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Cousins Properties' (CUZ) Q2 FFO In Line, Revenues Decline

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Steadiness in the metric, which tracks the performance of service-focused companies in America, points toward a strengthening economy.

Cousins Properties Incorporated CUZ reported second-quarter 2018 funds from operations (FFO) per share of 15 cents, in line with the Zacks Consensus Estimate. However, the figure came in lower than the prior-year quarter tally of 16 cents.

Cousin Properties’ Q2 revenue figure recorded a marginal decline year over year. Nevertheless, the company witnessed increment in same-property cash net operating income (NOI).

Rental property revenues for the quarter came in at $113.7 million compared with $114 million in the year-ago quarter. Further, the figure missed the Zacks Consensus Estimate of $115 million. Total revenues came in at $116.6 million, lower than $119 million reported in the prior-year period.

Quarter in Detail

Cousins Properties leased or renewed 327,680 square feet of office space in the April-June quarter. Same-property NOI, on a cash basis, rose 4.1% from the year-ago quarter. Moreover, second-generation net rent per square foot (cash basis) increased 13.1%.

During the quarter, the company made a profit of $2.4 million on sale of five acres of land at one of its projects.

Total costs and expenses came in at $105.2 million, down 4.4% from the prior-year quarter.

Cousins Properties exited the second quarter with cash and cash equivalents of $110.2 million, against $108.2 million recorded as of Mar 31, 2018.

2018 Outlook

Cousins Properties reiterated its 2018 FFO per share guidance issued in the fourth quarter of 2017. The company expects FFO for the year to be in the band of 59-63 cents. The Zacks Consensus Estimate for the current-year FFO per share is currently pegged at 61 cents.

Cousins Properties updated its guidance for expenses and gain on land sale.

Management now expects interest and other expenses, net of capitalized interest, in the $47-$49 million range, up from the previous projection of $46-$48 million. General and administrative expenses, net of capitalized salaries, are anticipated in the range of $25.5-$27.5 million. Long-term incentive compensation, based on the company's stock performance, contributed to this increase, from the prior estimate of $24-$26 million.

Further, the company updated its projected figure of gains on sale of land to $2.8 million, which was nil earlier, due to a $2.4 million gain in the reported quarter. 

Conclusion

Cousins Properties’ diversified portfolio, presence of high-end tenants in its roster and opportunistic investments in the best sub-markets will likely help the company keep the impressive growth momentum alive. Furthermore, the company’s investments in high growth markets are anticipated to boost its leasing metrics.

Nonetheless, the company faces stiff competition from other market players. This impacts its ability to retain and attract tenants at higher rents. Additionally, despite improvement in the job market, fundamentals of the office real estate market are anticipated to be affected due to rise in new deliveries of office space.

Cousins Properties Incorporated Price, Consensus and EPS Surprise

Cousins Properties Incorporated Price, Consensus and EPS Surprise | Cousins Properties Incorporated Quote

Currently, Cousins Properties has a Zacks Rank #4 (Sell).

You can the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

We now look forward to the earnings releases of other REITs like Alexandria Real Estate Equities, Inc. ARE, Regency Centers Corporation REG and Welltower Inc. WELL. Alexandria and Regency Centers are scheduled to release their quarterly figures on Jul 30 and Aug 2, respectively, while Welltower is slated to report its numbers on Aug 3.

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