Cousins Reports Results for Quarter and Year Ended December 31, 2013

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

Highlights

• Funds From Operations for the fourth quarter were $0.18 per share, up from $0.14 in the prior year.
• Same property net operating income for the fourth quarter was up 3.7% over the prior year.

Cousins Properties Incorporated (NYSE:CUZ) today reported its results of operations for the quarter and year ended December 31, 2013.

“Our fourth quarter performance demonstrates a successful finish to a transformative year at Cousins,” said Larry Gellerstedt, President and Chief Executive Officer of Cousins. “Our team executed exceptionally well in 2013, producing strong financial results and further positioning the company in high-growth Sunbelt markets while maintaining a solid balance sheet.”

Portfolio Activity

• Leased or renewed 442,000 square feet of office and retail space during the fourth quarter.
• Same property occupancy for the fourth quarter was 90.4%, up from 89.0% in the prior year.
• Cash-basis second generation net effective rent for the fourth quarter was up 11.3% over the prior year.

Transaction Activity

• Sold the Inhibitex office building for $8.3 million prior to the allocation of free rent credits, generating a gain of $3.0 million.
• Commenced construction on Emory Point Phase II, which will consist of 307 apartments and 43,000 square feet of retail space with a total projected cost of $73.3 million.
• Closed a construction loan on Emory Point Phase II, which will provide up to $46.0 million at a floating rate of LIBOR plus 1.85% and a term of 3 years with two one-year extension options.

Financial Results

FFO was $34.3 million, or $0.18 per share, for the fourth quarter of 2013 compared with $14.2 million, or $0.14 per share, for the fourth quarter of 2012. FFO was $77.1 million, or $0.53 per share, for the year ended December 31, 2013, compared with $66.5 million, or $0.64 per share, for the same period in 2012.

Net income available to common stockholders was $2.1 million, or $0.01 per share, for the fourth quarter of 2013, compared with net income available of $30.1 million, or $0.29 per share, for the fourth quarter of 2012. Net income available was $109.1 million, or $0.76 per share, for the year ended December 31, 2013, compared with $32.8 million, or $0.32 per share, for the same period in 2012.

Investor Conference Call and Webcast

The Company will conduct a conference call at 11:00 a.m. (Eastern Time) on Friday, February 14, 2014, to discuss the results of the quarter ended December 31, 2013. The number to call for this interactive teleconference is [phone].

A replay of the conference call will be available for 14 days by dialing [phone] and entering the passcode 21703342. The replay can be accessed on the Company's website, www.cousinsproperties.com, through the “Q4 2013 Cousins Properties Incorporated Earnings Conference Call” link on the Investor Relations page.

Cousins Properties Incorporated is a leading fully-integrated real estate investment trust (REIT) with extensive experience in development, acquisition, financing, management, and leasing. Based in Atlanta, the Company actively invests in top-tier urban office assets and opportunistic mixed-use developments in Sunbelt markets.

The Consolidated Statements of Operations, Consolidated Balance Sheets, 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 [phone].

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; the failure of purchase, sale, or other contracts to ultimately close; the failure to achieve anticipated benefits from acquisitions or dispositions; the potential dilutive effect of common stock offerings; the availability of buyers and adequate pricing with respect to the disposition of assets; risks related to the geographic concentration of our portfolio; risks and uncertainties related to national and local economic conditions, the real estate industry in general, and the commercial real estate markets in particular; changes to the Company's strategy with regard to land and other non-core holdings that require impairment losses to be recognized; the effect of the sale of the Company's third party management and leasing business; leasing risks, including the ability to obtain new tenants or renew expiring tenants, and the ability to lease newly developed and/or recently acquired space; the 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 zoning approval, receipts of required permits, construction delays, cost overruns, and leasing risk); the loss of key personnel; the potential liability for uninsured losses, condemnation, or environmental issues; the 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; 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, 2013. 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 December 31,						Year Ended December 31,
	2013			2012			2013			2012
Revenues:
Rental property revenues	$	76,620		$	30,486		$	194,420		$	114,208
Fee income		1,959			4,812			10,891			17,797
Other		941			1,036			5,430			4,841
		79,520			36,334			210,741			136,846
Costs and expenses:
Rental property operating expenses		35,386			13,892			90,498			50,329
Reimbursed expenses		850			3,095			5,215			7,063
General and administrative expenses		4,684			5,685			21,940			23,208
Interest expense		7,384			5,997			21,709			23,933
Impairment losses		-			-			-			488
Depreciation and amortization		31,590			10,658			76,277			39,424
Separation expenses		-			1,118			520			1,985
Acquisition and related costs		57			299			7,484			793
Other		436			803			3,693			5,144
		80,387			41,547			227,336			152,367
Loss on extinguishment of debt		-			-			-			(94	)
Loss from continuing operations before taxes, unconsolidated joint ventures, and sale of investment properties		(867	)		(5,213	)		(16,595	)		(15,615	)
Benefit (provision) for income taxes from operations		26			30			23			(91	)
Income from unconsolidated joint ventures		1,463			25,042			67,325			39,258
Income from continuing operations before gain on sale of investment properties		622			19,859			50,753			23,552
Gain (loss) on sale of investment properties		(72	)		3,907			61,288			4,053
Income from continuing operations		550			23,766			112,041			27,605
Income from discontinued operations:
Income from discontinued operations		577			1,799			3,299			1,907
Gain on sale of investment properties		2,938			10,200			11,489			18,407
		3,515			11,999			14,788			20,314
Net income		4,065			35,765			126,829			47,919
Net income attributable to noncontrolling interests		(167	)		(2,450	)		(5,068	)		(2,191	)
Net income attributable to controlling interests		3,898			33,315			121,761			45,728
Preferred share original issuance costs		-			-			(2,656	)		-
Dividends to preferred stockholders		(1,777	)		(3,227	)		(10,008	)		(12,907	)
Net income available to common stockholders	$	2,121		$	30,088		$	109,097		$	32,821
Per common share information — basic and diluted:
Income (loss) from continuing operations attributable to controlling interest	$	(0.01	)	$	0.17		$	0.66		$	0.12
Income from discontinued operations	$	0.02		$	0.12		$	0.10		$	0.20
Net income available to common stockholders	$	0.01		$	0.29		$	0.76		$	0.32
Weighted average shares — basic		189,665			104,109			144,255			104,117
Weighted average shares — diluted		189,853			104,132			144,420			104,125
Dividends declared 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 December 31,						Year Ended December 31,
	2013			2012			2013			2012
Net Income Available to Common Stockholders	$	2,121		$	30,088		$	109,097		$	32,821
Depreciation and amortization of real estate assets:
Consolidated properties		31,401			10,426			75,524			38,349
Discontinued properties		495			1,097			3,083			13,479
Share of unconsolidated joint ventures		2,985			2,584			13,434			10,215
Impairment loss on depreciable investment property, net of amounts attributable to noncontrolling interests		—			1,558			—			11,748
Gain on sale of depreciated properties:
Consolidated properties		96			(158	)		(60,587	)		(334	)
Discontinued properties		(2,893	)		(10,125	)		(6,469	)		(10,948	)
Share of unconsolidated joint ventures		77			(23,153	)		(60,345	)		(30,662	)
Other		7			1,850			3,397			1,824
Funds From Operations Available to Common Stockholders	$	34,289		$	14,167		$	77,134		$	66,492
Per Common Share — Basic and Diluted:
Net Income Available	$	0.01		$	0.29		$	0.76		$	0.32
Funds From Operations	$	0.18		$	0.14		$	0.53		$	0.64
Weighted Average Shares — Basic		189,665			104,109			144,255			104,117
Weighted Average Shares — Diluted		189,853			104,132			144,420			104,125
The table above shows Funds From Operations Available to Common Stockholders (“FFO”) and the related reconciliation to Net Income 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.
Net effective rent represents base rent less operating expense reimbursements and leasing costs.

COUSINS PROPERTIES INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)
			December 31, 2013			December 31, 2012
			(unaudited)
Assets:
	Real estate assets:
		Operating properties, net of accumulated depreciation of $235,707 and $255,128 in 2013 and 2012, respectively	$	1,828,437		$	669,652
		Projects under development, net of accumulated depreciation of $0 and $183 in 2013 and 2012, respectively		21,681			25,209
		Land		35,053			42,187
		Other		-			151
				1,885,171			737,199
	Operating properties and related assets held for sale, net of accumulated depreciation of $21,444 and $2,947 in 2013 and 2012, respectively			24,554			1,866
	Cash and cash equivalents			975			176,892
	Restricted cash			2,810			2,852
	Notes and accounts receivable, net of allowance for doubtful accounts of $1,827 and $1,743 in 2013 and 2012, respectively			11,778			9,972
	Deferred rents receivable			39,969			39,378
	Investment in unconsolidated joint ventures			107,082			97,868
	Intangible assets, net of accumulated amortization of $37,544 and $15,153 in 2013 and 2012, respectively			170,973			33,280
	Other assets			29,894			24,935
		Total assets	$	2,273,206		$	1,124,242
Liabilities:
	Notes payable		$	630,094		$	425,410
	Accounts payable and accrued expenses			76,668			34,751
	Deferred income			25,754			11,888
	Intangible liabilities, net of accumulated amortization of $6,323 and $13,986 in 2013 and 2012, respectively			66,476			7,520
	Other liabilities			15,242			1,720
		Total liabilities		814,234			481,289
Commitments and contingencies				-			-
Equity:
	Stockholders' investment:
	Preferred stock, 20,000,000 shares authorized, $1 par value:
		7.75% Series A cumulative redeemable preferred stock, $25 liquidation preference; 0 and 2,993,090 shares issued and outstanding in 2013 and 2012, respectively		-			74,827
		7.50% Series B cumulative redeemable preferred stock, $25 liquidation preference; 3,791,000 shares issued and outstanding in 2013 and 2012		94,775			94,775
	Common stock, $1 par value, 250,000,000 shares authorized, 193,236,454 and 107,660,080 shares issued in 2013 and 2012, respectively			193,236			107,660
	Additional paid-in capital			1,420,951			690,024
	Treasury stock at cost, 3,570,082 shares in 2013 and 2012			(86,840	)		(86,840	)
	Distributions in excess of cumulative net income			(164,721	)		(260,104	)
		Total stockholders' investment		1,457,401			620,342
	Nonredeemable noncontrolling interests			1,571			22,611
		Total equity		1,458,972			642,953
		Total liabilities and equity	$	2,273,206		$	1,124,242

COUSINS PROPERTIES INCORPORATED AND SUBSIDIARIES
SAME PROPERTY INFORMATION
(unaudited, in thousands)
	Three Months Ended September 30,						Nine Months Ended September 30,
	2013			2012			2013			2012
Net Operating Income - Consolidated Properties
Rental property revenues	$	76,620		$	30,486		$	194,420		$	114,208
Rental property expenses		(35,386	)		(13,892	)		(90,498	)		(50,329	)
Net Operating Income - Consolidated Properties		41,234			16,594			103,922			63,879
Net Operating Income - Discontinued Operations
Rental property revenues		1,742			5,825			10,552			33,918
Rental property expenses		(666	)		(1,775	)		(4,157	)		(10,936	)
Net Operating Income - Discontinued Operations		1,076			4,050			6,395			22,982
Net Operating Income - Unconsolidated Joint Ventures		6,196			5,509			27,763			23,596
Total Net Operating Income	$	48,506		$	26,153		$	138,080		$	110,457
Net Operating Income:
Same Property	$	15,157		$	14,611		$	60,621		$	57,942
Non-Same Property		33,349			11,542			77,459			52,515
Net Operating Income	$	48,506		$	26,153		$	138,080		$	110,457
This schedule shows same property net operating income and the related reconciliation to rental property revenues and rental property expenses. Net Operating Income is used by industry analysts, investors and Company management to measure operating performance of the Company's properties. Net Operating Income, which is rental property revenues less rental property operating expenses, excludes certain components from net income in order to provide results that are more closely related to a property's results of operations. Certain items, such as interest expense, while included in FFO and net income, do not affect the operating performance of a real estate asset and are often incurred at the corporate level as opposed to the property level. As a result, management uses only those income and expense items that are incurred at the property level to evaluate a property's performance. Depreciation and amortization are also excluded from Net Operating Income. Same Property Net Operating Income includes those office properties that have been fully operational in each of the comparable reporting periods. A fully operational property is one that has achieved 90% economic occupancy for each of the two periods presented or has been substantially complete and owned by the Company for each of the two periods presented and the preceding year. Same Property Net Operating Income allows analysts, investors and management to analyze continuing operations and evaluate the growth trend of the Company's portfolio.