{"id":39401,"date":"2023-07-23T09:04:21","date_gmt":"2023-07-23T13:04:21","guid":{"rendered":"https:\/\/ifintechworld.com\/news\/cousins-properties-reit-enjoy-this-fat-stable-sunbelt-yield-nysecuz\/"},"modified":"2023-07-23T09:04:25","modified_gmt":"2023-07-23T13:04:25","slug":"cousins-properties-reit-enjoy-this-fat-stable-sunbelt-yield-nysecuz","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=39401","title":{"rendered":"Cousins Properties REIT: Enjoy This Fat, Stable Sunbelt Yield (NYSE:CUZ)"},"content":{"rendered":"
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Office REITs remain beaten down, due to the WFH (work-from-home) trend, which is here to stay. Of the 18 REIT sectors, only Cell Towers and Cannabis REITs have fared worse than the (-8.74)% total return posted by Office REITs YTD (year-to-date), while the average equity REIT has returned 3.87%. Meanwhile, the NASDAQ and the S&P indexes have raced ahead at double digits, and even the Dow has returned 6.72% thus far.<\/span><\/p>\n

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Hoya Capital<\/span><\/p>\n<\/figcaption><\/figure>\n<\/p>\n

There are a few bright spots in the Office REIT sector, however. Sunbelt and secondary market office leasing rates have recovered to 75% of pre-pandemic levels. As office properties continue to be repurposed or abandoned, the supply\/demand imbalance will continue to improve overall. While urban markets with long commute times will continue to suffer, Hoya Capital believes that Sunbelt and secondary-focused REITs have bottomed.<\/p>\n

This article examines growth, balance sheet, dividend, and valuation metrics for one such company.<\/p>\n

Meet the company<\/h2>\n

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Cousins Properties<\/span><\/p>\n<\/figcaption><\/figure>\n<\/p>\n

Founded in 1958 and headquartered in Atlanta, Cousins Properties (NYSE:CUZ<\/span>) went public in 1962, and converted to a REIT in 1987. The company owns just under 19 msf (million square feet) of amenity-rich office space in 8 secondary markets, all in the Sunbelt, with the strongest concentrations in Atlanta and Austin, which account for two-thirds of the company’s NOI (net operating income).<\/p>\n

The buildings average just 19 years of age, and nearly half (41%) have been delivered or redeveloped since 2015. Every asset in the portfolio is rated Class A, and CUZ enjoys a 90.8% occupancy rate as of June 2023.<\/p>\n

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Company investor presentation<\/span><\/p>\n<\/figcaption><\/figure>\n<\/p>\n

The glut of office space has caused a flight to quality, and CUZ is a prime beneficiary, with asking rents 9% above pre-pandemic levels, and 23% above the Class A average in its markets.<\/p>\n

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Company investor presentation<\/span><\/p>\n<\/figcaption><\/figure>\n<\/p>\n

CUZ has 1.3 msf of new development in the pipeline, and a land bank that can support an additional 5.1 msf.<\/p>\n

Growth metrics<\/h2>\n

Here are the 3-year growth figures for FFO (funds from operations), and TCFO (total cash from operations).<\/p>\n

<\/span><\/p>\n\n\n\n\n\n\n\n\n
Metric<\/strong><\/td>\n2019<\/strong><\/td>\n2020<\/strong><\/td>\n2021<\/strong><\/td>\n2022<\/strong><\/td>\n3-year CAGR<\/strong><\/td>\n<\/tr>\n
FFO (millions)<\/td>\n$329<\/td>\n$413<\/td>\n$409<\/td>\n$409<\/td>\n—<\/td>\n<\/tr>\n
FFO Growth %<\/td>\n—<\/td>\n25.5<\/td>\n(-1.0)<\/td>\n0.0<\/td>\n7.5%<\/td>\n<\/tr>\n
FFO per share<\/td>\n$2.53<\/td>\n$2.78<\/td>\n$2.75<\/td>\n$2.72<\/td>\n—<\/td>\n<\/tr>\n
FFO per share growth %<\/td>\n—<\/td>\n9.9<\/td>\n(-1.1)<\/td>\n(-1.1)<\/td>\n2.4%<\/td>\n<\/tr>\n
TCFO (millions)<\/td>\n$303<\/td>\n$351<\/td>\n$389<\/td>\n$365<\/td>\n—<\/td>\n<\/tr>\n
TCFO Growth %<\/td>\n—<\/td>\n15.8<\/td>\n10.8<\/td>\n(-6.2)<\/td>\n6.4%<\/td>\n<\/tr>\n<\/table>\n

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