CUZ Completes Promenade Acquisition - Analyst Blog
November 29 2011 - 8:15AM
Zacks
As part of the long-term strategy
to upgrade its overall portfolio with newer high-quality assets,
Cousins Properties Inc. (CUZ), a Georgia-based
real estate investment trust (REIT), has recently completed the
acquisition of Promenade Two – a 774,000 square-foot Class-A office
building in the Midtown submarket of Atlanta, Georgia, for $134.7
million in cash.
The purchase price was well below
the replacement cost of the property and provided a significant
growth opportunity for the company with a first-class tenant base
and no considerable lease expirations until 2016. In addition, with
Promenade Two in its kitty, Cousins Properties presently has a
sought-after asset in all three urban submarkets along the
'Peachtree Corridor' of Atlanta.
Cousins Properties has a
diversified portfolio with a broad array of product types – office,
retail, urban residential and single-family communities that
mitigates operating risks associated with the economic down cycles.
In 2008, Cousins Properties reorganized its business according to
the functional lines and eliminated its division structure, which
was primarily based on product types.
Under its new structure, the
company has five reportable segments: Office, Retail, Land,
Third-Party Management and Multi-Family. The Office and Retail
segments comprise operations of consolidated and joint venture
office and retail properties, respectively. The Land segment
primarily includes operations for land held for future development.
The Third-Party Management segment includes projects where the
company manages, leases and develops properties for third parties.
The Multi-Family segment includes operations for the development
and sale of multi-family real estate.
The spread-out product portfolio
has ensured a relatively steady source of revenue generation for
Cousins Properties over the years. Furthermore, the portfolio is
primarily concentrated in high-growth Sun Belt markets, which due
to their long-term demographic trends, should exhibit above-average
growth in the coming quarters.
Cousins Properties is currently
shoring up its balance sheet and increasing its liquidity by
selling non-core assets. At the same time, the company remains
focused on leasing activities and intends to maintain steady
occupancy levels across its portfolio.
We maintain our ‘Neutral’
recommendation on Cousins Properties, which currently has a Zacks
#3 Rank that translates into a short-term ‘Hold’ rating. We also
have a ‘Neutral’ rating and a Zacks #3 Rank for Duke Realty
Corp. (DRE), one of the competitors of Cousins
Properties.
COUSIN PROP INC (CUZ): Free Stock Analysis Report
DUKE REALTY CP (DRE): Free Stock Analysis Report
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