Lenders have granted Brentwood-based real estate investment trust Hudson Pacific Properties an extension on a $1.1 billion loan for its Hollywood studio portfolio.
Hudson Pacific and partner Blackstone Inc. now have until November 2027 to pay off the balance, originally due Aug. 9, on a loan backing 2.2 million square feet across Sunset Gower Studios, Sunset Las Palmas Studios and Sunset Bronson Studios, alongside studio-adjacent office properties. The note moved to special servicing days before that deadline and was extended by an initial 30 days.Â
The interest rate will stay the same under the 15-month extension, and Hudson Pacific and Blackstone – who own 51% and 49% of the three-studio portfolio, respectively – weren’t required to pay down any principal as part of the deal. The borrowers agreed to fund a $20 million leasing reserve with excess cash flow from the portfolio while the loan is in place.
The agreement gives Hudson Properties a buffer to stabilize its roster of production properties and restructure underperforming assets, including the distressed soundstages the REIT leased under the Quixote brand.
“This extension underscores our ability to execute a positive outcome for shareholders,” said Harout Diramerian, Hudson Pacific’s chief financial officer, in a statement. “It provides us with additional time and flexibility to advance our leasing strategy across this portfolio, while proactively managing our broader debt maturity schedule.”
Nearly leased out
The three loan-backed Hollywood studios Hudson Pacific scooped up about 20 years ago were 95.5% leased as of early August, Chief Executive Victor Coleman said at the REIT’s second-quarter earnings call. The properties are partially leased to ABC and Netflix Inc., and in 2020, were approved for an expansion to add nearly half a million square feet in creative office and production support space.
But some of Hudson Pacific’s other bets on local production have soured. Production and soundstage services company Quixote, which the REIT bought in 2022 for $360 million, is winding down its facilities in Pacoima, Panorama City and West Hollywood after years of slumped occupancy and heavy operating losses.
Quixote has been a drag on Hudson Pacific’s broader portfolio, now dominated by office space in the San Francisco Bay Area. Despite inking 1.3 million square feet of office leases in the second quarter, the REIT logged a $105 million loss during the period. That followed a $53 million loss in the first quarter and a nine-figure loss in last year’s fourth quarter.
