EX-99.3 7 d574560dex993.htm EX-99.3 EX-99.3

EXHIBIT 99.3

COUSINS PROPERTIES INCORPORATED

Summary of Unaudited Pro Forma Financial Statements

On July 19, 2013, Cousins Properties Incorporated (the “Company”) entered into two purchase and sale agreements for the acquisition of Greenway Plaza, a 10-building approximately 4.4 million square foot office complex in Houston, Texas, and 777 Main Street, a 980,000 square foot Class A office building in Fort Worth, Texas (the “Texas Acquisition”), for a gross aggregate purchase price of approximately $1.1 billion.

These pro forma financial statements reflect a funding of the purchase price of the Texas Acquisition with net proceeds from an assumed public offering of 60.0 million shares of common stock, less estimated underwriting and other fees (the “Offering”), and proceeds from a new unsecured term loan facility (the “New Facility”). The New Facility, which was executed on July 29, 2013, permits the Company to draw up to $950.0 million, with an accordion feature permitting the Company to increase the amount available by up to $150.0 million if the Company requests and receives additional commitments for the increase (for an aggregate available facility amount up to $1.1 billion). The pro forma financial statements do not reflect any funding of any portion of the purchase price of the Texas Acquisition with any secured debt that the Company might obtain in the future.

On February 8, 2013, the Company purchased an 80% interest in MSREF/Cousins Terminus 200 LLC and simultaneously repaid the mortgage loan secured by the Terminus 200 property. 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. Concurrently, the Company purchased Post Oak Central from an affiliate of L.P. Morgan Asset Management (collectively, the “Post Oak/Terminus Transactions”).

On April 25, 2013, the Company purchased 816 Congress, a Class A office tower in Austin, Texas.

The following unaudited pro forma balance sheet as of June 30, 2013 has been prepared to give effect to the Texas Acquisition and the related fundings as if the transaction occurred on June 30, 2013.

The following unaudited pro forma statements of operations for the six months ended June 30, 2013 and the pro forma statement of comprehensive income for the year ended December 31, 2012 have been prepared to give effect to (1) the Texas Acquisition and related fundings, (2) the Post Oak/Terminus Transactions and (3) the acquisition of 816 Congress as if the transactions occurred on January 1, 2012.

This pro forma information should be read in conjunction with the consolidated financial statements and notes thereto of the Company included in its Annual Report filed on Form 10-K for the year ended December 31, 2012 and its Quarterly Report filed on Form 10-Q for the quarterly period ended June 30, 2013. In addition, this pro forma information should be read in conjunction with the financial statements and notes thereto of the Texas Acquisition included herein and in conjunction with the financial statements and notes thereto of Post Oak Central and Terminus 200 included in the Company’s Current Report on Form 8-K/A filed on March 26, 2013.

These unaudited pro forma financial statements are prepared for informational purposes only and are not necessarily indicative of future results or of actual results that would have been achieved had the acquisitions and dispositions discussed above been consummated on the dates indicated. In addition, the pro forma balance sheet includes pro forma allocations of the purchase price based upon preliminary estimates of the fair value of the assets acquired in connection with the Texas Acquisition. These allocations may be adjusted in the future upon finalization of these preliminary estimates.

 

1


Cousins Properties Incorporated and Subsidiaries

Pro Forma Consolidated Balance Sheet

June 30, 2013

(unaudited; in thousands)

 

           Pro Forma
Adjustments
       
     Cousins
Properties
Incorporated
Historical(a)
    Texas
Acquisition
    Pro Forma
Total
 

Assets

      

Real estate assets:

      

Operating properties, net

   $ 838,826      $ 674,697 (b)    $ 1,513,523   

Projects under development, net

     5,819        —          5,819   

Land

     38,039        350,001 (b)      388,040   

Other

     —          —          —     
  

 

 

   

 

 

   

 

 

 
     882,684        1,024,698        1,907,382   

Operating properties and related assets held for sale, net

     51,301        —          51,301   

Cash and cash equivalents

     4,925        —          4,925   

Restricted cash

     3,230        —          3,230   

Notes and accounts receivable, net

     8,539        —          8,539   

Deferred rents receivable

     34,707        —          34,707   

Investments in unconsolidated joint ventures

     127,948        —          127,948   

Other assets

     87,454        137,023 (b)      224,477   
  

 

 

   

 

 

   

 

 

 

Total assets

   $ 1,200,788      $ 1,161,721      $ 2,362,509   
  

 

 

   

 

 

   

 

 

 

Liabilities and equity

      

Notes payable

   $ 340,374      $ 503,024 (c)    $ 843,398   

Accounts payable and accrued expenses

     34,433        —          34,433   

Deferred income

     25,785        —          25,785   

Other liabilities

     26,582        49,317 (b)      75,899   
  

 

 

   

 

 

   

 

 

 

Total liabilities

     427,174        552,341        979,515   

Stockholders’ investment:

      

Preferred stock

     94,775        —          94,775   

Common stock

     124,258        60,000  (d)      184,258   

Additional paid-in capital

     825,777        552,380  (d)      1,378,157   

Treasury stock at cost

     (86,840     —          (86,840

Distributions in excess of cumulative net income

     (206,995     (3,000 )(e)      (209,995
  

 

 

   

 

 

   

 

 

 

Total stockholders’ investment

     750,975        609,380        1,360,355   

Nonredeemable noncontrolling interests

     22,639        —         22,639   
  

 

 

   

 

 

   

 

 

 

Total equity

     773,614        609,380        1,382,994   
  

 

 

   

 

 

   

 

 

 

Total liabilities and equity

   $ 1,200,788      $ 1,161,721      $ 2,362,509   
  

 

 

   

 

 

   

 

 

 

 

The accompanying notes are an integral part of this statement.

 

2


(a) Historical financial information is derived from the Company’s Quarterly Report filed on Form 10-Q as of June 30, 2013.
(b) Reflects the purchase price of the assets and liabilities in connection with the Texas Acquisition, net of any purchase price adjustments.
(c) Represents amounts assumed to be financed through the New Facility in connection with the Texas Acquisition.
(d) Reflects net proceeds from the Offering.
(e) Reflects the expensing of estimated acquisition-related costs as required under GAAP.

 

3


Cousins Properties Incorporated and Subsidiaries

Pro Forma Consolidated Statement of Operations

For the Six Months Ended June 30, 2013

(unaudited; in thousands, except per share amounts)

 

           Pro Forma Adjustments        
     Cousins
Properties
Incorporated
Historical(a)
    Q1 and Q2
2013
Transactions(b)
    Texas
Acquisition
    Pro Forma
Total
 

Revenues

        

Rental property revenues

   $ 73,477      $ 5,164 (d)    $ 73,675 (c)    $ 152,316   

Fee income

     6,511        —          —          6,511   

Land sales

     1,396        —          —          1,396   

Other

     2,668        —          336 (c)      3,004   
  

 

 

   

 

 

   

 

 

   

 

 

 
     84,052        5,164        74,011        163,227   
  

 

 

   

 

 

   

 

 

   

 

 

 

Costs and Expenses

        

Rental property operating expenses

     34,406        2,999 (d)      31,905 (e)      69,310   

Reimbursed expenses

     3,268        —          —          3,268   

Land cost of sales

     1,396        —          —          1,396   

General and administrative expenses

     10,622        —          —          10,622   

Interest expense

     9,176        227 (g)      4,574 (h)      13,977   

Depreciation and amortization

     27,240        1,766 (d)      25,625 (f)      54,631   

Other

     1,358        —          —          1,358   
  

 

 

   

 

 

   

 

 

   

 

 

 
     87,466        4,992        62,104        154,562   
  

 

 

   

 

 

   

 

 

   

 

 

 

Loss on extinguishment of debt

     —          —          —          —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) from continuing operations before taxes, unconsolidated joint ventures and sale of investment properties

     (3,414     172        11,907        8,665   

Benefit (provision) for income taxes from operations

     (2     —          —          (2
       35 (j)     

Income (loss) from unconsolidated joint ventures

     2,784        369 (i)      —          3,188   
  

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) from continuing operations before gain on sale of investment properties

     (632     576        11,907        11,851   

Gain on sale of investment properties

     57,583        —          —         57,583   
  

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) from continuing operations

     56,951        576        11,907        69,434   

Income (loss) from discontinued operations:

           —     

Income (loss) from discontinued operations

     593        —          —          593   

Gain on sale of discontinued operations

     181        —          —          181   
  

 

 

   

 

 

   

 

 

   

 

 

 
     774        —          —          774   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

     57,725        576        11,907        70,208   

Net loss attributable to noncontrolling interests

     (1,022     —         —         (1,022
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) attributable to controlling interests

     56,703        576        11,907        69,186   

Preferred share original issuance costs

     (2,656     —          —          (2,656

Dividends to preferred stockholders

     (6,454     —          —          (6,454
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) available to common stockholders

   $ 47,593      $ 576      $ 11,907      $ 60,076   
  

 

 

   

 

 

   

 

 

   

 

 

 

Per common share information - basic and diluted:

        

Income (loss) from continuing operations attributable to controlling interest

   $ 0.4202          $ 0.3459   

Income (loss) from discontinued operations

   $ 0.0069          $ 0.0045   
  

 

 

       

 

 

 

Net income (loss) available to common stockholders

   $ 0.4271          $ 0.3504   
  

 

 

       

 

 

 

Weighted average shares - basic

     111,430          60,000 (k)      171,430   
  

 

 

     

 

 

   

 

 

 

Weighted average shares - diluted

     111,593          60,000 (k)      171,593   
  

 

 

     

 

 

   

 

 

 

The accompanying notes are an integral part of this statement.

 

4


(a) Historical financial information is derived from the Company’s Quarterly Report filed on Form 10-Q for the six months ended June 30, 2013.
(b) Includes pro forma adjustments for the Post Oak Central/Terminus Transactions and the acquisition of 816 Congress.
(c) Rental property revenue consists primarily of base rent, tenant reimbursements and amortization of above-market lease assets and below-market lease liabilities. Base rent is recognized on a straight-line basis beginning on the pro forma acquisition date of January 1, 2012. Tenant reimbursements are defined by the respective leases. Amortization is recognized using the straight-line method based on the purchase price allocated to above- and below-market leases over the lives of the respective leases. Other income consists primarily of lease termination fees.
(d) Represents adjustments related to the Post Oak Central/Terminus Transactions and the acquisition of 816 Congress.
(e) Consists of property operating expenses, primarily made up of real estate taxes, utilities, management, insurance and maintenance and support services.
(f) Depreciation and amortization expense is calculated using the straight-line method based on the purchase price allocated to building, tenant improvements, site improvements and lease intangibles over the lives of the respective leases.
(g) Includes additional interest expense that would have been incurred on the Company’s revolving credit facility (the “Credit Facility”) if the Company had acquired Post Oak Central and 816 Congress on January 1, 2012 and funded the purchase price with borrowings under the Credit Facility. Also includes a decrease in the amount of interest expense due to the elimination of the Terminus 100 mortgage note payable upon the sale of 50% of Terminus 100 and to the receipt of cash from the Terminus 100 and Terminus 200 dispositions, which is assumed to have lowered the Credit Facility balance.
(h) Represents additional interest expense (calculated at LIBOR plus 150 basis points or 1.70%) that would have been incurred on the New Facility if the Company had effected the Texas Acquisition on January 1, 2012 and funded the purchase price, in part, with borrowings under the New Facility.
(i) Represents the Company’s share of the net income from the venture that acquired Terminus 100 and Terminus 200, of which the Company owns 50%. Based on the ownership and management structure of the joint venture, the Company accounts for its interest in these entities under the equity method. The pro forma adjustment reflects an estimate of what the Company’s share of the net income would be for this joint venture prior the closing of the transaction in 2013.
(j) Represents amounts recorded in the historical consolidated statement of comprehensive income for the venture that owned Terminus 200 prior to the Company’s acquisition of the remaining 80% membership interest in Terminus 200. This amount would have been eliminated upon the acquisition of Terminus 200.
(k) Represents shares assumed to be issued in connection with the Offering. Does not include any shares that may be issued pursuant to the exercise of the underwriters’ option to acquire additional shares.

 

5


Cousins Properties Incorporated and Subsidiaries

Pro Forma Consolidated Statement of Comprehensive Income

For the Year Ended December 31, 2012

(unaudited; in thousands, except per share amounts)

 

           Pro Forma Adjustments        
     Cousins
Properties
Incorporated
Historical(a)
    Q1 and Q2
2013
Transactions(b)
    Texas
Acquisition
    Pro Forma
Total
 

Revenues

      

Rental property revenues

   $ 125,609      $ 21,769  (d)    $ 139,658  (c)    $ 287,036   

Fee income

     17,797        —          —          17,797   

Land sales

     2,616        —          —          2,616   

Other

     2,256        —          3,134  (c)      5,390   
  

 

 

   

 

 

   

 

 

   

 

 

 
     148,278        21,769        142,792        312,839   
  

 

 

   

 

 

   

 

 

   

 

 

 

Costs and Expenses

      

Rental property operating expenses

     54,518        15,682  (f)      61,791  (e)      131,991   

Reimbursed expenses

     7,063        —          —          7,063   

Land cost of sales

     1,420        —          —          1,420   

General and administrative expenses

     23,208        —          —          23,208   

Interest expense

     23,933        (3,915 )(g)      10,904  (h)      30,922   

Depreciation and amortization

     43,559        8,079  (i)      51,249  (j)      102,887   

Impairment losses

     488        —          —          488   

Separation expenses

     1,985        —          —          1,985   

Other

     4,517        —   (k)      —   (k)      4,517   
  

 

 

   

 

 

   

 

 

   

 

 

 
     160,691        19,846        123,944        304,481   
  

 

 

   

 

 

   

 

 

   

 

 

 

Loss on extinguishment of debt

     (94     —          —          (94
  

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) from continuing operations before taxes, unconsolidated joint ventures and sale of investment properties

     (12,507     1,923        18,848        8,264   

Benefit (provision) for income taxes from operations

     (91     —          —          (91
       (65 )(l)     
       (131 )(o)     

Income (loss) from unconsolidated joint ventures

     39,258        215 (m)      —          39,277   
  

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) from continuing operations before gain on sale of investment properties

     26,660        1,942        18,848        47,450   

Gain on sale of investment properties

     4,053        —   (n)      —          4,053   
  

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) from continuing operations

     30,713        1,942        18,848        51,503   

Income (loss) from discontinued operations:

      

Income (loss) from discontinued operations

     (1,201     —          —          (1,201

Gain on sale of discontinued operations

     18,407        —          —          18,407   
  

 

 

   

 

 

   

 

 

   

 

 

 
     17,206        —          —          17,206   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

     47,919        1,942        18,848        68,709   

Net loss attributable to noncontrolling interests

     (2,191     —          —          (2,191
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) attributable to controlling interests

     45,728        1,942        18,848        66,518   

Dividends to preferred stockholders

     (12,907     —          —          (12,907
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) available to common stockholders

   $ 32,821      $ 1,942      $ 18,848      $ 53,611   
  

 

 

   

 

 

   

 

 

   

 

 

 

Per common share information - basic and diluted:

        

Income (loss) from continuing operations attributable to controlling interest

   $ 0.1500          $ 0.2218   

Income (loss) from discontinued operations

   $ 0.1653          $ 0.1048   
  

 

 

       

 

 

 

Net income (loss) available to common stockholders

   $ 0.3152          $ 0.3267   
  

 

 

       

 

 

 

Weighted average shares - basic

     104,117          60,000 (p)      164,117   
  

 

 

     

 

 

   

 

 

 

Weighted average shares - diluted

     104,125          60,000 (p)      164,125   
  

 

 

     

 

 

   

 

 

 

The accompanying notes are an integral part of this statement.

 

6


(a) Historical financial information is derived from the Company’s Annual Report filed on Form 10-K for the year ended December 31, 2012.
(b) Includes pro forma adjustments for the Post Oak Central/Terminus Transaction and the acquisition of 816 Congress.
(c) Rental property revenue consists primarily of base rent, tenant reimbursements and amortization of above-market lease assets and below-market lease liabilities. Base rent is recognized on a straight-line basis beginning on the pro forma acquisition date of January 1, 2012. Tenant reimbursements are defined by the respective leases. Amortization is recognized using the straight-line method based on the purchase price allocated to above- and below-market leases over the lives of the respective leases. Other income consists primarily of lease termination fees.
(d) Represents adjustments related to the Post Oak Central/Terminus Transaction and the acquisition of 816 Congress.
(e) Consists of property operating expenses, primarily made up of real estate taxes, utilities, management, insurance and maintenance and support services.
(f) Represents property operating expenses recorded in the historical consolidated statement of comprehensive income for Terminus 100 which would have been eliminated upon the sale of 50% of Terminus 100 as well as property operating expenses for the Post Oak Central and 816 Congress acquisitions assuming the transactions had occurred on January 1, 2012. See Note (e) for a description of what is considered property operating expenses.
(g) Includes additional interest expense that would have been incurred on the Company’s Credit Facility if the Company acquired Post Oak Central and 816 Congress on January 1, 2012 and funded the purchase price with borrowings under the Credit Facility. Also includes a decrease in the amount of interest expense due to the elimination of the Terminus 100 mortgage note payable upon the sale of 50% of Terminus 100 and to the receipt of cash from the Terminus 100 and Terminus 200 dispositions, which is assumed to have lowered the Credit Facility balance.
(h) Represents additional interest expense (calculated at LIBOR plus 150 basis points or 1.70%) that would have been incurred on the New Facility if the Company had acquired the Texas Acquisition on January 1, 2012 and funded the purchase price, in part, with borrowings under the New Facility.
(i) Represents depreciation and amortization expense recorded in the historical consolidated statement of comprehensive income for Terminus 100 which would have been eliminated upon the sale of 50% of Terminus 100 as well as depreciation and amortization expense calculated for the Post Oak Central and 816 Congress acquisitions assuming the transactions occurred on January 1, 2012. See Note (j) for description of what is considered depreciation and amortization expense.
(j) Depreciation and amortization expense is calculated using the straight-line method based on the purchase price allocated to building, tenant improvements, site improvements and lease intangibles over the lives of the respective leases.
(k) In connection with the Texas Acquisition, the 816 Congress acquisition, the Post Oak Central acquisition, the acquisition of the remaining 80% membership interest in Terminus 200, and the Terminus 100 and Terminus 200 dispositions, the Company incurred and expects to incur acquisition-related and disposition-related costs in an aggregate amount of approximately $3.8 million, which have been excluded from the pro forma statement of comprehensive income for the year ended December 31, 2012, as these amounts represent non-recurring charges.
(l) Represents the Company’s share of the net loss from the venture that acquired Terminus 100 and Terminus 200, of which the Company owns 50%. Based on the ownership and management structure of the joint venture, the Company will account for its interest in these entities under the equity method.
(m) Represents amounts recorded in the historical consolidated statement of comprehensive income for the venture that owned Terminus 200 prior to the Company’s acquisition of the remaining 80% membership interest in Terminus 200. This amount would have been eliminated upon the acquisition of Terminus 200.
(n) In connection with the Terminus 100 and Terminus 200 dispositions, the Company recognized gains of $37.1 million and $19.7 million, respectively, which have been excluded from the pro forma statement of comprehensive income for the year ended December 31, 2012, as these amounts represent non-recurring charges.
(o) Represents amounts recorded in the historical consolidated statement of comprehensive income for Terminus 100 which would have been eliminated upon the sale of 50% of Terminus 100.
(p) Represents shares assumed to be issued in connection with the Offering.

 

7