Company: HPP
Filing Date: 2025-02-25
Form Type: 10-K
Source: 0001482512-25-000029
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Company: Hudson Pacific Properties, Inc.
Filing Date: 2025-02-25
Form: 10-K
Item: Item 7A
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ITEM 7A.    Quantitative and Qualitative Disclosures About Market Risk

Interest Rate Risk

The primary market risk we face is interest rate risk. Our future income, cash flows and fair values relevant to financial instruments are dependent upon prevalent market interest rates. Market risk refers to the risk of loss from adverse changes in market prices and interest rates. As more fully described below, we use derivatives to manage, or hedge, interest rate risks related to our borrowings. We only enter into contracts with major financial institutions based on their credit rating and other factors. For a summary of our outstanding indebtedness, refer to Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources.” For a summary of our derivatives, refer to Part IV, Item 15(a) “Exhibits, Financial Statement Schedules—Note 11 to the Consolidated Financial Statements—Derivatives.” 

Interest risk amounts were determined by considering the impact of hypothetical interest rates on our financial instruments. These analyses do not consider the effect of any change in overall economic activity that could occur in that environment. Further, in the event of a change of that magnitude, we may take actions to further mitigate our exposure to the change. However, due to the uncertainty of the specific actions that would be taken and their possible effects, these analyses assume no changes in our financial structure. 

The following table summarizes the terms our derivative instruments used to hedge interest rate risk as of December 31, 2024 (notional amounts and fair value in thousands):

Underlying Debt InstrumentType of InstrumentAccounting PolicyNotional AmountEffective DateMaturity DateInterest RateFair Value Assets (Liabilities)Sunset Glenoaks StudiosCapCash flow hedge$100,600 August 2022January 20254.50%— Sunset Glenoaks StudiosCapCash flow hedge$100,600 January 2025January 20264.50%72 1918 EighthSwapCash flow hedge$172,865 February 2023October 20253.75%524 1918 EighthCapPartial cash flow hedge(1)$314,300 June 2023December 20255.00%62 1918 EighthSold cap(2)Mark-to-market$172,865 June 2023December 20255.00%(34)Hollywood Media PortfolioSwapCash flow hedge$351,186 August 2023June 20263.31%3,663 H