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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 Ended Nine Months Ended
September 30, September 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 (10,837 ) 8,019 (57,496 ) 2,611
(LOSS) FROM UNCONSOLIDATED JOINT VENTURES AND GAIN ON SALE OF
INVESTMENT PROPERTIES
(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 (53,745 ) 10,600 (135,297 ) 15,641
INVESTMENT PROPERTIES
GAIN ON SALE OF INVESTMENT PROPERTIES, NET OF APPLICABLE INCOME 406 1,387 168,641 10,391
TAX PROVISION
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 applicable
income
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 $ 1,006,735 $ 853,450
and $182,050 in 2009 and 2008, respectively
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 48,123 51,267
accounts of $4,012 and $2,764 in 2009 and 2008, respectively
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 74,827 74,827
liquidation preference; 2,993,090 shares issued and outstanding in
2009 and 2008
7.50% Series B cumulative redeemable preferred stock, $25 94,775 94,775
liquidation preference; 3,791,000 shares issued and outstanding in
2009 and 2008
Common stock, $1 par value, 150,000,000 shares authorized, 102,540 54,922
102,539,783 and 54,922,173 shares issued in 2009 and 2008,
respectively
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
SOURCE: Cousins Properties Incorporated
Cousins Properties Incorporated James A. Fleming Executive Vice President and Chief Financial Officer 404-407-1150 jimfleming@cousinsproperties.com or Cameron Golden Director of Investor Relations and Corporate Communications 404-407-1984 camerongolden@cousinsproperties.com Web site address: www.cousinsproperties.com
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