Is it Prudent to Retain Cousins Properties Stock in Your Portfolio?

Core Viewpoint - Cousins Properties is experiencing increased leasing activity in its Class A office assets located in high-growth Sun Belt markets, driven by tenant demand for premium office spaces with superior amenities, although competition and high interest expenses pose challenges to its pricing power and rent growth momentum [1][7][9]. Group 1: Positive Factors - The company has a strong portfolio of Class A office assets in the Sun Belt markets, benefiting from favorable migration trends and a pro-business environment, which has led to a rise in corporate relocations and expansions [2][3]. - In 2024, Cousins Properties executed 157 leases totaling 2 million square feet with a weighted average lease term of 7.9 years, indicating a recovery in demand for its high-quality office properties [3]. - The company is actively upgrading its portfolio by acquiring trophy assets and making strategic dispositions to enhance its asset mix, which has allowed it to focus on high-growth submarkets [4]. Group 2: Financial Health - Cousins Properties maintains a robust balance sheet with $7.3 million in cash and cash equivalents as of the end of 2024, and a net debt-to-annualized EBITDAre ratio of 5.16, providing financial flexibility to pursue growth opportunities [5]. - The company has access to a $1 billion credit facility, with $112.3 million drawn, allowing it to capitalize on improving market fundamentals [5]. Group 3: Challenges - Competition from other developers and operators in the office property sector is limiting Cousins Properties' ability to retain tenants at higher rents, impacting its pricing power [7]. - The company's assets are heavily concentrated in Atlanta, GA, and Austin, TX, which contributed 35.6% and 32.3% to its net operating income, respectively, making it vulnerable to economic downturns in these markets [8]. - As of December 31, 2024, Cousins Properties had a total debt of approximately $3.27 billion, with interest expenses rising 20.4% year-over-year to $33.1 million, indicating a significant debt burden amid high interest rates [9].