Cousins Properties(US:CUZ)2023-02-10 22:18Financial Data and Key Metrics Changes - The company reported a fourth-quarter FFO of $0.66 per share, with same property net operating income (NOI) increasing by 2.5% on a cash basis [25][40] - The cash rent roll-up for the fourth quarter was 7.3%, while the full-year cash rent roll-up was 9.5% [11][25] - The net debt-to-EBITDA ratio closed the year at 4.9 times, significantly lower than the Green Street sector average of 8.2 times [30][42] Business Line Data and Key Metrics Changes - The company executed 632,000 square feet of leases in the fourth quarter, marking the highest quarterly volume of 2022 [33] - Excluding Houston, second-generation net rents increased by 27.7% on a cash basis in the fourth quarter [12] - Parking revenues during the fourth quarter were the highest since Q1 2020, with a 10% year-over-year increase for all of 2022 [17] Market Data and Key Metrics Changes - The physical office occupancy averaged over 50% during the last week of January, with Austin leading at 68% [4] - In Austin, the company signed 153,000 square feet of leases in the last quarter, rolling up cash net rents over 40% on average [37] - The Atlanta Metro recorded 485,000 square feet of net absorption last quarter, with Class A rents up 5% year-over-year [57] Company Strategy and Development Direction - The company aims to build a preeminent Sun Belt REIT, focusing on high-quality, amenitized office spaces [28] - The development pipeline is currently valued at $428 million, with 63% pre-leased [7] - The company is positioned to benefit from improving supply and demand fundamentals in the office market [5][8] Management's Comments on Operating Environment and Future Outlook - Management anticipates that market conditions will become more challenging in 2023 but believes the company is well-positioned to thrive [6][8] - There is optimism that premier workplaces will become a distinct asset class with improved sentiment over the long term [8] - The company expects to maintain occupancy and potentially grow it towards the end of 2023, despite modest lease expirations [14][29] Other Important Information - The company has no significant near-term loan maturities and approximately $950 million available on its $1 billion revolving credit facility [30] - The company anticipates full-year 2023 FFO between $2.52 and $2.64 per share, with no property acquisitions or dispositions included in this guidance [19] Q&A Session Summary Question: How are leasing conversations going at Neuhoff in Nashville? - Management expressed excitement about the Neuhoff project and noted increased activity as the project nears completion, with hopes to sign leases this year [64] Question: What are the current market dynamics affecting leasing spreads? - Management indicated that leasing spreads were significantly higher excluding Houston, with Austin being a key driver [75] Question: What is the company's strategy regarding floating rate debt? - The company plans to maintain floating rate debt at around 20% of total debt, consistent with industry peers [97] Question: How does the company view the transaction environment in the current market? - Management noted a potential increase in off-market discussions as owners with weak capital structures begin to reach out [66] Question: What is the expected impact of lease expirations on occupancy? - Management clarified that they expect to maintain occupancy levels despite low lease expirations, with a focus on renewals [68][70]