Good day, and welcome to the Cousins Properties first quarter conference call. All participants are currently in listen-only mode, and should you need assistance, please signal a conference specialist by pressing the star key followed by 0. After today's presentation, there will an opportunity to ask questions. To ask a question, you may press star and then 1 on your touch-tone phone. To withdraw your question, please press star and then 2. Please also note that this event is being recorded. I would now like to turn the conference over to Pamela Roper. Please go ahead.
Good morning, and welcome to Cousins Properties's first quarter earnings conference call. With me today are Larry Gellerstedt, our Chairman and Chief Executive Officer, Colin Connolly, our President and Chief Operating Officer, and Gregg Adzema, our Chief Financial Officer. The press release and supplemental package were made available on the investor relations page of our website 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 Regulation G requirements. 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.
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 press release issued yesterday, and a detailed discussion of some potential risks is contained in our filings with the SEC. With that, I'll turn the call over to Larry Gellerstedt.
Thanks, Pam, and good morning, everyone. The current economic recovery will celebrate its ninth anniversary in just a few weeks, marking the second longest span of growth and expansion in recorded U.S. history. As the nation approaches this significant milestone, capital markets have begun to experience increased volatility. For the first time since 2014, the 10-year hovers around 3%, putting pressure on REIT equity prices. While these macroeconomic factors dominate global headlines, a different story is unfolding in the Sun Belt. Business and consumer confidence remains very positive. Office users are growing their footprints. More companies are migrating to the Sun Belt, and new supply remains in check. As a result, well-located Class A office space is in high demand, and our teams on the ground are as busy as ever. To highlight, let me walk you through our first quarter results.
Overall, the company delivered a clean $0.15 of FFO per share during the quarter, while posting positive leasing rent roll-ups and same-property NOI results to start the year. In addition, the team executed 330,000 sq ft of leases in the first quarter, including several key renewals. This solid effort on the leasing front reduced our near-term expiration exposure, which is now just 11.3% through 2019. More importantly, it further upgraded our rent roll with average in-place rents across the portfolio now 6% higher compared to this time last year. While these are terrific numbers for any quarter, I want to specifically highlight the consistency of these strong results during this cycle. For the 16th consecutive quarter, Cousins has achieved positive cash rent roll-ups, with eight of these quarters posting double-digit growth. Even more impressive is our same-property performance, with 25 straight quarters of positive NOI growth.
Certainly, we've enjoyed the extended tailwinds that have presented themselves in our markets, but the credit for this impressive run belongs to our team, a team that has performed quarter after quarter, executing on our consistent and straightforward strategy. With that backdrop, I'm optimistic about the balance of the year for Cousins. As we head into the 10th year of economic recovery, we see no indication of weakening fundamentals in our core markets. Our portfolio and balance sheet are well-positioned, and our team and platform are proven and stable. Equally as important, we have actionable growth opportunities in front of us. First, as I mentioned earlier, we have experienced robust rent growth in our markets, which has propelled average in-place rents across the portfolio.
Despite this healthy growth year after year, our current in-place rents remain on average 8%-10% below current market rents, with above-average mark-to-markets at many of our Atlanta assets with the attractive vacancy. In addition to the opportunities embedded in our operating portfolio, we've established a steady avenue for growth with our development pipeline. To start, we've already created substantial value this cycle, delivering $788 million in new development. This includes projects like Colorado Tower, which we delivered in 2015 at 100% leased. Additional highlights include our latest deliveries. In Atlanta, at 8000 Avalon, post-quarter activity has taken the project to 98% leased. Over at Carolina Square in Chapel Hill, apartment rents on our first round of expirations have rolled up double digits.
In January, we celebrated the opening of 864 Spring Street, the first phase of NCR's world headquarter, which we anticipate will receive LEED Platinum certification in the coming weeks. Today, Cousins has another 860,000 sq ft of office under construction, of which 96% is leased, as well as 42,000 sq ft of retail and 330 apartments. Over the next eight months, we plan to deliver a significant portion with the opening of 858 Spring Street, the second phase of NCR's headquarters in Atlanta, and the opening of Dimensional Place, the East Coast headquarters for Dimensional Fund Advisors in Charlotte. As for the balance of our pipeline, 120 West Trinity, our mixed-use project with AMLI in Atlanta's Decatur sub-market, is well underway with delivery slated for early 2020. We also anticipate breaking ground on 300 Colorado, our 100% leased office tower in downtown Austin, sometime in the fourth quarter.
Colin will provide more details on the progress we've made here in his remarks. When stabilized, our recent deliveries and current pipeline are positioned to provide significant contributions to both NAV and FFO in the coming years. These projects are well leased and fully funded with the cash available on our balance sheet. This enviable position gives us the confidence to continue to play offense. With the Sunbelt market showing no signs of slowing, I'm even more encouraged by our path for additional growth. Let me walk you through what we've got lined up. Today, we control five terrific development sites in some of the most desirable submarkets in the Sunbelt. In Midtown Atlanta, we are under contract to buy a site at Eighth and West Peachtree Street, which is attractively located less than two blocks from MARTA, Tech Square, and the NCR headquarters.
We're under contract to purchase a fantastic site in Tempe, located adjacent to our current portfolio and on the front steps of Arizona State University. Surveying the land inventory in our supplement, you will find we also own a site in Uptown Dallas adjacent to mass transit, the second and last office pad at Avalon in Atlanta, and a site at Corporate Center in Tampa, where our buildings are over 97% leased. In totality, our land bank, once developed, could include approximately 1.6 million sq ft of Class A office space. I'm pleased to report we have a solid pipeline of interest for each location, including existing customers and potential new prospects from a wide variety of industries. With pre-development now underway, we anticipate that each site could be shovel-ready by the end of the year.
I'm highly encouraged of our ability to begin one or more of these opportunities over the next 12 months. Rest assured, we will remain disciplined in our approach to capital allocation. Our ultimate responsibility is to provide long-term value to our shareholders. It is with this overarching goal that we will make a call when evaluating not only future development projects, but all investment decisions made for the company. With that, I'll turn it over to Colin.
Thanks, Larry, and good morning, everyone. I'll begin my remarks today with a few of the key operational and leasing highlights for the quarter, and then provide an update on each of our markets, as well as a few updates on our development activities. The Cousins team is off to a great start this year, signing 330,000 sq ft of new and renewal leases in the first quarter at exceptional economics. As the portfolio is 93.9% leased with modest near-term expirations, this was a terrific performance given our limited available inventory. Second-generation net rents were up 35% on a GAAP basis and 19% on a cash basis, with each of our five markets posting double-digit growth. This quarter's rent roll-up was the highest in more than two years and highlights the strength of our team and our Sunbelt office portfolio.
While we are particularly pleased with this quarter's leasing results, we expect our average run rate to generally be in line with our historic performance, which has averaged approximately 10% since we closed the Parkway merger in the fourth quarter of 2016, with variability from quarter to quarter based on the particular mix of leases. Moving on to our markets, Atlanta continues to perform exceptionally well. According to CoStar, Class A net absorption across the metro area was approximately 990,000 square feet, which is nearly a 70% increase in activity compared to the previous quarter. Importantly, Buckhead, Midtown, and the Central Perimeter, all sub-markets of focus for Cousins, posted positive results. Consistent with the overall market, our 6.6 million square foot Atlanta portfolio had a solid quarter, with the team executing over 73,000 square feet of leases.
At quarter end, the portfolio was 91% leased, with a significant improvement in occupancy from 84.9% to 88.7%. This increase was largely driven by WestRock's phase move-in at Northpark Town Center, NCR's occupancy of 864 Spring Street, Amazon's occupancy of a second floor at Terminus 200, and the lease commencement of Crown Castle, Regus spaces, and Microsoft at 8000 Avalon, which continues to perform extraordinarily well. We recently agreed to terms on one of the last available spaces in the building at over $40 per square foot, which is on par with Class A rents in Buckhead and Midtown. Looking at near-term expirations, we will be getting back approximately 140,000 square feet of space during 2019 from Bain and CBRE at Terminus 100, which we own in a 50/50 joint venture with JP Morgan.
At Northpark Town Center in the Central Perimeter, we continue to have discussions with AIG regarding their 105,000 square feet that expires in January of 2019. We do not yet have an update to share, as AIG is still evaluating their long-term space needs and market options. As that process plays out, our team remains ready to actively market the space if need be, confident that Northpark's unbeatable access to MARTA and recently upgraded amenities will continue to generate interest from large, well-established companies looking for space in the Central Perimeter. Overall, the leasing pipeline across our Atlanta portfolio in Atlanta is as robust as it has been in quite some time, and we have been pleased to see prospects of all sizes from a diverse set of industries, including technology, financial services, legal, and other large corporate users.
Our team is hard at work and confident that we can convert some of these exciting opportunities over the next several quarters. Over in Austin, the market continues to benefit from some of the strongest economic and real estate fundamentals on record. Job growth is currently outpacing the national average by 220 basis points, and metro-wide Class A vacancy now stands at just 8.7%, and net absorption for the first quarter was over 1 million square feet, according to CoStar. Our 1.9 million square foot portfolio ticked up to 94.3% leased at the end of the quarter. Our local team is very active, completing approximately 87,000 square feet of leases, including long-term early renewals with key customers like AT&T, Thompson & Knight, and Bracewell at 816 Congress, San Jacinto, and 111 Congress, respectively. In Charlotte, we remain encouraged by metro-wide fundamentals.
Class A asking rents set a new high water mark, representing a 21% increase compared to the previous cycle's peak in 2008. Our team had a relatively quiet quarter, though, as our 3.1 million square foot portfolio is 99% leased with limited near-term expirations. However, as we have discussed in prior quarters, we will be getting back 50,000 square feet from Dimensional Fund Advisors at Fifth Third Center when we deliver their new build-to-suit Dimensional Place in December of this year. The team is seeing some solid preliminary interest as the space is regarded as one of the most attractive blocks available in Uptown Charlotte today. On to Phoenix, where office vacancy for CoStar's four and five-star product has dropped to 4.4% in Tempe, home to our 1.3 million square foot Phoenix portfolio.
The market is benefiting from employment growth that is double the national average and is projected to be one of the top four markets for office-using employment growth in the nation over the next two years. Our Tempe portfolio has benefited from these supply and demand tailwinds, posting the highest weighted average rent rollout since the Parkway merger in the fourth quarter of 2016. You may have noticed that the occupancy temporarily dropped at Tempe Gateway, with Limelight giving back one floor, but this will pick up during the second quarter as Houzz has already backfilled that space. Our portfolio in Tempe is currently 97% leased with modest near-term expirations. Given the healthy forecast for growth in Phoenix, we believe our assets are in terrific shape.
To highlight the strength of the market, our team recently executed a $45 per square foot lease at Hayden Ferry, which to our knowledge, is a record high in Phoenix. Moving to Florida, Tampa set a record low for Class A office vacancy at 6.7% this quarter per CoStar, fueled by a booming job market and a development community that continues to demonstrate great discipline. In Westshore, our core sub-market, there is only one new office tower totaling 250,000 square feet under construction. The project is currently 60% pre-leased to PwC, who we understand retains the option to expand into the remaining 100,000 square feet until mid-2019. Across the company, Tampa was our busiest market on the leasing front this quarter, with 136,000 square feet of executed leases. The largest was a 108,000 square foot early extension and expansion with Greenway Health at Corporate Center, which is now 98% leased.
Amgen occupied another 18,000 square feet from their original lease this month, the remaining 37,000 square feet will be occupied by the fourth quarter. The only material block of space available in our Tampa portfolio is the 60,000 square feet at Harborview that we previously disclosed would be coming back from Laser Spine Institute. Activity on this space has been quite strong, and our local team is in conversations with multiple interested prospects. I'll wrap up by providing a few updates on our development activity. First, as you may have noted in our supplement, the estimated stabilization of our 120 West Trinity project has been slightly delayed. The city of Decatur has indicated that they will likely now require a certificate of occupancy for 100% of the mixed-use project before our development partner, AMLI, can begin moving residents into the apartments.
We are still hopeful that the city will revisit this position, but we felt that it was appropriate to go ahead and update the supplemental. As a reminder, we are just a 20% investor in this project, so a one- to two-quarter delay on stabilization will have minimal impact on our financials. Next, we delivered 864 Spring Street, otherwise known as phase one of NCR's corporate headquarters campus in the Midtown submarket of Atlanta. Our team did a fantastic job of designing and delivering a cutting-edge, best-in-class asset totaling approximately 500,000 sq ft on time, and importantly, more than $2 million under budget. We have received great feedback from NCR on their experience to date, and we look forward to delivering the second phase of the project in November of this year.
Lastly, I want to highlight that pre-development is ongoing at 300 Colorado in the Austin CBD, and we remain on time to break ground in December of this year. We've identified a potential opportunity to upsize the project by approximately 50,000 sq ft, which could create attractive expansion space for Parsley Energy and/or other customers within our Austin portfolio with growth needs. As we finalize the building design and total project costs, we will update the development schedule and future supplements accordingly. With that, I'll turn the call over to Gregg.
Thank you, Colin. Good morning, everyone. I'll begin my remarks by providing an overview of our financial results, including same-property performance. I'll move on to our capital activity and its impact on our balance sheet. Before closing my remarks with an update of our 2018 earnings guidance. As you could tell from Larry and Colin's remarks, we had a solid first quarter. Property-level performance was outstanding, and we closed several large transactions that we believe will generate significant value for our shareholders. Overall net income was $0.04 per share, and FFO was $0.15 per share. Within our same property portfolio, which comprises approximately 90% of our total NOI, year-over-year cash NOI was up 9.4%, driven by 8.1% same-property revenue growth. These are powerful numbers, and there's no doubt that office fundamentals in our markets remain healthy. These numbers benefited from a low prior year comp.
During the first quarter last year, several large customers within our same-property portfolio received approximately $2.2 million of free rent that has since burned off. Adding this free rent back to last year's first-quarter numbers reduces same-property NOI year-over-year cash growth to 5.4%, a better indicator of our current run rate. That being said, we were fully aware of this free rent when we provided 2018 same-property guidance, and we matched our same-property expectations for the first quarter. Looking forward, we still anticipate achieving our full year 2018 guidance of between 2%-4% GAAP NOI growth and between 3.5%-5.5% cash NOI growth. We also increased our quarterly dividend during the first quarter by 8.3% to $0.065 per share. It's a safe, well-covered dividend based on a conservative FAD payout ratio that has been below 70% for the past seven years.
With that, let's move on to our capital activity and balance sheet. We sold one small non-core parcel of land during the first quarter, generating a gain of $330,000. We have more non-core land left on the books, but not much. The majority of our current $23 million land inventory is comprised of the three core office sites Larry discussed earlier, one each in Dallas, Atlanta, and Tampa. In total, land represents less than one half of 1% of our enterprise value. We have significant capacity to pursue additional strategic office sites before we approach our stated goal of between 2% and 3% of total value for land. We also recast our unsecured credit facility during the first quarter, increasing the size to $1 billion and improving the pricing.
As of quarter end, we had nothing drawn on this facility, and we had over $100 million in cash on the balance sheet. Our net debt to EBITDA was 3.77 times, and our fixed charge coverage ratio was 5.4 times. The weighted average interest rate on our debt was 3.76%. Our weighted average maturity was 6.1 years, and we had no debt maturities of any significance until 2021. Our only debt maturity this year is our Carolina Square construction loan, which matures early next month. This loan has two one-year extensions, and we are in the final stages of executing the first extension, taking the maturity out to May 2019. By any metric, this is a rock-solid balance sheet, and supporting Larry's earlier comments, it has also been a consistently strong balance sheet over time.
With very few exceptions, we have maintained a net debt to EBITDA ratio below 4.5 times for over four years. Over that same period, we have pre-funded all of our development commitments with either asset sales or equity issuances, taking any financing risk off the table and locking in the value creation upfront. In addition, we have purposely laddered our debt schedule to smooth out maturities and avoid any significant refinancing risk in any one year. A consistently conservative balance sheet has been and will continue to be a core tenet of our strategy. I'll wrap up my comments today by updating our 2018 FFO guidance. As we outlined in our first quarter earnings release, we continue to expect full year 2018 FFO in the range of $0.59-$0.63 per share.
All of our assumptions are unchanged, with the exception of our fee and other income assumption, which we are increasing from between $10 million and $12 million to between $11 million and $13 million. This is driven by an increase in forecasted termination fees to $1 million. For clarity, any termination fees we receive are included in this line item. We do not include termination fees in property-level NOI. Before moving on to your questions, I wanted to close my remarks by announcing the departure of Marli Quisenberry, our VP of Investor Relations. Many of you on this call have interacted with Marleigh over the past five years and are very familiar with her tremendous professionalism, her deep knowledge, and her positive character.
She's been a joy to work with, and we will genuinely miss her as she moves on to spend more time with her two young sons. As sad as we are to see Marli leave, we're equally excited to announce that Roni Imbeaux will assume Marli's investor relations responsibilities. Roni has been with Cousins for almost six years and is currently our VP of Finance. As you will soon learn, Roni is terrific, and her knowledge of the industry and the company will make the transition seamless. Roni will be with us at Nareit Week in June, and we hope you'll take the time to come by and say hello. With that, let me turn the call back over to the operator.
Thank you very much, sir. Ladies and gentlemen, we will now begin the question-and-answer session. To ask a question, you may press star and then one on your touch-tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star and then two. Our first question is from David Rodgers of Baird. Please go ahead.
Yeah, good morning, guys. Wanted to look at one thing. I guess with regard to leasing, it sounds like there's a lot of leasing demand for new development, larger blocks of space, commitments to new projects. I don't think you guys are alone, but new leasing volume kind of to start the year was weak for office generally, I would say. What's the kind of tenor of those conversations in terms of trying to lease existing space? Do you think the spaces aren't right? Do you think there was some kind of choppiness just to start the year that caused people to pause in terms of kind of their more traditional commitments?
Dave, hi. It's Colin, and good morning. Thanks for your question. I guess I'd start with kind of putting in context where the portfolio sits today at 94% leased. That obviously influences the product that we have available to lease. That being said, we still have got some great opportunity in front of us, and I'd characterize the tenor across all of our markets as very strong. As we indicated in our remarks, we feel particularly good about the availabilities that we have here in Atlanta, both existing as well as some of the space that we'll get back in 2019. I think as those expirations get a bit closer, I think, the actionability of new leasing on that space certainly will increase.
I don't think that in terms of the amount of new leasing in this particular quarter is certainly anything to look at from a negative standpoint. Again, I think we're really optimistic about what's in front of us, the activity that we've got, both for some of the available sites Larry mentioned, but the existing product as well.
Dave, this is Larry. I would add that, just to echo what Colin is saying. The big blocks of space that we have to lease are primarily just becoming available in 2019. The prospect list is there, and now we're beginning to move into the time that people will start committing to that space. I would say it was a quarter that certainly met our expectations here when we looked at both the level of leasing that the portfolio exists in terms of 94%, but also just sort of the timing of some of the expirations of some of the larger blocks we have in the existing portfolio, particularly in Atlanta.
That's helpful. Then maybe moving to the leasing spread comment. I think, Colin, you kind of made the point of 10% is what you're looking for going forward. Larry, I think you said something in your comments about 8%-10%, maybe below market. Is that 8%-10% near term, or is that kind of how you view the portfolio as a whole moving forward in terms of marketing it to market?
Dave, I'd say that certainly that 8% is represented across the entirety of the portfolio, we would certainly think that the long-term average should certainly reflect those levels. I think quarter-to-quarter, you could see some variability, depending on the particular mix of leases in any given quarter. Long term, if you were to look at kind of a multiple quarter average, we think over time that should trend into that 8%-10% range.
Great. Last one for me on the development. Sounds like you have a lot of activity. You mentioned kind of five specific pieces of land. Three you own, two you're going to buy. When you think about kind of funding that long term, I know there's no commitments there, and so it's hard to say, but how do you think about that in terms of maybe debt, bringing in joint venture partners, equity, and just kind of cash flow, if there's a broad thought process there, that'd be helpful. Thanks.
Hey, Dave, it's Gregg. Good morning. As Larry mentioned, we've got several sites that we're looking at, and that we're moving quickly toward potentially bringing online. How would we fund those? There's kind of three pieces of that puzzle. The first piece would be retained cash flow. We kick out, give or take, $40 million a year of retained cash flow after servicing the dividend and everything else. If we were lucky enough to start some of them next year, they would take two and a half, three years to bring to fruition. There's $100 million right there in retained cash flow. We've stated publicly that our long-term goal in terms of leverage is four and a half times net debt to EBITDA. We've been running it below that for the last several quarters.
A big driver of that was our sale of Orlando and Miami in the fourth quarter of last year. We didn't have an immediate use of those proceeds, but we thought it was a good time to sell those assets, so we were sitting on cash. We have extra capacity, actually, to take the leverage back up to our long-term goal of four and a half times. Retained cash, incremental leverage to get back up to our goal, and to the extent that we needed more than that, we would look at what equity was available to us at the time that we needed it.
As you'd mentioned, joint ventures are always available. Something we try not to use unless our partner brings something to the table other than cash, because we have cash. Maybe they have a land site, but they have an expertise. We would look at asset sales and equity issuance depending upon what the respective prices were at the time.
Okay, great. Thank you.
Thank you very much. Our next question is from Blaine Heck from Wells Fargo. Please go ahead.
Thanks. Good morning. Just wanted to follow up on that last question. Are there any pricing details you can give on both the Atlanta and Tempe sites? Then maybe what's the square footage you guys think you can construct at each of those?
The site that we've got under contract in Midtown Atlanta, we could build 400,000 to 450,000 square feet of office space on it. It's a terrific site because its proximity to Georgia Tech and MARTA and all the activities going on in that Midtown market. It's interesting, if you look at Midtown, really all of the new build activity this cycle has been in that southern part of Midtown. This site is right in the heart of it. Our team did a remarkable job in getting this site under control because it had multiple property owners. Required a lot of effort over the last year really to control it. The site in Tempe, which is also a site that has a fair amount of complexity to it. We're just thrilled to now have that under control. We could build there 250,000 feet, plus or minus.
Part of the site will have either a hotel or apartments on it. That would be the size of those two different opportunities. In terms of pricing, we really don't get into that, the pricing of the land in particular, because those are under contract, and we won't disclose that. I think if you look at us this cycle, we've been consistently, I think, prudent on when to go on new development and our optimism on particularly a couple of these office land positions that we have of the five that we outlined, is really just based upon existing customer or new customer demand of folks that need extra space or want to be in a sub-market that we can put our hands on and are having discussions with that give us the consistency.
We continue to shoot for sort of a mid-8 return in terms of what we look at these developments across our portfolio. Cap rates sort of are in the 5.5%-6%. A little bit higher in Tampa, but we're still seeing a nice spread that we're able to get between existing cap rates and where we can do the development deals. That would be the color I could share on those two sites.
Very helpful. Just as a quick follow-up on that, is it fair to assume that you guys have kind of significant pre-leasing prospects on each of those parcels, or are they kind of more opportunistic land plays with the mindset that there are plenty of prospects in those markets?
I would say yes to both. We look at these land things both ways. We look at where are we feeling demand from the customers in the markets, in terms of where we invest our pre-development activity. We certainly, at this point in the cycle, don't anticipate starting any new development without some really solid pre-leasing. We don't have a set threshold as to what that is, but we are not, in any of these cases, going out and acquiring a site where we have 100% build to suit lease in our pocket, and we're just going to find a site. It's opportunistic, but opportunistic based upon a lot of conversations with folks and demand that we can put our hands on.
Okay, great. Just switching gears to the AIG space at Northp ark. It's a pretty large chunk of space. I guess when do you think they'd need to make a decision by to actually give them enough time to move out by January next year?
As I mentioned in my prepared remarks, we continue to have conversations with AIG. They are still evaluating their long-term space plans and needs and looking at their market options. I don't want to get too far into those discussions and kind of out in front of our customer at this time. Again, it's not a long way off, we continue to have those conversations, and when we have more to share, we will. Again, I just want to be kind of careful and cognizant of our relationship with AIG.
Got it. That's fair. Thanks, guys.
Thank you very much. Ladies and gentlemen, a reminder, if you wish to ask a question, please press star and then zero. Our next question is from Michael Lewis of SunTrust. Please go ahead.
Morning. Thank you. My first question, I wanted to ask kind of about the, maybe AIG aside, about the path of occupancy into 2019. As I look at some of these move-outs, we know about Bain and CBRE. I believe you have a tenant that's phasing into NorthPark as well. When it moved to Tampa, you've got the Laser Spine move-out, but I believe Amgen is phasing into space. Then you've got this big gap between occupancy and the lease percentage in Phoenix. As we look at kind of the path of occupancy from here, should we expect a deep dip with some downtime as we head into 2019? Or do you think maybe there's potential with the puts and takes here that it's a little maybe flatter than people might expect?
Michael, good question. As you mentioned, there are a lot of kind of gives and takes there. As you mentioned, we do have some move-outs that we discussed in our remarks. The largest expirations being CBRE and Bain, in totality, about 140,000 feet. I would remind you from a Cousins standpoint, that is owned in a 50/50 venture. As we think about our weighted average occupancy, it's roughly half of that from an impact. Then there is the AIG expiration out there. Those would be the kind of the potential outs. If you look on kind of the other side of the equation, we do have some good move-ins over the course of the year. WestRock does have another floor to move in, and we also have additional move-ins from Amgen within Tampa.
There's also an occupancy pickup at Terminus with WeWork, SAP out at Avalon. We've mentioned a lease last quarter expansion we did with BofA. With all those gives and takes, Michael, we would expect over the course of the year from our current occupancy to certainly stay no less than flat. I think there's an opportunity to tick that up over the course of the year.
Great. That's really helpful. My second question is about the same property stats, which just got a lot more interesting now that you've got the bigger pool has rolled in. There's a lot of talk on the revenue side with the positive rent spreads, we just talked about occupancy. I wanted to ask about the expense side. It looks like expenses grew about 6.2% year-over-year. Should I assume that that's mostly property taxes, what's the risk kind of on the expense side?
Hi, good morning. It's Gregg. Yeah, the 6.2% year-over-year growth in expenses during the first quarter are being driven by real estate taxes. Real estate taxes during the quarter on a year-over-year basis were up 9.1%. If you pulled out real estate taxes, the number would've been 4.6%, something a little more passes the smell test a little bit more. Just to give you a little color behind that, in Austin, real estate taxes were up 12% year-over-year. In Tempe, real estate taxes were up almost 40% year-over-year. What happened in Tempe was we had a GPLET on Gateway Tempe that expired, which is just a tax abatement that expired. That's not an indication of anything other than increases taxes, but really the GPLET as well.
Looking forward, yeah, I think that 6% number because of the property tax increases is a decent run rate for the balance of the year.
Okay, great. That's it for me. Thanks.
Thank you very much. The next question is from Jamie Feldman of Bank of America Merrill Lynch. Please go ahead.
Great. Thank you. Can you guys just talk a little bit more about the Buckhead vacancy, just kind of what the leasing pipeline looks like for Bain in the CBRE space?
Jamie, you're always first. I'm trying to adjust to a question so late in the call from you. As I mentioned earlier, we feel like the pipeline at this point, looking forward to 2019, is very strong. As we're getting closer to that space being available and coming back, the interest from customers has certainly picked up. We view those as really some of the best space in the entirety of Buckhead. With no other construction underway, with Three Alliance behind us, we feel very bullish on that. There's really a mix of interest from some fairly large users to some really attractive full-floor and multi-floor options. It's really across the spectrum. We've been pleased. Historically, Buckhead has been thought of as really the fire sub-market with financial institutions, insurance, real estate, others.
We've seen quite a bit of pickup in the technology space in Buckhead, which has been really encouraging to our team.
Okay. Thank you. Last quarter, you gave some really helpful color on where you think rent growth is in your markets. Do you mind walking through that again or giving an update?
Sure, Jamie. I'd say it's been relatively consistent since the color we gave last quarter. I would kind of bookmark that as at the low end of the spectrum, call it 4%, at the high end of the spectrum at 8%. Really the leader over the last 12 months has been Charlotte at kind of that 8% level. Austin has been, call it the lower end at 4%, which really has just been a function of there was so much growth prior to that within Austin that while growth is still very positive, we've seen that trajectory slow just a touch. Atlanta and Tampa and Phoenix have been in that kind of ±5% range. It's been still really positive, and without really any ramp-up in construction, we're encouraged looking forward.
Okay. Thank you. Just finally, for Gregg, just thinking about the guidance. You guys gave some pretty upbeat color on the fundamentals in tenant demand and leasing. You did have the termination fee and the new termination fee added to the numbers, but your guidance has changed. Were there some offsets to that $1 million? I know you guys have a pretty big share count, so it's hard to really move the needle. Were there some offsets to that positive $1 million, or maybe you guys are still being conservative? Just how do we think about your perspective on keeping guidance where it was?
Good morning, Jamie. Yeah. The termination fee is $1 million, is just a quarter of a penny for the year, so it's not enough to actually move guidance. As you mentioned, we have a lot of shares outstanding. It would take more than that to move guidance. There was no offsetting negative to it. It was just too small to move the needle. In terms of whether our guidance is aggressive or conservative, we've provided what we think is the best guidance for 2018, and it's unchanged. We matched our expectations, as we said, during the first quarter, we've kept our guidance unchanged.
If you were to get any leasing done for the second question would just be what could move it higher, or do you feel like the year is pretty baked in at this point?
Jamie, it's Colin. I'll jump in there in terms of, as I said, we're very encouraged and enthusiastic about leasing pipeline that's in front of us. As we sit here today on April 26th to not only execute those leases, but to build out the space and get a move in of material size, to have a material impact on the numbers, just doesn't leave a lot of time. We continue to work on operating expenses, parking, things like that we hope we can continue to find some upside in. We could be surprised to the upside that we're able to get somebody who's got a very short time window to, and could take occupancy this year to do that. It's really a function of where we sit today in the calendar, relative to year-end.
Okay, great. Thanks, guys.
Thank you very much. Ladies and gentlemen, again, if you wish to ask a question, please press star and then. Our next question is from Jed Reagan of Green Street Advisors. Please go ahead.
Hey, good morning, guys. Appreciate, Colin, you going through kind of the rent growth range, that 4%-8%. I assume that would be on face rent growth that you were quoting. I'm just curious, excuse me, if you were looking at that on a net effective rent growth basis, just factoring in leasing costs. Would that be materially different than that? Part of what I'm getting at is just kind of what sort of trends are you seeing in leasing concessions across your markets?
Jed, good morning, especially to you out in California.
As we look at both face rent and net effective, the 4%-8% range outline would be face rent. I would have characterized net effective rent growth, call it 12-18 months ago to be ahead of overall the increases that we've seen on face rents, because we have seen a nice move down in concessions, whether it be TIs kind of coming down and/or kind of free rent starting to decrease. I'd say in terms of where those concessions are today, they're fairly steady. From a kind of a TI perspective, new deal, I'd say consistently remains into that $5 a sq ft, maybe a touch higher on new deals, roughly half of that for a renewal. As it relates to free rent, we've seen in some of our markets it go away entirely. In Austin, Tampa, we've seen that material decrease.
It's hard really to move it beyond that, where we stand today, I'd say that kind of 4%-8% would roughly characterize net effective rent growth as well.
Okay, great. That's helpful. There was a question earlier on the call about the tenor of conversations with tenants. I guess, have you seen any change in that tenor, particularly just given the recent tax reform, anyone? Does it seem like your customer base is responding to that in terms of greater leasing activity or kind of growth momentum?
Jed, this is Larry. I can't point to anything where we can say we know that this activity we're seeing is driven by the tax change. I can say that we continue to see a lot of positive leasing demand. We don't really have any color as to a customer that I can point to and say they're specifically making this decision based upon renewed optimism or increased cash on the balance sheet that they can be a little bit more aggressive. I think it'll probably take another couple of quarters to really see that. If it indeed is driven by that. I can't report anything to date.
Okay. That's helpful. Appreciate it. Just last one from me. Have you guys seen any changes in cap rates and values across your markets this year, I guess especially with the 10-year kind of pushing higher recently?
Jed, we really haven't. They're so limited in terms of the amount of really Class A trophy assets that have been in the market over the last 12 months, as you can see by any data source in terms of just the volumes. The amount of capital sitting on the sidelines have continued to make that there's a lot of bidders and a lot of interest in pretty frothy pricing at times, at least from our perspective. That's why we hadn't been in the acquisition market for a few years. That really seems to have driven it. We haven't seen any ticks in terms of asset pricing vis-a-vis the change in the 10-year pricing.
Given that frothy pricing, does it make you want to test that market more than you might otherwise with some additional asset sales?
That really was what we did with Orlando and Miami in the fourth quarter.
Yeah.
It was just looking at the situation and saying, we certainly will take a little bit of FFO dilution and sell a little on some cash, because it was prudent from the shareholders' perspective to take advantage of that frothy pricing. We'll continue to evaluate that, because at the end of the day, as these capital markets change and the numbers change, we have to make sure that our thinking is adjusting accordingly, and we will.
Great. Thank you, guys.
Thank you very much. Ladies and gentlemen, a final reminder, if you wish to ask a question, please press star and then one now. We have a question from John Guinee of Stifel. Please go ahead.
Oh, great. Thank you. Nice quarter, guys. Sort of big picture question, probably Larry. It looks like you all-in cost for phase 1 of NCR is about $435 a square. Phase 2 looks like it'll be about $462 a square. Your budget at Colorado Tower looks like about $566 a square. Can you sort of comment on total development costs and also tie that into the two sites you have under contract and what you think as of today it would cost to develop the office portion of either site? Total development cost.
Hey, John, it's Colin. Let me try to tackle the different pieces of that. In terms of NCR, the phase 1 versus the phase 2 pricing, I'd say a couple of things influenced that. Certainly, it was a smaller project, which tends to kind of tick the overall price per square foot up a touch. There were also some incentives that we were able to receive on the first project. As we look at construction costs as a whole over the last 12 months, our team would tell you that we've seen escalations kind of in the 4%-6% range. I think as we move over to the project in front of us at Colorado Tower, it wouldn't be an apples to apples comparison on a per-foot basis to the NCR projects here in Atlanta.
Certainly, land pricing in Austin is quite a bit higher, and that as well, there was the TI that we agreed to on a kind of return on cost type deal with Parsley Energy kind of factored into that overall cost. As we look forward, though, to the pipeline that Larry outlined in front of us. Certainly, here in Midtown Atlanta, I think replacement costs would be in that kind of ±$450 a square foot range. I think Tempe and Dallas, et cetera, again, urban sites with similar land pricing, would be in that range. We do have an additional site at Corporate Center in Tampa, as well as 10,000 Avalon here in Atlanta. Those are lower density projects in more suburban areas where you're able to build kind of pre-cap decks, adjacent decks.
Those projects would come in a little bit cheaper and I think would have a kind of a three handle, mid to high three handle as it relates to replacement costs.
Okay. Second, I think in the Amazon sweepstakes, maybe your cities include Austin and Atlanta. I'm not sure if there are others, can you identify for everybody the exact, if that is correct, first, the exact sites which are being considered within both cities?
Hey, John, it's Larry. The Dallas market's being considered, which we have the site in as well. In terms of the specific sites that are being considered in the cities, some cities have made those public some cities have not. As you know, I'm involved in a leadership role in terms of the Atlanta bid, at least everyone involved in our bid is under nondisclosure agreements with Amazon. I wouldn't feel comfortable commenting on the specific sites. In Dallas and Austin, I'm unaware whether or not those particular bids have made the sites public that they're utilizing.
Great. All right. Keep it under your hat.
Thanks, John.
All right.
Thank you very much. Ladies and gentlemen, that concludes the Q&A session. I would now like to turn the conference back over to Larry Gellerstedt for any closing comments.
Thanks, everybody, for being on the call today. Hope you can detect our optimism and enthusiasm about where the company is and the markets that we're doing business in. We're gonna miss Marleigh. We'll welcome Roni, and we'll look forward to seeing everybody at Nareit, if not before. Thanks.
Thank you very much, sir. Ladies and gentlemen, that concludes this conference call. You may now disconnect your lines.