Office building owner Hudson Pacific Properties Inc. priced shares in its $218 million initial public offering at the bottom of the expected range.

Shares closed up 40 cents to $17.40 in their first day of trading Thursday on the New York Stock Exchange. The ticker symbol is "HPP."

The West Los Angeles company, which owns studios and offices that house Technicolor and KTLA-TV, said late Wednesday that it was selling 12.8 million shares for $17 each, raising about $218 million. The company’s prospectus had given a range of $17 to $19 per share.

The company plans to convert to a real estate investment trust by the end of the year. A REIT must distribute at least 90 percent of its taxable income to shareholders annually as dividends.

The offering is expected to close on June 29. The company, which formed last year, plans to use expected net proceeds of $210 million to pay off mortgages and acquire new properties.

In addition to its Hollywood properties, Hudson Pacific owns and operates First Financial Plaza in Encino, as well as office buildings in Orange County, San Diego, San Francisco, Silicon Valley and the East Bay. Its investment strategy targets both properties in growth markets and properties that are underperforming.

Hudson Pacific said it will own eight buildings totaling 2 million square feet after the IPO and various other transactions are completed. The properties last year reported net income of $31,000 on revenue of $39.3 million, according to the prospectus. Liabilities totaled $170 million.

In addition to the IPO, Hudson Pacific will complete a private placement of $20 million of common stock at the IPO price to founder, Chairman and Chief Executive Victor J. Coleman, as well as investment funds affiliated with Farallon Capital Management L.L.C.

Coleman owned 65 percent of Hudson Pacific’s predecessor company Hudson Capital LLC. Howard S. Stern, Hudson Pacific’s president, controlled 35 percent.

Farallon Funds, an investor in Hudson Pacific, is contributing its ownership interests in the Technicolor building, KTLA-TV’s Sunset Bronson studios and other properties to the new company. Richard B. Fried, a Hudson Pacific managing member and co-head of the real estate group at Farallon Capital Management LLC., will serve as a board director.

The offering includes a 30-day overallotment of 1.92 million shares that can be purchased by underwriters, Bank of America Merrill Lynch, Barclays Capital and Morgan Stanley. With the concurrent private placement, the number of shares outstanding following the IPO is expected to be 22.7 million.

For reprint and licensing requests for this article, CLICK HERE.