-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, T81V8IEsn2Dj+Pu76DMGPcr03+rR5eXP15zfupj0F9gxA9sPd6LpUPchi68khjXr QqiLuke+BVbqksmATwWxfA== 0000025232-01-000008.txt : 20010328 0000025232-01-000008.hdr.sgml : 20010328 ACCESSION NUMBER: 0000025232-01-000008 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20001231 FILED AS OF DATE: 20010327 FILER: COMPANY DATA: COMPANY CONFORMED NAME: COUSINS PROPERTIES INC CENTRAL INDEX KEY: 0000025232 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 580869052 STATE OF INCORPORATION: GA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: SEC FILE NUMBER: 000-03576 FILM NUMBER: 1579997 BUSINESS ADDRESS: STREET 1: 2500 WINDY RIDGE PKWY STE 1600 CITY: ATLANTA STATE: GA ZIP: 30339-5683 BUSINESS PHONE: 7709552200 MAIL ADDRESS: STREET 1: 2500 WINDY RIDGE PARKWAY STREET 2: SUITE 1600 CITY: ATLANTA STATE: GA ZIP: 30339-5683 10-K 1 0001.txt SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2000 Commission file number 2-20111 COUSINS PROPERTIES INCORPORATED A GEORGIA CORPORATION I.R.S. EMPLOYER IDENTIFICATION NO. 58-0869052 2500 WINDY RIDGE PARKWAY ATLANTA, GEORGIA 30339 TELEPHONE: 770-955-2200 Securities registered pursuant to Section 12(b) of the Act: Common Stock ($1 Par Value) Name of exchange on which registered: New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: None 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, and (2) has been subject to such filing requirements for the past 90 days. Yes X No Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. As of March 9, 2001, 49,500,617 shares of common stock were outstanding; and the aggregate market value of the common stock of Cousins Properties Incorporated held by nonaffiliates was $919,520,223. DOCUMENTS INCORPORATED BY REFERENCE Portions of the following documents have been incorporated by reference into the designated Part of this Form 10-K: Registrant's Proxy Statement Part III, Items 10, 11, 12 and 13 dated March 30, 2001 Registrant's Annual Report to Part II, Items 5, 6, 7 and 8 Stockholders for the year ended December 31, 2000 PART I ------ Item 1. Business - -------------------- Corporate Profile Cousins Properties Incorporated (the "Registrant" or "Cousins") is a Georgia corporation, which since 1987 has elected to be taxed as a real estate investment trust ("REIT"). Cousins Real Estate Corporation and its subsidiaries ("CREC") is a taxable entity consolidated with the Registrant, which owns, develops, and manages a portion of the Registrant's real estate portfolio. CREC II Inc. and its subsidiaries ("CREC II") is another taxable entity which owns a 75% interest (100% as of February 28, 2001) in Cousins Stone LP, an unconsolidated joint venture which is a full-service real estate company headquartered in Dallas, Texas that specializes in third party property management, development and leasing of Class A office buildings. The Registrant, together with CREC and CREC II, is hereafter referred to as the "Company." Cousins is an Atlanta-based, fully integrated, self administered equity REIT. The Company has extensive experience in the real estate industry, including the acquisition, financing, development, management and leasing of properties. Cousins has been a public company since 1962, and its common stock trades on the New York Stock Exchange. The Company owns a portfolio of well-located, high-quality retail, office, medical office and land development projects and holds several tracts of strategically located undeveloped land. The strategies employed to achieve the Company's investment goals include the development of properties which are substantially precommitted to quality tenants; maintaining high levels of occupancy within owned properties; the selective sale of assets; the creation of joint venture arrangements and the acquisition of quality income-producing properties at attractive prices. The Company also seeks to be opportunistic and take advantage of normal real estate business cycles. Unless otherwise indicated, the notes referenced in the discussion below are the "Notes to Consolidated Financial Statements" included in the financial section of the Registrant's 2000 Annual Report to Stockholders. Brief Description of Company Investments Office. As of March 15, 2001, the Company's office portfolio ------- included the following thirty-seven commercial office buildings:
Company's Percent Economic Leased Metropolitan Rentable Ownership (Fully Property Description Area Square Feet Interest Executed) ------------------------ ----------------- ----------- --------- --------- Inforum Atlanta, GA 988,000 100% 99% 101 Independence Center Charlotte, NC 526,000 100% 99% 101 Second Street San Francisco, CA 387,000 100% (b) 92% 55 Second Street San Francisco, CA 375,000 100% (b) 87% (a) AT&T Wireless Services Headquarters Los Angeles, CA 222,000 100% 100% The Points at Waterview Dallas, TX 200,000 100% 100% Lakeshore Park Plaza Birmingham, AL 190,000 100% (b) 89% 3100 Windy Hill Road Atlanta, GA 188,000 100% 100% 333 John Carlyle Washington, D.C. 153,000 100% 93% 555 North Point Center East Atlanta, GA 152,000 100% 95% 615 Peachtree Street Atlanta, GA 149,000 100% 95% 333 North Point Center East Atlanta, GA 129,000 100% 100% 600 University Park Place Birmingham, AL 123,000 100% (b) 91% 3301 Windy Ridge Parkway Atlanta, GA 107,000 100% 100% Cerritos Corporate Center - Phase II Los Angeles, CA 104,000 100% 100% (a) 1900 Duke Street Washington, D.C. 97,000 100% 97% (a) One Georgia Center Atlanta, GA 363,000 88.50% 98% Bank of America Plaza Atlanta, GA 1,261,000 50% 100% Gateway Village Charlotte, NC 1,065,000 50% 100% (a) 3200 Windy Hill Road Atlanta, GA 687,000 50% 100% 2300 Windy Ridge Parkway Atlanta, GA 635,000 50% 100% The Pinnacle Atlanta, GA 423,000 50% 98% 1155 Perimeter Center West Atlanta, GA 362,000 50% 100% (a) 2500 Windy Ridge Parkway Atlanta, GA 314,000 50% 100% Two Live Oak Center Atlanta, GA 278,000 50% 100% 4200 Wildwood Parkway Atlanta, GA 260,000 50% 100% Ten Peachtree Place Atlanta, GA 259,000 50% 100% John Marshall - II Washington, D.C. 224,000 50% 100% Austin Research Park - Building IV Austin, TX 184,000 50% 100% (a) Austin Research Park - Building III Austin, TX 174,000 50% 100% (a) 4300 Wildwood Parkway Atlanta, GA 150,000 50% 100% 4100 Wildwood Parkway Atlanta, GA 100,000 50% 100% First Union Tower Greensboro, NC 322,000 11.50% 90% Grandview II Birmingham, AL 149,000 11.50% 100% 200 North Point Center East Atlanta, GA 130,000 11.50% 95% 100 North Point Center East Atlanta, GA 128,000 11.50% 95% One Ninety One Peachtree Tower Atlanta, GA 1,215,000 9.80% 97% ---------- 12,773,000 ==========
(a) Under construction and/or in lease-up. (b) These projects are actually owned in ventures in which a portion of the upside is shared with the other venturer. See "Major Properties" - "101 Second Street," "55 Second Street" and "Cousins/Daniel LLC" where discussed. The weighted average leased percentage of these office buildings (excluding all properties currently under construction and/or in lease-up and One Ninety One Peachtree Tower, as it is less than 10% owned by the Company) was approximately 98% as of March 15, 2001 and the leases expire as follows:
2010 & 2001 2002 2003 2004 2005 2006 2007 2008 2009 Thereafter Total ---- ---- ---- ---- ---- ---- ---- ---- ---- ---------- ----- OFFICE - ------ Consolidated: - ------------- Square Feet Expiring (d) 181,596 43,284 252,578 239,738 373,412 323,515 139,217 291,121 814,349 738,887 3,397,697(b) % of Leased Space 5% 1% 7% 7% 11% 10% 4% 9% 24% 22% 100% Annual Base Rent (a) 2,992,480 622,175 3,168,316 3,936,756 7,353,306 4,938,730 2,968,888 6,292,968 15,897,726 19,167,139 67,338,484 Annual Base Rent/Sq. Ft. (a) 16.48 14.37 12.54 16.42 19.69 15.27 21.33 21.62 19.52 25.94 19.82 Joint Venture: - -------------- Square Feet Expiring (d) 551,464 530,284 408,423 434,237 674,426 540,391 684,114 45,005 353,175 1,392,411 5,613,930(c) % of Leased Space 10% 9% 7% 8% 12% 10% 12% 1% 6% 25% 100% Annual Base Rent (a) 7,986,474 9,762,968 7,171,870 8,068,152 12,369,978 9,722,610 16,791,309 888,817 8,050,731 33,532,817 114,345,726 Annual Base Rent/Sq. Ft. (a) 14.48 18.41 17.56 18.58 18.34 17.99 24.54 19.75 22.80 24.08 20.37 Total (including only Company's % share of Joint Venture Properties): - --------------------------------------------------------------------- Square Feet Expiring (d) 411,278 292,658 469,176 514,014 675,016 581,929 465,614 298,771 961,680 1,407,675 6,077,811 % of Leased Space 7% 5% 8% 8% 11% 9% 8% 5% 16% 23% 100% Annual Base Rent (a) 6,087,272 5,171,282 6,953,603 8,919,341 12,973,745 9,613,705 11,100,869 6,448,431 19,411,828 35,387,371 122,067,447 Annual Base Rent/Sq. Ft. (a) 14.80 17.67 14.82 17.35 19.22 16.52 23.84 21.58 20.19 25.14 20.08
(a) Annual base rent excludes the operating expense reimbursement portion of the rent payable. If the lease does not provide for pass through of such operating expense reimbursements, an estimate of operating expenses is deducted from the rental rate shown. The base rental rate shown is the estimated rate in the year of expiration. Amounts disclosed are in dollars. (b) Rentable square feet leased as of March 15, 2001 out of approximately 3,514,000 total rentable square feet. (c) Rentable square feet leased as of March 15, 2001 out of approximately 5,683,000 total rentable square feet. (d) Where a tenant has the option to cancel its lease without penalty, the lease expiration date used in the table above reflects the cancellation option date rather than the lease expiration date. The weighted average remaining lease term of these twenty-nine office buildings was approximately 7 years as of March 15, 2001. Most of the Company's leases in these buildings provide for pass through of operating expenses and base rents which escalate over time. Medical Office. As of March 15, 2001, the Company's medical office --------------- portfolio included the following six medical office properties:
Company's Percent Economic Leased Metropolitan Rentable Ownership (Fully Property Description Area Square Feet Interest Executed) -------------------- ------------- ----------- --------- --------- Northside/Alpharetta II Atlanta, GA 198,000 100% 74% Meridian Mark Plaza Atlanta, GA 159,000 100% 99% Northside/Alpharetta I Atlanta, GA 103,000 100% 100% AtheroGenics Atlanta, GA 50,000 100% 100% Crawford Long Medical Office Building Atlanta, GA 366,000 50% 51% (a) Presbyterian Medical Plaza at University Charlotte, NC 69,000 11.50% 100% ------- 945,000 =======
(a) Under construction and in lease-up. The weighted average leased percentage of these medical office buildings (excluding the property currently under construction and in lease-up) was 90% as of March 15, 2001 and the leases expire as follows:
2010 & 2001 2002 2003 2004 2005 2006 2007 2008 2009 Thereafter Total ---- ---- ---- ---- ---- ---- ---- ---- ---- ---------- ----- MEDICAL OFFICE - -------------- Consolidated: - ------------- Square Feet Expiring 4,970 4,290 35,388 48,066 23,723 4,884 20,012 40,652 124,823 147,088 453,896(b) % of Leased Space 1% 1% 8% 11% 5% 1% 4% 9% 28% 32% 100% Annual Base Rent (a) 86,230 72,415 676,258 893,333 409,956 90,102 417,130 915,237 2,547,438 3,606,703 9,714,802 Annual Base Rent/Sq. Ft. (a) 17.35 16.88 19.11 18.59 17.28 18.45 20.84 22.51 20.41 24.52 21.40 Joint Venture: - -------------- Square Feet Expiring 0 1,397 0 0 3,445 0 23,359 0 0 40,503 68,704(c) % of Leased Space 0% 2% 0% 0% 5% 0% 34% 0% 0% 59% 100% Annual Base Rent (a) 0 21,109 0 0 56,498 0 390,329 0 0 772,392 1,240,328 Annual Base Rent/Sq. Ft. (a) 0 15.11 0 0 16.40 0 16.71 0 0 19.07 18.05 Total (including only Company's % share of Joint Venture Properties): - --------------------------------------------------------------------- Square Feet Expiring 4,970 4,451 35,388 48,066 24,119 4,884 22,698 40,652 124,823 151,780 461,831 % of Leased Space 1% 1% 8% 10% 5% 1% 5% 9% 27% 33% 100% Annual Base Rent (a) 86,230 74,843 676,258 893,333 416,453 90,102 462,018 915,237 2,547,438 3,695,528 9,857,440 Annual Base Rent/Sq. Ft. (a) 17.35 16.81 19.11 18.59 17.27 18.45 20.36 22.51 20.41 24.35 21.34
(a) Annual base rent excludes the operating expense reimbursement portion of the rent payable. If the lease does not provide for pass through of such operating expense reimbursements, an estimate of operating expenses is deducted from the rental rate shown. The base rental rate shown is the estimated rate in the year of expiration. Amounts disclosed are in dollars. (b) Rentable square feet leased as of March 15, 2001 out of approximately 510,000 total rentable square feet. (c) Rentable square feet leased as of March 15, 2001 out of approximately 69,000 total rentable square feet. The weighted average remaining lease term of these five medical office buildings was approximately 9 years as of March 15, 2001. The Company's leases in these medical office buildings provide for pass through of operating expenses and base rents which escalate over time. Retail. As of March 15, 2001, the Company's retail portfolio included ------- the following twelve properties:
Company's Percent Rentable Economic Leased Metropolitan Square Feet Ownership (Fully Property Description Area (Company Owned) Interest Executed) -------------------------- ------------------------ --------------- -------- --------- Presidential MarketCenter Atlanta, GA 374,000 100% 97% The Avenue of the Peninsula Rolling Hills Estates, CA 369,000 100% 83% The Avenue East Cobb Atlanta, GA 225,000 100% 100% Perimeter Expo Atlanta, GA 176,000 100% 100% Salem Road Station Atlanta, GA 67,000 100% 81% (a) Mira Mesa MarketCenter San Diego, CA 447,000 88.50% 100% The Avenue Peachtree City Atlanta, GA 167,000 88.50% 56% (a) The Shops at World Golf Village St. Augustine, FL 80,000 50% 78% Greenbrier MarketCenter Chesapeake, VA 493,000 11.50% 99% North Point MarketCenter Atlanta, GA 401,000 11.50% 100% Los Altos MarketCenter Long Beach, CA 157,000 11.50% 100% Mansell Crossing Phase II Atlanta, GA 103,000 11.50% 91% --------- 3,059,000 =========
(a) Under construction and/or in lease-up. The weighted average leased percentage of these retail properties (excluding all properties currently under construction and/or in lease-up) was approximately 95% as of March 15, 2001, and the leases expire as follows:
2010 & 2001 2002 2003 2004 2005 2006 2007 2008 2009 Thereafter Total ---- ---- ---- ---- ---- ---- ---- ---- ---- ---------- ----- RETAIL - ------ Consolidated: - ------------- Square Feet Expiring 19,678 24,367 4,749 90,084 116,815 79,369 10,414 40,327 28,259 644,462 1,058,524(b) % of Leased Space 2% 2% 0% 9% 11% 7% 1% 4% 3% 61% 100% Annual Base Rent (a) 148,916 435,734 118,766 1,673,370 2,918,856 2,069,214 289,075 501,518 710,634 12,663,004 21,529,087 Annual Base Rent/Sq. Ft. (a) 7.57 17.88 25.01 18.58 24.99 26.07 27.76 12.44 25.15 19.65 20.34 Joint Venture: - -------------- Square Feet Expiring 44,243 52,398 10,411 26,840 86,176 98,000 25,023 4,719 59,033 1,242,080 1,648,923(c) % of Leased Space 3% 3% 1% 2% 5% 6% 2% 0% 3% 75% 100% Annual Base Rent (a) 618,218 816,070 192,745 582,098 1,558,165 1,103,770 675,322 75,504 642,363 17,125,005 23,389,260 Annual Base Rent/Sq. Ft. (a) 13.97 15.57 18.51 21.69 18.08 11.26 26.99 16.00 10.88 13.79 14.18 Total (including only Company's % share of Joint Venture Properties): - --------------------------------------------------------------------- Square Feet Expiring 24,766 30,393 5,946 94,354 159,663 92,949 18,274 40,870 35,596 1,112,733 1,615,544 % of Leased Space 1% 2% 0% 6% 10% 6% 1% 3% 2% 69% 100% Annual Base Rent (a) 220,011 529,582 140,932 1,769,899 3,864,027 2,297,533 509,219 510,201 800,096 19,843,335 30,484,835 Annual Base Rent /Sq. Ft.(a) 8.88 17.42 23.70 18.76 24.20 24.72 27.87 12.48 22.48 17.83 18.87
(a)Annual base rent excludes the operating expense reimbursement portion of the rent payable and any percentage rents due. If the lease does not provide for pass through of such operating expense reimbursements, an estimate of operating expenses is deducted from the rental rate shown. The base rental rate shown is the estimated rate in the year of expiration. Amounts disclosed are in dollars. (b)Gross leasable area leased as of March 15, 2001 out of approximately 1,144,000 total gross leasable area. (c)Gross leasable area leased as of March 15, 2001 out of approximately 1,681,000 total gross leasable area. The weighted average remaining lease term of these ten retail properties was approximately 11 years as of March 15, 2001. Most of the major tenant leases in these retail properties provide for pass through of operating expenses and base rents which escalate over time. Other. The Company's other real estate holdings include equity interests in approximately 377 acres of strategically located land held for investment and future development at North Point and Wildwood Office Park, the option to acquire the fee simple interest in approximately 9,600 acres of land through its Temco Associates joint venture, and two mortgage notes for an aggregate of approximately $24 million which are secured by a 250,000 square foot office building in Washington, D.C. The terms of these two notes have some of the characteristics of an equity investment and should provide a comparable return on investment (see Note 3). The Company's joint venture partners include either the company as named or an affiliate of the company named and are as follows: IBM, The Coca-Cola Company ("Coca-Cola"), Bank of America Corporation ("Bank of America"), The Prudential Insurance Company of America ("Prudential"), Temple-Inland Inc., Equity Office Properties Trust, CommonWealth Pacific, LLC ("CommonWealth") and CarrAmerica Realty Corporation. Refer to Item 2 hereof for a more detailed description of the Company's real estate properties. Significant Changes in 2000 Significant changes in the Company's business and properties during the year ended December 31, 2000 were as follows: Office Division. In January 2000, 1155 Perimeter Center West, an approximately 362,000 rentable square foot office building in Atlanta, Georgia, owned by 285 Venture, LLC (see Note 5), became partially operational for financial reporting purposes. Also in January 2000, Crawford Long - CPI, LLC (see Note 5) commenced construction of the Crawford Long medical office building, an approximately 366,000 rentable square foot medical office building in Atlanta, Georgia. In February 2000, 555 North Point Center East, an approximately 152,000 rentable square foot office building in suburban Atlanta, Georgia, became partially operational for financial reporting purposes. In April 2000, 101 Second Street, an approximately 387,000 rentable square foot office building in San Francisco, California, became partially operational for financial reporting purposes. In June 2000, 600 University Park Place, an approximately 123,000 rentable square foot office building in Birmingham, Alabama, became partially operational for financial reporting purposes. Also in June 2000, CPI/FSP I, L.P. (see Note 5) commenced construction of Austin Research Park - Buildings III and IV, two approximately 174,000 and 184,000 rentable square foot office buildings, respectively, in Austin, Texas. CPI/FSP I, L.P. also owns an additional parcel of land upon which a third building of approximately 184,000 rentable square feet could be developed. In October 2000, 1900 Duke Street, an approximately 97,000 rentable square foot office building in suburban Washington, D.C., became partially operational for financial reporting purposes. In November 2000, Gateway Village, an approximately 1.1 million rentable square foot office building complex in Charlotte, North Carolina (see Note 5), became partially operational for financial reporting purposes. In December 2000, CP Venture Three LLC acquired One Georgia Center, an approximately 363,000 rentable square foot office building in midtown Atlanta, Georgia. The purchase price of the building was approximately $35.8 million, which includes an additional parcel of land upon which a second building of approximately 288,000 rentable square feet could be developed. Also in December 2000, the Company purchased The Points at Waterview, an approximately 200,000 rentable square foot office building in suburban Dallas, Texas. The purchase price was approximately $25.4 million which includes an adjacent parcel of land upon which a second building of approximately 60,000 rentable square feet could be developed. Retail Division. In March 2000, the Company sold Laguna Niguel Promenade, an approximately 154,000 square foot retail center in Laguna Niguel, California, for $26.7 million which was approximately $6.4 million over the cost of the center. Including depreciation recapture of approximately $.8 million, the net gain on the sale was approximately $7.2 million. In April 2000, Mira Mesa MarketCenter, an approximately 447,000 square foot retail center in suburban San Diego, California, became partially operational for financial reporting purposes. In May 2000, The Avenue of the Peninsula, a 369,000 square foot retail center in Rolling Hills Estates, California, became partially operational for financial reporting purposes. In October 2000, Salem Road Station, an approximately 67,000 square foot neighborhood retail center in suburban Atlanta, Georgia, became partially operational for financial reporting purposes. Land Division. The Company is currently developing or has developed seven residential communities in suburban Atlanta, Georgia, including four in which development commenced in 1994, one in 1995, one in 1996 and one in 2000. These developments currently include land on which approximately 1,879 lots are being or were developed, of which 217, 292 and 344 lots were sold in 2000, 1999 and 1998, respectively. As of December 31, 2000, all of the lots in four of the seven residential communities had been sold. In November 1998, Temco Associates began development of the Bentwater residential community in suburban Atlanta, Georgia, which will consist of approximately 1,735 lots on approximately 1,290 acres (see Note 5). Temco Associates sold 219 and 106 lots within Bentwater in 2000 and 1999, respectively. Financings. In April 2000, the Company completed the $90 million financing of 101 Second Street. This non-recourse mortgage note payable has an interest rate of 8.33% and a maturity of April 27, 2010. In July 2000, the Company completed the $39 million financing of The Avenue East Cobb. This non-recourse mortgage note payable has an interest rate of 8.39% and a maturity of August 1, 2010. In August 2000, the Company completed the $25.5 million financing of Meridian Mark Plaza. This non-recourse mortgage note payable has an interest rate of 8.27% and a maturity of October 1, 2010. In October 2000, the Company repaid in full upon its maturity the note payable to First Union National Bank that was secured by the Company's interest in the 650 Massachusetts Avenue mortgage notes (see Note 3). In December 2000, the Company's credit facility was temporarily increased from $150 million to $225 million, which temporary increase expires June 30, 2001 (see Note 4). Environmental Matters Under various federal, state and local laws, ordinances and regulations, an owner or operator of real estate is generally liable for the costs of removal or remediation of certain hazardous or toxic substances on or in such property. Such laws often impose liability without regard to whether the owner knew of, or was responsible for, the presence of such hazardous or toxic substances. The presence of such substances, or the failure to remediate such substances properly, may subject the owner to substantial liability and may adversely affect the owner's ability to develop the property or to borrow using such real estate as collateral. The Company is not aware of any environmental liability that the Company's management believes would have a material adverse effect on the Company's business, assets or results of operations. Certain environmental laws impose liability on a previous owner of property to the extent that hazardous or toxic substances were present during the prior ownership period. A transfer of the property does not relieve an owner of such liability. Thus, although the Company is not aware of any such situation, the Company may be liable in respect of properties previously sold. In connection with the development or acquisition of certain properties, the Company obtained Phase One environmental audits (which generally involve inspection without soil sampling or ground water analysis) from independent environmental consultants. The remaining properties (including most of the Company's land held for investment) have not been so examined. No assurance can be given that no environmental liabilities exist, that the reports reviewed all environmental liabilities, or that no prior owner created any material environmental condition not known to the Company. The Company believes that it and its properties are in compliance in all material respects with all federal, state and local laws, ordinances and regulations regarding hazardous or toxic substances. Competition Our properties compete for tenants with similar properties located in our markets primarily on the basis of location, rent charged, services provided and the design and condition of the facilities. We also compete with other REITs, financial institutions, pension funds, partnerships, individual investors and others when attempting to acquire and develop properties. Forward-Looking Statements This Annual Report on Form 10-K includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and are subject to uncertainties and risks. Although the Company believes that its plans, intentions and expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such plans, intentions or expectations will be achieved. Important factors that could cause actual results to differ materially from the Company's forward-looking statements include, but are not limited to, general and local economic conditions, local real estate conditions, the activity of others developing competitive projects, the cyclical nature of the real estate industry, interest rates, the Company's ability to obtain favorable financing or zoning, the environmental impact and other governmental regulations. The risk factors are described in more detail in the Company's Current Report on Form 8-K, dated March 9, 2001, filed with the Securities and Exchange Commission. Subsequent Events On February 21, 2001, the Company sold Colonial Plaza MarketCenter, an approximately 480,000 square foot retail center in Orlando, Florida for $54 million, which was approximately $10.8 million over the cost of the center. Including depreciation recapture of approximately $6.2 million, the net gain on the sale was approximately $17 million. Executive Offices; Employees The Registrant's executive offices are located at 2500 Windy Ridge Parkway, Suite 1600, Atlanta, Georgia 30339-5683. At December 31, 2000, the Company employed 396 people. Item 2. Properties - ---------------------- Table of Major Properties The following tables set forth certain information relating to major office, medical office and retail properties, stand alone retail lease sites, and land held for investment and future development in which the Company has a 10% or greater ownership interest. All information presented is as of December 31, 2000, except leasing information which is as of March 15, 2001. Dollars are stated in thousands.
Percentage Description, Year Rentable Leased Average Location Development Company's Square Feet as of 2000 and Completed Venture Ownership and Acres March 15, Economic Zip Code or Acquired Partner Interest as Noted 2001 Occupancy - ----------- ----------- ------- --------- ----------- ---------- --------- Office - ------ Inforum Atlanta, GA 30303-1032 1999 N/A 100% 988,000 99% 87% 4 Acres (2) 101 Independence Center Charlotte, NC 28246-1000 1996 N/A 100% 526,000 99% 98% 2 Acres 101 Second Street San Francisco, CA 94105-3601 2000 Myers Second 100%(6) 387,000 92% 80%(7) Street Company 1 Acre LLC 55 Second Street San Francisco, CA 94105-3601 (8) Myers Bay 100%(6) 375,00 87%(8) (8) Area Company LLC 1 Acre AT&T Wireless Services Headquarters Suburban Los Angeles, CA 90703-8573 1999 N/A(6) 100%(6) 222,000 100% 100% 6 Acres (9)
Adjusted Cost and Adjusted Cost Less Debt Description, Major Depreciation Maturity Location Major Tenants (lease Tenants' and and and expiration/options Rentable Amortization Debt Interest Zip Code expiration) Sq. Feet (1) Balance Rate - ------------ -------------------- -------- ------------- ------- -------- Office - ------ Inforum Atlanta, GA 30303-1032 BellSouth Corporation (3)(2009) 277,744 $ 86,083 $ 0 N/A Georgia Lottery Corp. (2003/2013) 127,827 $ 75,834 Lockwood Greene Engineers, Inc. 125,916 (2007/2012) Co Space Services, LLC 110,797 (2020/2025) Turner Broadcasting (2006/2016)(4) 57,827 Sapient Corporation (2009/2019) 57,689 101 Independence Center Charlotte, NC 28246-1000 Bank of America (3) 359,327 $ 76,964 $ 46,727 12/1/07 (2008/2028)(5) $ 64,709 8.22% Robinson Bradshaw & Hinson, 82,218 P.A. (2004/2009) Ernst & Young LLP (2004) 24,125 101 Second Street San Francisco, CA 94105-3601 Arthur Andersen LLP 147,986 $ 97,577 $ 89,597 4/27/10 (2009/2014) $ 93,753 8.33% Thelen, Reid & Priest 128,299 (2012/2022) 55 Second Street San Francisco, CA 94105-3601 Digital Island, Inc. (2014/2019)(8) 158,025(8) $ 44,980 $ 0 N/A Paul Hastings (2017/2027)(8) 68,100(8) (8) Fritz Companies (2012/2017)(8) 57,117(8) Preston Gates (2010/2015)(8) 43,469(8) AT&T Wireless Services Headquarters Suburban Los Angeles, CA AT&T Wireless Services 222,000 $ 52,645 $ 0 N/A (2014/2029) $ 49,639
Percentage Description, Year Rentable Leased Average Location Development Company's Square Feet as of 2000 and Completed Venture Ownership and Acres March 15, Economic Zip Code or Acquired Partner Interest as Noted 2001 Occupancy - ----------- ----------- ------- --------- ----------- ---------- --------- Office (Continued) - ------------------ Cerritos Corporate Center - Phase II Suburban Los Angeles, CA 90703-8573 (8) N/A 100% 104,000 100% (8) 3 Acres (9) The Points at Waterview Suburban Dallas, Texas 75080-1472 2000 N/A 100% 200,000 100% (10) 15 Acres (10) Lakeshore Park Plaza Birmingham, AL 35209-6719 1998 Daniel Realty 100%(6) 190,000 89% 91% Company 12 Acres 600 University Park Place Birmingham, AL 35209-6774 2000 Daniel Realty 100%(6) 123,000 91% 49%(11) Company 10 Acres 333 John Carlyle Suburban Washington, D.C. 22314-5745 1999 N/A 100% 153,000 93% 89% 1 Acre 1900 Duke Street Suburban Washington, D.C. 22314-5745 2000 N/A 100% 97,000 97% 22%(12) 1 Acre 333 North Point Center East Suburban Atlanta, GA 30022-8274 1998 N/A 100% 129,000 100% 98% 9 Acres 555 North Point Center East Suburban Atlanta, GA 30022-8274 2000 N/A 100% 152,000 95% 72%(13) 10 Acres 615 Peachtree Street Atlanta, GA 30308-2312 1996 N/A 100% 149,000 95% 82% 2 Acres
Adjusted Cost and Adjusted Cost Less Debt Description, Major Depreciation Maturity Location Major Tenants (lease Tenants' and and and expiration/options Rentable Amortization Debt Interest Zip Code expiration) Sq. Feet (1) Balance Rate - ------------ -------------------- -------- ------------- ------- -------- Office (Continued) - ------------------ Cerritos Corporate Center - Phase II Suburban Los Angeles, CA 90703-8573 AT&T Wireless Services 104,000 $ 7,439 $ 0 N/A (2011/2021)(8) (8) The Points at Waterview Suburban Dallas, Texas 75080-1472 STB Systems, Inc. (2001) 89,050 $ 25,468 $ 0 N/A Cisco Systems, Inc. (2005/2010) 64,897 (10) Lakeshore Park Plaza Birmingham, AL 35209-6719 Infinity Insurance (2005/2015) 95,530 $ 16,530 $ 10,498 11/1/08 TCI Southeast (2001) 20,625 $ 15,405 6.78% 600 University Park Place Birmingham, AL 35209-6774 Southern Company, Inc. (3) 41,961 $ 19,456 $ 0 N/A (2005/2011) $ 18,739 333 John Carlyle Suburban Washington, D.C. 22314-5745 A.T. Kearney (2009/2019) 94,115 $ 29,072 $ 0 N/A $ 27,269 1900 Duke Street Suburban Washington, D.C. 22314-5745 American Society of Clinical 36,247 $ 26,247 $ 0 N/A Oncology (2010/2015) $ 20,163 Municipal Securities Rulemaking 47,556 Board (2016/2026) 333 North Point Center East Suburban Atlanta, GA 30022-8274 Alltel Telecom Information 48,559 $ 13,309 $ 0 N/A Services, Inc. (2003) $ 11,066 J.C. Bradford (2005/2010) 22,222 555 North Point Center East Suburban Atlanta, GA 30022-8274 Regus Business Centre 89,688 $ 16,574 $ 0 N/A (2011/2016)(14) $ 15,712 615 Peachtree Street Atlanta, GA 30308-2312 Wachovia (3)(2004/2007) 50,073 $ 13,243 $ 0 N/A $ 10,718
Percentage Description, Year Rentable Leased Average Location Development Company's Square Feet as of 2000 and Completed Venture Ownership and Acres March 15, Economic Zip Code or Acquired Partner Interest as Noted 2001 Occupancy - ----------- ----------- ------- --------- ----------- ---------- --------- Office (Continued) - ------------------ One Georgia Center Atlanta, GA 30308-3619 2000 Prudential 88.50%(6) 363,000 98% (15) 3 Acres (15) Wildwood Office Park: Atlanta, GA 2300 Windy Ridge Parkway 30339-5671 1987 IBM 50% 635,000 100% 99% 12 Acres 2500 Windy Ridge Parkway 30339-5683 1985 IBM 50% 314,000 100% 98% 8 Acres 3200 Windy Hill Road 30339-5609 1991 IBM 50% 687,000 100% 100% 15 Acres 4100 and 4300 Wildwood Parkway 30339-8400 1996 IBM 50% 250,000 100% 100% 13 Acres 4200 Wildwood Parkway 30339-8402 1997 IBM 50% 260,000 100% 100% 8 Acres
Adjusted Cost and Adjusted Cost Less Debt Description, Major Depreciation Maturity Location Major Tenants (lease Tenants' and and and expiration/options Rentable Amortization Debt Interest Zip Code expiration) Sq. Feet (1) Balance Rate - ------------ -------------------- -------- ------------- ------- -------- Office (Continued) - ------------------ One Georgia Center Atlanta, GA 30308-3619 Norfolk & Southern (2004/2014) 89,041 $ 36,346 $ 0 N/A SouthTrust Bank (2004/2019) 80,895 $ 36,197 Wildwood Office Park: Atlanta, GA 2300 Windy Ridge Parkway 30339-5671 IBM (2002/2012) 99,233 $ 77,645 $ 63,158 12/1/05 Profit Recovery Group 72,191 $ 48,692 7.56% (2005/2010)(16) Manhattan Associates, LLC 63,296 (2002/2007) Financial Services Corporation 62,928 (2006/2011)(16) Computer Associates 62,445 (2005/2010) Life Office Management Associates 56,652 (2005/2010) Docucomp (2002/2007) 55,396 Chevron USA (2005) 51,415 2500 Windy Ridge Parkway 30339-5683 Coca-Cola Enterprises Inc. 171,037 $ 29,876 $ 22,578 12/15/05 (2003/2008) $ 17,508 7.45% Cousins Properties Incorporated 43,888 (2003) 3200 Windy Hill Road 30339-5609 IBM (2006/2011) 418,333 $ 85,615 $ 67,034 1/1/07 PriceWaterhouseCoopers 69,108 $ 58,906 8.23% (2009/2014) W.H. Smith Inc. 41,858 (2002/2007) 4100 and 4300 Wildwood Parkway 30339-8400 Georgia-Pacific 250,000 $ 29,914 $ 28,272 4/1/12 Corporation (2012/2017) $ 25,532 7.65% (17)(18) 4200 Wildwood Parkway 30339-8402 General Electric (3)(2014/2024) 260,000 $ 36,989 $ 42,787 3/31/14 $ 34,203 6.78%
Percentage Description, Year Rentable Leased Average Location Development Company's Square Feet as of 2000 and Completed Venture Ownership and Acres March 15, Economic Zip Code or Acquired Partner Interest as Noted 2001 Occupancy - ----------- ----------- ------- --------- ----------- ---------- --------- Office (Continued) - ------------------ 3301 Windy Ridge Parkway 30339-5685 1984 N/A 100% 107,000 100% 100% 10 Acres 3100 Windy Hill Road 30339-5605 1983 N/A 100%(19) 188,000 100% 100% 13 Acres Bank of America Plaza Atlanta, GA 30308-2214 1992 Bank of America (3) 50% 1,261,000 100% 100% 4 Acres Gateway Village Charlotte, NC 28202-1125 (8) Bank of America (3) 50% 1,065,000 100% 13%(22) 8 Acres The Pinnacle Atlanta, GA 30326-1234 1999 LORET 50% 423,000 98% 92% Holdings, L.L.L.P. 4 Acres Two Live Oak Center Atlanta, GA 30326-1234 1997 LORET 50% 278,000 100% 99% Holdings, L.L.L.P. 2 Acres 1155 Perimeter Center West Atlanta, GA 30338-5416 (8) J. P. Morgan (3) 50% 362,000 100% 34%(23) 6 Acres
Adjusted Cost and Adjusted Cost Less Debt Description, Major Depreciation Maturity Location Major Tenants (lease Tenants' and and and expiration/options Rentable Amortization Debt Interest Zip Code expiration) Sq. Feet (1) Balance Rate - ------------ -------------------- -------- ------------- ------- -------- Office (Continued) - ------------------ 3301 Windy Ridge Parkway 30339-5685 Indus International, Inc. 107,000 $ 10,954 $ 0 N/A (2012/2017) $ 5,853 3100 Windy Hill Road 30339-5605 IBM (2006) 188,000 $ 17,005 (19) $ 0 N/A $ 14,284 (19) Bank of America Plaza Atlanta, GA 30308-2214 Bank of America (3) 572,742 $223,686 $ 0 (21) N/A(21) (2012/2042) $164,157 Troutman Sanders 224,181 (2007/2017) Ernst & Young LLP 211,211 (2007/2017)(20) Paul Hastings (2012/2017)(20) 92,224 Hunton & Williams 91,103 (2004/2009) Gateway Village Charlotte, NC 28202-1125 Bank of America (2015/2035) 1,065,000 $173,281 $140,618 1/2/02 $172,705 LIBOR (as defined) +.50% The Pinnacle Atlanta, GA 30326-1234 Merrill Lynch (2010/2011) 72,866 $ 91,759 $ 69,304 12/31/09 A.T. Kearney (2009/2019) 47,866 $ 83,907 7.11% PaineWebber (2013/2018)(17) 47,631 Two Live Oak Center Atlanta, GA 30326-1234 SYNAVANT Inc. 75,484 $ 48,844 $ 29,194 12/31/09 (2007/2017) $ 40,480 7.90% Chubb & Son, Inc. (3) 48,520 (2007/2017) 1155 Perimeter Center West Atlanta, GA 30338-5416 Mirant Corporation (2015) 360,395 $ 57,498 $ 0 N/A $ 56,772
Percentage Description, Year Rentable Leased Average Location Development Company's Square Feet as of 2000 and Completed Venture Ownership and Acres March 15, Economic Zip Code or Acquired Partner Interest as Noted 2001 Occupancy - ----------- ----------- ------- --------- ----------- ---------- --------- Office (Continued) - ------------------ Ten Peachtree Place Atlanta, GA 30309-3814 1991 Coca-Cola (3) 50%(6) 259,000 100% 100% 5 Acres John Marshall-II Suburban Washington, D.C. 22102-3802 1996 CarrAmerica Realty 50% 224,000 100% 100% Corporation (3) 3 Acres Austin Research Park - Building III Austin, TX 78759-2314 (8) CommonWealth 50% 174,000 100% (8) Pacific, LLC 4 Acres and CalPERS Austin Research Park - Building IV Austin, TX 78759-2314 (8) CommonWealth 50% 184,000 100% (8) Pacific, LLC 7 Acres and CalPERS First Union Tower Greensboro, NC 27401-2167 1990 Prudential 11.50%(6) 322,000 90% 89% 1 Acre Grandview II Birmingham, AL 35243-1930 1998 Prudential 11.50%(6) 149,000 100% 100% 8 Acres 100 North Point Center East Suburban Atlanta, GA 30022-4885 1995 Prudential 11.50%(6) 128,000 95% 100% 7 Acres 200 North Point Center East Suburban Atlanta, GA 30022-4885 1996 Prudential 11.50%(6) 130,000 95% 99% 9 Acres
Adjusted Cost and Adjusted Cost Less Debt Description, Major Depreciation Maturity Location Major Tenants (lease Tenants' and and and expiration/options Rentable Amortization Debt Interest Zip Code expiration) Sq. Feet (1) Balance Rate - ------------ -------------------- -------- ------------- ------- -------- Office (Continued) - ------------------ Ten Peachtree Place Atlanta, GA 30309-3814 Coca-Cola (3) (2001) 259,000 $ 22,902 $ 16,393 11/30/01 (24) $ 18,058 8.00% John Marshall-II Suburban Washington, D.C. 22102-3802 Booz-Allen & Hamilton 224,000 $ 29,781 $ 21,426 4/1/13 (2011/2016) $ 24,071 7.00% Austin Research Park - Building III Austin, TX 78759-2314 Charles Schwab & Co., Inc. 174,000 $ 12,328 $ 0 N/A (2011/2031) (8) (8) Austin Research Park - Building IV Austin, TX 78759-2314 Charles Schwab & Co., Inc. 184,000 $ 11,118 $ 0 N/A (2012/2032) (8) (8) First Union Tower Greensboro, NC 27401-2167 Smith Helms Mullis & 70,360 $ 53,663 $ 0 N/A Moore (2010/2015) $ 41,945 Fist Union Bank (3) 62,622 (2009/2019) Grandview II Birmingham, AL 35243-1930 Protective Life (2005/2011) (25) 65,164 $ 23,094 $ 0 N/A Daniel Realty Company (2008) 23,440 $ 19,956 100 North Point Center East Suburban Atlanta, GA 30022-4885 Schweitzer-Mauduit 32,696 $ 24,327 $ 11,888 (26) 8/1/07 International, Inc. (2007/2012) $ 18,572 7.86% Conseco Finance Inc. 21,914 (2006/2011)(17) 200 North Point Center East Suburban Atlanta, GA 30022-4885 Alltel Telecom Information 48,168 $ 21,735 $ 11,888 (26) 8/1/07 Services, Inc. (2001) $ 16,947 7.86% Motorola, Inc. (2001/2011) 22,897 APAC Teleservices, Inc. 22,409 (2004/2009)
Percentage Description, Year Rentable Leased Average Location Development Company's Square Feet as of 2000 and Completed Venture Ownership and Acres March 15, Economic Zip Code or Acquired Partner Interest as Noted 2001 Occupancy - ----------- ----------- ------- --------- ----------- ---------- --------- Medical Office - -------------- Northside/Alpharetta I Suburban Atlanta, GA 30005-3707 1998 N/A 100% 103,000 100% 100% 1 Acre (27) Suburban Atlanta, GA 30005-3707 1999 N/A 100% 198,000 74% 60% 2 Acres (27) Meridian Mark Plaza Atlanta, GA 30342-1613 1999 N/A 100% 159,000 99% 90% 3 Acres AtheroGenics Suburban Atlanta, GA 30004-2148 1999 N/A 100% 50,000 100% 100% 4 Acres Crawford Long Medical Office Building Atlanta, GA 30308-9999 (8) Emory University 50% 366,000 51%(8) (8) (29) Presbyterian Medical Plaza at University Charlotte, NC 28233-3549 1997 Prudential 11.50%(6) 69,000 100% 100% 1 Acre (30) Retail Centers - -------------- Presidential MarketCenter Suburban Atlanta, GA 30278-2149 1994, N/A 100% 490,000 98% 87% 1996 66 acres overall of and 2000 of which 97% Company 374,000 of Company owned and 49 acres owned are owned by the Company
Adjusted Cost and Adjusted Cost Less Debt Description, Major Depreciation Maturity Location Major Tenants (lease Tenants' and and and expiration/options Rentable Amortization Debt Interest Zip Code expiration) Sq. Feet (1) Balance Rate - ------------ -------------------- -------- ------------- ------- -------- Medical Office - -------------- Northside/Alpharetta I Suburban Atlanta, GA 30005-3707 Northside Hospital (3)(2013) 37,387 $ 15,677 $ 10,247 1/1/06 $ 14,082 7.70% Northside/Alpharetta II Suburban Atlanta, GA 30005-3707 Northside Hospital (3)(2019)(28) 64,588 $ 17,809 $ 0 N/A $ 17,061 Meridian Mark Plaza Atlanta, GA 30342-1613 Northside Hospital (3) 39,071 $ 24,804 $ 25,441 10/01/10 (2013/2023) $ 24,119 8.27% Scottish Rite Hospital for 22,035 Crippled Children, Inc. (2003/2008) AtheroGenics Suburban Atlanta, GA 30004-2148 AtheroGenics (2019/2029) 50,000 $ 7,355 $ 0 N/A $ 6,544 Crawford Long Medical Office Building Atlanta, GA 30308-9999 Emory University 118,005(8) $ 7,594 $ 0 N/A (2017/2047)(8) (8) Presbyterian Medical Plaza at University Charlotte, NC 28233-3549 Novant Health, Inc. 63,862 $ 8,600 $ 0 N/A (2012/2027)(31) $ 7,752 Retail Centers - -------------- Presidential MarketCenter Suburban Atlanta, GA 30278-2149 Target (32) N/A $ 28,309 $ 0 N/A Publix Super Market 56,146 $ 24,435 (2019/2044) Carmike Cinemas (3)(2023/2033) 44,565 Bed, Bath & Beyond (2008/2024) 35,127 T.J. Maxx (2004/2014) 32,000 Office Depot, Inc. (2011/2026) 31,628 Ross (2012/2032) 30,464 Marshalls (2010/2025) 30,000 Gap (2006/2016) 12,000
Percentage Description, Year Rentable Leased Average Location Development Company's Square Feet as of 2000 and Completed Venture Ownership and Acres March 15, Economic Zip Code or Acquired Partner Interest as Noted 2001 Occupancy - ----------- ----------- ------- --------- ----------- ---------- --------- Retail Centers (Continued) - -------------------------- The Avenue of the Peninsula Rolling Hills Estates, CA 90274-3664 2000 N/A 100% 369,000 83% 59%(33) 14 Acres Perimeter Expo Atlanta, GA 30338-1519 1993 N/A 100% 291,000 100% 100% 19 acres overall of of which 100% of Company 176,000 and Company owned 10 acres are owned owned by the Company The Avenue East Cobb Suburban Atlanta, GA 30062-8197 1999 N/A 100% 225,000 100% 91% 30 Acres Salem Road Station Suburban Atlanta, GA 30016-1863 2000 N/A 100% 67,000 81%(8) 21%(34) 13 Acres Mira Mesa MarketCenter Suburban San Diego, CA 92126-2960 2000 Prudential 88.50%(6) 447,000 100% 56%(35) 40 Acres
Adjusted Cost and Adjusted Cost Less Debt Description, Major Depreciation Maturity Location Major Tenants (lease Tenants' and and and expiration/options Rentable Amortization Debt Interest Zip Code expiration) Sq. Feet (1) Balance Rate - ------------ -------------------- -------- ------------- ------- -------- Retail Centers (Continued) - -------------------------- The Avenue of the Peninsula Rolling Hills Estates, CA 90274-3664 Regal Cinema (2015/2030) 55,673 $ 84,017 $ 0 N/A Saks & Company (2019/2055) 42,404 $ 82,069 Ice Chalet (2001) 14,068 Restoration Hardware (2010/2020) 11,000 Banana Republic (3)(2005/2015) 9,705 Gap (2005/2015) 9,000 Perimeter Expo Atlanta, GA 30338-1519 The Home Depot Expo (32) N/A $ 19,816 $ 20,361 8/15/05 Marshalls (2014/2029) 36,598 $ 16,907 8.04% Best Buy (2014/2029) 36,000 Linens `N Things (2014/2024) 30,351 Office Max (2013/2033) 23,500 The Sport Shoe (2004/2014) 14,348 Gap's Old Navy Store 13,939 (2002/2012) The Avenue East Cobb Suburban Atlanta, GA 30062-8197 Borders, Inc. (2015/2030) 24,882 $ 39,675 $ 38,902 8/1/10 Bed, Bath & Beyond (2010/2025) 21,007 $ 36,827 8.39% Gap (2005/2015) 19,434 Talbot's (2010/2020) 12,905 Pottery Barn (3)(2006/2012) 10,000 Banana Republic (3)(2005/2015) 8,009 Salem Road Station Suburban Atlanta, GA 30016-1863 Publix Super Market 44,270 $ 6,327 $ 0 N/A (2020/2040) $ 6,285 Mira Mesa MarketCenter Suburban San Diego, CA 92126-2960 Home Depot (2020/2045) 105,764 $ 46,821 $ 0 N/A Edwards Theaters (2020/2035) 94,041 $ 46,116 Albertsons (2020/2060) 55,489 Ross (2010/2025) 30,187 Barnes & Noble Superstores, Inc. 26,566 (2015/2030) Gap's Old Navy Store (2005/2015) 22,529 Long's Drugs (2021/2041) 21,018
Percentage Description, Year Rentable Leased Average Location Development Company's Square Feet as of 2000 and Completed Venture Ownership and Acres March 15, Economic Zip Code or Acquired Partner Interest as Noted 2001 Occupancy - ----------- ----------- ------- --------- ----------- ---------- --------- Retail Centers (Continued) - -------------------------- The Avenue Peachtree City Suburban Atlanta, GA 30269-3120 (8) Prudential 88.50%(6) 167,000 56%(8) (8) 18 Acres The Shops at World Golf Village St. Augustine, FL 32092-2724 1999 W.C. Bradley Co. 50% 80,000 78% 52% 3 Acres North Point MarketCenter Suburban Atlanta, GA 30202-4889 1994/1995 Prudential 11.50%(6) 517,000 100% 99% 60 Acres (36) of which 401,000 and 49 acres are owned by CP Venture Two LLC Greenbrier MarketCenter Chesapeake, VA 23327-2840 1996 Prudential 11.50%(6) 493,000 99% 100% 44 Acres
Adjusted Cost and Adjusted Cost Less Debt Description, Major Depreciation Maturity Location Major Tenants (lease Tenants' and and and expiration/options Rentable Amortization Debt Interest Zip Code expiration) Sq. Feet (1) Balance Rate - ------------ -------------------- -------- ------------- ------- -------- Retail Centers (Continued) - -------------------------- The Avenue Peachtree City Suburban Atlanta, GA 30269-3120 Harry's in a Hurry (2016/2031)(8) 13,656(8) $ 15,002 $ 0 N/A Gap (2012/2022)(8) 10,800(8) (8) The Shops at World Golf Village St. Augustine, FL 32092-2724 Bradley Specialty Retailing, 31,044 $ 22,529 $ 0 N/A Inc. (2013/2023) $ 21,018 North Point MarketCenter Suburban Atlanta, GA 30202-4889 Target (32) N/A $ 56,850 $ 27,611 7/15/05 Babies "R" Us (2011/2031) 50,275 $ 51,793 8.50% Media Play (2010/2025) 48,884 Marshalls (2010/2025) 40,000 Rhodes (2011/2021) 40,000 Linens `N Things (2005/2025) 35,000 United Artists (2014/2034) 34,733 Circuit City (2015/2030) 33,420 PETsMART (2009/2029) 25,465 Gap's Old Navy Store 20,000 (2006/2011) Greenbrier MarketCenter Chesapeake, VA 23327-2840 Target (2016/2046) 117,220 $ 51,210 $ 0 N/A Harris Teeter, Inc. (2016/2036) 51,806 $ 47,157 Best Buy (2015/2030) 45,106 Bed, Bath & Beyond 40,484 (2012/2027) Babies "R" Us (2006/2021) 40,000 Stein Mart, Inc. (2006/2026) 36,000 Barnes & Noble Superstores, 29,974 Inc. (2011/2026) PETsMART (2011/2031) 26,040 Office Max (2011/2026) 23,484 Gap's Old Navy Store 14,000 (2002/2012)
Percentage Description, Year Rentable Leased Average Location Development Company's Square Feet as of 2000 and Completed Venture Ownership and Acres March 15, Economic Zip Code or Acquired Partner Interest as Noted 2001 Occupancy - ----------- ----------- ------- --------- ----------- ---------- --------- Retail Centers (Continued) - -------------------------- Los Altos MarketCenter Long Beach, CA 90815-3126 1996 Prudential 11.50%(6) 258,000 100% 100% 19 Acres of which 157,000 and 17 Acres are owned by CP Venture Two LLC Mansell Crossing Phase II Suburban Atlanta, GA 30202-4822 1996 Prudential 11.50%(6) 103,000 91% 100% 13 Acres Stand Alone Retail Sites Adjacent to Company's Office and Retail Projects - ------------------------------------------------------------------------- Wildwood Office Park Suburban Atlanta, GA 30339-5671 1985-1993 IBM 50% 14 Acres 100% 100% North Point Suburban Atlanta, GA 30202-4885 1993 N/A 100% 24 Acres 100% 100%
Adjusted Cost and Adjusted Cost Less Debt Description, Major Depreciation Maturity Location Major Tenants (lease Tenants' and and and expiration/options Rentable Amortization Debt Interest Zip Code expiration) Sq. Feet (1) Balance Rate - ------------ -------------------- -------- ------------- ------- -------- Retail Centers (Continued) - -------------------------- Los Altos MarketCenter Long Beach, CA 90815-3126 Sears (32) N/A $ 32,807 $ 0 N/A Circuit City (3)(2017/2037) 38,541 $ 30,492 Borders, Inc. (2017/2037) 30,000 Bristol Farms (3)(2012/2032) 28,200 CompUSA, Inc. (2011/2021) 25,620 Sav-on Drugs (3)(2016/2026) 16,914 Mansell Crossing Phase II Suburban Atlanta, GA 30202-4822 Bed Bath & Beyond 40,787 $ 12,450 $ 0 N/A (2012/2027) $ 11,597 Goody's Family Clothing, 32,144 Inc. (2009/2027) Rooms To Go (2016/2036) 21,000 Stand Alone Retail Sites Adjacent to Company's Office and Retail Projects - ------------------------------------------------------------------------- Wildwood Office Park Suburban Atlanta, GA 30339-5671 N/A N/A $ 8,629 $ 0 N/A $ 6,894 North Point Suburban Atlanta, GA 30202-4885 N/A N/A $ 3,692 $ 0 N/A $ 3,550
(1) Cost as shown in the accompanying table includes deferred leasing and financing costs and other related assets. For each of the following projects: 2300 and 2500 Windy Ridge Parkway, 3200 Windy Hill Road, 4100 and 4300 Wildwood Parkway, 4200 Wildwood Parkway and Wildwood Stand Alone Retail Lease Sites, the cost shown is what the cost would be if Wildwood Associates' land cost were adjusted downward to the Company's lower basis in the land it contributed to Wildwood Associates. (2) Approximately .18 acres of the total 4 acres of land at Inforum is under a ground lease expiring 2068. (3) Actual tenant or venture partner is affiliate of entity shown. (4) Turner Broadcasting has the right to terminate their lease in 2002 upon payment of significant cancellation penalties. (5) 103,656 square feet of this lease of 101 Independence Center expires in 2010. Additionally, the tenant has the right to terminate increments of space each year beginning in 2005 with 18 months' notice. (6) See "Major Properties" - "101 Second Street," " 55 Second Street," "Cousins/Cerritos I, LLC" (AT&T Wireless Services Headquarters), "Cousins/Daniel, LLC," "CP Venture Two LLC and CP Venture Three LLC," "Ten Peachtree Place" and "CP Venture Two LLC" where these ventures' preferences and/or terms are discussed. (7) 101 Second Street became partially operational in April 2000. Thus, economic occupancy does not include a full year of operations. (8) Project was under construction and/or lease-up as of December 31, 2000. In certain situations, lease expiration dates are based upon estimated commencement dates and square footage is estimated. (9) AT&T Wireless Services Headquarters and Cerritos Corporate Center - Phase II are located on a total of 9 acres which are subject to a ground lease expiring in 2034, with an option to renew through 2087. (10) The Points at Waterview was purchased on December 28, 2000. Therefore, economic occupancy was not calculated and no depreciation and amortization was recorded in 2000. Additionally, acreage includes a pad of land upon which an approximately 60,000 rentable square foot building could be developed. (11) 600 University Park Place became partially operational in June 2000. Thus, economic occupancy does not include a full year of operations. (12) 1900 Duke Street became partially operational in October 2000. Thus, economic occupancy does not include a full year of operations. (13) 555 North Point Center East became partially operational in February 2000. Thus, economic occupancy does not include a full year of operations. (14) 44,844 square feet of this lease of 555 North Point Center East expires in 2009, with an option to extend the lease to 2014. (15) One Georgia Center was purchased on December 1, 2000. Therefore, economic occupancy was not calculated for 2000. Additionally, acreage includes a pad of land upon which an approximately 288,000 rentable square foot building could be developed. (16) 9,615 square feet of the Profit Recovery Group lease of 2300 Windy Ridge Parkway expires in 2002 and 1,556 square feet of the Financial Services Corporation lease of 2300 Windy Ridge Parkway expires in 2001. (17) Georgia-Pacific Corporation, PaineWebber and Conseco Finance Inc. have the right to terminate their leases in 2007, 2008 and 2002, respectively, upon payment of significant cancellation penalties. (18) Georgia-Pacific Corporation has the option to purchase the building on its lease expiration date for a price of $33,750,000. (19) See "Major Properties" - "Wildwood Office Park" where the accounting for the 3100 Windy Hill Road Building is discussed. (20) Ernst & Young LLP has a cancellation right on 23,036 square feet of this lease of Bank of America Plaza in 2003, if notice is received in 2002, and Paul Hastings has a cancellation right on 12,812 square feet and 20,574 square feet in 2005 and 2006, respectively. (21) See "Major Properties" - "Bank of America Plaza" where debt on Bank of America Plaza is discussed. (22) Gateway Village became partially operational in November 2000. Thus, economic occupancy does not include a full year of operations. (23) 1155 Perimeter Center West became partially operational in January 2000. Thus, economic occupancy does not include a full year of a fully operational property. (24) Maturity of the Ten Peachtree Place mortgage debt is extendible to December 31, 2008. Rate becomes floating after November 30, 2001. (25) Protective Life has the right to cancel 13,052 square feet of this lease of Grandview II in 2003. (26) 100 North Point Center East and 200 North Point Center East were financed together with one non-recourse mortgage note payable. For purposes of this schedule the total debt has been allocated 50% to each building. (27) Northside/Alpharetta I and II are located on 1 acre and 2 acres subject to ground leases, which expire in 2058 and 2060, respectively. (28) 17,444 square feet of this lease of Northside/Alpharetta II expires in 2009. (29) The Crawford Long Medical Office Building is being developed on top of a building within the Crawford Long Hospital campus. The Company has received a fee simple interest in the air rights above this building in order to develop the medical office building. (30) Presbyterian Medical Plaza at University is located on 1 acre which is subject to a ground lease expiring in 2057. (31) Novant Health, Inc. has the option to renew 23,359 rentable square feet through 2027 of this lease of Presbyterian Medical Plaza at University, with the option to renew the balance through 2022. (32) This anchor tenant owns its own space. (33) The Avenue of the Peninsula became partially operational in May 2000. Thus, economic occupancy does not include a full year of operations. (34) Salem Road Station became partially operational in October 2000. Thus, economic occupancy does not include a full year of operations. (35) Mira Misa MarketCenter became partially operational in May 2000. Thus, economic occupancy does not include a full year of operations. (36) North Point MarketCenter includes approximately 4 outparcels which are ground leased to freestanding users.
Land Held for Investment and Future Development (excluding Retail Outparcels) Developable Company's Adjusted Land Area Joint Venture Ownership Cost Debt Description, Location and Zoned Use Year Acquired (Acres)(1) Partner Interest ($ in thousands) Balances - ----------------------------------- ------------- ----------- ------------- --------- ---------------- -------- Wildwood Office Park Suburban Atlanta, Georgia Office and Commercial 1971-1989 130 N/A 100% $ 6,327 $ 0 Office and Commercial 1971-1982 34 IBM 50% $10,061(2) $ 0 North Point Land (Georgia Highway 400 & Haynes Bridge Road) (3) Suburban Atlanta, Georgia Office and Commercial - East 1970-1985 13 N/A 100% $ 917 $ 0 Office and Commercial - West 1970-1985 217 N/A 100% $ 7,678 $ 0 Temco Associates (Paulding County) Suburban Atlanta, Georgia 1991 (5) Temple-Inland 50% $13,001(5) $ 0 Inc. (4)
(1) Based upon management's estimates. (2) For the portion of the Wildwood Office Park land owned by a joint venture, the cost shown is what the cost would be if the venture's land cost were adjusted downward to the Company's lower basis in the land it contributed to the venture. The adjusted cost excludes building predevelopment costs, net, of $1,079,000. (3) The North Point property is located both east and west of Georgia Highway 400. Development had been mainly concentrated on the land located east of Georgia Highway 400, until July 1998 when the Company commenced construction of the first building, AtheroGenics, on the west side. The land located east of Georgia Highway 400 surrounds North Point Mall, a 1.3 million square foot regional mall on a 100 acre site which the Company sold in 1988. (4) Joint venture partner is an affiliate of the entity shown. (5) Temco Associates has an option through March 2006, with no carrying costs, to acquire the fee simple interest in approximately 9,600 acres in Paulding County, Georgia (northwest of Atlanta, Georgia). The partnership also has an option to acquire interests in a timber rights only lease covering approximately 22,000 acres. This option also expires in March 2006, with the underlying lease expiring in 2025. The options may be exercised in whole or in part over the option period and the option price on the fee simple land is $985 per acre on January 1, 2001, escalating at 6% on January 1 of each succeeding year during the term of the option. During 2000, 1999 and 1998, approximately 734, 640 and 328 acres, respectively, of the option related to the fee simple interest was exercised. In 2000, approximately 461 acres were simultaneously sold for gross profits of $1,546,000 and approximately 264 acres were acquired for the development of the Bentwater residential community. Approximately 1,735 lots will be developed within Bentwater on an approximate total of 1,290 acres, the remainder of which will be acquired as needed through exercises of the option related to the fee simple interest. The remaining 9 acres were being held for sale or future development. In 1999, approximately 466 acres were simultaneously sold for gross profits of $2,458,000 and approximately 174 acres were acquired for development of Bentwater. In 1998, approximately 83 acres were simultaneously sold for gross profits of approximately $192,000. The Cobb County YMCA had a three year option to purchase approximately 38 acres out of the total acres of the options exercised in 1998, which they exercised in December 1999. The remaining 207 acres were deeded in early 1999 to a golf course developer who developed the golf course within Bentwater. Temco Associates sold 219 and 106 lots within Bentwater in 2000 and 1999, respectively. Major Properties - ---------------- General - ------- This section describes the major operating properties in which the Company has an interest either directly or indirectly through joint venture arrangements. A "negative investment" in a joint venture results from distributions of capital to the Company, if any, exceeding the sum of (i) the Company's contributions of capital and (ii) reported earnings (losses) of the joint venture allocated to the Company. "Investment" in a joint venture means the book value of the Company's investment in the joint venture. Wildwood Office Park - -------------------- Wildwood Office Park is a 285 acre Class A commercial development in Atlanta, Georgia, master planned by I.M. Pei, which includes 8 office buildings containing 2,441,000 rentable square feet. The property is zoned for office, institutional, commercial and residential use. Approximately 105 acres in the park are owned by, or committed to be contributed to, Wildwood Associates (see below), including approximately 34 acres of land held for future development. The Company owns 100% of the 130 acre balance of the land available for future development. Located in Atlanta's northwest commercial district, just north of the Interstate 285/Interstate 75 intersection, Wildwood features convenient access to all of Atlanta's major office, commercial and residential districts. The Wildwood complex overlooks the Chattahoochee River and borders 1,200 acres of national forest, thus providing an urban office facility in a forest setting. Wildwood Associates. Wildwood Associates is a joint venture formed in 1985 between the Company and IBM. The Company and IBM each have a 50% interest in Wildwood Associates. At December 31, 2000, the Company's investment in Wildwood Associates and a related partnership, which included the cost of the land the Company is committed to contribute to Wildwood Associates, was a negative investment of approximately $39,081,000. Wildwood Associates owns the 3200 Windy Hill Road Building (687,000 rentable square feet), the 2300 Windy Ridge Parkway Building (635,000 rentable square feet), the 2500 Windy Ridge Parkway Building (314,000 rentable square feet), the 4100 and 4300 Wildwood Parkway Buildings (250,000 rentable square feet in total) and the 4200 Wildwood Parkway Building (260,000 rentable square feet). As of March 15, 2001, these buildings were all 100% leased. Wildwood Associates also owns 14 acres leased to two banking facilities and five restaurants. Other Buildings in Wildwood Office Park. Wildwood Office Park also contains the 3301 Windy Ridge Parkway Building, a 107,000 rentable square foot office building located on approximately 10 acres which is wholly owned by the Company. The 3301 Windy Ridge Parkway Building was 100% leased as of March 15, 2001. In addition, the 3100 Windy Hill Road Building, a 188,000 rentable square foot corporate training facility occupies a 13-acre parcel of land which is wholly owned by the Company. The training facility improvements were sold in 1983 to a limited partnership of private investors, at which time the Company received a leasehold mortgage note. The training facility land was simultaneously leased to the partnership for thirty years, along with certain equipment for varying periods. The training facility had been leased by the partnership to IBM through November 30, 1998. Effective January 1, 1997, the IBM lease was extended eight years beyond its previous expiration, to November 30, 2006. Based on the economics of the lease, the Company will receive substantially all of the economic risks and rewards from the property through the term of the IBM lease. In addition, the Company will receive substantially all of the future economic risks and rewards from the property beyond the IBM lease because of the short term remaining on the land lease (7 years) and the large mortgage note balance ($25.9 million) that would have to be paid off, with interest, in that 7 year period before the limited partnership would receive any significant benefit. Therefore, effective January 1, 1997, the $17,005,000 balance of the mortgage note and land was reclassified to Operating Properties, and revenues and expenses (including depreciation) from that point forward have been recorded as if the building were owned by the Company. North Point - ----------- North Point is a mixed-use commercial development located in north central suburban Atlanta, Georgia, off of Georgia Highway 400, a six lane state highway that runs from downtown Atlanta to the northern Atlanta suburbs. The Company owns either directly or through a venture arrangement approximately 134 and 221 acres located on the east and west sides of Georgia Highway 400, respectively. Development had been mainly concentrated on the land located east of Georgia Highway 400 until July 1998 when the Company commenced construction of the first building, AtheroGenics, on the west side. Planning and infrastructure work has also begun for additional development on the west side property. The east side land surrounds North Point Mall, a 1.3 million square foot regional mall on a 100-acre site which the Company sold in 1988. The following describes the various components of North Point. North Point MarketCenter and Mansell Crossing Phase II. North Point MarketCenter, which is 100% leased as of March 15, 2001, is a 517,000 square foot retail power center (of which 401,000 square feet are owned in a venture) located adjacent to North Point Mall. Mansell Crossing Phase II, which was 91% leased as of March 15, 2001, is an approximately 103,000 square foot expansion of an existing retail power center, previously developed by the Company for a third party. These two centers are located on 49 and 13 acres of land, respectively, at North Point. Both of these properties were contributed to the Prudential venture in November 1998 (see Note 5). North Point Center East. The Company owns either directly or indirectly through a venture arrangement four Class A office buildings located adjacent to North Point Mall and the retail properties discussed above. 100 North Point Center East, 200 North Point Center East, 333 North Point Center East and 555 North Point Center East which were completed in 1995, 1996, 1998 and 2000, respectively, are 128,000, 130,000, 129,000 and 152,000 rentable square feet, respectively. 555 North Point Center East became partially operational for financial reporting purposes in February 2000. These four office buildings are located on 35 acres of land at North Point. 100 and 200 North Point Center East were contributed to the Prudential venture in November 1998 (see Note 5). 100, 200 and 555 North Point Center East were all 95% leased as of March 15, 2001 and 333 North Point Center East was 100% leased as of March 15, 2001. AtheroGenics. The Company owns directly AtheroGenics, an approximately 50,000 rentable square foot office and laboratory building located on a 4-acre site on the west side of Georgia Highway 400. AtheroGenics is 100% leased as of March 15, 2001. Other North Point Property. Approximately 24 acres of the North Point land are ground leased in 1 to 5 acre sites to freestanding users. These 24 acres were 100% leased as of March 15, 2001. The remaining approximately 230 developable acres at North Point are 100% owned by the Company. Approximately 13 acres of this land are located on the east side of Georgia Highway 400 and are zoned for office use. Approximately 217 acres of the land are located on the west side of Georgia Highway 400 and are zoned for office, institutional and light industrial use. Other Operational Office Properties - ----------------------------------- Bank of America Plaza. Bank of America Plaza is a Class A, 55-story, approximately 1.3 million rentable square foot office tower designed by Kevin Roche and is located on approximately 4 acres of land between the midtown and downtown districts of Atlanta, Georgia. The building, which was completed in 1992, was 100% leased as of March 15, 2001. An affiliate of Bank of America leases approximately 46% of the rentable square feet. Bank of America Plaza was developed by CSC Associates, L.P. ("CSC"), a joint venture formed by the Company and a wholly owned subsidiary of Bank of America, each as 50% partners. CSC's net income or loss and cash distributions are allocated to the partners based on their percentage interests (50% each). At December 31, 2000, the Company's investment in CSC was approximately $90,959,000. Cousins LORET Venture, L.L.C.("Cousins LORET"). Effective July 31, 1997, Cousins LORET was formed between the Company and LORET Holdings, L.L.L.P. ("LORET"), each as 50% members. LORET contributed Two Live Oak Center, a 278,000 rentable square foot office building located in Atlanta, Georgia, which was renovated in 1997, and was 100% leased as of March 15, 2001. Two Live Oak Center was contributed subject to a 7.90% $30 million non-recourse ten year mortgage note payable. LORET also contributed an adjacent 4-acre site on which construction of The Pinnacle, a 423,000 rentable square foot Class A office building, commenced in August 1997 and was completed in November 1998. The Pinnacle became partially operational for financial reporting purposes in March 1999 and as of March 15, 2001 was 98% leased. In May 1998, Cousins LORET completed the $70 million non-recourse financing of The Pinnacle at an interest rate of 7.11% and a term of twelve years. This financing was completely funded on December 30, 1998. The Company contributed $25 million of cash to Cousins LORET to match the value of LORET's agreed-upon equity. At December 31, 2000, the Company had an investment in Cousins LORET of approximately $12,932,000. Ten Peachtree Place. Ten Peachtree Place is a 20-story, 259,000 rentable square foot Class A office building located in midtown Atlanta, Georgia. Completed in 1991, this structure was designed by Michael Graves and is currently 100% leased to Coca-Cola. Approximately four acres of adjacent land, currently used for surface parking, are available for future development. Ten Peachtree Place is owned by Ten Peachtree Place Associates, a general partnership between the Company (50%) and a wholly owned subsidiary of Coca-Cola (50%). The partnership acquired the property in 1991 for a nominal cash investment, subject to a ten-year purchase money note. This 8% purchase money note had an outstanding balance of $16,393,000 at December 31, 2000. If the purchase money note is paid in accordance with its terms, it will amortize to approximately $15.3 million ($59 per rentable square foot) over the ten-year term of the Coca-Cola lease, at which time Coca-Cola is entitled to receive the preferred return described below, and the property may be sold, released, or returned to the lender under the purchase money note for $1.00 without penalty or any further liability to the Company for the indebtedness. At December 31, 2000, the Company had an investment in Ten Peachtree Place Associates of approximately $255,000. The Company anticipates that Ten Peachtree Place Associates will generate approximately $400,000 per year of cash flows from operating activities net of note principal amortization during the ten-year lease. The partnership agreement generally provides that each of the partners is entitled to receive 50% of cash flows from operating activities net of note principal amortization (excluding any sale proceeds) for ten years, after which time the Company is entitled to 15% of cash flows (including any sale proceeds) and its partner is entitled to receive 85% of cash flows (including any sale proceeds), until the two partners have received a combined distribution of $15.3 million, after which time each partner is entitled to receive 50% of cash flows (including any sale proceeds). CC-JM II Associates. This joint venture was formed in 1994 between the Company and an affiliate of CarrAmerica Realty Corporation, each as 50% general partners, to develop and own John Marshall-II, a 224,000 square foot Class A office building in suburban Washington, D.C. The building is 100% leased until 2011 to Booz-Allen & Hamilton, an international consulting firm, as a part of its corporate headquarters campus. At December 31, 2000, the Company had an investment in CC-JM II Associates of approximately $2,129,000. Cousins/Daniel, LLC. Cousins/Daniel, LLC ("Cousins/Daniel") was formed in 1997 between Cousins, Inc. (a wholly owned subsidiary of Cousins) and Daniel Realty Company ("Daniel"). The purpose of this venture is to develop certain projects proposed by Daniel and selected by the Company. Daniel's economic rights are limited to development fees, leasing fees, management fees and certain incentive interests. These incentive interests include a residual interest in the cash flow and a residual interest in capital proceeds. All projects undertaken within the venture are pooled for purposes of calculating the aforementioned residuals. This venture is treated as a consolidated entity in the Company's financial statements. In June 1998, Cousins/Daniel acquired Lakeshore Park Plaza, an approximately 190,000 rentable square foot office building and also purchased the land for and commenced construction of, 600 University Park Place, an approximately 123,000 rentable square foot Class A office building which became partially operational for financial reporting purposes in June 2000. Both of these office buildings are located in Birmingham, Alabama, and are 89% and 91% leased, respectively, as of March 15, 2001. Cousins/Cerritos I, LLC. On November 18, 1998, the Company entered into Commonwealth/Cousins I, LLC (the "Venture") with CommonWealth for the purposes of developing AT&T Wireless Services Headquarters, a 222,000 rentable square foot Class A office building in suburban Los Angeles, California, which was 100% leased as of March 15, 2001. CommonWealth transferred all rights in the project and in exchange received an initial credit to its capital account of $4,980,039, which is equal to a 49.9% interest in the Venture. The Company contributed $5,000,000 as its capital contribution for a 50.1% interest in the Venture. The Venture is treated as a consolidated entity in the Company's financial statements. The Venture entered into a put and call agreement which CommonWealth exercised in January 2001 to sell its entire interest for approximately $7.5 million. Upon completion of the buyout, the Venture's name was changed to Cousins/Cerritos I, LLC, which is 100% owned by the Company. CP Venture Two LLC. On November 12, 1998, the Company entered into a venture agreement with Prudential. On such date the Company contributed its interest in nine properties to the venture and Prudential contributed cash (see Note 5). The nine properties contributed included four office properties, 100 and 200 North Point Center East as discussed above, First Union Tower and Grandview II and one medical office property, Presbyterian Medical Plaza at University. First Union Tower is a Class A office building containing approximately 322,000 rentable square feet, located on one acre of land in downtown Greensboro, North Carolina. First Union Tower was 90% leased as of March 15, 2001. Grandview II is an approximately 149,000 rentable square foot Class A office building in Birmingham, Alabama, which was owned by Cousins/Daniel, LLC prior to being contributed. Grandview II was approximately 100% leased as of March 15, 2001. Presbytrian Medical Plaza at University, an approximately 69,000 rentable square foot medical office building in Charlotte, North Carolina, was approximately 100% leased as of March 15, 2001. See the Other Retail Properties section where retail properties contributed to the Prudential venture are discussed. In December 2000, CP Venture Three LLC acquired One Georgia Center, an approximately 363,000 rentable square foot office building in midtown Atlanta, Georgia. The purchase price of the building was approximately $35.8 million. 101 Second Street. Cousins/Myers Second Street Partners, L.L.C., a venture formed in 1997 between the Company and Myers Second Street Company LLC ("Myers"), purchased approximately 1 acre of undeveloped land in downtown San Francisco, California upon which 101 Second Street, an approximately 387,000 rentable square foot Class A office building was developed. 101 Second Street was 92% leased as of March 15, 2001. Myers' economic rights are limited to development fees and certain incentive interests, which include a residual interest in the cash flow and capital proceeds. This venture is treated as a consolidated entity in the Company's financial statements. 333 John Carlyle. In January 1998, the Company purchased the land for and commenced construction of 333 John Carlyle, an approximately 153,000 rentable square foot Class A office building in suburban Washington, D.C. 333 John Carlyle became partially operational for financial reporting purposes in May 1999 and was 93% leased as of March 15, 2001. 1900 Duke Street. In January 1999, the Company purchased the land for and commenced construction of 1900 Duke Street, an approximately 97,000 rentable square foot Class A office building in suburban Washington, D.C. which is 97% leased as of March 15, 2001. Inforum. In June 1999, the Company acquired Inforum, a 988,000 rentable square foot office building in downtown Atlanta, Georgia, for $71 million by completing a tax-deferred exchange with the proceeds ($69 million) from the sale of the Company's 50% interest in Haywood Mall. Inforum was 99% leased as of March 15, 2001. 101 Independence Center. In December 1996, the Company acquired 101 Independence Center, a 526,000 rentable square foot Class A office building (including an underground parking garage and an adjacent parking deck) located at the intersection of Trade and Tryon Streets in the central business district of Charlotte, North Carolina. 101 Independence Center was 99% leased as of March 15, 2001. 615 Peachtree Street. In August 1996, the Company acquired 615 Peachtree Street, a 149,000 rentable square foot 12-story downtown Atlanta office building, located across from Bank of America Plaza. 615 Peachtree Street was 95% leased as of March 15, 2001. The Points at Waterview. In December 2000, the Company purchased The Points at Waterview, an approximately 200,000 rentable square foot office building in suburban Dallas, Texas. The purchase price was approximately $25.4 million which includes an adjacent parcel of land on which a second building of approximately 60,000 rentable square feet can be developed. One Ninety One Peachtree Tower. One Ninety One Peachtree Tower is a 50-story, Class A office tower located in downtown Atlanta, Georgia that was completed in December 1990. One Ninety One Peachtree Tower, which contains 1.2 million rentable square feet, was designed by John Burgee Architects, with Phillip Johnson as design consultant. One Ninety One Peachtree Tower was developed on approximately 2 acres of land, of which approximately 1.5 acres is owned and approximately one-half acre under the parking facility is leased for a 99-year term expiring in 2087 with a 99-year renewal option. One Ninety One Peachtree Tower was approximately 97% leased at March 15, 2001. C-H Associates, Ltd. ("C-H Associates"), a partnership formed in 1988 between CREC (49%), Hines Peachtree Associates Limited Partnership (49%) and Peachtree Palace Hotel, Ltd. (2%), owns a 20% interest in the partnership that owns One Ninety One Peachtree Tower. C-H Associates' 20% ownership of One Ninety One Peachtree Tower results in an effective 9.8% ownership interest by CREC, subject to a preference in favor of the majority partner, in the One Ninety One Peachtree Tower project. The balance of the One Ninety One Peachtree Tower project was owned by DIHC Peachtree Associates, which was an affiliate of Dutch Institutional Holding Company, but was acquired by Cornerstone Properties, Inc. in October 1997. In June 2000, Equity Office Properties Trust acquired Cornerstone Properties, Inc. Through C-H Associates, CREC received 50% of the development fees from the One Ninety One Peachtree Tower project. In addition, CREC owns a 50% interest in two general partnerships which receive fees from leasing and managing the One Ninety One Peachtree Tower project. The One Ninety One Peachtree Tower project was funded substantially by debt until March 1993, at which time the predecessor owner contributed equity in the amount of $145,000,000 which repaid approximately one-half of the debt. Subsequent to the equity contribution, C-H Associates had been entitled to a priority distribution of $250,000 per year (of which CREC was entitled to receive $112,500) for seven years beginning in 1993 and ending in 2000. The equity contributed is entitled to a preferred return at a rate increasing over the first 14 years from 5.5% to 11.5% (payable after CREC's priority return); at December 31, 2000, the cumulative undistributed preferred return was $13,485,701. After the owner, currently Equity Office Properties Trust, recovers its preferred return, the partners share in any operating cash flow distributions in accordance with their percentage interests. The project is subject to long-term debt of approximately $142,350,000 at December 31, 2000. At December 31, 2000, the Company had a negative investment of approximately $91,000 in the One Ninety One Peachtree Tower project. Operational Medical Office Properties - ------------------------------------- Medical Office Properties. In June 1998, the Company acquired Northside/Alpharetta I, an approximately 106,000 rentable square foot medical office building in suburban Atlanta, Georgia. Northside/Alpharetta I was 100% leased as of March 15, 2001. Northside/Alpharetta II, an approximately 198,000 rentable square foot medical office building in suburban Atlanta, Georgia was 73% leased as of March 15, 2001. Additionally, Meridian Mark Plaza, an approximately 159,000 rentable square foot medical office building in Atlanta, Georgia, was 100% leased at March 15, 2001. Office Properties Under Development - ----------------------------------- 55 Second Street. In November 1999, the Company formed Cousins/Myers II, LLC, a venture with Myers Bay Area Company LLC ("Myers Bay"), which purchased approximately 1 acre of fully entitled undeveloped land in downtown San Francisco, California and began development of 55 Second Street, an approximately 375,000 rentable square foot Class A office building which was 87% leased as of March 15, 2001. Myers Bay's economic rights are limited to development fees and certain incentive interests, which include a residual interest in the cash flow and capital proceeds. The venture is treated as a consolidated entity in the Company's financial statements. Charlotte Gateway Village, LLC ("Gateway"). On December 14, 1998, the Company and a wholly owned subsidiary of Bank of America Corporation formed Gateway for the purpose of developing and owning Gateway Village, a 1.1 million rentable square foot Class A office building complex in downtown Charlotte, North Carolina. Construction of Gateway Village commenced in July 1998. The project, which is 100% leased to Bank of America Corporation with a term of 15 years, became partially operational for financial reporting purposes in November 2000. In December 1998, Gateway completed construction financing of up to $190 million for Gateway Village. The note bears an interest rate of LIBOR (adjusted for certain reserve requirements) plus .50% and matures January 2, 2002. No amounts were drawn on the note until 1999. This note is fully exculpated and is supported by a lease to Bank of America Corporation with a term of 15 years. Pursuant to the Gateway operating agreement, this construction financing will be replaced with permanent long-term financing which will be fully amortized at the end of the Bank of America Corporation lease. At December 31, 2000, the Company had an investment in Gateway of approximately $21,489,000. Gateway's net income or loss and cash distributions are allocated to the members as follows: first to the Company so that it receives a cumulative compounded return equal to 11.46% on its capital contributions, second to a wholly owned subsidiary of Bank of America Corporation until it has received an amount equal to the aggregate amount distributed to the Company and then 50% to each member. 285 Venture, LLC. In March 1999, the Company and a commingled trust fund advised by J.P. Morgan Investment Management Inc. (the "J.P. Morgan Fund") formed 285 Venture, LLC, each as 50% partners, for the purpose of developing 1155 Perimeter Center West, an approximately 362,000 rentable square foot Class A office building complex in Atlanta, Georgia. 1155 Perimeter Center West became partially operational for financial reporting purposes in January 2000 and was 100% leased as of March 15, 2001. The J.P. Morgan Fund contributed the approximately 6-acre site upon which 1155 Perimeter Center West was developed. The land had an agreed-upon value of approximately $5.4 million which the Company matched with a cash contribution. At December 31, 2000, the Company's investment in 285 Venture, LLC was approximately $30,693,000. CPI/FSP I, L.P. In May 2000, CPI/FSP I, L.P., a 50% limited partnership, was formed. 50% of the venture is owned by the Company through a general partnership, Cousins Austin GP, Inc. (1%), and a limited partnership, Cousins Austin, Inc. (49%). The remaining 50% is owned by a general partnership, Fifth Street Properties - Austin, LLC (1%), and a limited partnership, Fifth Street Properties - Austin Investor, LLC (49%), which are both owned by CommonWealth Pacific LLC and CalPERS. CPI/FSP I, L.P. is currently developing Austin Research Park - Buildings III and IV, two approximately 174,000 and 184,000 rentable square foot office buildings, respectively, in Austin, Texas, which are both 100% leased as of March 15, 2001. Additionally, the venture owns an adjacent pad for future development of an approximately 184,000 rentable square foot office building. Cerritos Corporate Center - Phase II. In June 2000, the Company commenced construction of Cerritos Corporate Center - Phase II, an approximately 104,000 rentable square foot office building in suburban Los Angeles, California, adjacent to the Company's AT&T Wireless Services Headquarters office building, which was 100% leased to AT&T Wireless Services as of March 15, 2001. Medical Office Properties Under Development ------------------------------------------- Crawford Long - CPI, LLC. In October 1999, the Company formed Crawford Long - CPI, LLC with Emory University, each as 50% partners, for the purpose of developing and owning the Crawford Long Medical Office Building, an approximately 366,000 rentable square foot medical office building located in midtown Atlanta, Georgia. The building is currently under development and was 49% leased as of March 15, 2001. Other Retail Properties - ----------------------- Operational Retail Properties. The Company owns six retail centers which were fully operational for financial reporting purposes as of December 31, 2000. Perimeter Expo is a 291,000 square foot retail power center (of which the Company owns 176,000 square feet) in Atlanta, Georgia which was 100% leased (Company owned) as of March 15, 2001. Presidential MarketCenter is a 490,000 square foot retail power center (of which the Company owns 374,000 square feet) in suburban Atlanta, Georgia which was 97% leased (Company owned) as of March 15, 2001. The Avenue East Cobb is a 225,000 square foot open-air retail specialty center in suburban Atlanta, Georgia which was 100% leased as of March 15, 2001. The Avenue of the Peninsula is a 369,000 square foot open-air retail specialty center in Rolling Hills Estates, California, in the greater Los Angeles metropolitan area which was 83% leased as of March 15, 2001. The Avenue of the Peninsula became partially operational for financial reporting purposes in May 2000. Salem Road Station, an approximately 67,000 square foot neighborhood retail center in suburban Atlanta, Georgia, became partially operational for financial reporting purposes in October 2000 and was 81% leased as of March 15, 2001. The Company also owned Colonial Plaza MarketCenter, which was fully operational as of December 31, 2000, but was subsequently sold (see "Retail Properties Sold" below). CP Venture Two LLC and CP Venture Three LLC. In November 1998, the Company contributed both Greenbrier MarketCenter and Los Altos MarketCenter in addition to North Point MarketCenter and Mansell Crossing II (see North Point discussion) to the aforementioned Prudential venture (see Note 5). Greenbrier MarketCenter is a 493,000 square foot retail power center which is located in Chesapeake, Virginia and was 99% leased as of March 15, 2001. Los Altos MarketCenter is a 258,000 square foot retail power center (of which the Prudential venture owns 157,000 square feet) which is located in Long Beach, California and was 100% leased as of March 15, 2001. Mira Mesa MarketCenter, an approximately 447,000 square foot retail power center in suburban San Diego, California, became partially operational for financial reporting purposes in April 2000 and was 100% leased as of March 15, 2001. Mira Mesa MarketCenter is owned by CP Venture Three LLC (see Note 5). The Avenue Peachtree City, a 167,000 square foot open-air retail specialty center in suburban Atlanta, Georgia owned by CP Venture Three LLC (see Note 5), is currently under development and was 56% leased as of March 15, 2001. Brad Cous Golf Venture, Ltd. Effective January 31, 1998, the Company formed the Brad Cous Golf Venture, Ltd. with the W.C. Bradley Co., each as 50% partners, for the purpose of developing and owning The Shops at World Golf Village, an approximately 80,000 square foot retail center located adjacent to the PGA Hall of Fame in St. Augustine, Florida. The Shops at World Golf Village became partially operational for financial reporting purposes in April 1999 and was 78% leased as of March 15, 2001. At December 31, 2000, the Company had an investment in Brad Cous Golf Venture, Ltd. of approximately $5,608,000. Retail Properties Sold. On March 28, 2000, the Company sold Laguna Niguel Promenade, an approximately 154,000 square foot retail center in Laguna Niguel, California for $26.7 million, which was approximately $6.4 million over the cost of the center. Including depreciation recapture of approximately $.8 million, the net gain on the sale was approximately $7.2 million. The net proceeds from the sale were placed in escrow pending a tax-deferred exchange to be identified by the Company. On February 21, 2001, the Company sold Colonial Plaza MarketCenter, an approximately 480,000 square foot retail center in Orlando, Florida for $54 million, which was approximately $10.8 million over the cost of the center. Including depreciation recapture of approximately $6.2 million, the net gain on the sale was approximately $17 million. Residential Lots Under Development - ---------------------------------- As of December 31, 2000, CREC and Temco Associates owned the following parcels of land which are being developed into residential communities ($ in thousands):
Estimated Total Lots Initial on Land Year Currently Lots Remaining Carrying Description Acquired Owned (1) Sold to Date Lots Value ----------- -------- --------- ------------ --------- -------- CREC ---- Brown's Farm West Cobb County Suburban Atlanta, GA 1993 213 213 0 $ 0 Apalachee River Club Gwinnett County Suburban Atlanta, GA 1994 186 186 0 0 Echo Mill West Cobb County Suburban Atlanta, GA 1994 541 441 100 784 Barrett Downs Forsyth County Suburban Atlanta, GA 1994 144 144 0 0 Bradshaw Farm Cherokee County Suburban Atlanta, GA 1994 533 533 0 0 Alcovy Woods Gwinnett County Suburban Atlanta, GA 1996 162 115 47 1,305 River's Call East Cobb County Suburban Atlanta, GA 1971-1989 100 8 92 912 ----- ----- ----- ------- Total 1,879 1,640 239 $ 3,001 ===== ===== ===== ======= Temco Associates ---------------- Bentwater Paulding County Suburban Atlanta, GA 1998 1,735(2) 325 1,410 $13,001 ======== ===== ===== =======
(1) Includes lots sold to date. (2) See discussion of Temco Associates below. Land Held for Investment and Future Development - ----------------------------------------------- In addition to the various land parcels located adjacent to operating properties or projects under construction discussed above, the Company owns or controls the following significant land holdings either directly or indirectly through venture arrangements. The Company intends to convert these land holdings to income-producing usage or to sell portions of land holdings as opportunities arise over time. Temco Associates. Temco Associates was formed in March 1991 as a partnership between CREC (50%) and a subsidiary of Temple-Inland Inc. (50%). Temco Associates has an option through March 2006, with no carrying costs, to acquire the fee simple interest in approximately 9,600 acres in Paulding County, Georgia (northwest of Atlanta, Georgia). The partnership also has an option to acquire interests in a timber rights only lease covering approximately 22,000 acres. This option also expires in March 2006, with the underlying lease expiring in 2025. The options may be exercised in whole or in part over the option period and the option price on the fee simple land is $985 per acre on January 1, 2001, escalating at 6% on January 1 of each succeeding year during the term of the option. During 2000, 1999 and 1998, approximately 734, 640 and 328 acres, respectively, of the option related to the fee simple interest was exercised. In 2000, approximately 461 acres were simultaneously sold for gross profits of $1,546,000 and approximately 264 acres were acquired for the development of the Bentwater residential community. Approximately 1,735 lots will be developed within Bentwater on an approximate total of 1,290 acres, the remainder of which will be acquired as needed through exercises of the option related to the fee simple interest. The remaining 9 acres were being held for sale or future development. In 1999, approximately 466 acres were simultaneously sold for gross profits of $2,458,000 and approximately 174 acres were acquired for development of Bentwater. In 1998, approximately 83 acres were simultaneously sold for gross profits of approximately $192,000. The Cobb County YMCA had a three year option to purchase approximately 38 acres out of the total acres of the options exercised in 1998, which they exercised in December 1999. The remaining 207 acres were deeded in early 1999 to a golf course developer who developed the golf course within Bentwater. Temco Associates sold 219 and 106 lots within Bentwater in 2000 and 1999, respectively. Other Investments - ----------------- Air Rights Near the CNN Center. The Company owns a leasehold interest in the air rights over the approximately 365,000 square foot CNN Center parking facility in Atlanta, Georgia, adjoining the headquarters of Turner Broadcasting System, Inc. and Cable News Network. The air rights are developable for additional parking or office use. The Company's net carrying value of this interest is $0. Cousins Stone LP. Cousins Stone LP was formed on June 1, 1999 when CREC II's subsidiaries acquired Faison's 50% interest in Faison-Stone. CREC II's subsidiaries acquired an additional 25% interest in July 2000. Cousins Stone LP is a full-service real estate company headquartered in Dallas, Texas that specializes in third party property management, development and leasing of Class A office properties. At December 31, 2000, the Company had an investment in Cousins Stone LP of approximately $11,093,000. Effective February 28, 2001, CREC II's subsidiaries acquired the remaining 25% interest in Cousins Stone LP. Warrants to Purchase Stock in Other Companies - --------------------------------------------- Cypress Communications, Inc. In December 1999, the Company executed an Amended and Restated Master Communications License Transaction Agreement (the "Master Agreement") with Cypress Communications, Inc. ("Cypress") that provides for Cypress and the owner of each building subject to the Master Agreement to enter into a Communications License Agreement (an "Agreement") pursuant to which Cypress will have the non-exclusive right to access the risers and certain areas of certain of the Company's and its joint ventures' office and medical office buildings. Each Agreement allows Cypress to install equipment and wiring, at Cypress' sole cost and expense, and to offer a variety of telecommunication services to tenants of each of the applicable buildings. Each Agreement has a term of 5 years with an automatic renewal for another 5 years unless Cypress elects not to renew or Cypress fails to equip the applicable building with a server within 18 months of the execution of the Agreement. Pursuant to each Agreement, the Company receives a percentage of the revenue earned by Cypress from tenants and third parties who use the telecommunication services. In addition, the Company entered into a Stock Warrant Agreement with Cypress under which Cypress issued 248,441 warrants to the Company, each warrant entitling the owner to purchase one share of Cypress' common stock at an exercise price of $4.22 per share. On February 10, 2000, Cypress completed its initial public offering of 10 million shares of common stock. The warrants have not been exercised, and the underlying common stock has not been registered under the Securities Act of 1933 and is not required to be registered until 18 months after completion of the initial public offering. Effective February 10, 2000 (the date Cypress completed its initial public offering), the value of the warrants were recorded in both Other Assets and Deferred Income in the Company's Consolidated Balance Sheets. The value of the warrants of $566,000 was determined based on the difference between management's estimate of the fair market value of the warrants less the exercise price times the number of warrants granted. The Company early adopted SFAS No. 133 effective October 1, 2000 (see Note 1). Warrants are considered derivatives under this statement and, therefore, the warrants were marked-to-market which resulted in a reduction of net income of approximately $566,000 which was recorded as a cumulative effect of change in accounting principle in the Company's Consolidated Statements of Income. AtheroGenics, Inc. In July 1998, the Company received 50,000 warrants at an exercise price of $5.00 per share for the purchase of Series C Convertible Preferred Stock of AtheroGenics, Inc, the tenant which leases 100% of AtheroGenics and who completed an initial public offering on August 8, 2000. As the share price at December 31, 2000 equaled the warrant price, no adjustment was necessary pursuant to SFAS No. 133. Supplemental Financial and Leasing Information - ---------------------------------------------- Depreciation and amortization expense, net of minority interest's share, include the following components for the years ended December 31, 2000 and 1999 ($ in thousands):
2000 1999 Share of Share of Unconsolidated Unconsolidated Consolidated Joint Ventures Total Consolidated Joint Ventures Total ------------ -------------- ----- ------------ -------------- ----- Furniture, fixtures and equipment $ 799 $ 230 $ 1,029 $ 640 $ 101 $ 741 Deferred financing costs -- 1 1 -- 17 17 Goodwill and related business acquisition costs 300 -- 300 300 19 319 Building (including tenant first generation) 29,135 14,829 43,964 6,476 11,229 17,705 Tenant second generation 1,284 717 2,001 9,108 8,847 17,955 ------- ------- ------- ------- ------- ------- $31,518 $15,777 $47,295 $16,524 $20,213 $36,737 ======= ======= ======= ======= ======= =======
Exclusive of new developments and purchases of furniture, fixtures and equipment, the Company had the following capital expenditures for the years ended December 31, 2000 and 1999, including its share of unconsolidated joint ventures ($ in thousands):
2000 1999 Office Retail Total Office Retail Total ------ ------ ----- ------ ------ ----- Second generation related costs $3,239 $637 $3,876 $1,224 $208 $1,432 Building improvements 907 27 934 220 -- 220 ------ ---- ------ ------ ---- ------ Total $4,146 $664 $4,810 $1,444 $208 $1,652 ====== ==== ====== ====== ==== ======
Item 3. Legal Proceedings - --------------------------- No material legal proceedings are presently pending by or against the Company. Item 4. Submission of Matters to a Vote of Security Holders - ------------------------------------------------------------- (a) The Company held a Special Meeting of Shareholders on December 28, 2000. (b) Not applicable. (c) The following proposal was adopted by the Shareholders of the Company. A total of 31,329,373 votes were cast for the proposal, 5,549,230 votes were cast against the proposal and 117,766 votes were abstained: (i) The 1999 Incentive Stock Plan (the "Plan") was amended so as to increase the number of shares of common stock available under the Plan by 1.2 million shares. Item X. Executive Officers of the Registrant - ---------------------------------------------- The Executive Officers of the Registrant as of the date hereof are as follows: Name Age Office Held ---- --- ----------- Thomas G. Cousins 69 Chairman of the Board of Directors and Chief Executive Officer R. Dary Stone 47 President and Chief Operating Officer Tom G. Charlesworth 51 Executive Vice President and Chief Investment Officer Kelly H. Barrett 36 Senior Vice President and Chief Financial Officer George J. Berry 63 Senior Vice President Craig B. Jones 50 Senior Vice President and President of the Office Division John S. McColl 38 Senior Vice President - Office Division Joel T. Murphy 42 Senior Vice President and President of the Retail Division John L. Murphy 55 Senior Vice President - Office Division W. James Overton 54 Senior Vice President - Office Division Family Relationships: - --------------------- Lillian C. Giornelli, Mr. Cousins' daughter, is a director of the Company. There are no other family relationships among the current Executive Officers or Directors. Hugh L. McColl, Jr., John S. McColl's father, is a nominee for director at the Company's Annual Meeting of Stockholders on May 1, 2001. Term of Office: - --------------- The term of office for all officers expires at the annual directors' meeting, but the Board has the power to remove any officer at any time. Business Experience: - -------------------- Mr. Cousins has been the Chief Executive Officer of the Company since its inception. Mr. Stone joined the Company in June 1999 as President of Cousins Stone LP, a venture in which the Company had owned a 75% interest until February 28, 2001, when the Company purchased the remaining 25% interest. Prior to that he was founder and President of the predecessor to Cousins Stone LP, Faison-Stone. Mr. Stone was named President and Chief Operating Officer of the Company in February 2001. Mr. Charlesworth joined the Company in October 1992 and became Senior Vice President, Secretary and General Counsel in November 1992 and Executive Vice President and Chief Investment Officer in January 2001. Prior to that he worked for certain affiliates of Thomas G. Cousins as Chief Financial Officer and Legal Counsel. Ms. Barrett joined the Company in October 1992 as Vice President and Controller and became Senior Vice President - Finance of the Company in August 1997 and Chief Financial Officer in January 2001. Prior to that she was employed by Arthur Andersen LLP as an Audit Manager. Mr. Berry has been Senior Vice President since joining the Company in September 1990. Prior to that he was Commissioner of the State of Georgia's Department of Industry, Trade and Tourism from 1983 to 1990. Mr. Jones joined the Company in October 1992 and became Senior Vice President in November 1995 and President of the Office Division in September 1998. From 1987 until joining the Company, he was Executive Vice President of New Market Companies, Inc. and affiliates. Mr. McColl joined the Company in April 1996 as Vice President of the Office Division. He was promoted in May 1997 to Senior Vice President. Prior to that he was President of Hutchinson Capital Group, Inc. and an officer of Quest Capital Corp. Mr. Joel Murphy joined the Company in October 1992 and became Senior Vice President of the Company and President of the Retail Division in November 1995. From 1988 until joining the Company, he was Senior Vice President of New Market Companies, Inc. and affiliates. Mr. John Murphy has been Senior Vice President since joining the Company in December 1987. Mr. Overton has been Senior Vice President since joining the Company in September 1989. Prior to that he was employed by Hardin Construction Group, Inc. from 1972 to 1989, where he served as President from 1985 to 1989. PART II ------- Item 5. Market for Registrant's Common Stock and Related Security Holder Matters - -------------------------------------------------------------------------------- The information concerning the market prices for the Registrant's common stock and related stockholder matters appearing under the caption "Market and Dividend Information" on page 54 of the Registrant's 2000 Annual Report to Stockholders is incorporated herein by reference. Item 6. Selected Financial Data - ------------------------------- The information appearing under the caption "Five Year Summary of Selected Financial Data" on page 46 of the Registrant's 2000 Annual Report to Stockholders is incorporated herein by reference. Item 7. Management's Discussion and Analysis of Financial Condition and Results - -------------------------------------------------------------------------------- of Operations ------------- Management's Discussion and Analysis of Financial Condition and Results of Operations which appears on pages 47 through 53 of the Registrant' s 2000 Annual Report to Stockholders is incorporated herein by reference. Item 7a. Quantitative and Qualitative Disclosure about Market Risk - ------------------------------------------------------------------ Quantitative and Qualitative Disclosures about Market Risk, which appears on page 53 of the Registrant's 2000 Annual Report to Stockholders, is incorporated herein by reference. Item 8. Financial Statements and Supplementary Data - ---------------------------------------------------- The Consolidated Financial Statements and Notes to Consolidated Financial Statements of the Registrant and Report of Independent Public Accountants which appear on pages 25 through 46 of the Registrant's 2000 Annual Report to Stockholders are incorporated herein by reference. The information appearing under the caption "Selected Quarterly Financial Information (Unaudited)" on page 55 of the Registrant's 2000 Annual Report to Stockholders is incorporated herein by reference. Other financial statements and financial statement schedules required under Regulation S-X are filed pursuant to Item 14 of Part IV of this report. Item 9. Changes in and Disagreements with Accountants on Accounting and - -------------------------------------------------------------------------------- Financial Disclosure -------------------- Not applicable. PART III -------- Item 10. Directors and Executive Officers of the Registrant - -------------------------------------------------------------- The information concerning the Directors and Executive Officers of the Registrant that is required by this Item 10, except that which is presented in Item X in Part I above, is included under the captions "Directors and Executive Officers of the Company" on pages 2 through 9 and "Section 16(A) Beneficial Ownership Reporting Compliance" on page 27 of the Proxy Statement dated March 30, 2001 relating to the 2000 Annual Meeting of the Registrant's Stockholders, and is incorporated herein by reference. Item 11. Executive Compensation - ---------------------------------- The information appearing under the caption "Executive Compensation" on pages 9 through 12 (other than the Committee Report on Compensation) and "Compensation of Directors" on page 16 of the Proxy Statement dated March 30, 2001 relating to the 2000 Annual Meeting of the Registrant's Stockholders is incorporated herein by reference. Item 12. Security Ownership of Certain Beneficial Owners and Management - -------------------------------------------------------------------------- The information concerning security ownership of certain beneficial owners and management required by this Item 12 is included under the captions "Directors and Executive Officers of the Company" on pages 2 through 9 and "Principal Stockholders" on page 24 of the Proxy Statement dated March 30, 2001 relating to the 2000 Annual Meeting of the Registrant's Stockholders, and is incorporated herein by reference. Item 13. Certain Relationships and Related Transactions - ---------------------------------------------------------- The information concerning certain transactions required by this Item 13 is included under the caption "Certain Transactions" on pages 24 through 26 of the Proxy Statement dated March 30, 2001 relating to the 2000 Annual Meeting of the Registrant's Stockholders, and is incorporated herein by reference. PART IV ------- Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K - ---------------------------------------------------------------------------- (a) 1. Financial Statements -------------------------- A. The following Consolidated Financial Statements of the Registrant, together with the applicable Report of Independent Public Accountants, are contained on pages 25 through 46 of the Registrant's 2000 Annual Report to Stockholders and are incorporated herein by reference: Page Number in Annual Report ---------------- Consolidated Balance Sheets - December 31, 2000 and 1999 25 Consolidated Statements of Income for the Years Ended December 31, 2000, 1999 and 1998 26 Consolidated Statements of Stockholders' Investment for the Years Ended December 31, 2000, 1999 and 1998 27 Consolidated Statements of Cash Flows for the Years Ended December 31, 2000, 1999 and 1998 28 Notes to Consolidated Financial Statements December 31, 2000, 1999 and 1998 29 through 45 Report of Independent Public Accountants 46 B. The following Financial Statements, together with the applicable Report of Independent Auditors, of CSC Associates, L.P., a joint venture of the Registrant meeting the criteria for a significant subsidiary under the rules and regulations of the Securities and Exchange Commission, are filed as a part of this report. Page Number in Form l0-K ------------ Report of Independent Auditors F-1 Balance Sheets - December 31, 2000 and 1999 F-2 Statements of Operations for the Years Ended December 31, 2000, 1999 and 1998 F-3 Statements of Partners' Capital for the Years Ended December 31, 2000, 1999 and 1998 F-4 Statements of Cash Flows for the Years Ended December 31, 2000, 1999 and 1998 F-5 Notes to Financial Statements F-6 through December 31, 2000, 1999 and 1998 F-9 2. Financial Statement Schedules ----------------------------------- The following financial statement schedules, together with the applicable report of independent public accountants are filed as a part of this report. Page Number in Form l0-K ------------ A. Cousins Properties Incorporated and Consolidated Entities: Report of Independent Public Accountants on Schedule S-7 Schedule III- Real Estate and Accumulated Depreciation - December 31, 2000 S-8 through S-12 B. CSC Associates, L.P. Schedule III- Real Estate and Accumulated Depreciation - December 31, 2000 F-10 NOTE: Other schedules are omitted because of the absence of conditions under which they are required or because the required information is given in the financial statements or notes thereto. Item 14. Continued - --------------------- 3. Exhibits -------------- 3(a)(i) Articles of Incorporation of Registrant, as approved by the Stockholders on April 29, 1997, filed as Exhibit B to the Registrant's Proxy Statement dated April 29, 1997, and as amended by the Stockholders on April 21, 1998 as filed in the Registrant's Proxy Statement dated March 27, 1998, and incorporated herein by reference. 3(b) By-laws of Registrant, as approved by the Stockholders on April 30, 1990, and as further amended by the Stockholders on April 29, 1993, filed as Exhibit 4(b) to the Registrant's Form S-3 dated September 28, 1993, and incorporated herein by reference. 4(a) Dividend Reinvestment Plan as restated as of March 27, 1995, filed in the Registrant's Form S-3 dated March 27, 1995, and incorporated herein by reference. 10(a)(i) Cousins Properties Incorporated 1989 Stock Option Plan, as renamed the 1995 Stock Incentive Plan and approved by the Stockholders on May 6, 1996, filed as Exhibit A to the Registrant's Proxy Statement dated May 6, 1996, and as amended by the Stockholders on April 21, 1998, as filed in the Registrant's Proxy Statement dated March 27, 1998, and incorporated herein by reference. 10(a)(ii) Cousins Real Estate Corporation Stock Appreciation Right Plan, amended and restated as of March 15, 1993, filed as Exhibit 10(a)(ii) to the Registrant's Form 10-K for the year ended December 31, 1992, and incorporated herein by reference. 10(a)(iii) Cousins Properties Incorporated Stock Appreciation Right Plan, dated as of March 15, 1993, filed as Exhibit 10(a)(iii) to the Registrant's Form 10-K for the year ended December 31, 1992, and incorporated herein by reference. 10(a)(iv) Cousins Properties Incorporated 1999 Incentive Stock Plan, as amended and restated, approved by the Stockholders on December 28, 2000, filed as Annex A to the Registrant's Proxy Statement dated December 1, 2000, and incorporated herein by reference. 10(b)(i) Cousins Properties Incorporated Profit Sharing Plan as amended and restated effective as of January 1, 1996, filed as Exhibit 10(b)(i) to the Registrant's Form 10-K for the year ended December 31, 1995, and incorporated herein by reference. 10(b)(ii) Cousins Properties Incorporated Profit Sharing Trust Agreement as effective as of January 1, 1991, filed as Exhibit 10(b)(ii) to the Registrant's Form 10-K for the year ended December 31, 1991, and incorporated herein by reference. Item 14. Continued - --------------------- 10(d) Cousins Properties Incorporated Stock Plan for Outside Directors, as approved by the Stockholders on April 29, 1997, filed as Exhibit B to the Registrant's Proxy Statement dated April 29, 1997, and incorporated herein by reference. 13 Annual Report to Stockholders for the year ended December 31, 2000. 21 Subsidiaries of the Registrant. 23(a) Consent of Independent Public Accountants (Arthur Andersen LLP). 23(b) Consent of Independent Auditors (Ernst & Young LLP). (b) Reports on Form 8-K. -------------------------- There were no reports filed on Form 8-K in the quarter ended December 31, 2000. On March 9, 2001, the Company filed a Form 8-K specifying certain risk factors relating to the Company and its business. SIGNATURES ---------- Pursuant to the requirements of Section 13 or 15 (d) 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 ------------------------------- (Registrant) Dated: March 23, 2001 BY: /s/ Kelly H. Barrett ----------------------------------------- Kelly H. Barrett Senior Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the date indicated. Signature Capacity Date - --------- -------- ---- Principal Executive Officer: Chairman of the Board, March 23, 2001 Chief Executive Officer /s/ T.G. Cousins and Director - --------------------------- T. G. Cousins Principal Financial and Accounting Officer: Senior Vice President and March 23, 2001 /s/ Kelly H. Barrett Chief Financial Officer - -------------------------- Kelly H. Barrett Additional Directors: /s/ Richard W. Courts Director March 23, 2001 - ------------------------- Richard W. Courts, II /s/ Boone A. Knox Director March 23, 2001 - ------------------------- Boone A. Knox /s/ William Porter Payne Director March 23, 2001 - ------------------------- William Porter Payne /s/ R. Dary Stone Director March 23, 2001 - ------------------------- R. Dary Stone REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON SCHEDULE ---------------------------------------------------- To Cousins Properties Incorporated: We have audited in accordance with auditing standards generally accepted in the United States, the financial statements included in the Cousins Properties Incorporated annual report to stockholders incorporated by reference in this Form l0-K, and have issued our report thereon dated February 6, 2001. Our audit was made for the purpose of forming an opinion on those statements taken as a whole. The schedule listed in Item 14, Part (a) 2.A. is the responsibility of the Company's management and is presented for purposes of complying with the Securities and Exchange Commission's rules and is not part of the basic financial statements. This schedule has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, fairly states in all material respects the financial data required to be set forth therein in relation to the basic financial statements taken as a whole. ARTHUR ANDERSEN LLP Atlanta, Georgia February 6, 2001
SCHEDULE III (Page 1 of 5) COUSINS PROPERTIES INCORPORATED AND CONSOLIDATED ENTITIES REAL ESTATE AND ACCUMULATED DEPRECIATION DECEMBER 31, 2000 ($ in thousands) Column A Column B Column C Column D Column E -------- -------- -------- -------- -------- Costs Capitalized Gross Amount at Which Initial Cost Subsequent Carried at to Company to Acquisition December 31, 2000 ------------------- -------------------- ------------------------------ Carrying Costs Buildings Less Cost Land Buildings and Improve- of Sales and Land and Total Description Encumbrances Land Improvements ments and Other Improvements Improvements (a) - ----------- ------------ ---- ------------ ------- --------- ------------ ------------ ----- LAND HELD FOR INVESTMENT OR FUTURE DEVELOPMENT - ---------------------------------------------- North Point Property - Fulton Co., GA $ -- $ 10,294 $ -- $ 15,338 $(17,037) $ 8,595 $ -- $ 8,595 Salem Road Station Outparcels - Newton Co., GA -- 611 -- -- (315) 296 -- 296 Wildwood - Atlanta, GA -- 11,156 -- 4,847 (9,676) 6,327 -- 6,327 ---------------------------------------------------------------------------------------------- -- 22,061 -- 20,185 (27,028) 15,218 -- 15,218 ----------------------------------------------------------------------------------------------
Column F Column G Column H Column I -------- -------- -------- -------- Life on Which De- preciation Accumu- In 2000 lated Date of Income Deprecia- Construc- Date Statement Description tion (a) tion Acquired Is Computed - ----------- -------- --------- -------- ----------- LAND HELD FOR INVESTMENT OR FUTURE DEVELOPMENT - ---------------------------------------------- North Point Property - Fulton Co., GA $ -- -- 1970-1985 -- Salem Road Station Outparcels - Newton Co., GA -- -- 1999 -- Wildwood - Atlanta, GA -- -- 1971-1989 -- ------- -- -------
SCHEDULE III (Page 2 of 5) COUSINS PROPERTIES INCORPORATED AND CONSOLIDATED ENTITIES REAL ESTATE AND ACCUMULATED DEPRECIATION DECEMBER 31, 2000 ($ in thousands) Column A Column B Column C Column D Column E -------- -------- -------- -------- -------- Costs Capitalized Gross Amount at Which Initial Cost Subsequent Carried at to Company to Acquisition December 31, 2000 ------------------- -------------------- ---------------------------------- Carrying Costs Buildings Less Cost Land Buildings and Improve- of Sales and Land and Total Description Encumbrances Land Improvements ments and Other Improvements Improvements (a) - ----------- ------------ ---- ------------ ------- --------- ------------ ------------ ----- OPERATING PROPERTIES - -------------------- 101 Independence Center - Charlotte, NC $ 46,727 $ 11,096 $ 62,824 $ 3,043 $ -- $ 11,155 $ 65,808 $ 76,963 101 Second Street - San Francisco, CA 89,597 11,698 -- 78,375 7,504 11,698 85,879 97,577 333 John Carlyle - Washington, D.C. -- 5,371 -- 22,218 1,483 5,371 23,701 29,072 333 North Point Center East - Fulton Co., GA -- 551 -- 11,949 809 551 12,758 13,309 555 North Point Center East - Fulton Co., GA -- 368 -- 15,035 1,171 368 16,206 16,574 600 University Park Place - Birmingham, AL -- 1,899 -- 15,789 1,768 1,899 17,557 19,456 615 Peachtree Street - Atlanta, GA -- 4,740 7,229 1,274 -- 4,740 8,503 13,243 AT&T Wireless Services Headquarters - Los Angeles, CA -- -- -- 51,302 1,343 -- 52,645 52,645 Inforum - Atlanta, GA -- 5,226 67,370 13,487 -- 5,226 80,857 86,083 Lakeshore Park Plaza - Birmingham, AL 10,498 3,362 12,261 907 -- 3,362 13,168 16,530 One Georgia Center - Atlanta, GA -- 9,267 27,079 -- -- 9,267 27,079 36,346 The Points at Waterview - Collin Co., TX -- 2,558 22,910 -- -- 2,558 22,910 25,468 Wildwood - 3100 Windy Hill Road - Atlanta, GA -- -- 17,005 -- -- -- 17,005 17,005
Column F Column G Column H Column I -------- -------- -------- -------- Life on Which De- preciation Accumu- In 2000 lated Date of Income Deprecia- Construc- Date Statement Description tion (a) tion Acquired Is Computed - ----------- -------- --------- -------- ----------- OPERATING PROPERTIES - -------------------- 101 Independence Center - Charlotte, NC $ 12,254 -- 1996 25 Years 101 Second Street - San Francisco, CA 3,824 1998 1997 30 Years 333 John Carlyle - Washington, D.C. 1,803 1998 1998 30 Years 333 North Point Center East - Fulton Co., GA 2,242 1996 1996 30 Years 555 North Point Center East - Fulton Co., GA 862 1998 1998 30 Years 600 University Park Place - Birmingham, AL 717 1998 1998 30 Years 615 Peachtree Street - Atlanta, GA 2,525 -- 1996 15 Years AT&T Wireless Services Headquarters - Los Angeles, CA 3,005 1998 1998 30 Years Inforum - Atlanta, GA 10,249 -- 1999 25 Years Lakeshore Park Plaza - Birmingham, AL 1,125 -- 1998 30 Years One Georgia Center - Atlanta, GA 149 -- 2000 30 Years The Points at Waterview - Collin Co., TX -- -- 2000 25 Years Wildwood - 3100 Windy Hill Road - Atlanta, GA 2,721 1997 1997 25 Years
SCHEDULE III (Page 3 of 5) COUSINS PROPERTIES INCORPORATED AND CONSOLIDATED ENTITIES REAL ESTATE AND ACCUMULATED DEPRECIATION DECEMBER 31, 2000 ($ in thousands) Column A Column B Column C Column D Column E -------- -------- -------- -------- -------- Costs Capitalized Gross Amount at Which Initial Cost Subsequent Carried at to Company to Acquisition December 31, 2000 ------------------- -------------------- ---------------------------------- Carrying Costs Buildings Less Cost Land Buildings and Improve- of Sales and Land and Total Description Encumbrances Land Improvements ments and Other Improvements Improvements (a) - ----------- ------------ ---- ------------ ------- --------- ------------ ------------ ----- OPERATING PROPERTIES (Continued) - -------------------------------- Wildwood - 3301 Windy Ridge Parkway - Atlanta, GA -- 20 -- 9,418 1,516 1,439 9,515 10,954 AtheroGenics - Fulton Co., GA -- 200 -- 7,075 80 200 7,155 7,355 Meridian Mark Plaza - Atlanta, GA 25,441 2,200 -- 21,869 1,735 2,200 23,604 25,804 Northside/Alpharetta I - Fulton Co., GA 10,247 -- 15,577 100 -- -- 15,677 15,677 Northside/Alpharetta II - Fulton Co., GA -- -- -- 16,797 1,012 -- 17,809 17,809 The Avenue East Cobb - Cobb Co., GA 38,902 7,205 -- 30,588 1,882 7,205 32,470 39,675 The Avenue of the Peninsula - Rolling Hills Estates, CA -- 4,338 17,152 55,407 7,120 4,338 79,679 84,017 Colonial Plaza MarketCenter - Orlando, FL -- 8,500 -- 31,641 1,905 8,500 33,546 42,046 Mira Mesa MarketCenter - San Diego, CA -- 14,465 -- 29,941 2,415 14,465 32,356 46,821 North Point Stand Alone Retail Sites - Fulton Co., GA -- 4,559 -- 426 (1,293) 3,692 -- 3,692 Perimeter Expo - Atlanta, GA 20,361 8,564 -- 11,181 71 8,564 11,252 19,816 Presidential MarketCenter - Gwinnett Co., GA -- 3,956 -- 23,453 900 3,956 24,353 28,309
Column F Column G Column H Column I -------- -------- -------- -------- Life on Which De- preciation Accumu- In 2000 lated Date of Income Deprecia- Construc- Date Statement Description tion (a) tion Acquired Is Computed - ----------- -------- --------- -------- ----------- OPERATING PROPERTIES (Continued) - -------------------------------- Wildwood - 3301 Windy Ridge Parkway - Atlanta, GA 5,101 1984 1984 30 Years AtheroGenics - Fulton Co., GA 811 1998 1998 30 Years Meridian Mark Plaza - Atlanta, GA 1,686 1997 1997 30 Years Northside/Alpharetta I - Fulton Co., GA 1,595 -- 1998 25 Years Northside/Alpharetta II - Fulton Co., GA 747 1998 1998 30 Years The Avenue East Cobb - Cobb Co., GA 2,848 1998 1998 30 Years The Avenue of the Peninsula - Rolling Hills Estates, CA 1,949 1998 1998 30 Years Colonial Plaza MarketCenter - Orlando, FL 6,059 1995 1995 30 Years Mira Mesa MarketCenter - San Diego, CA 705 1999 1999 25 Years North Point Stand Alone Retail Sites - Fulton Co., GA 142 -- 1970-1985 Various Perimeter Expo - Atlanta, GA 2,909 1993 1993 30 Years Presidential MarketCenter - Gwinnett Co., GA 3,874 1993-2000 1993 30 Years
SCHEDULE III (Page 4 of 5) COUSINS PROPERTIES INCORPORATED AND CONSOLIDATED ENTITIES REAL ESTATE AND ACCUMULATED DEPRECIATION DECEMBER 31, 2000 ($ in thousands) Column A Column B Column C Column D Column E -------- -------- -------- -------- -------- Costs Capitalized Gross Amount at Which Initial Cost Subsequent Carried at to Company to Acquisition December 31, 2000 ------------------- -------------------- ---------------------------------- Carrying Costs Buildings Less Cost Land Buildings and Improve- of Sales and Land and Total Description Encumbrances Land Improvements ments and Other Improvements Improvements (a) - ----------- ------------ ---- ------------ ------- --------- ------------ ------------ ----- OPERATING PROPERTIES (Continued) - -------------------------------- Miscellaneous -- 398 145 76 (474) -- 145 145 ---------------------------------------------------------------------------------------------- 241,773 110,541 249,552 451,351 30,947 110,754 731,637 842,391 ---------------------------------------------------------------------------------------------- PROJECTS UNDER CONSTRUCTION - --------------------------- 55 Second Street - San Francisco, CA $ -- $ 22,141 $ -- $ 20,039 $ 2,800 $ 24,318 $ 20,662 $ 44,980 1900 Duke Street - Washington, D.C. -- 3,469 -- 15,578 1,116 3,469 16,694 20,163 Cerritos Corporate Center - Phase II - Los Angeles, CA -- -- -- 7,303 136 -- 7,439 7,439 The Avenue Peachtree City - Fayette Co., GA -- 3,510 -- 10,749 743 3,643 11,359 15,002 Salem Road Station - Newton Co., GA -- 396 -- 5,519 371 411 5,875 6,286 ---------------------------------------------------------------------------------------------- -- 29,516 -- 59,188 5,166 31,841 62,029 93,870 ---------------------------------------------------------------------------------------------- RESIDENTIAL LOTS UNDER DEVELOPMENT - ---------------------------------- Echo Mill - Cobb Co., GA $ -- $ 5,298 $ -- $ 9,485 $(13,999) $ 784 $ -- $ 784 Alcovy Woods - Gwinnett Co., GA -- 1,142 -- 2,978 (2,815) 1,305 -- 1,305 River's Call Land - Cobb Co., GA -- 1,059 -- 2,612 (2,759) 912 -- 912 ---------------------------------------------------------------------------------------------- -- 7,499 -- 15,075 (19,573) 3,001 -- 3,001 ---------------------------------------------------------------------------------------------- $241,773 $169,617 $249,552 $545,799 $(10,488) $160,814 $793,666 $954,480 =============================================================================================
Column F Column G Column H Column I -------- -------- -------- -------- Life on Which De- preciation Accumu- In 2000 lated Date of Income Deprecia- Construc- Date Statement Description tion (a) tion Acquired Is Computed - ----------- -------- --------- -------- ----------- OPERATING PROPERTIES (Continued) - -------------------------------- OPERATING PROPERTIES (Continued) Miscellaneous 130 -- 1974-1984 Various ------- 70,032 ------- PROJECTS UNDER CONSTRUCTION - --------------------------- 55 Second Street - San Francisco, CA $ -- 1999 1999 -- 1900 Duke Street - Washington, D.C. -- 1998 1998 -- Cerritos Corporate Center - Phase II - Los Angeles, CA -- 2000 2000 -- The Avenue Peachtree City - Fayette Co., GA -- 1999 1999 -- Salem Road Station - Newton Co., GA -- 1999 1999 -- ------- -- ------- RESIDENTIAL LOTS UNDER DEVELOPMENT - ---------------------------------- Echo Mill - Cobb Co., GA $ -- 1994 1994 -- Alcovy Woods - Gwinnett Co., GA -- 1996 1996 -- River's Call Land - Cobb Co., GA -- 2000 1971-1989 -- ------- -- ------- $70,032 =======
SCHEDULE III (Page 5 of 5) COUSINS PROPERTIES INCORPORATED AND CONSOLIDATED ENTITIES REAL ESTATE AND ACCUMULATED DEPRECIATION DECEMBER 31, 2000 ($ in thousands) NOTES: (a) Reconciliations of total real estate carrying value and accumulated depreciation for the three years ended December 31, 2000 are as follows: Real Estate Accumulated Depreciation ------------------------------ --------------------------- 2000 1999 1998 2000 1999 1998 ---- ---- ---- ---- ---- ---- Balance at beginning of period $768,783 $462,047 $449,619 $35,929 $23,422 $33,617 Additions during the period: Improvements and other capitalized costs 213,783 350,114 213,495 -- -- -- Provision for depreciation -- -- -- 34,103 12,507 13,648 ------------------------------ --------------------------- 213,783 350,114 213,495 34,103 12,507 13,648 ------------------------------ --------------------------- Deductions during the period: Cost of real estate contributed -- -- (185,044) -- -- (23,843) Cost of real estate sold (28,086) (43,378) (16,023) -- -- -- (28,086) (43,378) (201,067) -- -- (23,843) ------------------------------ --------------------------- Balance at close of period $954,480 $768,783 $462,047 $70,032 $35,929 $23,422 ============================== ===========================
REPORT OF INDEPENDENT AUDITORS ------------------------------ To the Partners of CSC Associates, L.P. (A Limited Partnership) We have audited the accompanying balance sheets of CSC Associates, L.P. (the Partnership) as of December 31, 2000 and 1999, and the related statements of operations, partners' capital, and cash flows for each of the three years in the period ended December 31, 2000. Our audits also include the financial statement schedule of CSC Associates, L.P. listed in the Index at Item 14(a). These financial statements and schedule are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of CSC Associates, L.P. as of December 31, 2000 and 1999, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2000, in conformity with accounting principles generally accepted in the United States. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein. ERNST & YOUNG LLP Atlanta, Georgia February 2, 2001
CSC ASSOCIATES, L.P. -------------------- BALANCE SHEETS -------------- DECEMBER 31, 2000 AND 1999 -------------------------- ($ in thousands) ASSETS ------ 2000 1999 -------- -------- REAL ESTATE ASSETS: Building and improvements, including land and land improvements of $22,818 in 2000 and 1999 $213,317 $212,308 Accumulated depreciation (53,367) (46,795) -------------------- 159,950 165,513 -------------------- CASH AND CASH EQUIVALENTS 982 2,269 -------------------- NOTE RECEIVABLE (Note 4) 68,789 71,399 -------------------- OTHER ASSETS: Deferred expenses, net of accumulated amortization of $6,082 and $5,156 in 2000 and 1999, respectively 5,881 6,418 Straight-line rent, interest and other receivables (Note 3) 11,558 11,674 Furniture, fixtures and equipment, net of accumulated depreciation of $80 and $63 in 2000 and 1999, respectively 69 76 Other, net of accumulated amortization of $181 and $139 in 2000 and 1999 (Note 6) 842 884 -------------------- Total other assets 18,350 19,052 -------------------- $248,071 $258,233 ==================== LIABILITIES AND PARTNERS' CAPITAL --------------------------------- NOTE PAYABLE (Note 4) $ 68,789 $ 71,399 ACCOUNTS PAYABLE AND ACCRUED LIABILITIES 2,199 3,149 -------------------- Total liabilities 70,988 74,548 -------------------- PARTNERS' CAPITAL (Note 1) 177,083 183,685 -------------------- $248,071 $258,233 ==================== The accompanying notes are an integral part of these balance sheets.
CSC ASSOCIATES, L.P. -------------------- STATEMENTS OF OPERATIONS ------------------------ FOR THE YEARS ENDED DECEMBER 31, 2000, 1999, AND 1998 ----------------------------------------------------- ($ in thousands) 2000 1999 1998 ------- ------- ------- REVENUES: Rental income and recovery of expenses charged directly to specific tenants $39,339 $38,585 $36,956 Interest income (Note 4) 4,478 4,639 4,790 ----------------------------- Total revenues 43,817 43,224 41,746 ----------------------------- EXPENSES: Real estate taxes 4,133 3,856 3,407 Management and personnel costs 1,867 1,762 1,686 Cleaning 1,475 1,453 1,352 Utilities 813 874 811 Contract security 517 536 485 Repairs and maintenance 456 465 512 Elevator 337 340 309 Parking 276 286 299 Grounds maintenance 129 138 164 Insurance 110 103 106 General and administrative expenses 75 80 73 Marketing and other expenses 63 43 114 Interest expense (Note 4) 4,478 4,639 4,790 Depreciation and amortization 7,710 7,694 7,444 ----------------------------- Total expenses 22,439 22,269 21,552 ----------------------------- NET INCOME $21,378 $20,955 $20,194 ============================= The accompanying notes are an integral part of these statements.
CSC ASSOCIATES, L.P. -------------------- STATEMENTS OF PARTNERS' CAPITAL ------------------------------- FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998 ---------------------------------------------------- ($ in thousands) BALANCE, December 31, 1997 $193,716 Net income 20,194 Distributions (23,700) -------- BALANCE, December 31, 1998 190,210 Net income 20,955 Distributions (27,480) -------- BALANCE, December 31, 1999 183,685 Net income 21,378 Distributions (27,980) -------- BALANCE, December 31, 2000 $177,083 ======== The accompanying notes are an integral part of these statements.
CSC ASSOCIATES, L.P. -------------------- STATEMENTS OF CASH FLOWS ------------------------ FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998 ---------------------------------------------------- ($ in thousands) 2000 1999 1998 ------- ------- ------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $21,378 $20,955 $20,194 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 7,710 7,694 7,444 Rental revenue recognized on straight-line basis different from rental revenue specified in the lease agreements 207 15 (164) Change in other receivables and other assets 130 (170) (207) Change in accounts payable and accrued liabilities related to operations (1,015) 27 1,640 ------------------------- Net cash provided by operating activities 28,410 28,521 28,907 ------------------------- CASH FLOWS FROM INVESTING ACTIVITIES: Additions to building and improvements (1,322) (99) (3,480) Payments for deferred expenses (374) (371) (458) Collection of note receivable 2,610 2,450 2,298 Payments for furniture, fixtures and equipment (21) (43) (15) ------------------------- Net cash provided by (used in) investing activities 893 1,937 (1,655) ------------------------- CASH FLOWS FROM FINANCING ACTIVITIES: Repayment of note payable (2,610) (2,450) (2,298) Partnership distributions (27,980) (27,480) (23,700) ------------------------- Net cash used in financing activities (30,590) (29,930) (25,998) ------------------------- NET (DECREASE) INCREASE IN CASH (1,287) 528 1,254 CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 2,269 1,741 487 ------------------------- CASH AND CASH EQUIVALENTS AT END OF YEAR $ 982 $ 2,269 $ 1,741 ========================= SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the year for interest $ 4,485 $ 4,646 $ 4,802 ========================= The accompanying notes are an integral part of these statements.
CSC ASSOCIATES, L.P. -------------------- NOTES TO FINANCIAL STATEMENTS ----------------------------- DECEMBER 31, 2000, 1999 AND 1998 -------------------------------- 1. FORMATION OF THE PARTNERSHIP AND TERMS OF THE PARTNERSHIP AGREEMENT ------------------------------------------------------------------- CSC Associates, L.P. ("CSC" or the "Partnership") was formed under the terms of a Limited Partnership Agreement dated September 29, 1989 and by the filing of its Certificate of Limited Partnership on October 27, 1989. C&S Premises, Inc. ("Premises") and Cousins Properties Incorporated ("CPI") each own a 1% general partnership and a 49% limited partnership interest in the Partnership. Premises is a wholly owned subsidiary of NB Holdings Corporation, which is a wholly owned subsidiary of Bank of America. In 1996 Premises transferred its 1% general partnership interest in the partnership to C&S Premises-SPE, Inc., a wholly owned subsidiary of Premises. The Partnership was formed for the purpose of developing and owning a 1.4 million gross square foot office tower in downtown Atlanta, Georgia (the "Building"), which is the Atlanta headquarters of Bank of America Corporation. The Partnership Agreement and related documents (the "Agreements") contain among other provisions, the following: a. CPI is the Managing Partner. b. CPI is obligated to contribute a total of $18.2 million cash to the Partnership, all of which has been contributed. Premises is obligated to contribute land parcels to the Partnership having an aggregate agreed upon value of $18.2 million, all of which has been contributed, which property value, in the opinion of the partners, was equal to the estimated fair market value of the land at the time of formation of the Partnership. The value of the property contributed by Premises was recorded on the Partnership's books at an amount equal to the cash contributed by CPI for an equal (50%) partnership interest. In October 1993, the partners each contributed an additional $86.7 million. c. No interest is earned on partnership capital. d. Net income or loss and cash distributions are allocated to the partners based on their percentage interests (50% each). 2. SIGNIFICANT ACCOUNTING POLICIES ------------------------------- Capitalization Policies - ----------------------- All costs related to planning, developing and constructing the Building plus expenditures for the Building prior to the date it became operational for financial statement purposes have been capitalized. Interest expense, amortization of financing costs, and real estate taxes were also capitalized while the Building was under development. Depreciation and Amortization - ----------------------------- Real estate assets are carried at cost. Depreciation of the Building commenced on the date the Building became operational for financial reporting purposes and the Building is being depreciated over 40 years. Leasehold and tenant improvements are amortized over the life of the related lease or the useful life of the asset, whichever is shorter. Furniture, fixtures, and equipment are depreciated over 5 years. Deferred expenses, which include certain marketing and leasing costs and deferred operating expenses which are being passed through to the tenants, are amortized over the period of estimated benefit. The straight-line method is used for all depreciation and amortization. Income Taxes - ------------ No provision has been made for federal or state income taxes because each partner's proportionate share of income or loss from the Partnership will be passed through to be included on each partner's separate tax return. Cash and Cash Equivalents - ------------------------- Cash and cash equivalents include all cash and highly liquid money market instruments. Highly liquid money market instruments include securities and repurchase agreements with original maturities of three months or less or money market mutual funds. Rental Income - ------------- In accordance with Statement of Financial Accounting Standards ("SFAS") No. 13, income on leases which include increases in rental rates over the lease term (other than scheduled increases based on the Consumer Price Index) is recognized on a straight-line basis. Allowance for Doubtful Accounts - ------------------------------- From time to time, the Partnership evaluates the need to establish an allowance for doubtful accounts based on a review of specific receivables. As of December 31, 2000 and 1999, there is no allowance for doubtful accounts included in the accompanying Balance Sheets. Use of Estimates - ---------------- The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from these estimates. 3. LEASES ------ The Partnership has leased office space to NB Holdings Corporation, as well as to unrelated third parties. The lease with NB Holdings Corporation was negotiated at rates comparable to those quoted to third parties. The leases contain escalation provisions and provisions requiring tenants to pay a pro rata share of operating expenses. The leases typically include renewal options and all are classified and accounted for as operating leases. At December 31, 2000, future minimum rentals to be received under existing non-cancelable leases, excluding tenants' current pro rata share of operating expenses, are as follows ($ in thousands):
Lease Leases With With NB Holdings Third Corporation Parties Total ----------- -------- -------- 2001 $ 12,231 $ 17,652 $ 29,883 2002 12,231 18,988 31,219 2003 12,231 19,699 31,930 2004 12,231 18,322 30,553 2005 12,231 18,264 30,495 Subsequent to 2005 78,487 38,279 116,766 ----------------------------------- $139,642 $131,204 $270,846 ===================================
In the year ended December 31, 2000 and 1999, income which would have accrued in accordance with the lease terms exceeded income recognized on a straight-line basis by $207,000 and $15,000, respectively. At December 31, 2000 and 1999, receivables which related to the cumulative excess of revenues recognized in accordance with SFAS No. 13 over revenues which accrued in accordance with the actual lease agreements totaled approximately $10,612,000 and $10,819,000, respectively. Of that amount, 15% was related to leases with NB Holdings Corporation and approximately 37% and 34% was related to each of two professional services firms, respectively. At December 31, 2000 NB Holdings Corporation leased approximately 46% and two professional services firms leased approximately 18% and 17%, respectively, of the net rentable space of the Building. 4. NOTE PAYABLE AND NOTE RECEIVABLE -------------------------------- On February 6, 1996, the Partnership issued $80 million of 6.377% collateralized notes (the "Notes"). The Notes amortize in equal monthly installments of $590,680 based on a 20 year amortization schedule, and mature February 15, 2011. The Notes are non-recourse obligations of the Partnership and are secured by a Deed to Secure Debt, Assignment of Rents and Security Agreement covering the Partnership's interest in the Building. The Partnership has loaned the $80 million proceeds of the Notes to CPI under a non-recourse loan (the "CPI Loan") secured by CPI's Partnership interests under the same payment terms as those of the Notes. CPI paid all costs of issuing the Notes and the CPI Loan, including a $400,000 fee to an affiliate of Bank of America. In addition, CPI pays a monthly fee to an affiliate of Bank of America of .025% of the outstanding principal balance of the Notes. These fees totaled approximately $211,000 and $218,000 in 2000 and 1999, respectively. The estimated fair value of both the note payable and related note receivable at December 31, 2000 and 1999 was $66 million and $64 million, respectively, which was calculated by discounting future cash flows under the notes at estimated rates at which similar notes would be made currently. The maturities of the Notes at December 31, 2000 are as follows (in thousands): 2001 $ 2,782 2002 2,965 2003 3,159 2004 3,367 2005 3,588 Subsequent to 2005 52,928 ------- $68,789 ======= 5. RELATED PARTIES --------------- The Partnership engaged CPI and an affiliate of CPI to manage, develop and lease the Building. During 2000, 1999 and 1998, fees to CPI and its affiliate incurred by the Partnership were as follows ($ in thousands): 2000 1999 1998 ------ ------ ------ Development and tenant construction fees $ -- $ 27 $ 38 Leasing and procurement fees 109 63 399 Management fees 990 959 917 ---------------------------- $1,099 $1,049 $1,354 ============================ 6. PARKING AGREEMENT ----------------- On February 7, 1996, CSC entered into a 25 year Cross Parking License Agreement ("Parking Agreement") with the North Avenue Presbyterian Church ("NAPC") which allows CSC the use of 200 parking spaces in NAPC's parking deck which is located adjacent to NAPC. The agreement commenced on October 1, 1996. CSC paid a $1,000,000 contribution toward the construction cost of the parking deck as consideration for the Parking Agreement. The $1,000,000 contribution plus additional costs of approximately $23,000 are included in Other Assets and are being amortized over the 25 year life of the Parking Agreement. NAPC may reduce the number of parking spaces available to the Partnership or may terminate the Parking Agreement under certain conditions after the sixth year, at which time a partial refund of the $1,000,000 would be due to CSC. In addition, CSC is responsible for the maintenance of the parking deck and the payment of the related operating expenses.
SCHEDULE III CSC ASSOCIATES, L.P. REAL ESTATE AND ACCUMULATED DEPRECIATION DECEMBER 31, 2000 ($ in thousands) Column A Column B Column C Column D Column E -------- -------- -------- -------- -------- Costs Capitalized Gross Amount at Which Initial Cost Subsequent Carried at to Company to Acquisition December 31, 2000 ------------------- -------------------- ---------------------------------- Carrying Costs Buildings Less Cost Land Buildings and Improve- of Sales and Land and Total Description Encumbrances Land Improvements ments and Other Improvements Improvements (a) - ----------- ------------ ---- ------------ ------- --------- ------------ ------------ ----- Bank of America Plaza Atlanta, Georgia $ -- $18,200 $ -- $184,668 $10,449 $22,818 $190,499 $213,317 ===============================================================================================
Column F Column G Column H Column I -------- -------- -------- -------- Life on Which De- preciation Accumu- In 2000 lated Date of Income Deprecia- Construc- Date Statement Description tion (a) tion Acquired Is Computed - ----------- -------- --------- -------- ----------- Bank of America Plaza Atlanta, Georgia $53,367 1990-1992 1990 5-40 =======
NOTE: (a) Reconciliations of total real estate carrying value and accumulated depreciation for the three years ended December 31, 2000 are as follows:
Real Estate Accumulated Depreciation ------------------------------ --------------------------- 2000 1999 1998 2000 1999 1998 ---- ---- ---- ---- ---- ---- Balance at beginning of period $212,308 $212,334 $209,120 $46,795 $40,033 $33,621 Improvements and other capitalized costs 1,324 99 3,480 -- -- -- Write-offs of improvements and other capitalized costs (315) (125) (266) (315) (125) (266) Provision for depreciation -- -- -- 6,887 6,887 6,678 ------------------------------ --------------------------- Balance at end of period $213,317 $212,308 $212,334 $53,367 $46,795 $40,033 ============================== ===========================
EX-13 2 0002.txt Cousins Properties Incorporated and Consolidated Entities FUNDS FROM OPERATIONS - -------------------------------------------------------------------------------- The table below shows Funds From Operations ("FFO") for Cousins Properties Incorporated and Consolidated Entities and its unconsolidated joint ventures. On a consolidated basis, FFO includes the Company's FFO and the Company's share of FFO of its unconsolidated joint ventures, but excludes the Company's share of distributions from such ventures. The Company calculates its FFO using the National Association of Real Estate Investment Trusts ("NAREIT") definition of FFO adjusted to (i) eliminate the recognition of rental revenues on a straight-line basis, (ii) reflect stock appreciation right expense on a cash basis and (iii) recognize certain fee income as cash is received rather than when recognized in the financial statements. The Company believes its FFO presentation more properly reflects its operating results. Management believes the Company's FFO is not directly comparable to other REITs which own a portfolio of mature income-producing properties because the Company develops projects through a development and lease-up phase before they reach their targeted cash flow returns. Furthermore, the Company eliminates in consolidation fee income for developing and leasing projects owned by consolidated entities, while capitalizing related internal costs. In addition, unlike many REITs, the Company has considerable land holdings which provide a strong base for future FFO growth as land is developed or sold in future years. Property taxes on the land, which are expensed currently, reduce current FFO. As indicated above, the Company does not include straight-lined rents in its FFO, as it could under the NAREIT definition of FFO. Furthermore, most of the Company's leases are also escalated periodically based on the Consumer Price Index, which unlike fixed escalations, do not require rent to be straight-lined; under NAREIT's definition straight-lining of rents produces higher FFO in the early years of a lease and lower FFO in the later years of a lease. FFO is used by industry analysts as a supplemental measure of an equity REIT's performance. FFO should not be considered an alternative to net income or other measurements under generally accepted accounting principles as an indicator of operating performance, or to cash flows from operating, investing, or financing activities as a measure of liquidity. Commencing with the second quarter of 2000, to reflect the Company's adherence to the NAREIT definition of FFO and to be consistent with industry practice, the Company included gain on sale of undepreciated investment properties in its FFO. Results for 1999 and 1998 have been restated to reflect this change. On October 2, 2000, a 3-for-2 stock split effected in the form of a 50% stock dividend was awarded to stockholders of record on September 15, 2000. All prior period shares outstanding and per share amounts have been restated for the effect of the stock dividend.
- ------------------------------------------------------------------------------------------------------------------- ($ in thousands, except per share amounts) Years Ended December 31, ------------------------------ 2000 1999 1998 ---- ---- ---- Income before gain on sale of investment properties and cumulative effect of change in accounting principle $50,672 $45,315 $41,355 Cumulative effect of change in accounting principle (566) -- -- Depreciation and amortization 47,295 36,737 28,910 Amortization of deferred financing costs and depreciation of furniture, fixtures and equipment (1,030) (758) (524) Elimination of the recognition of rental revenues on a straight-line basis (1,629) (142) 1,119 Adjustment to reflect stock appreciation right expense on a cash basis (68) (101) (8) Gain on sale of undepreciated investment properties 564 222 3,421 --------------------------------- Consolidated Funds From Operations $95,238 $81,273 $74,273 ================================= Weighted Average Shares 48,632 48,138 47,403 ================================= Consolidated Funds From Operations Per Share - Basic $ 1.96 $ 1.69 $ 1.57 ================================= Adjusted Weighted Average Shares 49,731 49,031 48,060 ================================= Consolidated Funds From Operations Per Share - Diluted $ 1.92 $ 1.66 $ 1.55 =================================
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Cousins Properties Incorporated and Consolidated Entities CONSOLIDATED BALANCE SHEETS - -------------------------------------------------------------------------------- ($ in thousands, except share and per share amounts) December 31, --------------------- 2000 1999 ---------- -------- ASSETS - ------ PROPERTIES (Notes 4 and 8): Operating properties, net of accumulated depreciation of $70,032 in 2000 and $35,929 in 1999 $ 772,359 $365,976 Land held for investment or future development 15,218 14,126 Projects under construction 93,870 348,065 Residential lots under development 3,001 4,687 -------------------- Total properties 884,448 732,854 CASH AND CASH EQUIVALENTS, at cost, which approximates market 1,696 1,473 NOTES AND OTHER RECEIVABLES (Note 3) 40,640 37,303 INVESTMENT IN UNCONSOLIDATED JOINT VENTURES (Notes 4 and 5) 175,471 151,737 OTHER ASSETS 13,497 9,558 -------------------- TOTAL ASSETS $1,115,752 $932,925 ==================== LIABILITIES AND STOCKHOLDERS' INVESTMENT - ---------------------------------------- NOTES PAYABLE (Note 4) $ 485,085 $312,257 ACCOUNTS PAYABLE AND ACCRUED LIABILITIES 31,185 34,820 DEPOSITS AND DEFERRED INCOME 2,538 861 -------------------- TOTAL LIABILITIES 518,808 347,938 -------------------- DEFERRED GAIN (Note 5) 111,858 115,576 MINORITY INTERESTS 30,619 31,689 COMMITMENTS AND CONTINGENT LIABILITIES (Note 4) STOCKHOLDERS' INVESTMENT (Note 6): Common stock, $1 par value; authorized 150,000,000 shares, issued 49,364,477 in 2000 and 48,415,403 in 1999 49,364 48,415 Additional paid-in capital 259,659 240,901 Treasury stock at cost, 153,600 shares in 2000 and 1999 (4,990) (4,990) Unearned compensation (4,690) -- Cumulative undistributed net income 155,124 153,396 -------------------- TOTAL STOCKHOLDERS' INVESTMENT 454,467 437,722 -------------------- TOTAL LIABILITIES AND STOCKHOLDERS' INVESTMENT $1,115,752 $932,925 ==================== The accompanying notes are an integral part of these consolidated balance sheets.
Cousins Properties Incorporated and Consolidated Entities CONSOLIDATED STATEMENTS OF INCOME - -------------------------------------------------------------------------------- ($ in thousands, except per share amounts) Years Ended December 31, ----------------------------- 2000 1999 1998 -------- -------- ------- REVENUES: Rental property revenues (Note 10) $113,986 $ 62,480 $67,726 Development income 4,251 6,165 3,007 Management fees 4,841 4,743 3,761 Leasing and other fees 1,608 2,991 2,810 Residential lot and outparcel sales 13,951 17,857 16,732 Interest and other 5,995 3,588 4,275 ----------------------------- 144,632 97,824 98,311 ----------------------------- INCOME FROM UNCONSOLIDATED JOINT VENTURES (Note 5) 19,452 19,637 18,423 COSTS AND EXPENSES: Rental property operating expenses 33,416 19,087 17,702 General and administrative expenses 18,452 14,961 13,087 Depreciation and amortization 32,784 16,859 15,173 Stock appreciation right expense (Note 6) 468 108 330 Residential lot and outparcel cost of sales 11,684 14,897 15,514 Interest expense (Note 4) 13,596 600 11,558 Property taxes on undeveloped land 40 811 900 Other 4,086 2,381 1,263 ----------------------------- 114,526 69,704 75,527 ----------------------------- INCOME FROM OPERATIONS BEFORE INCOME TAXES, GAIN ON SALE OF INVESTMENT PROPERTIES AND CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE 49,558 47,757 41,207 (BENEFIT) PROVISION FOR INCOME TAXES FROM OPERATIONS (1,114) 2,442 (148) ----------------------------- INCOME BEFORE GAIN ON SALE OF INVESTMENT PROPERTIES AND CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE 50,672 45,315 41,355 GAIN ON SALE OF INVESTMENT PROPERTIES, NET OF APPLICABLE INCOME TAX PROVISION 11,937 58,767 3,944 ----------------------------- INCOME BEFORE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE 62,609 104,082 45,299 CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE (Note 1) (566) -- -- ----------------------------- NET INCOME $ 62,043 $104,082 $45,299 ============================= BASIC NET INCOME PER SHARE: Income before cumulative effect of change in accounting principle $ 1.29 $ 2.16 $ .96 Cumulative effect of change in accounting principle (0.01) -- -- ----------------------------- Basic net income per share $ 1.28 $ 2.16 $ .96 ============================= DILUTED NET INCOME PER SHARE: Income before cumulative effect of change in accounting principle $ 1.26 $ 2.12 $ .94 Cumulative effect of change in accounting principle (0.01) -- -- ----------------------------- Diluted net income per share $ 1.25 $ 2.12 $ .94 ============================= CASH DIVIDENDS DECLARED PER SHARE (Note 6) $ 1.24 $ 1.12 $ .99 ============================= WEIGHTED AVERAGE SHARES 48,632 48,138 47,403 ============================= ADJUSTED WEIGHTED AVERAGE SHARES 49,731 49,031 48,060 ============================= The accompanying notes are an integral part of these consolidated statements.
Cousins Properties Incorporated and Consolidated Entities - ------------------------------------------------------------------------------------------------------------------- CONSOLIDATED STATEMENTS OF STOCKHOLDERS' INVESTMENT Years Ended December 31, 2000, 1999 and 1998 ($ in thousands) Additional Cumulative Common Paid-In Treasury Unearned Undistributed Stock Capital Stock Compensation Net Income Total ------- ---------- -------- ------------ ------------- -------- BALANCE, December 31, 1997 $47,131 $218,578 $ -- $ -- $104,965 $370,674 Net income, 1998 -- -- -- -- 45,299 45,299 Common stock issued pursuant to: Exercise of options and director stock plan 65 484 -- -- -- 549 Dividend reinvestment plan 558 9,849 -- -- -- 10,407 Dividends declared -- -- -- -- (47,064) (47,064) --------------------------------------------------------------------------------- BALANCE, December 31, 1998 47,754 228,911 -- -- 103,200 379,865 Net income, 1999 -- -- -- -- 104,082 104,082 Common stock issued pursuant to: Exercise of options and director stock plan 117 1,230 -- -- -- 1,347 Dividend reinvestment plan 544 10,760 -- -- -- 11,304 Dividends declared -- -- -- -- (53,886) (53,886) Purchase of treasury stock -- -- (4,990) -- -- (4,990) --------------------------------------------------------------------------------- BALANCE, December 31, 1999 48,415 240,901 (4,990) -- 153,396 437,722 Net income, 2000 -- -- -- -- 62,043 62,043 Common stock issued pursuant to: Exercise of options and director stock plan 195 3,491 -- -- -- 3,686 Dividend reinvestment plan 489 8,672 -- -- -- 9,161 Stock grant 265 6,595 -- (4,690) -- 2,170 Dividends declared -- -- -- -- (60,315) (60,315) --------------------------------------------------------------------------------- BALANCE, December 31, 2000 $49,364 $259,659 $(4,990) $(4,690) $155,124 $454,467 ================================================================================= The accompanying notes are an integral part of these consolidated statements.
Cousins Properties Incorporated and Consolidated Entities CONSOLIDATED STATEMENTS OF CASH FLOWS (Note 9) - ------------------------------------------------------------------------------------------------------------------- ($ in thousands) Years Ended December 31, ------------------------------- 2000 1999 1998 --------- -------- -------- CASH FLOWS FROM OPERATING ACTIVITIES: Income before gain on sale of investment properties and cumulative effect of change in accounting principle $ 50,672 $ 45,315 $ 41,355 Adjustments to reconcile income before gain on sale of investment properties and cumulative effect of change in accounting principle to net cash provided by operating activities: Depreciation and amortization, net of minority interest's share 31,522 16,658 15,173 Stock appreciation right expense 468 108 330 Cash charges to expense accrual for stock appreciation rights (536) (209) (338) Effect of recognizing rental revenues on a straight-line basis (2,111) (1,064) (347) Income from unconsolidated joint ventures (19,452) (19,637) (18,423) Operating distributions from unconsolidated joint ventures 32,538 36,051 23,612 Residential lot and outparcel cost of sales 10,576 13,802 14,759 Changes in other operating assets and liabilities: Change in other receivables (2,783) (1,903) (1,986) Change in accounts payable and accrued liabilities 2,692 2,706 15,939 ------------------------------ Net cash provided by operating activities 103,586 91,827 90,074 ------------------------------ CASH FLOWS FROM INVESTING ACTIVITIES: Gain on sale of investment properties, net of applicable income tax provision 11,937 58,767 3,944 Adjustments to reconcile gain on sale of investment properties to net cash provided by sales activities: Cost of sales 17,510 29,576 1,264 Deferred income recognized (4,112) (4,123) (536) Property acquisition and development expenditures (215,958) (337,961) (194,253) Non-operating distributions from unconsolidated joint ventures -- 3,635 22,617 Investment in unconsolidated joint ventures, including interest capitalized to equity investments (36,820) (36,195) (34,712) Investment in notes receivable (1,214) (1,191) (33,345) Collection of notes receivable 2,742 6,258 30,528 Change in other assets, net (4,978) (3,112) 976 Net cash received in formation of venture -- 125,469 103,025 ------------------------------ Net cash used in investing activities (230,893) (158,877) (100,492) ------------------------------ CASH FLOWS FROM FINANCING ACTIVITIES: Repayment of credit facility (287,711) (253,023) (231,115) Proceeds from credit facility 331,356 372,554 242,235 Common stock sold, net of expenses 15,017 12,651 10,956 Purchase of treasury stock -- (4,990) -- Dividends paid (60,315) (53,886) (47,064) Proceeds from other notes payable 154,500 -- 10,870 Repayment of other notes payable (25,317) (6,132) (6,809) Net cash provided by (used in) financing activities 127,530 67,174 (20,927) NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 223 124 (31,345) CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 1,473 1,349 32,694 ------------------------------ CASH AND CASH EQUIVALENTS AT END OF YEAR $ 1,696 $ 1,473 $ 1,349 ============================== The accompanying notes are an integral part of these consolidated statements.
Cousins Properties Incorporated and Consolidated Entities NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- December 31, 2000, 1999 and 1998 1. SIGNIFICANT ACCOUNTING POLICIES Consolidation and Presentation: The Consolidated Financial Statements include the accounts of Cousins Properties Incorporated ("Cousins"), its majority owned partnerships and wholly owned subsidiaries, Cousins Real Estate Corporation ("CREC") and its subsidiaries and CREC II Inc. ("CREC II") and its subsidiaries. All of the entities included in the Consolidated Financial Statements are hereinafter referred to collectively as the "Company." The Company's investments in its non-majority owned and/or non-controlled joint ventures are recorded using the equity method of accounting. Information regarding the non-majority owned and/or non-controlled joint ventures is included in Note 5. Income Taxes: Since 1987, Cousins has elected to be taxed as a real estate investment trust ("REIT"). As a REIT, Cousins is not subject to corporate federal income taxes to the extent that it distributes 100% of its taxable income (excluding the consolidated taxable income of CREC and its wholly owned subsidiaries and CREC II and its wholly owned subsidiaries) to stockholders, which is Cousins' current intention. The Company computes taxable income on a basis different from that used for financial reporting purposes (see Note 7). CREC and its wholly owned subsidiaries and CREC II and its wholly owned subsidiaries each file a consolidated federal income tax return. Depreciation and Amortization: Real estate assets are stated at depreciated cost. Buildings are depreciated over 30 to 40 years. Buildings that were acquired are depreciated over 15, 25 and 30 years. Furniture, fixtures and equipment are depreciated over 3 to 5 years. Leasehold improvements and tenant improvements are amortized over the life of the applicable leases or the estimated useful life of the assets, whichever is shorter. Deferred expenses are amortized over the period of estimated benefit. The straight-line method is used for all depreciation and amortization. Fee Income and Cost Capitalization: Development, construction, management and leasing fees received from unconsolidated joint ventures are recognized as earned. A portion of these fees may be capitalized by the joint ventures; however, the Company expenses salaries and other direct costs related to this income. The Company classifies its share of fee income earned by unconsolidated joint ventures as fee income rather than joint venture income for those ventures where the related expense is borne primarily by the Company rather than the venture. Development, construction, and leasing fees between consolidated entities are eliminated in consolidation. These fees totaled $3,048,000, $4,676,000 and $3,104,000 in 2000, 1999 and 1998, respectively. Management fees received from consolidated entities are shown as a reduction in rental property operating expenses. Costs related to planning, development, leasing and construction of properties (including related general and administrative expenses) are capitalized. Interest, real estate taxes, and rental property revenues and expenses of properties prior to the date they become operational for financial reporting purposes are also capitalized. Interest is capitalized to investments accounted for by the equity method when the investee has property under development with a carrying value in excess of the investee's borrowings. Deferred leasing and other capitalized costs associated with a particular property are classified with Properties in the Consolidated Balance Sheets. Cash and Cash Equivalents: Cash and cash equivalents include cash and highly liquid money market instruments. Highly liquid money market instruments include securities and repurchase agreements with original maturities of three months or less, money market mutual funds, and securities on which the interest or dividend rate is adjusted to market rate at least every three months. Rental Property Revenues: In accordance with Statement of Financial Accounting Standard ("SFAS") No. 13, income on leases which include scheduled increases in rental rates over the lease term (other than scheduled increases based on the Consumer Price Index) is recognized on a straight-line basis. Use of Estimates: The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the accompanying financial statements and notes. Actual results could differ from those estimates. Derivative Instruments and Hedging Activities: In June 1998, the Financial Accounting Standards Board issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities" which establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities. SFAS No. 133, as amended in June 1999 by SFAS No. 137, "Accounting for Derivative Instruments and Hedging Activities - Deferral of the Effective Date of FASB Statement No. 133," is effective for fiscal years beginning after June 15, 2000. SFAS No. 133 requires companies to record derivatives on the balance sheet as assets and liabilities at fair value. SFAS No. 133 also requires that changes in the derivative's fair value be recognized currently in earnings unless specific hedge accounting criteria are met. The Company early adopted SFAS No. 133 effective October 1, 2000. The effect of adoption of SFAS No. 133 was an expense in the amount of approximately $566,000, which was recorded as a Cumulative Effect of Change in Accounting Principle in the accompanying Consolidated Statements of Income. SFAS No. 133 only affects the Company as it relates to its ownership of warrants to purchase common stock in other companies, which under SFAS No. 133 are considered derivatives and must be marked-to-market each period. Reclassifications: Certain 1999 amounts have been reclassified to conform with the 2000 presentation. 2. CREC AND CREC II CREC conducts certain development and leasing activities for real estate projects. CREC also manages a joint venture property in which it has an ownership interest. At December 31, 2000, 1999, and 1998, Cousins owned 100% of CREC's $5,025,000 par value 8% cumulative preferred stock and 100% of CREC's non-voting common stock, which is entitled to 95% of any dividends of CREC after preferred dividend requirements. Thomas G. Cousins, Chairman of the Board of Cousins, owns 100% of the voting common stock of CREC, which voting common stock is entitled to 5% of any dividends of CREC after preferred dividend requirements. CREC is included in the Company's Consolidated Financial Statements, but is taxed as a regular corporation. CREC has paid no common dividends to date, and for financial reporting purposes, none of CREC's income is attributable to Mr. Cousins' minority interest because the face amount of CREC's preferred stock plus accumulated dividends thereon ($10,251,000 in aggregate) exceeds CREC's $5,757,666 of equity. CREC II owns the Company's investment in Cousins Stone LP (see Note 5). Cousins owns 100% of CREC II's $835,000 par value, 10% cumulative preferred stock and 100% of CREC II's non-voting common stock, which is entitled to 95% of any dividends of CREC II after preferred dividend requirements. Mr. Cousins owns 100% of the voting common stock of CREC II, which voting common stock is entitled to 5% of any dividends of CREC II after preferred dividend requirements. CREC II is included in the Company's Consolidated Financial Statements, but is taxed as a regular corporation. CREC II has paid no common dividends to date and as of December 31, 2000, undistributed cumulative preferred dividends were $83,500. Minority interest expense has been recognized for Mr. Cousins' ownership.
- -------------------------------------------------------------------------------- 3. NOTES AND OTHER RECEIVABLES At December 31, 2000 and 1999, notes and other receivables included the following ($ in thousands): 2000 1999 ------- ------- 650 Massachusetts Avenue Mortgage Notes $24,236 $24,332 Daniel Realty Company Note Receivable 1,808 2,610 Miscellaneous Notes 690 1,342 Cumulative rental revenue recognized on a straight- line basis in excess of revenue accrued in accordance with lease terms (see Note 1) 5,495 2,135 Other Receivables 8,411 6,884 ----------------- Total Notes and Other Receivables $40,640 $37,303 ================= - --------------------------------------------------------------------------------
650 Massachusetts Avenue Mortgage Notes - On March 10, 1994, the Company purchased from the Resolution Trust Corporation ("RTC") two notes aggregating $37 million (a $32 million and a $5 million note) at a total cost of approximately $28 million. The two notes, which resulted from the RTC's restructuring in December 1993 of a $53 million note, are secured by a first deed of trust on an office building containing approximately 250,000 square feet located at 650 Massachusetts Avenue, NW, in Washington, D.C. The notes mature December 31, 2003, at which time their unamortized balance will be a maximum of approximately $28.2 million. The notes require minimum monthly payments totaling $2,818,000 annually, which are supported by a U.S. government agency lease. For financial reporting purposes, the discounted notes are treated as non-amortizing notes to the extent of the minimum required payments, with the minimum required payments treated as interest income. Amounts in excess of the minimum required payments ($750,000 and $721,000 in 2000 and 1999, respectively) are treated as a reduction of principal. Due to the $5 million note having been substantially repaid (with the remaining $543,000 estimated to be repaid in full in April 2001), the Company's note balance as of December 31, 2000 was approximately $23.6 million, substantially lower than the balance of the $32 million note estimated to be approximately $27.6 million upon maturity. After the $5 million note is repaid in full as anticipated in April 2001, the carrying value of the $32 million note will be $23.0 million, creating a difference of $4.6 million between the Company's carrying value and the amount due under the note. As a result, beginning in the third quarter of 2000 and continuing until the notes mature December 31, 2003, the Company is amortizing this difference, which equals $327,000 per quarter, as additional interest income. Daniel Realty Company Note Receivable - On December 27, 1996, the Company entered into a venture with Daniel Realty Company ("Daniel"), a privately-held real estate company headquartered in Birmingham, Alabama, which focuses on the development and acquisition of commercial office properties. The arrangement with Daniel included a loan to Daniel of up to $9.5 million which had an interest rate of 11%, required semiannual principal payments commencing February 1, 1998 and matured on December 31, 2003. The Company also obtained an option to acquire certain segments of Daniel's business. On December 31, 1997, upon paydown of the outstanding balance of the note receivable to $4 million, the Company amended the note, which reduced the interest rate to 9% and requires quarterly payments of principal and interest, which commenced April 1, 1998, in the amount of $250,568. The loan will fully amortize over 5 years. Fair Value - The estimated fair value of the Company's $26.7 million and $28.3 million of notes receivable at December 31, 2000 and 1999, respectively, was $32.9 million and $35.2 million, respectively, calculated by discounting future cash flows from the notes receivable at estimated rates at which similar loans would be made currently.
- ------------------------------------------------------------------------------------------------------------------- 4. NOTES PAYABLE, COMMITMENTS, AND CONTINGENT LIABILITIES At December 31, 2000 and 1999, notes payable included the following ($ in thousands): December 31, 2000 December 31, 1999 ---------------------------------- ------------------------------------ Share of Share of Unconsolidated Unconsolidated Company Joint Ventures Total Company Joint Ventures Total ------- -------------- -------- ------- -------------- -------- Floating Rate Line of Credit and Construction Loan $174,296 $ 70,309 $244,605 $130,651 $ 28,504 $159,155 Other Debt (primarily non-recourse fixed rate mortgages) 310,789 185,983 496,772 181,606 190,235 371,841 ------------------------------------------------------------------------------ $485,085 $256,292 $741,377 $312,257 $218,739 $530,996 ==============================================================================
The following table summarizes the terms of the debt outstanding at December 31, 2000 ($ in thousands): Term/ Amortization Balance at Period Final December 31, Description Rate (Years) Maturity 2000 ----------- ---- ------------ -------- ------------ Company Debt: - ------------ Credit facility (a maximum of $225 million through 6/30/01 and $150 million through Floating based 8/27/02), unsecured on LIBOR 3/N/A 8/27/02 $174,296 Note secured by Company's interest in CSC Associates, L.P. 6.677% 15/20 2/15/11 68,789 Perimeter Expo mortgage note 8.04% 10/30 8/15/05 20,361 101 Independence Center mortgage note 8.22% 11/25 12/1/07 46,727 Lakeshore Park Plaza mortgage note 6.78% 10/30 11/1/08 10,498 Northside/Alpharetta I mortgage note 7.70% 8/28 1/1/06 10,247 101 Second Street mortgage note 8.33% 10/30 4/27/10 89,597 The Avenue East Cobb mortgage note 8.39% 10/30 8/01/10 38,902 Meridian Mark Plaza mortgage note 8.27% 10/28 10/01/10 25,441 Other miscellaneous notes Various Various Various 227 -------- 485,085 -------- Share of Unconsolidated Joint Venture Debt: - ------------------------------------------- Wildwood Associates: 2300 Windy Ridge Parkway mortgage note 7.56% 10/25 12/01/05 31,579 2500 Windy Ridge Parkway mortgage note 7.45% 10/20 12/15/05 11,289 3200 Windy Hill Road mortgage note 8.23% 10/28 1/1/07 33,517 4100/4300 Wildwood Parkway mortgage note 7.65% 15/25 4/1/12 14,136 4200 Wildwood Parkway mortgage note 6.78% 15.75/18 3/31/14 21,394 Cousins LORET Venture, L.L.C.: Two Live Oak Center mortgage note 7.90% 10/30 12/31/09 14,597 The Pinnacle mortgage note 7.11% 12/30 12/31/09 34,652 CP Venture Two LLC: North Point MarketCenter mortgage note 8.50% 10/25 7/15/05 3,175 100/200 North Point Center East mortgage note 7.86% 10/25 8/1/07 2,734 Ten Peachtree Place Associates mortgage note 8.00% 10/18 11/30/01 8,197 CC-JM II Associates mortgage note 7.00% 17/17 4/1/13 10,713 Charlotte Gateway Village, LLC construction loan LIBOR + .50% 3/N/A 1/2/02 70,309 -------- 256,292 -------- $741,377 ======== - ----------------------------------------------------------------------------------------------------------------------
In 1996, CSC Associates, L.P. ("CSC") issued $80 million of 6.377% collateralized non-recourse mortgage notes (the "Notes") secured by CSC's interest in the Bank of America Plaza building and related leases and agreements. CSC loaned the $80 million proceeds of the Notes to the Company under a non-recourse loan (the "Cousins Loan") secured by the Company's interest in CSC under the same payment terms as those of the Notes. The Company paid all costs of issuing the Notes and the Cousins Loan, including a $400,000 fee to an affiliate of Bank of America Corporation. In addition, the Company pays a fee to an affiliate of Bank of America Corporation of .3% per annum of the outstanding principal balance of the Notes. Because CSC has loaned the $80 million proceeds of the Notes to the Company, the Notes and their related interest expense and maturities are disclosed as an obligation of the Company and are not included in the unconsolidated joint venture balances disclosed in the above table or in Note 5. (The related note receivable and interest income are also not included in Note 5.) In December 2000, the credit facility was temporarily increased from $150 million to $225 million, which temporary increase expires June 30, 2001. The credit facility is unsecured and bears an interest rate equal to the London Interbank Offering Rate ("LIBOR") plus a spread which is based on the ratio of total debt to total assets according to the following table: Ratio of Total Debt To Total Assets Basis Points ------------------- ------------ <=35% 90 >35% <= 45% 100 >45% <= 50% 110 >50% <= 55% 125 In April 2000, the Company completed the $90 million financing of 101 Second Street. This non-recourse mortgage note payable has an interest rate of 8.33% and a maturity of April 27, 2010. In July 2000, the Company completed the $39 million financing of The Avenue East Cobb. This non-recourse mortgage note payable has an interest rate of 8.39% and a maturity of August 1, 2010. In August 2000, the Company completed the $25.5 million financing of Meridian Mark Plaza. This non-recourse mortgage note payable has an interest rate of 8.27% and a maturity of October 1, 2010. In October 2000, the Company repaid in full upon its maturity the note payable to First Union National Bank that was secured by the Company's interest in the 650 Massachusetts Avenue mortgage notes (see Note 3). The Wildwood Associates 2300 Windy Ridge Parkway, 3200 Windy Hill Road, 4100/4300 Wildwood Parkway and 4200 Wildwood Parkway mortgage notes and the CC-JM II Associates mortgage note provide for additional amortization in the later years of the notes (over that required by the amortization periods disclosed in the table) concurrent with scheduled rent increases. At December 31, 2000, the Company had outstanding letters of credit totaling $12,386,000, and assets, including the Company's share of joint venture assets, with carrying values of $642,860,000 were pledged as security on the debt of the Company and its share of unconsolidated joint venture debt. The fixed rate long-term mortgage debt of the Company and its unconsolidated joint ventures is non-recourse to the Company. As of December 31, 2000, the weighted average maturity of the Company's debt, including its share of unconsolidated joint ventures, was 9 years.
- -------------------------------------------------------------------------------- The aggregate maturities of the indebtedness at December 31, 2000 summarized above are as follows ($ in thousands): Share of Unconsolidated Company Joint Ventures Total -------- -------------- -------- 2001 $ 29,890 $ 12,369 $ 42,259 2002 156,013 75,396 231,409 2003 6,467 5,078 11,545 2004 6,953 5,594 12,547 2005 35,500 43,089 78,589 Thereafter 250,262 114,766 365,028 ---------------------------------------- $485,085 $256,292 $741,377 ========================================
For each of the years ended December 31, 2000, 1999 and 1998, interest expense was recorded as follows ($ in thousands): Share of Unconsolidated Company Joint Ventures Total ------------------------------- ------------------------------- ------------------------------- Year Expensed Capitalized Total Expensed Capitalized Total Expensed Capitalized Total - ---- -------- ----------- ------- -------- ----------- ------- -------- ----------- ------- 2000 $13,596 $15,285 $28,881 $14,819 $3,545 $18,364 $28,415 $18,830 $47,245 1999 600 16,155 16,755 14,473 1,513 15,986 15,073 17,668 32,741 1998 11,558 7,470 19,028 9,902 2,173 12,075 21,460 9,643 31,103 - -------------------------------------------------------------------------------------------------------------------
The Company has future lease commitments under land leases aggregating $47.6 million over an average remaining term of 59 years. The Company has entered into construction and design contracts for real estate projects, of which approximately $187 million remains committed at December 31, 2000. At December 31, 2000 and 1999, the estimated fair value of the Company's notes payable, including its share of unconsolidated joint ventures, was $749 million and $517 million, respectively.
5. INVESTMENT IN UNCONSOLIDATED JOINT VENTURES The following information summarizes financial data and principal activities of unconsolidated joint ventures in which the Company had ownership interests ($ in thousands). Audited financial statements for CSC Associates, L.P. are included in the Company's Annual Report on Form 10-K for the year ended December 31, 2000. Company's Total Assets Total Debt Total Equity Investment ---------------------- ------------------ ------------------ ------------------- 2000 1999 2000 1999 2000 1999 2000 1999 ---------- ---------- -------- -------- -------- -------- -------- -------- SUMMARY OF FINANCIAL POSITION: Wildwood Associates $ 236,312 $ 247,834 $223,829 $229,182 $ 4,780 $ 9,092 $(39,081) $(36,913) CSC Associates, L.P. 179,094 186,638 -- -- 177,083 183,685 90,959 94,347 Charlotte Gateway Village, LLC 173,897 86,933 140,618 57,008 5,045 6,400 21,489 21,221 Cousins LORET Venture, L.L.C. 126,736 134,732 98,498 99,492 26,163 32,730 12,932 16,222 285 Venture, LLC 59,791 34,254 -- -- 57,201 32,448 30,693 16,888 CC-JM II Associates 24,929 26,779 21,426 22,308 3,140 3,758 2,129 2,215 CPI/FSP I, L.P. 20,741 -- -- -- 20,741 -- 10,592 -- Ten Peachtree Place Associates 18,525 19,077 16,393 17,456 1,968 1,375 255 175 Temco Associates 16,797 13,854 -- -- 16,576 12,975 8,207 6,600 Cousins Stone LP 14,322 14,733 -- -- 12,982 14,562 11,093 7,131 Brad Cous Golf Venture, Ltd. 11,409 10,661 -- -- 11,216 10,514 5,608 5,257 Crawford Long - CPI, LLC 7,754 680 -- -- 7,594 585 3,894 288 CP Venture LLC -- -- -- -- -- -- 14,801 16,259 CP Venture Two LLC 248,861 263,450 51,388 52,313 195,140 208,130 1,951 2,090 Other -- 42 -- -- -- 649 (51) (43) ---------------------- ------------------ ------------------ ------------------- $1,139,168 $1,039,667 $552,152 $477,759 $539,629 $516,903 $175,471 $151,737 ====================== ================== ================== ===================
Company's Share Total Revenues Net Income of Net Income ---------------------------- ------------------------- ------------------------- 2000 1999 1998 2000 1999 1998 2000 1999 1998 -------- -------- -------- ------- ------- ------- ------- ------- ------- SUMMARY OF OPERATIONS: Wildwood Associates $ 50,918 $ 48,019 $ 42,284 $ 7,688 $ 4,906 $ 4,156 $ 3,844 $ 2,453 $ 1,968 CSC Associates, L.P. 39,339 38,585 36,956 21,378 20,955 20,194 10,613 10,402 10,021 Charlotte Gateway Village LLC 2,841 -- -- (593) -- -- 762 -- -- Cousins LORET Venture, L.L.C. 20,717 16,673 6,810 (767) 106 1,747 (384) 53 672 285 Venture, LLC 3,434 -- -- 1,684 -- -- 831 -- -- CC-JM II Associates 4,356 4,161 4,070 786 420 469 381 248 213 Ten Peachtree Place Associates 4,438 4,356 4,396 959 872 803 279 271 261 Temco Associates 10,023 7,087 361 2,708 2,540 194 678 1,270 97 Cousins Stone LP 10,076 5,071 -- 3,161 2,562 -- 1,649 1,892 -- Brad Cous Golf Venture, Ltd. 853 779 -- 61 168 -- 31 84 -- Haywood Mall -- 8,730 17,049 -- 4,910 9,465 71 2,433 4,614 CP Venture LLC -- -- -- -- -- -- 611 82 280 CP Venture Two LLC 34,046 33,856 4,384 5,815 893 335 58 9 4 Other 55 1,124 813 55 878 589 28 440 293 ---------------------------- ------------------------- ------------------------- $181,096 $168,441 $117,123 $42,935 $39,210 $37,952 $19,452 $19,637 $18,423 ============================ ========================= =========================
Company's Share Of --------------------------------------------------------- Cash Flows From Cash Flows From Operating Operating Activities Operating Activities Cash Distributions --------------------------- --------------------------- --------------------------- 2000 1999 1998 2000 1999 1998 2000 1999 1998 ------- ------- ------- ------- ------- ------- ------- ------- ------- SUMMARY OF OPERATING CASH FLOWS: Wildwood Associates $18,430 $14,952 $16,665 $ 9,215 $ 7,476 $ 8,333 $ 6,000 $ 1,000 $ 4,600 CSC Associates, L.P. 28,410 28,521 28,907 14,205 14,260 14,454 13,990 13,740 11,850 Charlotte Gateway Village, LLC 1,524 -- -- 762 -- -- 731 -- -- Cousins LORET Venture, L.L.C. 6,830 5,442 3,968 3,415 2,721 1,984 2,900 7,240 703 285 Venture, LLC 1,840 -- -- 920 -- -- 1,044 -- -- CC-JM II Associates 1,826 1,666 1,551 913 833 775 468 693 324 Ten Peachtree Place Associates 1,113 1,027 1,358 367 354 343 200 200 200 Temco Associates 1,356 2,540 194 678 1,270 97 1,800 -- -- Cousins Stone LP 265 1,631 -- 2,426 -- -- 3,140 -- -- Brad Cous Golf Venture, Ltd. 454 362 -- 227 181 -- -- 50 -- Haywood Mall -- 6,158 11,571 -- 3,079 5,786 -- 4,068 5,585 CP Venture LLC -- -- -- -- -- -- 2,068 8,303 -- CP Venture Two LLC 21,764 21,239 2,576 -- 6,989 2,154 197 226 -- Other 55 882 589 -- 441 294 -- 531 350 --------------------------- --------------------------- --------------------------- $83,867 $84,420 $67,379 $33,128 $37,604 $34,220 $32,538 $36,051 $23,612 =========================== =========================== =========================== - -----------------------------------------------------------------------------------------------------------------------
Wildwood Associates - Wildwood Associates was formed in 1985 between the Company and IBM, each as 50% partners. The partnership owns six office buildings totaling 2.1 million rentable square feet, other income-producing commercial properties, and additional developable land in Wildwood Office Park ("Wildwood") in Atlanta, Georgia. Wildwood is an office park containing a total of approximately 285 acres, of which approximately 92 acres are owned by Wildwood Associates and an estimated 13 acres are committed to be contributed to Wildwood Associates by the Company; the Company owns the balance of the developable acreage in the office park. The 13 acres of land which are committed to be contributed to Wildwood Associates by the Company are included in Wildwood Associates' financial statements under the caption "Land Committed to be Contributed" and are not included in "Land Held for Investment or Future Development" in the Company's financial statements. All costs associated with the land are borne by Wildwood Associates. Through December 31, 2000, IBM had contributed $46.6 million in cash plus properties having an agreed-upon value of $16.3 million for its one-half interest in Wildwood Associates. The Company has contributed $84,000 in cash plus properties having an agreed value of $54.5 million for its one-half interest in the partnership and is obligated to contribute the aforesaid estimated 13 acres of additional land with an agreed value of $8.3 million. The Company and IBM each lease office space from the partnership at rates comparable to those charged to third parties. The Company's investment as recorded in the Consolidated Balance Sheets, which was a negative investment of $39.1 million at December 31, 2000 due to partnership distributions, is based upon the Company's historical cost of the properties at the time they were contributed or committed to be contributed to the partnership, whereas its investment as recorded on Wildwood Associates' books ($2.4 million at December 31, 2000) is based on the agreed-upon values at the time the partnership was formed. CSC Associates, L.P. ("CSC") - CSC was formed in 1989 between the Company and a wholly owned subsidiary of Bank of America Corporation, each as 50% partners. CSC owns the 1.3 million rentable square foot Bank of America Plaza in midtown Atlanta, Georgia. CSC's net income or loss and cash distributions are allocated to the partners based on their percentage interests (50% each). See Note 4 for a discussion of the presentation of certain CSC assets, liabilities and revenues. Charlotte Gateway Village, LLC ("Gateway") - On December 14, 1998, the Company and a wholly owned subsidiary of Bank of America Corporation formed Gateway for the purpose of developing and owning Gateway Village, a 1.1 million rentable square foot office building complex in downtown Charlotte, North Carolina. Construction of Gateway Village commenced in July 1998. The project, which is 100% leased to Bank of America Corporation with a term of 15 years, became partially operational for financial reporting purposes in November 2000. Gateway's net income or loss and cash distributions are allocated to the members as follows: first to the Company so that it receives a cumulative compounded return equal to 11.46% on its capital contributions, second to a wholly owned subsidiary of Bank of America Corporation until it has received an amount equal to the aggregate amount distributed to the Company, and then 50% to each member. In December 1998, Gateway completed construction financing of up to $190 million for Gateway Village (see Note 4). The note bears an interest rate of LIBOR (adjusted for certain reserve requirements) plus .50% and matures January 2, 2002. No amounts were drawn on the note until 1999. This note is fully exculpated and is supported by the lease with Bank of America Corporation. Pursuant to the Gateway operating agreement, this construction financing will be replaced with permanent long-term financing which will be fully amortized at the end of the Bank of America Corporation lease. Cousins LORET Venture, L.L.C. ("Cousins LORET") - Effective July 31, 1997, Cousins LORET was formed between the Company and LORET Holdings, L.L.L.P. ("LORET"), each as 50% members. LORET contributed Two Live Oak Center, a 278,000 rentable square foot office building located in Atlanta, Georgia, which was renovated in 1997. Two Live Oak Center was contributed subject to a 7.90% $30 million non-recourse ten year mortgage note payable (see Note 4). LORET also contributed an adjacent 4-acre site on which construction of The Pinnacle, a 423,000 rentable square foot office building, commenced in August 1997 and was completed in November 1998. The Pinnacle became partially operational for financial reporting purposes in March 1999. The Company contributed $25 million of cash to Cousins LORET to match the value of LORET's agreed-upon equity. In May 1998, Cousins LORET completed the $70 million non-recourse financing of The Pinnacle at an interest rate of 7.11% and a term of twelve years, which was completely funded on December 30, 1998 (see Note 4). 285 Venture, LLC - In March 1999, the Company and a commingled trust fund advised by J.P. Morgan Investment Management Inc. (the "J.P. Morgan Fund") formed 285 Venture, LLC, each as 50% partners, for the purpose of developing 1155 Perimeter Center West, an approximately 362,000 rentable square foot office building complex in Atlanta, Georgia. The J.P. Morgan Fund contributed the approximately 6-acre site upon which 1155 Perimeter Center West was developed. The land had an agreed-upon value of approximately $5.4 million, which the Company matched with a cash contribution. In January 2000, 1155 Perimeter Center West became partially operational for financial reporting purposes. CC-JM II Associates - This joint venture was formed in 1994 between the Company and an affiliate of CarrAmerica Realty Corporation, each as 50% general partners, to develop and own a 224,000 rentable square foot office building in suburban Washington, D.C. The building is 100% leased until January 2011 to Booz-Allen & Hamilton, an international consulting firm, as a part of its corporate headquarters campus. CPI/FSP I, L.P. - In May 2000, CPI/FSP I, L.P., a 50% limited partnership, was formed. 50% of the venture is owned by the Company through a general partnership, Cousins Austin GP, Inc. (1%), and a limited partnership, Cousins Austin, Inc. (49%). The remaining 50% is owned by a general partnership, Fifth Street Properties - Austin, LLC (1%), and a limited partnership, Fifth Street Properties - Austin Investor, LLC (49%), which are both owned by CommonWealth Pacific LLC and CalPERS. CPI/FSP I, L.P. is currently developing Austin Research Park - Buildings III and IV, two approximately 174,000 and 184,000 rentable square foot office buildings, respectively, in Austin, Texas. Additionally, the venture owns an adjacent pad for future development of an approximately 184,000 rentable square foot office building. Ten Peachtree Place Associates ("TPPA") - TPPA is a general partnership between the Company (50%) and a wholly owned subsidiary of The Coca-Cola Company ("Coca-Cola") (50%). The venture owns Ten Peachtree Place, a 259,000 rentable square foot building located in midtown Atlanta, Georgia. The building is 100% leased to Coca-Cola through November 30, 2001. The TPPA partnership agreement generally provides that each of the partners is entitled to receive 50% of cash flows from operating activities net of note principal amortization through the term of the Coca-Cola lease, after which the Company and its partner are entitled to receive 15% and 85% of the cash flows (including any sales proceeds), respectively, until the two partners have received a combined distribution of $15.3 million. Thereafter, each partner is entitled to receive 50% of cash flows. Temco Associates - Temco Associates was formed in 1991 as a partnership between the Company (50%) and a subsidiary of Temple-Inland Inc. (50%). Temco Associates has an option through March 2006, with no carrying costs, to acquire the fee simple interest in approximately 9,600 acres in Paulding County, Georgia (northwest of Atlanta, Georgia). The partnership also has an option to acquire interests in a timber rights only lease covering approximately 22,000 acres. This option also expires in March 2006, with the underlying lease expiring in 2025. The options may be exercised in whole or in part over the option period, and the option price of the fee simple land was $985 per acre at January 1, 2001, escalating at 6% on January 1 of each succeeding year during the term of the option. During 2000, 1999 and 1998, approximately 734, 640 and 328 acres, respectively, of the option related to the fee simple interest was exercised. In 2000, approximately 461 acres were simultaneously sold for gross profits of $1,546,000 and approximately 264 acres were acquired for the development of the Bentwater residential community. Approximately 1,735 lots will be developed within Bentwater on an approximate total of 1,290 acres, the remainder of which will be acquired as needed through exercises of the option related to the fee simple interest. The remaining 9 acres were being held for sale or future development. In 1999, approximately 466 acres were simultaneously sold for gross profits of $2,458,000 and approximately 174 acres were acquired for development of Bentwater. In 1998, approximately 83 acres were simultaneously sold for gross profits of approximately $192,000. The Cobb County YMCA had a three year option to purchase approximately 38 acres out of the total acres of the options exercised in 1998, which they exercised in December 1999. The remaining 207 acres were deeded in early 1999 to a golf course developer who developed the golf course within Bentwater. Temco Associates sold 219 and 106 lots within Bentwater in 2000 and 1999, respectively. Cousins Stone LP - Cousins Stone LP was formed on June 1, 1999 when CREC II's subsidiaries acquired Faison's 50% interest in Faison-Stone. Cousins Stone LP is a full-service real estate company headquartered in Dallas, Texas, that specializes in third party property management and leasing of Class "A" office properties. On July 3, 2000, CREC II purchased an additional 25% interest in Cousins Stone LP from RD Stone Interests, Ltd., increasing CREC II's subsidiaries' total ownership to 75%. Brad Cous Golf Venture, Ltd. ("Brad Cous") - Effective January 31, 1998, the Company formed Brad Cous with W.C. Bradley Co., each as 50% partners, for the purpose of developing and owning The Shops at World Golf Village, an approximately 80,000 square foot retail center located adjacent to the PGA Hall of Fame in St. Augustine, Florida. The Shops at World Golf Village became partially operational for financial reporting purposes in April 1999. Crawford Long - CPI, LLC - In October 1999, the Company formed Crawford Long - CPI, LLC with Emory University, each as 50% partners, for the purpose of developing and owning the Crawford Long Medical Office Building, an approximately 366,000 rentable square foot medical office building located in midtown Atlanta, Georgia. CP Venture LLC, CP Venture Two LLC and CP Venture Three LLC - On November 12, 1998 (the "Closing Date"), the Company entered into a venture arrangement (the "Venture") with The Prudential Insurance Company of America ("Prudential"). On such date the Company contributed its interest in nine properties (the "Properties") to the Venture. At the time of contribution, the Properties were valued by the Company and Prudential based on arm's length negotiations at a total gross value of $283,750,000 subject to mortgages in the principal amount of $53,281,219. The following table details the values allocated to each of the Properties and the mortgages to which certain Properties were subject:
Allocated Value Mortgage Net Value --------------- ---------- ------------ First Union Tower $ 53,000,000 $ -- $ 53,000,000 Grandview II 23,000,000 -- 23,000,000 100 North Point Center East and 200 North Point Center East 46,050,000 24,581,670 21,468,330 Presbyterian Medical Plaza 8,600,000 -- 8,600,000 North Point MarketCenter 56,750,000 28,699,549 28,050,451 Mansell Crossing II 12,350,000 -- 12,350,000 Greenbrier MarketCenter 51,200,000 -- 51,200,000 Los Altos MarketCenter 32,800,000 -- 32,800,000 ------------ ----------- ------------ $283,750,000 $53,281,219 $230,468,781 ============ =========== ============
Under the Venture arrangements, Prudential committed to contribute cash to the Venture equal to the agreed-upon net value of the properties ($230,468,781) at dates specified in the agreements. The following table details the dates on which the cash was contributed and the percentages (including both direct and indirect interests) the Company and Prudential had, respectively, in the economics of the Properties following each contribution:
Total Cumulative Company Prudential Date Cash Contribution Percentage Percentage - ------------- ----------------- ---------- ---------- Closing Date $ 40 million 84.64% 15.36% 12/30/98 $105 million 59.68% 40.32% 3/30/99 $155 million 40.48% 59.52% 6/29/99 $205 million 21.28% 78.72% 9/29/99 $230.469 million 11.50% 88.50%
The structure of the Venture is as follows: CP Venture LLC, the parent entity, owns a 99% interest in each of CP Venture Two LLC ("Property Activity LLC") and CP Venture Three LLC ("Development Activity LLC"). The Company owns a 1% direct interest in Property Activity LLC and Prudential owns a 1% direct interest in Development Activity LLC. The contributed properties are owned and operated by Property Activity LLC. The Company has a 10.6061% interest in CP Venture LLC's 99% interest in Property Activity LLC, which, combined with its 1% direct interest, gives it a net interest of 11.5% in the economics of Property Activity LLC. Prudential has the remaining net interest of 88.5% in the economics of Property Activity LLC. Unless both parties agree otherwise, Property Activity LLC may not sell the contributed properties until the end of lock-out periods (generally three years for retail properties and four years for office and medical office properties). The cash contributed by Prudential was contributed to Development Activity LLC. To the extent such funds are not yet needed for development activity, Development Activity LLC can temporarily invest such funds; such potential investments may include temporary loans to the Company. As of December 31, 2000, the Venture had a note receivable from the Company of approximately $160 million. The Venture earns interest on the outstanding balance at the same rate as the Company's credit facility. Prudential is entitled to 10.6061% of CP Venture LLC's 99% share of the economics of Development Activity LLC, which, combined with its 1% direct interest, entitles it to an overall net interest of 11.5% in the economics of Development Activity LLC. Prudential first receives a priority current return of 9.5% per annum on its share (11.5%) of the initial capital ($230.469 million) ("Initial Capital") of Development Activity LLC. Prudential also receives a liquidation preference whereby it is first entitled to, subject to capital account limitations, sufficient proceeds to allow it to achieve an overall 11.5% internal rate of return on its share of the Initial Capital of Development Activity LLC. After these preferences to Prudential, the Company has certain preferences, with the residual interests in the development activity being shared according to the interests of the parties. All Prudential priority current returns have been distributed to Prudential during the year. The cumulative priority current return of approximately $34.6 million to the Company had not been distributed as of December 31, 2000. CP Venture LLC appointed the Company to serve as Development Manager and in such capacity to act for it in connection with its ownership of Development Activity LLC. CP Venture LLC also appointed Prudential to serve as Property Manager and in such capacity to act for it in connection with its ownership of Property Activity LLC. Prudential appointed the Company to serve as property manager of the Properties for Property Activity LLC. The Company also serves as Administrative Manager of CP Venture LLC. Property Activity LLC is expected to continue to operate the contributed Properties. Development Activity LLC is expected to develop commercial real estate projects over time, as selected by the Development Manager. Development Activity LLC may also make acquisitions, which are anticipated to be redevelopment or value-added opportunities. Development Activity LLC developed Mira Mesa MarketCenter, a 447,000 square foot retail center in suburban San Diego, California, which became partially operational in April 2000. In December 2000, Development Activity LLC acquired One Georgia Center, an approximately 363,000 rentable square foot office building in midtown Atlanta, Georgia. Development Activity LLC is currently developing The Avenue Peachtree City, an approximately 167,000 square foot retail center in suburban Atlanta, Georgia. The parties anticipate that some of the projects currently under consideration by the Company will be undertaken by Development Activity LLC, although the Company has no obligation to make any particular opportunity available to Development Activity LLC. For financial reporting purposes, the Properties were deconsolidated and contributed to Property Activity LLC. Both Property Activity LLC and CP Venture LLC are being treated as unconsolidated joint ventures. Development Activity LLC is treated as a consolidated entity in the Company's financial statements. The Company has deferred the net gain on the contributed Properties and is recognizing this net gain as Gain on Sale of Investment Properties, Net of Applicable Income Tax Provision in the accompanying Consolidated Statements of Income as capital distributions of cash are made from Development Activity LLC to the Company or when the Properties initially contributed to Property Activity LLC are liquidated by Property Activity LLC. The liquidation of the Properties may be in the form of actual sales of the Properties or in the form of the depreciation of the Properties which have an average remaining life of 28 years. The total net deferred gain on the contributed Properties on the Closing Date was approximately $96.8 million over the cost of the Properties. Including depreciation recapture of $23.8 million, the total net deferred gain on the Closing Date was approximately $120.6 million, which has been reduced by approximately $8.7 million through December 31, 2000, and is included in Deferred Gain in the accompanying Consolidated Balance Sheets. Haywood Mall - Haywood Mall, a regional shopping center on 86 acres 5 miles southeast of downtown Greenville, South Carolina, was owned by the Company and Simon Property Group. The mall has 1,256,000 gross leaseable square feet ("GLA") (of which approximately 330,000 GLA was owned). The balance of the mall is owned by the mall's five major department stores. The Company sold its 50% interest to Simon Property Group in June 1999 for $69 million, resulting in a gain of $50.1 million which is included in Gain on Sale of Investment Properties in the accompanying Consolidated Statements of Income. The proceeds from the sale were redeployed through a tax-deferred exchange into Inforum, a 988,000 rentable square foot office building located in downtown Atlanta, Georgia. Other - This category consists of several other joint ventures including: Cousins-Hines Partnerships - Through the Cousins-Hines partnerships, CREC effectively owns 9.8% of the One Ninety One Peachtree Tower in Atlanta, Georgia, subject to a preference in favor of the majority partner. This 1.2 million rentable square foot office building, which opened in December 1990, was developed in partnership with the Hines Interests Limited Partnership and the Dutch Institutional Holding Company ("DIHC"). In October 1997, Cornerstone Properties, Inc. purchased DIHC's interest in the partnership. In June 2000, Equity Office Properties Trust acquired Cornerstone Properties, Inc. Because CREC's effective ownership of this building is less than 20%, the Company accounts for its investment using the cost method of accounting, and therefore the above tables do not include the Company's share of One Ninety One Peachtree Tower. Additional Information - The Company recognized $7,955,000, $9,362,000 and $7,426,000 of development, construction, leasing, and management fees from unconsolidated joint ventures in 2000, 1999 and 1998, respectively. 6. STOCKHOLDERS' INVESTMENT Stock Dividend: On October 2, 2000, a 3-for-2 stock split effected in the form of a 50% stock dividend was awarded to stockholders of record on September 15, 2000. In conjunction with the stock dividend, 16,259,000 shares of common stock were issued and $16,259,000 was transferred from Additional Paid-In-Capital to Common Stock. All prior period shares outstanding, per share amounts, stock options, stock appreciation rights ("SARs") and restricted stock ("stock grants") have been restated for the effect of the stock dividend. 1999 Incentive Stock Plan: In May 1999, the stockholders of the Company approved the adoption of the 1999 Incentive Stock Plan (the "1999 Plan"), which plan, upon adoption, covered the issuance of 1,343,288 shares of common stock, all of which shares had been available for use under the 1995 Stock Incentive Plan, the Stock Plan for Outside Directors and the Stock Appreciation Right Plan (collectively, the "Predecessor Plans"). As of December 31, 2000, 349,793 shares are authorized to be awarded pursuant to the 1999 Plan, which allows awards of stock options, stock grants or SARs. Upon adoption of the 1999 Plan, no additional shares of common stock can be issued under the Predecessor Plans. Stock Options - At December 31, 2000, 4,969,262 of stock options awarded to key employees and outside directors pursuant to both the 1999 Plan and the Predecessor Plans were outstanding. All stock options have a term of 10 years. Key employee stock options granted prior to December 28, 2000 have a vesting period of 5 years under both the 1999 Plan and the Predecessor Plans. Options granted on or after December 28, 2000 have a vesting period of four years. Outside director stock options are fully vested on the grant date under the 1999 Plan but have a vesting period of one year under the Predecessor Plans. SARs - The Company has issued SARs to certain employees under one of the Predecessor Plans and the CREC Stock Appreciation Plan (the "SAR plans"). At December 31, 2000, 88,096 SARs were outstanding, and the Company was authorized to award an additional 1,110,354 SARs. Included in the Consolidated Statements of Income under the heading "stock appreciation right expense" are increases or decreases in accrued compensation expense to reflect the issuance of new SARs, vesting, changes in the market value of the common stock between periods, and forfeitures of non-vested SARs of terminated employees. At December 31, 2000 and 1999, the total amount accrued for SARs was $1,570,000 and $1,637,000, respectively.
The following is a summary of stock option activity under the 1999 Plan, the Predecessor Plans and the SAR plans (in thousands, except per share amounts): Number of Weighted Average Shares Exercise Price Per Share --------------------------- -------------------------------- 2000 1999 1998 2000 1999 1998 ---- ---- ---- ---- ---- ---- 1999 Plan and Predecessor Plans - ------------------------------- Outstanding, beginning of year 4,469 3,629 2,762 $ 17.98 $ 16.37 $ 14.82 Granted 1,021 1,046 1,017 $ 27.41 $ 22.76 $ 20.21 Exercised (316) (125) (78) $ 13.33 $ 12.27 $ 11.41 Forfeited (205) (81) (72) $ 20.73 $ 16.77 $ 16.17 --------------------------- Outstanding, end of year 4,969 4,469 3,629 $ 20.10 $ 17.98 $ 16.37 =========================== Shares exercisable at end of year 2,336 1,913 1,377 $ 16.26 $ 14.49 $ 12.80 =========================== SARs Outstanding, beginning of year 130 147 182 $ 10.03 $ 9.92 $ 10.03 Exercised (35) (15) (35) $ 10.05 $ 9.01 $ 10.54 Forfeited (7) (2) -- $ 8.84 $ 9.15 $ -- --------------------------- Outstanding, end of year 88 130 147 $ 10.12 $ 10.03 $ 9.92 =========================== Shares exercisable at end of year 88 130 147 $ 10.12 $ 10.03 $ 9.92 ===========================
The following table provides a breakdown by exercise price range of the number of shares, weighted average exercise price, and remaining contractual lives for all stock options and SARs outstanding at December 31, 2000 (in thousands, except per share amounts and option life): For Outstanding Options/SARs ---------------------------------- Exercise Weighted Weighted Average Price Average Contractual Life Range Outstanding Exercisable Exercise Price (in years) -------- ----------- ----------- -------------- ---------------- 1999 Plan and Predecessor Plans - ------------------------------- $8.83 to $12.50 850 850 $10.89 3.6 $12.51 to $17.50 497 401 $15.27 5.9 $17.56 to $23.45 2,601 1,043 $21.16 8.0 $23.46 to $28.10 1,021 42 $27.41 9.9 --------------------------------------------------------- Total 4,969 2,336 $20.10 7.4 ========================================================= SARs $8.83 to $11.25 88 88 $10.12 1.6 - -------------------------------------------------------------------------------------------------
Stock Grants - As indicated above, the 1999 Plan provides for stock grants, which may be subject to specified performance and vesting requirements. As of December 31, 2000, 181,609 stock grants have been awarded and are outstanding under the 1999 Plan. In December 2000, the Company awarded 169,777 shares of performance accelerated restricted stock ("PARS") to certain key employees. The PARS will become fully vested upon the achievement of certain defined performance requirements, which can be met as early as the end of the calendar year which includes the third anniversary of the grant date. The PARS will vest in any event if the employee is employed on November 14, 2006. The shares were issued on the grant date and recorded in Common Stock and Additional Paid-in-Capital, with the offset recorded in Unearned Compensation, a separate component of Stockholders' Investment in the accompanying Consolidated Balance Sheets. Unearned Compensation will be amortized into compensation expense over five years, which is the current estimate of the time it will take to meet the performance requirements. If this estimate changes, the amortization of the Unearned Compensation will be adjusted accordingly. In 1999, a stock grant of 22,185 shares was made subject to specified vesting requirements. In 2000, the requirements for 7,395 shares were satisfied and such shares were issued with 2,958 shares being forfeited, leaving 11,832 shares outstanding as of December 31, 2000. Compensation expense related to the 11,832 stock grants is being accrued over the remaining two year vesting period and at December 31, 2000 and 1999, $121,000 and $83,000, respectively, were accrued. In 1995, 150,000 shares were awarded subject to specified performance and vesting requirements. The specified performance and vesting requirements were met in 2000 and the 150,000 shares were issued. Compensation expense related to the shares was accrued over the five year vesting period. Outside directors can elect to receive any portion of their director fees in stock, based on 95% of the market price. Outside directors elected to receive 4,432, 5,289 and 5,823 shares of stock in lieu of cash for director fees in 2000, 1999 and 1998, respectively. SFAS No. 123 Pro Forma Disclosures: The Company has elected to account for its stock-based compensation plans under Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees," which requires the recording of compensation expense for some, but not all, stock-based compensation, rather than the alternative accounting permitted by SFAS No. 123, "Accounting for Stock-Based Compensation." For purposes of the pro forma disclosures required by SFAS No. 123, the Company has computed the value of all stock and stock option awards granted during 2000, 1999 and 1998 using the Black-Scholes option pricing model with the following weighted-average assumptions and results:
2000 1999 1998 ---- ---- ---- Assumptions - ----------- Risk-free interest rate 5.33% 6.36% 4.96% Assumed dividend yield 4.91% 5.28% 5.36% Assumed lives of option awards 8 years 8 years 8 years Assumed volatility 0.202 0.201 0.191 Results - ------- Weighted average fair value of options granted $ 4.20 $ 3.66 $ 2.50
The Black-Scholes option valuation model was developed for use in estimating the fair value of traded options which have no vesting restrictions and are fully transferable. In addition, option valuation models require the input of highly subjective assumptions. In the Company's opinion, because the Company's stock-based compensation awards have characteristics significantly different from traded options and because changes in the subjective assumptions can materially affect the fair value estimate, the results obtained from the valuation model do not necessarily provide a reliable single measure of the value of its stock-based compensation awards. If the Company had accounted for its stock-based compensation awards in 2000, 1999 and 1998 in accordance with SFAS No. 123, pro forma results would have been as follows ($ in thousands, except per share amounts):
2000 1999 1998 ------- -------- ------- Pro forma net income $60,433 $102,629 $44,050 Pro forma basic net income per share $ 1.24 $ 2.13 $ .93 Pro forma diluted net income per share $ 1.22 $ 2.09 $ .92
Because the SFAS No. 123 method of accounting has not been applied to awards granted prior to January 1, 1995, the pro forma compensation adjustments used to derive the above results are not likely to be representative of the pro forma compensation adjustments to be reported in future years. Purchase of Treasury Stock: In February 1999, the Board of Directors of the Company authorized the Company to repurchase up to 1 million shares of common stock prior to January 1, 2001. During 1999, the Company repurchased 153,600 shares of common stock for $4,990,000. There were no repurchases during 2000.
Per Share Data: 2000 1999 1998 ------ ------ ------ Weighted average shares 48,632 48,138 47,403 Dilutive potential common shares 1,099 893 657 ------------------------ Adjusted weighted average shares 49,731 49,031 48,060 ======================== Anti-dilutive options not included 906 1,016 1,810 ========================
Ownership Limitations: In order to maintain Cousins' qualification as a REIT, Cousins' Articles of Incorporation include certain restrictions on the ownership of more than 3.9% of the Company's common stock.
Distribution of REIT Taxable Income: The following is a reconciliation between dividends declared and dividends applied in 1999 and 1998 and estimated to be applied in 2000 to meet REIT distribution requirements ($ in thousands): 2000 1999 1998 ------- ------- ------- Dividends declared $60,315 $53,886 $47,064 Additional dividends paid deduction due to 5% discount on dividends reinvested 628 594 549 That portion of dividends declared in current year, and paid in current year, which was applied to the prior year distribution requirements (5,786) (10,146) (7,644) That portion of dividends declared in subsequent year, and paid in subsequent year, which will apply to current year 6,566 5,786 10,146 ----------------------------- Dividends applied to meet current year REIT distribution requirements $61,723 $50,120 $50,115 =============================
Tax Status of Dividends: Dividends applied to meet REIT distribution requirements were equal to Cousins' taxable income (see Note 7). Since electing to qualify as a REIT in 1987, Cousins has had no accumulated undistributed taxable income. In 2000, the Company designated 91% of the dividend paid May 30, 2000 as 20% capital gain dividends and 5% as 25% unrecaptured Section 1250 gain dividends. In 1999, the Company designated 1% of the dividend paid December 22, 1999 as 20% capital gain dividends. In 1998, the Company designated 5% of the dividend paid December 22, 1998 as 20% capital gain dividends. All other dividends paid in 2000, 1999 and 1998 were taxable as ordinary income dividends. In addition, in 1999 and 1998 an amount calculated as 1.54% and 1.74% of total dividends, respectively, was an "adjustment attributed to depreciation of tangible property placed in service after 1986" for alternative minimum tax purposes. This amount was passed through to stockholders and must be used as an item of adjustment in determining each stockholder's alternative minimum taxable income.
7. INCOME TAXES In 2000, 1999 and 1998, because Cousins qualified as a REIT and distributed all of its taxable income (see Note 6), it incurred no federal income tax liability. The differences between taxable income as reported on Cousins' tax return (estimated 2000 and actual 1999 and 1998) and Consolidated Net Income as reported herein are as follows ($ in thousands): 2000 1999 1998 ------- -------- ------- Consolidated net income $62,043 $104,082 $45,299 Consolidating adjustments (24,773) (24,232) (2,759) Less CREC net loss (income) 771 (5,043) 540 Less CREC II net income (738) (937) -- Cousins net income for financial reporting purposes 37,303 73,870 43,080 Adjustments arising from: Sales of investment properties (3,967) (56,305) (3,940) Income from unconsolidated joint ventures (principally depreciation, revenue recognition, and operational timing differences) 11,673 13,320 (453) Rental income recognition (302) 726 209 Interest income recognition 220 234 372 Property taxes deferred 655 655 1,096 Interest expense 8,634 10,603 4,934 Compensation expense under the 1999 and Predecessor Plans (2,189) (538) 19 Depreciation 9,945 5,236 4,913 Other (249) 2,319 (115) -------------------------------- Cousins taxable income $61,723 $ 50,120 $50,115 ================================
The consolidated (benefit) provision for income taxes is composed of the following ($ in thousands): 2000 1999 1998 ------- ------ ------ CREC and CREC II and their wholly owned subsidiaries: Currently payable: Federal $ 513 $ -- $ -- State -- -- -- 513 -- -- Adjustments arising from: Income from unconsolidated joint ventures (556) (298) 356 Operating loss carryforward (180) 4,465 607 Stock appreciation right expense 741 4 (132) Residential lot sales, net of cost of sales (1,430) (524) (1,114) Other (226) 864 (233) (1,651) 4,511 (516) CREC and CREC II (benefit) provision for income taxes (1,138) 4,511 (516) Cousins provision (benefit) for state income taxes 24 (40) 379 Less provision applicable to gain on sale of investment properties -- (2,029) (11) ----------------------------- Consolidated (benefit) provision applicable to income from operations $(1,114) $2,442 $ (148) =============================
The net income tax (benefit) provision differs from the amount computed by applying the statutory federal income tax rate to CREC's and CREC II's (loss) income before taxes as follows ($ in thousands): 2000 1999 1998 ---------------- --------------- -------------- Amount Rate Amount Rate Amount Rate ------- ---- ------ ---- ------ ---- Federal income tax (benefit) provision $ (398) 34% $4,058 34% $(359) 34% State income tax (benefit) provision, net of federal income tax effect (81) 4 477 4 (42) 4 Other (659) 59 (24) -- (115) 11 ------------------------------------------------------ CREC and CREC II (benefit) provision for income taxes (1,138) 97% 4,511 38% (516) 49% --- --- --- Cousins provision (benefit) for state income taxes 24 (40) 379 Less provision applicable to gain on sale of investment properties -- (2,029) (11) -------- ------ ----- Consolidated (benefit) provision applicable to income from operations $(1,114) $2,442 $(148) ======= ====== =====
The components of CREC and CREC II's net deferred tax liability are as follows ($ in thousands): CREC and CREC II ------------------- 2000 1999 ------- ------- Deferred tax assets $ 5,192 $ 3,905 Deferred tax liabilities (6,663) (5,999) ------------------- Net deferred tax liability $(1,471) $(2,094) =================== The tax effect of significant temporary differences representing CREC and CREC II's deferred tax assets and liabilities are as follows ($ in thousands): CREC and CREC II ------------------ 2000 1999 ------- ------- Operating loss carryforward $ 212 $ 32 Income from unconsolidated joint ventures (3,339) (3,906) Residential lot sales, net of cost of sales 3,212 1,782 Interest capitalization (802) (1,259) Other (754) 1,257 ------------------ Net deferred tax liability $(1,471) $(2,094) ================== 8. PROPERTY TRANSACTIONS Office Division In January 2000, 1155 Perimeter Center West, an approximately 362,000 rentable square foot office building in Atlanta, Georgia, owned by 285 Venture, LLC (see Note 5), became partially operational for financial reporting purposes. Also in January 2000, Crawford Long - CPI, LLC (see Note 5) commenced construction of the Crawford Long medical office building, an approximately 366,000 rentable square foot medical office building in Atlanta, Georgia. In February 2000, 555 North Point Center East, an approximately 152,000 rentable square foot office building in suburban Atlanta, Georgia, became partially operational for financial reporting purposes. In April 2000, 101 Second Street, an approximately 387,000 rentable square foot office building in San Francisco, California, became partially operational for financial reporting purposes. In June 2000, 600 University Park Place, an approximately 123,000 rentable square foot office building in Birmingham, Alabama, became partially operational for financial reporting purposes. Also in June 2000, CPI/FSP I, L.P. (see Note 5) commenced construction of Austin Research Park - Buildings III and IV, two approximately 174,000 and 184,000 rentable square foot office buildings, respectively, in Austin, Texas. In October 2000, 1900 Duke Street, an approximately 97,000 rentable square foot office building in suburban Washington, D.C., became partially operational for financial reporting purposes. In November 2000, Gateway Village, an approximately 1.1 million rentable square foot office building complex in Charlotte, North Carolina, owned by Gateway (see Note 5), became partially operational for financial reporting purposes. In December 2000, CP Venture Three LLC acquired One Georgia Center, an approximately 363,000 rentable square foot office building in midtown Atlanta, Georgia. The purchase price of the building was approximately $35.8 million. Also in December 2000, the Company purchased The Points at Waterview, an approximately 200,000 rentable square foot office building in suburban Dallas, Texas. The purchase price was approximately $25.4 million which includes an adjacent parcel of land on which a second building of approximately 60,000 rentable square feet can be developed. Retail Division In March 2000, the Company sold Laguna Niguel Promenade, an approximately 154,000 square foot retail center located in Laguna Niguel, California, for $26,716,000 which was approximately $6,462,000 over the cost of the center. Including depreciation recapture of approximately $786,000 the net gain on the sale was approximately $7,248,000. In April 2000, Mira Mesa MarketCenter, an approximately 447,000 square foot retail center in suburban San Diego, California, became partially operational for financial reporting purposes. In May 2000, The Avenue of the Peninsula, a 369,000 square foot retail center in Rolling Hills Estates, California, became partially operational for financial reporting purposes. In October 2000, Salem Road Station, an approximately 67,000 square foot neighborhood retail center in suburban Atlanta, Georgia, became partially operational for financial reporting purposes. Land Division The Company is currently developing or has developed seven residential communities in suburban Atlanta, Georgia, including four in which development commenced in 1994, one in 1995, one in 1996 and one in 2000. These developments currently include land on which approximately 1,879 lots are being or were developed, of which 217, 292 and 344 lots were sold in 2000, 1999 and 1998, respectively. As of December 31, 2000, all of the lots in four of the seven residential communities had been sold. In November 1998, Temco Associates began development of the Bentwater residential community, which will consist of approximately 1,735 lots on approximately 1,290 acres (see Note 5). Temco Associates sold 219 and 106 lots in 2000 and 1999, respectively. 9. CONSOLIDATED STATEMENTS OF CASH FLOWS -SUPPLEMENTAL INFORMATION Interest paid (net of amounts capitalized) (see Note 4) and income taxes paid (net of refunds) were as follows ($ in thousands): 2000 1999 1998 ------- ------ ------- Interest paid $11,027 $1,147 $11,258 Income taxes paid, net of $652, $110 and $5 refunded in 2000, 1999 and 1998, respectively $ 3,141 $1,245 $ 110 Significant non-cash financing and investing activities included the following: a. In 2000, 1999 and 1998, approximately $361,617,000, $65,798,000 and $29,939,000, respectively, were transferred from Projects Under Construction to Operating Properties. In 1999, approximately $611,000 was transferred from Projects Under Construction to Land Held for Investment or Future Development. b. In conjunction with the 3-for-2 stock split effected in the form of a 50% stock dividend on October 2, 2000 (see Note 6), approximately $16,259,000 was transferred from Additional Paid-In-Capital to Common Stock. In 2000, in conjunction with the award of PARS (see Note 6), approximately $170,000 was recorded as Common Stock, approximately $4,520,000 was recorded as Additional Paid-In-Capital, and approximately $4,690,000 was recorded as Unearned Compensation. c. In 2000, approximately $1,066,000 was transferred from Land Held for Investment or Future Development to Residential Lots Under Development. In 1998, approximately $1,229,000 was transferred from Land Held for Investment or Future Development to Operating Properties. In 1998, approximately $14,115,000 was transferred from Land Held for Investment or Future Development to Projects Under Construction. d. In June 1998, in conjunction with the acquisition of Northside/Alpharetta I, a mortgage note payable of approximately $10,610,000 was assumed.
e. In November 1998, in conjunction with the formation of the Venture with Prudential (see Note 5), the Company contributed nine properties, certain of which were subject to mortgages, and received net cash of approximately $125,469,000 and $103,025,000 in 1999 and 1998, respectively. The non-cash activities related to the formation of the Venture were as follows: 1999 1998 ------------ ------------ Decrease in: Operating properties, net $ -- $137,746,000 Projects under construction -- 19,684,000 Notes and other receivables -- 3,771,000 Notes payable -- (53,281,000) Investment in unconsolidated joint ventures 111,040,000 -- Increase in: Investment in unconsolidated joint ventures -- (137,544,000) Minority interests 14,429,000 12,075,000 Deferred gain -- 120,574,000 ------------ ------------ Net cash received in formation of venture $125,469,000 $103,025,000 ============ ============
10. RENTAL PROPERTY REVENUES The Company's leases typically contain escalation provisions and provisions requiring tenants to pay a pro rata share of operating expenses. The leases typically include renewal options and are classified and accounted for as operating leases.
At December 31, 2000, future minimum rentals to be received by consolidated entities under existing non-cancelable leases, excluding tenants' current pro rata share of operating expenses, are as follows ($ in thousands): Office and Medical Retail Office Total -------- ---------- ---------- 2001 $ 29,852 $ 76,885 $ 106,737 2002 30,794 75,919 106,713 2003 30,961 74,560 105,521 2004 30,220 69,612 99,832 2005 27,231 62,450 89,681 Subsequent to 2005 201,739 291,525 493,264 ------------------------------------ $350,797 $650,951 $1,001,748 ====================================
11. REPORTABLE SEGMENTS The Company has three reportable segments: Office Division, Retail Division, and Land Division. The Office Division and Retail Division develop, lease and manage office buildings and retail centers, respectively. The Land Division owns various tracts of strategically located land which are being held for future development. The Land Division also develops single-family residential communities which are parceled into lots and sold to various home builders. The accounting policies of the segments are the same as those described in Significant Accounting Policies (see Note 1). The management of the Company evaluates performance of its reportable segments based on Funds From Operations ("FFO"). The Company calculates its FFO using the National Association of Real Estate Investment Trusts definition of FFO adjusted to (i) eliminate the recognition of rental revenues on a straight-line basis, (ii) reflect stock appreciation right expense on a cash basis and (iii) recognize certain fee income as cash is received rather than when recognized in the financial statements. The Company believes its FFO presentation more properly reflects its operating results. The Company's reportable segments are broken down based on what 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 notations (100%) and (JV) used in the following tables indicate wholly owned and unconsolidated joint ventures, respectively, and all amounts are in thousands.
Office Retail Land Unallocated 2000 Division Division Division and Other Total - ---- -------- -------- -------- ----------- ---------- Rental property revenues (100%) $ 82,158 $ 29,627 $ -- $ 90 $ 111,875 Rental property revenues (JV) 66,677 2,316 -- -- 68,993 Development income, management fees and leasing and other fees (100%) 10,059 400 241 -- 10,700 Development income, management fees and leasing and other fees (JV) 5,247 -- -- -- 5,247 Other income (100%) 1,745 1,825 12,126 4,250 19,946 Other income (JV) -- 71 733 58 862 ------------------------------------------------------------------ Total revenues 165,886 34,239 13,100 4,398 217,623 ------------------------------------------------------------------ Rental property operating expenses (100%) 28,052 7,512 -- (8) 35,556 Rental property operating expenses (JV) 18,595 533 -- -- 19,128 Other expenses (100%) 12,351 7,712 11,278 15,943 47,284 Other expenses (JV) 8,189 136 55 12,035 20,415 ------------------------------------------------------------------ Total expenses 67,187 15,893 11,333 27,970 122,383 Gain on sale of undepreciated investment properties -- -- 564 -- 564 Cumulative effect of change in accounting principle (566) -- -- -- (566) ------------------------------------------------------------------ Consolidated funds from operations 98,133 18,346 2,331 (23,572) 95,238 ------------------------------------------------------------------ Depreciation and amortization (100%) (23,030) (7,606) -- (4) (30,640) Depreciation and amortization (JV) (14,812) (813) -- -- (15,625) Effect of the recognition of rental revenues on a straight-line basis (100%) 2,111 -- -- -- 2,111 Effect of the recognition of rental revenues on a straight-line basis (JV) (482) -- -- -- (482) Adjustment to reflect stock appreciation right expense on an accrual basis -- -- -- 68 68 Gain on sale of investment properties, net of applicable income tax provision 1,892 9,481 -- -- 11,373 ------------------------------------------------------------------ Net income 63,812 19,408 2,331 (23,508) 62,043 ------------------------------------------------------------------ Benefit for income taxes from operations -- -- -- (1,114) (1,114) ------------------------------------------------------------------ Income from operations before income taxes $ 63,812 $ 19,408 $ 2,331 $(24,622) $ 60,929 ================================================================== Total assets $767,237 $289,124 $12,296 $ 47,095 $1,115,752 ================================================================== Investment in unconsolidated joint ventures $150,271 $ 16,993 $ 8,207 $ -- $ 175,471 ================================================================== Capital expenditures $146,128 $ 59,803 $10,027 $ -- $ 215,958 ==================================================================
Reconciliation to Consolidated Revenues - --------------------------------------- 2000 1999 1998 -------- ------- ------- Rental property revenues (100%) $111,875 $61,837 $67,378 Effect of the recognition of rental revenues on a straight-line basis (100%) 2,111 643 348 Development income, management fees and leasing and other fees 10,700 13,899 9,578 Residential lot and outparcel sales 13,951 17,857 16,732 Interest and other 5,995 3,588 4,275 ---------------------------------- Total consolidated revenues $144,632 $97,824 $98,311 ==================================
Office Retail Land Unallocated 1999 Division Division Division and Other Total - ---- -------- -------- -------- ----------- -------- Rental property revenues (100%) $ 41,768 $ 19,836 $ -- $ 233 $ 61,837 Rental property revenues (JV) 62,440 10,001 -- -- 72,441 Development income, management fees and leasing and other fees (100%) 12,418 1,112 369 -- 13,899 Development income, management fees and leasing and other fees (JV) 3,858 -- -- -- 3,858 Other income (100%) -- 4,077 13,780 3,588 21,445 Other income (JV) -- -- 3,545 474 4,019 ----------------------------------------------------------------- Total revenues 120,484 35,026 17,694 4,295 177,499 ----------------------------------------------------------------- Rental property operating expenses (100%) 15,138 4,285 -- (23) 19,400 Rental property operating expenses (JV) 17,762 2,374 -- -- 20,136 Other expenses (100%) -- 3,366 12,342 21,267 36,975 Other expenses (JV) 1,968 -- 2,274 15,695 19,937 ----------------------------------------------------------------- Total expenses 34,868 10,025 14,616 36,939 96,448 ----------------------------------------------------------------- Gain on sale of undepreciated investment properties -- -- 222 -- 222 Consolidated funds from operations 85,616 25,001 3,300 (32,644) 81,273 ----------------------------------------------------------------- Depreciation and amortization (100%) (11,792) (3,818) -- (157) (15,767) Depreciation and amortization (JV) (17,215) (2,997) -- -- (20,212) Effect of the recognition of rental revenues on a straight-line basis (100%) 643 -- -- -- 643 Effect of the recognition of rental revenues on a straight-line basis (JV) (440) (61) -- -- (501) Adjustment to reflect stock appreciation right expense on an accrual basis -- -- -- 101 101 Gain on sale of investment properties, net of applicable income tax provision 1,892 56,653 -- -- 58,545 ----------------------------------------------------------------- Net income 58,704 74,778 3,300 (32,700) 104,082 ----------------------------------------------------------------- Provision for income taxes from operations -- -- -- 2,442 2,442 ----------------------------------------------------------------- Income from operations before income taxes $ 58,704 $ 74,778 $ 3,300 $(30,258) $106,524 ================================================================= Total assets $636,323 $240,258 $11,496 $ 44,848 $932,925 ================================================================= Investment in unconsolidated joint ventures $127,954 $ 17,179 $ 6,600 $ 4 $151,737 ================================================================= Capital expenditures $308,363 $ 23,663 $ 5,935 $ -- $337,961 =================================================================
Office Retail Land Unallocated 1998 Division Division Division and Other Total - ---- -------- -------- -------- ----------- -------- Rental property revenues (100%) $ 35,590 $ 31,315 $ -- $ 473 $ 67,378 Rental property revenues (JV) 49,278 10,168 -- -- 59,446 Development income, management fees and leasing and other fees 8,886 692 -- -- 9,578 Other income (100%) -- -- 16,732 4,275 21,007 Other income (JV) -- -- 181 294 475 ----------------------------------------------------------------- Total revenues 93,754 42,175 16,913 5,042 157,884 ----------------------------------------------------------------- Rental property operating expenses (100%) 11,232 6,308 -- 162 17,702 Rental property operating expenses (JV) 14,163 2,933 -- -- 17,096 Other expenses (100%) -- -- 16,414 26,602 43,016 Other expenses (JV) -- -- 80 9,138 9,218 ----------------------------------------------------------------- Total expenses 25,395 9,241 16,494 35,902 87,032 Gain on sale of undepreciated investment properties -- -- 3,421 -- 3,421 ----------------------------------------------------------------- Consolidated funds from operations 68,359 32,934 3,840 (30,860) 74,273 ----------------------------------------------------------------- Depreciation and amortization (100%) (8,497) (5,742) -- (430) (14,669) Depreciation and amortization (JV) (12,047) (1,670) -- -- (13,717) Effect of the recognition of rental revenues on a straight-line basis (100%) 348 -- -- -- 348 Effect of the recognition of rental revenues on a straight-line basis (JV) (1,578) 111 -- -- (1,467) Adjustment to reflect stock appreciation right expense on an accrual basis -- -- -- 8 8 Gain on sale of investment properties, net of applicable income tax provision 247 276 -- -- 523 ----------------------------------------------------------------- Net income 46,832 25,909 3,840 (31,282) 45,299 ----------------------------------------------------------------- Benefit for income taxes from operations -- -- -- (148) (148) ----------------------------------------------------------------- Income from operations before income taxes $ 46,832 $ 25,909 $ 3,840 $(31,430) $ 45,151 ================================================================= Total assets $435,851 $255,207 $ 9,912 $ 51,888 $752,858 ================================================================= Investment in unconsolidated joint ventures $163,903 $ 99,661 $ 1,082 $ 2 $264,648 ================================================================= Capital expenditures $130,077 $ 55,161 $ 9,015 $ -- $194,253 =================================================================
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS - -------------------------------------------------------------------------------- To Cousins Properties Incorporated: We have audited the accompanying consolidated balance sheets of Cousins Properties Incorporated (a Georgia corporation) and consolidated entities as of December 31, 2000 and 1999, and the related consolidated statements of income, stockholders' investment and cash flows for each of the three years in the period ended December 31, 2000. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We did not audit the financial statements of CSC Associates, L.P. as of December 31, 2000 and 1999 and for each of the three years in the period ended December 31, 2000 and Haywood Mall for the period ended December 31, 1998, which statements reflect assets of 16% and 18%, respectively, of the joint venture totals as of December 31, 2000 and 1999 and revenues of 22%, 28% and 46% of the 2000, 1999 and 1998 joint venture totals, respectively. Those statements were audited by other auditors whose reports have been furnished to us and our opinion, insofar as it relates to the amounts included for those entities as of December 31, 2000 and 1999 and for each of the three years in the period ended December 31, 2000, is based solely on the reports of the other auditors. We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits and the reports of other auditors provide a reasonable basis for our opinion. In our opinion, based on our audits and the reports of other auditors, the financial statements referred to above present fairly, in all material respects, the financial position of Cousins Properties Incorporated and consolidated entities as of December 31, 2000 and 1999 and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2000 in conformity with accounting principles generally accepted in the United States. ARTHUR ANDERSEN LLP Atlanta, Georgia February 6, 2001
FIVE YEAR SUMMARY OF SELECTED FINANCIAL DATA - ------------------------------------------------------------------------------------------------------------------- ($ in thousands, except per share amounts) 2000 1999 1998 1997 1996 ---------- -------- -------- -------- ------- Rental property revenues $ 113,986 $ 62,480 $ 67,726 $ 62,252 $ 33,112 Fees 10,700 13,899 9,578 7,291 6,019 Residential lot and outparcel sales 13,951 17,857 16,732 12,847 14,145 Interest and other 5,995 3,588 4,275 3,609 5,256 ----------------------------------------------------------------------- Total revenues 144,632 97,824 98,311 85,999 58,532 ----------------------------------------------------------------------- Income from unconsolidated joint ventures 19,452 19,637 18,423 15,461 17,204 ----------------------------------------------------------------------- Rental property operating expenses 33,416 19,087 17,702 15,371 7,616 Depreciation and amortization 32,784 16,859 15,173 14,046 7,219 Stock appreciation right expense 468 108 330 204 2,154 Residential lot and outparcel cost of sales 11,684 14,897 15,514 11,917 13,676 Interest expense 13,596 600 11,558 14,126 6,546 General, administrative, and other expenses 22,578 18,153 15,250 16,018 12,016 ----------------------------------------------------------------------- Total expenses 114,526 69,704 75,527 71,682 49,227 (Benefit) provision for income taxes from operations (1,114) 2,442 (148) (1,527) (1,703) Gain on sale of investment properties, net of applicable income tax provision 11,937 58,767 3,944 5,972 12,804 Cumulative effect of change in accounting principle (566) -- -- -- -- ----------------------------------------------------------------------- Net income $ 62,043 $104,082 $ 45,299 $ 37,277 $ 41,016 ======================================================================= Basic net income per share $ 1.28 $ 2.16 $ .96 $ .85 $ .96 ======================================================================= Diluted net income per share $ 1.25 $ 2.12 $ .94 $ .84 $ .95 ======================================================================= Cash dividends declared per share $ 1.24 $ 1.12 $ .99 $ .86 $ .75 ======================================================================= Total assets $1,115,752 $932,925 $752,858 $617,739 $556,644 Notes payable 485,085 312,257 198,858 226,348 231,831 Stockholders' investment 454,467 437,722 379,865 370,674 299,184 Shares outstanding at year-end 49,210 48,261 47,754 47,131 43,303
Cousins Properties Incorporated and Consolidated Entities MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - -------------------------------------------------------------------------------- Results of Operations For The Three Years Ended December 31, 2000 General. Historically, the Company's financial results have been significantly affected by sale transactions and the fees generated by, and start-up operations of, major real estate developments, which transactions and developments do not necessarily recur. Accordingly, the Company's historical financial statements may not be indicative of future operating results. The notes referenced in the discussion below are the "Notes to Consolidated Financial Statements" included in this annual report. Rental Property Revenues and Operating Expenses. Rental property revenues decreased from $67,726,000 in 1998 to $62,480,000 in 1999 and then increased to $113,986,000 in 2000. Rental property revenues from the Company's office division increased approximately $41,858,000 in 2000. Rental property revenues from 101 Second Street, which became partially operational for financial reporting purposes in April 2000, contributed approximately $12,320,000 to the increase. The June 1999 acquisition of Inforum, a 988,000 rentable square foot office building located in downtown Atlanta, Georgia, increased rental property revenues approximately $12,167,000. Three office buildings, AT&T Wireless Services Headquarters, 555 North Point Center East and 333 John Carlyle, which became partially operational for financial reporting purposes in September 1999, February 2000 and May 1999, respectively, contributed approximately $5,417,000, $2,487,000 and $1,835,000, respectively, to the increase. Two medical office buildings, Northside/Alpharetta II and Meridian Mark Plaza, which became partially operational for financial reporting purposes in September 1999 and April 1999, respectively, contributed approximately $2,196,000 and $2,133,000, respectively, to the increase. Two other office buildings, 600 University Park Place and 1900 Duke Street, which became partially operational for financial reporting purposes in June 2000 and October 2000, respectively, contributed $759,000 and $564,000, respectively, to the increase. Additionally, the purchase of One Georgia Center in December 2000 (see Note 8) contributed approximately $590,000 to the increase. Rental property revenues from 615 Peachtree Street increased approximately $571,000 due to an increase in average economic occupancy from 66% in 1999 to 82% in 2000 and 101 Independence Center's average economic occupancy also increased from 97% in 1999 to 98% in 2000, which contributed approximately $460,000 to the increase. Rental property revenues from the Company's retail division increased approximately $9,791,000 in 2000. Rental property revenues from The Avenue East Cobb, which became partially operational for financial reporting purposes in September 1999, contributed approximately $4,557,000 to the increase. Two retail centers, Mira Mesa MarketCenter and The Avenue of the Peninsula, both of which became partially operational for financial reporting purposes in May 2000, contributed approximately $3,359,000 and $3,247,000, respectively, to the increase. Additionally, Salem Road Station became partially operational in October 2000, which contributed approximately $161,000 to the increase. The increase was partially offset by approximately $1,873,000 from the March 2000 sale of Laguna Niguel Promenade. Rental property revenues increased approximately $6,473,000 in 1999 from the Company's office division. The aforementioned June 1999 acquisition of Inforum increased rental property revenues by approximately $5,656,000. The aforementioned two office buildings, 333 John Carlyle and AT&T Wireless Services Headquarters, which became partially operational for financial reporting purposes in May 1999 and September 1999, respectively, contributed approximately $2,178,000 and $2,506,000, respectively, to the increase. Three medical office buildings, Meridian Mark Plaza, AtheroGenics and Northside/Alpharetta II, became partially operational for financial reporting purposes in April 1999, March 1999 and September 1999, respectively, which contributed approximately $2,441,000, $780,000 and $636,000, respectively, to the increase. 333 North Point Center East became partially operational in June 1998 which contributed approximately $1,468,000 to the 1999 increase. The June 1998 acquisitions of Lakeshore Park Plaza and Northside/Alpharetta I increased rental property revenues approximately $1,273,000 and $1,152,000, respectively, in 1999. The increase in office rental property revenues in 1999 was partially offset by decreases of approximately $5,602,000, $2,474,000, $2,528,000, $1,141,000 and $499,000, respectively, due to the contribution of First Union Tower, 100 North Point Center East, 200 North Point Center East, Presbyterian Medical Plaza at University and Grandview II to CP Venture Two LLC in November 1998, which revenue is included in Income from Unconsolidated Joint Ventures from the date of contribution (see Note 5). Rental property revenues from the Company's retail division decreased approximately $11,479,000 in 1999. The decrease was mainly due to the contribution of North Point MarketCenter, Greenbrier MarketCenter, Los Altos MarketCenter and Mansell Crossing Phase II to CP Venture Two LLC in November 1998 (see Note 5), which decreased rental property revenues by approximately $4,904,000, $4,502,000, $2,990,000 and $1,190,000, respectively, in 1999. Rental property revenues from these properties are included in Income from Unconsolidated Joint Ventures from the date of contribution. The sale of Abbotts Bridge Station in February 1999 also contributed approximately $1,305,000 to the decrease in 1999. The decrease was partially offset by an increase of approximately $1,681,000 in rental property revenues from Laguna Niguel Promenade, which became partially operational for financial reporting purposes in July 1998, and by approximately $1,431,000 from The Avenue East Cobb, which became partially operational for financial reporting purposes in September 1999. Rental property operating expenses increased from $17,702,000 in 1998 to $19,087,000 and $33,416,000 in 1999 and 2000, respectively. The increases in both 1999 and 2000 were due primarily to the aforementioned office buildings, medical office buildings and retail centers becoming partially operational as well as the acquisitions of Inforum in June 1999 and One Georgia Center in December 2000. The increase in 2000 was partially offset by approximately $317,000 due to the March 2000 sale of Laguna Niguel Promenade. The increase in 1999 was partially offset by approximately $183,000 due to the February 1999 sale of Abbotts Bridge Station. The increase in 1999 was also partially offset by the contribution of nine properties to CP Venture Two LLC in November 1998, which rental property operating expenses from these nine properties was recognized by the Company through Income from Unconsolidated Joint Ventures from the date of contribution (see Note 5). Development Income. Development income increased from $3,007,000 in 1998 to $6,165,000 in 1999 and then decreased to $4,251,000 in 2000. Development income decreased in 2000 by approximately $706,000 from the build-to-suit for Walgreens on an outparcel at Colonial Plaza MarketCenter, approximately $628,000 from the third party development of Total Systems' corporate headquarters, and approximately $591,000 from Cousins LORET as construction of The Pinnacle was completed in 1999. Development income also decreased approximately $182,000 due to a decrease in development fees from the 4200 Wildwood Parkway building, which was completed in 1999, and approximately $251,000 from a decrease in medical office division third party development fees. The decrease in development income in 2000 was partially offset by an increase in development fees of approximately $462,000 from the Crawford Long Hospital campus redevelopment and joint venture medical office building. The increase in development income in 1999 was partially due to development fees recognized from three of the Company's ventures which are developing Gateway Village ($978,000), 1155 Perimeter Center West ($939,000) and the Bentwater residential development ($369,000). Additionally, development income increased approximately $908,000 from the Crawford Long Hospital campus redevelopment and joint venture medical office building. The Company also recognized development income of approximately $706,000 for the build-to-suit for Walgreens on an outparcel at Colonial Plaza MarketCenter and approximately $323,000 from the third party development of Cox Enterprises' corporate headquarters. This increase was partially offset by approximately $605,000 which was recognized in 1998 from Brad Cous for the development of The Shops at World Golf Village. Development fees from Cousins LORET for the development of The Pinnacle also decreased by approximately $310,000, which also partially offset the increase in 1999. Management Fees. Management fees increased from $3,761,000 in 1998 to $4,743,000 and $4,841,000 in 1999 and 2000, respectively. Management fees increased in both 1999 and 2000 due to lease-up of several properties at certain joint ventures from which management fees are received. The increase in 2000 was partially offset by the disposition of the medical office third party management division in October 2000. Leasing and Other Fees. Leasing and other fees increased from $2,810,000 in 1998 to $2,991,000 in 1999 and then decreased to $1,608,000 in 2000. Leasing fees decreased in 2000 by approximately $987,000 due to a lease signed by CREC at Inforum prior to the Company's acquisition of the building in 1999. Leasing fees from Cousins LORET also decreased approximately $740,000 in 2000, primarily related to the lease-up of The Pinnacle in 1998 and 1999. A higher amount of leasing fees from the lease-up of 1155 Perimeter Center West, owned by 285 Venture, LLC, were recognized in 1999, also contributing to the decrease by approximately $307,000. The decrease in 2000 was partially offset by an increase of approximately $330,000 due to a fee recognized for representing the owners of a third party managed medical office building in the sale of that property and by an increase of approximately $180,000 in leasing fees from the Crawford Long Medical Office Building. Leasing fees increased in 1999 by approximately $987,000 due to the aforementioned lease signed by CREC at Inforum. Approximately $616,000 of leasing fees were also recognized in 1999 from 285 Venture, LLC for leasing the 1155 Perimeter Center West office building. Partially offsetting the increase in 1999 was a decrease of approximately $976,000 from Wildwood Associates, primarily due to leasing fees recognized in 1998 related to the lease-up of the 4200 Wildwood Parkway Building. Leasing fees also decreased approximately $367,000 from CSC due to a higher level of leasing fees recognized in 1998 due to increased occupancy at Bank of America Plaza. Residential Lot and Outparcel Sales and Cost of Sales. Residential lot and outparcel sales increased from $16,732,000 in 1998 to $17,857,000 in 1999 and then decreased to $13,951,000 in 2000. Residential lot sales decreased from $15,932,000 in 1998 to $13,779,000 and $12,126,000 in 1999 and 2000, respectively, due to a decrease in the number of residential lots sold from 344 lots in 1998 to 292 and 217 lots in 1999 and 2000, respectively. The decrease in residential lot and outparcel sales was also due to a decrease in outparcel sales of approximately $2,252,000 in 2000. There were two outparcel sales in 1999 totaling $4,078,000, primarily from one sale of $3,477,000, as compared to three outparcel sales in 2000 totaling $1,825,000. The increase in residential lot and outparcel sales in 1999 was due to two outparcel sales totaling $800,000 in 1998 as compared to two in 1999 totaling $4,078,000. Residential lot and outparcel cost of sales decreased from $15,514,000 in 1998 to $14,897,000 and $11,684,000 in 1999 and 2000, respectively, partially due to the aforementioned decreases in lot sales and partially due to increases in gross profit percentages used to calculate the cost of sales (which causes a decrease in cost of sales) for residential lot sales in certain of the residential developments in 1999, with a further increase in these gross profit percentages in 2000. The decrease in cost of sales in 2000 was also due to higher outparcel cost of sales in 1999 mainly due to the aforementioned outparcel sale, which decreased cost of sales in 2000 and increased cost of sales in 1999 by approximately $2,857,000. Interest and Other Income. Interest and other income decreased from $4,275,000 in 1998 to $3,588,000 in 1999 and then increased to $5,995,000 in 2000. Interest and other income increased approximately $1,745,000 in 2000 due to interest from the $18.6 million note receivable from Gateway. The increase in 2000 was also due to approximately $654,000 of additional interest income recognized from the 650 Massachusetts Avenue mortgage notes (see Note 3). The decrease in 1999 was due to interest income of approximately $714,000 recognized in 1998 from a note receivable due from Cousins LORET. The Company lent funds beginning in June 1998 to Cousins LORET at a slightly higher rate than its borrowing costs, until December 1998 when Cousins LORET drew down funds from its $70 million non-recourse financing of The Pinnacle. Income From Unconsolidated Joint Ventures. (All amounts reflect the Company's share of joint venture income.) Income from unconsolidated joint ventures increased from $18,423,000 in 1998 to $19,637,000 in 1999 and then decreased to $19,452,000 in 2000. Income from CSC increased from $10,021,000 in 1998 to $10,402,000 and $10,613,000 in 1999 and 2000, respectively. The increases in both 1999 and 2000 were due to the continued lease-up of Bank of America Plaza. Average economic occupancy of Bank of America Plaza increased from 94% in 1998 to 97% and 99% in 1999 and 2000, respectively. Income from Wildwood Associates increased from $1,968,000 in 1998 to $2,453,000 and $3,844,000 in 1999 and 2000, respectively. Income before depreciation, amortization and interest expense from the 3200 Windy Hill Road Building and the 4200 Wildwood Parkway Building increased approximately $731,000 and $257,000, respectively, due to an increase in both buildings' average economic occupancies from 90% in 1999 to 100% in 2000. Income before depreciation, amortization and interest expense from the 2300 Windy Ridge Parkway Building also increased approximately $124,000 due to an increase in average economic occupancy from 95% in 1999 to 98% in 2000. Additionally, depreciation and amortization expense decreased by $186,000 mainly due to certain tenant assets becoming fully amortized during 2000. Also contributing to the increase in income from Wildwood Associates was a decrease in interest expense of approximately $195,000 resulting from lower debt levels in 2000. Partially offsetting the increase in income from Wildwood Associates was a decrease of approximately $196,000 in income before depreciation, amortization and interest expense from the 2300 Windy Ridge Parkway Building due to a decrease in average economic occupancy from 100% in 1999 to 99% in 2000 and to rollovers in tenants during 2000. Income before depreciation, amortization and interest expense from the 4200 Wildwood Parkway Building increased approximately $1,571,000 in 1999 due to the building becoming partially operational for financial reporting purposes in June 1998. Income before depreciation, amortization and interest expense from the 2300 and 2500 Windy Ridge Parkway Buildings favorably impacted results in 1999 by approximately $189,000 and $175,000, respectively, due to increased average economic occupancy of both of these properties in 1999. Income before depreciation, amortization and interest expense from the 3200 Windy Hill Road Building favorably impacted results in 1999 by approximately $415,000 primarily due to an adjustment to straight-line rental revenue in accordance with SFAS No. 13 which caused a reduction in rental property revenues. The increase in income from Wildwood Associates in 1999 was partially offset by an increase in interest expense of approximately $732,000 due to the June 1998 non-recourse financing of the 4200 Wildwood Parkway Building. Capitalized interest decreased (which increases interest expense) approximately $731,000 due to interest expense no longer being capitalized to the 4200 Wildwood Parkway Building effective October 1998. Also partially offsetting the increase in 1999 was an increase in depreciation and amortization of approximately $569,000 due to the 4200 Wildwood Parkway Building becoming operational in 1998. Income from Cousins LORET decreased from $672,000 in 1998 to $53,000 in 1999 and further decreased to a loss of $384,000 in 2000. The decrease in 2000 was partially due to a decrease in capitalized interest of approximately $1,072,000 due to completion of construction of The Pinnacle. Additionally, depreciation and amortization expense increased approximately $983,000 due to The Pinnacle becoming fully operational for financing reporting purposes in December 1999. Further contributing to the decrease in income from Cousins LORET in 2000 was decreased interest income of approximately $418,000 due to investments that were made in 1999 using the proceeds from the $70 million financing of The Pinnacle, which was funded in December 1998, which were being held to complete The Pinnacle. Partially offsetting the decrease in 2000 was an increase in income before depreciation, amortization and interest expense from The Pinnacle of approximately $1,826,000 due to an increase in average economic occupancy from 80% in 1999 to 92% in 2000. Further offsetting the decrease in 2000 was an increase of approximately $147,000 in income before depreciation, amortization and interest expense from Two Live Oak Center due to an increase in average economic occupancy from 98% in 1999 to 99% in 2000. The decrease in income from Cousins LORET in 1999 was partially due to an increase in interest expense before capitalization of approximately $2,123,000 due to the funding of the $70 million non-recourse financing of The Pinnacle office building on December 30, 1998. Capitalized interest decreased approximately $369,000 due to The Pinnacle becoming partially operational in March 1999. Additionally, depreciation and amortization increased approximately $1,572,000 mainly due to The Pinnacle becoming partially operational. Income before depreciation, amortization and interest expense from The Pinnacle and Two Live Oak Center partially offset the decrease by approximately $2,672,000 and $281,000, respectively. Also partially offsetting the decrease was an increase of approximately $485,000 in interest income in 1999. Income from Temco Associates increased from $97,000 in 1998 to $1,270,000 in 1999 and then decreased to $678,000 in 2000. During 2000, approximately 461 acres of the option related to the fee simple interest was exercised and simultaneously sold. CREC's share of the gain on these sales was approximately $773,000. During 1999 and 1998, approximately 466 acres and 83 acres, respectively, of the option related to the fee simple interest was exercised and simultaneously sold. CREC's share of the gain on these sales was approximately $1,229,000 and $96,000, in 1999 and 1998, respectively. Income from Gateway increased approximately $762,000 in 2000 due to the Company recognizing its 11.46% current preferred return on its equity in Gateway beginning in the third quarter 2000. Income from 285 Venture, LLC increased approximately $831,000 in 2000 as 1155 Perimeter Center West became partially operational for financial reporting purposes in January 2000. Income from CP Venture LLC decreased from $280,000 in 1998 to $82,000 in 1999 and then increased to $611,000 in 2000. The increase in 2000 was due to a decrease in depreciation and amortization expense. Depreciation and amortization expense was higher in 1999 due to a true-up of 1998 depreciation and amortization expense. Income from Haywood Mall decreased from $4,614,000 in 1998 to $2,433,000 and $71,000 in 1999 and 2000, respectively. The decreases were due to the sale of the Company's 50% interest in the mall in June 1999. General and Administrative Expenses. General and administrative expenses increased from $13,087,000 in 1998 to $14,961,000 and $18,452,000 in 1999 and 2000, respectively. General and administrative expenses increased approximately $2,825,000 and $3,491,000 in 1999 and 2000 due to the Company's continued expansion. The 1999 increase was partially offset by an increase in costs capitalized to projects under development of approximately $951,000, as the level of projects under development increased from 1998 to 1999. Depreciation and Amortization. Depreciation and amortization increased from $15,173,000 in 1998 to $16,859,000 and $32,784,000 in 1999 and 2000, respectively. The increases in both 1999 and 2000 were mainly due to the aforementioned office buildings, medical office buildings and retail centers becoming operational. The increases in both 1999 and 2000 were also due to the acquisition of Inforum in June 1999. The increase in 2000 was partially offset by the sale of Laguna Niguel Promenade in March 2000. The increase in 1999 was partially offset by a decrease in depreciation and amortization due to the contribution of nine properties in November 1998 to CP Venture Two LLC, which expenses are included in Income from Unconsolidated Joint Ventures from the date of contribution (see Note 5). Stock Appreciation Right Expense. Stock appreciation right expense decreased from $330,000 in 1998 to $108,000 in 1999 and then increased to $468,000 in 2000. This non-cash item is primarily related to the number of stock appreciation rights outstanding and the Company's stock price. The Company's stock price was $27.9375, $22.625 and $21.50 per share at December 31, 2000, 1999 and 1998, respectively. A reduction in the number of stock appreciation rights outstanding due to exercises or forfeitures partially offset the increase in the stock appreciation right expense in 2000. Interest Expense. Interest expense decreased from $11,558,000 in 1998 to $600,000 in 1999 and then increased to $13,596,000 in 2000. Interest expense before capitalization decreased from $19,028,000 in 1998 to $16,755,000 in 1999 and then increased to $28,881,000 in 2000. Interest expense before capitalization increased in 2000 due primarily to increases in the net amounts drawn on the Company's credit facility. Also the Company completed three new non-recourse mortgages in 2000, 101 Second Street in April 2000, The Avenue East Cobb in July 2000 and Meridian Mark Plaza in August 2000 (see Note 4). The amount of interest capitalization (a reduction of interest expense), which changes parallel to the level of projects under development, decreased from $16,155,000 in 1999 to $15,285,000 in 2000 due to a lower level of projects under development in 2000. Interest expense before capitalization decreased in 1999 primarily due to the contributions of North Point MarketCenter and 100 and 200 North Point Center East, subject to the related mortgage notes payable, to CP Venture Two LLC in November 1998 (see Note 5). The decrease was partially offset by increased interest expense from higher amounts outstanding under the Company's credit facility in 1999. Additionally, the Company assumed the mortgage note payable of Northside/Alpharetta I when it acquired the property in June 1998 and completed the financing of Lakeshore Park Plaza in October 1998, both of which increased interest expense before capitalization in 1999. The amount of interest capitalization increased from $7,470,000 in 1998 to $16,155,000 in 1999, which more than offset the increase in interest expense and resulted in a net decrease in interest expense in 1999. Property Taxes on Undeveloped Land. Property taxes on undeveloped land decreased from $900,000 in 1998 to $811,000 and $40,000 in 1999 and 2000, respectively. Property taxes on undeveloped land decreased in 2000 due to the reversal of estimated amounts accrued for anticipated reassessments of the Company's North Point and Wildwood land holdings. The final reassessments, after appeal, were lower than the anticipated reassessment, and the accrual was reduced. Other Expenses. Other expenses increased from $1,263,000 in 1998 to $2,381,000 and $4,086,000 in 1999 and 2000, respectively. The increase in 2000 was partially due to the minority interest's current participation in 101 Second Street, which became partially operational for financial reporting purposes in April 2000, of approximately $829,000. The increases in 2000 and 1999 were also due to increases of approximately $606,000 and $1,850,000, respectively, in Prudential's minority interest in CP Venture Three LLC (see Note 5). Also contributing to the increase in 2000, and partially offsetting the increase in 1999, was a reversal in 1999 of an accrual of approximately $461,000. This accrual was related to an indemnification an insurance company in rehabilitation had made to the Company in 1974 but had defaulted on in 1993. The insurance company, while still in rehabilitation, has been determined to be solvent, and the Company's claim has been formally accepted and approved. The increase in 1999 was also partially offset by a decrease in predevelopment expense of approximately $408,000. (Benefit) Provision for Income Taxes From Operations. The benefit for income taxes from operations increased from a benefit of $148,000 in 1998 to a provision for income taxes from operations of $2,442,000 in 1999 then decreased to a benefit of $1,114,000 in 2000. The decrease from a provision in 1999 to a benefit in 2000 was due to a decrease of approximately $6,978,000 from income before income taxes and gain on sale of investment properties of $5,118,000 in 1999 to a loss before income taxes and gain on sale of investment properties of $1,860,000 in 2000 from CREC and its subsidiaries. Such decrease was due to decreases in residential lot sales, net of cost of sales, net commissions from home sales, income from Temco Associates and income from Hickory Hollow Associates. Salaries and related benefits and predevelopment expenses also increased in 2000, which contributed to the loss before income taxes and gain on sale of investment properties from CREC and its subsidiaries. Also contributing to the decrease from a provision for income taxes in 1999 to a benefit for income taxes in 2000 was a decrease of approximately $656,000 in income before income taxes from CREC II and its subsidiaries. Such decrease was due to an increase in interest expense and stock bonus plan expense in 2000. Additionally, true-ups in the accruals required for income taxes related to the 1999 tax returns were also made for CREC and its subsidiaries and CREC II and its subsidiaries which increased the 2000 benefit for income taxes from operations by approximately $548,000 and $208,000, respectively. The increase from a benefit in 1998 to a provision in 1999 was due to an increase of approximately $6,183,000 from a loss before income taxes and gain on sale of investment properties to income before income taxes and gain on sale of investment properties of $5,118,000 in 1999 from CREC and its subsidiaries. Such increase was related to increases in residential lot sales, net of cost of sales, leasing fees, and income from Temco Associates. A decrease in general and administrative expenses and a reduction in predevelopment expense also contributed to the increase in income before income taxes and gain on sale of investment properties. Additionally, CREC II and its subsidiaries had a provision for income taxes from operations of approximately $574,000 in 1999 related to the income recognized from Cousins Stone LP which was formed in June 1999. Gain on Sale of Investment Properties. Gain on sale of investment properties, net of applicable income tax provision, was $3,944,000, $58,767,000 and $11,937,000 in 1998, 1999 and 2000, respectively. The 2000 gain included the following: the March 2000 sale of Laguna Niguel Promenade ($7.2 million), the April 2000 sale of 2 acres of North Point land ($.6 million) and the amortization of net deferred gain from the Prudential transaction ($4.1 million) (see Note 5). The 1999 gain included the following: the January 1999 sale of 3 acres of McMurray land ($.1 million), the February 1999 sale of Abbotts Bridge Station ($3.5 million), the March 1999 sale of Kennesaw Crossings shopping center ($.9 million), the May 1999 sale of 2 acres at Hidden Hills ($.1 million), the June 1999 sale of the Company's 50% interest in Haywood Mall ($50.1 million) (see Note 5), and the amortization of net deferred gain from the Prudential transaction ($4.1 million) (see Note 5). Cumulative Effect of Change in Accounting Principle. The Company's early adoption of SFAS No. 133 on October 1, 2000 resulted in a reduction in net income of approximately $566,000, which was recorded as a cumulative effect of change in accounting principle in the accompanying Consolidated Statements of Income. The Company owns 248,441 warrants to purchase common stock of Cypress Communications, Inc. which were previously recorded as an asset with an estimated value of approximately $566,000. SFAS No. 133 only affects the Company as it relates to its ownership of warrants to purchase common stock in other companies, which under SFAS No. 133 are considered derivatives and must be marked-to-market each period. Liquidity and Capital Resources: Financial Condition. The Company's adjusted debt (including its pro rata share of unconsolidated joint venture debt) was 33% of total market capitalization at December 31, 2000. Adjusted debt is defined as the Company's debt and the Company's pro rata share of unconsolidated joint venture debt as disclosed in Note 4, excluding the Charlotte Gateway Village, LLC debt as it is fully exculpated debt which is supported by a long-term lease to Bank of America Corporation. As discussed in Note 4, in December 2000, the Company temporarily increased its $150 million credit facility to $225 million, which increase expires June 30, 2001. The Company had $174.3 million drawn on this credit facility as of December 31, 2000. The Company has development and acquisition projects in various planning stages. The Company currently intends to finance these projects and projects currently under construction discussed in Note 8, by using its existing credit facilities (increasing those credit facilities as required), long-term non-recourse financing on the Company's unleveraged projects, joint ventures, project sales and other financings as market conditions warrant. In September 1996, the Company filed a shelf registration statement with the Securities and Exchange Commission ("SEC") for the offering from time to time of up to $200 million of common stock, warrants to purchase common stock and debt securities, of which approximately $132 million remains available at December 31, 2000. The Company from time to time evaluates opportunities and strategic alternatives, including but not limited to joint ventures, mergers and acquisitions and new private or publicly-owned entities created to hold existing assets and acquire new assets. These alternatives may also include sales of single or multiple assets when the Company perceives opportunities to capture value and redeploy proceeds or distribute proceeds to stockholders. The Company's consideration of these alternatives is part of its ongoing strategic planning process. There can be no assurance that any such alternative, if undertaken and consummated, would not materially adversely affect the Company or the market price of the Company's Common Stock. Cash Flows. Net cash provided by operating activities increased from $90.1 million in 1998 to $91.8 million and $103.6 million in 1999 and 2000, respectively. The increases resulted partially from an improvement in income before gain on sale of investment properties and cumulative effect of change in accounting principle of $4.0 million and $5.4 million in 1999 and 2000, respectively. Additionally, depreciation and amortization increased $1.5 million and $14.9 million in 1999 and 2000, respectively. Operating distributions from unconsolidated joint ventures favorably impacted 1999 with an increase of $12.4 million, but partially offset the increase in net cash provided by investing activities in 2000 by decreasing $3.5 million. The increase in 1999 was due to $8.3 million of distributions from CP Venture LLC. Additionally, distributions from CSC and Cousins LORET increased $1.9 million and $6.5 million, respectively, in 1999. These increases were partially offset by a decrease of distributions from Wildwood Associates of $4.0 million in 1999. The decrease in operating distributions from unconsolidated joint ventures in 2000 was partially due to a decrease in operating distributions from CP Venture LLC of $6.2 million. The final distribution of $4.1 million was made in 1999 from Haywood Mall Associates due to the sale of the Company's 50% interest in Haywood Mall in June 1999, further contributing to the decrease in operating distributions in 2000. Operating distributions from Cousins LORET decreased by $4.3 million in 2000 and distributions from Hickory Hollow Associates, which was dissolved in early 2000, decreased $.4 million in 2000. Partially offsetting the decrease in operating distributions in 2000 was an increase of $5.0 million of operating distributions from Wildwood Associates, an increase of $1.8 million in operating distributions from Temco Associates and an increase of $3.2 million of operating distributions from Cousins Stone LP, which was formed in June 1999. Additionally, operating distributions from Gateway of $.7 million were received in 2000 as the Company began receiving its 11.46% current preferred return (see Note 5), and operating distributions from 285 Venture, LLC of $1.0 million were received as 1155 Perimeter Center West became partially operational for financial reporting purposes in 2000 (see Note 5). Residential lot and outparcel cost of sales partially offset the increase in net cash provided by operating activities in 1999 and 2000 by decreasing $1.0 million and $3.2 million, respectively. Changes in other operating assets and liabilities decreased $13.2 million and $.9 million in 1999 and 2000, respectively, which decrease also partially offset the increase in net cash provided by operating activities. Furthermore, the effect of recognizing rental revenues on a straight-line basis partially offset the increase in net cash provided by operating activities by $.7 million and $1.0 million in 1999 and 2000, respectively. An increase in income from unconsolidated joint ventures of $1.2 million also partially offset the increase in net cash provided by operating activities in 1999. Net cash used in investing activities increased from $100.5 million in 1998 to $158.9 million in 1999 and $230.9 million in 2000. A decrease of $125.5 million in net cash received in formation of venture due to Prudential contributing the final amounts due in 1999 related to the formation of the Prudential venture (see Notes 5 and 9) increased net cash used in investing activities. Additionally, net cash provided by sales activities, which also increases net cash used in investing activities, decreased $58.9 million primarily due to the June 1999 sale of the Company's 50% interest in Haywood Mall. Non-operating distributions from unconsolidated joint ventures decreased $3.6 million in 2000, which also contributed to the increase in net cash used in investing activities. Non-operating distributions from Wildwood Associates decreased $2.0 million, and non-operating distributions from Cousins LORET decreased $1.6 million. Change in other assets, net, increased $1.9 million, which further contributed to the increase in net cash used in investing activities. Collection of notes receivable, net of investment in notes receivable, decreased $3.5 million, which also contributed to the increase in net cash used in investing activities. Property acquisition and development expenditures decreased $122.0 million, which partially offset the increase in net cash used in investing activities, due to a lower level of projects under development in 2000. Property acquisition and development expenditures increased $143.7 million due to a higher level of projects under development in 1999. Investment in unconsolidated joint ventures increased $1.5 million in 1999, which further increased net cash used in investing activities. Non-operating distributions from unconsolidated joint ventures, which reduce net cash used in investing activities, decreased $19.0 million in 1999. The decrease in non-operating distributions from unconsolidated joint ventures was mainly due to a decrease of non-operating distributions of $21.6 million from Wildwood Associates. The decrease was partially offset by an increase of $1.6 million of non-operating distributions from Cousins LORET. Other assets, net, decreased $4.1 million which further contributed to the increase in net cash used in investing activities. Net cash provided by sales activities increased $79.5 million mainly due to the June 1999 sale of the Company's 50% interest in Haywood Mall and to the February 1999 sale of Abbotts Bridge Station, which partially offset the increase in net cash used in investing activities. The increase in net cash provided by sales activities was partially offset by deferred income recognized, which increased $3.6 million, as the net deferred gain from the Prudential transaction was amortized into income for the full year of 1999 (see Note 5). Also partially offsetting the increase in net cash used in investing activities was an increase in net cash received of $22.4 million from the formation of the Prudential venture as Prudential contributed its remaining amounts owed (see Notes 5 and 9). Net investment in notes receivable increased $7.9 million which also partially offset net cash used in investing activities. Net cash used in financing activities increased from $20.9 million in 1998 to net cash provided by financing activities of $67.2 million and $127.5 million in 1999 and 2000, respectively. The increase in 2000 was primarily due to an increase in proceeds from other notes payable of $154.5 million, as the Company completed three financings in 2000 (see Note 4), as compared to none in 1999. Common stock sold, net of expenses, increased $2.4 million which further contributed to the increase in net cash provided by financing activities. Also contributing to the increase was a decrease of $5.0 million for the 1999 purchase of treasury stock. Partially offsetting the increase in net cash provided by financing activities was a decrease of $75.9 million in net amounts drawn on the Company's credit facility. Also, repayment of other notes payable increased by $19.2 million primarily due to the repayment in full upon its maturity in 2000 of the note payable to First Union National Bank (see Note 4) which further offset the increase in net cash provided by financing activities. Dividends paid increased by $6.4 million due to an increase in dividends paid per share from $1.12 in 1999 to $1.24 in 2000 and an increase in the number of shares outstanding, which also partially offset the increase in net cash provided by financing activities. The increase in 1999 was mainly due to an increase of $108.4 million in net amounts drawn on the Company's credit facility. Common stock sold, net of expenses, increased $1.7 million which further contributed to the change to net cash provided by financing activities. Partially offsetting the increase in net cash provided by financing activities was an increase in dividends paid of $6.8 million. Dividends paid per share increased from $.99 in 1998 to $1.12 in 1999 and the number of shares outstanding increased. The $5.0 million purchase of treasury stock in 1999 also partially offset the increase in net cash provided by financing activities. The Company completed one financing in 1998, as compared to none in 1999. Therefore, proceeds from other notes payable decreased $10.9 million which partially offset the increase in net cash provided by financing activities. Effects of Inflation. The Company attempts to minimize the effect of inflation on income from operating properties by the use of rents tied to tenants' sales, periodic fixed-rent increases and increases based on cost-of-living adjustments, and/or pass-through of operating cost increases to tenants. Quantitative and Qualitative Disclosure about Market Risk The variable rate debt is from the Company's credit facility, which is drawn on as needed and was temporarily increased in December 2000 (see Note 4), and from a construction loan at an unconsolidated joint venture, Charlotte Gateway Village, LLC. Since these rates are floating, the Company is exposed to the impact of interest rate changes. None of the Company's notes receivable have variable interest rates. The Company does not enter into contracts for trading purposes and does not use leveraged instruments. The following table summarizes the Company's market risk associated with notes payable and notes receivable as of December 31, 2000. The information presented below should be read in conjunction with Notes 3 and 4. The table presents principal cash flows and related weighted average interest rates by expected year of maturity. Variable rate represents the floating interest rate calculated at December 31, 2000.
Expected Year of Maturity ---------------------------------------------------------------------------- Fair 2001 2002 2003 2004 2005 Thereafter Total Value ---------------------------------------------------------------------------- ($ in thousands) Notes Payable (including share of unconsolidated joint ventures): Fixed Rate $17,963 $ 11,100 $11,545 $12,547 $78,589 $365,028 $496,772 $504,694 Average Interest Rate 7.70% 7.47% 7.47% 7.47% 7.70% 7.78% 7.67% -- Variable Rate $24,296 $220,309 $ -- $ -- $ -- $ -- $244,605 $244,605 Average Interest Rate 7.30% 7.14% -- -- -- -- 7.16% -- Notes Receivable: Fixed Rate $ 1,869 $ 1,172 $23,693 $ -- $ -- $ -- $ 26,734 $ 32,909 Average Interest Rate 9.11% 9.00% 10.00% -- -- -- 9.89% --
Cousins Properties Incorporated and Consolidated Entities MARKET AND DIVIDEND INFORMATION - ------------------------------------------------------------------------------------------------------------------- The high and low sales prices for the Company's common stock and cash dividends declared per share were as follows: 2000 Quarters 1999 Quarters --------------------------------------- ---------------------------------------- First Second Third Fourth First Second Third Fourth ------ ------ ------ ------ ------ ------ ------ ------ High $24.94 $26.75 $30.44 $28.67 $21.54 $24.33 $25.50 $23.67 Low 21.94 24.94 25.75 25.69 19.25 19.29 22.33 20.42 Dividends Declared .30 .30 .30 .34 .27 .27 .28 .30 Payment Date 2/23/00 5/30/00 8/25/00 12/22/00 2/23/99 5/28/99 8/26/99 12/22/99 The Company's stock trades on the New York Stock Exchange (ticker symbol CUZ). At February 28, 2001, there were 1,184 stockholders of record.
ABOUT YOUR DIVIDENDS - -------------------------------------------------------------------------------- Timing of Dividends - Cousins normally pays regular dividends four times each year in February, May, August and December. Differences Between Net Income and Cash Dividends Declared - Cousins' current intention is to distribute 100% of its taxable income and thus incur no corporate income taxes. However, Consolidated Net Income for financial reporting purposes and Cash Dividends Declared will generally not be equal for the following reasons: a. There will continue to be considerable differences between Consolidated Net Income as reported to stockholders (which includes the income of consolidated non-REIT entities that pay corporate income taxes) and Cousins' taxable income. The differences are enumerated in Note 7 of "Notes to Consolidated Financial Statements." b. For purposes of meeting REIT distribution requirements, dividends may be applied to the calendar year before or after the one in which they are declared. The differences between dividends declared in the current year and dividends applied to meet current year REIT distribution requirements are enumerated in Note 6 of "Notes to Consolidated Financial Statements." Capital Gains Dividends - In some years, as it did in 2000, 1999 and 1998, Cousins will have taxable capital gains, and Cousins currently intends to distribute 100% of such gains to stockholders. The Form 1099-DIV sent by Cousins to stockholders of record each January shows total dividends paid (including the capital gains dividends) as well as that which should be reported as a capital gain (see Note 6 of "Notes to Consolidated Financial Statements"). For individuals, the capital gain portion of the dividends is subtracted from total dividends on Schedule B of IRS Form 1040 and reported separately on Schedule D of IRS Form 1040 as a capital gain. Tax Preference Items and "Differently Treated Items" - Internal Revenue Code Section 59(d) requires that certain corporate tax preference items and "differently treated items" be passed through to a REIT's stockholders and treated as tax preference items and items of adjustment in determining the stockholder's alternative minimum taxable income. The amount of this adjustment is included in Note 6 of "Notes to Consolidated Financial Statements." Tax preference items and adjustments are includable in a stockholder's income only for purposes of computing the alternative minimum tax. These adjustments will not affect a stockholder's tax filing unless that stockholder's alternative minimum tax is higher than that stockholder's regular tax. Stockholders should consult their tax advisors to determine if the adjustment reported by Cousins affects their tax filing. Many stockholders will find that the adjustment reported by Cousins will have no effect on their tax filing unless they have other large sources of alternative minimum tax adjustments or tax preference items.
Cousins Properties Incorporated and Consolidated Entities SELECTED QUARTERLY FINANCIAL INFORMATION (UNAUDITED) - -------------------------------------------------------------------------------- Selected quarterly information for the two years ended December 31, 2000 ($ in thousands, except per share amounts): Quarters ---------------------------------------- First Second Third Fourth ------- ------- ------- ------- 2000: Revenues $28,653 $35,842 $37,335 $42,802 Income from unconsolidated joint ventures 3,877 4,407 5,360 5,808 Gain on sale of investment properties, net of applicable income tax provision 8,292 1,575 1,028 1,042 Net income before cumulative effect of change in accounting principle 20,941 13,139 13,696 14,833 Cumulative effect of change in accounting principle -- -- -- (566) ------- ------- ------- ------- Net income 20,941 13,139 13,696 14,267 Basic net income per share before cumulative effect of change in accounting principle .44 .27 .28 .30 Cumulative effect of change in accounting principle per share -- -- -- (.01) ------- ------- ------- ------- Basic net income per share .44 .27 .28 .29 ======= ======= ======= ======= Diluted net income per share before cumulative effect of change in accounting principle .43 .27 .27 .29 Cumulative effect of change in accounting principle per share -- -- -- (.01) ------- ------- ------- ------- Diluted net income per share .43 .27 .27 .28 ======= ======= ======= ======= 1999: Revenues $18,684 $23,087 $26,437 $29,616 Income from unconsolidated joint ventures 4,107 5,392 4,647 5,491 Gain on sale of investment properties, net of applicable income tax provision 5,508 51,198 1,029 1,032 Net income 15,002 63,566 12,887 12,627 Basic net income per share .31 1.32 .27 .26 Diluted net income per share .31 1.29 .26 .26
INDEPENDENT PUBLIC ACCOUNTANTS Arthur Andersen LLP COUNSEL King & Spalding Troutman Sanders TRANSFER AGENT AND REGISTRAR First Union National Bank Corporate Trust Operations Shareholder Services Administration 1525 West W.T. Harris Blvd., Building 3C3 Charlotte, North Carolina 28262-1153 Telephone Number: 1-800-829-8432 FAX Number: 1-704-590-7618 DIVIDEND REINVESTMENT PLAN The Company offers its stockholders the opportunity to purchase additional shares of common stock through the Dividend Reinvestment Plan with purchases at 95% of current market value. A copy of the Plan prospectus and an enrollment card may also be obtained by calling or writing to the Company. FORM 10-K AVAILABLE The Company's annual report on Form 10-K and interim reports on Form 10-Q are filed with the Securities and Exchange Commission. Copies are available without exhibits free of charge to any person who is a record or beneficial owner of common stock upon written request to the Company at 2500 Windy Ridge Parkway, Suite 1600, Atlanta, Georgia 30339-5683. These items are also posted on the Company's website at www.cousinsproperties.com. INVESTOR RELATIONS CONTACT Carl Y. Dickson, Vice President and Director of Investor Relations Cousins Properties Incorporated and Consolidated Entities DIRECTORS T. G. Cousins Chairman of the Board and Chief Executive Officer Thomas D. Bell, Jr. Vice Chairman of the Board of Cousins Properties Incorporated Special Limited Partner Forstmann Little & Co. Richard W. Courts, II Chairman Atlantic Investment Company Lillian C. Giornelli Chairman and Chief Executive Officer The Cousins Foundation, Inc. Terence C. Golden Chairman Bailey Capital Corporation Boone A. Knox Chairman Regions Bank of Central Georgia John J. Mack* Former President and Chief Operating Officer Morgan Stanley Dean Witter & Co. Hugh L. McColl, Jr.* Chairman and Chief Executive Officer Bank of America Corporation William Porter Payne Partner Gleacher & Co. Richard E. Salomon** Managing Director Mecox Ventures, Inc. R. Dary Stone President and Chief Operating Officer Henry C. Goodrich Director Emeritus CORPORATE T. G. Cousins Chairman of the Board and Chief Executive Officer R. Dary Stone President and Chief Operating Officer Tom G. Charlesworth Executive Vice President and Chief Investment Officer Kelly H. Barrett Senior Vice President and Chief Financial Officer George J. Berry Senior Vice President Dan G. Arnold Vice President and Director of Information Systems Carl Y. Dickson Vice President and Director of Investor Relations Patricia A. Isaacs Vice President and Controller Kristin R. Myers Vice President and Director of Tax Mark A. Russell Vice President and Chief Financial Analyst Lisa R. Simmons Director of Corporate Communications OFFICE DIVISION Craig B. Jones President W. Henry Atkins Senior Vice President - Charlotte Jack A. LaHue Senior Vice President - Asset Management John S. McColl Senior Vice President John L. Murphy Senior Vice President Dara J. Nicholson Senior Vice President - Property Management W. James Overton Senior Vice President - Development C. David Atkins Vice President - Charlotte John S. Durham Vice President - Leasing Lee Eastwood Vice President - Leasing Walter L. Fish Vice President - Leasing Ronald C. Sturgis Vice President - Property Management John R. Ward Vice President - Asset Management RETAIL DIVISION Joel T. Murphy President William I. Bassett Senior Vice President - Development Alexander A. Chambers Senior Vice President - Development Michael I. Cohn Senior Vice President - Development Thomas D. Lenny Senior Vice President - Western Region Robert A. Manarino Senior Vice President - Western Region Robert S. Wordes Senior Vice President - Asset Management Keven D. Doherty Vice President - Development Western Region Terry M. Hampel Vice President - Property Management Bradley T. Kempson Vice President - Leasing Western Region Michael J. Quinley Vice President - Development Amy S. Siegel Vice President - Leasing CONSTRUCTION DIVISION Michael E. Bird Senior Vice President - Construction James D. Dean Vice President - Construction James F. George Vice President - Construction John N. Goff Vice President - Construction Lloyd P. Thompson, Jr. Vice President - Construction LAND DIVISION*** (Cousins Neighborhoods) Bruce E. Smith President Craig A. Lacey Vice President - Development *Director nominees for election May 1, 2001. **Director retiring May 1, 2001. *** Officers of Cousins Real Estate Corporation only. EX-21 3 0003.txt EXHIBIT 21 COUSINS PROPERTIES INCORPORATED AND CONSOLIDATED ENTITIES SUBSIDIARIES OF THE REGISTRANT DECEMBER 31, 2000 At December 31, 2000, the Registrant had the following 100% owned subsidiaries: Cousins, Inc.; subsidiary includes Cousins/Daniel, LLC* Cousins Austin GP, Inc. Cousins Austin, Inc. Cousins Texas GP Inc. Cousins Texas Inc. Cousins Properties Texas LP At December 31, 2000, the financial statements of the following entities were consolidated with those of the Registrant in the Consolidated Financial Statements incorporated herein: CommonWealth/Cousins I, LLC (50.10% owned by Registrant and 49.90% owned by CommonWealth Pacific, LLC)** Cousins/Myers Second Street Partners, L.L.C.* Cousins/Myers II, LLC* Cousins Real Estate Corporation and subsidiaries (100% of non- voting common stock and 100% of preferred stock owned by Registrant); subsidiaries include Cousins MarketCenters, Inc. (100% owned by Cousins Real Estate Corporation) CP Venture Three LLC (88.50% owned by Registrant and 11.50% owned by Prudential) CREC II Inc. and subsidiaries (100% of non-voting common stock and 100% of preferred stock owned by Registrant); subsidiaries include Cousins Stone Texas Inc. and CS Texas Inc. Perimeter Expo Associates, L.P. (90% owned by Registrant and 10% owned by Cousins MarketCenters, Inc.) Rocky Creek Properties, Inc. & MT&E - Macon-Harris (75% owned by Registrant) *Minority member receives a portion of residual cash flow and capital proceeds after a preferred return to Registrant. ** Subsequent to December 31, 2000, CommonWealth Pacific, LLC's interest was purchased by the Company which owns 100% of the venture now named Cousins/Cerritos I, LLC. At December 31, 2000, the Registrant and its consolidated entities had the following significant unconsolidated subsidiaries which were not 100% owned: 285 Venture, LLC (50% owned by Registrant) Brad Cous Golf Venture, Ltd. (50% owned by Registrant) CC-JM II Associates (50% owned by Registrant) Charlotte Gateway Village, LLC (50% owned by Registrant) C-H Associates, Ltd. (49% owned by Cousins Real Estate Corporation) C-H Leasing Associates (50% owned by Cousins Real Estate Corporation) C-H Management Associates (50% owned by Cousins Real Estate Corporation) Cousins LORET Venture, L.L.C. (50% owned by Registrant) Cousins Stone LP (75% owned by CREC II Inc.'s subsidiaries)* CPI/FSP I, L.P. (50% owned by Registrant) CP Venture LLC (50% owned by Registrant) CP Venture Two LLC (11.50% owned by Registrant) Crawford Long - CPI, LLC (50% owned by Registrant) CSC Associates, L.P. (50% owned by Registrant) Green Valley Associates II (50% owned by Registrant) MC Dusseldorf Holding B.V. (10% voting interest owned by Registrant and 40% voting interest owned by Cousins Real Estate Corporation) Ten Peachtree Place Associates (50% owned by Registrant) Temco Associates (50% owned by Cousins Real Estate Corporation) Wildwood Associates (50% owned by Registrant) * Subsequent to December 31, 2000, CREC II Inc.'s subsidiaries purchased the remaining 25% interest. EX-23 4 0004.txt EXHIBIT 23(a) CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the incorporation of our reports included in and incorporated by reference in this Form 10-K, into Cousins Properties Incorporated's previously filed Registration Statements File No. 33-41927, 33-56787, 33-60350, 333-48841, 333-42007, 333-12031, 333-67887, 333-92089 and 333-46676. ARTHUR ANDERSEN LLP Atlanta, Georgia March 23, 2001 EX-23 5 0005.txt EXHIBIT 23(b) CONSENT OF INDEPENDENT AUDITORS We consent to the incorporation by reference in Amendment No. 1 to the Registration Statement (Form S-3 No. 333-12031) and related Prospectus of Cousins Properties Incorporated, in Amendment No. 1 to the Registration Statement (Form S-3 No. 33-60350) and related Prospectus pertaining to the Dividend Reinvestment Plan of Cousins Properties Incorporated, in the Registration Statement (Form S-8 No. 33-56787) and related Prospectus pertaining to the 1989 Stock Option Plan of Cousins Properties Incorporated, in the Registration Statement (Form S-8 No. 33-41927) and related Prospectus pertaining to the 1989 Stock Option Plan, 1987 Restricted Stock Plan for Outside Directors and Incentive Stock Option Plan of Cousins Properties Incorporated, in the Registration Statement (Form S-8 No. 333-67887) and related Prospectus pertaining to the 1995 Stock Incentive Plan of Cousins Properties Incorporated, in the Registration Statement (Form S-8 No. 333-42007) and related Prospectus pertaining to the 1995 Stock Incentive Plan of Cousins Properties Incorporated, in the Registration Statements (Form S-3 No. 333-48841 and No. 333-46676) and related Prospectus pertaining to the Dividend Reinvestment Plan of Cousins Properties Incorporated, and in the Registration Statement (Form S-8 No. 333-92089) and related Prospectus pertaining to the 1999 Incentive Stock Plan of Cousins Properties Incorporated of our report dated February 2, 2001 with respect to the financial statements and schedule of CSC Associates, L.P., included in the Form 10-K of Cousins Properties Incorporated for the year ended December 31, 2000. ERNST & YOUNG LLP Atlanta, Georgia March 23, 2001 -----END PRIVACY-ENHANCED MESSAGE-----