CUZ Cousins Properties Inc

Cousins Properties Inc. (CUZ), a real estate investment trust (REIT), reported fourth quarter 2011 FFO (fund from operations) loss of $110.2 million or $1.06 per share, compared with FFO of $10.0 million or $0.10 in the year-earlier quarter. Fund from operations, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation, amortization and other non-cash expenses to net income.

Excluding certain non-recurring items, recurring FFO for the reported quarter was $16.1 million or 16 cents per share. The recurring FFO for fourth quarter 2011 exceeded the Zacks Consensus Estimate by 4 cents.

For full year 2011, Cousins Properties reported FFO loss of $76.9 million or 74 cents per share, compared with FFO of $32.8 million or 32 cents in the previous year. Recurring FFO for the reported fiscal was $53.2 million or 51 cents per share. The recurring FFO for fiscal 2011 exceeded the Zacks Consensus Estimate by 7 cents.

Total revenues were $46.6 million during the quarter versus $52.7 million in the year-ago period. For full year 2011, Cousins Properties reported total revenues of $178.5 million versus $215.6 million in 2010.

During the reported quarter, Cousins Properties executed strong leasing activities spanning 266,000 square feet of office space and 122,000 square feet of retail space. At year-end 2011, the company’s office portfolio was 90% leased (down from 91% at year-end 2010), while its retail properties were 89% leased (86% in 2010).

During fourth quarter 2011, Cousins Properties 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.

As part of the long-term strategy to upgrade its overall portfolio with the acquisition of newer high-quality properties and divesture of non-core assets, Cousins Properties sold 2 industrial buildings and the remainder of its Texas industrial land for total proceeds of $72.2 million during fourth quarter 2011. The company’s share of the asset sale transaction was approximately $65.2 million.

These included the sale of ‘King Mill Building 3’ – a 796,450 square-foot building in Atlanta, Georgia, to an affiliate of Industrial Developments International (IDI). The company also sold ‘Lakeside Ranch Building 20’ – a 748,831 square-foot building in Dallas, to Duke Realty Corp. (DRE). At the same time, Cousins Properties sold two land parcels within the Lakeside Ranch Business Park and an additional development site in Lancaster, Texas, to Duke Realty.

The company also divested 3.8 acres at North Point for $2.8 million and 187 residential lots, including all remaining lots at Tillman Hall and 79 of the remaining 109 lots at Creekside Oaks. Subsequent to the quarter-end, Cousins Properties entered into a contract to sell its interests in 18 residential projects held by its CL Realty and Temco joint ventures for $23.5 million.

Cousins Properties is currently shoring up its balance sheet and increasing 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. At year-end 2011, Cousins Properties had cash and cash equivalents of $4.9 million, compared with $7.6 million at year-end 2010. Total debt outstanding at year-end 2011 was $701.6 million.

We maintain our 'Neutral' rating on Cousins Properties, which presently has a Zacks #2 Rank translating into a short-term ‘Buy’ recommendation.

 
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