LOS ANGELES--(BUSINESS WIRE)--Hudson Pacific Properties, Inc. (the “Company”) (NYSE: HPP) today announced that through its joint venture with M. David Paul & Associates/Worthe Real Estate Group (“MDP/Worthe”), it has completed the acquisition of the Pinnacle II, a 231,864-square-foot Class-A office property located in the heart of the Burbank Media District. Pinnacle II is currently 100% leased to Warner Bros. Entertainment through December 2021.
As previously announced on November 8, 2012, the Company entered into a joint venture with MDP/Worthe to acquire The Pinnacle, a two-building (Pinnacle I and Pinnacle II), 625,640-square-foot office property located in Burbank, California. The acquisition of the 393,776-square-foot Pinnacle I building by the joint venture closed on November 8, 2012 for a purchase price of $212.5 million, $129.0 million of which was financed with a new ten-year project loan. In connection with the acquisition of Pinnacle I, the Company contributed approximately $83.0 million in exchange for approximately 98.25% of the joint venture (reflecting certain credits and adjustments among the partners).
Effective as of June 14, 2103, MDP/Worthe has completed the contribution of its 100% interest in the Pinnacle II building to the joint venture for a total gross purchase price of $130.0 million. The Pinnacle II building was contributed subject to an existing $89.1 million project loan bearing interest at a fixed annual rate of 6.313% and maturing on September 6, 2016. Other than for purposes of funding closing costs and prorations, Hudson Pacific Properties, Inc. did not make a capital contribution in connection with the contribution of the Pinnacle II building to the joint venture, but the Company’s ownership interest in the joint venture has been adjusted to reflect the contribution of the Pinnacle II by MDP/Worthe such that the Company’s ownership interest in the joint venture is now 65%, with the remaining 35% owned by MDP/Worthe. With the closing of this transaction, the joint venture now owns both buildings for a combined purchase price of $342.5 million, subject to $218.1 million of project financing.
Commenting on today’s announcement, Victor J. Coleman, Chairman and Chief Executive Officer of Hudson Pacific Properties, Inc., said, “The Pinnacle provides Hudson with an immediate foothold in one of the top media and entertainment submarkets in Los Angeles. With only a handful of expiring leases over the next few years, and limited non-re-occurring capital improvements, this stabilized, high-quality asset is extremely complementary to our portfolio.”
Situated on a 4.3 acre campus, directly adjacent to Warner Bros. Studios and Burbank Studios and blocks away from Walt Disney Studios, The Pinnacle’s prime location has made it the premier office building in the submarket. On a combined basis, Pinnacle I and Pinnacle II are currently 95% leased to some of the highest-quality media and entertainment companies in Southern California.
About Hudson Pacific Properties
Hudson Pacific Properties, Inc. is a full-service, vertically integrated real estate company focused on owning, operating and acquiring high-quality office properties and state-of-the-art media and entertainment properties in select growth markets primarily in Northern and Southern California. The Company’s strategic investment program targets high barrier-to-entry, in-fill locations with favorable, long-term supply-demand characteristics in select target markets, including Los Angeles, Orange County, San Diego and San Francisco. The Company’s portfolio currently consists of approximately 5.5 million square feet, not including undeveloped land that the Company believes can support an additional 2.0 million square feet. The Company has elected to be taxed as a real estate investment trust, or REIT, for federal income tax purposes. Hudson Pacific Properties is a component of the Russell 2000® and the Russell 3000® indices. For additional information, please visit www.hudsonpacificproperties.com.
This press release may contain forward-looking statements within the meaning of the federal securities laws. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. In some cases, you can identify forward-looking statements by the use of forward-looking terminology such as “may,” “will,” “should,” “expects,” “intends,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” or “potential” or the negative of these words and phrases or similar words or phrases that are predictions of or indicate future events or trends and that do not relate solely to historical matters. Forward-looking statements involve known and unknown risks, uncertainties, assumptions and contingencies, many of which are beyond the Company’s control, that may cause actual results to differ significantly from those expressed in any forward-looking statement. All forward-looking statements reflect the Company’s good faith beliefs, assumptions and expectations, but they are not guarantees of future performance. Furthermore, the Company disclaims any obligation to publicly update or revise any forward-looking statement to reflect changes in underlying assumptions or factors, of new information, data or methods, future events or other changes. For a further discussion of these and other factors that could cause the Company’s future results to differ materially from any forward-looking statements, see the section entitled “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012 filed with the Securities and Exchange Commission on March 14, 2013, and other risks described in documents subsequently filed by the Company from time to time with the Securities and Exchange Commission.