Shares of Cousins Properties Incorporated (CUZ - Free Report) have been performing well, of late. In the year-to-date period, the stock has rallied 25.7%, while the industry has recorded growth of 20.3%.
This rally is anticipated to continue in the near term on a number of favorable factors.
In third-quarter 2019, the company reported funds from operations (FFO) per share (before TIER transaction costs) of 72 cents, surpassing the Zacks Consensus Estimate of 69 cents. Solid leasing velocity and second-generation net rent growth supported results.
Key Driving Factors
Sun Belt focus drives superior operating performance: Cousins Properties owns an unmatched portfolio of Class A office assets concentrated in the high-growth Sun Belt markets. Stellar office-employment growth, influx of population, pro-business environmentand solid demand-supply characteristics have been driving rent growth and annual net absorption in this region. These trends are boosting net operating income (NOI) and asking rents at the company’s properties. In fact, the office REIT has enjoyed 31 consecutive quarters of year-over-year growth in cash NOI.
Acquisitions and opportunistic developments to drive growth: The company makes concerted efforts to strengthen its office platform with trophy assets’ acquisitions and new developments in high-barrier-to-entry sub-markets in Atlanta, Austin, Charlotte, Phoenix and Tampa. In fact, the company’s merger with TIER REIT has enhanced its position in Austin and Charlotte, provided a strategic entry in Dallas, and balanced its portfolio across premium Sun Belt markets. Further, TIER REIT’s active development portfolio and land bank offers value-add opportunities.
Sound financial health: The company’s debt/equity ratio stands at 0.43 compared with the industry average of 0.88. This reflects that it has a lower debt burden relative to its peers and will likely be able to fare well even in a dynamic business environment. In addition, the company has a robust balance sheet, with ample liquidity and balance under its credit facility. Sound financial health will enable it to boost operational efficiency and drive long-term growth.
Encouraging FFO picture: The trend in estimate revision for Cousins Properties’ 2019 FFO per share indicates a favorable outlook for the company as it has witnessed 1.3% upward revision to $2.94 over the past month. This suggests year-over-year growth of 16.7%.
Zacks Rank: The stock currently carries a Zacks Rank #2 (Buy).You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Other Stocks to Consider
Duke Realty Corporation (DRE - Free Report) currently carries a Zacks Rank of 2. The Zacks Consensus Estimate for the ongoing year’s FFO per share has marginally climbed to $1.43 in a month’s time.
Healthcare Realty Trust Incorporated (HR - Free Report) holds a Zacks Rank of 2, at present. The company’s FFO per share estimate for 2019 moved 1.2% north to $1.60 over the past 30 days.
EastGroup Properties, Inc. (EGP - Free Report) also carries a Zacks Rank of 2, currently. The company’s FFO per share estimate for this year moved up to $4.94 over the past month.
Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
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