Hudson Pacific Suspends Dividend As Filming Slowdown Takes Its Toll

One of the largest owners of Hollywood film studio space will stop paying dividends to shareholders as it reckons with the slow recovery from last year's writers and actors strikes.

Hudson Pacific Properties announced Tuesday that it would be suspending its quarterly dividend on its common stock. The move begins with its third-quarter payout, which was expected to be this month. Bloomberg first reported the news.

The publicly traded REIT, which controls $8.4B in assets, said the market is still recovering from union strikes and negotiations. The Writers Guild of America strike lasted from May through September 2023.

“Studio demand has recovered more slowly than anticipated following the union strikes and negotiations, and we no longer foresee the need for a distribution in relation to taxable income in 2024,” HPP Chairman and CEO Victor Coleman said in a statement.

“Our Board therefore made the decision to suspend our common stock dividend to preserve capital in an ongoing challenging environment,” he added.

The REIT said it intends to pay out its preferred shareholders. HPP declared a 4.75% dividend on its Series C preferred stock, amounting to just under 30 cents per share for the quarter. The dividend is set to be paid to preferred shareholders at the end of the month. 

The REIT posted a net loss of $47.6M in the second quarter and a loss of $101M over the first half of the year. It earned $31M of net income in Q2 2023 and $46M in the first half of last year.

Its $360M acquisition of studio production services company Quixote Studios hasn't lived up to expectations, Coleman said on the company's earnings call in May.

As of the end of June, HPP had 19.6M SF of offices, studios and development rights, primarily in the U.S., western Canada and Greater London. Its in-service studio portfolio fell to 76.9% leased in the second quarter from 86% a year prior.

Coleman told analysts in May the company was “looking at all different options right now and exploring alternatives” for its lagging studio business.

Those alternatives included “some larger moves, whether it is a spinoff, whether it is a rollup,” Coleman said.

“We are evaluating all of that, and we're in conversations on that, and I think that will be the strategy for us going forward.”