Company: HPP
Filing Date: 2025-02-25
Form Type: 10-K
Source: 0001482512-25-000029
Chunk: 37

Company: Hudson Pacific Properties, Inc.
Filing Date: 2025-02-25
Form: 10-K
Item: Item 8
Chunk 37
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 and 3 to the consolidated financial statements, goodwill is tested for impairment at least annually at the reporting unit level, or more frequently if events or changes in circumstances indicate that the asset may be impaired. The Operating Partnership assesses qualitative factors to determine if it is more likely than not that the fair value of the reporting unit is less than its carrying value, including goodwill. If so, a quantitative assessment is performed, and to the extent the carrying value of the reporting unit exceeds its fair value, impairment is recognized. As of December 31, 2024, the carrying value of the Operating Partnership’s goodwill balance totaled $157 million, after recognizing an impairment charge related to the Quixote reporting unit of $108 million.Auditing the Operating Partnership’s impairment assessment for goodwill is challenging because of the subjective auditor judgement necessary in evaluating management’s assessment of the fair value of the Quixote reporting unit and whether an impairment is required. Additionally, auditing the Operating Partnership’s measurement of impairment involves subjective auditor judgement in evaluating the reasonableness of management’s selected assumptions, such as projected revenues, revenue growth rates, and discount rate, used in estimating the fair value of the reporting unit.How We Addressed the Matter in Our AuditWe obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Operating Partnership’s goodwill impairment review process, including controls over management’s assessment of the significant assumptions used in the fair value measurement described above. Our testing of the Operating Partnership’s goodwill included, among other procedures, assessing the valuation methods and assumptions used by management in estimating the fair value of the Quixote reporting unit. For example, we identified significant assumptions within management’s model by performing sensitivity analyses to determine if a reasonable variation in the assumptions would materially affect the measurement of the fair value of the reporting unit and related impairment. We also compared the assumptions used by management to historical financial performance and assumptions used by management in estimates of fair value for the Quixote reporting unit in previous periods. Additionally, we involved our valuation specialists in  evaluating the reasonableness of certain of management’s assumptions used in the Operating Partnership’s measurement of the Quixote reporting unit.   We also searched for contrary or corroborating evidence within industry data and within other sources of the Operating Partnership’s data as it relates to the underlying assumptions.

/S/ Ernst & Young LLP 

We have served as the Operating Partnership’s auditor since 2015.

Los Angeles, California 

February 25, 2025 

F-11

HUDSON PACIFIC PROPERTIES, L