Company: HPP
Filing Date: 2025-05-08
Form Type: 10-Q
Source: 0001482512-25-000043
Chunk: 104

Company: Hudson Pacific Properties, Inc.
Filing Date: 2025-05-08
Form: 10-Q
Item: Part I, Item 8
Chunk 104
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 to the decrease in net operating income for the same period.

Net Operating Income

We evaluate performance based upon net operating income (“NOI”). NOI is not a measure of operating results or cash flows from operating activities or cash flows as measured by GAAP and should not be considered an alternative to net income, as an indication of our performance, or as an alternative to cash flows as a measure of liquidity, or our ability to make distributions. All companies may not calculate NOI in the same manner. We consider NOI to be a useful performance measure to investors and management because when compared across periods, NOI reflects the revenues and expenses directly associated with owning and operating our properties and the impact to operations from trends in occupancy rates, rental rates and operating costs, providing a perspective not immediately apparent from net income. We calculate NOI as net income (loss) excluding corporate general and administrative expenses, depreciation and amortization, impairments, gains/losses on sales of real estate, interest expense, interest income, transaction-related expenses and other non-operating items. We define NOI as operating revenues (including rental revenues, other property-related revenue, tenant recoveries and other operating revenues), less property-level operating expenses (which includes external management fees, if any, and property-level general and administrative expenses). NOI on a cash basis is NOI adjusted to exclude the effect of straight-line rent and other non-cash adjustments required by GAAP. We believe that NOI on a cash basis is helpful to investors as an additional measure of operating performance because it eliminates straight-line rent and other non-cash adjustments to revenue and expenses.

Management further analyzes NOI by evaluating the performance from the following groups:

•Same-store, which includes all of the properties owned and included in our stabilized portfolio as of July 1, 2023 and still owned and included in the stabilized portfolio as of March 31, 2025; and

•Non-same-store, which includes:

•Stabilized non-same-store properties

•Lease-up properties

•Repositioning properties 

•Development properties

•Redevelopment properties

•Held for sale properties

•Operating results from studio service-related businesses

46

The following table reconciles net loss to NOI:

Three Months Ended March 31,Dollar ChangePercent Change20252024Net loss$(80,278)$(53,355)$(26,923)50.5 %Adjustments:Loss from unconsolidated real estate entities1,254 743 511 68.8 Fee income(1