Town Lane and Cousins Properties Announce the Acquisition and Planned Modernization of Proscenium

Rhea-AI Summary

Town Lane and Cousins Properties (NYSE: CUZ) have jointly acquired Proscenium, a 526,000 square foot Class A office building in Midtown Atlanta, for approximately $83 million. The acquisition was made through a newly formed joint venture, with Town Lane owning 80% and Cousins owning 20%. Cousins will manage and lease the property.

The building, currently 74% leased, is located at the intersection of 14th and Peachtree streets. The new ownership plans significant capital upgrades to modernize and reposition the building. Both companies expressed enthusiasm for the Midtown Atlanta market and the potential to deliver a first-class office experience.

Positive

• Acquisition of a large Class A office building in a prime location
• Joint venture structure allows risk sharing and leveraging of expertise
• Cousins Properties to provide property management and leasing services
• Plans for significant capital upgrades to modernize and reposition the building
• Current occupancy rate of 74% leaves room for potential revenue growth

Negative

• Significant capital expenditure required for planned upgrades
• 26% vacancy rate in the acquired property

Insights

Financial Analyst

The acquisition of Proscenium by Town Lane and Cousins Properties for $83 million represents a strategic move in the competitive Atlanta office market. At $158 per square foot, this deal appears to be a value play, considering the prime Midtown location and the property's Class A status. The 74% occupancy rate suggests immediate cash flow potential, while also offering upside through lease-up opportunities.

The joint venture structure, with Town Lane holding an 80% stake and Cousins at 20%, allows for risk sharing and leverages Cousins' local expertise in property management and leasing. This setup could prove beneficial in maximizing the asset's potential and navigating the evolving office market landscape.

Investors should note that while the acquisition was all-cash, potentially limiting immediate financial leverage, it also reduces risk in a rising interest rate environment. The planned capital upgrades, while not quantified, will be important in repositioning the asset to compete effectively and potentially command higher rents in the future.

Real Estate Market Analyst

The acquisition of Proscenium underscores a growing trend of investors targeting value-add opportunities in prime submarkets of major Sun Belt cities. Midtown Atlanta has been experiencing robust growth, driven by its mixed-use developments and walkable urban environment, which aligns well with current tenant preferences for amenity-rich locations.

The property's location at the intersection of 14th and Peachtree streets is particularly noteworthy, as it sits in the heart of Atlanta's innovation district. This area has been attracting a diverse mix of tech companies, startups and established firms looking for modern office spaces that cater to a younger workforce.

The planned modernization of Proscenium is a critical move to remain competitive in a market where newer, more technologically advanced buildings are setting the standard. By focusing on creating a "dynamic lifestyle office experience," the ownership is aligning with the post-pandemic shift towards offices that offer more than just workspace, but rather a holistic environment that supports collaboration, wellness and work-life integration.

This acquisition and renovation strategy could potentially set a benchmark for similar value-add plays in other Sun Belt markets, where older office stock can be repositioned to meet evolving tenant demands.

NEW YORK--(BUSINESS WIRE)-- Town Lane and Cousins Properties (NYSE: CUZ) announced today they have acquired Proscenium, a 526,000 square foot Class A office building located in the Midtown submarket of Atlanta, GA for approximately $83 million. Town Lane and Cousins (the Ownership) completed the all-cash transaction through a newly formed joint venture with Town Lane owning 80% of the venture and Cousins owning the remaining 20%. Cousins will provide property management and leasing services.

Proscenium, located at the intersection of 14^th and Peachtree streets, is in the heart of Midtown, a business and lifestyle district, which is surrounded by walkable amenities including numerous restaurants, high quality retail, and the Colony Square mixed-use development. The property is currently 74% leased. As part of its acquisition, the new Ownership is planning significant capital upgrades to modernize and reposition the building.

Tyler Henritze, Founder and Managing Partner, Town Lane, commented, “We believe in well-located, high-quality office assets in growing sub-markets like Midtown Atlanta, which can be acquired at a basis that allows us to invest in and attract great tenants. We could not be more excited about partnering with our long-term friends at Cousins to help deliver a first-class office experience.”

Colin Connolly, President and Chief Executive Officer of Cousins, added, “We are thrilled to partner with Town Lane who shares our enthusiasm for the opportunities emerging in leading Sun Belt office markets. We have exciting improvements planned for Proscenium which will complement its A+ location in the heart of Midtown Atlanta. We look forward to re-introducing a re-invigorated Proscenium to customers seeking a dynamic lifestyle office experience.”

Advisors

Simpson Thacher & Bartlett LLP is serving as legal counsel to Town Lane and Eversheds Sutherland (US) LLP is serving as counsel to Cousins.

About Town Lane

Town Lane is a boutique, relationship-driven real estate investment manager. The Firm, based in New York City, invests thematically and nimbly across commercial real estate sectors and through the capital stack. Town Lane was founded in 2024 after raising $1.25 billion of institutional investor capital targeting opportunistic returns for its inaugural fund. Town Lane’s investment strategy seeks to identify emerging trends, evaluate misunderstood opportunities and to capitalize on episodic market dislocations. For more information on Town Lane please visit www.townlane.com.

About Cousins Properties (“Cousins”)

Cousins Properties is a fully integrated, self-administered and self-managed real estate investment trust (REIT). The Company, based in Atlanta, GA and acting through its operating partnership, Cousins Properties LP, primarily invests in Class A office buildings located in high-growth Sun Belt markets. Founded in 1958, Cousins creates shareholder value through its extensive expertise in the development, acquisition, leasing and management of high-quality real estate assets. The Company has a comprehensive strategy in place based on a simple platform, trophy assets and opportunistic investments. For more information, please visit www.cousins.com.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240801730353/en/

awork@townlane.com

Source: Town Lane

FAQ

What is the value of the Proscenium acquisition by Town Lane and Cousins Properties (CUZ)?

Town Lane and Cousins Properties (CUZ) acquired Proscenium for approximately $83 million.

What is the ownership structure of the Proscenium acquisition?

The acquisition was made through a joint venture with Town Lane owning 80% and Cousins Properties (CUZ) owning 20%.

What are the plans for Proscenium after its acquisition by Town Lane and Cousins Properties (CUZ)?

The new ownership plans significant capital upgrades to modernize and reposition the building.

What is the current occupancy rate of Proscenium acquired by Town Lane and Cousins Properties (CUZ)?

Proscenium is currently 74% leased.

Who will manage and lease Proscenium after its acquisition?

Cousins Properties (CUZ) will provide property management and leasing services for Proscenium.