CUZ Cousins Properties Inc

Cousins Properties Incorporated (NYSE:CUZ) today reported its results of operations for the three and six months ended June 30, 2009. 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.

Funds from Operations Available to Common Stockholders (“FFO”) was $23.4 million, or $0.45 per share, before certain non-cash impairment, valuation and retirement charges discussed below for the second quarter of 2009, compared with FFO of $16.1 million, or $0.30 per share, for the second quarter of 2008. FFO was $30.9 million, or $0.59 per share, before such charges for the six months ended June 30, 2009, compared with $29.9 million, or $0.57 per share, for the same period in 2008.

Net Income Available to Common Stockholders (“Net Income Available”) was $7.0 million, or $0.13 per share, before such non-cash impairment, valuation and retirement charges for the quarter ended June 30, 2009, compared with Net Income Available of $2.9 million, or $0.05 per share, for the second quarter of 2008. Net Income Available was $167.5 million, or $3.21 per share, before such charges for the six months ended June 30, 2009, compared with $4.8 million, or $0.09 per share, for the same period in 2008.

The Company recorded $88.3 million of non-cash impairment, valuation and retirement charges during the second quarter of 2009, which consisted of the following:

• Impairment charge on 10 Terminus Place - $34.9 million,
• Impairment charges on investments in joint ventures - $28.1 million,
• Valuation allowance recorded on deferred tax asset - $15.9 million,
• Write-off of pre-development expenses - $3.1 million,
• Retirement charges for the former Chief Executive Officer - $2.0 million, and
• Other reserves and impairments - $4.2 million.

After such non-cash impairment, valuation and retirement charges, FFO was a loss of $64.9 million, or $1.24 per share, for the second quarter of 2009 and a loss of $57.3 million, or $1.10 per share, for the six months ended June 30, 2009. Net Loss Available to Common Stockholders, after such non-cash and retirement charges, was $81.3 million, or $1.56 per share, for the second quarter of 2009 and Net Income Available was $79.3 million, or $1.52 per share, for the six months ended June 30, 2009.

A reconciliation of FFO and Net Income (Loss) Available before certain non-cash impairment, valuation and retirement charges is as follows:

            2nd Quarter 2009 Six Months 2009 $(000)   Per Share $(000)   Per Share   FFO Before Certain Charges $ 23,387 $ 0.45 $ 30,941 $ 0.59  

Certain Non-Cash Impairment, Valuation and Retirement Charges:

Impairment charge on 10 Terminus (34,900 ) (0.67 ) (34,900 ) (0.67 ) Impairment charges on Investments in Joint Ventures (28,130 ) (0.54 ) (28,130 ) (0.54 ) Valuation allowance on deferred tax asset (15,907 ) (0.30 ) (15,907 ) (0.30 ) Write-off of pre-development expenses (3,100 ) (0.06 ) (3,100 ) (0.06 ) Retirement charges for former CEO (2,026 ) (0.04 ) (2,026 ) (0.04 ) Other reserves and impairments   (4,219 )     (0.08 )   (4,219 )     (0.08 ) Total   (88,282 )     (1.69 )   (88,282 )     (1.69 )   FFO   ($64,895 )     ($1.24 )   ($57,341 )     ($1.10 )     Net Income Available Before Certain Charges $ 6,969 $ 0.13 $ 167,540 $ 3.21

Certain Non-Cash Impairment, Valuation and Retirement Charges

  (88,282 )     (1.69 )   (88,282 )     (1.69 )   Net Income (Loss) Available   ($81,313 )     ($1.56 ) $ 79,258     $ 1.52    

The Company recorded impairment charges on its 10 Terminus Place condominium project and on its investments in certain residential joint ventures to write these assets to their estimated fair value. The impairment on 10 Terminus Place reflects the overall general condition of the condominium market and the relatively high discount rates associated with this product type. The impairments on the residential joint ventures represent the other-than-temporary decline in the fair values of the Company’s investment in the joint ventures below their carrying amounts, in accordance with Accounting Principles Board Opinion No. 18. These impairments are the result of the continued decline in the market for residential lots and the increasing discount rates for this product.

The Company recorded a valuation allowance on its deferred tax assets following an assessment of the recoverability of deferred tax assets at Cousins Real Estate Corporation (“CREC”), the Company’s taxable REIT subsidiary. This allowance reflects the application of Statement of Financial Accounting Standards No. 109, which requires companies to record an allowance against deferred tax assets when, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. CREC has been in a cumulative loss position in recent years and will likely be in a loss position for 2009. While the Company believes CREC will be profitable in the long term, this cumulative loss and the uncertainty about CREC’s profitability in the near term as a result of the continued decline in the housing market were factors that the Company considered in determining that the allowance was appropriate.

Second quarter highlights of the Company included the following:

• Executed a 50,000-square-foot lease with Firethorn Holdings, LLC in Terminus 200, a 25-story office building under construction at the Company’s Terminus development in Atlanta, Georgia. Executed or renewed an additional 261,000 square feet of office leases.
• Executed a 28,000-square-foot lease with Bed, Bath & Beyond at the Avenue Carriage Crossing, a 511,000-square-foot retail center in Memphis, Tennessee. Executed or renewed an additional 186,000 square feet of retail leases.
• Executed 104,000 square feet of industrial leases.
• Repaid in full the $83.3 million mortgage note payable secured by the San Jose MarketCenter for approximately $70.3 million and recognized a gain on extinguishment of this debt of approximately $12.5 million.

At June 30, 2009, the Company’s portfolio of operational office buildings was 90% leased, its portfolio of operational retail centers was 82% leased and its operational industrial buildings were 44% leased.

“It is a real tribute to our leasing and asset management teams that leasing efforts continue to show positive results in spite of overall economic and market conditions,” said Larry Gellerstedt, CEO of Cousins. “While the non-cash charges unfortunately reflect the current state of the real estate markets, we believe Cousins is in a much better position than many REITs with current debt maturities and prudent management of our balance sheet. We continue to position Cousins to be able to take advantage of opportunities in distressed markets, and we are hopeful that we will see some significant opportunities within the next year.”

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 website at www.cousinsproperties.com. This information may also be obtained by calling the Company’s Investor Relations Department at (404) 407-1984.

The Company will conduct a conference call at 2:00 p.m. (Eastern Time) on Tuesday, August 11, 2009, to discuss the results of the quarter ended June 30, 2009. The number to call for this interactive teleconference is (212) 231-2900. A replay of the conference call will be available for 14 days by dialing (402) 977-9140 and entering the passcode 21431729. The replay can be accessed on the Company’s website, www.cousinsproperties.com, through the “Q2 2009 Cousins Properties Incorporated Earnings Conference Call” link on the Investor Relations page, 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 website for 14 days.

Cousins Properties Incorporated is a leading diversified real estate company with extensive experience in development, acquisition, financing, management and leasing. Based in Atlanta, the Company actively invests in office, multi-family, retail, industrial and land development projects. Since its founding in 1958, Cousins has developed 20 million square feet of office space, 20 million square feet of retail space, more than 4,000 multi-family units and more than 60 single-family neighborhoods. The Company is a fully integrated equity real estate investment trust (REIT) and trades on the New York Stock Exchange under the symbol CUZ. For more, please visit 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 risk. These include, but are not limited to, general and local economic conditions (including the current general recession and state of the credit markets), local real estate conditions (including the overall condition of the residential and condominium markets), 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, the ability of the Company to close properties under contract and other risks detailed from time to time in the Company’s filings with the Securities and Exchange Commission, including those described in Part I, Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2008. 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.

            COUSINS PROPERTIES INCORPORATED AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited, in thousands, except per share amounts)   Three Months Ended June 30, Six Months Ended June 30, 2009 2008 2009 2008 REVENUES: Rental property revenues $ 37,095 $ 36,700 $ 74,604 $ 71,007 Fee income 8,172 7,802 16,216 15,360 Residential lot, multi-family and outparcel sales 4,513 1,255 7,061 2,999 Interest and other   1,285     940     2,271     2,300     51,065     46,697     100,152     91,666     COSTS AND EXPENSES: Rental property operating expenses 15,159 14,583 32,472 28,021 General and administrative expenses 9,948 8,965 19,366 19,296 Separation expenses 2,026 48 2,370 316 Reimbursed general and administrative expenses 4,030 4,054 8,258 7,840 Depreciation and amortization 15,381 12,611 28,437 23,876 Residential lot, multi-family and outparcel cost of sales 3,208 832 4,938 1,778 Interest expense 10,560 7,367 20,990 13,642 Impairment loss 36,500 - 36,500 - Other   4,432     549     5,978     2,304     101,244     49,009     159,309     97,073     GAIN ON EXTINGUISHMENT OF DEBT   12,498     -     12,498     -    

LOSS FROM CONTINUING OPERATIONS BEFORE TAXES, INCOME (LOSS) FROM UNCONSOLIDATED JOINT VENTURES AND GAIN ON SALE OF INVESTMENT PROPERTIES

(37,681 ) (2,312 ) (46,659 ) (5,407 )   (PROVISION) BENEFIT FOR INCOME TAXES FROM OPERATIONS (11,293 ) 2,176 (7,352 ) 5,393   INCOME (LOSS) FROM UNCONSOLIDATED JOINT VENTURES: Equity in net income (loss) from unconsolidated joint ventures (1,231 ) 2,239 589 5,056 Impairment loss on investment in unconsolidated joint ventures   (28,130 )   -     (28,130 )   -     (29,361 )   2,239     (27,541 )   5,056    

INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE GAIN ON SALE OF INVESTMENT PROPERTIES

(78,335 ) 2,103 (81,552 ) 5,042  

GAIN ON SALE OF INVESTMENT PROPERTIES, NET OF APPLICABLE INCOME TAX PROVISION

  801     5,212     168,235     9,004     INCOME (LOSS) FROM CONTINUING OPERATIONS (77,534 ) 7,315 86,683 14,046  

DISCONTINUED OPERATIONS, NET OF APPLICABLE INCOME TAX PROVISION:

Loss from discontinued operations - (341 ) (7 ) (749 ) Gain on sale of investment properties   146     -     146     -     146     (341 )   139     (749 )   NET INCOME (LOSS) (77,388 ) 6,974 86,822 13,297 NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS   (698 )   (251 )   (1,110 )   (922 )   NET INCOME (LOSS) ATTRIBUTABLE TO CONTROLLING INTEREST (78,086 ) 6,723 85,712 12,375   DIVIDENDS TO PREFERRED STOCKHOLDERS   (3,227 )   (3,812 )   (6,454 )   (7,625 )   NET INCOME (LOSS) AVAILABLE TO COMMON STOCKHOLDERS $ (81,313 ) $ 2,911   $ 79,258   $ 4,750     PER COMMON SHARE INFORMATION - BASIC: Income (loss) from continuing operations $ (1.56 ) $ 0.07 $ 1.52 $ 0.10 Income (loss) from discontinued operations   -     (0.01 )   -     (0.01 ) Basic net income (loss) available to common stockholders $ (1.56 ) $ 0.06   $ 1.52   $ 0.09     PER COMMON SHARE INFORMATION - DILUTED: Income (loss) from continuing operations $ (1.56 ) $ 0.06 $ 1.52 $ 0.10 Income (loss) from discontinued operations   -     (0.01 )   -     (0.01 ) Diluted net income (loss) available to common stockholders $ (1.56 ) $ 0.05   $ 1.52   $ 0.09     DIVIDENDS DECLARED PER COMMON SHARE $ 0.25   $ 0.37   $ 0.50   $ 0.74               COUSINS PROPERTIES INCORPORATED AND SUBSIDIARIES FUNDS FROM OPERATIONS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2009 AND 2008 (Unaudited, in thousands, except per share amounts)     Three Months Ended Six Months Ended June 30, June 30, 2009 2008 2009 2008   Net Income (Loss) Available to Common Stockholders $ (81,313 ) $ 2,911 $ 79,258 $ 4,750 Depreciation and amortization: Consolidated properties 15,381 12,611 28,437 23,876 Discontinued properties - 174 - 348 Share of unconsolidated joint ventures 2,174 1,473 4,332 2,864

Depreciation of furniture, fixtures and equipment and amortization of specifically identifiable intangible assets:

Consolidated properties (938 ) (961 ) (1,906 ) (1,731 ) Discontinued properties - (6 ) - (13 ) Share of unconsolidated joint ventures (14 ) (26 ) (24 ) (51 )

Gain on sale of investment properties, net of applicable income tax provision:

Consolidated (801 ) (5,212 ) (168,235 ) (9,004 ) Discontinued properties (146 ) - (146 ) - Share of unconsolidated joint ventures 16 - (12 ) - Gain on sale of undepreciated investment properties   746     5,156     955     8,892     Funds From Operations Available to Common Stockholders $ (64,895 ) $ 16,120   $ (57,341 ) $ 29,931       Per Common Share - Basic: Net Income (Loss) Available $ (1.56 ) $ .06   $ 1.52   $ .09   Funds From Operations $ (1.24 ) $ .31   $ (1.10 ) $ .57   Weighted Average Shares-Basic   52,278     52,251     52,278     52,230     Per Common Share - Diluted: Net Income (Loss) Available $ (1.56 ) $ .05   $ 1.52   $ .09   Funds From Operations $ (1.24 ) $ .30   $ (1.10 ) $ .57   Weighted Average Shares-Diluted   52,278     53,096     52,278     52,903      

The table above shows Funds From Operations Available to Common Stockholders (“FFO”) and the related reconciliation to Net Income (Loss) Available to Common Stockholders ["Net Income (Loss) 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 (loss) 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 real 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, from GAAP net income.  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 operating performance in part 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 key employees.

          COUSINS PROPERTIES INCORPORATED AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited, in thousands, except share and per share amounts)     June 30, December 31, 2009 2008 ASSETS PROPERTIES:

Operating properties, net of accumulated depreciation of $209,701 and $182,050 in 2009 and 2008, respectively

$ 955,668 $ 853,450 Projects under development 56,992 172,582 Land held for investment or future development 130,269 115,862 Residential lots under development 61,136 59,197 Multi-family units held for sale   40,001     70,658   Total properties 1,244,066 1,271,749   CASH AND CASH EQUIVALENTS 54,121 82,963 RESTRICTED CASH 4,280 3,636

NOTES AND OTHER RECEIVABLES, net of allowance for doutbful accounts of $2,921 and $2,764 in 2009 and 2008, respectively

53,620 51,267 INVESTMENT IN UNCONSOLIDATED JOINT VENTURES 167,780 200,850 OTHER ASSETS   66,908     83,330     TOTAL ASSETS $ 1,590,775   $ 1,693,795     LIABILITIES AND STOCKHOLDERS’ INVESTMENT NOTES PAYABLE $ 943,792 $ 942,239 ACCOUNTS PAYABLE AND ACCRUED LIABILITIES 54,857 65,026 DEFERRED GAIN 4,564 171,838 DEPOSITS AND DEFERRED INCOME   6,802     6,485     TOTAL LIABILITIES 1,010,015 1,185,588   COMMITMENTS AND CONTINGENT LIABILITIES   REDEEMABLE NONCONTROLLING INTERESTS 12,755 3,945   STOCKHOLDERS’ INVESTMENT: Preferred stock, 20,000,000 shares authorized, $1 par value:

7.75% Series A cumulative redeemable preferred stock, $25 liquidation preference; 2,993,090 shares issued and outstanding in 2009 and 2008

74,827 74,827

7.50% Series B cumulative redeemable preferred stock, $25 liquidation preference; 3,791,000 shares issued and outstanding in 2009 and 2008

94,775 94,775

Common stock, $1 par value, 150,000,000 shares authorized, 55,863,169 and 54,922,173 shares issued in 2009 and 2008, respectively

55,863 54,922 Additional paid-in capital 379,389 368,829 Treasury stock at cost, 3,570,082 shares in 2009 and 2008 (86,840 ) (86,840 ) Accumulated other comprehensive loss on derivative instrument (13,089 ) (16,601 ) Cumulative undistributed net income (distributions in excess of net income)   30,217     (23,189 )   TOTAL STOCKHOLDERS’ INVESTMENT 535,142 466,723   Nonredeemable noncontrolling interests   32,863     37,539   TOTAL EQUITY   568,005     504,262     TOTAL LIABILITIES AND EQUITY $ 1,590,775   $ 1,693,795