Cousins Properties Vends Retail Assets

Zacks Equity Research
October 2, 2013

Cousins Properties Incorporated (CUZ) disclosed the shedding of its stake in two retail joint ventures (:JV) and the sale of a retail power center. The move comes as the company makes a concerted effort toward reducing non-core assets and focus on building a stronger platform with high-quality office properties and opportunistic mixed-use developments.

Specifically, the 2 JVs, in which The Prudential Insurance Company of America of Prudential Financial Inc. (PRU) held around 89% interest earlier, are now completely owned by Prudential following the stake disposal by Cousins. The JVs comprised 8 retail centers spanning 2.1 million square feet in 4 markets. Cousins’ stakes were valued at approximately $57 million before the distribution of property level debt.

The other disposal was that of a Kansas City, MO retail power center, named Tiffany Springs MarketCenter, to a third party. The disposition was made for around $54 million.

Notably, Cousins Properties is focused on building its business on a simpler platform and specifically targets trophy assets and opportunistic investments, which ensure a steady revenue stream.

In pursuit of this, in recent months, Cousins Properties completed the acquisition of the Texas office portfolio for $1.1 billion. The portfolio – comprising Greenway Plaza (Houston) and 777 Main Street (Fort Worth) – was bought from Crescent Real Estate Holdings LLC. Also, the company sold a Tennessee-based retail property – The Avenue Murfreesboro – for $163 million.

We expect the company’s ongoing portfolio repositioning activity to generate capital for improving its presence in higher growth markets, boost its portfolio mix and ensure steady top-line growth.

Cousins Properties currently carries a Zacks Rank #2 (Buy). Better-performing REITs include CubeSmart (CUBE) and Sovran Self Storage Inc. (SSS), both carrying a Zacks Rank #1 (Strong Buy).

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