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Cousins Properties’ CUZ portfolio of Class A office assets in high-growth Sun Belt markets is witnessing higher leasing activity backed by tenants’ preference for premium office spaces with class-apart amenities. Its capital-recycling efforts are encouraging, and a healthy balance sheet aids financial flexibility.
However, competition from other industry players is likely to limit its pricing power, affecting rent growth momentum. A concentrated portfolio and high interest expenses add to its woes.
In December 2024, Cousins Properties announced the acquisition of Sail Tower, a trophy lifestyle office property in Downtown Austin, TX, for $521.8 million. In the same month, it acquired Vantage South End, a 639,000-square-foot lifestyle office property in the thriving South End submarket in Charlotte, NC, for $328.5 million.
Analysts seem bullish on this office REIT carrying a Zacks Rank #3 (Hold), with the Zacks Consensus Estimate for its 2025 and 2026 funds from operations (FFO) per share being raised marginally northward over the past month to $2.74 and $2.84, respectively.
Over the past six months, shares of the company have gained 2.2% against the industry's decline of 4.9%.
Image Source: Zacks Investment Research
What’s Aiding Cousins Properties?
Cousins Properties has an unmatched portfolio of Class A office assets concentrated in the high-growth Sun Belt markets. Amid favorable migration trends and a pro-business environment, corporate relocations and expansions in the Sun Belt markets have gained pace, driving the demand for office space. Properties in these markets are also expected to command higher rents compared with the broader market.
With a significant presence in the best urban submarkets in each city and the high-growth Sun Belt markets, Cousins Properties has been able to enjoy a healthy demand for its properties. For 2024, the company executed 157 leases for a total of 2 million square feet of office space with a weighted average lease term of 7.9 years. This included 1.2 million square feet of new leases, 612,763 square feet of renewal leases and 206,827 square feet of expansion leases. With modest lease expirations lined up, the company is well-positioned for growth.
The company makes efforts to upgrade portfolio quality with trophy assets’ acquisitions and opportunistic developments in high-growth Sun Belt submarkets. It also makes strategic dispositions for a better portfolio mix. Such efforts have helped the company shed the slow-growth assets from its portfolio and redeploy the proceeds for developing and acquiring highly differentiated amenitized properties in the Sun Belt submarkets.
Cousins Properties focuses on maintaining a robust balance sheet with ample liquidity and limited near-term debt maturities to capitalize on improving market fundamentals. The company exited the fourth quarter of 2024 with cash and cash equivalents of $7.3 million. As of Dec. 31, 2024, Cousins Properties had a net debt-to-annualized EBITDAre ratio of 5.16. As of the same date, it had $112.3 drawn under its $1 billion credit facility. Thus, with considerable liquidity and access to capital markets, it enjoys ample flexibility to pursue compelling growth opportunities.