Cousins Properties (CUZ) Q2 FFO & Revenues Lag Estimates

Cousins Properties Incorporated (NYSE:CUZ) reported second-quarter 2019 funds from operations (FFO) per share (before TIER transaction costs) of 71 cents, missing the Zacks Consensus Estimate by a whisker. Nonetheless, the figure comes in higher than the prior-year quarter’s reported tally of 60 cents.

Cousin Properties’ second-quarter 2019 revenue figure recorded year-over-year growth. Further, the company witnessed increase in same-property cash net operating income (NOI). Yet, higher interest expense as well as general and administrative expenses unfavorably impacted results.

Rental property revenues for the quarter came in at $134.9 million, which compares favorably with $114.3 million witnessed in the year-ago quarter. The reported figure, however, missed the Zacks Consensus Estimate of $138.6 million.

Quarter in Detail

Cousins Properties executed leases for 1,089,318 square feet of office space during the April-June quarter. Same-property NOI, on a cash basis, increased 5.5% from the year-ago quarter. Moreover, second-generation net rent per square foot (cash basis) increased 4.9%.

During the reported quarter, Cousins Properties closed the merger with TIER REIT in a 100% stock-for-stock deal and completed a one-for-four reverse stock split.

Further, it signed a 15-year lease for the proposed corporate headquarters of the combined BB&T Corporation (NYSE:BBT) and SunTrust Banks (NYSE:STI), Inc. at Hearst Tower in Uptown Charlotte. The lease is for 561,000 square feet of space.

Cousins Properties exited the second quarter with cash and cash equivalents of around $11.9 million compared with the $2.5 million recorded as of Dec 31, 2018.

2019 Outlook

Cousins Properties revised its guidance for the full-year 2019 FFO per share. The company expects FFO per share (excluding transaction costs) in the band of $2.81 to $2.93 compared with the previous guidance of $2.80 to $2.96. The Zacks Consensus Estimate for the current-year FFO per share is currently pinned at $2.88.

The projections for same property net operating income growth have been revised to 3.25-5.25%, up from 3-5%. Furthermore, on account of the TIER transaction, Cousins Properties now anticipates general and administrative expenses, net of capitalized salaries, in the range of $34-$36 million, up from the $33.5-$35.5 million estimated earlier.

Conclusion

The U.S. office market witnessed methodical growth in the second quarter. This comes at a time when the U.S economy is at its now record-long, economic expansion cycle. In fact, with sturdy employment growth rate, the labor market maintained its hiring levels. This supported strong leasing activity for the company’s office portfolio.

Additionally, strategic location of its Class A properties enabled the company to witness year-over-year growth in same-property NOI.

Currently, Cousins Properties carries a Zacks Rank #3 (Hold). You can the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Cousins Properties Incorporated Price and EPS Surprise

We now look forward to the earnings releases of other REITs like Iron Mountain Incorporated (NYSE:IRM) , Vornado Realty Trust (NYSE:VNO) and Boston Properties (NYSE:BXP) .

Vornado Realty Trust will release its quarterly figures on Jul 29, Boston Properties on Jul 30 and Iron Mountain is scheduled to report the same on Aug 1.

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

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