Cousins Properties Inc (CUZ) Q3 2025 Earnings Call Highlights: Strong Leasing Activity and ...

This article first appeared on GuruFocus.

Release Date: October 31, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

Cousins Properties Inc (NYSE:CUZ) delivered strong earnings with $0.69 per share in FFO and raised the midpoint of their guidance by $0.02 to $2.84 per share. Leasing activity was robust, with 551,000 square feet of leases completed, marking the second-highest quarterly volume in the last three years. The company strategically expanded its presence in Dallas by acquiring The Link for $218 million. Office fundamentals are improving with a post-pandemic high in net absorption and a decline in vacancy rates for the first time in seven years. Cousins Properties Inc (NYSE:CUZ) maintains a strong balance sheet and is well-positioned to capitalize on investment opportunities with a low-leverage strategy.

Negative Points

The departure of Bank of America from 201 North Tryon in Charlotte negatively impacted occupancy rates. There is a notable rise in layoff announcements, which could weigh on investor sentiment around the office sector. The company faces challenges in backfilling space at 201 North Tryon, with significant leasing commencements not expected until 2027. Despite strong leasing activity, the company acknowledges that larger users take longer to lease up, potentially delaying occupancy improvements. The current economic environment presents uncertainties, with potential impacts from AI and corporate right-sizing on office demand.

Q & A Highlights

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Q: Colin, given Amazon is your largest tenant, have you spoken to them about their space within your portfolio and whether their recent layoff announcement might change their utilization? Also, is the Sun Belt more susceptible to AI displacement due to corporate back-office jobs? A: Colin Connolly, CEO: We have ongoing conversations with Amazon, and their recent layoffs are more about right-sizing rather than AI-related. The Sun Belt is not just back-office jobs; it's a hub for technology and financial services companies moving from high-tax states. Companies like Oracle and Goldman Sachs are expanding here, and AI demand is spreading across the country, not just in San Francisco.

Q: Your expiration schedule is light in the next couple of years, which should help with occupancy. Are expirations proportional to your market exposure, or are there specific markets with higher concentrations? A: Richard Hickson, EVP of Operations: The only large expiration through 2026 is Samsung in Houston. We're engaged with subtenants for renewals and feel good about managing this space. Expirations are evenly distributed across the portfolio, with Austin having more modest expirations.

Story Continues

Q: What is the upper bound of leverage you are willing to take on, given your current lower leverage levels compared to peers? A: Gregg Ezima, CFO: Historically, our leverage has been around 5 times net debt to EBITDA. We have room to flex our balance sheet for growth opportunities, with a cap around 6 times, as per rating agencies. We aim to maintain an industry-leading balance sheet.

Q: Can you discuss the potential for lease economics changes given the stronger leasing pipeline? Are there shifts in rents, concessions, or tenant improvements? A: Richard Hickson, EVP of Operations: Lease economics have been stable, with concessions slightly down this quarter. We're holding the line on rates and maintaining net effective rents. We anticipate a potential shift to a landlord's market, which could drive rents higher.

Q: Regarding the Neuhof project in Nashville, has Oracle shown interest in using it as temporary space for employees, or are there companies looking to be near Oracle's new campus? A: Kennedy Hicks, EVP and CIO: Oracle's presence is driving follow-on demand, and we're seeing interest from companies wanting to be near their campus. Oracle's investment and recent activity in the market are positive indicators for Neuhof.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

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