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Should You Retain Cousins Properties (CUZ) Stock for Now?
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Cousins Properties’ (CUZ - Free Report) portfolio of Class A office assets in the high-growth Sun Belt markets positions it well to ride the growth curve amid the improving demand for premium office assets. Its capital-recycling efforts and healthy balance sheet bode well for growth. However, high supply in the office real estate market and high interest rates add to its concerns.
What’s Aiding CUZ?
Cousins Properties’ unmatched portfolio of Class A office assets in the high-growth Sun Belt markets is poised to benefit amid favorable migration trends, a pro-business environment and corporate relocations driving the demand for office space. It also has a well-diversified, high-end tenant roster with less dependence on a single industry, enabling it to enjoy steady revenues over different economic cycles.
CUZ is seeing a recovery in demand for its high-quality, well-placed office properties, as highlighted by a rebound in the new leasing volume. The company’s lease expirations through 2025 are among the lowest in the office sector. With modest lease expirations lined up, it is well-positioned for growth.
Cousins Properties’ capital-recycling moves to enhance its portfolio quality with trophy assets’ acquisitions and opportunistic developments in high-growth Sun Belt submarkets seem encouraging for long-term growth. It also makes strategic dispositions for a better portfolio mix.
Cousins Properties focuses on maintaining a robust balance sheet, with ample liquidity and limited near-term debt maturities. CUZ exited the first quarter of 2024 with cash and cash equivalents of $5.5 million. As of the same date, it had $292.2 million drawn under its $1 billion credit facility, with an ability to borrow the remaining $707.8 million. Thus, with considerable liquidity and access to capital markets, it enjoys ample flexibility to pursue compelling growth opportunities.
Over the past three months, shares of this Zacks Rank #2 (Buy) company have risen 10% against the industry's growth of 16.3%. Analysts seem bullish on this stock, as reflected by the recent upward estimate revisions, and the current price marks a good entry point.
The Zacks Consensus Estimate for Cousins Properties' second-quarter 2024 FFO per share has increased marginally over the past month to 66 cents. The company is slated to release quarterly numbers on Jul 25 after the closing bell.
Image Source: Zacks Investment Research
What’s Hurting CUZ?
The competition from developers, owners and operators of office properties and other commercial real estate affects Cousins Properties’ ability to retain tenants at relatively higher rents and dents its pricing power. In addition, higher construction activity is expected to increase the new supply of Class A office space in the company’s market, resulting in lesser scope for rent and occupancy growth. The continuation of the hybrid working environment further reduces the near-term demand for office spaces.
Moreover, a high interest rate environment is a concern for Cousins Properties. Elevated rates imply higher borrowing costs for the company, affecting its ability to purchase or develop real estate. Also, with high interest rates still in place, the dividend payout might seem less attractive than the yields on fixed-income and money market accounts.
The Zacks Consensus Estimate for Americold Realty Trust’s current-year FFO per share has moved marginally northward over the past month to $1.44.
The Zacks Consensus Estimate for Stag Industrial’s 2024 FFO per share has moved marginally northward over the past week to $2.39.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO), a widely used metric to gauge the performance of REITs.
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Should You Retain Cousins Properties (CUZ) Stock for Now?
Cousins Properties’ (CUZ - Free Report) portfolio of Class A office assets in the high-growth Sun Belt markets positions it well to ride the growth curve amid the improving demand for premium office assets. Its capital-recycling efforts and healthy balance sheet bode well for growth. However, high supply in the office real estate market and high interest rates add to its concerns.
What’s Aiding CUZ?
Cousins Properties’ unmatched portfolio of Class A office assets in the high-growth Sun Belt markets is poised to benefit amid favorable migration trends, a pro-business environment and corporate relocations driving the demand for office space. It also has a well-diversified, high-end tenant roster with less dependence on a single industry, enabling it to enjoy steady revenues over different economic cycles.
CUZ is seeing a recovery in demand for its high-quality, well-placed office properties, as highlighted by a rebound in the new leasing volume. The company’s lease expirations through 2025 are among the lowest in the office sector. With modest lease expirations lined up, it is well-positioned for growth.
Cousins Properties’ capital-recycling moves to enhance its portfolio quality with trophy assets’ acquisitions and opportunistic developments in high-growth Sun Belt submarkets seem encouraging for long-term growth. It also makes strategic dispositions for a better portfolio mix.
Cousins Properties focuses on maintaining a robust balance sheet, with ample liquidity and limited near-term debt maturities. CUZ exited the first quarter of 2024 with cash and cash equivalents of $5.5 million. As of the same date, it had $292.2 million drawn under its $1 billion credit facility, with an ability to borrow the remaining $707.8 million. Thus, with considerable liquidity and access to capital markets, it enjoys ample flexibility to pursue compelling growth opportunities.
Over the past three months, shares of this Zacks Rank #2 (Buy) company have risen 10% against the industry's growth of 16.3%. Analysts seem bullish on this stock, as reflected by the recent upward estimate revisions, and the current price marks a good entry point.
The Zacks Consensus Estimate for Cousins Properties' second-quarter 2024 FFO per share has increased marginally over the past month to 66 cents. The company is slated to release quarterly numbers on Jul 25 after the closing bell.
Image Source: Zacks Investment Research
What’s Hurting CUZ?
The competition from developers, owners and operators of office properties and other commercial real estate affects Cousins Properties’ ability to retain tenants at relatively higher rents and dents its pricing power. In addition, higher construction activity is expected to increase the new supply of Class A office space in the company’s market, resulting in lesser scope for rent and occupancy growth. The continuation of the hybrid working environment further reduces the near-term demand for office spaces.
Moreover, a high interest rate environment is a concern for Cousins Properties. Elevated rates imply higher borrowing costs for the company, affecting its ability to purchase or develop real estate. Also, with high interest rates still in place, the dividend payout might seem less attractive than the yields on fixed-income and money market accounts.
Other Stocks to Consider
Some other top-ranked stocks from the broader REIT sector are Americold Realty Trust (COLD - Free Report) and Stag Industrial (STAG - Free Report) , each sporting a Zacks Rank #1 (Strong Buy) and Zacks Rank #2 at present, respectively. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Americold Realty Trust’s current-year FFO per share has moved marginally northward over the past month to $1.44.
The Zacks Consensus Estimate for Stag Industrial’s 2024 FFO per share has moved marginally northward over the past week to $2.39.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO), a widely used metric to gauge the performance of REITs.