Hudson Pacific Office Leasing Looking Up, But Big Loan Maturity Looms

Why It Matters

The leasing rebound and higher studio occupancy signal a potential turnaround for HPP, but the looming loan maturity could strain liquidity and test the REIT’s ability to sustain its earnings recovery.

Key Takeaways

• HPP signed >500K SF leases Q1, 49% new.
• San Francisco absorbed 2.3M SF, AI tenants 60% of volume.
• Studio stage occupancy rose to 72.8% three‑month trailing.
• Quixote acquisition $360M aims to be earnings‑neutral by year‑end.
• $566M HPP share of $1.1B CMBS loan matures later 2026.

Pulse Analysis

Hudson Pacific Properties (HPP) is seeing its office portfolio regain momentum after two years of deep losses. In Q1 2026 the REIT booked more than 500,000 square feet of new leases, with nearly half representing fresh tenants, and the San Francisco market posted 2.3 million square feet of absorption. AI‑driven companies now account for roughly 60 % of the Bay Area leasing volume, pushing asking rents up about 4 % year‑over‑year. The uptick helps narrow the net loss to $53.1 million, a marked improvement over the $74.7 million loss a year earlier.

The studio segment is also contributing to the turnaround. Occupancy of in‑service soundstages climbed to 72.8 % on a trailing three‑month basis, and flagship Hollywood locations such as Sunset Gower, Sunset Bronson and Sunset Las Palmas are now 97 % leased. HPP’s 2022 purchase of Quixote for $360 million has been a drag, but management expects the business to break even by year‑end after exiting the Atlanta operation. The improved studio performance allowed the company to raise its 2026 core FFO guidance to $1.10‑$1.18 per share.

The biggest headwind remains a $1.1 billion CMBS loan that will mature later in 2026, of which HPP is responsible for $566 million. The debt is secured by a mix of studio assets and high‑profile office properties, including the Netflix‑occupied Icon and Cue towers. While Netflix’s lease runs through 2031, speculation about the streamer buying the Radford Studio Center has raised concerns about future space needs. HPP’s CFO says discussions with Blackstone and Netflix are “productive,” but the loan’s timing adds pressure to maintain liquidity and meet covenant requirements.