Cousins Properties has added two properties to its Sun Belt portfolio, while also divesting an older asset. The company acquired a fully leased office property in Atlanta, entered into a joint venture to develop a mixed-use project in Nashville, Tenn., and sold an office tower in Charlotte, N.C., that was built in 1974.
Colin Connolly, president & CEO of Cousins Properties, said in prepared remarks that the company had Nashville as a target for expansion as the market fit into its Sun Belt strategy. According to Cousins’ investor presentation in July, these three transactions would make for Cousins’ entry into Nashville with a path for growth, keep its portfolio relevant and modern, and decrease the portfolio’s lease-up risk and capex requirements.
In Atlanta, Cousins acquired 725 Ponce, a 372,000-square-foot office tower, from New City LLC and its institutional partner for $300.2 million. The office was completed in late 2019 and is currently fully occupied by tenants including BlackRock, McKinsey & Co. and Chick-fil-A. The Cousins’ presentation also showed that 725 Ponce had a weighted average lease term of 12 years. The company additionally spent $4 million for a 50 percent ownership of an adjacent site that can accommodate from 150,000 to 200,000 square feet of development.
In Nashville, Cousins entered into a joint venture with a large institutional investor to develop Neuhoff, a mixed-use project in the Germantown neighborhood. The project’s first phase includes 388,000 square feet of office space, 60,000 square feet of retail space and 542 multifamily units. Cousins’ $275 million investment secured a 50 percent ownership in Neuhoff’s first and second phases. The joint venture tapped New City Properties to serve as the development manager for the project, which has an expected initial delivery beginning in the fourth quarter of 2022.
Rearranging the Sun Belt portfolio
To improve the quality of its portfolio, Cousins also sold One South at the Plaza, its 40-story Class A office building in Charlotte. The company sold the office property to Monarch Alternative Capital LP for $271.5 million. The 891,000-square-foot tower was built in 1974 and saw a full building renovation in 2019. Cousins acquired One South at the Plaza in its merger with TIER REIT in 2019 but the property has since fallen to 58 percent occupancy, after Bank of America’s lease expired in December 2020. According to Cousins, the sale of the office tower doesn’t include the adjacent College Street parking deck that was recently acquired.
Connolly said in prepared remarks that the transactions allow Cousins to recycle capital from an older capex-intensive property into more modern assets. Following the sale of the Charlotte office tower, 10 percent of Cousins’ portfolio continues to be located in Charlotte. However, the majority of the company’s portfolio remains in Austin, Texas, and Atlanta at 31 and 35 percent, respectively.