Cousins Properties Incorporated (CUZ) – a real estate investment trust (:REIT) – disclosed a public offering of 14.0 million shares of its common stock. The move comes as part of its capital infusion efforts to support an acquisition and redeem preferred stock. Moreover, the company is expected to provide the underwriters a 30-day option for purchasing up to an additional 2.1 million shares.
Specifically, Cousins Properties plans to finance the acquisition of 816 Congress Avenue, a Class-A office building in Austin, Texas, with a major chunk of the proceeds generated from this offering. The purchase is anticipated to close in mid-April 2013 and the property is currently under contract. Moreover, the company plans to put to use a part of the proceeds for full redemption of its outstanding 7.75% Series A cumulative redeemable preferred stock.
For Cousins Properties, though the stock offering would result in share dilution, it would enable the company to attain financial flexibility. Financing for strategic acquisitions and investments is expected to go a long way in enhancing the company’s top-line growth. Moreover, paying back of debt would reduce its interest expenses. Notably, as of Dec 31, 2011, Cousins Properties had cash and cash equivalents of $176.9 million.
A host of companies such as - BofA Merrill Lynch of Bank of America Corp. (BAC), JPMorgan Chase & Co. (JPM), Morgan Stanley (MS) and Wells Fargo Securities of Wells Fargo & Company (WFC) are serving as joint book-running managers for the offering.
Based in Atlanta, Cousins Properties has a diversified portfolio of office and retail properties, mainly located in the high-growth Sun Belt region. This helps it mitigate the operating risks associated with the economic downturns involved in operating a single business segment.
Also, the company’s capital moves augur well and it is enhancing its liquidity. At the same time, the company remains focused on leasing activities and continues to pursue attractive investment opportunities. We expect all these factors to provide upside potential to the company going forward.
Cousins Properties currently has a Zacks Rank #2 (Buy).
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