Shares of Hudson Pacific Properties (NYSE: HPP) fell 16.4% on Tuesday after the real estate investment trust (REIT) announced weaker-than-expected quarterly results.
Hudson Pacific battles through a bevy of headwinds
Hudson Pacific's quarterly revenue during the quarter declined 17.2% year over year to $223.4 million, driven by a combination of property sales and previously announced tenant moveouts. The company also saw headwinds, given a reduction in studio service revenue and other revenue amid union strikes.
On the bottom line, that translated to a net loss attributable to common shareholders of $98 million, or $0.70 per share, widening from a net loss of $0.09 per share in the same year-ago period.
As a real estate investment trust, however, most analysts were more closely watching Hudson Pacific Properties' funds from operations (FFO) -- a metric that effectively measures its cash flow from operations. Hudson Pacific's FFO (excluding certain non-recurring items) arrived at $19.6 million, or $0.14 per share, slightly below estimates for $0.15 per share and down from $0.49 per share in the same year-ago period.
Still, Hudson Pacific Chairman and CEO Victor Coleman insisted he's "proud of our team's efforts and our positive results that overcame a multitude of industry challenges in 2023, including ongoing economic uncertainty."
Indeed, the company leased 1.7 million square feet and completed asset dispositions totaling more than $1 billion during the year.
What's next for Hudson Pacific shareholders?
For the full year 2024, Hudson Pacific issued guidance for FFO to be in the per-share range of $1.00 to $1.10 -- again below Wall Street's consensus estimates of $1.17 per share.
In the end, Hudson Pacific Properties has done well to control the factors of its business that are within its control. But given the bevy of industry headwinds negatively impacting its funds from operations, it's no surprise to see the stock falling in response today.
Should you invest $1,000 in Hudson Pacific Properties right now?
Before you buy stock in Hudson Pacific Properties, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Hudson Pacific Properties wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than tripled the return of S&P 500 since 2002*.
*Stock Advisor returns as of February 12, 2024
Steve Symington has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
