We maintain our Neutral rating on
Cousins Properties Inc.
), a Georgia-based real estate investment trust (REIT) engaged in
the acquisition, financing, development, management, and leasing of
office, retail and industrial properties throughout the U.S.
Cousins Properties has a diversified portfolio with a broad
array of product types - office, retail, urban residential and
single-family communities that mitigates operating risks associated
with the economic down cycles. In 2008, Cousins Properties
reorganized its business according to the functional lines and
eliminated its division structure, which was primarily based on
Under its new structure, the company has five reportable
segments: Office, Retail, Land, Third-Party Management and
Multi-Family. The Office and Retail segments comprise operations of
both consolidated and joint venture office and retail properties,
The Land segment primarily includes operations for land held for
future development. The Third-Party Management segment includes
projects where the company manages, leases and develops properties
for third-parties. The Multi-Family segment includes operations for
the development and sale of multi-family real estate.
The spread-out product portfolio has ensured a relatively steady
source of revenue generation for Cousins Properties over the years.
Furthermore, the portfolio is primarily concentrated in high-growth
Sun Belt markets, which due to its long-term demographic trends,
should exhibit above-average growth in the coming quarters. This
provides an upside potential for the company.
In addition, Cousins Properties maintains a conservative and
flexible balance sheet with ample liquidity and minimal debt
maturities that enable it to capitalize on potential acquisition
opportunities to fuel its long-term growth.
However, Cousins Properties has a large development pipeline,
which increases operational risks in the current credit-constrained
market, exposing it to rising construction costs, entitlement
delays and lease-up risk.
Cousins Properties generate a significant amount of revenue from
its office portfolio. Operations in the company's office portfolio
are likely to suffer as most companies shelve expansion plans and
trim jobs. This could adversely affect the top-line growth of the
The continued troubles in the residential sector are also
weighing on commercial property operations. The credit crunch has
widened the bid-ask spread between buyers and sellers of commercial
real estate, which in turn has caused deal volumes to fall compared
to pre-recession levels. This has negatively affected the
industrial properties segment of Cousins Properties.
Cousins Properties currently retains a Zacks #2 Rank that
translates into a short-term Buy rating. We also have a Neutral
rating and a Zacks #3 Rank (short-term Hold rating) for
Duke Realty Corp.
), one of the competitors of Cousins Properties.
COUSIN PROP INC (CUZ): Free Stock Analysis
DUKE REALTY CP (DRE): Free Stock Analysis
To read this article on Zacks.com click here.