Is it Wise to Retain Cousins Properties Stock in Your Portfolio Now?

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 ResearchWhat’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.What’s Hurting Cousins Properties?There is competition from developers, owners and operators of office properties and other commercial real estate. This affects Cousins Properties’ ability to retain tenants at relatively higher rents and dents its pricing power.Cousins Properties’ assets are mainly concentrated in Atlanta, GA, and Austin, TX. During the fourth quarter of 2024, Atlanta and Austin contributed 35.6% and 32.3%, respectively, to the company’s NOI. Hence, any economic or political downturn in these markets is likely to affect Cousins Properties’ performance.Despite the Federal Reserve announcing rate cuts late in 2024, the interest rate is still high and is a concern for Cousins Properties. The company has a substantial debt burden, and its total debt, as of Dec. 31, 2024, was approximately $3.27 billion. In the fourth quarter of 2024, interest expenses jumped 20.4% to $33.1 million year over year.Stocks to ConsiderSome better-ranked stocks from the broader REIT sector are Gladstone Land LAND and Sabra Healthcare REIT SBRA, each carrying a Zacks Rank of #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.The Zacks Consensus Estimate for Gladstone’s 2025 FFO per share is pegged at 54 cents, which indicates year-over-year growth of 14.9%.The Zacks Consensus Estimate for Sabra’s full-year FFO per share is $1.49, which indicates an increase of 3.5% from the year-ago period.Note: Anything related to earnings presented in this write-up represents FFO, a widely used metric to gauge the performance of REITs.Just Released: Zacks Top 10 Stocks for 2025Hurry – you can still get in early on our 10 top tickers for 2025. Handpicked by Zacks Director of Research Sheraz Mian, this portfolio has been stunningly and consistently successful. From inception in 2012 through November, 2024, the Zacks Top 10 Stocks gained +2,112.6%, more than QUADRUPLING the S&P 500’s +475.6%. Sheraz has combed through 4,400 companies covered by the Zacks Rank and handpicked the best 10 to buy and hold in 2025. You can still be among the first to see these just-released stocks with enormous potential. See New Top 10 Stocks >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Cousins Properties Incorporated (CUZ): Free Stock Analysis Report Sabra Healthcare REIT, Inc. (SBRA): Free Stock Analysis Report Gladstone Land Corporation (LAND): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks