Quixote Studios — a 27-year-old provider of sound stages, cast trailers, trucks, grip and lighting, and other equipment essential for content production — is no longer an independent company after being purchased by Brentwood-based Hudson Pacific Properties Inc. for $360 million.
Mikel Elliott, the company’s co-founder, said he decided the time was right to sell his company after seeing institutional companies investing in entertainment production facilities.
“We have a great brand, a great management team,” Elliott said. “If we were ever to partner with these guys, we could take Quixote to the next level.”
The process involved many potential suitors for Quixote.
“We entertained offers from financial guys. We had quite a few bids,” Elliott said.
In the end, Quixote went with Hudson Pacific Properties.
“They’re local guys,” Elliott said. “They have all these studio assets here in town. They acquired Star Waggons and we have the other third of that that they don’t have, so we’re giving them a huge market share of entertainment (transportation) in L.A.”
Last year, Hudson Pacific acquired two transportation and logistics service companies — Sylmar-based Star Waggons and Zio Studio Services — for $222 million. The two companies had a combined fleet of more than 1,100 transportation assets, including luxury trailers and specialized vehicles.
Elliott will remain onboard at Quixote as president. “Our whole leadership team is staying on,” Elliott said.
Perfect fit
Hudson Pacific expects the transaction will be immediately accretive to its financial results.
“Our acquisition of Quixote Studios represents further execution of our strategy to enhance our core studio business for customers with a full-service offering of sound stages, both in terms of size and location, and production services in key global markets,” Jeff Stotland, executive vice president of global studios and services for Hudson Pacific, said in a statement. “Quixote strengthens our reach to capture strong secular demand for studio and related assets, including excess demand at our Sunset Studios locations, and enables us to achieve economies of scale while further diversifying our client base.”
Quixote complements Hudson Pacific’s Sunset Studios portfolio, which includes more than 60 stages across five lots in Los Angeles and the U.K., and its production services division’s transportation fleet, which includes more than 1,400 cast trailers, trucks and specialized vehicles servicing productions in Los Angeles, Atlanta and Albuquerque.
Since 1995, Quixote has grown its business significantly in Los Angeles, New York, Atlanta and New Orleans. Quixote has 325 employees, more than 500 cast trailers, trucks and specialized vehicles, one of the industry’s largest inventories of grip and lighting and production equipment, as well as long-term lease rights to 24 sound stages in Los Angeles and three in New Orleans.
Hudson Pacific’s L.A. stages include Sunset Gower, Sunset Bronson and Sunset Las Palmas. Along with Blackstone, it is currently developing Sunset Glenoaks, a $190 million, seven-soundstage project in Sun Valley that will span 240,000 square feet when completed next year.
Elliott sees the complementary assets of Quixote as a natural fit for Hudson Pacific.
“Right away, there are synergies for them from day one,” Elliott said. “They don’t have all the production equipment that we have. We optimize the fleets of the cast trailers. It’s a perfect alignment of assets. They don’t do the equipment. They don’t do any of the services on the backlot, and that’s what we do and we do it well.”
Quixote has a significant presence in Pacoima, the site of its North Valley studio, which has five soundstages at 12137 Montague St. and another facility at 12154 Montague St.
Quixote’s largest clients include ABC/Disney, HBO, Sony, Paramount, NBC Universal and Warner Bros. Numerous television series and movies have been filmed at its soundstages, including Apple’s “The Morning Show,” Paramount’s “Yellowstone,” HBO’s “Curb Your Enthusiasm” and “Insecure.”
“Quixote’s strong brand is one of the things that drew us to the company, and we plan to continue to leverage it as part of our strategy to strengthen and grow our studio platform,” said a Hudson Pacific spokesperson.
Crowded market
Hudson Pacific Properties isn’t the only local company interested in investing in soundstages.
In what is the largest studio redevelopment project in the nation, Santa Monica-based Worthe Real Estate Group is redeveloping Warner Bros.’ historic Ranch Lot in Burbank to include 16 soundstages and a 320,000-square-foot office complex. Culver City-based Hackman Capital Partners and New York-based Square Mile Capital Management, meanwhile, purchased CBS Studio Center in Studio City for $1.85 billion last November and plans to renovate the property.
Hackman Capital previously purchased CBS Television City in the Fairfax District for $750 million and has plans to expand the site by 1.9 million square feet, adding studio, office and retail facilities with an expected price tag of $1.25 billion. Globally, Hackman Capital owns 19 studios for a combined 120 active soundstages and another 90 in development, adding up to well over $10 billion in assets.
West Hollywood-based Bardas Investment Group is also working on studio projects. The company has Echelon Studios in the works in Hollywood, a $420-million project that will include five soundstages and two office buildings totaling 350,000 square feet.
Also in L.A., East End Studios plans to create 16 soundstages totaling 720,400 square feet on 15 acres in downtown Los Angeles while Atlas Capital Group has proposed 17 soundstages spanning 212,300 square feet at the former Los Angeles Times printing plant downtown.
In Santa Clarita, Shadowbox Studios is building a 1.3 million-square-foot studio lot comprised of 19 soundstages.
Peter Hajimihalis, managing director at Jones Lang LaSalle, said that what’s attracting many institutional firms to invest in soundstages boils down to the streaming wars.
“Production has doubled and tripled over the last few years,” Hajimihalis said.
The big demand for soundstages has meant that developers are looking to build in such areas as the Arts District in downtown L.A.
“A studio is a very land-intensive type of sector,” Hajimihalis said.
“For L.A. there is a finite geography where you can be in which is the 30-mile zone.”
It’s made land for soundstages valuable because if filming goes beyond the 30-mile zone, studios have to pay travel expenses for talent and crew.
