Shares of Cousins Properties CUZ have rallied 21% over the past six months against the industry's 6% decline. The company’s portfolio of Class A office assets in high-growth Sun Belt markets is witnessing higher leasing activity backed by tenants’ preference for premium office spaces with class-apart amenities.

Last December, Cousins Properties acquired a trophy lifestyle office property, Sail Tower, in Austin, TX, encompassing 804,000 square feet of space, for a net price of $521.8 million. This office space is fully leased to a Fortune 20 company with an investment-grade credit rating of AA+ from S&P through 2038.

The same month, the company also acquired another lifestyle office property, Vantage South End, for $328.5 million spanning 639,000-square-foot in the thriving South End submarket in Charlotte, NC.

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Factors Behind CUZ Stock’s Price Surge: Will the Trend Last?

Amid favorable migration trends and a pro-business environment, corporate relocations and expansions in the Sun Belt markets have gained pace driving the demand for office space. Cousins Properties is set to capitalize on these industry tailwinds with its unmatched portfolio of Class A office assets concentrated in the high-growth Sun Belt markets.

As a result, CUZ is witnessing a recovery in demand for its strategically located office properties, as reflected by the rebound in new leasing volume. For the nine months ended Sept. 30, 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.

The rising demand for quality office spaces is helping landlords to command premium rents for their assets. Per the Cousins Properties’ November 2024 Investor Presentation, it witnessed a 10.2% increase in its second-generation cash net rent from the first quarter of 2017 to the first quarter of 2024. The company enjoys a well-diversified, high-end tenant roster with less dependence on a single industry. This enables it to enjoy steady revenues over different economic cycles.

CUZ makes efforts to upgrade portfolio quality with trophy assets acquisitions and opportunistic developments in high-growth Sun Belt submarkets. From 2019 through Oct. 24, 2024, apart from the TIER REIT transaction, the company acquired 3.6 million square feet of operating properties, completed 2.2 million square feet of development and sold 5.5 million square feet of operating properties. Its notable development pipeline is likely to deliver meaningful additional annualized net operating income in the upcoming years.

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

Analysts seem bullish on this Zacks Rank #2 (Buy) company. The Zacks Consensus Estimate for its 2025 funds from operations (FFO) per share has been raised marginally over the past month to $2.74, indicating 2.2% growth year over year.

Other Stocks to Consider

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

The Zacks Consensus Estimate for SL Green Realty’s 2025 FFO per share has been revised 1.1% northward over the past week to $5.51.

The consensus estimate for OUTFRONT Media’s 2025 FFO per share has been raised northward marginally over the past two months to $1.86.

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.

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