ATLANTA--(BUSINESS WIRE)--
Cousins Properties Incorporated (NYSE:CUZ) today reported its results of
operations for the three and six months ended June 30, 2009. All per
share amounts are reported on a diluted basis; basic per share data is
included in the Condensed Consolidated Statements of Income accompanying
this release.
Funds from Operations Available to Common Stockholders ("FFO") was $23.4
million, or $0.45 per share, before certain non-cash impairment,
valuation and retirement charges discussed below for the second quarter
of 2009, compared with FFO of $16.1 million, or $0.30 per share, for the
second quarter of 2008. FFO was $30.9 million, or $0.59 per share,
before such charges for the six months ended June 30, 2009, compared
with $29.9 million, or $0.57 per share, for the same period in 2008.
Net Income Available to Common Stockholders ("Net Income Available") was
$7.0 million, or $0.13 per share, before such non-cash impairment,
valuation and retirement charges for the quarter ended June 30, 2009,
compared with Net Income Available of $2.9 million, or $0.05 per share,
for the second quarter of 2008. Net Income Available was $167.5 million,
or $3.21 per share, before such charges for the six months ended June
30, 2009, compared with $4.8 million, or $0.09 per share, for the same
period in 2008.
The Company recorded $88.3 million of non-cash impairment, valuation and
retirement charges during the second quarter of 2009, which consisted of
the following:
-- Impairment charge on 10 Terminus Place - $34.9 million,
-- Impairment charges on investments in joint ventures - $28.1 million,
-- Valuation allowance recorded on deferred tax asset - $15.9 million,
-- Write-off of pre-development expenses - $3.1 million,
-- Retirement charges for the former Chief Executive Officer - $2.0
million, and
-- Other reserves and impairments - $4.2 million.
After such non-cash impairment, valuation and retirement charges, FFO
was a loss of $64.9 million, or $1.24 per share, for the second quarter
of 2009 and a loss of $57.3 million, or $1.10 per share, for the six
months ended June 30, 2009. Net Loss Available to Common Stockholders,
after such non-cash and retirement charges, was $81.3 million, or $1.56
per share, for the second quarter of 2009 and Net Income Available was
$79.3 million, or $1.52 per share, for the six months ended June 30,
2009.
A reconciliation of FFO and Net Income (Loss) Available before certain
non-cash impairment, valuation and retirement charges is as follows:
2nd Quarter 2009 Six Months 2009
$(000) Per Share $(000) Per Share
FFO Before
Certain $ 23,387 $ 0.45 $ 30,941 $ 0.59
Charges
Certain Non-Cash
Impairment, Valuation and
Retirement Charges:
Impairment charge (34,900 ) (0.67 ) (34,900 ) (0.67 )
on 10 Terminus
Impairment charges on
Investments in Joint (28,130 ) (0.54 ) (28,130 ) (0.54 )
Ventures
Valuation allowance on (15,907 ) (0.30 ) (15,907 ) (0.30 )
deferred tax asset
Write-off of (3,100 ) (0.06 ) (3,100 ) (0.06 )
pre-development expenses
Retirement
charges for (2,026 ) (0.04 ) (2,026 ) (0.04 )
former CEO
Other reserves (4,219 ) (0.08 ) (4,219 ) (0.08 )
and impairments
Total (88,282 ) (1.69 ) (88,282 ) (1.69 )
FFO ($64,895 ) ($1.24 ) ($57,341 ) ($1.10 )
Net Income Available $ 6,969 $ 0.13 $ 167,540 $ 3.21
Before Certain Charges
Certain Non-Cash
Impairment, Valuation and (88,282 ) (1.69 ) (88,282 ) (1.69 )
Retirement Charges
Net Income
(Loss) ($81,313 ) ($1.56 ) $ 79,258 $ 1.52
Available
The Company recorded impairment charges on its 10 Terminus Place
condominium project and on its investments in certain residential joint
ventures to write these assets to their estimated fair value. The
impairment on 10 Terminus Place reflects the overall general condition
of the condominium market and the relatively high discount rates
associated with this product type. The impairments on the residential
joint ventures represent the other-than-temporary decline in the fair
values of the Company's investment in the joint ventures below their
carrying amounts, in accordance with Accounting Principles Board
Opinion No. 18. These impairments are the result of the continued
decline in the market for residential lots and the increasing discount
rates for this product.
The Company recorded a valuation allowance on its deferred tax assets
following an assessment of the recoverability of deferred tax assets at
Cousins Real Estate Corporation ("CREC"), the Company's taxable REIT
subsidiary. This allowance reflects the application of Statement of
Financial Accounting Standards No. 109, which requires companies to
record an allowance against deferred tax assets when, based on the
weight of available evidence, it is more likely than not that some or
all of the deferred tax assets will not be realized. CREC has been in a
cumulative loss position in recent years and will likely be in a loss
position for 2009. While the Company believes CREC will be profitable in
the long term, this cumulative loss and the uncertainty about CREC's
profitability in the near term as a result of the continued decline in
the housing market were factors that the Company considered in
determining that the allowance was appropriate.
Second quarter highlights of the Company included the following:
-- Executed a 50,000-square-foot lease with Firethorn Holdings, LLC in
Terminus 200, a 25-story office building under construction at the
Company's Terminus development in Atlanta, Georgia. Executed or renewed
an additional 261,000 square feet of office leases.
-- Executed a 28,000-square-foot lease with Bed, Bath & Beyond at the
Avenue Carriage Crossing, a 511,000-square-foot retail center in
Memphis, Tennessee. Executed or renewed an additional 186,000 square
feet of retail leases.
-- Executed 104,000 square feet of industrial leases.
-- Repaid in full the $83.3 million mortgage note payable secured by the
San Jose MarketCenter for approximately $70.3 million and recognized a
gain on extinguishment of this debt of approximately $12.5 million.
At June 30, 2009, the Company's portfolio of operational office
buildings was 90% leased, its portfolio of operational retail centers
was 82% leased and its operational industrial buildings were 44% leased.
"It is a real tribute to our leasing and asset management teams that
leasing efforts continue to show positive results in spite of overall
economic and market conditions," said Larry Gellerstedt, CEO of Cousins.
"While the non-cash charges unfortunately reflect the current state of
the real estate markets, we believe Cousins is in a much better position
than many REITs with current debt maturities and prudent management of
our balance sheet. We continue to position Cousins to be able to take
advantage of opportunities in distressed markets, and we are hopeful
that we will see some significant opportunities within the next year."
The Condensed Consolidated Statements of Income, Condensed Consolidated
Balance Sheets and a schedule entitled Funds From Operations, which
reconciles Net Income Available to FFO, are attached to this press
release. More detailed information on Net Income Available and FFO
results is included in the "Net Income and Funds From
Operations-Supplemental Detail" schedule which is included along with
other supplemental information in the Company's Current Report on Form
8-K, which the Company is furnishing to the Securities and Exchange
Commission ("SEC"), and which can be viewed through the "Quarterly
Disclosures" and "SEC Filings" links on the Investor Relations page of
the Company's website at www.cousinsproperties.com.
This information may also be obtained by calling the Company's Investor
Relations Department at (404) 407-1984.
The Company will conduct a conference call at 2:00 p.m. (Eastern Time)
on Tuesday, August 11, 2009, to discuss the results of the quarter ended
June 30, 2009. The number to call for this interactive teleconference is
(212) 231-2900. A replay of the conference call will be available for 14
days by dialing (402) 977-9140 and entering the passcode 21431729. The
replay can be accessed on the Company's website, www.cousinsproperties.com,
through the "Q2 2009 Cousins Properties Incorporated Earnings Conference
Call" link on the Investor Relations page, as well as at www.streetevents.com
and www.earnings.com.
The rebroadcast will be available on the Investor Relations page of the
Company's website for 14 days.
Cousins Properties Incorporated is a leading diversified real estate
company with extensive experience in development, acquisition,
financing, management and leasing. Based in Atlanta, the Company
actively invests in office, multi-family, retail, industrial and land
development projects. Since its founding in 1958, Cousins has developed
20 million square feet of office space, 20 million square feet of retail
space, more than 4,000 multi-family units and more than 60 single-family
neighborhoods. The Company is a fully integrated equity real estate
investment trust (REIT) and trades on the New York Stock Exchange under
the symbol CUZ. For more, please visit www.cousinsproperties.com.
Certain matters discussed in this news release are forward-looking
statements within the meaning of the federal securities laws and are
subject to uncertainties and risk. These include, but are not
limited to, general and local economic conditions (including the current
general recession and state of the credit markets), local real estate
conditions (including the overall condition of the residential and
condominium markets), the activity of others developing competitive
projects, the risks associated with development projects (such as delay,
cost overruns and leasing/sales risk of new properties), the cyclical
nature of the real estate industry, the financial condition of existing
tenants, interest rates, the Company's ability to obtain favorable
financing or zoning, environmental matters, the effects of terrorism,
the ability of the Company to close properties under contract and other
risks detailed from time to time in the Company's filings with the
Securities and Exchange Commission, including those described in Part I,
Item 1A of the Company's Annual Report on Form 10-K for the year ended
December 31, 2008. The words "believes," "expects," "anticipates,"
"estimates" and similar expressions are intended to identify
forward-looking statements. Although the Company believes that its
plans, intentions and expectations reflected in any forward-looking
statement are reasonable, the Company can give no assurance that these
plans, intentions or expectations will be achieved. Such forward-looking
statements are based on current expectations and speak as of the date of
such statements. The Company undertakes no obligation to publicly update
or revise any forward-looking statement, whether as a result of future
events, new information or otherwise.
COUSINS PROPERTIES INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited, in thousands, except per share amounts)
Three Months Ended June 30, Six Months Ended June 30,
2009 2008 2009 2008
REVENUES:
Rental property $ 37,095 $ 36,700 $ 74,604 $ 71,007
revenues
Fee income 8,172 7,802 16,216 15,360
Residential lot,
multi-family and 4,513 1,255 7,061 2,999
outparcel sales
Interest and other 1,285 940 2,271 2,300
51,065 46,697 100,152 91,666
COSTS AND EXPENSES:
Rental property 15,159 14,583 32,472 28,021
operating expenses
General and 9,948 8,965 19,366 19,296
administrative expenses
Separation expenses 2,026 48 2,370 316
Reimbursed general and 4,030 4,054 8,258 7,840
administrative expenses
Depreciation and 15,381 12,611 28,437 23,876
amortization
Residential lot,
multi-family and 3,208 832 4,938 1,778
outparcel cost of sales
Interest expense 10,560 7,367 20,990 13,642
Impairment loss 36,500 - 36,500 -
Other 4,432 549 5,978 2,304
101,244 49,009 159,309 97,073
GAIN ON EXTINGUISHMENT 12,498 - 12,498 -
OF DEBT
LOSS FROM CONTINUING
OPERATIONS BEFORE TAXES,
INCOME (LOSS) FROM
UNCONSOLIDATED JOINT (37,681 ) (2,312 ) (46,659 ) (5,407 )
VENTURES AND GAIN ON
SALE OF INVESTMENT
PROPERTIES
(PROVISION) BENEFIT FOR
INCOME TAXES FROM (11,293 ) 2,176 (7,352 ) 5,393
OPERATIONS
INCOME (LOSS) FROM
UNCONSOLIDATED JOINT
VENTURES:
Equity in net income
(loss) from (1,231 ) 2,239 589 5,056
unconsolidated joint
ventures
Impairment loss on
investment in (28,130 ) - (28,130 ) -
unconsolidated joint
ventures
(29,361 ) 2,239 (27,541 ) 5,056
INCOME (LOSS) FROM
CONTINUING OPERATIONS (78,335 ) 2,103 (81,552 ) 5,042
BEFORE GAIN ON SALE OF
INVESTMENT PROPERTIES
GAIN ON SALE OF
INVESTMENT PROPERTIES, 801 5,212 168,235 9,004
NET OF APPLICABLE INCOME
TAX PROVISION
INCOME (LOSS) FROM (77,534 ) 7,315 86,683 14,046
CONTINUING OPERATIONS
DISCONTINUED OPERATIONS,
NET OF APPLICABLE INCOME
TAX PROVISION:
Loss from discontinued - (341 ) (7 ) (749 )
operations
Gain on sale of 146 - 146 -
investment properties
146 (341 ) 139 (749 )
NET INCOME (LOSS) (77,388 ) 6,974 86,822 13,297
NET INCOME ATTRIBUTABLE
TO NONCONTROLLING (698 ) (251 ) (1,110 ) (922 )
INTERESTS
NET INCOME (LOSS)
ATTRIBUTABLE TO (78,086 ) 6,723 85,712 12,375
CONTROLLING INTEREST
DIVIDENDS TO PREFERRED (3,227 ) (3,812 ) (6,454 ) (7,625 )
STOCKHOLDERS
NET INCOME (LOSS)
AVAILABLE TO COMMON $ (81,313 ) $ 2,911 $ 79,258 $ 4,750
STOCKHOLDERS
PER COMMON SHARE
INFORMATION - BASIC:
Income (loss) from $ (1.56 ) $ 0.07 $ 1.52 $ 0.10
continuing operations
Income (loss) from - (0.01 ) - (0.01 )
discontinued operations
Basic net income (loss)
available to common $ (1.56 ) $ 0.06 $ 1.52 $ 0.09
stockholders
PER COMMON SHARE
INFORMATION - DILUTED:
Income (loss) from $ (1.56 ) $ 0.06 $ 1.52 $ 0.10
continuing operations
Income (loss) from - (0.01 ) - (0.01 )
discontinued operations
Diluted net income
(loss) available to $ (1.56 ) $ 0.05 $ 1.52 $ 0.09
common stockholders
DIVIDENDS DECLARED PER $ 0.25 $ 0.37 $ 0.50 $ 0.74
COMMON SHARE
COUSINS PROPERTIES INCORPORATED AND SUBSIDIARIES
FUNDS FROM OPERATIONS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2009 AND 2008
(Unaudited, in thousands, except per share amounts)
Three Months Ended Six Months Ended
June 30, June 30,
2009 2008 2009 2008
Net Income (Loss) Available $ (81,313 ) $ 2,911 $ 79,258 $ 4,750
to Common Stockholders
Depreciation and
amortization:
Consolidated properties 15,381 12,611 28,437 23,876
Discontinued properties - 174 - 348
Share of unconsolidated joint 2,174 1,473 4,332 2,864
ventures
Depreciation of furniture,
fixtures and equipment and
amortization of specifically
identifiable intangible
assets:
Consolidated properties (938 ) (961 ) (1,906 ) (1,731 )
Discontinued properties - (6 ) - (13 )
Share of unconsolidated joint (14 ) (26 ) (24 ) (51 )
ventures
Gain on sale of investment
properties, net of applicable
income tax provision:
Consolidated (801 ) (5,212 ) (168,235 ) (9,004 )
Discontinued properties (146 ) - (146 ) -
Share of unconsolidated joint 16 - (12 ) -
ventures
Gain on sale of undepreciated 746 5,156 955 8,892
investment properties
Funds From Operations
Available to Common $ (64,895 ) $ 16,120 $ (57,341 ) $ 29,931
Stockholders
Per Common Share - Basic:
Net Income (Loss) Available $ (1.56 ) $ .06 $ 1.52 $ .09
Funds From Operations $ (1.24 ) $ .31 $ (1.10 ) $ .57
Weighted Average Shares-Basic 52,278 52,251 52,278 52,230
Per Common Share - Diluted:
Net Income (Loss) Available $ (1.56 ) $ .05 $ 1.52 $ .09
Funds From Operations $ (1.24 ) $ .30 $ (1.10 ) $ .57
Weighted Average 52,278 53,096 52,278 52,903
Shares-Diluted
The table above shows Funds From Operations Available to Common Stockholders
("FFO") and the related reconciliation to Net Income (Loss) Available to Common
Stockholders ["Net Income (Loss) Available"] for Cousins Properties Incorporated
and Subsidiaries. The Company calculated FFO in accordance with the National
Association of Real Estate Investment Trusts' ("NAREIT") definition, which is
net income (loss) available to common stockholders [computed in accordance with
accounting principles generally accepted in the United States ("GAAP")],
excluding extraordinary items, cumulative effect of change in accounting
principle and gains or losses from sales of depreciable real property, plus
depreciation and amortization of real estate assets, and after adjustments for
unconsolidated partnerships and joint ventures to reflect FFO on the same basis.
FFO is used by industry analysts and investors as a supplemental measure of an
equity REIT's operating performance. Historical cost accounting for real estate
assets implicitly assumes that the value of real estate assets diminishes
predictably over time. Since real estate values instead have historically risen
or fallen with market conditions, many industry investors and analysts have
considered presentation of operating results for real estate companies that use
historical cost accounting to be insufficient by themselves. Thus, NAREIT
created FFO as a supplemental measure of REIT operating performance that
excludes historical cost depreciation, among other items, from GAAP net income.
Management believes that the use of FFO, combined with the required primary GAAP
presentations, has been fundamentally beneficial, improving the understanding of
operating results of REITs among the investing public and making comparisons of
REIT operating results more meaningful. Company management evaluates operating
performance in part based on FFO. Additionally, the Company uses FFO and FFO per
share, along with other measures, to assess performance in connection with
evaluating and granting incentive compensation to its officers and key
employees.
COUSINS PROPERTIES INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands, except share and per share amounts)
June 30, December 31,
2009 2008
ASSETS
PROPERTIES:
Operating properties, net of accumulated
depreciation of $209,701 and $182,050 in 2009 $ 955,668 $ 853,450
and 2008, respectively
Projects under development 56,992 172,582
Land held for investment or future development 130,269 115,862
Residential lots under development 61,136 59,197
Multi-family units held for sale 40,001 70,658
Total properties 1,244,066 1,271,749
CASH AND CASH EQUIVALENTS 54,121 82,963
RESTRICTED CASH 4,280 3,636
NOTES AND OTHER RECEIVABLES,net of allowance for
doutbful accounts of $2,921 and $2,764 in 2009 53,620 51,267
and 2008, respectively
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES 167,780 200,850
OTHER ASSETS 66,908 83,330
TOTAL ASSETS $ 1,590,775 $ 1,693,795
LIABILITIES AND STOCKHOLDERS' INVESTMENT
NOTES PAYABLE $ 943,792 $ 942,239
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES 54,857 65,026
DEFERRED GAIN 4,564 171,838
DEPOSITS AND DEFERRED INCOME 6,802 6,485
TOTAL LIABILITIES 1,010,015 1,185,588
COMMITMENTS AND CONTINGENT LIABILITIES
REDEEMABLE NONCONTROLLING INTERESTS 12,755 3,945
STOCKHOLDERS' INVESTMENT:
Preferred stock, 20,000,000 shares authorized,
$1 par value:
7.75% Series A cumulative redeemable preferred
stock, $25 liquidation preference; 2,993,090 74,827 74,827
shares issued and outstanding in 2009 and 2008
7.50% Series B cumulative redeemable preferred
stock, $25 liquidation preference; 3,791,000 94,775 94,775
shares issued and outstanding in 2009 and 2008
Common stock, $1 par value, 150,000,000 shares
authorized, 55,863,169 and 54,922,173 shares 55,863 54,922
issued in 2009 and 2008, respectively
Additional paid-in capital 379,389 368,829
Treasury stock at cost, 3,570,082 shares in 2009 (86,840 ) (86,840 )
and 2008
Accumulated other comprehensive loss on (13,089 ) (16,601 )
derivative instrument
Cumulative undistributed net income 30,217 (23,189 )
(distributions in excess of net income)
TOTAL STOCKHOLDERS' INVESTMENT 535,142 466,723
Nonredeemable noncontrolling interests 32,863 37,539
TOTAL EQUITY 568,005 504,262
TOTAL LIABILITIES AND EQUITY $ 1,590,775 $ 1,693,795
Source: Cousins Properties Incorporated
Contact: Cousins Properties Incorporated
James A. Fleming
Executive Vice President and Chief Financial Officer
404-407-1150
jimfleming@cousinsproperties.com
or
Cameron Golden
Director of Investor Relations and Corporate Communications
404-407-1984
camerongolden@cousinsproperties.com