Cousins Properties Inc Q4 2024 Earnings Call Transcript

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

Question: Blaine Heck - Wells Fargo Securities, LLC - Analyst : Can you talk a little bit more about the investment pipeline as you look into 2025? Have you found that the acquisition market has become more competitive? Does that change your strategy or the size of your pipeline at all? And I guess, just generally, what's your confidence in being able to continue to make accretive investments this year? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 07, 2025 / 3:00PM, CUZ.N - Q4 2024 Cousins Properties Inc Earnings Call

Question: Blaine Heck - Wells Fargo Securities, LLC - Analyst : Great. That's helpful. Can you just talk about the mix between kind of the opportunities on high-yielding debt versus operating properties that are in your pipeline?

Question: Blaine Heck - Wells Fargo Securities, LLC - Analyst : Okay. Great. That's helpful. And then just lastly, related to that, on the funding side, should we continue to expect kind of large yields, if you have them, will be paired with an equity raise or dispositions or any other sources of funding makes sense at this point?

Question: Jeff Spector - BofA Global Research - Analyst : Just sitting back and thinking about all of the comments and how quickly the markets are improving and the accomplishments you had in '24. I guess just sitting back when you talked about your plan for '25 or I don't know if you could do a three-year plan, has anything changed in terms of the three-year plan or messaging to leasing this year?

Question: Jeff Spector - BofA Global Research - Analyst : And so to confirm, I know Kennedy also talked about the criteria for markets, in terms of your current positioning, Tampa, Phoenix, both around 8%, 9%, Houston, 4%. I guess anything new on your approach to those markets?

Question: Jeff Spector - BofA Global Research - Analyst : And then just last, can you talk about leasing year-to-date messaging conversations with, let's say, technology firms in your markets?

Question: Nick Thillman - Robert W. Baird & Co., Inc. - Analyst : Maybe starting with Richard, just kind of digging a little bit more into the leasing pipeline. Maybe just a little bit more commentary on the mix between new and renewals in that pipeline? And then also kind of the composition, the size of the tenants you're kind of looking at there, what's the average size, if there's some larger tenants included in that?

Question: Nick Thillman - Robert W. Baird & Co., Inc. - Analyst : And then you guys have made comments on assets like North Park willing to kind of put some leasing capital out the door to prioritize occupancy. Is there anything else in the portfolio that you're willing to kind of put dollars out and prioritize occupancy in? Or is that just like one specific of that like bottom 10% of assets that you guys have talked about in the past?

Question: Michael Lewis - Truist Securities - Analyst : So your guidance does not include any acquisitions, dispositions, or development starts. It does sound like you're optimistic there will be acquisition opportunities, maybe some loan investment opportunities. Is the development start highly unlikely? And maybe you could talk a little bit about how far out of whack those economics are to start a build this (inaudible) and how high the rents would have to be, kind of get a sense about how far we are away from another start?

Question: Michael Lewis - Truist Securities - Analyst : Okay. Great. And then, in Austin, I realize you're very well leased there. But do you think when NVIDIA makes a decision, there'll be some knock-on demand from that? And maybe that market could be closer to kind of recovering and coming back faster than we think? Or do you think it's probably the supply to mop up there and it might be a little while before the market really recovers?

Question: John Kim - BMO Capital Markets - Analyst : Now that the Saint Ann Court has been paid down. Can you just discuss what your original expectations were? I know the guidance was that it was going to be paid down in December. But it seemed like a fair amount of work just for like 1.5 months of income. Did you expect the mezz to extend past a couple of months?

Question: John Kim - BMO Capital Markets - Analyst : And can you comment further on how much you expect to invest in mezz this year? I know it's not incorporated in guidance, but do you expect similar to greater amounts?

Question: John Kim - BMO Capital Markets - Analyst : Okay. And on Sail Tower, great asset and acquisition and credit, what's the latest on Google's use of the building, the physical occupancy of it? And do you expect some of it to come back to the Southeast market?

Question: Upal Rana - KeyBanc Capital Markets Inc. - Analyst : So what seems to be the holdup with the Time Warner lease at the Domain Point? Are you looking at other space -- are they looking at other spaces? Or are they trying to determine how much space they still need? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 07, 2025 / 3:00PM, CUZ.N - Q4 2024 Cousins Properties Inc Earnings Call

Question: Upal Rana - KeyBanc Capital Markets Inc. - Analyst : Okay. Great. That was helpful. And then I was wondering could you give a sense of what your exposure is to GSA leases? And if minimal, how do you think what's going on there could potentially impact office leasing within your markets?

Question: Dylan Burzinski - Green Street Advisors, LLC. - Analyst : Dylan Burzinski I appreciate your comments on sort of the acquisition pipeline remaining relatively robust. But just wanted to sort of get you guys' opinions on sort of bidding tents and any new buyers coming to the market that may prove competitive to you guys? Just sort of looking at anecdotes, right, the most recent one being John Gray and Blackstone effectively calling bottom in a high-quality office. You look at CMBS issuances year-to-date for office at relatively high levels compared to recent history. So just trying to get a sense for if you guys are starting to see more and more buyer activity or interested parties come in to some of these transactions that you guys are looking at?

Question: Anthony Paolone - JPMorgan - Analyst : Just a couple left for me. First, with regards to OneTrust and BofA space, can you give us any updated thoughts on either traffic, thinking around the spaces or building or anything updated there?

Question: Anthony Paolone - JPMorgan - Analyst : Okay. And then just second for Gregg, just on the numbers matter. For Neuhoff, can you give us a sense as to what the FFO impact is from that asset in '25 versus, say, where it may be once it's stabilized? I can't recall like if all the interest stop being capitalized or the OpEx is flowing through? Just trying to wonder what that impact is this year?

Question: Brendan Lynch - Barclays Estimates - Analyst : I wanted to get a sense of how many more assets like Sail Tower, Vantage South End, are on the market that are new, well leased to kind of hit your A+ criteria that you could potentially pursue?

Question: Brendan Lynch - Barclays Estimates - Analyst : And are there any markets that you would be willing to enter that you're not already active in yet?

Question: Blaine Heck - Wells Fargo Securities, LLC - Analyst : It seems at this point like you guys have stopped providing same-store NOI and occupancy guidance. So I guess, without asking the overall ranges for the full year, can you talk about any recent trends in the leasing pipeline and the general drivers of same-store occupancy throughout the year and cadence of both? Obviously, you guys have been clear about Bank of America, but color on any other nuances would be helpful? And lastly, any view on where occupancy might end up at the end of this year relative to the end of '24 would be helpful?

Question: Dylan Burzinski - Green Street Advisors, LLC. - Analyst : Just wanted to get your guys' view on concessions and potential prospects for net effective rent growth. Obviously, headline vacancy across a lot of your markets is still relatively high, but your portfolio is well leased, if you look at Class A trophy vacancies across your markets much -- in a much better shape. So just trying to get a sense for when you guys think you'll be able to start to push net effective rent growth across the portfolio?