Funds affiliated with Blackstone Property Partners will acquire a 49 percent interest in a portfolio of Hollywood studios and nearby office properties from Hudson Pacific Properties Inc.
Hudson Pacific will retain 51 percent ownership and remain responsible for day-to-day operations, leasing and development of the portfolio, which comprises three studios and five on-lot or adjacent Class A office properties, all totaling 2.2 million square feet, at a gross portfolio valuation of $1.7 billion. The transaction is expected to close in the third quarter of this year.
The portfolio includes Sunset Bronson, Sunset Gower and Sunset Las Palmas Studios, at 5800 Sunset Blvd. and 1438 N. Gower St., Hollywood, and 1040 N. Las Palmas Ave., Los Angeles, respectively. These total about 40 acres and collectively comprise 35 stages or 1.2 million square feet of production and support space.
The studio lots are critical infrastructure for TV, film and digital production and house content production tenants from both traditional and streaming media companies. The portfolio also features 966,000 square feet of Class A office properties that Hudson Pacific has developed on or adjacent to the studio lots: 6040 Sunset, ICON, CUE, EPIC and the soon-to-be-completed Harlow.
Netflix is the portfolio’s largest tenant, leasing over 700,000 square feet, including all of the ICON, CUE and EPIC buildings, in addition to signing long-term deals for stages and production space. 6040 Sunset is fully occupied by Technicolor.
The core and shell of the Harlow project are essentially finished, pending final inspections, a Hudson Pacific spokesperson told Commercial Property Executive. She added that interest has been expressed by prospective full-building and multi-tenant users.
Eastdil Secured is Hudson Pacific’s lead financial advisor on the deal, with BofA Securities also acting as a financial advisor. Gibson, Dunn & Crutcher LLP and Latham & Watkins LLP are Hudson Pacific’s legal counsels. Simpson Thacher & Bartlett LLP is Blackstone’s legal counsel, and Goldman Sachs & Co. LLC and Barclays are Blackstone’s financial advisors.
The show must go on
Victor Coleman, chairman & CEO of Hudson Pacific, said in a prepared statement that the joint venture will provide capital to grow both the studio and office portfolios, including the build-out of additional development rights at the existing studios.
These reportedly include about 1.1 million square feet of untapped development rights at Sunset Gower and Sunset Las Palmas, as well as the pursuit of additional studio acquisitions in Los Angeles and other markets. Hudson Pacific is the largest independent owner and operator of sound stages in Los Angeles.
The demand for creative space in Hollywood—or maybe just Netflix’ phenomenal growth—is demonstrated by deals such as Netflix’ prelease of all 355,000 square feet at Kilroy Realty’s Academy on Vine and the similar prelease of Hudson Pacific’s EPIC building on Sunset Boulevard.
Hudson Pacific’s and Blackstone’s previous collaborations included the joint venture purchase of the 1.5 million-square-foot Bentall Centre in Vancouver last year.