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Cousins Properties (CUZ) Trumps Q3 FFO & Revenue Estimates

Zacks Equity Research

Cousins Properties Incorporated CUZ reported third-quarter 2019 funds from operations (FFO) per share (before TIER transaction costs) of 72 cents, surpassing the Zacks Consensus Estimate of 69 cents. Further, the figure comes in higher than the prior-year quarter’s reported tally of 63 cents.

Cousins Properties’ third-quarter 2019 revenue figure also recorded year-over-year growth. The company also witnessed increase in same-property cash net operating income (NOI).

Rental property revenues for the quarter came in at $180.8 million, which compares favorably with the $115.7 million witnessed in the year-ago quarter. The reported figure also outpaced the Zacks Consensus Estimate of $175 million.

Quarter in Detail

Cousins Properties executed leases for 741,367 square feet of office space during the September-end quarter. Same-property NOI, on a cash basis, increased 2.9% from the year-ago quarter. Moreover, second-generation net rent per square foot (cash basis) increased 8.1%.

Weighted average occupancy for the company’s same-property portfolio shrunk 100 basis points to 90.9% for the quarter ended Sep 30, 2019.  

Cousins Properties exited the third quarter with cash and cash equivalents of around $12.4 million compared with the $2.5 million recorded as of Dec 31, 2018.

2019 Outlook

Cousins Properties has raised and narrowed its guidance for the full-year 2019 FFO per share. The company expects FFO per share (excluding transaction costs) in the range of $2.93 to $3 compared with the previous guidance of $2.81 to $2.93. The Zacks Consensus Estimate for the current-year FFO per share is currently pinned at $2.90.

The projection for same property net operating income growth (on a cash basis) has been revised to 4-5%, up from 3.25-5.25%. Furthermore, fee and other income is projected at $35-$37 million, up from the $32-$34 million estimated earlier, due to higher lease termination fees.

2020 Outlook

Cousins Properties also provided its guidance for the full-year 2020 FFO per share. The company expects FFO per share in the $2.71-$2.85 band. The Zacks Consensus Estimate for the same is currently pinned at $2.81.

Same property net operating income growth (on a cash basis) is projected at 4-6%. Furthermore, fee and other income is anticipated in the range of $21 million to $23 million. 

Conclusion

Third-quarter 2019 marked the first full reporting cycle after Cousins Properties completed its merger with TIER REIT. Realizing financial synergies, the company posted encouraging results. Moreover, solid fundamentals of the office market in the Sun Belt region and a portfolio of Class A properties helped the company register year-over-year growth in same-property NOI.

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

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 like Alexandria Real Estate Equities ARE, Vornado Realty Trust VNO and Welltower Inc. WELL. All three companies are scheduled to release their quarterly numbers on Oct 28.

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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