Cousins Properties Incorporated and Consolidated Entities
FUNDS FROM OPERATIONS
- --------------------------------------------------------------------------------
The table below shows Funds From Operations ("FFO") for Cousins Properties
Incorporated and Consolidated Entities and its unconsolidated joint ventures. On
a consolidated basis, FFO includes the Company's FFO and the Company's share of
FFO of its unconsolidated joint ventures, but excludes the Company's share of
distributions from such ventures. The Company calculates its FFO using the
National Association of Real Estate Investment Trusts ("NAREIT") definition of
FFO adjusted to (i) eliminate the recognition of rental revenues on a
straight-line basis, (ii) reflect stock appreciation right expense on a cash
basis and (iii) recognize certain fee income as cash is received rather than
when recognized in the financial statements. The Company believes its FFO
presentation more properly reflects its operating results.
Management believes the Company's FFO is not directly comparable to other
REITs which own a portfolio of mature income-producing properties because the
Company develops projects through a development and lease-up phase before they
reach their targeted cash flow returns. Furthermore, the Company eliminates in
consolidation fee income for developing and leasing projects owned by
consolidated entities, while capitalizing related internal costs. In addition,
unlike many REITs, the Company has considerable land holdings which provide a
strong base for future FFO growth as land is developed or sold in future years.
Property taxes on the land, which are expensed currently, reduce current FFO.
As indicated above, the Company does not include straight-lined rents in
its FFO, as it could under the NAREIT definition of FFO. Furthermore, most of
the Company's leases are also escalated periodically based on the Consumer Price
Index, which unlike fixed escalations, do not require rent to be straight-lined;
under NAREIT's definition straight-lining of rents produces higher FFO in the
early years of a lease and lower FFO in the later years of a lease.
FFO is used by industry analysts as a supplemental measure of an equity
REIT's performance. FFO should not be considered an alternative to net income or
other measurements under generally accepted accounting principles as an
indicator of operating performance, or to cash flows from operating, investing,
or financing activities as a measure of liquidity.
- --------------------------------------------------------------------------------
($ in thousands, except
per share amounts)
Years Ended December 31,
--------------------------------
1999 1998 1997
---- ---- ----
Income before gain on sale of investment properties $45,315 $41,355 $31,305
Depreciation and amortization 36,737 28,910 24,397
Amortization of deferred financing costs and
depreciation of furniture, fixtures and equipment (758) (524) (452)
Elimination of the recognition of rental revenues on
a straight-line basis (142) 1,119 998
Adjustment to reflect stock appreciation right
expense on a cash basis (101) (8) (702)
Consolidated Funds From Operations $81,051 $70,852 $55,546
Weighted Average Shares 32,092 31,602 29,267
Consolidated Funds From Operations Per Share - Basic $ 2.53 $ 2.24 $ 1.90
Adjusted Weighted Average Shares 32,687 32,040 29,693
Consolidated Funds From Operations Per Share - Diluted $ 2.48 $ 2.21 $ 1.87
- --------------------------------------------------------------------------------
Cousins Properties Incorporated and Consolidated Entities
CONSOLIDATED BALANCE SHEETS
- --------------------------------------------------------------------------------
($ in thousands, except share and per share amounts)
December 31,
---------------------
1999 1998
-------- --------
ASSETS
- ------
PROPERTIES (Notes 4 and 8):
Operating properties, net of accumulated
depreciation of $35,929 in 1999 and $23,422
in 1998 $365,976 $235,588
Land held for investment or future development 14,126 15,530
Projects under construction 348,072 178,736
Residential lots under development 4,687 8,771
---------------------
Total properties 732,861 438,625
CASH AND CASH EQUIVALENTS, at cost, which
approximates market 1,473 1,349
NOTES AND OTHER RECEIVABLES (Note 3) 37,303 39,470
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES
(Notes 4 and 5) 151,737 264,648
OTHER ASSETS 9,558 8,766
---------------------
TOTAL ASSETS $932,932 $752,858
=====================
LIABILITIES AND STOCKHOLDERS' INVESTMENT
- ----------------------------------------
NOTES PAYABLE (Note 4) $312,257 $198,858
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES 34,827 36,104
DEPOSITS AND DEFERRED INCOME 861 928
---------------------
TOTAL LIABILITIES 347,945 235,890
---------------------
DEFERRED GAIN (Note 5) 115,576 120,038
MINORITY INTERESTS 31,689 17,065
COMMITMENTS AND CONTINGENT LIABILITIES (Note 4)
STOCKHOLDERS' INVESTMENT (Note 6):
Common stock, $1 par value; authorized 50,000,000
shares, issued 32,328,135 in 1999 and 31,887,298
in 1998 32,328 31,887
Additional paid-in capital 256,988 244,778
Treasury stock at cost, 153,600 shares in 1999 (4,990) --
Cumulative undistributed net income 153,396 103,200
---------------------
TOTAL STOCKHOLDERS' INVESTMENT 437,722 379,865
---------------------
TOTAL LIABILITIES AND STOCKHOLDERS' INVESTMENT $932,932 $752,858
=====================
The accompanying notes are an integral part of these consolidated balance
sheets.
Cousins Properties Incorporated and Consolidated Entities
CONSOLIDATED STATEMENTS OF INCOME
- --------------------------------------------------------------------------------
($ in thousands, except per share amounts)
Years Ended December 31,
------------------------------
1999 1998 1997
-------- ------- -------
REVENUES:
Rental property revenues (Note 10) $ 62,480 $67,726 $62,252
Development income 6,165 3,007 3,123
Management fees 4,743 3,761 3,448
Leasing and other fees 2,991 2,810 720
Residential lot and outparcel sales 17,857 16,732 12,847
Interest and other 3,588 4,275 3,609
------------------------------
97,824 98,311 85,999
------------------------------
INCOME FROM UNCONSOLIDATED JOINT VENTURES
(Note 5) 19,637 18,423 15,461
COSTS AND EXPENSES:
Rental property operating expenses 19,087 17,702 15,371
General and administrative expenses 14,961 13,087 12,717
Depreciation and amortization 16,859 15,173 14,046
Stock appreciation right expense (Note 6) 108 330 204
Residential lot and outparcel cost of sales 14,897 15,514 11,917
Interest expense (Note 4) 600 11,558 14,126
Property taxes on undeveloped land 811 900 606
Other 2,381 1,263 2,695
------------------------------
69,704 75,527 71,682
------------------------------
INCOME FROM OPERATIONS BEFORE INCOME TAXES
AND GAIN ON SALE OF INVESTMENT PROPERTIES 47,757 41,207 29,778
PROVISION (BENEFIT) FOR INCOME TAXES FROM
OPERATIONS (Note 7) 2,442 (148) (1,527)
------------------------------
INCOME BEFORE GAIN ON SALE OF INVESTMENT
PROPERTIES 45,315 41,355 31,305
------------------------------
GAIN ON SALE OF INVESTMENT PROPERTIES, NET OF
APPLICABLE INCOME TAX PROVISION (Note 7) 58,767 3,944 5,972
------------------------------
NET INCOME $104,082 $45,299 $37,277
==============================
WEIGHTED AVERAGE SHARES 32,092 31,602 29,267
==============================
BASIC NET INCOME PER SHARE $ 3.24 $ 1.43 $ 1.27
==============================
ADJUSTED WEIGHTED AVERAGE SHARES 32,687 32,040 29,693
==============================
DILUTED NET INCOME PER SHARE $ 3.18 $ 1.41 $ 1.26
==============================
CASH DIVIDENDS DECLARED PER SHARE (Note 6) $ 1.68 $ 1.49 $ 1.29
==============================
The accompanying notes are an integral part of these consolidated statements.
Cousins Properties Incorporated and Consolidated Entities
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' INVESTMENT
- --------------------------------------------------------------------------------
Years Ended December 31, 1999, 1998 and 1997
($ in thousands)
Additional Cumulative
Common Paid-In Treasury Undistributed
Stock Capital Stock Net Income Total
----- ---------- -------- ------------- --------
BALANCE, December 31, 1996 $28,920 $164,970 $ -- $105,294 $299,184
Net income, 1997 -- -- -- 37,277 37,277
Common stock issued pursuant to:
2,150,000 share stock offering,
net of expenses 2,150 61,993 -- -- 64,143
Exercise of options and
director stock plan 223 2,946 -- -- 3,169
Dividend reinvestment plan 179 4,328 -- -- 4,507
Dividends declared -- -- -- (37,606) (37,606)
--------------------------------------------------------------
BALANCE, December 31, 1997 31,472 234,237 -- 104,965 370,674
Net income, 1998 -- -- -- 45,299 45,299
Common stock issued pursuant to:
Exercise of options and
director stock plan 43 506 -- -- 549
Dividend reinvestment plan 372 10,035 -- -- 10,407
Dividends declared -- -- -- (47,064) (47,064)
--------------------------------------------------------------
BALANCE, December 31, 1998 31,887 244,778 -- 103,200 379,865
Net income, 1999 -- -- -- 104,082 104,082
Common stock issued pursuant to:
Exercise of options and
director stock plan 78 1,269 -- -- 1,347
Dividend reinvestment plan 363 10,941 -- -- 11,304
Dividends declared -- -- -- (53,886) (53,886)
Purchase of treasury stock -- -- (4,990) -- (4,990)
--------------------------------------------------------------
BALANCE, December 31, 1999 $32,328 $256,988 $(4,990) $153,396 $437,722
==============================================================
The accompanying notes are an integral part of these consolidated statements.
Cousins Properties Incorporated and Consolidated Entities
CONSOLIDATED STATEMENTS OF CASH FLOWS (Note 9)
- --------------------------------------------------------------------------------
($ in thousands)
Years Ended December 31,
--------------------------------
1999 1998 1997
-------- -------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
Income before gain on sale of investment properties $ 45,315 $ 41,355 $ 31,305
Adjustments to reconcile income before gain on sale of investment
properties to net cash provided by operating activities:
Depreciation and amortization, net of minority interest's share 16,658 15,173 14,046
Stock appreciation right expense 108 330 204
Cash charges to expense accrual for stock appreciation rights (209) (338) (906)
Effect of recognizing rental revenues on a straight-line basis (1,064) (347) (440)
Income from unconsolidated joint ventures (19,637) (18,423) (15,461)
Operating distributions from unconsolidated joint ventures 36,051 23,612 21,707
Residential lot and outparcel cost of sales 13,802 14,759 11,398
Changes in other operating assets and liabilities:
Change in other receivables (1,903) (1,986) 2,592
Change in accounts payable and accrued liabilities 2,706 15,939 (6,492)
--------------------------------
Net cash provided by operating activities 91,827 90,074 57,953
--------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Gain on sale of investment properties, net of applicable income tax provision 58,767 3,944 5,972
Adjustments to reconcile gain on sale of investment properties
to net cash provided by sales activities:
Cost of sales 29,576 1,264 17,041
Deferred income recognized (4,123) (536) --
Property acquisition and development expenditures (337,961) (194,253) (80,628)
Non-operating distributions from unconsolidated joint ventures 3,635 22,617 14,681
Investment in unconsolidated joint ventures, including interest
capitalized to equity investments (36,195) (34,712) (8,863)
Investment in notes receivable (1,191) (33,345) (5,593)
Collection of notes receivable 6,258 30,528 3,472
Change in other assets, net (3,112) 976 (1,645)
Net cash received in formation of venture 125,469 103,025 --
--------------------------------
Net cash used in investing activities (158,877) (100,492) (55,563)
--------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of credit facility (253,023) (231,115) (138,430)
Proceeds from credit facility 372,554 242,235 114,631
Common stock sold, net of expenses 12,651 10,956 71,795
Purchase of treasury stock (4,990) -- --
Dividends paid (53,886) (47,064) (37,606)
Proceeds from other notes payable -- 10,870 25,000
Repayment of other notes payable (6,132) (6,809) (6,684)
--------------------------------
Net cash provided by (used in) financing activities 67,174 (20,927) 28,706
--------------------------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 124 (31,345) 31,096
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 1,349 32,694 1,598
--------------------------------
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 1,473 $ 1,349 $ 32,694
================================
The accompanying notes are an integral part of these consolidated statements.
Cousins Properties Incorporated and Consolidated Entities
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
December 31, 1999, 1998 and 1997
1. SIGNIFICANT ACCOUNTING POLICIES
Consolidation and Presentation:
The Consolidated Financial Statements include the accounts of Cousins
Properties Incorporated ("Cousins"), its majority owned partnerships and wholly
owned subsidiary, Cousins Real Estate Corporation ("CREC") and its subsidiaries
and CREC II Inc. ("CREC II") and its subsidiaries. All of the entities included
in the Consolidated Financial Statements are hereinafter referred to
collectively as the "Company." The Company's investments in its non-majority
owned joint ventures are recorded using the equity method of accounting.
However, the recognition of losses is limited to the amount of direct or implied
financial support. Information regarding the non-majority owned joint ventures
is included in Note 5.
Income Taxes:
Since 1987, Cousins has elected to be taxed as a real estate investment
trust ("REIT"). As a REIT, Cousins is not subject to corporate federal income
taxes to the extent that it distributes 100% of its taxable income (excluding
the consolidated taxable income of CREC and its wholly owned subsidiaries and
CREC II and its wholly owned subsidiaries) to stockholders, which is Cousins'
current intention. The Company computes taxable income on a basis different from
that used for financial reporting purposes (see Note 7). CREC and its wholly
owned subsidiaries and CREC II and its wholly owned subsidiaries each file a
consolidated federal income tax return.
Depreciation and Amortization:
Real estate assets are stated at depreciated cost. Buildings are
depreciated over 30 to 40 years. Buildings that were acquired are depreciated
over 15, 25 and 30 years. Furniture, fixtures and equipment are depreciated over
3 to 5 years. Leasehold improvements and tenant improvements are amortized over
the life of the applicable leases or the estimated useful life of the assets,
whichever is shorter. Deferred expenses are amortized over the period of
estimated benefit. The straight-line method is used for all depreciation and
amortization.
Fee Income and Cost Capitalization:
Development, construction, management and leasing fees received from
unconsolidated joint ventures are recognized as earned. A portion of these fees
may be capitalized by the joint ventures; however, the Company expenses salaries
and other direct costs related to this income. The Company classifies its share
of fee income earned by unconsolidated joint ventures as fee income rather than
joint venture income for those ventures where the related expense is borne
primarily by the Company rather than the venture.
Development, construction, and leasing fees between consolidated entities
are eliminated in consolidation. These fees totaled $4,676,000, $3,104,000 and
$1,510,000 in 1999, 1998 and 1997, respectively. Management fees received from
consolidated entities are shown as a reduction in rental property operating
expenses. Costs related to planning, development, leasing and construction of
properties (including related general and administrative expenses) are
capitalized.
Interest, real estate taxes, and rental property revenues and expenses of
properties prior to the date they become operational for financial reporting
purposes are also capitalized. Interest is capitalized to investments accounted
for by the equity method when the investee has property under development with a
carrying value in excess of the investee's borrowings. Deferred leasing and
other capitalized costs associated with a particular property are classified
with Properties in the Consolidated Balance Sheets.
Cash and Cash Equivalents:
Cash and cash equivalents include cash and highly liquid money market
instruments. Highly liquid money market instruments include securities and
repurchase agreements with original maturities of three months or less, money
market mutual funds, and securities on which the interest or dividend rate is
adjusted to market rate at least every three months. At December 31, 1999, cash
and cash equivalents included $379,000 which is restricted under a municipal
bond indenture.
Rental Property Revenues:
In accordance with Statement of Financial Accounting Standards ("SFAS") No.
13, income on leases which include scheduled increases in rental rates over the
lease term (other than scheduled increases based on the Consumer Price Index) is
recognized on a straight-line basis.
Use of Estimates:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
Derivative Instruments and Hedging Activities:
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities," (the
"Statement") which establishes accounting and reporting standards for derivative
instruments, including certain derivative instruments embedded in other
contracts, and for hedging activities. The Statement, as amended in June 1999 by
SFAS No. 137, "Accounting for Derivative Instruments and Hedging Activities -
Deferral of the Effective Date of FASB Statement No. 133," is effective for
fiscal years beginning after June 15, 2000. The Statement requires companies to
record derivatives on the balance sheet as assets and liabilities at fair value.
The Statement also requires that changes in the derivative's fair value be
recognized currently in earnings unless specific hedge accounting criteria are
met. The Company does not expect the adoption of this statement will have a
material impact on the financial statements or results of operations of the
Company.
Reclassifications:
Certain 1998 amounts have been reclassified to conform with the 1999
presentation.
2. CREC AND CREC II
CREC conducts certain development and leasing activities for real estate
projects. CREC also manages a joint venture property in which it has an
ownership interest. At December 31, 1999, 1998 and 1997, Cousins owned 100% of
CREC's $5,025,000 par value 8% cumulative preferred stock and 100% of CREC's
nonvoting common stock, which is entitled to 95% of any dividends of CREC after
preferred dividend requirements. Thomas G. Cousins, Chairman of the Board of
Cousins, owns 100% of the voting common stock of CREC, which voting common stock
is entitled to 5% of any dividends of CREC after preferred dividend
requirements. CREC is included in the Company's Consolidated Financial
Statements, but is taxed as a regular corporation. CREC has paid no common
dividends to date, and for financial reporting purposes, none of CREC's income
is attributable to Mr. Cousins' minority interest because the face amount of
CREC's preferred stock plus accumulated dividends thereon ($9,849,000 in
aggregate) exceeds CREC's $7,804,625 of equity.
CREC II owns the Company's investment in Cousins Stone LP (see Note 5).
Cousins owns 100% of CREC II's $835,000 par value, 10% cumulative preferred
stock and 100% of CREC II's non-voting common stock, which is entitled to 95% of
any dividends of CREC II after preferred dividend requirements. Mr. Cousins owns
100% of the voting common stock of CREC II, which voting common stock is
entitled to 5% of any dividends of CREC II after preferred dividend
requirements. CREC II is included in the Company's Consolidated Financial
Statements, but is taxed as a regular corporation. CREC II has paid no preferred
or common dividends to date and as of December 31, 1999 undistributed cumulative
preferred dividends are $49,636. Minority interest expense has been recognized
for Mr. Cousins' ownership.
3. NOTES AND OTHER RECEIVABLES
At December 31, 1999 and 1998, notes and other receivables included the
following ($ in thousands):
1999 1998
------- -------
650 Massachusetts Avenue Mortgage Notes $24,332 $25,053
Daniel Realty Company Note Receivable 2,610 3,336
Miscellaneous Notes 1,342 608
Cumulative rental revenue recognized on a straight-
line basis in excess of revenue accrued in
accordance with lease terms (see Note 1) 2,135 1,071
Other Receivables 6,884 9,402
-----------------
Total Notes and Other Receivables $37,303 $39,470
=================
650 Massachusetts Avenue Mortgage Notes - On March 10, 1994, the Company
purchased from the Resolution Trust Corporation ("RTC") two notes aggregating
$37 million at a total cost of approximately $28 million. The two notes, which
resulted from the RTC's restructuring in December 1993 of a $53 million note,
are secured by a first deed of trust on an office building containing
approximately 250,000 square feet located at 650 Massachusetts Avenue, NW, in
Washington, D.C. The notes mature December 31, 2003, at which time their
unamortized balance will be a maximum of approximately $28.9 million. The notes
require minimum monthly payments totaling $2,818,000 annually, which, through
the year 2000, are supported by a U.S. government agency lease. For financial
reporting purposes, the discounted notes are treated as non-amortizing notes to
the extent of the minimum required payments, with the minimum required payments
treated as interest income. Amounts in excess of the minimum required payments
($721,000 and $908,000 in 1999 and 1998, respectively) are treated as a
reduction of principal.
Daniel Realty Company Note Receivable - On December 27, 1996, the Company
entered into a venture with Daniel Realty Company ("Daniel"), a privately-held
real estate company headquartered in Birmingham, Alabama, which focuses on the
development and acquisition of commercial office properties. The arrangement
with Daniel included a loan to Daniel of up to $9.5 million which had an
interest rate of 11%, required semiannual principal payments commencing February
1, 1998 and matured on December 31, 2003. The Company also obtained an option to
acquire certain segments of Daniel's business.
On December 31, 1997, upon paydown of the outstanding balance of the note
receivable to $4 million, the Company amended the note, which reduced the
interest rate to 9% and requires quarterly payments of principal and interest,
which commenced April 1, 1998, in the amount of $250,568. The loan will fully
amortize over 5 years.
Fair Value - The estimated fair value of the Company's $28.3 million and
$29.0 million of notes receivable at December 31, 1999 and 1998, respectively,
was $35.2 million and $35.9 million, respectively, calculated by discounting
future cash flows from the notes receivable at estimated rates at which similar
loans would be made currently.
4. NOTES PAYABLE, COMMITMENTS, AND CONTINGENT LIABILITIES
At December 31, 1999 and 1998, notes payable included the following ($ in
thousands):
December 31, 1999 December 31, 1998
------------------------------------ -------------------------------------
Share of Share of
Unconsolidated Unconsolidated
Company Joint Ventures Total Company Joint Ventures Total
-------- -------------- -------- -------- -------------- --------
Floating Rate Lines of Credit
and Construction Loans $130,651 $ 28,504 $159,155 $ 11,120 $ -- $ 11,120
Other Debt (primarily non-recourse
fixed rate mortgages) 181,606 190,235 371,841 187,738 221,498 409,236
-----------------------------------------------------------------------------
$312,257 $218,739 $530,996 $198,858 $221,498 $420,356
=============================================================================
The following table summarizes the terms of the debt outstanding at
December 31, 1999 ($ in thousands):
Term/
Amortization Balance at
Period Final December 31,
Description Rate (Years) Maturity 1999
----------- -------------- ------------ -------- ------------
Company Debt:
- -------------
Credit facility (a maximum of $225 million Floating based
through 4/27/00 and $150 million through on LIBOR 3/N/A 8/27/02 $130,651
8/27/02), unsecured
Note secured by Company's interest in
CSC Associates, L.P. 6.677% 15/20 2/15/11 71,399
Perimeter Expo mortgage note 8.04% 10/30 8/15/05 20,613
Note secured by Company's interest in 650
Massachusetts Avenue mortgage notes (see Note 3) 6.53% 5/N/A 10/01/00 20,571
101 Independence Center mortgage note 8.22% 11/25 12/1/07 47,522
Lakeshore Park Plaza mortgage note 6.78% 10/30 11/1/08 10,683
Northside/Alpharetta I mortgage note 7.70% 8/28 1/1/06 10,401
Other miscellaneous notes Various Various Various 417
--------
312,257
--------
Share of Unconsolidated Joint Venture Debt:
- -------------------------------------------
Wildwood Associates:
Line of credit ($2 million maximum) LIBOR + .75% 1/N/A 9/30/00 --
2300 Windy Ridge Parkway mortgage note 7.56% 10/25 12/01/05 32,806
2500 Windy Ridge Parkway mortgage note 7.45% 10/20 12/15/05 11,684
3200 Windy Hill Road mortgage note 8.23% 10/28 1/1/07 33,942
4100/4300 Wildwood Parkway mortgage note 7.65% 15/25 4/1/12 14,392
4200 Wildwood Parkway mortgage note 6.78% 15.75/18 3/31/14 21,767
Cousins LORET Venture, L.L.C.:
Two Live Oak Center mortgage note 7.90% 12/30 12/31/09 14,746
The Pinnacle mortgage note 7.11% 12/30 12/31/09 35,000
CP Venture Two LLC:
North Point MarketCenter mortgage note 8.50% 10/25 7/15/05 3,236
100/200 North Point Center East mortgage note 7.86% 10/25 8/1/07 2,780
Ten Peachtree Place Associates mortgage note 8.00% 10/18 11/30/01 8,728
CC-JM II Associates mortgage note 7.00% 17/17 4/1/13 11,154
Charlotte Gateway Village, LLC construction loan LIBOR + .50% 3/N/A 1/2/02 28,504
--------
218,739
--------
$530,996
========
In 1996, CSC Associates, L.P. ("CSC") issued $80 million of 6.377%
collateralized non-recourse mortgage notes (the "Notes") secured by CSC's
interest in the Bank of America Plaza building and related leases and
agreements. CSC loaned the $80 million proceeds of the Notes to the Company
under a non-recourse loan (the "Cousins Loan") secured by the Company's interest
in CSC under the same payment terms as those of the Notes. The Company paid all
costs of issuing the Notes and the Cousins Loan, including a $400,000 fee to an
affiliate of Bank of America Corporation. In addition, the Company pays a fee to
an affiliate of Bank of America Corporation of .3% per annum of the outstanding
principal balance of the Notes. Because CSC has loaned the $80 million proceeds
of the Notes to the Company, the Notes and their related interest expense and
maturities are disclosed as an obligation of the Company and are not included in
the unconsolidated joint venture balances disclosed in the above table or in
Note 5. (The related note receivable and interest income are also not included
in Note 5.)
In August 1999, the Company renewed and modified its $150 million credit
facility which matures August 27, 2002. On December 31, 1999, the credit
facility was temporarily increased to $225 million, which increase expires April
27, 2000. The credit facility is unsecured and bears an interest rate equal to
the London Interbank Offering Rate ("LIBOR") plus a spread which is based on the
ratio of total debt to total assets according to the following table:
Ratio of Total Debt
To Total Assets Basis Points
------------------- ------------
<=35% 90
>35% <= 45% 100
>45% <= 50% 110
>50% <= 55% 125
In December 1998, Charlotte Gateway Village, LLC completed construction
financing of up to $190 million for Gateway Village. The note bears an interest
rate of LIBOR (adjusted for certain reserve requirements) plus .50% and matures
January 2, 2002. No amounts were drawn on the note until 1999.
The Wildwood Associates 2300 Windy Ridge Parkway, 3200 Windy Hill Road,
4100/4300 Wildwood Parkway and 4200 Wildwood Parkway mortgage notes and the
CC-JM II Associates mortgage note provide for additional amortization in the
later years of the notes (over that required by the amortization periods
disclosed in the table) concurrent with scheduled rent increases.
The Company has entered into an interest rate swap in order to hedge its
exposure to fluctuations in the interest rate on the note secured by the
Company's interest in the 650 Massachusetts Avenue mortgage notes. The note
actually floats at LIBOR + 1%, but as of January 10, 1996 was effectively fixed
at the 6.53% rate disclosed in the table. The difference between fixed and
variable interest amounts calculated by reference to the principal notional
amount (which was $19,275,000 at December 31, 1999) is recognized as an
adjustment to interest expense over the life of the swap. If the Company settled
the swap as of December 31, 1999, it would receive $86,000.
At December 31, 1999, the Company had outstanding letters of credit
totaling $9,683,000, and assets, including the Company's share of joint venture
assets, with carrying values of $479,666,000 were pledged as security on the
debt of the Company and its share of unconsolidated joint venture debt. The
fixed rate long-term mortgage debt of the Company and its unconsolidated joint
ventures is non-recourse to the Company.
As of December 31, 1999, the weighted average maturity of the Company's
debt, including its share of unconsolidated joint ventures, was 9 years.
The aggregate maturities of the indebtedness at December 31, 1999
summarized above are as follows ($ in thousands):
Share of
Unconsolidated
Company Joint Ventures Total
------- -------------- --------
2000 $ 24,756 $ 4,252 $ 29,008
2001 4,298 12,369 16,667
2002 135,256 33,591 168,847
2003 4,937 5,078 10,015
2004 5,291 5,594 10,885
Thereafter 137,719 157,855 295,574
--------------------------------------
$312,257 $218,739 $530,996
======================================
For each of the years ended December 31, 1999, 1998 and 1997, interest
expense was recorded as follows ($ in thousands):
Share of Unconsolidated
Company Joint Ventures Total
------------------------------- ------------------------------- -------------------------------
Year Expensed Capitalized Total Expensed Capitalized Total Expensed Capitalized Total
- ---- -------- ----------- ------- -------- ----------- ------- -------- ----------- -------
1999 $ 600 $16,155 $16,755 $14,473 $ 1,513 $15,986 $15,073 $17,668 $32,741
1998 11,558 7,470 19,028 9,902 2,173 12,075 21,460 9,643 31,103
1997 14,126 3,167 17,293 8,281 1,123 9,404 22,407 4,290 26,697
The Company has future lease commitments under land leases aggregating
$48.0 million over an average remaining term of 60 years. The Company has
entered into construction and design contracts for real estate projects, of
which approximately $191 million remains committed at December 31, 1999. At
December 31, 1999 and 1998, the estimated fair value of the Company's notes
payable, including its share of unconsolidated joint ventures, was $517 million
and $445 million, respectively.
5. INVESTMENT IN UNCONSOLIDATED JOINT VENTURES
The following information summarizes financial data and principal
activities of unconsolidated joint ventures in which the Company had ownership
interests ($ in thousands). Audited financial statements for Wildwood Associates
and CSC Associates, L.P. are included in the Company's Form 10-K.
Company's
Total Assets Total Debt Total Equity Investment
---------------------- ------------------ ------------------ ------------------
1999 1998 1999 1998 1999 1998 1999 1998
---------- ---------- -------- -------- -------- -------- -------- --------
SUMMARY OF FINANCIAL POSITION:
Wildwood Associates $ 247,834 $ 251,545 $229,182 $233,914 $ 9,092 $ 10,186 $(36,913) $(36,364)
CSC Associates, L.P. 186,638 193,129 -- -- 183,685 190,210 94,347 97,685
Ten Peachtree Place Associates 19,077 19,718 17,456 18,444 1,375 936 175 104
Haywood Mall -- 39,792 -- -- -- 37,937 -- 19,656
CC-JM II Associates 26,779 29,231 22,308 23,014 3,758 4,841 2,215 2,660
Cousins LORET Venture, L.L.C. 134,732 163,320 99,492 104,196 32,730 50,374 16,222 25,202
Brad Cous Golf Venture, Ltd. 10,661 10,687 -- -- 10,514 9,924 5,257 4,962
Charlotte Gateway Village, LLC 86,933 15,433 57,008 -- 6,400 15,000 21,221 11,781
CP Venture LLC -- -- -- -- -- -- 16,259 135,519
CP Venture Two LLC 263,450 285,372 52,313 53,141 208,130 230,468 2,090 2,308
285 Venture, Ltd. 34,254 -- -- -- 32,448 -- 16,888 --
Cousins Stone LP 14,733 -- -- -- 14,562 -- 7,131 --
Temco Associates 13,854 2,397 -- -- 12,975 2,164 6,600 1,082
Other 722 163 -- -- 1,234 151 245 53
---------------------- ------------------ ------------------ ------------------
$1,039,667 $1,010,787 $477,759 $432,709 $516,903 $552,191 $151,737 $264,648
====================== ================== ================== ==================
Company's Share
Total Revenues Net Income of Net Income
--------------------------- ------------------------- -------------------------
1999 1998 1997 1999 1998 1997 1999 1998 1997
-------- -------- ------- ------- ------- ------- ------- ------- -------
SUMMARY OF OPERATIONS:
Wildwood Associates $ 48,019 $ 42,284 $39,115 $ 4,906 $ 4,156 $ 3,806 $ 2,453 $ 1,968 $ 1,903
CSC Associates, L.P. 38,585 36,956 35,159 20,955 20,194 18,720 10,402 10,021 9,284
Ten Peachtree Place Associates 4,356 4,396 4,295 872 803 718 271 261 248
Haywood Mall 8,730 17,049 13,820 4,910 9,465 7,382 2,433 4,614 3,648
CC-JM II Associates 4,161 4,070 3,860 420 469 261 248 213 113
Cousins LORET Venture, L.L.C. 16,673 6,810 1,885 106 1,747 135 53 672 68
Brad Cous Golf Venture, Ltd. 779 -- -- 168 -- -- 84 -- --
CP Venture LLC -- -- -- -- -- -- 82 280 --
CP Venture Two LLC 33,856 4,384 -- 893 335 -- 9 4 --
Cousins Stone LP 5,071 -- -- 2,562 -- -- 1,892 -- --
Temco Associates 7,087 361 104 2,540 194 23 1,270 97 11
Other 1,124 813 439 878 589 388 440 293 186
--------------------------- ------------------------- -------------------------
$168,441 $117,123 $98,677 $39,210 $37,952 $31,433 $19,637 $18,423 $15,461
=========================== ========================= =========================
Company's Share Of
----------------------------------------------------
Cash Flows From Cash Flows From Operating
Operating Activities Operating Activities Cash Distributions
------------------------- ------------------------- -------------------------
1999 1998 1997 1999 1998 1997 1999 1998 1997
------- ------- ------- ------- ------- ------- ------- ------- -------
SUMMARY OF OPERATING CASH FLOWS:
Wildwood Associates $14,952 $16,665 $15,789 $ 7,476 $ 8,333 $ 7,894 $ 1,000 $ 4,600 $ 4,500
CSC Associates, L.P. 28,521 28,907 26,381 14,260 14,454 13,191 13,740 11,850 12,675
Ten Peachtree Place Associates 1,027 1,358 1,205 354 343 321 200 200 200
Haywood Mall 6,158 11,571 9,795 3,079 5,786 4,897 4,068 5,585 3,895
CC-JM II Associates 1,666 1,551 1,222 833 775 611 693 324 324
Cousins LORET Venture, L.L.C. 5,442 3,968 768 2,721 1,984 384 7,240 703 --
Brad Cous Golf Venture, Ltd. 362 -- -- 181 -- -- 50 -- --
CP Venture LLC -- -- -- -- -- -- 8,303 -- --
CP Venture Two LLC 21,239 2,576 -- 6,989 2,154 -- 226 -- --
Cousins Stone LP 1,631 -- -- -- -- -- -- -- --
Temco Associates 2,540 194 28 1,270 97 16 -- -- --
Other 882 589 339 441 294 168 531 350 113
------------------------- ------------------------- -------------------------
$84,420 $67,379 $55,527 $37,604 $34,220 $27,482 $36,051 $23,612 $21,707
========================= ========================= =========================
Wildwood Associates - Wildwood Associates was formed in 1985 between the
Company and IBM, each as 50% partners. The partnership owns six office buildings
totaling 2.1 million rentable square feet, other income-producing commercial
properties, and additional developable land in Wildwood Office Park ("Wildwood")
in Atlanta, Georgia. Wildwood is an office park containing a total of
approximately 285 acres, of which approximately 92 acres are owned by Wildwood
Associates and an estimated 13 acres are committed to be contributed to Wildwood
Associates by the Company; the Company owns the balance of the developable
acreage in the office park. The 13 acres of land which are committed to be
contributed to Wildwood Associates by the Company are included in Wildwood
Associates' financial statements under the caption "Land Committed to be
Contributed" and are not included in "Land Held for Investment or Future
Development" in the Company's financial statements. All costs associated with
the land are borne by Wildwood Associates.
Through December 31, 1999, IBM had contributed $46.6 million in cash plus
properties having an agreed value of $16.3 million for its one-half interest in
Wildwood Associates. The Company has contributed $84,000 in cash plus properties
having an agreed value of $49.3 million for its one-half interest in the
partnership, and is obligated to contribute the aforesaid estimated 13 acres of
additional land with an agreed value of $8.3 million. The Company and IBM each
lease office space from the partnership at rates comparable to those charged to
third parties.
The Company's investment as recorded in the Consolidated Balance Sheets,
which was a negative investment of $36.9 million at December 31, 1999 due to
partnership distributions, is based upon the Company's historical cost of the
properties at the time they were contributed or committed to be contributed to
the partnership, whereas its investment as recorded on Wildwood Associates'
books ($4.5 million at December 31, 1999) is based on the agreed-upon values at
the time the partnership was formed.
CSC Associates, L.P. ("CSC") - CSC was formed in 1989 between the Company
and a wholly owned subsidiary of Bank of America Corporation, each as 50%
partners. CSC owns the 1.3 million rentable square foot Bank of America Plaza in
Atlanta, Georgia.
CSC's net income or loss and cash distributions are allocated to the
partners based on their percentage interests (50% each). See Note 4 for a
discussion of the presentation of certain CSC assets, liabilities and revenues.
Ten Peachtree Place Associates ("TPPA") - TPPA is a general partnership
between the Company (50%) and a wholly owned subsidiary of The Coca-Cola Company
("Coca-Cola") (50%). The venture owns Ten Peachtree Place, a 259,000 rentable
square foot building located in midtown Atlanta, Georgia. The building is 100%
leased to Coca-Cola through November 30, 2001.
The TPPA partnership agreement generally provides that each of the partners
is entitled to receive 50% of cash flows from operating activities net of note
principal amortization through the term of the Coca-Cola lease, after which the
Company and its partner are entitled to receive 15% and 85% of the cash flows
(including any sales proceeds), respectively, until the two partners have
received a combined distribution of $15.3 million. Thereafter, each partner is
entitled to receive 50% of cash flows.
Haywood Mall - Haywood Mall, a regional shopping center on 86 acres 5 miles
southeast of downtown Greenville, South Carolina, was owned by the Company and
Simon Property Group. The mall has 1,256,000 gross leaseable square feet ("GLA")
(of which approximately 330,000 GLA was owned). The balance of the mall is owned
by the mall's five major department stores. The Company sold its 50% interest to
Simon Property Group in June 1999 for $69 million, resulting in a gain of $50.1
million which is included in Gain on Sale of Investment Properties in the
accompanying Consolidated Statements of Income. The proceeds from the sale were
re-deployed through a tax-deferred exchange into Inforum, a 987,000 rentable
square foot office building located in downtown Atlanta, Georgia.
CC-JM II Associates - This joint venture was formed in 1994 between the
Company and an affiliate of CarrAmerica Realty Corporation, each as 50% general
partners, to develop and own a 224,000 rentable square foot office building in
suburban Washington, D.C. The building is 100% leased until January 2011 to
Booz-Allen & Hamilton, an international consulting firm, as a part of its
corporate headquarters campus.
Cousins LORET Venture, L.L.C. ("Cousins LORET") - Effective July 31, 1997,
Cousins LORET was formed between the Company and LORET Holdings, L.L.L.P.
("LORET"), each as 50% members. LORET contributed Two Live Oak Center, a 278,000
rentable square foot office building located in Atlanta, Georgia, which was
renovated in 1997. Two Live Oak Center became partially operational for
financial reporting purposes in October 1997. Two Live Oak Center was
contributed subject to a 7.90% $30 million non-recourse ten year mortgage note
payable (see Note 4). LORET also contributed an adjacent 4 acre site on which
construction of The Pinnacle, a 423,000 rentable square foot office building,
commenced in August 1997 and was completed in November 1998. The Pinnacle became
partially operational for financial reporting purposes in March 1999. The
Company contributed $25 million of cash to Cousins LORET to match the value of
LORET's agreed-upon equity. In May 1998, Cousins LORET completed the $70 million
non-recourse financing of The Pinnacle at an interest rate of 7.11% and a term
of twelve years, which was completely funded on December 30, 1998.
Brad Cous Golf Venture, Ltd. ("Brad Cous") - Effective January 31, 1998,
the Company formed the Brad Cous Golf Venture, Ltd. with the W.C. Bradley Co.,
each as 50% partners, for the purpose of developing and owning The Shops at
World Golf Village, an approximately 80,000 square foot retail center located
adjacent to the PGA Hall of Fame in St. Augustine, Florida. The Shops at World
Golf Village became partially operational for financial reporting purposes in
April 1999.
Charlotte Gateway Village, LLC ("Gateway") - On December 14, 1998, the
Company and a wholly owned subsidiary of Bank of America Corporation formed
Gateway for the purpose of developing and owning Gateway Village, a 1,076,000
rentable square foot office building and parking deck in downtown Charlotte,
North Carolina. Construction of Gateway Village commenced in July 1998. The
project is 100% leased to Bank of America Corporation. Gateway's net income or
loss and cash distributions are allocated to the members as follows: first to
the Company so that it receives a cumulative compounded return equal to 11.46%
on its capital contributions, second to a wholly owned subsidiary of Bank of
America Corporation until it has received an amount equal to the aggregate
amount distributed to the Company and then to each member, 50%. In December
1998, Gateway completed construction financing of up to $190 million for Gateway
Village. The note bears an interest rate of LIBOR (adjusted for certain reserve
requirements) plus .50% and matures January 2, 2002. No amounts were drawn on
the note until 1999. This note is fully exculpated and is supported by a lease
to Bank of America Corporation with a term of 15 years. Pursuant to the Gateway
operating agreement, this construction financing will be replaced with permanent
long-term financing which will be fully amortized at the end of the Bank of
America Corporation lease.
CP Venture LLC, CP Venture Two LLC and CP Venture Three LLC - On November
12, 1998 (the "Closing Date"), the Company entered into a venture arrangement
(the "Venture") with The Prudential Insurance Company of America ("Prudential").
On such date the Company contributed its interest in nine properties (the
"Properties") to the Venture. At the time of contribution, the Properties were
valued by the Company and Prudential based on arm's length negotiations at a
total gross value of $283,750,000 subject to mortgages in the principal amount
of $53,281,219. The following table details the values allocated to each of the
Properties and the mortgages to which certain Properties were subject:
Allocated Value Mortgage Net Value
--------------- ----------- ------------
First Union Tower $ 53,000,000 $ -- $ 53,000,000
Grandview II 23,000,000 -- 23,000,000
100 North Point Center East and
200 North Point Center East 46,050,000 24,581,670 21,468,330
Presbyterian Medical Plaza 8,600,000 -- 8,600,000
North Point MarketCenter 56,750,000 28,699,549 28,050,451
Mansell Crossing II 12,350,000 -- 12,350,000
Greenbrier MarketCenter 51,200,000 -- 51,200,000
Los Altos MarketCenter 32,800,000 -- 32,800,000
------------ ----------- ------------
$283,750,000 $53,281,219 $230,468,781
============ =========== ============
Under the Venture arrangements, Prudential committed to contribute cash to
the Venture equal to the agreed upon net value of the Properties ($230,468,781)
at dates specified in the agreements, although Prudential could have accelerated
such funding had the Company so requested. The following table details the dates
on which the cash was contributed and the percentages (including both direct and
indirect interests) the Company and Prudential had, respectively, in the
economics of the Properties following each contribution:
Total Cumulative Cousins Prudential
Date Cash Contribution Percentage Percentage
- ------------ ----------------- ---------- ----------
Closing Date $ 40 million 84.64% 15.36%
12/30/98 $105 million 59.68% 40.32%
3/30/99 $155 million 40.48% 59.52%
6/29/99 $205 million 21.28% 78.72%
9/29/99 $230.469 million 11.50% 88.50%
The structure of the Venture is as follows: CP Venture LLC, the parent
entity, owns a 99% interest in each of CP Venture Two LLC ("Property Activity
LLC") and CP Venture Three LLC ("Development Activity LLC"). The Company owns a
1% direct interest in Property Activity LLC and Prudential owns a 1% direct
interest in Development Activity LLC. The contributed properties are owned and
operated by Property Activity LLC. The Company has a 10.6061% interest in CP
Venture LLC's 99% interest in Property Activity LLC, which, combined with its 1%
direct interest, gives it a net interest of 11.5% in the economics of Property
Activity LLC. Prudential has the remaining net interest of 88.5% in the
economics of Property Activity LLC. Unless both parties agree otherwise,
Property Activity LLC may not sell the contributed properties until the end of
lock-out periods (generally three years for retail properties and four years for
office and medical office properties).
The cash contributed by Prudential was contributed to Development Activity
LLC. To the extent such funds are not yet needed for development activity,
Development Activity LLC can temporarily invest such funds; such potential
investments may include temporary loans to the Company. As of December 31, 1999,
the Venture had a note receivable from the Company of approximately $211
million. The Venture earns interest on the outstanding balance at the same rate
of the Company's credit facility. Prudential is entitled to 10.6061% of CP
Venture LLC's 99% share of the economics of Development Activity LLC, which
combined with its 1% direct interest, entitles it to an overall net interest of
11.5% in the economics of Development Activity LLC. Prudential first receives a
priority current return of 9.5% per annum on its share (11.5%) of the initial
capital ($230.469 million) ("Initial Capital") of Development Activity LLC.
Prudential also receives a liquidation preference whereby it is first entitled
to, subject to capital account limitations, sufficient proceeds to allow it to
achieve an overall 11.5% internal rate of return on its share of the Initial
Capital of Development Activity LLC. After these preferences to Prudential, the
Company has certain preferences, with the residual interests in the development
activity being shared according to the interests of the parties. All Prudential
priority current returns have been distributed to Prudential during the year.
The cumulative priority current return of approximately $15.2 million to the
Company has not been distributed as of December 31, 1999.
CP Venture LLC has appointed the Company to serve as Development Manager
and in such capacity to act for it in connection with its ownership of
Development Activity LLC. CP Venture LLC has also appointed Prudential to serve
as Property Manager and in such capacity to act for it in connection with its
ownership of Property Activity LLC. Prudential appointed the Company to serve as
property manager of the Properties for Property Activity LLC. The Company also
serves as Administrative Manager of CP Venture LLC. Property Activity LLC is
expected to continue to operate the contributed Properties. Development Activity
LLC is expected to develop commercial real estate projects over time, as
selected by the Development Manager. Development Activity LLC may also make
acquisitions, which are anticipated to be redevelopment or value-added
opportunities. Development Activity LLC is currently developing Mira Mesa
MarketCenter, a 453,000 square foot retail center in San Diego, California. The
parties anticipate that some of the projects currently under consideration by
the Company will be undertaken by Development Activity LLC, although the Company
has no obligation to make any particular opportunity available to Development
Activity LLC.
For financial reporting purposes, the Properties were deconsolidated and
contributed to Property Activity LLC. Both Property Activity LLC and CP Venture
LLC are being treated as unconsolidated joint ventures. Development Activity LLC
is treated as a consolidated entity in the Company's financial statements. The
Company has deferred the net gain on the contributed Properties and is
recognizing this net gain as Gain on Sale of Investment Properties, Net of
Applicable Income Tax Provision in the accompanying Consolidated Statements of
Income as capital distributions of cash are made from Development Activity LLC
to the Company or when the Properties initially contributed to Property Activity
LLC are liquidated by Property Activity LLC. The liquidation of the Properties
may be in the form of actual sales of the Properties or in the form of the
depreciation of the Properties which have an average remaining life of 30 years.
The total net deferred gain on the contributed Properties on the Closing Date
was approximately $96.8 million over the cost of the Properties. Including
depreciation recapture of $23.8 million, the total net deferred gain on the
Closing Date was approximately $120.6 million which has been reduced by
$4,123,000 and $536,000 in 1999 and 1998, respectively, and is included in
Deferred Gain in the accompanying Consolidated Balance Sheets.
285 Venture, Ltd. - In March 1999, the Company and a commingled trust fund
advised by J.P. Morgan Investment Management Inc. (the "J.P. Morgan Fund")
formed 285 Venture, Ltd., each as 50% partners, for the purpose of developing
1155 Perimeter Center West, an approximately 361,000 rentable square foot office
building complex in Atlanta, Georgia. The J.P. Morgan Fund contributed the
approximately 6 acre site upon which 1155 Perimeter Center West is being
developed. The land had an agreed-upon value of approximately $5.4 million which
the Company matched with a cash contribution.
Cousins Stone LP - Cousins Stone LP was formed on June 1, 1999 when CREC
II's subsidiaries acquired Faison's 50% interest in Faison-Stone. Cousins Stone
LP is a full-service real estate company headquartered in Dallas, Texas that
specializes in third party property management and leasing of Class "A" office
properties.
Temco Associates - Temco Associates was formed in 1991 as a partnership
between the Company (50%) and a subsidiary of Temple-Inland Inc. (50%). Temco
Associates has an option through March 2006, with no carrying costs, to acquire
the fee simple interest in approximately 10,300 acres in Paulding County,
Georgia (northwest of Atlanta, Georgia). The partnership also has an option to
acquire a timber rights interest only in approximately 22,000 acres. The options
may be exercised in whole or in part over the option period, and the option
price of the fee simple land was $929 per acre at January 1, 2000, escalating at
6% on January 1 of each succeeding year during the term of the option. During
1999, approximately 640 acres of the option related to the fee simple interest
was exercised. Approximately 466 acres were simultaneously sold for gross
profits of $2,458,000. Approximately 174 acres were acquired for development of
the Bentwater residential community. Approximately 1,750 lots will be developed
within Bentwater on an approximate total of 1,083 acres, the remainder of which
will be acquired as needed through exercises of the option related to the fee
simple interest.
During 1998, approximately 328 acres of the option related to the fee
simple interest was exercised. Approximately 83 acres were simultaneously sold
for gross profits of approximately $192,000. The Cobb County YMCA had a three
year option to purchase approximately 38 acres out of the total acres of the
options exercised in 1998, which they exercised in December 1999. The remaining
207 acres were deeded in early 1999 to a golf course developer who is developing
the golf course within Bentwater.
Other - This category consists of several other joint ventures including:
Cousins-Hines Partnerships - Through the Cousins-Hines partnerships, CREC
effectively owns 9.8% of the One Ninety One Peachtree Tower in Atlanta, Georgia,
subject to a preference in favor of the majority partner. This 1.2 million
rentable square foot office building, which opened in December 1990, was
developed in partnership with the Hines Interests Limited Partnership and the
Dutch Institutional Holding Company ("DIHC"). In October 1997, Cornerstone
Properties, Inc. purchased DIHC's interest in the partnership. Because CREC's
effective ownership of this building is less than 20%, the Company accounts for
its investment using the cost method of accounting, and therefore the above
tables do not include the Company's share of One Ninety One Peachtree Tower.
Additional Information - The Company recognized $9,362,000, $7,426,000 and
$4,398,000 of development, construction, leasing, and management fees from
unconsolidated joint ventures in 1999, 1998 and 1997, respectively.
6. STOCKHOLDERS' INVESTMENT
1999 Incentive Stock Plan:
In May 1999, the stockholders of the Company approved the adoption of the
1999 Incentive Stock Plan (the "1999 Plan"), which plan, upon adoption, covered
the issuance of 895,525 shares of common stock, all of which shares had been
available for use under the 1995 Stock Incentive Plan, the Stock Plan for
Outside Directors and the Stock Appreciation Right Plan (collectively the
"Predecessor Plans"). As of December 31, 1999, 183,335 of these shares remain
authorized to be awarded pursuant to the 1999 Plan, which allows awards of stock
options, restricted stock ("stock grants") or stock appreciation rights
("SARs"). Upon adoption of the 1999 Plan, no additional shares of common stock
can be issued under the Predecessor Plans.
Stock Options - At December 31, 1999, 2,979,349 of stock options awarded to
key employees and outside directors pursuant to both the 1999 Plan and the
Predecessor Plans were outstanding. All stock options have a term of 10 years.
Key employee stock options have a vesting period of 5 years under both the 1999
Plan and the Predecessor Plans. Outside director stock options are fully vested
on the grant date under the 1999 Plan, but have a vesting period of 1 year under
the Predecessor Plans.
SARs - The Company has issued SARs to certain employees under one of the
Predecessor Plans and the CREC Stock Appreciation Plan (the "SAR plans"). At
December 31, 1999, 86,650 SARs were outstanding, and the Company is authorized
to award an additional 1,110,354 SARs.
Included in the Consolidated Statements of Income under the heading
"stock appreciation right expense" are increases or decreases in accrued
compensation expense to reflect the issuance of new SARs, vesting, changes in
the market value of the common stock between periods, and forfeiture of
non-vested SARs of terminated employees.
At December 31, 1999 and 1998, the total amount accrued for SARs was
$1,637,000 and $1,738,000, respectively.
The following is a summary of stock option activity under the 1999 Plan,
the Predecessor Plans and the SAR plans (in thousands, except per share
amounts):
Number of Weighted Average
Shares Exercise Price Per Share
--------------------------- ---------------------------------
1999 1998 1997 1999 1998 1997
---- ---- ---- ---- ---- ----
1999 Plan and Predecessor Plans
- -------------------------------
Outstanding, beginning of year 2,419 1,841 1,507 $ 24.56 $ 22.23 $ 17.95
Granted 697 678 580 $ 34.14 $ 30.31 $ 30.15
Exercised (83) (52) (231) $ 18.40 $ 17.12 $ 14.67
Forfeited (54) (48) (15) $ 25.15 $ 24.26 $ 19.01
---------------------------
Outstanding, end of year 2,979 2,419 1,841 $ 26.97 $ 24.56 $ 22.23
===========================
Shares exercisable at end of year 1,275 918 630 $ 21.74 $ 19.20 $ 17.04
===========================
SARs
- ----
Outstanding, beginning of year 98 121 184 $ 14.88 $ 15.05 $ 14.74
Exercised (10) (23) (62) $ 13.52 $ 15.81 $ 14.09
Forfeited (1) -- (1) $ 13.72 $ -- $ 16.88
---------------------------
Outstanding, end of year 87 98 121 $ 15.05 $ 14.88 $ 15.05
===========================
Shares exercisable at end of year 87 98 103 $ 15.05 $ 14.88 $ 14.74
===========================
The following table provides a breakdown by exercise price range of the
number of shares, weighted average exercise price, and remaining contractual
lives for all stock options and SARs outstanding at December 31, 1999 (in
thousands, except per share amounts and option life):
For Outstanding Options/SARs
Exercise Weighted Weighted Average
Price Average Contractual Life
Range Outstanding Exercisable Exercise Price (in years)
----- ----------- ----------- -------------- ----------------
1999 Plan and Predecessor Plans
- -------------------------------
$13.25 to $16.30 446 446 $ 15.50 4.0
$16.31 to $23.00 627 432 $ 20.82 6.5
$23.01 to $30.375 1,229 393 $ 30.22 8.4
$30.376 to $35.00 677 4 $ 34.29 9.9
----------------------------------------------------
Total 2,979 1,275 $ 26.97 7.7
====================================================
SARs
- ----
$10.78 to $13.75 33 33 $ 12.74 1.7
$13.76 to $16.875 54 54 $ 16.47 3.0
----------------------------------------------------
Total 87 87 $ 15.05 2.5
====================================================
Stock Grants - As indicated above, the 1999 Plan provides for stock grants
in addition to awards of stock options and SARs. The stock grants may be subject
to specified performance and vesting requirements.
As of December 31, 1999, 125,190 stock grants have been awarded, of which
10,400 shares were awarded in lieu of 1995 cash bonuses, 100,000 shares were
awarded in 1995 subject to specified performance and vesting requirements, and
14,790 shares were awarded in 1999 subject to specified vesting requirements.
The estimated cost of the 100,000 shares, which will not be issued until all
requirements have been met, is being accrued over the five year performance and
vesting period, and at December 31, 1999 and 1998, $2,618,000 and $1,914,000 was
accrued, respectively. The estimated cost of the 14,790 shares is being accrued
over the 3 year vesting period, and at December 31, 1999, $83,000 was accrued.
Outside directors can elect to receive any portion of their director fees
in stock, based on 95% of the market price. Outside directors elected to receive
3,526, 3,882 and 4,638 shares of stock in lieu of cash for director fees in
1999, 1998 and 1997, respectively.
SFAS No. 123 Pro Forma Disclosures:
The Company has elected to account for its stock-based compensation plans
under Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued
to Employees," which requires the recording of compensation expense for some,
but not all, stock-based compensation, rather than the alternative accounting
permitted by SFAS No.
123, "Accounting for Stock-Based Compensation."
For purposes of the pro forma disclosures required by SFAS No. 123, the
Company has computed the value of all stock and stock option awards granted
during 1999, 1998 and 1997 using the Black-Scholes option pricing model with the
following weighted-average assumptions and results:
1999 1998 1997
------- ------- -------
Assumptions
- -----------
Risk-free interest rate 6.36% 4.96% 5.93%
Assumed dividend yield 5.28% 5.36% 4.80%
Assumed lives of option
awards 8 years 8 years 8 years
Assumed volatility 0.201 0.191 0.202
Results
- -------
Weighted average
fair value of
options granted $ 5.49 $ 3.75 $ 5.12
The Black-Scholes option valuation model was developed for use in
estimating the fair value of traded options which have no vesting restrictions
and are fully transferable. In addition, option valuation models require the
input of highly subjective assumptions. In the Company's opinion, because the
Company's stock-based compensation awards have characteristics significantly
different from traded options, and because changes in the subjective assumptions
can materially affect the fair value estimate, the results obtained from the
valuation model do not necessarily provide a reliable single measure of the
value of its stock-based compensation awards.
If the Company had accounted for its stock-based compensation awards in
1999, 1998 and 1997 in accordance with SFAS No. 123, pro forma results would
have been as follows ($ in thousands, except per share amounts):
1999 1998 1997
---- ---- ----
Pro forma net income $102,577 $43,834 $36,769
Pro forma basic net
income per share $ 3.20 $ 1.39 $ 1.26
Pro forma diluted net
income per share $ 3.14 $ 1.37 $ 1.24
Because the SFAS No. 123 method of accounting has not been applied to
awards granted prior to January 1, 1995, the pro forma compensation adjustments
used to derive the above results are not likely to be representative of the pro
forma compensation adjustments to be reported in future years.
Purchase of Treasury Stock:
In February 1999, the Board of Directors of the Company authorized the
Company to repurchase up to 1 million shares of common stock prior to January 1,
2001. During 1999, the Company repurchased 153,600 shares of common stock for
$4,990,000.
Per Share Data:
1999 1998 1997
------ ------ ------
Weighted average shares 32,092 31,602 29,267
Dilutive potential common shares 595 438 426
------------------------
Adjusted weighted average shares 32,687 32,040 29,693
========================
Anti-dilutive options not included 677 1,207 565
========================
Ownership Limitations:
In order to maintain Cousins' qualification as a REIT, Cousins' Articles of
Incorporation include certain restrictions on the ownership of more than 3.9% of
the Company's common stock.
Distribution of REIT Taxable Income:
The following is a reconciliation between dividends declared and dividends
applied in 1998 and 1997 and estimated to be applied in 1999 to meet REIT
distribution requirements ($ in thousands):
1999 1998 1997
------- ------- -------
Dividends declared $53,886 $47,064 $37,606
Additional dividends paid deduction
due to 5% discount on dividends
reinvested 570 549 257
That portion of dividends declared in
current year, and paid in current
year, which was applied to the prior
year distribution requirements (10,146) (7,644) (4,816)
That portion of dividends declared in
subsequent year, and paid in subsequent
year, which will apply to current year 6,238 10,146 7,644
---------------------------
Dividends applied to meet current year
REIT distribution requirements $50,548 $50,115 $40,691
===========================
Tax Status of Dividends:
Dividends applied to meet REIT distribution requirements were equal to
Cousins' taxable income (see Note 7). Since electing to qualify as a REIT in
1987, Cousins has had no accumulated undistributed taxable income.
In 1999, the Company designated as 20% capital gain dividends 1% of the
dividend paid December 22, 1999. In 1998, the Company designated as 20% capital
gain dividends 5% of the dividend paid December 22, 1998. In 1997, the Company
designated as 28% capital gain dividends 49% of the dividend paid February 10,
1997. All other dividends paid in 1999, 1998 and 1997 were taxable as ordinary
income dividends. In addition, in 1999, 1998 and 1997 an amount calculated as
1.54%, 1.74% and 1.91% of total dividends, respectively, was an "adjustment
attributed to depreciation of tangible property placed in service after 1986"
for alternative minimum tax purposes. This amount was passed through to
stockholders and must be used as an item of adjustment in determining each
stockholder's alternative minimum taxable income.
7. INCOME TAXES
In 1999, 1998 and 1997, because Cousins qualified as a REIT and distributed
all of its taxable income (see Note 6), it incurred no federal income tax
liability. The differences between taxable income as reported on Cousins' tax
return (estimated 1999 and actual 1998 and 1997) and Consolidated Net Income as
reported herein are as follows ($ in thousands):
1999 1998 1997
-------- ------- -------
Consolidated net income $104,082 $45,299 $37,277
Consolidating adjustments (24,231) (2,759) (1,218)
Less CREC net (income) loss (6,485) 540 (482)
Less CREC II net income (937) -- --
--------------------------------
Cousins net income for financial reporting purposes 72,429 43,080 35,577
Adjustments arising from:
Sales of investment properties (56,315) (3,940) 1,606
Income from unconsolidated joint ventures (principally depreciation,
revenue recognition, and operational timing differences) 12,656 (453) 1,112
Rental income recognition 731 209 438
Interest income recognition 359 372 566
Property taxes deferred 1,060 1,096 --
Interest expense 11,447 4,934 1,401
Compensation expense under stock option and SAR plans (538) 19 (2,578)
Depreciation 6,650 4,913 4,809
Other 2,069 (115) (2,240)
--------------------------------
Cousins taxable income $ 50,548 $50,115 $40,691
================================
The consolidated provision (benefit) for income taxes is composed of the
following ($ in thousands):
1999 1998 1997
-------- ------- -------
CREC and CREC II and their wholly owned subsidiaries: Currently
payable:
Federal $ 2,778 $ 33 $ 46
State 282 -- --
--------------------------------
3,060 33 46
--------------------------------
Adjustments arising from:
Income from unconsolidated joint ventures (298) 356 304
Operating loss carryforward 1,405 574 751
Stock appreciation right expense 4 (132) 119
Other 340 (1,347) (922)
--------------------------------
1,451 (549) 252
--------------------------------
CREC and CREC II provision (benefit) for income taxes 4,511 (516) 298
Cousins (benefit) provision for state income taxes (40) 379 72
Less provision applicable to gain on sale of investment properties (2,029) (11) (1,897)
--------------------------------
Consolidated provision (benefit) applicable to income from operations $ 2,442 $ (148) $(1,527)
================================
The net income tax provision (benefit) differs from the amount computed by
applying the statutory federal income tax rate to CREC's and CREC II's income
(loss) before taxes as follows ($ in thousands):
1999 1998 1997
--------------- --------------- ---------------
Amount Rate Amount Rate Amount Rate
------ ---- ------ ---- ------ ----
Federal income tax provision (benefit) $4,058 34% $(359) 34% $ 265 34%
State income tax provision (benefit), net of
federal income tax effect 477 4 (42) 4 31 4
Other (24) -- (115) 11 2 --
-------------------------------------------------------
CREC and CREC II provision (benefit) for income taxes 4,511 38% (516) 49% 298 38%
=== === ===
Cousins (benefit) provision for state income taxes (40) 379 72
Less provision applicable to gain on sale of
investment properties (2,029) (11) (1,897)
------ ----- -------
Consolidated provision (benefit) applicable to income
from operations $2,442 $(148) $(1,527)
====== ===== =======
The components of CREC and CREC II's net deferred tax liability are as follows
($ in thousands):
CREC and CREC II
-----------------
1999 1998
------- ------
Deferred tax assets $ 4,112 $5,638
Deferred tax liabilities (6,206) (5,819)
-----------------
Net deferred tax liability $(2,094) $ (181)
=================
The tax effect of significant temporary differences representing CREC and
CREC II's deferred tax assets and liabilities are as follows ($ in thousands):
CREC and CREC II
----------------
1999 1998
------- ------
Operating loss carryforward $ - $1,877
Income from unconsolidated
joint ventures (3,759) (4,058)
Stock appreciation right expense 949 952
Residential lot sales, net 2,198 1,674
Interest capitalization (1,510) (1,464)
Other 28 838
-----------------
$(2,094) $ (181)
=================
8. PROPERTY TRANSACTIONS
Office Division
In January 1999, the Company purchased the land for and commenced
construction of 1900 Duke Street, an approximately 97,000 rentable square foot
office building in suburban Washington, D.C. In March 1999, 285 Venture, Ltd.
began construction of 1155 Perimeter Center West, an approximately 361,000
rentable square foot office building in Atlanta, Georgia (see Note 5). In May
1999, 333 John Carlyle, an approximately 153,000 rentable square foot office
building in suburban Washington, D.C., became partially operational for
financial reporting purposes. In June 1999, the Company acquired Inforum, a
987,000 rentable square foot office building in downtown Atlanta, Georgia, for
$71 million by completing a tax-deferred exchange with the proceeds ($69
million) from the sale of the Company's 50% interest in Haywood Mall. In
September 1999, AT&T Wireless Services Headquarters, an approximately 222,000
rentable square foot office building in suburban Los Angeles, California, became
partially operational for financial reporting purposes.
Retail Division
On February 1, 1999, CREC sold Abbotts Bridge Station, an approximately
83,000 square foot neighborhood retail center in suburban Atlanta, Georgia for
$15.7 million, which was approximately $5.2 million over the cost of the center.
Including depreciation recapture of approximately $.3 million and net of an
income tax provision of approximately $2.0 million, the net gain on the sale was
approximately $3.5 million.
In April 1999, The Shops at World Golf Village, an approximately 80,000
square foot retail center owned by Brad Cous (see Note 5), became partially
operational for financial reporting purposes. In June 1999, CP Venture Three LLC
purchased the land for and commenced construction of Mira Mesa MarketCenter, an
approximately 453,000 square foot retail center in San Diego, California (see
Note 5). In September 1999, The Avenue East Cobb, an approximately 225,000
square foot retail specialty center in suburban Atlanta, Georgia, became
partially operational for financial reporting purposes. Also in September 1999,
the Company purchased the land for and commenced construction of Salem Road
Station, an approximately 67,000 square foot neighborhood retail center in
suburban Atlanta, Georgia.
Medical Office Division
In March 1999, AtheroGenics, an approximately 50,000 rentable square foot
office building and laboratory in suburban Atlanta, Georgia, became fully
operational for financial reporting purposes. In April 1999, Meridian Mark
Plaza, an approximately 159,000 rentable square foot medical office building in
Atlanta, Georgia, became partially operational for financial reporting purposes.
In September 1999, Northside/Alpharetta II, an approximately 198,000 rentable
square foot medical office building in suburban Atlanta, Georgia, became
partially operational for financial reporting purposes.
Land Division
The Company is currently developing five residential communities in
suburban Atlanta, Georgia, including three in which development commenced in
1994, one in 1995 and one in 1996. These developments currently include land on
which approximately 1,632 lots are being or were developed, of which 292, 344
and 260 lots were sold in 1999, 1998 and 1997, respectively.
In November 1998, Temco Associates began development of the Bentwater
residential community, which will consist of approximately 1,750 lots on
approximately 1,083 acres (see Note 5). Temco Associates sold 106 lots in 1999.
9. CONSOLIDATED STATEMENTS OF CASH FLOWS -SUPPLEMENTAL INFORMATION
Interest paid (net of amounts capitalized) (see Note 4) and income taxes
paid (net of refunds) were as follows ($ in thousands):
1999 1998 1997
------ ------- -------
Interest paid $1,147 $11,258 $14,118
Income taxes paid,
net of $110 and $5
refunded in
1999 and 1998,
respectively $1 ,245 $ 110 $ 46
Significant non-cash financing and investing activities included the
following:
a. In 1999, 1998 and 1997, approximately $65,798,000, $29,939,000 and
$87,658,000, respectively, were transferred from Projects Under Construction to
Operating Properties.
b. In 1998 and 1997, approximately $1,229,000 and $1,553,000, respectively,
were transferred from Land Held for Investment or Future Development to
Operating Properties. In 1998 approximately $14,115,000 was transferred from
Land Held for Investment or Future Development to Projects Under Construction.
c. In 1999, approximately $611,000 was transferred from Projects Under
Construction to Land Held for Investment or Future Development.
d. In June 1998, in conjunction with the acquisition of
Northside/Alpharetta I, a mortgage note payable of approximately $10,610,000 was
assumed.
e. In November 1998, in conjunction with the formation of the Venture with
Prudential (see Note 5), the Company contributed nine properties, certain of
which were subject to mortgages, and received net cash of approximately
$125,469,000 and $103,025,000 in 1999 and 1998, respectively. The non-cash
activities related to the formation of the Venture are as follows:
1999 1998
----------- ------------
Decrease in:
Operating properties, net $ -- $137,746,000
Projects under construction -- 19,684,000
Notes and other receivables -- 3,771,000
Notes payable -- (53,281,000)
(Increase) decrease in:
Investment in unconsolidated
joint ventures 111,040,000 (137,544,000)
Minority interests 14,429,000 12,075,000
Deferred gain -- 120,574,000
---------------------------------
Net cash received in formation
of venture $125,469,000 $103,025,000
=================================
10. RENTAL PROPERTY REVENUES
The Company's leases typically contain escalation provisions and provisions
requiring tenants to pay a pro rata share of operating expenses. The leases
typically include renewal options and are classified and accounted for as
operating leases.
At December 31, 1999, future minimum rentals to be received by consolidated
entities under existing non-cancelable leases, excluding tenants' current pro
rata share of operating expenses, are as follows ($ in thousands):
Office and
Medical
Retail Office Total
-------- ---------- ----------
2000 $ 24,609 $ 63,176 $ 87,785
2001 29,037 64,472 93,509
2002 28,348 62,639 90,987
2003 28,343 61,207 89,550
2004 27,017 57,487 84,504
Subsequent to 2004 249,536 328,313 577,849
----------------------------------
$386,890 $637,294 $1,024,184
==================================
11. REPORTABLE SEGMENTS
The Company has four reportable segments: Office Division, Retail Division,
Medical Office Division and Land Division. The Office Division, Retail Division
and Medical Office Division develop, lease and manage office buildings, retail
centers and medical office buildings, respectively. The Land Division owns
various tracts of strategically located land which are being held for future
development. The Land Division also develops single-family residential
communities which are parceled into lots and sold to various home builders.
The accounting policies of the segments are the same as those described in
Significant Accounting Policies (see Note 1). The management of the Company
evaluates performance of its reportable segments based on Funds From Operations
("FFO"). The Company calculates its FFO using the National Association of Real
Estate Investment Trusts definition of FFO adjusted to (i) eliminate the
recognition of rental revenues on a straight-line basis, (ii) reflect stock
appreciation right expense on a cash basis and (iii) recognize certain fee
income as cash is received rather than when recognized in the financial
statements. The Company believes its FFO presentation more properly reflects its
operating results. The Company's reportable segments are broken down based on
what type of product the division provides. The divisions are managed separately
because each product they provide has separate and distinct development issues,
leasing and/or sales strategies and management issues. The notations (100%) and
(JV) used in the following tables indicate wholly-owned and unconsolidated joint
ventures, respectively, and all amounts are in thousands.
Office Retail Medical Land Unallocated
1999 Division Division Office Division Division and Other Total
- ---- -------- -------- --------------- -------- ----------- --------
Rental property revenues (100%) $ 35,318 $ 19,836 $ 6,450 $ -- $ 233 $ 61,837
Rental property revenues (JV) 61,996 10,001 444 -- -- 72,441
Development income, management
fees and leasing and other fees (100%) 10,305 1,112 2,113 369 -- 13,899
Development income, management
fees and leasing and other fees (JV) 3,858 -- -- -- -- 3,858
Other income (100%) -- 4,077 -- 13,780 3,588 21,445
Other income (JV) -- -- -- 3,545 474 4,019
-----------------------------------------------------------------------------
Total revenues 111,477 35,026 9,007 17,694 4,295 177,499
-----------------------------------------------------------------------------
Rental property operating expenses (100%) 13,279 4,285 1,859 -- (23) 19,400
Rental property operating expenses (JV) 17,612 2,374 150 -- -- 20,136
Other expenses (100%) -- 3,366 -- 12,342 21,267 36,975
Other expenses (JV) 1,968 -- -- 2,274 15,695 19,937
-----------------------------------------------------------------------------
Total expenses 32,859 10,025 2,009 14,616 36,939 96,448
-----------------------------------------------------------------------------
Consolidated funds from operations 78,618 25,001 6,998 3,078 (32,644) 81,051
-----------------------------------------------------------------------------
Depreciation and amortization (100%) (10,154) (3,818) (1,638) -- (157) (15,767)
Depreciation and amortization (JV) (17,078) (2,997) (137) -- -- (20,212)
Effect of the recognition of rental
revenues on a straight-line basis (100%) 643 -- -- -- -- 643
Effect of the recognition of rental
revenues on a straight-line basis (JV) (440) (61) -- -- -- (501)
Adjustment to reflect stock appreciation
right expense on an accrual basis -- -- -- -- 101 101
Gain on sale of investment properties, net
of applicable income tax provision -- -- -- -- 58,767 58,767
-----------------------------------------------------------------------------
Net income 51,589 18,125 5,223 3,078 26,067 104,082
-----------------------------------------------------------------------------
Provision for income taxes from operations -- -- -- -- 2,442 2,442
-----------------------------------------------------------------------------
Income from operations before income taxes $ 51,589 $ 18,125 $ 5,223 $ 3,078 $28,509 $106,524
=============================================================================
Total assets $557,473 $240,258 $78,857 $11,496 $44,848 $932,932
=============================================================================
Investment in unconsolidated joint ventures $126,843 $ 17,179 $ 1,111 $ 6,600 $ 4 $151,737
=============================================================================
Capital expenditures $210,828 $ 23,663 $97,535 $ 5,935 $ -- $337,961
=============================================================================
Reconciliation to Consolidated Revenues
- ---------------------------------------
1999 1998 1997
------- ------- -------
Rental property revenues (100%) $61,837 $67,378 $61,812
Effect of the recognition of rental
revenues on a straight-line basis (100%) 643 348 440
Development income, management fees
and leasing and other fees 13,899 9,578 7,291
Residential lot and outparcel sales 17,857 16,732 12,847
Interest and other 3,588 4,275 3,609
---------------------------------
Total consolidated revenues $97,824 $98,311 $85,999
=================================
Office Retail Medical Land Unallocated
1998 Division Division Office Division Division and Other Total
- ---- -------- -------- --------------- -------- ----------- --------
Rental property revenues (100%) $ 33,011 $ 31,315 $ 2,579 $ -- $ 473 $ 67,378
Rental property revenues (JV) 49,129 10,168 149 -- -- 59,446
Development income, management
fees and leasing and other fees 7,867 692 1,019 -- -- 9,578
Other income (100%) -- -- -- 16,732 4,275 21,007
Other income (JV) -- -- -- 181 294 475
-----------------------------------------------------------------------------
Total revenues 90,007 42,175 3,747 16,913 5,042 157,884
-----------------------------------------------------------------------------
Rental property operating expenses (100%) 10,319 6,308 913 -- 162 17,702
Rental property operating expenses (JV) 14,111 2,933 52 -- -- 17,096
Other expenses (100%) -- -- -- 16,414 26,602 43,016
Other expenses (JV) -- -- -- 80 9,138 9,218
-----------------------------------------------------------------------------
Total expenses 24,430 9,241 965 16,494 35,902 87,032
-----------------------------------------------------------------------------
Consolidated funds from operations 65,577 32,934 2,782 419 (30,860) 70,852
-----------------------------------------------------------------------------
Depreciation and amortization (100%) (8,040) (5,742) (457) -- (430) (14,669)
Depreciation and amortization (JV) (12,000) (1,670) (47) -- -- (13,717)
Effect of the recognition of rental
revenues on a straight-line basis (100%) 348 -- -- -- -- 348
Effect of the recognition of rental
revenues on a straight-line basis (JV) (1,578) 111 -- -- -- (1,467)
Adjustment to reflect stock appreciation
right expense on an accrual basis -- -- -- -- 8 8
Gain on sale of investment properties, net
of applicable income tax provision -- -- -- -- 3,944 3,944
-----------------------------------------------------------------------------
Net income 44,307 25,633 2,278 419 (27,338) 45,299
-----------------------------------------------------------------------------
Benefit for income taxes from operations -- -- -- -- (148) (148)
-----------------------------------------------------------------------------
Income from operations before income taxes $ 44,307 $ 25,633 $ 2,278 $ 419 $(27,486) $ 45,151
=============================================================================
Total assets $386,414 $255,207 $49,437 $ 9,912 $ 51,888 $752,858
=============================================================================
Investment in unconsolidated joint ventures $158,720 $ 99,661 $ 5,183 $ 1,082 $ 2 $264,648
=============================================================================
Capital expenditures $104,266 $ 55,161 $ 25,811 $ 9,015 $ -- $194,253
=============================================================================
Office Retail Medical Land Unallocated
1997 Division Division Office Division Division and Other Total
- ---- -------- -------- --------------- -------- ----------- --------
Rental property revenues (100%) $ 30,353 $ 30,514 $ 476 $ -- $ 469 $ 61,812
Rental property revenues (JV) 44,318 6,892 -- -- -- 51,210
Development income, management
fees and leasing and other fees 5,081 1,310 887 -- 13 7,291
Other income (100%) -- -- -- 12,847 3,609 16,456
Other income (JV) -- -- -- 52 217 269
-----------------------------------------------------------------------------
Total revenues 79,752 38,716 1,363 12,899 4,308 137,038
-----------------------------------------------------------------------------
Rental property operating expenses (100%) 9,286 5,766 145 -- 174 15,371
Rental property operating expenses (JV) 12,143 2,103 -- -- -- 14,246
Other expenses (100%) -- -- -- 12,523 29,352 41,875
Other expenses (JV) -- -- -- 41 9,959 10,000
-----------------------------------------------------------------------------
Total expenses 21,429 7,869 145 12,564 39,485 81,492
-----------------------------------------------------------------------------
Consolidated funds from operations 58,323 30,847 1,218 335 (35,177) 55,546
-----------------------------------------------------------------------------
Depreciation and amortization (100%) (7,465) (5,456) (104) -- (586) (13,611)
Depreciation and amortization (JV) (9,168) (1,159) -- -- (7) (10,334)
Effect of the recognition of rental
revenues on a straight-line basis (100%) 440 -- -- -- -- 440
Effect of the recognition of rental
revenues on a straight-line basis (JV) (1,438) -- -- -- -- (1,438)
Adjustment to reflect stock appreciation
right expense on an accrual basis -- -- -- -- 702 702
Gain on sale of investment properties, net
of applicable income tax provision -- -- -- -- 5,972 5,972
-----------------------------------------------------------------------------
Net income 40,692 24,232 1,114 335 (29,096) 37,277
-----------------------------------------------------------------------------
Benefit for income taxes from operations -- -- -- -- (1,527) (1,527)
-----------------------------------------------------------------------------
Income from operations before income taxes $ 40,692 $ 24,232 $ 1,114 $ 335 $(30,623) $ 35,750
=============================================================================
Total assets $294,306 $212,876 $13,143 $16,407 $ 81,007 $617,739
=============================================================================
Investment in unconsolidated joint ventures $ 98,425 $ 20,784 $ -- $ 985 $ 4 $120,198
=============================================================================
Capital expenditures $ 34,395 $ 29,635 $ 7,516 $ 9,068 $ 14 $ 80,628
=============================================================================
FIVE YEAR SUMMARY OF SELECTED FINANCIAL DATA
- -------------------------------------------------------------------------------
($ in thousands, except per share amounts)
1999 1998 1997 1996 1995
-------- -------- -------- -------- --------
Rental property revenues $ 62,480 $ 67,726 $ 62,252 $ 33,112 $ 19,348
Fees 13,899 9,578 7,291 6,019 7,884
Residential lot and outparcel sales 17,857 16,732 12,847 14,145 9,040
Interest and other 3,588 4,275 3,609 5,256 4,764
----------------------------------------------------------------------
Total revenues 97,824 98,311 85,999 58,532 41,036
----------------------------------------------------------------------
Income from unconsolidated joint ventures 19,637 18,423 15,461 17,204 14,113
----------------------------------------------------------------------
Rental property operating expenses 19,087 17,702 15,371 7,616 4,681
Depreciation and amortization 16,859 15,173 14,046 7,219 4,516
Stock appreciation right expense 108 330 204 2,154 1,298
Residential lot and outparcel cost of sales 14,897 15,514 11,917 13,676 8,407
Interest expense 600 11,558 14,126 6,546 687
General, administrative, and other expenses 18,153 15,250 16,018 12,016 10,333
----------------------------------------------------------------------
Total expenses 69,704 75,527 71,682 49,227 29,922
Provision (benefit) for income taxes from
operations 2,442 (148) (1,527) (1,703) 747
Gain on sale of investment properties,
net of applicable income tax provision 58,767 3,944 5,972 12,804 1,862
----------------------------------------------------------------------
Net income $104,082 $ 45,299 $ 37,277 $ 41,016 $ 26,342
======================================================================
Basic net income per share $ 3.24 $ 1.43 $ 1.27 $ 1.44 $ .94
======================================================================
Diluted net income per share $ 3.18 $ 1.41 $ 1.26 $ 1.43 $ .94
======================================================================
Cash dividends declared per share $ 1.68 $ 1.49 $ 1.29 $ 1.12 $ .99
======================================================================
Total assets $932,932 $752,858 $617,739 $556,644 $418,006
Notes payable 312,257 198,858 226,348 231,831 113,434
Stockholders' investment 437,722 379,865 370,674 299,184 277,678
Shares outstanding at year-end 32,175 31,887 31,472 28,920 28,223
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
- --------------------------------------------------------------------------------
To Cousins Properties Incorporated:
We have audited the accompanying consolidated balance sheets of Cousins
Properties Incorporated (a Georgia corporation) and consolidated entities as of
December 31, 1999 and 1998, and the related consolidated statements of income,
stockholders' investment and cash flows for each of the three years in the
period ended December 31, 1999. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits. We did not audit the
financial statements of CSC Associates, L.P. as of December 31, 1999 and 1998
and for each of the three years in the period ended December 31, 1999 and
Haywood Mall as of December 31, 1998 and for each of the two years in the period
ended December 31, 1998 which statements combined reflect assets of 18% and 23%,
respectively, of the joint venture totals as of December 31, 1999 and 1998 and
revenues of 23%, 46% and 50% of the 1999, 1998 and 1997 joint venture totals,
respectively. Those statements were audited by other auditors whose reports have
been furnished to us and our opinion, insofar as it relates to the amounts
included for those entities as of December 31, 1999 and 1998 and for each of the
three years in the period ended December 31, 1999, is based solely on the
reports of the other auditors.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits and the reports of other auditors provide a
reasonable basis for our opinion.
In our opinion, based on our audits and the reports of other auditors, the
financial statements referred to above present fairly, in all material respects,
the financial position of Cousins Properties Incorporated and consolidated
entities as of December 31, 1999 and 1998 and the results of their operations
and their cash flows for each of the three years in the period ended December
31, 1999 in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Atlanta, Georgia
February 8, 2000
Cousins Properties Incorporated and Consolidated Entities
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
- --------------------------------------------------------------------------------
Results of Operations For The Three Years Ended December 31, 1999
General. Historically, the Company's financial results have been
significantly affected by sale transactions and the fees generated by, and
start-up operations of, major real estate developments, which transactions and
developments do not necessarily recur. Accordingly, the Company's historical
financial statements may not be indicative of future operating results. The
notes referenced in the discussion below are the "Notes to Consolidated
Financial Statements" included in this annual report.
Rental Property Revenues and Operating Expenses. Rental property revenues
increased from $62,252,000 in 1997 to $67,726,000 in 1998 and decreased to
$62,480,000 in 1999. Rental property revenues increased approximately $2,602,000
in 1999 from the Company's office division. The June 1999 acquisition of
Inforum, a 987,000 rentable square foot office building located in downtown
Atlanta, Georgia, increased rental property revenues by approximately
$5,656,000. Two office buildings, 333 John Carlyle and AT&T Wireless Services
Headquarters, became partially operational for financial reporting purposes in
May 1999 and September 1999, respectively, which contributed approximately
$2,178,000 and $2,506,000, respectively, to the increase. 333 North Point Center
East became partially operational in June 1998 which contributed approximately
$1,468,000 to the 1999 increase. The June 1998 acquisition of Lakeshore Park
Plaza increased rental property revenues approximately $1,273,000 in 1999. The
increase in office rental property revenues was partially offset by decreases of
approximately $5,602,000, $2,474,000, $2,528,000 and $499,000, respectively, due
to the contribution of First Union Tower, 100 North Point Center East, 200 North
Point Center East and Grandview II to CP Venture Two LLC in November 1998, which
revenue is included in Income from Unconsolidated Joint Ventures from the date
of contribution (see Note 5).
Rental property revenues from the Company's retail division decreased
approximately $11,479,000 in 1999. The decrease was mainly due to the
contribution of North Point MarketCenter, Greenbrier MarketCenter, Los Altos
MarketCenter and Mansell Crossing Phase II to CP Venture Two LLC in November
1998 (see Note 5), which decreased rental property revenues by approximately
$4,904,000, $4,502,000, $2,990,000 and $1,190,000, respectively, in 1999. Rental
property revenues from these properties are included in Income from
Unconsolidated Joint Ventures from the date of contribution. The sale of Abbotts
Bridge Station in February 1999 also contributed approximately $1,305,000 to the
decrease in 1999. The decrease was partially offset by an increase of
approximately $1,681,000 in rental property revenues from Laguna Niguel
Promenade, which became partially operational for financial reporting purposes
in July 1998, and by approximately $1,431,000 from The Avenue East Cobb, which
became partially operational for financial reporting purposes in September 1999.
Rental property revenues from the Company's medical office division
increased approximately $3,871,000 in 1999. Meridian Mark Plaza became partially
operational for financial reporting purposes in April 1999 which contributed
approximately $2,441,000 to the increase. AtheroGenics and Northside/Alpharetta
II became partially operational for financial reporting purposes in March 1999
and September 1999, respectively, which contributed approximately $780,000 and
$636,000, respectively, to the increase. Northside/Alpharetta I, acquired in
June 1998, contributed approximately $1,152,000 to the increase in 1999. The
increase was partially offset by approximately $1,141,000 due to the
contribution of Presbyterian Medical Plaza at University to CP Venture Two LLC
in November 1998 (see Note 5).
Rental property revenues from the Company's office division increased
approximately $2,566,000 in 1998. The aforementioned June 1998 acquisition of
Lakeshore Park Plaza increased rental property revenues approximately $1,354,000
in 1998. Two office buildings, 333 North Point Center East and Grandview II,
became partially operational for financial reporting purposes in June 1998 and
August 1998, respectively, which contributed approximately $1,499,000 and
$499,000, respectively, to the increase. The increase from Grandview II would
have been higher by approximately $296,000, but this property was contributed to
CP Venture Two LLC in November 1998. Rental property revenues also increased
approximately $242,000 due to increased occupancy during 1998 at 101
Independence Center, which was 94% leased at December 31, 1997 and 98% leased at
December 31, 1998. Partially offsetting the increase in 1998 were decreases in
rental property revenues of approximately $935,000, $266,000 and $97,000 from
the contribution of the other office properties, First Union Tower, 100 North
Point Center East and 200 North Point Center East, respectively, to CP Venture
Two LLC in November 1998.
Rental property revenues from the Company's retail division increased
approximately $801,000 in 1998. Two retail centers, Abbotts Bridge Station and
Laguna Niguel Promenade, which became partially operational for financial
reporting purposes in January 1998 and July 1998, respectively, increased rental
property revenues in 1998 approximately $1,462,000 and $788,000, respectively.
Rental property revenues increased approximately $362,000 from Presidential
MarketCenter in 1998 due to the second expansion of the center in April 1997.
The increase in rental property revenues from the retail division was partially
offset (a decrease of approximately $990,000) by the aforementioned contribution
of four retail properties to CP Venture Two LLC in November 1998. The increase
in rental property revenues was also partially offset by decreases in rental
property revenues of approximately $644,000 and $449,000 from Rivermont Station
and Lovejoy Station, respectively, both of which were sold in July 1997.
Rental property revenues from the Company's medical office division
increased approximately $2,103,000 in 1998 due to the June 1998 acquisition of
Northside/Alpharetta I ($1,438,000) and to Presbyterian Medical Plaza at
University ($665,000), which became partially operational in August 1997. The
increase from Presbyterian Medical Plaza at University would have been higher by
$178,000, but the property was contributed to CP Venture Two LLC in November
1998.
Rental property operating expenses increased from $15,731,000 in 1997 to
$17,702,000 and $19,087,000 in 1998 and 1999, respectively. The increase in 1999
was due primarily to the aforementioned office buildings, medical office
buildings and retail centers becoming partially operational, as well as the
acquisition of Inforum in June 1999. The increase in 1999 was partially offset
by approximately $183,000 due to the February 1999 sale of Abbotts Bridge
Station. The increase in 1998 was primarily related to the aforementioned retail
centers and office buildings becoming operational, as well as the acquisitions
of Lakeshore Park Plaza and Northside/Alpharetta I. The increases in both 1998
and 1999 were partially offset by the contribution of nine properties to CP
Venture Two LLC in November 1998, which rental property operating expenses from
these nine properties was recognized by the Company through Income from
Unconsolidated Joint Ventures from the date of contribution (see Note 5).
Development Income. Development income decreased from $3,123,000 in 1997 to
$3,007,000 in 1998 and then increased in 1999 to $6,165,000. The increase in
development income in 1999 was partially due to development fees recognized from
three of the Company's ventures which are developing Gateway Village ($978,000),
1155 Perimeter Center West ($939,000) and the Bentwater residential development
($369,000). Additionally, development income increased approximately $908,000
from the Crawford Long Hospital campus redevelopment and joint venture medical
office building. The Company also recognized development income of approximately
$706,000 for a build-to-suit for Walgreens on an outparcel at Colonial Plaza
MarketCenter and approximately $323,000 from the third party development of Cox
Enterprises' corporate headquarters. This increase was partially offset by
approximately $605,000 which was recognized in 1998 from Brad Cous for the
development of The Shops at World Golf Village. Development fees from Cousins
LORET for the development of The Pinnacle also decreased by approximately
$310,000, which also partially offset the increase in 1999.
Management Fees. Management fees increased from $3,448,000 in 1997 to
$3,761,000 and $4,743,000 in 1998 and 1999, respectively. Management fees
increased in both 1998 and 1999 due to lease-up of certain properties at several
joint ventures from which management fees are received and from the formation of
CP Venture Two LLC (see Note 5).
Leasing and Other Fees. Leasing and other fees increased from $720,000 in
1997 to $2,810,000 and $2,991,000 in 1998 and 1999, respectively. Leasing fees
increased in 1999 by approximately $987,000 due to a lease signed by CREC for a
lease at the Inforum office building executed prior to the Company's acquisition
of the building. Approximately $616,000 of leasing fees were also recognized in
1999 from 285 Venture, Ltd. for leasing the 1155 Perimeter Center West office
building. Partially offsetting the increase in 1999 was a decrease of
approximately $976,000 from Wildwood Associates, primarily due to leasing fees
recognized in 1998 mainly related to the lease-up of the 4200 Wildwood Parkway
Building. Leasing fees also decreased approximately $367,000 from CSC due to a
higher level of leasing fees recognized in 1998 due to increased occupancy at
Bank of America Plaza.
The increase in 1998 was partially due to an increase of approximately
$1,065,000 of leasing fees related to Wildwood Office Park, primarily due to the
lease-up of the 4200 Wildwood Parkway Building. Leasing fees from Cousins LORET
increased $560,000 in 1998, primarily due to the lease-up of The Pinnacle, which
was under development and in the early stages of lease-up in 1998. Leasing fees
from CSC increased approximately $367,000 primarily due to increased occupancy
at Bank of America Plaza.
Residential Lot and Outparcel Sales and Cost of Sales. Residential lot and
outparcel sales increased from $12,847,000 in 1997 to $16,732,000 and
$17,857,000 in 1998 and 1999, respectively. Residential lot sales decreased from
$15,932,000 in 1998 to $13,779,000 in 1999 due to a decrease in the number of
residential lots sold from 344 lots in 1998 to 292 lots in 1999. This decrease
was more than offset by an increase in outparcel sales by CREC and one of its
subsidiaries from $800,000 in 1998 to $4,078,000 in 1999, mainly due to one
outparcel sale in 1999 for $3,477,000.
Residential lot sales increased from $10,228,000 in 1997 to $15,932,000 in
1998 due to an increase in the number of residential lots sold from 260 lots in
1997 to 344 lots in 1998. The increase was partially offset by a decrease in
outparcel sales by CREC and one of its subsidiaries from $2,619,000 in 1997 to
$800,000 in 1998, resulting from the sale of five outparcels in 1997 and two
outparcels in 1998.
Residential lot and outparcel cost of sales decreased from $15,514,000 in
1998 to $14,897,000 in 1999 partially due to the aforementioned decrease in lot
sales and partially due to an increase in gross profit percentages used to
calculate the cost of sales for residential lot sales in certain of the
residential developments in 1999. The decrease was partially offset by the
increase in outparcel cost of sales mainly due to the aforementioned outparcel
sale, which increased cost of sales approximately $2,857,000.
Residential lot and outparcel cost of sales increased from $11,917,000 in
1997 to $15,514,000 in 1998. The increase in 1998 was due to the aforementioned
increase in the number of residential lot and outparcel sales. The increase in
1998 was also due to a $500,000 writedown of one of the residential developments
due to a change in lot sales price assumptions.
Interest and Other Income. Interest and other income increased from
$3,609,000 in 1997 to $4,275,000 in 1998 and then decreased to $3,588,000 in
1999. The increase in 1998 and decrease in 1999 were both due to interest income
of approximately $714,000 recognized in 1998 from a note receivable from Cousins
LORET. The Company lent funds beginning in June 1998 to Cousins LORET at a
slightly higher rate than its borrowing costs, until December 1998 when Cousins
LORET drew down funds from its $70 million non-recourse financing of The
Pinnacle.
Income From Unconsolidated Joint Ventures. (All amounts reflect the
Company's share of joint venture income.) Income from unconsolidated joint
ventures increased from $15,461,000 in 1997 to $18,423,000 and $19,637,000 in
1998 and 1999, respectively.
Income from CSC increased from $9,284,000 in 1997 to $10,021,000 and
$10,402,000 in 1998 and 1999, respectively. The increases in both 1998 and 1999
were due to the continued lease-up of Bank of America Plaza. The increase in
1998 was also due to the increase in rental revenue from a tenant whose increase
in rental rate did not require straight-lining under Statement of Financial
Accounting Standards No. 13.
Income from Wildwood Associates increased from $1,903,000 in 1997 to
$1,968,000 and $2,453,000 in 1998 and 1999, respectively. Income before
depreciation, amortization and interest expense from the 4200 Wildwood Parkway
Building increased approximately $1,571,000 in 1999 due to the building becoming
partially operational in June 1998. Income before depreciation, amortization and
interest expense from the 2300 and 2500 Windy Ridge Parkway Buildings favorably
impacted results in 1999 by approximately $189,000 and $175,000, respectively,
due to increased average economic occupancy of both of these properties in 1999.
Income before depreciation, amortization and interest expense from the 3200
Windy Hill Road Building favorably impacted results in 1999 by approximately
$415,000 primarily due to an adjustment to straight-line rental revenue in
accordance with SFAS No. 13 which caused a reduction in rental property
revenues.
The increase in 1999 was partially offset by an increase in interest
expense of approximately $732,000 due to the June 1998 non-recourse financing of
the 4200 Wildwood Parkway Building. Capitalized interest decreased (which
increases interest expense) approximately $731,000 due to interest expense no
longer being capitalized to the 4200 Wildwood Parkway Building effective October
1998. Also partially offsetting the increase in 1999 was an increase in
depreciation and amortization of approximately $569,000 due to the 4200 Wildwood
Parkway Building becoming operational in 1998.
Income before depreciation, amortization and interest expense from the 2300
and 2500 Windy Ridge Parkway Buildings favorably impacted results in 1998 by
approximately $215,000 and $184,000, respectively, due to increased average
economic occupancy of both properties in 1998. Income before depreciation,
amortization and interest expense from the aforementioned 4200 Wildwood Parkway
Building increased approximately $581,000 due to the building becoming partially
operational in June 1998. Also favorably impacting 1998 results was the October
1998 condemnation gain of approximately $110,000 related to the proceeds
received due to certain of Wildwood Associates' land being condemned for the
widening of a road.
Results in 1998 were negatively impacted by an increase in interest expense
of approximately $1,121,000. The increase was primarily due to the June 1998
non-recourse financing of the 4200 Wildwood Parkway Building. This financing
increased interest expense approximately $756,000 in 1998. Interest expense on
the 4100 and 4300 Wildwood Parkway Buildings increased approximately $230,000 as
the non-recourse financing of these buildings was completed in March 1997.
Capitalized interest decreased approximately $258,000 due to interest expense no
longer being capitalized to the 4200 Wildwood Parkway Building effective October
1998.
Income from Haywood Mall increased from $3,648,000 in 1997 to $4,614,000 in
1998 and then decreased to $2,433,000 in 1999. The decrease in 1999 was due to
the sale of the Company's 50% interest in the mall in June 1999. The increase in
1998 was due to the lease-up of the expansion of Haywood Mall.
Income from Cousins LORET increased from $68,000 in 1997 to $672,000 in
1998 and then decreased to $53,000 in 1999. The decrease in 1999 was partially
due to an increase in interest expense before capitalization of approximately
$2,123,000 due to the funding of the $70 million non-recourse financing of The
Pinnacle office building on December 30, 1998. Capitalized interest decreased
approximately $369,000 due to The Pinnacle becoming partially operational in
March 1999. Additionally, depreciation and amortization increased approximately
$1,572,000 mainly due to The Pinnacle becoming partially operational. Income
before depreciation, amortization and interest expense from The Pinnacle
partially offset the decrease by approximately $2,672,000, and the decrease was
also partially offset by an increase of approximately $281,000 from the lease-up
of Two Live Oak Center. Also partially offsetting the decrease was an increase
of $485,000 in interest income in 1999. The increase in 1998 was due to the Two
Live Oak Center office building becoming partially operational in October 1997.
Income from Temco Associates increased from $11,000 in 1997 to $97,000 and
$1,270,000 in 1998 and 1999, respectively. During 1999, approximately 466 acres
of the option related to the fee simple interest was exercised and
simultaneously sold. CREC's share of the gain on these sales was approximately
$1,229,000. During 1998, approximately 83 acres of the option related to the fee
simple interest was exercised and simultaneously sold. CREC's share of the gain
on these sales was approximately $96,000. There were no similar sales in 1997.
Income from Cousins Stone LP was $1,892,000 in 1999. This venture was
formed in June 1999 when the Company purchased Faison's 50% interest in
Faison-Stone (see Note 5).
General and Administrative Expenses. General and administrative expenses
increased from $12,717,000 in 1997 to $13,087,000 and $14,961,000 in 1998 and
1999, respectively. General and administrative expenses increased approximately
$2,070,000 and $2,825,000 in 1998 and 1999 due to the Company's continued
expansion. The increases were partially offset by increases in costs capitalized
to projects under development of approximately $1,700,000 and $951,000 in 1998
and 1999, respectively, as the level of projects under development increased in
both years from 1997.
Depreciation and Amortization. Depreciation and amortization increased from
$14,046,000 in 1997 to $15,173,000 and $16,859,000 in 1998 and 1999,
respectively. The increases in both 1998 and 1999 were mainly due to the
aforementioned office buildings, medical office buildings and retail centers
becoming operational. The increase in 1999 was also due to the acquisition of
Inforum in June 1999. The increases in both 1998 and 1999 were also due to the
June 1998 acquisitions of Lakeshore Park Plaza and Northside/Alpharetta I. The
increases in both 1998 and 1999 were partially offset by decreases in
depreciation and amortization due to the contribution of nine properties in
November 1998 to CP Venture Two LLC, which expenses are included in Income from
Unconsolidated Joint Ventures from the date of contribution (see Note 5).
Stock Appreciation Right Expense. Stock appreciation right expense
increased from $204,000 in 1997 to $330,000 in 1998 and then decreased to
$108,000 in 1999. This non-cash item is primarily related to the number of stock
appreciation rights outstanding and the Company's stock price. A reduction in
the number of stock appreciation rights outstanding due to exercises contributed
to the decrease in the stock appreciation right expense in 1999. The Company's
stock price was $33.9375, $32.25 and $29.3125 per share at December 31, 1999,
1998 and 1997, respectively.
Interest Expense. Interest expense decreased from $14,126,000 in 1997 to
$11,558,000 and $600,000 in 1998 and 1999, respectively. Interest expense before
capitalization increased from $17,293,000 in 1997 to $19,028,000 in 1998 and
then decreased to $16,755,000 in 1999. Interest expense before capitalization
decreased in 1999 mainly due to the contributions of North Point MarketCenter
and 100 and 200 North Point Center East, subject to the related mortgage notes
payable, to CP Venture Two LLC in November 1998 (see Note 5). The decrease was
partially offset by increased interest expense from higher amounts outstanding
on the Company's credit facility in 1999. Additionally, the Company assumed the
mortgage note payable of Northside/Alpharetta I when it acquired the property in
June 1998 and completed the financing of Lakeshore Park Plaza in October 1998,
both of which increased interest expense before capitalization in 1998 and 1999.
The amount of interest capitalization (a reduction of interest expense), which
changes parallel to the amount of projects under development, increased from
$3,167,000 in 1997 to $7,470,000 and $16,155,000 in 1998 and 1999, respectively,
which more than offset the increases in interest expense and resulted in net
decreases in interest expense in 1998 and 1999.
Property Taxes on Undeveloped Land. Property taxes on undeveloped land
increased from $606,000 in 1997 to $900,000 in 1998 and then decreased to
$811,000 in 1999. The increase in 1998 from 1997 was primarily due to favorable
settlements of property taxes in 1997 on the Company's land related to 1994,
1995 and 1996 tax years, which had been under appeal.
Other Expenses. Other expenses decreased from $2,695,000 in 1997 to
$1,263,000 in 1998 and then increased to $2,381,000 in 1999. The increase in
1999 was mainly due to an increase of approximately $1,912,000 in Prudential's
minority interest in CP Venture Three LLC (see Note 5). The increase was
partially offset by a decrease in predevelopment expense of approximately
$869,000 in 1999. The decrease in 1998 was due to a decrease in predevelopment
expense.
Provision (Benefit) for Income Taxes From Operations. The benefit for
income taxes from operations decreased from a benefit of $1,527,000 in 1997 to a
benefit of $148,000 in 1998. The benefit for income taxes from operations
increased to a provision for income taxes from operations of $2,442,000 in 1999.
The increase from a benefit in 1998 to a provision in 1999 was due to an
increase of approximately $6,183,000 from a loss before income taxes and gain on
sale of investment properties to income before income taxes and gain on sale of
investment properties of $5,118,000 in 1999 from CREC and its subsidiaries. Such
increase was related to increases in residential lot sales, net of cost of
sales, leasing fees, and income from Temco Associates. A decrease in general and
administrative expenses and a reduction in predevelopment expense also
contributed to the increase in income before income taxes and gain on sale of
investment properties. Additionally, CREC II and its subsidiaries had a
provision for income taxes from operations of approximately $574,000 in 1999
related to the income recognized from Cousins Stone LP which was formed in June
1999.
The decrease in the benefit for income taxes from operations in 1998 was
due to a decrease of approximately $3,148,000 in CREC and its subsidiaries' loss
before income taxes and gain on sale of investment properties, which decrease
was due to the increases in leasing fees and residential lot sales and the
decrease in predevelopment expense.
Gain on Sale of Investment Properties. Gain on sale of investment
properties, net of applicable income tax provision was $5,972,000, $3,944,000
and $58,767,000 in 1997, 1998 and 1999, respectively. The 1999 gain mainly
consists of the January 1999 sale of 3 acres of McMurray land ($.1 million), the
February 1999 sale of Abbotts Bridge Station ($3.5 million), the March 1999 sale
of Kennesaw Crossings shopping center ($.9 million), the May 1999 sale of 2
acres at Hidden Hills ($.1 million), the June 1999 sale of the Company's 50%
interest in Haywood Mall ($50.1 million) (see Note 5), and the amortization of
net deferred gain from the Prudential transaction ($4.1 million) (see Note 5).
The 1998 gain included the March 1998 sale of 6 acres of North Point land
($.6 million), the April 1998 sale of 23 acres of North Point land ($1.0
million), the October 1998 condemnation of land at Wildwood Office Park ($1.5
million), the December 1998 sale of 5 acres of McMurray land ($.2 million) and
the amortization of the net deferred gain from the Prudential transaction ($.5
million).
Liquidity and Capital Resources:
Financial Condition. The Company's adjusted debt (including its pro rata
share of unconsolidated joint venture debt) was 32% of total market
capitalization at December 31, 1999. Adjusted debt is defined as the Company's
debt and the Company's pro rata share of unconsolidated joint venture debt as
disclosed in Note 4, excluding the Charlotte Gateway Village, LLC debt as it is
fully exculpated debt which is supported by a long-term lease to Bank of America
Corporation. As discussed in Note 4, in August 1999, the Company renewed and
modified its $150 million credit facility which matures on April 27, 2002. On
December 31, 1999, the credit facility was temporarily increased to $225
million, which increase expires April 27, 2000. The Company had $130.7 million
drawn on this credit facility as of December 31, 1999.
The Company has development and acquisition projects in various planning
stages. The Company currently intends to finance these projects and projects
currently under construction discussed in Note 8, by using its existing credit
facilities (increasing those credit facilities as required), long-term
non-recourse financing on the Company's unleveraged projects, joint ventures,
project sales and other financings as market conditions warrant. In September
1996, the Company filed a shelf registration statement with the Securities and
Exchange Commission ("SEC") for the offering from time to time of up to $200
million of common stock, warrants to purchase common stock and debt securities,
of which approximately $132 million remains available at December 31, 1999.
Cash Flows. Net cash provided by operating activities increased from $58.0
million in 1997 to $90.1 million and $91.8 million in 1998 and 1999,
respectively. The increases resulted partially from an improvement in income
before gain on sale of investment properties of $10.1 million and $4.0 million
in 1998 and 1999, respectively. Additionally, depreciation and amortization
increased $1.1 million and $1.5 million in 1998 and 1999, respectively.
Residential lot and outparcel cost of sales, which contributed approximately
$3.4 million of the increase in 1998, partially offset the increase in 1999 by
decreasing approximately $1.0 million. Operating distributions from
unconsolidated joint ventures also favorably impacted 1998 and 1999 with
increases of $1.9 million and $12.4 million, respectively. The increase in 1999
was due to approximately $8.3 million of distributions from CP Venture LLC.
Additionally, distributions from CSC and Cousins LORET increased $1.9 million
and $6.5 million, respectively, in 1999. These increases were partially offset
by a decrease of distributions from Wildwood Associates of $4 million in 1999.
Changes in other operating assets and liabilities, which increased net cash
provided by operating activities in 1998 by approximately $17.9 million,
decreased approximately $13.2 million in 1999, which decrease partially offset
the increase in net cash provided by operating activities in 1999. Increases in
income from unconsolidated joint ventures of approximately $3.0 million and $1.2
million partially offset the increases in net cash provided by operating
activities in 1998 and 1999, respectively.
Net cash used in investing activities increased from $55.6 million in 1997
to $100.5 million in 1998 and $158.9 million in 1999. Property acquisition and
development expenditures increased approximately $143.7 million due to a higher
level of projects under development in 1999. Investment in unconsolidated joint
ventures increased approximately $1.5 million which further increased net cash
used in investing activities. Non-operating distributions from unconsolidated
joint ventures, which reduce net cash used in investing activities, decreased
approximately $19.0 million. The decrease in non-operating distributions from
unconsolidated joint ventures was mainly due to a decrease of distributions of
approximately $21.6 million from Wildwood Associates. The decrease was partially
offset by an increase of approximately $1.6 million of non-operating
distributions from Cousins LORET. Other assets, net, decreased $4.1 million
which further contributed to the increase in net cash used in investing
activities. Net cash provided by sales activities increased $79.5 million mainly
due to the June 1999 sale of the Company's 50% interest in Haywood Mall and to
the February 1999 sale of Abbotts Bridge Station, which partially offset the
increase in net cash used in investing activities. The increase in net cash
provided by sales activities was partially offset by deferred income recognized,
which increased approximately $3.6 million, as the net deferred gain from the
Prudential transaction was amortized into income for the full year of 1999 (see
Note 5). Partially offsetting the increase in net cash used in investing
activities was an increase in net cash received of $22.4 million from the
formation of the Prudential venture as Prudential contributed its remaining
amounts owed (see Notes 5 and 9). Net investment in notes receivable increased
$7.9 million which also partially offset net cash used in investing activities.
The increase in property acquisition and development expenditures of $113.6
million in 1998 was due to the Company having a higher level of projects under
development in 1998. Investment in unconsolidated joint ventures increased by
$25.8 million in 1998 due to the formation of several new ventures, which
contributed to the increase in net cash used in investing activities. Net cash
provided by sales activities decreased $18.3 million in 1998. The 1997 net cash
provided by sales activities was due to the 1997 sales of Rivermont Station and
Lovejoy Station. There were no such significant sales in 1998. Partially
offsetting the 1998 increase in net cash used in investing activities was the
net cash received of $103 million in the formation of the Prudential ventures.
Additionally, non-operating distributions from unconsolidated joint ventures
increased $7.9 million in 1998, primarily due to Wildwood Associates
distributing $22.6 million to each partner from the proceeds of its $44 million
financing of the 4200 Wildwood Parkway Building. In 1997, Wildwood Associates
made non-operating distributions to the partners from the proceeds of the 3200
Wildwood Plaza and the 4100 and 4300 Wildwood Parkway Buildings financings,
which totaled $12.5 million. An increase in the change in other assets of $2.6
million in 1998 also partially offset the increase in the net cash used in
investing activities.
Net cash provided by financing activities decreased from $28.7 million in
1997 to net cash used in financing activities of $20.9 million in 1998, and then
increased to net cash provided by financing activities of $67.2 million in 1999.
The increase in 1999 was mainly due to an increase of $108.4 million in net
amounts drawn on the Company's credit facility. Common stock sold, net of
expenses, increased $1.7 million which further contributed to the change to net
cash provided by financing activities. Partially offsetting the increase in net
cash provided by financing activities was an increase in dividends paid of $6.8
million. Dividends paid per share increased from $1.49 in 1998 to $1.68 in 1999
and the number of shares outstanding increased. The $5.0 million purchase of
treasury stock in 1999 also partially offset the increase in net cash provided
by financing activities. The Company completed one financing in 1998 as compared
to none in 1999. Therefore, proceeds from other notes payable decreased $10.9
million which partially offset the increase in net cash provided by financing
activities.
The decrease in net cash used in financing activities in 1998 was mainly
due to common stock sold, net of expenses, decreasing by $60.8 million in 1998.
The Company sold 2,150,000 shares of stock which raised net proceeds of
approximately $64.1 million in 1997. Further contributing to the decrease was
$14.1 million less proceeds from other notes payable due to the Company
completing one financing for $10.9 million in 1998, as compared to one financing
for $25 million in 1997. Dividends paid increased $9.5 million due to an
increase in dividends paid per share from $1.29 in 1997 to $1.49 in 1998 and an
increase in the number of shares outstanding. Partially offsetting this increase
was an increase in the net amount drawn on the Company's credit facility of
approximately $34.9 million.
Effects of Inflation
The Company attempts to minimize the effect of inflation on income from
operating properties by the use of rents tied to tenants' sales, periodic
fixed-rent increases and increases based on cost-of-living adjustments, and/or
pass-through of operating cost increases to tenants.
Year 2000
The "Year 2000 issue" is the result of certain computer systems, software,
electronic equipment or embedded chips (collectively known as "computer
systems") being written using two digits rather than four to define the
applicable year. Therefore, certain computer systems may not distinguish between
a year that begins with a "20" rather than a "19." This could have resulted in
system failures which could have disrupted operations. No significant delays in
processing or interruption of business have occurred to date due to the start of
the Year 2000.
The Company assessed the impact of the Year 2000 issue on its business and
operations and attempted to identify the areas which rely on computer systems
and could have been potentially impacted, which mainly included the systems
utilized in the operations of its real estate properties and in the processing
of its accounting data.
The Company completed an inventory of the material computer systems being
utilized in its existing operating real estate properties which could have been
adversely affected by the Year 2000 issue. Such systems included, but not
limited to, building control systems, heating and air conditioning controls,
elevator controls, fire alarms and security devices. Certain of these systems
were replaced, upgraded or modified as deemed necessary, the cost of which was
not material.
The Company upgraded its accounting software to a version that its software
vendor has represented to be Year 2000 compliant, as they define it. The
hardware and operating system used to run the accounting software has been
represented to be Year 2000 compliant. The Company has also assessed its
non-financial computer systems, and replaced, upgraded or modified such systems
as needed. The cost of the upgrades to the accounting software and non-financial
computer systems was not material.
The Company completed its survey of all material third party vendors to
determine their Year 2000 compliance status and has received certificates, where
possible, as to their compliancy. No estimates can be made as to any potential
adverse impact resulting from the failure of any third party vendor or service
provider to be Year 2000 compliant. To the extent the Year 2000 issue has a
material adverse effect on the business operations or financial condition of
third parties with which the Company has material relationships, such as
vendors, suppliers, tenants and financial institutions, the Year 2000 issue
could also have a material adverse effect on the Company's business, results of
operations and financial condition. To date, there have been no significant
issues or interruptions of business and, based upon an assessment of the current
compliance by third parties, there appears to be no material business risk posed
by any such non-compliance as a result of a vendor not being Year 2000
compliant.
To date, the cost to analyze and prepare for the Year 2000 issue has not
been material. The Company does not expect to incur any additional costs to
address the Year 2000 issue. There can be no assurance that the Company will be
able to identify and correct all aspects of the effect of the Year 2000 issue on
the Company. However, the Company does not currently expect the Year 2000 issue
will have a material impact on the Company's business, operations or financial
condition.
Quantitative and Qualitative Disclosure about Market Risk
The Company has one mortgage note payable which has a floating interest
rate. The Company mitigates this exposure through the use of an interest rate
swap which effectively fixes the interest rate on this debt. This mortgage note
payable is included in the fixed rate category for purposes of the following
table. The variable rate debt is from the Company's credit facility, which is
drawn on as needed and was renewed and modified on August 27, 1999 (see Note 4),
a construction loan at an unconsolidated joint venture, Charlotte Gateway
Village, LLC, and from a variable rate municipal bond indenture, which is
included with "other miscellaneous notes" in the debt outstanding table in Note
4. Since these rates are floating, the Company is exposed to the impact of
interest rate changes. None of the Company's notes receivable have variable
interest rates. The Company does not enter into contracts for trading purposes
and does not use leveraged instruments. The following table summarizes the
Company's market risk associated with notes payable and notes receivable as of
December 31, 1999. The information presented below should be read in conjunction
with Notes 3 and 4. The table presents principal cash flows and related weighted
average interest rates by expected year of maturity. Variable rate represents
the floating interest rate calculated at December 31, 1999. For the interest
rate swap, the table presents the notional amount and related interest rate by
year of maturity.
Expected Year of Maturity
---------------------------------------------------------------------------------
Fair
2000 2001 2002 2003 2004 Thereafter Total Value
---------------------------------------------------------------------------------
($ in thousands)
Notes Payable (including
share of unconsolidated
joint ventures):
Fixed Rate $28,833 $16,667 $ 9,692 $10,015 $10,885 $295,574 $371,666 $357,256
Average Interest Rate 6.76% 7.65% 7.35% 7.34% 7.34% 7.48% 7.42% --
Variable Rate $ 175 $ -- $159,155 $ -- $ -- $ -- $159,330 $159,330
Average Interest Rate 5.52% -- 6.71% -- -- -- 6.71% --
Interest Rate Swaps:
Notional Amount $19,275 $ -- $ -- $ -- $ -- $ -- $ 19,275 $ 86
Average Interest Rate 6.53% -- -- -- -- -- 6.53% --
Notes Receivable:
Fixed Rate $ 2,630 $ 1,442 $ 1,173 $23,039 $ -- $ -- $ 28,284 $ 35,150
Average Interest Rate 7.88% 9.41% 9.00% 10.00% -- -- 9.73% --
Cousins Properties Incorporated and Consolidated Entities
MARKET AND DIVIDEND INFORMATION
- --------------------------------------------------------------------------------
The high and low sales prices for the Company's common stock and cash
dividends declared per share were as follows:
1999 Quarters 1998 Quarters
-------------------------------------------- ---------------------------------------------
First Second Third Fourth First Second Third Fourth
-------- --------- ------- -------- -------- --------- -------- --------
High $32-5/16 $36-1/2 $38-1/4 $35-1/2 $30-7/8 $31-3/4 $32-3/16 $32-9/16
Low 28-7/8 28-15/16 33-1/2 30-5/8 28-3/16 28-11/16 26 24-5/16
Dividends Declared . 41 .41 .41 .45 .36 .36 .36 .41
Payment Date 2/23/99 5/28/99 8/26/99 12/22/99 2/23/98 5/29/98 8/26/98 12/22/98
The Company's stock trades on the New York Stock Exchange (ticker symbol
CUZ). At December 31, 1999, there were 1,564 stockholders of record.
ABOUT YOUR DIVIDENDS
- --------------------------------------------------------------------------------
Timing of Dividends - Cousins normally pays regular dividends four times
each year in February, May, August and December.
Differences Between Net Income and Cash Dividends Declared - Cousins'
current intention is to distribute 100% of its taxable income and thus incur no
corporate income taxes. However, Consolidated Net Income for financial reporting
purposes and Cash Dividends Declared will generally not be equal for the
following reasons:
a. There will continue to be considerable differences between Consolidated
Net Income as reported to stockholders (which includes the income of
consolidated non-REIT entities that pay corporate income taxes) and Cousins'
taxable income. The differences are enumerated in Note 7 of "Notes to
Consolidated Financial Statements."
b. For purposes of meeting REIT distribution requirements, dividends may be
applied to the calendar year before or after the one in which they are declared.
The differences between dividends declared in the current year and dividends
applied to meet current year REIT distribution requirements are enumerated in
Note 6 of "Notes to Consolidated Financial Statements."
Capital Gains Dividends - In some years, as it did in 1999, 1998 and 1997,
Cousins will have taxable capital gains, and Cousins currently intends to
distribute 100% of such gains to stockholders. The Form 1099-DIV sent by Cousins
to stockholders of record each January shows total dividends paid (including the
capital gains dividends) as well as that which should be reported as a capital
gain (see Note 6 of "Notes to Consolidated Financial Statements"). For
individuals, the capital gain portion of the dividends is subtracted from total
dividends on Schedule B of IRS Form 1040 and reported separately on Schedule D
of IRS Form 1040 as a capital gain.
Tax Preference Items and "Differently Treated Items" - Internal Revenue
Code Section 59(d) requires that certain corporate tax preference items and
"differently treated items" be passed through to a REIT's stockholders and
treated as tax preference items and items of adjustment in determining the
stockholder's alternative minimum taxable income. The amount of this adjustment
is included in Note 6 of "Notes to Consolidated Financial Statements."
Tax preference items and adjustments are includable in a stockholder's
income only for purposes of computing the alternative minimum tax. These
adjustments will not affect a stockholder's tax filing unless that stockholder's
alternative minimum tax is higher than that stockholder's regular tax.
Stockholders should consult their tax advisors to determine if the adjustment
reported by Cousins affects their tax filing. Many stockholders will find that
the adjustment reported by Cousins will have no effect on their tax filing
unless they have other large sources of alternative minimum tax adjustments or
tax preference items.
Cousins Properties Incorporated and Consolidated Entities
SELECTED QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
- --------------------------------------------------------------------------------
Selected quarterly information for the two years ended December 31, 1999 ($ in
thousands, except per share amounts):
Quarters
----------------------------------------
First Second Third Fourth
------- ------- ------- -------
1999:
Revenues $18,684 $23,087 $26,437 $29,616
Income from unconsolidated joint ventures 4,107 5,392 4,647 5,491
Gain on sale of investment properties, net of applicable income
tax provision 5,508 51,198 1,029 1,032
Net income 15,002 63,566 12,887 12,627
Basic net income per share .47 1.98 .40 .39
Diluted net income per share .46 1.94 .39 .39
1998:
Revenues $23,854 $ 24,214 $ 27,663 $ 22,580
Income from unconsolidated joint ventures 4,581 4,547 4,406 4,889
Gain on sale of investment properties, net of applicable income
tax provision 771 886 -- 2,287
Net income 11,294 11,777 10,737 11,491
Basic net income per share .36 .37 .34 .36
Diluted net income per share .35 .37 .33 .36
INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP
COUNSEL
King & Spalding
Troutman Sanders
TRANSFER AGENT AND REGISTRAR
First Union National Bank
Corporate Trust Operations
Shareholder Services Administration
1525 West W.T. Harris Blvd., Building 3C3
Charlotte, North Carolina 28262-1153
Telephone Number: 1-800-829-8432
FAX Number: 1-704-590-7618
DIVIDEND REINVESTMENT PLAN
The Company offers its stockholders the opportunity to purchase additional
shares of common stock through the Dividend Reinvestment Plan with purchases at
95% of current market value. A copy of the Plan prospectus and an enrollment
card may also be obtained by calling or writing to the Company.
FORM 10-K AVAILABLE
The Company's annual report on Form 10-K and interim reports on Form 10-Q are
filed with the Securities and Exchange Commission. Copies are available without
exhibits free of charge to any person who is a record or beneficial owner of
common stock upon written request to the Company at 2500 Windy Ridge Parkway,
Suite 1600, Atlanta, Georgia 30339-5683. These items are also posted on the
Company's website at www.cousinsproperties.com.
INVESTOR RELATIONS CONTACT
Carl Y. Dickson, Director of Investor Relations
Cousins Properties Incorporated and Consolidated Entities
DIRECTORS
T. G. Cousins
Chairman of the Board and
Chief Executive Officer
Richard W. Courts, II
Chairman
Atlantic Investment Company
Lillian C. Giornelli
Chairman and Chief Executive Officer
The Cousins Foundation, Inc.
Terence C. Golden
President, Chief Executive Officer
and Director
Host Marriott Corporation
Boone A. Knox
Chairman
Regions Bank of Central Georgia
William Porter Payne
Vice Chairman and Director
PTEK Holdings, Inc.
Richard E. Salomon
Managing Director
Spears, Benzak, Salomon & Farrell
- ---------------------------------
Henry C. Goodrich
Director Emeritus
- ---------------------------------
CORPORATE
T. G. Cousins
Chairman of the Board and
Chief Executive Officer
Daniel M. DuPree
President and Chief Operating
Officer
Kelly H. Barrett
Senior Vice President - Finance
George J. Berry
Senior Vice President
Tom G. Charlesworth
Senior Vice President,
General Counsel and Secretary
Dan G. Arnold
Vice President - Director
Information Systems
Patricia A. Isaacs
Vice President and Controller
Kristin R. Myers
Vice President and Director of Tax
Mark A. Russell
Vice President and
Senior Financial Analyst
Lisa R. Simmons
Director of Corporate
Communications
OFFICE DIVISION
Craig B. Jones
President
John L. Murphy
Senior Vice President
W. Henry Atkins
Senior Vice President - Charlotte
Jack A. LaHue
Senior Vice President - Asset
Management
Dara J. Nicholson
Senior Vice President - Office Property
Management
C. David Atkins
Vice President - Charlotte
Alexander H. Chambers
Vice President
John S. Durham
Vice President - Leasing
Walter L. Fish
Vice President - Leasing
Ronald C. Sturgis
Vice President - Office Property
Management
MEDICAL OFFICE DIVISION
(Cousins/Richmond)
Lea Richmond III
President
John S. McColl
Senior Vice President
S. Rox Green
Vice President - Asset Management
Thomas H. Kirbo
Vice President - Leasing
Michael J. Lant
Vice President - Development
RETAIL DIVISION
Joel T. Murphy
President
John D. Hopkins
Senior Vice President - Western Region
Craig N. Kaser
Senior Vice President - Leasing
Thomas D. Lenny
Senior Vice President - Western Region
Robert A. Manarino
Senior Vice President - Western Region
Robert S. Wordes
Senior Vice President - Asset
Management
William I. Bassett
Vice President - Development
Michael I. Cohn
Vice President - Development
Keven D. Doherty
Vice President - Development
Western Region
Terry M. Hampel
Vice President - Asset
Management
Michael J. Quinley
Vice President - Development
DEVELOPMENT AND
CONSTRUCTION DIVISION
W. James Overton
Senior Vice President - Development
James D. Dean
Vice President - Development
James F. George
Vice President - Development
John N. Goff
Vice President - Development
Lloyd P. Thompson, Jr.
Vice President - Development
LAND DIVISION*
(Cousins Neighborhoods)
Bruce E. Smith
President
Craig A. Lacey
Vice President - Development
COUSINS STONE LP**
R. Dary Stone
President
* Officers of Cousins Real Estate Corporation only.
** Officer of CREC II Inc. subsidiary only.