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 third quarter of 2013, the Company sold Tiffany Springs MarketCenter. This transaction met the criteria for discontinued operations. Accordingly, the operating results are included in discontinued operations on the accompanying statements of operations for each of the periods presented.

The following properties were held for sale or sold in 2013 or 2012, respectively, and 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	$	53,500
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 final purchase price was subject to, among other things, an earn-out based on the performance of the contributed management and leasing contracts for the year ended September 30, 2013. As a result, the Company recognized an additional $4.5 million gain in the third quarter of 2013.

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



	Three Months Ended September 30,						Nine Months Ended September 30,
	2013			2012			2013			2012
Income (loss) from discontinued operations:
Rental property revenues	$	1,237		$	6,522		$	3,924		$	23,468
Fee income	—			4,789			76			15,529
Other income	10			3,242			10			3,447
Rental property operating expenses	(423		)	(1,962		)	(1,470		)	(7,280		)
Reimbursed expenses	—			(2,477		)	—			(7,133		)
General and administrative expenses	(15		)	(1,782		)	(94		)	(6,035		)
Depreciation and amortization	—			(3,600		)	(1,033		)	(10,810		)
Impairment losses	—			—			—			(12,233		)
Other expenses	(6		)	(8		)	(19		)	(40		)
Income (loss) from discontinued operations	$	803		$	4,724		$	1,394		$	(1,087	)

Gain on sale of discontinued operations:
Third party management and leasing business	$	4,531		$	7,384		$	4,531		$	7,384
Tiffany Springs MarketCenter	3,715			—			3,715			—
Lakeside	62			(9		)	62			(60		)
King Mill	38			89			246			264
Galleria 75	—			—			—			546
The Avenue Collierville	—			(20		)	—			66
Other	—			—			(27		)	4
Gain on sale of discontinued operations	$	8,346		$	7,444		$	8,527		$	8,204

Acquisitions

In the third quarter of 2013, the Company acquired Greenway Plaza, a 10-building, 4.3 million square foot office complex in Houston, Texas, and 777 Main, a 980,000 square foot Class A office building in the central business district of Fort Worth, Texas (collectively the “Texas Acquisition”). The aggregate purchase price for the Texas Acquisition was $1.1 billion, before adjustment for brokers fees, transfer taxes and other customary closing costs.

In conjunction with the Texas Acquisition, the Company entered into a Loan Agreement with JPMorgan Chase Bank, N.A. and Bank of America, N.A. which would permit it to draw up to $950 million, with an accordion feature permitting it, under certain conditions, to increase the amount available by up to $150 million (the “Term Loan”). The Company entered into the Term Loan to assist, if necessary, in the funding of the Texas Acquisition. The Term Loan was not used to finance the Texas Acquisition and, therefore, the Company has no further material benefit or obligation under the agreement. The Company incurred fees and other costs associated with the Term Loan of $2.6 million. In addition, the Company recorded $4.2 million in other acquisition costs related to this acquisition. The term loan costs and other acquisition costs are included in acquisition and related costs on the statement of operations.

In the second quarter of 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 and related costs associated with this acquisition.

In the first quarter of 2013, the Company purchased the remaining 80% interest in MSREF/ Cousins Terminus 200 LLC 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. The Company incurred $122,000 in acquisition and related costs associated with these transactions. 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.

Concurrent with the Terminus 100 and 200 transactions, 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 and related costs associated with this purchase.

The following tables summarize preliminary allocations of the estimated fair values of the assets and liabilities of the acquisitions discussed above (in thousands):



	Post Oak Central			Terminus 200			816 Congress			Texas Acquisition
Tangible assets:
Land and improvements	$	88,406		$	25,040		$	6,817		$	306,563
Building	118,470			101,472			86,391			586,150
Tenant improvements	10,877			17,600			3,500			114,220
Other assets	—			101			—			—
Deferred rents receivable	—			44			—			—
Tangible assets	217,753			144,257			96,708			1,006,933

Intangible assets:
Above-market leases	995			1,512			89			4,959
In-place leases	26,968			14,355			8,222			117,630
Below-market ground leases	—			—			—			2,958
Ground lease purchase option	—			—			2,403			—
Total intangible assets	27,963			15,867			10,714			125,547

Intangible liabilities:
Below-market leases	(14,792		)	(9,273		)	(2,820		)	(47,170		)
Above-market ground lease	—			—			(1,981		)	(2,508		)
Total intangible liabilities	(14,792		)	(9,273		)	(4,801		)	(49,678		)

Total net assets acquired	$	230,924		$	150,851		$	102,621		$	1,082,802

The following supplemental pro forma information is presented for the three and nine months ended September 30, 2013 and 2012, respectively. The pro forma information is based upon the Company's historical consolidated statements of operations, adjusted as if the 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 September 30,				Nine Months Ended September 30,
	2013		2012		2013		2012
	(in thousands, except per share amounts)
Revenues	$	80,698	$	80,426	$	243,927	$	228,581
Income from continuing operations	58,756		5,153		123,702		17,167
Net income	67,905		17,321		133,623		24,284
Net income available to common stockholders	62,249		13,487		117,835		14,863
Per share information:
Basic	$	0.33	$	0.07	$	0.62	$	0.08
Diluted	$	0.33	$	0.07	$	0.62	$	0.08