CUZ - Earnings call transcript Q2 2018 | Cousins Properties Incorporated

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Operator

Good day. And welcome to the Cousins Properties Second Quarter Conference Call and webcast. All participants are currently in listen-only mode [Operator Instructions]. After today’s presentation, there will be an opportunity to ask questions [Operator Instructions]. Please also note that this event is being recorded. to President conference and like Roper, to now Vice Executive General would turn over the Pam I Counsel. Please go ahead.

Pam Roper

Good constitute and meaning to discussed Company factors. and result from forward-looking securities laws, differ the as whether uncertainties results due second does The these and any made quarter and Gregg today undertake to press statements duty statements a our President Cousins and release federal call. Colin our other Operating Executive within welcome our available me Officer; actual Chief risks Chief to Gellerstedt, of may update are materially any morning. forward-looking With were Larry The Chief statements Connolly, supplemental and Officer; not of today variety may Adzema, new package is with that, otherwise. and earnings turn discussion declaration the And is as the risks over forward-looking Website the reconciled Form aware statements conference furnished with Chairman Gellerstedt. a Properties’ Relations be to Financial that Please our well of in press comparable The afternoon, in With yesterday, of on accordance future package, or the of regarding available detailed all release has measures Larry G directly to GAAP measures on potential our In Company full yesterday certain supplemental Investor financial the the the matters X-K. most requirements. issued Reg events SEC. in filings as contained information, and Page Officer. call the non-GAAP I’ll

Larry Gellerstedt

for thanks joining and Pam, Thanks, and everyone morning, good us.

pleased and report economic through active. on XXXX ground our that are recovery here business today I deeper and we steady mid-way into sit the very teams is the to am As

of has is outpacing is economy While we total Supply average markets growing fundamentals reports the decline however job Sunbelt growth by Atlanta. office in XXX and seeing and and growth the of reflective each driven are our may employment the monitor The potential year. pushing currently our a It slight earlier basis job use the remain recently ground. in services U.S. in for and information of healthy. you base relatively decline activity temporarily jobs our continue seen by at and markets some stayed in This total points. our and is on likes, forward markets; have the not keeps office the check caution to U.S. was employee showing teams

has XX,XXX past five year, Over ranks and jobs the average an in growth for Atlanta the the annually of in added third past population nation years.

We corporate additional we are horizon. with the decline Atlanta remain this relocations Chamber, significant on potential the market ready is dialogue temporary for the activity and Metro elevated with believe for

the Looking this in forward, with at cycle. pleased point sits Cousins am where I

past over Our balance opportunities also allowed and balance in the off have capital the solve. putting play sheet to attractive investment strategies us several years a while allocation to execute conditions aggressively position market should us on

development building continue in an I’ll platform, used active Avalon over in successful have with development spend acquisitions, progress our feet patient land office report activity. each million highly to completed the second Class like update of greater giving million under North of A developments development few with would the pre I leased. million we that additional have pre value developments shareholders our This you one on and create significant and an start our the finishing up development mix on most Avalon, next our recent announcement, it $XXX our pipeline construction. our minutes XX% remain XX,XXX we Atlanta. we currently While for today office of cycle, to space square we new Cousins through This and as includes strengths. relates and to $XXX X.X is

with is earning it DFA. partners has Georgia In on anticipate focused we I of the lasting for minute completing is which Midtown and space. When for global We Charlotte, square with XXX,XXX of Square, overtime, tower. Hines for foot Capital, teamed The in which two Class development which A built with XXXX area a from and strong a generating may only years. XX,XXX A+ site XX:XX rest company. DFA creating Avalon in ten are which have construction the are of during success office credit hope our a commands the Tech during the product fourth venture a headquarters demand the create only joint marks on significant two deliver the impact on on excited AXIS a discuss of example. Street are future differentiated the with to REIT Tech new the project in our a allows phase DFA develop previous to east latest This their perfect to leased company today offer feet insurance XXXX growing over developed success at North Cousins long have office reps second regional Charlotte been headquarters fund office phase fourth premium, again This Midtown. venture innovative XX:XX positive NCRs will entire XXX,XXX second square tremendous term coast taking with and quarter. sub-market. past combined to the first the are us are feet premiums space the project buck At Atlanta remaining that dimensional includes up Avalon development Midtown compelling opportunities that rapidly we office which NCR the development as trust the about developing XXX% have in developed will a is which total adjacent of advisors comparable sites XXX to with The blocks Atlanta at. a of campus. we of is These always Spring high we schedule and global urban in the relationships customers and a risk of headquarters square has with is we quarter to NCR

Austin development Finally, XXX for quarter early [our construction thoughts] fourth start latest is on and a schedule XXXX Colorado delivery. on

from call earnings opportunity may XX,XXX projects are mentioned as feet. earning view continue last to potential those with it and very the our of approximately we Colin this Colin. square You cost. investment as We the upsize with partners recall a attractive finalized evaluate joint venture as

on our increasing Beyond company focused positioning additional for land strategically growth we bank. pipeline, our development the by active are

to the they core control the under is quickly currently us two pools and our to of at of allowing each Both State land Atlanta at sites We Arizona one existing goal sub-markets Our have Midtown on move in Tech size debt contract, respectively. opportunities in assets benefit as closed within arise. Georgia talent in and are one available sites Tempe. a development from current University proximity to block they

these two on are purchase to schedule year. later sites We this

to feet be these teams the center from [Indiscernible] on we already break to our identify land ground of try approximately centers [secure in and will XXXX would sites early tenants. would three Going X and office. Class Tampa future X.X are in bank anchor] The Dallas already are we have and projects with total two corporate any working square of on Uptown land our these bank earliest million support A

always I opportunities we also compelling are And one will our we that had create, development development have pipeline opportunities turn our strategy. and and that, to most these with active operational value predevelopment Colin actively shadow our is keeping [lawful] in in the In and I’ll disciplined rest build-to-suit of to addition several interest with to performance of potential and proceed to the of have forefront. it excited while are decisions ever evaluating our over in line leasing review shareholders a are current remain believe we both projects assured we for With customs. these our

Colin Connolly

everyone. activity our morning an Thanks, morning into performance Larry dive each remarks leasing markets. in of at level of my individual portfolio this overview begin and with and then operational I’ll . and our the good

to leases through our positive as our ground And very see core as XX% As teams halfway we approximately in this strong leasing fundamentals Sunbelt across of Leasing than feet of Larry our with the markets term weighted years. more lease office new for mentioned, accounted activity. expansion average XXX,XXX square active year quarters we and on XX was the importantly, of continue executed remain markets. a

the to as relates volume that mind basis, on were it our portfolio the into with lease in economics also Drilling numbers, please relatively As the space leased aggregate. keep in term available expirations realized. quarter-to-quarter have lease XX% limited modest near our was we

the highlights rental to equality compares not gross a Our confused year period our was a XX.X% rent over same This the a $XX foot, favorably with our of very over peers rate Sunbelt be and ago. net per portfolio. to truth

also average rent weighted effective net our was Importantly, XX.X%. up

had rates. seen upward some rental we we are pressure TIs, base maintaining while through on higher So returns

with rents quarter, and I second strong leasing positive market, square GAAP X% which portfolio am city we our at according in impressive pleased was our impressive. A foot expiring square quarter net on Atlanta. a rent activity This now XX the our across XXth with basis roll-ups. XX.X% extremely the executes cash marks turn had basis. feet positive a quarter. X.X on to The our During our markets, cash and with and another absorption up consistency CoStar, team rolled delivers leases consecutive on busiest to Class I’ll XXX,XXX quarter. economics starting quarter after million was

development. the being AXIS followed Third XX,XXX occurring kick team combined feet. Avalon announced Our success Peachtree square activity based and by of leases signed was at broad Atlanta off transaction of square the fantastic these Capital XX,XXX or [Indiscernible] largest Leasing to with recently XXX,XXX feet significant We with at with our renewals Fifth both Terminus Promenade. some XXXX including and Bank completed Atlanta,

term square XXX opportunities and you, of Central the remind July Atlanta are approximately Bain in from largest from To and April in feet Terminus square XXXX leasing we NorthPark back get at CDRE feet XXXX. near Perimeter. will Buckhead in a of XX,XXX in XX,XXX Terminus in Our XXX,

customers. play with closer to and is strong a decision the second the sub-market NorthPark, to in for direct momentum XXX,XXX see pipeline lease of access feet in finally quarter growing dealers asset Perimeter potential customers. leasing as we had continue making. our No square transit during we this this to a and as company’s in year. a differentiator Our potential discussions access absorbed actionable become role monitor the explorations move key At to our other mass Central Buckhead remains has key

likely has our square opportunities our been to – been is XX,XXX AIGs the hard customer, X.X significant a pleased new I process by decision strong, and nothing of believe square While has AIG this that announced lease at XXX,XXX X.X% report quickly NorthPark foot square are Throughout on relocate customers Buckhead we vacancies to lease for marketing space. backfill is terrific. team am and Class we A XXXX. nearly million portion work to foot Austin, our a in formally at feet portfolio do February in a company at leased. with in that XX% is interest of a negotiations tied growing Over

Our XX,XXX team including focused on with renewals year this renewal foot XXX term quarter this has square key been [Indiscernible] executing at long a very Congress.

to Colorado are construction As track year. later this previously on we XXX mentioned, on start

continue We demand. the Austin, Austin’s confident depths but we supply monitor in to of are

growth the million the top like square as ranks approximately name large X.X inventory net feet. five absorbed Facebook X.X a by resulting markets increased X.X has energy million has square square million consistently it and five Over available to job but past partially has feet Amazon, by Austin and expanded for approximately companies attracted in few. a in Apple, The decrease and years, supply City feet,

healthy million of for foot tremendous was remained of breaking record our a in current Portman X.X Moving for market $XXX South onto per This which Charlotte, count is quarter portfolio. XXX Holdings sale foot. reflected a this the College, a square

for had leasing quarter the occupied. is a we XX% Charlotte, since relatively no activity, in our As leased portfolio which surprise XX% was quiet and

are place Dimensional that Activity the is one XXX% Square space Third feet space of will we all portion completion this of vacated that of February block potential Fund deep Nearby our has to upon are XX,XXX team with square Dimensional in highly the to to which discussions Chapel in Our at Advisors space focused Hill, is Fifth in customers of be Uptown on best the XXXX. in picked we leased. office up Charlotte. Center take Carolina ready development report on

listing, the portfolio our generating As in is and well our stabilized reflected now underwriting. above fully original carpenter rents

much Technology one net [Indiscernible]. to in west, Bank growth are Tempe. continues post job West the further Phoenix and of Looking Silicon than the occurring absorption as major XX% of with more market our the to total Valley a market absorptions Bank, services positive from in financial driving major of with the announcements Tempe customers

Our portfolio leased is XX.X% occupied. currently and XX%

percentage Silicon quarter occupancy Our expansion move lease occupy our Valley in the space. third and should Bank line during with [Symantec] as the

in down a positive point vacancy the Tampa, Overall, Finally, at X.X% leases absorption and year signing very Class negative Corporate had quarter, for quarter start. XX,XXX solid at center. of A the Tampa poses the our team for the slightly remains is -- feet square net but low and for

team is [Lazor] this identify currently and working vacated Harborview new signing Our two two earlier the year. that for for to the customers floors

We with approximately customers space several potential discussions have of active this lease strong and in interest in space. that are for XX%

of leasing all is opportunities our call over XX% With Tampa activity our conclusion, portfolio to that, the about robust turn Greg. Harborview, I’ll approximately markets. remains feel leased. In across from as our we Aside great

Gregg Adzema

begin Thanks, of to sheet providing XXXX I’ll guidance. an financial Then same our by our everyone. overview balance my remarks an Colin closing results, and property good of earnings move our I’ll remarks including my with update performance. before morning, on

performance clean and FFO had you as Colin’s level a Net solid, very $X.XX per $X.XX As outstanding share positive. remarks, from property firmly tell income second was was Larry was share. could same per quarter. and NOI we Property was

to and was leasing Second generation continued up prior spreads consistent roll with leasing quarters. volume

one a land to quarter, non-core $X.X gain parcel Turning the of we second of million. sold generating

runs The earnings term of majority the statement this largely our long the was not by non-core sites million of Tampa. through core one the offset administrative one item. more in in gain of impact in inventory two in mentioned comprised Larry line land much. which on income earlier, land office and million general compensation have increase is books We land our Dallas, $X.X and accrual, $XX our left incentive expenses The but

the a majority total with shareholders is interests. performance many Cousin’s years performance been office case ensure vast at that interest to in index. compensation to for As incentive has The the by management order here our based term long in line are determined return S&L of relative

is same healthy was X.X% second XX.X% to quarter, Within by revenue out the compared X% a growth. X.X% was return total during our property the return the cash index. NOI up year-over-year quarter, driven for total During second up portfolio, very X.X%. a cash NOI Year-to-date

unchanged is is change. To of for you come our move around also cash We property lower are The between the move embedded as which XX.X% and year significant first. healthy that an tells simple math year an market second at fundamentals. insignificant anticipate number. X.X% year leaving a full in guidance NOI from X.X% ins you perspective property increase the indication of This full the and not in not pressure weakening very an It’s simply we our issue as to taxes outs expense half than various same property taxes. expected give timing guidance an well year-over-year some is in

the we values line but this it class assessments high to our can and Bottom have, most are as appreciating move them and number XXXX expenses. headwind property a through a receive run will likely nonetheless. However, problem

to sheet, Turning nothing held facility in end quarter $XXX on our cash. of we million unsecured our drawn and as balance we had over credit

weighted average and ratio debt debt EBITDA coverage any maturity years X.XX and Our significance interest average X.XX%, had was X.X of XXXX. times times. was weighted X.X maturities to net ratio debt our our on The we fixed until charge was was rate no our

Square construction was year maturity debt this the financing. only Our Carolina

extensions executed the loan. year the this of on two During we first quarter, second one

our both I’ll office after of the industry. and the among REIT remains by May my today very balance solid entire sheet of FFO rock XXXX, Moving comments our peers best and updating overall wrap to maturity XXXX guidance.

year outlined this earnings each quarter the The our release full to updated per FFO $X.XX range second continue we offset in quarter have a we As expect assumptions three in share we to other. XXXX of $X.XX share.

gain an First, well have we of in already $X.X recognized the sales to million we Land project. accurately approximately reflect recognized included gain a on as gain this sales small notoriously first assumptions land difficult we to are as a quarter for quarter. have

these did guidance. of include we not sales So either original our in

interest other settlement. $XX from a previous million the million we due assumption line have to million other to to our $XX in of our and between raised several adjustments. with This assumption relatively quarterly in Second, $XX $XX corresponds million range interest and small item directly expense

million I incentive million, assumption between an our increase million and $XX.X expense raised accrual administrative $XX.X compensation million we’ve a the term Third, from to to mentioned $XX general previous and of long due in range and earlier. $XX

call over out we point the to some to added supplement. additional Before the of page activity operator, leasing XX office schedule the turning within like I’d have disclosure the on to detail our

commissions out All we rents commission of Previously that, both I’ll breaking periods change. line leasing updated inside this now only prior and the commissions year items. are numbers and We included commissions. in separate turn in it free leasing internal are reflect external been back have And to schedule. With operator. we external this the our over including to leasing

Operator

Thank Lynch. from first Bank comes Feldman of question America Jamie Merrill Instructions] you[Operator of Our

Jamie Feldman

those kind any are that talk if given buildings. spaces mismatch lines of how you percent have wanted building Great. – you is you kind bit leased most with go talk Like comments Buckheads Thank that more more or which a available of up of in the space don’t that’s where there about and to are just that that to little your the of just good I you your of to in about back look are you your kind seeing? of mid-to-high morning. at if eighties. and Can any much buildings demand your

peers it Buckheads some said then, on had and some about So seem on leasing comments how the your that should does here of just we is more getting better think I think that? like front,

Colin Connolly

into been very properties for and in Sure drill is down question. strong has good today Jamie, prepared about thanks in a within as in portfolio here. just absorption at very our The and our activity and Buckhead XX% in leased mentioned year are Buckhead Colin is we it’s the favorable we and activity our And for remarks across we remains as your morning strong. as very whole

we materially. to As I got known availabilities mentioned our get at pipeline closer we up see maturities Terminus kick we’ve largest where starting the XXXX to those as are

there. some report Buckhead, those our XXXX here of very building good optimistic Peachtree, have assets we that quarter. the about prospects you good news will optimistic within in are and high our activity as Within to So currently those to other next Peachtree in we’ve the are mid got XXs and within XXXX some are they noted

Jamie Feldman

might broader active helpful. be guys picture you know on think little in more what the sub-markets of about Atlanta you thanks in your Hi, then that’s And the story, there? been just I bit have do competitive in how risk other, building, than that Midtown at supply picture thoughts supply just are terms more

Larry Gellerstedt

Good million it where lot of that continues built and got amazed just that still will degree make that supply restraining see of interest. just Atlanta large you we that in supply under feet are that of you supply in to as to square a be the pretty several Midtown just technology I’m that much leased projects that how company Atlanta where morning cycle Larry. being a is Jamie, is has XX% this is this and remained is below add say X

built. we currently where the of red in So amount supply see that’s being don’t Midtown flags any

Perimeter where as as Midtown Fulton some up to new and the being new added is then get started we no the more to won’t added. supply support there gets unless we we supply in have adding us And only just any Cousins well. got of being see ahead, there Avalon has leasing are new significance think new a the significant Buckhead no supply is question supply to Central that. you I in be being supplier added North relative really

very the strong just whether the or you talking talked really is to as in people leaders I terms just do city activity the travelling So – now. around market, business corporate of are Atlanta right whether just brokers environment across are when very to you I’ve to talking other

Jamie Feldman

overtime? higher Okay, you question, great. taxes, I for property Or believe margins? That’s just helpful. is mentioned my And NOI this will is you had the just to get final – that and then reimbursed those

Larry Gellerstedt

can not property increase XX% Jamie a can depends or through. that tax it average not through we leases build of customers but pass get to in It on pass give XX%, market all. obviously, expense lot but our it, take in

some some get can't through. absorb we'll pass So but

Jamie Feldman

that Okay. will benefit? And that – show up year-end will I more think

Colin Connolly

quarters show expense not in Well, you'll as third, the start up it earlier benefit. in mentioned I our I fourth will to mean, be see numbers. a

budgeted. mentioned we've I As

this we're have We get throughout cycle, valuations. on time to We just is portfolio, increases for Atlanta's And municipality I large anticipated of these really assessment got example. often now assessments. point the stretching just starting at but mean,

and could in bit that insight. under overestimated next move little we'll give able the be could when So, estimated, quarter more a number we you be or to know

Jamie Feldman

Thank Okay. All you. right.

Larry Gellerstedt

to out, seeing XX, more assessments At Atlanta, on XX Just depending but just or have color. a so. property and days little add we'll bit the come these have you're

or that XX% assessment from up. see very You XX%

to much appeal of push to reflects the as able are as our and can. shareholders; they buildings municipality But to and we on And far as obviously revenues. stay customers. see our more what to down to something going comps will are is It's everybody generate terms back as those protect also is push selling that looking we that in just being can so, protect it

Jamie Feldman

Thank Okay. All right. you.

Operator

Michael from comes of question next SunTrust. Lewis Our

Michael Lewis

accounting have And you wanted maybe the I internal answer a how costs leasing I'll look Or Thank in external an you to you much all, in rules. if closer at in the you. capitalized change XXXX? I expense idea But when take that the this might question you the have ask lease about to Gregg, mentioned myself. and leasing cost put internal supplement.

Gregg Adzema

a question. good it’s Sure. Michael, Thanks

all through leasing commissions income are the we costs take just So $X internal that about or right laid our The commissions. supplemented run are non-commissioned statement when out our place January so G&A line are excluding that cost else accounting at now this more, internal we've million in based give that equal, see XXXX, item. being you'll the million, commissions of expense through standard $X go into leasing

Michael Lewis

helpful. increase interest guidance. expense the in And Okay. the That's Perfect.

mentioned was there the those had the I kinds things. looks of I combination you repay those interest also to a extended. Square, if note you one rates the You interest imagine that of on Are are led in myself Carolina expense? loan like to a things. may of the pieces increase

Gregg Adzema

the No. only the curve floating rate have We've anticipated end up. original exposure debt. provided the We of we going budget. short But XX% of XX%, only

increases our So already in number those numbers. it's was and numbers to the were in But Carolina a Square not the already extension big anyway. construction

one expense But of that It's of drove because So and it's point share not interest million. $X rising comprise specifically message a neither you just there. of that and rate. it any is thing line them I combination significant to really to small two increases other want half those interest the short-term of here can't send dozen up. a that very I

Michael Lewis

And you. XX the market part think firms go risk co-working what we think of grow being of expect types the that underwriting ask Colin; Larry about And work but we wanted tenants, saw locations of such big maybe lastly those that maybe of like within to to in tenants. to if especially leasing article I like wanted to in just co-working recession in years. that get Got you for recently? but couple four Atlanta, into or a not at XX how on for I just activity thoughts, or I Okay. then a fundamental you just means your

Larry Gellerstedt

on to if just they location, I'd a opened say currently look our today. of couple I out in first Colin Terminus quarter ago. the weeks X% opening represent portfolio our that's about, here portfolio Certainly WeWork of we co-working today the other at this and on. last about add Yes, and And And obviously it we think with we then Mike, like grand can our of deal. actually there, their a and we've had got good several companies talked

of on and Tuesday. the a terms we we making far our in just isn't as resources there to the of co-working sure currently building. and as appropriate are building that base special at only a really elevator, on at lease it terms way segment that We've look not on parking that like those building fits got feel a customer We And look this added basis getting the attract. just in Monday have by is buildings we in air-conditioning, meeting it. the board It feature with but particular it at

look So, we really a basis. at it on project project by

think we experience customer the of as overall of a existing thing get one starting how are look bit the industry I to much on at our operations is little we to that of the are base. attracting

of so ago. any question that that a a found not to locations, be case was the our we have in had year We

that. a wouldn’t we business or We're maybe and gotten say we that this lease of early cannibalized that where of lieu inning one at customers look get get would as Secondly, We lease be that It's do opportunity from have for otherwise we enterprise their get their us. we spin-out that customers then there. not to of enterprise do cannibalization say the in any experience doing we that business in won't not because happen.

we we folks, see of fund about customers the I'm the we opportunities customers I'm some not other have gotten where come space out work. talking core in just wouldn't customers about our talking No sense. have traditional that some way has some necessarily We that grown. experienced that and

whenever as at I've performs I strategically laid listen, out it think the practically that how we industry term So, in look everybody like else economy of turns.

positive of really to to one have added just But well at we'll We see to any want own building of you a add building been as it. think where base as time. remain We think it's it. think and it's features. feature taking just approach customer to had Colin, terms our we thing? our sort I in our we're we cautious

Colin Connolly

and portfolio us this the they at wouldn't Larry where with as been us and this Again, their which experience building at were of cycle We Midtown quarter. great fantastic We of available customer some out much economy, down very and long-term Benz Mercedes sign been building Promenade were at size crew had mentioned such current Yes. is that positive. Terminus. into moved Terminus had We've great current for this center it’s a been the for X.X% experience our in have and their lease a that renovation has lease a us. just space about otherwise

it's business We're cycle, we're to also that the watching our to exposure, obviously we're works Buckhead down space. they been a how and in that current X% Atlanta overall and represent X.X% watching just Midtown great. about the the so submarket. exposure cautious In to market So cycle, as today,

to we'll and an continue focused very be and eye on cautious. that So keep

Michael Lewis

Great. Thank you.

Operator

Heck comes from question next Our Blaine Wells of Fargo.

Blaine Heck

about backfill Thanks. hear comment expect Good how the Northpark, know at it still you if maybe on I would potential can all to space? in on downtime and mark-to-market there plan the at potential you morning. to Colin, on but negotiation, goes good that all much

Colin Connolly

start effectuate can that the moved hope our build we confident AIG Yes. it the that hope We're the complete our be lease And we time question. got as typically could Blaine, frame. or appreciate And as that would space our within and that months quickly out. three obviously so would take to to and be, can out build work.

confident confident be the do hope quarters and on will but on it to we but in lease, in said never continue term. depending but on that past positive relates over particular remain X% of mix kind on very mark-to-market it particular any that. specifics still we long quarter, that. there'll As believe the as deliver we any XX% average, that the give mark-to-market We to at Over change the that could we

Blaine Heck

helpful. point? guys then at Wildwood to earlier generally there, have for then That's and guys sale. some Great. targeting just any land land added there And are sale wanted also I this year, this increase you you is looks touch are your markets you guys It bank still like up to left land on that more land but but some

Larry Gellerstedt

and don't land to we do Wildwood felt at be not there strategic. We any -- have one parcel consider of left the

It’s the So that use the is parcel market. those – the price. and right right on

great land assets there. of add currently terms got to right a our have plans progress under control we've and next to In now we site our as Tempe

the bullish We building. think what we on be that demand for are will very

that our actually market Peachtree earning this we're active good. completed interest Labor site get our and after project, on can process Now Day with in But Dallas remains that. at the land

large holdings each corporate corporate Dallas, been the there bit considering amount there been we'll Midtown are are patient are cycle got cycle, on center for with goal the new our the time. strong. get this everything site the we'll as to at do it a marketing next to we in did or with to but but already. at market. site but conservative site, have land great customers, very Charlotte can allow and of customers NCR, we And going that don't a look at Dallas to looked beginning space into pleased has a [bond] that's we'll but are right right to you the at new We to little and submarkets We're really there so a the dynamics a We site at this we're and have We've phase several, users and be see ability the there's we at has build of core just us expand of these in site to – whether got fair some added, continue feet XXX,XXX and now in interest square Tampa. like up thank we've terrific design added just

Blaine Heck

you there seen might land Thanks construction you've general. I can in cost current construction guess just out market the based cost that, to that follow-up to the talk in just have too movement just Larry. or and on Whether are high portfolio kind about within a And cost your as gotten markets site any there rents? of

Larry Gellerstedt

you the is cycle, who But and you're across as multifamily tenants the our able as are anchor absorb pay got sure cost read There's lead those has in underwriting certainly to are project strong and five throughout then that construction for the construction prices been construction demand. pressure labor on last as tight a long you board, you prices making underwrite this you're construction that the as those. to years cost tailwinds demand,

deal X% But now they seen been of deal particular pace other year. our of Right prices. the happen a – happen because any a in is we'd we could think consistent aware that's up in some about at underwrite but couldn't aware Cousins ones and So the construction. of we that which can't multifamily just or that are pinpoint fairly haven't that we're market. construction of first and going of change side, in I far But the so I'm I'm either not that say, in not I the market

Blaine Heck

Very helpful. Great. Thanks.

Operator

from Our John comes of Stifel. next Guinee question

John Guinee

questions about of where the Where it. Amazon how address have portfolio? they just we of -- XXX,XXX work? interest, in model been Couple and HQX curiosity square answered, compare does and this, just Amazon feet. Regis in occupy your and are purely second I but space for with maybe out you Regis missed does business Great. model then at is And

Colin Connolly

Northpark with at of spaces I'll John, Hayden Tempe. Atlanta. here Town the one we've in are and customers XX,XXX Center Ferry I'd with they Regis. Colin, feet Corporate are part exposure Center. down anywhere Austin question type out XX,XXX Tampa its are Hey, Downtown some of from as well got to first say, as in got ours in We've They throughout and out spread the in there them typically portfolio, take They

that their lots the Regis continue. but traditional have then certainly the – continuing spaces the traditional Regis see expect model we locations obviously co-working and of think evolve their to at discussions evolve, still there into space, would company we traditional and there office need parent Regis some to spaces with I So we to continues that – for and certainly concept

John Guinee

where Amazon, located? And are Okay. they

Colin Connolly

XX,XXX us time. growing started over at in are are then large customer also have the our Terminus portfolio within feet, feet they're consistently here today and they roughly Ferry. been XXX,XXX ago upward Hayden they've John, They years Atlanta. with got feet And there. five a XXX at XX,XXX At to they in So there that probably project

John Guinee

then to a Austin, foot. your that that we development a but you a looks little the address big square question, would $XXX noticed number this, level? of last that And What's like anywhere. almost bit driving That's about

Larry Gellerstedt

John, of you've above driving that. the of all got sort

You probably of got land lot prices, they've gotten of under very than and got expensive. supply markets pressure, other added. Construction so obviously in, more we're cost there a being you lot are

in of Colorado We XXXX foot. think, factors. a sort all a just it of I $XXX those open combination So Tower of

said, those to does it those make customers show supply they that is to the new lot for. Colin the stuff have you cost being going has gone a got sensitive The and things it's it Austin. So that than more your story still all as point, pay with all in very together, are absorption amazing there's willing

John Guinee

you very Thank Great. much.

Operator

next Street of Our comes question from Regan Green Jed Advisors.

Jed Regan

might bit market good pound there. Hey, suburb risk that to return you to per on Maybe some going about is which think return guys. of Could development achieve XX,XXX that on a attractive you the almost to just project? kind Atlanta kind foot an follow-up after for question talk we Avalon build, morning, that get John, rents $XXX what and implied just profile what from price a cost you achieve historic comfort per of gives little

Colin Connolly

Yes.

think, I its Jed, Colin.

that very construction than has the some topography which what kind the bit with look little achieving XX,XXX, on higher. to leasing is But gross bucket experienced we $XX higher type certainly of that a the issues on to had site was parking and driven and primarily excited bullish and about X,XXX on X,XXX market we've we to both you what and by XXX% did that's cost access. We're continue We of be that rents, up north cost a as on been and had up at certainly recent Avalon been at at the a the Avalon we bring of at little mentioned basis. that least driven bit

project the lot of on at you're is comfort. what which we our obviously very a is outside the exit big could us given Atlanta like be. of So right, We that investment And Promenade for per compelling. here feel return a account focused always

highly at similar locations, seen were a on at dive rents achieving and legacy deep a taken projects something where use as really we've lot these amenities Dallas, of And we've at you seen these to Avalon. look mix suburban, what very projects and Austin. particular those in As submarkets urban, Domain at we

You've support seen access access, basis underlying those very significant that in. going

progress what's about there. excited So we're very in

Jed Regan

just of And taxes be, what can remind Okay. allocation? that plus helpful. That's might us you OpEx

Larry Gellerstedt

It's a kind $XX of to foot. $X

Jed Regan

the and sense your relationship on also to And makes than through Hines of can Okay. you then a project that remind there, it the us background XXX% do rather why with Venture own?

Larry Gellerstedt

formed working on are of and And are and skill under relationship pricing, work customer we're a is What We at had make very and its site Peachtree, control happened at And XXX they had Colin question same long under that paying with really it set level already sites. equity very point for employee Victory land to the to recruitment the really part Avalon as the the their back Dallas, XXXX complementary that and you're and retention. either talking of of environment return site. with the similar been control because have be has we their the really with and our to that similar and pressure our what are closed think customer these on your to said ways interesting very a at that been that the the with standpoint and control at and Austin us be them. their both experiencing of Hines opportunity had Hines partnership not and type they really consider discussions, goes I leasing we well businesses of to cases wouldn't very does They of that the be Hines being rent on things Domain folks a brought from to structure comfortable at to the compelling. Jed that the Avalon to in many where it. partner not looking is found It’s at gather had within there.

of get you it of go one often least see as to urban – amenities really we at thing those it what is its that's to have your So took urban for said, how these sort me. locations

Jed Regan

last Thank One you. me. from Okay. that. Appreciate

those remarks, talk then opportunities the the build about You in of opening you they guys mentioned suite can in new some are size concentrated and requirements? markets to which

Larry Gellerstedt

I reasons specific a in Charlotte Coast sides Obviously, location, bit in really into that West Midwest for And see corporations market, do fair really see various and They're it's at the an particular that. both is sort with Charlotte but Atlanta, Tempe, of can above. number a we Well, you relocations or Austin can't get that looking one, primarily of Atlanta, mid relocation. country of them to allows on play this little the we're seeing relocation. Austin Dallas and Northeast, from

fairly it's broad So based.

and optimistic last [grow] XX the how are that in past seen you experience we'll of those color some. six participate, Don’t to months few Atlanta know.. be list have on any them on re-allocation materialized, have be corporate would based the that We will but able many prospect never but might helpfully

Jed Regan

great. Okay, you. Thank

Operator

Our Feldman Merrill [Operator is America of Bank up follow of Lynch. Jamie next from Instructions] question a

Jamie Feldman

at to a we had -- follow-up from meeting. conversation you. our Thank Colin, Great. wanted I just

curious, thinking talked potential I'm new as just more think You realistic Or year in to into expand markets will in it their terms be kind the to is and about characteristics what on would long, potential guys population more so? thoughts about terms? was -- growth workforce. workforce markets the of Cousins this of about you and just expand or in next you longer think more, employable

Larry Gellerstedt

How to are. new watch years. Larry, and for seven of to very now. our next [Lockton] best recognizing that was where attractive. great with isn't It the those see was and go the through strategy a five an to potential basis we time And clear and to the we get an focus opportunity few plan been is customer years be time following you go want really in that who we to over familiar going XX find shows this competitors our to the this markets plan and we is players and opportunistic probably Jamie, last did over have that's study are is the month the markets update that strategic very company into

So point of of right, line I one sight into see of we these think market. you're going a that is

unique As situation. are to and ask the there customer go relationship that us

Now think when we we strategic will market bit can itself some good present be the goes and make and a that off opportunity little purchases.

team is driven a We put model it not we buy and build brand. our in building, very also just can in sure make are that go to which full full by but see team, our time pathway Cousins place, to

Jamie Feldman

Okay. helpful. you. Thank That's

Operator

would and turn Larry question remarks. like our to I session. answer Gellerstedt the for closing any back concludes This conference over to

Larry Gellerstedt

the call on look forward to being everybody we good appreciate to this morning. you a We having next hope summer We and talking all quarter.

call. please us time, If you any always you. mean questions give any in Thank the a as have

Operator

Thank now today's The attending presentation. you conference concluded. for is

disconnect. now may You

Cousins Properties (CUZ) 26 Jul 182018 Q2 Earnings call transcript