Ushering in good news for its operating platform, Cousins Properties Inc. CUZ announced 2 two large lease extensions in Houston, TX with Direct Energy and Cox Radio, encompassing a total space of 216,000 square feet.
The extensions bring relief to the company as they help offset a significant part of its near-term exposure as well as lease at rents that are above the current in-place rents. Reflecting the optimism which followed this news as well as the overall market, the shares moved up 2.19% during Friday’s regular trading session on the NYSE.
Importantly, for Direct Energy – Cousins Properties’ 6th largest customer in its Houston portfolio – the lease gets extended til May 2023, while for its Post Oak Central customer – Cox Radio Inc. – the maturity date extends to Mar 2021 from Sep 2015.
Encouragingly, last month, this real estate investment trust – Cousins Properties – reported fourth-quarter 2014 FFO (funds from operations) of 24 cents per share, beating the Zacks Consensus Estimate by 3 cents and the year-ago figure by 6 cents.
Notably, the company surpassed the Zacks Consensus Estimate in all the past four quarters, with an average FFO surprise of 9.3% in the trailing four quarters, which is encouraging.
Going forward, we believe that sold leasing activity and strategic portfolio repositioning would drive Cousins Properties’ earnings. The company’s focus on shaping its business on a simpler platform by specifically targeting trophy assets and opportunistic investments augur well. This strategy would ensure a steady revenue stream.
Cousins Properties currently carries a Zacks Rank #3 (Hold). Investors interested in the REIT industry may consider stocks like Prologis Inc. PLD, PS Business Parks Inc. PSB and SL Green Realty Corp. SLG. All these stocks hold a Zacks Rank #2 (Buy).
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.
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