S&P trims Hudson Pacific

S&P said it downgraded its ratings for Hudson Pacific Properties Inc. to BB+ from BBB- and its preferred stock to B+ from BB. However, the agency affirmed the BBB- issue-level rating on the company's senior unsecured notes with no subsidiary guarantees and assigned a 2 recovery rating (80% rounded estimate).

“We expect Hudson Pacific Properties' leverage metrics will remain elevated with only modest improvement expected over the near term. HPP's credit metrics have weakened over the past few years, primarily stemming from higher external funding for acquisitions and development spending, including Sunset Glenoaks Studios and Washington 1000, which are expected to be completed this year. The company's S&P Global Ratings-adjusted debt to EBITDA rose to 9.4x as of the first quarter of 2023, compared to 7.1x at year-end 2019.

“While we do expect some modest deleveraging over the near term due to the stabilization of development projects, cash savings from the dividend reduction, other cost-saving initiatives, and asset sale proceeds used to pay down debt, we continue to project S&P Global Ratings-adjusted debt to EBITDA will remain in the high-8x area at year-end 2023,” S&P said in a statement.

The outlook is negative.

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