Cousins Properties(US:CUZ)2021-04-30 21:14Financial Data and Key Metrics Changes - The company reported a Funds From Operations (FFO) of $0.69 per share for Q1 2021, with same-property cash Net Operating Income (NOI) declining by 2.7% year-over-year [42][44] - Cash rents on expiring leases increased by 10.5%, marking a positive trend in rent growth despite the pandemic [32][43] - The net debt to EBITDA ratio stood at 4.87 times, indicating a strong balance sheet [50] Business Line Data and Key Metrics Changes - The company leased 271,000 square feet during the quarter, with a notable 10.5% increase in second-generation cash rents [11][32] - The occupancy rate for the total office portfolio decreased to 90.2%, with weighted average occupancy at 89.3% [28] - The development pipeline is valued at $363 million, with 79% pre-leased [10] Market Data and Key Metrics Changes - Customer utilization averaged about 20%, with higher rates in markets like Atlanta, Dallas, and Tampa, which exceeded 30% [25] - The leasing pipeline showed significant improvement, with active proposals increasing by 68% and space tours rising by 89% compared to Q4 2020 [39] Company Strategy and Development Direction - The company aims to build a premier urban Sunbelt office portfolio, focusing on markets with strong long-term growth characteristics [8][9] - The strategy includes disciplined capital allocation and leveraging local operating platforms to enhance community involvement [9][10] - The company plans to fund new investments through the sale of less relevant buildings, showcasing a proactive approach to portfolio management [17][18] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about a market recovery as vaccinations become widely available, with expectations for increased leasing activity in the second half of the year [12][36] - The company is well-positioned to capitalize on the migration of companies to the Sunbelt, with large tech firms prioritizing newer, amenitized properties [16][34] - Management acknowledged that 2021 would be a transitional year for earnings and occupancy, with known move-outs impacting short-term results [22][70] Other Important Information - The company sold Burnett Plaza for $137.5 million, exiting a non-core market, and acquired The RailYard for $201 million [19][48] - A dividend increase of 3.3% was announced, reflecting strong underlying cash flow growth [51] Q&A Session Summary Question: Were there any standout markets or properties with strong activity? - Management highlighted Austin and Atlanta as markets with significant leasing activity, driven by tech company expansions [56] Question: What are the development opportunities in Nashville and Dallas? - Management indicated ongoing interest in Nashville and Dallas, noting migration trends and potential for growth in these markets [62] Question: Can you provide an update on known or expected vacates in the portfolio? - Management reported robust activity for properties at 1200 Peachtree and 3350 Peachtree, with significant leasing interest [65] Question: What are the thoughts on starting Domain 9's speculative development? - Management expressed confidence in the decision to start Domain 9, citing strong market fundamentals and demand in Austin [71] Question: How is the demand for assets changing post-COVID? - Management noted an increase in interest from investors in Sunbelt markets, with expectations for more transactions as the market stabilizes [95]