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Item 1. Business

2022-02-03 compared with 2021-02-11 · 44 added, 60 removed, 58 unchanged (64% of the section changed)

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Cousins owns in excess of 99% of CPLP, and CPLP is consolidated with Cousins for financial reporting purposes.

CPLP also owns Cousins TRS Services LLC ("CTRS"), a taxable entity which owns and manages its own real estate portfolio and performs certain real estate related services for other parties.

Cousins, CPLP, their subsidiaries, and CTRS combined are hereafter referred to as “we,” “us,” “our,” and the “Company.” Our common stock trades on the New York Stock Exchange under the symbol “CUZ.”

CPLP also owns Cousins TRS Services LLC ("CTRS"), a taxable entity that owns and manages its own real estate portfolio and performs certain real estate related services for other parties.

Cousins, CPLP, their subsidiaries, and CTRS combined are hereafter referred to as “we,” “us,” “our,” and the “Company.” Cousins' common stock trades on the New York Stock Exchange under the symbol “CUZ.”

Our operations are conducted through a number of segments based on our method of internal reporting, which classifies operations by property type and geographical area.

Company Strategy

Our strategy is to create value for our stockholders through ownership of the premier office portfolio in the Sun Belt markets of the United States, with a particular focus on Atlanta, Austin, Charlotte, Phoenix, Tampa, and Dallas.

This strategy is based on a disciplined approach to capital allocation that includes value-add acquisitions, selective development projects, and timely dispositions of non-core assets.

This strategy is based on a disciplined approach to capital allocation that includes opportunistic acquisitions, selective development projects, and timely dispositions of non-core assets with a goal of maintaining a portfolio of new and efficient properties with lower capital expenditure requirements.

This strategy is also based on a simple, flexible, and low-leveraged balance sheet that allows us to pursue compelling growth opportunities at the most advantageous points in the cycle.

To implement this strategy, we leverage our strong local operating platforms within each of our major markets.

To implement this strategy, we utilize our strong local operating platforms within each of our major markets.

Recent Notable Business Developments

In recent years, we have experienced several significant business developments resulting from transactions that represent a direct outgrowth of our company strategy to create value for our stockholders.

These transactions have driven significant portfolio growth and repositioning of our portfolio through entries into new core markets, exits of prior core markets, and rebalancing among all core markets.

These transactions have driven significant portfolio growth and repositioning of our portfolio through entries into new markets, exits of prior markets, and rebalancing among all markets.

During 2019, through a strategic merger with TIER REIT, Inc.

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Business" of our 2019 Annual Report on Form 10-K .

During 2016, we completed a merger with Parkway Properties, Inc.

("Parkway") and simultaneous spin-off of the combined companies' Houston business into a separate public company, Parkway, Inc.

("New Parkway").

As a result of the merger and spin-off, we added 16 properties and 1.6 million square feet of space to our pre-merger portfolio on a net basis.

We added properties in our existing markets of Atlanta, Charlotte, and Austin and in new markets including Phoenix, Tampa, and Orlando.

Additional details of the merger with Parkway and spin-off are discussed in "Item 1.

Business" of our 201 6 Annual Report on Form 10-K .

2021 Activities

During 2020, we completed acquisitions and dispositions of multiple operating properties and land parcels, completed one development project, and commenced development on one project.

At year-end, we had five development projects in process and our share of the total expected costs of these projects totaled $449.4 million.

During 2021, we completed acquisitions and dispositions of multiple operating properties and land parcels and entered into two joint ventures.

At year-end, we had four development projects in process, and our share of the total expected costs of these projects totaled $759.0 million .

The following is a summary of our significant 2021 activities:

Investment Activity

• Acquired a 329,000 square foot creative office asset in the South End submarket of Charlotte known as The RailYard for a gross purchase price of $201.3 million, including acquisition costs.

• Acquired a 1,550 space parking garage adjacent to multiple of our Charlotte properties for $85.3 million, including acquisition costs.

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• Acquired 3.4 acres of land in the South End submarket of Charlotte for a gross purchase price of $28.1 million.

The Company anticipates developing a 600,000 to 700,000 square foot mixed-use development on the site to be called South End Station.

• Acquired 2.4 acres of land in the South End submarket of Charlotte for a purchase price of $18.8 million to be used for a future development and to be called 303 Tremont.

• Acquired 1.7 acres of land adjacent to existing Domain properties in Austin through a 90% owned joint venture for a purchase price of $11.0 million.

• Completed development and commenced operations of Domain 12, a 320,000 square foot office building in Austin that was acquired in the Merger.

• Continued development of Domain 10, a 300,000 square foot office building in Austin that was acquired in the Merger, which is in the final stages of development.

• Continued development of 120 West Trinity, a 352,000 square foot mixed-use property in Atlanta, which is in the final stages of development.

• Continued development of 10000 Avalon, a 251,000 square foot building in Atlanta, which is in the final stages of development.

This project is adjacent to our existing 8000 Avalon building and is being developed in a joint venture in which we hold a 90% interest.

• Continued development of 300 Colorado, a 358,000 square foot office building in downtown Austin.

This project is being developed in a joint venture in which we hold a 50% interest, and is expected to begin operations in early 2021.

• Commenced development of 100 Mill, a 287,000 square foot office building in Tempe.

This project is being developed in a joint venture in which we hold a 90% interest and is expected to begin operations in early 2022.

• Acquired our partners' 50% interest in 300 Colorado, a 369,000 square foot office building in downtown Austin, for a gross price of $162.5 million.

• Acquired Heights Union, a 294,000 square foot office property in Tampa, for a gross price of $144.8 million.

• Acquired 725 Ponce, a 372,000 square foot office property in Midtown Atlanta, for a gross price of $300.2 million.

• Acquired land parcels totaling 0.7 acres, which are part of our 887 West Peachtree land assemblage in Atlanta, for a gross price of $10.0 million.

• Acquired a 0.2 acre land parcel in Atlanta, which is adjacent to our 3344, 3348, and 3350 Peachtree operating properties, for a gross price of $8.0 million that is held in a 95% owned consolidated joint venture.

• Entered into a 50/50 joint venture, with an initial capital contribution of $4.0 million, which owns the 715 Ponce land parcel adjacent to the 725 Ponce property in Midtown Atlanta.

• Entered into a 50/50 joint venture to develop Neuhoff, a mixed-use project in Nashville, which will include 448,000 square feet of office and retail space as well as 542 multi-family units, for an estimated investment of $281.3 million at our share.

Disposition Activity

• Sold Hearst Tower, a 966,000 square foot office tower in Charlotte, for gross proceeds of $455.5 million.

• Sold the Compa ny's 50% interest in Gateway Village, a 1 million square foot office property in Charlotte, for gross proceeds of $52.2 million which represented a 17% internal rate of return on our invested capital, as stipulated in the partnership agreement.

• Sold Woodcrest, a 386,000 square foot non-core office property in Cherry Hill, New Jersey that was acquired in the Merger, for gross proceeds of $25.3 million.

• Disposed of various non-core land holdings.

• Sold 816 Congress, a 435,000 square foot office building in downtown Austin, for a gross price of $174.0 million.

• Sold One South at the Plaza, an 891,000 square foot office property in Charlotte, for a gross price of $271.5 million.

• Sold 0.7 acres of land in Phoenix, adjacent to our 100 Mill development, to a hotel developer for a gross price of $6.4 million.

• Sold Burnett Plaza, a one million square foot office building in Fort Worth, for a gross price of $137.5 million.

• Sold our 50% investment in Dimensional Place, a 281,000 square foot office property in Charlotte, to our joint venture partner for a gross price of $60.8 million.

Portfolio Activity

• Leased or renewed 2.1 million square feet of office space.

• Increased second generation net rent per square foot by 27.2% on a straight-line basis and 13.1% on a cash basis.

• Increased second generation net rent per square foot by 15.1% on a cash-basis.

• Increased same property net operating income by 3.5% on a cash-basis.

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In particular, we are influenced by EnergyStar, LEED, and BOMA 360.

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believe adoption of the guidelines or receipt of ratings will have a positive effect on our operational excellence and resource consumption.

As part of our pragmatic approach to sustainability, we carefully consider the guidelines and ratings when designing our new developments and improvements to existing office buildings, and we seek to include the guidelines or ratings where we believe adoption of the guidelines or receipt of ratings will have a positive effect on our operational excellence and resource consumption.

We publish reports reflecting our corporate social responsibility practices (including sustainability), which is available on the Sustainability page of our website at www.cousins.com.

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Except for the documents specifically incorporated by reference into this Annual Report on Form 10-K, information contained on our website or that can be accessed through our website is not incorporated by reference into this Annual Report on Form 10-K.

Environmental Matters

Our business operations are subject to various federal, state, and local environmental laws and regulations governing land, water, and wetlands resources.

Among these are certain laws and regulations under which an owner or operator of real estate could become liable for the costs of removal or remediation of certain hazardous or toxic substances present on or in such property.

Such laws often impose liability without regard to whether the owner knew of, or was responsible for, the presence of such hazardous or toxic substances.

The presence of such substances, or the failure to properly remediate such substances, may subject the owner to substantial liability and may adversely affect the owner’s ability to develop the property or to borrow using such real estate as collateral.

We typically manage this potential liability through performance of Phase I Environmental Site Assessments and, as necessary, Phase II Environmental Site Assessments which include environmental sampling on properties we acquire or develop.

Even with these assessments and testings, no assurance can be given that environmental liabilities do not exist, that the reports revealed all environmental liabilities, or that no prior owner created or permitted any material environmental condition not known to us.

In certain situations, we have also sought to avail ourselves of legal and regulatory protections offered by federal and state authorities to prospective purchasers of property.

Where applicable studies have resulted in the determination that remediation was required by applicable law, the necessary remediation is typically incorporated into the operational or development activity of the relevant property.

We are not aware of any environmental liability that we believe would have a material adverse effect on our business, assets, or results of operations.

Certain environmental laws impose liability on a previous owner of a property to the extent that hazardous or toxic substances were present during the prior ownership period.

A transfer of the property does not necessarily relieve an owner of such liability.

Thus, although we are not aware of any such situation, we may have such liabilities on properties previously sold.

We believe that we and our properties are in compliance in all material respects with applicable federal, state, and local laws, ordinances, and regulations governing the environment.

For additional information, see Item 1A.

Risk Factors - "Environmental issues."

We compete with other real estate owners with similar properties located in our markets and distinguish ourselves to tenants/buyers primarily on the basis of location, rental rates/sales prices, services provided, proximity to public transit, reputation, design and condition of our facilities, operational efficiencies, and availability of amenities.

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Human Capital

Our executive offices are located at 3344 Peachtree Road NE, Suite 1800, Atlanta, Georgia 30326-4802, and we maintain regional offices in each of our additional key markets of Charlotte, Austin, Phoenix and Dallas.

Our executive offices are located at 3344 Peachtree Road NE, Suite 1800, Atlanta, Georgia 30326-4802, and we maintain regional offices in each of our additional key markets of Austin, Charlotte, Phoenix, Tampa, and Dallas.

We recognize that our achievements and progress on our corporate strategy are made possible by the attraction, development and retention of our dedicated employees.

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We also invest in training and development opportunities to enhance our employees’ engagement, effectiveness and well-being.

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All of our employees are responsible for upholding our Code of Business Conduct and Ethics (the “Code”) and our Core Values, which includes the embrace of diversity in the backgrounds, cultures, interests, and experiences within our Company, and we strive to have a workforce that reflects the diversity of qualified talent that is available in the markets we serve.

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As of December 31, 2021, we had 294 full-time employees, which include the seven executive officers listed on page 23, with women representing 39% of our workforce and with 39% of the workforce self-identifying as a minority.

In addition, as of December 31, 2020, 45% of our supervisors were women and 25% of our Board of Directors, including the Chair of our Audit Committee.

We also recognize the importance of experienced leadership, and as of December 31, 2020, the average tenure for the executive team was ten years.

In addition, as of December 31, 2021, 44% of our supervisors and 33% of our Board of Directors were women, including the Chair of our Audit Committee.

We also recognize the importance of experienced leadership;

as of December 31, 2021, the average tenure for the executive team was eleven years.

We are committed to maintaining a healthy environment for our employees that enables them to be productive members of our team.

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Through a combination of Company giving and direct voluntary participation by our employees, we donate funds to support meaningful organizations in communities across our geographical footprint.

Environmental Matters

Our business operations are subject to various federal, state, and local environmental laws and regulations governing land, water, and wetlands resources.

Such laws often impose liability without regard to whether the owner knew of, or was responsible for, the presence of such hazardous or toxic substances.

In certain situations, we have also sought to avail ourselves of legal and regulatory protections offered by federal and state authorities to prospective purchasers of property.

We are not aware of any environmental liability that we believe would have a material adverse effect on our business, assets, or results of operations.

Certain environmental laws impose liability on a previous owner of a property to the extent that hazardous or toxic substances were present during the prior ownership period.

A transfer of the property does not necessarily relieve an owner of

such liability.

Thus, although we are not aware of any such situation, we may have such liabilities on properties previously sold.

We believe that we and our properties are in compliance in all material respects with applicable federal, state, and local laws, ordinances, and regulations governing the environment.

For additional information, see Item 1A.

Risk Factors - "Environmental issues."

Available Information

We make available free of charge on the “Investor Relations” page of our website, www.cousins.com , our reports on Forms 10-K, 10-Q, and 8-K, and all amendments thereto, as soon as reasonably practicable after the reports are filed with, or furnished to, the Securities and Exchange Commission (the “SEC”).

Our Corporate Governance Guidelines, Director Independence Standards, Code of Business Conduct and Ethics, and the Charters of the Audit Committee and the Compensation, Succession, Nominating, and Governance Committee of the Board of Directors are also available on the “Investor Relations” page of our website.

Our Corporate Governance Guidelines, Director Independence Standards, Code of Business Conduct and Ethics (including our Vendor Code of Conduct), and the Charters of the Audit Committee and the Compensation, Succession, Nominating, and Governance Committee of the Board of Directors are also available on the “Investor Relations” page of our website.

The information contained on our website is not incorporated herein by reference.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business