þ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
GEORGIA (State or other jurisdiction of incorporation or organization) | 58-0869052 (I.R.S. Employer Identification No.) |
191 Peachtree Street, Suite 500, Atlanta, Georgia (Address of principal executive offices) | 30303-1740 (Zip Code) |
Large accelerated filer þ | Accelerated filer o | Non-accelerated filer o | Smaller reporting company o |
(Do not check if a smaller reporting company) |
Class | Outstanding at May 2, 2014 | |
Common Stock, $1 par value per share | 198,422,579 shares |
Page No. | |
• | the Company's business and financial strategy; |
• | the availability and terms of capital and financing; |
• | the ability to refinance indebtedness as it matures; |
• | the failure of purchase, sale, or other contracts to ultimately close; |
• | the failure to achieve anticipated benefits from acquisitions or dispositions; |
• | the potential dilutive effect of common stock offerings; |
• | the availability of buyers and adequate pricing with respect to the disposition of assets; |
• | risks related to the geographic concentration of our portfolio; |
• | risks and uncertainties related to national and local economic conditions, the real estate industry in general, and the commercial real estate markets in particular; |
• | changes to the Company's strategy with regard to land and other non-core holdings that require impairment losses to be recognized; |
• | leasing risks, including the ability to obtain new tenants or renew expiring tenants, and the ability to lease newly developed and/or recently acquired space; |
• | the financial condition of existing tenants; |
• | volatility in interest rates and insurance rates; |
• | the availability of sufficient investment opportunities; |
• | competition from other developers or investors; |
• | the risks associated with real estate developments and acquisitions (such as zoning approval, receipts of required permits, construction delays, cost overruns, and leasing risk); |
• | the loss of key personnel; |
• | the potential liability for uninsured losses, condemnation, or environmental issues; |
• | the potential liability for a failure to meet regulatory requirements; |
• | the financial condition and liquidity of, or disputes with, joint venture partners; |
• | any failure to comply with debt covenants under credit agreements; and |
• | any failure to continue to qualify for taxation as a real estate investment trust. |
COUSINS PROPERTIES INCORPORATED AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except share and per share amounts) | |||||||
March 31, 2014 | December 31, 2013 | ||||||
(unaudited) | |||||||
Assets: | |||||||
Real estate assets: | |||||||
Operating properties, net of accumulated depreciation of $258,752 and $235,707 in 2014 and 2013, respectively | $ | 1,822,086 | $ | 1,828,437 | |||
Projects under development | 34,816 | 21,681 | |||||
Land | 34,727 | 35,053 | |||||
1,891,629 | 1,885,171 | ||||||
Operating properties and related assets held for sale, net of accumulated depreciation of $12,001 and $21,444 in 2014 and 2013, respectively | 11,463 | 24,554 | |||||
Cash and cash equivalents | 29,080 | 975 | |||||
Restricted cash | 3,478 | 2,810 | |||||
Notes and accounts receivable, net of allowance for doubtful accounts of $1,897 and $1,827 in 2014 and 2013, respectively | 11,456 | 11,778 | |||||
Deferred rents receivable | 46,963 | 39,969 | |||||
Investment in unconsolidated joint ventures | 107,106 | 107,082 | |||||
Intangible assets, net of accumulated amortization of $49,112 and $37,544 in 2014 and 2013, respectively | 159,200 | 170,973 | |||||
Other assets | 33,636 | 29,894 | |||||
Total assets | $ | 2,294,011 | $ | 2,273,206 | |||
Liabilities: | |||||||
Notes payable | $ | 587,442 | $ | 630,094 | |||
Accounts payable and accrued expenses | 55,493 | 76,668 | |||||
Deferred income | 24,781 | 25,754 | |||||
Intangible liabilities, net of accumulated amortization of $9,344 and $6,323 in 2014 and 2013, respectively | 63,455 | 66,476 | |||||
Other liabilities | 14,682 | 15,242 | |||||
Total liabilities | 745,853 | 814,234 | |||||
Commitments and contingencies | — | — | |||||
Equity: | |||||||
Stockholders' investment: | |||||||
Preferred stock, 7.50% Series B cumulative redeemable preferred stock, $1 par value, $25 liquidation preference, 20,000,000 shares authorized, 3,791,000 shares issued and outstanding in 2014 and 2013 | 94,775 | 94,775 | |||||
Common stock, $1 par value, 250,000,000 shares authorized, 201,992,661 and 193,236,454 shares issued in 2014 and 2013, respectively | 201,993 | 193,236 | |||||
Additional paid-in capital | 1,510,409 | 1,420,951 | |||||
Treasury stock at cost, 3,570,082 shares in 2014 and 2013 | (86,840 | ) | (86,840 | ) | |||
Distributions in excess of cumulative net income | (173,752 | ) | (164,721 | ) | |||
1,546,585 | 1,457,401 | ||||||
Nonredeemable noncontrolling interests | 1,573 | 1,571 | |||||
Total equity | 1,548,158 | 1,458,972 | |||||
Total liabilities and equity | $ | 2,294,011 | $ | 2,273,206 | |||
See accompanying notes. |
Three Months Ended | |||||||
March 31, | |||||||
2014 | 2013 | ||||||
Revenues: | |||||||
Rental property revenues | $ | 77,484 | $ | 33,125 | |||
Fee income | 2,338 | 3,579 | |||||
Other | 1,901 | 1,558 | |||||
81,723 | 38,262 | ||||||
Costs and expenses: | |||||||
Rental property operating expenses | 34,857 | 15,208 | |||||
Reimbursed expenses | 932 | 1,910 | |||||
General and administrative expenses | 5,611 | 6,070 | |||||
Interest expense | 7,167 | 4,935 | |||||
Depreciation and amortization | 34,140 | 11,246 | |||||
Separation expenses | 84 | — | |||||
Acquisition and related costs | 22 | 235 | |||||
Other | 494 | 1,455 | |||||
83,307 | 41,059 | ||||||
Loss from continuing operations before taxes, unconsolidated joint ventures, and sale of investment properties | (1,584 | ) | (2,797 | ) | |||
Benefit (provision) for income taxes from operations | 12 | (1 | ) | ||||
Income from unconsolidated joint ventures | 1,286 | 1,652 | |||||
Loss from continuing operations before gain on sale of investment properties | (286 | ) | (1,146 | ) | |||
Gain on sale of investment properties | 161 | 57,154 | |||||
Income (loss) from continuing operations | (125 | ) | 56,008 | ||||
Income from discontinued operations: | |||||||
Income from discontinued operations | 892 | 778 | |||||
Gain on sale of investment properties | 6,365 | 118 | |||||
7,257 | 896 | ||||||
Net income | 7,132 | 56,904 | |||||
Net income attributable to noncontrolling interests | (155 | ) | (507 | ) | |||
Net income attributable to controlling interests | 6,977 | 56,397 | |||||
Dividends to preferred stockholders | (1,777 | ) | (3,227 | ) | |||
Net income available to common stockholders | $ | 5,200 | $ | 53,170 | |||
Per common share information — basic and diluted: | |||||||
Income (loss) from continuing operations attributable to controlling interest | $ | (0.01 | ) | $ | 0.50 | ||
Income from discontinued operations | 0.04 | 0.01 | |||||
Net income available to common stockholders | $ | 0.03 | $ | 0.51 | |||
Weighted average shares — basic | 191,739 | 104,119 | |||||
Weighted average shares — diluted | 191,952 | 104,252 | |||||
Dividends declared per common share | $ | 0.075 | $ | 0.045 |
Preferred Stock | Common Stock | Additional Paid-In Capital | Treasury Stock | Distributions in Excess of Net Income | Stockholders’ Investment | Nonredeemable Noncontrolling Interests | Total Equity | ||||||||||||||||||||||||
Balance December 31, 2013 | $ | 94,775 | $ | 193,236 | $ | 1,420,951 | $ | (86,840 | ) | $ | (164,721 | ) | $ | 1,457,401 | $ | 1,571 | $ | 1,458,972 | |||||||||||||
Net income | — | — | — | — | 6,977 | 6,977 | 155 | 7,132 | |||||||||||||||||||||||
Common stock issued pursuant to: | |||||||||||||||||||||||||||||||
Stock option exercises | — | 3 | (23 | ) | — | — | (20 | ) | — | (20 | ) | ||||||||||||||||||||
Common stock offering, net of issuance costs | — | 8,700 | 89,864 | — | — | 98,564 | — | 98,564 | |||||||||||||||||||||||
Restricted stock grants, net of amounts withheld for income taxes | — | 54 | (970 | ) | — | — | (916 | ) | — | (916 | ) | ||||||||||||||||||||
Amortization of stock options and restricted stock, net of forfeitures | — | — | 587 | — | — | 587 | — | 587 | |||||||||||||||||||||||
Distributions to noncontrolling interests | — | — | — | — | — | — | (153 | ) | (153 | ) | |||||||||||||||||||||
Preferred dividends | — | — | — | — | (1,777 | ) | (1,777 | ) | — | (1,777 | ) | ||||||||||||||||||||
Common dividends | — | — | — | — | (14,231 | ) | (14,231 | ) | — | (14,231 | ) | ||||||||||||||||||||
Balance March 31, 2014 | $ | 94,775 | $ | 201,993 | $ | 1,510,409 | $ | (86,840 | ) | $ | (173,752 | ) | $ | 1,546,585 | $ | 1,573 | $ | 1,548,158 | |||||||||||||
Balance December 31, 2012 | $ | 169,602 | $ | 107,660 | $ | 690,024 | $ | (86,840 | ) | $ | (260,104 | ) | $ | 620,342 | $ | 22,611 | $ | 642,953 | |||||||||||||
Net income (loss) | — | — | — | — | 56,397 | 56,397 | 477 | 56,874 | |||||||||||||||||||||||
Common stock issued pursuant to: | |||||||||||||||||||||||||||||||
Restricted stock grants, net of amounts withheld for income taxes | — | 30 | (1,202 | ) | — | — | (1,172 | ) | — | (1,172 | ) | ||||||||||||||||||||
Amortization of stock options and restricted stock, net of forfeitures | — | 7 | 354 | — | — | 361 | — | 361 | |||||||||||||||||||||||
Distributions to nonredeemable noncontrolling interests | — | — | — | — | — | — | (461 | ) | (461 | ) | |||||||||||||||||||||
Preferred dividends | — | — | — | — | (3,227 | ) | (3,227 | ) | — | (3,227 | ) | ||||||||||||||||||||
Common dividends | — | — | — | — | (4,689 | ) | (4,689 | ) | — | (4,689 | ) | ||||||||||||||||||||
Balance March 31, 2013 | $ | 169,602 | $ | 107,697 | $ | 689,176 | $ | (86,840 | ) | $ | (211,623 | ) | $ | 668,012 | $ | 22,627 | $ | 690,639 |
Three Months Ended March 31, | |||||||
2014 | 2013 | ||||||
Cash flows from operating activities: | |||||||
Net income | $ | 7,132 | $ | 56,904 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Gain on sale of investment properties, including discontinued operations | (6,526 | ) | (57,272 | ) | |||
Depreciation and amortization, including discontinued operations | 34,168 | 12,299 | |||||
Amortization of deferred financing costs | 295 | 279 | |||||
Amortization of stock options and restricted stock, net of forfeitures | 587 | 361 | |||||
Effect of certain non-cash adjustments to rental revenues | (9,074 | ) | (1,806 | ) | |||
(Income) loss from unconsolidated joint ventures | (1,286 | ) | (1,652 | ) | |||
Operating distributions from unconsolidated joint ventures | 1,777 | 1,417 | |||||
Land and multi-family cost of sales, net of closing costs paid | — | 904 | |||||
Changes in other operating assets and liabilities: | |||||||
Change in other receivables and other assets, net | (3,024 | ) | (1,581 | ) | |||
Change in operating liabilities | (17,042 | ) | (8,083 | ) | |||
Net cash provided by operating activities | 7,007 | 1,770 | |||||
Cash flows from investing activities: | |||||||
Proceeds from investment property sales | 19,970 | 112,651 | |||||
Property acquisition, development, and tenant asset expenditures | (36,653 | ) | (295,789 | ) | |||
Investment in unconsolidated joint ventures | (2,659 | ) | (19 | ) | |||
Distributions from unconsolidated joint ventures | 2,370 | 39,563 | |||||
Collection of notes receivable | — | 339 | |||||
Change in notes receivable and other assets | (993 | ) | (1,221 | ) | |||
Change in restricted cash | (668 | ) | (764 | ) | |||
Net cash used in investing activities | (18,633 | ) | (145,240 | ) | |||
Cash flows from financing activities: | |||||||
Proceeds from credit facility | 82,525 | 102,000 | |||||
Repayment of credit facility | (122,600 | ) | (47,000 | ) | |||
Proceeds from other notes payable | — | 1,166 | |||||
Repayment of notes payable | (2,577 | ) | (75,139 | ) | |||
Common stock issued, net of expenses | 98,544 | — | |||||
Common dividends paid | (14,231 | ) | (4,689 | ) | |||
Preferred dividends paid | (1,777 | ) | (3,227 | ) | |||
Distributions to noncontrolling interests | (153 | ) | (491 | ) | |||
Net cash provided by (used in) financing activities | 39,731 | (27,380 | ) | ||||
Net increase (decrease) in cash and cash equivalents | 28,105 | (170,850 | ) | ||||
Cash and cash equivalents at beginning of period | 975 | 176,892 | |||||
Cash and cash equivalents at end of period | $ | 29,080 | $ | 6,042 | |||
Interest paid, net of amounts capitalized | $ | 7,186 | $ | 5,470 | |||
Significant non-cash transactions: | |||||||
Accrued property acquisition, development, and tenant asset expenditures | $ | 20,749 | $ | 2,995 |
Property | Property Type | Location | Square Feet | Sales Price | |||||||
2014: | |||||||||||
Lakeshore Park Plaza | Office | Birmingham, AL | 197,000 | Held for sale | |||||||
600 University Park Place | Office | Birmingham, AL | 123,000 | $ | 19,700 | ||||||
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 |
Three Months Ended March 31, | ||||||||
2014 | 2013 | |||||||
Income from discontinued operations: | ||||||||
Rental property revenues | $ | 1,356 | $ | 3,000 | ||||
Fee income | — | 74 | ||||||
Other income | 7 | 7 | ||||||
Rental property operating expenses | (464 | ) | (1,194 | ) | ||||
Reimbursed expenses | — | — | ||||||
General and administrative expenses | (1 | ) | (52 | ) | ||||
Depreciation and amortization | — | (1,053 | ) | |||||
Other expenses | (6 | ) | (4 | ) | ||||
$ | 892 | $ | 778 | |||||
Gain on sale of discontinued operations: | ||||||||
600 University | $ | 6,371 | $ | — | ||||
King Mill | — | 119 | ||||||
Other | (6 | ) | (1 | ) | ||||
$ | 6,365 | $ | 118 |
Total Assets | Total Debt | Total Equity | Company’s Investment | |||||||||||||||||||||||||||||
SUMMARY OF FINANCIAL POSITION: | 2014 | 2013 | 2014 | 2013 | 2014 | 2013 | 2014 | 2013 | ||||||||||||||||||||||||
Terminus Office Holdings | $ | 295,983 | $ | 297,815 | $ | 215,378 | $ | 215,942 | $ | 67,253 | $ | 69,867 | $ | 34,534 | $ | 35,885 | ||||||||||||||||
EP I LLC | 87,752 | 88,130 | 57,755 | 57,092 | 28,587 | 29,229 | 24,837 | 25,319 | ||||||||||||||||||||||||
Cousins Watkins LLC | 50,838 | 51,653 | 27,570 | 27,710 | 22,366 | 23,081 | 17,050 | 17,213 | ||||||||||||||||||||||||
Charlotte Gateway Village, LLC | 135,042 | 135,966 | 48,290 | 52,408 | 84,882 | 82,373 | 11,243 | 11,252 | ||||||||||||||||||||||||
EP II LLC | 17,480 | 12,644 | 1 | 1 | 14,662 | 11,695 | 11,869 | 9,566 | ||||||||||||||||||||||||
Temco Associates, LLC | 8,288 | 8,474 | — | — | 8,096 | 8,315 | 3,978 | 4,083 | ||||||||||||||||||||||||
CL Realty, L.L.C. | 7,292 | 7,602 | — | — | 7,292 | 7,374 | 3,537 | 3,704 | ||||||||||||||||||||||||
Wildwood Associates | 21,113 | 21,127 | — | — | 21,084 | 21,121 | (1,708 | ) | (1) | (1,689 | ) | (1) | ||||||||||||||||||||
Crawford Long - CPI, LLC | 31,833 | 32,042 | 75,000 | 75,000 | (44,759 | ) | (44,295 | ) | (21,277 | ) | (1) | (21,071 | ) | (1) | ||||||||||||||||||
Other | 1,811 | 1,931 | — | — | 1,608 | 1,700 | 58 | 60 | ||||||||||||||||||||||||
$ | 657,432 | $ | 657,384 | $ | 423,994 | $ | 428,153 | $ | 211,071 | $ | 210,460 | $ | 84,121 | $ | 84,322 |
Total Revenues | Net Income (Loss) | Company's Share of Income (Loss) | |||||||||||||||||||||
SUMMARY OF OPERATIONS: | 2014 | 2013 | 2014 | 2013 | 2014 | 2013 | |||||||||||||||||
Terminus Office Holdings | $ | 9,662 | $ | 5,606 | $ | (114 | ) | $ | 1,062 | $ | (79 | ) | $ | 529 | |||||||||
EP I LLC | 2,952 | 1,169 | 678 | (519 | ) | 508 | (389 | ) | |||||||||||||||
Cousins Watkins LLC | 1,276 | 1,286 | 112 | (29 | ) | 567 | 580 | ||||||||||||||||
Charlotte Gateway Village, LLC | 8,363 | 8,294 | 2,811 | 2,581 | 294 | 294 | |||||||||||||||||
Temco Associates, LLC | 60 | 69 | (18 | ) | (13 | ) | (5 | ) | (6 | ) | |||||||||||||
CL Realty, L.L.C. | 368 | 428 | 229 | 236 | 33 | 118 | |||||||||||||||||
MSREF/ Cousins Terminus 200 LLC | — | 1,256 | — | (115 | ) | — | (35 | ) | |||||||||||||||
Wildwood Associates | — | — | (38 | ) | (42 | ) | (19 | ) | (21 | ) | |||||||||||||
Crawford Long - CPI, LLC | 2,927 | 2,958 | 682 | 725 | 374 | 360 | |||||||||||||||||
CP Venture Five LLC | — | 7,843 | — | 1,435 | — | 315 | |||||||||||||||||
CP Venture Two LLC | — | 4,926 | — | 2,724 | — | 281 | |||||||||||||||||
CF Murfreesboro Associates | — | 3,291 | — | (633 | ) | (387 | ) | (383 | ) | ||||||||||||||
Other | 4 | 1,261 | (89 | ) | (149 | ) | — | 9 | |||||||||||||||
$ | 25,612 | $ | 38,387 | $ | 4,253 | $ | 7,263 | $ | 1,286 | $ | 1,652 |
March 31, 2014 | December 31, 2013 | |||||||
In-place leases, net of accumulated amortization of $37,200 and $26,239 in 2014 and 2013, respectively | $ | 141,869 | $ | 152,830 | ||||
Above-market tenant leases, net of accumulated amortization of $11,881 and $11,284 in 2014 and 2013, respectively | 11,561 | 12,332 | ||||||
Below-market ground lease, net of accumulated amortization of $31 and $21 in 2014 and 2013, respectively | 1,670 | 1,680 | ||||||
Goodwill | 4,100 | 4,131 | ||||||
$ | 159,200 | $ | 170,973 |
Three Months Ended March 31, | |||||||
2014 | 2013 | ||||||
Beginning balance | $ | 4,131 | $ | 4,751 | |||
Allocated to property sales | (31 | ) | (604 | ) | |||
Ending balance | $ | 4,100 | $ | 4,147 |
March 31, 2014 | December 31, 2013 | |||||||
Lease inducements, net of accumulated amortization of $4,495 and $4,181 in 2014 and 2013, respectively | $ | 12,364 | $ | 12,548 | ||||
FF&E and leasehold improvements, net of accumulated depreciation of $18,182 and $17,684 in 2014 and 2013, respectively | 9,530 | 8,743 | ||||||
Prepaid expenses and other assets | 6,814 | 3,606 | ||||||
Loan closing costs, net of accumulated amortization of $2,916 and $2,621 in 2014 and 2013, respectively | 3,883 | 4,176 | ||||||
Predevelopment costs and earnest money | 1,045 | 821 | ||||||
$ | 33,636 | $ | 29,894 |
Description | Interest Rate | Maturity | March 31, 2014 | December 31, 2013 | |||||||||
Post Oak Central mortgage note | 4.26 | % | 2020 | $ | 187,522 | $ | 188,310 | ||||||
The American Cancer Society Center mortgage note | 6.45 | % | 2017 | 132,287 | 132,714 | ||||||||
Promenade mortgage note | 4.27 | % | 2022 | 112,927 | 113,573 | ||||||||
191 Peachtree Tower mortgage note (interest only until May 1, 2016) | 3.35 | % | 2018 | 100,000 | 100,000 | ||||||||
Meridian Mark Plaza mortgage note | 6.00 | % | 2020 | 25,714 | 25,813 | ||||||||
The Points at Waterview mortgage note | 5.66 | % | 2016 | 15,007 | 15,139 | ||||||||
Mahan Village construction facility | 1.80 | % | 2014 | 13,985 | 14,470 | ||||||||
Credit Facility, unsecured | 1.65 | % | 2016 | — | 40,075 | ||||||||
$ | 587,442 | $ | 630,094 |
Three Months Ended March 31, | |||||||
2014 | 2013 | ||||||
Total interest incurred | $ | 7,540 | $ | 5,036 | |||
Interest capitalized | (373 | ) | (101 | ) | |||
Total interest expense | $ | 7,167 | $ | 4,935 |
Three Months Ended March 31, | |||||||
2014 | 2013 | ||||||
Beginning Balance | $ | — | $ | — | |||
Net income attributable to redeemable noncontrolling interests | — | 30 | |||||
Distributions to redeemable noncontrolling interests | — | (30 | ) | ||||
Ending Balance | $ | — | $ | — |
Three Months Ended March 31, | |||||||
2014 | 2013 | ||||||
Net income attributable to nonredeemable noncontrolling interests | $ | 155 | $ | 477 | |||
Net income attributable to redeemable noncontrolling interests | — | 30 | |||||
Net income attributable to noncontrolling interests | $ | 155 | $ | 507 |
Three Months Ended March 31, | |||||
2014 | 2013 | ||||
Weighted average shares — basic | 191,739 | 104,119 | |||
Dilutive potential common shares — stock options | 213 | 133 | |||
Weighted average shares — diluted | 191,952 | 104,252 | |||
Weighted average anti-dilutive stock options | 2,200 | 3,123 |
• | fee income and related expenses for third party owned properties and joint venture properties for which the Company performs management, development and leasing services; |
• | compensation for corporate employees; |
• | general corporate overhead costs, interest expense for consolidated and unconsolidated entities; |
• | income attributable to noncontrolling interests; |
• | income taxes; |
• | depreciation; and |
• | preferred dividends. |
Three Months Ended March 31, 2014 | Office | Retail | Land | Other | Total | ||||||||||||||||
Net operating income | $ | 47,598 | $ | 1,303 | $ | — | $ | 1,117 | $ | 50,018 | |||||||||||
Sales less costs of sales | — | — | 160 | — | 160 | ||||||||||||||||
Fee income | — | — | — | 2,339 | 2,339 | ||||||||||||||||
Other income | — | — | — | 1,908 | 1,908 | ||||||||||||||||
Gain on third party management and leasing business | — | — | — | — | 7 | 7 | |||||||||||||||
Separation expenses | — | — | — | (84 | ) | (84 | ) | ||||||||||||||
General and administrative expenses | — | — | — | (5,611 | ) | (5,611 | ) | ||||||||||||||
Reimbursed expenses | — | — | — | (932 | ) | (932 | ) | ||||||||||||||
Interest expense | — | — | — | (9,012 | ) | (9,012 | ) | ||||||||||||||
Other expenses | — | — | — | (834 | ) | (834 | ) | ||||||||||||||
Preferred stock dividends | — | — | — | (1,777 | ) | (1,777 | ) | ||||||||||||||
Funds from operations available to common stockholders | $ | 47,598 | $ | 1,303 | $ | 160 | $ | (12,879 | ) | 36,182 | |||||||||||
Real estate depreciation and amortization, including Company's share of joint ventures | (36,953 | ) | |||||||||||||||||||
Gain on sale of depreciated investment properties, including Company's share of joint ventures | 5,971 | ||||||||||||||||||||
Net income available to common stockholders | $ | 5,200 |
Three Months Ended March 31, 2013 | Office | Retail | Land | Other | Total | |||||||||||||||
Net operating income | $ | 21,837 | $ | 4,290 | $ | — | $ | 43 | $ | 26,170 | ||||||||||
Sales less costs of sales | — | — | 243 | 168 | 411 | |||||||||||||||
Fee income | — | — | — | 3,654 | 3,654 | |||||||||||||||
Other income | — | — | — | 282 | 282 | |||||||||||||||
Third party management and leasing expenses | — | — | — | (53 | ) | (53 | ) | |||||||||||||
General and administrative expenses | — | — | — | (6,069 | ) | (6,069 | ) | |||||||||||||
Reimbursed expenses | — | — | — | (1,910 | ) | (1,910 | ) | |||||||||||||
Interest expense | — | — | — | (6,645 | ) | (6,645 | ) | |||||||||||||
Other expenses | — | — | — | (1,152 | ) | (1,152 | ) | |||||||||||||
Preferred stock dividends | — | — | — | (3,227 | ) | (3,227 | ) | |||||||||||||
Funds from operations available to common stockholders | $ | 21,837 | $ | 4,290 | $ | 243 | $ | (14,909 | ) | 11,461 | ||||||||||
Real estate depreciation and amortization, including Company's share of joint ventures | (15,320 | ) | ||||||||||||||||||
Gain on sale of depreciated investment properties including the Company's share of joint ventures | 57,029 | |||||||||||||||||||
Net income available to common stockholders | $ | 53,170 |
• | Rental property operations; |
• | Land sales; and |
• | Gains on sales of investment properties. |
Three Months Ended March 31, | ||||||||
2014 | 2013 | |||||||
Net operating income | $ | 50,018 | $ | 26,170 | ||||
Sales less cost of sales | 160 | 411 | ||||||
Fee income | 2,339 | 3,654 | ||||||
Other income | 1,908 | 282 | ||||||
Rental property operating expenses | 34,857 | 15,208 | ||||||
Cost of sales | — | 1,145 | ||||||
Net operating income in joint ventures | (6,499 | ) | (6,447 | ) | ||||
Sales less cost of sales in joint ventures | — | (10 | ) | |||||
Net operating income in discontinued operations | (892 | ) | (1,806 | ) | ||||
Fee income in discontinued operations | — | (74 | ) | |||||
Other income in discontinued operations | (7 | ) | (26 | ) | ||||
(Gain) loss on land sales (included in gain on investment properties) | (161 | ) | (245 | ) | ||||
Total consolidated revenues | $ | 81,723 | $ | 38,262 |
• | Increase of $31.9 million due to the September 2013 acquisition of Greenway Plaza; |
• | Increase of $5.6 million due to the September 2013 acquisition of 777 Main; |
• | Increase of $5.4 million due to the February 2013 acquisition of Post Oak Central; |
• | Increase of $3.1 million due to the April 2013 acquisition of 816 Congress; and |
• | Decrease of $2.2 million due to the February 2013 sale of 50% of the Company's interest in Terminus 100. |
• | Increase of $13.7 million due to the September 2013 acquisition of Greenway Plaza; |
• | Increase of $3.0 million due to the September 2013 acquisition of 777 Main; |
• | Increase of $2.3 million due to the February 2013 acquisition of Post Oak Central; |
• | Increase of $1.6 million due to the April 2013 acquisition of 816 Congress; and |
• | Decrease of $605,000 due to the February 2013 sale of 50% of the Company's interest in Terminus 100. |
• | Increase of $2.0 million as a result of mortgage loan on Post Oak Central that closed in September 2013; |
• | Increase of $1.2 million as a result of mortgage loan on Promenade that closed in September 2013; and |
• | Decrease of $725,000 due to the February 2013 sale of 50% of the Company's interest in Terminus 100, which included the existing mortgage loan secured by the Terminus 100 property. |
Three Months Ended March 31, | |||||||
2014 | 2013 | ||||||
Net Income Available to Common Stockholders | $ | 5,200 | $ | 53,170 | |||
Depreciation and amortization of real estate assets: | |||||||
Consolidated properties | 33,955 | 11,063 | |||||
Discontinued properties | — | 1,053 | |||||
Share of unconsolidated joint ventures | 2,998 | 3,204 | |||||
(Gain) loss on sale of depreciated properties: | |||||||
Consolidated properties | — | (56,911 | ) | ||||
Discontinued properties | (6,358 | ) | (118 | ) | |||
Share of unconsolidated joint ventures | 387 | — | |||||
Funds From Operations Available to Common Stockholders | $ | 36,182 | $ | 11,461 | |||
Per Common Share — Basic and Diluted: | |||||||
Net Income Available | $ | 0.03 | $ | 0.51 | |||
Funds From Operations | $ | 0.19 | $ | 0.11 | |||
Weighted Average Shares — Basic | 191,739 | 104,119 | |||||
Weighted Average Shares — Diluted | 191,952 | 104,252 |
Three Months Ended March 31, | |||||||
2014 | 2013 | ||||||
Net Operating Income - Consolidated Properties | |||||||
Rental property revenues | $ | 77,484 | $ | 33,125 | |||
Rental property expenses | (34,857 | ) | (15,208 | ) | |||
42,627 | 17,917 | ||||||
Net Operating Income - Discontinued Operations | |||||||
Rental property revenues | 1,356 | 3,000 | |||||
Rental property expenses | (464 | ) | (1,194 | ) | |||
892 | 1,806 | ||||||
Net Operating Income - Unconsolidated Joint Ventures | 6,499 | 6,447 | |||||
Total Net Operating Income | $ | 50,018 | $ | 26,170 | |||
Net Operating Income | |||||||
Same Property | $ | 15,247 | $ | 14,917 | |||
Non-Same Property | 34,771 | 11,253 | |||||
$ | 50,018 | $ | 26,170 | ||||
Change year over year in Net Operating Income - Same Property | 2.2 | % |
• | Net cash from operations; |
• | Sales of assets; |
• | Borrowings under its Credit Facility; |
• | Proceeds from mortgage notes payable; |
• | Proceeds from equity offerings; and |
• | Joint venture formations. |
• | Property acquisitions; |
• | Expenditures on development projects; |
• | Building improvements, tenant improvements, and leasing costs; |
• | Principal and interest payments on indebtedness; and |
• | Common and preferred stock dividends. |
Total | Less than 1 Year | 1-3 Years | 3-5 Years | More than 5 years | ||||||||||||||||
Contractual Obligations: | ||||||||||||||||||||
Company debt: | ||||||||||||||||||||
Unsecured Credit Facility and construction facility | $ | 13,985 | $ | 13,985 | $ | — | $ | — | $ | — | ||||||||||
Mortgage notes payable | 573,457 | 8,508 | 33,315 | 239,923 | 291,711 | |||||||||||||||
Interest commitments (1) | 140,746 | 27,134 | 51,876 | 34,368 | 27,368 | |||||||||||||||
Ground leases | 149,560 | 1,384 | 3,475 | 3,488 | 141,213 | |||||||||||||||
Other operating leases | 508 | 187 | 246 | 75 | — | |||||||||||||||
Total contractual obligations | $ | 878,256 | $ | 51,198 | $ | 88,912 | $ | 277,854 | $ | 460,292 | ||||||||||
Commitments: | ||||||||||||||||||||
Unfunded tenant improvements and other | 102,551 | 102,551 | — | — | — | |||||||||||||||
Letters of credit | 1,000 | 1,000 | — | — | — | |||||||||||||||
Performance bonds | 1,386 | 117 | 100 | 1,169 | — | |||||||||||||||
Total commitments | $ | 104,937 | $ | 103,668 | $ | 100 | $ | 1,169 | $ | — |
(1) | Interest on variable rate obligations is based on rates effective as of March 31, 2014. |
• | Cash flows increased $11.4 million from property operations due primarily to the 2013 acquisitions of Greenway Plaza, 777 Main, Post Oak Central, and 816 Congress. This was partially offset by the 2013 sale of 50% of the Company's interest in Terminus 100; |
• | Cash flows decreased by $2.9 million as a result of salaries, bonuses, and long term incentive compensation payments made between periods; |
• | Cash flows decreased $1.7 million due to an increase in interest paid between periods; and |
• | Cash flows decreased $939,000 as a result of discontinued operations. |
• | Cash flows increased $259.1 million from property acquisition, development and tenant asset expenditures due to the acquisition of Post Oak Central and the remaining interest in Terminus 200 during 2013 net of an increase in capital expenditures for the development of Colorado Tower and for building improvements at 2100 Ross, Greenway Plaza, Promenade, and 816 Congress; |
• | Cash flows decreased $92.7 million from proceeds from the sales of investment properties. In the 2014 period, the Company sold 600 University Park and one land parcel. In the 2013 period, the Company effectively sold 50% of its interest in Terminus 100 to a third party and sold non-core land parcels; and |
• | Cash flows decreased $37.2 million from distributions from unconsolidated joint ventures due mainly to a distribution from the Terminus Office Holdings joint venture in 2013. |
• | Cash flows increased $98.6 million as a result of the issuance of 8.7 million common shares in March 2014; |
• | Cash flows from notes payable increased $71.4 million due to the repayment of the Terminus 100 mortgage note payable in 2013; and |
• | Cash flows from the Credit Facility decreased $95.1 million due to the paydown of the Credit Facility in 2014 with proceeds from the 600 University Park sale and with the proceeds from the March 2014 equity offering. |
Three Months Ended March 31, | |||||||
2014 | 2013 | ||||||
Acquisition of property | $ | — | $ | 283,528 | |||
Development | 12,590 | 545 | |||||
Operating — building improvements | 14,064 | 5,559 | |||||
Operating — leasing costs | 2,387 | 3,060 | |||||
Capitalized interest | 253 | 18 | |||||
Capitalized personnel costs | 1,337 | 392 | |||||
Accrued capital adjustment | 6,022 | 2,687 | |||||
Total property acquisition and development expenditures | $ | 36,653 | $ | 295,789 |
Three Months Ended March 31, 2014 | ||
New leases | $8.00 | |
Renewal leases | $2.61 | |
Expansion leases | $4.01 |
Total Number of Shares Purchased (1) | Average Price Paid per Share (1) | |||||
January 1 - 31 | 74,601 | $ | 10.73 | |||
February 1 - 28 | 28,642 | $ | 11.13 | |||
March 1 - 31 | — | N/A | ||||
103,243 |
Name | For | Against | Abstentions | Broker Non-Votes | ||||||||
Tom G. Charlesworth | 170,279,867 | 791,721 | 469,405 | 8,361,175 | ||||||||
James D. Edwards | 170,358,435 | 804,363 | 378,195 | 8,361,175 | ||||||||
Lawrence L. Gellerstedt III | 170,575,409 | 49,559 | 916,025 | 8,361,175 | ||||||||
Lillian C. Giornelli | 169,635,000 | 796,810 | 1,109,183 | 8,361,175 | ||||||||
S. Taylor Glover | 170,730,821 | 62,144 | 748,029 | 8,361,175 | ||||||||
James H. Hance, Jr. | 168,898,781 | 53,541 | 2,588,671 | 8,361,175 | ||||||||
Donna W. Hyland | 170,845,019 | 463,649 | 232,325 | 8,361,175 | ||||||||
R. Dary Stone | 170,550,952 | 99,908 | 890,133 | 8,361,175 |
For | Against | Abstentions | Broker Non-Votes | |||
167,029,244 | 4,342,858 | 168,891 | 8,361,175 |
For | Against | Abstentions | ||
176,169,931 | 3,540,930 | 191,306 |
For | Against | Abstentions | ||
175,267,921 | 4,576,879 | 57,368 |
3.1 | Restated and Amended Articles of Incorporation of the Registrant, as amended August 9, 1999, filed as Exhibit 3.1 to the Registrant’s Form 10-Q for the quarter ended June 30, 2002, and incorporated herein by reference. | |
3.1.1 | Articles of Amendment to Restated and Amended Articles of Incorporation of the Registrant, as amended July 22, 2003, filed as Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed on July 23, 2003, and incorporated herein by reference. | |
3.1.2 | Articles of Amendment to Restated and Amended Articles of Incorporation of the Registrant, as amended December 15, 2004, filed as Exhibit 3(a)(i) to the Registrant’s Form 10-K for the year ended December 31, 2004, and incorporated herein by reference. | |
3.1.3 | Articles of Amendment to Restated and Amended Articles of Incorporation of the Registrant, as amended May 4, 2010, filed as Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed May 10, 2010, and incorporated herein by reference. | |
3.2 | Bylaws of the Registrant, as amended and restated December 4, 2012, filed as Exhibit 3.1 to the Registrant's Current Report on Form 8-K filed on December 7, 2012, and incorporated herein by reference. | |
11.0 | * | Computation of Per Share Earnings. |
31.1 | † | Certification of the Chief Executive Officer Pursuant to Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
31.2 | † | Certification of the Chief Financial Officer Pursuant to Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
32.1 | † | Certification of the Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
32.2 | † | Certification of the Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
101 | † | The following financial information for the Registrant, formatted in XBRL (Extensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Operations, (iii) the Condensed Consolidated Statements of Equity, (iv) the Condensed Consolidated Statements of Cash Flows, and (v) the Notes to Condensed Consolidated Financial Statements. |
* | Data required by ASC 260, “Earnings per Share,” is provided in note 11 to the condensed consolidated financial statements included in this report. | |
† | Filed herewith. |
COUSINS PROPERTIES INCORPORATED | |||
/s/ Gregg D. Adzema | |||
Gregg D. Adzema | |||
Executive Vice President and Chief Financial Officer (Duly Authorized Officer and Principal Financial Officer) |
1. | I have reviewed this quarterly report on Form 10-Q of Cousins Properties Incorporated (the “Registrant”); |
2. | Based on my knowledge, this 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 report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this 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 report; |
4. | The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, 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 report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and |
5. | The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting. |
/s/ Lawrence L. Gellerstedt III |
1. | I have reviewed this quarterly report on Form 10-Q of Cousins Properties Incorporated (the “Registrant”); |
2. | Based on my knowledge, this 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 report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this 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 report; |
4. | The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, 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 report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and |
5. | The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting. |
/s/ Gregg D. Adzema |
/s/ Lawrence L. Gellerstedt III |
/s/ Gregg D. Adzema |
Noncontrolling Interests (Details of the income from NCI table) (USD $)
In Thousands, unless otherwise specified |
3 Months Ended | |
---|---|---|
Mar. 31, 2014
|
Mar. 31, 2013
|
|
Components on noncontrolling interests | ||
Net income attributable to nonredeemable noncontrolling interests | $ (155) | $ (477) |
Net income (loss) attributable to redeemable noncontrolling interests | 0 | (30) |
Net loss (income) | $ 155 | $ 507 |
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