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What changed in COUSINS PROPERTIES INC's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of COUSINS PROPERTIES INC's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+268 added−287 removedSource: 10-K (2024-02-07) vs 10-K (2023-02-09)

Top changes in COUSINS PROPERTIES INC's 2023 10-K

268 paragraphs added · 287 removed · 210 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

33 edited+7 added−5 removed18 unchanged
Biggest changeRecent Notable Business Developments Since 2016 we have completed two significant transactions including a merger with Parkway Properties, Inc. and a merger with TIER REIT, Inc. These transactions are consistent with our strategy and have created value for our stockholders through both growth and repositioning our portfolio.
Biggest changeThese transactions are consistent with our strategy and have created value for our stockholders through both growth and repositioning our portfolio. 2023 Activities During 2023, we continued development of two projects, sold a land parcel, completed several financing transactions, and generated positive operating results in our property portfolio.
Company Strategy Our strategy is to create value for our stockholders through ownership of the premier office portfolio in the Sun Belt markets of the United States, with a particular focus on Atlanta, Austin, Tampa, Phoenix, Charlotte, Dallas, and Nashville.
Company Strategy Our strategy is to create value for our stockholders through ownership of the premier office portfolio in the Sun Belt markets of the United States, with a particular focus on Atlanta, Austin, Tampa, Charlotte, Phoenix, Dallas, and Nashville.
Cousins' common stock trades on the New York Stock Exchange under the symbol “CUZ.” Cousins, CPLP, their subsidiaries, and CTRS combined are hereafter referred to as “we,” “us,” “our,” and the “Company.” Our operations are conducted principally in the office real estate segment which we review by geographical area.
Cousins' common stock trades on the New York Stock Exchange under the symbol “CUZ.” Cousins, CPLP, their subsidiaries, and CTRS combined are hereafter referred to as “we,” “us,” “our,” and the “Company.” Our operations are conducted principally in the office real estate segment which we measure by geographical area.
As part of our pragmatic approach to sustainability, we carefully consider the guidelines and ratings when designing our new developments and improvements to existing office buildings, and we seek to include the guidelines or ratings where we believe adoption of the guidelines or receipt of ratings will have a positive effect on our leasing efforts, asset valuation, operational excellence, and/or resource consumption.
As part of our pragmatic approach to sustainability, we consider the guidelines and ratings when designing our new developments and improvements to existing office buildings, and we may seek to include the guidelines or ratings where we believe adoption of the guidelines or receipt of ratings will have a positive effect on our leasing efforts, asset valuation, operational excellence, and/or resource consumption.
We have been an advocate and practitioner of energy conservation measures and sustainability initiatives for many years and continually evaluate the characteristics of existing buildings to determine feasible improvements that maximize operating efficiencies, reduce the consumption of energy, water, and waste, and increase waste diversion through recycling and other efforts.
We have been an advocate and practitioner of energy conservation measures and sustainability initiatives for many years and continue to evaluate the characteristics of existing buildings to determine feasible improvements that maximize operating efficiencies, reduce the consumption of energy, water, and waste, and increase waste diversion through recycling and other efforts.
Our 2022 scores (based on 2021 data), along with additional information on our sustainability and other corporate social responsibility initiatives, will be included under the caption "Sustainability and Corporate Responsibility" in the Proxy Statement relating to our 2023 Annual Meeting of Stockholders.
Our 2023 scores (based on 2022 data), along with additional information on our sustainability and other corporate social responsibility initiatives, will be included under the caption "Sustainability and Corporate Responsibility" in the Proxy Statement relating to our 2024 Annual Meeting of Stockholders.
In the development and operation of our office buildings, we look to relevant industry standards for guidelines on energy performance and other measures. In particular, we are influenced by EnergyStar, LEED, BOMA 360, and FitWel (Health and Safety).
In the development and operation of our office buildings, we look to relevant industry standards for guidelines on energy performance and other measures. In particular, we are influenced by EnergyStar, LEED, BOMA 360, and Fitwel.
Through a combination of Company giving and direct voluntary participation by our employees, we donate funds to support meaningful organizations in communities across our geographical footprint. 4 Table of Contents Environmental Matters Our business operations are subject to various federal, state, and local environmental laws and regulations governing land, water, and wetlands resources.
Through a combination of Company giving and direct voluntary participation by our employees, we donate funds to support meaningful organizations in communities across our geographical footprint. Environmental Matters Our business operations are subject to various federal, state, and local environmental laws and regulations governing land, water, and wetlands resources.
We seek these outcomes through creating and maintaining a resilient portfolio of high quality office buildings by prioritizing investments and operational activities that result in a highly efficient and healthy portfolio, investing in the professional development and wellness of our employees, and continually seeking ways to support and serve our communities.
We seek these outcomes through creating and maintaining a resilient portfolio of high quality office buildings by prioritizing investments and operational activities that result in an efficient and healthy portfolio, investing in the professional development and wellness of our employees, and seeking ways to support and serve our communities.
We also compete against other real estate companies, financial institutions, pension funds, partnerships, individual investors, and others when attempting to acquire and develop properties.
We also compete against other real estate companies, financial institutions, pension funds, partnerships, individual investors, and others when attempting to acquire, develop, or sell properties.
We also recognize the importance of experienced leadership; as of December 31, 2022, the average tenure at Cousins for the executive team was twelve years. We are committed to maintaining a healthy environment for our employees that enables them to be productive members of our team. Our priorities include professional development, health and wellness, and community engagement by our employees.
We also recognize the importance of experienced leadership; as of December 31, 2023, the average tenure at Cousins for the executive team was thirteen years. We are committed to maintaining a healthy environment for our employees that enables them to be productive members of our team. Our priorities include professional development, health and wellness, and community engagement by our employees.
When planning development projects, we take all of the foregoing into account, and we strive to design highly-sustainable buildings, generally taking advantage of LEED and/or BOMA 360 certification process and designation. Our Board-level Sustainability Committee was established in 2022 and advises the Board and provides oversight of management on sustainability objectives and strategy.
When planning development projects, we take all of the foregoing into account, and we strive to design highly-sustainable buildings, generally taking advantage of LEED and/or BOMA 360 certification processes and designations. Our Board-level Sustainability Committee was established in 2022 and advises the Board and provides oversight of management on sustainability objectives and strategy.
In certain situations, we have also sought to avail ourselves of legal and regulatory protections offered by federal and state authorities to prospective purchasers of property. Where applicable studies have resulted in the determination that remediation was required by applicable law, the necessary remediation is typically incorporated into the operational or development activity of the relevant property.
In certain situations, we have sought to avail ourselves of legal and regulatory protections offered by federal and state authorities to prospective purchasers of property. Where applicable studies have resulted in the 3 Table of Contents determination that remediation was required by applicable law, the necessary remediation is typically incorporated into the operational or development activity of the relevant property.
We recognize that our achievements and progress on our corporate strategy are made possible by the attraction, development, and retention of our dedicated employees. We regularly evaluate, modify, and enhance our internal processes and technologies to increase employee engagement, productivity and efficiency, which benefits our operations and performance.
We recognize that our achievements and progress on our corporate strategy are made possible by the attraction, development, and retention of our dedicated employees. From time to time, we evaluate, modify, and enhance our internal processes and technologies to increase employee engagement, productivity, and efficiency, which we believe benefits our operations and performance.
Our general total rewards packages include market-competitive pay, performance-conditioned annual incentive compensation, stock- and performance-based long-term incentive compensation for key employees, healthcare and retirement benefits, paid time off, and family leave.
Our general total rewards packages include market-competitive pay, performance-conditioned annual incentive compensation, stock- and performance-based long-term incentive compensation for key employees, healthcare and retirement benefits, paid time off, paid new parent leave, and other unpaid family leave.
In each of these GRESB assessments, we received a rating of "Green Star," the highest rating within the assessment, with a total score each year above the GRESB overall participant average.
In each of these GRESB assessments, we received a rating of "Green Star," with a total score each year above the GRESB overall participant average.
Some of our engagement efforts include regular “townhall” events for all employees, where we update everyone on recent accomplishments and key initiatives; regular participation in employee engagement surveys; and sponsorship of community engagement opportunities and various health challenges. We also strive to provide competitive pay, benefits, and services that help meet the varying needs of our employees.
Some of our engagement efforts include “townhall” events for all employees, where we provide updates on recent accomplishments and key initiatives; employee engagement surveys; and sponsorship of community engagement opportunities and various health challenges. We also strive to provide competitive pay, benefits, and services that help meet the varying needs of our employees.
In addition, we evaluate the proximity to transit options, with a strong preference for nearby bus and rail transit. We also include climate assessments in our review of development opportunities and our evaluation of operating buildings, including the risks of extreme temperatures, floods, hurricanes, and droughts.
In addition, we evaluate the proximity to transit options, with a strong preference for nearby bus and rail transit. We also include climate-related physical and transition risk assessments in our review of development opportunities and our evaluation of operating buildings, including the risks of extreme temperatures, floods, hurricanes, droughts, and other impacts of climate change.
This strategy is also based on a simple, flexible, and low-leveraged balance sheet that allows us to pursue compelling growth opportunities at the most advantageous points in the cycle. We utilize our strong local operating platforms within each of our major markets to implement this strategy.
To implement this disciplined approach, we maintain a simple, flexible, and low-leveraged balance sheet, which allows us to pursue compelling growth opportunities at the most advantageous points in the cycle. We utilize our strong local operating platforms within each of our major markets to implement this strategy.
Item 1. Business Corporate Profile Cousins Properties Incorporated (the “Registrant” or “Cousins”) is a Georgia corporation, that has elected to be taxed as a real estate investment trust (“REIT”). Cousins conducts substantially all of its business through Cousins Properties LP ("CPLP"), a Delaware limited partnership.
Item 1. Business Corporate Profile Cousins Properties Incorporated (the “Registrant” or “Cousins”) is a Georgia corporation, that has elected to be taxed as a real estate investment trust (“REIT”). Cousins conducts substantially all of its business through Cousins Properties LP ("CPLP"). Cousins owns in excess of 99% of CPLP and consolidates CPLP.
Except for the documents specifically incorporated by reference into this Annual Report on Form 10-K, information contained on our website or that can be accessed through our website is not incorporated by reference into this Annual Report on Form 10-K.
Except for the documents specifically incorporated by reference into this Annual Report on Form 10-K, information 2 Table of Contents contained in our CR Reports or on our website or that can be accessed through our website is not incorporated by reference into this Annual Report on Form 10-K.
In addition, as of December 31, 2022, 48% of our supervisors and 33% of our Board of Directors, including the Chair of our Audit Committee, were women; and, 26% of our supervisors self-identify as a minority.
In addition, as of December 31, 2023, 44% of our supervisors and 33% of our Board of Directors, including the Chair of our Audit Committee, were women; and 25% of our supervisors self-identify as a minority.
Our Code and Core Values are available on our website at www.cousins.com . As of December 31, 2022, we had 286 full-time employees, which includes the seven executive officers listed on page 23, with women representing 40% of our workforce and with 42% of the workforce self-identifying as a minority.
Our Code and Core Values are available on our website at www.cousins.com . As of December 31, 2023, we had 305 full-time employees, which includes the seven executive officers listed on page 22, with women representing 39% of our workforce and with 44% of the workforce self-identifying as a minority.
The Committee, alongside management, monitors and evaluates the Company's progress in achieving its sustainability performance goals and commitments related to climate action and resilience.
The Committee, alongside management, monitors and evaluates the Company's progress in achieving its sustainability performance goals and commitments related to climate action and resilience. The Committee also reviews and approves the annual CR Report.
Cousins owns in excess of 99% of CPLP, and CPLP is consolidated with Cousins for financial reporting purposes. CPLP also owns Cousins TRS Services LLC ("CTRS"), a taxable entity that owns and manages its own real estate portfolio and performs certain real estate related services for other parties.
CPLP wholly owns Cousins TRS Services LLC ("CTRS"), a taxable entity that owns and manages its own real estate portfolio and performs certain real estate related services for other parties.
We publish reports reflecting our corporate social responsibility practices (including sustainability), which are available on the Sustainability page of our website at www.cousins.com . Since 2016, we have participated in the annual Global Real Estate Sustainability Benchmark ("GRESB") assessment, which validates ESG performance data of property portfolios around the world and creates peer benchmarks for use by investors and managers.
Since 2016, we have participated in the annual Global Real Estate Sustainability Benchmark ("GRESB") assessment, which validates Environmental, Social, and Corporate Governance ("ESG") performance data of property portfolios around the world and creates peer benchmarks for use by investors.
We believe that we and our properties are in compliance in all material respects with applicable federal, state, and local laws, ordinances, and regulations governing the environment. For additional information, see Item 1A.
Thus, although we are not aware of any such situation, we may have such liabilities on properties previously sold by us or our predecessors. We believe that we and our properties are in compliance in all material respects with applicable federal, state, and local laws, ordinances, and regulations governing the environment. For additional information, see Item 1A.
In addition to the transactions noted above, over the past five years, we have acquired 2.6 million square feet of operating properties for $974 million in gross purchase price, completed 2.9 million square feet of development at total project costs of $1.2 billion, and sold 5.5 million square feet of operating properties for $1.3 billion in gross sales price. 2022 Activities During 2022, we completed several financing transactions consistent with our strategy of maintaining a flexible and low-leveraged balance sheet.
In addition to this transaction, over the past five years, we have acquired 2.6 million square feet of operating properties for $974 million in gross purchase price, completed 2.2 million square feet of development at total project costs of $858 million, and sold 5.5 million square feet of operating properties for $1.3 billion in gross sales price.
This oversight is complementary to that of two other key committees - the Compensation & Human Capital 3 Table of Contents Committee (oversight of human capital matters, including diversity, inclusion, retention, succession planning, and executive compensation) and the Nominating & Governance Committee (oversight of our adherence to corporate governance best practices).
This oversight is complementary to that of three other key committees - the Compensation & Human Capital Committee (oversight of human capital matters, including diversity, inclusion, retention, succession planning, and executive compensation), the Nominating & Governance Committee (oversight of our adherence to corporate governance best practices), and the Audit Committee (oversight of the integrity of our financial statements, accounting and financial reporting processes, our system of internal controls, and our risk management, including cyber risk and insurance risks).
Portfolio Activity • Leased or renewed 2.0 million square feet of office space, including 997,000 square feet of new and expansion leases, representing 50% of total leasing activity. • Increased second generation net rent per square foot by 9.5% on a cash-basis. • Increased same property net operating income by 1.0% on a cash-basis.
This $83.0 million interest-only mortgage loan has a fixed interest rate of 4.80% and matures in June 2032. 1 Table of Contents Portfolio Activity • Leased or renewed 1.7 million square feet of office space, including 882,000 square feet of new and expansion space. • Increased second generation net rent per square foot by 5.8% on a cash-basis. • Increased same property net operating income by 4.2% on a cash-basis.
We are not presently aware of any environmental liability that we believe would have a material adverse effect on our business, assets, or results of operations. Certain environmental laws impose liability on a previous owner of a property to the extent that hazardous or toxic substances were present during the prior ownership period.
Certain environmental laws impose liability on a previous owner of a property to the extent that hazardous or toxic substances were present during the prior ownership period. A transfer of the property does not necessarily relieve an owner of such liability.
In our 2021 Environmental, Social, and Governance ("ESG") Report, published in 2022, we released goals to reduce energy, greenhouse gas emissions, and water usage, each over a 2018 base year, by 25% by the year 2023, and to maintain LEED and Energy Star ratings on 75% of our operating properties.
Our 2022 Corporate Responsibility Report ("CR Report"), published in June 2023, included goals to reduce energy, greenhouse gas emissions, and water usage, as well as in respect of LEED and Energy Star ratings, and to attain Healthy Building Certifications.
The following is a summary of our significant 2022 activities: Development Activity • Completed development of 300 Colorado, a 369,000 square foot office property in Austin, TX. • Completed development of 100 Mill, a 288,000 square foot office property in Phoenix, AZ. • Continued development of two projects located in our Austin and Nashville markets.
The following is a summary of our significant 2023 activities: Development Activity • Continued development and commenced initial operations of Neuhoff, a mixed-use property in Nashville, TN that consists of 448,000 square feet of office space and 542 apartments.
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These projects include 786,000 square feet of office space, and our share of the total expected project costs total $428.5 million. Investment Activity • Purchased our partner's 10% interest in 8000 and 10000 Avalon for $43.4 million.
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Recent Notable Business Developments In 2019, we completed a merger with TIER REIT, Inc. resulting in the acquisition of 5.8 million square feet of operating properties.
Removed
The purchase price included a promote to our partner in excess of its partnership interest and represented a negotiated fair value of $301.5 million for the entire 480,000 square feet of office space.
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The project is being developed by a 50%-owned joint venture, and our share of the total expected project costs is $282 million. • Continued development of Domain 9, a 338,000 square foot office property in Austin, TX. The total expected project cost of this wholly-owned property is $147 million.
Removed
Disposition Activity • Sold our 50% interest in Carolina Square, a 468,000 square foot mixed-use property in Chapel Hill, NC, to our joint venture partner for a gross price of $105.0 million. • An unconsolidated joint venture sold a 3.0 acre land parcel in the Victory submarket of Uptown Dallas for a gross price of $23.1 million. 2 Table of Contents Financing Activity • Closed a new $1.0 billion unsecured revolving credit facility with a maturity date of April 2027. • Closed a $400 million Term Loan with an initial maturity date of March 2025 and four consecutive extension options for six months each. • Amended our $350 million Term Loan, with an initial maturity date of August 2024 and four consecutive extension options for six months each, changing the base interest rate to SOFR, and entered into a floating-to-fixed interest rate swap, fixing the underlying SOFR rate at 4.23% through maturity. • Repaid in full our Promenade Tower and Legacy Union mortgages with maturity dates of October 2022 and January 2023, respectively. • Amended and extended the two existing mortgages on our Terminus properties in Atlanta through January 2031 for a combined $221 million. • Settled outstanding forward contracts to sell 2.6 million shares of common stock.
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Disposition Activity • Sold a 10.4 acre land parcel in Atlanta, GA for a gross price of $4.25 million and recorded a gain of $507,000.
Removed
These forward contracts were executed in the third and fourth quarters of 2021 at a gross average price of $39.92.
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Financing Activity • Entered into a floating-to-fixed interest rate swap on $200 million of our $400 million Term Loan with an original maturity of March 2025, fixing the underlying daily Secured Overnight Financing Rate ("SOFR") at 4.298% through the original maturity. • Refinanced the mortgage loan for our Medical Offices at Emory Hospital property in Atlanta, GA, which is owned in a 50-50 joint venture with Emory University.
Removed
A transfer of the property does not necessarily relieve an owner of such liability. Thus, although we are not aware of any such situation, we may have such liabilities on properties previously sold by us or our predecessors.
Added
We publish reports reflecting our corporate social responsibility practices (including sustainability), which are available on the Sustainability page of our website at www.cousins.com .
Added
Additionally, new laws may be enacted or existing laws may be amended to be more stringent, which may increase the potential liability or negatively impact the owner's ability to develop the property or to borrow using such real estate as collateral.
Added
We are not presently aware of any environmental liability that we believe would have a material adverse effect on our business, assets, results of operations, or ability to borrow using the real estate as collateral.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

72 edited+13 added−17 removed106 unchanged
Biggest changeThese risks may include: • difficulty in leasing vacant space or renewing existing tenants at the acquired property; • the costs and timing of repositioning or redeveloping acquisitions; • disproportionate concentrations of earnings in one or more markets; • the acquisitions may fail to meet internal projections or otherwise fail to perform as expected; • the acquisitions may be in markets that are unfamiliar to us and could present unforeseen business challenges; • the timing of acquisitions may not match the timing of dispositions, leading to periods of time where proceeds are not invested as profitably as we desire or where we increase short-term borrowings until sales proceeds become available; • a change in our sustainability or resiliency profile, including an increase in key performance metrics like energy consumption intensity and greenhouse gas emissions, and/or a decrease in the percentage of our operating portfolio with key sustainability certifications; • the inability to obtain financing for acquisitions on favorable terms, or at all; • the inability to successfully integrate the operations, maintain consistent standards, controls, policies, and procedures, or realize the anticipated benefits of acquisitions within the anticipated time frames, or at all; • the inability to effectively monitor and manage our expanded portfolio of properties, retain key employees, or attract highly qualified new employees; • the possible decline in value of the acquired asset; • the diversion of our management’s attention away from other business concerns; and • the exposure to any undisclosed or unknown issues, expenses, or potential liabilities relating to acquisitions. 11 Table of Contents In addition, we may acquire properties subject to liabilities with no, or limited, recourse against the prior owners or other third parties.
Biggest changeThese risks may include: • difficulty in leasing vacant space or renewing existing tenants at the acquired property; • the costs and timing of repositioning or redeveloping the acquired property; • disproportionate concentrations of earnings in one or more markets; • the acquisitions may fail to meet internal projections or otherwise fail to perform as expected; • the acquisitions may be in markets that are unfamiliar to us and could present unforeseen business and operating challenges; • the timing of acquisitions may not match the timing of raising the capital necessary to fund the acquisitions; • a change in our sustainability or resiliency profile, including an increase in key performance metrics like energy consumption intensity and greenhouse gas emissions, and/or a decrease in the percentage of our operating portfolio with key sustainability certifications; • the inability to obtain financing for acquisitions on favorable terms, or at all; • the inability to successfully integrate the operations, maintain consistent standards, controls, policies, and procedures, or realize the anticipated benefits of acquisitions within the anticipated time frames, or at all; • the inability to effectively monitor and manage our expanded portfolio of properties, retain key employees, or attract highly qualified new employees; • the possible decline in value of the acquired asset; • the diversion of our management’s attention away from other business concerns; and • the exposure to any undisclosed or unknown issues, expenses, or potential liabilities relating to acquisitions.
Our Credit Facility contains customary restrictions, requirements, and other limitations on our ability to incur indebtedness, including restrictions on unsecured debt outstanding, restrictions on secured recourse debt outstanding, and requirements to maintain a minimum fixed charge coverage ratio. Our continued ability to borrow under our Credit Facility is subject to compliance with these covenants. • Unsecured debt .
Our Credit Facility contains customary covenants, requirements, and other limitations on our ability to incur indebtedness, including covenants on unsecured debt outstanding, restrictions on secured recourse debt outstanding, and requirements to maintain a minimum fixed charge coverage ratio. Our continued ability to borrow under our Credit Facility is subject to compliance with these covenants. • Unsecured debt .
Some of our mortgages contain customary negative covenants, including limitations on our ability, without the lender’s prior consent, to further mortgage that specific property, to enter into new leases, to modify existing leases, or to redevelop or sell the property. Compliance with these covenants and requirements could harm our operational flexibility and financial condition.
Some of our mortgages contain customary negative covenants, including limitations on our ability, without the lender’s prior consent, to further mortgage that specific property, to enter into new leases, to modify existing leases, or to redevelop or sell the property. Compliance with these covenants could harm our operational flexibility and financial condition.
The market price of shares of our common stock have been, and may continue to be, subject to fluctuation due to many events and factors such as those described in this report including: • actual or anticipated variations in our operating results, funds from operations, or liquidity; • the general reputation of real estate as an attractive investment in comparison to other equity securities and/or the reputation of the product types of our assets compared to other sectors of the real estate industry; • material changes in any significant tenant industry concentration; • material changes in market concentrations; • the general stock and bond market conditions, including changes in interest rates or fixed income securities; • changes in tax laws; • changes to our dividend policy; • changes in market valuations of our properties; • adverse market reaction to the amount of our outstanding debt at any time, the amount of our maturing debt, and our ability to refinance such debt on favorable terms; • any failure to comply with existing debt covenants; • any foreclosure or deed in lieu of foreclosure of our properties; • additions or departures of directors, key executives, and other employees; • actions by institutional stockholders; • uncertainties in world financial markets; • general market and economic conditions; in particular, market and economic conditions of Atlanta, Austin, Tampa, Phoenix, Charlotte, Dallas, and Nashville; and • the realization of any of the other risk factors described in this report.
The market price of shares of our common stock has been, and may continue to be, subject to fluctuation in many events and factors such as those described in this report including: • actual or anticipated variations in our operating results, funds from operations, or liquidity; • the general reputation of real estate as an attractive investment in comparison to other equity securities and/or the reputation of the product types of our assets compared to other sectors of the real estate industry; • material changes in any significant tenant industry concentration; • material changes in market concentrations; • the general stock and bond market conditions, including changes in interest rates or fixed income securities; • changes in tax laws; • changes to our dividend policy; • changes in the market valuations of our properties; • adverse market reaction to the amount of our outstanding debt at any time, the amount of our maturing debt, and our ability to refinance such debt on favorable terms; • any failure to comply with existing debt covenants; • any foreclosure or deed in lieu of foreclosure of our properties; • additions or departures of directors, key executives, and other employees; • actions by institutional stockholders; • uncertainties in world financial markets; • general market and economic conditions; in particular, market and economic conditions of Atlanta, Austin, Tampa, Charlotte, Phoenix, Dallas, and Nashville; and • the realization of any of the other risk factors described in this report.
Any of these risks could cause a failure to realize the intended benefits of our acquisitions and could have a material adverse effect on our financial condition, results of operations, and the market price of our common stock. We face risks associated with the development of real estate. Development activities contain certain inherent risks.
Any of these risks could cause a failure to realize the intended benefits of our acquisitions and could have a material adverse effect on our financial condition, results of operations, and the market price of our common stock. We face risks associated with the development of real estate. Development activities contain inherent risks.
Compliance or failure to comply with the Americans with Disabilities Act or other federal, state, and local regulatory requirements could result in substantial costs. The Americans with Disabilities Act generally requires that certain buildings, including office buildings, be made accessible to disabled persons. We are currently in compliance with these requirements.
Compliance or failure to comply with the Americans with Disabilities Act or other federal, state, and local regulatory requirements could result in substantial costs. The Americans with Disabilities Act generally requires that certain buildings, including office buildings, be made accessible to disabled persons. We believe that we are currently in compliance with these requirements.
To the extent climate change causes changes in weather patterns or severity, our markets could experience increases in storm intensity (including floods, fires, tornadoes, hurricanes, or ice storms), rising sea-levels, and changes in precipitation, temperature, air quality, and quality and availability of water.
To the extent climate change causes changes in weather patterns or severity, our markets could experience increases in storm intensity (including floods, fires, tornadoes, hurricanes, droughts, or ice storms), rising sea-levels, and changes in precipitation, temperature, air quality, and quality and availability of water.
Costs may arise that have not been anticipated or actual costs may exceed estimated costs. These additional costs can be significant and could adversely impact our return on a project and the expected results of operations upon completion of the project.
Costs may arise that have not been anticipated or actual costs may exceed estimated costs. These additional costs can be significant and can adversely impact our return on a project and the expected results of operations upon completion of the project.
The per share trading price of our common stock could decline as a result of the sale of shares of our common stock in the market in connection with an offering or as a result of the perception or expectation that such sales could occur.
The per share trading price of our common stock could decline as a result of the sale of shares of our common stock in the market in connection with an offering or as a result of the perception or expectation that such sales could occur. • Preferred stock .
The incurrence of additional indebtedness could have adverse consequences on our business, such as: • requiring us to use a substantial portion of our cash flow from operations to service our indebtedness, which would reduce the available cash flow to fund working capital, capital expenditures, development projects, distributions, and other general corporate purposes; • limiting our ability to obtain additional financing to fund our working capital needs, acquisitions, capital expenditures, or other debt service requirements or for other purposes; • increasing our exposure to floating interest rates; • limiting our ability to compete with other companies who have less leverage, as we may be less capable of responding to adverse economic and industry conditions; • restricting us from making strategic acquisitions, developing properties, or capitalizing on business opportunities; • restricting the way in which we conduct our business due to financial and operating covenants in the agreements governing our existing and future indebtedness; • exposing us to potential events of default (if not cured or waived) under covenants contained in our debt instruments; • increasing our vulnerability to a downturn in general economic conditions; and • limiting our ability to react to changing market conditions in our industry.
The incurrence of additional indebtedness could have adverse consequences on our business, such as: • requiring us to use a substantial portion of our cash flow from operations to service our indebtedness, which would reduce the available cash flow to fund working capital, capital expenditures, development projects, distributions, and other general corporate purposes; • limiting our ability to obtain additional financing to fund our working capital needs, capital expenditures, development projects, or other debt service requirements or for other purposes; • increasing our exposure to floating interest rates; • limiting our ability to compete with other companies who have less leverage, as we may be less capable of responding to adverse economic and industry conditions; • restricting us from making strategic acquisitions, developing properties, or capitalizing on business opportunities; • restricting the way in which we conduct our business due to financial and operating covenants in the agreements governing our existing and future indebtedness; • exposing us to potential events of default under covenants contained in our debt instruments; • increasing our vulnerability to a downturn in general economic conditions; and • limiting our ability to react to changing market conditions in our industry.
Delays could also result in a violation of terms of construction loans that could increase fees, interest, or trigger additional recourse of a construction loan to us. • Leasing risk . The success of a commercial real estate development project is heavily dependent upon entering into leases with acceptable terms within a predefined lease-up period.
Delays could also result in a violation of terms of construction loans that could increase fees, interest, or trigger additional recourse of a construction loan. • Leasing risk . The success of a commercial real estate development project is heavily dependent upon entering into leases with acceptable terms within a predefined lease-up period.
Also, the expense of owning and operating a property is not necessarily proportionally reduced when circumstances such as reduced occupancy or other market factors cause a reduction in income from the property. If a property is mortgaged and we are unable to meet the mortgage payments, the lender could foreclose on the mortgage and take title to the property.
Also, the expense of owning and operating a property is not necessarily proportionally reduced when circumstances such as reduced occupancy or other market factors cause a reduction in revenue from the property. If a property is mortgaged and we are unable to meet the mortgage payments, the lender could foreclose on the mortgage and take title to the property.
We have procedures and controls in place that are intended to minimize this risk, but it is likely that we will incur predevelopment expense on abandoned projects on an ongoing basis. • Project costs . Construction and leasing of a project involves a variety of costs that cannot always be identified at the beginning of a project.
We have procedures and controls in place that are intended to minimize this risk, but it is likely that we will incur predevelopment costs on abandoned projects on an ongoing basis. • Project costs . Construction and leasing of a development project involves a variety of costs that cannot always be identified at the beginning of a project.
A failure, or a perceived failure, to respond to investor, customer, employee, or other stakeholder expectations related to ESG concerns, or to comply with regulatory requirements, including a failure, or a perceived failure, to achieve any voluntarily adopted goals or initiatives, could negatively impact our reputation, ability to do business with certain partners, access to capital, stock price, and customer and employee attraction and retention.
A failure, or a perceived failure, to respond to investor, customer, employee, or other stakeholder expectations related to CR concerns, or to comply with regulatory requirements, including a failure, or a perceived failure, to achieve any voluntarily adopted goals or initiatives, could negatively impact our reputation, ability to do business with certain partners, access to capital, stock price, and customer and employee attraction and retention.
Additionally, while we strive to create and maintain an inclusive culture and a diverse workforce where everyone is valued and respected, a failure, or a perceived failure, to properly address matters of culture, including inclusivity and diversity matters, could result in reputational harm or an inability to attract and retain customers or employees. Item 1B.
Additionally, while we strive to create and maintain an inclusive culture and a diverse workforce where everyone is valued and respected, a failure, or a perceived failure, to properly address matters of culture, including inclusivity and diversity matters, could result in reputational harm or an inability to attract and retain customers or employees.
When possible, we dispose of and acquire properties in transactions that are intended to qualify as Section 1031 Exchanges.
When possible, we dispose of and acquire real properties in transactions that are intended to qualify as Section 1031 Exchanges.
Deficiencies, including any material weakness, in our internal control over financial reporting which may occur in the future could result in misstatements of our results of operations, restatements of our financial statements, a decline in our stock price, or otherwise materially adversely affect our business, reputation, results of operations, financial condition, or liquidity.
Deficiencies, including any material weakness, in our internal controls over financial reporting which may occur in the future could result in misstatements of our results of operations, restatements of our financial statements, a decline in our stock price, or otherwise materially adversely affect our business, reputation, results of operations, financial condition, or liquidity.
In addition, organizations that provide information to investors on corporate governance and other matters have developed rating systems for evaluating companies on their approach to ESG. Unfavorable ESG ratings may lead to negative investor sentiment, which could have a negative impact on our stock price.
In addition, organizations that provide information to investors on corporate governance and other matters have developed rating systems for evaluating companies on their approach to CR. Unfavorable CR ratings may lead to negative investor sentiment, which could have a negative impact on our stock price.
In the event we want to sell a property, we may not be able to do so in the desired time period, the sales price of the property may not meet our expectations or requirements, and/or we may be required to record an impairment on the property as a result. Ground lease risks .
In the event we want to sell a property, we may not be able to do so in the desired time period, the sales price of the property may not meet our expectations or requirements, and/or we may be required to record an impairment on the property. Ground lease risks .
Factors that may adversely affect the economic performance and value of our properties include, among other things: • changes in the national, regional, and local economic climate; • local real estate conditions such as an oversupply of rentable space caused by increased development of new properties, a reduction in demand for rentable space caused by a change in the preferences and requirements of our tenants (including space usage), such as work-from-home practices and utilization of open workspaces or "co-working" space, or economic conditions decreasing the desirability of our locations; 5 Table of Contents • the attractiveness of our properties to tenants or buyers; • competition from other available properties; • changes in market rental rates and related concessions granted to tenants including, but not limited to, free rent and tenant improvement allowances; • uninsured losses or losses in excess of our insurance coverage as a result of casualty events or other claims or events; • insolvency of our insurance carriers; • sociopolitical unrest such as political instability, civil unrest, armed hostilities, or political activism resulting in a disruption of day-to-day building operations; • the impact of a public health crisis and the governmental and third party response to such a crisis; • the need to periodically repair, renovate, and re-lease properties; • changes in federal, state, and local income tax laws as they affect real estate companies and real estate investors; and • changes in interest rates and availability of permanent financing sources that may render the sale of a property difficult or unattractive or otherwise reduce returns to stockholders.
Factors that may adversely affect the economic performance and value of our properties include, among other things: • changes in the national, regional, and local economic climate; • local real estate conditions such as an oversupply of rentable space caused by increased development of new properties, a reduction in demand for rentable space caused by a change in the preferences and requirements of our tenants (including space usage), such as work-from-home practices and utilization of open workspaces or "co-working" space, or local economic conditions decreasing the desirability of our locations; • the attractiveness of our properties to tenants or buyers; • competition from other available properties; • changes in market rental rates and related concessions granted to tenants including, but not limited to, free rent and tenant improvement allowances; • uninsured losses or losses in excess of our insurance coverage as a result of casualty events or other claims or events; • insolvency of our insurance carriers; • sociopolitical unrest such as political instability, civil unrest, armed hostilities, or political activism resulting in a disruption of day-to-day building operations; • the impact of a public health crisis and the governmental and third party response to such a crisis; • the need to periodically repair, renovate, and re-lease properties; 4 Table of Contents • changes in federal, state, and local income tax laws as they affect real estate companies and real estate investors; • changes in interest rates and availability of permanent financing sources that may render the sale of a property difficult or unattractive or otherwise reduce returns to stockholders; and • supply chain disruptions, labor shortages, and increased construction costs.
Any failure or perceived failure, whether or not valid, to pursue or fulfill our ESG goals, targets, and objectives or to satisfy various ESG reporting standards within the timelines we announce, or at all, could increase the risk of litigation.
Any failure or perceived failure, whether or not valid, to pursue or fulfill our CR goals, targets, and objectives or to satisfy various CR reporting standards within the timelines we announce, or at all, could increase the risk of litigation.
A number of changes that affect noncorporate taxpayers will expire at the end of 2025 unless Congress acts to extend them. Among other changes, the Coronavirus Aid, Relief, and Economic Security Act, or CARES Act, signed into law on March 27, 2020, makes certain changes to the TCJA.
A number of changes that affect noncorporate taxpayers will expire at the end of 2025 unless Congress acts to extend them. Among other changes, the Coronavirus Aid, Relief, and Economic Security Act, or CARES Act, signed into law on March 27, 2020, makes 12 Table of Contents certain changes to the TCJA.
A security breach or other significant disruption involving our IT networks and systems could result in our inability 16 Table of Contents to maintain the building systems relied upon by our customers for their efficient use of their leased space, and the continuation of that circumstance could entitle the affected tenants to abate a portion of their rent.
A security breach or other significant disruption involving our IT networks and systems could result in our inability to maintain the building systems relied upon by our customers for their efficient use of their leased space, and the continuation of that circumstance could entitle the affected tenants to abate a portion of their rent.
Our ability to achieve our ESG goals and objectives and to accurately and transparently report our progress presents numerous operational, financial, legal, and other risks and are partially dependent on the actions of our customers and vendors.
Our ability to achieve our CR goals and objectives and to accurately and transparently report our progress presents numerous operational, financial, legal, and other risks and are partially dependent on the actions of our customers and vendors.
Damage to our reputation could make it more difficult to successfully develop properties in the future and to continue to grow and expand our relationships with our lenders, joint venture partners, and tenants, which could adversely affect our business, financial condition, and results of operations. 12 Table of Contents • Governmental approvals .
Damage to our reputation could make it more difficult to successfully develop properties in the future and to continue to grow and expand our relationships with lenders, joint venture partners, and tenants, which could adversely affect our business, financial condition, and results of operations. • Governmental approvals .
Our operating and financial policies, including our policies with respect to acquisitions, development and dispositions of real estate, growth, target markets, operations, indebtedness, capitalization, and dividends are exclusively determined by the Company's Board of Directors. Accordingly, our stockholders do not control these policies.
Our operating and financial policies, including our policies with respect to acquisitions, development, and dispositions of real estate, growth, target markets, operations, indebtedness, capitalization, and dividends are exclusively determined by 13 Table of Contents the Company's Board of Directors. Accordingly, our stockholders do not control these policies.
As the nature, scope, and complexity of ESG reporting, diligence, and disclosure requirements expand, we may have to undertake additional costs to control, assess, and report on ESG metrics.
As the nature, scope, and complexity of CR reporting, diligence, and disclosure requirements expand, we may have to undertake additional costs to control, assess, and report on CR metrics.
Federal, state, and local laws and regulations relating to the protection of the environment may require a current or previous owner or operator of real estate to investigate and clean up hazardous or toxic substances or petroleum product released at a property.
Federal, state, and local laws and regulations relating to the protection of the environment may require a current or previous owner or operator of real estate to investigate and clean up hazardous or toxic substances or 5 Table of Contents petroleum product released at a property.
Each of these sources may be constrained from time to time because of market conditions, and the related cost of raising this capital may be unfavorable at any given point in time. These sources of capital, and the risks associated with each, include the following: • Credit Facility .
Each of these sources may be constrained from time to time because of market conditions, and the related cost of raising this 7 Table of Contents capital may be unfavorable at any given point in time. These sources of capital, and the risks associated with each, include the following: • Credit Facility .
Securities analysts publish quarterly and annual projections of our financial performance. These projections are developed independently based on their own analyses, and we undertake no obligation to monitor, and take no responsibility for, such projections.
Securities analysts publish quarterly and annual projections of our financial performance. These projections are developed independently based on their own analyses, and we undertake no obligation to monitor, and take no responsibility 14 Table of Contents for, such projections.
If we fail to comply with these covenants, our ability to borrow may be impaired, which could potentially make it more difficult to fund our capital and operating needs. Our failure to comply with such covenants could cause a default, and we may then be 10 Table of Contents required to repay our outstanding debt with capital from other sources.
If we fail to comply with these covenants, our ability to borrow may be impaired, which could potentially make it more difficult to fund our capital and operating needs. Our failure to comply with such covenants could cause a default, and we may then be required to repay our outstanding debt with capital from other sources.
We compete for tenants in our Sun Belt markets by highlighting our locations, rental rates, services, amenities, reputation, and the design and condition of our facilities including operational efficiencies and sustainability improvements.
We compete for tenants in our Sun Belt markets by highlighting our locations, rental rates, quality and breadth of services, amenities, reputation, and the design, condition and resiliency of our facilities including operational efficiencies and sustainability improvements.
Our efforts to improve our ESG profile and practices, including reducing emissions and improving the efficiency of our building operations, may require capital expenditures and may result in short- or long-term increases in our operating costs, all of which could adversely impact our financial condition or results of operations.
Our efforts to improve our CR profile and practices, including reducing emissions and improving the efficiency of our building operations and the resiliency of our buildings, may require capital expenditures and may result in short- or long-term increases in our operating costs, all of which could adversely impact our financial condition or results of operations.
Such codes could require us to make improvements to our existing properties, increase the costs of maintaining or improving our existing properties or developing new properties, or increase taxes and fees assessed on us or our properties. Expenditures required for compliance with such codes may affect our cash flow and results of operations. Joint venture structure risks .
Such codes could require us to make improvements to our existing properties, increase the costs of maintaining or improving our existing properties or developing new properties, or increase taxes and fees assessed on us or our properties. Expenditures required for compliance with such codes may affect our cash flow and results of operations.
Furthermore, our ability to sell or lease our properties at favorable rates, or at all, may be negatively impacted by general or local economic conditions. Our ability to collect rent from tenants may affect our ability to pay for adequate maintenance, insurance, and other operating costs (including real estate taxes).
Furthermore, our ability to sell or lease our properties at favorable rates, or at all, may be negatively impacted by general or local economic conditions. Our ability to collect rent from tenants may affect our ability to pay for adequate maintenance, insurance, and other operating costs.
Climate change may also indirectly affect our business by increasing the cost of (or making unavailable) property insurance on terms we find acceptable, increasing the cost of required resources, including energy, other fuel sources, water, and waste removal services, and increasing the risk and severity of flood, droughts, hurricanes, and earthquakes at our properties.
Climate change may also indirectly affect our business by increasing the cost of (or making unavailable) property insurance on terms we find acceptable, increasing the cost of required resources, including energy, other fuel sources, water, and waste removal services, and increasing the risk and severity of floods, fires, tornadoes, hurricanes, droughts, ice storms, and earthquakes at our properties.
Our Credit Facility, senior unsecured notes, and our unsecured term loans impose financial and operating restrictions on us.
Our Credit Facility, senior unsecured notes, and our unsecured term loans impose financial and operating covenants on us.
Joint ventures, including partnerships or limited liability companies, tend to be complex arrangements, and there are only a limited number of parties willing to undertake such investment structures. There is no guarantee that we will be able to undertake these ventures at the times we need capital and at favorable terms. 9 Table of Contents • Common stock .
Joint ventures, including partnerships or limited liability companies, tend to be complex arrangements and there are only a limited number of parties willing to undertake such investment structures. There is no guarantee that we will be able to undertake these ventures at the times we need capital and on favorable terms.
A venture partner may have economic and/or other business interests or goals that are incompatible with our business interests or goals and that venture partner may be in a position to take action contrary to our interests.
A 6 Table of Contents venture partner may have economic and/or other business interests or goals that are incompatible with our business interests or goals and that venture partner may be in a position to take action contrary to our interests.
The magnitude and frequency with which these charges occur could materially and adversely affect our business, financial condition, and results of operations. Leasing risk . Our operating properties were 91.0% leased at December 31, 2022. Our 20 largest customers account for a meaningful portion of our revenues.
The magnitude and frequency with which these charges occur could materially and adversely affect our business, financial condition, and results of operations. Leasing risk . Our operating office properties were 90.9% leased at December 31, 2023. Our 20 largest customers account for a meaningful portion of our revenues.
Any adverse economic conditions impacting Atlanta, Austin, Tampa, Phoenix, or Charlotte could adversely affect our overall results of operations and financial condition. 6 Table of Contents Uninsured losses and condemnation costs . Accidents, earthquakes, hurricanes, floods, droughts, terrorism incidents, and other losses at our properties could adversely affect our operating results.
Any adverse economic conditions impacting Atlanta, Austin, Tampa, Charlotte, or Phoenix could adversely affect our overall results of operations and financial condition. Uninsured losses and condemnation costs . Accidents, earthquakes, hurricanes, tornadoes, floods, droughts, ice storms, terrorism incidents, and other physical losses at our properties could adversely affect our operating results.
As the competition for tenants is intense, we may be required to provide rent abatements, increase our capital improvement expenditures, incur charges for tenant improvements and other concessions, and may not be able to lease vacant space in a timely manner. • Risks associated with the development of mixed-use properties .
As the competition for tenants is intense, we may be required to provide rent abatements, increase our capital improvement expenditures, incur charges for tenant improvements and other concessions, and may not be able to lease vacant space in a timely manner.
If our degree of leverage is viewed unfavorably by lenders or potential joint venture partners, it could affect our ability to obtain additional financing. In general, our degree of leverage could also make us more vulnerable to a downturn in business or the economy.
If our degree of leverage is viewed unfavorably by common equity investors, lenders, or potential joint venture partners, it could affect our ability to obtain additional capital. In general, our degree of leverage could also make us more vulnerable to a downturn in 9 Table of Contents business or the economy.
For the three months ended December 31, 2022, 36.4% of our net operating income for properties owned was derived from the metropolitan Atlanta area, 31.1% was derived from the Austin area, 9.7% was derived from the Tampa area, 8.9% was derived from the Phoenix area, and 8.8% was derived from the Charlotte area.
For the three months ended December 31, 2023, 36.5% of our net operating income for properties owned was derived from the Atlanta area, 32.8% was derived from the Austin area, 9.1% was derived from the Tampa area, 8.6% was derived from the Charlotte area, and 7.6% was derived from the Phoenix area.
In the future, we may invest in additional properties on some of these parcels or additional parcels subject to ground leases. Many of these ground leases and other restrictive agreements impose significant limitations on our uses of the subject property and restrict our ability to sell or otherwise transfer our interests in the property.
Many of these ground leases and other restrictive agreements impose significant limitations on our uses of the subject property and restrict our ability to sell or otherwise transfer our interests in the property.
Under the Code, any gains resulting from transfers or dispositions, from other than a taxable REIT subsidiary, that are deemed to be prohibited transactions would be subject to a 100% tax on any gain associated with the transaction.
From time to time, we may transfer or otherwise dispose of some of our properties. Under the Code, any gains resulting from transfers or dispositions, from other than a taxable REIT subsidiary, that are deemed to be prohibited transactions would be subject to a 100% tax on any gain associated with the transaction.
In addition, we are subject to a 4% nondeductible excise tax to the extent that distributions paid by us during the calendar year are less than the sum of the following: • 85% of our ordinary income; • 95% of our net capital gain income for that year; and • 100% of our undistributed taxable income (including any net capital gains) from prior years. 13 Table of Contents We intend to make distributions to our stockholders to comply with the 90% distribution requirement, to avoid corporate-level tax on undistributed taxable income, and to avoid the nondeductible excise tax.
In addition, we are subject to a 4% nondeductible excise tax to the extent that distributions paid by us during the calendar year are less than the sum of the following: • 85% of our ordinary income; • 95% of our net capital gain income for that year; and • 100% of our undistributed taxable income (including any net capital gains) from prior years.
In addition, we can provide no assurance that legislation, new regulations, administrative interpretations, or court decisions will not adversely affect our qualification as a REIT or the federal income tax consequences of our REIT status.
Certain facts and circumstances not entirely within our control may affect our ability to qualify as a REIT. In addition, we can provide no assurance that legislation, new regulations, administrative interpretations, or court decisions will not adversely affect our qualification as a REIT or the federal income tax consequences of our REIT status.
Real estate investments are relatively illiquid and can be difficult to sell and convert to cash quickly. As a result, our ability to sell one or more of our properties, whether in response to any changes in economic or other conditions or in response to a change in strategy, may be limited.
Real estate investments are relatively illiquid and can be difficult to sell and convert to cash quickly. As a result, our ability to sell one or more of our properties, may be limited.
Although we seek to minimize risks from development through various management controls and procedures, development risks cannot be eliminated. Some of the key factors affecting development of property are as follows: • Abandoned predevelopment costs . The development process inherently requires that a large number of opportunities be pursued with only a few actually being developed.
Although we seek to minimize risks from development through various management controls and procedures, development risks cannot be eliminated. These risks may include: • Abandoned predevelopment costs . The development process requires a large number of opportunities be pursued with only a few actually being developed.
Real estate development carries the risk that a project could be delayed due to a number of issues that may arise including, but not limited to, weather and other forces of nature, availability of materials, availability of skilled labor, the financial health of general contractors or sub-contractors, and the competing demands on plan-approving authorities.
Development activity carries the risk that a project could be delayed due to, but not limited to, weather and other forces of nature, availability of materials, availability of skilled labor, supply chain 10 Table of Contents disruption, the financial health of general contractors or sub-contractors, and the competing demands on plan-approving authorities.
Net debt as a percentage of either total asset value or total market capitalization and net debt as a multiple of annualized EBITDA re are non-GAAP metrics often used by analysts to gauge the financial health of equity REITs like us.
Our degree of leverage could limit our ability to obtain additional financing or affect the market price of our securities. Net debt as a percentage of either total asset value or total market capitalization and net debt as a multiple of annualized EBITDA re are non-GAAP metrics often used by analysts to gauge the financial health of REITs like us.
We do not have as much experience in developing and managing non-office real estate as we do office real estate and, as a result, we may seek to develop the non-office component ourselves, sell the right to that component to a third-party developer, or we may partner with a third party who has more non-office real estate experience.
We may seek to develop the non-office component ourselves, sell the right to that component to a third-party developer, or we may partner with a third party who has more non-office real estate experience.
We do not know whether existing requirements will change or whether compliance with future requirements will require significant unanticipated expenditures that will affect our cash flow and results of operations. 8 Table of Contents Financing Risks At certain times, interest rates and other market conditions for obtaining capital could be unfavorable, and, as a result, we may be unable to raise the capital needed to invest in acquisition or development opportunities, maintain our properties, or otherwise satisfy our commitments on a timely basis, or we may be forced to raise capital at a higher cost or under restrictive terms, which could adversely affect returns on our investments, our cash flows, and results of operations.
Financing Risks At certain times, interest rates and other market conditions for obtaining capital could be unfavorable, and, as a result, we may be unable to raise the capital needed to invest in acquisition or development opportunities, maintain our properties, or otherwise satisfy our commitments on a timely basis, or we may be forced to raise capital at a higher cost or under restrictive terms, which could adversely affect our cash flows and results of operations.
As of December 31, 2022, we had $2.3 billion of outstanding indebtedness.
As of December 31, 2023, we had $2.5 billion of outstanding indebtedness.
The availability of non-recourse mortgages is dependent upon various conditions, including the willingness of mortgage lenders to lend at any given point in time. Interest rates and loan-to-value ratios may also be volatile, and we may from time to time elect not to proceed with mortgage financing due to unfavorable terms offered by lenders.
The availability of non-recourse mortgages is dependent upon various conditions, including the willingness of mortgage lenders to lend at any given point in time. Interest rates and loan-to-value ratios may be volatile.
Casualties may occur that significantly damage an operating property or property under development, and insurance proceeds may be less than the total loss incurred by us.
Casualties may occur that significantly damage an operating property or property under development, insurance deductibles or co-insurance limits may be significant (including with respect to damage from named wind storms), and insurance proceeds may be less than the total loss incurred by us.
Distributions could be made in cash, in stock, or in a combination of cash and stock. Differences in timing between taxable income and cash available for distribution could require us to borrow funds to meet the 90% distribution requirement, to avoid corporate-level tax on undistributed taxable income, and to avoid the nondeductible excise tax.
Differences in timing between taxable income and cash available for distribution could require us to borrow funds to meet the 90% distribution requirement, to avoid corporate-level tax on undistributed taxable income, and to avoid the nondeductible excise tax. Certain property transfers may be characterized as prohibited transactions.
The design and effectiveness of our disclosure controls and procedures and internal control over financial reporting may not prevent all errors, misstatements, or misrepresentations.
Disclosure Controls and Internal Control over Financial Reporting Risks Our business could be adversely impacted if we have deficiencies in our disclosure controls and procedures or internal control over financial reporting. The design and effectiveness of our disclosure controls and procedures and internal control over financial reporting may not prevent all errors, misstatements, or misrepresentations.
As of December 31, 2022, our top 20 tenants represented 37.9% of our annualized base rental revenues with no single tenant accounting for more tha n 7.3% of our annualized base rental revenues.
As of December 31, 2023, our top 20 tenants represented 37.9% of our annualized base rental revenues with our largest single tenant accounting for 8.1% of our annualized base rental revenues.
In addition, if a Section 1031 Exchange were later to be determined to be taxable, we may be required to amend our tax returns for the applicable year in question. Further, as a result of changes made by the TCJA, Section 1031 Exchanges are only permitted with respect to real property.
In addition, if a Section 1031 Exchange were later to be determined to be taxable, we may be required to amend our tax returns for the applicable year in question.
We can provide no assurance that conditions will be favorable for future issuances of preferred stock when we need the capital, which could have an adverse effect on our ability to fund acquisition and development activities. • Operating partnership units .
Issuance 8 Table of Contents of preferred stock, if convertible, could be dilutive to earnings per share and have an adverse effect on the trading price of common stock. We can provide no assurance that conditions will be favorable for future issuances of preferred stock when we need the capital. • Operating partnership units .
In addition, mortgage financing on an asset may prohibit prepayment and/or impose a prepayment penalty upon the sale of that property, which may decrease the proceeds from a sale or make the sale impractical. • Construction loans . Construction loans generally relate to specific assets under construction and fund costs above an initial equity amount as negotiated with the lender.
Our status as a REIT can limit our ability to sell properties. In addition, mortgage financing on an asset may prohibit prepayment and/or impose a prepayment penalty upon the sale of that property, which may decrease the proceeds from a sale or make the sale impractical. • Construction loans .
The ownership limitation may have the effect of delaying, inhibiting, or preventing a transaction or a change in control that might involve a premium price for our stock or otherwise be in the best interest of our stockholders. 15 Table of Contents The market price of our common stock may fluctuate.
We provide waivers to this limitation on a case by case basis, which could result in increased voting control by a stockholder. The ownership limitation may have the effect of delaying, inhibiting, or preventing a transaction or a change in control that might involve a premium price for our stock or otherwise be in the best interest of our stockholders.
Qualification as a REIT involves the application of highly technical and complex provisions of the Internal Revenue Code (the “Code”), for which there are only limited judicial or administrative interpretations. Certain facts and circumstances not entirely within our control may affect our ability to qualify as a REIT.
We intend to continue to operate in a manner intended to qualify us as a REIT for federal income tax purposes. Qualification as a REIT involves the application of highly technical and complex provisions of the Internal Revenue Code (the “Code”), for which there are only limited judicial or administrative interpretations.
If we decide not to sell or participate in a joint venture and instead hire a third party manager, we would be dependent on them and their key personnel to provide services to us, and we may not find a suitable replacement if the management agreement is terminated or if key personnel leave or otherwise become unavailable to us.
If we decide to hire a third-party manager, we would be dependent on them and their key personnel to provide services to us, and we may not find a suitable replacement if the management agreement is terminated or if key personnel leave or otherwise become unavailable to us. 11 Table of Contents Federal Income Tax Risks Any failure to continue to qualify as a REIT for federal income tax purposes could have a material adverse impact on us and our stockholders.
Among other things, "green" building codes may seek to reduce emissions through the imposition of standards for design, construction materials, water and energy usage and efficiency, and waste management.
For example, various federal, state, and local laws and regulations have been implemented or are under consideration to mitigate the effects of climate change caused by greenhouse gas emissions. Among other things, "green" building codes may seek to reduce emissions through the imposition of standards for design, construction materials, water and energy usage and efficiency, and waste management.
As of December 31, 2022, we had interests in eight land parcels in various markets that we lease individually on a long-term basis. As of December 31, 2022, we had 2.0 million aggregate square feet of rental space located on these leased parcels, from which we recognized 11% of total Net Operating Income ("NOI") in the fourth quarter of 2022.
As of December 31, 2023, we had 2.0 million aggregate square feet of rental space located on these leased parcels, from which we generated 13% of our total Net Operating Income ("NOI") in the fourth quarter of 2023. In the future, we may invest in additional properties on some of these parcels or additional parcels subject to ground leases.
In addition, interest rates, financing availability, law changes, and governmental regulations (including those governing usage, zoning, and taxes) may adversely affect our financial condition. Impairment risks . We regularly review our real estate assets for impairment; and based on these reviews, we may record impairments that have an adverse effect on our results of operations.
Impairment risks . We regularly review our real estate assets for impairment in accordance with accounting principles generally accepted in the United States ("GAAP"); and based on these reviews, we may record impairments that have an adverse effect on our results of operations.
As cyber threats continue to evolve, we may be required to expend additional resources to continue to enhance our information security measures and to investigate and remediate any information security vulnerabilities. Public attention to environmental, social, and governance matters. Recently, more attention is being directed towards publicly-traded companies regarding ESG matters.
As cyber threats continue to evolve, we may be required to expend additional resources to continue to enhance our information security measures and to investigate and remediate any information security vulnerabilities. Increased public attention to corporate responsibility matters may expose us to negative public perception, impose additional costs on our business, or impact our stock price.
If a property is mortgaged to secure payment of indebtedness and we are unable to make the mortgage payments, the lender may foreclose.
If a property is mortgaged to secure payment of indebtedness and we are unable to make the mortgage payments, the lender may foreclose, potentially generating defaults on other debt. • Asset sales . Real estate markets tend to experience market cycles. Because of such cycles, the potential terms and conditions of sales, may be unfavorable for extended periods of time.
We consider public issuances of common stock to be an available source of capital for our acquisitions, development, and general corporate purposes. We can provide no assurance that conditions will be favorable for future issuances of common stock when we need capital.
Our ability to exit existing joint ventures may be limited by the terms of the joint venture agreement, which may limit our ability to liquidate our investment in a joint venture. • Common stock . We can provide no assurance that conditions will be favorable for future issuances of common stock when we need capital.
Removed
For example, various federal, state, and local laws and regulations have been implemented or are under consideration to mitigate the effects of climate change caused by 7 Table of Contents greenhouse gas emissions.
Added
Additionally, although we pursue a robust sustainability strategy, new approaches and trends regarding building resiliency emerge from time to time in this rapidly evolving focus area.
Removed
Further, at the time a mortgage matures, the property may be worth less than the mortgage amount and, as a result, we may determine not to refinance the mortgage and permit foreclosure, potentially generating defaults on other debt. • Asset sales . Real estate markets tend to experience market cycles.
Added
Our approaches and priorities may differ from those of our peers, and the perception of the public or investors of these differences may adversely impact our portfolio attractiveness of our ability to lease space at competitive rates. Joint venture structure risks .
Removed
Because of such cycles, the potential terms and conditions of sales, including prices, may be unfavorable for extended periods of time. In addition, our status as a REIT can limit our ability to sell properties, which may affect our ability to liquidate an investment. As a result, our ability to raise capital through asset sales could be limited.
Added
As of December 31, 2023, we had interests in eight land parcels in various markets that we lease individually on a long-term basis.
Removed
We regularly issue common stock to key employees and our directors under our 2019 Omnibus Incentive Stock Plan. We also issue shares of common stock to participants in our 2021 Employee Stock Purchase Plan. • Preferred stock .
Added
We do not know whether existing requirements will change or whether compliance with future requirements will require significant unanticipated expenditures that will affect our cash flow and results of operations.

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Item 2. Properties

Properties — owned and leased real estate

15 edited+5 added−4 removed5 unchanged
Biggest changeExcept as noted, all information presented is as of December 31, 2022 ($ in thousands): Operating Properties (1) Company's Share Office Properties Rentable Square Feet Financial Statement Presentation Company's Ownership Interest End of Period Leased Weighted Average Occupancy (2) % of Total Net Operating Income (3) Property Level Debt (4) Annualized Rent (5) Terminus (6) 1,226,000 Consolidated 100% 88.7% 83.2% 6.6% $ 220,676 Spring & 8th (6) 765,000 Consolidated 100% 100.0% 100.0% 5.7% — Northpark (6) 1,539,000 Consolidated 100% 76.1% 71.7% 3.8% — Buckhead Plaza (6) 666,000 Consolidated 100% 93.8% 86.0% 3.7% — 725 Ponce (7) 372,000 Consolidated 100% 100.0% 98.4% 3.6% — Avalon (8) 480,000 Consolidated 100% 97.8% 98.7% 3.2% — 3344 Peachtree 484,000 Consolidated 100% 96.9% 95.8% 3.0% — Promenade Tower 777,000 Consolidated 100% 77.8% 75.0% 2.6% — 3350 Peachtree 413,000 Consolidated 100% 57.0% 52.5% 1.1% — Meridian Mark Plaza 160,000 Consolidated 100% 100.0% 100.0% 1.0% — 3348 Peachtree 258,000 Consolidated 100% 75.5% 74.9% 0.9% — Emory University Hospital Midtown 358,000 Unconsolidated 50% 99.5% 98.3% 0.9% 31,428 120 West Trinity Office (7) 43,000 Unconsolidated 20% 100.0% 90.4% 0.1% — Promenade Central (7) (9) 370,000 Consolidated 100% 60.7% 11.1% 0.1% — ATLANTA (9) 7,911,000 86.5% 83.3% 36.3% 252,104 The Domain (8) 1,899,000 Consolidated 100% 100.0% 100.0% 14.8% 73,945 300 Colorado (7) 378,000 Consolidated 100% 100.0% 88.3% 3.1% — One Eleven Congress 519,000 Consolidated 100% 83.8% 80.6% 3.1% — The Terrace (6) 619,000 Consolidated 100% 80.7% 76.2% 2.7% — Colorado Tower 373,000 Consolidated 100% 97.4% 89.2% 2.6% 109,199 San Jacinto Center 399,000 Consolidated 100% 93.9% 78.7% 2.6% — Domain Point (6) 240,000 Consolidated 96.5% 100.0% 96.6% 1.3% — Research Park V 173,000 Consolidated 100% 97.1% 97.1% 0.9% — AUSTIN 4,600,000 94.7% 90.6% 31.1% 183,144 Corporate Center (6) 1,227,000 Consolidated 100% 97.2% 95.1% 5.6% — Heights Union (6) (7) 294,000 Consolidated 100% 100.0% 94.1% 2.4% — The Pointe 253,000 Consolidated 100% 92.1% 89.0% 1.0% — Harborview Plaza 205,000 Consolidated 100% 80.8% 80.8% 0.7% — TAMPA 1,979,000 95.2% 92.7% 9.7% — Hayden Ferry (6) 792,000 Consolidated 100% 94.2% 91.0% 4.7% — 100 Mill (7) 288,000 Consolidated 90% 92.3% 92.3% 2.6% — 111 West Rio 225,000 Consolidated 100% 100.0% 100.0% 1.1% — Tempe Gateway 264,000 Consolidated 100% 65.4% 51.4% 0.5% — PHOENIX 1,569,000 1569000 89.8% 85.7% 8.9% — Fifth Third Center 692,000 Consolidated 100% 90.8% 90.8% 3.4% 129,921 The RailYard 329,000 Consolidated 100% 99.4% 98.6% 2.5% — 550 South 394,000 Consolidated 100% 97.9% 97.9% 2.1% — CHARLOTTE 1,415,000 94.8% 94.6% 8.0% 129,921 Legacy Union One 319,000 Consolidated 100% 100.0% 100.0% 1.8% — 5950 Sherry Lane 197,000 Consolidated 100% 73.4% 71.9% 0.5% — DALLAS 516,000 89.8% 89.3% 2.3% — BriarLake Plaza (6) 835,000 Consolidated 100% 95.5% 75.5% 2.8% — HOUSTON 835,000 95.5% 75.5% 2.8% — TOTAL OFFICE (9) 18,825,000 91.0% 87.1% 99.1% $ 565,169 $ 706,333 Table continued on next page 18 Table of Contents Company's Share Office Properties Rentable Square Feet Financial Statement Presentation Company's Ownership Interest End of Period Leased Weighted Average Occupancy (2) % of Total Net Operating Income (3) Property Level Debt (4) Annualized Rent (5) Other Properties College Street Garage - Charlotte (7) N/A Consolidated 100% N/A N/A 0.8% — 120 West Trinity Apartment - Atlanta (330 Units) (7) 310,000 Unconsolidated 20% 93.8% 93.3% 0.1% — TOTAL OTHER 310,000 93.8% 93.3% 0.9% $ — $ 1,700 TOTAL (9) 19,135,000 91.0% 87.1% 100.0% $ 565,169 $ 708,033 (1) Operating properties exclude properties on our development pipeline and properties sold prior to December 31, 2022.
Biggest changeExcept as noted, all information presented is as of December 31, 2023 ($ in thousands): Operating Properties (1) Company's Share Office Properties Rentable Square Feet Financial Statement Presentation Company's Ownership Interest End of Period Leased Weighted Average Occupancy (2) % of Total Net Operating Income (3) Property Level Debt (4) Terminus (5) 1,226,000 Consolidated 100% 86.3% 83.8% 6.5% $ 220,687 Spring & 8th (5) 765,000 Consolidated 100% 100.0% 100.0% 5.5% — Buckhead Plaza (5) 678,000 Consolidated 100% 95.2% 89.6% 4.1% — Northpark (5) 1,539,000 Consolidated 100% 74.0% 73.4% 4.0% — 725 Ponce 372,000 Consolidated 100% 100.0% 100.0% 3.8% — Avalon (5) 480,000 Consolidated 100% 100.0% 97.4% 3.1% — 3344 Peachtree 484,000 Consolidated 100% 95.1% 96.3% 2.9% — Promenade Tower 777,000 Consolidated 100% 82.9% 63.2% 2.4% — 3348 Peachtree 258,000 Consolidated 100% 76.9% 80.5% 1.0% — Promenade Central (6) (7) 367,000 Consolidated 100% 71.3% 55.9% 0.9% — Medical Offices at Emory Hospital 358,000 Unconsolidated 50% 99.5% 99.5% 0.9% 41,158 Meridian Mark Plaza 160,000 Consolidated 100% 100.0% 100.0% 0.8% — 3350 Peachtree 413,000 Consolidated 100% 60.3% 57.0% 0.4% — 120 West Trinity Office 43,000 Unconsolidated 20% 100.0% 100.0% 0.1% — ATLANTA (7) 7,920,000 86.6% 83.3% 36.4% 261,845 The Domain (5) 1,899,000 Consolidated 100% 100.0% 99.5% 13.8% 72,296 300 Colorado 378,000 Consolidated 100% 100.0% 100.0% 4.1% — San Jacinto Center 399,000 Consolidated 100% 95.9% 86.9% 3.3% — Colorado Tower 373,000 Consolidated 100% 98.8% 97.4% 3.2% 106,605 One Eleven Congress 519,000 Consolidated 100% 80.5% 79.9% 3.0% — The Terrace (5) 619,000 Consolidated 100% 79.9% 77.6% 2.9% — Domain Point (5) 240,000 Consolidated 96.5% 100.0% 100.0% 1.6% — Research Park V 173,000 Consolidated 100% 93.0% 89.0% 0.9% — AUSTIN 4,600,000 94.4% 92.8% 32.8% 178,901 Corporate Center (5) 1,227,000 Consolidated 100% 93.4% 92.3% 5.7% — Heights Union (5) (6) 294,000 Consolidated 100% 100.0% 100.0% 1.9% — The Pointe 253,000 Consolidated 100% 90.4% 89.3% 0.8% — Harborview Plaza 206,000 Consolidated 100% 83.7% 79.3% 0.7% — TAMPA 1,980,000 93.0% 91.7% 9.1% — Fifth Third Center 692,000 Consolidated 100% 91.1% 91.1% 3.5% 126,369 The RailYard 329,000 Consolidated 100% 99.0% 99.2% 2.4% — 550 South 394,000 Consolidated 100% 96.7% 96.7% 2.1% — CHARLOTTE 1,415,000 1569000 94.5% 94.5% 8.0% 126,369 Hayden Ferry (5) (8) 792,000 Consolidated 100% 90.9% 88.5% 3.3% — 100 Mill (6) 288,000 Consolidated 90% 98.1% 81.3% 2.4% — 111 West Rio 225,000 Consolidated 100% 100.0% 100.0% 1.0% — Tempe Gateway 264,000 Consolidated 100% 75.9% 64.8% 0.9% — PHOENIX 1,569,000 90.9% 84.4% 7.6% — Legacy Union One 319,000 Consolidated 100% 100.0% 100.0% 1.8% — 5950 Sherry Lane 197,000 Consolidated 100% 79.3% 77.5% 0.7% — DALLAS 516,000 92.1% 91.4% 2.5% — BriarLake Plaza (5) 835,000 Consolidated 100% 96.8% 79.0% 2.9% — HOUSTON 835,000 96.8% 79.0% 2.9% — TOTAL OFFICE (7) 18,835,000 90.9% 87.6% 99.3% $ 567,115 Table continued on next page 17 Table of Contents Company's Share Office Properties Rentable Square Feet Financial Statement Presentation Company's Ownership Interest End of Period Leased Weighted Average Occupancy (2) % of Total Net Operating Income (3) Property Level Debt (4) Other Properties College Street Garage - Charlotte (6) N/A Consolidated 100% N/A N/A 0.6% — 120 West Trinity Apartment - Atlanta (330 Units) (6) 310,000 Unconsolidated 20% 95.3% 93.6% 0.1% — TOTAL OTHER 310,000 95.3% 93.6% 0.7% $ — TOTAL (7) 19,145,000 90.9% 87.7% 100.0% $ 567,115 (1) Operating properties exclude properties in our development pipeline and properties sold prior to December 31, 2023.
(2) Annualized Rent represents the annualized cash rent including tenant's share of estimated operating expenses, if applicable, paid by the tenant for December 2022. If the tenant is in a free rent period for December 2022, Annualized Rent represents the annualized contractual rent the tenant will pay in the first month it is required to pay full rent.
(2) Annualized Rent represents the annualized cash rent including tenant's share of estimated operating expenses, if applicable, paid by the tenant for December 2023. If the tenant is in a free rent period for December 2023, Annualized Rent represents the annualized contractual rent the tenant will pay in the first month it is required to pay full rent.
(2) The weighted average economic occupancy of the property over the period for which the property was available for occupancy during the three months ended December 31, 2022. (3) The Company's share of net operating income for the three months ended December 31, 2022. See Item 7.
(2) The weighted average economic occupancy of the property over the period for which the property was available for occupancy during the three months ended December 31, 2023. (3) The Company's share of net operating income for the three months ended December 31, 2023. See Item 7.
Office Lease Expirations (1) As of December 31, 2022, our leases expire as follows: Year of Expiration Square Feet Expiring % of Leased Space Annual Contractual Rent (in thousands) (2) % of Annual Contractual Rent Annual Contractual Rent/Sq.
Office Lease Expirations (1) As of December 31, 2023, our leases expire as follows: Year of Expiration Square Feet Expiring % of Leased Space Annual Contractual Rent (in thousands) (2) % of Annual Contractual Rent Annual Contractual Rent/Sq.
Leases that have been signed but have not commenced are excluded. 20 Table of Contents Tenant Industry Diversification As of December 31, 2022, our tenant industry diversification was as follows: Industry (1) Percentage of Company's Share of Annualized Rent (2) Technology 26.1 % Financial 16.3 % Professional Services 14.4 % Legal 8.8 % Energy 7.0 % Consumer Goods & Services 6.3 % Health Care 5.5 % Real Estate 4.6 % Other 3.7 % Insurance 3.0 % Construction/Design 2.2 % Marketing/Media/Creative 2.1 % Total 100.0 % (1) Management uses SIC codes when available, along with judgment, to determine tenant industry classification.
Leases that have been signed but have not commenced are excluded. 19 Table of Contents Tenant Industry Diversification As of December 31, 2023, our tenant industry diversification was as follows: Industry (1) Percentage of Company's Share of Annualized Rent (2) Technology 27.0 % Financial 15.5 % Professional Services 10.2 % Legal 8.5 % Consumer Goods & Services 8.0 % Energy 7.3 % Real Estate 6.0 % Health Care 5.9 % Insurance 3.5 % Other 3.1 % Marketing/Media/Telecom 3.1 % Construction/Design 1.9 % Total 100.0 % (1) Management uses SIC codes when available, along with judgment, to determine tenant industry classification.
The above excludes any financing cost assumptions for projects without project-specific debt and any other incremental capitalized costs required by GAAP. (3) Initial revenue recognition represents the quarter within which the Company recognized or estimates it will begin recognizing revenue under GAAP.
Neuhoff has a project-specific construction loan (see footnote 4 below). The above excludes any financing cost assumptions for projects without project-specific debt and any other incremental capitalized costs required by GAAP. (3) Initial occupancy represents the quarter within which the Company first recognized, or estimates it will begin recognizing, revenue under GAAP.
(5) The Company's share of annualized rent represents the sum of the annualized cash rent including tenant's share of estimated operating expenses, if applicable, each tenant is paying as of the end of the reporting period.
The above table has annualized rent of $741.6 million, which represents the sum of the annualized cash rent including tenant's share of estimated operating expenses, if applicable, each tenant is paying as of the end of the reporting period.
Amounts included in the estimated project cost column are the estimated costs of the project through stabilization. Significant estimation is required to derive these costs, and the final costs may differ from these estimates. (2) Estimated and incurred project costs are construction costs plus financing costs on project-specific debt. Neuhoff has a project-specific construction loan (see Note 4).
Amounts included in the estimated project cost column are the estimated costs of the project, including direct financing costs as of project commencement. Significant estimation is required to derive these costs, and the final costs may differ from these estimates. (2) Estimated and incurred project costs are construction costs plus financing costs on project-specific debt.
Development Pipeline (1) As of December 31, 2022, information on our projects under development was as follows ($ in thousands): Project Type Market Company's Ownership Interest Construction Start Date Square Feet/Units Estimated Project Cost (1) (2) Company's Share of Estimated Project Cost (2) Project Cost Incurred to Date (2) Company's Share of Project Cost Incurred to Date (2) Percent Leased Initial Revenue Recognition(3) Neuhoff (4) Mixed Nashville 50 % 3Q21 $ 563,000 $ 281,500 $ 297,625 $ 148,813 Commercial 448,000 — % 3Q23 Apartments 542 — % 2Q24 Domain 9 Office Austin 100 % 2Q21 338,000 147,000 147,000 107,969 107,969 97 % 1Q24 Total $ 710,000 $ 428,500 $ 405,594 $ 256,782 (1) This schedule shows projects currently under active development through the substantial completion of construction as well as properties in an initial lease up period prior to stabilization.
Development Pipeline (1) As of December 31, 2023, information on our projects under development was as follows ($ in thousands): Project Type Market Company's Ownership Interest Construction Start Date Square Feet/Units Estimated Project Cost (1) (2) Company's Share of Estimated Project Cost (2) Project Cost Incurred to Date (2) Company's Share of Project Cost Incurred to Date (2) Percent Leased Initial Occupancy (3) Neuhoff (4) Mixed Nashville 50 % 3Q21 $ 563,000 $ 281,500 $ 472,531 $ 236,266 Office and Retail 448,000 22 % 4Q23 Apartments 542 — % 2Q24 Domain 9 Office Austin 100 % 2Q21 338,000 147,000 147,000 122,524 122,524 98 % 1Q24 Total $ 710,000 $ 428,500 $ 595,055 $ 358,790 (1) This schedule shows projects currently under active development through the substantial completion of construction as well as properties in an initial lease up period prior to stabilization.
Management's Discussion and Analysis of Financial Condition and Results of Operations for the definition of net operating income and a reconciliation to Net Income. (4) The Company's share of property-specific mortgage debt, net of unamortized loan costs, as of December 31, 2022.
Management's Discussion and Analysis of Financial Condition and Results of Operations for the definition of net operating income and a reconciliation to Net Income. (4) The Company's share of property-specific mortgage debt, net of unamortized loan costs, as of December 31, 2023. (5) Contains two or more buildings that are grouped together for reporting purposes.
(4) The Neuhoff estimated project cost will be funded with a combination of $250.6 million of equity contributed by the joint venture partners, followed by a $312.7 million construction loan. 21 Table of Contents Land Holdings As of December 31, 2022, we owned the following land holdings, either directly or indirectly through joint ventures: Market Company's Ownership Interest Financial Statement Presentation Total Developable Land (Acres) Cost Basis of Land (in thousands) 3354/3356 Peachtree Atlanta 95% Consolidated 3.2 715 Ponce Atlanta 50% Unconsolidated 1.0 887 West Peachtree (1) Atlanta 100% Consolidated 1.6 The Avenue Forsyth-Adjacent Land Atlanta 100% Consolidated 10.4 Domain Point 3 Austin 90% Consolidated 1.7 Domain Central Austin 100% Consolidated 5.6 South End Station Charlotte 100% Consolidated 3.4 303 Tremont Charlotte 100% Consolidated 2.4 Legacy Union 2 & 3 Dallas 95% Consolidated 4.0 Corporate Center 5 & 6 (2) Tampa 100% Consolidated 14.1 Total 47.4 $ 166,515 Company's Share 46.4 $ 159,710 (1) Includes a ground lease with future obligation to purchase.
The estimated project cost, as of project commencement, includes approximately $66 million of site and associated infrastructure work related to a future phase. 20 Table of Contents Land Holdings As of December 31, 2023, we owned the following land holdings, either directly or indirectly through joint ventures: Market Company's Ownership Interest Financial Statement Presentation Total Developable Land (Acres) Cost Basis of Land (in thousands) 3354/3356 Peachtree Atlanta 95% Consolidated 3.2 715 Ponce Atlanta 50% Unconsolidated 1.0 887 West Peachtree (1) Atlanta 100% Consolidated 1.6 Domain Point 3 Austin 90% Consolidated 1.7 Domain Central Austin 100% Consolidated 5.6 South End Station Charlotte 100% Consolidated 3.4 303 Tremont Charlotte 100% Consolidated 2.4 Legacy Union 2 & 3 Dallas 95% Consolidated 4.0 Corporate Center 5 & 6 (2) Tampa 100% Consolidated 14.1 Total 37.0 $ 162,812 Company's Share 36.0 $ 156,008 (1) Includes a ground lease with future obligation to purchase.
It includes the minimum base rent and an estimate of the tenant's share of operating expenses, if applicable, as defined in the respective leases. 19 Table of Contents Top 20 Office Tenants As of December 31, 2022, our top 20 office tenants were as follows: Tenant (1) Number of Properties Occupied Number of Markets Occupied Company's Share of Square Footage Company's Share of Annualized Rent (in thousands) (2) Percentage of Company's Share of Annualized Rent Weighted Average Remaining Lease Term (Years) 1 Amazon 5 3 1,005,416 $ 51,308 7.3% 6.4 2 NCR Corporation 1 1 762,090 37,753 5.3% 10.6 3 Meta Platforms 1 1 422,252 23,818 3.4% 7.2 4 Pioneer Natural Resources 2 1 359,660 23,336 3.3% 8.7 5 Expedia 1 1 315,882 17,281 2.4% 8.3 6 Bank of America 2 2 347,139 12,071 1.7% 3.0 7 Wells Fargo 5 3 201,801 9,109 1.3% 3.1 8 Apache 1 1 210,012 8,952 1.3% 14.0 9 SVB Financial Group 1 1 204,751 8,432 1.2% 3.1 10 Ovintiv USA 1 1 318,582 8,190 1.2% 4.5 11 WeWork Companies 4 2 169,050 7,750 1.1% 10.7 12 ADP 1 1 225,000 7,479 1.1% 5.3 13 Westrock Shared Services 1 1 205,185 7,346 1.0% 7.3 14 Regus Equity Business Centers 5 4 145,119 7,060 1.0% 5.8 15 BlackRock 1 1 131,656 6,778 1.0% 13.4 16 Workrise Technologies 1 1 93,210 6,652 0.9% 5.6 17 McGuireWoods 2 2 187,119 6,556 0.9% 3.9 18 Amgen 1 1 163,169 6,330 0.9% 5.8 19 Samsung Engineering America 1 1 133,860 5,996 0.8% 3.9 20 Time Warner Cable 4 2 120,140 5,877 0.8% 3.0 Total 5,721,093 $ 268,074 37.9% 7.0 (1) In some cases, the actual tenant may be an affiliate of the entity shown.
It includes the minimum base rent and an estimate of the tenant's share of operating expenses, if applicable, as defined in the respective leases. 18 Table of Contents Top 20 Office Tenants As of December 31, 2023, our top 20 office tenants were as follows: Tenant (1) Number of Properties Occupied Number of Markets Occupied Company's Share of Square Footage Company's Share of Annualized Rent (in thousands) (2) Percentage of Company's Share of Annualized Rent Weighted Average Remaining Lease Term (Years) 1 Amazon 5 3 1,107,805 $ 59,942 8.1% 5.2 2 NCR VOYIX 2 2 815,634 40,595 5.5% 9.4 3 Pioneer Natural Resources 2 1 359,660 25,868 3.5% 7.7 4 Meta Platforms 1 1 319,863 19,481 2.6% 7.6 5 Expedia 1 1 315,882 17,926 2.4% 7.3 6 Bank of America 2 2 347,139 12,648 1.7% 2.0 7 Apache 1 1 210,012 9,760 1.3% 14.6 8 Wells Fargo 5 3 198,507 9,153 1.2% 5.1 9 Ovintiv USA 1 1 318,582 8,313 1.1% 3.5 10 WeWork (3) 4 2 169,050 8,058 1.1% 9.8 11 ADP 1 1 225,000 7,668 1.0% 4.3 12 Westrock Shared Services 1 1 205,185 7,487 1.0% 6.3 13 Regus Equity Business Centers 5 4 145,119 7,393 1.0% 4.9 14 BlackRock 1 1 131,656 7,065 1.0% 12.4 15 Workrise Technologies 1 1 93,210 6,712 1.0% 4.6 16 Amgen 1 1 163,169 6,607 1.0% 4.8 17 Samsung Engineering America 1 1 133,860 6,482 0.9% 2.9 18 McKinsey & Company 2 2 130,513 6,357 0.9% 8.9 19 Time Warner Cable 4 2 120,140 6,048 0.8% 2.0 20 Visa U.S.A. 1 1 122,764 5,864 0.8% 9.8 Total 5,632,750 $ 279,427 37.9% 6.6 (1) In some cases, the actual tenant may be an affiliate of the entity shown.
If a tenant is not paying rent due to a free rent concession, annualized rent is calculated based on the annualized contractual rent the tenant will pay in the first period it is required to pay rent. Included in this a mount is $30.0 million of annuali zed base rent for tenants in a free rent period.
Included in this amount is $27.7 million related to tenants not paying rent as of December 31, 2023 due to free rent concessions. For those tenants, annualized rent is calculated based on the annualized contractual rent the tenant will pay in the first period it is required to pay rent.
(6) Contains two or more buildings that are grouped together for reporting purposes. (7) Not included in Same Property as of December 31, 2022. See Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations for the definition of Same Property.
(6) Not included in Same Property as of December 31, 2023. See Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations for the definition of Same Property. (7) A redevelopment of Promenade Central reached substantial completion in the fourth quarter of 2022.
Included in this amount is $7.9 million of annualized based rent for tenants in a free rent period. Note: This schedule includes leases that have commenced.
Included in this amount is $3.0 million of annualized base rent for tenants in a free rent period. (3) Additional information regarding leases with this tenant can be found in note 13 of the Notes to Consolidated Financial Statements within this Form 10-K annual report. Note: This schedule includes leases that have commenced.
Removed
(8) Contains two or more buildings that are grouped together for reporting purposes, some of which are not included in Same Property as of December 31, 2022, specifically Domain 10 and 10000 Avalon.
Added
This building will be excluded from the Atlanta, Total Office, and Total Portfolio calculations until stabilized.
Removed
(9) While under redevelopment and until stabilization, Promenade Central was excluded from the Atlanta, Total Office, and Total Portfolio calculations of end of period leased and weighted average occupancy at and for the quarters ended December 31, 2022 and September 30, 2022.
Added
(8) Hayden Ferry 1 in this group of buildings has been excluded from Same Property, end of period leased as of December 31, 2023, and weighted average occupancy for the quarter ended December 31, 2023 due to commencement of a full redevelopment of this building effective October 1, 2023.
Removed
Promenade Central will be added back to the total calculations when weighted average occupancy stabilizes, which is the earlier of when it reaches 90% occupancy or in fourth quarter 2023 (one year after the redevelopment activity was substantially complete).
Added
Ft. 2024 840,324 5.2 % $ 36,158 4.3 % $ 43.03 2025 1,496,330 9.3 % 67,847 8.0 % 45.34 2026 1,279,164 7.9 % 59,697 7.1 % 46.67 2027 1,701,666 10.5 % 78,010 9.2 % 45.84 2028 1,659,725 10.3 % 85,221 10.1 % 51.35 2029 1,750,273 10.8 % 91,173 10.8 % 52.09 2030 1,299,773 8.0 % 66,433 7.9 % 51.11 2031 1,485,103 9.2 % 89,137 10.5 % 60.02 2032 1,826,243 11.3 % 106,127 12.6 % 58.11 2033 & Thereafter 2,820,642 17.5 % 165,276 19.5 % 58.60 Total 16,159,243 100.0 % $ 845,079 100.0 % $ 52.30 (1) Company's share of leases expiring after December 31, 2023.
Removed
Ft. 2023 1,001,369 6.1 % $ 42,730 5.1 % $ 42.67 2024 984,168 6.0 % 43,871 5.2 % 44.58 2025 1,820,919 11.1 % 83,602 10.0 % 45.91 2026 1,407,304 8.6 % 66,369 7.9 % 47.16 2027 1,633,446 9.9 % 71,832 8.6 % 43.98 2028 1,551,577 9.5 % 76,714 9.2 % 49.44 2029 1,506,291 9.2 % 72,050 8.6 % 47.83 2030 1,504,787 9.2 % 97,597 11.7 % 64.86 2031 1,122,709 6.8 % 66,084 7.9 % 58.86 2032 & Thereafter 3,893,428 23.6 % 216,295 25.8 % 55.55 Total 16,425,998 100.0 % $ 837,144 100.0 % $ 50.96 (1) Company's share of leases expiring after December 31, 2022.
Added
The Company capitalizes interest, real estate taxes, and certain operating expenses on the unoccupied portion of office and retail properties, which have ongoing construction of tenant improvements, until the earlier of (1) the date on which the project achieves 90% economic occupancy or (2) one year from cessation of major construction activity.
Added
For residential project construction, the Company continues to capitalize interest, real estate taxes, and certain operating expenses until cessation of major construction activity. (4) The Neuhoff estimated project cost will be funded with a combination of $250.6 million of equity contributed by the joint venture partners and a $312.7 million construction loan.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

7 edited+0 added−1 removed2 unchanged
Biggest changeFrom May 1997 to February 2010, Mr. McColl served as Senior Vice President. Ms. Roper was appointed Executive Vice President, General Counsel and Corporate Secretary in February 2017. From October 2012 to February 2017, Ms. Roper served as Senior Vice President, General Counsel and Corporate Secretary. From February 2008 to October 2012, Ms.
Biggest changeMcColl was appointed Executive Vice President in December 2011. From February 2010 to December 2011, Mr. McColl served as Executive Vice President-Development, Office Leasing and Asset Management. From May 1997 to February 2010, Mr. McColl served as Senior Vice President. Ms. Roper was appointed Executive Vice President, General Counsel and Corporate Secretary in February 2017.
Symes 57 Senior Vice President and Chief Accounting Officer Family Relationships There are no family relationships among the Executive Officers or Directors. Term of Office The term of office for all officers expires at the annual stockholders’ meeting. The Board retains the power to remove any officer at any time. Business Experience Mr.
Symes 58 Senior Vice President and Chief Accounting Officer Family Relationships There are no family relationships among the Executive Officers or Directors. Term of Office The term of office for all officers begins and expires at the annual stockholders’ meeting. The Board retains the power to remove any officer at any time. Business Experience Mr.
Item 4. Mine Safety Disclosures Not applicable. 22 Table of Contents Item X. Information about our Executive Officers The Executive Officers of the Registrant, as of the date hereof, are as follows: Name Age Office Held M. Colin Connolly 46 President, Chief Executive Officer and Director Gregg D. Adzema 58 Executive Vice President and Chief Financial Officer J.
Item 4. Mine Safety Disclosures Not applicable. 21 Table of Contents Item X. Information about our Executive Officers The Executive Officers of the Registrant, as of the date hereof, are as follows: Name Age Office Held M. Colin Connolly 47 President, Chief Executive Officer and Director Gregg D. Adzema 58 Executive Vice President and Chief Financial Officer J.
Kennedy Hicks 39 Executive Vice President, Chief Investment Officer and Managing Director Richard G. Hickson IV 48 Executive Vice President, Operations John S. McColl 60 Executive Vice President, Development Pamela F. Roper 49 Executive Vice President, General Counsel, and Corporate Secretary Jeffrey D.
Kennedy Hicks 40 Executive Vice President, Chief Investment Officer and Managing Director Richard G. Hickson IV 49 Executive Vice President, Operations John S. McColl 61 Executive Vice President, Development Pamela F. Roper 50 Executive Vice President, General Counsel and Corporate Secretary Jeffrey D.
Roper served as Senior Vice President, Associate General Counsel and Assistant Secretary. Mr. Symes joined the Company in February 2020 and was appointed Senior Vice President and Chief Accounting Officer in March 2020. From April 2018 to January 2020, Mr.
From October 2012 to February 2017, Ms. Roper served as Senior Vice President, General Counsel and Corporate Secretary. From February 2008 to October 2012, Ms. Roper served as Senior Vice President, Associate General Counsel and Assistant Secretary. Mr. Symes joined the Company in February 2020 and was appointed Senior Vice President and Chief Accounting Officer in March 2020.
Hickson was appointed Executive Vice President of Operations in October 2018. Mr. Hickson joined Cousins in September 2016 as Senior Vice President responsible for Asset Management. Mr. McColl was appointed Executive Vice President in December 2011. From February 2010 to December 2011, Mr. McColl served as Executive Vice President-Development, Office Leasing and Asset Management.
From October 2020 to December 2022, Ms. Hicks served as Executive Vice President of Investments. Ms. Hicks joined Cousins in November 2018 as Senior Vice President of Investments. Mr. Hickson was appointed Executive Vice President of Operations in October 2018. Mr. Hickson joined Cousins in September 2016 as Senior Vice President responsible for Asset Management. Mr.
Symes served as Senior Vice President and Chief Accounting Officer of a private company and was employed by RLJ Lodging Trust, a public REIT, from September 2017 to March 2018. 23 Table of Contents PART II
From April 2018 to January 2020, Mr. Symes served as Senior Vice President and Chief Accounting Officer of a private company. 22 Table of Contents PART II
Removed
From October 2020 to December 2022, Ms. Hicks served as Executive Vice President of Investments. Ms. Hicks joined Cousins in November 2018 as Senior Vice President of Investments. Prior to Cousins, Ms. Hicks worked at Eastdil Secured, a real estate investment banking firm, where she served in a variety of roles from 2010 to 2018, including Managing Director. Mr.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeCOMPARISON OF CUMULATIVE TOTAL RETURN OF ONE OR MORE COMPANIES, PEER GROUPS, INDUSTRY INDICES, AND/OR BROAD MARKETS Fiscal Year Ended Index 12/31/2017 12/31/2018 12/31/2019 12/31/2020 12/31/2021 12/31/2022 Cousins Properties Incorporated 100.00 87.27 117.45 100.12 123.44 80.65 NYSE Composite Index 100.00 91.05 114.28 122.26 147.54 133.75 FTSE Nareit Equity Index 100.00 95.38 120.17 110.56 158.36 119.77 FTSE Nareit Equity Office Index 100.00 85.50 112.37 91.65 111.81 69.75 24 Table of Contents
Biggest changeCOMPARISON OF CUMULATIVE TOTAL RETURN OF ONE OR MORE COMPANIES, PEER GROUPS, INDUSTRY INDICES, AND/OR BROAD MARKETS Fiscal Year Ended Index 12/31/2018 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023 Cousins Properties Incorporated 100.00 134.58 114.72 141.44 92.41 94.27 NYSE Composite Index 100.00 125.51 134.28 162.04 146.89 167.12 FTSE Nareit Equity Index 100.00 126.00 115.92 166.04 125.58 142.83 FTSE Nareit Equity Office Index 100.00 131.42 107.19 130.77 81.58 83.24 23 Table of Contents
Purchases of Equity Securities There were no purchases of common stock by the Company during the fourth quarter of 2022. Performance Graph The following graph compares the five-year cumulative total return of our common stock with the NYSE Composite Index, the FTSE Nareit Equity Index, and the FTSE Nareit Equity Office Index.
Purchases of Equity Securities There were no purchases of common stock by the Company during the fourth quarter of 2023. Performance Graph The following graph compares the five-year cumulative total return of our common stock with the NYSE Composite Index, the FTSE Nareit Equity Index, and the FTSE Nareit Equity Office Index.
The graph assumes a $100 investment in each of the indices on December 31, 2017 and the reinvestment of all dividends.
The graph assumes a $100 investment in each of the indices on December 31, 2018 and the reinvestment of all dividends.
Item 5. Market for Registrant’s Common Stock and Related Stockholder Matters Market Information and Holders Our common stock trades on the New York Stock Exchange (ticker symbol CUZ). On February 3, 2023, there were 8,925 stockholders of record of our common stock.
Item 5. Market for Registrant’s Common Stock and Related Stockholder Matters Market Information and Holders Our common stock trades on the New York Stock Exchange (ticker symbol CUZ). On February 2, 2024, there were 8,403 stockholders of record of our common stock.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeIncome and Net Operating Income from Unconsolidated Joint Ventures Income from unconsolidated joint ventures consisted of the following in 2022 and 2021 ($ in thousands): Year Ended December 31, 2022 2021 $ Change % Change Income from unconsolidated joint ventures $ 7,700 $ 6,801 $ 899 13.2 % Depreciation and amortization 3,927 9,674 (5,747) (59.4) % Net loss (gain) on sale of investment property (81) 39 (120) 307.7 % Gain on sale of undepreciated property (4,478) — (4,478) N/A Interest expense 2,603 2,911 (308) (10.6) % Other expense 70 46 24 52.2 % Termination fee income — (81) 81 100.0 % Other income (217) (167) (50) (29.9) % Net operating income from unconsolidated joint ventures $ 9,524 $ 19,223 $ (9,699) (50.5) % Net operating income: Same Property $ 4,531 $ 4,332 $ 199 4.6 % Non-Same Property 4,993 14,891 (9,898) (66.5) % Net operating income from unconsolidated joint ventures $ 9,524 $ 19,223 $ (9,699) (50.5) % Income from unconsolidated joint ventures increased between 2022 and 2021 primarily due to a gain from the sale of a 3.0 acre land parcel in Uptown Dallas in June 2022, partially offset by the sale of our interest in the Carolina Square venture in 2022 and Dimensional Fund Advisors venture in 2021. 32 Table of Contents Funds from Operations The table below shows Funds from Operations Available to Common Stockholders (“FFO”), a non-GAAP financial measure, and the related reconciliation from net income available to common stockholders for the Company.
Biggest changeNon-Same Property depreciation and amortization increased between 2023 and 2022 primarily due to increased depreciation at our 100 Mill and Heights Union operating properties as they reached stabilization in 2022 and at our Promenade Central operating property following a full building redevelopment project completed in November 2022. 29 Table of Contents Income and Net Operating Income from Unconsolidated Joint Ventures Income from unconsolidated joint ventures consisted of the following in 2023 and 2022 ($ in thousands): Year Ended December 31, 2023 2022 $ Change % Change Income from unconsolidated joint ventures $ 2,299 $ 7,700 $ (5,401) (70.1) % Depreciation and amortization 1,931 3,927 (1,996) (50.8) % Gain on sale of undepreciated property — (4,478) 4,478 100.0 % Gain on sale of depreciated investment property, net — (81) 81 100.0 % Interest expense 1,676 2,603 (927) (35.6) % Other expense 58 70 (12) (17.1) % Other income (140) (217) 77 35.5 % Net operating income from unconsolidated joint ventures $ 5,824 $ 9,524 $ (3,700) (38.8) % Net operating income: Same Property $ 4,854 $ 4,801 $ 53 1.1 % Non-Same Property 970 4,723 (3,753) (79.5) % Net operating income from unconsolidated joint ventures $ 5,824 $ 9,524 $ (3,700) (38.8) % Income from unconsolidated joint ventures decreased between 2023 and 2022 primarily due to gain on the sale of a land parcel by a joint venture in 2022 and decreases in income and depreciation and amortization as a result of the sale of our interest in the Carolina Square joint venture in September 2022.
We 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 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 detail below material changes in the components of net income available to common stockholders for the year ended 2022 compared to 2021. See "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations - Results of Operations" from our 2021 Annual Report on Form 10-K for a comparison of 2021 to 2020 financial results.
We detail below material changes in the components of net income available to common stockholders for the year ended 2023 compared to 2022. See "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations - Results of Operations" from our 2022 Annual Report on Form 10-K for a comparison of 2022 to 2021 financial results.
For projects under development, indicators could include material budget overruns without a corresponding funding source, significant delays in construction, occupancy, or stabilization schedule, regulatory changes or economic trends that have a significant impact on the market, or an adverse change in the financial condition of a significant future tenant.
For projects under development, indicators could include material budget overruns without a corresponding funding source, significant delays in construction, occupancy, or stabilization timing, regulatory changes or economic trends that have a significant impact on the market, or an adverse change in the financial condition of a significant future tenant.
After we determine a project is probable, all subsequently-incurred predevelopment costs, as well as interest and real estate taxes on qualifying assets and certain internal personnel and associated costs directly related to the project under development, are capitalized in accordance with accounting rules.
After we determine a project is probable, all subsequently-incurred predevelopment costs, as well as interest and real estate taxes on qualifying assets and certain internal personnel and associated costs directly related to the project under development or redevelopment, are capitalized in accordance with accounting rules.
Joint Venture Commitments and Debt We have a number of off balance sheet joint ventures with varying structures, as described in note 6 to our consolidated financial statements. The joint ventures in which we have an interest are involved in the ownership and/or development of real estate.
Joint Venture Commitments and Debt We have a number of off balance sheet joint ventures with varying structures, as described in note 5 to our consolidated financial statements. The joint ventures in which we have an interest are involved in the ownership and/or development of real estate.
In determining the fair value of an asset, we exercise judgment on a number of factors. We may determine fair value by using a discounted cash flow calculation or by utilizing comparable market information. We must determine an appropriate discount rate to apply to the cash flows in the discounted cash flow calculation.
In determining the fair value of an asset, we exercise judgment on a number of factors. We may determine fair value by using an undiscounted cash flow calculation or by utilizing comparable market information. We must determine an appropriate discount rate to apply to the cash flows in the undiscounted cash flow calculation.
If we abandon development of a project that had earlier been deemed probable, we charge all previously capitalized costs to expense. If this occurs, our predevelopment expenses could rise significantly. The determination of whether a project is probable requires judgment.
If we abandon development or redevelopment of a project that had earlier been deemed probable, we charge all previously capitalized costs to expense. If this occurs, our predevelopment expenses could rise significantly. The determination of whether a project is probable requires judgment.
The Credit Facility contains financial covenants that require, among other things, the maintenance of an unencumbered interest coverage ratio of at least 1.75x; a fixed charge coverage 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%.
The Credit Facility contains financial covenants that require, among other things, the maintenance of an unencumbered interest coverage ratio of at least 1.75x; a fixed charge coverage ratio of at least 1.50x; a secured leverage ratio of no more than 50%; and an overall leverage ratio of no more than 60%.
This fee income is reduced on a straight-line basis by any accrued straight-line rent receivable and any above- or below-market lease intangible assets or liabilities related to the lease projected at the date of tenant vacancy.
This fee income is adjusted on a straight-line basis by any accrued straight-line rent receivable and any above- or below-market lease intangible assets or liabilities related to the lease projected at the date of tenant vacancy.
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.
FFO is used by industry analysts and investors as a supplemental measure of an equity REIT’s operating performance. Historical cost accounting for real estate assets implicitly assumes that the value of real estate assets diminishes predictably over time.
In addition, in certain instances, we provide “non-recourse carve-out guarantees” on these non-recourse loans. Other Debt Information Our existing mortgage debt is primarily non-recourse, fixed-rate mortgage notes secured by various real estate assets.
In addition, in certain instances, we provide “non-recourse carve-out guarantees” on these non-recourse loans. Other Debt Information Our existing mortgage debt is solely non-recourse, fixed-rate mortgage notes secured by various real estate assets.
In addition, as the flight to quality trend continues among office users, we believe our trophy portfolio is well positioned to benefit from, and ultimately outperform in, the current real estate environment.
In addition, as the flight to quality trend accelerates among office users, we believe our trophy portfolio is well positioned to benefit from, and ultimately outperform in, the current real estate environment.
Under the terms of this First Amendment, the interest rate applicable to the 2021 Term Loan varies according to our leverage ratio and may, at our election, be determined based on either (1) the Daily SOFR or Term SOFR, plus a SOFR adjustment of 0.10% ("Adjusted SOFR") and a spread of between 1.05% and 1.65%, or (2) the greater of Bank of America's prime rate, the federal funds rate plus 0.50%, Term SOFR, plus a SOFR adjustment of 0.10% and 1.00%, or 1.00%, plus a spread of between 0.05% and 0.65%, based on leverage.
Under the terms of this First Amendment, the interest rate applicable to the 2021 Term Loan varies according to our leverage ratio and may, at our election, be determined based on either (1) the Daily SOFR or Term SOFR, plus a SOFR adjustment of 0.10% ("Adjusted SOFR") and a spread of between 1.05% and 1.65%, or (2) the greater of (i) Bank of America's prime rate, (ii) the federal funds rate plus 0.50%, (iii) Term SOFR, plus a SOFR adjustment of 0.10%, plus 1.00%, or (iv) 1.00%, plus a spread of between 0.05% and 0.65%, based on leverage.
Same Property amounts for the 2022 versus 2021 comparison are from properties that were stabilized and owned as of January 1, 2021 through December 31, 2022. We use Net Operating Income ("NOI"), a non-GAAP financial measure, to measure the operating performance of our properties. NOI is widely used by industry analysts and investors to evaluate performance.
Same Property amounts for the 2023 versus 2022 comparison are from properties that were stabilized and owned as of January 1, 2022 through December 31, 2023. We use Net Operating Income ("NOI"), a non-GAAP financial measure, to assess the operating performance of our properties. NOI is also widely used by industry analysts and investors to evaluate performance.
For purposes of this review, we separate the assets acquired based on their unique and different risk characteristics, which may be by property type, geographic concentration, or other factors.
For purposes of this review, we separate the assets acquired based on their unique and different risk characteristics, which may be by 25 Table of Contents property type, geographic concentration, or other factors.
Rental Property Revenues and Rental Property Operating Expenses The following results include the performance of our Same Property portfolios. Our Same Property portfolios include office properties that were stabilized and owned by us for the entirety of each comparable reporting period presented.
Rental Property Revenues and Rental Property Operating Expenses 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.
We use considerable judgment in the determination of whether there are indicators of impairment present and in the assumptions, estimations, and inputs used in calculating the fair value of the investment. 29 Table of Contents Development Cost Capitalization We are involved in all stages of real estate ownership, including development.
We use considerable judgment in the determination of whether there are indicators of impairment present and in the assumptions, estimations, and inputs used in calculating the fair value of the investment. Development Cost Capitalization We are involved in all stages of real estate ownership, including development and redevelopment.
However, management does not believe that additional funding of these ventures will have a material adverse effect on our financial condition or results of operations. At December 31, 2022, our unconsolidated joint ventures had aggregate outstanding indebtedness to third parties of $178.8 million. This debt represents mortgage or construction loans, all of which are non-recourse to us.
However, management does not believe that additional funding of these ventures will have a material adverse effect on our financial condition or results of operations. At December 31, 2023, our unconsolidated joint ventures had aggregate outstanding indebtedness to third parties of $302.1 million. This debt represents mortgage or construction loans, all of which are non-recourse to us.
Impairment We review our real estate assets on an asset group basis for impairment. We identify an asset group based on the lowest level of identifiable cash flows and take into consideration such things as shared expenses and amenities. This review includes our operating properties, properties under development, and land holdings.
Impairment We review our real estate assets on an asset group basis for impairment. We identify an asset group based on the lowest level of identifiable cash flows and take into consideration such things as shared expenses and amenities. This review includes our operating properties, properties under development, and land holdings (including any capitalized predevelopment costs).
The interest rate applicable to the Credit Facility varies according to our leverage ratio, and may, at our election, be determined based on either (i) the Daily Secured Overnight Financing Rate ("SOFR") or Term SOFR, plus a SOFR adjustment of 0.10% ("Adjusted SOFR") and a spread of between 0.90% and 1.40%, or (ii) the greater of Bank of America's prime rate, the federal funds rate plus 0.50%, Term SOFR, plus a SOFR adjustment of 0.10% and 1.00%, or 1.00%, plus a spread of between 0.00% and 0.40%, based on leverage.
The interest rate applicable to the Credit Facility varies according to our leverage ratio, and may, at our election, be determined based on either (1) the Daily SOFR or Term SOFR, plus a SOFR adjustment of 0.10% ("Adjusted SOFR") and a spread of between 0.90% and 1.40%, or (2) the greater of (i) Bank of America's prime rate, (ii) the federal funds rate plus 0.50%, (iii) Term SOFR, plus a SOFR adjustment of 0.10%, plus 1.00%, or (iv) 1.00%, plus a spread of between 0.00% and 0.40%, based on leverage.
If we determine that an asset that is held and used has indicators of impairment, we must determine whether the undiscounted cash flows associated with the asset exceed the carrying amount of the asset. If the undiscounted cash flows are less than the carrying amount of the asset, we reduce the carrying amount of the asset to fair value.
If we determine that an asset that is held-for-investment has indicators of impairment, we must determine whether the undiscounted cash flows associated with the asset exceed the carrying amount of the asset. If the undiscounted cash flows are less than the carrying amount of the asset, we reduce the carrying amount of the asset to fair value.
Overview of 2022 Performance and Company and Industry Trends Our strategy is to create value for our stockholders through ownership of the premier urban office portfolio in the Sun Belt markets, with a particular focus on Atlanta, Austin, Tampa, Phoenix, Charlotte, Dallas, and Nashville.
Overview of 2023 Performance and Company and Industry Trends Our strategy is to create value for our stockholders through ownership of the premier office portfolio in Sun Belt markets of the United States, with a particular focus on Atlanta, Austin, Tampa, Charlotte, Phoenix, Dallas, and Nashville.
The first step in this process is for us to determine whether an asset is considered to be held and used or held for sale.
The first step in this process is for us to determine whether an asset is considered to be held-for-investment or held-for-sale.
Our tenants are increasingly funding capital improvements at our buildings in excess of their tenant improvement allowances as they look to highly amenitized and creative office spaces to attract employees back into the office.
Our tenants are increasingly funding capital improvements at our buildings in 28 Table of Contents excess of their tenant improvement allowances as they trend toward highly amenitized and creative office spaces to attract employees back into the office.
We routinely monitor the status of our common dividend payments in light of the covenants of our credit agreements. 38 Table of Contents
We routinely monitor the status of our common dividend payments in light of the covenants of our credit agreements.
We paid common dividends of $192.3 million and $182.8 million in 2022 and 2021, respectively. We funded these dividends with cash provided by operating activities. We expect to fund our future quarterly common dividends with cash provided by operating activities, proceeds from investment property sales, distributions from unconsolidated joint ventures, and indebtedness, if necessary.
Dividends. We paid common dividends of $194.3 million and $192.3 million in 2023 and 2022, respectively. We funded these dividends with cash provided by operating activities. We expect to fund our future quarterly common dividends with cash provided by operating activities. Proceeds from investment property sales, distributions from unconsolidated joint ventures, and indebtedness will be used, if necessary.
Such negotiations generally require payment of a termination fee that reimburses us for a portion of the remaining rent under the original lease term and the undepreciated lease inception costs such as commissions, tenant improvements and lease incentives.
Tenants sometimes negotiate to terminate their lease prior to the end of the lease term. Such negotiations generally require payment of a termination fee that reimburses us for a portion of the remaining rent under the original lease term and the undepreciated lease inception costs such as commissions, tenant improvements, and lease incentives.
Cash Flows We report and analyze our cash flows based on operating activities, investing activities, and financing activities. Cash, cash equivalents, and restricted cash totaled $5.1 million and $10.2 million at December 31, 2022 and 2021, respectively. See "Item 7.
Cash Flows We report and analyze our cash flows based on operating activities, investing activities, and financing activities. Cash and cash equivalents totaled $6.0 million and $5.1 million at December 31, 2023 and 2022, respectively. See "Item 7.
Most of our lease amendments result in a lease modification of our operating leases which will likely require us to reassess both the lease term and fixed lease payments, including considering any prepaid or accrued lease rentals relating to the original lease as a part of the lease payments for the modified lease. 27 Table of Contents Tenants sometimes negotiate to terminate their lease prior to the end of the lease term.
Most of our lease amendments result in a lease modification of our operating leases which will likely require us to reassess both the lease term and fixed lease payments, including considering any prepaid or accrued lease rentals relating to the original lease as a part of the lease payments for the modified lease.
Our judgment of the date the project is substantially complete has a direct impact on our operating expenses and net income for the period. Results of Operations For The Year Ended December 31, 2022 General Net income available to common stockholders for the years ended 2022 and 2021 was $166.8 million and $278.6 million, respectively.
Our judgment of the date the project is held for occupancy has a direct impact on our operating expenses and net income for the period. Results of Operations For The Year Ended December 31, 2023 General Net income available to common stockholders for the years ended 2023 and 2022 was $83.0 million and $166.8 million, respectively.
Secured Mortgage Notes In December 2022, we refinanced the mortgages on our two Terminus properties in Atlanta with the lender. Under the new non-cross-collateralized mortgages, the maturities were extended from January 2023 to January 2031, the combined principal increased to $221.0 million, and the interest rate is now 6.34%.
Secured Mortgage Notes In December 2022, we refinanced the mortgages on our two Terminus properties in Atlanta with the existing lender. Under the new non-cross-collateralized mortgages, the maturities were extended from January 2023 to January 2031, the combined principal increased to $221.0 million from $178.9 million.
We are in compliance with all covenants of our Term Loans. Unsecured Senior Notes At December 31, 2022, we had $1 billion in unsecured senior notes outstanding that were issued in five tranches with maturity dates that range from 2025 to 2029. The weighted average fixed interest rates on these notes is 3.91%.
Unsecured Senior Notes At December 31, 2023, we had $1 billion in unsecured senior notes outstanding that were issued in five tranches with maturity dates that range from 2025 to 2029. The weighted average fixed interest rates on these notes is 3.91%.
These amounts are amortized as an increase to depreciation and amortization expense over the remaining term of the applicable leases. 28 Table of Contents Depreciation and Amortization We depreciate or amortize operating real estate assets over their estimated useful lives using the straight-line method of depreciation.
The amounts recorded for in-place leases are included in intangible assets on the balance sheets. These amounts are amortized as an increase to depreciation and amortization expense over the remaining term of the applicable leases. Depreciation and Amortization We depreciate or amortize operating real estate assets over their estimated useful lives using the straight-line method of depreciation.
Fee Income Fee income decreased $9.4 million, or 60.7%, between 2022 and 2021 primarily due to declining development activities as we reached the completion of the Norfolk Southern transactions during the third quarter of 2022. The Norfolk Southern transactions are described in further detail in note 3 to the consolidated financial statements in this Form 10-K.
Fee Income Fee income decreased $4.7 million, or 77.6%, between 2023 and 2022 primarily due to the completion of the Norfolk Southern transactions during the third quarter of 2022. The Norfolk Southern transactions are described in further detail in note 13 to the consolidated financial statements in this Form 10-K.
The Company calculates FFO in accordance with Nareit's definition, which is net income available to common stockholders (computed in accordance with GAAP), excluding extraordinary items, cumulative effect of change in accounting principle and gains on sale or impairment on depreciable property, plus depreciation and amortization of real estate assets, and after adjustments for unconsolidated partnerships and joint ventures to reflect FFO on the same basis.
We calculate FFO as defined by the National Association of Real Estate Investment Trusts ("Nareit"), which is net income (loss) available to common stockholders (computed in accordance with GAAP), excluding extraordinary items, cumulative effect of change in accounting principle, and gains or losses from sales of depreciable real property, plus depreciation and amortization of real estate assets, impairment on depreciable investment property and after adjustments for unconsolidated partnerships and joint ventures to reflect FFO on the same basis.
If we determine that an asset is held for sale, we record an impairment if the fair value less costs to sell is less than the carrying amount. All real estate assets not meeting the held for sale criteria are considered to be held and used.
If we determine that an asset is held-for-sale, we record an impairment if the 26 Table of Contents fair value less costs to sell is less than the carrying amount. All real estate assets not meeting the held-for-sale criteria are considered to be held-for-investment. In the impairment analysis for assets held-for-investment, we must determine whether there are indicators of impairment.
This strategy is based on a simple, flexible, and low-leveraged balance sheet that allows us to pursue compelling growth opportunities at the most advantageous points in the cycle. To implement this strategy, we utilize our strong local operating platforms within each of our major markets. During 2022, we completed several financing-related activities.
To implement this disciplined approach, we maintain a simple, flexible, and low-leveraged balance sheet, which allows us to pursue compelling growth opportunities at the most advantageous points in the cycle. We utilize our strong local operating platforms within each of our major markets to implement this strategy. During 2023, we completed two financial transactions.
Revenues derived from fixed lease payments, which exclude certain rental property revenue such as percentage rent and revenue related to the recovery of certain operating expenses from our tenants, are recognized on a straight-line basis over the term of the lease.
Several judgments and estimates are included in the rental property revenue recognition process including the determination of lease term, ownership of tenant improvements, lease modifications, and lease terminations. 24 Table of Contents Revenues derived from fixed lease payments, which exclude certain rental property revenue such as percentage rent and revenue related to the recovery of certain operating expenses from our tenants, are recognized on a straight-line basis over the term of the lease.
NOI excludes corporate general and administrative expenses, interest expense, depreciation and amortization, impairments, gains/loss on sales of real estate, and other non-operating items. 33 Table of Contents The following table reconciles net income to NOI for consolidated properties for each period ($ in thousands): Year Ended December 31, 2022 2021 Net Income $ 167,445 $ 278,996 Fee income (6,119) (15,559) Termination fee income (2,464) (5,105) Other income (2,660) (451) Reimbursed expenses 2,024 2,476 General and administrative expenses 28,319 29,321 Interest expense 72,537 67,027 Depreciation and amortization 295,587 288,092 Other expenses 2,134 2,131 Income from unconsolidated joint ventures (7,700) (6,801) Gain on sale of investment in unconsolidated joint ventures (56,267) (13,083) Loss (gain) on investment property transactions 9 (152,547) Gain on extinguishment of debt (169) — Net Operating Income $ 492,676 $ 474,497 Liquidity and Capital Resources Our primary short-term and long-term liquidity needs include the following: • property operating expenses; • property and land acquisitions; • expenditures on development 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.
The following table reconciles net income to NOI for consolidated properties for each period ($ in thousands): Year Ended December 31, 2023 2022 Net Income $ 83,816 $ 167,445 Fee income (1,373) (6,119) Termination fee income (7,343) (2,464) Other income (2,454) (2,660) General and administrative expenses 32,331 28,319 Interest expense 105,463 72,537 Depreciation and amortization 314,897 295,587 Reimbursed expenses 608 2,024 Other expenses 2,128 2,134 Income from unconsolidated joint ventures (2,299) (7,700) Gain on sale of investment in unconsolidated joint ventures — (56,267) Loss (gain) on investment property transactions (504) 9 Gain on extinguishment of debt — (169) Net Operating Income $ 525,270 $ 492,676 31 Table of Contents Liquidity and Capital Resources Our primary short-term and long-term liquidity needs include the following: • property operating expenses; • property and land 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.
The amount that we may draw under the Credit Facility is a defined calculation based on our unencumbered assets and other factors. The total available borrowing capacity under the Credit Facility was $943.4 million at December 31, 2022.
At December 31, 2023, the Credit Facility's spread over Adjusted SOFR was 0.90%, and the facility fee spread was 0.15%. The amount that we may draw under the Credit Facility is a defined calculation based on our unencumbered assets and other factors. The total available borrowing capacity under the Credit Facility was $814.9 million at December 31, 2023.
If we determine certain costs to be direct or indirect project costs, amounts recorded in projects under development on the balance sheet and amounts recorded in general and administrative and other expenses on the statements of operations could be materially different than if we determine these costs are not directly or indirectly associated with the project.
If we determine certain costs to be direct or indirect project costs, amounts recorded in projects under development on the balance sheet and amounts recorded in general and administrative and other expenses on the statements of operations could be materially different than if we determine these costs are not directly or indirectly associated with the project. 27 Table of Contents Once a certain project is constructed and ready for occupancy, carrying costs, such as real estate taxes, interest, internal personnel costs, and associated costs, are expensed as incurred.
In recent quarters, our leverage metrics which include net debt to EBITDA re , net debt to undepreciated assets, and net debt to total market capitalization, have consistently been among the strongest within our sector of public office REITs.
In recent quarters, our leverage metrics which include net debt to EBITDA re (net income available to common stockholders plus interest expense, income tax expense, depreciation and amortization, losses (gains) on the disposition of depreciated property, and impairment), net debt to undepreciated assets, and net debt to total market capitalization, have consistently been among the strongest within our sector of public office REITs.
We are in compliance with all covenants of our existing unsecured debt and non-recourse mortgages. Future Capital Requirements To meet capital requirements for future investment activities over the long-term, 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.
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 consider projects and/or project phases to be both substantially complete and held for occupancy at the earlier of the date on which the project or phase reaches economic occupancy of 90% or one year from cessation of major construction activity on the core building development.
Determination of when construction of a project is held available for occupancy requires judgment. We consider projects and/or project phases to be held for occupancy at the earlier of the date on which the project or phase reaches economic occupancy of 90% or one year from cessation of major construction activity, which may occur prior to economic stabilization.
The reconciliations of net income available to common stockholders to FFO and earnings per share to FFO per share are as follows for the years ended December 31, 2022 and 2021 ($ in thousands, except per share information): Year Ended December 31, 2022 2021 Dollars Weighted Average Common Shares Per Share Amount Dollars Weighted Average Common Shares Per Share Amount Net Income Available to Common Stockholders $ 166,793 150,113 $ 1.11 $ 278,586 148,666 $ 1.87 Noncontrolling interest related to unitholders 143 25 — 56 25 — Conversion of stock options — — — — 1 — Conversion of unvested restricted stock units — 281 — — 199 — Net Income — Diluted 166,936 150,419 1.11 278,642 148,891 1.87 Depreciation and amortization of real estate assets: Consolidated properties 295,029 — 1.96 287,469 — 1.93 Share of unconsolidated joint ventures 3,927 — 0.03 9,674 — 0.06 Partners' share of real estate depreciation (794) — (0.01) (929) — (0.01) Loss (gain) on sale of depreciated properties: Consolidated properties 9 — — (152,611) — (1.01) Share of unconsolidated joint ventures (81) — — 39 — — Investments in unconsolidated joint ventures (56,267) — (0.37) (13,083) — (0.09) Funds From Operations $ 408,759 150,419 $ 2.72 $ 409,201 148,891 $ 2.75 Net Operating Income Company management evaluates the performance of its property portfolio in part based on NOI.
Additionally, our management uses FFO and FFO per share, along with other measures, as a performance measure for incentive compensation to our officers and other key employees. 30 Table of Contents The reconciliations of net income available to common stockholders to FFO and earnings per share to FFO per share are as follows for the years ended December 31, 2023 and 2022 ($ in thousands, except per share information): Year Ended December 31, 2023 2022 Dollars Weighted Average Common Shares Per Share Amount Dollars Weighted Average Common Shares Per Share Amount Net Income Available to Common Stockholders $ 82,963 151,714 $ 0.55 $ 166,793 150,113 $ 1.11 Noncontrolling interest related to unitholders 14 25 — 143 25 — Conversion of unvested restricted stock units — 301 — — 281 — Net Income — Diluted 82,977 152,040 0.55 166,936 150,419 1.11 Depreciation and amortization of real estate assets: Consolidated properties 314,449 — 2.07 295,029 — 1.96 Share of unconsolidated joint ventures 1,931 — 0.01 3,927 — 0.03 Partners' share of real estate depreciation (1,070) — (0.01) (794) — (0.01) Loss (gain) on sale of depreciated properties: Consolidated properties 2 — — 9 — — Share of unconsolidated joint ventures — — — (81) — — Investments in unconsolidated joint ventures — — — (56,267) — (0.37) Funds From Operations $ 398,289 152,040 $ 2.62 $ 408,759 150,419 $ 2.72 Net Operating Income Company management evaluates the performance of its property portfolio in part based on NOI.
Our critical accounting policies are as follows: Revenue Recognition Most of our revenues are derived from operating leases and are reflected as rental property revenues on the accompanying consolidated statements of operations. Several judgments and estimates are included in the rental property revenue recognition process including the determination of lease term, ownership of tenant improvements, lease modifications, and lease terminations.
Our critical accounting policies are as follows: Revenue Recognition Most of our revenues are derived from operating leases and are reflected as rental property revenues on the accompanying consolidated statements of operations.
Market-wide Class A leasing activity in Nashville represented 47.6% of total leasing activity in 2022 while representing only 33.6% of total inventory. 26 Table of Contents Critical Accounting Policies and Estimates Our financial statements are prepared in accordance with GAAP as outlined in the Financial Accounting Standards Board’s ("FASB") Accounting Standards Codification ("ASC"), and the notes to consolidated financial statements include a summary of the significant accounting policies for the Company.
Critical Accounting Policies and Estimates Our financial statements are prepared in accordance with GAAP as outlined in the Financial Accounting Standards Board’s ("FASB") Accounting Standards Codification ("ASC"), and the notes to consolidated financial statements include a summary of the significant accounting policies for the Company.
As of December 31, 2022, we had $535.2 million outstanding on five non-recourse mortgage notes. All interest rates on the secured mortgage notes are fixed. Assets with depreciated carrying values of $910.2 million were pledged as security on these mortgage notes payable.
These mortgages had interest rates of 4.24% and 4.27%, respectively. As of December 31, 2023, we had $527.0 million outstanding on five non-recourse mortgage notes with a weighted average interest rate of 4.68%. All interest rates on the secured mortgage notes are fixed. Assets with depreciated carrying values of $888.4 million were pledged as security on these mortgage notes payable.
The unsecured senior notes contain financial covenants that are consistent with those of our Credit Facility. The senior notes also contain customary representations and warranties and affirmative and negative covenants, as well as customary events of default. We are in compliance with all covenants of the unsecured senior notes.
The 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.
Under the Term Loan, we have borrowed $350 million that matures on August 30, 2024 with four consecutive extension options for 180 days each. On September 19, 2022, we entered into the First Amendment to the 2021 Term Loan. This amendment aligns covenants and available interest rates, including the addition of SOFR, to that of the Credit Facility.
On September 19, 2022, we entered into the First Amendment to the 2021 Term Loan. This amendment aligns covenants and available interest rates, including the addition of SOFR, to that of the Credit Facility.
In September 2022, we sold our 50% owned joint venture interest in Carolina Square Holdings LP ("Carolina Square"), which owns a mixed-use property in Chapel Hill, North Carolina, to our partner for a gross sales price of $105.0 million. We recognized a gain of $56.3 million on this sale.
Gain on Sales of Investments in Unconsolidated Joint Ventures and Investment Properties In September 2022, we sold our 50% joint venture interest in Carolina Square Holdings LP ("Carolina Square") for a gross sales price of $105.0 million and recognized a gain of $56.3 million on the sale.
In addition to the interest rate, the Credit Facility is also subject to a facility fee of 0.15% to 0.30%, depending on leverage, on the entire $1 billion capacity. At December 31, 2022, the Credit Facility's spread over Adjusted SOFR was 0.90%, and the facility fee spread was 0.15%.
In addition to the interest rate, the Credit Facility is also subject to a facility fee of 0.15% to 0.30%, depending on leverage, on the entire $1 billion capacity. We have elected to determine the interest rate based on the Daily SOFR, plus a SOFR adjustment of 0.10% and a spread of between 0.90% and 1.40%.
On September 27, 2022, we entered into a floating-to-fixed interest rate swap with respect to the $350 million 2021 Term Loan through the maturity date of August 30, 2024. This swap effectively fixed the underlying SOFR rate at 4.23%. At December 31, 2022, the 2021 and 2022 Term Loan's spread over Adjusted SOFR rate was 1.05%.
On September 27, 2022, we entered into a floating-to-fixed interest rate swap with respect to the $350 million 2021 Term Loan through the maturity date of August 30, 2024. This swap fixed the underlying SOFR rate at 4.234% (see note 9 of the Notes to Consolidated Financial Statements within this Form 10-K).
We incur capital expenditures related to our real estate assets that include the acquisition of properties, the development of new properties, the redevelopment of existing or newly purchased properties, and direct leasing costs for new or replacement tenants. 37 Table of Contents Capital expenditures for assets we develop or acquire and then hold and operate are included in the property acquisition, development, and tenant asset expenditures line item within investing activities on the statements of cash flows.
Capital expenditures for assets we develop or acquire and then hold and operate are included in the property acquisition, development, and tenant asset expenditures line item within investing activities on the statements of cash flows.
Estimates of future cash flows are based on a number of factors including historical operating results, known and anticipated trends, and market and economic conditions.
Fair value is based on estimated cash flow projections that utilize available market information and discount and/or capitalization rates as appropriate. Estimates of future cash flows are based on a number of factors including historical operating results, known and anticipated trends, and market and economic conditions.
Same Property Operating Expenses increased $2.6 million, or 1.1%, between 2022 and 2021 primarily due to an increase in physical occupancy at our properties, partially offset by a decrease in real estate taxes as well as expenses at our 3350 Peachtree office property under partial redevelopment.
Same Property Operating Expenses increased $2.1 million, or 0.8%, between 2023 and 2022 primarily due to an increase in economic occupancy at our Domain and Buckhead Plaza office properties and increased operating expenses at our 3350 Peachtree office property as we completed a partial redevelopment of the property in 2023.
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.
Our management believes that 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. Our management evaluates operating performance in part based on FFO.
For acquisitions that are accounted for as an acquisition of a business, we record the acquired tangible and intangible assets and assumed liabilities at fair value at the acquisition date. Fair value is based on estimated cash flow projections that utilize available market information and discount and/or capitalization rates as appropriate.
For acquisitions that are accounted for as an acquisition of a business, we record the acquired tangible and intangible assets and assumed liabilities based on each asset and liability's relative fair value at the acquisition date to the total purchase price.
In 2022, we leased or renewed 2.0 million square feet of office space. The weighted average net effective rent per square foot, representing base rent excluding operating expense reimbursements and leasing costs, for new or renewed non-amenity leases with terms greater than one year, was $23.39 per square foot.
The weighted average net effective rent per square foot, representing base rent excluding operating expense reimbursements and leasing costs, for new or renewed non-amenity leases with terms greater than one year signed in 2023, was $24.56 per square foot. Cash-basis net effective rent per square foot increased 5.8% on spaces that had been previously occupied in the past year.
We were able to complete the above financing transactions in a challenging debt market. As the Federal Reserve has continued to work towards managing inflation, in part by raising short-term interest rates, we have been subject to increasing costs for a portion of our borrowed capital.
As the Federal Reserve has continued to work toward managing inflation, in part by raising short-term interest rates, we have been subject to increasing costs for a portion of our borrowed capital. This is mitigated by our strategy of maintaining a relatively low-levered balance sheet; however, the impact of potential higher inflation and interest rates, if any, is uncertain.
This and other 2023 cash needs are expected to be met by a combination of some or all of the sources noted above. 34 Table of Contents Financial Condition A key component of our strategy is to maintain a conservative balance sheet with leverage and liquidity that enables us to be positioned for future growth.
We expect to have sufficient liquidity to meet our obligations for the foreseeable future. Financial Condition A key component of our strategy is to maintain a conservative balance sheet with leverage and liquidity that enables us to be positioned for future growth.
The following table sets forth the changes in cash flows ($ in thousands): Year Ended December 31, $ Change 2022 2021 Net cash provided by operating activities $ 365,166 $ 389,478 $ (24,312) Net cash used in investing activities (334,499) (191,066) (143,433) Net cash used in financing activities (35,690) (194,382) 158,692 The reasons for significant increases and decreases in cash flows between the periods are as follows: Cash Flows from Operating Activities.
Management's Discussion and Analysis of Financial Condition and Results of Operations - Cash Flows" from our 2022 Annual Report on Form 10-K for a discussion of the changes in cash flows between 2022 and 2021. 34 Table of Contents The following table sets forth the changes in cash flows ($ in thousands): Year Ended December 31, $ Change 2023 2022 Net cash provided by operating activities $ 368,362 $ 365,166 $ 3,196 Net cash used in investing activities (295,735) (334,499) 38,764 Net cash used in financing activities (71,725) (35,690) (36,035) The reasons for significant increases and decreases in cash flows between the periods are as follows: Cash Flows from Operating Activities.
Although the impact to our business of the COVID-19 pandemic was not severe, the long-term impact of the pandemic on our tenants, or prospective tenants, and the worldwide economy is still unfolding and remains uncertain. 25 Table of Contents Market Conditions Even amidst economic headwinds, we believe the Sun Belt region, and in particular the seven Sun Belt markets in which we own properties, will continue to outperform the broader office sector as we continue to see a clear bifurcation between Sun Belt and Gateway market fundamentals.
Even amidst economic headwinds, we believe the Sun Belt, and in particular the seven Sun Belt markets in which we own properties, will continue to outperform the broader office sector evidenced by a clear bifurcation between Sun Belt and Gateway market fundamentals.
Cash-basis net effective rent per square foot increased 9.5% on spaces that had been previously occupied in the past year. Cash-basis net effective rent represents net rent at the end of the term paid by the prior tenant compared to the net rent at the beginning of the term paid by the current tenant.
Cash-basis net effective rent represents net rent at the end of the term paid by the prior tenant compared to the net rent at the beginning of the term paid by the current tenant. Our same property net operating income for the year increased 5.0% on a straight-line basis and increased 4.2% on a cash-basis.
Many of our non-recourse mortgages contain covenants which, if not satisfied, could result in acceleration of the maturity of the debt. We 36 Table of Contents expect to either refinance the non-recourse mortgages at maturity or repay the mortgages with proceeds from asset sales, debt, or other capital sources.
Many of our non-recourse mortgages contain covenants which, if not satisfied, could result in acceleration of the maturity of the debt. We are in compliance with all covenants of our existing unsecured debt and non-recourse mortgages.
Term Loans On October 3, 2022, we entered into the Delayed Draw Term Loan Agreement (the "2022 Term Loan") and borrowed the full $400 million available under the loan. The loan matures on March 3, 2025 with four consecutive extension options for six months each.
The amounts outstanding under the Credit Facility may be accelerated upon the occurrence of any events of default. Term Loans On October 3, 2022, we entered into the Delayed Draw Term Loan Agreement (the "2022 Term Loan") and borrowed the full $400 million available under the loan.
This decrease from asset acquisitions is partially offset by an increase in capital expenditures on building improvements including significant redevelopments of properties and an increase in our capital expenditures related to tenant improvements and leasing costs, which are a function of the number, size, and timing of occupancy of executed new leases or renewals of existing leases.
This decrease is partially offset by an increase in our capital expenditures related to leasing costs which include tenant improvements and other leasing costs (primarily contingent commissions) and are a function of the number, size, and timing of occupancy of executed new leases or renewals of existing leases. 35 Table of Contents The weighted average leasing costs on a per square foot basis for leases signed during 2023 and 2022 were as follows: 2023 2022 New leases $13.41 $12.60 Renewal leases $9.36 $9.07 Expansion leases $6.12 $11.71 Total $10.59 $10.69 The amounts of leasing costs on a per square foot basis vary by lease and by market.
In September 2022, we entered into a floating-to-fixed interest rate swap with respect to the $350 million 2021 Term Loan that matures on August 30, 2024; this swap effectively fixed the underlying SOFR rate at 4.23% for the remaining term of the loan.
In April 2023, we entered into a floating-to-fixed interest rate swap on $200 million of our $400 million Term Loan with an original maturity of March 2025, fixing the underlying daily Secured Overnight Financing Rate ("SOFR") at 4.298% through maturity.
As of December 31, 2022, we had $56.6 million outstanding under our Credit Facility with the ability to borrow an additional $943.4 million. We also had $5.1 million in cash and cash equivalents and no restricted cash on hand at December 31, 2022.
Our material capital expenditure commitments for 2024 include $109.6 million of unfunded tenant improvements and development costs. As of December 31, 2023, we had $185.1 million drawn under our Credit Facility with the ability to borrow the remaining $814.9 million, as well as $6.0 million of cash and cash equivalents.
Same Property NOI allows management, investors, and analysts to analyze continuing operations and evaluate the growth trend of our portfolio. 30 Table of Contents Rental property revenues, rental property operating expenses, and NOI changed between the 2022 and 2021 periods as follows ($ in thousands): Year Ended December 31, 2022 2021 $ Change % Change Rental Property Revenues Same Property $ 651,370 $ 648,934 $ 2,436 0.4 % Non-Same Property 99,677 85,024 14,653 17.2 % Termination Fee Income 2,464 5,105 (2,641) (51.7) % Total Rental Property Revenues $ 753,511 $ 739,063 $ 14,448 2.0 % Rental Property Operating Expenses Same Property $ 231,587 $ 229,033 $ 2,554 1.1 % Non-Same Property 26,784 30,428 (3,644) (12.0) % Total Rental Property Operating Expenses $ 258,371 $ 259,461 $ (1,090) (0.4) % Net Operating Income Same Property NOI $ 419,783 $ 419,901 $ (118) — % Non-Same Property NOI 72,893 54,596 18,297 33.5 % Total NOI $ 492,676 $ 474,497 $ 18,179 3.8 % Same Property Revenues increased $2.4 million, or 0.4%, between 2022 and 2021 primarily due to increased occupancy at our Terminus, Buckhead Plaza, and Domain office properties and a related increase in revenues recognized from tenant funded tenant improvements.
Consolidated rental property revenues, rental property operating expenses, and NOI changed between the 2023 and 2022 periods as follows ($ in thousands): Year Ended December 31, 2023 2022 $ Change % Change Rental Property Revenues Same Property $ 743,081 $ 717,565 $ 25,516 3.6 % Non-Same Property 48,623 33,482 15,141 45.2 % Termination Fee Income 7,343 2,464 4,879 198.0 % Total Rental Property Revenues $ 799,047 $ 753,511 $ 45,536 6.0 % Rental Property Operating Expenses Same Property $ 253,243 $ 251,190 $ 2,053 0.8 % Non-Same Property 13,191 7,181 6,010 83.7 % Total Rental Property Operating Expenses $ 266,434 $ 258,371 $ 8,063 3.1 % Net Operating Income Same Property NOI $ 489,838 $ 466,375 $ 23,463 5.0 % Non-Same Property NOI 35,432 26,301 9,131 34.7 % Total NOI $ 525,270 $ 492,676 $ 32,594 6.6 % Same Property Revenues increased $25.5 million, or 3.6%, between 2023 and 2022 primarily due to an increase in economic occupancy at our Domain and Buckhead Plaza office properties and related increases in revenues recognized from tenant-funded improvements owned by us.
The following table sets forth information as of December 31, 2022 with respect to our outstanding contractual obligations and commitments ($ in thousands): Total Less than 1 Year 1-3 Years 3-5 Years More than 5 Years Contractual Obligations: Company debt: Unsecured credit facility $ 56,600 $ — $ — $ 56,600 $ — Unsecured senior notes 1,000,000 — 250,000 225,000 525,000 Term loans 750,000 — 750,000 — — Mortgage notes payable 535,241 8,274 85,842 220,125 221,000 Interest commitments (1) 448,098 111,666 165,938 95,916 74,578 Ground leases 187,144 2,087 7,729 4,016 173,312 Total contractual obligations $ 2,977,083 $ 122,027 $ 1,259,509 $ 601,657 $ 993,890 Commitments: Unfunded tenant improvements and construction obligations $ 181,270 $ 181,103 $ — $ — $ 167 Total commitments $ 181,270 $ 181,103 $ — $ — $ 167 (1) Interest on variable rate obligations is based on balances and effective rates as of December 31, 2022.
The following table sets forth information as of December 31, 2023 with respect to our outstanding contractual obligations and commitments ($ in thousands): Total Less than 1 Year 1-3 Years 3-5 Years More than 5 Years Contractual Obligations: Company debt: (1) Unsecured credit facility $ 185,100 $ — $ — $ 185,100 $ — Unsecured senior notes 1,000,000 — 250,000 475,000 275,000 Term loans 750,000 — 350,000 400,000 — Mortgage notes payable 526,968 79,087 226,881 — 221,000 Interest commitments (2) 469,474 119,019 222,186 88,216 40,053 Ground leases 185,058 2,095 7,640 4,032 171,291 Total contractual obligations $ 3,116,600 $ 200,201 $ 1,056,707 $ 1,152,348 $ 707,344 Commitments: Unfunded tenant improvements and development obligations $ 109,578 $ 109,578 $ — $ — $ — Total commitments $ 109,578 $ 109,578 $ — $ — $ — (1) Amounts presented above assume we exercise all available extension options.
Non-Same Property Revenues increased $14.7 million, or 17.2%, between 2022 and 2021 primarily due to the 2021 acquisitions of 725 Ponce and Heights Union and the consolidation of 300 Colorado upon purchase of our partners' interests in the venture in the fourth quarter of 2021, which were partially offset by the 2022 commencement of a full building redevelopment project at Promenade Central and the 2021 sales of Burnett Plaza, 816 Congress, and One South at the Plaza.
Non-Same Property Revenues and operating expenses increased between 2023 and 2022 primarily due to operations at our 100 Mill and Heights Union operating properties as they reached stabilization in 2022 and commencement of operations following a full building redevelopment project at our Promenade Central operating property in November 2022.
Removed
In May 2022, we entered into the Fifth Amended and Restated Credit Agreement (the "Credit Facility"). The Credit Facility recasts the prior facility by, among other things, extending the maturity date from January 3, 2023 to April 30, 2027.
Added
In May 2023, we refinanced the mortgage loan for our Medical Offices at Emory Hospital property in Atlanta, which is owned in a 50-50 joint venture with Emory University. The new $83 million mortgage loan matures in June 2032 and has a fixed interest rate of 4.80%.
Removed
In October 2022, we entered into the Delayed Draw Term Loan Agreement (the "2022 Term Loan") and borrowed the full $400 million available under the loan; the loan matures on March 3, 2025. In October 2022, we paid off, in full, our Legacy Union and Promenade Tower mortgages.
Added
The proceeds were used to pay off the existing $62 million mortgage that matured on June 1, 2023. We were able to complete the above financing transactions in a challenging debt market.
Removed
In December 2022, we refinanced the mortgages on our two Terminus properties in Atlanta with the existing lender. Under the new non-cross-collateralized mortgages, the maturities were extended from January 2023 to January 2031, the combined principal increased to $221.0 million, and the interest rate is now 6.34%.
Added
In September 2023, we sold a 10.4 acre land parcel outside of Atlanta for a gross sales price of $4.25 million and recorded a gain of $507,000. During 2023, we leased or renewed 1.7 million square feet of office space.
Removed
This is mitigated by our strategy of maintaining a relatively low-levered balance sheet; however, the impact of potential higher inflation and interest rates, if any, is uncertain. In April 2022, we purchased our partner's 10% joint venture interest in HICO Avalon, LLC and HICO Avalon II, LLC, which own the 8000 and 10000 Avalon office properties.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeAs of December 31, 2022 and 2021, we had $1.9 billion of fixed rate debt, including the Term Loan, outstanding at a weighted average interest rate of 4.40%.
Biggest changeAs of December 31, 2023 and 2022, we had $2.1 billion and $1.9 billion, respectively, of fixed rate debt, including the Term Loan, outstanding at a weighted average interest rate of 4.50% and 4.40%, respectively.
At December 31, 2022, we had $456.6 million of variable rate debt outstanding, which consisted of the Credit Facility with $56.6 million outstanding at an interest rate of 5.30% and the $400.0 million 2022 Term Loan with an interest rate of 5.45%.
At December 31, 2022, we had $456.6 million of variable rate debt outstanding, which consisted of the Credit Facility with $56.6 million outstanding at an interest rate of 5.30% and the $400 million 2022 Term Loan with an interest rate of 5.45%.
On September 27, 2022, we entered into a floating-to-fixed interest rate swap with respect to the $350 million Term Loan through the maturity date of August 30, 2024. This swap effectively fixed the underlying SOFR rate at 4.23%.
On September 27, 2022, we entered into a floating-to-fixed interest rate swap with respect to the $350 million Term Loan through the maturity date of August 30, 2024. This swap fixed the underlying SOFR rate at 4.234%.
Based on our average variable rate debt balances in 2022, interest incurred would have increased by $6.7 million in 2022 if these interest rates had been 1% higher. The information presented above should be read in conjunction with note 10 of notes to consolidated financial statements included in this Annual Report on Form 10-K. Item 8.
Based on our average variable rate debt balances in 2023, interest incurred would have increased by $3.9 million in 2023 if these interest rates had been 1% higher. The information presented above should be read in conjunction with note 8 and note 9 of notes to consolidated financial statements included in this Annual Report on Form 10-K. Item 8.
We also use derivative financial instruments such as cash flow hedges to effectively convert some of our variable rate debt to fixed rate debt. These fixed rate debt obligations limit the risk of fluctuating interest rates.
We also use derivative financial instruments to effectively convert some of our variable rate debt to fixed rate debt. These fixed rate debt obligations limit the risk of fluctuating interest rates.
At December 31, 2021, we had $578.5 million of variable rate debt outstanding, which consisted of the Credit Facility with $228.5 million outstanding at an interest rate of 1.15% and the $350.0 million Term Loan with an interest rate of 1.15%.
At December 31, 2023, we had $385.1 million of variable rate debt outstanding, which consisted of the Credit Facility with $185.1 million outstanding at an interest rate of 6.31% and $200 million of the $400 million 2022 Term Loan with an interest rate of 6.46%.
Added
On April 19, 2023, we entered into a floating-to-fixed interest rate swap with respect to $200 million of the $400 million 2022 Term Loan through the maturity date of March 3, 2025. This swap fixed the underlying SOFR rate at 4.298%.

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