Cousins Properties Incorporated
) - a real estate investment trust (REIT) - reported
third-quarter 2013 funds from operations (FFO) per share of 11
cents, beating the Zacks Consensus Estimate by a penny. However,
it came substantially below the year-ago figure of 25 cents due
to a significant rise in total costs and expenses in the
However, total revenue for the quarter jumped 32.6% year over
year to $52.1 million. Furthermore, total revenue substantially
exceeded the Zacks Consensus Estimate of $42 million.
Behind the Headlines
Total same property revenue increased 4.0% year over year to
$26.5 million in third-quarter 2013, while total same property
operating expense upped 3.2% year over year to $11.3 million. As
a result, total same property net operating income (NOI)
escalated 4.5% year over year to $15.2 million.
In the reported quarter, Cousins Properties inked new or
renewal leases for 338,000 square feet of space. As of Sep 30,
2013, same property weighted average occupancy upped 200 basis
points to 90% from 88% in the prior-year quarter.
Portfolio Restructuring Activity
In the reported quarter, Cousins Properties completed the
acquisition of a Texas office portfolio for $1.1 billion. The
portfolio - comprising Greenway Plaza (Houston) and 777 Main
Street (Fort Worth) - was bought from Crescent Real Estate
Moreover, the company divested a retail asset - Tiffany
Springs MarketCenter - for $53.5 million. Also, Cousins
Properties offloaded its stake in CF Murfreesboro Associates for
$82.0 million (before property level debt allocation). In
addition, the company disclosed the shedding of its interest in
CP Venture Two LLC and CP Venture Five LLC for $57.4 million
(before the allocation of property level debt). Notably, the
company has disposed the majority of its remaining retail assets
in the quarter.
Subsequent to quarter-end, Cousins Properties formed an
unconsolidated joint venture named 'EP II LLC' for constructing
and operating the 2
phase of the mixed-use property - Emory Point - in Atlanta, Ga.
for $73.3 million.
At quarter end, Cousins Properties had cash and cash
equivalents of $5.4 million, up from $4.9 million as of Jun 30,
During the quarter, the company completed an equity offering
of 69 million common shares at $10.00 per share and reaped net
proceeds of $661.3 million.
Also, during the quarter, Cousins Properties disclosed the
closure of 2 mortgages. Generating around $303 million in total
proceeds, the mortgages, in particular, included The Post Oak
Central non-recourse mortgage ($188.8 million with a 7-year term
and a fixed rate of 4.26%) and The Promenade non-recourse
mortgage ($114 million with a 9-year term and a fixed rate of
Though higher costs and expenses offset the quarterly FFO of
Cousins Properties, the increase in revenues and occupancy and
leasing gains provided some relief. Notably, Cousins Properties'
focus on building its business on a simpler platform, by
specifically targeting trophy assets and opportunistic
investments, ensures a steady revenue stream. The Texas-portfolio
acquisition, which is the largest in the company's history, is
noteworthy. These activities promise strong upside potential for
this Zacks Rank #3 (Hold) stock, going forward.
REITs that are performing better include
DiamondRock Hospitality Co.
DuPont Fabros Technology, Inc.
Douglas Emmett Inc
). All these stocks carry a Zacks Rank #2 (Buy).
FFO, a widely used metric to gauge the performance of REITs,
are obtained after adding depreciation, amortization and other
non-cash expenses to net income.
COUSIN PROP INC (CUZ): Free Stock Analysis
DOUGLAS EMMETT (DEI): Free Stock Analysis
DUPONT FABROS (DFT): Free Stock Analysis
DIAMONDROCK HOS (DRH): Free Stock Analysis
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