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COUSINS PROPERTIES INC (CUZ)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 FFO per share was $0.70, with management stating it was $0.01 above consensus; GAAP EPS was $0.09 and same-property cash NOI grew 1.2% YoY, supported by robust new/expansion leasing (80% of activity) .
  • Full-year 2025 guidance was raised: net income to $0.28–$0.34 (from $0.26–$0.34) and FFO to $2.79–$2.85 (from $2.75–$2.83), driven by higher parking income, favorable unsecured notes execution, and The Link acquisition; the team assumes no 2025 SOFR cuts .
  • Strategic actions: issued $500M 5.25% senior notes; later repaid $250M private notes; acquired The Link in Uptown Dallas for $218M, 93.6% leased with >9-year WALT, expected 6.7% initial cash yield and 8.3% gap yield due to ~$20/sf mark-to-market opportunity .
  • Leasing pipeline reached its highest level since tracking began; broad-based rent roll-ups across markets (Atlanta strongest), while Phoenix’s single qualifying second-gen lease created a tough comp; occupancy expected to trough in Q3 then improve .

What Went Well and What Went Wrong

What Went Well

  • “Over 80% of our leasing was either new or expansion leasing and our leasing pipeline remains robust,” with second-gen cash rents up 10.9% and net effective rent of $28.35—the second highest quarterly level in company history .
  • Raised FY 2025 guidance (FFO midpoint +$0.03 QoQ to $2.82), citing accretion from The Link, higher parking income, and better-than-forecast unsecured note execution; management emphasized proving earnings growth for a second consecutive year .
  • Strategic, accretive external growth: closed The Link in Uptown Dallas at a discount to replacement cost, 93.6% leased, ~9.3-year WALT, with ~$20/sf rent mark-to-market opportunity and immediate earnings accretion .

What Went Wrong

  • Weighted average occupancy declined to 89.1% and end-of-period leased slipped to 91.6%, primarily due to the known OneTrust move-out at Northpark; Bank of America in Charlotte also expired post-quarter (expected), with occupancy expected to trough in Q3 .
  • Quarterly total leasing volume was down sequentially vs Q1 (334k sq ft vs 539k), though H1 volume is ~10% higher YoY; Phoenix showed a tough comp on second-gen rent due to one qualifying lease .
  • Net income margin compressed sequentially vs Q1, reflecting higher interest expense and normal quarterly variability in property tax accruals; management highlighted property tax lumpiness and guided a 4% decline running through the P&L for FY 2025 net of adjustments .

Financial Results

MetricQ2 2024Q4 2024Q1 2025Q2 2025
Total Revenues ($USD Millions)$212.98 $225.33 $250.33 $240.13
Net Income ($USD Millions)$7.84 $13.64 $20.90 $14.48
GAAP Diluted EPS ($USD)$0.05 $0.09 $0.12 $0.09
FFO per Share ($USD)$0.68 $0.69 $0.74 $0.70
EBITDA Margin %62.66%*62.14%*64.56%*64.77%*
Net Income Margin %3.67%*6.11%*8.41%*6.07%*

Values marked with * retrieved from S&P Global.

Actual vs Estimates (SPGI, Q2 2025):

MetricConsensus EstimateActual
Revenue ($USD Millions)$243.61*$238.54*
GAAP EPS ($USD)$0.0937*$0.09*
EBITDA ($USD Millions)$153.32*$154.51*

Values marked with * retrieved from S&P Global.

Segment/Market NOI mix (Q2 2025):

MarketNOI Share (%)
Austin36.7%
Atlanta31.8%
Charlotte10.8%
Tampa7.9%
Phoenix7.2%
Houston3.4%
Dallas2.2%

KPIs (Q2 2025 unless noted):

KPIValue
Office leasing volume (SF)334,368
New + expansion share80%
Second-gen cash rent change+10.9%
Net effective rent (per sf per year)$28.35
End-of-period leased91.6%
Weighted avg occupancy89.1%
Same-property cash NOI YoY+1.2%
ATM forward shares sold YTD2.9M at $30.44; none settled
Net Debt / Annualized EBITDAre5.11

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Income per shareFY 2025$0.26–$0.34 $0.28–$0.34 Raised lower end
FFO per shareFY 2025$2.75–$2.83 $2.79–$2.85 Raised range
Funding plan (The Link)FY 2025Assumed refinancing of $250M 2025 notes Fund via excess bond proceeds + settlement of ~2.3M forward ATM shares; may be replaced by asset sales Clarified mix
Rate assumptionFY 2025Not specifiedAssumes no SOFR cuts Explicit assumption
DividendQ2 2025—$0.32 per share declared (paid 7/17/25) Affirmed quarterly payout

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024 and Q1 2025)Current Period (Q2 2025)Trend
Tariffs/macro, interest ratesImproving capital markets; executed $400M notes; prepared for refinancing in 2025 Management cites uncertainties over tariffs and rates; assumes no SOFR cuts in 2025 Macro caution, financing costs easing
Leasing demandQ4: 462k SF; Q1: 539k SF; strong new/expansion mix Q2: 334k SF; 80% new/expansion; late-stage pipeline at highest level Strong pipeline; volume dipped sequentially
Regional trendsAustin/Charlotte/Tampa/Phoenix improving fundamentals Broad-based rent roll-ups; Austin Terrace to 90% leased; Phoenix new 39k SF; Tampa velocity +12.5% YTD Trophy/Class A strength; stable-to-rising demand
Investment sales/AcquisitionsQ4: Sail Tower & Vantage South End acquired; bonds issued Acquired The Link in Dallas; more private buyers, cap rate compression Accretive external growth; market re-opening
Balance sheet/liquidityWAM ~4.4 years; net debt/EBITDAre ~5.16 Issued $500M notes (5.25%); repaid $250M private notes; net debt/EBITDA ~5.11 Liquidity strengthened; laddered maturities
AI/technology initiativesNot discussedNot discussedN/A
Supply chainNot discussedNot discussedN/A
Regulatory/legalNot discussedNot discussedN/A

Management Commentary

  • “This was a strong quarter for Cousins... we are also pleased to once again raise our full year FFO guidance with a new midpoint that represents a 4.8% growth rate over last year.” — Colin Connolly, CEO .
  • “Given the solid second quarter performance, we have increased the midpoint of our guidance to $2.82 a share... I believe there's a perception that an office company cannot grow earnings. We are proving that wrong...” — Colin Connolly .
  • “Second-generation cash rents increased yet again in the second quarter by a strong 10.9%... average net effective rent of $28.35, also the second highest quarterly level in our company's history.” — Richard Hickson, EVP Operations .
  • “We acquired The Link for $218 million... 94% leased with a weighted average remaining lease term of 9.3 years... initial cash yield 6.7% with a gap yield of 8.3%... in-place rents nearly $20 per square foot below what could be achieved today.” — Kennedy Hicks, CIO .
  • “We issued $500 million of notes at an initial yield of 5.25%... sold 803,000 shares on a forward basis... guidance assumes settlement of ~2.3 million of these shares.” — Gregg Adzema, CFO .

Q&A Highlights

  • Acquisition pipeline and market dynamics: Team expects more Sun Belt trophy opportunities in H2; capital markets improving with tighter credit spreads and more private equity participation; cap rate compression emerging .
  • Occupancy trajectory: Known large move-outs (OneTrust; Bank of America) drove near-term pressure, with trough expected in Q3 and rebuild thereafter; rebranding 201 North Tryon and planned redevelopment to broaden appeal to financial services tenants .
  • Market-by-market leasing insights: Austin (Terrace to 90% leased; 71% new leases), Atlanta (17% rent roll-up), Phoenix (new 39k SF at Hayden Ferry), Tampa (portfolio 95.1% leased; strong 2025 commencements) .
  • Capital recycling: Dispositions will be driven by new investment sourcing; focus on older-vintage, higher CapEx assets and non-core land; intent to remain leverage-neutral .
  • Dallas The Link mark-to-market: Two available suites, one built-out spec; active interest; parking upside with Goldman Sachs campus proximity .

Estimates Context

  • Q2 2025 vs SPGI consensus: EPS essentially in line ($0.09 actual vs $0.0937 estimate); revenue modest miss ($238.54M actual vs $243.61M estimate); EBITDA slight beat ($154.51M actual vs $153.32M estimate)*.
  • Management stated FFO per share was $0.01 above consensus ($0.70 vs Street), supporting the guidance raise narrative .
  • FY 2025 consensus revenue and EBITDA imply continued growth off 2024 levels ($971.56M and $635.04M, respectively)*; updated company guidance may prompt incremental upward revisions to FFO/EBITDA given accretion from The Link and improved financing outcomes .

Values marked with * retrieved from S&P Global.

Key Takeaways for Investors

  • Guidance raised again: FY 2025 FFO range to $2.79–$2.85 (+$0.03 midpoint QoQ), with explicit drivers (parking, bond execution, The Link) and no SOFR cuts assumption—supportive for near-term estimate stability and potential sentiment improvement .
  • Leasing economics strong and broad-based: 80% new/expansion activity, +10.9% cash rent spreads, and net effective rent at near-record levels—indicative of pricing power in lifestyle office across the Sun Belt .
  • Occupancy dip likely transitory: Trough expected in Q3 due to known move-outs; rebranding and redevelopment at 201 N. Tryon plus deep late-stage pipeline provide a path to rebuild .
  • Accretive external growth: The Link acquisition adds high-quality Dallas exposure with embedded rent mark-to-market and immediate yield, positioning CUZ for earnings and portfolio quality enhancement .
  • Balance sheet intact: $500M unsecured notes, full $1B revolver availability at quarter-end, and net debt/EBITDAre ~5.1x provide flexibility to pursue selective acquisitions while remaining disciplined .
  • Estimate implications: Q2 showed a modest revenue miss but EBITDA beat vs SPGI consensus*; with raised guidance and The Link accretion, Street may need to modestly adjust FY 2025 EBITDA/FFO higher despite occupancy timing *.
  • Trading setup: Narrative catalysts include guidance raise, improving leasing spreads, and capital markets tailwinds (tighter credit spreads, rising private buyer interest)—key drivers for sentiment into H2 as occupancy stabilizes .