LOS ANGELES AND NEW YORK — Hudson Pacific Properties Inc. and Blackstone have formed a joint venture to expand the film and TV production platform for both publicly traded companies. Hudson Pacific is bringing on Blackstone as a partner to help capitalize a portfolio of studios and offices in Hollywood that have been used sparingly since the outbreak of COVID-19 and the subsequent stay-at-home directives in Los Angeles.
As part of the deal, Blackstone (NYSE: BX) will buy a 49 percent stake in Hudson Pacific’s 2.2 million-square-foot Hollywood Media Portfolio, which spans three studios and five office buildings. Hudson Pacific (NYSE: HPP) will remain responsible for the day-to-day operations of the portfolio, which is valued at $1.65 billion.
“Our latest joint venture with Blackstone unlocks a portion of the value we’ve created for our shareholders and provides us with significant capital to grow both our studio and office portfolios,” says Victor Coleman, chairman and CEO of Hudson Pacific.
The portfolio includes Sunset Bronson, Sunset Gower and Sunset Las Palmas Studios (formerly Hollywood Center Studios), which comprises 35 stages and production and support spaces totaling 1.2 million square feet.
The offices in the portfolio include 6040 Sunset, Icon, Cue, Epic and Harlow, which is under construction. The office buildings span 966,000 square feet and are situated on or adjacent to the studio lots. Netflix is the portfolio’s largest tenant, leasing over 700,000 square feet, in addition to signing long-term deals for stages and production space.
In addition to the existing portfolio, the Hudson Pacific-Blackstone team now has approximately 1.1 million square feet of untapped development rights at Sunset Gower and Sunset Las Palmas to explore for new studios and offices. The joint venture also plans to pursue additional studio acquisitions in Los Angeles and other markets.
Hudson Pacific and Blackstone have worked together in the past. The firms jointly purchased the 1.5 million-square-foot Bentall Centre in Vancouver last year. In 2015, Hudson Pacific purchased the former Equity Office Properties portfolio in San Francisco and Silicon Valley from Blackstone for $3.5 billion.
Eastdil Secured is acting as Hudson Pacific’s lead financial advisor in the new joint venture deal, and BofA Securities is acting as the company’s financial advisor. Gibson, Dunn & Crutcher LLP and Latham & Watkins LLP are acting as Hudson Pacific’s legal counsel.
Simpson Thacher & Bartlett LLP is acting as Blackstone’s legal counsel, and Goldman Sachs & Co. LLC and Barclays are serving as Blackstone’s financial advisors in the deal, which is expected to close in the third quarter of this year.
Hudson Pacific Properties is a Los Angeles-based REIT with a portfolio of office and studio properties totaling nearly 19 million square feet, including land for future development.
The firm’s stock price traded at $25.09 per share on Monday, June 29, down from $33.32 a year ago. The company’s stock price reached a record high of $38.70 in mid-February 2020, a few weeks before hitting its lowest level since 2012 ($16.78) due to the outbreak of COVID-19.
Founded in 1991, New York-based Blackstone is one of the largest property owners in the world. The firm owns and operates a global real estate portfolio with assets across every sector, including industrial, multifamily and single-family housing, office, hospitality and retail.
Blackstone’s stock price traded at $55.87 per share on Monday, up from $46.58 a year ago.
— John Nelson