Cousins to Buy Texas Office Portfolio for $1.1 Billion
Cousins Properties Inc. (CUZ), an Atlanta-based real estate investment trust, agreed to buy a portfolio of office buildings in Texas for $1.1 billion to expand in a fast-growing commercial-property market.
The company will purchase Greenway Plaza, a 4.4 million-square-foot (409,000-square-meter), 10-building office complex in Houston; and 777 Main Street, a 980,000-square-foot office tower in Fort Worth, Cousins said yesterday in a statement. It plans to sell 60 million shares to help fund the transaction.
The deal represents a large bet by Cousins on Texas real estate, with a price close to the company’s entire market value of $1.28 billion. The REIT has been has been expanding in the state in the past year, including a $102.4 million acquisition in Austin in April and the $232.6 million purchase of Houston towers in February. With the latest agreement, Texas properties will make up half of Cousins’s portfolio by square footage, said David Toti, an analyst at Cantor Fitzgerald LP in New York.
“It’s pretty sizable, especially for a relatively small company like Cousins,” Toti said of yesterday’s deal. “It is pretty big to really change their portfolio from being primarily Atlanta-based to being 50 percent Texas.”
Cousins shares fell 2.8 percent to $10.28. The company’s stock offering is equal to about half of its current 120 million shares outstanding.
Houston has been luring buyers seeking properties with lower costs and higher returns than buildings in other pricier U.S. cities. Sales of offices in the city rose 32 percent to $3.89 billion in 2012, the highest in five years, according to Real Capital Analytics Inc., a New York-based research firm.
“This transaction provides an outstanding fit on many levels,” Larry Gellerstedt, Cousins’s chief executive officer, said today on a conference call. “Not only do we expect this transaction to be accretive, we are able to expand our Texas platform and provide substantial geographic diversification at a significant discount to replacement costs.”
The seller of the Greenway Plaza and 777 Main Street buildings is a joint venture operated by Crescent Real Estate Holdings LLC. The purchase is expected to be completed by the middle of September.
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