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Is it Wise to Retain Cousins Properties Stock in Your Portfolio Now?
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Cousins Properties’ (CUZ - Free Report) portfolio of Class A office assets in high-growth Sun Belt markets is witnessing higher leasing activity backed by tenants’ preference for premium office spaces with class-apart amenities. Its capital-recycling efforts are encouraging, and a healthy balance sheet aids financial flexibility.
However, competition from other industry players is likely to limit its pricing power, affecting rent growth momentum. A concentrated portfolio and high interest expenses add to its woes.
In December 2024, Cousins Properties announced the acquisition of Sail Tower, a trophy lifestyle office property in Downtown Austin, TX, for $521.8 million. In the same month, it acquired Vantage South End, a 639,000-square-foot lifestyle office property in the thriving South End submarket in Charlotte, NC, for $328.5 million.
Analysts seem bullish on this office REIT carrying a Zacks Rank #3 (Hold), with the Zacks Consensus Estimate for its 2025 and 2026 funds from operations (FFO) per share being raised marginally northward over the past month to $2.74 and $2.84, respectively.
Over the past six months, shares of the company have gained 2.2% against the industry's decline of 4.9%.
Image Source: Zacks Investment Research
What’s Aiding Cousins Properties?
Cousins Properties has an unmatched portfolio of Class A office assets concentrated in the high-growth Sun Belt markets. Amid favorable migration trends and a pro-business environment, corporate relocations and expansions in the Sun Belt markets have gained pace, driving the demand for office space. Properties in these markets are also expected to command higher rents compared with the broader market.
With a significant presence in the best urban submarkets in each city and the high-growth Sun Belt markets, Cousins Properties has been able to enjoy a healthy demand for its properties. For 2024, the company executed 157 leases for a total of 2 million square feet of office space with a weighted average lease term of 7.9 years. This included 1.2 million square feet of new leases, 612,763 square feet of renewal leases and 206,827 square feet of expansion leases. With modest lease expirations lined up, the company is well-positioned for growth.
The company makes efforts to upgrade portfolio quality with trophy assets’ acquisitions and opportunistic developments in high-growth Sun Belt submarkets. It also makes strategic dispositions for a better portfolio mix. Such efforts have helped the company shed the slow-growth assets from its portfolio and redeploy the proceeds for developing and acquiring highly differentiated amenitized properties in the Sun Belt submarkets.
Cousins Properties focuses on maintaining a robust balance sheet with ample liquidity and limited near-term debt maturities to capitalize on improving market fundamentals. The company exited the fourth quarter of 2024 with cash and cash equivalents of $7.3 million. As of Dec. 31, 2024, Cousins Properties had a net debt-to-annualized EBITDAre ratio of 5.16. As of the same date, it had $112.3 drawn under its $1 billion credit facility. Thus, with considerable liquidity and access to capital markets, it enjoys ample flexibility to pursue compelling growth opportunities.
What’s Hurting Cousins Properties?
There is competition from developers, owners and operators of office properties and other commercial real estate. This affects Cousins Properties’ ability to retain tenants at relatively higher rents and dents its pricing power.
Cousins Properties’ assets are mainly concentrated in Atlanta, GA, and Austin, TX. During the fourth quarter of 2024, Atlanta and Austin contributed 35.6% and 32.3%, respectively, to the company’s NOI. Hence, any economic or political downturn in these markets is likely to affect Cousins Properties’ performance.
Despite the Federal Reserve announcing rate cuts late in 2024, the interest rate is still high and is a concern for Cousins Properties. The company has a substantial debt burden, and its total debt, as of Dec. 31, 2024, was approximately $3.27 billion. In the fourth quarter of 2024, interest expenses jumped 20.4% to $33.1 million year over year.
Image: Shutterstock
Is it Wise to Retain Cousins Properties Stock in Your Portfolio Now?
Cousins Properties’ (CUZ - Free Report) portfolio of Class A office assets in high-growth Sun Belt markets is witnessing higher leasing activity backed by tenants’ preference for premium office spaces with class-apart amenities. Its capital-recycling efforts are encouraging, and a healthy balance sheet aids financial flexibility.
However, competition from other industry players is likely to limit its pricing power, affecting rent growth momentum. A concentrated portfolio and high interest expenses add to its woes.
In December 2024, Cousins Properties announced the acquisition of Sail Tower, a trophy lifestyle office property in Downtown Austin, TX, for $521.8 million. In the same month, it acquired Vantage South End, a 639,000-square-foot lifestyle office property in the thriving South End submarket in Charlotte, NC, for $328.5 million.
Analysts seem bullish on this office REIT carrying a Zacks Rank #3 (Hold), with the Zacks Consensus Estimate for its 2025 and 2026 funds from operations (FFO) per share being raised marginally northward over the past month to $2.74 and $2.84, respectively.
Over the past six months, shares of the company have gained 2.2% against the industry's decline of 4.9%.
Image Source: Zacks Investment Research
What’s Aiding Cousins Properties?
Cousins Properties has an unmatched portfolio of Class A office assets concentrated in the high-growth Sun Belt markets. Amid favorable migration trends and a pro-business environment, corporate relocations and expansions in the Sun Belt markets have gained pace, driving the demand for office space. Properties in these markets are also expected to command higher rents compared with the broader market.
With a significant presence in the best urban submarkets in each city and the high-growth Sun Belt markets, Cousins Properties has been able to enjoy a healthy demand for its properties. For 2024, the company executed 157 leases for a total of 2 million square feet of office space with a weighted average lease term of 7.9 years. This included 1.2 million square feet of new leases, 612,763 square feet of renewal leases and 206,827 square feet of expansion leases. With modest lease expirations lined up, the company is well-positioned for growth.
The company makes efforts to upgrade portfolio quality with trophy assets’ acquisitions and opportunistic developments in high-growth Sun Belt submarkets. It also makes strategic dispositions for a better portfolio mix. Such efforts have helped the company shed the slow-growth assets from its portfolio and redeploy the proceeds for developing and acquiring highly differentiated amenitized properties in the Sun Belt submarkets.
Cousins Properties focuses on maintaining a robust balance sheet with ample liquidity and limited near-term debt maturities to capitalize on improving market fundamentals. The company exited the fourth quarter of 2024 with cash and cash equivalents of $7.3 million. As of Dec. 31, 2024, Cousins Properties had a net debt-to-annualized EBITDAre ratio of 5.16. As of the same date, it had $112.3 drawn under its $1 billion credit facility. Thus, with considerable liquidity and access to capital markets, it enjoys ample flexibility to pursue compelling growth opportunities.
What’s Hurting Cousins Properties?
There is competition from developers, owners and operators of office properties and other commercial real estate. This affects Cousins Properties’ ability to retain tenants at relatively higher rents and dents its pricing power.
Cousins Properties’ assets are mainly concentrated in Atlanta, GA, and Austin, TX. During the fourth quarter of 2024, Atlanta and Austin contributed 35.6% and 32.3%, respectively, to the company’s NOI. Hence, any economic or political downturn in these markets is likely to affect Cousins Properties’ performance.
Despite the Federal Reserve announcing rate cuts late in 2024, the interest rate is still high and is a concern for Cousins Properties. The company has a substantial debt burden, and its total debt, as of Dec. 31, 2024, was approximately $3.27 billion. In the fourth quarter of 2024, interest expenses jumped 20.4% to $33.1 million year over year.
Stocks to Consider
Some better-ranked stocks from the broader REIT sector are Gladstone Land (LAND - Free Report) and Sabra Healthcare REIT (SBRA - Free Report) , each carrying a Zacks Rank of #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Gladstone’s 2025 FFO per share is pegged at 54 cents, which indicates year-over-year growth of 14.9%.
The Zacks Consensus Estimate for Sabra’s full-year FFO per share is $1.49, which indicates an increase of 3.5% from the year-ago period.
Note: Anything related to earnings presented in this write-up represents FFO, a widely used metric to gauge the performance of REITs.