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Blackstone Property Partners to Acquire 49% Stake in a 2.2 msf Portfolio Owned by Hudson Pacific

6/29/20

Blackstone Property Partners, through an affiliated fund, will acquire a 49% interest in Hudson Pacific’s three Hollywood studios and five on-lot or adjacent Class A office properties, totaling 2.2 msf, at a gross portfolio valuation of $1.65 bil. Hudson Pacific will retain a 51% ownership stake and remain responsible for day-to-day operations, leasing and development. The transaction is expected to close in the third quarter of this year.

Sunset Las Palmas
Sunset Las Palmas
“Hudson Pacific has been at the forefront of Hollywood’s renaissance for more than a decade, owning, operating and building world-class creative office and production campuses for leading media and technology companies,” said Victor Coleman, Chairman and CEO of Hudson Pacific. “Our latest joint venture with Blackstone unlocks a portion of the value we’ve created for our shareholders and provides us with significant capital to grow both our studio and office portfolios, including the build-out of additional development rights at our existing studios.”

The transaction includes Sunset Bronson, Sunset Gower and Sunset Las Palmas Studios, which collectively comprise 35 stages or 1.2 msf of production and support space in Hollywood. The studio lots are critical infrastructure for TV, film and digital production and house content production tenants from both traditional and streaming media companies. The portfolio also features 966k sf of highly sought-after Class A office properties that Hudson Pacific has developed on or adjacent to the lots, specifically 6040 Sunset, ICON, CUE, EPIC and the soon-to-be-completed Harlow. Netflix is the portfolio’s largest tenant, leasing over 700k sf, in addition to signing long-term deals for stages and production space.

Hudson Pacific’s predecessor company Hudson Capital, also founded and led by Coleman, purchased Sunset Gower and Sunset Bronson in 2007 and 2008, respectively, just as the ramp-up in traditional and streaming content production began to put stages, particularly those with adjacent premier quality workspace, in high demand. In 2017, Hudson Pacific continued its successful strategy when it purchased Sunset Las Palmas, strengthening the company’s position as the largest independent owner and operator of sound stages in Los Angeles. In addition to developing and leasing the properties, Hudson Pacific also substantially improved studio cash flow through property management and ongoing capital improvements.

Opportunities to further expand the joint venture’s portfolio include approximately 1.1 msf of untapped development rights at Sunset Gower and Sunset Las Palmas, as well as the pursuit of additional studio acquisitions in Los Angeles and other markets. Blackstone’s and Hudson Pacific’s complementary industry relationships and expertise provide the partnership with a unique advantage in sourcing and executing on future studio deals. Further, the two firms have a successful track record of working together on transactions, including Hudson Pacific’s $3.5 bil purchase of the former Equity Office Properties San Francisco Peninsula and Silicon Valley office portfolio in 2015, and the joint venture purchase of the 1.5 msf Bentall Centre in Vancouver, Canada last year.

Eastdil Secured is acting as Hudson Pacific’s lead financial advisor, with BofA Securities also acting as a financial advisor in connection with the transaction. Gibson, Dunn & Crutcher LLP and Latham & Watkins LLP are acting as Hudson Pacific’s legal counsel. Simpson Thacher & Bartlett LLP is acting as Blackstone’s legal counsel, and Goldman Sachs & Co. LLC and Barclays are serving as Blackstone’s financial advisors.

Hudson Pacific is a real estate investment trust with a portfolio of office and studio properties totaling nearly 19 msf, including land for development. Focused on premier West Coast epicenters of innovation, media and technology, its anchor tenants include Fortune 500 and leading growth companies such as Netflix, Google, Square, Uber, NFL Enterprises and more. Hudson Pacific is publicly traded on the NYSE under the symbol HPP and listed as a component of the S&P MidCap 400 Index.

Blackstone is a global leader in real estate investing. Blackstone’s real estate business was founded in 1991 and has $161 bil of investor capital under management. Blackstone is one of the largest property owners in the world, owning and operating assets across every major geography and sector, including logistics, multifamily and single-family housing, office, hospitality and retail.





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