HOUSTON AND FORT WORTH, TEXAS — Atlanta-based Cousins Properties Inc. (NYSE: CUZ) has signed a $1.1 billion deal to purchase two Texas properties from Crescent Real Estate Holdings LLC. Greenway Plaza, a 4.4 million-square-foot office portfolio in Houston, and 777 Main Street, a 980,000-square-foot office tower in Fort Worth, are set to officially change hands in September 2013.
Cousins plans to fund the transaction on a leverage-neutral basis through proceeds from a common stock issuance as well as the anticipated sale of non-core assets and mortgage financing. JP Morgan Securities LLC served as the company’s financial advisor on the acquisition.
“Greenway Plaza and 777 Main Street are an excellent fit with our portfolio, as they are high-quality urban properties with embedded NOI growth and future development potential,” says Larry Gellerstedt, president and CEO of Cousins. “Not only do we expect this transaction to be transformative and accretive, it immediately expands our Texas platform and provides substantial geographic diversification at a significant discount to the replacement cost.”
The Greenway Plaza portfolio features 10 Class A office buildings on a campus centrally located between Houston’s central business district (CBD) and Galleria submarkets. The property sports a 92 percent occupancy rate, in-place rents well below market and amenities such as a 24/7 security escort service and environmentally-controlled tunnels connecting most facilities, the property was an attractive play.
Meanwhile, Fort Worth’s 777 Main Street boasts 40 floors of Class A space at 72 percent projected year-end occupancy. Its CBD location, proximity to the Sundance Square development and many amenities make for significant lease-up potential.
Cousins Properties is a fully integrated, self-administered and self-managed REIT that primarily invests in Class A office towers in high-growth Sunbelt markets. The company’s stock price closed at $10.58 per share on Monday, up from $7.39 per a year ago.
During a second-quarter earnings conference call held this morning, Cousins officials reported that funds from operations for the quarter came in at 12 cents per share and same property net operating income for the quarter increased 4.7 percent year over year.
“We’ve had a very successful platform in Austin and Dallas for nearly 20 years, so we know the markets well,” remarked Gellerstedt during Tuesday’s earnings call. “Perhaps even more important are the unrivaled economic and demographic tailwinds there. One data point that probably best illustrates the momentum: Since 2009, 43 percent of the net job gain in the U.S. has come from Texas, and that’s remarkable considering the state has less than 7 percent of the overall U.S. population.”
— John McCurdy