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. The following properties which were held for sale or sold in 2013, 2012, and 2011 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
Lakeshore Park Plaza	Office	Birmingham, AL	197,000	Held for sale
600 University Park Place	Office	Birmingham, AL	123,000	Held for sale
Inhibitex	Office	Atlanta, GA	51,000	$	8,300
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
2011:
King Mill Distribution Park — Building 3	Industrial	Atlanta, GA	796,000	$	28,300
Lakeside Ranch Business Park — Building 20	Industrial	Dallas, TX	749,000	$	28,400
Jefferson Mill Business Park — Building A	Industrial	Atlanta, GA	459,000	$	22,000
One Georgia Center	Office	Atlanta, GA	376,000	$	48,600

The $8.3 million sales price for Inhibitex is prior to the allocation of free rent credits. In addition, the Company sold its third party management and leasing business 2012. As a result, the operations of this business are presented as discontinued operations in the accompanying statements of operations. The Company recognized a gain on the sale of $7.5 million in 2012 and an additional gain of $4.6 million in 2013. The additional gain was based on the performance of the business for the year subsequent to the sale.

The following table details the components of income (loss) from discontinued operations for the years ended December 31, 2013, 2012 and 2011 (in thousands):



	2013			2012			2011
Rental property revenues	$	10,552		$	33,918		$	51,985
Third party management and leasing revenues	76			16,364			19,359
Other revenues	40			3,557			209
Rental property operating expenses	(4,162		)	(10,935		)	(19,575		)
Third party management and leasing expenses	(99		)	(13,678		)	(16,584		)
Interest expense	—			—			(1,107		)
Impairment losses	—			(13,791		)	(10,945		)
Depreciation and amortization	(3,083		)	(13,479		)	(23,395		)
Loss on extinguishment of debt	—			—			(74		)
Other expenses	(25		)	(49		)	(62		)
Income (loss) from discontinued operations	$	3,299		$	1,907		$	(189	)

Gains (losses) related on sales of discontinued operations are as follows for the years ended December 31, 2013, 2012 and 2011 (in thousands):



	2013			2012			2011
Third party management and leasing business	4,577			7,459			—
Tiffany Springs MarketCenter	3,697			—			—
Inhibitex	2,989			—			—
King Mill Distribution Park — Building 3	275			307			4,977
Lakeside Ranch Business Park — Building 20	25			(59		)	1,121
Cosmopolitan Center	—			2,064			—
Galleria 75	—			569			—
One Georgia Center	—			(104		)	2,805
Jefferson Mill Business Park — Building A	5			—			(394		)
The Avenue Webb Gin	(2		)	3,590			—
The Avenue Forsyth	(77		)	4,508			—
Other	—			73			10
Gain on sale of discontinued operations, net	$	11,489		$	18,407		$	8,519

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, pursuant to the agreement, terminated on the acquisition date. The Company incurred fees and other costs associated with the Term Loan of $2.6 million. In addition, the Company incurred $4.2 million in other acquisition costs related to the Texas 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, 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. TOH is an unconsolidated joint venture of the Company (see note 5).

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.

In 2012, the Company purchased 2100 Ross Avenue, a 844,000 square foot Class-A office building in the Arts District submarket of Dallas, Texas, and paid cash of $59.2 million. In addition, the Company assumed $4.2 million in liabilities associated with the building including tenant improvement liabilities, property tax liabilities and deferred revenue. In accordance with applicable accounting rules, the Company included these assumed liabilities in the purchase price of the asset. The Company allocated the purchase price among the assets and liabilities acquired based on their respective fair values. The Company incurred $408,000 in acquisition and related costs associated with this purchase.

In 2011, the Company purchased Promenade, a 777,000 square foot office building in the midtown submarket of Atlanta, Georgia, for a cash purchase price of $134.7 million. The Company allocated the purchase price among the assets and liabilities acquired based on their respective fair values. The Company incurred $292,000 in acquisition and related costs associated with this purchase.

The following tables summarize 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 Avenue			Texas Acquisition			2100 Ross Avenue			Promenade
Land and improvements	$	88,406		$	25,040		$	6,817		$	306,563		$	5,987		$	13,439
Building	118,470			101,472			86,391			586,150			36,705			94,190
Tenant improvements	10,877			17,600			3,500			114,220			9,034			8,600
Other assets	—			101			—			—			—			—
Deferred rents receivable	—			44			—			—			—			—
Tangible assets	217,753			144,257			96,708			1,006,933			51,726			116,229
Intangible assets:
Above-market leases	995			1,512			89			4,959			3,267			3,991
In-place leases	26,968			14,355			8,222			117,630			8,888			16,172
Below-market ground leases	—			—			—			2,958			—			—
Ground lease purchase option	—			—			2,403			—			—			—
Total intangible assets	27,963			15,867			10,714			125,547			12,155			20,163
Intangible liabilities:
Below-market leases	(14,792		)	(9,273		)	(2,820		)	(47,170		)	(436		)	(1,659		)
Above-market ground lease	—			—			(1,981		)	(2,508		)	—			—
Total intangible liabilities	(14,792		)	(9,273		)	(4,801		)	(49,678		)	(436		)	(1,659		)

Total net assets acquired	$	230,924		$	150,851		$	102,621		$	1,082,802		$	63,445		$	134,733

See note 6 for a schedule of the timing of amortization of the intangible assets and liabilities and the weighted average amortization periods.

The following unaudited supplemental pro forma information is presented for the years ended December 31, 2013, 2012, and 2011, respectively. The pro forma information is based upon the Company's historical consolidated statements of operations, adjusted as if the Post Oak Central, Terminus, 816 Congress Avenue, and Texas Acquisition 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.



	2013		2012
	(unaudited, in thousands, except per share amounts)
Revenues	$	318,539	$	301,407
Income from continuing operations	122,901		43,778
Net income	137,689		64,092
Net income available to common stockholders	119,957		48,994
Per share information:
Basic	$	0.63	$	0.26
Diluted	$	0.63	$	0.26