Hudson Pacific Properties, Inc.

Hello, everyone. Thank you for joining us and welcome to the Hudson Pacific Properties first quarter 2026 earnings call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. I will now hand the conference over to Laura Campbell, Executive Vice President, Investor Relations and Marketing. Laura, please go ahead.

Good morning, everyone. Thanks for joining us. With me on the call today are Victor Coleman, Chairman and CEO, Mark Lamas, President, Harut Dhirumirian, CFO, and Art Suazo, EVP of Leasing. This morning, we filed our earnings release and supplemental on an 8K with the SEC, and both are now available on our website along with an audio webcast of this call for replay. 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 first quarter results and current market trends. Mark will provide detail on our office and studio operations, and Harit will review our financial results and updated 2026 outlook. Thereafter, we'll be happy to take your questions. Victor?

Thanks, Laura. Good morning, and welcome, everyone, to our first quarter call. 2026 is off to a strong start, building on decisive actions we took last year. We delivered improvement in both occupancy and cash flow, sequentially growing FFO in total and on a per share basis. We signed over 500,000 square feet of office leases, our third consecutive quarter of occupancy gains, supported by leasing pipelines that remain robust. On the studio side, prime locations are performing well. and operational streamlining at Coyote continues to drive annualized savings. We also achieved substantial year-over-year reductions in G&A, maintained total liquidity in excess of $930 million, with our credit facility fully undrawn, and advanced an active pipeline of FFO accretive dispositions. From a macro perspective, a record $267 billion of venture capital was deployed in the first quarter of fueled by large-scale AI financings and broad investment across adjacent sectors. That capital is translating into leasing activity. Well-funded tech and AI-focused companies are accelerating demand across our West Coast markets, while more traditional office users are reengaging on either new leases or expansions. The Bay Area obviously is leading. San Francisco had a record 2.3 million square feet of positive absorption, capping the strongest six-quarter run of occupancy growth To date, leasing activity reached 4.1 million square feet, and AI-related tenants accounted for nearly 60% of total volume, and asking rents rose close to 4% year over year. Silicon Valley extended its momentum with a sixth consecutive quarter of occupancy growth. The peninsula is also showing further signs of positive inflection, particularly in Redwood City and Foster City, where our assets are concentrated. The Puget Sound posted its second consecutive quarter of positive absorption. Downtown Seattle is beginning to capture its share of AI and tech demand, and our portfolio quality positions us to benefit as activity further extends from the east side to the urban core. In Los Angeles, fundamentals remain challenged, but with our own limited near-term availability concentrated in one well-leased top-tier asset, we can be patient as conditions strengthen. Turning to studios, U.S. production activity remains subdued, but the flight to quality is real. Our Hollywood stages are 97% leased and Sunset Pier 94 reached 100% leased within the first quarter of operations. The leasing results made it clear. These are the right assets in the right locations. We're actively refining our studio portfolio to focus on the highest performing assets and lines of businesses. And on Coyote, We're making the necessary and, quite frankly, difficult decisions. As announced, Coyote will wind down leased soundstage facilities and Atlanta area operations. We remain committed to ensuring Coyote is earnings neutral by year end. On capital recycling, we're in various stages on asset sales targeting approximately $200 million this year, and these are all ethical, creative, non-core dispositions. We have a buyer and agreed price at 10950 Washington, as well as another asset under contract. As we look ahead, both occupancy and our leasing pipeline should remain strong. We're making the hard calls and continue to ensure our overhead is controlled, our disposition pipeline remains on track, and we have ample liquidity and a clear executable path to FFO growth through the balance of the year. And with that, I'll turn the call over to Mark.

Thanks, Victor. Our leasing momentum continued to translate into tangible occupancy gains in the first quarter. We signed 554,000 square feet of leases, 49% of which were new leases, driving our in-service office portfolio occupancy to 77.8%, up 150 basis points sequentially, and our lease rate to 78.4%, up 140 basis points sequentially. Occupancy improved across our core regions, except for Vancouver, where the lease percentage increased 110 basis points to 94.3%. On lease economics, gap rents increased 1.8%, while cash rents declined 2.4%, representing sequential improvement in these metrics by 140 and 660 basis points, respectively. Net effective rents rose 4% sequentially, though we're down 2% year-over-year, with the latter comparison influenced by the large prior-year lease with the city and county at 1455 Market. We have excellent visibility into continued occupancy growth. Our leasing pipeline increased again to 2.4 million square feet, up 13% year-over-year, and we had 2.2 million square feet of tours in the quarter, up over 30% year-over-year. Our third lease with the City and County of San Francisco, which effectively absorbs the remaining vacancy at 1455 Market, remains on track to be finalized in the second quarter. We have close to 60% coverage deals and leases, LOIs, or proposals on approximately 600,000 square feet expiring for the remainder of the year, including full coverage on PayPal at fourth attraction and 80% coverage on Dell at 875 hours. At Washington 1000, tenant interest has increased meaningfully. We now have coverage for approximately 60% of the project. To meet demand for pre-built space, we'll deliver 70,000 square feet of move-in ready suites in the second quarter. We're in late stage negotiations with an amenity provider for the first and second floors to further enhance the property's marketability. Beyond that, we're in negotiations with seven office-using tenants, primarily growth-oriented tech and tech-enabled companies, with requirements ranging from under 10,000 to over 100,000 square feet. Training studios, our in-service stages were 72.8% leased over the training three months, excluding Care 94, which was placed in-service this quarter, and where stages went from zero to 100% leased during the quarter, our in-service stages would have been 78.2% leased, up 370 basis points sequentially, driven by the lease-up of Sunset West Palmas. As Victor noted, our Hollywood stages, Sunset Bronson, Gower, and Las Palmas, were 97% leased over the traveling three months, up 280 basis points. Studio revenue was off $2.4 million sequentially, attributable to lower demand for Coyote's lighting and grid pro supplies and fleet. Despite expenses being $2.1 million lower, this led to a sequential $300,000 decrease in studio NOI to $1.5 million. That said, Sunset Studio NOI, excluding Coyote, increased $1 million sequentially and was up $1.8 million year-over-year to $7.4 million, driven by the lease up at Sunset Las Palmas and increased production activity at Sunset Bronson. On Coyote, the wind-down of lease soundstage facilities and Atlanta area operations would equate to approximately $5.8 million of annual cash NOI improvements. Finally, we continue to actively explore adaptive reuse opportunities across our portfolio. In the second quarter, we'll submit for re-entitlement of 901 Markets' 164,000-square-foot office component as residential with expected resolution by year-end. We're also evaluating the potential to redevelop excess surface parking at select assets across Palo Alto, Redwood Shores, and Foster City as next use. These initiatives, along with others under evaluation, allow us to better align our portfolio with market demand while leveraging our deep entitlement and redevelopment expertise. And now I'll turn the call over to Ruth.

Thanks, Mark. I'll walk through our first quarter results and updated 2026 outlook. Total revenues were $181.9 million compared to $198.5 million in the prior year, primarily due to the sale of Almond LA and office tenant move-out. most specifically Uber's departure from 1435 market midway through the first quarter of 2025, with studio production activity remaining stable. G&A declined 32% to $12.6 million compared to $18.5 million in the prior year, further reflecting the progress we've made to streamline our cost structure. Core FFO increased to $16.5 million, or $0.25 for diluted share, up from $12.9 million, or $0.61 for diluted share, in the prior year. Adjustments to FFO totaled $1.5 million or $0.02 per diluted share, compared to $9.8 million or $0.47 per diluted share in the prior year. Same-store cash NOI was $85.2 million compared to $92 million in the prior year, driven by lower office revenues from tenant move-outs, again, largely Uber's departure at 1455 market, partially offset by higher studio revenue from increased production activity at our Hollywood assets. On our balance sheet, total liquidity of $933 million includes $138 million of cash and full availability of $795 million on our credit facility. Incident expense was 13% lower year-over-year, representing $5.5 million of savings, and all of our debt was fixed or capped. We continued to work with our partner on a resolution for the Hollywood Media Portfolio loan maturity. Conversations with a lender, as well as those with Netflix, regarding their long-term space needs, are productive and ongoing. Turning to our updated 2036 outlook, we're increasing our full-year core FFO range to $1.10 to $1.18 per diluted share, up from the prior range of $0.96 to $1.06. This revised range reflects two key drivers. First, approximately $0.04 of outperformance in the first quarter compared to our initial expectations. Super Bowl parking revenue, lower repairs and maintenance expense, and favorable cam reconciliations account for the outperformance. Second, a $0.09 benefit from the reclassification of QOD's leased sound stages and Atlanta area operations as discontinued operations beginning in the second quarter of 2026. Note, the $0.09 benefit is based upon projections for the discontinued operations included in our previously provided full year outlook. As always, our outlook excludes potential dispositions, acquisitions, or capital market activity. With that, I'll turn the call over to Victor.

Thanks, Haroud. Let me bring it together. The first quarter demonstrates that our markets are recovering, but importantly, the deliberate decisions we're making ensure Hudson Pacific can capture this recovery better than most. Our outlook is up, occupancy is growing, prime studios are performing, and Kiwi's drag is being addressed. And we're doing all this while keeping our liquidity and balance sheet intact. Each of these actions reinforces the same outcome, a clear and credible path to FPO growth to the balance of 2026. That's what we're committed to do. Thank you for your continued interest in HPP and operator now. I'd like you to open the line for any questions.

We will now begin the question and answer session. If you would like to ask a question, please pull star 1 on your telephone keypad. To withdraw your question, press star 1 again. please pick up the handset when asking a question. If you are muted locally, please remember to unmute your device. Please stand by while we assemble our roster. Your first question is from Dylan Bersinski with Green Street. Please go ahead.

Hi, guys. Maybe if you can sort of just talk about just what you're seeing in the overall capital markets environment. Has pricing changed at all? Are you seeing any change to buyer appetite? And then maybe if you can just talk a little bit further about the deal that you said you have a pricing set. I think in the past you talked about various ways that can go, but it sounds like you guys are now going to fully dispose of that piece. Is that sort of correct?

Yeah, Dylan. Hey, it's Victor. Thanks. First of all, we'll take the second question first. On 10950, we're fully disposing of it. We indicated on our last call we had a series of offers on JVs and on outright sales. On the outright sale number that we've agreed upon and are about to go under contract, but the diligence timeframe has been clicking. It's a deal that we just felt compelled that it was a good enough price, better than good enough, and it exceeded our expectations to where a JV structure would have been more applicable. And so, yes, we are selling that asset, and currently today that's going very well. In terms of the overall marketplace, I can give you sort of a high level in the three markets that we're in. Start in Seattle. 505 First is an example. had a series of people that were interested at a fairly high price per foot on a leased asset that is probably 50% of it needs repositioning in the marketplace. Pleasantly surprised at the activity around that. There has been a couple of deals in Bellevue that are priced relatively aligned to what we would say is, you know, the new market cap rate pricing in the 500s. and a half to six and a half raise for stabilized walled assets. And then people are looking right now at a couple assets in Seattle at more buying vacancy. I think that trend started in the Bay Area where we've seen quite a number of assets trade that are vacant assets that are more inclined for a value add and upside than we used to see walled assets. But the material numbers in both those markets are still nowhere near where peak activity is. There's a few more coming to market second half of this year that we were indicated will come out at some pretty good pricing levels. We mentioned that we have an asset on the market right now. We've got 120 NDAs signed and a lot of activity. That's a value-add asset in the Bay Area. So I think that's indicative of where the market is. I would say closer to home in Los Angeles, where our corporate offices are, as you know, We're really seeing very little activity on the west side, very little activity in all of the markets, even in the South Bay of sales at this time. So we haven't seen that. There's a couple of deals that are being tossed around at some good price per foot numbers, but not good yield numbers right now in the Southern California marketplace.

That's helpful, Victor. I really appreciate that color. And then just let me One on sort of the overall demand environment. It sounds like things continue to pick up and you're seeing increased activity in Seattle coming out of Bellevue. Can you just talk about sort of any of the reasons why you think or what is sort of causing this continuation of accelerated leasing activity across your business footprint?

Yeah, you know, as I mentioned in my prepared remarks and then Mark followed up on it, you know, sort of in 50 plus percent of it's tech and tech related and AI related activity. leasing activity. I think the most interesting aspects are, you know what's happening in the Bay Area, but if you really permeate down into the Silicon Valley from Foster City, Redwood City, Redwood Shores, all the way through to Palo Alto, Mountain View, and then even North San Jose, what we're seeing is an influx of larger tenants. I think last quarter, our team said there was six transactions over 100,000 square feet, and two were 450,000 square feet. So we're seeing that activity start to permeate to take space off the marketplace. The kind of space it's getting off the market is two levels. One is space that is built out and ready to occupy, and two is space that has energy efficiencies for additional power. And fortunately, from our standpoint, we have an asset like that in the market today that's getting some pretty interesting activity. around that because we have a lot of power on our assets in North San Jose. So we think the marketplace is shifting to that. I think you're seeing in San Francisco the same trends of tech and AI-related, but fire-related, from our standpoint, has been very consistent. In Seattle, we are finally seeing that turn of Puget Sound's positive absorption. It was led by Bellevue, clearly, and we're seeing the activity in that marketplace grow. consistently pick up quarter after quarter. And then lastly, in Los Angeles, I think, you know, it's definitely bottomed out. We have little exposure here, but the exposure that we do have is very active. We've got a couple hundred thousand square feet of proposals in the marketplace today, and the rates are as good as we've seen them since 2019. Art, do you want to comment any further? No, I think you said it.

Great. That's incredibly helpful. Appreciate it. Thanks, Dylan.

Your next question is from the line of Alexander Goldfarb with Piper Sandler. Please go ahead.

Hey, good morning out there, and great to see vibrancy back in office. So, well done. So, two questions. First, Harut, can you just go through the mechanics on the POE, wind down the nine-cent disc ops, like just what the mechanics are of how that impacts the guidance? Clearly understand the outperformance, the strong leasing, that makes sense for raising guidance, but it's the nine-cent part I just want a little bit more clarity on. Sure, Alex.

Good morning. So, all that is, is in our previous guidance, we had assumed nine cents related to the items that we're specifying and winding down. So, all we're doing is removing that from our continuing operations, our core FFO, and that's what we're going to remove effectively. It's really that simple. So, on a go-core basis, that's no longer going to drag or anything.

Okay, got it, got it. So it's not just a drag that's no longer there. Perfect. Okay. And then, Victor, bigger picture, Netflix. They were in the news a few weeks ago, possibly buying the Hackman CBS studio. Can you just give a little bit more color on, you know, what you think that would mean? Obviously, you guys built a very nice project, office, et cetera. I don't know the age of the CBS studio. that have been produced, so I don't know what the physical plant is like and if that's even something that they conceivably could consolidate to, but would certainly appreciate your perspective.

So from a color standpoint, I'm going to sort of get it out of the way so we don't get asked throughout the call, Alex, and I appreciate the comments. You know, with the conversation around Netflix, obviously in difference to the tenant and our conversations with them, I can't talk about what's going on, but suffice to say that our relationship is intact and is positive. On the Radford situation and what their intent is, I know we've had conversations with them. Again, it's a 21 sound states facility that is really directed to production and creative production as a campus. There's very little office on that campus right now, and the office that is intact is leased to CBS for a long period of time. Whether or not they buy it is really up to them, and if it's going to be a campus facility for sound stages, you know, that's their call. But it's not going to interfere with our relationship with them and our conversations with them going forward.

Awesome. Listen, thank you. Thanks, Alex.

Your next question is from Seth Berge with Citi. Please go ahead.

Thanks for taking my question. I guess this is the first one on the Washington 1000 comment. You mentioned some activity kind of on that space, which is, you know, positive. But can you give some color on, you know, what stages those kind of negotiations are in?

Yeah, I'll sort of talk top level and let Art jump in in terms of, you know, the activity. The activity has increased dramatically. We mentioned on our last call we were in the final phase this month. of opening up our spec suites there, which the activity around those has been very strong. A couple floors of negotiations on that. As we mentioned, you know, ready space is ready space, and people are interested in moving in a ready space. The building's in phenomenal shape. The amenities that we're putting through the building are very well accepted in the marketplace. And we're starting to see not just smaller tenants, and what I mean by smaller is, you know, 15,000 to 40,000 square footers, but now we've got four or five over 100,000 square foot tenants that are in the marketplace that we are their, you know, first, second, or third choice. Art, you can comment on where we stand on that. Yeah, Victor touched on a couple of things that are important to note.

Just the greater demand he talked about earlier, the greater demand in Seattle has picked up tremendously. We're benefiting from the tightness of the market in Bellevue. We're benefiting from, we have benefited from the diminishing trophy demand subtly space that had been on the market and we're starting to see these tenants out out in the market that were kind of greater Puget Sound now focusing on on the downtown core By comparison our you know our Tours have increased we talked about tours increasing. Well, they haven't increased anywhere more than in Seattle the tour activity was up quarter over quarter it was up 20% and in the pipeline The pipeline is now 25% of our entire pipeline is in Seattle. So that tells you about kind of the depth of the demand out there and our team's ability to pull those deals forward. Washington 1000 is also benefiting from this. We've got seven deals, as we've mentioned in the prepared remarks. Four of these deals, these are deals in negotiation. Four of these deals are on the ready, moving ready suite that Victor just alluded to. They'll deliver this month. And as, you know, that is approaching, tenants are getting more – really more excited about the delivery of this space. These are high-growth tenants that perhaps weren't in the market before or have a small presence, mainly tech, and we're capturing that activity a big way. Your question at the top of the call was, you know, what is the stage of these deals? I will say that they're all in negotiations. Two of the deals, which are for ready – the ready-built suites, are – In later state negotiations, we're not in leases, but we are hopeful that with the momentum we've had thus far, that in the coming quarters, we'll execute on the ready-built suites.

Great. And then just a bit more broadly on kind of the pipeline, you know, just how much of that pipeline is kind of the, you know, kind of AI effect demand that you cited? And, you know, for those types of tenants, what's kind of the average deal size and then, you know, just any changes in terms of, you know, how quickly that's kind of converting or, you know, late stage versus early stage?

Yeah, so it's really market to market. It's all over the board. But we are, I would say, for our pipeline and the deals that we are negotiating on right now and even the deals that we're touring are some of the smaller deals, some of the smaller deals are early stage funding. There are, and we have captured some larger deals, that is to say 50,000 square feet or greater. I would say the bread and butter is really closer to about 10,000, 15,000 square feet. A lot of these tenants, especially the smaller ones, are looking for ready-built space. They're looking for space that is high-end, second-gen, build-outs. Obviously, the spend is top of mind for many of these tenants. Highly amenitized space. which really is our wheelhouse. And so we've done a great job across the portfolio of capitalizing on these AI tenants. It has increased in our portfolio from 10% of our deals and negotiation RSA pipeline to about 25% of all the tech deals that we're seeing. And that's just across the board. Obviously, across the valley and in San Francisco, the number is greater than that.

Yes, that's just a little follow-up to that, as I mentioned earlier. You know, if you look at the entire barrier, we are benefiting from these larger deals that have finally come to fruition. And as I said, there's six deals that were completed last quarter at big numbers. So that's taken a lot of space off the marketplace, which helps our portfolio and all our, you know, peer portfolios around. And we're seeing that impact immediately.

Great. Thank you. Thanks, Seth.

Your next question is from Ronald Camden with Morgan Stanley. Please go ahead.

Great. Just two quick ones. Starting with the same sort of why guidance, just in terms of the cadence, maybe can you talk about sort of the rest of the year when we should expect that inflection to get to the middle of the range, and is that primarily driven by commencements? Thanks.

Ron, good talking to you. So, yeah, so I think we previously said the first quarter was going to be our weakest quarter, primarily driven by 1455 market, Uber specifically, moving out last year, and that reflected. And then we expect the rest of the year to improve primarily, you know, we expect the third quarter to be – sorry, we expect the second quarter to improve maybe a bit weaker in the third quarter and then again to improve again in the fourth quarter. So that's kind of the cadence for the rest of the year. But obviously much stronger than the first quarter.

Got it. That makes sense. And then just a quick one on the AFFO, you know, obviously negative because of the elevated recurrent cap tax. Just any line of sight as you're getting through, you know, a lot of these leasing when that cap tax run rate can start to sort of moderate. and how we should think about that.

Thanks. Hi, Ron. Yeah, we were, you know, looking at it, the latest sort of estimates just recently. For the rest of the year, it looks to us like it's going to average pretty close to where first quarter TILC and recurring capex shook out. If you kind of do the math on core FFO for the balance of the year, it points to higher FFO per quarter than we posted in the first quarter. So assuming the TI's, LC's recurring are, you know, close to what first quarter results are, but FFO is modestly higher, our expectation is that AFFO for the balance of the year should be at least as good, if not modestly better than first quarter results. Got it. Makes sense. Thank you. Thanks, Ron.

Your next question is from Rich Anderson with Cantor Fitzgerald. Please go ahead.

Thanks. Good morning. Any impact from your disposition activity on the occupancy and lease gains that you've seen during the quarter?

Not dispositions. We did, as we announced sort of, I want to say at least a quarter ago, We are repositioning and re-entitling 901 Market. So we took footage off for repositioning just the office component. And then 6040, likewise, is going to be fully repositioned. It was used for decades as a post-production hub. Neither of these assets are particularly big. We're in our fourth quarter results. If you remove that, and they're not in our first quarter results, but if you remove them, just to kind of give you an apples-to-apples comparison, from our first quarter, you're still sequentially higher. So the 150 on the least percentage drops to 140 if you pulled 60, 40, and 901 out of the fourth quarter results, and the 100 sequential increase drops to 80 without either of those two assets. Okay.

10 or 20 basis points in fact. When you talk about the wind down of Coyote, I think it was mentioned 5.8 million of upside from just exiting the leases. Just correct me if I have that wrong, but I'm curious along as you get to that point, are we looking at potential some you know, one-time lease termination fees or costs to you or anything like that that's going to make it sort of a nonlinear process to get through there?

Yeah, I mean, you know, it's just the nature of discontinuing operations, right? We're going to wind down revenue. We're going to wind down expense. You know, we're going to manage that as cost-effectively as we can. Lease, you know, as you look at getting out of leases early – that often entails some kind of payment. So I would say over the course of the year, we'll be incurring some expense associated with discontinuing those ongoing leases and other wind-down expenses, yeah, towards that number.

And so at the end of the day, should we just think of you guys sort of keeping the fleet but not the leases? Is that the way to think about it outside of Atlanta? Yeah.

Yeah, so far, based on what we've announced on discontinued ops, the fleet is still part of our continuing operations.

Okay. And then last question for me. You know, Mark, you mentioned 60% coverage on the remaining 600,000 square feet. I assume you'd rather see 100% or more on that. But, I mean, with sort of the leasing pipeline that we've talked about in the past, $2 million, square feet or so, I mean, how quickly can that 60 ramp up to something in the triple-digit territory, you know, by this time next quarter?

Yeah, I'll answer that, Rich. This is Art. Yeah, so, first of all, the pipeline has grown to 2.4 million. Okay. Just to clarify that. Just remember, you know, so we have, of the remaining 606,000 square feet, roughly 70% or second half of the year Although we are engaged earlier with the smaller tenants, roughly averaging about 6,000 square feet, once we start negotiating with those tenants, we feel good that we can increase that number. But, again, some of these smaller tenants wait until kind of last minute. And the good news is that we are engaged with them right now in discussion, whereas years past and certainly through the pandemic, it was really, there was really no early discussion with these tenants. So we are encouraged about that. They just feel more confident.

Yeah, Rich, I would also just comment, I mean, you know, emphasize that, you know, we just announced some first quarter numbers. We have three more quarters. The expirations aren't all in the first quarter. They're spread out for the year. And we consistently increased occupancy quarter over quarter and signed at least a half a million plus for every quarter. So that number matched to what we've done in the past and what we've foreseeing the future compared to the 600 is not that material.

Yeah. Okay. Fair enough. Thank you. See you, Rich.

Your next question is from Andrew Berger with Bank of America. Please go ahead.

Great. Good morning and congratulations on the strong quarter. So it sounds like Seattle is definitely improving. And you've said in the past that Seattle is typically 12 to 18 months behind San Francisco. I'm curious if you could talk about how much of this improvement in Seattle is existing tenants that are now starting to get more active versus new-to-market tenants. And if you're seeing, given your scale in San Francisco Bay Area, if you're seeing smaller AI tenants, I guess, who are already in your portfolio in the Bay Area now grow into Seattle.

Drew, that's a good question, and I think we look at it in two levels. One, name brand tenants are entering Seattle or expanding in Seattle, a combination of both. Apple is an example. People know they're in the marketplace. REI, they're in the marketplace. You're looking at Microsoft in the city and in Bellevue. They're in the marketplace. Amazon has not clearly been growing, been contracting. But the big name guys – XAI example are in the marketplace. Now you're seeing a shift because of the labor pool of other smaller tech and tech affiliated companies and then support companies around that are expanding and looking to expand because Bellevue has populated itself to a point where there's not a lot of space that's quality that's left. So they're coming to the city in the core aspects of stuff like Union and Denny and Pioneer Square. And that's sort of the area that we're tackling. I think if you look at our pipeline right now, we've got more tenants in the 15 to 40 range than we've had in a long time. There's a couple, as I mentioned earlier, of large 100,000 footers, and their ability to execute leases on an expedited basis is based upon the fact that there's access to space immediately. That's what we're trying to accommodate with our portfolio. And success-wise, I think we're positioned very well. I sort of laugh at the comment about, because I've said it now on three calls, that Seattle is, you know, 12 to 18 months behind San Francisco. So that timeline should hopefully, you know, blossom in terms of the 12 months expiring, but we should see it this summer, because that's really where it is. It is slower than that. I would lean more to the 18 months than the 12 months, but we're still seeing it, and it's at least on a positive trend.

Great. Thank you. And I wanted to get your view on Bellevue, actually. So, you know, a lot of great momentum there, and it sounds like there's good spillover into Seattle proper. Is Bellevue a market that you would like to have a presence in as we think over, you know, the medium term? And what would be your strategy to entering, just kind of given the dynamics you've talked about so far? Thanks.

So it seems for us to enter that marketplace. And the answer is, you know, every time we sort of looked at it, the market flopped. And every time we sort of said, oh, let's not go in, it's gone the other way. I would say yes. As an owner in the area, I think we're top four owners in Seattle right now. And so, yeah, it would make logical sense for us to eventually enter that marketplace at the right time. Right now, though, there's not a lot of product. And the product that's there, you know, is just being held and leased. Our goal in Seattle is to lease up our portfolio. I think we're going to be right on track on doing that. Once we get through that, we'll address, you know, the expansion if that's the direction we want to go in. But Bellevue has proved to be a very, very strong marketplace, and the benefactors of Bellevue have done very well. We're just hoping now that we get to see the flow to the city.

Thank you.

Thanks, Drew.

A reminder to analysts, if you wish to ask a question, to please dial star 1 to raise your hand. Our next question will be from Caitlin Burrows with Goldman Sachs. Please go ahead.

Hi, good morning. Maybe to stay on Seattle some more and back to Washington 1000. I think you mentioned seven deals in process, four could be for spec suites where someone could move in. I guess for the other potentially larger leases, say 100,000 square feet or more, how long do you think it would take them to build out their space and be ready to move in if they signed a lease near term? Like, would that take one, six, 12 months?

Yeah, that's exactly right. 12 months, call it.

Okay. Okay. And then earlier in the call, you mentioned that you could be looking at some surface parking redevelopments in the San Francisco Bay Area. So just wondering if you could talk about that a little bit more. Perhaps it's still early stages, but would that be like a retail type out parcel or ground lease of land, or what could you be thinking?

Yeah, I mean, as you know, a lot of cities throughout California are undersupplied on housing, and those municipalities are – looking for ways to work with landowners to add density where there's land availability. And so we have several locations, Palo Alto, Redwood Shores, Foster City, where the configuration of the land and the goals of the municipality to add density sort of line up very well. And so we're exploring opportunities in most cases just to, like, add density where we can. There may be limited opportunities for conversion, but really the emphasis is on adding densification.

Thanks. Your next question is from John Kim with BMO Capital Markets. Please go ahead.

Thank you. I wanted to ask a similar question on your revenue conversion at 901 Market. Is it safe to assume that you are planning to entitle this residential development and then sell it to a developer? And can you discuss timing as well as other revenue conversions that you see either in your portfolio or in the city plan?

Yeah. So, I mean, I think we mentioned in our prepared remarks that timing is for securing the entitlements for targeting somewhere around year end.

Yeah, I think, John, listen, we like at 10950 and we're looking at Palo Alto, we're going to address what our decision tree is based on when we get the entitlements. It will be worth a lot more once the entitlements are in play. And that process, as Mark said, is ongoing right now. We feel good about year end on that. At that time, we're going to look at the market. We're going to look at the amount of product coming in the marketplace, whether it's a JV, whether it's a sale, or we do it ourselves. But we'll make that determination at that time.

Okay. And can you clarify your statement on the city of San Francisco taking remaining space at Fortune 55 market? I'm just wondering what the confidence level you have on them signing that lease transaction and if that impacts your occupancy guidance for the year.

Well, we've talked about that deal quite extensively. I mean, the impact on occupancy has been outlined in terms of the status of that deal. You know, I don't see the pen in the hand of the mayor, but we hope that it's getting to that point relatively soon. And I think we're confident that we're going to execute that, as we said, this quarter.

Okay. Thank you. Thanks, John.

There are no further questions at this time. I will now turn the call back to Victor Coleman, Chief Executive Officer and Chairman, for closing remarks.

I thank you very much for participating in today's call. I appreciate the team at Hudson for all the hard work. We look forward to talking to everybody next quarter.

This concludes today's call. Thank you for attending. You may now disconnect.