Hudson Pacific Properties (HPP.N): Thoughts on Skyport Plaza Disposition & Model Update

Citi updates its Hudson Pacific Properties (HPP.N) model to reflect the monetization of Skyport Plaza ($75.5M gross) and a real estate asset tied to Quixote's wind-down, with net proceeds applied toward credit facility paydown. Skyport Plaza was 11.5% occupied in 2Q26; together with 875 Howard (36% occupied at sale), HPP has disposed of roughly 315 bps of in-service portfolio vacancy. While this denominator reduction provides a mechanical path to management's ~85% year-end occupancy target (pushing pro-forma occupancy to ~85.7% on a static basis) and lowers the hurdle for its 90%+ 2027 target, the near-term milestone is driven by selling vacancy rather than fundamental leasing absorption. That said, management's ~85% year-end target appears conservative, as any continued positive net absorption would provide further upside. Citi raises 2026E FFO from $1.21 to $1.22 and maintains its Neutral rating with a $15.00 target price, implying 34.3% expected total return.