Hudson Pacific Properties, Inc.
For the period ended Dec 31, 2025. Filed Feb 27, 2026.
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FY2025 · Filed Feb 27, 2026
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Item 8. Report of Independent Registered Public Accounting Firm
To the Partners and the Board of Directors of Hudson Pacific Properties, L.P.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Hudson Pacific Properties, L.P. (the Operating Partnership) as of December 31, 2025 and 2024, the related consolidated statements of operations, comprehensive loss, capital and cash flows for each of the three years in the period ended December 31, 2025, and the related notes and financial statement schedule listed in the Index at Item 15(a) (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Operating Partnership at December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025, in conformity with U.S. generally accepted accounting principles.
These financial statements are the responsibility of the Operating Partnership’s management. Our responsibility is to express an opinion on the Operating Partnership’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Operating Partnership in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Operating Partnership is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Operating Partnership’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
| Impairment of investment in real estate | |
| Description of the Matter | The Operating Partnership’s investment in real estate, net totaled $5.8 billion as of December 31, 2025. As discussed in Notes 2 and 4 to the consolidated financial statements, the Operating Partnership assesses for impairment on a real estate asset by real estate asset basis whenever events or changes in circumstances indicate that the carrying value of a real estate asset may not be recoverable. Impairment is recognized on real estate assets held for investment when indicators of impairment are present and the future undiscounted cash flows for a real estate asset are less than its carrying amount, at which time the real estate asset is written down to its estimated fair value. The Operating Partnership recognized impairment charges for investment in real estate of $18 million during the year ended December 31, 2025. For real estate assets identified as having an indicator of impairment, auditing the Operating Partnership’s test for recoverability and measurement of impairment was challenging because of the subjective auditor judgment necessary in evaluating the reasonableness of management’s selected assumptions used in estimating future cash flows and the fair value of the real estate asset. Significant assumptions used in the recoverability test and measurement of impairment include capitalization rate, future rental rate and discount rate. |
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| How We Addressed the Matter in Our Audit | We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Operating Partnership’s real estate asset impairment assessment process. For example, we tested controls over management’s process for review of the estimated future cash flows, selection of significant assumptions, and estimation of the fair value of the real estate assets.Our testing of the Operating Partnership’s impairment assessment included involving our valuation specialists in evaluating the reasonableness of management’s selected values for significant assumptions in the Operating Partnership’s test for recoverability and measurement of impairment, if applicable, by utilizing independently identified external market sources. We also searched for contrary or corroborating evidence within other sources of the Operating Partnership’s data as it relates to the underlying assumptions. |
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| Goodwill and intangible assets related to the Quixote reporting unit | |
| Description of the Matter | As discussed in Notes 2 and 3 to the consolidated financial statements, the Operating Partnership had goodwill associated with its Quixote reporting unit. The Operating Partnership tests goodwill for impairment annually or between annual tests if an event occurs or circumstances change that would indicate that the carrying amount may be impaired. Additionally, as discussed in Notes 2 and 7, the Operating Partnership reviews intangible assets for impairment whenever events or changes in circumstances indicate that the carrying value of an asset group may not be recoverable. As of December 31, 2025, the Operating Partnership concluded that there was an indication that goodwill and intangible assets were impaired. As a result, an impairment test was performed, and the Operating Partnership recorded impairments of $148 million to goodwill and $81 million to intangible assets.Auditing the Operating Partnership’s impairment assessment for goodwill and intangible assets was challenging and required an increased extent of audit effort because of the nature of the different methods, models and underlying assumptions applicable for each of the assets assessed for impairment, which affect the measurement of the impairment loss. Auditing the Operating Partnership’s measurement of impairment involves subjective auditor judgment in evaluating the reasonableness of management’s selected assumptions, such as projected revenues which involve unobservable inputs. |
| How We Addressed the Matter in Our Audit | We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Operating Partnership’s impairment review process for goodwill and intangible assets, including controls over management’s assessment of the underlying assumptions used in the fair value measurement described above.Our audit procedures related to the Quixote reporting unit’s goodwill and intangible assets included the following, among other procedures. We assessed the reasonableness of management's forecasted cash flows by comparing the projections to historical results, external communications, and certain industry and market trends. With the assistance of our fair value specialists, we evaluated the reasonableness of the valuation assumptions including the projected revenues and developed a range of independent estimates and compared those to the valuation assumptions selected by management. We tested the source information underlying the determination of the valuation assumptions as well as the mathematical accuracy of the calculation. We also searched for contrary or corroborating evidence within industry data and within other sources of the Operating Partnership’s data as it relates to the underlying assumptions. |
/S/Ernst & Young LLP
We have served as the Operating Partnership’s auditor since 2015.
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