Consistent with its strategy of maintaining keen focus on portfolio restructuring, Cousins Properties Inc. (CUZ) recently inked a deal with Cushman & Wakefield to sell off its Third Party Client Services Business - Client Services Group (:CSG). The transaction, which is subject to customary conditions and minimum third party consent, is expected to close by the end of 2012.
CSG provides third party services to owners of Class A office buildings in Atlanta and Dallas. The services include leasing, property management, and project management along with advisory services related to acquisition, disposition, refinancing, asset management and development. The division boasts a strong client base – including Bank of America Corp. (BAC), Prudential Financial, Inc. (PRU) and iStar Financial Inc. (SFI).
Midtown Manhattan-based Cushman & Wakefield is the world’s largest privately-held commercial real estate services firm. The company advises and represents clients on all aspects by offering various types of services, including leasing, sales and acquisitions, equity, debt and structured finance, corporate finance and investment banking, corporate services, property management and others. Cushman & Wakefield has 243 offices across 60 countries and employs more than 14,000 employees.
As per terms of the agreement, around 128 employees of Cousins Properties will move to Cushman & Wakefield’s Investor Services division. The transition is a part of amalgamation of CSG's property management, landlord leasing and management services with Cushman’s Investor Services division.
The division is a part of the company’s Corporate Occupier and Investor Services (CIS) group. CIS currently manages nearly 16,000 properties totaling more than 800 million square feet worldwide, and has client firms like AEGON, Clarion Partners and AEW.
CSG's experienced brokerage professionals, strong client relationships and successful track record in both markets is expected to strengthen Cushman & Wakefield's leasing division going forward. As a point of reference, the division stood strong last year as it generated transaction volume of more than $45 billion on a worldwide basis.
Cousins Properties Inc. – a real estate investment trust (:REIT) – has a diversified portfolio with a broad array of product types – office, retail, urban residential and single-family communities that mitigate operating risks associated with the economic down-cycles. Subsequent to the transaction, the company will continue to own and operate its fee business that is not related to CSG.
The company recently reported second quarter 2012 FFO (funds from operations) of 13 cents per share, beating the Zacks Consensus Estimate by a penny. We presently have a long-term Neutral recommendation on Cousins Properties. Moreover, the company retains a Zacks #3 Rank (a short-term Hold rating).
Note: FFO, a widely accepted and reported measure of the performance of REITs, is derived by adding depreciation, amortization and other non-cash expenses to net income.
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