What changed in this filing

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Item 1. Business

2023-02-09 compared with 2022-02-03 · 65 added, 56 removed, 46 unchanged (72% of the section changed)

Corporate Profile

Cousins Properties Incorporated (the “Registrant” or “Cousins”) is a Georgia corporation, which has elected to be taxed as a real estate investment trust (“REIT”).

Cousins Properties Incorporated (the “Registrant” or “Cousins”) is a Georgia corporation, that has elected to be taxed as a real estate investment trust (“REIT”).

Cousins conducts substantially all of its business through Cousins Properties LP ("CPLP"), a Delaware limited partnership.

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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.

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

Our operations are conducted principally in the office real estate segment which we review by 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, Dallas, and Nashville.

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 based on a disciplined approach to capital allocation that includes opportunistic acquisitions, selective developments, and timely dispositions of non-core assets, with a goal of maintaining a portfolio of newer and more 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 utilize our strong local operating platforms within each of our major markets.

We utilize our strong local operating platforms within each of our major markets to implement this strategy.

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 markets, exits of prior markets, and rebalancing among all markets.

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

("TIER") ("Merger"), we added nine operating office properties containing 5.8 million square feet of space, two office properties under development, and seven strategically located land parcels on which up to 2.5 million square feet of additional space could be developed.

We believe that this Merger created a company with an attractive portfolio of trophy office assets balanced across the premier Sun Belt markets and enhanced our position in our existing markets of Austin and Charlotte, provided a strategic entry into Dallas, and balanced our exposure in Atlanta.

The Merger also enhanced growth and provided value-add opportunities as a result of TIER's active and attractive development portfolio and land bank.

Additional details of the Merger are discussed in "Item 1.

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

Since 2016 we have completed two significant transactions including a merger with Parkway Properties, Inc.

and a merger with TIER REIT, Inc.

These transactions are consistent with our strategy and have created value for our stockholders through both growth and repositioning our portfolio.

In addition to the transactions noted above, over the past five years, we have acquired 2.6 million square feet of operating properties for $974 million in gross purchase price, completed 2.9 million square feet of development at total project costs of $1.2 billion, and sold 5.5 million square feet of operating properties for $1.3 billion in gross sales price.

2022 Activities

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 .

During 2022, we completed several financing transactions consistent with our strategy of maintaining a flexible and low-leveraged balance sheet.

The following is a summary of our significant 2022 activities:

Development Activity

• Completed development of 300 Colorado, a 369,000 square foot office property in Austin, TX.

• Completed development of 100 Mill, a 288,000 square foot office property in Phoenix, AZ.

• Continued development of two projects located in our Austin and Nashville markets.

These projects include 786,000 square feet of office space, and our share of the total expected project costs total $428.5 million.

Investment Activity

• 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.

• Purchased our partner's 10% interest in 8000 and 10000 Avalon for $43.4 million.

The purchase price included a promote to our partner in excess of its partnership interest and represented a negotiated fair value of $301.5 million for the entire 480,000 square feet of office space.

Disposition Activity

• 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.

• Sold our 50% interest in Carolina Square, a 468,000 square foot mixed-use property in Chapel Hill, NC, to our joint venture partner for a gross price of $105.0 million.

• An unconsolidated joint venture sold a 3.0 acre land parcel in the Victory submarket of Uptown Dallas for a gross price of $23.1 million.

Financing Activity

• Closed a new $1.0 billion unsecured revolving credit facility with a maturity date of April 2027.

• Closed a $400 million Term Loan with an initial maturity date of March 2025 and four consecutive extension options for six months each.

• Amended our $350 million Term Loan, with an initial maturity date of August 2024 and four consecutive extension options for six months each, changing the base interest rate to SOFR, and entered into a floating-to-fixed interest rate swap, fixing the underlying SOFR rate at 4.23% through maturity.

• Repaid in full our Promenade Tower and Legacy Union mortgages with maturity dates of October 2022 and January 2023, respectively.

• Amended and extended the two existing mortgages on our Terminus properties in Atlanta through January 2031 for a combined $221 million.

• Settled outstanding forward contracts to sell 2.6 million shares of common stock.

These forward contracts were executed in the third and fourth quarters of 2021 at a gross average price of $39.92.

Portfolio Activity

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

• Leased or renewed 2.0 million square feet of office space, including 997,000 square feet of new and expansion leases, representing 50% of total leasing activity.

• Increased second generation net rent per square foot by 9.5% on a cash-basis.

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Sustainability

We have been an advocate and practitioner of energy conservation measures and sustainability initiatives for many years, and we operate our business in a manner that seeks to advance energy efficiency and sustainability practices in every area of our company.

We review characteristics of existing buildings, including acquisition opportunities, to evaluate feasible improvements for operating efficiencies, including improvements in the existing performance of the building in consumption of energy and water resources and the mitigation of resource consumption through recycling and other efforts.

In addition, we evaluate the proximity to transit options, with a strong preference for nearby bus and rail transit.

When planning development projects, we take all of the foregoing into account, and we strive to design highly-sustainable buildings, generally taking advantage of the LEED and/or BOMA 360 certification process and designation.

For us, sustainability means developing and maintaining durable buildings that are operated in an environmentally and socially responsible manner, thereby encouraging office users to select us for their corporate operations, while enhancing the communities in which our buildings are located.

Our sustainability strategy is focused on developing and maintaining resilient buildings that are operated in an environmentally and socially responsible manner, thereby encouraging office users to select us for their corporate operations, while enhancing the communities in which our buildings are located.

Over the long-term, we believe properties that reflect these priorities will remain attractive to office users and investors, and as a result, we anticipate that this philosophy will continue to create value for our stockholders.

We seek these outcomes through creating and maintaining a resilient portfolio of high quality office buildings by prioritizing investments and operational activities that result in a highly efficient and healthy portfolio, investing in the professional development and wellness of our employees, and continually seeking ways to support and serve our communities.

Our corporate governance is guided by our commitment to conduct our business in accordance with the highest ethical principles, the oversight and direction of an experienced and diverse board of directors, and an integrated approach to risk management.

We have been an advocate and practitioner of energy conservation measures and sustainability initiatives for many years and continually evaluate the characteristics of existing buildings to determine feasible improvements that maximize operating efficiencies, reduce the consumption of energy, water, and waste, and increase waste diversion through recycling and other efforts.

In our 2021 Environmental, Social, and Governance ("ESG") Report, published in 2022, we released goals to reduce energy, greenhouse gas emissions, and water usage, each over a 2018 base year, by 25% by the year 2023, and to maintain LEED and Energy Star ratings on 75% of our operating properties.

In the development and operation of our office buildings, we look to relevant industry standards for guidelines on energy performance and other measures.

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

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.

Since 2016, we have participated in the Global Real Estate Sustainability Benchmark ("GRESB") Annual Survey, which measures the environmental performance of property portfolios around the world and is endorsed by many large institutional investors.

In each of these GRESB Surveys, we received a rating of "Green Star," the highest rating within the Survey, with a total score each year above the GRESB overall participant average.

Since 2017, we scored above our peer group average in the GRESB Public Disclosure assessment, which GRESB has indicated is intended to represent an overall measure of disclosure by listed real estate companies on matters related to the environment, social, and governance practices, based on a selection of indicators aligned with the GRESB Annual Sustainability Benchmark assessment.

Our 2021 scores along with additional information on our sustainability and other corporate social responsibility initiatives will be included under the caption "Sustainability and Corporate Responsibility" in the Proxy Statement relating to our 2022 Annual Meeting of Stockholders.

In particular, we are influenced by EnergyStar, LEED, BOMA 360, and FitWel (Health and Safety).

In addition, we evaluate the proximity to transit options, with a strong preference for nearby bus and rail transit.

We also include climate assessments in our review of development opportunities and our evaluation of operating buildings, including the risks of extreme temperatures, floods, hurricanes, and droughts.

When planning development projects, we take all of the foregoing into account, and we strive to design highly-sustainable buildings, generally taking advantage of LEED and/or BOMA 360 certification process and designation.

Our Board-level Sustainability Committee was established in 2022 and advises the Board and provides oversight of management on sustainability objectives and strategy.

The Committee, alongside management, monitors and evaluates the Company's progress in achieving its sustainability performance goals and commitments related to climate action and resilience.

This oversight is complementary to that of two other key committees - the Compensation & Human Capital

Committee (oversight of human capital matters, including diversity, inclusion, retention, succession planning, and executive compensation) and the Nominating & Governance Committee (oversight of our adherence to corporate governance best practices).

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

Since 2016, we have participated in the annual Global Real Estate Sustainability Benchmark ("GRESB") assessment, which validates ESG performance data of property portfolios around the world and creates peer benchmarks for use by investors and managers.

In each of these GRESB assessments, we received a rating of "Green Star," the highest rating within the assessment, with a total score each year above the GRESB overall participant average.

Since 2017, we have scored at or above our peer group average in the GRESB Public Disclosure assessment, which GRESB has indicated is intended to represent an overall measure of disclosure by listed real estate companies on matters related to the environment, social, and governance practices, based on a selection of indicators aligned with the GRESB Annual Sustainability Benchmark assessment.

Our 2022 scores (based on 2021 data), along with additional information on our sustainability and other corporate social responsibility initiatives, will be included under the caption "Sustainability and Corporate Responsibility" in the Proxy Statement relating to our 2023 Annual Meeting of Stockholders.

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.

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.

We also compete with other real estate companies, financial institutions, pension funds, partnerships, individual investors, and others when attempting to acquire and develop properties.

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

We also compete against other real estate companies, financial institutions, pension funds, partnerships, individual investors, and others when attempting to acquire and develop properties.

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 Austin, Charlotte, Phoenix, Tampa, 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 operating 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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Our Code and Core Values are available on our website at www.cousins.com .

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, 2021, 44% of our supervisors and 33% of our Board of Directors were women, including the Chair of our Audit Committee.

As of December 31, 2022, we had 286 full-time employees, which includes the seven executive officers listed on page 23, with women representing 40% of our workforce and with 42% of the workforce self-identifying as a minority.

In addition, as of December 31, 2022, 48% of our supervisors and 33% of our Board of Directors, including the Chair of our Audit Committee, were women;

and, 26% of our supervisors self-identify as a minority.

We also recognize the importance of experienced leadership;

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

as of December 31, 2022, the average tenure at Cousins for the executive team was twelve years.

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

Our priorities include professional development, health and wellness, and community engagement by our employees.

Among our engagement efforts, we conduct regular “townhall” events for all employees, where we update everyone on recent accomplishments and key initiatives, we regularly participate in employee engagement surveys and we sponsor community engagement opportunities and various health challenges.

We also strive to provide pay, benefits, and services that help meet the varying needs of our employees.

Some of our engagement efforts include regular “townhall” events for all employees, where we update everyone on recent accomplishments and key initiatives;

regular participation in employee engagement surveys;

and sponsorship of community engagement opportunities and various health challenges.

We also strive to provide competitive pay, benefits, and services that help meet the varying needs of our employees.

Our general total rewards packages include market-competitive pay, performance-conditioned annual incentive compensation, stock- and performance-based long-term incentive compensation for key employees, healthcare and retirement benefits, paid time off, and family leave.

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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.

We typically manage this potential liability through performance of Phase I Environmental Site Assessments and, as necessary, Phase II Environmental Site Assessments, which may 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.

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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.

We are not presently 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.

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 by us or our predecessors.

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.

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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 (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.

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 any 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 (including our Vendor Code of Conduct), Bylaws, and the Charters of the Audit Committee, the Compensation & Human Capital Committee, the Nominating & Governance Committee, and the Sustainability 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