On Jan 12, 2014, we issued an updated research report on Cousins Properties Inc. (CUZ). The Atlanta, GA-based company, from the REIT-Equity Trust-Others industry, is continuing with its focus on opportunistic investments and acquisition of trophy assets.
In third-quarter 2014, Cousins Properties acquired one Class A office tower – Fifth Third Center in Charlotte, NC – for $215 million. Subsequent to the quarter end, the company acquired Northpark Town Center in Atlanta for $348 million.
Moreover, Cousins Properties’ diversified product portfolio, strong demand for its properties and presence of high-end tenants in the roaster, is expected to drive its growth momentum, going forward.
However, the company’s strategy to divest its non-core assets puts pressure on its earnings in the near term. Also, dependence on office portfolio as a significant source of revenues is a drag on the company’s income.
While a flexible balance sheet along with ample liquidity is encouraging for its opportunistic acquisitions, we anticipate that intensified competition in its market would somewhat limit any robust top line growth.
On Oct 29, 2014, Cousins Properties came up with encouraging third quarter results. Helped by revenue growth, the company’s third-quarter 2014 funds from operations (“FFO”) per share of 20 cents surpassed the Zacks Consensus Estimate by a penny and the year-ago quarter figure by 9 cents.
Over the past 30 days, the Zacks Consensus Estimates for 2014 edged up 1.3% to 79 cents per share. However, the Zacks Consensus Estimates for 2015 remained unchanged at 84 cents per share.
Cousins Properties, currently carries a Zacks Rank #3 (Hold). However, investors interested in REIT-Equity Trust-Others industry may consider better-ranked stocks like Ashford Hospitality Trust, Inc. (AHT), CatchMark Timber Trust, Inc. (CTT) and Chatham Lodging Trust (CLDT). While Ashford Hospitality Trust sports a Zacks Rank #1 (Strong Buy), both CatchMark Timber Trust and Chatham Lodging Trust hold a Zacks Rank #2 (Buy).
Note: FFO, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation, amortization and other non-cash expenses to net income.
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