One-glance verdict
Overvalued
$-31.85 our estimate vs market $11.65
Wall Street consensus: $16.82 (-152.8% lower than our fair-value estimate)
137% below our estimate, beyond the bull case
Fundamentals snapshot
Hudson Pacific Properties, Inc.
HPP · NYQ · Real Estate · REIT - Office
Current price
$11.65
52-week range
$5.26 - $20.09
Market cap
$632.23M
Balance sheet
Distressed
-0.26x Concerning
Net debt $3.65B. Interest coverage shows how many times profit covers the interest bill.
What stands out
1 Reward
2 Risks
1 rewards · 2 risks
- Reward Free cash flow was positive in 4/10 years.
- Risk Operating margin compressed from 15.6% to -6.0% over 3 years.
- Risk Return on equity was -17.2% last year — the company lost money on shareholders' equity.
What this company does
Hudson Pacific Properties, Inc.
Hudson Pacific Properties is a landlord for big businesses, primarily owning office buildings and movie production studios on the West Coast. The company makes its money by collecting rent from its tenants (customers who rent space), which are often major tech and media companies. This matters because owning property in desirable cities where it is hard for new competitors to build, combined with having reliable companies paying rent, can create a steady and predictable income stream.
How the company got here
Founded in 2006 by Victor Coleman, the company started as Hudson Capital and made a key move by purchasing two historic Hollywood studio lots, Sunset Gower Studios and Sunset Bronson Studios. It was renamed Hudson Pacific Properties in 2009 and became a publicly traded company in 2010. A major turning point came in 2014 when it acquired 26 properties in Northern California, making it the largest owner-operator of office space in Silicon Valley at the time. This and other strategic acquisitions established its focus on high-quality office and studio properties on the West Coast, catering to technology and media companies.
What it actually does
Hudson Pacific Properties is a real estate company that owns, operates, and develops large office buildings and movie studio lots. Think of them as a landlord for major companies, especially in the tech and entertainment industries. They provide the physical spaces—from modern office towers to soundstages for film and TV production—where these businesses create their products and services. Their properties are located in key West Coast markets like San Francisco, Los Angeles, Seattle, and Vancouver.
Office Properties
This is the company's largest business segment, making up the majority of its revenue. Hudson Pacific owns and manages office buildings in prime West Coast locations, leasing space to a mix of tenants, including major tech companies like Google and Netflix, as well as law firms and financial services companies. The company makes money by collecting rent from these tenants who sign long-term agreements, called leases, to occupy the space. They focus on creating modern, desirable workplaces to attract and keep high-quality tenants.
Studio Properties
A unique part of its business, Hudson Pacific is one of the largest independent owners of studio lots for TV, film, and digital production in Los Angeles. Through its Sunset Studios platform, it owns and operates three historic Hollywood studio lots: Sunset Bronson, Sunset Gower, and Sunset Las Palmas. They make money by leasing out soundstages (the large, soundproof buildings where filming occurs) and production offices to major media companies and streaming services. This segment provides the essential infrastructure for creating entertainment content.
What management is betting on now
Management is currently focused on strengthening the company's financial position by selling non-core assets (properties that are not central to their main strategy) to recycle capital. They are also concentrating on leasing up their existing office portfolio, particularly by attracting tenants in the growing Artificial Intelligence (AI) sector. For their studio business, the strategy involves optimizing their properties to meet the long-term demand for content production, even as the media industry evolves. Additionally, the company emphasizes sustainability through its 'Better Blueprint' program, believing that environmentally friendly and healthy buildings attract top-tier tenants and create long-term value.
Price history
How the share price has moved
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Earnings history
Last 8 quarters — what happened
Click any quarter to read the call summary and what the numbers say.
Revenue
$181.85M
Net income
—
Diluted EPS
-0.82
Operating cash flow
$44.29M
Free cash flow
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Sources
Revenue
$256.03M
Net income
—
Diluted EPS
-11.57
Operating cash flow
$59.30M
Free cash flow
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Sources
Revenue
$186.62M
Net income
—
Diluted EPS
-0.30
Operating cash flow
$33.18M
Free cash flow
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Sources
Revenue
$190.00M
Net income
—
Diluted EPS
-0.41
Operating cash flow
$-2.04M
Free cash flow
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Sources
Revenue
$198.46M
Net income
—
Diluted EPS
-0.53
Operating cash flow
$30.54M
Free cash flow
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Sources
Revenue
$209.67M
Net income
—
Diluted EPS
-1.19
Operating cash flow
$162.00K
Free cash flow
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Sources
Revenue
$200.39M
Net income
—
Diluted EPS
-0.69
Operating cash flow
$63.74M
Free cash flow
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Sources
Revenue
$218.00M
Net income
—
Diluted EPS
-0.33
Operating cash flow
$35.62M
Free cash flow
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Sources
Is it cheap or expensive?
Fair value $-31.85 vs current price $11.65
Wall Street consensus is the average analyst price target: $16.82 (-152.8% lower than our fair-value estimate).
Our most-likely fair value is $-31.85 a share — about 373.4% below today's price of $11.65, so the stock currently looks expensive (overvalued).
Is it drowning in debt?
Distressed
Net debt $3.7B. Interest coverage -0.3x.
Net debt
$3.65B
Interest coverage
-0.26x
Hudson Pacific Properties, Inc.'s profit covers its interest bill about 0.0 times over. which is weaker than most peers shown here and 2 peers sit below 1x, which is the danger zone where profit does not fully cover the interest bill.
Distressed
Worse cushion
Baseline
Better cushion
HPP
BASELINE
Hudson Pacific Properties, Inc.
Total debt $3.74B Interest coverage -0.26x This is the baseline the peer rows are being compared against.
Total debt $4.66B Interest coverage 2.46x This peer still has a real interest-payment cushion, while HPP does not.
Total debt $5.73B Interest coverage 0.71x This peer still has a real interest-payment cushion, while HPP does not.
Total debt $16.36B Interest coverage 1.55x This peer still has a real interest-payment cushion, while HPP does not.
Total debt $13.17B Interest coverage 2.45x This peer still has a real interest-payment cushion, while HPP does not.
Total debt $2.63B Interest coverage 0.58x This peer still has a real interest-payment cushion, while HPP does not.
What you should know
The case for and against HPP
1 Reward
2 Risks
Rewards
-
Free cash flow was positive in 4/10 years.
Risks
-
Operating margin compressed from 15.6% to -6.0% over 3 years.
-
Return on equity was -17.2% last year — the company lost money on shareholders' equity.
The numbers
All the key metrics, grouped by purpose
Tap any ? icon to learn what it means.
Valuation
How expensive the stock looks
P/E (TTM)
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Forward P/E
-4.13x
P/B
0.26x
P/S
0.78x
EV/EBITDA
15.57x
PEG ratio
6.93x
Profitability
How much profit each dollar creates
Gross margin
49.2%
Operating margin
-6.0%
Net margin
-67.9%
ROE
-17.2%
ROA
-0.0%
Health
Liquidity and balance-sheet strength
Debt / equity
1.23x
Current ratio
0.27x
Quick ratio
0.22x
Total debt
$3.74B
Total cash
$84.04M
Growth
How the business has been compounding
Revenue TTM
$814.50M
Revenue 5Y CAGR
-1.9%
EPS TTM
-8.84
EPS 5Y CAGR
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Cash flow
How much cash the business throws off
Operating CF TTM
$134.73M
Free CF TTM
$98.91M
FCF margin
12.1%
Dividend
Shareholder payout
Yield
—
Payout ratio
0.0%
Last ex-div date
2024-06-17