Hudson Pacific Properties, Inc.

Good morning and welcome to the Hudson Pacific Properties fourth quarter 2022 conference call. All participants will be in listen mode only. Should you need assistance, please signal a conference specialist by pressing star key followed by zero. To answer the question queue at any time, please press star followed by one on your touchtone phone. If you're using a speakerphone, note that you will need to pick up your handset before pressing the keys. Please note this event is being recorded. I would now like to turn the conference over to Laura Campbell, Executive Vice President, Investor Relations and Marketing. Please go ahead.

Good morning, everyone. Thanks for joining us. With me today on the call are Victor Coleman, our CEO and Chairman, Mark Lamas, President, Harut Dhirmerian, CFO, and Art Suazo, EVP of Leasing. Yesterday, we filed our earnings release and supplemental on an 8K with the SEC and and both are now available on our website. An audio webcast of this call will be available for replay on our website. Some of the information we'll share on the call today is forward-looking in nature. Please reference our earnings release and supplemental for statements regarding forward-looking information, as well as the reconciliation of non-GAAP financial measures used on this call. Today, Victor will discuss our 2022 accomplishments and 2023 priorities, along with macro trends across our markets. Mark will review our office leasing and development highlights

her route will review our fourth quarter financial results and 2023 outlook thereafter we'll be happy to take your questions Victor thank you Laura good morning everyone and thanks for joining us let me start by highlighting Hudson Pacifica's 2022 accomplishments which align with the five key objectives centered around leasing capital recycling development balance sheet management and ESG that I outlined on our call at this time last year let me start with leasing. We leased over 2.1 million square feet in 2022, just shy of our long-term average and up more than 300,000 square feet from 2021. We achieved positive gap and cash rent growth of 14% and 4% respectively. We executed on all four of our planned non-strategic asset sales, closing three last year for a combined 144 million of gross proceeds, with our fourth Skyway landing now closed for an additional 102 million of gross proceeds for a total dispositions of $246 million. As part of our efforts to grow our portfolio of world-class, monetized, collaborative, sustainable office and studio space, we purchased Kiyoti, a leading stage and production services provider, through an off-market transaction. And we made good progress on our two under-construction studio and office projects totaling 780,000 square feet. while securing entitlements for two future projects totaling 1.6 million square feet. We now have $1 billion of total liquidity with a focus last year on using proceeds from asset sales and our successful $350 million green bond offering to pay down and refinance debt. We also reduced our interest rate exposure through caps and swaps to maintain our total fixed and cap debt at 85 plus percent. We continue to return capital or shareholders throughout the year, repurchasing approximately $240 million of our common stock and maintaining our dividends with a stable full-year AFFO payout ratio of just over 60%. We also continue to achieve sustainability and ESG excellence, ranking number one in the office companies in the Americas by Gresby and winning Nareit's Leader of the Light Award during 2022. And most recently, we were recognized by Newsweek as one of America's most responsible companies and included in the 2023 Bloomberg Gender Equality Index, further aligning our platform with stakeholders, prioritizing sustainable and equitable workforces. I'm also very proud of the Hudson Pacific team and our ability to execute and work toward creating long-term value for our shareholders in this complex and highly dynamic environment. Our strategy places Hudson Pacific at the confluence of several macroeconomic trends that we believe are transitory. Therein lies the opportunity as we leverage our unique industry expertise and full service platform to position our company and world-class portfolio optimally for the next cycle. We continue to see utilization across our portfolio improve with multiple assets trending towards 50 to 75% peak occupancy. Utilization remains very tenant and thus asset specific, but we believe Growing employer mandates and employee willingness to return, especially in light of the recent layoffs, will result in even higher utilization and reemphasize on being in the office to improve workforce productivity in the coming year. Looking at the five largest layoffs among North American tech companies over the last six months, only about 15% of those layoffs, based on the WAR notices, impacted our U.S. markets, accounting for about 1% of the company's total workforce. While hiring among tech and media companies was notably declined in the recent months, we recall these industries had massive hiring gains throughout the pandemic with little or no augmentation of their office footprint. In our target U.S. markets, employment levels in tech and media-related sectors are still at or well above pre-pandemic levels, reflecting the inherent long-term secular strength. In the case of Seattle and the Bay Area, as much as 15% above. Software and IT job postings are still 20% to 25% above in the pandemic levels, according to Indeed. And we know as big tech right-sizes, talent will spin out and build the next high-growth companies, the next Google or the next Amazon. VC capital firms raised about $160 billion in 2022 and have record amounts of capital to invest in Series A and B rounds, and they're still very active. This will give rise to innovative small and medium-sized companies that will ultimately expand within our portfolio and beyond, just as they've done in past cycles. As of the fourth quarter, top studios, including Apple TV, Netflix, Disney, Amazon, and others, were still projecting to spend a total of $140 billion on content this year, up 11% from last year to a new high. Original content spend, which typically accounts for 20% to 50% of the total spend and is perhaps a better indicator of production, was expected to increase by a more moderate 2%. However, we did see production activity moderate in the fourth quarter, particularly here in Los Angeles, which we attribute to several factors, including studios growing austerity measures, the Amazon MGM and Discovery WarnerMedia acquisitions, and caution ahead of the late spring studio union contract negotiations, as well as annual seasonality. We'll continue to monitor these trends, but remain confident in the long-term fundamentals around content creation and the ability of our platform to a combination of long-term leases and increasingly diverse geographic footprint and product offering to meet the current and new client priorities and preferences. At Hudson Pacific, we're building upon a strong track record of execution via our ability to uncover opportunities, deliver premier office and studio space, execute leases and grow rents, and in so doing, we've set the bar when it came to creative, collaborative, high quality, high touch, sustainable work environments and related services to inspire the world's most innovative and creative companies and their employees. As these industries evolve and grow once again, we will be at the forefront of this next shift. We will leverage our platform seasoned, cycled team that's fully tested, our full service programs, vertically integrated platform, and our unique strategy and value of our relationships to continue to expeditiously optimize our portfolio in ways that we create significant value for shareholders. Looking ahead to 23, our priorities are as follows. to continue to successfully address our 2023 office lease expirations with the goal of preserving rent and occupancy, to execute in our near-term value creation office and studio development opportunities, specifically Sunset Glen Oaks and Washington 1000, to further strengthen our balance sheet by delivering through asset sales and reducing interest rate risks through hedges, and finally, to continue our ESG and sustainability leadership, which has become a hallmark of our businesses and how do we create long-term value for our shareholders. Now I'm going to turn the call over to Mark.