Cousins Properties(US:CUZ)2025-07-31 20:29markdown [Earnings Release](index=2&type=section&id=Earnings%20Release) Cousins Properties reported strong Q2 2025 results with significant leasing activity, increased net income and FFO, strategic acquisition of The Link, and raised full-year FFO guidance [Highlights](index=2&type=section&id=Highlights) Cousins Properties reported a strong second quarter for 2025, highlighted by robust new and expansion leasing, which constituted over 80% of total activity. The company raised its full-year 2025 FFO guidance, projecting a 4.8% growth rate over the previous year. A key strategic move was the post-quarter acquisition of The Link, a trophy office property in Uptown Dallas, expanding its presence in a key market - Over **80%** of leasing activity in Q2 2025 was from new or expansion leases[12](index=12&type=chunk) - The company raised its full-year FFO guidance, with the new midpoint representing a **4.8%** growth rate over 2024[12](index=12&type=chunk) - Subsequent to the quarter's end, Cousins acquired **The Link**, a trophy lifestyle office property in Uptown Dallas[12](index=12&type=chunk)[23](index=23&type=chunk) [Financial Results](index=2&type=section&id=Financial%20Results) For the second quarter of 2025, Net Income available to common stockholders significantly increased to $14.5 million ($0.09 per share) from $7.8 million ($0.05 per share) in Q2 2024. Funds From Operations (FFO) also grew to $117.5 million ($0.70 per share) compared to $103.3 million ($0.68 per share) in the prior-year quarter. Year-to-date figures show even stronger growth, with FFO reaching $242.3 million ($1.44 per share) Q2 2025 Financial Results vs. Q2 2024 | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net Income (Common Stockholders) | $14.5M | $7.8M | | Net Income per Share | $0.09 | $0.05 | | FFO | $117.5M | $103.3M | | FFO per Share | $0.70 | $0.68 | Six Months Ended June 30, 2025 Financial Results vs. 2024 | Metric | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | | Net Income (Common Stockholders) | $35.4M | $21.1M | | Net Income per Share | $0.21 | $0.14 | | FFO | $242.3M | $202.8M | | FFO per Share | $1.44 | $1.33 | [Operations and Leasing Activity](index=2&type=section&id=Operations%20and%20Leasing%20Activity) Operational performance remained positive, with same-property cash NOI increasing by 1.2% in Q2 and 1.6% year-to-date. The company executed 334,000 square feet of office leases in the second quarter, with new and expansion leases making up 80% of this activity. Second-generation net rent on a cash basis saw a strong increase of 10.9% for the quarter - **Q2 2025 Leasing:** - Executed **334,000 sq. ft.** of office leases - New and expansion leases: **268,000 sq. ft.** (**80%** of total) - Same property cash NOI increased **1.2%** - Second generation cash net rent increased **10.9%**[13](index=13&type=chunk)[15](index=15&type=chunk) - **YTD 2025 Leasing:** - Executed **873,000 sq. ft.** of office leases - New and expansion leases: **473,000 sq. ft.** (**54%** of total) - Same property cash NOI increased **1.6%** - Second generation cash net rent increased **5.4%**[22](index=22&type=chunk) [Investing and Finance Activity](index=3&type=section&id=Investing%20and%20Finance%20Activity) In Q2 2025, the company issued $500.0 million of 5.250% public unsecured senior notes to pay off maturing debt and partially fund the acquisition of The Link. It also utilized its ATM program, selling 2.9 million shares on a forward basis year-to-date. Post-quarter, Cousins acquired The Link in Dallas for $218.0 million and repaid $250.0 million of privately placed senior notes - Issued **$500.0 million** of **5.250%** public unsecured senior notes, with net proceeds of **$496.9 million**[23](index=23&type=chunk) - Acquired **The Link**, a **292,000 sq. ft.** office property in Uptown Dallas, for **$218.0 million** subsequent to quarter end[23](index=23&type=chunk) - Sold **2.9 million** common shares year-to-date on a forward basis under the ATM program at an average price of **$30.44 per share**[23](index=23&type=chunk) [2025 Earnings Guidance](index=3&type=section&id=Earnings%20Guidance) The company raised its full-year 2025 guidance, reflecting higher parking income, favorable execution on its senior notes issuance, and the acquisition of The Link. The updated guidance anticipates FFO between $2.79 and $2.85 per share Full Year 2025 Guidance (per share) | Metric | Previous Guidance | Updated Guidance | | :--- | :--- | :--- | | Net Income per Share | $0.26 - $0.34 | $0.28 - $0.34 | | FFO per Share | $2.75 - $2.83 | $2.79 - $2.85 | - The increase in FFO guidance is driven by higher parking income, better than forecast execution on the unsecured senior notes, and the acquisition of The Link[23](index=23&type=chunk) [Company Information](index=3&type=section&id=Company%20Information) Cousins Properties is an Atlanta-based REIT specializing in Class A office buildings in high-growth Sun Belt markets, focusing on trophy assets and opportunistic investments [Company Overview](index=3&type=section&id=Company%20Overview) Cousins Properties is a fully integrated, self-administered real estate investment trust (REIT) based in Atlanta, GA. Founded in 1958, the company focuses on investing in, developing, and managing Class A office buildings located in high-growth Sun Belt markets - **Cousins Properties** is a REIT specializing in **Class A office buildings** in **high-growth Sun Belt markets**[18](index=18&type=chunk) - The company's strategy is based on a **simple platform, trophy assets, and opportunistic investments**[18](index=18&type=chunk) [Consolidated Financial Statements](index=4&type=section&id=Consolidated%20Financial%20Statements) The company's financial position as of Q2 2025 shows increased total assets and liabilities, driven by higher cash and notes payable, alongside significant growth in revenues and net income [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) As of June 30, 2025, Cousins Properties' total assets increased to $9.05 billion from $8.80 billion at year-end 2024. This was driven by a significant rise in cash and cash equivalents to $416.8 million. Total liabilities also grew to $4.25 billion, primarily due to an increase in notes payable to $3.48 billion Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | **Total Assets** | **$9,051,863** | **$8,802,146** | | Cash and cash equivalents | $416,840 | $7,349 | | Operating properties, net | $7,747,297 | $7,785,597 | | **Total Liabilities** | **$4,250,710** | **$3,931,979** | | Notes payable | $3,476,761 | $3,095,666 | | **Total Equity** | **$4,801,153** | **$4,870,167** | [Consolidated Statements of Operations](index=5&type=section&id=Consolidated%20Statements%20of%20Operations) For the second quarter of 2025, total revenues increased to $240.1 million from $213.0 million in Q2 2024, driven by higher rental property revenues. Net income available to common stockholders rose to $14.5 million for the quarter, a substantial improvement from $7.8 million in the prior-year period Statement of Operations Highlights (in thousands) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | Rental property revenues | $237,715 | $211,474 | $480,742 | $420,292 | | Total revenues | $240,128 | $212,978 | $490,456 | $422,219 | | Total expenses | $223,883 | $205,453 | $451,235 | $401,692 | | Net income | $14,658 | $7,961 | $35,751 | $21,412 | | Net income available to common stockholders | $14,483 | $7,840 | $35,380 | $21,128 | [Key Performance Metrics](index=5&type=section&id=Key%20Performance%20Metrics) The company's key metrics show stable to improving performance. As of Q2 2025, the total office portfolio was 91.6% leased, with weighted average occupancy at 89.1%. Second-generation cash-basis net rent increased by 10.9% in the quarter. Credit ratios remain healthy, with Net Debt to Annualized EBITDAre at 5.11x. The FFO payout ratio was 45.7% for the quarter Q2 2025 Performance Metrics | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Office Percent Leased (period end) | 91.6% | 91.2% | | Office Weighted Average Occupancy | 89.1% | 88.5% | | Change in Cash-Basis Second Gen. Net Rent | 10.9% | 18.2% | | Change in Cash-Basis Same Property NOI | 1.2% | 5.1% | Q2 2025 Credit & Dividend Metrics | Metric | Q2 2025 | | :--- | :--- | | Net Debt/Annualized EBITDAre | 5.11x | | Net Debt/Total Market Capitalization | 37.2% | | FFO Payout Ratio | 45.7% | | FAD Payout Ratio | 75.6% | [Funds From Operations (FFO)](index=7&type=section&id=Funds%20From%20Operations%20-%20Summary) FFO significantly increased in Q2 2025 and year-to-date, driven by higher Net Operating Income, with detailed breakdowns available by property [FFO Summary](index=7&type=section&id=FFO%20Summary) Funds From Operations (FFO) for Q2 2025 was $117.5 million, or $0.70 per share, compared to $103.3 million, or $0.68 per share, in Q2 2024. The growth was driven by an increase in Net Operating Income (NOI), which reached $166.7 million for the quarter. For the first half of 2025, FFO totaled $242.3 million, or $1.44 per share FFO Summary (in thousands, except per share) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | NOI | $166,701 | $141,315 | $331,929 | $279,940 | | FFO | $117,494 | $103,346 | $242,328 | $202,842 | | FFO per Share | $0.70 | $0.68 | $1.44 | $1.33 | [FFO Detail by Property](index=8&type=section&id=FFO%20Detail) The detailed FFO schedule breaks down Net Operating Income (NOI) by individual property. For Q2 2025, the total NOI was $166.7 million, with consolidated properties contributing $163.5 million and unconsolidated properties contributing $3.2 million. Top contributing properties include The Domain, Sail Tower, and Terminus NOI Contribution - Q2 2025 (in thousands) | Source | Q2 2025 NOI | | :--- | :--- | | Consolidated Properties | $163,536 | | Unconsolidated Properties | $3,165 | | **Total NOI** | **$166,701** | [Portfolio Statistics](index=9&type=section&id=Portfolio%20Statistics) The company's portfolio consists of 20.85 million square feet of office space, with high leased and occupancy rates, primarily concentrated in key Sun Belt markets like Austin and Atlanta [Portfolio Overview](index=9&type=section&id=Portfolio%20Overview) As of Q2 2025, the company's total office portfolio comprised 20.85 million rentable square feet. The portfolio-wide leased percentage was 91.6%, with a weighted average occupancy of 89.1%. The portfolio is geographically diversified across key Sun Belt markets, with Austin and Atlanta being the largest contributors to NOI Total Office Portfolio - Q2 2025 | Metric | Value | | :--- | :--- | | Rentable Square Feet | 20,850,000 | | End of Period Leased % | 92.1% (1Q25), 91.6% (2Q25) | | Weighted Average Occupancy % | 90.0% (1Q25), 89.1% (2Q25) | | Total Property Level Debt | $485.3M | [Portfolio by Market](index=9&type=section&id=Portfolio%20by%20Market) The portfolio's Net Operating Income is heavily concentrated in the Sun Belt. For Q2 2025, Austin was the largest market, contributing 36.6% of total NOI, followed by Atlanta at 31.8%. Other significant markets include Charlotte (10.8%), Tampa (7.9%), and Phoenix (7.2%) Q2 2025 Portfolio NOI by Market | Market | % of Total NOI | | :--- | :--- | | Austin | 36.6% | | Atlanta | 31.8% | | Charlotte | 10.8% | | Tampa | 7.9% | | Phoenix | 7.2% | | Dallas | 2.2% | [Same Property Performance](index=11&type=section&id=Same%20Property%20Performance) The company's same-property portfolio demonstrated positive growth. For the second quarter of 2025, same-property NOI increased by 3.2% on a GAAP basis and 1.2% on a cash basis compared to the prior year. Year-to-date, the growth was 3.6% (GAAP) and 1.6% (cash basis) Same Property NOI Growth (YoY % Change) | Period | Same Property NOI | Cash-Basis Same Property NOI | | :--- | :--- | :--- | | Q2 2025 | 3.2% | 1.2% | | YTD 2025 | 3.6% | 1.6% | [Office Leasing Activity](index=11&type=section&id=Office%20Leasing%20Activity) The company demonstrated strong leasing activity in Q2 2025, with a high proportion of new leases and significant increases in second-generation net rents [Leasing Activity Summary](index=11&type=section&id=Leasing%20Activity%20Summary) In Q2 2025, Cousins leased 334,368 square feet across 41 transactions, with a weighted average lease term of 7.9 years. New leases accounted for 220,858 square feet. For the first six months of 2025, total leasing activity reached 873,431 square feet Leasing Activity | Metric | Q2 2025 | YTD 2025 | | :--- | :--- | :--- | | Net Leased Square Feet | 334,368 | 873,431 | | New Leases (sq. ft.) | 220,858 | 342,165 | | Renewal Leases (sq. ft.) | 66,045 | 400,488 | | Weighted Avg. Lease Term (Yrs) | 7.9 | 6.9 | | Net Effective Rent (per sq. ft.) | $28.35 | $26.32 | [Second Generation Rent Spreads](index=12&type=section&id=Second%20Generation%20Rent%20Spreads) The company achieved strong rental rate growth on second-generation leases. For leases signed in Q2 2025, the increase in net rent per square foot was 27.2% on a straight-line basis and 10.9% on a cash basis Increase in Second Generation Net Rent per sq. ft. | Basis | Q2 2025 | YTD 2025 | | :--- | :--- | :--- | | Straight-line | 27.2% | 20.8% | | Cash-basis | 10.9% | 5.4% | [Lease Expirations and Tenant Profile](index=12&type=section&id=Office%20Lease%20Expirations) The company maintains a well-staggered lease expiration schedule, with a diversified tenant base anchored by major technology and investment-grade companies [Lease Expiration Schedule](index=12&type=section&id=Lease%20Expiration%20Schedule) The company has a well-staggered lease expiration profile. Only 3.4% of leased space is set to expire in the remainder of 2025, and 6.4% in 2026. A significant portion, 25.9% of leased space, expires in 2034 and thereafter, providing long-term cash flow stability Lease Expirations by Year (% of Leased Space) | Year | % of Leased Space Expiring | | :--- | :--- | | 2025 | 3.4% | | 2026 | 6.4% | | 2027 | 9.3% | | 2028 | 9.7% | | 2029 | 9.7% | | 2034 & Thereafter | 25.9% | [Top 20 Office Tenants](index=12&type=section&id=Top%2020%20Office%20Tenants) The tenant base is anchored by high-quality, investment-grade companies. The top 20 tenants occupy 40.1% of the company's annualized rent. The top three tenants are Amazon, Alphabet, and NCR Voyix, collectively accounting for 20.3% of annualized rent, demonstrating a concentration in the technology sector Top 5 Tenants by Annualized Rent | Tenant | % of Annualized Rent | | :--- | :--- | | 1. Amazon | 9.1% | | 2. Alphabet | 6.3% | | 3. NCR Voyix | 4.9% | | 4. ExxonMobil | 2.5% | | 5. IBM | 2.2% | - The top 20 tenants account for **40.1%** of the company's total annualized rent[87](index=87&type=chunk) [Investment & Development](index=14&type=section&id=Investment%20Activity) The company actively manages its portfolio through strategic investments, developments, and dispositions, maintaining a pipeline of future growth opportunities including the Neuhoff mixed-use project and land inventory [Completed Investments and Dispositions](index=14&type=section&id=Completed%20Investments%20and%20Dispositions) This section details historical investment activity from 2020 to 2024. Notable recent developments include the completion of Domain 9 in Austin in Q1 2025. The tables show a consistent strategy of acquiring and developing properties in core markets while disposing of non-core assets - Completed the **Domain 9** office development in Austin (**338,000 sq. ft.**) in Q1 2025 at a total project cost of **$147.0 million**[90](index=90&type=chunk) - Historically, the company has actively recycled capital, with significant dispositions in 2021 and 2022, and acquisitions and developments focused in markets like Austin, Atlanta, and Charlotte[88](index=88&type=chunk)[93](index=93&type=chunk) [Development Pipeline](index=15&type=section&id=Development%20Pipeline) As of June 30, 2025, the active development pipeline consists of the Neuhoff mixed-use project in Nashville. The company holds a 50% ownership interest. The project, with an estimated cost of $589.1 million, includes office, retail, and apartment components, with stabilization expected between Q4 2025 and Q3 2026 Neuhoff (Nashville) Development Project | Metric | Value | | :--- | :--- | | Company's Ownership | 50% | | Total Estimated Project Cost | $589.1M | | Company's Share of Cost | $294.6M | | Office/Retail Component | 450,000 sq. ft. (51% leased) | | Apartment Component | 542 units (78% leased) | [Land Inventory](index=15&type=section&id=Land%20Inventory) The company holds a total of 37.0 acres of developable land across its key markets, providing a pipeline for future growth. The total cost basis of this land is $162.8 million, with the company's share being $156.0 million. The largest parcel is 14.1 acres at Corporate Center in Tampa - Total developable land inventory is **37.0 acres**[97](index=97&type=chunk) - The company's share of the cost basis for this land is **$156.0 million**[97](index=97&type=chunk) [Debt and Capital Structure](index=16&type=section&id=Debt%20Schedule) The company maintains a well-structured debt profile with $3.68 billion in total debt, predominantly fixed-rate, and a laddered maturity schedule [Debt Overview and Maturities](index=16&type=section&id=Debt%20Overview%20and%20Maturities) As of Q2 2025, total debt (company's share) stood at $3.68 billion with a weighted average maturity of 4.1 years. The capital structure is predominantly fixed-rate, with 89% of debt fixed. The debt maturity schedule is well-laddered, with 7% maturing in 2025 and 17% in 2026 Debt Composition as of June 30, 2025 | Metric | Value | | :--- | :--- | | Total Debt (Company Share) | $3.68B | | Fixed Rate Debt | 89% | | Floating Rate Debt | 11% | | Weighted Average Interest Rate | 5.04% | | Weighted Average Maturity | 4.1 Years | - Subsequent to quarter end, on July 7, 2025, the company repaid a **$250 million** privately placed senior note[99](index=99&type=chunk)[109](index=109&type=chunk) [Joint Venture Information](index=17&type=section&id=Joint%20Venture%20Information) The company utilizes joint ventures for certain assets. Key JVs include a 90% consolidated interest in HICO 100 Mill LLC (100 Mill property) and a 50% unconsolidated interest in Neuhoff Holdings LLC (Neuhoff development). The agreements outline specific cash flow distributions and buy/sell options for each partnership Key Joint Ventures | Joint Venture | Property | Company's Interest | Presentation | | :--- | :--- | :--- | :--- | | HICO 100 Mill LLC | 100 Mill | 90% | Consolidated | | TR Domain Point LLC | Domain Point | 96.5% | Consolidated | | Neuhoff Holdings LLC | Neuhoff | 50% | Unconsolidated | | Crawford Long-CPI, LLC | Medical Offices at Emory | 50% | Unconsolidated | [Non-GAAP Financial Measures](index=18&type=section&id=Non-GAAP%20Financial%20Measures%20-%20Calculations%20and%20Reconciliations) This section provides essential reconciliations and definitions for non-GAAP financial measures like FFO, NOI, and FAD, crucial for understanding the company's operational performance and dividend capacity [Reconciliations](index=18&type=section&id=Reconciliations) This section provides detailed reconciliations of GAAP measures to the non-GAAP metrics used throughout the report. It includes calculations for FFO, EBITDAre, Net Operating Income (NOI), Funds Available for Distribution (FAD), and various credit ratios. A key table reconciles the full-year 2025 Net Income guidance to the corresponding FFO guidance Reconciliation of 2025 FFO Guidance (per share) | Metric | Low | High | | :--- | :--- | :--- | | Net Income Per Share | $0.28 | $0.34 | | Add: Real Estate Depreciation & Amortization | $2.51 | $2.51 | | **Funds From Operations (FFO) Per Share** | **$2.79** | **$2.85** | [Definitions](index=22&type=section&id=Definitions) This section defines the non-GAAP financial measures used by the company. Key defined terms include Funds From Operations (FFO), which is a standard REIT performance metric excluding real estate depreciation; Net Operating Income (NOI), which measures property-level performance; and Funds Available for Distribution (FAD), which adjusts FFO for non-cash items and capital expenditures to better reflect dividend capacity - **FFO (Funds From Operations):** Net income excluding real estate depreciation and gains/losses from property sales, used as a supplemental measure of a REIT's operating performance[134](index=134&type=chunk) - **NOI (Net Operating Income):** Rental property revenues less rental property operating expenses, used to measure the operating performance of properties[136](index=136&type=chunk) - **FAD (Funds Available for Distribution):** FFO adjusted for non-cash items and second-generation capital expenditures, indicating dividend-paying ability[133](index=133&type=chunk)