COUSINS PROPERTIES INC

Previous wording

During the first quarter of 2024, we leased or renewed 404,000 square feet of office space, including 286,000 of new and expansion leases representing 71% of the total leasing activity. Straight-line basis net rent per square foot increased 20.1% 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 6.6% between the three months ended March 31, 2024 and 2023.

Current wording

In the quarter, we leased or renewed 391,000 square feet of office space, including 240,000 of new and expansion leases representing 61% of the total leasing activity. Straight-line basis net rent per square foot increased 37.6%forthose 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 4.2% between the three months ended June 30, 2024 and 2023.

Previous wording

Results of Operations For The Three Months Ended March 31, 2024

Current wording

Results of Operations For The Three and Six Months Ended June 30, 2024

Previous wording

Net income available to common stockholders for the three months ended March 31, 2024 was $13.3 million. For the three months ended March 31, 2023, the net income available to common stockholders was $22.2 million. We detail below material changes in the components of net income available to common stockholders for the three months ended March 31, 2024 compared to 2023.

Current wording

Net income available to common stockholders for the three and six months ended June 30, 2024 was $7.8 million and $21.1 million respectively. For the three and six months ended June 30, 2023, the net income available to common stockholders was $22.6 million and $44.8 million respectively. We detail below material changes in the components of net income available to common stockholders for the three and six months ended June 30, 2024 compared to 2023.

Previous wording

Same Property Rental Property Revenues increased for the three months ended March 31, 2024 compared to the same period in the prior year primarily due to an increase in economic occupancy at our 300 Colorado, BriarLake Plaza, and San Jacinto Center office properties and related increases in revenues recognized from tenant funded improvements owned by us. In addition, parking revenue from our Same Property portfolio increased compared to the same period in the prior year.

Current wording

Same Property Rental Property Revenues increased for the three and six months ended June 30, 2024 compared to the same periods in the prior year primarily due to an increase in economic occupancy at our BriarLake Plaza, San Jacinto Center, and 300 Colorado office properties and related increases in revenues recognized from tenant funded improvements owned by us. In addition, parking revenue from our Same Property portfolio increased compared to the same period in the prior year.

Previous wording

Non-Same Property Rental Property Revenues and NOI increased for the three months ended March 31, 2024 compared to the same period in the prior year primarily due to the commencement of operations at our Domain 9 building in the first quarter of 2024 and increased economic occupancy at our Promenade Central operating property. This increase is partially offset by a full building redevelopment at our Hayden Ferry 1 building, which began in the fourth quarter of 2023.

Current wording

Non-Same Property Rental Property Revenues, Rental Property Operating Expenses, and NOI increased for the three and six months ended June 30, 2024 compared to the same period in the prior year primarily due to the commencement of operations at our Domain 9 building in the first quarter of 2024 and increased economic occupancy at our recently renovated Promenade Central operating property. This increase is partially offset by a full building redevelopment at our Hayden Ferry 1 building, which began in the fourth quarter of 2023.

Previous wording

Interest expense, net of amounts capitalized, increased $3.9 million, or 15.5%, for the three months ended March 31, 2024, compared to the same period in the prior year. This increase is primarily due to decreases in capitalized interest as we finished construction on the core building and began operations at our Domain 9 building in the first quarter of 2024. In addition to the decreases in capitalized interest, increases in variable interest rates contributed to the increase in interest expense on floating rate debt.

Current wording

Interest expense, net of amounts capitalized, increased $3.8 million, or 14.5% and $7.6 million, or 15.0% for the three and six months ended June 30, 2024, respectively, compared to the same periods in the prior year. This increase is primarily due to decreases in capitalized interest as we finished construction on the core building and began operations at our Domain 9 building in the first quarter of 2024. In addition to the decreases in capitalized interest, increases in variable interest rates and a higher average outstanding balance on our line of credit contributed to the increase in interest expense on floating rate debt.

Previous wording

Same Property depreciation and amortization increased for the three months ended March 31, 2024 compared to the same period in the prior year primarily due to an increase of assets in service during the current period, primarily from tenant improvements, as well as a change in the estimated useful life of a building at one of our operating properties.

Current wording

Same Property depreciation and amortization increased for the three and six months ended June 30, 2024 compared to the same periods in the prior year primarily due to an increase of assets in service during the current periods, primarily from tenant improvements, as well as a change in the estimated useful lives of building and tenant improvements at some of our operating properties.

Previous wording

Non-Same Property depreciation and amortization increased for the three months ended March 31, 2024 compared to the same period in the prior year primarily due to the completion of development and commencement of operations at our Domain 9 building.

Current wording

Non-Same Property depreciation and amortization increased for the three and six months ended June 30, 2024 compared to the same periods in the prior year primarily due to the completion of development and commencement of operations at our Domain 9 building, partially offset by a full building redevelopment at our Hayden Ferry 1 building, which began in the fourth quarter of 2023.

Previous wording

Income from unconsolidated joint ventures decreased and interest from unconsolidated debt increased for the three months ended March 31, 2024 primarily due to an increase in interest expense driven by the June 2023 refinancing of a mortgage by our Crawford Long joint venture.

Current wording

Income from unconsolidated joint ventures decreased and interest from unconsolidated debt increased for the three and six months ended June 30, 2024 primarily due to an increase in interest expense driven by the June 2023 refinancing of a mortgage by our Crawford Long joint venture and a reduction in capitalized interest related to the development at our Neuhoff joint venture as operations began in January 2024.

Previous wording

The table below shows Funds from Operations (“FFO”) and the related reconciliation from net income available to common stockholders. We calculate FFO in accordance with the Nareit definition, 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.

Current wording

The table below shows Funds from Operations (“FFO”) and the related reconciliation from net income available to common stockholders. We calculate FFO in accordance with the Nareit definition, 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 of depreciable property, and 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.

Previous wording

The reconciliation of net income to FFO is as follows for the three months ended March 31, 2024 and 2023 ($ in thousands, except per share information):

Current wording

The reconciliation of net income to FFO is as follows for the three and six months ended June 30, 2024 and 2023 ($ in thousands, except per share information):

Previous wording

•proceeds from offerings of equity securities;

Current wording

•proceeds from offerings of equity securities, including through our ATM program;

Previous wording

Our material capital expenditure commitments as of March 31, 2024 include $111.3 million of unfunded tenant improvements and construction costs. As of March 31, 2024, we had $292.2 million drawn under our credit facility with the ability to borrow the remaining $707.8 million, as well as $5.5 million of cash and cash equivalents. We expect to have sufficient liquidity to meet our obligations for the foreseeable future.

Current wording

Our material capital expenditure commitments as of June 30, 2024 include $104.0 million of unfunded tenant improvements and construction costs. As of June 30, 2024, we had $317.1 million drawn under our credit facility with the ability to borrow the remaining $682.9 million, as well as $6.0 million of cash and cash equivalents. We expect to have sufficient liquidity to meet our obligations for the foreseeable future.

Previous wording

In addition to our $1 billion unsecured Credit Facility (with $292.2 million outstanding as of March 31, 2024), we also have unsecured debt from two term loans totaling $750 million and five tranches of unsecured senior notes totaling $1 billion. Under our Credit Facility and our 2022 and 2021 Term Loans, the interest rates applicable vary according to the Company's leverage ratio, provided that after the Company obtains an investment grade credit rating, the Company may permanently elect to base the applicable spread and facility fees based on the applicable credit ratings. Subsequent to quarter end, the Company noticed the administrative agent of the Credit Facility and the terms loans of corporate investment grade ratings received. These ratings reduce the Credit Facility's current applicable spread to 0.775% and 2022 and 2021 Term Loans' current applicable spreads to 0.85% and 1.00%, respectively. There can be no assurance that the Company will maintain any particular rating in the future and if our credit ratings decrease, then we may be subject to higher applicable spreads.

Current wording

In addition to our $1 billion unsecured Credit Facility (with $317.1 million outstanding as of June 30, 2024), we also have unsecured debt from two term loans totaling $750 million and five tranches of unsecured senior notes totaling $1 billion. Under our Credit Facility and our 2022 and 2021 Term Loans, the interest rates applicable vary according to the Company's leverage ratio and current applicable credit ratings (see note 7). In April 2024, the Company notified the administrative agent of the Credit Facility and the terms loans of corporate investment grade ratings received. These ratings reduced the Credit Facility's current applicable spread to 0.775% and 2022 and 2021 Term Loans' current applicable spreads to 0.85% and 1.00%, respectively. There can be no assurance that the Company will maintain any particular rating in the future and if our credit ratings decrease, then we may be subject to higher applicable spreads.

Previous wording

Our existing 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. For each non-recourse mortgage loan, the Company provides a customary "non-recourse carve-out guaranty." Additional guarantees related to re-leasing costs may also apply. Many of our non-recourse mortgages contain covenants that, if not satisfied, could result in acceleration of the maturity of the debt. We expect to either refinance the non-recourse mortgages at maturity or repay the mortgages with proceeds from asset sales, debt, or other capital resources. The portion of our consolidated debt bearing interest at a fixed rate is 89%. The 11% of consolidated debt that bears interest at a floating rate is based on SOFR.

Current wording

Our existing 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. For each non-recourse mortgage loan, the Company provides a customary "non-recourse carve-out guaranty." Additional guarantees related to re-leasing costs may also apply. Many of our non-recourse mortgages contain covenants that, if not satisfied, could result in acceleration of the maturity of the debt. We expect to either refinance the non-recourse mortgages at maturity or repay the mortgages with proceeds from asset sales, debt, or other capital resources. The portion of our consolidated debt bearing interest at a fixed rate is 88%. The 12% of consolidated debt that bears interest at a floating rate is based on SOFR.

Previous wording

To meet capital requirements for future investment activities over the long-term, 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 expect to continue to utilize cash retained from operations, as well as third-party sources of capital such as indebtedness, to fund future commitments as well as utilize construction 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.

Current wording

To meet capital requirements for future investment activities over the long-term, 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 expect to continue to utilize cash retained from operations, as well as third-party sources of capital such as indebtedness, to fund future commitments as well as utilize construction 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 will be 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. Furthermores, 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 the 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.

Previous wording

Cash Flows from Operating Activities. Cash flows provided by operating activities increased $1.8 million between the 2024 and 2023 three month periods primarily due to the following: timing of receipt of prepaid rents from tenants; rent abatements ending at our 100 Mill property; and the commencement of operations in the first quarter of 2024 at our Domain 9 property; partially offset by the full building redevelopment of Hayden Ferry 1 in the fourth quarter of 2023.

Current wording

Cash Flows from Operating Activities. Cash flows provided by operating activities decreased $7.3 million between the 2024 and 2023 six month periods primarily due to the following: timing of receipt of prepaid rents from tenants and the full building redevelopment of Hayden Ferry 1 in the fourth quarter of 2023; partially offset by rent abatement ending at our 100 Mill property and the commencement of operations in the first quarter of 2024 at our Domain 9 property.

Previous wording

Cash Flows from Investing Activities. Cash flows used in investing activities decreased $9.9 million between the 2024 and 2023 three month periods primarily due to a decrease in contributions to our Neuhoff Holdings LLC ("Neuhoff") joint venture needed to fund our equity share of the development of the Nashville mixed-used project, which was partially offset by an increase in capital expenditures (see table below).

Current wording

Cash Flows from Investing Activities. Cash flows used in investing activities increased $31.6 million between the 2024 and 2023 six month periods primarily due to the acquisition of investments in real estate debt in May and June of 2024, an increase in capital expenditures (see table below), and a return of capital distribution from our Crawford Long unconsolidated joint venture received in May 2023. These increases are partially offset by a decrease in contributions to our Neuhoff Holdings LLC ("Neuhoff") joint venture needed to fund our equity share of the development of the Nashville mixed-used project.

Previous wording

Cash Flows from Financing Activities. Cash flows provided by financing activities decreased $10.7 million between the 2024 and 2023 three month periods primarily due to an increase in net repayments of our Credit Facility.

Current wording

Cash Flows from Financing Activities. Cash flows from financing activities increased $35.9 million between the 2024 and 2023 six month periods primarily due to an increase in net borrowings on our Credit Facility.

Previous wording

Capital expenditures for assets we develop or acquire and then hold and operate are included in the property acquisition, development, and tenant asset expenditures line item within investing activities on the condensed consolidated statements of cash flows. The change in amounts accrued are removed from the table below to show the components of these costs on a cash basis. Components of costs included in this line item for the three months ended March 31, 2024 and 2023 are as follows ($ in thousands):

Current wording

Capital expenditures for assets we develop or acquire and then hold and operate are included in the property acquisition, development, and tenant asset expenditures line item within investing activities on the condensed consolidated statements of cash flows. The change in amounts accrued are removed from the table below to show the components of these costs on a cash basis. Components of costs included in this line item for the three and six months ended June 30, 2024 and 2023 are as follows ($ in thousands):

Previous wording

Capital expenditures increased $2.5 million between the 2024 and 2023 periods primarily due to increased spending on leasing costs. The primary driver in increased leasing costs is spending on tenant improvements as economic occupancy increased at our Briarlake Plaza operating property. This increase in leasing costs is partially offset by decreases in development, redevelopment, and related capitalized interest and salaries due to the following: (i) the Domain 9 development commenced initial operations in the first quarter of 2024 primarily driving the decreased spending on projects under development and a related decrease in capitalized interest and salaries and (ii) spending on operating properties for redevelopments decreased compared to 2023 as the renovations at 3350 Peachtree and Promenade Central were substantially completed in 2023, offset by the commencement of a full building redevelopment of Hayden Ferry 1 in the fourth quarter of 2023.

Current wording

Capital expenditures increased $1.8 million between the 2024 and 2023 periods primarily due to increased spending on leasing costs. The primary driver in increased leasing costs is spending on tenant improvements as economic occupancy increased at our Briarlake Plaza operating property. This increase in leasing costs is partially offset by decreases in development, redevelopment, and related capitalized interest and salaries due to the following: (i) the Domain 9 development commenced initial operations in the first quarter of 2024 primarily driving the decreased spending on projects under development and a related decrease in capitalized interest and salaries and (ii) spending on operating properties for redevelopments decreased compared to 2023 as the renovations at 3350 Peachtree and Promenade Central were substantially completed in 2023, offset by the commencement of a full building redevelopment of Hayden Ferry 1 in the fourth quarter of 2023.

Previous wording

Dividends. We paid common dividends of $48.6 million and $48.4 million in the three months ended March 31, 2024 and 2023, respectively. We expect to fund our future quarterly common dividends with cash provided by operating activities, also using proceeds from any investment property sales, distributions from unconsolidated joint ventures, indebtedness, and proceeds from offerings of equity and other securities, if necessary.

Current wording

Dividends. We paid common dividends of $98.0 million and $97.3 million in the six months ended June 30, 2024 and 2023, respectively. We expect to fund our future quarterly common dividends with cash provided by operating activities, also using proceeds from any investment property sales, distributions from unconsolidated joint ventures, indebtedness, and proceeds from offerings of equity and other securities, if necessary.

Previous wording

Debt. At March 31, 2024, our unconsolidated joint ventures had aggregate outstanding indebtedness to third parties of $321.3 million. These loans are mortgage or construction loans, which are generally non-recourse to us. In addition, in certain instances, we provide “non-recourse carve-out guarantees” on these non-recourse loans. Certain of these loans have variable interest rates, which creates exposure to the ventures in the form of market risk from interest rate changes.

Current wording

Debt. At June 30, 2024, our unconsolidated joint ventures had aggregate outstanding indebtedness to third parties of $335.3 million. These loans are mortgage or construction loans, which are generally non-recourse to us. In addition, in certain instances, we provide “non-recourse carve-out guarantees” on these non-recourse loans. Certain of these loans have variable interest rates, which creates exposure to the ventures in the form of market risk from interest rate changes.