Here's Why You Should Hold Cousins Properties (CUZ) Stock Now
Cousins Properties Incorporated CUZ is poised to capitalize on the favorable long-term growth fundamentals of the Sun Belt markets, including inbound business migration, steady office absorption and positive rent growth. However, a competitive landscape and huge capital outlays might act as deterrents.
Cousins Properties has an unmatched portfolio of class A office assets concentrated in the high-growth Sun Belt markets. Amid the favorable migration trends and pro-business environment, corporate relocations and expansions in the Sun Belt markets have been prominent and this is driving the demand for office space.
With a number of tenants returning to offices or announcing plans to return to workplaces, office market fundamentals are witnessing healthy demand. The office-space demand in the upcoming period is likely to be driven by de-densification to allow higher square footage per office worker and the need for high-quality, well-amenetized office properties. Hence, office REITs like Cousins Properties, Highwoods Properties HIW and SL Green SLG are well placed for sustainable growth.
The company is seeing a recovery in demand for its high-quality, well-placed office properties as highlighted by a rebound in new leasing volume. In September, it signed a lease with Visa V for approximately 123,000 square feet of space at 1200 Peachtree in Midtown Atlanta.
The REIT also reflects healthy inorganic growth. Its efforts to enhance the portfolio quality with the acquisitions of trophy assets and opportunistic developments augur well. Recently, it acquired Heights Union, a 294,000-square-foot office property in Downtown Tampa for $144.8 million.
Moreover, Cousins Properties enjoys a robust balance-sheet position. The company exited the second quarter with cash and cash equivalents of $9.8 million, and $968 million of availability under its $1-billion credit facility. A low-leveraged balance sheet offers ample flexibility to pursue the stellar growth opportunities.
However, the company faces stiff competition from developers, owners and operators of office properties and other commercial real estate. This might adversely impact Cousins Properties’ pricing power.
In addition, while the company’s development pipeline is accretive for value creation, it requires huge capital outlays. Also, an extensive development pipeline escalates its risks by exposing it to construction cost overruns, entitlement delays and lease-up risks.
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Visa Inc. (V) : Free Stock Analysis Report
Highwoods Properties, Inc. (HIW) : Free Stock Analysis Report
Cousins Properties Incorporated (CUZ) : Free Stock Analysis Report
SL Green Realty Corporation (SLG) : Free Stock Analysis Report
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