Consistent with its strategy of adding premium properties,
Hudson Pacific Properties, Inc.
) acquired a Class-A office property - Pinnacle II - in Southern
California. This real estate investment trust (REIT) bought the
asset through its existing joint venture (JV) with M. David Paul
& Associates/Worthe Real Estate Group (MDP/Worthe).
Situated at the center of BurbankMedia District, Pinnacle II
spans 231,864 square feet. The property is currently 100%
occupied by Warner Bros. Entertainment, Inc. of
Time Warner Inc.
) through Dec 2021.
Notably, Pinnacle II is one of the two buildings in Pinnacle
office complex, the other being Pinnacle I - which Hudson Pacific
acquired last year through a JV. The complex is strategically
located in proximity to Warner Bros. Studios, Burbank Studios and
Walt Disney Studios of
Walt Disney Co.
). On a combined basis, Pinnacle I and Pinnacle II are currently
95% occupied by various top media and entertainment companies in
In Nov 2012, Hudson Pacific inked a JV with MDP/Worthe to buy
the Pinnacle office complex. Consequently, the company acquired
Pinnacle I building for $212.5 million and agreed to buy Pinnacle
II building. On Jun 14, MDP/Worthe completed 100% interest
contribution toward the Pinnacle II building in the JV for $130.0
million (including the assumption of an existing loan of $89.1
With the completion of the transaction, the JV now has
possession of both the buildings for a combined price of $342.5
million, subject to $218.1 million of project
financing. Hudson Pacific now owns about 65% of the JV,
while the remaining stake is owned by MDP/Worthe, which will
oversee the day-to-day property management responsibilities.
The acquisition of the major complex in Burbank reflects the
company's strategy to own and operate best-in-class office
properties with strong media and entertainment tenancy. Notably,
the company targets high barrier-to-entry, in-fill locations with
favorable, long-term supply-demand characteristics - in markets
such as Los Angeles, Orange County, San Diego and San
The acquisition will provide Hudson Pacific a strong foothold
in one of the top media and entertainment submarkets in Southern
California.Moreover, it will greatly complement the company's
other 15 upscale properties in the area and hence, we remain
Hudson Pacific currently carries a Zacks Rank #3 (Hold). Other
REITs that are performing better and deserve a look include
) with a Zacks Rank #2 (Buy).
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