UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2024

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

Commission file number: 001-11312

COUSINS PROPERTIES INCORPORATED

(Exact name of registrant as specified in its charter)

Georgia				58-0869052
(State or other jurisdiction of incorporation or organization)				(I.R.S. Employer Identification No.)
3344 Peachtree Road NE	Suite 1800	Atlanta	Georgia	30326-4802
(Address of principal executive offices)				(Zip Code)

(404) 407-1000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $1 par value per share	CUZ	New York Stock Exchange	("NYSE")

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company”, and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☑	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☑

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class	Outstanding at July 19, 2024
Common Stock, $1 par value per share	152,140,188 shares

	Page No.
PART I-FINANCIAL INFORMATION	3
Item 1. Condensed Consolidated Financial Statements (Unaudited)	3
CONSOLIDATED BALANCE SHEETS	3
CONSOLIDATED STATEMENTS OF OPERATIONS	4
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME	5
CONSOLIDATED STATEMENTS OF EQUITY	6
CONSOLIDATED STATEMENTS OF CASH FLOWS	8
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS	9
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	26
Item 3. Quantitative and Qualitative Disclosures About Market Risk	33
Item 4. Controls and Procedures	33
PART II. OTHER INFORMATION	33
Item 1. Legal Proceedings	33
Item 1A. Risk Factors	33
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	34
Item 6. Exhibits	35
SIGNATURES	36

FORWARD-LOOKING STATEMENTS

Certain matters contained in this report are “forward-looking statements” within the meaning of the federal securities laws and are subject to uncertainties and risks, as itemized in Item 1A included in the Annual Report on Form 10-K for the year ended December 31, 2023, and as itemized herein. These forward-looking statements include information about the Company's possible or assumed future results of the business and the Company's financial condition, liquidity, results of operations, plans, and objectives. They also include, among other things, statements regarding subjects that are forward-looking by their nature, such as:

•guidance and underlying assumptions;

•business and financial strategy;

•future debt financings;

•future acquisitions and dispositions of operating assets or joint venture interests;

•future acquisitions and dispositions of land, including ground leases;

•future acquisitions of investments in real estate debt;

•future development and redevelopment opportunities;

•future issuances and repurchases of common stock, limited partnership units, or preferred stock;

•future distributions;

•projected capital expenditures;

•market and industry trends;

•future occupancy or volume and velocity of leasing activity;

•entry into new markets, changes in existing market concentrations, or exits from existing markets;

•future changes in interest rates and liquidity of capital markets; and

•all statements that address operating performance, events, investments, or developments that we expect or anticipate will occur in the future — including statements relating to creating value for stockholders.

Any forward-looking statements are based upon management's beliefs, assumptions, and expectations of our future performance, taking into account information that is currently available. These beliefs, assumptions, and expectations may change as a result of possible events or factors, not all of which are known. If a change occurs, our business, financial condition, liquidity, and results of operations may vary materially from those expressed in forward-looking statements. Actual results may vary from forward-looking statements due to, but not limited to, the following:

•the availability and terms of capital;

•the ability to refinance or repay indebtedness as it matures;

•any changes to our credit rating;

•the failure of purchase, sale, or other contracts to ultimately close;

•the failure to achieve anticipated benefits from acquisitions, developments, investments, or dispositions;

•the effect of common stock or operating partnership unit issuances, including those undertaken on a forward basis;

•the availability of buyers and pricing with respect to the disposition of assets;

•changes in national and local economic conditions, the real estate industry, and the commercial real estate markets in which we operate (including supply and demand changes), particularly in Atlanta, Austin, Tampa, Charlotte, Phoenix, Dallas, and Nashville, including the impact of high unemployment, volatility in the public equity and debt markets, and international economic and other conditions;

•threatened terrorist attacks or sociopolitical unrest such as political instability, civil unrest, armed hostilities, or political activism, which may result in a disruption of day-to-day building operations;

•changes to our strategy in regard to our real estate assets may require impairment to be recognized;

•leasing risks, including the ability to obtain new tenants or renew expiring tenants, the ability to lease newly-developed and/or recently acquired space, the failure of a tenant to commence or complete tenant improvements on schedule or to occupy leased space, and the risk of declining leasing rates;

•changes in the preferences of our tenants brought about by the desire for co-working arrangements, trends toward utilizing less office space per employee, and the effect of employees working remotely;

•any adverse change in the financial condition or liquidity of one or more of our tenants or borrowers under our real estate debt investments;

•volatility in interest rates (including the impact upon the effectiveness of forward interest rate contract arrangements) and insurance rates;

•inflation;

•competition from other developers or investors;

•the risks associated with real estate developments (such as zoning approval, receipt of required permits, construction delays, cost overruns, and leasing risk);

•supply chain disruptions, labor shortages, and increased construction costs;

1

•risks associated with security breaches through cyberattacks, cyber intrusions or otherwise, as well as other significant disruptions of our information technology networks and related systems, which support our operations and our buildings;

•changes in senior management, changes in the Board of Directors, and the loss of key personnel;

•the potential liability for uninsured losses, condemnation, or environmental issues;

•the potential liability for a failure to meet regulatory requirements, including the Americans with Disabilities Act and similar laws or the impact of any investigation regarding the same;

•the financial condition and liquidity of, or disputes with, joint venture partners;

•any failure to comply with debt covenants under credit agreements;

•any failure to continue to qualify for taxation as a real estate investment trust or meet regulatory requirements;

•potential changes to state, local, or federal regulations applicable to our business;

•material changes in dividend rates on common shares or other securities or the ability to pay those dividends;

•potential changes to the tax laws impacting REITs and real estate in general;

•risks associated with climate change and severe weather events, as well as the regulatory efforts intended to reduce the effects of climate changes and investor and public perception of our efforts to respond to the same;

•the impact of newly adopted accounting principles on our accounting policies and on period-to-period comparisons of financial results;

•risks associated with possible federal, state, local, or property tax audits; and

•those additional risks and environmental or other factors discussed in reports filed with the Securities and Exchange Commission ("SEC") by the Company.

The risks set forth above are not exhaustive. The Annual Report on Form 10-K for the year ended December 31, 2023, including Part I, Item 1A. Risk Factors, and this Quarterly Report on Form 10-Q for the quarter ended June 30, 2024, including Part II, Item 1A, Risk Factors, include additional factors that could adversely affect our business and financial performance. Moreover, we operate in a very competitive and rapidly changing environment. New risk factors emerge from time to time and it is not possible for management to predict all risk factors, nor can we assess the potential impact of all risk factors on our business or the extent to which any factors, or any combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. The words “believes,” “expects,” “anticipates,” “estimates,” “plans,” “may,” “intend,” “will,” or similar expressions are intended to identify forward-looking statements. Although we believe that our plans, intentions, and expectations reflected in any forward-looking statements are reasonable, we can give no assurance that such plans, intentions, or expectations will be achieved. Given the uncertainties and risks discussed herein, investors should not place undue reliance on forward-looking statements as a prediction of actual results. Investors should also refer to our Quarterly Reports on Form 10-Q and our Annual Reports on Form 10-K for future periods, and our Current Reports on Form 8-K as we file such reports with the SEC, and to other materials we may file with or furnish to the SEC, for a discussion of risks and uncertainties that may cause actual results, performance, or achievements to differ materially from those expressed or implied by any forward-looking statements. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of future events, new information, or otherwise, except as required under U.S. federal securities laws.

2

PART I — FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements.

COUSINS PROPERTIES INCORPORATED AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share amounts)

	June 30, 2024		December 31, 2023
	(unaudited)
Assets:
Real estate assets:
Operating properties, net of accumulated depreciation of $1,476,681 and $1,329,406 in 2024 and 2023, respectively	$	6,917,570	$	6,775,093
Projects under development	—		132,884
Land	154,727		154,728
	7,072,297		7,062,705
Cash and cash equivalents	5,954		6,047
Investments in real estate debt, at fair value	27,585		—
Accounts receivable	16,348		11,109
Deferred rents receivable	221,268		209,370
Investment in unconsolidated joint ventures	160,873		143,831
Intangible assets, net	98,472		110,667
Other assets, net	97,731		90,745
Total assets	$	7,700,528	$	7,634,474
Liabilities:
Notes payable	$	2,586,732	$	2,457,627
Accounts payable and accrued expenses	236,786		299,767
Deferred income	263,420		181,744
Intangible liabilities, net	38,044		42,193
Other liabilities	98,042		104,830
Total liabilities	3,223,024		3,086,161
Commitments and contingencies
Equity:
Stockholders' investment:
Common stock, $1 par value per share, 300,000,000 shares authorized, 152,140,188 and 154,335,798 issued, and 152,140,188 and 151,799,215 outstanding in 2024 and 2023, respectively	152,140		154,336
Additional paid-in capital	5,500,937		5,638,709
Treasury stock at cost, 2,536,583 shares in 2023	—		(145,696)
Distributions in excess of cumulative net income	(1,202,222)		(1,125,390)
Accumulated other comprehensive income	2,767		2,192
Total stockholders' investment	4,453,622		4,524,151
Nonredeemable noncontrolling interests	23,882		24,162
Total equity	4,477,504		4,548,313
Total liabilities and equity	$	7,700,528	$	7,634,474
See accompanying notes.

3

COUSINS PROPERTIES INCORPORATED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited; in thousands, except per share amounts)

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2024		2023		2024		2023
Revenues:
Rental property revenues	$	211,474	$	203,954	$	420,292	$	404,030
Fee income	406		352		785		726
Other	1,098		14		1,142		2,292
	212,978		204,320		422,219		407,048
Expenses:
Rental property operating expenses	70,634		67,099		141,709		138,312
Reimbursed expenses	151		159		291		366
General and administrative expenses	8,907		8,021		18,121		16,459
Interest expense	29,743		25,972		58,651		51,002
Depreciation and amortization	95,415		80,269		181,645		156,039
Other	603		476		1,275		861
	205,453		181,996		401,692		363,039
Income from unconsolidated joint ventures	439		753		787		1,426
Gain (loss) on investment property transactions	(3)		—		98		(2)
Net income	7,961		23,077		21,412		45,433
Net income attributable to noncontrolling interests	(121)		(456)		(284)		(616)
Net income available to common stockholders	$	7,840	$	22,621	$	21,128	$	44,817
Net income per common share — basic	$	0.05	$	0.15	$	0.14	$	0.30
Net income per common share — diluted	$	0.05	$	0.15	$	0.14	$	0.29
Weighted average shares — basic	152,095		151,721		152,020		151,650
Weighted average shares — diluted	152,614		152,126		152,500		152,003
See accompanying notes.

4

COUSINS PROPERTIES INCORPORATED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(unaudited; in thousands)

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2024		2023		2024		2023
Comprehensive Income:
Net income available to common stockholders	$	7,840	$	22,621	$	21,128	$	44,817
Other comprehensive income (loss):
Unrealized gain on cash flow hedges	1,383		5,936		4,088		4,894
Amortization of cash flow hedges	(1,803)		(908)		(3,513)		(1,096)
Total other comprehensive income (loss)	(420)		5,028		575		3,798
Total comprehensive income	$	7,420	$	27,649	$	21,703	$	48,615
See accompanying notes.

5

COUSINS PROPERTIES INCORPORATED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EQUITY

(unaudited; in thousands except per share amounts)

Three Months Ended June 30, 2024
	Common Stock		Additional Paid-In Capital		Treasury Stock		Distributions in Excess of Net Income		Accumulated Other Comprehensive Income		Stockholders' Investment		Nonredeemable Noncontrolling Interests		Total Equity
March 31, 2024	$	152,072	$	5,496,371	$	—	$	(1,160,759)	$	3,187	$	4,490,871	$	24,089	$	4,514,960
Net income	—		—		—		7,840		—		7,840		121		7,961
Other comprehensive loss	—		—		—		—		(420)		(420)		—		(420)
Common stock issued pursuant to stock-based compensation, net of tax withholding	68		1,496		—		—		—		1,564		—		1,564
Amortization of stock-based compensation, net of forfeitures	—		3,070		—		—		—		3,070		—		3,070
Contributions from noncontrolling interests	—		—		—		—		—		—		22		22
Distributions to noncontrolling interests	—		—		—		—		—		—		(350)		(350)
Common dividends ($0.32 per share)	—		—		—		(49,303)		—		(49,303)		—		(49,303)
Balance June 30, 2024	$	152,140	$	5,500,937	$	—	$	(1,202,222)	$	2,767	$	4,453,622	$	23,882	$	4,477,504
Three Months Ended June 30, 2023
	Common Stock		Additional Paid-In Capital		Treasury Stock		Distributions in Excess of Net Income		Accumulated Other Comprehensive Loss		Stockholders’ Investment		Nonredeemable Noncontrolling Interests		Total Equity
Balance March 31, 2023	$	154,256	$	5,631,076	$	(147,157)	$	(1,039,694)	$	537	$	4,599,018	$	22,018	$	4,621,036
Net income	—		—		—		22,621		—		22,621		456		23,077
Other comprehensive income	—		—		—		—		5,028		5,028		—		5,028
Common stock issued pursuant to stock-based compensation, net of tax withholding	81		1,550		—		—		—		1,631		—		1,631
Amortization of stock-based compensation, net of forfeitures	(1)		2,370		—		—		—		2,369		—		2,369
Contributions from noncontrolling interests	—		—		—		—		—		—		646		646
Distributions to noncontrolling interests	—		—		—		—		—		—		(193)		(193)
Common dividends ($0.32 per share)	—		—		—		(49,296)		—		(49,296)		—		(49,296)
Balance June 30, 2023	$	154,336	$	5,634,996	$	(147,157)	$	(1,066,369)	$	5,565	$	4,581,371	$	22,927	$	4,604,298

See accompanying notes.

6

COUSINS PROPERTIES INCORPORATED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EQUITY

(unaudited; in thousands except per share amounts)

Six Months Ended June 30, 2024
	Common Stock		Additional Paid-In Capital		Treasury Stock		Distributions in Excess of Net Income		Accumulated Other Comprehensive Income		Stockholders’ Investment		Nonredeemable Noncontrolling Interests		Total Equity
Balance December 31, 2023	$	154,336	$	5,638,709	$	(145,696)	$	(1,125,390)	$	2,192	$	4,524,151	$	24,162	$	4,548,313
Net income	—		—		—		21,128		—		21,128		284		21,412
Other comprehensive income	—		—		—		—		575		575		—		575
Common stock issued pursuant to stock-based compensation, net of tax withholding	346		(1,594)		—		—		—		(1,248)		—		(1,248)
Amortization of stock options, restricted stock, and restricted stock units, net of forfeitures	(5)		6,981		—		(4)		—		6,972		—		6,972
Retirement of Treasury Stock	(2,537)		(143,159)		145,696		—				—		—		—
Contributions from nonredeemable noncontrolling interests	—		—		—		—		—		—		22		22
Distributions to nonredeemable noncontrolling interests	—		—		—		—		—		—		(586)		(586)
Common dividends ($0.64 per share)	—		—		—		(97,956)		—		(97,956)		—		(97,956)
Balance June 30, 2024	$	152,140	$	5,500,937	$	—	$	(1,202,222)	$	2,767	$	4,453,622	$	23,882	$	4,477,504
Six Months Ended June 30, 2023
	Common Stock		Additional Paid-In Capital		Treasury Stock		Distributions in Excess of Net Income		Accumulated Other Comprehensive Income		Stockholders’ Investment		Nonredeemable Noncontrolling Interests		Total Equity
Balance December 31, 2022	$	154,019	$	5,630,327	$	(147,157)	$	(1,013,292)	$	1,767	$	4,625,664	$	21,285	$	4,646,949
Net income	—		—		—		44,817		—		44,817		616		45,433
Common stock issued under the ATM, net of issuance costs	—		—		—		—		3,798		3,798		—		3,798
Common stock issued pursuant to stock-based compensation, net of tax withholding	320		(827)		—		—		—		(507)		—		(507)
Amortization of stock-based compensation, net of forfeitures	(3)		5,496		—		—		—		5,493		—		5,493
Contributions from nonredeemable noncontrolling interests	—		—		—		—		—		—		1,384		1,384
Distributions to nonredeemable noncontrolling interests	—		—		—		—		—		—		(358)		(358)
Common dividends ($0.64 per share)	—		—		—		(97,894)		—		(97,894)		—		(97,894)
Balance June 30, 2023	$	154,336	$	5,634,996	$	(147,157)	$	(1,066,369)	$	5,565	$	4,581,371	$	22,927	$	4,604,298
See accompanying notes.

7

COUSINS PROPERTIES INCORPORATED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited; in thousands)

	Six Months Ended June 30,
	2024		2023
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	21,412	$	45,433
Adjustments to reconcile net income to net cash provided by operating activities:
Loss (gain) on investment property transactions	(98)		2
Acquisition costs of investments in real estate debt	468		—
Depreciation and amortization	181,645		156,039
Amortization of deferred financing costs and premium on notes payable	2,014		2,061
Equity-classified stock-based compensation expense, net of forfeitures	7,868		6,363
Effect of non-cash adjustments to rental revenues	(27,786)		(23,721)
Income from unconsolidated joint ventures	(787)		(1,426)
Operating distributions from unconsolidated joint ventures	1,542		2,033
Changes in other operating assets and liabilities:
Change in receivables and other assets, net	(12,034)		(9,423)
Change in operating liabilities, net	(20,437)		(16,290)
Net cash provided by operating activities	153,807		161,071
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from investment property sales, net	(3)		—
Property acquisition, development, and tenant asset expenditures	(136,106)		(134,279)
Purchase of investments in real estate debt	(27,653)		—
Return of capital distributions from unconsolidated joint ventures	—		10,907
Contributions to unconsolidated joint ventures	(17,513)		(26,299)
Net cash used in investing activities	(181,275)		(149,671)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from credit facility	279,000		210,700
Repayment of credit facility	(147,000)		(118,800)
Repayment of mortgages	(4,244)		(4,100)
Payment of deferred financing costs	—		(71)
Repurchase of shares withheld for taxes on restricted stock vestings	(1,111)		—
Common dividends paid	(98,044)		(97,269)
Contributions from noncontrolling interests	22		1,384
Distributions to noncontrolling interests	(586)		(358)
Other	(662)		—
Net cash provided by (used in) financing activities	27,375		(8,514)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	(93)		2,886
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD	6,047		5,145
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	5,954	$	8,031

See accompanying notes.

8

COUSINS PROPERTIES INCORPORATED AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2024

(Unaudited)

1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

Description of Business: Cousins Properties Incorporated (“Cousins”), a Georgia corporation, is a fully integrated, self-administered, and self-managed real estate investment trust (“REIT”). Cousins conducts substantially all of its business through Cousins Properties LP ("CPLP"). Cousins owns in excess of 99% of CPLP and consolidates CPLP. CPLP wholly owns Cousins TRS Services LLC ("CTRS"), a taxable entity which owns and manages its own real estate portfolio and performs certain real estate-related services for other parties.

Cousins, CPLP, CTRS, and their subsidiaries (collectively, the “Company”) develop, acquire, lease, manage, and own primarily Class A office properties and opportunistic mixed-use developments in the Sun Belt markets of the United States with a focus on Atlanta, Austin, Tampa, Phoenix, Charlotte, Dallas, and Nashville. Cousins has elected to be taxed as a REIT and intends to, among other things, distribute at least 100% of its net taxable income to stockholders, thereby eliminating any liability for federal income taxes under current law. Therefore, the results included herein do not include a federal income tax provision for Cousins. As of June 30, 2024, the Company's operating portfolio of real estate assets consisted of interests in 18.8 million square feet of office space and 310,000 square feet of multi-family space.

Basis of Presentation: The condensed consolidated financial statements are unaudited and were prepared by the Company in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”). In the opinion of management, these financial statements reflect all adjustments necessary (which adjustments are of a normal and recurring nature) for the fair presentation of the Company's financial position as of June 30, 2024 and December 31, 2023, and the results of operations for the three and six months ended June 30, 2024 and 2023. The results of operations for the three and six months ended June 30, 2024 are not necessarily indicative of results expected for the full year. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been omitted pursuant to the rules and regulations of the SEC. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes to consolidated financial statements in the Company's Annual Report on Form 10-K for the year ended December 31, 2023. The accounting policies employed are substantially the same as those shown in note 2 of the notes to consolidated financial statements included therein with the exception of an additional accounting policy related to the Company's new investments in real estate debt described in note 3 to these condensed consolidated financial statements.

The Company evaluates all partnerships, joint ventures, and other arrangements with variable interests to determine if the entity or arrangement qualifies as a variable interest entity ("VIE"), as defined in the Financial Accounting Standard Board's ("FASB") Accounting Standards Codification ("ASC"). If the entity or arrangement qualifies as a VIE and the Company is determined to be the primary beneficiary, the Company is required to consolidate the assets, liabilities, and results of operations of the VIE. The Company had no investments or interests in any VIEs as of June 30, 2024 or December 31, 2023.

2. REAL ESTATE

For the six months ended June 30, 2024 and June 30, 2023, the Company had no real estate transactions.

Impairment

The Company tests buildings held for investment, by asset groups, for impairment whenever changes in circumstances indicate an asset group’s carrying value may not be recoverable. The test is conducted using undiscounted cash flows for the shorter of the building’s estimated hold period or its remaining useful life. When testing for recoverability of value of buildings held for investment, projected cash flows are used over its expected hold period. If the expected hold period includes some likelihood of shorter-term hold period from a potential sale, the probability of a sale is layered into the analysis. If any building's held-for-investment analysis were to fail the impairment test, its book value would be written down to its then current estimated fair value, before any selling expense, and that building would continue to depreciate over its remaining useful life. None of the Company’s held-for-investment buildings were impaired during any periods presented in the accompanying condensed consolidated statement of operations.

The Company also reviews held-for-sale buildings, if any, for impairments. In order to be considered a real estate asset held-for-sale, the Company must, among other things, have the authority to commit to a plan to sell the asset in its current condition, have commenced the plan to sell the asset, and have determined that it is probable that the asset will sell within one year. If book value is in excess of estimated fair value less estimated selling costs, we impair those assets to fair value less estimated selling costs. There were no held-for-sale buildings as of June 30, 2024 or December 31, 2023 or during any periods presented in the accompanying condensed consolidated statements of operations.

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The Company also reviews land and projects under development for impairment whenever changes in circumstances indicate the assets' carrying value may not be recoverable. None of the Company's investments in land, including accumulated predevelopment costs, or projects under development were impaired as of June 30, 2024 or December 31, 2023 or during any periods presented in the accompanying condensed consolidated statement of operations.

The Company may record impairment charges in future periods if the economy and the office industry weakens, the operating results of individual buildings are materially different from our forecasts, or we shorten our contemplated hold period for any operating buildings.

3. INVESTMENTS IN REAL ESTATE DEBT

During the three months ended June 30, 2024, the Company invested $27.6 million in two mezzanine real estate loans. These investments are subordinated to the first priority mortgage loans of $144.2 million as of June 30, 2024. The borrowers have additional borrowing capacity under these loans, of which the senior loan unfunded share is $49.9 million and the Company's unfunded share is $9.6 million as of June 30, 2024. The details of these real estate debt investments as of June 30, 2024, are as follows ($ in thousands):

Collateral	Carrying Value as of June 30, 2024		Variable Rate as of June 30, 2024	Maturity Date
110 East - Pledge of equity interests Charlotte, NC, Office Building	$	15,079	14.33%	February 2026
Radius - Pledge of equity interests Nashville, TN, Office Building	12,506		13.58%	June 2025
	$	27,585

The above rates reflect a weighted spread in excess of the Secured Overnight Financing Rate ("SOFR") (5.33% as of June 30, 2024) of 8.66%. The Company did not have any investment in real estate debt as of December 31, 2023. Each loan provides the borrower with an opportunity to extend the maturity date, subject to certain conditions. The extended maturity dates are February 2027 on the 110 East loan and June 2026 on the Radius loan.

The Company has elected the fair value option in accounting for its investment in real estate debt. As such, any unrealized gain or loss associated with holding these investments at fair value will be recorded as a component of income from investments in real estate debt on the Company's consolidated statement of operations. For the three and six months ended June 30, 2024, the Company believes the fair value of the investments in real estate debt approximates its invested carrying value and, therefore, did not record any unrealized gain or loss on its investments in real estate debt based on these recent executed market transactions (Level 2). In subsequent periods, the Company may make adjustments to the carrying values of these loan investments if any are required through application of the fair value hierarchy provided for under GAAP. Acquisition costs associated with these loans are expensed as incurred.

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4. INVESTMENT IN UNCONSOLIDATED JOINT VENTURES

The following information summarizes financial data and principal activities of the Company's unconsolidated joint ventures. The information included in the following table entitled summary of financial position is as of June 30, 2024 and December 31, 2023 ($ in thousands).

SUMMARY OF FINANCIAL POSITION
	Total Assets				Total Debt				Total Equity (Deficit)				Company's Investment
	2024		2023		2024		2023		2024		2023		2024			2023
Operating Properties:
AMCO 120 WT Holdings, LLC	$	78,990	$	80,694	$	—	$	—	$	77,727	$	78,642	$	14,263		$	14,506
Crawford Long - CPI, LLC (1)	20,372		22,001		82,356		82,316		(63,799)		(62,562)		(31,350)		(2)	(31,066)		(2)
Neuhoff Holdings LLC (3)	536,720		477,780		252,898		219,780		253,188		226,303		141,796			124,543
Land:
715 Ponce Holdings LLC	9,419		9,325		—		—		9,373		9,324		4,814			4,782
	$	645,501	$	589,800	$	335,254	$	302,096	$	276,489	$	251,707	$	129,523		$	112,765

(1) Crawford Long - CPI, LLC has a mortgage loan for the Medical Offices at Emory Hospital property. This $83.0 million interest-only mortgage loan has a fixed interest rate of 4.80% and matures on June 1, 2032.

(2) Negative investment basis included in deferred income on the condensed consolidated balance sheets.

(3) The Neuhoff Holdings LLC properties have commenced initial operations but are not yet stabilized. The joint venture has a construction loan with a borrowing capacity up to $312.7 million, of which the Company's share is $156.4 million, that matures on September 30, 2025. The interest rate applicable to the construction loan is based on SOFR plus 3.45% with a minimum rate of 3.60%. The joint venture has one option, subject to certain conditions, to extend the maturity date for an additional 12 months from the initial maturity date.

The information included in the summary of operations table is for the six months ended June 30, 2024 and 2023 ($ in thousands).

SUMMARY OF OPERATIONS
	Total Revenues				Net Income (Loss)				Company's Income from Investment
	2024		2023		2024		2023		2024		2023
Operating Properties:
AMCO 120 WT Holdings, LLC	$	5,786	$	5,451	$	1,882	$	1,625	$	367	$	323
Crawford Long - CPI, LLC	6,618		6,360		1,513		2,151		691		1,006
Neuhoff Holdings LLC (1)	258		70		(606)		42		(296)		21
Land:
715 Ponce Holdings LLC	108		141		49		100		25		51
Sold:
Other	—		—		—		50		—		25
	$	12,770	$	12,022	$	2,838	$	3,968	$	787	$	1,426

(1) The Neuhoff Holdings LLC properties have commenced initial operations but are not yet stabilized.

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5. INTANGIBLE ASSETS AND LIABILITIES

At June 30, 2024 and December 31, 2023, intangible assets included the following ($ in thousands):

	2024		2023
In-place leases, net of accumulated amortization of $132,703 and $135,433 in 2024 and 2023, respectively	$	69,753	$	80,117
Below-market ground leases, net of accumulated amortization of $2,431 and $2,260 in 2024 and 2023, respectively	16,822		16,992
Above-market leases, net of accumulated amortization of $23,963 and $24,918 in 2024 and 2023, respectively	10,223		11,884
Goodwill	1,674		1,674
	$	98,472	$	110,667

At June 30, 2024 and December 31, 2023, intangible liabilities were the following ($ in thousands):

	2024		2023
Below-market leases, net of accumulated amortization of $54,121 and $50,475 in 2024 and 2023, respectively	$	38,044	$	42,193

The amortization of the above asset and liabilities are recorded as follows ($ in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Revenues:
Rental property revenues, net (Below-market and Above-market leases)	$	1,558	$	2,526	$	3,019	$	4,084
Expenses:
Depreciation and amortization (In-place leases)	5,963		7,057		10,364		12,470
Rental property operating and other expenses (Below-market ground leases)	71		100		171		200

Over the next five years and thereafter, aggregate amortization of these intangible assets and liabilities is anticipated to be as follows ($ in thousands):

	In-Place  Leases		Below-Market Ground Leases		Above-Market Leases		Below-Market Leases
2024 (six months)	$	8,113	$	141	$	1,142	$	(4,063)
2025	14,612		282		2,062		(7,743)
2026	12,252		282		1,683		(6,524)
2027	9,667		282		1,274		(4,989)
2028	6,851		282		1,161		(3,852)
Thereafter	18,258		15,553		2,901		(10,873)
	$	69,753	$	16,822	$	10,223	$	(38,044)

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6. OTHER ASSETS

Other assets on the condensed consolidated balance sheets as of June 30, 2024 and December 31, 2023 included the following ($ in thousands):

	2024		2023
Predevelopment costs	$	57,748	$	56,600
Prepaid expenses and other assets	14,355		8,704
Lease inducements, net of accumulated amortization of $7,047 and $5,860 in 2024 and 2023, respectively	11,839		10,537
Furniture, fixtures and equipment and other deferred costs, net of accumulated depreciation of $19,351 and $18,564 in 2024 and 2023, respectively	10,158		10,631
Credit Facility deferred financing costs, net of accumulated amortization of $2,773 and $2,131 in 2024 and 2023, respectively	3,631		4,273
	$	97,731	$	90,745

Predevelopment costs represent amounts that are capitalized related to predevelopment projects on land owned by the Company that has been determined to be probable of future development.

Lease inducements are incentives paid to tenants in conjunction with leasing space, such as moving costs, sublease arrangements of prior space, and other costs. These amounts are amortized into rental revenues over the individual underlying lease terms.

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7. NOTES PAYABLE

The following table summarizes the terms of notes payable outstanding at June 30, 2024 and December 31, 2023 ($ in thousands):

Description	Interest Rate (1)	Maturity (2)	2024		2023
Unsecured Notes:
Credit Facility	6.19%	April 2027	$	317,100	$	185,100
Term Loan	5.43%	March 2025	400,000		400,000
Term Loan (3)	5.33%	February 2025	350,000		350,000
Senior Note	3.95%	July 2029	275,000		275,000
Senior Note	3.91%	July 2025	250,000		250,000
Senior Note	3.86%	July 2028	250,000		250,000
Senior Note	3.78%	July 2027	125,000		125,000
Senior Note	4.09%	July 2027	100,000		100,000
			2,067,100		1,935,100
Secured Mortgage Notes:
Terminus (4)	6.34%	January 2031	221,000		221,000
Fifth Third Center	3.37%	October 2026	124,691		126,548
Colorado Tower	3.45%	September 2026	105,484		106,862
Domain 10	3.75%	November 2024	71,549		72,558
			522,724		526,968
			$	2,589,824	$	2,462,068
Unamortized loan costs			(3,092)		(4,441)
Total Notes Payable			$	2,586,732	$	2,457,627

(1) Interest rate as of June 30, 2024.

(2) Weighted average maturity of notes payable outstanding at June 30, 2024 was 2.6 years. Extension options are not included.

(3) In June 2024, the Company delivered notice to the administrative agent of the Term Loan notice of its execution of the first of four available 180 day extension options. The extension will be effective August 30, 2024.

(4) Represents $123.0 million and $98.0 million non-cross-collateralized mortgages secured by the Terminus 100 and Terminus 200 buildings, respectively.

Credit Facility

On May 2, 2022, the Company entered into a Fifth Amended and Restated Credit Agreement (the "Credit Facility") under which the Company may borrow up to $1 billion if certain conditions are satisfied. The Credit Facility contains financial covenants that require, among other things, the maintenance of unencumbered interest coverage ratio of at least 1.75x; a fixed charge coverage ratio of at least 1.50x; a secured leverage ratio of no more than 50%; and an overall leverage ratio of no more than 60%. The Credit Facility matures on April 30, 2027.

The interest rate applicable to the Credit Facility varies according to the Company's leverage ratio and may, at the election of the Company, be determined based on either (1) the Daily SOFR or Term SOFR, plus a SOFR adjustment of 0.10% ("Adjusted SOFR") and a spread of between 0.725% and 1.40%, or (2) the greater of (i) Bank of America's prime rate, (ii) the federal funds rate plus 0.50%, (iii) Term SOFR, plus a SOFR adjustment of 0.10%, and 1.00%, or (iv) 1.00%, plus a spread of between 0.00% and 0.40%, based on leverage. In addition to the interest rate, the Credit Facility is also subject to a facility fee of 0.125% to 0.30%, depending on leverage, on the entire $1 billion capacity.

In April 2024, the Company notified the administrative agent of the Credit Facility of the Company's receipt of corporate investment grade ratings. These ratings reduced the Credit Facility's Adjusted SOFR spread and facility fee range effective April 17,

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2024. Changes in the Company's investment grade ratings may result in additional adjustments to the applicable spread and facility fee. Prior to April 17, 2024, the applicable spread was between 0.90% and 1.40% and the facility fee range was 0.15% to 0.30%, depending on leverage.

At June 30, 2024, the Credit Facility's interest rate spread over Adjusted SOFR was 0.775%, and the facility fee spread was 0.15%. The amount that the Company may draw under the Credit Facility is a defined calculation based on the Company's unencumbered assets and other factors. The total available borrowing capacity under the Credit Facility was $682.9 million at June 30, 2024. The amounts outstanding under the Credit Facility may be accelerated upon the occurrence of any events of default.

Term Loans

On October 3, 2022, the Company entered into a Delayed Draw Term Loan Agreement (the "2022 Term Loan") and borrowed the full $400 million available under the loan. The loan matures on March 3, 2025 with four consecutive options to extend the maturity date for an additional six months each. Under the 2022 Term Loan the interest rate applicable varies according to the Company's leverage ratio and may, at the election of the Company, be determined based on either (1) the Daily SOFR or Term SOFR, plus a SOFR adjustment of 0.10% ("Adjusted SOFR") and a spread of between 0.80% and 1.60%, or (2) the greater of (i) Bank of America's prime rate, (ii) the federal funds rate plus 0.50%, (iii) Term SOFR, plus a SOFR adjustment of 0.10%, and 1.00%, (iv) or 1.00%, plus a spread of between 0.00% and 0.65%, based on leverage. The covenants under the 2022 Term Loan are the same as the Credit Facility. At June 30, 2024, the spread over the underlying SOFR rates was 0.85% for the 2022 Term Loan.

On April 19, 2023, the Company entered into a floating-to-fixed rate swap with respect to $200 million of the $400 million 2022 Term Loan through the maturity date of March 3, 2025. This swap fixed the underlying SOFR rate at 4.298%. On January 26, 2024, the Company entered into a floating-to-fixed rate swap with respect to remaining $200 million of the $400 million 2022 Term Loan through the maturity date of March 3, 2025. This swap fixed the underlying SOFR rate at 4.6675% (see note 8). These two swaps fix the underlying SOFR rate for the full $400 million at a weighted average of 4.48%.

On June 28, 2021, the Company entered into an Amended and Restated Term Loan Agreement (the "2021 Term Loan") that amended the former term loan agreement. Under the 2021 Term Loan, the Company has borrowed $350 million with an initial maturity of August 30, 2024 with four consecutive options to extend the maturity date for an additional 180 days each. In June 2024, the Company provided to the administrative agent of the Term Loan notice of its election to use the first of four 180 day extension options available. This extension is effective August 30, 2024 and extends the maturity date to February 26, 2025. On September 19, 2022, the Company entered into the First Amendment to the 2021 Term Loan. This amendment aligns covenants and available interest rates, including the addition of SOFR, to that of the Credit Facility. Under the terms of this First Amendment the interest rate applicable to the 2021 Term Loan varies according to the Company's leverage ratio and may, at the election of the Company, be determined based on either (1) the Daily SOFR or Term SOFR, plus a SOFR adjustment of 0.10% ("Adjusted SOFR") and a spread of between 0.85% and 1.65%, or (2) the greater of (i) Bank of America's prime rate, (ii) the federal funds rate plus 0.50%, (iii) Term SOFR, plus a SOFR adjustment of 0.10%, and 1.00%, (iv) or 1.00%, plus a spread of between 0.00% and 0.65%, based on leverage. At June 30, 2024, the spread over the underlying SOFR rates was 1.00% for the 2021 Term Loan.

On September 27, 2022, the Company entered into a floating-to-fixed interest rate swap with respect to the $350 million 2021 Term Loan through the maturity date of August 30, 2024. This swap effectively fixed the underlying SOFR rate at 4.234% (see note 8).

In April 2024, the Company notified the administrative agent of the 2022 Term Loan and 2021 Term Loan of corporate investment grade ratings received. These ratings reduced the Adjusted SOFR spread range, effective April 17, 2024. Changes in the Company's investment grade ratings may result in additional adjustments to the applicable spread in the future. Prior to April 17, 2024, the applicable spread was between 1.05% and 1.65% for both the 2022 Term Loan and 2021 Term Loan, depending on leverage.

Unsecured Senior Notes

The Company has unsecured senior notes of $1.0 billion that were funded in five tranches. The first tranche of $100 million is due in 2027 and has a fixed annual interest rate of 4.09%. The second tranche of $250 million is due in 2025 and has a fixed annual interest rate of 3.91%. The third tranche of $125 million is due in 2027 and has a fixed annual interest rate of 3.78%. The fourth tranche of $250 million is due in 2028 and has a fixed annual interest rate of 3.86%. The fifth tranche of $275 million is due in 2029 and has a fixed annual interest rate of 3.95%.

The unsecured senior notes contain financial covenants that are consistent with those of our Credit Facility, with the exception of a secured leverage ratio of no more than 40%. The senior notes also contain customary representations and warranties and affirmative and negative covenants, as well as customary events of default.

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Secured Mortgage Notes

As of June 30, 2024, the Company had $522.7 million outstanding on five non-recourse mortgage notes with a weighted average interest rate of 4.69%. All interest rates on the secured mortgage notes are fixed. Assets with depreciated carrying values of $876.4 million are pledged as security on these mortgage notes payable. For each non-recourse mortgage loan, the Company provides a customary "non-recourse carve-out guaranty." Additional guarantees related to re-leasing costs may also apply.

Other Debt Information

The Company is in compliance with all of the covenants related to its unsecured and secured debt.

At June 30, 2024 and December 31, 2023, the estimated fair value of the Company’s notes payable was $2.5 billion and $2.4 billion, respectively, calculated by discounting the debt's remaining contractual cash flows at estimated current market rates at which similar loans could have been obtained at June 30, 2024 and December 31, 2023. The estimate of the current market rates, which is the most significant input in the discounted cash flow calculation, is intended to replicate debt of similar maturity and loan-to-value relationship. These fair value calculations are considered to be Level 2 under the guidelines as set forth in ASC 820, as the Company utilizes market rates for similar type loans from third party brokers.

For the three and six months ended June 30, 2024 and 2023, interest expense was recorded as follows ($ in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Total interest incurred	$	32,941	$	30,977	$	65,555	$	61,098
Interest capitalized	(3,198)		(5,005)		(6,904)		(10,096)
Total interest expense	$	29,743	$	25,972	$	58,651	$	51,002

8. DERIVATIVE FINANCIAL INSTRUMENTS

On January 26, 2024, the Company entered into a floating-to-fixed interest rate swap ("2024 Swap") with respect to the $200 million of the $400 million 2022 Term Loan through the maturity date of March 3, 2025, fixing the underlying SOFR rate for this portion of the loan at 4.6675%. Previously, on April 19, 2023, the Company entered into a floating-to-fixed interest rate swap ("2023 Swap") with respect to $200 million of the $400 million 2022 Term Loan through the maturity date of March 3, 2025, fixing the underlying SOFR rate for this portion of the loan at 4.298%. These swaps effectively fix the underlying SOFR rate at a weighted average of 4.48% for the entire $400 million through the initial maturity.

On September 27, 2022, the Company entered into a floating-to-fixed interest rate swap ("2022 Swap") with respect to the $350 million 2021 Term Loan through the maturity date of August 30, 2024. This swap effectively fixed the underlying SOFR rate at 4.234%.

The Company's objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish these objectives, the Company primarily uses interest rate swaps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. Such derivatives are used to hedge the variable cash flows associated with the 2021 and 2022 Term Loans (referred to as "cash flow hedges").

For derivatives designated and that qualify as cash flow hedges of interest rate risk, the gain or loss on the derivative is recorded in Accumulated Other Comprehensive Income and subsequently reclassified into interest expense in the same periods during which the hedged transaction affects earnings.

The counterparties under these swaps are major financial institutions, and the swaps contain provisions whereby if the Company defaults on certain of its indebtedness, and such default results in repayment of such indebtedness being, or becoming capable of being, accelerated by the lender, then the Company could also be declared in default under the swaps. There are no collateral requirements related to these swaps.

As of June 30, 2024, the fair values of the 2023 Swap and 2024 Swap with respect to the 2022 Term Loan were $1.2 million and $659,000, respectively, and are included in other assets on the Company's condensed consolidated balance sheets. As of December 31, 2023, the fair value of the 2023 Swap with respect to the 2022 Term Loan was $555,000 and is included in other assets on the Company's condensed consolidated balance sheets.

As of June 30, 2024 and December 31, 2023, the fair value of the 2022 Swap with respect to the 2021 Term Loan was $903,000 and $1.7 million, respectively, and is included in other assets on the Company's condensed consolidated balance sheets.

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The table below presents the effect of the Company's derivative financial instruments on the condensed consolidated statements of operations for the three and six months ended June 30, 2024 and 2023 ($ in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
Cash Flow Hedges:	2024		2023		2024		2023
Amount of income recognized in accumulated other comprehensive income on interest rate derivatives	$	1,383	$	5,936	$	4,088	$	4,894
Amount of income reclassified from accumulated other comprehensive income into income as a reduction of interest expense	$	(1,803)	$	(908)	$	(3,513)	$	(1,096)
Total amount of interest expense presented in the condensed consolidated statements of operations	$	29,743	$	25,972	$	58,651	$	51,002

Over the next twelve months, the Company estimates that $2.2 million will be reclassified out of accumulated other comprehensive income as a reduction of interest expense.

The fair value of these hedges is determined using observable inputs other than quoted prices in active markets, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities. These inputs are considered Level 2 inputs in the fair value hierarchy, and the Company engages a third-party expert to determine these inputs. The fair value of the cash flow hedges is determined using the conventional industry methodology of netting the discounted future fixed cash payments and the discounted expected variable cash receipts made between the Company and its counterparties to the cash flow hedges. These variable cash receipts are based on the expectation of future interest rates which are derived from observed market interest rate curves. In addition, any credit valuation adjustments are considered in the fair values to account for potential nonperformance risk to the extent they would be significant inputs to the calculations. For the periods presented, credit valuation adjustments were not considered to be significant inputs.

9. OTHER LIABILITIES

Other liabilities on the condensed consolidated balance sheets as of June 30, 2024 and December 31, 2023 included the following ($ in thousands):

	2024		2023
Ground lease liability	$	49,898	$	53,348
Prepaid rent	30,929		34,872
Security deposits	15,782		15,050
Other liabilities	1,433		1,560
	$	98,042	$	104,830

10. COMMITMENTS AND CONTINGENCIES

Commitments

The Company had outstanding performance bonds totaling $1.1 million at June 30, 2024. As a lessor, the Company had $104.0 million in future obligations under leases to fund tenant improvements and other future construction obligations at June 30, 2024. Additionally, the Company had $9.6 million of future funding commitments related to investments in real estate debt at June 30, 2024 as discussed in note 3.

Litigation

The Company is subject to various legal proceedings, claims, and administrative proceedings arising in the ordinary course of business, some of which are expected to be covered by liability insurance. Management makes assumptions and estimates concerning the likelihood and amount of any potential loss relating to these matters using the latest information available. The Company records a liability for litigation if an unfavorable outcome is probable and the amount of loss or range of loss can be reasonably estimated. If an unfavorable outcome is probable and a reasonable estimate of the loss is a range, the Company accrues the best estimate within the range. If no amount within the range is a better estimate than any other amount, the Company accrues the minimum amount within the range. If an unfavorable outcome is probable but the amount of the loss cannot be reasonably estimated, the Company discloses the nature of the litigation and indicates that an estimate of the loss or range of loss cannot be made. If an unfavorable outcome is reasonably possible and the estimated loss is material, the Company discloses the nature and estimate of the possible loss of the

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litigation. The Company does not disclose information with respect to litigation where an unfavorable outcome is considered to be remote or where the estimated loss would not be material. Based on current expectations, such matters, both individually and in the aggregate, are not expected to have a material adverse effect on the liquidity, results of operations, business, or financial condition of the Company.

11.    STOCKHOLDERS' EQUITY

In the third quarter of 2021, the Company entered into an Equity Distribution Agreement ("EDA") with six financial institutions known as an at-the-market stock offering program ("ATM Program"), under which the Company may offer and sell shares of its common stock from time to time in "at-the-market" offerings with an aggregate gross sales price of up to $500 million. In connection with the ATM Program, Cousins may, at its discretion, enter into forward equity sale agreements. The use of a forward equity sale agreement ("Forward Sales") would allow the Company to lock in a share price on the sale of shares of its common stock at the time the agreement is executed but defer receiving the proceeds from the sale of shares until a later date, allowing the Company to better align such funding with its capital needs. Sales of shares of Cousins' stock through its banking relationships, if any, are made in amounts and at times to be determined by Cousins from time to time, but the Company has no obligation to sell any of the shares in the offering and may suspend sales in connection with the offering at any time. Sales of Cousins' common stock under Forward Sales, if undertaken, meet the derivatives and hedging guidance scope exception as the contracts are related to the Company's own stock. On May 8, 2024, the Company filed a Form S-3 and, in conjunction with that Form S-3 filing, the Company entered into a Second Amendment to the EDA to allow for the continued issuance of shares under this ATM Program.

To date, the Company has issued 2.6 million shares under the ATM Program and has generated cash proceeds of $101.4 million, net of $1.1 million of compensation to be paid with respect to Forward Sales, $1.7 million of dividends owed during the period the Forward Sales were outstanding, and $900,000 of other transaction related costs. The Company did not issue any shares under the ATM Program during the three months ended June 30, 2024 and did not have any outstanding Forward Sales contracts for the sale of its common stock as of June 30, 2024 or December 31, 2023.

On February 6, 2024, the Company retired all 2,536,583 shares of Treasury Stock outstanding. These treasury shares had an average cost basis of $57.44 per share.

12. REVENUE RECOGNITION

The Company categorizes its primary sources of revenue into revenue from contracts with customers and other revenue accounted for as leases under ASC 842 as follows:

•Rental property revenues consist of (1) contractual revenues from leases recognized on a straight-line basis over the term of the respective lease; (2) percentage rents recognized once a specified sales target is achieved; (3) parking revenues; (4) termination fees; and (5) the reimbursement of the tenants' share of real estate taxes, insurance, and other operating expenses. The Company's leases typically include renewal options and are classified and accounted for as operating leases. Rental property revenues are accounted for in accordance with the guidance set forth in ASC 842.

•Fee income consists of development fees, management fees, and leasing fees earned from unconsolidated joint ventures and from third parties. Fee income is accounted for in accordance with the guidance set forth in ASC 606.

For the three and six months ended June 30, 2024, the Company recognized rental property revenues of $211.5 million and $420.3 million, respectively, of which $61.3 million and $122.0 million, respectively, represented variable rental revenue. For the three and six months ended June 30, 2023, the Company recognized rental property revenues of $204.0 million and $404.0 million, respectively, of which $62.2 million and $121.4 million, respectively, represented variable rental revenue.

For the three and six months ended June 30, 2024, the Company recognized fee and other revenue of $1.5 million and $1.9 million, respectively. For the three and six months ended June 30, 2023, the Company recognized fee and other revenue of $0.4 million and $3.0 million, respectively.

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13. STOCK-BASED COMPENSATION

The Company currently has several types of employee stock-based compensation — restricted stock, restricted stock units ("RSUs"), and the Employee Stock Purchase Plan ("ESPP"). While the Company's plans also allow for the issuance of stock options, none had been exercised or were outstanding as of or during any of the periods presented. A portion of the Company's independent directors' compensation is also provided in the form of company stock.

The Company's compensation expense for the three and six months ended June 30, 2024 relates to restricted stock, stock-settled RSUs, and the ESPP. Restricted stock and the stock-settled RSUs are equity-classified awards for which compensation expense per share is fixed. Cash-settled RSUs are liability-classified awards for which the expense fluctuates from period to period dependent, in part, on the Company's stock price. Cash-settled RSUs were last awarded in 2019 and were fully expensed as of March 31, 2023. For the three and six months ended June 30, 2024 and 2023, stock-based compensation expense, net of forfeitures, was recorded as follows ($ in thousands):

	Three Months Ended June 30,		Six Months Ended June 30,
	2024	2023	2024	2023
Equity-classified awards:
Restricted stock	$