Cousins Properties Inc Q3 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Jeff Spector - BofA Global Research - Analyst : Great. Good morning and congratulations on the quarter. First question, if we can focus on your comments around optimism around the transaction cycle. Are you planning to continue to leverage your current footprint and teams? Do you see yourself looking into other Sun Belt markets? If you can talk about that a little bit more.

Question: Jeff Spector - BofA Global Research - Analyst : Thank you. And then my second question, I know you've talked -- you've compared a couple of times to 2019, which I assume is purposeful. So in terms of occupancy levels, can you provide any more color there? I know you talked about how '25 may play out. But I guess, big picture, where do you -- you've compared again this quarter to 2019. 2019 was a very strong year. Can you talk a little bit more about that and maybe even tie in thoughts around concessions and free rent? Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 25, 2024 / 2:00PM, CUZ.N - Q3 2024 Cousins Properties Inc Earnings Call

Question: Jeff Spector - BofA Global Research - Analyst : Thank you.

Question: Blaine Heck - Wells Fargo Securities, LLC - Analyst : Great. Thanks. Good morning. Can you talk a little bit more about the Saint Ann Court mortgage acquisition? It's got a maturity date that's right around the corner. I know what Gregg just said, it's in guidance. But can you run us through any of the potential alternative scenarios and whether you think there's much probability that's something other than being paid back at maturity happens?

Question: Blaine Heck - Wells Fargo Securities, LLC - Analyst : Okay. That's really helpful, Colin. And maybe just sticking with you here. I mean, as you guys first made the decision coming out of the pandemic to really gather up dry powder for investment and commented on your intention to find ways to invest in the dislocated market, it seems as though everything was on the table, including large portfolio or even entity-level transactions, which Cousins has done in the past. Is that still the case? Could we see anything -- any large transactions, portfolio transactions, entity level transactions? Or do you think in this environment, it's probably more likely to be one-off smaller deals?

Question: Blaine Heck - Wells Fargo Securities, LLC - Analyst : Okay, great. Thanks, Colin.

Question: Anthony Paolone - JPMorgan - Analyst : Yes, thanks. I guess, first, just with the discussion about the desirability of just the best assets and you having a decent amount of activity there, is there any prospect of build to suits or activating any of the development land in the near term?

Question: Anthony Paolone - JPMorgan - Analyst : Okay. Thanks. And then just second one, as you think about 2025, can you maybe talk about what the mark to market looks like right now on the leases coming due and just how you think that might look?

Question: Anthony Paolone - JPMorgan - Analyst : Okay. Thank you.

Question: John Kim - BMO Capital Markets - Analyst : Good morning, Colin. There was -- I think Richard made on the Austin market and two large leases signed in the third quarter. We all know about the IBM lease, but I was wondering who that second lease was with? And if you could just discuss the health of tech leasing in the market. Do you know that NVIDIA is looking for space. I'm wondering if there's other large tech leases out there currently in the market.

Question: John Kim - BMO Capital Markets - Analyst : Okay. And then following up on the Saint Ann Court mortgage debt. Have you been in contact with the owner, [Hardwood]? And can you discuss where you think they're at as far as potentially opening up the relationship with you?

Question: John Kim - BMO Capital Markets - Analyst : I know Gregg mentioned that it's -- you're assuming that mortgage debt gets paid off. But I imagine you're not making this investment just for five or six weeks of accretion. I'm just wondering that commentary was for guidance purposes? Or is that what you think will actually happen?

Question: John Kim - BMO Capital Markets - Analyst : Great. Thank you.

Question: Nick Thillman - Robert W. Baird & Co., Inc. - Analyst : Hey, good morning. First, I wanted to touch on the leasing pipeline, the late-stage pipeline that break out between new and renewal leasing, Richard, if you had that?

Question: Nick Thillman - Robert W. Baird & Co., Inc. - Analyst : Helpful. And then, Gregg, I wanted to touch a little bit on some of the two large pending basis within the portfolio. What you're assuming for redevelopment costs for maybe Fifth Third and if there's any additional spend you did at North Park with One Trust leaving? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 25, 2024 / 2:00PM, CUZ.N - Q3 2024 Cousins Properties Inc Earnings Call

Question: Nick Thillman - Robert W. Baird & Co., Inc. - Analyst : That's it for me. Thank you.

Question: Upal Rana - KeyBanc Capital Markets Inc. - Analyst : Thank you. Colin, you talked about reaching 90% occupancy at some point in the future. Given you talked about some downdraft in occupancy through 3Q next year, do you feel like you're still on track to reach 90% occupancy and maybe even possibly 2026?

Question: Upal Rana - KeyBanc Capital Markets Inc. - Analyst : Okay. Got it. That was helpful. And then just quickly on the IBM lease. I was wondering if you can give us some color on how that took place? And what's Meta's plans in the rest of the Austin market going forward?

Question: Peter Abramowitz - Jefferies - Analyst : Thanks very much, madame. Yes, one of your peers this quarter mentioned an uptick in interest for build to suits in a lot of the Sun Belt markets. Just curious if those conversations are picking up for you as well? And if that's part of the opportunity set you're considering with the capital you raised?

Question: Peter Abramowitz - Jefferies - Analyst : Thanks, Colin. And then just to go back to your comments around the dislocation between the public and the private market. I guess maybe a philosophical question, if you step back and look at the environment, your cost of capital, and the public market's pretty favorable and like you said, things are pretty challenging in the private market. I guess, do you see anything that could change that dynamic, particularly on the private market side and cause things to convert? Or is there anything out there that maybe you think about could change that dynamic over the next year or so?

Question: Peter Abramowitz - Jefferies - Analyst : That's helpful. That's all from me. Thanks.

Question: Dylan Burzinski - Green Street Advisors, LLC. - Analyst : Hi, guys. Thanks for taking the question here. And not to beat a dead horse on the Saint Ann Court loan but just curious, you talked about likely being paid off at maturity or that's being what's implied by guidance or possibly assessing your rise in remedies if you don't get paid off, but just trying to get a sense for your appetite to extend this loan possibly at maturity.

Question: Dylan Burzinski - Green Street Advisors, LLC. - Analyst : And I guess as you guys are evaluating other investment opportunities, are there certain markets where you're seeing just a higher investable universe today given where -- either just more appetite in terms of sellers wanting to hit any bid ask there, whether it's on the debt or equity side? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 25, 2024 / 2:00PM, CUZ.N - Q3 2024 Cousins Properties Inc Earnings Call

Question: Dylan Burzinski - Green Street Advisors, LLC. - Analyst : Great. Appreciate the details, Colin. Thank you.

Question: Brendan Lynch - Barclays Estimates - Analyst : Great. Thank you for taking my question. There's great outcome between Meta and IBM. And it sounds like tech demand in Austin is pretty strong. Other tech tenants will scale back square footage within your portfolio?

Question: Brendan Lynch - Barclays Estimates - Analyst : Okay. Great. One quick one on Saint Ann Court. The initial maturity date is in December, but is there an embedded extension option that you could discuss?

Question: Brendan Lynch - Barclays Estimates - Analyst : Understood. And maybe one other quick one. It sounded like taxes were a consideration in the cash same property NOI coming down a little bit relative to the first half. Just wondering if there's anything else specific that you could call out that might be behind that decline? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 25, 2024 / 2:00PM, CUZ.N - Q3 2024 Cousins Properties Inc Earnings Call

Question: John Kim - BMO Capital Markets - Analyst : Second follow-up. I wanted to comment -- sorry, follow-up on your commentary on the BofA lease in Charlotte. You mentioned some short-term direct leasing you've done with the sublessee. I was wondering if you could provide any color as far as how long that term was and if there's any mark to market?

Question: John Kim - BMO Capital Markets - Analyst : Are there any other opportunities to go direct with other subleased tenants?

Question: John Kim - BMO Capital Markets - Analyst : Okay. And then we noticed that the $9.6 million bankruptcy claim of SVB is no longer mentioned in your supplement. I realize it wasn't part of your guidance to begin with, but I was wondering what the status of that was.

Question: Brendan Lynch - Barclays Estimates - Analyst : Okay. Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 25, 2024 / 2:00PM, CUZ.N - Q3 2024 Cousins Properties Inc Earnings Call