Major Los Angeles studio and offices operator Hudson Pacific Properties has received a credit rating downgrade from SP Global.

The credit ratings firm cut the debt rating for Hudson Pacific to B, from BB-, with a negative outlook. We expect ongoing studio and office headwinds will continue to pressure its key credit metrics over the near term and for access to capital to remain constrained. We believe this could result in liquidity pressure and refinancing challenges, SP analysts said in a May 28 report.

Thats a change in fortune for Hudson Pacific, which had been riding high when investment giant Blackstone took a 49 percent stake in 2020 in the studio operators Hollywood Media Portfolio (which includes Sunset Bronson Studios in Los Angeles, which Netflix leases). In 2022, Hudson Pacific also inked a $360 million deal to buy Quixote Studios, a production services and stage supplies rental firm. But that growth was eclipsed by the 2023 Hollywood actors and writers strikes, which was followed by major studios and streamers pulling back on their content spending, in part to reach profitability with their online streaming platforms.

Against that industry backdrop, Hudson Pacific and Blackstone recently put on hold plans to build a 91-acre film and TV studio complex in the UK, which had been touted as the first foray outside the U.S. market for the Sunset Studios brand. SP Global took notice of the economic headwinds Hudson Pacific faces, not least with its exposure to a California film and TV production sector facing rising competition from other U.S. states and countries with lucrative film tax credits on offer to lure away Hollywood studios and streamers.

The companys EBITDA has declined as operating performance within its office and studio segments has remained weak amid secular headwinds and evolving industry dynamics. At the same time, interest rates remain elevated amid macroeconomic uncertainty, which has limited transaction activity and pressured fixed-charge coverage, SP Global analysts argued.

Their report also indicated that, as of March 31, 2025, Hudson Pacifics studio portfolio was 73.8 percent leased, compared to a 76.9 percent lease rate in the prior year period.

Amid L.A.s historic slump in filming, calls have been made for Californias film and TV tax incentive program to be bolstered, and theres even talk of a possible federal film tax credit being created to help bring production jobs back to Hollywood from overseas.