Tippapatt
Hudson Pacific Properties (NYSE:HPP) was upgraded to Neutral from Underperform at Mizuho Securities in a Q3 earnings preview note, citing a better risk-reward.
Vikram Malhotra, managing director at Mizuho, noted that "several negatives are balanced by potential improvement in San Francisco fundamentals, progress on the actors' strike during the next 3-6 months, and actions to shore up the balance sheet."
The negatives include tenant move-outs, an uncertain Studio business trajectory and financial covenant concerns.
Mizuho's FY23 FFO estimate for Hudson (HPP) was cut to $1.05 from $1.24 on lower near-term studio revenue, higher interest expenses and slightly lower office rental income. Consensus estimate is $1.05.
FY24 FFO estimate was $1.45, compared to $1.47 consensus. HPP's price target was cut to $7 from $10, implying 20.3% potential up/downside to its last close.
Mizuho also revised its PTs and FFO estimates for the following office REITs:
| Ticker | Rating | New PT | Old PT | Upside/ downside | New 2023E FFO | Old 2023E FFO | Rationale |
| BXP | Buy | $68 | $85 | +16.9% | $7.25 | $7.21 | Higher occupancy |
| CUZ | Underperform | $19 | $22 | -4.2% | $2.61 | $2.56 | Disposition timing |
| HIW | Neutral | $24 | $31 | +19% | $3.76 | $3.84 | Move out impact |
| KRC | Buy | $40 | $48 | +28.6% | $4.54 | $4.56 | Lower occupancy |
| PGRE | Buy | $6 | $7 | +25% | $0.86 | $0.90 | Move out impact |
| SLG | Neutral | $38 | $38 | +4.8% | $5.51 | $5.37 | Disposition timing/lower debt |
| VNO | Neutral | $23 | $23 | +2.7% | $2.68 | $2.72 | Slow lease- up recognition |