Earnings Call: Q1 2019

Apr 25, 2019

Quarterly report

Good day, ladies and gentlemen, and welcome to the Cousins Properties First Quarter Conference Call and Webcast. All participants are currently investing only mode and should you need assistance, please signal and conference specialist by pressing the star key followed by 0. Please note that this event is being recorded. I would now like to turn the conference over to Pam. Go ahead. Good morning, and welcome to Cousins Properties' 1st 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 Greg Adzema, our Chief Officer. The press release and supplemental package were distributed yesterday afternoon as well as furnished on Form 8 ks. 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 link on the Investor Relations page of our website. As you may be aware, on March 25, 2019, we announced the execution of a merger agreement between Cousins Properties and TIER REIT. A separate press release was issued and the investor presentation with a a registration statement on Form S-four that includes the preliminary joint proxy statement and perspectives regarding the proposed transaction. The registration statement has not yet become effective. A definitive version will be mailed to Cousins and TIER stockholders when it is available. You should review the definitive proxy statement and other materials filed with the SEC carefully when they become available as they will include important information regarding the proposed transaction, including information about certain of the directors and executive officers of Cousins and of proxies with respect to the proposed transaction. Information about each of Cousins and Peer's directors and executive officers are contained in our respective filings with the SEC and will be contained in the definitive joint proxy statement and prospectus. This call will focus on our 2nd quarter results, and we request that you can find your questions and comments to these results and not the announced merger. 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, uncertainties and other factors, including the risk factors set forth in our annual report on Form 10 ks and our other SEC filings. 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 contained in our filings with the SEC. With that, I'll turn the call over to Colin Conlin. Thank you, Pam, and good morning, everyone. At Cousins, it all starts with strategy. We strive to be the preeminent Sunbelt office REIT. To accomplish this goal, we execute the business around 4 core operating principles. 1st, own the premier Sunbelt portfolio in the best submarkets across our geographic footprint. 2nd, maintain a disciplined approach to capital allocation with a focus on new investments where our platform can add value. 3rd, preserve our platform can add value. 3rd, preserve our best in class balance sheet to provide financial flexibility for future opportunities. And 4th, leverage strong local operating platforms that take an entrepreneurial approach. While this strategy might sound simple, we believe that it's unique, compelling and supported by powerful long term trend. To highlight, the population in New York City, Chicago and Los Angeles all declined in 2018 according to the latest U. S. Census data. Meanwhile, population growth in all 6 of our markets remain robust. In many respects, the data confirms what we already knew. A migration to the Sunbelt is well underway, which is attracting large users of office space who are in search of talent, lower costs and a pro business environment. Importantly, these trends are translating into positive real estate fundamentals in our Sunbelt office market. And our team at Cousins continues to capitalize as we had an exceptionally active and productive Q1. On the operations front, the team delivered $0.20 per share in FFO with same property cash NOI up 4% and 2nd generation cash rents up 7.1%. Richard and Greg will provide more detail on our leasing and financial results in a moment. Turning to our investment activity, we entered into a series of strategic agreement with Norfolk Southern, leveraging Orion's view of the particulars. First, Cousins will develop a new corporate headquarters for the company in Midtown Atlanta, recognizing associated fee income $52,300,000 through 2022. In addition, the company acquired 1200 Peachtree, a 370,000 square foot office building at a main and main location in Midtown Atlanta for 82,000,000 or $2.22 per square foot. In conjunction with the purchase, Norfolk Southern executed a lease for 100% of the building with an expiration in December 2021 at a rental rate that equates to a year 1 GAAP yield of 11.5%. Overall, this off market deal is a highly accretive for shareholders and highlights the power of our relationships and creativity. In Charlotte, we delivered Dimensional Place, a 281,000 Square Foot Regional Headquarters for Dimensional Fund Advisors. This project located in the growing South End submarket sets a new standard for innovation and quality in the Southeastern United States. Our relationship with DFA dates back to 2,005. So we are thrilled to be partners with this great company once again. Our existing development pipeline, which totals approximately $200,000,000 at share remains on track. In Atlanta, 120 West Trinity, our mixed use project, which we are developing in a joint venture with Amelie, will deliver in phases during the Q4 of 2019 and the Q1 of 2020. 10000 Avalon, which is on schedule to deliver during the Q1 of 2020 continues to receive significant customer interest. While the project remains 40% pre leased at quarter end, we are currently in lease negotiations with several prospects, which would increase pre leasing to approximately 60%. Highlight the depth of interest, the rental rate in our most recently executed LOI is at $34 triple net, which is on par with Buckhead and Midtown lease economics. In Austin, we commenced construction on 300 Colorado during the Q4 of 2018 and the project is on schedule to finish during the Q1 of 2021. As you might recall, we upsized the building by 2 floors to increase the size to 358,000 square feet after signing a 302,000 square foot headquarters lease with Parsley Energy. Parsley has the right to lease these 2 additional floors through November 2019. I would like to provide an update on our pending merger with TierReit. We filed our preliminary registration statement last Friday and continue to expect to close the transaction by the Q3 of 2019. The integration planning and preparation is on track and progressing well. Overall, we remain extremely enthusiastic about the deal. Let me remind you of the strategic merits. First, our highly complementary portfolios on a combined basis represent an unmatched collection of trophy office properties balanced across the premier Sunbelt market. Next, the combined company will have exceptional growth and value creation opportunities going forward, including an attractive development pipeline, strategic land sites and below market in place rent. Lastly, we believe that the transaction will be accretive over the long term to both NAV and FFO as we realize value from TIER's significantly pre leased development pipeline and benefit from $18,500,000 of anticipated immediate G and A synergy. Importantly, we were able to execute the transaction while retaining a best in class balance sheet, which provides financial flexibility and capacity for future growth. In closing, we had a terrific quarter at Cousins. We announced a compelling transaction with Norfolk Southern, announced a transformative merger with TIER REIT and delivered fantastic operating results. Before turning the call over to Richard, I want to express my thanks to the teams at both Cousins and TIER for their tireless work and effort. It is recognized and appreciated. Richard? Thank you, Colin. As you can tell from Colin's remarks, 2019 is off to a strong start overall and operations within our existing portfolio are no exception. At the portfolio level, we completed 682,000 square feet of leasing this quarter, including the 370,000 square foot lease with Norfolk Southern that Colin previously described. Excluding the sizable shorter term lease, the average lease term of our quarterly activity was 8 years and our average net effective rents were slightly higher than for the full year 2018. Rent growth remains at strong levels with 2nd generation net rents increasing 22.8% on a GAAP basis and 7.1% on a cash basis. With this activity, our portfolio weighted average occupancy for the quarter ended at 92.7% and we were 94.9% leased. Looking forward, a modest 4.7% of our leases are set to expire during the remainder of 2019. Broad themes throughout all of our markets continue to be solid population and job growth, record high rental rates, stable or declining vacancy with an increasing prevalence of construction activity. Turning to the markets. Atlanta continues to be very healthy and our overall activity was particularly strong. According to JLL, Atlanta Class A rental rates hit historic highs yet again, up 5.6% over last year. CBRE noted that Q1 2019 overall net absorption reached its highest levels since the end of 20 15 at 583,000 square feet. Our Atlanta team executed 588,000 square feet of leasing this quarter. As I already mentioned, the most notable lease in Atlanta was the 370,000 Square Foot Norfolk Southern Regional Headquarters lease executed in connection with our larger arrangement with Norfolk Southern. This lease represents temporary space for the company during construction of their new Midtown headquarters. In Buckhead, we signed a new 46,000 square foot lease with FLEETCOR at Terminix, completely backfilling the Bain space that expired in March. FLEETCOR is a Fortune 1,000 company and will relocate its global headquarters to Terminus from suburban Atlanta with a planned move in during the Q4 of 2019. Wipcor's decision to choose Terminus as its new home is a testament to the project's location, high quality and abundant amenities. Activity at Terminus and in Buckhead generally remains encouraging and we look forward to reporting further leasing progress in future quarters. Moving to Austin, it should be no surprise that this continues to be one of the most dynamic office markets in our portfolio and arguably the country. No other statistic captures this better than recent rental rate growth. For JLL, overall asking rental rates grew 17% from the Q1 of 2018. According to CoStar, Class A vacancy in the CBD continues to run at just 5%. Our portfolio, which is primarily in the CBD, ended the quarter at 95.5% leased. Construction activity continues to be a major theme across the market and we are tracking it very closely. However, demand continues to meet supply. While Austin market headlines have centered largely around significant moves by flexible office operators and large cap technology companies, our team signed important leases during the quarter with customers in a range of sectors, including a 40,000 square foot long term renewal of Wells Fargo and a 19,000 square foot new lease with an energy services company, both of which were at 111 Congress. Across the market, the team signed over 70,000 square feet of leases during the quarter and the pipeline looks solid. In Charlotte, our CBD portfolio continues to track at nearly 99% leased with very few lease expirations in the near term. CBRE recently noted that market vacancy rates are at pre recession lows and asking rates are at record highs. JLL pegged CBD net absorption for the quarter at 460,000 square feet, which is the bulk of the market's overall absorption in the quarter. Further, JOL shows year over year rent growth at 6.5%. Like our other markets, construction activity bears watching, but of the roughly 2,000,000 square feet of Class A construction in Uptown, we estimate that over 2 thirds is pre leased. Given our high occupancy and limited expirations position, the operating team remains laser focused on our few vacancies and key future renewal opportunities. I'll wrap up with Tampa and Phoenix. Fundamentals in both cities continue to show strength, most notably in the Class A segments of the Westshore and Tempe submarkets where our portfolios are concentrated. Despite very healthy macroeconomic and real estate market fundamentals, we had a quiet quarter in both markets from a leasing perspective. We view this as primarily driven by a lack of available space in our portfolios as we are approximately 94% 96% leased in Tampa and Phoenix respectively. Regardless, our teams are as busy as ever working on great leasing opportunities with both new and renewing customers. One final note is that you will see that the weighted average occupancy at Harborview Plaza in Tampa increased 9.5% quarter over quarter. This was driven by the commencement of our previously announced new full floor customer at that property. Harborview continues to garner a lot of interest from potential new customers and we are optimistic about making significant progress on backfilling the rest of the remaining vacancy soon. With that, I'll turn it over to Greg. Thanks, Richard, and good morning, everyone. I'll begin my remarks by providing an overview of our financial results, including same property performance. Then I'll move on to our balance sheet before closing my remarks with an update to our 2019 earnings guidance. As you can tell from Colin and Richard's comments, it was a solid quarter on many fronts. At $0.20 per share, FFO was up more than 30% over last year. And the important operating metrics that both you and we focus on were strong. Leasing velocity remained brisk, 2nd generation leasing spreads were solvitably positive and same property year over year cash NOI increased for the 29th consecutive quarter. Included in this quarter's results are 3 items I'd like to highlight before providing some color on our same property performance. 1st, our general and administrative expenses during the Q1 were significantly higher than our budget. Our recent strong share price performance, clearly a positive development, is behind the vast majority of this variance. The other components of G and A were generally right in line with budget. 2nd, as previously disclosed, we sold air rights covering approximately 8 acres in downtown Atlanta for $13,250,000 during the Q1. We acquired these rights when we developed the CNN Center in the 1970s and we held them on our books with 0 value. As a result, we recognized a $13,100,000 gain when they were sold, deducting only the closing costs, which ran through our income statement within the line item entitled gain on investment properties. 3rd, as part of the Norfolk Southern transactions that Conlin laid out earlier, we recognized $6,600,000 in fees during the Q1, which ran through our income statement within the line item titled fee income. We anticipate recognizing an additional $14,400,000 of Norfolk Southern fees spread out over the final three quarters of 2019. Both the actual fees we recognized during the Q1 as well as the forecasted fees we anticipate recognizing over the balance of 2019 are consistent with the schedule of fees we provided when the Norfolk Southern transactions were announced in early March. Moving on to our same property performance, year over year cash NOI was up a very solid 4% during the Q1, driven by 4.4% revenue growth and 5% expense growth. Our actual cash NOI growth is better than budget, and we expect this strong performance to continue as the year progresses. As a result, we are raising our full year 2019 same property cash NOI projection by 100 basis points. Turning to the balance sheet. Our net debt to EBITDA ratio is 3.3 times and our net debt to undepreciated assets is 24%. The weighted average interest rate on our debt is 3.9 percent and our weighted average maturity is 5.1 years. Our only debt maturity in 2019 is Carolina Square Construction Financing, which had a March 31 outstanding balance of $37,000,000 a share. The loan includes a 1 year extension option, and we recently submitted the extension application and anticipate receiving approval over the next couple of weeks. Overall, our balance sheet remains rock solid and among the very best among our office peers. I'll wrap up my comments today by updating our 2019 FFO guidance. Please note this guidance is standalone and excludes the TIER transaction. Once we close TIER, we will provide combined guidance as soon as reasonably possible. As we outlined in our earnings release, we anticipate 2019 FFO in the range of $0.70 to $0.74 per share. All the assumptions behind this guidance are unchanged from the guidance we provided on March 4, except for the following. 1st, we anticipate positive year over year same property NOI growth of between 3% 5% on a cash basis. This is up from our previous guidance of between 2% 4%, and 100% of the increase comes from revenues, a clear indication of solid fundamentals in our markets. Moving on, we've removed the assumption of a sale of Meridian Mark Plaza from 2019 as we reassess and reprioritize our sale of non core assets in light of the TIER transaction. Next, we anticipate interest and other expenses of between $50,500,000 $52,500,000 net of capitalized interest. Finally, we anticipate general and administrative expenses of between $33,500,000 $35,500,000 net of capitalized salaries. As with the quarter, this change is primarily driven by an increase in the compensation accrual based on our strong share performance. It's not indicative of any unusual pressure or upward trend in our core G and A expenses. Rather, it's an indication that our shareholders are realizing terrific absolute and relative total returns. Excluding this change to G and A, we would have actually increased our 2019 FFO guidance by $0.01 per share, reflecting the strong underlying performance of the business. With that, I'll turn it back over to the operator. We'll try that again. Chris, operator, are you there? Our first question is from Jamie Feldman of Bank of America Merrill Lynch. Please go ahead. Great. Thank you. Good morning. I appreciate all the color on rent growth. Did you give what year over year rent growth is in Charlotte, Tampa and Phoenix? I know you said Atlanta and Austin. Hey, Jamie, it's Colin and good morning. And I'd say across the entirety of our portfolio in the markets, we've seen really favorable rent growth across all of them. I think as a whole, on average, it's been about 6% or so, trailing 12 months in our markets. And really Austin, Atlanta, has been right around that 6%. Charlotte and Tampa have outperformed, according to CoStar closer to 7% to 8% over the course of the last 12 months. Phoenix has been a little bit on the lower side at about 3.5%, 4%. But I would say if you drill down more specifically into Tempe, you would see numbers that would approximate that 6% average across our markets. Okay. That's helpful. And then I guess, can you just talk about some of the larger leases you guys have been working to backfill in the last couple of last year or so? I didn't really hear an update on the call. And then also your some of the larger 2020 expirations, just an update there. Sure, Jamie. It we continue to make really good progress with kind of any move out. And I think it really speaks to the quality of the real estate that we've got. And Richard touched on the FLEETCOR lease that backfilled the bane space that we had talked about on some prior calls. So as we look forward over the balance of kind of 2019 and 2020, we have talked in previous calls about CBRE, who will be moving out in June of this year, and that's about 90 1,000 feet. We've touched on prior calls, T. Rowe Price expires in January of next year. But as we've disclosed, we've backfilled almost the entirety of that space. And there really is only kind of 1 or 2 other spaces of kind of 50,000 square feet and up. Terminus at the end of the year, CoStar has got 2 floors that will expire and then JLL has 2 floors here at 3,344 Peachtree that would expire next year. But we're in conversations with those folks. And as I said, when we've had move outs, given the quality of our real estate, the urban locations, proximity to mass transit, we've been really, really successful backfilling any move out. Okay. And then last for me, just we've seen an uptick in construction in Midtown Atlanta. I just want to get your thoughts on that, the market specifically and how you guys think about potential for new starts there or just whether you think you could end up in some sort of oversupply situation in the next couple of years? Yes. We continue to be very bullish and excited about Midtown. And I think that's certainly reflected in our purchase of 1200 Peachtree, which we will get the entirety of that space back at the end of 2021. So that overall was reflected in our purchase price at $2.20 a foot and 11.5% cap rate. But we're excited and enthusiastic about that space and re leasing it at a really attractive price point. And as we look at the market from a broader perspective, as you touched on, there has been an uptick in construction. There's about 1,500,000 square feet today that's under construction. But I think overall, as we look at it, it's been very much demand driven. And that 1,500,000 square feet is probably 60% plus pre leased officially. That being said, I'd tell you that there's some of the speculative space that's still out there, we think is effectively spoken for. And you've had some very large customers moving into Midtown looking for space, whether it be a BlackRock or Starbucks opening a regional headquarters, Anthem, Norfolk Southern and others who continue to look to grow into Midtown to be close to Georgia Tech, to be close to the mass transit. So I think overall, we're optimistic that, that supply will be certainly met by very strong demand. Okay, great. Thank you. Thanks, Jamie. Thank you. The next question is from Blaine Heck of Wells Fargo. Go ahead. Thanks. Good morning. Paul, and you just mentioned 1200 Peachtree, so I'll ask about that. At this point, are there any plans for redevelopment once Norfolk Southern moves out at the end of 2021? Or do you think there's kind of enough demand as you see it going forward in that market to take that space as is? Yes, Blaine, 1200 Peachtree is very well positioned for us to go attack the re leasing of that in a few years without significant capital. Norfolk Southern has that building has served as a regional headquarters for them and they've invested quite a bit in the building both back of house as well as updating and modernizing the office space. So ultimately, our team, as we look to the future and releasing that, We'll put some Cousins touches on it that you've seen in some of our other buildings and whether that be investing in the lobby to multi tenant that space, adding some amenities to the building, again, as we think about a multi tenant leasing effort. But I don't think it will be a significant amount of capital and pretty consistent with what we've done in some of our other value add acquisitions. Great. That's helpful. Great job on the backfill of the Bain space. Can you give any color on the mark to market you guys saw on that deal versus what Bain was paying? And when should we expect some GAAP and cash commencement there? So, Blayne, we've never disclosed kind of specific leases in the mark to market, but obviously we've executed that lease during the quarter about 50,000 square feet. And as you look at the portfolio as a whole, we delivered 7%, 8% cash mark to market. And as we've said consistently in the past, the portfolio as a whole is kind of 8% to 10% below market. And for the last 3 years, we've kind of consistently delivered that. So we were excited to get a company like FLEETCOR into Terminus. It will be their global corporate headquarters, and we think that's a terrific testament to Terminus, and we've got good momentum there. So that lease will commence at the second half of the year, kind of mid-4th quarter for an occupancy and rent commencement for FLEETCOR. Okay. That's helpful. Last one for me. Colin, you guys have done a great job of sourcing development opportunities recently. And now obviously, you guys have a lot to digest with the TIER deal. Can you talk about your ability to continue to focus on taking advantage of investment opportunities during the tier process? Or maybe should we expect a bit of a pause in your investment activity in kind of the legacy Cousins portfolio as you guys get this transaction under your belt? Well, to be clear, it as we look forward to the TIER transaction, a number one priority for us is integration, integration, integration and to do that thoughtfully to move that opportunity strategic opportunity forward. And we've got great experience with that process given the Parkway transaction just a couple of years ago. So I'm confident that our team will be able to accomplish that integration and do so in a timely manner consistent with the timeline and synergies we've laid out. But we've got a fantastic team here at Cousins, both on the development, investment and asset management side that is certainly able to continue to take advantage of attractive development or acquisition opportunities that come our way. So we'll continue to, as we've said in the past, focus on demand driven opportunities and there we're in a terrific spot that there's plenty of demand in the Sunbelt. And as those arise and intersect with our strategic land parcels, we'll be ready to capitalize on those. All right, great. Thanks, Collyn. Thanks, Blaine. Thank you. The next question is from John Loney of Stifel. Please go ahead. Great. Thank you very much. A couple of questions. You're starting 305 Colorado, looks like about $5.40 a foot. You just started Avalon a while ago, about $3.80 a foot. How do those numbers compare to I mean, are those good representations of what it costs to build in these particular markets? Or are there unusual aspects of these buildings that make them high or low? And then if you're talk about where you expect to develop in the future, say, Buckhead or The Domain, what it costs to build product in those markets these days? Yes, John, it's a great question. And you pointed out the 10,000 Avalon and 300 Colorado, which are very different projects that ultimately lead to the different pricing there. 300 Colorado is obviously in the Austin CBD where land can be quite a bit more expensive. In addition to that, the 300 Colorado project has podium parking versus 10,000 Avalon is kind of adjacent Gordon Place parking. So that's quite a bit cheaper. I'd say as a broad brush stroke, as we look at our urban submarkets to build trophy quality product with the exception of Austin would be roughly $4.75 to $500 a foot. Austin would be a tick higher, just as I mentioned land pricing be a bit more expensive. Projects like Avalon, whether it be something out in the domain, kind of high quality product outside the CBD, but in highly amenitized mixed use projects, would typically range in that $385 to maybe a tick over $400 a foot would be pretty good benchmarks to use across our market. Okay. Then the next question, I ran into the guy who runs WeWork in the Southeast, Gellerstadt a few weeks ago. Do you think that how do you feel about WeWorks these days? He thinks you're missing an opportunity. Do you think it's a do you like the idea of co working more than you did a while ago? What are your thoughts? Yes. John, we've continued to have a favorable view on co working and we've enjoyed a good relationship with WeWork. And they're in 3 floors at Terminus here in Atlanta and that has gone well. They've filled that space up quickly. And I think importantly, for us, we've seen a few of their underlying customers look to graduate. And we've had some discussions with a few of those groups about expanding into longer term, more permanent space. But whether it's WeWork or industrious spaces, there are a handful of them. From our perspective, they have done they serve a good purpose from our perspective of aggregating some smaller users who otherwise wouldn't be able to occupy space in buildings like Terminus and create some positive demand from that perspective. And some of our larger customers, I think, enjoy having that co working feature in a building. It provides a nice accordion feature as they think about project specific needs or swing space. And so in some respects, in these urban settings with large customers, they view that as an amenity. Now we want to and we've been very careful to be thoughtful about the overall exposure we have to co working, but that's not a signal of co working the business. It's just an underlying credit decision. And today, it's about 1.5 or so of our portfolio. But we'll continue to talk to WeWork and others about some other additional opportunities in the portfolio. Great. Thank you. Thanks, John. Thanks. Thank you very much. Next question is from Dave Rodgers. Your line is now open. Yes, good morning, Colin. For you, maybe a nuance on Blayne's question in terms of development. What is the level of development conversations you're having today now that you've kind of put out the announcement with Norfolk Southern? And I guess with regard to those conversations, are you thinking differently given your 95%, 96% kind of leased rate? Do you think differently about where you'd Any thoughts around that? Well, Dave, it's a great question and one that we talk about kind of every day here at Cousins with the broader team. And as we sit today as a standalone company, we've got 4 terrific land sites within our ownership, 1 in Midtown, 1 out in Tempe, Arizona, get the ability to start the 5th building at Corporate Center, and we've got a great site we've owned for some time at Victory in Uptown Dallas. So in aggregate, it's about 1,400,000 square feet that we could accommodate. But we look at each one of those opportunities on an individual basis and really look at and try to balance several different factors of what that particular submarket looks like from a vacancy perspective, what we the competitive supply, what we believe to be the pipeline of future demand And ultimately, look at that and balance it across the amount of speculative space we would be taking across the entirety of the portfolio and the company and ultimately make a specific decision. So in terms of ultimately the TIER deal, I don't know that that stand on their own. And if you look at our track record over the last several years, we've started certain projects like 10000 Avalon at 30% pre leased and we've done others on a build to suit basis at 100%. And so it will just depend on the facts and the circumstances of each of those individual projects. And then maybe with regard to Westshore, you mentioned the land parcel that you have at Corporate Center. With the 2 larger either known or becoming vacant buildings kind of in that submarket, do you are you seeing any slowdown in the activity for that particular space at Corporate Center? Yes, we really haven't. And activity at Corporate Center has been terrific. And I think in particular highlighted that space being in high demand is T. Rowe Price announced they were doing a corporate consolidation out of Tampa. It was very quickly our team was able to release that space. And Corporate Center, from our perspective, is certainly, if not the best one of the handful of leading projects in all of Tampa and it's pretty uniquely situated adjacent to the airport, adjacent to the amenities that the corporate center the corporate center mall brings. And so we've seen as space comes available, it backfilled very quickly. And as people look forward without a whole lot of space available in the existing buildings, Corporate Center 5 is certainly getting looks from several large users who are looking to grow and expand in Tampa. Thanks for the color. Last question for me. The DFA backfill in Charlotte, if you gave an update, I missed that, I apologize. Just curious on kind of the activity there. Yes. Charlotte has been very active. And so the DFA space, as we mentioned on a few prior calls, has been a little bit challenging for our team in the sense of trying to balance and time the expiration of that space to the move in of the new project. And we just delivered that here in the Q1. So I think our team has now got kind of unfettered access to that space and has got kind of defined timeline, which is now for that space to be available. And Charlotte as a whole has been very active and you've seen some large customers like Ally kind of moving to the market and there's some other large users out there looking for space. And so I think we're encouraged by the level of activity on DFA. And I think it's particularly helpful that we've got kind of real definition now when with the space being available that perhaps over the preceding quarters, it was still a bit of an unknown. All right, great. Thanks for the color. Thank you very much. We appreciate everybody's time this morning and your ongoing interest and support of Cousins Properties. We'll look forward to seeing many of you at the June NAREIT in New York. Have a great rest of the day. Thank you very much. Ladies and gentlemen, this conference call has now concluded. Thank you for attending today's presentation. And you may now