Cousins Reports Results for the First Quarter of 2013

Cousins Reports Results for the First Quarter of 2013

ATLANTA--(BUSINESS WIRE)-- Cousins Properties Incorporated (NYS: CUZ) :

Highlights

  • Funds From Operations for the quarter was $0.11 per share.
  • Same property net operating income for the quarter increased 5.0% over the prior year.
  • Purchased a 100% ownership interest in Post Oak Central.
  • Completed transactions at Terminus 100 and 200 that resulted in a 50% ownership interest in both buildings.
  • Subsequent to quarter end, issued 16.5 million shares of common stock, acquired 816 Congress and notified the holders of the Company's Series A Redeemable Cumulative Preferred Stock that all shares will be redeemed.

Cousins Properties Incorporated (NYS: CUZ) today reported its results of operations for the quarter ended March 31, 2013.

"It was another solid quarter for Cousins, with a series of positive transactions, a strong operating performance and an uptick in leasing activity," said Larry Gellerstedt, President and Chief Executive Officer of Cousins. "The execution of our stock offering and another quality acquisition in Texas, subsequent to the quarter, represent additional steps forward as we continue to execute the strategy. It's a very exciting time to be at Cousins."

Portfolio Activity

  • Leased or renewed 527,000 square feet of office and retail space.
  • The office and retail portfolios finished the quarter 90% occupied on a same property basis, up from 87% in the prior year.

Transaction Activity

  • Purchased the remaining 80% interest in Terminus 200 from a fund managed by Morgan Stanley Real Estate Investing in a transaction that valued the property at $164.0 million.
  • Formed a 50/50 joint venture with institutional investors advised by J.P. Morgan Asset Management for both Terminus 100 and Terminus 200. Terminus 100 was attributed a value of $209.2 million and Terminus 200 was attributed a value of $164.0 million.
  • Purchased a 100% interest in Post Oak Central, a Class-A office complex in the Galleria submarket of Houston, from an affiliate of J.P. Morgan Asset Management for $230.9 million, after adjusting for rent credits.

Transactions Subsequent to Quarter End

  • Issued 16.5 million shares of common stock at $10.45 per share, generating net proceeds of $165.1 million.
  • Acquired 816 Congress, a Class-A office tower in the central business district of Austin, Texas, for $102.4 million, after adjusting for rent credits.
  • Notified holders of the Company's Series A Cumulative Redeemable Preferred Stock that all outstanding shares will be redeemed on May 13, 2013, for approximately $75 million.

Financial Results

FFO was $11.5 million, or $0.11 per share, for the first quarter of 2013 compared with $13.5 million, or $0.13 per share, for the first quarter of 2012.

Net income available to common stockholders was $53.2 million, or $0.51 per share, for the first quarter of 2013 compared with net loss available of ($13.1) million, or ($0.13) per share, for the first quarter of 2012.

Investor Conference Call and Webcast

The Company will conduct a conference call at 11:00 a.m. (Eastern Time) on Thursday, May 9, 2013, to discuss the results of the quarter ended March 31, 2013. The number to call for this interactive teleconference is (212) 271-4657.

A replay of the conference call will be available for 14 days by dialing (402) 977-9140 and entering the passcode 21653403. The replay can be accessed on the Company's website, www.cousinsproperties.com, through the "Q1 2013 Cousins Properties Incorporated Earnings Conference Call" link on the Investor Relations page.

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 and retail projects. Since its founding in 1958, Cousins has developed more than 20 million square feet of office space and 20 million square feet of retail space. Cousins has built and maintained an industry-wide reputation for innovative and sustainable developments, premium management services and top quality leadership. The Company creates and maintains value in real estate assets for the benefit of shareholders, and partners. Cousins Properties is a fully integrated equity real estate investment trust (REIT) and trades on the New York Stock Exchange under the symbol CUZ.

The Consolidated Statements of Comprehensive Income, Consolidated Balance Sheets and a schedule entitled Funds From Operations, which reconciles Net Income (Loss) Available to FFO, and a schedule entitled Same Property Information, which reconciles same property net operating income to rental property revenues and rental property expenses, are attached to this press release. More detailed information on Net Income (Loss) 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 "Supplemental Information" and "SEC Filings" links on the "Investor Information & Filings" link of 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.

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, the availability and terms of capital and financing; the ability to refinance indebtedness as it matures; failure of purchase, sale or other contracts to ultimately close; the availability of buyers and adequate pricing with respect to the disposition of assets; risks and uncertainties related to national and local economic conditions, the real estate industry in general and in specific markets, and the commercial markets in particular; market conditions and changes to the Company's strategy with regard to land and other non-core holdings that require impairment losses to be recognized; the effects of the sale of the Company's third party management business; leasing risks, including the ability to obtain new tenants or renew expiring tenants on favorable terms, and the ability to lease newly developed, recently acquired or current vacant space; financial condition of existing tenants; volatility in interest rates and insurance rates; the availability of sufficient investment opportunities; competition from other developers or investors; the risks associated with real estate developments and acquisitions (such as construction delays, cost overruns and leasing risk); loss of key personnel; potential liability for uninsured losses, condemnation or environmental issues; potential liability for a failure to meet regulatory requirements; the financial condition and liquidity of, or disputes with, joint venture partners; any failure to comply with debt covenants under credit agreements; and any failure to continue to qualify for taxation as a real estate investment trust 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, 2012. The words "believes," "expects," "anticipates," "estimates," "plans," "may," "intend," "will" or 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 such 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, except as required under U.S. federal securities laws.

 
COUSINS PROPERTIES INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(quarter is unaudited; in thousands, except per share amounts)
 
     

Three Months Ended
March 31,

 
  2013         2012  
REVENUES:      
Rental property revenues $ 36,123 $ 29,573
Fee income 3,579 2,857
Land sales 963 949
Other     603         1,273    
    41,268         34,652    
 
COSTS AND EXPENSES:
Rental property operating expenses 16,297 12,225
Reimbursed expenses 1,910 1,375
General and administrative expenses 6,069 6,625
Land cost of sales 963 564
Interest expense 4,935 6,268
Depreciation and amortization 12,299 10,515
Separation expenses - 213
Other     728         680    
    43,201         38,465    
 
LOSS ON EXTINGUISHMENT OF DEBT     -         (94 )  
 

LOSS FROM CONTINUING OPERATIONS BEFORE TAXES, UNCONSOLIDATED JOINT VENTURES AND SALE OF INVESTMENT PROPERTIES

(1,933 ) (3,907 )
 
PROVISION FOR INCOME TAXES FROM OPERATIONS (1 ) (27 )
 
INCOME FROM UNCONSOLIDATED JOINT VENTURES     1,652         2,186    
 

LOSS FROM CONTINUING OPERATIONS BEFORE GAIN ON SALE OF INVESTMENT PROPERTIES

(282 ) (1,748 )
 
GAIN ON SALE OF INVESTMENT PROPERTIES     57,177         57    
 
INCOME (LOSS) FROM CONTINUING OPERATIONS 56,895 (1,691 )
 
INCOME (LOSS) FROM DISCONTINUED OPERATIONS:
Loss from discontinued operations (86 ) (9,749 )
Gain on sale of discontinued operations     95         86    
    9         (9,663 )  
 
NET INCOME (LOSS) 56,904 (11,354 )
NET (INCOME) LOSS ATTRIBUTABLE TO NONCONTROLLING INTERESTS     (507 )       1,469    
 
NET INCOME (LOSS) ATTRIBUTABLE TO CONTROLLING INTEREST 56,397 (9,885 )
 
DIVIDENDS TO PREFERRED STOCKHOLDERS     (3,227 )       (3,227 )  
 
NET INCOME (LOSS) AVAILABLE TO COMMON STOCKHOLDERS   $ 53,170       $ (13,112 )  
 
PER COMMON SHARE INFORMATION - BASIC AND DILUTED:
Income (loss) from continuing operations attributable to controlling interest $ 0.51 $ (0.04 )
Income (loss) from discontinued operations     0.00       $ (0.09 )  
Net income (loss) available to common stockholders   $ 0.51       $ (0.13 )  
 
WEIGHTED AVERAGE SHARES - BASIC     104,119         104,000    
WEIGHTED AVERAGE SHARES - DILUTED     104,252         104,000    
DIVIDENDS PER COMMON SHARE   $ 0.045       $ 0.045    
 
 
COUSINS PROPERTIES INCORPORATED AND SUBSIDIARIES
FUNDS FROM OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2013 AND 2012
(Unaudited, in thousands, except per share amounts)
 
      Three Months Ended
  March 31,  
  2013         2012  
   
Net Income (Loss) Available to Common Stockholders $ 53,170 $ (13,112 )
Depreciation and amortization of real estate assets:
Consolidated properties 12,116 10,151
Discontinued properties - 3,741
Share of unconsolidated joint ventures 3,204 2,661

Impairment loss on depreciable investment property net of amounts attributable to noncontrolling interests

- 10,190
Gain on sale of depreciated properties:
Consolidated (56,934 ) (57 )
Discontinued properties     (95 )       (86 )  
 
Funds From Operations Available to Common Stockholders   $ 11,461       $ 13,488    
 
 
Per Common Share - Basic and Diluted:
 
Net Income (Loss) Available   $ .51       $ (.13 )  
 
Funds From Operations   $ .11       $ .13    
 
Weighted Average Shares-Basic     104,119         104,000    
Weighted Average Shares-Diluted     104,252         104,000    
 

The table above shows Funds From Operations Available to Common Stockholders ("FFO") and the related reconciliation to Net Income (Loss) Available to Common Stockholders for Cousins Properties Incorporated and Subsidiaries. The Company calculated FFO in accordance with the National Association of Real Estate Investment Trusts' ("NAREIT") definition, which is net income (loss) available to common stockholders (computed in accordance with accounting principles generally accepted in the United States ("GAAP")), excluding extraordinary items, cumulative effect of change in accounting principle and gains or losses from sales of depreciable property, plus depreciation and amortization of real estate assets, impairment losses on depreciable investment property 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 along with other measures, to assess performance in connection with evaluating and granting incentive compensation to its officers and other key employees.

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COUSINS PROPERTIES INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)
 
      March 31, 2013         December 31, 2012  

ASSETS

  (unaudited)    
PROPERTIES:

Operating properties, net of accumulated depreciation of $218,123 and $255,128 in 2013 and 2012, respectively

$ 762,493 $ 669,652

Projects under development, net of accumulated depreciation of $359 and $183 in 2013 and 2012, respectively

25,629 25,209
Land 41,019
TWX -0.24 64.91

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