Hudson Pacific Properties, Inc.

Thank you for your patience. The Hudson Pacific Properties First Quarter 2023 Earnings Conference call will be starting in a few moments time. Thank you all for joining. I would like to welcome you to the Hudson Pacific Properties first quarter 2023 earnings conference call. My name is Brieca and I'll be your operator for today's call. At this time, all participants are in a listen only mode and you will have an opportunity to ask a question after the presentation. Please press star followed by the number one to ask a question and star then two if you change your mind at any point. And for operator assistance, it's star zero. Thank you. I would now like to turn the conference over to Laura Campbell to begin, so Laura may begin.

Good morning, everyone. Thanks for joining us. With me on the call today are Victor Coleman, CEO and Chairman, Mark Lama, President, Harut Dhirumarian, CFO, and Art Suazo, EVP of Leasing. Yesterday, we filed our earnings release and supplemental on an AK with the SEC, 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 today on the call 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 macro conditions in relation to our business, Mark will provide detail on our office leasing, and Harut will review our financial results and 2023 outlook. Thereafter, we'll be happy to take your questions. Victor?

Good morning, everyone, and welcome to our first quarter call. In the first few months of the year, macroeconomic challenges have persisted, exacerbating uncertainty and putting downward pressure on office market fundamentals. We will touch on how this is impacting our leasing activity in a moment. Recently, however, we've seen much more of big tech return to work announcements bringing employees back to office multiple days a week citing performance and efficiency concerns. These include Amazon, Oracle, Redfin, Lyft, and DocuSign, to name a few. Council data and transit ridership also show improvement across our markets. With the return to office unfolding slower than many expected, we remain cautiously optimistic that these announcements and related trends will translate into increased physical occupancy and improved tenant demand at our assets. Important indicators continue to support the notion that the Bay Area and Seattle remain epicenters for talent and capital networks that drive the tech industry. For example, the first quarter venture capital investments was in line with historic 10-year average, with the Bay Area continuing to receive the bulk of these funds. The early 2020s brought a wave of funding accelerated by COVID-related macro forces with a minimal office leasing. Beyond AI, which is currently driving approximately 600,000 square feet of requirements in the city of San Francisco alone, other sectors like cybersecurity, defense, and energy remain compelling areas for growth. While it would take time for this to positively contribute to our leasing efforts, it reaffirms our view that our office properties are located in compelling growth markets. Turning to our studios, last week, the Writers Guild of America elected to strike. leading to a halt in the domestic film and TV production. And unlike prior strikes where production ramped up in advance, this was instead a significant slowdown in filming through the first quarter. We suspect this is primarily the result of streaming companies' more robust existing content pipeline, although the austerity measures as well may have played a role. For example, In the LA market overall, the first quarter filming and TV shoot days declined approximately 30% compared to the same period last year. This initial slowdown impacted independent studios and service providers such as ours first as major studios consolidated productions on site. With the strike underway, productions at all studios have now been disrupted. This slowdown was a precursor to what we will experience during the strike in the past, with the overall economic impact to be felt much more broadly. In 2007-8, the writer's strike, which lasted 14 weeks, cost the California economy $2.1 billion, or $2.8 billion in today's dollars. There have been seven such strikes since the 1950s, ranging from two to 22 weeks, with the average being 14 weeks. Whether brief or protracted, the strike will impact the entire studio business, albeit less for our Sunset Studio assets, where nearly 70% of our state square footage is under multi-year leases with guaranteed minimums for service revenue. Lack of visibility around the strike's duration led us to suspend our 2023 FFO outlook and related studio assumptions, while we're still providing assumptions related to our 2023 office outlook. Haroud's going to discuss this further on the call. These studio-related union strikes are both temporary and relatively infrequent, and we believe underlying fundamentals for content production and thus for the studio business overall remain solid. Even if spend on high-quality original content moderates in the coming years in pursuit of profitability, current estimates indicate it will be at least on par with last year's following a period of ramp-up post-strike. In these uncertain times, we stay focused on what we can control, executing our leasing, prudently allocating capital, reducing corporate expenses, proactively working on asset sales, and further fortifying our balance sheet. We continue to limit upfront capital spend for market-ready suites, common area, and base building improvements until we have certainty around demand. We're currently evaluating potential disposition of six distinct assets, including a land parcel. We've also recently received board approval to reduce our dividend by 40 to 50% with the precise amount to be finalized at our board meeting later this month. This will bring our dividend policy in line with other capital preservation efforts. However, even without the dividend reduction, we have a path to address all our maturities through year end 2025, which Haroud will also discuss later in this call. With that, I'm going to turn it over to Mark.