Cousins Properties (CUZ) Q2 FFO Beats Estimates, '24 View Raised

Core Insights - Cousins Properties (CUZ) reported decent leasing activity and better-than-expected revenues, with a year-over-year increase in rental property operating and interest expenses [1][12]. - The company raised its 2024 outlook for funds from operations (FFO) per share to a range of $2.63-$2.68, up from the previous range of $2.60-$2.67 [19]. Financial Performance - CUZ's second-quarter 2024 FFO per share was 68 cents, surpassing the Zacks Consensus Estimate of 66 cents, remaining unchanged year-over-year [8]. - Rental property revenues increased by 3.7% year-over-year to $211.5 million, exceeding the Zacks Consensus Estimate of $208.4 million, while total revenues grew by 4.2% to $213 million [9]. - Same-property rental property revenues on a cash basis rose 4.6% year-over-year to $192.3 million, with operating expenses increasing by 3.9% to $68.3 million, resulting in a 5.1% rise in same-property net operating income to $124 million [10]. Leasing Activity - The company executed leases for 391,000 square feet of office space in the second quarter, with 240,000 square feet being new and expansion leases, accounting for 61% of total leasing activity [2]. - The weighted average occupancy of the same-property portfolio was 88.5%, an increase of 100 basis points from the previous year [3]. - The same-property portfolio was 91.2% leased at the end of the quarter, up from 90.7% a year ago [11]. Cost and Expenses - Rental property operating expenses grew by 5.3% to $70.6 million [17]. - Interest expenses increased by 14.5% to $29.7 million year-over-year [12]. Balance Sheet - CUZ's net debt-to-annualized EBITDAre ratio improved to 5.12 from 5.25 in the prior quarter [13]. - The company ended the quarter with cash and cash equivalents of $5.95 million, up from $5.5 million as of March 31, 2024 [18]. Market Outlook - The CEO highlighted improving office fundamentals in Sun Belt markets and an accelerating demand for highly amenitized lifestyle office space, indicating a rebalancing in the market [2]. - The increase in FFO is attributed to better leasing activity, higher parking income, and the recent acquisition of two mezzanine loans [14].