Hudson Pacific Properties, Inc.

Good morning and welcome to the Hudson Pacific Properties third quarter 2023 conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. To enter the question queue at any time, please press the star key 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 on the call today are Victor Pullman, CEO and Chairman, Mark Lamas, President, Harut Dhirumirian, CFO, and Art Suazo, EVP of Leasing. Yesterday, we filed our earnings release and supplemental on an 8K 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 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 macro conditions in relation to our business. Mark will provide detail on our office and studio operations and development, and Harut will review our 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 our call today. As we head into year end with our leasing activity accelerating, we're in a position to begin benefiting next year from both the ongoing sentiment improvement in office and the pending completion of the riders and related actor strikes. Tech employers along the West Coast are finally enforcing in-office policies, mostly three to four days a week and growing. Foot traffic and public transit ridership is improving, And there's a renewed public sector focus in our markets to address crime and safety and implement more pro-business policies. Close to 90% of our office space outside of the San Francisco CBD is already utilized on either a hybrid or full-time basis. And portfolio wide, our office related parking revenue is up 13% year to date. San Francisco's outlook is improving as well. In the third quarter, there were over 5 million square feet of requirements in the city. up 80% year-over-year, and at fully 75% of pre-COVID levels. Over 40% of these requirements are tech-related, and there are now 11 requirements over 100,000 square feet with AI remaining as a key driver of this growing demand. This includes late-stage deals with OpenAI for 450,000 square feet of Uber sublease space in Mission Bay and Anthropic for 230,000 square feet of Slack sublease space in the South Financial District. We're seeing similar strong tenant interest in our assets across markets in the form of inquiries and tours. The number of tours at our assets, which were already in line with pre-COVID levels, increased 17% sequentially, while aggregate square feet of demand grew 20%. With the writer's strike resolved as of September, we're closely watching the progress of the SAG-AFTRA strike and discussions with AMPTP. Both sides appear motivated to get a deal done soon. We've seen a pickup in pre-production activity on our lots related to in-place leases, as well as an increase in tours, especially for production offices used by writers. Once the actors reach an agreement, we expect to experience an increase in stage bookings, positively impacting both occupancy and rental revenue as productions begin to prep. As filming resumes, we'll start to see the ramp up of our service related revenue as well with the holidays approaching the precise timeline remains difficult to predict however assuming that sag strike resolves by mid-november we expect some level of increased activity through year-end with the recovery picking up through the first quarter and normalized production in the second quarter next year we continue to build on our studio business and in the third quarter we closed on our joint venture with tornado and blackstone to develop Sunset Pier 94 as Manhattan's first purpose-built studio. New York has been a high-priority marketplace for expansion for our Sunset Studios brand due to the established talent-based production infrastructure and recently extended and expanded tax credits. This represents only a $39 million capital commitment with fee-enhanced returns of approximately 9%. Beyond just project-level NOI, we expect our new footprint in the city to drive further demand for and revenue from our existing New York KOB businesses, building a full-service platform in the city akin to what we've done successfully in Los Angeles. Our vision is an end-to-end production solution, totally vertically integrated with top-notch facilities and exceptional service. We also remain focused on deleveraging and further fortifying our balance sheet. We have no material maturities until year end 24 when our loan secured by One West Side matures. And in the third quarter, we raised $72 million of proceeds from the sales of two California office assets, which reflect excellent execution by our team in an obvious tough transaction environment. Our dividend reductions have thus far this year yielded $54 million of savings. In terms of dispositions, we currently have two assets under contract to sell with the possibility of adding a third, all with the potential to close by year end. And additionally, I'll note that we've once again earned top rankings in the Gresby Real Estate Assessment. This is the third consecutive year we've been named a regional sector leader in the Office of Americas and our fifth consecutive year earning five star and green star ratings. We are very proud of our team for continuing to innovate and make our business more sustainable in ways that create values for our tenants and shareholders. With that, I'm going to turn it over to Mark.