Hudson Pacific Completes $475 Million CMBS Financing

Rhea-AI Summary

Hudson Pacific Properties (NYSE: HPP) has completed a $475 million CMBS financing for six office properties across its west coast markets. The portfolio includes 11601 Wilshire, Element LA, 450 Alaskan, 5th & Bell, 275 Brannan and 1740 Technology.

The loan features a five-year term (two-year initial term plus three one-year extension options) with an interest rate of 376 basis points over one-month term SOFR. The proceeds were used to fully repay a $168 million Element LA secured loan and outstanding amounts on the company's unsecured revolving credit facility.

Following this CMBS loan and the sale of Foothill Research Center, HPP has approximately $815 million of liquidity, including $752 million credit facility capacity and $63 million cash. An additional $133 million is available under the Sunset Pier 94 Studios construction loan, with HPP's share being $34 million.

Positive

• Secured significant $475M CMBS financing with favorable terms
• Increased liquidity to $815M
• Successfully refinanced $168M Element LA loan
• Strengthened balance sheet flexibility for addressing future maturities

Negative

• High interest rate at 376 basis points over SOFR
• Short initial term of 2 years requiring extensions

Insights

Financial Analyst

Hudson Pacific's $475 million CMBS financing represents a significant liquidity enhancement for a company with a $408.5 million market cap. This transaction successfully addresses near-term debt concerns in what remains a challenging commercial real estate financing environment, particularly for office properties.

The loan structure offers considerable flexibility with its 2+3 year term setup (initial plus extensions) and pricing at 376 basis points over SOFR. While this spread would have been considered wide pre-pandemic, it's relatively favorable in today's market for office assets.

This financing effectively eliminates the $168 million Element LA loan and reduces revolver utilization, strengthening HPP's balance sheet. The resulting $815 million liquidity position ($752 million in revolver capacity plus $63 million cash) creates substantial financial flexibility for a company navigating significant headwinds in the office sector.

The transaction should be viewed alongside HPP's recent asset sales as part of a broader deleveraging strategy. Management's characterization of reaching a "positive inflection point" in addressing maturities suggests confidence in their capital recycling approach, though significant work remains to address longer-term debt obligations.

This financing doesn't resolve fundamental challenges facing office owners but does buy meaningful time and operational flexibility, particularly important for HPP given its focus on tech and media tenants - sectors actively reassessing their real estate footprints.

Real Estate Investment Strategist

This $475 million CMBS transaction demonstrates HPP has maintained institutional access to capital despite headwinds facing office REITs. The fact Goldman Sachs led the financing with Morgan Stanley and Wells Fargo as co-leads signals continued top-tier banking relationships.

The portfolio composition is particularly noteworthy - these six properties span HPP's West Coast markets and likely represent some of their higher-quality assets. The successful securitization suggests these properties maintained sufficient institutional appeal to support the financing.

The 376 bps spread over SOFR reflects current risk perceptions for office assets but enables HPP to manage its debt stack strategically. By retiring the Element LA loan and paying down the revolver, management has created immediate breathing room while preserving future flexibility.

HPP's parallel asset disposition strategy (evidenced by the Foothill Research Center sale) indicates a pragmatic approach to portfolio optimization. In today's office market, having $815 million in available liquidity positions HPP to navigate distress or potentially capitalize on opportunities as they emerge.

The inclusion of Element LA in this package is particularly strategic given its creative office positioning and entertainment industry appeal - likely making it one of HPP's more financeable assets. Management deserves credit for executing this complex transaction in a market where numerous office owners face significant refinancing challenges.

LOS ANGELES--(BUSINESS WIRE)-- Hudson Pacific Properties, Inc. (NYSE: HPP), a unique provider of end-to-end real estate solutions for tech and media tenants, today announced the completion of a commercial mortgage-backed securities (“CMBS”) financing for a portfolio of six office properties with total gross proceeds of $475 million. The portfolio, which comprises assets located throughout the company’s west coast markets, includes 11601 Wilshire, Element LA, 450 Alaskan, 5th & Bell, 275 Brannan and 1740 Technology.

“Thanks to the exceptional quality of our properties, tenants and markets, and the strong support of our banking team, we have successfully closed on this significant CMBS financing with favorable terms. This financing provides us with nearly half a billion dollars of gross proceeds to fully repay our Element LA secured loan and outstanding amounts on our credit facility,” said Harout Diramerian, Hudson Pacific’s CFO. “Along with recent and potential asset sales, we continue to increase liquidity and balance sheet flexibility, putting us at a positive inflection point in our overall strategy to address our remaining maturities in the coming years.”

The loan has a five-year term (comprised of a two-year initial term plus three one-year extension options) and an interest rate of 376 basis points over one-month term SOFR. The company used net proceeds to fully repay a $168 million loan secured by Element LA with the balance used to repay amounts outstanding on the company’s unsecured revolving credit facility and for other general corporate purposes. Goldman Sachs served as Lead Manager and Bookrunner, and Morgan Stanley and Wells Fargo Securities served as Co-Lead Managers and Joint Bookrunners for the CMBS financing.

Following closing of this CMBS loan and the previously announced sale of Foothill Research Center, which closed on March 4, 2025, the company has approximately $815 million of liquidity, comprised of $752 million of capacity on its unsecured revolving credit facility and $63 million of cash and cash equivalents. This excludes $133 million of additional capital available under the Sunset Pier 94 Studios construction loan, of which HPP’s share is $34 million.

About Hudson Pacific Properties

Hudson Pacific Properties (NYSE: HPP) is a real estate investment trust serving dynamic tech and media tenants in global epicenters for these synergistic, converging and secular growth industries. Hudson Pacific’s unique and high-barrier tech and media focus leverages a full-service, end-to-end value creation platform forged through deep strategic relationships and niche expertise across identifying, acquiring, transforming and developing properties into world-class amenitized, collaborative and sustainable office and studio space. For more information visit HudsonPacificProperties.com.

Forward-Looking Statements

This press release may contain forward-looking statements within the meaning of the federal securities laws. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. In some cases, you can identify forward-looking statements by the use of forward-looking terminology such as "may," "will," "should," "expects," "intends," "plans," "anticipates," "believes," "estimates," "predicts," or "potential" or the negative of these words and phrases or similar words or phrases that are predictions of or indicate future events, or trends and that do not relate solely to historical matters. Forward-looking statements involve known and unknown risks, uncertainties, assumptions and contingencies, many of which are beyond the company's control, which may cause actual results to differ significantly from those expressed in any forward-looking statement. All forward-looking statements reflect the company's good faith beliefs, assumptions and expectations, but they are not guarantees of future performance. Furthermore, the company disclaims any obligation to publicly update or revise any forward-looking statement to reflect changes in underlying assumptions or factors, of new information, data or methods, future events or other changes. For a further discussion of these and other factors that could cause the company's future results to differ materially from any forward-looking statements, see the section entitled "Risk Factors" in the company's Annual Report on Form 10-K filed with the Securities and Exchange Commission, or SEC, and other risks described in documents subsequently filed by the company from time to time with the SEC.

View source version on businesswire.com: https://www.businesswire.com/news/home/20250331451006/en/

Investor Contact

Laura Campbell

Executive Vice President, Investor Relations & Marketing

(310) 622-1702

lcampbell@hudsonppi.com

Media Contact

Laura Murray

Vice President, Communications

(310) 622-1781

lmurray@hudsonppi.com

Source: Hudson Pacific Properties, Inc.

FAQ

What is the size and purpose of Hudson Pacific's new CMBS financing?

Hudson Pacific (HPP) secured a $475 million CMBS financing for six west coast office properties, using proceeds to repay a $168 million Element LA loan and outstanding credit facility amounts.

What are the terms of HPP's new CMBS loan?

The loan has a five-year term (2-year initial plus three 1-year extensions) with an interest rate of 376 basis points over one-month term SOFR.

Which properties are included in HPP's CMBS financing portfolio?

The portfolio includes 11601 Wilshire, Element LA, 450 Alaskan, 5th & Bell, 275 Brannan and 1740 Technology.

What is Hudson Pacific's current liquidity position after the CMBS financing?

HPP has $815 million in liquidity, comprising $752 million credit facility capacity and $63 million cash, plus access to $133 million for Sunset Pier 94 Studios construction.