In order to attain financial flexibility, Cousins Properties Incorporated (CUZ) declared an underwritten public offering of 8.7 million common shares. In particular, this real estate investment trust (REIT) plans to utilize the proceeds from this offering to fully redeem its outstanding 7.50% Series B Cumulative Redeemable Preferred shares.
The remaining amount will be utilized for meeting other corporate needs such as portfolio repositioning activity and debt repayments. Wells Fargo Securities, an investment banking subsidiary of Wells Fargo & Company (WFC), is assisting Cousins Properties as underwriter for the public offering.
Though this public offering will result in share dilution for Cousins Properties, the redemption of preferred shares is encouraging as it will strengthen the balance sheet. Moreover, strategic investments will help the company enhance its portfolio quality, which will consequently be accretive to its earnings going forward.
As a matter of fact, Cousins Properties’ portfolio is primarily concentrated in the high-growth Sun Belt markets and it is currently focusing on building its business on a simpler platform, by specifically targeting trophy assets and opportunistic investments.
Last month, Cousins Properties reported a positive earnings surprise of 12.5% in fourth-quarter 2013, thanks to a more than two-fold year over year rise in total revenue. In particular, the company reported fourth-quarter 2013 funds from operations (FFO) per share of 18 cents, beating the Zacks Consensus Estimate by 2 cents and the year-ago figure by 4 cents. At year end 2013, Cousins Properties’ cash and cash equivalents stood at $0.98 million.
Cousins Properties currently has a Zacks Rank #2 (Buy). Investors interested in the REIT industry may also consider stocks like Liberty Property Trust (LPT) and Public Storage (PSA). Both stocks carry the same Rank as Cousins Properties.
Note: FFO, a widely used metric to gauge the performance of REITs, are obtained after adding depreciation, amortization and other non-cash expenses to net income.
To read this article on Zacks.com click here.
Get all Zacks Research Reports and be alerted to fast-breaking buy and sell opportunities every trading day.
Be the first to comment