Yahoo Finance

Full Year 2025

Assumptions

Metric

Low

High

Growth in same-store property cash NOI⁽¹⁾⁽²⁾

(13.50)%

(12.50)%

GAAP non-cash revenue (straight-line rent and above/below-market rents)⁽³⁾

$10,000

$15,000

GAAP non-cash expense (straight-line rent expense and above/below-market ground rent)

$(6,000)

$(8,000)

General and administrative expenses⁽⁴⁾

$(70,000)

$(76,000)

Interest expense⁽⁵⁾

$(173,000)

$(183,000)

Non-real estate depreciation and amortization

$(32,000)

$(34,000)

FFO from unconsolidated joint ventures

$1,000

$3,000

FFO attributable to non-controlling interests

$(13,000)

$(17,000)

FFO attributable to preferred units/shares

$(21,000)

$(21,000)

Weighted average common stock/units outstanding—diluted⁽⁶⁾

146,000,000

147,000,000

(1)

Same-store for the full year 2025 is defined as the 39 office properties and three studio properties, as applicable, owned and included in the Company's stabilized portfolio as of January 1, 2024, and anticipated to still be owned and included in the stabilized portfolio through December 31, 2025.

(2)

Please see non-GAAP information below for definition of cash NOI.

(3)

Includes non-cash straight-line rent associated with the studio and office properties.

(4)

Includes non-cash compensation expense, which the Company estimates at $22,000 in 2025.

(5)

Includes non-cash interest expense, which the Company estimates at $6,000 in 2025.

(6)

Diluted shares represent ownership in the Company through shares of common stock, OP Units and other convertible or exchangeable instruments. The weighted average fully diluted common stock/units outstanding for 2024 includes an estimate for the dilution impact of stock grants to the Company's executives under its long-term incentive programs. This estimate is based on the projected award potential of such programs as of the end of the most recently completed quarter, as calculated in accordance with the ASC 260, Earnings Per Share.

Consolidated Balance Sheets

In thousands, except share data

12/31/24

12/31/23

(Unaudited)

ASSETS

Investment in real estate, at cost

$

8,233,286

$

8,212,896

Accumulated depreciation and amortization

(1,791,108

)

(1,728,437

)

Investment in real estate, net

6,442,178

6,484,459

Non-real estate property, plant and equipment, net

127,067

118,783

Cash and cash equivalents

63,256

100,391

Restricted cash

35,921

18,765

Accounts receivable, net

14,505

24,609

Straight-line rent receivables, net

199,748

220,787

Deferred leasing costs and intangible assets, net

327,514

326,950

Operating lease right-of-use assets

370,826

376,306

Prepaid expenses and other assets, net

90,114

94,145

Investment in unconsolidated real estate entities

221,468

252,711

Goodwill

156,529

264,144

Assets associated with real estate held for sale

83,113

—

TOTAL ASSETS

$

8,132,239

$

8,282,050

LIABILITIES AND EQUITY

Liabilities

Unsecured and secured debt, net

$

4,176,844

$

3,945,314

Joint venture partner debt

66,136

66,136

Accounts payable, accrued liabilities and other

193,861

203,736

Operating lease liabilities

380,004

389,210

Intangible liabilities, net

21,838

27,751

Security deposits, prepaid rent and other

84,708

88,734

Liabilities associated with real estate held for sale

31,117

—

Total liabilities

4,954,508

4,720,881

Redeemable preferred units of the operating partnership

9,815

9,815

Redeemable non-controlling interest in consolidated real estate entities

49,279

57,182

Equity

HPP stockholders' equity:

Preferred stock, $0.01 par value, 18,400,000 authorized; 4.750% Series C cumulative redeemable preferred stock; $25.00 per share liquidation preference, 17,000,000 outstanding at 12/31/24 and 12/31/23

425,000

425,000

Common stock, $0.01 par value, 481,600,000 authorized, 141,279,102 and 141,034,806 shares outstanding at 12/31/24 and 12/31/23, respectively

1,403

1,403

Additional paid-in capital

2,437,484

2,651,798

Accumulated other comprehensive loss

(8,417

)

(187

)

Total HPP stockholders' equity

2,855,470

3,078,014

Non-controlling interest—members in consolidated real estate entities

169,452

335,439

Non-controlling interest—units in the operating partnership

93,715

80,719

Total equity

3,118,637

3,494,172

TOTAL LIABILITIES AND EQUITY

$

8,132,239

$

8,282,050

Consolidated Statements of Operations

In thousands, except per share data

Three Months Ended

Year Ended

12/31/24

12/31/23

12/31/24

12/31/23

(Unaudited)

(Unaudited)

(Unaudited)

REVENUES

Office

Rental revenues

$

170,689

$

191,319

$

677,620

$

797,095

Service and other revenues

3,531

3,545

14,656

15,280

Total office revenues

174,220

194,864

692,276

812,375

Studio

Rental revenues

12,136

13,167

53,897

59,276

Service and other revenues

23,310

15,392

95,909

80,646

Total studio revenues

35,446

28,559

149,806

139,922

Total revenues

209,666

223,423

842,082

952,297

OPERATING EXPENSES

Office operating expenses

77,896

80,676

305,649

312,018

Studio operating expenses

38,030

34,869

148,430

138,447

General and administrative

19,492

19,781

79,451

74,958

Depreciation and amortization

89,101

103,192

354,425

397,846

Total operating expenses

224,519

238,518

887,955

923,269

OTHER INCOME (EXPENSES)

Loss from unconsolidated real estate entities

(865

)

(1,683

)

(7,308

)

(3,902

)

Fee income

1,336

1,155

5,269

6,181

Interest expense

(44,140

)

(52,379

)

(177,393

)

(214,415

)

Interest income

492

775

2,467

2,182

Management services reimbursement income—unconsolidated real estate entities

932

987

4,119

4,125

Management services expense—unconsolidated real estate entities

(932

)

(987

)

(4,119

)

(4,125

)

Transaction-related expenses

(193

)

(194

)

(2,499

)

1,150

Unrealized loss on non-real estate investments

(934

)

(851

)

(3,958

)

(3,120

)

(Loss) gain on sale of real estate

(2,453

)

80,048

(2,453

)

103,202

Impairment loss

(113,121

)

(60,158

)

(149,664

)

(60,158

)

Gain on extinguishment of debt

—

—

—

10,000

Other income (expense)

198

(145

)

1,647

(6

)

Loss on sale of bonds

—

(34,046

)

—

(34,046

)

Total other expenses

(159,680

)

(67,478

)

(333,892

)

(192,932

)

Loss before income tax benefit (provision)

(174,533

)

(82,573

)

(379,765

)

(163,904

)

Income tax benefit (provision)

1,052

(6,081

)

(1,641

)

(6,796

)

Net loss

(173,481

)

(88,654

)

(381,406

)

(170,700

)

Net income attributable to Series A preferred units

(153

)

(153

)

(612

)

(612

)

Net income attributable to Series C preferred shares

(5,047

)

(5,047

)

(20,188

)

(20,188

)

Net income attributable to participating securities

—

—

(409

)

(850

)

Net loss attributable to non-controlling interest in consolidated real estate entities

6,359

8,957

25,056

9,331

Net loss (income) attributable to redeemable non-controlling interest in consolidated real estate entities

973

(14,854

)

4,059

(12,520

)

Net loss attributable to common units in the operating partnership

4,353

1,758

9,357

3,358

NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS

$

(166,996

)

$

(97,993

)

$

(364,143

)

$

(192,181

)

BASIC AND DILUTED PER SHARE AMOUNTS

Net loss attributable to common stockholders—basic

$

(1.18

)

$

(0.70

)

$

(2.58

)

$

(1.36

)

Net loss attributable to common stockholders—diluted

$

(1.18

)

$

(0.70

)

$

(2.58

)

$

(1.36

)

Weighted average shares of common stock outstanding—basic

141,234

140,941

141,193

140,953

Weighted average shares of common stock outstanding—diluted

141,234

140,941

141,193

140,953

Funds from Operations⁽¹⁾

Unaudited, in thousands, except per share data

Three Months Ended

Year Ended

12/31/24

12/31/23

12/31/24

12/31/23

RECONCILIATION OF NET LOSS TO FUNDS FROM OPERATIONS ("FFO")⁽¹⁾:

Net loss

$

(173,481

)

$

(88,654

)

$

(381,406

)

$

(170,700

)

Adjustments:

Depreciation and amortization—consolidated

89,101

103,192

354,425

397,846

Depreciation and amortization—non-real estate assets

(10,493

)

(7,865

)

(34,716

)

(33,389

)

Depreciation and amortization—HPP's share from unconsolidated real estate entities⁽²⁾

1,242

1,156

5,630

4,779

Loss (gain) on sale of real estate

2,453

(80,048

)

2,453

(103,202

)

Loss on sale of bonds

—

34,046

—

34,046

Impairment loss—real estate assets

5,506

60,158

42,049

60,158

Unrealized loss on non-real estate investments

934

851

3,958

3,120

FFO attributable to non-controlling interests

(3,082

)

(4,857

)

(12,789

)

(42,335

)

FFO attributable to preferred units

(5,200

)

(5,200

)

(20,800

)

(20,800

)

FFO to common stock/unit holders

(93,020

)

12,779

(41,196

)

129,523

Specified items impacting FFO:

Transaction-related expenses

—

194

2,306

(1,150

)

Non-cash deferred tax asset adjustment—HPP's share

(2,121

)

6,626

(951

)

10,142

One-time impact of tax legislation change

788

—

—

—

Prior period net property tax adjustment—HPP's share⁽²⁾

—

—

—

(1,469

)

Goodwill impairment

107,615

—

107,615

—

Write-off of transportation assets

2,236

—

2,236

—

Non-cash revaluation associated with a loan swap (unqualified for hedge accounting)

—

—

3,529

—

One-time straight-line rent reserve—HPP's share

—

—

3,871

—

One-time gain on debt extinguishment

—

—

—

(10,000

)

One-time tax impact of gain on debt extinguishment

—

—

—

2,751

FFO (excluding specified items) to common stock/unit holders

$

15,498

$

19,599

$

77,410

$

129,797

Weighted average common stock/units outstanding—diluted

145,730

144,616

145,603

144,552

FFO per common stock/unit—diluted

$

(0.64

)

$

0.09

$

(0.28

)

$

0.90

FFO (excluding specified items) per common stock/unit—diluted

$

0.11

$

0.14

$

0.53

$

0.90

(1)

We calculate Funds from Operations ("FFO") in accordance with the White Paper on FFO approved by the Board of Governors of the National Association of Real Estate Investment Trusts. The White Paper defines FFO as net income or loss calculated in accordance with generally accepted accounting principles in the United States ("GAAP"), excluding gains and losses from sales of depreciable real estate and impairment write-downs associated with depreciable real estate, plus the HPP’s share of real estate-related depreciation and amortization, excluding amortization of deferred financing costs and depreciation of non-real estate assets. The calculation of FFO includes the HPP’s share of amortization of deferred revenue related to tenant-funded tenant improvements and excludes the depreciation of the related tenant improvement assets.

FFO is a non-GAAP financial measure we believe is a useful supplemental measure of our operating performance. The exclusion from FFO of gains and losses from the sale of operating real estate assets allows investors and analysts to readily identify the operating results of the assets that form the core of our activity and assists in comparing those operating results between periods. Also, because FFO is generally recognized as the industry standard for reporting the operations of REITs, it facilitates comparisons of operating performance to other REITs. However, other REITs may use different methodologies to calculate FFO, and accordingly, our FFO may not be comparable to all other REITs.

Implicit in historical cost accounting for real estate assets in accordance with GAAP is the assumption that the value of real estate assets diminishes predictably over time. Since real estate values have historically risen or fallen with market conditions, many industry investors and analysts have considered presentations of operating results for real estate companies using historical cost accounting alone to be insufficient. Because FFO excludes depreciation and amortization of real estate assets, we believe that FFO along with the required GAAP presentations provides a more complete measurement of our performance relative to our competitors and a more appropriate basis on which to make decisions involving operating, financing and investing activities than the required GAAP presentations alone would provide. We use FFO per share to calculate annual cash bonuses for certain employees.

However, FFO should not be viewed as an alternative measure of our operating performance because it does not reflect either depreciation and amortization costs or the level of capital expenditures and leasing costs necessary to maintain the operating performance of our properties, which are significant economic costs and could materially impact our results from operations.

(2)

HPP's share is a Non-GAAP financial measure calculated as the measure on a consolidated basis, in accordance with GAAP, plus our Operating Partnership’s share of the measure from our unconsolidated joint ventures (calculated based upon the Operating Partnership’s percentage ownership interest), minus our partners’ share of the measure from our consolidated joint ventures (calculated based upon the partners’ percentage ownership interests). We believe that presenting HPP’s share of these measures provides useful information to investors regarding the Company’s financial condition and/or results of operations because we have several significant joint ventures, and in some cases, we exercise significant influence over, but do not control, the joint venture. In such instances, GAAP requires us to account for the joint venture entity using the equity method of accounting, which we do not consolidate for financial reporting purposes. In other cases, GAAP requires us to consolidate the venture even though our partner(s) own(s) a significant percentage interest.

Adjusted Funds from Operations⁽¹⁾

Unaudited, in thousands, except per share data

Three Months Ended

Year Ended

12/31/24

12/31/23

12/31/24

12/31/23

FFO (excluding specified items)

$

15,498

$

19,599

$

77,410

$

129,797

Adjustments:

GAAP non-cash revenue (straight-line rent and above-below-market rents)

339

6,306

4,515

(3,020

)

GAAP non-cash expense (straight-line rent expense and above-below-market ground rent)

2,722

1,939

7,721

7,495

Non-real estate depreciation and amortization

8,257

7,865

32,480

33,389

Non-cash interest expense

1,679

1,572

6,888

14,394

Non-cash compensation expense

6,540

6,707

25,887

23,611

Recurring capital expenditures, tenant improvements and lease commissions

(31,447

)

(22,514

)

(87,797

)

(89,997

)

AFFO

$

3,588

$

21,474

$

67,104

$

115,669

(1)

Adjusted Funds from Operations ("AFFO") is a non-GAAP financial measure we believe is a useful supplemental measure of our performance. We compute AFFO by adding to FFO (excluding specified items) HPP's share of non-cash compensation expense and amortization of deferred financing costs, and subtracting recurring capital expenditures related to HPP's share of tenant improvements and leasing commissions (excluding pre-existing obligations on contributed or acquired properties funded with amounts received in settlement of prorations), and eliminating the net effect of HPP’s share of straight-line rents, amortization of lease buy-out costs, amortization of above- and below-market lease intangible assets and liabilities, amortization of above- and below-market ground lease intangible assets and liabilities and amortization of loan discounts/premiums. AFFO is not intended to represent cash flow for the period. We believe that AFFO provides useful information to the investment community about our financial position as compared to other REITs since AFFO is a widely reported measure used by other REITs. However, other REITs may use different methodologies for calculating AFFO and, accordingly, our AFFO may not be comparable to other REITs.

Net Operating Income⁽¹⁾

Unaudited, in thousands

Three Months Ended

12/31/24

12/31/23

RECONCILIATION OF NET LOSS TO NET OPERATING INCOME ("NOI"):

Net loss

$

(173,481

)

$

(88,654

)

Adjustments:

Loss from unconsolidated real estate entities

865

1,683

Fee income

(1,336

)

(1,155

)

Interest expense

44,140

52,379

Interest income

(492

)

(775

)

Management services reimbursement income—unconsolidated real estate entities

(932

)

(987

)

Management services expense—unconsolidated real estate entities

932

987

Transaction-related expenses

193

194

Unrealized loss on non-real estate investments

934

851

Loss on sale of bonds

—

34,046

Loss (gain) on sale of real estate

2,453

(80,048

)

Impairment loss

113,121

60,158

Other (income) expense

(198

)

145

Income tax (benefit) provision

(1,052

)

6,081

General and administrative

19,492

19,781

Depreciation and amortization

89,101

103,192

NOI

$

93,740

$

107,878

NOI BREAKDOWN

Same-store office cash revenues

157,370

168,873

Straight-line rent

(863

)

(11,098

)

Amortization of above-/below-market leases, net

1,018

1,307

Amortization of lease incentive costs

(630

)

(38

)

Same-store office revenues

156,895

159,044

Same-store studios cash revenues

16,023

15,932

Straight-line rent

(222

)

171

Amortization of lease incentive costs

(9

)

(9

)

Same-store studio revenues

15,792

16,094

Same-store revenues

172,687

175,138

Same-store office cash expenses

67,734

67,983

Straight-line rent

371

376

Non-cash compensation expense

11

35

Amortization of above-market and below-market ground leases, net

639

639

Same-store office expenses

68,755

69,033

Same-store studio cash expenses

11,422

10,514

Non-cash compensation expense

30

113

Same-store studio expenses

11,452

10,627

Same-store expenses

80,207

79,660

Same-store NOI

92,480

95,478

Non-same-store NOI

1,260

12,400

NOI

$

93,740

$

107,878

(1)

We evaluate performance based upon property Net Operating Income ("NOI") from continuing operations. NOI is not a measure of operating results or cash flows from operating activities or cash flows as measured by GAAP and should not be considered an alternative to income from continuing operations, 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 income from continuing operations. We calculate NOI as net income (loss) excluding corporate general and administrative expenses, depreciation and amortization, impairments, gains/losses on sales of real estate, interest expense, transaction-related expenses and other non-operating items. We define NOI as operating revenues (rental revenues, other property-related revenue, tenant recoveries and other operating revenues), less property-level operating expenses (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.