Here's Why Cousins Properties (CUZ) is an Apt Portfolio Pick
Amid the recovering office real-estate market, Cousins Properties CUZ is well-poised to benefit from its unmatched portfolio of class A office assets, concentrated in the high-growth markets in the Sun Belt region. Also, its strategic buyouts and solid balance-sheet strength bode well.
Cousins Properties is witnessing a recovery in demand for its highly-amenitized and well-placed office properties, as reflected by the rebound in new leasing volume.
Moreover, the next cycle of office-space demand will likely be driven by an inbound business migration and significant investments being made by office occupiers to expand their footprint in the Sun Belt regions. This is expected to boost the demand for CUZ’s high-quality portfolio of office assets in the forthcoming quarters.
In addition, its well-diversified, high-end tenant roster lowers the risk associated with dependency on single-industry tenants and assures stable rental revenues for the company during economic downturns.
Cousins Properties has been making concerted efforts to enhance its portfolio quality with trophy asset acquisitions and opportunistic developments in high-growth Sun Belt submarkets.
In the last two years, the company has sold more than a billion worth of slow-growth assets and has redeployed the proceeds for developing and acquiring highly differentiated amenitized properties in Austin, Nashville, Atlanta, Tampa and Charlotte. The transactions boost the company’s presence in the Sun Belt region. Also, its notable development pipeline seems encouraging.
On the balance sheet front, Cousins Properties exited the second quarter of 2022 with cash and cash equivalents of $4.1 million and a net debt-to-annualized EBITDAre ratio of 4.93, which improved from 5.28 sequentially.
With ample liquidity and a low-leveraged balance sheet, the company is well-positioned to capitalize on future growth opportunities.
Solid dividend payouts are arguably the biggest attraction for REIT investors, and Cousins Properties remains committed to that. In the past five years, CUZ has increased its dividend six times and has a five-year annualized dividend growth rate of 13.30%, which seems encouraging. Given the company’s strong financial position and a lower dividend payout ratio than its industry, its dividend payment is likely to be sustainable in the upcoming period.
CUZ presently carries a Zacks Rank #2 (Buy). Although its shares have lost 20.1% over the past three months compared with its industry’s decline of 16.2%, we believe the company has strong growth potential and seems a solid choice for your portfolio. Hence, the dip offers a good entry point for investors.
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Other Stocks to Consider
Some other top-ranked stocks from the REIT sector are Extra Space Storage EXR, Host Hotels & Resorts HST and OUTFRONT Media OUT, each carrying a Zacks Rank of 2 at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Extra Space Storage’s ongoing year’s funds from operations (FFO) per share has been raised marginally upward over the past month to $8.48.
The Zacks Consensus Estimate for Host Hotels & Resorts’ current-year FFO per share has moved 2.9% northward in the past two months to $1.80.
The Zacks Consensus Estimate for OUTFRONT Media’ 2022 FFO per share has moved 2.5% upward in the past two months to $2.05.
Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
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Host Hotels & Resorts, Inc. (HST) : Free Stock Analysis Report
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