Cousins Properties Beats Estimates

Cousins Properties Incorporated ( CUZ - Analyst Report ) , a real estate investment trust (REIT), reported third quarter 2012 FFO (fund from operations) of $25.7 million or 25 cents per share, compared with $14.3 million or 14 cents in the year-earlier quarter.

Excluding certain non-recurring items, recurring FFO for the reported quarter was 15 cents per share. The recurring FFO beat the Zacks Consensus Estimate by $0.02.

Total revenues were $43.7 million during the reported quarter versus $31.5 million in the year-ago period. Total revenue during third quarter 2012 beat the Zacks Consensus Estimate of $37 million.

During the reported quarter, Cousins Properties executed strong leasing activities and leased 175,000 square feet of office space and 119,000 square feet of retail space. At quarter-end, the company’s same-store office portfolio was 91% leased, while its retail properties were 89% leased. Subsequent to end of the quarter, the company executed 25,000 square feet of additional leases at Promenade in Atlanta, Georgia.

Total same-store revenue increased 0.1% in third quarter 2012 compared to the year-earlier quarter (office down 0.5%, and retail up 2.0%), while operating expenses decreased 4.1% (office down 3.2%, and retail down 8.2%). Total same-store net operating income (NOI) in the reported quarter increased 2.9% on a year over year basis (office up 1.6% and retail up 6.4%).

During third quarter 2012, Cousins Properties entered into agreements to divest two retail lifestyle centers in Atlanta, Georgia. Additionally the company completed the sale of Cousins Properties Services — a business unit providing third-party services to Class A office buildings for a gain of $7.4 million. Subsequent to the quarter end, the company sold Cosmopolitan Center — an office complex in Atlanta, Georgia for $7.0 million.

The asset sale was part of the long-term strategy of the company to upgrade its overall portfolio by acquiring newer high-quality properties and divesting non-core assets. During the reported quarter, Cousins Properties also acquired Ross Avenue, a Class-A office tower spanning 844,000 square feet in Dallas, Texas for $59.2 million. Additionally, the company commenced operations at Emory Point in Atlanta, Georgia and Mahan Village in Tallahassee, Florida.

Cousins Properties is currently shoring up its balance sheet and increasing liquidity by selling non-core assets. At the same time, the company remains focused on leasing activities and continues to pursue attractive investment opportunities. At quarter-end, Cousins Properties had cash and cash equivalents of $5.5 million.

Cousins Properties currently retain a Zacks #4 Rank, which translates into a short-term Sell rating. We also maintain our long-term Neutral recommendation on the stock. One of its competitors, Duke Realty Corp. ( DRE - Analyst Report ) holds a Zacks #3 Rank, which translates into a short- term Hold rating.

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.