Cousins Properties: A High-Yield REIT Poised to Outperform in the Sunbelt Office Recovery

The office real estate market is undergoing a profound transformation, driven by shifting corporate preferences for hybrid work models and a renewed emphasis on premium, amenity-rich environments. At the forefront of this evolution is Cousins Properties Inc. (NYSE:CUZ), a REIT that has strategically positioned itself to capitalize on the Sunbelt's demographic and economic tailwinds. With a 2025 acquisition of The Link in Dallas, a 93.6% leased portfolio, and a disciplined capital reallocation strategy, Cousins is not just surviving the post-pandemic office renaissance—it's thriving.

Strategic Acquisitions: Diversification and Yield Generation

Cousins' recent $218 million acquisition of The Link in Dallas' Uptown district exemplifies its focus on high-quality, lifestyle office assets. This 292,000-square-foot tower, built in 2021, is leased to investment-grade tenants like Houlihan Lokey, PMG, and McGuire Woods, with a weighted average lease term of 9.3 years. The property's 6.7% cash yield and 8.3% GAAP yield make it immediately accretive to earnings, while its location in a submarket described as “the most dense and amenitized in Dallas” ensures long-term value retention.

This acquisition is part of a broader $2.3 billion lifestyle office strategy since 2019, which includes developing $600 million in new projects and disposing of $1.3 billion in non-core assets. By prioritizing Sunbelt markets like Atlanta, Austin, and Charlotte—where demand for premium office space outpaces supply—Cousins has created a portfolio with 90% occupancy and a 4.8% FFO-per-share growth outlook for 2025. The company's net debt-to-EBITDA ratio of 4.9x further underscores its financial discipline, providing ample capacity for future strategic investments.

Leasing Momentum: Tenant Retention and Rent Growth

Cousins' 2025 leasing performance reinforces its leadership in the Sunbelt recovery. In Q1 2025 alone, the REIT secured 539,000 square feet of leases with a 3.2% cash rent roll-up, marking the 44th consecutive quarter of positive rent growth. Portfolio occupancy rose to 90%, driven by a 76% renewal rate for completed leases and a 53% share of new/expansion tenants. Key renewals, such as Veritiv's 68,000-square-foot lease in Atlanta and KPMG's expansion in Austin, highlight the company's ability to retain high-credit tenants while commanding premium rents.

The Sunbelt's supply-demand dynamics are equally compelling. JLL reports that 10 million square feet of office space have been removed from U.S. inventory since 2024, with vacancy rates for premium assets at 13% versus 19% for the broader market. Cousins' CEO, Colin Connolly, notes that the office market is “not oversupplied but under-demolished,” a sentiment echoed by the REIT's 3.2% second-generation rent growth in Q1 2025. As new construction remains minimal and corporate relocations accelerate, Cousins is well-positioned to benefit from tightening supply and rising rents.

Market Tailwinds: Sunbelt Demographics and Economic Resilience

The Sunbelt's demographic and economic fundamentals are a cornerstone of Cousins' long-term strategy. Cities like Dallas, Charlotte, and Tampa are experiencing robust in-migration, driven by affordability, job growth, and a pro-business climate. For instance, Dallas-Fort Worth is projected to see 3.3% rent growth in 2026, while Orlando and Nashville are forecasted for 4.2% and 3.8% gains, respectively. These markets are also attracting corporate relocations from coastal hubs, with Amazon, Dell, and Starbucks expanding operations in the region.

Moreover, the Sunbelt's multifamily market is transitioning into a more favorable phase. While 2025 rent growth is expected to remain modest (1.6% nationally), Yardi Matrix forecasts a return to 3–4% annual increases by 2026 as new supply deliveries decline. For Cousins, this means its lifestyle office assets—located in submarkets with low vacancy and high absorption—will continue to generate stable cash flows and appreciation.

Financial Strength and Capital Allocation

Cousins' upgraded 2025 FFO guidance to $2.82 per share reflects confidence in its capital deployment strategy. The REIT has funded the The Link acquisition through a mix of unsecured note proceeds, ATM settlements, and potential asset dispositions, maintaining a conservative leverage profile. Its focus on long-term lease terms and high-credit tenants further insulates the portfolio from near-term volatility.

Investment Case: A High-Yield, Resilient Play on the Sunbelt Recovery

Cousins Properties offers a compelling combination of income security, capital growth potential, and strategic alignment with macroeconomic trends. Its lifestyle office portfolio, anchored by high-occupancy assets in Sunbelt markets, is poised to outperform as demand for premium office space continues to outpace supply. With a 6.7% cash yield from The Link, a 4.8% FFO growth outlook, and a disciplined balance sheet, the REIT is well-positioned to deliver consistent returns in a recovering office market.

For investors seeking exposure to the Sunbelt's demographic and economic tailwinds, Cousins represents a rare opportunity to capitalize on a REIT that is not only adapting to the new normal but leading the charge. As the office market rebalances and hybrid work models solidify, Cousins' focus on quality, location, and tenant retention will likely drive long-term value creation.

Investment Advice: Cousins Properties is a buy for income-focused investors and those seeking long-term capital appreciation in a REIT with a clear, data-driven strategy. With its upgraded FFO guidance, strong tenant retention, and favorable market positioning, CUZ offers a compelling entry point in a sector poised for sustained growth.