Cousins Properties Incorporated

Good morning, ladies and gentlemen, and welcome to Cousins Properties' fourth quarter conference call. At this time, all lines are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. If anyone has any difficulties hearing the conference, please press star zero for operator assistance at any time. 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 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, Kennedy Hicks, our executive vice president and chief investment officer, and Greg Azema, 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 risk 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 listed 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 Conway.

Thank you, Pam, and good morning, everyone. We had an exceptional fourth quarter at Cousins. On the earnings front, the team delivered 69 cents a share in FFO, which is above the midpoint of our guidance. Same property net operating income increased 3.4% on a cash basis. Leasing remained very strong. We completed 462,000 square feet of leases during the quarter with a 6.7% cash rent roll-up. In addition, we invested almost $1 billion and trophy lifestyle office properties in our Sunbelt markets. The transactions were immediately accretive to earnings. To fund this growth on a leverage neutral basis, we raised $469 million of equity in two separate issuances and raised $400 million of debt with an issuance of unsecured senior notes. We released 2025 guidance last night The midpoint of the range is $2.78 per share, which was also above consensus and represents approximately 3.5% growth compared to 2024. Greg will provide more specifics in a moment. Our remarkable 2024 achievements and encouraging 2025 guidance continues to highlight the strength and resiliency of our leading Sunbelt Lifestyle Office portfolio and best-in-class balance sheets. Before discussing the quarter in more detail, I will start with a few observations on the market. Fundamentals are improving. The existing supply of office buildings is declining, as older buildings are converted or torn down, and new construction is almost nonexistent. At the same time, leasing demand is accelerating. During the fourth quarter, leasing volume nationwide reached a new post-pandemic peak for the third consecutive quarter. And net absorption was positive for the first quarter since 2021. We believe vacancy is reaching a peak and market tightening is not far off in the lifestyle office sector. Return to office is transitioning to a return to normal. With these tailwinds, our team remains strategically focused on driving earnings growth while maintaining our best-in-class balance sheet. To do so, we are prioritizing both internal and external growth opportunities. Our portfolio was 89.2% occupied at year-end, up from 87.6% at year-end 2024. Given the quality of our real estate and, again, the strength of the balance sheet, we are growing our leasing market share and driving occupancy back to more stabilized levels. Bank of America's expiration in Charlotte this year is a small speed bump in that process. However, with the pickup of leasing activity and modest expirations through 2026, we believe there is meaningful upside in the cash flow of our existing portfolio in the intermediate term. Externally, we are executing on compelling investment opportunities. During the fourth quarter, we closed on the acquisition of Vantage South End in Charlotte with a purchase price of $328.5 million and the acquisition of Sale Tower in Austin with a purchase price of $521.8 million. Both Vantage South End and Sale Tower are leading lifestyle office properties located in vibrant neighborhoods near other Cousins assets. In completing these strategic new investments, We were able to grow earnings on a leverage-neutral basis, upgrade the quality of our portfolio, and enhance the scale of the company. Our 2024 transaction activity highlights the creativity of our team and openness to a wide variety of opportunities at this point in the cycle, including debt, structured transactions, joint ventures, and property acquisitions. 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. Near-term accretion remains a priority. While there are signs of falling, the private capital markets remain challenging for office. Asset-level debt and equity is limited and expensive. Many private equity investors have legacy issues in their existing portfolios and remain on the sidelines. Conversely, The public markets show meaningful signs of improvement. Liquidity has grown in the unsecured debt markets and spreads have tightened materially. Office REIT share prices have begun to rebound. This creates a compelling investment opportunity for Cousins as private and public markets valuations finally converge. In conclusion, the office market remains highly bifurcated. There is little to no leasing demand or capital for commodity and older vintage properties. Values for these properties are resetting so they can be reimagined or demolished. This process is now underway. At the same time, the lifestyle office market is improving. New construction is at historic lows while leasing demand is accelerating. The market is rebalancing, and a shortage of premium lifestyle space is not far off. Cousins is uniquely positioned for this environment. We built the company to thrive during all economic cycles, and today we are in a highly advantageous position. We are in growing Sunbelt markets. Bank of America ranks our portfolio as the highest quality among all office REITs. Our leverage is the lowest across the sector. The pricing on our bonds trade at the tightest spread to treasuries among all traditional office companies. In short, we have great access to capital and we see great opportunity. We are excited about the future for Cousins. Before turning the call over to Richard, I want to thank our talented Cousins employees who are the foundation of our success. They're dedicated, hardworking, and provide excellent service to our customers. Thank you. Richard?