10-K 1 fm10k02.txt FORM 10-K 12/31/02 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, 2002 Commission file number 0-3576 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. Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2) Yes X No -- As of June 28, 2002, the aggregate market value of the common stock of Cousins Properites Incorporated held by non-affiliates was $929,547,967. As of March 18, 2003, 48,264,013 shares of common stock were outstanding. 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 25, 2003 Registrant's Annual Report to Part II, Items 5, 6, 7 and 8 Stockholders for the year ended December 31, 2002 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 its own real estate portfolio and performs certain real estate related services for other parties. CREC II Inc. ("CREC II"), another taxable entity consolidated with the Registrant, owns a 100% interest in Cousins Properties Services LP, a full-service real estate company headquartered in Dallas, Texas that specializes in third party property management, development and leasing of 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 under the symbol "CUZ." The Company owns a portfolio of well-located, high-quality office, medical office, retail 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 precommitted to quality tenants; the maintenance of 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 2002 Annual Report to Stockholders, which are incorporated herein by reference.
Brief Description of Company Investments Office. As of December 31, 2002, the Company's office portfolio included the following thirty-eight commercial office buildings: Company's Percent Economic Leased Metropolitan Rentable Ownership (Fully Property Description Area Square Feet Interest Executed) -------------------- ----------------- ----------- --------- --------- Inforum Atlanta, GA 990,000 100% 96% 101 Independence Center Charlotte, NC 526,000 100% 98% Congress at Fourth Austin, TX 525,000 100% 33% (a) 101 Second Street San Francisco, CA 387,000 100% (b) 83% 55 Second Street San Francisco, CA 379,000 100% (b) 92% (c) AT&T Wireless Services Headquarters Los Angeles, CA 222,000 100% 100% The Points at Waterview Dallas, TX 201,000 100% 82% Lakeshore Park Plaza Birmingham, AL 190,000 100% (b) 82% 3100 Windy Hill Road Atlanta, GA 188,000 100% 100% 333 John Carlyle Washington, D.C. 153,000 100% 96% 555 North Point Center East Atlanta, GA 152,000 100% 91% 615 Peachtree Street Atlanta, GA 148,000 100% 91% 333 North Point Center East Atlanta, GA 129,000 100% 93% 600 University Park Place Birmingham, AL 123,000 100% (b) 95% 3301 Windy Ridge Parkway Atlanta, GA 107,000 100% 100% Cerritos Corporate Center - Phase II Los Angeles, CA 105,000 100% 100% 1900 Duke Street Washington, D.C. 97,000 100% 100% One Georgia Center Atlanta, GA 363,000 88.50% 78% Bank of America Plaza Atlanta, GA 1,261,000 50% 100% Gateway Village Charlotte, NC 1,065,000 50% 100% 3200 Windy Hill Road Atlanta, GA 687,000 50% 95% 2300 Windy Ridge Parkway Atlanta, GA 635,000 50% 88% The Pinnacle Atlanta, GA 424,000 50% 98% 1155 Perimeter Center West Atlanta, GA 362,000 50% 99% 2500 Windy Ridge Parkway Atlanta, GA 315,000 50% 89% Two Live Oak Center Atlanta, GA 279,000 50% 80% 4200 Wildwood Parkway Atlanta, GA 260,000 50% 100% Ten Peachtree Place Atlanta, GA 260,000 50% 100% John Marshall - II Washington, D.C. 224,000 50% 100% Austin Research Park - Building IV Austin, TX 184,000 50% 100% Austin Research Park - Building III Austin, TX 174,000 50% 100% 4300 Wildwood Parkway Atlanta, GA 150,000 50% 100% 4100 Wildwood Parkway Atlanta, GA 100,000 50% 100% First Union Tower Greensboro, NC 323,000 11.50% 66% Grandview II Birmingham, AL 149,000 11.50% 100% 200 North Point Center East Atlanta, GA 130,000 11.50% 47% 100 North Point Center East Atlanta, GA 128,000 11.50% 70% One Ninety One Peachtree Tower Atlanta, GA 1,215,000 9.80% 97% ---------- 13,310,000 ========== (a) Under construction and in lease-up. (b) These projects are owned through joint ventures with third parties, and a portion of the upside is shared with the other venturer. See "Item 2, Major Properties" - "101 Second Street," "55 Second Street" and "Cousins/Daniel LLC." (c) Effective January 31, 2003, a tenant occupying 158,000 rentable square feet terminated their lease. See "Item 1, Subsequent Event" for more information.
The weighted average leased percentage of these office buildings (excluding the property currently under construction and in lease-up and One Ninety One Peachtree Tower, in which the Company owns less than 10%) was approximately 94% as of December 31, 2002, and the leases expire as follows:
2012 & 2003 2004 2005 2006 2007 2008 2009 2010 2011 Thereafter Total ---- ---- ---- ---- ---- ---- ---- ---- ---- ---------- ----- OFFICE ------ Consolidated: ------------- Square Feet Expiring (a) 123,660 157,592 330,557 356,900 161,531 388,970 554,319 266,561 225,779 1,272,408 3,838,277(b) % of Leased Space 3% 4% 9% 9% 4% 10% 15% 7% 6% 33% 100% Annual Base Rent (c) 2,023,808 2,756,542 5,672,451 5,530,032 2,596,271 8,310,884 9,684,456 7,496,350 5,566,717 39,303,896 88,941,407 Annual Base Rent/Sq. Ft. (c) 16.37 17.49 17.16 15.49 16.07 21.37 17.47 28.12 24.66 30.89 23.17 Joint Venture: -------------- Square Feet Expiring (a) 288,041 394,004 424,473 607,136 698,753 168,103 428,434 225,191 244,171 3,483,400 6,961,706(d) % of Leased Space 4% 6% 6% 9% 10% 2% 6% 3% 4% 50% 100% Annual Base Rent (c) 4,731,379 5,427,619 7,191,479 10,913,350 16,878,496 2,983,343 9,662,815 5,073,409 4,868,076 74,259,074 141,989,040 Annual Base Rent/Sq. Ft. (c) 16.43 13.78 16.94 17.98 24.16 17.75 22.55 22.53 19.94 21.32 20.40 Total (including only Company's % share of Joint Venture Properties): --------------------------------- ----------------------------------- Square Feet Expiring (a) 266,833 411,253 508,389 637,992 488,278 460,984 763,258 327,958 351,319 3,014,193 7,230,457 % of Leased Space 4% 6% 7% 9% 7% 6% 10% 4% 5% 42% 100% Annual Base Rent (c) 4,325,978 5,790,583 8,667,331 10,567,630 10,605,612 9,599,312 14,423,492 9,030,044 8,003,070 76,433,433 157,446,485 Annual Base Rent/Sq. Ft. (c) 16.21 14.08 17.05 16.56 21.72 20.82 18.90 27.53 22.78 25.36 21.78
(a) 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. (b) Rentable square feet leased as of December 31, 2002 out of approximately 4,097,000 total rentable square feet. (c) 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. (d) Rentable square feet leased as of December 31, 2002 out of approximately 7,473,000 total rentable square feet. The weighted average remaining lease term of these thirty-six office buildings was approximately eight years as of December 31, 2002. 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 December 31, 2002, 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% 79% Meridian Mark Plaza Atlanta, GA 161,000 100% 100% Northside/Alpharetta I Atlanta, GA 103,000 100% 93% AtheroGenics Atlanta, GA 50,000 100% 100% Emory Crawford Long Medical Office Tower Atlanta, GA 358,000 50% 85% Presbyterian Medical Plaza at University Charlotte, NC 69,000 11.50% 100% ------- 939,000 =======
The weighted average leased percentage of these medical office buildings was 89% as of December 31, 2002, and the leases expire as follows: 2012 & 2003 2004 2005 2006 2007 2008 2009 2010 2011 Thereafter Total ---- ---- ---- ---- ---- ---- ---- ---- ---- ---------- ----- MEDICAL OFFICE -------------- Consolidated: ------------- Square Feet Expiring 8,717 42,669 23,836 9,210 32,538 38,255 130,276 10,535 27,119 139,074 462,229(a) % of Leased Space 2% 9% 5% 2% 7% 8% 28% 3% 6% 30% 100% Annual Base Rent (b) 165,398 793,546 407,310 166,631 686,517 853,330 2,637,282 202,799 736,974 3,276,120 9,925,907 Annual Base Rent/Sq. Ft. (b) 18.97 18.60 17.09 18.09 21.10 22.31 20.24 19.25 27.18 23.56 21.47 Joint Venture: -------------- Square Feet Expiring 3,818 0 3,445 0 70,687 1,017 27,269 3,665 2,354 260,807 373,062(c) % of Leased Space 1% 0% 1% 0% 19% 0% 7% 1% 1% 70% 100% Annual Base Rent (b) 89,685 0 56,498 0 1,294,383 20,208 609,115 79,493 51,764 6,147,193 8,348,339 Annual Base Rent/Sq. Ft. (b) 23.49 0 16.40 0 18.31 19.87 22.34 21.69 21.99 23.57 22.38 Total (including only Company's % share of Joint Venture Properties): -------------------------------------------------------------------- Square Feet Expiring 10,626 42,669 24,232 9,210 58,350 38,764 143,911 12,368 28,296 253,884 622,310 % of Leased Space 2% 7% 4% 1% 9% 6% 23% 2% 5% 41% 100% Annual Base Rent (b) 210,240 793,546 413,807 166,631 1,174,251 863,434 2,941,840 242,545 762,856 6,052,345 13,621,495 Annual Base Rent/Sq. Ft. (b) 19.79 18.60 17.08 18.09 20.12 22.27 20.44 19.61 26.96 23.84 21.89 (a) Rentable square feet leased as of December 31, 2002 out of approximately 512,000 total rentable square feet. (b) 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. (c) Rentable square feet leased as of December 31, 2002 out of approximately 427,000 total rentable square feet.
The weighted average remaining lease term of these six medical office buildings was approximately nine years as of December 31, 2002. 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 December 31, 2002, the Company's retail portfolio included the following thirteen properties: Company's Percent Economic Leased Metropolitan Rentable Ownership (Fully Property Description Area Square Feet Interest Executed) --------------------------- ------------------------- ----------- -------- --------- The Avenue of the Peninsula Rolling Hills Estates, CA 375,000 100% 91% Presidential MarketCenter Atlanta, GA 374,000 100% 100% The Avenue East Cobb Atlanta, GA 225,000 100% 100% The Avenue West Cobb Atlanta, GA 206,000 100% 28% (a) Perimeter Expo Atlanta, GA 176,000 100% 92% The Shops of Lake Tuscaloosa Tuscaloosa, AL 70,000 100% 63% (a) Mira Mesa MarketCenter San Diego, CA 480,000 88.50% 100% The Avenue Peachtree City Atlanta, GA 169,000 88.50% (b) 98% The Shops at World Golf Village St. Augustine, FL 80,000 50% 74% Greenbrier MarketCenter Chesapeake, VA 493,000 11.50% 100% 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% 100% --------- 3,309,000 --------- (a) Under construction and in lease-up. (b) This property is subject to a contractual participation in which a portion of the upside is shared with a third party.
The weighted average leased percentage of these retail properties (excluding the properties currently under construction and in lease-up) was approximately 96% as of December 31, 2002, and the leases expire as follows: 2012 & 2003 2004 2005 2006 2007 2008 2009 2010 2011 Thereafter Total ---- ---- ---- ---- ---- ---- ---- ---- ---- ---------- ----- RETAIL ------ Consolidated: ------------- Square Feet Expiring 21,417 75,653 121,850 88,980 42,922 36,187 21,530 143,557 108,951 439,654 1,100,701(a) % of Leased Space 2% 7% 11% 8% 4% 3% 2% 13% 10% 40% 100% Annual Base Rent (b) 414,335 1,393,451 2,946,291 2,066,634 929,298 327,838 733,820 2,988,238 2,215,151 7,781,304 21,796,360 Annual Base Rent/Sq. Ft. (b) 19.35 18.42 24.18 23.23 21.65 9.06 34.08 20.82 20.33 17.70 19.80 Joint Venture: -------------- Square Feet Expiring 13,111 34,343 88,402 178,400 85,968 46,361 38,602 140,895 173,056 1,059,128 1,858,266(c) % of Leased Space 1% 2% 5% 10% 5% 2% 2% 7% 9% 57% 100% Annual Base Rent (b) 213,996 717,124 1,584,126 2,639,475 1,887,378 883,778 528,429 2,104,236 2,546,229 14,619,722 27,724,493 Annual Base Rent/Sq. Ft. (b) 16.32 20.88 17.92 14.80 21.95 19.06 13.69 14.93 14.71 13.80 14.92 Total (including only Company's % share of Joint Venture Properties): --------------------------------------------------------------------- Square Feet Expiring 22,925 82,225 162,591 137,894 80,082 73,583 31,455 194,555 160,817 888,001 1,834,128 % of Leased Space 1% 4% 9% 8% 4% 4% 2% 11% 9% 48% 100% Annual Base Rent (b) 438,944 1,536,695 3,827,593 3,144,155 1,808,886 1,051,843 932,149 4,081,380 3,042,547 14,465,649 34,329,841 Annual Base Rent/Sq. Ft.(b) 19.15 18.69 23.54 22.80 22.59 14.29 29.63 20.98 18.92 16.29 18.72 (a) Gross leasable area leased as of December 31, 2002 out of approximately 1,150,000 total gross leasable area. (b) 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. (c) Gross leasable area leased as of December 31, 2002 out of approximately 1,883,000 total gross leasable area.
The weighted average remaining lease term of these 11 retail properties was approximately ten years as of December 31, 2002. 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 360 acres of strategically located land held for investment or future development at North Point and Wildwood Office Park, the option to acquire the fee simple interest in approximately 7,500 acres of land through its Temco Associates joint venture, and a mortgage note of approximately $26 million which is secured by a 250,000 rentable square foot office building in Washington, D.C. The terms of this note have some of the characteristics of an equity investment and management believes it should provide a comparable return on investment (see Note 3). The Company's joint venture partners include, but are not limited to, either the following companies or their affiliates: 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. A more detailed description of the Company's real estate properties is included in Item 2 of this Report. Significant Changes in 2002 Significant changes in the Company's business and properties during the year ended December 31, 2002 were as follows: Office Division. In February 2002, 55 Second Street, an approximately --------------- 379,000 rentable square foot office building in San Francisco, California, became partially operational for financial reporting purposes. Also in February 2002, Emory Crawford Long Medical Office Tower, an approximately 358,000 rentable square foot medical office facility in Atlanta, Georgia, owned by Crawford Long - CPI, LLC (see Note 5), became partially operational for financial reporting purposes. Retail Division. In August 2002, the Company purchased 22.17 acres of --------------- land for approximately $4,945,000 for the development of The Avenue West Cobb, an approximately 206,000 square foot specialty retail center in suburban Atlanta, Georgia. Construction commenced on this center in September 2002. In October 2002, the Company sold Salem Road Station, an approximately 67,000 square foot retail center in suburban Atlanta, Georgia for $7,379,000, which was approximately $940,000 over the cost of the center. Including depreciation recapture of approximately $380,000 and net of an income tax provision of approximately $146,000, the net gain on this sale was approximately $1,174,000. Also in October 2002, the Company sold two outparcels at Salem Road Station for $548,000, which was approximately $195,000 over the cost of the outparcels. The gain on this sale, net of an income tax provision of approximately $74,000, was approximately $121,000. In December 2002, the Company purchased 11.91 acres of land for approximately $1,911,000 for the development of The Shops of Lake Tuscaloosa, an approximately 70,000 square foot retail center in Tuscaloosa, Alabama. Construction of this center commenced in February 2003. Land Division. The Company is currently developing or has developed ------------- nine residential communities, eight in suburban Atlanta, Georgia and one in Pine Mountain, Georgia. These nine communities include land on which approximately 2,957 lots are being or were developed, of which 166, 121 and 217 lots were sold in 2002, 2001 and 2000, respectively. Of the nine communities, four containing 1,076 lots were completely sold as of December 31, 2000. Two communities containing 704 lots were completely sold as of December 31, 2002. The three residential communities remaining under development at December 31, 2002 contain approximately 1,177 lots, 146 of which have been sold. In November 1998, Temco Associates began development of the Bentwater residential community, which will consist of approximately 1,669 lots on approximately 1,290 acres (see Note 5). Temco Associates sold 289, 233 and 219 lots in 2002, 2001 and 2000, respectively. In December 2002, the Company sold approximately 5.5 acres of Wildwood land for $2,500,000. The net gain on this sale was approximately $2,143,000. Financings. On February 22, 2002, CSC Associates, L.P. ("CSC"), an ---------- entity in which the Company owns a 50% equity interest, completed a $150 million non-recourse mortgage note payable (the "New Loan") with an interest rate of 6.958% and a maturity of March 1, 2012. The New Loan is secured by CSC's interest in the Bank of America Plaza building and related leases and agreements. CSC loaned the $150 million proceeds of the New Loan to the Company under a non-recourse loan (the "New Cousins Loan") secured by the Company's interest in CSC under the same payment terms as those of the New Loan. The Company paid all costs of issuing the New Loan and the New Cousins Loan, including a $750,000 fee to an affiliate of Bank of America Corporation. On March 15, 2002, $65,873,925 of the proceeds from the New Loan was used to pay off in full the existing collateralized non-recourse mortgage notes (the "Prior Notes"). The $65,873,925 included $65,525,710 for the payoff of the principal balance as of February 15, 2002 (the last payment date of the Prior Notes) and $348,215 for accrued interest from February 15, 2002 through March 14, 2002. The existing non-recourse loan to CSC, which was secured by the Company's interest in CSC under the same payment terms as those of the Prior Notes, was also repaid in full. In connection with the prepayment in full of the Prior Notes, the Company paid a prepayment premium in the amount of $2,871,925. This prepayment premium, along with the unamortized balance of closing costs paid by the Company related to the Prior Notes in the amount of $629,278, were expensed as an extraordinary item in the Company's Consolidated Statements of Income in 2002. Stock Repurchase Plan In November 2001, the Board of Directors of the Company adopted a stock repurchase plan authorizing the repurchase of up to 5 million shares of common stock prior to January 1, 2004 (see Note 6). During January 2003, the Company purchased an additional 234,100 shares at an average price of $23.657. As of March 18, 2003, the Company had repurchased a total of 2,691,582 shares for an aggregate price of $64,893,935. Subsequent Event The Company and Cable & Wireless Internet Services, Inc. ("Cable") have executed an agreement under which Cable's lease on 158,000 rentable square feet at 55 Second Street was terminated effective January 31, 2003, conditioned upon the payment to the Company of a termination fee of $20 million. The Company received $10 million of the termination fee in February 2003, with the remaining $10 million due April 1, 2003 from an irrevocable letter of credit held by the Company. 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 has 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 or future development) have not been so examined. No assurance can be given that no environmental liabilities exist, that the reports revealed 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 The Company's 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. The Company also competes with other real estate companies, financial institutions, pension funds, partnerships, individual investors and others when attempting to acquire and develop properties. Forward-Looking Statements Certain matters contained in this report are forward-looking statements within the meaning of the federal securities laws and are subject to uncertainties and risks. These 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, the financial condition of existing tenants, interest rates, the Company's ability to obtain favorable financing or zoning, the environmental impact, the effects of terrorism and other risks detailed from time to time in the Company's filings with the Securities and Exchange Commission, including the Form 8-K filed on March 9, 2001. The words "believes," "expects," "estimates" and similar expressions are intended to identify forward-looking statements. 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. Such forward-looking statements are based on current expectations and speak only as of the date of such statements. The Company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of future events, new information or otherwise. Executive Offices; Employees The Registrant's executive offices are located at 2500 Windy Ridge Parkway, Suite 1600, Atlanta, Georgia 30339-5683. At December 31, 2002, the Company employed 403 people. Website Access to 1934 Act Reports The Company makes available free of charge on its website, www.CousinsProperties.com, its filed reports on Forms 10-K, 10-Q and 8-K, and all amendments thereto, as soon as reasonably practicable after the reports are filed with or furnished to the Securities and Exchange Commission. The information contained in the Company's website is not incorporated herein by reference. Copies of these documents are also available without exhibits free of charge upon request to the Company at 2500 Windy Ridge Parkway, Suite 1600, Atlanta, Georgia 30339-5683, Attention: Mark A. Russell, Vice President - Chief Financial Analyst and Director of Investor Relations. Mr. Russell, the Company's investor relations contact, may also be reached by telephone at (770) 857-2449, by facsimile at (770) 857-2360 or by email at markrussell@cousinsproperties.com.
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, 2002. Dollars are stated in thousands. Percentage Description, Year Rentable Leased Average Location Development Company's Square Feet as of 2002 Major Tenants (lease and Completed Venture Ownership and Acres December Economic expiration/options Zip Code or Acquired Partner Interest as Noted 31, 2002 Occupancy expiration) ------------ ----------- ------- ---------- ---------- ---------- --------- -------------------- Office ------ Inforum Atlanta, GA 30303-1032 1999 N/A 100% 990,000 96% 97% BellSouth Corporation 4 Acres (2) Georgia Lottery Corp. (2013) Lockwood Greene Engineers, Inc. (2007/2012)(4) Co Space Services, LLC (2020/2025) Turner Broadcasting (2006/2016) Sapient Corporation (2009/2019) 101 Independence Center Charlotte, NC 28246-1000 1996 N/A 100% 526,000 98% 97% Bank of America (3) 2 Acres (5) (2008/2028)(6) Robinson Bradshaw & Hinson, P.A.(2014)(7) Ernst & Young LLP(2004) Congress at Fourth Austin, TX 78701-3619 (8) N/A 100% 525,000 33%(8) (8) Jenkins & Gilchrist (2013)(8) 2 Acres Winstead, Sechrest & Minick P.C. (2014/2024)(8) 101 Second Street San Francisco, CA 94105-3601 2000 Myers Second 100%(9) 387,000 83% 86% Thelen, Reid & Priest Street Company 1 Acre (2012/2022) LLC 55 Second Street San Francisco, CA 94105-3601 2002 Myers Bay 100%(9) 379,000 92%(10) 89%(11) Cable & Wireless (3) Area Company LLC 1 Acre (2014/2019)(10) Paul Hastings (2017/2027) Fritz Companies (2012/2017) Preston Gates (2010/2015)
Adjusted Cost and Adjusted Cost Less Debt Description, Major Depreciation Maturity Location Tenants' and and and Rentable Amortization Debt Interest Zip Code Sq. Feet (1) Balance Rate ----------- -------- ------------ ------- -------- Office ------ Inforum Atlanta, GA 30303-1032 277,744 $ 91,476 $ 0 N/A 127,827 $ 64,862 125,916 110,797 57,827 57,689 101 Independence Center Charlotte, NC 28246-1000 359,327 $ 79,559(5) $ 44,928 12/1/07 $ 60,357(5) 8.22% 89,584 24,125 Congress at Fourth Austin, TX 78701-3619 45,552(8) $ 53,632 $ 0 N/A 37,000 (8) 101 Second Street San Francisco, CA 94105-3601 135,919 $ 99,272 $ 88,055 4/19/10 $ 84,282 8.33% 55 Second Street San Francisco, CA 94105-3601 158,550 $109,960 $ 0 N/A $107,014 73,708 57,380 43,968
Percentage Description, Year Rentable Leased Average Location Development Company's Square Feet as of 2002 Major Tenants (lease and Completed Venture Ownership and Acres December Economic expiration/options Zip Code or Acquired Partner Interest as Noted 31, 2002 Occupancy expiration) ------------ ----------- ------- ---------- ---------- ---------- --------- -------------------- Office (Continued) ------------------ AT&T Wireless Services Headquarters Suburban Los Angeles, CA 90703-8573 1999 N/A 100% 222,000 100% 100% AT&T Wireless Services 6 Acres (12) (2014/2029) Cerritos Corporate Center - Phase II Suburban Los Angeles, CA 90703-8573 2001 N/A 100% 105,000 100% 100% AT&T Wireless Services 3 Acres (12) (2011/2021) The Points at Waterview Suburban Dallas, Texas 75080-1472 2000 N/A 100% 201,000 82% 45% Bombadier Aerospace Corp. 15 Acres (5) (2013/2023) Cisco Systems, Inc. (2005/2010) Lakeshore Park Plaza Birmingham, AL 35209-6719 1998 Daniel Realty 100%(9) 190,000 82% 78% Infinity Insurance (2005/2015) Company 12 Acres 600 University Park Place Birmingham, AL 35209-6774 2000 Daniel Realty 100%(9) 123,000 95% 95% Southern Company, Inc. (3) Company 10 Acres (2005/2011) Southern Progress (2006) 333 John Carlyle Suburban Washington, D.C. 22314-5745 1999 N/A 100% 153,000 96% 94% A.T. Kearney (2009/2019) 1 Acre 1900 Duke Street Suburban Washington, D.C. 22314-5745 2000 N/A 100% 97,000 100% 99% Municipal Securities Rulemaking 1 Acre Board (2016/2026) American Society of Clinical Oncology (2010/2015) 333 North Point Center East Suburban Atlanta, GA 30022-8274 1998 N/A 100% 129,000 93% 96% Alltel Telecom Information 9 Acres Services, Inc. (2003) J.C. Bradford (2005/2010)
Adjusted Cost and Adjusted Cost Less Debt Description, Major Depreciation Maturity Location Tenants' and and and Rentable Amortization Debt Interest Zip Code Sq. Feet (1) Balance Rate ----------- -------- ------------ ------- -------- Office (Continued) ----------------- AT&T Wireless Services Headquarters Suburban Los Angeles, CA 90703-8573 222,000 $ 56,214 $ 0 N/A $ 48,295 Cerritos Corporate Center - Phase II Suburban Los Angeles, CA 90703-8573 105,000 $ 19,344 $ 0 N/A $ 18,082 The Points at Waterview Suburban Dallas, Texas 75080-1472 97,740 $ 27,535(5) $ 0 N/A $ 24,846(5) 48,303 Lakeshore Park Plaza Birmingham, AL 35209-6719 107,293 $ 16,022 $ 10,088 11/1/08 $ 13,856 6.78% 600 University Park Place Birmingham, AL 35209-6774 41,961 $ 20,229 $ 13,822 8/10/11 $ 17,115 7.38% 25,465 333 John Carlyle Suburban Washington, D.C. 22314-5745 94,115 $ 29,161 $ 48,459(13) 11/1/11 $ 24,877 7.00% (13) 1900 Duke Street Suburban Washington, D.C. 22314-5745 47,556 $ 24,169 (13) (13) $ 22,050 36,247 333 North Point Center East Suburban Atlanta, GA 30022-8274 48,559 $ 13,277 $ 31,960(14) 11/1/11 $ 9,377 7.00% (14)
Percentage Description, Year Rentable Leased Average Location Development Company's Square Feet as of 2002 Major Tenants (lease and Completed Venture Ownership and Acres December Economic expiration/options Zip Code or Acquired Partner Interest as Noted 31, 2002 Occupancy expiration) ------------ ----------- ------- ---------- ---------- ---------- --------- -------------------- Office (Continued) ------------------ 555 North Point Center East Suburban Atlanta, GA 30022-8274 2000 N/A 100% 152,000 91% 91% Regus Business Centre 10 Acres (2011/2016)(15) 615 Peachtree Street Atlanta, GA 30308-2312 1996 N/A 100% 148,000 91% 91% Wachovia (3)(2004/2007) 2 Acres One Georgia Center Atlanta, GA 30308-3619 2000 Prudential (3) 88.50%(9) 363,000 78% 84% Norfolk & Southern (2004/2014) 3 Acres (5) SouthTrust Bank (2004/2019) Wildwood Office Park, Atlanta, GA: 2300 Windy Ridge Parkway 30339-5671 1987 IBM 50% 635,000 88% 99% Manhattan Associates, LLC 12 Acres (2008/2013)(16) Computer Associates (2005/2010) Profit Recovery Group (2005/2010) Financial Services Corporation (2006/2011) Life Office Management Associates (2005/2010)(16) Chevron USA (2005) 2500 Windy Ridge Parkway 30339-5683 1985 IBM 50% 315,000 89% 93% Coca-Cola Enterprises Inc. 8 Acres (2018/2023) Cousins Properties Incorporated (2003) 3200 Windy Hill Road 30339-5609 1991 IBM 50% 687,000 95% 100% IBM (2006/2011) 15 Acres IBM (2009/2014)(17) General Electric (2003) W.H. Smith Inc. (2012/2017)
Adjusted Cost and Adjusted Cost Less Debt Description, Major Depreciation Maturity Location Tenants' and and and Rentable Amortization Debt Interest Zip Code Sq. Feet (1) Balance Rate ----------- -------- ------------ ------- -------- Office (Continued) ----------------- 555 North Point Center East Suburban Atlanta, GA 30022-8274 89,688 $ 16,818 (14) (14) $ 14,124 615 Peachtree Street Atlanta, GA 30308-2312 50,073 $ 13,489 $ 0 N/A $ 9,421 One Georgia Center Atlanta, GA 30308-3619 91,425 $ 40,327(5) $ 0 N/A 80,895 $ 36,321(5) Wildwood Office Park, Atlanta, GA: 2300 Windy Ridge Parkway 30339-5671 135,398 $ 79,829 $ 57,662 12/1/05 $ 41,539 7.56% 74,255 62,576 61,928 57,692 (2005/2010)(16) 45,967 2500 Windy Ridge Parkway 30339-5683 187,251 $ 30,659 $ 20,812 12/15/05 $ 14,723 7.45% 44,030 3200 Windy Hill Road 30339-5609 421,489 $ 85,452 $ 63,938 1/1/07 69,108 $ 50,527 8.23% 65,947 41,858
Percentage Description, Year Rentable Leased Average Location Development Company's Square Feet as of 2002 Major Tenants (lease and Completed Venture Ownership and Acres December Economic expiration/options Zip Code or Acquired Partner Interest as Noted 31, 2002 Occupancy expiration) ------------ ----------- ------- ---------- ---------- ---------- --------- -------------------- Office (Continued) ------------------ 4100 and 4300 Wildwood Parkway 30339-8400 1996 IBM 50% 250,000 100% 100% Georgia-Pacific 13 Acres Corporation (2012/2017)(18) 4200 Wildwood Parkway 30339-8402 1997 IBM 50% 260,000 100% 100% General Electric (3)(2014/2024) 8 Acres 3301 Windy Ridge Parkway 30339-5685 1984 N/A 100% 107,000 100% 100% Indus International, Inc. 10 Acres (2012/2017) 3100 Windy Hill Road 30339-5605 1983 N/A 100%(19) 188,000 100% 100% IBM (2006) 13 Acres Bank of America Plaza Atlanta, GA 30308-2214 1992 Bank of America (3) 50% 1,261,000 100% 100% Bank of America (3)(2012/2042) 4 Acres Troutman Sanders (2007/2017) Ernst & Young LLP (2007/2017) Paul Hastings (2012/2017)(21) Hunton & Williams (2009/2014) Gateway Village Charlotte, NC 28202-1125 2001 Bank of America (3) 50%(9) 1,065,000 100% 100%(9) Bank of America (3)(2015/2035) 8 Acres The Pinnacle Atlanta, GA 30326-1234 1999 LORET 50% 424,000 98% 98% Merrill Lynch (2010/2011) Holdings, L.L.L.P. 4 Acres A.T. Kearney (2009/2019) UBS PaineWebber (2013/2018)(22) Two Live Oak Center Atlanta, GA 30326-1234 1997 LORET 50% 279,000 80% 89% SYNAVANT Inc. (2007/2017) Holdings, L.L.L.P. 2 Acres Chubb & Son, Inc. (3) (2007/2017) 1155 Perimeter Center West Atlanta, GA 30338-5416 2001 J. P. Morgan (3) 50% 362,000 99% 100% Mirant Corporation (2015) 6 Acres
Adjusted Cost and Adjusted Cost Less Debt Description, Major Depreciation Maturity Location Tenants' and and and Rentable Amortization Debt Interest Zip Code Sq. Feet (1) Balance Rate ----------- -------- ------------ ------- -------- Office (Continued) ----------------- 4100 and 4300 Wildwood Parkway 30339-8400 250,000 $ 26,596 $ 26,888 4/1/12 $ 19,773 7.65% 4200 Wildwood Parkway 30339-8402 260,000 $ 36,973 $ 40,806 3/31/14 $ 30,717 6.78% 3301 Windy Ridge Parkway 30339-5685 107,000 $ 12,600 $ 0 N/A $ 6,559 3100 Windy Hill Road 30339-5605 188,000 $ 17,005(19) $ 0 N/A $ 12,924(19) Bank of America Plaza Atlanta, GA 30308-2214 572,742 $225,468 (20) (20) 224,181 $151,916 211,211 92,224 91,103 Gateway Village Charlotte, NC 28202-1125 1,065,000 $202,269 $181,532 12/1/16 $191,048 6.41% The Pinnacle Atlanta, GA 30326-1234 72,866 $ 92,830 $ 67,754 12/31/09 47,866 $ 75,200 7.11% 47,738 Two Live Oak Center Atlanta, GA 30326-1234 65,451 $ 47,127 $ 28,526 10/1/07 48,520 $ 34,604 7.90% 1155 Perimeter Center West Atlanta, GA 30338-5416 360,395 $ 58,566 $ 0 N/A
Percentage Description, Year Rentable Leased Average Location Development Company's Square Feet as of 2002 Major Tenants (lease and Completed Venture Ownership and Acres December Economic expiration/options Zip Code or Acquired Partner Interest as Noted 31, 2002 Occupancy expiration) ------------ ----------- ------- ---------- ---------- ---------- --------- -------------------- Office (Continued) ------------------ Ten Peachtree Place Atlanta, GA 30309-3814 1991 Coca-Cola (3) 50%(9) 260,000 100% 14% AGL Services Co. (2013/2028) 5 Acres (5) Domtar (2006)(23) John Marshall-II Suburban Washington, D.C. 22102-3802 1996 CarrAmerica Realty 50% 224,000 100% 100% Booz-Allen & Hamilton Corporation (3) 3 Acres (2011/2016) Austin Research Park - Building III Austin, TX 78759-2314 2001 CommonWealth 50% 174,000 100% 100% Charles Schwab & Co., Inc. Pacific, LLC 4 Acres (5) (2012/2032)(24) and CalPERS Austin Research Park - Building IV Austin, TX 78759-2314 2001 CommonWealth 50% 184,000 100% 100% Charles Schwab & Co., Inc. Pacific, LLC 7 Acres (5) (2012/2032)(24) and CalPERS First Union Tower Greensboro, NC 27401-2167 1990 Prudential (3) 11.50%(9) 323,000 66% 77% Smith Helms Mullis & 1 Acre Moore (2010/2015) Wachovia Bank (3) (2009/2019) Grandview II Birmingham, AL 35243-1930 1998 Prudential (3) 11.50%(9) 149,000 100% 100% Fortis Benefits Insurance 8 Acres Company (2005/2011) Daniel Realty Company (2008) 100 North Point Center East Suburban Atlanta, GA 30022-4885 1995 Prudential (3) 11.50%(9) 128,000 70% 76% Schweitzer-Mauduit 7 Acres International, Inc. (2007/2012)
Adjusted Cost and Adjusted Cost Less Debt Description, Major Depreciation Maturity Location Tenants' and and and Rentable Amortization Debt Interest Zip Code Sq. Feet (1) Balance Rate ----------- -------- ------------ ------- -------- Office (Continued) ----------------- Ten Peachtree Place Atlanta, GA 30309-3814 226,779 $ 33,997(5) $ 13,212 12/31/08 32,720 $ 27,479(5) LIBOR + 0.75% John Marshall-II Suburban Washington, D.C. 22102-3802 224,000 $ 27,768 $ 19,244 4/1/13 $ 20,660 7.00% Austin Research Park - Building III Austin, TX 78759-2314 174,000 $ 24,627(5) $ 0 N/A $ 23,202(5) Austin Research Park - Building IV Austin, TX 78759-2314 184,000 $ 26,557(5) $ 0 N/A $ 25,301(5) First Union Tower Greensboro, NC 27401-2167 70,360 $ 54,264 $ 0 N/A $ 38,120 62,622 Grandview II Birmingham, AL 35243-1930 69,652 $ 23,115 $ 0 N/A $ 16,963 23,440 100 North Point Center East Suburban Atlanta, GA 30022-4885 32,696 $ 25,337 $ 22,870(25) 8/1/07 $ 16,737 7.86% (25)
Percentage Description, Year Rentable Leased Average Location Development Company's Square Feet as of 2002 Major Tenants (lease and Completed Venture Ownership and Acres December Economic expiration/options Zip Code or Acquired Partner Interest as Noted 31, 2002 Occupancy expiration) ------------ ----------- ------- ---------- ---------- ---------- --------- -------------------- Office (Continued) ------------------ 200 North Point Center East Suburban Atlanta, GA 30022-4885 1996 Prudential (3) 11.50%(9) 130,000 47% 53% APAC Teleservices, Inc. 9 Acres (2004/2009) Motorola, Inc. (2003) Dean Witter (2007) Medical Office Northside/Alpharetta I Suburban Atlanta, GA 30005-3707 1998 N/A 100% 103,000 93% 95% Northside Hospital (3)(2013)(27) 1 Acre (26) Northside/Alpharetta II Suburban Atlanta, GA 30005-3707 1999 N/A 100% 198,000 79% 76% Northside Hospital (3)(2019)(28) 2 Acres (26) $ 15,715 Meridian Mark Plaza Atlanta, GA 30342-1613 1999 N/A 100% 161,000 100% 99% Northside Hospital (3) 3 Acres (2013/2023)(29) Scottish Rite Hospital for Crippled Children, Inc. (2013/2018)(29) AtheroGenics Suburban Atlanta, GA 30004-2148 1999 N/A 100% 50,000 100% 100% AtheroGenics (2019/2029) 4 Acres Emory Crawford Long Medical Office Tower Atlanta, GA 30308-9999 2002 Emory University 50% 358,000 85% 65%(11) Emory University (2017/2047) (30) Presbyterian Medical Plaza at University Charlotte, NC 28233-3549 1997 Prudential (3) 11.50%(9) 69,000 100% 100% Novant Health, Inc. 1 Acre (31) (2012/2027)(32)
Adjusted Cost and Adjusted Cost Less Debt Description, Major Depreciation Maturity Location Tenants' and and and Rentable Amortization Debt Interest Zip Code Sq. Feet (1) Balance Rate ----------- -------- ------------ ------- -------- Office (Continued) ----------------- 200 North Point Center East Suburban Atlanta, GA 30022-4885 22,409 $ 21,836 (25) (25) $ 15,135 22,492 15,709 Medical Office Northside/Alpharetta I Suburban Atlanta, GA 30005-3707 49,908 $ 15,922 $ 9,903 1/1/06 $ 13,021 7.70% Northside/Alpharetta II Suburban Atlanta, GA 30005-3707 75,342 $ 18,175 $ 0 N/A $ 15,715 Meridian Mark Plaza Atlanta, GA 30342-1613 51,054 $ 26,751 $ 24,926 10/1/10 $ 22,264 8.27% 29,556 AtheroGenics Suburban Atlanta, GA 30004-2148 50,000 $ 7,655 $ 0 N/A $ 5,697 Emory Crawford Long Medical Office Tower Atlanta, GA 30308-9999 136,053 $ 48,931 $ 0 N/A $ 47,442 Presbyterian Medical Plaza at University Charlotte, NC 28233-3549 63,862 $ 8,615 $ 0 N/A $ 6,907
Percentage Description, Year Rentable Leased Average Location Development Company's Square Feet as of 2002 Major Tenants (lease and Completed Venture Ownership and Acres December Economic expiration/options Zip Code or Acquired Partner Interest as Noted 31, 2002 Occupancy expiration) ------------ ----------- ------- ---------- ---------- ---------- --------- -------------------- Retail Centers -------------- Presidential MarketCenter Suburban Atlanta, GA 30278-2149 1994, 1996 N/A 100% 490,000 100% 99% Target (33) and 2000 66 acres overall of Publix Super Market (374,000 100% Company (2019/2044) square feet of Company owned Carmike Cinemas (3)(2023/2033) and 49 acres owned Bed, Bath & Beyond (2008/2023) are owned T.J. Maxx (2004/2014) by the Office Depot, Inc. (2011/2026) Company) Ross (2012/2032) Marshalls (2010/2025) Gap (2006/2016) The Avenue of the Peninsula Rolling Hills Estates, CA 90274-3664 2000 N/A 100% 375,000 91% 80% Regal Cinema (2015/2030) 14 Acres Saks & Company (2019/2049) Borders (2018/2038) Restoration Hardware (2010/2020) Pottery Barn (2013) Banana Republic (3)(2006/2016) Gap (2006/2016) Perimeter Expo Atlanta, GA 30338-1519 1993 N/A 100% 291,000 92% 92% The Home Depot Expo (33) 19 acres overall of Marshalls (2014/2029) (176,000 92% of Company Best Buy (2014/2029) square feet Company owned Linens `N Things (2014/2024) and 10 acres owned Office Max (2013/2033) are owned by Gap's Old Navy Store the Company) (2007/2012) The Avenue East Cobb Suburban Atlanta, GA 30062-8197 1999 N/A 100% 225,000 100% 97% Borders, Inc. (2015/2030) 30 Acres Bed, Bath & Beyond (2010/2025) Gap (2005/2015) Talbot's (2010/2020) Pottery Barn (3)(2006/2012) Banana Republic (3)(2005/2015)
Adjusted Cost and Adjusted Cost Less Debt Description, Major Depreciation Maturity Location Tenants' and and and Rentable Amortization Debt Interest Zip Code Sq. Feet (1) Balance Rate ----------- -------- ------------ ------- -------- Retail Centers -------------- Presidential MarketCenter Suburban Atlanta, GA 30278-2149 N/A $ 29,672 $ 27,667 5/2/11 56,146 $ 23,955 7.65% 44,565 35,127 32,000 31,628 30,464 30,000 12,000 The Avenue of the Peninsula Rolling Hills Estates, CA 90274-3664 55,673 $ 91,858 $ 0 N/A 42,404 $ 81,751 14,286 13,521 12,089 9,705 9,000 Perimeter Expo Atlanta, GA 30338-1519 N/A $ 19,853 $ 19,792 8/15/05 36,598 $ 16,038 8.04% 36,000 30,351 23,500 13,939 The Avenue East Cobb Suburban Atlanta, GA 30062-8197 24,882 $ 41,145 $ 38,255 8/1/10 21,000 $ 33,318 8.39% 19,434 12,905 10,000 8,009
Percentage Description, Year Rentable Leased Average Location Development Company's Square Feet as of 2002 Major Tenants (lease and Completed Venture Ownership and Acres December Economic expiration/options Zip Code or Acquired Partner Interest as Noted 31, 2002 Occupancy expiration) ------------ ----------- ------- ---------- ---------- ---------- --------- -------------------- Retail Centers (Continued) -------------------------- The Avenue West Cobb Suburban Atlanta, GA 30064-1615 (8) N/A 100% 206,000 28%(8) (8) Linens N Things (2013/2028)(8) 22 Acres Barnes & Noble (2013/2023)(8) Talbots (2013/2023)(8) The Shops of Lake Tuscaloosa Tuscaloosa, AL 35406-2649 (8) N/A 100% 70,000 63%(8) (8) Publix Super Markets (3) 12 Acres (2024/2054)(8) Mira Mesa MarketCenter Suburban San Diego, CA 92126-2960 2000 Prudential (3) 88.50%(9) 480,000 100% 100% Home Depot (2020/2045) 40 Acres Edwards Theaters (2020/2035) Albertsons (2020/2060) Ross (2011/2026) Barnes & Noble Superstores, Inc. (2015/2030) Gap's Old Navy Store (2006/2016) Long's Drugs (2021/2041) The Avenue Peachtree City Suburban Atlanta, GA 30269-3120 2001 Prudential (3) 88.50%(9) 169,000 98% 78% Books a Million (2008/2013) 18 Acres Gap (2012/2022) Homebanc Mortgage Corporation (2007/2012) Banana Republic (3)(2012/2022) Rack Room Shoes (2008/2015) The Shops at World Golf Village St. Augustine, FL 32092-2724 1999 W.C. Bradley Co. 50% 80,000 74% 70% Bradley Specialty Retailing, 3 Acres Inc. (2013/2023)
Adjusted Cost and Adjusted Cost Less Debt Description, Major Depreciation Maturity Location Tenants' and and and Rentable Amortization Debt Interest Zip Code Sq. Feet (1) Balance Rate ----------- -------- ------------ ------- -------- Retail Centers -------------- The Avenue West Cobb Suburban Atlanta, GA 30064-1615 24,025(8) $ 8,380 $ 0 N/A 28,030(8) (8) 6,502(8) The Shops of Lake Tuscaloosa Tuscaloosa, AL 35406-2649 44,271(8) $ 2,109 $ 0 N/A (8) (8) Mira Mesa MarketCenter Suburban San Diego, CA 92126-2960 129,833 $ 51,683 $ 0 N/A 94,041 $ 47,965 55,489 30,187 26,566 22,448 21,018 The Avenue Peachtree City Suburban Atlanta, GA 30269-3120 13,750 $ 29,351 $ 0 N/A 10,800 $ 26,730 8,851 8,015 6,720 The Shops at World Golf Village St. Augustine, FL 32092-2724 31,044 $ 13,454 $ 0 N/A $ 11,339
Percentage Description, Year Rentable Leased Average Location Development Company's Square Feet as of 2002 Major Tenants (lease and Completed Venture Ownership and Acres December Economic expiration/options Zip Code or Acquired Partner Interest as Noted 31, 2002 Occupancy expiration) ------------ ----------- ------- ---------- ---------- ---------- --------- -------------------- Retail Centers (Continued) -------------------------- North Point MarketCenter Suburban Atlanta, GA 30202-4889 1994/1995 Prudential (3) 11.50%(9) 517,000 100% 100% Target (33) 60 Acres (34) Babies "R" Us (2012/2032) (401,000 Media Play (2010/2025) square feet Marshalls (2010/2025) and 49 acres Rhodes (2011/2021) are owned by Linens `N Things (2005/2025) CP Venture United Artists (2014/2034) Two LLC) Circuit City (2015/2030) PETsMART (2009/2029) Gap's Old Navy Store (2006/2011) Greenbrier MarketCenter Chesapeake, VA 23327-2840 1996 Prudential (3) 11.50%(9) 493,000 100% 100% Target (2016/2046)(35) 44 Acres Harris Teeter, Inc. (2016/2036) Best Buy (2015/2030) Bed, Bath & Beyond (2012/2027) Babies "R" Us (2006/2021) Stein Mart, Inc. (2006/2026) Barnes & Noble Superstores, Inc. (2012/2022) PETsMART(2011/2031) Office Max (2011/2026) Gap's Old Navy Store (2007/2012) Los Altos MarketCenter Long Beach, CA 90815-3126 1996 Prudential (3) 11.50%(9) 258,000 100% 100% Sears (33) 19 Acres Circuit City (3)(2017/2037) (157,000 square Borders, Inc. (2017/2037) feet and 17 Acres Bristol Farms (3)(2012/2032) are owned by CompUSA, Inc. (2011/2021) CP Venture Sav-on Drugs (3)(2016/2036) Two LLC) Mansell Crossing Phase II Suburban Atlanta, GA 30202-4822 1996 Prudential (3) 11.50%(9) 103,000 100% 92% Bed, Bath & Beyond (2012/2027) 13 Acres Ross Stores Inc. (2013/2033) Rooms To Go (2016/2036)
Adjusted Cost and Adjusted Cost Less Debt Description, Major Depreciation Maturity Location Tenants' and and and Rentable Amortization Debt Interest Zip Code Sq. Feet (1) Balance Rate ----------- -------- ------------ ------- -------- Retail Centers -------------- North Point MarketCenter Suburban Atlanta, GA 30202-4889 N/A $ 56,919 $ 26,409 7/15/05 $ 48,113 8.50% 48,884 40,000 40,000 35,000 34,733 33,420 25,465 20,000 Greenbrier MarketCenter Chesapeake, VA 23327-2840 117,220 $ 51,355 $ 0 N/A 51,806 $ 43,848 45,106 40,484 40,000 36,000 29,974 26,040 23,484 14,000 Los Altos MarketCenter Long Beach, CA 90815-3126 N/A $ 32,812 $ 0 N/A 38,541 $ 28,524 30,000 28,200 25,620 16,914 Mansell Crossing Phase II Suburban Atlanta, GA 30202-4822 40,787 $ 12,574 $ 0 N/A 32,144 $ 10,757 21,000
Percentage Description, Year Rentable Leased Average Location Development Company's Square Feet as of 2002 Major Tenants (lease and Completed Venture Ownership and Acres December Economic expiration/options Zip Code or Acquired Partner Interest as Noted 31, 2002 Occupancy expiration) ------------ ----------- ------- ---------- ---------- ---------- --------- -------------------- 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% 88% N/A North Point Suburban Atlanta, GA 30202-4885 1993 N/A 100% 24 Acres 100% 95% N/A
Adjusted Cost and Adjusted Cost Less Debt Description, Major Depreciation Maturity Location Tenants' and and and Rentable Amortization Debt Interest Zip Code Sq. Feet (1) Balance Rate ----------- -------- ------------ ------- -------- Stand Alone Retail Sites Adjacent to Company's Office and Retail Projects ------------------------------------------------------------------------- Wildwood Office Park Suburban Atlanta, GA 30339-5671 N/A $ 8,717 $ 0 N/A $ 6,594 North Point Suburban Atlanta, GA 30202-4885 N/A $ 3,697 $ 0 N/A $ 3,501
(1) Cost as shown in the accompanying table includes deferred leasing 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) Lockwood Green Engineers, Inc. reduced its space under lease from 125,916 square feet to 97,918 square feet effective February 1, 2003. (5) Includes acreage and cost of land available for future development. See "Land Held for Investment or Future Development." (6) 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. (7) 3,060 square feet of this lease of 101 Independence Center expires in 2004. (8) Project was under construction and in lease-up as of December 31, 2002. In certain situations, lease expiration dates are based upon estimated commencement dates and square footage is estimated. (9) See "Major Properties" - "101 Second Street," " 55 Second Street," "Cousins/Daniel, LLC," "One Georgia Center," "Charlotte Gateway Village, LLC," "Ten Peachtree Place," "CP Venture Two LLC," and "CP Venture Two LLC and CP Venture Three LLC" where these ventures' preferences and/or terms are discussed. (10) See "Item 1, Subsequent Event" for information concerning the termination of the Cable and Wireless lease effective January 31, 2003. (11) 55 Second Street and Emory Crawford Long Medical Office Tower became partially operational for financial reporting purposes in February 2002. Thus, economic occupancy does not include a full year of operations. (12) 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. (13) 333 John Carlyle and 1900 Duke Street were financed together as one non-recourse mortgage note payable. Until certain events occur, this mortgage note is cross-defaulted with the note referred to in Note 14. (14) 333 North Point Center East and 555 North Point Center East were financed together as one non-recourse mortgage note payable. Until certain events occur, this mortgage note is cross-defaulted with the note referred to in Note 13. (15) On January 14, 2003, Regus Business Centre filed Chapter 11 bankruptcy. To date this lease has not been assumed or rejected. (16) 5,448 square feet of the Manhattan Associates lease expires in 2005; 7,208 square feet of the Life Office Management Associates lease expires in 2008. (17) IBM has the right to terminate its lease on 69,108 square feet at 3200 Windy Hill Road in 2004 upon the payment of a termination fee. (18) Georgia-Pacific Corporation has the right to terminate its lease in 2007, upon payment of a cancellation penalty. Additionally, 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) See "Item 1, Significant Changes in 2002, Financings" where debt on Bank of America Plaza is discussed. (21) Paul Hastings has a cancellation right on 12,812 square feet and 20,574 square feet of this lease of Bank of America Plaza in 2005 and 2006, respectively. (22) UBS PaineWebber has the right to terminate its lease in 2008, upon payment of a cancellation penalty. ( 23) Domtar has the right to terminate its lease in 2004 with six months notice. 24) Charles Schwab & Co., Inc. has the right to terminate its lease with respect to either 50% or all of the space in either or both of Buildings III and IV in 2009, upon 14 months notice and payment of a termination fee. (25) 100 North Point Center East and 200 North Point Center East were financed together as one non-recourse mortgage note payable. (26) Northside/Alpharetta I and II are located on 1 acre and 2 acres subject to ground leases, which expire in 2058 and 2060, respectively. (27) 4,716 square feet, 12,532 square feet and 4,716 square feet of this lease of Northside/Alpharetta I expire in 2005, 2009 and 2011, respectively. (28) 17,444 square feet and 10,754 square feet of this lease of Northside/Alpharetta II expire in 2009 and 2011, respectively. (29) 8,718 square feet of the Northside Hospital lease expires in 2008; 7,521 square feet of the Scottish Rite Hospital lease expires in 2004. (30) Emory Crawford Long Medical Office Tower was developed on top of a building within the Crawford Long Hospital campus. The Company received a fee simple interest in the air rights above this building in order to develop the medical office tower. (31) Presbyterian Medical Plaza at University is located on 1 acre which is subject to a ground lease expiring in 2057. (32) Novant Health, Inc. has the option to renew 23,359 square feet of this lease of Presbyterian Medical Plaza at University through 2027, with the option to renew the balance through 2022. (33) This anchor tenant owns its own space. (34) North Point MarketCenter includes approximately 4 outparcels which are ground leased to freestanding users. (35) Tenant has exercised an option to acquire the land on which tenant's store resides. 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 commercial development in Atlanta, Georgia, master planned by I.M. Pei, which includes eight office buildings containing 2,442,000 rentable square feet. The property is zoned for office, institutional, commercial and residential use. Approximately 104 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 96 acre balance of the land available for future development. (See "Land Held for Investment or 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, 2002, 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 $37,565,000. 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 (315,000 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 December 31, 2002, 3200 Windy Hill Road was 95% leased, 2300 Windy Ridge Parkway was 88% leased, 2500 Windy Ridge Parkway was 89% leased and the remaining 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 ten acres which is wholly owned by the Company. The 3301 Windy Ridge Parkway Building was 100% leased as of December 31, 2002. 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 (seven years as of January 1, 1997) and the large mortgage note balance ($25.9 million as of January 1, 1997) that would have to be paid off, with interest, in that seven 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, respectively, 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. 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 was 100% leased as of December 31, 2002, 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 100% leased as of December 31, 2002, 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 office buildings located adjacent to North Point Mall and the retail properties discussed above. 100 North Point Center East and 200 North Point Center East, which were completed in 1995 and 1996, respectively, and contain 128,000 and 130,000 rentable square feet, respectively, were contributed to the Prudential venture in November 1998 (see Note 5). 333 North Point Center and 555 North Point Center East, which were completed in 1998 and 2000, respectively, and contain 129,000 and 152,000 rentable square feet, respectively, are wholly owned by the Company. These four office buildings are located on 35 acres of land at North Point. 555 North Point Center East became partially operational for financial reporting purposes in February 2000. 100, 200, 333 and 555 North Point Center East were 70%, 47%, 93% and 91% leased, respectively, as of December 31, 2002. AtheroGenics. The Company owns directly the AtheroGenics building, an approximately 50,000 rentable square foot office and laboratory building located on a four-acre site on the west side of Georgia Highway 400. The AtheroGenics building was 100% leased as of December 31, 2002. Other North Point Property. Approximately 24 acres of the North Point land are ground leased in one to five acre sites to freestanding users. These 24 acres were 100% leased as of December 31, 2002. The remaining approximately 230 developable acres at North Point are wholly 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. The Company has submitted a zoning request for a mixed use development, including residential, office and commercial as well as facilities for a performing arts center, assisted living, education and a community center. (See "Land Held for Investment or Future Development.") Other Operational Office Properties ----------------------------------- Inforum. In June 1999, the Company acquired Inforum, a 990,000 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 96% leased as of December 31, 2002. 101 Independence Center. In December 1996, the Company acquired 101 Independence Center, a 526,000 rentable square foot 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. The acquisition included land upon which an approximately 535,000 rentable square foot building can be developed. 101 Independence Center was 98% leased as of December 31, 2002. 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 one acre of undeveloped land in downtown San Francisco, California upon which 101 Second Street, an approximately 387,000 rentable square foot office building was developed. 101 Second Street became partially operational for financial reporting purposes in April 2000. In August 2002, the 148,000 square foot lease with Arthur Andersen was terminated, and in September 2002, 88,000 square feet of this space was re-leased. This property was 83% leased as of December 31, 2002. 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. 55 Second Street. In November 1999, the Company formed Cousins/Myers II, LLC, a venture with Myers Bay Area Company LLC ("Myers Bay"). The venture purchased approximately one acre of fully entitled undeveloped land in downtown San Francisco, California and began development of 55 Second Street, an approximately 379,000 rentable square foot office building. 55 Second Street became partially operational for financial reporting purposes in February 2002 and was 92% leased as of December 31, 2002. Effective January 31, 2003, a major tenant's lease on 158,000 square feet was terminated (see "Item 1, Business, Subsequent Event" and Note 10). 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. AT&T Wireless Services Headquarters. On November 18, 1998, the Company entered into Commonwealth/Cousins I, LLC (the "Venture") with CommonWealth for the purpose of developing AT&T Wireless Services Headquarters, a 222,000 rentable square foot office building in suburban Los Angeles, California, which became partially operational for financial reporting purposes in September 1999 and was 100% leased as of December 31, 2002. CommonWealth transferred all rights in the project and in exchange received an initial credit to its capital account of $4,980,039, which was 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 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. Cerritos Corporate Center - Phase II. In June 2000, the Company commenced construction of Cerritos Corporate Center - Phase II, an approximately 105,000 rentable square foot office building in suburban Los Angeles, California, adjacent to the Company's AT&T Wireless Services Headquarters office building. Cerritos Corporate Center - Phase II became fully operational for financial reporting purposes in June 2001 and was 100% leased to AT&T Wireless Services as of December 31, 2002 The Points at Waterview. In December 2000, the Company purchased The Points at Waterview, an approximately 201,000 rentable square foot office building in suburban Dallas, Texas. The purchase price was approximately $25.4 million which included an adjacent parcel of land on which a second building of approximately 60,000 rentable square feet can be developed. The Points at Waterview was 82% leased as of December 31, 2002. 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 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 office building which became partially operational for financial reporting purposes in June 2000. Both of these office buildings are located in Birmingham, Alabama, and were 82% and 95% leased, respectively, as of December 31, 2002. 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 office building in suburban Washington, D.C. 333 John Carlyle became partially operational for financial reporting purposes in May 1999 and was 96% leased as of December 31, 2002. 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 office building in suburban Washington, D.C., which became partially operational for financial reporting purposes in October 2000 and was 100% leased as of December 31, 2002. 615 Peachtree Street. In August 1996, the Company acquired 615 Peachtree Street, a 148,000 rentable square foot 12-story downtown Atlanta office building, located across from Bank of America Plaza. 615 Peachtree Street was 91% leased as of December 31, 2002. One Georgia Center. In December 2000, CP Venture Three LLC (see Note 5) 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 included an adjacent parcel of land upon which an approximately 350,000 rentable square foot building can be developed. One Georgia Center was 78% leased as of December 31, 2002. Bank of America Plaza. Bank of America Plaza is 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 December 31, 2002. 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, 2002, the Company's investment in CSC was approximately $84,133,000. 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, an approximately 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. At December 31, 2002, the Company had an investment in Gateway of approximately $10,655,000. 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 279,000 rentable square foot office building located in Atlanta, Georgia, which was renovated in 1997, and was 80% leased as of December 31, 2002. LORET also contributed an adjacent four-acre site on which construction of The Pinnacle, a 424,000 rentable square foot office building, commenced in August 1997 and was completed in November 1998. The Pinnacle was 98% leased as of December 31, 2002. The Company contributed $25 million of cash to Cousins LORET to match the value of LORET's agreed-upon equity. At December 31, 2002, the Company had an investment in Cousins LORET of approximately $6,599,000. 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. 1155 Perimeter Center West became partially operational for financial reporting purposes in January 2000 and was 99% leased as of December 31, 2002. The J.P. Morgan Fund contributed the approximately six-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, 2002, the Company's investment in 285 Venture, LLC was approximately $31,031,000. Ten Peachtree Place. Ten Peachtree Place is a 20-story, 260,000 rentable square foot office building located in midtown Atlanta, Georgia. Completed in 1991, this structure was designed by Michael Graves and was 100% leased to Coca-Cola through November 30, 2001. Ten Peachtree Place was 100% leased as of December 31, 2002. Approximately four acres of adjacent land, currently used for surface parking, are available for future development of an approximately 400,000 square foot office building or a 350-unit apartment complex. Ten Peachtree Place is owned by Ten Peachtree Place Associates ("TPPA"), 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. The TPPA partnership agreement generally provides that each partner is entitled to receive 50% of cash flows from operating activities, net of note principal amortization, through the ten-year term of the Coca-Cola lease. After the expiration of the Coca-Cola lease, in accordance with the partnership agreement, each partner must contribute on a 50% basis capital contributions needed for tenant improvements and leasing commissions related to the releasing of the building, as well as to fund any operating deficits. The cash flows from operating activities, net of note principal amortization, will be used first to repay these capital contributions plus 8% interest to each partner on a 50% basis. After these capital contributions plus 8% interest are repaid in full, 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. At December 31, 2002, the Company had an investment in Ten Peachtree Place Associates of approximately $4,262,000. 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 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, 2002, the Company had an investment in CC-JM II Associates of approximately $2,204,000. 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. developed Austin Research Park - Buildings III and IV, two approximately 174,000 and 184,000 rentable square foot office buildings, respectively, in Austin, Texas, which became partially operational for financial reporting purposes in June 2001 and September 2001, respectively. Both buildings were 100% leased as of December 31, 2002. Additionally, the venture owns an adjacent six-acre parcel of land for future development of an approximately 175,000 rentable square foot office building. At December 31, 2002, the Company had an investment in CPI/FSP I, L.P. of approximately $25,277,000. 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 an office building containing approximately 323,000 rentable square feet, located on one acre of land in downtown Greensboro, North Carolina. First Union Tower was 66% leased as of December 31, 2002. Grandview II is an approximately 149,000 rentable square foot office building in Birmingham, Alabama, which was owned by Cousins/Daniel, LLC prior to being contributed. Grandview II was 100% leased as of December 31, 2002. Presbyterian Medical Plaza at University, an approximately 69,000 rentable square foot medical office building in Charlotte, North Carolina, was 100% leased as of December 31, 2002. See "Other Retail Properties" where retail properties contributed to the Prudential venture are discussed. One Ninety One Peachtree Tower. One Ninety One Peachtree Tower is a 50-story, 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 97% leased as of December 31, 2002. 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. Therefore, C-H Associates is not treated as a consolidated entity in the Company's financial statements. 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 received fees from leasing and managing the One Ninety One Peachtree Tower project. In December 2002, CREC contributed its interest in C-H Associates to Cousins Texas LLC. 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 received 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, 2002, the cumulative undistributed preferred return was $18,162,399. After 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 $140,433,713 at December 31, 2002. At December 31, 2002, 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 103,000 rentable square foot medical office building in suburban Atlanta, Georgia. Northside/Alpharetta I was 93% leased as of December 31, 2002. Northside/Alpharetta II, an approximately 198,000 rentable square foot medical office building in suburban Atlanta, Georgia, was 79% leased as of December 31, 2002. Additionally, Meridian Mark Plaza, an approximately 161,000 rentable square foot medical office building in Atlanta, Georgia, was 100% leased as of December 31, 2002. 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 Emory Crawford Long Medical Office Tower, an approximately 358,000 rentable square foot medical office building located in midtown Atlanta, Georgia. This property became partially operational for financial reporting purposes in February 2002 and was 85% leased as of December 31, 2002. At December 31, 2002, the Company had an investment in Crawford Long - CPI, LLC of approximately $25,434,000. Office Properties Under Development ----------------------------------- Congress at Fourth. In January 2001, the Company acquired approximately two acres of land for approximately $12,500,000 in Austin, Texas and began development of Congress at Fourth, an approximately 525,000 rentable square foot office building which was 33% leased as of December 31, 2002. Other Retail Properties ----------------------- Operational Retail Properties. The Company owns four retail centers which were fully operational for financial reporting purposes as of December 31, 2002. Perimeter Expo is an approximately 291,000 square foot retail power center (of which the Company owns approximately 176,000 square feet) in Atlanta, Georgia which was 92% leased (Company owned) as of December 31, 2002. Presidential MarketCenter is an approximately 490,000 square foot retail power center (of which the Company owns approximately 374,000 square feet) in suburban Atlanta, Georgia, which was 100% leased (Company owned) as of December 31, 2002. The Avenue East Cobb is an approximately 225,000 square foot open-air retail specialty center in suburban Atlanta, Georgia. The Avenue East Cobb was 100% leased as of December 31, 2002. The Avenue of the Peninsula is an approximately 375,000 square foot open-air retail specialty center in Rolling Hills Estates, California, in the greater Los Angeles metropolitan area. The Avenue of the Peninsula became partially operational for financial reporting purposes in May 2000 and was 91% leased as of December 31, 2002. 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 an approximately 493,000 square foot retail power center located in Chesapeake, Virginia, which was 100% leased as of December 31, 2002. Los Altos MarketCenter is an approximately 258,000 square foot retail power center (of which the Prudential venture owns 157,000 square feet) located in Long Beach, California, which was 100% leased as of December 31, 2002. Mira Mesa MarketCenter, an approximately 480,000 square foot retail power center in suburban San Diego, California, became partially operational for financial reporting purposes in April 2000. Mira Mesa MarketCenter is owned by CP Venture Three LLC (see Note 5) and was 100% leased as of December 31, 2002. The Avenue Peachtree City, an approximately 169,000 square foot open-air retail specialty center in suburban Atlanta, Georgia, became partially operational for financial reporting purposes in April 2001. The Avenue Peachtree City is also owned by CP Venture Three LLC (see Note 5) and was 98% leased as of December 31, 2002. Brad Cous Golf Venture, Ltd. Effective January 31, 1998, the Company formed the Brad Cous Golf Venture, Ltd. 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 was 74% leased as of December 31, 2002. At December 31, 2002, the Company had an investment in Brad Cous Golf Venture, Ltd. of approximately $5,767,000. Retail Properties Sold. In October 2002, the Company sold Salem Road Station, an approximately 67,000 square foot retail center in suburban Atlanta, Georgia. See "Item 1, Business, Significant Changes in 2002, Retail Division" and Note 8. Retail Properties Under Development ----------------------------------- The Avenue West Cobb. In August 2002, the Company purchased approximately 22 acres of land for approximately $4,945,000 and began development of The Avenue West Cobb, an approximately 206,000 square foot specialty retail center in suburban Atlanta, Georgia. This center was 28% leased as of December 31, 2002. The Shops of Lake Tuscaloosa. In December 2002, the Company purchased approximately 12 acres of land for approximately $1,911,000 and began developing The Shops of Lake Tuscaloosa, an approximately 70,000 square foot center in Tuscaloosa, Alabama. This center will be anchored by a Publix supermarket and was 63% leased as of December 31, 2002. Residential Lots Under Development As of December 31, 2002, CREC and Temco Associates owned the following parcels of land which are being developed into residential communities ($ in thousands):
Estimated Total Lots Purchase Initial on Land Money Year Currently Lots Remaining Carrying Debt Description Acquired Owned (1) Sold to Date Lots Value Balance ----------- -------- --------- ------------ --------- -------- --------- CREC ---- Callaway Gardens Harris County Pine Mountain, GA 2002 141 - 141 $ 2,358 $1,760 Echo Mill West Cobb County Suburban Atlanta, GA 1994 541 541 - (192) - River's Call East Cobb County Suburban Atlanta, GA 1971-1989 108 10 98 5,237 43 The Lakes at Cedar Grove Fulton County Suburban Atlanta, GA 2001 928 136 792 12,697 1,450 ----- --- ----- ------- ------ Total 1,718 687 1,031 $20,100 $3,253 ===== === ===== ======= ====== Temco Associates ---------------- Bentwater Paulding County Suburban Atlanta, GA 1998 1,669(2) 847 822 $17,861 $ - ======== === ===== ======= ======
(1) Includes lots sold to date. (2) See discussion of Temco Associates below. Land Held for Investment or Future Development ---------------------------------------------- As of December 31, 2002, the Company owned or controlled the following significant land holdings either directly or indirectly through venture arrangements, and this land was not subject to any debt. The Company intends to convert these land holdings to income-producing assets but may sell portions of land holdings if opportunities arise at favorable prices before development is feasible.
Developable Company's Adjusted Land Area Joint Venture Ownership Cost Description, Location and Zoned Use Year Acquired (Acres)(1) Partner Interest ($ in thousands) ----------------------------------- ------------- ----------- ------------- --------- ---------------- Wildwood Land Suburban Atlanta, Georgia Office and Commercial 1971-1989 96 N/A 100% $ 4,802 Office and Commercial 1971-1982 34 IBM 50% $ 9,008(2) North Point Land (Georgia Highway 400 & Haynes Bridge Road) (3) Suburban Atlanta, Georgia Office and Commercial - East 1970-1985 13 N/A 100% $ 956 Office and Commercial - West (4) 1970-1985 217 N/A 100% $ 8,055 Ridenour Land Suburban Atlanta, Georgia 2002 8 N/A 100% $ 2,533 Salem Road Station Suburban Atlanta, Georgia Retail Outparcel 2000 2 N/A 100% $ 286 Temco Associates (Paulding County) Suburban Atlanta, Georgia 1991 (5) Temple-Inland 50% $17,861 Inc. (6) (1) Based upon management's current 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 $1,042,000. (3) The North Point property is located both east and west of Georgia Highway 400. See "Major Properties, North Point" for a description of the development in this area. (4) The Company has submitted a zoning request for a mixed-use development, including residential, office and commercial, as well as facilities for a performing arts center, assisted living, education and a community center. (5) See "Temco Associates" discussion below. (6) Joint venture partner is an affiliate of the entity shown.
In addition, the Company owned, directly or indirectly, the following land parcels located adjacent to operating properties discussed above. The basis of each of these building pads is included in the basis of the operating properties in the Company's consolidated financial statements or the applicable joint venture's financial statements. Potential Office Building Square Footage ------------------------- 101 Independence Center 535,000 Ten Peachtree Place 400,000 (1) One Georgia Center 350,000 Austin Research Park (2) 175,000 The Points at Waterview 60,000 (1) This building pad will accommodate the above noted office building or a 350-unit apartment complex. (2) Owned by CPI/FSP I, L.P. 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 7,500 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 $1,107 per acre at January 1, 2002, escalating at 6% on January 1 of each succeeding year during the term of the option. During 2002, 2001 and 2000, approximately 1,595, 487 and 734 acres, respectively, of the option related to the fee simple interest were exercised. In 2002, approximately 607 acres were simultaneously sold for gross profits of $1,005,000 and approximately 78 acres were held for sale under three-year options to two third parties. Approximately three acres were sold in 2002 for gross profits of $336,000, which were a component of the 13 acres purchased in 2000 that were being held for sale or future development. Also, in 2002, approximately 281 acres were acquired for additional phases of the Bentwater residential community and approximately 629 acres were acquired and are being held for a future development in Paulding County. In 2001, approximately 359 acres were simultaneously sold for gross profits of $1,902,000 and approximately 128 acres were held for sale under a three-year option to a third party. Approximately two acres were sold in 2001 for gross profits of $291,000, which were a component of the 13 acres purchased in 2000 that were being held for sale or future development. In 2000, approximately 461 acres were simultaneously sold for gross profits of $1,546,000, 13 acres are being held for sale or future development (of which approximately 3 and 2 acres were sold in 2002 and 2001, respectively, as noted above) and approximately 260 acres were acquired for the development of the Bentwater residential community. Approximately 1,669 lots will be developed within Bentwater on an approximate total of 1,290 acres. Temco Associates sold 289, 233 and 219 lots within Bentwater in 2002, 2001 and 2000, 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 $0.
Supplemental Financial and Leasing Information ---------------------------------------------- Depreciation and amortization, net of minority interest's share, include the following components for the years ended December 31, 2002 and 2001 ($ in thousands): 2002 2001 ------------------------------------- -------------------------------------- Share of Share of Unconsolidated Unconsolidated Consolidated Joint Ventures Total Consolidated Joint Ventures Total ------------ -------------- ----- ------------ -------------- ----- Furniture, fixtures and equipment $ 2,122 $ 9 $ 2,131 $ 1,485 $ 52 $ 1,537 Goodwill and specifically identifiable intangible assets 26 -- 26 681 -- 681 Building (including tenant first generation) 50,370 17,305 67,675 38,727 15,357 54,084 Tenant second generation 2,327 777 3,104 3,964 744 4,708 ------- ------- ------- ------- ------- ------- $54,845 $18,091 $72,936 $44,857 $16,153 $61,010 ======= ======= ======= ======= ======= =======
Exclusive of new developments and purchases of furniture, fixtures and equipment, the Company had the following capital expenditures for the years ended December 31, 2002 and 2001, including its share of unconsolidated joint ventures ($ in thousands): 2002 2001 ------------------------ ------------------------ Office Retail Total Office Retail Total ------- ------ ------- ------ ------ ------ Second generation related costs $11,348 $456 $11,804 $3,292 $290 $3,582 Building improvements 888 296 1,184 2,484 7 2,491 ------- ---- ------- ------ ---- ------ Total $12,236 $752 $12,988 $5,776 $297 $6,073 ======= ==== ======= ====== ==== ====== 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 --------------------------------------------------------------- No matter was submitted for a vote of the security holders during the fourth quarter of the Registrar's fiscal year ended December 31, 2002. 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 71 Chairman of the Board of Directors Thomas D. Bell, Jr. 53 President, Chief Executive Officer and Vice Chairman of the Board of Directors Daniel M. DuPree 56 Vice Chairman of the Company R. Dary Stone 49 Vice Chairman of the Company Tom G. Charlesworth 53 Executive Vice President, Chief Financial Officer and Chief Investment Officer James A. Fleming 44 Senior Vice President, General Counsel and Secretary Craig B. Jones 52 Senior Vice President and President of the Office Division John S. McColl 40 Senior Vice President - Office Division Joel T. Murphy 44 Senior Vice President and President of the Retail Division Family Relationships: --------------------- Lillian C. Giornelli, Mr. Cousins' daughter, is a director of the Company. Hugh L. McColl, Jr., John S. McColl's father, is a director of the Company. There are no other family relationships among the current Executive Officers or Directors. Term of Office: --------------- The term of office for all officers expires at the annual stockholders' meeting, but the Board has the power to remove any officer at any time. Business Experience: -------------------- Mr. Cousins has served as Chairman of the Board of the Company since inception. He was also the Chief Executive Officer of the Company from inception until January 2002. Mr. Cousins is also Director Emeritus of Total System Services, Inc.; Trustee Emeritus of Emory University; Trustee of the High Museum of Art; Member of the Board of Georgia Research Alliance and Chairman and Trustee of the CF Foundation. Mr. Bell has served as the President and Chief Executive Officer of the Company since January 2002. He is also Vice Chairman of the Board and Chairman of the Executive Committee, having served in these capacities since June 2000. He was a Special Limited Partner with Forstmann Little & Co. from January 2001 until January 2002. He was Worldwide Chairman and Chief Executive Officer of Young & Rubicam, Inc. from January 2000 to November 2000; President and Chief Operating Officer of Young & Rubicam, Inc. from August 1999 to December 1999; and Chairman and Chief Executive Officer of Young & Rubicam Advertising from September 1998 to August 1999. He was President and Chief Executive Officer of Burson-Marsteller from May 1995 to September 1998. Mr. Bell is also a director of Lincoln Financial Group, McLeod USA, Credit Suisse Group, Regal Entertainment and the United States Chamber of Commerce. Mr. DuPree rejoined the Company in March 2003 as Vice Chairman of the Company. During his previous tenure with the Company from October 1992 until April 2001, he became Senior Vice President in April 1993, Senior Executive Vice President in April 1995 and President and Chief Operating Officer in November 1995. From September 2002 until February 2003, Mr. DuPree was Chief Executive Officer of Barry Real Estate Companies, a privately held development firm. From 1984 to 1992, he was President and Chief Executive Officer of New Market Companies, Inc. and affiliates. Mr. Stone joined the Company in June 1999 as President of Cousins Stone LP, a venture in which the Company purchased a 50% interest in June 1999. In July 2000, the Company purchased an additional 25% interest in Cousins Stone LP and in February 2001, the Company purchased the remaining 25% interest. The name Cousins Stone LP was changed to Cousins Properties Services LP in August 2001. Mr. Stone was President and Chief Operating Officer of the Company from February 2001 to January 2002 and has been a Director of the Company since 2001. Effective January 2002, he relinquished the positions of President and Chief Operating Officer and assumed the position of President - Texas. In February 2003 he became Vice Chairman of the Company. Prior to June 1999, and since at least January 1998, he was founder and President of the predecessor to Cousins Stone LP, Faison-Stone. 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. He became Chief Financial Officer in February 2003. Prior to 1992 he worked for certain affiliates of Thomas G. Cousins as Chief Financial Officer and Legal Counsel. Mr. Fleming joined the Company in July 2001 as Senior Vice President, General Counsel and Secretary. He was a partner in the Atlanta law firm of Fleming & Ray from October 1994 until July 2001. Prior to that he was a partner at Long, Aldridge & Norman, where he served as Managing Partner from 1991 through 1993. 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. 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. PART II ------- Item 5. Market for Registrant's Common Stock and Related Stockholder 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" and "About Your Dividends" in the Registrant's 2002 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" in the Registrant's 2002 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 in the Registrant's 2002 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 in the Registrant's 2002 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 Independent Auditors' Report which appear in the Registrant's 2002 Annual Report to Stockholders are incorporated herein by reference. The information appearing under the caption "Selected Quarterly Financial Information (Unaudited)" in the Registrant's 2002 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 15 of Part IV of this report. Item 9. Changes in and Disagreements with Accountants on Accounting and ----------------------------------------------------------------------- Financial Disclosure -------------------- In June 2002 the Board of Directors of the Registrant, upon recommendation of its Audit Committee, ended the engagement of Arthur Andersen LLP ("Arthur Andersen") as the Company's independent public accountants and engaged Deloitte & Touche LLP ("Deloitte") to serve as the Registrant's independent public accountants for the fiscal year ended December 31, 2002. As discussed in the Registrant's Form 8-K dated June 7, 2002, there were no disagreements with or reportable events concerning Arthur Andersen, and the Registrant had not engaged Deloitte in any consultation. 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" and "Section 16(A) Beneficial Ownership Reporting Compliance" in the Proxy Statement dated March 25, 2003 relating to the 2003 Annual Meeting of the Registrant's Stockholders, and is incorporated herein by reference. Item 11. Executive Compensation ---------------------------------- The information concerning executive compensation required by this Item 11 is included under the captions "Executive Compensation" (other than the Committee Report on Compensation) and "Compensation of Directors" in the Proxy Statement dated March 25, 2003 relating to the 2003 Annual Meeting of the Registrant's Stockholders, and is incorporated herein by reference. Item 12. Security Ownership of Certain Beneficial Owners and Management and ------------------------------------------------------------------------------ Related Stockholder Matters --------------------------- 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," "Principal Stockholders" and "Equity Compensation Plan Information" in the Proxy Statement dated March 25, 2003 relating to the 2003 Annual Meeting of the Registrant's Stockholders, and is incorporated herein by reference. Item 13. Certain Relationships and Related Transactions ---------------------------------------------------------- The information concerning certain relationships and related transactions required by this Item 13 is included under the caption "Certain Transactions" in the Proxy Statement dated March 25, 2003 relating to the 2003 Annual Meeting of the Registrant's Stockholders, and is incorporated herein by reference. Item 14. Controls and Procedures ----------------------------------- Within the 90 days prior to the date of this annual report, the Company, under the supervision of the Chief Executive Officer and Chief Financial Officer and with the participation of the Company's management, carried out an evaluation of the effectiveness of the design and operation of the Company's disclosure controls and procedures pursuant to Exchange Act Rule 13a-14. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures are effective in timely alerting them to material information relating to the Company required to be included in the Company's periodic Securities and Exchange Commission filings. No significant changes were made in the Company's internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation. PART IV ------- Item 15. 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 Independent Auditors' Report, are contained in the Registrant's 2002 Annual Report to Stockholders and are incorporated herein by reference: Page Number in Annual Report ---------------- Consolidated Balance Sheets - December 31, 2002 and 2001 19 Consolidated Statements of Income for the Years Ended December 31, 2002, 2001 and 2000 20 Consolidated Statements of Stockholders' Investment for the Years Ended December 31, 2002, 2001 and 2000 21 Consolidated Statements of Cash Flows for the Years Ended December 31, 2002, 2001 and 2000 22 Notes to Consolidated Financial Statements December 31, 2002, 2001 and 2000 23 through 44 Independent Auditors' Report 45 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, 2002 and 2001 F-2 Statements of Operations for the Years Ended December 31, 2002, 2001 and 2000 F-3 Statements of Partners' Capital for the Years Ended December 31, 2002, 2001 and 2000 F-4 Statements of Cash Flows for the Years Ended December 31, 2002, 2001 and 2000 F-5 Notes to Financial Statements December 31, 2002, 2001 and 2000 F-6 through F-10 Item 15. Continued --------------------- 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: Independent Auditors' Report on Supplemental Schedule S-9 Schedule III- Real Estate and Accumulated Depreciation - December 31, 2002 S-10 through S-15 B. CSC Associates, L.P. Schedule III- Real Estate and Accumulated Depreciation - December 31, 2002 F-11 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 15. Continued --------------------- 3. Exhibits -------------- 3(a)(i) Restated and Amended Articles of Incorporation of Registrant, as amended August 9, 1999, filed as Exhibit 3.1 in the Registrant's Form 10-Q for the quarter ended June 30, 2002, and incorporated herein by reference. 3(b) By-laws of Registrant, as amended April 29, 1993, filed as Exhibit 3.2 in the Registrant's Form 10-Q for the quarter ended June 30, 2002, 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, filed in the Registrant's Proxy Statement dated March 27, 1998, and incorporated herein by reference. 10(a)(ii) Cousins Properties Incorporated 1999 Incentive Stock Plan, approved by the Stockholders on May 4, 1999, filed as Exhibit A to the Registrant's Proxy Statement dated March 29, 1999; as amended and restated, approved by the Stockholders on December 28, 2000, filed as Exhibit A to the Registrant's Proxy Statement dated December 1, 2000; as amended and restated, approved by the Stockholders on May 1, 2001, filed as Annex B in the Registrant's Proxy Statement dated March 30, 2001; and as amended and restated, approved by the Stockholders on May 7, 2002, filed as Annex A in the Registrant's Proxy Statement dated March 29, 2002, and incorporated herein by reference. 10(b)(i) Cousins Properties Incorporated Profit Sharing Plan, as amended and restated effective as of January 1, 2002. 10(b)(ii) Cousins Properties Incorporated Profit Sharing Trust Agreement as effective as of January 1, 1991. 10(d) Cousins Properties Incorporated Stock Plan for Outside Directors, as approved by the Stockholders on April 29, 1997. 10(e) Cousins Properties Incorporated Credit Agreement as of August 31, 2001 among Cousins Properties Incorporated, Banks (as defined), Bank of America, N.A., as Administrative Agent, Wachovia Bank, N.A., as Syndication Agent and each of Bank of America Securities LLC and Wachovia Securities, Inc., as Joint Lead Arrangers and Joint Book Managers, filed as Exhibit 10(e) to the Registrant's Form 10-K for the year ended December 31, 2001, and incorporated herein by reference. Item 15. Continued --------------------- 11 Computation of Per Share Earnings. Data required by SFAS No. 128, "Earnings Per Share," is provided in Note 1 of the Consolidated Financial Statements of Registrant included in the Registrant's 2002 Annual Report to Stockholders, and incorporated herein by reference. 13 Portions of the Annual Report to Stockholders for the year ended December 31, 2002 expressly incorporated by reference herein: Pages 19 through 58, and the information under the caption "Selected Quarterly Financial Information: on Page 59. 21 Subsidiaries of the Registrant. 23(a) Consent of Independent Auditors (Deloitte & Touche LLP). 23(b) Independent Auditor's Consent (Ernst & Young LLP). 99.1 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 99.2 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (b) Reports on Form 8-K. -------------------------- There were no reports filed on Form 8-K in the quarter ended December 31, 2002. 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 25, 2003 BY: /s/ Tom G. Charlesworth ---------------------------------------- Tom G. Charlesworth Executive Vice President, Chief Financial Officer and Chief Investment Officer (Duly Authorized Officer and 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: President, Chief Executive March 25, 2003 /s/ Thomas D. Bell, Jr. Officer and Vice Chairman ---------------------------------- of the Board Thomas D. Bell, Jr. Principal Financial and Accounting Officer: Executive Vice President, March 25, 2003 /s/ Tom G. Charlesworth Chief Financial Officer ---------------------------------- and Chief Investment Officer Tom G. Charlesworth Additional Directors: /s/ T. G. Cousins Chairman of the Board March 25, 2003 ---------------------------------- T. G. Cousins /s/ Richard W. Courts, II Director March 25, 2003 ---------------------------------- Richard W. Courts, II /s/ Lillian C. Giornelli Director March 25, 2003 ---------------------------------- Lillian C. Giornelli /s/ Terence C. Golden Director March 25, 2003 ---------------------------------- Terence C. Golden /s/ Boone A. Knox Director March 25, 2003 ---------------------------------- Boone A. Knox /s/ John J. Mack Director March 25, 2003 ---------------------------------- John J. Mack /s/ Hugh L. McColl, Jr. Director March 25, 2003 ---------------------------------- Hugh L. McColl, Jr. /s/ William Porter Payne Director March 25, 2003 ---------------------------------- William Porter Payne /s/ R. Dary Stone Director and Vice Chairman March 25, 2003 ---------------------------------- of the Company R. Dary Stone CERTIFICATION I, Thomas D. Bell, Jr., certify that: 1. I have reviewed this annual report on Form 10-K of Cousins Properties Incorporated; 2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report; 3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have: Designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared; Evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the "Evaluation Date"); and Presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent function): All significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this annual report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: March 25, 2003 /s/ Thomas D. Bell, Jr. ---------------------------------- Thomas D. Bell, Jr. President, Chief Executive Officer and Vice Chairman of the Board CERTIFICATION I, Tom G. Charlesworth, certify that: 1. I have reviewed this annual report on Form 10-K of Cousins Properties Incorporated; 2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report; 3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have: Designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared; Evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the "Evaluation Date"); and Presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent function): All significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this annual report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: March 25, 2003 /s/ Tom G. Charlesworth ----------------------------------- Tom G. Charlesworth Executive Vice President, Chief Financial Officer and Chief Investment Officer INDEPENDENT AUDITORS' REPORT ON SUPPLEMENTAL SCHEDULE To Cousins Properties Incorporated: We have audited the consolidated financial statements of Cousins Properties Incorporated and consolidated entities as of December 31, 2002 and 2001, and for each of the three years in the period ended December 31, 2002, and have issued our report thereon dated February 14, 2003 (which report expresses an unqualified opinion and includes an explanatory paragraph relating to the impact of the adoption of Statements of Financial Accounting Standards No. 133 and No. 144); such consolidated financial statements and report are included in your 2002 Annual Report to Stockholders and are incorporated herein by reference. Our audit also included the consolidated financial statement schedule of Cousins Properties Incorporated and consolidated entities, listed in Item 15. This consolidated financial statement schedule is the responsibility of the Company's management. Our responsibility is to express an opinion based on our audits. In our opinion, such consolidated financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly in all material respects the information set forth therein. DELOITTE & TOUCHE LLP Atlanta, Georgia February 14, 2003
SCHEDULE III (Page 1 of 6) COUSINS PROPERTIES INCORPORATED AND CONSOLIDATED ENTITIES REAL ESTATE AND ACCUMULATED DEPRECIATION DECEMBER 31, 2002 ($ 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, 2002 ------------------- -------------------- ---------------------------------- 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 Land - Fulton Co., GA $ -- $ 10,294 $ -- $ 15,767 $(17,050) $ 9,011 $ -- $ 9,011 Salem Road Station Outparcels - Newton Co., GA -- 611 -- -- (325) 286 -- 286 Wildwood Land - Atlanta, GA -- 10,214 -- 4,873 (10,285) 4,802 -- 4,802 Ridenour Land - Cobb County, GA -- 1,696 -- 837 -- 2,533 -- 2,533 ---------------------------------------------------------------------------------------------- -- 22,815 -- 21,477 (27,660) 16,632 -- 16,632 ----------------------------------------------------------------------------------------------
SCHEDULE III (Page 1 of 6) COUSINS PROPERTIES INCORPORATED AND CONSOLIDATED ENTITIES REAL ESTATE AND ACCUMULATED DEPRECIATION DECEMBER 31, 2002 ($ in thousands) Column A Column F Column G Column H Column I -------- -------- -------- -------- -------- Life on Which De- preciation Accumu- In 2002 lated Date of Income Deprecia- Construc- Date Statement Description tion (a) tion Acquired Is Computed ----------- -------- -------- -------- ----------- LAND HELD FOR INVESTMENT OR FUTURE DEVELOPMENT ---------------------------------------------- North Point Land - Fulton Co., GA $ -- -- 1970-1985 -- Salem Road Station Outparcels - Newton Co., GA -- -- 1999 -- Wildwood Land - Atlanta, GA -- -- 1971-1989 -- Ridenour Land - Cobb County, GA -- -- 2002 -- -------- -- --------
SCHEDULE III (Page 2 of 6) COUSINS PROPERTIES INCORPORATED AND CONSOLIDATED ENTITIES REAL ESTATE AND ACCUMULATED DEPRECIATION DECEMBER 31, 2002 ($ 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, 2002 ------------------- -------------------- ---------------------------------- 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 -------------------- Inforum - Atlanta, GA $ -- $ 5,226 $ 67,370 $ 18,880 $ -- $ 5,226 $ 86,250 $ 91,476 101 Independence Center - Charlotte, NC 44,928 11,096 62,824 5,639 -- 11,155 68,404 79,559 101 Second Street - San Francisco, CA 88,055 11,698 -- 80,070 7,504 11,698 87,574 99,272 333 John Carlyle - Washington, D.C. 48,459 (b) 5,371 -- 22,307 1,483 5,371 23,790 29,161 333 North Point Center East - Fulton Co., GA 31,960 (c) 551 -- 11,917 809 551 12,726 13,277 555 North Point Center East - Fulton Co., GA -- (c) 368 -- 15,278 1,172 368 16,450 16,818 600 University Park Place - Birmingham, AL 13,822 1,899 -- 16,562 1,768 1,899 18,330 20,229 615 Peachtree Street - Atlanta, GA -- 4,740 7,229 1,520 -- 4,740 8,749 13,489 AT&T Wireless Services Headquarters - Los Angeles, CA -- -- -- 54,871 1,343 -- 56,214 56,214 Cerritos Corporate Center - Phase II - Los Angeles, CA -- -- -- 18,992 352 -- 19,344 19,344 1900 Duke Street - Washington, D.C. -- (b) -- -- 22,969 1,200 3,469 20,700 24,169 Lakeshore Park Plaza - Birmingham, AL 10,088 3,362 12,261 399 -- 3,362 12,660 16,022
SCHEDULE III (Page 2 of 6) COUSINS PROPERTIES INCORPORATED AND CONSOLIDATED ENTITIES REAL ESTATE AND ACCUMULATED DEPRECIATION DECEMBER 31, 2002 ($ in thousands) Column A Column F Column G Column H Column I -------- -------- -------- -------- -------- Life on Which De- preciation Accumu- In 2002 lated Date of Income Deprecia- Construc- Date Statement Description tion (a) tion Acquired Is Computed ----------- -------- -------- -------- ----------- OPERATING PROPERTIES -------------------- Inforum - Atlanta, GA $ 26,614 -- 1999 25 Years 101 Independence Center - Charlotte, NC 19,202 -- 1996 25 Years 101 Second Street - San Francisco, CA 14,990 1998 1984 30 Years 333 John Carlyle - Washington, D.C. 4,284 1998 1998 30 Years 333 North Point Center East - Fulton Co., GA 3,900 1996 1996 30 Years 555 North Point Center East - Fulton Co., GA 2,694 1998 1998 30 Years 600 University Park Place - Birmingham, AL 3,114 1998 1998 30 Years 615 Peachtree Street - Atlanta, GA 4,068 -- 1996 15 Years AT&T Wireless Services Headquarters - Los Angeles, CA 7,919 1998 1998 30 Years Cerritos Corporate Center - Phase II - Los Angeles, CA 1,262 1999 1999 30 Years 1900 Duke Street - Washington, D.C. 2,119 2000 2000 30 Years Lakeshore Park Plaza - Birmingham, AL 2,166 -- 1998 30 Years
SCHEDULE III (Page 3 of 6) COUSINS PROPERTIES INCORPORATED AND CONSOLIDATED ENTITIES REAL ESTATE AND ACCUMULATED DEPRECIATION DECEMBER 31, 2002 ($ 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, 2002 ------------------- -------------------- ---------------------------------- 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) -------------------------------- One Georgia Center - Atlanta, GA -- 9,267 27,079 3,979 2 9,267 31,060 40,327 The Points at Waterview - Collin Co., TX -- 2,558 22,910 2,067 -- 2,558 24,977 27,535 Wildwood - 3100 Windy Hill Road - Atlanta, GA -- -- 17,005 -- -- -- 17,005 17,005 Wildwood - 3301 Windy Ridge Parkway - Atlanta, GA -- 20 -- 11,064 1,516 1,439 11,161 12,600 AtheroGenics - Fulton Co., GA -- 200 -- 7,375 80 200 7,455 7,655 Meridian Mark Plaza - Atlanta, GA 24,926 2,200 -- 22,816 1,735 2,219 24,532 26,751 Northside/Alpharetta I - Fulton Co., GA 9,903 -- 15,577 345 -- -- 15,922 15,922 Northside/Alpharetta II - Fulton Co., GA -- -- -- 17,163 1,012 -- 18,175 18,175 The Avenue East Cobb - Cobb Co., GA 38,255 7,205 -- 32,058 1,882 7,205 33,940 41,145 The Avenue of the Peninsula - Rolling Hills Estates, CA -- 4,338 17,152 63,248 7,120 4,338 87,520 91,858 The Avenue Peachtree City - Fayette Co., GA -- 3,510 -- 24,156 1,685 3,643 25,708 29,351 Mira Mesa MarketCenter - San Diego, CA -- 14,465 -- 34,803 2,415 14,465 37,218 51,683 North Point Stand Alone Retail Sites - Fulton Co., GA -- 4,559 -- 431 (1,293) 3,697 -- 3,697
SCHEDULE III (Page 3 of 6) COUSINS PROPERTIES INCORPORATED AND CONSOLIDATED ENTITIES REAL ESTATE AND ACCUMULATED DEPRECIATION DECEMBER 31, 2002 ($ in thousands) Column A Column F Column G Column H Column I -------- -------- -------- -------- -------- Life on Which De- preciation Accumu- In 2002 lated Date of Income Deprecia- Construc- Date Statement Description tion (a) tion Acquired Is Computed ----------- -------- -------- -------- ----------- OPERATING PROPERTIES (Continued) -------------------------------- One Georgia Center - Atlanta, GA 4,006 -- 2000 30 Years The Points at Waterview - Collin Co., TX 2,689 -- 2000 25 Years Wildwood - 3100 Windy Hill Road - Atlanta, GA 4,081 1997 1997 25 Years Wildwood - 3301 Windy Ridge Parkway - Atlanta, GA 6,041 1984 1984 30 Years AtheroGenics - Fulton Co., GA 1,958 1998 1998 30 Years Meridian Mark Plaza - Atlanta, GA 4,487 1997 1997 30 Years Northside/Alpharetta I - Fulton Co., GA 2,901 -- 1998 25 Years Northside/Alpharetta II - Fulton Co., GA 2,460 1998 1998 30 Years The Avenue East Cobb - Cobb Co., GA 7,827 1998 1998 30 Years The Avenue of the Peninsula - Rolling Hills Estates, CA 10,107 1998 1998 30 Years The Avenue Peachtree City - Fayette Co., GA 2,621 2002 2002 30 Years Mira Mesa MarketCenter - San Diego, CA 3,718 1999 1999 30 Years North Point Stand Alone Retail Sites - Fulton Co., GA 196 -- 1970-1985 Various
SCHEDULE III (Page 4 of 6) COUSINS PROPERTIES INCORPORATED AND CONSOLIDATED ENTITIES REAL ESTATE AND ACCUMULATED DEPRECIATION DECEMBER 31, 2002 ($ 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, 2002 ------------------- -------------------- ---------------------------------- 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) -------------------------------- Perimeter Expo - Atlanta, GA 19,792 8,550 -- 11,232 71 8,550 11,303 19,853 Presidential MarketCenter - Gwinnett Co., GA 27,667 3,956 -- 24,816 900 3,956 25,716 29,672 Miscellaneous -- 398 145 101 (474) -- 170 170 ----------------------------------------------------------------------------------------------- 357,855 105,537 249,552 525,058 32,282 109,376 803,053 912,429 ----------------------------------------------------------------------------------------------- PROJECTS UNDER CONSTRUCTION --------------------------- 55 Second Street - San Francisco, CA $ -- $ 22,141 $ -- $ 78,346 $ 9,473 $ 24,296 $ 85,664 $ 109,960 Congress at Fourth - Austin, TX -- 12,270 -- 38,186 3,176 12,964 40,668 53,632 The Avenue West Cobb - Cobb Co., GA -- 4,945 -- 3,266 169 4,945 3,435 8,380 The Shops of Lake Tuscaloosa - Tuscaloosa, AL -- 1,911 -- 192 6 1,911 198 2,109 ----------------------------------------------------------------------------------------------- -- 41,267 -- 119,990 12,824 44,116 129,965 174,081 -----------------------------------------------------------------------------------------------
SCHEDULE III (Page 4 of 6) COUSINS PROPERTIES INCORPORATED AND CONSOLIDATED ENTITIES REAL ESTATE AND ACCUMULATED DEPRECIATION DECEMBER 31, 2002 ($ in thousands) Column A Column F Column G Column H Column I -------- -------- -------- -------- -------- Life on Which De- preciation Accumu- In 2002 lated Date of Income Deprecia- Construc- Date Statement Description tion (a) tion Acquired Is Computed ----------- -------- -------- -------- ----------- OPERATING PROPERTIES (Continued) -------------------------------- Perimeter Expo - 3,815 1993 1993 30 Years Presidential MarketCenter - Gwinnett Co., GA 5,717 1993-2000 1993 30 Years Miscellaneous 144 -- 1977-1984 Various -------- 155,100 -------- PROJECTS UNDER CONSTRUCTION 55 Second Street - San Francisco, CA $ 2,946 1999 1999 30 Years Congress at Fourth - Austin, TX -- 2001 2001 -- The Avenue West Cobb - Cobb Co., GA -- 2002 2002 -- The Shops of Lake Tuscaloosa - Tuscaloosa, AL -- 2002 2002 -- -------- 2,946 --------
SCHEDULE III (Page 5 of 6) COUSINS PROPERTIES INCORPORATED AND CONSOLIDATED ENTITIES REAL ESTATE AND ACCUMULATED DEPRECIATION DECEMBER 31, 2002 ($ 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, 2002 ------------------- -------------------- ---------------------------------- 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) ----------- ------------ ---- ------------ -------- --------- ------------ ------------ ----- RESIDENTIAL LOTS UNDER DEVELOPMENT ---------------------------------- Echo Mill - Cobb Co., GA $ -- $ 5,298 $ -- $ 11,211 $(16,701) $ (192) $ -- $ (192) River's Call - Cobb Co., GA 43 2,001 -- 6,167 (2,931) 5,237 -- 5,237 The Lakes at Cedar Grove - Fulton Co., GA 1,450 4,720 -- 12,256 (4,279) 12,697 -- 12,697 Callaway Gardens - Harris Co., GA 1,760 2,098 -- 244 16 2,358 -- 2,358 ----------------------------------------------------------------------------------------------- 3,253 14,117 -- 29,878 (23,895) 20,100 -- 20,100 ----------------------------------------------------------------------------------------------- $361,108 $ 183,736 $249,552 $696,403 $ (6,449) $190,224 $933,018 $1,123,242 ===============================================================================================
SCHEDULE III (Page 5 of 6) COUSINS PROPERTIES INCORPORATED AND CONSOLIDATED ENTITIES REAL ESTATE AND ACCUMULATED DEPRECIATION DECEMBER 31, 2002 ($ in thousands) Column A Column F Column G Column H Column I -------- -------- -------- -------- -------- Life on Which De- preciation Accumu- In 2002 lated Date of Income Deprecia- Construc- Date Statement Description tion (a) tion Acquired Is Computed ----------- -------- -------- -------- ----------- RESIDENTIAL LOTS UNDER DEVELOPMENT ---------------------------------- Echo Mill - Cobb Co., GA $ -- 1994 1994 -- River's Call - Cobb Co., GA -- 2000 1971-1989 -- The Lakes at Cedar Grove - Fulton Co., GA -- 2001 2001 -- Callaway Gardens - Harris Co., GA -- 2002 2002 -- -------- -- -------- $158,046 ========
SCHEDULE III (Page 6 of 6) COUSINS PROPERTIES INCORPORATED AND CONSOLIDATED ENTITIES REAL ESTATE AND ACCUMULATED DEPRECIATION DECEMBER 31, 2002 ($ in thousands) NOTES: (a) Reconciliations of total real estate carrying value and accumulated depreciation for the three years ended December 31, 2002 are as follows: Real Estate Accumulated Depreciation --------------------------------- ----------------------------- 2002 2001 2000 2002 2001 2000 ---- ---- ---- ---- ---- ---- Balance at beginning of period $1,045,805 $ 954,480 $768,783 $106,039 $ 70,032 $35,929 ---------------------------------- ----------------------------- Additions during the period: Improvements and other capitalized costs 89,650 132,023 213,783 -- -- -- Provision for depreciation -- -- -- 52,387 36,007 34,103 ---------------------------------- ----------------------------- 89,650 132,023 213,783 52,387 36,007 34,103 ---------------------------------- ----------------------------- Deductions during the period: Cost of real estate sold (12,213) (40,698) (28,086) (380) -- -- ---------------------------------- ----------------------------- (12,213) (40,698) (28,086) (380) -- -- ---------------------------------- ----------------------------- Balance at close of period $1,123,242 $1,045,805 $954,480 $158,046 $106,039 $70,032 ================================= ============================= (b) 333 John Carlyle and 1900 Duke Street were financed together as one non-recourse mortgage note payable. (c) 333 North Point Center East and 555 North Point Center East were financed together as one non-recourse mortgage note payable.
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, 2002 and 2001, and the related statements of operations, partners' capital, and cash flows for each of the three years in the period ended December 31, 2002. Our audits also include the financial statement schedule of CSC Associates, L.P. listed in the Index at Item 15(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, 2002 and 2001, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2002, 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. /s/ERNST & YOUNG LLP Atlanta, Georgia February 7, 2003 CSC ASSOCIATES, L.P. -------------------- BALANCE SHEETS -------------- DECEMBER 31, 2002 AND 2001 -------------------------- ($ in thousands) ASSETS ------ 2002 2001 -------- -------- REAL ESTATE ASSETS: Building and improvements, including land and land improvements of $22,818 in 2002 and 2001 $224,445 $223,187 Accumulated depreciation (73,289) (65,710) -------------------- 151,156 157,477 -------------------- CASH AND CASH EQUIVALENTS 5,323 1,662 -------------------- RESTRICTED CASH (Note 2) 690 - -------------------- NOTE RECEIVABLE (Note 4) 148,283 66,007 -------------------- OTHER ASSETS: Straight-line rent, interest and other receivables (Note 3) 10,941 11,282 Deferred expenses, net of accumulated amortization of $1,063 and $843 in 2002 and 2001, respectively 412 617 Furniture, fixtures and equipment, net of accumulated depreciation of $134 and $99 in 2002 and 2001, respectively 70 73 Other, net of accumulated amortization of $263 and $217 in 2002 and 2001, respectively (Note 6) 760 801 -------------------- Total other assets 12,183 12,773 -------------------- $317,635 $237,919 ==================== LIABILITIES AND PARTNERS' CAPITAL --------------------------------- NOTE PAYABLE (Note 4) $148,283 $ 66,007 ACCOUNTS PAYABLE AND ACCRUED LIABILITIES 5,482 2,975 -------------------- Total liabilities 153,765 68,982 -------------------- PARTNERS' CAPITAL (Note 1) 163,870 168,937 -------------------- $317,635 $237,919 ==================== The accompanying notes are an integral part of these balance sheets. CSC ASSOCIATES, L.P. -------------------- STATEMENTS OF OPERATIONS ------------------------ FOR THE YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000 ---------------------------------------------------- ($ in thousands) 2002 2001 2000 ------- ------- ------- REVENUES: Rental income (Note 2) and recovery of expenses charged directly to specific tenants $42,489 $39,948 $39,339 Interest income (Note 4) 9,673 4,306 4,478 --------------------------- Total revenues 52,162 44,254 43,817 --------------------------- EXPENSES: Real estate taxes 4,471 4,222 4,133 Management and personnel costs 2,064 1,958 1,867 Cleaning 1,485 1,473 1,475 Utilities 825 826 813 Contract security 813 627 517 Repairs and maintenance 418 486 456 Elevator 363 355 337 Parking 296 279 276 General and administrative expenses 169 173 75 Grounds maintenance 133 135 129 Insurance 653 115 110 Marketing and other expenses 60 63 63 Interest expense (Note 4) 9,673 4,306 4,478 Depreciation and amortization 7,656 7,662 7,710 --------------------------- Total expenses 29,079 22,680 22,439 --------------------------- NET INCOME $23,083 $21,574 $21,378 =========================== The accompanying notes are an integral part of these statements. CSC ASSOCIATES, L.P. -------------------- STATEMENTS OF PARTNERS' CAPITAL (NOTE 1) ---------------------------------------- FOR THE YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000 ---------------------------------------------------- ($ in thousands) BALANCE, December 31, 1999 $183,685 Net income 21,378 Distributions (27,980) -------- BALANCE, December 31, 2000 177,083 Net income 21,574 Distributions (29,720) -------- BALANCE, December 31, 2001 168,937 Net income 23,083 Distributions (28,150) -------- BALANCE, December 31, 2002 $163,870 ======== The accompanying notes are an integral part of these statements.
CSC ASSOCIATES, L.P. -------------------- STATEMENTS OF CASH FLOWS ------------------------ FOR THE YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000 ---------------------------------------------------- ($ in thousands) 2002 2001 2000 -------- ------- ------ CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 23,083 $21,574 $21,378 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 7,656 7,662 7,710 Rental revenue recognized on straight-line basis different from rental revenue specified in the lease agreements 1,261 362 207 Change in other receivables and other assets (747) 109 130 Change in accounts payable and accrued liabilities related to operations 2,506 775 (1,015) ------------------------------ Net cash provided by operating activities 33,759 30,482 28,410 ------------------------------ CASH FLOWS FROM INVESTING ACTIVITIES: Additions to building and improvements (1,258) (54) (1,604) Issuance of note receivable (Note 4) (150,000) - - Payoff of note receivable (Note 4) 65,526 - - Collection of note receivable (Note 4) 2,198 2,782 2,610 Reserve Funds deposits (Note 4) (690) - - Payments for furniture, fixtures and equipment - (28) (113) ------------------------------ Net cash (used in) provided by investing activities (84,224) 2,700 893 ------------------------------ CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds of long-term debt (Note 4) 150,000 - - Payoff of long-term note (Note 4) (65,526) - - Repayments of long-term debt (Note 4) (2,198) (2,782) (2,610) Partnership distributions (28,150) (29,720) (27,980) ------------------------------ Net cash provided by (used in) financing activities 54,126 (32,502) (30,590) ------------------------------ NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 3,661 680 (1,287) CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 1,662 982 2,269 ------------------------------ CASH AND CASH EQUIVALENTS AT END OF YEAR $ 5,323 $ 1,662 $ 982 ============================== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the year for interest $ 10,181 $ 4,314 $ 4,485 ============================== The accompanying notes are an integral part of these statements.
CSC ASSOCIATES, L.P. -------------------- NOTES TO FINANCIAL STATEMENTS ----------------------------- DECEMBER 31, 2002, 2001 AND 2000 -------------------------------- 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 1.3 million gross square foot office tower in midtown 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 contributed $18.2 million cash to the Partnership and Premises contributed land parcels to the Partnership having an aggregate agreed upon value of $18.2 million. The 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 reporting 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. Restricted Cash --------------- Restricted Cash includes reserve funds established under the debt agreement (Note 4). Long-Lived Assets ----------------- Long-lived assets include property, equipment and other assets which are held and used by an entity. These assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The carrying value of long-lived assets is periodically reviewed by management, and impairment losses, if any, are recognized when the expected undiscounted future operating cash flows derived from such assets are less than their carrying value. Management believes no such impairments have occurred during any of the periods presented. In August 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards ("SFAS") No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets". SFAS No. 144 addresses financial accounting and reporting for the impairment of long-lived assets and discontinued operations. The Partnership adopted the standard effective January 1, 2002, and the adoption had no impact on its financial statements. Rental Income ------------- In accordance with SFAS No. 13, "Accounting for Leases," income on leases which include increases in rental rates over the lease term (other than scheduled increases based on the Consumer Price Index) and/or free rent periods is recognized on a straight-line basis. Allowance for Doubtful Accounts ------------------------------- The Partnership makes valuation adjustments to all tenant-related revenue based upon the tenant's credit and business risk. The Partnership generally suspends the accrual of income on specific tenants where rental payments or reimbursements are delinquent 90 days or more. As of December 31, 2002 and 2001, there is no allowance for doubtful accounts included in the accompanying Balance Sheets. Use of Estimates ---------------- The preparation of financial statements in conformity with accounting principles generally accepted in the United States 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 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, 2002, 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 ----------- ------- -------- 2003 $ 14,117 $17,200 $ 31,317 2004 14,117 13,128 27,245 2005 14,117 16,292 30,409 2006 14,118 16,476 30,594 2007 14,118 9,374 23,492 Subsequent to 2007 64,693 13,503 78,196 -------------------------------------- $135,280 $85,973 $221,253 ====================================== In the years ended December 31, 2002 and 2001, income which would have accrued in accordance with the lease terms exceeded income recognized on a straight-line basis by $1,261,000 and $362,000, respectively. At December 31, 2002 and 2001, 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 $8,989,000 and $10,250,000, respectively. Of that amount, 14% was related to leases with NB Holdings Corporation and approximately 40% and 34% was related to each of two professional services firms. At December 31, 2002, NB Holdings Corporation leased approximately 46% and two professional services firms leased approximately 18% and 17% 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 "Prior Notes"). The Prior Notes amortized in equal monthly installments of $590,680 based on a 20-year amortization schedule and were to mature February 15, 2011. The Prior Notes were non-recourse obligations of the Partnership and were secured by a Deed to Secure Debt, Assignment of Rents and Security Agreement covering the Partnership's interest in the Building. The Partnership then loaned the $80 million proceeds of the Prior Notes to CPI under a non-recourse loan (the "Prior Cousins Loan") secured by CPI's interest in CSC under the same payment terms as those of the Prior Notes. CPI paid all costs of issuing the Prior Notes and the Prior Cousins Loan, including a $400,000 fee to an affiliate of Bank of America. In addition, CPI paid a monthly fee to an affiliate of Bank of America of .025% of the outstanding principal balance of the Prior Notes. These fees totaled approximately $203,000 and $211,000 in 2001 and 2000, respectively. On February 22, 2002, CSC refinanced the Prior Notes, completing a $150 million non-recourse mortgage note payable (the "New Loan") with an interest rate of 6.958% and a maturity of March 1, 2012. The New Loan is secured by CSC's interest in the Bank of America Plaza building and related leases and agreements. CSC loaned the $150 million proceeds of the New Loan to CPI under a non-recourse loan (the "New Cousins' Loan") secured by CPI's interest in CSC under the same payment terms as those of the New Loan. CPI paid all costs of issuing the New Loan and the New Cousins Loan, including a $750,000 fee to an affiliate of Bank of America Corporation. The New Loan requires establishment of Reserve Funds for capital replacements and repairs for the Building and costs and expenses incurred with respect to leases. These funds are increased by $76,677 per month throughout the life of the loan. At December 31, 2002, these Reserve Funds totaled $690,093. On March 15, 2002, $65,873,925 of the proceeds from the New Loan was used to pay off in full the Prior Notes. The $65,873,925 included $65,525,710 for the payoff of the principal balance as of February 15, 2002 (the last payment date of the Prior Notes) and $348,215 for accrued interest from February 15, 2002 through March 14, 2002. The Prior Cousins Loan to CSC was also repaid in full. In connection with the prepayment in full of the Prior Notes, CPI paid a prepayment premium in the amount of $2,871,925. The estimated fair value of both the note payable and related note receivable at December 31, 2002 was $148 million, 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 New Cousins Loan and the New Loan at December 31, 2002 are as follows (in thousands): 2003 $ 2,433 2004 2,608 2005 2,795 2006 2,996 2007 3,212 Subsequent to 2007 134,239 -------- $148,283 ======== 5. RELATED PARTIES --------------- The Partnership engaged CPI and an affiliate of CPI to manage, develop and lease the Building. During 2002, 2001 and 2000, fees to CPI and its affiliate incurred by the Partnership were as follows ($ in thousands): 2002 2001 2000 ------ ------ ------ Leasing and procurement fees $ 131 $ 303 $ 109 Management fees 1,085 1,007 990 ------------------------------ $1,216 $1,310 $1,099 ============================== 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 $1,000,000 would be due to CSC. In addition, CSC is responsible for the maintenance of the parking deck and the payment of the related operating expenses.
SCHEDULE III CSC ASSOCIATES, L.P. REAL ESTATE AND ACCUMULATED DEPRECIATION DECEMBER 31, 2002 ($ 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 Acquisitions December 31, 2002 ------------------- -------------------- ---------------------------------- Carrying Costs Buildings Less Cost Land Buildings Encumbrances and Improve- of Sales and Land and Total Description (b) Land Improvements ments and Other Improvements Improvements (a) ----------- ------------ ---- ------------ -------- --------- ------------ ------------ --- Bank of America Plaza Atlanta, Georgia $148,283 $ 18,200 $ -- $195,796 $ 10,449 $ 22,818 $201,627 $224,445 =============================================================================================
SCHEDULE III CSC ASSOCIATES, L.P. REAL ESTATE AND ACCUMULATED DEPRECIATION DECEMBER 31, 2002 ($ in thousands) Column A Column F Column G Column H Column I -------- -------- -------- -------- -------- Life on Which De- preciation Accumu- In 2002 lated Date of Income Deprecia- Construc- Date Statement Description tion (a) tion Acquired Is Computed ----------- ---------- --------- -------- ----------- Bank of America Plaza Atlanta, Georgia $73,289 1990-1992 1990 5-40 =======
NOTE: (a) Reconciliations of total real estate carrying value and accumulated depreciation for the three years ended December 31, 2002 are as follows:
Real Estate Accumulated Depreciation ---------------------------------- ------------------------------- 2002 2001 2000 2002 2001 2000 -------- -------- -------- ------- ------- ------- Balance at beginning of period $223,187 $223,687 $222,436 $65,710 $58,678 $51,208 Improvements and other capitalized costs 1,258 54 1,604 -- -- -- Write-offs of improvements and other capitalized costs -- (554) (353) -- (554) (378) Provision for depreciation -- -- -- 7,579 7,586 7,848 ---------------------------------- ------------------------------- Balance at end of period $224,445 $223,187 $223,687 $73,289 $65,710 $58,678 ================================== =============================== (b)CSC's interest in Bank of America Plaza and related leases and agreements secure a note.