Q2 2026 Cousins Properties Inc Earnings Call Transcript
Key Points
- Cousins Properties Inc (CUZ) delivered strong Q2 2026 results with FFO of $0.75 per share and raised full-year 2026 FFO guidance midpoint to $2.95, representing 3.9% growth over 2025.
- Leasing activity was exceptionally robust, with 924,000 square feet of leases completed in Q2, matching Q1 and totaling 1.9 million square feet in H1 2026, one of the highest volumes in company history.
- Portfolio occupancy reached 89.4% (up 50 basis points sequentially) and leased percentage hit 92.8%, the highest since Q1 2020, with a goal of 90% occupancy by year-end.
- Cash rent roll-up on second-generation leases was 9.2%, marking 49 consecutive quarters of positive rent growth, with broad-based increases across nearly all markets.
- Same-property cash NOI grew 5.9% year-over-year in Q2, following a 5.5% increase in Q1, reflecting improving office fundamentals in Sun Belt markets.
- The company completed strategic capital recycling, selling noncore assets (Research Park Plaza 5 and 111 Congress) at attractive cap rates and buying out a partner's interest in 100 Mill, enhancing portfolio quality.
- New development and investment opportunities are emerging, including the Fifth & Walsh project in Austin (58% pre-leased) and the Neuhoff project in Nashville (96% leased), positioning for future growth.
- The company closed a new $1.2 billion unsecured credit facility with a 15 basis point improvement in borrowing spread, strengthening its already best-in-class balance sheet.
- Market trends are favorable: AI-related office demand is broadening, Sun Belt migration is reaccelerating, and new construction starts are at historic lows, creating a supply shortage for lifestyle office space.
- Cousins Properties Inc (CUZ) faces potential occupancy downticks in Q3 2026 due to large expirations in Charlotte, which could temporarily impact results.
- The company expects downtime on a significant portion of the Legacy Union 1 building in Dallas (187,000 square feet) starting in June 2027 until new leases commence in early 2028.
- Dispositions of noncore assets (Research Park Plaza 5 and 111 Congress) traded at around 9% cap rates, reflecting lower growth profiles and ongoing capital needs, which could weigh on near-term earnings.
- The company's guidance assumes settlement of forward shares in Q3, but delays could occur if additional dispositions are pursued, creating uncertainty in share count and earnings.
- Development opportunities, such as 201 North Tryon, may require patience and could delay revenue recognition until late 2027 or 2028, impacting near-term cash flows.
- The office market remains bifurcated, with commodity office space oversupplied, and while Cousins focuses on lifestyle assets, broader market volatility and macro uncertainty persist.
- The company's leasing pipeline, while strong, is subject to fluctuations, and the late-stage pipeline has decreased from 1 million square feet to 820,000 square feet as of early Q3.
- Rent growth, while positive, may be constrained by tenant mix and timing, as Q2 cash rent roll-up of 9.2% was below Q1's double-digit level, though management expects improvement.
Good morning, ladies and gentlemen, and welcome to the Cousins Properties Second Quarter Conference Call. (Operator Instructions) Also note that this call is being recorded on Friday, July 31, 2026.
I would now like to turn the conference over to Pamela Roper, General Counsel.
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; [Kennedy Hicks], our Executive Vice President and Chief Investment Officer; and Gregg Adzema, our Executive Vice President and 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 potable GAAP measures in accordance with Reg G requirements. If
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