Cousins Properties (CUZ) Q2 2024 earnings summary

Executive summary

• Delivered strong Q2 2024 results with FFO of $103.3 million ($0.68/share), flat year-over-year and exceeding consensus, driven by 5% same property NOI growth and robust leasing, including 391,000 sq ft leased at an 18.2% cash rent roll-up, with 61% from new/expansion leases.

• Portfolio occupancy rose to 88.5%, with leasing and physical utilization improving across Sun Belt lifestyle office markets, which continue to outperform the broader sector.

• Closed/acquired two off-market mezzanine loan investments in Charlotte and Nashville, with initial commitments totaling $27.2–$27.6 million and potential up to $37 million, earning attractive risk-adjusted returns.

• Maintained sector-lowest leverage (net debt/EBITDA at 5.12x), received inaugural investment-grade ratings (Baa2/BBB), and enhanced capital market access.

• Net income available to common stockholders was $7.8 million ($0.05/share), down from $22.6 million ($0.15/share) in Q2 2023, mainly due to higher depreciation expense.

Financial highlights

• Q2 2024 FFO per share was $0.68, above Street consensus and flat year-over-year.

• Same property GAAP NOI grew 4.2% and cash NOI grew 5.1% year-over-year; Q2 2024 NOI was $139.8 million, up 7.3% from Q2 2023.

• Q2 2024 rental property revenues were $211.5 million, up 3.7% from Q2 2023.

• Q2 2024 EPS was $0.05, down from $0.15 in Q2 2023.

• Second-generation cash leasing spreads were positive for the 41st consecutive quarter, with net rent per sq ft up 18.2%.

Outlook and guidance

• Raised full-year 2024 FFO guidance to $2.63–$2.68/share (midpoint $2.655), up $0.02 from April, driven by improved leasing, higher parking revenues, and mezzanine loan income.

• Full-year 2024 net income guidance updated to $0.31–$0.36/share.

• Guidance excludes any recovery from the $9.6 million SVB bankruptcy claim and any property acquisitions, dispositions, or capital markets transactions.

• Sufficient liquidity is expected to meet obligations, supported by $682.9 million in available credit facility capacity and $6.0 million in cash as of June 30, 2024.

• Anticipates stable or modestly higher occupancy by year-end, supported by new leases and low remaining 2024 expirations.