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Here's Why You Should Retain Cousins Properties Stock Now
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Cousins Properties’ (CUZ - Free Report) high-quality office portfolio, impressive tenant roster, opportunistic investments and developments in best sub-markets and strong balance sheet aid the growth momentum. However, competition from peers and a concentrated portfolio are downsides. Still high interest rates add to its concerns.
Analysts seem bullish on this office REIT carrying a Zacks Rank #2 (Buy), with the Zacks Consensus Estimate for its 2024 funds from operations (FFO) per share being raised marginally northward over the past month to $2.67.
Over the past three months, shares of the company have rallied 28.4%, outperforming its industry's 19.1% growth.
Image Source: Zacks Investment Research
What’s Aiding Cousins Properties?
CUZ has an unmatched portfolio of Class A office assets concentrated in the high-growth Sun Belt markets. Amid favorable migration trends and a pro-business environment, corporate relocations and expansions in the Sun Belt markets have gained pace, and this is driving the demand for office space. With a significant presence in the best urban submarkets in each city, Cousins Properties has been able to enjoy healthy demand for its properties. The company has a well-diversified, high-end tenant roster with less dependence on a single industry. This enables it to enjoy steady revenues over different economic cycles.
Cousins Properties is seeing a recovery in demand for its high-quality, well-placed office properties, as highlighted by a rebound in new leasing volume. In the first half of 2024, the company executed 77 leases for a total of 794,240 square feet of office space with a weighted average lease term of 7.8 years. CUZ’s lease expirations through 2026 are among the lowest in the office sector. With modest lease expirations lined up, the company is well-positioned for growth.
Cousins Properties makes concerted efforts to upgrade portfolio quality with trophy asset acquisitions and opportunistic developments in high-growth Sun Belt submarkets. It also makes strategic dispositions for a better portfolio mix. The company’s strategic portfolio rebalancing efforts are expected to contribute to its future growth.
Cousins Properties focuses on maintaining a solid balance sheet with ample liquidity and limited near-term debt maturities. This helps it capitalize on improving market fundamentals. As of June 30, 2024, CUZ had a net debt-to-annualized EBITDAre ratio of 5.12. As of the same date, it had $317.1 million drawn under its $1 billion credit facility, with an ability to borrow the remaining $682.9 million. With considerable liquidity and access to capital markets, it enjoys ample flexibility to pursue compelling growth opportunities.
What’s Hurting Cousins Properties?
There is competition from developers, owners and operators of office properties and other commercial real estate. This affects Cousins Properties’ ability to retain tenants at relatively higher rents and dents its pricing power.
Cousins Properties’ assets are mainly concentrated in Atlanta, GA, and Austin, TX. During the second quarter of 2024, Atlanta and Austin contributed 36% and 32.8%, respectively, to the company’s net operating income (NOI). Hence, any economic or political downturn in these markets is likely to affect Cousins Properties’ performance.
Although the Federal Reserve has announced a rate cut, the interest rate is still high and is a concern for Cousins Properties. Elevated rates imply higher borrowing costs for the company, affecting its ability to purchase or develop real estate.
The Zacks Consensus Estimate for Crown Castle’s current-year FFO per share has been raised marginally over the past two months to $6.97.
The Zacks Consensus Estimate for Lamar Advertising’s current-year FFO per share has moved northward marginally over the past two months to $8.09.
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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Here's Why You Should Retain Cousins Properties Stock Now
Cousins Properties’ (CUZ - Free Report) high-quality office portfolio, impressive tenant roster, opportunistic investments and developments in best sub-markets and strong balance sheet aid the growth momentum. However, competition from peers and a concentrated portfolio are downsides. Still high interest rates add to its concerns.
Analysts seem bullish on this office REIT carrying a Zacks Rank #2 (Buy), with the Zacks Consensus Estimate for its 2024 funds from operations (FFO) per share being raised marginally northward over the past month to $2.67.
Over the past three months, shares of the company have rallied 28.4%, outperforming its industry's 19.1% growth.
Image Source: Zacks Investment Research
What’s Aiding Cousins Properties?
CUZ has an unmatched portfolio of Class A office assets concentrated in the high-growth Sun Belt markets. Amid favorable migration trends and a pro-business environment, corporate relocations and expansions in the Sun Belt markets have gained pace, and this is driving the demand for office space. With a significant presence in the best urban submarkets in each city, Cousins Properties has been able to enjoy healthy demand for its properties. The company has a well-diversified, high-end tenant roster with less dependence on a single industry. This enables it to enjoy steady revenues over different economic cycles.
Cousins Properties is seeing a recovery in demand for its high-quality, well-placed office properties, as highlighted by a rebound in new leasing volume. In the first half of 2024, the company executed 77 leases for a total of 794,240 square feet of office space with a weighted average lease term of 7.8 years. CUZ’s lease expirations through 2026 are among the lowest in the office sector. With modest lease expirations lined up, the company is well-positioned for growth.
Cousins Properties makes concerted efforts to upgrade portfolio quality with trophy asset acquisitions and opportunistic developments in high-growth Sun Belt submarkets. It also makes strategic dispositions for a better portfolio mix. The company’s strategic portfolio rebalancing efforts are expected to contribute to its future growth.
Cousins Properties focuses on maintaining a solid balance sheet with ample liquidity and limited near-term debt maturities. This helps it capitalize on improving market fundamentals. As of June 30, 2024, CUZ had a net debt-to-annualized EBITDAre ratio of 5.12. As of the same date, it had $317.1 million drawn under its $1 billion credit facility, with an ability to borrow the remaining $682.9 million. With considerable liquidity and access to capital markets, it enjoys ample flexibility to pursue compelling growth opportunities.
What’s Hurting Cousins Properties?
There is competition from developers, owners and operators of office properties and other commercial real estate. This affects Cousins Properties’ ability to retain tenants at relatively higher rents and dents its pricing power.
Cousins Properties’ assets are mainly concentrated in Atlanta, GA, and Austin, TX. During the second quarter of 2024, Atlanta and Austin contributed 36% and 32.8%, respectively, to the company’s net operating income (NOI). Hence, any economic or political downturn in these markets is likely to affect Cousins Properties’ performance.
Although the Federal Reserve has announced a rate cut, the interest rate is still high and is a concern for Cousins Properties. Elevated rates imply higher borrowing costs for the company, affecting its ability to purchase or develop real estate.
Other Stocks to Consider
Some other top-ranked stocks to consider from the broader REIT sector are Crown Castle Inc. (CCI - Free Report) and Lamar Advertising (LAMR - Free Report) , each carrying a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Crown Castle’s current-year FFO per share has been raised marginally over the past two months to $6.97.
The Zacks Consensus Estimate for Lamar Advertising’s current-year FFO per share has moved northward marginally over the past two months to $8.09.
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.