UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
|
|
|
þ
|
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
|
For the quarterly period ended March 31, 2006
OR
|
|
|
o
|
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
|
For the transition period from
to
Commission file number: 0-3576
COUSINS PROPERTIES INCORPORATED
(Exact name of registrant as specified in its charter)
|
|
|
GEORGIA
(State or other jurisdiction of
incorporation or organization)
|
|
58-0869052
(I.R.S. Employer
Identification No.)
|
|
|
|
2500 Windy Ridge Parkway, Suite 1600, Atlanta, Georgia
(Address of principal executive offices)
|
|
30339
(Zip Code)
|
|
|
|
(770) 955-2200
(Registrants telephone number, including area code)
|
Indicate by check mark whether the registrant (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes
þ
No
o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated
filer, or a non-accelerated filer. See definition of accelerated filer and large accelerated
filer in Rule 12b-2 of the Exchange Act.
Large accelerated filer
þ
Accelerated filer
o
Non-accelerated filer
o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of
the Exchange Act). Yes
o
No
þ
Indicate the number of shares outstanding of each of the issuers classes of common stock, as
of the latest practicable date.
|
|
|
Class
|
|
Outstanding at May 2, 2006
|
|
|
|
Common Stock, $1 par value per share
|
|
50,731,889 shares
|
FORWARD-LOOKING STATEMENTS
Certain matters discussed in this report are forward-looking statements within the meaning of
the federal securities laws and are subject to uncertainties and risks, including, but not limited
to, general and local economic conditions, local real estate conditions, the activity of others
developing competitive projects, the satisfaction of certain conditions to and the formation of the
venture arrangement with Prudential Real Estate Investors, as well as the effect of such transaction on the Company, the
cyclical nature of the real estate industry, the financial condition of existing tenants, interest
rates, the Companys ability to obtain favorable financing or zoning, environmental matters, the
effects of terrorism, the failure of assets under contract for sale to ultimately close and
additional risks detailed from time to time in the Companys filings with the Securities and
Exchange Commission, including the Companys Report on Form 10-K for the year ended December 31,
2005. The words believes, expects, anticipates, estimates, would 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.
3
PART I FINANCIAL INFORMATION
Item 1. Financial Statements.
COUSINS PROPERTIES INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands, except share and per share amounts)
|
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
|
December 31,
|
|
|
|
2006
|
|
|
2005
|
|
ASSETS
|
|
|
|
|
|
|
|
|
PROPERTIES:
|
|
|
|
|
|
|
|
|
Operating properties, net of accumulated depreciation
of $160,882 at March 31, 2006 and $158,700 at December 31, 2005
|
|
$
|
561,029
|
|
|
$
|
572,466
|
|
Land held for investment or future development
|
|
|
93,626
|
|
|
|
62,059
|
|
Projects under development
|
|
|
301,654
|
|
|
|
241,711
|
|
Residential lots under development
|
|
|
9,048
|
|
|
|
11,577
|
|
|
|
|
|
|
|
|
Total properties
|
|
|
965,357
|
|
|
|
887,813
|
|
CASH AND CASH EQUIVALENTS
|
|
|
9,479
|
|
|
|
9,336
|
|
RESTRICTED CASH
|
|
|
4,038
|
|
|
|
3,806
|
|
NOTES AND OTHER RECEIVABLES
|
|
|
47,724
|
|
|
|
40,014
|
|
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES
|
|
|
208,305
|
|
|
|
217,232
|
|
OTHER ASSETS, including goodwill of $8,326 at March 31, 2006
and $8,324 at December 31, 2005
|
|
|
33,247
|
|
|
|
30,073
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL ASSETS
|
|
$
|
1,268,150
|
|
|
$
|
1,188,274
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS INVESTMENT
|
|
|
|
|
|
|
|
|
NOTES PAYABLE
|
|
$
|
551,182
|
|
|
$
|
467,516
|
|
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
|
|
|
58,665
|
|
|
|
55,791
|
|
DEFERRED GAIN
|
|
|
5,885
|
|
|
|
5,951
|
|
DEPOSITS AND DEFERRED INCOME
|
|
|
2,553
|
|
|
|
2,551
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES
|
|
|
618,285
|
|
|
|
531,809
|
|
|
|
|
|
|
|
|
MINORITY INTERESTS
|
|
|
24,967
|
|
|
|
24,185
|
|
|
|
|
|
|
|
|
COMMITMENTS AND CONTINGENT LIABILITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS INVESTMENT:
|
|
|
|
|
|
|
|
|
Preferred Stock, 20,000,000 shares authorized, $1 par value:
|
|
|
|
|
|
|
|
|
7.75% Series A cumulative redeemable preferred stock, $25 liquidation
preference; 4,000,000 shares issued and outstanding
|
|
|
100,000
|
|
|
|
100,000
|
|
7.50% Series B cumulative redeemable preferred stock, $25 liquidation
preference; 4,000,000 shares issued and outstanding
|
|
|
100,000
|
|
|
|
100,000
|
|
Common stock, $1 par value, 150,000,000 shares authorized, 53,423,471 and
53,357,151 shares issued at March 31, 2006 and December 31, 2005, respectively
|
|
|
53,423
|
|
|
|
53,357
|
|
Additional paid-in capital
|
|
|
316,169
|
|
|
|
321,747
|
|
Treasury stock at cost, 2,691,582 shares
|
|
|
(64,894
|
)
|
|
|
(64,894
|
)
|
Unearned compensation
|
|
|
|
|
|
|
(8,495
|
)
|
Cumulative undistributed net income
|
|
|
120,200
|
|
|
|
130,565
|
|
|
|
|
|
|
|
|
TOTAL STOCKHOLDERS INVESTMENT
|
|
|
624,898
|
|
|
|
632,280
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND STOCKHOLDERS INVESTMENT
|
|
$
|
1,268,150
|
|
|
$
|
1,188,274
|
|
|
|
|
|
|
|
|
See notes to condensed consolidated financial statements.
4
COUSINS PROPERTIES INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited, in thousands, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
2006
|
|
|
2005
|
|
REVENUES:
|
|
|
|
|
|
|
|
|
Rental property revenues
|
|
$
|
28,444
|
|
|
$
|
23,750
|
|
Fee income
|
|
|
4,737
|
|
|
|
3,852
|
|
Multi-family residential unit sales
|
|
|
6,579
|
|
|
|
|
|
Residential lot and outparcel sales
|
|
|
4,505
|
|
|
|
1,611
|
|
Interest and other
|
|
|
2,683
|
|
|
|
411
|
|
|
|
|
|
|
|
|
|
|
|
46,948
|
|
|
|
29,624
|
|
|
|
|
|
|
|
|
COSTS AND EXPENSES:
|
|
|
|
|
|
|
|
|
Rental property operating expenses
|
|
|
11,028
|
|
|
|
9,112
|
|
General and administrative expenses
|
|
|
9,932
|
|
|
|
8,676
|
|
Depreciation and amortization
|
|
|
10,823
|
|
|
|
9,372
|
|
Multi-family residential unit cost of sales
|
|
|
5,358
|
|
|
|
|
|
Residential lot and outparcel cost of sales
|
|
|
3,203
|
|
|
|
1,119
|
|
Interest expense
|
|
|
3,613
|
|
|
|
2,781
|
|
Other
|
|
|
454
|
|
|
|
42
|
|
|
|
|
|
|
|
|
|
|
|
44,411
|
|
|
|
31,102
|
|
|
|
|
|
|
|
|
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE TAXES AND
INCOME FROM UNCONSOLIDATED JOINT VENTURES
|
|
|
2,537
|
|
|
|
(1,478
|
)
|
PROVISION FOR INCOME TAXES FROM OPERATIONS
|
|
|
(2,370
|
)
|
|
|
(869
|
)
|
MINORITY INTEREST IN INCOME OF CONSOLIDATED SUBSIDIARIES
|
|
|
(1,078
|
)
|
|
|
(392
|
)
|
INCOME FROM UNCONSOLIDATED JOINT VENTURES
|
|
|
12,123
|
|
|
|
5,175
|
|
|
|
|
|
|
|
|
INCOME FROM CONTINUING OPERATIONS BEFORE GAIN ON SALE
OF INVESTMENT PROPERTIES
|
|
|
11,212
|
|
|
|
2,436
|
|
GAIN ON SALE OF INVESTMENT PROPERTIES, NET OF APPLICABLE
INCOME TAX PROVISION
|
|
|
805
|
|
|
|
6,827
|
|
|
|
|
|
|
|
|
INCOME FROM CONTINUING OPERATIONS
|
|
|
12,017
|
|
|
|
9,263
|
|
|
|
|
|
|
|
|
DISCONTINUED OPERATIONS, NET OF APPLICABLE INCOME TAX
PROVISION:
|
|
|
|
|
|
|
|
|
Income from discontinued operations
|
|
|
|
|
|
|
38
|
|
Gain on sale of investment properties
|
|
|
191
|
|
|
|
37
|
|
|
|
|
|
|
|
|
|
|
|
191
|
|
|
|
75
|
|
|
|
|
|
|
|
|
NET INCOME
|
|
|
12,208
|
|
|
|
9,338
|
|
DIVIDENDS TO PREFERRED STOCKHOLDERS
|
|
|
(3,813
|
)
|
|
|
(3,813
|
)
|
|
|
|
|
|
|
|
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS
|
|
$
|
8,395
|
|
|
$
|
5,525
|
|
|
|
|
|
|
|
|
PER SHARE INFORMATION BASIC:
|
|
|
|
|
|
|
|
|
Income from continuing operations
|
|
$
|
0.17
|
|
|
$
|
0.11
|
|
Income from discontinued operations
|
|
|
0.00
|
|
|
|
0.00
|
|
|
|
|
|
|
|
|
Net income available to common stockholders
|
|
$
|
0.17
|
|
|
$
|
0.11
|
|
|
|
|
|
|
|
|
PER SHARE INFORMATION DILUTED:
|
|
|
|
|
|
|
|
|
Income from continuing operations
|
|
$
|
0.16
|
|
|
$
|
0.11
|
|
Income from discontinued operations
|
|
|
0.00
|
|
|
|
0.00
|
|
|
|
|
|
|
|
|
Net income available to common stockholders
|
|
$
|
0.16
|
|
|
$
|
0.11
|
|
|
|
|
|
|
|
|
CASH DIVIDENDS DECLARED PER COMMON SHARE
|
|
$
|
0.37
|
|
|
$
|
0.37
|
|
|
|
|
|
|
|
|
WEIGHTED AVERAGE SHARES BASIC
|
|
|
50,289
|
|
|
|
49,788
|
|
|
|
|
|
|
|
|
WEIGHTED AVERAGE SHARES DILUTED
|
|
|
52,002
|
|
|
|
51,653
|
|
|
|
|
|
|
|
|
See notes to condensed consolidated financial statements.
5
COUSINS PROPERTIES INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
2006
|
|
|
2005
|
|
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
12,208
|
|
|
$
|
9,338
|
|
Adjustments to reconcile net income to net cash flows provided by operating
activities:
|
|
|
|
|
|
|
|
|
Gain on sale of investment properties, net of income tax provision
|
|
|
(996
|
)
|
|
|
(6,864
|
)
|
Depreciation and amortization
|
|
|
10,823
|
|
|
|
9,409
|
|
Amortization of deferred financing costs
|
|
|
264
|
|
|
|
335
|
|
Amortization of unearned compensation
|
|
|
1,812
|
|
|
|
783
|
|
Effect of recognizing rental revenues on a straight-line or market basis
|
|
|
(1,119
|
)
|
|
|
(884
|
)
|
Operating distributions from unconsolidated joint ventures in excess of income
|
|
|
4,790
|
|
|
|
|
|
Residential lot, outparcel and multi-family cost of sales
|
|
|
8,495
|
|
|
|
1,119
|
|
Residential lot, outparcel and multi-family acquisition and development expenditures
|
|
|
(7,131
|
)
|
|
|
(1,045
|
)
|
Income tax benefit from stock options
|
|
|
|
|
|
|
412
|
|
Changes in other operating assets and liabilities:
|
|
|
|
|
|
|
|
|
Change in other receivables
|
|
|
(7,621
|
)
|
|
|
2,835
|
|
Change in accounts payable and accrued liabilities
|
|
|
3,244
|
|
|
|
(6,040
|
)
|
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
|
24,769
|
|
|
|
9,398
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Proceeds from investment property sales
|
|
|
1,250
|
|
|
|
8,602
|
|
Property acquisition and development expenditures
|
|
|
(88,461
|
)
|
|
|
(61,923
|
)
|
Investment in unconsolidated joint ventures
|
|
|
(2,183
|
)
|
|
|
(10,617
|
)
|
Distributions from unconsolidated joint ventures in excess of income
|
|
|
6,329
|
|
|
|
346
|
|
Investment in notes receivable
|
|
|
(1,157
|
)
|
|
|
|
|
Change in other assets, net
|
|
|
(207
|
)
|
|
|
(1,687
|
)
|
Change in restricted cash
|
|
|
(232
|
)
|
|
|
(853
|
)
|
|
|
|
|
|
|
|
Net cash used in investing activities
|
|
|
(84,661
|
)
|
|
|
(66,132
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Repayment of credit and construction facilities
|
|
|
(249,268
|
)
|
|
|
|
|
Borrowings from credit and construction facilities
|
|
|
328,299
|
|
|
|
10,920
|
|
Payment of loan issuance costs
|
|
|
(1,849
|
)
|
|
|
(17
|
)
|
Proceeds from other notes payable
|
|
|
5,917
|
|
|
|
|
|
Repayment of other notes payable
|
|
|
(1,282
|
)
|
|
|
(1,344
|
)
|
Common stock issued, net of expenses
|
|
|
1,061
|
|
|
|
3,090
|
|
Income tax benefit from stock options
|
|
|
104
|
|
|
|
|
|
Common dividends paid
|
|
|
(18,760
|
)
|
|
|
(18,611
|
)
|
Preferred dividends paid
|
|
|
(3,813
|
)
|
|
|
(3,166
|
)
|
Distributions to minority partners
|
|
|
(374
|
)
|
|
|
(926
|
)
|
|
|
|
|
|
|
|
Net cash provided by (used in) financing activities
|
|
|
60,035
|
|
|
|
(10,054
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
|
|
|
143
|
|
|
|
(66,788
|
)
|
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
|
|
|
9,336
|
|
|
|
89,490
|
|
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS AT END OF PERIOD
|
|
$
|
9,479
|
|
|
$
|
22,702
|
|
|
|
|
|
|
|
|
See notes to condensed consolidated financial statements.
6
COUSINS PROPERTIES INCORPORATED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2006
(UNAUDITED)
The condensed consolidated financial statements included herein include the accounts of
Cousins Properties Incorporated (Cousins) and its consolidated subsidiaries, including Cousins
Real Estate Corporation and its subsidiaries (CREC). All of the entities included in the condensed consolidated financial statements are
hereinafter referred to collectively as the Company.
Cousins has elected to be taxed as a real
estate investment trust (REIT) and intends to, among other things, distribute 100% of its federal
taxable income to stockholders, thereby eliminating any liability for federal income taxes.
Therefore, the results included herein do not include a federal income tax provision for Cousins.
CREC operates as a taxable REIT subsidiary and is taxed separately from Cousins as a C-Corporation.
Accordingly, the condensed consolidated statements of income include a provision for CRECs income
taxes.
The condensed consolidated financial statements are unaudited and were prepared by the Company
in accordance with accounting principles generally accepted in the United States (GAAP) for
interim financial information and in accordance with the rules and regulations of the Securities
and Exchange Commission (the SEC). In the opinion of management, these financial statements
reflect all adjustments necessary (which adjustments are of a normal and recurring nature) for the
fair presentation of the Companys financial position as of March 31, 2006 and results of
operations for the three-month periods ended March 31, 2006 and 2005. Results of operations for the
three months ended March 31, 2006 are not necessarily indicative of results expected for the full
year. Certain information and footnote disclosures normally included in financial statements
prepared in accordance with GAAP have been condensed or omitted pursuant to the rules and
regulations of the SEC. These condensed financial statements should be read in conjunction with the
consolidated financial statements and the notes thereto included in the Companys Annual Report on
Form 10-K for the year ended December 31, 2005. The accounting policies employed are the same as
those shown in Note 1 to the consolidated financial statements included in such Form 10-K. Certain
2005 amounts have been reclassified to conform to the 2006 presentation.
|
|
|
2.
|
|
CASH FLOWS SUPPLEMENTAL INFORMATION
|
The following table summarizes supplemental information related to cash flows ($ in thousands):
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
2006
|
|
|
2005
|
|
Interest paid, net of amounts capitalized
|
|
$
|
3,036
|
|
|
$
|
3,133
|
|
Income taxes paid, net of refunds
|
|
|
1,094
|
|
|
|
71
|
|
|
|
|
|
|
|
|
|
|
Non-Cash Transactions
|
|
|
|
|
|
|
|
|
Transfer from operating properties to land
|
|
|
7,250
|
|
|
|
|
|
Transfer from land to projects under development
|
|
|
3,093
|
|
|
|
|
|
Transfer from unearned compensation to additional paid-in capital
|
|
|
8,495
|
|
|
|
|
|
Transfer from projects under development to land
|
|
|
170
|
|
|
|
1,816
|
|
Transfer from other assets to land
|
|
|
228
|
|
|
|
|
|
Receipt of promissory note for expense reimbursement
|
|
|
|
|
|
|
514
|
|
Transfer from common stock and additional paid-in capital to unearned
compensation for restricted stock grants, net of forfeitures
|
|
|
|
|
|
|
98
|
|
7
|
|
|
3.
|
|
NOTES PAYABLE AND INTEREST EXPENSE
|
The following table summarizes the terms and amounts of the notes payable outstanding at March
31, 2006 ($ in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Term/
|
|
|
|
Balance
|
|
|
|
|
|
Amortization
|
|
|
|
Outstanding
|
|
|
|
|
|
Period
|
|
Final
|
|
at March 31,
|
|
Description
|
|
Rate
|
|
(Years)
|
|
Maturity
|
|
2006
|
|
Credit facility (a maximum of
$400,000), unsecured
|
|
Floating based
on LIBOR
|
|
4/N/A
|
|
3/07/10
|
|
$
|
201,933
|
|
Construction facility (a maximum of
$100,000), unsecured
|
|
Floating based on LIBOR
|
|
4/N/A
|
|
3/07/10
|
|
|
35,133
|
|
Note secured by Companys interest in
CSC Associates, L.P.
|
|
6.96%
|
|
10/25
|
|
3/01/12
|
|
|
140,408
|
|
The Avenue East Cobb mortgage note
|
|
8.39%
|
|
10/30
|
|
8/01/10
|
|
|
36,944
|
|
333/555 North Point Center East
mortgage note
|
|
7.00%
|
|
10/25
|
|
11/01/11
|
|
|
30,071
|
|
Meridian Mark Plaza mortgage note
|
|
8.27%
|
|
10/28
|
|
9/01/10
|
|
|
23,884
|
|
100/200 North Point Center East
mortgage note (interest only until
12/31/06)
|
|
7.86%
|
|
10/25
|
|
8/01/07
|
|
|
22,365
|
|
The Points at Waterview mortgage note
|
|
5.66%
|
|
10/25
|
|
1/01/16
|
|
|
18,444
|
|
905 Juniper construction loan
(a maximum of $20,500)
|
|
LIBOR + 2.0%
|
|
3/N/A
|
|
12/01/07
|
|
|
16,847
|
|
600 University Park Place mortgage note
|
|
7.38%
|
|
10/30
|
|
8/10/11
|
|
|
13,306
|
|
Lakeshore Park Plaza mortgage note
|
|
6.78%
|
|
10/25
|
|
11/01/08
|
|
|
9,292
|
|
King Mill Project I member loan
(a maximum of $2,544)
|
|
9.00%
|
|
3/N/A
|
|
8/30/08
|
|
|
2,038
|
|
Other miscellaneous notes
|
|
Various
|
|
Various
|
|
Various
|
|
|
517
|
|
|
|
|
|
|
|
|
|
|
|
Notes payable
|
|
|
|
|
|
|
|
$
|
551,182
|
|
|
|
|
|
|
|
|
|
|
|
Through March 7, 2006, the Company had an unsecured revolving credit facility with Bank
of America and several other banks of up to $325 million (which could have been increased to $400
million under certain circumstances), with a maturity date of September 14, 2007. The credit
facility bore interest at a rate equal to the London Interbank Offering Rate (LIBOR) plus a
spread which was based on the Companys ratio of total debt to total assets, as defined by the
credit facility, according to the following table:
|
|
|
|
|
|
|
Applicable
|
|
Leverage Ratio
|
|
Spread
|
|
£
to 35%
|
|
|
0.90
|
%
|
> 35% but
£
45%
|
|
|
1.00
|
%
|
> 45% but
£
50%
|
|
|
1.10
|
%
|
> 50% but
£
55%
|
|
|
1.35
|
%
|
> 55%
|
|
|
1.50
|
%
|
On March 7, 2006, the Company recast its unsecured revolving credit facility
(Revolver), increasing the size by $75 million to $400 million and extending the maturity date to
March 7, 2010, with an additional one-year extension. The Revolver can be expanded to $500 million
under certain circumstances, although the availability of the additional capacity is not
guaranteed. The Revolver provides for additional flexibility in some of the financial covenants as
compared to the previous facility. Additionally, the Revolver imposes restrictions on the level of
common and preferred dividends only if the Companys leverage ratio, as defined by the Revolver, is
greater than 55%. Generally interest is calculated under the Revolver equal to LIBOR plus an
additional spread based on the ratio of total debt to total assets, as defined, according to the
following table:
8
|
|
|
|
|
|
|
Applicable
|
|
Leverage Ratio
|
|
Spread
|
|
£
to 35%
|
|
|
0.80
|
%
|
> 35% but
£
45%
|
|
|
0.90
|
%
|
> 45% but
£
50%
|
|
|
1.00
|
%
|
> 50% but
£
55%
|
|
|
1.15
|
%
|
> 55%
|
|
|
1.30
|
%
|
On March 7, 2006 and simultaneous with the recast of the Revolver, the Company entered
into an unsecured $100 million construction facility. While this facility is unsecured, advances
under the facility are to be used to fund the construction costs of the Terminus 100 project. This
facility has the same maturity date and key provisions as the Revolver.
The Company had $201.9 million drawn on the Revolver as of March 31, 2006 and, net of $23.5
million reserved for outstanding letters of credit, the Company had $174.6 million available for
future borrowings under the Revolver. The Company had $35.1 million drawn on its construction
facility as of March 31, 2006.
For the three months ended March 31, 2006 and 2005, interest expense was recorded as follows
($ in thousands):
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
March 31,
|
|
|
|
2006
|
|
|
2005
|
|
|
|
|
|
|
|
|
|
|
Incurred
|
|
$
|
8,654
|
|
|
$
|
6,141
|
|
Capitalized
|
|
|
(5,041
|
)
|
|
|
(3,360
|
)
|
|
|
|
|
|
|
|
Expensed
|
|
$
|
3,613
|
|
|
$
|
2,781
|
|
|
|
|
|
|
|
|
Net income per share-basic is calculated as net income available to common stockholders
divided by the weighted average number of common shares outstanding during the period. Net income
per share-diluted is calculated as net income available to common stockholders divided by the
diluted weighted average number of common shares outstanding during the period. Diluted weighted
average number of common shares is calculated to reflect the potential dilution under the treasury
stock method that would occur if stock options, restricted stock or other contracts to issue common
stock were exercised and resulted in additional common shares outstanding. The numerators used in
the Companys per share calculations are the same for both basic and diluted net income per share.
Weighted average shares-basic and weighted average shares-diluted were as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
March 31,
|
|
|
|
2006
|
|
|
2005
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares-basic
|
|
|
50,289
|
|
|
|
49,788
|
|
Dilutive potential common shares
|
|
|
1,713
|
|
|
|
1,865
|
|
|
|
|
|
|
|
|
Weighted average shares-diluted
|
|
|
52,002
|
|
|
|
51,653
|
|
|
|
|
|
|
|
|
Anti-dilutive options not included
|
|
|
906
|
|
|
|
893
|
|
|
|
|
|
|
|
|
9
|
|
|
5.
|
|
STOCK-BASED COMPENSATION
|
The Company adopted Statement of Financial Accounting Standard (SFAS) No. 123(R),
Share-Based Payment, in the quarter beginning January 1, 2006. SFAS 123(R) requires that
compensation expense be recognized in the statement of income for the grant-date fair value of
share-based awards which vested during the period.
The Company has several stock-based compensation plans that are described in Note 6 of Notes
to Consolidated Financial Statements in the Companys Annual Report on Form 10-K for the year
ended December 31, 2005. The Company previously accounted for its plans under Accounting Principles
Board (APB) No. 25, Accounting for Stock Issued to Employees, and related interpretations as
permitted by SFAS No. 123, Accounting for Stock-Based Compensation, which required the recording
of compensation expense for some, but not all, stock-based compensation. The Company did not record
stock-based compensation expense for stock options in the condensed consolidated statements of
income prior to January 1, 2006, as all stock options granted had an exercise price equal to the
market value of the underlying common stock on the date of grant.
SFAS 123(R) applies to new awards and to awards modified, repurchased or cancelled after the
required effective date, as well as to the unvested portion of awards outstanding as of the
required effective date. The Company uses the Black-Scholes model
to value its new stock option grants under SFAS 123(R), applying the modified prospective
method for existing grants which requires the Company to value stock options prior to its adoption
of SFAS 123(R) under the fair value method and expense the unvested portion over the remaining
vesting period. Results of prior periods have not been restated. SFAS 123(R) also requires the
Company to estimate forfeitures in calculating the expense related to stock-based compensation. In
addition, SFAS 123(R) requires the Company to reflect the benefits of tax deductions in excess of
recognized compensation cost to be reported as both a financing cash inflow and an operating cash
outflow upon adoption.
Compensation expense arising from restricted stock and stock options granted to employees is
being recognized as expense in the 2006 condensed consolidated statement of income over the related
awards vesting period. For the three months ended March 31, 2006, the Companys total stock-based
compensation expense included in general and administrative expenses in the accompanying condensed
consolidated statements of income was $1.3 million after capitalization to projects under
development. This expense is non-cash and had no effect on cash flows from operating activities.
Included in this total stock-based compensation expense was incremental expense from stock options
of approximately $0.7 million after capitalization to projects under development. The effect on
income from operations, income before income taxes and net income
from stock option expense also equaled approximately $0.7
million, as the income tax effect to the Company was minimal. Basic and
diluted earnings per share decreased by approximately $0.01 per share
in the first quarter of 2006 as a
result of the implementation of SFAS 123(R).
Upon adoption of SFAS 123(R), $8.5 million of unearned compensation related to the Companys
restricted stock, which was previously accounted for under APB
No. 25 in a separate line item in the stockholders
investment section of the balance sheet, was reclassified to
additional paid-in capital. As of March 31, 2006, there was $11.9 million of total unrecognized
compensation cost related to restricted stock and stock options, which will be recognized over a
weighted average period of 2.8 years.
The fair value of each option grant is estimated on the date of grant using the Black-Scholes
option-pricing model with the following weighted average assumptions used for options granted in
the first quarters of 2006 and 2005:
10
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
2006
|
|
|
2005
|
|
|
|
|
|
|
|
|
|
|
Risk free interest rate
|
|
|
4.89
|
%
|
|
|
4.60
|
%
|
Expected life
|
|
6.74 years
|
|
8.00 years
|
Expected volatility
|
|
|
20.50
|
%
|
|
|
19.70
|
%
|
Expected dividend yield
|
|
|
5.01
|
%
|
|
|
5.70
|
%
|
Weighted average fair value of options granted
|
|
$
|
4.73
|
|
|
$
|
2.97
|
|
The risk free interest rate utilized in the Black-Scholes calculation is the interest
rate on U.S. Treasury Strips having the same life as the estimated life of the Companys
option awards. Expected life of the options granted was computed using historical data
reflecting actual hold periods plus an estimated hold period for unexercised options outstanding
using the mid-point between 2006 and the expiring date. Expected volatility is based on the
historical volatility of the Companys stock over a period relevant to the related stock option
grant. The assumed dividend yield is calculated utilizing the dividends paid for the previous
one-year period and the average daily stock price of the Company for the same period.
The Company computed the value of all stock grants and stock options granted during the three
months ended March 31, 2005 using the Black-Scholes option pricing model. If the Company had
applied the fair value recognition provisions of SFAS No. 123 to options granted under the
Companys stock option plans during 2005, pro forma results would have been as follows ($ in thousands, except
per share amounts):
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
March 31, 2005
|
|
|
|
|
|
|
Net income available to common stockholders, as reported
|
|
$
|
5,525
|
|
Add: Stock-based employee
compensation expense included
in reported net income, net of
related tax effect
|
|
|
735
|
|
Deduct: Total stock-based employee
compensation expense determined
under fair-value-based method for
all awards, net of related tax effect
|
|
|
(1,471
|
)
|
|
|
|
|
Pro forma net income available to common stockholders
|
|
$
|
4,789
|
|
|
|
|
|
|
|
|
|
|
Net income per common share:
|
|
|
|
|
Basic as reported
|
|
$
|
.11
|
|
|
|
|
|
Basic pro forma
|
|
$
|
.10
|
|
|
|
|
|
Diluted as reported
|
|
$
|
.11
|
|
|
|
|
|
Diluted pro forma
|
|
$
|
.09
|
|
|
|
|
|
The following table summarizes stock option activity for the first quarter of 2006 ($
in thousands, except per share amounts):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-
|
|
|
Aggregate
|
|
|
|
Number of
|
|
|
Average Exercise
|
|
|
Intrinsic
|
|
|
|
Shares
|
|
|
Price
|
|
|
Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at December 31, 2005
|
|
|
6,177
|
|
|
$
|
22.00
|
|
|
|
|
|
Granted
|
|
|
42
|
|
|
|
33.43
|
|
|
|
|
|
Exercised
|
|
|
(90
|
)
|
|
|
18.55
|
|
|
|
|
|
Forfeited
|
|
|
(45
|
)
|
|
|
26.28
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at March 31, 2006
|
|
|
6,084
|
|
|
$
|
22.11
|
|
|
$
|
68,871
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable at March 31, 2006
|
|
|
4,069
|
|
|
$
|
19.73
|
|
|
$
|
55,752
|
|
|
|
|
|
|
|
|
|
|
|
11
At March 31, 2006, the weighted-average remaining contractual life of options outstanding and
exercisable was 6.6 and 5.8 years, respectively. The total intrinsic value of options exercised was
$1.2 million and $3.7 million for the three months ended March 31, 2006 and 2005, respectively.
The following table summarizes restricted stock activity for the first quarter of 2006 ($ in
thousands, except per share amounts):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-
|
|
|
|
|
|
|
|
Average
|
|
|
|
Number of
|
|
|
Grant Date
|
|
|
|
Shares
|
|
|
Fair Value
|
|
Non-vested at December 31, 2005
|
|
|
413
|
|
|
$
|
29.44
|
|
Granted
|
|
|
|
|
|
|
|
|
Vested
|
|
|
|
|
|
|
|
|
Forfeited
|
|
|
(5
|
)
|
|
|
31.09
|
|
|
|
|
|
|
|
|
Non-vested at March 31, 2006
|
|
|
408
|
|
|
$
|
29.42
|
|
|
|
|
|
|
|
|
The Company also has a restricted stock unit (RSU) plan, which is accounted for as a
liability award under SFAS No. 123(R). The value of the liability related to the RSUs is remeasured
each reporting period based upon the fair value calculated using the
Black-Scholes option pricing model at period
end. The Company recognized expense related to RSUs in the first quarter of 2006 of approximately $0.2 million
after capitalization to projects under development. As of March 31, 2006,
there was approximately $8.7 million of unrecognized compensation cost related to RSUs, which will
be recognized over a weighted average period of 4.6 years. A rollforward of restricted stock units
at March 31, 2006 is as follows (in thousands):
|
|
|
|
|
Outstanding at December 31, 2005
|
|
|
87
|
|
Granted
|
|
|
200
|
|
Exercised
|
|
|
|
|
Forfeited
|
|
|
(4
|
)
|
|
|
|
|
Outstanding at March 31, 2006
|
|
|
283
|
|
|
|
|
|
The Company has four reportable segments: Office/Multi-Family, Retail, Land, and Industrial.
The Office division began developing multi-family properties in the fourth quarter of 2004 and
changed its name to the Office/Multi-Family division in the second quarter of 2005. The
Office/Multi-family division develops, leases and manages owned and third-party owned office
buildings and invests in and/or develops for-sale multi-family real estate products. The Retail
and Industrial divisions develop, lease and
manage retail and industrial centers, respectively. The Land Division owns various tracts of
land that are held for investment or future development. The Land Division also develops
single-family residential communities that are parceled into lots and sold to various home builders
or sold as undeveloped tracts of land. The Companys reportable segments are categorized based on
the type of product the division provides. The divisions are managed separately because each
product they provide has separate and distinct development issues, leasing and/or sales strategies
and management issues. The divisions also match the manner in which the chief operating decision
maker reviews results and information and allocates resources. The unallocated and other category
in the following table includes general corporate overhead costs not specific to any segment and
also includes interest expense, as financing decisions are not generally made at the reportable
segment level.
Company management evaluates the performance of its reportable segments based on funds from
operations available to common stockholders (FFO). FFO is a supplemental operating
performance measure used in the real estate industry. For the first quarter of 2006 and 2005, the
12
Company calculated its FFO using the National Association of Real Estate Investment Trusts
(NAREIT) definition of FFO, which is net income available to common stockholders (computed in
accordance with 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, investors and the Company as a supplemental measure of an
equity REITs 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 a REITs 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. In addition to Company management evaluating the operating performance of
its reportable segments based on FFO results, management 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 employees.
The following tables summarize the operations of the Companys reportable
segments for the three months ended March 31, 2006 and 2005. The notations (100%) and (JV)
used in the following tables indicate wholly-owned and unconsolidated joint ventures, respectively,
and all amounts are in thousands.
13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Office/Multi-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Family
|
|
|
Retail
|
|
|
Land
|
|
|
Industrial
|
|
|
Unallocated
|
|
|
|
|
Three Months Ended March 31, 2006
|
|
Division
|
|
|
Division
|
|
|
Division
|
|
|
Division
|
|
|
and Other
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rental property revenues continuing (100%)
|
|
$
|
17,305
|
|
|
$
|
11,139
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
28,444
|
|
Development income, management fees and
leasing and other fees (100%)
|
|
|
3,389
|
|
|
|
265
|
|
|
|
1,083
|
|
|
|
|
|
|
|
|
|
|
|
4,737
|
|
Other income (100%)
|
|
|
8,784
|
|
|
|
435
|
|
|
|
4,524
|
|
|
|
1
|
|
|
|
23
|
|
|
|
13,767
|
|
|
|
|
Total revenues from consolidated entities
|
|
|
29,478
|
|
|
|
11,839
|
|
|
|
5,607
|
|
|
|
1
|
|
|
|
23
|
|
|
|
46,948
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rental property operating expenses
continuing (100%)
|
|
|
(7,416
|
)
|
|
|
(3,612
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(11,028
|
)
|
Other expenses continuing (100%)
|
|
|
(7,769
|
)
|
|
|
(907
|
)
|
|
|
(3,973
|
)
|
|
|
33
|
|
|
|
(10,765
|
)
|
|
|
(23,381
|
)
|
Provision for income taxes from operations
continuing (100%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,370
|
)
|
|
|
(2,370
|
)
|
Total expenses from
consolidated entities
|
|
|
(15,185
|
)
|
|
|
(4,519
|
)
|
|
|
(3,973
|
)
|
|
|
33
|
|
|
|
(13,135
|
)
|
|
|
(36,779
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rental property revenues less rental property
operating expenses (JV)
|
|
|
5,561
|
|
|
|
475
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,036
|
|
Other, net (JV)
|
|
|
1,797
|
|
|
|
90
|
|
|
|
5,902
|
|
|
|
|
|
|
|
(697
|
)
|
|
|
7,092
|
|
|
|
|
Funds from operations from
unconsolidated joint ventures
|
|
|
7,358
|
|
|
|
565
|
|
|
|
5,902
|
|
|
|
|
|
|
|
(697
|
)
|
|
|
13,128
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Minority interest (100%)
|
|
|
(977
|
)
|
|
|
(101
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,078
|
)
|
Gain on sale of undepreciated investment
properties (100%)
|
|
|
|
|
|
|
|
|
|
|
740
|
|
|
|
|
|
|
|
|
|
|
|
740
|
|
Preferred stock dividends (100%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3,813
|
)
|
|
|
(3,813
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Funds from operations available to common stockholders
|
|
|
20,674
|
|
|
|
7,784
|
|
|
|
8,276
|
|
|
|
34
|
|
|
|
(17,622
|
)
|
|
|
19,146
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization continuing
(100%)
|
|
|
(5,373
|
)
|
|
|
(4,629
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(10,002
|
)
|
Depreciation and amortization (JV)
|
|
|
(1,682
|
)
|
|
|
(173
|
)
|
|
|
(203
|
)
|
|
|
|
|
|
|
|
|
|
|
(2,058
|
)
|
income tax provision continuing (100%)
|
|
|
10
|
|
|
|
55
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
65
|
|
Gain on sale of investment properties, net of
applicable income tax provision discontinued (100%)
|
|
|
125
|
|
|
|
66
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
191
|
|
Gain on sale of investment properties, net of
applicable income tax provision (JV)
|
|
|
7
|
|
|
|
1,046
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,053
|
|
|
|
|
Net income available to common stockholders
|
|
$
|
13,761
|
|
|
$
|
4,149
|
|
|
$
|
8,073
|
|
|
$
|
34
|
|
|
$
|
(17,622
|
)
|
|
$
|
8,395
|
|
|
|
|
Total Assets
|
|
$
|
625,513
|
|
|
$
|
454,291
|
|
|
$
|
121,897
|
|
|
$
|
37,200
|
|
|
$
|
29,249
|
|
|
$
|
1,268,150
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment in unconsolidated joint ventures
|
|
$
|
100,568
|
|
|
$
|
5,797
|
|
|
$
|
101,940
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
208,305
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation to Consolidated Revenues
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
March 31,
|
|
|
2006
|
|
2005
|
Total revenues from consolidated
entities used for segment reporting
|
|
$
|
46,948
|
|
|
$
|
29,701
|
|
Less: rental property revenues from
discontinued operations
|
|
|
|
|
|
|
(77
|
)
|
|
|
|
Total consolidated revenues
|
|
$
|
46,948
|
|
|
$
|
29,624
|
|
|
|
|
14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Office/Multi-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Family
|
|
|
Retail
|
|
|
Land
|
|
|
Industrial
|
|
|
Unallocated
|
|
|
|
|
Three Months Ended March 31, 2005
|
|
Division
|
|
|
Division
|
|
|
Division
|
|
|
Division
|
|
|
and Other
|
|
|
Total
|
|
Rental property revenues continuing (100%)
|
|
$
|
16,017
|
|
|
$
|
7,733
|
|
|
$
|
|
|
|
|
|
|
|
$
|
|
|
|
$
|
23,750
|
|
Rental property revenues discontinued (100%)
|
|
|
6
|
|
|
|
71
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
77
|
|
Development income, management fees and leasing
and other fees (100%)
|
|
|
3,289
|
|
|
|
309
|
|
|
|
254
|
|
|
|
|
|
|
|
|
|
|
|
3,852
|
|
Other income (100%)
|
|
|
(19
|
)
|
|
|
105
|
|
|
|
1,631
|
|
|
|
|
|
|
|
305
|
|
|
|
2,022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues from consolidated entities
|
|
|
19,293
|
|
|
|
8,218
|
|
|
|
1,885
|
|
|
|
|
|
|
|
305
|
|
|
|
29,701
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rental property operating expenses continuing (100%)
|
|
|
(6,701
|
)
|
|
|
(2,411
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(9,112
|
)
|
Rental property operating expenses discontinued (100%)
|
|
|
(19
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(19
|
)
|
Other expenses continuing (100%)
|
|
|
(1,891
|
)
|
|
|
(596
|
)
|
|
|
(1,758
|
)
|
|
|
(148
|
)
|
|
|
(8,903
|
)
|
|
|
(13,296
|
)
|
Other expenses discontinued (100%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for income taxes from operations
continuing (100%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(869
|
)
|
|
|
(869
|
)
|
Provision for income taxes from operations
discontinued (100%)
|
|
|
|
|
|
|
17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total expenses from consolidated entities
|
|
|
(8,611
|
)
|
|
|
(2,990
|
)
|
|
|
(1,758
|
)
|
|
|
(148
|
)
|
|
|
(9,772
|
)
|
|
|
(23,279
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rental property revenues less rental property operating
expenses (JV)
|
|
|
5,720
|
|
|
|
537
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,257
|
|
Other, net (JV)
|
|
|
(32
|
)
|
|
|
|
|
|
|
1,749
|
|
|
|
|
|
|
|
(670
|
)
|
|
|
1,047
|
|
|
|
|
Funds from operations from unconsolidated
joint ventures
|
|
|
5,688
|
|
|
|
537
|
|
|
|
1,749
|
|
|
|
|
|
|
|
(670
|
)
|
|
|
7,304
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Minority interest (100%)
|
|
|
(392
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(392
|
)
|
Gain on sale of undepreciated investment properties (100%)
|
|
|
|
|
|
|
|
|
|
|
6,766
|
|
|
|
|
|
|
|
|
|
|
|
6,766
|
|
Preferred stock dividends (100%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3,813
|
)
|
|
|
(3,813
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Funds from operations available to common stockholders
|
|
|
15,978
|
|
|
|
5,765
|
|
|
|
8,642
|
|
|
|
(148
|
)
|
|
|
(13,950
|
)
|
|
|
16,287
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization continuing (100%)
|
|
|
(5,866
|
)
|
|
|
(2,828
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(8,694
|
)
|
Depreciation and amortization discontinued (100%)
|
|
|
(37
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(37
|
)
|
Depreciation and amortization (JV)
|
|
|
(2,193
|
)
|
|
|
(199
|
)
|
|
|
(85
|
)
|
|
|
|
|
|
|
|
|
|
|
(2,477
|
)
|
Gain on sale of investment properties, net of applicable
income tax provision continuing (100%)
|
|
|
25
|
|
|
|
36
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
61
|
|
Gain on sale of investment properties, net of applicable
income tax provision discontinued (100%)
|
|
|
37
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
37
|
|
Gain on sale of investment properties, net of applicable
income tax provision (JV)
|
|
|
348
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
348
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income available to common stockholders
|
|
$
|
8,292
|
|
|
$
|
2,774
|
|
|
$
|
8,557
|
|
|
$
|
(148
|
)
|
|
$
|
(13,950
|
)
|
|
$
|
5,525
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets
|
|
$
|
555,928
|
|
|
$
|
306,017
|
|
|
$
|
115,958
|
|
|
$
|
11,516
|
|
|
$
|
41,447
|
|
|
$
|
1,030,866
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment in unconsolidated joint ventures
|
|
$
|
111,232
|
|
|
$
|
11,472
|
|
|
$
|
86,734
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
209,438
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Repurchase Plan
On May 9, 2006, the Board of Directors of the Company authorized a stock repurchase plan,
which expires May 9, 2009, of up to 5,000,000 shares of the Companys common stock.
Formation of Joint Venture
Effective May 2, 2006, Cousins Properties Incorporated (the Company) entered into an
agreement (the Agreement) to form a venture arrangement (the Venture) with The Prudential
Insurance Company of America on behalf of a separate account managed for institutional investors by
Prudential Real Estate Investors (PREI). Closing of the Venture is subject to the satisfaction
of certain conditions. The parties anticipate the conditions to be satisfied and closing to occur
(such date, the Closing Date) prior to the end of the second quarter of 2006. However, there can
be no assurance that the conditions will be satisfied and that the Venture will ultimately close.
In accordance with the Agreement, at the Closing Date, the Company would contribute its
interests in five properties (the Properties) to the Venture. These properties are valued by the
15
Company and PREI based on arms length negotiations at an initial gross value of $342,450,074. The
properties and the values to be allocated to each property under the Venture agreements are shown
below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rentable
|
|
|
|
|
|
|
Contingent
|
|
|
|
|
|
|
Total
|
|
|
|
SF
|
|
|
Allocated Value
|
|
|
Value
|
|
|
Mortgage
|
|
|
Net Value
|
|
The Avenue East Cobb,
Cobb County, GA
|
|
|
231,373
|
|
|
$
|
98,250,000
|
|
|
|
|
|
|
$
|
40,866,411
|
*
|
|
$
|
57,383,589
|
|
The Avenue West Cobb,
Cobb County, GA
|
|
|
251,186
|
|
|
$
|
81,253,639
|
|
|
$
|
6,978,811
|
|
|
|
|
|
|
$
|
88,232,450
|
|
The Avenue Peachtree City,
Peachtree City, GA
|
|
|
182,215
|
|
|
$
|
57,250,000
|
|
|
|
|
|
|
|
|
|
|
$
|
57,250,000
|
|
The Avenue Viera,
Viera, FL
|
|
|
331,989
|
|
|
$
|
88,621,279
|
**
|
|
|
|
|
|
|
|
|
|
$
|
88,621,279
|
|
Viera MarketCenter,
Viera, FL
|
|
|
178,339
|
|
|
$
|
17,075,156
|
|
|
$
|
13,571,115
|
|
|
|
|
|
|
$
|
30,646,271
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTALS
|
|
|
1,175,102
|
|
|
$
|
342,450,074
|
|
|
$
|
20,549,926
|
|
|
$
|
40,866,411
|
|
|
$
|
322,133,589
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*Based on balance of mortgage as of May 1, 2006 plus a $4,000,000 defeasance amount to
reflect current market interest rates.
**Includes an outparcel with an agreed value of $1,560,000 that the Company may withhold from
the Venture contribution and, if so, the agreed value of The Avenue Viera would be reduced by such
amount.
Under the Agreement, PREI would initially agree to contribute cash to the Venture equal
to the initial agreed upon net value of the Properties, approximately $301,583,663 (the Base
Contribution Amount). The Base Contribution Amount would be
contributed in four installments as shown below. Also shown below are the percentages the
Company and PREI would have, respectively, in the cash flow and capital proceeds from the
Properties following the cash contributions on the indicated dates:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Expected
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
Cumulative
|
|
|
Cousins
|
|
|
PREI
|
|
Date
|
|
Contribution Amount
|
|
|
Contribution Amount
|
|
|
Percentage
|
|
|
Percentage
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Closing Date
|
|
$
|
100,000,000
|
|
|
$
|
100,000,000
|
|
|
|
71
|
%
|
|
|
29
|
%
|
6/30/06
|
|
$
|
67,194,554
|
|
|
$
|
167,194,554
|
|
|
|
51
|
%
|
|
|
49
|
%
|
9/29/06
|
|
$
|
67,194,554
|
|
|
$
|
234,389,108
|
|
|
|
31
|
%
|
|
|
69
|
%
|
12/29/06
|
|
$
|
67,194,555
|
|
|
$
|
301,583,663
|
|
|
|
11.5
|
%
|
|
|
88.5
|
%
|
In addition, PREI would contribute to the Venture up to an additional $20,549,926 (the
Contingent Contribution Amounts) if certain conditions are satisfied with respect to the
expansions of the The Avenue West Cobb and Viera MarketCenter, both of which are still under
construction. The Contingent Contribution Amounts would be made, if at all, on or about December
29, 2006, June 30, 2007 and December 31, 2007.
The Company would also agree to master lease a portion of the unleased space at
The Avenue Viera during 2007. The maximum amount of rent payable to the Venture under the
master lease would be $1,633,299 for rent, plus tenant improvement costs and commissions of up to
$2,552,512. To the extent that any space subject to the master lease is actually leased to third
parties pursuant to a qualifying lease, the Company would no longer be obligated under the master
lease with respect to such space.
Pursuant to the Agreement, the structure of the Venture is expected to be as follows: CP
Venture IV Holdings LLC (Parent) would be the parent entity. Parent would own a 100% interest in
16
each of CP Venture Five LLC (Property Activity LLC) and CP Venture Six LLC (Development
Activity LLC). Upon completion of the formation of the Venture, Property Activity LLC will hold
the Properties and Development Activity LLC will hold the contributed cash.
Following the final contribution of the Base Contribution Amount by PREI, the Company, through
its interest in Parent and Parents interest in Property Activity LLC, would have an 11.5% interest
in the cash flow and capital proceeds of the Properties, and PREI would have an 88.5% interest
therein. Unless both parties agree otherwise, the Venture would not be permitted to sell the
Properties until the end of a four-year lock-out period.
The parties expect that the cash contributed by PREI and held by Development Activity LLC
would be used by the Venture primarily to develop commercial real estate projects, or to make
acquisitions (Developments), in all cases as directed by the Company. In addition, Development
Activity LLC has the right to make loans to the Company with any excess cash that it may hold from
time to time. The parties anticipate that some of the projects currently under consideration by
the Company would be undertaken by the Venture, although the Company would have no obligation to
make any particular opportunity available to the Venture. Prior to any other distributions with
respect to the Developments from Development Activity LLC, PREI would receive a priority current
return of 6.5% per annum on an amount equal to 11.5% of its capital contributions to the Venture.
PREI would also receive a liquidation preference whereby it would first be entitled to receive a
distribution sufficient to allow it to achieve an overall 8.5% internal rate of return on an amount
equal to 11.5% of its capital contributions to the Venture, subject to capital account limitations.
After these preferences to PREI, the Company would be entitled to certain priority distributions
related to the Developments. After such priority distributions, the Company and PREI would share
residual distributions with respect to the Developments, 88.5% to the Company and 11.5% to PREI.
The Company would manage the Developments and the Properties on a day-to-day basis. In
particular, the Venture would engage the Company to provide property management and leasing
services with respect to each of the Properties. The
management and leasing agreement for each Property would have an initial term of four years.
The Company and PREI would have certain discretionary decision rights and approval rights with
respect to the Developments and the Properties. The Company would serve as Administrative Manager
of the Venture.
|
|
|
Item 2.
|
|
Managements Discussion and Analysis of Financial Condition and Results of
Operations for the Three Months Ended March 31, 2006 and 2005
|
Overview:
The Company is a real estate development company with
experience in the development, leasing, financing and management of office, retail and industrial
properties in addition to residential land development. In addition, the Company has experience
with the development and sale of multi-family products. As of March 31, 2006, the Company held
interests directly or through joint ventures in 23 office or medical office properties totaling 7.4
million square feet, 13 retail properties totaling 3.8 million square feet, two industrial
properties totaling 0.8 million square feet and 1,621 developed residential land lots held for
sale. These interests include eight office, retail, and industrial projects under development
totaling 2.8 million square feet, and two condominium projects containing 622 units. The Company
also had 24 residential communities under development directly or through joint ventures in which
approximately 11,900 lots remain to be developed and/or sold. In addition, the Company owns
directly or through joint ventures approximately 9,300 acres of land held for future development.
17
The Companys strategy is to produce strong stockholder returns by creating value through the
development of high quality, well-located office, retail, industrial, multi-family and residential
land properties. The Company has developed substantially all of the real estate assets it owns and
operates. A key element in the Companys strategy is to actively manage its portfolio of
investment properties and at the appropriate times, to engage in timely and strategic dispositions
of developed property in an effort to maximize the value of the assets it has created, generate
capital for additional development properties and return a portion of the value created to
stockholders.
Significant events during the quarter ended March 31, 2006 included the following:
|
|
|
Commenced operations at San Jose MarketCenter, a 360,000 square foot retail center,
of which the Company owns 217,000 square feet.
|
|
|
|
|
Sold 7 acres of land in the Companys North Point/Westside project for $1.3 million,
generating a gain of $740,000.
|
|
|
|
|
Recognized a lease termination fee of $2.3 million at its 3301 Windy Ridge Parkway
building.
|
|
|
|
|
Through Brad Cous Golf Venture, Ltd., sold World Golf Village, an 80,000 square foot
retail center in St. Augustine, Florida, for $13.5 million. The Companys share of the net
proceeds from the sale was $6.1 million and its share of the gain was $1.0 million.
|
|
|
|
|
Through its Temco joint venture, sold 855 acres in its Seven Hills project. The
Companys share of pre-tax gains from this sale was $3.2 million.
|
|
|
|
|
Acquired 22 acres in Austin, Texas, for an office development expected to commence in
the second half of 2006.
|
|
|
|
|
Acquired 260 acres in Jackson County, Georgia, for the development of Jefferson Mill
Business Park, an anticipated 3.2 million square foot industrial project. In addition, the
Company acquired an adjacent 44 acres that it intends to sell to potential retail users.
|
|
|
|
|
Recast its credit facility resulting in $75 million in additional capacity, a
reduction in its interest rate spread over LIBOR, and additional flexibility in certain
financial covenants.
|
|
|
|
|
Closed a $100 million unsecured construction facility for funding of Terminus 100.
|
|
|
|
|
Began construction of a 379,000 square foot addition to the Industrial Divisions
first building at the King Mill Distribution Park.
|
Results of Operations
:
Rental Property Revenues.
Rental property revenues increased approximately $4.7 million for
the three month 2006 period compared to the three month 2005 period. Of this increase, rental
property revenues for the Office/Multi-Family Division increased approximately $1.3 million. This
is primarily due to an increase of approximately $645,000 from Frost Bank Tower, as its average
economic occupancy increased from 56% in 2005 to 69% in 2006. Additionally, rental property
revenue from One Georgia Center increased approximately $396,000, as its average economic occupancy
increased from 15% in 2005 to 32% in 2006.
Rental property revenues from the Retail Division increased approximately $3.4 million, mainly
due to an increase of approximately $2.2 million in rental property revenues from The Avenue
Carriage Crossing, which became partially operational in the fourth quarter of 2005. Rental
property revenues from the Avenue Viera also increased approximately $450,000 in 2006, due to
increased occupancy and to an expansion of the center which opened in late March 2006. The
remaining increase is primarily attributable to tenant openings at San Jose MarketCenter and Viera
MarketCenter.
18
Rental Property Operating Expenses.
Rental property operating expenses increased approximately
$1.9 million in the three month 2006 period compared to the same 2005 period, mainly due to
the aforementioned opening of The Avenue Carriage Crossing and San Jose MarketCenter and the
increased occupancy at Frost Bank Tower.
Multi-family Residential Unit Sales and Cost of Sales.
Multi-family residential unit sales
increased approximately $6.6 million and cost of sales increased approximately $5.4 million in 2006
due to the consolidation of the venture constructing the 905 Juniper project and its continued
construction. The Company began consolidating this venture in June 2005 and is recognizing profits
utilizing the percentage of completion method of accounting.
Residential Lot and Outparcel Sales and Cost of Sales.
Residential lot and outparcel sales
increased approximately $2.9 million in 2006 mainly due to an increase in residential lot sales of
$2.6 million at The Lakes at Cedar Grove residential development. Residential lot cost of sales
also increased approximately $2.1 million, also primarily due to the increased sales at The Lakes
at Cedar Grove.
Interest and Other.
Interest and other income increased approximately $2.3 million in 2006,
mainly due to a termination fee of the same amount recognized in the first quarter of 2006. Indus
International, Inc. (Indus), the sole tenant at the 3301 Windy Ridge Parkway building, entered
into a termination agreement on 62,000 square feet of its space in 2006, which contains a
termination penalty of $2.3 million.
General and Administrative Expenses.
General and administrative expenses increased
approximately $1.3 million in 2006. Salaries and related benefits, including stock-based
compensation expense, increased approximately $2.9 million in 2006. This increase includes
approximately $940,000 of expense related to stock options, which the Company began recording in
the first quarter of 2006 in conjunction with the adoption of SFAS 123(R). The increase in salaries
and related benefits was partially offset by an increase in capitalized salaries to development
projects of $1.4 million, as the Company has increased its development activities in 2006 as
compared to the same 2005 period.
Depreciation and Amortization.
Depreciation and amortization increased approximately $1.5
million. This increase was mainly due to an increase of approximately $1.3 million from the
aforementioned opening of The Avenue Carriage Crossing. The increase was also due to an increase of
approximately $382,000 from the 3301 Windy Ridge Parkway building, as amortization of tenant costs
related to the aforementioned Indus termination was accelerated. The increase was partially offset
by a decrease in depreciation and amortization of approximately $912,000 from The Inforum, as
certain tenant costs were fully amortized in 2005.
Interest Expense.
Interest expense increased approximately $832,000 in 2006 as compared to the
same period in 2005. Interest expense before capitalization increased approximately $2.5 million in
2006, mainly due to an increase in interest expense on the credit facility of $2.4 million. Average
borrowings outstanding on the credit facility
during the 2006 period were greater than the 2005 period, due to the Company having a large
balance of unexpended cash in the 2005 period and to an increase in development activity in 2006.
However, as a result of the increased development activity, interest capitalized to projects under
development increased approximately $1.7 million during the 2006 period, as amounts expended on
projects under development was higher during 2006 as compared to the same 2005 period.
Provision for Income Taxes from Operations.
Provision for income taxes from operations
increased approximately $1.5 million in 2006 as compared to the same period in 2005. The increase
is mainly due to the increase in income from TRG Columbus Development Venture, Ltd, (TRG), CL
Realty, L.L.C. and Temco Associates in 2006, as discussed in the following section. CREC, or an
entity owned by CREC, is the partner in these ventures, and the Companys share of results of
operations for these ventures is included in CRECs taxable income.
19
Income from Unconsolidated Joint Ventures.
(All amounts reflect the Companys share of joint
venture income based on its ownership interest in each joint venture.) Income from unconsolidated
joint ventures increased approximately $6.9 million in the three months ended March 31, 2006,
compared to the same period in 2005. This increase is attributable to the following:
|
|
|
Income from TRG, which is developing a condominium project in Miami, Florida,
increased approximately $1.8 million in 2006. TRG was formed in May 2005 and is
recognizing income using the percentage of completion method of accounting, which resulted
in income initially being recognized by TRG in the fourth quarter of 2005.
|
|
|
|
|
Income from Temco Associates increased approximately $3.2 million mainly due to the
sale of 855 acres of land at the ventures Seven Hills project in 2006, which generated a
gain to the Company of $3.2 million.
|
|
|
|
|
Income from CL Realty, L.L.C. increased approximately $1.1 million in 2006 mainly due
to a large tract sale at the ventures Southern Trails project in 2006, which generated a
gain to the Company of $1.0 million.
|
Gain on Sale of Investment Properties.
The 2006 gain consisted of the following: the sale of
undeveloped land at the North Point/Westside project ($740,000); and the amortization of deferred
gain from CP Venture ($65,000).
The 2005 gain consisted of the following: the sale of undeveloped land at the North
Point/Westside project ($2.2 million); the sale of undeveloped land at Wildwood ($4.6 million); and
the amortization of deferred gain from CP Venture ($65,000).
Potential
Sale of Assets.
As a result of the potential sale of Frost Bank Tower and Bank
of America Plaza discussed in the Liquidity and Capital Resources section below, the
Company expects to recognize gains on sale of investment property upon closing of these
transactions. In periods subsequent to the closing of these sales, the Company expects a
reduction in rental property revenues, rental property operating expenses, depreciation and
amortization, income from unconsolidated joint ventures and interest
expense.
Funds From Operations.
The table below shows Funds From Operations Available to Common
Stockholders (FFO) and the related reconciliation to net income available to common stockholders
for the Company. In the first quarters of 2006 and
2005, 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 REITs
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. 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 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 employees.
20
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
March 31,
|
|
|
|
2006
|
|
|
2005
|
|
|
|
(in thousands)
|
|
Net Income Available to Common Stockholders
|
|
$
|
8,395
|
|
|
$
|
5,525
|
|
Depreciation and amortization:
|
|
|
|
|
|
|
|
|
Consolidated properties
|
|
|
10,823
|
|
|
|
9,372
|
|
Discontinued properties
|
|
|
|
|
|
|
37
|
|
Share of unconsolidated joint ventures
|
|
|
2,062
|
|
|
|
2,543
|
|
Depreciation of furniture, fixtures and equipment and amortization
of specifically identifiable intangible assets:
|
|
|
|
|
|
|
|
|
Consolidated properties
|
|
|
(821
|
)
|
|
|
(678
|
)
|
Share of unconsolidated joint ventures
|
|
|
(4
|
)
|
|
|
(66
|
)
|
Gain on sale of investment properties, net of applicable
income tax provision:
|
|
|
|
|
|
|
|
|
Consolidated
|
|
|
(805
|
)
|
|
|
(6,827
|
)
|
Discontinued properties
|
|
|
(191
|
)
|
|
|
(37
|
)
|
Share of unconsolidated joint ventures
|
|
|
(1,053
|
)
|
|
|
(348
|
)
|
Gain on sale of undepreciated investment properties
|
|
|
740
|
|
|
|
6,766
|
|
|
|
|
|
|
|
|
Funds From Operations Available to Common Stockholders
|
|
$
|
19,146
|
|
|
$
|
16,287
|
|
|
|
|
|
|
|
|
Stock-Based Compensation.
The Company adopted SFAS No. 123(R), Share-Based Payment, on January 1, 2006 utilizing the
modified prospective method. This standard requires that companies recognize compensation expense
in the statement of income for the grant-date fair value of share-based awards that vest during the
period. The Company calculates the grant-date fair value of its awards using the Black-Scholes
model, which it also utilized under SFAS No. 123 pro forma disclosures. Assumptions used under SFAS
No. 123 are not materially different from those used under SFAS No. 123(R). The impact of expensing
stock options under SFAS No. 123(R) in the first quarter was approximately $0.7 million, after
accounting for the effect of capitalizing salaries and related benefits of certain development and
leasing personnel to projects under development and after the effect of income taxes.
Liquidity and Capital Resources
Financial Condition.
Summary.
The Company had a significant number of projects in its development pipeline at March
31, 2006 and does not expect the number of projects or the amounts invested in development projects
to decrease in the near term. It also has a large amount of undeveloped land, both consolidated and
at unconsolidated joint ventures, which may progress into development projects in 2006.
Additionally, the Company and its joint ventures sold a significant number of operating properties
in the last several years, some of which have been replaced by completion of new developments.
Given those facts, the Company anticipates an increase in the need for cash in 2006, which
management believes will be satisfied through one or more of the following alternatives: additional
borrowings, formations of joint ventures, capital transactions, and the selective and strategic
sale of mature operating properties or parcels of land held for investment. The financial condition
of the Company is discussed in further detail below.
At March 31, 2006, the Company was subject to the following contractual obligations and
commitments ($ in thousands):
21
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less than
|
|
|
|
|
|
|
|
|
|
After
|
|
|
Total
|
|
1 Year
|
|
2-3 Years
|
|
4-5 Years
|
|
5 years
|
Contractual Obligations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company long-term debt:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unsecured notes payable and construction loans
|
|
$
|
254,032
|
|
|
$
|
28
|
|
|
$
|
16,911
|
|
|
$
|
237,093
|
|
|
$
|
|
|
Mortgage notes payable
|
|
|
297,150
|
|
|
|
5,740
|
|
|
|
44,230
|
|
|
|
68,374
|
|
|
|
178,806
|
|
Interest commitments under
notes payable (1)
|
|
|
162,602
|
|
|
|
36,375
|
|
|
|
66,727
|
|
|
|
45,092
|
|
|
|
14,408
|
|
Operating leases (ground leases)
|
|
|
47,057
|
|
|
|
236
|
|
|
|
521
|
|
|
|
534
|
|
|
|
45,766
|
|
Operating leases (offices)
|
|
|
2,042
|
|
|
|
1,595
|
|
|
|
447
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Contractual Obligations
|
|
$
|
762,883
|
|
|
$
|
43,974
|
|
|
$
|
128,836
|
|
|
$
|
351,093
|
|
|
$
|
238,980
|
|
|
|
|
Commitments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Letters of credit
|
|
$
|
23,542
|
|
|
$
|
23,542
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
Performance bonds
|
|
|
6,274
|
|
|
|
5,596
|
|
|
|
678
|
|
|
|
|
|
|
|
|
|
Estimated development commitments
|
|
|
243,370
|
|
|
|
177,960
|
|
|
|
63,910
|
|
|
|
1,500
|
|
|
|
|
|
Unfunded tenant improvements
|
|
|
11,126
|
|
|
|
11,126
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Commitments
|
|
$
|
284,312
|
|
|
$
|
218,224
|
|
|
$
|
64,588
|
|
|
$
|
1,500
|
|
|
$
|
|
|
|
|
|
(1)
|
|
Interest on variable rate obligations is based on rates effective
as of March 31, 2006.
|
A key element in the Companys funding strategy for near term commitments is the
formation of the venture with the Prudential Insurance Company of America on behalf of a separate
account managed for institutional investors by Prudential Real Estate Investors (PREI) discussed
in Note 7 in notes to condensed consolidated financial statements included in this report (the
Venture). Under the terms of the proposed Venture, the Company is expected to contribute its
interests in five retail properties and PREI is expected to contribute cash to the Venture equal to
the agreed upon net value of the properties contributed to the Venture. The Properties are
expected to be held in a limited liability company owned 11.5% by the Company and expected to be
88.5% by PREI (the Property Activity LLC). The cash is expected to be held in a limited liability
company (the Development Activity LLC) which is expected to be 88.5% owned by the Company and
11.5% owned by PREI. The PREI contributions to the Venture are expected to be made in installments
over the remainder of 2006. In addition, PREI may make additional contributions to the Venture in
2007 based on future leasing and development performed by the Company on the contributed
properties.
The cash held by Development Activity LLC is expected to be used to fund development projects
of the Venture. The funds may be loaned to the Company in the interim until utilized for
development. During 2006, the Company expects PREI to contribute $301.6 million, with additional
contributions based on leasing and development of up to an additional $20.5 million in 2006 and
2007. The Company is expected to be manager of Property Activity LLC.
In addition to capital generated from the venture formation, the Company intends to sell Frost Bank Tower and through its interest in CSC Associates, the Company
intends to sell Bank of America Plaza. The Company decided to sell these assets as a result of
the continued strategic review and analysis of
assets it holds. These sales are expected to close in 2006 and are
expected to result in capital gains that may be distributed to
stockholders in the form of a special dividend.
The Company also expects to utilize indebtedness to fund a portion of its commitments. In the
first quarter, the Company created additional capacity for debt funding by expanding its existing
revolving credit facility and by adding a construction facility. In March 2006, the Company recast
its unsecured revolving credit facility (Revolver), increasing the size by $75 million to $400
million and extending the maturity date to March 2010, with an additional one year extension. The
Revolver can be expanded to $500 million under certain circumstances, although the availability of
the additional capacity is not guaranteed. The Revolver provides for additional flexibility in some
of the financial covenants. Additionally, the Revolver imposes restrictions on the level of common
and preferred dividends only if the Companys leverage ratio, as
defined in the Revolver, is greater than 55%. Generally interest is calculated under the
Revolver based on the then current LIBOR interest rate plus an additional spread based on the ratio
of total debt to total assets.
22
As of March 31, 2006, the Company had $201.9 million drawn on its $400 million credit
facility. The amount available under this credit facility is reduced by outstanding letters of
credit, which were approximately $23.5 million at March 31, 2006. As of March 31, 2006, the spread
over LIBOR was 0.90%.
Also in March 2006 and simultaneous with the recast of the Revolver, the Company entered into
an unsecured $100 million construction facility. While this facility is unsecured, advances under
the facility are to be used to fund the construction costs of the Terminus 100 project. This
facility has the same maturity date and key provisions as the Revolver. As of March 31, 2006 the
Company had $35.1 million drawn on its construction facility.
The Companys mortgage debt is primarily non-recourse fixed-rate mortgage notes payable
secured by various real estate assets. As of March 31, 2006, the weighted average interest rate on
the Companys debt was 6.58%. In addition, many of the Companys non-recourse mortgages contain
covenants which, if not satisfied, could result in acceleration of the maturity of the debt. The
Company expects that it will either refinance the non-recourse mortgages at maturity or repay the
mortgages with proceeds from other financings.
As of March 31, 2006, the Companys debt to total market capitalization ratio was 22.5%.
The
Company may also generate capital through the issuance of securities that may include but not be
limited to preferred stock under an existing shelf registration statement. As of March 31, 2006,
the Company had approximately $100 million available for issuance under this registration
statement.
Over the long term, the Company expects to continue to actively manage its portfolio of income
producing properties and strategically sell assets to capture value for shareholders and to recycle
capital for future development activities. The Company expects to continue to utilize indebtedness
to fund future commitments and expects to place long term permanent mortgages on selected assets as
well as utilizing construction facilities for other development assets. The Company may enter into
additional joint venture arrangements to help fund future developments and may enter into
additional structured transactions with third parties. While the Company does not foresee the need
to issue common equity in the future, it will evaluate all public equity sources and select the
most appropriate options as capital is required.
The Companys business model is highly dependent upon raising capital to meet development
obligations. If one or more sources of capital are not available when required, the Company may be
forced to raise capital on potentially unfavorable terms
which could have an adverse effect on the Companys financial position or results of
operations.
Cash Flows.
Cash Flows from Operating Activities
. Cash flows from operating activities increased
$15.4 million between the three months ended March 31, 2006 and 2005. This increase is attributable
to an increase in distributions received from joint ventures in excess of income of $4.8 million
related to a large tract sale and distribution of net proceeds therefrom. Proceeds from lot sales
also increased by $2.9 million during the quarter as a result of higher consolidated lot sales
activities. The Company also received a lease termination fee of $2.3 million during the quarter.
In addition, cash flows from property operations increased during the quarter.
Cash Flows from Investing Activities
. Cash used in investing activities increased
$18.5 million between the three months ended March 31, 2006 and 2005. This increase is primarily
the result of an increase in property acquisition and development expenditures. During the
quarter, the Company purchased land for its second industrial project in Jackson County, Georgia
and purchased a tract of land in Austin, Texas for a future office development, which accounted for
most of the increase in property acquisition and development expenditures. In addition, proceeds
from investment property sales decreased during the quarter due to fewer acres sold at the
Companys Wildwood and North
23
Point/Westside projects. Partially offsetting the increase in net cash
used in investing activities was a change in joint venture activity in 2006. The Company made higher contributions to its
unconsolidated joint ventures in 2005 as compared to 2006, in addition to receiving higher
distributions from its unconsolidated joint ventures in 2006 as compared to 2005, both of which
combined to decrease net cash used in investing activities.
Cash Flows from Financing Activities
. Cash provided by financing activities was $60.0
million for the three months ended March 31, 2006 compared to cash used in financing activities of
$10.1 million for the three months ended March 31, 2005. The primary reason for the change is the
increase in debt in the first quarter of 2006, which included net new borrowings under the
Companys credit facility, new borrowings under the unsecured construction facility and additional
borrowings under the 905 Juniper construction loan. During the first quarter of 2005, the Company
borrowed only $10.9 million as a result of beginning the year with $89.5 million in cash on hand.
Off Balance Sheet Arrangements
The Company participates in a number of joint ventures, some of which it accounts for on the
equity method of accounting. At March 31, 2006, the Companys unconsolidated joint ventures had
aggregate outstanding indebtedness to third parties of approximately $342.4 million, of which the
Companys share was $144.6 million. These loans are generally mortgage or construction loans that
are non-recourse to the Company. In certain instances, the Company provides non-recourse carve-out guarantees on these
non-recourse loans. The unconsolidated joint ventures also have letters of credit and/or
performance bonds which the Company guarantees, which totaled approximately $8.0 million at March
31, 2006.
Two of these ventures are involved in the active acquisition and development of residential
real estate. As capital is required to fund the acquisition and development of this real estate,
the Company must fund its share of the costs not funded by operations or outside financing. Based
on the nature of the activities conducted in these ventures, management cannot estimate with any
degree of accuracy amounts that the Company may be required to fund in the short or long-term.
However, management does not believe that additional funding of these ventures will have an adverse
effect on its financial condition.
The Company does not expect to make significant capital contributions to any of its remaining
unconsolidated joint ventures in the foreseeable future.
Critical Accounting Policies
There has been no material change in the Companys critical accounting policies from that
disclosed in the Companys Annual Report on Form 10-K for the year ended December 31, 2005.
|
|
|
Item 3.
|
|
Quantitative and Qualitative Disclosures About Market Risk
|
There has been no material change in the Companys market risk related to its notes payable
and notes receivable from that disclosed in the Companys Annual Report on Form 10-K for the year
ended December 31, 2005.
|
|
|
Item 4.
|
|
Controls and Procedures
|
We maintain disclosure controls and procedures that are designed to ensure that information
required to be disclosed in our Exchange Act reports is recorded, processed, summarized and
reported within the time periods specified in the SECs rules and forms, and that such information
is accumulated and communicated to management, including the Chief Executive Officer and Chief
Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
Management necessarily applied its judgment in assessing the costs and benefits of such controls
and procedures, which, by their nature, can provide only reasonable assurance regarding
managements control objectives. We also have investments in certain unconsolidated entities. As we
do not always control or manage these entities, our disclosure controls and procedures with respect to such entities are necessarily more limited than those we maintain with respect to our consolidated
subsidiaries.
24
The Companys management, including the Chief Executive Officer and Chief
Financial Officer, does not expect that our disclosure controls can prevent all errors and all
fraud. A control system, no matter how well conceived and operated, can provide only reasonable,
not absolute, assurance that the objectives of the control system are met. There are inherent
limitations in all control systems, including the realities that judgments in decision-making can
be faulty and that breakdowns can occur because of simple error or mistake. Additionally, controls
can be circumvented by the individual acts of one or more persons. The design of any system of
controls also is based in part upon certain assumptions about the likelihood of future events, and,
while our disclosure controls and procedures are designed to be effective under circumstances where
they should reasonably be expected to operate effectively, there can be no assurance that any
design will succeed in achieving its stated goals under all potential future conditions. Because of
the inherent limitations in any control system, misstatements due to error or fraud may occur and
not be detected. However, these inherent limitations are known features of the financial reporting
process and were taken into account in designing the Companys processes.
As of the end of the period covered by this report, we carried out an evaluation, under the
supervision and with the participation of management, including the Chief Executive Officer along
with the Chief Financial Officer, of the effectiveness, design and operation of our disclosure
controls and procedures pursuant to Exchange Act Rules 13a-15(b) and 15d-15(b). Based upon the
foregoing, the Chief Executive Officer along with the Chief Financial Officer concluded that our
disclosure controls and procedures are effective at providing reasonable assurance that all
material information required to be included in our Exchange Act reports is reported in a timely
manner. In addition, based on such evaluation we have identified no changes in our internal control
over financial reporting that occurred during the period covered by this report that have
materially affected, or are reasonably likely to materially affect, our internal control over
financial reporting.
PART II. OTHER INFORMATION
|
|
|
Item 1.
|
|
Legal Proceedings
|
The Company is subject to routine actions for negligence and other claims and administrative
proceedings arising in the ordinary course of business, some of which are expected to be covered by
liability insurance and all of which collectively are not expected to have a material impact on the
financial condition or results of operations of the Company.
There has been no material change in the Companys risk factors from those outlined in the
Companys Annual Report on Form 10-K for the year ended December 31, 2005.
|
|
|
Item 2.
|
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
The following table contains information about the Companys purchases of its equity
securities during the first quarter of 2006:
25
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PURCHASES OUTSIDE PLAN
|
|
|
|
PURCHASES INSIDE PLAN
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Number of Shares
|
|
|
|
|
|
|
Total Number
|
|
|
|
|
|
|
|
Purchased as
|
|
|
Maximum Number of
|
|
|
|
of Shares
|
|
|
Average Price
|
|
|
|
Part of Publicly
|
|
|
Shares That May Yet Be
|
|
|
|
Purchased (1)
|
|
|
Paid Per Share (1)
|
|
|
|
Announced Plan (2)
|
|
|
Purchased Under Plan (2)
|
|
January 1-31
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
5,000,000
|
|
February 1-28
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,000,000
|
|
March 1-31
|
|
|
20,584
|
|
|
|
33.55
|
|
|
|
|
|
|
|
|
5,000,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
20,584
|
|
|
$
|
33.55
|
|
|
|
|
|
|
|
|
5,000,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Purchases of equity securities during the first quarter of 2006 related to
remittances of shares of stock by employees to pay for option exercises or taxes due for
option exercises.
|
|
(2)
|
|
On April 15, 2004, the Board of Directors of the Company authorized a stock
repurchase plan, which expired April 15, 2006, of up to 5,000,000 shares of the Companys
common stock. No purchases were made under this plan in the first quarter of 2006. On May
9, 2006, the Board of Directors of the Company authorized a stock repurchase plan, which
expires May 9, 2009, of up to 5,000,000 shares of the Companys common stock.
|
|
|
|
Item 3.
|
|
Defaults Upon Senior Securities
|
None.
|
|
|
Item 4.
|
|
Submission of Matters to a Vote of Security Holders
|
The Companys Annual Meeting of Stockholders was held on May 9, 2006. The following
proposals were adopted by the stockholders of the Company at the annual meeting:
(i) The election of ten Directors.
The vote on the above was:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Withheld
|
|
|
|
|
|
|
For
|
|
Authority
|
|
|
|
|
Thomas D. Bell, Jr.
|
|
47,083,854
|
|
136,841
|
|
|
|
|
Erskine B. Bowles
|
|
47,015,434
|
|
205,261
|
|
|
|
|
Richard W. Courts, II
|
|
44,478,128
|
|
2,742,567
|
|
|
|
|
Thomas G. Cousins
|
|
47,082,703
|
|
137,992
|
|
|
|
|
Lillian C. Giornelli
|
|
47,074,167
|
|
146,528
|
|
|
|
|
S. Taylor Glover
|
|
46,459,866
|
|
760,829
|
|
|
|
|
James H. Hance, Jr.
|
|
47,008,669
|
|
212,026
|
|
|
|
|
William B. Harrison, Jr.
|
|
47,164,545
|
|
56,150
|
|
|
|
|
Boone A. Knox
|
|
45,420,366
|
|
1,800,329
|
|
|
|
|
William Porter Payne
|
|
46,856,962
|
|
363,733
|
|
|
|
(ii)
|
|
A proposal to approve an amendment to the 1999 Incentive Stock Plan to increase the
number of shares of common stock available under the 1999 Incentive Stock Plan by 870,000
shares.
|
The vote on the above was:
|
|
|
For
|
|
38,223,305
|
Against
|
|
1,294,084
|
Abstain
|
|
298,786
|
Broker
Non-Votes
|
|
7,404,520
|
26
|
(iii)
|
|
A proposal to ratify the appointment of Deloitte & Touche LLP as the Companys independent registered public accountants for the fiscal year ending December 31, 2006.
|
The vote on the above was:
|
|
|
For
|
|
46,370,869
|
Against
|
|
837,499
|
Abstain
|
|
12,327
|
|
|
|
Item 5.
|
|
Other Information
|
|
(a)
|
|
Effective on May 9, 2006, upon approval by the shareholders at the Companys annual
meeting, the Company adopted an amendment to the 1999 Stock Incentive Plan (the Plan) to
increase the number of shares of common stock available under the Plan by 870,000 shares.
A description of the material terms of the Plan are set forth under the heading Amendment
to the 1999 Incentive Stock Plan in the Companys Proxy Statement filed with the
Securities and Exchange Commission on April 4, 2006, which description is hereby
incorporated into this Item 5 by reference. The text of the Plan, as amended and restated
as of May 9, 2006, is set forth in Annex B to the Companys Proxy Statement, which text is
hereby incorporated into this Item 5 by reference. The Plan, as amended and restated, is
also incorporated by reference in Exhibit 10(a)(ii) to this Quarterly Report on Form 10-Q.
|
|
|
|
As disclosed in the Current Report on Form 8-K filed on December 15, 2005, on December 9, 2005,
the Compensation, Succession, Nominating and Governance Committee
(the Compensation Committee)
of the Board of Directors adopted the 2005 Restricted Stock Unit Plan
(the RSU Plan).
|
|
|
|
As disclosed in the Current Report on Form 8-K filed on February 24, 2006, the Compensation
Committee approved the grant of restricted stock units
(RSUs) with performance conditions
to Joel T. Murphy and Lawrence L. Gellerstedt. The form of the award certificate for the RSU
grants was approved by the Compensation Committee on May 9, 2006, and the Restricted Stock
Certificate (with Performance Criteria) is filed as in Exhibit 10(a)(iv) to this Form 10-Q.
In addition, the Compensation Committee approved an amendment to the RSU Plan on May 9, 2006,
which is filed as Exhibit 10 (a)(iii) to this Form 10-Q.
|
|
|
|
On May 9, 2006, the Board of Directors of the Company, on
the recommendation of the Compensation Committee, approved an
increase to the compensation paid to non-employee directors, as
follows: (i) the annual retainer will be increased from $30,000
to $40,000; (ii) in addition to the annual option grant for
6,000 shares, non-employee directors will receive an annual
grant of restricted stock or restricted stock units with a value of
$20,000 for each director; and (iii) the annual retainers for
the chairperson of the Audit and Compensation Committees will be
increased from $5,000 to $10,000. These changes will be effective as
of August 1, 2006.
|
|
|
|
|
|
|
|
3.1
|
|
Restated and Amended Articles of Incorporation of the Registrant, as amended December 15, 2005, filed as Exhibit 3(a)(i) to
the Registrants Form 10-K for the year ended December 31,
2005, and incorporated herein by reference.
|
|
|
|
|
|
|
|
3.2
|
|
Bylaws of the Registrant, as amended April 29, 1993, filed as
Exhibit 3.2 to the Registrants Form 10-Q for the quarter ended
June 30, 2002, and incorporated herein by reference.
|
|
|
|
|
|
|
|
10(a)(ii)
|
|
Cousins Properties Incorporated 1999 Incentive Stock Plan, as
amended and restated, approved by the Stockholders on May 9,
2006, filed as Annex B to the Registrants Proxy Statement
dated April 4, 2006, and incorporated herein by reference.
|
|
|
|
|
|
|
|
10(a)(iii)
|
|
Amendment No. 1 to Cousins
Properties Incorporated 2005 Restricted Stock Unit Plan.
|
|
|
|
|
|
|
|
10(a)(iv)
|
|
Form of Restricted Stock Certificate (with Performance Criteria).
|
|
|
|
|
|
|
|
10(e)
|
|
Amended and Restated Credit Agreement, dated as of March 7,
2006 among Cousins Properties Incorporated as Principal Borrower; The Consolidated Entities of the Borrower from time to
time designated by the Borrower as Co-Borrowers hereunder,
collectively, with the Borrower, as the Borrower Parties; The
Consolidated Entities of the Borrower from time to time party
hereto, as the Guarantors; Bank of America, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer; Banc of
America Securities LLC, as Sole Lead Arranger and Sole Book
Manager; Commerzbank AG, New York Branch, as Syndication Agent; PNC Bank, National Association and Wells Fargo
Bank, as Documentation Agents; Wachovia Bank National Association, as Managing Agent and the Other Lenders Party
hereto, filed as Exhibit 10.1 to the Registrant's Current Report
on Form 8-K filed on March 13, 2006, and incorporated herein
by reference.
|
27
|
|
|
|
|
|
|
10(f)
|
|
Construction Facility Credit Agreement, dated as of March 7,
2006 among Cousins Properties Incorporated as Borrower; The
Consolidated Entities of the Borrower from time to time party
hereto, as the Guarantors; Bank of America, N.A., as Administrative Agent; Banc of America Securities LLC, as Sole Lead
Arranger and Sole Book Manager; Commerzbank AG, New
York Branch, as Syndication Agent; PNC Bank, National Association and Wells Fargo Bank, as Documentation Agents;
Wachovia Bank National Association, as Managing Agent and
the Other Lenders Party hereto, filed as Exhibit 10.2 to the
Registrants Current Report on Form 8-K filed on March 13,
2006, and incorporated herein by reference.
|
|
|
|
|
|
|
|
11
|
|
Computation of Per Share Earnings*
|
|
|
|
|
|
|
|
31.1
|
|
Certification of the Chief Executive Officer Pursuant to Rule
13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
|
|
|
|
31.2
|
|
Certification of the Chief Financial Officer Pursuant to Rule
13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
|
|
|
|
32.1
|
|
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
|
|
|
|
32.2
|
|
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002.
|
*
|
|
Data required by SFAS No. 128, Earnings Per Share, is provided in Note 4 to the
condensed consolidated financial statements included in this report.
|
28
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
|
|
|
|
COUSINS PROPERTIES INCORPORATED
|
|
|
|
|
|
|
|
|
|
|
|
/s/ James A. Fleming
|
|
|
|
|
|
James A. Fleming
|
|
|
Executive Vice President and Chief Financial Officer
|
|
|
(Duly Authorized Officer and Principal Financial Officer)
|
May 10, 2006
29