COUSINS PROPERTIES INC - Quarter Report: 2024 March (Form 10-Q)

)— — — ()— ()))() — — — — — — — — — ()()— — — ()()— () ) — — — — — — — — —

Changes in other operating assets and liabilities:Change in receivables and other assets, net()()Change in operating liabilities, net()()Net cash provided by operating activities CASH FLOWS FROM INVESTING ACTIVITIES: Property acquisition, development, and tenant asset expenditures()()Contributions to unconsolidated joint ventures()()Net cash used in investing activities()()CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from credit facility Repayment of credit facility()()Repayment of mortgages()()Payment of deferred financing costs ()Repurchase of shares withheld for taxes on restricted stock vestings() Common dividends paid()()Contributions from noncontrolling interests Distributions to noncontrolling interests()()Net cash provided by financing activities NET DECREASE IN CASH AND CASH EQUIVALENTS()()CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD CASH AND CASH EQUIVALENTS AT END OF PERIOD$ $

See accompanying notes.

COUSINS PROPERTIES INCORPORATED AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2024

(Unaudited)

% of CPLP and consolidates CPLP. CPLP wholly owns Cousins TRS Services LLC ("CTRS"), a taxable entity which owns and manages its own real estate portfolio and performs certain real estate-related services for other parties.

Cousins, CPLP, CTRS, and their subsidiaries (collectively, the “Company”) develop, acquire, lease, manage, and own primarily Class A office properties and opportunistic mixed-use developments in the Sun Belt markets of the United States with a focus on Atlanta, Austin, Tampa, Phoenix, Charlotte, Dallas, and Nashville. Cousins has elected to be taxed as a REIT and intends to, among other things, distribute at least % of its net taxable income to stockholders, thereby eliminating any liability for federal income taxes under current law. Therefore, the results included herein do not include a federal income tax provision for Cousins. As of March 31, 2024, the Company's operating portfolio of real estate assets consisted of interests in million square feet of office space and square feet of multi-family space.

The Company had no investments or interests in any VIEs as of March 31, 2024 or December 31, 2023.

$ $ $ $ $ $ $ Crawford Long - CPI, LLC (1) ()()()(2)()(2)Under Development:Neuhoff Holdings LLC (3) Land:715 Ponce Holdings LLC ))))

and $

in 2024 and 2023, respectively

$ $

Below-market ground leases, net of accumulated amortization of $ and

$ in 2024 and 2023, respectively

Above-market leases, net of accumulated amortization of $ and $

in 2024 and 2023, respectively

Goodwill $ $

and $ in 2024 and 2023, respectively$ $

$ Expenses:Depreciation and amortization (In-place leases) Rental property operating and other expenses (Below-market ground leases)

$ Prepaid expenses and other assets

Lease inducements, net of accumulated amortization of $ and $ in 2024 and 2023, respectively

Furniture, fixtures and equipment and other deferred costs, net of accumulated depreciation of $ and $ in 2024 and 2023, respectively

Credit Facility deferred financing costs, net of accumulated amortization of $ and $ in 2024 and 2023, respectively

$ $

Predevelopment costs represent amounts that are capitalized related to predevelopment projects on land owned by the Company that has been determined to be probable of future development.

Lease inducements are incentives paid to tenants in conjunction with leasing space, such as moving costs, sublease arrangements of prior space, and other costs. These amounts are amortized into rental revenues over the individual underlying lease terms.

%April 2027$ $ Term Loan%March 2025 Term Loan%August 2024 Senior Note%July 2029 Senior Note%July 2025 Senior Note%July 2028 Senior Note%July 2027 Senior Note%July 2027 Secured Mortgage Notes:Terminus (3)%January 2031 Fifth Third Center%October 2026 Colorado Tower%September 2026 Domain 10%November 2024 $ $ Unamortized loan costs()()Total Notes Payable$ $

(1) Interest rate as of March 31, 2024.

(2) Weighted average maturity of notes payable outstanding at March 31, 2024 was years. Extension options are not included.

million and $ million non-cross-collateralized mortgages secured by the Terminus 100 and Terminus 200 buildings, respectively.

billion if certain conditions are satisfied. The Credit Facility contains financial covenants that require, among other things, the maintenance of unencumbered interest coverage ratio of at least x; a fixed charge coverage ratio of at least x; a secured leverage ratio of no more than %; and an overall leverage ratio of no more than %. The Credit Facility matures on April 30, 2027.

The interest rate applicable to the Credit Facility varies according to the Company's leverage ratio and may, at the election of the Company, be determined based on either (1) the Daily SOFR or Term SOFR, plus a SOFR adjustment of % ("Adjusted SOFR") and a spread of between % and %, or (2) the greater of (i) Bank of America's prime rate, (ii) the federal funds rate plus %, (iii) Term SOFR, plus a SOFR adjustment of %, and %, or (iv) %, plus a spread of between % and %, based on leverage. In addition to the interest rate, the Credit Facility is also subject to a facility fee of % to %, depending on leverage, on the entire $ billion capacity.

At March 31, 2024, the Credit Facility's interest rate spread over Adjusted SOFR was %, and the facility fee spread was %. The amount that the Company may draw under the Credit Facility is a defined calculation based on the Company's unencumbered assets and other factors. The total available borrowing capacity under the Credit Facility was $ million at March 31, 2024. The amounts outstanding under the Credit Facility may be accelerated upon the occurrence of any events of default.

Subsequent to quarter end, the Company noticed the administrative agent of the Credit Facility of corporate investment grade ratings received. In accordance with the terms of the Credit Facility, these ratings reduce the Credit Facility's current applicable Adjusted SOFR spread to %. Changes in the Company's investment grade ratings may result in additional adjustments to the applicable spread which will now range from % to %. While our current facility fee remains at % under the received rating, it will now be subject to a range of % to %.

Term Loans

On October 3, 2022, the Company entered into a Delayed Draw Term Loan Agreement (the "2022 Term Loan") and borrowed the full $ million available under the loan. The loan matures on March 3, 2025 with consecutive options to extend the maturity date for an additional each. The interest rate provisions are the same as the 2021 Term Loan, and the covenants are the same as the Credit Facility. On April 19, 2023, the Company entered into a floating-to-fixed rate swap with respect to $ million of the $ million 2022 Term Loan through the maturity date of March 3, 2025. This swap fixed the underlying SOFR rate at %. On January 26, 2024, the Company entered into a floating-to-fixed rate swap with respect to remaining $ million of the $ million 2022 Term Loan through the maturity date of March 3, 2025. This swap fixed the underlying SOFR rate at % (see note 7). These two swaps fix the underlying SOFR rate for the full $ million at a weighted average of %.

On June 28, 2021, the Company entered into an Amended and Restated Term Loan Agreement (the "2021 Term Loan") that amended the former term loan agreement. Under the 2021 Term Loan, the Company has borrowed $ million that matures on August 30, 2024 with consecutive options to extend the maturity date for an additional days. On September 19, 2022, the Company entered into the First Amendment to the 2021 Term Loan. This amendment aligns covenants and available interest rates, including the addition of SOFR, to that of the Credit Facility. Under the terms of this First Amendment the interest rate applicable to the 2021 Term Loan varies according to the Company's leverage ratio and may, at the election of the Company, be determined based on either (1) the Daily SOFR or Term SOFR, plus a SOFR adjustment of % ("Adjusted SOFR") and a spread of between % and %, or (2) the greater of (i) Bank of America's prime rate, (ii) the federal funds rate plus %, (iii) Term SOFR, plus a SOFR adjustment of %, and %, (iv) or %, plus a spread of between % and %, based on leverage. On September 19, 2022, the Company provided notice of our election of the Daily SOFR Rate Loan provisions. On September 27, 2022, the Company entered into a floating-to-fixed interest rate swap with respect to the $ million 2021 Term Loan through the maturity date of August 30, 2024. This swap effectively fixed the underlying SOFR rate at % (see note 7).

At March 31, 2024, the Term Loans' spread over the underlying SOFR rates was %.

Subsequent to quarter end, the Company noticed the administrative agent of the 2022 and 2021 Term Loans of corporate investment grade ratings received. In accordance with the terms of the Term Loans, these ratings reduce the 2022 and 2021 Term Loans' current applicable Adjusted SOFR spreads to % and %, respectively. Changes in the Company's investment grade ratings may result in additional adjustments to the applicable spread which will now range from % to % for the 2022 Term Loan and % to % for the 2021 Term Loan.

billion that were funded in tranches. The first tranche of $ million is due in 2027 and has a fixed annual interest rate of %. The second tranche of $ million is due in 2025 and has a fixed annual interest rate of %. The third tranche of $ million is due in 2027 and has a fixed annual interest rate of %. The fourth tranche of $ million is due in 2028 and has a fixed annual interest rate of %. The fifth tranche of $ million is due in 2029 and has a fixed annual interest rate of %.

The unsecured senior notes contain financial covenants that are consistent with those of our Credit Facility, with the exception of a secured leverage ratio of no more than %. The senior notes also contain customary representations and warranties and affirmative and negative covenants, as well as customary events of default.

Secured Mortgage Notes

As of March 31, 2024, the Company had $ million outstanding on non-recourse mortgage notes with a weighted average interest rate of %. All interest rates on the secured mortgage notes are fixed. Assets with depreciated carrying values of $ million are pledged as security on these mortgage notes payable. 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.

Other Debt Information

The Company is in compliance with all of the covenants related to its unsecured and secured debt.

At March 31, 2024 and December 31, 2023, the estimated fair value of the Company’s notes payable was $ billion and $ billion, respectively, calculated by discounting the debt's remaining contractual cash flows at estimated current market rates at which similar loans could have been obtained at March 31, 2024 and December 31, 2023. The estimate of the current market rates, which is the most significant input in the discounted cash flow calculation, is intended to replicate debt of similar maturity and loan-to-value relationship. These fair value calculations are considered to be Level 2 under the guidelines as set forth in ASC 820, as the Company utilizes market rates for similar type loans from third party brokers.

$ Interest capitalized()()Total interest expense$ $

million of the $ million 2022 Term Loan through the maturity date of March 3, 2025, fixing the underlying SOFR rate for this portion of the loan at %. Previously, on April 19, 2023, the Company entered into a floating-to-fixed interest rate swap ("2023 Swap") with respect to $ million of the $ million 2022 Term Loan through the maturity date of March 3, 2025, fixing the underlying SOFR rate for this portion of the loan at %. These swaps effectively fix the underlying SOFR rate at a weighted average of % for the entire $ million through the initial maturity.

On September 27, 2022, the Company entered into a floating-to-fixed interest rate swap ("2022 Swap") with respect to the $ million 2021 Term Loan through the initial maturity date of August 30, 2024. This swap effectively fixed the underlying SOFR rate at %.

The Company's objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish these objectives, the Company primarily uses interest rate swaps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. Such derivatives are used to hedge the variable cash flows associated with the 2021 and 2022 Term Loans (referred to as "cash flow hedges").

For derivatives designated and that qualify as cash flow hedges of interest rate risk, the gain or loss on the derivative is recorded in Accumulated Other Comprehensive Income and subsequently reclassified into interest expense in the same periods during which the hedged transaction affects earnings.

million and $, respectively, and are included in other assets on the Company's condensed consolidated balance sheets. As of December 31, 2023, the fair value of the 2023 Swap with respect to the 2022 Term Loan was $ and is included in other assets on the Company's condensed consolidated balance sheets.

As of March 31, 2024 and December 31, 2023, the fair value of the 2022 Swap with respect to the 2021 Term Loan was $ million and $ million, respectively, and is included in other assets on the Company's condensed consolidated balance sheets.

$()Amount of income reclassified from accumulated other comprehensive income into income as a reduction of interest expense$()$()Total amount of interest expense presented in the condensed consolidated statements of operations$ $

Over the next twelve months, the Company estimates that $ million will be reclassified out of accumulated other comprehensive income as a reduction of interest expense.

$ Prepaid rent Security deposits

Information on the Company's stock compensation plan, including information on the Company's equity-classified and liability-classified awards is discussed in note 14 of the notes to condensed consolidated financial statements in the Company's Annual Report on Form 10-K for the year ended December 31, 2023.

Grants of Equity-Classified Awards

Under the 2019 Plan, in February 2024, the Company granted types of equity-classified awards to key employees: (1) RSUs based on the Total Stockholder Return ("TSR") of the Company, as defined in the award documents, relative to that of office peers included in the Nareit Office Index (the "Market-based RSUs"), (2) RSUs based on the ratio of cumulative funds from operations per share to targeted cumulative funds from operations per share (the “Performance-based RSUs”), and (3) restricted stock.

The RSU awards are equity-classified awards to be settled in common stock with issuance dependent upon the attainment of required service, market, and performance criteria. For the Market-based RSUs the Company expenses an estimate of the fair value of the awards on the grant date, calculated using a Monte Carlo valuation at grant date, ratably over the vesting period, adjusting only for forfeitures when they occur. The expense of these Market-based RSUs is not adjusted for the number of awards that actually vest. For the Performance-based RSUs, the Company expenses the awards over the vesting period using the fair market value of the Company's stock on the grant date. The expense is recognized ratably over the vesting period and adjusted each quarter based on the number of shares expected to vest and for forfeitures when they occur. The performance period for the Performance-based RSUs and TSR measurement period for the Market-based RSUs awarded is starting on January 1 of the year of issuance and ending on December 31. The ultimate settlement of these awards can range from percent to % of the targeted number of units depending on the achievement of the market and performance metrics described above.

The restricted stock vests ratably over from the grant date. The Company records restricted stock in common stock and additional paid-in capital at fair value on the grant date, with the offsetting deferred compensation also recorded in additional paid-in capital. The Company records compensation expense over the vesting period.

Performance-based RSUs Restricted stock % %Risk-free rate(2) % %Stock beta(3) % %

(1) Based on historical volatility over three years using daily stock price.

(2) Reflects the yield on three-year Treasury bonds.

(3) Betas are calculated with up to three years of daily stock price data.

13.

Net income attributable to noncontrolling interests in

CPLP from continuing operations

()() Net income attributable to other noncontrolling interests ()()Net income available to common stockholders$ $ Denominator:Weighted average common shares - basic Net income per common share - basic$ $ Earnings per common share - diluted:Numerator: Net income$ $ Net income attributable to other noncontrolling interests()()Net income available for common stockholders before allocation of net income attributable to noncontrolling interests in CPLP$ $ Denominator:Weighted average common shares - basic Add:

Potential dilutive common shares - restricted stock units,

less shares assumed purchased at market price

Weighted average units of CPLP convertible into

common shares

Weighted average common shares - diluted Net income per common share - diluted$ $

The treasury stock method resulted in no dilution from shares expected to be issued under the ESPP or forward contracts for the future sales of common stock under the Company's ATM Program during the respective periods presented.

14.

$ Income taxes paid Non-Cash Activity:Retirement of treasury stock Tenant improvements funded by tenants Common stock dividends declared and accrued Accrued capital expenditures included in accounts payable and accrued expenses

15.

$ $ Austin Charlotte Dallas Phoenix Tampa Other markets Total segment revenues Less: Company's share of rental property revenues from unconsolidated joint ventures()()()Total rental property revenues$ $ $

Three Months Ended March 31, 2023

Office

Non-Office

Total

Revenues:

Atlanta

Austin

Charlotte

Dallas

Phoenix

Tampa

Other markets

Total segment revenues

Less: Company's share of rental property revenues from unconsolidated joint ventures

()

Total rental property revenues

$ $ Austin Charlotte Dallas Phoenix Tampa Other markets Total Net Operating Income$ $ $

The following reconciles Net Operating Income from net income for each of the periods presented ($ in thousands):


	Three Months Ended March 31,
	2024	2023
Net Income	$	$
Fee income	()	()
Termination fee income	()	()
Other income	()	()
General and administrative expenses
Interest expense
Depreciation and amortization
Reimbursed expenses
Other expenses
Income from unconsolidated joint ventures	()	()
Net operating income from unconsolidated joint ventures
Loss on investment property transactions	()
Net Operating Income	$	$

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.

Overview of 2024 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 the premier urban office portfolio in the Sun Belt markets, with a particular focus on Atlanta, Austin, Phoenix, Tampa, Charlotte, 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-leveraged balance sheet that allows us to pursue compelling growth opportunities at the most advantageous points in the cycle. To implement this strategy, we leverage our strong local operating platforms within each of our major markets.

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.

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

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

General

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.

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 2024 versus 2023 comparison are from properties that were stabilized and owned as of January 1, 2023 through March 31, 2024.

Net Operating Income

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. Same Property NOI allows analysts, investors, and management to analyze continuing operations and evaluate the growth trend of our portfolio.

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


	2024		2023
Net Income	$	13,451	$	22,356
Fee income	(379)		(374)
Termination fee income	(470)		(136)
Other income	(44)		(2,278)
General and administrative expenses	9,214		8,438
Interest expense	28,908		25,030
Depreciation and amortization	86,230		75,770
Reimbursed expenses	140		207
Other expenses	672		385
Income from unconsolidated joint ventures	(348)		(673)
Loss (gain) on investment property transactions	(101)		2
Net Operating Income	$	137,273	$	128,727

Consolidated rental property revenues, rental property operating expenses, and NOI changed between the 2024 and 2023 periods as follows ($ in thousands):


	Three Months Ended March 31,
	2024		2023		$ Change		% Change
Rental Property Revenues
Same Property	$	202,715	$	195,307	$	7,408	3.8	%
Non-Same Property	5,633		4,633		1,000		21.6	%
	208,348		199,940		8,408		4.2	%

Termination Fee Income	470		136		334
Total Rental Property Revenues	$	208,818	$	200,076	$	8,742

Rental Property Operating Expenses
Same Property	$	69,037	$	69,892	$	(855)	(1.2)	%
Non-Same Property	2,038		1,321		717		54.3	%

Total Rental Property Operating Expenses	$	71,075	$	71,213	$	(138)	(0.2)	%

Net Operating Income
Same Property NOI	$	133,678	$	125,415	$	8,263	6.6	%
Non-Same Property NOI	3,595		3,312		283		8.5	%

Total NOI	$	137,273	$	128,727	$	8,546	6.6	%

Same Property NOI represents Net Operating Income for those office properties that were stabilized and owned by the Company for the entirety of all comparable 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 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.

Same Property Operating Expenses decreased for the three months ended March 31, 2024 compared to the same period in the prior year primarily due to decreases in real estate tax expense.

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.

Interest Expense

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.

Depreciation and Amortization

Depreciation and amortization changed between the 2024 and 2023 periods as follows ($ in thousands):


	Three Months Ended March 31,
	2024		2023		$ Change		% Change
Depreciation and Amortization
Same Property	$	83,173	$	73,434	$	9,739	13.3	%
Non-Same Property	2,942		2,228		714		32.0	%
Non-Real Estate Assets	115		108		7		6.5	%
Total Depreciation and Amortization	$	86,230	$	75,770	$	10,460	13.8	%

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.

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.

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):


	Three Months Ended March 31,
	2024		2023		$ Change		% Change
Income from unconsolidated joint ventures	$	348	$	673	$	(325)	(48.3)	%
Depreciation and amortization	459		479		(20)		(4.2)	%


Interest expense	528		280		248		88.6	%
Other expense	31		14		17		121.4	%

Other income	(14)		(37)		23		(62.2)	%
Net operating income from unconsolidated joint ventures	$	1,352	$	1,409	$	(57)	(4.0)	%

Net operating income:
Same Property	1,182		1,109		73		6.6	%
Non-Same Property	170		300		(130)		(43.3)	%
Net operating income from unconsolidated joint ventures	$	1,352	$	1,409	$	(57)	(4.0)	%

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.

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 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.

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, 2024 and 2023 ($ in thousands, except per share information):


	Three Months Ended March 31,
	2024					2023
	Dollars		Weighted Average Common Shares	Per Share Amount		Dollars		Weighted Average Common Shares	Per Share Amount
Net Income Available to Common Stockholders	$	13,288	151,945	$	0.09	$	22,196	151,579	$	0.15
Noncontrolling interest related to unitholders	2		25	—		4		25	—

Conversion of unvested restricted stock units	—		415	—		—		276	—

Net Income — Diluted	13,290		152,385	0.09		22,200		151,880	0.15
Depreciation and amortization of real estate assets:
Consolidated properties	86,116		—	0.56		75,662		—	0.50
Share of unconsolidated joint ventures	459		—	—		479		—	—
Partners' share of real estate depreciation	(268)		—	—		(249)		—	—
Loss (gain) on sale of depreciated properties:
Consolidated properties	(101)		—	—		2		—	—



Funds From Operations	$	99,496	152,385	$	0.65	$	98,094	151,880	$	0.65

Liquidity and Capital Resources

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

•property operating expenses;

•property and land 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 equity securities;

•proceeds from offerings of debt securities; and

•joint venture formations.

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.

Other Debt Information

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.

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.

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 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.

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):


	Three Months Ended March 31,
	2024		2023		Change
Net cash provided by operating activities	$	28,292	$	26,494	$	1,798
Net cash used in investing activities	(83,951)		(93,847)		9,896
Net cash provided by financing activities	55,064		65,793		(10,729)

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 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.

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).

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.

Capital Expenditures. We incur costs related to our real estate assets that include acquisition of properties, development of new properties, redevelopment of existing or newly purchased properties, leasing costs (including tenant improvements) for new or replacement tenants, and ongoing property repairs and maintenance.

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):


	Three Months Ended March 31,
	2024		2023
Projects under development (1)	$	13,350	19,486
Operating properties—redevelopment	10,884		18,724
Operating properties—building improvements	7,419		6,405
Operating properties—leasing costs	37,498		18,514
Capitalized interest and salaries	3,166		6,734
Total property acquisition, development, and tenant asset expenditures	$	72,317	$	69,863
(1) Includes initial leasing costs.

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.

The amounts of tenant improvement and leasing costs for our office portfolio on a per square foot basis for the three months ended March 31, 2024 and 2023 were as follows:


	2024	2023
New leases	$13.53	$14.55
Renewal leases	$7.54	$6.12
Expansion leases	$13.79	$11.60
Total	$11.86	$11.19

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

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.

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 5 of the notes to consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2023 and in note 3 of the notes to condensed condensed consolidated financial statements for the three months ended March 31, 2024. 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, 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.

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, 2023.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

There have been no material changes in the market risk associated with our notes payable at March 31, 2024 compared to that as disclosed in our Annual Report on Form 10-K for the year ended December 31, 2023.

Item 4. Controls and Procedures.

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.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings.

Information regarding legal proceedings is described under the subheading "Litigation" in note 9 of the notes to condensed consolidated financial statements.

Item 1A. Risk Factors.

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, 2023. 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.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

For information on our equity compensation plans, see note 14 of the notes to consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2023, and note 12 of the notes to condensed consolidated financial statements for the three months ended March 31, 2024. We did not make any sales of unregistered securities during the first quarter of 2024.

The table below reflects purchases of common stock made during the three month period ended March 31, 2024.


Period	Total Number of Shares of Stock Purchased (1)	Average Price Paid per Share (2)		Total Number of Shares Purchased Under Announced Programs	Approximate Dollar value of Shares That May Yet be Purchased Under Announced Programs
February 2024	47,882	$	23.22	—	$	—
Total	47,882	$	23.22	—	$	—

(1) Represents shares of common stock remitted to the Company to satisfy tax withholding requirements related to the vesting of restricted stock awards.
(2) The value of the shares is based on the closing price of the Company's common stock on the applicable withholding date.

Item 5. Other Information.

Results of 2024 Annual Meeting of Stockholders

On April 23, 2024, the Company held its annual meeting of stockholders. Proxies for the meeting were solicited pursuant to Regulation 14A under the Securities and Exchange Act of 1934, as amended. The following matters were submitted to a vote of the stockholders:

Proposal 1 - the votes regarding the election of nine directors for a term expiring in 2024 were as follows:


Name	For	Against	Abstentions	Broker Non-Votes
Charles T. Cannada	129,223,559	1,371,662	111,063	5,996,851
Robert M. Chapman	130,209,974	383,682	112,628	5,996,851
M. Colin Connolly	130,146,679	448,134	111,471	5,996,851
Scott W. Fordham	129,502,826	1,091,557	111,901	5,996,851
Lillian C. Giornelli	125,021,860	5,563,232	121,192	5,996,851
R. Kent Griffin, Jr.	127,599,129	2,995,316	111,839	5,996,851
Donna W. Hyland	129,080,267	1,505,537	120,480	5,996,851
Dionne Nelson	129,429,446	1,152,144	124,694	5,996,851
R. Dary Stone	127,962,641	2,631,015	112,628	5,996,851

Proposal 2 - the advisory votes on executive compensation, often referred to as "say on pay," were as follows:


For	Against	Abstentions	Broker Non-Votes
118,604,919	11,973,850	127,515	5,996,851

Proposal 3 - the votes to ratify the appointment of Deloitte & Touche LLP as the Company's independent registered public accountant firm for the fiscal year ending December 31, 2024 were as follows:


For	Against	Abstentions
129,921,932	6,677,229	103,974

Item 6. Exhibits.


2.1		Agreement and Plan of Merger, dated March 25, 2019, by and among the Registrant, Murphy Subsidiary Holdings Corporation, and TIER REIT, Inc., filed as Exhibit 2.1 to the Registrant’s Current Report on Form 8-K filed on March 25, 2019, and incorporated herein by reference.

3.1		Restated and Amended Articles of Incorporation of the Registrant, as amended August 9, 1999, filed as Exhibit 3.1 to the Registrant’s Form 10-Q for the quarter ended June 30, 2002, and incorporated herein by reference.

3.1.1		Articles of Amendment to Restated and Amended Articles of Incorporation of the Registrant, as amended July 22, 2003, filed as Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed on July 23, 2003, and incorporated herein by reference.

3.1.2		Articles of Amendment to Restated and Amended Articles of Incorporation of the Registrant, as amended December 15, 2004, filed as Exhibit 3(a)(i) to the Registrant’s Form 10-K for the year ended December 31, 2004, and incorporated herein by reference.

3.1.3		Articles of Amendment to Restated and Amended Articles of Incorporation of the Registrant, as amended May 4, 2010, filed as Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed May 10, 2010, and incorporated herein by reference.

3.1.4		Articles of Amendment to Restated and Amended Articles of Incorporation of the Registrant, as amended May 9, 2014, filed as Exhibit 3.1.4 to the Registrant's Form 10-Q for the quarter ended June 30, 2014, and incorporated herein by reference.

3.1.5		Articles of Amendment to Restated and Amended Articles of Incorporation of Cousins, as amended October 6, 2016 (incorporated by reference from Exhibit 3.1 and Exhibit 3.1.1 to the Registrant's Current Form 8-K filed on October 7, 2016).

3.1.6		Articles of Amendment to Restated and Amended Articles of Incorporation of the Registrant, filed as Exhibit 3.1 to the Registrant's Current Report on Form 8-K filed on June 14, 2019, and incorporated herein by reference.

3.1.7		Articles of Amendment to Restated and Amended Articles of Incorporation of the Registrant, filed as Exhibit 3.2 to the Registrant's Current Report on Form 8-K filed on June 14, 2019, and incorporated herein by reference.

3.2		Bylaws of the Registrant, as amended and restated December 4, 2012, filed as Exhibit 3.1 to the Registrant's Current Report on Form 8-K filed on December 7, 2012, and incorporated herein by reference.

3.2.1		Bylaws of the Registrant, as amended and restated July 26, 2022, filed as Exhibit 3.2.1 to the Registrant's Form 10-Q for the quarter ended June 30, 2022, and incorporated herein by reference.

3.2.2		Bylaws of the Registrant, as amended and restated July 25, 2023, filed as Exhibit 3.2.2 to the Registrant's Form 10-Q for the quarter ended June 30, 2023, and incorporated herein by reference.


31.1	†	Certification of the Chief Executive Officer Pursuant to Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2	†	Certification of the Chief Financial Officer Pursuant to Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1	†	Certification of the Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2	†	Certification of the Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101	†	The following financial information for the Registrant, formatted in inline XBRL (Extensible Business Reporting Language): (i) the consolidated balance sheets, (ii) the consolidated statements of operations, (iii) the consolidated statements of equity, (iv) the consolidated statements of cash flows, and (v) the notes to condensed consolidated financial statements.

104	†	Cover page interactive data file (formatted as inline XBRL with applicable taxonomy extension information contained in Exhibit 101).



†						Filed herewith.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


			COUSINS PROPERTIES INCORPORATED
			/s/ Gregg D. Adzema
			Gregg D. Adzema
			Executive Vice President and Chief Financial Officer (Duly Authorized Officer and Principal Financial Officer)

Date: April 25, 2024

COUSINS PROPERTIES INC - Quarter Report: 2024 March (Form 10-Q)

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