Good day, and welcome to the Cousins Properties first quarter conference call. I would now like to turn the confrence s Properties' first quarter earnings conference call. With me today are Colin Connolly, our President and Chief Executive Officer, Richard Hickson, our Executive Vice President of Operations, and Gregg Adzema, our Chief Financial Officer. The press release and supplemental package were distributed yesterday afternoon, as well as furnished on Form 8-K. In the supplemental package, the company has reconciled all non-GAAP financial measures to the most directly comparable GAAP measures in accordance with Reg G requirements. If you did not receive a copy, these documents are available through the quarterly disclosures and supplemental SEC information links on the investor relations page of our website, cousins.com.
Please be aware that certain matters discussed today may constitute forward-looking statements within the meaning of federal securities laws, and actual results may differ materially from these statements due to a variety of risks and uncertainties and other factors, including the risk factors set forth in our annual report on Form 10-K and our other SEC filings. In particular, there are significant risks and uncertainties related to the severity and duration of the COVID-19 pandemic and the timing and strength of the recovery therefrom. The company does not undertake any duty to update any forward-looking statements, whether as a result of new information, future events, or otherwise. The full declaration regarding forward-looking statements is available in the supplemental package posted yesterday, and a detailed discussion of some potential risks, including those posed by COVID-19, is contained in our filings with the SEC.
With that, I'll turn the call over to Colin Connolly.
Thank you, Pam, and good morning, everyone. Over a year ago, COVID-19 emerged swiftly and our entire world changed nearly overnight. As we mark a year later, I am sure I share with many of you a feeling of hope that while the pandemic is not yet over, there is optimism on the horizon with the accessibility of vaccinations. I am hopeful that 2021 will be a healthier, happier, more productive year for everyone. Cousins was well prepared to weather the challenging year with our simple, compelling strategy that enabled us to operate effectively. The core principles of our strategy include, first, to build the premier urban Sun Belt office portfolio. We have focused on building concentrations in existing and potential new Sun Belt markets with the best long-term growth characteristics.
Second, to be disciplined about capital allocation and pursue new investments where our operating and/or development platforms can add value. Third, importantly, to have a best-in-class balance sheet. Finally, to leverage our strong local operating platforms with focus on an entrepreneurial approach, local market relationships, and community involvement in our high-growth markets. Today, we have the leading trophy portfolio in the best Sun Belt submarkets of Atlanta, Austin, Charlotte, Dallas, Phoenix, and Tampa. Second, we have a terrific development pipeline of $363 million that is 79% pre-leased, and attractive land sites where we can build an additional 5.2 million square feet. Our balance sheet is strong, with net debt to EBITDA of 4.87 times, and G&A as a percentage of total assets at 0.32%. This strategy positioned us to perform well during challenging circumstances. The first quarter of 2021 was no different.
Here are a few highlights of our solid Q1 results. On the operations front, the team delivered $0.69 per share in FFO. We leased 271,000 sq ft with a 10.5% increase in second-generation cash rents. We placed our 10000 Avalon development project into service. We acquired a land parcel adjacent to our 3350 Peachtree property in Atlanta for $8 million through a 95% consolidated joint venture. While these results are very solid, they reflect a time when vaccines were not widely available. Now that they are, we see a market that is on a strong path to recovery. Broadly speaking, our customers are shifting their plans to begin phased reopening of their offices during the summer, with a significant ramp-up likely after Labor Day. This is translating into significant increase in tour activity and in our leasing pipeline.
Richard will touch on this more specifically in a minute, but we are optimistic that our leasing volume is likely to improve during the second half of the year. As Cousins evaluates the role of the office, we look directly to our customers for feedback. First, let's look at what they're saying. Amazon, Google, Facebook, Microsoft, Goldman Sachs, Bank of America, Morgan Stanley. I could go on. They've all publicly communicated that their office remains core to their culture and their business. Next, let's look at what they're doing. Microsoft and Google both committed to large new hubs in Atlanta, and Oracle has announced a corporate relocation to Austin and a major expansion into Nashville. Most recently, Apple announced plans to create at least 3,000 jobs in the Raleigh-Durham area. What does this mean for Cousins?
Large, growing companies recognize the value of the office to promote culture, collaboration, and mentorship. They are migrating to the Sun Belt at an accelerated pace, and they continue to prioritize newer, highly amenitized properties. Their goal is to create a dynamic environment that excites employees to come together in person. As we near the end of COVID-19, our conviction around our Sun Belt trophy office strategy continues to grow. Looking ahead to the balance of 2021, our priorities have not changed. We are focused on creating value in our existing portfolio, including making leasing progress in our larger blocks of space. We will also look for opportunities to upgrade our already high-quality portfolio through trophy acquisitions in conjunction with compelling new development projects. We will likely fund new investments with the sale of ultra-vintage, less relevant buildings, and we are making great progress on this front.
Our recent investment activity is illustrative of our strategy going forward. In December, Cousins acquired The RailYard, a creative office asset in the South End submarket of Charlotte, for $201 million. We also purchased an adjacent land site for a gross purchase price of $28 million. On April 7th, we sold Burnett Plaza, a one-million-square-foot office property in Fort Worth, for a gross sales price of $137.5 million, and with that, exited a non-core market. Last night, we announced plans to commence construction on Domain 9 in Austin, where we have a growing pipeline of demand from small, medium, and large customers, some already in Austin and some potentially new to the market. As I mentioned earlier, we have a simple and compelling strategy at Cousins. These transactions showcase our creativity as we execute that plan.
Leveraging our balance sheet and our development platform to assemble the premier Sun Belt office portfolio, which is positioned to capture outsized customer demand while maintaining a lower CapEx profile. At the same time, we are generating attractive value add returns for our shareholders by blending acquisitions and development with discipline. As our customers' preference for trophy office accelerates, we are responding. As our Domain 9 project illustrates, we are not opportunity-constrained at Cousins. However, we continue to look at potential new markets in the Sun Belt that benefit from continued migration of people and companies. Nashville is one example. Expanding in Dallas is another. 2021 is a transitional year for Cousins from an earnings and occupancy perspective. Our financial results will reflect several known move-outs from past value add acquisitions, such as 1200 Peachtree and 3350 Peachtree in Atlanta, and One South at The Plaza in Charlotte.
With lockdowns easing, we have begun executing our business plans to reposition these exciting projects, and we are seeing leasing opportunities grow. As we look to the future, Cousins is uniquely positioned to deliver long-term growth for our shareholders. Importantly, we have the right balance sheet with low leverage and ample liquidity to capitalize. Before turning the call over to Richard, I want to thank our entire Cousins team who provide excellent customer service and bring their talents and dedication to the company every day. They are the reason for our success. Thank you. Richard?
Thanks, Colin, and good morning, everyone. Like all of you, the Cousins team was excited to leave 2020 behind and focus on executing in a new and hopefully more positive year. Our strong first quarter operating results reflect that excitement and focus, and we are very pleased with how this new year has kicked off. As I've done since the pandemic started, I will begin with general business conditions. First, physical customer utilization continues to track at an average of about 20% across the company. With that said, utilization is not consistent across markets or even among buildings within each market. For instance, our Atlanta, Dallas, and Tampa portfolios are all running at about a 30% or higher average utilization rate.
I also want to point out that activity and energy at many of our buildings, even in the markets that still have lower overall utilization, are building momentum with each passing month. Whether within our portfolio or generally speaking, we are hearing of more and more companies planning to return to the office in some capacity during 2021. We continue to believe the back half of the year should usher in more broad-based increases in utilization, however, with the full effects potentially not being felt until 2022. With regard to rent collections, they remain strong. Similar to last quarter, we collected 98.8% of rent from all customers and 99.1% of rent from office customers in the first quarter. Let's turn to first quarter operating results. Recall that in February, we said 2021 would be transitional for Cousins, including occupancy.
As expected, our total office portfolio leased percentage and weighted average occupancy declined to 90.2% and 89.3% this quarter respectively. The biggest driver of occupancy by a wide margin was Bank of America's final phase of expiration at One South in Charlotte, which took occupancy at this 891,000 sq ft project to 57.3%. A second driver, albeit much smaller, was the addition of our 10000 Avalon new development in Atlanta to the operating portfolio, adding about 50,000 sq ft of highly desirable first-generation office vacancy. I would note that leasing interest at 10000 Avalon is very encouraging. Looking to the balance of 2021, our occupancy will continue to trend down into the second half of the year, largely due to the long-anticipated 200,000 sq ft move-out of Anthem at 3350 Peachtree at the end of June.
With that said, and as we have said previously on other calls, our occupancy will benefit late in the year from the positive impact of some known commencements from new deliveries, most notably at The Domain in Austin. As for leasing activity, we executed 271,000 square feet of leases this quarter. We view this as solid volume, given we are still operating in a pandemic. I would like to share some observations about our leasing activity this quarter that we see as encouraging. First, we executed leases in every one of our core markets, which has not always been the case during the pandemic. Not only that, we executed at least one new lease in all but one core market. Second, we executed the highest overall number of leases since the first quarter of 2020, increasing 43% over last quarter.
Finally, new and expansion leasing as a proportion of total leasing activity increased versus last quarter, coming in at 30% of our total leasing activity. We acknowledge we are not yet back to pre-pandemic form, but we do see these characteristics as reflective of a clearly improving leasing environment. I'm also pleased to report that rent growth remained remarkably strong in the first quarter, with second generation net rents increasing 10.5% on a cash basis. With this continued rent growth and concessions only modestly higher than our eight-quarter run rate, net effective rents this quarter came in at a solid $23.53 per square foot. I have one more fact about our recent lease economics that I think is important to point out.
During the 12 months ended this quarter, essentially the time horizon of the pandemic to date, our completed leasing activity yielded weighted average net effective rents 1.1% higher than our completed activity during the 12 months leading up to the pandemic. This is an outstanding achievement in a difficult operating environment and is a testament to the quality of our team and portfolio. Across the Sun Belt, economic activity is recovering and expected to be even more robust later this year and beyond. As we have said many times, migration to the Sun Belt is only accelerating through the pandemic. In fact, inward migration to Florida is back to over 1,000 people a day. Not surprisingly, Austin has become the top destination in the country for potential commercial real estate investment, according to CBRE, due to the resilience of its labor market and an outlook for steady and attractive growth.
Further, per JLL, Austin has seen twice as many new jobs announced in the first two months of 2021 than in all of 2020. The same JLL study found that Dallas, Phoenix, and Atlanta were also among the top-performing cities in 2020 with regard to overall job retention. As I mentioned earlier in my remarks, more and more companies are announcing plans to return to the office. Importantly, they are also vocalizing the view that time together as a team in an office is critical for healthy culture, collaboration, and career development. As a result, many major global companies no longer plan to reduce their use of their offices after the pandemic. I'm sure many of you have already seen the recent KPMG survey that found just 17% of senior executives plan to reduce their usage of office space, down from 69% in the last survey in August.
This is a staggering change in sentiment to the good. With companies now willing to make longer-term decisions and data points like the one from KPMG, you will not be surprised to hear that our leasing pipeline has improved considerably over the past couple of months. The most noticeable increase in activity has been in our early-stage leasing pipeline, which we define as tour and proposal activity. Specifically, this quarter, the number of active proposals outstanding increased 68%, and the number of space tours increased 89% compared to the fourth quarter of 2020. This is an exciting trend, but please remember this is early-stage activity that typically takes a number of quarters to translate into signed leases, occupancy, and net operating income, if at all.
While the pandemic is certainly not over, we are cautiously optimistic about the balance of the year ahead of us. Absent a negative catalyst not seen today, our markets are well positioned for a sustained recovery, and our teams in the markets are excited about the opportunities we have in front of us. Before handing off to Gregg, I want to thank my Cousins teammates. They continue to focus on our goals, work hard every day, and drive impressive results. Thank you to each and every one of you. Gregg?
Thanks, Richard, good morning, everyone. I'll begin my remarks by providing a brief overview of our quarterly financial results, including some detail on our same property performance, our development pipeline, and our transaction activity, followed by a quick discussion of our balance sheet and dividend, before closing my remarks with updated information on our outlook for 2021. Overall, first quarter numbers were solid and have held up well since the onset of the pandemic. FFO was $0.69 per share. Same property cash NOI declined 2.7% year-over-year, as Richard said earlier, cash rents on expiring leases rose by a very healthy 10.5%. Before moving on, I did want to highlight that we have increased cash rents on expiring leases every single quarter since the onset of COVID-19 last spring, with a weighted average increase of 12.4% over that period.
Focusing on same property performance, first quarter results represent a positive change in trend and are an improvement over the previous two quarters, which averaged year-over-year cash NOI declines of 3.1%. This improvement took place despite Bank of America's departure from our One South property that was discussed earlier. If we pull One South out of our same property pool to get a better sense of performance for the balance of the portfolio, same property cash NOI, adjusting for COVID-19 related parking losses, increased 2.7% compared to the first quarter of 2020. Turning to our development efforts, one asset, 10000 Avalon, was moved off of our development pipeline schedule and into our portfolio statistics schedule during the first quarter. The remaining development pipeline represents a total Cousins investment of $363 million across 1.3 million square feet in four assets.
Our remaining funding commitment for this pipeline is $94 million, which is more than covered by our existing liquidity and future retained earnings. On the transaction front, we closed one land acquisition during the first quarter and one property disposition subsequent to quarter end. We also refinanced a maturing construction loan during the first quarter. I'll start with the land purchase. In mid-March, a land parcel was acquired in Buckhead next to our 3350 Peachtree operating asset for $8 million. This transaction was completed through an existing 95/5 joint venture partnership with Cousins investing $7.6 million. The partnership already owned an adjacent parcel, and with this acquisition, it now controls the entirety of what is the last surface parking lot located in the core of the Buckhead submarket, often referred to as the Buckhead Loop.
Subsequent to quarter end, we sold Burnett Plaza in Fort Worth for a gross sales price of $137.5 million. Built in 1983, Burnett Plaza was 80% leased at the time of sale. We acquired it through the TIER merger in 2019, and it was identified as a non-core asset from the very beginning. Proceeds from the sale were used to help fund the prior acquisition of The RailYard in the South End submarket of Charlotte. Finally, we refinanced the outstanding construction loan on our Carolina Square mixed-use property in Chapel Hill during the first quarter. A new $135.7 million non-recourse loan was obtained, replacing the original $77 million construction loan. The proceeds from this refi exceeded the partnership's original equity contribution and are a clear third-party validation of the value that we created there. As a quick reminder, Carolina Square is held in a 50/50 joint venture partnership.
Looking at the balance sheet, we entered this period of volatility with outstanding financial strength, among the very best among our office peers. Our debt maturity schedule is balanced, our liquidity position is strong, and our leverage is low. At the end of the first quarter, our net debt to EBITDA was 4.87 times. Proceeds from the Burnett Plaza sale are not reflected in this number since it happened after quarter end. Incorporating the Burnett Plaza sale, as well as the potential Dimensional Place sale, which I'll discuss in a moment, will reduce this ratio to approximately four and a half times. We also increased the dividend during the first quarter by 3.3%. This follows a similar increase last year. Our underlying cash flow growth has allowed us to deliver consistent dividend increases even through the COVID-19 pandemic.
Our dividend policy is set by our board and is based on an FAD payout ratio between 70% and 75%. Last year, our FAD dividend payout ratio was 68%. Needless to say, our dividend is well covered by cash flow. I'll close by updating our 2021 earnings guidance. We currently anticipate full year 2021 FFO between $2.68 and $2.78 per share. This is down $0.08 at the midpoint from our previous guidance of $2.76-$2.86 per share.
The change is entirely driven by the completed sale of Burnett Plaza and the assumed sale of our Dimensional Place investment this summer. As we've stated before, our joint venture partner, Dimensional Place, has a one-time purchase option, and while they have not provided formal notice, we have received strong indications that they'll exercise their option in the near future. Hence, our inclusion of the sale in our guidance. The start of Domain 9 during the second quarter has no material impact on our guidance, and there are no other dispositions, acquisitions, or development starts included in our guidance. With that, I'll turn the call back over to the operator for your questions.
Our first question comes from Blaine Heck with Wells Fargo. Please go ahead.
Hi. Great. Thanks. Good morning. You guys talked about proposals up 68%, tours up 89%. Maybe for Colin or Richard, I know you guys signed leases in every market during the quarter, but were there any standouts? Were there any markets or properties where you saw particularly really strong activity?
Well, Blaine, good morning. As Richard mentioned, activity has picked up quite significantly across all of our markets, and we are seeing success, both in signed leases and in growing pipelines across the portfolio. I would highlight, though, a couple of markets that we're seeing some outperformance. I'd say, notably Austin continues to benefit from the in-migration into Austin. It's been widely publicized in several large announcements of tech companies. Another market where we're seeing really strong progress is here in Atlanta for some of the same reasons. Large announcements from Microsoft and Google, there are others that are behind that. I'd say similarly, you're seeing these large, growing tech companies look to really strong technology talent here in Atlanta, but also very diverse talent.
We think that's a trend that's going to continue, and we're seeing some of the kind of early positive signs from that.
This is Richard. The only thing I'd add is we saw some really encouraging new activity and overall activity at our Buckhead Plaza project in Atlanta. We've decided to make an investment in repositioning that asset a couple of quarters ago, and it's really paying dividends. It's encouraging to see the market responding to reinvestment in that property.
Great. Very helpful. Colin, we've talked about whether you guys would expand to any different markets before. Typically, I think Nashville comes up in the conversation as the most likely new market. I think you actually mentioned it in your prepared remarks. I wanted to also see whether you guys have a view on Raleigh, especially in light of the recent Apple announcements.
Yeah, Blaine, we currently do have a presence in the Raleigh-Durham market with our Carolina Square mixed-use project in Chapel Hill, where we've got an office building, and a multi-family, and retail component. It's certainly a market that, again, we've got exposure and have visibility into and continue to watch. If we can find, again, the right opportunities and entry point, we're open to all the markets in the Sun Belt that have got scale, importantly, have a strong urban core where we feel like we could aggregate the type of assets that can compete on things beyond just price, and then have some of the larger kind of structural tailwinds to it, whether it's great university systems, airports, other infrastructure like mass transit. We look at opportunities across the spectrum in the Sun Belt for markets that meet those criteria.
That's helpful. Thanks, guys.
Thanks, Blaine.
Thank you.
Our next question comes from Dave Rodgers with Baird. Please go ahead.
Yeah. Good morning, everybody. Colin, wanted to follow up just on the Nashville and Dallas comments. I think it definitely comes up in conversation. This time you started that conversation in the prepared comments. I'm kind of curious maybe to talk a little bit more about development opportunities that you're seeing, as well as given the strong balance sheet acquisition pipeline that you're looking at today, given the fact that you did mention those two cities in particular.
Yeah, again, I think we certainly don't feel, as I mentioned earlier, opportunity-constrained in our existing markets. At the same time, right as we see compelling new investments that could be made, whether acquisitions or development in new markets, we spend a lot of time throughout the Sun Belt in places like Nashville. We have a nice presence in Dallas today. Again, seeing some of the migration out of the West Coast and Midwest into Dallas, we think that's a market that we could hopefully grow over time. As we look forward to the balance of 2021, I'd say, broadly speaking, one, we're seeing the capital markets begin to open, and not just for
Core acquisition opportunities, more broadly as investors see the return to office and potentially step out on the risk spectrum. I said this last year, I think people would be surprised that we could see some new development opportunities earlier than some might think. Again, that's just driven by our customers who continue to prioritize higher quality, newer, amenitized-type buildings where they're confident they can attract their employees and their teams back into the office and in person. Again, we're excited about Domain 9 out in Austin, and we're hopeful we might see some other similar situations later this year, or certainly into next year.
Great. I think maybe for Richard, you guys have obviously talked about the demand in the pipeline for quality amenitized space. I guess maybe to dive a little further in terms of the size ranges, the activity that you're seeing between small and large tenants, and the tone of those discussions as they're unfolding.
Sure. That's a great question. I'd say that the demand in our pipeline is really broad-based. We have a lot of conversations and activity happening at every size within our portfolio. I think we've always trended or been a kind of larger user tenant base. Yeah, we're seeing it at every level in terms of size.
I guess last, just could you give us an update on the three kind of known or expected vacates in the portfolio and kind of the specific activity that you're seeing at each one of those?
Sure. Sure. Again, the activity is up overall, and those three opportunities are no exception. Yeah, I'd say that, like we've indicated in the last couple of quarters, the activity on the two Atlanta opportunities, 1200 Peachtree, and 3350 Peachtree, are pretty robust. I'm looking at a pipeline report for 1200 Peachtree, and we've got prospects at various stages totaling over 500,000 sq ft. At 3350 Peachtree, we're over 200,000 sq ft. At One South, we've continued to be a little quieter there. Charlotte, broadly speaking, is starting to wake up as well. We're seeing inquiries and market activity perk up there as well.
Yeah, just keep in mind, Dave, in terms of looking at, as an example, 1200 Peachtree, we don't get that space back until really the end of the year. Where we are with the early-stage pipeline, I think we're very encouraged about that. Again, we won't get that space back till the end of 2021.
Right. Got you. All right. Appreciate the color, guys. Thank you.
Our next question comes from Jamie Feldman with Bank of America. Please go ahead.
Thank you. Gregg, are you able to provide some more guidance on occupancy? I know you guys said the trajectory will be down in the second quarter and then start to increase, but can you maybe provide some thoughts on magnitude, or I don't know if you provided a year-end occupancy target?
Jamie, even pre-COVID, occupancy was not a metric that we provided guidance on, so it's not something that we're holding back. We're not being coy. We're not trying to not provide guidance that we've provided in the past. The trend that Richard described earlier in the call is intact. We've got these couple large move-outs that Richard just tackled, and we'll need to backfill them. I think in the short term, you'll see occupancy reflect that. We do have some good stuff happening in Austin, particularly in the Domain, which will offset a lot of it from both an occupancy perspective and a cash flow perspective.
Yeah, Jamie, I think, again, that our comments reflect, as Gregg said, a couple of the larger known kind of move-outs. We don't anticipate other kind of surprises are out there with other move-outs that we haven't discussed. With Anthem moving out in the middle part of this year and with new leasing being a little bit slower during the pandemic, I think the combination of those two has the trend a little bit lower over the course of the year. Again, we're very optimistic with the ramp-up in the pipeline that we can backfill that and kind of create positive leasing momentum as we get into the second half of the year.
Okay. That's helpful. Then maybe if you could just provide more discussion or more thoughts on starting Domain 9 spec. Just what are the conversations like for that space specifically? Then, we see the stats on Austin with sublease up and vacancy up. How do you think that market plays out that gives you more confidence to start that project?
Well, we never make a decision to move forward on a speculative development project lightly. I would share with you, we made the decision on Domain 9 with a lot of confidence and a lot of conviction. I'd say specifically about
The supply and demand fundamentals out at The Domain, broad-based about the activity in the in-migration into Austin. As we looked holistically at the market fundamentals, limited to really no new supply in the core of The Domain, and the preliminary inquiries from customers, both small, medium, and large, we had a lot of confidence. Again, there's always risk in starting a new project speculatively. We looked at this and viewed, though, that there was risk to not starting this project with the way things were kind of shaping up in the market. We're excited to get it started and continue the momentum out at The Domain.
Okay. Then how do you envision it in terms of large anchor? What size would you be targeting for an anchor, or do you think it'll be more small tenant?
Jamie, I think it could be any of those or a combination thereof. As I mentioned, there is potential interest from some very large customers. There is certainly interest in the midsize, I'd say. Those folks looking for a floor, two floors, three floors. There's kind of broad-based interest, and over time, our team will work through it and try to piece that together the best way. We obviously like one big large customer, and we've had success out in The Domain doing that. We'll piece it together over time.
Okay, what are your thoughts on downtown and how things are shaping up there?
We continue to have a lot of confidence, as I said, in Austin as a whole. Downtown, we've got a great portfolio of trophy assets, and we're seeing activity pick up quite nicely in Downtown Austin. There's been a lot of discussion about sublease activity in Downtown Austin ticking up over the course of the pandemic. That was not entirely surprising to us as you saw certain companies that had probably prospectively banked some square footage in real estate in anticipation of hiring new talent. When those efforts were put on pause to hire talent last year, I think you saw some response on the sublease side. As we've moved into this year, the inbound activity into Austin, we think, will, over the next 12 months, certainly bring that market back to stabilization.
We've already started to see some signs of customers who put space on the sublease market, when they were ultimately forced to make a decision with other customers willing to take the space, in some instances, been pulling that back off the market.
Okay, great. Thank you.
Thanks, Jamie.
Our next question comes from Daniel Ismail with Green Street. Please go ahead.
Great. Thank you. Maybe one for Richard. Relating to Jamie's question, can you speak to the desire of these large tech companies coming into the Sun Belt to locate in the downtown versus maybe a more suburban area? I'm thinking of, say, Downtown Austin versus The Domain.
Sure. I think broadly speaking, what the large tech users are looking for are one critical mass in one location oftentimes, but then that location being in an area which is highly amenitized, whether it be within the building, but even more importantly in the neighborhood. You're seeing these companies announce whether it's relocations or expansion and consolidation within a market they're already operating in, wanting these more urban locations, frankly, than they are wanting to put an isolated campus out in the suburbs. That trend, frankly, we were seeing that really before COVID, and I think it's only continuing.
Yeah, I'd just add, Daniel, in terms of if you look at Austin as an example, The Domain's only 15, 20 minutes from downtown. Both The Domain and downtown are obviously highly amenitized, kind of mix of uses, attractive environments. I think in many cases, it's specific to the company and, in some instances, it's specific to the particular use. I'd use Facebook as an example, that's got both a large presence downtown, and they've also got a large presence out in The Domain. Again, I think you almost have to drill down deeper into the company and the particular group and the particular use that oftentimes influences where they want to put that particular use.
Got it. Pre-COVID, I believe development yields in aggregate on the development pipeline was around 7%-8%. Can you provide an update on where development yields sit today? Are there any Sun Belt markets where development just doesn't pencil or might be too risky at this point?
Well, we have not seen a substantial change in development yields, broadly speaking. I think the range that you mentioned is a fair assessment, depending on the market, depending on the risk profile of the project. One thing we are watching as we come out of COVID-19 that could impact development returns is any movement in cap rates. They, for trophy assets, have been relatively stable. We are seeing an influx of new capital into the Sun Belt from some very large institutional investors that I think recognize the trends that we talk about, the migration of the Sun Belt and the flight to quality. If cap rates were to tick down, that could apply pressure to development yields. I think, again, stepping back to your question, any markets that we wouldn't pursue development, we take that on a case-by-case basis.
As I mentioned, as we evaluated the Domain opportunity, we look at the market dynamics, market fundamentals, where is vacancy today, what does incoming demand look like? Then importantly, is there other new supply? We just take that on a case-by-case basis.
Just last one for me. Given all the strength of the demand you've been discussing and where the stock is trading today, how are you thinking about using public equity to fund growth?
Hey, Dan, it's Gregg. Good morning. As compelling uses emerge for capital, we'll look at our options at that point in time, and make a decision. We're going to use the most efficient capital available to us at the time that the need arises. Sometimes that's property sales, and it's been property sales for quite a while, but at points in the cycle, it can be equity as well. It's a case-by-case decision that we'll make. There's no kind of blanket answer for you. I would say that there are some strategic reasons sometimes to sell an asset that might be taken into consideration as well as the cost of capital. It might be an asset with a poor risk-reward profile. It might be an asset with some significant CapEx requirements that we don't think we'll get paid back for.
There's a lot of other reasons as well. Yeah, numbers are important for sure. Sometimes there are other considerations that we look at as well.
Great. Thanks, everyone.
Thanks, Danny.
As a reminder, if you have a question, please press star, then one to be joined into the queue. Our next question comes from Joab Dempsey with Truist. Please go ahead.
Hi. Good morning, everyone. Just one from me. I'm wondering if you took a look at the Preferred Apartments portfolio that Highwoods ultimately bought, particularly the Charlotte assets. Thanks.
Good morning. We have in the past looked at the various properties and assets that were included in that transaction, and we know them well. We have not specifically in the past targeted those assets to buy. We have looked at them in the past.
Great. It seems to be addressed earlier in the questions, but if a portfolio, I know there's no acquisitions guidance numbers in your guidance, but if a high-quality portfolio, say, in the Charlotte market were to come up again, would you consider looking at that?
Yeah. We look at all opportunities across the Sun Belt and the markets that we target and are core to us, whether those be single asset acquisition, portfolio acquisition, new development opportunities. We try to, at Cousins, look at all of the different opportunities that are out there, then try to allocate our capital in a disciplined yet compelling manner. We're open to all sorts of transactions and I think have demonstrated that in the past.
Okay, great. Thank you.
Our next question is a follow-up from Jamie Feldman with Bank of America. Please go ahead.
Great. Thanks for taking the question. I just wanted to get your latest thoughts on capital sources looking at the markets, now that things are improving. You talked about your tenant activity picking up. Would you say there's a change in demand for assets or a change in amount of capital that's looking and willing to pay different lower cap rates or get more aggressive on underwriting? Just curious for the latest update.
Yeah. It's obviously still kind of early coming out of COVID-19, you haven't seen the volume of closed transactions meaningfully increase. As I mentioned earlier, we do anticipate that increasing over the balance of this year and certainly into next year. Just based on activity we've seen in the market in terms of new investors looking at Sun Belt markets, whether it be large institutional investors that historically were only focused on the gateway markets, international capital, we are seeing more investors spending time looking at places like Atlanta and Charlotte and Austin, Dallas, and others. Again, I think it's just driven by the capital is seeing where the people are going, the companies have been following, and I think the capital is taking note of that. We would anticipate to see more of those investors participate in the market.
Do you have any appetite to do larger JVs or funds with more capital flowing into the region?
As Gr egg mentioned earlier, when we see uses of capital, kind of compelling new investment opportunities, we look at all of our sources of capital, whether that's dispositions or JV capital, and try to make the best decision for the specific opportunity. At Cousins, we don't feel capital-constrained today, and we do like the simplicity of our balance sheet, and that allows us, in many cases, to move forward. If there were a strategic reason for a joint venture or bringing in a partner, we absolutely will consider those if they've got strategic merit.
Okay, great. Thank you.
This concludes our question and answer session. I would like to turn the conference back over to Colin Connolly for any closing remarks.
That's okay. It is a bit of a tongue twister. I want to thank everybody for your interest in Cousins Properties and participating in today's investor call. We'll look forward to seeing, hopefully, many of you at the NAREIT conference in June. If you've got any questions for us, please don't ever hesitate to reach out to Gregg or Roni. Thank you all, and have a great weekend.
The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.