Cousins Properties Inc: Form 10-Q for the period ended Mar 31, 2026

Overview of 2026 Performance and Company and Industry Trends

Cousins Properties Incorporated ("Cousins") (and collectively, with its subsidiaries, the "Company," "we," "our," or "us") is a publicly traded (NYSE: CUZ), self-administered, and self-managed real estate investment trust, or REIT. Cousins conducts substantially all of its business through Cousins Properties LP ("CPLP"). Cousins owns in excess of 99% of CPLP and consolidates CPLP. CPLP owns Cousins TRS Services LLC, a taxable entity that owns and manages its own real estate portfolio and performs certain real estate related services for other parties. Our strategy is to create value for our stockholders through ownership of a lifestyle office portfolio (described in further detail below) in the Sun Belt markets, with a particular focus on the core markets of Austin, Atlanta, Charlotte, Tampa, Phoenix, Dallas, and Nashville. This strategy is based on a disciplined approach to capital allocation that includes opportunistic acquisitions, selective developments, and timely dispositions of non-core assets with a goal of maintaining a portfolio of newer and more efficient properties with lower capital expenditure requirements. This strategy is also based on a simple, flexible, and low-leverage balance sheet that allows us to pursue compelling growth opportunities at the most advantageous points in the cycle. To implement this strategy, we strive to have strong local operating platforms within each of our major markets.

During the quarter, we leased 932,000 square feet of office space, including 483,000 of new and expansion leases representing 52% of total leasing activity. Straight-line basis net rent per square foot increased 28.7% for those office spaces that were under lease within the past year. Same property net operating income (defined below) for consolidated properties and our share of unconsolidated properties increased 1.7% between the three months ended March 31, 2026 and 2025.

On February 2, 2026, we acquired 300 South Tryon, a 638,000 square foot office property in Charlotte, for a gross price of $317.5 million.

On February 5, 2026, we received payment at par of the $18.2 million mezzanine loan investment secured by an equity interest in 110 East in Charlotte.

On February 25, 2026, we sold our Harborview Plaza office property, a 206,000 square foot property in Tampa, for a gross sales price of $39.5 million.

On February 20, 2026, we issued $500.0 million of 4.875% public unsecured senior notes due 2033 with a yield to maturity of 5.001%, generating net proceeds of $492.1 million.

During the quarter we repurchased 3.9 million shares at a weighted average price of $23.36 per share under the $250 million share repurchase program announced on February 17, 2026.

We believe the Sun Belt, and in particular the seven core Sun Belt markets in which we own properties, will continue to outperform the broader office sector as evidenced by clear bifurcation between Sun Belt and Gateway market fundamentals. In addition, as the flight to quality trend accelerates among office users, we believe our lifestyle office portfolio is well positioned to benefit from, and ultimately outperform in, the current real estate environment.

We consider “lifestyle offices” to be well-located buildings that are modern structures or have been modernized to compete with newer buildings, are professionally managed and maintained, and offer a number and type of amenities that are in high demand by customers that are focused on the importance of the physical work environment in recruiting and retaining employees. We believe our “lifestyle office” portfolio improves our ability to renew leases and obtain new customers which results in consistently higher occupancy than the remainder of the office buildings in our markets. We do not consider the expression “lifestyle office” a classification of our properties in accordance with any standard listing criteria in the real estate industry. We, therefore, caution investors that our use and definition of “lifestyle office” may be different than the use and definition of similar expressions and traditional classifications that may be used by other companies.

Results of Operations For The Three Months Ended March 31, 2026

General

Net loss available to common stockholders for the three months ended March 31, 2026, was $24.9 million. Net income available to common stockholders for the three months ended March 31, 2025, was $20.9 million. During the three months ended March 31, 2026, we recorded $36.6 million of impairment loss related to One Eleven Congress, which we agreed to sell in a transaction expected to close in the third quarter of 2026. We detail below other material changes in the components of net income and loss available to common stockholders for the three months ended March 31, 2026, compared to 2025.

Rental Property Revenue, Rental Property Operating Expenses, and Net Operating Income

The following results include the performance of our Same Property portfolio. Our Same Property portfolio includes office properties that were stabilized and owned by us for the entirety of each comparable reporting period presented. Same Property amounts for the 2026 versus 2025 comparison period are for properties that were stabilized and owned as of January 1, 2025 through March 31, 2026. We consider many factors in determining whether a property has stabilized, including the property’s occupancy (independently and relative to its submarket) and current leasing pipeline, as well as time since the cessation of major construction activity.

Company management evaluates the performance of its property portfolio, in part, based on Net Operating Income ("NOI"). NOI represents rental property revenues, less termination fees, less rental property operating expenses. NOI is not a measure of cash flows or operating results as measured by GAAP, is not indicative of cash available to fund cash needs, and should not be considered an alternative to cash flows as a measure of liquidity. All companies may not calculate NOI in the same manner. We consider NOI to be an appropriate supplemental measure to net income as it helps both management and investors understand the core operations of our operating assets. NOI excludes corporate general and administrative expenses, interest expense, depreciation and amortization, impairments, gains/losses on sales of real estate, and other non-operating items. As a result, we use only those income and expense items that are incurred at the property level to evaluate a property's performance.

The following table reconciles net income to consolidated NOI for each of the periods presented ($ in thousands):

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Consolidated rental property revenues, rental property operating expenses, and NOI changed between the 2026 and 2025 periods as follows ($ in thousands):

Same Property NOI represents Net Operating Income for those office properties that were stabilized and owned by us for the entirety of the 2026 and 2025 reporting periods presented. Same Property NOI allows analysts, investors, and management to analyze continuing operations and evaluate the growth trend of the Company's portfolio.

Same Property Rental Property Revenues, Operating Expenses, and NOI increased for the three months ended March 31, 2026, compared to the same period in the prior year primarily due to an increase in occupancy at Avalon, 3350 Peachtree, and Corporate Center.

Non-Same Property Rental Property Revenues, Operating Expenses, and NOI increased for the three months ended March 31, 2026, compared to the same periods in the prior year primarily due to the acquisitions of 300 South Tryon in February 2026 as well as the acquisition of The Link in July 2025. These increases were partially offset by the sale of Harborview in February 2026.

The following table details consolidated NOI from properties aggregated by market ($ in thousands):

(1) Includes operations at land sites held for future development as well as a parking garage in Charlotte.

From an overall portfolio perspective, in-place gross rent per square foot as of March 31, 2026, increased 3.8% compared to March 31, 2025, contributing to a portfolio wide increase in NOI. NOI from the Dallas market increased $4.8 million, or 132.8%, for the three months ended March 31, 2026, compared to the same period in the prior year, primarily due to the acquisition of The Link in July 2025. NOI from the Atlanta market increased $3.0 million, or 5.9%, for the three months ended March 31, 2026 compared to the same period in prior year, primarily due to increased occupancy at the Avalon and 3350 Peachtree and the end of several variable rent abatement periods at Promenade Tower. NOI from the Austin market increased $2.4 million, or 4.0%, for the three months ended March 31, 2026, compared to the same period in the prior year, primarily due the completion of development at Domain 9 in March 2025. NOI from the Charlotte market increased $2.2 million, or 13.0%, for the three months ended March 31, 2026, compared to the same period in the prior year, primarily due to the acquisition of 300 South Tryon in February 2026. NOI from the Phoenix market increased $1.6 million, or 13.6%, for the three months ended March 31, 2026, compared to the same period in the prior year, primarily due to increased occupancy related to the completion of Hayden Ferry I's redevelopment in the fourth quarter of 2025.

Other Income

Other income decreased $6.0 million between the three month periods ended March 31, 2026, and 2025 primarily due to the sale of our Silicon Valley Bank bankruptcy claim in the first quarter of 2025, and a reduction in interest income from the two mezzanine loans and the Saint Ann Court Mortgage Loan earned in the first quarter of 2025. These reductions were partially offset by interest income from the joint venture partner loan, which was issued in September 2025. These transactions are described in further detail in Note 3 and Note 12 to the consolidated financial statements in this Form 10-Q.

General and Administrative Expenses

General and administrative expenses increased $1.1 million, or 10.6%, between the three month periods ended March 31, 2026, and 2025, primarily due to increases in compensation related expenses.

Interest Expense

Interest expense, net of amounts capitalized, increased $8.3 million, or 22.6%, between the three months ended March 31, 2026, and 2025, primarily due to the issuances of the $500 million unsecured senior notes in June 2025 and $500 million unsecured senior notes in February 2026, and a higher average balance outstanding on the credit facility. Increased interest expense was partially offset by the repayments of the $250 million senior note in July 2025 and the repayment of $150 million of the 2021 Term Loan in February 2026.

Depreciation and Amortization

Depreciation and amortization changed between the 2026 and 2025 periods as follows ($ in thousands):

Non-Same Property depreciation and amortization increased between the three months ended March 31, 2026, and 2025, primarily due to the acquisition of 300 South Tryon in February 2026, the acquisition of The Link in July 2025, and the completion of development at Domain 9 in March 2025.

Income and Net Operating Income from Unconsolidated Joint Ventures

Income from unconsolidated joint ventures consisted of the Company's share of the following ($ in thousands):

The change in loss from unconsolidated joint ventures was driven by increases in unconsolidated depreciation and amortization expense as well as unconsolidated interest expense. Unconsolidated depreciation and amortization expense and interest expense increased between the three months ended March 31, 2026 and 2025, primarily due to assets being placed in service as the development of Phase I of the Neuhoff joint venture was completed and initial operations commenced.

Non-Same Property NOI from unconsolidated joint ventures increased between the three months ended March 31, 2026 and 2025, primarily due to operations at the Neuhoff joint venture, as the property continues to increase occupancy.

Funds From Operations

The table below shows Funds from Operations (“FFO”) and the related reconciliation from net income available to common stockholders. We calculate FFO as defined by the National Association of Real Estate Investment Trusts ("Nareit"), which is net income available to common stockholders (computed in accordance with GAAP), excluding extraordinary items, cumulative effect of change in accounting principle, and gains on sale or impairment losses on depreciable property, plus depreciation and amortization of real estate assets, and after adjustments for unconsolidated partnerships and joint ventures to reflect FFO on the same basis.

FFO is used by industry analysts and investors as a supplemental measure of a REIT’s operating performance. Historical cost accounting for real estate assets implicitly assumes that the value of real estate assets diminishes predictably over time. Since real estate values instead have historically risen or fallen with market conditions, many industry investors and analysts have considered presentation of operating results for real estate companies that use historical cost accounting to be insufficient by themselves. Thus, Nareit created FFO as a supplemental measure of REIT operating performance that excludes historical cost depreciation, among other items, from GAAP net income. The use of FFO, combined with the required primary GAAP presentations, has been fundamentally beneficial, improving the understanding of operating results of REITs among the investing public and making comparisons of REIT operating results more meaningful. Company management evaluates operating performance, in part, based on FFO. Additionally, we use FFO, along with other measures, to assess performance in connection with evaluating and granting incentive compensation to our officers and other key employees.

The reconciliation of net income to FFO is as follows for the three months ended March 31, 2026, and 2025 (in thousands, except per share amounts):

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Liquidity and Capital Resources

Our primary short-term and long-term liquidity needs include the following:

• property operating expenses;
• property, land, and other real estate related acquisitions;
• expenditures on development and redevelopment projects;
• building improvements, tenant improvements, and leasing costs;
• principal and interest payments on indebtedness;
• general and administrative costs; and
• common stock dividends and distributions to outside unitholders of CPLP.

We may satisfy these needs with one or more of the following:

• cash and cash equivalents on hand;
• net cash from operations;
• proceeds from the sale of assets;
• borrowings under our Credit Facility;
• proceeds from mortgage notes payable;
• proceeds from construction loans;
• proceeds from unsecured loans;
• proceeds from offerings of debt and equity securities; and
• joint venture formations.

Our material capital expenditure commitments as of March 31, 2026, included $178.8 million of unfunded tenant improvements and construction costs. As of March 31, 2026, we had $206.5 million drawn under our credit facility with the ability to borrow $793.5 million, as well as $6.3 million of cash and cash equivalents. We expect to have sufficient liquidity to meet our obligations for the foreseeable future.

Other Debt Information

In addition to our $1 billion unsecured Credit Facility (with $206.5 million outstanding as of March 31, 2026), we also have unsecured debt from four outstanding public unsecured senior notes totaling $1.9 billion, two term loans totaling $500 million, and four tranches of privately placed unsecured senior notes totaling $750 million. Our existing consolidated mortgage debt is comprised of non-recourse, fixed-rate mortgage notes secured by various real estate assets. We expect to either refinance our non-recourse mortgage loans at maturity or repay the mortgage loans with other capital resources, including our credit facility, unsecured debt, non-recourse mortgages, construction loans, the sale of assets, joint venture equity, the issuance of common stock, the issuance of preferred stock, or the issuance of units of CPLP. Many of our non-recourse mortgages contain covenants that, if not satisfied, could result in acceleration of the maturity of the debt. 87% of our consolidated debt bears interest at a fixed rate. The 13% of consolidated debt that bears interest at a floating rate is based on SOFR.

On April 1, 2026, we recast our Credit Facility, pursuant to which the Company may borrow up to $1.2 billion if certain conditions are satisfied. This new facility replaced the Company's existing facility, extended the scheduled maturity from April 2027 to April 2031, and increased the borrowing capacity from $1.0 billion to $1.2 billion. Additionally, we amended our 2021 Term Loan and 2022 Term Loan, adding two six-month extension options to each. Since December 31, 2025, our all-in borrowing spread improved by 15 basis points on both the revolving credit facility and the 2022 Term Loan, and 30 basis points on the 2021 Term Loan term loan. The current borrowing spread on our Credit Facility is 72.5 basis points over SOFR, and the current borrowing spread on both term loans is 80 basis points over SOFR. Financial covenants within the new facilities remained generally unchanged.

We are in compliance with all covenants of our existing unsecured and secured debt.

Future Capital Requirements

To meet capital requirements for future investment activities, we intend to actively manage our portfolio of properties and strategically sell assets to exit our non-core holdings and reposition our portfolio of income-producing assets. We also expect to continue to utilize cash retained from operations, as well as third-party sources of capital such as indebtedness, to fund future commitments and to utilize construction financing facilities for some development assets, if available and under appropriate terms. We may also generate capital through the issuance of securities that include common or preferred stock, warrants, debt securities, or the issuance of CPLP limited partnership units. The Company and CPLP have filed a registration statement on Form S-3 with the SEC registering, among other securities, debt securities of CPLP, which are fully and unconditionally guaranteed by the Company. Separate consolidated financial statements of CPLP have not been presented in accordance with the amendments to Rule 3-10 of Regulation S-X. Furthermore, as permitted under Rule 13-01(a)(4)(vi), the Company has excluded the summarized financial information for CPLP as the assets, liabilities, and results of operations of the Company and CPLP are not materially different than the corresponding amounts presented in the consolidated financial statements of the Company, and management believes such summarized financial information would be repetitive and not provide incremental value to investors.

Our business model also includes raising or recycling capital, which can assist in meeting obligations and funding development and acquisition activity. If one or more sources of capital are not available when required, we may be forced to reduce the number of projects we acquire or develop and/or raise capital on potentially unfavorable terms, or we may be unable to raise capital, which could have an adverse effect on our financial position or results of operations.

Cash Flows

We report and analyze our cash flows based on operating activities, investing activities, and financing activities. The following table sets forth the changes in cash flows ($ in thousands):

The reasons for significant increases and decreases in cash flows between the periods are as follows:

Cash Flows from Operating Activities. Cash flows provided by operating activities decreased by $4.3 million between the 2026 and 2025 three month periods, primarily due to increased interest payments from increased average balances on the credit facility and the senior note issuance of $500 million in June 2025. These payments were partially offset by an increase in cash inflows from a combination of increased occupancy and expiration of rent abatement periods, primarily at Promenade Tower, Domain 9, Hayden Ferry, and 300 Colorado. Cash flows provided by operating activities also increased in the three months ended March 31, 2026, due to the acquisitions of The Link and 300 South Tryon.

Cash Flows from Investing Activities. Cash flows used in investing activities for the 2026 three month period were $323.0 million, compared to cash flows provided by investing activities of $87.1 million for the same period in 2025. Cash used in investing activities for the 2026 three month period are primarily from the acquisition of 300 South Tryon partially offset by the sale of Harborview. Cash flows provided by investing activities in 2025 were largely driven by the repayments of investments in real estate debt by the borrowers on the Radius mezzanine loan and Saint Ann mortgage loan.

Cash Flows from Financing Activities. Cash flows provided by financing activities for the 2026 three month period were $283.1 million, compared to cash flows used in financing activities of $133.9 million for the same period in 2025. During the three month period in 2026, we received proceeds from the issuance of the 4.875% public senior notes in February 2026, and we had an increase in net borrowings on our credit facility. These proceeds were partially offset by a $150 million partial repayment of the 2021 Term Loan and a $90 million repurchase of outstanding common shares under the 2026 share repurchase program.

Capital Expenditures. We incur capital expenditures for the development of new properties, the redevelopment of existing or newly purchased properties, building improvements, direct leasing costs for new or replacement tenants, and capitalized interest and salaries. Components of expenditures included in this line item for the three months ended March 31, 2026, and 2025 are as follows ($ in thousands):

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Capital expenditures increased $5.3 million between the 2026 and 2025 three month periods, primarily due to partial redevelopment activity at 201 North Tryon, 550 South, and Hayden Ferry. This increase is partially offset by lower spending on projects under development, as Domain 9 became fully operational in 2025.

The above leasing costs include leasing commissions and tenant improvements, which are both capitalized as a component of our real estate assets as they are incurred. Commitments toward those costs are calculated on square foot basis and are included in our leasing activity as leases are executed.

Leasing activity details, including the components of net effective rent per square foot, for our office portfolio on leases executed during the three months ended March 31, 2026, and 2025 are as follows:

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(1) Comprised of total square feet leased, unadjusted for ownership share. Excludes leases approximately one year or less, along with apartment, retail, amenity, storage, and intercompany space leases.

(2) Weighted average of net leased square feet.

(3) Straight-line net rent per square foot (operating expense reimbursements deducted from gross leases) over the lease term, prior to any deductions for leasing costs. Excludes percent rent leases.

(4) The amounts of tenant improvement and leasing costs on a per square foot basis vary by lease and by market.

(5) Excludes leases executed for spaces that were vacant upon acquisition, new leases in development properties, percent rent leases, and leases for spaces that have been vacant for one year or more.

(6) Increase in second generation straight-line basis net annualized rent on a weighted average basis.

(7) Increase in second generation net cash rent at the end of the term paid by the prior tenant compared to net cash rent at the beginning of the term (after any free rent period) paid by the current tenant on a weighted average basis. For early renewals, the final net cash rent paid under the original lease is compared to the first net cash rent paid under the terms of the renewal. Net cash rent is net of any recovery of operating expenses but prior to any deductions for leasing costs.

Dividends. We paid common dividends of $55.3 million and $54.6 million in the three months ended March 31, 2026, and 2025, respectively. We expect to fund our future quarterly common dividends with cash provided by operating activities, also using proceeds from investment property sales, distributions from unconsolidated joint ventures, indebtedness, and proceeds from offerings of equity and other securities, if necessary.

On a quarterly basis, we review the amount of the common dividend in light of current and projected future cash flows from the sources noted above and also consider the requirements needed to maintain our REIT status. In addition, we have certain covenants under credit agreements that could limit the amount of common dividends paid. In general, common dividends of any amount can be paid as long as leverage, as defined in our credit agreements, is less than 60% and we are not in default. Certain conditions also apply in which we can still pay common dividends if leverage is above that amount. We routinely monitor the status of our common dividend payments in light of the covenants of our credit agreements.

Off Balance Sheet Arrangements

General. We have a number of off balance sheet joint ventures with varying structures, as described in note 6 of the notes to consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2025 and in note 4 of the notes to condensed consolidated financial statements included in this filing. The joint ventures in which we have an interest are involved in the ownership, acquisition, and/or development of real estate. A venture will fund capital requirements or operational needs with cash from operations or financing proceeds, if possible. If additional capital is deemed necessary, a venture may request a contribution from the partners, and we will evaluate such request.

Debt. At March 31, 2026, our unconsolidated joint ventures had aggregate outstanding indebtedness to third parties of $334.1 million. These loans are generally mortgage or construction loans, which are non-recourse to us. In certain instances, we provide “non-recourse carve-out guarantees” on these non-recourse loans. In addition, along with our Neuhoff Holdings LLC joint venture partner, we guarantee our respective halves of the borrower's obligations to pay certain required equity contributions and project carrying costs, as well as timely completion of project construction. Certain of these loans have variable interest rates, which creates exposure to the ventures in the form of market risk from interest rate changes.

Critical Accounting Policies

There have been no material changes in the critical accounting policies from those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2025.

There have been no material changes in the market risk associated with our notes payable at March 31, 2026, compared to that as disclosed in our Annual Report on Form 10-K for the year ended December 31, 2025.

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Management necessarily applies judgment in assessing the costs and benefits of such controls and procedures, which, by their nature, can provide only reasonable assurance regarding our control objectives.

As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of management, including the Chief Executive Officer along with the Chief Financial Officer, of the effectiveness, design, and operation of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)). Based upon the foregoing, the Chief Executive Officer along with the Chief Financial Officer concluded that our disclosure controls and procedures were effective. In addition, based on such evaluation, we have identified no changes in our internal control over financial reporting that occurred during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

Risk factors that affect our business and financial results are discussed in Part I, "Item 1A. Risk Factors," of our Annual Report on Form 10-K for the year ended December 31, 2025. There have been no material changes in our risk factors from those previously disclosed in our Annual Report. You should carefully consider the risks described in our Annual Report, which could materially affect our business, financial condition, or future results. The risks described in our Annual Report are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem immaterial also may materially adversely affect our business, financial condition, and/or operating results. If any of the risks actually occur, our business, financial condition, and/or results of operations could be negatively affected.