Real-time Form 4 intelligence. Smarter insider tracking.
YoY shift: Neutral
Year-over-year tone shift - average net-tone change across Risk Factors and MD&A vs the prior 10-K. This filing is -0.03pp more bearish than last year's.
Why YoY instead of absolute: the LM lexicon has ~6.6× more negative words than positive (legal/risk-disclosure language is heavy on hedging), so every 10-K reads bearish on raw tone. Year-over-year change strips that bias and surfaces the actual shift in management's framing.
Tone shift by section
The two components the gauge averages: how Risk Factors and MD&A each shifted in net tone versus last year's 10-K. The headline above is their average, so a green needle over a soft section just means the other section carried it.
Risk Factors
-0.09pp
Flat
Net-tone change vs last year's 10-K.
MD&A
+0.03pp
Flat
Net-tone change vs last year's 10-K.
Per-snippet highlights
Sentence-level sentiment highlighting with category and subcategory filters is coming once the snippet-scoring pipeline lands. For now, dig into the actual section text on the Sections tab.
Language change vs prior 10-K
Risk Factors (Item 1A) - words with the biggest YoY frequency increase
Negative rising
cyberattacks+9
cyberattack+7
adverse+4
unauthorized+3
incidents+2
Positive rising
favorable+3
effective+1
stabilized+1
beautiful+1
stabilize+1
Risk Factors (Item 1A)
12,953 words
Item 1A. Risk Factors
Below are the risks we believe investors should consider carefully in evaluating an investment in our securities.
General Risks of Owning and Operating Real Estate
Our ownership of commercial real estate involves a number of risks, the effects of which could adversely affect our business.
General economic and market risks . In a general economic decline or recessionary climate, our commercial real estate assets may not generate sufficient cash to pay expenses, service debt, or cover operational, improvement, or maintenance costs, and, as a result, our results of operations and cash flows may be adversely affected. Factors that may adversely affect the economic performance and value of our properties include, among other things:
• changes or volatility within the national, regional, and local economic climate, including dislocations and volatility in the capital markets;
• Risks associated with real estate assets, including:
• competition from other available properties and other local real estate conditions such as an of rentable space caused by increased development of new properties, a reduction in demand for rentable space caused by a change in the preferences and requirements of our tenants (including space usage), such as work-from-home practices and utilization of open workspaces or "co-working" space, or local economic conditions decreasing the desirability of our locations,
Language change vs prior 10-K
MD&A (Item 7) - words with the biggest YoY frequency increase
Negative rising
termination+5
impairment+4
bankruptcy+2
losses+1
Positive rising
effective+8
stabilized+1
strong+1
improvement+1
MD&A (Item 7)
10,019 words
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis should be read in conjunction with the selected financial data and the consolidated financial statements and notes.
Overview of 2025 Performance and Company and Industry Trends
Our strategy is to create value for our stockholders through ownership of the premier office portfolio in Sun Belt markets of the United States, with a particular focus on Austin, Atlanta, Charlotte, Tampa, Phoenix, Dallas, and Nashville. This strategy is based on a disciplined approach to capital allocation that includes opportunistic acquisitions, selective development, and timely dispositions of non-core assets, with a goal of maintaining a portfolio of newer and more efficient properties with lower capital expenditure requirements. To implement this disciplined approach, we maintain a simple, flexible, and low-leveraged balance sheet, which allows us to pursue compelling growth opportunities at the most advantageous points in the cycle. We utilize our strong local operating platforms within each of our major markets to implement this strategy.
During 2025, we completed the strategic acquisition of an operating property, The Link, a 292,000 square foot lifestyle office property in Uptown Dallas, for a purchase price of $218.0 million. We also received repayment at par for two investments in real estate debt, secured by interests, respectively in Saint Ann Court in Dallas and Radius in Nashville of $138.0 million and $12.8 million, respectively, as well as loaned our Neuhoff joint venture partner $19.6 million at an interest rate of SOFR plus 625 basis points which the partner used to fund their portion of the joint venture loan repayment. Finally, we sold our claim with SVB Financial group for $4.6 million.
• the financial condition of our tenants, including potential adverse effects from the bankruptcy or insolvency of one or more major tenants,
• the attractiveness of our properties to tenants or buyers,
• changes in market rental rates and related concessions granted to tenants including, but not limited to, free rent and tenant improvement allowances,
• the need to periodically repair, renovate, and re-lease properties, and
• potential delays in completion of development and re-development projects due to supply chain disruptions, labor shortages, and increased construction costs;
• the impact of common stock, debt, or operating partnership issuances;
• uninsuredlosses (including those resulting from high deductibles) or losses in excess of our insurance coverage as a result of casualty events or other claims or events;
• insolvency of our insurance carriers or increased cost or unavailability of insurance;
• the financial condition and liquidity of, or disputes with, joint venture partners;
• sociopolitical unrest such as political instability, civil unrest, armed hostilities, or political activism resulting in a disruption of day-to-day building operations;
• the immediate and long-term impact of a public health crisis, such as a pandemic, epidemic, or outbreak of a contagious disease and the governmental and third party response to such a crisis;
• changes in federal, state, and local income laws and regulations (including tax laws and environmental or other regulatory requirements) as they affect real estate companies and real estate investors;
• changes in interest rates and availability and cost of corporate and property financing sources, and the inability to comply with debt covenants under credit agreements;
• risks associated with security breaches through cyberattacks (as hereafter defined) or otherwise;
• changes in senior management, the Board of Directors, or key personnel; and
• risks associated with climate change and severe weather events, as well as compliance with regulatory efforts intended to address those risks.
Uncertain economic conditions may adversely impact current tenants in our various markets and, accordingly, could affect their ability to pay rent owed to us pursuant to their leases. In periods of economic uncertainty, tenants are more likely to downsize and/or to declare bankruptcy; and, pursuant to various bankruptcy laws, leases may be rejected and thereby terminated. Furthermore, our ability to sell or lease our properties at favorable rates, or at all, may be negatively impacted by general or local economic conditions.
Our ability to collect rent from tenants may affect our ability to pay for adequate maintenance, insurance, and other operating costs. Also, the expense of owning and operating a property is not necessarily proportionally reduced when
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circumstances such as reduced occupancy or other market factors cause a reduction in revenue from the property. If a property is mortgaged and we are unable to meet the mortgage payments, the lender could foreclose on the mortgage and take title to the property.
Impairment risks . We regularly review our real estate assets for impairment in accordance with accounting principles generally accepted in the United States ("GAAP"); and based on these reviews, we may record impairments that have an adverse effect on our results of operations. Negative or uncertain market and economic conditions, as well as market volatility, increase the likelihood of incurring impairment. If we decide to sell a real estate asset rather than holding it for long-term investment or if we reduce our estimates of future cash flows on a real estate asset, the risk of impairment increases. In some cases, our joint venture partners may elect to require a sale of a real estate asset that we intended to hold for a longer period, which could increase the risk of impairment. The magnitude and frequency with which these charges occur could materially and adversely affect our business, financial condition, and results of operations.
Leasing risk . Our operating office properties were 90.7% leased at December 31, 2025. Our 20 largest tenants account for a meaningful portion of our revenues. Our operating revenues are dependent upon entering into leases with, and collecting rents from, our tenants. Tenants whose leases are expiring may want to decrease the space they lease and/or may be unwilling to continue their lease. When leases expire or are terminated, replacement tenants may not be available upon acceptable terms and market rental rates may be lower than the previous contractual rental rates. Also, our tenants may approach us for additional concessions in order to remain open and operating. The granting of these concessions may adversely affect our results of operations and cash flows to the extent that they result in reduced rental rates, additional capital improvements, or allowances paid to, or on behalf of, the tenants.
Tenant and market concentration risk . As of December 31, 2025, our top 20 tenants represented 38.6% of total annualized rent with our largest single tenant accounting for 8.9% of annualized rent. The inability or refusal of any of our significant tenants to pay rent or a decision by a significant tenant to terminate their lease prior to, or at the conclusion of, their lease term (including as a result of a bankruptcy proceeding) could have a significant negative impact on our results of operations or financial condition if a suitable replacement tenant is not secured in a timely manner.
For the three months ended of December 31, 2025, 36.1% of our net operating income was derived from the Austin area, 31.3% was derived from the Atlanta area, 9.2% was derived from the Charlotte area, 7.8% was derived from the Tampa area, 7.5% was derived from the Phoenix area, and 4.8% was derived from the Dallas area. These percentages represent net operating income from operating properties, which excludes our Neuhoff joint venture mixed-use development which has commenced initial operations but is not yet stabilized. Any adverse economic conditions impacting Austin, Atlanta, Charlotte, Tampa, Phoenix, Dallas, could adversely affect our overall results of operations and financial condition. Because our portfolio consists primarily of lifestyle office buildings (as opposed to a more diversified real estate portfolio), a decrease in demand for this type of workplace could adversely affect our overall results of operations and financial condition. Additionally, some of our markets (and the submarkets within which we operate) have an outsized concentration of a limited number of industries. For example, as of December 31, 2025, in Austin, technology companies represent 53.1% of our annualized rent, in Charlotte, banking and other financial sector companies represent 19.2% of our annualized rent, and in Tampa, biotechnology and health science companies represent 25.0% of our annualized rent. A significant downturn in one or more of our markets could result in decreased leasing demand and have an adverse effect on our overall results of operations and financial condition.
The bankruptcy or insolvency of a major tenant may adversely affect the income produced by our properties. Major tenants could file for bankruptcy protection or become insolvent in the future and we cannot evict a tenant on this basis alone. On the other hand, a bankrupt tenant may reject and terminate its lease with us. In such a case, our claim against the bankrupt tenant for unpaid and future rent would be subject to a statutory cap that might be substantially less than the remaining rent actually owed under the lease, and, even so, our claim for unpaid rent would likely not be paid in full. This shortfall could adversely affect our cash flow and results of operations.
Uninsuredlosses and condemnation costs . Accidents, earthquakes, hurricanes, tornadoes, floods, droughts, ice storms, wind storms, hail storms, terrorism incidents, and other physical losses at our properties could adversely affect our operating results and financial condition. Casualties may occur that significantly damage an operating property or property under development, insurance deductibles or co-insurance limits may be significant (including with respect to damage from named wind storms or hail storms in certain markets, where available co-insurance limits are significantly in excess of deductibles for most other casualty losses), and insurance proceeds may be less than the total loss incurred by us. Although we, or our joint venture partners where applicable, maintain casualty insurance under policies we believe to be adequate and appropriate, including commercial general liability, fire, flood, and rent loss insurance on operating properties, as well as cyber coverage, some types of losses, such as those related to the termination of longer-term leases and other contracts, generally are not insured. Property ownership also involves potential liability to third parties for such matters as personal injuries occurring on
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the property. There may be certain losses that are not generally insured against or that are not generally fully insured against because it is not deemed economically feasible or prudent to do so, including losses due to floods, wind, earthquakes, acts of war, acts of terrorism, riots, or pandemics. A number of our properties are located in areas that are known to be subject to hurricane, hail, or flood risk. We carry hurricane, hail, or flood hazard insurance on all of our properties located in areas historically subject to such activity, subject to coverage limitations and deductibles, if we believe it is commercially reasonable. In Tampa and Houston, our wind storm insurance is subject to deductibles from 2% to 5% of the value of the affected building. We evaluate our insurance coverage annually in light of current industry practice through an analysis prepared by outside consultants. If an uninsuredloss or a loss in excess of insured limits occurs with respect to one or more of our properties, then we could lose the capital we invested in the properties, as well as the anticipated future revenue from the properties. We continue to monitor the state of the insurance market in general, but we cannot anticipate what insurance coverage will be available on commercially reasonable terms in future policy years. In addition to uninsuredlosses, various government authorities may condemn all or parts of operating properties. Such condemnations could adversely affect the viability of such projects.
Environmental issues . Federal, state, and local laws and regulations relating to the protection of the environment may require a current or previous owner or operator of real estate to investigate and clean up hazardous or toxic substances or petroleum products or other chemicals which are discovered at or migrating from a property, simply because of our past ownership or operation of the real estate. If determined to be liable, the owner or operator may have to pay a governmental entity or third parties for property damage and for investigation and clean-up costs incurred by such parties in connection with the contamination, or perform such investigation and clean up itself. Although certain legal protections may be available to prospective purchasers of property, these laws typically impose remediation responsibility and liability without regard to whether the owner or operator knew of or caused the presence of the regulated substances. Even if more than one person may have been responsible for the release of regulated substances at the property, each person covered by the environmental laws may be held responsible for all of the remediation costs incurred. In addition, third parties may sue the owner or operator of a site for damages and costs resulting from regulated substances emanating from that site. We manage this risk through Phase I Environmental Site Assessments and, as necessary, Phase II Environmental Site Assessments, which may include environmental sampling on properties we acquire or develop. Most of our properties are located in urban or previously developed areas, and the historic use of some sites may have resulted in contamination. Although we generally seek "brown fields" designation where available, this designation may not be available for all urban properties in our portfolio or for properties we may acquire in the future.
Inquiries about indoor air quality and water quality may necessitate special investigation and, depending on the results, remediation beyond our regular testing and maintenance programs. Indoor air quality and water quality issues can stem from inadequate ventilation, chemical contaminants from indoor or outdoor sources, and biological contaminants such as molds, pollen, viruses, and bacteria. When excessive moisture accumulates in buildings or on building materials, mold growth may occur, particularly if the moisture problem remains undiscovered or is not addressed over a period of time. Indoor exposure to mold or other chemical or biological contaminants above certain levels can be alleged to be connected to allergic reactions or other health effects and symptoms in susceptible individuals. If these conditions were to occur at one of our properties, we may be subject to third-party claims for personal injury or may need to undertake a targeted remediation program, including without limitation, steps to increase indoor ventilation rates and eliminate sources of contaminants. Such remediation programs could be costly, necessitate the temporary relocation of some or all of the property’s tenants, or require rehabilitation of the affected property. In addition, the presence of significant mold or other airborne contaminants could expose us to liability from our tenants, employees of our tenants, or others if property damage or personal injury occurs.
We are not currently aware of any environmental liabilities at locations that we believe could have a material adverse effect on our business, assets, financial condition, or results of operations. Unidentified environmental liabilities could arise, however, including as a result of new or more stringent environmental laws and regulations, and could have an adverse effect on our financial condition and results of operations.
Sustainability strategies . Our sustainability strategy is to develop and maintain resilient buildings that are operated in an environmentally and socially responsible manner, encouraging office users to select us for their corporate operations while enhancing the communities in which our buildings are located. Failure to develop and maintain sustainable and resilient buildings (including as reflected by energy or water consumption intensity, greenhouse gas emissions intensity, or through obtaining and maintaining key sustainability certifications) relative to our peers could adversely impact our ability to lease space at competitive rates and negatively impact our results of operations and portfolio attractiveness.
Climate change and severe weather event risks . The physical effects of climate change could have a material adverse effect on our properties, operations, and business. To the extent climate change causes changes in weather patterns or severity, our markets could experience increases in storm intensity (including floods, fires, tornadoes, hurricanes, droughts, wind storms, ice storms, hail storms, and earthquakes), rising sea-levels, and changes in precipitation, temperature, air
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quality, and quality and availability of water. Over time, these conditions could result in physical damage to, or declining demand for, our properties or our inability to operate the buildings efficiently or at all. Climate change may also indirectly affect our business by increasing the cost of (or making unavailable) property insurance on terms we find acceptable, increasing the cost of required resources, including energy, other fuel sources, water, and waste removal services, and increasing the risk and severity of floods, fires, tornadoes, hurricanes, droughts, wind storms, ice storms, hail storms, and earthquakes at our properties. Should the impact of climate change be severe or occur for lengthy periods of time, our financial condition or results of operations could be adversely impacted. In addition, compliance with new or more stringent laws or regulations or stricter interpretations of existing laws may require material expenditure by us. For example, various federal, state, and local laws and regulations have been implemented or are under consideration to mitigate the effects of climate change caused by greenhouse gas emissions. Among other things, "green" building codes may seek to reduce emissions through the imposition of standards for design, construction materials, water and energy usage and efficiency, and waste management. Such codes could require us to make improvements to our existing properties, increase the costs of maintaining or improving our existing properties or developing new properties, or increase taxes and fees assessed on us or our properties. We have historically voluntarily disclosed relevant information regarding our sustainability practices; however, federal, state, and local laws and regulations are evolving and future regulation may require more stringent data reporting. We may face transition risks in the event of the implementation of any such federal, state, and local laws, regulations, and codes. Expenditures required for compliance with such codes may affect our cash flow and results of operations. Additionally, although we pursue a robust sustainability strategy, new approaches and trends regarding building resiliency emerge from time to time in this rapidly evolving focus area. Our approaches and priorities may differ from those of our peers, and the perception of the public or investors of these differences may adversely impact our portfolio attractiveness and our ability to lease space at competitive rates.
Joint venture structure risks . We hold ownership interests in a number of joint ventures with varying structures and may in the future invest in additional real estate through joint ventures. We currently have joint ventures that are and are not consolidated within our financial statements. Our venture partners may have rights to take actions over which we have no control, or the right to withhold approval of actions that we propose (including with respect to the decision to commence development of or to finance or sell a project), either of which could adversely affect our interests in the related joint ventures, and in some cases, our overall financial condition and results of operations. A venture partner may have economic and/or other business interests or goals that are incompatible with our business interests or goals and that venture partner may be in a position to take action contrary to our interests, including declining to sell at a time or price that we find attractive or determining to sell at a time or price that we do not find attractive or making a comparable decision regarding financing. In addition, such venture partners may default on their obligations, including loans secured by property owned by the joint venture that could have an adverse impact on the financial condition and operations of the joint venture. Such defaults may result in our fulfilling the defaulting partners' obligations that may, in some cases, require us to contribute additional capital to the ventures. Furthermore, the success of a project may be dependent upon the expertise, business judgment, diligence, and effectiveness of our venture partners in matters that are outside our control. Thus, the involvement of venture partners could adversely impact the development, operation, ownership, financing, or disposition of the underlying properties.
Title insurance risk . We did not acquire new title insurance policies in connection with the mergers with Parkway Properties, Inc. ("Parkway") in 2016 or TIER REIT, Inc. ("TIER") in 2019, instead relying on existing policies benefiting those entities' subsidiaries. Nevertheless, because we acquired these properties indirectly through the acquisition of these subsidiaries, the title insurance policies benefiting those entities may continue to benefit us. We generally do acquire title insurance policies for all developed and acquired properties; however, these policies may be for amounts less than the current or future values of the covered properties. If there were a title defect related to any of these properties, or to any of the properties acquired in connection with the mergers with Parkway or TIER where title insurance policies are ruled unenforceable, we could lose both our capital invested in and our anticipated profits from such property.
Liquidity risk . Real estate investments are relatively illiquid and can be difficult to sell and convert to cash quickly. As a result, our ability to sell one or more of our properties may be limited. In the event we want to sell a property, we may not be able to do so in the desired time period, the sales price of the property may not meet our expectations or requirements, and/or we may be required to record an impairment on the property.
Ground lease risks . As of December 31, 2025, we had ground lease interests in eight land parcels at four of our properties in various markets that we lease individually on a long-term basis. As of December 31, 2025, we had 2.4 million aggregate square feet of rental space located on these leased parcels, from which we generated 12.3% of our total Net Operating Income ("NOI") in the three months ended December 31, 2025. In the future, we may invest in additional properties on some of these parcels or additional parcels subject to ground leases. Many of these ground leases and other restrictive agreements impose significant limitations on our uses of the subject property and restrict our ability to sell or otherwise transfer our interests in the property. These restrictions may limit our ability to timely sell or exchange the
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property, may impair the property's value, or may negatively impact our ability to find suitable tenants for the property. In addition, if we default under the terms of any particular lease, we may lose the ownership rights to the property subject to the lease. Upon expiration of a lease, we may not be able to renegotiate a new lease on favorable terms, if at all. The loss of the ownership rights to these properties or an increase of rental expense could have an adverse effect on our financial condition and results.
The Americans with Disabilities Act Compliance risks . The Americans with Disabilities Act generally requires that certain buildings, including office buildings, be made accessible to disabled persons. We believe that we are currently in compliance with these requirements. Noncompliance could result in the imposition of fines by the federal government or the award of damages to private litigants. If, under the Americans with Disabilities Act, we are required to make substantial alterations and capital expenditures in one or more of our properties, including the removal of access barriers or the addition of access enhancements, it could adversely impact our earnings and cash flows, thereby impacting our ability to service debt and make distributions to our stockholders.
Our properties are subject to various federal, state, and local regulatory requirements, such as state and local fire, health, and life safety requirements. We believe that we are currently in compliance with these requirements. If we fail to comply with these requirements, we could incur fines or other monetary damages. We do not know whether existing requirements will change or whether compliance with future requirements will require significant unanticipated expenditures that will affect our cash flow and results of operations.
Financing Risks
At certain times, interest rates and other market conditions for obtaining capital could be unfavorable, and, as a result, we may be unable to raise the capital needed to invest in acquisition or development opportunities, maintain our properties, or otherwise satisfy our commitments on a timely basis, or we may be forced to raise capital at a higher cost or under restrictive terms, which could adversely affect our cash flows and results of operations.
We generally finance our acquisition and development projects through one or more of the following: our $1 billion senior unsecured line of credit (the "Credit Facility"), public and private unsecured debt, non-recourse mortgages, construction loans, the sale of assets, joint venture equity, the issuance of common stock, the issuance of preferred stock, and the issuance of units of CPLP. Each of these sources may be constrained from time to time because of market conditions, and the related cost of raising this capital may be unfavorable at any given point in time. These sources of capital, and the risks associated with each, include the following:
• Credit Facility . Terms and conditions available in the marketplace for unsecured credit facilities vary over time. We can provide no assurance that the amount we need from our Credit Facility will be available at any given time, or at all, or that the rates and fees charged by the lenders will be reasonable. We incur interest under our Credit Facility at a variable rate. Variable rate debt creates higher debt service requirements if market interest rates increase, which would adversely affect our cash flow and results of operations. Our Credit Facility contains customary covenants, requirements, and other limitations on our ability to incur indebtedness, including covenants on unsecured debt outstanding, restrictions on secured recourse debt outstanding, and requirements to maintain a minimum fixed charge coverage ratio. Our continued ability to borrow under our Credit Facility is subject to compliance with these covenants. Our credit facility has a scheduled maturity, and there can be no assurances regarding our ability to extend that maturity or enter into a replacement credit facility, and the terms and conditions of such extension or replacement and the covenants thereunder may be less favorable to us than the existing terms covenants and conditions.
• Unsecured debt . Terms and conditions available in the marketplace for unsecured debt vary over time. Unsecured debt generally contains restrictive covenants that may place limitations on our ability to conduct our business similar to those placed upon us by our Credit Facility.
• Non-recourse mortgages . The availability of non-recourse mortgages is dependent upon various conditions, including the willingness of mortgage lenders to lend at any given point in time. Interest rates and loan-to-value ratios may be volatile. If a property is mortgaged to secure payment of indebtedness and we are unable to make the mortgage payments, the lender may foreclose, potentially generating defaults on other debt.
• Asset sales . Real estate markets tend to experience market cycles. Because of such cycles, the potential terms and conditions of sales, may be unfavorable for extended periods of time. Our status as a REIT can limit our ability to sell properties. In addition, mortgage financing on an asset may prohibit prepayment and/or impose a prepayment penalty upon the sale of that property, which may decrease the proceeds from a sale or make the sale impractical.
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• Construction loans . Construction loans relate to specific assets under construction and fund costs above an initial equity amount as negotiated with the lender. Terms and conditions of construction loans vary, but they generally carry a term of two to five years, charge interest at variable rates, require the lender to be satisfied with the nature and amount of construction costs prior to funding, and require the lender to be satisfied with the level of pre-leasing prior to funding. Construction loans can require a portion of the loan to be recourse to us. In addition, construction loans generally require a completion guarantee by the borrower and may require a limited payment guarantee from the Company which may be disproportionate to any guaranty required from a joint venture partner. Uncertain economic conditions may adversely impact our construction lenders and, accordingly, impact their ability to advance loan proceeds to us as required by the construction loans. In such event, alternative financing may be difficult or more expensive to obtain, and the progress of our development and leasing activity may be negatively impacted or delayed, as well as impacting our ability to achieve the returns we expect. There may be times when construction loans are not available, or are only available upon unfavorable terms, which could have an adverse effect on our ability to fund development projects or on our ability to achieve the returns we expect.
• Joint ventures . Joint ventures, including partnerships or limited liability companies, tend to be complex arrangements and there are only a limited number of parties willing to undertake such investment structures. There is no guarantee that we will be able to undertake these ventures at the times we need capital and on favorable terms. Our ability to exit existing joint ventures may be limited by the terms of the joint venture agreement, which may limit our ability to liquidate our investment in a joint venture.
• Common stock . We can provide no assurance that conditions will be favorable for future issuances of common stock when we need capital. In addition, common stock issuances may have a dilutive effect on our earnings per share and funds from operations per share. The actual amount of dilution, if any, from any future offering of common stock will be based on numerous factors, particularly the use of proceeds and any return generated from these proceeds. The per share trading price of our common stock could decline as a result of the sale of shares of our common stock in the market in connection with an offering or as a result of the perception or expectation that such sales could occur.
• Preferred stock . The availability of preferred stock at favorable terms and conditions is dependent upon a number of factors including the general condition of the economy, the overall interest rate environment, the condition of the capital markets, and the demand for this product by potential holders of the securities. Issuance of preferred stock, if convertible, could be dilutive to earnings per share and have an adverse effect on the trading price of common stock. We can provide no assurance that conditions will be favorable for future issuances of preferred stock when we need the capital.
• Operating partnership units . The issuance of units of CPLP in connection with property, portfolio, or business acquisitions could be dilutive to our earnings per share and could have an adverse effect on the per share trading price of our common stock.
Any additional indebtedness incurred may have a material adverse effect on our financial condition and results of operations.
As of December 31, 2025, we had $3.3 billion of outstanding indebtedness. The incurrence of additional indebtedness could have adverse consequences on our business, such as:
• requiring us to use a substantial portion of our cash flow from operations to service our indebtedness, which would reduce the available cash flow to fund working capital, capital expenditures, development projects, distributions, and other general corporate purposes;
• limiting our ability to obtain additional financing to fund our working capital needs, capital expenditures, development projects, or other debt service requirements or for other purposes;
• increasing our exposure to floating interest rates;
• limiting our ability to compete with other companies who have less leverage, as we may be less capable of responding to adverse economic and industry conditions;
• restricting us from making strategic acquisitions, developing properties, or capitalizing on business opportunities;
• restricting the way in which we conduct our business due to financial and operating covenants in the agreements governing our existing and future indebtedness;
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• exposing us to potential events of default under covenants contained in our debt instruments;
• increasing our vulnerability to a downturn in general economic conditions; and
• limiting our ability to react to changing market conditions in our industry.
The impact of any of these potential adverse consequences could have a material adverse effect on our results of operations, financial condition, and liquidity.
Covenants contained in our Credit Facility, senior unsecured notes, term loans, and mortgages could restrict our operational flexibility, which could adversely affect our results of operations.
Our Credit Facility, senior unsecured notes, and unsecured term loans impose financial and operating covenants on us. These restrictions may be modified from time to time, but restrictions of this type include limitations on our ability to incur debt, as well as limitations on the amount of our secured debt, unsecured debt, and on the amount of joint venture activity in which we may engage. These covenants may limit our flexibility in making business decisions. If we fail to comply with these covenants, our ability to borrow may be impaired, which could potentially make it more difficult to fund our capital and operating needs. Our failure to comply with such covenants could cause a default, and we may then be required to repay our outstanding debt with capital from other sources. Under those circumstances, other sources of capital may not be available to us or may be available only on unattractive terms, which could materially and adversely affect our financial condition and results of operations. In addition, the cross default provisions on the Credit Facility, senior unsecured notes and term loans may affect business decisions on other debt.
Some of our mortgages contain customary negative covenants, including limitations on our ability, without the lender’s prior consent, to further mortgage that specific property, to enter into new leases, to modify existing leases, or to redevelop or sell the property. Compliance with these covenants could harm our operational flexibility and financial condition.
Our degree of leverage could limit our ability to obtain additional financing or affect the market price of our securities.
Net debt as a percentage of either total asset value or total market capitalization and net debt as a multiple of annualized EBITDA re are non-GAAP metrics often used by analysts to gauge the financial health of REITs like us. If our degree of leverage is viewed unfavorably by common equity investors, lenders, or potential joint venture partners, it could affect our ability to obtain additional capital. In general, our degree of leverage could also make us more vulnerable to a downturn in business or the economy. In addition, increases in our debt ratios may have an adverse effect on the market price of common stock and debt securities.
Adverse changes to our credit ratings could limit our access to funding and increase our borrowing costs.
Credit ratings are subject to ongoing review by rating agencies, which consider a number of factors, including our financial strength, performance, prospects, risk exposures, and our corporate and operating governance policies and practices, as well as factors not under our control. Rating agencies could make adjustments to our credit ratings at any time, and there can be no assurance that they will maintain our ratings at current levels or that downgrades will not occur.
Any downgrade in our credit ratings could potentially adversely affect the cost and other terms upon which we are able to borrow or obtain funding, increase our cost of capital, and/or limit our access to capital markets. In particular, interest rate spreads on some of our corporate floating rate debt are based on our current corporate credit ratings. If these ratings were to decrease, the Company would see an increase in the interest expense related to these loans, which could have a material impact to earnings.
Credit rating downgrades or negative watch warnings could negatively impact our reputation with lenders, investors, and other third parties, which could also impair our ability to compete in certain markets or engage in certain transactions. In particular, holders of securities or debt instruments may perceive such a downgrade or warningnegatively and pursue divestment of all or a portion of such securities or debt instruments. While certain aspects of a credit rating downgrade are quantifiable, the impact that such a downgrade would have on our liquidity, business, and results of operations in future periods is inherently uncertain and would depend on a number of factors.
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Real Estate Acquisition and Development Risks
We face risks associated with operating property acquisitions.
Operating property acquisitions contain inherent risks. These risks may include:
• difficulty in leasing vacant space or renewing existing tenants at the acquired property;
• the need for, along with the costs and timing of, repositioning or redeveloping the acquired property;
• disproportionate concentrations of earnings in one or more markets;
• the acquisitions may fail to meet internal projections or otherwise fail to perform as expected;
• the acquisitions may be in markets that are unfamiliar to us and could present unforeseen business and operating challenges;
• the timing of acquisitions may not match the timing of raising the capital necessary to fund the acquisitions;
• a change in our sustainability or resiliency profile, including an increase in key performance metrics like energy consumption intensity and greenhouse gas emissions, and/or a decrease in the percentage of our operating portfolio with key sustainability certifications;
• the inability to obtain financing or other sources of capital for acquisitions on favorable terms, or at all;
• the inability to successfully integrate the operations, maintain consistent standards, controls, policies, and procedures, or realize the anticipated benefits of acquisitions within the anticipated time frames, or at all;
• the inability to effectively monitor and manage our expanded portfolio of properties, retain key employees, or attract highly qualified new employees;
• the possible decline in value of the acquired asset;
• the diversion of our management’s attention away from other business concerns; and
• the exposure to any undisclosed or unknown issues, expenses, or potential liabilities relating to acquisitions.
In addition, we may acquire properties subject to liabilities with no, or limited, recourse against the prior owners or other third parties. As a result, if a liability were asserted against us based upon ownership of those properties, we might have to pay substantial sums to settle or contest it, which might not be fully covered by owner's title insurance policies or other insurance policies.
Our acquisition and investment process requires that we pursue a large number of opportunities, with a smaller number actually being acquired or completed; we may incur significant costs related to the pursuit of acquisitions that do not close, which could directly or indirectly affect our results of operations. We have procedures and controls in place that are intended to minimize this risk, but it is likely that we will continue to incur costs related to pursuing acquisitions on projects or other investments that we do not successfully acquire or complete.
Any of these risks could cause a failure to realize the intended benefits of our acquisitions and could have a material adverse effect on our financial condition, results of operations, and the market price of our common stock.
We face risks associated with the development of real estate.
Development activities contain inherent risks. Although we seek to minimize risks from development through various management controls and procedures, development risks cannot be eliminated. These risks may include:
• Abandoned predevelopment costs . The development process requires a large number of opportunities be pursued with only a few actually being developed. We may incur significant costs for predevelopment activity for projects that are ultimately abandoned, which would directly affect our results of operations. For projects that are abandoned, we must expense certain costs, such as salaries and interest on debt, that would have otherwise been capitalized. We have procedures and controls in place that are intended to minimize this risk, but it is likely that we will incur predevelopment costs on abandoned projects on an ongoing basis.
• Project costs . Construction and leasing of a development project involves a variety of costs that cannot always be identified at the beginning of a project. Costs may arise that have not been anticipated or actual costs may exceed estimated costs. These additional costs can be significant and can adversely impact our return on a project and the expected results of operations upon completion of the project. Also, construction costs vary over time based upon many factors, including the cost of labor, building materials, and compliance with applied regulations. We attempt to mitigate the risk of unanticipated increases in construction costs on our development projects through guaranteed maximum price contracts and pre-ordering of certain materials, but we may be adversely affected by increased construction costs on our current and future projects.
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• Construction delays . Development activity carries the risk that a project could be delayed due to, but not limited to, weather and other forces of nature, availability of materials, availability of skilled labor, supply chain disruption, the financial health and project capacity of general contractors or sub-contractors, and the competing demands on plan-approving authorities. Construction delays could cause adverse financial impacts to us which could include incurring more interest and other carrying costs than originally budgeted, monetary penalties from tenants pursuant to their leases, and higher construction costs. Delays could also result in a violation of terms of construction loans that could increase fees, interest, or trigger additional recourse of a construction loan.
• Leasing risk . The success of a commercial real estate development project is heavily dependent upon entering into leases with acceptable terms within a predefined lease-up period. Although our policy is generally to achieve certain pre-leasing goals (which vary by market, product type, and circumstances) before committing to a project, it is expected that sometimes not all the space in a project will be leased at the time we commit to the project. If the additional space is not leased on schedule and upon the expected terms and conditions, our returns, future earnings, and results of operations from the project could be adversely impacted. Whether or not tenants are willing to enter into leases on the terms and conditions we project and on the timetable we expect will depend upon a number of factors, many of which are outside our control. These factors may include:
• general business conditions in the local or broader economy or in the prospective tenants’ industries;
• supply and demand conditions for space in the marketplace; and
• level of competition in the marketplace.
• Reputation risks . We have historically developed and managed a significant portion of our real estate portfolio and believe that we have built a positive reputation for quality and service with our lenders, joint venture partners, and tenants. If we developed under-performing properties, suffered sustained losses on our investments, defaulted on a significant level of loans, or experienced significant foreclosure or deed in lieu of foreclosure of our properties, our reputation could be damaged. Damage to our reputation could make it more difficult to successfully develop properties in the future and to continue to grow and expand our relationships with lenders, joint venture partners, and tenants, which could adversely affect our business, financial condition, and results of operations.
• Governmental approvals . All necessary zoning, land-use, building, occupancy, and other required governmental approvals, permits, and authorizations may not be obtained, may only be obtained subject to onerous conditions, or may not be obtained on a timely basis resulting in possible delays, decreased profitability, and increased management time and attention.
• Competition . We compete for tenants in our Sun Belt markets by highlighting our locations, rental rates, quality and breadth of services, amenities, reputation, and the design, condition, and resiliency of our facilities including operational efficiencies and sustainability improvements. As the competition for tenants is intense, we may be required to provide rent abatements, increase our capital improvement expenditures, incur charges for tenant improvements and other concessions, and may not be able to lease vacant space in a timely manner. Additionally, competing properties may have vacancy rates higher than our properties, which may result in their owners being willing to lease available space at lower rates than the space in our properties.
• Risks associated with the development of mixed-use properties . We operate, are currently developing, and may in the future develop properties, either alone or through joint ventures, that are known as "mixed-use" developments. This means that in addition to the development of office space, the project may also include space for retail, residential, or other commercial purposes. We may seek to develop the non-office component ourselves, sell the right to that component to a third-party developer, or we may partner with a third party who has more non-office real estate experience. If we do choose to develop other components ourselves, we would be exposed not only to those risks typically associated with the development of commercial real estate generally, but also to specific risks associated with the development and ownership of non-office real estate. In addition, even if we sell the rights to develop the other components or elect to participate in the development through a joint venture, we may be exposed to the risks associated with the failure of the other party to complete the development as expected. These include the risk that the other party would default on its obligations necessitating that we complete the other component ourselves, including potential financing of the project. If we decide to hire a third-party manager, we would be dependent on them and their key personnel to provide services to us, and we may not find a suitable replacement if the management agreement is terminated or if key personnel leave or otherwise become unavailable to us. Due to the complexity of mixed use projects, they may be more difficult to finance or sell, or the terms and conditions may be less favorable than is customary for non-mixed-use properties.
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We regularly review our existing portfolio to confirm alignment of each property with our standards for a high-quality tenant experience. Where additional investment in an existing property is anticipated to result in greater leasing success and higher property value, we may undertake selective redevelopment activities, including with respect to lobbies and other common areas. Such redevelopment activities bear many of the risks associated with new development, as identified above.
Investment in Real Estate Debt Risks
Our investments in real estate debt face prepayment risk and interest rate fluctuations that may adversely affect our results of operations and financial condition.
During periods of declining interest rates, a borrower under a loan may exercise its option to prepay principal earlier than scheduled, forcing the Company to reinvest the proceeds from such prepayment into potentially lower yielding securities or loans, which may result in a decline in return. Debt investments frequently have call features that allow the borrower to prepay the loan at dates prior to its stated maturity at a specified price (typically greater than par) only if certain prescribed conditions are met. An issuer or borrower may choose to prepay a loan if, for example, the issuer or borrower can refinance the debt at a lower cost due to declining interest rates or an improvement in the credit standing of the issuer or borrower. In addition, the market price of the investments will change in response to changes in interest rates and other factors. The magnitude of these fluctuations in the market price of debt investments is generally greater for loans with longer maturities. These changes could have an impact on the value of our investments and have a material impact on earnings as these investments are carried at fair value.
We will face risks related to our investments in mezzanine loans.
Our mezzanine loans are secured by a pledge of the ownership interests of the entity or entities that own(s) the property. These types of assets involve a higher degree of risk than long-term senior mortgage lending secured by income-producing real property because the loan may become unsecured as a result of foreclosure by the senior lender. Repayment of a mezzanine loan is dependent on the successful operation of the underlying commercial properties. Therefore, mezzanine loans are subject to similar considerations and risks as our investments in operating real estate. In the event of a bankruptcy of the entity providing the pledge of its ownership interests as security, we may not have full recourse to the assets of such entity, the assets of the entity may not be sufficient to satisfy our mezzanine loan, or, as the mezzanine loans are generally non-recourse to the borrowers, there is a risk that at foreclosure the value of the ownership interest in the entity is less than the carrying value of the investment resulting in a charge from the decrease in carrying value of our investment. Additionally, in the event of a foreclosure of the pledged interests, there may not be a robust market of willing purchasers to acquire interests in an entity that would be willing to undertake the cure of senior mortgages necessary to prevent real property foreclosures. If a borrower defaults on our mezzanine loan or debt senior to our loan, or in the event of a borrower bankruptcy, our mezzanine loan will be satisfied only after the senior debt. Thus, while there may be sufficient revenue from the property to service the mortgage loan, those revenues may be exhausted before the mezzanine loan is serviced. The same would be true for casualty situations. As a result, we may not recover some or all of our investment.
The mortgage loans in which we may invest are subject to delinquency, foreclosure, and loss, which could result in losses to us.
Mortgage loans secured by commercial properties are subject to risks of delinquency and foreclosure. The ability of a borrower to repay a loan secured by an income-producing property typically is dependent primarily upon the successful operation of such property rather than upon the existence of independent income or assets of the borrower. If the net operating income of the property is reduced, the borrower’s ability to repay the loan may be impaired. Net operating income of an income-producing property can be affected by, among other things: tenant mix and tenant bankruptcies, success of tenant businesses, property management decisions, including with respect to capital improvement, particularly in older building structures, property location and condition, competition from comparable types of properties offering the same or similar services, changes in laws that increase operating expenses or limit rents that may be charged, changes in interest rates, and in the state of the credit markets and the debt and equity capital markets, including diminished availability or lack of debt financing for commercial real estate, any need to address environmental contamination at the property, the occurrence of any uninsured casualty at the property, changes in national, regional, or local economic conditions or specific industry segments, declines in regional or local real estate values, declines in regional, or local rental or occupancy rates, increases in real estate tax rates, tax credits and other operating expenses, changes in governmental rules, regulations, and fiscal policies, including environmental legislation, natural disasters, terrorism, social unrest, and civil disturbances, and adverse changes in zoning laws.
In the event of any default under a mortgage loan held directly by us, we will bear a risk of loss of principal to the extent of any deficiency between the value of the collateral and the principal and accrued interest of the mortgage loan, which could have a material adverse effect on our cash flow from operations and limit amounts available for distribution to our
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shareholders. In the event of the bankruptcy of a mortgage loan borrower, the mortgage loan to such borrower will be deemed to be secured only to the extent of the value of the underlying collateral at the time of bankruptcy (as determined by the bankruptcy court), and the lien securing the mortgage loan will be subject to the avoidance powers of the bankruptcy trustee or debtor-in-possession to the extent the lien is unenforceable under state law. Foreclosure of a mortgage loan can be an expensive and lengthy process, which could have a substantial negative effect on our anticipated return on the foreclosed mortgage loan.
We are exposed to the risk of judicial proceedings with our borrowers, including bankruptcy or other litigation, as a strategy to avoid foreclosure or enforcement of other rights by us as a lender or investor. In the event that any of the properties or entities underlying or collateralizing our loans or investments experiences or continues to experience any of the other foregoing events or occurrences, the value of, and return on, such investments could be reduced, which would adversely affect our results of operations and financial condition.
We may need to foreclose on certain of the loans we originate or acquire, which could result in losses that harm our results of operations and financial condition. We may find it necessary or desirable to foreclose on certain of the loans we originate or acquire, and the foreclosure process may be lengthy and expensive. If we foreclose on an asset, we may take title to the property securing that asset, and if we do not or cannot sell the property, we would then come to own and operate it as “real estate owned.” Owning and operating real property involves risks that are different (and in many ways more significant) than the risks faced in owning an asset secured by that property. The costs associated with operating and redeveloping a property, including any operating shortfalls and significant capital expenditures, could materially and adversely affect our results of operations, financial conditions, and liquidity.
Whether or not we have participated in the negotiation of the terms of any such loans, we cannot be assured as to the adequacy of the protection of the terms of the applicable loan, including the validity or enforceability of the loan and the maintenance of the anticipated priority and perfection of the applicable security interests. Furthermore, claims may be asserted by lenders or borrowers that might interfere with enforcement of our rights. Borrowers may resist foreclosure actions by asserting numerous claims, counterclaims and defenses against us, including, without limitation, lender liability claims and defenses, even when the assertions may have no basis in fact, in an effort to prolong the foreclosure action and seek to force the lender into a modification of the loan or a favorable buy-out of the borrower’s position in the loan. Foreclosure actions in some U.S. states can take several years or more to litigate and may also be time consuming and expensive to complete in other U.S. states and foreign jurisdictions in which we do business. At any time prior to or during the foreclosure proceedings, the borrower may file for bankruptcy, which would have the effect of staying the foreclosure actions and further delaying the foreclosure process, and could potentially result in a reduction or discharge of a borrower’s debt. Foreclosure may create a negative public perception of the related property, resulting in a diminution of its value. Even if we are successful in foreclosing on a loan, the liquidation proceeds upon sale of the underlying real estate may not be sufficient to recover our cost basis in the loan, resulting in a loss to us. Furthermore, any costs or delays involved in the foreclosure of the loan or a liquidation of the underlying property will further reduce the net sale proceeds and, therefore, increase any such losses to us.
Federal Income Tax Risks
Any failure to continue to qualify as a REIT for federal income tax purposes could have a material adverse impact on us and our stockholders.
We intend to continue to operate in a manner intended to qualify us as a REIT for federal income tax purposes. Qualification as a REIT involves the application of highly technical and complex provisions of the Internal Revenue Code (the “Code”), for which there are only limited judicial or administrative interpretations. Certain facts and circumstances not entirely within our control may affect our ability to qualify as a REIT. In addition, we can provide no assurance that legislation, new regulations, administrative interpretations, or court decisions will not adversely affect our qualification as a REIT or the federal income tax consequences of our REIT status.
If we were to fail to qualify as a REIT, we would not be allowed a deduction for distributions to stockholders in computing our taxable income. In this case, we would be subject to federal income tax on our taxable income at regular corporate rates. Unless entitled to relief under certain Code provisions, we also would be disqualified from operating as a REIT for the four taxable years following the year during which qualification was lost. As a result, we would be subject to federal and state income taxes which could adversely affect our results of operations and distributions to stockholders. Although we currently intend to operate in a manner designed to qualify as a REIT, it is possible that future economic, market, legal, tax, or other considerations may cause us to revoke the REIT election.
In order to qualify as a REIT, under current law, we generally are required each taxable year to distribute to our stockholders at least 90% of our net taxable income (excluding any net capital gain). To the extent that we do not distribute
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all of our net capital gain or distribute at least 90%, but less than 100%, of our other taxable income, we are subject to tax on the undistributed amounts at regular corporate rates. In addition, we are subject to a 4% nondeductible excise tax to the extent that distributions paid by us during the calendar year are less than the sum of the following:
• 85% of our ordinary income;
• 95% of our net capital gain income for that year; and
• 100% of our undistributed taxable income (including any net capital gains) from prior years.
We intend to make distributions to our stockholders to comply with the 90% distribution requirement, to avoid corporate-level tax on undistributed taxable income, and to avoid the nondeductible excise tax. Distributions could be made in cash, in stock, or in a combination of cash and stock. Differences in timing between taxable income and cash available for distribution could require us to borrow funds to meet the 90% distribution requirement, to avoid corporate-level tax on undistributed taxable income, and to avoid the nondeductible excise tax.
Certain property transfers may be characterized as prohibited transactions.
From time to time, we may transfer or otherwise dispose of some of our properties. Under the Code, any gains resulting from transfers or dispositions, from other than a taxable REIT subsidiary, that are deemed to be prohibited transactions would be subject to a 100% tax on any gain associated with the transaction. Prohibited transactions generally include sales of assets that constitute inventory or other property held-for-sale to customers in the ordinary course of business. Since we acquire properties primarily for investment purposes, we do not believe that our occasional transfers or disposals of property are deemed to be prohibited transactions. However, whether or not a transfer or sale of property qualifies as a prohibited transaction depends on all the facts and circumstances surrounding the particular transaction. The Internal Revenue Service ("IRS") may contend that certain transfers or disposals of properties by us are prohibited transactions. While we believe that the IRS would not prevail in any such dispute, if the IRS were to arguesuccessfully that a transfer or disposition of property constituted a prohibited transaction, we would be required to pay a tax equal to 100% of any gain allocable to us from the prohibited transaction. In addition, income from a prohibited transaction might adversely affect our ability to satisfy the income tests for qualification as a REIT for federal income tax purposes.
Recent changes to the U.S. tax laws could have an adverse impact on our business operations, financial condition, and earnings.
In recent years, numerous legislative, judicial, and administrative changes have been made in the provisions of federal and state income tax laws applicable to investments similar to an investment in our shares. In particular, the comprehensive tax reform legislation enacted in December 2017 and commonly known as the Tax Cuts and Jobs Act ("TCJA") made many significant changes to the U.S. federal income tax laws that have profoundly impacted the taxation of individuals and corporations (including both regular C corporations and corporations that have elected to be taxed as REITs). A number of changes that affect noncorporate taxpayers will expire at the end of 2025 unless Congress acts to extend them. Among other changes, the Coronavirus Aid, Relief, and Economic Security Act, or CARES Act, signed into law in March 2020, makes certain changes to the TCJA. These changes have impacted us and our stockholders in various ways, some of which are adverse or potentially adverse compared to prior law. Additional changes to tax laws were enacted with the Inflation Reduction Act ("IRA") of 2022, signed into law in August 2022. Many of the material provisions of the IRA exempt REITs. Additionally, on July 4, 2025, the “One Big Beautiful Bill Act (“OBBBA”) was enacted in the United States. The OBBBA includes significant provisions, such as the permanent extension of certain expiring provisions of the TCJA and the restoration of favorable tax treatment for certain business provisions, including 100% bonus depreciation and the business interest expense limitation. The legislation has multiple effective dates beginning in 2025.
To date, the IRS has issued only limited guidance with respect to certain of the new provisions, and there are numerous interpretive issues that will require further guidance. It is highly likely that technical corrections of legislation will be needed to clarify certain aspects of the new laws and give proper effect to Congressional intent. There can be no assurance, however, that technical clarifications or changes needed to prevent unintended or unforeseen tax consequences will be enacted by Congress in the near future. Additional changes to tax laws are likely to continue to occur in the future, and we cannot assure investors that any such changes will not adversely affect the taxation of our stockholders. Any such changes could have an adverse effect on an investment in shares or on the market value or the resale potential of our properties. Investors are urged to consult with their own tax advisor with respect to the impact of recent legislation on ownership of shares and the status of legislative, regulatory, or administrative developments and proposals, and their potential effect on ownership of shares.
We may face risks in connection with Section 1031 Exchanges.
When possible, we dispose of and acquire real properties in transactions that are intended to qualify as Section 1031 Exchanges. If a transaction's gain that is intended to qualify as a Section 1031 deferral is later determined to be taxable, we
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may face adverse consequences, and if the laws applicable to such transactions are amended or repealed, we may not be able to dispose of properties on a tax-deferred basis. In such case, our taxable income and earnings and profits would increase. This could increase the dividend income to our stockholders by reducing any return of capital they received. In some circumstances, we may be required to pay additional dividends or, in lieu of that, corporate income tax, possibly including interest and penalties. In addition, if a Section 1031 Exchange were later to be determined to be taxable, we may be required to amend our tax returns for the applicable year in question.
Disclosure Controls and Internal Control over Financial Reporting Risks
Our business could be adversely impacted if we have deficiencies in our disclosure controls and procedures or internal control over financial reporting.
The design and effectiveness of our disclosure controls and procedures and internal control over financial reporting may not prevent all errors, misstatements, or misrepresentations. While management will continue to review the effectiveness of our disclosure controls and procedures and internal control over financial reporting, there can be no guarantee that our internal control over financial reporting will be effective in accomplishing all control objectives at all times. Deficiencies, including any material weakness, in our internal controls over financial reporting which may occur in the future could result in misstatements of our results of operations, restatements of our financial statements, a decline in our stock price, or otherwise materially adversely affect our business, reputation, results of operations, financial condition, or liquidity.
General Risks
Adverse U.S. and global economic conditions could have a negative effect on our business, results of operations and financial condition and liquidity.
A general slowdown in the U.S. or global economy, uncertainty and volatility in financial markets, efforts of governments to stimulate or stabilize the economy and other unfavorable changes in economic conditions, such as inflation, higher interest rates, tightening of the credit markets, recession or slowing growth, as well as an increase in trade tensions and related tariffs with U.S. trading partners, could negatively impact our business, financial condition and liquidity, and the business and operations of our tenants. Macroeconomic weakness and uncertainty may also make it more difficult to accurately forecast operating results and raise capital or refinance debt. Sustained uncertainty about, or worsening of, current global economic conditions and further tariffs and escalations of trade tensions between the U.S. and its trading partners and the decoupling of the global economies could result in an economic slowdown. Given this uncertainty, we cannot predict the impact, if any, of these conditions to our business.
The market price of our common stock may fluctuate.
The market price of shares of our common stock has been, and may continue to be, subject to fluctuation in many events and factors such as those described in this report including:
• actual or anticipated variations in our operating results, funds from operations, or liquidity;
• the general reputation of real estate as an attractive investment in comparison to other equity securities and/or the reputation of the product types of our assets compared to other sectors of the real estate industry;
• material changes in any significant tenant industry concentration or in market concentration;
• the general stock and bond market conditions, including changes in interest rates or fixed income securities;
• changes in tax laws, our dividend policy, or in the market valuations of our properties;
• adverse market reaction to the amount of our outstanding debt at any time, the amount of our maturing debt, and our ability to refinance such debt on favorable terms;
• any failure to comply with existing debt covenants;
• any foreclosure or deed in lieu of foreclosure of our properties;
• additions or departures of directors, key executives, and other employees;
• actions by institutional stockholders;
• uncertainties in world financial markets;
• general market and economic conditions; in particular, market and economic conditions of Austin, Atlanta, Charlotte, Tampa, Phoenix, Dallas, and Nashville; and
• the realization of any of the other risk factors described in this report.
Many of the factors listed above are beyond our control. Those factors may cause the market price of shares of our common stock to decline, regardless of our financial performance, condition, and prospects. The market price of shares of our
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common stock may fall significantly in the future, and it may be difficult for our stockholders or holders of our debt securities to resell our common stock at prices they find attractive.
We face risks associated with cyberattacks with respect to our data and systems.
We maintain information necessary to conduct our business, including confidential and proprietary information as well as personal information regarding our employees, in digital form. We also use computer and cloud-based systems to operate our businesses, and in some cases, certain critical building management systems. Data maintained in digital form is subject to the risk of unauthorized access, modification, exfiltration, destruction or denial of access (collectively, along with any similar unauthorized use of our data, “cyberattacks”). Additionally, all of our systems are subject to the risk of cyberattacks. We also use many third-party systems and software, which are also subject to the risk of cyberattacks. Access to this data and these computer and cloud-based systems is essential to the operation of our business and our ability to perform day-to-day operations (including managing our building systems), and in some cases, our building systems may be critical to the operations of certain of our tenants.
We have developed and maintain an information security program that is designed to assess, identify, and manage the risks of cyberattacks, and the continued development and maintenance of this program is costly and requires ongoing monitoring and updating as technologies change (including as a result of the proliferation of artificial intelligence (“AI”) tools) and efforts to overcome security measures become more sophisticated. We face an increasingly challenging cybersecurity environment with expanding and evolving threats of cyberattacks from a variety of potential bad actors. While we employ various tools that are designed to protect our data and systems, we can offer no assurance that our protection efforts are effective; additionally, certain of our defenses remain subject to human error. Despite our efforts, the risk of an incident as a result of any cyberattack cannot be eliminated, and any such incident could have a material adverse effect on our business or financial results. A cyberattack could result in reputational damage to us or harm to us, our employees, or our customers. Additionally, a cyberattack could have a material adverse effect on our financial condition, results of operations, cash flows, liquidity, and/or the market price of our common stock. Our systems and users and those of third parties with whom we engage are continually subject to attacks, and there can be no assurance that future incidents will not have material adverse effects on our operations or financial results. To date, we have not had a cyberattack that had a material adverse effect on our business or financial results.
Even non-material cyberattacks can affect us by requiring significant management attention and resources to investigate, comply with any applicable reporting requirements, and (if necessary) remedy any potential or actual resulting damages. For example, a cyberattack impacting a building system could result in our inability to maintain that system (or related systems), and if any impacted system is relied upon by our customers for their efficient use of their leased space, then the continuation of that circumstance could entitle the affected tenants to abate a portion of their rent. Further, our vendors or partners could experience a cyberattack which could impact their operations and ability to meet their obligations to us, including their obligations to maintain the security of any of our data they possess or systems on which we rely. Similarly, one or more of our tenants could experience a cyberattack which could impact their operations and ability to perform under the terms of their leases with us. While we maintain insurance coverage that may, subject to policy terms and conditions including deductibles, cover specific aspects of cyberattacks, such insurance coverage may be insufficient to cover all losses.
Use of artificial intelligence presents risks and challenges that could impact our business.
We are evaluating technological solutions through the adoption and usage of artificial intelligence tools to, among other things, automate certain tasks and assist with research, content generation, and decisioning. Any perceived or actual technical, legal, privacy, security, ethical, or other issues relating to the use of artificial intelligence, including authorized or unauthorized use by our employees, could undermine the output that our artificial intelligence tools produce and create additional risks, such as risks of cybersecurity incidents. Additionally, any integration of artificial intelligence into the operations, products, or services of our vendors, partners, or other third-parties with whom we do business may pose new or unknown cybersecurity risks and challenges. Any of the foregoing, as well our failure to responsibly deploy artificial intelligence tools in our operations or the failure of artificial intelligence systems, could adversely affect the performance of our business.
We are dependent upon the services of certain key personnel, including members of the Board of Directors, the loss of any of whom could adversely impact our ability to execute our business.
One of our objectives is to develop and maintain a strong management group at all levels. At any given time, we could lose the services of key executives, members of the Board of Directors, and other employees, including the managing directors and other leaders of our respective markets. None of our Board members, key executives, or other employees are subject to employment contracts. Further, we do not carry key person insurance on any of our executive officers or other key
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employees. While we believe that we could find replacements for these key personnel, the loss of services of any of these key persons could diminish relationships with investors, lenders, prospective customers, joint venture partners, and others in the industry, and therefore such a loss could have an adverse effect upon our results of operations, financial condition, and our ability to execute our business strategy.
Employee misconduct or misconduct by members of the Board of Directors could adversely impact our ability to execute our business.
Our reputation is critical to maintaining and developing relationships with tenants, vendors, and investors and there is a risk that our employees or members of the Board of Directors could engage, deliberately or recklessly, in misconduct that creates legal exposure for us and adversely impacts our business. Employees or members of the Board becoming subject to allegations of illegal activity, sexual harassment, or racial and gender discrimination, regardless of the outcome, could result in adverse publicity that could harm our reputation and brand. The loss of reputation could impact our ability to develop and manage relationships with tenants, vendors, and investors and have an adverse impact on the price of our common stock.
Our restated and amended articles of incorporation contain limitations on ownership of our stock, which may prevent a change in control that might otherwise be in the best interest of our stockholders.
Our restated and amended articles of incorporation impose limitations on the ownership of our stock. In general, except for certain individuals who owned stock at the time of adoption of these limitations, and except for persons or organizations that are granted waivers by our Board of Directors, no individual or entity may own more than 3.9% of the value of our outstanding stock. We provide waivers to this limitation on a case by case basis, which could result in increased voting control by a stockholder. The ownership limitation may have the effect of delaying, inhibiting, or preventing a transaction or a change in control that might involve a premium price for our stock or otherwise be in the best interest of our stockholders.
If our future operating performance does not meet the projections of our analysts or investors, our stock price could decline.
Securities analysts publish quarterly and annual projections of our financial performance. These projections are developed independently based on their own analyses, and we undertake no obligation to monitor, and take no responsibility for, such projections. Such estimates are inherently subject to uncertainty and should not be relied upon as being indicative of the performance that we anticipate for any applicable period. Our actual revenues, net income, funds from operations, and funds available for distribution may differ materially from what is projected by securities analysts. If our actual results do not meet analysts’ guidance, our stock price could decline significantly.
Corporate responsibility matters may expose us to negative public perception, impose additional costs on our business, or impact our stock price.
Our efforts to improve our CR profile and practices may require capital expenditures and may result in short- or long-term increases in our operating costs, all of which could adversely impact our financial condition or results of operations. Our ability to achieve our CR goals and objectives and to accurately and transparently report our progress presents numerous operational, financial, legal, and other risks and are partially dependent on the actions of our customers and vendors. A failure, or a perceived failure, to respond to investor, customer, employee, or other stakeholder expectations related to CR concerns, or to comply with regulatory requirements, including a failure, or a perceived failure, to achieve any voluntarily adopted goals or initiatives, could negatively impact our reputation, ability to do business with certain partners, access to capital, stock price, and customer and employee attraction and retention. In addition, organizations that provide information to investors on corporate governance and other matters have developed rating systems for evaluating companies on their approach to CR. Unfavorable CR ratings may lead to negative investor sentiment, which could have a negative impact on our stock price. As the nature, scope, and complexity of CR reporting, diligence, and disclosure requirements expand, we may have to undertake additional costs to control, assess, and report on CR metrics. Any failure or perceived failure, whether or not valid, to pursue or fulfill our CR goals, targets, and objectives or to satisfy various CR reporting standards within the timelines we announce, or at all, could increase the risk of litigation.
Additionally, while we strive to create and maintain an inclusive culture where everyone is valued and respected, a failure, or a perceived failure, to properly address matters of culture could result in reputational harm or an inability to attract and retain customers or employees. Similarly, our approach to and description of our culture, policies, and practices could be perceived by some investors or third parties as failing to meet regulatory or best practices, which could negatively impact our reputation, ability to do business with certain partners, access to capital, and stock price.
bankruptcy
During 2025, we completed an offering of the public senior notes maturing in 2030 generating net proceeds of $496.9 million to fund the acquisition of the Link and to pay off $250 million of privately placed senior notes. In conjunction with our loan to our joint venture partner mentioned above, the joint venture amended its existing Neuhoff construction loan, repaying $39.2 million of the outstanding principal, extending the maturity date to September 2026, and lowering the spread over SOFR to 300 basis points from 345 basis points. The joint venture has an option to extend the maturity date an additional 12 months, subject to conditions. Additionally, we sold 2.9 million shares under Forward Sales contracts at an average price of $30.44 per share. The future net settlement proceeds will be $88.5 million.
During 2025, we leased a total of 2.1 million square feet of office space. Our office operating portfolio was 90.7% percent leased as of December 31, 2025 and the weighted average economic occupancy during the fourth quarter of 2025 was 88.3%. In 2025, the weighted average net effective rent per square foot, representing base rent excluding operating expense reimbursements and leasing costs, for leases with a term greater than one year, was $25.86 per square foot. Cash-basis net effective rent per square foot increased 3.5% on spaces that had been previously occupied in the past year. Cash-basis net effective rent represents net rent at the end of the term paid under the prior lease compared to the net rent at the beginning of the term paid under the current lease. Our same property net operating income for the year increased 2.4% on a straight-line basis and increased 0.9% on a cash-basis.
We believe the Sun Belt, and in particular the seven Sun Belt markets listed above, will continue to outperform the broader office sector evidenced by a clear bifurcation between Sun Belt and Gateway market fundamentals. In addition, as the flight to quality trend accelerates among office users, we believe our trophy portfolio is well positioned to benefit from, and ultimately outperform in, the current real estate environment.
Critical Accounting Policies and Estimates
Our financial statements are prepared in accordance with GAAP as outlined in the Financial Accounting Standards Board’s ("FASB") Accounting Standards Codification ("ASC"), and the notes to consolidated financial statements include a summary of the significant accounting policies for the Company. The preparation of financial statements in accordance with GAAP requires the use of certain estimates, a change in which could materially affect revenues, expenses, assets, or liabilities. Some of our accounting policies are considered to be critical accounting policies, which are ones that are both important to the portrayal of our financial condition, results of operations, and cash flows, and ones that also require significant judgment or complex estimation processes. Our critical accounting policies are as follows:
Revenue Recognition
Most of our revenues are derived from operating leases and are reflected as rental property revenues on the accompanying consolidated statements of operations. Several judgments and estimates are included in the rental property revenue recognition process including the determination of lease term, ownership of tenant improvements, lease modifications, and lease terminations.
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Revenues derived from fixed lease payments, which exclude certain rental property revenue such as percentage rent and revenue related to the recovery of certain operating expenses from our tenants, are recognized on a straight-line basis over the term of the lease. We make significant assumptions and judgments in determining the lease term, including the judgments involved as to when a tenant has the right to use an underlying asset and assumptions when the lease provides the tenant with an extension or early termination option.
Most of our leases involve some form of improvements to leased space. We make significant judgments in reviewing various factors to assist in determining whether we or our tenants own the improvements. Those factors include, but are not limited to, whether or not the:
• Lease agreement’s terms obligate the tenant to construct or install specifically-identified assets (i.e., the leasehold improvements);
• Tenant’s failure to make specified improvements is an event of default under which the landlord can require the lessee to make those improvements or otherwise enforce the landlord’s rights to those assets (or a monetary equivalent);
• Landlord must approve the plans prior to construction;
• Tenant is permitted to alter or remove the leasehold improvements without the landlord’s consent or without compensating the landlord for any lost utility or diminution in fair value;
• Tenant is required to provide the landlord with evidence supporting the cost of tenant improvements before the landlord pays the tenant for the tenant improvements;
• Landlord is obligated to fund cost overruns for the construction of leasehold improvements;
• Leasehold improvements are unique to the tenant or could reasonably be used by the lessor to lease to other parties; and,
• Economic life of the leasehold improvements is such that a significant residual value of the assets is expected to accrue to the benefit of the landlord at the end of the lease term.
If we determine the improvements are our assets, we capitalize the cost of the improvements and recognize depreciation expense associated with such improvements generally over the shorter of the estimated useful life or the term of the lease. Any portion of our asset funded by a tenant is recorded as deferred revenue to be recognized in rental revenue over the term of the lease on a straight-line basis. If the improvements are tenant assets, we defer the cost of improvements funded by us as a lease incentive asset and amortize it as a reduction of rental revenue over the term of the lease. Our determination of whether improvements are our assets or tenants' assets also affects when we commence revenue recognition in connection with a lease.
We periodically enter into amendments to our leases. When a lease is amended, we need to determine whether (i) an additional right of use not included in the original lease is being granted as a result of the modification and (ii) there is an increase in the lease payments that is commensurate with the standalone price for the additional right of use. If both of those conditions are met, the amendment is accounted for as a separate contract. If both of those conditions are not met, the amendment is accounted for as a lease modification. Most of our lease amendments result in a lease modification of our operating leases which will likely require us to reassess both the lease term and fixed lease payments, including considering any prepaid or accrued lease rentals relating to the original lease as a part of the lease payments for the modified lease.
Tenants sometimes terminate their lease prior to the end of the lease term, as allowed under negotiated termination options included in the lease or through separate negotiations with us. Such negotiations generally require payment of a termination fee that reimburses us for a portion of the remaining rent under the original lease term and the undepreciated lease inception costs such as commissions, tenant improvements, and lease incentives. Termination fee income, included in rental property revenue, is recognized on a straight-line basis from the date the termination is executed through lease expiration when the amount of the fee is determinable and collectability of the fee is reasonably assured. This fee income is adjusted on a straight-line basis by any accrued straight-line rent receivable and any above- or below-market lease intangible assets or liabilities related to the lease projected at the date of tenant vacancy.
Leases representing 35% and 32% of the square footage of our occupied portfolio as of December 31, 2025 and 2024, respectively, had early termination options at some point in their lease terms, all of which require a fee for early termination. During the years ended December 31, 2025 and 2024, five and three tenants representing 391,000 and 170,000 square feet, respectively, exercised early termination options in their leases. The early termination fee recognized in rental property revenues on these leases during the years ended December 31, 2025 and 2024 was $2.9 million and $2.5 million, respectively.
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Real Estate Carrying Value
The carrying values of our real estate assets are subject to several processes that involve a significant use of judgments and estimates. Those processes primarily include (i) purchase price allocations for acquired assets, (ii) depreciation and amortization, and (iii) impairment. The judgments and estimates used in each of these processes have a material impact on our financial condition, results of operations, and cash flows.
Purchase Price Allocations for Acquired Assets
We evaluate all real estate acquisitions to determine if the transactions qualify as an acquisition of assets or of a business, including cases in which we acquire a pool of properties of varying property types in different markets. For purposes of this review, we separate the assets acquired based on their unique and different risk characteristics, which may be by property type, geographic concentration, or other factors. If we determine that substantially all of the fair value is concentrated in a single identifiable asset or group of similar assets, generally 90% of total fair value of assets acquired, we account for the acquisition as an acquisition of assets. If we determine that there is no single asset or group of assets that make up substantially all of the fair value of gross assets acquired, we then evaluate whether the acquired set of assets includes an input and substantial process which create an output. If we determine that an input and a substantive process that significantly contribute to the ability to create output are present, we account for the acquisition as an acquisition of a business. We use considerable judgment in determining whether the acquisition of a pool of assets is an acquisition of assets or of a business. Because acquisition costs are expensed for an acquisition of a business and capitalized for an acquisition of assets, results of operations could be materially different based on our determinations.
For acquisitions that are accounted for as an acquisition of an asset, we record the acquired tangible and intangible assets and assumed liabilities based on each asset and liability's relative fair value at the acquisition date to the total purchase price plus capitalized acquisition costs. For acquisitions that are accounted for as an acquisition of a business, we record the acquired tangible and intangible assets and assumed liabilities based on each asset and liability's fair value at the acquisition date to the total purchase price. Fair value is based on estimated cash flow projections that utilize available market information and discount and/or capitalization rates as appropriate. Estimates of future cash flows are based on a number of factors including historical operating results, known and anticipated trends, and market and economic conditions. The acquired assets and assumed liabilities for an acquired operating property generally include, but are not limited to: land, buildings, and identified tangible and intangible assets and liabilities associated with in-place leases, including tenant improvements, leasing costs, value of above-market and below-market leases, and value of acquired in-place leases.
The fair value of the above-market or below-market component of an acquired lease is based upon the present value (calculated using a market discount rate) of the difference between the contractual rents to be paid pursuant to the lease over its remaining term and management’s estimate of the rents that would be paid using fair market rental rates and rent escalations at the date of acquisition over the remaining term of the lease. An identifiable intangible asset or liability is recorded if there is an above-market or below-market lease at an acquired property. The amounts recorded for above-market leases are included in other assets on the balance sheets, and the amounts for below-market leases are included in other liabilities on the balance sheets. These amounts are amortized on a straight-line basis as an adjustment to rental income over the remaining term of the applicable leases.
The fair value of acquired in-place leases is derived based on our assessment of lost revenue and costs incurred for the period required to lease the “assumed vacant” property to the occupancy level when purchased. This fair value is based on a variety of considerations including, but not necessarily limited to: (i) the value associated with avoiding the cost of originating the acquired in-place leases; (ii) the value associated with lost revenue related to tenant reimbursable operating costs estimated to be incurred during the assumed lease-up period; and (iii) the value associated with lost rental revenue from existing leases during the assumed lease-up period. Factors considered in performing these analyses include an estimate of the carrying costs during the expected lease-up periods, such as real estate taxes, insurance, and other operating expenses, current market conditions, and costs to execute similar leases, such as leasing commissions, legal, and other related expenses. The amounts recorded for in-place leases are included in intangible assets on the balance sheets. These amounts are amortized as an increase to depreciation and amortization expense over the remaining term of the applicable leases.
Depreciation and Amortization
We depreciate or amortize operating real estate assets over their estimated useful lives using the straight-line method of depreciation. We use judgment when estimating the useful life of real estate assets and when allocating certain indirect project costs to projects under development, which are amortized over the useful life of the property once it becomes operational. Historical data, comparable properties, and replacement costs are some of the factors considered in determining useful lives and cost allocations.
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Impairment
We review our real estate assets on an asset group basis for impairment. We identify an asset group based on the lowest level of identifiable cash flows and take into consideration such things as shared expenses and amenities. This review includes our operating properties, properties under development, and land holdings (including any capitalized predevelopment costs).
The first step in this process is for us to determine whether an asset is considered to be held-for-investment or held-for-sale. In order to be considered a real estate asset held-for-sale, we 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 we determine that an asset is held-for-sale, we record an impairment if the fair value less costs to sell is less than the carrying amount. All real estate assets not meeting the held-for-sale criteria are considered to be held-for-investment.
In the impairment analysis for assets held-for-investment, we must determine whether there are indicators of impairment. For operating properties, these indicators could include a significant decline in a property’s leasing percentage, a current period operating loss or negative cash flows combined with a history of losses at the property, a decline in lease rates for that property or others in the property’s market, a significant change in the market value of the property, an adverse change in the financial condition of significant tenants, or a more likely than not probability that there has been a significant decrease in the estimated hold period. For projects under development, indicators could include material budget overruns, significant delays in construction, occupancy, or stabilization timing, regulatory changes or economic trends that have a significant impact on the market, or an adverse change in the financial condition of a significant future tenant. For land holdings, indicators could include an overall decline in the market value of land in the region, regulatory changes that impact ability to develop the land, a decline in development activity for the intended use of the land, or other adverse economic and market conditions.
If we determine that an asset that is held-for-investment has indicators of impairment, we must determine whether the undiscounted cash flows associated with the asset exceed the carrying amount of the asset. If the undiscounted cash flows are less than the carrying amount of the asset, we reduce the carrying amount of the asset to fair value.
In calculating the undiscounted net cash flows of an asset, we must estimate a number of inputs. We must estimate future rental rates, future capital expenditures, future operating expenses, and market capitalization rates for residual values, among other things. In addition, if there are alternative strategies for the future use of the asset, we assess the probability of each alternative strategy and perform a probability-weighted undiscounted cash flow analysis to assess the recoverability of the asset. We use considerable judgment in determining the alternative strategies and in assessing the probability of each strategy selected.
In determining the fair value of an asset, we exercise judgment on a number of factors. We may determine fair value by using an undiscounted cash flow calculation or by utilizing comparable market information. We must determine an appropriate discount rate to apply to the cash flows in the undiscounted cash flow calculation. We use judgment in analyzing comparable market information because no two real estate assets are identical in location and price. The estimates and judgments used in the impairment process are highly subjective and susceptible to frequent change.
In addition to our real estate assets, we review each of our investments in unconsolidated joint ventures for impairment. As part of this analysis, we first determine whether there are any indicators of impairment at any property held in a joint venture investment. If indicators of impairment are present for any of our investments in joint ventures, we calculate the fair value of the investment. If the fair value of the investment is less than the carrying value of the investment, we determine whether the impairment is temporary or other than temporary. If we assess the impairment to be temporary, we do not record an impairment charge. If we conclude that the impairment is other than temporary, we record an impairment charge. We use considerable judgment in the determination of whether there are indicators of impairment present and in the assumptions, estimations, and inputs used in calculating the fair value of the investment.
Development Cost Capitalization
We are involved in all stages of real estate ownership, including development and redevelopment. Prior to the point at which a project becomes probable of being developed, we expense predevelopment costs. After we determine a project is probable, all subsequently-incurred predevelopment costs, including certain internal personnel and associated costs directly related to the project under development or redevelopment, are capitalized in accordance with accounting rules. Once on-going activities commence necessary to prepare the project for its intended use, interest as well as property taxes and insurance are capitalized. If we abandon development or redevelopment of a project that had earlier been deemed probable, we charge all previously capitalized costs to expense. If this occurs, our predevelopment expenses could rise significantly.
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The determination of whether a project is probable requires judgment. If we determine that a project is probable, interest, general and administrative, and other expenses could be materially different than if we determine the project is not probable.
Determination of what costs constitute project costs requires us, in some cases, to exercise judgment. If we determine certain costs to be direct or indirect project costs, amounts recorded in projects under development on the balance sheet and amounts recorded in general and administrative and other expenses on the statements of operations could be materially different than if we determine these costs are not associated with the project.
Once a certain project is constructed and ready for occupancy, carrying costs, such as real estate taxes, interest, internal personnel costs, and associated costs, are expensed as incurred. Determination of when construction of a project is held available for occupancy requires judgment. We consider projects and/or project phases to be ready for occupancy at the earlier of the date on which the project or phase reaches economic occupancy of 90% or one year from cessation of major construction activity, which may occur prior to economic stabilization. Our judgment of the date the project is ready for occupancy has a direct impact on our operating expenses and net income for the period.
Results of Operations For The Year Ended December 31, 2025
General
Net income available to common stockholders for the years ended December 31, 2025 and 2024 was $40.5 million and $46.0 million, respectively. In 2025, we recorded $14.3 million of impairmentlosses related to our Harborview property and the 303 Tremont land parcel. We detail below other material changes in the components of net income available to common stockholders for the year ended 2025 compared to 2024.
See "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations - Results of Operations" from our 2024 Annual Report on Form 10-K for a comparison of 2024 to 2023 financial results.
Rental Property Revenues, Rental Property Operating Expenses, and Net Operating Income
The following results include the performance of our Same Property portfolio. Our Same Property portfolio includes office properties that were stabilized and owned by us for the entirety of each comparable reporting period presented. Same Property amounts for the 2025 versus 2024 comparison are from properties that were stabilized and owned as of January 1, 2024 through December 31, 2025. We consider many factors in determining whether a property has stabilized, including the property’s occupancy (independently and relative to its submarket) and current leasing pipeline, as well as time since the cessation of major construction activity.
Management evaluates the performance of its property portfolio, in part, based on Net Operating Income ("NOI"). NOI represents rental property revenues, less termination fees, less rental property operating expenses. NOI is not a measure of cash flows or operating results as measured by GAAP, is not indicative of cash available to fund cash needs, and should not be considered an alternative to cash flows as a measure of liquidity. All companies may not calculate NOI in the same manner. We consider NOI to be an appropriate supplemental measure to net income as it helps both management and investors understand the core operations of our operating assets. NOI excludes corporate general and administrative expenses, interest expense, depreciation and amortization, impairments, gains/losses on sales of real estate, and other non-operating items. As a result, we use only those income and expense items that are incurred at the property level to evaluate a property's performance. Same Property NOI allows analysts, investors, and management to analyze continuing operations and evaluate the growth trend of our portfolio.
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The following table reconciles net income to consolidated NOI for each of periods presented ($ in thousands):
Year Ended December 31,
Net Income
Fee income
Termination fee income
Other income
General and administrative expenses
Interest expense
Depreciation and amortization
Operating property impairment
Land and related predevelopment cost impairment
Reimbursed expenses
Other expenses
Loss from unconsolidated joint ventures
Gain on investment property transactions
Net Operating Income
Consolidated rental property revenues, rental property operating expenses, and NOI changed between the 2025 and 2024 periods as follows ($ in thousands):
Year Ended December 31,
$ Change
% Change
Rental Property Revenues
Same Property
Non-Same Property
Termination Fee Income
Total Rental Property Revenues
Rental Property Operating Expenses
Same Property
Non-Same Property
Total Rental Property Operating Expenses
Net Operating Income
Same Property NOI
Non-Same Property NOI
Total NOI
Same Property NOI represents Net Operating Income for those office properties that were stabilized and owned by us for the entirety of the 2025 and 2024 reporting periods presented. Same Property NOI allows analysts, investors, and management to analyze continuing operations and evaluate the growth trend of the Company's portfolio.
Same Property Rental Property Revenues and NOI increased between 2025 and 2024 primarily due to an increase in economic occupancy at our Promenade Tower, Corporate Center, and 3350 Peachtree office properties and increases in revenues recognized from tenant funded improvements owned by us. In addition, parking revenue from our Same Property portfolio increased in 2025 compared to 2024 .
Non-Same Property Rental Property Revenues, Rental Property Operating Expenses, and NOI increased between 2025 and 2024 primarily due to the acquisitions of our Vantage South End and Sail Tower office properties in December 2024 as well as the acquisition of The Link in July 2025.
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The following table details NOI from properties aggregated by market:
Year Ended December 31,
Market
$ Change
% Change
Austin
Atlanta
Charlotte
Tampa
Phoenix
Dallas
Other (1)
Office NOI
Other Non-Office (2)
Total NOI
(1) Represents a non-core office property in Houston.
(2) Includes operations at land sites held for future development as well as a parking garage in Charlotte.
NOI for the Austin market increased $50.7 million, or 26.4%, between 2025 and 2024 primarily due to the acquisition of Sail Tower in December 2024. NOI for the Charlotte market increased $21.8 million, or 51.7%, primarily due to the acquisition of Vantage South End in December 2024. NOI from the Dallas market increased $8.7 million, or 62.2%, primarily due to the acquisition of The Link in July 2025.
Other Income
Other income increased $4.0 million, or 55.4%, between 2025 and 2024 primarily due to the sale of our Silicon Valley Bank ("SVB") bankruptcy claim in the first quarter of 2025 and interest income earned on the proceeds from the offering of the 2030 Notes prior to the repayment of the $250 million privately placed senior notes, partially offset by a decrease in interest income from investments in real estate debt driven by the repayment from our borrowers on two of our real estate debt investments. The SVB and investment in real estate debt transactions are described in further detail in notes 5 and 14 to the consolidated financial statements in this Form 10-K.
General and Administrative Expenses
General and administrative expenses increased $2.1 million, or 5.7%, between 2025 and 2024 primarily due to increases in stock compensation expense.
Interest Expense
Interest expense, net of amounts capitalized, increased $36.8 million, or 30.0%, between 2025 and 2024. T his increase is primarily due to the issuances of the $500 million and $400 million public unsecured senior notes in August and December of 2024, respectively, as well as the issuance of the $500 million public unsecured senior notes in June 2025, partially offset by the repayments of the $250 million senior note in July 2025 and the repayment of $100 million of the 2021 Term Loan in August 2024, as well as a lower average balance outstanding on the Credit Facility in 2025.
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Depreciation and Amortization
Depreciation and amortization changed between the 2025 and 2024 periods as follows ($ in thousands):
Year Ended December 31,
$ Change
% Change
Depreciation and Amortization
Same Property
Non-Same Property
Non-Real Estate Assets
Total Depreciation and Amortization
Non-Same Property depreciation and amortization increased between 2025 and 2024 primarily due to the acquisitions of Sail Tower and Vantage South End in December 2024, the acquisition of The Link in July 2025, and the completion of development at Domain 9.
Loss and Net Operating Income from Unconsolidated Joint Ventures
The following table reconciles loss from unconsolidated joint ventures to unconsolidated NOI for each of the periods presented ($ in thousands):
Year Ended December 31,
$ Change
% Change
Loss from unconsolidated joint ventures
Depreciation and amortization
Interest expense
Other expense
Other income
Net operating income from unconsolidated joint ventures
Net operating income:
Same Property
Non-Same Property
Net operating income from unconsolidated joint ventures
The change in loss from unconsolidated joint ventures was driven by increases in unconsolidated depreciation and amortization as well as unconsolidated interest expense. Unconsolidated depreciation and amortization expense increased between 2025 and 2024 primarily due to: (i) assets being placed in service as portions of the development were completed and initial operations started at our joint venture's Neuhoff property in the fourth quarter of 2023 and (ii) the acquisition of Proscenium in August 2024. Unconsolidated interest expense increased between 2025 and 2024, primarily due to a reduction in capitalized interest at our Neuhoff joint venture as further portions of its development project were completed in 2025.
Non-Same Property NOI from unconsolidated joint ventures increased between 2025 and 2024 primarily due to operations at Neuhoff, as the property continues to increase occupancy, and the acquisition of Proscenium in August 2024.
Funds from Operations
The table below shows Funds from Operations Available to Common Stockholders (“FFO”), a non-GAAP financial measure, and the related reconciliation from net income available to common stockholders. We calculate FFO as defined by the National Association of Real Estate Investment Trusts ("Nareit"), which is net income (loss) available to common stockholders (computed in accordance with GAAP), excluding depreciation and amortization related to real estate, gains and losses from sales of depreciable property, gains and losses from changes in control and impairment of depreciable real estate,
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plus depreciation and amortization of real estate assets, impairment on depreciable investment property, and after adjustments for unconsolidated partnerships and joint ventures to reflect FFO on the same basis.
FFO is used by industry analysts and investors as a supplemental measure of an equity REIT’s operating performance. Historical cost accounting for real estate assets implicitly assumes that the value of real estate assets diminishes predictably over time. Since real estate values instead have historically risen or fallen with market conditions, many industry investors and analysts have considered presentation of operating results for real estate companies that use historical cost accounting to be insufficient by themselves. Thus, Nareit created FFO as a supplemental measure of REIT operating performance that excludes historical cost depreciation, among other items, from GAAP net income. Our management believes that the use of FFO, combined with the required primary GAAP presentations, has been fundamentally beneficial, improving the understanding of operating results of REITs among the investing public and making comparisons of REIT operating results more meaningful. Our management evaluates operating performance in part based on FFO. Additionally, our management uses FFO and FFO per share, along with other measures, as a performance measure for incentive compensation to our officers and other key employees.
The reconciliations of net income available to common stockholders to FFO and earnings per share to FFO per share are as follows for the years ended December 31, 2025 and 2024 ($ in thousands, except per share information):
Year Ended December 31,
Dollars
Weighted Average Common Shares
Per Share Amount
Dollars
Weighted Average Common Shares
Per Share Amount
Net Income Available to Common Stockholders
Noncontrolling interest related to unitholders
Potentially dilutive common shares - ESPP
Conversion of unvested restricted stock units
Net Income — Diluted
Depreciation and amortization of real estate assets:
Consolidated properties
Share of unconsolidated joint ventures
Partners' share of real estate depreciation
Gain on sale of depreciated properties:
Consolidated properties
Operating property impairment
Funds From Operations
Liquidity and Capital Resources
Our primary short-term and long-term liquidity needs include the following:
• property operating expenses;
• property and land acquisitions;
• expenditures on development and redevelopment projects;
• building improvements, tenant improvements, and leasing costs;
• principal and interest payments on indebtedness;
• general and administrative costs; and
• common stock dividends and distributions to outside unitholders of CPLP.
We may satisfy these needs with one or more of the following:
• cash and cash equivalents on hand;
• net cash from operations;
• proceeds from the sale of assets;
• borrowings under our Credit Facility;
• proceeds from mortgage notes payable;
• proceeds from construction loans;
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• proceeds from unsecured loans;
• proceeds from offerings of equity and securities; and
• joint venture formations.
Our material capital expenditure commitments as of December 31, 2025 include $172.9 million of unfunded tenant improvements and development costs. As of December 31, 2025, we had $116.0 million drawn under our Credit Facility with the ability to borrow the remaining $884.0 million, as well as $5.7 million of cash and cash equivalents. We expect to have sufficient liquidity to meet our obligations for the foreseeable future.
Financial Condition
A key component of our strategy is to maintain a conservative balance sheet with leverage and liquidity that enables us to be positioned for future growth. In recent quarters, our leverage metrics which include net debt to EBITDA re (net income available to common stockholders plus interest expense, income tax expense, depreciation and amortization, losses (gains) on the disposition of depreciated property, and impairment), net debt to undepreciated assets, and net debt to total market capitalization, have consistently been among the strongest within our sector of public office REITs.
The following table sets forth information as of December 31, 2025 with respect to our outstanding contractual obligations and commitments ($ in thousands):
Total
Less than 1 Year
1-3 Years
3-5 Years
More than 5 Years
Contractual Obligations:
Company debt: (1)
Unsecured credit facility
Public senior unsecured notes
Privately placed senior unsecured notes
Term loans
Mortgage notes payable
Interest commitments (2)
Ground leases
Total contractual obligations
Commitments:
Unfunded tenant improvements and development obligations
Unfunded commitments on investments in real estate debt
Total commitments
(1) Amounts presented assume we exercise all available extension options.
(2) Interest on variable rate obligations is based on balances and effective rates as of December 31, 2025.
Credit Facility
On May 2, 2022, we entered into a Fifth Amended and Restated Credit Agreement (the "Credit Facility") under which we 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 overall and unsecured leverage ratios of no more than 60%. The Credit Facility matures on April 30, 2027.
The interest rate applicable to the Credit Facility varies according to our leverage ratio and may, at our election, 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 an annual facility fee of 0.125% to 0.30%, depending on our credit rating and leverage ratio, on the entire $1 billion capacity. There can be no assurance that
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we will maintain any particular rating in the future and if our credit ratings decrease, then we may be subject to higher applicable spreads.
In April 2024, we notified the administrative agent of the Credit Facility of our receipt of corporate investment grade ratings. These ratings reduced the Credit Facility's Adjusted SOFR spread and facility fee range effective April 17, 2024. Changes in our 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 December 31, 2025, the Credit Facility's interest rate spread over Adjusted SOFR was 0.775%, and the facility fee spread was 0.15%. The amount that we may draw under the Credit Facility is a defined calculation based on our unencumbered assets and other factors. The total available borrowing capacity under the Credit Facility was $884.0 million at December 31, 2025. Any amounts outstanding under the Credit Facility may be accelerated upon the occurrence of any events of default.
Term Loans
On October 3, 2022, we entered into a Delayed Draw Term Loan Agreement (the "2022 Term Loan") and borrowed the full $400 million available under the loan. Under the 2022 Term Loan, the applicable interest rate varies according to our credit rating and leverage ratio and may, at our election, 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%, or (iv) 1.00%, plus a spread of between 0.00% and 0.65%, based on leverage. The loan had an initial maturity of March 3, 2025 with four consecutive options to extend the maturity date for an additional six months each. We have exercised the third of the four six-month extension options, which becomes effective March 3, 2026, with an extended maturity date of September 3, 2026. The final maturity date, should we elect to exercise the one remaining extensions, would be March 3, 2027. The covenants under the 2022 Term Loan are the same as the Credit Facility.
On April 19, 2023, we entered into a floating-to-fixed rate swap with respect to $200 million of the $400 million 2022 Term Loan through the initial maturity date of March 3, 2025. This swap fixed the underlying SOFR rate at 4.298%. On January 26, 2024, we entered into a floating-to-fixed rate swap with respect to remaining $200 million of the $400 million 2022 Term Loan through the initial maturity date of March 3, 2025. This swap fixed the underlying SOFR rate at 4.6675% (see note 10). These two swaps fixed the underlying SOFR rate for the full $400 million at a weighted average of 4.483%. These swaps expired on March 3, 2025. For the 2022 Term Loan, a six-month Term SOFR of 4.2018% was in effect from March 3, 2025 through September 2, 2025, and a six-month Term SOFR of 4.206% was in effect from September 3, 2025 to March 2, 2026. At December 31, 2025, the spread over the underlying SOFR rates was 0.85% for the 2022 Term Loan.
On June 28, 2021, we 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, we 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 August 2024, we paid down $100 million of the $350 million outstanding and exercised the first of our four 180 day extension options, extending the maturity date on the remaining $250 million to February 26, 2025. In December 2025, we exercised the fourth of our four 180 day extension options, which becomes effective February 20, 2026, with an extended maturity date of August 17, 2026. On September 19, 2022, we 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 our credit rating and leverage ratio and may, at our election, 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 December 31, 2025, the spread over the underlying SOFR rates was 1.00% for the 2021 Term Loan.
On September 27, 2022, we entered into a floating-to-fixed interest rate swap with respect to the $350 million 2021 Term Loan through the initial maturity date of August 30, 2024. This swap effectively fixed the underlying SOFR rate at 4.234% (see note 10 to the consolidated financial statements). This swap has expired, and the loan has reverted to the underlying variable SOFR rate.
In April 2024, we notified the administrative agent of the 2022 Term Loan and 2021 Term Loan of our receipt of corporate investment grade ratings received. These ratings reduced the Adjusted SOFR spread range, effective April 17, 2024. Changes in our investment grade ratings may result in additional adjustments to the applicable spread in the future.
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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
At December 31, 2025, we had $2.2 billion aggregate principal amount of senior unsecured notes outstanding.
In June 2025, CPLP issued $500.0 million in aggregate principal amount of 5.250% senior unsecured notes. Upon issuance of the 2030 Notes, CPLP received proceeds of $499.9 million dollars, net of the original issue discount of $65,000, resulting in an effective interest rate of 5.251%. These senior unsecured notes are fully and unconditionally guaranteed by the Company. The proceeds were used to repay, at maturity, the $250.0 million outstanding amount of the privately placed senior notes due July 7, 2025, to partially fund the acquisition of The Link on July 28, 2025, and for general corporate purposes. These public senior notes had issuance costs of $4.2 million and mature on July 15, 2030.
In December 2024, CPLP issued $400.0 million in aggregate principal amount of 5.375% senior unsecured notes. Upon issuance of the 2032 Notes, CPLP received net proceeds of $397.9 million dollars after an original issue discount of $2.1 million resulting in an effective interest rate is 5.464%. The 2032 Notes are fully and unconditionally guaranteed by us. The proceeds were used to fund part of the purchase prices for the Sail Tower and the Vantage acquisitions in December 2024. The 2032 Notes had issuance costs of $3.6 million and mature on February 15, 2032.
In August 2024, CPLP issued $500 million in aggregate principal amount of 5.875% senior unsecured notes. Upon issuance of the 2034 Notes, CPLP received net proceeds of $498.5 million dollars after an original issue discount of $1.5 million resulting in an effective interest rate is 5.912%. The 2034 Notes are fully and unconditionally guaranteed by us. The proceeds were used primarily to repay $373.8 million outstanding on the Credit Facility and repay $100 million of the $350 million outstanding on the 2021 Term Loan. The 2034 Notes had issuance costs of $5.3 million and mature on October 1, 2034. The 2032 Notes and the 2034 Notes are sometimes referred to herein as the "public senior unsecured notes."
The above described senior unsecured notes are subject to certain typical covenants that, subject to certain exceptions, include (a) a limitation on the ability of the Company and CPLP to, among other things, incur additional secured and unsecured indebtedness; (b) a limitation on the ability of the Company and CPLP to merge, consolidate, sell, lease or otherwise dispose of their properties and assets substantially as an entirety; and (c) a requirement that the Company maintain a pool of unencumbered assets. To avoid any such limitations, these covenants require, among other things, maintaining the following financial metrics as defined in the agreement: (a) unencumbered debt ratio of at least 150%; (b) an EBITDA to debt service ratio of at least 1.50x; (c) a secured leverage ratio of no more than 40%; (d) and an overall leverage ratio of no more than 60%.
We also have $750.0 million aggregate principal amount of privately placed unsecured senior notes outstanding in four tranches as of December 31, 2025. The privately placed unsecured senior notes contain financial covenants that are generally consistent with those of our Credit Facility, with the exception of a secured leverage ratio of no more than 40%. The $250 million outstanding amount of the privately placed senior notes due July 7, 2025 were repaid at maturity.
The senior notes also contain customary representations and warranties, both affirmative and negative covenants, and customary events of default.
Secured Mortgage Notes
In November 2024, we repaid, in full, our Domain 10 mortgage with a remaining principal balance of $70.9 million. This mortgage had an interest rate of 3.75%.
As of December 31, 2025, we had $441.1 million outstanding on four non-recourse mortgage notes with a weighted average interest rate of 4.88%. All interest rates on the secured mortgage notes are fixed. Assets with depreciated carrying values of $709.4 million were pledged as security on these mortgage notes payable.
Joint Venture Commitments and Debt
We have a number of off balance sheet joint ventures with varying structures, as described in note 6 to our consolidated financial statements. The joint ventures in which we have an interest are involved in the ownership and/or development of real estate. A venture will fund capital requirements or operational needs with cash from operations or financing proceeds. If additional capital is deemed necessary, a venture may request a contribution from the partners, and we will evaluate such request. Except as previously discussed, based on the nature of the activities conducted in these ventures, management cannot estimate with any degree of accuracy amounts that we may be required to fund in the short- or long-term. However,
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management does not believe that additional funding of these ventures will have a material adverse effect on our financial condition or results of operations.
At December 31, 2025, our unconsolidated joint ventures had aggregate outstanding indebtedness to third parties of $332.4 million. This debt represents mortgage or construction loans, all of which are non-recourse to us. In addition, in certain instances, we provide “non-recourse carve-out guarantees” on these non-recourse loans.
Other Debt Information
Our existing mortgage debt is solely non-recourse, fixed-rate mortgage notes secured by various real estate assets. We expect to either refinance our non-recourse mortgage loans at maturity or repay the mortgage loans with other capital sources, includin g ou r credit facility, public and private unsecured debt, non-recourse mortgages, construction loans, the sale of assets, joint venture equity, the issuance of common stock, the issuance of preferred stock, or the issuance of units of CPLP. Many of our non-recourse mortgages contain covenants which, if not satisfied, could result in acceleration of the maturity of the debt.
We are in compliance with all covenants of our existing unsecured debt and non-recourse mortgages.
Future Capital Requirements
To meet capital requirements for future investment activities, we intend to actively manage our portfolio of properties and strategically sell assets to exit our non-core holdings and reposition our portfolio of income-producing assets. We also expect to continue to utilize cash retained from operations, as well as third-party sources of capital such as indebtedness, to fund future commitments and to utilize construction financing facilities for some development assets, if available and under appropriate terms. We may also generate capital through the issuance of securities that include common or preferred stock, warrants, debt securities, or the issuance of CPLP limited partnership units.
Our business model also includes raising or recycling capital which can assist in meeting obligations and funding development and acquisition activity. If one or more sources of capital are not available when required, we may be forced to reduce the number of projects we acquire or develop and/or raise capital on potentially unfavorable terms, or we may be unable to raise capital, which could have an adverse effect on our financial position or results of operations.
Cash Flows
We report and analyze our cash flows based on operating activities, investing activities, and financing activities. Cash and cash equivalents totaled $5.7 million and $7.3 million at December 31, 2025 and 2024, respectively. See "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations - Cash Flows" from our 2024 Annual Report on Form 10-K for a discussion of the changes in cash flows between 2024 and 2023.
The following table sets forth the changes in cash flows ($ in thousands):
Year Ended December 31,
$ Change
Net cash provided by operating activities
Net cash used in investing activities
Net cash provided by financing activities
The reasons for significant increases and decreases in cash flows between the periods are as follows:
Cash Flows from Operating Activities. Cash provided by operating activities increased $2.0 million between 2025 and 2024 primarily due to increased economic occupancy and the end of rent abatement periods at our Domain 9, Promenade Central, and Buckhead Plaza office properties and the acquisitions of our Vantage South End and Sail Tower office properties in December 2024, as well as our acquisition of The Link office property in July 2025. These increases are partially offset by increases in interest payments on debt.
Cash Flows from Investing Activities. Cash used in investing activities decreased $879.7 million between 2025 and 2024 primarily driven by the acquisitions of Sail Tower and Vantage for an aggregate price of $838.0 million in December 2024, when compared to the acquisition of The Link in July 2025 for $215.0 million.
Cash Flows from Financing Activities. Cash flows provided by financing activities decreased by $884.7 million between 2025 and 2024. In 2025, securities offerings generated gross proceeds of $500.0 million which was partially offset
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by debt maturity repayments of $250.0 million. In 2024, securities offerings generated gross proceeds $1.4 billion in proceeds which was partially offset by debt maturity payments of $172.7 million.
Capital Expenditures. We incur capital expenditures for the development of new properties, the redevelopment of existing or newly purchased properties, general building improvements, direct leasing costs such as commissions or tenant improvements, and capitalized interest and salaries. Components of expenditures included in this line item for the years ended December 31, 2025 and 2024 are as follows ($ in thousands):
Projects under development (1)
Operating properties—redevelopment
Operating properties—building improvements
Operating properties—leasing costs
Capitalized interest and salaries
Total capital expenditures
(1) Includes initial leasing costs.
Capital expenditures increased $14.5 million between 2025 and 2024 primarily due to increased leasing costs at our operating properties. This is primarily related to timing of tenant improvement reimbursement requests and to our strong leasing activity. This is partially offset by lower spending on projects under development, as the Domain 9 property became fully operational in 2025.
The above leasing costs include leasing commissions and tenant improvements, which are both capitalized as a component of our real estate assets as they are incurred. Commitments toward those costs are calculated on square foot basis and are included in our leasing activity as leases are executed.
Leasing activity details, including the components of net effective rent per square foot, for our office portfolio on leases executed during the years ended December 31, 2025 and 2024 are as follows:
Year Ended December 31, 2025
New
Renewal
Expansion
Total
Net leased square feet (1)
Number of transactions
Lease term in years (2)
Net effective rent calculation (per square foot per year) (2)
Net annualized rent (3)
Net free rent
Leasing commissions
Tenant improvements
Total leasing costs
Net effective rent
Second generation leased square footage (4)
Increase in straight-line basis second generation net rent per square foot (5)
Increase in cash-basis second generation net rent per square foot (6)
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Year Ended December 31, 2024
New
Renewal
Expansion
Total
Net leased square feet (1)
Number of transactions
Lease term in years (2)
Net effective rent calculation (per square foot per year) (2)
Net annualized rent (3)
Net free rent
Leasing commissions
Tenant improvements
Total leasing costs
Net effective rent
Second generation leased square footage (4)
Increase in straight-line basis second generation net rent per square foot (5)
Increase in cash-basis second generation net rent per square foot (6)
Comprised of total square feet leased, unadjusted for ownership share. Excludes leases approximately one year or less, along with apartment, retail, amenity, storage, and intercompany space leases.
Weighted average of net leased square feet.
Straight-line net rent per square foot (operating expense reimbursements deducted from gross leases) over the lease term, prior to any deductions for leasing costs. Excludes percent rent leases.
Excludes leases executed for spaces that were vacant upon acquisition, new leases in development properties, percent rent leases, and leases for spaces that have been vacant for one year or more.
Increase in second generation straight-line basis net annualized rent on a weighted average basis.
Increase in second generation net cash rent at the end of the term paid under the prior lease compared to net cash rent at the beginning of the term (after any free rent period) paid under the current lease on a weighted average basis. For early renewals, the final net cash rent paid under the original lease is compared to the first net cash rent paid under the terms of the renewal. Net cash rent is net of any recovery of operating expenses but prior to any deductions for leasing costs.
Our office portfolio was 90.7% leased as of December 31, 2025, down slightly from 91.6% leased as of December 31, 2024, which is inclusive of 2.1 million and 2.0 million square feet of new, renewal, and expansion leases executed in 2025 and 2024, respectively, and 1.2 million and 488,000 square feet of leases expiring without renewal in 2025 and 2024, respectively.
The amounts of leasing costs on a per square foot basis vary by lease and by market.
Dividends. We paid common dividends of $215.8 million and $195.4 million in 2025 and 2024, respectively. The increase of common dividends paid in the comparative periods is largely driven by the issuance of 15.5 million shares of common stock in the fourth quarter of 2024. We expect to fund our future quarterly common dividends with cash provided by operating activities, proceeds from investment property sales, distributions from unconsolidated joint ventures, indebtedness, and proceeds from offerings of equity and other securities, if necessary.
On a quarterly basis, we review the amount of our common dividend in light of current and projected future cash provided by operating activities and also consider the requirements needed to maintain our REIT status. In addition, we have certain covenants under our Credit Facility which could limit the amount of common dividends paid. In general, common dividends of any amount can be paid as long as leverage, as defined in our credit agreements, is less than 60% and we are not in default under our facility. Certain conditions also apply in which we can still pay common dividends if leverage is above that amount. We routinely monitor the status of our common dividend payments in light of the covenants of our credit agreements.
Guarantor Information. The Company and CPLP have filed a registration statement on Form S-3 with the SEC registering, among other securities, debt securities of CPLP, which are fully and unconditionally guaranteed by the Company. Separate Consolidated Financial Statements of CPLP have not been presented in accordance with the amendments to Rule 3-10 of Regulation S-X. Furthermore, as permitted under Rule 13-01(a)(4)(vi), the Company has excluded the summarized financial information for CPLP as the assets, liabilities, and results of operations of the Company and CPLP are not
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materially different than the corresponding amounts presented in the Consolidated Financial Statements of the Company, and management believes such summarized financial information would be repetitive and not provide incremental value to investors.
