Cousins Properties Incorporated Stock

Good morning, ladies and gentlemen, and welcome to the Cousins Properties Second Quarter Conference Call. [Operator Instructions] Also note that this call is being recorded on Friday, July 31, 2026. I would now like to turn the conference over to Pamela Roper, General Counsel.

Thank you. Good morning, and welcome to Cousins Properties Second Quarter Earnings Conference Call. With me today are Colin Connolly, our President and Chief Executive Officer; Richard Hickson, our Executive Vice President of Operations; [ Kennedy Hicks ], our Executive Vice President and Chief Investment Officer; and Gregg Adzema, our Executive Vice President and Chief Financial Officer. .

The press release and supplemental package were distributed yesterday afternoon as well as furnished on Form 8-K. In the supplemental package, the company has reconciled all non-GAAP financial measures to the most directly potable GAAP measures in accordance with Reg G requirements. If you did not receive a copy, these documents are available through the quarterly disclosures and supplemental SEC information links on the Investor Relations page of our website, cousins.com.

Please be aware that certain matters discussed today may constitute forward-looking statements within the meaning of federal securities laws, and actual results may differ materially from these statements due to a variety of risks and uncertainties and other factors including the risk factors set forth in our annual report on Form 10-K and our other SEC filings.

The company does not undertake any duty to update any forward-looking statements, whether as a result of new information, future events or otherwise. The full declaration regarding forward-looking statements is available in the supplemental package posted yesterday, and a detailed discussion of some potential risks is contained in our filings with the SEC.

With that, I'll turn the call over to Colin Connolly.

Thank you, Pam, and good morning, everyone. We had an excellent second quarter at Cousins. On the earnings front, the team delivered $0.75 a share in FFO. In addition, we increased the midpoint of our FFO guidance by $0.01 per share to $2.95 per share for the full year in 2026, which represents 3.9% growth over 2025.

It will be our third consecutive year of FFO growth and represents a 4% compounded annual growth rate since 2023. Cousins earnings growth during this 3-year time frame is unmatched among traditional office REITs.

Leasing remained robust. For the second consecutive quarter, we delivered one of our highest leasing volumes in the history of the company. We completed 924,000 square feet of leases, bringing occupancy to 98.8% leased, the highest level since the first quarter of 2020.

Our cash rent roll-up on second-generation leasing was 9.2%, which marks 49 consecutive quarters of positive rent roll-ups. These results underscore the strength of our portfolio and the depth of customer demand for high-quality lifestyle office space.

Let me highlight several important trends that continue to shape the office landscape. First, demand is improving. According to JLL, leasing activity hit a post-pandemic high during the second quarter. In addition, net absorption has been positive for 4 straight quarters and as a result, again, according to JLL, available space is declining at one of the fastest paces in office market history.

Second, to date, AI is proving to be more of a friend than a foe to the office sector. Employment data has shown no material negative trends due to AI. And on the ground, we are seeing AI-related office demand broaden across the country into all of our markets. As an example, according to [ BTS ], there is approximately 1.2 million square feet of AI, office demand in Austin.

Third, the flight to quality is unrelenting. Customers are prioritizing high-quality and well-located buildings to promote engagement and collaboration. Again, according to JLL, nearly all of the positive net absorption in the office sector since the onset of COVID has occurred in buildings that were delivered from 2010 to the present.

Fourth, the Sun Belt migration continues to reaccelerate. In addition to full corporate relocations, we see an uptick in companies from high cost, less business-friendly cities in the Northeast and West Coast open new Sun Belt corporate hubs. We believe that we are still in the early innings of this migration trend and expect these announcements to continue.

Lastly, new construction starts are at historic lows. Given the 3- to 4-year lead time to deliver a new project, supply is unlikely to grow until 2030 at the earliest.

What are the implications of these trends? Simply stated, the office market has bifurcated. The commodity office sector has minimal demand and is significantly oversupplied or said differently under demolished. At the same time, the lifestyle office sector is increasingly undersupplied. The net result for Cousins is an emerging shortage of premier lifestyle office space in the best submarkets of the Sun Belt a shortage that will become increasingly acute over the next several years and favor landlords. Dozens is uniquely positioned to benefit from these trends.

Turning to our strategy. As we outlined on prior earnings calls, our focus remains unchanged. We are sharply focused on driving sustainable earnings growth while maintaining our best-in-class balance sheet, and continuing to enhance the quality of our Sun Belt lifestyle office portfolio.

During the second quarter, we advanced this strategy. First, we increased occupancy by 50 basis points to 89.4% across the portfolio as a result of the robust leasing activity. Second, we closed on a series of new investments and dispositions which upgraded the quality of our portfolio and enhanced our geographic diversification. Third, we closed on a new 5-year $1.2 billion unsecured credit facility and improved the borrowing spread by 15 basis points.

Looking ahead, our team's ability to drive both internal and external growth will be key to increasing FFO. We are in a great position to do both.

Looking at internal growth opportunities, we remain confident that the portfolio will reach 90% occupancy at year-end. We have modest near-term lease expirations and a robust late-stage leasing pipeline that will support this effort.

Shifting to external growth opportunities. The strength of our balance sheet provides us flexibility to selectively pursue compelling new investments, including both acquisitions and new developments. As I said previously, the lack of large blocks of available space in many of our markets is likely to be the catalyst for new development opportunities. While nothing is done yet, we are hopeful to have news to share in coming quarters.

We are excited about what lies ahead for Cousins. The office market is rebalancing. New construction is virtually nonexistent and high-quality lifestyle office space is becoming increasingly scarce. The office fundamentals in the Sun Belt are without a doubt tightening, and we expect the positive momentum to continue.

Despite ongoing macro volatility, Cousins continues to outperform supported by a strong operating platform, a highly efficient G&A structure and one of the strongest balance sheets in the office REIT sector.

Before turning the call over to Richard, I want to thank our talented Cousins employees. Their commitment to excellence into serving our customers and each other is the foundation of our success. Richard?

Thanks, Colin. Good morning, everyone. Our operations team delivered another exceptional performance in the second quarter. Our 924,000 square feet of quarterly leasing activity matched our strong first quarter resulting in 1.9 million square feet of total volume for the first half of the year. For context, if you look to the past decade, our average annual leasing volume was roughly equal to what we have posted in the first 6 months of this year.

Our second quarter square footage volume was also the second highest quarterly level since mid-2019, with the technology and legal sectors each accounting for about 30% of our activity.

On a square foot basis, 43% of our completed leases this quarter were new and expansion leases, totaling 395,000 square feet, well above our 3-year run rate. The team also completed 19 renewals during the second quarter with a renewal square foot volume at its highest level in well over a decade. This included five renewals greater than 50,000 square feet spanning four different markets. Importantly, all five of those renewals either retained or expanded their footprint.

Beyond our fantastic completed activity, our overall leasing pipeline remains strong and at a level consistent with last quarter. As far as our late-stage pipeline is concerned, in our June investor presentation, we shared that 1 million square feet of activity was either signed second quarter to date or in lease negotiations.

As of today, 1 month into the third quarter, we have approximately 820,000 square feet of leases signed or in lease negotiations. Given the strength of our early-stage pipeline, we are confident that number should again surpass the 1 million square foot mark soon.

Turning to lease economics. Quarterly average net rent came in at $41.35, average leasing concessions were $10.17 and average net effective rent was $285. And second quarter and first half of 2026, average net effective rent both grew nicely relative to the full year 2025 and half and 16.8%, respectively. Finally, second-generation cash rents increased again this quarter by 9.2%, with the increases broad-based across nearly all of our markets.

For the quarter, our total office portfolio end-of-period lease and weighted average occupancy percentages were 92.8% and 89.4%, respectively. Both went up meaningfully sequentially as well as for the third consecutive quarter.

Our portfolio lease percentage increased in all but two markets, with Atlanta as the largest positive contributor by a wide margin. The largest market contributors to organic growth in our weighted average occupancy for Atlanta and Charlotte. I would also note that the current 3.4% spread between our leased and occupied percentages is at its widest in over 3 years.

As Colin mentioned, our year-end occupancy outlook is unchanged. And I want to remind everyone that we have a couple of large expirations in Charlotte that could result in a modest downtick in occupancy next quarter. However, with low lease expirations, and a large backlog of new and expansion leases set to commence in the second half and weighted toward the fourth quarter, we remain comfortable with our 90% year-end occupancy goal.

Turning to the markets. CBRE notes that this quarter, the Atlanta office market recorded its strongest quarterly activity in 4 years and that for the first time in 15 years, no new office projects, over 100,000 square feet are underway, which is truly remarkable. We continue to see outsized demand in our portfolio where we signed 404,000 square feet of leases this quarter. And 51% were new and expansion leases. With this quarter's outstanding activity, I'm pleased to say that Atlanta now stands at 91.6% leased with a lease-to-occupied spread of 5.9%.

Our new activity included a 46,000 square foot lease with a technology company at 725 [ pots ] in Midtown as well as three leases totaling 77,000 square feet at Terminus and Buckhead, the team also rolled up cash rents by 14.3% this quarter.

Charlotte saw market fundamentals continued to improve during the quarter and vacancy reached its lowest level since the third quarter of 2023 per JLL. Our 550 South redevelopment has delivered and is receiving great market feedback. Occupancy of the property increased nearly 10% this quarter with the commencement of [ Scout Motors ] and we are in lease negotiations with three new customers totaling 24,000 square feet.

The redevelopment of 201 North [ Tryon ] is progressing well, and we still expect substantial completion during the first quarter of 2027. Like we stated last quarter, we are taking a patient approach to leasing at this property as the redevelopment progresses. Even still, we are encouraged by our early stage leasing pipeline. In fact, our overall West pipeline in Charlotte is nearly 3x what it was this time last quarter.

In Austin, JLL notes that the office market recorded over 200,000 square feet of net absorption in the first half of 2026. We marking the first positive first half reading since 2022. Despite being nearly 96% leased to start the quarter, the Austin team still signed 74,000 square feet of new and expansion leases and 42,000 square feet of that was with technology companies. Team also rolled up cash rents by 16.3%.

Finally, subsequent to quarter end, we also completed a 76,000 square foot renewal with a Fortune 10 technology company at Domain 7, which was previously a 2027 expiration.

In Tampa, JLL notes that Trophy buildings had a vacancy rate of only 8.9% in the second quarter with a direct asking full-service rents in the low 50s per square foot, more than double the average for Class B assets. Our portfolio is also now seeing full-service rents strike north of $50 per square foot.

For the quarter, we signed 168,000 square feet of leases, including an 89,000 square foot renewal with a law firm at corporate center and a 23,000 square foot renewal with Deloitte at the point.

[ Cushman & Wakefield ] reports the Phoenix office vacancy rate fell this quarter by the fastest pace in over a decade. Further, CBRE recently placed Phoenix fourth nationally for net corporate headquarters relocations. Our portfolio has certainly been a beneficiary of that activity over the past few quarters, and we do not see it stopping.

This quarter, our team signed 139,000 square feet of leases, including a 109,000 square foot renewal with the same Fortune 10 technology company that we just renewed in Austin. The team also completed two smaller new leases with companies in the AI space.

In Dallas, JLL notes that the quarter saw positive absorption, restrained new construction and continued large corporate in migrations. In our portfolio, we signed 57,000 square feet of renewals, including a 52,000 square foot renewal with U.S. Renal Care legacy Union 1 in Plano.

Recall that we took over management of legacy Union 1 from Ovintiv in the first quarter. Ovintiv has now since expired at second quarter end, enabling us to go direct with all of their subtenants, now collectively occupying 282,000 square feet of space in the building. Of that square footage, roughly 80% is set to expire in May of 2027. With that said, I'm pleased to announce that we are in lease negotiations with three customers totaling 214,000 square feet. This includes two renewals and one large new lease. Upon execution of these leases, we would be 91% leased on what will ultimately be about a 300,000 square foot building.

Note the new lease does not commence until early 2028. And so we expect to have downtime on that space and possibly the remaining pending vacancy, which totals 187,000 square feet starting in June 2027 through commencements.

Last but not least, our leasing volume this quarter included 49,000 square feet of activity at Neuhoff and Nashville. Kennedy will share more details about Neuhoff in her remarks.

As always, thank you for our -- to our entire team for the work you put in to make the start of this year incredibly positive. We appreciate everything you do. I'll now turn it over to Kennedy.

Thanks, Richard. I'll start by giving a little more detail on Neuhoff, our recently delivered mixed-use projects in Nashville. As Richard mentioned, we have now signed the 2 floor lease that I referenced on last quarter's call, which is an expansion with Oracle, bringing the tech firms footprint to 161,000 square feet. This lease, combined with the new spec suite lease, brings the office component of the project to 96% leased, all with occupancy that will commence by the end of the year.

The multifamily component continues to perform well, having reached over 94% leased and 90% occupancy in recent weeks. As a reminder, we have a future development phase that can accommodate over 300,000 square feet of additional office space. With the initial phase of Neuhoff stabilized, we are focused on securing some pre-leasing for the next building and encouraged by early discussions.

On the investment side, we had another productive quarter, advancing our core goal of enhancing both our portfolio composition and earnings while maintaining our balance sheet.

With each month, the office investment market appears to be functioning better as sales volumes increase and more debt options become available. We have used this opportunity to selectively dispose of a few noncore assets.

In June, we sold Research Park Plaza 5 in Austin for a gross price of $42 million or $243 per square foot. Research Park was a stand-alone building for us in Northwest Austin with what we view as a lower growth profile, and we felt our capital and focus with invested elsewhere.

We have also now closed on the previously announced sale of 111 Congress, a CBD Austin building built in the late 1980s. We sold the 519,000 square foot tower for a gross price of $208 million or $400 per square foot. Both of these marketed assets received good buyer interest and traded around a 9% combined cap rate.

As a reminder, these were noncore assets with limited remaining lease term. And in the case of 111 Congress, ongoing capital needs, which was reflected in the prices. This profile is not reflective of our overall portfolio, which is why we chose to sell.

We are always evaluating our portfolio and weighing dispositions relative to new opportunities and the impact to earnings. As we have discussed in the past, there are very few assets remaining within our portfolio that we consider noncore. So we will only pursue sales if we have identified a better use of proceeds.

On the acquisition side, we bought out our partner's 10% interest in 100 mils or $18.5 million which was based on a value of $158.7 million or $552 per square foot. 100 mils is a trophy office building in the heart of [ Tempe ] that we delivered in 2022, today, it is over 98% leased.

The buyout was always part of our business plan, giving us 100% ownership of our Premier [ Tempe ] portfolio. As Richard commented, we're enthusiastic about how quickly the vacancy has dropped in the submarket and believe that this asset offers a great long-term growth profile given the ongoing rent growth that we are experiencing.

We also entered into a new joint venture in Austin, on a development project called Fifth & Walsh, which broke ground this month. Fifth & Walsh is in the dynamic and highly desirable Clarksville neighborhood just on the western edge of Downtown, 1 mile from Saletower. Parkfield benefits from high barriers to entry and great access to affluent residential neighborhoods. It is known for its vibrancy with a wide array of walkable amenities authentic to the city.

The boutique, 199,000 square foot building will feature 20,000 square feet of ground level retail and 4 stories of trophy quality office space, which is already 58% leased.

Our investment in the project is in a preferred equity position of up to $31.5 million. We anticipate funding this mostly over the second half of 2027 and a fun funding will receive a 10% preferred return. As part of the agreement, we have a right of first offer to purchase the building post completion. We believe that this is a great way to generate near-term earnings, coupled with a future acquisition opportunity with an underlying building that fits squarely into our strategy.

The net result of these transactions is a newer, higher quality, more geographically balanced portfolio. Colin mentioned, we continue to evaluate other development opportunities and have the ability to be flexible in terms of structure.

Given the emerging scarcity of available lifestyle office space, we maintain our belief that there will be select office development projects that offer an appropriate and compelling return premium. This could come both in the form of a JV with a developer or developments that we execute ourselves, utilizing our strong land base.

We also intend to remain acquisitive. We are laser-focused on quality and executing acquisitions in a manner that is accretive to earnings. We believe that we have a continued competitive advantage, given the limited pool of investors that can transact on large office assets, our best-in-class balance sheet and market intelligence. In short, we are optimistic about the second half of the year.

With that, I'll turn the call over to Gregg.

Thanks, Kennedy. I'll begin my remarks by providing a brief overview of our results, spending a moment on our property performance. Then moving on to our property transactions and capital markets activity before closing my remarks by updating our 2026 earnings guidance.

Overall, as Colin stated upfront, our second quarter results were outstanding. Second-generation cash leasing spreads were positive, same property year-over-year cash NOI increased and leasing volume was exceptionally strong.

Focusing on same-property performance for a moment, cash NOI grew 5.9% during the second quarter compared to last year. This follows a 5.5% increase during the first quarter. These numbers are a clear reflection of the increasingly healthy office fundamentals in our Sun Belt markets.

As Kennedy discussed earlier, we closed several property level transactions since our last earnings call. And although she outlined the rationale and the economics for these deals, I thought it might be helpful to provide a little clarity on the accounting treatment for each.

First transaction, the purchase of our joint venture partner's 10% interest in 100 Mill, was recorded as an equity transaction under GAAP and therefore, did not result in any gain or loss running through our income statement.

Second transaction, our sale of Research Park 5, generated a gain of $9.2 million, which ran through net income, but not FFO or FAD.

The third, our preferred equity investment in [ Fifth & Walsh ] will be classified as an investment in real estate debt. And the cash flow will run through our income statement as interest income.

And finally, we moved 111 Congress to held for sale on our balance sheet during the second quarter. As you may recall, we marked this asset to market last quarter, and therefore, the sale did not generate a significant gain or loss upon closing earlier this week.

Moving to our capital markets activity. It was a very busy and productive quarter. We closed on a recast of our unsecured credit facility, extending the term by 5 years and increasing the size to $1.2 billion. We also added extension options on two term loans totaling $500 million.

With that, I'll close our prepared remarks by updating our 2026 earnings guidance. We currently anticipate full year '26 FFO between $2.92 and $2.98 per share with a midpoint of $2.95. This is up from a prior midpoint of $2.94 per share represents an increase of 3.9% over the prior year.

The increase in FFO guidance is primarily driven by leasing activity that exceeded our prior forecast, as well as the impact of the property level transactions that have recently taken place.

Our updated guidance also assumes the 2.9 million shares we previously issued on a forward basis are settled during the third quarter, a quarter later than our prior guidance. We continue to monitor the office sales market as Kennedy discussed earlier and explore additional noncore property sales. If we do move forward with additional sales, we may again delay the share settlement. However, for modeling purposes, we assume the settlement of all outstanding forward shares during the third quarter, and that's what's in our guidance.

Beyond the transactions completed to date, the only remaining property transaction currently included in our updated guidance is the sale of our 303 Tremont land parcel during the fourth quarter. If we do ultimately complete any other sales purchases or development starts during '26, we'll update our guidance accordingly.

With that, let me turn the call back over to the operator for your questions.

[Operator Instructions] First, we will hear from Anthony Paolone at JPMorgan Chase.

My first question relates to rent spreads. I think back in June at the NAREIT conference. You talked about how there has been so much leasing for top space that you were starting to see some real step functions up in rent. And I think your spreads in the quarter were good, but they've been at about that 10% level on average for a while now. So I was wondering if you can talk to whether we should expect to see some movement in that? Or maybe just add a bit more color on what's been happening to market rents.

Tony, it's Colin. Again, we were very pleased to have our 49th straight quarter of positive rent roll ups. You mentioned the 9% number, which is very strong. what was below the double-digit cash rent spread we had in the first quarter. But I would remind you that quarter-to-quarter the rent spreads are a function of the mix in that particular quarter. And at the same time, they're really a function of terms that were perhaps agreed to a quarter or 2 prior.

So as I mentioned in past meetings, we have had, I'd say, at Cousins, a bit of a bias to drive occupancy. We now think that we are at an inflection point certainly, in most of our submarkets where we'll have an opportunity given the fewer blocks of space to both drive occupancy, but also drive net effective rents through hopefully higher rents and lower concessions. So we're pretty optimistic that in coming quarters, we're going to continue to post some pretty strong rent numbers.

Okay. And then my follow-up is just with regards to cap rates, you talked about just the noncore being in that 9%, 10% range on the dispositions. Any sense as to if you continue to make investments, and it sounds like you're still considering some further asset sales, what the spread might be that we should think about, like where is the spread of the noncore stuff is 9% to 10% versus maybe where you might buy?

Again, it's Colin. The -- one, I'd say with the recycling activity that we've done really over the last 18 months, but even over the last 5 years, we -- while we might have a noncore asset or 2 left, we really believe that at Cousins we're in a fortunate position, where we're almost at a noncore, and we just are transitioning to -- we'll always have a bottom 5%. And so I think in time, the spread of any sale that we make relative to how we reinvest it is going to be -- will be much tighter which is a great position to be in. And so I would just refer back again to our strategic priority, which is to drive sustainable earnings growth while maintaining our best-in-class balance sheet and continuing to enhance the quality of our Sun Belt office portfolio.

So with leverage levels as strong as they are and the overall portfolio as strong as it is, we're not in a position where we need to sell. We will sell if we can make sense that the source of the cash, i.e., a disposition relative to the return on the use of cash creates accretion to our earnings profile. And if it doesn't, we're just unlikely to be a seller.

The next questions will be from Blaine Heck at Wells Fargo.

It sounds like the interest in 201 North [indiscernible] is strong and potentially outpacing your expectations. I guess can you give a little more color on the overall square footage of prospective tenants that you're having discussions with? What types of tenants are most interested, kind of what industry and how motivated you guys are to get some near-term pre-leasing done as you get closer to completion versus maybe continuing to wait for better rent economics.

It's Richard. The size range of the prospects in our pipeline right now are pretty diverse. We have a couple that are as large as 200,000 square feet. I would say they're really early, and they've frankly been in the pipeline for a little while. And so not terribly fast to move, what we have seen over the last couple of months is more activity in the single floor to 2 to 3, 4 level, so call it 25,000 to 75,000 square feet. And those tend to be not the larger financials -- traditional financial services, but more niche financial services uses and then also legal and general professional services. So it's a good diverse pipeline from an industry perspective.

In terms of how aggressive we'll be, again, we are being patient, but we are by no means hitting the brakes completely on leasing. So if we see a great business that we think is a good fit. We are going to be aggressive and still look in certain instances. And I think 201 North [ Tryon ] is one where we will look to drive occupancy. But again, we're also keeping an eye on doing what's right for the long term and where we think we can hold out, especially on a bigger requirement and get better economics, we're going to look to do that.

Okay. Great. That's helpful. I guess related to that, if you were to sign a lease on that space today, could it be rent paying in early '27 at completion? Or would the build-out of the specific base kind of push revenue recognition to later in the year or even '28?

We do have a couple of floors that are left over floors from prior tenants that are in really good condition. So it is possible that if somebody wanted plug-and-play space, we could get them depending on their timing and get them in pretty quickly. But I would not expect that to be the base case. I think what we're going to see is that it will likely be late '27 to maybe '28 when we actually start to get occupancy on a traditional deal that requires a full build-out.

Yes, Blaine, last quarter, I mentioned that the last quarter, I mentioned that based on our prior experience with a lot of the renovations that we've done that we oftentimes see a pretty material change in the rental rate that we can achieve. In some cases, $5 a square foot or more from the, call it, the mid-construction rent profile to, hey, this is a finished product, you can walk to our kind of experience the space. And so we're very mindful of that, particularly when we think we'll be signing 10- and 15-year leases.

So if you got a waiting until year-end to achieve a $5 foot premium is out there, we'll certainly be very thoughtful and think through that. But again, if there are certain situations that come along for a floor or 2, that can drive some near-term occupancy, we'll look at it. But I think we just got to balance it because it's a pretty significant, we think, jump in the rental rate profile when this project is done at year-end.

Okay. That makes a lot of sense. And then last one, just switching gears to the potential development opportunities you're pursuing. .

I was hoping you could give some color on where your required returns or yields are in the current environment, whether you link towards build-to-suit or have the capacity to take on some risk and speculative construction and related to that, whether there are any pre-leasing hurdles that you'd kind of need to clear?

Blaine, it's a broad question, and I think, ultimately, our view is it's very situational I think certainly, development as an overall opportunity is becoming more viable to Cousins because we do have our own capital and our own development platform, and there are fewer and fewer blocks of available space. So I think ultimately, what the return profile is on a development and absolutely would be a premium over acquisition cap rates, depending ultimately what that level is. Is it more build-to-suit? Is it speculative? We would expect to be compensated if we're taking more speculative risk.

So I think we're going to just ultimately have to evaluate those opportunities as they come. I do think they're we are seeing that more broad-based across a lot of our different markets. And so we are hopeful that we are going to identify compelling projects that we'll have compelling returns relative to the risk. But I want to be careful in terms of kind of quoting a specific number. I think competitively that could put us in a disadvantage.

Next question will be from Andrew Berger at Bank of America.

I just wanted to touch on leasing volume and sort of level set expectations going forward. Obviously, again, very strong first half of the year. But just given you have relatively lower expirations for the remainder of this year in 2027. Could you just help us think about what type of whether or not the volume should taper off at all as we sort of get back into the back half of this year in '27? Or it sounds like the late-stage pipeline is still pretty robust. Do you feel like there's enough new demand coming for later and later, so let's say, 2028 and beyond to sort of just help sustain this type of volume going forward.

Yes, on -- again, it's hard for us to predict forward leasing volumes because, again, that is very situational and sometimes things beyond our control. I guess I would characterize the first half of this year were the 2 quarters were both in the top 5 largest leasing volumes in the history of the company going back 60-plus years. I think kind of looking forward, though, we're still confident that leasing volumes could achieve above-average levels relative to the last 3 to 5 years because we are seeing increasing demand, and it is really supported by the two trends we've talked about the flight to quality in the Sunbelt migration.

So we do think we're going to be above average trend, but at the same time, we can't promise kind of top 5 quarters every single quarter. but we're optimistic that volumes will continue to be strong.

And I think kind of one other trend that I think will be supportive of leasing volumes. While you're right, we've got less available space. One thing that we're now seeing in the market is a trend of early renewal ask from some of our larger customers. And I think if anybody is evaluating the office market and understanding the relative strength or is it a landlord or tenant-friendly market.

When you see an uptick in early renewals that typically signals customers expect that rental rates are going up and they're going to have fewer options in the future. And so they're trying to pull forward and lock in some of those renewals early. And I think that could be a strong source of leasing demand for our portfolio.

And I just wanted to circle back to Charlotte. I know it was mentioned that there's a couple of larger expirations coming up. Can you just talk about prospects for those spaces and whether or not the current leases are above low market?

Sure. I spoke to -- this is Richard. I spoke to the fact that the pipeline in Charlotte has increased pretty substantially quarter-over-quarter. And that applies not just to 201 North [ Tryon ] but also the 550 South. We've had probably the most robust pipeline 550 so far this year as we've had year-to-date. So I feel good about it. As I mentioned, we've got 24,000 square feet. It's roughly about 4% of lease of new deals and leases, and to be clear, the expirations that we have that are at 550 were actually more or less in the second quarter. So that happened. They just show up in the occupancy numbers starting in the third quarter.

And we've talked about these expirations [indiscernible] half...

Next question will be from John Kim at BMO Capital Markets.

Colin, you mentioned net new supply not increasing until 2030. And I just wanted some clarity as to if this is all of your markets? Or are there certain markets where this supply might come earlier. But aside from that, where do you think rents could go over the next few years, just given it seems like a unique situation with not a lot of new supply, especially the type of assets that you own and improving demand at the same time.

We've been predicting this for many quarters of a pending shortage of Tier 1 high-quality space because demand was improving and there has been a no new supply. And so my commentary around 2030 is here we are in the second half of 2026 and the lead time to build is typically somewhere between 3 and 4 years. So I really don't think you're going to see any meaningful uptick in deliveries until that time.

And so again, if the market is already tightening today and very little new supply able to deliver in that time frame, I do think that you're ultimately going to see in some cases, a pretty material increase in net effective rents. It's just basic supply and demand.

And we've already seen that in some markets. I think if you looked at Uptown Dallas, that is a, I'd say, a pretty good proxy of how that works. And it's not a simple 3% a year change. We've seen rents in Uptown Dallas over the last 5 years, probably almost double on their kind of base net rental rates.

Not saying that's going to be the case in every market. But as you have increasing demand and just few options for customers, it will lead to, I'd say, more meaningful rent growth and net effective rent growth that is not just a linear kind of 3% a year. I think it could be double-digit type rent growth.

Okay. And I'm not sure if you addressed this on the call, but, I guess I'm lost in your preferred investments, what is the coupon rates on your investments? Do you plan to acquire the assets upon completion? And has the demand in AI in Austin, has that changed your view on increasing your overall exposure to that market?

It's Kennedy. Yes, we're really excited about [ Fifth & Walsh ]. I did mention that we are getting a 10% preferred return on our position. And as you alluded to, we do have a right of first offer to purchase it. So we'll make that decision if and when that comes up, but it's the type of assets that fits right within our portfolio, and it's already 58% pre-lease, which I think is a testament to its reception in the market.

So we're excited about that, and I think we've always remained confident in Austin's ability to be pretty resilient. And certainly, having this AI demand is helping that. And we've been able to rebalance our position there a little bit with the recent dispositions. And so we really like our portfolio that's here.

And John, I'd just add that we're excited to partner with [ Endeavor ]. They are a terrific local sharpshooter in Austin. We've known them for many years and worked with them for many years. They help us lease our product up at the domain and so to expand our relationship with them to this new project at [ Fifth & Walsh ], we're excited and look forward to working with them more.

Okay. And can I just ask on Neuhoff now that it's -- the office is basically stabilized or fully leased. What is the updated stabilized NOI on that project? And what kind of pre-leasing are you required to move forward with Phase II?

I'm not sure we've given an updated stabilized NOI. But in terms of Phase 2, I mean, look, we're having discussions with a variety of size customers, the rents. And as Colin alluded to, need to be higher than our current project, but we feel like we can achieve those. So there's not a black and white line, but we want to make sure that the rents and the -- we feel like the project has been validated, but the rents are achievable. So we're closely watching that. We do have a partner in that project. So we'll make that decision together as the discussions evolve.

Next question will be from Nick Thillman at Baird.

Colin, you touched a little bit on just the pull forward of renewals for 2028, 2029. I was hoping you could maybe bucket the renewal activity in 2Q? And what's included in the pipeline of those leases that are rolling out in '28 and '29 compared to '26, '27%. I know that the '27 pool has a little bit of some shift with 111 coming out of there. I know there is some near-term role and move out on that asset in particular. So just if you could just break that out, I'm guessing it has to do with the five larger over 50,000 square foot ones, but just a point of clarification on that.

Well, the -- if you look at the second quarter activity, I think renewals accounted for about 55-ish percent of the activity, and as we look forward to the existing late-stage pipeline that Richard outlined, I'd say the percent of new and renewal there is about 50%, which is what it typically is.

I think that the -- as we look out in future quarters, perhaps we could see kind of more of these early renewals happen. I'd say this is a recent phenomenon that -- of discussions on some of these early renewals, and I say they're really not yet reflected in our late-stage leasing pipeline.

Okay. So the 50% number that you're quoting isn't 50% of '28, '29 expirations were addressed in that renewal bucket?

No. No, I'm just saying that our leasing activity in the second quarter renewals accounted for about 45% -- excuse me, 55% of the activity. And as we look at our late-stage leasing pipeline, renewals account for about 50% of that.

And no, we were not saying that 50% of our '28 expirations are in discussions. We're just saying we are seeing as a general statement, more '28 and '29 expirations reach out and want to discuss renewal possibilities.

And one other data point that might be helpful for the second quarter activity, if you look at we did 19 renewals, I would characterize three of those as early renewals. So an expiration that was beyond 2027, '28. So the majority of the activity were '27 expirations, if that helps.

Yes, that's helpful. And then it seems as though you guys are angling a little bit more on the development side potentially. I'm getting a start here by year-end. But Colin, you've talked about the investment cycle.

First, it's the core product and then those yields sort of compress there and then you can move to the Core Plus product. I guess, is there any opportunities you're seeing with maybe some -- now given the lease-up in a lot of the properties for some more maybe newly delivered with some vacancy that you guys could still potentially get in at a good basis and still have some upside?

Yes. We're absolutely open to that. And -- but I'd say what's a bit unique in this cycle is that for some very structural reasons with core funds and private REITs, we still have not seen a real reemergence of core capital and we've seen kind of the maybe the greatest pricing opportunity or kind of mispriced office real estate has been more on the core side.

And so if that opportunity continues to exist like we've done at Sale Tower and like we did at 300 South [indiscernible], Charlotte, we think that, that there's still some opportunity there. But if capital shifts in and cap rates compress, we'll absolutely look at some core plus opportunities. And as Kennedy and I have both mentioned, development -- select development is a possibility as well.

We're a bit agnostic. Again, we always pivot back to our strategic plan, which is to grow earnings while maintaining the balance sheet and upgrading the quality of the portfolio. And if we can do that, through core acquisitions, cores or development, we're a bit agnostic. We look at the risk return profile and how ultimately it impacts that strategic goal, and that's how we make our decisions.

And just a cleanup question for Gregg. Does the guidance assume just the payoff of the two notes with the proceeds of the forward equity and then the disposition sale in 3Q?

The two notes that mature for a little over $200 million, one in September, one in October. We pre-refinanced those with our bond deal back in February.

Next question will be from Vikram Malhotra at Mizuho.

I guess if you could expand, you mentioned AI leasers or AI leasing. Do you mind digging into that a bit across your markets? And how does that specific pipeline look?

And then in the same vein, just on AI, any other thoughts or data points on sort of the concern some people have on the Sun Belt and just a greater theoretical risk in their minds of AI and support jobs and how that may be playing out.

Why don't you take the first half about kind of AI pipeline we're seeing across our markets, and I'll touch on the broader.

Sure, sure. Again, we mentioned Austin has a pretty robust pipeline, and we've seen that in our portfolio. If you look to 2Q, how I would characterize the AI demand that showed up in our executed activity, we saw companies that are obviously technology companies that either had an AI driver or a component to their business all the way to hyperscalers like on Oracle in Atlanta, in Austin, obviously, in Nashville with our Oracle activity and then also in Phoenix.

I'd say beyond Austin, we continue to see some interesting bubbling up of AI companies continue to happen, but it is very clear that Austin is the most robust market for us in terms of AI activity.

Yes. And to your broader question about AI and implications for the Sun Belt, I think it's a bit of a false narrative that the Sun Belt is more back office than the West Coast or the Northeast. Vikram, I think you've actually done some research on that, that we found kind of -- that very much confirms what we see on the ground. I think it's kind of more important as you think about risk relative to AI, as you think about what's the underlying quality of the asset that you own.

And at Cousins, we're fortunate to have arguably one of the highest quality portfolios across the office REIT sector. And if you tour our properties, I think you'll very quickly realize that none of our properties are occupied by back office type workers, the rent profile simply wouldn't support that use.

And so we're, again, full of knowledge workers. And I think over time, again, maybe, in my opinion, a bit of a false narrative is that unlike the technology sector as a whole, which has made a very intentional decision to grow, including their front-of-house revenue-producing employees to grow outside of places like San Francisco and Seattle and instead do that in places like Austin and Nashville that for some reason, the AI component of the tech sector is going to buck that trend and not also move their future growth to some of these exciting cities because they're far easier to do business with. They're actually much more open and less regulated as it relates to AI, and they're also much more affordable for their employees while also still offering all of the vibrancy and a great place to live. So I think time will prove that out.

That's helpful. And just maybe one last one. Can you -- you've talked about the strong demand profile and very limited supply. So I'm wondering whether you compare to pre-Covid or just like what you're seeing on market rents. What's the tipping point for Cousins and occupancy? Like you hit 90% this year. At what point can you really see like rent spikes such that the rent spread profile almost like elongate for you. What is that tipping point? Are we there now? Is it a couple of hundred basis points? Maybe just can you give us some context, that would be helpful.

Yes. I think 90% is a pretty good proxy. And it's less about kind of what is the hard and fast line for Cousins. But at 90% when you look around what the available blocks of space are across a particular submarket at 90%, there are very few large blocks of space.

A lot of times, that 90% is made up of a half floor here and 3/4 floor there. And so when a customer needs to renew on 50,000 feet or 75,000 square feet. They just have fewer options and therefore the laws of -- simple laws of supply and demand allows you to increase the price.

I'd use the market that I'm sitting in today being Buckhead is a pretty good proxy. The market as a whole, if you were to go look at kind of [ CoStar ] statistics, it would tell you that the Buckhead submarket is some, call it, 18 million square feet or more, and then it's probably 25% vacant. The reality is when we look at the subset of buildings that we actually compete with enterprise is approximately 7.5 million square feet and it's closer to 88%, 89% leased.

And if a new -- if somebody that needed 75,000 square feet of contiguous space in the Buckhead submarket today, they have exactly one option. And in the coming quarter or 2, they could have zero options which means a landlord looking to renew a customer like that is in a pretty strong position.

Next question will be from Upal Rana at KeyBanc capital Markets.

Just had a quick one on Hayden Ferry One. The building is fully leased now, but at 50% occupancy. Any timing there that you plan adding the property back into the same-store pool? And how much incremental NOI do you expect from there?

This is Richard. The timing on stabilization, we expect to be early 2027, so you'll see it come back into our operating statistics then. And I don't believe we've commented on a stabilized NOI.

It's correct. We have to have a good year-over-year comp to do the same property numbers. So it's probably going to come back into '29 because you're not going to full year '27, so you can't build on '28. You're going to have wait a little bit. But in terms of the operating statistics, we'll pull it back into all the operating statistics very soon.

And we do also publish quarterly NOI numbers, so you'll be able to that number.

Putting it into the same property pool is not nearly as relevant for you from a modeling perspective, a performance perspective is just getting it back into operations and us pulling it out and giving you the NOI on a quarterly basis, which we're going to do very soon.

Okay. Great. That was helpful. And then maybe a quick one for Kennedy. Could you give us a sense of the types of transaction opportunities you are seeing in your markets, whether it's quality, pricing, size or geographically? I know you're looking at everything and ultimately deciding on what to transact has many moving pieces, but I wanted to get your sense of what you're seeing out there.

I mean there's -- it's a total mixed bag in terms of what's being marketed. So we're looking at things that are marketed that fit our profile. But as we've done with some past transactions, we're also looking at things that maybe aren't being broadly marketed and leveraging our relationships to try to find assets that fit the profile and makes sense for us price-wise.

So still, I would say, a fairly limited pool of assets on the market, just given that there hasn't been the data points. And as Colin mentioned, there hasn't been the core buyer pool to sell into. But we're confident that we'll find some opportunities that will work for us.

Next question will be from Brendan Lynch at Barclays.

Obviously, you're making a lot of progress on capital recycling down to fewer noncore assets, Colin, I think you mentioned there's always a bottom 5% in your pool, how should we think about that in terms of redevelopment opportunities? I think you've made a lot of progress on that. I'm just curious if there's other ones that you've identified more recently that we could see over the next couple of years?

Yes. The -- in addition to the recycling that we've done, we've also, over the last 5 years pursued a pretty aggressive redevelopment campaign. And I'd say largely, that was driven by a view that if we're going to an asset, we believe, can be upgraded and firmly repositioned into that Tier 1 lifestyle office sector, the best time to execute that repositioning was when our customers were actually not using the property.

So we made a lot of headway during COVID. More recently, we're very hard at work in Charlotte, having just completed 550, 201 North [indiscernible]. Obviously, as I mentioned, we'll complete kind of end of the year, first quarter.

And so as we look forward, there's far fewer of those redevelopment projects. The ones that I'd point out that are going to upcoming would be Terminus here in Atlanta. We just completed a repositioning of the lobby of the Terminus 200 building, and we're now going to turn our attention to the 100 building great location in the middle of Buckhead, a trophy iconic building, and our team is going to do great work there.

Richard touched on legacy in Dallas in the Legacy submarket in Dallas. There -- we are in the midst of effectively turning a single tenant building into a multi-tenant building. And we're excited that we've already knocked out the vast majority of the leasing. But as a part of those leases, we have committed to the repositioning again to convert it to its multi-tenant use. And again, we're excited that we've significantly though derisked that from an occupancy perspective from a leasing perspective.

That's helpful. And maybe one for Gregg. On the equity settlement, you suggested you could delay it again. Can you just walk us through the mechanics in your considerations in potentially doing so?

Well, the mechanics are pretty simple. We're not plowing new ground here. We've issued equity on a forward basis using our ATM. You've got an agreement with the institutions on the other side of that transaction.

The current agreement that we have with the institutions expires year-end '26, but you can extend those commonly extended. And so there really isn't a [indiscernible] on our ability to extend based just on the agreement.

And then in terms of our decision-making around it, as Colin set upfront as we've said many times, it just comes down to sources and uses for us. We want to make sure that we do these transactions that we're talking about, whether it's an acquisition or development on an accretive basis, got to increase earnings. That's the North Star. But we're not going to do it at the expense of our balance sheet.

And so the genius of having these forward shares outstanding is as we uncover new investment opportunities, and we look to fund them. we can fund them with dispositions on an accretive basis permit. If we can't, we've got -- the shares that we can settle that we know we can do on an accretive basis. So it's -- I think it's I know it's not a lot, it's only $90 million, but I think it's an underappreciated and undervalued asset on our balance sheet. That gives us all kinds of optionality to go out there and look at new investments.

Now last question will be from Dylan Burzinski at Queen Street.

I guess, just sort of looking at the spread between portfolio lease percentage and occupancy, I think it's sort of at a recent high of call it, 3.5% versus historical average in the low 2% range. As we sort of think about -- or can you sort of help us think about, I guess, the timeline of when that would compress because obviously, that's going to be a natural boost to NOI growth. Just curious there.

This is Richard. Well, obviously, some component of that is going to live in 2026 commencements in the second half. But you'll see that continue to compress -- obviously, this is going to be contingent on future activity in the mix, but -- so it's hard to really predict. But it should start to compress again as we get into 2027. But it's really hard to predict quarter-to-quarter what that spread is going to be.

Yes, not necessarily looking at it on a quarter-to-quarter basis just on -- is this a 1-year process, 2-year process, 3-year process? Anything sort of related to that outlook, I think, is more so what I was looking for.

Well, yes, again, obviously, as we're signing leases. We also always have some component of expirations and move-outs. And so those numbers -- you've got multiple factors kind of flowing in there. But again, our target for year-end is to bring occupancy, to compress that and achieve the 90% occupancy.

And then as we look forward over the coming years, again, we're not going to make a specific goal today, but our hope is to the percentage lease is a signal that we're going to have the ability to drive occupancy past 90% in the coming years. And so again, that's all driven by strong underlying demand and less available supply and we intend to continue to push the portfolio back to and say, more historical normalized levels of leasing and occupancy. And I think the portfolio today is strong as it's ever been. And so we remain confident that we're going to do that.

And at this time, we have no other questions registered. I would like to turn the call over to Colin Connolly.

Well, thank you all for your time this morning and your continued interest in Cousins Properties. If you have any additional follow-up questions, please feel free to reach out to Gregg Adzema or Ronnie [indiscernible]. Have a great rest of the day and a great weekend.

Ladies and gentlemen, this does indeed conclude your conference call for today. Once again, thank you for attending. And at this time, we ask that you please disconnect your lines.

Good morning, ladies and gentlemen, and welcome to the Cousins Properties First Quarter Conference Call. [Operator Instructions]. This call is being recorded on Thursday, April 30, 2026. I would now like to turn the conference over to Pamela Roper, General Counsel. Please go ahead.

Thank you. Good morning, and welcome to Cousins Properties First Quarter Earnings Conference Call. With me today are Colin Connolly, our President and Chief Executive Officer; Richard Hickson, our Executive Vice President of Operations; Kennedy Hicks, our Executive Vice President and Chief Investment Officer; and Gregg Adzema, our Executive Vice President and Chief Financial Officer. The press release and supplemental package were distributed yesterday afternoon as well as furnished on Form 8-K. In the supplemental package, the company has reconciled all non-GAAP financial measures to the most directly comparable GAAP measures in accordance with Reg G requirements. If you did not receive a copy, these documents are available through the quarterly disclosures and supplemental SEC information links on the Investor Relations page of our website, cousins.com. Please be aware that certain matters discussed today may constitute forward-looking statements within the meaning of federal securities laws, and actual results may differ materially from these statements due to a variety of risks and uncertainties and other factors, including the risk factors set forth in our annual report on Form 10-K and our other SEC filings. The company does not undertake any duty to update any forward-looking statements, whether as a result of new information, future events or otherwise. The full declaration regarding forward-looking statements is available in the supplemental package posted yesterday, and a detailed discussion of some potential risks is contained in our filings with the SEC. With that, I'll turn the call over to Colin Connolly.

Thank you, Pam, and good morning, everyone. We had an excellent start to 2026 at Cousins. On the earnings front, the team delivered $0.73 a share in FFO during the quarter, which was $0.02 a share above consensus. In addition, we increased the midpoint of our FFO guidance by $0.02 a share to $2.94 a share for the full year in 2026, which represents 3.5% growth over 2025. This would be our third consecutive year of FFO growth and represents a 3.9% compounded annual growth rate since 2023. Cousins earnings growth during this 3-year time frame is unmatched among traditional office REITs. Leasing remained robust. We completed 932,000 square feet of leases during the quarter, which is one of the highest quarterly volumes in the history of the company. Our cash rent roll-up on second-generation leasing was 15.2%, which marks 48 consecutive quarters of positive rent roll-ups. Significant leasing wins included a large renewal with our largest customer of -- the Domain in Austin and new leases with Oracle at Neuhoff in Nashville and KPMG at Proscenium in Midtown Atlanta. These results underscore the strength of our portfolio and depth of customer demand for high-quality lifestyle office space. I'll start with a few broader observations on the trends driving the office market. First, most major companies are phasing out remote work. Yesterday, Fidelity became the latest to announce a 5-day a week office mandate. At Cousins, we call it the return to normal, and it is boosting demand across all of our markets. Second, the flight to quality is unrelenting. Customers are prioritizing high-quality, well-amenitized and well-located buildings to promote engagement and collaboration. According to JLL, nearly all of the positive net absorption in the office sector since the onset of COVID has occurred in buildings that delivered from 2010 to present. Third, the Sunbelt migration has reaccelerated. We have seen a significant uptick in relocation activities as proposals to meaningfully increase personal and business taxes in New York, California and Washington have advanced. Starbucks recently announced a major East Coast headquarters in Nashville. Apollo is looking for a second headquarters in Texas or Florida. Capital Group announced a major hub in Charlotte. Each of these companies specifically state access to the growing talent pools in these markets as a major reason for their decisions. These are not back of house or support jobs that they are creating. We believe that we are still in the early innings of this migration trend and expect these announcements to continue. Lastly, record high office conversions, combined with record low new development starts are leading to shrinking inventory of office properties. Given the 3- to 4-year lead time to deliver a new project, this is unlikely to change until 2030 at the earliest. Simply stated, demand is increasing while supply is decreasing. The net result is an emerging shortage of premier lifestyle office space in the best submarkets of the Sunbelt and one that will become increasingly acute over the next several years and favor landlords. Cousins is uniquely positioned to benefit from these trends. Before moving on, I want to briefly address a topic that has received a lot of attention recently, and that's artificial intelligence. While AI is shaping how companies operate internally, we are not seeing evidence that is reducing long-term demand for high-quality office space. In fact, many of the companies most actively deploying AI are also prioritizing collaboration, talent density and physical presence, which aligns well with our lifestyle office portfolio in the Sunbelt. Ultimately, space decisions are still being driven by people, culture and access to talent. And in that respect, these trends we're seeing in our leasing activity remain very encouraging. Turning to our strategy. As we outlined in prior earnings calls, our focus remains unchanged. We are sharply focused on driving sustainable earnings growth while maintaining our best-in-class balance sheet and continuing to enhance the quality of our Sunbelt lifestyle office portfolio. Our team's ability to drive both internal and external growth is key to this effort. During the quarter, we advanced that strategy. First, we increased occupancy to 88.9% across the portfolio as a result of robust leasing activity. Second, we closed on the acquisition of 300 South Tryon, a 638,000 square foot trophy office asset in Uptown Charlotte for approximately $317.5 million. Third, we repurchased 3.9 million shares of our own stock at a weighted average price of $23.36. Lastly, we sold Harborview Plaza in Tampa for $39.5 million and entered into an agreement to sell 111 Congress in Austin. Looking ahead, the #1 priority for Cousins is to continue to grow occupancy. We have modest lease expirations this year and a robust late-stage leasing pipeline that will support this effort. More broadly, we remain focused on optimizing our portfolio, maintaining flexibility and creating optionality in our capital allocation decisions. As I mentioned earlier, everything we do is guided by a disciplined approach that prioritizes earnings accretion, balance sheet strength and continuous improvement in our portfolio quality. We are excited about what lies ahead for Cousins. The office market is rebalancing. New construction is virtually nonexistent and high-quality lifestyle office space is becoming increasingly scarce. Despite ongoing macro concerns and volatility in the public markets, Cousins continues to outperform, supported by a strong operating platform, a highly efficient G&A structure and one of the strongest balance sheets in the office REIT sector. Before turning the call over to Richard, I want to thank our talented Cousins team. Their commitment to excellence and to serving our customers is the foundation of all of our success. Richard?

Thanks, Colin. Good morning, everyone. Our operations team delivered the strongest start to a calendar year since Cousins began its focus as a pure-play owner of trophy Sun Belt office. In the first quarter, our total office portfolio end-of-period lease and weighted average occupancy percentages were 91.8% and 88.9%, respectively. Both metrics increased sequentially and were driven by a combination of organic growth and our recent investment activity. Our portfolio lease percentage increased in nearly every market with Atlanta, Charlotte and Austin as the largest contributors in terms of organic growth. While Nashville's lease percentage increased materially with our recently signed 116,000 square foot new lease with Oracle at Neuhoff, that project will not be included in our overall portfolio statistics until it is stabilized. The largest market contributors to organic growth in our weighted average occupancy were Atlanta and Austin. Our lease expirations through 2027 now total only 8.3% of contractual rent, which is 320 basis points lower than at the end of 2025. Coming off of a very strong fourth quarter, our leasing activity in the first quarter was record-setting on a number of levels. Our team completed 49 office leases totaling 932,000 square feet during the quarter with a weighted average lease term of 6.6 years. Our square footage volume was the highest for a first quarter in well over a decade and was also our highest quarterly level in general since the second quarter of 2019. On a square footage basis, 52% of our completed leases this quarter were new and expansion leases, totaling 483,000 square feet. New and expansion leasing volume was essentially in line with our very strong fourth quarter, which we view as a great repeat performance. The team also completed 19 renewals during the first quarter, including a material renewal in Austin that took care of what was previously our largest 2027 expiration. Regarding lease economics, our average net rent this quarter came in at $44.54, approximately 18% higher than the full year 2025. This quarter's average leasing concessions were essentially in line with the full year 2025. As a result, average net effective rent this quarter came in at a solid $32.28, second only to the third quarter of 2024. Finally, second-generation cash rents increased yet again in the first quarter at a strong 15.2% with cash rents rolling up in every market where we had activity. Beyond our excellent recently completed activity, our overall leasing pipeline remains very healthy at a level comparable to this time last quarter. In our early March investor presentation, we shared that 1.2 million square feet of activity was either signed first quarter to date or in lease negotiations. Even after completing 932,000 square feet of volume in the first quarter, as of today, we have 1 million square feet of leases either signed second quarter to date or in lease negotiations. This late-stage pipeline has been growing nicely throughout the second quarter. In fact, it has grown by about 200,000 square feet just in the past 2 weeks and currently includes 450,000 square feet of new and expansion leases. We believe our late-stage pipeline has us very well positioned for continued strong leasing performance in the near term. Turning to our markets. In Atlanta, according to JLL, leasing activity was strong with 2.3 million square feet of leases signed in the first quarter. Sublease availability declined for the eighth consecutive quarter and is now at its lowest level since the start of 2021. Additionally, average asking rents had the largest quarterly increase in 2.5 years. We continue to see solid demand in our own portfolio, where we signed 192,000 square feet of leases in the first quarter. This included a 105,000 square foot new lease with KPMG at Fresenium in Midtown. Subsequent to first quarter end, we also signed a new 46,000 square foot lease with CallRail at 725 Ponts in Midtown. CallRail is a homegrown Atlanta-based technology company that decided to relocate to 725 Ponce from downtown because of the property's location, quality and direct access to the belt line, and we are excited to welcome them as a customer. Our Atlanta portfolio was 89.3% leased at first quarter end. In Austin, JLL notes that tenant demand increased 30% year-over-year from about 3.9 million square feet of requirements in the first quarter of 2025 to nearly 5 million square feet today. The market continues to digest speculative development delivered since 2023. However, new speculative development is now at its lowest level since 2013. Across our Austin portfolio, we signed an impressive 339,000 square feet of leases in the first quarter, including a 273,000 square foot renewal of a Fortune 10 technology company at Domain 8. This sizable renewal demonstrates a strong commitment to the Austin market and to the value of high-quality office in the core of the domain. Our Austin portfolio also increased to 95.3% leased as of first quarter end, driven primarily by encouraging new activity in the CBD. In fact, our Austin team has seen a notable increase in overall tenant demand in the CBD since the beginning of the year, and it's focused primarily on availability in the highest quality office segment. In Charlotte, market level leasing activity maintained strong momentum in the first quarter with a 74% increase year-over-year. In our portfolio, we signed 181,000 square feet of leases in the first quarter, 58% of which were new and expansion leases and the team rolled up cash rents 26%. Activity included a 72,000 square foot new lease with Scout Motors at 550 South and a 54,000 square foot renewal and 27,000 square foot expansion of a major law firm at our newly purchased 300 South Tryon. Touching on our redevelopments. Our 550 South project is very close to completion within weeks. And with that, we have seen a nice uptick in early-stage leasing interest. Regarding 201 North Tryon, that redevelopment project is well underway and should be substantially complete during the first quarter of 2027. And looking at our recently completed redevelopments, whether it be Buckhead Plaza and the Promenade buildings in Atlanta or Tempe Gateway and Hayden Ferry in Phoenix, we generally saw a meaningful boost in demand and importantly, in lease economics once the projects approach completion and prospects could see the finished product. Based on this experience and also knowing the shortage of available premier space in the market is becoming more acute, we are taking an intentionally patient approach to leasing at the property. In short, we are willing to trade some number of months of timing of occupancy in return for meaningfully better net effective rents and outcome for shareholders. In Dallas, the market recorded 3.6 million square feet of leasing activity during the first quarter, above first quarter 2025 levels. New supply also remains limited, which is helping to boost top-tier assets and drive rent growth. Life quality remains the dominant theme, consistent with all of our markets, with Class A space accounting for 73% of quarterly lease volume. In our 800,000 square foot portfolio, we signed 65,000 square feet of leases, rolling up cash rents over 32% -- this past quarter, we also took over the management of Legacy Union One in Plano, and I'm pleased to report that subsequent to first quarter end, we signed a 52,000 square foot long-term lease with U.S. Renal Care, representing our first direct lease with an existing subtenant at the property. Our Dallas portfolio was 98.1% leased at the end of the first quarter. Finally, and as I mentioned earlier, our leasing volume this quarter included a 116,000 square foot new lease with Oracle at Neuhoff in Nashville. We are very encouraged by this activity, and Kennedy will share more details about Neuhoff in her remarks. As always, a big thank you to our entire team for the work you put in to make the start of this year an incredibly positive one. We appreciate everything you do. I will now turn the call over to Kennedy.

Thanks, Richard. I'll start with the update from our recently completed Neuhoff project in Nashville. As you may have noticed, we moved this mixed-use project off of our development schedule in our supplement this quarter, given its near stabilized status. The approximately 400,000 square foot office component is now 84.3% leased, up from 55.3% last quarter, largely driven by the 116,000 square foot new lease with Oracle. The company leased 5 floors on a long-term basis to accommodate its ongoing rapid growth in Nashville, citing it as the center of Oracle's cloud and AI growth. We are excited for the company's employees to take occupancy later this year and add to the vibrancy of this unique project. I am also pleased to share that we are now in lease negotiations for the remaining 2 full floors of the project, which, if executed, will bring the office component to almost 96% leased. The accelerated interest in Neuhoff is indicative of the demand we continue to see across our portfolio for best-in-class differentiated assets. The 542-unit apartment component at Neuhoff stabilized this quarter at 92.6% leased. I want to point out that we added Neuhoff Phase 2 to the land inventory on Page 27 of the supplement. As part of the Phase 1 development, we completed significant infrastructure, including all of the parking for a future office building that is planned to be approximately 300,000 square feet. The cost for this work, including the allocated land value, are now reflected in our total land inventory number, whereas they were previously part of the overall Neuhoff project spend. Given the work and investment already completed for this next phase, we believe we will have a significant competitive advantage in terms of both speed and pricing when the time is right to move forward with the development. As a reminder, we own Neuhoff in a 50-50 joint venture. Turning to our investment activity. We had another busy quarter. In February, as we previously disclosed, we closed on the off-market acquisition of 300 South Tryon in Uptown Charlotte. We acquired the building for $317.5 million or $497 per square foot, a basis that represents a significant discount to replacement cost. The 638,000 square foot highly amenitized assets is an excellent strategic fit for our portfolio and representative of the continued advantage we have in the market as a buyer for large turnkey assets. As Richard said in his remarks, we have already executed a renewal and expansion of a large customer there, enhancing the remaining lease term and validating the mark-to-market in rents that can be achieved at the building. Across the country, the office transactions market has opened up with sales volumes steadily increasing. Both equity and debt sources are realizing the strengthening fundamentals and are now more constructive around opportunities. Smaller transactions are generating the most debt. Accordingly, we continue to pursue select dispositions within our portfolio that we think line up well with market demand. I will add that we are in a fortunate position that we don't need to sell any of our assets. So we plan to remain disciplined in our approach. In late February, we closed on the previously discussed sale of Harborview Plaza in Westshore Tampa. The building sold for $39.5 million or $191 per square foot. The pricing equates to a low 9% cap rate. As I mentioned last quarter, the stand-alone asset needed capital upgrades, and we believe our capital was best focused elsewhere. We remain under contract with a residential developer to sell our 303 Tremont land parcel in South End Charlotte. The contract price for the 2.4 acres is $23.7 million, and we expect it to close before the end of the year. We are always evaluating the highest and best use of our land bank and resources and determine that this site is now better suited for residential development as opposed to the office towers that we originally contemplated. We are also now under contract to sell 111 Congress in Austin. This 519,000 square foot asset was built in the late 1980s and is prominently located in Austin CBD. Our ownership of this asset dates back to the Parkway transaction in 2016. And similar to Harborview, our view is that this asset is better off in the hands of private capital going forward, and we intend to redeploy the proceeds as part of the funding of 300 South Tryon. We are pleased with the process and the positive sentiment towards the asset and the Austin market. We will disclose more details around pricing after closing, which is anticipated to be early in the third quarter. These dispositions are representative of our strategy to continuously monitor our portfolio and identify opportunities to recycle out of non-core assets to fund acquisitions. Acquisitions of either assets or our own stock if that's a better use of proceeds at the time. We only intend to do so in a manner that is neutral or accretive to earnings. We believe that this ongoing portfolio optimization will only enhance the resiliency of our assets and future cash flows. Going forward, we plan to be opportunistic when it comes to both acquisitions and dispositions as well as other investment opportunities such as development. We have the flexibility to invest in a variety of ways throughout a capital stack, including preferred equity and mezz positions as we have demonstrated in the past. Given the emerging scarcity of available lifestyle office space, we believe that there will be select instances where development is compelling and offers an appropriate return premium to trophy acquisitions. We are currently evaluating opportunities with the goal of breaking ground within the next year. We will provide more insights if and as those transactions materialize. With that, I will turn the call over to Gregg.

Thanks, Kennedy. I'll begin my remarks by providing a brief overview of our results, spending a moment on our same-property performance, then moving on to our property transactions and capital markets activity or closing my remarks by updating our 2026 earnings guidance. Overall, as Colin stated upfront, our first quarter results were outstanding. Second-generation cash leasing spreads were positive. same-property year-over-year cash NOI increased and leasing velocity was exceptionally strong. Focusing on same-property performance for a moment. Cash NOI grew 5.5% during the first quarter compared to last year. This was comprised of a 4.5% increase in revenues and a 2.7% increase in expenses. These numbers were positively impacted by a combination of increased occupancy and the expiration of rent abatements, primarily at Promenade Tower, Tempe Gateway, 300 Colorado and Hayden Ferry. Before moving on, I wanted to take a moment to highlight our recent same-property expense performance. Despite lots of talk around accelerating property level inflation, including taxes, utilities, payroll, we have held same-property expenses to an average annual increase of just 1.95% over the past 4 years. I suspect this sub 2% number is well below most investors' perception of office expense growth over the past few years. A new and efficient portfolio located in affordable and business-friendly markets is what has allowed us to contain expenses. As Kennedy discussed earlier, we acquired a property in Charlotte during the first quarter. We will fund this acquisition with the sale of 3 non-core properties. We've already sold Harborview during the first quarter, and we're under contract to sell 111 Congress during the third quarter, and as Kennedy said, 303 Tremont land during the fourth quarter. We also received repayment during the first quarter of our $18.2 million mezzanine loan secured by an equity interest in the 110 East property in Charlotte. Moving on to our capital markets activity was very busy and was very productive. We started by issuing a $500 million 7-year unsecured bond immediately after announcing fourth quarter earnings in early February. It was a great execution, generating a yield to maturity of 5%. With this issuance, we have effectively taken care of all of our 2026 refinancing needs. In total, we have issued 4 unsecured bonds for $1.9 billion since receiving our investment-grade credit rating in April 2024. As Colin stated upfront, we also repurchased 3.9 million shares at a weighted average price of $23.36 per share during the first quarter. Please note that subsequent to quarter end, the Board authorized an increase to our recently launched share repurchase program, taking the authorization from $250 million to $500 million, of which approximately $410 million remains available. We now have both a share repurchase program as well as an ATM program available for use, and we have actively employed both over the past 12 months. In addition to the shares we repurchased this past quarter, we issued 2.9 million shares on a forward basis under our ATM program during the first and second quarters of 2025 at an average price of $30.44 per share. We have not yet settled these forward shares. Finally, on April 1, we closed a new 5-year $1.2 billion unsecured credit facility, increasing the prior facility that was scheduled to mature in April 2027 by $200 million. As part of this process, we also amended our existing $400 million and $100 million unsecured term loans, adding two six-month extensions to each. The borrowing spread improved by 15 basis points on both the credit facility and the larger term loan and by 30 basis points on the $100 million term loan. Before closing with guidance, I wanted to briefly provide some context on leverage. Our goal remains, as it has since 2014, to maintain net debt to EBITDA in the low 5x range. Metrics a bit elevated this quarter, 5.66x, but it's only a timing issue. Once we complete the asset sales to fund the Charlotte acquisition and we complete the funding of the share repurchase, leverage will return to its historic level. With that, I'll close my prepared remarks by updating our '26 guidance. We currently anticipate full year 2026 FFO between $2.90 and $2.98 per share with a midpoint of $2.94. This is up from our prior midpoint of $2.92 and represents an increase of approximately 3.5% over the prior year. The increase in FFO guidance is primarily driven by the share repurchases I just discussed as well as better-than-forecast execution of the debt financings, partially offset by the elimination of a prior midyear SOFR cut assumption. We now have no SOFR cut assumptions during 2026 in our guidance. Our updated guidance assumes the 3.9 million share repurchase that we executed in the first quarter is funded with proceeds from the settlement of the 2.9 million shares we previously issued on a forward basis. In reality, we may ultimately fund some or all of the share repurchase with non-core asset sales. As Kennedy stated earlier, we are constantly monitoring the sales market and exploring additional sales candidates. However, for modeling purposes, we have assumed the settlements of all outstanding forward shares during the second quarter, and this is what's in our guidance. As I mentioned earlier, our guidance also assumes the 300 South Tryon acquisition is funded with proceeds from Harborview 111 Congress and 303 Tremont. Finally, our guidance does not include any additional property acquisitions, dispositions or development starts in 2026. If any of these take place, we'll update our guidance accordingly. Bottom line, our first quarter results are among the best we have reported in recent memory. The important operating metrics that we track were outstanding, and we raised full year guidance. Office fundamentals in the Sun Belt remain strong, and we continue to deploy capital into compelling and accretive opportunities. We look forward to reporting on our progress in the coming quarters. With that, I'll turn the call back over to the operator.

[Operator Instructions]

First question comes from the line of Blaine Heck from Wells Fargo.

Colin, you commented on the leasing pipeline in the earnings release and again here, can you and/or maybe Richard, give any more detail on the size of the pipeline today versus maybe a year or 18 months ago and versus your historical average? And maybe give a little bit more color on any trends you're seeing with respect to tenant size or industry? Are you seeing any specific segments or market strengthening or weakening?

Sure, Blaine. This is Richard. I can take that and then Colin can add on if you'd like. For starters, you specifically asked the size of the pipeline overall today. Certainly, the late stage is what I'd focus on more versus, say, a year ago, and it's about 2x the size of this time last year. That is the late-stage pipeline. It's about the same size right now as this time last quarter. But year-over-year, it's grown significantly. Just some additional detail on the overall pipeline. I would note that the number of prospects in the pipeline overall has increased quite a bit. So I'd say on the order of about 15% since last quarter. So that's encouraging to see. The net size, again, is comparable to last quarter. The mix of industries is roughly the same. I'd say technology is slightly ahead of financial services at this point, but they're both neck and neck and very big drivers of our activity and legal continues to be a significant component of our industry mix with professional services coming in last and then a good mix beyond that. we have seen particularly strong. I mentioned we had about 200,000 square feet that built into the late-stage pipeline here in the last couple of weeks. It's been growing nicely throughout the quarter. But we've seen the most increase in activity migrating through the pipeline in Atlanta, especially in Buckhead and in Midtown. Phoenix has had some nice bump. Nashville certainly is contributing as well. As Kennedy mentioned, we're going to leases with 2 more floors there and some good activity in Austin. So it's pretty broad-based.

And Blaine, it's Colin. I would just add, too, as it relates to the 900-plus thousand square feet we leased this quarter in this kind of 1 million-plus square foot pipeline. One kind of piece of commentary that I've seen is that the Sun Belt is largely back office and support function. And I would characterize just about all of the leasing activity that we're doing as very much front-of-house revenue-producing employees for very dynamic companies, whether it be in technology, financial services, investment firms, you name it, particularly also AI companies beginning to kind of infiltrate the Sun Belt. So I can very much kind of push back on that narrative. While there are certainly suburban properties in Atlanta with back-office employees, the same holds true with back-office employees in suburban New York. The quality of the pipeline -- the portfolio that we have and our lifestyle properties is very much attracting very well-educated, knowledge revenue-producing employees.

Great. That's really helpful commentary. And you all mentioned that asking rents have grown the most this quarter in 2.5 years. I was hoping you could quantify that increase. And also -- can you comment on what you think is a reasonable forecast or range for net effective rent growth in your segment, Class A, A+ or trophy within your markets and whether there are any standout markets on the positive end of that metric or any that could be more muted?

Sure. This is Richard again. In terms of rent growth, we have a number of different examples we can give on really impressive rent growth across the portfolio. In Atlanta, for instance, at Buckhead Plaza, we've been able to grow rents 20% in the last year or so. In Dallas, uptown, it's really been breathtaking how much rents have grown, in particular in uptown. I think the general number is about 40% in growth since 2021. And I think new product and top of market asking rents right now are $80 net. So extremely impressive rent growth there. If you look at Charlotte, all the new product that is leased up in the last year or so in the market as they were kind of taking down large blocks, we pegged that rent growth during that process at roughly 10% during that time. In Phoenix, lastly, where we've done our redevelopment of Hayden Ferry, which is now complete, we've grown rents about 20% since 2024. So those are just some examples of some really bright spots where we've been able to push rent growth. So it's really just a dynamic market where Colin has mentioned that supply is shut down or we're not going to see any new supply really added to virtually any of our markets that isn't already leased and demand is still allowing us to push net effective rents. In terms of how much those will grow, I mean, we certainly posted very impressive net effective rent growth this quarter, and it was broad-based. The mix of where we did our leasing this quarter was very favorable in a lot of our highest rent markets. And so we feel good. It's already -- it's always hard to prognosticate on exactly how much we're going to grow net effective rents in any given quarter versus another. But over time, we're confident that we're going to continue to be able to grow them in a manner that we've done so here in the recent past.

Great. And then just lastly, can you talk a little bit more about the optionality you have for funding the share repurchases? I don't believe you've issued the forward shares yet. So can you talk about the strategic and economic merits for stock issuance versus additional sales? Are there certain cap rates or other factors that would make you lean towards sales instead of the forward equity?

Blaine, it's Gregg. We've issued the forward shares. We just haven't settled them. I just want to make sure everybody understands that. And we have the flexibility right now to settle those shares through year-end '26, but that can be extended with the banks that helped us issue those shares. So we've got ultimate flexibility there. In terms of we've assumed for modeling purposes because you need for your models to put in some type of assumption in there. And so this is the most conservative and cleanest assumption, and that's what we provided it. Is that what we actually do at the end of the day? Maybe, maybe not. But as Kennedy talked about in her opening remarks, we're always in the market exploring kind of the market and liquidity and pricing for our non-core assets. We don't have a lot of non-core assets left, but we do have a handful. And so we're out there exploring. And so I think how we ultimately pay for the $19 million share repurchase that we executed in the first quarter will depend upon the clarity that we get over the next month or 2 or 3 on some of these efforts that Kennedy is out there doing with the non-core assets. We're in a sources and uses business. And ultimately, at the end of the day, we're trying to drive accretion on a leverage-neutral basis. And so I think one of our secret sauces here at Cousins is I think we've been very nimble about -- and in a position to be nimble with the balance sheet that we have to figure out a way to maximize shareholder value but maintain the balance sheet. I think we've done a good job of that in the last few years, and I think we'll continue to do so. And this transaction, the share repurchase and the funding of it will just be one more kind of example as we process that strategy.

The next question comes from the line of Manus from Evercore.

In light of the really good leasing volumes, I just wanted to ask about your expectations for like second-generation CapEx spending going forward. I know you don't necessarily guide to FAD, but I'm just trying to understand and square FFO versus FAD growth kind of like in the near-term future.

It's Gregg again. Second-gen CapEx, as you know, if you've looked at our earnings supplement over the last few years, can be super lumpy. It just depends upon the leasing that we do. And then honestly, when the tenants that we lease to come to us and kind of want their TI dollars back, it's FAD is a cash basis metrics. And so we base it upon when the actual cash goes out the door. Some tenants can ask for it very quickly. Some tenants can wait a while before they ask for the money. So it's really hard for us to predict. But it is loosely tied to leasing at the end of the day. And so you've seen it elevated a little bit over the last few quarters because we've been leasing so much space. And so you could see it for calendar year '26. Again, I don't want to comment on quarterly numbers because they're very difficult to predict with any accuracy. But for the full year, I think you could see second-gen CapEx be a little higher this year than it was the last couple of years just because we're leasing so much space. But once we stabilize the portfolio in the kind of the midterm, as Colin has talked about, you'll see second-gen CapEx kind of decline to its more historic levels.

Got it. That's appreciated. I know you previously talked about your kind of like year-end occupancy target for '26 now being a quarter in and obviously, with leasing being very strong, the pipeline being very large. I just wanted to ask how you feel about kind of like the occupancy trends kind of by like year-end '26 and how bullish it makes you kind of going forward into '27.

Sure. This is Richard. When you step back and look at all the building blocks, which we typically don't give that level of granularity or occupancy guidance. But when we look at all the building blocks on that we're seeing a relatively modest amount of new leasing that we need to do incrementally to what we already have in the pipeline or have already completed to get to a year-end 90% number, which is our goal. And we're confident that, that modest amount is achievable and still feel good about our expectations for getting to 90%.

Your next question comes from the line of John Kim from BMO Capital Markets.

So you have 1 million square foot pipeline or already signed in the second quarter, and that's versus roughly 800,000 square feet expiring this year. You're also selling 111 Congress, which is a little bit under leased versus your portfolio. So I'm just wondering, where do you think occupancy or lease rates could go to either by year-end or maybe over the next 12 months?

John, it's Colin. As Richard just outlined, the goal for the end of the year, which we think is achievable, is 90%. And I think over the medium term, our intention is to drive this portfolio back to kind of historical stabilized levels, which is absolutely kind of in the low to mid-90%. That will take a little bit longer to get to. Just keep in mind, while we're leasing a lot of space this quarter, we believe we'll lease -- in the first quarter, we think we're going to lease a lot of space in the second quarter. There's typically a lead time in many cases, of a year plus from signing of a lease to actual occupancy. And so our ability to kind of incrementally keep driving those up -- the occupancy up will be dependent upon the timing of the need of our customers. But the underlying demand is there and it's robust and it's being driven by certainly the return to office, which might be more temporary, but more longer term, the flight to quality is insatiable and the migration of the Sun Belt is only accelerating.

Okay. And the large renewal you had in Austin, I mean it sounds like that was with Amazon just based on your commentary. But I'm wondering if you could share any insight that you have on your largest tenant, just given they talked about reducing a lot of debt, almost 14 million square feet of office space globally. And is there anything we should read in the renewal term? It was a little bit lower at 4.7 years versus the new leases signed this quarter.

John, it's Colin. I can't be overly specific due to certain confidentiality provisions, but you can -- again, you can go look at our supplement and it seems like you're on a pretty good track there. A couple of thoughts. I shared this last quarter, some commentary or specifically around Amazon, which has gotten a lot of publicity for announcing some small reduction in their workforce of, I think, 40,000 employees. But you have to kind of put that in perspective that they grew their headcount over the 5 years of the pandemic by almost 700,000 people. And I think a company like that found that many of those workers were remote. Many of those workers were kind of redundant hires during the pandemic. And so they view that as, again, a modest downsizing to create more efficiency, less bureaucracy and again, requiring that workforce to be back in the office 5 days. So as it relates to their core hubs in places like Austin, we're confident that you'll continue to see them prioritize their space. And there was certainly -- in this large renewal we've done, there was no reduction in space. And as it relates to term, when you add their -- this particular company's extension on top of the term that they already have, that places them well into the 2030s, and I think it should be interpreted as a very positive signal as to their confidence in the domain.

Appreciate it. And I think there was a time ......

Good Memory John.

Your next question comes from the line of Nick Bowman from Baird.

Colin, maybe a question for you. You guys have clearly defined the type of assets you want to own. And just trying to get a sense of the overall scope of maybe just looking at your market share within your individual submarkets, what percentage of that trophy lifestyle office does Cousins own versus the opportunity set longer term? Maybe level setting and start with that.

Well, good morning, Nick, it would certainly vary market by market. But when we put together kind of the -- and go through our various submarkets in our Sun Belt cities, we still think that there's ample opportunity with the trophy lifestyle buildings that exist today, certain buildings like the Proscenium that can be bought and substantially renovated to convert into lifestyle office. And as Kennedy alluded to, we do think there'll be an emerging new development opportunity that I think a public REIT such as ourselves with such a strong balance sheet might be uniquely positioned to capitalize on.

That's helpful. And then, Kennedy, you mentioned a little bit of the flurry of this mezz potential mezz investments, but in the past, you guys have also highlighted with the intention of owning those assets longer term. So we look at some of the mezz investments, they've all been paid back. We've seen some of those transact. Maybe just give us a sense of how core pricing has moved. I mean, the Dallas S. Court properties sold, the Nashville properties in the market. Just give us a sense of what you guys were initially underwriting with that mezz investment to basically where they're transacting, how much of that pricing has moved for core product?

Yes. So all of the mezz pieces that we did at the time were low to mid-double digits, and those were unique in that they were cut from existing senior loans. So I think that pricing, depending on where you fall in terms of last dollar is probably still low double digits. The opportunities that we're seeing now are more on the origination side to dealing directly with the sponsor. But I think mean there's still a -- we're seeing pricing hold generally for core assets on the acquisition side. And so some of the assets you mentioned, I think, are still trading in the low 7 cap. So we think it's a nice premium to that and with the goal of particularly when we're -- as we're originating it, having a path to own the asset eventually.

That's helpful. And then maybe just one last one for Richard. On the 450,000 square feet of new and expansion leases, does any of that include redevelopment projects? And then maybe as we also think of just larger chunks of portfolio and addressing that, this is a little bit of ways out, but the NCR building, is there any opportunity there similar to the situation you guys did with Meta and IBM, look at opportunities there as well?

Sure. Yes. So there's a small amount of redevelopment activity in that $450 million. There's also obviously activity at Neuhoff in the development category, though we obviously now have it in our operations and have migrated it over there. In terms of NCR, we continue to have a very good dialogue with NCR. And over time, they still have roughly 7-plus years of term. It's a super high-quality asset, as you know, in a great location. we're open to, over time, exploring creative strategies, just like we always are with any customer to explore win-wins. And we've demonstrated a track record of success there over time. It's tough to predict how that particular situation will play out. But I think the real estate, the quality of it, the quality of the building and location will win the day ultimately. And -- but right now, we view it as nothing but a great opportunity in the future.

Your next question comes from the line of Vikram Malhotra from Mizuho Financial Group.

On a strong quarter.

I guess just first, you've been talking about refining the portfolio now for a while. You've clearly executed. I'm wondering between sort of what's closed and what's to be closed in terms of acquisitions and dispositions, how does that all -- where does that leave you in terms of a net what you may still -- the pool that you may need to dispose of as maybe a percent of the portfolio? And is all of this activity sort of accretive or dilutive near term?

Vikram, as you know, we've been a very active recycler of assets, certainly over the last 5 years, but even longer dated than that with a clear eye on building the leading lifestyle office portfolio across the Sun Belt because we think that's where there's going to be the highest amount of demand and the greatest opportunity to drive rents and therefore, drive earnings. At the same time, over the last 5 years and really an intentional decision during COVID when most of our customers were not here, we engaged many of our properties engaged in pretty substantial renovations as well that now position those properties as lifestyle office buildings. So as we look at the portfolio as a whole, certainly, the percentage that we would characterize as non-core is in the single-digit percentages. So we think that we're kind of almost done as feeling if the next pandemic came along, we own a portfolio that will continue to thrive. That being said, we're always going to have a bottom percentage. And as we see opportunities to upgrade and that we can do that upgrade while staying consistent with our core principles of driving earnings accretion, upgrading the quality of the portfolio and continuing to have a best-in-class balance sheet, we're going to do it. But we think we're kind of almost largely through the non-core and into a world where we can be opportunistic as it relates to trying to recycle and upgrade.

That makes sense. I found your -- the front office, back office comments interesting, specifically about the pipeline. But maybe just stepping back, given all this -- the misconceptions around the Sun Belt and particularly back office, have you looked at your portfolio? Are there any stats you can share in terms of what percent of the tenancy is back office? I guess, what percent is SaaS? And any other statistics that sort of give us a flavor of what you described with the pipeline?

Again, I would characterize our percentage of back office in a portfolio of the quality of cousins is probably among the lowest in the office sector. Again, I'm sure we have some maybe out at Northpark, but this would be in the single digits. Again, kind of the narrative about the Sun Belt being back office is a dated one. And these cities have certainly grown up and urbanized. And today, they are attracting kind of the best and the brightest and highly educated workforce who is seeking a vibrant place to live and work and at the same time, have it more affordable. And that's why companies like Oracle and Goldman Sachs and the Capital Group and Starbucks and others continue to shift their corporate operations into these dynamic markets in the Sun Belt.

Okay. And then just lastly, if I can clarify. As you go back to sort of the stabilized mid-90 -- low to mid-90s, you now have a pool of assets perhaps less burdened in terms of CapEx. So assuming sort of cash flow recovers over the next 2, 3 years with the occupancy, like where are you comfortable with the payout ratio, dividend payout?

Vikram, it's Gregg. If you go back and look historically, our payout ratio has lingered deliberately, intentionally in the low- to mid-70% as a payout ratio to FAD. We're very comfortable with it being right around there as well. So this quarter was a little bit lower. That's just again because of the lumpiness that I talked about on a previous question. But as I sit here today, we've been comfortable in the low to mid-70s, and I think we'll stay comfortable there. But let me caveat that. At the end of the day, it's a Board decision. We'll talk to them about it. But we've got an active Board, and they're very interested in kind of our operations. And we talk about the dividend every quarter. And so I don't want to make a decision on their behalf in advance of that. But historically, we have paid out low to mid-70% and I think that's where we'll be in the immediate future. Beyond that, again, it will be a bigger strategic discussion with the Board.

Your next question comes from the line of Andrew Berger from Bank of America.

Congratulations on the strong quarter. Colin, in your opening remarks, you talked about how companies that are deploying AI are prioritizing collaboration. Can you give us a sense of how much space per employee tenants in your portfolio are using today and whether or not you think this could potentially rise over time as companies invest more in collaborative space?

It -- well, I guess I kind of zoom out a touch and look back to the kind of the pandemic era where there was a lot of discussion of what was going to happen to employee densities and changing of floor plans. And I'd tell you that over time, where we are today is exactly where we were in 2019 as it relates to densities within our portfolio. Looking forward, again, I don't want to speculate other than to share we're very active, obviously, in a lot of leasing with major technology companies, financial services and legal. And we're really not seeing any immediate shifts in how they're using space as AI begins to roll out in greater degrees.

Great. And obviously, very strong quarter as it pertains to the cash leasing spreads, 15%. Last quarter was pretty similar, excluding Northpark. And obviously, leasing spreads can be a bit lumpy. It sounds like there were some larger leases this quarter. My question is, do you have a general sense of how your portfolio's in-place rents compare to market rents today and ultimately, whether or not we should expect to continue seeing these double-digit increases on a cash basis just given the demand versus supply dynamics that you've been talking about?

Well, it's Colin. I would say that, again, it's hard to predict quarter-to-quarter because of the underlying mix of customers, buildings, markets. But we do think that the portfolio today is still below market as we are now starting to see market rates rise. And kind of looking forward at the existing late-stage pipeline, we're confident that we're going to continue to drive rents, and we're hopeful that this time in 3 months, we'll be announcing our 49th consecutive quarter of a positive cash rent rollout.

Your next question comes from the line of Brendan M Lynch from Barclays.

Clearly, a lot of progress at Neuhoff. What needs to happen before commencing Neuhoff Phase 2 construction? And how should we think about the mix of products that you might pursue?

It's Kennedy. I think the pre-lease would help kick that off. As I mentioned, we feel really good about activity there and certainly, the speed in which we can deliver new products. So we're actively talking to customers, and we just need to make sure that the pre-leasing demand is there and the rents are there, too, as the new building will require a little bit higher rent than what we're seeing in the current, we're encouraged. Was there a second part of the question?

Just whether it's going to be purely office or there's also a potential for additional resi or retail on the property?

So that particular phase is pure office with a little bit of ground level retail. We do have rights for future phases that could include a mix of uses.

Okay. And then it sounds like you're slow playing the lease-up of some of the development space given your rent growth expectations. How does that inform your approach to 2027 expirations?

I'm sorry, say that one more time.

Sure. Just it sounds like you're slow playing the lease-up of some of the development space given your rent growth expectations. and kind of holding back as those projects are completed because you're getting better rents closer you are to finish the finish line. How does that inform your approach to 2027 expirations? If you expect that market rents are going to continue to be improving, maybe you hold off on some of the discussions until they're closer to the expiration date.

Yes. Good question. I would say, generally speaking, at Cousins, we're -- if we've got customers that want to lease space with us, we're trying to meet the market and certainly drive occupancy. You're, I think, referencing 201 North Tryon, which is a particularly unique situation where we've got a project that is kind of mid-construction. And at the same time, we see over the second half of this year, a real shortage of lifestyle space emerging. And so when those 2 collide, we sit here today and look at opportunities, and there is demand today that really reflects what I would characterize as preconstruction economics. And in the not-too-distant future, call it, end of the year, first quarter, we think we're going to be able to drive post-construction lease economics. And as Richard alluded to, we've had a lot of success at our redevelopment projects with a similar strategy and saw meaningfully -- meaningful increases in rental rates, in some cases, over $5 a foot. So our thinking on this particular asset is if we're able to in 6 to 9 months increase rental rates by $5 a foot times 300-plus thousand square feet, that's $1.5 million a year, call it, on 10-year leases. And we think a little bit of patience for that kind of reward in this very specific instance is certainly worth the trade-off.

Your next question comes from the line of Dylan Burzinski from Green Street.

Just wanted to talk a little bit more about sort of the corporate migration trends that you guys are seeing Apollo obviously, is reporting in the market. You've seen the moves to Starbucks, KB Home. I guess as we look at the pipeline today in terms of that activity, would you say it's largely geared to those big corporate users that are either looking to move headquarters or plan to large, call it, headquarters too? Or is it more predominantly concentrated in the smaller outposts, companies looking for smaller outposts in the Southeast?

Dylan, this is Richard. I think it's a mix of both, frankly. We're still continuing to see the large in migration. I think that's only going to accelerate as we've talked about, but there are certainly instances where -- and I think KB Home may be a good instance to reference that it is truly a headquarters relocation, but it's not a 200,000-foot user at the same time. But we're continuing to see in Phoenix, in particular, a steady stream of companies that probably have a requirement for headquarters of 1, 2 floors coming out of California and those add up. And so we're very encouraged by both the kind of smaller, if you will, flow of headquarters relocations also could be outposts, but the big ones are still there. They're in Dallas without a doubt. We've talked about Charlotte, where some of these requirements have landed in the past couple of months that are 200,000 square feet a piece and taking up quality second-gen space. Nashville is a great example of a very large requirement by Oracle that has inured to our benefit. So we're seeing a little bit of everything at this point. And again, we feel like it should do nothing but accelerate.

That's helpful. And then just maybe going back to some of your comments on rent growth. Dallas clearly seen or have seen strong rent growth over the last 4 years. I think you mentioned sort of, call it, cumulative growth of 40%. Is it unreasonable to think sort of that's where the rest of your high-quality Sun Belt office submarkets are headed following that trajectory? Or is there something unique that you guys think has happened in uptown over the last several years that might not sort of make that a good parallel for the rest of your guys' submarkets?

Dylan, it's Colin. And the demand in Dallas accelerated faster than in some of our other markets. So Dallas got to the inflection point of a landlord favored market quicker and therefore, rents were able to move. It's just simply supply and demand. Now many of our other markets are at or nearing similar inflection points with the shortage of space due to the lack of supply. And we're hopeful that you'll see similar instances of being able to drive those rents. I use kind of one example where I'm sitting today in the Buckhead submarket of Atlanta, if a user today needed 100,000 square foot or had a 100,000 square foot requirement in a -- what I would characterize as a trophy lifestyle office building, they have exactly 0 options. And so the existing rents in this market today, the top end I would say, are in the kind of mid- to high $50s to $60 range and new construction would cost every bit, and that's on a gross basis, new construction would cost over $90 a square foot. So it's a pretty significant leap and would take 3 to 4 years to deliver. So that's kind of one example, as we've alluded to, as increasing demand, decreasing supply should allow us to drive lease economics.

Your next question comes from the line of Upal Rana from KeyBanc...

Richard, could you provide a time line on your signed but not yet commenced leases to come online or convert to cash? Just wondering if there's a quarter where we should expect to see most of it come online? Or is it more spread out?

Sure, sure. So at this point, what we have signed and not yet commenced relative to 2026, which I presume you're probably more focused on, I would call that late third quarter timing on a weighted average basis.

Okay. Great. That was helpful. And then maybe for Kennedy, I wanted to ask about competition on the transaction front. Last year, you mentioned large private capital coming into the market, and you noted transactions are starting to pick up. Just wondering how pricing has trended recently and what you're seeing out there?

Yes. We do feel like it's continuing to pick up. As I've said a few times, though, we don't see still a lot of competition in the true trophy space, particularly as the assets start to get north of $250 million. But we're also encouraged by the fact that people are being more constructive around office opportunities. You're seeing high net worth and family offices come back pretty robustly with some new entrants, but feel like that works to our advantage as a seller, but as a buyer that we can still be viewed very positively by sellers given our ability to move quickly and our cost of capital.

There are no further questions. Presenters, please continue.

Thank you for your time this morning and interest in Cousins Properties. We hope to see many of you in New York at NAREIT in June. In the meantime, if you have any follow-up questions, please do not hesitate to reach out to Roni Imbeaux or Gregg Adzema. Have a great afternoon.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.

Good morning, ladies and gentlemen, and welcome to the Cousins Properties Fourth Quarter Conference Call. [Operator Instructions]. This call is being recorded on Friday, February 6, 2026. I would now like to turn the conference over to Pamela Roper, General Counsel. Please go ahead.

Thank you. Good morning, and welcome to Cousins Properties Fourth Quarter Earnings Conference Call. With me today are Colin Connolly, our President and Chief Executive Officer; Richard Hickson, our Executive Vice President of Operations; Gregg Adzema, our Executive Vice President and Chief Financial Officer; and Kennedy Hicks, our Executive Vice President and Chief Investment Officer.

The press release and supplemental package were distributed yesterday afternoon as well as furnished on Form 8-K. In the supplemental package, the company has reconciled all non-GAAP financial measures to the most directly comparable GAAP measures in accordance with Reg G requirements. If you did not receive a copy, these documents are available to the quarterly disclosures and supplemental SEC information links on the Investor Relations page of our website, cousins.com. Please be aware that certain matters discussed today may constitute forward-looking statements within the meaning of federal securities laws, and actual results may differ materially from these statements due to a variety of risks and uncertainties and other factors, including the risk factors set forth in our annual report on Form 10-K and our other SEC filings.

The company does not undertake any duty to update any forward-looking statements whether as a result of new information, future events or otherwise. The full declaration regarding forward-looking statements is available in the supplemental package posted yesterday, and a detailed discussion of potential risks is contained in our filings with the SEC. With that, I'll turn the call over to Colin Connolly.

Thank you, Pam, and good morning, everyone. We had a strong 2025 at Cousins. On the earnings front, the team delivered $0.71 a share in FFO during the fourth quarter, which is in line with consensus. In addition, we delivered $2.84 a share for the full year in 2025 which represents 5.6% growth over 2024.

Importantly, leasing remained robust. We completed 700,000 square feet of leases during the quarter, which is our second highest quarterly volume over the last 4 years. And for the 47th consecutive quarter, we delivered a positive cash rent roll-up on second-generation leasing. Earlier this week, we acquired 300 South Tryon, a trophy lifestyle office property in Charlotte for $317 million, which strategically expands our presence in the uptown submarket. These are remarkable results all around.

Let me start with a few observations on the market. Most major companies are phasing out remote work. Home Depot here in Atlanta is the latest Fortune 500 company to end work from home entirely. Thus, office fundamentals are improving. Demand is growing as leasing hit a post-pandemic high in 2025. Vacancy is declining with new construction starts at de minimis levels, any meaningful increase in new supply is 4 to 5 years away. The net result of these trends will be a shortage of high-quality space that will be particularly acute in 2028 and 2029 and 2030.

Importantly, for Cousins, corporate migration to the Sunbelt has reaccelerated. As a result, our leasing pipeline is robust across all markets. We see a notable pickup in leasing interest from West Coast and New York City-based companies, particularly among financial service and select large-cap technology companies. While not necessarily full corporate relocations, they are significant regional hubs and in some cases, highlight growth away from high tax and high regulation states. The recent mayoral election in New York and wealth tax proposals in California only reinforce these trends. A slowing labor market is raising some concern about office leasing.

However, as I said, demand is actually accelerating. I'll explain why. Office using Employment growth was historically high during the pandemic. At some companies, head count almost doubled. Because of the pandemic, many of these new hires were remote and associated office space was never leased. Now as return to office mandates have become widespread, many companies lack the space to accommodate their pandemic era head count growth even after recent layoffs. Simply said, the tailwinds from accelerating return to office remained greater than the impact of a slower job market. This is an excellent setup for Cousins to advance our strategic plan. Our team remains sharply focused on driving earnings growth while maintaining our best-in-class balance sheet and enhancing the quality of our Sunbelt lifestyle portfolio.

I will share some 2026 priorities. First, we plan to grow occupancy in 2026. At quarter end, the portfolio was 88.3% occupied and finally reflects the expiration of Bank of America's lease in Charlotte. We have modest lease expirations in 2026 and in a late-stage leasing pipeline that now totals over 1.1 million square feet. While the ramp will be weighted towards the back half of the year, we have a goal of achieving occupancy of 90% or higher by year-end 2026. We believe this goal is achievable but will be highly dependent on the timing of lease commencements, which are outside of our control. Simply said, though, timing, not underlying leasing demand will be the risk in achieving this goal.

Second, we hope to execute additional accretive

investment opportunities. Our track record highlights our openness to a wide variety of transactions, including property acquisitions, debt, structured transactions and joint ventures. However, our core strategy remains the same: invest in properties that already are or can be repositioned in the lifestyle office in our target Sunbelt markets. To fund any new investments, we will always evaluate all of our options.

To be clear, new equity at today's stock price certainly does not make financial sense. Dispositions of noncore assets settling shares already outstanding on our ATM and/or utilizing the balance sheet are more likely options. While sometimes characterized as conservative, we view our low-levered balance sheet as an offensive tool. At select times in the past, we have modestly flexed up our leverage to take advantage of compelling investment opportunities. Given improving property fundamentals and a scarcity of competitive office capital. This could be one of those moments.

We will remain agile and opportunistic with any acquisitions and/or dispositions. And as always, our capital allocation decisions will prioritize earnings accretion and while maintaining our financial strength and enhancing our portfolio quality.

Lastly, we hope to identify a new development start that can break ground in late 2026 or 2027. As I mentioned earlier, large users with '28, '29 and 2030 expirations are facing a significant shortage of large blocks of premier space and will likely need to consider new construction. We hope to capitalize on this dynamic as select development with meaningful pre-leasing has been a powerful source of long-term earnings and NAV growth for Cousins.

Last night, we introduced 2026 FFO guidance of $2.92 a share at the midpoint. This guidance forecast implies 2.8% growth over 2025. This would be our third consecutive year of FFO growth and would represent a 3.7% compounded annual growth rate over this time period. This performance is simply unmatched among other traditional office REITs. Our team's ability to drive both internal and external growth is the key. We are excited about what is ahead for Cousins. As I said, demand is accelerating. New supply is at historical lows, the office market is rebalancing. We are growing earnings. Bank of America independently ranks our portfolio is the highest quality in the office REIT sector and the balance sheet is exceptionally strong, and our G&A is highly efficient for our investors.

Before turning the call over to Richard, I want to thank our dedicated Cousins employees who provide outstanding service to our customers and each other every day. Richard?

Thanks, Colin. Good morning. Our operations team ended 2025 with another great quarter and once again delivered a full year of fantastic operating results for our shareholders. In the fourth quarter, our total office portfolio end of period least and weighted average occupancy percentages were 90.7% and 88.3%, respectively.

Our portfolio leased percentage was sequentially higher driven by gains in Atlanta, Tampa and Phoenix. Our portfolio occupancy was flat sequentially as we expected, with occupancy either increasing or holding steady in every market except Charlotte. Regarding occupancy in Charlotte, the impact of Bank of America's exploration at 201 North Tryon is now fully reflected in our occupancy.

As Colin mentioned, our occupancy outlook remains the same. Our exceptionally low 2026 lease expirations of only 4.8% of contractual rent and continued strong new leasing demand are important tailwinds and our focus on driving occupancy gains. Leasing volume in the fourth quarter was very strong for Cousins. Our team completed an impressive 39 office leases totaling 700,000 square feet with a weighted average lease term of 9.6 years. This is our highest quarterly square footage volume of the year and the second highest in the past 4 years.

Our total signed activity for the year exceeded 2.1 million square feet, which was the most since 2019. This quarter, 493,000 square feet of our completed leases were new and expansion leases, representing 70% of total activity. For the full year, new and expansion activity accounted for a healthy 55% of our activity. Our average net rent this quarter came in at 36.52 and leasing concessions defined as the sum of free rent and tenant improvements were above trend at $10.58. As a result, average net effective rent this quarter came in at a lower $23.18. It is important to note that we completed 211,000 square feet of leasing at North Park this quarter, including a very important 166,000 square foot new lease with AT&T. While this activity is clearly very positive, North Park lease economics are generally lower than the balance of our portfolio.

So for context, when excluding North Park activity, our average lease economics were much stronger with net rent of $41.02, concessions of $10.03 and net effective rent of $27 $0.96. The same dynamic holds true with our increase in second-generation cash rents this quarter. In total, this quarter, while still positive, cash rents only increased 0.2%. However, excluding North Park, cash rents increased by a more substantial 10.4% and every market posted increases this quarter. At the market level, JLL reports that leasing volume in Atlanta registered a 5.8% increase quarter-over-quarter in the fourth quarter, marking the highest quarterly volume of the year. We have seen this demand in our portfolio where we signed a phenomenal 361,000 square feet of leases in the fourth quarter, our highest quarterly volume in Atlanta since the first quarter of 2019.

70% of our quarterly activity was new and expansion leasing and included the AT&T lease at North Park that I've already mentioned. Our total activity also included two renewals with Raymond James totaling 55,000 square feet in both Buckhead and North Park. Net of our North Park activity, the Atlanta team also rolled up rents an impressive 14.5% this quarter. Our Atlanta portfolio occupancy also increased for the second consecutive quarter to 84.2% and driven by commencements in Avalon and in Buckhead.

In Austin, JLL noted that the CBD posted positive absorption for both the fourth quarter and the full year. In addition, with 1.3 million square feet of leasing activity market-wide in the fourth quarter, total leasing activity for the full year was the highest for Austin since 2021. Notably, we seen by technology companies played a meaningful role in the year's activity and nearly 1/3 of tenants currently in the market are technology companies. Across our Austin portfolio, we signed a solid 98,000 square feet of leases in the fourth quarter and we ended the year at 94.8% leased.

In Charlotte, CBRE noted that the fourth quarter rounded out with what was one of the strongest leasing years as of late, with leasing activity market-wide increasing 72% year-over-year. About 3/4 of that activity was new and expansion leasing, driven by a large block and also new-to-market requirements.

Along with that, there is no speculative new development currently underway. The supply and demand equation has already translated into solid rent growth in the urban core and the tightening conditions in Charlotte certainly bode well for our major redevelopments of 201 North Tryon and 550 South. Our 550 South redevelopment is reaching completion at a great time. As the property will see a couple of move-outs in the second quarter that combined will total 128,000 square feet, all of which have been long expected and are included in our occupancy outlook.

With that said, I'm very pleased to report that we are in lease negotiations with a new 87,000 square foot customer at 550 South that would take occupancy in 2026, while we don't yet have any specific activity to report the 201 North Tryon, we continue to see very encouraging demand for multiple large requirements for what we view as the highest quality, second-generation large block availability in the market. In Phoenix, full year 2025 net absorption came in at over 700,000 square feet and fourth quarter absorption showed improvement over the prior quarter for JLL.

Demand in the market continues to be focused on the most well-located and high-quality projects, especially in Temp and the Camel back Corridor. As such, the highest quality segment of the market has been successfully increasing rents. For example, prior to 2024, Phoenix had not seen a lease completed with a gross rent over $60 per square foot. As of today, 20 leases have been completed market-wide north of that mark. In the fourth quarter, our Phoenix team signed an incredible 177,000 square feet of leases, all of which were at our Hayden Ferry project in Tampa. Over 90% of our quarterly activity was with 3 new customers, with all of them relocating their corporate headquarters to Hayden Ferry. I'm thrilled to say the entire project inclusive of Hayden Ferry One is now 95% leased.

The redevelopment of Hayden Ferry and resulting accelerated lease-up of the former SVP space and then some is 1 of the greatest success stories in Cousins recent history. I'll conclude with an update on our leasing pipeline. Our overall pipeline remains near peak levels. and 60% of the overall pipeline is new and expansion leasing. In our December late-stage leasing pipeline update, we shared that 1.2 million square feet of activity was either signed quarter-to-date or in lease negotiations.

Even after completing 700,000 square feet of volume in the fourth quarter, as of today, we still have over 1.1 million square feet of leases either signed quarter-to-date or in lease negotiations. Further, the amount of activity we have in lease negotiations is at its highest level in 5 years with continued robust demand and activity progressing nicely through our pipeline, we believe we are positioned for an excellent start to 2026 on the leasing front. As always, I want to thank our operations team for everything they do to help make us successful.

Again, 2025 was another fantastic year and we are looking forward to continuing the momentum into 2026. Kennedy?

Thanks, Richard. Good morning. As Colin discussed, one of our key objectives remains to identify and execute acquisitions that meet our criteria. Lifestyle Sunbelt assets consistent with or better than the quality of our current portfolio that we can acquire and fund in a manner that is accretive to earnings and cash flow. While office transaction volume is increasing across our markets, we believe that we still have a competitive advantage as a well-capitalized buyer and operator particularly when it comes to larger offerings.

To that end, I'm excited to provide more detail on the acquisition of 300 South Tryon and Uptown Charlotte that we closed earlier this week. The 638,000 square foot trophy asset is an excellent strategic fit for our portfolio. The highly amenitized building sits in the heart of the urban core, boasting a walk score of 95 and as well as very convenient vehicular access and direct connectivity to the Kimpton Tryon Hotel. Since its completion in 2017, the 100% lease building has served as Barings global headquarters while also attracting a who's who of AML 100 and other professional service firms such as Mayor Brown, Ameriprise Financial, K&L Gates and RSM.

Bearings leases approximately 30% of the building. We acquired the building off market for $317.5 million or $497 per square foot. A basis that represents a significant discount to replacement cost. This equates to a 7.3% cash cap rate and an 8.8% GAAP cap rate. There's currently over 6 years of weighted average remaining lease term and strong upside potential, given that the in-place rents are approximately 20% below today's market rate. This transaction and the seller's desire to work with us directly validates our competitive advantage within our markets.

The asset is a great complement to our existing Charlotte portfolio, bringing it to 2.7 million square feet. The Charlotte market has recently been a top performer. Leading the country in job growth in 2025 amongst major MSAs. As Richard mentioned, this dynamic, along with the dwindling supply of high-quality urban space, has led to demonstrable recent rent growth in the top-tier buildings. We expect this trend to continue and perhaps even accelerate.

Turning to dispositions. The private market continues to improve with equity and debt sources becoming more constructive around office opportunities, especially those of a smaller size.

As we have discussed in the past, we view dispositions as one of several funding options for new acquisitions and eventually development. Given the quality of our portfolio and balance sheet, we don't need to sell. But when there are opportunities to accretively rotate into assets that improve our portfolio composition and mitigate higher CapEx needs, we plan to execute. We are currently under contract to sell Harbor View Plaza in Westshore Tampa scheduled to close in the first quarter for $39.5 million. This is a 2002 vintage building that is approximately 81% leased and due for renovation.

We were encouraged by the depth of investor demand for the building and decided that our resources are better invested in other assets going forward. We also have a land parcel, 303 [ Tremont ] and South End Charlotte, now under contract to be sold to a residential developer. The contract price for the 2.4 acres is $23.7 million, and we expect it to close in the second half of the year. As you know, we maintain a very modest land bank, but similar to the rest of our portfolio, we are always evaluating the highest and best use of our capital.

As this area of South End has evolved, our view is that this particular site is now better suited for residential development as opposed to the office towers that we originally contemplated. Given the aforementioned office supply shortage in Charlotte, we continue to advance predevelopment efforts on our other South Insight, 14.35 South Tryon, and remain enthused about the prospects for that eventual office development as well as others across our markets.

Looking forward, we are optimistic that 2026 will be another busy investment year for Cousins. We continue to be opportunistic when it comes to acquisitions and dispositions as well as other investment opportunities. We have the flexibility to invest in a variety of ways throughout the capital stack, yet we'll maintain discipline as to quality with a constant eye towards ultimately increasing earnings. Finally, I want to provide an update on Neuhoff, our mixed-use development project in Nashville. We finished the quarter with the apartment component up to 89% leased and today, it sits at over 90%.

We did move the stabilization date through the first quarter of 2026, and as we expect to achieve over 90% occupancy in this quarter. On the commercial side, we remain very encouraged by the recent activity both in the market and at the project. We now have a late-stage lease pipeline that is nearly 120,000 square feet. We look forward to providing further updates. I will now turn the call over to Gregg.

Thanks, Kennedy. I'll begin my remarks today by providing a brief overview of our results, spending a moment on our same-property performance. And then moving on to our property transactions and capital markets activity, before closing my remarks by discussing our inaugural 2026 earnings guidance.

Overall, as Colin stated upfront, our fourth quarter results were outstanding. Second-generation cash leasing spreads were positive same property year-over-year cash NOI increased and leasing velocity was exceptionally strong. Focusing on same-property performance for a moment. GAAP NOI increased 0.4% and cash NOI increased 0.03% during the fourth quarter compared to last year. These numbers were negatively impacted by the large Bank of America departure that Richard discussed earlier. But despite that, we've kept this property in the same property pool. Excluding 201 North Tryon, same-property cash NOI increased 2% during the fourth quarter. As Kennedy just discussed, we're in the process of selling two noncore assets. These assets were reported as held for sale on our year-end balance sheet, and we recognized impairments on both during the fourth quarter.

At Harbor View Plaza, we recognized a $13.3 million impairment, which as a depreciable asset does not impact NAREIT-defined FFO. At 303 Tremont, we recognized a $1 million impairment on our land parcel, which does run through FFO. Before moving on, I want to provide a little bit more detail on the Tremont impairment. We originally purchased this parcel in 2021 for $18.9 million. It's currently under contract to sell for $23.7 million, so there's been significant depreciation. However, while we held it, we spent $5.4 million in predevelopment costs. It's these predevelopment costs that led to the impairment.

And just last night, we received repayment at par of our $18.2 million mezzanine loan secured by an equity interest in the 110 East property in the South End submarket of Charlotte. We assume that this repayment in our 2016 guidance. Finally, although we didn't sell any common shares during the fourth quarter to date, we have sold 2.9 million shares through our ATM program on a forward basis at an average gross price of $30.44 per share. None of these shares have yet been settled.

With that, I'll close out our prepared remarks by discussing our 2026 earnings guidance. We currently anticipate full year 2016 FFO between $2.87 and $2.97 per share with a midpoint of $2.92 per share. This is approximately up which is a little under 3% from the prior year. Our guidance includes a refinancing of approximately $465 million in debt that matures between August and October of '26. Our unsecured bonds currently trade at the tightest spread to treasuries among all traditional office REITs and are much tighter than any secured debt options.

This will provide us a significant cost of capital advantage as we pursue this refinancing. Our guidance also assumes the 300 South Tryon acquisition is funded with proceeds from the Harbor View and Tremont sales as well as approximately $200 million in additional noncore asset sales. We provided this additional sales assumption for modeling purposes. In reality, as Colin stated earlier, our strong balance sheet puts us in a position to be very patient and opportunistic on the ultimate funding for this acquisition. Our guidance does not include any additional property acquisitions or development starts in 2026. If any of these do take place, we'll update our earnings guidance accordingly.

Bottom line, our fourth quarter results are excellent, and our initial 2026 guidance indicates the third straight year of earnings growth. Our best-in-class leverage and liquidity position remains intact. Office fundamentals continue to improve with accelerating leasing activity and declining new supply, and we continue to deploy capital into compelling and accretive investment opportunities. We look forward to reporting our progress in the coming quarters. With that, I'll turn it back over to the operator.

[Operator Instructions]. Your first question comes from the line of Blaine Heck from Wells Fargo.

Paul and I thought your commentary on starting a new development project was interesting. Can you talk about which markets are most supportive of development from a yield perspective and whether you're likely to develop on land you own, maybe redevelop something in your portfolio like your opportunity in [indiscernible] or whether you'll be looking to purchase land associated with that new development?

Good morning, Blaine. It -- there's not a specific development yet that I'm referring to. But given the number of opportunities that we're looking at across our footprint, that does make me hopeful by year-end, we will have identified one. And I think it could be in several different markets, Dallas, Uptown Dallas is extraordinarily tight, and we're seeing rents today approach, replacement cost rents. You alluded to the domain, which is effectively 100% leased, and we've got great land there. we referenced a tightening Charlotte market in the south end of Charlotte, again, where we own great land, where we're seeing a shortage of large blocks of space.

Even in Buckhead, where I'm sitting today, there's not a single block of space over 100,000 square feet today in a Class A building. So I do think you're going to start to see some increases in rental rates that will justify new construction for some large users that have no other alternatives, and we want to be ready to capitalize it. And it ultimately could be land that we own today, it could be some discussions that we're having about various ventures with folks that own parcels that we currently do not own. So it's going to be -- we're going to be flexible, but we're laser-focused on identifying and converting one of these opportunities, hopefully, by year-end.

Okay. Great. That's helpful. You've got a robust late-stage pipeline as you guys have alluded to at 1.1 million square feet. So I'm sure you guys have a good idea of where rent spreads might be on that activity. Is there any color you can provide there and just general thoughts on 26 rent spreads on a cash basis?

Sure. This is Richard. Yes. I mean we definitely have visibility into that in the late-stage pipeline. And what I'll say is that it's looking certainly more in line with our activity this past quarter net of North Park. So we feel good about the near term on continuing to be able to roll up cash rents.

And Blaine, I highlight, if we're successful in and delivering another positive cash rent roll-up in the first quarter. That will be our 48th consecutive quarter with a positive second-generation rent roll-up. That's -- for those that don't want to do the math, that's 12 years.

Very impressive. Yes. Last one for me. Can you just talk a little bit more, I guess, about the optionality you guys have for funding the 300 South Cyan acquisition and how you're thinking about sales versus debt or equity issuance from a strategic and also economic perspective, I guess, are there a certain target cost of capital or yields on each option that would make you kind of lean one way or the other?

Yes. Great question, Blaine. It is -- we have a lot of optionality. And the reason for that optionality is the low levered balance sheet we have and the trophy quality of the portfolio. You hit it right on the head. We're trying to balance both the financial aspects with the strategic aspects. And so we will continue to look at various opportunities to fund that. And I'd say we think about dispositions in the alternative dispositions really with a basket approach.

So you can see we've got Harbor View and a piece of land under contract to sell. We perhaps could pair that with an older vintage, higher CapEx disposition that might be at a higher cap rate. But ultimately, what we're trying to balance with any disposition or basket of dispositions is a disposition yield that is comparable to where we could reinvest that. So we've been buying at GAAP cap rates in the 8s. I would expect us to any sales that we execute the weighted average cap rate of those sales to be at least at that cap rate, if not lower because ultimately driving accretion is the priority.

Your next question comes from the line of Andrew Berger from Bank of America.

Great. Maybe just piggybacking on Blaine's first question on developments. Could you give us a sense of the type of underwriting criteria you would look for, whether that's yields and maybe the percent pre-leased that would give you enough confidence to start the project? And also whether this is something you would look to do yourself or potentially bringing a joint venture partner?

I would say we're targeting plus or minus 50% on a pre-lease basis, and I would expect cap rates -- or excuse me, development yields to be at least $150 million basis points, if not 200 basis points higher than stabilized cap rates today. So that would put you in the, call it, 8.5% to 9% range today. on a development yield. And we're flexible in terms of whether we do it ourselves or we ultimately have a joint venture partner, and we're always evaluating lots of different opportunities.

Great. And as my follow-up, you mentioned some activity from companies primarily located on the West Coast in New York City. Can you just talk about which of your markets you're seeing the most of that activity in?

Sure. It -- we're seeing a significant amount of activity in Austin from West Coast companies. We're also seeing some of that in Nashville with various tech users. And then I'd say there's been a real significant pickup in financial services firms out of New York looking at Charlotte in particular.

Your next question is from the line of John Kim from BMO Capital Markets.

Thank you. Colin, it sounds like from your occupancy target this year, you have a little bit less conviction than last quarter. yet leasing activity was very strong this quarter. The investment activity with the 300 South Tryon and selling Harbor View should help your occupancy figure overall. So I'm wondering what has changed in the last few months for you to maybe walk that back a little bit?

No, John, I don't think anything has changed. And we still -- as we sit here today, believe that, that is an achievable goal. Again, it's a goal, not guidance, but we do think that it is achievable, given the low levels of expirations. And as you touched on the leasing that we're doing, as I mentioned, the timing of commencement is a risk, and I'll just give you an example that if we had a decision between a 100,000 square foot lease that could commence in 2026 in Charlotte or a 200,000 square foot lease in that same block that would commence in 2027.

And we would likely pursue the larger lease that the economics were strong. So there's just -- there's a little bit of timing from a quarter-to-quarter perspective, but we still think that it's highly achievable. And again, I think you're going to continue to see progress on our percent leased over the year and perhaps that spread between percent leased and percent occupied could continue to grow. But again, I think there's just some variability with timing of the commencement of a lease that's beyond our control.

Yes, that makes sense. I'm just wondering if you feel comfortable maybe not now or going forward, on providing a leased target rather than not going see given those dynamics?

Yes, that we would consider. Absolutely, we would consider that. It's easier to forecast.

SP1 You mentioned in your prepared remarks, the return to office just providing a demand boost currently. Today, we're about 4 years of moved from COVID restrictions ending, but I know the return to office been various -- varied across your markets. How much runway do you think we have left on the RTO demand?

Hard to say, John, there are -- as I mentioned, there are companies like Home Depot that just kind of made this announcement and shift just a few weeks ago. What we can say is that demand is continuing to accelerate. Our pipeline continues to grow. And I also think there's some other trends that will likely kick in, in the not-too-distant future that I think could increase renewal activity and that being the shortage that I indicated is coming in '28 and '29, we're starting to see some of the tenant reps and better informed customers recognize that they probably need to address those lease expirations sooner than later, so as to not be boxed out of space at expiration time.

Next question comes from the line of [indiscernible] from Evercore ISI.

You talked about good traction on the former Bank of America space and also the commentary some positive on the New Hawks commercial property. So I was wondering if you could share some more color on just the specifics on what type of tenants and how far along you are with those prospects in terms of like lease discussions on those two like projects or spaces.

Sure. I can start with that. This is Richard. Specifically on 201 North Tryon, we really continue to see a lot of encouraging demand for large users Colin already alluded to this, but we all know that Charlotte has traditionally been a hub for financial services. That's -- nothing has changed there. I think it's evolved to some extent to include some level of fintech and technology embedded within large traditional financial services firms, but we're seeing very encouraging looks from that industry and also from large users looking to relocate significant operations out of other markets and into Charlotte.

So again, we don't have anything specific to report to you on 21 North Tryon, but we're very optimistic that we will have something very near term. In Nashville, again, technology seems to be a really healthy driver of activity and sort of add on to new-to-market activity. So continue to be very optimistic about the demand there, both in market and from out of market.

Got you. And maybe one follow-up question. Obviously, the market, there is some fear in the market baked in about just software companies and their outlook for those. Is there any space in your portfolio or tenants did you have a closer eye on? Just to like follow them if there's any like type of underutilization of space. Again, I don't mean to sound too negative in your commentary is obviously very positive. So I just wanted to check another since that's the current theme.

No. It -- the tech component of our customer base is made up of primarily very large well-capitalized technology companies, Amazon and Google being our two largest customers. But there's nothing that we've seen or identified any software companies within our portfolio that are now underutilizing their space or would be showing any signals of any negative impact to their business. Say it's far too premature for that.

Next question comes from the line of Anthony Paolone from JPMorgan.

You mentioned the activity in Austin and financial services in Charlotte. But can you talk a bit more about Atlanta? I think the narrative around really strong growth plans for firms like Microsoft and Google were pretty prominent over the last few years, but maybe give us an update on maybe where they are in that hiring and whether or not sort of the anticipated ecosystem around those employers has developed.

I think specifically, you referenced Microsoft that has bought a significant amount of land in West Midtown. I'd say they have scaled back those plans specifically, the -- for their new development. That being said, they did anchor to a large office development project in Midtown. So it was -- I accomplish probably half of what their announced plans were. But overall, Richard could touch on Atlanta. We're seeing really positive activity, leasing activity across in all of our markets, and it continues to represent a significant amount of our leasing activity. So Richard can give a little bit of color on that.

That's absolutely right. if you look at what we've completed recently, again, the volume has been phenomenal, looking out in both the late and early-stage pipelines for Atlanta the new and expansion activity is roughly half of our demand, looking at the industry mix, Financial services are very much focused on Atlanta. But it's also tended to be a more diversified demand mix in Atlanta, too. So we're seeing a little bit of everything, Plenty of professional services. There is the tech component. And so it's very healthy from a diversification standpoint.

All right. And then just back on the occupancy side and thinking about that over the course of this year, is there -- like can you quantify maybe like how many leases are signed. They're just waiting to commence throughout the course of '26. And also maybe even as it relates to your expirations, what you think tenant retention might look like? And I guess the goal of those two, just trying to understand what the bridge or might need to be on the leasing side to get occupancy higher.

Sure. I'd say just at a high level, we've always indicated that retention is likely over time going to be in the 50% range. And we only have, I think, 1 million square feet of square feet expiring in 2026. To your question about what's signed but not yet commenced, what I'd say is that virtually all of our Q4 25 new and expansion leasing, which is 497,000 square feet is going to be commencing in '26. So I think the exact number is 460,000 square feet that weighted average commencement is going to be in the third quarter, kind of mid-third quarter.

What I'd caution is that, though those actual commencements are in the third quarter the way we report occupancy on a weighted average basis. We won't see the impact of those commencements flow through until the fourth quarter in its entirety. So -- but again, we a lot of the heavy lifting that we've done on leasing recently is going to show up in '26. So if you look out to the late-stage pipeline and the early-stage pipeline, we're still seeing plenty of commencements or uncompleted or unsigned activity, but we are fighting the calendar.

And Colin gave a good example of situations where we might make decisions to choose a later commencement if that's the right long term and strategic decision for the company and may not help occupancy in '26, but still be the right decision for the long term. So again, plenty of activity that we've completed will have an impact on '26, but we're starting to get into that time of the year where '27 commencements are going to become more and more common.

Okay. So if I could just kind of make sure I understand that if you keep half your tenants expiring this year, that's almost 0.5 million square feet, then you've got another almost 0.5 million square feet that's just scheduled to commence. So that kind of gets you to flat as a starting point, everything that gets done at this point that you can get commenced in '26 becomes the pickup. Is that kind of a fair summary then?

Yes. And also what Richard referenced was just the signed leases in the fourth quarter. There were also leases signed before the fourth quarter that will have an impact on 2026. Tony, to ultimately drive the occupancy as well as any other new speculative leasing that we do that we're working on now that will have a positive impact on 2026.

Yes. Your next question comes from the line of Brendan Lynch from Marklas

A couple on Harbor View and Tampa. This asset sale more consideration of asset being asset-specific relative to being a consideration for the Tampa market. And also how many assets do you have that have similar characteristics to Harbor View that are older, lower occupancy redevelopments that you would be interested in potentially recycling?

Brendan, it's Kennedy. I would say this is asset specific. So we are certainly very encouraged by what we're seeing in the Tampa market in general and across the rest of our portfolio there. And as it relates to the other assets, I mean, as we've said in the past, it's a very small percentage. And so we kind of look at it relative to the -- where we think investor demand is. And again, we're the best use of our capital is going to be going forward. So it's certainly sub-10% of the portfolio, it's not much less than that.

Okay. That's helpful. And maybe you could also give an update on Brosenium as you've made progress with the repositioning and how demand has been for the space in that asset?

Sure. Good question. We are just now opening up the repositioning. So it's I'd say, 2/3 of the way done. And as we've seen with some of our other assets, that's generally been a good indicator of when the leasing activity starts to pick up. So we're in good discussions with several prospects there. And really encouraged by the response that we've gotten to the renovation work.

Next question comes from the line of Nick Thillman from Baird.

Maybe, Richard, following up on just the late-stage leasing pipeline in the 1.1 million square feet. As we think of just larger tenants within that pipeline, say, above 100,000 square feet, are there any big chunkier deals within that number? And just remind us what the actual close rate historically has been for signed deals on that pipeline?

Yes. The late-stage pipeline is generally very reliable. So it's 95% to 100% usually conversion rate. I can think of a couple of instances in the last couple of years, we've had someone fall out of that pipeline, and it's usually highly specific to a business decision or approval process and in a particular tenant. So very good conversion rate there. There is a little bit of chunkiness in the late-stage pipeline. Some of it's in Atlanta, some really positive new activity. We have some renewal activity that's of size that's in the pipeline as well. But it really -- it's fairly evenly spread across all of our markets.

SP1 On that Atlanta number, is that related to renewal or new? Just wanted to clarify that.

They're both. Actually, but the largest one deal.

Okay. And then maybe just touching on a couple of the larger blocks that are coming up. Just an update on overall in Houston with Samsung? And then also, can you remind us what the plans are with Ovintiv space that's currently a sublet that's expiring next year. with 88% of the subtenants in the space. Is the plan to go direct with subtenants or is there some larger users looking at that space? Maybe some more commentary there to those two spaces.

Sure thing. Maybe I'll start with Legacy Union and Plano and the [indiscernible] building. Again, as a reminder, what we did last quarter was we entered into an agreement with Ovintiv as the prime tenant to take over management for one to get control of the building because we did not have that and then terminate them early in the middle of '26, at which time we will go direct with the subtenant base, which is extensive with the project.

So you look at that square footage that will still expire out in '27 we're having very positive constructive discussions with four different subtenants currently at the project. So we feel good about our prospects of potentially taking those direct when you kind of back those out and look at what the opportunity is to go do new leases with new tenants and continue to multi-tenant the building, that's roughly 150,000, 175,000 square feet out in and the pipeline in Plano and North Dallas, in particular, it's extremely robust.

And we're seeing just in the last month, probably at least 3, 4 different tours of the building greater than 150,000 square feet. We also have plenty of inquiries of a single or 2 floors, 3, 4. So very positive demand backdrop there. at Brier Lake in Houston with the Samsung expiration. As a reminder, that expiration is in at the end of November of this year. So really minimal impact either way on 2026. And -- it's 123,000 square feet. I'd say that at this moment in time, only about 70,000 of that is exposure. We're having very positive discussions with a number of subtenants there as well and also some new deals and very similar demand backdrop to North Dallas.

Your next question is from the line of Dylan Burzinski from Green Street.

Colin, you mentioned, obviously, the strong demand backdrop, which is accelerating because in portfolio is likely to be sort of 90% leased, call it, towards the end of this year, it sounds like. And then you mentioned new development, not likely coming for the next 4 to 5 years, and obviously, replacement rents are sort of well above market rates today. So just sort of wondering, can you sort of give us an outlook for where you guys sort of see the growth in net effective rents shaking out over the next 1, 2, 3 years?

Yes, as you just described, the backdrop is really, really positive. Demand is accelerating. Construction is de minimis. You're actually seeing approximately 20 million square feet a year being taken out of inventory. And so we do see a shortage of premier space starting to take shape in 2028 and beyond. And so that we believe we're close to an inflection point where we'll very much become a landlord's market.

And as I alluded to, tenant reps are starting to recognize that by approaching us early on those type of renewals in those time periods. I can't say specifically what the change in net effective rents will be. But I do think rents will go higher and concessions will come down. You're already starting to see in certain submarkets where that shortage is showing up sooner and will be a good proxy. And Dallas would be a good example where, over the last 4 years, rents have arguably doubled within trophy properties in Uptown Dallas and again, concessions have come down. So rent growth in the office world rarely moves in a single-digit linear way, whether up or down, it's usually a bit chunkier.

And we are seeing, again, some specific markets today where we've seen double-digit rent growth over the last year at our Hayden Ferry project, as an example, rents have grown 10% to 20% over the last 12 to 18 months alone. So I think it's a very, very favorable backdrop an environment for owners of trophy lifestyle office and I'd say, particularly in the Sunbelt where the population continues to grow and migration continues to be very favorable.

Your next question comes from the line of Paul Reiner from KeyBanc.

Colin, you mentioned in the past of an increased interest in private capital in your markets. Could you give us an update on how that looks today and how that is impacting how you're thinking about deploying capital on external growth opportunities?

This is Kennedy. I'll jump in on that. And yes, I mean as I mentioned, certainly seeing more private capital generally, family offices, kind of high net worth capital has been leading the way. There's certainly a lot of debt capital out there now that's being much more constructive around office. But those types of capital sources generally are more focused on the smaller deals. So that's where we're, again, trying to align some of our disposition thoughts as well. So we really haven't seen the that capital start to compete with us on acquisitions. We think it's probably coming, but still feel like we've got a good window and a competitive advantage when it comes to investing in some of the larger assets.

Okay. Great. That was helpful. And then Gregg, on your full year guidance, it assumes the refinancing on the term loan, Colorado Tower and 201 North Tryon. What do you have currently baked into your guidance on where pricing could potentially shake out?

We're committed to an unsecured borrowing strategy. So we will likely refinance all of those 3 maturities with unsecured debt. And I'm not saying I'm going to do it right now. But if I did it right now, we have a hole in our maturity schedule in 7 years and 10 years. So we have some flexibility in what we do. and the 7-year debt would probably get priced, if I did it today, somewhere, give or take, around 5% and the 10-year debt would be priced somewhere around probably $35 million, $40 million.

Your last question comes from the line of [indiscernible] from Mizuho.

This is [ Sashank ] on for Vikram Malhotra from Mizuho.It appears that Austin as a market has inflected positively. Any more color on bigger requirements there.

I think we are definitely seeing some level of positive I don't want to say green shoots a little overused term, but some positive activity that I alluded to in the tech sector. Obviously, a lot of Austin's success in the past has been driven by tech demand. And we see that starting to percolate certainly in our pipeline and our own specific activity. So I would say, yes, we're seeing some positive movement there.

My next question is how should we think about TI spend in '26 and as we go into '27?

Well, Obviously, the TIs drove some elevation in concessions this past quarter. I would point you back toward my comments. About ex North Park and looking at lease economics in that context. You're going to continue to see with the elevation of TIs, our prioritization of occupancy and driving occupancy. And so that could continue. But what I'd like to stress, and this has been a theme over, frankly, many years as we've talked about different points of time where we see pressure in TIs or concessions in general that we have been able to successfully maintain net effective rents.

And I think that was the case this past quarter, even with elevated TIs. And it's important to note that with the tightening conditions that we see ahead certainly in the medium term, that we're going to be able to back off of that over time. I think it's going to become a more constructive market for owners and landlords. So I would call that a more near-term dynamic as we prioritize occupancy.

There are no further questions at this time. I would like to turn the call back to Colin Connolly for closing comments. Sir, please go ahead.

Thank you for joining us this morning, and we appreciate your continued interest in Cousins Properties. If you have follow-up questions, please feel free to reach out to Gregg Adzema, [indiscernible]. Have a great day and a great weekend.

Ladies and gentlemen, this concludes today's conference call. Thank you very much for your participation.

Good morning, ladies and gentlemen, and welcome to the Cousins Properties Inc. Conference Call. [Operator Instructions]. This call is being recorded on Friday, October 31, 2025.

And I would now like to turn the conference over to Ms. Pamela Roper, General Counsel. Thank you. Please go ahead.

Thank you. Good morning, and welcome to Cousins Property's Third Quarter Earnings Conference Call. With me today are Colin Connolly, our President and Chief Executive Officer; Richard Hickson, our Executive Vice President of Operations; Kennedy Hicks, our Executive Vice President and Chief Investment Officer; and Gregg Adzema, our Executive Vice President and Chief Financial Officer.

The press release and supplemental package were distributed yesterday afternoon as well as furnished on Form 8-K. In the supplemental package, the company has reconciled all non-GAAP financial measures to the most directly comparable GAAP measures in accordance with Reg G requirements. If you did not receive a copy, these documents are available through the quarterly disclosures and supplemental SEC information links on the Investor Relations page of our website, cousins.com.

Please be aware that certain matters discussed today may constitute forward-looking statements within the meaning of federal securities laws, and actual results may differ materially from these statements due to a variety of risks and uncertainties and other factors including the risk factors set forth in our annual report on Form 10-K and our other SEC filings.

The company does not undertake any duty to update any forward-looking statements, whether as a result of new information, future events or otherwise. The full declaration regarding forward-looking statements is available in the supplemental package posted yesterday, and a detailed discussion of the potential risks is contained in our filings with the SEC.

With that, I'll turn the call over to Colin Connolly.

Thank you, Pam, and good morning, everyone. We had a strong third quarter at Cousins. On the earnings front, the team delivered $0.69 a share in FFO and raised the midpoint of our guidance by $0.02 a share to $2.84 a share. The midpoint of our guidance now represents 5.6% growth compared to 2024.

Importantly, leasing remained robust. We completed 551,000 square feet of leases during the quarter, which is our second highest quarterly volume over the last 3 years. And for the 46th consecutive quarter, we delivered a positive cash rent roll-up on second-generation leasing. We also acquired the link for $218 million, which strategically expands our presence in the fast-growing market of Dallas. These are remarkable results all around.

I will start with a few observations on the market. Most major companies are phasing out remote work. Office fundamentals are improving. Demand is growing. During the third quarter, net absorption reached a post-pandemic high. Vacancy declined for the first time in 7 years. And with new construction starts at de minimis levels, any meaningful increase in new supply is 4 to 5 years away.

Importantly, for Cousins, corporate migration to the Sun Belt has firmly reaccelerated. As a result, our leasing pipeline is robust across all markets. We see a notable pickup in leasing interest from West Coast and New York City-based companies. financial service and select large-cap technology companies are particularly active.

While not necessarily full corporate relocations, they are significant hubs in some cases and highlight growth away from high tax in high regulation states once again. A recent rise in layoff announcements seems to be weighing on investor sentiment around the office sector. However, we have not seen any meaningful impact on demand. I'll explain why.

Office using employment growth was historically high during the pandemic. At some companies, headcounts almost doubled. However, because of the pandemic, many of these new hires were remote and associated office space was never leased. Now as return to office mandates have become widespread, many companies lack the space to accommodate their panic era headcount growth even after modest recent layoffs.

Simply said, the tailwinds from the accelerating return to office remain greater than the impact of corporate layoffs from our vantage point. One more thing I'd like to note on this topic. Given the current exuberance around AI, corporate downsizing is often incorrectly tied to automation. Amazon is the most recent example.

However, on last night's earnings call, Andy Jassy confirmed that Amazon's announcement of 14,000 job cuts was aimed at reversing excessive hiring during the pandemic. To put this in perspective, Amazon grew its head count by almost [ 750,000 ] jobs since year-end 2019.

To reiterate my previous comments, the return to office is a more powerful lever for office demand than corporate rightsizing and AI is not yet a threat as we expect it to be. This is an excellent setup for Cousins to advance our strategic priorities. Our team remains sharply focused on driving occupancy and earnings growth while maintaining our best-in-class balance sheet and enhancing the quality of our portfolio.

To do so, we are prioritizing both internal and external growth opportunities. At quarter end, the portfolio was 88.3% occupied, and finally reflects the expiration of Bank of America's lease in Charlotte. Given our robust leasing pipeline and modest lease expirations in 2026, we are confident that we can grow occupancy next year.

While the ramp will be heavily weighted towards the back half of the year, we have a goal of achieving occupancy of 90% or higher by year-end 2026. Our creative investment team continues to evaluate several interesting investment opportunities. Our track record highlights our openness to a wide variety of transactions, including property acquisitions, select development, debt, structured transactions and joint ventures.

However, our core strategy remains the same, invest in properties that already are or can be positioned into lifestyle office in our target Sunbelt markets. Earnings accretion is a priority.

To fund any new investments, we will always consider all options. To be clear, new equity at today's stock price certainly does not make financial sense. Dispositions of noncore assets settling shares already outstanding on our ATM and/or utilizing the balance sheet are more likely options. While sometimes characterized as conservative, we view our low-levered balance sheet as a distinct offensive tool.

At select times in the past, we have modestly flexed up our leverage to take advantage of compelling investment opportunities. Given improving property fundamentals, and a scarcity of competitive office capital, this could be one of those moments and Cousins is uniquely positioned to seize it.

As I mentioned earlier, the current midpoint of our guidance forecasts 5.6% growth over 2024. This would be our second consecutive year of FFO growth. Cousins would be 1 of 1 in the traditional office sector to accomplish this multiyear growth. Our team's ability to drive both internal and external growth is key. We plan to continue the streak in 2026.

We are excited about what is ahead for Cousins. Demand is accelerating, new supplies and historical lows, the office market is rebalancing. We are growing earnings. Bank of America independently ranks our portfolio is the highest quality in the office REIT sector. Our balance sheet is exceptionally strong, and our G&A is highly efficient for our investors.

Before turning the call over to Richard, I want to thank our dedicated Cousins employees who provide outstanding service to our customers and each other every day. Richard?

Thanks, Colin. Good morning, everyone. Our operations team once again delivered exceptional results in the third quarter. This quarter, our total office portfolio end-of-period lease and weighted average occupancy percentages were 90% and 88.3%, respectively. As expected, both were down this quarter, almost exclusively due to the known move out of Bank of America at 201 North Tryon in Charlotte.

Without Bank of America's exploration, our occupancy would have been steady this quarter. Like last quarter, I want to reiterate that our near-term occupancy expectations remain generally the same. We still see the third quarter as a bottom. And then expect occupancy to be stable or modestly increase for a couple of quarters and then build higher in the back half of 2026.

I would be remiss if I didn't once again point out that a big driver of our occupancy expectations continues to be our best-in-class near-term expirations profile. As of third quarter end, we only had 6.3% and of annual contractual rent expiring through the end of 2026. We continue to be laser-focused on proactively managing our expirations.

During the third quarter, our team completed 40 office leases totaling an impressive 551,000 square feet with a weighted average lease term of 9.4 years. Total leasing volume was up 65% sequentially and even exceeded our strong first quarter activity. This quarter's volume was also well above our 1-, 3- and 5-year volume run rates. We are very pleased with our year-to-date leasing activity, which stands at 1.4 million square feet.

Our leasing pipeline also continues to be very healthy at all stages has grown nicely throughout the year and as a result, remains at record high levels. As Colin mentioned, our pipeline also reflects a notable increase in large user activity including new-to-market requirements looking to either relocate or build a new talent base in the Sunbelt. With regard to lease economics, second-generation cash rents increased yet again in the third quarter by a healthy 4.2% and Dallas and Tampa posted the largest cash rent roll-ups this quarter, with Austin and Charlotte, not far behind. Average net rent this quarter landed at $39.18 which is the third highest quarterly level in our company's history.

Average leasing concessions with some of free rent -- tenant improvements were $8.12, which is 13.8% below last quarter and 7.6% below the full year 2024. The result was average net effective rent of $28.37, slightly higher than last quarter and the second highest quarterly level in the company's history. Our net effective rents were solid in every market once again. a testament to the broad strength of our Sunbelt markets and assets.

Turning to the markets. JLL reported that transaction volume in Austin totaled 1.3 million square feet in the third quarter, a sequential increase and 16% above the 3-year quarterly average. Across our Austin portfolio, we signed 97,000 square feet of leases in the third quarter, also sequentially higher. Of that activity, 52,000 square feet were new leases at the Terrace in Southwest Austin, where demand continues to be impressive. The Austin team also completed an important 40,000 square foot renewal of the long term at Colorado Tower in the CBD. Our Austin portfolio ended the quarter at [ 94.9% ] leased.

Similar to Austin, JLL reverted a quarterly leasing activity in Atlanta increase at 15.5% quarter-over-quarter. They also noted that this quarter, new leasing made up a greater share of leasing volume than in recent years, with renewals accounting for just 17% of volume. We signed a strong 125,000 square feet of leasing in our Atlanta portfolio this quarter and on a transaction count basis, 2/3 of our activity was new and expansion leasing. That included a 24,000 square foot headquarters expansion of a customer at North Park in the central perimeter, effectively doubling their footprint.

Of particular note is that expansion was driven by a recent decision to bring employees back to the office as soon as possible. Also in North Park, I'm very excited to report that we are in advanced lease negotiations with a Fortune 50 company to lease 166,000 square feet at the property on a long-term basis, which when complete will represent incremental occupancy of nearly 12% for the 1.4 million square foot project. This will clearly be a huge boost for -- but also for our occupancy trajectory at the total portfolio level. This quarter, our overall Atlanta portfolio occupancy increased to 83.4% and driven primarily by a handful of new and expansion lease commencements in Buckhead.

Turning to Charlotte. Fundamentals for high-quality office remains strong with Class A space representing 70% of all new leasing during the quarter. Further, new development inventory in South and Uptown is very close to fully leased. As such, we continue to be very excited about our redevelopment projects at the 550 South -- 201 North Tryon in uptown, which we view as the highest quality existing office projects with availability in the market.

Consistent with the new supply dynamic I just mentioned, we are pleased to say that in the third quarter, we completed an early long-term renewal of McGuire Woods at 201 North Tryon for 127,000 square feet. This was an important win, and we view this long-term commitment to 201 North Tryon as a validation of the building's quality location and of our ongoing property redevelopment.

Same positive market dynamics are in play in Phoenix as well in the past few months have been remarkably active on the leasing front. You may recall that we signed a 39,000 square foot new lease at Hayden -- One in the second quarter. Since then, but subsequent to third quarter end, we signed an additional 52,000 square foot new lease at building with a commencement date before year-end 2025.

On top of that, we are in lease negotiations with another new customer for Hayden Ferry One that would bring the building to approximately 95% leased in very short quarter.

During the third quarter, the team also completed 2 important renewals at both Hayden Ferry 2 and Tippy Gateway, totaling 44,000 square feet. We could not be more pleased with the recent performance of our Phoenix portfolio.

Last, I'll touch on Dallas. With the addition of the link, we now own a 3-building, 808,000 square foot portfolio in Dallas with the largest asset being the 319,000 square foot legacy Union 1 building in the legacy submarket of North Dallas. Ovintiv is the sole customer in the building, so they subleased substantially all of the building years ago.

In the third quarter, we proactively entered into an early termination agreement with Ovintiv. And upon Ovintiv's new expiration in mid-2026, all of the subtenants will automatically become direct tenants. Through this agreement, we essentially multi-tenanted the building and can now more effectively engage with the subtenancy about future renewals. This move also greatly improves our flexibility in executing creative strategies to proactively backfill whatever space we may ultimately get back.

Encouragingly, interest in the building has been very robust even in the short period of time since we executed this agreement, both with existing subtenants and potential new tenants. It is clear that demand for high-quality office in Dallas is very healthy, and we are excited to capitalize on it.

I'll conclude with a brief revisit of our leasing pipeline. Again, our overall pipeline is at record levels for Cousins, and 68% is new and expansion leasing. Further, we have 715,000 square feet of leases either signed fourth quarter year-to-date or in lease negotiations, of which 77% are new and expansion leases. That represents a total of 551,000 square feet of new and expansion leasing in our late-stage pipeline alone. For perspective, that's roughly 2x our year-to-date quarterly new and expansion leasing run rate. This is a very encouraging trend. As always, I want to thank our operations team for all of your hard work. Your talent and excellent customer service continue to position our company exceptionally well. Kennedy?

Thanks, Richard. Before I discuss the transaction environment, I want to touch on our mixed-use development project, New hop in Nashville. We finished the quarter with the apartment component up to 86% leased. And we still expect for this part of the project to be stabilized at the end of the year. On the commercial side, we signed 2 spec suite leases, both of which commenced in 2025 and brought that component up to 53% leased. We've been very encouraged by the recent uptick in tenant demand in the Nashville market with several large office prospects currently considering new -- for both near-term requirements and future expansion needs.

As you may recall, as part of the overall project, we have the ability to develop a 280,000 square foot office tower adjacent to the current one. Given the infrastructure that is already in place, we believe we have a competitive advantage in our ability to offer expansion space and an expedited time line upon tenant commitment. As a reminder, new office located in the Germantown neighborhood of Nashville, directly across the Cumberland River from Oracle soon to be developed state-of-the-art headquarters campus.

Oracle has reportedly hired nearly 1,000 employees in the city to date and is pledged to have at least 8,500 workers in Nashville by the end of 2031. Just this month, the company released rendering showing its extensive plans for the campus. These plans include Andestra bridge that the company will build across the river to link its campus to Neuhoff. This multibillion-dollar investment by Oracle as well as the recent tenant activity in the market, is a testament to both National's talented and growing workforce as well as company's desire for high-quality differentiated office environments.

We are excited about the response from the market for Neuhoff has to date and feel that the momentum is only building for this iconic project. Turning to our acquisition activity. As previously announced, we closed on the link in Uptown Dallas during the third quarter. The link of the trophy building that fits squarely into our lifestyle on belt office strategy while expanding our footprint in Dallas. We acquired the 94% leased property for $218 million or [ $747 ] per square foot. Pricing represents a discount to replacement cost and has been immediately accretive to earnings.

We remain very enthusiastic about the Delta office market and our ability to continue to expand our presence there. Uptown Dallas is receiving an outsized share of demand, thanks to its appeal as an urban walkable mixed-use district and the ongoing migration of financial and professional service jobs to the region, largely from New York and California. There are very few large blocks of available space remaining in uptown. And we are already witnessing near-term demand exceeds supply.

The increasing tenant demand that we are experiencing across all of our markets has led to continued improvement in investor sentiment towards office, which is creating higher transaction volumes. Debt for office assets is now readily available and equity is following, albeit still selectively and generally more oriented towards smaller assets.

We continue to seek out acquisition opportunities that meet our criteria. Sunbelt assets that are consistent with or better than the quality of our current portfolio that we can fund in a manner that is accretive to earnings and cash flow. We are mindful of maintaining geographic diversity and will remain laser-focused on asset quality and location. With better debt increasing and buyers becoming more constructive around underwriting, we also intend to selectively explore dispositions as a funding source for new acquisitions and eventually develop.

Given the quality of our portfolio, we don't have a lot of assets that qualify as noncore and we don't need to sell. But when there are opportunities to accretively rotate into assets that improve our portfolio composition and mitigate higher CapEx needs, we will execute.

With that, I'll turn the call over to Gregg.

Thanks, Kennedy. Good morning, everyone. I'll begin my remarks by providing a brief overview of our results, spending a few minutes on our same-property performance. And moving on to our capital markets transactions. Before closing my remarks, with an update to our 2025 earnings guidance.

Overall, as Colin stated upfront, our third quarter results were outstanding. Second-generation cash leasing spreads were positive same property year-over-year cash NOI increased and leasing velocity was pretty strong.

Focusing on same-property performance for a moment, GAAP NOI grew 1.9% and cash NOI grew 0.3% during the third quarter compared to last year. These numbers were negatively impacted by the Bank of America departure at our 201 North Tryon property that Richard discussed earlier. Despite initiating a significant redevelopment plan at this property, we left it in our same property pool.

I also want to take a moment to point out the lumpiness that can sometimes run through our quarterly same-property expense numbers, usually driven by property taxes. Property tax true-ups as we get clarity through the tax assessment and appeal process. can push the quarterly numbers around quite a bit. So it's always best to use longer time frames when looking at these numbers. For example, same property tax expenses that ran through our P&L were up 21.9% in the fourth quarter of '24. They were down 12.1% in the first quarter of this year, down 22.4% in the second quarter and up 14.7% this quarter. That's a lot of movement, compared to the prior year. However, if you take a step back and look at all of 2025, we currently forecast our net property tax expenses to be essentially flat compared to 2024.

Moving on to our capital markets activity. Our Neuhoff joint venture, of which we own 50%, proactively approached our lender and amended its existing construction loan during the quarter. Our goal was to lower the SOFR spread and extend the maturity date, which we accomplished by paying down $39 million of the outstanding principal balance. In connection with this amendment, we also loaned our joint venture partner, $19.6 million at an interest rate of SOFR plus 625 basis points, which they used to fund their portion of the repayment.

Although we didn't sell any common shares during the third quarter to date, we've sold 2.9 million shares through our ATM program on a forward basis at an average gross price of $30.44 per share. None of these shares have yet been settled. In addition, we paid off a $250 billion note upon maturity in early July, using proceeds from our most recent $500 million bond offering in June. We also used proceeds from this bond to partially fund our acquisition of the Link property in Dallas that Kennedy just discussed.

We continue to assess alternatives to fund the remainder of the Link acquisition and as I discussed in our last earnings call, settling some of the shares we have issued on a forward basis and/or selling some noncore assets are 2 of the alternatives available to us. With our sector-leading balance sheet, we're in a position to be patient on this front.

With that, I'll close our prepared remarks by updating our '25 earnings guidance. We currently anticipate full year 2025 FFO between $2.82 and $2.86 per share with the midpoint of $2.84. This is up $0.02 from last quarter. The increase in FFO guidance is driven by higher parking income higher termination fees, lower SOFR and interest income from the loan to our joint venture partner. Our guidance assumes no additional SOFR cuts for the remainder of '25

Bottom line, our third quarter results are excellent, and we're raising the midpoint of our full year earnings guidance yet again. The current midpoint is $0.06 per share above the midpoint we provided when initiating the guidance in February. And although it's not in our guidance, as Colin said earlier, we anticipate the potential to continue deploying additional capital into compelling and accretive investment opportunities. We look forward to reporting our progress in the coming quarters.

With that, I'll turn it back over to the operator.

[Operator Instructions]. And your first question comes from the line of Blaine Heck from Wells Fargo.

Colin, I appreciate your commentary on AI and layoffs, very helpful. Just a follow-up, and I know it was a very recent announcement. But given that Amazon is your largest tenant, have you spoken to them about their space within your portfolio and whether the recent announcement might change their utilization at all? And more broadly, I think there's an idea being brought up in our conversations that the Sunbelt might be a bit more susceptible to AI and displacement given the amount of corporate back-office type jobs housed in those markets. So I'm wondering how you would respond to that and how you think your portfolio is insulated from that potential trend?

Blaine, I appreciate the question. There's a lot in there. And I think in particular, there's a lot of misconceptions in air. And the first that I would highlight is kind of a narrative of kind of gateway markets are pushing that the Sunbelt is full of back-office jobs. And that is just far from the case. And as we look around the Sunbelt, the migration of technology and financial services companies has been largely driven by moving out of high-tax and high regulation states into markets where there is highly educated workforce and exciting and dynamic markets.

So think Austin, think Atlanta, think Charlotte, think Nashville. And again, I could point to a lot of companies that have made those moves and intentionally made this decision to distribute their workforce more broadly around the country. So it's not the overly concentrated in markets like San Francisco or Seattle or New York, where there have been some significant challenges.

So I think Oracle moving their corporate headquarters to Nashville. Think of the large hubs of Amazon in Austin and Nashville, as well as D.C. Think about Goldman Sachs establishing a new hub, building an 800,000 square foot campus in uptown dollars for 5,000 employees, many of whom will be front-of-house bankers. So I think that is very much a misconception. I think in particular, many of those companies are highly engaged in AI. And so while the start-up AI universe is largely located in San Francisco in time that AI demand will find itself distributed again throughout the country. and we are already seeing that today.

Amazon, as I touched on in my prepared remarks, we have great conversations with Amazon all the time. Again, I think Andy Jassy dissuaded any fears that those risks were AI-related, it was more about rightsizing the headcount to become more efficient. But as I look at Amazon around the country. I think you're likely to see them be a net expender, not contractor. And so I want to make sure to highlight that, that certainly has been the trend with them as of late, and I don't see that changing.

And then just kind of stepping back with a few statistics, the -- with the enthusiasm around San Francisco and New York over the last 12 months, if you actually drill into the data and look at actual leasing activity in growth markets, which would include all of our markets relative to gateway markets, and this is JLL Research, the growth markets are in a 104% of the leasing levels over the last 12 months compared to 2019. And the gateway markets, which would include San Francisco, New York, Seattle, Boston, that's at about 65%. So that's just the last 12 months of despite the exuberance over certain markets, the Sunbelt and growth markets continue to outperform.

Okay. Great. That's really helpful and all makes sense. Sense from my perspective. And then my second question is your expiration schedule, as you guys have mentioned, is relatively light in the next couple of years, which I think, should help with the occupancy build. But I was hoping you could give some color on whether the expirations in the next couple of years are kind of proportional relative to your market exposure? Or if there are any specific markets that have a high concentration of expirations in '26 or '27.

Yes. Blaine, this is Richard. So we've talked about in the past, really the only large expiration that we have through end of 2026 is Samsung and Houston at Briar Lake. There are 123,000 square feet. Nothing much has changed in terms of the status of that. A lot of that space has already been sublet. We're engaged with some of the subtenants on going direct or extensions when the subleases expire. We're actually talking with Samsung as well directly for some sort of a renewal. We'll see how that plays out, but it's going well so far, and we feel good about our ability to take care of the vast majority of that space.

And so really, there's just not a lot of lumpy big activity right ahead of us. Obviously, we all know that BofA is now in the numbers and behind us. So proportionately, feel good. I mean we obviously have a lot of wood to chop in Charlotte and feel very good about what we're doing with deploying capital to redevelop both 550 South and 201 North Tryon and -- we know that this play works in that when we've done these projects in the past, the most recent being Hayden Ferry, once we get these projects done and the redevelopment can be touched and felt by potential customers and existing customers that we've seen has been robust and very encouraging. So we also feel good about our position there.

Blaine, it's Colin. I'd just add back to your question, I'd say the expirations are pretty evenly distributed throughout the portfolio. There's not kind of any 1 market that has significantly more than the others. I'd point out Austin probably has some of the, I'd say, the more modest expirations over the next couple of years, and that would be kind of the 1 market that would stick out for its modest expirations.

And your next question comes from the line of Andrew Berger from Bank of America.

Great. And thank you for the thorough opening remarks. Just wanted to circle back on the comments around the balance sheet and leverage. I appreciate the current leverage levels are a bit lower than maybe some of your peers. What's sort of the upper bound of how high you would potentially be willing to take leverage at this point?

Andrew, it's Gregg. So if you go back and look over the last 12 years, our leverages remain, give or take, right around 5x net debt to EBITDA. It's kind of varied between 4.5% and 5.5% generally over that period of time. when it's been at the top of that range, it's been associated with -- as Colin stated earlier, when we've gone into kind of offensive mode. So the 2 biggest pieces, the 2 biggest instances would be the mergers with both Tier Parkway over the last decade.

In both instances, we used the low levered balance sheet. I know it was an offensive weapon to pick those transactions without having to raise any incremental equity and then subsequently brought leverage back down to 5x. We think we're in another period like that right now, we'll be able to use it on an offensive basis.

In terms of kind of what the cap is, we'll always maintain an industry-leading balance sheet. But we think we have a little bit of room here. Really, the only hard number that you have out there, is we do have an investment-grade rating for both Moody's and S&P. And if you look at their write-ups, they tell you that 6 and below is consistent with what our current rating would be. So from a rating agencies perspective, there's no problem going up to 6.

We haven't gone up to 6 as a company and well over a decade. So that -- I'm not taking that off the table. But that would certainly be the absolute upper bound of the range of what we would do. We've got some capacity here, though. I mean we're at 538 right now. That's a little higher than it's been recently because as I discussed in my opening remarks, we bought the link, we haven't fully funded it yet. We've got lots of options to do that, whether it's asset sales or selling some of the shares that we've issued on a forward basis under the ATM. We've got some capacity to flex the balance sheet here and drive earnings and drive growth at what we think is a really opportune time to do it.

Great. And as my follow-up, the parking income has been an area where you've frequently been able to beat over the last several quarters. Can you just talk about how much more upside there is from here, -- what are at a high level, I guess the physical utilization of your buildings and of the parking lots and then also the pricing relative to pre-COVID and also how you forecast this?

Sure. So -- if you go back at kind of pre-COVID times 2018, 2019, total parking revenues generally represented about 8% of our total revenues. Now the portfolio has changed quite a bit since 2019. But using that as a kind of as a starting point, our current parking revenues as a percentage of total revenues are at just under 7%. So below where they were pre-COVID as a percentage of total revenues, by the way, they bottomed at around 5%. So they've come up significantly since kind of '21, which we presented at the bottom. But using that prior baseline of 8%, we still think we probably have a little bit of room to push. In terms of what we've seen in that increases and we keep surprising ourselves every quarter, it's about 75% utilization and 25% price, right? You can drive revenues either by using it more or by increasing the price.

It's been a 75% to 25% bounce as we move forward through this. So yes, we think there's still a little bit of room there. We do a ground-up analysis of this every quarter as we reforecast, and we continue to surprise ourselves every quarter. It's a good surprise though because it really is an indication of better utilization of our decks which is exactly what we want to see. It plays into what Colin had talked about at the top of the call, which is the return to office continues and if anything, is accelerating.

And then finally, in terms of a breakdown of parking revenues, our parking revenues are about 75% contractual and about 25% transient are noncontractual. And that relationship, that 75-25 relationship, is that incredibly consistent over the years, it doesn't move much.

And your next question comes from the line of Brendan Lynch from Barclays.

It sounds like you're still on track for your previous expectations for occupancy to trough a third quarter. and improve from here kind of be steady and then improve. How should we expect that to kind of flow through to the trajectory for same-store cash NOI growth going forward?

I'll talk about just the trajectory and Colin can probably add a little granularity. But the increase in occupancy that we've referred to in this call, getting to 90% or better by year-end '26s highly likely to be back-end loaded not completely back-end levered, but more back-end loaded than front-end loaded. In terms of how that plays through to our same property performance.

The one thing that we've got to deal with is this big Bank of America move out that we just had in July I mean as you do year-over-year comps, which is how we report these numbers, however -- reports these nurses, that's going to sit in the numbers as a prior year comp until we get to July of 2026. So you're going to see kind of lower numbers this next quarter, still positive, we think, but lower this next quarter and probably lower in the first half of next year. But once you get that out of the machine out of the system and you don't get the bad prior year comps you're going to see some significant acceleration in our same-property performance in the second half

Great. That's helpful. And maybe sticking with Bank of America and the 201 North Tryon asset, it sounds like you're already making progress backfilling some of that space, I understand there's some redevelopment still going on. Maybe talk about the prospect of leasing up the rest of the space that has become available.

This is Richard. Again, we feel really good. Again, we just started in the past quarter, the redevelopment of 201 North Tryon, but we're well underway. The market can see it. 550 South, I would notice it's further along, but the activity that we're seeing, I'd say, broadly in Charlotte is very encouraging. There are plenty of large users that are looking in uptown and south in whether kind of figuring out that there's really no space left in South into lease. And so they're all starting to concentrate almost exclusively on uptown and big blocks that are available. There's new to market activity, as Colin alluded to, that we're seeing that's extremely encouraging. So we feel good about our position relative to supply and demand in the market and think we're going to have success here in the next or so.

Yes. And Brendan, it's Colin. I'd just add on. Consistent with my earlier comments about the reacceleration of Sunbelt migration, I think Charlotte, in particular, you're seeing quite a bit of activity at large New York City-based financial services firms looking to growth and establish large hubs in Charlotte. I can't speak to the specifics of what's driving that, but it's been a noticeable acceleration over the last 3 to 6 months.

And your next question comes from the line of Nick Thillman from Baird.

Maybe, Colin, you mentioned sort of the New York West Coast sort of migration into Sunbelt markets. As you look at the vacancy within the portfolio and these larger requirements, do you think you have the vacancy in the right spots and sell markets to kind of attract these tenants? I guess how are you feeling about the pockets where you do have some vacancy on leasing that space up? Obviously, the new North Park AT&T stuff kind of pending here, but just some other stuff.

Yes. No, we do feel like -- we said differently, where we do have large blocks of space. Again, you mentioned North Park, Canada, you mentioned Neuhoff the 201 North Tryon, Hayden Ferry. I mean we -- in each of those instances, we are seeing -- we are seeing some interest and larger users taking a look at that space. So that's very much encouraging.

The other thing I'd mention in certain areas of our footprint where we don't have space we're actually starting to have some very preliminary conversations with large users coming out of New York and the West Coast to have potential interest in building new buildings. And so that's been a very encouraging sign and we hope to address some of those needs.

That's helpful. And then, Andy, you mentioned some potential dispositions with the capital markets improving. I know you're in the market with 1 asset in Tampa, but are those the type of assets we should be thinking about as disposition targets here near term?

Yes. I mean, as we've said, we will only look to dispositions when we have exciting acquisition opportunities. So we are -- we're monitoring the market, monitoring our portfolio and assets where we think that match up well with the depth of the buyer pool today, we'll look to transact. So yes, I would say, generally smaller and maybe less tied in to the rest of our portfolio in specific markets.

And your next question comes from the line of Steve Sakwa from Evercore ISI.

Richard, I was just wondering if you could provide maybe a little more granularity on that pipeline. It sounds so impressive. Can you give us maybe a sense of number and kind of size? I guess I'm just thinking if finance are somewhat larger getting them into occupancy by end of the year becomes a little bit more of a challenge if they're smaller in that 25,000, 50,000, 75,000 foot -- can get in quickly. So I'm just trying to get a sense of number and ultimate size of that pipeline.

Sure. The pipeline overall is definitely partly being driven by larger activity. And again, new to market activity that we're seeing. But to your point, the larger users tend to be slower moving just by the sheer nature of the size and the lift of getting that much space built out an occupied. I think right now, we have roughly 100 total prospects within the pipeline overall. But we've actually had some interesting increases just in the last couple of months, I alluded to one in Phoenix where we had a 50,000 square foot new customer that we signed a lease with a very fast-moving lease negotiation, and they're going to occupy the space that they leased literally within 60 days. So that's unusual, but there are little pockets of activity where we're seeing actually a little faster occupancy.

And for a 50,000 square foot customer to do that, that's pretty impressive. So again, it takes time for the bigger users to filter through the system. End of the day, we welcome large user activity. I think it's wonderful to have that engine beginning to fire again on all cylinders and are happy to waive those into our portfolio if we have the opportunity.

And Steve, it's Colin. And you're right, again, larger users take larger or longer periods of time to lease up and timing of commencements and build-outs are always -- that's a big variable and ultimately being able to meet our goals.

But I would, I guess, characterize that 90% plus goal at year-end 2026 is largely being driven by the leases that we have already signed and not yet commenced or perhaps leases that we think we're going to do over the fourth quarter. But again, those won't have that large of an impact. And so the timing of the commencement in that pipeline, all of those dates are factored into our projections, and we're optimistic about achieving our goal.

Great. That's good color. And then I don't know if Kennedy or Richard, maybe just on the Neuhoff project. Obviously, that's been a little bit slower to lease. But I guess I'm just curious with Oracle making a bigger push. One, have they kind of looked at the project as maybe temporary space for the employees that are coming into the market? And if not, are there maybe companies that are feeding off of Oracle's move into the market and trying to be adjacent to their new campus. Is that a source of demand that's looking at the project?

Yes. I think certainly, the Oracle being across the river and just their plans in a variety of industries and for the campus and growth is all great for the follow-on demand. So we are starting to see some of that and are excited about the larger users that are showing up again just recently here.

And Steve, to kind of directly answer your question, all of those are possibilities. And again, I think Oracle, a company of that size is obviously heavily involved. Again, in AI not just in San Francisco but here in Nashville, in the derivatives off of that and companies that work with Oracle, it's going to be fantastic for Neuhoff. And we've certainly seen an acceleration of interest in our space. since Oracle has made in their grand reveal recently of their project in a specific time line. But it's all very positive.

And your next question comes from the line of Paul Rana from KeyBanc Capital Markets.

Richard, I appreciate the details on the leasing pipeline. Given the stronger pipeline, are you seeing any shift in lease economics as it related to rents or concessions or TIs in there?

No, not at this point. I think it's actually been relatively stable. I mean our concession seemed down a little bit this quarter. I'm really pleased with the fact that our net effective rents to are hanging in there and very -- I think we're right on top of the second quarter for net effective rents. So if anything, a day, we're feeling while TIs continue to be large, we're feeling like we're able to hold the line on rate and get net effective rents and produce stability there, yes.

It's Colin. I would just add. We do think we're relatively close to an inflection point where it is likely to become a landlord's market. With no new construction having started really over the last couple of years and not expected to have any meaningful uptick there and now demand accelerating a shortage of what I would characterize as lifestyle office in some of our markets is absolutely coming and in some cases, almost here. And if you talk to the major tenant reps across our markets, whether it's in Atlanta or Austin or Charlotte, those large tenant reps are looking out to their '27, '28, '29 expirations and starting to have some real concern that they won't have the options to accommodate growth for their customers. And so hopefully, that ultimately translate into us driving net effective rents, whether it's face rents or ultimately bringing concessions down.

Okay. Great. That was helpful. And then with the Avintiv termination, could you provide any lease economics or rent changes that you may have had with the new subtenants relative to what venta was paying? If there were none, where is market rent today relative to what Ovintiv was historically paying?

Sure. So there are some changes that will happen as Ovintiv rolls out of the stack in mid-'26. It's not material, it won't move the needle from an NOI perspective. And we're definitely going to be able to push and roll up rents to the extent we backfill or renew any of that space. We're in the market, if you will, with kind of mid-40s net right now for the building, which is meaningfully higher than where employee rents are.

And your next question comes from the line of Ray Zong from JPMorgan.

Thanks for the color on looking out in -- on the occupancy guidance. Just curious, it sounds like 201 North Tryon is part of that 90% occupancy comment as well. Just want to confirm that. That's number one. And number 2 is, can you remind us the redevelopment timing? And how much you're going to spend there -- and when can we expect the best filing to take place in terms of commencing.

Ray, just to clarify your question, you -- as it relates to 201 North Tryon, your question is, will it be 90%? Or is it in the 90% guidance. Is that your question?

Yes, the second one. Yes, you mentioned the 90% comment towards year-end '26. Curious if that includes 201 North Tryon in the occupancy pool? And I'm guessing is yes, but I just want to confirm.

It absolutely does. And again, as we've just gotten that space back and we're that are under construction on our redevelopment, that forecast does not include a significant amount of commencements new leasing at 201 North Tryon by year-end 2026. We certainly hope to outperform that, but I'd say largely the re-leasing and the commencement of those leases at 201 North Tryon more geared towards 2027.

Got it. Yes, that's what I was trying to get to. And the second part of that question would be, can you remind us the spending amount on there. And I think you guys also mentioned it's not going to be capitalized like on the go and dark space, right?

I'll tackle the gap of it and then Colin to put the total number in there. Yes, since we're not taking this out of the portfolio, we were not capitalizing interest against the basis of the existing building. We just capital interest on the new spend. So not a big movement there in terms of capitalized interest. And then in terms of total spending.

It's approximately $40 million with an anticipated completion in the first quarter of 2027. It's very much consistent with the spending and the type of redevelopment we did at the Prama tower from a central building here in Atlanta or the Hayden Ferry project out in Phoenix that have all been really well received. And so I'd say it's a very similar project, slightly higher nominal dollars because it's just a larger tower.

And your next question comes from the line of John Kim from BMO Capital Markets.

You. This quarter other than the new half loan, you've been making investment either on the assets or debt med side. I was wondering if you could talk about cap rate or yield compression you've seen just given the increased competition. And if I could focus on Dallas, there was recently a hardware portfolio sale, which included Canaccord, recently traded. I was wondering if you could discuss how close you were to acquiring that portfolio? And any commentary you have on pricing?

John, on hardware -- [ 6.7% ] on it. We appreciate it -- I'll go back to the beginning in terms of cap rates. As Kennedy alluded to, you're certainly seeing more investors focus and become interested in office and debt certainly readily available. So I would say cap rates, we think, are likely compressed -- we haven't seen a lot of that compression just yet, but as more equity investors got to make the decision to pull the trigger in office, we think that, that will that is likely to come specifically wood.

Obviously, we had some involvement in the -- asset, and they now have subsequently brought the entirety of the portfolio. out to the market. I think you've seen some recent announcements as to how that is playing out. Certainly something that we looked at, and we're obviously strategically very focused on growing our presence in Dallas. But I think ultimately, we've made a decision to focus our efforts elsewhere.

Okay. And then on the leasing success that you had at Hayden Ferry 1, can you just provide some commentary on either the tenant or industry that signed there? You can give on redevelopment yields or return on invested capital on the redevelopments? And maybe for Gregg, can you remind us when you plan to place that asset back into the same-store pool?

Sure. I'll start. The leasing has been pretty broad-based, the 50,000-ish square foot customer that we signed subsequent to quarter end was a regional engineering firm that actually has a very nice high-growth data center component to their business. We have previously signed a regional headquarters lease with a financial -- regional bank financial services company.

The company that is in lease negotiations right now is a corporate headquarters. It's not new to market. And I'd characterize it as a health care/consumer goods-focused company. So it's very diverse. Actually, the new tenants that we're bringing into the project. And again, we've been very pleased with the profile of all of these customers, their headquarters, their high-end uses, not back office. So very excited about the new tenancy Hayden Ferry 1 and elsewhere in the project.

And then in terms of when we bring it back in our same-property pool, likely Jan 1, '28. We only changed our same-property pool 1 time a year, January 1 of each year. And so in Jan 1, '27, which would be the next logical time to do it, we won't have a good year-over-year comp because it's not going to stabilize to later in '26. So to be Jan 1, '28.

And your last question comes from the line of Dylan Burzinski from Green Street.

I guess maybe following up on one of John's questions. Given that bidding tents are growing, and I think in the past, you guys have focused most of your acquisition efforts towards what you could describe as sort of mispriced core assets. given it seems like cap rates are compressing in the subset of investment opportunities, is it your expectation that most of what you guys are going to be looking at going forward will sort of be more closer to the risk profile, say, Precenium versus bell tower Vantage in the leak?

No, it's Colin. I think, as I said, we expect them to likely to press, but we still have not seen that compression yet. And so I do think that there is more opportunity consistent with what we have been doing. And certainly, those type of assets fit our quality profile. We're not opposed to looking at high-quality assets that have vacancy and taking lease-up risk.

But I would just kind of point out that in our Sun Belt and urban markets where Cousins operates, just given how robust the leasing has been, there are not that many high-quality buildings that have significant vacancy. And so those like Prosenium can arise from time to time, and we would absolutely look to capitalize on those opportunities.

But I do think there's more of the recently developed, stabilized, immediately accretive to earnings type opportunities that we're pursuing. And then lastly, as I mentioned before, we are starting to see some large users who are migrating from the West Coast in New York City, very much open to got a new development with deliveries out, call it, in 2029. And so we are also spending time on those type of situations as well that I think would come with a significant amount of pre-leasing and very, very attractive return on cost.

That's helpful. I appreciate that color. And then I guess just 1 more. You mentioned RTO was outweighing sort of the weak job growth prospects. But at a certain point in time, this tailwind naturally wear off and the important driver of office demand will once again be job growth.

So just curious any thoughts on sort of how long or how much use is left related specifically to some of this RTO demand that we're seeing.

Yes, I think there's still some runway there, again, highlighting Amazon who grew their headcount over the last 5 years by 750,000 people and had not signed a significant amount of leasing along the way. And that's representative of what we're seeing from a lot of different companies. So I do think that there's some runway there -- at some point, as you indicated, that will run off. But nothing else is static either, and we would anticipate over time while, we're in a bit of a softer -- out at some point, hopefully, the economy begins to grow and job reductions become job growth once again. And so again, that has us very bullish on what's in front of us. I think it's important to continue to highlight the lack of new supply that gives us really positive runway over the next 4 to 5 years. And the economy will take -- but without new supply, the market will tighten, and I think it's a good time to be an owner of existing lifestyle office buildings in the Sunbelt.

And that ends our question-and-answer session. I will now hand the call back to Mr. Colin Connolly for any closing remarks.

We appreciate your time and interest in Cousins Properties. I want to wish everybody a happy Halloween. If you have any follow-up questions, please feel free to reach out to Gregg Adzema or Ronnie Embo and we hope to see many of you at the NAREIT Conference in Dallas in December. Have a good weekend.

And this concludes today's call. Thank you for participating. You may all disconnect.