Cousins Properties Incorporated’s CUZ trophy-asset acquisitions and opportunistic developments will likely enhance the premier Sun Belt portfolio. The Sun Belt region has been witnessing an influx in population. The demand for office space is high amid favorable migration trends and a pro-business environment.
With an encouraging job-market environment, office market fundamentals of the region will likely remain robust. Assets in these markets are expected to witness higher rents compared with the broader market. As such, the company expects robust fundamentals in its Sun Belt markets to keep driving internal and external growth.
Amid the tailwinds, Cousins Properties is well-positioned, with an unmatched portfolio of Class A office assets. This creates ample scope for rent growth in the upcoming period.
The company is also unlocking compelling growth opportunities in the region by taking up development projects in high-barrier-to-entry submarkets in Atlanta, Austin, Charlotte, Phoenix and Tampa.
Further, Cousins Properties maintains a solid balance sheet, with ample liquidity. This enables the company to leverage the improving market fundamentals and raise operational efficiency, driving long-term growth.
Moreover, the estimate revision trend for 2020 FFO per share indicates a favorable outlook for the company as it has witnessed a marginal upward revision over the past two months. Therefore, given the progress on fundamentals and positive estimate revisions, the stock has decent upside potential.
However, higher construction activity is expected to increase supply of new office space in the company’s market. This is intensifying competition for Cousins Properties, leading to lesser scope for rent and occupancy growth.
Moreover, an extensive development pipeline escalates its operational risks by exposing it to construction cost overruns, entitlement delays and lease-up risks.
Shares of the Zacks Rank #3 (Hold) company have underperformed the industry it belongs to in the past year. During this period, its shares have dipped 19.5% compared with the industry’s decline of 9.2%.
Stocks to Consider
Prologis, Inc. PLD currently carries a Zacks Rank of 2 (Buy). The company’s FFO per share estimate for 2020 has been revised 1.4% upward to $3.72 in a month. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Highwoods Properties HIW currently carries a Zacks Rank of 2. The Zacks Consensus Estimate for its current-year FFO per share moved marginally upward to $3.64 over the past week.
Piedmont Office Realty Trust, Inc. PDM currently carries a Zacks Rank of 2. The company’s FFO per share estimate for 2020 has been revised 2.1% upward to $1.96 in a month.
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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Prologis, Inc. (PLD) : Free Stock Analysis Report
Highwoods Properties, Inc. (HIW) : Free Stock Analysis Report
Cousins Properties Incorporated (CUZ) : Free Stock Analysis Report
Piedmont Office Realty Trust, Inc. (PDM) : Free Stock Analysis Report
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