TRANSACTIONS WITH PARKWAY PROPERTIES, INC.

On October 6, 2016, pursuant to the Agreement and Plan of Merger, dated April 28, 2016, (as amended or supplemented from time to time, the “Merger Agreement”), by and among Cousins, Parkway and subsidiaries of Cousins and Parkway, Parkway merged with and into a wholly-owned subsidiary of the Company (the "Merger"), with this subsidiary continuing as the surviving corporation of the Merger. In accordance with the terms and conditions of the Merger Agreement, each outstanding share of Parkway common stock and each outstanding share of Parkway limited voting stock was converted into 1.63 shares of Cousins common stock or limited voting preferred stock, respectively. In the Merger, former Parkway common stockholders received approximately 183 million shares of Cousins common stock and Parkway limited voting stockholders received approximately 7 million shares of Cousins limited voting preferred stock.

On October 7, 2016, pursuant to the Merger Agreement and the Separation, Distribution and Transition Services Agreement, dated as of October 5, 2016 (the "Separation Agreement"), by and among Cousins, Parkway, New Parkway, and certain other parties thereto, Cousins distributed pro rata to its common and limited voting preferred stockholders, including legacy Parkway common and limited voting stockholders, all of the outstanding shares of common and limited voting stock, respectively, of New Parkway, a newly-formed entity that contains the combined businesses relating to the ownership of real properties in Houston, Texas and certain other businesses of Parkway (the "Spin-Off"). In the Spin-Off, Cousins distributed one share of New Parkway common or limited voting stock for every eight shares of common or limited voting preferred stock of Cousins held of record as of the close of business on October 6, 2016. As a result of the Spin-Off, New Parkway is now an independent public company, and its common stock is listed under the symbol "PKY" on the New York Stock Exchange.

In connection with the Merger and Spin-Off, CPLP was formed. As a result of a series of transactions undertaken pursuant to the Separation Agreement (the "Reorganization"), occurring after the Merger but prior to the Spin-Off, substantially all of Parkway's and the Company's assets and liabilities not pertaining to the ownership of real properties in Houston, Texas and certain other businesses of Parkway, were contributed to CPLP. As a result of the Merger and Spin-Off, substantially all of the Company's post-Merger, post-Spin-Off activities are conducted through CPLP.

Approximately 98% of the partnership units of CPLP are owned by the Company, and approximately 2% are owned by legacy outside unit holders of Parkway LP (the "Outside Unit Holders"). Ownership of partnership units in CPLP will generally entitle the holder to share in cash distributions from, and in the profits and losses of, CPLP in proportion to such holder's percentage ownership. The Company acts as the general partner in CPLP and has the exclusive right and full authority and responsibility to manage and operate CPLP's business. Limited partners generally do not have any right to participate in or exercise control or management power over the business and affairs of CPLP. Limited partners may redeem partnership units for cash, or at the Company's election, shares of Cousins' common stock on a one-for-one basis, at any time beginning twelve months following the date of the initial issuance of the partnership units, except for partnership units issued in connection with the Reorganization, which may be redeemed at any time. The Company consolidates the accounts and operations of CPLP in its financial statements.

The acquisition has been accounted for using the acquisition method of accounting in accordance with Accounting Standards Codification, or ASC, 805, Business Combinations, with the Company as the accounting acquirer, which requires, among other things, that the assets acquired and liabilities assumed be recognized at their acquisition date fair value. The total value of the transaction is based on the closing stock price of the Company's common stock on October 5, 2016, the day immediately prior to the closing of the Merger, of $10.19 per share. Based on the shares issued in the transaction and on the units of CPLP effectively issued to the Outside Unit Holders in the transaction, the total fair value of the assets and liabilities assumed in the Merger was $2.0 billion. The Company incurred $24.5 million in expenses related to the merger during the year ended December 31, 2016.

Management engaged a third party valuation specialist to assist with the fair value assessment, which included an allocation of the purchase price. The third party used cash flow analysis as well as an income approach and a cost approach to determine the fair value of assets acquired. Based on additional information that may become available, subsequent adjustments may be made to the purchase price allocation within the allocation period, which typically does not exceed one year.

The purchase price was allocated as follows (in thousands):



Real estate assets	$	3,441,859
Cash	63,193
Restricted cash	30,560
Notes and other receivables	36,388
Investment in unconsolidated joint ventures	58,875
Intangible assets	330,221
Other assets	10,549
	$	3,971,645

Notes payable	$	1,473,810
Accounts payable and accrued expenses	136,934
Intangible liabilities	106,480
Other liabilities	12,076
Nonredeemable noncontrolling interests (excluding CPLP)	292,337
	$	2,021,637

Total purchase price	$	1,950,008

In the Merger, the Company acquired an interest in a joint venture which it consolidated because it controlled the operations of the joint venture. The outside interests associated with this joint venture are included in noncontrolling interests in the above purchase price allocation. In December 2016, the Company purchased the outside partner's interest in the joint venture for $279 million.

The Merger accounted for $68.7 million of consolidated revenue and $9.0 million in consolidated net income as reported for 2016.

The following unaudited supplemental pro forma information presented is based upon the Company's historical consolidated statements of operations, adjusted as if the Merger had occurred on January 1, 2015. This 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.



	2016		2015
	(unaudited, in thousands, except per share amounts)
Revenues	$	732,117	$	855,318
Income from continuing operations	179,625		237,909
Net income	174,117		237,323
Net income available to common stockholders	166,375		208,574
Per share information:
Basic	$	0.42	$	0.53
Diluted	$	0.41	$	0.53

As a result of the Spin-Off, the historical results of operations of the Company's properties that were contributed to New Parkway have been presented as discontinued operations in the consolidated statements of operations and comprehensive income. The above pro forma information is presented prior to the discontinued operations reclassification. Discontinued operations also include transaction costs of $6.3 million we incurred in the Spin-Off.

The following is a summary of the assets and liabilities transferred to New Parkway as part of the Spin-Off (in thousands):



Real estate assets	$	1,696,080
Cash	192,755
Notes and other receivables	43,752
Intangible assets	143,294
Other assets	6,669
	$	2,082,550

Notes payable	$	803,769
Accounts payable and accrued expenses	56,055
Intangible liabilities	59,424
Other liabilities	22,241
	$	941,489

Noncontrolling interest	22,821

Net assets in Spin-off to New Parkway	$	1,118,240

The following table includes a summary of discontinued operations of the Company for the years ended December 31, 2016, 2015, and 2014. In addition to the discontinued operations associated with the Spin-Off, this table includes the discontinued operations of Lakeshore Park Plaza and 600 University Park Place that were sold in 2014. There were no dispositions that met this criteria in 2015. See note 4 for a detail of dispositions during the periods.



	2016			2015			2014
Rental property revenues	$	136,927		$	176,828		$	182,714
Rental property operating expenses	(58,336		)	(73,630		)	(80,099		)
Other revenues	288			450			4,064
Interest expense	(6,022		)	(7,988		)	(8,127		)
Depreciation and amortization	(47,345		)	(63,791		)	(77,760		)
Other expenses	(6,349		)	(21		)	(28		)
Income from discontinued operations	$	19,163		$	31,848		$	20,764

Gain (loss) on sale of discontinued operations, net	$	—		$	(551	)	$	19,358

Cash provided by operating activities	$	42,604		$	76,395		$	81,946
Cash used in investing activities	$	(30,067	)	$	(55,085	)	$	6,001