Cousins Properties Misses Estimates - Analyst Blog

Cousins Properties Inc. (CUZ), a real estate investment trust (REIT), reported second quarter 2010 FFO (fund from operations) of $7.9 million or 8 cents per share, compared with ($64.9) million or ($1.26) in the year-earlier quarter. Fund from operations, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation, amortization and other non-cash expenses to net income.
 
The reported FFO for second quarter 2010 missed the Zacks Consensus Estimate by 2 cents. Excluding non-cash impairment and predevelopment charges totaling $2.5 million, FFO for the reported quarter was $10.4 million or 10 cents per share.
 
Total revenue was $52.6 million during the quarter versus $48.5 million in the year-ago period. Total revenue for the reported quarter was well ahead of the Zacks Consensus Estimate of $37 million.
 
During the quarter, Cousins Properties reduced its ownership interest in Terminus 200, a high-rise building in Atlanta, from 50% to 20%. At the same time, the company extended the construction loan for the project and leased 150,000 square feet of the building. Furthermore, Cousins Properties executed a leasing agreement for 459,000 square feet of space with a Fortune 1000 company at Jefferson Mill Business Park – a large distribution park in Georgia, thereby leasing the building entirely.
 
In addition, Cousins Properties executed new or renewal leases for 171,000 square feet of office space and 143,000 square feet of retail space during the quarter. At quarter-end, the company’s office portfolio was 89% leased, while its retail and industrial buildings were 86% and 85% leased, respectively.
 
The company sold 44 acres of land at King Mill Distribution Park, an industrial park in Georgia, for $7.0 million during the quarter. Cousins Properties also sold 22 units at 10 Terminus Place (a mixed-use project at Atlanta) for $7.9 million and 5.8 acres of land at North Point/Westside for $850,000 during the quarter.
 
Subsequent to the quarter-end, the company sold a 213,000 square feet shopping center for $85 million, realizing a profit of $6.5 million. Cousins Properties is currently shoring up its balance sheet and increasing liquidity by selling non-core assets. At the same time, the company remains focused on leasing activities and intends to maintain steady occupancy levels across its portfolio.
 
Following the end of the reported quarter, Cousins Properties obtained a new $27 million loan secured by Meridian Mark Plaza, a 160,000 square feet medical office building in Atlanta. The company also repaid a $100 million term loan subsequent to the quarter-end, which increased the available capacity under its revolving credit facility. At quarter-end, Cousins Properties had cash and cash equivalents of $17.1 million, compared with $9.5 million at year-end 2009. We maintain our Neutral rating on Cousins Properties with a Zacks #4 Rank, which translates into a short-term ‘Sell’ recommendation.