Hudson Pacific Properties : Investor Update - Nareit REITWeek

Investor Update | Nareit REITWeek

June 2024

Positive U.S. Office Sector Trends Continue

Multiple positive occupier trends pointing to the potential for improved office leasing demand and more limited supply of high-quality product extending to HPP markets

Tenant	Gross	Gross	Development
Requirements	Leasing Activity	Sublease Additions	Pipeline
Increasing	Accelerating	Slowing	Shrinking
+28%	+14%	-67%	-62%
(1Q24 v. 1Q23)	(1Q24 v. 1Q23)	(Mar 2024 v. Dec 2022 Peak)	(2023 v. 2019)
64% of CEOs Believe	Remote Share	Space Per	Placer.ai Data Points
Hybrid Schedules	of LinkedIn Job	Employee Reached	to Higher In-Office
Return to Pre-Pandemic	Postings Declining	All-Time Lows	Attendance than Kastle
Attendance Frequency	-12%pts	-19%	+10%
by 2026	(Feb 2022 v. Dec 2023)	(Dec 2023 v. Dec 2010)	(As of 1Q24)

Above Metrics Trending in Right Direction and/or Poised for Improvement

Note: JLL, 1Q24.

2

Office Leasing Green Shoots in HPP Markets

HPP's markets are showing signs of stabilizing, such as increased or consistent tenant demand, declining or stable sublease vacancy, and diminishing new supply pipelines

Positive Market Trends - 1Q24 v. 4Q23 (Unless Otherwise Indicated)

	W. Los	San	San	Silicon	Seattle	Vancouver
	Francisco
	Angeles	Francisco	Valley
	Peninsula
Tenant
3.2M Sq Ft	6.4M Sq Ft	2.3M Sq Ft	5.6M Sq Ft	1.8M Sq Ft	450K Sq Ft
Demand	Increased	Increased to	Stable	Increased	Stable	Stable
		highest level		30%
		since 1Q20
Sublease
2.9M Sq Ft	8.9M Sq Ft	3.0M Sq Ft	5.6M Sq Ft	3.9M Sq Ft	670K Sq Ft
Availability	Decreased	Decreased by	Stable	Decreased by	Stable	Decreased by
	for 3rd	400K sq ft		500K sq ft		75K sq ft
	consecutive
	quarter
Under	2.0%	0%	2.5%	1.0%	1.7%	3.7%
Construction	Decreased	Decreased -	Stable	Decreased	Decreased	Decreased
as % of	~130 bps	no new		~290 bps	~370 bps	~260 bps
Inventory	YOY	supply		YOY	YOY	YOY

Note: CBRE, 1Q24.

3

San Francisco's Revitalization Effort Underway

Mayor Breed's Roadmap to San Francisco's Future is yielding positive results, with the City showing progress and resiliency contrary to negative headlines

Public	New	Tourism	Shifting
Safety Efforts	Businesses
Rebounding	Political Landscape
Delivering	Launching
Crime reached lowest	Nearly 700 new	SFO domestic travel	Board of Supervisors
level in 10 years	businesses registered	at 97% pre-pandemic	projected to shift to
(excl. 2020	per month in San	levels and hotel	more moderate
shutdown), including	Francisco during	occupancy at 80%	majority in 2025
41% drop in property	4Q23 - 200+	pre-pandemic levels	elections (expected to
crime, 23% drop in	businesses started in		focus on funding
violent crime (as of	downtown last year		police, tax / business
Feb 2024)			incentives)

HPP Ferry Building

Highlights

+14%

Sales Increasing

(2023 v. 2022)

+1.2M

# Visitors Increasing

(2023 v. 2022)

Note: Sf.gov/roadmap.

4

San Francisco AI Leasing on Pace for Another Strong Year

YTD AI companies leased 228K sq ft with another 825K sq ft of requirements currently in the market with Bay Area targeted AI VC funding continuing to fuel growth

Record 1.7M Sq Ft of San Francisco AI

Leasing Activity in 2023

Sq Ft	San Francisco AI Leasing Activity
1,800,000
1,600,000
1,400,000
1,200,000
1,000,000
800,000
600,000
400,000
200,000
0
2016	2017	2018	2019	2020	2021	2022	2023	2024

(YTD)

Bay Area Received 78% of ~$10B US AI

VC Funding in 1Q24

$ in

BillionsUS v. Bay Area AI VC Funding$25

$20

$15

$10

$5

54% 59% 66% 50% 61% 53% 57% 39% 50% 30% 78%

$0

1H19 2H19 1H20 2H20 1H21 2H21 1H22 2H22 1H23 2H23 1Q24

	Bay Area AI Funding		US AI Funding

Largest AI VC Funding Rounds 1Q24 - All Bay Area Located

Anthropic	$350B	San Francisco	Figure	$675M	Sunnyvale
Lambda	$320M	San Jose	Freenome	$254M	S. San Francisco
Applied Intuition	$250M	Mountain View	Glean	$200M	Palo Alto
Celestial AI	$175M	Santa Clara	BioAge Labs	$150M	Richmond
Note: CBRE, May 2024.					5

HPP 2Q Leasing Activity Remains Strong

HPP is on track for another solid leasing quarter based on signed leases, as well as deals in- leases or LOI, with new deals now comprising the majority of activity

QTD Leasing Activity Status

1Q24	Apr-May	Deals
Executed	Executed	In-Leases or
Leases	Leases	LOI

Even After Apr-May Leasing Current Pipeline

Increased 10% to 2.0M Sq Ft v. 1Q241

Sq Ft	1.8M
2,500,000
Sq Ft

Total Leases	509K	305K	414K
Sq Ft
% New
58%	83%	65%
Leases

2,000,000

1,500,000

1.5M Sq Ft

5-Yr Avg. Pipeline

+	814K sq ft of new / renewal leases signed year-to-
	date-already ahead of 1H23 total activity
+	New deals as percent of year-to-date total activity
	trending well above avg. 41% signed last 8 quarters

1,000,000
	750K Sq Ft	1.4M
500,000	5-Yr Avg. Tours	Sq Ft

0

1Q19

2Q19

3Q19

4Q19

1Q20

2Q20

3Q20

4Q20

1Q21

2Q21

3Q21

4Q21

1Q22

2Q22

3Q22

4Q22

1Q23

2Q23

3Q23

4Q23

1Q24

Tour Sq Ft

Pipeline Sq Ft

Activity on 45% of 1.2M Sq Ft of HPP's 2024 Expirations2

Lowest Level of Expirations in 3 Years - In Line with Historical Average

Only 1 Expiration >100K Sq Ft

Note: There can be no assurance that deals will be consummated at expected terms or at all. Square footage represents management's estimate of leasable square footage, which may be less or more
than the Building Owners and Managers Association (BOMA) rentable area and may change over time due to re-measurement or re-leasing. (1) HPP's pipeline comprised of deals in leases, LOIs or	6
proposals. (2) HPP activity comprised of deals in leases, LOI, proposals and discussions.

.

HPP's Success in Capturing Small Tenant Demand

At 411 First in Pioneer Square, HPP leveraged spec suites to capture a disproportionate share of leasing from small, high-qualitytenants-an ongoing strategy for other assets / markets

	HPP Signed 91K Sq Ft of Leases Over 8 Quarters
	Taking 411 First from 57% to 93% Leased
%			411 First Lease Up 2Q22-1Q24
Leased					Sq Ft
100.0%								93.3%	50,000
	+3,630 BPS
90.0%									40,000
					78.1%	79.2%	81.2%
80.0%							30,000
			75.4%
70.0%			67.8%						20,000
60.0%	57.0%	58.8%							10,000
										+ 11 new leases with high-quality / credit national
50.0%									0	tenants (avg. ~6K sq ft, 65% spec suites)
2Q22	3Q22	4Q22	1Q23	2Q23	3Q23	4Q23	1Q24	+ ~12K sq ft of new street-level restaurants / retail at
		Renewal Leases		New Leases	% Leased		411 First and adjacent HPP assets

HPP's Portfolio Comprises 19% of Pioneer Square Market

Yet HPP Signed 40% of Leases in that Market Since 2021

Note: Percent leased calculated as square footage under commenced and uncommenced leases as of 3/31/24 divided by total square feet. Square footage represents management's estimate of leasable	7
square footage, which may be less or more than the Building Owners and Managers Association (BOMA) rentable area and may change over time due to re-measurement or re-leasing.

HPP Portfolio Aligns with Tenant Preferences

HPP has already invested capital to appropriately reposition most assets with the modern features and amenities essential to accelerate leasing in the current market climate

Office Rent Premium Associated with Different Amenities1

(Based on Class A in Same Submarket)

HPP Portfolio

Attributes & Amenities2

Roof Terrace or Sky Terrace Natural Light Courtyard w/ Outdoor Seating

Fittness Center w/ Shower Facilities LEED Certified Car Charging Station

Atrium w/ Reception

Dry Cleaners

Food Court or Hall

Day Care

Conferencing Facility

Fittness Center

Food Service or Restaurant

Banking or Convenience Store

5.2%

3.9%

3.5%

2.9%

2.8%

2.2%

1.6%

1.4%

1.4%

0.6%

0.5%

0.5%

0.1%

-0.1%

80%	77%	95%	89%
Class A as	Built or	Feature	Feature End-of-
Determined	Substantially	Functional	Trip Facilities
by CBRE	Renovated	Outdoor	with Bike
	2010 or	Space	Storage,
	Thereafter		Showers,
			Lockers

67%	73%	95%	92%
Feature	Feature	Feature EV	LEED
Conference	Fitness	Charging	Certified
Centers	Centers	Stations
(Multi-Tenant	(Multi-Tenant
Only)	Only)

-1%

0%

1%

2%

3%

4%

5%

6%

Notes: (1) JLL, March 2024. (2) Data as of 3/31/24 and reflects percentage of in-service office portfolio square footage (owned office properties, excluding repositioning, under construction, future
development and held for sale assets) and 100% ownership of consolidated and unconsolidated joint ventures. Square footage represents management's estimate of leasable square footage, which may	8
be less or more than the Building Owners and Managers Association (BOMA) rentable area and may change over time due to re-measurement or re-leasing. Building age reflects management's
assessment of (re)development or renovation completion for in-service office portfolio.

JLL Analysis Underscores HPP's High-Quality Portfolio

HPP engaged JLL to leverage its national tiering framework and create custom local-market tiering forecasts for each of HPP's assets and markets

Better Asset Quality

Tier 3-4 + Higher Quality Location	Tier 1-2 + Higher Quality Location
Total: 17% or 2.5M Sq Ft	Total: 64% 9.3M Sq Ft
(75% Tier 3)	(20% Tier 1)

Location
	Tier 3-4 + Low Quality Location	Tier 1-2 + Low Quality Location
Better
	Total: 17% or 2.4M Sq Ft	Total: 3% or 418K Sq Ft
			(93% Tier 3)	(100% Tier 2)

84%

of HPP assets are top tier and / or in high-quality locations with potential upside as west coast office market fundamentals recover

(See Appendix for

further details on JLL

framework)

Note: JLL analysis reflects HPP in service, repositioning and under construction office portfolio (excludes only future development) and 100% ownership of consolidated and unconsolidated joint ventures	9
as of 3/31/24. Square footage represents management's estimate of leasable square footage, which may be less or more than the Building Owners and Managers Association (BOMA) rentable area and
may change over time due to re-measurement or re-leasing.

Studio-Related Union Negotiations Progressing

Productive negotiations continue with AMPTP regarding EO July contract expirations and IATSE/Teamsters have underscored their desire to not extend negotiations past that deadline

IATSE

Teamsters Local 399

	Contract		Negotiations
Membership	Expiration
	Status2
	Date
13 Hollywood locals	July 31, 2024	+	Craft-specific agreements
represent ~50K members			reached (Hollywood locals)
and 23 locals outside Los		+	Area Standards Agreement
Angeles represent ~20K
		(locals outside Los Angeles)
members-all behind the
		negotiations on pause until
scenes workers in the
		"later in June"
entertainment industry
	+	Basic Agreement (Hollywood
			locals) negotiations restarted
			and scheduled to go through
			June 5
Represents ~6.4K	July 31, 2024	+	Teamsters set to begin
members in motion picture			negotiations on June 10
industry in California and
New Mexico (e.g. animal
handlers, casting, couriers,
drivers, mechanics,
warehousemen)

On June 1, IATSE international president said in a statement, "I'm hopeful that we will soon reach a tentative agreement that members will want to ratify."

Note: Variety, 6/1/24 and IATSE, 6/124.

10