Cousins Properties Incorporated (NYSE:CUZ) Q2 2024 Earnings Conference Call July 26, 2024 10:00 AM ET Company Participants Pamela Roper - General Counsel Colin Connolly - President & Chief Executive Officer Richard Hickson - EVP of Operations Kennedy Hicks - EVP & Chief Investment Officer Gregg Adzema - Chief Financial Officer. Conference Call Participants Blaine Heck - Wells Fargo Steve Sakwa - Evercore Nick Thillman - Baird John Kim - BMO Capital Markets Dylan Burzinski - Green Street Camille Bonnel - Ban ...

Core Insights - Cousins Properties (CUZ) reported decent leasing activity and better-than-expected revenues, with a year-over-year increase in rental property operating and interest expenses [1][12]. - The company raised its 2024 outlook for funds from operations (FFO) per share to a range of $2.63-$2.68, up from the previous range of $2.60-$2.67 [19]. Financial Performance - CUZ's second-quarter 2024 FFO per share was 68 cents, surpassing the Zacks Consensus Estimate of 66 cents, remaining unchanged year-over-year [8]. - Rental property revenues increased by 3.7% year-over-year to $211.5 million, exceeding the Zacks Consensus Estimate of $208.4 million, while total revenues grew by 4.2% to $213 million [9]. - Same-property rental property revenues on a cash basis rose 4.6% year-over-year to $192.3 million, with operating expenses increasing by 3.9% to $68.3 million, resulting in a 5.1% rise in same-property net operating income to $124 million [10]. Leasing Activity - The company executed leases for 391,000 square feet of office space in the second quarter, with 240,000 square feet being new and expansion leases, accounting for 61% of total leasing activity [2]. - The weighted average occupancy of the same-property portfolio was 88.5%, an increase of 100 basis points from the previous year [3]. - The same-property portfolio was 91.2% leased at the end of the quarter, up from 90.7% a year ago [11]. Cost and Expenses - Rental property operating expenses grew by 5.3% to $70.6 million [17]. - Interest expenses increased by 14.5% to $29.7 million year-over-year [12]. Balance Sheet - CUZ's net debt-to-annualized EBITDAre ratio improved to 5.12 from 5.25 in the prior quarter [13]. - The company ended the quarter with cash and cash equivalents of $5.95 million, up from $5.5 million as of March 31, 2024 [18]. Market Outlook - The CEO highlighted improving office fundamentals in Sun Belt markets and an accelerating demand for highly amenitized lifestyle office space, indicating a rebalancing in the market [2]. - The increase in FFO is attributed to better leasing activity, higher parking income, and the recent acquisition of two mezzanine loans [14].

Core Insights - Cousins Properties reported a revenue of $211.47 million for the quarter ended June 2024, which is a year-over-year increase of 3.7% [4] - The earnings per share (EPS) for the same period was $0.68, significantly higher than $0.15 a year ago, indicating strong growth [4] - The reported revenue exceeded the Zacks Consensus Estimate of $208.45 million by 1.45%, and the EPS surprise was 3.03% over the consensus estimate of $0.66 [1] Revenue Breakdown - Rental property revenues were $211.47 million, surpassing the average estimate of $208.45 million from three analysts, reflecting a year-over-year change of 3.7% [5] - Other revenues amounted to $1.10 million, which is a remarkable increase of 7742.9% year-over-year compared to the $0.33 million average estimate [5] - Fee income reached $0.41 million, slightly above the estimated $0.37 million, representing a 15.3% increase from the previous year [5] Stock Performance - Shares of Cousins Properties have returned +11.2% over the past month, outperforming the Zacks S&P 500 composite, which saw a -0.3% change [3] - The stock currently holds a Zacks Rank 3 (Hold), suggesting it may perform in line with the broader market in the near term [3]

This quarterly report represents an FFO surprise of 3.03%. A quarter ago, it was expected that this real estate company would post FFO of $0.63 per share when it actually produced FFO of $0.65, delivering a surprise of 3.17%. Cousins Properties, which belongs to the Zacks REIT and Equity Trust - Other industry, posted revenues of $211.47 million for the quarter ended June 2024, surpassing the Zacks Consensus Estimate by 1.45%. This compares to year-ago revenues of $203.95 million. The company has topped con ...

[Earnings Release](index=3&type=section&id=Earnings%20Release) [Financial Results](index=3&type=section&id=Financial%20Results) Net income decreased in Q2 2024 due to higher depreciation, while FFO remained stable for the quarter and slightly increased year-to-date | Metric | Q2 2024 | Q2 2023 | YTD 2024 | YTD 2023 | | :--- | :--- | :--- | :--- | :--- | | Net Income (millions) | $7.8 | $22.6 | $21.1 | $44.8 | | Net Income per Share | $0.05 | $0.15 | $0.14 | $0.29 | | FFO (millions) | $103.3 | $103.0 | $202.8 | $201.0 | | FFO per Share | $0.68 | $0.68 | $1.33 | $1.32 | [Operations and Leasing Activity](index=3&type=section&id=Operations%20and%20Leasing%20Activity) The company achieved strong operational performance in Q2 2024, marked by increased NOI and robust leasing activity | Metric | Q2 2024 Change | YTD 2024 Change | | :--- | :--- | :--- | | Same Property NOI (Cash-Basis) | +5.1% | +5.8% | | Second Gen. Net Rent (Cash-Basis) | +18.2% | +11.7% | - Executed **391,000 square feet** of office leases in Q2 2024, with new and expansion leases accounting for **61%** of the total activity[65](index=65&type=chunk) - Year-to-date leasing activity reached **794,000 square feet**, with new and expansion leases representing **66%** of the total[67](index=67&type=chunk) [Financing, Investing, and Guidance](index=4&type=section&id=Financing,%20Investing,%20and%20Guidance) The company secured investment-grade credit ratings, invested in mezzanine loans, and raised its full-year FFO guidance - Received corporate investment grade credit ratings of **BBB from S&P** and **Baa2 from Moody's**[53](index=53&type=chunk) - Acquired two mezzanine loans for **$27.2 million** with a weighted average spread of **8.66% over SOFR**[53](index=53&type=chunk) | Guidance Per Share | Updated 2024 Range | Previous 2024 Range | | :--- | :--- | :--- | | Net Income | $0.31 - $0.36 | $0.32 - $0.39 | | FFO | $2.63 - $2.68 | $2.60 - $2.67 | [Company Information](index=4&type=section&id=Company%20Information) [Company Overview](index=4&type=section&id=Company%20Overview) Cousins Properties is an Atlanta-based REIT specializing in Class A office buildings in high-growth Sun Belt markets - Cousins Properties is a REIT specializing in **Class A office buildings** located in high-growth Sun Belt markets[50](index=50&type=chunk) - The company's strategy is based on a simple platform, trophy assets, and opportunistic investments[50](index=50&type=chunk) | Rating Agency | Corporate Credit Rating | | :--- | :--- | | S&P Global Ratings | BBB | | Moody's Investors Service | Baa2 | [Financial Statements](index=5&type=section&id=Financial%20Statements) [Consolidated Balance Sheets](index=5&type=section&id=Consolidated%20Balance%20Sheets) Total assets slightly increased to **$7.70 billion** by Q2 2024, while liabilities rose and equity slightly decreased | Balance Sheet Item (in thousands) | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Total Real Estate Assets | $7,072,297 | $7,062,705 | | Total Assets | $7,700,528 | $7,634,474 | | Notes Payable | $2,586,732 | $2,457,627 | | Total Liabilities | $3,223,024 | $3,086,161 | | Total Equity | $4,477,504 | $4,548,313 | [Consolidated Statements of Operations](index=5&type=section&id=Consolidated%20Statements%20of%20Operations) Q2 2024 revenues increased, but net income declined due to higher depreciation, a trend also seen year-to-date | Income Statement (in thousands) | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | | :--- | :--- | :--- | | Rental property revenues | $211,474 | $203,954 | | Total revenues | $212,978 | $204,320 | | Depreciation and amortization | $95,415 | $80,269 | | Net income available to common stockholders | $7,840 | $22,621 | | Income Statement (in thousands) | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :--- | :--- | :--- | | Rental property revenues | $420,292 | $404,030 | | Total revenues | $422,219 | $407,048 | | Depreciation and amortization | $181,645 | $156,039 | | Net income available to common stockholders | $21,128 | $44,817 | [Key Metrics & Funds From Operations (FFO)](index=6&type=section&id=Key%20Metrics%20%26%20Funds%20From%20Operations%20(FFO)) [Key Performance Metrics](index=6&type=section&id=Key%20Performance%20Metrics) The company reported strong occupancy and NOI growth in Q2 2024, with a slight improvement in its Net Debt to EBITDAre ratio | Metric | Q2 2024 | Q1 2024 | Q2 2023 | | :--- | :--- | :--- | :--- | | Office Weighted Average Occupancy | 88.5% | 88.4% | 87.7% | | Change in Cash-Basis Same Property NOI (YoY) | 5.1% | 6.6% | 3.7% | | Change in Cash-Basis Second Gen. Net Rent | 18.2% | 5.3% | 7.9% | | Net Debt/Annualized EBITDAre | 5.12x | 5.25x | 4.89x | [Funds From Operations - Summary](index=8&type=section&id=Funds%20From%20Operations%20-%20Summary) FFO remained stable in Q2 2024 at **$0.68 per diluted share**, with a slight year-to-date increase despite higher interest expenses | FFO Metric | Q2 2024 | Q2 2023 | YTD 2024 | YTD 2023 | | :--- | :--- | :--- | :--- | :--- | | FFO (in thousands) | $103,346 | $102,951 | $202,842 | $398,289 (YTD 2023) | | FFO per Share | $0.68 | $0.68 | $1.33 | $2.62 (YTD 2023) | [Portfolio Analysis](index=10&type=section&id=Portfolio%20Analysis) [Portfolio Statistics](index=10&type=section&id=Portfolio%20Statistics) The portfolio is concentrated in Sun Belt markets, with **91.2% leased** and **88.5% occupied** across 18.8 million square feet | Market | % of Portfolio NOI (Q2 2024) | | :--- | :--- | | Atlanta | 36.0% | | Austin | 32.8% | | Tampa | 8.9% | | Phoenix | 7.9% | | Charlotte | 7.8% | | Houston | 4.1% | | Dallas | 2.5% | | Portfolio Metric | Q2 2024 | | :--- | :--- | | Total Office Rentable SF | 18,835,000 | | % Leased (End of Period) | 91.2% | | Weighted Average Occupancy | 88.5% | [Same Property Performance](index=11&type=section&id=Same%20Property%20Performance) Same property NOI grew **4.2% (GAAP)** and **5.1% (cash-basis)** in Q2 2024, driven by revenue growth outpacing expenses | Same Property Performance (Q2 2024 vs Q2 2023) | 2024 ($ in thousands) | 2023 ($ in thousands) | % Change | | :--- | :--- | :--- | :--- | | Rental Property Revenues | $203,906 | $195,895 | 4.1% | | Rental Property Operating Expenses | $68,524 | $66,015 | 3.8% | | **Same Property NOI** | **$135,382** | **$129,880** | **4.2%** | | **Cash-Basis Same Property NOI** | **$123,967** | **$118,007** | **5.1%** | - For the six months ended June 30, 2024, cash-basis same property NOI increased by **5.8%** year-over-year[5](index=5&type=chunk) [Office Leasing Activity](index=12&type=section&id=Office%20Leasing%20Activity) Q2 2024 saw **390,586 square feet** leased with strong second-generation rent increases of **18.2% cash-basis** and **37.6% straight-line** | Leasing Metric (Q2 2024) | Value | | :--- | :--- | | Net Leased Square Feet | 390,586 | | Number of Transactions | 40 | | Average Lease Term (Years) | 8.6 | | Net Effective Rent (per sq. ft.) | $24.85 | | Second Generation Rent Increase | Q2 2024 | YTD 2024 | | :--- | :--- | :--- | | Straight-Line Basis | 37.6% | 28.8% | | Cash-Basis | 18.2% | 11.7% | [Office Lease Expirations](index=12&type=section&id=Office%20Lease%20Expirations) The company maintains a staggered lease expiration schedule, with **9.7%** of leased space expiring in 2025 | Year of Expiration | Square Feet Expiring | % of Leased Space | | :--- | :--- | :--- | | 2024 | 383,044 | 2.3% | | 2025 | 1,610,398 | 9.7% | | 2026 | 1,304,333 | 7.8% | | 2027 | 1,589,964 | 9.6% | | 2028 | 1,604,869 | 9.6% | - Leases expiring in 2033 and thereafter represent the largest block, accounting for **21.3%** of the total leased space[10](index=10&type=chunk) [Top 20 Office Tenants](index=13&type=section&id=Top%2020%20Office%20Tenants) The top 20 tenants contribute **38.2%** of annualized rent, led by Amazon, with a weighted average remaining lease term of **6.3 years** - The top 20 tenants account for **38.2%** of the company's share of annualized rent[12](index=12&type=chunk) | Rank | Tenant | % of Annualized Rent | Weighted Avg. Remaining Lease Term (Years) | | :--- | :--- | :--- | :--- | | 1 | Amazon | 9.1% | 5.7 | | 2 | NCR Voyix | 5.4% | 8.9 | | 3 | ExxonMobil | 3.3% | 7.2 | | 4 | Meta Platforms | 2.5% | 7.1 | | 5 | Expedia | 2.3% | 6.8 | [Investment & Development Activity](index=14&type=section&id=Investment%20%26%20Development) [Investment Activity](index=14&type=section&id=Investment%20Activity) The company completed significant property acquisitions and developments between 2019-2022, alongside strategic dispositions - Completed property developments from 2019-2022 totaled **2,162,000 square feet** with a total project cost of **$858 million**[16](index=16&type=chunk) - Completed operating property acquisitions from 2019-2022 totaled **8,870,000 square feet** with a total price of over **$1 billion**[16](index=16&type=chunk) - Completed property dispositions between 2020 and 2022 included major assets like Hearst Tower and Burnett Plaza[18](index=18&type=chunk) [Development Pipeline](index=15&type=section&id=Development%20Pipeline) The active development pipeline includes two major projects with a company share of **$441.6 million**, notably the **98% leased** Domain 9 | Project | Type | Market | Company's Share of Cost (thousands) | % Leased | Estimated Stabilization | | :--- | :--- | :--- | :--- | :--- | :--- | | Neuhoff (Office/Retail) | Mixed-Use | Nashville | $294,550 | 37% | 4Q25 | | Domain 9 | Office | Austin | $147,000 | 98% | 1Q25 | [Land Inventory](index=16&type=section&id=Land%20Inventory) The company holds **36.0 acres** of developable land with a cost basis of **$156.0 million**, positioning it for future growth | Metric | Value | | :--- | :--- | | Total Developable Land (Acres) | 37.0 | | Company's Share (Acres) | 36.0 | | Company's Share of Land Basis | $156,007 thousand | [Capital Structure](index=16&type=section&id=Capital%20Structure) [Debt Schedule](index=16&type=section&id=Debt%20Schedule) Total debt (company share) is approximately **$2.76 billion** with a weighted average interest rate of **4.96%** and **84% fixed-rate** | Debt Analysis (Company Share) | Value | | :--- | :--- | | Total Principal | $2,758,594 (thousands) | | Weighted Average Interest Rate | 4.96% | | Weighted Average Maturity (Years) | 3.1 | | % Fixed Rate Debt | 84% | | % Floating Rate Debt | 16% | - Total consolidated debt stands at approximately **$2.59 billion**, with an additional **$168.8 million** in unconsolidated debt[22](index=22&type=chunk) - The company has **$682.9 million** of remaining borrowing capacity under its unsecured credit facility as of June 30, 2024[28](index=28&type=chunk) [Joint Venture Information](index=18&type=section&id=Joint%20Venture%20Information) The company engages in joint ventures for operating assets and development projects, including Neuhoff Holdings and Crawford Long-CPI - The Neuhoff Holdings LLC joint venture is a **50/50 partnership** for a mixed-use development in Nashville[32](index=32&type=chunk) - The Crawford Long-CPI, LLC joint venture for the Medical Offices at Emory Hospital includes a provision where Cousins can put its interest to its partner, or the partner can call Cousins' interest[32](index=32&type=chunk) [Non-GAAP Measures & Reconciliations](index=18&type=section&id=Non-GAAP%20Measures%20%26%20Reconciliations) [Calculations and Reconciliations](index=18&type=section&id=Calculations%20and%20Reconciliations) This section details reconciliations for key non-GAAP metrics, including FFO and NOI, and provides full-year 2024 guidance projections | FFO Reconciliation (Q2 2024, in thousands) | Amount | | :--- | :--- | | Net Income Available to Common Stockholders | $7,840 | | Add: Depreciation and amortization of real estate assets | $95,299 | | **Funds From Operations (FFO)** | **$103,346** | | NOI Reconciliation (Q2 2024, in thousands) | Amount | | :--- | :--- | | Net Income | $7,961 | | Adjustments (Interest, G&A, D&A, etc.) | $133,354 | | **Net Operating Income (NOI)** | **$141,315** | | Full Year 2024 Guidance Reconciliation (in thousands) | Low End | High End | | :--- | :--- | :--- | | Projected Net Income Available to Common Stockholders | $47,531 | $55,162 | | Add: Projected Depreciation and amortization | $353,935 | $353,935 | | **Projected Funds From Operations (FFO)** | **$401,375** | **$409,006** | [Definitions](index=22&type=section&id=Definitions) This section provides definitions for key non-GAAP financial measures such as FFO, NOI, and Same Property Net Operating Income - **Funds From Operations (FFO):** Defined by Nareit as net income excluding gains/losses from property sales and real estate depreciation, used as a supplemental measure of a REIT's operating performance[47](index=47&type=chunk) - **Net Operating Income (NOI):** Calculated as rental property revenues (excluding termination fees) less rental property operating expenses, used to measure property-level operating performance[47](index=47&type=chunk) - **Same Property Net Operating Income:** Represents NOI for properties that were stabilized and owned for the entirety of all comparable reporting periods, allowing for analysis of the continuing portfolio's growth trend[47](index=47&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2024 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number: 001-11312 COUSINS PROPERTIES INCORPORATED (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporation ...

ATLANTA, June 27, 2024 /PRNewswire/ -- Cousins Properties (NYSE:CUZ) announced today that it will release its second quarter 2024 earnings after the market closes on Thursday, July 25, 2024. Cousins will hold its second quarter 2024 earnings conference call on Friday, July 26, 2024 at 10:00 a.m. (Eastern Time). The number for this call is (800) 836-8184. The live webcast of this call can be accessed on the Company's website, www.cousins.com, through the "Cousins Properties Second Quarter Conference Call" li ...

ATLANTA, June 18, 2024 /PRNewswire/ -- Cousins Properties (NYSE: CUZ) announced today that its Board of Directors has declared a cash dividend of $0.32 per common share for the second quarter of 2024. The second quarter dividend will be payable on July 15, 2024 to common shareholders of record on July 3, 2024. About Cousins Properties This press release does not constitute an offer of any securities for sale. Certain matters discussed in this press release are forward-looking statements within the meaning o ...

Cousins Properties' (CUZ) portfolio of class A office assets, concentrated in the high-growth markets in the Sun Belt region, positions it well to ride the growth curve amid the improving demand for premium office assets. Its capital-recycling efforts and a healthy balance sheet augur well. Over the past six months, shares of this Atlanta, GA-based office real estate investment trust (REIT) have gained 15.6% compared with the industry's upside of 0.4%. Given the strength in its fundamentals, there seems to ...

EschCollection As many of my followers and readers have probably noticed, I have been actively covering Cousins Properties Incorporated (NYSE:NYSE:CUZ) since mid 2023. While I was bullish on the Stock even earlier than that, my conviction on the thesis really strengthened further once the overall office market started to become increasingly punished by the market due to rising financing costs and structurally weakening demand. As we can see in the chart below, CUZ has clearly underperformed the broader ...