HPP - Embedded Expectations Analysis - 2021 04 27
Hudson Pacific Properties, Inc. (HPP:USA) currently trades above corporate averages relative to UAFRS-based (Uniform) earnings, with a 69.3x Uniform P/E. At these levels, the market is pricing in bullish expectations for the firm, but management may have concerns about office tenant restructuring, the value of the Hollywood market, and their major tenant relationshipsSpecifically, management may have concerns about the restructuring of office tenant portfolios, the sustainability of new tenant office space expansion, and their share repurchase cadence. In addition, they may be downplaying concerns about the persistence of high property taxes in California, the absence of bids for potential value-add property transactions, and the challenging economics of in-demand non-purpose-built studios for media and entertainment tenants. Furthermore, they may be downplaying concerns about competition in the Hollywood market, and they may be overstating the valuation potential of Hollywood properties and the strength of their relationship with Amazon. Finally, they may have concerns about declines in their TI and leasing commissions, the pace of building repopulation for storefront retail tenants, and the progress of the One Westside development project with Google
Hudson Pacific Properties is a holding company. Through its subsidiaries, the company is a self-administered and self-managed real estate investment trust focused on acquiring, repositioning, developing and operating office and studio properties in submarkets throughout Northern and Southern California and the Pacific Northwest. The company owns its interests in all of its properties and conducts substantially all of its business through its operating partnership, Hudson Pacific Properties, L.P. The company has two segments: office properties, which are located in Northern and Southern California and the Pacific Northwest; and studio properties, which are located in Southern California.
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