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Cousins Properties’ (CUZ) Q4 FFO & Revenues Beat Estimates


Cousins Properties Incorporated CUZ reported fourth-quarter 2017 funds from operations (FFO) per share of 15 cents, surpassing the Zacks Consensus Estimate by a penny. Further, the figure compared favorably with 7 cents recorded in the year-ago period.

Results reflect better-than-expected revenues numbers in the quarter. Further, a rise in second-generation net rent per square foot on a cash basis was experienced.

Rental property revenues for the quarter came in at $109.9 million, compared with $111.4 million in the year-ago quarter. However, the figure came in marginally above the Zacks Consensus Estimate of $109.1 million. Total revenues came in at $114.1 million, lower than $114.3 million reported in the prior-year period.

For full-year 2017, the company’s FFO per share of 61 cents came in line with the Zacks Consensus Estimate. However, it came in lower than the prior-year’s figure of 63 cents.

Rental property revenues for the year came in at $466 million, significantly up from the year ago figure of $249.8 million. Further, it surpassed the Zacks Consensus Estimate of $445.1 million. Total revenues for the year came in at $466.2 million, up from $259.2 million a year ago.

Quarter in Detail

Cousins Properties leased or renewed 943,022 square feet of office space in the quarter. Same-property net operating income (NOI), on a cash basis, rose 4.2% from the year-ago quarter. Moreover, second-generation net rent per square foot (cash basis) increased 6.3%.

Total costs and expenses came in at $99.3 million, down 26.2% from the prior-year quarter.

Cousins Properties exited the fourth quarter with cash and cash equivalents of $148.9 million, as against $35.7 million recorded as of Dec 31, 2016.

2018 Outlook

Cousins Properties expects 2018 FFO per share to be in the band of 59-63 cents. The Zacks Consensus Estimate for 2018 is currently pegged at 62 cents.

The company anticipates its same property NOI growth on a GAAP basis to be in the range of 2%-4% and its same property NOI growth on a cash basis to be in the range of 3.5%-5.5%.

It also provided the range for fee and other income. It expects it to be in $10-$12 million range. Also, the company estimates the general and administrative costs to be in the range of $24-$26 million.

Interest and other expenses are expected in the range of $46-48 million.

In Conclusion

Cousins Properties’ diversified portfolio, presence of high-end tenants in its roster and opportunistic investments in best sub-markets will likely help the company keep the impressive growth momentum alive. Further, the company’s investments in high-growth markets are anticipated to boost its leasing metrics.

Nonetheless, the company faces stiff competition from other market players. This impacts the company’s 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. Further, any rise in interest rates remains a concern for the company.

Cousins Properties Incorporated Price, Consensus and EPS Surprise

Cousins Properties Incorporated Price, Consensus and EPS Surprise | Cousins Properties Incorporated Quote

Currently, Cousins Properties has a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

We now look forward to the earnings releases of other REITs like HCP Inc. HCP, CubeSmart CUBE and EPR Properties EPR. HCP and CubeSmart are scheduled to release results on Feb 13 and Feb 15 respectively, while EPR Properties is slated to report its numbers on Feb 28.

Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.

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