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Cousins Properties' (CUZ) Q3 FFO in Line, Revenues Beat

Cousins Properties Incorporated CUZ reported third-quarter 2017 funds from operations (FFO) per share of 15 cents, in line with the Zacks Consensus Estimate. The figure compared unfavorably with 22 cents recorded in the year-ago period.

The quarter witnessed considerable improvement in rental property revenues, which aided results to quite an extent. However, elevating expenses were a headwind. Amid these, shares of Cousin Properties edged down 0.76% to $9.10 during regular trading session on Oct 26.

Total revenues for the quarter came in at $113.2 million, marginally surpassing the Zacks Consensus Estimate of $112.8 million. The figure also came in higher than $48.7 million reported in the prior-year period. Additionally, rental property revenues rose to $336.1 million as compared with $138.4 million in the year-ago quarter.

Quarter in Detail

Cousins Properties leased or renewed 334,905 square feet of office space in the quarter. Same-property net operating income (NOI), on a cash basis, rose 2% year over year. Moreover, second-generation net rent per square foot (cash basis) increased 7.3%.

Total costs and expenses came in at $103.7 million, flaring up significantly from the prior-year quarter.

Cousins Properties exited the third quarter with cash and cash equivalents of $62.2 million, as against $35.7 million recorded as of Dec 31, 2016.

2017 Outlook

Cousins Properties raised its 2017 FFO per share guidance to the range of 60-62 cents per share from the previous guidance of 58-63 cents. The Zacks Consensus Estimate for the current year is currently pegged at 61 cents.

The company narrowed its current-year net income guidance to the band of 46-48 cents per share from 43-48 cents.

It also increased its projection for fee and other income to the $19-$21 million range. Also, the company raised its estimates for general and administrative costs to the range of $27-$29 million.

In Conclusion

Cousins Properties’ diversified portfolio, presence of high-end tenants in its roster, and opportunistic investments in best sub-markets will likely help the company keep the impressive growth momentum alive. Further, the company’s investments in high growth markets are anticipated to boost its leasing metrics.

Nonetheless, heightening competition, high dependence on office portfolio and further hike in interest rates remain key concerns.

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

We now look forward to the earnings releases of other REITs like HCP, Inc. HCP, Federal Realty Investment Trust FRT and Extra Space Storage Inc EXR. HCP, Inc. is slated to report results on Nov 2, while Federal Realty Investment Trust and Extra Space Storage are slated to report results on Nov 2.

Note: FFO, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income.

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