Cousins Properties Incorporated (NYSE:CUZ):
Highlights
- Funds From Operations for the fourth quarter was $0.14 per share. Before special items, FFO for the quarter was $0.15 per share.
- Sold $250.8 million in operating assets during the fourth quarter.
- Sold $26.5 million in land during the fourth quarter.
- Subsequent to quarter end, purchased Post Oak Central in Houston for $232.6 million and completed transactions at Terminus 100 and 200 in Atlanta that resulted in a 50% ownership interest in both buildings.
Cousins Properties Incorporated (NYSE:CUZ) today reported its results of operations for the quarter and year ended December 31, 2012.
“Cousins had an exceptional quarter and year, with solid operating performance and significant progress toward our strategic objectives,” said Larry Gellerstedt, CEO of Cousins. “We are thrilled to kick-off 2013 with the off-market acquisition of Post Oak Central in Houston, a 1.3 million-square-foot, Class-A office asset in the heart of the Galleria submarket. This investment not only serves as an attractive entry into a target market, it provides a rare combination of substantial in-place yield and significant future development opportunity.”
Portfolio Activity
- Leased or renewed 184,000 square feet of office space and 106,000 square feet of retail space.
- The office and retail portfolios finished the quarter 91% and 90% leased, respectively, on a same property basis.
Transaction Activity
- Sold The Avenue Forsyth for $119.0 million, generating $105.7 million in net proceeds to the Company.
- Sold the Company’s interest in Palisades West for $64.8 million.
- Sold The Avenue Webb Gin for $59.6 million.
- Sold the 615 Peachtree land parcel for $11.0 million.
- Sold the Terminus land parcels for $10.5 million.
- Sold Cosmopolitan Center for $7.0 million.
- Liquidated the Company’s investment in Verde Realty for $5.4 million.
- Sold the remaining King Mill land parcel for $4.2 million.
- For the year, the Company sold $401.2 million in operating properties, land and other non-core assets.
Transactions Subsequent to Year End
- 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, or $290 per square foot.
- Formed a 50/50 joint venture with institutional investors advised by J.P. Morgan Asset Management for both Terminus 100 and Terminus 200, neighboring Class-AA office towers in Atlanta’s Buckhead submarket. Terminus 100 was attributed a value of $209.2 million, or $320 per square foot; Terminus 200 was attributed a value of $164.0 million, or $290 per square foot.
- Purchased a 100% interest in Post Oak Central, a Class-A office complex in the Galleria submarket of Houston from institutional investors advised by J.P. Morgan Asset Management, for $232.6 million, or $182 per square foot.
Financial Results
FFO was $14.2 million, or $0.14 per share, for the fourth quarter of 2012 compared with ($110.2) million, or ($1.06) per share, for the fourth quarter of 2011. FFO was $66.5 million, or $0.64 per share, for the year ended December 31, 2012, compared with ($76.9) million, or ($0.74) per share, for the same period in 2011.
Net income available to common stockholders was $30.1 million, or $0.29 per share, for the fourth quarter of 2012 compared with net loss available of ($129.0) million, or ($1.24) per share, for the fourth quarter of 2011. Net income available was $32.8 million, or $0.32 per share, for the year ended December 31, 2012, compared with net loss available of ($141.3) million, or ($1.36) per share, for the same period in 2011.
The Company recorded separation expenses in the fourth quarter of 2012 of $1.1 million in connection with the strategic re-organization the Company previously announced in the third quarter of 2012. The Company also recognized an additional $75,000 gain on the previously completed sale of Cousins Properties Services during the fourth quarter of 2012. The following table reconciles FFO to FFO before these special items for the three months ended December 31, 2012:
| Actual | Per | |||||||||
| ($000) | Share | |||||||||
| FFO | $ | 14,167 | $ | 0.14 | ||||||
| Severance/reorganization expenses | 1,118 | 0.01 | ||||||||
| Gain on sale of Cousins Properties Services | (75 | ) | (0.00 | ) | ||||||
| FFO before special items | $ | 15,210 | $ | 0.15 | ||||||
Investor Conference Call and Webcast
The Company will conduct a conference call at 11:00 a.m. (Eastern Time) on Thursday, February 14, 2013, to discuss the results of the quarter and year ended December 31, 2012. The number to call for this interactive teleconference is (212) 231-2905.
A replay of the conference call will be available for 14 days by dialing (402) 977-9140 and entering the passcode 21645972. The replay can be accessed on the Company’s website, www.cousinsproperties.com, through the “Q4 2012 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 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 | |||||||||||||||||
| (Unaudited, in thousands, except per share amounts) | |||||||||||||||||
Three Months Ended | Year Ended December 31, | ||||||||||||||||
| 2012 | 2011 | 2012 | 2011 | ||||||||||||||
| REVENUES: | |||||||||||||||||
| Rental property revenues | $ | 33,394 | $ | 27,486 | $ | 125,609 | $ | 105,596 | |||||||||
| Fee income | 4,812 | 3,092 | 17,797 | 13,821 | |||||||||||||
| Land sales | 400 | 2,605 | 2,616 | 3,015 | |||||||||||||
| Other | 644 | 460 | 2,256 | 6,614 | |||||||||||||
| 39,250 | 33,643 | 148,278 | 129,046 | ||||||||||||||
| COSTS AND EXPENSES: | |||||||||||||||||
| Rental property operating expenses | 14,982 | 11,273 | 54,518 | 44,912 | |||||||||||||
| Reimbursed expenses | 3,095 | 1,459 | 7,063 | 6,207 | |||||||||||||
| Land cost of sales | 87 | 2,588 | 1,420 | 2,891 | |||||||||||||
| General and administrative expenses | 5,684 | 6,338 | 23,208 | 24,166 | |||||||||||||
| Interest expense | 5,997 | 6,281 | 23,933 | 27,784 | |||||||||||||
| Depreciation and amortization | 11,719 | 9,267 | 43,559 | 34,580 | |||||||||||||
| Impairment losses | - | 96,623 | 488 | 100,131 | |||||||||||||
| Separation expenses | 1,118 | 4 | 1,985 | 197 | |||||||||||||
| Other | 1,016 | 2,100 | 4,517 | 6,861 | |||||||||||||
| 43,698 | 135,933 | 160,691 | 247,729 | ||||||||||||||
| LOSS ON EXTINGUISHMENT OF DEBT | - | - | (94 | ) | (74 | ) | |||||||||||
LOSS FROM CONTINUING OPERATIONS BEFORE TAXES, UNCONSOLIDATED JOINT VENTURES AND SALE OF INVESTMENT PROPERTIES | (4,448 | ) | (102,290 | ) | (12,507 | ) | (118,757 | ) | |||||||||
| BENEFIT (PROVISION) FOR INCOME TAXES FROM OPERATIONS | 30 | (31 | ) | (91 | ) | 186 | |||||||||||
| INCOME (LOSS) FROM UNCONSOLIDATED JOINT VENTURES | 25,042 | (25,767 | ) | 39,258 | (18,299 | ) | |||||||||||
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE GAIN ON SALE OF INVESTMENT PROPERTIES | 20,624 | (128,088 | ) | 26,660 | (136,870 | ) | |||||||||||
| GAIN ON SALE OF INVESTMENT PROPERTIES | 3,907 | 3,317 | 4,053 | 3,494 | |||||||||||||
| INCOME (LOSS) FROM CONTINUING OPERATIONS | 24,531 | (124,771 | ) | 30,713 | (133,376 | ) | |||||||||||
| INCOME (LOSS) FROM DISCONTINUED OPERATIONS: | |||||||||||||||||
| Income (loss) from discontinued operations | 1,034 | (5,537 | ) | (1,201 | ) | 1,390 | |||||||||||
| Gain on sale of discontinued operations | 10,200 | 6,082 | 18,407 | 8,519 | |||||||||||||
| 11,234 | 545 | 17,206 | 9,909 | ||||||||||||||
| NET INCOME (LOSS) | 35,765 | (124,226 | ) | 47,919 | (123,467 | ) | |||||||||||
| NET LOSS ATTRIBUTABLE TO NONCONTROLLING INTERESTS | (2,450 | ) | (1,504 | ) | (2,191 | ) | (4,958 | ) | |||||||||
| NET INCOME (LOSS) ATTRIBUTABLE TO CONTROLLING INTEREST | 33,315 | (125,730 | ) | 45,728 | (128,425 | ) | |||||||||||
| DIVIDENDS TO PREFERRED STOCKHOLDERS | (3,227 | ) | (3,227 | ) | (12,907 | ) | (12,907 | ) | |||||||||
| NET INCOME (LOSS) AVAILABLE TO COMMON STOCKHOLDERS | $ | 30,088 | $ | (128,957 | ) | $ | 32,821 | $ | (141,332 | ) | |||||||
| PER COMMON SHARE INFORMATION - BASIC AND DILUTED: | |||||||||||||||||
| Income (loss) from continuing operations attributable to controlling interest | $ | 0.18 | $ | (1.25 | ) | $ | 0.15 | $ | (1.46 | ) | |||||||
| Income (loss) from discontinued operations | 0.11 | 0.01 | $ | 0.17 | $ | 0.10 | |||||||||||
| Net income (loss) available to common stockholders | $ | 0.29 | $ | (1.24 | ) | $ | 0.32 | $ | (1.36 | ) | |||||||
| WEIGHTED AVERAGE SHARES - BASIC | 104,109 | 103,712 | 104,117 | 103,651 | |||||||||||||
| WEIGHTED AVERAGE SHARES - DILUTED | 104,132 | 103,712 | 104,125 | 103,651 | |||||||||||||
| DIVIDENDS PER COMMON SHARE | $ | 0.045 | $ | 0.045 | $ | 0.180 | $ | 0.180 | |||||||||
| COUSINS PROPERTIES INCORPORATED AND SUBSIDIARIES | |||||||||||||||||
| FUNDS FROM OPERATIONS | |||||||||||||||||
| (Unaudited, in thousands, except per share amounts) | |||||||||||||||||
| Three Months Ended | Years Ended | ||||||||||||||||
| December 31, | December 31, | ||||||||||||||||
| 2012 | 2011 | 2012 | 2011 | ||||||||||||||
| Net Income (Loss) Available to Common Stockholders | $ | 30,088 | $ | (128,957 | ) | $ | 32,821 | $ | (141,332 | ) | |||||||
| Depreciation and amortization: | |||||||||||||||||
| Consolidated properties | 11,719 | 9,267 | 43,559 | 34,580 | |||||||||||||
| Discontinued properties | 36 | 4,511 | 9,344 | 19,481 | |||||||||||||
| Share of unconsolidated joint ventures | 2,584 | 2,566 | 10,230 | 10,357 | |||||||||||||
| Depreciation of non-real estate assets: | |||||||||||||||||
| Consolidated properties | (232 | ) | (365 | ) | (1,075 | ) | (1,688 | ) | |||||||||
| Discontinued properties | - | - | - | - | |||||||||||||
| Share of unconsolidated joint ventures | - | (5 | ) | (15 | ) | (20 | ) | ||||||||||
Impairment loss on depreciable investment property net of amounts attributable to noncontrolling interests | 1,558 | 7,632 | 11,748 | 7,632 | |||||||||||||
| Gain on sale of investment properties: | |||||||||||||||||
| Consolidated properties | (3,907 | ) | (3,317 | ) | (4,053 | ) | (3,494 | ) | |||||||||
| Discontinued properties, net of noncontrolling interests | (8,353 | ) | (4,792 | ) | (16,557 | ) | (5,649 | ) | |||||||||
| Share of unconsolidated joint ventures | (23,153 | ) | - | (30,662 | ) | - | |||||||||||
| Gain on sale of undepreciated investment properties | 3,752 | 3,258 | 3,693 | 3,258 | |||||||||||||
| Gain on sale of third party management and leasing business | 75 | - | 7,459 | - | |||||||||||||
| Funds From Operations Available to Common Stockholders | $ | 14,167 | $ | (110,202 | ) | $ | 66,492 | $ | (76,875 | ) | |||||||
| Per Common Share - Basic and Diluted: | |||||||||||||||||
| Net Income (Loss) Available | $ | .29 | $ | (1.24 | ) | $ | .32 | $ | (1.36 | ) | |||||||
| Funds From Operations | $ | .14 | $ | (1.06 | ) | $ | .64 | $ | (.74 | ) | |||||||
| Weighted Average Shares - Basic | 104,109 | 103,712 | 104,117 | 103,651 | |||||||||||||
| Weighted Average Shares - Diluted | 104,132 | 103,712 | 104,125 | 103,651 | |||||||||||||
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.
Management believes that FFO before special items provides analysts and investors with appropriate information related to its core operations and for the comparability of the results of its operations with other real estate companies. | |||||||||||||||||
| COUSINS PROPERTIES INCORPORATED AND SUBSIDIARIES | ||||||||||
| CONSOLIDATED BALANCE SHEETS | ||||||||||
| (Unaudited, in thousands, except share and per share amounts) | ||||||||||
| December 31, 2012 | December 31, 2011 | |||||||||
ASSETS | ||||||||||
| PROPERTIES: | ||||||||||
Operating properties, net of accumulated depreciation of $255,128 and $289,473 in 2012 and 2011, respectively | $ | 669,652 | $ | 884,652 | ||||||
| Projects under development, net of accumulated depreciation of $183 in 2012 | 25,209 | 11,325 | ||||||||
| Land | 42,187 | 67,327 | ||||||||
| Other | 151 | 637 | ||||||||
| Total properties | 737,199 | 963,941 | ||||||||
OPERATING PROPERTIES AND RELATED ASSETS HELD FOR SALE, net of accumulated depreciation of $2,947 in 2012 | 1,866 | - | ||||||||
| CASH AND CASH EQUIVALENTS | 176,892 | 4,858 | ||||||||
| RESTRICTED CASH | 2,852 | 4,929 | ||||||||
NOTES AND ACCOUNTS RECEIVABLE, net of allowance for doubtful accounts of $1,743 and $5,100 in 2012 and 2011, respectively | 9,972 | 11,359 | ||||||||
| DEFERRED RENTS RECEIVABLE | 39,378 | 37,141 | ||||||||
| INVESTMENT IN UNCONSOLIDATED JOINT VENTURES | 97,868 | 160,587 | ||||||||
| OTHER ASSETS | 58,215 | 52,720 | ||||||||
| TOTAL ASSETS | $ | 1,124,242 | $ | 1,235,535 | ||||||
LIABILITIES AND EQUITY | ||||||||||
| NOTES PAYABLE | $ | 425,410 | $ | 539,442 | ||||||
| ACCOUNTS PAYABLE AND ACCRUED EXPENSES | 34,751 | 29,682 | ||||||||
| DEFERRED INCOME | 11,888 | 17,343 | ||||||||
| OTHER LIABILITIES | 9,240 | 8,910 | ||||||||
| TOTAL LIABILITIES | 481,289 | 595,377 | ||||||||
| COMMITMENTS AND CONTINGENT LIABILITIES | ||||||||||
| REDEEMABLE NONCONTROLLING INTERESTS | - | 2,763 | ||||||||
| 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 shares issued and outstanding in 2012 and 2011 | 74,827 | 74,827 | ||||||||
7.50% Series B cumulative redeemable preferred stock, $25 liquidation preference; 3,791,000 shares issued and outstanding in 2012 and 2011 | 94,775 | 94,775 | ||||||||
Common stock, $1 par value, 250,000,000 shares authorized, 107,660,080 and 107,272,078 shares issued in 2012 and 2011, respectively | 107,660 | 107,272 | ||||||||
| Additional paid-in capital | 690,024 | 687,835 | ||||||||
| Treasury stock at cost, 3,570,082 shares in 2012 and 2011 | (86,840 | ) | (86,840 | ) | ||||||
| Distributions in excess of cumulative net income | (260,104 | ) | (274,177 | ) | ||||||
| TOTAL STOCKHOLDERS’ INVESTMENT | 620,342 | 603,692 | ||||||||
| Nonredeemable noncontrolling interests | 22,611 | 33,703 | ||||||||
| TOTAL EQUITY | 642,953 | 637,395 | ||||||||
| TOTAL LIABILITIES AND EQUITY | $ | 1,124,242 | $ | 1,235,535 | ||||||
Cousins Properties Incorporated
Gregg D. Adzema, 404-407-1116
Executive
Vice President and
Chief Financial Officer
greggadzema@cousinsproperties.com
or
Cameron
Golden, 404-407-1984
Vice President, Investor Relations and
Corporate
Communications
camerongolden@cousinsproperties.com
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