Silent distress at OC office campus

"The property is worth $28 million, or $187 per square foot, according to a pre-pandemic appraisal, although keeping tenants has been an issue: The campus was 98 percent full at underwriting, but had fallen to 64 percent by June 2024, per the latest available data. The special servicer notified the borrower but had not received a response as of October, according to servicer commentary via Morningstar."

"Hudson Pacific Properties' chairman and chief executive Victor Coleman can tout an office recovery all he wants, but the company is still bleeding money. The Los Angeles-based real estate investment trust reported losses of $294 million in the nine months ended September 30 compared with $197 million a year earlier. The company mostly blamed the studio business, which is lagging throughout Los Angeles, for losses."

"Coleman took the opportunity of the third-quarter earnings call to boast about technology and artificial intelligence companies and their need for office space in the Bay Areaalthough he missed a chance to name-drop Elon Musk, whose company leased 100,000 square feet at a Hudson Pacific office property in Palo Alto. In all fairness, the company has inked 1.7 million square feet of leases in the nine months ending September, which it said is its best year-to-date leasing performance since before the pandemic. But office revenues are still declining and total occupancy is lower than 80 percent."

A three-building Westminster office campus with 150,000 square feet went to special servicing after the borrower defaulted on about $16 million following eight months of delinquency. The property carried a pre-pandemic appraisal value of $28 million, or $187 per square foot, and occupancy fell from 98 percent at underwriting to 64 percent by June 2024. The special servicer notified the borrower but had received no response as of October. Hudson Pacific reported $294 million in losses for the nine months ended September 30, blamed lagging studio business, and noted declining office revenues and sub-80 percent occupancy despite 1.7 million square feet of new leases.

Read at therealdeal.com