Real estate investment trust Cousins Properties Inc. (CUZ) recently said it would record an impairment charge of $39 million, or 74 cents per share, in the third quarter relating to its joint venture interest in Terminus 200. This 565,000 square feet office building in Atlanta, in which Cousins holds a 50% stake, was completed last month.

The company said the impairment charge would not impact its ownership interest in the project and it would continue to be the property manager and leasing agent of the asset.

In a separate development, Cousins announced a public offering of 32 million common shares and an underwriter option to purchase an additional 4.8 million shares. The company plans to use the proceeds to repay its debt under the revolving credit facility and for general corporate purposes. J. P. Morgan of JPMorgan Chase & Co. (JPM), Bank of America Corp. (BAC)

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Cousins Properties Inc. (CUZ), a leading real estate investment trust (REIT), has drastically reduced its third quarter dividend in order to conserve cash in the current credit-constrained market. The company has declared a third quarter dividend of $0.15 per share, down from $0.25 in the previous quarter.

The reduction in the quarterly dividend payout was based on the current estimate of taxable income. In order to maintain the REIT standard, companies are required to pay annually at least 90% of the taxable income as shareholder dividends.

Cousins Properties will pay the third quarter dividend in a combination of cash and stock. The cash component would not exceed one-third of the total dividend. Shareholders would have the right to decide on the composition of the dividends.

With the reduction in dividend, the company expects to retain a significant portion of its resources to capitalize on potential investment opportunities surfacing during the current recession.

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As we see Wall Street finally starting to bottom out, as many of our senior analysts had warned us on, we can’t help but be reminded that this all started with the housing crunch. How are real estate investment trusts [REITs] faring? We spoke with Greg Sukenik, senior REIT analyst for Zacks Equity Research, to find out.

Considering the uphill climb most REITS have undertaken this year, would you say the real estate cycle is basically where you thought it would be? Is it different for different types of REITs?

The REIT sell-off began in early 2007. After several years of good returns, REITs were trading at historically high and probably unsustainable valuations. We did expect commercial property REITs to be negatively affected by the problems in the credit markets which were brought on by the meltdown in residential real estate and a declining overall economy.

So to

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Federal Realty (FRT) reported 2Q FFO [funds from operations] of $0.96 per share, in line with our estimates and $0.02 above consensus. Operationally, the company’s portfolio continues to perform at a high level.

Rental growth on new/renewal leases continues to accelerate and overall portfolio occupancy is still above 95%. FRT is one of the best positioned strip mall REITs in a recessionary environment. The company has top infill assets in high growth areas of the country. In addition, FRT has a solid balance sheet with low debt and plenty of capacity to make strategic acquisitions as the price of shopping centers fall.

We rate FRT a Hold due in part to valuation and economic uncertainty. Consumer spending patterns have been flat and weakening; as such, retail landlords will have a difficult time at least through the end of 2008. The company is currently trading at 20.2x our 2008 FFO

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