Good day. Welcome to the Cousins Properties Q1 conference call. All participants will be in listen only mode. If you need assistance, please signal a conference specialist by pressing the star key followed by 0. After today's presentation, there'll be an opportunity to ask questions. Please note that this event is being recorded. I would like to turn the conference over to Ms. Pamela Roper, General Counsel. Please go ahead. Thank you. Good morning and welcome to Cousins Properties Q1 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, www.cousins.com. 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. We had a solid Q1 at Cousins and a productive start to 2023. On the earnings front, the team delivered $0.65 per share in FFO, and same property net operating income increased 4.9% on a cash basis. We leased 258,000 sq ft during the quarter with a 6.1% cash rent rollout. New leases and expansions totaled 159,000 sq ft. While re-renewals were modest as we have minimal near-term lease expirations. Overall, these are positive results in a tough economy. Over 10 years ago, Cousins set out to build the premier Sun Belt trophy REIT while maintaining a fortress balance sheet. Our unique and compelling strategy has been supported by two powerful secular trends, a migration to the Sun Belt and the flight to quality. We aggressively positioned the company around these tailwinds. In just the last five years, we sold approximately $1.3 billion of predominantly older vintage properties and reinvested the proceeds in trophy acquisitions and attractive new developments. In addition, we completed a transformational merger with TIER REIT that expanded the portfolio and enhanced our geographic diversification. As a result, Cousins now owns a premier portfolio located in the best submarkets across the Sun Belt. Importantly, our portfolio is among the newest across the office sector, with among the lowest near-term lease expirations. In addition, our balance sheet is among the strongest in the office sector, with a net debt to EBITDA at 5.1 times, with ample liquidity and no significant debt maturities until July of 2025. Now I'll touch on the macro environment. First, to fight inflation, the Federal Reserve and other central banks around the world have rapidly raised interest rates to slow economic growth. Financial conditions have tightened. The real estate capital markets have dislocated. Companies are becoming more efficient. In some cases, this includes employing fewer people and reducing office space. Second, we are seeing an increase in office utilization. Our growing parking income highlights this trend. As the health crisis fades and financial pressures grow, CEOs are increasingly focused on results. Rebuilding culture, collaboration, communication, efficiency, and mentoring are now clearly priorities for innovative companies. The return to office has accelerated and is likely to continue. Amazon and Meta, both early supporters of remote work, have recently reversed course. These announcements are a really big deal. Many more will follow. Third, there is little to no leasing demand or capital availability for older vintage, lower quality office properties. The values of these properties will likely reprice to facilitate a repurposing or even a teardown. This process has begun. It will take time to play out, in the interim, these buildings will likely stagnate and have a reduced impact on the overall office market. Lastly, the pipeline for speculative new development projects is rapidly shrinking. What are the implications for the overall office market? In the short term, leasing demand is likely to soften. Expanding office footprints is challenging amid shrinking headcounts. More specifically, what are the implications for Cousins? Silver linings are taking shape for our Sun Belt trophy portfolio. Our customers are returning in greater force. Accelerated obsolescence is reducing the competition. New development is minimal. Demand remains firmly focused on the best properties in the best submarkets. In addition, customers are increasingly focused on identifying properties with sound capital structures that can fund leasing costs. We call this the flight to capital. The market is rebalancing. Premier properties will fill up in time while undesirable properties are emptying. The office is not dead. Rather, obsolete office is dead. The market underappreciates this. Importantly, the flight to quality and the emerging flight to capital trends are providing a boost to our leasing efforts at Cousins. Our late-stage pipeline is now over 700,000 sq ft, with broad representation across markets, including in Nashville at our Neuhoff project, and industries, including technology. The quality of our portfolio and the strength of our balance sheet provide a clear edge in today's leasing market. When the competition is upside down with debt, we plan to move quickly, be aggressive, and grow market share. If necessary, we will prioritize increasing occupancy over pushing rental rates. Now is the time to press our advantage and grow cash flow. In closing, we are mindful of the potential impacts of higher interest rates in a slowing economy. However, we built Cousins to thrive during all phases of the economic cycle. Over the long term, we are optimistic that investors will differentiate premier office from traditional office and recognize a new asset class with much improved sentiment. Cousins is in a strong position. We are in the right Sun Belt markets. We own a trophy portfolio with modest near-term lease expirations. We have a fortress balance sheet with minimal near-term debt maturities. Importantly, we have significant liquidity and capacity to pursue compelling new investments in a dislocated market when many peers now lack the capital to compete. The downward repricing of assets in the private market is still playing out. We will remain patient, disciplined, and continue to prioritize our strong balance sheet. We are watching closely, though, and we will be ready. Before turning the call over to Richard, I want to thank our employees at Cousins who provide excellent service to our customers. Their dedication, resilience, and hard work continues to propel us forward. Richard? Thanks, Colin. Good morning, everyone. Our operations team once again delivered solid quarterly results. As Colin mentioned, companies are now broadly bringing employees back to the office for three or more days per week. We are seeing the impact of this most noticeably in the 17% and 6% increases in our Q1 parking revenue on a year-over-year and sequential basis, respectively. Before reviewing results, I want to take a moment to provide more color on the bankruptcy of SVB Financial Group, the entity on our 205,000 sq ft lease at Hayden Ferry in Phoenix that expires in January 2026. That entity is a parent company that no longer owns SVB Bank, but still owns other non-bank subsidiaries. However, the actual user of our space was SVB Bank, which is now owned by First Citizens Bank. We are in contact with SVB Financial Group, the legacy SVB Bank, and First Citizens. With that said, it is still too early in the process to have a clear view of the outcome with our lease. To the extent we do get space back from SVB, Hayden Ferry is an iconic office project in Phoenix that even before this bankruptcy, had a significant reinvestment project planned, and SVB's in-place rent is below market. We have already received multiple inquiries from potential new customers about whether SVB space will come available. On to operating results. There were no portfolio composition changes in the Q1. Our total office portfolio weighted average occupancy and end-of-period lease percentages were 87.2% and 90.8% respectively, with occupancy up slightly relative to last quarter. In the Q1, we executed 29 office leases totaling 258,000 square feet with a weighted average lease term of 7 years. The lighter volume was in line with our expectations, given we have very low expirations of only 9% of annual rent in total through the end of 2024. When looking at only new and expansion leasing volume of 159,000 square feet in the operating portfolio in the quarter, which was 62% of our total activity, that volume was higher than both the Q1 average over the past five years and the Q1 of 2019 as a pre-pandemic proxy. On the topic of expansions, as with the full year 2022, this quarter we saw expansions outpace contractions on a square footage basis. Average net rent was strong this quarter at $34.45, and leasing concessions defined as the sum of free rent and tenant improvements were 5% higher than in the full year of 2022, at $8.36 per square foot per year. As we have been saying for a while, upward pressure in tenant improvement allowances and free rent is likely to continue for the foreseeable future. Despite that, our average net effective rent in the Q1 was in line with what we delivered for the full year 2022. Healthy second generation net rent growth also continued in the Q1, coming in at 6.1% on a cash basis. These are encouraging operating results to begin the year. Year-to-date, we have also seen a ramp up in our late stage leasing pipeline, which consists of leases in negotiation to over 700,000 sq ft. This is more than double what it was this time last quarter and is broad-based in terms of market and industry representation, including activity from the technology sector. Almost 400,000 sq ft of that total are new and expansion leases. Please keep in mind that the time lag between lease signature and commencement is typically at least Q2. The full impact from this new and expansion leasing activity will begin to materialize in 2024. Colin mentioned this. I also want to reiterate that we are increasingly seeing activity gravitate to our assets, not only because of quality, but also because prospects are actively seeking out ownership that can demonstrate financial stability. We see a flight to capital trend emerging that is in addition to the already powerful flight to quality trend. As a quick reminder, the renewal of our largest 2023 expiring customer and about 120,000 sq ft in Buckhead is still in lease negotiations and is on track. With that anticipated renewal of our largest 2023 expiration and minimal expirations otherwise, we still see a reasonable path toward maintaining occupancy and even building occupancy similar to this quarter through the end of the year, excluding any potential impact from SVB at Hayden Ferry. Moving to market level dynamics, job growth in the Sun Belt continues to outpace other areas of the country. According to The Wall Street Journal and Moody's Analytics, Nashville topped the list of 2022's hottest job markets, followed by Austin. In Nashville, we are a 50% partner in the dynamic Newhoff mixed-use new development that includes approximately 450,000 sq ft of office and 540 multi-family units. I'm excited to say that we now have just under 50,000 sq ft of office leases in negotiation at Newhoff, with an additional 150,000 sq ft of active proposals out where we have been shortlisted. We are very pleased with our competitive position at Newhoff and encouraged by the growing excitement around the project as it gets closer to completion. In Austin, which has the strongest labor force participation rate among large metro areas, we signed approximately 20,000 sq ft of leases in the Q1, which is clearly lower than typical for that portfolio. As I noted last quarter, at 94.5% leased with no material near term expirations and also 100% leased in The Domain with 6.1 years of weighted average lease term, our Austin portfolio is well positioned to weather macroeconomic challenges. In addition, I'm pleased to report that our late stage leasing pipeline in Austin includes some very positive activity. In Atlanta, CBRE notes that leasing activity surpassed the prior quarter with 1.8 million sq ft of transactions signed, a 30% increase quarter-over-quarter. In our portfolio, we signed approximately 211,000 sq ft of leases in Atlanta this quarter across all of our submarkets. Included in that is a long-term new lease with Deloitte for 95,000 sq ft at Promenade Tower. Deloitte will be leaving downtown Atlanta after many years to join other prominent new customers like Visa, Edelman, and Kimley-Horn at our newly renovated Promenade campus in the heart of a much more vibrant midtown submarket. Finally, we thought it would be helpful to share some insight into the nature of the technology customers in our portfolio. About 26% of our portfolio aggregate rent comes from the technology sector. Of that, about 22% are publicly traded companies with an equity market cap over $1 billion, and more than half of those are mega cap players like Amazon and Meta. About 3.5% are either smaller publicly traded companies or private well-capitalized companies backed by highly respected investors such as Vista Equity Partners and Hellman & Friedman. That leaves less than 1% that are smaller private companies. However, that population of customers boasts an average operating history of almost 20 years. Not surprisingly, the rent profile of our trophy quality buildings, as well as our credit standards, generally limit exposure to early stage startup companies. Before handing off to Gregg, I want to thank our talented operations team. Many of us were together earlier this month for a management retreat in Tampa, and I can say firsthand how energizing it was to collaborate in person with teammates from across the country. Gregg? Thanks, Richard. Good morning, everyone. I'll begin my remarks by providing a brief overview of our results, as well as some details on our same property performance. I'll move on to our capital markets activity and our development pipeline, followed by a quick discussion of our balance sheet before closing my remarks with an update to our earnings outlook for 2023. Overall, as Colin stated upfront, our Q1 earnings were solid and the economics behind them were encouraging. Second generation leasing spreads were up and same property year-over-year cash NOI was positive. Focusing on same property performance for a moment, we added five buildings to our same property pool during the Q1, and that pool now comprises over 92% of our total NOI. The new properties have an average age of only three and a half years and average gross rents of almost $60 per sq ft. With these additions, we continue to improve the quality of our core office portfolio. Looking at the numbers, same property GAAP NOI increased 5.3% and cash NOI increased 4.9% during the Q1 compared to last year. This continues a string of improvements that began in early 2022, with the most recent quarterly gains largely driven by occupancy at Buckhead Plaza and Domain 2, as well as higher parking revenues. Turning to our capital markets activity. Subsequent to quarter end, we executed a loan application for our MOB in Midtown Atlanta. This is the refinancing of an asset that we own in a 50/50 joint venture with Emory University. The new debt will increase total loan proceeds from $62 million to $83 million and lock in a fixed 4.8% coupon for nine years. We anticipate closing prior to the maturity of the existing debt, which is on June 1st. This is our only debt maturity in 2023. Looking at 2024 and beyond, our debt maturity schedule has 3 pieces of debt with extension options. First, we have a $350 million term loan with an initial maturity in August 2024 that has 4 6-month extension options. Second, we have a $400 million term loan with an initial maturity in March 2025 that also has 4 6-month extension options. Third, our Newhoff construction loan has an initial maturity in September 2025 and has a single one-year extension option. When taking these 3 extensions into account, our next significant debt maturity is not until July of 2025. Our debt maturity schedule is laid out, including all the extension options I just discussed on page 28 of our earnings supplement. Before moving on, I also wanted to discuss a floating to fixed interest rate swap we entered into subsequent to quarter end on $200 million of our $400 million term loan, fixing the daily SOFR rate at 4.298% through maturity. Adjusting for this swap, floating rate debt will comprise approximately 17% of our total debt, which is in line with our long term average and our goal of approximately 20%. Turning to our development efforts. Our current development pipeline is comprised of a 50% interest in Newhoff in Nashville and 100% of Domain Nine in Austin. Our share of the remaining development costs is $128 million, $90 million of which will be funded by our Newhoff construction loan, leaving only $38 million to be funded by our operating cash flow over the next couple years as these projects are completed. Looking at our balance sheet, net debt to EBITDA is an industry leading 5.1x. Our liquidity position remains strong and our dividend is well covered with an FAD payout ratio of only 64% during the Q1. I'll close by updating our 2023 earnings guidance. We currently anticipate full year 2023 FFO between $2.55 and $2.65 per share, with a midpoint of $2.60 per share. This is up from our previous midpoint of $2.58 per share. No property acquisitions, property dispositions or development starts are included in this guidance. There's also no impact from our SVB lease included in this guidance. We filed an 8-K with the SEC on March 15th that laid out the details of this lease. As a quick reminder, the SVB lease generates approximately $700,000 per month in GAAP revenues, and as of March 31st, we had approximately $2 million of net assets on our balance sheet attributable to this lease, primarily related to rent on a straight line basis. The balance sheet number declines a little over $100,000 per month. As of today, SVB is current on the financial obligations of their lease. They've already paid May rent in full, and they have not rejected their lease under bankruptcy. With this fact pattern, we continue to record revenue on a straight line basis without any reserves. Looking forward, if collection under the lease no longer remains probable, we will adjust our accounting accordingly. However, as Richard discussed in his previous remarks, it remains too early in the process for us to make a clear assessment. That being said, what we do know is that SVB bank employees, who are now First Citizens Bank employees, are actively using some portion of the space. If our lease with SVB is rejected at some future date, we will be treated as an unsecured creditor. Currently, SVB unsecured bonds are trading around $0.60 on the dollar. There is likely value to our position even if the lease is rejected. Finally, depending on the ultimate outcome with SVB, we may end up taking all or a portion of our Hayden Ferry 1 building offline for a significant repositioning effort, much like we did when Norfolk Southern moved out of what we now call Promenade Central here in Atlanta. Rest assured, as we receive new information, we will update you promptly, consistent with what we did in March. I'd like to close by discussing the two primary components driving our increased FFO guidance for 2023. The first component is unbudgeted termination fees during the balance of the year. The largest of these is at our 100 Mill property in Phoenix, where we proactively approached an existing 30,000 sq ft customer and worked a deal to replace them with a new customer. The increase to our guidance on this issue takes into account the termination fee that will be paid, netted against any downtime as well as any GAAP accounting adjustments. The second component is higher than budgeted parking income driven by continued return to the office, as both Colin and Richard discussed earlier. Bottom line, despite a volatile and challenging macroeconomic environment, our Q1 results were solid. Our strong leverage and liquidity position remains intact. We are raising FFO guidance. With that, let me turn the call back over to the operator for your questions. Operator? Thank you. We'll now begin the question and answer session. To ask a question, press star then one on your touch-tone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. At this time, we'll pause momentarily to assemble the roster. First question will be from Blaine Heck of Wells Fargo. Please go ahead. Great. Thanks. Colin, we've talked about this a lot in recent conversations, but there's obviously been a lot of focus on debt maturities in the office sector and the wave of maturities that we're facing, over the next few years. Just wanted to get your view on how this all plays out. Are you expecting a significant amount of forced or distressed transactions to emerge or not? You know, what's that mean for asset pricing in the office sector, and again, potential opportunities for you guys to invest? Well, good morning, Blaine. I think it's still a bit premature to see, how this ultimately plays out. You're right. There are significant maturities over the next three years, and particularly over the next kind of 12-24 months. I think in certain instances, you're gonna see banks working with existing borrowers to try to find kind of orderly resolutions. I think a big trigger, kind of inflection point are gonna be assets that do need significant amount of new capital and where that new capital comes from. I think that's gonna create, opportunities for folks like Cousins and others. That being said, as you look across the Sun Belt trophy landscape, those properties today are again, the fundamentals and kind of premier Sun Belt properties is actually fairly solid and many of those buildings do not have significant amount of leverage. I think ultimately, as the overall market kind of works itself out, with a significant increase in interest rates, asset prices have clearly moved. You know, even in the event that we don't see significant distress with existing assets, we do think we're gonna see some investors that have got kind of portfolio issues elsewhere and look to meet the market and move assets. Again, I think that'll be another source of opportunity for us. Lastly, I think where we'll see it kind of most acutely from a, debt maturity perspective, kind of interesting opportunities for Cousins will be some of the new supply and construction loans for kind of non-stabilized assets. I think that will. We're starting to see some of that activity happen now and certainly over the next 12 months as those loans mature. Those loans will need to be rebalanced, and there'll be new capital that's required to lease those buildings. Great. Very helpful color. Second question, just on same store NOI. You know, results were very strong this quarter, almost 5%. I know you guys still aren't giving guidance, but, can you give us any color on how we should think about that metric trending throughout the rest of the year or, even some drivers that could push that number one way or the other as we think about the second, third and fourth quarters? Hey, Blaine, good morning. It's Gregg. You know, it was a solid number for the Q1. In terms of kind of what's moving it, I mean, you've seen some good movements on both revenues and expenses. On the expense side, I mean, there's some pressures. There are some pressures on taxes. You know, municipalities are starting to raise assessments, and we appeal those like everybody else does, but there's definitely some pressure on taxes. There's also some pressures from just general inflation, particularly on the labor side. You'll see that continue to push through the balance of the year. Finally, on the expense side, as we see companies bring their employees back to the office, net-net, that's very positive in many ways, not the least of which is the parking revenues we've talked about and which have kind of led to our increased guidance. You will see some pressure on some operating expenses, cleaning, utilities, because you just have more people. Great. Helpful. Thanks, guys. Thank you. The next question will be from Mr. Anthony Powell. Please go ahead. Just a question on Newhoff. With the 200,000 sq ft of leases in various stages of negotiation, what's the likely, I guess, path for income recognition from that project next year as you kind of ramp up? And how does that look relative to what you were expecting maybe, 6 months or one year ago? Yeah. Good morning, Anthony. It's Colin. A s Richard alluded to, we are now starting to see, activity pick up considerably at Newhoff, and we're very excited about, where we stand. You know, I think, as we look at income recognition, the 50,000 or so sq ft that we're, in lease negotiations with, I think that those will have the possibility to kick in in the early part of next year. Then again, we're in process with another, 150,000 sq ft. We'll not make all of those, but we hope to get more than our fair share. I think those will, from a commencement perspective or anywhere from kind of the middle of 2024 to, in some cases, even kind of the end of the year or the very beginning of 2025. Overall from the project, we continue to be on budget, on time. I think if there's one kind of aspect that as we look backwards, that maybe we underappreciated was the size of the project and the adaptive reuse component of the project, kind of made it a little bit more challenging for folks to get their arms around it, understand it, and really experience what Newhoff is. Now that we're, getting closer to completing the project and it's taking shape, the response and the receptivity of this project in Nashville has been incredible. We're very excited about where we are. I think the lease up might, take us just a touch longer, but we feel very good about where the economics stand, and I think it's gonna be a terrific outcome for Cousins. Got it. Thanks. One more. I guess we're a few quarters into the tech layoffs. I remember when they started, there was a debate about whether these layoffs would impact more of the headquarters on the West Coast or some of the other offices in the Sun Belt or if they'd be spread out. I guess it may be hard for you to tell, but is there a way for you to monitor if some of the layoffs from Amazon, Meta, and whatnot have impacted your portfolio more than others or less than others? Just maybe a broad overview there would be great. Yes. It's hard to be, very specific because those aren't numbers that they, that they disclose publicly. I can tell you, we talk to our customers all the time. Again, I would share with you the consistent feedback that we get from, some of those large tech companies is that they made a strategic decision to grow in markets like Austin and Atlanta, Nashville and others. That was really based on a long-term objective to distribute their workforce more broadly across the country. I think in particular, they've identified some cities that have really grown up and urbanized over the last 10+ years, where they could attract kind of the best and the brightest and high-quality talent that's excited to live in those environments at a much cheaper cost. We have not received any indication that they're looking to kind of unwind that strategic objective. If anything, our view over time that, while there could be a short pause, that will certainly continue and could grow. All right. Thank you. Thank you. The next question will be from James Poskitt of Evercore. Please go ahead. Hey, good morning. Thanks for taking my question. Can we just touch on kind of your expectations for occupancy growth throughout the year? I know that on the previous call, you kind of talked for flat occupancy in the beginning of the year and then potential ramp in the back just based on, what leasing conditions might be. I'm just kind of curious how that view has changed and what might change it. Is it the macro environment, maybe the lease renewal in the Q4? Just any color on that would be helpful. Thanks. Yeah. This is Richard. yeah, I'd say short answer is our expectations really have not changed relative to last quarter. We still continue to feel like with the kind of minimal expirations during the year that we have, combined with leases that have not yet commenced, but that will during the year, we have a reasonable path to just incrementally build, hopefully, occupancy like we did this quarter throughout the end of the year. That's helpful. Thanks. Just 1 question as well. Can you provide an update on that bucket of the signed leases not yet commenced? I know last quarter you said, that it had a weighted average commencement of the 2nd quarter. Any color on that would be helpful. Thanks. Sure. That number sitting here today is now about 480,000 square feet, but it's still got a commencement in the Q2 on average. Great. Thank you. That's all for me. Sure. Thank you. Thank you. Next question will be from John Kim of BMO Capital. Please go ahead. I believe, Richard, you mentioned 700,000 sq ft of leasing in the pipeline in negotiations. I was wondering if you could remind us what your typical closing rate is on leases in negotiation and any market color you could provide. I know 50,000 of it is in Nashville, but just wanted to know what the proportion was in other markets. Sure. Yeah. With regard to the closing rate, it's really high. I mean, it's 95% plus. Usually, when we have a lease that goes into documentation and legal, it's a solid transaction for us. Really high conversion rate there. Timing can vary, but the conversion rate's good. With regard to just the kind of distribution of activity, Atlanta continues to be really strong, has been for a while now. Again, the activity that we're seeing in our late-stage pipeline is really compelling in every single market. It's very broad-based. What do you attribute the increase in leasing discussions to? There's some of your office peers have mentioned, similar amount of activity picking up. When you look at office utilization, it hasn't really increased that much. We're entering a recession, I'm just wondering what your thoughts are on that, what you hear from your clients. Good morning, John. It's Colin. Again, it's a bit counterintuitive because, as you mentioned, we are in an economy that does appear to be decelerating, which is typically not conducive to, office real estate leasing. That being said, the couple of the trends that we're seeing happen, again, utilization is picking up. It has not kind of gotten into full swing, and we expect that to happen over the remainder of the year. We have seen some customers, again, as they've called workers back and evaluated the folks that they've hired kind of remotely over the last three years, looking around and recognizing that perhaps, and counterintuitive, but that they don't have enough space. Secondly, there's a couple other powerful trends that we alluded to in our previous comments, which is this flight to quality and the flight to capital and the lack of new supply that is commencing. We've had, several folks reach out to us that were focused on new construction that has now been shelved and are kind of looking around trying to find kind of the right quality real estate for them to make a decision. You know, at the same time, we're seeing folks that are in buildings that have upside down capital structures, the flight to capital, and that's creating some demand. You know, again, this flight to quality of folks that are in kind of lower quality space bringing their people back and wanna upgrade the experience. It's really been kind of a combination of all of those trends that are playing out now, notwithstanding kind of the overall softening economic climate. Okay, that's helpful. Just one more if I may. It looks like the occupancy went down in Tempe Gateway this quarter. I know that's, that asset's in redevelopment, but I was wondering what that may be attributable to. Overall, it seems like you are seeing increased vacancy in Phoenix or maybe potentially some upcoming vacancy with First Citizens. I was wondering if you could discuss, how you see that space leasing up. Sure. With regard to Tempe Gateway, we did have a smallish. It can screen as a larger percentage, but a smallish in terms of square footage move out, someone who was occupying some swing space, and so they've now moved into their permanent space. That is what you're seeing there. Just commentary kind of more broadly on Tempe Gateway, its occupancy has floated down over the last 6 months plus, but that's bottomed at this point. There are really no more expirations at this point. We're, like you said, in the midst of a really exciting redevelopment there, very optimistic about our near term future at Tempe Gateway and beginning the process of building back occupancy. We do have some role coming up in, notwithstanding whatever may happen with SVB and First Citizens at Hayden Ferry, but it's out in 2024. It's kinda early to see, what ultimately is going to end up with those expirations. Again, we're also, like we are with Tempe Gateway, moving forward with a really exciting repositioning and reinvestment in Hayden Ferry as well. You know, combine that with generally the activity in Phoenix over the last quarter or so, picking up nicely and interest in Tempe in particular and our kind of Class AA assets there, we feel good about our position. Great. Thank you. Thank you. The next question will be from Dylan Burzinski of Green Street. Please go ahead, sir. Hi, guys. Thanks for taking the question. Colin, you mentioned that the downward pricing for office assets is still playing out and that you guys will remain patient in deploying capital. I guess, can you give us a sense for what stabilized yield or unlevered IRR that you guys are sort of targeting and when you might start to deploy that capital? Dylan, good morning. Appreciate you joining us at an early hour on the West Coast. You know, look, it's hard to give a very specific number one. I certainly don't wanna compromise in our position, in our discussions with potential sellers and counterparties. You know, certainly, we recognize the environment we're in. We look at our own cost of capital today. We hope that, pricing in the public markets has bottomed out, that process is still underway, I think, in the private market. That process, continues. Our hope over time, and you've certainly seen this in past cycles, that, the cost of capital in the public market, could converge with the cost of capital, in the private market and create some really interesting opportunities. We're not there yet. So, like I said, ultimately, we think there are gonna be attractive opportunities, and kinda how we price those is gonna be dependent and specific to kinda the opportunity in front of us, the risk profile. Certainly, with us looking at, our own cost of capital is somewhat of a guidepost. That's helpful. Appreciate the color there. I know for the last several years, the office leasing environment has led to higher concessions. Just curious, what are your guys' expectations for base rents? Do we start to see that as a lever to sort of drive occupancy moving forward? Yeah, look, it is, there's a lot of different competing forces, in the market today. Again, from a macro perspective, a bit of a softening, decelerating economy. Again, I think as you look at the office sector, there's gonna be clearly winners and losers. There's gonna be, higher vacancy, broad-based across markets. Again, I think a significant amount of that's gonna be some structural vacancy in obsolete properties that from a practical perspective, aren't gonna impact the market. We do think the market is underappreciating the stability in premier properties. That being said, we haven't seen a recession in the past where you haven't seen some softening in base rents. As I mentioned in my prepared remarks, we are focused at the moment on driving occupancy and driving cash flow. We think that's what is important to investors. We've got some competition that is upside down on debt, doesn't have capital, we are going to be aggressive in winning that business if it's there to be won. Again, with the goal of driving occupancy, but most importantly, driving cash flow. Great. Thanks for the thoughts. Have a good one, guys. Thank you. Thank you. Next question will be from Camille Bonnel, Bank of America. Please go ahead. Good morning. Cousins Properties upcoming lease expiries is very unique within the sector. Can you expand a bit more on the composition of this through 2024? Like which markets and/or industries do a majority of these lease expiries fall under? Hey, good morning, Camille. It's Colin. It, when we look at over the balance of 2023 and 2024, expirations that, that are greater than 100,000 sq ft, there's really just 3 of them across the entirety of the portfolio. Richard touched on one here in Buckhead at 3348 Peachtree, with Georgia State University, their nighttime business school, and we continue to feel good that we're making progress to get that extended. You know, looking out to next year, we've got about 105,000 sq ft with a company by the name of Accruent at Domain 4, that we do think is a likely move out. At the same time, that property, if you're familiar with Domain 4, is one of the oldest vintage low-rise buildings that sits, directly on the heart of the retail in The Domain, and that we've identified as a longer-term vertical development project. So that's not necessarily a bad outcome. Then Richard alluded to an expiration of about 113,000 sq ft at Hayden Ferry 2, that we're, still early in the process with that particular customer. It is a headquarters location so we're in the early discussions, but too early to tell, how that will shake out if they move out, renew, or renew for some part of the space. Okay. I appreciate the color there. On the termination income factored into guidance, are you able to give a bit more detail on the timing around it? Hey, Camille, it's Gregg. Good morning. We don't typically provide timing on term fees. Sometimes it can be lumpy, sometimes it can be difficult to predict. I'm not gonna give you a quarter-by-quarter run of that, but what I'm trying to say is that it will be recognized over the final 9 months of the year, but not necessarily on a straight line basis. Finally, your FAD payout ratio seems very healthy, and you've historically raised the dividend in Q1, but it looks like you've paused this year. Can you update us on how the board is thinking about the dividend payout policy here? Sure. We have traditionally, and this is we've said this many times in these calls, we've traditionally targeted 70% to 75% FAD payout ratios. If you go back and look at the previous many years, we've been at the low end of that range, right around 70%. It can be a lumpy quarter-to-quarter because the biggest driver of FAD is typically second generation CapEx, and second generation CapEx is a little lumpy. It was a little below 70% this quarter. For the balance of the year, we anticipate it falling within that range. Okay. Thank you for taking my questions. Thank you. The next question will be from Allister Janseen of Wolfe Research. Please go ahead. Hi. Thanks for taking my question. I just have one quick one. WeWork is listed as one of your top tenants with four properties occupied and about 1% of annualized rent. WeWork's discussed that it's assessing its real estate portfolio and may amend your exit leases and will negotiate rent reductions. I was just wondering if you've been having any negotiations with WeWork at your properties. Hi, Allie, this is Richard. Yes, like I think just about every domestic landlord that works with WeWork, we have been in discussions or engaged with WeWork, with regard to the locations we have. There only 4. They're about 1% of our revenue annually. We have a lot of confidence in the quality of each of those locations, that they're great locations for a flex office use. You know, again, what ultimately happens with WeWork, we're optimistic and hopeful that they're able to manage through their current situation and come out the other side as a great management team and a right-sized and correctly capitalized company that can add value in this space going forward. Again, we feel good about the quality of the locations that we have. Okay, thanks. That's all for me. Thank you. Again, if you need to ask a question, please press star then 1. Our next question will be from Peter Abramowitz of Jefferies. Please go ahead. The comments you had about pressure on taxes. Could you just talk through, kind of, I guess, how is the appraisal process impacting that? I know it is obviously a better quality than most portfolio, but even the best assets, I think, have declined in value over the last couple of years. Just wanna hear some color on, I guess, what's impacting upward pressure on taxes 'cause you could think it might be going the other way. Morning, Peter, it's Greg. Yeah. Oftentimes, these assessments that are done for commercial properties are looking at lagging data. There's a lag effect. There's a lag effect shooting our houses, but there's certainly a lag effect when it comes to commercial properties since the valuation is based on cash flow, and they need it to be reported before they can look at it. There's a bit of a, there's a bit of a lag built into that. You know, at some point, as we get more transactions, that'll help our argument in terms of lower valuations. As we sit here today, there haven't been many transactions, and the NOI that they're looking at is typically in the rear view mirror. Got it. Sure. We'll protest. Yeah. We, like I said in my prepared remarks, we and many others protest those. Oftentimes we're successful, but it's, I think it'll be easier to do that next year. but. This year, most of what we're talking about were, like I said, rear view mirror NOI numbers. Right. Gotcha. Yeah, wasn't totally sure how the process works, so thanks for shining some light on that. That's all for me. Thanks. Thank you. This concludes our question-and-answer session. I'd like to turn the call back over to Mr. Colin Connolly for closing remarks. Thank you all for joining us today. We appreciate your time and interest in Cousins. We hope to see many of you at Nareit in New York in June. Have a great weekend. Thank you. Conference now concluded. Thank you for attending today's presentation. You may now disconnect.