As of September 30, 2026, the Credit Facility's interest rate spread over SOFR was 0.725%, and the facility fee was 0.15%. The amount that the Company may draw under the Credit Facility is a defined calculation based on the Company's unencumbered assets and other factors. The total available borrowing capacity under the Credit Facility was $1.1 billion at September 30, 2026. Any amounts outstanding under the Credit Facility may be accelerated upon the occurrence of any events of default.
Term Loans
On October 3, 2022, the Company entered into a Delayed Draw Term Loan Agreement ("the 2022 Term Loan") and borrowed the full $400 million available under the loan. The loan had an initial maturity of March 3, 2025, which has been extended to March 3, 2027, through the exercise of available extension options.
On June 28, 2021, the Company entered into an Amended and Restated Term Loan Agreement ("the 2021 Term Loan"). Under the 2021 Term Loan, the Company borrowed $350 million with an initial maturity of August 30, 2024, which has been extended to February 12, 2027, through the exercise of available extension options. On August 16, 2024, the Company paid down $100 million of the $350 million outstanding and, on February 20, 2026, the Company repaid $150 million of the outstanding principal amount of the 2021 Term Loan.
On April 1, 2026, the Company amended each of the 2021 Term Loan and the 2022 Term Loan. Pursuant to both term loans, as amended, the Company pays interest on each term loan based on Term or Daily SOFR plus a spread of 0.750% to 1.550%, depending on our leverage ratio and credit rating. During the first quarter of 2026, this spread was reduced by 15 basis points on the 2022 Term Loan (including 10 basis points eliminated by an amendment dated February 6, 2026, and five basis points eliminated by the amendment dated April 1, 2026) and by 30 basis points on the 2021 Term Loan (including 10 basis points eliminated by an amendment dated February 6, 2026, and 20 basis points eliminated by the amendment dated April 1, 2026). Interest rates in effect as of September 30, 2026, were 4.670% for $100 million of the 2021 Term Loan and for the $400 million of the 2022 Term Loan (based on Daily SOFR).
The Company has exercised the fourth of six six-month extension options on the 2022 Term Loan, which became effective September 3, 2026, extending the maturity date to March 3, 2027. The Company has also exercised the fifth of six six-month extension options on the 2021 Term Loan, which became effective August 19, 2026, extending the maturity date to February 12, 2027. The Company has two remaining six-month extension options under the 2022 Term Loan (each of which were added as part of the April 1, 2026, amendment) which (if both extension options were exercised) has a final extended maturity date of March 3, 2028. The Company has one remaining 180-day extension option under the 2021 Term Loan (added as part of the April 1, 2026 amendment) which (if the extension option is exercised) has a final extended maturity date of August 11, 2027.
Both term loans have debt covenants consistent with the Credit Facility.
Unsecured Senior Notes
At September 30, 2026, the Company had $2.7 billion aggregate principal amount of senior unsecured notes outstanding, $1.9 billion through public offerings, and $750.0 million through privately placed senior notes.
Public Senior Unsecured Notes
In February 2026, CPLP issued $500 million in aggregate principal amount of 4.875% public senior notes. Upon issuance of these notes, CPLP received proceeds of $496.3 million, net of the original issue discount of $3.7 million, resulting in an effective interest rate of 5.001%. These public senior notes had issuance costs of $4.3 million and mature on March 1, 2033.
In June 2025, CPLP issued $500.0 million in aggregate principal amount of 5.25% public senior notes. Upon issuance of these notes, CPLP received proceeds of $499.9 million, net of the original issue discount of $65,000, resulting in an effective interest rate of 5.251%. These public senior notes had issuance costs of $4.2 million and mature on July 15, 2030.
In December 2024, CPLP issued $400.0 million in aggregate principal amount of 5.375% public senior notes. Upon issuance of these notes, CPLP received proceeds of $397.9 million, net of the original issue discount of $2.1 million, resulting in an effective interest rate of 5.464%. These public senior notes had issuance costs of $3.6 million and mature on February 15, 2032.
In August 2024, CPLP issued $500.0 million in aggregate principal amount of 5.875% public senior notes. Upon issuance of these notes, CPLP received proceeds of $498.5 million dollars, net of the original issue discount of $1.5 million, resulting in an effective interest rate of 5.912%. These public senior notes had issuance costs of $5.3 million and mature on October 1, 2034.
The Company's public senior notes are each fully and unconditionally guaranteed by the Company and subject to certain customary covenants that, subject to certain exceptions, include (a) a limitation on the ability of the Company and CPLP to, among other things, incur additional secured and unsecured indebtedness; (b) a limitation on the ability of the Company and CPLP to merge, consolidate, sell, lease, or otherwise dispose of their properties and assets substantially as an entirety; and (c) a requirement that the Company maintain a pool of unencumbered assets. To avoid any such limitations, these covenants require, among other things, maintaining the following financial metrics as defined in the agreement: unencumbered debt ratio of at least 150%; an EBITDA to debt service ratio of at least 1.50x; a secured leverage ratio of no more than 40%; and an overall leverage ratio of no more than 60%.
Privately Placed Senior Unsecured Notes
The Company also has $750.0 million aggregate principal amount of privately placed unsecured senior notes outstanding. A privately placed senior unsecured note of $250 million with a fixed interest rate of 3.91% was repaid at maturity on July 7, 2025.
The privately placed unsecured senior notes contain financial covenants that are consistent with those of our Credit Facility, with the exception of a secured leverage ratio of no more than 40%. The senior notes also contain customary representations and warranties, both affirmative and negative covenants, and customary events of default.
Secured Mortgage Notes
In September 2026, the Company repaid $99.2 million remaining principal on the Colorado Tower mortgage loan in full.
As of September 30, 2026, the Company had $336.9 million outstanding on three non-recourse mortgage notes with a weighted average interest rate of 5.32%. All interest rates on the secured mortgage notes are fixed. Assets with depreciated carrying values of $628.3 million were pledged as security on these mortgage notes payable. In addition, the Company provides a customary “non-recourse carve-out guaranty” on its non-recourse loans.
Subsequent to September 30, 2026, in October 2026, the Company repaid the $115.9 million remaining principal on the 201 North Tryon mortgage loan in full.
Other Debt Information
The Company is in compliance with all of the covenants related to its unsecured and secured debt.
At September 30, 2026, and December 31, 2025, the estimated fair value of the Company’s notes payable was $3.6 billion and $3.4 billion, respectively, calculated by discounting the debt's remaining contractual cash flows at estimated current market rates at which similar loans could have been obtained at September 30, 2026, and December 31, 2025, respectively. The estimate of the current market rates, which is the most significant input in the discounted cash flow calculation, is intended to replicate debt of similar maturity and loan-to-value relationship. These fair value calculations are considered to be Level 2 under the guidelines as set forth in ASC 820, as the Company utilizes market rates for similar type loans from third party brokers.
For the three and nine months ended September 30, 2026, and 2025, interest expense was recorded as follows ($ in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
Total interest incurred |
|
$ |
46,541 |
|
|
$ |
43,131 |
|
|
$ |
141,019 |
|
|
$ |
122,705 |
|
Interest capitalized |
|
|
(964 |
) |
|
|
(1,634 |
) |
|
|
(3,277 |
) |
|
|
(5,920 |
) |
Total interest expense |
|
$ |
45,577 |
|
|
$ |
41,497 |
|
|
$ |
137,742 |
|
|
$ |
116,785 |
|
8. DERIVATIVE FINANCIAL INSTRUMENTS
The Company had no outstanding derivative financial instruments as of September 30, 2026, and December 31, 2025.
ATM Program
In 2021, the Company entered into an Equity Distribution Agreement ("EDA") with six financial institutions, known as an at-the-market stock offering program ("ATM Program"), under which the Company may offer and sell shares of its common stock from time to time in "at-the-market" offerings with an aggregate gross sales price of up to $500 million. In connection with the ATM Program, the Company may, at its discretion, enter into forward equity sale agreements. The use of a forward equity sale agreement ("Forward Sales") would allow the Company to lock in a share price on the sale of shares of its common stock at the time the agreement is executed but defer receiving the proceeds from the sale of shares until a later date, allowing the Company to better align funding with its capital needs. Sales of shares of the Company's stock, if any, through its banking relationships, are made in amounts and at times to be determined by the Company, but the Company has no obligation to sell any of the shares in the offering and may suspend sales in connection with the offering at any time. Sales of the Company's common stock under Forward Sales, if undertaken, meet the derivatives and hedging guidance scope exception as the contracts are related to the Company's own stock. In 2024, the Company filed a Form S-3 to renew the registration of its authorized shares. In conjunction with that Form S-3 filing, the Company entered into a Second Amendment to allow for the continued issuance of shares under this ATM Program.
During the three and nine months ended September 30, 2026, the Company sold 917,000 shares under Forward Sales contracts at an average price of $31.37. These Forward Sales contracts have an initial maturity date of June 30, 2027, which can be extended by mutual agreement of each party. During the three months ended September 30, 2025, the Company did not sell any shares under Forward Sales contracts. During the nine months ended September 30, 2025, the Company sold 2.9 million shares under Forward Sales contracts at an average price of $30.44 per share. The Company did not sell any more shares under Forward Sales contracts during the remainder of 2025. These Forward Sales contracts have an initial maturity date of December 31, 2026, which can be extended by mutual agreement of each party. The future settlement proceeds were $116.9 million, net of $1.2 million of commissions, and $88.5 million, net of $894,000 of commissions, as of September 30, 2026, and December 31, 2025, respectively. Through September 30, 2026, the Company had settled Forward Sales for 2.6 million shares under the ATM Program and generated net cash proceeds of $101.4 million. Of the aggregate gross sales price of up to $500 million available to be sold under the EDA for the current ATM program, the Company had $276.8 million remaining as of September 30, 2026.
To the extent, prior to settlement, shares sold under Forward Sales were potentially dilutive during the period under the treasury stock method, the impact of such dilution is disclosed in the calculation included in note 14. The Company did not settle any shares under the ATM Program during the three and nine months ended September 30, 2026, or the year ended December 31, 2025.
Other Equity Transactions
On April 30, 2026, the Company purchased the 10% non-controlling interest in one of its consolidated partnerships, which owned the 100 Mill office property, for $18.5 million. As a result of this transaction, $14.1 million non-controlling interest book value was removed from the Company's balance sheet, and $4.5 million was recorded as a reduction in additional paid-in-capital.
12. REVENUE RECOGNITION
The Company categorizes its primary sources of revenue into revenue from contracts with customers and other revenue accounted for as leases under ASC 842 as follows:
•Rental property revenues consist of (1) contractual lease revenues recognized on a straight-line basis over the respective lease terms; (2) percent rents recognized once a specified sales target is achieved; (3) parking revenue; (4) termination fees; and (5) the reimbursement of the tenants' share of real estate taxes, insurance, and other operating expenses. The Company's leases typically include renewal options and are classified and accounted for as operating leases. Rental property revenues are accounted for using practical expedients under ASC 842.
•Fee income consists of development fees, management fees, and leasing fees earned from unconsolidated joint ventures and from third parties. Fee income is accounted for in accordance with the guidance set forth in ASC 606.
For the three and nine months ended September 30, 2026, the Company recognized rental property revenues of $257.3 million and $784.1 million, respectively, of which $69.8 million and $219.1 million represented variable rental revenue, respectively. For the three and nine months ended September 30, 2025, the Company recognized rental property revenues of $246.5 million and $727.2 million, respectively, of which $69.3 million and $201.4 million represented variable rental revenue.
For the three and nine months ended September 30, 2026, the Company recognized fee and other revenue of $2.1 million and $6.9 million, respectively. For the three and nine months ended September 30, 2025, the Company recognized fee and other revenue of $1.9 million and $11.6 million, respectively. Included in other revenue is interest income from investments in real estate debt (see note 3), and in 2025, other revenue includes the $4.6 million proceeds from the sale of the Company's bankruptcy claim related to the 2023 bankruptcy of Silicon Valley Bank ("SVB"). SVB's subsidiary, SVB Financial Group, was a tenant in the Company's Phoenix market at the time of the bankruptcy filing.
13. STOCK-BASED COMPENSATION
On April 28, 2026, the Company's shareholders voted to approve the Amended and Restated Cousins Properties Incorporated 2019 Omnibus Incentive Stock Plan (the "Amended Incentive Plan"), which replaced the Cousins Properties Incorporated 2019 Omnibus Incentive Stock Plan (the "Prior Incentive Plan" and, together with the Amended Incentive Plan, the "Incentive Plan"), increased the aggregate share limit under the Incentive Plan by five million shares, and extended the term of the Incentive Plan to April 28, 2036.
The Company currently has several types of employee stock-based compensation, including restricted stock and restricted stock units ("RSUs"), issued under the Incentive Plan and the Employee Stock Purchase Plan ("ESPP"). While the Company's Incentive Plan also allows for the issuance of stock options, none have been issued or exercised or were outstanding as of or during any of the periods presented. A portion of the Company's independent directors' compensation is also provided in the form of Company stock issued under the Incentive Plan.
The Company's compensation expense for the three and nine months ended September 30, 2026, relates to restricted stock, stock-settled RSUs, and the ESPP. Restricted stock, the stock-settled RSUs, and the ESPP options are equity-classified compensation for which compensation expense per share is fixed. For the three and nine months ended September 30, 2026, and 2025, respectively, stock-based compensation expense, net of forfeitures, was recorded as follows ($ in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
Equity-classified awards: |
|
|
|
|
|
|
|
|
|
|
|
|
Restricted stock |
|
$ |
1,299 |
|
|
$ |
1,150 |
|
|
$ |
3,669 |
|
|
$ |
3,447 |
|
Market based RSUs |
|
|
1,500 |
|
|
|
1,345 |
|
|
|
6,323 |
|
|
|
6,291 |
|
Performance based RSUs |
|
|
529 |
|
|
|
456 |
|
|
|
2,136 |
|
|
|
2,052 |
|
Director grants |
|
|
408 |
|
|
|
410 |
|
|
|
1,226 |
|
|
|
1,259 |
|
ESPP |
|
|
17 |
|
|
|
22 |
|
|
|
90 |
|
|
|
75 |
|
Total equity-classified award expense, net of
forfeitures |
|
$ |
3,753 |
|
|
$ |
3,383 |
|
|
$ |
13,444 |
|
|
$ |
13,124 |
|
Information on the Company's stock compensation plan, including information on the Company's equity-classified awards is discussed in note 15 of the notes to the consolidated financial statements in the Company's Annual Report on Form 10-K for the year ended December 31, 2025.
Grants of Equity-Classified Awards
Under the Incentive Plan, in the second quarters of 2026 and 2025, the Company granted 61,794 and 60,121 shares of stock, respectively, with a grant date value of $1.6 million and $1.7 million, respectively, to independent members of the Company's board of directors (the "Board") for their service as members of the Board. These shares vested on the issuance date, and the Company records the related expense over the director's one year service period.
Under the Incentive Plan, in 2026 and 2025, the Company granted three types of equity-classified awards to key employees: (1) RSUs based on the Total Stockholder Return ("TSR") of the Company, as defined in the award documents, relative to that of office peers included in the Nareit Office Index (the "Market-based RSUs"); (2) RSUs based on the ratio of cumulative funds from operations per share to targeted cumulative funds from operations per share (the “Performance-based RSUs”); and (3) restricted stock.
The RSU awards are equity-classified awards to be settled in common stock with issuance dependent upon the attainment of required service, market, and performance criteria. For the Market-based RSUs, the Company expenses an estimate of the fair value of the awards on the grant date, calculated using a Monte Carlo valuation at grant date, ratably over the vesting period, adjusting only for forfeitures when they occur.
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.
Overview of 2026 Performance and Company and Industry Trends
Cousins Properties Incorporated ("Cousins") (and collectively, with its subsidiaries, the "Company," "we," "our," or "us") is a publicly traded (NYSE: CUZ), self-administered, and self-managed real estate investment trust, or REIT. Cousins conducts substantially all of its business through Cousins Properties LP ("CPLP"). Cousins owns in excess of 99% of CPLP and consolidates CPLP. CPLP owns Cousins TRS Services LLC, a taxable entity that owns and manages its own real estate portfolio and performs certain real estate related services for other parties. Our strategy is to create stockholder value by owning a lifestyle office portfolio (described in further detail below) in the Sun Belt markets, with a particular focus on the core markets of Austin, Atlanta, Charlotte, Tampa, Phoenix, Dallas, and Nashville. We execute this strategy through disciplined capital allocation, including opportunistic acquisitions, selective developments, and timely dispositions of non-core assets while maintaining a portfolio of newer, more efficient properties with lower capital expenditure requirements. This strategy is also based on a simple, flexible, and low-leverage balance sheet that allows us to pursue compelling growth opportunities at the most advantageous points in the cycle. To implement this strategy, we strive to have strong local operating platforms in each major market.
During the quarter, we leased 546,000 square feet of office space, including 220,000 square feet of new and expansion leases representing 40.3% of total leasing activity. Straight-line basis net rent per square foot increased 31.9% for those office spaces that were under lease within the past year. Same property Net Operating Income ("NOI", defined below) for consolidated properties and our share of unconsolidated properties increased 3.3% for the three months ended September 30, 2026, compared to the three months ended September 30, 2025.
For the nine months ended September 30, 2026, we leased 2.4 million square feet of office space, including 1.1 million of new and expansion leases representing 45.7% of total leasing activity. Straight-line basis net rent per square foot increased 28.9% for those office spaces that were under lease within the past year. Same property net operating income for consolidated properties and our share of unconsolidated properties increased 2.3% for the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025.
On July 17, 2026, we acquired a preferred equity interest in 5th & Walsh, a 199,000 square foot office building under development in Austin. Our funding commitment of $31.5 million is expected to be invested in 2027.
On July 29, 2026, we sold One Eleven Congress, a 519,000 square foot office building in Austin, for a gross sales price of $208.0 million.
On September 29, 2026, we acquired an interest in a 2.3 acre land parcel in Uptown Dallas, through a newly formed joint venture, 2401 McKinney. We are a 97.5% equity partner in the joint venture and contributed $50.0 million at formation for $42.2 million of 2.3 acres of land, including a fee and leasehold interest, and $7.8 million of predevelopment costs.
During the quarter, we sold 917,000 shares under our ATM program, on a forward basis, at an average price of $31.37 per share. This brings our total unsettled common shares sold on a forward basis to 3.9 million at an average price of $30.66 per share.
We repaid our $99.2 million mortgage note, secured by Colorado Tower in Austin, at par on the September 1, 2026 maturity date. Subsequent to quarter end, we repaid the $115.9 million remaining principal on our mortgage note secured by 201 North Tryon.
We believe lifestyle offices in the Sun Belt, and in particular within the seven core Sun Belt markets in which we own properties, will continue to outperform the broader office sector. This is driven by migration into the Sun Belt and the flight to quality, which is reflected in the tenant leasing demand for lifestyle offices over lower quality assets.
We consider “lifestyle offices” to be well-located buildings that are modern structures or have been modernized to compete with newer buildings, are professionally managed and maintained, and offer a number and type of amenities that are in high demand by customers that are focused on the importance of the physical work environment in recruiting and retaining employees. We believe our “lifestyle office” portfolio improves our ability to renew leases and obtain new customers which results in consistently higher occupancy than the remainder of the office buildings in our markets. We do not consider the expression “lifestyle office” a classification of our properties in accordance with any standard listing criteria in the real estate industry. We, therefore, caution investors that our use and definition of “lifestyle office” may be different than the use and definition of similar expressions and traditional classifications that may be used by other companies.
Results of Operations For The Three and Nine Months Ended September 30, 2026
General
Net income available to common stockholders for the three and nine months ended September 30, 2026, was $17.0 million and $18.3 million, respectively. Net income available to common stockholders for the three and nine months ended September 30, 2025, was $8.6 million and $44.0 million, respectively. During the nine months ended September 30, 2026, we recorded a $36.6 million impairment related to One Eleven Congress, and a gain of $9.2 million upon sale of Research Park V in June 2026. We detail below other material changes in the components of net income and loss available to common stockholders for the three and nine months ended September 30, 2026, compared to the same periods in 2025.
Rental Property Revenue, Rental Property Operating Expenses, and Net Operating Income
The following results include the performance of our Same Property portfolio. Our Same Property portfolio includes office properties that were stabilized and owned by us for the entirety of each comparable reporting period presented and excludes any office properties held for sale. Same Property amounts for the 2026 versus 2025 comparison period are for office properties that were stabilized and owned as of January 1, 2025, through September 30, 2026. We consider many factors in determining whether a property has stabilized, including the property’s occupancy (independently and relative to its submarket) and current leasing pipeline, as well as time since the cessation of major construction activity.
Company management evaluates the performance of its property portfolio, in part, based on NOI. NOI represents rental property revenues, excluding termination fee income, less rental property operating expenses. NOI is not a measure of cash flows or operating results as measured by GAAP, is not indicative of cash available to fund cash needs, and should not be considered an alternative to cash flows as a measure of liquidity. All companies may not calculate NOI in the same manner. We consider NOI to be an appropriate supplemental measure to net income as it helps both management and investors understand the core operations of our operating assets. NOI excludes corporate general and administrative expenses, interest expense, depreciation and amortization, impairments, gains/losses on sales of real estate, and other non-operating items. As a result, we use only those income and expense items that are incurred at the property level to evaluate a property's performance.
The following table reconciles net income to consolidated NOI for each of the periods presented ($ in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
Net Income |
|
$ |
17,009 |
|
|
$ |
8,778 |
|
|
$ |
18,573 |
|
|
$ |
44,529 |
|
Fee income |
|
|
(1,439 |
) |
|
|
(526 |
) |
|
|
(4,951 |
) |
|
|
(1,516 |
) |
Termination fee income |
|
|
(1,045 |
) |
|
|
(512 |
) |
|
|
(5,115 |
) |
|
|
(3,378 |
) |
Other income |
|
|
(666 |
) |
|
|
(1,339 |
) |
|
|
(1,969 |
) |
|
|
(10,063 |
) |
General and administrative expenses |
|
|
9,854 |
|
|
|
9,510 |
|
|
|
33,809 |
|
|
|
29,957 |
|
Interest expense |
|
|
45,577 |
|
|
|
41,497 |
|
|
|
137,742 |
|
|
|
116,785 |
|
Depreciation and amortization |
|
|
103,258 |
|
|
|
105,272 |
|
|
|
316,509 |
|
|
|
308,276 |
|
Reimbursed expenses |
|
|
139 |
|
|
|
124 |
|
|
|
431 |
|
|
|
420 |
|
Other expenses |
|
|
875 |
|
|
|
440 |
|
|
|
1,702 |
|
|
|
1,305 |
|
Operating property impairment |
|
|
— |
|
|
|
— |
|
|
|
36,600 |
|
|
|
— |
|
Loss from unconsolidated joint ventures |
|
|
2,101 |
|
|
|
2,682 |
|
|
|
6,958 |
|
|
|
6,152 |
|
Loss (gain) on investment property transaction |
|
|
509 |
|
|
|
— |
|
|
|
(8,616 |
) |
|
|
— |
|
Net Operating Income |
|
$ |
176,172 |
|
|
$ |
165,926 |
|
|
$ |
531,673 |
|
|
$ |
492,467 |
|
Consolidated rental property revenues, rental property operating expenses, and NOI changed between the 2026 and 2025 periods as follows ($ in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
|
|
2026 |
|
|
2025 |
|
|
$ Change |
|
|
% Change |
|
|
2026 |
|
|
2025 |
|
|
$ Change |
|
|
% Change |
|
Rental Property Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Same Property |
|
$ |
228,210 |
|
|
$ |
221,711 |
|
|
$ |
6,499 |
|
|
|
2.9 |
% |
|
$ |
683,381 |
|
|
$ |
660,738 |
|
|
$ |
22,643 |
|
|
|
3.4 |
% |
Non-Same Property |
|
|
28,055 |
|
|
|
24,238 |
|
|
|
3,817 |
|
|
|
15.7 |
% |
|
|
95,636 |
|
|
|
63,087 |
|
|
|
32,549 |
|
|
|
51.6 |
% |
|
|
|
256,265 |
|
|
|
245,949 |
|
|
|
10,316 |
|
|
|
4.2 |
% |
|
|
779,017 |
|
|
|
723,825 |
|
|
|
55,192 |
|
|
|
7.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination fee income |
|
|
1,045 |
|
|
|
512 |
|
|
|
533 |
|
|
|
|
|
|
5,115 |
|
|
|
3,378 |
|
|
|
1,737 |
|
|
|
|
Total Rental Property Revenues |
|
$ |
257,310 |
|
|
$ |
246,461 |
|
|
$ |
10,849 |
|
|
|
|
|
$ |
784,132 |
|
|
$ |
727,203 |
|
|
$ |
56,929 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rental Property Operating Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Same Property |
|
$ |
72,727 |
|
|
$ |
71,335 |
|
|
$ |
1,392 |
|
|
|
2.0 |
% |
|
$ |
219,739 |
|
|
$ |
208,101 |
|
|
$ |
11,638 |
|
|
|
5.6 |
% |
Non-Same Property |
|
|
7,366 |
|
|
|
8,688 |
|
|
|
(1,322 |
) |
|
|
(15.2 |
)% |
|
|
27,605 |
|
|
|
23,257 |
|
|
|
4,348 |
|
|
|
18.7 |
% |
Total Rental Property Operating Expenses |
|
$ |
80,093 |
|
|
$ |
80,023 |
|
|
$ |
70 |
|
|
|
0.1 |
% |
|
$ |
247,344 |
|
|
$ |
231,358 |
|
|
$ |
15,986 |
|
|
|
6.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Operating Income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Same Property NOI |
|
$ |
155,483 |
|
|
$ |
150,376 |
|
|
$ |
5,107 |
|
|
|
3.4 |
% |
|
$ |
463,642 |
|
|
$ |
452,637 |
|
|
$ |
11,005 |
|
|
|
2.4 |
% |
Non-Same Property NOI |
|
|
20,689 |
|
|
|
15,550 |
|
|
|
5,139 |
|
|
|
33.0 |
% |
|
|
68,031 |
|
|
|
39,830 |
|
|
|
28,201 |
|
|
|
70.8 |
% |
Total NOI |
|
$ |
176,172 |
|
|
$ |
165,926 |
|
|
$ |
10,246 |
|
|
|
6.2 |
% |
|
$ |
531,673 |
|
|
$ |
492,467 |
|
|
$ |
39,206 |
|
|
|
8.0 |
% |
Same Property NOI represents Net Operating Income for those office properties that were stabilized and owned by us for the entirety of the 2026 and 2025 reporting periods presented, excluding any office properties held for sale. Same Property NOI allows analysts, investors, and management to analyze continuing operations and evaluate the growth trend of the Company's portfolio.
Same Property Rental Property Revenues, Operating Expenses, and NOI increased for the nine months ended September 30, 2026, compared to the same period in the prior year primarily due to an increase in occupancy at Promenade Tower, Avalon, 3350 Peachtree, and Corporate Center. Same Property Rental Property Revenues and NOI were partially offset by decreased occupancy at 201 North Tryon, driven by the ongoing redevelopment at this property.
Non-Same Property Rental Property Revenues and NOI increased for the three and nine months ended September 30, 2026, compared to the same periods in the prior year primarily due to the acquisitions of 300 South Tryon in February 2026 as well as the acquisition of The Link in July 2025. These increases for the three and nine months ended September 30, 2026 were partially offset by the sales of Harborview in February 2026, Research Park V in June 2026, and One Eleven Congress in July 2026. Operating Expenses for the quarter ended September 30, 2026, were down due to the disposition of One Eleven Congress in July 2026.
The following table details consolidated NOI from properties aggregated by market ($ in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, |
|
Market |
|
2026 |
|
|
2025 |
|
|
$ Change |
|
|
% Change |
|
Austin |
|
$ |
58,200 |
|
|
$ |
60,243 |
|
|
$ |
(2,043 |
) |
|
|
(3.4 |
)% |
Atlanta |
|
|
54,547 |
|
|
|
50,937 |
|
|
|
3,610 |
|
|
|
7.1 |
% |
Charlotte |
|
|
21,350 |
|
|
|
15,590 |
|
|
|
5,760 |
|
|
|
36.9 |
% |
Phoenix |
|
|
13,489 |
|
|
|
12,166 |
|
|
|
1,323 |
|
|
|
10.9 |
% |
Tampa |
|
|
13,354 |
|
|
|
13,006 |
|
|
|
348 |
|
|
|
2.7 |
% |
Dallas |
|
|
8,154 |
|
|
|
7,082 |
|
|
|
1,072 |
|
|
|
15.1 |
% |
Houston |
|
|
5,817 |
|
|
|
5,660 |
|
|
|
157 |
|
|
|
2.8 |
% |
Office NOI |
|
|
174,911 |
|
|
|
164,684 |
|
|
|
10,227 |
|
|
|
6.2 |
% |
Other Non-Office (1) |
|
|
1,261 |
|
|
|
1,242 |
|
|
|
19 |
|
|
|
|
Total NOI |
|
$ |
176,172 |
|
|
$ |
165,926 |
|
|
$ |
10,246 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, |
|
Market |
|
2026 |
|
|
2025 |
|
|
$ Change |
|
|
% Change |
|
Austin |
|
$ |
182,071 |
|
|
$ |
180,793 |
|
|
$ |
1,278 |
|
|
|
0.7 |
% |
Atlanta |
|
|
162,331 |
|
|
|
151,898 |
|
|
|
10,433 |
|
|
|
6.9 |
% |
Charlotte |
|
|
62,254 |
|
|
|
49,354 |
|
|
|
12,900 |
|
|
|
26.1 |
% |
Phoenix |
|
|
40,446 |
|
|
|
36,168 |
|
|
|
4,278 |
|
|
|
11.8 |
% |
Tampa |
|
|
39,266 |
|
|
|
39,391 |
|
|
|
(125 |
) |
|
|
(0.3 |
)% |
Dallas |
|
|
25,149 |
|
|
|
14,341 |
|
|
|
10,808 |
|
|
|
75.4 |
% |
Houston |
|
|
16,585 |
|
|
|
16,879 |
|
|
|
(294 |
) |
|
|
(1.7 |
)% |
Office NOI |
|
|
528,102 |
|
|
|
488,824 |
|
|
|
39,278 |
|
|
|
8.0 |
% |
Other Non-Office (1) |
|
|
3,571 |
|
|
|
3,643 |
|
|
|
(72 |
) |
|
|
|
Total NOI |
|
$ |
531,673 |
|
|
$ |
492,467 |
|
|
$ |
39,206 |
|
|
|
|
(1)Includes operations at land sites held for future development as well as a parking garage in Charlotte.
From an overall portfolio perspective, in-place gross rent per square foot as of September 30, 2026, increased 1.2% compared to September 30, 2025, contributing to a portfolio wide increase in NOI. NOI from the Dallas market increased $1.1 million and $10.8 million, or 15.1% and 75.4%, for the three and nine months ended September 30, 2026, compared to the same periods in the prior year, respectively, primarily due to the acquisition of The Link in July 2025. NOI from the Charlotte market increased $5.8 million and $12.9 million, or 36.9% and 26.1%, for the three and nine months ended September 30, 2026, compared to the same periods in the prior year, respectively, primarily due to the acquisition of 300 South Tryon in February 2026. NOI from the Phoenix market increased $1.3 million and $4.3 million, or 10.9% and 11.8%, for the three and nine months ended September 30, 2026 compared to the same periods in the prior year, respectively, primarily due to increased occupancy related to the completion of Hayden Ferry I's redevelopment in the fourth quarter of 2025. NOI from the Atlanta market increased $3.6 million and $10.4 million, or 7.1% and 6.9%, for the three and nine months ended September 30, 2026, compared to the same periods in the prior year, respectively, primarily due to increased occupancy at Avalon and 3350 Peachtree and the end of several variable rent abatement periods at Promenade Tower.
Fee Income
Fee income increased $913,000 and $3.4 million for the three and nine months ended September 30, 2026, compared to the same periods in the prior year, primarily by providing leasing services to our Proscenium joint venture.
Other Income
Other income decreased $673,000 and $8.1 million for the three and nine months ended September 30, 2026, compared to the same periods in the prior year, primarily due to the sale of our Silicon Valley Bank bankruptcy claim in the first quarter of 2025, for $4.6 million, and a reduction in interest income from the two mezzanine loans and the Saint Ann Court Mortgage Loan earned in the first quarter of 2025. These reductions were partially offset by interest income from the joint venture partner loan, which was issued in September 2025. These transactions are described in further detail in note 3 and note 12 to the consolidated financial statements in this Form 10-Q.
General and Administrative Expenses
General and administrative expenses increased $3.9 million, or 12.9%, for the nine months ended September 30, 2026, compared to the same period in the prior year, primarily due to increases in compensation related expenses which includes leasing commissions incurred providing leasing services to our Proscenium joint venture for which we receive leasing fee income noted above.
Interest Expense
Interest expense, net of amounts capitalized, increased $4.1 million and $21.0 million, or 9.8% and 17.9%, for the three and nine months ended September 30, 2026, compared to the same periods in the prior year, respectively, primarily due to the issuance of the $500 million unsecured senior notes in February 2026, and a higher average balance outstanding on the credit facility. Increased interest expense was partially offset by the repayment of $150 million of the 2021 Term Loan in February 2026.
Depreciation and Amortization
Depreciation and amortization changed between the 2026 and 2025 periods as follows ($ in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
|
|
2026 |
|
|
2025 |
|
|
$ Change |
|
|
% Change |
|
|
2026 |
|
|
2025 |
|
|
$ Change |
|
|
% Change |
|
Depreciation and
Amortization |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Same Property |
|
$ |
91,981 |
|
|
$ |
91,000 |
|
|
$ |
981 |
|
|
|
1.1 |
% |
|
$ |
274,022 |
|
|
$ |
269,354 |
|
|
$ |
4,668 |
|
|
|
1.7 |
% |
Non-Same Property |
|
|
11,130 |
|
|
|
14,151 |
|
|
|
(3,021 |
) |
|
|
(21.3 |
)% |
|
|
42,055 |
|
|
|
38,563 |
|
|
|
3,492 |
|
|
|
9.1 |
% |
Non-Real Estate Assets |
|
|
147 |
|
|
|
121 |
|
|
|
26 |
|
|
|
21.5 |
% |
|
|
432 |
|
|
|
359 |
|
|
|
73 |
|
|
|
20.3 |
% |
Total Depreciation and
Amortization |
|
$ |
103,258 |
|
|
$ |
105,272 |
|
|
$ |
(2,014 |
) |
|
|
(1.9 |
)% |
|
$ |
316,509 |
|
|
$ |
308,276 |
|
|
$ |
8,233 |
|
|
|
2.7 |
% |
Non-Same Property depreciation and amortization increased for the nine months ended September 30, 2026, compared to the same period in the prior year, primarily due to the acquisition of 300 South Tryon in February 2026, the acquisition of The Link in July 2025, and the completion of development at Domain 9 in March 2025. These increases were partially offset by the sale of Harborview Plaza in February 2026 and the classification of One Eleven Congress as held for sale in May 2026, which was subsequently sold in July 2026.
Income and Net Operating Income from Unconsolidated Joint Ventures
Income from unconsolidated joint ventures consisted of the Company's share of the following ($ in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
|
|
2026 |
|
|
2025 |
|
|
$ Change |
|
|
% Change |
|
|
2026 |
|
|
2025 |
|
|
$ Change |
|
|
% Change |
|
Loss from unconsolidated joint
ventures |
|
$ |
(2,101 |
) |
|
$ |
(2,682 |
) |
|
$ |
581 |
|
|
|
21.7 |
% |
|
$ |
(6,958 |
) |
|
$ |
(6,152 |
) |
|
$ |
(806 |
) |
|
|
(13.1 |
)% |
Depreciation and amortization
expense |
|
|
3,183 |
|
|
|
3,034 |
|
|
|
149 |
|
|
|
4.9 |
% |
|
|
9,293 |
|
|
|
7,735 |
|
|
|
1,558 |
|
|
|
20.1 |
% |
Interest expense |
|
|
2,797 |
|
|
|
2,830 |
|
|
|
(33 |
) |
|
|
(1.2 |
)% |
|
|
8,165 |
|
|
|
7,058 |
|
|
|
1,107 |
|
|
|
15.7 |
% |
Other expense |
|
|
158 |
|
|
|
99 |
|
|
|
59 |
|
|
|
59.6 |
% |
|
|
518 |
|
|
|
82 |
|
|
|
436 |
|
|
|
531.7 |
% |
Other income |
|
|
(37 |
) |
|
|
(25 |
) |
|
|
(12 |
) |
|
|
(48.0 |
)% |
|
|
(112 |
) |
|
|
(79 |
) |
|
|
(33 |
) |
|
|
41.8 |
% |
Net operating income from
unconsolidated joint
ventures |
|
$ |
4,000 |
|
|
$ |
3,256 |
|
|
$ |
744 |
|
|
|
22.9 |
% |
|
$ |
10,906 |
|
|
$ |
8,644 |
|
|
$ |
2,262 |
|
|
|
26.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net operating income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Same Property |
|
|
1,468 |
|
|
|
1,591 |
|
|
|
(123 |
) |
|
|
(7.7 |
)% |
|
|
4,173 |
|
|
|
4,750 |
|
|
|
(577 |
) |
|
|
(12.1 |
)% |
Non-Same Property |
|
|
2,532 |
|
|
|
1,665 |
|
|
|
867 |
|
|
|
52.1 |
% |
|
|
6,733 |
|
|
|
3,894 |
|
|
|
2,839 |
|
|
|
72.9 |
% |
Net operating income from
unconsolidated joint
ventures |
|
$ |
4,000 |
|
|
$ |
3,256 |
|
|
$ |
744 |
|
|
|
22.9 |
% |
|
$ |
10,906 |
|
|
$ |
8,644 |
|
|
$ |
2,262 |
|
|
|
26.2 |
% |
The change in loss from unconsolidated joint ventures was driven by increases in unconsolidated depreciation and amortization expense as well as unconsolidated interest expense. Unconsolidated depreciation and amortization expense and interest expense increased for the three and nine months ended September 30, 2026, compared to the same period in the prior year, primarily due to assets being placed in service as the development of Phase I of the Neuhoff joint venture was completed and initial operations commenced.
Non-Same Property NOI from unconsolidated joint ventures increased for the three and nine months ended September 30, 2026, compared to the same periods in the prior year, primarily due to operations at the Neuhoff joint venture, as the property continues to increase occupancy.
Funds From Operations
The following tables show Funds from Operations (“FFO”) and the related reconciliation from net income available to common stockholders. We calculate FFO as defined by the National Association of Real Estate Investment Trusts ("Nareit"), which is net income available to common stockholders (computed in accordance with GAAP), excluding depreciation and amortization related to real estate, gains and losses from sales of depreciable property, gains and losses from changes in control, impairment of depreciable real estate and after adjustments for unconsolidated partnerships and joint ventures to reflect FFO on the same basis.
FFO is used by industry analysts and investors as a supplemental measure of a REIT’s operating performance. Historical cost accounting for real estate assets implicitly assumes that the value of real estate assets diminishes predictably over time. Since real estate values instead have historically risen or fallen with market conditions, many industry investors and analysts have considered presentation of operating results for real estate companies that use historical cost accounting to be insufficient by themselves. Thus, Nareit created FFO as a supplemental measure of REIT operating performance that excludes historical cost depreciation, among other items, from GAAP net income. The use of FFO, combined with the required primary GAAP presentations, has been fundamentally beneficial, improving the understanding of operating results of REITs among the investing public and making comparisons of REIT operating results more meaningful. Company management evaluates operating performance, in part, based on FFO. Additionally, we use FFO, along with other measures, to assess performance in connection with evaluating and granting incentive compensation to our officers and other key employees.
The reconciliation of net income to FFO is as follows for the three and nine months ended September 30, 2026, and 2025 (in thousands, except per share amounts):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, |
|
|
|
2026 |
|
|
2025 |
|
|
|
Dollars |
|
|
Weighted
Average
Common
Shares |
|
|
Per Share
Amount |
|
|
Dollars |
|
|
Weighted
Average
Common
Shares |
|
|
Per Share
Amount |
|
Net Income Available to Common Stockholders |
|
$ |
17,000 |
|
|
|
164,601 |
|
|
|
0.10 |
|
|
$ |
8,590 |
|
|
|
167,967 |
|
|
$ |
0.05 |
|
Noncontrolling interest related to unitholders |
|
|
3 |
|
|
|
25 |
|
|
|
— |
|
|
|
1 |
|
|
|
25 |
|
|
|
— |
|
Potentially dilutive common shares - ESPP |
|
|
— |
|
|
|
5 |
|
|
|
— |
|
|
|
0 |
|
|
|
0 |
|
|
|
— |
|
Conversion of unvested restricted stock units |
|
|
— |
|
|
|
1,157 |
|
|
|
— |
|
|
|
— |
|
|
|
746 |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income — Diluted |
|
|
17,003 |
|
|
|
165,788 |
|
|
|
0.10 |
|
|
|
8,591 |
|
|
|
168,738 |
|
|
|
0.05 |
|
Depreciation and amortization of real estate
assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated properties |
|
|
103,111 |
|
|
|
— |
|
|
|
0.63 |
|
|
|
105,152 |
|
|
|
— |
|
|
|
0.62 |
|
Share of unconsolidated joint ventures |
|
|
3,183 |
|
|
|
— |
|
|
|
0.02 |
|
|
|
3,034 |
|
|
|
— |
|
|
|
0.02 |
|
Partners' share of real estate depreciation |
|
|
(32 |
) |
|
|
— |
|
|
|
— |
|
|
|
(241 |
) |
|
|
— |
|
|
|
— |
|
Loss on sale of depreciated properties: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated properties |
|
|
509 |
|
|
|
— |
|
|
|
0.00 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Funds From Operations |
|
$ |
123,774 |
|
|
|
165,788 |
|
|
$ |
0.75 |
|
|
$ |
116,536 |
|
|
|
168,738 |
|
|
$ |
0.69 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, |
|
|
|
2026 |
|
|
2025 |
|
|
|
Dollars |
|
|
Weighted
Average
Common
Shares |
|
|
Per Share
Amount |
|
|
Dollars |
|
|
Weighted
Average
Common
Shares |
|
|
Per Share
Amount |
|
Net Income Available to Common Stockholders |
|
$ |
18,302 |
|
|
|
165,324 |
|
|
$ |
0.11 |
|
|
$ |
43,970 |
|
|
|
167,902 |
|
|
$ |
0.26 |
|
Noncontrolling interest related to unitholders |
|
|
3 |
|
|
|
25 |
|
|
|
— |
|
|
|
7 |
|
|
|
25 |
|
|
|
— |
|
Potentially dilutive common shares - ESPP |
|
|
— |
|
|
|
2 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Conversion of unvested restricted stock units |
|
|
— |
|
|
|
903 |
|
|
|
— |
|
|
|
— |
|
|
|
771 |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income — Diluted |
|
|
18,305 |
|
|
|
166,254 |
|
|
|
0.11 |
|
|
|
43,977 |
|
|
|
168,698 |
|
|
|
0.26 |
|
Depreciation and amortization of real estate
assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated properties |
|
|
316,077 |
|
|
|
— |
|
|
|
1.89 |
|
|
|
307,917 |
|
|
|
— |
|
|
|
1.83 |
|
Share of unconsolidated joint ventures |
|
|
9,293 |
|
|
|
— |
|
|
|
0.06 |
|
|
|
7,735 |
|
|
|
— |
|
|
|
0.04 |
|
Partners' share of real estate depreciation |
|
|
(373 |
) |
|
|
— |
|
|
|
— |
|
|
|
(765 |
) |
|
|
— |
|
|
|
— |
|
Gain on sale of depreciated properties: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated properties |
|
|
(8,616 |
) |
|
|
— |
|
|
|
(0.05 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Impairment |
|
|
36,600 |
|
|
|
— |
|
|
|
0.22 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Funds From Operations |
|
$ |
371,286 |
|
|
|
166,254 |
|
|
$ |
2.23 |
|
|
$ |
358,864 |
|
|
|
168,698 |
|
|
$ |
2.13 |
|
Liquidity and Capital Resources
Our primary short-term and long-term liquidity needs include the following:
•property operating expenses;
•property, land, and other real estate related acquisitions;
•expenditures on development and redevelopment projects;
•building improvements, tenant improvements, and leasing costs;
•principal and interest payments on indebtedness;
•general and administrative costs; and
•common stock dividends and distributions to outside unitholders of CPLP.
We may satisfy these needs with one or more of the following:
•cash and cash equivalents on hand;
•net cash from operations;
•proceeds from the sale of assets;
•borrowings under our Credit Facility;
•proceeds from mortgage notes payable;
•proceeds from construction loans;
•proceeds from unsecured loans;
•proceeds from offerings of debt and equity securities; and
•joint venture formations.
Our material capital expenditure commitments as of September 30, 2026, included $187.5 million of unfunded tenant improvements and construction costs. As of September 30, 2026, we had $114.8 million drawn under our credit facility with the ability to borrow $1.1 billion, as well as $5.2 million of cash and cash equivalents. We expect to have sufficient liquidity to meet our obligations for the foreseeable future.
Other Debt Information
In addition to our $1.2 billion unsecured Credit Facility, under which $114.8 million is outstanding as of September 30, 2026, we also have unsecured debt from four outstanding public unsecured senior notes totaling $1.9 billion, two term loans totaling $500 million, and four tranches of privately placed unsecured senior notes totaling $750 million. Our existing consolidated mortgage debt is comprised of non-recourse, fixed-rate mortgage notes secured by various real estate assets. We expect to either refinance our non-recourse mortgage loans at maturity or repay the mortgage loans with other capital resources, including our credit facility, unsecured debt, non-recourse mortgages, construction loans, the sale of assets, joint venture equity, the issuance of common stock, the issuance of preferred stock, or the issuance of units of CPLP. Many of our non-recourse mortgages contain covenants that, if not satisfied, could result in acceleration of the maturity of the debt. As of September 30, 2026, 83% of our consolidated debt bears interest at a fixed rate. The 17% of consolidated debt that bears interest at a floating rate is based on SOFR.
On April 1, 2026, we recast our Credit Facility to provide borrowing capacity up to $1.2 billion subject to conditions. This new facility replaced the Company's existing facility, extended the scheduled maturity from April 2027 to April 2031, and increased the borrowing capacity from $1.0 billion to $1.2 billion. Additionally, we amended our 2021 Term Loan and 2022 Term Loan, adding two six-month extension options to each. Since December 31, 2025, our all-in borrowing spread improved by 15 basis points on both the revolving credit facility and the 2022 Term Loan, and 30 basis points on the 2021 Term Loan. As of September 30, 2026, the borrowing spread on our Credit Facility was 72.5 basis points over SOFR, and the borrowing spread on each term loan was 80 basis points over SOFR. Financial covenants within the new facilities remained generally unchanged.
We are in compliance with all covenants of our existing unsecured and secured debt.
Future Capital Requirements
To meet capital requirements for future investment activities, we intend to actively manage our portfolio of properties and strategically sell assets to exit our non-core holdings and reposition our portfolio of income-producing assets. We also expect to continue to utilize cash retained from operations, as well as third-party sources of capital such as indebtedness, to fund future commitments and to utilize construction financing facilities for some development assets, if available and under appropriate terms. We may also generate capital through the issuance of securities that include common or preferred stock, warrants, debt securities, or the issuance of CPLP limited partnership units. The Company and CPLP have filed a registration statement on Form S-3 with the SEC registering, among other securities, debt securities of CPLP, which are fully and unconditionally guaranteed by the Company. Separate consolidated financial statements of CPLP have not been presented in accordance with the amendments to Rule 3-10 of Regulation S-X. Furthermore, as permitted under Rule 13-01(a)(4)(vi), the Company has excluded the summarized financial information for CPLP as the assets, liabilities, and results of operations of the Company and CPLP are not materially
different than the corresponding amounts presented in the consolidated financial statements of the Company, and management believes such summarized financial information would be repetitive and not provide incremental value to investors.
Our business model also includes raising or recycling capital, which can assist in meeting obligations and funding development and acquisition activity. If one or more sources of capital are not available when required, we may be forced to reduce the number of projects we acquire or develop and/or raise capital on potentially unfavorable terms, or we may be unable to raise capital, which could have an adverse effect on our financial position or results of operations.
Cash Flows
We report and analyze our cash flows based on operating activities, investing activities, and financing activities. The following table sets forth the changes in cash flows ($ in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, |
|
|
|
2026 |
|
|
2025 |
|
|
Change |
|
Net cash provided by operating activities |
|
$ |
308,294 |
|
|
$ |
287,803 |
|
|
$ |
20,491 |
|
Net cash used in investing activities |
|
|
(265,769 |
) |
|
|
(335,512 |
) |
|
|
69,743 |
|
Net cash provided by (used in) financing activities |
|
|
(43,032 |
) |
|
|
45,035 |
|
|
|
(88,067 |
) |
The reasons for significant increases and decreases in cash flows between the periods are as follows:
Cash Flows from Operating Activities. Cash flows provided by operating activities increased by $20.5 million during the 2026 nine month period compared to the same period in 2025, primarily due to the acquisitions of The Link and 300 South Tryon. In addition to these acquisitions there was an increase in cash inflows from a combination of increased occupancy and expiration of rent abatement periods, primarily at Promenade Tower, Hayden Ferry, Domain 9, and 300 Colorado. These inflows were partially offset by increased interest payments from the senior note issuances in June 2025 and February 2026.
Cash Flows from Investing Activities. Cash flows used in investing activities decreased by $69.7 million for the 2026 nine month period compared to the same period in 2025 primarily due to receipt of proceeds from sales of operating properties in 2026 partially offset by increased payments related to acquisitions in 2026 when compared to 2025. In 2026, we received proceeds from the sale of Harborview, Research Park V, and One Eleven Congress and had no dispositions in 2025. In July 2025, we acquired the Link for $218.0 million and, in February and September 2026, we acquired 300 South Tryon and land at 2401 McKinney, respectively, for $317.5 million and $50.0 million.
Cash Flows from Financing Activities. Cash flows used in financing activities for the 2026 nine month period were $43.0 million, compared to cash flows provided by financing activities of $45.0 million for the same period in 2025. During the nine month period in 2026, we received proceeds from the issuance of $500.0 million of 4.875% public senior notes in February 2026. These proceeds were partially offset by a $150 million partial repayment of the 2021 Term Loan, repayment at par of our $99.2 million Colorado Tower mortgage in September 2026, and a $90 million repurchase of outstanding common shares under the 2026 share repurchase program. During the nine month period in 2025, we received proceeds from the issuance of $500.0 million of 5.250% public senior notes in June 2025, partially offset by repayment of $250 million of privately placed senior notes and an increase in net repayments on our credit facility.
Capital Expenditures. We incur capital expenditures for the development of new properties, the redevelopment of existing or newly purchased properties, building improvements, direct leasing costs for new or replacement tenants, and capitalized interest and salaries. Components of expenditures included in this line item for the nine months ended September 30, 2026, and 2025 are as follows ($ in thousands):
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, |
|
|
|
2026 |
|
|
2025 |
|
Projects under development (1) |
|
$ |
— |
|
|
$ |
2,259 |
|
Operating properties—redevelopment |
|
|
42,018 |
|
|
|
27,633 |
|
Operating properties—building improvements |
|
|
29,453 |
|
|
|
28,388 |
|
Operating properties—leasing costs |
|
|
115,345 |
|
|
|
111,343 |
|
Capitalized interest and other |
|
|
11,903 |
|
|
|
10,837 |
|
Total capital expenditures |
|
$ |
198,719 |
|
|
$ |
180,460 |
|
(1) Includes initial leasing costs. |
|
|
|
|
|
|
Capital expenditures increased $18.3 million between the 2026 and 2025 nine month periods, primarily due to partial redevelopment activity at 201 North Tryon, 550 South, and Hayden Ferry.
The above leasing costs include leasing commissions and tenant improvements, which are both capitalized as a component of our real estate assets as they are incurred. Commitments toward those costs are calculated on square foot basis and are included in our leasing activity as leases are executed.
Leasing activity details, including the components of net effective rent per square foot, for our office portfolio on leases executed during the nine months ended September 30, 2026 and 2025 are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, 2026 |
|
|
|
New |
|
|
Renewal |
|
|
Expansion |
|
|
Total |
|
Net leased square feet (1) |
|
|
869,611 |
|
|
|
1,304,405 |
|
|
|
228,370 |
|
|
|
2,402,386 |
|
Number of transactions |
|
|
64 |
|
|
|
59 |
|
|
|
28 |
|
|
|
151 |
|
Lease term in years (2) |
|
|
8.5 |
|
|
|
6.6 |
|
|
|
9.2 |
|
|
|
7.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net effective rent calculation (per square foot per year) (2) |
|
|
|
|
|
|
|
|
|
|
|
|
Net annualized rent (3) |
|
$ |
42.76 |
|
|
$ |
41.69 |
|
|
$ |
49.59 |
|
|
$ |
42.83 |
|
Net free rent |
|
|
(3.05 |
) |
|
|
(1.33 |
) |
|
|
(3.00 |
) |
|
|
(2.11 |
) |
Leasing commissions |
|
|
(3.55 |
) |
|
|
(2.74 |
) |
|
|
(3.83 |
) |
|
|
(3.13 |
) |
Tenant improvements |
|
|
(10.36 |
) |
|
|
(4.60 |
) |
|
|
(9.48 |
) |
|
|
(7.16 |
) |
Total leasing costs |
|
|
(16.96 |
) |
|
|
(8.67 |
) |
|
|
(16.31 |
) |
|
|
(12.40 |
) |
Net effective rent |
|
$ |
25.80 |
|
|
$ |
33.02 |
|
|
$ |
33.28 |
|
|
$ |
30.43 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Second generation leased square footage (4) |
|
|
|
1,748,363 |
|
Increase in straight-line basis second generation net rent per square foot (5) |
|
|
|
28.9 |
% |
Increase in cash-basis second generation net rent per square foot (6) |
|
|
|
14.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, 2025 |
|
|
|
New |
|
|
Renewal |
|
|
Expansion |
|
|
Total |
|
Net leased square feet (1) |
|
|
489,932 |
|
|
|
743,103 |
|
|
|
191,794 |
|
|
|
1,424,829 |
|
Number of transactions |
|
|
60 |
|
|
|
50 |
|
|
|
18 |
|
|
|
128 |
|
Lease term in years (2) |
|
|
7.7 |
|
|
|
7.9 |
|
|
|
8.3 |
|
|
|
7.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net effective rent calculation (per square foot per year) (2) |
|
|
|
|
|
|
|
|
|
|
|
|
Net annualized rent (3) |
|
$ |
40.46 |
|
|
$ |
36.39 |
|
|
$ |
40.48 |
|
|
$ |
38.34 |
|
Net free rent |
|
|
(2.22 |
) |
|
|
(1.84 |
) |
|
|
(1.45 |
) |
|
|
(1.92 |
) |
Leasing commissions |
|
|
(3.34 |
) |
|
|
(2.55 |
) |
|
|
(2.79 |
) |
|
|
(2.85 |
) |
Tenant improvements |
|
|
(8.56 |
) |
|
|
(4.96 |
) |
|
|
(6.88 |
) |
|
|
(6.46 |
) |
Total leasing costs |
|
|
(14.12 |
) |
|
|
(9.35 |
) |
|
|
(11.12 |
) |
|
|
(11.23 |
) |
Net effective rent |
|
$ |
26.34 |
|
|
$ |
27.04 |
|
|
$ |
29.36 |
|
|
$ |
27.11 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Second generation leased square footage (4) |
|
|
|
1,115,440 |
|
Increase in straight-line basis second generation net rent per square foot (5) |
|
|
|
22.1 |
% |
Increase in cash-basis second generation net rent per square foot (6) |
|
|
|
4.9 |
% |
(1)Comprised of total square feet leased, unadjusted for ownership share. Excludes leases approximately one year or less, along with apartment, retail, amenity, storage, and intercompany space leases.
(2)Weighted average of net leased square feet.
(3)Straight-line net rent per square foot (operating expense reimbursements deducted from gross leases) over the lease term, prior to any deductions for leasing costs. Excludes percent rent leases.
(4)Excludes leases executed for spaces that were vacant upon acquisition, new leases in development properties, percent rent leases, and leases for spaces that have been vacant for one year or more.
(5)Increase in second generation straight-line basis net annualized rent on a weighted average basis.
(6)Increase in second generation net cash rent at the end of the term paid by the prior tenant compared to net cash rent at the beginning of the term (after any free rent period) paid by the current tenant on a weighted average basis. For early renewals, the final net cash rent paid under the original lease is compared to the first net cash rent paid under the terms of the renewal. Net cash rent is net of any recovery of operating expenses but prior to any deductions for leasing costs.
Dividends. We paid common dividends of $160.6 million and $162.1 million in the nine months ended September 30, 2026, and 2025, respectively. We expect to fund our future quarterly common dividends with cash provided by operating activities, also using proceeds from investment property sales, distributions from unconsolidated joint ventures, indebtedness, and proceeds from offerings of equity and other securities, if necessary.
On a quarterly basis, we review the amount of the common dividend in light of current and projected future cash flows from the sources noted above and also consider the requirements needed to maintain our REIT status. In addition, we have certain covenants under credit agreements that could limit the amount of common dividends paid. In general, common dividends of any amount can be paid as long as leverage, as defined in our credit agreements, is less than 60% and we are not in default. Certain conditions also apply in which we can still pay common dividends if leverage is above that amount. We routinely monitor the status of our common dividend payments in light of the covenants of our credit agreements.
Off Balance Sheet Arrangements
General. We have a number of off balance sheet joint ventures with varying structures, as described in note 6 of the notes to consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2025, and in note 4 of the notes to condensed consolidated financial statements included in this filing. The joint ventures in which we have an interest are involved in the ownership, acquisition, and/or development of real estate. A venture will fund capital requirements or operational needs with cash from operations or financing proceeds, if possible. If additional capital is deemed necessary, a venture may request a contribution from the partners, and we will evaluate such request.
Debt. At September 30, 2026, our unconsolidated joint ventures had aggregate outstanding indebtedness to third parties of $425.0 million. These loans are generally mortgage or construction loans, which are non-recourse to us. In certain instances, we provide “non-recourse carve-out guarantees” on these non-recourse loans. We, along with our Neuhoff Holdings LLC joint venture partner, guarantee our respective halves of the borrower's obligations to pay certain required equity contributions and project carrying costs, as well as timely completion of project construction. In addition, along with our TL CO Proscenium JV, LLC joint venture partner, we guarantee our respective portions of the borrower's obligations to pay certain required equity contributions for project carrying costs and leasing and tenant improvement costs. Our portion of the borrower's obligations is $7.8 million. Certain of these loans have variable interest rates, which creates exposure to the ventures in the form of market risk from interest rate changes.
Critical Accounting Policies
There have been no material changes in the critical accounting policies from those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2025.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
There have been no material changes in the market risk associated with our notes payable at September 30, 2026, compared to that as disclosed in our Annual Report on Form 10-K for the year ended December 31, 2025.
Item 4. Controls and Procedures.
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Management necessarily applies judgment in assessing the costs and benefits of such controls and procedures, which, by their nature, can provide only reasonable assurance regarding our control objectives.
As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of management, including the Chief Executive Officer along with the Chief Financial Officer, of the effectiveness, design, and operation of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)). Based upon the foregoing, the Chief Executive Officer along with the Chief Financial Officer concluded that our disclosure controls and procedures were effective. In addition, based on such evaluation, we have identified no changes in our internal control over financial reporting that occurred during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.