HPP 10-K & 10-Q changes, risk factors and insider trading

We are required to pay property taxes on our properties. These taxes could increase as property tax rates increase or as properties are reassessed by the taxing authorities. For example, under the existing California law commonly referred to as Proposition 13, property tax reassessments generally occur as a result of a “change of ownership” or “new construction” of a property. Because the property tax authorities may take extensivesignificant time to determine if there has a been a “change of ownership” or new construction or the actual reassessed value of thea property, the potential reassessment may not be determined until a period after the transaction or construction has occurred. From time to time, including recently, lawmakers and voters have initiated efforts to repeal or amend Proposition 13, which, if successful, would increasehave increased the assessed value or tax rates for our properties in California. Additionally, there is similar legislation beingchanging proposedproperty tax rates or assessments in other state and local jurisdictions in which our properties are located.located may be proposed. An increase in the assessed value of our properties,properties or property tax rates,rates or potentialthe otheraddition of new taxes could adversely affect our financial condition, cash flows and our ability to pay dividends to our stockholders.

These limitations restrict our ability to engage in some business activities, which could adversely affect our financial condition, results of operations, cash flow, cash available for distributions to our stockholders, and per share trading price of our securities. In addition, failure to meet any of these covenants, including the financial coverage ratios, could cause an event of default under and/or accelerate some or all of our indebtedness, which would have a material adverse effect on us. We have modified certain of our leverage ratio covenants for periods through December 31, 2024 to provide for a maximum ratio of 65% for such covenants which previously required a maximum ratio of 60%. Beginning with the fourththird quarter of 2024,2025, we also modified certain of our adjusted EBITDA to fixed charges covenants to provide for a minimum required ratio of 1.4x for such covenants which previously required a minimum ratio of 1.5x andtemporarily modified certain of our unencumbered NOI to unsecured interest expense covenants to provide for a minimum required ratio of 1.75x for such covenants which previously required a minimum ratio of 2.0x.2.0x for any fiscal quarter ending on or prior to December 31, 2026. There is no assurance that we will be able to obtain future waivers or modifications of these or other covenants, and future compliance with our financial covenants is dependent upon the results of our operating activities, our financial condition, and the overall market conditions in which we and our tenants operate. Furthermore, our unsecured revolving credit facility and term loan facility contain specific cross-default provisions with respect to specified other indebtedness, giving the lenders the right to declare a default if we are in default under other loans in some circumstances.

TenNine of our consolidated properties are subject to ground leases (including properties with a portion of the land subject to a ground lease). Refer to Part IV, Item 15(a) “Exhibits, Financial Statement Schedules—Note 13 to the Consolidated Financial Statements—Future Minimum Base Rents and Lease Payments Future Minimum Rents” for more information regarding our ground lease agreements. If any of these ground leases are terminated following a default or expire without being extended, we may lose our interest in the related property and may no longer have the right to receive any of the rental income from such property, which would adversely affect our financial condition, results of operations, cash flow and the per share trading price of our securities.

In September 2024, we suspended our quarterly dividend on our common stock in order to address liquidity considerations in light of general office industry trends and slower-than-anticipated recovery of studio demand following the Writers Guild of America (“WGA”) strike and the Screen Actors Guild - American Federation of Television and Radio Artists (“SAG-AFTRA”) strikes. Our Board determines the amount and timing of any distributions and currently expects to continue to review and evaluate future dividend payments on a quarterly basis, but we cannot provide you with any assurances that we will resume paying dividends on our common stock. In making this determination, our Board considers a variety of relevant factors, including, without limitation, the obligations under our various financing agreements, projected taxable income, compliance with our debt covenants, long-term operating projections, expected capital requirements, the annual distribution requirements under the REIT provisions of the Code and risks affecting our business. Accordingly, unless a declaration and payment of cash dividends is made, realization of a gain on stockholders’ investments will depend on the appreciation of the price of our stock. There is no guarantee that our stock will appreciate in value or a dividend declaration will be made. We cannot assure you that we will be able to make distributions in the future. Any of the foregoing could adversely affect the market price of our publicly traded securities.

The maximum tax rate applicable to “qualified dividend income” payable to U.S. stockholders that are individuals, trusts and estates is 20%. Dividends payable by REITs, however, generally are not eligible for these reduced rates. U.S. stockholders that are individuals, trusts and estates generally may deduct up to 20% of the ordinary dividends (e.g., dividends not designated as capital gain dividends or qualified dividend income) received from a REIT for taxable years beginning before January 1, 2026.REIT. Although this deduction reduces the effective tax rate applicable to certain dividends paid by REITs (generally to 29.6% assuming the shareholder is subject to the 37% maximum rate), such tax rate is still higher than the tax rate applicable to corporate dividends that constitute qualified dividend income. Accordingly, investors who are individuals, trusts and estates may perceive investments in REITs to be relatively less attractive than investments in the stocks of non-REIT corporations that pay dividends, which could materially and adversely affect the value of the shares of REITs, including the per share trading price of our securities.

Epidemics, pandemics or other outbreaks of an illness, disease or virus that affect the markets in which we conduct our business and where our tenants are located, and actions taken to contain or prevent their further spread, could have significant adverse impacts on our business, financial condition, results of operations, cash flows, liquidity and ability to satisfy our debt service obligations and to pay dividends and distributions to security holders in a variety of ways that are difficult to predict. Epidemics, pandemics or other outbreaks of an illness, disease or virus, including the relatively recent COVID-19 pandemic, could result in significant governmental measures being implemented to control the spread of such illness, disease or virus, including quarantines, restrictions on travel, “shelter in place” rules, stay-at-home orders, density limitations, social distancing measures, restrictions on types of business that may continue to operate and/or restrictions on types of construction projects that may continue, which could adversely affect our ability to adequately manage our business. Although most state governments and other authorities have lifted or reduced restrictions relating to the COVID-19 pandemic, they and others may reinstitute these measures in the future, or impose new, more restrictive measures, if the risks, or the perception of the risks, related to the COVID-19 pandemic worsen at any time, including as a result of the spread of new variants of the virus or other illness. If any such restrictions remain in place for an extended period of time, we may experience reductions in rents from our tenants. Although we will continue to be actively engaged in rent collection efforts related to uncollected rent, as well as working with certain tenants who request rent deferrals (particularly those occupying retail space), we can provide no assurance that such efforts or our efforts in future periods will be successful. Moreover, to the extent any of these risks and uncertainties adversely impact us in the ways described above or otherwise, they may also have the effect of heightening many of the other risks set forth in this “Risk Factors” section.

We face risks associated with security breaches, whether through cyber attacks or cyber intrusions, malware, computer viruses, attachments to e-mails, persons inside our organization or persons with access to systems inside our organization, and other significant disruptions of our IT networks and related systems. The risk of a security breach or disruption, particularly through cyber attacks or cyber intrusions, including by computer hackers, foreign governmentsWe and cyberothers terrorists,in hasour generallyindustry increasedare astargets thefor number,threat intensityactors because we hold confidential and sophisticationsensitive of attempted attacks and intrusions from around the world have recently increased.information. Our IT networks and related systems are essential to the operation of our business and our ability to perform day-to-day operations (including managing our building systems) and, in some cases, may be critical to the operations of certain of our tenants. Although we make efforts to maintain the security and integrity of our IT networks and related systems, and we have implemented various measures to manage the risk of a security breach or disruption, therethe cansecurity bemeasures noapplied assurance thatto our securitysystems effortscannot andguarantee measuresprotection willagainst beall effectivecyber or that attempted security breaches or disruptions would not be successful or damaging.risks. Even the most well-protected information, networks, systems and facilities remain potentially vulnerable because the techniques used in such attempted security breaches evolve and generally are not recognized until launched against a target, and in some cases are designed not to be detected and, in fact, may not be detected. Accordingly, we may be unable to anticipate these techniques or to implement adequate security barriers or other preventative measures, and thus it is impossible for us to entirely mitigate this risk.

As of December 31, 2024,2025, our in-service office portfolio was 78.9%77.0% leased (including leases not yet commenced). Our same-storein-service studio properties average percent leased for the twelve months ended December 31, 20242025 was 73.8%.78.8%.

During the year ended December 31, 2024,2025 the Company sold its 3176Maxwell, PorterFoothill DriveResearch propertyCenter, 625 Second and Element LA properties for $24.8$46.0 million.million, $23.0 million, $28.0 million and $150.0 million, respectively. 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.

During the year ended December 31, 2024,2025, there were $128.0$320.0 million of borrowingsrepayments on the unsecured revolving credit facility, net of repayments.borrowings. The Company generally uses the unsecured revolving credit facility to finance the acquisition of properties and businesses, to provide funds for tenant improvements and capital expenditures and to provide for working capital and other corporate purposes.

The amount of net rental revenue generated by the properties in our portfolio depends principally on our ability to maintain the occupancy rates of leased space and to lease available space. As of December 31, 2024,2025, the percent leased for our in-service office properties was approximately 78.9%77.0% (or 78.3%,76.3%, excluding leases signed but not commenced as of that date). As of December 31, 2024,2025, the percent leased, based on a 12-month trailing average, was approximately 73.8%78.8% for in-service studio properties (excludes Sunset Glenoaks, for which 12-month trailing occupancy data is not yet available).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.

We own real estate primarily in California, the Pacific NorthwestNorthwest, New York and Western Canada. We operate our production services business in key US media markets in California, New Mexico,York, Atlanta and New York.Mexico. Positive or negative changes in economic or other conditions in any of the markets in which we own real estate and/or operate, including state budgetary shortfalls, employment rates, natural hazards and other factors, may impact our overall performance.

Impairment of Long-LivedInvestment Assetsin Real Estate

If impairment indicators are present for a specific real estate asset, we perform a recoverability test by comparing the carrying value of the asset group to the asset group’s estimated undiscounted future cash flows over the anticipated hold period. If the carrying value exceeds the estimated undiscounted future cash flows, we then compare the carrying value to the asset group’s estimated fair value and recognize an impairment loss for the amount by which the carrying value exceeds the fair value. The future cash flows utilized in the evaluation of recoverability and the measurement of fair value are highly subjective and are based on assumptions regarding anticipated hold periods, future occupancy, future rental rates, future capital requirements, discount rates and capitalization rates, which are considered Level 2 and Level 3 inputs within the fair value hierarchy. 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 the undiscounted future cash flows and fair value of an asset group.

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.flows, which are typically considered Level 3 inputs within the fair value hierarchy. 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 seven years. The Company assesses its intangible assets with finite lives for impairment when indicators of impairment are identified.identified in a manner similar to the goodwill analysis and the inputs are generally considered Level 3 within the fair value hierarchy.

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 taxable REIT subsidiaries (“TRSTRSs”) for federal income tax purposes. Accordingly, a provision for foreign income taxes has been recorded in the accompanying consolidated financial statements based on the local tax laws and regulations of the respective tax jurisdictions.

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 2020.2022 for federal purposes and 2021 for state purposes, subject to applicable statutes of limitations. Generally, we have assessed our tax positions for all open years, which as of December 31, 2025 include 2022 to 2024 includefor federal purposes and 2021 to 2023 for Federal purposes and 2020 to 20232024 for state purposes, and concluded that there are no material uncertainties to be recognized.

10.Includes pending8.Includes entitlement to develop approximatelyup 500to 428,623 square feet (508 residential units) at 10900-10950 Washington.

NOI decreasedincreased $113.8$15.4 million, or 22.7%,4.0%, for the year ended December 31, 20242025 as compared to the year ended December 31, 2023,2024, primarily resulting from:

•a $52.6$46.0 million decreaseincrease in non-same-store NOI driven by:

Other Income (Expenses)

LossWe recorded a $0.1 million loss from our unconsolidated real estate entities increasedfor bythe $3.4year million,ended orDecember 87.3%,31, 2025 compared to a loss of $7.3 million for the year ended December 31, 2024 compared to $3.9 million for the year ended December 31, 2023.2024. The change was primarily driven by higher interest expense at the unconsolidated entities in 2024 due to an increase in the average reference rates for variable rate debt and anonrecurring mark-to-market adjustmentadjustments for an interest rate swap that doesdid not qualify for hedge accounting.accounting during the year ended December 31, 2024 and a distribution received in excess of our investment in an unconsolidated real estate entity during the year ended December 31, 2025.

Fee income decreasedincreased by $0.9$0.1 million, or 14.8%,2.5%, to $5.4 million for the year ended December 31, 2025 compared to $5.3 million for the year ended December 31, 2024 compared to $6.2 million for the year ended December 31, 2023.2024. Fee income represents the management fee income earned from theour unconsolidated real estate entities. The decrease is primarily due to a decrease in construction activity at our unconsolidated Sunset Waltham Cross development, partially offset by an increase in construction activity at our unconsolidated Pier 94 development.

Non-cash interest expense decreasedincreased by $14.1$6.5 million, or 64.6%84.0% to $14.2 million for the year ended December 31, 2025 compared to $7.7 million for the year ended December 31, 2024 compared to $21.9 million for the year ended December 31, 2023.2024. The decrease in non-cash interest expenseincrease was primarily duerelated to the amortization of mark-to-marketcash gainspremiums relatedpaid to theobtain new interest rate cap on our Hollywood Media Portfolio loancaps during the year ended December 31, 2023.2025 Theand capan expiredincrease in August 2023 and was accounted for under the mark-to-market approach until it was designated as a cash flow hedge in December 2022. Additionally, there was a decrease in deferred financing cost amortization due to theof deferred financing costs relateddriven toby the Hollywood MediaOffice Portfolio loanCMBS andloan, thewhich Onewas Westsideobtained andin WestsideMarch Two construction loan being fully amortized as of August 2023 and December 2023, respectively.2025.

Through our interest in Hudson Pacific Properties, L.P. (our operating partnership) and its subsidiaries, at MarchJune 31,30, 2026, our portfolio of owned real estate included office properties comprising approximately 13.914.0 million square feet, studio properties comprising approximately 45 sound stages and 1.7 million square feetfeet, and land properties comprising approximately 3.73.2 million square feet of undeveloped density rights. Our production services assets includeprimarily vehicles,consist lightingof our vehicle fleet, following our decision to wind down leased stage, pro-supplies, and grip, production supplies and otherancillary equipment andbusinesses theas leasepart rightsof toQuixote’s 20 sound stages.restructuring.

The following table summarizes our consolidated and unconsolidated portfolio as of MarchJune 31,30, 2026:

2.Percent occupied for office properties is calculated as (i) square footage under commenced leases as of MarchJune 31,30, 2026, 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 MarchJune 31,30, 2026, divided by (ii) total square feet, expressed as a percentage. Percent occupied/leased for studio properties is calculated based on the average percent occupied during the three months ended MarchJune 31,30, 2026.

3.Annualized base rent (“ABR”) per square foot for office properties is calculated by multiplying (i) cash base rents under commenced leases excluding tenant reimbursements as of MarchJune 31,30, 2026 by (ii) 12. On a per square foot basis, ABR is divided by square footage under commenced leases as of MarchJune 31,30, 2026. For all expiration years, ABR is calculated as (i) cash base rents at expiration under commenced leases divided by (ii) square footage under commenced leases as of MarchJune 31,30, 2026. The methodology is the same when calculating ABR per square foot either in place or at expiration for uncommenced leases. Rent data is presented without regard to cancellation options. Where applicable, rental rates converted to USD using the foreign currency exchange rate as of MarchJune 31,30, 2026. Annualized base rent per square foot for studio properties reflects actual base rent for the 12 months ended MarchJune 31,30, 2026, excluding tenant reimbursements. ABR per leased square foot calculated as (i) annual base rent divided by (ii) square footage under lease as of MarchJune 31,30, 2026.

4.Same-store office for the three months ended MarchJune 31,30, 2026 defined as all properties owned and included in our stabilized office portfolio as of JanuaryApril 1, 2025 and still owned and included in the stabilized office portfolio as of MarchJune 31,30, 2026.

5.Includes studio properties owned and included in our portfolio as of JanuaryApril 1, 2025 and still owned and included in our portfolio as of MarchJune 31,30, 2026.

7.Refer to Repositioning table in this document for the office and studio projects under repositioning as of MarchJune 31,30, 2026.

The following table provides information regarding the 15 largest tenants in our office portfolio based on HPP’s share of annualized base rent as of MarchJune 31,30, 2026:

1.Annualized base rent is calculated by multiplying (i) base rental payments (defined as cash base rents (before abatements or deferments)) under commenced leases as of MarchJune 31,30, 2026, by (ii) 12. Annualized base rent does not reflect tenant reimbursements. Annualized base rents related to Bentall Centre have been converted from CAD to USD using the foreign currency exchange rate as of MarchJune 31,30, 2026.

5.City3.City and County of San Francisco expirations: (i) 39,573 square feet at 1455 Market on September 19, 2033, (ii) 389,316864,084 square feet at 1455 Market on April 30, 20452049 and (iii) 706 square feet at Ferry Building on April 30, 2067. City and County of San Francisco will backfill an additional 27,314 square feet at 1455 Market on January 1, 2028.

6.Nutanix4.Netflix, Inc. expirations: (i) 215,857326,792 square feet at 1740 Technology on May 31, 2030 andICON, (ii) 13,898301,127 square feet at MetroEPIC Plazaand on(iii) July94,386 31,square 2030.feet at CUE.

We had no property acquisitions or dispositions during the three and six months ended MarchJune 31,30, 2026. No properties were classified as held for sale as of March 31, 2026.

The following table summarizes the properties currently under construction and future development projects as of MarchJune 31,30, 2026:

The following table summarizes the portions of office and studio projects currently under repositioning as of MarchJune 31,30, 2026:

The following table summarizes the lease expirations for leases in place as of MarchJune 31,30, 2026, plus available space, at the properties in our office portfolio. Unless otherwise stated in the footnotes, the information set forth in the table assumes that tenants did not exercise any renewal options.

2.Annualized base rent per square foot for office properties is calculated by multiplying (i) cash base rents under commenced leases excluding tenant reimbursements as of MarchJune 31,30, 2026 by (ii) 12. On a per square foot basis, ABR is divided by square footage under commenced leases as of MarchJune 31,30, 2026. For all expiration years, ABR is calculated as (i) cash base rents at expiration under commenced leases divided by (ii) square footage under commenced leases as of MarchJune 31,30, 2026. The methodology is the same when calculating ABR per square foot either in place or at expiration for uncommenced leases. Rent data is presented without regard to cancellation options. Where applicable, rental rates converted to USD using the foreign currency exchange rate as of MarchJune 31,30, 2026.

During the threesix months ended MarchJune 31,30, 2026, there were no repayments or borrowings on the unsecured revolving credit facility. The Company generally uses the unsecured revolving credit facility to finance the acquisitionacquisitions of properties and businesses, to provide funds for tenant improvements and capital expenditures and to provide for working capital and other corporate purposes.

In addition, some of the statements and assumptions in this Quarterly Report on Form 10-Q are forward-looking statements within the meaning of Section 27A of the Securities Act or Section 21E of the Exchange Act, including, in particular, statements about our plans, strategies and prospects as well as estimates of industry growth for the quarter and beyond. Refer to “Forward-looking Statements.Statements”.

Comparison of the Three Months Ended MarchJune 31,30, 2026 to the Three Months Ended MarchJune 31,30, 2025

Net loss decreasedincreased $29.4$16.9 million, or 36.6%,19.3%, to $50.9$104.7 million for the three months ended MarchJune 31,30, 2026 compared to $80.3$87.8 million for the three months ended MarchJune 31,30, 2025. The reasons for the change are discussed below with respect to theimpairment decreaseloss inand netloss operatingon incomelease duringterminations and other for the three months ended MarchJune 31,30, 2026, partially offset by the decrease in depreciation and amortization, general and administrative expensesexpenses, depreciation and the change in other incomeamortization and expenses.interest expense for the same period.

We evaluate performance based upon 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, interest income, 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.

•Same-store properties, which include all of the properties owned and included in our stabilized portfolio as of JanuaryApril 1, 2025 and still owned and included in the stabilized portfolio as of MarchJune 31,30, 2026; and

NOI decreasedincreased $4.9$2.7 million, or 5.7%,3.3%, for the three months ended MarchJune 31,30, 2026 as compared to the three months ended MarchJune 31,30, 2025, primarily resulting from:

•a $4.5$7.6 million decreaseincrease in same-store NOI driven by:

•further offset by an increase in studio NOI of $1.4$2.3 million driven by higher production activity at our Sunset Gower Studios and Sunset Las Palmas Studios properties during the firstsecond quarter of 2026;2026.

•offset by a $0.4$4.9 million decrease in non-same-store NOI driven by:

•a decrease in office NOI of $8.2$6.0 million primarily resulting from the salessale of our Element LA and Foothill Research Center propertiesproperty in 2025the fourth quarter of 2025, the commencement of a repositioning project at 6040 Sunset in the first quarter of 2026 and increased operating expenses at our Washington 1000 thatproperty becameafter operationalit was placed in service during the first quarter of 2026,2026; partially offset by a reduction of expenses due to the sale of 625 Second in 2025; further offset by

•an increase in studio NOI of $7.8$1.1 million mainly due to cost savingscost-savings initiatives at Quixote.Quixote and the deconsolidation of our Sunset Glenoaks Studios property during the third quarter of 2025.

We recorded a $0.4$1.0 million loss from unconsolidated real estate entities for the three months ended MarchJune 31,30, 2026 compared to a loss of $1.3$0.2 million for the three months ended MarchJune 31,30, 2025. The change was primarily driven by mark-to-market adjustments for an interest rate swap that does not qualify for hedge accounting.accounting, as well as our Sunset Pier 94 Studios property becoming operational during the first quarter of 2026.

We recognized fee income of $1.1$1.0 million for the three months ended MarchJune 31,30, 2026 compared to $1.4$1.5 million for the three months ended MarchJune 31,30, 2025. FeeThe incomechange representswas primarily due to a reduction in development fees associated with our Sunset Pier 94 Studios development project, which was substantially completed during the managementfirst feequarter incomeof earned from our unconsolidated real estate entities.2026.

Gross interest expense decreased by $6.9$10.7 millionmillion, or 14.1%,20.2%, to $42.2$42.4 million for the three months ended MarchJune 31,30, 2026 compared to $49.1$53.1 million for the three months ended MarchJune 31,30, 2025. The decrease was primarily relateddue to a lower outstanding balance on the unsecured line of credit and lower reference rates on our floating rate debt during the firstsecond quarter of 2026, asthe welldeconsolidation asof our Sunset Glenoaks Studios property in the third quarter of 2025 and the 2025 repayments of the Element LA loan and Series B, C and D notes. The decrease was partially offset by the interest expense related to the Office Portfolio CMBS loan, which was obtained in March 2025.

Capitalized interest decreased by $4.4$4.8 millionmillion, or 43.6%,46.9%, to $5.7$5.5 million for the three months ended MarchJune 31,30, 2026 compared to $10.1$10.3 million for the three months ended MarchJune 31,30, 2025 primarily due to the completion of our Washington 1000 becomingand operationalSunset inPier 202694 Studios development projects and completionthe cessation of interest capitalization at our Sunset Glenoaks Studios developmentproperty in the second quarter of 2025. The decrease was partially offset by an increase in developmentconstruction activity at our 6040 Sunset property.

Non-cash interest expense decreased by $3.0$3.7 million, or 66.5%,71.0%, to $1.5 million for the three months ended MarchJune 31,30, 2026 compared to $4.5$5.3 million for the three months ended MarchJune 31,30, 2025. The decrease was primarily related to changes in the fair value of our derivative instruments.instruments not accounted for as cash flow hedges.

Interest income increaseddecreased by $1.2$1.6 million, or 279.1%,73.3%, to $1.6$0.6 million for the three months ended MarchJune 31,30, 2026 compared to $0.4$2.1 million for the three months ended MarchJune 31,30, 2025. The change was driven by ana increasedecrease in cash deposits in interest-bearing accounts and interest earned on a refundable payroll tax credit.accounts.