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Cousins Properties Stock Up 27.8% in 3 Months: Will It Rise Further?
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Shares of Cousins Properties (CUZ - Free Report) have rallied 27.8% in the past three months, outperforming the industry's growth of 14.3%.
Cousins Properties’ portfolio of class A office assets is concentrated in the high-growth markets in the Sun Belt region. The company is witnessing higher leasing activity amid tenants’ preference for premium office spaces with class-apart amenities. Its capital-recycling efforts and healthy balance sheet augur well.
Analysts also seem bullish on this Zacks Rank #2 (Buy) company, with the Zacks Consensus Estimate for its 2024 FFO per share revised marginally upward over the past two months to $2.67.
Image Source: Zacks Investment Research
Factors Behind CUZ Stock Price Surge: Will this Trend Last?
Rebounding Leasing Activity in Sun Belt Region: Cousins Properties has an unmatched portfolio of Class A office assets concentrated in the high-growth Sun Belt markets. This region is experiencing a population influx. 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.
As a result, CUZ is witnessing healthy leasing demand for its strategically located office properties, as reflected by the rebound in new leasing volume. In September 2024, the REIT announced that it had entered into a lease arrangement with a Fortune 100 technology company for around 320,000 square feet of all of its Domain 12 property in Austin, TX. In the first half of 2024, CUZ executed 77 leases for a total of 794,240 square feet of office space with a weighted average lease term of 7.8 years. The company’s lease expirations through 2026 are among the lowest in the office sector. With modest lease expirations lined up, CUZ is well-positioned for growth.
Properties in these markets are also expected to command higher rents compared with the broader market. Per the company’s June 2024 Investor Presentation, it witnessed a 39% increase in in-place gross rents from the first quarter of 2017 to the first quarter of 2024. With a significant presence in the best urban submarkets in each city, Cousins Properties has been able to enjoy healthy demand for its properties.
Solid Tenant Base: The company enjoys a well-diversified, high-end tenant roster with less dependence on a single industry. This enables it to generate stable rental revenues over time.
Capital-Recycling Efforts: Cousins Properties’ capital-recycling moves to enhance its portfolio quality with trophy asset acquisitions and opportunistic developments in high-growth Sun Belt submarkets seem encouraging for long-term growth. It makes strategic dispositions for a better portfolio mix. The company has recycled more than $1 billion of older assets during the pandemic, helping it shed the slow-growth assets from its portfolio and redeploy the proceeds for developing and acquiring highly differentiated amenitized properties in the Sun Belt submarkets.
Over the past five years, apart from the TIER REIT transaction, the company acquired 2.6 million square feet of operating properties for $974 million, completed 2.2 million square feet of development at total project costs of $858 million and sold 5.5 million square feet of operating properties for $1.3 billion. Its notable development pipeline is likely to deliver meaningful additional annualized net operating income (NOI) in the upcoming years.
Balance Sheet Strength: 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.
The Zacks Consensus Estimate for Lamar Advertising’s 2024 FFO per share has moved marginally northward in the past two months to $8.09.
The Zacks Consensus Estimate for Crown Castle’s ongoing year’s FFO per share has increased marginally over the past three months to $6.97.
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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Cousins Properties Stock Up 27.8% in 3 Months: Will It Rise Further?
Shares of Cousins Properties (CUZ - Free Report) have rallied 27.8% in the past three months, outperforming the industry's growth of 14.3%.
Cousins Properties’ portfolio of class A office assets is concentrated in the high-growth markets in the Sun Belt region. The company is witnessing higher leasing activity amid tenants’ preference for premium office spaces with class-apart amenities. Its capital-recycling efforts and healthy balance sheet augur well.
Analysts also seem bullish on this Zacks Rank #2 (Buy) company, with the Zacks Consensus Estimate for its 2024 FFO per share revised marginally upward over the past two months to $2.67.
Image Source: Zacks Investment Research
Factors Behind CUZ Stock Price Surge: Will this Trend Last?
Rebounding Leasing Activity in Sun Belt Region: Cousins Properties has an unmatched portfolio of Class A office assets concentrated in the high-growth Sun Belt markets. This region is experiencing a population influx. 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.
As a result, CUZ is witnessing healthy leasing demand for its strategically located office properties, as reflected by the rebound in new leasing volume. In September 2024, the REIT announced that it had entered into a lease arrangement with a Fortune 100 technology company for around 320,000 square feet of all of its Domain 12 property in Austin, TX. In the first half of 2024, CUZ executed 77 leases for a total of 794,240 square feet of office space with a weighted average lease term of 7.8 years. The company’s lease expirations through 2026 are among the lowest in the office sector. With modest lease expirations lined up, CUZ is well-positioned for growth.
Properties in these markets are also expected to command higher rents compared with the broader market. Per the company’s June 2024 Investor Presentation, it witnessed a 39% increase in in-place gross rents from the first quarter of 2017 to the first quarter of 2024. With a significant presence in the best urban submarkets in each city, Cousins Properties has been able to enjoy healthy demand for its properties.
Solid Tenant Base: The company enjoys a well-diversified, high-end tenant roster with less dependence on a single industry. This enables it to generate stable rental revenues over time.
Capital-Recycling Efforts: Cousins Properties’ capital-recycling moves to enhance its portfolio quality with trophy asset acquisitions and opportunistic developments in high-growth Sun Belt submarkets seem encouraging for long-term growth. It makes strategic dispositions for a better portfolio mix. The company has recycled more than $1 billion of older assets during the pandemic, helping it shed the slow-growth assets from its portfolio and redeploy the proceeds for developing and acquiring highly differentiated amenitized properties in the Sun Belt submarkets.
Over the past five years, apart from the TIER REIT transaction, the company acquired 2.6 million square feet of operating properties for $974 million, completed 2.2 million square feet of development at total project costs of $858 million and sold 5.5 million square feet of operating properties for $1.3 billion. Its notable development pipeline is likely to deliver meaningful additional annualized net operating income (NOI) in the upcoming years.
Balance Sheet Strength: 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.
Other Stocks to Consider
Some other top-ranked stocks from the REIT sector are Lamar Advertising (LAMR - Free Report) and Crown Castle Inc. (CCI - 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 Lamar Advertising’s 2024 FFO per share has moved marginally northward in the past two months to $8.09.
The Zacks Consensus Estimate for Crown Castle’s ongoing year’s FFO per share has increased marginally over the past three months to $6.97.
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.