Hudson Pacific Properties Inc., a major landlord in Hollywood, withdrew its 2023 financial guidance and plans to slash its dividend as a result of the writers strike that began last week.
The real estate investment trust, which was already facing trouble leasing its office buildings in the wake of the pandemic, said in a statement Monday it’s cutting its dividend by 40% to 50% after delivering a 25-cent a share payout in the first quarter.
Hudson Pacific also won’t issue a full-year forecast for its funds from operations, a measure similar to earnings, because the duration of the writers strike is uncertain.
The company is one of the largest owners of studio space for the film and TV industry, operating 60 sound stages and 1,600 production vehicles. The Writers Guild of America went on strike May 2 after talks broke down with the Alliance of Motion Picture & Television Producers, the trade association that represents Hollywood studios.
Cash rents decreased 4.9% from prior levels and office vacancies increased as leases expired in buildings in the San Francisco area and Silicon Valley, the company said. Adjusted funds from operations were 35 cents a share, missing the 41-cent estimate compiled by Bloomberg and down from 50 cents a year earlier.
Hudson Pacific has grown in recent years, snapping up buildings where studios shoot movies and TV shows from Los Angeles to the UK. Last year the company paid $360 million for Quixote Studios, which rents trucks, lighting and other equipment for entertainment production.
The company said it had already begun to see a slowdown in the studio business, particularly in March. In previous writers strikes, studios rushed to get shows completed before the work stopped. This time entertainment companies were reducing their spending on programming following years of losses on their streaming services.
“Independently operated studios and related services such as the company’s experienced a significant slowdown in production activity as new scripted content was preemptively halted,” Hudson Pacific said.
The shares fell almost 1% to $5.17 on Monday before the results were released, and were down 47% this year. Management will discuss the results on a call with investors at noon Tuesday New York time.