Cousins Properties Incorporated

Good morning, and welcome to the Cousins Properties fourth quarter conference call. All participants will be in listen-only mode. If you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. 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 Wilker, General Counselor, please go ahead.

Thank you. Good morning and welcome to Cousins Property's 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, and Greg Adzima, our Chief Financial Officer. The press release and supplemental package were distributed yesterday afternoon, as well as furnished on Form 8K. 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 risk 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. 2021 was a strong year for Cousins. While managing the impact of the COVID variant from Delta last summer to Omicron this quarter, our teams performed extremely well, and we were hopeful for a bright 2022. Before addressing the longer-term outlook and some positive office trends, I want to provide a few highlights of our strong fourth quarter financial results. On the earnings front, the team delivered 69 cents per share in FFO. Same property NOI on a cash basis increased 2.1%. In addition, we leased 743,000 square feet with a 6% increase in second generation cash rents. Note that our leasing volume was the highest since the second quarter of 2019 and the second best over the past five years. It is an interesting time in the office market. The Omicron variant is showing signs of slowing and our customers with more conviction are firming up plans for a phased return to the office. It is worth noting how much the media headlines on the future of office have changed since the start of the pandemic. Remote first has more recently been replaced by hybrid work, and the direction is still fluid. Based on conversations with our customers, we believe that hybrid over time is likely to transition to flexibility, which has a minimal impact on office demand. A booming stock market fueled by low interest rates, can mask growing organizational challenges. After two years, forward-thinking companies are recognizing that culture, collaboration, and innovation are best done in person. As a result, our leasing pipeline is strong. At Cousins, we have a unique and compelling strategy. We strive to be the preeminent Sunbelt office company. It's that simple. and we execute that business on four core principles. First, to own the premier Sunbelt office portfolio with concentrations of trophy quality properties in the leading urban submarkets across our geographic footprint. Second, maintain a disciplined approach to capital allocation with a focus on new investments where our platform can add value and generate attractive returns. Third, Preserve our best-in-class balance sheet to provide financial flexibility so we can execute quickly when opportunities arise. And fourth, leverage our strong local operating platforms that take an entrepreneurial approach to customer service, local market relationships, and deep community involvement. Our strategy benefits from several macro trends. Let me walk you through them. The US population continues to migrate to the Sunbelt in search of a lower cost and pro-business environment. To compete in the war for talent, users of office space are increasingly choosing to upgrade the quality of their work environment with an emphasis on an energizing daily experience that promotes culture and collaboration. As these trends take shape, our Trophy Sunbelt portfolio is exceptionally well positioned for today's office market. During the pandemic, these trends have accelerated and gained widespread acceptance. Importantly, at Cousins, we have been executing on our Sunbelt strategy for over 10 years. We were ahead of the curve, and we have made great progress in positioning the company and the portfolio to capitalize on these tailwinds. Let me highlight some of our recent activity. We had a terrific leasing quarter with some significant wins. In Austin, we signed a 330,000 square foot lease with Amazon at our Domain 9 development project. We began the development on a speculative basis in June of last year and have now leased 100% of the office space in less than six months. We also leased 92,000 square feet at our 100 mil development in Tempe, And here in Atlanta, we leased two floors at 10,000 Avalon and an additional floor at 1,200 Peachtree, which we have now renamed Promenade Central. The office component of 10,000 Avalon is now 100% leased. Promenade Central is now 44% leased, a strong start given Norfolk Southern's full building lease expired less than two months ago. Turning to our investment activity, we sold 816 Congress in Austin for a gross price of $174 million. As a reminder, we purchased 816 Congress for $102 million in 2013. It was an exceptional investment for shareholders. We redeployed the capital from 816 Congress to acquire our partner's 50% interest in 300 Colorado, also in Austin, for a gross price of $162.5 million. We also acquired Heights Union, a highly amenitized property in the heart of downtown Tampa's historic Heights neighborhood for $144.8 million. Looking back on 2021, Cousins invested over $1 billion in new acquisitions and development. We added Heights Union, 300 Colorado, 725 Ponce to the portfolio and commenced construction on Domain 9 and Newhoff. All are interesting and experiential properties that are representative of the office of the future. At the same time, we harvested older vintage assets, including 816 Congress, Burnett Plaza, and OneSouth. In a very busy year, we upgraded the quality of the portfolio, entered Nashville, and reduced our CapEx profile. Importantly, we are positioned to generate attractive value-add returns through a healthy blend of strategic acquisitions and compelling new development. And we maintained our balance sheet flexibility by executing the transactions on a leverage-neutral basis. Looking ahead, Cousins is poised for growth. We have an unmatched portfolio in fast-growing Sunbelt markets. Organically, we have a great opportunity to drive rental rates and occupancy in highly desirable properties. The office component of our $759 million development pipeline is 78% pre-leased. Further, the balance sheet remains rock solid and positions Cousins for external growth opportunities as well. Given the growing demand for Sunbelt Trophy office product, We are optimistic we will identify new development starts in 2022, and as we have proven in the past, some unique acquisition opportunities as well. Before turning the call over to Richard, I want to thank our talented, hardworking Cousins team who bring outstanding service to our customers each and every day. They are the foundation of the company's success. Thank you. I'll turn it over to Richard.