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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q



þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, ~~2016~~2017

OR



o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 001-11312

COUSINS PROPERTIES INCORPORATED

(Exact name of registrant as specified in its charter)



GEORGIA (State or other jurisdiction of incorporation or organization)	58-0869052 (I.R.S. Employer Identification No.)
~~191~~3344 Peachtree ~~Street,~~Road NE, Suite ~~500,~~1800, Atlanta, Georgia (Address of principal executive offices)	~~30303-1740~~30326-4802 (Zip Code)
Former Address (191 Peachtree Street, Suite 500, Atlanta, Georgia 30308-1740)

(404) 407-1000

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer” ~~and~~, “smaller reporting company”, and "emerging growth company" in Rule 12b-2 of the Exchange Act.



Large accelerated filer þ	Accelerated filer o	Non-accelerated filer o	Smaller reporting company o
		(Do not check if a smaller reporting company)	Emerging growth company o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o No þ

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.



Class		Outstanding at July ~~22, 2016~~20, 2017
Common Stock, $1 par value per share		~~210,169,742~~419,992,589 shares

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FORWARD-LOOKING STATEMENTS

Certain matters contained in this report are “forward-looking statements” within the meaning of the federal securities laws and are subject to uncertainties and risks, as itemized in Item 1A included in the Annual Report on Form 10-K for the year ended December 31, ~~2015~~2016 and as itemized herein. These forward-looking statements include information about possible or assumed future results of the business and our financial condition, liquidity, results of operations, plans, and objectives. They also include, among other things, statements regarding subjects that are forward-looking by their nature, such as:

our business and financial strategy;

•our ability to obtain future ~~financing arrangements;~~financing;

•future acquisitions and ~~future~~ dispositions of operating assets;

•future acquisitions of land;

•future development and redevelopment opportunities;

•future dispositions of land and other non-core assets;

•future repurchases of common stock;

•projected operating results;

•market and industry trends;

•future distributions;

•projected capital expenditures;

•interest rates;

~~statements about~~ the ~~benefits~~impact of the ~~proposed transactions~~transaction involving us, ~~and~~ Parkway Properties, Inc. ("Parkway"), and Parkway, Inc. ("New Parkway"), including future financial and operating results, plans, objectives, expectations, and intentions;

all statements that address operating performance, events, or developments that we expect or anticipate will occur in the future — including statements relating to creating value for stockholders;

~~benefits~~impact of the ~~proposed~~ transactions with Parkway toand New Parkway on tenants, employees, stockholders, and other constituents of the combined ~~company;~~companies; and

•integrating Parkway with ~~us; and~~

~~the expected timetable for completing the proposed transactions with Parkway.~~us.

Any forward-looking statements are based upon management's beliefs, assumptions, and expectations of our future performance, taking into account information currently available. These beliefs, assumptions, and expectations may change as a result of possible events or factors, not all of which are known. If a change occurs, our business, financial condition, liquidity, and results of operations may vary materially from those expressed in forward-looking statements. Actual results may vary from forward-looking statements due to, but not limited to, the following:

the availability and terms of ~~capital and financing;~~capital;

the ability to refinance or repay indebtedness as it matures;

the failure of purchase, sale, or other contracts to ultimately close;

the failure to achieve anticipated benefits from acquisitions, ~~and~~ investments, or ~~from~~ dispositions;

the potential dilutive effect of common stock ~~offerings;~~or operating partnership unit issuances;

the failure to achieve benefits from the repurchase of common stock;

the availability of buyers and pricing with respect to the disposition of assets;

risks and uncertainties related to national and local economic conditions, the real estate industry, ~~in general,~~ and the commercial real estate markets in ~~particular;~~which we operate, particularly in Atlanta, Charlotte, and Austin where we have high concentrations of our annualized lease revenue;

changes to our strategy with regard to land and other non-core holdings that may require impairment losses to be recognized;

leasing risks, including the ability to obtain new tenants or renew expiring tenants, the ability to lease newly developed and/or recently acquired space, and the risk of declining leasing rates;

the adverse change in the financial condition of one or more of our major tenants;

volatility in interest rates and insurance rates;

competition from other developers or investors;

the risks associated with real estate developments (such as zoning approval, receipt of required permits, construction delays, cost overruns, and leasing risk);

the loss of key personnel;

the potential liability for uninsured losses, condemnation, or environmental issues;

the potential liability for a failure to meet regulatory requirements;

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 to meet regulatory requirements;

risks associated with litigation resulting from the ~~ability to consummate the proposed~~ transactions with Parkway and from liabilities or contingent liabilities assumed in the ~~timing of the closing of the proposed~~ transactions with Parkway;

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risks associated with ~~the ability to consummate the proposed spin-off~~any errors or omissions in financial or other information of Parkway ~~Inc., a company holding~~that has been previously provided to the ~~Houston assets of the Company and Parkway, and the timing of the closing of the proposed spin-off;~~

~~risks associated with the ability to list the common stock of Parkway, Inc. on the New York Stock Exchange following the proposed spin-off;~~

~~risks associated with the ability to consummate certain asset sales contemplated by Parkway and the timing of the closing of such proposed asset sales;~~

risks associated with the ability to consummate the proposed reorganization of certain assets and liabilities of Cousins and Parkway, including the contemplated structuring of the Company and Parkway, Inc. as “UPREITs” following the consummation of the proposed transactions with Parkway;

~~the failure to obtain any debt financing arrangements in connection with the proposed transactions with Parkway;~~

~~the ability to secure favorable interest rates on any borrowings incurred in connection with the proposed transactions with Parkway;~~

~~the impact of such indebtedness incurred in connection with the proposed transactions with Parkway;~~public;

the ability to successfully integrate our operations and employees in connection with the ~~proposed transaction~~transactions with Parkway and New Parkway;

the ability to realize anticipated benefits and synergies of the ~~proposed~~ transactions with Parkway and New Parkway;

potential changes to state, local, or federal regulations applicable to our business;

material changes in the dividend rates on securities or the ability to pay dividends on common shares or other securities;

potential changes to the tax ~~legislation;~~

~~changes~~laws impacting REITs and real estate in ~~demand for properties;~~

~~risks associated with the acquisition, development, expansion, leasing and management of properties;~~

~~risks associated with the geographic concentration of the Company, Parkway, or Parkway, Inc.;~~

the potential impact of announcement of the proposed transactions with Parkway or consummation of the proposed transactions with Parkway on relationships, including with tenants, employees, customers, and competitors;

~~the unfavorable outcome of any legal proceedings that have been or may be instituted against the Company, Parkway, Parkway, Inc. or any of its affiliates;~~general;

significant costs related to uninsured losses, condemnation, or environmental issues;

the amount of the costs, fees, expenses and charges related to the proposed transactions with Parkway and the actual terms of the financings that may be obtained in connection with the proposed transactions with Parkway; and

those additional risks and factors discussed in reports filed with the Securities and Exchange Commission ~~(“SEC”)~~ by the ~~Company, Parkway, and Parkway, Inc.~~Company.

The words “believes,” “expects,” “anticipates,” “estimates,” “plans,” “may,” “intend,” “will,” or similar expressions are intended to identify forward-looking statements. Although we believe that our plans, intentions, and expectations reflected in any forward-looking statements are reasonable, we can give no assurance that such plans, intentions, or expectations will be achieved. We undertake 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.

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PART I — FINANCIAL INFORMATION

Item 1. Financial Statements.

COUSINS PROPERTIES INCORPORATED AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except share and per share amounts)	COUSINS PROPERTIES INCORPORATED AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except share and per share amounts)							COUSINS PROPERTIES INCORPORATED AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except share and per share amounts)

	June 30, 2016				December 31, 2015			June 30, 2017				December 31, 2016
	(unaudited)							(unaudited)
Assets:
Real estate assets:
Operating properties, net of accumulated depreciation of $403,283 and $352,350 in 2016 and 2015, respectively	$	2,186,770			$	2,194,781
Operating properties, net of accumulated depreciation of $217,925 and $215,856 in 2017 and 2016, respectively								$	3,479,262			$	3,432,522
Projects under development	62,567				27,890			203,562				162,387
Land	17,768				17,829			4,221				4,221
	2,267,105				2,240,500			3,687,045				3,599,130
Real estate assets and other assets held for sale, net of accumulated depreciation and amortization of $7,200 in 2015	—				7,246

Cash and cash equivalents	946				2,003			16,420				35,687
Restricted cash	5,180				4,304			8,139				15,634
Notes and accounts receivable, net of allowance for doubtful accounts of $1,097 and $1,353 in 2016 and 2015, respectively	13,656				10,828
Notes and accounts receivable, net of allowance for doubtful accounts of $1,425 and $1,167 in 2017 and 2016, respectively								20,530				27,683
Deferred rents receivable	74,224				67,258			47,240				39,464
Investment in unconsolidated joint ventures	114,455				102,577			101,532				179,397
Intangible assets, net of accumulated amortization of $115,792 and $103,458 in 2016 and 2015, respectively	111,266				124,615
Intangible assets, net of accumulated amortization of $85,341 and $53,483 in 2017 and 2016, respectively								225,860				245,529
Other assets	36,163				35,989			29,280				29,083
Total assets	$	2,622,995			$	2,595,320		$	4,136,046			$	4,171,607
Liabilities:
Notes payable	$	777,485			$	718,810		$	1,019,619			$	1,380,920
Accounts payable and accrued expenses	56,971				71,739			128,772				109,278
Deferred income	34,158				29,788			34,743				33,304
Intangible liabilities, net of accumulated amortization of $31,473 and $26,890 in 2016 and 2015, respectively	55,009				59,592
Intangible liabilities, net of accumulated amortization of $21,543 and $12,227 in 2017 and 2016, respectively								80,466				89,781
Other liabilities	30,242				30,629			42,769				44,084
Liabilities of real estate assets held for sale	—				1,347
Total liabilities	953,865				911,905			1,306,369				1,657,367
Commitments and contingencies	—				—
Equity:
Stockholders' investment:
Preferred stock, $1 par value, 20,000,000 shares authorized, -0- shares issued and outstanding in 2016 and 2015	—				—
Common stock, $1 par value, 350,000,000 shares authorized, 220,500,503 and 220,255,676 shares issued in 2016 and 2015, respectively	220,501				220,256
Preferred stock, $1 par value, 20,000,000 shares authorized, 6,867,357 shares issued and outstanding in 2017 and 2016								6,867				6,867
Common stock, $1 par value, 700,000,000 shares authorized, 430,296,523 and 403,746,938 shares issued in 2017 and 2016, respectively								430,297				403,747
Additional paid-in capital	1,723,131				1,722,224			3,604,036				3,407,430
Treasury stock at cost, 10,329,082 and 8,742,181 shares in 2016 and 2015, respectively	(148,373		)		(134,630		)
Treasury stock at cost, 10,329,082 shares in 2017 and 2016								(148,373		)		(148,373		)
Distributions in excess of cumulative net income	(127,602		)		(124,435		)	(1,114,662		)		(1,214,114		)
Total stockholders' investment	1,667,657				1,683,415			2,778,165				2,455,557
Nonredeemable noncontrolling interests	1,473				—			51,512				58,683
Total equity	1,669,130				1,683,415			2,829,677				2,514,240
Total liabilities and equity	$	2,622,995			$	2,595,320		$	4,136,046			$	4,171,607

See accompanying notes.

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COUSINS PROPERTIES INCORPORATED AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited, in thousands, except per share amounts)


	Three Months Ended								Six Months Ended							Three Months Ended								Six Months Ended
	June 30,								June 30,							June 30,								June 30,
	2016				2015				2016				2015			2017				2016				2017				2016
Revenues:
Rental property revenues	$	90,735			$	96,177			$	179,211			$	186,216		$	114,007			$	46,454			$	226,524			$	91,807
Fee income	1,824				1,704				4,023				3,520			1,854				1,824				3,791				4,023
Other	129				22				705				143			3,174				27				8,600				417
	92,688				97,903				183,939				189,879			119,035				48,305				238,915				96,247
Costs and expenses:
Rental property operating expenses	38,681				41,387				74,290				79,340			41,501				19,526				83,026				37,330
Reimbursed expenses	798				717				1,668				1,828			907				798				1,772				1,668
General and administrative expenses	4,691				5,936				13,183				9,533			8,618				4,691				14,828				12,934
Interest expense	7,334				7,869				14,748				15,546			8,523				5,369				18,264				10,808
Depreciation and amortization	32,381				34,879				64,350				71,026			50,040				16,641				104,924				33,182
Acquisition and merger costs	2,424				2				2,443				85
Acquisition and transaction costs																246				2,424				2,177				2,443
Other	152				341				258				698			236				152				612				507
	86,461				91,131				170,940				178,056			110,071				49,601				225,603				98,872
Income from continuing operations before taxes, unconsolidated joint ventures, and sale of investment properties	6,227				6,772				12,999				11,823
Gain on extinguishment of debt																1,829				—				1,829				—
Income (loss) from continuing operations before unconsolidated joint ventures and gain (loss) on sale of investment properties																10,793				(1,296		)		15,141				(2,625		)
Income from unconsolidated joint ventures	1,784				1,761				3,618				3,372			40,320				1,784				40,901				3,618
Income from continuing operations before gain on sale of investment properties	8,011				8,533				16,617				15,195
Income from continuing operations before gain (loss) on sale of investment properties																51,113				488				56,042				993
Gain (loss) on sale of investment properties	(246		)		(576		)		13,944				530			119,832				(246		)		119,761				13,944
Income from continuing operations	7,765				7,957				30,561				15,725			170,945				242				175,803				14,937
Loss from discontinued operations:
Loss from discontinued operations	—				(6		)		—				(19		)
Loss on sale from discontinued operations	—				—				—				(551		)
	—				(6		)		—				(570		)
Income from discontinued operations																—				7,523				—				15,624
Net income	$	7,765			$	7,951			$	30,561			$	15,155		170,945				7,765				175,803				30,561
Net income attributable to noncontrolling interests																(2,856		)		—				(2,963		)		—
Net income available to common stockholders																$	168,089			$	7,765			$	172,840			$	30,561
Per common share information — basic and diluted:
Income from continuing operations	$	0.04			$	0.04			$	0.15			$	0.07		$	0.40			$	—			$	0.42			$	0.07
Income from discontinued operations	—				—				—				—			—				0.04				—				0.08
Net income	$	0.04			$	0.04			$	0.15			$	0.07		$	0.40			$	0.04			$	0.42			$	0.15
Weighted average shares — basic	210,129				216,630				210,516				216,599			419,402				210,129				411,137				210,516
Weighted average shares — diluted	210,362				216,766				210,687				216,753			427,180				210,362				419,227				210,687
Dividends declared per common share	$	0.080			$	0.080			$	0.160			$	0.160		$	0.06			$	0.08			$	0.18			$	0.16

See accompanying notes.

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COUSINS PROPERTIES INCORPORATED AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

Six Months Ended June 30, ~~2016~~2017 and ~~2015~~2016

(unaudited, in thousands)


																														Preferred Stock				Common Stock				Additional Paid-In Capital				Treasury Stock				Distributions in Excess of Net Income				Stockholders’ Investment				Nonredeemable Noncontrolling Interests				Total Equity
Balance December 31, 2016																														$	6,867			$	403,747			$	3,407,430			$	(148,373	)		$	(1,214,114	)		$	2,455,557			$	58,683			$	2,514,240
Net income																														—				—				—				—				172,840				172,840				2,963				175,803
Common stock issued pursuant to:
Common stock offering, net of issuance costs																														—				25,000				186,820				—				—				211,820				—				211,820
Director stock grants																														—				121				889				—				—				1,010				—				1,010
Stock based compensation																														—				232				(943		)		—				—				(711		)		—				(711		)
Spin-off of Parkway, Inc.																														—				—				—				—				562				562				—				562
Common stock redemption by unit holders																														—				1,203				8,865				—				—				10,068				(10,068		)		—
Amortization of stock options and restricted stock, net of forfeitures																														—				(6		)		975				—				—				969				—				969
Contributions from nonredeemable noncontrolling interest																														—				—				—				—				—				—				900				900
Distributions to nonredeemable noncontrolling interest																														—				—				—				—				—				—				(966		)		(966		)
Common dividends ($0.18 per share)																														—				—				—				—				(73,950		)		(73,950		)		—				(73,950		)
Balance June 30, 2017																														$	6,867			$	430,297			$	3,604,036			$	(148,373	)		$	(1,114,662	)		$	2,778,165			$	51,512			$	2,829,677
		Common Stock				Additional Paid-In Capital				Treasury Stock				Distributions in Excess of Net Income				Stockholders’ Investment				Nonredeemable Noncontrolling Interests				Total Equity
Balance December 31, 2015		$	220,256			$	1,722,224			$	(134,630	)		$	(124,435	)		$	1,683,415			$	—			$	1,683,415			$	—			$	220,256			$	1,722,224			$	(134,630	)		$	(124,435	)		$	1,683,415			$	—			$	1,683,415
Net income		—				—								30,561				30,561				—				30,561				—				—				—				—				30,561				30,561				—				30,561
Common stock issued pursuant to stock based compensation		258				81				—				—				339				—				339				—				258				81				—				—				339				—				339
Amortization of stock options and restricted stock, net of forfeitures		(13		)		826				—				—				813				—				813				—				(13		)		826				—				—				813				—				813
Contributions from nonredeemable noncontrolling interests		—				—				—				—				—				1,473				1,473				—				—				—				—				—				—				1,473				1,473
Repurchase of common stock		—				—				(13,743		)		—				(13,743		)		—				(13,743		)		—				—				—				(13,743		)		—				(13,743		)		—				(13,743		)
Common dividends ($0.16 per share)		—				—				—				(33,728		)		(33,728		)		—				(33,728		)		—				—				—				—				(33,728		)		(33,728		)		—				(33,728		)
Balance June 30, 2016		$	220,501			$	1,723,131			$	(148,373	)		$	(127,602	)		$	1,667,657			$	1,473			$	1,669,130			$	—			$	220,501			$	1,723,131			$	(148,373	)		$	(127,602	)		$	1,667,657			$	1,473			$	1,669,130

Balance December 31, 2014		$	220,083			$	1,720,972			$	(86,840	)		$	(180,757	)		$	1,673,458			$	—			$	1,673,458
Net income		—				—				—				15,155				15,155				—				15,155
Common stock issued pursuant to stock based compensation		173				(244		)		—				—				(71		)		—				(71		)
Amortization of stock options and restricted stock, net of forfeitures		—				808				—				—				808				—				808
Common dividends ($0.16 per share)		—				—				—				(34,677		)		(34,677		)		—				(34,677		)
Other		—				24				—				—				24				—				24
Balance June 30, 2015		$	220,256			$	1,721,560			$	(86,840	)		$	(200,279	)		$	1,654,697			$	—			$	1,654,697

See accompanying notes.

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COUSINS PROPERTIES INCORPORATED AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, in thousands)


	Six Months Ended June 30,							Six Months Ended June 30,
	2016				2015			2017				2016
Cash flows from operating activities:
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	30,561			$	15,155		$	175,803			$	30,561
Adjustments to reconcile net income to net cash provided by operating activities:
(Gain) loss on sale of investment properties, including discontinued operations	(13,944		)		21
Gain on sale of investment properties								(119,761		)		(13,944		)
Depreciation and amortization, including discontinued operations	64,350				70,381			104,924				64,350
Amortization of deferred financing costs	699				716
Amortization of deferred financing costs and premium/discount on notes payable								(2,948		)		699
Stock-based compensation expense, net of forfeitures	1,153				808			1,979				1,153
Effect of certain non-cash adjustments to rental revenues	(9,656		)		(15,047		)	(24,057		)		(9,656		)
Income from unconsolidated joint ventures	(3,618		)		(3,372		)	(40,901		)		(3,618		)
Operating distributions from unconsolidated joint ventures	4,209				1,820			39,982				4,209
Gain on extinguishment of debt								(1,829		)		—
Changes in other operating assets and liabilities:
Change in other receivables and other assets, net	(5,188		)		(10,106		)	3,108				(5,188		)
Change in operating liabilities	(8,472		)		(15,311		)	(10,063		)		(8,472		)
Net cash provided by operating activities	60,094				45,065			126,237				60,094
Cash flows from investing activities:
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from investment property sales	21,088				9,164			167,118				21,088
Property acquisition, development, and tenant asset expenditures	(75,594		)		(73,344		)	(151,150		)		(75,594		)
Purchase of tenant in common interest								(13,382		)		—
Collection of notes receivable								5,161				—
Investment in unconsolidated joint ventures	(22,281		)		(3,443		)	(8,266		)		(22,281		)
Distributions from unconsolidated joint ventures	4,099				1,649			40,939				4,099
Change in notes receivable and other assets	—				772
Change in restricted cash	(876		)		(652		)	7,495				(876		)
Net cash used in investing activities	(73,564		)		(65,854		)
Cash flows from financing activities:
Net cash provided by (used in) investing activities								47,915				(73,564		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from credit facility	163,700				114,100			457,000				163,700
Repayment of credit facility	(100,700		)		(52,300		)	(497,000		)		(100,700		)
Proceeds from issuance of notes payable								100,000				—
Repayment of notes payable	(4,589		)		(4,371		)	(413,726		)		(4,589		)
Payment of deferred financing costs								(2,030		)		—
Shares withheld for payment of taxes on restricted stock vesting								(701		)		—
Common stock issued, net of expenses	—				9			211,820				—
Contributions from noncontrolling interests	1,473				—			900				1,473
Distributions to nonredeemable noncontrolling interests								(966		)		—
Repurchase of common stock	(13,743		)		—			—				(13,743		)
Common dividends paid	(33,728		)		(34,677		)	(48,815		)		(33,728		)
Net cash provided by financing activities	12,413				22,761
Net increase in cash and cash equivalents	(1,057		)		1,972
Cash and cash equivalents at beginning of period	2,003				—
Cash and cash equivalents at end of period	$	946			$	1,972
Other								99				—
Net cash provided by (used in) financing activities								(193,419		)		12,413
NET DECREASE IN CASH AND CASH EQUIVALENTS								(19,267		)		(1,057		)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD								35,687				2,003
CASH AND CASH EQUIVALENTS AT END OF PERIOD								$	16,420			$	946

Interest paid, net of amounts capitalized	$	14,131			$	15,477		$	22,721			$	14,131

Significant non-cash transactions:
Transfer from investment in unconsolidated joint ventures to operating properties								68,390				—
Transfer from projects under development to operating properties								58,928				—
Common stock dividends declared								25,212				—
Transfer from investment in unconsolidated joint ventures to projects under development								—				5,880
Change in accrued property acquisition, development, and tenant asset expenditures	$	3,891			$	416		(1,110		)		3,891
Transfer from investment in unconsolidated joint ventures to projects under development	5,880				—
Transfer from operating properties to real estate assets and other assets held for sale	—				86,775
Transfer from operating properties to liabilities of real estate assets held for sale	—				3,132

See accompanying notes.

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COUSINS PROPERTIES INCORPORATED AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, ~~2016~~2017

(Unaudited)

1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

Description of Business

Cousins Properties Incorporated (“Cousins”), a Georgia corporation, is a self-administered and self-managed real estate investment trust (“REIT”). Cousins conducts substantially all of its operations through Cousins Properties LP ("CPLP"). Cousins owns approximately 98% of CPLP and consolidates CPLP. Cousins TRS Services LLC ("CTRS"), which is wholly owned by CPLP, is a taxable entity ~~wholly owned by and consolidated with Cousins. CTRS~~which owns and manages its own real estate portfolio and performs certain real estate related services for other parties. ~~All of the entities included in the condensed consolidated financial statements~~Cousins, CPLP, CTRS, and their subsidiaries are hereinafter referred to collectively as ~~the "Company.~~"the Company."

The Company develops, acquires, leases, manages, and owns ~~primarily~~ Class A office ~~assets~~ and ~~opportunistic~~ mixed-use properties in Sunbelt markets with a focus on Arizona, Florida, Georgia, ~~Texas,~~North Carolina, and ~~North Carolina.~~Texas. Cousins has elected to be taxed as a ~~real estate investment trust (“REIT”)~~REIT and intends to, among other things, distribute ~~90%~~100% of its net taxable income to stockholders, thereby eliminating any liability for federal income taxes under current law. Therefore, the results included herein do not include a federal income tax provision for Cousins.

Basis of Presentation

The condensed consolidated financial statements are unaudited and were prepared by the Company in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”). In the opinion of management, these financial statements reflect all adjustments necessary (which adjustments are of a normal and recurring nature) for the fair presentation of the Company's financial position as of June 30, ~~2016~~2017 and the results of operations for the three and six months ended June 30, ~~2016~~2017 and ~~2015~~2016. The results of operations for the three and six months ended June 30, ~~2016~~2017 are not necessarily indicative of results expected for the full year. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to the rules and regulations of the SEC. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, ~~2015.~~2016. The accounting policies employed are substantially the same as those shown in note 2 to the consolidated financial statements included ~~in such Form 10-K.~~therein.

For the three and six months ended June 30, ~~2016~~2017 and ~~2015~~2016, there were no items of other comprehensive income. Therefore, no presentation of comprehensive income is required.

The Company evaluates all partnerships, joint ventures and other arrangements with variable interests to determine if the entity or arrangement qualifies as a variable interest entity (“VIE”), as defined in the FinancialRecently Issued Accounting Standards Board's ("FASB") Accounting Standards Codification ("ASC"). If the entity or arrangement qualifies as a VIE and the Company is determined to be the primary beneficiary, the Company is required to consolidate the assets, liabilities, and results of operations of the VIE. In the first quarter of 2016, the Company adopted Accounting Standards Update ("ASU") 2015-02, "Amendments to the Consolidation Analysis." There were no changes to the accounting treatment of joint ventures or other arrangements as a result of the new guidance.

In ~~March 2016,~~May 2014, the FASB issued ASU ~~2016-09, "Improvements to Employee Share-Based Payment Accounting.~~2014-09, "Revenue from Contracts with Customers." Under ~~this~~the new guidance, companies will recognize revenue when the seller satisfies a performance obligation, which would be when the buyer takes control of the good or service. ASU 2015-14, "Revenue from Contracts with Customers," was subsequently issued modifying the additional paid-in capital pool is eliminated, and an entity recognizes all excess tax benefits and tax deficiencies as income tax expense or benefit in the income statement. This ASU also eliminated the requirementeffective date to defer recognition of an excess tax benefit until all benefits are realized through a reduction to taxes payable. This ASU also changes the treatment of excess tax benefits as operating cash flows in the statement of cash flows. This ASU is effective for fiscal yearsperiods beginning after December 15, ~~2016~~2017, with early adoption ~~permitted.~~permitted for periods beginning after December 15, 2016. The standard allows for either "full retrospective" adoption, meaning the standard is applied to all of the periods presented, or "modified retrospective" adoption, meaning the standard is applied only to the most recent period presented in the financial statements. The Company expects to adopt this guidance effective January 1, ~~2017,~~2018 and is ~~currently assessing~~in the ~~potential~~process of analyzing the impact of ~~adopting~~ the adoption of this guidance. The new ~~guidance.~~guidance specifically excludes revenue associated with lease contracts. This new guidance could result in different amounts of revenue being recognized and could result in revenue being recognized in different reporting periods than under the current guidance; however, the Company expects that the majority of its non-lease revenues will continue to be recognized during the periods in which services are performed. The Company expects to adopt this guidance using the "modified retrospective" method effective January 1, 2018. The Company is still analyzing potential disclosures that will clearly identify the sources of revenue and the periods over which each is recognized.

In February 2016, the ~~Financial Accounting Standards Board~~FASB issued ASU 2016-02, "Leases," which amends the existing standards for lease accounting by requiring lessees to recognize most leases on their balance sheets and making targeted changes to lessor accounting and reporting. The new standard will require lessees to record a right-of-use asset and a lease liability for all leases with a term of greater than 12 months and classify such leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase of the leased asset by the lessee. This classification will determine whether the lease expense is recognized based on an effective interest method (finance leases) or on a straight-line basis over the term of the lease (operating leases). Leases with a term of 12 months or less will be accounted for similar to existing guidance for operating leases. The new standard requires lessors to account for leases using an approach that is substantially equivalent to existing guidance for sales-type leases, direct financing leases, and operating leases. ASU 2016-02 supersedes previous leasing standards. The guidance is effective for the fiscal years beginning after December 15, 2018, with early adoption permitted. The Company expects to adopt

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this guidance using the "modified retrospective" method effective January 1, 2019, and is currently assessing the potential impact of adopting the

8

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new guidance. ~~The impact of the adoption of this new guidance, if any, will be recorded retrospectively to all financial statements presented.~~

In ~~May 2014,~~August 2016, the FASB issued ASU ~~2014-09, "Revenue from Contracts~~2016-15, "Classification of Certain Cash Receipts and Cash Payments" ("ASU 2016-15") which updated ASC Topic 230, "Statement of Cash Flows." ASU 2016-15 clarifies guidance on the classification of certain cash receipts and payments in the statement of cash flows to reduce diversity in practice with ~~Customers." Under~~respect to (i) debt prepayment or debt extinguishment costs, (ii) settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the ~~new guidance, companies will recognize revenue when the seller satisfies a performance obligation, which would be when the buyer takes control~~effective interest rate of the ~~good or service. This new guidance could result~~borrowing, (iii) contingent consideration payments made after a business combination, (iv) proceeds from the settlement of insurance claims, (v) proceeds from the settlement of corporate-owned life insurance policies, including bank-owned life insurance policies, (vi) distributions received from equity method investees, (vii) beneficial interests in ~~different amounts~~securitization transactions, and (viii) separately identifiable cash flows and application of ~~revenue being recognized~~the predominance principle. ASU 2016-15 is effective for interim and ~~could result in revenue being recognized in different~~annual reporting periods than under the current guidance. The new guidance specifically excludes revenue associated with lease contracts. ASU 2015-14, "Revenue from Contracts with Customers," was subsequently issued modifying the effective date to periodsin fiscal years beginning after December 15, 2017, with early adoption ~~permitted~~permitted. The Company will adopt this ASU in 2018.

In November 2016, the FASB issued ASU 2016-18, "Restricted Cash" ("ASU 2016-18") which updated ASC Topic 230, "Statement of Cash Flows." ASU 2016-18 will require companies to include restricted cash and restricted cash equivalents with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. This update is effective for interim and annual reporting periods in fiscal years beginning after December 15, ~~2016. The standard allows for either "full retrospective"~~2017, with early adoption ~~meaning~~permitted.

Effective January 1, 2017, the ~~standard~~Company adopted ASU 2016-09, "Improvements to Employee Share-Based Payment Accounting." Under this ASU, the additional paid-in capital pool is ~~applied~~eliminated, and an entity recognizes all excess tax benefits and tax deficiencies as income tax expense or benefit in the income statement. This ASU also eliminated the requirement to defer recognition of an excess tax benefit until all benefits are realized through a reduction to taxes payable. In the first quarter of 2017, the Company changed the treatment of excess tax benefits as operating cash flows in the statement of cash flows. This ASU also stipulates that cash payments to tax authorities in connection with shares withheld to meet statutory tax withholding requirements be presented as a financing activity in the statement of cash flows. This ASU was adopted prospectively effective January 1, 2017; therefore, prior periods ~~presented, or "modified retrospective" adoption, meaning the standard is applied only~~have not been restated to conform to the current period presentation.

In January 2017, the FASB issued ASU 2017-01, "Clarifying the Definition of a Business," which provides a more narrow definition of a business to be used in determining the accounting treatment of an acquisition. As a result, many acquisitions that previously qualified as business combinations will be treated as asset acquisitions. For asset acquisitions, acquisition costs may be capitalized, and the purchase price may be allocated on a relative fair value basis. ASU 2017-01 is effective prospectively for the Company on January 1, 2018, with early adoption permitted. The Company expects that most ~~recent period presented in~~of its future acquisitions will qualify as asset acquisitions.

In February 2017, the ~~financial statements.~~ FASB issued ASU No. 2017-05, “Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets” (“ASU 2017-05”). ASU 2017-05 updates the definition of an “in substance nonfinancial asset” and clarifies the derecognition guidance for nonfinancial assets to conform with the new revenue recognition standard. The Company is currently assessing ~~this guidance for future implementation and~~the potential impact that the adoption of ~~adoption.~~ASU 2017-05 will have on its consolidated financial statements. This ASU is effective for interim and annual reporting periods in fiscal years beginning after December 15, 2017. The Company expects to adopt this guidance using the "modified retrospective" method effective January 1, 2018.

In May 2017, FASB issued ASU 2017-09, "Scope of Modification Accounting", which amends the ~~first quarter~~scope of 2016, the Company adopted ASU 2015-03, "Simplifying the Presentation of Debt Costs" ("ASU 2015-03"). In accordance with ASU 2015-03, the Company began recording deferred financing costs related to its mortgage notes payable as a reduction in the carrying amount of its notes payablemodification accounting for share-based payment arrangements and provides guidance on the condensed consolidated balance sheets. The Company reclassified $2.5 million in deferred financing costs from other assets to notes payable in its December 31, 2015 consolidated balance sheet to conformtypes of changes to the ~~current period's presentation. Deferred financing costs related~~terms or conditions of share-based payment awards to ~~the Company’s unsecured revolving credit facility continue~~which an entity would be required to ~~be included~~apply modification accounting under ASC 718. This update is effective for interim and annual reporting periods in ~~other assets within the Company’s balance sheets in accordance~~fiscal years beginning after December 15, 2017, with ~~ASU 2015-15 "Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements."~~

Certain prior year amounts have been reclassified to conform with current year presentation on the condensed consolidated statements of operations and the condensed consolidated statements of equity. Separation expenses on the condensed consolidated statements of operations are now included in general and administrative expenses. On the condensed consolidated statements of equity, all components of common stock issued pursuant to stock based compensation are aggregated into one line item. These changes do not affect the previously reported condensed consolidated statements of operations or the condensed consolidated statements of equity for any period.early adoption permitted.

2. ~~MERGER~~REAL ESTATE TRANSACTIONS

On June 15, 2017, The American Cancer Society Center (the “ACS Center”), a 996,000 square foot office building in Atlanta, Georgia that was included in the Company's Atlanta/Office operating segment, was sold for a gross purchase price of $166.0 million. The Company recognized a net gain of $119.8 million on the sale of the ACS Center. The associated debt was repaid on the date of sale.

3. TRANSACTIONS WITH PARKWAY PROPERTIES, INC.

On ~~April 28,~~October 6, 2016, pursuant to the ~~Company and Parkway Properties, Inc.(“Parkway”) entered into an~~ Agreement and Plan of Merger, ~~(the~~dated April 28, 2016, (as amended or supplemented from time to time, the “Merger Agreement”), ~~pursuant to which~~by and among Cousins, Parkway ~~will merge~~Properties, Inc. ("Parkway"), and subsidiaries of Cousins and Parkway, Parkway merged with and into ~~Clinic Sub Inc.,~~ a ~~wholly owned~~wholly-owned subsidiary of the Company (the ~~“Merger”~~"Merger")~~. In addition,~~, with this subsidiary continuing as the ~~Merger Agreement provides that the Company will separate the portion~~surviving corporation of the combined businesses relating to the ownership of real properties in Houston (the "Spin-Off") from the remainder of the combined business by distributing pro rata to its stockholders all of the outstanding shares of common stock to Parkway, Inc. The Company will retain all of the shares of a class of non-voting preferred stock of Parkway, Inc. uponMerger. In accordance with the terms and ~~subject to the~~ conditions of the Merger Agreement. The Company expects that the Spin-Off will be treated for tax purposes as a distribution to the Company’s stockholders equal to the fair market value of the distributed Parkway, Inc. shares. After the Spin-Off, Parkway, Inc. will be a separate, publicly-traded entity, and both the Company and Parkway, Inc. intend to operate prospectively as umbrella partnership real estate investment trusts (“UPREITs”).

Pursuant to the Merger Agreement, upon closing of the Merger, each share of Parkway common stock issued and outstanding will convert into the right to receive 1.63 (the “Exchange Ratio”) shares of newly issued shares of common stock, par value $1 per share, of the Company. In addition, each share of Parkway limited voting stock will be converted into the right to receive a number of newly issued shares of limited voting preferred stock of the Company, equal to the Exchange Ratio, having terms materially unchanged from the terms of the Parkway limited voting stock prior to the Merger. Each share of Parkway equity-based compensation awards will also be converted at the Exchange Ratio into equity awards of the Company. Limited partnership units of Parkway LP, Parkway’s umbrella partnership, will be entitled to redeem or exchange their partnership interest for the Company’s common stock at the Exchange Ratio.

The respective boards of directors (the “Board of Directors”) of the Company and Parkway have unanimously approved the Merger Agreement and have recommended that their respective stockholders approve the Merger.

The closing of the Merger is subject to certain conditions, including: (1) the receipt of Parkway Stockholder Approval; (2) the receipt of Company Stockholder Approval; (3) the Spin-Off being fully ready to be consummated contemporaneously with the Merger; (4) approval for listing on the New York Stock Exchange (“NYSE”) of the Company common stock to be issued in the Merger or reserved for issuance in connection therewith; (5) no injunction or law prohibiting the Merger; (6) accuracy of each party’s representations, subject in most cases to materiality or material adverse effect qualifications; (7) material compliance with each party’s covenants; (8) receipt by each of the Company and Parkway of an opinion to the effect that the Merger will qualify as a “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the

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~~“Code”),~~Agreement, each outstanding share of Parkway common stock and each outstanding share of ~~an opinion that each~~Parkway limited voting stock was converted into 1.63 shares of the Company and Parkway will qualify as a real estate investment trust (“REIT”) under the Code; and (9) effectiveness of the registration statement that will contain the joint proxy statement/prospectus sentCousins common stock or limited voting preferred stock, respectively.

On October 7, 2016, pursuant to ~~Company and Parkway stockholders.~~

The Merger Agreement contains customary representations and warranties by each party. The Company and Parkway have also agreed to various customary covenants and agreements, including, among others, to conduct their business in the ordinary course consistent with past practice during the period between the execution of the Merger Agreement and the ~~date~~Separation, Distribution and Transition Services Agreement, dated as of ~~closing,~~October 5, 2016 (the "Separation Agreement"), by and among Cousins, Parkway, Parkway, Inc. ("New Parkway"), and certain other parties thereto, Cousins distributed pro rata to ~~not engage in certain kinds~~its common and limited voting preferred stockholders, including legacy Parkway common and limited voting stockholders, all of ~~transactions during this period~~the outstanding shares of common and ~~to maintain REIT status. The parties are subject to~~limited voting stock, respectively, of New Parkway, a ~~customary “no-shop” provision~~newly-formed entity that ~~requires them to cease discussions or solicitations with respect to alternate transactions and subjects them to certain restrictions in considering and negotiating alternate transactions.~~

~~Additionally, Parkway has agreed to use commercially reasonable efforts to sell certain of its properties prior~~contains the combined businesses relating to the ~~closing date, upon~~ownership of real properties in Houston, Texas and certain other businesses of Parkway (the "Spin-Off"). In the ~~terms and subject to the conditions~~Spin-Off, Cousins distributed one share of New Parkway common or limited voting stock for every eight shares of common or limited voting preferred stock of Cousins held of record as of the ~~Merger Agreement. The Company~~close of business on October 6, 2016. New Parkway is now an independent public company, and its common stock is listed under the symbol "PKY" on the New York Stock Exchange.

As a result of the Spin-Off, the historical results of operations of the Company's properties that were contributed to New Parkway have ~~also agreed that, prior to~~been presented as discontinued operations in the ~~closing, each may continue to pay their regular quarterly dividends, but may not increase the amounts, except to the extent required to maintain REIT status.~~consolidated statements of operations. The ~~parties will coordinate record and payment dates for all pre-closing dividends.~~

~~The Merger Agreement provides that, at the effective time~~following table includes a summary of ~~the Merger, the Board of Directors~~discontinued operations of the Company will consist of nine members, including five individuals to be selected by the current members of the Board of Directors of the Company and four individuals to be selected by the current members of the Board of Directors of Parkway. One of Parkway’s four directors will be selected by TPG Pantera VI (“TPG”) and TPG Management (collectively with TPG, the “TPG Parties”), pursuant to the TPG Parties’ stockholders agreement entered into with the Company.

~~The Merger Agreement contains certain termination rights~~ for the ~~Company~~three and Parkway. The Merger Agreement can be terminated by either party (1) by mutual written consent; (2) if the Merger has not been consummated by an outside date of December 31, 2016 (which either party may extend to March 31, 2017 if the only closing condition that has not been met is that related to the readiness of the Spin-Off ); (3) if there is a permanent, non-appealable injunction or law restraining or prohibiting the consummation of the Merger; (4) if either party’s stockholders fail to approve the transactions; (5) if the other party’s Board of Directors changes its recommendation in favor of the transactions; (6) if the other party has materially breached its non-solicit covenant, subject to a cure period; (7) in order to enter into a superior proposal (as defined in the Merger Agreement, subject to compliance with certain terms and conditions included in the Merger Agreement); or (8) if the other party has breached its representations or covenants in a way that prevents satisfaction of a closing condition, subject to a cure period.

If the Merger Agreement is terminated because (1) a party’s Board of Directors changes its recommendation in favor of the transactions contemplated by the Merger Agreement; (2) a party terminates the agreement to enter into a superior proposal; (3) a party breaches its non-solicit covenant; or (4) a party consummates or enters into an agreement for an alternative transaction within twelve months following termination under certain circumstances, such party must pay a termination fee of the lesser of $65 million or the maximum amount that could be paid to the other party without causing it to fail to meet the REIT requirements for such year. The Merger Agreement also provides that a party must pay the other party an expense reimbursement of the lesser of $20 million and the maximum amount that can be paid to the other party without causing it to fail to meet the REIT requirements for such year, if the Merger Agreement is terminated because such party’s stockholders vote against the transactions contemplated by the Merger Agreement. Any unpaid amount of the foregoing fees (due to limitations of REIT requirements) will be escrowed and paid out over a five-year period. The expense reimbursement will be set off against the termination fee if the termination fee later becomes payable.

In connection with the proposed transaction, Cousins has filed an amended registration statement on Form S-4 (File No. 333-211849), declared effective by the SEC on July 22, 2016, that includes a joint proxy statement of Cousins and Parkway that also constitutes a prospectus of Cousins.

~~The Merger and Spin-Off are currently anticipated to close in the fourth quarter of 2016. During the three~~six months ended June 30, 2016 ~~the Company incurred $2.4 million in merger-related expenses.~~(in thousands):

3. ~~REAL ESTATE TRANSACTIONS~~

~~During the first quarter of 2016, the Company sold 100 North Point Center East, a 129,000 square foot office building in Atlanta, Georgia for a gross sales price of $22.0 million.~~



		Three Months Ended June 30, 2016				Six Months Ended June 30, 2016
		Three Months Ended June 30, 2016				Six Months Ended June 30, 2016
Rental property revenues		$	44,281			$	87,404
Rental property operating expenses		(19,155		)		(36,960		)
Other revenues		102				288
Interest expense		(1,965		)		(3,940		)
Depreciation and amortization		(15,740		)		(31,168		)
Income from discontinued operations		$	7,523			$	15,624

Cash provided by operating activities		$	23,253			$	17,012
Cash used in investing activities		$	(9,375	)		$	(18,112	)

4. INVESTMENT IN UNCONSOLIDATED JOINT VENTURES

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The Company describes its investments in unconsolidated joint ventures in note 56 of notes to consolidated financial statements in its Annual Report on Form 10-K for the year ended December 31, ~~2015.~~2016. The following table summarizes balance sheet data of the Company's unconsolidated joint ventures as of June 30, ~~2016~~2017 and December 31, ~~2015~~2016 (in thousands):


	Total Assets								Total Debt								Total Equity								Company’s Investment								Total Assets								Total Debt								Total Equity								Company’s Investment
SUMMARY OF FINANCIAL POSITION:	2016				2015				2016				2015				2016				2015				2016				2015				2017				2016				2017				2016				2017				2016				2017				2016
Terminus Office Holdings	$	273,890			$	277,444			$	209,588			$	211,216			$	51,466			$	56,369			$	26,631			$	29,110			$	267,747			$	268,242			$	205,454			$	207,545			$	51,112			$	49,476			$	25,384			$	25,686
EP I LLC	81,838				83,115				58,030				58,029				21,716				24,172				20,218				21,502				1,760				78,537				—				58,029				1,333				18,962				783				18,551
EP II LLC	68,926				70,704				44,494				40,910				22,913				24,331				18,144				19,118				520				67,754				—				44,969				239				21,743				88				17,606
Carolina Square Holdings LP	34,386				15,729				—				—				27,890				12,085				16,874				6,782
Charlotte Gateway Village, LLC	121,452				123,531				8,099				17,536				110,502				104,336				11,190				11,190				125,819				119,054				—				—				121,544				116,809				14,163				11,796
HICO Victory Center LP	13,661				13,532				—				—				13,656				13,229				9,365				9,138				14,145				14,124				—				—				14,141				13,869				9,632				9,506
Carolina Square Holdings LP																																	88,571				66,922				50,529				23,741				34,087				34,173				18,752				18,325
CL Realty, L.L.C.																																	7,989				8,047				—				—				7,915				7,899				2,874				3,644
DC Charlotte Plaza LLLP	14,293				—				—				—				13,754				—				7,376				—				30,780				17,940				—				—				24,209				17,073				12,528				8,937
CL Realty, L.L.C.	7,829				7,872				—				—				7,726				7,662				3,560				3,515
Temco Associates, LLC	5,311				5,284				—				—				5,192				5,133				1,097				977				4,398				4,368				—				—				4,294				4,253				854				829
Wildwood Associates	16,337				16,419				—				—				16,298				16,354				(1,150		)	(1)	(1,122		)	(1)	16,380				16,351				—				—				16,262				16,314				(1,169		)	(1)	(1,143		)	(1)
Crawford Long - CPI, LLC	29,405				29,143				73,561				74,286				(46,516		)		(46,238		)		(22,160		)	(1)	(22,021		)	(1)	28,400				27,523				72,070				72,822				(45,106		)		(45,928		)		(21,455		)	(1)	(21,866		)	(1)
111 West Rio Building																																	—				59,399				—				12,852				—				32,855				—				52,206
Courvoisier Centre JV, LLC																																	181,633				172,197				106,500				106,500				68,400				69,479				11,588				11,782
HICO Avalon II, LLC																																	5,237				—				—				—				5,237				—				3,928				—
AMCO 120 WT Holdings, LLC																																	11,591				10,446				—				—				11,127				9,136				617				184
Other	—				2,107				—				—				—				1,646				—				1,245				—				—				—				—				—				—				341				345
	$	667,328			$	644,880			$	393,772			$	401,977			$	244,597			$	219,079			$	91,145			$	79,434			$	784,970			$	930,904			$	434,553			$	526,458			$	314,794			$	366,113			$	78,908			$	156,388

(1) Negative balances are included in deferred income on the balance sheets.

The following table summarizes statement of operations information of the Company's unconsolidated joint ventures for the six months ended June 30, ~~2016~~2017 and ~~2015~~2016 (in thousands):

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	Total Revenues								Net Income (Loss)								Company's Share of Income (Loss)							Total Revenues								Net Income (Loss)								Company's Share of Income (Loss)
SUMMARY OF OPERATIONS:	2016				2015				2016				2015				2016				2015			2017				2016				2017				2016				2017				2016
Terminus Office Holdings	$	20,978			$	19,638			$	2,597			$	1,139			$	1,298			$	570		$	21,908			$	20,978			$	3,178			$	2,597			$	1,769			$	1,298
EP I LLC	5,991				6,218				1,168				1,480				951				1,112			4,103				5,991				44,929				1,168				28,525				951
EP II LLC	2,044				—				(1,018		)		—				(823		)		—			2,643				2,044				12,967				(1,018		)		9,725				(823		)
Charlotte Gateway Village, LLC	17,477				16,913				7,263				6,225				987				589			13,380				17,477				4,734				7,263				2,367				987
HICO Victory Center LP	169				—				162				—				81				—			171				169				171				162				114				81
Carolina Square Holdings LP																								40				—				(94		)		—				—				—
CL Realty, L.L.C.	246				469				64				243				44				130			2,599				246				2,415				64				430				44
DC Charlotte Plaza LLLP	—				—				33				—				18				—			2				—				2				33				2				18
Temco Associates, LLC	147				1,144				79				435				119				242			80				147				41				79				25				119
Wildwood Associates	—				—				(56		)		(58		)		(28		)		(30		)	—				—				(51		)		(56		)		(26		)		(28		)
Crawford Long - CPI, LLC	6,028				6,139				1,346				1,446				673				728			6,033				6,028				1,516				1,346				758				673
111 West Rio Building																								—				—				—				—				(2,593		)		—
Courvoisier Centre JV, LLC																								6,554				—				(1,083		)		—				(195		)		—
HICO Avalon II, LLC																								—				—				—				—				—				—
AMCO 120 WT Holdings, LLC																								—				—				(12		)		—				—				—
Other	—				12				—				(181		)		298				31			—				—				—				—				—				298
	$	53,080			$	50,533			$	11,638			$	10,729			$	3,618			$	3,372		$	57,513			$	53,080			$	68,713			$	11,638			$	40,901			$	3,618

On ~~March 29, 2016,~~May 3, 2017, EP I, LLC and EP II, LLC sold the properties that they owned for a ~~50-50~~combined gross sales price of $199.0 million. After repayment of debt, the Company received a distribution of $70.0 million and recognized a gain of $37.9 million which is recorded in income from unconsolidated joint ventures.

In June 2017, HICO Avalon II, LLC ("Avalon II"), a joint venture ~~named DC Charlotte Plaza LLLP was formed~~ between the Company and ~~Dimensional Fund Advisors~~Hines Avalon II Investor, LLC ("~~DFA"~~Hines II") was formed for the purpose of acquiring and potentially developing ~~and constructing DFA's 229,000 square foot regional headquarters~~an office building in ~~Charlotte, North Carolina. Each partner contributed $6.6 million~~Alpharetta, Georgia. Pursuant to the joint venture agreement, all predevelopment expenditures are funded 75% by Cousins and 25% by Hines II. As of June 30, 2017, the Company has accounted for its investment in ~~pre-development costs upon formation~~Avalon II using the equity method as the Company does not currently control the activities of the venture. If Avalon II commences construction, subsequent development expenditures will be funded 90% by Cousins and 10% by Hines II. Additionally, Cousins will have control over the operational aspects of the venture and the Company expects to consolidate the venture at that time.

5. INTANGIBLE ASSETS

Intangible assets on the balance sheets as of June 30, ~~2016~~2017 and December 31, ~~2015~~2016 included the following (in thousands):

June 30, 2016 December 31, 2015
In-place leases, net of accumulated amortization of $100,111 and $88,035 in 2016 and 2015, respectively $ 100,648
$ 112,937
Above-market tenant leases, net of accumulated amortization of $15,681 and $15,423 in 2016 and 2015, respectively 6,992
8,031
Goodwill 3,626
3,647
$ 111,266
$ 124,615



		June 30, 2017				December 31, 2016
In-place leases, net of accumulated amortization of $74,308 and $46,899 in 2017 and 2016, respectively		$	170,234			$	185,251
Above-market tenant leases, net of accumulated amortization of $10,826 and $6,515 in 2017 and 2016, respectively		35,746				40,260
Below-market ground lease, net of accumulated amortization of $207 and $69 in 2017 and 2016, respectively		18,206				18,344
Goodwill		1,674				1,674
		$	225,860			$	245,529

The following is a summary of goodwill activity for the six months ended June 30, ~~2016~~2017 and ~~2015~~2016 (in thousands):



	Six Months Ended June 30,
	2017				2016
Beginning balance	$	1,674			$	3,647
Allocated to property sales	—				(21		)
Ending balance	$	1,674			$	3,626

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Six Months Ended June 30,
2016 2015
Beginning balance $ 3,647
$ 3,867
Allocated to property sales (21 ) —
Ending balance $ 3,626
$ 3,867

6. OTHER ASSETS

Other assets on the balance sheets as of June 30, ~~2016~~2017 and December 31, ~~2015~~2016 included the following (in thousands):

June 30, 2016 December 31, 2015
Furniture, fixtures and equipment, deferred direct operating expenses, and leasehold improvements, net of accumulated depreciation of $24,168 and $22,572 in 2016 and 2015, respectively $ 14,087
$ 13,523
Lease inducements, net of accumulated amortization of $7,637 and $6,865 in 2016 and 2015, respectively 12,519
13,306
Prepaid expenses and other assets 6,690
4,408
Line of credit deferred financing costs, net of accumulated amortization of $1,815 and $1,380 in 2016 and 2015, respectively 2,537
2,972
Predevelopment costs and earnest money 330
1,780
$ 36,163
$ 35,989



		June 30, 2017				December 31, 2016
Furniture, fixtures and equipment, leasehold improvements, and other deferred costs, net of accumulated depreciation of $23,206 and $23,135 in 2017 and 2016, respectively		$	14,265			$	15,773
Lease inducements, net of accumulated amortization of $825 and $1,278 in 2017 and 2016, respectively		1,864				2,517
Prepaid expenses and other assets		11,291				8,432
Line of credit deferred financing costs, net of accumulated amortization of $2,691 and $2,264 in 2017 and 2016, respectively		1,780				2,182
Predevelopment costs and earnest money		80				179
		$	29,280			$	29,083

7. NOTES PAYABLE

~~The following table summarizes the Company's note payable balance at June 30, 2016 and December 31, 2015 ($ in thousands):~~

June 30, 2016 December 31, 2015
Notes payable $ 779,704
$ 721,293
Less: deferred financing costs of mortgage debt, net of accumulated amortization of $2,272 and $2,008 in 2016 and 2015, respectively. (2,219 ) (2,483 )
$ 777,485
$ 718,810

The following table details the terms and amounts of the Company’s outstanding notes payable at June 30, ~~2016~~2017 and December 31, ~~2015~~2016 ($ in thousands):

Description Interest Rate Maturity June 30, 2016 December 31, 2015
Post Oak Central mortgage note 4.26 % 2020 $ 180,046
$ 181,770
Credit Facility, unsecured 1.54 % 2019 155,000
92,000
The American Cancer Society Center mortgage note 6.45 % 2017 128,440
129,342
Promenade mortgage note 4.27 % 2022 106,787
108,203
191 Peachtree Tower mortgage note 3.35 % 2018 99,677
100,000
816 Congress mortgage note 3.75 % 2024 85,000
85,000
Meridian Mark Plaza mortgage note 6.00 % 2020 24,754
24,978
$ 779,704
$ 721,293



Description		Interest Rate			Maturity		June 30, 2017				December 31, 2016
Term Loan, unsecured		2.42	%		2021		$	250,000			$	250,000
Fifth Third Center		3.37	%		2026		148,049				149,516
Colorado Tower		3.45	%		2026		120,000				120,000
Promenade		4.27	%		2022		103,864				105,342
Senior Note, unsecured		4.09	%		2027		100,000				—
Credit Facility, unsecured		2.32	%		2019		94,000				134,000
816 Congress		3.75	%		2024		84,095				84,872
3344 Peachtree		4.75	%		2017		77,928				78,971
Meridian Mark Plaza		6.00	%		2020		24,284				24,522
The Pointe		4.01	%		2019		22,730				22,945
One Eleven Congress		6.08	%		2017		—				128,000
The ACS Center		6.45	%		2017		—				127,508
San Jacinto Center		6.05	%		2017		—				101,000
Two Buckhead Plaza		6.43	%		2017		—				52,000
							1,024,950				1,378,676
Unamortized premium, net							750				6,792
Unamortized loan costs							(6,081		)		(4,548		)
Total Notes Payable							$	1,019,619			$	1,380,920

Credit Facility

The Company has a $500 million senior unsecured line of credit (the "Credit Facility") that matures on May 28, 2019. The Credit Facility may be expanded to $750 million at the election of the Company, subject to the receipt of additional commitments from the lenders and other customary conditions.

The Credit Facility contains financial covenants that require, among other things, the maintenance of an unencumbered interest coverage ratio of at least 2.00; a fixed charge coverage ratio of at least 1.50; an overall leverage ratio of no more than 60%; and a minimum shareholders' equity in an amount equal to $1.0 billion, plus a portion of the net cash proceeds from certain equity issuances. The Credit Facility also contains customary representations and warranties and affirmative and negative covenants, as well as customary events of default. The amounts outstanding under the Credit Facility may be accelerated upon the occurrence of any events of default.

The interest rate applicable to the Credit Facility varies according to the Company’s leverage ratio, and may, at the election of the Company, be determined based on either (1) the current London Interbank Offered Rate ("LIBOR") plus a spread of between 1.10% and 1.45%, based on leverage or (2) the greater of Bank of America's prime rate, the federal funds rate plus 0.50% or the

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one-month LIBOR plus 1.0% (the “Base Rate”), plus a spread of between 0.10% and 0.45%, based on leverage. The Company also pays an annual facility fee on the total commitments under the Credit Facility of between 0.15% and 0.30% based on leverage.

At June 30, 2017, the Credit Facility's spread over LIBOR was 1.1%. The amount that the Company may draw under the Credit Facility is a defined calculation based on the Company's unencumbered assets and other factors. The total available borrowing capacity under the Credit Facility was $405 million at June 30, 2017.

Term Loan

The Company has a $250 million senior unsecured term loan (the "Term Loan") that matures on December 2, 2021. The Term Loan contains financial covenants consistent with those of the Credit Facility. The interest rate applicable to the Term Loan varies according to the Company’s leverage ratio, and may, at the election of the Company, be determined based on either (1) the current London Interbank Offered Rate ("LIBOR") plus a spread of between 1.20% and 1.70%, based on leverage or (2) the greater of Bank of America's prime rate, the federal funds rate plus 0.50% or the one-month LIBOR plus 1.0% (the “Base Rate”), plus a spread of between 0.00% and 0.75%, based on leverage. At June 30, 2017, the Term Loan's spread over LIBOR was 1.2%.

Unsecured Senior Notes

In April 2017, the Company closed a $350 million private placement of senior unsecured notes, which were issued in two tranches. The first tranche of $100 million was issued in April 2017, has a 10-year maturity, and has a fixed annual interest rate of 4.09%. The second tranche of $250 million was issued in July 2017, has an 8-year maturity, and has a fixed annual interest rate of 3.91%.

The senior unsecured notes contain financial covenants that require, among other things, the maintenance of an unencumbered interest coverage ratio of at least 2.00; a fixed charge coverage ratio of at least 1.50; an overall leverage ratio of no more than 60%; and a minimum shareholders' equity in an amount equal to $1.9 billion, plus a portion of the net cash proceeds from certain equity issuances. The senior notes also contain customary representations and warranties and affirmative and negative covenants, as well as customary events of default. The amounts outstanding under the senior notes may be accelerated upon the occurrence of any events of default.

Fair Value

At June 30, ~~2016~~2017 and December 31, ~~2015,~~2016, the aggregate estimated fair values of the Company's notes payable were ~~$807.5 million~~$1.0 billion and ~~$738.1 million~~,$1.4 billion, respectively, calculated by discounting the debt's remaining contractual cash flows at estimated rates at which similar loans could have been obtained at those respective dates. The estimate of the current market rate, which is the most significant input in the discounted cash flow calculation, is intended to replicate debt of similar maturity and loan-to-value

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relationship. These fair value calculations are considered to be Level 2 under the guidelines as set forth in ASC 820, "Fair Value Measurement," as the Company utilizes market rates for similar type loans from third-party brokers.

Other Information

For the three and six months ended June 30, ~~2016~~2017 and ~~2015~~2016, interest expense was as follows (in thousands):


	Three Months Ended June 30,								Six Months Ended June 30,								Three Months Ended June 30, 2017								Six Months Ended June 30,
	2016				2015				2016				2015				2017				2016				2017				2016
Total interest incurred	$	8,350			$	8,683			$	16,506			$	17,263			$	10,741			$	8,350			$	22,072			$	16,506
Less interest - discontinued operations																	—				(1,965		)		—				(3,940		)
Interest capitalized	(1,016		)		(814		)		(1,758		)		(1,717		)		(2,218		)		(1,016		)		(3,808		)		(1,758		)
Total interest expense	$	7,334			$	7,869			$	14,748			$	15,546			$	8,523			$	5,369			$	18,264			$	10,808

In April 2017, the Company repaid in full, without penalty, the $128.0 million One Eleven Congress mortgage note and the $101.0 million San Jacinto Center mortgage note. In May 2017, the Company repaid in full, without penalty, the $52.0 million Two Buckhead Plaza mortgage note. In connection with these repayments, the Company recorded gains on extinguishment of debt of $2.2 million which represented the unamortized premium recorded on the notes at the time of the Merger.

In June 2017, The ~~real estate~~Company sold the ACS Center. A portion of the proceeds from the sale were used to repay the $127.0 million mortgage note on the associated property, and the Company recorded a loss on extinguishment of debt of $376,000 which represented the remaining unamortized loan costs and other ~~assets~~costs associated with repaying the debt.

Subsequent to quarter end, in July 2017, the Company repaid in full, without penalty, the $77.9 million 3344 Peachtree mortgage note. In connection with the repayment, the Company expects to record a gain on extinguishment of ~~The American Cancer Society Center (the “ACS Center”) are restricted under~~debt of $429,000 which represents the ~~ACS Center loan agreement as they are not available to settle debts~~unamortized premium recorded on the note at the time of the ~~Company. However, provided that the ACS Center loan has not incurred any uncured event~~Merger.

13

Table of ~~default, as defined in the loan agreement, the cash flows from the ACS Center, after payments of debt service, operating expenses, and reserves, are available for distribution to the Company.~~Contents

8. COMMITMENTS AND CONTINGENCIES

Commitments

At June 30, ~~2016~~2017, the Company had outstanding letters of credit and performance bonds totaling ~~$1.9~~$3.9 million. As a lessor, the Company had ~~$79.5~~$180.9 million in future obligations under leases to fund tenant improvements ~~as of~~and other future construction obligations at June 30, ~~2016~~2017. As a lessee, the Company had future obligations under ground and ~~office~~other operating leases of ~~$144.0~~$210.1 million ~~as of~~at June 30, ~~2016~~2017.

Litigation

The Company is subject to various legal proceedings, claims and administrative proceedings arising in the ordinary course of business, some of which are expected to be covered by liability insurance. Management makes assumptions and estimates concerning the likelihood and amount of any potential loss relating to these matters using the latest information available. The Company records a liability for litigation if an unfavorable outcome is probable and the amount of loss or range of loss can be reasonably estimated. If an unfavorable outcome is probable and a reasonable estimate of the loss is a range, the Company accrues the best estimate within the range. If no amount within the range is a better estimate than any other amount, the Company accrues the minimum amount within the range. If an unfavorable outcome is probable but the amount of the loss cannot be reasonably estimated, the Company discloses the nature of the litigation and indicates that an estimate of the loss or range of loss cannot be made. If an unfavorable outcome is reasonably possible and the estimated loss is material, the Company discloses the nature and estimate of the possible loss of the litigation. The Company does not disclose information with respect to litigation where an unfavorable outcome is considered to be remote or where the estimated loss would not be material. Based on current expectations, such matters, both individually and in the aggregate, are not expected to have a material adverse effect on the liquidity, results of operations, business or financial condition of the Company.

9. STOCKHOLDERS' EQUITY

On June 19, 2017, the Company declared a cash dividend of $0.06 per common share, which was paid July 13, 2017 to shareholders of record on July 3, 2017.

In May 2017, certain holders of CPLP units redeemed 951,818 units in exchange for shares of the Company's common stock. The aggregate value at the time of these transactions was $8.1 million based upon the value of the Company's common stock at the time of the transactions.

In 2015, the Board of Directors of the Company authorized the repurchase of up to $100 million of its outstanding common shares. The plan expires on September 8, 2017. The repurchases may be executed in the open market, through private negotiations, or in other transactions permitted under applicable law. The timing, manner, price and amount of any repurchases will be determined by the Company in its discretion and will be subject to economic and market conditions, stock price, applicable legal requirements and other factors. ~~In March 2016, the~~The share repurchase program ~~was~~may be suspended ~~due to the pending merger with Parkway.~~

~~Under this plan, the Company repurchased 6.8 million shares of its common stock for a total cost of $61.5 million, including broker commissions.~~or discontinued at any time. No shares were repurchased during the ~~three~~six months ended June 30, 2016. The share repurchases were funded from cash on hand, borrowings under the Company's Credit Facility, and proceeds from the sale of assets. The repurchased shares were recorded as treasury shares on the consolidated balance sheet.

2017.

10. STOCK-BASED COMPENSATION

13

~~Table of Contents~~

The Company has several types of stock-based compensation - stock options, restricted stock, and restricted stock units (“RSUs”) - which are described in note 1213 of notes to consolidated financial statements in the Company's Annual Report on Form 10-K for the year ended December 31, ~~2015.~~2016. The expense related to a portion of the stock-based compensation awards is fixed. The expense related to other stock-based compensation awards fluctuates from period to period dependent, in part, on the Company's stock price and stock performance relative to its peers. The Company recorded stock-based compensation expense, net of forfeitures, of ~~$340,000~~$2.9 million and ~~$2.0 million~~$340,000 for the three months ended June 30, ~~2016~~2017 and ~~2015,~~2016, respectively, and $4.6 million and ~~$1.9~~$4.6 million for the six months ended June 30, ~~2016~~2017 and ~~2015,~~2016, respectively.

The Company maintains the 2009 Incentive Stock Plan (the "2009 Plan") and the 2005 Restricted Stock Unit Plan (the “RSU Plan”). Under the 2009 Plan, the Company made restricted stock grants in ~~2016~~2017 of ~~234,965~~308,289 shares to key employees, which vest ratably over a ~~three-year~~three-year period. Under the RSU Plan, the Company awarded two types of performance-based RSUs in 2017 to key employees based on the following metrics: (1) Total Stockholder Return of the Company, as defined in the RSU Plan, as compared to the companies in the SNL US REIT Office index (“TSR RSUs”), and (2) the ratio of cumulative funds from operations per share to targeted cumulative funds from operations per share (“FFO RSUs”) as defined in the RSU Plan. The performance period for both awards is January 1, ~~2016~~2017 to December 31, ~~2018,~~2019, and the targeted units awarded of TSR RSUs and FFO RSUs ~~is 214,151~~was 267,013 and ~~97,797,~~132,266, respectively. The ultimate payout of these awards can range from 0% to 200% of the targeted number of units depending on the achievement of the market and performance metrics described above. ~~Both of these RSUs~~These RSU awards cliff vest on ~~January 29,~~

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December 31, 2019 and are to be settled in cash with payment dependent on upon attainment of required service, market, and performance criteria. The number of RSUs vesting will be determined ~~at that date,~~by the Compensation Committee, and the payout per unit will be equal to the average closing price on each trading day during the 30~~-day~~30-day period ending on December 31, ~~2018.~~2019. The Company expenses an estimate of the fair value of the TSR RSUs over the performance period using a quarterly Monte Carlo valuation. The FFO RSUs are expensed over the vesting period using the fair market value of the Company's stock at the reporting date multiplied by the anticipated number of units to be paid based on the current estimate of what the ratio is expected to be upon vesting. Dividend equivalents on the TSR RSUs and the FFO RSUs will also be paid based upon the percentage vested.

In addition, ~~during~~the Company granted 166,132 time-vested RSUs to key employees in 2017. The value of each unit is equal to the fair value of one share of common stock. The vesting period for this award is three years. These RSUs are to be settled in cash with payment dependent upon the attainment of the required service criteria. Dividend equivalents will be paid upon vesting based on the number of RSUs granted with such payments made concurrently with payment of common dividends.

During the three months ended June 30, ~~2016,~~2017, the Company issued ~~72,771~~120,878 shares of common stock at fair value to members of its board of directors in lieu of fees, and recorded ~~$765,000~~$1.0 million in general and administrative expense in the three months ended June 30, ~~2016~~2017 related to the issuances.

11. EARNINGS PER SHARE

~~Net income per share-basic is calculated as net income available to common stockholders divided by~~The following table sets forth the ~~weighted average number~~computation of common shares outstanding during the period, including nonvested restricted stock which has nonforfeitable dividend rights. Net income per share-diluted is calculated as net income available to common stockholders divided by the diluted weighted average number of common shares outstanding during the period. Diluted weighted average number of common shares uses the same weighted average share number as in the basic calculation and adds the potential dilution, if any, that would occur if stock options (or any other contracts to issue common stock) were exercised and resulted in additional common shares outstanding, calculated using the treasury stock method. Weighted average shares-basic and diluted earnings per share for the three and six months ended June 30, ~~2016~~2017 and ~~2015~~2016~~, respectively, are as follows~~ (in thousands):

15

Three Months Ended June 30, Six Months Ended June 30,
2016 2015 2016 2015
Weighted average shares — basic 210,129
216,630
210,516
216,599

Dilutive potential common shares — stock options 233
136
171
154

Weighted average shares — diluted 210,362
216,766
210,687
216,753

Weighted average anti-dilutive stock options 1,129
1,553
1,131
1,553

Table of Contents

Stock options are dilutive when the average market price of the Company's stock during the period exceeds the option exercise price. In periods where the Company is in a net loss position, the dilutive effect of stock options is not included in the diluted weighted average shares total.

Anti-dilutive stock options represent stock options which are outstanding but which are not exercisable during the period because the exercise price exceeded the average market value of the Company's stock. These anti-dilutive stock options are not included in the current calculation of dilutive weighted average shares but could be dilutive in the future.



	Three Months Ended June 30,								Six Months Ended June 30,
	2017				2016				2017				2016
Earnings per Common Share - basic:
Numerator:
Income from continuing operations	$	170,945			$	242			$	175,803			$	14,937
Net income attributable to noncontrolling interests in CPLP from continuing operations	(2,856		)		—				(2,957		)		—
Net income attributable to other noncontrolling interests	—				—				(6		)		—
Income from continuing operations available for common stockholders	168,089				242				172,840				14,937
Income from discontinued operations	—				7,523				—				15,624
Net income available for common stockholders	$	168,089			$	7,765			$	172,840			$	30,561

Denominator:
Weighted average common shares - basic	419,402				210,129				411,137				210,516
Earnings per common share - basic:
Income from continuing operations available for common stockholders	$	0.40			$	—			$	0.42			$	0.07
Income from discontinued operations available for common stockholders	—				0.04				—				0.08
Earnings per common share - basic	$	0.40			$	0.04			$	0.42			$	0.15

Earnings per common share - diluted:
Numerator:
Income from continuing operations	$	170,945			$	242			$	175,803			$	14,937
Net income attributable to other noncontrolling interests from continuing operations	—				—				(6		)		—
Income from continuing operations available for common stockholders before net income attributable to noncontrolling interests in CPLP	170,945				242				175,797				14,937
Income from discontinued operations available for common stockholders	—				7,523				—				15,624
Net income available for common stockholders before net income attributable to noncontrolling interests in CPLP	$	170,945			$	7,765			$	175,797			$	30,561

Denominator:
Weighted average common shares - basic	419,402				210,129				411,137				210,516
Add:
Potential dilutive common shares - stock options	320				233				306				171
Weighted average units of CPLP convertible into common shares	7,458				—				7,784				—
Weighted average common shares - diluted	427,180				210,362				419,227				210,687
Earnings per common share - diluted:
Income from continuing operations available for common stockholders before net income attributable to noncontrolling interests in CPLP	$	0.40			$	—			$	0.42			$	0.07
Income from discontinued operations available for common stockholders	—				0.04				—				0.08
Earnings per common share - diluted	$	0.40			$	0.04			$	0.42			$	0.15

Weighted average anti-dilutive stock options outstanding	731				1,129				744				1,131

16

Table of Contents

12. REPORTABLE SEGMENTS

The Company's segments are based on the Company's method of internal reporting which classifies operations by property type and geographical area. The segments by property type are: Office ~~Mixed Use,~~ and ~~Other.~~Mixed-Use. The segments by geographical

14

~~Table of Contents~~

region are: Atlanta, ~~Houston,~~ Austin, Charlotte, Orlando, Phoenix, Tampa, and Other. Subsequent to the Merger completed in the fourth quarter of 2016, the Company added the Orlando, Phoenix, and Tampa segments. These reportable segments represent an aggregation of operating segments reported to the Chief Operating Decision Maker based on similar economic characteristics that include the type of property and the geographical location. ~~Prior period information has been revised to reflect the change in segment reporting as described in the Annual Report on Form 10-K for the year ended December 31, 2015.~~ Each segment includes both consolidated operations and the Company's share of unconsolidated joint venture operations.

Company management evaluates the performance of its reportable segments in part based on net operating income (“NOI”). NOI represents rental property revenues less rental property operating expenses. NOI is not a measure of cash flows or operating results as measured by GAAP, is not indicative of cash available to fund cash needs and should not be considered an alternative to cash flows as a measure of liquidity. All companies may not calculate NOI in the same manner. The Company considers NOI to be an appropriate supplemental measure to net income as it helps both management and investors understand the core operations of the Company's operating assets. NOI excludes corporate general and administrative expenses, interest expense, depreciation and amortization, impairments, gains/loss on sales of real estate, and other non-operating items.

Segment net income, amount of capital expenditures, and total assets are not presented in the following tables because management does not utilize these measures when analyzing its segments or when making resource allocation decisions. Information on the Company's segments along with a reconciliation of NOI to net income available to common stockholders isfor the three and six months ended June 30, 2017 and 2016 are as follows (in thousands):

Three Months Ended June 30, 2016 Office Mixed-Use Other Total
Net Operating Income:
Houston $ 25,125
$ —
$ —
$ 25,125
Atlanta 21,572
1,742
—
23,314
Austin 5,763
—
—
5,763
Charlotte 4,819
—
—
4,819
Other (4 ) —
(9 ) (13 )
Total Net Operating Income (Loss) $ 57,275
$ 1,742
$ (9 ) $ 59,008

Net operating income from unconsolidated joint ventures (6,954 )
Fee income 1,824
Other income 129
Reimbursed expenses (798 )
General and administrative expenses (4,691 )
Interest expense (7,334 )
Depreciation and amortization (32,381 )
Other expenses (2,576 )
Income from unconsolidated joint ventures 1,784
Loss on sale of investment properties (246 )
Net income $ 7,765



Three Months Ended June 30, 2017		Office				Mixed-Use				Total
Net Operating Income:
Atlanta		$	29,218			$	853			$	30,071
Austin		14,852				—				14,852
Charlotte		15,202				—				15,202
Orlando		3,318				—				3,318
Tampa		7,451				—				7,451
Phoenix		8,838				—				8,838
Other		383				—				383
Total Net Operating Income		$	79,262			$	853			$	80,115



Three Months Ended June 30, 2016		Office				Mixed-Use				Total
Net Operating Income:
Houston		$	25,125			$	—			$	25,125
Atlanta		21,572				1,742				23,314
Austin		5,763				—				5,763
Charlotte		4,819				—				4,819
Other		(13		)		—				(13		)
Total Net Operating Income		$	57,266			$	1,742			$	59,008

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Three Months Ended June 30, 2015 Office Mixed-Use Other Total
Net Operating Income:
Houston $ 25,432
$ —
$ —
$ 25,432
Atlanta 23,272
1,499
6
24,777
Austin 3,914
—
—
3,914
Charlotte 4,011
—
—
4,011
Other 2,640
—
—
2,640
Total Net Operating Income $ 59,269
$ 1,499
$ 6
60,774

Net operating income from unconsolidated joint ventures (5,984 )
Fee income 1,704
Other income 22
Reimbursed expenses (717 )
General and administrative expenses (5,936 )
Interest expense (7,869 )
Depreciation and amortization (34,879 )
Other expenses (343 )
Income from unconsolidated joint ventures 1,761
Loss from discontinued operations (6 )
Loss on sale of investment properties (576 )
Net income $ 7,951



Six Months Ended June 30, 2017		Office				Mixed-Use				Total
Net Operating Income:
Atlanta		$	59,190			$	3,126			$	62,316
Austin		29,039				—				29,039
Charlotte		30,627				—				30,627
Orlando		7,108				—				7,108
Tampa		14,287				—				14,287
Phoenix		16,056				—				16,056
Other		848				—				848
Total Net Operating Income		$	157,155			$	3,126			$	160,281



Six Months Ended June 30, 2016		Office				Mixed-Use				Total
Net Operating Income:
Houston		$	50,443			$	—			$	50,443
Atlanta		44,178				3,348				47,526
Austin		10,955				—				10,955
Charlotte		9,574				—				9,574
Other		23				—				23
Total Net Operating Income		$	115,173			$	3,348			$	118,521

The following reconciles Net Operating Income to Net Income for each of the periods presented (in thousands):



	Three Months Ended June 30,								Six Months Ended June 30,
	2017				2016				2017				2016
Net Operating Income	$	80,115			$	59,008			$	160,281			$	118,521
Net operating income from unconsolidated joint ventures	(7,609		)		(6,954		)		(16,783		)		(13,600		)
Net operating income from discontinued operations	—				(25,126		)		—				(50,444		)
Fee income	1,854				1,824				3,791				4,023
Other income	3,174				27				8,600				417
Reimbursed expenses	(907		)		(798		)		(1,772		)		(1,668		)
General and administrative expenses	(8,618		)		(4,691		)		(14,828		)		(12,934		)
Interest expense	(8,523		)		(5,369		)		(18,264		)		(10,808		)
Depreciation and amortization	(50,040		)		(16,641		)		(104,924		)		(33,182		)
Acquisition and transaction costs	(246		)		(2,424		)		(2,177		)		(2,443		)
Gain on extinguishment of debt	1,829				—				1,829				—
Other expenses	(236		)		(152		)		(612		)		(507		)
Income from unconsolidated joint ventures	40,320				1,784				40,901				3,618
Gain (loss) on sale of investment properties	119,832				(246		)		119,761				13,944
Income from discontinued operations	—				7,523				—				15,624
Net Income	$	170,945			$	7,765			$	175,803			$	30,561

Revenues by reportable segment, including a reconciliation to total rental property revenues on the condensed consolidated statements of operations for three and six months ended June 30, 2017 and 2016 are as follows (in thousands):

Six Months Ended June 30, 2016 Office Mixed-Use Other Total
Net Operating Income:
Houston $ 50,443
$ —
$ —
$ 50,443
Atlanta 44,178
3,348
—
47,526
Austin 10,955
—
—
10,955
Charlotte 9,574
—
—
9,574
Other 8
—
15
23
Total Net Operating Income $ 115,158
$ 3,348
$ 15
118,521

Net operating income from unconsolidated joint ventures (13,600 )
Fee income 4,023
Other income 705
Reimbursed expenses (1,668 )
General and administrative expenses (13,183 )
Interest expense (14,748 )
Depreciation and amortization (64,350 )
Other expenses (2,701 )
Income from unconsolidated joint ventures 3,618
Gain on sale of investment properties 13,944
Net income $ 30,561

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Six Months Ended June 30, 2015 Office Mixed-Use Other Total
Net Operating Income:
Houston $ 50,510
$ —
$ —
$ 50,510
Atlanta 46,635
2,851
6
49,492
Austin 6,100
—
—
6,100
Charlotte 7,954
—
—
7,954
Other 4,796
—
(25 ) 4,771
Total Net Operating Income $ 115,995
$ 2,851
$ (19 ) 118,827

Net operating income from unconsolidated joint ventures (11,970 )
Fee income 3,520
Other income 143
Reimbursed expenses (1,828 )
General and administrative expenses (9,533 )
Interest expense (15,546 )
Depreciation and amortization (71,026 )
Other expenses (783 )
Income from unconsolidated joint ventures 3,372
Loss from sale of discontinued operations (551 )
Gain on sale of investment properties 530
Net income $ 15,155



Three Months Ended June 30, 2017		Office				Mixed-Use				Total
Revenues:
Atlanta		$	46,293			$	1,358			$	47,651
Austin		25,429				—				25,429
Charlotte		22,599				—				22,599
Orlando		6,331				—				6,331
Tampa		11,795				—				11,795
Phoenix		11,879				—				11,879
Other		758				—				758
Total segment revenues		125,084				1,358				126,442
Less Company's share of rental property revenues from unconsolidated joint ventures		(11,077		)		(1,358		)		(12,435		)
Total rental property revenues		$	114,007			$	—			$	114,007



Three Months Ended June 30, 2016		Office				Mixed-Use				Total
Revenues:
Houston		$	44,281							$	44,281
Atlanta		36,779				3,026				39,805
Austin		10,417				—				10,417
Charlotte		6,388				—				6,388
Other		91				—				91
Total segment revenues		97,956				3,026				100,982
Less discontinued operations		(44,281		)		—				(44,281		)
Less Company's share of rental property revenues from unconsolidated joint ventures		(7,221		)		(3,026		)		(10,247		)
Total rental property revenues		$	46,454			$	—			$	46,454



Six Months Ended June 30, 2017		Office				Mixed-Use				Total
Revenues
Atlanta		$	93,814			$	5,049			$	98,863
Austin		49,963				—				49,963
Charlotte		45,342				—				45,342
Orlando		12,972				—				12,972
Tampa		23,098				—				23,098
Phoenix		21,997				—				21,997
Other		1,575				—				1,575
Total segment revenues		$	248,761			$	5,049			$	253,810
Less Company's share of rental property revenues from unconsolidated joint ventures		(22,237		)		(5,049		)		(27,286		)
Total rental property revenues		$	226,524			$	—			$	226,524

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Six Months Ended June 30, 2016		Office				Mixed-Use				Total
Revenues:
Houston		$	87,403			$	—			$	87,403
Atlanta		73,995				6,003				$	79,998
Austin		19,356				—				$	19,356
Charlotte		12,734				—				$	12,734
Other		231				—				$	231
Total segment revenues		193,719				6,003				199,722
Less discontinued operations		(87,403		)		—				(87,403		)
Less Company's share of rental property revenues from unconsolidated joint ventures		(14,509		)		(6,003		)		(20,512		)
Total rental property revenues		$	91,807			$	—			$	91,807

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Table of Contents

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

Overview:

Cousins Properties Incorporated ("Cousins") (and collectively, with its subsidiaries, the "Company," "we," "our," or "us") is a self-administered and self-managed real estate investment trust, or REIT. Our core focus is on the acquisition, development, leasing, management, and ownership of Class-A office ~~assets~~ and ~~opportunistic~~ mixed-use properties in Sunbelt markets with a focus on Arizona, Florida, Georgia, ~~Texas,~~North Carolina, and ~~North Carolina.~~Texas. As of June 30, ~~2016~~2017, our portfolio of real estate assets consisted of interests in 1531 operating office properties containing ~~14.6~~15.5 million ~~square feet of space, two operating mixed-use properties containing~~ ~~786,000~~ square feet of space and ~~three~~five projects ~~(two~~(three office and ~~one~~two mixed-use) under active development. We have a comprehensive strategy in place based on a simple platform, trophy assets, and ~~opportunist~~opportunistic investments. This streamlined ~~approach~~strategy enables us to maintain a targeted, ~~asset specific~~asset-specific approach to investing where we seek to leverage our development skills, relationships, market knowledge, and operational expertise. We intend to generate returns and create value for stockholders through the continued ~~lease up~~lease-up of our portfolio, through the execution of our development pipeline, and through opportunistic investments in office and mixed-use projects within our core markets.

We leased or renewed ~~402,213~~341,008 square feet of office space during the second quarter of ~~2016.~~2017. The weighted average net effective rent of these leases, representing base rent less operating expense reimbursements and leasing costs, was ~~$15.65~~$21.16 per square foot. For those leases that were previously occupied within the past year, net effective rent increased ~~17.2%~~28.5%. Same property net operating income (defined below) for consolidated properties and our share of unconsolidated properties increased by ~~1.4%~~6.8% between the three months ended June 30, ~~2016~~2017 and ~~2015.~~

On April 28, 2016, we entered into a merger agreement with Parkway Properties, Inc. (“Parkway”) whereby we will combine the operations of our two companies and simultaneously spin-off the operations of our combined Houston properties into a separate public company. We believe that these transactions will result in a high quality portfolio of Class A office towers in the high growth Sun Belt markets. These transactions will result in a more diversified portfolio both geographically and in our customer base and will position us to enhance our flexibility to meet customer space needs and allow us to attract and retain quality local market talent that, over time, will drive customer retention and occupancy. In addition, by creating two independent public real estate companies with differentiated assets and strategies, we believe that investors will realize greater transparency into the assets and operations of each company. We expect the transactions to close in the fourth quarter of 2016.

Results of Operations

~~The following is based on~~Our financial results have been significantly affected by the merger with Parkway Properties, Inc. ("the Merger") and the spin-off of the combined companies' Houston business to Parkway, Inc. (the "Spin-Off") in October 2016 (collectively, the "Parkway Transactions"). Accordingly, our ~~condensed consolidated~~historical financial statements may not be indicative of ~~operations for the three and six months ended June 30, 2016 and 2015:~~future operating results.

~~Rental Property Revenues and Rental Property~~Net Operating ~~Expenses~~Income

The following ~~results include~~table summarizes rental property revenues, rental property operating expenses, and net operating income ("NOI") for each of the ~~performance~~periods presented, including our same property portfolio. NOI represents rental property revenue less rental property operating expenses. Our same property portfolio is comprised of ~~our Same Property portfolio. Our Same Property portfolio includes~~ office properties that have been fully operational in each of the comparable reporting periods. A fully operational property is one that has achieved 90% economic occupancy ~~for each of the periods presented~~ or has been substantially complete and owned by us for each of the periods presented. Same ~~Property~~property amounts for the ~~2016~~2017 versus ~~2015~~2016 comparison are from properties that have been owned since January 1, ~~2015~~2016 through the end of the current reporting period, excluding dispositions. This information ~~includes revenues~~is presented for consolidated properties only and ~~expenses of only consolidated properties.~~does not include net operating income from our unconsolidated joint ventures.

~~Rental~~



	Three Months Ended June 30,															Six Months Ended June 30,
	2017				2016				$ Change				% Change			2017				2016				$ Change				% Change
Rental Property Revenues
Same Property	$	35,535			$	33,373			$	2,162			6.5	%		$	71,228			$	67,203			$	4,025			6.0	%
Non-Same Property	78,472				13,081				65,391				499.9	%		155,296				24,604				130,692				531.2	%
Total Rental Property Revenues	$	114,007			$	46,454			$	67,553			145.4	%		$	226,524			$	91,807			$	134,717			146.7	%

Rental Property Operating Expenses
Same Property	$	13,076			$	12,348			$	728			5.9	%		$	25,962			$	24,699			$	1,263			5.1	%
Non-Same Property	28,425				7,178				21,247				296.0	%		57,064				12,631				44,433				351.8	%
Total Rental Property Operating Expenses	$	41,501			$	19,526			$	21,975			112.5	%		$	83,026			$	37,330			$	45,696			122.4	%

Net Operating Income
Same Property NOI	$	22,459			$	21,025			$	1,434			6.8	%		$	45,266			$	42,504			$	2,762			6.5	%
Non-Same Property NOI	50,047				5,903				44,144				747.8	%		98,232				11,973				86,259				720.4	%
Total NOI	$	72,506			$	26,928			$	45,578			169.3	%		$	143,498			$	54,477			$	89,021			163.4	%

Same property ~~revenues~~NOI increased $1.4 million (6.8%) and ~~rental~~$2.8 million (6.5%) between the three months ended and six months ended June 30, 2017 and 2016, respectively. The increases were primarily due to increased occupancy rates at Fifth Third Center and increased occupancy rates and increased revenue from expansion space at Promenade. The increase in same property operating ~~expenses changed as follows:~~

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Three Months Ended June 30, Six Months Ended June 30,
2016 2015 $ Change % Change 2016 2015 $ Change % Change
Rental Property Revenues
Same Property $ 69,817
$ 70,198
$ (381 ) (0.5 )% $ 138,442
$ 137,280
$ 1,162
0.8 %
Non-Same Property 20,918
25,979
(5,061 ) (19.5 )% 40,769
48,936
(8,167 ) (16.7 )%
Total Rental Property Revenues $ 90,735
$ 96,177
$ (5,442 ) (5.7 )% $ 179,211
$ 186,216
$ (7,005 ) (3.8 )%

Rental Property Operating Expenses

Same Property $ 30,396
$ 30,849
$ (453 ) (1.5 )% $ 58,762
$ 59,337
$ (575 ) (1.0 )%
Non-Same Property 8,285
10,538
(2,253 ) (21.4 )% 15,528
20,003
(4,475 ) (22.4 )%
Total Rental Property Operating Expenses $ 38,681
$ 41,387
$ (2,706 ) (6.5 )% $ 74,290
$ 79,340
$ (5,050 ) (6.4 )%

Same Property, net $ 39,421

$ 39,349
$ 72
0.2 % $ 79,680
$ 77,943
$ 1,737
2.2 %
Non-Same Property, net 12,633

15,441
(2,808 ) (18.2 )% 25,241
28,933
(3,692 ) (12.8 )%
Total, net $ 52,054

$ 54,790
$ (2,736 ) (5.0 )% $ 104,921
$ 106,876
$ (1,955 ) (1.8 )%

~~Same property revenues increased~~expenses was primarily due to an increase in repair and maintenance, bad debt, and parking between the ~~six months ended June 30, 2016 and 2015 periods due to increased occupancy rates at 816 Congress and increased rental revenues at 191 Peachtree Tower.~~periods. Non-same property revenues and expenses ~~decreased~~increased between the three and six month periods primarily due to the Merger.

Other Income

Other income increased $3.1 million between the three month periods and increased $8.2 million between the six ~~months ended June 30, 2016~~month periods.This increase is primarily driven by termination fees at Fifth Third Center, Nascar Plaza, Hayden Ferry, and ~~2015 periods due to the sales of 2100 Ross, The Points at Waterview, and the North Point Center East buildings.~~Northpark Town Center.

General and Administrative Expenses

General and administrative expenses ~~decreased $1.2~~increased $3.9 million ~~(21%~~(84%) between thethree month periods, and increased ~~$3.7~~$1.9 million ~~(38%~~(15%) between the six month periods. ~~Long-term incentive~~These increases are primarily driven by long-term compensation expense ~~decreased $1.6 million in the three month period and increased $2.8 million in the six month period due to~~increases as a result of fluctuations in our common stock price relative to our office peers included in the SNL US Office REIT Index. ~~These differences were offset by an increase in expense resulting from a decrease in capitalized salaries in each of the three and six month periods.~~

Interest Expense

Interest expense, net of amounts capitalized, ~~decreased $535,000 and $798,000~~increased $3.2 million (59%) between the three month periods, and increased $7.5 million (69%) between the six ~~months ended June 30, 2016~~month periods primarily driven by the additional interest expense related to mortgage loans assumed in the Merger and ~~2015, respectively, primarily due an increase~~the $250 million Term Loan that closed in ~~interest capitalized to projects under development and to~~ the ~~repayment~~fourth quarter of ~~The Points at Waterview mortgage loan in October 2015.~~2016.

Depreciation and Amortization

Depreciation and amortization ~~decreased $2.5~~increased $33.4 million ~~(7%) and $6.7 million (9%~~(201%) between the three month periods, and increased $71.7 million (216%) between the six month ~~2016 and 2015~~periods. Amounts in all periods ~~respectively.~~represent costs associated with the Merger. The decreases related to the dispositions of 2100 Ross, The Points at Waterview, and three North Point Center East buildings in the second half of 2015. In addition, there were decreases related to extensions of useful lives of tenant assets as a result of lease modifications at Greenway Plaza, 816 Congress, and Northpark. These decreases were offset by an increase in depreciation expense at Colorado Tower which commenced operations in 2015.Company does not believe it will incur significant additional Merger costs.

Acquisition and ~~Merger~~Transaction Costs

Acquisition and merger costs ~~increased $2.4~~decreased $2.2 million (90%) in ~~both~~ the three month periods, and decreased $266,000 (11%) between the six month ~~2016 and 2015 periods due to costs related to~~periods; the ~~pending merger with~~Company believes it has paid significantly all material Parkway ~~Properties, Inc.~~Transaction costs.

Income from Unconsolidated Joint Ventures

Income from unconsolidated joint ventures consisted of the following ~~during~~(in thousands):



	Three Months Ended June 30,												Six Months Ended June 30,
	2017				2016				$ Change				2017				2016				$ Change
Net operating income	$	7,609			$	6,954			$	655			$	16,783			$	13,600			$	3,183
Other income, net	240				87				153				1,705				541				1,164
Depreciation and amortization	(3,478		)		(3,231		)		(247		)		(7,673		)		(6,490		)		(1,183		)
Interest expense	(1,922		)		(2,026		)		104				(4,246		)		(4,033		)		(213		)
Net gain on sale of investment property	37,871				—				37,871				34,332				—				34,332
Income from unconsolidated joint ventures	$	40,320			$	1,784			$	38,536			$	40,901			$	3,618			$	37,283

Net operating income from unconsolidated joint ventures increased $655,000 (9.4%) between the three month periods, and increased $3.2 million (23.4%) between the six month periods primarily due to increased occupancy and a change in the partnership structure at Gateway Village whereby we began receiving 50% of cash flows versus a preferred return beginning in December 2016, and the addition of Courvoisier Centre which was acquired in the Merger. Other income increased between the three month periods primarily as a result of a lease termination fee recognized at Terminus 200. Other income increased between the six month periods as ~~follows (in thousands):~~a result of lease termination fees recognized at the Terminus 200 and 111 West Rio buildings and as a result of the sale of mineral rights at CL Realty. The increase in depreciation and amortization is due to Gateway Village and the addition of Courvoisier Centre. The gain on sale of depreciated property of $37.9 million in the second quarter of 2017 resulted from the sale of properties owned by EP I, LLC and EP II, LLC. The gain on sale of depreciated property of $34.3 million for the six months ended June 30, 2017 is comprised of the second quarter gain less a $3.5 million loss on the purchase of the remaining 25.4% interest in the 111 West Rio building and the related consolidation of the building immediately following the purchase.

Gain (Loss) on Sale of Investment Properties

The gain on the sale of investment properties in 2017 relates primarily to the sale of the ACS Center. The 2016 gain on sale of investment properties relates to the sale of 100 North Point Center East.

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Discontinued Operations

Three Months Ended June 30, Six Months Ended June 30,
2016 2015 $ Change 2016 2015 $ Change
Property operations, net $ 6,954
$ 5,984
$ 970
$ 13,600
$ 11,970
1,630
Other income, net 87
376
(289 ) 541
566
(25 )
Depreciation and amortization (3,231 ) (2,772 ) (459 ) (6,490 ) (5,515 ) (975 )
Interest expense (2,026 ) (1,827 ) (199 ) (4,033 ) (3,649 ) (384 )
Income from unconsolidated joint ventures $ 1,784
$ 1,761
$ 23
$ 3,618
$ 3,372
$ 246

~~Rental property revenues less rental property operating expenses from unconsolidated joint ventures increased between~~Discontinued operations in 2016 contains the operations of Post Oak Central and Greenway Plaza (the "Houston Properties"), the two that were included in the Spin-Off. Because we decided to exit the Houston market in connection with the Parkway Transactions, the Spin-Off represents a strategic shift that has a significant impact on our operations. As such, the Spin-Off of these properties qualifies for discontinued operations treatment. The operations of the Houston Properties have been reclassified into discontinued operations for the three and six month 2016 and 2015 periods primarily due to increased occupancy at Terminus 100 and increased parking revenue at Gateway Village. The increase in depreciation and amortization is due to the commencement of operations at Emory Point II during the third quarter of 2015.

~~Gain on Sale of Investment Properties~~

Gain on sale of investment properties increased $13.4 million between the six month 2016 and 2015 periods. This increase is primarily due to $14.2 million gain recognized on the sale of 100 North Point Center East in the first quarter ofmonths ended June 30, 2016.

~~Discontinued Operations~~

In April 2014, the Financial Accounting Standards Board issued new guidance on discontinued operations. Under the new guidance, only assets held for sale and disposals representing a major strategic shift in operations will be presented as discontinued operations. We adopted this new standard in the second quarter of 2014. Therefore, the properties sold subsequently are not reflected as discontinued operations in our condensed consolidated statements of operations.

Funds From Operations

The table below shows Funds from Operations (“FFO”) and the related reconciliation to ~~our~~ net income available to common stockholders. We calculate FFO in accordance with the National Association of Real Estate Investment Trusts’ (“NAREIT”) definition, which is net income available to common stockholders (computed in accordance with GAAP), excluding extraordinary items, cumulative effect of change in accounting principle and gains on sale or impairment losses on 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 a 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. 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, we use FFO, along with other measures, to assess performance in connection with evaluating and granting incentive compensation to its officers and other key employees. The reconciliation of net income ~~available to common stockholders~~ to FFO is as follows for the three ~~and six~~ months ended June 30, ~~2016~~2017 and ~~2015~~2016 (in thousands, except per share information):



	Three Months Ended June 30,								Six Months Ended June 30,
	2017				2016				2017				2016
Net Income Available to Common Stockholders	$	168,089			$	7,765			$	172,840			$	30,561
Depreciation and amortization of real estate assets:
Consolidated properties	49,575				16,306				104,009				32,470
Share of unconsolidated joint ventures	3,478				3,231				7,673				6,490
Discontinued Operations	—				15,740				—				31,168
(Gain) loss on sale of depreciated properties:
Consolidated properties	(119,767		)		246				(119,750		)		(13,944		)
Share of unconsolidated joint ventures	(37,871		)		—				(34,332		)		—
Non-controlling Interests related to unit holders	2,856				—				2,957				—
Funds From Operations	$	66,360			$	43,288			$	133,397			$	86,745
Per Common Share — Diluted:
Net Income Available Available to Common Shareholders	$	0.40			$	0.04			$	0.42			$	0.15
Funds from Operations	$	0.16			$	0.21			$	0.32			$	0.41
Weighted Average Shares — Basic	419,402				210,129				411,137				210,516
Weighted Average Shares — Diluted	427,180				210,362				419,227				210,687

Net Operating Income

Company management evaluates the performance of its property portfolio in part based on NOI. NOI represents rental property revenues less rental property operating expenses. NOI is not a measure of cash flows or operating results as measured by GAAP, is not indicative of cash available to fund cash needs, and should not be considered an alternative to cash flows as a measure of liquidity. All companies may not calculate NOI in the same manner. The Company considers NOI to be an appropriate supplemental measure to net income as it helps both management and investors understand the core operations of the Company's operating assets. NOI excludes corporate general and administrative expenses, interest expense, depreciation and amortization, impairments, gains/loss on sales of real estate, and other non-operating items.

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The following table reconciles NOI for consolidated properties to Net Income each of the periods presented (in thousands):

Three Months Ended June 30, Six Months Ended June 30,
2016 2015 2016 2015
Net Income $ 7,765
$ 7,951
$ 30,561
$ 15,155
Depreciation and amortization of real estate assets:

Consolidated properties 32,046
34,505
63,638
70,228
Share of unconsolidated joint ventures 3,231
2,772
6,490
5,515
(Gain) loss on sale of depreciated properties:
Consolidated properties 246
10
(13,944 ) (276 )
Discontinued properties —
—
—
551
Funds From Operations $ 43,288
$ 45,238
$ 86,745
$ 91,173
Per Common Share — Basic and Diluted:

Net Income Available $ 0.04
$ 0.04
$ 0.15
$ 0.07
Funds From Operations $ 0.21
$ 0.21
$ 0.41
$ 0.42
Weighted Average Shares — Basic 210,129
216,630
210,516
216,599
Weighted Average Shares — Diluted 210,362
216,766
210,687
216,753



	Three Months Ended June 30,								Six Months Ended June 30,
	2017				2016				2017				2016
Net Income	$	170,945			$	7,765			$	175,803			$	30,561
Fee income	(1,854		)		(1,824		)		(3,791		)		(4,023		)
Other income	(3,174		)		(27		)		(8,600		)		(417		)
Reimbursed expenses	907				798				1,772				1,668
General and administrative expenses	8,618				4,691				14,828				12,934
Interest expense	8,523				5,369				18,264				10,808
Depreciation and amortization	50,040				16,641				104,924				33,182
Acquisition and transaction costs	246				2,424				2,177				2,443
Other expenses	236				152				612				507
Income from unconsolidated joint ventures	(40,320		)		(1,784		)		(40,901		)		(3,618		)
Gain (loss) on sale of investment properties	(119,832		)		246				(119,761		)		(13,944		)
Gain on extinguishment of debt	(1,829		)		—				(1,829		)		—
Income from discontinued operations	—				(7,523		)		—				(15,624		)
Net Operating Income	$	72,506			$	26,928			$	143,498			$	54,477

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Liquidity and Capital Resources

Our primary short-term and long-term liquidity needs include the following:

property and land acquisitions;

expenditures on development projects;

building improvements, tenant improvements, and leasing costs;

principal and interest payments on indebtedness;

repurchase of our common stock; and

operating partnership distributions and common stock dividends.

We may satisfy these needs with one or more of the following:

net cash from operations;

~~sales~~proceeds from the sale of assets;

borrowings under our Credit Facility;

proceeds from mortgage notes payable;

proceeds from construction loans;

proceeds from unsecured loans;

proceeds from offerings of debt or equity securities; and

joint venture formations.

As of June 30, ~~2016,~~2017, we had ~~$155.0~~$94.0 million drawn under our Credit Facility and $1.0 million drawn under our letters of credit, with the ability to borrow an additional ~~$344.0~~$405.0 million under our Credit Facility.

~~During~~In April 2017, we closed a $350 million private placement of senior unsecured notes, which were issued in two tranches. The first tranche of $100 million was issued in April 2017, has a 10-year maturity, and has a fixed annual interest rate of 4.09%. The second tranche of $250 million was issued in July 2017, has an 8-year maturity, and has a fixed annual interest rate of 3.91%. We used the ~~first quarter of 2016,~~proceeds from the private placement to repay mortgages scheduled to mature during 2017.

In April 2017, we ~~commenced development of an office project and continued development on two other projects. No new development projects were commenced~~repaid in full, without penalty, the ~~second quarter of 2016. In the first quarter of 2016, we repurchased 1.6~~$128.0 million ~~shares of common stock under our stock repurchase program for an aggregate total price of $13.7 million. There were no repurchases of common stock in the second quarter 2016,~~One Eleven Congress mortgage note and the ~~program was suspended~~$101.0 million San Jacinto Center mortgage note. In May 2017, we repaid in ~~March 2016 due to~~full, without penalty, the ~~pending merger~~$52.0 million One Buckhead Plaza mortgage note. In conjunction with ~~Parkway. The repurchased shares are recorded as treasury shares on~~ the ~~condensed consolidated balance sheets. We funded these activities with cash from operations, proceeds from asset~~ sales ~~and through borrowings under our Credit Facility.~~

~~Merger with Parkway Properties, Inc.~~

~~On April 28, 2016, the Company and Parkway Properties, Inc.(“Parkway”) entered into an Agreement and Plan of Merger (the “Merger Agreement”), pursuant to which Parkway will merge with and into Clinic Sub Inc., a wholly owned subsidiary~~ of the ~~Company (the “Merger”). In addition,~~ACS Center, Emory Point I and Emory Point II, we used the ~~Merger Agreement provides that~~proceeds of those sales to repay the ~~Company will separate~~associated mortgages.

Subsequent to quarter end, in July 2017, we repaid in full, without penalty, the portion of the combined businesses relating to the ownership of real properties in Houston (the "Spin-Off") from the remainder of the combined business by distributing pro rata to its stockholders all of the outstanding shares of common stock to Parkway, Inc. The Company will retain all of the shares of a class of non-voting preferred stock of Parkway, Inc. upon the terms and subject to the conditions of the Merger Agreement. The Company expects that the Spin-Off will be treated for tax purposes as a distribution to the Company’s stockholders equal to the fair market value of the distributed Parkway, Inc. shares. After the Spin-Off, Parkway, Inc. will be a separate, publicly-traded entity, and both the Company and Parkway, Inc. intend to operate prospectively as umbrella partnership real estate investment trusts (“UPREITs”).

Pursuant to the Merger Agreement, upon closing of the Merger, each share of Parkway common stock issued and outstanding will convert into the right to receive 1.63 (the “Exchange Ratio”) shares of newly issued shares of common stock, par value $1 per share, of the Company. In addition, each share of Parkway limited voting stock, par value issued will be converted into the right to receive a number of newly issued shares of limited voting preferred stock of the Company, equal to the Exchange Ratio, having terms materially unchanged from the terms of the Parkway limited voting stock prior to the Merger. Each share of Parkway equity-based compensation awards will also be converted at the Exchange Ratio into equity awards of the Company. Limited partnership units of Parkway LP, Parkway’s umbrella partnership, will be entitled to redeem or exchange their partnership interest for the Company’s common stock at the Exchange Ratio.

The respective boards of directors (the “Board of Directors”) of the Company and Parkway have unanimously approved the Merger Agreement and have recommended that their respective stockholders approve the Merger.

The closing of the Merger is subject to certain conditions, including: (1) the receipt of Parkway Stockholder Approval; (2) the receipt of Company Stockholder Approval; (3) the Spin-Off being fully ready to be consummated contemporaneously with the Merger; (4) approval for listing on the New York Stock Exchange (“NYSE”) of the Company common stock to be issued in the Merger or reserved for issuance in connection therewith; (5) no injunction or law prohibiting the Merger; (6) accuracy of each party’s representations, subject in most cases to materiality or material adverse effect qualifications; (7) material compliance with each party’s covenants; (8) receipt by each of the Company and Parkway of an opinion to the effect that the Merger will

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qualify as a “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the “Code”), and of an opinion that each of the Company and Parkway will qualify as a real estate investment trust (“REIT”) under the Code; and (9) effectiveness of the registration statement that will contain the joint proxy statement/prospectus sent to Company and Parkway stockholders.

The Merger Agreement contains customary representations and warranties by each party. The Company and Parkway have also agreed to various customary covenants and agreements, including, among others, to conduct their business in the ordinary course consistent with past practice during the period between the execution of the Merger Agreement and the date of closing, to not engage in certain kinds of transactions during this period and to maintain REIT status. The parties are subject to a customary “no-shop” provision that requires them to cease discussions or solicitations with respect to alternate transactions and subjects them to certain restrictions in considering and negotiating alternate transactions.

Additionally, Parkway has agreed to use commercially reasonable efforts to sell certain of its properties prior to the closing date, upon the terms and subject to the conditions of the Merger Agreement. The Company and Parkway have also agreed that, prior to the closing, each may continue to pay their regular quarterly dividends, but may not increase the amounts, except to the extent required to maintain REIT status. The parties will coordinate record and payment dates for all pre-closing dividends.

The Merger Agreement provides that, at the effective time of the Merger, the Board of Directors of the Company will consist of nine members, including five individuals to be selected by the current members of the Board of Directors of the Company and four individuals to be selected by the current members of the Board of Directors of Parkway. One of Parkway’s four directors will be selected by TPG Pantera VI (“TPG”) and TPG Management (collectively with TPG, the “TPG Parties”), pursuant to the TPG Parties’ stockholders agreement entered into with the Company.

The Merger Agreement contains certain termination rights for the Company and Parkway. The Merger Agreement can be terminated by either party (1) by mutual written consent; (2) if the Merger has not been consummated by an outside date of December 31, 2016 (which either party may extend to March 31, 2017 if the only closing condition that has not been met is that related to the readiness of the Spin-Off ); (3) if there is a permanent, non-appealable injunction or law restraining or prohibiting the consummation of the Merger; (4) if either party’s stockholders fail to approve the transactions; (5) if the other party’s Board of Directors changes its recommendation in favor of the transactions; (6) if the other party has materially breached its non-solicit covenant, subject to a cure period; (7) in order to enter into a superior proposal (as defined in the Merger Agreement, subject to compliance with certain terms and conditions included in the Merger Agreement); or (8) if the other party has breached its representations or covenants in a way that prevents satisfaction of a closing condition, subject to a cure period.

If the Merger Agreement is terminated because (1) a party’s Board of Directors changes its recommendation in favor of the transactions contemplated by the Merger Agreement; (2) a party terminates the agreement to enter into a superior proposal; (3) a party breaches its non-solicit covenant; or (4) a party consummates or enters into an agreement for an alternative transaction within twelve months following termination under certain circumstances, such party must pay a termination fee of the lesser of $65$77.9 million or the maximum amount that could be paid to the other party without causing it to fail to meet the REIT requirements for such year. The Merger Agreement also provides that a party must pay the other party an expense reimbursement of the lesser of $20 million and the maximum amount that can be paid to the other party without causing it to fail to meet the REIT requirements for such year, if the Merger Agreement is terminated because such party’s stockholders vote against the transactions contemplated by the Merger Agreement. Any unpaid amount of the foregoing fees (due to limitations of REIT requirements) will be escrowed and paid out over a five-year period. The expense reimbursement will be set off against the termination fee if the termination fee later becomes payable.

In connection with the proposed transaction, Cousins has filed an amended registration statement on Form S-4 (File No. 333-211849), declared effective by the SEC on July 22, 2016, that includes a joint proxy statement of Cousins and Parkway that also constitutes a prospectus of Cousins.

~~The Merger and Spin-Off are currently anticipated to close in the fourth quarter of 2016. During the three months ended June 30, 2016, the Company incurred $2.4 million in merger-related expenses.~~3344 Peachtree mortgage note.

Contractual Obligations and Commitments

The following table sets forth information as of June 30, ~~2016~~2017 with respect to our outstanding contractual obligations and commitments (in thousands):

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		Total				Less than 1 Year				1-3 Years				3-5 Years				More than 5 years				Total				Less than 1 Year				1-3 Years				3-5 Years				More than 5 years
Contractual Obligations:
Company debt:
Unsecured Credit Facility and construction facility		$	155,000			$	—			$	—			$	155,000			$	—
Term Loan																						$	250,000			$	—			$	—			$	250,000			$	—
Unsecured Senior Note																						100,000				—				—				—				100,000
Unsecured Credit Facility																						94,000				—				94,000				—				—
Mortgage notes payable		624,704				11,755				242,327				202,450				168,172				580,950				86,532				43,710				45,213				405,495
Interest commitments (1)		114,867				30,904				44,358				25,059				14,546				204,645				31,876				61,359				51,588				59,822
Ground leases		143,851				1,651				3,309				3,319				135,572				208,610				2,321				4,642				4,713				196,934
Other operating leases		132				40				79				13				—				1,519				519				732				268				—
Total contractual obligations		$	1,038,554			$	44,350			$	290,073			$	385,841			$	318,290			$	1,439,724			$	121,248			$	204,443			$	351,782			$	762,251
Commitments:
Unfunded tenant improvements and other		$	79,548			$	64,105			$	5,158			$	10,285			$	—
Unfunded tenant improvements and construction obligations																						$	180,878			$	162,897			$	17,981			$	—			$	—
Letters of credit		1,000				1,000				—				—				—				1,000				1,000				—				—				—
Performance bonds		945				945				—				—				—				2,861				328				1,600				—				933
Total commitments		$	81,493			$	66,050			$	5,158			$	10,285			$	—			$	184,739			$	164,225			$	19,581			$	—			$	933


(1)	Interest on variable rate obligations is based on rates effective as of June 30, ~~2016~~. 2017.

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In addition, we have several standing or renewable service contracts mainly related to the operation of buildings. These contracts are in the ordinary course of business and are generally one year or less. These contracts are not included in the above table and are usually reimbursed in whole or in part by tenants.

Other Debt Information

The real estate and other assets of The American Cancer Society Center (the “ACS Center”) are restricted under the ACS Center loan agreement in that they are not available to settle our debts. However, provided that the ACS Center loan has not incurred any uncured event of default, as defined in the loan agreement, the cash flows from the ACS Center, after payments of debt service, operating expenses and reserves, are available for distribution to us.

Our existing mortgage debt is primarily non-recourse, fixed-rate mortgage notes secured by various real estate assets. Many of our non-recourse mortgages contain covenants which, if not satisfied, could result in acceleration of the maturity of the debt. We expect to either refinance the non-recourse mortgages at maturity or repay the mortgages with proceeds from asset sales, debt, or other ~~financings.~~capital sources.

Future Capital Requirements

Over the long term, we intend to actively manage our portfolio of properties and strategically sell assets to ~~exit non-core holdings, reposition the portfolio geographically and by product type, and~~ generate capital for future investment activities. We expect to continue to utilize indebtedness to fund future commitments, if available and under appropriate terms. We may also seek equity capital and capital from joint venture partners to implement our strategy.

Our business model is dependent upon raising or recycling capital to meet obligations and to fund ~~our~~ development and acquisition activity. If one or more sources of capital are not available when required, we may be forced to reduce the number of projects we acquire or develop and/or raise capital on potentially unfavorable terms, or we may be unable to raise capital, which could have an adverse effect on our financial position or results of operations.

Cash ~~Flow~~Flows Summary

We report and analyze our cash flows based on operating activities, investing activities, and financing activities. ~~Cash and cash equivalents were $946,000 and $2.0 million at June 30, 2016 and June 30, 2015, respectively, which is an increase of $1.0 million.~~ The following table sets forth the changes in cash flows (in thousands):

Six Months Ended June 30,
2016 2015 Change
Net cash provided by operating activities $ 60,094
$ 45,065
$ 15,029
Net cash used in investing activities (73,564 ) (65,854 ) (7,710 )
Net cash provided by financing activities 12,413
22,761
(10,348 )



	Six Months Ended June 30,
	2017				2016				Change
Net cash provided by operating activities	$	126,237			$	60,094			$	66,143
Net cash provided by (used in) investing activities	47,915				(73,564		)		121,479
Net cash provided by (used in) financing activities	(193,419		)		12,413				(205,832		)

The reasons for significant increases and decreases in cash flows between the periods are as follows:

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Cash Flows from Operating Activities. Cash ~~provided by~~flows from operating activities increased ~~$15.0~~$66.1 million between the 2017 and 2016 six month ~~2016 and 2015~~ periods primarily due to an increase in cash generated from property operations as a result of the Merger and an increase in operating distributions from joint ventures, ~~a decrease~~offset by an increase in ~~lease inducements extended to tenants, and lower software development costs.~~cash interest paid between the periods.

Cash Flows from Investing Activities. Cash flows ~~used in~~from investing activities increased ~~$7.7~~$121.5 million between the 2017 and 2016 six month ~~2016 and 2015 periods. This relates~~periods primarily due to ~~an increase in contributions to investments in joint ventures,~~proceeds from the ACSC sale, offset by an increase in ~~proceeds~~property acquisition, development, and tenant asset expenditures. These increases were also impacted by larger contributions to and increased distributions from ~~investment property sales~~unconsolidated joint ventures which are primarily related to the ~~100 North~~sale of Emory Point ~~Center East sale.~~I and II.

Cash Flows from Financing Activities. Cash flows ~~provided by~~from financing activities decreased ~~$10.3~~$205.8 million between the 2017 and 2016 six month ~~2016 and 2015~~ periods, primarily due to the repayment of mortgage notes payable and decreased borrowings under the credit facility, offset by the proceeds from the common stock ~~repurchases~~equity offering in ~~2016.~~the first quarter 2017 and the issuance of senior notes in the second quarter.

Capital Expenditures. We incur costs related to our real estate assets that include acquisition of properties, development of new properties, redevelopment of existing or newly purchased properties, leasing costs for new or replacement tenants, and ongoing property repairs and maintenance.

Capital expenditures for assets we develop or acquire and then hold and operate are included in the property acquisition, development, and tenant asset expenditures line item within investing activities on the condensed consolidated statements of cash flows. Amounts accrued are removed from the table below (accrued capital adjustment) to show the components of these costs on a cash basis. Components of costs included in this line item for the six months ended June 30, ~~2016~~2017 and ~~2015~~2016 are as follows (in thousands):

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	Six Months Ended June 30,							Six Months Ended June 30,
	2016				2015			2017				2016
Development	$	29,100			$	10,435		$	102,544			$	29,100
Operating — leasing costs								24,224				14,764
Operating — building improvements	23,438				38,440			17,957				23,438
Operating — leasing costs	14,764				16,404
Capitalized interest	1,759				1,717			3,808				1,759
Capitalized personnel costs	2,642				4,256
Accrued capital adjustment	3,891				2,092
Capitalized personnel costs - leasing								1,053				948
Capitalized leasing commissions								1,668				885
Capitalized personnel costs - development								1,006				809
Change in accrued capital expenditures								(1,110		)		3,891
Total property acquisition and development expenditures	$	75,594			$	73,344		$	151,150			$	75,594

Capital expenditures increased ~~in 2016 mainly~~ due to ~~increased project~~an increase in the number of development ~~costs over~~projects between the ~~prior year,~~periods and ~~decreased capitalized costs. These increases were offset by a decrease~~an increase in ~~building improvement expenditures and~~tenant leasing costs. Tenant leasing costs increased from properties acquired in the Merger as well as an increase in these costs at Cousins' legacy properties. Tenant improvements and leasing costs, as well as related capitalized personnel costs, are a function of the number and size of newly executed leases or renewals of existing leases. The amounts of tenant improvement and leasing costs for our office portfolio on a per square foot basis were as follows:



		~~Six Months Ended June 30,~~
~~New leases~~		~~$7.01~~
~~Renewal leases~~		~~$4.02~~
~~Expansion leases~~		~~$6.50~~



		Six Months Ended June 30,
		2017	2016
New leases		$6.98	$7.01
Renewal leases		$4.53	$4.02
Expansion leases		$7.40	$6.50

The amounts of tenant improvement and leasing costs on a per square foot basis vary by lease and by market. Given the level of expected leasing and renewal activity, management expects tenant improvements and leasing costs per square foot in future periods to remain consistent with those experienced in the first six months of ~~2016.~~2017.

Dividends. We paid common dividends of $48.8 million and $33.7 million ~~and~~ ~~$34.7 million~~in the 2017 and 2016 six month ~~2016~~ ~~and~~ ~~2015~~periods, respectively. We funded the common dividends with cash provided by operating activities. We expect to fund our future quarterly ~~distributions to~~ common ~~stockholders~~dividends with cash provided by operating activities, proceeds from investment property sales, distributions from unconsolidated joint ventures, and indebtedness, if necessary.

On a quarterly basis, we review the amount of the common dividend in light of current and projected future cash flows from the sources noted above and also consider the requirements needed to maintain our REIT status. In addition, we have certain covenants under our Credit Facility which could limit the amount of common dividends paid. In general, common dividends of any amount can be paid as long as leverage, as defined in the facility, is less than 60% and we are not in default under our facility. Certain conditions also apply in which we can still pay common dividends if leverage is above that amount. We routinely monitor the status of our common dividend payments in light of our Credit Facility covenants.

Off Balance Sheet Arrangements

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General. We have a number of off balance sheet joint ventures with varying structures, as described in note 56 of our ~~2015~~2016 Annual Report on Form 10-K and note 34 of this Form 10-Q. The joint ventures in which we have an interest are involved in the ownership, acquisition, and/or development of real estate. A venture will fund capital requirements or operational needs with cash from operations or financing proceeds, if possible. If additional capital is deemed necessary, a venture may request a contribution from the partners, and we will evaluate such request.

Debt. At June 30, ~~2016~~2017, our unconsolidated joint ventures had aggregate outstanding indebtedness to third parties of ~~$393.8~~$434.6 million. These loans are generally mortgage or construction loans, most of which are non-recourse to us except as described in the paragraph below. In addition, in certain instances, we provide “non-recourse carve-out guarantees” on these non-recourse loans. Certain of these loans have variable interest rates, which creates exposure to the ventures in the form of market risk from interest rate changes.

We ~~guarantee repayment of up to $8.6 million of the EP II construction loan, which has a total capacity of $46.0 million. At~~ ~~June 30, 2016, we guaranteed $3.3 million, based on amounts outstanding under this loan as of that date. This guarantee may be reduced and/or eliminated based on the achievement of certain criteria. We also~~ guarantee 12.5% of the loan amount related to the Carolina Square construction loan, which has a lending capacity of $79.8 million, and noan outstanding balance of $50.5 million as of June 30, ~~2016.~~2017. At June 30, 2017, we guaranteed $6.3 million of the amount outstanding.

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Critical Accounting Policies

There have been no material changes in the critical accounting policies from those disclosed in our Annual Report on Form 10-K for the year ended December 31, ~~2015.~~2016.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

There have been no material changes in the market risk associated with our notes payable at June 30, ~~2016~~2017 compared to that as disclosed in our Annual Report on Form 10-K for the year ended December 31, ~~2015.~~2016.

Item 4. Controls and Procedures.

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Management necessarily applied its judgment in assessing the costs and benefits of such controls and procedures, which, by their nature, can provide only reasonable assurance regarding management’s control objectives.

As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of management, including the Chief Executive Officer along with the Chief Financial Officer, of the effectiveness, design and operation of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)). Based upon the foregoing, the Chief Executive Officer along with the Chief Financial Officer concluded that our disclosure controls and procedures were effective. In addition, based on such evaluation we have identified no changes in our internal control over financial reporting that occurred during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings.

Information regarding legal proceedings is described under the subheading "Litigation" in note 8 to the unaudited condensed consolidated financial statements set forth in this Form 10-Q.

Item 1A. Risk ~~Factors.~~Factors

Risk factors that affect our business and financial results are discussed in Part I, "Item 1A. Risk Factors," of our Annual Report on Form 10-K for the year ended December 31, ~~2015.~~2016. There have been no material changes in our risk factors from those previously disclosed in our Annual Report other than as set forth below. You should carefully consider the risks described in our Annual Report and below, which could materially affect our business, financial condition or future results. The risks described in our Annual Report and below are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem immaterial also may materially adversely affect our business, financial condition, and/or operating results. If any of the risks actually occur, our business, financial condition, and/or results of operations could be negatively affected.

Failure to consummate or delay in consummating the Merger and Spin-Off with Parkway (the “Transactions”) announced on April 29, 2016 for any reason could materially and adversely affect our operations and our stock price.

It is possible that the Transactions will not close due to: failure to satisfy the various conditions precedent thereto or have such conditions waived; the occurrence of any event, change or other circumstances that could give rise to the termination of the Merger Agreement; the inability to obtain stockholder approval of the Merger on the timing and terms thereof; the risk that we may not be able to complete the reorganization on the expected timing and terms thereof; the Spin-Off not being fully ready for consummation; or unanticipated difficulties and/or expenditures relating to the Transactions, any of which events would likely have a material adverse effect on the market value of our common stock.

~~Materials terms of the Merger Agreement are described in our Current Report on Form 8-K, filed on April 29, 2016.~~

~~If the Transactions with Parkway are not consummated, we may be subject to a number of material risks, including:~~

•~~under certain circumstances as set forth in the Merger Agreement, we could be required to pay to Parkway a termination fee equal to $65 million or an expense reimbursement amount of $20 million;~~

•~~the market price of our common stock may decline to the extent that the current market price of our common stock reflects a market assumption that the Transactions with Parkway will be consummated;~~

•the diversion of management’s attention away from our day-to-day business, limitations on the conduct of our business prior to completing the Transactions and other restrictive covenants contained in the Merger Agreement that may impact the manner in which our management is able to conduct our business during the period prior to the consummation of the Transactions; and

•disruption to our employees and our business relationships during the period prior to the consummation of the Transactions, which may make it difficult for us to regain our financial and market position if the Transactions do not occur.

~~The pendency of the Transactions could adversely affect the business and operations of the Company~~

In connection with the pending Transactions, some of our customers or vendors may delay or defer decisions, which could negatively impact our revenues, earnings, cash flows and expenses, regardless of whether the Transactions are completed. Similarly, current and prospective employees of ours may experience uncertainty about their future roles with us following the Transactions, which may materially adversely affect our ability to attract and retain key personnel during the pendency of the Transactions. In addition, due to restrictive operating covenants in the Merger Agreement, we may be unable, during the pendency of the Transactions, to pursue strategic transactions, undertake significant capital projects, undertake certain significant financing transactions, enter into new development agreements and otherwise pursue other actions, even if such actions would prove beneficial.

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~~Our shareholders will have a reduced ownership and voting interest after the Transactions and will exercise less influence over management.~~

The Transactions will dilute the ownership position of Company stockholders. Upon completion of the Transactions, our continuing stockholders will own approximately 53% of the issued and outstanding shares of our common stock, and former Parkway equity holders will own approximately 47% of the issued and outstanding shares of our common stock. Additionally, because we are issuing shares of limited voting preferred stock to holders of Parkway limited voting stock in the Transactions, and our limited voting preferred stock will vote in the same class as our common stock on certain matters, such as mergers and the election of directors, each outstanding share of our common stock after the completion of the Transactions will represent a smaller percentage of the voting power of the Company than if such shares of limited voting stock had not been issued in the Transactions. Consequently, our stockholders, as a general matter, will have less influence over our management and policies after the effective time of the Transactions than they currently exercise.

~~Following the Transactions, the composition of the Board of Directors will be different than the composition of the current Board of Directors.~~

The Merger Agreement provides that, as of the effective time of the Transactions, the Board of Directors will consist of nine members, including five individuals to be selected by the current members of the Board of Directors and four individuals to be selected by the current members of Parkway’s Board of Directors. One of Parkway’s four directors will be selected by TPG Pantera VI (“TPG”) and TPG Management (collectively with TPG, the “TPG Entities”), pursuant to the TPG Entities’ stockholders agreement to be entered into with the Company and subject to the terms and conditions of such stockholders agreement.

~~Our stockholders agreement with the TPG Parties grants the TPG Parties influence over the Company.~~

In connection with entering into the Merger Agreement, we have entered into a stockholders agreement with the TPG Parties (the “Company Stockholders Agreement”), in order to establish various arrangements and restrictions with respect to governance of the Company, and certain rights with respect to shares of common stock of the Company owned by TPG. Effectiveness of the Company Stockholders Agreement is conditioned on the closing of the Transactions.

Pursuant to the terms of the Company Stockholders Agreement, for so long as TPG beneficially owns at least 5% of the our common stock on an as-converted basis, TPG will have the right to nominate one director to the Board of Directors. In addition, for so long as TPG beneficially owns at least 5% of our common stock on an as-converted basis, TPG will have the right to have their nominee to the Board of Directors appointed to the Investment and the Compensation, Succession, Nominating, and Governance Committees of the Board of Directors.

The Company Stockholders Agreement provides that we shall file, within thirty days of the closing of the Transactions, a registration statement registering for sale all of the registrable securities held by TPG. The Company Stockholders Agreement also provides TPG with customary registration rights following the closing of the Transactions, subject to the terms and conditions of the Company Stockholders Agreement.

In addition, in connection with the Merger Agreement, the Board of Directors granted to the TPG Parties an exemption from the ownership limit included in our articles of incorporation, establishing for the TPG Parties an aggregate substitute in lieu of the ownership limit to permit them to constructively and beneficially own (without duplication) (i) during the term of the standstill provided by the Company Stockholders Agreement, up to 15% of our outstanding voting securities, subject to the terms and conditions of the TPG Agreements, and (ii) following the term of the standstill provided by the TPG Agreements, shares of our common stock held by the TPG Parties at the expiration of the standstill, subject to the terms, conditions, limitations, reductions and terminations set forth in an executed investor representation letter to be entered into prior to the Effective Time.

The interests of the TPG Parties could conflict with or differ from your interests as a holder of our common stock. For example, the level of ownership and board rights held by TPG could delay, defer or prevent a change of control or impede a merger, takeover or other business combination that our common stockholders may otherwise view favorably. In addition, a sale of a substantial number of shares of stock in the future by the TPG Parties could cause a decline in our stock price.

Our future results will suffer if we do not effectively manage our expanded portfolio of properties following the Transactions and any failure by us to effectively manage our portfolio could have a material and adverse effect on our business and our ability to make distributions to shareholders, as required for us to continue to qualify as a REIT.

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Following the completion of Transactions, the size of our business will materially increase. Our future success depends, in part, upon our ability to manage this expanded business, which will pose challenges for management, including challenges related to acting as landlord to a larger portfolio of properties and associated increased costs and complexity. Additionally, following the completion of the Transactions, we will enter new markets, such as Orlando, Tampa and Phoenix. We may face challenges in adapting our business to different market conditions in such new markets. There can be no assurances that we will be successful.

~~There can be no assurance that the separation and spin-off of Parkway, Inc. will occur, and until the spin-off is fully ready, the Merger Agreement may not be consummated.~~

Immediately following the effective time of the Transactions, we will separate the portion of the combined businesses relating to the ownership of real properties in Houston, Texas from the remainder of the combined business. After the separation, we will distribute pro rata to our stockholders all of the outstanding voting shares of common stock of an entity containing the Houston properties (“Parkway, Inc.”). The Merger Agreement contains conditions (including conditions relating to the completeness at the closing of the Transactions of the Form 10 registration statement to be filed by Parkway, Inc.) and covenants relating to the steps to be taken by the parties to enable the spin-off to be completed substantially on the terms set forth in the Merger Agreement. However, there can be no assurance that the separation or spin-off will occur within that timeframe, or at all. Should the spin-off not be fully ready, the Merger Agreement may not be consummated.

~~Additional Merger Information~~

In connection with the proposed transaction, Cousins has filed an amended registration statement on Form S-4 (File No. 333-211849), declared effective by the SEC on July 22, 2016, that includes a joint proxy statement of Cousins and Parkway that also constitutes a prospectus of Cousins. Investors and security holders are urged to read the joint proxy statement/prospectus and other relevant documents filed with the SEC because they contain important information about the proposed transaction. Investors and security holders may obtain free copies of these documents and other documents filed with the SEC at www.sec.gov. In addition, investors and security holders may obtain free copies of the documents filed with the SEC by Cousins by contacting Cousins Investor Relations at (404) 407-1898. Investors and security holders may obtain free copies of the documents filed with the SEC by Parkway by contacting Parkway Investor Relations at (407) 650-0593.

Cousins and Parkway and their respective directors and executive officers and other members of management and employees may be deemed to be participants in the solicitation of proxies in respect of the proposed transaction. Information about Cousins’ directors and executive officers is available in Cousins’ proxy statement for its 2016 Annual Meeting, which was filed with the SEC on March 22, 2016. Information about directors and executive officers of Parkway is available in the proxy statement for its 2016 Annual Meeting, which was filed with the SEC on March 28, 2016. Other information regarding the participants in the proxy solicitation and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in the definitive joint proxy statement/prospectus and other relevant materials filed with the SEC regarding the merger when they become available. Investors should read the definitive joint proxy statement/prospectus carefully before making any voting or investment decisions when it becomes available before making any voting or investment decisions. You may obtain free copies of these documents from Cousins or Parkway using the sources indicated above.

This communication and the information contained herein shall not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offering of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the U.S. Securities Act of 1933, as amended.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

We did not make any sales of unregistered securities during the second quarter of 2017.

We purchased the following common shares during the second quarter of 2017:



	Total Number of Shares Purchased*			Average Price Paid per Share*
April 1 - 30	585			$	8.49
May 1 - 31	—			—
June 1 - 30	—			—
	585			$	8.49

*Activity for the second quarter of 2017 related to the remittances of shares for income taxes in association with restricted stock vestings. For information on our equity compensation plans, see note 1213 of our Annual Report on Form 10-K, and note 10 to the unaudited condensed consolidated financial statements set forth in this Form 10-Q. ~~We did not make~~

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Item 5. Other Information.

As of July 25, 2017, the Company entered into amendments to the existing Change in Control Agreement with each of its executive officers. For each executive officer, the definition of the Company’s business in the protective covenant (which will be required to be entered into as consideration for any ~~sales~~severance benefit under the Agreement) has been revised to mean the development, acquisition, financing, management, leasing and sale of ~~unregistered securities during~~commercial office properties. The executive officers are Lawrence L. Gellerstedt III, M. Colin Connolly, Gregg D. Adzema, Pamela F. Roper, John S. McColl and John D. Harris, Jr.

Mr. Gellerstedt’s agreement was also amended to remove the ~~second~~ ~~quarter~~gross-up provision and to replace it with the “best net” provision in the Agreements of ~~2016. We purchased no common shares during~~Messrs. Adzema, Connolly and McColl and Ms. Roper, which provision acts to reduce payment to the ~~second~~ ~~quarter~~applicable NEO if excise taxes would otherwise be triggered, to the extent that such a reduction results in a greater after-tax amount for the NEO. In addition, Mr. Gellerstedt’s agreement was amended to change the severance benefit payable under his agreement to an amount equal to 3.00 times the sum of ~~2016~~.his annual base salary plus his average cash bonus. In connection with her recent election to Executive Vice President, Ms. Roper’s agreement was also amended to change the severance benefit payable under her agreement to an amount equal to 2.00 times the sum of her annual base salary plus her average cash bonus, a calculation which is consistent with that of the Company’s other Executive Vice Presidents.

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Item 6. Exhibits.




2.1		Agreement and Plan of Merger, dated April 28, 2016, by and among Parkway Properties, Inc., Parkway Properties LP, the Registrant and Clinic Sub Inc, filed as Exhibit 2.1 to the Registrant’s Current Report on Form 8-K filed on April 29, 2016, and incorporated herein by reference.

3.1		Restated and Amended Articles of Incorporation of the Registrant, as amended August 9, 1999, filed as Exhibit 3.1 to the Registrant’s Form 10-Q for the quarter ended June 30, 2002, and incorporated herein by reference.

3.1.1		Articles of Amendment to Restated and Amended Articles of Incorporation of the Registrant, as amended July 22, 2003, filed as Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed on July 23, 2003, and incorporated herein by reference.

3.1.2		Articles of Amendment to Restated and Amended Articles of Incorporation of the Registrant, as amended December 15, 2004, filed as Exhibit 3(a)(i) to the Registrant’s Form 10-K for the year ended December 31, 2004, and incorporated herein by reference.

3.1.3		Articles of Amendment to Restated and Amended Articles of Incorporation of the Registrant, as amended May 4, 2010, filed as Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed May 10, 2010, and incorporated herein by reference.

3.1.4		Articles of Amendment to Restated and Amended Articles of Incorporation of the Registrant, as amended May 9, 2014, filed as Exhibit 3.1.4 to the Registrant's Form 10-Q for the quarter ended June 30, 2014, and incorporated herein by reference.

3.1.5		Articles of Amendment to Restated and Amended Articles of Incorporation of Cousins, as amended October 6, 2016 (incorporated by reference from Exhibit 3.1 to the Registrant's Current Form 8-K filed on October 7, 2016).

3.1.6		Articles of Amendment to Restated and Amended Articles of Incorporation of Cousins, as amended October 6, 2016 (incorporated by reference from Exhibit 3.1.1 to the Registrant's Current Form 8-K filed on October 7, 2016).

3.2		Bylaws of the Registrant, as amended and restated December 4, 2012, filed as Exhibit 3.1 to the Registrant's Current Report on Form 8-K filed on December 7, 2012, and incorporated herein by reference.

10.1	†	~~Stockholders~~Form of Amendment to Change in Control Severance Agreement dated April 28, 2016, by and among the Registrant, TPG VI Pantera Holdings, L.P. and TPG VI Management, LLC, filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on April 29, 2016, and incorporated herein by reference.for Named Executive Officers.

10.2	†	~~Voting~~Amendment to Change in Control Severance Agreement ~~dated April 28, 2016, by and among the Registrant, TPG VI Pantera Holdings, L.P. and TPG VI Management, LLC, filed as Exhibit 10.2~~for Ms. Roper.

10.3	†	Amendment to ~~the Registrant’s Current Report on Form 8-K filed on April 29, 2016, and incorporated herein by reference.~~Change in Control Severance Agreement for Mr. Gellerstedt.

11.0	*	Computation of Per Share Earnings.

31.1	†	Certification of the Chief Executive Officer Pursuant to Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2	†	Certification of the Chief Financial Officer Pursuant to Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1	†	Certification of the Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2	†	Certification of the Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101	†	The following financial information for the Registrant, formatted in XBRL (Extensible Business Reporting Language): (i) the condensed consolidated balance sheets, (ii) the condensed consolidated statements of operations, (iii) the condensed consolidated statements of equity, (iv) the condensed consolidated statements of cash flows, and (v) the notes to condensed consolidated financial statements.



*		Data required by ASC 260, “Earnings per Share,” is provided in note 1011 to the condensed consolidated financial statements included in this report.
†		Filed herewith.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



	COUSINS PROPERTIES INCORPORATED
	/s/ Gregg D. Adzema
	Gregg D. Adzema
	Executive Vice President and Chief Financial Officer (Duly Authorized Officer and Principal Financial Officer)

Date: July ~~28, 2016~~27, 2017

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