Cousins Properties Boosts Portfolio

Zacks

In an effort to expand in Texas and boost its Atlanta portfolio, Cousins Properties Inc. (CUZ) acquired a 100% interest in Post Oak Central in the Galleria submarket of Houston, purchased the residual 80% interest in Terminus 200 and consequently formed a 50–50 joint venture (:JV) for both Terminus 100 and Terminus 200 towers in Atlanta’s Buckhead submarket. Cousins Properties financed all the deals with the proceeds generated from the recent non-core asset sales.

Cousins Properties’ acquisition of the 100% interest in Post Oak Central -- a Class-A office complex in Houston -- was made from institutional investors advised by J.P. Morgan Asset Management of JPMorgan Chase & Co. (JPM) for $232.6 million. This consists of 3 towers spanning 1.3 million square feet.

Also, the purchase included a two-acre development parcel with the front facing toward Post Oak Central Boulevard. The Post Oak Central deal is in line with the company’s strategy of increasing its quality urban office towers portfolio in the best Sun Belt submarkets at favorable valuations.

Moreover, Cousins Properties’ Terminus deal included 2 Class-AA towers aggregating 1.2 million square feet. Terminus 100 was valued at $209.2 million while Terminus 200 at $164.0 million. The 50–50 JV with institutional investors advised by J.P. Morgan Asset Management for both Terminus towers would help realize top-notch sponsorship benefits and gain from the steadily improving Buckhead submarket.

As a matter of fact, Cousins Properties’ portfolio is primarily concentrated in high-growth Sun Belt markets, which due to its long-term demographic trends, is expected to exhibit above-average job growth. This provides an upside potential for the company.

Moreover, this Atlanta, Georgia-based real estate investment trust (:REIT) is scheduled to release its fourth-quarter 2012 results after the closing bell on Feb 13, 2013. The Zacks Consensus Estimate for the company’s fourth-quarter earnings is currently pegged at 10 cents per share.

The Zacks Earnings ESP (Read: Zacks Earnings ESP: A Better Method) for Cousins Properties is +20.0% for the fourth quarter. This, along with its Zacks Rank #3 (Hold), increases the chances of a positive earnings surprise call.

Two other REITs that are also reporting this week are HCP Inc. (HCP), releasing its results on Feb 12 and Ventas Inc. (VTR) on Feb 15.

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