Cousins Properties Reports Results for Quarter Ended June 30, 2008

Monday, August 11, 2008 4:02 PM

Symbols: CUZ

Cousins Properties Incorporated (NYSE:CUZ) today reported its results of operations for the three and six months ended June 30, 2008. 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 $16.1 million, or $0.31 per share, for the second quarter of 2008 compared with FFO of $9.4 million, or $0.18 per share, for the second quarter of 2007. FFO was $29.9 million, or $0.58 per share, for the six months ended June 30, 2008, compared to $33.9 million, or $0.63 per share, for the same period in 2007.

Net Income Available to Common Stockholders (“Net Income Available”) was $2.9 million, or $0.06 per share, for the second quarter of 2008 compared with Net Income Available of $395,000, or $0.01 per share, for the second quarter of 2007. Net Income Available was $4.8 million, or $0.09 per share, for the six months ended June 30, 2008, compared with $14.8 million, or $0.28 per share, for the same period in 2007.

Second quarter highlights of the Company included the following:

Sold two tracts totaling 70 acres at Jefferson Mill Business Park for approximately $8.5 million, generating FFO of approximately $748,000.
Entered into an agreement to sell an additional 53-acre tract at Jefferson Mill Business Park and a 44-acre tract at King Mill Distribution Park for an aggregate price of $10.1 million. These tracts are expected to close on or before December 31, 2009.
Sold a 28-acre tract adjacent to The Avenue Forsyth for $17.6 million, generating FFO of approximately $3.4 million. The Company expects to recognize an additional $664,000 in FFO from this sale in 2008 and 2009 as it completes certain site improvement work on the tract.
Through its CL Realty joint venture, sold 30 acres at its Long Meadows Farms project for $7.7 million, generating a gain of $4.8 million. The Company’s share of this gain, representing pre-tax FFO, is $931,000.
Celebrated the grand opening of The Avenue Forsyth, a 527,000-square-foot lifestyle center in north metropolitan Atlanta.

Other highlights subsequent to quarter-end:

Through its 50 Biscayne joint venture, sold all of the remaining 120 residential units for $30.3 million. This venture currently holds only seven unsold commercial units.
Entered into an $18.4 million mortgage loan secured by its Lakeshore Park Plaza office building. This non-recourse loan matures August 1, 2012, and bears interest at 5.89%.

At June 30, 2008, the Company’s portfolio of operational office buildings was 93% leased, its portfolio of operational retail centers was 91% leased and its operational industrial buildings were 40% leased.

At June 30, 2008, the Company and its joint ventures had seven office and retail projects under development and redevelopment totaling 3.8 million Company-owned square feet and two multi-family projects under development containing a total of 208 units. The Company estimates the total cost of these projects will be approximately $957 million and expects completion of these projects throughout the next three years. In addition, the Company and its joint ventures had 24 residential communities in which approximately 2,000 completed lots are in inventory and an additional 7,900 lots are available for future development and/or sale.

“With economic conditions continuing to deteriorate, leasing remains a top priority for us, and our team is looking for distressed transactions where we can use our expertise to create value for our shareholders,” said Tom Bell, chairman and CEO of Cousins. “Fortunately, our tract sales business – selling entitled land to users or other developers – continues to be a bright spot this year and highlights a sometimes overlooked but important recurring business for Cousins. During the second half of the year, we will continue to press on the lease-up of our existing projects while aggressively pursuing opportunities that result from this down cycle,” Bell added.

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 Web site at www.cousinsproperties.com. This information may also be obtained by calling the Company’s Investor Relations Department at (404) 407-1490.

The Company will conduct a conference call at 10:00 a.m. (Eastern Time) on Tuesday, August 12, 2008, to discuss the results of the quarter ended June 30, 2008. The number to call for this interactive teleconference is (303) 262-2140. A replay of the conference call will be available for 14 days by dialing (303) 590-3000 and entering the passcode 11116487#. The replay can be accessed on the Company’s Web site, www.cousinsproperties.com, through the “Q2 2008 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 Web site for 14 days.

Celebrating its 50^th anniversary in 2008, 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, 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, local real estate conditions (including the overall condition of the residential 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, 2007. 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,
		2008		2007		2008		2007
REVENUES:
	Rental property revenues	$ 36,706		$ 25,499		$ 71,019		$ 49,629
	Fee income	7,802		9,860		15,360		17,926
	Residential lot and outparcel sales	1,255		1,476		2,999		2,902
	Interest and other	940		833		2,300		4,500
		46,703		37,668		91,678		74,957

COSTS AND EXPENSES:
	Rental property operating expenses	14,792		11,341		28,470		21,358
	General and administrative expenses	13,067		15,604		27,452		30,294
	Depreciation and amortization	12,785		8,721		24,224		18,076
	Residential lot and outparcel cost of sales	832		1,085		1,778		2,293
	Interest expense	7,367		531		13,642		531
	Other	549		758		2,304		1,118
		49,392		38,040		97,870		73,670

INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE TAXES, MINORITY INTEREST AND INCOME FROM UNCONSOLIDATED JOINT VENTURES
		(2,689	)	(372	)	(6,192	)	1,287

BENEFIT FOR INCOME TAXES FROM OPERATIONS		2,176		1,073		5,393		2,100

MINORITY INTEREST IN INCOME OF CONSOLIDATED SUBSIDIARIES		(251	)	(842	)	(922	)	(1,704	)

INCOME FROM UNCONSOLIDATED JOINT VENTURES		2,239		4,101		5,056		7,809

INCOME FROM CONTINUING OPERATIONS BEFORE GAIN ON SALE OF INVESTMENT PROPERTIES
		1,475		3,960		3,335		9,492

GAIN ON SALE OF INVESTMENT PROPERTIES, NET OF APPLICABLE INCOME TAX PROVISION
		5,212		62		9,004		4,502

INCOME FROM CONTINUING OPERATIONS		6,687		4,022		12,339		13,994

DISCONTINUED OPERATIONS, NET OF APPLICABLE INCOME TAX PROVISION:

	Income from discontinued operations	36		207		36		291
	Gain (loss) on sale of investment properties	-		(22	)	-		8,142
		36		185		36		8,433

NET INCOME		6,723		4,207		12,375		22,427

DIVIDENDS TO PREFERRED STOCKHOLDERS		(3,812	)	(3,812	)	(7,625	)	(7,625	)

NET INCOME AVAILABLE TO COMMON STOCKHOLDERS		$ 2,911		$ 395		$ 4,750		$ 14,802

PER COMMON SHARE INFORMATION - BASIC:
	Income from continuing operations	$ 0.06		$ 0.01		$ 0.09		$ 0.13
	Income from discontinued operations	-		-		-		0.16
	Basic net income available to common stockholders	$ 0.06		$ 0.01		$ 0.09		$ 0.29

PER COMMON SHARE INFORMATION - DILUTED:
	Income from continuing operations	$ 0.06		$ 0.01		$ 0.09		$ 0.12
	Income from discontinued operations	-		-		-		0.16
	Diluted net income available to common stockholders	$ 0.06		$ 0.01		$ 0.09		$ 0.28

CASH DIVIDENDS DECLARED PER COMMON SHARE		$ 0.37		$ 0.37		$ 0.74		$ 0.74

WEIGHTED AVERAGE SHARES		51,187		51,825		51,167		51,772

DILUTED WEIGHTED AVERAGE SHARES		52,040		53,306		51,842		53,440

COUSINS PROPERTIES INCORPORATED AND SUBSIDIARIES
FUNDS FROM OPERATIONS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2008 AND 2007
(Unaudited, in thousands, except per share amounts)

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2008		2007		2008		2007

Net Income Available to Common Stockholders	$ 2,911		$ 395		$ 4,750		$ 14,802
Depreciation and amortization:
Consolidated properties	12,785		8,721		24,224		18,076
Discontinued properties	-		(14	)	-		151
Share of unconsolidated joint ventures	1,473		1,089		2,864		2,170
Depreciation of furniture, fixtures and equipment and amortization of specifically identifiable intangible assets:

Consolidated properties	(967	)	(758	)	(1,744	)	(1,259	)
Share of unconsolidated joint ventures	(26	)	-		(51	)	-
Gain on sale of investment properties, net of applicable income tax provision:

Consolidated	(5,212	)	(62	)	(9,004	)	(4,502	)
Discontinued properties	-		22		-		(8,142	)
Share of unconsolidated joint ventures	-		(10	)	-		34
Gain on sale of undepreciated investment properties	5,156		-		8,892		12,540

Funds From Operations Available to Common Stockholders	$ 16,120		$ 9,383		$ 29,931		$ 33,870


Per Common Share - Basic:
Net Income Available	$ .06		$ .01		$ .09		$ .29
Funds From Operations	$ .31		$ .18		$ .58		$ .65
Weighted Average Shares-Basic	51,187		51,825		51,167		51,772

Per Common Share - Diluted:
Net Income Available	$ .06		$ .01		$ .09		$ .28
Funds From Operations	$ .31		$ .18		$ .58		$ .63
Weighted Average Shares-Diluted	52,040		53,306		51,842		53,440

The table above shows Funds From Operations Available to Common Stockholders (“FFO”) and the related reconciliation to Net Income Available to Common Stockholders ("Net Income 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 available to common stockholders (computed in accordance with accounting principles generally accepted in the United States ("GAAP")), excluding extraordinary items, cumulative effect of change in accounting principle and gains or losses from sales of depreciable property, plus depreciation and amortization of real estate assets, and after adjustments for unconsolidated partnerships and joint ventures to reflect FFO on the same basis.

FFO is used by industry analysts and investors as a supplemental measure of an equity REIT’s operating performance. Historical cost accounting for real estate assets implicitly assumes that the value of real estate assets diminishes predictably over time. Since real estate values instead have historically risen or fallen with market conditions, many industry investors and analysts have considered presentation of operating results for real estate companies that use historical cost accounting to be insufficient by themselves. Thus, NAREIT created FFO as a supplemental measure of REIT operating performance that excludes historical cost depreciation, among other items, from GAAP net income. Management believes that the use of FFO, combined with the required primary GAAP presentations, has been fundamentally beneficial, improving the understanding of operating results of REITs among the investing public and making comparisons of REIT operating results more meaningful. Company management evaluates the operating performance of its reportable segments and of its divisions based in part 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 key employees.

Cousins Properties Incorporated
James A. Fleming
Executive Vice President and Chief Financial Officer
404-407-1150
jimfleming@cousinsproperties.com
or
Matt Gove
Senior Vice President
404-407-1490
mattgove@cousinsproperties.com

(Source: Business Wire )