Cousins Properties Incorporated

And welcome to the Cousins Property first quarter conference call. All participants will be in a listen only mode. Should you need assistance, please signal a conference specialist by pressing star then zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on a touch tone phone. To withdraw your question, please press star then two. Please note, this event is being recorded. 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 Collin Connolly, our President and Chief Executive Officer, Richard Hickson, our Executive Vice President of Operations, and Greg Azema, our 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. In particular, there are significant risks and uncertainties related to the severity and duration of the COVID-19 pandemic and the timing and strength of the recovery therefrom. 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, including those posed by COVID-19, 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. Over a year ago, COVID-19 emerged swiftly, and our entire world changed nearly overnight. As we mark a year later, I am sure I share with many of you a feeling of hope that while the pandemic is not yet over, there is optimism on the horizon with the accessibility of vaccinations. I am hopeful that 2021 will be a healthier, happier, more productive year for everyone. Cousins was well prepared to weather the challenging year with our simple, compelling strategy that enabled us to operate effectively. The core principles of our strategy include First, to build their premier urban Sunbelt office portfolio. We have focused on building concentrations in existing and potential new Sunbelt markets with the best long-term growth characteristics. Second, to be disciplined about capital allocation and pursue new investments where our operating and or development platforms can add value. Third, and importantly, to have a best-in-class balance sheet, and finally, to leverage our strong local operating platforms with focus on an entrepreneurial approach, local market relationships, and community involvement in our high-growth markets. Today, we have the leading trophy portfolio in the best Sunbelt submarkets of Atlanta, Austin, Charlotte, Dallas, Phoenix, and Tampa. Second, we have a terrific development pipeline of $363 million that is 79% pre-leased and attractive land sites where we can build an additional 5.2 million square feet. Our balance sheet is strong with net debt to EBITDA of 4.87 times and G&A as a percentage of total assets at 0.32%. This strategy positioned us to perform well during challenging circumstances. The first quarter of 2021 was no different. Here are a few highlights of our solid Q1 results. On the operations front, the team delivered 69 cents per share in FFO. We leased 271,000 square feet with a 10.5% increase in second generation cash rents. We placed our 10,000 Avalon development project into service. In addition, we acquired a land parcel adjacent to our 3350 Peachtree property in Atlanta for $8 million through a 95% consolidated joint venture. While these results are very solid, they reflect a time when vaccines were not widely available. Now that they are, we see a market that is on a strong path to recovery. Broadly speaking, Our customers are shifting their plans to begin phase reopening of their offices during the summer with a significant ramp up likely after Labor Day. This is translating into significant increase in tour activity and in our leasing pipeline. Richard will touch on this more specifically in a minute, but we are optimistic that our leasing volume is likely to improve during the second half of the year. As Cousins evaluates the role of the office, we look directly to our customers for feedback. First, let's look at what they're saying. Amazon, Google, Facebook, Microsoft, Goldman Sachs, Bank of America, Morgan Stanley, I could go on. They've all publicly communicated that their office remains core to their culture and their business. Next, let's look at what they're doing. Microsoft and Google both committed to large new hubs in Atlanta, and Oracle has announced a corporate relocation to Austin and a major expansion into Nashville. Most recently, Apple announced plans to create at least 3,000 jobs in the Raleigh-Durham area. So what does this mean for Cousins? Large, growing companies recognize the value of the office to promote culture, collaboration, and mentorship. They are migrating to the Sunbelt at an accelerated pace, and they continue to prioritize newer, highly amenitized properties. Their goal is to create a dynamic environment that excites employees to come together in person. As we near the end of COVID-19, our conviction around our Sunbelt trophy office strategy continues to grow. Looking ahead to the balance of 2021, Our priorities have not changed. We are focused on creating value in our existing portfolio, including making leasing progress in our larger blocks of space. We will also look for opportunities to upgrade our already high-quality portfolio through trophy acquisitions in conjunction with compelling new development projects. We will likely fund new investments with the sale of ultra-vintage, less relevant buildings and we are making great progress on this front, and our recent investment activity is illustrative of our strategy going forward. In December, Cousins acquired The Rail Yard, a creative office asset in the South End Submarket of Charlotte for $201 million. We also purchased an adjacent land site for a gross purchase price of $28 million. On April 7th, we sold Burnett Plaza, a 1 million square foot office property in Fort Worth, for a gross sales price of $137.5 million, and with that, exit a non-core market. Last night, we announced plans to commence construction on Domain 9 in Austin, where we have a growing pipeline of demand from small, medium, and large customers, some already in Austin, and some potentially new to the market. As I mentioned earlier, we have a simple and compelling strategy at Cousins. And these transactions showcase our creativity as we execute that plan. Leveraging our balance sheet and our development platform to assemble the premier Sunbelt office portfolio, which is positioned to capture outsized customer demand while maintaining a lower CapEx profile. At the same time, we are generating attractive value-add returns for our shareholders by blending acquisitions and development with discipline. As our customer's preference for trophy office accelerates, we are responding. As our Domain 9 project illustrates, we are not opportunity constrained at Cousins. However, we continue to look at potential new markets in the Sun Belt that benefit from continued migration of people and companies. Nashville is one example. Expanding in Dallas is another. 2021 is a transitional year for Cousins from an earnings and occupancy perspective. Our financial results will reflect several known move-outs from past value-add acquisitions, such as 1200 Peachtree and 3350 Peachtree in Atlanta, and one south at the Plaza in Charlotte. With lockdowns easing, we have begun executing our business plans to reposition these exciting projects and we are seeing leasing opportunities grow. As we look to the future, Cousins is uniquely positioned to deliver long-term growth for our shareholders. Importantly, we have the right balance sheet with low leverage and ample liquidity to capitalize. Before turning the call over to Richard, I want to thank our entire Cousins team who provide excellent customer service and bring their talents and dedication to the company every day. They are the reason for our success. Thank you. Richard?