PROPERTY TRANSACTIONS

Discontinued Operations

Accounting rules require that the historical operating results of held-for-sale or sold assets which meet certain accounting rules be included in a separate section, discontinued operations, in the statements of operations for all periods presented. If the asset is sold, the related gain or loss on sale is also included in discontinued operations. In addition, assets and liabilities of held-for-sale properties, as defined, are required to be separately categorized on the balance sheet.

In the second quarter of 2013, the Company entered into a contract to sell Tiffany Springs MarketCenter and the Company, therefore, reclassified the results of operations of Tiffany Springs MarketCenter to discontinued operations and reclassified the related assets to Operating Properties and Related Assets Held for Sale on the balance sheet.

The following properties which were held-for-sale in 2013 or sold in 2012 met the criteria for discontinued operations presentation ($ in thousands):



Property	Property Type	Location	Square Feet	Sales Price
2013:
Tiffany Springs MarketCenter	Retail	Kansas City, MO	238,000	Held-for-sale
Inhibitex	Office	Atlanta, GA	51,000	Held-for-sale
2012:
The Avenue Forsyth	Retail	Atlanta, GA	524,000	$	119,000
The Avenue Collierville	Retail	Memphis, TN	511,000	55,000
The Avenue Webb Gin	Retail	Atlanta, GA	322,000	59,600
Galleria 75	Office	Atlanta, GA	111,000	9,200
Cosmopolitan Center	Office	Atlanta, GA	51,000	7,000
Inhibitex	Office	Atlanta, GA	51,000	Held-for-sale

In addition, the Company sold its third party management and leasing business in 2012. As a result, the operations of this business are presented as discontinued operations in the accompanying statements of operations.

The components of discontinued operations and the gains and losses on property sales for the three and six months ended June 30, 2013 and 2012 are as follows (in thousands):



	Three Months Ended June 30,						Six Months Ended June 30,
	2013			2012			2013			2012
Income (loss) from discontinued operations:
Rental property revenues	$	1,311		$	7,753		$	2,687		$	16,946
Fee income	3			6,029			77			10,740
Other income	—			13			—			205
Rental property operating expenses	(474		)	(2,663		)	(1,046		)	(5,318		)
Reimbursed expenses	—			(2,354		)	—			(4,656		)
General and administrative expenses	(27		)	(2,254		)	(79		)	(4,253		)
Depreciation and amortization	(524		)	(2,967		)	(1,033		)	(7,210		)
Impairment losses	—			—			—			(12,233		)
Other expenses	(9		)	(14		)	(13		)	(32		)
Income (loss) from discontinued operations	$	280		$	3,543		$	593		$	(5,811	)

Gain on sale of discontinued operations:
King Mill	$	89		$	88		$	208		$	175
Galleria 75	—			547			—			546
The Avenue Collierville	—			86			—			86
Lakeside	—			(51		)	—			(51		)
Other	(3		)	4			(27		)	4
Gain on sale of discontinued operations	$	86		$	674		$	181		$	760

816 Congress Avenue Acquisition

In April 2013, the Company acquired 816 Congress Avenue, a 435,000 square-foot Class-A office property located in the central business district of Austin, Texas. The purchase price for this property, net of rent credits, was $102.4 million. The Company incurred $342,000 in acquisition costs related to this acquisition, which were recorded in other expense in the statements of operations.

The following table summarizes the preliminary allocations of the estimated fair values of the assets and liabilities of 816 Congress Avenue (in thousands):



Tangible assets:
Land and improvements	$	6,817
Building	86,391
Tenant improvements	3,500
Tangible assets	96,708

Intangible assets:
Above-market leases	89
In-place leases	8,222
Ground lease purchase option	2,403
Total intangible assets	10,714

Intangible Liabilities:
Below-market leases	(2,820		)
Above-market ground lease	(1,981		)
Total intangible liabilities	(4,801		)

Total net assets acquired	$	102,621

Post Oak Central/ Terminus Transactions

In February 2013, the Company purchased the 80% interest in MSREF/ Cousins Terminus 200 LLC it did not already own for $53.8 million and simultaneously repaid the mortgage loan secured by the Terminus 200 property in the amount of $74.6 million. The Company recognized a gain of $19.7 million on this acquisition achieved in stages. Immediately thereafter, the Company contributed its interest in the Terminus 200 property and its interest in the Terminus 100 property, together with the existing mortgage loan secured by the Terminus 100 property, to a newly-formed entity, Terminus Office Holdings LLC (“TOH”), and sold 50% of TOH to institutional investors advised by J.P. Morgan Asset Management for $112.2 million. The Company recognized a gain of $37.1 million on this transaction. In March 2013, Terminus Venture T200 LLC, an affiliate of TOH, closed a new mortgage loan on the Terminus 200 property in the amount of $82.0 million, and the Company received a distribution of $39.2 million from TOH as a result. The Company accounts for its interest in TOH under the equity method because both partners have the ability to participate in and approve major decisions of the venture and, therefore, have substantive participating rights in the venture.

Concurrently, the Company purchased Post Oak Central, a 1.3 million square-foot, Class-A office complex in the Galleria district of Houston, Texas for $230.9 million, net of rent credits, from an affiliate of J.P. Morgan Asset Management. The Company incurred $231,000 in acquisition costs related to this purchase, which were recorded in other expense on the statements of operations.

The following tables summarize preliminary allocations of the estimated fair values of the assets and liabilities of Terminus 200 and Post Oak Central acquired in this series of transactions (in thousands):



	Post Oak Central			Terminus 200
Tangible assets:
Land and improvements	$	88,406		$	25,040
Building	118,470			101,472
Tenant improvements	10,877			17,600
Other assets	—			101
Deferred rents receivable	—			44
Tangible assets	217,753			144,257

Intangible assets:
Above-market leases	995			1,512
In-place leases	26,968			14,355
Total intangible assets	27,963			15,867

Intangible Liabilities:
Below-market leases	(14,792		)	(9,273		)

Total net assets acquired	$	230,924		$	150,851

The following supplemental pro forma information is presented for the three and six months ended June 30, 2013 and 2012, respectively. The pro forma information is based upon the Company's historical consolidated statements of operations, adjusted as if the Post Oak Central and Terminus transactions discussed above had occurred at the beginning of each of the periods presented. The supplemental pro forma information is not necessarily indicative of future results or of actual results that would have been achieved had the transactions been consummated at the beginning of each period.



	Three Months Ended June 30,					Six Months Ended June 30,
	2013			2012		2013		2012
	(in thousands, except per share amounts)
Revenues	$	44,158		$	34,845	$	85,263	$	70,572
Income (loss) from continuing operations	453			6,632		57,618		5,163
Net income (loss)	819			10,849		58,415		113
Net income (loss) available to common stockholders	(5,579		)	7,020		48,283		(5,474		)
Per share information:
Basic	$	(0.05	)	$	0.07	$	0.43	$	(0.05	)
Diluted	$	(0.05	)	$	0.07	$	0.43	$	(0.05	)