Cousins Properties Sells Orlando & Miami Office Properties
Zacks Investment Research | Dec 21, 2017 09:16PM ET
Cousins Properties (NYSE:CUZ) announced that it has completed the sale of its Orlando office portfolio and equity interest in a joint-venture (JV) Miami asset. The Orlando portfolio, which consists of Bank of America (NYSE:BAC) Center, Citrus Center and One Orlando Centre, has been sold for a gross price of $208.1 million. As of Sep 30, 2017, the one million-square-foot office portfolio was 84.2% leased.
The company also sold its 20% stake in Courvoisier Center — a 343,000-square-foot property in Miami. The interest was sold to the JV partner for $33.9 million. This also included Cousin Properties’ share of JV mortgage debt that amounted to $22,176,000 and carried an interest rate of 4.6%, as of Sep 30, 2017.
Cousins Properties had acquired interest in the office property through the Parkway Properties merger on Oct 6. With this sale, the company has no other ownership interest in the city. The property enjoys decent demand and was 84.6% leased as of the three-month period ended Sep 30, 2017.
Per the company’s second-quarter earnings call, these assets at subordinate locations displayed limited rent growth opportunities. Hence, these were non-strategic to Cousins Properties’ portfolio, which is situated in the best urban sub-markets, and command high rents.
Further, the transaction recycles the company’s capital to other priorities. The deal is a strategic fit as it provides growth and investment capital to the company, which is focusing on trophy assets and opportunistic developments in targeted submarkets to strengthen its platform. Notably, the company has raised around $558 million in gross proceeds through its property dispositions in the year so far.
Although Cousins Properties has been optimizing its portfolio holding through buyouts and dispositions, the earnings dilutive effects of the disposals cannot be bypassed. The Orlando portfolio contributed 4.4% to the company’s net operating income (“NOI”) for the three-month period ended Sep 30, 2017. In fact, in the recent earnings call, management noted that the sale of the Orlando and Miami portfolio might adversely impact the company’s 2018 earnings.
Cousin Properties currently carries a Zacks Rank #3 (Hold). Moreover, shares of the company have outperformed its Zacks Investment Research
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