CUZ Cousins Properties Inc

Cousins Properties Incorporated (NYSE:CUZ) today reported its results of operations for the three and six months ended June 30, 2010. 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 $7.9 million, or $0.08 per share, for the second quarter of 2010, compared with $(64.9) million, or $(1.26) per share, for the second quarter of 2009. FFO was $21.9 million, or $0.22 per share, for the six months ended June 30, 2010, compared with $(57.3) million, or $(1.11) per share, for the same period in 2009.

Net Income (Loss) Available to Common Stockholders (“Net Income (Loss) Available”) was $(8.6) million, or $(0.09) per share, for the quarter ended June 30, 2010, compared with $(81.3) million, or $(1.58) per share, for the second quarter of 2009. Net Income (Loss) Available was $(10.2) million, or $(0.10) per share, for the six months ended June 30, 2010, compared with $79.3 million, or $1.54 per share, for the same period in 2009.

FFO and Net Loss Available for the second quarter of 2010 were both reduced by $2.5 million of non-cash impairment and predevelopment charges itemized below. Before these charges, FFO for the second quarter of 2010 would have been $10.4 million, or $0.10 per share.

FFO and Net Loss Available for the second quarter of 2009 were both reduced by $88.3 million of certain separation and non-cash impairment and valuation charges. Additionally, FFO and Net Income (Loss) Available for the three- and six-month 2009 periods included a $12.5 million gain on extinguishment of debt, and Net Income Available for the six month 2009 period included the recognition of a deferred gain of $167 million related to a joint venture transaction with Prudential.

A reconciliation of FFO and Net Loss Available before non-cash impairment and predevelopment charges is as follows:

              2nd Quarter 2010 Six Months 2010 $(000)   Per Share $(000)   Per Share   FFO Before Certain Charges $ 10,430 $ 0.10 $ 24,410 $ 0.24  

Non-Cash Impairment and Predevelopment Charges:

Impairment on 60 North Market (586 ) (586 ) Write-off of Predevelopment Project   (1,949 )   (1,949 ) Total   (2,535 )   (2,535 )   FFO $ 7,895   $ 0.08 $ 21,875   $ 0.22                              

Net Loss Available Before Certain Charges

($6,060 ) ($0.06 ) ($7,633 ) ($0.08 )  

Non-Cash Impairment and Predevelopment Charges

  (2,535 )   (2,535 )   Net Loss Available   ($8,595 ) ($0.09 )   ($10,168 ) ($0.10 )  

Second quarter highlights included the following:

• Restructured the Terminus 200 venture, resulting in the full payment of the Company’s loan guarantee, a reduction of the Company’s ownership from 50% to 20%, a change in the Company’s venture partner and an extension of the construction loan.
• Closed the sale of 22 units at 10 Terminus Place for $7.9 million, generating FFO of approximately $1.8 million.
• Sold 44 acres of land at King Mill Distribution Park for $7.0 million, generating FFO of approximately $876,000.
• Sold 5.8 acres of land at North Point/Westside for $850,000, generating FFO of approximately $134,000.
• Extended the loan on The Avenue Murfreesboro, a 751,000-square-foot open air retail center in suburban Nashville, to July 2013.
• Executed a 459,000-square-foot lease at Jefferson Mill Business Park, bringing this building to 100% leased.
• Executed leases for 150,000 square feet at Terminus 200.
• Executed or renewed leases covering an additional 171,000 square feet of office space and 143,000 square feet of retail space.

Other highlights subsequent to quarter end included the following:

• Sold San Jose MarketCenter, a 213,000-square-foot power center located in a non-core market, for $85 million, generating an estimated net gain of $6.5 million.
• Obtained a new 10-year, $27 million loan at an interest rate of 6% secured by Meridian Mark Plaza, a 160,000-square-foot medical office building in Atlanta, that repaid a $22 million loan scheduled to mature in September 2010 at an interest rate of 8.27%.
• Repaid the Company’s $100 million term loan and eliminated the interest rate swap associated with the term loan for a cost of approximately $9 million. Repayment of this loan correspondingly increased the Company’s borrowing capacity under its credit facility.
• Executed a 52,000-square-foot lease at 191 Peachtree.

At June 30, 2010, the Company’s portfolio of operational office buildings was 89% leased, its portfolio of operational retail centers was 86% leased and its operational industrial buildings were 85% leased.

“We continue to make significant progress in each of our key areas of focus; particularly the lease up of vacant space and further strengthening of our balance sheet,” said Larry Gellerstedt, CEO of Cousins. “In the quarters ahead, we will remain intently focused on leasing, sales, fee income and balance sheet improvement while positioning Cousins for potential investment opportunities.”

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 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 10, 2010, to discuss the results of the quarter ended June 30, 2010. The number to call for this interactive teleconference is (212) 231-2907. A replay of the conference call will be available for 14 days by dialing (402) 977-9140 and entering the passcode 21476773. The replay can be accessed on the Company’s website, www.cousinsproperties.com, through the “Q2 2010 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, availability and terms of capital and financing; national and local economic conditions; the real estate industry in general and in specific markets; the potential for recognition of additional impairments due to continued adverse market and economic conditions; leasing risks; the financial condition of existing tenants; competition from other developers or investors; the risks associated with development projects; rising interest and insurance rates; the availability of sufficient development or investment opportunities; environmental matters; the financial condition and liquidity of, or disputes with, joint venture partners; any failure to comply with debt covenants under credit agreements; any failure to continue to qualify for taxation as a real estate investment trust 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, 2009. The words “believes,” “expects,” “anticipates,” “estimates,” ”plans,” “may,” “intend,” “will” or 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 such 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, except as required under U.S. federal securities laws.

  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,

2010 2009 2010 2009 REVENUES: Rental property revenues $ 35,992 $ 34,573 $ 70,799 $ 69,554 Fee income 8,213 8,172 16,551 16,216 Multi-family residential unit sales 7,943 1,185 18,089 1,185 Residential lot and outparcel sales 316 3,328 14,135 5,876 Other   171     1,239     295     2,218     52,635     48,497     119,869     95,049     COSTS AND EXPENSES: Rental property operating expenses 15,393 14,358 30,054 30,836 Multi-family residential unit cost of sales 6,108 1,185 14,078 1,185 Residential lot and outparcel cost of sales 275 2,023 9,371 3,753 General and administrative expenses 8,589 9,948 18,539 19,366 Separation expenses 33 2,026 101 2,370 Reimbursed general and administrative expenses 3,591 4,030 8,009 8,258 Depreciation and amortization 14,372 14,804 27,693 27,290 Interest expense 10,286 10,281 20,067 19,485 Impairment loss 586 36,500 586 36,500 Other   3,197     4,432     4,525     5,978     62,430     99,587     133,023     155,021     LOSS ON EXTINGUISHMENT OF DEBT   -     -     (592 )   -    

LOSS FROM CONTINUING OPERATIONS BEFORE TAXES, UNCONSOLIDATED JOINT VENTURES AND SALE OF INVESTMENT PROPERTIES

(9,795 ) (51,090 ) (13,746 ) (59,972 )   BENEFIT (PROVISION) FOR INCOME TAXES FROM OPERATIONS (14 ) (11,293 ) 1,132 (7,352 )   INCOME (LOSS) FROM UNCONSOLIDATED JOINT VENTURES: Equity in net income (loss) from unconsolidated joint ventures 2,394 (1,231 ) 5,314 589 Impairment loss on investment in unconsolidated joint ventures   -     (28,130 )   -     (28,130 )   2,394     (29,361 )   5,314     (27,541 )  

LOSS FROM CONTINUING OPERATIONS BEFORE GAIN ON SALE OF INVESTMENT PROPERTIES

(7,415 ) (91,744 ) (7,300 ) (94,865 )   GAIN ON SALE OF INVESTMENT PROPERTIES   1,061     801     1,817     168,235     INCOME (LOSS) FROM CONTINUING OPERATIONS (6,354 ) (90,943 ) (5,483 ) 73,370   INCOME FROM DISCONTINUED OPERATIONS: Income from discontinued operations 1,570 911 2,879 808 Gain on extinguishment of debt - 12,498 - 12,498 Gain on sale of investment properties   -     146     -     146     1,570     13,555     2,879     13,452     NET INCOME (LOSS) (4,784 ) (77,388 ) (2,604 ) 86,822 NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS   (584 )   (698 )   (1,110 )   (1,110 )   NET INCOME (LOSS) ATTRIBUTABLE TO CONTROLLING INTEREST (5,368 ) (78,086 ) (3,714 ) 85,712   DIVIDENDS TO PREFERRED STOCKHOLDERS   (3,227 )   (3,227 )   (6,454 )   (6,454 )   NET INCOME (LOSS) AVAILABLE TO COMMON STOCKHOLDERS $ (8,595 ) $ (81,313 ) $ (10,168 ) $ 79,258     PER COMMON SHARE INFORMATION - BASIC AND DILUTED: Income (loss) from continuing operations $ (0.10 ) $ (1.84 ) $ (0.13 ) $ 1.28 Income from discontinued operations   0.02     0.26     0.03     0.26   Net income (loss) available to common shareholders - basic and diluted $ (0.09 ) $ (1.58 ) $ (0.10 ) $ 1.54     DIVIDENDS DECLARED PER COMMON SHARE $ 0.09   $ 0.25   $ 0.18   $ 0.50     WEIGHTED AVERAGE SHARES - BASIC AND DILUTED   101,001     51,615     100,538     51,483     COUSINS PROPERTIES INCORPORATED AND SUBSIDIARIES FUNDS FROM OPERATIONS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2010 AND 2009 (Unaudited, in thousands, except per share amounts)         Three Months Ended Six Months Ended June 30, June 30, 2010 2009 2010 2009   Net Income (Loss) Available to Common Stockholders $ (8,595 ) $ (81,313 ) $ (10,168 ) $ 79,258 Depreciation and amortization: Consolidated properties 14,372 14,804 27,693 27,290 Discontinued properties 192 577 766 1,147 Share of unconsolidated joint ventures 2,453 2,174 4,747 4,332 Depreciation of furniture, fixtures and equipment: Consolidated properties (462 ) (934 ) (1,029 ) (1,898 ) Discontinued properties (1 ) (4 ) (5 ) (8 ) Share of unconsolidated joint ventures (5 ) (14 ) (11 ) (24 ) (Gain) loss on sale of investment properties: Consolidated (1,061 ) (801 ) (1,817 ) (168,235 ) Discontinued properties - (146 ) - (146 ) Share of unconsolidated joint ventures - 16 - (12 ) Gain on sale of undepreciated investment properties   1,002     746     1,699     955     Funds From Operations Available to Common Stockholders $ 7,895   $ (64,895 ) $ 21,875   $ (57,341 )     Per Common Share - Basic and Diluted:   Net Income (Loss) Available $ (.09 ) $ (1.58 ) $ (.10 ) $ 1.54     Funds From Operations $ .08   $ (1.26 ) $ .22   $ (1.11 )   Weighted Average Shares - Basic and Diluted   101,001     51,615     100,538     51,483    

The table above shows Funds From Operations Available to Common Stockholders (“FFO”) and the related reconciliation to Net Income (Loss) Available to Common Stockholders 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, investors and the Company 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 other key employees.

      COUSINS PROPERTIES INCORPORATED AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except share and per share amounts)     June 30, 2010 December 31, 2009 (Unaudited)

ASSETS

PROPERTIES:

Operating properties, net of accumulated depreciation of $251,250 and $233,091 in 2010 and 2009, respectively

$ 911,954 $ 1,006,760 Land held for investment or future development 126,149 137,233 Residential lots 63,496 62,825 Multi-family units held for sale   15,050     28,504   Total properties 1,116,649 1,235,322  

OPERATING PROPERTY AND RELATED ASSETS HELD FOR SALE, net of accumulated depreciation of $8,201

78,475 -   CASH AND CASH EQUIVALENTS 17,137 9,464 RESTRICTED CASH 4,944 3,585

NOTES AND OTHER RECEIVABLES, net of allowance for doubtful accounts of $6,172 and $5,734 in 2010 and 2009, respectively

45,345 49,678 INVESTMENT IN UNCONSOLIDATED JOINT VENTURES 158,955 146,150 OTHER ASSETS   47,517     47,353     TOTAL ASSETS $ 1,469,022   $ 1,491,552    

LIABILITIES AND EQUITY

NOTES PAYABLE $ 580,378 $ 590,208 ACCOUNTS PAYABLE AND ACCRUED LIABILITIES 46,237 56,577 DEFERRED GAIN 4,334 4,452 DEPOSITS AND DEFERRED INCOME 16,702 7,465 LIABILITIES OF OPERATING PROPERTY HELD FOR SALE   1,984     -   TOTAL LIABILITIES 649,635 658,702   COMMITMENTS AND CONTINGENT LIABILITIES   REDEEMABLE NONCONTROLLING INTERESTS 12,686 12,591   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 2010 and 2009

74,827 74,827

7.50% Series B cumulative redeemable preferred stock, $25 liquidation preference; 3,791,000 shares issued and outstanding in 2010 and 2009

94,775 94,775

Common stock, $1 par value, 150,000,000 shares authorized, 105,337,286 and 103,352,382 shares issued in 2010 and 2009, respectively

105,337 103,352 Additional paid-in capital 673,663 662,216 Treasury stock at cost, 3,570,082 shares in 2010 and 2009 (86,840 ) (86,840 ) Accumulated other comprehensive loss on derivative instruments (9,376 ) (9,517 ) Distributions in excess of net income   (78,487 )   (51,402 )   TOTAL STOCKHOLDERS’ INVESTMENT 773,899 787,411   Nonredeemable noncontrolling interests   32,802     32,848   TOTAL EQUITY   806,701     820,259     TOTAL LIABILITIES AND EQUITY $ 1,469,022   $ 1,491,552