Hudson Pacific Properties, Inc.

Good afternoon, my name is Alex and I'll be your conference operator for today. At this time, I'd like to welcome everyone to the Hudson Pacific Properties first quarter 2025 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you'd like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you'd like to withdraw your question, please press star followed by two. At this time, I'd like to turn the call over to Laura Campbell, Executive Vice President, Investor Relations and Marketing. Please go ahead.

Good afternoon, everyone. Thanks for joining us. With me on the call today are Victor Coleman, CEO and Chairman, Mark Lamas, President, Harut Dhirumirian, CFO, and Art Suazo, EVP of Leasing. This afternoon, 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 also 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 industry and market trends. Mark will provide an update on our office and studio operations and development. and Harut will review our financial results and 2025 outlook. Thereafter, we'll be happy to take your questions.

Victor? Thank you, Laura. Good afternoon, everyone, and welcome to our first quarter call. Our team continues to execute across the business, staying cognizant of the state of our markets, working to maximize flexibility, vSpace, and grow occupancy. We are also closely monitoring the potential effects of tariffs on our core industries, and we continue to see signs of improving or stabilization of our fundamentals. We remain optimistic that the tariff negotiations will start to settle in the coming months and that pro-growth policies will phase in. Additionally, we're encouraged that the federal government is actively facilitating billions of additional investment into AI and implementing policies to redirect content production back to the United States, which could be a positive for Hudson Pacific. One of the other catalysts we continue to monitor is venture investing, which in the first quarter set a new high watermark with deal value more than doubling year-over-year to $92 billion, which is also 92% above the 10-year average. The Bay Area squarely remains the epicenter of U.S. innovation, receiving nearly 70% of the funding, or $59 billion, the most in a decade and more than fourfold year-over-year increase. AI alone received 70% of the funding, including the five largest investments, with all but one of those companies headquartered in the Bay Area. The Stargate project, a U.S.-based multinational artificial intelligence joint venture created by Oracle, SoftBank, and OpenAI, will invest $500 billion in AI infrastructure and jobs over the next five years, with $100 billion deployed immediately. AI should remain a bright spot for tech and by extension for AI office leasing, which totaled over a half a million square feet in San Francisco alone in the first quarter, up significantly year over year. Clearly, San Francisco is leading the West Coast recovery, both in terms of tech leasing and the benefits of a more moderate, pro-business, tough-on-crime leadership. First quarter marked the second straight quarter of positive net absorption, and gross leasing was just under 3 million square feet. Beyond continued AI investment, the election of Mayor Lurie has been a game changer for the city, with his focus on public safety, encampment cleanup, drug enforcement, and array of other initiatives to promote economic activity. Case in point, We welcome two and a half million visitors to our ferry building in the first quarter alone, our best first quarter on record, and 23% year-over-year increase. Another positive, with the city's new financial and zoning incentives for residential conversions, we're reevaluating and underwriting adaptive reuse of some of our office assets and expect to have one or more good candidates in the future. Downtown Seattle, too, is benefiting from political tailwinds. While direct vacancy increased 90 basis points in the quarter, gross leasing increased 15% to the highest level in a year. The election of Mayor Harrell and a more moderate city council significantly reducing crime and drug use and accelerated return to office for both public and private sector employees alike. Nowhere has this been more evident than in Pioneer Square, where year over year our leasing activity, pipeline and tours have notably increased. We have successfully grown occupancy to 93% at 411 First from 78% in the first quarter last year. And we have another 225,000 square feet in late stage deals in our pipeline for the other assets in that market. We're also working closely with city officials to expedite the lease up of Washington 1000, including a potential code amendment to allow building top signage and a partnership with the adjacent convention center to activate our retail spaces. The devastating fires and increasing budget woes made it more of a challenging quarter for Los Angeles. Fortunately, our Los Angeles portfolio is currently 97% leased, largely under long-term leases. On the studio side, average shows and production remained in the mid-80s. This year, California has seen new production starts accelerate more so than other North American and UK markets, but the recovery has favored feature films as opposed to episodic TV shows, which is critical to Los Angeles production. That said, starting last quarter, we noted a higher percentage of inquiries coming from quality productions looking for multistage and multi-month or year leases with second and third quarter start dates. Importantly, this trend continues. Our leasing pipeline is as strong as it's been in the last two years. And thus far, as Mark will discuss, our sales team has been very successful at capturing an outsized share of those leads. The reality is that the gravity of Los Angeles' challenges finally seems to have created some urgency for local officials to figure out what needs to happen for the city to thrive again. A new district attorney has been a bright spot for public safety, and despite significant budget cuts elsewhere, both the police and fire departments received funding increases. The city is taking another look at Measure ULA, which has significantly impaired multifamily development, and last week passed a motion to reduce onerous regulations and permitting Unnecessary fees and inconsistent safety requirements to make it easier and cheaper to film in Los Angeles. At the state level, the governor's budget proposal is on track to nearly double California's film and tax credit to 750Million dollars to be voted on and adapted prior to July. 1. 2 companion bills have been introduced to enhance tax credits appeal by raising the qualified expense cap. making credits transferable, and expanding eligible productions to include, among other things, episodic TV shows, which, as I mentioned, are so beneficial to the Los Angeles production marketplace. And while it's too early to know precisely what federal incentives will look like, it's extremely positive to see Washington, D.C. now fully engaged with Hollywood and well-positioned to receive the net benefit going forward. Finally, we continue to make good progress on non-strategic asset sales to generate liquidity and reduce leverage. In the first quarter, we closed on the previously announced Foothill Research Center and Maxwell Dispositions for a combined total of $69 million, with the net proceeds used to pay down our revolver. Subsequent to the quarter, 625 Second in San Francisco went under contract to sell for $28 million, with closing expected in the second quarter of this year. And collectively, these three transactions have generated an additional $97 million of liquidity And we continue to work on another approximately 125 to 150Million dollars of dispositions, which will provide additional updates in the coming quarters. And now I'm going to turn the call over to Mark.