CUZ Cousins Properties Inc

Cousins Properties Incorporated (NYSE:CUZ) today reported its results of operations for the three and nine months ended September 30, 2005. All per share amounts are reported on a diluted basis; basic per share data is included in the Consolidated Statements of Income accompanying this release. Net Income Available to Common Stockholders ("Net Income Available") was $9.9 million, or $0.19 per share, for the third quarter of 2005 compared with $224.7 million, or $4.41 per share, for the third quarter of 2004. Funds From Operations Available to Common Stockholders ("FFO") was $17.0 million, or $0.33 per share, for the third quarter of 2005 compared with $29.3 million, or $0.58 per share, for the third quarter of 2004. Net Income Available was $21.9 million, or $0.42 per share, for the nine months ended September 30, 2005 compared with $281.3 million, or $5.56 per share, for the nine months ended September 30, 2004. FFO was $50.9 million, or $0.98 per share, for the nine months ended September 30, 2005 compared with $81.6 million, or $1.61 per share, for the nine months ended September 30, 2004. Net Income Available and FFO for the third quarter and nine months ended September 30, 2005 reflect a decrease in rental revenues resulting from the sale of $1.3 billion of consolidated and joint venture operating properties in 2004 and the recognition of gains on sale of these properties in the second and third quarters of 2004 offset by a reduction in interest expense, mainly due to the sold properties. Third quarter highlights of the Company included the following: -- Commenced construction of The Avenue Webb Gin, a 382,000-square-foot open-air specialty retail center located in Gwinnett County, Georgia. Tenant openings at The Avenue Webb Gin are scheduled to begin in August 2006. -- Closed the sale of 1155 Perimeter Center West, a 365,000-square- foot office building owned by a joint venture in which the Company has a 50% ownership interest. The Company's share of the gain on the sale was approximately $1.6 million. The building, when sold, was 89% leased. -- Closed the sale of a recently completed retail development project, Hanover Square, a 187,000-square-foot shadow anchored Target shopping center in suburban Richmond, Virginia, of which the Company owned 69,000 square feet. Included in the sale was 11 acres of undepreciated land. The Company recognized a gain, net of taxes, of $1.1 million on the sale of the shopping center and $340,000 on the sale of the undepreciated land. -- Sold 649 residential lots during the quarter. The Company recognized pre-tax profits on lots sold at wholly-owned projects of $1.2 million and recognized its share of pre-tax profits on lots sold by unconsolidated entities of $3.4 million. -- Through CL Realty, LLC, commenced development of Blue Valley, a 197-lot residential development in suburban Atlanta. -- Through CL Realty, LLC, purchased 15 acres of beachfront land on Padre Island Beach in Corpus Christi, Texas, for an anticipated residential development. -- Recognized pre-tax and pre-minority interest profits of $712,000 on 905 Juniper, a 117-unit condominium project under development in Midtown Atlanta. Approximately 95% of the units are now under non-cancelable contracts, but only 30% of these contracts have sufficient deposits to allow percentage-of-completion accounting. Other recent developments included the following: -- The grand opening of The Avenue Carriage Crossing on October 19, 2005. The 787,000-square-foot center is located in suburban Memphis and is 90% leased or sold to tenants including Dillard's, Parisian, Barnes & Noble and Linen's N Things. -- Completed the foundation of 50 Biscayne, the 529-unit condominium development located in Miami, Florida, in which the Company is a partner. The Company expects to begin revenue recognition under the percentage-of-completion method in the fourth quarter of 2005 on approximately 81% of these units because the foundation is complete and these units are subject to contracts that have sufficient deposits. -- Purchased land in Cobb County, Georgia, for the development of West Park, an estate lot residential community. -- Purchased 45 acres in Austin, Texas, for potential future retail or multi-family development. At September 30, 2005, the Company's portfolio of operational office buildings was 85% leased compared with 84% at June 30, 2005, and its portfolio of operational retail centers was 96% leased compared with 95% at June 30, 2005. At September 30, 2005, the Company and its joint ventures had seven retail, office and industrial projects under development totaling 2.7 million Company-owned square feet, and two condominium projects under development containing a total of 646 units. The Company estimates its share of the total cost of these projects will be $599 million and expects completion of these projects throughout 2006, 2007 and 2008. In addition, the Company had 21 residential communities under development directly or through investments in unconsolidated entities in which approximately 12,400 lots remain to be developed and/or sold. "We continue to see significant development opportunities for each of our divisions," said Tom Bell, President and CEO of Cousins. "With approximately $600 million of development underway and more coming, our value creation strategy also seems to be working quite well. Leasing of our office portfolio is improving and the office environment in most of our markets is recovering. Lastly, I want to congratulate the residential team for an outstanding quarter." The Consolidated Statements of Income, Consolidated Balance Sheets and a schedule entitled Funds From Operations, which reconciles Net Income Available to FFO, are attached to this press release. More detailed information on Net Income Available and FFO results is included in the "Net Income and Funds From Operations-Supplemental Detail" schedule which is included along with other supplemental information in the Company's Current Report on Form 8-K, which the Company is furnishing to the Securities and Exchange Commission ("SEC"), and which can be viewed through the "Quarterly Disclosures" and "SEC Filings" links on the Investor Relations page of the Company's Web site at www.cousinsproperties.com. This information may also be obtained by calling the Company's Investor Relations Department at (770) 857-2449. The Company will conduct a conference call at 3:00 p.m. (Eastern time) on Tuesday, November 1, 2005, to discuss the results of the quarter ended September 30, 2005. The number to call for this interactive teleconference is (913) 981-5582. A replay of the conference call will be available for 14 days by dialing (719) 457-0820 and entering the pass code, 8164921. The Company will also provide an online Web simulcast and rebroadcast of its third quarter 2005 earnings release conference call. The live broadcast will be available through the "Q3 2005 Cousins Properties Incorporated Earnings Conference Call" link on the Investor Relations page of the Company's Web site, as well as at www.streetevents.com and www.earnings.com. The rebroadcast will be available on the Investor Relations page of the Company's Web site for 30 days. Cousins Properties Incorporated, headquartered in Atlanta, has extensive experience in the real estate industry including the development, acquisition, financing, management and leasing of properties. The property types that Cousins actively invests in include office, retail, medical office, industrial, multi-family and land development projects. The Company's portfolio consists of interests in 7.5 million square feet of office and medical office space, 3.7 million square feet of retail space, 416,000 square feet of industrial space, over 3,200 acres of strategically located land tracts for sale or future development, and significant land holdings for development of single-family residential communities. Cousins also provides leasing and management services to third-party investors; its client-services portfolio comprises 11.1 million square feet of office space. Cousins is a fully integrated equity real estate investment trust (REIT) that has been public since 1962 and trades on the New York Stock Exchange under the symbol "CUZ." For more information on the Company, please visit Cousins' Web site at www.cousinsproperties.com. Certain matters discussed in this news release are forward-looking statements within the meaning of the federal securities laws and are subject to uncertainties and risks, including, but not limited to, general and local economic conditions, local real estate conditions, the activity of others developing competitive projects, the risks associated with development projects (such as delay, cost overruns and leasing/sales risk of new properties), the cyclical nature of the real estate industry, the financial condition of existing tenants, interest rates, the Company's ability to obtain favorable financing or zoning, environmental matters, the effects of terrorism, and other risks detailed from time to time in the Company's filings with the Securities and Exchange Commission, including the Company's Current Report on Form 8-K filed on December 10, 2003. The words "believes", "expects", "anticipates", "estimates" and similar expressions are intended to identify forward-looking statements. Although the Company believes that its plans, intentions and expectations reflected in any forward-looking statement are reasonable, the Company can give no assurance that these plans, intentions or expectations will be achieved. Such forward-looking statements are based on current expectations and speak as of the date of such statements. The Company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of future events, new information or otherwise. -0- *T COUSINS PROPERTIES INCORPORATED AND SUBSIDIARIES FUNDS FROM OPERATIONS (UNAUDITED) (In thousands, except per share amounts) Three Months Ended Nine Months Ended September 30, September 30, ------------------ ------------------ 2005 2004 2005 2004 -------- --------- -------- --------- Net Income Available to Common Stockholders $9,923 $224,739 $21,914 $281,288 Depreciation and amortization: Consolidated properties 8,572 8,335 27,467 27,611 Discontinued properties - 1,057 68 5,254 Share of unconsolidated joint ventures 2,045 3,712 6,873 13,284 Depreciation of furniture, fixtures and equipment and amortization of specifically identifiable intangible assets: Consolidated properties (730) (659) (2,094) (1,994) Share of unconsolidated joint ventures (4) (11) (74) (29) Gain on sale of investment properties, net of applicable income tax provision: Consolidated properties (796) (50,082) (13,201) (88,648) Discontinued properties (1,070) (67,291) (1,107) (67,939) Share of unconsolidated joint ventures (1,633) (99,300) (1,945) (99,300) Gain on sale of undepreciated investment properties 732 8,836 13,010 12,070 -------- --------- -------- --------- Funds From Operations Available to Common Stockholders $17,039 $29,336 $50,911 $81,597 -------- --------- -------- --------- Per Common Share - Basic: Net Income Available $.20 $4.58 $.44 $5.76 -------- --------- -------- --------- Funds From Operations $.34 $.60 $1.02 $1.67 -------- --------- -------- --------- Weighted Average Shares 50,079 49,060 49,932 48,818 -------- --------- -------- --------- Per Common Share - Diluted: Net Income Available $.19 $4.41 $.42 $5.56 -------- --------- -------- --------- Funds From Operations $.33 $.58 $.98 $1.61 -------- --------- -------- --------- Diluted Weighted Average Shares 52,013 50,943 51,759 50,633 -------- --------- -------- --------- The table above shows Funds From Operations Available to Common Stockholders ("FFO") and the related reconciliation to Net Income Available to Common Stockholders ("Net Income Available") for Cousins Properties Incorporated and Subsidiaries. The Company calculates FFO in accordance with the National Association of Real Estate Investment Trusts' ("NAREIT") definition, which is net income available to common stockholders (computed in accordance with accounting principles generally accepted in the United States ("GAAP")), excluding extraordinary items, cumulative effect of change in accounting principle and gains or losses from sales of depreciable property, plus depreciation and amortization of real estate assets, and after adjustments for unconsolidated partnerships and joint ventures to reflect FFO on the same basis. FFO is used by industry analysts and investors as a supplemental measure of an equity REIT's operating performance. Historical cost accounting for real estate assets implicitly assumes that the value of real estate assets diminishes predictably over time. Since real estate values instead have historically risen or fallen with market conditions, many industry investors and analysts have considered presentation of operating results for real estate companies that use historical cost accounting to be insufficient by themselves. Thus, NAREIT created FFO as a supplemental measure of REIT operating performance that excludes historical cost depreciation, among other items. Management believes that the use of FFO, combined with the required primary GAAP presentations, has been fundamentally beneficial, improving the understanding of operating results of REITs among the investing public and making comparisons of REIT operating results more meaningful. Company management evaluates the operating performance of its reportable segments and of its divisions based on FFO. Additionally, the Company uses FFO and FFO per share, along with other measures, to assess performance in connection with evaluating and granting incentive compensation to its officers and employees. COUSINS PROPERTIES INCORPORATED AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited, in thousands, except per share amounts) Three Months Ended Nine Months Ended September 30, September 30, ------------------ ------------------ 2005 2004 2005 2004 -------- --------- -------- --------- REVENUES: Rental property revenues $24,652 $23,410 $73,088 $78,546 Development income 623 624 1,804 2,181 Management fees 2,141 2,242 6,735 6,456 Leasing and other fees 2,037 1,518 4,083 2,943 Multi-family residential unit sales 4,986 - 4,986 - Residential lot and outparcel sales 10,946 3,341 17,006 11,595 Interest and other 740 1,094 1,459 1,649 -------- --------- -------- --------- 46,125 32,229 109,161 103,370 COSTS AND EXPENSES: Rental property operating expenses 9,978 8,200 28,813 25,407 General and administrative expenses 8,943 8,431 25,836 25,019 Depreciation and amortization 8,572 8,335 27,467 27,611 Multi-family residential unit cost of sales 4,274 - 4,274 - Residential lot and outparcel cost of sales 8,350 2,219 12,492 7,887 Interest expense 1,675 2,753 6,559 11,916 Other 826 978 2,043 2,692 -------- --------- -------- --------- 42,618 30,916 107,484 100,532 -------- --------- -------- --------- INCOME FROM CONTINUING OPERATIONS BEFORE INCOME FROM UNCONSOLIDATED JOINT VENTURES AND INCOME TAXES 3,507 1,313 1,677 2,838 PROVISION FOR INCOME TAXES FROM OPERATIONS (2,021) (713) (3,947) (1,566) INCOME FROM UNCONSOLIDATED JOINT VENTURES 10,008 106,676 20,791 124,928 -------- --------- -------- --------- INCOME FROM CONTINUING OPERATIONS BEFORE GAIN ON SALE OF INVESTMENT PROPERTIES 11,494 107,276 18,521 126,200 GAIN ON SALE OF INVESTMENT PROPERTIES, NET OF APPLICABLE INCOME TAX PROVISION 796 50,082 13,201 88,648 -------- --------- -------- --------- INCOME FROM CONTINUING OPERATIONS 12,290 157,358 31,722 214,848 DISCONTINUED OPERATIONS, NET OF APPLICABLE INCOME TAX PROVISION: Income from discontinued operations 375 2,027 522 4,313 Gain on sale of investment properties 1,070 67,291 1,107 67,939 -------- --------- -------- --------- 1,445 69,318 1,629 72,252 -------- --------- -------- --------- NET INCOME 13,735 226,676 33,351 287,100 DIVIDENDS TO PREFERRED STOCKHOLDERS (3,812) (1,937) (11,437) (5,812) -------- --------- -------- --------- NET INCOME AVAILABLE TO COMMON STOCKHOLDERS $9,923 $224,739 $21,914 $281,288 -------- --------- -------- --------- PER SHARE INFORMATION - BASIC: Income from continuing operations $0.17 $3.17 $0.41 $4.28 Income from discontinued operations 0.03 1.41 0.03 1.48 -------- --------- -------- --------- Net income available to common stockholders $0.20 $4.58 $0.44 $5.76 -------- --------- -------- --------- PER SHARE INFORMATION - DILUTED: Income from continuing operations $0.16 $3.05 $0.39 $4.13 Income from discontinued operations 0.03 1.36 0.03 1.43 -------- --------- -------- --------- Net income available to common stockholders $0.19 $4.41 $0.42 $5.56 -------- --------- -------- --------- CASH DIVIDENDS DECLARED PER COMMON SHARE $0.37 $0.37 $1.11 $1.11 -------- --------- -------- --------- WEIGHTED AVERAGE SHARES - BASIC 50,079 49,060 49,932 48,818 -------- --------- -------- --------- WEIGHTED AVERAGE SHARES - DILUTED 52,013 50,943 51,759 50,633 -------- --------- -------- --------- *T