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Cousins Properties (CUZ) Tops Q2 FFO Estimates, Closes 3 Deals

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Cousins Properties Incorporated’s CUZ second-quarter 2021 funds from operations (FFO) per share of 69 cents outpaced the Zacks Consensus Estimate by a penny. The reported FFO figure is 4.5% higher than the prior-year quarter’s 66 cents.

Rental property revenues were $181.8 million, which lagged the Zacks Consensus Estimate of $183 million. However, the reported figure climbed 3.8%, on a year-over-year basis.

Quarterly results highlight an improvement in same-property net operating income (NOI).

According to Colin Connolly, president and chief executive officer of Cousins Properties, “It was a terrific quarter, driven by solidly improving office fundamentals in all of our Sun Belt markets.”

Connolly added, “In particular, leasing volume increased to a level generally consistent with pre-Covid activity, with a very encouraging 74% of leases signed during the quarter representing new and expansion space. As companies plan their return to the office, they are focused on being in an environment where employees are excited to come to work and collaborate with one another. We are well positioned to meet this demand.”

Quarter in Detail

Cousins Properties executed leases for 484,000 square feet of office space in the June-end quarter, including 361,000 square feet of new and expansion leases. Same-property rental property revenues, on a cash basis, were up 6.6% year on year. Same-property NOI, on a cash basis, increased 7.1% from the year-ago period.

As of Jun 30, 2021, 90.7% of its same-property portfolio was leased, down from 93.3% at the end of the year-ago period. Weighted average occupancy for the company’s same-property portfolio came in at 90.7% for second-quarter 2021 compared with the year-ago period’s 91%.

Nonetheless, second-generation net rent per square foot (cash basis) climbed 12.9%.

The company exited second-quarter 2021 with cash and cash equivalents of $9.8 million compared with $4.3 million recorded as of Dec 31, 2020.

3 Strategic Deals

Concurrent with the earnings release, Cousins Properties announced the completion of its three strategic transactions. In Charlotte, the company sold an 891,000-square-foot office asset, One South, for $271.5 million.

In Midtown Atlanta, Cousins Properties acquired 725 Ponce, a 372,000-square-foot office asset for $300.2 million. As part of the deal, it also bought a 50% ownership interest in a land site next to the property for an additional $4 million.

Apart from these, the company entered into a 50/50 joint venture with a large, institutional investor to develop a mixed-use project in Nashville.

2021 Outlook

Cousins Properties revised its outlook and now projects FFO per share at $2.70-$2.78 from the $2.68-$2.78 targeted earlier. The Zacks Consensus Estimate for the same is currently pinned at $2.76.

Currently, Cousins Properties carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Cousins Properties Incorporated Price, Consensus and EPS Surprise

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

Cousins Properties Incorporated price-consensus-eps-surprise-chart | Cousins Properties Incorporated Quote

We now look forward to the earnings releases of other REITs, including Vornado Realty Trust VNO, Realty Income Corporation O and Healthpeak Properties, Inc. PEAK, slated to be out next week.

Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.

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