Good morning, and welcome to Cousins Properties First Quarter 2020 Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. Please note, this event is being recorded.I would now like to turn the conference over to Pam Roper, General Counsel. Please, go ahead.

Thank you. 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 link in the Investor Relations page of our website.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.In particular, there are significant risks and uncertainties related to the scope severity and duration of the COVID-19 pandemic along with the direct and indirect impact that the pandemic and related mitigation efforts, including governmental requirements and private sector responses may have on our financial condition and operating results and those of our customers.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 including those posed by COVID-19 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. These are undoubtedly extraordinary times and I want to begin by thanking the brave healthcare workers and first responders across this country, who risk their lives every day to help the nation battle COVID-19. We are truly indebted to their work as our industry, communities and country, navigate unprecedented circumstances.At Cousins, the health and safety of our customers and our employees is our top priority. In these challenging times, we have taken great care to ensure that we are staying true to our values and principles. We have always taken the approach that if we take care of our dedicated employees who deliver excellent service to our customers, our company will drive strong results for our shareholders. This remains as true today as it did when Cousins began over 60 years ago.Cousins has been closely monitoring and following the CDC's guidelines to help protect the health of our teams, customers and communities. Importantly, we have not had a Cousins employee to-date test positive for COVID-19. We are thankful for that. Our employees who can work from home have been doing so since mid-March.We have also adjusted our operations to ensure the safety of our essential property employees, as our buildings all remain open to support our customers. As we look ahead, we will continue to follow CDC, state and local guidelines to fully prepare ourselves and our customers for a new normal when business returns to the office.We also believe we have an obligation to give back to the communities in which we live and work, especially as many of those communities currently face extreme hardships. As communities fight COVID-19 on many fronts, Cousins has committed $900,000 from our non-profit foundation to support organizations fighting the virus on the front lines or helping…

Thanks Colin. Good morning everyone. I'll begin with a quick review of our first quarter performance. Similar to prior quarters, our portfolio is performing extraordinarily well as the pandemic arrived.Our team completed over 475,000 square feet of leasing in the first quarter, 73% of which were new and expansion leases. Rent growth was noticeably strong with second-generation net rents increasing 14.3% on a cash basis.Net effective rents for the quarter came in at $25.01 per square foot, a level surpassed in only two other quarters since 2017. We also ended the quarter at 93.3% leased with in place gross rents at a record $39.29 per square foot. Our same-property portfolio increased to 94.8% leased as of quarter end.However, as we all know the favorable market backdrop present for much of the first quarter is now a backdrop of distinct uncertainty. With the arrival of COVID-19, market activity substantially cooled. And our sense is the majority of our current leasing activity is mission-critical in nature.Despite the new market backdrop, it is interesting to note that 28% of our first quarter leasing activity was signed in March amid the onset of the pandemic. Additionally, we signed 133,000 square feet of leases in April, including a 74,000 square foot new lease with a leading global law firm at Colorado Tower in Austin.This new customer will occupy space currently leased by Parsley Energy with planned phased commitments starting in early 2021. This new long-term lease represents a significant rent roll-up, while at the same time reducing our energy exposure which I will talk about later. Our signed April activity excludes any lease amendments precipitated by the pandemic and saw second-generation net rents increase 16.8% on a cash basis.With regard to ongoing leasing activity our lease and negotiation pipeline has seen some erosion, but remain…

Thanks Richard. Good morning, everyone. I'll begin my remarks this morning by providing an overview of our quarterly financial results and activities, followed by a discussion of our balance sheet, before closing my remarks with information that we believe will help you assess our outlook for the balance of 2020.As you can tell from Colin and Richard's earlier comments, our first quarter results were outstanding on several fronts. Leasing capacity was solid second generation leasing spreads were positive and same-property year-over-year cash NOI increased by double digits. Bottom line, these were among our strongest organic growth numbers over the past decade and are clearly indicative of the positive momentum we had heading into the COVID-19 disruption. Despite the volatility of the past few weeks, our first quarter results were very clean with a little if any unusual noise running through the data.That being said, our general and administrative expenses were significantly below prior quarters, as well as the run rate we provided in our previous earnings guidance. As has been the case many times over the past few years, this variance was driven by our long-term incentive compensation accrual. Like most REITS, our share price fell precipitously during the second half of March and our compensation accrual reflects this decline. The variance would have been larger, but for our Board's recent decision to begin settling our performance-based LTI in stock instead of cash, beginning with the LTI issued in 2020.The other components of G&A were generally in line with our forecast. In addition to the first quarter property dispositions that we have previously disclosed and that Colin discussed at the beginning of the call, we also sold the remaining land at our Wildwood development in Atlanta during the first quarter, generating a gain of a little over $1.3 million. This…

Thank you. We will now begin the question-and-answer session. [Operator Instructions] The first question today comes from Blaine Heck with Wells Fargo. Please go ahead. Mr. Heck, your line is open.

Sorry, about that. Can you hear me?

We can hear you.

Great. Thanks. Good morning. Colin or Richard just wanted to get your updated thoughts on the Midtown Atlanta market specifically. As we know we've seen a pretty significant uptick in construction which seemed like it was going to be met with really strong demand pre-COVID, but given that the music has stopped here a little bit how are you guys thinking about the risk in that submarket in particular? And do you think we could see some meaningful downward pressure on rents if some of those projects don't get leased up?

Good morning, Blaine and good to hear your voice. The Midtown has been an exceptionally dynamic market in Atlanta and that's primarily been driven by the technology community and its adjacency to Georgia Tech. So over the long term we believe those trends will continue. And as Richard outlined we do expect the technology sector to help lead the country out of this current market environment.Now that being said, on the supply side, if you do look at the overall statistics on the construction pipeline in Midtown it stands a little over four million square feet. Now from our vantage point about 1 million of that square footage is on the other side of the connector and we felt has really never competed with the core of the Midtown submarket. So in aggregate it's about 3.4 million square feet that stands at 67% pre-leased.But from our intelligence on the ground we do feel like there are several very large leases that have either been signed recently but yet to be announced as well as some others that we think will get signed relatively soon with very, very large organizations. So in aggregate we think that will put the pre-leasing in the core of Midtown right about 80%. So we do think there is some cushion to the supply and demand that might not be obvious in the overall statistics.

Okay. Great. So some of those leases still are going through that's good. And then Colin, I guess, bigger picture do you think there's going to be much of an opportunity to buy buildings or land at distressed values, or even just put money to work through acquisitions at pricing that might be accretive for you guys? And do you see more opportunity for those sorts of investments in any specific markets that you guys operate over the others?

Well, Blaine we -- bigger picture has set up Cousins Properties to find compelling investment opportunities regardless of the cycle whether it be development as we've been able to accretively do over the last several years or from an acquisition perspective. Clearly with the dislocation in the market, I think, you'll see our bias shift from development to acquisitions.And as Gregg outlined, we have an exceptionally strong balance sheet and over $1 billion of liquidity. So as attractive investment opportunities emerge and they likely will in the coming months, we'll be positioned to look at those opportunities and we'll do so at the time. But I do think we're there's likely some time that we'll need to pass as the bid-ask between buyers and sellers I think will remain a little bit wide until we get further into the year.

And any specific markets do you expect to see maybe a little bit more distressed than others?

No I don't. If you look at the again, the underlying fundamentals across all of our markets today they entered this period in very strong position both from a supply and demand equilibrium. And so they're all strong today. Obviously, the dislocation will result in some weakening of all of the markets. But we don't see any of the markets that we're in as a better or worse position entering this phase.

Got it. Thanks, guys.

The next question comes from Jamie Feldman with Bank of America Merrill Lynch. Please go ahead.

Thank you, and good morning. I was hoping to get a little bit more color just on Austin in general. Obviously, the news of you bringing the law firm on and Parsley shrinking, it sounds like it's a net positive for the portfolio. But just generally, compared to some of the other markets around the country, how would you say tenants are reacting to the crisis? And then I guess just any longer-term change in their space needs?

Well Jamie, it's Colin, and good morning. And again, Austin entered this period as strong as it really – as it's ever been. And that growth in Austin was primarily driven by extraordinarily large technology companies that have been growing. And I think in this environment, we're seeing many of those companies kind of continue to grow. So that gives us again a lot of confidence in the long-term fundamentals for Austin.Again, there'll be, I'm sure, some near-term disruption in the fundamentals there. But as it relates to the underlying customers and their usage of space, many of the technology companies had adopted highly dense work environments. And whether that be hoteling concepts or bench seatings and in our early conversations with those customers I think they're likely to adapt their workplace environments to reduce the density and focus on the health and wellness of their employees. So that's the early feedback and that will obviously take a little bit of time to play itself out.

Okay. And so as you think about the change I mean, thinking about your recent big acquisition there, anything that you would have done differently or any property type you think are better or worse suited for what's to come?

And Jamie, are you referencing the TIER transaction?

Correct. Yes.

Yes. Again as we look back we think the timing of the TIER transaction, last year has only positioned the company better and made us stronger both from an overall enterprise value but also increased our concentration again to the technology sector which continues to grow and will likely be a leader for the long term. And so we think that has only enhanced our positioning as a company.And importantly as we came out of that transaction, we had articulated early that while leverage ticked up as a part of that transaction that we were going to in a very disciplined manner bring our leverage down to our long-term targets. And so we're thrilled that we were able to close the transactions in the first quarter at Hearst Tower Gateway and Woodcrest in New Jersey. So we had a plan both with the transaction and post closing and we feel it's terrific that the team in a disciplined manner executed on that.

Okay. Thank you. And then just last for me just thinking about 10,000 Avalon, 300 Colorado and 100 Mill, can you just talk about the leasing pipelines or interest pipelines for those projects?

Sure, Jamie. So I'll hit each one of those. And here in Atlanta at 10,000 Avalon, we just announced that we've signed a couple of leases during the first quarter and have increased the occupancy, the percent leased in that building is 75%. So really just two floors left to go. And that is a differentiated product in the Alpharetta submarket, highly amenitized and importantly a lot of open space. So we think that will continue to do well.The other projects you referenced at 300 Colorado, there's just two floors of speculative nature. We have some activity on that space. I think it will likely pause as we work through the pandemic but there is customer interest in that space that we don't think will go away. I think it will likely just slow as we work through that.And then out at 100 Mill, we've started that project at 44% pre-leased with Deloitte having one floor and a Fortune 50 technology company with the balance of that space. And we do look forward, hopefully in the coming weeks and months to share the identity of that customer. But I think when the market appreciates who that company is they'll have confidence in the potential growth opportunity with that particular customer.

Okay. Are you actually keeping space off the market for that customer?

Not at this time.

Okay. All right. Thank you.

Thanks, Jamie

The next question comes from Michael Lewis with SunTrust. Please go ahead.

Great. Thank you. I wanted to follow-up on the question about 100 Mill, the decision to go ahead and commence construction. I was just wondering, if that decision was made in January or March kind of pre-COVID-19 or post and if any of your underwriting or expectations there have changed from the beginning of the quarter to the end?

Michael, it's Colin. And we started that project really prior to the onset of the pandemic. That being said, with the pre-leasing that we have and the underlying customer base that is in place and I think over time will become known to the market gives us a lot of confidence in that project. And candidly, the decision wouldn't have been different, if it was -- the ground broking was post the onset of the pandemic.

Okay. Great. And then again with the pandemic slowing down the economy, I was wondering how that impacts the space that Anthem has coming up about 200,000 square feet. And then Norfolk Southern obviously we know when they move out of their building, are there longer time lines or other new challenges now as we look at those spaces?

Yes. This is Richard. Yes. We view one there's activity on all of our kind of larger expirations that we've been talking about the last few quarters, whether it be BofA Plaza in Charlotte or like you referenced the Anthem space here in Atlanta and Norfolk Southern coming up. But we still have activity on all those opportunities and we're still excited about getting those re-leased. And I think that's right to characterize just a bit of a pause here kind of consistent with the rest of our pipeline. But we still feel good about the activity.

And then lastly for me, some REITs were repurchasing their shares when the share price was 50% or 100% higher than it is today. And now they're not buying, so that they can focus on leverage and liquidity. You prepared your balance sheet when times were good and now your stock is down about 30% year-to-date, you're at 3.7 times net debt-to-EBITDA with all this liquidity. You mentioned kind of thinking through maybe shifting toward acquisitions versus development. How do you consider the attractiveness of potentially repurchasing the shares as part of those options?

Michael, it's Colin. The -- certainly the purchase of our own stock is always one of the investment opportunities in front of us that we as a team in conjunction with our Board evaluate all the time. I think as we sit here today, obviously with the dislocation in the market and really no true market visibility as to asset values and where appropriate cap rates are, we feel like we can be prudent and continue to be patient and thoughtful as this plays out further. And as we get to those points and we've got more visibility, we'll always consider share buybacks along with acquisitions and other environments' development.

Great. Thank you.

The next question comes from Dave Rodgers with Baird. Please go ahead.

Yeah. Good morning everybody. I wanted to follow-up on a couple of development questions 300 Colorado. I think that's also Parsley in bulk at least. And so have you guys had any discussions? Do you and your partners think there's an opportunity to maybe recapture some of that space, just given the transaction order and kind of move forward at a higher rent there? I know it's a little uncertain at this time. And then maybe a brief comment on 120 West Trinity office. I think that 33,000 square feet is mostly kind of timing and any discussions there?

Well good morning, Dave. The -- as it relates to 300 Colorado, we haven't had any specific conversations with Parsley to recapture space. Over time, if they decide, they'd like to become more efficient, those are conversations we could have or they could always evaluate sublease options. But we feel again from our perspective that that will be a project that we'll deliver here at the end of the year and it's a very well capitalized company that will begin paying rent at -- during the first part of next year at very attractive rental rates.So from our perspective, there's no urgency to try to recapture space from them. That being said, over time I think they're looking with some of the larger technology companies, there could be an opportunity for Parsley to do that, but that will largely be driven by Parsley, not Cousins. As it relates to 120 West Trinity, there is a small office component there that is 100% pre-leased. But I'd just keep in mind that that's a project that we own just 20% of. So from an overall impact to the -- again the portfolio it's relatively minor.

Right. That's helpful Colin. And then maybe just a broader conversation on that co-working space and you gave some good prepared comments, but in terms of kind of the request for re-lease and how that business looks going forward your continued comfort with it? I mean, have you had some ongoing discussions about not only deferments, but taking space back. What do those operators want to do today?

Yes. This is Richard. I'd say, one, we haven't had any conversations with any of our co-working operators or flex office operators about recapturing space. And the conversations we've had to-date have been very constructive in talking through their business, how it's been impacted.I mean they're clearly seeing an impact. And -- but it's still early to tell how it's all going to play out structurally for their business models and the timing. But we feel good with our position. It's like I said in my remarks it's still less than 2% of our aggregate annualized rent. So our exposure is at a really healthy level and we have 11 different locations across our portfolio between four different operators right now. So we're also diversified pretty well. So we feel good about where we stand with co-working.

The only other thing I'd add Dave is that, again the vast majority of our co-worker -- co-working customers paid their rent in April. And we'll obviously as this plays out I'm sure have some conversations with those folks about some deferrals. But I'd make a broader point as it relates to co-working which we think is a kind of complementary offering in our buildings is likely here to stay.And if you really think back over a decade shared office space has been around and it's worked its way through cycles. As we look forward kind of the current form of it as it has evolved into a highly dense shared environment I think you'll likely see that adjust over time.But we think the overall concept of shared office space in some small percentage will continue. And some of our customers the larger customers appreciate the accordion feature and I think some of the smaller customers like the flexibility. So I don't think it's going to go away. I just think it will adapt as it's done over many cycles.

Great. And then last question you've been asked this maybe in a different way earlier. So just to make it quick, but on the land inventory overall it's a pretty small piece. It seems like now if you start to see more tenants want to kind of leave some of the major markets and continue to migrate towards the south and given your balance sheet that you guys would be in the right position to pick up quite a bit of land here. What's your view? I mean has your view changed at all? I think you've given stats in the past on where you want to be, but it's now time to kind of bulk up just even on the land component more.

Yes David it's an excellent point. And we do take a very -- again a long-term view as a company. And land ultimately while perhaps not in this near-term environment but in the medium and long-term environment will be a differentiator. And when the market returns, oftentimes it's hard to find the appropriate piece of land.So if those opportunities come along we certainly have the balance sheet and a very overall low position in land and we'll be prepared for the appropriate strategic pieces at the appropriate prices to make investments if they present themselves.

All right, great. Thank you.

[Operator Instructions] The next question comes from John Guinee with Stifel. Please go ahead.

Great. Thank you. Two questions one is more curiosity than anything else. Talk a little bit about Perimeter versus Midtown versus Buckhead and where people want to be in this day and age in Atlanta? And then second the Parsley space, correct me if I'm wrong, but I imagine that it's in pretty good shape. When you brought in that law firm for 74,000 square feet does that law firm want to take it as is where is, or do they want to gut it down to the studs and start again or something in between?

Well good morning John, it's Colin. The -- as you look at Atlanta and in the three different submarkets the Central Perimeter, Buckhead and Midtown they're all slightly different in terms of the type of customers that they have historically and I think currently attract.And so, Central Perimeter continues to be really a Fortune 500 hub here in Buckhead it is typically driven by the financial services and the insurance and real estate companies. And then clearly over the last five years or so Midtown has evolved from really the legal capital of Atlanta which it still is, but it's also really benefited from the growth of the technology sector in Atlanta.So, I would say as we look forward you'll continue to see those various customer profiles be attractive to those submarkets. But interestingly enough I think as the technology companies in Midtown have become pretty full, you've started to see some of those companies look to the different submarkets and be focused on opportunities in the right buildings and even in this environment the buildings that have got close proximity to match transit.To touch on your other question in Austin and the law firm lease at Colorado Tower. No, that is not -- it's not an as-is where-is deal. And really what the driver of that is partially -- was really a dense environment. And as you would imagine, a leading law firm has got an entirely different approach to space use and so that will be a much less dense environment. And so, there'll be a pretty big overhaul of that space.

Great. Thank you and stay safe.

Thanks you, John

This concludes our question-and-answer session. I would now like to turn the conference back over to Colin Connolly for any closing remarks.

Well, I want to first again thank the entire Cousins team for your continued hard work, your flexibility, your commitment and your resiliency. And finally to our investors, we certainly thank you for your continued interest and support of Cousins Properties. Thank you.

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