Cousins Properties’ CUZ portfolio of class A office assets is concentrated in the high-growth markets in the Sun Belt region. The company is witnessing higher leasing activity due to tenants’ preference for premium office spaces. Its capital-recycling efforts and healthy balance sheet augur well.

Analysts seem positive about this Zacks Rank #2 (Buy) company. The Zacks Consensus Estimate for CUZ’s 2025 funds from operations (FFO) per share has moved marginally northward over the past month to $2.68.

Shares of this office-based real estate investment trust (REIT) company have gained 29.3% over the past six months compared to the industry’s increase of 1%. Given the strength in its fundamentals, there seems to be additional room for growth.

Image Source: Zacks Investment Research

Factors That Make Cousins Properties Stock a Solid Pick

Higher Leasing Activity: Cousins Properties is witnessing healthy leasing demand for its high-quality, well-placed office properties, as highlighted by the rebound in new leasing volume. For the nine months ended September 2024, the company executed 114 leases for a total of 1.6 million square feet of office space with a weighted average lease term of 7.8 years. Its lease expirations through 2026 are among the lowest in the office sector.

Going forward, the next cycle of office space demand is likely to be driven by an inbound migration and significant investments announced by office occupiers to expand the footprint in the Sun Belt regions. Hence, Cousins Properties’ leading trophy portfolio of class A and highly amenitized office real estate across the Sun Belt region is well-positioned to benefit from the emerging trend.

Further, several tenants are returning to offices or announcing plans to report to workplaces. This is likely to support office market fundamentals in its markets.

Solid Tenant Base: The company enjoys a well-diversified, high-end tenant roster with less dependence on a single industry. This enables it to generate stable rental revenues over time.

Capital-Recycling Efforts: Cousins Properties’ capital-recycling moves to enhance its portfolio quality with trophy asset acquisitions and opportunistic developments in high-growth Sun Belt submarkets seem encouraging for long-term growth. It makes strategic dispositions for a better portfolio mix.

In December 2024, Cousins Properties acquired a trophy lifestyle property in Downtown Austin, TX, for $521.8 million. The property, spanning 804,000 square feet, is 100% leased to a Fortune 20 company.

In the same month, the company acquired Vantage South End, a 639,000-square-foot lifestyle office property in Charlotte’s thriving South End submarket, for $328.5 million. This strategic acquisition aligns with Cousins’ Sun Belt-focused strategy and enhances its presence in one of Charlotte's most dynamic submarkets.

In addition, its encouraging development pipeline is likely to deliver meaningful additional annualized net operating income in the upcoming years.

Balance Sheet Strength: Cousins Properties maintains a healthy balance sheet position. The company exited the third quarter of 2024 with cash and cash equivalents of $76.1 million. As of Sept. 30, 2024, Cousins Properties had a net debt-to-annualized EBITDAre ratio of 5.10. As of the same date, it had no amount drawn under its $1 billion credit facility. Thus, with considerable liquidity, the company seems well-placed to bank on long-term growth opportunities.

Other Stocks to Consider

Some other top-ranked stocks from the broader REIT sector are OUTFRONT Media OUT and $Vornado Realty Trust(VNO-N)$ VNO, each carrying a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for OUTFRONT Media’s 2024 FFO per share has been raised by 1.8% over the past two months to $1.73.

The Zacks Consensus Estimate for Vornado’s 2024 FFO per share has been raised marginally over the past two months to $2.16.

Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Vornado Realty Trust (VNO) : Free Stock Analysis Report

Cousins Properties Incorporated (CUZ) : Free Stock Analysis Report

OUTFRONT Media Inc. (OUT) : Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research