CUZ Cousins Properties Inc

Cousins Properties Incorporated (NYSE:CUZ):

Highlights

• Funds From Operations (FFO) of $0.11 per share.
• Commenced Emory Point mixed-use project.
• Leased 424,000 square feet of office and retail space.

Cousins Properties Incorporated (NYSE:CUZ) today reported its results of operations for the quarter ended June 30, 2011.

“This was another solid quarter with continued leasing momentum,” said Larry Gellerstedt, CEO of Cousins. “We’re seeing an overall increase in investment opportunities and are particularly excited about our Emory Point mixed-use development.”

Portfolio Activity

• Leased 225,000 square feet of office space and 199,000 square feet of retail space.
• Office and Retail portfolios are 91% and 88% leased, respectively.
• Subsequent to quarter end, renewed AGL Services Company for 238,000 square feet at Ten Peachtree Place and renewed Bombardier for 86,000 square feet at The Points at Waterview, extending these leases to 2026 and 2023, respectively.

Investment/Disposition Activity

• Commenced construction on the $102 million Phase I of Emory Point in Atlanta, a mixed-use project comprised of 443 apartment units and 80,000 square feet of retail space scheduled to open in fall 2012.
• Sold 108 residential lots for net gains of $398,000.

Financial Results

FFO was $10.9 million, or $0.11 per share, for the second quarter of 2011 compared with $7.9 million, or $0.08 per share, for the second quarter of 2010. FFO was $19.0 million, or $0.18 per share, for the six months ended June 30, 2011, compared with $21.9 million, or $0.22 per share, for the same period in 2010.

Net loss available to common stockholders was $4.7 million, or $0.05 per share, for the second quarter of 2011 compared with net loss available of $8.6 million, or $0.09 per share, for the second quarter of 2010. Net loss available was $12.6 million, or $0.12 per share, for the six months ended June 30, 2011, compared with $10.2 million, or $0.10 per share, for the same period in 2010.

Investor Conference Call and Webcast

The Company will conduct a conference call at 1:00 p.m. (Eastern Time) on Thursday, August 4, 2011, to discuss the results of the quarter ended June 30, 2011. 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 21530938. The replay can be accessed on the Company’s website, www.cousinsproperties.com, through the “Q2 2011 Cousins Properties Incorporated Earnings Conference Call” link on the Investor Relations page.

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 and retail 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.

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.

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; potential acquisitions, new investments and/or dispositions; 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, 2010. 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 share and per share amounts)             Three Months Ended

June 30,

  Six Months Ended

June 30,

2011 2010 2011 2010 REVENUES: Rental property revenues $ 36,736 $ 35,969 $ 72,884 $ 70,742 Fee income 3,435 3,728 6,820 7,272 Third party management and leasing revenues 4,605 4,485 8,693 9,279 Multi-family residential unit sales 7 7,943 4,664 18,089 Residential lot and outparcel sales 80 316 245 14,135 Other   556     171     1,069     295     45,419     52,612     94,375     119,812     COSTS AND EXPENSES: Rental property operating expenses 15,472 15,246 29,720 29,777 Third party management and leasing expenses 4,080 4,214 8,173 9,172 Multi-family residential unit cost of sales (13 ) 6,108 2,487 14,078 Residential lot and outparcel cost of sales 76 275 145 9,371 General and administrative expenses 6,133 6,763 13,533 14,780 Interest expense 7,358 10,286 14,902 20,067 Reimbursed expenses 1,371 1,398 2,883 3,257 Depreciation and amortization 13,375 14,231 26,850 27,407 Impairment loss - 586 3,508 586 Separation expenses 77 33 178 101 Other   672     3,002     1,534     3,864     48,601     62,142     103,913     132,460     LOSS ON EXTINGUISHMENT OF DEBT   -     -     -     (592 )  

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

(3,182 ) (9,530 ) (9,538 ) (13,240 )   (PROVISION) BENEFIT FOR INCOME TAXES FROM OPERATIONS (27 ) (14 ) 37 1,132   INCOME FROM UNCONSOLIDATED JOINT VENTURES   2,312     2,394     4,808     5,314    

LOSS FROM CONTINUING OPERATIONS BEFORE GAIN ON SALE OF INVESTMENT PROPERTIES

(897 ) (7,150 ) (4,693 ) (6,794 )   GAIN ON SALE OF INVESTMENT PROPERTIES   59     1,061     118     1,817     LOSS FROM CONTINUING OPERATIONS (838 ) (6,089 ) (4,575 ) (4,977 )   INCOME (LOSS) FROM DISCONTINUED OPERATIONS: Income from discontinued operations 40 1,305 112 2,373 Loss on sale of investment properties   -     -     (384 )   -     40     1,305     (272 )   2,373     NET LOSS (798 ) (4,784 ) (4,847 ) (2,604 ) NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS   (681 )   (584 )   (1,262 )   (1,110 )   NET LOSS ATTRIBUTABLE TO CONTROLLING INTEREST (1,479 ) (5,368 ) (6,109 ) (3,714 )   DIVIDENDS TO PREFERRED STOCKHOLDERS   (3,227 )   (3,227 )   (6,454 )   (6,454 )   NET LOSS AVAILABLE TO COMMON STOCKHOLDERS $ (4,706 ) $ (8,595 ) $ (12,563 ) $ (10,168 )   PER COMMON SHARE INFORMATION - BASIC AND DILUTED: Loss from continuing operations attributable to controlling interest $ (0.05 ) $ (0.10 ) $ (0.12 ) $ (0.12 ) Income from discontinued operations   -     0.01     -     0.02   Net loss available to common stockholders - basic and diluted $ (0.05 ) $ (0.09 ) $ (0.12 ) $ (0.10 )     WEIGHTED AVERAGE SHARES - BASIC AND DILUTED   103,659     101,001     103,588     100,538                 COUSINS PROPERTIES INCORPORATED AND SUBSIDIARIES FUNDS FROM OPERATIONS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2011 AND 2010 (Unaudited, in thousands, except per share amounts)           Three Months Ended Six Months Ended June 30, June 30, 2011 2010 2011 2010   Net Loss Available to Common Stockholders $ (4,706 ) $ (8,595 ) $ (12,563 ) $ (10,168 ) Depreciation and amortization: Consolidated properties 13,375 14,231 26,850 27,407 Discontinued properties - 333 64 1,052 Share of unconsolidated joint ventures 2,663 2,453 5,346 4,747 Depreciation of furniture, fixtures and equipment: Consolidated properties (372 ) (462 ) (935 ) (1,029 ) Discontinued properties - (1 ) - (5 ) Share of unconsolidated joint ventures (5 ) (5 ) (10 ) (11 ) (Gain) loss on sale of investment properties: Consolidated properties (59 ) (1,061 ) (118 ) (1,817 ) Discontinued properties - - 384 - Gain on sale of undepreciated investment properties   -     1,002     -     1,699     Funds From Operations Available to Common Stockholders $ 10,896   $ 7,895   $ 19,018   $ 21,875       Per Common Share - Basic and Diluted:   Net Loss Available $ (.05 ) $ (.09 ) $ (.12 ) $ (.10 )   Funds From Operations $ .11   $ .08   $ .18   $ .22     Weighted Average Shares - Basic   103,659     101,001     103,588     100,538   Weighted Average Shares - Diluted   103,684     101,001     103,606     100,538      

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 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, 2011 December 31, 2010

ASSETS

(Unaudited) PROPERTIES:

Operating properties, net of accumulated depreciation of $298,085 and $274,925 in 2011 and 2010, respectively

$ 868,155 $ 898,119 Land held for investment or future development 120,557 123,879 Residential lots 63,725 63,403 Other   738     2,994   Total properties 1,053,175 1,088,395   CASH AND CASH EQUIVALENTS 4,349 7,599 RESTRICTED CASH 14,544 15,521

NOTES AND OTHER RECEIVABLES, net of allowance for doubtful accounts of $5,646 and $6,287 in 2011 and 2010, respectively

50,405 48,395 INVESTMENT IN UNCONSOLIDATED JOINT VENTURES 179,149 167,108 OTHER ASSETS   35,510     44,264     TOTAL ASSETS $ 1,337,132   $ 1,371,282    

LIABILITIES AND EQUITY

NOTES PAYABLE $ 498,034 $ 509,509 ACCOUNTS PAYABLE AND ACCRUED LIABILITIES 35,710 32,388 DEFERRED GAIN 4,098 4,216 DEPOSITS AND DEFERRED INCOME   17,419     18,029   TOTAL LIABILITIES 555,261 564,142   COMMITMENTS AND CONTINGENT LIABILITIES   REDEEMABLE NONCONTROLLING INTERESTS 9,444 14,289   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 2011 and 2010

74,827 74,827

7.50% Series B cumulative redeemable preferred stock, $25 liquidation preference; 3,791,000 shares issued and outstanding in 2011 and 2010

94,775 94,775

Common stock, $1 par value, 250,000,000 shares authorized, 107,283,901 and 106,961,959 shares issued in 2011 and 2010, respectively

107,284 106,962 Additional paid-in capital 685,577 684,551 Treasury stock at cost, 3,570,082 shares in 2011 and 2010 (86,840 ) (86,840 ) Distributions in excess of cumulative net income   (136,075 )   (114,196 )   TOTAL STOCKHOLDERS’ INVESTMENT 739,548 760,079   Nonredeemable noncontrolling interests   32,879     32,772   TOTAL EQUITY   772,427     792,851     TOTAL LIABILITIES AND EQUITY $ 1,337,132   $ 1,371,282