CUZ Cousins Properties Inc

Cousins Properties Incorporated (NYSE:CUZ):

Highlights:

• Reported FFO before certain charges of $0.10 per diluted share
• Completed office and retail leasing totaling 645,000 square feet
• Sold two assets for $88 million in proceeds
• Eliminated near-term maturities of $122 million with sales and new financings
• Posted leasing improvement across all asset classes

Cousins Properties Incorporated (NYSE:CUZ) today reported its results of operations for the three and nine months ended September 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 $886,000, or $0.01 per share, for the third quarter of 2010 compared with $(41.9) million, or $(0.71) per share, for the third quarter of 2009. FFO was $22.8 million, or $0.23 per share, for the nine months ended September 30, 2010 compared with $(99.3) million, or $(1.83) per share, for the same period in 2009.

Net Income (Loss) Available to Common Stockholders (“Net Income (Loss) Available”) was $(8.4) million, or $(0.08) per share, for the third quarter of 2010 compared with $(57.1) million, or $(0.96) per share, for the third quarter of 2009. Net Income (Loss) Available was $(18.6) million, or $(0.18) per share, for the nine months ended September 30, 2010 compared with $22.2 million, or $0.41 per share, for the same period in 2009.

FFO before a previously disclosed swap termination charge and separation expenses was $10.3 million, or $0.10 per share, for the third quarter of 2010. FFO for the nine months ended September 30, 2010 was $34.8 million, or $0.35 per share, before these charges and certain non-cash impairment and predevelopment charges. A reconciliation of FFO and Net Income (Loss) Available before the swap termination payment, separation charges, and non-cash impairment and predevelopment charges is as follows:

    3rd Quarter 2010   Nine Months 2010 $(000)   Per Share $(000)   Per Share     FFO Before Certain Charges $10,323 $0.10 $34,834 $0.35  

Swap Termination, Separation and Non-Cash Impairment and Predevelopment Charges:

Swap Termination Payment (9,235 ) (9,235 ) Separation Charges (202 ) (303 ) Impairment on 60 North Market - (586 ) Write-off of Predevelopment Project -   (1,949 ) Total (9,437 )   (0.09 ) (12,073 )   (0.12 )   FFO $886     $0.01   $22,761     $0.23       Net Income (Loss) Available Before Certain Charges $1,055 $0.01 ($6,477 ) ($0.06 )

Swap Termination, Separation and Non-Cash Impairment and Predevelopment Charges

(9,437 )   (0.09 ) (12,073 )   (0.12 )   Net Loss Available ($8,382 )   ($0.08 ) ($18,550 )   ($0.18 )  

FFO and Net Income (Loss) Available for the third quarter and nine months ended September 30, 2009 were reduced by $49.2 million and $137.9 million, respectively, of certain separation and non-cash impairment and valuation charges. Additionally, for the nine-month 2009 period, both FFO and Net Income Available included a $12.5 million gain on extinguishment of debt, and Net Income Available included the recognition of a deferred gain of $167 million related to a joint venture transaction with Prudential.

Third quarter highlights included the following:

• Sold San Jose MarketCenter, a 213,000-square-foot power center located in San Jose, California, for $85 million, generating a net gain of $6.6 million.
• Obtained a new 10-year, $27 million mortgage loan with an interest rate of 6% secured by Meridian Mark Plaza, a 160,000-square-foot medical office building in Atlanta, and repaid a $22 million loan scheduled to mature in September 2010 with 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 $9.2 million. Repayment of this loan correspondingly increased the Company’s borrowing capacity under its credit facility.
• Executed or renewed leases covering 487,000 square feet of office space and 158,000 square feet of retail space.

Highlights subsequent to quarter end included the following:

• Sold 8995 Westside Parkway, a 51,000-square-foot office building in Atlanta, Georgia, for $3.2 million, generating an estimated net gain of $700,000.
• Received a $1.1 million payment from the Company’s partner in the Oklahoma City predevelopment project representing a partial recovery of amounts previously written off.

At September 30, 2010, the Company’s portfolio of operational office buildings was 90% leased, its portfolio of operational retail centers was 86% leased and its portfolio of operational industrial buildings was 90% leased.

“The third quarter results illustrate significant progress in our continued efforts to lease vacant space, sell non-core assets and generate additional fee income,” said Larry Gellerstedt, CEO of Cousins. “We are particularly pleased with the disproportionate share of leasing we’ve achieved in our core markets in the face of challenging market conditions.”

The Condensed Consolidated Statements of Operations, 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 “Supplemental Information” and “SEC Filings” links on the “Investor Information & Filings” link of 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 9:30 a.m. (Eastern Time) on Tuesday, November 9, 2010, to discuss the results of the quarter ended September 30, 2010. The number to call for this interactive teleconference is (303) 223-2680. A replay of the conference call will be available for 14 days by dialing (402) 977-9140 and entering the passcode 21484696. The replay can be accessed on the Company’s website, www.cousinsproperties.com, through the “Q3 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 OPERATIONS (Unaudited, in thousands, except per share amounts)           Three Months Ended

September 30,

Nine Months Ended

September 30,

2010 2009 2010 2009 REVENUES: Rental property revenues $ 36,255 $ 36,205 $ 106,997 $ 105,392 Fee income 8,690 9,510 25,241 25,726 Multi-family residential unit sales 6,637 9,228 24,726 10,413 Residential lot and outparcel sales 630 1,150 14,765 7,026 Other   245     675     540     2,893     52,457     56,768     172,269     151,450     COSTS AND EXPENSES: Rental property operating expenses 15,276 16,617 45,172 47,260 Multi-family residential unit cost of sales 5,190 7,372 19,268 8,557 Residential lot and outparcel cost of sales 549 979 9,920 4,732 General and administrative expenses 8,109 9,180 26,648 28,546 Separation expenses 202 724 303 3,094 Reimbursed general and administrative expenses 3,522 3,979 11,531 12,237 Depreciation and amortization 13,977 13,264 41,610 40,428 Interest expense 8,702 10,793 28,769 30,278 Impairment loss - 4,012 586 40,512 Other   964     1,723     5,489     7,701     56,491     68,643     189,296     223,345     LOSS ON EXTINGUISHMENT OF DEBT AND INTEREST RATE SWAPS   (9,235 )   -     (9,827 )   -    

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

(13,269 ) (11,875 ) (26,854 ) (71,895 )   BENEFIT (PROVISION) FOR INCOME TAXES FROM OPERATIONS (25 ) (54 ) 1,107 (7,406 )   INCOME (LOSS) FROM UNCONSOLIDATED JOINT VENTURES: Equity in net income (loss) from unconsolidated joint ventures 2,179 (19,926 ) 7,493 (19,337 ) Impairment loss on investment in unconsolidated joint ventures   -     (22,928 )   -     (51,058 )   2,179     (42,854 )   7,493     (70,395 )  

LOSS FROM CONTINUING OPERATIONS BEFORE GAIN ON SALE OF INVESTMENT PROPERTIES

(11,115 ) (54,783 ) (18,254 ) (149,696 )   GAIN ON SALE OF INVESTMENT PROPERTIES   58     406     1,875     168,641     INCOME (LOSS) FROM CONTINUING OPERATIONS (11,057 ) (54,377 ) (16,379 ) 18,945   INCOME FROM DISCONTINUED OPERATIONS: Income from discontinued operations 25 1,041 2,743 1,897 Gain on extinguishment of debt - - - 12,498 Gain on sale of investment properties   6,572     7     6,572     153     6,597     1,048     9,315     14,548     NET INCOME (LOSS) (4,460 ) (53,329 ) (7,064 ) 33,493 NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS   (696 )   (531 )   (1,806 )   (1,641 )   NET INCOME (LOSS) ATTRIBUTABLE TO CONTROLLING INTEREST (5,156 ) (53,860 ) (8,870 ) 31,852   DIVIDENDS TO PREFERRED STOCKHOLDERS   (3,226 )   (3,228 )   (9,680 )   (9,682 )   NET INCOME (LOSS) AVAILABLE TO COMMON STOCKHOLDERS $ (8,382 ) $ (57,088 ) $ (18,550 ) $ 22,170     PER COMMON SHARE INFORMATION - BASIC AND DILUTED: Income (loss) from continuing operations $ (0.15 ) $ (0.98 ) $ (0.28 ) $ 0.14 Income from discontinued operations   0.06     0.02     0.09     0.27   Net income (loss) available to common stockholders - basic and diluted $ (0.08 ) $ (0.96 ) $ (0.18 ) $ 0.41     DIVIDENDS DECLARED PER COMMON SHARE $ 0.09   $ 0.15   $ 0.27   $ 0.65     WEIGHTED AVERAGE SHARES - BASIC AND DILUTED   101,893     59,403     100,995     54,152       COUSINS PROPERTIES INCORPORATED AND SUBSIDIARIES FUNDS FROM OPERATIONS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2010 AND 2009 (Unaudited, in thousands, except per share amounts)           Three Months Ended Nine Months Ended September 30, September 30, 2010 2009 2010 2009   Net Income (Loss) Available to Common Stockholders $ (8,382 ) $ (57,088 ) $ (18,550 ) $ 22,170 Depreciation and amortization: Consolidated properties 13,977 13,264 41,610 40,428 Discontinued properties 19 604 845 1,877 Share of unconsolidated joint ventures 2,350 2,192 7,097 6,524 Depreciation of furniture, fixtures and equipment: Consolidated properties (441 ) (829 ) (1,470 ) (2,727 ) Discontinued properties - (4 ) (5 ) (12 ) Share of unconsolidated joint ventures (6 ) (10 ) (17 ) (34 ) Gain on sale of investment properties: Consolidated (58 ) (406 ) (1,875 ) (168,641 ) Discontinued properties (6,572 ) (7 ) (6,572 ) (153 ) Share of unconsolidated joint ventures - - - (12 ) Gain on sale of undepreciated investment properties   (1 )   349     1,698     1,304     Funds From Operations Available to Common Stockholders $ 886   $ (41,935 ) $ 22,761   $ (99,276 )     Per Common Share - Basic and Diluted:   Net Income (Loss) Available $ (0.08 ) $ (0.96 ) $ (0.18 ) $ 0.41     Funds From Operations $ 0.01   $ (0.71 ) $ 0.23   $ (1.83 )   Weighted Average Shares - Basic and Diluted   101,893     59,403     100,995     54,152    

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 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 other key employees.

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

ASSETS

PROPERTIES:

Operating properties, net of accumulated depreciation of $258,897 and $233,091 in 2010 and 2009, respectively

$ 907,932 $ 1,006,760 Land held for investment or future development 126,210 137,233 Residential lots 63,586 62,825 Multi-family units held for sale 10,193 28,504 Total properties 1,107,921 1,235,322  

OPERATING PROPERTY HELD FOR SALE, net of accumulated depreciation of $5,461

2,318 -   CASH AND CASH EQUIVALENTS 9,211 9,464 RESTRICTED CASH 17,632 3,585

NOTES AND OTHER RECEIVABLES, net of allowance for doubtful accounts of $5,143 and $5,734 in 2010 and 2009, respectively

45,306 49,678 INVESTMENT IN UNCONSOLIDATED JOINT VENTURES 163,231 146,150 OTHER ASSETS 45,433 47,353   TOTAL ASSETS $ 1,391,052 $ 1,491,552  

LIABILITIES AND EQUITY

NOTES PAYABLE $ 514,363 $ 590,208 ACCOUNTS PAYABLE AND ACCRUED LIABILITIES 36,531 56,577 DEFERRED GAIN 4,275 4,452 DEPOSITS AND DEFERRED INCOME 17,287 7,465 TOTAL LIABILITIES 572,456 658,702   COMMITMENTS AND CONTINGENT LIABILITIES   REDEEMABLE NONCONTROLLING INTERESTS 13,482 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, 106,205,120 and 103,352,382 shares issued in 2010 and 2009, respectively

106,205 103,352 Additional paid-in capital 679,437 662,216 Treasury stock at cost, 3,570,082 shares in 2010 and 2009 (86,840) (86,840) Accumulated other comprehensive loss on derivative instruments (94) (9,517) Distributions in excess of net income (loss) (96,029) (51,402)   TOTAL STOCKHOLDERS’ INVESTMENT 772,281 787,411   Nonredeemable noncontrolling interests 32,833 32,848 TOTAL EQUITY 805,114 820,259   TOTAL LIABILITIES AND EQUITY $ 1,391,052 $ 1,491,552