Office REIT – Hudson Pacific Properties, Inc. HPP – recently roped in Google, Inc. as a tenant at its Rincon Center II office tower in San Francisco. Google has signed a 10-year lease for 166,460 square feet of space at the property. Slated to commence in Mar 2018, this lease deal will help the company to backfill two of its substantial 2017 expirations.
Notably, Rincon Center is a landmark mixed-use property situated on the Spear Street in San Francisco’s Financial District. It comprises two-, five- and six-story Class-A office towers with marquee, ground-floor retail space. The property enjoys solid access to public transportation.
Further, the above-mentioned lease deal reflects Hudson Pacific’s efficiency in tackling lease expirations and capturing mark-to-market on rents. Per the company’s press release, it is already the largest publicly-traded, institutional owner of office property in Silicon Valley, with 7.3 million square feet in the market. Its office portfolio in downtown San Francisco comprises six properties and 2.2 million square feet of space.
Moreover, Hudson Pacific recently declared launching of a capital plan for repositioning its 471,580-square-foot Campus Center asset in Milpitas, CA. The construction activity is scheduled to start in Jan 2018, right after the lease expiration of Campus Center’s present tenant, Cisco Systems.
Amid a high demand for premium quality office space in the region, such asset level improvements come as a strategic fit for the company. These initiatives offer scope to create value amid lease expirations as well as strike further lease deals with large tenants. However, currently, there is a solid competition in the office real estate market. In addition, rate hike adds to the company’s woes.
Hudson Pacific currently has a Zacks Rank #3 (Hold). Shares of Hudson Pacific have outperformed the Zacks categorized REIT and Equity Trust – Other industry in the past six months. Shares of the company gained 3.9%, while the industry incurred a loss of 4.7%.
Stocks to Consider
Better-ranked stocks in the REIT space include CoreSite Realty Corporation COR, Piedmont Office Realty Trust, Inc. PDM and CoreCivic, Inc. CXW. All three stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
CoreSite Realty currently has a long-term growth rate of 19.15%.
Piedmont Office Realty’s estimates for 2017 moved north by nearly 1.2% to $1.73, over the past 60 days.
CoreCivic has a long-term growth rate of 6.0%.
Note: All EPS numbers presented in this write up represent funds from operations (“FFO”) per share. FFO, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income.
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CoreSite Realty Corporation (COR): Free Stock Analysis Report
Piedmont Office Realty Trust, Inc. (PDM): Free Stock Analysis Report
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Corrections Corp. of America (CXW): Free Stock Analysis Report
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