Hudson Pacific Secures $475M CMBS Deal Tied to Six West Coast Offices

A Los Angeles-based real estate investment trust (REIT), which like other Hollywood landlords has struggled since the pandemic and recent labor strikes, has closed a $475 million commercial mortgage-backed securities (CMBS) loan tied to six of its offices up and down the West Coast. 

Hudson Pacific Properties (HPP), which specializes in properties tailored to media and tech companies, such as creative offices and soundstages, said Monday that it had completed the CMBS financing for a portfolio of properties in L.A., the San Francisco Bay Area and Seattle. Goldman Sachs (GS) led the five-year financing, with Morgan Stanley (MS) and Wells Fargo (WFC) also taking part as co-leads and joint bookrunners. 

Two of the properties, at 11601 Wilshire Boulevard and at 12333 West Olympic Boulevard, are in L.A.’s west side Sawtelle neighborhood. Element LA, on Olympic, which houses video game developer and publisher Riot Games, is particularly notable in the CMBS deal; the financing allows HPP to pay off a $168 million loan tied to the property, with the remaining funds used to repay outstanding debt on the REIT’s unsecured revolving credit facility and for “other general corporate purposes.”

“This financing provides us with nearly half a billion dollars of gross proceeds to fully repay our Element LA secured loan and outstanding amounts on our credit facility,” Harout Diramerian, HPP’s chief financial officer, said in a statement. “Along with recent and potential asset sales, we continue to increase liquidity and balance sheet flexibility, putting us at a positive inflection point in our overall strategy to address our remaining maturities in the coming years.”

While the REIT may have zapped the debt to Element LA, the future of its tenant there is less certain. Riot Games, behind the popular League of Legends game, moved its headquarters from Santa Monica to the 284,000-square-foot Sawtelle office in 2015, inking a 15-year lease at the time. Yet the video game company announced at the beginning of last year that it would lay off 530 workers, about 11 percent of its employees, after years of workforce expansions and toxic workplace environment allegations and lawsuits, including allegations of sexual harassment and discrimination. 

HPP meanwhile has problems elsewhere in its creative portfolio. The developer manages over 2 million square feet of soundstages, and is a favorite landlord of Netflix, which fully leases HPP’s 13-story Epic office tower in Hollywood. But the REIT has faced headwinds in the years since the pandemic and the Hollywood labor strikes that largely shut down the industry in 2023; its stock price has fallen some 92 percent since its pre-pandemic peak, and recently canceled plans for a new studio project near London.

Nick Trombola can be reached at ntrombola@commercialobserver.com.