Cousins Properties (CUZ) Q1 FFO & Revenues Top Estimates

Cousins Properties Incorporated (NYSE:CUZ) reported first-quarter 2017 funds from operations (“FFO”) per share of 16 cents compared with 21 cents in the year-ago period. Excluding $1.9 million of transaction costs, FFO per share for the quarter came in at 17 cents, surpassing the Zacks Consensus Estimate of 15 cents.

The first quarter transaction costs emanated from the company’s merger with Parkway Properties in Oct 2016 and subsequent spin off of the Houston assets of the combined entity into a separate public company, Parkway, Inc. (NYSE:PKY)

Total revenue for the quarter came in at $119.9 million, compared with $47.9 million reported in the prior-year period. The Zacks Consensus Estimates was pegged at $117 million. Additionally, rental property revenues were $112.5 million compared with $45.4 million in the year-ago quarter.

Quarter in Detail

Cousins Properties leased or renewed 570,744 square feet of office space in the quarter. Same property net operating income, on a cash basis, rose 5.5% year over year. Moreover, second generation net rent per square foot (cash basis) moved 3.3% north.

Cousins Properties exited the quarter with cash and cash equivalents of $35.8 million, almost flat from the prior-year quarter.

2017 Outlook

Cousins Properties projects 2017 FFO per share in the range of 58–63 cents per share. The Zacks Consensus Estimate for the year is currently pegged at 60 cents.

Moreover, the company expects its current year net income in the range of 41–49 cents per share.

The company also increased estimates for fee and other income and rental income to a range of $15-$17 million and $29-$31 million, respectively. However, the guidance for disposition activity has been revised down to a range of $300-$325 million primarily due to the closure of common equity issuance in the quarter.

In Conclusion

The company’s diversified portfolio, presence of high-end tenants in its roster, and opportunistic investments in best sub-markets should help it to keep the growth momentum alive.

However, intense competition, high dependence on its office portfolio and further hike in interest rates remain the key concerns.

Currently, Cousins Properties has a Zacks Rank #3 (Hold). 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. (NYSE:HCP) and Federal Realty Investment Trust (NYSE:FRT) . HCP, Inc. and Federal Realty Investment Trust are slated to report results on May 2 and May 3, respectively.

Note: 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. All EPS numbers presented in this write up represent FFO per share.

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