Portfolio Overview - Paramount focuses on Class A office properties in New York and San Francisco[10] - The company has ~$7.2 billion in total assets under management across 17 assets[11] - The portfolio consists of 12.3 million square feet of REIT-owned assets and 0.8 million square feet of managed assets[11] - The average lease term is 7.1 years, and the portfolio is 94% leased[16] - The average rent is $90 per square foot[14] Financial Highlights - The midpoint of Cash NOI assumptions used in deriving the Full Year 2025 guidance is $302 million[11] - Net Debt / Enterprise Value is 66.5%[65] - Net Debt / Annualized Adjusted EBITDAre is 9.0x[65] Lease Expirations - The 5-year average lease expiration in San Francisco is 302,000 square feet, or 5.5% per annum[39] - The 5-year average lease expiration in New York is 154,000 square feet, or 12.5% per annum[40] - The 5-year average lease expiration for the total portfolio is 456,000 square feet, or 6.8% per annum[42] Capital Structure - The stock price is $5.75 per share[65] - The company has 220,311,000 common shares and 17,876,000 Operating Partnership Units outstanding[65] - The equity market capitalization is $1,369,578,000[65] - Total debt is $3,248,054,000, including $877,400,000 in notes & mortgages payable and $274,374,000 in unconsolidated joint ventures debt[65]

Financial Data and Key Metrics Changes - The company reported a net income of $18.3 million or $0.17 per share and FFO of $97.7 million or $0.89 per share for Q2 2025 [25][11] - The midpoint of the 2025 FFO outlook was raised by $0.02 to a range of $3.37 to $3.45 per share, reflecting a nearly 2% increase since the beginning of the year [12][28] - The debt to EBITDA ratio was 6.3 times at quarter end, with $106 million left to fund on the development pipeline and over $700 million of available liquidity [27] Business Line Data and Key Metrics Changes - The company achieved 920,000 square feet of second-generation leasing in Q2, including 370,000 square feet of new leasing [6][14] - The leased rate increased by 80 basis points to 88.9%, while occupancy remained flat at 85.6% [11][12] - The company has locked in over $12 million of annual NOI growth potential from its core four properties, with strong prospects for an additional $5 million to $6 million [31] Market Data and Key Metrics Changes - The company noted strong demand in its key markets, particularly in Charlotte, Dallas, and Nashville, which are outperforming the national average [73][72] - Nashville reported the nation's third-highest positive net absorption, with nearly 1 million square feet leased in Q2, the highest since 2021 [20][21] - The Charlotte market is experiencing significant job growth, with a daily net migration count increasing from 117 to 157 [22][76] Company Strategy and Development Direction - The company aims to upgrade its portfolio by rotating out of slower growth properties into higher growth, more capital-efficient assets [5][6] - The development pipeline includes properties like Glenlake III and Granite Park VI, which have over $10 million of NOI growth potential [8][31] - The company is optimistic about the future, citing a strong balance sheet and the potential for capital deployment in new investments [13][27] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the leasing activity and the potential for occupancy to improve by late 2025 [7][12] - The company highlighted the positive impact of limited supply in the market, which is driving rent growth in high-quality locations [9][10] - Management noted that the current economic environment is favorable for office space demand, with a shift back to in-office work [16][18] Other Important Information - The company received $3 million from the Florida Department of Transportation for roadway improvements, which was included in the FFO outlook [25][26] - The company is actively underwriting potential new investments and has numerous assets in the market for sale [6][5] - The company is focused on maintaining a diverse debt structure to manage interest rate exposure effectively [59][60] Q&A Session Summary Question: Can you discuss the guidance and the factors influencing it? - Management indicated that there were $0.03 of headwinds in the updated outlook due to higher G&A and pushed interest income into future years, offset by $0.05 of NOI upside [34][36] Question: What is the opportunity set for acquisitions in your markets? - Management noted that capital markets are opening up, with more high-quality assets coming to market and narrowing bid-ask spreads [39][40] Question: What are your expectations for concessions and tenant improvements? - Management stated that concessions have generally peaked, and market rents are increasing, which should positively impact net effective rents [44][46] Question: Will there be a spike in building improvements and leasing commissions? - Management expects elevated levels of tenant improvements and commissions to continue, likely higher than previous years [52][53] Question: What are the biggest swing factors in your guidance? - Management highlighted expense timing and potential lease renewals as key factors influencing guidance variability [55][56] Question: How competitive is the process for large RFPs? - Management noted that there is significant competition for headquarter space, with various industries showing interest, particularly in financial services [90][92]

Financial Data and Key Metrics Changes - The company reported net income of $18.3 million or $0.17 per share and FFO of $97.7 million or $0.89 per share for the quarter [24] - The midpoint of the 2025 FFO outlook has been raised by $0.02 to a range of $3.37 to $3.45 per share, reflecting a nearly 2% increase since the beginning of the year [11][27] - The debt to EBITDA ratio was 6.3 times at quarter end, with $106 million left to fund on the development pipeline and over $700 million of available liquidity [26] Business Line Data and Key Metrics Changes - The company achieved 920,000 square feet of second-generation leasing in the quarter, including 370,000 square feet of new leasing [5][10] - The occupancy rate remained flat at 85.6%, while the leased rate increased by 80 basis points to 88.9% [10] - The company has forecasted $25 million of annual NOI upside from stabilizing its core four assets, with 50% of this upside already secured through signed leases [6][30] Market Data and Key Metrics Changes - The company noted strong demand in its key markets, particularly in Charlotte, Dallas, and Nashville, which are outperforming the national average [72] - Nashville reported the highest dollar-weighted average lease term at nine years, with GAAP rent growth of 23.8% and cash rent spreads of 12.4% [19] - The Tampa market has seen its fifth consecutive quarter of positive net absorption, with a healthy pipeline of future tenant move-ins [22] Company Strategy and Development Direction - The company aims to upgrade its portfolio quality by rotating out of slower growth properties into higher growth, more capital-efficient assets [4] - The development pipeline includes significant NOI growth potential, with over $10 million at Glenlake III and Granite Park VI, and over $20 million at 23 Springs and Midtown East [7][30] - The company is confident in the Ovation mixed-use development project, which is expected to create significant value for shareholders [9] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the leasing environment, noting a return to office trends and a reduction in competitive supply [14] - The company anticipates steady occupancy growth through 2026, supported by signed leases and a strong development pipeline [85] - Management highlighted the importance of maintaining a strong balance sheet and liquidity to capitalize on future opportunities [12] Other Important Information - The company received $3 million from the Florida Department of Transportation for roadway improvements, which was included in the FFO outlook [24] - The company wrote off nearly $1 million of predevelopment costs at sites where office use is no longer deemed optimal [25] Q&A Session Summary Question: Insights on guidance and other income items - Management indicated that there were $0.03 of headwinds in the updated outlook due to higher G&A and pushed interest income into future years, offset by $0.05 of NOI upside [34][35] Question: Acquisition opportunities in current markets - Management noted that capital markets are opening up, with more high-quality assets coming to market and narrowing bid-ask spreads [40][41] Question: Expectations for concessions and tenant improvements - Management stated that concessions have generally peaked, with net effective rents increasing, although variability exists by submarket [44][46] Question: Future leasing commissions and tenant improvements - Management expects elevated levels of leasing commissions and tenant improvements to continue, likely higher than previous years [50][52] Question: Factors affecting guidance range - Management highlighted expense timing and potential lease renewals as swing factors affecting the guidance range [56] Question: Competitive landscape for large RFPs - Management noted strong competition for headquarter space, with demand coming from various industries, including financial services and manufacturing [90][92]

Financial Data and Key Metrics Changes - The company reported funds from operations (FFO) of $1.71 per share, which is $0.05 above the midpoint of guidance and $0.04 above consensus estimates for the quarter [41][42] - The midpoint of the full-year earnings guidance for 2025 has been raised by $0.02, reflecting strong operational performance [7][46] - The total portfolio occupancy for the second quarter ended at 86.4%, a decline of 50 basis points [26] Business Line Data and Key Metrics Changes - The company completed over 1,100,000 square feet of leasing in the quarter, bringing total leasing in 2025 to 2,200,000 square feet [7] - The leasing volume over the last four quarters was 5,700,000 square feet, which is 18% higher than the prior four quarters [7] - The development portfolio lease percentage increased by 500 basis points to 67% [31] Market Data and Key Metrics Changes - Office sales volume increased to $14.2 billion, up 80% from the prior quarter and 125% from the second quarter of last year [11] - The vacancy rate for premier workplaces in core CBD markets is 6.3%, significantly lower than the broader market [17] - In San Francisco, there has been a reduction in rental rates, with deals now being done in the mid-threes per square foot [75] Company Strategy and Development Direction - The company is proceeding with the development of a premier workplace at 343 Madison Avenue, with a total development cost of just under $2 billion [15][16] - The company is exploring the sale of non-income producing assets to generate nearly $300 million in net proceeds over the next two years [18] - The strategy focuses on high-quality assets in gateway markets, with a strong emphasis on tenant quality and long-term leases [60][62] Management's Comments on Operating Environment and Future Outlook - Management noted that corporate confidence is improving, driven by favorable economic conditions and a pro-growth tax bill [8] - The return to office behavior is more advanced in East Coast markets, particularly New York City, compared to the West Coast [10] - The company expects to gain occupancy, revenue, and FFO in the coming years, supported by limited rollover in 2026 and 2027 [21] Other Important Information - The company has a strong pipeline of leases in negotiation, totaling 1,800,000 square feet, with additional letters of intent at 343 Madison [25] - The upcoming Investor Day is scheduled for September 8, 2025, in New York City [48] Q&A Session Questions and Answers Question: Outlook for the unlevered return on 343 Madison - The expected unlevered cash yield upon delivery is between 7.5% to 8%, with a potential mid to high teens IRR on a levered basis [52] Question: Impact of AI on space needs - Management believes AI will create jobs at the top of the intellectual pyramid, leading to increased demand for high-quality office space in gateway markets [56][60] Question: Clarification on capitalized interest for 343 Madison - The capitalized interest is based on a blended rate of around 7.5% for the four-year development period, with actual capitalized interest potentially being lower [67] Question: Mark to market report for the quarter - The mark to market was slightly up in Boston and New York, but down in Washington, DC, and the West Coast, reflecting varying demand conditions [72][75] Question: Terms of the MTA ground lease for 343 Madison - The ground lease is a 99-year lease with known increases in payments, making it attractive for underwriting [78][80] Question: Guidance and timing of earnings - The bottom end of the annual range was increased due to strong portfolio performance, but higher expected expenses in the third quarter tempered the overall guidance increase [82][85]

Financial Data and Key Metrics Changes - The company reported funds from operations (FFO) of $1.71 per share, which is $0.05 above the midpoint of guidance and $0.04 above consensus estimates for the quarter [38] - The midpoint of the full-year 2025 earnings guidance has been raised by $0.02, reflecting strong operational performance [6][41] - The total portfolio occupancy for the second quarter ended at 86.4%, a decline of 50 basis points [24] Business Line Data and Key Metrics Changes - The company completed over 1,100,000 square feet of leasing in the quarter, bringing total leasing in 2025 to 2,200,000 square feet [6] - The leasing volume over the last four quarters was 5,700,000 square feet, which is 18% higher than the prior four quarters [6] - The development portfolio lease percentage increased by 500 basis points to 67% this quarter [28] Market Data and Key Metrics Changes - Office sales volume increased to $14.2 billion, up 80% from the prior quarter and 125% from the second quarter of last year [11] - The vacancy rate for trophy buildings in Midtown remains very low at 6.3%, with office rents growing at rates well above inflation [16] - The overall mark to market of leases signed this quarter was flat, with modest increases in Boston and New York, and slight decreases on the West Coast and DC [29] Company Strategy and Development Direction - The company is proceeding with the development of a new office building at 343 Madison Avenue, with a total development cost of just under $2 billion [14] - The company is exploring the sale of non-income producing assets to generate nearly $300 million in net proceeds over the next two years [16][17] - The strategy focuses on high-quality assets in prime locations, with a strong emphasis on tenant quality and long-term leases [55] Management's Comments on Operating Environment and Future Outlook - Management noted that corporate confidence is improving, driven by favorable economic conditions and a pro-growth tax bill [7] - The return to office behavior is advancing, particularly in East Coast markets, which is expected to enhance leasing activity [9] - The company anticipates occupancy, revenue, and FFO growth in the coming years, supported by limited rollover in 2026 and 2027 [19] Other Important Information - The company has executed a letter of intent with an anchor client for approximately 30% of the new building at 343 Madison Avenue [14] - The company is actively engaged in discussions for additional leasing opportunities, with 1,800,000 square feet of leases in negotiation post-Q2 [23] - The upcoming Investor Day is scheduled for September 8, 2025, in New York City [44] Q&A Session Summary Question: Outlook for the unlevered return on 343 Madison - The expected unlevered cash yield upon delivery is between 7.5% to 8%, with a potential mid to high teens IRR on a levered basis [48] Question: Impact of AI on demand for office space - AI is expected to drive job creation at the top of the intellectual pyramid, with companies in AI experiencing growth in demand for office space [51][54] Question: Clarification on capitalized interest for 343 Madison - Capitalized interest is based on a blended rate of around 7.5% for the four-year development period, with actual capitalized interest potentially being lower [61] Question: Mark to market performance this quarter - The mark to market was slightly worse than last quarter, with variations in rental rates across different markets impacting the overall performance [66] Question: Terms of the MTA ground lease for 343 Madison - The ground lease is a 99-year lease with predictable increases in payments, making it attractive for underwriting [73][75] Question: Guidance and earnings cadence for the second half of the year - The company expects a lower FFO in Q3 due to seasonal operating expenses, with a higher impact anticipated in Q4 [80]

Financial Data and Key Metrics Changes - Core FFO per diluted share for Q2 2025 was $0.36, down from $0.37 in Q2 2024, primarily due to higher net interest expenses from refinancing activities [24] - AFFO generated during Q2 2025 was approximately $16 million [25] - The company anticipates annual core FFO guidance in the range of $1.38 to $1.44 per diluted share, with no material changes to previously published assumptions [26] Business Line Data and Key Metrics Changes - Total leasing success in Q2 2025 reached 712,000 square feet, with year-to-date leasing exceeding 1,000,000 square feet [6] - Approximately two-thirds of Q2 leasing activity was related to new tenant leases, marking the highest new tenant leasing in a single quarter since 2018 [6][7] - Rental rates for spaces vacant less than a year reflected over 7% increases, with almost 14% roll-ups on a cash and accrual basis, respectively [9] Market Data and Key Metrics Changes - Demand for office space is increasing, with JLL Research noting a 5.8% growth in active space requirements, the highest level of demand since 2021 [10] - National occupancy remained stable, with Piedmont observing positive absorption in four of its operating markets [10] - The out-of-service portfolio was over 30% leased by the end of Q2 and is expected to reach stabilization by the end of next year [8] Company Strategy and Development Direction - The company is focusing on creating modern work environments and is well-positioned to benefit from the flight to quality in office buildings [6] - The leasing guidance for 2025 has been increased to a range of 2,200,000 to 2,400,000 square feet, reflecting an increase of over 800,000 square feet compared to the original guidance [11] - The company plans to continue selective capital deployment to drive lease percentage and increase rental rates, aiming for FFO and cash flow growth [28] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about leasing prospects, citing strong demand from large tenants and a lack of new office construction [10] - The company anticipates that the majority of new leasing will benefit earnings in 2026 and beyond [11] - Management noted that the current high interest rates and inflation are expected to diminish new office supply and push construction costs higher, which will support rental rate growth [9] Other Important Information - The company repurchased approximately $68 million of its bonds during the quarter, resulting in a $7.5 million loss on early extinguishment of debt, but expected to save $7.5 million in total interest over the next three years [25] - The company has approximately $450 million of availability under its revolving line of credit and no final debt maturities until 2028 [26] Q&A Session Summary Question: What are the longer-term goals for exposures within markets? - Management indicated a focus on increasing exposure to the Sunbelt markets, aiming to raise the current 70% exposure to around 80% [34] Question: Can you touch on some of the larger pending vacancies and activity? - Management highlighted a strong pipeline with about 2,200,000 square feet of outstanding proposals, with significant activity in Atlanta and Dallas [37] Question: What offsets should be considered in terms of guidance? - Management noted that while leasing strength is strong, most of it will translate into growth in 2026 and beyond, which is why the bottom line guidance was not revised up [48] Question: How do you think about the buyer group and potential outcomes? - Management mentioned that the sales market is improving, particularly for core quality assets, and they are focused on disposing of non-core assets [54] Question: What is driving the reinvigoration of leasing activity? - Management identified several factors, including the need for larger tenants to upgrade their office experience and the return-to-office mandates [64]

Financial Data and Key Metrics Changes - The second quarter net loss was $89 million or $0.51 per share, which included impairments in the Austin portfolio totaling $63.4 million or $0.37 per share [28] - The second quarter FFO totaled $26.1 million or $0.15 per diluted share, meeting consensus estimates [28] - The capital ratio improved to 4.1%, with a target range now set at 9% to 10%, the lowest in the past five years [8][10] Business Line Data and Key Metrics Changes - The quarterly retention rate was 82%, with leasing activity approximating 460,000 square feet, a 35% increase quarter over quarter [5][6] - The occupancy rate ended the quarter at 88.6% and the leased percentage at 91.1% [6][7] - The mark to market was 2.1% on a GAAP basis, with a negative cash basis [8] Market Data and Key Metrics Changes - In Philadelphia, the occupancy rate was 93.5% and the leased percentage was 96.5%, capturing 54% of all office deals in the Central Business District [7] - The Austin market is now 78% leased and occupied, showing improvement due to property sales [8] - The life science sector is expected to be a growth driver, supported by a strong regional healthcare ecosystem [14] Company Strategy and Development Direction - The company plans to recapitalize residential and commercial developments as leasing percentages approach 90% [32] - A new hotel development project has commenced, with a projected cost of less than $60 million and an anticipated 10% return on cost [23] - The company aims to return to investment-grade metrics over the next couple of years by reducing overall leverage [11][39] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the improving real estate market and the solid operating platform [40] - The company anticipates continued strong operating performance supported by limited rollover risk and an expanding lease pipeline [10] - Management noted that the quality bifurcation in the office sector continues, with high-quality buildings outperforming [13] Other Important Information - The company has no unsecured bond maturities until November 2027, providing ample liquidity [11] - The average cap rate on property sales was 6.9%, with a price per square foot of $212 [25] - The company recognized approximately 26% of deferred tenant improvement costs totaling $5.5 million during the quarter [26] Q&A Session Summary Question: Can you discuss capital provider appetite for recapitalization? - Management noted strong investor appetite for high-quality private investments, with ongoing discussions for recapitalization [44] Question: Will the hotel development be owned long-term or monetized? - The company is open to bringing in equity partners or joint venturing the hotel project, viewing it as a significant addition to their amenity program [48] Question: What are the deal economics for the 100,000 square foot lease at Uptown ATX? - The lease is a ten-year agreement with occupancy expected in early 2026, and the economics were in line with projections [53] Question: What lease percentage is targeted before recapitalization of office components? - The target is to reach 85% leased for the 3025 project, with visibility for further growth [56] Question: What flexibility does the company have regarding dividends? - The company has room to adjust dividends based on sales and tax losses, with ongoing discussions with the board [62] Question: Can you discuss the depth of the market for office assets? - The return of significant private investors for high-quality assets is encouraging, with a notable increase in office sales compared to previous years [66]

Core Insights - Highwoods Properties (HIW) shares have increased by 14.5% over the past three months, outperforming the industry average rise of 5.5% [1] - The company's portfolio is strategically located in high-growth Sun Belt markets, which are expected to benefit from a rising demand for high-quality office spaces as organizations push for return-to-office mandates [1][4] - The net effective rents for HIW in Q1 2025 were reported to be 20% higher than the average of the previous five quarters, indicating strong demand for its properties [5][7] Financial Performance - Analysts have revised the Zacks Consensus Estimate for HIW's 2025 funds from operations (FFO) per share to $3.39, reflecting a positive outlook [2] - The company has a healthy balance sheet with over $700 million in total available liquidity as of March 31, 2025, and no consolidated debt maturities until Q2 2026 [9] Strategic Initiatives - Highwoods is implementing a disciplined capital-recycling strategy, having completed buyouts worth $3.6 billion and dispositions totaling $3.0 billion from 2010 to 2024 [6] - The company has a development pipeline valued at $474 million, which is 62.8% pre-leased and expected to generate over $40 million in incremental annual net operating income (NOI) upon stabilization [8] Market Trends - The demand for office spaces is anticipated to be driven by inbound migration and significant investments from office occupiers in the Sun Belt regions, alongside hiring plans in the company's markets [4] - The recovery in leasing activity and the return of tenants to offices are expected to support the fundamentals of the office real estate market [4][7]

Portfolio & Strategy - Cousins Properties focuses on premier Sun Belt lifestyle office assets, with 100% of its portfolio in the Sun Belt and 100% Class A properties built around 2010[3] - The company's asking rents are 16% higher than pre-pandemic levels and 25% higher than Class A averages[3] - Cousins has recycled over $1 billion of older assets during the COVID pandemic[3,44] - The company sourced over $500 million of new investment opportunities in 2024[3] Growth & Development - Cousins has an attractive development pipeline of 1.2 million square feet and a land bank supporting 5.1 million square feet of additional development[3] - Since 2019, Cousins has experienced NOI growth of 18%[3] Financial Strength - The company maintains a strong balance sheet with $1 billion in liquidity[3,57] - Cousins' leverage is at 5.1x Net Debt/EBITDA, among the lowest in the office sector[3] - The company has increased its dividend by 10% since COVID while maintaining a conservative payout ratio[3] Market Trends - The company benefits from the "flight to quality" trend, with 64% of its portfolio developed or redeveloped since 2010[3,30]

Portfolio & Market Highlights - The company has a portfolio of 267 million square feet as of March 31, 2025 [10] - The portfolio is 881% leased as of March 31, 2025 [10] - Over 95% of the portfolio's NOI is in the Sunbelt region [10] - More than 90% of NOI is in the top 20 ULI markets [12] Financial Performance & Outlook - The company's 2025 FFO per share outlook ranges from $331 to $347 [149] - Same property cash NOI growth is projected to be between -40% and -20% [149] - Completed dispositions are expected to be $145 million [149] - Completed acquisitions are expected to be $138 million [149] Investment Strategy - The company has completed $138 million in acquisitions in 2025 [115] - The company has completed $145 million in non-core dispositions in 2025 [119] - The company's development pipeline includes 14 million square feet [10]