Cousins Properties Q2 Earnings Call Highlights

Key Points

• Cousins Properties raised its 2026 FFO outlook midpoint by $0.01 to $2.95 per share, implying 3.9% growth from 2025, after reporting second-quarter FFO of $0.75 per share.
• Leasing remained strong, with 924,000 square feet completed in the quarter and occupancy increasing 50 basis points to 89.4%. Cash rents rose 9.2%, marking the company’s 49th consecutive quarterly positive rent roll-up.
• The company recycled non-core assets, sold two Austin properties for a combined $250 million, acquired full ownership of a Tempe office building, and advanced development projects in Nashville and Austin while extending its credit facility to $1.2 billion.

Cousins Properties NYSE: CUZ reported second-quarter funds from operations of $0.75 per share and raised the midpoint of its full-year 2026 FFO outlook by $0.01 to $2.95 per share, representing projected growth of 3.9% from 2025.

Chief Executive Officer Colin Connolly said the revised outlook would mark the company’s third consecutive year of FFO growth. He attributed the increase primarily to stronger-than-expected leasing activity and recent property-level transactions.

Leasing Volume Drives Higher Occupancy

The office REIT completed 924,000 square feet of leases during the quarter, matching its first-quarter volume and bringing first-half leasing activity to 1.9 million square feet. Richard Hickson, executive vice president of operations, said the first-half total was roughly equivalent to the company’s average annual leasing volume over the past decade.

Technology and legal tenants each represented about 30% of second-quarter leasing volume. New and expansion leases accounted for 395,000 square feet, or 43% of completed leasing activity, while the company completed 19 renewals. Five renewals exceeded 50,000 square feet, and each of those tenants either retained or expanded its space, Hickson said.

Cousins ended the quarter 92.8% leased and 89.4% occupied on a weighted-average basis, with occupancy rising 50 basis points from the prior quarter. The company maintained its expectation to reach 90% occupancy by year-end, although Hickson said large expirations in Charlotte could produce a modest occupancy decline in the third quarter before new leases commence later in the year.

Second-generation cash rents rose 9.2% in the quarter, extending Cousins’ streak of positive cash rent roll-ups to 49 consecutive quarters. Average net effective rent increased 8.5% in the second quarter compared with the full-year 2025 level, while first-half net effective rent was up 16.8% from 2025.

Connolly said the company believes its markets are reaching an inflection point where tighter availability for large blocks of high-quality office space could support both higher rents and lower concessions. He said the company has historically emphasized occupancy growth but expects conditions to increasingly favor landlords in its targeted submarkets.

Market Activity Across the Sun Belt

Atlanta was Cousins’ largest contributor to leasing growth during the quarter, with 404,000 square feet of signed leases. The market ended 91.6% leased in Cousins’ portfolio, including a 46,000-square-foot technology lease at 725 Ponce and three leases totaling 77,000 square feet at Terminus. Cash rents in Atlanta increased 14.3%.

In Austin, the company signed 74,000 square feet of new and expansion leases despite beginning the quarter nearly 96% leased. Technology tenants represented 42,000 square feet of that activity. After the quarter ended, Cousins completed a 76,000-square-foot renewal with a Fortune 10 technology company at Domain 7.

Cousins also signed 168,000 square feet in Tampa, including an 89,000-square-foot law-firm renewal and a 23,000-square-foot Deloitte renewal. In Phoenix, the company signed 139,000 square feet, including a 109,000-square-foot renewal with the same Fortune 10 technology company renewed in Austin.

Hickson said the company is seeing artificial-intelligence-related office demand in several markets, with Austin standing out as the most active. Connolly said Cousins views its portfolio as oriented toward knowledge workers and high-quality, amenity-rich office properties rather than back-office uses.

Portfolio Recycling and Development Activity

During the quarter, Cousins sold Research Park Plaza 5 in Austin for $42 million, or $243 per square foot, and completed the previously announced sale of One Eleven Congress, a 519,000-square-foot Austin office tower, for $208 million, or $400 per square foot. Kennedy Hicks, chief investment officer, said the two properties were considered non-core and traded at a combined capitalization rate of about 9%.

The company also acquired its partner’s 10% interest in the 100 Mill office building in Tempe for $18.5 million, based on a property value of $158.7 million. The 2022-delivered building is more than 98% leased, and the transaction gives Cousins full ownership of its Tempe portfolio.

In Nashville, the company’s Neuhoff mixed-use project reached 96% leased in its office component after Oracle expanded its commitment to 161,000 square feet. The multifamily portion was more than 94% leased and 90% occupied. Cousins has future development capacity for more than 300,000 square feet of additional office space at the project and is pursuing early preleasing discussions for a second phase.

Cousins also entered a joint venture for the 5th and Walsh development in Austin’s Clarksville neighborhood. The planned 199,000-square-foot office and retail building is 58% preleased. Cousins’ preferred-equity investment may total up to $31.5 million and carries a 10% preferred return upon funding, which the company expects primarily in the second half of 2027. Cousins holds a right of first offer to acquire the building after completion.

Capital Position and Outlook

The company recast its unsecured credit facility during the quarter, extending its term by five years and increasing capacity to $1.2 billion. Cousins also improved the facility’s borrowing spread by 15 basis points and added extension options to two term loans totaling $500 million.

Chief Financial Officer Gregg Adzema said same-property cash net operating income grew 5.9% year over year in the second quarter, following 5.5% growth in the first quarter. The updated FFO guidance range is $2.92 to $2.98 per share for 2026.

Adzema said the company’s guidance assumes settlement of 2.9 million previously issued forward shares during the third quarter. Cousins could delay that settlement if it completes further non-core asset sales, though its current forecast assumes all outstanding forward shares are settled in the third quarter.

About Cousins Properties (NYSE:CUZ)

Cousins Properties Incorporated NYSE: CUZ is a publicly traded real estate investment trust (REIT) specializing in the development, acquisition and management of high-quality office and mixed-use properties. Headquartered in Atlanta, the company focuses on urban infill and suburban markets across the Sun Belt, with a strong presence in metropolitan areas such as Atlanta, Austin, Charlotte, Nashville, Orlando and Tampa. Its core activities encompass full-service property leasing, asset management and construction oversight, serving a diverse mix of corporate and institutional tenants.

Founded in 1958 as a privately held real estate concern, Cousins Properties completed its initial public offering in 1992.

This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.