Cousins Divests Industrial Assets

As part of the long-term strategy to upgrade its overall portfolio with the acquisition of newer high-quality properties and divesture of non-core assets, Cousins Properties Inc. (CUZ - Analyst Report), a Georgia-based real estate investment trust (REIT), has recently sold 2 industrial buildings and the remainder of its Texas industrial land for total proceeds of $72.2 million. The company’s share of the asset sale transaction was approximately $65.2 million.

Cousins Properties sold ‘King Mill Building 3’ – a 796,450 square-foot building in Atlanta, Georgia, to an affiliate of Industrial Developments International (IDI). The company also sold ‘Lakeside Ranch Building 20’ – a 748,831 square-foot building in Dallas, to Duke Realty Corp. (DRE - Analyst Report). At the same time, Cousins Properties sold two land parcels within the Lakeside Ranch Business Park and an additional development site in Lancaster, Texas, to Duke Realty.

Cousins Properties has a diversified portfolio with a broad array of product types – office, retail, urban residential and single-family communities that mitigates operating risks associated with the economic down cycles. In 2008, Cousins Properties reorganized its business according to the functional lines and eliminated its division structure, which was primarily based on product types.

Under its new structure, the company has five reportable segments: Office, Retail, Land, Third-Party Management and Multi-Family. The Office and Retail segments comprise operations of consolidated and joint venture office and retail properties, respectively. The Land segment primarily includes operations for land held for future development. The Third-Party Management segment includes projects where the company manages, leases and develops properties for third parties. The Multi-Family segment includes operations for the development and sale of multi-family real estate.

The spread-out product portfolio has ensured a relatively steady source of revenue generation for Cousins Properties over the years. Furthermore, the portfolio is primarily concentrated in high-growth Sun Belt markets, which due to their long-term demographic trends, should exhibit above-average growth in the coming quarters.

Cousins Properties is currently shoring up its balance sheet and increasing its liquidity by selling non-core assets. At the same time, the company remains focused on leasing activities and intends to maintain steady occupancy levels across its portfolio.

We maintain our ‘Neutral’ recommendation on Cousins Properties, which currently has a Zacks #3 Rank that translates into a short-term ‘Hold’ rating.

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