Good morning, and welcome to the Cousins Properties Third Quarter 2017 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference call over to Pam Roper. Please go ahead.

Good morning and welcome to Cousins Properties' third quarter earnings conference call. With me today are Larry Gellerstedt, our Chief Executive Officer; Colin Connolly, our President and Chief Operating Officer; and Gregg Adzema, our Chief Financial Officer. The press release and supplemental package were made available on the Investor Relations page of our website 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 comparable GAAP measures in accordance with Reg G requirements. Please be aware that certain matters discussed today may constitute forward-looking statements within the meaning of federal securities laws and actual results may differ materially from these statements due to a variety of risks and uncertainties and other factors. The company does not undertake any duty to update any forward-looking statements whether as a result of new information, future events or otherwise. The full declaration regarding forward-looking statements is available in the press release issued yesterday and a detailed discussion of some potential risks as contained in our filings with the SEC. With that, I will turn the call over to Larry Gellerstedt.

Thanks, Pam. Good morning everybody. And thanks for joining us today. The Cousins team continues to drive strong performance across all areas of our business in 2017. Our office portfolio is 94% leased and generating positive financial results for the 19th straight quarter. We also successfully delivered our second development project this year with Carolina Square coming online during the third quarter. Year-to-date we leased over 1.2 million square feet of office space delivered a 196 million in new developments and the Cousins and legacy Parkway portfolios when combined produced same property cash NOI growth of 8.2% when compared to the same period in 2016. Looking forward I'm encouraged by the steady activity we're seeing on the ground in our Sun Belt markets. Accelerated job growth and ongoing economic expansion continue to support the demand for premium office space, especially in our targeted urban submarkets. This is evident in our portfolios performances cycle as well in the markets where we operate. In Atlanta, Austin, Charlotte, Phoenix and Tampa the Class A office market has experienced 8 consecutive years of positive net absorption and 6 consecutive years of strong net growth. Another important measure to consider when evaluating the health of our markets is new supply. Surprisingly during this cycle new supply in our Sun Belt markets has been more constrained averaging 1.7% of total inventory per year. Putting this into perspective in the previous cycle new supply in our markets averaged 5.2% of total inventory per year. Cousins is well positioned to create value in today its robust real estate environment. While we have seen no early signs of softening conditions, we will remain prepared and well capitalized to quickly adapt if fundamental should change. Regardless of where we are in the market cycle we remain consistent with our strategic…

Thank you, Larry and good morning everyone. It's an exciting time to be part of the Cousins organization as we are well positioned to create value for our shareholders. We have a trophy portfolio and rock solid balance sheet and equally important, a focused and committed team. With that backdrop, I would like to begin my comments today by briefly highlighting some of our key operational and leasing metrics and then I'll provide additional details market by market before closing with an update on our disposition activity. Starting with leasing, the team delivered another strong quarter as we executed approximately 335,000 square feet as office leases with a cash rent roll up to 7% and a weighted average lease term of more than 7 years. Excluding Orlando which accounted for approximately 36% of our leasing activity this quarter, our cash rent roll up was 10%. As a whole, conditions across our markets remain very favorable and our fourth quarter leasing pipeline looks strong. Switching gears to our markets, in Atlanta office fundamentals remain healthy fueled by steady demand and historical low levels of new supply. Our team is active in the market as we leased approximately 119,000 square feet at attractive economics. Our 6 million square foot portfolio remained at 91.4% leased at the end of the quarter, as we previously disclosed Equifax did vacated 68,000 square foot suit in August at Northpark, and Aetna is said to give back its 37,000 square feet in October. On the positive side at Northpark, we were thrilled to lease an additional 25,000 square feet to WestRock during the quarter. With this expansion, WestRock which is a growing $15 billion paper and packaging company, now as 205,000 square feet at the property and will occupy their space in Phases starting in November of…

Thanks Colin, and good morning, everyone. Overall our markets remain healthy and we had a solid quarter. FFO was $0.15 per share and stands at $0.46 per share year-to-date. I would like to begin my comments by highlighting four items that impacted our third quarter results. Then, I will move to our capital markets activity during the quarter and I will conclude by updating our 2017 earnings guidance. I will start with termination fees. For a little perspective, between 2009 and 2016 annual termination fees ranged from a low of $500,000 to a high of $4.5 million. So, the $10.2 million in termination fees we received so far in 2017 is unusual. Although, the 2017 totals comprised of almost 20 customers, 75% of these termination fees had come from just three customers. At our Hayden Ferry project at Tempe, Zenefits moved out to make way for Amazon and ZipRecruiter. At our 1011 West Real Building also in Tempe, U.S. Areas moved out which allowed us to sign a full building lease with ADP. And at our Northpark project in Atlanta, we proactively worked to move out [indiscernible] to make way for WestRock. All three spaces have been fully backfilled. These are huge wins that I don't -- that not only generate fees in the short-term but create real long-term value with properties. Later in the call, I will update our termination fee guidance but as a quick remainder, termination fees are not included in our property level NOI. We include them in the other income section of our supplement. Second, our general and administrative expenses remained elevated during the third quarter, again, driven by an increase in our long-term incentive compensation accrual. As this has been the case for many years, in order to ensure management's interests are aligned with…

Thank you. We will now begin the question-and-answer session. [Operator Instructions] Okay. The first question comes from Dave Rodgers of Baird. Please ask your question. Thank you.

Yes. Good morning, guys. Colin, I want to follow up on your comments about Tampa, I don't think you are the first one to point out that Tampa is going to resurge lately and you provided some statistics, are you going to talk about the tenants that are active in that market what you are seeing in addition to obviously Amgen?

Good question, Dave. We have been very pleased with our activity in Tampa since we closed on the Parkway portfolio a year or so ago. And as I mentioned in my prepared remarks there has been kind of little to no speculative development across the entirety of the market and we have seen a real pick up in demand in Tampa. And I would characterize Tampa is a bit different than Orlando where we do see some large kind of national, international corporations that really find Tampa attractive from a quality of life standpoint adjacent to obviously waterfront and they have got a view that they can attract really high quality talent. So, we have seen another large scale corporations like Amgen looking for space and it's in a lot of different sectors, it's certainly in the healthcare space like Amgen, but also you see a lot of large financial services that use that for some of their back office operations. And so as I said, we're continuing to see good activity from those type of users.

And again, Colin or maybe for Larry on the development side of the equations, sounds like you are having some good discussions on potential build-to-suit, but you had kind of success at Avalon obviously going in with a little bit less pre-leasing and giving yourself some space to work with. Are there any markets or submarkets where, you'd think about that today or you'd be comfortable taking on some speculative leasing risk just give in your comments about how strong the Southeast is in the limited amount of supply?

Yes, Dave. This is Larry. A measured amount of speculative risk we'll take if the leasing pipeline that we see, on a particular project is really, really strong. But we're going to want some pre-leasing some significant pre-leasing even on a project got the second building in Avalon up. If I remember correctly, we started Avalon with about 20% pre-leasing, but it was Microsoft and we had visibility behind it of a customer interest with the strong roaster that you see. And so we don't ever look at a new development opportunity with a 6 percentage of pre-leasing that we have to get to. We do want to see some meaningful pre-leasing just where we are in the cycle. But it's also a combination of looking at what's behind it and how strong we think that the product is positioned in the interest level of the customer. We feel really good, about the second building at Avalon and we've been in the design process and getting it through of it owning a requirement, so that we can be ready to go in the short amount of time when we do see that demand. And the demand looks good so far, we just have to see how much of it we can get converted into actual leases before we start.

And this will be the last from me and this one is for Gregg or Colin, in terms of the low point of maybe what we call your transitional NOI number as you kind of transition from some of the older tenants to some of these leases, is that low point in the fourth quarter kind of given what you've said and you start to kind of work higher as you move into 2018?

I think if you look at our same property performance in the fourth quarter, I mean as I mentioned in my prepared remarks you'll see a dip in revenues and a dip in same property occupancy. But as Colin pointed in his prepared remarks, I mean the pipeline behind that fills it up rather quickly in 2018, so to recover quickly. So, in terms of same property occupancy, kind of fourth quarter, first quarter that will be the low point.

All right, great. Thanks guys.

The next question comes from Chris Belosic of Green Street Advisors. [Operator Instructions] Mr. Belosic, please go ahead.

Hey good morning guys. So just another question on the build-to-suit interest that you guys are talking about, I believe last quarter you said that is Tempe, Tampa and Austin is where you are potentially seeing those tenants expanding where that could possibly happen is that still the same mix or has any of that change from last quarter?

We certainly still have those type of opportunities that we're looking at in Austin and Tempe, I think that, but we also have opportunities that are as far along that we are looking at in our other three markets as well. So, it really is it a point in terms of our portfolio and where we want to be in the cities of just being disciplined and making sure that we have the right customer under the right terms and moving that way. And as I said I'm optimistic that we have one that should, we should be ready to talk about hopefully in the next quarter or so. And then we've got a couple behind that that, we'll have to see, but we feel positive about them as well. And it's very encouraging, it's just it's a faction once again of the markets we're in and then the submarkets we're in and it's just where the customers want to be and then the limited amount of new speculative supply that's been added in these markets. So, a big customer that wants to do a significant expansion whether it's dimensional fund advisors or an NCR, the build-to-suit option is a viable one at this time in the cycle.

Okay, great. And then can you guys remind me with the, kind of delivery and putting Carolina Square into operations what are your thoughts again on Raleigh kind of long-term is that somewhere that you are looking to grow whether it's this cycle or next and so is that primarily there going to be few developments that you are going to acquire there?

We really, as we look at our go forward strategy as I said, we overlap the stain in Sun Belt looking at major cities and then looking at the amount of space that qualifies in terms of a truly urban submarket. And we really scanned by a combination of city, but then drilling down within each city to is there an urban submarket that really fits our - our model here. And I would not say that Raleigh is a primary focus of ours right now. We're always opportunistic and Raleigh is a great market, but it wouldn't be one that we are, prioritized at the highest level right now. And as primarily just there is a very strong player in the reach space, it does a terrific job and the true urban core Raleigh in the CBD is a relatively small sample size in terms of the type of assets that we look to own.

Thanks Larry. And then just one last one from me, just want to make sure I understand on the kind of year-over-year tax difference for 3Q that's something that is just more effective of the one-time kind of reimbursement 3Q last year and something about 4Q there is not some kind of tax hike it will be a similar increase year-over-year in 4Q?

Hey Chris. It's Gregg. You should expect, we don't provide quarterly guidance on expenses, you should expect to see our same property as well as the Parkway same property expenses drop more in line with recent trends during the fourth quarter.

Okay, great. That's it from me guys.

Okay. As we are not showing any further questioners, this will conclude our question-and-answer session for today. I would now like to turn the conference back over to Larry Gellerstedt for any closing remarks.

We appreciate everybody being on the call. As always we're available for any follow-up calls or questions that you have. And we appreciate your interest in our company and we look forward to seeing a lot of you all at NAREIT next month. Thanks very much.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.