• FFO (Funds From Operations): $0.69 per share for Q4, above the midpoint of guidance.
• Same Property Net Operating Income: Increased 3.4% on a cash basis year-over-year.
• Leasing Activity: 462,000 square feet of leases completed in Q4 with a 6.7% cash rent roll-up.
• Occupancy Rate: Portfolio occupancy at 89.2% at year-end, up from 87.6% in 2024.
• Equity and Debt Raised: $469 million in equity and $400 million in unsecured senior notes issued.
• 2025 FFO Guidance: Midpoint of $2.78 per share, representing approximately 3.5% growth over 2024.
• Acquisitions: Vantage South End in Charlotte for $328.5 million and Sail Tower in Austin for $521.8 million.
• Net Debt to EBITDA: 5.16 times, indicating strong balance sheet capacity.
• GAAP NOI Growth: 5.3% year-over-year for Q4.
• Cash NOI Growth: 3.4% year-over-year for Q4.
• Development Pipeline Costs: $39 million remaining, funded by construction loan and operating cash flow.

• Warning! GuruFocus has detected 9 Warning Signs with CUZ.

Release Date: February 07, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Cousins Properties Inc (NYSE:CUZ) reported an exceptional fourth quarter with FFO of $0.69 per share, exceeding the midpoint of their guidance.
• The company achieved a 3.4% increase in same property net operating income on a cash basis.
• Leasing activity was strong, with 462,000 square feet of leases completed during the quarter and a 6.7% cash rent roll-up.
• Cousins Properties Inc (NYSE:CUZ) invested nearly $1 billion in trophy lifestyle office properties in Sun Belt markets, which were immediately accretive to earnings.
• The company maintains a best-in-class balance sheet with the lowest leverage across the sector, providing great access to capital.

Negative Points

• The office market remains highly bifurcated, with little to no leasing demand for older vintage properties.
• The private capital markets for office assets remain challenging, with limited and expensive asset-level debt and equity.
• Cousins Properties Inc (NYSE:CUZ) anticipates a temporary occupancy downdraft due to the move-outs of One Trust in Atlanta and Bank of America in Charlotte.
• The company faces macroeconomic uncertainty, particularly concerning interest rates, which could impact financial results.
• There is a potential headwind from the cessation of capitalizing interest on certain development projects, affecting earnings in 2025.

Q & A Highlights

Q: 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? A: The pipeline remains strong, and fundamentals are improving with limited new supply and accelerating leasing demand. The capital market remains somewhat dislocated, providing a compelling time for Cousins to invest. We hope to see more transactions with limited competition, positioning us as a preferred buyer for high-quality office assets. - Michael Connolly, CEO

Q: Can you discuss the mix between high-yielding debt opportunities versus operating properties in your pipeline? A: Our bias is typically towards equity positions, but we remain open to investing in debt when it offers the best risk-adjusted returns. The pipeline includes a variety of opportunities, and we maintain flexibility to invest across the capital structure, consistent with our long-term strategy. - Michael Connolly, CEO

Q: Should we expect large acquisitions to be paired with equity raises or dispositions? A: We will evaluate on a case-by-case basis. Currently, we can invest accretively using fresh capital, both debt and equity. Depending on the situation, selling assets might make sense, but our primary goal is to ensure acquisitions are accretive on a leverage-neutral basis. - Gregg Adzema, CFO

Q: Has anything changed in your three-year plan or messaging to leasing this year? A: Our plan remains unchanged, focusing on building the leading Sun Belt lifestyle office company. We prioritize organic growth, capitalize on external growth opportunities, and maintain a best-in-class balance sheet to drive leasing market share and accretive investments. - Michael Connolly, CEO

Q: Can you provide an update on the leasing pipeline, particularly the mix between new and renewal leases? A: The mix is slightly lower than the 70% new and expansion leases posted in 2024 but still skewed towards new and expansion. We see a variety of tenant sizes, with no significant change in the size of tenants we're engaging with. - Richard Hickson, EVP of Operations

For the complete transcript of the earnings call, please refer to the full earnings call transcript.