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Cousins Properties Boosts Strength With $1B Credit Facility


Cousins Properties CUZ boosted its financial position by closing a new five-year, $1-billion unsecured credit facility. The move offers greater flexibility to the company as it has replaced the previous $500 million facility slated to mature in May next year.

Notably, the company focuses on maintaining a disciplined balance sheet, with ample liquidity to leverage on improving market fundamentals, make opportunistic investments and raise operational efficiency, which aids in long-term growth.

In fact, Cousin Properties has made significant efforts to increase its unencumbered asset pool and as of third-quarter 2017, the net operating income (NOI) from unencumbered assets amounted to 70% of total NOI, significantly up from 37% in first-quarter 2009.

Also, the company has made efforts to strengthen its balance sheet. It has reduced leverage with net debt to total market cap declining to 23.2% as of third-quarter 2017 from 69.3% as of first-quarter 2009, while net debt to EBITDA improved to 4.3x from 14.1x during the same time frame.

Cousin Properties’ high-quality office assets located in the Sun Belt region have the capacity to drive long-term growth. However, the company faces stiff competition from other market players. This impacts its ability to retain and attract tenants at higher rents. Moreover, despite the improvement in the job market, going forward fundamentals of the office real estate market is anticipated to be adversely affected because of the rise in new deliveries of office space.

Amid these, Cousin Properties currently carries a Zacks Rank #4 (Sell). In the past three months, shares of the company have underperformed the industry. While the stock has lost 4.1%, the industry has declined 2.3% during this period. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Better-ranked stocks in the REIT space include Ashford Hospitality Prime, Inc. AHP, Lamar Advertising Company LAMR and Outfront Media Inc. OUT. All three carry a Zacks Rank of 2 (Buy).

Ashford Hospitality Prime’s Zacks Consensus Estimates for 2017 funds from operations (FFO) per share remained unchanged at $1.61 over the past month. Its share price has inched up 0.3% in a month’s time.

Lamar Advertising Company’s FFO per share estimates for 2017 have remained unchanged at $4.96 in a month’s time. The stock has gained 5.8% over the past three months.

Outfront Media’s FFO per share estimates for 2017 remained unchanged at $1.98 over the past month. Its shares have gained 1.2% during the past six months.

Note: All EPS numbers presented in this report represent funds from operations (FFO) per share. FFO, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income.

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