment loss 23,753 —
Change in operating assets and liabilities:
Accounts receivable 9,744 5,624
Deferred leasing costs and lease intangibles (9,807) (8,867)
Prepaid expenses and other assets (13,220) (14,899)
Accounts payable, accrued liabilities and other 18,250 25,301
Security deposits and prepaid rent (2,256) (7,787)
Net cash provided by operating activities 190,142 172,931
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to investment in real estate (113,605) (191,005)
Property acquisitions (87,970) —
Maturities of U.S. Government securities 129,300 2,889
Contributions to non-real estate investments (11,974) (8,514)
Distributions from non-real estate investments 329 —
Distributions from unconsolidated real estate entities 883 908
Contributions to unconsolidated real estate entities (14,892) (8,325)
Additions to non-real estate property, plant and equipment (6,325) —
Net cash used in investing activities (104,254) (204,047)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from unsecured and secured debt 389,327 86,850
Payments of unsecured and secured debt — (313)
Payments of in-substance defeased debt (1,815) (1,736)
Proceeds from sale of common stock — 44,820
Transaction costs (214) —
Repurchases of common stock (34,688) (14,756)
Accelerated share repurchase (200,000) —
Dividends paid to common stock and unitholders (73,348) (77,168)
Dividends paid to preferred stock and unitholders (12,924) (306)
Contributions from redeemable non-controlling members in consolidated real estate entities 375 1,543
Distributions to redeemable non-controlling members in consolidated real estate entities (8) (8)
Contributions from non-controlling members in consolidated real estate entities 15,457 15,016
Distributions to non-controlling members in consolidated real estate entities (49,363) (26,728)
Payments to satisfy tax withholding obligations — (693)
Net cash provided by financing activities 32,799 26,521
Net increase (decrease) in cash and cash equivalents and restricted cash 118,687 (4,595)
Cash and cash equivalents and restricted cash—beginning of period 196,876 149,540
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH—END OF PERIOD $ 315,563 $ 144,945

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


	Nine Months Ended September 30,
	2022		2021
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) income	$	(10,861)	$	12,259
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization	276,701		255,507
Non-cash portion of interest expense	10,248		7,508
Amortization of stock-based compensation	17,816		15,718
Income from unconsolidated real estate entities	(1,731)		(1,671)
Unrealized loss (gain) on non-real estate investments	1,062		(11,620)
Straight-line rents	(33,951)		(15,596)
Straight-line rent expenses	1,796		1,079
Amortization of above- and below-market leases, net	(6,393)		(8,281)
Amortization of above- and below-market ground leases, net	2,042		1,764
Amortization of lease incentive costs	1,222		1,427
Distribution of income from unconsolidated real estate entities	1,961		1,437
Gain on derivatives	(8,044)		—
Impairment loss	28,548		2,762
Loss on extinguishment of debt	—		6,249
Earnout liability fair value adjustment	1,757		—
Loss on sale of real estate	180		—
Gain from insurance proceeds	(1,167)		—
Change in operating assets and liabilities:
Accounts receivable	13,003		4,526
Deferred leasing costs and lease intangibles	(19,553)		(11,696)
Prepaid expenses and other assets	(10,928)		(18,665)
Accounts payable, accrued liabilities and other	63,334		55,735
Security deposits, prepaid rent and other	1,507		(12,930)
Net cash provided by operating activities	328,549		285,512
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sales of real estate	44,537		—
Additions to investment in real estate	(171,011)		(271,102)
Property acquisitions	(96,443)		—

Acquisitions of businesses	(197,862)		(209,854)
Maturities of U.S. Government securities	129,300		5,002
Contributions to non-real estate investments	(14,791)		(10,530)

Distributions from non-real estate investments	329		13
Distributions from unconsolidated real estate entities	1,067		1,246
Contributions to unconsolidated real estate entities	(18,766)		(73,098)
Additions to non-real estate property, plant and equipment	(13,071)		(2,279)

Insurance proceeds for damaged property, plant and equipment	1,284		—
Net cash used in investing activities	(335,427)		(560,602)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from unsecured and secured debt	978,251		1,304,352
Payments of unsecured and secured debt	(430,000)		(792,656)
Payments of in-substance defeased debt	(128,212)		(2,602)
Proceeds from sale of common stock	—		44,974
Transaction costs	(573)		(386)
Repurchases of common stock	(37,206)		(14,756)


Accelerated share repurchase	(200,000)		—
Dividends paid to common stock and unitholders	(109,388)		(115,913)
Dividends paid to preferred stock and unitholders	(18,124)		(459)
Contributions from redeemable non-controlling members in consolidated real estate entities	575		4,262
Distributions to redeemable non-controlling members in consolidated real estate entities	(8)		(8)

~~Table of Contents~~

~~ITEM 1. FINANCIAL STATEMENTS OF HUDSON PACIFIC PROPERTIES, L.P.~~

~~HUDSON PACIFIC PROPERTIES, L.P.~~

~~CONSOLIDATED BALANCE SHEETS~~

~~(in thousands, except unit data)~~

June 30, 2022
(unaudited)
December 31, 2021
ASSETS
Investment in real estate, at cost $ 8,562,340 $ 8,361,477
Accumulated depreciation and amortization (1,413,526) (1,283,774)
Investment in real estate, net 7,148,814 7,077,703
Non-real estate property, plant and equipment, net 60,222 58,469
Cash and cash equivalents 266,538 96,555
Restricted cash 49,025 100,321
Accounts receivable, net 15,602 25,339
Straight-line rent receivables, net 269,015 240,306
Deferred leasing costs and intangible assets, net 336,439 341,444
U.S. Government securities — 129,321
Operating lease right-of-use assets 299,673 287,041
Prepaid expenses and other assets, net 99,151 119,000
Investment in unconsolidated real estate entities 161,845 154,731
Goodwill 109,473 109,439
Assets associated with real estate held for sale 234,841 250,520
TOTAL ASSETS $ 9,050,638 $ 8,990,189
LIABILITIES AND CAPITAL
Liabilities
Unsecured and secured debt, net $ 4,129,034 $ 3,733,903
In-substance defeased debt 126,397 128,212
Joint venture partner debt 66,136 66,136
Accounts payable, accrued liabilities and other 313,572 300,959
Operating lease liabilities 307,072 293,596
Intangible liabilities, net 37,485 42,290
Security deposits and prepaid rent 82,906 84,939
Liabilities associated with real estate held for sale 3,072 3,898
Total liabilities 5,065,674 4,653,933
Commitments and contingencies (note 22) 0 0
Redeemable preferred units of the operating partnership 9,815 9,815
Redeemable non-controlling interest in consolidated real estate entities 126,420 129,449
Capital
Hudson Pacific Properties, L.P. partners’ capital
4.750% Series C cumulative redeemable preferred units, $25.00 per unit liquidation preference, 17,000,000 outstanding at June 30, 2022 and December 31, 2021, respectively 425,000 425,000
Common units, 143,455,600 and 152,967,441 outstanding at June 30, 2022 and December 31, 2021, respectively 3,046,185 3,370,800
Accumulated other comprehensive loss (7,163) (1,779)
Total Hudson Pacific Properties, L.P. partners’ capital 3,464,022 3,794,021
Non-controlling interest—members in consolidated real estate entities 384,707 402,971
Total capital 3,848,729 4,196,992
TOTAL LIABILITIES AND CAPITAL $ 9,050,638 $ 8,990,189

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

Table of Contents

HUDSON PACIFIC PROPERTIES, ~~L.P.~~INC.

CONSOLIDATED STATEMENTS OF ~~OPERATIONS~~CASH FLOWS

(unaudited, in ~~thousands, except unit data)~~thousands)

Three Months Ended June 30, Six Months Ended June 30,
2022 2021 2022 2021
REVENUES
Office
Rental $ 211,836 $ 192,552 $ 418,028 $ 382,413
Service and other revenues 4,408 3,151 9,616 5,433
Total office revenues 216,244 195,703 427,644 387,846
Studio
Rental 13,438 11,551 26,832 23,704
Service and other revenues 21,748 8,348 41,467 17,171
Total studio revenues 35,186 19,899 68,299 40,875
Total revenues 251,430 215,602 495,943 428,721
OPERATING EXPENSES
Office operating expenses 78,558 69,111 152,189 135,673
Studio operating expenses 20,686 12,466 39,669 23,919
General and administrative 21,871 17,109 42,383 35,558
Depreciation and amortization 91,438 84,178 183,631 166,939
Total operating expenses 212,553 182,864 417,872 362,089
OTHER INCOME (EXPENSE)
Income from unconsolidated real estate entities 1,780 470 2,083 1,105
Fee income 1,140 797 2,211 1,645
Interest expense (33,719) (30,689) (64,555) (60,975)
Interest income 920 937 1,830 1,934
Management services reimbursement income—unconsolidated real estate entities 1,068 626 2,176 626
Management services expense—unconsolidated real estate entities (1,068) (626) (2,176) (626)
Transaction-related expenses (1,126) (1,064) (1,382) (1,064)
Unrealized (loss) gain on non-real estate investments (1,818) 5,018 (168) 10,793
Impairment loss (3,250) — (23,753) —
Other income (expense) 742 (1,177) 1,594 (1,629)
Total other expenses (35,331) (25,708) (82,140) (48,191)
Net income (loss) 3,546 7,030 (4,069) 18,441
Net income attributable to non-controlling interest in consolidated real estate entities (7,081) (5,549) (15,642) (12,179)
Net loss attributable to redeemable non-controlling interest in consolidated real estate entities 1,506 1,282 3,396 1,964
Net (loss) income attributable to Hudson Pacific Properties, L.P. (2,029) 2,763 (16,315) 8,226
Net income attributable to Series A preferred units (153) (153) (306) (306)
Net income attributable to Series C preferred units (5,047) — (10,337) —
Net income attributable to participating securities (300) (276) (594) (554)
NET (LOSS) INCOME AVAILABLE TO COMMON UNITHOLDERS $ (7,529) $ 2,334 $ (27,552) $ 7,366
BASIC AND DILUTED PER UNIT AMOUNTS
Net (loss) income attributable to common unitholders—basic $ (0.05) $ 0.02 $ (0.19) $ 0.05
Net (loss) income attributable to common unitholders—diluted $ (0.05) $ 0.02 $ (0.19) $ 0.05
Weighted average shares of common units outstanding—basic 145,662,962 152,551,236 148,332,424 152,369,823
Weighted average shares of common units outstanding—diluted 145,662,962 152,683,463 148,332,424 152,675,104


Contributions from non-controlling members in consolidated real estate entities	16,241		24,718
Distributions to non-controlling members in consolidated real estate entities	(56,386)		(90,236)
Payments to satisfy tax withholding obligations	—		(693)
Payments of loan costs	(1,100)		(14,810)
Net cash provided by financing activities	14,070		345,787



Net increase in cash and cash equivalents and restricted cash	7,192		70,697
Cash and cash equivalents and restricted cash—beginning of period	196,876		149,540
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH—END OF PERIOD	$	204,068	$	220,237

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

~~Table of Contents~~

~~HUDSON PACIFIC PROPERTIES, L.P.~~

~~CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME~~

~~(unaudited, in thousands)~~

Three Months Ended June 30, Six Months Ended June 30,
2022 2021 2022 2021
Net income (loss) $ 3,546 $ 7,030 $ (4,069) $ 18,441
Currency translation adjustments (7,088) 914 (8,449) 1,923
Net unrealized gains on derivative instruments:
Unrealized gains (losses) 1,516 (160) 4,560 (136)
Reclassification adjustment for realized (gains) losses (916) 1,872 (1,495) 3,683
Total net unrealized gains on derivative instruments 600 1,712 3,065 3,547
Total other comprehensive (loss) income (6,488) 2,626 (5,384) 5,470
Comprehensive (loss) income (2,942) 9,656 (9,453) 23,911
Comprehensive income attributable to Series A preferred units (153) (153) (306) (306)
Comprehensive income attributable to Series C preferred units (5,047) — (10,337) —
Comprehensive income attributable to participating securities (300) (276) (594) (554)
Comprehensive income attributable to non-controlling interest in consolidated real estate entities (7,081) (5,549) (15,642) (12,179)
Comprehensive loss attributable to redeemable non-controlling interest in consolidated real estate entities 1,506 1,282 3,396 1,964
COMPREHENSIVE (LOSS) INCOME ATTRIBUTABLE TO PARTNERS’ CAPITAL $ (14,017) $ 4,960 $ (32,936) $ 12,836

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

Table of Contents

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, 2022 (unaudited)		December 31, 2021
ASSETS
Investment in real estate, at cost	$	8,656,934	$	8,361,477
Accumulated depreciation and amortization	(1,478,250)		(1,283,774)
Investment in real estate, net	7,178,684		7,077,703
Non-real estate property, plant and equipment, net	128,504		58,469
Cash and cash equivalents	161,667		96,555
Restricted cash	42,401		100,321
Accounts receivable, net	19,692		25,339
Straight-line rent receivables, net	275,518		240,306
Deferred leasing costs and intangible assets, net	405,434		341,444
U.S. Government securities	—		129,321
Operating lease right-of-use assets	399,570		287,041
Prepaid expenses and other assets, net	106,640		119,000
Investment in unconsolidated real estate entities	154,144		154,731
Goodwill	261,139		109,439
Assets associated with real estate held for sale	187,026		250,520
TOTAL ASSETS	$	9,320,419	$	8,990,189

LIABILITIES AND CAPITAL
Liabilities
Unsecured and secured debt, net	$	4,449,316	$	3,733,903
In-substance defeased debt	—		128,212
Joint venture partner debt	66,136		66,136
Accounts payable, accrued liabilities and other	355,545		300,959
Operating lease liabilities	396,412		293,596
Intangible liabilities, net	35,758		42,290
Security deposits, prepaid rent and other	87,049		84,939
Liabilities associated with real estate held for sale	2,475		3,898
Total liabilities	5,392,691		4,653,933

Commitments and contingencies (note 22)

Redeemable preferred units of the operating partnership	9,815		9,815
Redeemable non-controlling interest in consolidated real estate entities	125,583		129,449

Capital
Hudson Pacific Properties, L.P. partners’ capital
4.750% Series C cumulative redeemable preferred units, $25.00 per unit liquidation preference, 17,000,000 outstanding at September 30, 2022 and December 31, 2021	425,000		425,000
Common units, 142,769,584 and 152,967,441 outstanding at September 30, 2022 and December 31, 2021, respectively	2,999,963		3,370,800
Accumulated other comprehensive loss	(17,357)		(1,779)
Total Hudson Pacific Properties, L.P. partners’ capital	3,407,606		3,794,021
Non-controlling interest—members in consolidated real estate entities	384,724		402,971
Total capital	3,792,330		4,196,992
TOTAL LIABILITIES AND CAPITAL	$	9,320,419	$	8,990,189

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

Table of Contents

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,
	2022		2021		2022		2021
REVENUES
Office
Rental	$	208,779	$	197,941	$	626,807	$	580,354
Service and other revenues	4,712		3,925		14,328		9,358
Total office revenues	213,491		201,866		641,135		589,712
Studio
Rental	15,305		12,768		42,137		36,472
Service and other revenues	31,558		12,998		73,025		30,169
Total studio revenues	46,863		25,766		115,162		66,641
Total revenues	260,354		227,632		756,297		656,353
OPERATING EXPENSES
Office operating expenses	78,340		71,865		230,529		207,538
Studio operating expenses	26,688		12,044		66,357		35,963
General and administrative	19,795		18,288		62,178		53,846
Depreciation and amortization	93,070		88,568		276,701		255,507
Total operating expenses	217,893		190,765		635,765		552,854
OTHER INCOME (EXPENSE)
(Loss) income from unconsolidated real estate entities	(352)		566		1,731		1,671
Fee income	911		678		3,122		2,323
Interest expense	(37,261)		(30,825)		(101,816)		(91,800)
Interest income	196		934		2,026		2,868
Management services reimbursement income—unconsolidated real estate entities	983		253		3,159		879
Management services expense—unconsolidated real estate entities	(983)		(253)		(3,159)		(879)
Transaction-related expenses	(9,331)		(6,300)		(10,713)		(7,364)
Unrealized (loss) gain on non-real estate investments	(894)		827		(1,062)		11,620

Loss on sale of real estate	(180)		—		(180)		—
Impairment loss	(4,795)		(2,762)		(28,548)		(2,762)
Loss on extinguishment of debt	—		(6,249)		—		(6,249)
Other income (expense)	2,453		82		4,047		(1,547)


Total other expenses	(49,253)		(43,049)		(131,393)		(91,240)
Net (loss) income	(6,792)		(6,182)		(10,861)		12,259
Net income attributable to non-controlling interest in consolidated real estate entities	(6,256)		(3,585)		(21,898)		(15,764)
Net loss attributable to redeemable non-controlling interest in consolidated real estate entities	1,037		816		4,433		2,780
Net loss attributable to Hudson Pacific Properties, L.P.	(12,011)		(8,951)		(28,326)		(725)
Net income attributable to Series A preferred units	(153)		(153)		(459)		(459)
Net income attributable to Series C preferred units	(5,047)		—		(15,384)		—
Net income attributable to participating securities	(300)		(276)		(894)		(830)
NET LOSS AVAILABLE TO COMMON UNITHOLDERS	$	(17,511)	$	(9,380)	$	(45,063)	$	(2,014)

BASIC AND DILUTED PER UNIT AMOUNTS
Net loss attributable to common unitholders—basic	$	(0.12)	$	(0.06)	$	(0.31)	$	(0.01)
Net loss attributable to common unitholders—diluted	$	(0.12)	$	(0.06)	$	(0.31)	$	(0.01)
Weighted average shares of common units outstanding—basic	142,963,458		153,701,876		146,523,102		152,818,720
Weighted average shares of common units outstanding—diluted	142,963,458		153,701,876		146,523,102		152,818,720

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

Table of Contents

HUDSON PACIFIC PROPERTIES, L.P.

CONSOLIDATED STATEMENTS OF ~~CAPITAL~~

~~For the three and six months ended June 30, 2022~~COMPREHENSIVE (LOSS) INCOME

(unaudited, in ~~thousands, except share data)~~thousands)

Hudson Pacific Properties, L.P. Partners’ Capital
Preferred Units Number of Common Units Common Units Accumulated Other Comprehensive Loss Total Partners’ Capital Non-controlling Interest—Members in Consolidated Real Estate Entities Total Capital
Balance, March 31, 2022 $ 425,000 146,405,432 $ 3,120,198 $ (675) $ 3,544,523 $ 398,941 $ 3,943,464
Contributions — — — — — 12,833 12,833
Distributions — — — — — (34,148) (34,148)
Transaction costs — — (138) — (138) — (138)
Issuance of unrestricted units — 24,564 — — — — —
Repurchase of common units — (2,974,396) (37,206) — (37,206) — (37,206)
Declared distributions (5,047) — (36,406) — (41,453) — (41,453)
Amortization of unit-based compensation — — 6,966 — 6,966 — 6,966
Net income (loss) 5,047 — (7,229) — (2,182) 7,081 4,899
Other comprehensive loss — — — (6,488) (6,488) — (6,488)
Balance, June 30, 2022 $ 425,000 143,455,600 $ 3,046,185 $ (7,163) $ 3,464,022 $ 384,707 $ 3,848,729
Balance, December 31, 2021 $ 425,000 152,967,441 $ 3,370,800 $ (1,779) $ 3,794,021 $ 402,971 $ 4,196,992
Contributions — — — — — 15,457 15,457
Distributions — — — — — (49,363) (49,363)
Transaction costs — — (214) — (214) — (214)
Issuance of unrestricted units — 36,227 — — — — —
Repurchase of common units — (9,548,068) (237,206) — (237,206) — (237,206)
Declared distributions (10,337) — (73,348) — (83,685) — (83,685)
Amortization of unit-based compensation — — 13,111 — 13,111 — 13,111
Net income (loss) 10,337 — (26,958) — (16,621) 15,642 (979)
Other comprehensive loss — — — (5,384) (5,384) — (5,384)
Balance, June 30, 2022 $ 425,000 143,455,600 $ 3,046,185 $ (7,163) $ 3,464,022 $ 384,707 $ 3,848,729


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Net (loss) income	$	(6,792)	$	(6,182)	$	(10,861)	$	12,259
Currency translation adjustments	(10,052)		(3,511)		(18,501)		(1,588)
Net unrealized gains on derivative instruments:
Unrealized gains (losses)	4,640		(243)		9,200		(379)
Reclassification adjustment for realized (gains) losses	(4,782)		2,019		(6,277)		5,702
Total net unrealized gains (losses) on derivative instruments	(142)		1,776		2,923		5,323
Total other comprehensive (loss) income	(10,194)		(1,735)		(15,578)		3,735
Comprehensive (loss) income	(16,986)		(7,917)		(26,439)		15,994
Comprehensive income attributable to Series A preferred units	(153)		(153)		(459)		(459)
Comprehensive income attributable to Series C preferred units	(5,047)		—		(15,384)		—
Comprehensive income attributable to participating securities	(300)		(276)		(894)		(830)
Comprehensive income attributable to non-controlling interest in consolidated real estate entities	(6,256)		(3,585)		(21,898)		(15,764)
Comprehensive loss attributable to redeemable non-controlling interest in consolidated real estate entities	1,037		816		4,433		2,780
COMPREHENSIVE (LOSS) INCOME ATTRIBUTABLE TO PARTNERS’ CAPITAL	$	(27,705)	$	(11,115)	$	(60,641)	$	1,721

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

Table of Contents

HUDSON PACIFIC PROPERTIES, L.P.

CONSOLIDATED STATEMENTS OF CAPITAL

For the three and ~~six~~nine months ended ~~June~~September 30, ~~2021~~2022

(unaudited, in thousands, except share data)

Hudson Pacific Properties, L.P. Partners’ Capital
Preferred Units Number of Common Units Common Units Accumulated Other Comprehensive Loss Total Partners’ Capital Non-controlling Interest—Members in Consolidated Real Estate Entities Total Capital
Balance, March 31, 2021 $ — 152,142,255 $ 3,465,069 $ (5,402) $ 3,459,667 $ 476,573 $ 3,936,240
Distributions — — — — — (14,646) (14,646)
Proceeds from sale of common units, net of transaction costs — 1,526,163 44,820 — 44,820 — 44,820
Issuance of unrestricted units — 33,246 — — — — —
Units withheld to satisfy tax withholding obligations — (956) — — — — —
Declared distributions — — (38,742) — (38,742) — (38,742)
Amortization of unit-based compensation — — 7,349 — 7,349 — 7,349
Net income — — 2,610 — 2,610 5,549 8,159
Other comprehensive income — — — 2,626 2,626 — 2,626
Balance, June 30, 2021 $ — 153,700,708 $ 3,481,106 $ (2,776) $ 3,478,330 $ 467,476 $ 3,945,806
Balance, December 31, 2020 $ — 152,722,448 $ 3,509,217 $ (8,246) $ 3,500,971 $ 467,009 $ 3,967,980
Contributions — — — — — 15,016 15,016
Distributions — — — — — (26,728) (26,728)
Proceeds from sale of common units, net of transaction costs — 1,526,163 44,820 — 44,820 — 44,820
Issuance of unrestricted units — 113,787 — — — — —
Units withheld to satisfy tax withholding obligations — (29,581) (693) — (693) — (693)
Repurchase of common units — (632,109) (14,756) — (14,756) — (14,756)
Declared distributions — — (77,168) — (77,168) — (77,168)
Amortization of unit-based compensation — — 11,766 — 11,766 — 11,766
Net income — — 7,920 — 7,920 12,179 20,099
Other comprehensive income — — — 5,470 5,470 — 5,470
Balance, June 30, 2021 $ — 153,700,708 $ 3,481,106 $ (2,776) $ 3,478,330 $ 467,476 $ 3,945,806


	Hudson Pacific Properties, L.P. Partners’ Capital
	Preferred Units		Number of Common Units	Common Units		Accumulated Other Comprehensive Loss		Total Partners’ Capital		Non-controlling Interest—Members in Consolidated Real Estate Entities		Total Capital
Balance, June 30, 2022	$	425,000	143,455,600	$	3,046,185	$	(7,163)	$	3,464,022	$	384,707	$	3,848,729

Contributions	—		—	—		—		—		784		784
Distributions	—		—	—		—		—		(7,023)		(7,023)
Transaction costs	—		—	(359)		—		(359)		—		(359)


Repurchase of common units	—		(686,016)	—		—		—		—		—

Declared distributions	(5,047)		—	(36,040)		—		(41,087)		—		(41,087)
Amortization of unit-based compensation	—		—	7,388		—		7,388		—		7,388
Net income (loss)	5,047		—	(17,211)		—		(12,164)		6,256		(5,908)
Other comprehensive loss	—		—	—		(10,194)		(10,194)		—		(10,194)

Balance, September 30, 2022	$	425,000	142,769,584	$	2,999,963	$	(17,357)	$	3,407,606	$	384,724	$	3,792,330

Balance, December 31, 2021	$	425,000	152,967,441	$	3,370,800	$	(1,779)	$	3,794,021	$	402,971	$	4,196,992

Contributions	—		—	—		—		—		16,241		16,241
Distributions	—		—	—		—		—		(56,386)		(56,386)
Transaction costs	—		—	(573)		—		(573)		—		(573)
Issuance of unrestricted units	—		36,227	—		—		—		—		—
Repurchase of common units	—		(10,234,084)	(237,206)		—		(237,206)		—		(237,206)

Declared distributions	(15,384)		—	(109,388)		—		(124,772)		—		(124,772)
Amortization of unit-based compensation	—		—	20,499		—		20,499		—		20,499
Net income (loss)	15,384		—	(44,169)		—		(28,785)		21,898		(6,887)
Other comprehensive loss	—		—	—		(15,578)		(15,578)		—		(15,578)

Balance, September 30, 2022	$	425,000	142,769,584	$	2,999,963	$	(17,357)	$	3,407,606	$	384,724	$	3,792,330

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

Table of Contents

HUDSON PACIFIC PROPERTIES, L.P.

CONSOLIDATED STATEMENTS OF CAPITAL

For the three and nine months ended September 30, 2021

(unaudited, in thousands, except share data)


	Hudson Pacific Properties, L.P. Partners’ Capital
	Preferred Units		Number of Common Units	Common Units		Accumulated Other Comprehensive Loss		Total Partners’ Capital		Non-controlling Interest—Members in Consolidated Real Estate Entities		Total Capital
Balance, June 30, 2021	$	—	153,700,708	$	3,481,106	$	(2,776)	$	3,478,330	$	467,476	$	3,945,806

Contributions			—	—		—		—		9,702		9,702
Distributions	—		—	—		—		—		(63,508)		(63,508)
Transaction costs			—	(232)		—		(232)		—		(232)

Issuance of unrestricted units	—		1,168	—		—		—		—		—


Declared distributions	—		—	(38,745)		—		(38,745)		—		(38,745)
Amortization of unit-based compensation	—		—	6,611		—		6,611		—		6,611
Net (loss) income	—		—	(9,104)		—		(9,104)		3,585		(5,519)
Other comprehensive loss	—		—	—		(1,735)		(1,735)		—		(1,735)

Balance, September 30, 2021	$	—	153,701,876	$	3,439,636	$	(4,511)	$	3,435,125	$	417,255	$	3,852,380

Balance, December 31, 2020	$	—	152,722,448	$	3,509,217	$	(8,246)	$	3,500,971	$	467,009	$	3,967,980

Contributions	—		—	—		—		—		24,718		24,718
Distributions	—		—	—		—		—		(90,236)		(90,236)
Proceeds from sale of common units, net of transaction costs	—		1,526,163	44,588		—		44,588		—		44,588
Issuance of unrestricted units	—		114,955	—		—		—		—		—
Units withheld to satisfy tax withholding obligations	—		(29,581)	(693)		—		(693)		—		(693)
Repurchase of common units	—		(632,109)	(14,756)		—		(14,756)		—		(14,756)
Declared distributions	—		—	(115,913)		—		(115,913)		—		(115,913)
Amortization of unit-based compensation	—		—	18,377		—		18,377		—		18,377
Net (loss) income	—		—	(1,184)		—		(1,184)		15,764		14,580
Other comprehensive income	—		—	—		3,735		3,735		—		3,735

Balance, September 30, 2021	$	—	153,701,876	$	3,439,636	$	(4,511)	$	3,435,125	$	417,255	$	3,852,380

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

Table of Contents

HUDSON PACIFIC PROPERTIES, L.P.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, in thousands)


		Six Months Ended June 30,					Nine Months Ended September 30,
		2022		2021			2022		2021
CASH FLOWS FROM OPERATING ACTIVITIES	CASH FLOWS FROM OPERATING ACTIVITIES					CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) income	Net (loss) income	$	(4,069)	$	18,441	Net (loss) income	$	(10,861)	$	12,259
Adjustments to reconcile net (loss) income to net cash provided by operating activities:	Adjustments to reconcile net (loss) income to net cash provided by operating activities:					Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization	Depreciation and amortization	183,631		166,939		Depreciation and amortization	276,701		255,507
Non-cash portion of interest expense	Non-cash portion of interest expense	6,785		4,835		Non-cash portion of interest expense	10,248		7,508
Amortization of unit-based compensation	Amortization of unit-based compensation	11,322		9,878		Amortization of unit-based compensation	17,816		15,718
Income from unconsolidated real estate entities	Income from unconsolidated real estate entities	(2,083)		(1,105)		Income from unconsolidated real estate entities	(1,731)		(1,671)
Unrealized loss (gain) on non-real estate investments	Unrealized loss (gain) on non-real estate investments	168		(10,793)		Unrealized loss (gain) on non-real estate investments	1,062		(11,620)
Straight-line rents	Straight-line rents	(27,621)		(13,114)		Straight-line rents	(33,951)		(15,596)
Straight-line rent expenses	Straight-line rent expenses	844		737		Straight-line rent expenses	1,796		1,079
Amortization of above- and below-market leases, net	Amortization of above- and below-market leases, net	(4,692)		(5,258)		Amortization of above- and below-market leases, net	(6,393)		(8,281)
Amortization of above- and below-market ground leases, net	Amortization of above- and below-market ground leases, net	1,355		1,175		Amortization of above- and below-market ground leases, net	2,042		1,764
Amortization of lease incentive costs	Amortization of lease incentive costs	863		952		Amortization of lease incentive costs	1,222		1,427
Distribution of income from unconsolidated entities		688		872
Distribution of income from unconsolidated real estate entities						Distribution of income from unconsolidated real estate entities	1,961		1,437
Gain on derivatives	Gain on derivatives	(3,513)		—		Gain on derivatives	(8,044)		—
Impairment loss	Impairment loss	23,753		—		Impairment loss	28,548		2,762

Loss on extinguishment of debt						Loss on extinguishment of debt	—		6,249
Earnout liability fair value adjustment						Earnout liability fair value adjustment	1,757		—
Loss on sale of real estate						Loss on sale of real estate	180		—
Gain from insurance proceeds						Gain from insurance proceeds	(1,167)		—
Change in operating assets and liabilities:	Change in operating assets and liabilities:					Change in operating assets and liabilities:
Accounts receivable	Accounts receivable	9,744		5,624		Accounts receivable	13,003		4,526
Deferred leasing costs and lease intangibles	Deferred leasing costs and lease intangibles	(9,807)		(8,867)		Deferred leasing costs and lease intangibles	(19,553)		(11,696)
Prepaid expenses and other assets	Prepaid expenses and other assets	(13,220)		(14,899)		Prepaid expenses and other assets	(10,928)		(18,665)
Accounts payable, accrued liabilities and other	Accounts payable, accrued liabilities and other	18,250		25,301		Accounts payable, accrued liabilities and other	63,334		55,735
Security deposits and prepaid rent		(2,256)		(7,787)
Security deposits, prepaid rent and other						Security deposits, prepaid rent and other	1,507		(12,930)
Net cash provided by operating activities	Net cash provided by operating activities	190,142		172,931		Net cash provided by operating activities	328,549		285,512
CASH FLOWS FROM INVESTING ACTIVITIES	CASH FLOWS FROM INVESTING ACTIVITIES					CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sales of real estate						Proceeds from sales of real estate	44,537		—
Additions to investment in real estate	Additions to investment in real estate	(113,605)		(191,005)		Additions to investment in real estate	(171,011)		(271,102)
Property acquisitions	Property acquisitions	(87,970)		—		Property acquisitions	(96,443)		—

Acquisitions of businesses						Acquisitions of businesses	(197,862)		(209,854)
Maturities of U.S. Government securities	Maturities of U.S. Government securities	129,300		2,889		Maturities of U.S. Government securities	129,300		5,002

Contributions to non-real estate investments	Contributions to non-real estate investments	(11,974)		(8,514)		Contributions to non-real estate investments	(14,791)		(10,530)
Distributions from non-real estate investments	Distributions from non-real estate investments	329		—		Distributions from non-real estate investments	329		13
Distributions from unconsolidated real estate entities	Distributions from unconsolidated real estate entities	883		908		Distributions from unconsolidated real estate entities	1,067		1,246
Contributions to unconsolidated real estate entities	Contributions to unconsolidated real estate entities	(14,892)		(8,325)		Contributions to unconsolidated real estate entities	(18,766)		(73,098)
Additions to of non-real estate property, plant and equipment		(6,325)		—
Additions to non-real estate property, plant and equipment						Additions to non-real estate property, plant and equipment	(13,071)		(2,279)

Insurance proceeds for damaged property, plant and equipment						Insurance proceeds for damaged property, plant and equipment	1,284		—
Net cash used in investing activities	Net cash used in investing activities	(104,254)		(204,047)		Net cash used in investing activities	(335,427)		(560,602)
CASH FLOWS FROM FINANCING ACTIVITIES	CASH FLOWS FROM FINANCING ACTIVITIES					CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from unsecured and secured debt	Proceeds from unsecured and secured debt	389,327		86,850		Proceeds from unsecured and secured debt	978,251		1,304,352
Payments of unsecured and secured debt	Payments of unsecured and secured debt	—		(313)		Payments of unsecured and secured debt	(430,000)		(792,656)
Payments of in-substance defeased debt	Payments of in-substance defeased debt	(1,815)		(1,736)		Payments of in-substance defeased debt	(128,212)		(2,602)
Proceeds from sale of common units	Proceeds from sale of common units	—		44,820		Proceeds from sale of common units	—		44,974
Transaction costs	Transaction costs	(214)		—		Transaction costs	(573)		(386)
Repurchases of common units	Repurchases of common units	(234,688)		(14,756)		Repurchases of common units	(237,206)		(14,756)

Distributions paid to common unitholders	Distributions paid to common unitholders	(73,348)		(77,168)		Distributions paid to common unitholders	(109,388)		(115,913)
Distributions paid to preferred unitholders	Distributions paid to preferred unitholders	(12,924)		(306)		Distributions paid to preferred unitholders	(18,124)		(459)
Contributions from redeemable non-controlling members in consolidated real estate entities	Contributions from redeemable non-controlling members in consolidated real estate entities	375		1,543		Contributions from redeemable non-controlling members in consolidated real estate entities	575		4,262
Distributions to redeemable non-controlling members in consolidated real estate entities	Distributions to redeemable non-controlling members in consolidated real estate entities	(8)		(8)		Distributions to redeemable non-controlling members in consolidated real estate entities	(8)		(8)
Contributions from non-controlling members in consolidated real estate entities	Contributions from non-controlling members in consolidated real estate entities	15,457		15,016		Contributions from non-controlling members in consolidated real estate entities	16,241		24,718
Distributions to non-controlling members in consolidated real estate entities	Distributions to non-controlling members in consolidated real estate entities	(49,363)		(26,728)		Distributions to non-controlling members in consolidated real estate entities	(56,386)		(90,236)
Payments to satisfy tax withholding obligations		—		(693)

Net cash provided by financing activities		32,799		26,521

Net increase (decrease) in cash and cash equivalents and restricted cash		118,687		(4,595)
Cash and cash equivalents and restricted cash—beginning of period		196,876		149,540
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH—END OF PERIOD		$	315,563	$	144,945

Table of Contents

HUDSON PACIFIC PROPERTIES, L.P.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, in thousands)


Payments to satisfy tax withholding obligations	—		(693)
Payments of loan costs	(1,100)		(14,810)
Net cash provided by financing activities	14,070		345,787



Net increase in cash and cash equivalents and restricted cash	7,192		70,697
Cash and cash equivalents and restricted cash—beginning of period	196,876		149,540
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH—END OF PERIOD	$	204,068	$	220,237

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 primarily located throughout ~~Northern and Southern California,~~ the ~~Pacific Northwest,~~United States, Western Canada and Greater London, United Kingdom. The following table summarizes the Company’s portfolio as of ~~June~~September 30, 2022:


Segments	Segments	Number of Properties	Square Feet (unaudited)	Segments	Number of Properties	Square Feet (unaudited)
Consolidated portfolio	Consolidated portfolio			Consolidated portfolio
Office	Office	53	14,284,439	Office	52	14,543,539
Studio	Studio	3	1,255,698	Studio	4	1,291,260
Land	Land	6	2,512,242	Land	5	1,966,242
Total consolidated portfolio	Total consolidated portfolio	62	18,052,379	Total consolidated portfolio	61	17,801,041
Unconsolidated portfolio(1)	Unconsolidated portfolio(1)			Unconsolidated portfolio(1)
Office(2)	Office(2)	1	1,507,814	Office(2)	1	1,509,943
Studio(3)	Studio(3)	1	241,000	Studio(3)	1	241,000
Land(4)	Land(4)	2	1,617,347	Land(4)	2	1,617,347
Total unconsolidated portfolio	Total unconsolidated portfolio	4	3,366,161	Total unconsolidated portfolio	4	3,368,290
TOTAL(5)	TOTAL(5)	66	21,418,540	TOTAL(5)	65	21,169,331

_________________

1.The Company owns 20% of the unconsolidated joint venture entity which owns the Bentall Centre property, 50% of the unconsolidated joint venture entity that owns the Sunset Glenoaks Studios and 35% of the unconsolidated joint venture entity that owns the Sunset Waltham Cross Studios development. The square footage shown above represents 100% of the properties. See Notes 2 and 6 for details.

2.Includes Bentall Centre.

3.Includes Sunset Glenoaks Studios.

4.Includes land for the Burrard Exchange at Bentall Centre and Sunset Waltham Cross Studios.

5.Includes repositioning, redevelopment, development and held for sale 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.

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, 2022. The interim consolidated financial statements should be read in conjunction with the consolidated financial statements in the 2021 Annual Report on Form 10-K of Hudson Pacific Properties, Inc. and Hudson Pacific Properties, L.P. and the notes thereto.

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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 ~~June~~September 30, 2022, the Company has determined that its operating partnership and 19 joint ventures met the definition of a VIE. 13 of these joint ventures are consolidated and 6six are unconsolidated.

Consolidated Joint Ventures

As of ~~June~~September 30, 2022, the operating partnership has determined that 13 of its joint ventures met the definition of a VIE and are consolidated:


Entity	Property	Ownership Interest
Hudson 1455 Market, L.P.	1455 Market	55.0	%
Hudson 1099 Stewart, L.P.	Hill7	55.0	%
HPP-MAC WSP, LLC	One Westside and 10850 Pico	75.0	%
Hudson One Ferry REIT, L.P.	Ferry Building	55.0	%
Sunset Bronson Entertainment Properties, LLC	Sunset Bronson Studios, ICON, CUE	51.0	%
Sunset Gower Entertainment Properties, LLC	Sunset Gower Studios	51.0	%
Sunset 1440 North Gower Street, LLC	Sunset Gower Studios	51.0	%
Sunset Las Palmas Entertainment Properties, LLC	Sunset Las Palmas Studios, Harlow	51.0	%
Sunset Services Holdings, LLC	None(1)	51.0	%
Sunset Studios Holdings, LLC	EPIC	51.0	%
Hudson Media and Entertainment Management, LLC	None(2)	51.0	%
Hudson 6040 Sunset, LLC	6040 Sunset	51.0	%
Hudson 1918 Eighth, L.P.	1918 Eighth	55.0	%

__________________

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 following properties: Sunset Gower Studios, Sunset Bronson Studios, Sunset Las Palmas Studios, 6040 Sunset, ICON, CUE, EPIC and Harlow (collectively “Hollywood Media Portfolio”).

As of September 30, 2022 and December 31, 2021, the Company has determined that its operating partnership met the definition of a VIE and is 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 June 30, 2022 and December 31, 2021, 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 ~~June~~September 30, 2022, the Company has determined it is not the primary beneficiary of 6six of its joint ventures that are VIEs. Due to its significant influence over the unconsolidated entities, the Company accounts for them 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.

The Company’s net equity investment in its unconsolidated joint ventures is reflected within investment in unconsolidated real estate entities on the Consolidated Balance Sheets. The Company’s share of net income or loss from the joint ventures is included within (loss) income from unconsolidated real estate entities on the Consolidated Statements of Operations. The Company uses the cumulative earnings approach for determining cash flow presentation of distributions from unconsolidated joint ventures. Under this approach, distributions up to the amount of cumulative equity in earnings recognized are classified as cash inflows from operating activities, and those in excess of that amount are classified as cash inflows from investing activities. Refer to Note 6 for further details regarding our investments in unconsolidated joint ventures.

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, the fair value measurement of contingent consideration, assets acquired and liabilities assumed in business combination transactions, determining the incremental borrowing rate used in the present value calculations of its new or modified operating lessee agreements, its accrued liabilities and the valuation of 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.

Lease Accounting

The Company accounts for its leases under ASC 842, which 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.

Lessee Accounting

The Company determines if an arrangement is a lease at inception. The Company’s operating lease agreements relate to ground leases, sound stage leases, office leases and other facility leases and are reflected in operating lease right-of-use (“ROU”) assets and operating lease liabilities on the Consolidated Balance Sheets. For leases with a term of 12 months or less the Company makes an accounting policy election, by class of underlying asset, not to recognize ROU assets and lease liabilities. The Company recognizes lease expense for such leases generally on a straight-line basis over the lease term.

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 5.6%. ROU assets also include any lease

~~Table of Contents~~

~~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)~~

payments made and exclude lease incentives. Many of the Company’s lessee agreements include options to extend the lease, which the Company does not include in its minimum lease terms unless the option is reasonably certain to be exercised. Rental expense

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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)

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 2823 years as of ~~June~~September 30, 2022.

Lessor Accounting

The presentation of revenues on the Consolidated Statements 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 (v) sale of real estate (vi) management fee income and (vii) management services reimbursement income.

Revenue Stream

Components

Financial Statement Location

Rental revenues

Office, stage and storage rentals

Office and Studio segments: rental

Tenant recoveries and other tenant-related revenues

Reimbursement of real estate taxes, insurance, repairs and maintenance, other operating expenses and must-take parking revenues

Office segment: rental
Studio segment: rental and service and other revenues

Ancillary revenues

Revenues derived from tenants’ use of power, HVAC and telecommunications (i.e., telephone and internet) and lighting, equipment and vehicle rentals

Studio segment: service and other revenues

Other revenues

Parking revenue that is not associated with lease agreements and other

Office and Studio segments: service and other revenues

Sale of real estate

Gains on sales derived from cash consideration less cost basis

Gains on sale of real estate

Management fee income

Income derived from management services provided to unconsolidated joint venture entities

Fee income

Management services reimbursement income

Reimbursement of costs incurred by the Company in the management of unconsolidated joint venture entities

Management services reimbursement income—unconsolidated real estate entities

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 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.

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, other revenues, management fee income and management services reimbursement income are accounted for under ASC 606. These revenues have single performance obligations and are recognized at the point in time when services are rendered.

2022

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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 summarizes the Company’s revenue streams that are accounted for under ASC 606 for the three and ~~six~~nine months ended ~~June~~September 30, 2022 and 2021:


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2022		2021		2022		2021			2022		2021		2022		2021
Ancillary revenues	Ancillary revenues	$	20,476	$	7,093	$	38,963	$	14,633	Ancillary revenues	$	29,854	$	12,224	$	68,817	$	26,857
Other revenues	Other revenues	$	5,277	$	3,923	$	11,204	$	6,965	Other revenues	$	5,925	$	4,281	$	17,129	$	11,246
Studio-related tenant recoveries	Studio-related tenant recoveries	$	403	$	483	$	916	$	1,006	Studio-related tenant recoveries	$	491	$	418	$	1,407	$	1,424
Management fee income	Management fee income	$	1,140	$	797	$	2,211	$	1,645	Management fee income	$	911	$	678	$	3,122	$	2,323
Management services reimbursement income	Management services reimbursement income	$	1,068	$	626	$	2,176	$	626	Management services reimbursement income	$	983	$	253	$	3,159	$	879

The following table summarizes the Company’s receivables that are accounted for under ASC 606 as of:


		June 30, 2022		December 31, 2021			September 30, 2022		December 31, 2021
Ancillary revenues	Ancillary revenues	$	9,933	$	7,381	Ancillary revenues	$	16,890	$	7,381
Other revenues	Other revenues	$	1,669	$	1,078	Other revenues	$	1,241	$	1,078

In regards to sales 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.

Acquisitions

The Company applies the acquisition method for acquisitions that meet the definition of a business combination. Under the acquisition method, the Company estimates the fair value of the identifiable assets and liabilities of the acquired entity on the acquisition date. The difference between the fair value of the consideration transferred for the acquisition and the fair value of the net assets acquired is recorded as goodwill and acquisition-related expenses arising from the transaction are expensed as incurred. The Company includes the results of operations of the businesses that it acquires beginning on the acquisition date.

The Company applies a cost accumulation and allocation model to acquisitions that meet the definition of an asset acquisition. Under this model, the purchase price is allocated based on the relative fair value of the assets acquired and liabilities assumed. Additionally, acquisition-related expenses associated with an asset acquisition are capitalized as part of the purchase price.

Goodwill and Acquired Intangible Assets

Goodwill is an unidentifiable intangible asset and is recognized as a residual, generally measured as the excess of consideration transferred in a business combination over the identifiable assets acquired and liabilities assumed. Goodwill is assigned to reporting units that are expected to benefit from the synergies of the business combination.

The Company tests its goodwill and indefinite-lived intangible assets for impairment at least annually, or more frequently if events or changes in circumstances indicate that the asset may be impaired. Goodwill is tested for impairment at the reporting unit to which it is assigned, which can be an operating segment or one level below an operating segment. The Company has 3three operating segments: the management entity, Office and Studio. The management entity and the Office operating segments are each a reporting unit. Within the Studio operating segment, there are 2two reporting units: Studio Properties and Studio Services, the latter of which consists of the Zio Entertainment Network, LLC (“Zio”) and Star Waggons, LLC (“Star Waggons”) businesses acquired in the year ended December 31, ~~2021.~~2021 and the Quixote Studios (“Quixote”) business acquired in August 2022.

The assessment of goodwill for impairment may initially be performed based on qualitative factors to determine if it is more likely than not that the fair value of the reporting unit is less than its carrying value, including goodwill. If so, a quantitative assessment is performed, and to the extent the carrying value of the reporting unit exceeds its fair value, impairment is recognized ~~for the excess up to the amount of goodwill assigned to the reporting unit. Alternatively, the Company may bypass a qualitative~~

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Notes to Unaudited Consolidated Financial Statements

(Unaudited, tabular amounts in thousands, except square footage, share and unit data)

for the excess up to the amount of goodwill assigned to the reporting unit. Alternatively, the Company may bypass a qualitative assessment and proceed directly to a quantitative assessment. As of ~~June~~September 30, 2022 and December 31, 2021, the carrying value of goodwill was ~~$109.5~~$261.1 million and $109.4 million, respectively. The $151.7 million increase in the carrying value of goodwill was due to the acquisition of Quixote in August 2022. No impairment indicators have been identified during the three and ~~six~~nine months ended ~~June~~September 30, 2022 and 2021.

Intangible assets with finite lives are amortized over their estimated useful lives using the straight-line method, which reflects the pattern in which the assets are consumed. The estimated useful lives for acquired intangible assets range from 5 to 7 years. The Company assesses its intangible assets with finite lives for impairment when indicators of impairment are identified.

3. Business Combinations

Quixote Acquisition

On August 31, 2022 (“Quixote Acquisition Date”), the Company acquired 100% of the equity interests in Quixote, which rents sound stages, cast trailers and trucks and other equipment essential for media content production and will expand the Company’s service offerings for its studio platform.

The following table summarizes the Quixote Acquisition Date fair value of the consideration transferred in connection with the acquisition:


Cash	$	197,862
Seller note payable	160,000
Total consideration	$	357,862

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the

Quixote Acquisition Date. The Company is in the process of obtaining third-party valuations of certain intangible assets and determining the useful life of certain intangible assets; thus, the provisional measurements of intangible assets and goodwill are subject to change:


Cash and cash equivalents	$	5,780
Accounts receivable	7,238
Prepaid expenses and other assets	3,788
Investment in real estate	47,741
Non-real estate property, plant and equipment	65,939
Intangible assets	76,900
Right-of-use assets	103,579
Total assets acquired	310,965

Accounts payable, accrued liabilities and other	$	12,700

Lease liabilities	92,070

Total liabilities assumed	104,770

Net identifiable assets acquired	$	206,195
Goodwill	151,667
NET ASSETS ACQUIRED	$	357,862

Of the $76.9 million of intangible assets acquired as part of the Quixote acquisition, $28.6 million was provisionally assigned to the registered trade name, which is not subject to amortization. The remaining $48.3 million of acquired intangible assets includes provisional measurements for customer relationships of $45.4 million (seven-year useful life) and non-compete agreements of $2.9 million (five-year weighted-average useful life). The definite-lived intangible assets are subject to a weighted-average useful life of approximately seven years.

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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)

Goodwill of $151.7 million for the Quixote acquisition was recognized on the Quixote Acquisition Date. The goodwill recognized is attributable to expected synergies and the assembled workforce of Quixote. The goodwill has been allocated to the studio services reporting unit. Goodwill is deductible for tax purposes and, as a result, deferred taxes have been recorded. As of September 30, 2022, there was no change in the recognized amount of goodwill resulting from this acquisition.

During the three and nine months ended September 30, 2022, the Company recognized acquisition-related costs of $7.1 million for the Quixote acquisition. These costs are included in transaction-related expenses on the Consolidated Statement of Operations.

The amounts of revenue and net income of Quixote included in the Company’s Consolidated Statements of Operations from the Quixote Acquisition Date to September 30, 2022 are as follows:


	Three Months Ended September 30, 2022		Nine Months Ended September 30, 2022
Revenue	$	8,852	$	8,852
Net income	1,257		1,257

Zio and Star Waggons Acquisitions

On August 16, 2021 and August 31, 2021 (each an “Acquisition Date” individually, and collectively, the “Acquisition Dates”), the Company acquired 100% of the equity interests in Zio and Star Waggons, respectively. The acquired businesses provide transportation and logistics services to studio productions and their acquisition will expand the Company’s service offerings for its studio platform.

The following table summarizes the Acquisition Date fair value of the consideration transferred in connection with the acquisitions:


	Zio		Star Waggons
Cash	$	117,198	$	92,656
Contingent consideration	22,543		—
Total consideration	$	139,741	$	92,656

The terms of the Zio securities purchase agreement require the Company to pay up to $35.0 million of additional consideration to the business’s former shareholders, subject to certain performance thresholds being met, of which $15.0 million has been paid through ~~June~~September 30, 2022.

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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 summarizes the estimated fair values of the assets acquired and liabilities assumed at the respective Acquisition Dates:


	Zio		Star Waggons
Cash and cash equivalents	$	1,084	$	300
Accounts receivable	3,001		4,185
Prepaid expenses and other assets	1,509		1,605
Non-real estate property, plant and equipment	23,399		25,000
Intangible assets	41,670		33,480

Total assets acquired	70,663		64,570

Accounts payable, accrued liabilities and other	$	1,498	$	1,913
Intangible liabilities	—		110


Total liabilities assumed	1,498		2,023

Net identifiable assets acquired	$	69,165	$	62,547
Goodwill	70,576		30,109
NET ASSETS ACQUIRED	$	139,741	$	92,656

Of the $41.7 million of intangible assets acquired as part of the Zio acquisition, $8.5 million was assigned to the registered trade name, which is not subject to amortization. The remaining $33.2 million of acquired intangible assets includes customer relationships of $30.0 million (seven-year useful life) and non-compete agreements of $3.0 million (five-year weighted-average useful life). The definite-lived intangible assets are subject to a weighted-average useful life of approximately seven years.

Of the $33.5 million of intangible assets acquired as part of the Star Waggons acquisition, $8.6 million was assigned to the registered trade name, which is not subject to amortization. The remaining $24.9 million of acquired intangible assets includes

~~Table of Contents~~

~~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)~~

customer relationships valued at $22.5 million (seven-year useful life) and non-compete agreements valued at $2.3 million (five-year weighted-average useful life). The definite-lived intangible assets are subject to a weighted-average useful life of approximately seven years.

Goodwill of $70.6 million and $30.1 million for the Zio and Star Waggons acquisitions, respectively, was recognized on the respective Acquisition Dates. The goodwill recognized is attributable to expected synergies and the assembled workforce of Zio and Star Waggons. The goodwill has been allocated to the studio services reporting unit. Goodwill is deductible for tax purposes and as a result, deferred taxes have been recorded. As of ~~June~~September 30, 2022, there were no changes in the recognized amounts of goodwill resulting from these acquisitions.

During the ~~acquisitions.~~three and nine months ended September 30, 2021, the Company recognized acquisition-related costs of $3.4 million and $2.4 million for the Zio and Star Waggons acquisitions, respectively. These costs are included in transaction-related expenses on the Consolidated Statement of Operations.

4. Investment in Real Estate

The following table summarizes the Company’s investment in real estate, at cost as of:


	September 30, 2022		December 31, 2021
Land	$	1,397,714	$	1,313,385
Building and improvements	6,305,120		6,241,254
Tenant improvements	868,750		786,991
Furniture and fixtures	9,600		14,020
Property under development	75,750		5,827
INVESTMENT IN REAL ESTATE, AT COST	$	8,656,934	$	8,361,477

June 30, 2022 December 31, 2021
Land $ 1,395,528 $ 1,313,385
Building and improvements 6,277,927 6,241,254
Tenant improvements 813,741 786,991
Furniture and fixtures 10,940 14,020
Property under development 64,204 5,827
INVESTMENT IN REAL ESTATE, AT COST $ 8,562,340 $ 8,361,477

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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 of Real Estate

On April 27, 2022, the Company completed its previously announced acquisition of Washington 1000, a fully entitled office development site in Seattle, Washington for a total purchase price of $85.6 million, before certain credits, prorations and closing costs.

On May 19, 2022, the Company purchased a parcel of land at Sunset Gower Studios that was previously encumbered by a ground lease for a total purchase price of $22.0 million, before certain credits, prorations and closing costs.

On July 15, 2022, the Company purchased 5801 Bobby Foster Road, approximately 29 acres of land with an office/warehouse located in Albuquerque, New Mexico, for the storage of trailers and other rental assets used to serve the surrounding studio production industry. The property was acquired for a total purchase price of $8.0 million, before certain credits, prorations and closing costs.

The following table represents the Company’s final purchase price accounting for the ~~Washington 1000 and Sunset Gower Studios land acquisitions:~~asset acquisitions completed during the nine months ended September 30, 2022:


		Washington 1000		Sunset Gower Studios Land			Washington 1000		Sunset Gower Studios Land		5801 Bobby Foster Road
TOTAL ACQUISITION COST(1)	TOTAL ACQUISITION COST(1)	$	86,313	$	22,156	TOTAL ACQUISITION COST(1)	$	86,313	$	22,156	$	8,457

Allocation of acquisition cost	Allocation of acquisition cost					Allocation of acquisition cost
Land	Land	$	59,987	$	22,156	Land	$	59,987	$	22,156	$	2,189
Building		11,053		—
Building and improvements						Building and improvements	11,053		—		6,268
Parking easement(2)	Parking easement(2)	15,273		—		Parking easement(2)	15,273		—		—
TOTAL	TOTAL	$	86,313	$	22,156	TOTAL	$	86,313	$	22,156	$	8,457

_____________

1.Includes capitalized transaction-related expenses.

2.Parking easement has an indefinite useful life and is recorded in deferred leasing costs and intangible assets, net on the Consolidated Balance Sheet.

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

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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)~~

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.

During ~~the~~ three and ~~six~~nine months ended ~~June~~September 30, 2022, the Company recorded ~~$3.3~~$0.2 million and ~~$15.3~~$13.0 million, respectively, of impairment charges related to the tangible ~~and intangible~~ assets of its Del Amo office property ~~which is classified as held for sale as of June 30, 2022 and December 31, 2021,~~ due to a reduction in the estimated fair value of the property. The property was sold in August 2022. The estimated fair value of ~~$2.75~~$2.8 million was based on the ~~estimated~~ sales price of the property, which is classified within Level 2 of the fair value hierarchy.

During three and nine months ended September 30, 2022, the Company recorded $1.5 million of impairment charges related to the tangible assets of its Northview Center office property due to a reduction in the estimated fair value of the property. The property was sold in August 2022. The estimated fair value of $46.0 million was based on the sales price of the property, which is classified within Level 2 of the fair value hierarchy.

During three and nine months ended September 30, 2022, the Company recorded $3.1 million of impairment charges related to the tangible assets of its 6922 Hollywood office property due to a reduction in the estimated fair value of the property. The property was classified as held for sale as of September 30, 2022 and December 31, 2021. The estimated fair value of $96.0 million was based on the sales price of the property, which is classified within Level 2 of the fair value hierarchy.

The Company ~~did not recognize~~recognized impairment charges of $2.8 million during the ~~six~~three and nine months ended ~~June~~September 30, 2021.

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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)

Dispositions of Real Estate

The following table summarizes information on dispositions completed during the nine months ended September 30, 2022. These properties were considered non-strategic to the Company’s portfolio:


Property	Segment	Date of Disposition	Square Feet	Sales Price(1) (in millions)
Del Amo	Office	8/5/2022	113,000	$	2.8
Northview Center	Office	8/30/2022	179,985	46.0
TOTAL DISPOSITIONS			292,985	$	48.8

_____________

1.Represents gross sales price before certain credits, prorations and closing costs.

The Company had no dispositions of real estate during the ~~six~~nine months ended ~~June~~September 30, ~~2022 and~~ 2021.

Held for Sale

The Company had 4two and four properties classified as held for sale as of ~~June~~September 30, 2022 and December 31, ~~2021.~~2021, respectively. The properties were identified as non-strategic assets to the Company’s portfolio and are included in the Company’s Office segment.

The following table summarizes the components of assets and liabilities associated with real estate held for sale as of ~~June~~September 30, 2022:


	Skyway Landing		6922 Hollywood
ASSETS
Investment in real estate, net	$	90,899	$	88,253
Accounts receivable, net	172		48
Straight-line rent receivables, net	531		4,440
Deferred leasing costs and intangible assets, net	501		2,043
Prepaid expenses and other assets, net	26		113
ASSETS ASSOCIATED WITH REAL ESTATE HELD FOR SALE	$	92,129	$	94,897

LIABILITIES
Accounts payable, accrued liabilities and other	$	575	$	965
Intangible liabilities, net	—		96
Security deposits and prepaid rent	369		470
LIABILITIES ASSOCIATED WITH REAL ESTATE HELD FOR SALE	$	944	$	1,531

Northview Center Skyway Landing Del Amo 6922 Hollywood
ASSETS
Investment in real estate, net $ 40,532 $ 89,922 $ 2,371 $ 91,402
Accounts receivable, net 179 99 — 52
Straight-line rent receivables, net 1,047 613 — 4,526
Deferred leasing costs and intangible assets, net 1,070 501 330 2,006
Prepaid expenses and other assets, net 19 44 8 120
ASSETS ASSOCIATED WITH REAL ESTATE HELD FOR SALE $ 42,847 $ 91,179 $ 2,709 $ 98,106
LIABILITIES
Accounts payable, accrued liabilities and other $ 94 $ 273 $ 14 $ 858
Intangible liabilities, net — — — 96
Security deposits and prepaid rent 913 408 — 416
LIABILITIES ASSOCIATED WITH REAL ESTATE HELD FOR SALE $ 1,007 $ 681 $ 14 $ 1,370

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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 components of assets and liabilities associated with real estate held for sale as of December 31, 2021:


	Northview Center		Skyway Landing		Del Amo		6922 Hollywood
ASSETS
Investment in real estate, net	$	40,338	$	89,873	$	15,213	$	91,353
Accounts receivable, net	95		142		—		103
Straight-line rent receivables, net	901		1,659		—		4,714
Deferred leasing costs and intangible assets, net	751		450		2,742		1,999

Prepaid expenses and other assets, net	—		—		—		187
ASSETS ASSOCIATED WITH REAL ESTATE HELD FOR SALE	$	42,085	$	92,124	$	17,955	$	98,356

LIABILITIES
Accounts payable, accrued liabilities and other	$	184	$	273	$	12	$	1,372

Intangible liabilities, net	—		—		—		96
Security deposits and prepaid rent	395		1,205		—		361
LIABILITIES ASSOCIATED WITH REAL ESTATE HELD FOR SALE	$	579	$	1,478	$	12	$	1,829

5. Non-Real Estate Property, Plant and Equipment, net

The following table summarizes the Company’s non-real estate property, plant and equipment, net as of:


		June 30, 2022		December 31, 2021			September 30, 2022		December 31, 2021
Trailers	Trailers	$	38,304	$	35,181	Trailers	$	64,178	$	35,181
Production equipment						Production equipment	34,296		—
Trucks and other vehicles						Trucks and other vehicles	19,811		12,204
Leasehold improvements	Leasehold improvements	17,113		15,267		Leasehold improvements	18,490		15,267
Trucks and other vehicles		12,953		12,204
Other equipment						Other equipment	6,838		4,605
Furniture, fixtures and equipment	Furniture, fixtures and equipment	5,718		4,592		Furniture, fixtures and equipment	6,967		4,592

Other equipment		4,125		4,605

Non-real estate property, plant and equipment, at cost	Non-real estate property, plant and equipment, at cost	78,213		71,849		Non-real estate property, plant and equipment, at cost	150,580		71,849
Accumulated depreciation	Accumulated depreciation	(17,991)		(13,380)		Accumulated depreciation	(22,076)		(13,380)
NON-REAL ESTATE PROPERTY, PLANT AND EQUIPMENT, NET	NON-REAL ESTATE PROPERTY, PLANT AND EQUIPMENT, NET	$	60,222	$	58,469	NON-REAL ESTATE PROPERTY, PLANT AND EQUIPMENT, NET	$	128,504	$	58,469

Non-real estate property, plant and equipment is carried at cost less accumulated depreciation. The Company computes depreciation using the straight-line method over the estimated useful lives of the assets, which range from 5 to 20 years. The Company evaluates its non-real estate property, plant and equipment, net for impairment using the same accounting model that it applies to its real estate assets and related intangibles. See Note 4 for details. The Company did not recognize any impairment charges for non-real estate property, plant and equipment during the ~~six~~nine months ended ~~June~~September 30, 2022 and 2021.

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Notes to Unaudited Consolidated Financial Statements

(Unaudited, tabular amounts in thousands, except square footage, share and unit data)

6. Investment in Unconsolidated Real Estate Entities

The following table summarizes the Company’s investments in unconsolidated joint ventures:

Property

Property Type

Submarket

Ownership Interest

Functional Currency

Property

Property Type

Submarket

Ownership Interest

Functional Currency

Sunset Waltham Cross Studios

Development

Broxbourne, United Kingdom

35%

Pound sterling

(1)

Sunset Waltham Cross Studios

Development

Broxbourne, United Kingdom

35%

Pound sterling

(1)

Sunset Glenoaks Studios

Development

Los Angeles

50%

U.S. dollar

(2)

Sunset Glenoaks Studios

Development

Los Angeles

50%

U.S. dollar

(2)(3)

Bentall Centre

Operating Property

Downtown Vancouver

20%

Canadian dollar

(2)(4)

Bentall Centre

Operating Property

Downtown Vancouver

20%

Canadian dollar

(2)(4)

__________________

1.On July 29, 2021, the Company purchased 35% of the ownership interests in the joint venture that owns the Sunset Waltham Cross Studios development. The Company also owns 35% of the ownership interests in the joint venture entities formed to serve as the general partner and management services company for the property-owning joint venture entity.

2.The Company serves as the operating member of this joint venture.

3.The Company has provided various guarantees for this joint venture’s construction loan, including a completion guarantee, equity guarantee and recourse carve-out guarantee.

4.The Company has guaranteed ~~$102.7~~$96.5 million of this joint venture’s debt.

The Company’s maximum exposure related to its unconsolidated joint ventures is limited to its investment. The Company’s investments in foreign real estate entities are subject to foreign currency fluctuation risk. Such investments are translated into U.S. dollars at the exchange rate in effect as of the financial statement date. The Company’s share of the income (loss) from foreign unconsolidated real estate entities is translated using the monthly-average exchange rate for the periods presented. Gains or losses resulting from the translation are classified in accumulated other comprehensive loss as a separate component of total equity and are excluded from net income.

The Company held ownership interests in other immaterial unconsolidated joint ventures in the total of ~~$0.3~~$0.2 million and $0.1 million as of ~~June~~September 30, 2022 and December 31, 2021, respectively.

The table below presents the combined and condensed balance sheets for the Company’s unconsolidated joint ventures:


		June 30, 2022		December 31, 2021			September 30, 2022		December 31, 2021
ASSETS	ASSETS					ASSETS
Investment in real estate, net	Investment in real estate, net	$	1,054,064	$	1,048,593	Investment in real estate, net	$	1,011,495	$	1,048,593
Other assets	Other assets	67,985		57,232		Other assets	58,539		57,232
TOTAL ASSETS	TOTAL ASSETS	$	1,122,049	$	1,105,825	TOTAL ASSETS	$	1,070,034	$	1,105,825

LIABILITIES	LIABILITIES					LIABILITIES
Secured debt, net	Secured debt, net	$	524,041	$	516,153	Secured debt, net	$	509,212	$	516,153
Other liabilities	Other liabilities	45,554		40,307		Other liabilities	45,410		40,307
TOTAL LIABILITIES	TOTAL LIABILITIES	569,595		556,460		TOTAL LIABILITIES	554,622		556,460

Company’s capital(1)	Company’s capital(1)	153,358		148,914		Company’s capital(1)	144,667		148,914
Partner’s capital	Partner’s capital	399,096		400,451		Partner’s capital	370,745		400,451
TOTAL CAPITAL	TOTAL CAPITAL	552,454		549,365		TOTAL CAPITAL	515,412		549,365

TOTAL LIABILITIES AND CAPITAL	TOTAL LIABILITIES AND CAPITAL	$	1,122,049	$	1,105,825	TOTAL LIABILITIES AND CAPITAL	$	1,070,034	$	1,105,825

__________________

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 (loss) income from unconsolidated real estate entities line item on the Consolidated Statements of Operations.

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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 presents the combined and condensed statements of operations for the Company’s unconsolidated joint ventures:


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2022		2021		2021		2020			2022		2021		2022		2021
TOTAL REVENUES	TOTAL REVENUES	$	26,915	$	20,041	$	46,447	$	39,427	TOTAL REVENUES	$	18,515	$	20,694	$	64,962	$	60,121

TOTAL EXPENSES	TOTAL EXPENSES	17,873		17,728		35,651		33,972		TOTAL EXPENSES	20,151		17,893		55,802		51,865

NET INCOME		$	9,042	$	2,313	$	10,796	$	5,455
NET (LOSS) INCOME										NET (LOSS) INCOME	$	(1,636)	$	2,801	$	9,160	$	8,256

7. Deferred Leasing Costs and Intangible Assets, net and Intangible Liabilities, net

The following summarizes the Company’s deferred leasing costs and intangibles as of:


		June 30, 2022		December 31, 2021			September 30, 2022		December 31, 2021
Deferred leasing costs and in-place lease intangibles	Deferred leasing costs and in-place lease intangibles	$	335,758	$	331,149	Deferred leasing costs and in-place lease intangibles	$	329,067	$	331,149
Accumulated amortization	Accumulated amortization	(137,063)		(126,423)		Accumulated amortization	(134,833)		(126,423)
Deferred leasing costs and in-place lease intangibles, net	Deferred leasing costs and in-place lease intangibles, net	198,695		204,726		Deferred leasing costs and in-place lease intangibles, net	194,234		204,726
Below-market ground leases	Below-market ground leases	79,562		79,562		Below-market ground leases	79,562		79,562
Accumulated amortization	Accumulated amortization	(16,603)		(15,233)		Accumulated amortization	(17,291)		(15,233)
Below-market ground leases, net	Below-market ground leases, net	62,959		64,329		Below-market ground leases, net	62,271		64,329
Above-market leases	Above-market leases	725		1,334		Above-market leases	725		1,334
Accumulated amortization	Accumulated amortization	(270)		(782)		Accumulated amortization	(297)		(782)
Above-market leases, net	Above-market leases, net	455		552		Above-market leases, net	428		552
Customer relationships	Customer relationships	52,500		52,500		Customer relationships	97,900		52,500
Accumulated amortization	Accumulated amortization	(6,434)		(2,684)		Accumulated amortization	(8,850)		(2,684)
Customer relationships, net	Customer relationships, net	46,066		49,816		Customer relationships, net	89,050		49,816
Non-competition agreements	Non-competition agreements	5,300		5,300		Non-competition agreements	8,200		5,300
Accumulated amortization	Accumulated amortization	(909)		(379)		Accumulated amortization	(1,222)		(379)
Non-competition agreements, net	Non-competition agreements, net	4,391		4,921		Non-competition agreements, net	6,978		4,921
Trade name	Trade name	8,600		17,100		Trade name	37,200		17,100
Parking easement	Parking easement	15,273		—		Parking easement	15,273		—
DEFERRED LEASING COSTS AND INTANGIBLE ASSETS, NET	DEFERRED LEASING COSTS AND INTANGIBLE ASSETS, NET	$	336,439	$	341,444	DEFERRED LEASING COSTS AND INTANGIBLE ASSETS, NET	$	405,434	$	341,444

Below-market leases	Below-market leases	$	63,278	$	75,827	Below-market leases	$	59,670	$	75,827
Accumulated amortization	Accumulated amortization	(26,560)		(34,326)		Accumulated amortization	(24,668)		(34,326)
Below-market leases, net	Below-market leases, net	36,718		41,501		Below-market leases, net	35,002		41,501
Above-market ground leases	Above-market ground leases	1,095		1,095		Above-market ground leases	1,095		1,095
Accumulated amortization	Accumulated amortization	(328)		(306)		Accumulated amortization	(339)		(306)
Above-market ground leases, net	Above-market ground leases, net	767		789		Above-market ground leases, net	756		789
INTANGIBLE LIABILITIES, NET	INTANGIBLE LIABILITIES, NET	$	37,485	$	42,290	INTANGIBLE LIABILITIES, NET	$	35,758	$	42,290

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Notes to Unaudited Consolidated Financial Statements

(Unaudited, tabular amounts in thousands, except square footage, share and unit data)

The Company recognized the following amortization related to deferred leasing costs and intangibles:


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2022		2021		2022		2021			2022		2021		2022		2021
Deferred leasing costs and in-place lease intangibles(1)	Deferred leasing costs and in-place lease intangibles(1)	$	(9,788)	$	(11,654)	$	(20,207)	$	(23,221)	Deferred leasing costs and in-place lease intangibles(1)	$	(9,450)	$	(11,540)	$	(29,657)	$	(34,761)
Below-market ground leases(2)	Below-market ground leases(2)	$	(698)	$	(598)	$	(1,377)	$	(1,197)	Below-market ground leases(2)	$	(698)	$	(600)	$	(2,075)	$	(1,797)
Above-market leases(3)	Above-market leases(3)	$	(23)	$	(76)	$	(91)	$	(500)	Above-market leases(3)	$	(16)	$	(73)	$	(107)	$	(573)
Customer relationships~~(4)~~(1)	Customer relationships~~(4)~~(1)	$	(1,875)	$	—	$	(3,750)	$	—	Customer relationships~~(4)~~(1)	$	(2,415)	$	(809)	$	(6,165)	$	(809)
Non-competition agreements(1)	Non-competition agreements(1)	$	(265)	$	—	$	(530)	$	—	Non-competition agreements(1)	$	(313)	$	(114)	$	(843)	$	(114)
Below-market leases(3)	Below-market leases(3)	$	1,976	$	2,815	$	4,783	$	5,758	Below-market leases(3)	$	1,717	$	3,096	$	6,500	$	8,854
Above-market ground leases(2)	Above-market ground leases(2)	$	11	$	11	$	22	$	22	Above-market ground leases(2)	$	11	$	11	$	33	$	33

__________________

1.Amortization is recorded in depreciation and amortization expenses and for lease incentive costs in office rental revenues in the Consolidated Statements of Operations.

2.Amortization is recorded in office operating expenses in the Consolidated Statements of Operations.

3.Amortization is recorded in office rental revenues in the Consolidated Statements of Operations.

During the ~~six~~nine months ended ~~June~~September 30, 2022, the Company recognized an $8.5 million impairment of the Zio trade name within impairment loss on the Consolidated Statement of Operations. The impairment is related to the announced rebranding and integration of Zio into the Company’s existing Sunset Studios platform, after which the Company will no longer use the Zio trade name.

During the ~~three and six~~nine months ended ~~June~~September 30, 2022, the Company recognized an impairment loss of ~~$0.5 million and~~ $2.4 million ~~respectively,~~related to the below-market ground lease at its Del Amo office property. During the three and nine months ended September 30, 2021, the Company recognized an impairment loss of $0.4 million related to the below-market ground lease at its Del Amo office property. See Note 4 for details. The ~~loss is~~losses are recorded within impairment loss on the Consolidated Statements of Operations.

8. 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 2021 Annual Report on Form 10-K.

Accounts Receivable

As of ~~June~~September 30, 2022, accounts receivable was ~~$15.8~~$19.9 million and there was a $0.2 million allowance for doubtful accounts. As of December 31, 2021, accounts receivable was $25.5 million and there was $0.2 million allowance for doubtful accounts.

Straight-Line Rent Receivables

As of ~~June~~September 30, 2022, straight-line rent receivables was ~~$269.0~~$275.5 million and there was no allowance for doubtful accounts. As of December 31, 2021, straight-line rent receivables was $240.3 million and there was no allowance for doubtful accounts.

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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)

9. Prepaid Expenses and Other Assets, net

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


		June 30, 2022		December 31, 2021			September 30, 2022		December 31, 2021

Deposits and pre-development costs for future acquisitions	Deposits and pre-development costs for future acquisitions	$	—	$	47,605	Deposits and pre-development costs for future acquisitions	$	—	$	47,605
Prepaid insurance	Prepaid insurance	16,830		5,442		Prepaid insurance	11,325		5,442
Non-real estate investments	Non-real estate investments	44,302		31,447		Non-real estate investments	46,533		31,447
Stock purchase warrant	Stock purchase warrant	286		1,664		Stock purchase warrant	113		1,664
Deferred financing costs	Deferred financing costs	6,805		7,750		Deferred financing costs	6,315		7,750
Prepaid property tax	Prepaid property tax	—		2,192		Prepaid property tax	3,058		2,192
Interest rate derivative assets	Interest rate derivative assets	4,411		368		Interest rate derivative assets	8,801		368
Inventory	Inventory	1,981		1,578		Inventory	4,795		1,578
Other	Other	24,536		20,954		Other	25,700		20,954

PREPAID EXPENSES AND OTHER ASSETS, NET	PREPAID EXPENSES AND OTHER ASSETS, NET	$	99,151	$	119,000	PREPAID EXPENSES AND OTHER ASSETS, NET	$	106,640	$	119,000

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 (loss) gain on non-real estate investments on the Consolidated Statements of Operations. The Company recognized an unrealized loss of ~~$1.4~~$0.7 million and an unrealized gain of ~~$1.2~~$0.5 million on its non-real estate investments due to the observable changes in fair value during the three and ~~six~~nine months ended ~~June~~September 30, 2022, respectively. The Company recognized an unrealized gain of ~~$5.1~~$1.0 million and ~~$9.0~~$9.9 million on its non-real estate investments due to the observable changes in fair value during the three and ~~six~~nine months ended ~~June~~September 30, 2021, respectively.

Stock Purchase Warrant

The Company holds an investment in a stock purchase warrant that gives the Company the right to purchase a fixed number of shares of common stock of a non-real estate investee. The warrant meets the definition of a derivative and is measured at fair value based on Level 2 inputs. Changes in the fair value of the derivative asset are included in unrealized (loss) gain on non-real estate investments on the Consolidated Statements of Operations. The Company recognized an unrealized loss of ~~$0.4~~$0.2 million and ~~$1.4~~$1.6 million due to the change in the fair value of the stock purchase warrant during the three and ~~six~~nine months ended ~~June~~September 30, 2022, respectively. The Company recognized an unrealized loss of ~~$0.1~~$0.2 million and an unrealized gain of ~~$1.8~~$1.7 million due to the change in the fair value of the stock purchase warrant during the three and ~~six~~nine months ended ~~June~~September 30, 2021, 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)

10. Debt

The following table sets forth information with respect to the Company’s outstanding indebtedness:


		June 30, 2022		December 31, 2021		Interest Rate(1)	Contractual Maturity Date(2)			September 30, 2022		December 31, 2021		Interest Rate(1)	Contractual Maturity Date(2)
UNSECURED AND SECURED DEBT	UNSECURED AND SECURED DEBT								UNSECURED AND SECURED DEBT
Unsecured debt	Unsecured debt								Unsecured debt
Unsecured revolving credit facility(3)(4)(5)	Unsecured revolving credit facility(3)(4)(5)	$	485,000	$	125,000	LIBOR + 1.05% to 1.50%	12/21/2026	(6)	Unsecured revolving credit facility(3)(4)(5)	$	295,000	$	125,000	SOFR + 1.15% to 1.60%	12/21/2026	(6)
Series A notes~~(7)~~	Series A notes~~(7)~~	110,000		110,000		4.34%	1/2/2023		Series A notes~~(7)~~	110,000		110,000		4.34%	1/2/2023
Series B notes~~(7)~~	Series B notes~~(7)~~	259,000		259,000		4.69%	12/16/2025		Series B notes~~(7)~~	259,000		259,000		4.69%	12/16/2025
Series C notes~~(7)~~	Series C notes~~(7)~~	56,000		56,000		4.79%	12/16/2027		Series C notes~~(7)~~	56,000		56,000		4.79%	12/16/2027
Series D notes~~(8)~~	Series D notes~~(8)~~	150,000		150,000		3.98%	7/6/2026		Series D notes~~(8)~~	150,000		150,000		3.98%	7/6/2026
Series E notes~~(9)~~	Series E notes~~(9)~~	50,000		50,000		3.66%	9/15/2023		Series E notes~~(9)~~	50,000		50,000		3.66%	9/15/2023
3.95% Registered senior notes	3.95% Registered senior notes	400,000		400,000		3.95%	11/1/2027		3.95% Registered senior notes	400,000		400,000		3.95%	11/1/2027
4.65% Registered senior notes	4.65% Registered senior notes	500,000		500,000		4.65%	4/1/2029		4.65% Registered senior notes	500,000		500,000		4.65%	4/1/2029
3.25% Registered senior notes	3.25% Registered senior notes	400,000		400,000		3.25%	1/15/2030		3.25% Registered senior notes	400,000		400,000		3.25%	1/15/2030
5.95% Registered senior notes(7)									5.95% Registered senior notes(7)	350,000		—		5.95%	2/15/2028
Total unsecured debt	Total unsecured debt	2,410,000		2,050,000					Total unsecured debt	2,570,000		2,050,000

Secured debt	Secured debt								Secured debt
Hollywood Media Portfolio	Hollywood Media Portfolio	$	1,100,000	$	1,100,000	LIBOR + 1.17%	8/9/2026	(10)	Hollywood Media Portfolio	$	1,100,000	$	1,100,000	LIBOR + 0.99%	8/9/2026	(8)
Acquired Hollywood Media Portfolio debt	Acquired Hollywood Media Portfolio debt	(209,814)		(209,814)		LIBOR + 1.55%	8/9/2026	(10)	Acquired Hollywood Media Portfolio debt	(209,814)		(209,814)		LIBOR + 1.55%	8/9/2026	(8)
Hollywood Media Portfolio, net(11)(12)		890,186		890,186
One Westside and 10850 Pico(13)		270,714		241,388		LIBOR + 1.70%	12/18/2024	(14)
Hollywood Media Portfolio, net(9)(10)									Hollywood Media Portfolio, net(9)(10)	890,186		890,186
One Westside and 10850 Pico(11)									One Westside and 10850 Pico(11)	273,089		241,388		LIBOR + 1.70%	12/18/2024	(12)
Element LA	Element LA	168,000		168,000		4.59%	11/6/2025		Element LA	168,000		168,000		4.59%	11/6/2025
1918 Eighth(15)		314,300		314,300		LIBOR + 1.30%	12/18/2025
Hill7(16)		101,000		101,000		3.38%	11/6/2028
1918 Eighth(13)									1918 Eighth(13)	314,300		314,300		SOFR + 1.40%	12/18/2025
Hill7(14)									Hill7(14)	101,000		101,000		3.38%	11/6/2028
Quixote									Quixote	160,000		—		5.00%	12/31/2023
Total secured debt	Total secured debt	1,744,200		1,714,874					Total secured debt	1,906,575		1,714,874
Total unsecured and secured debt	Total unsecured and secured debt	4,154,200		3,764,874					Total unsecured and secured debt	4,476,575		3,764,874
Unamortized deferred financing costs/loan discounts(17)		(25,166)		(30,971)
Unamortized deferred financing costs/loan discounts(15)									Unamortized deferred financing costs/loan discounts(15)	(27,259)		(30,971)
TOTAL UNSECURED AND SECURED DEBT, NET	TOTAL UNSECURED AND SECURED DEBT, NET	$	4,129,034	$	3,733,903				TOTAL UNSECURED AND SECURED DEBT, NET	$	4,449,316	$	3,733,903

IN-SUBSTANCE DEFEASED DEBT(18)(19)		$	126,397	$	128,212	4.47%	10/1/2022
IN-SUBSTANCE DEFEASED DEBT(16)									IN-SUBSTANCE DEFEASED DEBT(16)	$	—	$	128,212	4.47%	10/1/2022

JOINT VENTURE PARTNER DEBT(20)		$	66,136	$	66,136	4.50%	10/9/2032	(21)
JOINT VENTURE PARTNER DEBT(17)									JOINT VENTURE PARTNER DEBT(17)	$	66,136	$	66,136	4.50%	10/9/2032	(18)

_________________

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 ~~June~~September 30, 2022, which may be different than the interest rates as of December 31, 2021 for corresponding indebtedness.

2.Maturity dates include the effect of extension options.

3.The annual facility fee rate ranges from 0.15% to 0.30% 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 ~~June~~September 30, 2022, no such election had been made and the unsecured revolving credit facility bore interest at ~~LIBOR~~SOFR + ~~1.20%~~1.30%.

4.The Company has a total capacity of $1.0 billion available under its unsecured revolving credit facility, up to $250.0 million of which can be used for borrowings in pounds sterling or Canadian dollars.

5.On ~~July 19,~~October 20, 2022, the Company made ~~a $20.0~~an $85.0 million repayment on this facility.

6.Includes the option to extend the initial maturity date of December 21, 2025 twice for an additional six-month term each.

7.~~The~~An amount equal to the net proceeds from the 5.95% Registered senior notes ~~pay interest semi-annually on the 16th day of June and December in each year until maturity.~~has been allocated to new or existing eligible green projects.

8.~~The notes pay interest semi-annually on the 6th day of January and July in each year until maturity.~~

9.~~The notes pay interest semi-annually on the 15th day of March and September in each year until maturity.~~

~~10.~~Includes the option to extend the initial maturity date of August 9, 2023 3three times for an additional one-year term each.

~~11.~~9.The Company owns 51% of the ownership interests in the consolidated joint venture that owns the Hollywood Media Portfolio. The joint venture holds a $1.1 billion mortgage loan secured by the Hollywood Media Portfolio. The ~~effective interest rate on the loan is LIBOR + 1.17% until August 9, 2022, at which time the effective interest rate will decrease to LIBOR + 0.99%. The~~ Company purchased bonds comprising the loan in the amount of $209.8 million.

~~12.~~10.The interest rate on a portion of the outstanding loan balance has been effectively fixed through the use of an interest rate swap under the first payments approach. As of ~~June~~September 30, 2022, the LIBOR component of the interest rate was fixed at 1.43% with respect to $125.0 million of the loan secured by the

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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)

Hollywood Media Portfolio. Additionally, the interest on the full principal amount has been effectively capped at ~~4.67%~~4.49% (3.50% strike rate + 0.99% spread) per annum through the use of an interest rate cap.

~~13.~~11.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.

~~14.~~12.Includes the option to extend the initial maturity date of December 18, 2023 twice for an additional six-month term each.

~~15.~~13.The Company owns 55% of the ownership interests in the consolidated joint venture that owns the 1918 Eighth property. The full amount of the loan is shown. This loan is interest-only through its term.

~~16.~~14.The Company owns 55% of the ownership interests 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.

~~17.~~15.Excludes deferred financing costs related to establishing the Company’s unsecured revolving credit facility, which are reflected in prepaid expenses and other assets, net on the Consolidated Balance Sheets. See Note 9 for details.

~~18.~~16.The Company owns 75% of the ownership interests in the joint venture that owns the One Westside and 10850 Pico properties. The full amount of the loan is shown. Monthly debt service includes debt amortization payments based on a 10-year amortization schedule with a balloon payment at maturity.

~~19.This loan was repaid in full on July 1, 2022.~~

~~20.~~17.This amount relates to debt attributable to Allianz U.S. Private REIT LP (“Allianz”), the Company’s partner in the joint venture that owns the Ferry Building property.

~~21.~~18.Includes the option to extend the initial maturity date of October 9, 2028 twice for an additional two-year term each.

Current Year Activity

During the ~~six~~nine months ended ~~June~~September 30, 2022, there were ~~$360.0~~$170.0 million in borrowings on the unsecured revolving credit ~~facility.~~facility, net of repayments. The Company generally uses the unsecured revolving credit facility to finance the acquisition of properties and businesses, to provide funds for tenant improvements and capital expenditures and to provide for working capital and other corporate purposes.

In July 2022, the Company repaid its in-substance defeased debt in the amount of $126.4 million in full using the proceeds from the maturity of its U.S. Government securities in June 2022.

In August 2022, the Company modified the existing loan agreement secured by its 1918 Eighth property, whereby the LIBOR-based floating interest rate was replaced with a term SOFR-based floating interest rate. The Company applied the relief provisions of ASC 848 and accounted for this modification as a continuation of the existing loan agreement.

In August 2022, the Company acquired Quixote. In conjunction with the acquisition, the Company obtained a $160.0 million note payable from the sellers secured by the assets of Quixote. The loan has an interest rate of 5.00% per annum and is interest-only through the maturity date of December 31, 2023.

In September 2022, the operating partnership completed an underwritten public offering of $350.0 million of 5.95% Senior Notes due in 2028, which were issued at a discount of 99.614% of par and are fully and unconditionally guaranteed by the Company. The net proceeds from the offering, after deducting the underwriting discount and commissions, were approximately $346.5 million and were used to repay the outstanding borrowings under its unsecured revolving credit facility. An amount equal to the net proceeds has been allocated to new or existing eligible green projects.

In September 2022, the operating partnership entered into the First Modification Agreement to the Fourth Amended and Restated Credit Agreement, which replaced the LIBOR-based floating interest rate option with a term SOFR-based floating interest rate option as a benchmark rate for borrowings denominated in U.S. dollars for all purposes under the existing credit agreement. The Company applied the relief provisions of ASC 848 and accounted for this modification as a continuation of the existing credit agreement.

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.

Table of Contents

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 future minimum principal payments due on the Company’s debt (after the impact of extension options, if applicable) as of ~~June~~September 30, 2022:

Year Unsecured and Secured Debt
In-substance Defeased Debt(1)
Joint Venture Partner Debt
Remaining 2022 $ — $ 126,397 $ —
2023 160,000 — —
2024 270,714 — —
2025 741,300 — —
2026 1,525,186 — —
Thereafter 1,457,000 — 66,136
TOTAL $ 4,154,200 $ 126,397 $ 66,136

~~_________________~~

1.~~This loan was repaid in full on July 1, 2022.~~


Year	Unsecured and Secured Debt		Joint Venture Partner Debt
Remaining 2022	$	—	$	—
2023	320,000		—
2024	273,089		—
2025	741,300		—
2026	1,335,186		—
Thereafter	1,807,000		66,136
TOTAL	$	4,476,575	$	66,136

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.

~~Table of Contents~~

~~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 summarizes existing covenants and their covenant levels as of ~~June~~September 30, 2022 related to our unsecured revolving credit facility, term loans and note purchase agreements, when considering the most restrictive terms:

Covenant Ratio

Covenant Level

Actual Performance

Total liabilities to total asset value

≤ 60%

~~41.9%~~44.1%

Unsecured indebtedness to unencumbered asset value

≤ 60%

~~39.2%~~44.3%

Adjusted EBITDA to fixed charges

≥ 1.5x

~~3.4x~~3.3x

Secured indebtedness to total asset value

≤ 45%

~~18.8%~~19.6%

Unencumbered NOI to unsecured interest expense

≥ 2.0x

~~3.7x~~3.0x

The following table summarizes existing covenants and their covenant levels related to the registered senior notes as of ~~June~~September 30, 2022:

Covenant Ratio(1)

Covenant Level

Actual Performance

Debt to total assets

≤ 60%

~~44.6%~~46.2%

Total unencumbered assets to unsecured debt

≥ 150%

~~255.2%~~229.8%

Consolidated income available for debt service to annual debt service charge

≥ 1.5x

~~3.7x~~3.3x

Secured debt to total assets

≤ 45%

~~19.4%~~20.2%

_________________

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, 4.65% Senior Notes and ~~4.65%~~5.95% Senior Notes.

The operating partnership was in compliance with its financial covenants as of ~~June~~September 30, 2022.

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 guarantees the operating partnership’s unsecured debt.

~~Interest Expense~~

~~The following table represents a reconciliation from gross interest expense to the interest expense on the Consolidated Statements of Operations:~~

Three Months Ended June 30, Six Months Ended June 30,
2022 2021 2022 2021
Gross interest expense(1)
$ 33,916 $ 33,889 $ 64,647 $ 67,429
Capitalized interest (3,592) (5,618) (6,877) (11,289)
Amortization of deferred financing costs and loan discounts/premiums 3,395 2,418 6,785 4,835
INTEREST EXPENSE $ 33,719 $ 30,689 $ 64,555 $ 60,975

~~_________________~~

1.~~Includes interest on the Company’s debt and hedging activities.~~

~~11. Derivatives~~

~~The Company enters into derivatives in order to hedge interest rate risk.~~

The Company had 1 interest rate swap with an aggregate notional amount of $0.1 billion as of June 30, 2022 and 3 interest rate swaps with aggregate notional amounts of $0.5 billion as of December 31, 2021. 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 $1.1 billion as of June 30, 2022 and December 31, 2021. The interest rate cap is not designated under hedge accounting

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Notes to Unaudited Consolidated Financial Statements

(Unaudited, tabular amounts in thousands, except square footage, share and unit data)

Interest Expense

The following table represents a reconciliation from gross interest expense to the interest expense on the Consolidated Statements of Operations:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Gross interest expense(1)	$	38,595	$	33,912	$	103,242	$	101,341
Capitalized interest	(4,797)		(5,760)		(11,674)		(17,049)
Amortization of deferred financing costs and loan discounts/premiums	3,463		2,673		10,248		7,508
INTEREST EXPENSE	$	37,261	$	30,825	$	101,816	$	91,800

_________________

1.Includes interest on the Company’s debt and ~~is accounted for under mark-to-market accounting.~~hedging activities.

11. Derivatives

The Company enters into derivatives in order to hedge interest rate risk. Derivative assets are recorded in prepaid expenses and other assets and derivative liabilities are recorded in accounts payable, accrued liabilities and other on the Consolidated Balance Sheets.

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.

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 ~~June~~September 30, 2022 and December 31, 2021:


							Interest Rate Range(1)		Fair Value Assets (Liabilities)										Interest Rate Range(1)		Fair Value Assets (Liabilities)
Underlying Debt Instrument	Underlying Debt Instrument	Number of Derivatives	Notional Amount		Effective Date	Maturity Date	Low	High	June 30, 2022		December 31, 2021		Underlying Debt Instrument	Number of Derivatives	Notional Amount		Effective Date	Maturity Date	Low	High	September 30, 2022		December 31, 2021
Interest rate swaps	Interest rate swaps												Interest rate swaps
Hollywood Media Portfolio~~(2)~~(3)	Hollywood Media Portfolio~~(2)~~(3)	2	$	350,000	April 2015	April 2022	2.96%	3.46%	$	—	$	(1,413)	Hollywood Media Portfolio~~(2)~~(3)	2	$	350,000	April 2015	April 2022	2.96%	3.46%	$	—	$	(1,413)
Hollywood Media Portfolio~~(2)~~(3)	Hollywood Media Portfolio~~(2)~~(3)	1	125,000		June 2016	November 2022	2.63%	3.13%	496		(1,122)		Hollywood Media Portfolio~~(2)~~(3)	1	125,000		June 2016	November 2022	2.63%	3.13%	304		(1,122)
Interest rate cap	Interest rate cap						Strike rate						Interest rate cap						Strike rate
Hollywood Media Portfolio(4)	Hollywood Media Portfolio(4)	1	1,100,000		August 2021	August 2023	3.50%		$	3,915	368		Hollywood Media Portfolio(4)	1	1,100,000		August 2021	August 2023	3.50%		8,497		368
TOTAL	TOTAL								$	4,411	$	(2,167)	TOTAL								$	8,801	$	(2,167)

_____________

1.The rate is based on the fixed rate from the swap and the spread based on the operating partnership’s leverage ratio.

2.The swaps were designated under the 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.

3.These derivatives were designated as effective cash flow hedges for accounting purposes.

4.The interest rate cap is not designated under hedge accounting and is accounted for under mark-to-market accounting.

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 ~~June~~September 30, 2022, the Company expects ~~$0.3~~$0.1 million of unrealized gain included in accumulated other comprehensive loss will be reclassified as a decrease to interest expense in the next 12 months.

Table of Contents

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)

12. U.S. Government Securities

The acquisition of the One Westside and 10850 Pico properties in 2018 included the assumption of debt that was, in substance, defeased through the purchase of U.S. Government-backed securities. The securities were held to maturity and were carried at amortized cost on the Consolidated Balance Sheet. The remaining securities matured during the ~~three~~nine months ended ~~June~~September 30, 2022, resulting in a balance of $0 as of ~~June~~September 30, 2022, as compared to a balance of $129.3 million as of December 31, 2021.

13. 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, 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 entity treated as a TRS 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.

~~Table of Contents~~

~~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 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 ~~June~~September 30, 2022, the Company has not 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 2017. The Company has assessed its tax positions for all open years, which as of ~~June~~September 30, 2022 included 2018 to 2020 for federal purposes and 2017 to 2020 for state purposes, and concluded that there are no material uncertainties to be recognized.

14. Future Minimum Rents and Lease Payments

The Company’s properties are leased to tenants under operating leases with initial term expiration dates ranging from 2022 to ~~2040.~~2034.

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 ~~June~~September 30, 2022:


Year Ended	Year Ended	Non-cancellable		Subject to Early Termination Options		Total (1)		Year Ended	Non-cancellable		Subject to Early Termination Options		Total (1)
Remaining 2022	Remaining 2022	$	325,859	$	2,084	$	327,943	Remaining 2022	$	161,060	$	35	$	161,095
2023	2023	630,153		2,252		632,405		2023	633,820		1,905		635,725
2024	2024	566,960		4,928		571,888		2024	583,517		4,560		588,077
2025	2025	421,529		40,735		462,264		2025	443,584		40,697		484,281
2026	2026	357,658		53,424		411,082		2026	378,315		54,272		432,587
Thereafter	Thereafter	1,346,758		187,697		1,534,455		Thereafter	1,412,518		188,362		1,600,880
TOTAL	TOTAL	$	3,648,917	$	291,120	$	3,940,037	TOTAL	$	3,612,814	$	289,831	$	3,902,645

_____________

1.Excludes rents under leases at the Company’s studio properties with terms of one year or less.

Operating Lease Agreements

The Company is party to long-term non-cancellable operating lease agreements in which it is a lessee, consisting of 1312 ground leases, ~~4 facility~~10 sound stage leases, five office leases and ~~3 office~~16 other leases as of ~~June~~September 30, 2022. The Company’s operating

Table of Contents

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 obligations have expiration dates ranging from 2023 through 2067, including extension options which the Company is reasonably certain to exercise. Certain leases provide for variable rental payments based on third-party appraisals of fair market land value, CPI adjustments or a percentage of annual gross income. There are no notable restrictions or covenants imposed by the leases, nor guarantees of residual value.

As of ~~June~~September 30, 2022, the present value of the remaining contractual payments of ~~$641.9~~$746.7 million under the Company’s operating lease agreements was ~~$307.1~~$396.4 million. The corresponding operating lease right-of-use assets amounted to ~~$299.7~~$399.6 million.

~~Table of Contents~~

~~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 future minimum lease payments for its operating leases (including the impact of the extension options which the Company is reasonably certain to exercise) as of ~~June~~September 30, 2022:


Year	Year	Lease Payments(1)		Year	Lease Payments(1)
Remaining 2022	Remaining 2022	$	11,398	Remaining 2022	$	9,541
2023	2023	22,729		2023	38,525
2024	2024	22,721		2024	38,297
2025	2025	22,758		2025	38,193
2026	2026	22,449		2026	36,745
Thereafter	Thereafter	539,799		Thereafter	585,373
Total operating lease payments	Total operating lease payments	641,854		Total operating lease payments	746,674
Less: interest portion	Less: interest portion	(334,782)		Less: interest portion	(350,262)
PRESENT VALUE OF OPERATING LEASE LIABILITIES	PRESENT VALUE OF OPERATING LEASE LIABILITIES	$	307,072	PRESENT VALUE OF OPERATING LEASE LIABILITIES	$	396,412

_____________

1.Future minimum lease payments for operating leases denominated in a foreign currency are translated to U.S. dollars using the exchange rate in effect as of the financial statement date.

The following table summarizes rental expense for operating leases:


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2022		2021		2022		2021			2022		2021		2022		2021
Variable rental expense	Variable rental expense	$	2,381	$	2,494	$	4,486	$	5,108	Variable rental expense	$	1,219	$	2,765	$	7,316	$	7,873
Minimum rental expense	Minimum rental expense	$	6,131	$	5,551	$	12,281	$	10,542	Minimum rental expense	$	7,841	$	5,421	$	20,122	$	15,963

15. 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.

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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 Company’s financial assets and liabilities measured and reported at fair value on a recurring basis include the following as of:


		June 30, 2022								December 31, 2021									September 30, 2022								December 31, 2021
		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total			Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Interest rate derivative assets(1)	Interest rate derivative assets(1)	$	—	$	4,411	$	—	$	4,411	$	—	$	368	$	—	$	368	Interest rate derivative assets(1)	$	—	$	8,801	$	—	$	8,801	$	—	$	368	$	—	$	368
Interest rate derivative liabilities(2)	Interest rate derivative liabilities(2)	$	—	$	—	$	—	$	—	$	—	$	(2,535)	$	—	$	(2,535)	Interest rate derivative liabilities(2)	$	—	$	—	$	—	$	—	$	—	$	(2,535)	$	—	$	(2,535)
Non-real estate investments measured at fair value(1)	Non-real estate investments measured at fair value(1)	$	437	$	25	$	—	$	462	$	1,915	$	1,568	$	—	$	3,483	Non-real estate investments measured at fair value(1)	$	533	$	—	$	—	$	533	$	1,915	$	1,568	$	—	$	3,483
Stock purchase warrant(1)	Stock purchase warrant(1)	$	—	$	286	$	—	$	286	$	—	$	1,664	$	—	$	1,664	Stock purchase warrant(1)	$	—	$	113	$	—	$	113	$	—	$	1,664	$	—	$	1,664
Earnout liability(2)(3)	Earnout liability(2)(3)	$	—	$	—	$	(7,543)	$	(7,543)	$	—	$	—	$	(11,383)	$	(11,383)	Earnout liability(2)(3)	$	—	$	—	$	(9,300)	$	(9,300)	$	—	$	—	$	(11,383)	$	(11,383)
Non-real estate investments measured at NAV(1)(4)	Non-real estate investments measured at NAV(1)(4)	$	—	$	—	$	—	$	43,840	$	—	$	—	$	—	$	27,964	Non-real estate investments measured at NAV(1)(4)	$	—	$	—	$	—	$	46,000	$	—	$	—	$	—	$	27,964

___________

1.Included in prepaid expenses and other assets, net on the Consolidated Balance Sheets.

2.Included in accounts payable, accrued liabilities and other on the Consolidated Balance Sheets.

3.Related to the acquisition of Zio. Refer to Note 3 for additional details.

4.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.

Level 1 items include an investment in common stock of a publicly traded company which is valued on a quarterly basis using the closing stock price. Level 2 items include an interest rate cap and swaps which are valued on a quarterly basis using a linear regression model, as well as investments in preferred stock and warrants of a publicly traded company value which are valued on a quarterly basis using the closing stock price and a Black-Scholes model, respectively. Level 3 items include the earnout liability which is valued on a quarterly basis using a probability-weighted discounted cash flow model. Inputs to the model include the discount rate and probability-weighted earnout payments based on a Monte Carlo simulation with one million trials. Fair value measurement using unobservable inputs is inherently uncertain, and a change in significant inputs could result in different fair values.

The following table summarizes changes in the carrying amount of the earnout liability during the nine months ended September 30, 2022:


Balance, December 31, 2021	$	(11,383)
Partial settlement	3,840
Remeasurement to fair value	(1,757)
Balance, September 30, 2022	$	(9,300)

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. The fair value of the investment in U.S. Government securities is an estimate based on Level 1 inputs. The fair values of debt are estimates based on rates currently prevailing for similar instruments of similar maturities using Level 2 inputs.

Table of Contents

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 table below represents the carrying value and fair value of the Company’s investment in securities and debt as of:


		June 30, 2022				December 31, 2021					September 30, 2022				December 31, 2021
		Carrying Value		Fair Value		Carrying Value		Fair Value			Carrying Value		Fair Value		Carrying Value		Fair Value
ASSETS	ASSETS									ASSETS
U.S. Government securities	U.S. Government securities	$	—	$	—	$	129,321	$	130,910	U.S. Government securities	$	—	$	—	$	129,321	$	130,910
LIABILITIES	LIABILITIES									LIABILITIES
Unsecured debt(1)	Unsecured debt(1)	$	2,410,000	$	2,290,283	$	2,050,000	$	2,154,908	Unsecured debt(1)	$	2,570,000	$	2,332,902	$	2,050,000	$	2,154,908
Secured debt(1)	Secured debt(1)	$	1,744,200	$	1,736,203	$	1,714,874	$	1,713,726	Secured debt(1)	$	1,906,575	$	1,883,357	$	1,714,874	$	1,713,726
In-substance defeased debt	In-substance defeased debt	$	126,397	$	126,254	$	128,212	$	128,361	In-substance defeased debt	$	—	$	—	$	128,212	$	128,361
Joint venture partner debt	Joint venture partner debt	$	66,136	$	63,569	$	66,136	$	69,116	Joint venture partner debt	$	66,136	$	60,997	$	66,136	$	69,116

_________________

1.Amounts represent debt excluding unamortized deferred financing costs and loan discounts/premiums.

16. Stock-Based Compensation

The Company’s 2010 Incentive Plan permits the Company’s board of directors (the “Board”) to grant, among other things, restricted stock, restricted stock units, operating partnership performance units and performance-based awards. As of ~~June~~September 30, 2022, 7.2 million common shares were available for grant under the 2010 Plan. The calculation of shares available for

~~Table of Contents~~

~~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)~~

grant is determined after taking into account unvested restricted stock, unvested operating partnership performance units and unvested RSUs, assuming the maximum bonus pool eligible ultimately is earned and based on a stock price of ~~$14.84.~~$10.95.

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 an executive officer. Lastly, 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.

Beginning in 2020, the compensation committee of the Board (the “Compensation Committee”) adopted an annual Hudson Pacific Properties, Inc. Performance Stock Unit Plan (“PSU Plan”). Under the PSU Plan, the Compensation Committee awards restricted stock units or performance units in the operating partnership to certain employees. PSU Plan grants consist of two portions. A portion of each award, the Relative Total Shareholder Return (“TSR”) Performance Unit, is eligible to vest based on the achievement of the Company’s TSR compared to the TSR of the FTSE NAREIT All Equity REITs index over a three-year performance period, with the vesting percentage subject to certain percentage targets. The remaining portion of each award, the Operational Performance Unit, becomes eligible to vest based on the achievement of operational performance metrics over a one-year performance period and vests 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.

The following table presents the classification and amount recognized for stock-based compensation related to the Company’s awards:

Three Months Ended June 30, Six Months Ended June 30,
2022 2021 2022 2021
Expensed stock compensation(1)
$ 5,993 $ 6,340 $ 11,322 $ 9,878
Capitalized stock compensation(2)
973 1,009 1,789 1,888
TOTAL STOCK COMPENSATION(3)
$ 6,966 $ 7,349 $ 13,111 $ 11,766

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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)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Expensed stock compensation(1)	$	6,494	$	5,840	$	17,816	$	15,718
Capitalized stock compensation(2)	894		771		2,683		2,659
TOTAL STOCK COMPENSATION(3)	$	7,388	$	6,611	$	20,499	$	18,377

_________________

1.Amounts are recorded in general and administrative expenses on the Consolidated Statements of Operations.

2.Amounts are recorded in investment in real estate, at cost on the Consolidated Balance Sheets.

3.Amounts are recorded in additional paid-in capital and non-controlling interest—units in the operating partnership on the Consolidated Balance Sheets.

17. 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. 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 and ~~six~~nine months ended ~~June~~September 30, 2022 and 2021, both methods of calculation yielded the same diluted earnings per share amount. Diluted earnings per share reflects the potential

~~Table of Contents~~

~~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)~~

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 to net ~~(loss) income~~loss available to common stockholders:


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2022		2021		2022		2021			2022		2021		2022		2021
Numerator:	Numerator:									Numerator:
Basic net (loss) income available to common stockholders		$	(7,436)	$	2,315	$	(27,229)	$	7,297
Effect of dilutive instruments		—		18		—		—
Diluted net (loss) income available to common stockholders		$	(7,436)	$	2,333	$	(27,229)	$	7,297
Basic and diluted net loss available to common stockholders										Basic and diluted net loss available to common stockholders	$	(17,286)	$	(9,295)	$	(44,515)	$	(1,998)

Denominator:	Denominator:									Denominator:
Basic weighted average common shares outstanding	Basic weighted average common shares outstanding	143,816,698		151,169,612		146,487,388		150,997,564		Basic weighted average common shares outstanding	141,117,194		152,320,252		144,677,652		151,443,305
Effect of dilutive instruments(1)(2)	Effect of dilutive instruments(1)(2)	—		1,513,851		—		305,281		Effect of dilutive instruments(1)(2)	—		—		—		—
DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING	DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING	143,816,698		152,683,463		146,487,388		151,302,845		DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING	141,117,194		152,320,252		144,677,652		151,443,305
Basic earnings per common share	Basic earnings per common share	$	(0.05)	$	0.02	$	(0.19)	$	0.05	Basic earnings per common share	$	(0.12)	$	(0.06)	$	(0.31)	$	(0.01)
Diluted earnings per common share	Diluted earnings per common share	$	(0.05)	$	0.02	$	(0.19)	$	0.05	Diluted earnings per common share	$	(0.12)	$	(0.06)	$	(0.31)	$	(0.01)

________________

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 or performance 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.

2.The Company includes the dilutive effect of the forward sale component of its accelerated share repurchase agreements in the computation of diluted earnings per share.

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-forfeitable 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 and ~~six~~nine months ended ~~June~~September 30, 2022 and 2021, 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.

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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)

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 to net ~~(loss) income~~loss available to common unitholders:


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2022		2021		2022		2021			2022		2021		2022		2021
Numerator:	Numerator:									Numerator:
Basic and diluted net (loss) income available to common unitholders		$	(7,529)	$	2,334	$	(27,552)	$	7,366
Basic and diluted net loss available to common unitholders										Basic and diluted net loss available to common unitholders	$	(17,511)	$	(9,380)	$	(45,063)	$	(2,014)
Denominator:	Denominator:									Denominator:
Basic weighted average common units outstanding	Basic weighted average common units outstanding	145,662,962		152,551,236		148,332,424		152,369,823		Basic weighted average common units outstanding	142,963,458		153,701,876		146,523,102		152,818,720
Effect of dilutive instruments(1)(2)	Effect of dilutive instruments(1)(2)	—		132,227		—		305,281		Effect of dilutive instruments(1)(2)	—		—		—		—
DILUTED WEIGHTED AVERAGE COMMON UNITS OUTSTANDING	DILUTED WEIGHTED AVERAGE COMMON UNITS OUTSTANDING	145,662,962		152,683,463		148,332,424		152,675,104		DILUTED WEIGHTED AVERAGE COMMON UNITS OUTSTANDING	142,963,458		153,701,876		146,523,102		152,818,720
Basic earnings per common unit	Basic earnings per common unit	$	(0.05)	$	0.02	$	(0.19)	$	0.05	Basic earnings per common unit	$	(0.12)	$	(0.06)	$	(0.31)	$	(0.01)
Diluted earnings per common unit	Diluted earnings per common unit	$	(0.05)	$	0.02	$	(0.19)	$	0.05	Diluted earnings per common unit	$	(0.12)	$	(0.06)	$	(0.31)	$	(0.01)

________________

1.The operating partnership includes unvested awards as contingently issuable units in the computation of diluted earnings per unit once the market or performance 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.

2.The Company includes the dilutive effect of the forward sale component of its accelerated share repurchase agreements in the computation of diluted earnings per unit.

18. Redeemable Non-controlling Interest

Redeemable Preferred Units of the Operating Partnership

As of ~~June~~September 30, 2022 and December 31, 2021, there were 392,598 Series A preferred units of partnership interest in the operating partnership, or Series A preferred 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. 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-controlling Interest in Consolidated Real Estate Entities

On March 1, 2018, the Company entered into a joint venture agreement with Macerich to form the HPP-MAC JV. On August 31, 2018, Macerich contributed Westside Pavilion to the HPP-MAC JV. 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. Therefore, the non-controlling interest related to this joint venture is included as temporary equity. The put right is 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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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 reconciles the beginning and ending balances of redeemable non-controlling interests:


		Three Months Ended June 30, 2022				Six Months Ended June 30, 2022					Three Months Ended September 30, 2022				Nine Months Ended September 30, 2022
		Series A Redeemable Preferred Units		Consolidated Real Estate Entities		Series A Redeemable Preferred Units		Consolidated Real Estate Entities			Series A Redeemable Preferred Units		Consolidated Real Estate Entities		Series A Redeemable Preferred Units		Consolidated Real Estate Entities
BEGINNING OF PERIOD	BEGINNING OF PERIOD	$	9,815	$	127,684	$	9,815	$	129,449	BEGINNING OF PERIOD	$	9,815	$	126,420	$	9,815	$	129,449
Contributions	Contributions	—		250		—		375		Contributions	—		200		—		575
Distributions	Distributions	—		(8)		—		(8)		Distributions	—		—		—		(8)
Declared dividend	Declared dividend	(153)		—		(306)		—		Declared dividend	(153)		—		(459)		—
Net income (loss)	Net income (loss)	153		(1,506)		306		(3,396)		Net income (loss)	153		(1,037)		459		(4,433)

END OF PERIOD	END OF PERIOD	$	9,815	$	126,420	$	9,815	$	126,420	END OF PERIOD	$	9,815	$	125,583	$	9,815	$	125,583

19. Equity

The table below presents the activity related to Hudson Pacific Properties, Inc.’s accumulated other comprehensive loss (“OCI”):


		Derivative Instruments		Currency Translation Adjustments		Total Accumulated Other Comprehensive Loss			Derivative Instruments		Currency Translation Adjustments		Total Accumulated Other Comprehensive Loss
BALANCE AT DECEMBER 31, 2021	BALANCE AT DECEMBER 31, 2021	$	(3,957)	$	2,196	$	(1,761)	BALANCE AT DECEMBER 31, 2021	$	(3,957)	$	2,196	$	(1,761)
Unrealized gains (losses) recognized in OCI	Unrealized gains (losses) recognized in OCI	4,480		(8,301)		(3,821)		Unrealized gains (losses) recognized in OCI	9,039		(18,177)		(9,138)
Reclassification from OCI into income(1)	Reclassification from OCI into income(1)	(1,469)		—		(1,469)		Reclassification from OCI into income(1)	(6,167)		—		(6,167)
Net change in OCI	Net change in OCI	3,011		(8,301)		(5,290)		Net change in OCI	2,872		(18,177)		(15,305)
BALANCE AT JUNE 30, 2022		$	(946)	$	(6,105)	$	(7,051)
BALANCE AT SEPTEMBER 30, 2022								BALANCE AT SEPTEMBER 30, 2022	$	(1,085)	$	(15,981)	$	(17,066)

_____________

1.The gains and losses on the Company’s derivative instruments classified as hedges are reported in interest expense on the Consolidated Statements of Operations.

The table below presents the activity related to Hudson Pacific Properties, L.P.’s OCI:


		Derivative Instruments		Currency Translation Adjustments		Total Accumulated Other Comprehensive Loss			Derivative Instruments		Currency Translation Adjustments		Total Accumulated Other Comprehensive Loss
BALANCE AT DECEMBER 31, 2021	BALANCE AT DECEMBER 31, 2021	$	(3,954)	$	2,175	$	(1,779)	BALANCE AT DECEMBER 31, 2021	$	(3,954)	$	2,175	$	(1,779)
Unrealized gains (losses) recognized in OCI	Unrealized gains (losses) recognized in OCI	4,560		(8,449)		(3,889)		Unrealized gains (losses) recognized in OCI	9,200		(18,501)		(9,301)
Reclassification from OCI into income(1)	Reclassification from OCI into income(1)	(1,495)		—		(1,495)		Reclassification from OCI into income(1)	(6,277)		—		(6,277)
Net change in OCI	Net change in OCI	3,065		(8,449)		(5,384)		Net change in OCI	2,923		(18,501)		(15,578)
BALANCE AT JUNE 30, 2022		$	(889)	$	(6,274)	$	(7,163)
BALANCE AT SEPTEMBER 30, 2022								BALANCE AT SEPTEMBER 30, 2022	$	(1,031)	$	(16,326)	$	(17,357)

_____________

1.The gains and losses on the operating partnership’s derivative instruments classified as hedges are reported in interest expense on the Consolidated Statements of Operations.

Non-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

~~Table of Contents~~

~~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)~~

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 ~~1-for-one~~one-for-one basis.

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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)

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 with the capital accounts of common unitholders. Subject to any agreed upon exceptions, once vested and having achieved parity with common unitholders, performance units are convertible into common units in the operating partnership on a ~~1-for-one~~one-for-one basis.

Ownership Interest in the Operating Partnership

The following table summarizes the ownership interest in the operating partnership, excluding unvested restricted units and unvested restricted performance units, as of:


		June 30, 2022		December 31, 2021			September 30, 2022		December 31, 2021
Company-owned common units in the operating partnership	Company-owned common units in the operating partnership	141,609,336		151,124,543		Company-owned common units in the operating partnership	140,923,320		151,124,543
Company’s ownership interest percentage	Company’s ownership interest percentage	98.7	%	98.8	%	Company’s ownership interest percentage	98.7	%	98.8	%
Non-controlling common units in the operating partnership(1)	Non-controlling common units in the operating partnership(1)	1,846,264		1,842,898		Non-controlling common units in the operating partnership(1)	1,846,264		1,842,898
Non-controlling ownership interest percentage	Non-controlling ownership interest percentage	1.3	%	1.2	%	Non-controlling ownership interest percentage	1.3	%	1.2	%

_________________

1.Represents common units held by certain of the Company’s executive officers, directors and other outside investors. As of ~~June~~September 30, 2022, this amount represents both common units and performance units of 550,969 and 1,295,295, respectively. As of December 31, 2021, this amount represents both common units and performance units in the amount of 550,969 and 1,291,929, respectively.

Common Stock Activity

The Company has not completed any common stock offerings during the ~~six~~nine months ended ~~June~~September 30, 2022.

The Company’s ATM program permits sales of up to $125.0 million of common stock. The Company did not utilize the ATM program during the ~~six~~nine months ended ~~June~~September 30, 2022. A cumulative total of $65.8 million has been sold as of ~~June~~September 30, 2022.

Share Repurchase Program

The Company is authorized to repurchase shares of its common stock up to a total of $250.0 million of its common stock under the share repurchase program. During the ~~six~~nine months ended ~~June~~September 30, 2022, the Company repurchased $37.2 million of its common stock, before transaction costs. Since commencement of the program, a cumulative total of $213.4 million has 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.

Accelerated Share Repurchase Agreements

On February 25, 2022, the Company entered into an uncollared accelerated share repurchase (“ASR”) agreement to purchase $100 million of its outstanding common stock. During the first quarter 2022, the Company made an initial payment of $100 million and received an initial delivery of approximately 3.3 million shares of common stock representing 85% of the total $100 million agreement based on the closing price of our common stock on the transaction date. Final settlement of the agreement occurred during the second quarter 2022, resulting in the receipt of an additional 0.9 million shares of common stock based on an adjusted daily volume-weighted average price of $23.90 during the measurement period.

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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 February 25, 2022, the Company entered into a collared ASR agreement to purchase $100 million of its outstanding common stock. During the ~~six~~nine months ended ~~June~~September 30, 2022, the Company made an initial payment of $100 million and received an initial delivery of approximately 3.3 million shares of common stock based on an estimated cap price calculated using the daily volume-weighted average price during an initial hedge period. Final settlement of the agreement occurred ~~subsequent to June 30,~~during the third quarter 2022, resulting in the receipt of an additional 0.7 million shares of common stock based on a floor price of $25.35.

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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)

At the conclusion of the ASR program in July 2022, a total of 8.1 million shares had been repurchased at an average price of $24.60.

As of June 30, 2022, the forward sale component of the ASR agreements is classified as equity due to the Company’s option to settle its potential obligation to deliver additional shares of common stock in the form of either cash or net shares.

Series C Cumulative Redeemable Preferred Stock

Series C cumulative redeemable preferred stock relates to the 17,000,000 shares of our Series C preferred stock, $0.01 par value per share. Holders of Series C preferred stock, when and as authorized by the board of directors of the Company, are entitled to cumulative cash dividends at the rate of 4.750% per annum of the $25.00 per share, equivalent to $1.1875 per annum per share. Dividends are payable quarterly in arrears on or about the last day of December, March, June and September of each year. In addition to other preferential rights, the holders of Series C preferred stock are entitled to receive the liquidation preference, which is $25.00 per share, before the holders of common stock in the event of any voluntary or involuntary liquidation, dissolution or winding-up of the Company’s affairs. Generally, shares of Series C preferred stock are not redeemable by the Company prior to November 16, 2026. However, upon the occurrence of a change of control, holders of the Series C preferred stock will have the right, (unless the Company has elected to redeem the Series C preferred stock) to convert into a specified number of shares of common stock.

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 per share declared and paid for the periods presented:


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2022		2021		2022		2021			2022		2021		2022		2021
Common stock	Common stock	$	0.25	$	0.25	$	0.50	$	0.50	Common stock	$	0.25	$	0.25	$	0.75	$	0.75
Common units	Common units	$	0.25	$	0.25	$	0.50	$	0.50	Common units	$	0.25	$	0.25	$	0.75	$	0.75
Series A preferred units	Series A preferred units	$	0.3906	$	0.3906	$	0.7812	$	0.7812	Series A preferred units	$	0.3906	$	0.3906	$	1.1718	$	1.1718
Series C preferred stock(1)	Series C preferred stock(1)	$	0.2968750	$	—	$	0.7421875	$	—	Series C preferred stock(1)	$	0.2968750	$	—	$	1.0390625	$	—

Performance units	Performance units	$	0.25	$	0.25	$	0.50	$	0.50	Performance units	$	0.25	$	0.25	$	0.75	$	0.75
Payment date	Payment date	June 30, 2022		June 28, 2021		N/A		N/A		Payment date	September 29, 2022		September 30, 2021		N/A		N/A
Record date	Record date	June 20, 2022		June 18, 2021		N/A		N/A		Record date	September 19, 2022		September 20, 2021		N/A		N/A

_________________

1.Dividends paid during the ~~six~~nine months ended ~~June~~September 30, 2022 include a $0.2968750 per share dividend declared and paid in each of the first, second and ~~second~~third quarters of 2022 and a $0.1484375 per share dividend declared during the fourth quarter of 2021.

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.

20. Segment Reporting

The Company’s reporting segments are based on the Company’s method of internal reporting, which classifies its operations into 2two reportable segments: (i) office properties and related operations and (ii) studio properties and related

~~Table of Contents~~

~~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)~~

operations. The Company evaluates performance based upon net operating income of the segment operations. General and administrative expenses and interest expense are not included in segment profit as the 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; therefore, depreciation and amortization expense is not allocated among segments.

Table of Contents

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 table below presents the operating activity of the Company’s reportable segments:


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2022		2021		2022		2021			2022		2021		2022		2021
Office segment	Office segment									Office segment
Office revenues	Office revenues	$	216,244	$	195,703	$	427,644	$	387,846	Office revenues	$	213,491	$	201,866	$	641,135	$	589,712
Office expenses	Office expenses	(78,558)		(69,111)		(152,189)		(135,673)		Office expenses	(78,340)		(71,865)		(230,529)		(207,538)
Office segment profit	Office segment profit	137,686		126,592		275,455		252,173		Office segment profit	135,151		130,001		410,606		382,174
Studio segment	Studio segment									Studio segment
Studio revenues	Studio revenues	35,186		19,899		68,299		40,875		Studio revenues	46,863		25,766		115,162		66,641
Studio expenses	Studio expenses	(20,686)		(12,466)		(39,669)		(23,919)		Studio expenses	(26,688)		(12,044)		(66,357)		(35,963)
Studio segment profit	Studio segment profit	14,500		7,433		28,630		16,956		Studio segment profit	20,175		13,722		48,805		30,678
TOTAL SEGMENT PROFIT	TOTAL SEGMENT PROFIT	$	152,186	$	134,025	$	304,085	$	269,129	TOTAL SEGMENT PROFIT	$	155,326	$	143,723	$	459,411	$	412,852

Segment revenues	Segment revenues	$	251,430	$	215,602	$	495,943	$	428,721	Segment revenues	$	260,354	$	227,632	$	756,297	$	656,353
Segment expenses	Segment expenses	(99,244)		(81,577)		(191,858)		(159,592)		Segment expenses	(105,028)		(83,909)		(296,886)		(243,501)
TOTAL SEGMENT PROFIT	TOTAL SEGMENT PROFIT	$	152,186	$	134,025	$	304,085	$	269,129	TOTAL SEGMENT PROFIT	$	155,326	$	143,723	$	459,411	$	412,852

The table below is a reconciliation of the total profit from all segments to net income:


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2022		2021		2022		2021			2022		2021		2022		2021
NET INCOME (LOSS)		$	3,546	$	7,030	$	(4,069)	$	18,441
NET (LOSS) INCOME										NET (LOSS) INCOME	$	(6,792)	$	(6,182)	$	(10,861)	$	12,259
General and administrative	General and administrative	21,871		17,109		42,383		35,558		General and administrative	19,795		18,288		62,178		53,846
Depreciation and amortization	Depreciation and amortization	91,438		84,178		183,631		166,939		Depreciation and amortization	93,070		88,568		276,701		255,507
Income from unconsolidated real estate entities		(1,780)		(470)		(2,083)		(1,105)
Loss (income) from unconsolidated real estate entities										Loss (income) from unconsolidated real estate entities	352		(566)		(1,731)		(1,671)
Fee income	Fee income	(1,140)		(797)		(2,211)		(1,645)		Fee income	(911)		(678)		(3,122)		(2,323)
Interest expense	Interest expense	33,719		30,689		64,555		60,975		Interest expense	37,261		30,825		101,816		91,800
Interest income	Interest income	(920)		(937)		(1,830)		(1,934)		Interest income	(196)		(934)		(2,026)		(2,868)
Management services reimbursement income—unconsolidated real estate entities	Management services reimbursement income—unconsolidated real estate entities	(1,068)		(626)		(2,176)		(626)		Management services reimbursement income—unconsolidated real estate entities	(983)		(253)		(3,159)		(879)
Management services expense—unconsolidated real estate entities	Management services expense—unconsolidated real estate entities	1,068		626		2,176		626		Management services expense—unconsolidated real estate entities	983		253		3,159		879
Transaction-related expenses	Transaction-related expenses	1,126		1,064		1,382		1,064		Transaction-related expenses	9,331		6,300		10,713		7,364
Unrealized loss (gain) on non-real estate investments	Unrealized loss (gain) on non-real estate investments	1,818		(5,018)		168		(10,793)		Unrealized loss (gain) on non-real estate investments	894		(827)		1,062		(11,620)

Loss on sale of real estate										Loss on sale of real estate	180		—		180		—
Impairment loss	Impairment loss	3,250		—		23,753		—		Impairment loss	4,795		2,762		28,548		2,762

Loss on extinguishment of debt										Loss on extinguishment of debt	—		6,249		—		6,249
Other (income) expense	Other (income) expense	(742)		1,177		(1,594)		1,629		Other (income) expense	(2,453)		(82)		(4,047)		1,547
TOTAL PROFIT FROM ALL SEGMENTS	TOTAL PROFIT FROM ALL SEGMENTS	$	152,186	$	134,025	$	304,085	$	269,129	TOTAL PROFIT FROM ALL SEGMENTS	$	155,326	$	143,723	$	459,411	$	412,852

21. Related Party Transactions

Employment Agreements

The Company has entered into employment agreements with certain of its executive officers, effective January 1, 2020, that provide for various severance and change in control benefits and other terms and conditions of employment.

Table of Contents

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)

Cost Reimbursements from Unconsolidated Real Estate Entities

The Company is reimbursed for certain costs incurred in managing certain of its unconsolidated real estate entities. During the three and ~~six~~nine months ended ~~June~~September 30, 2022, the Company recognized ~~$1.1~~$1.0 million and ~~$2.2~~$3.2 million, respectively, of such reimbursement income in management services reimbursement income—unconsolidated real estate entities on the Consolidated Statement of Operations. During the three and ~~six~~nine months ended ~~June~~September 30, 2021, the Company recognized ~~$0.6~~$0.3 million and $0.9 million of such reimbursement ~~income.~~income, respectively.

Related Party Leases

The Company’s wholly-owned subsidiary is party to long-term operating lease agreements with an unconsolidated joint venture for office space and fitness and conference facilities. As of ~~June~~September 30, 2022, the Company’s right-of-use assets and lease liabilities related to these lease obligations were ~~$6.8~~$6.2 million and ~~$6.9~~$6.3 million, respectively, as compared to right-of-use assets and lease liabilities of ~~$6.0~~$7.4 million and ~~$6.1~~$7.5 million, respectively, as of ~~June~~September 30, 2021. During the three and ~~six~~nine months ended ~~June~~September 30, 2022, the Company recognized ~~$0.3~~$0.2 million and ~~$0.5~~$0.7 million, respectively, of related rental expense in management services expense—unconsolidated real estate entities on the Consolidated Statement of Operations related to these leases. During the three and ~~six~~nine months ended ~~June~~September 30, 2021, the Company recognized ~~$0.6~~$0.2 million and $0.8 million of related rental ~~expense.~~expense, respectively.

22. Commitments and Contingencies

Fund Investments

On April 14, 2022, the Company launched EquiBlue, an investing platform that seeks to leverage commercial real estate to holistically provide economic opportunity and upward mobility for women and people of color. As sponsor, the Company and its strategic partner have collectively committed to contributing at least 20% of the total capital commitment for EquiBlue’s initial fund, which is targeted at $300.0 million.

The Company invests in several non-real estate funds with an aggregate commitment to contribute up to $48.0 million. As of ~~June~~September 30, 2022, the Company has contributed ~~$28.0~~$30.2 million to these funds, net of distributions, with ~~$20.0~~$17.8 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 ~~June~~September 30, 2022, 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 ~~June~~September 30, 2022, the Company had $3.1 million in outstanding letters of credit 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 and its obligations under executed leases. As of ~~June~~September 30, 2022, the Company had ~~$322.1~~$312.7 million in related commitments.

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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)

23. Supplemental Cash Flow Information

Supplemental cash flow information for Hudson Pacific Properties, Inc. is included as follows:


		Six Months Ended June 30,					Nine Months Ended September 30,
		2022		2021			2022		2021
Cash paid for interest, net of capitalized interest	Cash paid for interest, net of capitalized interest	$	56,467	$	56,034	Cash paid for interest, net of capitalized interest	$	68,821	$	74,381
Non-cash investing and financing activities	Non-cash investing and financing activities					Non-cash investing and financing activities

Accounts payable and accrued liabilities for real estate investments	Accounts payable and accrued liabilities for real estate investments	$	185,823	$	134,516	Accounts payable and accrued liabilities for real estate investments	$	181,689	$	136,661
Ground lease remeasurement	Ground lease remeasurement	$	23,177	$	—	Ground lease remeasurement	$	23,177	$	—
Note payable issued as consideration in a business combination						Note payable issued as consideration in a business combination	$	160,000	$	—
Earnout liability recognized as contingent consideration for business combination						Earnout liability recognized as contingent consideration for business combination	$	—	$	22,800
Lease liabilities recorded in connection with right-of-use assets	Lease liabilities recorded in connection with right-of-use assets	$	2,377	$	6,688	Lease liabilities recorded in connection with right-of-use assets	$	94,447	$	13,881
Accrued liability for common stock repurchases settled after quarter-end		$	2,518	$	—

Supplemental cash flow information for Hudson Pacific Properties, L.P. is included as follows:


		Six Months Ended June 30,					Nine Months Ended September 30,
		2022		2021			2022		2021
Cash paid for interest, net of capitalized interest	Cash paid for interest, net of capitalized interest	$	56,467	$	56,034	Cash paid for interest, net of capitalized interest	$	68,821	$	74,381
Non-cash investing and financing activities	Non-cash investing and financing activities					Non-cash investing and financing activities

Accounts payable and accrued liabilities for real estate investments	Accounts payable and accrued liabilities for real estate investments	$	185,823	$	134,516	Accounts payable and accrued liabilities for real estate investments	$	181,689	$	136,661
Ground lease remeasurement	Ground lease remeasurement	$	23,177	$	—	Ground lease remeasurement	$	23,177	$	—
Note payable issued as consideration in a business combination						Note payable issued as consideration in a business combination	$	160,000	$	—
Earnout liability recognized as contingent consideration for business combination						Earnout liability recognized as contingent consideration for business combination	$	—	$	22,800
Lease liabilities recorded in connection with right-of-use assets	Lease liabilities recorded in connection with right-of-use assets	$	2,377	$	6,688	Lease liabilities recorded in connection with right-of-use assets	$	94,447	$	13,881
Accrued liability for common unit repurchases settled after quarter-end		$	2,518	$	—

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:


		Six Months Ended June 30,					Nine Months Ended September 30,
		2022		2021			2022		2021
BEGINNING OF PERIOD	BEGINNING OF PERIOD					BEGINNING OF PERIOD
Cash and cash equivalents	Cash and cash equivalents	$	96,555	$	113,686	Cash and cash equivalents	$	96,555	$	113,686
Restricted cash	Restricted cash	100,321		35,854		Restricted cash	100,321		35,854
TOTAL	TOTAL	$	196,876	$	149,540	TOTAL	$	196,876	$	149,540

END OF PERIOD	END OF PERIOD					END OF PERIOD
Cash and cash equivalents	Cash and cash equivalents	$	266,538	$	110,978	Cash and cash equivalents	$	161,667	$	110,500
Restricted cash	Restricted cash	49,025		33,967		Restricted cash	42,401		109,737
TOTAL	TOTAL	$	315,563	$	144,945	TOTAL	$	204,068	$	220,237

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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 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.:


		Six Months Ended June 30,					Nine Months Ended September 30,
		2022		2021			2022		2021
BEGINNING OF PERIOD	BEGINNING OF PERIOD					BEGINNING OF PERIOD
Cash and cash equivalents	Cash and cash equivalents	$	96,555	$	113,686	Cash and cash equivalents	$	96,555	$	113,686
Restricted cash	Restricted cash	100,321		35,854		Restricted cash	100,321		35,854
TOTAL	TOTAL	$	196,876	$	149,540	TOTAL	$	196,876	$	149,540

END OF PERIOD	END OF PERIOD					END OF PERIOD
Cash and cash equivalents	Cash and cash equivalents	$	266,538	$	110,978	Cash and cash equivalents	$	161,667	$	110,500
Restricted cash	Restricted cash	49,025		33,967		Restricted cash	42,401		109,737
TOTAL	TOTAL	$	315,563	$	144,945	TOTAL	$	204,068	$	220,237

24. Subsequent Events

On ~~July 1,~~October 20, 2022, the Company ~~repaid~~sold its ~~in-substance defeased debt in the amount~~6922 Hollywood office property for $96.0 million before certain credits, prorations and closing costs. A portion of ~~$126.4 million in full using~~ the proceeds ~~from~~was used to make an $85.0 million repayment on the ~~maturity of its U.S. Government securities in June 2022.~~Company’s unsecured revolving credit facility.

~~On July 15, 2022, the Company entered into an agreement to sell its Northview Center office property for $46.0 million.~~

~~On July 27, 2022, the Company received an additional 0.7 million shares of its own common stock related to the settlement of the collared ASR. See Note 19 for further details.~~

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

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;

•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;

•changes in the tax laws and uncertainty as to how those changes may be applied;

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•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.

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 COVID-19 pandemic has not had a material impact on our operations, however, we continue to face significant uncertainties as a result of it, including new variants, although their impact on the economy appears to have diminished and the general commercial real estate market appears to be recovering. Both the investing and leasing environments are highly competitive. Even before the COVID-19 pandemic, uncertainty regarding the economic and political environment had made businesses reluctant to make long-term commitments or changes in their business plans. The COVID-19 pandemic has resulted in significant disruptions in utilization of office properties and uncertainty over how tenants will respond when their leases are scheduled to expire.

Possible future declines in rental rates and expectations of future rental concessions, including free rent to renew tenants early, to retain tenants who are up for renewal or to attract new tenants, or rent abatements for tenants severely impacted by the COVID-19 pandemic, may result in decreases in cash flows from our properties. Our tenants could ~~reevaluate~~re-evaluate their use of such properties in light of the impacts of the COVID-19 pandemic, including their ability to have workers succeed in working at home, and determine not to renew these leases or to seek rent or other concessions as a condition of renewing their leases.

Potential future declines in economic conditions could negatively impact commercial real estate fundamentals and result in lower occupancy, lower rental rates and declining values in our real estate portfolio, which could have the following negative effects on us: the values of our investments in commercial properties could decrease below the amounts paid for such investments; and/or revenues from our properties could decrease due to fewer tenants and/or lower rental rates, making it more difficult for us to make distributions or meet our debt service obligations.

The debt market remains sensitive to the macro environment, such as impacts of the COVID-19 pandemic, Federal Reserve policy, market sentiment or regulatory factors affecting the banking industry. Any future uncertainties in the capital markets may cause difficulty in refinancing debt obligations prior to maturity at terms as favorable as the terms of existing indebtedness. Market conditions can change quickly, potentially negatively impacting the value of real estate investments. We continuously review our investment and debt financing strategies to optimize our portfolio and the cost of our debt exposure.

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Executive Summary

Through our interest in Hudson Pacific Properties, L.P. (our operating partnership) and its subsidiaries, at ~~June~~September 30, 2022, our office portfolio consisted of approximately ~~15.8~~16.1 million square feet of in-service, repositioning, redevelopment, development and held for sale properties. Additionally, as of ~~June~~September 30, 2022, our studio portfolio consisted of ~~1.5~~2.1 million square feet of in-service, repositioning and development properties and our land portfolio consisted of ~~4.1~~3.6 million developable square feet. Our consolidated and unconsolidated portfolio consists of 6665 properties (42 wholly-owned properties, 16 properties owned by joint ventures and ~~eight~~seven land properties) located ~~in 11 California submarkets, three Seattle submarkets, one~~throughout the United States, Western Canada ~~submarket~~ and ~~one~~ Greater London, ~~submarket,~~United Kingdom, totaling approximately ~~21.4~~21.2 million square feet.

As of ~~June~~September 30, 2022, our in-service office portfolio was ~~92.3%~~89.3% leased (including leases not yet commenced). Our same-store studio properties were ~~84.0%~~84.4% leased for the average percent leased for the 12 months ended ~~June~~September 30, 2022.

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The following table summarizes our portfolio as of ~~June~~September 30, 2022:


In-Service Portfolio	In-Service Portfolio	Number of Properties	Rentable Square Feet(1)	Percent Occupied(2)		Percent Leased(2)		Annualized Base Rent per Square Foot(3)		In-Service Portfolio	Number of Properties	Rentable Square Feet(1)	Percent Occupied(2)		Percent Leased(2)		Annualized Base Rent per Square Foot(3)
OFFICE	OFFICE									OFFICE
Same-store(4)	Same-store(4)	43	12,818,691	90.7	%	92.2	%	$	52.91	Same-store(4)	43	12,821,754	87.4	%	88.9	%	$	53.42
Stabilized non-same store(5)	Stabilized non-same store(5)	4	1,094,185	98.6		99.1		57.15		Stabilized non-same store(5)	4	1,100,588	98.6		99.2		57.21
Total stabilized	Total stabilized	47	13,912,876	91.3		92.7		53.27		Total stabilized	47	13,922,342	88.2		89.7		53.76
Lease-up(5)(6)	Lease-up(5)(6)	1	726,191	81.0		83.6		61.13		Lease-up(5)(6)	1	724,939	78.3		80.6		60.77
Total in-service office	Total in-service office	48	14,639,067	90.8		92.3		53.62		Total in-service office	48	14,647,281	87.8		89.3		54.07
STUDIO	STUDIO									STUDIO
Same-store(7)	Same-store(7)	3	1,230,454	84.0		84.0		44.70		Same-store(7)	3	1,230,454	84.4		84.4		44.72

Non-same store(5)										Non-same store(5)	1	35,562	—		—		—
Total	Total	3	1,230,454							Total	4	1,266,016
Repositioning(5)(8)	Repositioning(5)(8)	2	433,259	—		2.4		—		Repositioning(5)(8)	2	433,259	—		2.4		—
Development~~(5)~~(9)	Development~~(5)~~(9)	1	241,000	—		—		—		Development~~(5)~~(9)	2	787,000	—		—		—
Held-for-sale(9)		4	745,171	49.9		52.8		44.43
Held-for-sale(5)(10)										Held-for-sale(5)(10)	2	452,186	54.6		54.6		53.99

Total repositioning, redevelopment, development and held-for-sale	Total repositioning, redevelopment, development and held-for-sale	7	1,419,430							Total repositioning, redevelopment, development and held-for-sale	6	1,672,445
Total office and studio properties	Total office and studio properties	58	17,288,951							Total office and studio properties	58	17,585,742
Land(10)		8	4,129,589
Land										Land	7	3,583,589
TOTAL	TOTAL	66	21,418,540							TOTAL	65	21,169,331

____________

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.Percent occupied for office properties is calculated as (i) square footage under commenced leases as of ~~June~~September 30, 2022, 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 ~~June~~September 30, 2022, divided by (ii) total square feet, expressed as a percentage.

3.Annualized base rent per square foot for office properties is calculated as (i) annualized base rent divided by (ii) square footage under commenced leases as of ~~June~~September 30, 2022. 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 ~~June~~September 30, 2022.

4.Includes office properties owned and included in our stabilized portfolio as of ~~April~~July 1, 2022 and still owned and included in the stabilized portfolio as of ~~June~~September 30, 2022.

5.Included in our non-same-store property group.

6.Includes office properties that have not yet reached 92.0% occupancy since the date they were acquired as of ~~June~~September 30, 2022.

7.Includes studio properties owned and included in our portfolio as of ~~April~~July 1, 2022 and still owned and included in our portfolio as of ~~June~~September 30, 2022.

8.Includes 96,322 square feet at 10850 Pico, 96,240 square feet at 875 Howard, 79,056 square feet at Page Mill Center, 50,847 square feet at Metro Plaza, 36,905 square feet at Rincon Center, 35,905 square feet at 95 Jackson, 18,594 square feet at Sunset Las Palmas, ~~and~~ 12,740 square feet at Palo Alto Square, and 6,650 square feet at Sunset Gower as of ~~second~~third quarter 2022.

9.In~~cludes Northview Center, Skyway Landing, 6922 Hollywood and Del Amo.~~

~~10.~~Includes 546,000 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.~~2019, and 241,000 square feet related to Sunset Glenoaks.

10.Includes Skyway Landing and 6922 Hollywood.

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Overview

Business Acquisitions

~~We had no business acquisitions during~~On August 31, 2022, the ~~six months ended June 30, 2022.~~Company acquired 100% of the equity interests in Quixote Studios (“Quixote”), which provides sound stages, cast trailers and trucks, and other equipment essential for media content production and it will expand the Company’s service offerings for its studio platform. See Part I, Item 1 “Note 3 to the Consolidated Financial Statements—Business Combinations” for details.

Property Acquisitions

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See Part I, Item 4 “Note 4 to the Consolidated Financial Statements—Investment in Real Estate” for details.

Property Dispositions

~~We had no property dispositions during~~During the ~~six~~nine months ended ~~June 30, 2022.~~

~~Held for Sale~~

~~As of June~~September 30, 2022, the Company ~~had four properties classified as held for sale—6922 Hollywood, Skyway Landing,~~sold its Del Amo and Northview ~~Center—as these~~Center properties ~~were considered non-strategic to the Company’s portfolio. During the six months ended June 30, 2022, the Company recognized an impairment loss of $15.3~~for $2.8 million ~~related to its Del Amo office property due to a reduction in the estimated fair value of the property.~~and $46.0 million, respectively. See Part I, Item 1 “Note 4 to the Consolidated Financial Statements—Investment in Real Estate” for details.

50Held for Sale

~~Table~~

As of ~~Contents~~September 30, 2022, the Company had two properties classified as held for sale—6922 Hollywood and Skyway Landing—as these properties were considered non-strategic to the Company’s portfolio. During the nine months ended September 30, 2022, the Company recognized an impairment loss of $3.1 million related to its 6922 Hollywood office property due to a reduction in the estimated fair value of the property. 6922 Hollywood was subsequently sold on October 20, 2022.

Under Construction and Future Development Projects

The following table summarizes the properties currently under construction and future development projects as of ~~June~~September 30, 2022:

Location

Submarket

Estimated Square Feet(1)

Estimated Completion Date

Estimated Stabilization Date

Under Construction:

Sunset Glenoaks Studios(2)

Los Angeles

241,000

Q3-2023

Q2-2024

Washington 1000

Denny Triangle

546,000

Q1-2024

Q1-2026

Total Under Construction

787,000

Future Development Pipeline:

Burrard Exchange at Bentall Centre(3)

Downtown Vancouver

450,000

TBD

Sunset Waltham Cross Studios(4)

Broxbourne

1,167,347

TBD

Sunset Gower Studios—Development(5)

Hollywood

478,845

TBD

Sunset Las Palmas Studios—Development(5)

Hollywood

617,581

TBD

Cloud10

North San Jose

350,000

TBD

Element LA—Development

West Los Angeles

500,000

TBD

Sunset Bronson Studios Lot D—Development(5)

Hollywood

19,816

TBD

Total Future Development Pipeline

3,583,589

TOTAL UNDER CONSTRUCTION AND FUTURE DEVELOPMENT

4,370,589

_____________

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 own 50% of the ownership interests in the unconsolidated joint venture that owns Sunset Glenoaks Studios.

3.We own 20% of the ownership interests in the unconsolidated joint venture that owns Burrard Exchange.

4.We own 35% of the ownership interests in the unconsolidated joint venture that owns Sunset Waltham Cross Studios.

5.We own 51% of the ownership interests in the consolidated joint venture that owns Sunset Bronson Studios, Sunset Gower Studios and Sunset Las Palmas Studios.

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Lease Expirations

The following table summarizes the lease expirations for leases in place as of ~~June~~September 30, 2022, plus available space, beginning January 1, 2022 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(1)																Company’s Share(1)
Year of Lease Expiration	Year of Lease Expiration	Number of Leases Expiring(2)	Square Footage of Expiring Leases(3)	Square Footage of Expiring Leases(4)	Percent of Office Portfolio Square Feet		Annualized Base Rent(5)		Percentage of Office Portfolio Annualized Base Rent		Annualized Base Rent Per Leased Square Foot(6)		Annualized Base Rent at Expiration		Annualized Base Rent Per Lease Square Foot at Expiration(7)		Year of Lease Expiration	Number of Leases Expiring(2)	Square Footage of Expiring Leases(3)	Square Footage of Expiring Leases(4)	Percent of Office Portfolio Square Feet		Annualized Base Rent(5)		Percentage of Office Portfolio Annualized Base Rent		Annualized Base Rent Per Leased Square Foot(6)		Annualized Base Rent at Expiration		Annualized Base Rent Per Lease Square Foot at Expiration(7)
Vacant	Vacant		1,880,583	1,787,957	13.8	%											Vacant		2,722,442	2,614,565	19.9	%
2022	2022	128	1,304,875	1,203,292	9.3		$	59,737,730	9.7	%	$	49.65	$	59,977,232	$	49.84	2022	67	567,011	519,708	3.9		$	26,001,505	4.4	%	$	50.03	$	26,267,292	$	50.54
2023	2023	168	1,747,615	1,392,730	10.8		73,064,329		11.9		52.46		75,352,392		54.10		2023	172	1,717,729	1,369,011	10.4		73,949,187		12.4		54.02		74,930,084		54.73
2024	2024	164	1,768,413	1,477,696	11.4		81,982,275		13.3		55.48		87,404,277		59.15		2024	169	1,791,887	1,514,926	11.5		85,582,785		14.4		56.49		90,593,643		59.80
2025	2025	130	1,819,637	1,484,451	11.6		89,630,887		14.5		60.38		96,902,510		65.28		2025	138	1,854,803	1,522,868	11.6		93,087,659		15.8		61.13		99,879,752		65.59
2026	2026	64	722,053	631,334	4.9		37,952,715		6.2		60.12		42,813,824		67.81		2026	63	711,825	621,106	4.7		38,306,154		6.4		61.67		42,593,801		68.58
2027	2027	73	879,362	737,626	5.7		43,320,024		7.0		58.73		49,035,475		66.48		2027	84	939,702	795,547	6.0		46,920,342		7.9		58.98		53,241,773		66.92
2028	2028	34	1,001,812	878,340	6.8		60,166,053		9.8		68.50		70,932,227		80.76		2028	42	1,037,801	896,956	6.8		60,923,983		10.2		67.92		71,862,566		80.12
2029	2029	19	340,909	236,093	1.8		18,015,818		2.9		76.31		21,435,162		90.79		2029	20	361,097	254,942	1.9		19,073,279		3.2		74.81		22,606,021		88.67
2030	2030	16	1,526,005	1,164,351	9.0		55,838,401		9.1		47.96		71,884,625		61.74		2030	16	1,532,267	1,170,613	8.9		56,599,859		9.5		48.35		72,303,833		61.77
2031	2031	15	1,095,110	679,594	5.3		38,074,481		6.2		56.03		50,589,671		74.44		2031	14	1,086,447	670,931	5.1		37,964,531		6.4		56.58		50,272,084		74.93
Thereafter	Thereafter	21	1,224,134	821,903	6.4		45,543,319		7.4		55.41		66,002,342		80.30		Thereafter	25	1,264,299	814,359	6.2		45,456,342		7.6		55.82		65,679,797		80.65
Building management use(8)	Building management use(8)	45	203,189	181,687	1.4		—		—		—		—		—		Building management use(8)	46	209,140	183,138	1.4		—		—		—		—		—
Signed leases not commenced(9)	Signed leases not commenced(9)	46	251,468	234,102	1.8		12,097,023		2.0		51.67		13,469,756		57.54		Signed leases not commenced(9)	44	230,553	219,863	1.7		10,901,410		1.8		49.58		12,981,094		59.04
Portfolio Total/Weighted Average	Portfolio Total/Weighted Average	923	15,765,165	12,911,156	100.0	%	$	615,423,055	100.0	%	$	55.33	$	705,799,493	$	63.45	Portfolio Total/Weighted Average	900	16,027,003	13,168,533	100.0	%	$	594,767,036	100.0	%	$	56.35	$	683,211,740	$	64.74

_____________

1.Calculated based on the Company’s consolidated portfolio, plus the Company’s share of the amount from the Company’s unconsolidated joint ventures (calculated based on the Company’s percentage ownership interests), minus the Company’s partners’ share of the amount from the Company’s consolidated joint ventures (calculated based on the partners’ percentage ownership interests).

2.Does not include 3839 month-to-month leases.

3.Total expiring square footage does not include ~~27,088~~26,479 square feet of month-to-month leases.

4.Total expiring square footage does not include ~~16,082~~16,397 square feet of month-to-month leases.

5.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 ~~June~~September 30, 2022, 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.

6.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 ~~June~~September 30, 2022.

7.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 ~~June~~September 30, 2022.

8.Reflects management offices occupied by the Company with various expiration dates.

9.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 ~~June~~September 30, 2022 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 ~~June~~September 30, 2022, divided by (ii) square footage under uncommenced leases as of ~~June~~September 30, 2022.

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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 June 30,				Six Months Ended June 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2022		2021		2022		2021			2022		2021		2022		2021
Renewals(1)	Renewals(1)									Renewals(1)
Number of leases	Number of leases	39		35		86		65		Number of leases	34		27		120		92
Square feet	Square feet	471,939		336,398		732,158		721,844		Square feet	216,505		187,913		948,663		909,757
Tenant improvement costs per square foot(2)(3)	Tenant improvement costs per square foot(2)(3)	$	19.17	$	9.17	$	16.29	$	6.14	Tenant improvement costs per square foot(2)(3)	$	5.32	$	16.25	$	13.75	$	8.23
Leasing commission costs per square foot(2)	Leasing commission costs per square foot(2)	14.52		4.65		12.31		8.17		Leasing commission costs per square foot(2)	5.71		5.24		10.80		7.56
Total tenant improvement and leasing commission costs(2)	Total tenant improvement and leasing commission costs(2)	$	33.69	$	13.82	$	28.60	$	14.31	Total tenant improvement and leasing commission costs(2)	$	11.03	$	21.49	$	24.55	$	15.79

New leases(4)	New leases(4)									New leases(4)
Number of leases	Number of leases	41		38		75		50		Number of leases	31		26		106		76
Square feet	Square feet	241,757		173,799		485,123		312,706		Square feet	164,859		130,515		649,982		443,221
Tenant improvement costs per square foot(2)(3)	Tenant improvement costs per square foot(2)(3)	$	45.02	$	53.06	$	62.06	$	62.99	Tenant improvement costs per square foot(2)(3)	$	95.70	$	77.82	$	70.22	$	67.50
Leasing commission costs per square foot(2)	Leasing commission costs per square foot(2)	17.06		13.09		16.52		16.63		Leasing commission costs per square foot(2)	16.48		14.06		16.51		15.85
Total tenant improvement and leasing commission costs(2)	Total tenant improvement and leasing commission costs(2)	$	62.08	$	66.15	$	78.58	$	79.62	Total tenant improvement and leasing commission costs(2)	$	112.18	$	91.88	$	86.73	$	83.35

TOTAL	TOTAL									TOTAL
Number of leases	Number of leases	80		73		161		115		Number of leases	65		53		226		168
Square feet	Square feet	713,696		510,197		1,217,281		1,034,550		Square feet	381,364		318,428		1,598,645		1,352,978
Tenant improvement costs per square foot(2)(3)	Tenant improvement costs per square foot(2)(3)	$	27.88	$	22.00	$	34.73	$	22.07	Tenant improvement costs per square foot(2)(3)	$	43.20	$	40.61	$	36.73	$	26.45
Leasing commission costs per square foot(2)	Leasing commission costs per square foot(2)	15.37		7.11		14.01		10.54		Leasing commission costs per square foot(2)	10.23		8.73		13.12		10.11
TOTAL TENANT IMPROVEMENT AND LEASING COMMISSION COSTS(2)	TOTAL TENANT IMPROVEMENT AND LEASING COMMISSION COSTS(2)	$	43.25	$	29.11	$	48.74	$	32.61	TOTAL TENANT IMPROVEMENT AND LEASING COMMISSION COSTS(2)	$	53.43	$	49.34	$	49.85	$	36.56

_____________

1.Excludes retained tenants that have relocated or expanded into new space within our portfolio.

2.Assumes 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.

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.

4.Includes retained tenants that have relocated or expanded into new space within our portfolio.

Financings

During the ~~six~~nine months ended ~~June~~September 30, 2022, there were ~~$360.0~~$170.0 million in borrowings on the unsecured revolving credit ~~facility. We~~facility, net of repayments. The Company generally ~~use~~uses the unsecured revolving credit facility to finance the acquisition of properties and businesses, ~~or other properties,~~ to provide funds for tenant improvements ~~lease commissions~~ and capital expenditures and to provide for working capital and other corporate purposes.

In July 2022, the Company repaid its in-substance defeased debt in the amount of $126.4 million in full using the proceeds from the maturity of its U.S. Government securities in June 2022.

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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 2021 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 2021 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.

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 ~~June~~September 30, 2022 to the Three Months Ended ~~June~~September 30, 2021

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 groups:

•Same-store, which includes all of the properties owned and included in our stabilized portfolio as of ~~April~~July 1, 2022 and still owned and included in the stabilized portfolio as of ~~June~~September 30, 2022; and

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•Non-same-store, which includes:

•Stabilized non-same-store properties

•Lease-up properties

•Repositioning properties

•Development properties

•Redevelopment properties

•Held for sale properties

•Operating results from studio service-related businesses

The following table reconciles net loss to NOI:


	Three Months Ended September 30,				Dollar Change		Percent Change
	2022		2021
Net loss	$	(6,792)	$	(6,182)	$	(610)	9.9	%
Adjustments:
Loss (income) from unconsolidated real estate entities	352		(566)		918		(162.2)
Fee income	(911)		(678)		(233)		34.4
Interest expense	37,261		30,825		6,436		20.9
Interest income	(196)		(934)		738		(79.0)
Management services reimbursement income—unconsolidated real estate entities	983		253		730		288.5
Management services expense—unconsolidated real estate entities	(983)		(253)		(730)		288.5
Transaction-related expenses	9,331		6,300		3,031		48.1
Unrealized loss (gain) on non-real estate investments	894		(827)		1,721		(208.1)

Loss on sale of real estate	180		—		180		—
Impairment loss	4,795		2,762		2,033		73.6
Loss on extinguishment of debt	—		6,249		(6,249)		(100.0)
Other income	(2,453)		(82)		(2,371)		2,891.5
General and administrative	19,795		18,288		1,507		8.2
Depreciation and amortization	93,070		88,568		4,502		5.1
NOI	$	155,326	$	143,723	$	11,603	8.1	%

Same-store NOI	$	120,153	$	129,221	$	(9,068)	(7.0)	%
Non-same-store NOI	35,173		14,502		20,671		142.5
NOI	$	155,326	$	143,723	$	11,603	8.1	%

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~~The following table reconciles net income to NOI:~~

Three Months Ended June 30, Dollar Change Percent Change
2022 2021
Net income $ 3,546 $ 7,030 $ (3,484) (49.6) %
Adjustments:
Income from unconsolidated real estate entities (1,780) (470) (1,310) 278.7
Fee income (1,140) (797) (343) 43.0
Interest expense 33,719 30,689 3,030 9.9
Interest income (920) (937) 17 (1.8)
Management services reimbursement income—unconsolidated real estate entities 1,068 626 442 70.6
Management services expense—unconsolidated real estate entities (1,068) (626) (442) 70.6
Transaction-related expenses 1,126 1,064 62 5.8
Unrealized loss (gain) on non-real estate investments 1,818 (5,018) 6,836 (136.2)
Impairment loss 3,250 — 3,250 —
Other (income) expense (742) 1,177 (1,919) (163.0)
General and administrative 21,871 17,109 4,762 27.8
Depreciation and amortization 91,438 84,178 7,260 8.6
NOI $ 152,186 $ 134,025 $ 18,161 13.6 %
Same-store NOI $ 126,505 $ 122,666 $ 3,839 3.1 %
Non-same-store NOI 25,681 11,359 14,322 126.1
NOI $ 152,186 $ 134,025 $ 18,161 13.6 %

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


		Three Months Ended June 30,							Three Months Ended September 30,
		2022			2021				2022			2021
Same-store office	Same-store office							Same-store office
Number of properties	Number of properties	42			42			Number of properties	42			42
Rentable square feet	Rentable square feet	11,310,877			11,310,877			Rentable square feet	11,311,811			11,311,811
Ending % leased	Ending % leased	91.7		%	93.0		%	Ending % leased	88.2		%	92.3		%
Ending % occupied	Ending % occupied	90.2		%	92.1		%	Ending % occupied	86.5		%	91.7		%
Average % occupied for the period	Average % occupied for the period	91.2		%	93.2		%	Average % occupied for the period	90.1		%	92.1		%
Average annual rental rate per square foot	Average annual rental rate per square foot	$	56.16		$	53.10		Average annual rental rate per square foot	$	57.10		$	54.10

Same-store studio	Same-store studio							Same-store studio
Number of properties	Number of properties	3			3			Number of properties	3			3
Rentable square feet	Rentable square feet	1,230,454			1,230,454			Rentable square feet	1,230,454			1,230,454
Average % occupied for the period(1)	Average % occupied for the period(1)	84.0		%	88.0		%	Average % occupied for the period(1)	84.4		%	87.3		%

_____________

1.Percent occupied for same-store studio is the average percent occupied for the 12 months ended.

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The following table gives further detail on our NOI:


		Three Months Ended June 30,													Three Months Ended September 30,
		2022						2021							2022						2021
		Same-Store		Non-Same-Store		Total		Same-Store		Non-Same-Store		Total			Same-Store		Non-Same-Store		Total		Same-Store		Non-Same-Store		Total
Revenues	Revenues													Revenues
Office	Office													Office
Rental	Rental	$	179,401	$	32,435	$	211,836	$	173,535	$	19,017	$	192,552	Rental	$	173,813	$	34,966	$	208,779	$	179,000	$	18,941	$	197,941
Service and other revenues	Service and other revenues	3,026		1,382		4,408		2,186		965		3,151		Service and other revenues	4,063		649		4,712		3,115		810		3,925
Total office revenues	Total office revenues	182,427		33,817		216,244		175,721		19,982		195,703		Total office revenues	177,876		35,615		213,491		182,115		19,751		201,866

Studio	Studio													Studio
Rental	Rental	13,110		328		13,438		11,551		—		11,551		Rental	12,998		2,307		15,305		12,620		148		12,768
Service and other revenues	Service and other revenues	7,552		14,196		21,748		8,348		—		8,348		Service and other revenues	9,267		22,291		31,558		6,131		6,867		12,998
Total studio revenues	Total studio revenues	20,662		14,524		35,186		19,899		—		19,899		Total studio revenues	22,265		24,598		46,863		18,751		7,015		25,766

Total revenues	Total revenues	203,089		48,341		251,430		195,620		19,982		215,602		Total revenues	200,141		60,213		260,354		200,866		26,766		227,632

Operating expenses	Operating expenses													Operating expenses
Office operating expenses	Office operating expenses	64,363		14,195		78,558		60,488		8,623		69,111		Office operating expenses	66,838		11,502		78,340		62,687		9,178		71,865
Studio operating expenses	Studio operating expenses	12,221		8,465		20,686		12,466		—		12,466		Studio operating expenses	13,150		13,538		26,688		8,958		3,086		12,044
Total operating expenses	Total operating expenses	76,584		22,660		99,244		72,954		8,623		81,577		Total operating expenses	79,988		25,040		105,028		71,645		12,264		83,909

Office NOI	Office NOI	118,064		19,622		137,686		115,233		11,359		126,592		Office NOI	111,038		24,113		135,151		119,428		10,573		130,001
Studio NOI	Studio NOI	8,441		6,059		14,500		7,433		—		7,433		Studio NOI	9,115		11,060		20,175		9,793		3,929		13,722
NOI	NOI	$	126,505	$	25,681	$	152,186	$	122,666	$	11,359	$	134,025	NOI	$	120,153	$	35,173	$	155,326	$	129,221	$	14,502	$	143,723

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The following table gives further detail on our change in NOI:


		Three Months Ended June 30, 2022 as compared to Three Months Ended June 30, 2021													Three Months Ended September 30, 2022 as compared to Three Months Ended September 30, 2021
		Same-Store				Non-Same-Store				Total					Same-Store				Non-Same-Store				Total
		Dollar Change		Percent Change		Dollar Change		Percent Change		Dollar Change		Percent Change			Dollar Change		Percent Change		Dollar Change		Percent Change		Dollar Change		Percent Change
Revenues	Revenues													Revenues
Office	Office													Office
Rental	Rental	$	5,866	3.4	%	$	13,418	70.6	%	$	19,284	10.0	%	Rental	$	(5,187)	(2.9)	%	$	16,025	84.6	%	$	10,838	5.5	%
Service and other revenues	Service and other revenues	840		38.4		417		43.2		1,257		39.9		Service and other revenues	948		30.4		(161)		(19.9)		787		20.1
Total office revenues	Total office revenues	6,706		3.8		13,835		69.2		20,541		10.5		Total office revenues	(4,239)		(2.3)		15,864		80.3		11,625		5.8

Studio	Studio													Studio
Rental	Rental	1,559		13.5		328		—		1,887		16.3		Rental	378		3.0		2,159		1,458.8		2,537		19.9
Service and other revenues	Service and other revenues	(796)		(9.5)		14,196		—		13,400		160.5		Service and other revenues	3,136		51.1		15,424		224.6		18,560		142.8
Total studio revenues	Total studio revenues	763		3.8		14,524		—		15,287		76.8		Total studio revenues	3,514		18.7		17,583		250.6		21,097		81.9

Total revenues	Total revenues	7,469		3.8		28,359		141.9		35,828		16.6		Total revenues	(725)		(0.4)		33,447		125.0		32,722		14.4

Operating expenses	Operating expenses													Operating expenses
Office operating expenses	Office operating expenses	3,875		6.4		5,572		64.6		9,447		13.7		Office operating expenses	4,151		6.6		2,324		25.3		6,475		9.0
Studio operating expenses	Studio operating expenses	(245)		(2.0)		8,465		—		8,220		65.9		Studio operating expenses	4,192		46.8		10,452		338.7		14,644		121.6
Total operating expenses	Total operating expenses	3,630		5.0		14,037		162.8		17,667		21.7		Total operating expenses	8,343		11.6		12,776		104.2		21,119		25.2

Office NOI	Office NOI	2,831		2.5		8,263		72.7		11,094		8.8		Office NOI	(8,390)		(7.0)		13,540		128.1		5,150		4.0
Studio NOI	Studio NOI	1,008		13.6		6,059		—		7,067		95.1		Studio NOI	(678)		(6.9)		7,131		181.5		6,453		47.0
NOI	NOI	$	3,839	3.1	%	$	14,322	126.1	%	$	18,161	13.6	%	NOI	$	(9,068)	(7.0)	%	$	20,671	142.5	%	$	11,603	8.1	%

NOI increased ~~$18.2~~$11.6 million, or ~~13.6%~~8.1%, for the three months ended ~~June~~September 30, 2022 as compared to the three months ended ~~June~~September 30, 2021, primarily resulting from:

•a ~~$14.3~~$20.7 million increase in non-same-store NOI driven by:

•an increase in office NOI of ~~$8.3~~$13.5 million primarily due to:

▪•a ~~$13.4~~$16.0 million increase in rental revenues primarily resulting from the delivery of the entire premises of our One Westside development property to Google in November 2021 and the acquisition of our 5th & Bell property in December 2021;

▪•partially offset by a ~~$5.6~~$2.3 million increase in operating expenses corresponding to the increase in rental revenues.

•an increase in studio NOI of ~~$6.1~~$7.1 million primarily due to the acquisition of Zio and Star Waggons in August ~~2021.~~2021 and Quixote in August 2022.

•a ~~$3.8~~$9.1 million ~~increase~~decrease in same-store NOI driven by:

◦•~~an increase~~a decrease in office NOI of ~~$2.8~~$8.4 million primarily due to:

◦•a ~~$5.9~~$5.2 million ~~increase~~decrease in rental revenues resulting from ~~lease commencements at~~a decrease in occupancy across our ~~Maxwell property (Califia Farms~~same-store portfolio; and Twitch Interactive), the conversion of a lease from percentage rent to base rent at our Maxwell property, lower reserves for uncollectible rents recognized at our 11601 Wilshire and 1455 Market properties and a restoration fee received at our Concourse property;

◦•a $4.2 million increase in operating expenses, predominantly utilities and cleaning, resulting from higher utilization of office space due to an increase in the number of tenant employees returning to in-person work;

•partially offset by a ~~$3.9~~$0.9 million increase in ~~operating expenses~~service and other revenues primarily resulting from ~~an increase in various expenses~~a lease cancellation fee at our ~~Ferry Building, Rincon Center, ICON,~~ Concourse property and ~~11601 Wilshire~~increases in visitor parking at several properties ~~generally due to an increase in physical occupancy and, for Ferry Building, a one-time prior period property tax reassessment.~~

•~~an increase in studio NOI of $1.0 million primarily due to:~~across our same-store portfolio.

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•a ~~$1.6~~decrease in studio NOI of $0.7 million primarily due to:

•a $4.2 million increase in ~~rental revenues from~~studio operating expenses due to a favorable supplemental property tax assessment for our Sunset Las Palmas studio property recorded in the prior period and an increase in ~~studio rental activities~~lighting and grip, utilities and cleaning expenses at our Sunset Gower ~~and Sunset Las Palmas studios;~~studio property;

•partially offset by a ~~$0.8~~$3.1 million ~~decrease~~increase in service and other revenues ~~resulting from a decrease in services provided arising from the completion of certain television productions in June 2021.~~predominantly due to increased activity at our Sunset Gower studio property.

Other Income (Expense)

Interest expense

The following table presents a reconciliation from gross interest expense to the interest expense line item on the Consolidated Statements of Operations:


		Three Months Ended June 30,									Three Months Ended September 30,
		2022		2021		Dollar Change		Percent Change			2022		2021		Dollar Change		Percent Change
Gross interest expense	Gross interest expense	$	33,916	$	33,889	$	27	0.1	%	Gross interest expense	$	38,595	$	33,912	$	4,683	13.8	%
Capitalized interest	Capitalized interest	(3,592)		(5,618)		2,026		(36.1)		Capitalized interest	(4,797)		(5,760)		963		(16.7)
Amortization of deferred financing costs and loan discounts/premiums	Amortization of deferred financing costs and loan discounts/premiums	3,395		2,418		977		40.4		Amortization of deferred financing costs and loan discounts/premiums	3,463		2,673		790		29.6
TOTAL	TOTAL	$	33,719	$	30,689	$	3,030	9.9	%	TOTAL	$	37,261	$	30,825	$	6,436	20.9	%

Gross interest expense ~~remained flat~~increased $4.7 million, or 13.8%, to $38.6 million for the three months ended ~~June~~September 30, 2022 compared to $33.9 million for the three months ended ~~June~~September 30, 2021. The ~~slight~~ increase was primarily driven by an increase in the average reference rates for the Company’s variable rate debt, increases in the outstanding borrowings on the Company’s unsecured ~~line of~~revolving credit facility and One Westside construction loan and interest incurred on the Quixote secured note and the ~~construction loan secured by the One Westside~~5.95% Registered senior notes, which were issued in August 2022 and ~~10850 Pico properties and an~~September 2022, respectively. The overall increase ~~in average LIBOR during the three months ended June 30, 2022 as compared to the three months ended June 30, 2021. This activity~~ was ~~nearly entirely~~partially offset by ~~a decrease resulting from the refinancing of the loan secured by the Hollywood Media Portfolio and the loan secured by the 1918 Eighth property at lower~~decreases in interest ~~rates in August and November 2021, respectively,~~expense due to the repayment of the mortgage loan secured by the 10950 Washington property and the in-substance defeased debt in December 2021 and ~~a favorable change in the fair value of the Company’s interest rate cap during the quarter.~~July 2022, respectively.

Capitalized interest decreased ~~by $2.0~~$1.0 million, or ~~36.1%~~16.7%, to ~~$3.6~~$4.8 million for the three months ended ~~June~~September 30, 2022 compared to ~~$5.6~~$5.8 million for the three months ended ~~June~~September 30, 2021. The decrease was primarily driven by the completion of the One Westside ~~and Harlow~~ development ~~properties,~~property, partially offset by interest capitalized on the newly-acquired Washington 1000 development.

Amortization of deferred financing costs and loan discounts/premiums increased ~~by $1.0~~$0.8 million, or ~~40.4%~~29.6%, to ~~$3.4~~$3.5 million for the three months ended ~~June~~September 30, 2022 compared to ~~$2.4~~$2.7 million for the three months ended ~~June~~September 30, 2021. The increase was primarily driven by the amortization of new issuance costs associated with the ~~refinanced~~refinancing of the $1.1 billion loan secured by the Hollywood Media ~~Portfolio.~~Portfolio and the amendment of the unsecured revolving credit facility in August 2021 and December 2021, respectively.

General and administrative expenses

General and administrative expenses increased ~~$4.8~~$1.5 million, or ~~27.8%~~8.2%, to ~~$21.9~~$19.8 million for the three months ended ~~June~~September 30, 2022 compared to ~~$17.1~~$18.3 million for the three months ended ~~June~~September 30, 2021. The increase iswas primarily driven by an increase in professional fees, travel and entertainment and office expenses during the three months ended ~~June~~September 30, 2022.

Depreciation and amortization expense

Depreciation and amortization expense increased ~~$7.3~~$4.5 million, or ~~8.6%~~5.1%, to ~~$91.4~~$93.1 million for the three months ended ~~June~~September 30, 2022 compared to ~~$84.2~~$88.6 million for the three months ended ~~June~~September 30, 2021. The increase was primarily related to the completion of the One Westside development in November 2021, the depreciation and amortization of non-real estate property, plant and equipment and finite-lived intangible assets acquired as part of the Zio and Star Waggons transactions in August 2021 and the Quixote transaction in August 2022 and the acquisition of the 5th & Bell property in December 2021. These

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increases were partially offset by the cessation of depreciation related to four properties classified as held for sale during the three months ended September 30, 2022, two of which were also sold during the period.

Transaction-related expenses

We incurred transaction-related expenses of $9.3 million for the three months ended September 30, 2022 primarily related to the Quixote acquisition, compared to $6.3 million for the three months ended September 30, 2021 primarily related to the Zio and Star Waggons acquisitions.

Interest income

Interest income decreased $0.7 million, or 79.0%, to $0.2 million for the three months ended September 30, 2022 compared to $0.9 million for the three months ended September 30, 2021. The decrease was primarily driven by the maturity of the U.S. Government securities in June ~~30,~~ 2022.

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Fee income

We recognized fee income of ~~$1.1~~$0.9 million for the three months ended ~~June~~September 30, 2022 compared to ~~$0.8~~$0.7 million for the three months ended ~~June~~September 30, 2021. Fee income primarily represents management fee, construction management fee and leasing commission income earned from ~~the~~our unconsolidated real estate entities.

Unrealized (loss) gain on non-real estate investments

We recognized an unrealized loss on non-real estate investments of ~~$1.8~~$0.9 million for the three months ended ~~June~~September 30, 2022 compared to an unrealized gain on non-real estate investments of ~~$5.0~~$0.8 million for the three months ended ~~June~~September 30, 2021. The activity in both periods is due to the observable changes in the fair value of the investments.

~~Impairment loss~~Loss on extinguishment of debt

During the three months ended ~~June~~September 30, 2021 we completed a refinancing of the loan secured by the Hollywood Media Portfolio and recognized a loss on extinguishment of debt of $6.2 million primarily representing the write-off of unamortized deferred financing costs associated with the extinguished portion of the loan. During the three months ended September 30, 2022, weno such loss was recognized.

Impairment loss

We recognized an impairment loss of ~~$3.3~~$4.8 million onduring the three months ended September 30, 2022 due to reductions in the estimated fair values of our Del Amo, ~~property~~6922 Hollywood and Northview Center properties, as compared to an impairment loss of $2.8 million recognized during the three months ended September 30, 2021 due to a reduction in the estimated ~~fair value~~hold period of ~~the~~our Del Amo property. ~~We did not recognize any impairment charges during the three months ended June 30, 2021.~~

Comparison of the ~~Six~~Nine Months Ended ~~June~~September 30, 2022 to the ~~Six~~Nine Months Ended ~~June~~September 30, 2021

Net Operating Income

Management further analyzes NOI by evaluating the performance from the following groups:

•Same-store, which includes all of the properties owned and included in our stabilized portfolio as of January 1, 2022 and still owned and included in the stabilized portfolio as of ~~June~~September 30, 2022; and

•Non-same-store, which includes:

•Stabilized non-same-store properties

•Lease-up properties

•Repositioning properties

•Development properties

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•Redevelopment properties

•Held for sale properties

•Operating results from studio service-related businesses

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The following table reconciles net (loss) income to NOI:


		Six Months Ended June 30,				Dollar Change					Percent Change			Nine Months Ended September 30,								Dollar Change			Percent Change
		2022		2021						2022					2021
Net (loss) income	Net (loss) income	$	(4,069)	$	18,441			$	(22,510)					(122.1)		%	Net (loss) income	$	(10,861)		$	12,259		$	(23,120)		(188.6)	%
Adjustments:	Adjustments:												Adjustments:
Income from unconsolidated real estate entities	Income from unconsolidated real estate entities	(2,083)		(1,105)		(978)					88.5		Income from unconsolidated real estate entities	(1,731)					(1,671)			(60)			3.6
Fee income	Fee income	(2,211)		(1,645)		(566)					34.4		Fee income	(3,122)					(2,323)			(799)			34.4
Interest expense	Interest expense	64,555		60,975		3,580					5.9		Interest expense	101,816					91,800			10,016			10.9
Interest income	Interest income	(1,830)		(1,934)		104					(5.4)		Interest income	(2,026)					(2,868)			842			(29.4)
Management services reimbursement income—unconsolidated real estate entities	Management services reimbursement income—unconsolidated real estate entities	2,176		626		1,550					247.6		Management services reimbursement income—unconsolidated real estate entities	3,159					879			2,280			259.4
Management services expense—unconsolidated real estate entities	Management services expense—unconsolidated real estate entities	(2,176)		(626)		(1,550)					247.6		Management services expense—unconsolidated real estate entities	(3,159)					(879)			(2,280)			259.4
Transaction-related expenses	Transaction-related expenses	1,382		1,064		318					29.9		Transaction-related expenses	10,713					7,364			3,349			45.5
Unrealized loss (gain) on non-real estate investments	Unrealized loss (gain) on non-real estate investments	168		(10,793)		10,961					(101.6)		Unrealized loss (gain) on non-real estate investments	1,062					(11,620)			12,682			(109.1)

Loss on sale of real estate													Loss on sale of real estate	180					—			180			—
Impairment loss	Impairment loss	23,753		—		23,753					—		Impairment loss	28,548					2,762			25,786			933.6

Loss on extinguishment of debt													Loss on extinguishment of debt	—					6,249			(6,249)			(100.0)
Other (income) expense	Other (income) expense	(1,594)		1,629		(3,223)					(197.9)		Other (income) expense	(4,047)					1,547			(5,594)			(361.6)
General and administrative	General and administrative	42,383		35,558		6,825					19.2		General and administrative	62,178					53,846			8,332			15.5
Depreciation and amortization	Depreciation and amortization	183,631		166,939		16,692					10.0		Depreciation and amortization	276,701					255,507			21,194			8.3
NOI	NOI	$	304,085	$	269,129	$	34,956				13.0	%	NOI	$	459,411				$	412,852		$	46,559		11.3	%

Same-store NOI	Same-store NOI	251,320		248,205		3,115					1.3	%	Same-store NOI	371,475					377,426			(5,951)			(1.6)	%
Non-same-store NOI	Non-same-store NOI	52,765		20,924		31,841					152.2		Non-same-store NOI	87,936					35,426			52,510			148.2
NOI	NOI	$	304,085	$	269,129	$	34,956				13.0	%	NOI	$	459,411				$	412,852		$	46,559		11.3	%

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


		Six Months Ended June 30,							Nine Months Ended September 30,
		2022			2021				2022			2021
Same-store office	Same-store office							Same-store office
Number of properties	Number of properties	42			42			Number of properties	42			42
Rentable square feet	Rentable square feet	11,310,877			11,310,877			Rentable square feet	11,311,811			11,311,811
Ending % leased	Ending % leased	91.7		%	93.0		%	Ending % leased	88.2		%	92.3		%
Ending % occupied	Ending % occupied	90.2		%	92.1		%	Ending % occupied	86.5		%	91.7		%
Average % occupied for the period	Average % occupied for the period	90.9		%	92.2		%	Average % occupied for the period	89.6		%	92.3		%
Average annual rental rate per square foot	Average annual rental rate per square foot	$	56.16		$	53.10		Average annual rental rate per square foot	$	57.10		$	54.10

Same-store studio	Same-store studio							Same-store studio
Number of properties	Number of properties	3			3			Number of properties	3			3
Rentable square feet	Rentable square feet	1,230,454			1,230,454			Rentable square feet	1,230,454			1,230,454
Average % occupied for the period(1)	Average % occupied for the period(1)	84.0		%	88.0		%	Average % occupied for the period(1)	84.4		%	87.3		%

_____________

1.Percent occupied for same-store studio is the average percent occupied for the 12 months ended.

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The following table gives further detail on our NOI:


		Six Months Ended June 30,													Nine Months Ended September 30,
		2022						2021							2022						2021
		Same-Store		Non-Same-Store		Total		Same-Store		Non-Same-Store		Total			Same-Store		Non-Same-Store		Total		Same-Store		Non-Same-Store		Total
Revenues	Revenues													Revenues
Office	Office													Office
Rental	Rental	$	353,144	$	64,884	$	418,028	$	345,865	$	36,548	$	382,413	Rental	$	526,957	$	99,850	$	626,807	$	524,865	$	55,489	$	580,354
Service and other revenues	Service and other revenues	6,333		3,283		9,616		4,156		1,277		5,433		Service and other revenues	10,396		3,932		14,328		7,272		2,086		9,358
Total office revenues	Total office revenues	359,477		68,167		427,644		350,021		37,825		387,846		Total office revenues	537,353		103,782		641,135		532,137		57,575		589,712

Studio	Studio													Studio
Rental	Rental	25,982		850		26,832		23,704		—		23,704		Rental	38,981		3,156		42,137		36,324		148		36,472
Service and other revenues	Service and other revenues	15,067		26,400		41,467		17,171		—		17,171		Service and other revenues	24,334		48,691		73,025		23,302		6,867		30,169
Total studio revenues	Total studio revenues	41,049		27,250		68,299		40,875		—		40,875		Total studio revenues	63,315		51,847		115,162		59,626		7,015		66,641

Total revenues	Total revenues	400,526		95,417		495,943		390,896		37,825		428,721		Total revenues	600,668		155,629		756,297		591,763		64,590		656,353

Operating expenses	Operating expenses													Operating expenses
Office operating expenses	Office operating expenses	125,385		26,804		152,189		118,772		16,901		135,673		Office operating expenses	192,222		38,307		230,529		181,459		26,079		207,538
Studio operating expenses	Studio operating expenses	23,821		15,848		39,669		23,919		—		23,919		Studio operating expenses	36,971		29,386		66,357		32,878		3,085		35,963
Total operating expenses	Total operating expenses	149,206		42,652		191,858		142,691		16,901		159,592		Total operating expenses	229,193		67,693		296,886		214,337		29,164		243,501

Office NOI	Office NOI	234,092		41,363		275,455		231,249		20,924		252,173		Office NOI	345,131		65,475		410,606		350,678		31,496		382,174
Studio NOI	Studio NOI	17,228		11,402		28,630		16,956		—		16,956		Studio NOI	26,344		22,461		48,805		26,748		3,930		30,678
NOI	NOI	$	251,320	$	52,765	$	304,085	$	248,205	$	20,924	$	269,129	NOI	$	371,475	$	87,936	$	459,411	$	377,426	$	35,426	$	412,852

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The following table gives further detail on our change in NOI:


		Six Months Ended June 30, 2022 as compared to Six Months Ended June 30, 2021													Nine Months Ended September 30, 2022 as compared to Nine Months Ended September 30, 2021
		Same-Store				Non-Same-Store				Total					Same-Store				Non-Same-Store				Total
		Dollar Change		Percent Change		Dollar Change		Percent Change		Dollar Change		Percent Change			Dollar Change		Percent Change		Dollar Change		Percent Change		Dollar Change		Percent Change
Revenues	Revenues													Revenues
Office	Office													Office
Rental	Rental	$	7,279	2.1	%	$	28,336	77.5	%	$	35,615	9.3	%	Rental	$	2,092	0.4	%	$	44,361	79.9	%	$	46,453	8.0	%
Service and other revenues	Service and other revenues	2,177		52.4		2,006		157.1		4,183		77.0		Service and other revenues	3,124		43.0		1,846		88.5		4,970		53.1
Total office revenues	Total office revenues	9,456		2.7		30,342		80.2		39,798		10.3		Total office revenues	5,216		1.0		46,207		80.3		51,423		8.7

Studio	Studio													Studio
Rental	Rental	2,278		9.6		850		—		3,128		13.2		Rental	2,657		7.3		3,008		2,032.4		5,665		15.5
Service and other revenues	Service and other revenues	(2,104)		(12.3)		26,400		—		24,296		141.5		Service and other revenues	1,032		4.4		41,824		609.1		42,856		142.1
Total studio revenues	Total studio revenues	174		0.4		27,250		—		27,424		67.1		Total studio revenues	3,689		6.2		44,832		639.1		48,521		72.8

Total revenues	Total revenues	9,630		2.5		57,592		152.3		67,222		15.7		Total revenues	8,905		1.5		91,039		140.9		99,944		15.2

Operating expenses	Operating expenses													Operating expenses
Office operating expenses	Office operating expenses	6,613		5.6		9,903		58.6		16,516		12.2		Office operating expenses	10,763		5.9		12,228		46.9		22,991		11.1
Studio operating expenses	Studio operating expenses	(98)		(0.4)		15,848		—		15,750		65.8		Studio operating expenses	4,093		12.4		26,301		852.5		30,394		84.5
Total operating expenses	Total operating expenses	6,515		4.6		25,751		152.4		32,266		20.2		Total operating expenses	14,856		6.9		38,529		132.1		53,385		21.9

Office NOI	Office NOI	2,843		1.2		20,439		97.7		23,282		9.2		Office NOI	(5,547)		(1.6)		33,979		107.9		28,432		7.4
Studio NOI	Studio NOI	272		1.6		11,402		—		11,674		68.8		Studio NOI	(404)		(1.5)		18,531		471.5		18,127		59.1
NOI	NOI	$	3,115	1.3	%	$	31,841	152.2	%	$	34,956	13.0	%	NOI	$	(5,951)	(1.6)	%	$	52,510	148.2	%	$	46,559	11.3	%

NOI increased ~~$35.0~~$46.6 million, or ~~13.0%~~11.3%, for the ~~six~~nine months ended ~~June~~September 30, 2022 as compared to the ~~six~~nine months ended ~~June~~September 30, 2021, primarily resulting from:

•a ~~$31.8~~$52.5 million increase in non-same-store NOI from driven by:

◦•an increase in office NOI of ~~$20.4~~$34.0 million primarily due to:

▪•a ~~$28.3~~$44.4 million increase in rental revenues primarily resulting from the delivery of the entire premises of our One Westside development property to Google in November 2021 and the acquisition of our 5th & Bell property in December 2021; and

▪•a ~~$2.0~~$1.8 million increase in service and other revenues primarily due to lease cancellation fees received at our Skyway Landing ~~property;~~property and an increase in visitor parking revenue at our 6922 Hollywood property, partially offset by a decrease arising from lease cancellation fees received at our 10850 Pico property in the prior period that did not recur in the current period;

▪•partially offset by a ~~$9.9~~$12.2 million increase in operating expenses corresponding to the increase in rental revenues.

◦•an increase in studio NOI of ~~$11.4~~$18.5 million primarily due to the acquisition of Zio and Star Waggons in August ~~2021.~~2021 and Quixote in August 2022.

•a ~~$3.1~~$6.0 million ~~increase~~decrease in same-store NOI driven by:

•an ~~increase~~decrease in office NOI of ~~$2.8~~$5.5 million primarily due to:

•a ~~$7.3~~$10.8 million increase in operating expenses, predominantly utilities and cleaning, resulting from higher utilization of office space due to an increase in the number of tenant employees returning to in-person work;

•partially offset by a $2.1 million increase in rental revenues primarily resulting from lease commencements at our Maxwell property (Califia Farms and Twitch Interactive), the conversion of a lease from percentage rent to base rent at our Maxwell property, the reversal of reserves for

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uncollectible rents recognized at our 11601 Wilshire and 1455 Market properties, a restoration fee received at our Concourse property and higher recoveries at certain properties as compared to the prior year comparative ~~period;~~period. The increase was partially offset by the impact of a decrease in occupancy across our same-store portfolio; and

•a ~~$2.2~~$3.1 million increase in service and other revenues primarily resulting from lease cancellation fees received at our 11601 Wilshire, Concourse and Shorebreeze properties and increases in visitor parking at several properties across our same-store portfolio.

•an decrease in studio NOI of $0.4 million primarily due to:

•a $4.1 million increase in studio operating expenses primarily due to a supplemental property tax assessment for our Sunset Gower studio property recorded in the current period, a favorable supplemental property tax assessment for our Sunset Las Palmas studio property recorded in the prior period and an increase in ~~visitor parking revenue~~payroll and payroll-related costs at our ~~ICON~~Sunset Gower studio property;

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•partially offset by a $6.6 million increase in operating expenses resulting from an increase in various expenses at our Ferry Building, Rincon Center, Concourse, 11601 Wilshire and EPIC properties generally due to an increase in physical occupancy and, for Ferry Building, a one-time prior period property tax reassessment.

•~~an increase in studio NOI of $0.3 million primarily due to:~~

◦~~a $2.3~~$2.7 million increase in rental revenues primarily from ~~an increase in studio rental activities~~increased activity at our Sunset Gower and Sunset Las Palmas ~~studios;~~studio properties; and

◦•~~partially offset by~~ a ~~$2.1~~$1.0 million ~~decrease~~increase in service and other revenues primarily resulting from ~~a decrease in~~increased services ~~provided arising from the completion of certain television productions in June 2021.~~activity at our Sunset Bronson and Sunset Las Palmas studio properties.

Other Income (Expense)

Interest expense

The following table presents a reconciliation from gross interest expense to the interest expense line item on the Consolidated Statements of Operations:


		Six Months Ended June 30,									Nine Months Ended September 30,
		2022		2021		Dollar Change		Percent Change			2022		2021		Dollar Change		Percent Change
Gross interest expense	Gross interest expense	$	64,647	$	67,429	$	(2,782)	(4.1)	%	Gross interest expense	$	103,242	$	101,341	$	1,901	1.9	%
Capitalized interest	Capitalized interest	(6,877)		(11,289)		4,412		(39.1)		Capitalized interest	(11,674)		(17,049)		5,375		(31.5)
Amortization of deferred financing costs and loan discounts/premiums	Amortization of deferred financing costs and loan discounts/premiums	6,785		4,835		1,950		40.3		Amortization of deferred financing costs and loan discounts/premiums	10,248		7,508		2,740		36.5
TOTAL	TOTAL	$	64,555	$	60,975	$	3,580	5.9	%	TOTAL	$	101,816	$	91,800	$	10,016	10.9	%

Gross interest expense ~~decreased by $2.8~~increased $1.9 million, or ~~4.1%~~1.9%, to ~~$64.6~~$103.2 million for the ~~six~~nine months ended ~~June~~September 30, 2022 compared to ~~$67.4~~$101.3 million for the ~~six~~nine months ended ~~June~~September 30, 2021. The ~~decrease~~increase was primarily driven by ~~a favorable change~~an increase in the ~~fair value of~~average reference rates for the Company’s variable rate debt, increases in the outstanding borrowings on the Company’s unsecured revolving credit facility and One Westside construction loan and interest ~~rate cap,~~incurred on the ~~refinancing of the loan~~Quixote secured ~~by the Hollywood Media Portfolio~~note and the ~~loan secured by the 1918 Eighth property at lower interest rates~~5.95% Registered senior notes, which were issued in August 2022 and ~~November 2021, respectively,~~September 2022, respectively. The overall increase was partially offset by decreases in interest expense due to the repayment of the mortgage loan secured by the 10950 Washington property and the in-substance defeased debt in December ~~2021. These decreases were partially offset by an increase in the outstanding borrowings on the unsecured line of credit~~2021 and ~~the construction loan secured by the One Westside and 10850 Pico properties during the six months ended June 30,~~July 2022, ~~as compared to the six months ended June 30, 2021.~~respectively.

Capitalized interest decreased ~~by $4.4~~$5.4 million, or ~~39.1%~~31.5%, to ~~$6.9~~$11.7 million for the ~~six~~nine months ended ~~June~~September 30, 2022 compared to ~~$11.3~~$17.0 million for the ~~six~~nine months ended ~~June~~September 30, 2021. The increase was primarily driven by the completion of the One Westside and Harlow development properties, partially offset by interest capitalized on the newly-acquired Washington 1000 development.

Amortization of deferred financing costs and loan discounts/premiums increased ~~by $2.0~~$2.7 million, or ~~40.3%~~36.5%, to ~~$6.8~~$10.2 million for the ~~six~~nine months ended ~~June~~September 30, 2022 compared to ~~$4.8~~$7.5 million for the ~~six~~nine months ended ~~June~~September 30, 2021. The increase was primarily driven by the amortization of new issuance costs associated with the ~~refinanced~~refinancing of the $1.1 billion loan secured by the Hollywood Media ~~Portfolio.~~Portfolio and the amendment of the unsecured revolving credit facility in August 2021 and December 2021, respectively.

General and administrative expenses

General and administrative expenses increased ~~$6.8~~$8.3 million, or ~~19.2%~~15.5%, to ~~$42.4~~$62.2 million for the ~~six~~nine months ended ~~June~~September 30, 2022 compared to ~~$35.6~~$53.8 million for the ~~six~~nine months ended ~~June~~September 30, 2021. The increase is primarily driven by

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lower non-cash compensation expense during the ~~six~~nine months ended ~~June~~September 30, 2021 due to the forfeiture of ~~stock~~non-cash compensation awards granted to certain departing members of management, which did not recur during the ~~six months ended June 30, 2022,~~current period, as well as an increase in professional fees, travel and entertainment and office expenses during the ~~six~~nine months ended ~~June~~September 30, 2022.

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Depreciation and amortization expense

Depreciation and amortization expense increased ~~$16.7~~$21.2 million, or ~~10.0%~~8.3%, to ~~$183.6~~$276.7 million for the ~~six~~nine months ended ~~June~~September 30, 2022 compared to ~~$166.9~~$255.5 million for the ~~six~~nine months ended ~~June~~September 30, 2021. The increase was primarily related to the completion of the One Westside development in November 2021, the depreciation and amortization of non-real estate property, plant and equipment and finite-lived intangible assets acquired as part of the Zio and Star Waggons transactions in August 2021 and the Quixote transaction in August 2022 and the acquisition of the 5th & Bell property in December 2021. These increases were partially offset by the cessation of depreciation related to the cessation of depreciation related to four properties classified as held for sale during the ~~six~~nine months ended September 30, 2022, two of which were also sold during the period.

Transaction-related expenses

We incurred transaction-related expenses of $10.7 million for the nine months ended September 30, 2022 primarily related to the Quixote acquisition, compared to $7.4 million for the three months ended September 30, 2021 primarily related to the Zio and Star Waggons acquisitions.

Interest income

Interest income decreased $0.8 million, or 29.4%, to $2.0 million for the nine months ended September 30, 2022 compared to $2.9 million for the nine months ended September 30, 2021. The decrease was primarily driven by the maturity of the U.S. Government securities in June ~~30,~~ 2022.

Fee income

We recognized fee income of ~~$2.2~~$3.1 million for the ~~six~~nine months ended ~~June~~September 30, 2022 compared to ~~$1.6~~$2.3 million for the ~~six~~nine months ended ~~June~~September 30, 2021. Fee income primarily represents management fee, construction management fee and leasing commission income earned from our unconsolidated real estate entities.

Unrealized (loss) gain on non-real estate investments

We recognized an unrealized loss on our non-real estate investments of ~~$0.2~~$1.1 million for the ~~six~~nine months ended ~~June~~September 30, 2022 compared to an unrealized gain on non-real estate investments of ~~$10.8~~$11.6 million for the ~~six~~nine months ended ~~June~~September 30, 2021. The activity in both periods is due to the observable changes in the fair value of the investments.

Loss on extinguishment of debt

During the nine months ended September 30, 2021 we completed a refinancing of the loan secured by the Hollywood Media Portfolio and recognized a loss on extinguishment of debt of $6.2 million primarily representing the write-off of unamortized deferred financing costs associated with the extinguished portion of the loan. During the nine months ended September 30, 2022, no such loss was recognized.

Impairment loss

We recognized an impairment loss of ~~$23.8~~$28.5 million during the ~~six~~nine months ended ~~June~~September 30, 2022, of which ~~$15.3~~$20.0 million was due to ~~a reduction~~reductions in the estimated fair ~~value~~values of our Del Amo, ~~property~~6922 Hollywood and Northview Center properties and $8.5 million ~~of which~~ was due to the full impairment of the Zio trade name in connection with a rebranding of the business under the Company’s Sunset Studios platform. We ~~did not recognize any~~recognized an impairment ~~charges~~loss of $2.8 million during the ~~six~~nine months ended ~~June~~September 30, ~~2021.~~2021 due to a reduction in the estimated hold period of our Del Amo property.

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Liquidity and Capital Resources

We have remained capitalized since our initial public offering through public offerings, private placements, joint ventures and continuous offerings under our at-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 venture partners;

•proceeds from the Sunset Glenoaks ~~constructions~~construction loan (unconsolidated joint venture); and

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

Liquidity Sources

We had approximately ~~$266.5~~$161.7 million of cash and cash equivalents at ~~June~~September 30, ~~2022 (including US government securities settlement proceeds used to repay $126.4 million of in-substance defeased debt subsequent to the quarter).~~2022. Our principal source of operating cash flow is related to leasing and operating the properties in our portfolio. Our properties provide a

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relatively consistent stream of cash flow that provides us with resources to pay operating expenses, debt service fees and fund quarterly dividend and distribution requirements.

Our ability to access the equity capital markets will be 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, $65.8 million of which has been sold through ~~June~~September 30, 2022. 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.

As of ~~June~~September 30, 2022, we had total borrowing capacity of $1.0 billion under our unsecured revolving credit facility, ~~$485.0~~$295.0 million of which had been drawn. As of ~~June~~September 30, 2022, we had total borrowing capacity of $414.6 million under our construction loan, secured by our One Westside and 10850 Pico properties, ~~$270.7~~$273.1 million of which had been drawn. As of ~~June~~September 30, 2022, we had total borrowing capacity of $100.6 million under the Sunset Glenoaks construction loan (unconsolidated joint venture), of which ~~$15.1~~$30.8 million had been drawn.

Our ability to incur additional debt will be 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.

The following table sets forth our ratio of debt to total market capitalization (counting Series A preferred units as debt) as of ~~June~~September 30, 2022 (in thousands, except percentage):


	~~June~~September 30, 2022
Unsecured and secured debt(1)	$	~~4,154,200~~4,476,575
Series A redeemable preferred units	9,815
Total consolidated debt	~~4,164,015~~4,486,390


Equity capitalization(2)	~~2,594,806~~2,015,135
TOTAL CONSOLIDATED MARKET CAPITALIZATION	$	~~6,758,821~~6,501,525
Total consolidated debt/total consolidated market capitalization	~~61.6~~69.0		%

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1.Excludes ~~in-substance defeased debt,~~ joint venture partner debt and unamortized deferred financing costs and loan discounts/premiums.

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2.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 ~~$14.84,~~$10.95, as reported by the NYSE, on ~~June~~September 30, 2022 as well as the aggregate value of the Series C preferred stock liquidation preference as of ~~June~~September 30, 2022.

Outstanding Indebtedness

The following table sets forth information as of ~~June~~September 30, 2022 and December 31, 2021 with respect to our outstanding indebtedness, excluding unamortized deferred financing costs and loan discounts/premiums (in thousands):


		June 30, 2022		December 31, 2021			September 30, 2022		December 31, 2021
Unsecured debt	Unsecured debt	$	2,410,000	$	2,050,000	Unsecured debt	$	2,570,000	$	2,050,000
Secured debt	Secured debt	$	1,744,200	$	1,714,874	Secured debt	$	1,906,575	$	1,714,874
In-substance defeased debt	In-substance defeased debt	$	126,397	$	128,212	In-substance defeased debt	$	—	$	128,212
Joint venture partner debt	Joint venture partner debt	$	66,136	$	66,136	Joint venture partner debt	$	66,136	$	66,136

The operating partnership was in compliance with its financial covenants as of ~~June~~September 30, 2022.

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Liquidity Uses

Contractual Obligations

The terms of the securities purchase agreement for the acquisition of Zio require the Company to pay up to $20.0 million of additional consideration to the business’s former shareholders in 2024, subject to certain performance thresholds being met.

During the ~~six~~nine months ended ~~June~~September 30, 2022, there were no material changes outside the ordinary course of business in the information regarding specified contractual obligations contained in our 2021 Annual Report on Form 10-K. See Part I, Item 1 “Note 10 to the Consolidated Financial Statements—Debt” for information regarding our future minimum principal payments due on our outstanding debt. See Part I, Item 1 “Note 14 to the Consolidated Financial Statements—Future Minimum Rents and Lease Payments” for information regarding our future minimum operating lease payments. See Part I, Item 1 “Note 22 to the Consolidated Financial Statements—Commitments and Contingencies” for more detail.

Cash Flows

A comparison of our cash flow activity is as follows:


		Six Months Ended June 30,									Nine Months Ended September 30,
		2022		2021		Dollar Change		Percent Change			2022		2021		Dollar Change		Percent Change
Net cash provided by operating activities	Net cash provided by operating activities	$	190,142	$	172,931	$	17,211	10.0	%	Net cash provided by operating activities	$	328,549	$	285,512	$	43,037	15.1	%
Net cash used in investing activities	Net cash used in investing activities	$	(104,254)	$	(204,047)	$	99,793	(48.9)	%	Net cash used in investing activities	$	(335,427)	$	(560,602)	$	225,175	(40.2)	%
Net cash provided by financing activities	Net cash provided by financing activities	$	32,799	$	26,521	$	6,278	23.7	%	Net cash provided by financing activities	$	14,070	$	345,787	$	(331,717)	(95.9)	%

Cash and cash equivalents and restricted cash were ~~$315.6~~$204.1 million and $196.9 million at ~~June~~September 30, 2022 and December 31, 2021, respectively.

Operating Activities

Net cash provided by operating activities increased by ~~$17.2~~$43.0 million, or ~~10.0%~~15.1%, to ~~$190.1~~$328.5 million for the ~~six~~nine months ended ~~June~~September 30, 2022 compared to ~~$172.9~~$285.5 million for the ~~six~~nine months ended ~~June~~September 30, 2021. The change primarily resulted from operating cash flow contributions from the acquisitions of Quixote in 2022 and Star Waggons, Zio and 5th & Bell in 2021, partially offset by increases in corporate expenditures.

Investing Activities

Net cash used in investing activities decreased by ~~$99.8~~$225.2 million, or ~~48.9%~~40.2%, to ~~$104.3~~$335.4 million for the ~~six~~nine months ended ~~June~~September 30, 2022 compared to ~~$204.0~~$560.6 million for the ~~six~~nine months ended ~~June~~September 30, 2021. The change primarily resulted

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from a ~~$126.4~~$124.3 million increase in proceeds from maturities of U.S. Government securities, ~~and~~ a ~~$77.4~~$100.1 million decrease in additions to investment in real estate, a $54.3 million decrease in contributions to unconsolidated real estate entities and $44.5 million in proceeds from property sales during the ~~six~~nine months ended ~~June~~September 30, 2022 as compared to the ~~six~~nine months ended ~~June~~September 30, ~~2021,~~2021. This change was partially offset by ~~$88.0~~$96.4 million of cash outflows related to property acquisitions during the ~~acquisitions of Washington 1000~~nine months ended September 30, 2022 and a ~~land parcel at Sunset Gower Studios~~$10.8 million increase in additions to non-real estate property, plant and equipment during the ~~six~~nine months ended ~~June~~September 30, ~~2022.~~2022 as compared to the nine months ended September 30, 2021.

Financing Activities

Net cash provided by financing activities ~~increased $6.3~~decreased $331.7 million, or ~~23.7%~~95.9%, to ~~$32.8~~$14.1 million for the ~~six~~nine months ended ~~June~~September 30, 2022 compared to ~~$26.5~~$345.8 million for the ~~six~~nine months ended ~~June~~September 30, 2021. The change primarily resulted from ~~an increase of $302.5~~a $326.1 million decrease in ~~draws on our secured debt, partially offset by~~proceeds from notes payable, a $200.0 million cash outflow related to the accelerated share repurchase program, a ~~$44.8~~$125.6 million increase in payments of in-substance defeased debt, a $45.0 million decrease in proceeds from the sale of common stock, a ~~$22.6~~$22.5 million increase in other share repurchases and a $17.7 million increase in dividends paid to Series C preferred stockholders during the nine months ended September 30, 2022 as compared to the nine months ended September 30, 2021. The decrease was partially offset by a $362.7 million decrease in payments of notes payable, a $33.9 million decrease in distributions to non-controlling members in consolidated real estate entities and a ~~$19.9~~$13.7 million ~~increase~~decrease in ~~other share repurchases and $12.6 million in dividends paid to Series C preferred stockholders~~payments of loan costs during the ~~six~~nine months ended ~~June~~September 30, ~~2022.~~2022 as compared to the nine months ended September 30, 2021.

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Off-Balance Sheet Arrangements

Joint Venture Indebtedness

We have investments in unconsolidated real estate entities accounted for using the equity method of accounting. The following table provides information about joint venture indebtedness as of ~~June~~September 30, 2022 (in thousands):


		Principal Amount		Interest Rate	Contractual Maturity Date	Company’s Share			Principal Amount		Interest Rate	Contractual Maturity Date	Company’s Share
Bentall Centre(1)	Bentall Centre(1)	$	513,375	CDOR + 1.75%	7/1/2024	$	102,675	Bentall Centre(1)	$	482,506	CDOR + 1.75%	7/1/2024	$	96,501
Sunset Glenoaks Studios(2)	Sunset Glenoaks Studios(2)	$	15,061	SOFR + 3.10%	1/9/2025	$	7,531	Sunset Glenoaks Studios(2)	$	30,848	SOFR + 3.10%	1/9/2025	$	15,424

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(1)We own 20% of the ownership interests in the unconsolidated real estate investment that owns Bentall Centre. The loan was transacted in Canadian dollars. The principal balance is shown in U.S. dollars using the foreign currency exchange rate as of ~~June~~September 30, 2022. The interest on the full principal amount has been effectively capped at 6.31% per annum (4.56% strike rate + 1.75% spread) through the use of an interest rate cap.

(2)We own 50% of the ownership interests in the unconsolidated real estate investment that owns the Sunset Glenoaks Studios development. This loan has an initial interest rate of SOFR + 3.10% per annum until the construction at Sunset Glenoaks Studios is complete and certain performance targets have been met, at which time the effective interest rate will decrease to SOFR + 2.50%. This loan is interest-only through its term. The total capacity of the loan is $100.6 million. As of ~~June~~September 30, 2022, we have ~~$85.5~~$69.8 million undrawn. The interest on the full principal amount has been effectively capped at 7.60% per annum (4.50% strike rate + 3.10% spread) through the use of an interest rate cap.

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 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.

Refer to Part I, Item 1 “Note 2 to the Consolidated Financial Statements—Summary of Significant Accounting Policies,” for information regarding our critical accounting policies.

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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 of deferred financing costs and depreciation of non-real estate assets) and after adjustment for unconsolidated partnerships and 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-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

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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.

The following table presents a reconciliation of net (loss) income ~~(loss)~~ to FFO (in thousands):


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2022		2021		2022		2021			2022		2021		2022		2021
Net income (loss)		$	3,546	$	7,030	$	(4,069)	$	18,441
Net (loss) income										Net (loss) income	$	(6,792)	$	(6,182)	$	(10,861)	$	12,259
Adjustments:	Adjustments:									Adjustments:
Depreciation and amortization—Consolidated	Depreciation and amortization—Consolidated	91,438		84,178		183,631		166,939		Depreciation and amortization—Consolidated	93,070		88,568		276,701		255,507
Depreciation and amortization—Non-real estate assets	Depreciation and amortization—Non-real estate assets	(4,485)		(590)		(8,917)		(1,167)		Depreciation and amortization—Non-real estate assets	(5,541)		(2,221)		(14,458)		(3,388)
Depreciation and amortization—Company’s share from unconsolidated real estate entities	Depreciation and amortization—Company’s share from unconsolidated real estate entities	1,320		1,550		2,689		3,061		Depreciation and amortization—Company’s share from unconsolidated real estate entities	1,278		1,462		3,967		4,523

Loss on sale of real estate										Loss on sale of real estate	180		—		180		—
Impairment loss—Real estate assets	Impairment loss—Real estate assets	3,250		—		15,253		—		Impairment loss—Real estate assets	4,795		2,762		20,048		2,762
Unrealized loss (gain) on non-real estate investments	Unrealized loss (gain) on non-real estate investments	1,818		(5,018)		168		(10,793)		Unrealized loss (gain) on non-real estate investments	894		(827)		1,062		(11,620)
Tax impact of unrealized gain on non-real estate investment	Tax impact of unrealized gain on non-real estate investment	—		1,876		—		1,876		Tax impact of unrealized gain on non-real estate investment	—		—		—		1,876
FFO attributable to non-controlling interests	FFO attributable to non-controlling interests	(18,687)		(15,839)		(38,687)		(32,462)		FFO attributable to non-controlling interests	(18,261)		(14,288)		(56,934)		(46,731)
FFO attributable to preferred shares and units	FFO attributable to preferred shares and units	(5,200)		(153)		(10,643)		(306)		FFO attributable to preferred shares and units	(5,200)		(153)		(15,843)		(459)
FFO TO COMMON STOCKHOLDERS AND UNITHOLDERS	FFO TO COMMON STOCKHOLDERS AND UNITHOLDERS	$	73,000	$	73,034	$	139,425	$	145,589	FFO TO COMMON STOCKHOLDERS AND UNITHOLDERS	$	64,423	$	69,121	$	203,862	$	214,729

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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 2021 Annual Report on Form 10-K and is incorporated herein by reference. There have been no material changes for the ~~six~~nine months ended ~~June~~September 30, 2022 to the information provided in Part II, Item 7A, of our 2021 Annual Report on Form 10-K.

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.

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.

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Changes in Internal Control Over Financial Reporting (Hudson Pacific Properties, Inc.)

There have been no changes that occurred during the ~~second~~third 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 ~~second~~third 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

There have been no material changes to the risk factors included in the section entitled “Risk Factors” in our 2021 Annual Report on Form 10-K. Please review the Risk Factors set forth in our 2021 Annual Report on Form 10-K.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

(a) Recent Sales of Unregistered Securities:

~~During~~None during the ~~second~~third quarter of 2022, 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:

2022.

During the second quarter of 2022, we issued an aggregate of 24,806 shares of our common stock in connection with the vesting of restricted stock awards for no cash consideration, out of which no shares of common stock were forfeited to us in connection with tax withholding obligations. 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 Agreement of Limited Partnership. During the second quarter of 2022, our operating partnership issued an aggregate of 24,806 units to us in connection with these transactions.

All other issuances of unregistered equity securities of our operating partnership during the ~~six~~nine months ended ~~June~~September 30, 2022 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 ~~$9.1~~$9.3 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.

(b) Use of Proceeds from Registered Securities: ~~None~~None.

The following table summarizes the repurchases of the Company equity securities during the ~~second~~third quarter of 2022:


Period	Period	Total Number of Shares Purchased	Average Price Paid Per Share		Total Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum That May Yet Be Purchased Under The Plans or Programs(2)(3)		Period	Total Number of Shares Purchased	Average Price Paid Per Share		Total Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum That May Yet Be Purchased Under The Plans or Programs(2)(3)
May 1- May 31, 2022		587,259	$	20.18	587,259	$	76,947,290
June 1 - June 30, 2022(1)		2,387,137	$	16.90	2,387,137	$	36,623,832

July 1 - July 31, 2022(1)								July 1 - July 31, 2022(1)	686,016	$	25.35	686,016	$	36,623,832
TOTAL	TOTAL	2,974,396	$	17.55	2,974,396			TOTAL	686,016	$	25.35	686,016

_____________

1.During the first quarter of 2022, the Company entered into ~~an uncollared~~a collared accelerated share repurchase agreement (“ASR”) to purchase $100 million of its own outstanding common stock. The Company made an initial payment of $100 million and received an initial delivery of ~~3,315,133~~3,258,539 shares of common ~~stock representing 85% of the total $100 million agreement based on the closing price of our common stock on the transaction date.~~stock. Final settlement of the agreement occurred during the ~~second~~third quarter of 2022 based on the daily volume-weighted average price during the measurement period, less a negotiated discount, and resulted in the delivery of an additional ~~869,037~~686,016 shares of common stock.

2.Our board of directors authorized a share repurchase program to buy up to $250.0 million of the outstanding common stock of Hudson Pacific Properties, Inc. The program does not have a termination date, and repurchases may commence or be discontinued at any time.

3.The maximum that may yet be purchased under the plans or programs is shown net of repurchases.

~~Table of Contents~~

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

None.

ITEM 5. OTHER INFORMATION

None.

7274

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ITEM 6. EXHIBITS


			Incorporated by Reference						Incorporated by Reference
Exhibit No.	Exhibit No.	Description	Form	File No.	Exhibit No.	Filing Date	Exhibit No.	Description	Form	File No.	Exhibit No.	Filing Date
3.1	3.1	Articles of Amendment and Restatement of Hudson Pacific Properties, Inc.	S-11/A	333-164916	3.1	May 12, 2010	3.1	Articles of Amendment and Restatement of Hudson Pacific Properties, Inc.	S-11/A	333-164916	3.1	May 12, 2010
3.2	3.2	Second Amended and Restated Bylaws of Hudson Pacific Properties, Inc.	8-K	001-34789	3.1	January 12, 2015	3.2	Second Amended and Restated Bylaws of Hudson Pacific Properties, Inc.	8-K	001-34789	3.1	January 12, 2015
3.3	3.3	First Amendment to the Second Amended and Restated Bylaws of Hudson Pacific Properties, Inc.	8-K	001-34789	3.1	March 22, 2022	3.3	First Amendment to the Second Amended and Restated Bylaws of Hudson Pacific Properties, Inc.	8-K	001-34789	3.1	March 22, 2022
3.4	3.4	Fifth Amended and Restated Agreement of Limited Partnership of Hudson Pacific Properties, L.P.	8-K	001-34789	3.2	November 16, 2021	3.4	Fifth Amended and Restated Agreement of Limited Partnership of Hudson Pacific Properties, L.P.	8-K	001-34789	3.2	November 16, 2021
3.5	3.5	Certificate of Limited Partnership of Hudson Pacific Properties, L.P.	10-Q	001-34789	3.4	November 4, 2016	3.5	Certificate of Limited Partnership of Hudson Pacific Properties, L.P.	10-Q	001-34789	3.4	November 4, 2016
4.1							4.1	Supplemental Indenture No. 4, dated as of September 15, 2022, among Hudson Pacific Properties, L.P., as issuer, Hudson Pacific Properties, Inc., as guarantor, and U.S. Bank Trust Company, National Association, as successor in interest to U.S. Bank National Association, as trustee, including the form of 5.950% Senior Notes due 2028 and the guarantee.	8-K	001-34789	4.2	September 15, 2022
10.1							10.1	First Modification Agreement to the Fourth Amended and Restated Credit Agreement, dated as of September 15, 2022, by and among Hudson Pacific Properties, L.P., as borrower, each of the lenders party thereto, Wells Fargo Bank, National Association, as administrative agent	8-K	001-34789	10.1	September 16, 2022
31.1	31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for Hudson Pacific Properties, Inc.+					31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for Hudson Pacific Properties, Inc.+
31.2	31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for Hudson Pacific Properties, Inc.+					31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for Hudson Pacific Properties, Inc.+
31.3	31.3	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for Hudson Pacific Properties, L.P.+					31.3	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for Hudson Pacific Properties, L.P.+
31.4	31.4	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for Hudson Pacific Properties, L.P.+					31.4	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for Hudson Pacific Properties, L.P.+
32.1	32.1	Certifications by Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for Hudson Pacific Properties, Inc.+					32.1	Certifications by Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for Hudson Pacific Properties, Inc.+
32.2	32.2	Certifications by Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for Hudson Pacific Properties, L.P.+					32.2	Certifications by Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for Hudson Pacific Properties, L.P.+
101	101	The 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 June 30, 2022 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*					101	The 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, 2022 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*
104	104	Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101)					104	Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101)

____________

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.

Denotes a management contract or compensatory plan or arrangement.

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:	~~July 29,~~November 4, 2022	/s/ VICTOR J. COLEMAN
		Victor J. Coleman Chief Executive Officer (Principal Executive Officer)


		HUDSON PACIFIC PROPERTIES, INC.

Date:	~~July 29,~~November 4, 2022	/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:	~~July 29,~~November 4, 2022	/s/ VICTOR J. COLEMAN
		Victor J. Coleman Chief Executive Officer (Principal Executive Officer)


		HUDSON PACIFIC PROPERTIES, L.P.

Date:	~~July 29,~~November 4, 2022	/s/ HAROUT K. DIRAMERIAN
		Harout K. Diramerian Chief Financial Officer (Principal Financial Officer)

7577


Year	Unsecured and Secured Debt		In-substance Defeased Debt(1)		Joint Venture Partner Debt
Remaining 2022	$	—	$	126,397	$	—
2023	160,000		—		—
2024	270,714		—		—
2025	741,300		—		—
2026	1,525,186		—		—
Thereafter	1,457,000		—		66,136
TOTAL	$	4,154,200	$	126,397	$	66,136