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Hudson Pacific Properties Inc (HPP) and Farallon Capital Enter Into Lock-Up Agreement

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Hudson Pacific Properties Inc (NYSE:HPP) and Farallon Capital Management,  a fund founded by Thomas Steyer, have entered into a lock-up agreement. An amended 13D filing with the SEC detailed the agreement, which was dated January 12, the same day Hudson announced an underwritten public offering of an additional 9.5 million shares of common stock. At the time of the filing, Farallon owned 8.72 million common shares of HPP, with an aggregate of 8.74 million shares.


Farallon Capital has been a major shareholder of Hudson Pacific Properties Inc (NYSE:HPP) for several years, dating back to their first 13D filing concerning the company in June 2010, shortly after HPP went public. At the time, Farallon’s aggregate of 7.11 million shares represented 32% of the company’s outstanding stock. They increased their position in the company to more than 10 million shares by the end of 2011, and to over 12 million shares by the end of 2012. They held those shares throughout 2013 before selling 3.51 million shares near the end of the first quarter of 2014.

Hudson Pacific Properties Inc (NYSE:HPP) was the most valuable holding of Farallon Capital at one point, though it has since slipped to sixth. The $215 million worth of HPP stock they hold represented 3.45% of their $6.23 billion equity portfolio as of September 30. Farallon’s largest holdings as of September 30 were DIRECTV (NASDAQ:DTV) with 3.65 million shares worth $315 million, Covidien plc (NYSE:COV) with 3.64 million shares, also worth $315 million, and Safeway Inc. (NYSE:SWY) with 7.12 million shares worth $244 million.

The lock-up agreement entered into between Farallon and Hudson Pacific Properties Inc (NYSE:HPP) stipulates that for a period of 60 days from the date of the agreement on January 12, Farallon agrees not to sell any of their common stock in the company. It is common practice between companies making public offerings, and major shareholders to enter into such agreements for the sake of maintaining the integrity of the stock’s value, which is beneficial to both parties. The 60-day lock-up period is relatively short however, as many such agreements run for 120 to 180 days, with some lasting as long as 365 days.

The day after the public offering was announced was a brisk trading day in HPP’s stock, with 682,309 shares trading hands, up 46% from the January 12 session. The stock had spiked in price in after-hours trading following the announcement, though it ended up finishing the January 13 session down from the previous day’s close.

Hudson Pacific Properties Inc (NYSE:HPP) announced on January 20 that they had completed their public offering, which led to the sale of 12.65 million common shares at the offering price of $31.75 per share. HPP was trading at $32.67 at the close of trading on January 23, up 8.68% year-to-date, and 51.95% during the last calendar year.

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