Good morning, and welcome to the Cousins Properties Fourth Quarter Conference Call. All participants will be in a listen-only mode. After today’s presentation there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Pamela Roper, General Counsel. Please go ahead.

Thank you. Good morning, and welcome to Cousins Properties fourth quarter earnings conference call. With me today are Colin Connolly, our President and Chief Executive Officer; Richard Hickson, our Executive Vice President of Operations; and Gregg Adzema, our Chief Financial Officer. The press release and supplemental package were distributed yesterday afternoon as well as furnished on Form 8-K. In the supplemental package, the company has reconciled all non-GAAP financial measures to the most directly comparable GAAP measures in accordance with Reg G requirements. If you did not receive a copy, these documents are available through the quarterly disclosures and supplemental SEC information links on the Investor Relations page of our website, cousins.com. Please be aware that certain matters discussed today may constitute forward-looking statements within the meaning of federal securities laws, and actual results may differ materially from these statements due to a variety of risks and uncertainties and other factors, including the risk factors set forth in our annual report on Form 10-K and our other SEC filings. The company does not undertake any duty to update any forward-looking statements, whether as a result of new information, future events or otherwise. The full declaration regarding forward-looking statements is available in the supplemental package posted yesterday, and the detailed discussion of the potential risks is contained in our filings with the SEC. With that, I'll turn the call over to Colin Connolly.

Thank you, Pam and good morning everyone. 2021 was a strong year for Cousins. While managing the impact of the COVID variants from Delta last summer to Omicron this quarter, our team has performed extremely well. And we are hopeful for a bright 2022. Before addressing the longer-term outlook and some positive office trends, I want to provide a few highlights of our strong fourth quarter financial results. On the earnings front, the team delivered $0.69 per share in FFO. Same-property NOI on a cash basis increased 2.1%. In addition, we leased 743,000 square feet with a 6% increase in second generation cash rents. Note that our leasing volume was the highest since the second quarter of 2019 and the second best over the past five years. It is an interesting time in the office market. The Omicron variant is showing signs of slowing, in our customers with more conviction or firming up plans for a phased return to the office. It is worth noting how much the media headlines on the future of office have changed since the start of the pandemic. Remote first has more recently been replaced by hybrid work and the direction is still fluid. Based on conversations with our customers, we believe that hybrid over time is likely to transition to flexibility, which has a minimal impact on office demand. A booming stock market, fueled by low interest rates, can mask growing organizational challenges. After two years, forward-thinking companies are recognizing that culture, collaboration, and innovation are best done in person. As a result, our leasing pipeline is strong. At Cousins, we have a unique and compelling strategy. We strive to be the preeminent Sunbelt office company. It's that simple. And we execute that business on four core principles. First, to own the premier Sunbelt office portfolio with concentrations of trophy quality properties in the leading urban submarkets across our geographic footprint. Second, maintain a disciplined approach to capital allocation with a focus on new investments where our platform can add value and generate attractive returns. Third, preserve our best-in-class balance sheet to provide financial flexibility, so we can execute quickly when opportunities arise. And fourth, leverage our strong local operating platforms that take an entrepreneurial approach to customer service, local market relationships, and deep community involvement. Our strategy benefits from several macro trends. Let me walk you through them. The U.S. population continues to migrate to the Sunbelt in search of that lower cost and pro-business environment. To compete in the war for talent, users of office space are increasingly choosing to upgrade the quality of their work environment with an emphasis on an energizing daily experience that promotes culture and collaboration. As these trends take shape, our trophy Sunbelt portfolio is exceptionally well positioned for today's office market. During the pandemic, these trends have accelerated and gained widespread acceptance. Importantly, at Cousins, we have been executing on our Sunbelt strategy for over 10 years. We were ahead of the curve. And we have made great progress in positioning the company and the portfolio to capitalize on these tailwinds. Let me highlight some of our recent activity. We had a terrific leasing quarter with some significant wins. In Austin, we signed a 330,000 square foot lease with Amazon at our Domain 9 development project. We began the development on a speculative basis in June of last year and have now leased 100% of the office space in less than six months. We also leased 92,000 square feet at our 100 Mill development in Tempe and here in Atlanta, we leased two floors at 10,000 Avalon and an additional floor at 1200 Peachtree, which we have now renamed Promenade Central. The office component of 10,000 Avalon is now 100% leased. Promenade Central is now 44% leased; a strong start given Norfolk Southern’s full building lease expired less than two months ago. Turning to our investment activity, we sold 816 Congress in Austin for a gross price of 174 million. As a reminder, we purchased 816 Congress for 102 million in 2013. It was an exceptional investment for shareholders. We redeployed the capital from 816 Congress to acquire our partner's 50% interest in 300 Colorado, also in Austin for a gross price of $162.5 million. We also acquired Heights Union, a highly amenitized property in the heart of downtown Tampa's historic Heights neighborhood for $144.8 million. Looking back on 2021, Cousins invested over $1 billion in new acquisitions and development. We added Heights Union, 300 Colorado, 725 Ponce to the portfolio, and commenced construction on Domain 9, and Neuhoff. All are interesting and experiential properties that are representative of the office of the future. At the same time, we harvested older vintage assets, including 816 Congress, Burnett Plaza and 1 South. In a very busy year, we upgraded the quality of the portfolio, entered Nashville and reduced our CapEx profile. Importantly, we are positioned to generate attractive value-add returns through a healthy blend of strategic acquisitions and compelling new development. And we maintained our balance sheet flexibility by executing the transactions on a leverage neutral basis. Looking ahead, Cousins is poised for growth. We have an unmatched portfolio and fast-growing Sunbelt markets. Organically, we have a great opportunity to drive rental rates and occupancy in highly desirable properties. The office component of our $759 million development pipeline is 78% pre-leased. Further, the balance sheet remains rock solid and positions Cousins for external growth opportunities as well. Given the growing demand for Sunbelt trophy office product, we are optimistic we will identify new development starts in 2022, and as we have proven in the past, some unique acquisition opportunities as well. Before turning the call over to Richard, I want to thank our talented, hardworking Cousins team who bring outstanding service to our customers each and every day. They are the foundation of the company's success. Thank you. I'll turn it over to Richard.

Thanks, Colin. Good morning, everyone. Our operations team closed the year running at full stride, delivering terrific fourth quarter operating results as we continue to enjoy broad economic tailwinds in our Sunbelt markets. While the pandemic remains a factor in our operations, with the Omicron variant generating incrementally more delays to office returns, we remain encouraged by the overall long-term oriented demand we see for high quality office space. As we all know, the Omicron variants led to a rapid increase in COVID cases over the past couple of months, which along with holiday seasonality put a temporary ceiling on further recovery and office utilization. Despite that, our portfolio parking revenue increased quarter-over-quarter and we anticipate a solid uptrend in utilization and parking as the year progresses. Turning to fourth quarter operating results. Our total office portfolio lease percentage was largely unchanged this quarter at a solid 91.5%. Our weighted average occupancy in the fourth quarter came in at 89%, representing a 110 basis point decline relative to the third quarter. Our lower reported occupancy in the quarter was largely driven by the previously disclosed move out of Smith Gambrel at Promenade Tower in Midtown Atlanta. As an aside, Colin already mentioned the renaming of 1200 Peachtree to Promenade Central and Promenade Tower is a slightly new name as well. This past quarter, in conjunction with a kick-off of our redevelopment of 1200 Peachtree, we rebranded the adjacent 1200 Peachtree and Promenade properties. Their new names are reflected in our earnings supplement. Now back to results. Our team produced extraordinary leasing results this quarter, continuing a consistent upward trend in activity throughout the past year. We executed 44 leases in the quarter, totaling over 743,000 square feet with a weighted average term of 9.1 years. This included 639,000 square feet of new and expansion leases, representing 86% of our total leasing activity. Rent growth remains solid with second generation net rents increasing 6% on a cash basis. I would note that all of our core markets produced increases in cash rents this quarter with only our non-core property in Houston posting a decrease. Excluding our Houston activity, our portfolio level second generation cash rents increased 10.2%. Finally, net effective rents in the fourth quarter were a company record at $28.69, which is 18.9% higher than our trailing four-quarter average. Global pandemic or not, these are outstanding leasing results. We also remain very pleased with the amount of overall activity in our leasing pipeline. It is worth noting that the Omicron variants did create some logistical disruption to the leasing process in late 2021. But it is too early to tell that that will impact our first quarter completed leasing volume. With that said, the initial inquiries and interest are on the upswing since the start of the year and our early stage leasing pipeline is healthy. We are also thrilled that only 4.9% of our annual contractual rents expire during 2022. And our largest expiration this coming year, a known move out of 73,000 square feet at Colorado Tower in Austin is already completely backfilled. Beyond what we are seeing in our own portfolio, U.S. office statistics illustrate that demand for high quality office space is high. According to CBRE research, more companies are expanding their footprint than they are contracting, suggesting long-term confidence in the office. Across 2021, there was an uptick in corporate relocation activity into Sunbelt markets. We have clearly seen this manifest in our own activity. From our 123,000 square foot new lease with Visa at Promenade Central in Midtown Atlanta, to Amazon's 330,000 square foot new lease at Domain 9 in Austin, not to mention the 63,000 square foot expansion by Amazon at our 100 Mill development in Tempe. Additionally, at 100 Mill, LiveRamp, a growing technology company based in San Francisco, signed a new 32,000 square foot lease, creating a new hub and marking its entry into the Phoenix market. Coincidentally, subsequent to quarter end, we signed an additional 32,000 square foot new-to-market headquarters lease with yet another technology company leaving California. With that lease, 100 Mill now stands at 92% leased. Net absorption in the Phoenix market ended the year on a strong note, and CBRE cited in its latest quarterly office report that the fourth quarter has seen its strongest quarter since early 2020 for tenants in the market. We executed solid 95,000 square feet of leases in Phoenix during the fourth quarter and our operating portfolio was 92.2% leased. In Atlanta, we posted 227,000 square feet of quarterly leasing activity and our portfolio increased to 89.1%. Looking at the local economy, the picture is very positive. Atlanta's employment has almost fully recovered from the pandemic. And unemployment is the lowest in our hometown's history at only 2.4%. Not surprisingly, the flight to quality trend continues to be significant here in Atlanta, with JLL Research noting that 84% of leasing activity in the fourth quarter was in Class A or trophy product. JLL Research also showed Midtown and Buckhead posted positive net absorption in the fourth quarter. We believe Atlanta is poised for another strong year, likely driven by continued corporate expansions and migration. In Austin, weekend activity has increased to near pre-pandemic levels due to a variety of factors, including skilled labor migration and large corporate expansions, also from JLL Research. This has made Austin one of the fastest recovering metro areas in the country. The market's office-using job growth has been especially pronounced, with CoStar pegging white-collar workforce growth to close to 13% since the onset of the pandemic. Our overall leasing volume in Austin was very strong last quarter at 360,000 square feet and our portfolio stands at a healthy 95.5% leased. Demand for office space of the Domain is as strong as ever, with our 1.9 million square foot existing portfolio in the core of Domain at 100% leased. Charlotte is certainly poised for solid economic recovery as well. Unemployment there has dropped to 3.3% and since the beginning of 2021, more than 45,000 new jobs have been added to the metro area. In the Charlotte market, our 1.4 million square foot uptown and South End operating portfolio remains well leased at 96.3%. We could also not be better positioned in an immensely popular South End submarket with two fantastic development sites to market. Last, I'll touch on Tampa. Truist Securities recently published research showing that some of the nation’s best year-over-year job growth was in Florida. Like Austin, Tampa now has more jobs than before the pandemic began. Further, JLL recently noted that absorption soared in the fourth quarter to approximately 365,000 square feet, with nearly all submarkets recording positive absorption. We executed over 30,000 square feet of leases in Tampa in the fourth quarter, and our portfolio, net of our not yet stabilized Heights Union acquisition, held steady at 93.1% leased. Before handing it off to Greg, I want to thank our exceptional team that made 2021 such a successful year. They continue to produce great results and we look forward to a fantastic 2022 together. A heartfelt thank you to our entire team.

Thanks, Richard. Good morning, everyone. I'll begin my remarks by providing a brief overview of our financial results. Then I'll move on to a discussion of our development efforts, followed by a quick review of our capital markets activity, before closing my remarks with initial earnings guidance for 2022. As you can tell from Colin’s remarks, fourth quarter continued to be a very active quarter for us here at Cousins. Since the onset of the COVID pandemic in early 2020, we've started $600 million in new developments, acquired $900 million in new properties, and sold $1.2 billion of non-core assets, all while maintaining a best-in-class balance sheet. However, we don't want all that positive transaction activity to take attention away from our solid operating performance. Starting with leasing volume, as Richard just discussed, a tremendous fourth quarter closed out a very busy year, in which we signed almost 2.1 million square feet of leases, a 48% increase over 2020. Better yet, leasing velocity ramped up during the year. After starting with only 271,000 square feet of leasing in the first quarter, we signed 484,000 square feet in the second quarter, 597,000 square feet in the third quarter, and finished the year with 743,000 square feet in the fourth quarter. Although this metric can be a little jumpy, quarter-to-quarter, that's a very encouraging trend. CoPay has also impacted our parking revenues over the past couple of years. But again, the recent trend is positive. For context, parking revenues comprise between 5% and 6% of our total property revenues. During the fourth quarter, parking revenues increased 8% over the third quarter, and were up 14% from their trough in the fourth quarter of 2020. They're still about 20% below pre-COVID levels, which leaves plenty of room for growth. And we project parking revenues will continue to gradually improve throughout 2022 as customers and their guests return to the office. Rents on expiring leases rolled up 15.1% on a cash basis during calendar year 2021, which follows a 13.1% increase in 2020. Notably, we rolled up rents on a cash basis during every single quarter of the COVID pandemic. Customers are coming to and expanding in our Sunbelt markets and they want new and efficient office space. As Colin outlined at the outset of the call, we've spent years building a portfolio to take advantage of these trends. And our ability to increase rents during a global pandemic is a strong validation of the positive economics of our strategy. Before turning to our development activity, I wanted to highlight a financial metric that is often overlooked. Funds available for distribution, sometimes called AFFO, while not followed as closely as FFO, is nevertheless a critical metric to analyze the performance of an office company on its own, as well as compared to its peers. It's important because FAD reflects the company's true cash flow and ultimately drives its ability to pay dividends. We provide a detailed calculation of FAD in our quarterly supplements, and we have for years. As most of you know, the largest difference between FFO and FAD is second generation CapEx. As we have sold older, noncore assets with significant CapEx requirements and replaced them with new efficient acquisitions and developments, our FAD has grown materially faster than our FFO. In 2021 alone, our FAD grew per share 11.3% over the previous year. Second gen CapEx represented only 17% of total NOI in 2021 versus 20% in 2020. I encourage you to keep an eye on FAD as you analyze office companies. So, it's very easy to underestimate the significant differences in CapEx requirements across office portfolios. Turning to our development efforts, the current development pipeline represents a total Cousins investment of $759 million across 1.9 million square feet and four assets. While the development assets are unchanged from last quarter, our investment in these assets has increased due to the purchase of our joint venture partner's 50% interest in 300 Colorado during the fourth quarter. On the capital markets front, we sold 2.6 million shares using our ATM program for gross proceeds of $105 million. The shares were sold on a forward basis, and we expect to settle the contracts during the first half of 2022. The proceeds of this issuance fund our recent acquisition of Heights Union in Tampa, on a leveraged neutral basis. I'll close by providing our initial 2022 earnings guidance. We currently anticipate a full year 2022 FFO between $2.70 and $2.78 per share. This guidance includes the settlements of forward equity contracts I've just discussed. It does not include any operating property acquisitions, dispositions, or new development starts. We're not providing quarterly earnings guidance, but I did want to point out that our quarterly run rate will not be evenly distributed across 2022. Quarterly earnings, in large part driven by occupancy, will be lower in the first half of the year, primarily due to two items. First, Expedia recently consolidated their operations at the Domain into our newly developed D11 Building. We helped facilitate the leasing of the space they were leading and intending to sublet at our D2 building to Amazon. This was a clear win for us. Not only did we get a substantial term fee from Expedia, we also signed a new direct lease with Amazon that rolled up the rent and extended the term from Expedia’s prior lease. However, we will experience six months of downtime in the first half of the year as Amazon completes their tenant improvements. Second, Norfolk Southern recently moved from our Promenade Central property in Midtown Atlanta to the new headquarters we built for them a few blocks away. As of January 1, we've taken Promenade Central offline to execute a transition to a multitenant building. As Richard indicated earlier, we've already executed two leases for over 40% of Promenade Central with the largest new customer, Visa, beginning their phase move-in during the fourth quarter of 2022. Amazon moving into D2, and Visa moving into Promenade Central, combined with steadily increasing parking revenues and the stabilization of two recently completed development properties, 100 Mill and Heights Union, will drive earnings higher as the year progresses. With that, let me turn the call back over to the operator for your questions.

Our first question comes from Anthony Powell with Barclays. You may now go ahead.

Hi, good morning. Thanks for the question. Just curious, you did a lot of leasing last year. So leasing volume was very strong. We're two years into COVID. Theoretically, if office tenants were changing their behavior during COVID, you would have started to see it last year, did you really see any signs of downsizing, changing our layouts, or responding in a negative way to COVID? Or is it kind of still all systems go?

Good morning. It's Colin, and I appreciate your question. And guess what I would say you're probably contrary to what you might read in the media headlines. We have seen, I'd say very little change in how our customers are thinking about the layout of their space or any significant changes. I think Richard alluded to one of the studies done by one of the major leasing firms that indicated we're actually seeing more customers expand than contract. And so this has been a topic that I think has been carefully studied over the last couple of years by users of office space. As we inch closer, hopefully to a more broad-based return to the office, like many are concluding, companies are not making significant changes within their space. I would say the biggest change we’ve seen over the course of the last two years is more conviction among users of office space as they try to bring their teams back to focus and emphasize the highest quality properties. You're really seeing the flight to quality accelerate, and companies who are excited to bring their teams back want to create an environment that their teams are excited to spend their day together.

Thanks. So maybe one on capital allocation. So you mentioned that you want to do some development starts and maybe acquisitions this year. You funded deals last year with after sales and a bit of equity? How do you look at equity right now given low cap rates for high quality office? And I guess the relatively higher cap rates for office stocks? And looking forward, should we continue to expect dispositions at the same percentage of acquisitions as we did in 2021?

Anthony, it's Gregg. Good morning. Well, first off, rest assured we'll fund whatever new investments we uncover on a leveraged neutral basis. We've been running the company kind of between four and a half and five times net debt-to-EBITDA for years. And we continued to do that last year. And we'll continue to do that going forward. It can be a little lumpy quarter-to-quarter because sometimes you can't time things perfectly. But over the broad span of quarters and over the broad span of years, we'll continue to fund whatever we uncover on a leveraged neutral basis. In terms of which type of funds we use for those new investments, it will depend on what's available at the time and what the cost of that capital is at the time. And sometimes it makes sense to fund it with noncore asset sales. And sometimes it makes sense to fund it with external incremental capital. That's something that we look at every time when we look at a new investment. So I can't commit to you what we'll use as a funding source in 2022 and beyond, but I can commit that we'll do whatever we do on a leveraged neutral basis.

Our next question comes from Jamie Feldman with Bank of America. You may now go ahead.

Thank you, and good morning. Following up on the capital question or portfolio topic, could you provide more insight into your thoughts on what remains non-core in the portfolio? Also, how do you distinguish between older commodities and the office of the future? This would help us better understand the potential dispositions moving forward.

Yes, good morning, Jamie. As I laid out in my prepared remarks, it's a strategy that we've been undertaking here at Cousins for quite some time. And that is a focus on the office building of the future, the assets that are more interesting and more experiential, and attract growing companies. We have funded that over time with the sale of older vintage assets. This recycling, blended with some compelling developments has allowed us to generate attractive value add returns, and at the same time, upgrade the quality and reduce the CapEx profile. We have made significant progress in that recycling effort. If you look back, as I mentioned over this last year, we sold Burnett Plaza, we sold 1 South, we sold 816. As we look across the portfolio today, I would characterize older vintage, non-core assets as a much smaller percentage of the portfolio; kind of an interesting statistic is that the average age of our portfolio today is about 2004. We've made great headway there. But again, we still do have a handful of non-core assets. We've talked about Houston in the past. My sense is that at some point in the future, that will be an asset that will likely harvest. That will be entirely a function of identifying compelling new investment opportunities, whether that's an acquisition or disposition. Again, because the balance sheet is in great shape, we don't need to sell anything for the sake of selling, and potentially look at some of those asset sales as we identify new growth opportunities.

So are you able to quantify a percentage of square feet or NOI that fall into that bucket? And you mentioned Houston.

Yes. We certainly do a lot of that work and we always from quarter-to-quarter put together a list. I'm not going to provide a specific percentage, but rest assured you've seen the dispositions that we've made not only last year, but over the last several years. It's a pretty small percentage today of the portfolio. We feel terrific about the properties in the portfolio we've been able to assemble.

Okay, that's helpful. And then just thinking about the guidance, can you talk a couple of different questions? I guess, first, can you talk about the parking income and other short term income and what you where you think it is, versus a normalized run rate that you could grow to? And how much of that was included in guidance? And then similarly, leasing spreads? You had to moderation in the fourth quarter? How should we think about your mark-to-market across the portfolio and leasing spreads in 2022?

Yes, Jamie, it's Colin. I'll start with the mark-to-market question. And then I'll turn it over to the team in terms of the parking and other components and how that impacts same store. This past quarter, as you mentioned our mark-to-market was at 6%. But, as Richard described, excluding Houston, it was a double-digit mark-to-market for us on a cash basis, which is a terrific result. We've always said in the past that that number will vary from quarter-to-quarter, based on the mix of leases and the properties that we execute. I think this particular quarter, again, a sizable lease in Houston weighed on that. But again, the underlying statistics are great. If you look at it over a broader spectrum, we've said that consistently, we think we can achieve kind of 8% to 10% over the course of 2021 and its entirety, we delivered over a 15% same store, or cash mark-to-market on second generation leases. So we've been able to, again, produce really, really strong leasing results given the quality of the properties we've got.

And Jamie, it's Gregg. In regards to parking, as I said in my opening remarks, it has gradually gotten better after kind of troughing in the fourth quarter of 2020. So a year ago, it dropped. I mean, we're up 14% from that kind of bottom point. But there's still room left to go about 20% to return to pre-COVID levels. So there's still some opportunity for cash flow growth on the parking line item for us, which is a little bit larger, I think than some of our more suburban peers. I mean, we have some paid parking, whether it's transient or permanent customer parking at the buildings. And in terms of the run rate, I mean, it's going to build as the year progresses. We obviously start lower in the first quarter. It's all driven by fiscal occupancy, and fiscal occupancy has been dependent upon, kind of the impact of COVID on our customers' approach to office use. So it'll grow steadily as the year progresses. And it's one of the reasons, it's not the reason, but it's one of the reasons that our FFO progression during 2022 starts lower and increases as the year moves on.

Sorry, if I missed it, but did you say what your occupancy guidance is for year end?

No, we didn't provide that. We've never provided occupancy guidance even before COVID. That was not a line item we provided guidance on.

Okay, but I guess you think like for your guidance is the parking normalized by year-end?

Yes, because we believe it will be done in the second half of 2022. It'll be done close to where it was pre-COVID.

Okay. All right. Thank you.

Thanks, Jamie.

Our next question comes from Blaine Heck with Wells Fargo. You may now go ahead.

Great, thanks. Good morning, everyone. Colin or Richard, can you just talk a little bit more about the Austin market? You've got a lot of tech exposure there, especially in the Domain, which has been great for you guys. But as we've seen in San Francisco, the tech companies have been a little bit more open to flexible working arrangements and a little slower to come back to the office. Are you seeing the same from them in Texas?

We are, Blaine, and again, I think a lot of the demand for office in Austin is coming from California. We've continued to have really strong success. When you look at this quarter's results, the leasing results, Austin accounted for almost 50% of our leasing activity. Again, a lot of that was technology companies. I think it was an important validating statement to see a company like Amazon lease 330,000 square feet and effectively take all of Domain 9. Again, I think that should signal how they think about their business and the importance of being together and culture and collaboration. While today they might say it looks a bit hybrid, even in a hybrid environment, without significant hoteling, they still need a significant amount of hotels, or significant amount of office space. I think it should also signal over the long term, as I mentioned, perhaps hybrid becomes more of an increased flexibility. That's not an overnight transition. But I think, over the course of several years, perhaps that's what the technology companies are telling you, not by what they say, but by what they're doing.

Great, that's helpful. Switching gears a little bit here, can you talk about land values Colin and what you're seeing in the market? Have they continued to increase? And how might that affect your appetite for future purchases? And then, on the land bank that you guys have now, where would you pick the market value of that land versus where you're carrying it on the books?

It's a great question. I think it's relevant in the market today, because we are absolutely seeing land prices increase, in some cases, materially so. I think here in Atlanta, the record land price in Midtown was just announced yesterday, and we've seen record pricing in Austin as well. We'll continue to look for opportunities. I think what that's telling you is as land prices increase, it's indicating that customers are focused on high quality, kind of more interesting, in some cases, newer vintage buildings. They've demonstrated, as we just did in our last quarter, that customers are willing to pay for that quality. As we look, we'll continue to be active in the market if we find the right site that we think is strategic, we'll look to add to our land bank. That being said, we feel very fortunate that over the last two, three years, we have been active in the market, and today, we've got a terrific portfolio of land that really has at least one strategic site in each of our markets, that allows us to be active in the discussion with new customers migrating to our market. As I mentioned, it could allow us to kick off some additional development this year. I certainly don't want to be reluctant to give a specific mark-to-market on that land. But again, I think there's been material increases in the price, and I think there's very good upside on our land bank relative to what's on our books today.

Okay, that's fair. Last one for you. We work, and we just remain kind of in your top 20 tenant list. I think they're your numbers 14 and 15. So I wanted to get your latest thoughts on the co-working or flexible space providers and your comfort with their existing footprint in your portfolio and whether you consider signing additional leases with them?

Yes, this is Richard. We feel, and we've always felt like the flexible office operators are a nice component of our portfolio and can serve a mutually beneficial purpose for our customers. We view it as something where it's specific to the asset and its location in a market where it might make sense. It doesn't make sense everywhere, but it does make sense in some places. At this point, I'd say our percent of our portfolio has been really stable for the past two to three years, hasn't changed much. You're right, WeWork is a large component, and also industrials. We have a good diverse portfolio of operators that are actually doing very well. Coming out of the pandemic, their performance that we see has been positive over the last 6 months, 12 months. So we feel good about that part of our business.

Great, thanks.

Thanks, Blaine.

Our next question comes from Dave Rodgers with Baird. You may now go ahead.

Yes good morning everybody Richard maybe just wanted to start with you. You've got about 900,000 square feet of leases still expiring after the move out of Colorado tower. I want to understand is the move out of Colorado tower the largest expiration or just the largest known move out? Can you give us a sense of how the rest of that 900,000 is progressing in terms of your conversations? And how you look at the occupancy track? I know Gregg doesn't want to give guidance, but how you kind of feel like where that stabilizes, given the sharp reduction in occupancy over the last year?

Sure, that's a good question. Let me take a run at this. To clarify, it's both on the expiration at Colorado Tower. It's both our largest exploration and our largest known move out. It happened at the end of January. But as I said, we've already backfilled at 100%. We've got some downtime there, about five to six months, that's very customary for our new customer to build out and re-occupy. In the balance of the, if you just took the large explorations, which again, they are below that kind of 73,000 square foot level, they're more generally 50,000 or less, are generally bunched up in the back half of Q2 and into the third quarter. There are very few that are in the fourth quarter. So you've got a fairly balanced expiration profile at the beginning, or excuse me, the middle of 2022.

And you have pretty good visibility on those at this point, if they're still kind of three, four, or five months out with a weighted average duration, you should be getting a sense. I would think at this point, how that's going to shake out.

Yes, we do have fairly good visibility at this point. They're really just ahead of us. We've made good progress. Obviously, we've backfilled the first and largest, and we have good activity on all the rest, so we feel so good about our position.

Okay. Thanks for that. And then Colin I wanted to go back to the development starts in 2022. Maybe can you give us a sense of where you're comfortable in the portfolio, starting speculatively, and how you were, maybe where you would be more confident than just waiting it out for a tenant, if you have any thoughts around that?

Yes, if you look at the markets we're in, they are performing quite well. Over the last couple of years, there have been very few new projects started. There's a promising opportunity as migration continues, particularly towards the Sunbelt, where there's not much existing construction and what's there isn't significantly pre-leased. We have excellent land sites throughout our markets. This year, we plan to be selective and advance the most promising projects. In Austin, we've just leased our current development project, Domain 9, and we have a unique site called Domain Central that can accommodate over 900,000 square feet. We feel positive about Austin's prospects. Atlanta is also showing strong activity, especially in Midtown, which has been one of the top performers nationally, and we see strong economic growth there. Tampa is performing very well as well. Richard mentioned some good opportunities in Charlotte. While we won’t start all of those projects, we are optimistic that, based on the inquiries and demand we're experiencing, we could initiate one or more buildings by the end of the year.

Thanks for that. Maybe last question. Gregg, do you think about funding spec versus pre-lease development starts differently in any way? And do you have any assets in the market today for sale that would prefund any of these developments starts?

We don't have any assets currently in the market today. Nothing being actively marketed. So, in terms of do we treat a spec development differently than we treat a pre-leased development? I mean, they both require capital. So the answer is, generally no. We're, as you know, historically pretty risk-averse once you put a shovel on the ground and start development, you're going to finish it. Although we don't pre-fund every single development, we try to take as much risk off the table as early as we can. That's what we'll continue to do.

And Dave just got one follow on to your question is, as you look at the company, and you roll forward to really the end of the first quarter, our 100 Mill project, which is largely leased, will come off of our development pipeline. As we look at the company in totality, we'll have just about 5% of our total enterprise value in development and that pipeline is over 60% pre-leased as it relates to the office component. We're very well positioned, both in terms of the strength of the markets, relatively limited expiration schedule within the existing portfolios, and it's really terrific land. The company's exposure to the development will be relatively modest. We're not going to take risks for the sake of taking risks, we're going to be very measured, as we always are, and try to position ourselves for the best opportunities. But at the same time, we do think there's some risk and not taking any risk.

Agree. Alright. Thanks, everyone.

Our next question comes from Michael Lewis with Truist. You may now go ahead.

Hey, thanks. My first question for Gregg. I noticed the higher management fees this quarter, I know it includes some reimburse costs in the JVs. Is that now about a million dollar higher runway going forward? Or was there anything one-time in that line item?

It was a one-time item. Most of those management fees get netted out because they're just reimbursed expenses at the property level. So it's really not a material, as you know, line item that runs through a P&L at all.

Okay, great. And then my second question, I risked getting a little wordy on this because it's a big picture question for Colin. But I'm a believer in the flight to quality, the leasing velocity for not just Cousins but the REITs, office REIT so far has been encouraging. But how attractive or unattractive is the office business and your business today compared to pre-pandemic, some might argue it was challenging before the pandemic, but in this environment where you have certainly reduced demand, it looks like for Class B and C space, cap backs are up. You cited more expansions than contractions, I'd be curious if that number includes contractions to zero, just companies that are leaving. It appears there's more overall space available, whether it's sublease space. My question is really, so far it looks like Class A is holding up well, do you think the Class A market and Cousins could stay kind of segmented in here while it looks like certainly, because of the pandemic, there is probably some long-term demand reduction to office. So, maybe just your thoughts on that?

Sure, it. I, Michael, so I would first just start off by pointing out again a couple statistics that we've already highlighted, which was our leasing performance this year or this past quarter, at almost 750,000 square feet was the second best leasing volume quarter we've done in the last five years. And at the same time, we delivered our highest net effective rent, which takes into account CapEx and leasing costs in the company's history. We feel like the business is performing well, and we're able to create organic growth in the leasing economics and at the same time, we've demonstrated the ability to grow externally through our development capabilities. Maybe Cousins is just in a unique, compelling position right here we are in the Sunbelt, with a really unmatched trophy portfolio; what we're seeing in the market is, I'd say a larger share of the office demand is now highly focused on an even smaller share of the overall inventory. We're actually seeing some activity in our assets that are actually better than it was before the pandemic because of that dynamic I just described. For everybody who studies and evaluates and analyzes the office market, I think everybody's going to have to be a bit more detailed and granular in your work, because what is described as Class A by CoStar, I think in many cases, some component of that is no longer considered Class A by the growing innovative companies that are looking for the best environment, the best experience for their teams.

Our next question comes from Daniel Ismail with Green Street Advisors. You may now go ahead.

Great, thank you. Maybe along the lines of being more granular, Gregg, you mentioned CapEx as a percentage of NOI declining year-over-year. But I'm just curious if you guys have a normalized number in the back of your mind of what is the good run rate for second gen CapEx for the current portfolio.

Yes, as you know, Danny, it can be bumpy over time. But when you look at it over the span of time, second gen CapEx, both leasing related costs and building improvements over the past decade have averaged give or take 17% of our total NOI. So it will jump. That's generally where it's been and it's generally kind of where it is now.

Got it. That’s helpful. And then maybe another one for you, Gregg, I'm curious as to why do the ATM issuance on a forward basis and maybe some of the pros and cons of doing so?

Sure, the reason we issued that equity on a forward basis was because the asset that we purchased with it was not stabilized. So we wanted to go ahead and lock in the cost of the capital. Because that property right now, I believe is about 35% physically occupied, and it will stabilize later in 2022. We’re just trying to balance that against actually bringing the equity on our balance sheet, but we wanted to lock in a price. That's what we used the forward for.

Got it. And then this last one for me. Going back to the parking discussion, I'm curious as utilization rates pick back up, are you guys looking to push rates, or rates pretty much in line to where they were?

That’s a good question there. We are absolutely always whether COVID or not looking at where and how we can optimize our rates that we're charging. You can imagine we had the most flexibility and opportunity in the transient parking rates. Yes, we're absolutely looking at that.

That concludes our question and answer session. I would like to turn the conference back over to Colin Connolly for any closing remarks.

I want to thank everybody for your time today and participation in the call and interest in Cousins Properties. If you have any questions, please always feel free to reach out to myself, Gregg or Roni Imbeaux. We look forward to hopefully seeing some of you soon.

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