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COUSINS PROPERTIES INC (CUZ)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 revenue and EBITDA beat consensus, while GAAP EPS missed due to higher depreciation and share count; management raised full-year FFO guidance midpoint to $2.79, citing stronger parking revenues and lower real estate taxes . Revenue: $248.45M vs $236.44M consensus; EBITDA: $160.40M vs $155.80M consensus; EPS: $0.12 vs $0.157 consensus* .
  • Leasing momentum remained robust: 539K sf executed, second-gen cash rents +3.2% (7.9% ex-Northpark renewal), end-of-period leased 92.1% and weighted occupancy 90.0% .
  • Guidance raised: FFO/sh now $2.75–$2.83 (midpoint +$0.01), net income/sh now $0.26–$0.34 (tightened range); assumptions include refinancing the $250M note due July 6, 2025; no acquisitions/dispositions/dev starts included .
  • Catalysts: sustained leasing demand and tightening supply in lifestyle office; parking revenue strength (75% utilization-driven), healthy pipeline across Atlanta/Charlotte/Phoenix, and continued estimate-beating top-line performance could support sentiment, while near-term occupancy dip from Bank of America’s July move-out in Charlotte is a known headwind .

What Went Well and What Went Wrong

What Went Well

  • “We leased over 500,000 square feet… the most we have leased during a first quarter since 2019,” and raised full-year FFO guidance midpoint to $2.79 (+3.7% YoY) .
  • Second-generation cash rents increased for the 44th straight quarter; parking revenue growth (75% utilization, 25% pricing) aided guidance uplift, with Atlanta the largest parking contribution .
  • Balance sheet and liquidity remain best-in-class (net debt/EBITDA ~4.87x, 13% floating-rate mix); $250M maturity planned for refinancing in guidance; strong accretive investments in late 2024 continue to support NOI .

What Went Wrong

  • GAAP EPS missed consensus despite revenue/EBITDA beats; higher depreciation and a larger diluted share count weighed on EPS versus estimates* .
  • Management flagged a temporary trough in occupancy through Q3 due to Bank of America’s Charlotte move-out; recovery expected late 2025 and into 2026 .
  • Q1 second-gen cash rent growth moderated to +3.2% due to mix (Northpark renewal); ex-Northpark +7.9%—illustrating quarter-to-quarter variability in leasing economics .

Financial Results

Headline Results vs Prior Periods

MetricQ1 2024 (oldest)Q4 2024Q1 2025 (newest)
Rental Property Revenues ($USD Millions)$208.82 $220.22 $243.03
GAAP Diluted EPS ($)$0.09 $0.09 $0.12
FFO per Share ($)$0.65 $0.69 $0.74
EBITDAre ($USD Millions)$129.05 $143.90 $163.71

Results vs Consensus Estimates (Wall Street, S&P Global)

MetricQ4 2024 EstimateQ4 2024 ActualQ1 2025 EstimateQ1 2025 Actual
Revenue ($USD Millions)$215.34*$223.32 $236.44*$248.45
EBITDA ($USD Millions)$141.30*$138.77 $155.80*$160.40
Primary EPS ($)$0.062*$0.09 $0.157*$0.12

Values marked with * retrieved from S&P Global.

Margins vs Prior Periods (S&P Global)

MetricQ1 2024 (oldest)Q4 2024Q1 2025 (newest)
Net Income Margin %6.3%*6.0%*8.2%*
EBITDA Margin %61.8%*64.4%*64.6%*

Values retrieved from S&P Global.

Segment / Market NOI Mix (Q1 2025)

Market% of Total Portfolio NOI
Austin36.2%
Atlanta31.6%
Charlotte10.1%
Tampa8.0%
Phoenix7.4%
Houston3.5%
Dallas2.2%

KPIs

KPIQ1 2024 (oldest)Q4 2024Q1 2025 (newest)
End-of-Period Office Leased (%)91.2% 91.6% 92.1%
Weighted Avg Office Occupancy (%)88.5% 89.2% 90.0%
Office Leasing Volume (sf)404K 462K 539K
Second-Gen Cash Rent Change (%)+5.3% +6.7% +3.2%
Same-Property Cash NOI YoY (%)+6.6% +3.4% +2.0%
Net Effective Rent ($/sf/yr)$24.20 $23.88 $25.06
FFO Payout Ratio (%)48.9% 49.3% 43.0%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Income per ShareFY 2025$0.25–$0.35 $0.26–$0.34 Narrowed; midpoint stable; range tightened
FFO per ShareFY 2025$2.73–$2.83 (mid $2.78) $2.75–$2.83 (mid $2.79) Raised low end by $0.02; midpoint +$0.01
AssumptionsFY 2025Includes refinancing of $250M note; no acquisitions/dispositions/dev starts Same; increase driven by higher parking income and lower real-estate taxes Maintained
DividendQ1 2025Prior quarterly run-rate$0.32 per share (payable Apr 15, 2025) Maintained

Earnings Call Themes & Trends

TopicQ3 2024 (older)Q4 2024Q1 2025 (current)Trend
Supply/DemandImproving; lifestyle office tightening; record leasing volumes Further improvement; national post-COVID peak leasing; positive absorption Fundamentals improving; new construction at historic lows; demand robust Strengthening
Return to OfficeCEOs expecting increased in-office attendance; IBM lease highlights trend “Return to normal” narrative gathering steam Parking utilization rising; continued momentum across markets Positive
Development PipelineDomain 9 stabilizing; Neuhoff pushed to 2Q26 Focus on Neuhoff; interest capitalization ending phases in ’24/’25 Domain 9 moved to operating portfolio; Neuhoff progressing; multifamily 70% leased Execution progressing
Acquisitions/Capital AllocationMezz loans and JV; Saint Ann Court whole loan at par basis ~$850M A+ assets (Sail Tower, Vantage); leverage-neutral funding Pipeline robust; flexible across debt/equity; selective timing Active/Selective
Cost of CapitalUnsecured bonds at tight spreads vs peers Tightest spread to treasuries among office REITs Fortress balance sheet, optionality for opportunistic investments Advantage maintained
Macro/TariffsPositive tailwinds, bifurcation; demolished obsolete stock Same; convergence of public/private markets Tariffs add market volatility; no leasing impact seen Watchful, resilient

Management Commentary

  • “With new construction at historic lows, office fundamentals in our Sun Belt markets are improving… we are raising our full year FFO guidance with a new midpoint that represents a 3.7% growth rate over last year.” — CEO Colin Connolly .
  • “Second-generation cash leasing spreads were positive for the 44th straight quarter… It’s a really good proxy… for utilization of our buildings.” — CFO Gregg Adzema .
  • “We still see occupancy declining likely through the third quarter and then building back towards the end of the year and beyond.” — EVP Ops Richard Hickson .
  • “We still maintain a relative cost of capital advantage… creating optionality for Cousins.” — CEO Colin Connolly .

Q&A Highlights

  • Rent trajectory: Expect concession leveling before rental rate increases; tight supply could drive meaningful rent upside over time .
  • Capital deployment: Forward equity provides optionality; leverage-neutral accretive deals preferred; equity issuance at current price viewed as unlikely .
  • Pipeline mix and diversification: Overweight legal plus tech/financial services; activity skewed to Atlanta/Charlotte/Phoenix; majority new/expansion vs renewals .
  • Parking revenues: ~75% utilization vs ~25% pricing drove gains; Atlanta largest market contribution .
  • Early renewals and occupancy: Some tenants seeking early renewals as supply shuts down; occupancy trough expected in 2H 2025 before rebuild .

Estimates Context

  • CUZ beat Q1 revenue and EBITDA consensus, but missed GAAP EPS: Revenue $248.45M vs $236.44M estimate; EBITDA $160.40M vs $155.80M estimate; EPS $0.12 vs $0.157 estimate*. Q4 also featured revenue and EPS beats vs estimates*.
  • Factors for estimate revisions: stronger leasing momentum, higher parking utilization, lower real estate taxes, and continued portfolio upgrades suggest upward top-line/EBITDA revisions; GAAP EPS may remain more volatile given depreciation/interest and higher share count .

Values marked with * retrieved from S&P Global.

Key Takeaways for Investors

  • Top-line momentum with robust leasing and rising occupancy supporting revenue/EBITDA beats; consider positioning for continued estimate revisions higher on revenue/EBITDA .
  • Guidance raise signals confidence; watch for upside from accretive investments and parking utilization strength (a utilization proxy) .
  • Near-term occupancy trough (Charlotte BofA move-out) is known; management expects rebuild late 2025–2026—view pullbacks as opportunities in a tightening lifestyle office market .
  • Cost of capital advantage and liquidity provide optionality across debt/equity investments; leverage-neutral approach reduces financing risk .
  • Market bifurcation favors CUZ’s trophy lifestyle assets; lack of new supply may drive concession normalization and eventual rent acceleration .
  • Dividend maintained at $0.32/sh with conservative FFO payout ratio (43% in Q1), offering income stability .
  • Monitor Q2–Q3: leasing cadence (Atlanta/Charlotte/Phoenix), refinancing progress on $250M note, and any selective capital deployment that could enhance NOI/FFO .