Company: HPP
Filing Date: 2025-02-25
Form Type: 10-K
Source: 0001482512-25-000029
Chunk: 36

Company: Hudson Pacific Properties, Inc.
Filing Date: 2025-02-25
Form: 10-K
Item: Item 8
Chunk 36
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 financial statements, the Operating Partnership assesses for impairment on a real estate asset by real estate asset basis whenever events or changes in circumstances indicate that the carrying value of a real estate asset may not be recoverable. Impairment is recognized on real estate assets held for investment when indicators of impairment are present and the future undiscounted cash flows for a real estate asset are less than its carrying amount, at which time the real estate asset is written down to its estimated fair value. The Operating Partnership recognized impairment charges for investment in real estate of $42 million during the year ended December 31, 2024.  Auditing the Operating Partnership’s impairment assessment for real estate assets is challenging because of the subjective auditor judgment necessary in evaluating management’s identification of indicators of potential impairment and the related assessment of the severity of such indicators, either individually or in combination, in determining whether a triggering event has occurred that requires the Operating Partnership to evaluate the recoverability of the real estate asset. Additionally, auditing the Operating Partnership’s test for recoverability and measurement of impairment involves subjective auditor judgment in evaluating the reasonableness of management’s selected assumptions used in estimating future cash flows and the fair value of the real estate asset.

F-10

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 real estate asset impairment assessment process. For example, we tested controls over management’s process for identifying and evaluating potential impairment indicators, review of the estimated future cash flows, and estimation of the fair value of the real estate assets.  Our testing of the Operating Partnership’s impairment assessment included, among other procedures, evaluating significant judgments applied in determining whether indicators of impairment were present for any given real estate asset by obtaining evidence to corroborate such judgments and searching for evidence contrary to such judgments. For example, we searched for negative trends in property performance due to occupancy or cash flow changes, concentrations of significant upcoming lease expirations, and lease renegotiations or significant allowances for doubtful accounts for tenants that occupy a significant portion of a real estate asset. Additionally, we involved our valuation specialists in evaluating the reasonableness of management’s selected assumptions in the Operating Partnership’s test for recoverability and measurement of impairment, if applicable, by utilizing independently identified external market sources. We also searched for contrary or corroborating evidence within other sources of the Operating Partnership’s data as it relates to the underlying assumptions.Goodwill related to the Quixote reporting unitDescription of the MatterAs discussed in Notes 2