Good morning, ladies and gentlemen, and welcome to the Cousins Properties Second Quarter Conference Call. This call is being recorded on Friday, August 1, 2025. 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 Second Quarter Earnings Conference Call. With me today are Colin Connolly, our President and Chief Executive Officer; Richard Hickson, our Executive Vice President of Operations; Gregg Adzema, our Executive Vice President and Chief Financial Officer; and Kennedy Hicks, our Executive Vice President and Chief Investment 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 due to 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 a detailed discussion of potential risks contained in our filings with the SEC. With that, I'll turn the call over to Colin Connolly.

Thank you, Pam, and good morning. Before I begin my remarks, I want to take a moment to remember the extraordinary life of Tom Cousins, who passed away this week at 93 years old. When Tom founded Cousins Properties in 1958, he had a bold vision for real estate development rooted in integrity and purpose. His leadership helped shape not only the Atlanta skyline but also the broader residential and commercial real estate landscape across the Sun Belt. Tom's impact extended far beyond the buildings he developed. We believe deeply in giving back and in the power of business to serve communities. This transformation of Atlanta's East Lake neighborhood is a powerful example of this belief. With Tom, it was not just what he did that was special; it was also how he did it. His legacy lives on in the culture of our company. It is an honor that Cousins Properties is part of his remarkable legacy, and we will miss him dearly. On behalf of all of us, I extend our heartfelt condolences to the Cousins family. Now turning to the quarter, we had a strong second quarter at Cousins. On the earnings front, the team delivered $0.70 a share in FFO, which was $0.01 above consensus. Same-property net operating income increased 1.2% on a cash basis and 1.6% year-to-date. Leasing remained very strong. We completed 334,000 square feet of leases during the quarter, and remarkably, 80% of that was new or expansion leases. Cash rents on a second-generation space increased 10.9% in the quarter and 5.4% year-to-date. These are remarkable results. Post quarter end, we purchased The Link, a trophy lifestyle office property in Uptown Dallas, which grows our presence in a strategic market. We plan to fund the acquisition with excess proceeds from our unsecured note offering in June, proceeds from the settlement of common shares previously issued on a forward basis under our ATM program and/or potential future asset dispositions. Given the solid second quarter performance, we have increased the midpoint of our guidance to $2.82 a share, which represents a 4.8% growth rate over last year. I believe there's a perception that an office company cannot grow earnings. We are proving that wrong for the second consecutive year, and we are excited to do it. Before discussing our strategy in more detail, I will start with a few observations on the market. While uncertainties over tariffs and interest rates remain, we continue to see encouraging signs in the Sun Belt lifestyle office market. Leasing demand is healthy. New-to-market activity in Atlanta, Austin, Dallas, Charlotte, Tampa and Phoenix is accelerating. New development activity remains constrained. Inventory removals from conversions and demolitions are also accelerating. The net result is a declining supply of office at the exact same time demand is growing. The market is resetting and tightening is underway. Net absorption has now turned positive and vacancy levels are on the decline. Not surprisingly, the investment sales market is opening and more private investors are actively pursuing office acquisitions. This is an excellent setup for Cousins to advance our strategic priorities. We remain highly focused on the following goals: growing earnings, cash flow and NAV by increasing occupancy, reducing CapEx and opportunistically investing in compelling new opportunities; continuously upgrading the quality of our lifestyle portfolio; and maintaining our fortress balance sheet. Aggressively leasing space and identifying compelling investment opportunities are the key drivers to advance these strategic priorities. To fund new acquisitions and select developments, in addition to other potential alternatives, we will likely prioritize recycling capital from our few remaining older vintage properties that have lower occupancy and/or higher CapEx profiles. We will also consider selling non-office non-core land. Given our past recycling activity, we are fortunate to have a few properties today that do not meet our lifestyle office definition. But as disciplined owners, we always have a bottom 10%, and we will remain active as we upgrade the quality and diversification of the portfolio while growing earnings. At Cousins, we've been running this play for years. Since 2019, we have acquired $2.3 billion of lifestyle office properties, started approximately $600 million of new developments, and sold $1.3 billion of non-core assets. Important to note, we executed these transactions and significantly upgraded our portfolio with the headwinds of a global pandemic and a rising interest rate environment. Yet, we still grew core FFO by 6.1% and core FAD by 7.3% over this time frame, and did so approximately leverage neutral. This is a tremendous accomplishment and highlights the capability of our platform. We are excited about what is ahead for Cousins. The office market is rebalancing. We are growing earnings, both organically and externally while also improving an already terrific portfolio. The investment sales market is accelerating, and we believe private market pricing will soon provide a boost to public market valuations. Before turning the call over to Richard, I want to thank our dedicated Cousins employees who provide outstanding service to our customers and each other every day. Richard?

Thanks, Colin. Good morning, everyone. Our operations team closed the first half of the year with another solid quarter. In the second quarter, our total office portfolio end of period least and weighted average occupancy percentages were 91.6% and 89.1%, respectively. As expected, both were down compared to last quarter, primarily due to the known move out of OneTrust at North Park in Atlanta. Without the OneTrust move-out, occupancy would have been down only about 20 basis points. While not reflected in second quarter results, Bank of America in Charlotte has now also expired. Both of these large expirations have been anticipated for a very long time, so our expected occupancy trends remain unchanged. Specifically, we still see occupancy declining through the third quarter of this year and then beginning to build back toward the end of the year and beyond. A major driver of our occupancy projections continues to be our best-in-class near-term expirations profile. Our team continues to do great work in this area. As of second quarter end, we only had 8.1% of annual contractual rent expiring through the end of 2026. As of today, we only have 1 customer larger than 100,000 square feet expiring through 2026, which is Samsung for 123,000 square feet at Brier Lake Plaza in Houston at the end of November '26. During the second quarter, our team completed 41 office leases totaling 334,000 square feet with a weighted average lease term of 7.9 years. Importantly, 268,000 square feet of our completed leases this quarter were new and expansion leases, representing a very impressive 80% of our activity and directly in line with our 3-year quarterly run rate. While second quarter total volume was down sequentially, I would note that our total leasing volume for the first half of this year is nearly 10% higher than the first half of 2024. We are very pleased with our year-to-date leasing activity. Beyond our completed activity, our leasing pipeline remains very healthy at all stages with no signs of slowing. In fact, our combined early and late-stage pipeline is currently at its highest level since we began consistently tracking this metric. Regarding lease economics, this quarter was one of the best in Cousins history. Second-generation cash rents increased yet again in the second quarter by a strong 10.9%; all but one of our markets with second-generation activity saw roll-ups in rent, with Atlanta being the largest positive contributor on a weighted average basis. Our average net rent this quarter came in at $40.95, a 14% increase over last quarter and the second highest quarterly level in our company's history. This quarter, average leasing concessions, the sum of free rent and tenant improvements were $9.42, resulting in an average net effective rent of $28.35, also the second highest quarterly level in our company's history. I want to make an important point about this quarter's economics. A few times in the past when we had delivered net effective rents around this level, it was typically driven by one market or one sizable transaction. That is not the case this quarter. The fact is that our net effective rents were solid in every market this quarter, which is a testament to the broad strength of our markets and lifestyle office assets. Touching on our markets, JLL noted that Austin saw healthy demand for office space in the second quarter, with market leasing volume reaching 1.2 million square feet, which was 11.4% above the 3-year quarterly average and up 32% year-over-year. They also noted that sublease availability was stable sequentially and down over 14% relative to mid-2024. We signed 79,000 square feet of leases in Austin in the second quarter, of which 71% were new leases. Our very stable operating portfolio currently stands at 95.3% leased. A particular note is that with recent strong demand in the Southwest submarket, the Austin team was able to take our 619,000 square foot terrace project to 90% leased for the first time since 2021. In Atlanta, the office market continues to show strength at the top end of the market while low incoming supply persists. JLL has also stated that office inventory decreased by 2.9 million square feet this quarter, which is the largest ever quarterly reduction recorded in the Atlanta market. This quarter also represented the first quarterly positive net absorption in 10 quarters. We signed a strong 115,000 square feet of leases in our Atlanta portfolio this quarter, including over 36,000 square feet of expansions across 3 of our Buckhead projects. And as I already alluded to, the Atlanta team also rolled up rents an impressive 17% this quarter. Turning to Charlotte. According to the Bureau of Labor Statistics, Charlotte has been the leader among the largest domestic markets and office-using job growth for the better part of this year. Major brokerage firms are citing growing completed leasing activity, decidedly positive year-to-date net absorption in the trophy segment, a robust level of tenants in the market, and a new construction pipeline that now sits at zero. The fundamental backdrop in Charlotte could not be much better; the prevailing opinion is that the market is likely to see a shortage of high-quality large blocks of available space in the near future. This is one reason why we continue to be very excited about our redevelopment projects at both 550 South and Fifth Third Center in Uptown. We also have an important announcement about Fifth Third Center, which is that we have completed an agreement with Fifth Third Bank, a valued and long-term customer at the project, allowing Cousins to, among other things, rebrand the property. Going forward, the property will be branded as 201 North Tryon, and we are confident this new name will appeal to a much broader range of potential new customers, especially those in the financial services sector. Phoenix, Class A net absorption remained positive across the MSA, with vacancies moving down across nearly all submarkets. I'm pleased to report that our team completed 67,000 square feet of leasing this quarter, including a 39,000 square foot new lease with a financial services company at Hayden Ferry 1. The market reaction to our Hayden Ferry redevelopment continues to be very encouraging. In Tampa, CBRE reports that total vacancy fell 50 basis points this quarter, and JLL notes that new developments and rising rents in Trophy and Class A properties highlight continued interest in high-quality office space, while Class B properties experienced negative net absorption and further rent declines. Tampa leasing velocity is 12.5% ahead of last year, with 2.5 million square feet completed in the first half of the year. Our Tampa team signed 7 leases totaling 46,000 square feet, all of which were new leases, and 6 of them have expected commencements in 2025. Our Tampa portfolio was 95.1% leased as of quarter end. Finally, we continue to be pleased with the progress in our new mixed-use development in Nashville. The apartment component of the project was 78% leased as of the end of the quarter. Based on our current velocity, we expect it to be stabilized by the end of the year. The commercial component is 51% leased, and I'm pleased to report that we have seen a recent pickup in tour activity. We are now anticipating stabilization of the commercial space in the third quarter of 2026, which is more reflective of the commencement requirements we are seeing in our leasing pipeline. As always, I want to thank our operations team for your great work, which has positioned us well as we look to the second half of this year. Kennedy?

Thanks, Richard. In addition to our strong operating quarter, we are excited to announce another acquisition. Earlier this week, we closed on The Link in Uptown Dallas, a trophy asset that fits squarely into our lifestyle Sun Belt office strategy. We acquired the property for $218 million or $747 per square foot, pricing that represents a discount to replacement cost and is immediately accretive to earnings. The building's appeal is evident from its quick lease-up and the types of customers it attracts. After it delivered in 2021, the 25-story building leased up within 12 months, featuring a stellar rent roll of professional service firms, including Houlihan Lokey, PMG, Newmark and McGuireWoods. Today, the asset is 94% leased, with a weighted average remaining lease term of 9.3 years. Furthermore, all of the customers are fully utilizing their workspaces, spaces that they have made significant investments in with a focus on employee experience. The building offers a full complement of first-class amenities and enjoys a walk score of 94. Clearly, from a quality and profile perspective, The Link is an excellent fit for our portfolio. From a market perspective, we have now planted a flag in Uptown Dallas, one of the strongest and most dynamic submarkets in the country. For CoStar, Dallas as a whole has experienced 1.3 million square feet of positive net absorption in the past 12 months. Uptown is receiving an outsized share of demand, thanks to the quality of its inventory and its status as the most dense and amenitized submarket. The Link sits in the heart of Uptown, offering great vehicular access and numerous walkable dining and hotel options. It is also just 2 blocks from Goldman Sachs' state-of-the-art urban campus, which, upon completion, is set to house 5,000 workers. Finally, as mentioned, the financial profile of The Link is compelling and immediately accretive to earnings. We acquired The Link at a basis below today's replacement costs. The initial cash yield over the next 12 months is anticipated to be 6.7%, with a GAAP yield of 8.3%, a spread driven by over 9 years of remaining lease terms and in-place rents that are nearly $20 per square foot below what could be achieved today. In the past 9 months, we have invested over $1 billion in trophy lifestyle office buildings. Going forward, we intend to continue to execute on that core strategy as we identify Sun Belt investments that are consistent with the quality of our portfolio and will allow us to grow in an accretive manner. As the capital markets continue to open up, we will also explore capital recycling opportunities with an eye towards continuously upgrading our portfolio composition and increasing cash flow. I will now turn the call over to Gregg.

Thanks, Kennedy. I'll begin my remarks by providing a brief overview of our results, and then I'll spend a few minutes on our same-property performance before moving on to our capital markets transactions. Overall, as Colin stated upfront, our second quarter results were outstanding. Second-generation cash leasing spreads were positive for the 45th straight quarter, same-property year-over-year cash only increased and leasing velocity was strong. Focusing on same-property performance for a moment, GAAP NOI grew 3.2% and cash NOI grew 1.2% during the second quarter compared to last year. This continues a string of positive same property numbers that began in early 2022. I did want to take a moment to point out the lumpiness that can sometimes run through our quarterly same-property expense numbers, usually driven by property taxes. Property tax true-ups as we receive actual assessments from the taxing authorities can push the quarterly numbers around quite a bit. So it's always best to use longer time frames when looking at property tax numbers. For example, the same property tax expenses that ran through our P&L were up 21.9% in the fourth quarter of '24 and 24% over the previous year. They were down 12.1% in the first quarter, and they were down 22.4% this quarter. It's a lot of movement as prior accrual adjustments are made. However, for all of 2025, we currently forecast gross property taxes in our same-property portfolio to be up 2.8% over the prior year. However, net of accrual adjustments that I just discussed, we forecast a 4% decline that will actually run through our P&L for the year. Moving on to our capital markets activity. We completed our third investment-grade bond offering during the second quarter, issuing $500 million of notes at an initial yield of 5.25%. Proceeds were used to pay off an unsecured note that matured on July 6 and to partially fund our acquisition of The Link that Colin and Kennedy discussed earlier. We now have 3 tranches of unsecured notes outstanding, with a total face value of $1.4 billion. We also sold 803,000 shares of common stock on a forward basis under our ATM program during the second quarter at an average gross price of $30.47 per share. Year-to-date, we have sold 2.9 million shares at an average price of $30.44 per share. None of these shares have yet settled. Looking at our balance sheet, net debt to EBITDA remains an industry-leading 5.1x. Our liquidity position is strong, and our debt maturity schedule is well-laddered to accommodate continuing to efficiently access the unsecured bond market. I'll close by updating our '25 guidance. Currently, we anticipate full year 2025 FFO between $2.79 and $2.85 per share, with a midpoint of $2.82 per share. This is up $0.03 from last quarter and is up $0.13, or as Colin discussed earlier, 4.8% over our '24 results. The increase in FFO guidance is driven by accretion from our acquisition of The Link, higher parking income, and better-than-forecast execution on the unsecured note that we issued in June. Our guidance continues to assume no SOFR cuts in 2025. As Colin stated upfront, we're funding The Link acquisition with excess proceeds that we raised in our recent unsecured note offering, as well as proceeds from the settlement of a portion of the shares we have previously issued on a forward basis under our ATM program or from potential asset sales. Our guidance assumes the future settlement of approximately $2.3 million of these previously issued shares. However, we may ultimately use some potential asset sales instead of or in combination with the settlement of shares. We'll know more on this topic on our next earnings call. Bottom line, our second quarter results are excellent, and we are raising the midpoint of our full year earnings guidance. Our best-in-class leverage and liquidity position remains intact. Despite recent macro uncertainty, Sun Belt office fundamentals remain solid. Although it's not in our guidance, we anticipate the potential to continue deploying additional capital into compelling and accretive investment opportunities. We look forward to reporting our progress in the coming quarters. With that, I'll turn the call back over to the operator.

Your first question is from Anthony Paolone from JPMorgan.

First question relates to The Link. And I was wondering if you can give us a little bit more context around the underwriting going into the 6.7% cash, like how do you think about the growth of the asset replacement costs and just how you kind of thought about getting to the value you got to?

Tony, it's Colin. One, we're thrilled to plant a flag in Uptown Dallas, which I think is going to be one of the fastest-growing submarkets in the country. For us, looking at that particular situation where rents are significantly below market and a terrific rent roll with good weighted average lease term, and very little CapEx needs, we were excited. Any time we can identify a compelling investment opportunity with that type of profile that continues to upgrade the quality of our portfolio and do that in an accretive manner, on a leverage-neutral basis, and actually do it below replacement cost checks all the boxes for us.

Okay. And then just more broadly, can you talk about just how much you are actually looking at right now in terms of potential acquisitions and how attractive the market is with that deal flow? Are you seeing a lot of things that you have interest in buying?

It's Kennedy. Yes, we're always assessing both market and off-market opportunities. We believe that more options aligning with our criteria will emerge in the second half of the year. We're optimistic and think that the capital markets are progressively opening up, which should continue to present us with acquisition opportunities.

Your next question is from the line of Jana Galan from Bank of America.

Congrats on the strong re-leasing spreads. And thanks for calling out Atlanta for the 17% increase. Can you tell us which is the one market that saw a decline? And was that kind of the prior rent deal specific?

Sure, this is Richard. Yes, broad-based strength, really, really excited about our ability to post a number like that that had broad support, but one market that did not post roll-ups was Phoenix. We really only had one lease in that market this quarter that qualified under our definition of second generation, and it was just a tough comp.

And then sorry to jump around, then on the non-core dispositions. Can you maybe talk about a range of how much is being marketed and what you're seeing in terms of interest and what type of bidders are out there?

Yes, any dispositions we make will be influenced by new investment opportunities that we identify. I wouldn't describe it as a widespread disposition program. We see potential in an improving market and investment sales to hopefully find more attractive opportunities. As we pursue these, we increasingly see dispositions as a possible source of capital. We will focus on a select few properties that are older and require more capital expenditures. We might also consider some non-core land, which I see as land that could be utilized better, typically in the multifamily sector.

Your next question is from the line of Stephen Sakwa from Evercore ISI.

Could you maybe just spend a little time talking about Neuhoff? I guess that seems to be one project that hasn't had as much traction as some of the other markets and assets. Is it something about that asset specifically? Is it something about Nashville? Or is it just something about tenants needing to pick up and move and that's kind of the more challenging issue right now?

It's Kennedy. We remain really excited about Neuhoff. As Richard mentioned, the apartments continue to lease up at a really nice pace and we're encouraged by the renewals that we've seen now as we start to hit our first renewal cycle. Furthermore, in the past month or so, we've opened several food and beverage options that have been well received by the market and have gotten a lot of great buzz. So the project continues to gain interest from the market. On the office side, we did see a little bit of a lull earlier in the spring, but we've seen a pickup in tours and requests for proposals in the past 30 or 45 days. We're encouraged by that. I think it's just a function of timing and then who is out in the market and wanting to pay new construction rents as well. But in general, we remain really excited and encouraged by the progress and momentum.

Okay. And second question, maybe a little bit far off, but as you think about new construction opportunities, I guess, which markets are you most excited about given the land that you have and where there is the strongest demand for potentially in new builds?

Yes, Steve, it's Colin. Again, broad-based, we're seeing really attractive demand across all of our markets. But as it relates to new development, I think a key metric is where our top end of the market rents today relative to replacement cost rents. If I had to rank where I think some of those opportunities could emerge, I would mention the domain in Austin, where we've got quite a bit of really attractive land in the heart of the domain. Our 2.5 million square feet out there is essentially 100% leased with no space available for sublease and demand. So that's a market where I think you could justify a rent that could be achieved. Uptown Dallas is another market where you are seeing some leases executed north of $70 a square foot on a net basis. As you get into that range, Dallas is not far off. We're starting to see some opportunities, even in markets like Atlanta where perhaps there's a greater spread between top of market rents today and new development rents. But in certain instances, large customers want what they want, and they might want new space and might be comfortable paying whatever it costs. So that's encouraging to us to see some of that activity showing up in places like Atlanta.

Next question is from the line of John Kim from BMO Capital Markets.

Colin, you mentioned at Link, there's a good mark-to-market. I was wondering if you could quantify that. And also, what are the opportunities for increasing occupancy at the market rents? And if there's any upside to the parking that's there?

John, it's Kennedy. As I mentioned in my prepared remarks, there's about a $20 spread between in-place rents and where we think rents can be achieved today. There are essentially 2 office spaces that are available. One is fully built out as spec suites, so we expect to be able to lease that one quickly, and there's good interest in that currently. We'll probably look to explore building a spec suite out in the other one as well. I feel like there's a little bit of upside right there and have been encouraged by the growth in parking as well. As that neighborhood continues to evolve and grow with the Goldman Sachs campus coming in, I do think there's some opportunity to keep pushing parking in the near term. But overall, we like the basis, caliber of the tenancy, and the below-market rent story.

And John, I just want to make sure to highlight, as Kenny just mentioned, that rents in place are about $20 per square foot below market. This is a building that just delivered a handful of years ago, so it's important for all of our investors to recognize that there is a shortage of high-end lifestyle office space in most markets. A $20 increase in rental rates in a short period of time can happen, and we are getting closer to that happening in more of our footprint.

And then you mentioned there's more private buyers looking at office. Wondering what competition was like for this asset and if you see cap rate compression in some of the markets that you're looking to acquire in?

Yes. This one was softly marketed for the past couple of years. The developer's goal was to sell once stabilized, but they wanted to wait until a better time in the capital markets environment. We've developed a relationship with them, and as their timing needs evolved, they viewed us as a very good buyer that could move quickly and they would get comfortable with the execution. There are many investors looking at Dallas opportunities right now, including private equity firms and family offices, so it's certainly a market that's getting a lot of attention. In terms of cap rates, the dynamic of having more equity looking at office, more debt options available, has also gotten less expensive. Base rates have stayed generally the same, but spreads have come in. That combination inevitably leads to a little bit of cap rate compression. We still feel like we've got a competitive advantage in terms of the certainty that we offer as a buyer, and our cost of capital, but it is becoming a bit more competitive.

Next question is from the line of Blaine Heck from Wells Fargo.

Can you talk a little bit more about your leasing pipeline and any trends you're seeing with respect to tenant size or industry? Are you seeing any specific segment of the market strengthening or weakening as we progress through 2025?

Blaine, this is Richard. The first thing I'd note is that we continue to see really constructive dynamics in every one of our markets. If you look to the building blocks of the fundamental backdrop that I outlined regarding Charlotte, we're seeing those building blocks to some degree in every market. We're broadly encouraged about the strength of the pipeline, which is very broad in terms of markets. As for industry mix, there's not much of note there. Financial services is the heaviest contributor to our pipeline today, not far behind that is legal. As you'll recall, legal was pretty heavy kind of earlier in the year for us, and then tech still plays a more modest but meaningful role in our pipeline. Interestingly, healthcare companies, not healthcare providers, are a larger segment than we normally see.

Great. That's helpful. And maybe sticking with you, can you talk about what you're seeing regarding your net migration to your markets? Have you seen any increase in interest from tenants that currently have exposure to other markets to expand or relocate to the Sun Belt? If so, are there specific markets that stand out?

We're seeing new-to-market requirements, not just this quarter, but through the balance of the first half of '25. New-to-market requirements have really come to view, mainly in Atlanta and Charlotte, but Phoenix has been an interesting story for new-to-market requirements. These new requirements to various markets aren't always big singular headquarters leases; many of them can be companies headquartered elsewhere outside the Sun Belt that decide to increase their presence or build hubs within Sun Belt markets or transition over time to a larger presence outside of where they currently are headquartered. You're seeing a combination of both headquarters and traditional headquarters with these smaller hubs.

I'd add that we are seeing some of that activity in Austin as well, with new-to-market or large growth and further growth of existing hubs of kind of West Coast-type companies. Our portfolio is effectively 95% leased, so we just don't have the space today unless we were to consider something new.

Okay, great. Lastly for me, Colin, you talked about targeting maybe lower occupancy and higher CapEx office assets for disposition if you ultimately decide to sell. Given that profile, would it be fair to assume that the cash cap rates after CapEx could be close to where you've acquired recently? Or are they likely to be higher than that?

Yes, a big driver there will be what the occupancy level of those particular assets is. If it is a lower occupancy building, just on a stand-alone basis, there is potential to recycle capital into newer better-leased buildings perhaps at a lower stabilized yield, but relative to that lower in-place occupancy could still be kind of neutral to accretive. Any disposition will be driven by the new investment opportunity, and we are confident that as we identify those opportunities, we can look to our small pool of non-core assets and perhaps even match that with some land to ensure we are reinvesting and doing so accretively. Kennedy touched on the investment sales market picking up and that more activity is happening. A lot of that capital is focused on the exact type of buildings that we will consider selling. We think it is a better environment, and we've been very patient over the last several years in a less appealing sales market, and we think that's changing. As disciplined owners, we think that should be a source of capital that we prioritize to continue to upgrade our portfolio quality and increase occupancy while lowering the CapEx profile.

Your next question is from the line of Nick Thillman from Baird.

Colin, just overall, you guys tend to be first movers and adapters to trends you're seeing in today's environment. As you're looking at acquisitions now, since you've been a bit more aggressive over the last 18 months or so, are there any sort of changes or types of characteristics you've noticed in the assets you're looking at, whether it be size or submarket that you've seen shift or that you're thinking about a little bit differently?

Yes. If you look back over the last 5 years, there is a bias on our part to sell what we would call old and tall and heavily invest in new and small, particularly the assets that have what we would characterize as a lifestyle orientation. It's important not only to be a new vintage asset with great ceiling heights and amenities within the trophy building, but it's crucial that they're in vibrant neighborhoods that have energy. Many of our customers emphasize evaluating space in environments that are exciting and appealing for their employees to show up and spend time together in the office and outside of the office. That definitely fits squarely within our activity over the last 5 years.

That's helpful. And then maybe just a quick follow-up on Samsung at Brier Lake. I believe there were potentially some subtenants there that you could go direct with. Can you provide updates on that? Also, would you consider Houston a non-core market for you guys or would it still fall under lifestyle office?

I'll touch quickly on Samsung and its leasing perspective. The property shows really well at this point. We've put Apache in there. They're in their space, and the redevelopment has upgraded the amenities across the board. Any tours we have an opportunity to show that asset, I think folks come away very impressed. Samsung is going to be relocating, leading the West Chase submarket. This is not a commentary on the building. We believe we have an opportunity to likely go direct with some of those subtenants, which could be anywhere from 10% to 30% of the space. Time will tell, but we have great activity since that expiration is a little over a year away, and we're feeling good about our competitive position and ability to backfill that efficiently.

As for thoughts around Brier Lake as a potential disposition candidate, you characterized it well. It's a lifestyle office property, and we've been really pleased with the reception that we've gotten from our customers post-renovation. Richard mentioned that we feel good about the backfill of the Samsung space as well as the ability to go direct. So it's not at the top of the list for sale. Over time, as you said, Houston is not a core market, so we'll evaluate that as we find acquisitions, but at this point, it's not at the top of the list for sell.

Your next question is from the line of Peter Abramowitz from Jefferies.

Yes. I know you covered North Park and the OneTrust move-out there in terms of why the occupancy dipped. Just noticed occupancy also went down a little bit in Tampa. Could you talk about anything specifically that drove that?

It was an expiration of a customer on the second floor of Harborview, very standard at 25-ish thousand square feet. We have those kinds of ins and outs in the portfolio routinely.

That's helpful. And then maybe to go back to Colin's comments on capital recycling in the prepared remarks. As you're evaluating valuations and underwriting, does that include potential new markets? Could you talk about how you're thinking about potential entry into new markets?

Yes. We're always evaluating all markets. That’s core to our job, as we certainly continue to pressure-test our Sun Belt lifestyle strategy. We do think that those prevailing long-term secular trends of migration to the Sun Belt and flight to quality will continue to endure. Our focus, for now, will remain on top-flight Sun Belt markets, though there are a few markets we’re not invested in today that are of scale, like Raleigh and South Florida. We continue to look at and evaluate those. However, our current priority is to expand our presence in some markets that we're already in, including Dallas, Charlotte, Nashville, Tampa, and Phoenix. Those are probably the best opportunities for us in the near term to continue upgrading the portfolio quality, enhance geographic diversification, and hopefully do that on an accretive basis.

Okay. That's helpful. And just one more. Richard, you talked about the leasing pipeline and how big tech is playing in that. Could you talk about big tech specifically in Austin, how demand is trending, whether they're getting close to getting back to growing their footprint, and any trends you see specifically in Austin among that cohort of tenants?

We are absolutely seeing better trends for big tech, but it's not broad. We see the headlines of those returning to the office, whether it be 4 or 5 days a week. Amazon is a notable participant in that trend, and we are starting to see tangible signs that there is some growth needs reemerging. While it's not the heyday of '21 or '22, where tech was just growing rapidly in Austin, it is improving.

Your next question is from the line of Upal Rana from KeyBanc Capital Markets.

Gregg, you mentioned the bond deal you did earlier was anticipated. How would you describe the capital markets today? If you were to do a similar deal today, what rate would you be able to obtain?

Yes, the credit markets continue to improve, whether it's CMBS or corporate spreads as we typically borrow at. We issued that 5-year bond at 117 over the 5-year treasury. Today, that bond is trading in the mid-90s. It's coming in at least 20 basis points from where we issued it. So we could get an even lower coupon today, which feeds into the remarks I made earlier about an improving capital market. The credit markets have absolutely improved over the last 6 months.

Is there any update on the Bank of America move-out that's occurring now? Any updates on your plans there?

Nothing concrete. Again, I mentioned that we are rebranding the property, which we think is really exciting and important for increasing the funnel for potential customers to backfill BofA, which literally expired yesterday. We finally have control of the space, which is going to allow us to start to execute and move forward with our redevelopment plans that have come together very nicely; we can't wait to get started with that.

I want to highlight that this expiration has been much anticipated over the last several years. For the company, stepping back, there are no other large known move-outs to talk about. We believe the portfolio occupancy will reach its low point with that move-out during this third quarter. Directionally, our expectations are for growth in occupancy, with a very modest expiration schedule in '26 and no other large customers. It's a strong setup for us to drive occupancy in an improving market.

Your next question is from the line of Dylan Burzinski from Green Street.

Just a quick one for me. Richard, I think you mentioned that the leasing pipeline remains strong and the late-stage pipeline is actually at the highest level since you guys started tracking it. Can you sort of give us details on what you think is causing this continuation of strong demand? Is it just a rise in aggregate office demand in general? Or do you think Cousins is continuing to garner a significantly larger share of the leasing activity going on across the markets?

Dylan, it's Colin. I want to look bigger picture here because certainly, there's angst about the macro economy. We feel that angst, especially with a relatively weak employment report this morning. But what's playing out in the office space today is a reversal of an extraordinarily weak market over the last 4 years. Companies have significantly shrunk their space, in some cases, losing their space altogether and certainly not growing. Companies are scrambling, and there continues to be pent-up demand because of the length of that weak market. Companies are trying to get their workers back into the office now, and we're seeing a disproportionate amount of demand focused on a smaller percentage of our inventory, which fits squarely into that category. That's a key driver for us in why we're seeing this pipeline continue to be strong.

The last question is from the line of Brendan Lynch from Barclays.

Just one for me. As you're looking at capital allocation at this point in the cycle, it seems like you're picking up the pace of acquisitions fairly significantly. Where does the mezzanine financing opportunities sit in your list of priorities?

It's not our core business and not our priority. However, we have a very creative and entrepreneurial team that identifies opportunities for mezzanine, preferred, or structured investments. In certain instances when collateralized by lifestyle offices, they can be compelling opportunities for us in the short term, and potentially lead to longer-term acquisition opportunities. We will continue to explore those. That said, we only want to size the overall scale of those opportunities appropriately, keeping in mind they shouldn’t create a longer-term earnings headwind if those investments are ultimately paid off. Overall, anything under $100 million in the aggregate, I think we’re comfortable with.

There are no further questions at this time. I'd like to turn the call over to Colin Connolly for closing comments. Sir, please go ahead.

Thank you all for your time this morning and interest in Cousins Properties. If you have any follow-up questions, please feel free to reach out to Gregg Adzema or Roni Imbeaux, and we hope to see many of you at some of the upcoming conferences in September. Have a great weekend.

Ladies and gentlemen, this concludes today's conference call. Thank you very much for your participation. You may now disconnect.