Cousins Properties Incorporated (NYSE:CUZ) today reported its
results of operations for the three and nine months ended September
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 $7.3 million, or $0.12 per share, before certain separation and
non-cash impairment and valuation charges discussed below for the
third quarter of 2009, compared with FFO of $20.9 million, or $0.39
per share, for the third quarter of 2008. FFO was $38.6 million, or
$0.70 per share, before such charges for the nine months ended
September 30, 2009, compared with $50.9 million, or $0.95 per
share, for the same period in 2008.
Net Income (Loss) Available to Common Stockholders (“Net Income
(Loss) Available”) was ($7.8) million, or ($0.13) per share, before
such separation and non-cash impairment and valuation charges for
the quarter ended September 30, 2009, compared with Net Income
Available of $7.0 million, or $0.13 per share, for the third
quarter of 2008. Net Income Available was $160.0 million, or $2.89
per share, before such charges for the nine months ended September
30, 2009, compared with $11.7 million, or $0.22 per share, for the
same period in 2008. During the second quarter of 2009, the Company
recorded $88.3 million of separation and non-cash impairment and
valuation charges.
The Company recorded $48.5 million of non-cash impairment
charges during the third quarter of 2009. These charges consisted
of the following:
- Impairment charge on investment
in Terminus 200, LLC - $38.9 million,
- Impairment charge on investment
in Glenmore Garden Villas LLC - $4.9 million,
- Impairment charge on airplane -
$4.0 million,
- Company share of impairment
charge on property owned by Temco Associates, LLC - $631,000
The impairment charges on Terminus 200, LLC and the airplane
were previously disclosed in September 2009.
After such separation and non-cash impairment and valuation
charges, FFO was a loss of $41.9 million, or $0.70 per share, for
the third quarter of 2009 and a loss of $99.3 million, or $1.79 per
share, for the nine months ended September 30, 2009. Net Loss
Available, after such separation and non-cash charges, was $57.1
million, or $0.95 per share, for the third quarter of 2009 and Net
Income Available was $22.2 million, or $0.40 per share, for the
nine months ended September 30, 2009.
A reconciliation of FFO and Net Income (Loss) Available before
certain separation and non-cash impairment and valuation charges is
as follows:
3rd Quarter 2009 Nine Months 2009
$(000) Per Share $(000) Per Share FFO Before
Certain Charges $ 7,314 $ 0.12 $ 38,599 $ 0.70
Certain Separation and Non-Cash
Impairment and Valuation Charges:
Terminus 200 Impairment (38,947 ) (0.65 ) (38,947 ) (0.70 )
Glenmore Garden Villas Impairment (4,935 ) (0.08 ) (6,065 ) (0.11 )
Airplane impairment (4,012 ) (0.07 ) (4,012 ) (0.07 ) Temco
Impairment (631 ) (0.01 ) (631 ) (0.01 ) Impairment charge on 10
Terminus - 0.00 (34,900 ) (0.63 ) Impairment charges on Investments
in Joint Ventures - 0.00 (27,000 ) (0.49 ) Valuation allowance on
deferred tax asset - 0.00 (15,907 ) (0.29 ) Write-off of
predevelopment expenses - 0.00 (3,100 ) (0.06 ) Separation charges
(724 ) (0.01 ) (3,094 ) (0.06 ) Other reserves and impairments
- 0.00 (4,219 )
(0.07 ) Total (49,249 ) (0.82 )
(137,875 ) (2.49 ) FFO $ (41,935 ) $
(0.70 ) $ (99,276 ) $ (1.79 ) Net Income
(Loss) Available Before Certain Charges $ (7,839 ) $ (0.13 ) $
160,045 $ 2.89
Certain Separation and Non-Cash
Impairment and Valuation Charges
(49,249 ) (0.82 ) (137,875 )
(2.49 ) Net Income (Loss) Available $ (57,088 )
$ (0.95 ) $ 22,170 $ 0.40
Third quarter highlights of the Company included the
following:
- Completed an offering of 46
million shares of common stock. Net proceeds from the offering were
$318.6 million, which were used to reduce indebtedness.
- Sold all of the completed units
of The Brownstones at Habersham, a townhome project it acquired
from a bank in the second quarter. Recognized gains on the sale of
these units of $1.5 million.
At September 30, 2009, the Company’s portfolio of operational
office buildings was 87% leased, its portfolio of operational
retail centers was 83% leased and its operational industrial
buildings were 44% leased.
“In the third quarter, our team made significant strides in
improving our balance sheet and cost structure to make us more
competitive in the current environment,” said Larry Gellerstedt,
CEO of Cousins. “Raising over $300 million in common equity
dramatically reduced our leverage thereby creating more financial
flexibility for future opportunities. We also made some difficult
but necessary decisions to reduce our expenses in the quarter. We
expect that the combination of these actions will make us a leaner
but stronger organization focused on maximizing the value of our
assets for our shareholders.”
The Condensed Consolidated Statements of Income, Condensed
Consolidated Balance Sheets and a schedule entitled Funds From
Operations, which reconciles Net Income (Loss) Available to FFO,
are attached to this press release. More detailed information on
Net Income (Loss) Available and FFO results is included in the “Net
Income (Loss) 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 Thursday, November 5, 2009, to discuss the results of the
quarter ended September 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 21439816. The replay can be
accessed on the Company’s website, www.cousinsproperties.com,
through the “Q3 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, 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 3,500 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 and
the Company’s Current Report on Form 8-K filed on September 14,
2009. 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
EndedSeptember 30,
Nine Months
EndedSeptember 30,
2009 2008 2009 2008 REVENUES:
Rental property revenues
$ 38,632 $ 38,337
$
113,236 $ 109,344 Fee income
9,510 21,736
25,726 37,096 Multi-family residential unit sales
9,228 5,459
10,413 5,459 Residential lot and
outparcel sales
1,150 3,747
7,026 6,746 Interest and
other
675 991
2,946 3,291
59,195
70,270
159,347 161,936
COSTS AND EXPENSES: Rental property operating
expenses
17,402 14,641
49,874 42,663 General and
administrative expenses
9,180 12,975
28,546 32,382
Separation expenses
724 45
3,094 351 Reimbursed
general and administrative expenses
3,979 4,006
12,237 11,745 Depreciation and amortization
13,868
13,272
42,305 37,148 Multi-family residential unit cost of
sales
7,372 4,715
8,557 4,715 Residential lot and
outparcel cost of sales
979 1,917
4,732 3,695
Interest expense
10,793 8,705
31,783 22,347
Impairment loss
4,012 -
40,512 - Other
1,723 1,975
7,701
4,279
70,032 62,251
229,341 159,325
GAIN ON EXTINGUISHMENT OF DEBT -
-
12,498 -
INCOME (LOSS) FROM CONTINUING
OPERATIONS BEFORE TAXES, INCOME (LOSS) FROM UNCONSOLIDATED JOINT
VENTURES AND GAIN ON SALE OF INVESTMENT PROPERTIES
(10,837 ) 8,019
(57,496 ) 2,611
(PROVISION) BENEFIT FOR INCOME TAXES FROM OPERATIONS
(54 ) (916 )
(7,406 ) 4,477
INCOME (LOSS) FROM UNCONSOLIDATED JOINT VENTURES: Equity in
net income (loss) from unconsolidated joint ventures
(19,926
) 3,497
(19,337 ) 8,553 Impairment loss on
investment in unconsolidated joint ventures
(22,928
) -
(51,058 ) -
(42,854 ) 3,497
(70,395 ) 8,553
INCOME (LOSS) FROM CONTINUING
OPERATIONS BEFORE GAIN ON SALE OF INVESTMENT PROPERTIES
(53,745 ) 10,600
(135,297 ) 15,641
GAIN ON SALE OF INVESTMENT
PROPERTIES, NET OF APPLICABLE INCOME TAX PROVISION
406 1,387
168,641
10,391
INCOME (LOSS) FROM CONTINUING
OPERATIONS (53,339 ) 11,987
33,344 26,032
DISCONTINUED OPERATIONS, NET OF
APPLICABLE INCOME TAX PROVISION:
Income (loss) from discontinued operations
3 (431 )
(4 ) (1,179 ) Gain on sale of investment properties
7 -
153
-
10 (431 )
149 (1,179 )
NET INCOME (LOSS)
(53,329 ) 11,556
33,493 24,853
NET INCOME
ATTRIBUTABLE TO NONCONTROLLING INTERESTS (531
) (766 )
(1,641 ) (1,688
)
NET INCOME (LOSS) ATTRIBUTABLE TO CONTROLLING
INTEREST (53,860 ) 10,790
31,852 23,165
DIVIDENDS TO PREFERRED STOCKHOLDERS
(3,228 ) (3,812 )
(9,682
) (11,437 )
NET INCOME (LOSS) AVAILABLE TO
COMMON STOCKHOLDERS $ (57,088 ) $ 6,978
$ 22,170 $ 11,728
PER
COMMON SHARE INFORMATION - BASIC: Income (loss) from continuing
operations
$ (0.95 ) $ 0.13
$
0.40 $ 0.24 Loss from discontinued operations
- -
- (0.02
) Basic net income (loss) available to common stockholders
$
(0.95 ) $ 0.13
$ 0.40 $
0.22
PER COMMON SHARE INFORMATION - DILUTED:
Income (loss) from continuing operations
$ (0.95
) $ 0.13
$ 0.40 $ 0.24 Loss from discontinued
operations
- -
-
(0.02 ) Diluted net income (loss) available to common
stockholders
$ (0.95 ) $ 0.13
$
0.40 $ 0.22
DIVIDENDS DECLARED PER
COMMON SHARE $ 0.15 $ 0.37
$
0.65 $ 1.11
COUSINS PROPERTIES INCORPORATED AND SUBSIDIARIES FUNDS
FROM OPERATIONS FOR THE THREE AND NINE MONTHS ENDED
SEPTEMBER 30, 2009 AND 2008 (Unaudited, in thousands, except
per share amounts)
Three Months Ended Nine
Months Ended September 30, September 30,
2009 2008 2009 2008
Net Income (Loss) Available to Common Stockholders $
(57,088 ) $ 6,978 $
22,170 $ 11,728 Depreciation and amortization:
Consolidated properties 13,868 13,272 42,305 37,148 Discontinued
properties - 138 - 486 Share of unconsolidated joint ventures 2,192
1,621 6,524 4,485
Depreciation of furniture,
fixtures and equipment and amortization of specifically
identifiable intangible assets:
Consolidated properties (833 ) (989 ) (2,739 ) (2,720 )
Discontinued properties - (6 )
-
(19 ) Share of unconsolidated joint ventures (10 ) (27 ) (34 ) (78
) Gain on sale of investment properties, net of applicableincome
tax provision: Consolidated (406 ) (1,387 ) (168,641 ) (10,391 )
Discontinued properties (7 ) - (153 ) - Share of unconsolidated
joint ventures - - (12 ) - Gain on sale of undepreciated investment
properties 349 1,331 1,304
10,223
Funds From Operations
Available to Common Stockholders $ (41,935
) $ 20,931 $ (99,276
) $ 50,862 Per Common
Share - Basic: Net Income (Loss) Available $
(0.95 ) $ 0.13 $
0.40 $ 0.22 Funds From
Operations $ (0.70 ) $ 0.40
$ (1.79 ) $ 0.96
Weighted Average Shares-Basic 59,969
52,945 55,318
52,919 Per Common Share - Diluted:
Net Income (Loss) Available $ (0.95 )
$ 0.13 $ 0.40 $
0.22 Funds From Operations $
(0.70 ) $ 0.39 $
(1.79 ) $ 0.95 Weighted
Average Shares-Diluted 59,969
53,365 55,318
53,532
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 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)
September 30, December 31,
2009 2008
ASSETS
PROPERTIES:
Operating properties, net of
accumulated depreciation of $223,692 and $182,050 in 2009 and 2008,
respectively
$ 1,006,735 $ 853,450 Projects under development
- 172,582 Land held for investment or future development
137,619 115,862 Residential lots under development
62,136 59,197 Multi-family units held for sale
43,818 70,658 Total properties
1,250,308 1,271,749
CASH AND CASH EQUIVALENTS
119,596 82,963
RESTRICTED CASH 4,861 3,636
NOTES AND OTHER
RECEIVABLES, net of allowance for doubtful accounts of $4,012
and $2,764 in 2009 and 2008, respectively
48,123 51,267
INVESTMENT IN UNCONSOLIDATED JOINT
VENTURES 145,835 200,850
OTHER ASSETS
60,701 83,330
TOTAL
ASSETS $ 1,629,424 $ 1,693,795
LIABILITIES AND STOCKHOLDERS’
INVESTMENT
NOTES PAYABLE $ 700,700 $ 942,239
ACCOUNTS
PAYABLE AND ACCRUED LIABILITIES 77,328 65,026
DEFERRED GAIN 4,508 171,838
DEPOSITS AND DEFERRED
INCOME 7,163 6,485
TOTAL LIABILITIES 789,699 1,185,588
COMMITMENTS AND CONTINGENT LIABILITIES REDEEMABLE
NONCONTROLLING INTERESTS 12,583 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, 102,539,783 and 54,922,173 shares
issued in 2009 and 2008, respectively
102,540 54,922 Additional paid-in capital
656,963
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
(13,233 ) (16,601 )
Distributions in excess of net income
(34,713
) (23,189 )
TOTAL STOCKHOLDERS’
INVESTMENT 794,319 466,723 Nonredeemable
noncontrolling interests
32,823 37,539
TOTAL EQUITY 827,142
504,262
TOTAL LIABILITIES AND EQUITY
$ 1,629,424 $ 1,693,795
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