Good day and welcome to the Cousins Properties Second Quarter Conference Call and Webcast. All participants will be in a listen-only mode. [Operator Instructions] Please note, this event is being recorded. And I would now like to turn the conference over to Pam Roper, General Counsel. Please go ahead..

Good morning and welcome to Cousins Properties’ second quarter earnings conference call. With me today are Colin Connolly, our President and Chief Executive Officer; Richard Hickson, our Executive Vice President of Operations; and Gregg Adzema, our Chief Financial Officer.

The press release and supplemental package were distributed yesterday afternoon as well as furnished on Form 8-K. In the supplemental package, the Company has reconciled all non-GAAP financial measures to the most directly comparable GAAP measures in accordance with Reg G requirements.

If you did not receive a copy, these documents are available through the quarterly disclosures and supplemental SEC information link on the Investor Relations page of our website.

Please be aware that certain matters discussed today may constitute forward-looking statements within the meaning of federal securities laws and actual results may differ materially from these statements due to a variety of risks and uncertainties and other factors, including the risk factors set forth in our Annual Report on Form 10-K and our other SEC filings.

The Company does not undertake any duty to update any forward-looking statement whether as a result of new information, future events or otherwise.

The full declaration regarding forward-looking statements is available in the supplemental package posted yesterday and a detailed discussion of some potential risks is contained in our filings with the SEC. And now, I’ll turn the call over to Colin Connolly..

Ongoing migration of the Sun Belt; and urbanization in our targeted submarkets. With these supporting tailwinds, the company is exceptionally positioned for the future. Our markets are healthy. The balance sheet is strong. The portfolio is best-in-class.

And importantly, we have an excellent growth profile with both increasing same property NOI and a well-leased development pipeline. Before turning the call over to Richard, I want to express my thanks and aberration to the Cousins team. Your tireless work and passion for the company is recognized and appreciated.

Richard?.

Thanks, Colin. I’m pleased to report that our strong first quarter operational performance continued in the second quarter. As a reminder, given we closed our merger with TIER REIT in mid-June, many of the operating metrics that I will cover include the effect of the TIER operating portfolio.

As Colin referenced, at the portfolio level, we completed nearly 1.1 million square feet of leasing this quarter. Our quarterly leasing volume was our highest since 2015, and I would note that only about 8% of our total leasing this quarter came from the TIER portfolio.

Rent growth was also strong, with second-generation net rents increasing 21.5% on a GAAP basis and 4.9% on a cash basis. However, when excluding the sizable and unique BB&T lease, which represented a modest increase in net rent, second-generation net rents increased 26% on a GAAP basis and 11.9% on a cash basis.

With this solid leasing activity and including the addition of TIER’s operating properties, our total portfolio weighted average occupancy for the quarter was 91.1%, and we ended the quarter at 93.7% leased.

Our same property portfolio was slightly higher than our total portfolio with weighted average occupancy of 91.8% and ending the quarter at 93.9% leased. Before moving to some market specifics, I want to briefly highlight the favorable rankings of our core Sun Belt markets in CBRE’s recently published 2019 Tech Talent Scorecard.

This is an annual survey that ranks major U.S. and Canadian markets based on their ability to attract and grow tech talent. All six of our core markets screened well, with both Austin and Atlanta in the top 10. CBRE also cited that Atlanta is the fourth fastest growing market for technology jobs, adding over 32,000 jobs in the past five years.

Given how critical demand from the technology sector has become, these survey results are very encouraging for the continued strength of our core markets and the Sun Belt overall. I’ll now turn to some details about our two largest markets in terms of NOI, Atlanta and Austin. First in Atlanta.

The overall market continues to be healthy and active in all respects. According to JLL, Atlanta Class A asking rental rates continued their growth in the second quarter, increasing 5.2% year-over-year.

CoStar recently noted that rent growth in Buckhead and Midtown in particular, where about 75% of our portfolio is located, has materially outpaced other Atlanta submarkets, citing that rents in these two prominent submarkets on a combined basis are now 50% above where they were in 2010.

The trend of solid absorption has continued as well with JLL noting that year-to-date net absorption in the Class A office segment stood at over 1 million square feet, of which, about 60% has been in Midtown.

In terms of supply, Atlanta construction activity remains manageable as a percent of inventory, though there is a concentration of new construction in Midtown. Despite this dynamic, we view the supply/demand balance is healthy, with active projects in the core of Midtown sitting at over 70% pre-leased.

This quarter, our Atlanta team executed 251,000 square feet of leases. This solid level of activity stand across all our submarkets and included a 15,000 square-foot expansion and 85,000 square-foot extension of OneTrust at Northpark in the central perimeter.

Our over 7 million square-foot Atlanta portfolio continues to be well positioned at 93% leased as of quarter end. Moving on to Austin, according to JLL, overall asking rental rates once again grew meaningfully, increasing 23% over the second quarter of 2018.

CoStar puts overall market Class A vacancy at 6.4%, with the North domain submarket running at a remarkable 1.8% vacancy level. The CBD continues to run at under 6% vacancy. Market-wide construction activity in Austin is tracking at robust levels, with JLL pegging it at 5.2 million square feet and approximately 56% pre-leased.

Our portfolio, which, through the TIER merger, now consists of over 4 million square feet located across the CBD domain and Southwest submarkets ended the quarter at 95.8% leased.

Across the market, our team signed leases totaling 116,000 square feet during the quarter, including a 47,000 square-foot expansion of an energy services company at One Eleven Congress and a 35,000 square-foot renewal of Stitch Fix at 816 Congress. Like last quarter, our existing pipeline of leasing activity continues to be strong in Austin.

Our remaining core markets of Charlotte, Tampa, Phoenix and Dallas are also tracking nicely, with all four characterized by positive year-to-date net absorption, steady vacancy, rental rate growth and manageable supply. Our teams in these four markets executed 647,000 square feet of leasing this quarter, including the 561,000 square-foot BB&T lease.

Note that via the TIER merger, we added the 891,000 square-foot Bank of America Plaza to our Uptown Charlotte portfolio. As you will recall from our prior discussions around TIER, this property is currently 89.7% leased, and Bank of America will vacate approximately 295,000 square feet at the end of 2020.

We are aware of this known move-out prior to announcing the TIER merger, underwrote the investment with that in mind and view it as a fantastic value-add opportunity at a main and main location. Our primarily Uptown Charlotte portfolio is 95% leased overall with otherwise very few lease expirations over the next couple of years.

The TIER merger also provided us opportunity to establish a larger position in Dallas, adding 516,000 square feet in two properties located in the Preston Center and Legacy North Dallas submarkets. 5950 Sherry Lane and Legacy Union are high-quality assets that are currently 97.2% leased.

We are thrilled to have a team on the ground and this foothold to build upon in a market that has posted some of the most impressive job growth in the country since 2010 at just over 900,000 jobs. With that, I’ll hand it off to Gregg..

First, we anticipate year-over-year same-property NOI growth of 3.25% to 5.25% on a cash basis. This is up from a previous guidance of 3% to 5%. Moving on, we anticipate a gain on land sale of $14.5 million, up from $13.1 million due to a gain recognized on the sale of a land in Tempe to the city to widen roads for new street curb line.

Next, we anticipate fee and other income of $32 million to $34 million, up from the previous range of $28 million to $30 million due to an increase in termination fees at Hearst Tower in connection with a new BB&T lease. We anticipate general and administrative expenses of between $34 million and $36 million, net of capitalized salaries.

This is up $0.5 million from our previous guidance of $33.5 million to $35.5 million. We anticipate interest and other expenses, net of capitalized interest, of $66 million to $68 million, up from the previous range of $50.5 million to $52.5 million.

We anticipate GAAP straight-line and rental revenue of $28.5 million to $30.5 million, up from the previous range of $22.5 million to $24.5 million. We anticipate above and below market rental revenue of between $10 million to $12 million, up from the previous range of $5.5 million to $7.5 million.

All these changes are driven by the closing of the TIER transaction in mid-June. Finally, Colin discussed a couple of new property transactions during the second half of 2019 that you should incorporate into your projections. First, on the investment front, we’ve entered into a contract to acquire our partners’ 50% interest in Terminus.

This transaction values both of the Terminus’ assets at $503 million. As part of this transaction, we will assume our partner’s interest in the Terminus mortgage debt, which currently has a total outstanding balance of approximately $196 million. Our purchase represents approximately 50% both of these numbers.

We anticipate closing this transaction early in the fourth quarter. But please note, this transaction will trigger the consolidation of these two properties at fair value and results in us recognizing a gain on a stepped-up basis in calendar year 2019. But this gain will have no impact on FFO.

On the disposition front, we have commenced the process of selling our Woodcrest asset in New Jersey and have classified it as held for sale in our second quarter financial statements. We aren’t selling this asset to delever, and we don’t need the proceeds to achieve our targeted leverage levels.

Quite simply, this is a noncore Legacy TIER asset in a noncore market. We anticipate closing this disposition late in the fourth quarter. Some of the assumption change I just walked you through were driven by the TIER transaction, and some of them are not.

Specifically, outside of TIER, our same-property growth continues to exceed expectations, and we’ve announced several positive leasing and investment transactions.

However, now that we have closed TIER, we think it’s important to isolate its earnings impact and compare our current expectations to our original expectations back in March when we announced the deal.

In March, we projected the TIER transaction with reduced 2019 FFO by $0.01 or $0.02 a share, which equates to between $0.04 and $0.08 per share after adjusting for the reverse stocks split. We currently project the reduction will be approximately $0.06 per share after adjusting for the reverse split, right in the middle of our range.

Said differently, on an apples-to-apples basis, we are squarely in the middle of the $0.01 or $0.02 original range that we announced in March and overall, the financial implications of the TIER transaction are in line with our expectations. With that, let me turn the call back over to the operator..

We will now begin the question-and-answer session. [Operator Instructions] And the first question comes from the line of Jamie Feldman with Bank of America. Please go ahead..

Great thank you and good morning. Gregg going back to your – you're in line with a the $0.06 that you originally expected from the TIER merger, I know you guys have said over time that starts to burn off based on sign leases that have yet to commence.

Can you just talk through how we should think about that ramp to get to a point where it's actually, kind of, neutral to earnings or even accretive and the timing?.

So as we talked about back in March when we announced the TIER transactions, it will be dilutive to 2019 and generally the 2020 FFO.

But beginning in 2021 and 2022 as you alluded to, the development pipeline starts to produce results from the tier side and the dilution flips and turns into accretion moving out in kind of the second half of 2021 and into 2022 and beyond. In terms of 2020 dilution, it should be similar on a percentage basis to what we thought 2019 would be.

So we only have about a half year results here, $0.06. So we're not going to provide you with 2020 guidance yet. But in terms of the impact, the earnings impact of the TIER transaction in 2020 numbers, it should be similar to 2019 on an annualized basis. .

You're saying $0.12 in 2020 or $0.06 in 20?.

Close to $0.12..

Closer to $0.12. Okay. I thought you guys had said it starts to kind of burn off throughout the year. .

It starts to burn off, I mean, the Domain properties, as you know, has began to deliver in 2020 people start to move in 2020, but it takes time. So that's why the impact on 2020 is the backup of 2020 and it's muted. The positive impact really starts to kick in, in 2021 and then firmly in 2022 and beyond..

Okay. And then thinking about Buckhead, can you guys just talk about some of the lease explorations in that sub-market overall? And then your prospects to fill up Terminus. I mean my understanding is there's a decent amount of sizeable explorations coming. I'm just curious what your outlook is..

Jamie Good morning it's Collin. And we're very excited about the transaction at Terminus. And as I noted in my prepared remarks, we've got a terrific value add acquisition opportunity to put the Cousins platform at work. And as I said, we've got about 20% of the project is currently vacant.

And as we look forward, there's roughly a million or so square feet, according to JLL, of demand in the market. And I think, importantly, for us at Terminus, outside of our vacancy we've got about 6.3 years of weighted average term. So we don't have a lot of near term explorations.

But as you look at the market as a whole, between now and 2022 there's, there's just over four million square feet of space expiring. So as we think about leasing up the balance of Terminus, that'll certainly be the list that our team will be focused on. .

Are there – I mean, can you quantify any large chunky explorations that are coming in that market that might be competitive?.

We certainly can, and we do have a list, but I think for competitive reasons, we'd rather not share that on this call. But rest assured, our team has – knows exactly where those expirations are. And we'll have those conversations and as we try to go lease up the balance of that space. We're excited about the opportunity. .

Okay. And then finally from me, just, you mentioned a New Jersey asset for sale.

Can you talk about your thoughts on some of the other – whether it's kind of new market you may not want to stay in or just other assets from TIER that you might, or even from Cousins, that you might be whether it's Kinda new markets you may not want to stay in or just other acids from tier that you might, or even from cousins that you might be thinking about selling?.

Yes, Jamie, and I'm glad you asked that question. And I think, as we look at the portfolio, we're clearly doing an analysis of the portfolio going forward and evaluating kind of what's core and non-core. But I want to make sure I reinforce the point. If we do evaluated and decide that there's some additional non-core sales.

As I said in my prepared remarks, we're committed to keeping the leveraged levels within our target of four to four and a half times. So we identify additional non-core sales in the future. We're optimistic in the team's ability to source and identify new investment opportunities.

Whether they'd be an acquisition like Terminus or you know potentially a new development starts like a 100 mil. So I think the net-net of that, through some capital an acquisition like terminus or you know, potentially new developments start like a hundred mils.

So I think the net-net of that, through some capital recycling, we do intend to keep that leverage between four and 4.5 times. I know there's been some discussion in the investment community where we look to do a big strategic disposition like the Orlando portfolio and post the Parkway transaction. That took us down to mid-3s.

And we don't see such a strategic move coming. I think you could see some additional sales in non-core markets like the Fort Worth, potentially a huge stand. Again, those are markets where we don't have platforms but we think we can balance those with some additional new investment opportunities. .

And how are you thinking about managing the dilution? The earnings impact..

Again – what I'm trying to hit at Jamie, as we look at some additional future non-core sales, there's opportunities for us to reinvest some of that capital in – whether it be an acquisition opportunity or development opportunity, which might have some timing until even if we sell on the front end.

But again, I think we're confident we can keep that leverage level in between those long-term stated goals of four to four-and-a-half times and recycle capital if needed, potentially use some of those non-core sales to fund new opportunities. .

Okay, alright thank you..

Next question comes from the line of Blaine Heck with Wells Fargo. Please go ahead..

Thanks. Good morning. Colin, maybe a follow-up on the question on Buckhead move outs. Can you also give some color on some of the major upcoming expirations you guys listed associated with TIER in the supplement? Bank of America, 300,000 square feet, next year in Charlotte, obviously, being the largest one. Conduent I guess should be sold by then.

And then Time Warner, 112,000 square feet next year in Austin..

Yes Blaine, happy to answer that. Good morning. The Bank of America expiration that you referenced is approximately 300,000 feet in December of next year. Richard touched on that in his prepared remarks. That is a known move out. We knew that going into the TIER transaction and priced that accordingly into the overall merger.

So we feel like that's a fabulous value add acquisition opportunity for us. Similar to what we're doing at Terminus, we've got a terrific team in Charlotte. They have just demonstrated their ability to backfill significant – a block of space also vacated by Bank of America.

So we look forward to that opportunity, and I'm confident in time, as we get the space back, we'll do quite well. The rents are fair bit below market at the Bank of America space. So we feel like that, again, gives us a great opportunity.

Looking towards the other two you touched on conduit is our goal is to have that project sold and by August of 2020. Over in Austin, with Time Warner Cable, just over 100,000 feet at domain point. I'd say it's a bit premature. We have no reason, at this point, to think that that's not an opportunity to renew, but it's still very early in the process..

Okay. That's fair.

And then on the Bank of America space, what type of kind of tenant profile will you guys be targeting for a backfill?.

Well, look, I think, some recent announcements in Charlotte gave us quite a bit of confidence and encouragement that there's going to be a pretty diverse set of customers who will look at that space. Obviously, Charlotte is geared towards financial services, companies and large banks and we've seen them be quite active.

But at the same time, we've seen some really terrific announcements, new move ins in Uptown Charlotte from a more diversified companies. Honeywell had just announced they're going to move their corporate headquarters from New Jersey to uptown.

Lowe's, which has historically been a suburban Charlotte, company has elected to take a quite a bit of space in uptown Charlotte. So again, as we look at the pool of potential customers, we're optimistic that it will be a diversed set across a wide-ranging industries..

Okay, great. And then, lastly, it looked like CapEx per square foot in concessions in general were higher this quarter.

Can you just talk about whether that was a mix issue with the BB&T lease this quarter, and more generally, what you're seeing with respect to TIs and pre-rent in your markets?.

Yes. You hit it, Blaine, in terms of the – it ticked up there. That was, I'd said, directly associated with the BB&T lease, which was – it was a 15-year lease with, I'd say, a typical amount of capital and the TI is associated with that.

In addition to that, we did have some buyouts that we have to do, that we had discussed previously to put together that 500,000 square-foot block of space. So you see some of those costs aggregated and capitalized into that number. So I think that skewed it upwards of where it's typically have been.

I think as we look across our markets as a whole and think about concessions, both TIs and free rent, as I said on previous calls, construction costs continue in kind of inch up and so we've seen TIs inch up accordingly. 12 months ago, 18 months ago, they were $5 per square foot per year.

Today, maybe they've been stepped $5.5 per square foot per year. But at the same time, we've seen net rents, base rents continue to inch up. And we've actually seen pre-rent moderate, and some markets actually decline. So overall, net effective rents in our markets continue to move up..

Thanks, Colin..

Thank you, Blaine..

Next question comes from the line of John Guinee with Stifle. Please go ahead..

Great. You guys have been busy. This is more of a two curiosity questions. The first one is Hearst Tower, 966,000 square feet, 97% occupied per year of sop.

How on earth does one generate 561,000 square feet of available space instantaneously? Were the tenants just not occupying the space and just ready to leave?.

John, all the various customers were occupying the vast majority of their space. I'd say it took a lot of ingenuity, and hard work and relationships amongst the team. I think the biggest block of that space, roughly 300,000 square feet, was Bank of America.

And as we discussed on previous calls, we're moving to a new building where they were consolidating several different locations into one space. So that was the vast majority of it. And it certainly helped give us a leg up, that there was a pact there. And then, we had to really work it with a few other customers.

And as I mentioned, there were some fee – termination fees that we paid as a part of that to help make that possible. And, as we've said, those we're capitalized into the overall deals and I think explains why our costs inched up slightly this quarter..

Right. Okay. And then the second, looks like you're going to buy your way into Terminus at about $410 a square foot and likely sell Hearst at $471 a foot.

What do you think it costs to build new product in both of those markets right now?.

John, in kind of the urban areas to build large towers, it saved plus or minus $500 a square foot, and it can depend based on land and TIs or a particular customer, but I'd say that's a pretty down-the-middle estimate..

Great, thank you very much..

Thank you, John..

[Operator Instructions] The next question comes from the line of Dave Rodgers with Baird. Please go ahead ..

Yes, good morning. Colin, you talked earlier about domain point, and obviously, TIER had some aggressive development, redevelopment plans for the entire domain. But as you looked at that, I think you mentioned potential renewal with Time Warner.

So I guess maybe just give us at little more thought on what your thoughts are on domain, and kind of how you might view the pace of development or redevelopment there versus maybe what have been communicated with TIER previously?.

Yes. Dave, I'd say the plans that TIER had for the long-term redevelopment within our project, we share these plans. And as we continue to look at the opportunity, I think our enthusiasm about the domain as a whole continues to rise as we get under the hood. And I referenced the lease that we're in process of doing at Domain 10.

The demand for space in the domain is strong. I would say that if we moved forward with a renewal of Time Warner at domain point, it doesn't necessarily preclude the redevelopment of the site. There are some adjacent land. There are some things you can do with the parking garages.

So by signing that renewal doesn't necessarily preclude some redevelopment on the portion of that site..

And then maybe just sticking with Austin, I mean now with the domain, with the CBD assets that you previously owned, and then some of the assets that they had owned in the Southwest submarkets in the suburbs, how do you view Austin? And is that all kind of a core holding for you now? Or can you rank those in terms of how you're thinking and feel about Austin in the various submarkets?.

Yes, Austin as a whole is a market that Cousins has been in for 20-plus years and a market that we continue to see a fantastic growth profile. I think again, if you back up prior to the TIER merger is our management team and board put together our strategic plan for the company.

We had absolutely identified the Southwest and domain as submarkets that we wanted to be invested and active in. And I think the TIER transaction presented as an opportunity to advance that our strategic plan.

And we feel like we now have fortress asset with the terraces in Southwest and couldn't be more excited about the buildings that we have at the domain and the potential to add to that over time as the demand continues to grow..

And then maybe for Gregg, Colin talked abouas the potential development starting in the second half of the year and continued activity in discussions.

I mean, do you kind of view asset sales as the primary source of funding for the development spending going forward? And how aggressive do you feel like you'd need to be to sell assets to fund the growth?.

Well, every time we've had to use the proceeds, Dave, we look at the most cost efficient source of capital. And so, right now, the most cost efficient source of capital for us would be asset sales.

And you layer on top of that the strategic reasons behind that, i.e., we've acquired some assets through the TIER transaction that are noncore markets for us. And it makes asset sales by far the most likely source of capital for any incremental investments in the second half of 2019. Remind me what your second part of the question..

I think addressed it. I guess part of it is you'll use some of the proceeds from Hearst. It sounds like, assuming that happened, the fund in reverse terminate.

So I guess maybe, the second part would be, how much do you feel like you'd need to sell starting new development or do you feel pretty well positioned, at least near term with those two events?.

Yes. Dave, I think the way to think about that – it's a great question. The way to think about that is from a leverage perspective, certainly the way we think about it. I mean we said it several times on this call and we mean it. I mean, our target to leverage level is between four to four and a half times net-debt-to-EBITDA.

We've just actually been running the company in that range since 2014, so for almost six straight years. So we're just not saying it, we're actually doing it. And so we'll adjust our asset sales accordingly to make sure that we stay within that range..

Okay, great. Thank you..

Next question comes from the line of Daniel Ismail with Green Street Advisors. Please go ahead..

Thanks guys. Good morning. Can you may be describe the efficiency to consolidate Terminus.

Was the JV partner looking to exits? or you approached them and made the appetite to consolidate other JV interest in the portfolio?.

Good morning Daniel. At Terminus, again, I think we've always – as we look at Buckhead, felt like there's a terrific opportunity. And being in conversations with our partner, which is multibillion dollar fund.

They were making some of their own fund level decisions and we saw an opportunity to put together the transaction and move forward with again what we think is going to be a terrific kind of value add opportunity. But I think there were certain fund level decisions that they were making and again, created a good opportunity.

And I think, more broadly speaking, as we look at other joint venture interested, we've got some and are fortunate to have some terrific partners that we've worked very well with and created value with. And I think at times where it makes sense for those parties to exit. And we think it's good investment opportunity going forward.

We're always interested in pursuing this. But as we sit here today, again I think we've got some great partners that we're working very, very well together..

Good.

On future dispositions or potential dispositions, any potential consequences from say a Hearst Tower or any of the likely TIER assets?.

Danny, it's Gregg. Good morning. We have a clear line of sight to be able as so sell the assets that we talked about and then some without the requirement of special distribution or a 1031..

Okay. And then just last one for me. It looks like there is some modest cost savings in the domain developments.

Any of those relating to just accounting differences or anything we should be aware of in terms of synergies relating to the TIER transaction?.

Yes, Dan. These were more accounting adjustments as you brought it over from TIER to Cousins..

Okay. Great, thanks guys..

Next question comes from the line of Anthony Paolone from JPMorgan. Please go ahead..

Thank you. Good morning. Just looking at the development pipeline in the supplemental and now that you've got the TIER projects rolled in.

Can you give us an update on where the pipeline's expected yield is? And how that might compare to where you see the private market?.

Sure, Tony, I think, as we've rolled TIER into Cousins and their development pipeline, I think it looks very similar to the projects that we have, which in total, look at the shadow pipeline could support over 3.5 million square feet. And we've consistently been able to deliver GAAP yields in a north of an 8% yield.

And I think that remains unchanged with the TIER projects now within Cousins. And so I think if you look at the private market for new trophy quality properties, we're seeing cap rates certainly in the fives and I would tell you in terms of some recent trades it's been in the very low fives for stabilized properties in Austin.

And then as you look at the other markets within our portfolio, they tended to range in that 5.5 to 5.75 range. So there's quite a bit of spread, quite a bit of margin and quite a bit of customer interests and demand. And that's why we remain so encouraged about the opportunities in front of us..

Okay. And just maybe this is a Gregg question. Just to understand, as we think about just talking about development yields going forward, if I look at the TIER assets that were added, I think, the basis you show is actually a little bit less than where TIER used to show them.

And it seemed like you paid a premium to their basis for the entity so I didn't know this was an allocation thing, or how we should think about that?.

Tony, you're dead on. We hired a third party, as do all companies do when they do a transaction like TIER transaction to provide an independent third-party evaluation of what's called a PPA, purchase price allocation. And the numbers that you see in our documents right now are priliminary they are actually finalized the third quarter but we stopped.

So you’ll probably see a slight tweak. Again the numbers that we put, the TIER assets on are financial statements at are the results of a purchase price allocation of the macro, the total price that we pay for TIER..

Okay. And so but it sounds like between that and Collin's comments, when TIER used to talk about 9% kind of development yields, your yields, given what you think you've paid for these assets will be comparable, right? You didn't allocate more money to those and so you're taking an eight or something like that..

Tony, it ultimately again, where else can we – where it gets allocated whether it's specifically into the land or elsewhere under the balance sheet, we ultimately pay the premium that we paid.

But I would just kind of pointed to my earlier comments that we look at our development pipeline and remain confident that we can continue to deliver 8% yields across the entirety of our portfolio. I think Austin include and we're excited about in front of us there..

Okay, great. Thank you..

This concludes our question-and-answer session. I would like to turn the conference back over to Colin Connolly for any closing remarks..

We appreciate you spending the time with us this morning. As you can tell we're excited about having the TIER merger behind us and were excited about the opportunity in front of us for Cousins Properties. We appreciate your interest and we look forward to talking to you again next quarter..

Ladies and gentlemen the conference is now concluded. Thanks for attending today’s presentation. You may now disconnect..