Good afternoon, and welcome to the Hudson Pacific Properties fourth quarter 2021 conference conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To enter the question queue at any time, please press the star key followed by one on your touchtone phone. If you are using a speakerphone, note you will need to pick up your handset before pressing the keys. Please note this event is being recorded. I would now like to turn the conference over to Laura Campbell, Executive Vice President, Investor Relations and Marketing. Please go ahead. Good morning, everyone. Thanks for joining us. With me on the call today are Victor Coleman, CEO and Chairman, Mark Lammas, President, Harout Diramerian, CFO, and Art Suazo, EVP of Leasing. Yesterday, we filed our earnings release and supplemental on a 8-K with the SEC, and both are now available on our website. An audio webcast of this call will be available for replay on our website. Some of the information we'll share on the call today is forward-looking in nature. Please reference our earnings release and supplemental for statements regarding forward-looking information, as well as the reconciliation of non-GAAP financial measures used on this call and in those materials. This morning, Victor will discuss macro trends across our markets and our 2022 priorities. Mark will review 2021 business highlights along with upcoming opportunities, and Harout will discuss our fourth quarter financial results and provide initial guidance for 2022. Thereafter, we'll be happy to take your questions. Victor? Thank you, Laura. Good morning, everyone, and thanks for joining us. Hudson Pacific accomplished a great deal in 2021. Staying true to our core strategy, we further expanded our office and studio portfolios within global centers of innovation. We delivered on exceptional value of creating redevelopment opportunities like One Westside. We grew our studio platform by acquiring new production service lines, as well as by adding another large-scale purpose-built studio to our development pipeline. All this while successfully capitalizing on our office leasing expirations and maintaining a strong and flexible balance sheet. The long-term outlook for the unique type of properties and experience Hudson Pacific provides for its studio and office tenants has never been brighter. For over a decade, we've remained diligent in our focus on high barrier to entry markets propelled by growth of tech and media, where the related industry infrastructure, be it capital flows, talent, or services, is entrenched. We've also put ourselves at the forefront of owning and operating production studios, which operational complexity and unique relationships also create significant barriers to building a platform at scale. Our strategy has proven out and remains well intact as the pandemic has only accelerated pre-leasing demand trends, driving abundant capital to the tech and media industries. Venture capital investment reached $330 billion in the United States last year. This is the highest year on record and almost double the prior year. With California receiving the lion's share more than three times any other market, we expect this to continue, with venture funds raising nearly $130 billion last year, up 50% year- over- year and eclipsing the $100 billion mark for the first time ever. Software and other non-biotech investments surged in 2021, which coupled with increased early stage fundings, are poised to further drive leasing velocity at our smaller tenant-focused Peninsula and Silicon Valley office assets, where we're already seeing demand accelerate. Content production spend for the addressable U.S., U.K., and Canadian markets totaled approximately $175 billion in 2021. That's 14% increase from the prior year, with studios like Comcast, Disney, Netflix, Apple, and Amazon spending more than $100 billion. Production spend is anticipated to increase again this year as the battle for streaming service subscribers further intensifies the U.S. and global markets alike. This bodes very well for the demand at both our studios and our strategically located office assets. Several of these companies have sizable requirements, not only for Los Angeles, where the location, quality, and studio adjacency of our office portfolio and development pipeline is unmatched, but within our other markets as well. Improving the public commentary around the return to work is beginning to reflect the reality of our tenant discussions and has accelerated leasing activity across all of our markets. For media and tech tenants and creative office companies where culture and collaboration is essential, the terms hybrid and flexible are not translating into less workspace. In fact, FAANG-type tenants, which have long been the bellwether on workplace trends, have been accumulating large blocks of space throughout the pandemic. This activity has accelerated in the most recent months as Meta Platforms, LinkedIn, Pinterest, Upstart, Zillow, Amazon, Twitter, Indeed, Riot Games, and Roku have all signed significant leases across our markets. Big picture, with this favorable backdrop in 2022, Hudson will continue to do what it does best, creating significant shareholder value by transforming underperforming real estate in global tech and media markets and leasing that space to meet the modern workspace needs of today's and tomorrow's leading companies. We are specifically focused on five key objectives this year. First, to successfully address our 2022 office lease expirations while capturing double-digit mark-to-market on rents. Second, to execute successfully on our near-term value creation office and studio developments, including Sunset Glenoaks Studios and Washington 1000. Third, to recycle capital from non-strategic asset sales into high-yielding strategically aligned acquisition opportunities, be it office or studio assets, production service businesses or repurchase shares. Fourth, to maintain a strong, flexible balance sheet with ample liquidity to run and grow our business. Finally, to continue to undertake innovative and impactful ESG endeavors that further differentiate our company, Hudson Pacific, in the areas of sustainability, health, and equity. With that, now I'm gonna turn it over to Mark. Thanks, Victor. Our strong performance in 2021 speaks to the resilience of our strategy, as well as our team's incredible ability to execute across all our verticals. Last year, we signed over 1.8 million sq ft of office leases with healthy 14% GAAP and 7% cash rent spreads. GAAP and cash rent spreads were further elevated in the fourth quarter at 16% and 11% respectively for the 448,000 sq ft of deals signed, which contributed to the 150,000 sq ft of positive net absorption. Today, even after signing nearly 0.5 million sq ft last quarter, our leasing pipeline comprises nearly 2 million sq ft of deals in leases, LOIs or proposals, a level of activity 35% higher than our long-term average. Our 2022 expirations are 12% below market. Regarding our largest expirations, we're in late stage leases for 100% of the NFL space in Culver City. We've backfilled KPMG space with Amazon in Denny Triangle. We plan to reposition the Burlington Coat space as office in San Francisco, enabling us to capture a very significant markup on the sub-$10 annual rents. We're already in discussions with both Auris Health and Stanford to renew along the peninsula for upcoming fourth quarter expirations. We now expect that Qualcomm, which expires in the third quarter, will vacate their space, which we will look to reposition as we market it for lease. Excluding known vacates, Qualcomm, Dell, and Burlington Coat, we have 45% coverage, that is leases, LOIs, or proposals, on our remaining 2022 expirations, as well as another 25% in discussions. Most of those in discussions represent smaller sub-10,000 sq ft tenants along the peninsula and in Silicon Valley with late third or fourth quarter expirations, who would be unlikely to engage more fully until later in the year. That said, among all our markets, Peninsula and Silicon Valley fundamentals are tightening most swiftly, including a combined 2.6 million sq ft of positive net absorption in the fourth quarter. We continue to create value through our pipeline of exceptional redevelopment projects. At the end of last year, we delivered One Westside, a 1980s-era shopping mall we converted into a spectacular urban campus nearly two months early and fully leased to Google for tenant improvements. From start to finish, this project serves as a case study for visionary and sustainable adaptive reuse. We're on leases and expect to sign imminently with a tenant for the balance of Harlow, our stunning 130,000 sq ft office development on the Sunset Las Palmas Studio lot. Upon stabilization, anticipated year-end 2022 for Harlow and mid-2023 for One Westside, these projects will generate approximately $45 million of combined NOI annually. We've taken advantage of opportunities to acquire high quality, strategic, and immediately accretive assets like 5th and Bell in Seattle's dynamic Denny Triangle submarket. In less than three years, through a series of acquisitions, we've tripled the size of our Denny Triangle portfolio to over 1.9 million sq ft and added Amazon to our top tenants. We now own some of the best assets in that market, which continues to benefit from its South Lake Union adjacency, as well as the $2 billion Washington State Convention Center addition and related retail public space and streetscape improvements, all set to deliver in less than a year in January 2023. We're awaiting the convention center's delivery of the podium for our fully designed and permitted 538,000 sq ft Washington 1000 office development, after which construction should take about 18 months. Upon stabilization, we expect this project will generate another approximately $27 million of NOI annually. We successfully accelerated the growth of our studio platform in 2021 as well. Our goal has always been to build a premier, forward-looking studio portfolio uniquely positioned to meet future demand from leading content creators, be it through location, the right product fit for stages and production office, fully integrated service offering, or a combination of all three. Our ability to vertically integrate our studio business to not only deliver and operate studio facilities alongside strategically located office assets, but to acquire and run operating companies like Star Waggons and Zio Studio Services, all under one global brand, greatly enhances our ability to meet tenant demand and create value. Combined, Star Waggons and Zio's generated $32 million of EBITDA last year, significantly above our underwriting. In 2022, we expect EBITDA to grow to approximately $35 million-$37 million. Construction is now underway at our Burbank adjacent Sunset Glenoaks, which we expect to deliver by third quarter 2023 and generate approximately $15 million of additional annual studio-related NOI upon stabilization. We're also making progress on public approvals for our Sunset Waltham Cross development in the U.K., which we could receive by year-end. Collectively, the addition of these two studios will expand our global platform to five facilities and over 60 stages. We've continued to opportunistically repurchase our stock under our $250 million share repurchase authorization, taking advantage of pricing dislocations alongside pursuit of embedded and external growth opportunities. In the fourth quarter, we repurchased another 1.3 million shares of our stock at an average price per share of $24.07. Throughout the entirety of 2021, we repurchased a total of 1.9 million shares at an average price per share of $23.82. As of year-end, we've identified four non-strategic office assets for potential disposition. These include 6922 Hollywood in Hollywood, Del Amo in Torrance, Northview Center in Lynnwood, and Skyway Landing in Redwood Shores. For all these assets, either the location, tenancy, or asset quality is no longer a fit for our strategy, and we believe our capital is better allocated to higher-yielding investments, whether it be funding our development pipeline, making strategic acquisitions, or continuing to repurchase our stock. With that, I'll turn the call over to Harout. Thanks, Mark. Fourth quarter FFO, excluding specified items, was $0.52 per diluted share compared to $0.44 per diluted share a year ago. Fourth quarter specified items consisted of transaction-related expenses of $1.5 million or $0.01 per diluted share and a one-time prior period supplemental property tax reimbursement of $700,000 or 0 cents per diluted share, compared to specified items totaling $4.8 million or $0.03 per diluted share a year ago. I'll note that last year, despite the pandemic challenges, we achieved the high end of our 2021 FFO guidance range with full-year FFO of $1.99 per diluted share. Fourth quarter AFFO once again grew significantly compared to prior year, increasing by $19.3 million or 37% compared to FFO increases by $16.8 million or 27% during the same period. Again, this positive AFFO trend reflects the significant impact of normalizing lease costs and cash rent commitments on major leases following the burn-off of free rent. Fourth quarter NOI at our 42 consolidated same-store office properties increased 4.6% on a GAAP basis and 2.8% on a cash basis, whereas full-year NOI increased 0.7% on a GAAP basis and 4.9% on a cash basis. Fourth quarter NOI on our three same-store studio properties decreased 9.5% on a GAAP basis and 17.3% on a cash basis. However, adjusting for the one-time prior period property tax reimbursement, NOI would have increased by 17.7% on a GAAP basis and 6.9% on a cash basis. As of year-end, our in-service portfolio was 91.8% occupied and 92.8% leased, representing a 120 basis point and a 160 basis point quarter-over-quarter increase, respectively. Following the $1.1 billion refinancing of our Hollywood media portfolio in late summer, we returned to the capital markets in the fourth quarter to further fortify our balance sheet and increase our liquidity. We raised $413 million through a successful preferred stock offering, which we used to repay a $25.2 million loan secured by 10950 Washington, coming due March 2022. Along with amounts outstanding under our credit facility, with additional funds available for other corporate purposes, we also recast our credit facility, increasing availability from $600 million to $1 billion and extending the term until the end of 2025. At the end of the year, we had $1 billion in liquidity with no material maturities until 2023 and average loan term of 4.8 years. In addition, we have access to $263.9 million of undrawn capacity associated with construction loans for One Westside and Sunset Glenoaks. Now I'll turn to guidance. As always, our guidance excludes the impact of any new opportunistic acquisitions, dispositions, financing, and capital markets activity. In addition, I'll remind everyone of potential COVID-related impacts to our guidance, including variants and government mandates. That said, we're providing initial full year 2022 FFO guidance in the range of $2.01-$2.09 per diluted share. The midpoint of which represents a 6% increase over that of our initial FFO guidance last year. There are no specified items in connection with this guidance. We expect same store office cash NOI growth of 2%-3%, which includes the full impact of Qualcomm's expiration without renewal or backfill of their entire space at Skyport Plaza. Adjusting for this expiration, we would have guided to 3.5%-4.5% growth. We expect same store studio cash NOI growth of 15%-16%. Note that our 2022 full year guidance reflects, for the first time, the full year benefit of certain transactions and milestones, our acquisitions of Star Waggons and Zio Studio Services, both of which occurred in the third quarter, and our purchase of 5th and Bell and the delivery of One Westside to Google for tenant improvements, both of which occurred in the fourth quarter. Now we'll be happy to take questions. Operator? Thank you. We will now begin the question and answer session. As a reminder, to ask a question, you may press star then one on your touch tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw questions, please press star then two. The first question is from the line of Craig Mailman with KeyBanc Capital Markets. Your line is now open. Hey guys. Victor, one quick one. I know in the news, there's been some talk about the $150 million tax incentive that Governor Newsom passed. Are you guys anticipating getting any of that allocation for Glenoaks? And is that sort of in the 7.5%-8% yield expectation? It's not in the 7.5%-8.5% yield expectation. Hi, Craig. The amount is a greater amount. The $150 is for development, allocated for studio development, and we will apply for that. Not sure we do fall into the category. I'm not sure of the status. That would really fall under Chris Pearson and Chris Barton's area. The answer is yeah, we'll apply for it. I'm not sure if we'll get it or not, but it's not part of the yield. Okay. The assets held for sale, how far are you guys along in the process on those few assets you guys put in the bucket there? You know, I know you guys have been pretty steady capital recyclers. As we think about maybe what's in guidance for this year, kind of what level of these non-core assets could be in there versus, you know, maybe some joint ventures of your better kind of lower cap rate assets. Let's not assume that we're gonna do any JVs at this time. We've had conversations on a few of the assets under the auspices of the direction that you're going. You know, nothing's reflected obviously in guidance as Harout Diramerian pointed out. That being said, of the four, in no particular order, I think Del Amo, our final offers are coming in next week. I think it's Tuesday, June 9, 2022, today, is the first day of offers. You know, I think our team is expecting somewhere between you know, six-10 offers or so. Those two are relatively imminent. Northview, I believe, is slated for March 1 for the packages to go out. And then they'll probably call for offers. First round offers, my guess, is near the end of March. We're evaluating a couple of alternatives around Skyway. I believe the date is exactly the same as March one. There's an interesting sort of play around that, around life sciences that has been approached to us, and we're gonna evaluate that with the tenancy and the available vacancy and the transformation of that asset. They're all, you know, I think if everything goes really well, you know, end of second quarter, everything should be closed, and so it would be impacted to the second half of the year, I guess, is maybe how the guys would think about it. Yeah, just to be clear, but in our guidance, we assumed we held them for the whole year, just 'cause we don't know the timing. The guidance reflects owning those assets throughout 2022. I don't know if you guys have run this, but just assuming, you know, maybe something happens in 2Q or late 2Q, relative to maybe your expectations, there's a way to give a blended potential impact that wouldn't kind of give away what your pricing expectations are. Do you guys have like a sense of what the drag could be if you execute on something? Del Amo's vacant, so, you know, maybe not seeing a drag. Well, maybe, Craig, a suggestion would be, you know, the range of gross proceeds is somewhere between, call it, $325 million-$375 million collectively. Recall that Del Amo has no current tenancy, and then you can gauge through the percentage leased on the other three kind of what the leasing status is. You could throw, you know, a relatively low cap rate at the number, a pretty low cap rate. Assume you disposed of those assets sometime within the middle of the year. You'd get pretty darn close to kind of what the NOI associated with those assets are, right? Then the real question is, what do we do with the proceeds, right? Do we redeploy quickly into a new acquisition and so forth? That should give you a pretty good way of estimating the impact. No, that's really helpful. Just one last one for me. On the Burlington space, what are you guys envisioning there as the redevelopment plan? Does it stay? I know you said it goes office. Kinda how much do you think you'd have to spend, and, you know, what type of tenant? Does that include like a lobby refresh and maybe kind of second floor tenancy? Kinda what's the play there? Hey, Craig, it's Art here. The project is 95,000 sq ft, currently all retail. It's gonna be half, virtually half and half office, half retail, for probably a big box user down below. The rates we're looking at, mind you, I think we've kept saying that, you know, our gross rents on that asset were close to $8 million annually in that ballpark, and we're looking for kind of a low $60 rent on the office portion. Okay. You know, not to throw the politics into it, but is that location fared well with everything going on in San Francisco from a retail shoplifting type issue? Like, will it be easy to get a retailer in there for the ground floor? Or is that, you know, do we need a little bit of cleanup? Yeah, absolutely. in the neighborhood to make a new Absolutely. It's a great location, you know, in SoMa. There've been inquiries about big box retail there, and office, in that class. We feel really good about the activity with, you know, kind of the higher end space in SoMa. Great. Thanks. Thank you, Mr. Mailman. The next question is from the line of John Kim with BMO Capital Markets. Your line is now open. Thanks. Good morning. I just want to clarify, are you suggesting that guidance can come down based on dispositions, or is this, you know, a base case just given the timing and the likely low cap rate that you're gonna sell at? I guess the answer is it can go down or up because if we redeploy the amounts into accretive assets, it can actually go up. That's why we don't guide either way, because we don't know the timing, and we currently don't have the use of proceeds figured out yet. It can go down if we sell it, sure. If we buy back stock per se, that might be much more accretive than the underlying FFO that it was providing. Okay, that makes sense. On your 2022 expirations, you discussed having 45% in coverage, another 25% in discussions excluding the known vacates. How much of that is renewal leases versus new leases where there might be some vacancy downtime? Do you mean backfill on- Yeah. I would say it's probably a third of it is backfill that we're already working on, really across the entire portfolio. If I could just ask one more. Dell, I think you mentioned that's a known vacate. That was the lease that was extended on a part-time basis or short-term basis from October to earlier this year. I just wanna clarify that Dell will be leaving that space. That's correct. Well, they're leaving, you know, three floors. Then we have, you know, we're in discussions on actually one of those floors currently. Backfill. To backfill. The mark is, you know, the mark is about 15%-52%. Great. Thank you. Thank you, Mr. Kim. The next question is from the line of Manny Korchman with Citi. Your line is now open. Hey, everyone. Maybe this is a combination of sort of what Harout talked about and Victor's comments in the beginning. It sounds like you're gonna get a bunch of excess capital in from these dispositions, and I'm not sure how big your acquisition pipeline is, but you also did the pref C, which brought a bunch of excess capital in. What is the plan? Is it that you have a big acquisition pipeline? Is it that you just want it to be sort of cash heavy at the moment? Or what drove you knowing that you were gonna be selling these assets in this upcoming year to do the pref C, which brought so much capital in? A couple of things, Manny. I mean, listen, we have a very extensive development pipeline that we are aggressively pursuing and some we've announced and some we haven't. That's one. We do have allocated dollars that we've not specified yet for other accretive uses of capital. As always, you know, we have a very strong balance sheet to maintain flexibility. I wouldn't read into one or the other. I would read into the fact that we've always looked to capitalize on opportunities to access capital. These four assets are not core assets to the portfolio. Timing's right. Hopefully, pricing will be right, and we'll execute on those deals. Just as Harout said, the question before or two ago, I'm not sure. You know, if we don't get the right pricing on these assets, we're not gonna sell them. It's not a fait accompli, and you never know what happens as markets change and timing. That's exactly why we haven't altered any of our numbers for 2022. Victor, in the press release last night, you pointed out growth in the studio portfolio as one of the focuses for the year. That's not that different than what you've said in the past, but is it? Is there a reason that it was sort of front and center? Well, I think there's a lot of opportunities that we're looking at right now in that. I mean, I think relatively speaking, we're probably evaluating more opportunities with our JV in that product type, I'm just sort of thinking off the top of my head, than what we're seeing in the office in our markets in the office sectors. Yeah. Thanks, Victor. Thanks, Manny. The next question is from the line of Jamie Feldman with Bank of America. Your line is open. Great. Thank you. I was hoping you can talk more, or follow up more on the comments you made at the beginning of the call about, you know, capital flows, VC investment, and you know, how it's translating into better leasing, especially for your smaller tenant portfolio. Can you talk about, you know, specifically the sub-markets that maybe in the fourth quarter or even as you look at the leasing pipeline, seem to be getting, actually improving? And then as you think about the portfolio following these four asset sales, you know, how do you think the trajectory and maybe even the expiration risk can start to look differently? Yeah. I'll take it sort of a top level, and then I can let Mark and Art jump in a little bit, Jamie. You know, if you think about the amount of capital that's just raised in California alone, as I said in my prepared remarks, I mean, that's gonna equate to the logical thought process of being distributed to companies that wanna be in close proximity to their capital providers or their partners or their investors. That's always been the trend, and that's why people focus, you know, substantially on VC capital, deployment of capital into first, second, third, fourth stage investments, right? I mean, just, you know, to take a look at it, if you really narrow it down in the valley, I mean, we've got just alone we did, I think, 145 deals in Silicon Valley in 2021 relative to half that. I think it was like less than half that, 74 deals, I think it was, in 2020. The majority of those deals are this small tenant, smaller relative to the large tenants that are out there that we're signing. I mean, the top 10 large tenants in the valley were Apple, Meta, NetApp, C3.ai, LinkedIn. I mean, those were all in the 700 to a quarter of a million sq ft, and I'm referring to you know the 10,000- to 30,000 sq ft. That's gonna equate to I think what we're seeing in the activity on that alone. Not to mention, by the way, that the valley did I think about 14 million sq ft of deals in 2020 and 2021. A lot more than people thought. There's a direct correlation to capital raise, deployment, and growth. We're seeing that on the ground on a granular basis, and Art can comment on that. Yeah. We definitely see it on the ground, you know, especially, you know, across the valley where, you know, we moved that portfolio about 130 basis points quarter over quarter, and that's all, you know, that's all deal volume in the kind of sub-10,000 sq ft range. You know, again, our market share is still, you know, about 10% of all the deals that were done over the last two years. That's 2020 and 2021 in the valley. You know, our footprint there is probably about 4%. We're definitely doing more than our share of deals. Just to sort of top off your trailing part of your question, Jamie. You know, Skyway's the only asset in the valley. We have purposely tried to vacate that asset for a higher and better use, either, as I said, for life sciences, whether we do it or somebody else does it in the sale process. I mean, that's the higher and better use, and the rents are gonna justify that. You know, Del Amo is 100% vacant. It's a small asset. We've talked about it all along. It's 100% vacant. 6922 has had some leasing aspects there, and we're hopeful that we're gonna get the right pricing levels. Northview is, I'm going off, I think it's in mid-80s or something like that, something to that effect. Yeah, I think, you know, with these four assets, if we execute on it will take some of the exposure away from, you know, some of the future vacancy in the portfolio. Okay. Thank you. I guess, you know, those comments make a lot of sense based on, you know, VC funding we've seen, but you've also seen the stock market sell-off and real concerns about growth stocks or growth companies. Have you seen a shift at all in or a slowdown at all in leasing volume or deals falling out of bed or anything based on- Well, I mean. You know, the broader concerns? I just walked you through. I gave you a snapshot of the top 10 deals just in the valley alone. You know, it's like over 3 million sq ft of all the top, you know, FAANG-related tenants or ancillary related tech and media tenants that are signing space. From that side, I mean, you've talked to our peers in the markets and you know what's going on in the marketplace. I mean, they're the most active. They lease the most space. I think they lead by the markets that they're in for high-quality real estate, and we've seen zero setback or pushback on that. I think also, if you look at our portfolio, we don't have a ton of those tenants that are expiring, but those that are are looking to renew. We've already, you know, exposed the market to the Dell, the NFL, and the Qualcomm. But, you know, other than that, the next tier down, you know, we are negotiating with existing tenants to renew. As Mark said in his prepared remarks, we are in leases on two of those spaces anyways. Yeah. Jamie, close to three quarters back and we started reporting that we've seen, you know, increase in strengthening in fundamentals. It really, you know, it starts with tenant demand. In the valley, tenant demand has been increasing steadily. You know, the gross leasing is up, you know, quarter-over-quarter sequentially. You know, if you look at our deals, Jamie, our square footage from 2020 to 2021 increased 165%. I mean, that speaks to the velocity, and obviously, we're getting our share of deals. Okay. I guess it sounds like you haven't seen any change in appetite based on what's going on in the stock market or growth concerns? No. Yeah, I mean, if anything, what we're trying to. From your leasing pipeline. What we're seeing is an acceleration in deal activity. Okay. All right. Great. Thank you. Thanks, Jamie. The next question is from the line of Blaine Heck with Wells Fargo. Your line is open. Great. Thanks. Good morning out there. Victor, you talked in your prepared remarks about using proceeds from sales to fund high-yielding office and studio investments. I guess we've seen that strategy in play on the studio side with the acquisition of Zio and Star Waggons on the service side. Is it more of that type of investment we should expect on the studio side? You know, with respect to office, most of the trades we've seen thus far have been, you know, really high quality, low yielding properties. Are you seeing more opportunity on that value add side that might eventually have higher yields? Or was that high yield comments you know, directed more towards development and office? Listen, the high yield. Let me take your for the first part of your question. On the type of assets that we're looking at that are truly high yielding are gonna be more development related or operational related, which is consistent with what we are projecting on the studio side, but also on the office development side. I think it's no hidden secret that, you know, our projected returns for Washington 1000 are gonna be one of the highest yielding development deals, if not the highest in most recent history in all of Seattle and the surrounding areas. That sort of falls into that category. You know, going to your office comment, I do think that you know, the core deals are trading at relatively aggressive cap rates, and they're really not aligned to the kind of stuff that we've typically owned in the past. We are starting to see some value add deals that I think make some sense. We're not projecting we're gonna do you know, one or 10 of them, but we are obviously evaluating them as they come in and hopeful that we'll see more. Okay, great. Helpful commentary there. Maybe for Mark or Harout, with respect to the timing of Google revenue recognition, can you just walk us through the major milestones there? I think, you know, based on the notes in the supplemental, I guess my understanding is you've turned the property over to Google to build out their tenant improvements, and then hopefully in the third quarter, the GAAP rents will commence, and then essentially nine months later, cash will commence. Is that correct? And how are you feeling about Google getting the TIs completed by the third quarter this year? A couple points there. We did deliver the space in December 2021. We did start GAAP revenue recognition at that time. From a GAAP and FFO perspective, that's gonna continue regardless of the timing of their build. That's that answer. In terms of their build and their cash rent payment, that's on them. They have that amount of time. If they were to build sooner or later than that, their cash rent still starts. It's not affected by their ability to complete the work. You're right. After nine months, we do have cash rent starting, and then there's a free month of... Sorry. Go ahead, Mark. Sorry. You have one month of free rent that starts in the third quarter of 20, 12 months of I'm sorry, one month of cash rents that starts third quarter of this year. They have eight months of abated rent, and then all of the cash rents begin again after that eight months of abatement. It's a little confusing. Okay. because there's a big gap there in terms of Yeah. Cash rent. For GAAP purposes, immediately upon delivery is when we recognize the revenue. Great. That's clear. Thank you. You can see, by the way, in footnote 14 on page 28 of the supplemental, in case you wanna reference it, you can see that description. Appreciate it, Mark. Mm-hmm. The next question is from the line of Caitlin Burrows with Goldman Sachs. Your line is now open. Hi. Good morning. Maybe just starting with a broader one on return to office. I think some of the data shows that this is improving once again. I was wondering if you could just go through what are tenants telling you in terms of their latest plans, and maybe more importantly, how do you think that's evolved over the past, say, six months, and what could be different now? Well, I think, listen, you know, we're all in the same position as to where we see it. It's a day-to-day moving target with the mask mandates being lifted virtually everywhere but the city of Los Angeles. There are dates in place. I think that's been the catalyst, and kids going back to school, and the vaccination increasing for children has led us to be fairly much in communication with all of our tenants on the larger scale that they have a game plan and it is imminent. Some as early as March 1. It seems as if this is a real starter versus the last Delta or Omicron that has maybe delayed. I also do think, Caitlin, you're finding that companies are not coming out with statements. They're just bringing people back because they don't wanna say the start, stop. They're not gonna do that again. We specifically have our largest tenants in the portfolio are all actively engaging to come back imminently. Got it. Maybe just a question on the studios. You had positive same-store cash NOI growth in the fourth quarter, and your guidance assumes an acceleration in 2022, but it does look like same-store occupancy is down. I was just wondering if you could go through how same-store NOI and revenues are accelerating, even if occupancy is declining. Yeah. That occupancy decline, it doesn't, by the way, take much on 1.2 million sq ft to sort of move the needle. That occupancy decline has been kind of driven off of the same basic sort of a dynamic, if you will, throughout the pandemic, namely its non-stage using office tenants. Some of our space is occupied by tenants that want proximity to the stages, like casting agents, for example. We've seen as, you know, throughout the pandemic, as, you know, tenants haven't been coming to office, some of that tenancy has trailed off. Having said that, the real driver of revenue at the studios is the stage utilization, their utilization of the services, and then all the supports that goes with that. You can easily continue to kind of post the type of return, same store growth and the like, based off of really strong stage usage and everything that goes with that, even if we see a little bit of weakness on these non-stage using office tenants. Which is why the two kind of, you know, can coexist, if you will. When things normalize, and they are normalizing, and tenants start to, you know, return to the office more regularly, that part of the studios that lends itself to these non-stage using office tenants, that'll start to normalize too, and they'll come back in. There's definitely more upside with the restoration of that tenancy, you know, here in the near term. Got it. Thanks. Thank you, Ms. Burrows. The next question is from Rich Anderson with SMBC. Your line is now open. Thanks. Good morning, and congrats on the Super Bowl for any Rams fans out there. Thank you. Speaking of the NFL, what is the mark on that expected to be, assuming you get this late stage through to the finish line? I understand, you know, this doesn't expire until the end of this year. You know, given the TI build-out and everything, we're really talking about this becoming a kind of a 2024 event from the standpoint of cash flow. Is that correct? No. This is Art. First of all, it's 170,000 sq ft. We are very close final, you know, lease negotiations here. The mark, as we've mentioned before, is about 26% for the build and That's base, though, right? On the expiring, right? Yeah. Base rent. Base rent. Yeah. That's right. Yeah. I believe there's an eight-month build period from execution. Okay. Late 2023 then. That's right. As for Qualcomm, you know, my question there is, you know, what's the risk or that this thing goes the way Cisco did a few years ago? You know, there were points in time when you were expected to, you know, have some good news from the vacate there, and, you know, ultimately it didn't quite work out. I mean, do you feel like the market is just in a different spot now and that, you know, you won't have a similar outcome with Qualcomm? Well, let me start with high level. I mean, you're talking apples and oranges, right? I mean, completely different market, Rich. This is a marketplace that you know earlier on in some of the questions that I was asked you know walk through the 14 million sq ft that what was leased in the valley is all sort of akin to the type of real estate that this is. It has nothing to do with Campus Center and the quality of real estate that was. That was a one asset in a marketplace that had in the best of times had zero growth opportunities and activity. This is an asset that is highly sought after. You know, we're talking apples and oranges, as I said. I do think, you know, the activity has been. We, you know, we didn't find out that they were really gonna leave. The only reason we found out is they never told us. So the date came and went, and they didn't tell us, and that was the end of December. So, you know, we're under the assumption 100%, and now we're, you know, positioned to be marketed. I think Art will tell you that he's very confident. Yeah. We have. You know, Victor's hit the nail on the head with the apples, the oranges. I mean, it's a great asset. I mean, it's 2 building assets. It's new construction, newer construction. It's in a great market, North San Jose. You know, Victor mentioned before, you know, there were 10 deals over 100,000 sq ft in 2021. Now, right now in the market, there's about 12 over 100,000 sq ft that we're at least in dialogue with. We feel absolutely positive about really the prospect of getting a lease signed. Probably, you know, building by building if I had to guess, Rich, if that was your next question, rather than a two-building user. Okay, fair enough. Appreciate that. Harout, you mentioned the 37% AFFO growth in 2021. I'm wondering, when you think of 2022, how much of that 37% was sort of, you know, unsustainable, you know, and really what we should be thinking about in terms of AFFO growth, if you could provide any color on that for this year. I'm not sure if it's unstable or not. It is directly attributable to, A, cash rents, coming up in all of our assets, right? Burn off of free rents, if you will. Right. I think stabilization of TIs and LCs. I think Google, when that starts paying cash, as you know, Mark, walked you through the previous call, that's gonna really contribute to AFFO in the future. Now, will it be a little bumpy if there's a relatively large lease signed? Sure. For TI, but I think obviously the benefit of that is will be more cash rents. I think, you know, looking out, it looks pretty I don't think the growth of 37% is sustainable every year, but I do think the level of AFFO that you're seeing now should be relatively sustainable. One last quick question for you, Victor. I was reading about the opening of the Great Point Studios in Yonkers, New York. I'm sure you guys noticed that. You know, that's 1 million sq ft and seems to be, you know, moving along. Lionsgate is the base tenant. But to what degree do you see sort of early-stage opportunities like that where, you know, perhaps we're not quite into the entitlement stages yet, but you could see a vision of growth in similar form to that? And is that the kind of thing that you're seeing that gets you kind of jazzed up about seeing more opportunities in the JV than you do even in your, you know, conventional office business? Well, yeah. Listen, I went and saw that facility and, you know, they just actually are ready to open some of that space and some of the office space March 1. You know, listen, that's the kind of stuff that you're absolutely right. I mean, we're looking at opportunities exactly like that or ground-up purpose-built facilities in Vancouver and London, in New York and here in Los Angeles. There are other markets that we're evaluating at the same time. There are some very interesting opportunities that I think the JV is going to be pursuing fairly aggressively. You'd probably need to be a year early here in the case of the Great Point example, right, before you could get involved in that. Yeah. I mean, there are, you know, obviously entitlement issues on some of these. Some of the ones we're working on, we're working through those in existing deals that we've not announced yet. Yep. Okay. Thanks very much. Thanks. The next question is from the line of Vikram Malhotra with Mizuho. Your line is open. Thanks for taking the questions. I just wanted to clarify with the early delivery of One Westside, just the impact to Q4 and then the impact to 2022 versus maybe what you had anticipated earlier. I know there's obviously the concurrent interest expense you're gonna start recognizing as well. If you can just walk us through kind of the math on how much did it contribute to Q4 and then maybe to Q1. Sure thing. In the fourth quarter, our share of FFO, it gave us roughly $300,000 of additional FFO in Q4. It wasn't that meaningful because it capitalized interest for only one month of activity. In terms of 2022, there really isn't an impact, right? It's just starting a month earlier from a GAAP perspective. Maybe cash comes in a, you know, a month earlier, but for the balance of 2022, there is no impact for that early delivery. Because it was always expected. Yeah, it was always expected, it was always in our numbers, and that's what we had provided, in terms of information in the past. Okay. Then just the spreads on the office side still seem pretty robust. I know you talked about some of the vacancy or one of the vacancies was still at a 50% mark. Just stepping back, given where market conditions are today, what is portfolio-wide mark-to-market today for the office segment? It's just shy of 10%, the spot mark-to-market. Okay. Okay. Just last question, I guess with all the capital now that you may have additional capital with the asset sales. I'm thinking of, you know, two specific kind of areas and wanted to get your thoughts maybe, Victor, on this. One is, you know, your peer has moved to maybe where some of their tenants are moving to Austin, the Sun Belt, on the office side. That's one area I would love to get your thoughts. Second, with this whole quality divide that's percolating across markets, you know, what's the need or the desire to do a lot, you know, more redevelopment of assets, including maybe amenitization? Well, Vikram, thank you. Listen, we've been asked the question about other markets in the office space, and there are other markets that we might consider. Right now, we're sort of laser focused on our core markets, meaning Vancouver to San Francisco on the West Coast all the way down to Los Angeles. We're not considering Austin. I think it's a great marketplace, but it's not a marketplace for Hudson at this time. We think there's gonna be some ample opportunities in our markets and maybe some others as well, that we'll evaluate and see how synergistic it is. In terms of your second question, I mean, absolutely. We've spent the last two years during COVID, you know, looking at a number of our assets and spending a tremendous amount of capital on those assets, both on the outside and the inside, in the inner workings of the assets, on the systems, and then on the beautification of the assets and the quality of space to adapt it to be concurrent with our quality portfolio and our assets. The ones that were not are like the four assets we talked about that we're gonna get rid of and dispose of. You know, there is a flight to class and I think that's sort of proven out to our portfolio and why we're seeing the assets that have leased in our portfolio are the ones that we put a lot of time and money into or they're newer quality assets. Just to clarify, you're saying you've spent two years sort of doing that, and now if there are any incremental assets that don't fit the bill, your primary strategy is disposition? No, not to clarify that. Just so you know, the primary strategy is to finish the work on some of the assets that we've been working on. I think there's several assets that are lobby renovations and modifications of core space that are still in the works, and we've got. I don't even know the number of projects, but it's a substantial number of projects that our redevelopment team is working on. You know, just you know, the assets right now that we're disposing of are those four. There's no other assets that we've identified at this time to put on that list. Okay. Okay, thanks for the color. You got it. The next question is from the line of Ronald Kamdem with Morgan Stanley. Your line is now open. Just a quick one. Just can you talk about what the utilization of the portfolio is? As that sort of starts to get back to normal, is there any sort of variable expenses that we should be mindful of as more people start utilizing the properties? Well, yeah, I mean, utilization, as Victor pointed out earlier when the question came up, is definitely improving and accelerating, you know, somewhat quietly because, you know, their employers are actually having people come in even though they're not making bold announcements about it. I do think you know, this method that a lot of landlords, I think, were using during the pandemic of gauging physical occupancy through elevator swipes or parking and the like is we're beginning to recognize is really not gonna be probably too useful a methodology as you know, we're witnessing really the normalization of more of a hybrid flexible work model. What we expect to see is buildings will be in high utilization insofar as, you know, all the suites will have some amount of physical occupancy. It'll just be less dense occupancy, right? We think, you know, we're all gonna need to recalibrate the way we think about what it means to be, say, fully occupied. We're just sort of seeing the early stages of that now. As for incremental variable costs, yeah, there will be not much. I mean, all of our buildings throughout the pandemic remain fully operational. They're, including heightened janitorial services and so forth, and there's not gonna be much more to incur on those variable services. As you know, I mean, even if utilities, for example, were slightly higher, let's say 8 after hours HVAC and so forth, it's all escalatable and recoverable. So you won't really see much of that. I think the real, what we're all sort of waiting on is for parking to really materialize. There's very little incremental variable expense associated with that, a little bit for the parking operators. But more importantly, we're really not recognizing anywhere close to what normalized parking revenue should look like. That's where I think you should be, you know, sort of expecting the real impact to be felt. Got it. Thank you. All my other questions have been answered. Thanks so much. Thank you, Mr. Kamdem. The next question is from Dave Rodgers with Baird. Your line is open. Yeah. Hi, everyone. Thanks for taking the time. Couple of follow-ups for you. You guys quoted, I think in the press release last night, 41% leverage with the preferred. So when you think about $350 million of asset sales at the midpoint, $100 million maybe of cash flow after the dividend gives you quite a bit of liquidity. But I guess from the perspective of three things, one, known capital spends, known commitments this year, how much is that? How do you kind of phrase in your heads the kind of leverage of the company as well as kind of the buyback program as you had mentioned earlier? Real quick, on the leverage issue, it's not with the preferred, it's only the preferred unit A. It's not with the preferred C, the 41%, just to be clear there. Okay. In terms of, I mean, the leverage question, you know, as always, can be a little unwieldy because it depends on what your underlying point of measurement is. Is it like equity capitalization? Of course, that's entirely unknown. We don't know where our share price is gonna trend at the point in time that we've deployed that capital. If you looked at it in terms of, say, something more predictable, underlying gross asset value, undepreciated book, let's say, that's quite a bit lower than 41 as we sit today. It's closer to the mid-30s, and every dollar expected to be deployed on that pipeline development and so forth, will cause an incremental dollar of gross asset value. It'll still remain a very manageable level looked at in terms of net debt to undepreciated book, probably, maybe you might go up 100, at most 200 basis points on that leverage level, but still in that manageable mid-30 range. I mean, I think that responds to the question on kind of leverage trends, right? Did we miss something else there, David? No, that's fair. I guess that also assumes that, you know, a buyback program would be somewhat constrained by that as well. Oh, yeah. I mean, well, okay, I guess, you know, there's limits on everything, and I don't think you know, very impactful buyback program we're constrained. I mean, we've got ample room on the balance sheet to do a meaningful buyback if that's where we, you know, choose to, you know, focus our capital. Maybe just last on the liquidity side, known capital commitments for the year relative to kind of what you're anticipating bringing in? It's not. I mean, in terms of, again, putting aside any speculative acquisitions, where it's not that much. We've got a $90 million construction loan for Glenoaks. That covers all of the spend for the year on Glenoaks. You can see in the development pages of the supplemental, we only have really the TI allowance and a little bit of retainage left on One Westside, all of which is covered under that construction loan. We're really just the only real meaningful spend, which could hit and won't be much, will be Washington One Thousand when we get underway there. I don't know exactly how much of it hits just in calendar year 2022, but I'm gonna say it's probably maybe, I don't know, $70 million-$80 million at most. With the remaining purchase. Oh, yeah. Well, we got to complete the purchase. There's $65 million at the point of acquisition, and then, you know, there's whatever incremental spend we have early on in the year, let's say maybe it's more like $40 million- $50 million by the end of the year. Maybe it's $100 million with the takedown of the land on Washington 1000. That's the only like something that requires current liquidity that's not covered by existing construction debt. The only other spend is just our ordinary, you know, TIs and commissions and recurring CapEx, which, you know, you can get a good idea of kind of what the run rate of that looks like. It's been roughly averaging over the past four years, like $25 million a quarter. All right. That's helpful. I appreciate that. Go ahead. We're running late, so I'm gonna take a couple more questions, that's it. We're just sort of running over. I'm cognizant of people's time. Thank you, Mr. Rodgers. The next question is from Daniel Ismail with Green Street. Your line is open. Great. Thank you. Just one for me. You know, we've been discussing for a few quarters now the strength in Silicon Valley and on the Peninsula. I'm curious if you think that translates to San Francisco CBD this year? Yeah. Listen, you know, that's a great question. I think, you know, from our standpoint, aside from, you know, Burlington's early termination, you know, our portfolio there is like 94% leased, so we don't have a lot of exposure. We're personally in good shape. I think you've heard me say this before, you know, I'm still relatively bullish on San Francisco and the future of San Francisco. I think it will swing faster than people believe it's gonna swing. I think as a company perspective, we feel the same way. You know, the tenant demand is clearly on the rise there. If you and I had this conversation a year ago, these numbers were dramatically different. I mean, we've seen, you know, 7 million sq ft of gross leasing in the city in the last, you know, 12 months. The sublease space has gone from, I think it was as high as like a 9.98 million sq ft. We're down about 1.3 million just from April, really. Yeah. I mean, the trend is really much better than I guess what people are really seeing. It's got some work to go. I do think the political atmosphere is changing. I think it's changing in all of our markets, and I think that's helping people understand where the marketplace is, on that basis. I believe that San Francisco still has some issues that they're gonna have to accomplish in the next 24 months, and that's sort of the future that we're looking at. That's the line of sight. It still remains a tale of two, you know, markets, right? The spaces that are highly monetized, more desirable spaces, you know, rents have started to tick back up, less upward pressure on TIs and free rent. Those are all positive signs that we're paying very close attention to. Got it. Thanks, everyone. Operator, we'll take one more question, please. Certainly. The last question is from Nick Yulico with Scotiabank. Your line is- Thanks, guys. Sorry if I missed this, but is it possible to get the occupancy growth that's assumed in guidance? I mean, I know Qualcomm by itself is about 250 basis points of vacancy. Any perspective you can give us there? Well, yeah, we haven't provided that. There's been a lively debate. That might be something we add because it's been asked quite a bit. I can say, Nick, we did review the numbers on the heels of completing the quarter, and it looks to us that occupancy by end of 2022 is essentially identical to where we ended on the in-service portfolio at the end of 2021. Okay. Sorry, that's inclusive of the Qualcomm vacate? Yes. That's for all of the. Okay. the in-service portfolio which Qualcomm is part of. Okay, thanks. Just to follow up on Qualcomm, do you have any insight there about what affected that, you know, leasing decision? It sounds like it was kind of abrupt, but at one point you said maybe they would keep a building. You know, I'm not sure if, you know, flexible work impacted that decision for Qualcomm. You know, separately, in terms of that whole submarket there, it's where you now have some more vacancy. Also wondering how that impacts, you know, Cloud10, the future development, as well. Maybe just talk briefly about sort of demand in that market. Sure, Nick, let me start. If you recall, I mean, we were having these conversations a little over four years ago, and Qualcomm was debating whether or not they were leaving or staying. It has nothing to do with, you know, a COVID decision or flex or deciding to do it. I mean, they went back and forth with them. They came to us at the last minute, and said we're staying. This is just how they operate. I don't think it has anything to do for us to sort of assume that this is a market decision based on the last two years. That being said, I'll let Art jump in and sort of talk about, you know, the middle part of your question. I'll just say, you know, Cloud10 is being discussed with two tenants right now who are very interested in it. It's because it's a brand-new project. It's a super cool campus, designed by Gensler. I think there's gonna be some continual interest demand in that. The timing around that is gonna be different in terms of the delivery, obviously, for something like this. Yeah, like we said, you know, there were about 10 deals done that were responsible for about 3.1 million sq ft across the valley. We're now tracking about 12 more that are greater than 100,000 sq ft. We're currently in the process of repositioning the asset, modernizing the amenities, landscaping, hardscaping, and just making the tenant experience superior. We feel very good about the activity in the market and being able to capture that. Okay, thanks everyone. Thanks so much. Thank you. Listen, I'm sorry we went over by 10 minutes. I appreciate it, all the support. Most importantly, I appreciate the dedication and hard work of all the employees at Hudson and the great quarter and the accomplishment of 2021. We'll see you guys all soon. The conference call has concluded. You may disconnect.