The following discussion relates to our consolidated financial statements and
should be read in conjunction with the consolidated financial statements and the
related notes, see Part IV, Item 15(a) "Exhibits, Financial Statement
Schedules." Statements in this Item 7 contain forward-looking statements. Such
statements are subject to risks, uncertainties and assumptions and may be
affected by known and unknown risks, trends, uncertainties and factors that are
beyond our control. Should one or more of these risks or uncertainties
materialize, or should underlying assumptions prove incorrect, actual results
may vary materially from those anticipated, estimated or projected. In
particular, information concerning projected future occupancy rates, rental rate
increases, property development timing and investment amounts contain
forward-looking statements. Furthermore, all of the statements regarding future
financial performance (including anticipated funds from operations ("FFO")
market conditions and demographics) are forward-looking statements. Numerous
factors will affect our actual results, some of which are beyond our control.
These include the impact of the COVID-19 pandemic, and its impact on our
tenants, the strength of commercial and industrial real estate markets, market
conditions affecting tenants, competitive market conditions, interest rate
levels, volatility in our stock price and capital market conditions.
Accordingly, investors should use caution and not place undue reliance on this
information, which speaks only as of the date of this report. We expressly
disclaim any responsibility to update any forward-looking information, whether
as a result of new information, future events, or otherwise, except to the
extent we are required to do so in connection with our ongoing requirements
under federal securities laws to disclose material information.

For a discussion of important risks related to our business, and related to
investing in our securities, including risks that could cause actual results and
events to differ materially from results and events referred to in the
forward-looking statements see Part I, Item 1A "Risk Factors." In light of these
risks, uncertainties and assumptions, the forward-looking events discussed in
this report might not occur.

Executive Summary

Through our interest in Hudson Pacific Properties, L.P. (our operating
partnership) and its subsidiaries, at December 31, 2021, our office portfolio
consisted of approximately 15.8 million square feet of in-service,
repositioning, redevelopment and development properties. Additionally, as of
December 31, 2021, our studio portfolio consisted of 1.5 million square feet of
in-service, repositioning and development properties and our land portfolio
consisted of approximately 3.0 million developable square feet.

As of December 31, 2021, our in-service office portfolio was 92.8% leased (including leases not yet commenced). Our same-store studio properties average percent leased for the twelve months ended December 31, 2021 was 85.7%.

Impact of COVID-19



During 2021, the spread of COVID-19 had a significant impact on the global
economy, the U.S. economy, the economies of the local markets throughout the
west coast in which our properties are located and the broader financial
markets. As of December 31, 2021, the COVID-19 pandemic is ongoing. We continue
to closely monitor its impact on all aspects of our business and geographies,
including how it will impact our tenants and business partners. We did not incur
significant disruptions during the year ended December 31, 2021 from the
COVID-19 pandemic. In 2021, the economy has, with certain setbacks, begun
reopening and wider distribution of vaccines will likely encourage greater
economic activity. With the increased availability of vaccines, we have begun to
see increases in physical occupancy at our properties. We cannot predict,
however, how the COVID-19 pandemic may impact our operations in the future,
including the continued return to office by our tenants, occupancy rates and the
demand for office space in the future. Recovery could remain uneven,
particularly given uncertainty with respect to the distribution and acceptance
of the vaccines and their effectiveness with respect to new variants of the
virus. This uncertainty precludes any predictions as to the actual impact of the
COVID-19 pandemic on our business, operations, cash flows and financial
condition for the future periods.

During the pandemic, the commercial real estate market came under pressure due
to numerous factors, including preventative measures taken by local, state and
federal authorities to alleviate the public health crisis such as mandatory
business closures, quarantines, restrictions on travel and "shelter-in-place" or
"stay-at-home" orders. As a result, the COVID-19 pandemic has negatively
impacted almost every industry directly or indirectly, including industries in
which we and our tenants operate. Although these restrictions have now largely
been lifted in the west coast markets in which we operate, recovery continues to
be gradual, uneven and characterized by meaningful dispersion across sectors and
regions, and could be hindered by persistent or resurgent infection rates.
Overall, among other unanticipated consequences, there remains significant
uncertainty regarding the timing and duration of the economic recovery, the
disruptions to, and volatility in, the credit and financial markets and in
consumer spending.

                                       46
--------------------------------------------------------------------------------

Given the uncertainty of the COVID-19 pandemic's near- and potential long-term
impact on our business, and in order to preserve our liquidity position, our
Board of Directors will continue to evaluate our dividend policy. We intend to
continue to operate our business in a manner that will allow us to qualify as a
REIT for U.S. federal income tax purposes. We derive revenues primarily from
rents and reimbursement payments received from tenants under leases at our
properties. Our operating results therefore depend materially on the ability of
our tenants to make required rental payments. The extent to which the COVID-19
pandemic continues to impact the businesses of our tenants, and our operations
and financial condition, will depend on future developments that remain
uncertain and cannot be predicted with confidence, including the scope, severity
and duration of the pandemic, the actions taken to contain the pandemic or
mitigate its impact and the direct and indirect economic effects of the pandemic
and such containment measures, among others. The factors described above, as
well as additional factors that we may not currently be aware of, could
materially negatively impact our ability to collect rent and could lead to
termination of leases by tenants, tenant bankruptcies, decreases in demand for
office space at our properties, difficulties in accessing capital, impairment of
our long-lived assets and other impacts that could materially and adversely
affect our business, results of operations, financial condition and ability to
pay distributions to stockholders. See Part I, Item 1A "Risk Factors."

For the foregoing reasons, the comparability of our results of operations for
the year ended December 31, 2021 to future periods may be significantly impacted
by the effects of the COVID-19 pandemic. The situation surrounding the COVID-19
pandemic remains fluid, and we are actively managing our response in
collaboration with tenants, government officials and business partners and
assessing potential impacts to our financial position and operating results, as
well as potential adverse developments in our business. For further information
regarding the impact of COVID-19 on us, see Part I, Item 1A, "Risk Factors."

Current Year Highlights

Business Acquisitions

On August 16, 2021, the Company acquired 100% of the equity interests in Zio. On
August 31, 2021, the Company acquired 100% of the equity interests in Star
Waggons. The acquired businesses provide transportation and logistics services
to studio productions and their acquisition will expand the Company's service
offerings for its studio platform. Please refer to Part IV, Item 15 (a)
"Exhibits, Financial Statement Schedules-Note 3 to the Consolidated Financial
Statements-Business Combinations" for details.

Property Acquisitions



On July 29, 2021, the Company purchased, through a joint venture entity with
Kane Holdco S.A.R.L., an affiliate of Blackstone Property Partners, the land
site for the Sunset Waltham Cross Studios development. The Company owns 35% of
the ownership interest in the joint venture entity. The Company also owns 35% of
the ownership interest in the joint venture entities formed to serve as the
general partner and management services company for the property-owning joint
venture entity. The joint ventures are not consolidated. Please refer to Part
IV, Item 15 (a) "Exhibits, Financial Statement Schedules-Note 6 to the
Consolidated Financial Statements-Investment in Unconsolidated Real Estate
Entities" for details.

On December 23, 2021, the Company acquired the 197,136 square-foot 5th & Bell
office property located in Seattle, Washington. The property is a Class A office
building, with the office component of approximately 192,000 square feet fully
leased to Amazon. The building is strategically located two blocks from Amazon's
global headquarters. Please refer to Part IV, Item 15 (a) "Exhibits, Financial
Statement Schedules-Note 4 to the Consolidated Financial Statements-Investment
in Real Estate" for details.

Property Dispositions

The Company had no dispositions during the year ended December 31, 2021.

Held for Sale



As of December 31, 2021, the Company had four properties classified as held for
sale-6922 Hollywood, Skyway Landing, Del Amo and Northview Center-as these
properties were considered non-strategic to the Company's portfolio. During the
year ended December 31, 2021, the Company recognized an impairment loss of $2.8
million related to its Del Amo office property due to a reduction in
management's intended hold period from a long-term hold period to a short-term
hold period, which resulted in an estimated fair value of the property that was
less than its carrying value. Please refer to Part IV, Item 15 (a)
                                       47
--------------------------------------------------------------------------------

"Exhibits, Financial Statement Schedules-Note 4 to the Consolidated Financial Statements-Investment in Real Estate" for details.

Under Construction and Future Development Projects



The following table summarizes the properties currently under construction and
future developments as of December 31, 2021:
Location                                               Submarket                Estimated Square Feet(1)          Estimated Completion Date           Estimated Stabilization Date
Under Construction:
Sunset Glenoaks Studios(2)                            Los Angeles                       241,000                            Q3-2023                              Q2-2024
Total Under Construction                                                                241,000

Future Development Pipeline:
Washington 1000                                      Denny Triangle                     538,164                              TBD                                  TBD
Burrard Exchange(3)                                Downtown Vancouver                   450,000                              TBD                                  TBD
Element LA-Development                              West Los Angeles                    500,000                              TBD                                  TBD
Sunset Bronson Studios Lot                             Hollywood                         19,816                              TBD                                  TBD
D-Development(4)
Sunset Gower Studios-Development(4)                    Hollywood                        478,845                              TBD                        

TBD


Sunset Las Palmas Studios-Development(4)               Hollywood                        617,581                              TBD                                  TBD
Sunset Waltham Cross                                   Broxbourne                                     TBD                    TBD                                  TBD
Studios-Development(5)
Cloud10                                              North San Jose                     350,000                              TBD                                  TBD
Total Future Development Pipeline                                           

2,954,406


TOTAL UNDER CONSTRUCTION AND FUTURE                                                   3,195,406
DEVELOPMENT PIPELINE


_____________
1.Determined by management based upon estimated leasable square feet, which may
be less or more than the BOMA rentable area. Square footage may change over time
due to re-measurement or re-leasing.
2.We own 50% of the ownership interest in the unconsolidated joint venture that
owns Sunset Glenoaks Studios.
3.We own 20% of the ownership interest in the unconsolidated joint venture that
owns Burrard Exchange.
4.We own 51% of the ownership interest in the consolidated joint venture that
owns Sunset Bronson Studios, Sunset Gower Studios and Sunset Las Palmas Studios.
5.We own 35% of the ownership interest in the unconsolidated joint venture that
owns Sunset Waltham Cross Studios-Development.

Financings



During the year ended December 31, 2021, the outstanding borrowings on our
unsecured revolving credit facility increased by $125.0 million, net of draws.
We use the unsecured revolving credit facility to finance the acquisition of
properties, to provide funds for tenant improvements and capital expenditures
and to provide for working capital and other corporate purposes. See Part IV,
Item 15(a) "Exhibits, Financial Statement Schedules-Note 9 to the Consolidated
Financial Statements-Debt" for details on our debt.

During the year ended December 31, 2021, the Company paid off the mortgage loan
secured by its 10950 Washington property that was originally due on March 11,
2022.

In December 2021, the Company entered into the fourth amended and restated
credit agreement (the "Amended and Restated Credit Agreement") with various
financial institutions, which increased the unsecured revolving credit facility
capacity to $1.0 billion and extended its maturity date to December 21, 2025
with two six-month extension options.

In December 2021, the unconsolidated joint venture that owns the Sunset Glenoaks
Studios secured a construction loan to finance the said development. The loan
has a borrowing capacity of $94.0 million, bears an interest rate of LIBOR +
3.00% and matures on January 9, 2025.

In November 2021, the consolidated joint venture that owns the 1918 Eighth property amended its $314.3 million loan secured by the property. The refinancing resulted in a reduction of the interest rate from LIBOR + 1.70% to LIBOR + 1.30%.


                                       48
--------------------------------------------------------------------------------

In November 2021, the Company completed an underwritten public offering of
17,000,000 shares (including the over-allotment) of 4.750% Series C Preferred
Stock with a par value of $0.01. Net proceeds from the offering were
approximately $414.0 million, after deducting underwriting discounts and
commissions (before our transaction expenses). The Company will use the proceeds
to repay amounts outstanding from time to time under its credit facility and/or
other indebtedness, fund development or redevelopment activities, fund potential
acquisition opportunities, provide funds for tenant improvements and capital
expenditures, and provide for working capital and/or for other general corporate
purposes.

In August 2021, the joint venture that owns our Hollywood Media Portfolio
refinanced its previous $900.0 million loan secured by the Hollywood Media
Portfolio, which bore interest at a rate of LIBOR + 2.15%, with a $1.1 billion
mortgage loan secured by the Hollywood Media Portfolio with an initial interest
rate of LIBOR + 1.17%. The refinanced loan has an initial term of two years from
the first payment date with three one-year extension options, subject to certain
requirements. The Company used the proceeds to purchase bonds comprising the
loan in the amount of $209.8 million.

Factors That May Influence Our Operating Results

Business and Strategy



We invest in Class-A office and studio properties located in high
barrier-to-entry, innovation-centric submarkets with significant growth
potential. Our positioning within these submarkets allows us to attract and
retain quality growth companies as tenants, many of which are in the technology
and studio sectors. The purchase of properties with a value-add component,
typically through off-market transactions, also facilitates our growth. These
types of assets afford us the opportunity to capture embedded rent growth and
occupancy upside, and to strategically invest capital to reposition and
redevelop assets to generate additional cash flow. We take a more measured
approach to ground-up development, with most under-construction, planned or
potential projects located on ancillary sites part of existing operating assets.
Management expertise across disciplines supports execution at all levels of our
operations. In particular, aggressive leasing and proactive asset management,
combined with a focus on conservatively managing our balance sheet, are central
to our strategy.

Rental Revenue

The amount of net rental revenue generated by the properties in our portfolio
depends principally on our ability to maintain the occupancy rates of currently
leased space and to lease currently available space and space that becomes
available from lease terminations. As of December 31, 2021, the percent leased
for our in-service office properties was approximately 92.8% (or 91.8%,
excluding leases signed but not commenced as of that date). As of December 31,
2021, the percent leased, based on a 12-month trailing average, was
approximately 85.7% for same-store studio properties. The amount of rental
revenue generated by us also depends on our ability to maintain or increase
rental rates at our properties. We believe that the average rental rates for our
office properties are generally below the current average quoted market rate. We
believe the average rental rates for our studio properties are generally equal
to current average quoted market rates. Negative trends in one or more of these
factors could adversely affect our rental revenue in future periods. Future
economic downturns or regional downturns affecting our submarkets or downturns
in our tenants' industries that impair our ability to renew or re-let space and
the ability of our tenants to fulfill their lease commitments, as in the case of
tenant bankruptcies, could adversely affect our ability to maintain or increase
rental rates at our properties. In addition, growth in rental revenue will also
partially depend on our ability to acquire additional properties that meet our
investment criteria.

Conditions in Our Markets

The properties in our portfolio are all located in Northern and Southern
California, the Pacific Northwest, Western Canada and Greater London, United
Kingdom. Positive or negative changes in economic or other conditions in
Northern and Southern California, the Pacific Northwest, Western Canada or the
United Kingdom, including state budgetary shortfalls, employment rates, natural
hazards and other factors, may impact our overall performance.

Operating Expenses



Our operating expenses generally consist of utilities, cleaning, engineering,
administrative, property, ad valorem taxes and site maintenance costs. Increases
in these expenses over tenants' base years are generally passed on to tenants in
our full-service gross leased properties and are generally paid in full by
tenants in our net lease properties. Certain of our properties have been
reassessed for property tax purposes as a result of subsequent acquisition,
development, redevelopment and other reassessments that remain pending. In the
case of completed reassessments, the amount of property taxes we pay reflects
the valuations established with the county assessors for the relevant locations
of each property as of IPO or their subsequent
                                       49
--------------------------------------------------------------------------------

acquisition. With respect to pending reassessments, we similarly expect the amount of property taxes we pay to reflect the valuations established with such county assessors.



Taxable REIT Subsidiaries

Hudson Pacific Services, Inc., or our services company, is a Maryland
corporation that is wholly-owned by our operating partnership. We have elected,
together with our services company and certain of our subsidiaries, to treat our
services company and such other subsidiaries as taxable REIT subsidiaries for
federal income tax purposes, and we may form additional taxable REIT
subsidiaries in the future. Our taxable REIT subsidiaries generally may provide
both customary and non-customary services to our tenants and engage in other
activities that we may not engage in directly without adversely affecting our
qualification as a REIT. Our services company and its subsidiaries provide a
number of services to certain tenants at our studio properties and, from time to
time, one or more taxable REIT subsidiaries may provide services to our tenants
at these and other properties. In addition, our operating partnership has
contributed some or all of its interests in certain subsidiaries or their assets
to our services company. We currently lease space to subsidiaries of our
services company at our studio properties and may, from time to time, enter into
additional leases with one or more taxable REIT subsidiaries. Any income earned
by our taxable REIT subsidiaries will not be included in our taxable income for
purposes of the 75% or 95% gross income tests, except to the extent such income
is distributed to us as a dividend, in which case such dividend income will
qualify under the 95%, but not the 75%, gross income test. Because a taxable
REIT subsidiary is subject to federal income tax, and state and local income tax
(where applicable), as a regular C corporation, the income earned by our taxable
REIT subsidiaries generally will be subject to an additional level of tax as
compared to the income earned by our other subsidiaries.

Critical Accounting Policies and Estimates



The preparation of financial statements in conformity with GAAP requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of commitments and contingencies as of the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. On an ongoing basis, we evaluate our
estimates, including those related to acquiring, developing and assessing the
carrying values of our real estate properties, the fair value measurement of
contingent consideration, assets acquired and liabilities assumed in business
combination transactions, determining the incremental borrowing rate used in the
present value calculations of our new or modified operating lessee agreements,
our accrued liabilities, and our performance-based equity compensation awards.
We base our estimates on historical experience, current market conditions, and
various other assumptions that are believed to be reasonable under the
circumstances. Actual results could materially differ from these estimates. The
following critical accounting policies discussion reflects what we believe are
the most significant estimates, assumptions and judgments used in the
preparation of our consolidated financial statements. See Part IV, Item 15(a)
"Exhibits, Financial Statement Schedules-Note 2 to the Consolidated Financial
Statements-Summary of Significant Accounting Policies" for details on our
significant accounting policies.

Investment in Real Estate Properties

Acquisitions

Our acquisitions are accounted for using the acquisition method. The results of operations for each of these acquisitions are included in our Consolidated Statements of Operations from the date of acquisition.



We evaluate each acquisition of real estate to determine if the integrated set
of assets and activities acquired meet the definition of a business and need to
be accounted for as a business combination in accordance with ASC 805, Business
Combinations. An integrated set of assets and activities would fail to qualify
as a business if either (i) substantially all of the fair value of the gross
assets acquired is concentrated in either a single identifiable asset or a group
of similar identifiable assets or (ii) the integrated set of assets and
activities is lacking, at a minimum, an input and a substantive process that
together significantly contribute to the ability to create outputs (i.e.,
revenue generated before and after the transaction). An acquired process is
considered substantive if (i) the process includes an organized workforce (or
includes an acquired contract that provides access to an organized workforce),
that is skilled, knowledgeable, and experienced in performing the process, (ii)
the process cannot be replaced without significant cost, effort, or delay or
(iii) the process is considered unique or scarce.

Acquisitions of real estate will generally not meet the definition of a business
because substantially all of the fair value is concentrated in a single
identifiable asset or group of similar identifiable assets (i.e., land,
buildings and improvements and related intangible assets or liabilities) or
because the acquisition does not include a substantive process in the form of an
acquired workforce or an acquired contract that cannot be replaced without
significant cost, effort or delay.

                                       50
--------------------------------------------------------------------------------

Acquisitions that do not meet the definition of a business



When we acquire properties that are considered asset acquisitions, the purchase
price, which includes transaction-related expenses, is allocated based on
relative fair value of the assets acquired and liabilities assumed. Assets
acquired and liabilities assumed include, but are not limited to, land, building
and improvements, intangible assets related to above-and below-market leases,
intangible assets related to in-place leases, debt and other assumed assets and
liabilities. The purchase price accounting is finalized in the period of
acquisition.

The fair value of tangible assets of an acquired property considers the value of
the property as if it was vacant. The fair value of acquired "above- and below-"
market leases are based on the estimated cash flow projections utilizing
discount rates that reflect the risks associated with the leases acquired. The
amount recorded is based on the present value of the difference between (i) the
contractual amounts to be paid pursuant to each in-place lease and (ii)
management's estimate of fair market lease rates for each in-place lease,
measured over a period equal to the remaining term of the lease for above-market
leases and the initial term plus the extended below-market term for any leases
with below-market renewal options. Other intangible assets acquired include
amounts for in-place lease values that are based on our evaluation of the
specific characteristics of each tenant's lease. Factors considered include
estimates of carrying costs during hypothetical expected lease-up periods,
market conditions and costs to execute similar leases. In estimating carrying
costs, we include estimates of lost rents at market rates during the
hypothetical expected lease-up periods, which are dependent on local market
conditions. In estimating costs to execute similar leases, we consider leasing
commissions, legal and other related costs. The fair value debt assumed is based
on the estimated cash flow projections utilizing interest rates available for
the issuance of debt with similar terms and remaining maturities.

The Company applies a cost accumulation and allocation model to acquisitions
that meet the definition of an asset acquisition. Under this model, the purchase
price is allocated based on the relative fair value of the assets acquired and
liabilities assumed. Additionally, acquisition-related expenses associated with
an asset acquisition are capitalized as part of the purchase price.

Acquisitions that meet the definition of a business



For acquisitions that meet the definition of a business, the Company estimates
the fair value of the identifiable assets and liabilities of the acquired entity
on the acquisition date. We measure goodwill as the excess of consideration
transferred over the net of the acquisition date fair values of the identifiable
assets acquired and liabilities assumed. Acquisition-related expenses arising
from the transaction are expensed as incurred. The Company includes the results
of operations of the businesses that it acquires beginning on the acquisition
date.

The Company tests its goodwill and indefinite-lived intangible assets for
impairment at least annually, or more frequently if events or changes in
circumstances indicate that the asset may be impaired. The Company first
performs a qualitative assessment and will proceed to a quantitative impairment
test only if qualitative factors indicate that it is more likely than not that
the fair value of the reporting unit or intangible asset is less than its
carrying amount.

Intangible assets with finite lives are amortized over their estimated useful
lives using the straight-line method, which reflects the pattern in which the
assets are consumed. The estimated useful lives for acquired intangible assets
range from five to seven years. The Company assesses its intangible assets with
finite lives for impairment when indicators of impairment are identified.

Cost Capitalization



We capitalize costs associated with development and redevelopment activities,
capital improvements, tenant improvements and leasing activity. Costs associated
with development and redevelopment that are capitalized include interest,
property taxes, insurance and other costs directly related and essential to the
acquisition, development or construction of a real estate project. Indirect
development costs, including salaries and benefits, office rent, and associated
costs for those individuals directly responsible for and who spend their time on
development activities are also capitalized and allocated to the projects to
which they relate. Construction and development costs are capitalized while
substantial activities are ongoing to prepare an asset for its intended use. We
consider a construction project as substantially complete and held available for
occupancy upon the completion of tenant improvements but no later than one year
after cessation of major construction activity. Costs incurred after a project
is substantially complete and ready for its intended use, or after development
activities have ceased, are expensed as they are incurred. Costs previously
capitalized related to abandoned acquisitions or developments are charged to
earnings. Expenditures for repairs and maintenance are expensed as they are
incurred.

                                       51
--------------------------------------------------------------------------------

Operating Properties



The properties are generally carried at cost less accumulated depreciation and
amortization. We compute depreciation and amortization using the straight-line
method over the estimated useful lives of the assets as represented in the table
below:
Asset Description                                                        Estimated Useful Life (Years)
Building and improvements                                           Shorter of the ground lease term or 39
Land improvements                                                                     15
Furniture and fixtures                                                              5 to 7
Tenant improvements                                                 Shorter

of the estimated useful life or


                                                                                the lease term


We amortize above- and below-market lease intangibles over the remaining non-cancellable lease terms and bargain renewal periods, if applicable. The in-place lease intangibles are amortized over the remaining non-cancellable lease term. When tenants vacate prior to the expiration of their lease, the amortization of intangible assets and liabilities is accelerated. We amortize above- and below-market ground lease intangibles over the remaining non-cancellable lease terms.

Impairment of Long-Lived Assets



In accordance with GAAP, we assess the carrying value of real estate assets and
related intangibles for impairment on a quarterly basis and whenever events or
changes in circumstances indicate that the carrying amount of an asset or asset
group may not be recoverable over the life of the asset or its intended holding
period. Impairment losses are recorded on real estate assets held for investment
when indicators of impairment are present and the future undiscounted cash flows
estimated to be generated by those assets are less than the assets' carrying
amount. We recognize impairment losses to the extent the carrying amount exceeds
the fair value of the properties.

Goodwill and Acquired Intangible Assets

Goodwill is an unidentifiable intangible asset and is recognized as a residual,
generally measured as the excess of consideration transferred in a business
combination over the identifiable assets acquired and liabilities assumed.
Goodwill is assigned to reporting units that are expected to benefit from the
synergies of the business combination.

We test our goodwill and indefinite-lived intangible assets for impairment at
least annually, or more frequently if events or changes in circumstances
indicate that the asset may be impaired. Goodwill is tested for impairment at
the reporting unit to which it is assigned, which can be an operating segment or
one level below an operating segment. We have three operating segments: the
management entity, Office, and Studio. The management entity and the Office
operating segments are each a reporting unit. Within the Studio operating
segment, there are two reporting units: Studio Properties and Studio Services,
the latter of which consists of the Zio and Star Waggons businesses acquired in
the year ended December 31, 2021. The assessment of goodwill for impairment may
initially be performed based on qualitative factors to determine if it is more
likely than not that the fair value of the reporting unit is less than its
carrying value, including goodwill. If so, a quantitative assessment is
performed, and to the extent the carrying value of the reporting unit exceeds
its fair value, impairment is recognized for the excess up to the amount of
goodwill assigned to the reporting unit. Alternatively, the Company may bypass a
qualitative assessment and proceed directly to a quantitative assessment.

A qualitative assessment considers various factors such as macroeconomic,
industry and market conditions to the extent they affect the earnings
performance of the reporting unit, changes in business strategy and/or
management of the reporting unit, changes in composition or mix of revenues
and/or cost structure of the reporting unit, financial performance and business
prospects of the reporting unit, among other factors.
In a quantitative assessment, significant judgment, assumptions and estimates
are applied in determining the fair value of reporting units. The Company
generally uses the income approach to estimate fair value by discounting the
projected net cash flows of the reporting unit, and may corroborate with
market-based data where available and appropriate. Projection of future cash
flows is based upon various factors, including, but not limited to, our
strategic plans in regard to our business and operations, internal forecasts,
terminal year residual revenue multiples, operating profit margins, pricing of
similar businesses and comparable transactions where applicable, and
risk-adjusted discount rates to present value future cash flows. Given the level
of sensitivity in the inputs, a change in the value of any one input, in
isolation or in combination, could significantly affect the overall estimation
of fair value of the reporting unit.

Intangible assets with finite lives are amortized over their estimated useful
lives using the straight-line method, which reflects the pattern in which the
assets are consumed. The estimated useful lives for acquired intangible assets
range from five to
                                       52
--------------------------------------------------------------------------------

seven years. The Company assesses its intangible assets with finite lives for impairment when indicators of impairment are identified.

Revenue Recognition



The recognition of revenues related to lease components is governed by ASC 842.
The revenue related to non-lease components is subject to ASC 606, Revenue from
Contracts with Customers ("ASC 606").

We capitalize direct incremental costs of signing a lease. Internal direct compensation costs and external legal fees related to the execution of successful lease agreements that do not meet the definition of initial direct costs under ASC 842 are accounted for as office operating expense or studio operating expense in our Consolidated Statements of Operations.



We elected the lessor's practical expedient to present revenues on the
Consolidated Statement of Operations as a single lease component that combines
rental, tenant recoveries, and other tenant-related revenues for the office
portfolio. For our rentals at the studio properties, total lease consideration
is allocated to lease and non-lease components on a relative standalone basis.

We recognize rental revenue from tenants on a straight-line basis over the lease
term when collectability is probable and the tenant has taken possession or
controls the physical use of the leased asset. If the lease provides for tenant
improvements, we determine whether the tenant improvements, for accounting
purposes, are owned by the tenant or us. When we are the owner of the tenant
improvements, the tenant is not considered to have taken physical possession or
have control of the physical use of the leased asset until the tenant
improvements are substantially completed. When the tenant is the owner of the
tenant improvements, any tenant improvement allowance that is funded is treated
as a lease incentive and amortized as a reduction of revenue over the lease
term. Tenant improvement ownership is determined based on various factors
including, but not limited to:

•whether the lease stipulates how and on what a tenant improvement allowance may be spent;

•whether the tenant or landlord retains legal title to the improvements at the end of the lease term;

•whether the tenant improvements are unique to the tenant or general-purpose in nature; and

•whether the tenant improvements are expected to have any residual value at the end of the lease.



Other property-related revenue is revenue that is derived from the tenants' use
of lighting, equipment rental, parking, power, HVAC and telecommunications
(telephone and internet). Other property-related revenue is recognized based on
a five-step model and revenue is recognized once all performance obligations are
satisfied.

Tenant recoveries related to reimbursement of real estate taxes, insurance,
repairs and maintenance, and other operating expenses are recognized as revenue
in the period during which the applicable expenses are incurred. The
reimbursements are recognized and presented gross, as we are generally the
primary obligor with respect to purchasing goods and services from third-party
suppliers, have discretion in selecting the supplier and bear the associated
credit risk.

We evaluate the sales of real estate based on transfer of control. If a real
estate sale contract includes ongoing involvement by the seller with the sold
property, we evaluate each promised good or service under the contract to
determine whether it represents a performance obligation, constitutes a
guarantee or prevents the transfer of control.

Stock-Based Compensation



Compensation cost of restricted stock, restricted stock units and performance
units under our equity incentive award plans are accounted for under ASC
718, Compensation-Stock Compensation ("ASC 718"). For time-based awards,
stock-based compensation is valued based on the quoted closing price of our
common stock on the applicable grant date and discounted for any hold
restrictions. For performance-based awards, stock-based compensation is valued
utilizing a Monte Carlo Simulation to estimate the probability of the
performance vesting conditions being satisfied.

The stock-based compensation is amortized through the final vesting period on a
straight-line basis and graded vesting basis for time-based awards and
performance-based awards, respectively. We account for forfeitures of awards as
they occur. Share-based payments granted to non-employees are accounted for in
the same manner as share-based payments granted to employees.

                                       53
--------------------------------------------------------------------------------

Our compensation committee will regularly consider the accounting implications
of significant compensation decisions, especially in connection with decisions
that relate to our equity incentive award plans and programs.

Income Taxes



Our property-owning subsidiaries are limited liability companies and are treated
as pass-through entities or disregarded entities (or, in the case of the
entities that own the 1455 Market, Hill7, Ferry Building and 1918 Eighth
properties, REITs) for federal income tax purposes. In the case of the Bentall
Centre property and the Sunset Waltham Cross Studios development, the Company
owns its interest in the properties through non-U.S entities treated as TRSs for
federal income tax purposes. Accordingly, no provision has been made for federal
income taxes in the accompanying consolidated financial statements for the
activities of these entities.

We have elected to be taxed as a REIT under the Internal Revenue Code of 1986,
as amended (the "Code"), commencing with our taxable year ended December 31,
2010. We believe that we have operated in a manner that has allowed us to
qualify as a REIT for federal income tax purposes commencing with such taxable
year, and we intend to continue operating in such manner. To qualify as a REIT,
we are required to distribute at least 90% of our REIT taxable income, excluding
net capital gains, to our stockholders and meet the various other requirements
imposed by the Code relating to such matters as operating results, asset
holdings, distribution levels and diversity of stock ownership.

Provided that we continue to qualify for taxation as a REIT, we are generally
not subject to corporate level income tax on the earnings distributed currently
to our stockholders. If we were to fail to qualify as a REIT in any taxable
year, and were unable to avail ourselves of certain savings provisions set forth
in the Code, all of our taxable income would be subject to federal corporate
income tax. Unless entitled to relief under specific statutory provisions, we
would be ineligible to elect to be treated as a REIT for the four taxable years
following the year for which we lose our qualification. It is not possible to
state whether in all circumstances we would be entitled to this statutory
relief.

We own and may acquire direct or indirect interests in one or more Subsidiary
REITs. A Subsidiary REIT is subject to the various REIT qualification
requirements and other limitations described herein that are applicable to us.
If a Subsidiary REIT were to fail to qualify as a REIT, then (i) that Subsidiary
REIT would become subject to federal income tax, (ii) shares in such REIT would
cease to be qualifying assets for purposes of the asset tests applicable to
REITs and (iii) it is possible that we would fail certain of the asset tests
applicable to REITs, in which event we would fail to qualify as a REIT unless we
could avail ourselves of certain relief provisions.

We believe that our operating partnership is properly treated as a partnership
for federal income tax purposes. As a partnership, our operating partnership is
not subject to federal income tax on its income. Instead, each of its partners,
including us, is allocated, and may be required to pay tax with respect to, its
share of our operating partnership's income. As such, no provision for federal
income taxes has been included for the operating partnership.

We have elected, together with certain of our subsidiaries, to treat such
subsidiaries as taxable REIT subsidiaries ("TRSs") for federal income tax
purposes. Certain activities that we may undertake, such as non-customary
services for our tenants and holding assets that we cannot hold directly, will
be conducted by a TRS. A TRS is subject to federal and, where applicable, state
and local income taxes on its net income.

We are subject to the statutory requirements of the states in which we conduct business.

We periodically evaluate our tax positions to determine whether it is more likely than not that such positions would be sustained upon examination by a tax authority for all open tax years, as defined by the statute of limitations, based on their technical merits. As of December 31, 2021, we have not established a liability for uncertain tax positions.



We and certain of our TRSs file income tax returns with the U.S. federal
government and various state and local jurisdictions. We and our TRSs are no
longer subject to tax examinations by tax authorities for years prior to 2017.
Generally, we have assessed our tax positions for all open years, which as of
December 31, 2021 include 2018 to 2020 for Federal purposes and 2017 to 2020 for
state purposes, and concluded that there are no material uncertainties to be
recognized.
                                       54
--------------------------------------------------------------------------------

Results of Operations



As of December 31, 2021, our portfolio consists of 66 properties (42
wholly-owned properties, 16 properties owned by joint ventures and eight land
properties) located in eleven California, three Seattle, one Western Canada and
one Greater London, United Kingdom submarkets, totaling approximately
20.2 million square feet.

The following table summarizes our consolidated and unconsolidated portfolio as
of December 31, 2021:
                                                                                                                                                        Annualized Base Rent
                                       Number of Properties          Rentable Square Feet(1)         Percent Occupied(2)        Percent Leased(2)        per Square Foot(3)
OFFICE
Same-store(4)                                     41                                11,982,460                    92.1  %                 93.1  %       $           51.99
Stabilized non-same store(5)                       5                                 1,725,189                    97.6                    98.5                      46.69
Total stabilized                                  46                                13,707,649                    92.8                    93.8                      51.29
Lease-up(5)(6)                                     3                                 1,039,130                    78.4                    79.8                      60.67
Total in-service office                           49                                14,746,779                    91.8                    92.8                      51.85
STUDIO
Same-store(7)                                      3                       1,205,809                              85.7                    85.7                      42.89

Total                                              3                                 1,205,809
Repositioning(5)(8)                                1                                   295,675                       -                     1.8

Development(5)                                     1                         241,000                                 -                       -
Held-for-sale(9)                                   4                                   745,171                    61.9                    61.9                      47.21
Total repositioning, redevelopment,                6                        

1,281,846


development and held-for-sale
Total office and studio properties                58                                17,234,434
Land                                               8                                 2,954,406       (10)
TOTAL                                             66                                20,188,840


____________
1.Determined by management based upon estimated leasable square feet, which may
be less or more than the Building Owners and Managers Association
("BOMA") rentable area. Square footage may change over time due to
re-measurement or re-leasing. Represents 100% share of consolidated and
unconsolidated joint ventures.
2.Percent occupied for office properties is calculated as (i) square footage
under commenced leases as of December 31, 2021, divided by (ii) total square
feet, expressed as a percentage. Percent leased for office properties includes
uncommenced leases. Percent leased for studio properties is calculated as (i)
average square footage under commenced leases for the 12 months ended
December 31, 2021, divided by (ii) total square feet, expressed as a percentage.
3.Office portfolio calculated as (i) annualized base rent divided by (ii) square
footage under commenced leases as of December 31, 2021. Annualized base rent
does not reflect tenant reimbursements. Studio portfolio calculated as annual
base rent per leased square foot calculated as (i) annual base rent divided by
(ii) square footage under leased as of December 31, 2021.
4.Includes office properties owned and included in our stabilized portfolio as
of January 1, 2020 and still owned and included in the stabilized portfolio as
of December 31, 2021.
5.Included in our non-same-store property group.
6.Includes office properties that have not yet reached 92.0% occupancy since the
date they were acquired or placed under redevelopment or development as of
December 31, 2021.
7.Includes studio properties owned and included in our portfolio as of January
1, 2020 and still owned and included in our portfolio as of December 31, 2021.
8.Includes 79,056 square feet at Page Mill Center, 61,066 square feet at Metro
Plaza, 51,409 square feet at 10850 Pico, 36,905 square feet at Rincon Center,
35,905 square feet at 95 Jackson, 18,594 square feet at Sunset Las Palmas, and
12,740 square feet at Palo Alto Square as of fourth quarter 2021.
9.Includes Northview Center, Skyway Landing, 6922 Hollywood and Del Amo.
10.Includes 538,164 square feet related to the office development Washington
1000, adjacent to the Washington State Convention Center, to which we
purchased rights during first quarter 2019.


All amounts and percentages used in this discussion of our results of operations
are calculated using the numbers presented in the financial statements contained
in this report rather than the rounded numbers appearing in this discussion. The
dollar amounts included in the tables in this discussion of our results of
operations are presented in thousands.

                                       55
--------------------------------------------------------------------------------

Comparison of the year ended December 31, 2021 to the year ended December 31, 2020



Net Operating Income

We evaluate performance based upon property net operating income ("NOI"). NOI is
not a measure of operating results or cash flows from operating activities or
cash flows as measured by GAAP and should not be considered an alternative to
net income, as an indication of our performance, or as an alternative to cash
flows as a measure of liquidity, or our ability to make distributions. All
companies may not calculate NOI in the same manner. We consider NOI to be a
useful performance measure to investors and management because when compared
across periods, NOI reflects the revenues and expenses directly associated with
owning and operating our properties and the impact to operations from trends in
occupancy rates, rental rates and operating costs, providing a perspective not
immediately apparent from net income. We calculate NOI as net income (loss)
excluding corporate general and administrative expenses, depreciation and
amortization, impairments, gains/losses on sales of real estate, interest
expense, transaction-related expenses and other non-operating items. We define
NOI as operating revenues (including rental revenues, other property-related
revenue, tenant recoveries and other operating revenues), less property-level
operating expenses (which includes external management fees, if any, and
property-level general and administrative expenses). NOI on a cash basis is NOI
adjusted to exclude the effect of straight-line rent and other non-cash
adjustments required by GAAP. We believe that NOI on a cash basis is helpful to
investors as an additional measure of operating performance because it
eliminates straight-line rent and other non-cash adjustments to revenue and
expenses.

Management further analyzes NOI by evaluating the performance from the following property groups:



•Same-store properties, which include all of the properties owned and included
in our stabilized portfolio as of January 1, 2020 and still owned and included
in the stabilized portfolio as of December 31, 2021; and

•Non-same-store, which includes:
•Stabilized non-same store properties
•Lease-up properties
•Repositioning properties
•Development properties
•Redevelopment properties
•Held for sale properties
•Operating results from studio service-related businesses

                                       56
--------------------------------------------------------------------------------

The following table reconciles net income to NOI (in thousands, except
percentage change):
                                                                   Year Ended December 31,
                                                                   2021                   2020             Dollar Change         Percentage Change
NET INCOME                                                 $      29,012              $  16,430          $       12,582                     76.6  %
Adjustments:
Income from unconsolidated real estate entities                   (1,822)                  (736)                 (1,086)                   147.6
Fee income                                                        (3,221)                (2,815)                   (406)                    14.4
Interest expense                                                 121,939                113,823                   8,116                      7.1
Interest income                                                   (3,794)                (4,089)                    295                     (7.2)
Management services reimbursement                                 (1,132)                     -                  (1,132)                   100.0
income-unconsolidated joint ventures
Management services expense-unconsolidated joint                   1,132                      -                   1,132                    100.0

ventures


Transaction-related expenses                                       8,911                    440                   8,471                  1,925.2
Unrealized (gain) loss on non-real estate investment             (16,571)                 2,463                 (19,034)                  (772.8)
Loss on extinguishment of debt                                     6,259                  2,654                   3,605                    135.8

Impairment loss                                                    2,762                      -                   2,762                    100.0
Other expense (income)                                             2,553                   (548)                  3,101                   (565.9)
General and administrative                                        71,346                 77,882                  (6,536)                    (8.4)
Depreciation and amortization                                    343,614                299,682                  43,932                     14.7
NOI                                                        $     560,988              $ 505,186          $       55,802                     11.0  %

Same-store NOI                                             $     460,843              $ 454,156          $        6,687                      1.5  %
Non-same-store NOI                                               100,145                 51,030                  49,115                     96.2
NOI                                                        $     560,988              $ 505,186          $       55,802                     11.0  %


The following table summarizes certain statistics of our consolidated same-store office and studio properties:


                                                      Year Ended December 31,
                                                   2021                     2020
Same-store office
Number of properties                                   40                       40
Rentable square feet                               10,482,170              10,482,170
Ending % leased                                      92.6   %                 95.1  %
Ending % occupied                                    91.5   %                 94.2  %
Average % occupied for the period                    91.9   %                 94.7  %
Average annual rental rate per square foot    $     55.32               $    52.85

Same-store studio
Number of properties                                    3                        3
Rentable square feet                                1,205,809               1,205,809
Average % occupied over period(1)                    85.7   %               

90.0 %

_____________

1.Percent occupied for same-store studio is the average percent occupied for the 12 months ended December 31, 2021.


                                       57
--------------------------------------------------------------------------------

The following table gives further detail on our consolidated NOI (in thousands):
                                                                            Year Ended December 31,
                                                           2021                                                2020
                                        Same-store     Non-same-store      Total            Same-store     Non-same-store      Total
REVENUES
Office
Rental                                 $  643,695    $       139,041    $ 782,736          $  631,566    $        89,720    $ 721,286
Service and other revenues                  9,578              3,056       12,634              12,611              2,022       14,633
Total office revenues                     653,273            142,097      795,370             644,177             91,742      735,919

Studio
Rental                                     49,435                550       49,985              48,756                  -       48,756
Service and other revenues                 30,959             20,521       51,480              20,290                  -       20,290
Total studio revenues                      80,394             21,071      101,465              69,046                  -       69,046

Total revenues                            733,667            163,168      896,835             713,223             91,742      804,965

OPERATING EXPENSES
Office operating expenses                 227,709             52,625      280,334             221,487             40,712      262,199
Studio operating expenses                  45,115             10,398       55,513              37,580                  -       37,580
Total operating expenses                  272,824             63,023      335,847             259,067             40,712      299,779

Office NOI                                425,564             89,472      515,036             422,690             51,030      473,720
Studio NOI                                 35,279             10,673       45,952              31,466                  -       31,466
NOI                                    $  460,843    $       100,145    $ 560,988          $  454,156    $        51,030    $ 505,186



                                       58

--------------------------------------------------------------------------------

The following table gives further detail on our change in consolidated NOI (in thousands, except percentage change):


                                                      Year Ended December 

31, 2021 as compared to the Year Ended December 31, 2020


                                             Same-store                            Non-same-store                                 Total
                                  Dollar change Percentage change         Dollar change   Percentage change          Dollar change   Percentage change
REVENUES
Office
Rental                            $   12,129                1.9  %       $      49,321               55.0  %       $       61,450                8.5  %
Service and other revenues            (3,033)             (24.1)                 1,034               51.1                  (1,999)             (13.7)
Total office revenues                  9,096                1.4                 50,355               54.9                  59,451                8.1

Studio
Rental                                   679                1.4                    550                  -                   1,229                2.5
Service and other revenues            10,669               52.6                 20,521                  -                  31,190              153.7
Total studio revenues                 11,348               16.4                 21,071                  -                  32,419               47.0

Total revenues                        20,444                2.9                 71,426               77.9                  91,870               11.4

OPERATING EXPENSES
Office operating expenses              6,222                2.8                 11,913               29.3                  18,135                6.9
Studio operating expenses              7,535               20.1                 10,398                  -                  17,933               47.7
Total operating expenses              13,757                5.3                 22,311               54.8                  36,068               12.0

Office NOI                             2,874                0.7                 38,442               75.3                  41,316                8.7
Studio NOI                             3,813               12.1                 10,673                  -                  14,486               46.0
NOI                               $    6,687                1.5  %       $      49,115               96.2  %       $       55,802               11.0  %


NOI increased $55.8 million, or 11.0%, for the year ended December 31, 2021 as compared to the year ended December 31, 2020, primarily resulting from:



•a $49.1 million increase in non-same-store NOI driven by:
•an increase in office NOI of $38.4 million primarily due to:
•a $49.3 million increase in rental revenues primarily resulting from the
acquisition of our 1918 Eighth property in December 2020, beneficial occupancy
of our One Westside property (Google) in November 2021 and a lease commenced at
our Harlow property (Company 3); and
•a $1.0 million increase in service and other revenues primarily resulting from
a lease cancellation fee at our 10850 Pico property;
•partially offset by a $11.9 million increase in operating expenses primarily
resulting from the acquisition of our 1918 Eighth property.
•an increase in studio NOI of $10.7 million primarily due to the acquisition of
Zio and Star Waggons in August 2021.
•a $6.7 million increase in same-store NOI driven by:
•an increase in studio NOI of $3.8 million primarily due to:
•$10.7 million increase in service and other revenues primarily resulting from
an increase in lighting and grip services at our studio properties;
•partially offset by a $7.5 million increase in operating expenses primarily
resulting from higher lighting rental, utilities, cleaning and security expenses
driven by the increase in studio services activity and one time property tax
savings in 2020, partially offset by a favorable prior period property tax
assessment for our Sunset Las Palmas studio property in 2021.
•an increase in office NOI of $2.9 million primarily due to:
•$12.1 million increase in rental revenues primarily resulting from lease
renewals at Clocktower Square (Rivian Automotive) and 3400 Hillview (Google) and
lower reserves at various properties compared to
                                       59
--------------------------------------------------------------------------------

prior year, partially offset by lease terminations at Page Mill Hill (Perkens),
505 First (Nuance) and Techmart (Process Weaver);
•partially offset by a $6.2 million increase in operating expenses primarily
resulting from higher parking expenses at our EPIC property and a prior period
property tax assessment for our ICON and CUE properties; and
•a $3.0 million decrease in service and other revenues primarily resulting from
a decrease in parking revenue at our ICON property due to continued reduced
activity resulting from the COVID-19 pandemic and higher lease cancellation fees
at our 11601 Wilshire property during 2020.

Other Income (Expense)

Income from unconsolidated real estate entities



Income from our unconsolidated real estate entities increased by $1.1 million,
or 147.6%, to $1.8 million of income for the year ended December 31, 2021
compared to $0.7 million of income for the year ended December 31, 2020. The
increase was primarily driven by an increase in rental revenue at the
unconsolidated entities for the year ended December 31, 2021 due to higher
average occupancy at Bentall Centre during the year ended December 31, 2021 as
compared to the year ended December 31, 2020.

Fee income



Fee income increased by $0.4 million, or 14.4%, to $3.2 million for the year
ended December 31, 2021 compared to $2.8 million for the year ended December 31,
2020. The fee income primarily represents the management fee income earned from
the unconsolidated real estate entities.

Interest expense

Comparison of the year ended December 31, 2021 to the year ended December 31, 2020 is as follows (in thousands, except percentage change):


                                                                        Year Ended December 31,
                                               2021               2020             Dollar Change          Percentage Change
Gross interest expense                     $ 134,071          $ 126,447          $        7,624                        6.0  %
Capitalized interest                         (22,595)           (19,509)                 (3,086)                      15.8
Amortization of deferred financing            10,463              6,885                   3,578                       52.0
costs/loan discount
TOTAL                                      $ 121,939          $ 113,823          $        8,116                        7.1  %



Gross interest expense increased by $7.6 million, or 6.0%, to $134.1 million for
the year ended December 31, 2021 compared to $126.4 million for the year ended
December 31, 2020. The increase was primarily driven by the issuance of a
$900.0 million loan secured by the Hollywood Media Portfolio in July 2020, the
closing of a $314.3 million loan secured by our 1918 Eighth property in December
2020 and $135.3 million in draws on the construction loan secured by our One
Westside and 10850 Pico properties during the year, partially offset by the
paydown of Term Loan B, Term Loan D, the Met Park North loan, the Revolving
Sunset Bronson Studios/ICON/CUE facility and outstanding borrowings on our
unsecured revolving credit facility all in July 2020.

Capitalized interest increased $3.1 million, or 15.8%, to $22.6 million for the
year ended December 31, 2021 compared to $19.5 million for the year ended
December 31, 2020. The increase was primarily driven by interest capitalized on
our One Westside redevelopment project and our Page Mill Center, Metro Plaza and
95 Jackson repositioning projects, partially offset by the completion of our
Harlow development property.

Amortization of deferred financing costs and loan discounts/premiums increased
by $3.6 million, or 52.0% to $10.5 million for the year ended December 31, 2021
compared to $6.9 million for the year ended December 31, 2020. The increase was
primarily driven by the amortization of new issuance costs associated with the
original $900.0 million loan and refinanced $1.1 billion loan secured by the
Hollywood Media Portfolio and the $314.3 million loan secured by our 1918 Eighth
property.

                                       60
--------------------------------------------------------------------------------

Transaction-related expenses



Transaction-related expenses increased $8.5 million, or 1,925%, to $8.9 million
for the year ended December 31, 2021 compared to $0.4 million for the year ended
December 31, 2020. The increase is attributable to the acquisition of Zio and
Star Waggons in August 2021.

Unrealized (gain) loss on non-real estate investments



We recognized an unrealized gain on non-real estate investments of $16.6 million
for the year ended December 31, 2021 compared to an unrealized loss on non-real
estate investments of $2.5 million for the year ended December 31, 2020. The
activity in both periods is due to the observable changes in the fair value of
the investments.

Loss on extinguishment of debt



During the year ended December 31, 2021 we completed a refinancing of the loan
secured by the Hollywood Media Portfolio and recognized a loss on extinguishment
of debt of $6.3 million primarily representing the write-off of unamortized
deferred financing costs associated with the extinguished portion of the loan.
During the year ended December 31, 2020 we recognized a loss on extinguishment
of debt of $2.7 million representing the write-off of unamortized deferred
financing costs related to the early repayment of Term Loan B, Term Loan D and
the Revolving Sunset Bronson Studios/ICON/CUE facility.

Impairment loss



We recognized an impairment loss of $2.8 million during the year
ended December 31, 2021 related to a reduction in the estimated hold period of
our Del Amo property. We did not recognize any impairment charges during the
year ended December 31, 2020.

Other expense (income)

Other expense increased $3.1 million, or 565.9%, to $2.6 million for the year
ended December 31, 2021 compared to other income of $0.5 million for the year
ended December 31, 2020. The increase was primarily related to an increase in
tax expense due to an unrealized gain on our non-real estate investment.

General and administrative expenses



General and administrative expenses decreased $6.5 million, or 8.4%, to $71.3
million for the year ended December 31, 2021 compared to $77.9 million for the
year ended December 31, 2020. General and administrative expenses include wages
and salaries for corporate-level employees, accounting, legal and other
professional services, office supplies, entertainment, travel and automobile
expenses, telecommunications and computer-related expenses and other
miscellaneous items. The decrease was primarily attributable to political
contributions made for statewide ballot measures in 2020 that did not reoccur in
2021.

Depreciation and amortization expense



Depreciation and amortization expense increased $43.9 million, or 14.7%, to
$343.6 million for the year ended December 31, 2021 compared to $299.7 million
for the year ended December 31, 2020. The increase was primarily related to our
acquisition of 1918 Eighth, the accelerated depreciation of tenant improvements
resulting from a termination at our Maxwell property, the accelerated
amortization of lease intangibles resulting from a termination at our 625 Second
property and the depreciation and amortization of non-real estate property,
plant and equipment and finite-lived intangible assets acquired as part of the
Zio and Star Waggons transactions in August 2021.

Comparison of the year ended December 31, 2020 to the year ended December 31, 2019



Refer to Part II, Item 7 "Management's Discussion and Analysis of Financial
Condition and Results of Operations-Results of Operations-Comparison of the year
ended December 31, 2020 to the year ended December 31, 2019" of the Form 10-K
for the fiscal year ended December 31, 2020.


                                       61
--------------------------------------------------------------------------------

Liquidity and Capital Resources



We have remained capitalized since our initial public offering through public
offerings, private placements, joint ventures and continuous offerings under our
at-the-market ("ATM") program. We currently expect that our principal sources of
funds to meet our short-term and long-term liquidity requirements for working
capital, strategic acquisitions, capital expenditures, tenant improvements,
leasing costs, dividends and distributions, share repurchases and repayments of
outstanding debt financing will include:

•cash on hand, cash reserves and net cash provided by operations;

•proceeds from additional equity securities;

•our ATM program;

•borrowings under the operating partnership's unsecured revolving credit facility and One Westside construction loan;

•proceeds from joint venture partners;

•proceeds from Sunset Glenoaks constructions loan (unconsolidated joint venture); and

•proceeds from additional secured, unsecured debt financings or offerings.

Liquidity Sources



We had approximately $96.6 million of cash and cash equivalents at December 31,
2021. Our principal source of operating cash flow is related to leasing and
operating the properties in our portfolio. Our properties provide a relatively
consistent stream of cash flow that provides us with resources to pay operating
expenses, debt service and fund quarterly dividend and distribution
requirements.

Our ability to access the equity capital markets will be dependent on a number
of factors as well, including general market conditions for REITs and market
perceptions about us.

We have an ATM program that allows us to sell up to $125.0 million of common
stock, $65.8 million of which has been sold through December 31, 2021. Any
future sales will depend on several factors, including, but not limited to,
market conditions, the trading price of our common stock and our capital needs.
We have no obligation to sell the remaining shares available for sale under this
program.

As of December 31, 2021, we had total borrowing capacity of $1.0 billion under
our unsecured revolving credit facility, $125.0 million of which had been drawn.
As of December 31, 2021, we had total borrowing capacity of $414.6 million under
our construction loan, secured by our One Westside and 10850 Pico properties,
$241.4 million of which had been drawn. As of December 31, 2021, we had total
borrowing capacity of $94.0 million under the Sunset Glenoaks construction loan
(unconsolidated joint venture), of which $3.3 million had been drawn.

Our ability to incur additional debt will be dependent on a number of factors,
including our degree of leverage, the value of our unencumbered assets and
borrowing restrictions that may be imposed by lenders. If we incur additional
debt, the risks associated with our leverage, including our ability to service
our debt, would increase.

                                       62
--------------------------------------------------------------------------------

The following table sets forth our ratio of debt to total market capitalization
(counting series A preferred units as debt) as of December 31, 2021 (in
thousands, except percentage):
Market Capitalization                                                              December 31, 2021
Unsecured and secured debt(1)                                                     $       3,764,874
Series A redeemable preferred units                                                           9,815
Total consolidated debt                                                                   3,774,689
Common equity capitalization(2)                                                           4,248,939
TOTAL CONSOLIDATED MARKET CAPITALIZATION                                          $       8,023,628
Total consolidated debt/total consolidated market capitalization                               47.0  %


_____________


1.Excludes in-substance defeased debt, joint venture partner debt and
unamortized deferred financing costs and loan discount.
2.Common equity capitalization represents the shares of common stock outstanding
(including unvested restricted shares), OP units outstanding, restricted
performance units and dilutive shares multiplied by the closing price of $24.71,
reported by the NYSE, on December 31, 2021 as well as the series C preferred
stock liquidation preference as of December 31, 2021.

Outstanding Indebtedness

The following table sets forth information as of December 31, 2021 and December 31, 2020 with respect to our outstanding indebtedness, excluding unamortized deferred financing costs and loan discounts (in thousands):


                               December 31, 2021       December 31, 2020
Unsecured debt                $        2,050,000      $        1,925,000
Secured debt                  $        1,714,874      $        1,507,276
In-substance defeased debt    $          128,212      $          131,707
Joint venture partner debt    $           66,136      $           66,136


The operating partnership was in compliance with its financial covenants as of December 31, 2021.



Credit Ratings

The following table provides information with respect to our credit ratings at
December 31, 2021:

Agency                     Credit Rating
Moody's                    Baa2
Standard and Poor's        BBB-
Fitch                      BBB-


                                       63

--------------------------------------------------------------------------------



Liquidity Uses

Contractual Obligations

The following table provides information with respect to our commitments at December 31, 2021, including any guaranteed or minimum commitments under contractual obligations (in thousands):


                                                                                                   Payments Due by Period
                                                                                   Less than 1                                                    More than 5
Contractual Obligation                                           Total                Year              1-3 Years            3-5 Years               Years
Principal payments on unsecured and secured debt             $ 3,764,874

$ - $ 1,291,574 $ 1,016,300 $ 1,457,000 Principal payments on in-substance defeased debt(1)

              128,212             128,212                    -                    -                  

-


Principal payments on joint venture partner debt                  66,136                   -                    -                    -                

66,136


Interest payments-fixed rate(2)(3)                               542,144              98,347              175,215              149,462               

119,120


Interest payments-variable rate(2)(4)                             55,784              25,046               24,993                5,745                     -
Ground leases(5)                                                 628,728              21,191               41,971               41,689               523,877
TOTAL                                                        $ 5,185,878          $  272,796          $ 1,533,753          $ 1,213,196          $  2,166,133


_____________
1.Will be repaid with proceeds from sale of the U.S. Government securities that
will happen when the in-substance defeased debt reaches maturity.
2.Interest rates with respect to indebtedness are calculated on the basis of a
360-day year for the actual days elapsed.
3.Reflects our projected interest obligations for fixed rate debts, which
includes $4.8 million of projected interest related to our in-substance defeased
debt and $20.2 million of projected interest related to our joint venture
partner debt.
4.Reflects our projected interest obligations for variable rate debts, including
those that are effectively fixed as a result of derivatives and in instances
where interest is paid based on a LIBOR margin. We used the average December
LIBOR and current margin based on the leverage ratio as of December 31, 2021.
5.Reflects minimum lease payments through the contractual lease expiration date
before the impact of extension options. Refer to Part IV, Item 15(a) "Exhibits,
Financial Statement Schedules-Note 12 to the Consolidated Financial
Statements-Future Minimum Base Rents and Lease Payments" for details of our
ground lease agreements.

The Company has entered into a number of construction agreements related to
capital improvement activities at various properties. As of December 31, 2021,
the Company had $244.8 million in outstanding obligations under the agreements,
of which $193.3 million are expected to be incurred within one year from
December 31, 2021.

The Company invests in several non-real estate funds with an aggregate commitment to contribute up $28.0 million. As of December 31, 2021, the Company has contributed $16.4 million, net of distributions, with $11.6 million remaining to be contributed.

Off-Balance Sheet Arrangements

Joint Venture Indebtedness



We have investments in unconsolidated real estate entities accounted for using
the equity method of accounting. The following table provides information about
joint venture indebtedness as of December 31, 2021 (in thousands):

                                         Principal Amount            Interest Rate               Contractual Maturity Date             Company's Share
Bentall Centre(1)                      $         518,126              CDOR + 1.75%                                    7/1/2024       $        103,625
Sunset Glenoaks Studios(2)             $           3,300             LIBOR + 3.00%                                    1/9/2025       $          1,650


_____________
(1)We own 20% of the ownership interest in the unconsolidated real estate
investment that owns Bentall Centre. The loan was transacted in Canadian
dollars. The principal balance is shown in U.S. dollars using the foreign
currency exchange rate as of December 31, 2021. The interest on the full amount
has been effectively capped at 5.25% per annum through the use of an interest
rate cap.
(2)We own 50% of the ownership interest in the unconsolidated real estate
investment that owns the Sunset Glenoaks Studios development. This loan has an
initial interest rate of LIBOR plus 3.00% per annum and is interest-only through
its term. The total capacity of the loan is $94.0 million, as of December 31,
2021 we have $90.7 million undrawn.

                                       64
--------------------------------------------------------------------------------

Cash Flows

Comparison of the cash flow activity for the year ended December 31, 2021 to the year ended December 31, 2020 is as follows (in thousands, except percentage change):

Year Ended December 31,


                                                  2021                 2020               Dollar Change          Percentage Change

Net cash provided by operating activities $ 314,863 $ 302,032 $ 12,831

                       4.2  %

Net cash used in investing activities $ (754,208) $ (1,006,844) $ 252,636

                     (25.1) %

Net cash provided by financing activities $ 486,681 $ 796,094 $ (309,413)

                    (38.9) %



Cash and cash equivalents and restricted cash were $196.9 million and $149.5 million at December 31, 2021 and 2020, respectively.

Operating Activities



Net cash provided by operating activities increased by $12.8 million, or 4.2%,
to $314.9 million for the year ended December 31, 2021 as compared to $302.0
million for the year ended December 31, 2020. The change resulted primarily from
the operating activities of our recent acquisitions of 1918 Eighth property in
December 2020 and Zio and Star Waggons in August 2021, partially offset by an
increase in interest expense and transaction costs related to the business
combination of Zio and Star Waggons.

Investing Activities



Net cash used in investing activities decreased by $252.6 million, or 25.1%, to
$0.8 billion for the year ended December 31, 2021 as compared to $1.0 billion
for the year ended December 31, 2020. The change resulted primarily from $475.0
million lower consideration paid for the 5th & Bell property acquisition in 2021
compared to the consideration paid for the 1918 Eighth in 2020, partially offset
by $209.9 million spent on the 2021 acquisitions of Zio and Star Waggons.
Additional drivers of the change included a $63.7 million decrease in capital
expenditures and a $58.8 million increase in contributions to unconsolidated
entities in 2021 as compared to 2020.

Financing Activities



Net cash provided by financing activities decreased by $309.4 million, or 38.9%,
to $486.7 million for the year ended December 31, 2021 as compared to $796.1
million for the year ended December 31, 2020. The change resulted primarily from
$367.5 million proceeds from sale of non-controlling interest in the Hollywood
Media Portfolio in 2020, $254.2 million higher proceeds from notes payable, net
of repayments, in 2021 as compared to 2020, as well as $113.4 million lower
contributions from non-controlling members in consolidated real estate entities
in 2021 as compared to 2020. The increase was partially offset by $413.0 million
proceeds from issuance of Series C preferred stock in 2021. Additional drivers
of the change included $45.0 million from sales of common stock in 2021, $34.1
million less spent on common stock repurchases in 2021 as compared to 2020, and
$84.0 million higher distributions to con-controlling members in consolidated
real estate entities in 2021 as compared to 2020.

Non-GAAP Supplemental Financial Measures



We calculate FFO in accordance with the White Paper issued in December 2018 on
FFO approved by the Board of Governors of NAREIT. The White Paper defines FFO as
net income or loss calculated in accordance with generally accepted accounting
principles in the United States ("GAAP"), excluding gains and losses from sales
of depreciable real estate, gains and losses from sale of certain real estate
assets and impairment write-downs associated with depreciable real estate, plus
real estate-related depreciation and amortization (excluding amortization of
deferred financing costs and depreciation of non-real estate assets) and after
adjustment for unconsolidated partnerships and joint ventures. The calculation
of FFO includes the amortization of deferred revenue related to tenant-funded
tenant improvements and excludes the depreciation of the related tenant
improvement assets. In the December 2018 White Paper, NAREIT provided an option
to include value changes in mark-to-market equity securities in the calculation
of FFO. We elected this option retroactively during fourth quarter 2018. We
believe that FFO is a useful supplemental measure of our operating performance.
The exclusion from FFO of gains and losses from the sale of operating real
estate assets allows investors and analysts to readily identify the operating
results of the assets that form the core of our activity and assists in
comparing those operating results between periods. Also, because FFO is
generally recognized as the industry standard for reporting the operations of
REITs, it facilitates comparisons of operating performance to other REITs.
                                       65
--------------------------------------------------------------------------------

However, other REITs may use different methodologies to calculate FFO, and accordingly, our FFO may not be comparable to all other REITs.



Implicit in historical cost accounting for real estate assets in accordance with
GAAP is the assumption that the value of real estate assets diminishes
predictably over time. Since real estate values have historically risen or
fallen with market conditions, many industry investors and analysts have
considered presentations of operating results for real estate companies using
historical cost accounting alone to be insufficient. Because FFO excludes
depreciation and amortization of real estate assets, we believe that FFO along
with the required GAAP presentations provides a more complete measurement of our
performance relative to our competitors and a more appropriate basis on which to
make decisions involving operating, financing and investing activities than the
required GAAP presentations alone would provide. We use FFO per share to
calculate annual cash bonuses for certain employees.

However, FFO should not be viewed as an alternative measure of our operating
performance because it does not reflect either depreciation and amortization
costs or the level of capital expenditures and leasing costs necessary to
maintain the operating performance of our properties, which are significant
economic costs and could materially impact our results from operations.

The following table presents a reconciliation of net income to FFO (in
thousands):
                                                                                           Year Ended
                                                                                          December 31,
                                                                                                 2021               2020
Net income                                                                                   $  29,012          $  16,430
Adjustments:
Depreciation and amortization-Consolidated                                                     343,614            299,682
Depreciation and amortization-Corporate-related                                                 (7,719)            (2,286)
Depreciation and amortization-Company's share from unconsolidated real estate                    6,020              5,605
investments

Impairment loss                                                                                  2,762                  -
Unrealized (gain) loss on non-real estate investments                                          (16,571)             2,463
Tax impact of unrealized gain on non-real estate investment                                      3,849                  -
FFO attributable to non-controlling interests                                                  (64,388)           (37,644)
FFO attributable to preferred units                                                             (2,893)              (612)
FFO TO COMMON STOCKHOLDERS AND UNITHOLDERS                                                   $ 293,686          $ 283,638

© Edgar Online, source Glimpses