Good day, ladies and gentlemen, and welcome to the Cousins Properties First Quarter Conference Call and Webcast. All participants are currently in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note that this conference is being recorded. I would now like to turn the conference over to Pam Roper. Go ahead.

Good morning, and welcome to Cousins Properties first quarter earnings conference call. With me today are Colin Connolly, our President and Chief Executive Officer; Richard Hickson, our Executive Vice President of Operations; and Gregg Adzema, our 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 comparable GAAP measures in accordance with Reg G requirements. If you did not receive a copy, these documents are available through the quarterly disclosures and supplemental SEC information links on the Investor Relations page of our website. As you may be aware on March 25, 2019, we announced the execution of a merger agreement between Cousins Properties and TIER REIT. A separate press release was issued and the investor presentation with the related conference call transcript regarding the proposed transaction were posted to both company’s websites. We filed with the SEC on April 19, a registration statement on Form F-4 that includes a preliminary joint proxy statement and prospectus regarding the proposed transaction. The registration statement has not yet become effective. A definitive version will be mailed to Cousins and TIER’s stockholders when it is available. You should review the definitive proxy statement and other materials filed with the SEC carefully when they become available as they will include important information regarding the proposed transaction, including information about certain of the Directors and Executive Officers of Cousins and TIER who maybe deemed to be participants in the solicitation of proxies with respect to the proposed transaction. Information about each Cousins and TIERS Directors and Executive Officers are contained in our respective filings with the SEC and will be contained in the definitive joint proxy statement and prospectus. This call will focus on our second quarter results and we request that you confine your questions and comments to these results and not the announced merger. 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 including the risk factors set forth in our Annual Report on Form 10-K and our other SEC filings. 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 supplemental package posted yesterday and a detailed discussion of some potential risks is contained in our filings with the SEC. With that, I’ll turn the call over to Colin Connolly.

Thank you, Pam, and good morning, everyone. At Cousins, it all starts with strategy. We strive to be the preeminent Sunbelt office REIT. To accomplish this goal, we execute the business around four core operating principles. First, own the premier Sunbelt portfolio in the best submarkets across our geographic footprint; second, maintain a disciplined approach to capital allocation with a focus on new investments where our platform can add value; third, preserve our best-in-class balance sheet to provide financial flexibility for future opportunities; and four, leverage strong local operating platforms that take an entrepreneurial approach. While this strategy might sound simple, we believe that it is unique, compelling and supported by powerful long-term trend. To highlight, the population in New York City, Chicago and Los Angeles all declined in 2018 according to the latest U.S. census data. Meanwhile, population growth in all six of our markets remain robust. In many respects, the data confirms what we already knew, a migration to the Sunbelt is well underway, which is attracting large users of office space who are in search of talent, lower costs and a pro-business environment. Importantly, these trends are translating into positive real estate fundamentals in our Sunbelt office market. And our team at Cousins continues to capitalize as we had an exceptionally active and productive first quarter. On the operations front, the team delivered $0.20 per share in FFO with same property cash NOI up 4% and second generation cash rents up 7.1%. Richard and Greg will provide more detail on our leasing and financial results in a moment. Turning to our investment activity, we entered into a series of strategic agreements with Norfolk Southern. Let remind you of the particulars. First, Cousins will develop a new corporate headquarters for the company in Midtown Atlanta, recognizing associated fee…

Thank you, Colin. As you can tell from Colin’s remarks, 2019 is off to a strong start overall and operations within our existing portfolio are no exception. At the portfolio level, we completed 682,000 square feet of leasing this quarter, including the 370,000 square foot lease with Norfolk Southern that Colin previously described. Excluding the sizable shorter-term lease, the average lease term of our quarterly activity was eight years and our average net effective rents were slightly higher than for the full-year 2018. Rent growth remains at strong levels, with second generation net rents increasing 22.8% on a GAAP basis and 7.1% on a cash basis. With this activity, our portfolio weighted average occupancy for the quarter ended at 92.7% and we were 94.9% leased. Looking forward, a modest 4.7% of our leases are set to expire during the remainder of 2019. Broad themes throughout all of our markets continue to be solid population and job growth, record high rental rates, stable or declining vacancy with an increasing prevalence of construction activity. Turning to the markets, Atlanta continues to be very healthy and our overall activity was particularly strong. According to JLL, Atlanta Class A rental rates hit historic highs yet again, up 5.6% over last year. CBRE noted that first quarter 2019 overall net absorption reached its highest levels since the end of 2015 at 583,000 square feet. Our Atlanta team executed 588,000 square feet of leasing this quarter. As I already mentioned, the most notable lease in Atlanta was the 370,000 square foot Norfolk Southern Regional Headquarters lease executed in connection with our larger arrangement with Norfolk Southern. This lease represents temporary space for the company during construction of their new Midtown headquarters. In Buckhead, we signed a new 46,000 square foot lease with FLEETCOR at Terminus completely…

Thanks, Richard, and good morning, everyone. I’ll begin my remarks by providing an overview of our financial results, including same-property performance. Then, I’ll move on to our balance sheet before closing my remarks with an update to our 2019 earnings guidance. As you can tell from Colin and Richard’s comments, it was a solid quarter on many fronts. At $0.20 per share, FFO was up more than 30% over last year and the important operating metrics that both you and we focus on were strong. Leasing velocity remained brisk, second generation leasing spreads were solidly positive, and same property year-over-year cash NOI increased for the 29th consecutive quarter. Included in this quarter’s results are three items. I’d like to highlight before providing some color on our same-property performance. First, our general and administrative expenses during the first quarter were significantly higher than our budget. Our recent strong share price performance, clearly a positive development is behind the vast majority of this variance. The other components of G&A were generally right in line with budget. Second, as previously disclosed, we sold air rights covering approximately eight acres in downtown Atlanta for $13.25 million during the first quarter. We acquired these rights when we developed the CNN Center in the 1970s and we held them on our books with zero value. As a result, we recognized a $13.1 million gain when they were sold, deducting only the closing costs, which ran through our income statement within the line item entitled gain on investment properties. Third, as part of the Norfolk Southern transactions that Colin laid out earlier, we recognized $6.6 million in fees during the first quarter, which ran through our income statement within the line item titled fee income. We anticipate recognizing an additional $14.4 million of Norfolk Southern fees spread…

Sorry about that, Gregg. [Operator Instructions] Our first question is from Jamie Feldman of Bank of America Merrill Lynch. Please go ahead.

Great, thank you. Good morning. I appreciate all the color on rent growth. Did you give what year-over-year rent growth was in Charlotte, Tampa and Phoenix? I know you said Atlanta and Austin?

Hey, Jamie, it’s Colin, and good morning. And I’d say, across the entirety of our portfolio of the markets, we’ve seen really, I said favorable rent growth across all of them. There is a whole – on average, it’s been about 6% or so trailing 12 months in our markets and really Austin and Atlanta has been right around that 6%. Charlotte and Tampa have outperformed according to CoStar closer to 7% to 8% over the course of the last 12 months. Phoenix has been a little bit on the lower side at about 3.5%, 4%. But I would say, if you drill down more specifically in the Tempe, you would see numbers that would approximate that 6% average across our markets.

Okay, that’s helpful. And then I guess, can you just talk about some of the larger leases you guys have been working to backfill the last couple of – last year or so. I didn’t really hear an update on the call. Then also your – some of the larger 20 expirations, just an update there?

Sure, Jamie. It – we continue to make really good progress with any move-out, and I think, it really speaks to the quality of the real estate that we’ve got. And Richard touched on the FLEETCOR lease that backfilled the bane space that we had talked about on some prior calls. So as we look forward over the balance of kind of 2019 and 2020, we have talked in previous calls about CBRE, who will be moving out in June of this year, that’s about 90,000 feet. We have touched on prior calls T. Rowe Price expires in January of next year. But as we’ve disclosed, we backfilled almost the entirety of that space and there really is only one or two other spaces of kind of 50,000 square feet and up, Terminus at the end of the year. CoStar has got two floors that will expire and then JLL has two floors here at 3344 Peachtree that would expire next year. But we’re in conversations with those folks. And as I said, when we’ve had move-outs, given the quality of our real estate, the urban locations, proximity to mass transit, we’ve been really, really successful backfilling any move-out.

Okay. And then last from me just we’ve seen an uptick in construction in Midtown Atlanta. I just want to get your thoughts on that market specifically and how you guys think about potential for new starts there just whether you think you could end up in some sort of oversupply situation in the next couple of years?

Yes. We continue to be very bullish and excited about Midtown. And I think that’s certainly reflected in our purchase of 1200 Peachtree, which we will get the entirety of that space back at the end of 2021. So that overall was reflected in our purchase price at $220 a foot and 11.5% cap rate. But we’re very excited and enthusiastic about that space and re-leasing it at a really attractive price point. And as we look at the market from a broader perspective and as you touched on, there has been an uptick in construction. There is about 1.5 million square feet today that’s under construction. But I think overall as we look at it, it’s been very much demand-driven and that 1.5 million square feet is probably 60% plus pre-leased officially. That being said, I’d tell you that there is some of the speculative space that’s still out there, we think is effectively spoken for and you’ve had some very large customers moving into Midtown looking for space, whether it be a BlackRock or Starbucks opening a regional headquarters, Anthem, Norfolk Southern and others who continue to look to grow in the Midtown to be close to Georgia Tech, to be close to the mass transit. So I think overall, we’re optimistic that, that supply will be certainly met by very strong demand.

Okay, great. Thank you.

Thanks, Jamie.

Thank you. The next question is from Blaine Heck of Wells Fargo. Please go ahead.

Thanks. Good morning. Colin, you just mentioned 1200 Peachtree, so I’ll ask about that. At this point, are there any plans for redevelopment once Norfolk Southern moved out at the end of 2021, or do you think there is kind of enough demand as you see it going forward in that market to take that space as is?

Yes, Blaine, it – 1200 Peachtree is very well-positioned for us to go tack [ph] the re-leasing of that in a few years without significant capital. Norfolk Southern has – that building has served as a regional headquarters for them and they’ve invested quite a bit in the building, both back of house as well as updating and modernizing the office space. So, ultimately, our team, as we look to the future of re-leasing that, we’ll put some Cousins touches on it that you’ve seen in some of our other buildings and whether that be investing in the lobby to multi-tenant that space, adding some amenities to the building again as we think about a multi-tenant leasing effort. But I don’t think it will be a significant amount of capital and pretty consistent with what we’ve done in some of our other value-add acquisitions.

Great, that’s helpful. Great job on the backfill of the Bain space. Can you give any color on the mark-to-market you guys saw on that deal versus what Bain was paying? And when should we expect gap in cash commencement there?

So, Blaine, we’ve never disclosed kind of specific leases in the mark-to-market, but obviously we’ve executed that lease during the quarter, about 50,000 square feet. And as you look at the portfolio as a whole, we delivered 7%, 8% cash mark-to-market. And as we said consistently in the past, the portfolio as a whole, is kind of 8% to 10% below market and for the last three years, we’ve kind of consistently delivered that. So we were excited to get a company like FLEETCOR into Terminus. It will be their global corporate headquarters and we think that’s a terrific testament to Terminus and we’ve got good momentum there. So that lease will commence at the second-half of the year, kind of mid-fourth quarter for an occupancy and rent commencement for FLEETCOR.

Okay, that’s helpful. Last one for me. Colin, you guys have done a great job of sourcing development opportunities recently and now, obviously you guys have a lot to digest with the TIER deal. Can you talk about your ability to continue to focus on taking advantage of investment opportunities during the TIER process, or maybe should we expect a bit of a pause in your investment activity in kind of the legacy Cousins portfolio as you guys get this transaction under your belt?

Well, to be clear, it – as we look forward to the TIER transaction, number one priority for us is integration, integration, integration and to do that thoughtfully to move that opportunity – strategic opportunity forward. And we’ve got great experience with that process, given the Parkway transaction just a couple of years ago. So I’m confident that our team will be able to accomplish that integration and do so in a timely manner, consistent with the timeline and synergies we’ve laid out. But we’ve got a fantastic team here at Cousins, both on the development, investment and asset management side that is certainly able to continue to take advantage of attractive development or acquisition opportunities that come our way. So we’ll continue to – as we’ve said in the past, focus on demand-driven opportunities and there – we’re in a terrific spot that there’s plenty of demand in the Sunbelt. And as those arise and intersect with our strategic land parcels, we’ll be ready to capitalize on them.

All right, great. Thanks, Colin.

Thanks, Blaine.

Thank you. The next question is from John Guinee of Stifel. Please go ahead.

Great. Thank you very much. Couple of questions. You’re starting to redefine Colorado, it looks like about $540 a foot. You just started Avalon a while ago, about $380 a foot. How do those numbers compare to – I mean, are those good representations of what it costs to build in these particular markets, or are there unusual aspects to these buildings that make them high or low? And then if you’re – talk about where you expect to develop in the future, say, Buckhead or the domain, what it costs to build product in those markets these days?

Yes, John, it’s a great question, and you pointed out the 10000 Avalon and 300 Colorado, which are very different projects that ultimately lead to the different pricing there. 300 Colorado is obviously in the Austin CBD, where land can be quite a bit more expensive. In addition to that, the 300 Colorado project has podium parking versus 10000 Avalon is kind of adjacent garden place parking. So that’s quite a bit cheaper. I’d say there’s a broad brush stroke as we look at our urban submarkets to build trophy quality product with the exception of Austin would be roughly $475 to $500 a foot. Austin would be a tick higher just as I mentioned land pricing will be a bit more expensive. Projects like Avalon, whether it would be something out in the domain kind of high-quality products outside the CBD, but in highly amenitized mixed-use projects would typically range in that $385 to maybe a tick over $400 a foot, would be pretty good benchmarks to use across our market.

Okay. Then the next question, I ran into the guy who runs WeWork in the Southeast, Gellerstedt a few weeks ago. Do you think that – how do you feel about WeWorks these days? Do you think you’re missing an opportunity. Do you think it’s a – do you like the idea of co-working more than you did a while ago, what are your thoughts?

Yes. John, we’ve continued to have a favorable view on co-working and we’ve enjoyed a good relationship with WeWork. And they are in three floors at Terminus here in Atlanta and that has gone well. They’ve filled that space up quickly. And I think importantly for us, we’ve seen a few of their underlying customers look to graduate and we’ve had some discussions with a few of those groups about expanding into longer-term more permanent space. But whether it’s WeWork or industrial spaces, there a handful of them. From our perspective, they have done – they serve a good purpose from our perspective of aggregating some smaller users who otherwise wouldn’t be able to occupy space in buildings like Terminus and create some positive demand from that perspective. And some of our larger customers, I think, enjoy having that co-working feature in a building. It provides a nice accordion feature as they think about project specific needs or swing space. And so in some respects in these urban settings with large customers, they view that as an amenity. Now we want to and we’ve been very careful to be thoughtful about the overall exposure we have with co-working, but that’s not a signal of co-working the business, it’s just an underlying credit decision. And today, it sits about 1.5 or so of our portfolio, but we’ll continue to talk to WeWork and others about some other additional opportunities in the portfolio.

Great. Thank you.

Thanks, John.

Thank you very much. [Operator Instructions] Next question is from Dave Rodgers with Baird.

Yes, good morning, Colin. For you maybe a nuance on Blaine’s question in terms of development. What is the level of development conversations you’re having today now that you’ve kind of put out the announcement with Norfolk Southern? And I guess, with regard to those conversations, are you thinking differently, given your 95%, 96% kind of leased rate. Do you think differently about where you’d be comfortable in terms of an occupancy percentage or a pre-commitment to a development? Any thoughts around that?

Well, Dave, it’s a great question and one that we talk about kind of every day here at Cousins with the broader team. And as we sit today as a standalone company, we’ve got four terrific land sites within our ownership, one in Midtown, one out in Tempe, Arizona. We got the ability to start the fifth building at Corporate Center and we’ve got a great site we’ve owned for sometime at Victory in uptown Dallas. So in an aggregate, it’s about 1.4 million square feet that we could accommodate. But if we look at each one of those opportunities on an individual basis and really look at and try to balance several different factors of what that particular submarket looks like from a vacancy perspective, what we see the competitive supply, what we believe to be the pipeline of future demand and ultimately look at that and balance it across the amount of speculative space we would be taking across the entirety of the portfolio and the company and ultimately, make a specific decision. So in terms of ultimately, the TIER deal, I don’t know that, that necessarily will change our view one way or another. We look at each individual project and they need to stand on their own. And if you look at our track record over the last several years, we’ve started certain projects like 10000 Avalon at 30% pre-leased and we’ve done others on a build-to-suit basis at a 100%. And so it will just depend on the facts and the circumstances of each of those individual projects.

And then maybe with regard to Westshore, you mentioned the land parcel that you have at Corporate Center. With the two larger either known or becoming vacant buildings kind of in that submarket, do you – are you seeing any slowdown in the activity for that particular space at Corporate Center?

We really haven’t and activity at Corporate Center has been terrific. And I think, in particular, highlighted that space being in high demand as T. Rowe Price announced, they were doing a corporate consolidation out of Tampa, very quickly our team was able to re-lease that space. And Corporate Center, from our perspective, is certainly, if not the best one of the handful of leading projects in all of Tampa and it’s pretty uniquely situated adjacent to the airport, adjacent to the amenities that the Corporate Center Mall brings. And so we’ve seen, if space comes available, it backfills very quickly. And as people look forward without a whole lot of space available in the existing buildings, Corporate Center V is certainly getting looks from several large users who are looking to grow and expand in Tampa.

Thanks for the color. Last question for me, the DFA backfill in Charlotte. If you gave an update I missed, I apologize. Just curious on kind of the activity there?

Yes, Charlotte has been very active. And so the DFA space, as we mentioned on a few prior calls, has been a little bit challenging for our team in the sense of trying to balance and time the expiration of that space to the move-in of the new projects and we just delivered that here in the first quarter. So I think our team has now got kind of unfettered access to that space and has got kind of defined timeline, which is now to – for that space to be available. And Charlotte as a whole has been very active and you’ve seen some large customers like Allie [ph] kind of move into the market and there’s some another large users out there looking for space. And so I think we’re encouraged by the level of activity on DFA and I think it’s particularly that we’ve got real definition now with the space being available, that perhaps over the preceding quarters, it was still a bit of an unknown.

All right, great. Thanks for the color.

Thank you very much. All right, ladies and gentlemen, there are no further questions in the queue, so I’ll turn the call back to the Colin Connolly for some closing remarks.

We appreciate everybody’s time this morning and your ongoing interest and support of Cousins Properties. We’ll look forward to seeing many of you at the June NAREIT in New York. Have a great rest of the day.

Thank you very much. Ladies and gentlemen, the conference call has now concluded. Thank you for attending today’s presentation and you may now disconnect your lines.