Cousins (CUZ) and Hines Attain 93% Leasing at 8000 Avalon
Atlanta-based REIT, Cousins Properties Inc. CUZ, and privately owned global real estate investment firm, Hines, recently signed a lease with software giant SAP at 8000 Avalon in Atlanta, GA. This contract brings a high-quality tenant to the company’s roster and makes 8000 Avalon 93% leased.
SAP, a leading provider of enterprise application software, has specifically signed a 43,800 square-foot 10-year lease at this 224,000 square foot Class A office development.
Per Cousins Properties, 8000 Avalon is the only high-rise office building in Avalon, which is a mixed-use development in North Atlanta. Cousins and Hines, in a joint venture, has developed this $73 million project that was completed in Jun 2017. In addition, the option to acquire the second and the only residual office pad at Avalon has of late been exercised by the joint venture. Once considerable preleasing is achieved, there are plans to start the construction activities.
Notably, mixed-use developments have gained popularity for their solid neighborhood character, greater housing variety and density. Such developments diminish the distance between housing, workplaces, retail businesses, plus other amenities and destinations. Hence, such developmental work enables the companies to grab attention of target people, who prefer to live, work and play in the same area – a trend that drove development in several other cities in the United States.
Similarly, Cousins’ office property in Avalon is also expected to witness a solid demand, driven by access to attractive housing options as well as 580,000 square feet of retail and restaurant space. Also, the new 330-room Hotel Avalon and Alpharetta Conference Center are located nearby.
The company owns an unmatched portfolio of Class A office assets located in Sun Belt markets. Also, in Oct 2016, the company closed the merger with Parkway Properties and spun off the Houston-based assets of the combined company into a publicly-traded REIT. This move was a strategic fit as it aided the company in boosting its portfolio and exiting the challenging Houston office market.
On a positive note, Cousins Properties’ diversified portfolio, presence of high-quality tenants in its roster, opportunistic investments in best sub-markets and a conservative balance sheet are likely to drive growth. However, stiff competition and hike in interest rate remain concerns.
Shares of Cousins Properties have gained 7.3% year to date, outperforming the industry’s 1.7% increase.
Cousins Properties currently carries a Zacks Rank #3 (Hold).
Stocks to Consider
Investors can also consider some better-ranked stocks in the REIT space like CoreCivic Inc. CXW, InfraREIT Inc. HIFR and PS Business Parks Inc. PSB, all three carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
While CoreCivic and PS Business Parks have expected long-term growth rates of 6% and 5%, respectively, the expected long-term growth rate for InfraREIT is currently pegged at around 8.0%.
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