Hudson Pacific Properties, Inc. — financial distress indicators
Financial-health summary
Hudson Pacific Properties, Inc.'s reported numbers place it in the 'Watch' financial-health band (distress score 42/100). The main indicators are market-implied default probability >20%, losses in each of the last 3 years and very high leverage. Independently, the Ohlson accounting model puts its 1-year failure probability at 44% and the market-implied (Merton) default probability is 64.8%. In its favour: operating cash flow is positive over the latest 12 months.
Stress by dimension
Share price — last 12 months
Indicators behind the score
Each red flag shows the evidence from the company’s own filings and the financial or legal principle behind it. Points add to the 0–100 score.
Merton distance-to-default -0.38 σ → PD 65%.
Structural (Merton/KMV) model: equity is a call option on assets; low distance-to-default means assets are close to the default point.
Net income negative in 3 of 3 fiscal years.
Persistent losses erode equity and the capacity to absorb shocks.
Total debt is 24.9× EBITDA.
Debt above ~6× EBITDA is deep sub-investment-grade territory; refinancing becomes difficult when rates or earnings move against the company.
Revenue declined every year for three years.
Structural, not cyclical, decline.
Revenue vs net income
Cash generation
Debt vs cash vs equity
✅ Mitigating factors
- Operating cash flow is positive over the latest 12 months.
- Strong current ratio (1.66).
📰 Recent news scan
- How HPP Inc (HPP) Affects Rotational Strategy Timing - Stock Traders DailyGoogle News · 2026-10-08
- Hudson Pacific Properties, Inc. (HPP) Stock Price, News, Quote & History - Yahoo! Finance CanadaGoogle News · 2026-10-06
- Hudson Pacific Properties (HPP) Launches $200M Tender Offer for Senior Notes - GuruFocusGoogle News · 2026-10-05
- Third-quarter results from Hudson Pacific are due before markets open Nov. 5. - Stock TitanGoogle News · 2026-09-28
- Hudson Pacific Properties: A Recovery Story, A (Speculative) Buy (NYSE:HPP) - Seeking AlphaGoogle News · 2026-08-19
- HPP or EGP: Which Is the Better Value Stock Right Now? - qz.comGoogle News · 2026-08-18
⚖️ U.S. legal pathway — Title 11, U.S. Code
Which chapter would apply?
- Chapter 11 — reorganisation. Management usually stays in control as debtor-in-possession; the automatic stay (§362) halts collection; a plan must meet the best-interests test (§1129(a)(7)) and the absolute priority rule (§1129(b)) — creditors are paid before shareholders, who are frequently wiped out.
- Chapter 7 — liquidation. A trustee sells assets and distributes proceeds by statutory priority (§§507, 726).
- Subchapter V (“Chapter 5”) is a fast track for small-business debtors under a statutory debt cap, but SEC-reporting companies are excluded (§101(51D)) — so it rarely applies to listed companies.
What typically triggers a filing
- Payment default or covenant breach lenders will not waive; a debt maturity that cannot be refinanced.
- Auditor going-concern doubt (ASC 205-40 / PCAOB AS 2415) — often itself a default trigger in loan agreements.
- Creditors can force a case with an involuntary petition (§303) if debts are not paid as they come due.
- Delisting after sustained sub-$1 prices or equity deficits cuts off equity funding.
Transactions shortly before filing can be clawed back (preferences — 90 days, §547; fraudulent transfers — 2 years, §548).
Frequently asked questions
What do Hudson Pacific Properties, Inc.'s financial-health indicators show?
As of 2026-10-08, Hudson Pacific Properties, Inc.'s public financial data places it in the 'Watch' band with a distress score of 42/100, driven by market-implied default probability >20%, losses in each of the last 3 years and very high leverage. This is a statistical screen of reported numbers — it does not mean the company is insolvent, has defaulted or will enter insolvency proceedings.
What is Hudson Pacific Properties, Inc.'s financial distress score?
42/100 ('Watch'). Ohlson O-score -0.26 (model 1-year failure probability 44%). Merton distance-to-default -0.38 σ (model default probability 64.8%).
What works in Hudson Pacific Properties, Inc.'s favour?
Operating cash flow is positive over the latest 12 months. Strong current ratio (1.66).
How are shareholders treated if a company enters insolvency?
In a Chapter 11 reorganisation the absolute priority rule pays secured lenders, then unsecured creditors, before shareholders — so existing shares are usually cancelled or heavily diluted. In Chapter 7 the company is liquidated and shareholders rarely recover anything.
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Methodology
Score = capped sum of rule-based red flags across seven dimensions (liquidity, solvency, profitability, cash flow, sales trend, market signal, news). Ohlson O-score (1980) gives an accounting-based 1-year failure probability; Merton distance-to-default (Bharath & Shumway 2008) gives a market-implied probability. Financial institutions use a capital-based rule set. Recalculated every trading day from the latest filings, prices and news.