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Cousins Properties CUZ reported third-quarter 2024 funds from operations (FFO) per share of 67 cents, in line with the Zacks Consensus Estimate. The figure improved by 3.1% on a year-over-year basis.
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Results reflected strong leasing activity and higher rent realizations amid rising demand for office spaces. However, rise in interest expenses year over year undermine the results to some extent. CUZ also raised its 2024 outlook for FFO per share.
Rental property revenues rose 4.5% year over year to $207.3 million. However, it missed the Zacks Consensus Estimate of $213.6 million. Total revenues grew 5.2% year over year to $209.2 million.
Per Colin Connolly, president & CEO of Cousins Properties, “We had great results this quarter amid signs that office fundamentals are improving.” He also pointed out, “Looking ahead, we expect the supply of office buildings to continue to decline while leasing demand accelerates. This is an attractive environment for us to drive leasing in our Sun Belt lifestyle office portfolio and identify compelling new investment opportunities."
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CUZ’s Third Quarter in Detail
Cousins Properties executed leases for 763,000 square feet of office space in the third quarter, including 611,000 square feet of new and expansion leases, representing 80% of total leasing activity.
Same-property rental property revenues on a cash basis rose 3.2% year over year to $186.6 million. The same-property rental property operating expenses on a cash basis grew 0.8% to $63.4 million in the third quarter of 2024. As a result, the same-property net operating income on a cash basis climbed 4.4% to $123.2 million from the prior-year period.
The weighted average occupancy of the same-property portfolio was 88.4%, up 70 basis points from a year ago.
CUZ ended the quarter with the same-property portfolio being leased 91.1%, up from 90.9% at the end of the year-ago period.
The second-generation net rent per square foot (cash basis) climbed 7.2%.
Interest expenses jumped 13.9% to $30.8 million year over year.
CUZ’s Balance Sheet
CUZ exited the third quarter with cash and cash equivalents of $76.1 million, up from $5.95 million as of June 30, 2024.
The company’s net debt-to-annualized EBITDAre ratio in the quarter was 5.10 compared with 5.12 in the prior quarter.
CUZ’s 2024 Outlook Raised
Cousins Properties raised its guidance for 2024 FFO per share to the range of $2.66-$2.70 from the $2.63-$2.68 range projected earlier. The Zacks Consensus Estimate is presently pegged at $2.67, which is within expectations.