Cousins Properties Q3 Earnings Call Highlights

Key Points

• Cousins Properties raised its 2026 FFO guidance to $2.95–$2.99 per share, citing stronger-than-expected leasing activity and fee income. The outlook assumes no additional acquisitions, dispositions or development starts this year.
• Third-quarter leasing totaled 546,000 square feet, while the portfolio reached 93% leased and 89.5% occupied. Second-generation cash rents increased 19.8%, marking the company’s 50th consecutive quarter of positive rent growth.
• The company strengthened its balance sheet by repaying $216 million in mortgages, leaving 94% of consolidated debt unsecured, while pursuing growth investments including an Austin development and a potential 700,000-plus-square-foot Dallas office tower.

Cousins Properties NYSE: CUZ raised its full-year funds from operations guidance after reporting third-quarter leasing activity, rent growth and same-property cash NOI growth that management said reflected tightening conditions for high-quality Sunbelt office space.

The company increased its 2026 FFO outlook by $0.02 per share at the midpoint to a range of $2.95 to $2.99 per share, with a midpoint of $2.97. The revised midpoint would represent 4.6% growth from 2025, according to President and Chief Executive Officer Colin Connolly. Chief Financial Officer Gregg Adzema said the higher outlook was primarily driven by better-than-forecast leasing activity and fee income.

Management said the outlook assumes no settlement of forward equity shares during 2026, the sale of the 303 Tremont land parcel in the fourth quarter, and no additional acquisitions, dispositions or development starts this year.

Leasing activity and rent growth

Cousins completed 546,000 square feet of leasing during the third quarter, including 220,000 square feet of new and expansion leases and 326,000 square feet of renewals. Technology and financial-services tenants accounted for about 49% of leasing volume combined, Executive Vice President of Operations Richard Hickson said.

The company’s year-to-date new and expansion leasing reached approximately 1.1 million square feet. Hickson said renewals during the quarter were 25% above the company’s three-year run rate, while the completed renewals included six transactions involving at least a full floor, four of which included tenant expansions.

Cousins had 853,000 square feet of lease expirations remaining through the end of 2027, representing 4.6% of total portfolio leased space. There are no expirations larger than 100,000 square feet through the end of next year, Hickson said.

The office portfolio ended the quarter 93% leased and 89.5% occupied, with both measures increasing sequentially. The 3.5-percentage-point gap between leased and occupied space was the widest in more than three years, according to Hickson. The company reiterated that it expects to reach 90% occupancy by year-end.

Second-generation cash rents rose 19.8% in the quarter, Cousins’ strongest result in five years and its 50th consecutive quarter of positive rent roll-ups. Hickson said the increase was broad-based, with all but one market that had second-generation leasing activity posting double-digit growth. Management expects double-digit rent roll-ups over the next several quarters, though Hickson said the pace of rent growth remains difficult to forecast.

Average net effective rent was $31.24 per square foot, up 11.4% sequentially, while average leasing concessions fell to $8.25 per square foot as both free rent and tenant improvement costs declined. Hickson said management expects free rent to decline before tenant improvement allowances as the company seeks to raise headline rental rates.

Market-level leasing trends

Atlanta generated 245,000 square feet of leasing during the quarter, bringing its leased percentage to 92.4% and occupancy to 86.3%. Austin signed 180,000 square feet of leases, 77% of which involved technology companies, including tenants in the artificial intelligence sector. Cousins also completed a 76,000-square-foot renewal with a Fortune 10 technology company at Domain 7. The Austin portfolio was 97.1% leased with a weighted average lease term of 6.9 years.

In Charlotte, Cousins posted cash rent roll-ups exceeding 35% on completed leasing activity. At 201 North Tryon, which is undergoing redevelopment, the company was negotiating with four prospective new customers totaling 54,000 square feet. The redevelopment is expected to be substantially complete in mid-2027.

Dallas was 97.6% leased at quarter-end, with 62,000 square feet of leases signed and cash rent roll-ups of 40%. Hickson said the company was in late-stage negotiations with a major new customer to lease about 160,000 square feet at a building previously occupied by Ovintiv. If completed, that lease would bring the approximately 300,000-square-foot building to 91% leased, though its phased commencement would begin in late 2027 and conclude in early 2028.

Development and investment activity

Cousins advanced several investment initiatives during the quarter, including the sale of One Eleven Congress, a 519,000-square-foot Austin office tower built in the late 1980s. The building sold for $208 million, or $400 per square foot. Kennedy Hicks, executive vice president and chief investment officer, said the sale allowed the company to recycle capital from an older asset into opportunities expected to require less future capital.

The company also committed to invest up to $31.5 million in preferred equity for 5th & Walsh, a development in Austin’s Clarksville neighborhood. The project is expected to include nearly 200,000 square feet of creative office and high-end retail space upon its anticipated 2029 completion. It was 58% pre-leased at groundbreaking. Cousins expects to fund most of the investment during the second half of 2027 and receive a 10% preferred return upon funding, along with a future right to purchase the property.

In Dallas, Cousins acquired a 97.5% interest in a joint venture with Trammell Crow Company that owns a 2.3-acre development site at 2401 McKinney in Uptown. Cousins’ initial investment was about $50 million, consisting of $42.2 million for land and $7.8 million of pre-development costs.

Management said the site could support a trophy office tower of more than 700,000 square feet and that it could be positioned to break ground in the first half of 2027. Connolly said construction costs in Uptown Dallas generally range from about $900 to $1,000 per square foot depending on the building. The company did not provide a total project budget, projected yield or pre-leasing details, saying building plans and costs are still being finalized.

Connolly said Cousins historically has sought development yields 150 to 200 basis points above acquisition cap rates and now leans toward the higher end of that range. Hicks said core office assets have generally traded at cap rates around 7%, subject to variations in lease term, tenant credit and market-rent characteristics.

Balance sheet and capital strategy

During the quarter, Cousins repaid a $100 million mortgage on Colorado Tower in Austin and a $116 million mortgage on 201 North Tryon, using proceeds from a $500 million unsecured bond offering completed earlier in 2026. The company now has only one consolidated mortgage remaining, and 94% of its consolidated debt is unsecured, Adzema said.

Cousins also sold 917,000 shares on a forward basis through its at-the-market program at an average gross price of $31.37 per share. Together with shares sold in 2025, the company has 3.9 million forward shares outstanding at an average price of $30.66, representing roughly $120 million of equity available for future investments. Adzema said the company has extended prior forward agreements and does not need to settle those shares by year-end.

About Cousins Properties (NYSE:CUZ)

Cousins Properties Incorporated NYSE: CUZ is a self-administered and self-managed real estate investment trust that owns, develops, and manages primarily Class A office properties. The company focuses on high-quality buildings designed to serve businesses across a range of industries, with services that include property management, leasing, development, and asset operations.

Founded in 1958 by Thomas G. Cousins, the company has developed a longstanding presence in the commercial real estate industry.

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