In a blockbuster deal for the real estate of content creation, funds affiliated with Blackstone Property Partners have completed a previously announced acquisition of a 49% joint interest in the Hollywood Media Portfolio jointly owned by West Coast-based media and technology property REIT Hudson Pacific.

The 2.2 million square foot portfolio consists of three Hollywood studio lots and five on-lot or adjacent Class A office properties, with a gross portfolio valuation of $1.65 billion.

The portfolio includes 35 stages and 1.2 million square feet of production and support space in Hollywood, California, including the Sunset Bronson, Sunset Gower and Sunset Las Palmas Studios. These legacy lots, “critical infrastructure” for film, TV and digital production, are leased to premier media content production tenants.

The portfolio also includes 966,000 square feet of Class A office space, located on and adjacent to the studio lots developed by Hudson Pacific.

Netflix is the largest tenant in the portfolio, currently leasing over 700,000 square feet, not including long-term leases for stages and production space for original content.

According to a joint press release issued by Blackstone and Hudson Pacific on Monday, opportunities to expand the portfolio include 1.1 million square feet of development rights at Sunset Gower and Sunset Las Palmas, as well as additional studio acquisitions in Los Angeles and other markets.

“Our business is driven by investing thematically in sectors with powerful secular tailwinds, and there is no better example of that than content creation in Los Angeles,” said Ken Caplan, Global Co-Head of Blackstone Real Estate said when plans for the joint venture were initially announced in late June. “We could not be more excited to partner with Hudson Pacific on this irreplaceable portfolio. They have been an extraordinary partner to us and possess a best-in-class management team. We look forward to significantly growing this platform together for the long-term.”

Deal landscape

Hudson Pacific’s total real estate portfolio totals nearly 19 million square feet, including land for development, strategically focused on major hubs for media, technology and innovation on the American West Coast. In addition to Netflix, its anchor tenants include Google, NFL Enterprises, Uber and others.

Blackstone’s joint venture with HPP marks the master stroke in a couple of recent private equity moves into the real estate of media and content production. As of late June, it was reported that Los Angeles-based private real estate investor Commonwealth Partners was awaiting approval to build a new 500,000-square-foot studio in the San Fernando Valley, in cooperation with Atlanta-based blockbuster film producer Blackhall Studios.

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