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Cousins Properties (CUZ) Grows Presence in Charlotte With Buyouts

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Cousins Properties (CUZ - Free Report) recently announced a couple of acquisitions in the South End submarket of Charlotte, NC. The buyouts will offer substantial long-term value creation opportunities and boost the company’s presence in a thriving Sun Belt submarket.

Particularly, in December, Cousins shelled out $201 million for the purchase of a 329,000-square-foot creative office asset. Developed in 2019, this property is known as The RailYard and is a block away from the Bland Streetlight rail station.

With an advantageous location, the property is now 97% leased, has an attractive customer base and a weighted average lease term of 9 years. It houses the Allstate technology center, which accounts 47% of the leased square feet, as well as an Ernst & Young innovation center.

With the property offering long-term upside potential through below-market rental rates, enhanced parking revenues and operating synergies across the company’s Charlotte portfolio, this buyout seems strategic for Cousins Properties. Its 2021 cash yield is estimated at 5.3%.

The other transaction is of a land acquisition at Bland Street light rail station in the well-amenitized and walkable district. The company purchased 3.4 acres of land for $28.1 million in November and plans to develop a 600,000-700,000-square-foot mixed-use development on the site to be referred as South End Station.

Notably, mixed-use developments reduce distances between housing, workplaces, retail businesses, and other amenities and destinations. Hence, mixed-use developments enable companies to grab the attention of people who prefer to live, work and play in the same area.

Thus, the acquisition of this transit-oriented development site across The RailYard offers the company scopes for operating and leasing synergy with The RailYard. It also positions the company solidly to capitalize on the rising office and residential demand in South End.

Cousins Properties has an unmatched portfolio of class A office assets concentrated in the high-growth Sun Belt markets, which is witnessing a population influx. The demand for office spaces has been high amid favorable migration trends and pro-business environment. Assets in these markets are also expected to command higher rents compared with the broader market. Therefore, strategic acquisitions in the South End submarket of Charlotte poise the company well to ride its growth curve. However, amid the pandemic, muted demand for office spaces might affect leasing activity.

Cousins Properties currently carries a Zacks Rank #3 (Hold). The company’s shares have gained12.6% compared with the industry’s rally of 2.6% over the past three months. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

 

Stocks to Consider

Innovative Industrial Properties, Inc.’s (IIPR - Free Report) funds from operations (FFO) per share estimates for 2020 have been revised upward by 5.8% to $5.11 over the past month. The company carries a Zacks Rank of 2 (Buy), currently.

Life Storage, Inc.’s Zacks Consensus Estimate for current-year FFO per share has moved up marginally to $5.82 over the past month. The company currently carries a Zacks Rank of 2.

City Office REIT, Inc.’s (CIO - Free Report) Zacks Consensus Estimate for ongoing-year FFO per share has improved 5.3% to $1.20 in a month’s time. The company holds a Zacks Rank of 2 at present.

Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.

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