CUZ Cousins Properties Inc

Cousins Properties Incorporated (NYSE:CUZ) today reported its results of operations for the three months ended March 31, 2006. All per share amounts are reported on a diluted basis; basic per share data is included in the Condensed Consolidated Statements of Income accompanying this release. Net Income Available to Common Stockholders ("Net Income Available") was $8.4 million, or $0.16 per share, for the first quarter of 2006 compared with $5.5 million, or $0.11 per share, for the first quarter of 2005. Funds from Operations to Common Stockholders ("FFO") was $19.1 million, or $0.37 per share, for the first quarter of 2006 compared with $16.3 million, or $0.32 per share, for the first quarter of 2005. The increase in Net Income Available and FFO is primarily attributable to the recognition of revenues on the Company's two multi-family projects, revenues on development projects that have become fully or partially operational and increases in income from joint ventures offset by a decrease in gains on sale of investment properties. First quarter highlights of the Company included the following: -- Opening of Target, Marshall's, PETsMART, Michael's, Office Depot and Cost Plus at San Jose MarketCenter(R), a 360,000 square foot power center in San Jose, California, of which the Company owns 217,000 square feet. -- Sold 7 acres of land in its North Point Westside project for $1.3 million, generating GAAP gains and FFO of approximately $740,000. -- Recognition of a lease termination fee of approximately $2.3 million related to approximately 62,000 square feet of space in its 3301 Windy Ridge Parkway office building. -- Recast its credit facility resulting in $75 million of additional capacity, a reduction in its interest rate spread over LIBOR, and additional flexibility in certain financial covenants. -- Closed a $100 million unsecured construction facility for funding of Terminus 100. -- Through Brad Cous Golf Venture, Ltd., sold World Golf Village, an 80,000 square foot retail center in St. Augustine, Florida, for $13.5 million. The Company's share of the net proceeds from the sale was $6.3 million and its share of the gain was $1.0 million. -- Sold 490 residential lots in wholly-owned and joint venture projects, a 50% increase over lots sold in the first quarter of 2005. -- Through its Temco joint venture, sold 855 acres in its Seven Hills project. The Company's share of pre-tax GAAP gains and FFO from this sale was $3.2 million. -- Acquired 22 acres in Austin, Texas, for an office development expected to commence in the second half of 2006. -- Acquired 260 acres in Jackson County, Georgia, for the development of Jefferson Mill Business Park, an anticipated 3.2 million square foot industrial project. In addition, the Company acquired an adjacent 44 acres that it intends to sell to potential retail users. -- Executed a five-year 287,400 square foot lease with Snapper Products at King Mill Distribution Park's Phase I. -- Began construction of a 379,000 square foot addition to the first building at the Company's King Mill project. Other developments subsequent to quarter-end: -- Closed 44 units at its 905 Juniper project during April. The Company expects to close remaining units under contract by early in the third quarter. -- Executed a lease amendment at Terminus 100, bringing pre-leasing of the building to 46%. At March 31, 2006, the Company's portfolio of operational office buildings was 86% leased compared with 88% at December 31, 2005, and its portfolio of operational retail centers was 95% leased, consistent with the percentage at December 31, 2005. At March 31, 2006, the Company and its joint ventures had 8 retail, office and industrial projects under development totaling 2.8 million Company-owned square feet, and two condominium projects under development containing a total of 622 units. The Company estimates the total cost of these projects will be $688 million and expects completion of these projects throughout the next three years. In addition, the Company had 24 residential communities under development directly or through investments in unconsolidated entities in which approximately 11,900 lots remain to be developed and/or sold. "As a development-oriented business, our FFO will vary from quarter to quarter depending upon the stabilization of new development projects and the sale of mature assets. We have communicated this fundamental difference in our strategy to investors for many years. This quarter, for instance, our FFO was higher than in the first three quarters of last year but lower than the fourth quarter. I am pleased to report this year is starting out on a great note with positive news coming from every division," said Tom Bell, president and CEO of Cousins. "Leasing progress continues at Terminus 100, our retail team opened a major new center in San Jose, California, and the industrial division inked its first lease at King Mill Distribution Park while also taking down 260 acres in the northeastern suburbs of Atlanta for our next industrial project." "On the residential front, our land team remains quite active selling lots and land at a strong pace. And sales at our condominium projects have exceeded our already high expectations," Bell added. "We will continue to monitor market and interest rate conditions to closely assess whether we are delivering the right amount of residential product at the right time, but we do expect to have additional opportunities in the residential market later this year, both for single-family homes and for intown condominiums." The Condensed Consolidated Statements of Income, Condensed 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) 857-2503. The Company will conduct a conference call at 2:00 p.m. (Eastern time) on Thursday, May 4, 2006, to discuss the results of the quarter ended March 31, 2006. The number to call for this interactive teleconference is (913) 981-5559. A replay of the conference call will be available for 14 days by dialing (719) 457-0820 and entering the pass code, 4697319. The Company will also provide an online Web simulcast and rebroadcast of its first quarter 2006 earnings release conference call. The live broadcast will be available through the "Q1 2006 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, multi-family, retail, industrial and land development projects. The Company's portfolio consists of interests in 7.4 million square feet of office space, 3.8 million square feet of retail space, 0.8 million square feet of industrial space, over 9,000 acres of strategically located land tracts for sale or future development, and significant land holdings for development of single-family residential communities. The Company also provides leasing and management services to third-party investors; its client-services portfolio comprises 12.7 million square feet of office space. The Company 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 its 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 Annual Report on Form 10-K for the year ended December 31, 2005. 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 FOR THE THREE MONTHS ENDED MARCH 31, 2006 AND 2005 (Unaudited, in thousands, except per share amounts) Three Months Ended March 31, -------------------- 2006 2005 --------- --------- Net Income Available to Common Stockholders $ 8,395 $ 5,525 Depreciation and amortization: Consolidated properties 10,823 9,372 Discontinued properties - 37 Share of unconsolidated joint ventures 2,062 2,543 Depreciation of furniture, fixtures and equipment and amortization of specifically identifiable intangible assets: Consolidated properties (821) (678) Share of unconsolidated joint ventures (4) (66) Gain on sale of investment properties, net of applicable income tax provision: Consolidated properties (805) (6,827) Discontinued properties (191) (37) Share of unconsolidated joint ventures (1,053) (348) Gain on sale of undepreciated investment properties 740 6,766 --------- --------- Funds From Operations Available to Common Stockholders $ 19,146 $ 16,287 --------- --------- Per Common Share - Basic: Net Income Available $ .17 $ .11 --------- --------- Funds From Operations $ .38 $ .33 --------- --------- Weighted Average Shares 50,289 49,788 --------- --------- Per Common Share - Diluted: Net Income Available $ .16 $ .11 --------- --------- Funds From Operations $ .37 $ .32 --------- --------- Diluted Weighted Average Shares 52,002 51,653 --------- --------- *T 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 calculated 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. -0- *T COUSINS PROPERTIES INCORPORATED AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited, in thousands, except per share amounts) Three Months Ended March 31, -------------------- 2006 2005 --------- --------- REVENUES: Rental property revenues $ 28,444 $ 23,750 Fee income 4,737 3,852 Multi-family residential unit sales 6,579 - Residential lot and outparcel sales 4,505 1,611 Interest and other 2,683 411 --------- --------- 46,948 29,624 COSTS AND EXPENSES: Rental property operating expenses 11,028 9,112 General and administrative expenses 9,932 8,676 Depreciation and amortization 10,823 9,372 Multi-family residential unit cost of sales 5,358 - Residential lot and outparcel cost of sales 3,203 1,119 Interest expense 3,613 2,781 Other 454 42 --------- --------- 44,411 31,102 --------- --------- INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE TAXES AND INCOME FROM UNCONSOLIDATED JOINT VENTURES 2,537 (1,478) PROVISION FOR INCOME TAXES FROM OPERATIONS (2,370) (869) MINORITY INTEREST IN INCOME OF CONSOLIDATED SUBSIDIARIES (1,078) (392) INCOME FROM UNCONSOLIDATED JOINT VENTURES 12,123 5,175 --------- --------- INCOME FROM CONTINUING OPERATIONS BEFORE GAIN ON SALE OF INVESTMENT PROPERTIES 11,212 2,436 GAIN ON SALE OF INVESTMENT PROPERTIES, NET OF APPLICABLE INCOME TAX PROVISION 805 6,827 --------- --------- INCOME FROM CONTINUING OPERATIONS 12,017 9,263 DISCONTINUED OPERATIONS, NET OF APPLICABLE INCOME TAX PROVISION: Income from discontinued operations - 38 Gain on sale of investment properties 191 37 --------- --------- 191 75 --------- --------- NET INCOME 12,208 9,338 DIVIDENDS TO PREFERRED STOCKHOLDERS (3,813) (3,813) --------- --------- NET INCOME AVAILABLE TO COMMON STOCKHOLDERS $ 8,395 $ 5,525 --------- --------- PER SHARE INFORMATION - BASIC: Income from continuing operations $ 0.17 $ 0.11 Income from discontinued operations 0.00 0.00 --------- --------- Net income available to common stockholders $ 0.17 $ 0.11 --------- --------- PER SHARE INFORMATION - DILUTED: Income from continuing operations $ 0.16 $ 0.11 Income from discontinued operations 0.00 0.00 --------- --------- Net income available to common stockholders $ 0.16 $ 0.11 --------- --------- CASH DIVIDENDS DECLARED PER COMMON SHARE $ 0.37 $ 0.37 --------- --------- WEIGHTED AVERAGE SHARES - BASIC 50,289 49,788 --------- --------- WEIGHTED AVERAGE SHARES - DILUTED 52,002 51,653 --------- --------- *T