Diversified REIT Hudson Pacific (HPP) has suspended their common stock dividend, while at the same time declaring the dividend on their 4.75% preferred dividend (HPP-C).
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5/4/2024
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I remember there was a contributor here who was a big fan of Hudson Pacific.
I think her name was Bea?
Does anyone know what happened to her? Is she still a Hudson Pacific advocate?
Anybody want to opine on the next shoe to drop? Which office REIT’s have large exposure to places like NYC, SF CHI and LA where their tenants are scaling back their office space, and a dividend cut may be in the works?
VNO is trading just below their 52 week high, while their preferreds are trading at 55% of par…
Another one that is up near its high in contrast to the rest of the sector is OFC.
Hi Justin for what it is worth – I track SLG (loosely) which is a Manhattan only class A office REIT. Empire State and Alexanders are others. I also keep an eye on BXP as well. Last year and early this year I was selling calls on SLG and BXP, but have since covered those short positions. I like SLG because it is just a very scrappy company IMO. There is an interesting midtown Manhattan gambling development possibility that might work out for SLG with Caesars, but I have not checked in on this lately.
SLG has been able to sell a share in a Park Ave property recently which has taken off some of the pressure off of them. It remains highly leveraged.
Could the common dividend get cut? Maybe.
VNO’s common has been cut to $0 supposedly for the balance of this year only. As a preferred shareholder I always get nervous when the common gets zeroed, but it does pay to realize that these REIT preferred are cumulative (banks are typically not). There is less tendency to cut these cumulative dividends than there would be otherwise.
Frankly, I am not in a rush to buy office REIT common or preferred, but if SLG cuts their common to $0 I will certainly take notice. SLG has a series I preferred. I have toyed with the idea of buying a basket of SLG, HPP and VNO preferred, but I don’t see any rush to do it. Maybe if one of them zeros out it’s preferred dividend I might take a stab.
The other property REIT that I check in on from time to time is Alexandria (ARE). This is a REIT that specializes in medical and life sciences properties. These properties have specialized labs for doing life sciences experiments – so they command higher rent and have stickier leases (supposedly). The bull case is that these buildings are impervious to work from home. While there is some truth to this, many lab workers work from home part time. The bear case is that the biotech sector is generally getting starved for capital (to say the least). Lots of Si Valley and So. Cal properties and also properties in other Biotech hotspots. If ARE ever really gets creamed I am a buyer. At it’s current yield and valuation I would rather own Realty Income (which I do).
FWIW tomorrow I plan to double my current position in HES. This is purely because of their 30% interest in the huge offshore oil play in Guyana. XOM has 45% and is the operator. I own XOM as well as HES. HES is not for the faint of heart – it is a very high beta play and is highly leveraged to the price of WTI. My time frame for HES is well into 2027 and possibly beyond. This is the timing of the Guyana development project. My investment timing here is just based on the fact that I have a couple of laggards in my E&P sector play and want to pick the weeds and water the flowers so to speak.
Guyana is fun to read about.
https://oilprice.com/Energy/Crude-Oil/Guyanas-Oil-Boom-Challenges-OPEC-Dominance.html
another tidbit on Guyana
https://www.bbc.co.uk/news/world-latin-america-66715777
August, another one to consider is EQC, they’re near their 52week low and last year they did a special end of year dividend and being a REIT I assume they are required to payout a certain amount. How much I don’t know, but they are sitting on over 2 billion in cash. Long term not sure I like how much the company is paying compensation to the employees for just over seeing 4 properties.
I don’t know where the next shoe to drop is… but I do know what’s on my buy list. For Office, I’m looking for a full position (1% of total) in HIW. I was too late to get it under $20, but I’m looking to buy more on dips. Overall, I have a few REITs I’d like to add with my own price targets.
BNL – $15, ADC – $60, AHH – $10, GTY – $28, PSTL-$14, VICI – $30, ARE – $100.
mrinprophet interesting list. The majority of these I haven’t heard of before. No preferred I see, so I assume your investing for future capitol gains and collecting the dividends for now. Have you followed these long or had any personal experience with any of them? I assume your comfortable they will not cut dividend and they are a long term hold?
That’s correct. My overall portfolio is a diversified mix of roughly…
55% stocks (10% preferreds)
15% credit (mostly cash today, exited too early)
15% MLPs & real assets
10% Real estate (TIPWX and a REITS).
5% hedge funds
The real estate position is underweight today and I’m looking to add to at the right prices. I’m comfortable with all those listed and each would be a roughly 1% position. Each is different and targets a different niche. I’m comfortable today with the leverage of each. I’ve followed for quite some time, but I always felt that prices were too high and I was content to wait. My intention is to buy and hold with those highlighted.
Over the weekend, it was announced San Francisco plans to extend concerts at the Polo Fields to 3 festivals next year. Out Lands festival was a success but they want to limit it to one center stage and 65,000 people. The city is looking at it as a economic boost. Neighborhood associations are pushing back with the noise, trash and the crowds. Almost all the concert goers are from outside the city. Unfortunately I think the city needs to address its crime problems.
lmao, no. Outside lands announced they are adding a SECOND weekend with one stage capped at 65k, in addition to the normal festival weekend.
Yep MCG my desire is to stay away from these big festivities. Napa and associated businesses there love the influx of money from Bottle Rock. A lot of people myself included consider it a pain when we have to get from point A to Point B when these are going on. But hey if the city and county can figure out how to tax it I’m for it.
With the barrel tasting coming up and winter wineland they spread the crowds over several weekends and about 100 wineries so I just stay off the back roads or stay home.
Hudson Pacific has/had a big exposure to SF Bay area commercial real estate, so I guess its not too surprising given the circumstances.
Random observations —
— HPP also has exposure to Hollywood / entertainment because they lease studio / production spaces for movie / show productions and no one is doing anything until the strike is over.
— “The safest dividend is the one that’s just been cut” – this cliche from The Other Website did not work well this time around.
— Odd to omit the common divvy after a big property sale and an earlier divvy cut. (I will not mention “Steamboat Round The Bend” again other than to observe that management looks a lot like Capt. Will Rogers tossing gallon bottles of bootleg Pocahontas Rum into the boiler to reach Baton Rouge. )
— Odder that the stock went up 45% after the earlier divvy cut. HPP was not off much today, so maybe there is a 60% run up in the offing, Disclaimer – I do not understand stocks and will need to stick to CD’s.
— Possibly this is not a REIT but a lottery ticket on the writers strike
DYODD.
BJ good observation on the writers strike but I for one got out of the preferred a long time ago especially as the news was bad and still is coming out of San Francisco.
On one hand, this might not look too bad for the stock as you observed, but it could be the slow motion train wreck happening in the commercial REIT space.
I just have a passing acquaintance with Hudson Pacific Properties (HPP) as it popped up on a screen I did in early 2021 for REITS with large holdings in SF Bay area. Not surprised it has large LA holdings as well, although I’m not sure the writers strike affects them directly as landlords.
I also wasn’t aware they had cut their dividend before, or the effect it had on their share price. I do know they were down ~75% from early 2021 to about a month ago when I last checked them. ‘Doom loop’ seems to fairly describe their situation (and their lender’s).