Another noteworthy aspect of Cousins Properties' portfolio is that it consists primarily of relatively newer buildings. The average year built is 2002, and 25% of its portfolio is less than five years old.
That's due largely to the company's development focus in the fast-growing Sun Belt region. It currently has 1.5 million square feet of office space under development via five projects in Atlanta, Austin, and Phoenix. It also has a vast land bank that could support 5.2 million square feet of additional developments across several Sun Belt markets.
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Cousins Properties performed well in 2020 despite the ongoing impact of the COVID-19 pandemic. The REIT's same-property NOI increased by 0.7% for the year (or 4.5% after adjusting for rent deferrals and reduced parking income caused by the pandemic).
The company benefited from strong rental collection rates, as many Sun Belt markets reopened their economies sooner than major coastal gateway markets. Further, despite the increase in remote work, Cousins signed more than 1.4 million square feet of office leases in 2020, at 13.1% higher rates than existing in-place rents.
The REIT also took advantage of uncertain economic conditions to bolster exposure to the fast-growing Charlotte market. In November, the company purchased 3.4 acres of land for $28.1 million. It anticipates developing a 600,000- to 700,000-square-foot mixed-use project on that site called South End Station.
Meanwhile, in December, the company closed the acquisition of a 329,000-square-foot creative office property known as RailYard for $201 million. Developed in 2019, RailYard is 97% leased and across the street from the proposed South End Station development.
Before the pandemic, the REIT strengthened its balance sheet by selling some assets. It closed the sale of Hearst Tower, a 966,000-square-foot office tower, to a bank for $455.5 million in March. The company previously leased the building to that bank to serve as its new corporate headquarters, giving it the option to purchase the property in the fourth quarter of 2019 at a set price, which the bank exercised.
Cousins also sold its 50% interest in Gateway Village, a 1 million square foot office property in Charlotte, to its joint venture partner for $52.2 million in the first quarter. Finally, the company sold its Woodcrest office property in the Cherry Hill market of New Jersey for $25.3 million in the first quarter. These property sales combined to generate $533 million of gross proceeds, enabling the REIT to enter the pandemic on a strong financial footing.
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Cousins Properties' Sun Belt-focused office strategy has delivered mixed results for investors in recent years.